Receivable Provisions, Net of Recoveries
The Company recorded receivable provisions, net of recoveries of
$0.1 millionfor accounts receivable and financing receivables in the second quarter of 2013, which was consistent with the prior year comparative period.
The Company's accounts receivables and financing receivables are subject to credit risk. These receivables are concentrated with the leading theater exhibitors and studios in the film entertainment industry. To minimize the Company's credit risk, the Company retains title to underlying theater systems that are leased, performs initial and ongoing credit evaluations of its customers and makes ongoing provisions for its estimate of potentially uncollectible amounts. Accordingly, the Company believes it has adequately protected itself against exposures relating to receivables and contractual commitments.
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Interest Income and Expense
Interest income was less than
Interest expense was
$0.3 millionin the second quarter of 2013, as compared to $0.5 millionin the second quarter of 2012. Included in interest expense is the amortization of deferred finance costs of $0.1 millionand less than $0.1 millionin the second quarter of 2013 and 2012, respectively. The Company's policy is to defer and amortize, over the life of the debt instrument, all the costs relating to debt financing which are paid directly to the debt provider.
The Company's effective tax rate differs from the statutory tax rate and will vary from year to year primarily as a result of numerous permanent differences, investments and other tax credits, the provision for income taxes at different rates in foreign and other provincial jurisdictions, enacted statutory tax rate increases or reductions in the year, changes due to foreign exchange, changes in the Company's valuation allowance based on the Company's recoverability assessments of deferred tax assets, and favorable or unfavorable resolution of various tax examinations. There was no change in the Company's estimates of the recoverability of its deferred tax assets based on an analysis of both positive and negative evidence, including projected future earnings. As at
June 30, 2013, the Company had a gross deferred income tax asset of $38.2 million, against which the Company is carrying a $6.1 millionvaluation allowance. For the three months ended June 30, 2013, the Company recorded an income tax provision of $4.8 million, of which a provision of $0.1 millionwas related to an increase in unrecognized tax benefits.
The Company anticipates utilizing the majority of its currently-available tax attributes over the next two years.
The Company accounts for investments in new business ventures using the guidance of the FASB ASC 323 "Investments -
Equity Method and Joint Ventures" ("ASC 323"). At June 30, 2013, the equity method of accounting is being utilized for an investment with a carrying value of $2.4 million( December 31, 2012- $3.0 million). For the three months ended June 30, 2013, gross revenues, cost of revenue and net loss for the investment were $0.8 million, $3.2 millionand $4.3 million, respectively (2012 - $2.8 million, $2.9 million, and $2.4 million, respectively). The Company has recorded its proportionate share of the net loss which amounted to $0.5 millionfor the second quarter of 2013 and a net loss of $0.2 millionin the second quarter of 2012.