Other Commercial Commitments Effects of Inflation Outlook Interest Rate Risk Foreign Currency Transaction Risk 22 We are contingently liable for secured and unsecured letters of credit  of $24.8 million as of September 30, 2013, of which $20.1 million  reduces our borrowing capacity. such as our projects that have contract arrangements where the  approval of engineering and design specifications may affect the  timing of the project execution.  Strength in the Canadian oil sands region continues to be a major  contributor to our improved operations and backlog in Canada. The  relocation to our newly constructed facility and the ramp-up, staffing  and expansion of our operations in Canada pose various risks and  uncertainties in the near term.  The following table reflects potential cash outflows that may result  in the event that we are unable to perform under our contracts  (in thousands): We also had performance and maintenance bonds totaling $283.4  million that were outstanding at September 30, 2013. Performance  and maintenance bonds are primarily used to guarantee contract  performance to our customers. We believe that cash available and borrowing capacity under our  existing credit facility should be sufficient to finance anticipated  operational activities, capital improvements and debt repayments  for the foreseeable future. We continue to monitor our markets and  will strive to maintain our leadership and competitive advantage  in the markets we serve while aligning our cost structures with  market conditions. We are subject to inflation, which can cause increases in our costs  of raw materials, primarily copper, aluminum and steel. Fixed- price contracts can limit our ability to pass these increases to our  customers, thus negatively impacting our earnings. The inflation in  commodity prices could potentially impact our operations in our  fiscal year ending September 30, 2014. Quantitative and Qualitative Disclosures About Market Risk We are exposed to certain market risks arising from transactions  we have entered into in the normal course of business. These risks  primarily relate to fluctuations in interest rates, foreign exchange  rates and commodity prices. Powell participates in capital-intensive markets that are cyclical in  nature. Cyclicality is predominantly driven by customer demand,  global economic conditions and anticipated environmental  or regulatory changes which affect the manner in which our  customers proceed with capital investments. Market cycles are  many months or years in length and require our customers to  analyze factors which include the demand for oil, gas and electrical  energy, the overall financial environment, governmental budgets,  the outlook for regulatory actions and environmental concerns.  Orders take a number of months to produce and are traditionally  awarded in competitive bid situations. Scheduling is matched to  the customer requirements which may change during the course  of any particular project. Growth in demand for energy is expected to continue over the  long term. This, when coupled with the need for replacement of  existing infrastructure that is at the end of its life cycle, demonstrates  a continued need for products and services produced by us.  Our orders over the past year have been solid, driven primarily  by continued strength in oil and gas production projects, refining  projects and transportation markets. We continue to experience  timing challenges in the near-term related to the awarding of large  projects due to various global market conditions and industry  constraints. However, the outlook for continued opportunities for our  products and services remains positive; even though the timing and  pricing of many of these projects are difficult to predict.  If we decide to borrow under one of our credit facilities, we will  be subject to market risk resulting from changes in interest rates  related to our floating rate bank credit facility. If we were to make  such borrowings, a hypothetical 100 basis point increase in  variable interest rates may result in a material impact to our financial  statements. While we do not currently have any derivative contracts  to hedge our exposure to interest rate risk, in the past we have  entered and may in the future enter into such contracts. During each  of the past three years, we have not experienced a significant effect  on our business due to changes in interest rates. We have operations that expose us to currency risk in the British  Pound Sterling, the Canadian Dollar and to a lesser extent the  Euro. Amounts invested in our foreign operations are translated  into U.S. Dollars at the exchange rates in effect at the balance  sheet date. The resulting translation adjustments are recorded as  accumulated other comprehensive income (loss), a component  of stockholders’ equity in our consolidated balance sheets. We  believe the exposure to the effects that fluctuating foreign currencies  have on our consolidated results of operations is limited because  the foreign operations primarily invoice customers and collect  Our operating results are frequently impacted by the timing and  resolution of change orders and project close-out which could  cause gross margins to improve or deteriorate during the period in  which these items are approved and finalized with customers. Our  operating results are also impacted by factors outside of our control,  As of September 30, 2013, Payments Due by Period: Letters of  Credit Less than 1 year  $ 14,828 1 to 3 years 9,383 3 to 5 years 600 More than 5 years  — Total long-term commercial obligations $ 24,811