Shaw 2012 Annual Report Download - page 39

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2012
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 are
affected by changes in regulations, policies and decisions, including changes in interpretation
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. Changes in the regulatory regime may adversely affect the operations
and performance of the Company.
ii) Economic conditions
Canada’s economy is affected by uncertainty in global financial and equity markets and
slowdowns in global economic growth. Advertising revenues are affected by prevailing economic
conditions. Changes in economic conditions may affect discretionary consumer spending,
resulting in increased or decreased demand for Shaw’s product offerings as well as advertising
airtime and rates. There can be no assurance that current or future events caused by volatility
in domestic or international economic conditions or a decline in economic growth will not have
an adverse effect on the Company’s business and operating results.
iii) Interest rates, foreign exchange rates and capital markets
As at August 31, 2012 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 13 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 13 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, 2012, 100% of Shaw’s consolidated long-term debt was fixed with
respect to interest rates.
(b) Foreign exchange: 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.
(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, or changes in Shaw’s credit ratings, 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.
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