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## InTEREST RATES uSED FOR DETERMInInG FAIR VALuE 

The interest rates used to discount the estimated cash flows, when applicable, are based on the government yield curve at the reporting date plus an adequate credit spread and were as follows: 

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## AMORTIzED COST IMPACT On InTEREST ExPEnSE 

In fiscal 2011, we expensed $0.1 million (2010: $0.5 million) and $0.2 million (2010: $0.2 million) of short-term and long-term interest, respectively, relating to interest that was calculated using the effective interest rate method relating to its transaction fees on our borrowings. 

## FORWARD ExCHAnGE COnTRACTS 

We systematically enter into foreign exchange contracts, with maturities of 15 months or less, with exceptions for one customer who requires hedging at their request. We use hedge accounting to account for these foreign exchange contracts. 

At year-end, we had the following total foreign exchange forward single rate contracts outstanding: 

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The single rate contracts at December 31, 2011 have rates ranging from 0.9491 to 1.02823, with maturities ranging from January 2012 to September 2012. 

At year-end 2011, we had the following foreign exchange “average rate forward” purchase contracts outstanding: 

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## Average rate forward purchase contracts: 

Where the average noon-day exchange rate during the contract term falls between the benefit and protection rates, no cash settlements are exchanged between us and the intermediary If the average noon-day exchange rate during the contract term is less than the benefit rate, then on the contract settlement date, we would pay the intermediary the difference in the rate times the notional dollar value hedged If the average noon-day exchange rate during the contract term is greater than the protection rate, then on the contract settlement date, the intermediary would pay us the difference in the rate times the notional dollar value hedged The benefit and protection rates are the same for forward single rate contracts, while forward average range contracts have a spread between the benefit and protection rates 

With the exception of US$2.4 million average rate contracts with maturities ranging between January 2013 and December 2013, all foreign exchange contracts have maturities that are less than one year. 

## CASH FLOW HEDGE 

Prior to November 30, 2011, our U.S. subsidiary had an interest rate swap agreement in place that converted principal and interest payments from Canadian to U.S. dollars and was used to hedge the foreign exchange exposure on the 6.31% Series A note. The note and interest rate swap had the same critical terms and the swap was valued at rates prevailing as at the balance sheet date. Gains and losses on the swap were included in other comprehensive income and transferred to income to offset gains and losses on the debt when recorded in income. As of November 30, 2011, in anticipation of the Icelandic USA Acquisition and associated refinancing, we extinguished the swap. 

