Newalta categorizes its financial instruments carried at fair value into one of three different levels, depending on the significance of inputs employed in their measurement.
Level 1 includes assets and liabilities measured at fair value based on unadjusted quoted prices for identical assets and liabilities in active markets that are accessible at the measurement date. An active market for an asset or liability is considered to be a market where transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Newalta's cash, senior unsecured debentures and senior secured debt are classified as level 1 financial instruments.
Level 2 includes valuations determined using directly or indirectly observable inputs other than quoted prices included within Level 1. Financial instruments in this category are valued using models or other industry standard valuation techniques derived from observable market data. Such valuation techniques include inputs such as quoted forward prices, time value, volatility factors and broker quotes that can be observed or corroborated in the market for the entire duration of the derivative instrument. Instruments valued using Level 2 inputs include the embedded derivative within the senior unsecured debentures.
Level 3 includes valuations based on inputs which are less observable, unavailable or where the observable data does not support a significant portion of the instruments' fair value. Generally, Level 3 valuations are longer dated transactions, occur in less active markets, occur at locations where pricing information is not available or have no binding broker quote to support Level 2 classification. At December 31, 2012 and 2011, Newalta did not have any significant Level 3 assets or liabilities.
Credit risk and economic dependence
Newalta is subject to credit risk on its trade accounts receivable balances. The customer base is large and diverse, and one customer balance represented 10% of total accounts receivable at December 31, 2012, (no single customer was greater than 10% as at December 31, 2011). This account receivable is recognized within the Onsite segment. Newalta views the credit risks on these amounts as normal for the industry. Credit risk is minimized by Newalta's broad customer base and diverse product lines, and is mitigated by the ongoing assessment of the credit worthiness of its customers as well as monitoring the amount and age of balances outstanding. Newalta's assessment of credit risk has remained unchanged from the prior year.
Revenue from Newalta's largest customer represented 10% of revenue for the year ended December 31, 2012 (13% for the year ended December 31, 2011). This revenue is recognized within the Facilities segment. No other customer's revenue exceeded 10% for the period presented.
Based on the nature of operations, established collection history and industry norms, receivables are not considered past due until 90 days after invoice date, although standard payment terms require payment within 30 to 90 days. Depending on the nature of the service and/or product, customers may be provided with extended payment terms while Newalta gathers certain processing or disposal data. Included in the Corporation's trade receivable balance, are receivables totalling $5.0 million (December 31, 2011 - $2.8 million), which are considered to be outstanding beyond normal repayment terms at December 31, 2012. A provision of $0.5 million (December 31, 2011 - $0.3 million) has been established as an allowance for doubtful accounts. No additional provision has been made as there has not been a significant change in credit quality and the amounts are still considered collectible. Newalta does not hold any collateral over these balances but may hold credit insurance for specific non-domestic customer accounts. Total accounts receivable of $150.3 million is comprised of $106.8 million of trade receivables, accrued receivables of $27.6 million and other receivables of $15.9 million.
---------------------------------------------------------------------------- Trade receivables Allowance for doubtfulAging aged by invoice date accounts Net receivables---------------------------------------------------------------------------- Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, 2012 2011 2012 2011 2012 2011----------------------------------------------------------------------------Current 69,640 76,063 12 38 69,628 76,02531-60 days 27,740 22,204 7 24 27,733 22,18061-90 days 4,481 8,016 58 50 4,423 7,96691 days + 4,965 2,757 403 173 4,562 2,584----------------------------------------------------------------------------Total 106,826 109,040 480 285 106,346 108,755----------------------------------------------------------------------------
