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

months ended

July 28, 2018

and

July 29, 2017:

	(In thousands)
	2018			2017
Recognized in AOCI:
Gain (loss) before income taxes	$	6,347		$	(967	)
Less income tax provision (benefit)		1,518			(359	)
Net		4,829			(608	)
Reclassified from AOCI to cost of sales:
Gain before income taxes		8,934			31
Less income tax provision		2,064			11
Net		6,870			20
Net change to AOCI	$	(2,041	)	$	(628	)

As of

July 28, 2018,

the notional amount of our outstanding aluminum swap contracts was

$26.3

million and, assuming

change in commodity prices,

$3.6

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

months. See Note

As of

July 28, 2018,

the fair value of the derivative asset was

$3.6

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

April 28, 2018,

the fair value of the derivative asset was

$6.2

million, 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

as defined by the fair value hierarchy as they are observable market based inputs or unobservable inputs that are corroborated by market data.