We recognized net foreign exchange gains of $15 million this year from the revaluation of US dollar denominated cash, bonds and other securities and the senior unsecured notes held in Inmet prior to the change in its functional currency from the Canadian dollar to the US dollar effective June 1, 2012. As of this date, Inmet's US dollar-denominated monetary assets and liabilities were no longer revalued. Instead we began recognizing foreign exchange impacts on the revaluation of Inmet's Canadian dollar denominated monetary assets and liabilities with a gain of $10 million in 2012 on Canadian dollar denominated cash, bonds and other securities due to a weakening in the US dollar relative to the Canadian dollar. We recognized a foreign exchange loss of $2 million this quarter on these Canadian dollar denominated holdings.
Additionally, in 2012 we began holding our euro-based operations' excess cash in US dollars. We recognized $16 million in foreign exchange losses this year, including $15 million this quarter, on the revaluation of US denominated cash balances to euros due to a depreciation in the US dollar relative to the euro.
2013 outlook for investment and other income
Investment and other income is affected by the balance of our cash, bonds and other securities, and by interest rates and exchange rates. We are capitalizing interest income earned on funds from the proceeds of our senior unsecured notes (as we are capitalizing interest costs on the senior unsecured notes). At December 31, 2012, we held Cdn $218 million in cash, bonds and other securities subject to translation in our US dollar denominated accounts and US $599 million in cash subject to translation in our euro accounts.
Income tax expense
---------------------------------------------------------------------------- three months ended December 31(thousands) 2012 2011 change----------------------------------------------------------------------------Cayeli $3,983 $9,444Las Cruces 18,371 8,097Pyhasalmi 8,013 6,612Corporate and other 1,346 (1,662)---------------------------------------------------------------------------- $31,713 $22,491----------------------------------------------------------------------------Consolidated effective tax rate 45% 33% +8%------------------------------------------------------------------------------------------------------------------------------------------------------- year ended December 31(thousands) 2012 2011 change---------------------------------------------------------------------------Cayeli $32,923 $50,947Las Cruces 72,495 22,788Pyhasalmi 23,951 30,710Corporate and other 1,935 (2,374)--------------------------------------------------------------------------- $131,304 $102,071---------------------------------------------------------------------------Consolidated effective tax rate 28% 28% ----------------------------------------------------------------------------
