Shaw 2009 Annual Report Download - page 37

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During October, 2009 the Company issued $1.25 billion of senior notes at a rate of
5.65% due 2019. The net proceeds (after issuance at a discount of $4.0 million and
underwriting expenses) of approximately $1.24 billion were used to fund the early
redemption of the US senior notes detailed above. In conjunction with the redemption
of the US senior notes, the Company unwound and settled a portion of the principal
component of two of the associated cross-currency interest rate swaps. The Company
simultaneously entered into offsetting currency swap transactions for the outstanding
notional principal amounts under all the remaining cross-currency interest rate swap
agreements.
In addition, some of the Company’s capital expenditures are incurred in US dollars,
while its revenue is primarily denominated in Canadian dollars. Decreases in the value
of the Canadian dollar relative to the US dollar could have a material adverse effect on
the Company’s cash flows. To mitigate some of the uncertainty in respect to capital
expenditures, the Company regularly enters into forward contracts in respect of US
dollar commitments.With respect to 2009, the Company entered into forward
contracts to purchase US $46.0 million over a period of 12 months commencing
in September 2008 at an average exchange rate of 1.1507 Cdn. In addition, the
Company had in place long term forward contracts to purchase US $12.3 million
during 2009 at an average rate 1.4078. At August 31, 2009, the Company has
forward contracts to purchase US $84.0 million over a period of 12 months
commencing in September 2009 at an average exchange rate of 1.1089 Cdn. In
addition, the Company has in place long term forward contracts to purchase US
$7.0 million during 2010 at an average rate 1.4078.
Further information concerning the policy and use of derivative financial instruments
is contained in Note 1 to the Consolidated Financial Statements.
(c) Capital markets: The Company requires ongoing access to capital markets to support
its operations. Changes in capital market conditions, including significant changes in
market interest rates or lending practices, may have a material adverse effect on the
Company’s ability to raise or refinance short-term or long-term debt, and thus on its
financial position and ability to operate.
(d) Economic conditions: During 2009 Canada’s economic growth trended downward
reflecting the uncertainty in global financial and equity markets and the slowdown in
global economic growth. While the Company believes the Western Canadian market
will remain relatively stable and has assumed no significant deterioration in economic
conditions, there can be no assurance that these events or any future events caused by
volatility in world financial and equity markets or a decline in economic growth will not
have an adverse effect on the Company’s business and operating results.
iii) Contingencies
The Company and its subsidiaries are involved in litigation matters arising in the ordinary course
and conduct of its business. Although such proceedings cannot be predicted with certainty,
management does not expect that the outcome of these matters will have a material adverse
effect on the corporation.
33
Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2009