Note 5. Derivative Financial Instruments

6 Months Ended

Oct. 29, 2011

Derivative Instruments and Hedging Activities Disclosure [Text Block]

5.  DERIVATIVE FINANCIAL INSTRUMENTS

We have entered into aluminum swap contracts to partially mitigate our exposure to changes in the cost of aluminum cans through July 2012.  The financial instruments are designated and accounted for as a cash flow hedge.  Accordingly, gains or losses attributable to the effective portion of the cash flow hedge are reported in Accumulated Other Comprehensive Income (“AOCI”) and reclassified into earnings through cost of sales in the period in which the hedged transaction affects earnings.  The ineffective portion of the change in fair value of our cash flow hedge was immaterial.  The following summarizes the gains (losses) recognized in AOCI and the Condensed Consolidated Statements of Income relative to the cash flow hedge for the second quarter and six months ended October 29, 2011 and October 30, 2010:

	(In thousands)
	Second Quarter Ended						Six Months Ended
		2011			2010			2011			2010
Recognized in AOCI:
Gain (loss) before income taxes	$	(3,348	)	$	1,617		$	(3,936	)	$	432
Less income tax provision (benefit)		(1,215	)		576			(1,434	)		154
Net	$	(2,133	)	$	1,041		$	(2,502	)	$	278
Reclassified from AOCI to cost of sales:
Gain (loss) before income taxes	$	576		$	(770	)	$	1,719		$	(1,393	)
Less income tax provision (benefit)		205			(274	)		612			(496	)
Net	$	371		$	(496	)	$	1,107		$	(897	)
Net change to AOCI	$	(2,504	)	$	1,537		$	(3,609	)	$	1,175

As of October 29, 2011, the notional amount of our outstanding aluminum swap contracts was $18,577,000 and, assuming no change in the commodity prices, $1,384,000 of unrealized net loss (before tax) will be reclassified from AOCI and recognized in earnings over the next twelve months.  See Notes 1 and 6.

As of October 29, 2011, the fair value of the derivative liability was $1,384,000, which was included in Accrued liabilities.  As of April 30, 2011, the fair value of the derivative asset was $4,271,000, which was included in Prepaid and other assets.  Such valuation does not entail a significant amount of judgment and the inputs that are significant to the fair value measurement are Level 2 in the fair value hierarchy as they are observable market based inputs or unobservable inputs that are corroborated by market data.