Telus 2010 Annual Report Download - page 76

72 . TELUS 2010 annual report
Commitments and contingent liabilities
Contractual obligations
The Company’s known contractual obligations at December 31, 2010, are quantified in the following table. Interest obligations are included in long-term
debt maturities. See Capabilities – Section 4.3 Liquidity and capital resources for a chart of long-term debt principal maturities through 2025.
Long-term debt maturities(1)
All except Operating Purchase Other long-term
($ millions) capital leases Capital leases leases(2) obligations(3) obligations(4)(5) To t a l
2 011 1,488 8 285 1,291 19 3,091
2012 701 – 253 833 42 1,829
2013 583 – 235 360 31 1,209
2014 958 – 214 102 21 1,295
2015 851 – 200 92 22 1,165
Thereafter 4,266 – 1,146 526 185 6,123
To t a l 8,847 8 2,333 3,204 320 14,712
(1) Where applicable, debt maturities reflect hedged foreign exchange rates as at December 31, 2010. Interest payment cash outflows in respect of commercial paper have been
calculated based on rates in effect as at December 31, 2010.
(2) Of the total minimum operating lease payments of $2,333 million, $2,291 million was in respect of land and buildings; approximately 57% was in respect of the Company’s
five largest operating leases, all of which were for office premises over various terms, with expiry dates that range between 2016 and 2026. See Note 20(a) of the Consolidated
financial statements for further details on operating leases.
(3) Where applicable, purchase obligations reflect foreign exchange rates as at the current year-end, December 31, 2010. Purchase obligations include future operating and capital
expenditures that have been contracted for as at the current year-end and include the most likely estimates of prices and volumes, where necessary. As purchase obligations
reflect market conditions at the time the obligation was incurred for the items being purchased, they may not be representative of future years. Obligations from personnel supply
contracts and other such labour agreements have been excluded.
(4) Items that do not result in a future outlay of economic resources, such as deferred gains on sale-leasebacks of buildings and deferred customer activation and connection fees,
have been excluded.
(5) Uncertain income tax positions that could result in current income taxes being payable have been, or will be, substantially funded over the next 12 months.
Guarantees (Note 20(c) of the Consolidated financial statements)
Canadian GAAP requires the disclosure of certain types of guarantees
and their maximum, undiscounted amounts. As at December 31, 2010,
the Company’s maximum undiscounted guarantee amounts, without
regard for the likelihood of having to make such payment, were
not material.
In the normal course of operations, the Company may provide
indemnification in conjunction with certain transactions. Other than
obligations recorded as liabilities at the time of the transaction,
historically the Company has not made significant payments under
these indemnifications.
In connection with its 2001 disposition of TELUS’ directory business,
the Company agreed to bear a proportionate share of the new owner’s
increased directory publication costs if the increased costs were to
arise from a change in the applicable CRTC regulatory requirements.
The Company’s proportionate share is 40% through May 2011 and
then 15% in the final five years, ending May 2016. As well, should the
CRTC take any action that would result in the owner being prevented
from carrying on the directory business as specified in the agreement,
TELUS would indemnify the owner in respect of any losses that the
owner incurred. As at December 31, 2010, the Company has no liability
recorded in respect of indemnification obligations.
Claims and lawsuits
A number of claims and lawsuits (including class actions) seeking
damages and other relief are pending against the Company. As well,
the Company has received or is aware of certain potential claims
(including intellectual property infringement claims) against the Company
and, in some cases, numerous other wireless carriers and telecommu-
nications service providers. In some instances, the matters are at a
preliminary stage and the potential for liability and magnitude of potential
loss cannot be readily determined currently. It is impossible at this
time for the Company to predict with any certainty the outcome of any
such claims, potential claims and lawsuits. However, subject to the
foregoing limitations, management is of the opinion, based upon legal
assessment and information presently available, that it is unlikely that
any liability, to the extent not provided for through insurance or otherwise,
would be material in relation to the Company’s consolidated financial
position, excepting the items disclosed in Note 20(d) of the Consolidated
financial statements and Section 10.9 Litigation and legal matters.
7.9 Outstanding share information
The total number of outstanding and issuable shares in the following
table assumes full conversion of outstanding options and shares
reserved for future option grants, at January 31, 2011.
Outstanding shares
Common Non-Voting To t a l
(millions) Shares Shares shares
Common equity
Outstanding shares at
December 31, 2010 174.9 147.5 322.4(1)
Outstanding shares at
January 31, 2011 174.9 148.9 323.8
Options outstanding and
issuable(2) at January 31, 2011 – 29.2 29.2
Outstanding and issuable
shares at January 31, 2011 174.9 178.1 353.0
(1) For the purposes of calculating diluted earnings per share, the number of shares
was 321.0 million in 2010.
(2) Assuming full conversion and ignoring exercise prices.
Outstanding shares at January 31, 2011, include an increase of approxi-
mately 1.25 million TELUS Non-Voting Shares issued from treasury
under the DRISP for the dividend paid on January 4, 2011. The DRISP
participation rate was approximately 32% for the January 4 dividend.
TELUS will discontinue the current practice of the issuance of shares
from treasury at a 3% discount for reinvesting dividends, and will
commence purchases on the open market without discount, effective
March 1, 2011. (See Section 4.3.)