Shaw 2015 Annual Report Download - page 103

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Shaw Communications Inc.
Notes to the Consolidated Financial Statements
August 31, 2015 and 2014
[all amounts in millions of canadian dollars except share and per share amounts]
(iii) Long-term debt
The carrying value of long-term debt is at amortized cost based on the initial fair value as determined at the time of
issuance or at the time of a business acquisition. The fair value of publicly traded notes is based upon current trading
values. The fair value of finance lease obligations is determined by discounting future cash flows using a rate for loans
with similar terms, conditions and maturity dates. The carrying value of bank credit facilities approximates fair value as
the debt bears interest at rates that fluctuate with market rates. Other notes and debentures are valued based upon
current trading values for similar instruments.
(vi) Other long-term liabilities
The fair value of program rights payable, estimated by discounting future cash flows, approximates their carrying value.
The fair value of contingent consideration arising from a business acquisition is determined by calculating the present
value of the probability weighted assessment of the likelihood that revenue targets will be met and the estimated timing
of such payments.
(v) Derivative financial instruments
The fair value of US currency forward purchase contracts is determined using an estimated credit-adjusted mark-to-
market valuation using observable forward exchange rates at the end of reporting periods and contract forward rates.
The carrying values and estimated fair values of an investment in a publicly traded company, long-term debt and a
contingent liability are as follows:
August 31, 2015 August 31, 2014
Carrying
value
$
Estimated
fair value
$
Carrying
value
$
Estimated
fair value
$
Assets
Investment in publicly traded company(1) 4477
Liabilities
Long-term debt (including current portion)(2) 5,669 6,307 4,690 5,390
Contingent liability(3) 22––
(1) Level 1 fair value – determined by quoted market prices.
(2) Level 2 fair value – determined by valuation techniques using inputs based on observable market data, either directly or
indirectly, other than quoted prices.
(3) Level 3 fair value – determined by valuation techniques using inputs that are not based on observable market data.
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.
Market risk
Market risk is the risk that the fair value or cash flows of a financial instrument will fluctuate as a result of changes in market
prices, including foreign exchange and interest rates, the Company’s share price and market price of publicly traded
investments.
2015 Annual Report Shaw Communications Inc. 101