Advertisement
Interest costs on long-term debt were higher in the first quarter of 2013 as a result of the U.S. $700 million debt issued on March 29, 2012; however, interest expense was similar because substantially all interest costs were capitalized in both quarters.
Foreign Exchange (Gain) Loss
Three Months Ended March 31($ millions) 2013 2012----------------------------------------------------------------------------Foreign exchange (gain) loss - long-term debt $ 37 $ (20)Foreign exchange (gain) loss - other (9) 4----------------------------------------------------------------------------Total foreign exchange (gain) loss $ 28 $ (16)--------------------------------------------------------------------------------------------------------------------------------------------------------
Foreign exchange gains/losses are primarily the result of revaluations of our U.S. dollar-denominated long-term debt caused by fluctuations in U.S./Cdn dollar exchange rates.
The foreign exchange loss on long-term debt in the first quarter of 2013 was the result of a weakening Canadian dollar to U.S. $0.98 at March 31, 2013 from U.S. $1.01 at December 31, 2012. Conversely, the foreign exchange gain in the first quarter of 2012 was the result of a strengthening Canadian dollar to U.S. $1.00 at March 31, 2012 from U.S. $0.98 at December 31, 2011.
The quarter-over-quarter change in foreign exchange also reflects higher outstanding debt levels in the first quarter of 2013, as a result of the U.S. $700 million debt issued on March 29, 2012.
Tax Expense
Three Months Ended March 31($ millions) 2013 2012----------------------------------------------------------------------------Current tax expense $ 90 $ -Deferred tax expense (recovery) (22) 99----------------------------------------------------------------------------Total tax expense $ 68 $ 99--------------------------------------------------------------------------------------------------------------------------------------------------------
The quarter-over-quarter decrease in total tax expense from 2012 to 2013 reflects lower earnings before tax in the 2013 quarter.
Current taxes increased in 2013 primarily because:
-- tax pools sheltered 2012 income from significant current taxes; and-- taxes on income generated in the Corporation's partnership in 2012 were deferred to 2013.
Asset Retirement Obligation
March 31Three months ended ($ millions) 2013----------------------------------------------------------------------------Asset retirement obligation, beginning of period $ 1,102Increase in risk-free interest rate (62)Accretion expense 6Reclamation spending (33)----------------------------------------------------------------------------Asset retirement obligation, end of period $ 1,013Less current portion (44)----------------------------------------------------------------------------Non-current portion $ 969--------------------------------------------------------------------------------------------------------------------------------------------------------
