Note 5 - Derivative Financial Instruments

9 Months Ended

Jan. 31, 2015

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

5

. DERIVATIVE FINANCIAL INSTRUMENTS

From time to time, we enter into aluminum swap contracts to partially mitigate our exposure to changes in the cost of aluminum cans. Such 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 (Loss) (“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 hedges were immaterial. The following summarizes the gains (losses) recognized in the Consolidated Statements of Income and AOCI relative to cash flow hedges for the three and nine months ended January 31, 2015 and January 25, 2014:

	(In thousands)
	Three Months Ended						Nine Months Ended
	2015			2014			2015			2014
Recognized in AOCI:
Gain (loss) before income taxes	$	(1,096	)	$	(53	)	$	152		$	(1,203	)
Less income tax provision (benefit)		(407	)		(20	)		56			(447	)
Net	$	(689	)	$	(33	)	$	96		$	(756	)
Reclassified from AOCI to cost of sales:
Gain (loss) before income taxes	$	249		$	(596	)	$	526		$	(1,811	)
Less income tax provision (benefit)		92			(221	)		195			(672	)
Net	$	157		$	(375	)	$	331		$	(1,139	)
Net change to AOCI	$	(846	)	$	342		$	(235	)	$	383

As of January 31, 2015, the notional amount of our outstanding aluminum swap contracts was $44.9 million and, assuming no change in the commodity prices, $424,000 of unrealized loss before tax will be reclassified from AOCI and recognized in earnings over the next twelve months. See Note 1.

As of January 31, 2015, the fair value of the derivative asset, derivative long-term asset and derivative liability was $273,000, $56,000 and $697,000, which was included in prepaid and other assets, other assets and accrued liabilities, respectively. At May 3, 2014, the fair value of the derivative asset was $5,000, 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 as defined by the fair value hierarchy as they are observable market based inputs or unobservable inputs that are corroborated by market data.