Note 10 - Derivative Financial Instruments |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Text Block] |
The Company enters into forward foreign exchange contracts to reduce its exposure to foreign exchange currency rate fluctuations related to a portion of the forecasted Canadian dollar and Mexican Peso denominated payroll, rent and utility cash flows for the
three remaining months of fiscal 2017 and a portion of the first nine months of fiscal 2018. These contracts are effective economic hedges but do not qualify for hedge accounting under ASC 815 “Derivatives and Hedging”. Accordingly, changes in the fair value of these derivative contracts are recognized into cost of sales in the consolidated statement of operations and comprehensive income (loss). 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 October 1, 2017:
The unrealized loss recognized in earnings for the three month period as a result of revaluing the outstanding instruments to fair value on October 1, 2017 was $118 ( October 2, 2016 – unrealized loss $4 ), and the unrealized gain for the nine month period ended October 1, 2017 was $1,438 ( October 2, 2016 – unrealized gain $995 ), which was included in cost of sales in the consolidated statement of operations and comprehensive income (loss). The realized gain on the settled contracts for the three months period ended October 1, 2017 was $271 ( October 2, 2016 – realized loss $619 ), and the realized loss for the nine month period ended October 1, 2017 was $179 ( October 2, 2016 – realized loss $2,197 ), which is included in cost of sales in the consolidated statement of operations and comprehensive income (loss). 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 derivative asset as at October 1, 2017 was $182 ($Nil as at January 1, 2017) and derivative liability as at October 1, 2017 was Nil ($1,256 as at January 1, 2017) which reflected the fair market value of the unsettled forward foreign exchange contracts.Foreign exchange gains and losses are recorded in cost of sales in the consolidated statement of operations and comprehensive loss pertaining to translation of foreign denominated transactions during the period in addition to foreign denominated monetary assets and liabilities at the end of the reporting period. The total aggregate translated
foreign exchange gain of
$67 was recognized for the three months ended October 1, 2017 (
October 2, 2016 – gain of $99 ). The total aggregate translated foreign exchange loss of $13 was recognized for the nine months ended October 1, 2017 (
October 2, 2016 – gain of $203 ). |
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