Telus 2011 Annual Report Download - page 126

122 . TELUS 2011 ANNUAL REPORT
all considered when determining whether past-due accounts should be
allowed for; the same factors are considered when determining whether
to write off amounts charged to the allowance account against the cus-
tomer account receivable. The doubtful accounts expense is calculated
on a specific-identification basis for customer accounts receivable over
a specific balance threshold and on a statistically derived allowance
basis for the remainder. No customer accounts receivable are written
off directly to the doubtful accounts expense.
The following table presents a summary of the activity related to the
Company’s allowance for doubtful accounts.
Years ended December 31 (millions) 2 0 11 2010
Balance, beginning of period $ß41 $ß59
Additions (doubtful accounts expense) 43 49
Net use (48) (67)
Balance, end of period $ß36 $ß41
Derivative assets (and derivative liabilities)
Counterparties to the Company’s share-based compensation cash-
settled equity forward agreements and foreign exchange derivatives are
major financial institutions that have all been accorded investment grade
ratings by a primary rating agency (the counterparties to the Company’s
cross currency interest rate swap agreements that matured in fiscal
2011 were also major financial institutions that had all been accorded
invest ment grade ratings by a primary rating agency). The dollar amount
of credit exposure under contracts with any one financial institution is
limited and counterparties’ credit ratings are monitored. The Company
does not give or receive collateral on swap agreements and hedging
items due to its credit rating and those of its counterparties. While the
Company is exposed to credit losses due to the non-performance
of its counter parties, the Company considers the risk of this remote.
The Company’s derivative liabilities do not have credit risk-related
contingent features.
(c) Liquidity risk
As a component of the Company’s capital structure financial policies,
discussed further in Note 3, the Company manages liquidity risk by:
.maintaining a daily cash pooling process that enables the Company
to manage its liquidity surplus and liquidity requirements according to
the actual needs of the Company and its subsidiaries;
.maintaining bilateral bank facilities (Note 18) and syndicated credit
facilities (Note 20(d));
.the sales of trade receivables to an arm’s-length securitization trust;
.maintaining a commercial paper program;
.continuously monitoring forecast and actual cash flows; and
.managing maturity profiles of financial assets and financial liabilities.
As disclosed in Note 20(g), the Company has significant debt
maturities in future years. As at December 31, 2011, the Company
has access to a shelf prospectus, in effect until November 2013,
pursuant to which it can offer $2.5 billion (December 31, 2010 –
access to a shelf prospectus, in effect until October 2011, pursuant to
which it can offer $2.0 billion; January 1, 2010 – access to a shelf
prospectus, in effect until October 2011, pursuant to which it can offer
$3.0 billion) of debt or equity securities. The Company believes that
its investment grade credit ratings contribute to reasonable access
to capital markets.
The Company closely matches the derivative financial liability
contractual maturities with those of the risk exposures they are being
used to manage.
The Company’s undiscounted financial liability expected maturities do not differ significantly from the contractual maturities. The Company’s
undiscounted financial liability contractual maturities, including interest thereon (where applicable), are as set out in the following tables:
Non-derivative(1) Derivative
Non-interest
bearing Currency swaps amounts
financial Short-term Long-term debt to be exchanged
As at December 31, 2011 (millions) liabilities borrowings(2) (Note 20) (Receive) Pay Total
2012
First quarter $ 804 $ß 6 $ß1,111 $ß (77) $ß 75 $ß 1,919
Balance of year 513 5 276 (91) 89 792
2013 18 7 605 – – 630
2014 – 405 980 – – 1,385
2015 – – 873 – – 873
2016 – – 807 – – 807
Thereafter – – 4,070 – – 4,070
Total $ß1,335 $ß423 $ß8,722 $ß(168) $ß164 $ß10,476
(1) Subsequent to December 31, 2011, the Company entered into a loan commitment (that is subject to final documentation) in respect of a real estate joint venture, as discussed further
in Note 17(b); that commitment has not been included in this table.
(2) Interest payment cash outflows in respect of short-term borrowings, commercial paper and amounts drawn under the Company’s credit facilities (if any) have been calculated based
upon the rates in effect as at December 31, 2011.