Shaw 2009 Annual Report Download - page 29

Download and view the complete annual report

Please find page 29 of the 2009 Shaw annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 113

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113

March 1, 2009 and the fair value of the reporting units continued to exceed their carrying value by a
significant amount. A hypothetical decline of 10% and 20% in the fair value of the broadcast rights for
each reporting unit as at March 1, 2009 would not result in any impairment loss. Further, any changes
in economic conditions since the impairment testing conducted as at March 1, 2009 do not represent
events or changes in circumstance that would be indicative of impairment at August 31, 2009.
Significant estimates inherent to this analysis include discount rates and the terminal value. The
estimates that have been utilized in the impairment tests reflect any changes in market conditions
and are as follows:
March
2009
December
2008
March
2009
December
2008
March
2009
December
2008
Discount Rate Terminal Growth Rate
Terminal Service
Operating Income
before Amortization
Multiple
Terminal Value
Cable systems 9.0% 8.5% 2.5% 2.75% 6.0x 7.5x
DTH and satellite services 10.5% 10.0% 2.0% 2.5% 5.5x 6.0x
A sensitivity analysis of significant estimates is conducted as part of every impairment test. With
respect to the impairment tests performed in the third quarter, in the Cable reporting unit an
increase in the discount rate of 1% would cause the fair value to decline by less than 13%, a 1%
decrease in the terminal growth rate would cause the fair value to decline by less than 7%, and a 0.5
times reduction in the terminal service operating income before amortization multiple would cause
the fair value to decline by less than 2%. With respect to the DTH and Satellite services reporting
unit, an increase in the discount rate of 1% would cause the fair value to decline by less than 10%, a
1% decrease in the terminal growth rate would cause the fair value to decline by less than 4%, and a
0.5 times reduction in the terminal service operating income before amortization multiple would
cause the fair value to decline by less than 2%.
2009
$
2008
$
Carrying amount
Broadcast rights
Cable systems 3,833,021 3,792,946
DTH and satellite services 983,132 983,132
4,816,153 4,776,078
Goodwill – non-regulated satellite services 88,111 88,111
Net book value 4,904,264 4,864,189
viii) Employment benefit plans
Shaw has a defined benefit pension plan for key senior executives. The amounts reported in the
financial statements relating to the defined benefit pension plan are determined using actuarial
valuations that are based on several assumptions. The valuation uses management’s assumptions for
the discount rate, rate of compensation increase, and expected average remaining years of service of
employees. While the Company believes these assumptions are reasonable, differences in actual
results or changes in assumptions could affect employee benefit obligations and the related income
statement impact. The Company accounts for differences between actual and assumed results by
recognizing differences in benefit obligations and plan performance over the working lives of the
employees who benefit from the plan. The most significant assumption used to calculate the net
25
Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2009