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Note 9 - Derivative Financial Instruments
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Dec. 30, 2012
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| Derivative Instruments and Hedging Activities Disclosure [Text Block] |
The
Company entered into forward foreign exchange contracts to
reduce its exposure to foreign exchange currency rate
fluctuations related to forecasted Canadian dollar
denominated payroll, rent and utility cash flows in the
fiscal 2012 and the first three months of fiscal 2013, and
Mexican peso denominated payroll, rent and utility cash
flows for fiscal 2012 and the first nine months of 2013.
These contracts were effective as hedges from an economic
perspective, but did not meet the requirements for hedge
accounting under “ASC 815” “Derivatives
and Hedging”. Accordingly, changes in the fair value
of these contracts were recognized into net income in the
consolidated statement of operations and comprehensive
income. The Company does not enter into forward foreign
exchange contracts for trading or speculative
purposes.
The
following table presents a summary of the outstanding foreign
currency forward contracts as at December 30, 2012:
The
unrealized gain recognized in earnings as a result of
revaluing the instruments to fair value on December 30,
2012 was $590 (2011 – unrealized loss of $43) which
was included in cost of sales in the statement of
operations and comprehensive income. The realized gain on
these contracts was $712 (2011 - $109), and is included as
a component of cost of sales, in the consolidated statement
of operations. Fair value was determined using the market
approach with valuation based on market observables (Level
2 quantitative inputs in the hierarchy set forth under ASC
820 “Fair Value Measurements”).
The
following table presents the fair value of the
Company’s derivative instruments as presented on the
consolidated balance sheet as at December 30, 2012:
There
were no derivative instruments outstanding at January 2,
2011.
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