DERIVATIVE INSTRUMENT

3 Months Ended

Jul. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENT

DERIVATIVE INSTRUMENT

Our objective in using an interest rate derivative is to hedge our exposure to the variability in cash flows of our floating-rate debt. To accomplish this objective, we entered into an interest rate swap contract to fix the variable interest rate on our term loan. The interest rate swap had a $70.0 million notional amount and qualified as a cash flow hedge.

Under ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which we adopted on November 1, 2017, the ineffective portion of a hedging instrument is no longer required to be recognized currently in earnings or disclosed. Changes in the fair value of cash flow hedges are recorded in accumulated other comprehensive income and subsequently reclassified into earnings in the period that the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income for our interest rate swap will be reclassified to interest expense as interest expense is incurred on our term loan.

The gain recognized in other comprehensive income for the three months ended July 31, 2018, was $208,000, and the amount reclassified from accumulated other comprehensive income into interest expense during this period was $29,000. At July 31, 2018 and April 30, 2018, the fair value of our interest rate swap included in other assets on our Condensed Consolidated Balance Sheets was $2.0 million and $1.8 million, respectively.