Shaw 2011 Annual Report Download - page 44

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Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2011
IMPACT OF REGULATION
As more fully discussed under Government regulations and regulatory developments,
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, policies and decisions, including
changes in interpretations of 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
As at August 31, 2011 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 10 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 10 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. Increases in interest rates
could have a material adverse effect on the Company’s cash flows.
As at August 31, 2011, 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.
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. As at August 31, 2011 the
Company had no US denominated debt outstanding.
(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: Canada’s economy is impacted by uncertainty in global financial
and equity markets and a slowdown in global economic growth. Advertising revenues
are impacted by prevailing economic conditions. Changes in economic conditions can
affect demand for advertising airtime as well as advertising rates. There can be no
assurance that current 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.
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