Note 5 - Derivative Financial Instruments

9 Months Ended

Jan. 28, 2012

Note 5 - Derivative Financial Instruments Disclosure

Note 5 - Derivative Financial Instruments

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 April 2013.  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 third quarter and nine months ended January 28, 2012 and January 29, 2011:

	(In thousands)
	Third Quarter Ended					Nine Months Ended
	2012			2011		2012			2011
Recognized in AOCI:
Gain (loss) before income taxes	$	697		$	1,627	$	(3,239	)	$	2,059
Less income tax provision (benefit)		265			579		(1,169	)		733
Net	$	432		$	1,048	$	(2,070	)	$	1,326
Reclassified from AOCI to cost of sales:
Gain (loss) before income taxes	$	(711	)	$	133	$	1,008		$	(1,260	)
Less income tax provision (benefit)		(270	)		47		342			(449	)
Net	$	(441	)	$	86	$	666		$	(811	)
Net change to AOCI	$	873		$	962	$	(2,736	)	$	2,137

As of January 28, 2012, the notional amount of our outstanding aluminum swap contracts was $23,417,000 and, assuming no change in the commodity prices, $304,000 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 January 28, 2012 and April 30, 2011, the fair value of the derivative asset was $24,000 and $4,271,000, respectively, 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.