Derivative Instruments

12 Months Ended

Jul. 31, 2016

Derivative Instruments [Abstract]

Derivative Instruments

Note 5—Derivative Instruments

Prior to the Zedge Spin-Off, the primary risk managed by the Company using derivative instruments was foreign exchange risk. Foreign exchange forward contracts were entered into as hedges against unfavorable fluctuations in the U.S. dollar – Norwegian krone (“NOK”) exchange rate. Zedge is based in Norway and much of its operations are located in Norway. Subsequent to the Zedge Spin-Off, the Company provides hedging services to Zedge pursuant to the Transition Services Agreement (see Note 20) until Zedge establishes a credit facility and is able to enter into foreign exchange contracts. The Company did not apply hedge accounting to these contracts, therefore the changes in fair value were recorded in earnings. By using derivative instruments to mitigate exposures to changes in foreign exchange rates, the Company was exposed to credit risk from the failure of the counterparty to perform under the terms of the contract. The Company minimized the credit or repayment risk by entering into transactions with high-quality counterparties.

The fair value of outstanding derivative instruments recorded as assets in the accompanying consolidated balance sheets were as follows:

July 31 (in thousands)		2016		2015
Asset Derivatives	Balance Sheet Location
Derivatives not designated or not qualifying as hedging instruments:
Foreign exchange forwards	Other current assets	$	—	$	38

The fair value of outstanding derivative instruments recorded as liabilities in the accompanying consolidated balance sheets were as follows:

July 31 (in thousands)		2016		2015
Liability Derivatives	Balance Sheet Location
Derivatives not designated or not qualifying as hedging instruments:
Foreign exchange forwards	Other current liabilities	$	—	$	39

The effects of derivative instruments on the consolidated statements of operations were as follows:

		Amount of Gain (Loss) Recognized on Derivatives
		Year ended July 31,
(in thousands)		2016			2015			2014
Derivatives not designated or not qualifying as hedging instruments	Location of Gain (Loss) Recognized on Derivatives
Foreign exchange forwards	Other income (expense), net	$	(145	)	$	(58	)	$	—