Note 5 - Derivative Financial Instruments

9 Months Ended

Jan. 27, 2018

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 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 the Consolidated Statements of Income and AOCI relative to the cash flow hedge for the

three

and

nine

months ended

January 27, 2018

and

January 28, 2017:

	(In thousands)
	Three Months Ended					Nine Months Ended
	201 8		201 7			201 8		201 7
Recognized in AOCI:
Gain (loss) before income taxes	$	2,067	$	176		$	6,623	$	(21	)
Less income tax provision (benefit)		731		65			2,421		(8	)
Net	$	1,336	$	111		$	4,202	$	(13	)
Reclassified from AOCI to cost of sales:
Gain (loss) before income taxes	$	844	$	(651	)	$	1,237	$	(2,844	)
Less income tax provision (benefit)		289		(242	)		435		(1,056	)
Net	$	555	$	(409	)	$	802	$	(1,788	)
Reclassified tax effects to provision for income taxes (see Note 6)	$	515	$	-		$	515	$	-
Net change to AOCI	$	1,296	$	520		$	3,915	$	1,775

As of

January 27, 2018,

the notional amount of our outstanding aluminum swap contracts was

$33.6

million and, assuming

no

change in the commodity prices,

$4.7

million of unrealized gain before tax will be reclassified from AOCI and recognized in earnings over the next

12

months. See Note

1.

As of

January 27, 2018,

the fair value of the derivative asset was

$4.7

million, which was included in prepaid and other assets. At

April 29, 2017,

the fair value of the derivative asset, derivative liability and derivative long-term liability was

$602,000,

$848,000

and

$476,000,

which was included in prepaid and other assets, accrued liabilities and other liabilities, respectively. 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.