Page 58 - SIGA Annual Report 2014

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NOTES TO
THE FINANCIAL
STATEMENTS
YEAR ENDED
MARCH 31, 2014
58
20. FINANCIAL RISK MANAGEMENT (CONTINUED)
Credit Risk
SIGA’s principal financial assets are cash and cash equivalents, short-term investments, and accounts receivable, which are subject
to credit risk. The carrying amounts of financial assets on the statement of financial position represent SIGA’s maximum credit
exposure at the statement of financial position date.
SIGA does not extend credit to its gaming customers. Credit risk is limited to its accounts receivable balance which consists
primarily of credit extended to business entities for business functions held at the various casino locations. The credit risk on cash
and cash equivalents and short-term investments is limited because the counterparties are chartered banks with high credit-ratings
assigned by national credit-rating agencies. Credit risk is not considered significant.
The following reflects an aging summary of SIGA’s trade accounts receivable balances:
March 31, 2014
March 31, 2013
Current
$ 1,409,129
$ 4,264,720
30-59 days
80,526
5,153
60-89 days
90 days and greater
36,238
37,158
1,525,893
4,307,031
Allowance for doubtful accounts
$ 1,525,893
$ 4,307,031
The allowance for doubtful accounts is reviewed quarterly based on an estimate of outstanding amounts that are considered
uncollectible. Historically, SIGA has not written-off a significant portion of its trade accounts receivable balances.
Interest Rate Risk
Interest rate risk is the risk of financial loss resulting from changes in market interest rates. In order to manage its interest rate
risk exposure, SIGA entered into separate interest rate swap arrangements for the Dakota Dunes, Living Sky and Painted Hand
construction projects on December 12, 2007. SIGA entered a separate interest rate swap arrangement for Dakota Dunes on
March 22, 2013. These arrangements fixed the interest rates for the loan for each construction project at 4.94%, 5.09%, 5.09%
and 2.08% respectively over the term of the loans.
At March 31, 2014, if interest rates at that date had been 100 basis points lower with all other variables held constant, total
comprehensive income for the year before distribution to SLGA would have been $2,661,599 (2013 – $2,384,661) lower, arising
mainly as a result of higher unrealized losses on interest rate swaps, partially offset by lower interest expense on variable
borrowings. If interest rates had been 100 basis points higher, with all other variables held constant, total comprehensive
income for the year before distribution to SLGA would have been $2,443,630 (2013 – $2,384,661) higher, arising mainly
as a result of lower unrealized losses on interest rate swaps, partially offset by higher interest expense on variable borrowings.
Foreign Exchange Risk
SIGA faces exposure to the U.S./Canadian dollar exchange rate through the purchase of goods and services payable in U.S. dollars.
The risk is not considered significant.