Shaw 2015 Annual Report Download - page 95

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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]
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, 2015, 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
2016.
26. EMPLOYEE BENEFIT PLANS
Defined contribution pension plans
The Company has defined contribution pension plans for its non-union employees 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.
For union employees, the Company contributes amounts up to 9.8% of earnings to the individuals’ registered retirement savings
plans. Total pension costs in respect of these plans were $38 (2014 – $37) of which $26 (2014 – $24) was expensed and the
remainder capitalized.
Defined benefit pension plans
The Company has two non-registered retirement plans for designated executives and senior executives and several registered
pension plans for certain employees in the media business. The following is a summary of the accrued benefit liabilities
recognized in the statement of financial position.
2015
$
2014
$
Unregistered plans
Accrued benefit obligation 509 493
Fair value of plan assets 391 330
118 163
Registered plans
Accrued benefit obligation 173 171
Fair value of plan assets 172 160
111
Accrued benefit liabilities and deficit 119 174
The plans expose the Company to a number of risks, of which the most significant are as follows:
(i) Volatility in market conditions: The accrued benefit obligations are calculated using discount rates with reference to bond
yields closely matching the term of the estimated cash flows while many of the assets are invested in other types of
assets. If plan assets underperform these yields, this will result in a deficit. Changing market conditions in conjunction
with discount rate volatility will result in volatility of the accrued benefit liabilities. To minimize some of the investment
risk, the Company has established long-term funding targets where the time horizon and risk tolerance are specified.
(ii) Selection of accounting assumptions: The calculation of the accrued benefit obligations involves projecting future cash
flows of the plans over a long time frame. This means that assumptions used can have a material impact on the
statements of financial position and comprehensive income because in practice, future experience of the plans may not
be in line with the selected assumptions.
2015 Annual Report Shaw Communications Inc. 93