Derivative Instruments and Activities

12 Months Ended

Apr. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

From time to time, we enter into forward exchange and interest rate swap contracts as a hedge against foreign currency asset and liability commitments, changes in interest rates, and anticipated transaction exposures, including intercompany sales and purchases. All derivatives are recognized as assets or liabilities and measured at fair value. Derivatives that are not determined to be effective hedges are adjusted to fair value with a corresponding adjustment to earnings. We do not use financial instruments for trading or speculative purposes.

Interest Rate Contracts

As of April 30, 2023, we had total debt outstanding of $748.3 million, net of unamortized issuance costs of $0.7 million, of which $749.0 million are variable rate loans outstanding under the Amended and Restated CA, which approximated fair value.

As of April 30, 2023 and 2022, the interest rate swap agreements we maintained were designated as fully effective cash flow hedges as defined under FASB ASC Topic 815, “Derivatives and Hedging” (ASC Topic 815). As a result, there was no impact on our Consolidated Statements of Income from changes in the fair value of the interest rate swaps, as they were fully offset by changes in the interest expense on the underlying variable rate debt instruments. Under ASC Topic 815, derivative instruments that are designated as cash flow hedges have changes in their fair value recorded initially within Accumulated other comprehensive loss on the Consolidated Statements of Financial Position. As interest expense is recognized based on the variable rate loan agreements, the corresponding deferred gain or loss on the interest rate swaps is reclassified from Accumulated other comprehensive loss to Interest expense on the Consolidated Statements of Income. It is management’s intention that the notional amount of interest rate swaps be less than the variable rate loans outstanding during the life of the derivatives.

The following table summarizes our interest rate swaps designated as cash flow hedges:


			Notional Amount
			As of April 30,
Hedged Item (1)	Date entered into	Nature of Swap	2023		2022		Fixed Interest Rate		Variable Interest Rate
Amended and Restated CA	March 15, 2023	Pay fixed/receive variable	$	50,000	$	—	3.565	%	1-month SOFR reset every month for a 3-year period ending April 15, 2026
Amended and Restated CA	March 14, 2023	Pay fixed/receive variable	50,000		—		4.053	%	1-month SOFR reset every month for a 3-year period ending March 15, 2026
Amended and Restated CA	March 13, 2023	Pay fixed/receive variable	50,000		—		3.720	%	1-month SOFR reset every month for a 3-year period ending March 15, 2026
Amended and Restated CA	December 13, 2022	Pay fixed/receive variable	50,000		—		3.772	%	1-month SOFR reset every month for a 3-year period ending December 15, 2025
Amended and Restated CA	June 16, 2022	Pay fixed/receive variable	100,000		—		3.467	%	1-month SOFR reset every month for a 2-year period ending May 15, 2024 (2)
Amended and Restated CA	April 06, 2022	Pay fixed/receive variable	100,000		100,000		2.588	%	1-month SOFR reset every month for a 2-year period ending April 15, 2024 (2)
Amended and Restated CA	April 12, 2021	Pay fixed/receive variable	100,000		100,000		0.465	%	1-month SOFR reset every month for a 3-year period ending April 15, 2024 (2)
Amended and Restated CA	February 26, 2020	Pay fixed/receive variable	—		100,000		1.168	%	1-month SOFR reset every month for a 3-year period ending March 15, 2023 (2)
Amended and Restated CA	August 07, 2019	Pay fixed/receive variable	—		100,000		1.400	%	1-month LIBOR reset every month for a 3-year period ending August 15, 2022
Amended and Restated CA	June 24, 2019	Pay fixed/receive variable	—		100,000		1.650	%	1-month LIBOR reset every month for a 3-year period ending July 15, 2022
			$	500,000	$	500,000


(1)			On November 30, 2022, we entered into the second amendment to our Amended and Restated CA. Refer to Note 14, “Debt and Available Credit Facilities” for more information related to our Amended and Restated CA.
(2)			On November 30, 2022, we amended the Amended and Restated CA (as defined in Note 14, “Debt and Available Credit Facilities”) and as a result we amended our outstanding interest rate swaps designated as cash flow hedges to change the rates from LIBOR-based rates to SOFR-based rates. We applied ASU 2020-04 at the time of modification, and there was no impact on our Consolidated Financial Statements.

We record the fair value of our interest rate swaps on a recurring basis using Level 2 inputs of quoted prices for similar assets or liabilities in active markets. The fair value of the interest rate swaps as of April 30, 2023 was a deferred loss of $(0.6) million and a deferred gain of $7.8 million. Based on the maturity dates of the contracts, the entire deferred loss as of April 30, 2023 was recorded within Other long-term liabilities, $6.4 million of the deferred gain was recorded within Prepaid expenses and other current assets, and $1.4 million was recorded within Other non-current assets.

The fair value of the interest rate swaps as of April 30, 2022 was a deferred loss of $(0.2) million and a deferred gain of $5.8 million. Based on the maturity dates of the contracts, the entire deferred loss as of April 30, 2022 was recorded within Other accrued liabilities, $0.9 million of the deferred gain was recorded within Prepaid expenses and other current assets, and $4.9 million was recorded within Other non-current assets.

The pretax gains (losses) that were reclassified from Accumulated other comprehensive loss into Interest expense for the years ended April 30, 2023, 2022, and 2021 were $5.0 million, $(4.2) million, and $(3.7) million, respectively. Based on the amount in Accumulated other comprehensive loss at April 30, 2023, approximately $7.2 million, net of tax, would be reclassified into Net income in the next twelve months.

Foreign Currency Contracts

We may enter into forward exchange contracts to manage our exposure on certain foreign currency denominated assets and liabilities. The forward exchange contracts are marked to market through Foreign exchange transaction gains (losses) on our Consolidated Statements of Income and carried at fair value on our Consolidated Statements of Financial Position. Foreign currency denominated assets and liabilities are remeasured at spot rates in effect on the balance sheet date, with the affects of changes in spot rates reported in Foreign exchange transaction gains (losses) on our Consolidated Statements of Income.

As of April 30, 2023 and 2022, we did not maintain any open forward exchange contracts. In addition, we did not maintain any open forward contracts during the years ended April 30, 2023 and 2022.

During the year ended April 30, 2021, to manage foreign currency exposures on an intercompany loan, we entered into one forward exchange contract to sell €32 million and buy $38.8 million. This forward contract expired on April 15, 2021. We did not designate this forward exchange contract as a hedge under the applicable sections of ASC Topic 815 as the benefits of doing so were not material due to the short-term nature of the contract. The fair value changes in the forward exchange contract substantially mitigated the changes in the value of the applicable foreign currency denominated liability. The fair value of the open forward exchange contract was measured on a recurring basis using Level 2 inputs of quoted prices for similar assets or liabilities in active markets. For the year ended April 30, 2021, the loss recognized on this forward contract was $0.8 million and included in Foreign exchange transaction gains (losses) on our Consolidated Statement of Income.