Fair Value and Derivatives |
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| Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value and Derivatives | 10. FAIR VALUE AND DERIVATIVES Fair Value of Financial Instruments Fair value measurements are determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants exclusive of any transaction costs. The Company utilizes a fair value hierarchy based upon the observability of inputs used in valuation techniques as follows:
Accounts receivable and accounts payable are carried at amounts that approximate fair value due to their short-term maturity. The estimated fair values of these instruments would be classified within Level 2 of the fair value hierarchy, as the valuation is based on observable market inputs. Cash equivalents are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices for identical assets. Derivatives We operate globally and are exposed to market risks arising from fluctuations in foreign currency exchange rates and interest rates. As part of our financial risk management strategy, we use derivative financial instruments to hedge exposure to variability in cash flows associated with these market risks. These instruments are used solely for risk management purposes. We do not engage in derivative transactions for trading or speculative purposes.
Derivatives Not Designated as Hedging Instruments We have entered into non-designated foreign currency forward contracts to manage balance sheet foreign currency risk associated with intercompany loans and other foreign currency denominated assets and liabilities. These contracts, classified as Level 2 in the fair value hierarchy are recorded net at fair value on our condensed consolidated balance sheets, and the related gains and losses are recognized in other, net. The notional amount of forward contracts in place was $29.4 million as of August 31, 2026 and consisted of economic hedges with maturities through September 2026. These derivatives are not designated as hedging instruments.
The location and amount of (losses) gains from derivatives not designated as hedging instruments in our condensed consolidated statements of operations were as follows:
Derivatives Designated as Hedging Instruments We have entered into a receive-variable, pay-fixed interest rate swap agreement with a $200.0 million notional value, which is designated as a cash flow hedge. This cash flow hedge fixed a portion of the variable interest due on our term loan facility, with an effective date of December 2, 2022 and a maturity date of June 30, 2027. Under the terms of the agreement, we pay a fixed interest rate of 4.215%, plus an applicable margin ranging between 137.5 to 175 basis points and receive a variable rate of interest based on term SOFR from the counterparty, which is reset according to the duration of the SOFR term. The Company expects to reclassify a $0.1 million loss of accumulated other comprehensive income into earnings during the remaining term of the interest rate swap through June 30, 2027. We record the fair value of our interest rate swaps on a recurring basis using Level 2 observable market inputs for similar assets or liabilities in active markets.
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