Financial Instruments and Fair Value Measurements

12 Months Ended

Dec. 31, 2011

Financial Instruments and Fair Value Measurements [Abstract]

Financial Instruments and Fair Value Measurements

13. Financial Instruments and Fair Value Measurements

Financial Risk Management Objectives and Policies

The Company is exposed primarily to credit, interest rate and currency exchange rate risks which arise in the normal course of business.

Credit Risk

Credit risk is the potential financial loss resulting from the failure of a customer or counterparty to settle its financial and contractual obligations to the Company, as and when they become due. The primary credit risk for the Company is its receivable accounts. The Company has established credit limits for customers and monitors their balances to mitigate its risk of loss. At December 31, 2011 and January 1, 2011, there were no significant concentrations of credit risk. No one customer represented more than 10% of the Company's net trade receivables at December 31, 2011 and January 1, 2011. The maximum exposure to credit risk is primarily represented by the carrying amount of the Company's accounts receivable.

Interest Rate Risk

On December 31, 2011 the Company currently has a fixed rate of 4.98% on its term debt.  Prior to the refinancing completed in January 2010, the Company's exposure to the risk of changes in market interest rates related primarily to the Company's debt which bore interest at variable rates, which approximated market interest rates. While the Company used an interest rate swap to convert all of its Term Loan from variable to fixed rates for most of fiscal 2009, it terminated the swap contract on December 22, 2009.  See Note 5 Debt for additional details concerning the swap contract.  The valuation of this swap was determined using the three month LIBOR index.  On December 31, 2011 the interest rate on the Company's revolver was a variable rate based on LIBOR plus 2.25% with a floor of 4.0%.  As the revolver is short term in nature, the Company does not consider this as a material risk to the financial statements.

Currency Exchange Rate Risk

The Company's currency exposure is concentrated in the Canadian dollar, Mexican peso, New Taiwan dollar, Chinese RMB and the Hong Kong dollar.  Because of the Company's limited exposure to any single foreign market, any exchange gains or losses have not been material and are not expected to be material in the future.  As a result, the Company does not attempt to mitigate its foreign currency exposure through the acquisition of any speculative or leveraged financial instruments.

Fair Value Measurements

Assets and liabilities that require fair value measurement are recorded at fair value using market and income valuation approaches and considering the Company's and counterparty's credit risk. The Company uses the market approach and the income approach to value assets and liabilities as appropriate.  There were no assets or liabilities requiring fair value measurement on December 31, 2011.