Derivative Instruments

3 Months Ended

Nov. 30, 2021

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 currency forward 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 debt. The Company’s foreign currency forward 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 accumulated other comprehensive income or loss.

At November 30, 2021 exchange rates, notional amounts of forward exchange contracts for the purchase of Polish Zlotys and the sale of Euros; and the purchase of Mexican Pesos and the sale of U.S. Dollars aggregated to $120.9 million. The fair value of the contracts is included on the 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 October 2023, 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 accumulated other comprehensive loss would be reclassified to the results of operations in Interest and foreign exchange at the time of occurrence. At November 30, 2021 exchange rates, approximately $5.4 million would be reclassified to revenue or cost of revenue in the next year.

At November 30, 2021, an interest rate swap agreement maturing in September 2023 had a notional amount of $99.4 million and an interest rate swap agreement maturing June 2024 had a notional amount of $135.0 million. The fair value of the contracts is included on the 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 Accumulated other comprehensive loss and charged or credited to interest expense. At November 30, 2021 interest rates, approximately $4.5 million would be reclassified to interest expense in the next year.

Fair Values of Derivative Instruments

(in millions)

	Asset Derivatives					Liability Derivatives
		November 30, 2021		August 31, 2021			November 30, 2021		August 31, 2021
	Balance sheet location	Fair Value		Fair Value		Balance sheet location	Fair Value		Fair Value
Derivatives designated    as hedging    instruments
Foreign forward    exchange contracts	Accounts receivable,   net	$	—	$	0.1	Accounts payable and   accrued liabilities	$	5.7	$	0.3
Interest rate swap   contracts	Accounts receivable,   net		—		—	Accounts payable and   accrued liabilities		7.1		10.0
		$	—	$	0.1		$	12.8	$	10.3
Derivatives not    designated as    hedging instruments
Foreign forward   exchange contracts	Accounts receivable,   net	$	—	$	—	Accounts payable and   accrued liabilities	$	0.1	$	0.1

The Effect of Derivative Instruments on the Statements of Operations

(in millions)

Derivatives in cash flow hedging relationships	Location of gain (loss) recognized in income on derivatives	Gain (loss) recognized in income on derivatives three months ended November 30,
		2021			2020
Foreign forward exchange contract	Interest and foreign exchange	$	(0.3	)	$	(0.1	)

Derivatives in cash flow hedging relationships	Gain (loss) recognized in OCI on derivatives three months ended November 30,						Location of gain (loss) reclassified from accumulated OCI into income	Gain (loss) reclassified from accumulated OCI into income three months ended November 30,						Location of gain (loss) on derivative (amount excluded from effectiveness testing)	Gain (loss) recognized on derivative (amount excluded from effectiveness testing) three months ended November 30,
	2021			2020				2021			2020				2021		2020
Foreign    forward    exchange    contracts	$	(4.6	)	$	(1.0	)	Revenue	$	(0.2	)	$	(0.3	)	Revenue	$	0.2	$	0.1
Foreign    forward    exchange    contracts		(1.3	)		—		Cost of    revenue		—			—		Cost of    revenue		0.1		—
Interest rate    swap    contracts		1.7			0.3		Interest and    foreign    exchange		(1.3	)		(1.3	)	Interest and    foreign    exchange		—		—
	$	(4.2	)	$	(0.7	)		$	(1.5	)	$	(1.6	)		$	0.3	$	0.1

The following table presents the amounts in the Consolidated Statements of Operations in which the effects of the cash flow hedges are recorded and the effects of the cash flow hedge activity on these line items for the three months ended November 30, 2021 and 2020:

	For The Three Months Ended November 30,
	2021					2020
	Total		Amount of gain (loss) on cash flow hedge activity			Total		Amount of gain (loss) on cash flow hedge activity
Revenue	$	550.7	$	(0.2	)	$	403.0	$	(0.3	)
Cost of revenue	$	503.1	$	—		$	362.3	$	—
Interest and foreign exchange	$	12.6	$	(1.3	)	$	11.1	$	(1.3	)