DERIVATIVE INSTRUMENTS

Our objective in using an interest rate derivatives is to add stability to interest expense and to manage our exposure to interest rate fluctuations. To accomplish this objective, we primarily use interest rate swap contracts to fix the variable rate interest on our term loans. The interest rate swap contracts qualify as cash flow hedges.

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 payments are made on our term loan. During the next 12 months, we estimate an additional $61,000 will be reclassified as a decrease to interest expense.

At December 31, 2018, we had two interest rate swap contracts in effect with a notional amount of $145.0 million and one additional interest rate swap that becomes effective on January 31, 2023 with a notional amount of $70.0 million.

The table below presents the fair value of our derivative financial instruments as well as their classification on our Consolidated Balance Sheets as of December 31, 2018, April 30, 2018 and April 30, 2017.



		(in thousands)						(in thousands)
		December 31, 2018		April 30, 2018		April 30, 2017		December 31, 2018		April 30, 2018	April 30, 2017
	Balance Sheet Location	Fair Value		Fair Value		Fair Value	Balance Sheet Location	Fair Value		Fair Value	Fair Value
Derivative instruments - interest rate swaps	Other Assets	$	818	$	1,779	—	Accounts Payable and Accrued Expenses	$	1,675	—	—

Total derivatives designated as hedging instruments		$	818	$	1,779	—		$	1,675	—	—

The table below presents the effect of the Company's derivative financial instruments on the Consolidated Statements of Operations as of December 31, 2018 and April 30, 2018.



	(in thousands)
	Gain (Loss) Recognized in OCI						Location of Gain (Loss) Reclassified from Accumulated OCI into Income	Gain (Loss) Reclassified from Accumulated OCI into Income
	Transition Period Ended December 31,			Year Ended April 30,				Transition Period Ended December 31,			Year Ended April 30,
	2018			2018		2017		2018			2018			2017
Interest rate contracts	$	(2,794	)	$	1,627	—	Interest expense	$	(159	)	$	(152	)	—

Total derivatives in cash flow hedging relationships	$	(2,794	)	$	1,627	—		$	(159	)	$	(152	)	—