Shaw 2013 Annual Report Download - page 122

S
haw
C
ommunications Inc
.
N
O
TE
S
T
OCO
N
SO
LIDATED FINAN
C
IAL
S
TATEMENT
S
August 31, 2013 and 201
2
[all amounts in millions of Canadian dollars exce
p
t share and
p
er share amounts
]
C
urrenc
y
ris
k
Certain of the Com
p
an
y
’s ca
p
ital ex
p
enditures and e
q
ui
p
ment costs are incurred in US dollars
,
wh
i
le
i
ts revenue
i
s
p
r
i
mar
i
l
y
denom
i
nated
i
n
C
anad
i
an dollars. Decreases
i
n the value o
f
the
Canadian dollar relative to the US dollar could have an adverse effect on the Company’s cash
f
lows. To miti
g
ate some of the uncertaint
y
in res
p
ect to ca
p
ital ex
p
enditures and e
q
ui
p
men
t
costs, the
C
om
p
an
y
re
g
ularl
y
enters
i
nto
f
orward contracts
i
n res
p
ect o
f
U
S
dollar
commitments. With respect to 2013, the Company entered into forward contracts to purchase
U
S $150 over a
p
eriod of 12 months commencin
g
in Se
p
tember 2012 at an avera
g
e exchan
g
e
rate o
f1
.
0011 C
dn. At Au
g
ust
31
,
2013
the
C
om
p
an
y
had
f
orward contracts to
p
urchase U
S
$
85 over a period of 12 months commencing in September 2013 at an average exchange rat
e
o
f 1.0212 Cdn in res
p
ect of ca
p
ital ex
p
enditures and e
q
ui
p
ment costs.
I
n
te
r
est
r
ate
ri
s
k
D
ue to the ca
p
ital-intensive nature of its o
p
erations, the Com
p
an
y
utilizes lon
g
-term financin
g
extens
i
vel
yi
n
i
ts ca
pi
tal structure. The
p
r
i
mar
y
com
p
onents o
f
th
i
s structure are a bank
i
n
g
f
acility and various Canadian senior notes with varying maturities issued in the public market
s
as more full
y
described in note 13
.
I
nterest on the
C
om
p
an
y
’s bank
i
n
gf
ac
i
l
i
t
yi
s based on
f
loat
i
n
g
rates, wh
i
le the sen
i
or notes ar
e
f
ixed-rate obligations. The Company utilizes its credit facility to finance day-to-day operations
and, de
p
endin
g
on market conditions,
p
eriodicall
y
converts the bank loans to fixed-rate
i
nstruments throu
g
h
p
ubl
i
c market debt
i
ssues. As at Au
g
ust
31
,
2013
,
100%
o
f
th
e
Company’s consolidated long-term debt was fixed with respect to interest rates.
M
ar
k
et r
i
s
k
N
et income and other comprehensive income for 2013 could have varied if the Canadian dollar
t
o US dollar forei
g
n exchan
g
e rates or market interest rates varied b
y
reasonabl
yp
ossibl
e
a
m
ou
n
ts
.
The sensitivity to currency risk has been determined based on a hypothetical change in
Canadian dollar to US dollar forei
g
n exchan
g
e rates of 10%. Forei
g
n exchan
g
e forward
contracts would be
i
m
p
acted b
y
th
i
sh
yp
othet
i
cal chan
g
e result
i
n
gi
n a chan
g
e to othe
r
comprehensive income by
$
7 net of tax (2012 –
$
5). A portion of the Company’s accounts
receivables and accounts
p
a
y
able and accrued liabilities is denominated in US dollars; however
,
d
ue to the
i
r short-term nature, there
i
snos
ig
n
ifi
cant market r
i
sk ar
i
s
i
n
gf
rom
f
luctuat
i
ons
in
f
oreign exchange rates.
The sens
i
t
i
v
i
t
y
to
i
nterest rate r
i
sk has been determ
i
ned based on a h
yp
othet
i
cal chan
g
eo
f
one
percentage or
100
bas
i
spo
i
nts. Fore
i
gn exchange
f
orward contracts would be
i
mpacted by th
i
s
h
ypothetical change but would not have resulted in a change to other comprehensive income i
n
2013
or
2012
. Interest on the
C
om
p
an
y
’s bank
i
n
gf
ac
i
l
i
t
yi
s based on
f
loat
i
n
g
rates and ther
e
i
snos
i
gn
ifi
cant market r
i
sk ar
i
s
i
ng
f
rom
f
luctuat
i
ons
i
n
i
nterest rates.
C
redit ris
k
Accounts rece
i
vable
i
n res
p
ect o
fC
able and
S
atell
i
te d
i
v
i
s
i
ons are not sub
j
ect to an
y
s
ig
n
ifi
cant
concentrations of credit risk due to the Company’s large and diverse customer base. For the
M
edia division, a si
g
nificant
p
ortion of sales are made to advertisin
g
a
g
encies which results in
some concentrat
i
on o
f
cred
i
tr
i
sk. At Au
g
ust
31
,
2013
,a
pp
rox
i
matel
y
5
9% (2012
–5
8%)
o
f
118