Shaw 2010 Annual Report Download - page 44

Download and view the complete annual report

Please find page 44 of the 2010 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 126

  • 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
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126

successfully depends on a number of factors, including its ability to secure popular television
programs and achieve high distribution levels. The Company expects that competition will continue
to increase and there can be no assurance that increased competition will not have a material
adverse effect on Shaw’s results of operations.
IMPACT OF REGULATION
As more fully discussed under Government regulation and regulatory development, substantially all
of the Corporation’s business activities are subject to regulations and policies administered by
Industry Canada and/or the CRTC. The Corporation’s operations and results can be affected,
possibly adversely, by changes in regulations and decisions in connection with regulations and
policies, including changes in interpretations or the language of existing regulations by courts, the
regulator (the CRTC) or the government. This regulation relates to, among other things, licensing,
competition, programming carriage and the potential for new or increased fees.
ii) Interest rate, foreign exchange, capital market and economic conditions risks
Shaw manages its exposure to floating interest rates and US dollar foreign exchange fluctuation
through the use of interest rate and cross-currency exchange agreements or “swaps”. In order to
minimize the risk of counterparty default under its swap agreements, Shaw assesses the
creditworthiness of its swap counterparties. Currently 100% of the total swap portfolio is held
by financial institutions with Standard & Poor’s (or equivalent) ratings ranging from AA- to A-1.
As at August 31, 2010 Shaw has the following financial exposures at risk in its day-to-day operations:
(a) Interest rates: Due to the capital-intensive nature of Shaw’s operations, the Company
utilizes long-term financing extensively in its capital structure. The primary
components of this structure are:
1. Banking facilities as more fully described in Note 9 to the Consolidated
Financial Statements.
2. Various Canadian denominated senior notes and debentures with varying
maturities issued in the public markets as more fully described in Note 9 to
the Consolidated Financial Statements.
Interest on bank indebtedness is based on floating rates, while the senior notes are
fixed-rate obligations. If required, Shaw utilizes its credit facility to finance day-to-day
operations and, depending on market conditions, periodically converts the bank loans
to fixed-rate instruments through public market debt issues.
As at August 31, 2010, 100% of Shaw’s consolidated long-term debt was fixed with
respect to interest rates.
(b) Foreign exchange: As the Company has grown it has accessed US capital markets and
in addition, some of the company’s capital expenditures are incurred in US dollars.
As at August 31, 2010 the Company had no US denominated debt outstanding.
As at August 31, 2009 the Company had the following three series of senior notes
outstanding that were denominated in US dollars:
kUS $440 million 8.25% senior notes due April 11, 2010,
kUS $225 million 7.25% senior notes due April 6, 2011, and
kUS $300 million 7.20% senior notes due December 15, 2011.
40
Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2010