Shaw 2013 Annual Report Download - page 81

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
]
actual loss eventually sustained may be more or less than the estimate, depending on event
s
which have
y
et to occur and which cannot be foretold, such as future business,
p
ersonal an
d
eco
n
o
m
ic co
n
ditio
n
s.
(ii)
Property, plant and equ
i
pmen
t
The Company is required to estimate the expected useful lives of its property, plant an
d
e
q
u
ip
ment. These est
i
mates o
f
use
f
ul l
i
ves
i
nvolve s
ig
n
ifi
cant
j
ud
g
ement. In determ
i
n
i
n
g
these
estimates, the Company takes into account industry trends and company-specific factors
,
including changing technologies and expectations for the in-service period of these assets.
M
ana
g
ement’s
j
ud
g
ement
i
s also re
q
u
i
red
i
n determ
i
nat
i
on o
f
the amort
i
zat
i
on method, the
res
i
dual value o
f
assets and the cap
i
tal
i
zat
i
on o
f
labour and overhead
.
(iii)
Bus
i
ness comb
i
nat
i
ons – purchase pr
i
ce allocat
i
o
n
P
urchase
p
r
i
ce allocat
i
ons
i
nvolve uncerta
i
nt
y
because mana
g
ement
i
sre
q
u
i
red to make
assumpt
i
ons and
j
udgements to est
i
mate the
f
a
i
r value o
f
the
i
dent
ifi
able assets acqu
i
red and
liabilities assumed in business combinations. Fair value estimates are based on quoted marke
t
p
r
i
ces and w
i
del
y
acce
p
ted valuat
i
on techn
iq
ues,
i
nclud
i
n
g
d
i
scounted cash
f
low
(“
D
C
F”
)
analys
i
s.
S
uch est
i
mates
i
nclude assumpt
i
ons about
i
nputs to the valuat
i
on techn
i
ques,
industry economic factors and business strategies.
(
iv) Im
p
airmen
t
The
C
om
p
an
y
est
i
mates the recoverable amount o
fi
ts
CG
Us us
i
n
g
a FVL
CS
calculat
i
on base
d
o
n a DCF analysis. Significant judgements are inherent in this analysis including estimating th
e
amount and timin
g
of the cash flows attributable to the broadcast ri
g
hts and licenses, the
select
i
on o
f
an a
pp
ro
p
r
i
ate d
i
scount rate, and the
i
dent
ifi
cat
i
on o
f
a
pp
ro
p
r
i
ate term
i
nal
g
rowth
rate assumptions. In this analysis the Company estimates the discrete future cash flows
associated with the intan
g
ible asset for five
y
ears and determines a terminal value. The futur
e
cash
f
lows are based on the
C
om
p
an
y
’s est
i
mates o
ff
uture o
p
erat
i
n
g
results, econom
ic
conditions and the competitive environment. The terminal value is estimated using both a
p
er
p
etuit
yg
rowth assum
p
tion and a multi
p
le of o
p
eratin
g
income before amortization. Th
e
di
scount rates used
i
n the anal
y
s
i
s are based on the
C
om
p
an
y
’s we
ig
hted avera
g
e cost o
f
ca
pi
tal
and an assessment of the risk inherent in the projected cash flows. In analyzing the FVLC
S
d
etermined b
y
the DCF anal
y
sis the Com
p
an
y
also considers a market a
pp
roach determinin
g
a
recoverable amount
f
or each un
i
t and total ent
i
t
y
value determ
i
ned us
i
n
g
a market
capitalization approach. Recent market transactions are taken into account, when available
.
The ke
y
assum
p
tions used to determine the recoverable amounts, includin
g
a sensitivit
y
anal
y
s
i
s, are
i
ncluded
i
n note
10
.
(
v
)
Employee bene
fi
t plan
s
The amounts reported in the financial statements relating to the defined benefit pension plans
are determ
i
ned us
i
n
g
actuar
i
al valuat
i
ons that are based on several assum
p
t
i
ons
i
nclud
i
n
g
the
d
iscount rate and rate of compensation increase. While the Company believes these
assumptions are reasonable, differences in actual results or changes in assumptions coul
d
a
ff
ect em
p
lo
y
ee bene
fi
t obl
ig
at
i
ons and the related
i
ncome statement
i
m
p
act. The mos
t
significant assumption used to calculate the net employee benefit plan expense is the discount
77