Shaw 2009 Annual Report Download - page 92

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Indemnities
Many agreements related to acquisitions and dispositions of business assets include
indemnification provisions where the Company may be required to make payment to a vendor or
purchaser for breach of contractual terms of the agreement with respect to matters such as
litigation, income taxes payable or refundable or other ongoing disputes. The indemnification
period usually covers a period of two to four years. Also, in the normal course of business, the
Company has provided indemnifications in various commercial agreements, customary for the
telecommunications industry, which may require payment by the Company for breach of contractual
terms of the agreement. Counterparties to these agreements provide the Company with comparable
indemnifications. The indemnification period generally covers, at maximum, the period of the
applicable agreement plus the applicable limitations period under law.
The maximum potential amount of future payments that the Company would be required to make
under these indemnification agreements is not reasonably quantifiable as certain indemnifications
are not subject to limitation. However, the Company enters into indemnification agreements only
when an assessment of the business circumstances would indicate that the risk of loss is remote. At
August 31, 2009, management believes it is remote that the indemnification provisions would
require any material cash payment.
The Company indemnifies its directors and officers against any and all claims or losses reasonably
incurred in the performance of their service to the Company to the extent permitted by law.
Irrevocable standby letters of credit and performance bonds
The Company and certain of its subsidiaries have granted irrevocable standby letters of credit and
performance bonds, issued by high rated financial institutions, to third parties to indemnify them in
the event the Company does not perform its contractual obligations. As of August 31, 2009, the
guarantee instruments amounted to $1,032 (2008 – $158,296). The Company has not recorded
any additional liability with respect to these guarantees, as the Company does not expect to make
any payments in excess of what is recorded on the Company’s consolidated financial statements.
The guarantee instruments mature at various dates during fiscal 2010 to 2012.
17. PENSION PLANS
Defined contribution pension plans
The Company has defined contribution pension plans for all non-union employees and contributes
5% of eligible earnings to the maximum amount deductible under the Income Tax Act. For union
employees, the Company contributes amounts up to 7.5% of earnings to the individuals’ registered
retirement savings plans. Total pension costs in respect of these plans for the year were $21,148
(2008 – $17,622; 2007 – $14,486) of which $12,281 (2008 – $10,214; 2007 – $8,586) was
expensed and the remainder capitalized.
Defined benefit pension plan
The Company provides a non-contributory defined benefit pension plan for certain of its senior
executives. Benefits under this plan are based on the employees’ length of service and their highest
three-year average rate of pay during their years of service. Employees are not required to contribute
88
Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2009, 2008 and 2007
[all amounts in thousands of Canadian dollars except share and per share amounts]