Shaw 2012 Annual Report Download - page 120

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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]
The carrying values and estimated fair values of long-term debt, other liabilities and derivative
financial instruments are as follows:
August 31, 2012 August 31, 2011 September 1, 2010
Carrying
value
Estimated
fair value
Carrying
value
Estimated
fair value
Carrying
value
Estimated
fair value
$$$$$$
Assets
Derivative financial instruments –
Cross-currency interest rate
exchange agreements(1) ––– – 57 57
US currency forward purchase
contracts(1) ––2 2 10 10
––2 2 67 67
Liabilities
Other current/non-current liability ––161 162 159 160
Long-term debt 5,263 5,753 5,257 5,542 3,983 4,353
Derivative financial instruments –
US currency forward purchase
contracts(1) 11––––
Cross-currency interest rate
exchange agreements(1) ––8 8 87 87
5,264 5,754 5,426 5,712 4,229 4,600
(1) Level 2 fair value – determined by valuation techniques using inputs based on observable
market data, either directly or indirectly, other than quoted prices.
Derivative financial instruments held at August 31, 2012 have maturity dates throughout fiscal
2013.
As at August 31, 2012 and 2011 and September 1, 2010, US currency forward purchase
contracts qualified as hedging instruments and were designated as cash flow hedges. The cross-
currency interest rate exchange agreements did not qualify as hedging instruments as the
underlying hedged US denominated debt was repaid during 2010.
Upon redemption of US $300 7.2% senior notes in 2010, the Company entered into amended
agreements with the counterparties of the cross-currency agreements to fix the settlement of
the principal liability on December 15, 2011 at $162. At August 31, 2011, the carrying
amount of the liability was $161 (September 1, 2010 – $159).
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.
116