Shaw 2011 Annual Report Download - page 134

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Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2011, 2010 and 2009
[all amounts in thousands of Canadian dollars except share and per share amounts]
advertising receivables is due from the ten largest accounts. The largest amount due from an
advertising agency is $20,393 which is approximately 12% of advertising receivables. As at
August 31, 2011, the Company had accounts receivable of $442,817 (2010 – $196,415), net
of the allowance for doubtful accounts of $28,797 (2010 – $18,969). 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, 2011, $121,221 (2010 – $79,434) 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 mitigates the credit risk of advertising receivables by performing initial and
ongoing credit evaluations of advertising customers. Credit is extended and credit limits are
determined based on credit assessment criteria and credit quality. In addition, the Company
mitigates credit risk of subscriber receivables through advance billing and procedures to
downgrade or suspend services on accounts that have exceeded agreed credit terms.
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.
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