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Note 11 - Derivative financial instruments
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9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2012
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| Derivative Instruments and Hedging Activities Disclosure [Text Block] |
11.
Derivative
financial instruments
The
Company has 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 for the next
five months, and Mexican peso denominated payroll, rent and
utility cash flows for the next ten months. 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 September 30, 2012:
The
unrealized gain recognized in earnings as a result of
revaluing the instruments to fair value on September 30, 2012
was $1,119 for the three month period ended September 30,
2012 and the unrealized gain for the nine month period ended
September 30, 2012 was $1,126, which were included in cost of
sales in the statement of operations and comprehensive
income. The realized loss on these contracts for the quarter
was $79 and the realized gain for the nine month period was
$357, and is included as a component of cost of sales, in the
consolidated statement of operations and comprehensive
income. 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). During the three and nine month periods ended October
2, 2011, unrealized loss on revaluation of derivative
financial instruments was $125.
The
following table presents the fair value of the
Company’s derivative instruments located on the
consolidated balance sheet as at the following dates:
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