Shaw 2009 Annual Report Download - page 98

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Market risk
Net income and other comprehensive income for 2009 could have varied if the Canadian dollar to
US dollar foreign exchange rates or market interest rates varied by reasonably possible amounts.
The sensitivity to currency risk has been determined based on a hypothetical change in Canadian
dollar to US dollar foreign exchange rates of 10%. The financial instruments impacted by this
hypothetical change include foreign exchange forward contracts and cross-currency interest rate
exchange agreements and would have changed other comprehensive income by $17,092 (net of
tax). A portion of the Company’s accounts receivables and accounts payable and accrued liabilities
is denominated in US dollars; however, due to their short-term nature, there is no significant market
risk arising from fluctuations in foreign exchange rates.
The sensitivity to interest rate risk has been determined based on a hypothetical change of one
percentage or 100 basis points. The financial instruments impacted by this hypothetical change
include foreign exchange forward contracts and cross-currency interest rate exchange agreements
and would have changed other comprehensive income by $5,691 (net of tax). Interest on the
Company’s banking facilities is based on floating rates and there is no significant market risk arising
from fluctuations in interest rates.
Credit risk
Accounts receivable are not subject to any significant concentrations of credit risk due to the
Company’s large and diverse customer base. As at August 31, 2009, the Company had accounts
receivable of $194,483, net of the allowance for doubtful accounts of $17,161. The Company
maintains an allowance for doubtful accounts for the estimated losses resulting from the inability of
its customers to make required payments. In determining the allowance, the Company considers
factors such as the number of days the subscriber account is past due, whether or not the customer
continues to receive service, the Company’s past collection history and changes in business
circumstances. As at August 31, 2009, $77,256 of accounts receivable is considered to be past
due, defined as amounts outstanding past normal credit terms and conditions. The Company
believes that its allowance for doubtful accounts is sufficient to reflect the related credit risk.
The Company also mitigates credit risk through advance billing and procedures to downgrade or
suspend services on accounts that have exceeded agreed credit terms.
The Company has mitigated the credit risk of holding short-term securities by investing funds in a
Government of Canada treasury bill.
Credit risks associated with cross-currency interest rate exchange agreements and US currency
contracts arise from the inability of counterparties to meet the terms of the contracts. In the event of
non-performance by the counterparties, the Company’s accounting loss would be limited to the net
amount that it would be entitled to receive under the contracts and agreements. In order to
minimize the risk of counterparty default under its swap agreements, the Company assesses the
creditworthiness of its swap counterparties. Currently 100% of the total swap portfolio is held by
financial institutions with Standard & Poor’s (or equivalent) ratings ranging from AA- to A-1.
94
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]