|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Years ended December 31, 2005 and 2004 (in thousands of dollars, except per share amounts)
4. DERIVATIVE FINANCIAL INSTRUMENTS:
TSX Inc. has entered into total return swaps which synthetically replicate the economics of TSX Inc. purchasing the Company's shares as a partial hedge to the share appreciation rights of restricted share units and deferred share units that are awarded to directors and employees of the Company and its affiliates. TSX Inc. has purchased derivative financial instruments to effectively hedge against the impact of its share price fluctuations on the non-performance based portion of the long-term incentive plan.
The counterparty creates a hedge and delivers the cash proceeds net of borrowing costs to TSX Inc. at maturity. TSX Inc. has pledged assets with a market value of $NIL (2004 - $11,934) at December 31, 2005 in a collateral account at The Canadian Depository for Securities Limited but retains beneficial ownership.
As at December 31, 2005:
|
|
|
Remaining term to maturity (notional amount)
|
Fair value
|
|
|
|
Under 1 year
|
1 to 3 years
|
Total
|
Gain
|
Loss
|
Net
|
|
| Equity Swap Contract #3 |
$ 711
|
$ –
|
$ 711
|
$ 601
|
$ –
|
$ 601
|
| Equity Swap Contract #4 |
772
|
–
|
772
|
652
|
–
|
652
|
| Equity Swap Contract #5 |
–
|
695
|
695
|
409
|
–
|
409
|
| Equity Swap Contract #6 |
935
|
–
|
935
|
471
|
–
|
471
|
| Equity Swap Contract #7 |
–
|
12,388
|
12,388
|
430
|
–
|
430
|
|
|
$ 2,418
|
$ 13,083
|
$ 15,501
|
$ 2,563
|
$ –
|
$ 2,563
|
|
As at December 31, 2004:
|
|
|
Remaining term to maturity (notional amount)
|
Fair value
|
|
|
|
Under 1 year
|
1 to 3 years
|
Total
|
Gain
|
Loss
|
Net
|
|
| Equity Swap Contract #2 |
$ 10,174
|
$ –
|
$ 10,174
|
$ 3,291
|
$ –
|
$ 3,291
|
| Equity Swap Contract #3 |
711
|
–
|
711
|
33
|
–
|
33
|
| Equity Swap Contract #4 |
–
|
772
|
772
|
36
|
–
|
36
|
|
|
|
$ 10,885
|
$ 772
|
$ 11,657
|
$ 3,360
|
$ –
|
$ 3,360
|
|
|
