7.	ON-BALANCE SHEET DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Derivative Financial Instruments

The Company has stand-alone derivative financial instruments in the form of interest rate swap agreements, which derive their value from underlying interest rates. These transactions involve both credit and market risk. The notional amount is an amount on which calculations, payments, and the value of the derivative are based. The notional amount does

not

represent direct credit exposure. Direct credit exposure is limited to the net difference between the calculated amount to be received and paid, if any. Such difference, which represents the fair value of the derivative instrument, is reflected on the Company’s consolidated balance sheet as an unrealized gain or loss on derivatives.

The Company is also exposed to credit-related losses in the event of nonperformance by the counterparties to these agreements. The Company controls the credit risk of its financial contracts through credit approvals, limits and monitoring procedures, and currently has

reason to believe that any counterparties will fail to fulfill their obligations.

This interest rate swap agreement is considered a cash flow hedge to hedge against the variability of interest rates on outstanding debt. The net unrealized gain relating to interest rate swaps was recorded in current assets with an offset to other comprehensive income for the effective portion of the hedge. At

January 31, 2018,

these cash flow hedges were deemed

100%

effective. The portion of the net unrealized gain in current assets is the amount expected to be reclassified to income within the next

twelve

months.

The following information pertains to the Company's outstanding interest rate swap at

January 31, 2018.

The interest rate swap matures in

May

2018.The

pay rate is fixed and the receive rate is

one

month LIBOR.

Instrument			Notional Amount				Pay Rate			Receive Rate
Interest rate swap			$	3,866,668			1.25%			1.56%

The table below details the adjustments to other comprehensive income (loss), on a before tax and net-of tax basis, for the fiscal quarters ended

January 31, 2018

and

2017.

	Before-Tax			Tax Benefit (Expense)			Net-of-Tax
Three Months Ended January 31, 2017
Gain on interest rate swap	$	15,121		$	(6,048	)	$	9,073
Reclassification adjustment to income		7,015			(2,806	)		4,209
Net unrealized gain	$	22,136		$	(8,854	)	$	13,282
Three Months Ended January 31, 2018
Gain on interest rate swap	$	3,003		$	(841	)	$	2,162
Reclassification adjustment to income		(1,692	)		474			(1,218	)
Net unrealized gain	$	1,311		$	(367	)	$	944

The reclassification

adjustments of

$1,692

represents savings in interest that would have been paid without the interest rate swap agreement during the quarter ended

January 31, 2018,

and

$7,015

represent interest the Company paid in excess of the amount that would have been paid without the interest rate swap agreement during the quarter ended

January 31, 2017.

These amounts were reclassified from accumulated other comprehensive income (loss) and recorded in consolidated statements of operations as a charge or credit to interest expense.

other material amounts were reclassified during the quarters ended

January 31, 2018

and

2017.