Shaw 2010 Annual Report Download - page 113

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The following table presents the gains and losses, excluding tax effects, on derivatives designated
as cash flow hedges to manage currency risks for 2009.
$ Location $ Location $
Gain (loss)
recognized in other
comprehensive income
(effective portion)
Gain (loss) reclassified
from other comprehensive
income into
income (effective portion)
Gain (loss) reclassified from
other comprehensive
income into
income (ineffective portion)
Cross-currency
interest rate
exchange
agreements 24,799 Other gains 31,845 Other gains –
Interest expense (26,313) Loss on financial
instruments –
US currency
forward
purchase
contracts 15,278 Equipment costs 11,795 Other gains –
40,077 17,327 –
The Company’s estimate of the net amount of existing gains or losses arising from the unrealized fair
value of derivatives designated as cash flow hedges which are reported in accumulated other
comprehensive income and would be reclassified to net income in the next twelve months,
excluding tax effects, is a gain of $10,002 for foreign exchange forwards based on contractual
maturities.
The following table presents gains and losses, excluding tax effects, arising from derivatives that
were not designated as hedges.
Location
2010
$
2009
$
Gain (loss)
recognized in
income
Cross-currency interest rate exchange agreements Loss on financial
instruments 4,958 –
US currency forward purchase contracts Other gains –(78)
Risk management
The Company is exposed to various market risks including currency risk and interest rate risk, as
well as credit risk and liquidity risk associated with financial assets and liabilities. The Company
has designed and implemented various risk management strategies, discussed further below, to
ensure the exposure to these risks is consistent with its risk tolerance and business objectives.
Currency risk
As the Company has grown it has accessed US capital markets for a portion of its borrowings. Since
the Company’s revenues and assets are primarily denominated in Canadian dollars, it faced
significant potential foreign exchange risks in respect of the servicing of the interest and principal
109
Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2010, 2009 and 2008
[all amounts in thousands of Canadian dollars except share and per share amounts]