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## 9. FINANCIAL INSTRUMENTS (CONTINUED): 

Derivative financial instruments (continued): 

(c) Foreign exchange contracts (continued): 

<img src='content_image/158426.jpg'>

(d)  Interest rate swap agreement: 

 In order to fix the interest rate on a substantial portion of the expected drawdown of the revolving credit facility, the Company entered into a new 5-year interest rate swap agreement effective June 28, 2013 at a rate of 2.09% for a value of $50.0 million, decreasing to $40.0 million on June 29, 2015 and to $30.0 million on June 28, 2016. The Company’s previous 5-year interest rate swap agreement of $70.0 million at a rate of 4.005% expired on June 28, 2013. The counterparties to this swap arrangement are major Canadian financial institutions.The Company does not anticipate any material adverse effect on its financial position resulting from its involvement in this type of swap arrangement, nor does it anticipate non-performance by the counterparties. As at September 28, 2013, the fair value of the swap was a liability of $0.2 million (September 29, 2012 – liability of $1.9 million.) 

## Risks 

 The Company, through its financial assets and liabilities, is exposed to various risks.The following analysis provides a measurement of risks at year-end. 

(a) Credit risk: 

 Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligation.The Company believes it has limited credit risk other than those explained in note 7 - Trade and other receivables and note 9 - Financial instruments. 

