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Foreign Exchange Risk. As a result of our foreign operations, we incur costs and we carry assets and
liabilities that are denominated in foreign currencies, primarily the Canadian dollar, while sales of products are
primarily denominated in U.S. dollars.
We maintain a foreign currency hedging strategy, which uses derivative financial instruments to mitigate the
risks associated with changes in foreign currency exchange rates. This strategy takes into consideration all of our
exposures. We do not use derivative financial instruments for trading or speculative purposes.
In applying our strategy, from time to time, we use foreign currency forward contracts to hedge certain
forecasted expenses denominated in foreign currencies, primarily the Canadian dollar. We designate these
contracts as cash flow hedges of forecasted expenses, to the extent eligible under the accounting rules, and
evaluate hedge effectiveness prospectively and retrospectively. As such, the effective portion of the gain or loss
on these contracts is reported as a component of accumulated other comprehensive income (loss) and reclassified
to earnings in the same line item as the associated forecasted transaction and in the same period during which the
hedged transaction affects earnings. Any ineffective portion is immediately recorded in earnings.
We also use, from time to time, foreign currency forward contracts to economically hedge recognized
foreign currency exposures on the balance sheets of various subsidiaries, primarily those denominated in
Canadian dollars. We do not designate these forward contracts as hedging instruments. Accordingly, the gain or
loss associated with these contracts is immediately recorded in earnings.
The following table provides information about our foreign currency forward contracts as of December 28,
2013 and December 29, 2012. All of our foreign currency forward contracts mature within 12 months.
December 28, 2013 December 29, 2012
Notional
Amount
Average
Contract
Rate
Estimated
Fair Value
Gain (Loss)
Notional
Amount
Average
Contract
Rate
Estimated
Fair Value
Gain (Loss)
(In millions except contract rates)
Foreign currency forward contracts:
Canadian Dollar ................ $124 1.0409 $(4) $142 0.9993 $—
Total ............................ $124 $(4) $142 $—
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