Full report - SGI Canada

As at December 31, 2010, the cost of 33 (2009 – 131) available for sale investments exceeded their fair
value by $986,000 (2009 – $4,364,000). The unrealized losses on the bonds and debentures arose
primarily from changes in interest rates. For Canadian and U.S. common shares and pooled funds, the
unrealized losses are primarily the result of investment-specific business environment factors associated
with the underlying equity investments.
The Corporation conducts a quarterly review to identify and evaluate investments that show indications of
impairment. An investment is considered impaired if its fair value falls below its cost, and a write-down is
recorded in investment earnings when the decline is considered other than temporary. Factors considered
in determining whether a loss is temporary include the length of time and extent to which fair value has
been below cost, financial condition and near-term prospects of the issuer, and the ability to hold the
investment for a period of time sufficient to allow for any anticipated recovery. During the year, investment
write-downs of $464,000 (note 11) were recorded related to impairments of Canadian common shares and
non-North American pooled equity funds that were considered other than temporary (2009 – $3,965,000,
Canadian and U.S. common shares and U.S. and non-North American pooled equity funds).
Determination of fair value
Fair value is best evidenced by an independent quoted market price for the same instrument in an active
market. An active market is one where quoted prices are readily available, representing regularly occurring
transactions. The determination of fair value requires judgment and is based on market information where
available and appropriate. Fair value measurements are categorized into levels within a fair value hierarchy
based on the nature of the inputs used in the valuation.
Level 1 – Where quoted prices are readily available from an active market.
Level 2 – Valuation model not using quoted prices, but still using predominantly observable market inputs,
such as market interest rates.
Level 3 – Models using inputs that are not based on observable market data.
2010 2009
Level 1 Level 2 Total Level 1 Level 2 Total
Short-term investments $ 43,011 $ — $ 43,011 $ 18,933 $ — $ 18,933
Bonds and debentures 366,985 — 366,985 393,128 — 393,128
Canadian common shares 74,658 — 74,658 68,330 — 68,330
U.S. common shares 23,094 — 23,094 22,637 — 22,637
Pooled funds:
Canadian equity 18,007 — 18,007 17,287 — 17,287
United States equity 7,413 — 7,413 7,529 — 7,529
Non-North American equity 32,162 — 32,162 26,747 — 26,747
Mortgage — 25,154 25,154 — 23,067 23,067
$ 565,330 $ 25,154 $ 590,484 $ 554,591 $ 23,067 $ 577,658
Preferred shares and investments accounted for on an equity basis are not included in the above fair value
hierarchy table as preferred shares are carried at cost and the investments accounted for on the equity
basis are recorded using the equity method.
6. Property, Plant and Equipment
The components of the Corporation’s investment in property, plant and equipment, as well as the related
accumulated amortization, are as follows:
Cost
Amortization for the year is $1,029,000 (2009 – $604,000) and is included in administrative expenses on
the Consolidated Statement of Operations.
7. Other Assets
Other assets are comprised of the following:
2010 2009
Accumulated
Amortization
(thousands of $)
Net Book
Value
Net Book
Value
Land $ 972 $ — $ 972 $ 972
Building 23,136 16,437 6,699 7,487
Computer hardware
and other equipment 19,515 16,065 3,450 287
Total $ 43,623 $ 32,502 $ 11,121 $ 8,746
2010 2009
(thousands of $)
Accrued pension asset (note 16) $ 1,387 $ 1,464
Prepaid expenses 1,224 1,157
Goodwill 481 481
Net investment in capital lease 142 681
Total $ 3,234 $ 3,783
Net investment in capital lease
The Corporation, as lessor, has a 37% interest in a lease agreement with the Ministry of Government
Services, a related party, for a term of 30 years (expiring April 2011) on property in Prince Albert,
Saskatchewan. The lease transfers substantially all benefits and risks associated with the ownership of
the property to the lessee. The total minimum lease payments receivable under the lease agreement are
$144,000 (2009 – $727,000), payable by April 2011. Unearned income at December 31, 2010, is $2,000
(2009 – $46,000).
The fair value of the net investment in the capital lease is $144,000 (2009 – $744,000). The fair value is
calculated by discounting scheduled cash flows through to the estimated expiration of the lease using
current interest rates.
74 | 2010 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2010 | 75