Universal suspended its commercial operations in June 2011. Effective January 1, 2012, management of Universal is committed to an active program to locate a buyer for the sale of assets held in Universal. Although it was expected that the sale would be recognized within one year from the date of classification of assets as 'held for sale', events beyond management's control have caused a delay in the sale of these assets. Management remains committed to its plan to sell the assets in Universal. For the year ended December 31, 2012, Universal incurred certain fixed costs, including interest on debt and facility occupancy costs amounting to $783. As a result, the Company's total share of cumulative unrecognized losses increased to $2,574 as at December 31, 2012.
The Company and the joint venture partner have each provided a guarantee up to the amount of $6,500 to Universal's banker as additional security for Universal's credit facilities. As at December 31, 2012, the total loan outstanding to Universal's banker was $7,577, of which the Company's share was $3,789.
The Company will continue to fund its share of Universal's cash requirements until proceeds from the sale of Universal's assets are realized.
For the year ended December 31, 2012, cash flow provided by operating activities totaled $16,153 compared to $7,642 in 2011. The improvement in operations combined with an improvement in collections of receivables and a decline of payables disbursements due to timing differences, offset in part by an increase in inventories, contributed to the increase in cash flows from operations.
Cash utilized for purchases of property, plant and equipment totaled $3,101 in 2012, compared to $2,981 in 2011 which included $620 relating to the introduction of new products in 2011. In 2012, capital expenditures included approximately $632 relating to new quarry development costs and new equipment upgrades.
Advances to Universal relating to the loan receivable for the year ended December 31, 2012 amounted to $2,670. Further discussion is contained above under the caption "Universal Resource Recovery Inc".
Cash advances to Universal for the year ended December 31, 2011 totaled $3,295. These advances increased the carrying value of the investment in Universal, as they were utilized by Universal to finance its operational activities and capital expenditures incurred during the start-up period of its waste composting facility located in Welland, Ontario.
Proceeds from the sale of property, plant and equipment totaled $520 of which $461 pertained to the sale of certain obsolete production equipment which was no longer supported by the Company's operational processes.
Bank operating advances increased by $5,288 to $10,435 in 2012. This increase helped to support funding the term loan and the subordinated secured debenture repayments.
During 2012 and 2011, principal repayments on term loans totaled $2,730 and $2,791, respectively. These repayments included $2,500 paid on the term loan in both 2012 and 2011.
In July 2007, the Company had entered into an interest rate swap contract to hedge the risk arising from variability of cash flows relating to its variable rate term bank loan under its credit facility. The fixed interest rate under the swap contract was 5.16%. For the year ended December 31, 2011, the interest rate differential together with the loss on the change in fair value of the swap contract totaled $516 and was recorded in 'finance costs' in the consolidated statement of comprehensive income (loss). This contract was settled for $1,459 in 2011.
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