Shaw 2010 Annual Report Download - page 115

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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, 2010, the Company had accounts
receivable of $196,415 (2009 – $194,483), net of the allowance for doubtful accounts of $18,969
(2009 – $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, 2010, $79,434 (2009 – $77,256) of
accounts receivable is considered to be past due, defined as amounts outstanding past normal credit
terms and conditions. Uncollectible accounts receivable are charged against the allowance account
based on the age of the account and payment history. 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 mitigates the credit risk of holding short-term securities by investing funds in
Government of Canada treasury bills and bonds.
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.
Liquidity risk
Liquidity risk is the risk that the Company will experience difficulty in meeting obligations
associated with financial liabilities. The Company manages its liquidity risk by monitoring cash
flow generated from operations, available borrowing capacity, and by managing the maturity profiles
of its long-term debt.
The Company’s undiscounted contractual maturities as at August 31, 2010 are as follows:
Trade and
other
payables
(1)
$
Other long
term liability
$
Long-term debt
repayable at
maturity
$
Derivative
instruments
(2)
$
Interest
payments
$
Within one year 623,070 – 576 23,183 249,744
1 to 3 years – 162,150 451,265 6,626 485,650
3 to 5 years – – 951,432 – 365,278
Over 5 years – – 2,617,760 – 1,456,800
623,070 162,150 4,021,033 29,809 2,557,472
(1) Includes trade payables and accrued liabilities.
(2) The estimated net cash outflow for derivative instruments is based on the US dollar foreign exchange
rate as at August 31, 2010.
111
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]