Quarterly report pursuant to Section 13 or 15(d)

Note 10 - Derivative Financial Instruments

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Note 10 - Derivative Financial Instruments
 9 Months Ended
Sep. 27, 2015
Notes to Financial Statements  
Derivative Instruments and Hedging Activities Disclosure [Text Block]
10.
Derivative financial instruments
 
 
The Company enters into forward foreign exchange contracts to reduce its exposure to foreign exchange currency rate fluctuations related to forecasted Canadian dollar and Mexican Peso denominated payroll, rent and utility cash flows for the three remaining months of fiscal 2015 and first nine months of fiscal 2016. 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 net earnings in the consolidated statement of operations and comprehensive 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 September 27, 2015:  
 
Currency
Buy/Sell
Foreign Currency Amount
  
Notional Contract
Value in USD
  
Canadian Dollar
Buy
CAD 6,800
   $ 5,566  
Mexican Peso
Buy
MXN 289,525
   $ 19,392  
 
The unrealized loss recognized in earnings for the three month period as a result of revaluing the outstanding instruments to fair value on September 27, 2015 was $805 (September 28, 2014 – unrealized loss $923), and the unrealized loss for the nine month period ended September 27, 2015 was $334 (September 28, 2014 – unrealized gain $171), 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 27, 2015 was $1,237 (September 28, 2014 – realized loss $90), and the realized loss for the nine month period ended September 27, 2015 was $3,119 (September 28, 2014 – realized loss $863), and is also 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 liability as at September 27, 2015 was $3,037 (December 28, 2014 - $2,703) which reflected the fair market value of the unsettled forward foreign exchange contracts.