Note 5 - Derivative Financial Instruments

3 Months Ended

Jul. 29, 2017

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

months ended

July 29, 2017

and

July 30, 2016:

	(In thousands)
	2017			2016
Recognized in AOCI:
Loss before income taxes	$	(967	)	$	(450	)
Less income tax benefit		(359	)		(167	)
Net		(608	)		(283	)
Reclassified from AOCI to cost of sales:
Gain (loss) before income taxes		31			(1,110	)
Less income tax provision (benefit)		11			(412	)
Net		20			(698	)
Net change to AOCI	$	(628	)	$	415

As of

July 29, 2017,

the notional amount of our outstanding aluminum swap contracts was

$53.2

million and, assuming

no

change in the commodity prices,

$1.4

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

July 29, 2017,

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

$205,000,

$1.6

million and

$318,000,

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