Note 5 - Derivative Financial Instruments

6 Months Ended

Oct. 27, 2018

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

and

six

months ended

October 27, 2018

and

October 28, 2017:

	(In thousands)
	Three Months Ended					Six Months Ended
	2018			2017		2018			2017
Recognized in AOCI:
Gain before income taxes	$	1,076		$	5,523	$	7,424		$	4,556
Less income tax provision		257			2,049		1,776			1,690
Net	$	819		$	3,474	$	5,648		$	2,866
Reclassified from AOCI to cost of sales:
Gain before income taxes	$	4,596		$	362	$	13,530		$	393
Less income tax provision		1,061			135		3,125			146
Net	$	3,535		$	227	$	10,405		$	247
Net change to AOCI	$	(2,716	)	$	3,247	$	(4,757	)	$	2,619

As of

October 27, 2018,

the notional amount of our outstanding aluminum swap contracts was

$43.0

million and, assuming

no

change in commodity prices,

$101,456

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

12

months. See Note

1.

As of

October 27, 2018,

the fair value of the derivative asset was

$101,456

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

2

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