v3.26.1
Derivative Instruments
 9 Months Ended
May 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments

Note 11 – Derivative Instruments

Foreign operations give rise to market risks from changes in foreign currency exchange rates. Foreign exchange contracts with established financial institutions are utilized to hedge a portion of that risk. Interest rate swap agreements are used to reduce the impact of changes in interest rates on certain current and probable future debt. The Company’s foreign exchange contracts and interest rate swap agreements are designated as cash flow hedges, and therefore the effective portion of unrealized gains and losses is recorded in AOCL.

At May 31, 2026 exchange rates, notional amounts of foreign exchange contracts for the purchase of Polish Zlotys and the sale of Euros, the purchase of U.S. Dollars and the sale of Euros, and the purchase and sale of Mexican Pesos and U.S. Dollars, aggregated to $227.3 million. The fair value of the contracts is included on the Condensed Consolidated Balance Sheets as Accounts payable and accrued liabilities when in a loss position, or as Accounts receivable, net when in a gain position. As the contracts mature at various dates through May 2027, any such gain or loss remaining will be recognized in Manufacturing Revenue or Cost of revenue along with the related transactions. In the event that the underlying transaction does not occur or does not occur in the period designated at the inception of the hedge, the amount classified in AOCL would be reclassified to the results of operations in Interest and foreign exchange at the time of occurrence. At May 31, 2026 exchange rates, approximately $5.4 million would be reclassified to Manufacturing Revenue and Cost of revenue in the next year.

At May 31, 2026, interest rate swap agreements maturing from August 2027 through January 2032 had notional amounts that aggregated to $468.0 million. The fair value of the contracts is included on the Condensed Consolidated Balance Sheets in Accounts payable and accrued liabilities when in a loss position, or in Accounts receivable, net when in a gain position. As interest expense on the underlying debt is recognized, amounts corresponding to the interest rate swap are reclassified from AOCL and charged or credited to interest expense. At May 31, 2026 interest rates, approximately $5.4 million would be reclassified to Interest and foreign exchange in the next year.

Fair Values of Derivative Instruments

(in millions)

 

 

Asset Derivatives

 

 

Liability Derivatives

 

 

 

 

 

May 31,
2026

 

 

August 31,
2025

 

 

 

 

May 31,
2026

 

 

August 31,
2025

 

 

 

Balance sheet location

 

Fair Value

 

 

Fair Value

 

 

Balance sheet location

 

Fair Value

 

 

Fair Value

 

Derivatives designated as hedging instruments

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

Accounts receivable, net

 

$

6.9

 

 

$

5.4

 

 

Accounts payable and accrued liabilities

 

$

0.2

 

 

$

2.9

 

Interest rate swap contracts

 

Accounts receivable, net

 

 

13.1

 

 

 

13.6

 

 

Accounts payable and accrued liabilities

 

 

0.1

 

 

 

0.7

 

 

 

 

$

20.0

 

 

$

19.0

 

 

 

 

$

0.3

 

 

$

3.6

 

Derivatives not designated as hedging instruments

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

Accounts receivable, net

 

$

0.5

 

 

$

—

 

 

Accounts payable and accrued liabilities

 

$

—

 

 

$

—

 

The Effect of Derivative Instruments on the Statements of Income

(in millions)

Three months ended May 31, 2026 and 2025

Derivatives in cash flow hedging relationships

Gain (loss) recognized in AOCL on derivatives three months ended
May 31,

 

Location of gain (loss) reclassified from AOCL into income

Gain (loss) reclassified from AOCL into income three months ended
May 31,

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Foreign exchange contracts

$

(0.7

)

 

$

(1.5

)

Revenue

$

—

 

 

$

1.5

 

Foreign exchange contracts

 

0.2

 

 

 

0.2

 

Cost of revenue

 

1.9

 

 

 

—

 

Interest rate swap contracts

 

4.8

 

 

 

(0.8

)

Interest and foreign exchange

 

1.9

 

 

 

2.8

 

 

$

4.3

 

 

$

(2.1

)

 

$

3.8

 

 

$

4.3

 

 

 

Derivatives not designated as hedging instruments

 

Location of gain (loss) recognized in income on derivatives

 

Gain (loss) recognized in income on derivatives three months ended
May 31,

 

 

 

 

 

2026

 

 

2025

 

Foreign exchange contracts

 

Interest and foreign exchange

 

$

0.5

 

 

$

—

 

The Effect of Derivative Instruments on the Statements of Income

(in millions)

Nine months ended May 31, 2026 and 2025

Derivatives in cash flow hedging relationships

 

Gain (loss) recognized in AOCL on derivatives nine months ended
May 31,

 

 

Location of gain (loss) reclassified from AOCL into income

 

Gain (loss) reclassified from AOCL into income nine months ended
May 31,

 

 

 

2026

 

 

2025

 

 

 

 

2026

 

 

2025

 

Foreign exchange contracts

 

$

0.9

 

 

$

1.6

 

 

Revenue

 

$

0.6

 

 

$

3.1

 

Foreign exchange contracts

 

 

8.6

 

 

 

—

 

 

Cost of revenue

 

 

4.0

 

 

 

(0.1

)

Interest rate swap contracts

 

 

7.9

 

 

 

11.2

 

 

Interest and foreign exchange

 

 

6.4

 

 

 

9.9

 

 

 

$

17.4

 

 

$

12.8

 

 

 

 

$

11.0

 

 

$

12.9

 

 

Derivatives not designated as hedging instruments

 

Location of gain (loss) recognized in income on derivatives

 

Gain (loss) recognized in income on derivatives nine months ended
May 31,

 

 

 

 

 

2026

 

 

2025

 

Foreign exchange contracts

 

Interest and foreign exchange

 

$

0.5

 

 

$

(0.3

)

The following table presents the location and amounts in the Condensed Consolidated Statements of Income in which the effects of the cash flow hedges were recorded for the three and nine months ended May 31, 2026 and 2025:

 

 

Three months ended
May 31,

 

 

Nine months ended
May 31,

 

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Total Revenue

 

$

576.5

 

 

$

842.7

 

 

$

1,870.1

 

 

$

2,480.7

 

Gain (loss) on cash flow hedges in Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts:

 

 

 

 

 

 

 

 

 

 

 

 

Gain (loss) reclassified from AOCL

 

$

—

 

 

$

1.5

 

 

$

0.6

 

 

$

3.1

 

Amount excluded from effectiveness testing

 

$

0.4

 

 

$

0.8

 

 

$

1.6

 

 

$

0.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Cost of revenue

 

$

495.4

 

 

$

691.2

 

 

$

1,616.2

 

 

$

2,017.0

 

Gain (loss) on cash flow hedges in Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts:

 

 

 

 

 

 

 

 

 

 

 

 

Gain (loss) reclassified from AOCL

 

$

1.9

 

 

$

—

 

 

$

4.0

 

 

$

(0.1

)

Amount excluded from effectiveness testing

 

$

—

 

 

$

—

 

 

$

0.1

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Interest and foreign exchange

 

$

16.5

 

 

$

13.2

 

 

$

45.7

 

 

$

58.3

 

Gain (loss) on cash flow hedges in Interest and foreign exchange

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap contracts:

 

 

 

 

 

 

 

 

 

 

 

 

Gain (loss) reclassified from AOCL

 

$

1.9

 

 

$

2.8

 

 

$

6.4

 

 

$

9.9