The credit risk associated with derivative financial instruments arises from the possibility that the counterparties may default on their obligations. In order to minimize this risk, the Company enters into derivative transactions only with highly rated financial institutions.
Interest Rate Risk
The Company minimizes its interest rate risk by managing its portfolio of floating and fixed rate debt, as well as managing the term to maturity. The Company may use derivative instruments such as interest rate swap agreements to manage its current and anticipated exposure to interest rates. There were no interest rate swap agreements outstanding as at December 31, 2012 or December 31, 2011.
The Company had a floating rate debt of $26.5 million as at December 31, 2012.
Liquidity Risk
Liquidity risk is the risk that the Company may encounter difficulties in meeting obligations associated with financial liabilities. As at December 31, 2012, the Company had unutilized lines of credit of $149.4 million.
Accounts payable are primarily due within 90 days and will be satisfied from current working capital.
The Company expects that continued cash flows from operations in 2012, together with currently available credit facilities, will be more than sufficient to fund its requirements for investments in working capital, capital assets and dividend payments through the next 12 months, and that the Company's credit ratings provide reasonable access to capital markets to facilitate future debt issuance.
14.INTEREST INCOME AND EXPENSE
The components of interest expense are as follows:
2012 2011----------------------------------------------------------------------------Term loan facility $ 2,807 $ 1,941Senior debentures 6,907 7,071---------------------------------------------------------------------------- $ 9,714 $ 9,012--------------------------------------------------------------------------------------------------------------------------------------------------------
The components of interest and investment income are as follows:
2012 2011----------------------------------------------------------------------------Interest income on rental conversions $ 3,529 $ 2,981Other 445 233---------------------------------------------------------------------------- $ 3,974 $ 3,214--------------------------------------------------------------------------------------------------------------------------------------------------------
15.INCOME TAXES
Significant components of the provision for income tax expense were as follows:
2012 2011----------------------------------------------------------------------------Current income tax expense $ 43,212 $ 41,159Deferred income tax expense (recovery) 773 (1,450)----------------------------------------------------------------------------Total income tax expense $ 43,985 $ 39,709--------------------------------------------------------------------------------------------------------------------------------------------------------
