2004 Crown Investments Corporation of Saskatchewan Annual Report

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Notes to Consolidated Financial StatementsDecember 31, 20041. Summary of Significant Accounting Policies (continued)s) Derivative financial instruments (continued)Effective January 1, 2004, the Corporation commenced application of the new Canadian Institute ofChartered Accountants Accounting Guideline 13. The guideline requires identification, designation,documentation and effectiveness of hedging relationships be established at the inception of eachhedge in order to apply hedge accounting. Hedge accounting is used when there is a high degree ofcorrelation between price movements in the derivative financial instrument and the item designated asbeing hedged. Gains and losses are recognized in the same period as the hedged item is settled and arerecorded in the statement of earnings and retained earnings. If correlation ceases, hedge accountingis terminated and future changes in the market value of the derivative instruments are recognized asgains or losses in the period of change. For those derivative instruments that existed at January 1, 2004,there was no material impact on these financial statements as a result of the adoption of AccountingGuideline 13.t) Employee future benefitsThe Corporation has three defined benefit pension plans and a defined contribution pension planthat provides retirement benefits for its employees. For its defined benefit plans, the Corporation hasadopted the following policies:i) For the purpose of calculating the expected return on plan assets, those assets are valued at marketvalue, which approximates fair value.ii) Pension obligations are determined by an independent actuary using the projected benefit methodprorated on service and management’s best estimate assumptions of expected plan investmentperformance, salary escalation, age at retirement, mortality of members and future pensionindexing, based upon the consumer price index.iii) The discount rate used to determine the accrued benefit obligation was determined by referenceto market interest rates at the measurement date of high-quality debt instruments with cash flowsthat match the timing and amount of expected benefit payments.iv) Past service costs from plan amendments and the transitional asset are amortized on a straight-linebasis over a period of time which is a blending of the expected average remaining service lifetimeof the active members and the future life expectancy of the pensioners.v) The excess of the net actuarial gain (loss) over 10 per cent of the greater of the accrued benefitobligation and the fair value of the plan assets is amortized over a period of time which is blendingof the expected average remaining service lifetime of the active members and the future lifeexpectancy of the pensioners.vi) When the restructuring of a benefit plan results in both a settlement and a curtailment ofobligations, the curtailment is accounted for prior to the settlement.The Corporation also provides a defined benefit service recognition plan for management employees.The cost of the plan is determined using the projected benefit method prorated on service.u) Use of estimatesThe preparation of financial statements in conformity with Canadian generally accepted accountingprinciples requires management to make estimates and assumptions that affect the reported amountsof assets and liabilities and disclosure of contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during the reporting period.72
Notes to Consolidated Financial StatementsDecember 31, 20041. Summary of Significant Accounting Policies (continued)u) Use of estimates (continued)Significant items subject to estimates and assumptions include the carrying amounts of property, plantand equipment and underlying estimations of useful lives of depreciable assets and capitalization oflabour and overhead, provision for unpaid insurance claims, the carrying amount of goodwill, customeraccounts and future income taxes and underlying estimates of future cash flow, the carrying amountsof accounts receivable and underlying provision for bad debts and the carrying amounts of deferredpension costs and underlying actuarial assumptions. The inherent uncertainty involved in making suchestimates and assumptions may impact the actual results reported in future periods.2. Status of Crown Investments Corporation of SaskatchewanCrown Investments Corporation of Saskatchewan was established by Order in Council 535/47 datedApril 2, 1947, and is continued under the provisions of The Crown Corporations Act, 1993. The Corporation isan agent of Her Majesty in Right of the Province of Saskatchewan and as a Provincial Crown corporation isnot subject to Federal and Provincial income taxes. Certain jointly controlled enterprises are not ProvincialCrown corporations and are subject to Federal and Provincial income taxes.3. Prior Period Adjustment(thousands of dollars)During the year, the Corporation adjusted amounts previously reported for accounts receivable andproperty, plant and equipment. The corrections were accounted for retroactively with restatement of allprior periods reported. The effect of the corrections to the financial statements as atDecember 31, 2003 is as follows:Operating revenuesDepreciation and amortizationRetained earningsAccounts receivableProperty, plant and equipmentItems not affecting cash from operationsNon-cash working capital balance$(766)1,263(1,933)(1,909)(2,053)1,263(766)4. Short-Term InvestmentsShort-term investments consist of funds invested at an effective average interest rate of 2.44 per cent(2003 - 2.93 per cent).5. Inventories(thousands of dollars)2004 2003Raw materialsWork-in-progressFinished goods$39,0982,730138,239$34,8261,055129,384$180,067$165,26573
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2004 Financial HighlightsCrown Sect
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Table Of Contents2004 HighlightsLet
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Chair’s MessageSaskatchewan’s C
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Corporate ProfileCIC is the financi
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Corporate ProfileCIC ManagementThe
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Corporate ProfileFinancial and Publ
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Corporate ProfileCIC’s Holdings20
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Corporate ProfileSASKATCHEWAN GOVER
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Corporate ProfileSaskatchewan Telec
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Policy and ProgramsUtility Bundle C
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Policy and ProgramsCommitment to Gr
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Page 30: GovernanceFor the purposes of this
Page 33 and 34: Strategic Direction and Performance
Page 41 and 42: Management’s Discussion and Analy
Page 43 and 44: MANAGEMENT’S DISCUSSION AND ANALY
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Page 68 and 69: Consolidated Statement of Financial
Page 70 and 71: Consolidated Statement of Cash Flow
Page 72 and 73: Notes to Consolidated Financial Sta
Page 96: Notes to Consolidated Financial Sta
Page 99 and 100: Non-Consolidated Statement of Finan
Page 101 and 102: Non-Consolidated Statement of Cash
Page 103 and 104: Notes to Non-Consolidated Financial
Page 105 and 106: Notes to Non-Consolidated Financial
Page 107: Notes to Non-Consolidated Financial
Page 110: Pat AtkinsonMinisterPrinted in Sask
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2004 Crown Investments Corporation of Saskatchewan Annual Report

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