Financial Instruments | 6 Months Ended |
Jun. 30, 2014 |
Financial Instruments [Abstract] | ' |
Financial Instruments | ' |
17. Financial Instruments |
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(a) Financial Instruments |
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The Company maintains cash with various major financial institutions. The Company's cash is invested with highly rated financial institutions. |
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The Company's accounts receivables and financing receivables are subject to credit risk. The Company's accounts receivable and financing receivables are concentrated with the theater exhibition industry and film entertainment industry. To minimize the Company's credit risk, the Company retains title to underlying theater systems leased, performs initial and ongoing credit evaluations of its customers and makes ongoing provisions for its estimate of potentially uncollectible amounts. The Company believes it has adequately provided for related exposures surrounding receivables and contractual commitments. |
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(b) Fair Value Measurements |
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The carrying values of the Company's cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities due within one year approximate fair values due to the short-term maturity of these instruments. The Company's other financial instruments are comprised of the following: |
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| | As at June 30, 2014 | | | As at December 31, 2013 | | | | | | | | | | | | | |
| | Carrying | | | Estimated | | | Carrying | | | Estimated | | | | | | | | | | | | | |
| | Amount | | | Fair Value | | | Amount | | | Fair Value | | | | | | | | | | | | | |
Net financed sales receivable | $ | 92,133 | | $ | 91,055 | | $ | 93,493 | | $ | 92,043 | | | | | | | | | | | | | |
Net investment in sales-type leases | $ | 12,736 | | $ | 12,414 | | $ | 13,617 | | $ | 13,214 | | | | | | | | | | | | | |
Available-for-sale investment | $ | 700 | | $ | 700 | | $ | 1,000 | | $ | 1,000 | | | | | | | | | | | | | |
Foreign exchange contracts — designated forwards | $ | 209 | | $ | 209 | | $ | -421 | | $ | -421 | | | | | | | | | | | | | |
The estimated fair values of the net financed sales receivable and net investment in sales-type leases are estimated based on discounting future cash flows at currently available interest rates with comparable terms (Level 2 input in accordance with the Fair Value Measurements Topic of the FASB ASC hierarchy) as at June 30, 2014 and December 31, 2013, respectively. |
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The fair value of the Company's available-for-sale investment is determined using the present value of expected cash flows based on projected earnings and other information readily available from the business venture (Level 3 input in accordance with the Fair Value Measurements Topic of the FASB ASC hierarchy) as at June 30, 2014 and December 31, 2013, respectively. The discounted cash flow valuation technique is based on significant unobservable inputs of revenue and expense projections, appropriately risk weighted, as the investment is in a start-up entity. The significant unobservable inputs used in the fair value measurement of the Company's available-for-sale investment are long-term revenue growth and pretax operating margin. A significant increase (decrease) in any of those inputs in isolation would result in a lower or higher fair value measurement. |
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The fair value of foreign currency derivatives is determined using quoted prices in active markets (Level 2 input in accordance with the Fair Value Measurements Topic of the FASB ASC hierarchy) as at June 30, 2014 and December 31, 2013, respectively. These identical instruments are traded on a closed exchange. |
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There were no significant transfers between Level 1 and Level 2 during the six months ended June 30, 2014 or 2013. When a determination is made to classify an asset or liability within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement. The table below sets forth a summary of changes in the fair value of the Company's available-for-sale investment measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the period: |
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| | | Available For Sale Investments | | | | | | | | | | | | | | | | | |
| | | 2014 | | 2013 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance, January 1, | $ | 1,000 | | $ | 1,350 | | | | | | | | | | | | | | | | | |
| Transfers into/out of Level 3 | | - | | | - | | | | | | | | | | | | | | | | | |
| Total gains or losses (realized/unrealized) | | | | | | | | | | | | | | | | | | | | | | |
| | Included in earnings | | -650 | | | - | | | | | | | | | | | | | | | | | |
| | Change in other comprehensive income | | 350 | | | - | | | | | | | | | | | | | | | | | |
| Purchases, issuances, sales and settlements | | - | | | - | | | | | | | | | | | | | | | | | |
Ending balance, June 30, | $ | 700 | | $ | 1,350 | | | | | | | | | | | | | | | | | |
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| The amount of total gains or losses for the period included in earnings attributable to the | | | | | | | | | | | | | | | | | | | | | | |
change in unrealized gains or losses relating to assets still held at the reporting date | $ | -650 | | $ | - | | | | | | | | | | | | | | | | | |
There were no transfers in or out of the Company's level 3 assets during the six months ended June 30, 2014. |
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(c) Financing Receivables |
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The Company's net investment in leases and its net financed sale receivables are subject to the disclosure requirements of ASC 310 “Receivables”. Due to differing risk profiles of its net investment in leases and its net financed sales receivables, the Company views its net investment in leases and its net financed sale receivables as separate classes of financing receivables. The Company does not aggregate financing receivables to assess impairment. |
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The Company monitors the credit quality of each customer on a frequent basis through collections and aging analyses. The Company also holds meetings monthly in order to identify credit concerns and whether a change in credit quality classification is required for the customer. A customer may improve in their credit quality classification once a substantial payment is made on overdue balances or the customer has agreed to a payment plan with the Company and payments have commenced in accordance to the payment plan. The change in credit quality indicator is dependent upon management approval. |
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The Company classifies its customers into four categories to indicate the credit quality worthiness of its financing receivables for internal purposes only: |
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Good standing — Theater continues to be in good standing with the Company as the client's payments and reporting are up-to-date. |
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Credit Watch — Theater operator has begun to demonstrate a delay in payments, has been placed on the Company's credit watch list for continued monitoring, but active communication continues with the Company. Depending on the size of outstanding balance, length of time in arrears and other factors, transactions may need to be approved by management. These financing receivables are considered to be in better condition than those receivables related to theaters in the "Pre-approved transactions" category, but not in as good of condition as those receivables in "Good standing". |
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Pre-approved transactions only — Theater operator is demonstrating a delay in payments with little or no communication with the Company. All service or shipments to the theater must be reviewed and approved by management. These financing receivables are considered to be in better condition than those receivables related to theaters in the "All transactions suspended" category, but not in as good of condition as those receivables in "Credit Watch." Depending on the individual facts and circumstances of each customer, finance income recognition may be suspended if management believes the receivable to be impaired. |
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All transactions suspended — Theater is severely delinquent, non-responsive or not negotiating in good faith with the Company. Once a theater is classified as “All transactions suspended”, the theater is placed on nonaccrual status and all revenue recognitions related to the theater are stopped. |
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The following table discloses the recorded investment in financing receivables by credit quality indicator: |
| As at June 30, 2014 | | As at December 31, 2013 | | | | | | | |
| Minimum | | Financed | | | | Minimum | | Financed | | | | | | | | | |
| Lease | | Sales | | | | Lease | | Sales | | | | | | | | | |
| Payments | | Receivables | | Total | | Payments | | Receivables | | Total | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
In good standing | $ | 11,435 | | $ | 90,900 | | $ | 102,335 | | $ | 12,318 | | $ | 89,017 | | $ | 101,335 | | | | | | | |
Credit watch | | - | | | 333 | | | 333 | | | 420 | | | 3,895 | | | 4,315 | | | | | | | |
Pre-approved transactions | | 294 | | | 532 | | | 826 | | | 288 | | | - | | | 288 | | | | | | | |
Transactions suspended | | 1,972 | | | 861 | | | 2,833 | | | 1,397 | | | 817 | | | 2,214 | | | | | | | |
| $ | 13,701 | | $ | 92,626 | | $ | 106,327 | | $ | 14,423 | | $ | 93,729 | | $ | 108,152 | | | | | | | |
While recognition of finance income is suspended, payments received by a customer are applied against the outstanding balance owed. If payments are sufficient to cover any unreserved receivables, a recovery of provision taken on the billed amount, if applicable, is recorded to the extent of the residual cash received. Once the collectibility issues are resolved and the customer has returned to being in good standing, the Company will resume recognition of finance income. |
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The Company's investment in financing receivables on nonaccrual status is as follows: |
| | As at June 30, 2014 | | As at December 31, 2013 | | | | | | | | | | | | |
| | Recorded | | Related | | Recorded | | Related | | | | | | | | | | | | |
| | Investment | | Allowance | | Investment | | Allowance | | | | | | | | | | | | |
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Net investment in leases | $ | 2,265 | | $ | -965 | | $ | 1,684 | | $ | -606 | | | | | | | | | | | | |
Net financed sales receivables | | 861 | | | -493 | | | 817 | | | -236 | | | | | | | | | | | | |
| | $ | 3,126 | | $ | -1,458 | | $ | 2,501 | | $ | -842 | | | | | | | | | | | | |
The Company considers financing receivables with aging between 60-89 days as indications of theaters with potential collection concerns. The Company will begin to focus its review on these financing receivables and increase its discussions internally and with the theater regarding payment status. Once a theater's aging exceeds 90 days, the Company's policy is to review and assess collectibility on the theater's past due accounts. Over 90 days past due is used by the Company as an indicator of potential impairment as invoices up to 90 days outstanding could be considered reasonable due to the time required for dispute resolution or for the provision of further information or supporting documentation to the customer. |
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The Company's aged financing receivables are as follows: |
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| | As at June 30, 2014 |
| | | | | | | | | | | | | | Related | | | | | | | | Recorded |
| | Accrued | | | | | | | | Billed | | Unbilled | | Total | | | | | Investment |
| | And | | | | | | | | Financing | | Recorded | | Recorded | | Related | | Net of |
| | Current | | 30-89 Days | | 90+ Days | | Receivables | | Investment | | Investment | | Allowances | | Allowances |
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Net investment in leases | $ | 257 | | $ | 178 | | $ | 1,141 | | $ | 1,576 | | $ | 12,125 | | $ | 13,701 | | $ | -965 | | $ | 12,736 |
Net financed sales receivables | | 1,911 | | | 1,166 | | | 4,131 | | | 7,208 | | | 85,418 | | | 92,626 | | | -493 | | | 92,133 |
Total | | $ | 2,168 | | $ | 1,344 | | $ | 5,272 | | $ | 8,784 | | $ | 97,543 | | $ | 106,327 | | $ | -1,458 | | $ | 104,869 |
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| | As at December 31, 2013 |
| | | | | | | | | | | | | | Related | | | | | | | | Recorded |
| | Accrued | | | | | | | | Billed | | Unbilled | | Total | | | | | Investment |
| | And | | | | | | | | Financing | | Recorded | | Recorded | | Related | | Net of |
| | Current | | 30-89 Days | | 90+ Days | | Receivables | | Investment | | Investment | | Allowances | | Allowances |
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Net investment in leases | $ | 444 | | $ | 218 | | $ | 841 | | $ | 1,503 | | $ | 12,920 | | $ | 14,423 | | $ | -806 | | $ | 13,617 |
Net financed sales receivables | | 2,502 | | | 1,211 | | | 3,018 | | | 6,731 | | | 86,998 | | | 93,729 | | | -236 | | | 93,493 |
Total | | $ | 2,946 | | $ | 1,429 | | $ | 3,859 | | $ | 8,234 | | $ | 99,918 | | $ | 108,152 | | $ | -1,042 | | $ | 107,110 |
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The Company's recorded investment in past due financing receivables for which the Company continues to accrue finance income is as follows: |
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| | As at June 30, 2014 | | | |
| | | | | | | | | | Related | | | | | Recorded | | | |
| | Accrued | | | | | | Billed | | Unbilled | | | | Investment | | | |
| | And | | | | | | Financing | | Recorded | | Related | | Past Due | | | |
| | Current | | 30-89 Days | | 90+ Days | | Receivables | | Investment | | Allowance | | and Accruing | | | |
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Net investment in leases | $ | 108 | | $ | 145 | | $ | 469 | | $ | 722 | | $ | 4,796 | | $ | - | | $ | 5,518 | | | |
Net financed sales receivables | | 440 | | | 387 | | | 2,215 | | | 3,042 | | | 16,586 | | | - | | | 19,628 | | | |
Total | | $ | 548 | | $ | 532 | | $ | 2,684 | | $ | 3,764 | | $ | 21,382 | | $ | - | | $ | 25,146 | | | |
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| | As at December 31, 2013 | | | |
| | | | | | | | | | Related | | | | | Recorded | | | |
| | Accrued | | | | | | Billed | | Unbilled | | | | Investment | | | |
| | And | | | | | | Financing | | Recorded | | Related | | Past Due | | | |
| | Current | | 30-89 Days | | 90+ Days | | Receivables | | Investment | | Allowance | | and Accruing | | | |
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Net investment in leases | $ | 168 | | $ | 108 | | $ | 205 | | $ | 481 | | $ | 4,865 | | $ | -200 | | $ | 5,146 | | | |
Net financed sales receivables | | 450 | | | 469 | | | 2,056 | | | 2,975 | | | 19,282 | | | - | | | 22,257 | | | |
Total | | $ | 618 | | $ | 577 | | $ | 2,261 | | $ | 3,456 | | $ | 24,147 | | $ | -200 | | $ | 27,403 | | | |
The Company considers financing receivables to be impaired when it believes it to be probable that it will not recover the full amount of principal and interest owing under the arrangement. The Company uses its knowledge of the industry and economic trends, as well as its prior experiences to determine the amount recoverable for impaired financing receivables. The following table discloses information regarding the Company's impaired financing receivables: |
| | | For the Three Months Ended June 30, 2014 | | | | | | | | |
| | | | | | | | | Average | | Interest | | | | | | | | |
| | | Recorded | | Unpaid | | Related | | Recorded | | Income | | | | | | | | |
| | | Investment | | Principal | | Allowance | | Investment | | Recognized | | | | | | | | |
Recorded investment for which there is a related allowance: | | | | | | | | | | | | | | | | | | | | | | |
| | Net financed sales receivables | | 525 | | | - | | | -493 | | | 524 | | | - | | | | | | | | |
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Recorded investment for which there is no related allowance: | | | | | | | | | | | | | | | | | | | | | | |
| | Net financed sales receivables | | - | | | - | | | - | | | - | | | - | | | | | | | | |
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Total recorded investment in impaired loans: | | | | | | | | | | | | | | | | | | | | | | |
| | Net financed sales receivables | $ | 525 | | $ | - | | $ | -493 | | $ | 524 | | $ | - | | | | | | | | |
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| | | For the Three Months Ended June 30, 2013 | | | | | | | | |
| | | | | | | | | Average | | Interest | | | | | | | | |
| | | Recorded | | Unpaid | | Related | | Recorded | | Income | | | | | | | | |
| | | Investment | | Principal | | Allowance | | Investment | | Recognized | | | | | | | | |
Recorded investment for which there is a related allowance: | | | | | | | | | | | | | | | | | | | | | | |
| | Net financed sales receivables | | 188 | | | 220 | | | -66 | | | 172 | | | - | | | | | | | | |
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Recorded investment for which there is no related allowance: | | | | | | | | | | | | | | | | | | | | | | |
| | Net financed sales receivables | | 358 | | | 49 | | | - | | | 363 | | | - | | | | | | | | |
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Total recorded investment in impaired loans: | | | | | | | | | | | | | | | | | | | | | | |
| | Net financed sales receivables | $ | 546 | | $ | 269 | | $ | -66 | | $ | 535 | | $ | - | | | | | | | | |
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| | | For the Six Months Ended June 30, 2014 | | | | | | | | |
| | | | | | | | | Average | | Interest | | | | | | | | |
| | | Recorded | | Unpaid | | Related | | Recorded | | Income | | | | | | | | |
| | | Investment | | Principal | | Allowance | | Investment | | Recognized | | | | | | | | |
Recorded investment for which there is a related allowance: | | | | | | | | | | | | | | | | | | | | | | |
| | Net financed sales receivables | | 525 | | | - | | | -493 | | | 526 | | | - | | | | | | | | |
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Recorded investment for which there is no related allowance: | | | | | | | | | | | | | | | | | | | | | | |
| | Net financed sales receivables | | - | | | - | | | - | | | - | | | - | | | | | | | | |
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Total recorded investment in impaired loans: | | | | | | | | | | | | | | | | | | | | | | |
| | Net financed sales receivables | $ | 525 | | $ | - | | $ | -493 | | $ | 526 | | $ | - | | | | | | | | |
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| | | For the Six Months Ended June 30, 2013 | | | | | | | | |
| | | | | | | | | Average | | Interest | | | | | | | | |
| | | Recorded | | Unpaid | | Related | | Recorded | | Income | | | | | | | | |
| | | Investment | | Principal | | Allowance | | Investment | | Recognized | | | | | | | | |
Recorded investment for which there is a related allowance: | | | | | | | | | | | | | | | | | | | | | | |
| | Net financed sales receivables | | 188 | | | 220 | | | -66 | | | 172 | | | - | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Recorded investment for which there is no related allowance: | | | | | | | | | | | | | | | | | | | | | | |
| | Net financed sales receivables | | 358 | | | 49 | | | - | | | 367 | | | 22 | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total recorded investment in impaired loans: | | | | | | | | | | | | | | | | | | | | | | |
| | Net financed sales receivables | $ | 546 | | $ | 269 | | $ | -66 | | $ | 539 | | $ | 22 | | | | | | | | |
The Company's activity in the allowance for credit losses for the period and the Company's recorded investment in financing receivables is as follows: |
| | Three Months Ended June 30, 2014 | | | Six Months Ended June 30, 2014 | | | | | | | | | | | |
| | Net Investment | | Net Financed | | | Net Investment | | Net Financed | | | | | | | | | | | |
| | in Leases | | Sales Receivables | | | in Leases | | Sales Receivables | | | | | | | | | | | |
Allowance for credit losses: | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | $ | 806 | | $ | 488 | | | $ | 806 | | $ | 236 | | | | | | | | | | | |
| Provision | | 159 | | | 5 | | | | 159 | | | 257 | | | | | | | | | | | |
Ending balance | $ | 965 | | $ | 493 | | | $ | 965 | | $ | 493 | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance: individually evaluated for impairment | $ | 965 | | $ | 493 | | | $ | 965 | | $ | 493 | | | | | | | | | | | |
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Financing receivables: | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance: individually evaluated for impairment | $ | 13,701 | | $ | 92,626 | | | $ | 13,701 | | $ | 92,626 | | | | | | | | | | | |
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| | Three Months Ended June 30, 2013 | | | Six Months Ended June 30, 2013 | | | | | | | | | | | |
| | Net Investment | | Net Financed | | | Net Investment | | Net Financed | | | | | | | | | | | |
| | in Leases | | Sales Receivables | | | in Leases | | Sales Receivables | | | | | | | | | | | |
Allowance for credit losses: | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | $ | 1,130 | | $ | 66 | | | $ | 1,130 | | $ | 66 | | | | | | | | | | | |
| Charge-offs | | - | | | - | | | | - | | | - | | | | | | | | | | | |
| Provision | | 100 | | | - | | | | 100 | | | - | | | | | | | | | | | |
Ending balance | $ | 1,230 | | $ | 66 | | | $ | 1,230 | | $ | 66 | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance: individually evaluated for impairment | $ | 1,230 | | $ | 66 | | | $ | 1,230 | | $ | 66 | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Financing receivables: | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance: individually evaluated for impairment | $ | 15,690 | | $ | 85,692 | | | $ | 15,690 | | $ | 85,692 | | | | | | | | | | | |
(d) Foreign Exchange Risk Management |
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The Company is exposed to market risk from changes in foreign currency rates. A majority portion of the Company's revenues is denominated in U.S. dollars while a substantial portion of its costs and expenses is denominated in Canadian dollars. A portion of the net U.S. dollar cash flows of the Company is periodically converted to Canadian dollars to fund Canadian dollar expenses through the spot market. In China and Japan the Company has ongoing operating expenses related to its operations in Chinese Renminbi and Japanese yen, respectively. Net cash flows are converted to and from U.S. dollars through the spot market. The Company also has cash receipts under leases denominated in Chinese Renminbi, Japanese yen, Canadian dollar and Euros which are converted to U.S. dollars through the spot market. The Company's policy is to not use any financial instruments for trading or other speculative purposes. |
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The Company entered into a series of foreign currency forward contracts to manage the Company's risks associated with the volatility of foreign currencies. Certain of these foreign currency forward contracts met the criteria required for hedge accounting under the Derivatives and Hedging Topic of the FASB ASC at inception, and continue to meet hedge effectiveness tests at June 30, 2014 (the “Foreign Currency Hedges”), with settlement dates throughout 2015. Foreign currency derivatives are recognized and measured in the balance sheet at fair value. Changes in the fair value (gains or losses) are recognized in the condensed consolidated statement of operations except for derivatives designated and qualifying as foreign currency hedging instruments. For foreign currency hedging instruments, the effective portion of the gain or loss in a hedge of a forecasted transaction is reported in other comprehensive income and reclassified to the condensed consolidated statement of operations when the forecasted transaction occurs. Any ineffective portion is recognized immediately in the consolidated statement of operations. The Company currently does not hold any derivatives which are not designated as hedging instruments and therefore no gain or loss pertaining to an ineffective portion has been recognized. |
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The following tabular disclosures reflect the impact that derivative instruments and hedging activities have on the Company's condensed consolidated financial statements: |
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Notional value foreign exchange contracts as at: |
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| | June 30, | | December 31, | | | | | | | | | | | | | | | | | | |
| | | 2014 | | | 2013 | | | | | | | | | | | | | | | | | | |
Derivatives designated as hedging instruments: | | | | | | | | | | | | | | | | | | | | | | | |
| Foreign exchange contracts – Forwards | $ | 23,453 | | $ | 23,555 | | | | | | | | | | | | | | | | | | |
Fair value of derivatives in foreign exchange contracts as at: |
| | | June 30, | | December 31, | | | | | | | | | | | | | | | | | |
| | Balance Sheet Location | 2014 | | 2013 | | | | | | | | | | | | | | | | | |
Derivatives designated as hedging instruments: | | | | | | | | | | | | | | | | | | | | | | | |
| Foreign exchange contracts — Forwards | Other assets | $ | 423 | | $ | - | | | | | | | | | | | | | | | | | |
| Foreign exchange contracts — Forwards | Accrued and other liabilities | | -214 | | | -421 | | | | | | | | | | | | | | | | | |
| | | $ | 209 | | $ | -421 | | | | | | | | | | | | | | | | | |
Derivatives in Foreign Currency Hedging relationships are as follows: |
| | | Three Months Ended June 30, | | Six Months Ended June 30, | | | | | | | | | | | |
| | | | 2014 | | | 2013 | | | 2014 | | | 2013 | | | | | | | | | | | |
Foreign exchange contracts - Forwards | Derivative Gain (Loss) Recognized in OCI (Effective Portion) | | $ | 937 | | $ | -498 | | $ | 127 | | $ | -800 | | | | | | | | | | | |
| | | $ | 937 | | $ | -498 | | $ | 127 | | $ | -800 | | | | | | | | | | | |
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| Location of Derivative | | | | | | | | | | | | | | | | | | | | | | | |
| (Loss) Gain Reclassified | | | | | | | | | | | | | | | | | | | | | | | |
| from AOCI into Income | | Three Months Ended June 30, | | Six Months Ended June 30, | | | | | | | | | | | |
| (Effective Portion) | | | 2014 | | | 2013 | | | 2014 | | | 2013 | | | | | | | | | | | |
Foreign exchange contracts - Forwards | Selling, general and administrative expenses | | $ | -256 | | $ | -82 | | $ | -504 | | $ | 48 | | | | | | | | | | | |
| | | $ | -256 | | $ | -82 | | $ | -504 | | $ | 48 | | | | | | | | | | | |
(e) Investments in New Business Ventures |
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The Company accounts for investments in new business ventures using the guidance of the FASB ASC 323 or FASB ASC 320, as appropriate. As at June 30, 2014, the equity method of accounting is being utilized for investments with a total carrying value of $1.2 million (December 31, 2013 — $0.4 million). In 2013, the Company contributed $1.4 million, net of its share of costs, to a new business venture in the early-stage of start-up. In the first quarter of 2014, this new business venture was operational. For the three months ended June 30, 2014, gross revenues, cost of revenue and net loss for these investments were $1.4 million, $0.8 million and $0.2 million, respectively (2013 — $0.8 million, $3.2 million and $4.3 million, respectively). For the six months ended June 30, 2014, gross revenues, cost of revenue and net loss for these investments were $2.3 million, $1.7 million and $1.0 million, respectively (2013 — $4.2 million, $6.9 million and $6.5 million, respectively). The difference between the Company's investment balance and the amount of underlying equity in net assets owned by the Company amounts to $0.3 million and relates to goodwill. The Company has determined it is not the primary beneficiary of these VIEs, and therefore these entities have not been consolidated. In addition, the Company has an investment in preferred stock of another business venture of $1.5 million which meets the criteria for classification as a debt security under the FASB ASC 320 and is recorded at its fair value of $0.7 million at June 30, 2014 (December 31, 2013 — $1.0 million). In the three and six months ended June 30, 2014, the Company recognized an other-than-temporary impairment of $0.7 million, respectively, for its investment, of which $0.4 million was recognized out of other comprehensive income and $0.3 million as a direct impairment in the condensed consolidated statement of operations. This investment is classified as an available-for-sale investment. The Company has invested $2.5 million in the preferred shares of an enterprise which meet the criteria for classification as an equity security under FASB ASC 325 and accrued $0.5 million pertaining to warrants related to the respective investment (December 31, 2013 – investment of $2.5 million and $0.5 million pertaining to warrants). There has been no change in the value of this investment. The total carrying value of investments in new business ventures at June 30, 2014 is $4.9 million (December 31, 2013 — $5.8 million) and is recorded in Other Assets. |
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