||Quantitative and Qualitative Disclosure about Market Risk
We are exposed to various market risks including interest rates on our financial instruments
and foreign exchange rates.
Interest Rate Risk
Our interest rate risk is limited to our outstanding balances on our inventory and working
capital financing agreements, loan and security agreement, taxable revenue bonds, and factoring
agreement for the financing of inventory, accounts receivable and certain other receivables, which
amounted to $63.3 million at December 31, 2004. A 100 basis point movement in interest rates would
result in approximately $0.2 million annualized increase or decrease in interest expense based on
the outstanding balance of these agreements at December 31, 2004.
Foreign Exchange Risk
Currently, our foreign currency exchange rate risk is primarily limited to the Canadian Dollar
and the Euro. In the future, our foreign currency exchange risk may also include other currencies
applicable to certain of our international operations. We have and may continue, from time to time,
to employ derivative financial instruments to manage our exposure to fluctuations in foreign
currency rates. To hedge our net investment and intercompany payable or receivable balances in
foreign operations, we may enter into forward currency exchange contracts. We do not hold or issue
derivative financial instruments for trading purposes or for speculative purposes.