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## 5. Term deposits 

The term deposits are classified as short term as they can be redeemed prior to maturity without penalty. 

<img src='content_image/157552.jpg'>

## 6. Financial Instruments 

## Operating Loan Facility 

During the fourth quarter of 2013 the Company increased its operating loan facility to $100,000,000 and extended its term for an additional year until 2018. During 2011, the Company established an operating loan facility totaling $50,000,000 with an initial five year term with its principal banker and during the fourth quarter of 2012 the Company increased its operating loan facility to $75,000,000 and extended its term for an additional year until 2017. The interest rate on the facility varies based upon the actual amounts borrowed, but ranges from 0.45% to 1.45% over prime interest rates or 1.45% to 2.45% over guaranteed notes, depending on the preference of the Company. Security for this facility includes a General Security Agreement covering all current and future assets. 

 In accordance with its loan facility, the Company is required to ensure that the following covenants are met: 

• the ratio of Funded Debt to EBITDA shall not exceed 3.00:1.00 calculated on a trailing 12 month basis; 

• the ratio of EBITDA to Interest Expense shall not be less than 3.00:1.00 calculated on a trailing 12 month basis; 

• the ratio of Tangible Assets to Funded Debt shall not be less than 2.25:1.00. 

EBITDA is not a recognized measure under IFRS. EBITDA is defined as net income from continuing operations before interest expense, current tax expense, depreciation and amortization. Tangible Assets, as per the loan agreement, consists of all accounts receivable, inventory, unrestricted cash, term deposits and cash equivalents and the net book value of fixed assets. 

The Company did not access the loan facility in 2013. The Company accessed the loan facility during the second quarter of 2012 on a short-term basis, having repaid the amount borrowed prior to June 30, 2012. 

## Contracts measured at fair value 

## Forward exchange contracts 

During the third quarter of 2013 the Company entered into a forward exchange contract as a risk management strategy. Forward exchange contracts are included in current assets/liabilities except for those with maturities greater than 12 months after the end of the reporting period, which are classified as non-current assets/ liabilities. The Company has not designated any of its forward exchange contracts as effective accounting hedges and, accordingly, fair values its forward exchange contracts with the resulting gains and losses recorded in the Consolidated Statement of Net Income and Comprehensive Income. 

