Shaw 2012 Annual Report Download - page 112

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Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2012 and 2011
[all amounts in millions of Canadian dollars except share and per share amounts]
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, 2012, 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 commercial surety bonds
The Company and certain of its subsidiaries have granted irrevocable standby letters of credit
and commercial surety 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, 2012, the guarantee instruments amounted to $4. 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 2013 and 2014.
26. EMPLOYEE BENEFIT PLANS
Defined contribution pension plans
The Company has defined contribution pension plans for the majority of its non-union and
certain union employees and, for the majority of these employees, contributes 5% of eligible
earnings to the maximum amount deductible under the Income Tax Act. Total pension costs in
respect of these plans for the year were $32 (2011 – $29) of which $20 (2011 – $18) was
expensed and the remainder capitalized.
Defined benefit pension plans
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 eligible pensionable earnings during their years of service. In
2012, the Company closed the plan to new participants and amended the plan to freeze base
salary levels at August 31, 2012 for purposes of determining eligible pensionable earnings.
108