Note 10 - Derivative Financial Instruments |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||
| 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. 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 loss. The Company does not enter into forward foreign exchange contracts for trading or speculative purposes. There were no outstanding foreign currency forward contracts as at September 30, 2018.
The unrealized gain recognized in earnings for the three month period as a result of revaluing the instruments to fair value on September 30, 2018 was $108 ( October 1, 2017 – unrealized loss $118 ), and the unrealized gain for the nine month period ended September 30, 2018 was $338 ( October 1, 2017 – unrealized gain $1,438 ), which was included in cost of sales in the consolidated statement of operations and comprehensive income (loss). The realized loss on the settled contracts for the three months period ended September 30, 2018 was $43 ( October 1, 2017 – realized gain $271 ), and the realized loss for the nine month period ended September 30, 2018 was $ 135 ( October 1, 2017 – realized loss $179 ), 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 September 30, 2018 was $Nil ( December 31, 2017 -
$37 ) and derivative liability as at September 30, 2018 was $Nil ( December 31, 2017 -
$375 ) 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 loss of $183 was recognized for the three months ended September 30, 2018 (
October 1, 2017 – gain of $67 ). The total aggregate translated foreign exchange loss of $207 was recognized for the nine months ended September 30, 2018 (
October 1, 2017 – loss of $13 ). |
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