The Company borrows money under the PNC Facility. The PNC Facility has a term ending on Advances made under the PNC Facility bear interest at the U.S. base rate plus an applicable margin ranging from to or LIBOR plus an applicable margin ranging from to The base commercial lending rate should approximate U.S. prime rate. The base commercial lending rate should approximate U.S. prime rate.

 

The Company also borrows money under the Financing Agreement. The Term Loan A Facility matures on The Term Loan A Facility bears interest LIBOR plus an applicable margin of through and borrowings under the Financing Agreement will thereafter bear interest at LIBOR plus an applicable margin ranging from to In the Company paid the Term Loan B Facility in full. In the Company paid off the Term Loan A Facility.  

 

The impact of a change in interest rates would have a significant impact on our reported earnings.

 

10% increase in interest rate (millions)		$	0.6
10% decrease in interest rate (millions)		$	(0.6)

   

 

Given the Company’s global business operations, we are exposed to exchange rate fluctuations on expenditures denominated in foreign currencies. However, most of our sales and component purchases are denominated in U.S. dollars, which limits our foreign currency risk. Our foreign exchange risk relates primarily to our Canadian and Mexican and payroll, Euro based component purchases and other operating expenses denominated in local currencies in our geographic locations. To mitigate this risk, the Company has historically entered into forward foreign exchange contracts to reduce its exposure to foreign exchange currency rate fluctuations related to forecasted Canadian dollar and Mexican peso. There were outstanding forward foreign exchange contracts at The strengthening of the Canadian dollar and Mexican peso would result in an increase in costs to the organization and lead to a reduction in reported earnings.

 

The impact of a change in exchange rates would be estimated to have the following impact on cost of sales for the Company:

 

10% increase in both the CAD and PESO foreign exchange rates (millions)		$	2.3
10% decrease in both the CAD and PESO foreign exchange rates (millions)		$	(2.9)

 

The Company has historically entered into forward foreign exchange contracts to reduce its exposure to foreign exchange currency rate fluctuations related to a portion of forecasted Canadian dollar denominated payroll, rent and utility cash flows and Mexican peso denominated payroll, rent and utility cash flows. These contracts were effective economic hedges, but did qualify for hedge accounting under ASC “Derivatives and Hedging”. Accordingly, changes in the fair value of these derivative contracts were recognized into net loss in the consolidated statement of operations and comprehensive loss. The Company does enter into forward foreign exchange contracts for trading or speculative purposes. The Company had forward foreign exchange contracts outstanding as at

 

The unrealized gain recognized in earnings as a result of revaluing the outstanding instruments to fair value on was ( – unrealized gain of ) ( – unrealized gain of ) which was recorded in cost of sales in the consolidated statement of operations and comprehensive loss. The realized loss on settled contracts during was ( – realized loss ) ( – realized loss ), which was recorded in cost of sales in the consolidated statement of operations and comprehensive loss. Fair value was determined using the market approach with valuation based on market observables (Level quantitative inputs in the hierarchy set forth under ASC “Fair Value Measurements”).

 

		December 29 , 201 9				December 3 0 , 201 8
Average USD:CAD contract rate			—				N/A
Average USD:CAD mark-to-market rate			—				N/A
Average USD:PESO contract rate			—				20.43
Average USD:PESO mark-to-market rate			—				19.66

   

The derivative asset as at was ( as at and derivative liability as at was ( as at 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. A total aggregate translated foreign exchange loss of was recognized for the fiscal year ended loss of gain of ).

  

 

In the normal course of operations, there is a risk that a counterparty default on its contractual obligations to us which would result in a financial loss that could impact our reported earnings. In order to mitigate this risk, we complete credit approval procedures for new and existing customers and obtain credit insurance where it is financially viable to do so given anticipated revenue volumes, in addition to monitoring our customers’ financial performance. We believe our procedures in place to mitigate customer credit risk and the respective allowance for doubtful accounts are adequate. During the fiscal year ended the Company recorded an additional provision for bad debt expense of million predominantly related to customer which was serviced out of the Dongguan China facility and included within restructuring charges. The Company takes measures to reduce credit risk, these charges can have a material impact on our financial performance.

 

There is limited risk of financial loss or defaults on our outstanding forward currency contracts as the counterparty to the transactions had a Standard and Poor’s rating of A- or above as at

 

 

There is a risk that we have sufficient cash available to satisfy our financial obligations as they come due. The financial liabilities we have recorded in the form of accounts payable, accrued liabilities and other current liabilities are primarily due within days with the exception of the current portion of finance lease obligations which could exceed days and our PNC Facility which utilizes a lock-box to pay down the obligation effectively daily. As at the Company’s liquidity was comprised of in cash on hand and of funds available to borrow under the PNC Facility. We believe that cash flow from operations, together with cash on hand and our PNC Facility, which had of funds available as at is sufficient to fund our financial obligations. However, availability under the PNC Facility is subject to certain conditions, including borrowing base conditions based on eligible inventory and accounts receivable, as determined by the lender.

 

On the Company used the net proceeds from the Rights Offering to repay the of borrowings outstanding under its Term Loan B Facility. On the Company repaid an additional of the portion of borrowings outstanding under its Term Loan A Facility, which was funded through the use of our PNC Facility.

 

 

The carrying values of the Company’s cash, accounts receivable, accounts payable and accrued liabilities due within -year approximate fair values due to the short-term maturity of these instruments. The Company’s financial instruments at are comprised of the following:

 

		As at December 29 , 201 9								As at December 30, 2018
		Carrying Amount				Estimated Fair Value				Carrying Amount				Estimated Fair Value
Level 1
Cash		$	1,368				1,368			$	1,601			$	1,601
Level 2
Derivative assets			—				—				15				15
Revolving credit facility			34,701				34,701				25,020				25,020
Current and long term debt			35,000				38,750				57,407				62,000
Warrant liability			1,730				1,730				2,009				2,009
Level 3
Contingent consideration			—				—				3,050				3,050