Fair Value Measurements

9 Months Ended

Jan. 31, 2021

Fair Value Measurements

Fair Value Measurements

11. Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents the estimated carrying amount and fair value of the Company’s liabilities measured at fair value on a recurring basis:

	January 31,		April 30,
	2021		2020
	(in thousands)
Interest rate swaps (Level 2)	$	24,566	$	32,218

The Company has interest rate swap agreements with a notional amount of $500.0 million that convert the variable interest rate on its Term Loan Facility to a fixed interest rate of 2.46%. The contracts were effective on February 28, 2019 and terminate on February 28, 2023. The objective of the interest rate swap agreements is to eliminate the variability of interest payment cash flows associated with variable interest rates. The Company designated the interest

rate swaps as a cash flow hedges. The Company believes there have been no material changes in the creditworthiness of the counterparty to this interest rate swap and believes the risk of nonperformance by such party is minimal.

As of January 31, 2021, $11.9 million of the interest rate swap liability was classified in other accrued expenses and current liabilities and $12.6 million was classified in other liabilities in the Condensed Consolidated Balance Sheet. The Company recognized losses, net of tax, of $2.2 million and $6.5 million in earnings during the three and nine months ended January 31, 2021, respectively, related to its interest rate swaps. These losses are included in interest expense in the Condensed Consolidated Statements of Operations and Comprehensive Income. As of January 31, 2021, the Company expects that approximately $11.9 million of pre-tax net losses will be reclassified from accumulated other comprehensive income (loss) into earnings during the next twelve months.

The fair value of interest rate swaps is determined using Level 2 inputs. Generally, the Company obtains the Level 2 inputs from its counterparties. Substantially all of the inputs throughout the full term of the instruments can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. The fair value of the Company’s interest rate swap was determined using widely accepted valuation techniques including a discounted cash flow analysis on the expected cash flows of the derivative. This analysis reflected the contractual terms of the derivatives, including the period to maturity, and used observable market-based inputs, including interest rate curves and implied volatilities.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Disclosures are required for certain assets and liabilities that are measured at fair value on a nonrecurring basis in periods subsequent to initial recognition. Such measurements of fair value relate primarily to assets and liabilities measured at fair value in connection with business combinations and long-lived asset impairments. The Company recorded a $1.0 million impairment of operating lease ROU assets during the nine months ended January 31, 2021. There were no other material long-lived asset impairments during the nine months ended January 31, 2021 or 2020.