As at December 29, 2012, a sensitivity analysis was performed on the Company's U.S. dollar denominated financial instruments, which principally consist of US$0.6 million of cash, to determine how a change in the U.S. dollar exchange rate would impact net earnings. A 500 basis point rise or fall in the Canadian dollar against the U.S. dollar, assuming that all other variables, in particular interest rates, remained the same, would have resulted in a $6 and $11 decrease or increase, respectively, in the Company's net earnings for the 13 week and 26 week periods ended December 29, 2012, respectively.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's exposure to interest rate fluctuations is primarily related to cash borrowings under its existing credit facility, which bears interest at floating rates, and interest earned on its cash balances. The Company has performed a sensitivity analysis on interest rate risk as at December 29, 2012 to determine how a change in interest rates would have impacted net earnings. As at December 29, 2012, the Company's cash balance available for investment was approximately $30.8 million. A 100 basis point change in interest rates would have increased or decreased net earnings by approximately $54 and $108 for the 13 week and 26 week periods ended December 29, 2012, respectively. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.
Equity Price Risk
Equity price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market equity prices. The Company's exposure to equity price fluctuations is primarily related to the RSU and DSU liability included in payables and accruals. The value of the vested DSU and RSU liability is adjusted to reflect changes in the market value of the Company's Subordinate Voting Shares on the TSX. The Company has performed a sensitivity analysis on equity price risk as at December 29, 2012 to determine how a change in the price of the Subordinate Voting Shares would have impacted net earnings. As at December 29, 2012, a total of 156,139 RSUs and 83,136 DSUs have been granted and are outstanding. An increase or decrease of $1.00 in the market price of the Company's Subordinate Voting Shares would have increased or decreased net earnings by approximately $167 for the 13 week and 26 week periods ended December 29, 2012. This analysis assumes that all RSUs and DSUs were fully vested and other variables remain constant.
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company's approach to managing liquidity risk is to ensure, to the extent possible, that it will have sufficient liquidity to meet its liabilities when due. As at December 29, 2012, the Company had $30.8 million of cash; an operating credit facility of $25 million that is committed until June 27, 2014; and a $10 million uncommitted letter of credit facility which includes an uncommitted demand overdraft facility in the amount of $0.5 million related thereto. The credit facilities are used to finance seasonal working capital requirements for merchandise purchases and other corporate purposes. The Company expects that the majority of its payables and accruals and deferred revenue will be discharged within 90 days.
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