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Derivative Financial Instruments and Risk Management
 12 Months Ended
Jan. 31, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments and Risk Management
Note 8—Derivative Financial Instruments and Risk Management
The Company has entered into a cross-currency interest rate swap to manage the interest rate risk and foreign currency exchange risk associated with the floating-rate foreign currency-denominated term loan borrowing by our Danish Subsidiary and an interest rate swap to manage the interest rate risk associated with the variable rate term loan borrowing by the Company. Both swaps have been designated as cash flow hedges of floating-rate borrowings and are recorded at fair value.
The cross-currency interest rate swap agreement utilized by the Company effectively modifies the Company’s exposure to interest rate risk and foreign currency exchange rate risk by converting the Company’s floating-rate debt denominated in U.S. Dollars on our Danish subsidiary’s books to a fixed-rate debt denominated in Danish Kroner for the term of the loan, thus reducing the impact of interest-rate and foreign currency exchange rate changes on future interest expense and principal repayments. This swap involves the receipt of floating rate amounts in U.S. Dollars in exchange for fixed-rate interest payments in Danish Kroner, as well as exchanges of principal at the inception spot rate, over the life of the term loan.
The interest rate swap agreement utilized by the Company on the term loan effectively modifies the Company’s exposure to interest rate risk by converting the Company’s floating-rate debt to fixed-rate debt for the next five years, thus reducing the impact of interest-rate changes on future interest expense. This swap involves the receipt of floating rate amounts in U.S. dollars in exchange for fixed rate payments in U.S. dollars over the life of the term loan.
The following table summarizes the notional amount and fair value of the Company’s derivative instrument:
 
Cash Flow Hedges
(In thousands)
  
January 31, 2020
 
  
January 31, 2019
 
  
 
 
  
Fair Value Derivatives
 
  
 
 
  
Fair Value Derivatives
 
 
  
Notional Amount
 
  
Asset
 
  
Liability
 
  
Notional Amount
 
  
Asset
 
  
Liability
 
Cross-currency Interest Rate Swap
  
$
4,489
 
  
$
—  
  
$
250
 
  
$
6,329
 
  
$
—  
  
$
600
 
Interest Rate Swap
  
$
8,250
 
  
$
—  
  
$
96
 
  
$
11,250
 
  
$
85
 
  
$
—  
The following tables present the impact of the derivative instruments in our consolidated financial statements for the years ended January 31, 2020 and 2019:
 
 
  
Years Ended
 
 
 
  
Amount of Gain
Recognized in OCI
on
Derivative
 
  
Location of Gain
Reclassified from
Accumulated OCI  into
Income
 
  
Amount of Gain
Reclassified from
Accumulated OCI into
Income
 
Cash Flow Hedge
(In thousands)
  
January 31,
2020
 
  
January 31,
2019
 
  
January 31,
2020
 
  
January 31,
2019
 
Swap contracts
  
$
159
 
  
$
797
 
  
 
Other Income
 
  
$
338
 
  
$
769
 
 
  
 
 
 
  
 
 
 
  
   
  
 
 
 
  
 
 
 
At January 31, 2020, the Company expects to reclassify approximately $0.1 million of net gains on the swap contracts from accumulated other comprehensive loss to earnings during the next 12 months due to changes in foreign exchange rates and the payment of variable interest associated with the floating-rate debt.