Note 7 - Derivative Financial Instruments

12 Months Ended

Apr. 30, 2022

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

7. DERIVATIVE FINANCIAL INSTRUMENTS

From time to time, the Company enters 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 cash flow hedges. Accordingly, gains or losses 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 following summarizes the gains (losses) recognized in the consolidated statements of income and AOCI:         

	(In thousands)
	Fiscal		Fiscal		Fiscal
	2022		2021		2020
Recognized in AOCI-
Gain (loss) before income taxes	$	15,105	$	12,973	$	(9,613	)
Less income tax provision (benefit)		3,613		3,103		(2,299	)
Net		11,492		9,870		(7,314	)
Reclassified from AOCI to cost of sales-
Gain (loss) before income taxes		10,001		2,550		(4,786	)
Less income tax provision (benefit)		2,391		610		(1,145	)
Net		7,610		1,940		(3,641	)
Net change to AOCI	$	3,882	$	7,930	$	(3,673	)

As of April 30, 2022, the notional amount of our outstanding aluminum swap contracts was $57.7 million and, assuming no change in the commodity prices, $8.7 million of unrealized gain before tax will be reclassified from AOCI and recognized as a reduction of cost of sales over the next 12 months.

As of April 30, 2022, the fair value of the derivative asset was $8.8 million, which was included in prepaid and other assets. As of May 1, 2021, the fair value of the derivative asset was $3.6 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 2 as defined by the fair value hierarchy as they are observable market based inputs or unobservable inputs that are corroborated by market data.