Shaw 2011 Annual Report Download - page 24

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2011
The same restrictions apply to Canadian carriers pursuant to the Telecommunications Act and
associated regulations, except that there is no requirement that the CEO be a resident
Canadian. The same restrictions are also contained in the Radiocommunication Act and
associated regulations. Shaw must file a foreign ownership compliance report annually with the
CRTC confirming that it meets the Canadian ownership requirements for Canadian carriers.
The Corporation’s Articles contain measures to ensure the Corporation is able to remain
compliant with applicable Canadian ownership requirements and its ability to obtain, amend or
renew a license to carry on any business.
In June 2010 the Minister of Industry initiated a public consultation on foreign investment
restrictions in the telecommunications sector with the goal of encouraging investment,
innovation and competition. The consultation paper released presented three options for
consideration: (1) increase the limit for direct foreign investment in broadcasting and
telecommunications carriers to 49 percent; (2) lift restrictions on telecommunications carriers
with a 10-percent market share or less, by revenue, or (3) remove telecommunications
restrictions completely. Shaw participated in the consultation and has expressed support for an
increase of direct foreign investment limits for broadcasting undertakings to 49% in order to
ensure competitive parity among all participants in the broadcasting and telecommunications
industries. The Minister of Industry is expected to report on the result of the consultation. It is
possible that the consultation and report could lead to proposed legislative changes to the
foreign investment rules.
E. Key performance drivers
Shaw measures the success of its strategies using a number of key performance drivers which
are outlined below, including a discussion as to their relevance, definitions, calculation
methods and underlying assumptions.
FINANCIAL MEASURES:
i) Revenue
Revenue is a measurement determined in accordance with Canadian and US generally accepted
accounting principles (“GAAP”). It represents the inflow of cash, receivables or other
consideration arising from the sale of products and services. Revenue is net of items such as
trade or volume discounts and certain excise and sales taxes. It is the base on which free cash
flow, a key performance driver, is determined; therefore, it measures the potential to deliver
free cash flow as well as indicating growth in a competitive market place.
The Company’s continuous disclosure documents may provide discussion and analysis of
non-GAAP financial measures. These financial measures do not have standard definitions
prescribed by Canadian or US GAAP and therefore may not be comparable to similar measures
disclosed by other companies. The Company utilizes these measures in making operating
decisions and assessing its performance. Certain investors, analysts and others utilize these
measures in assessing the Company’s financial performance and as an indicator of its ability to
service debt and return cash to shareholders. These non-GAAP measures have not been
presented as an alternative to net income or any other measure of performance or liquidity
prescribed by Canadian or US GAAP. The following contains a listing of the Company’s use of
non-GAAP financial measures and provides a reconciliation to the nearest GAAP measurement
or provides a reference to such reconciliation.
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