Shaw 2011 Annual Report Download - page 133

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Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2011, 2010 and 2009
[all amounts in thousands of Canadian dollars except share and per share amounts]
Interest rate risk
Due to the capital-intensive nature of its operations, the Company utilizes long-term financing
extensively in its capital structure. The primary components of this structure are banking
facilities and various Canadian senior notes with varying maturities issued in the public markets
as more fully described in note 10.
Interest on the Company’s banking facilities is based on floating rates, while the senior notes
are fixed-rate obligations. The Company 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, 2011, 100% of the
Company’s consolidated long-term debt was fixed with respect to interest rates.
Market risk
Net income and other comprehensive income for 2011 could have varied if the Canadian dollar
to US dollar foreign exchange rates or market interest rates varied by reasonably possible
amounts.
The sensitivity to currency risk has been determined based on a hypothetical change in
Canadian dollar to US dollar foreign exchange rates of 10%. The financial instruments
impacted by this hypothetical change include foreign exchange forward contracts and cross-
currency interest rate exchange agreements and would have changed net income by $766 net
of tax (2010 – $3,759) and other comprehensive income by $4,035 net of tax (2010 –
$18,378). A portion of the Company’s accounts receivables and accounts payable and accrued
liabilities is denominated in US dollars; however, due to their short-term nature, there is no
significant market risk arising from fluctuations in foreign exchange rates.
The sensitivity to interest rate risk has been determined based on a hypothetical change of one
percentage or 100 basis points. The financial instruments impacted by this hypothetical change
include foreign exchange forward contracts and cross-currency interest rate exchange
agreements and would have changed net income by $16 net of tax (2010 – $200) and other
comprehensive income by $22 net of tax (2010 – $51). Interest on the Company’s banking
facilities is based on floating rates and there is no significant market risk arising from
fluctuations in interest rates.
Credit risk
Accounts receivable in respect of Cable and Satellite divisions are not subject to any significant
concentrations of credit risk due to the Company’s large and diverse customer base. For the
Media division, a significant portion of sales are made to advertising agencies which results in
some concentration of credit risk. At August 31, 2011, approximately 58% of the $175,929 of
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