The forward foreign exchange contracts primarily require the Company to sell U.S. dollars for Canadian dollars at contractual rates. The Company had the following forward exchange contracts:
October 31, 2011
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Equivalent to
Type Notional Currency Maturity CDN dollars Fair Value
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less than 3
Sell $10,165 USD months $ 9,908 $(233)
Sell $22,080 USD 3-12 months $21,587 $(491)
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$(724)
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April 30, 2011
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Equivalent to
Type Notional Currency Maturity CDN dollars Fair Value
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less than 3
Sell $8,350 USD months $8,626 $716
Sell $5,600 USD 3-12 months $5,737 $420
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$1,136
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May 1, 2010
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Equivalent to
Type Notional Currency Maturity CDN dollars Fair Value
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less than 3
Sell $12,875 USD months $13,836 $ 759
Sell $21,225 USD 3-12 months $22,890 $1,294
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$2,053
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Buy $(5,000) USD 3-12 months $(6,093) $(992)
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Accounting for the impact of hedges, a one cent strengthening (weakening) of the U.S. dollar against the Canadian dollar would have decreased (increased) other comprehensive income by approximately $660,000 for the first period of fiscal 2012.
Interest Rate Risk
The Company is exposed to interest rate risk due to its holdings of interest-bearing marketable securities. It is the Company's policy to invest in securities with a maturity date of twelve months or less and Company practice is to hold such securities, when possible, until maturity. A 1% increase (decrease) to the interest rate would result in an approximate $48,000 (2010 - $120,000) decrease (increase) in the fair value of the investments held as at the reporting date.
The Company is also exposed to interest rate risk due to its imputed interest on other long-term liabilities.
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet liabilities when due. At October 31, 2011, the Company had $115.9 million of cash and marketable securities and has a secured bank credit facility of $10.0 million, less off balance sheet arrangements as described in Note 13 to meet liabilities when due. The credit facility is collateralized by a general security agreement and contains no covenants.
All of the Company's financial liabilities, except for its "other long-term liabilities" and operating lease for its premise have contractual maturities of less than thirty days.
