Note 6 - Derivative Financial Instruments

12 Months Ended

May. 02, 2015

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

6. 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 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 Fiscal 2015, Fiscal 2014 and Fiscal 2013:

	(In thousands)
	Fiscal			Fiscal			Fiscal
	2015			2014			2013
Recognized in AOCI-
Loss before income taxes	$	(3,488	)	$	(1,059	)	$	(2,521	)
Less income tax benefit		(1,294	)		(393	)		(935	)
Net		(2,194	)		(666	)		(1,586	)
Reclassified from AOCI to cost of sales-
Gain (loss) before income taxes		248			(2,028	)		(2,060	)
Less income tax provision (benefit)		92			(752	)		(769	)
Net		156			(1,276	)		(1,291	)
Net change to AOCI	$	(2,350	)	$	610		$	(295	)

As of May 2, 2015, the notional amount of our outstanding aluminum swap contracts was $38.0 million and, assuming no change in the commodity prices, $3.0 million of unrealized loss before tax will be reclassified from AOCI and recognized in earnings over the next 12 months. See Note 1.

As of May 2, 2015, the fair value of the derivative liability and derivative long-term liability was $3.0 million and $751,000, which was included in accrued liabilities and other liabilities, respectively. As of 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.