(1) Includes convertible debentures and senior unsecured debentures in 2011.
(2) Excludes capitalized interest of $1,595 and $4,664 in Q4 2012 and 2012 year-to-date, respectively, and $858 and $2,744 in Q4 2011 and 2011 year-to-date, respectively.
(3) Relates to decommissioning liability.
(4) Relates to the early redemption feature for the Series 1 and 2 senior unsecured debentures.
The decrease in finance charges before the gain on the embedded derivatives and the unwinding of the discount for the quarter and year-to-date is attributable to unamortized issue costs expensed upon early redemption of the Convertible Debentures in Q4 2011. The non-cash gain on the embedded derivatives is associated with the early redemption feature for the Series 1 and Series 2 Senior Unsecured Debentures (collectively the "Senior Unsecured Debentures") recognized during the quarter. The gain is an estimate of the fair value of the embedded derivatives and is primarily impacted by the risk-free rate, market volatility, and our credit spread. See Note 17 to the Financial Statements for further information.
Finance charges associated with the Senior Unsecured Debentures include annual coupon rates of 7.625% and 7.75%, respectively, as well as the accretion of issue costs and gains or losses on the embedded derivatives for both series. In 2011, we had Convertible Debentures with an annual coupon rate of 7.0%, which were refinanced in Q4 2011 with the Series 2 Senior Unsecured Debentures. See "Liquidity and Capital Resources" in this MD&A for discussion of our long-term borrowings.
Three months ended Year ended December 31, December 31,($000s) 2012 2011 % change 2012 2011 % change----------------------------------------------------------------------------Deferred taxes 706 2,578 (73) 11,208 14,187 (21)----------------------------------------------------------------------------Effective tax rate 14.6% 29.9% (51) 20.8% 29.7% (30)----------------------------------------------------------------------------
Deferred taxes decreased 73% and 21% to $0.7 million and $11.2 million, respectively, in the quarter and for the year. The lower effective tax rate in 2012 resulted due to statutory and other rate decreases and changes in non-deductible items including stock-based compensation expense and gain on embedded derivatives. Our statutory tax rate in Canada is 25.72% for 2012 and was 27.35% in 2011. Loss carry forwards were approximately $142 million at December 31, 2012. We do not anticipate paying significant income tax until 2016.
CHANGES IN CONSOLIDATED FINANCIAL POSITION
As at As at December December $($000s) 31, 2012 31, 2011 change % change Commentary----------------------------------------------------------------------------Assets See ConsolidatedCash 409 - 409 - Statements of Cash FlowsAccounts and other Consistent with increase receivables 150,347 134,172 16,175 12 in revenue Increase primarilyInventories related to higher 43,123 30,953 12,170 39 inventory at VSCProperty, plant and equipment 929,580 820,102 109,478 13 See Uses of CashPermits and other intangible assets 58,614 59,593 (979) (2) -Goodwill 102,615 102,897 (282) - - Increase due to non-cash gain on embeddedOther derivative related to assets(1) Senior Unsecured Debentures and higher 34,070 17,304 16,766 97 prepaid expenses----------------------------------------------------------------------------Equity and liabilitiesBank See Consolidated indebtedness - 6,168 (6,168) - Statements of Cash FlowsAccounts payable and accrued Increase related to liabilities 181,876 144,067 37,809 26 higher capital spending Increase relates to long-Deferred term waste processing revenue 6,494 3,830 2,664 70 contractDividends Increase in dividend rate payable 5,426 3,889 1,537 40 and shares outstanding----------------------------------------------------------------------------Senior See Consolidated secured debt 76,500 68,493 8,007 12 Statements of Cash FlowsSenior unsecured debentures 246,334 245,049 1,285 1 -Other long- Change relates to non- term current obligations under liabilities 4,228 5,459 (1,231) (23) our Incentive plans Increase relates toDeferred tax current year taxable liability 77,519 68,389 9,130 13 income Increase due to change inDecommissioni risk free rate. See ng liability Critical Accounting 78,941 77,756 1,185 2 Estimates Increase due primarily toEquity equity offering completed 641,440 541,921 99,519 18 in Q4 2012----------------------------------------------------------------------------
