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Note 11 - Derivative financial instruments
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Apr. 01, 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 in the first
four months of fiscal 2012, and Mexican peso denominated
payroll, rent and utility cash flows in the twelve months of
2012. 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 April 1, 2012:
The
unrealized gain recognized in earnings as a result of
revaluing the instruments to fair value on April 1, 2012 was
$462 which was included in cost of sales in the 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). The realized gain on
these contracts was $387, and is included as a component of
cost of sales, in the consolidated statement of operations
and comprehensive income. The Company did not
enter into any derivative financial instruments contracts
during the first quarter of 2011.
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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