Shaw 2015 Annual Report Download - page 94

Shaw Communications Inc.
Notes to the Consolidated Financial Statements
August 31, 2015 and 2014
[all amounts in millions of canadian dollars except share and per share amounts]
Comprised of: $
Program related agreements 551
Lease of transmission facilities, circuits and premises 643
Lease and maintenance of transponders 659
Exclusive rights to use intellectual property 61
Other (primarily maintenance and support contracts) 57
1,971
Included in operating, general and administrative expenses are transponder maintenance expenses of $80 (2014 – $80)
and rental expenses of $134 (2014 – $107).
(iii) At August 31, 2015, the Company had capital expenditure commitments in the normal course of business of $23 in
respect of fiscal 2016.
(iv) As part of the CRTC decisions approving the acquisition of the broadcasting businesses in 2012 and 2011, the Company
is required to contribute approximately $182 in new benefits to the Canadian broadcasting system over seven years. The
obligations have been recorded in the income statement at fair value, being the sum of the discounted future net cash
flows using appropriate discount rates. At August 31, 2015, the remaining expenditure commitments in respect of these
obligations is $57 which will be funded over future years through fiscal 2019.
(v) In late fiscal 2014, the Company partnered with Rogers to form shomi, a new subscription video-on-demand service
which launched in beta in early November 2014. The Company’s remaining capital commitment is $58 of which, $9 was
funded subsequent to year end.
Contingencies
The Company and its subsidiaries are involved in litigation matters arising in the ordinary course and conduct of its business.
Although resolution of such matters cannot be predicted with certainty, management does not consider the Company’s exposure
to litigation to be material to these consolidated financial statements.
Guarantees
In the normal course of business the Company enters into indemnification agreements and has issued irrevocable standby
letters of credit and commercial surety bonds with and to third parties.
Indemnities
Many agreements related to acquisitions and dispositions of business assets include indemnification provisions where the
Company may be required to make payment to a vendor or purchaser for breach of contractual terms of the agreement with
respect to matters such as litigation, income taxes payable or refundable or other ongoing disputes. The indemnification period
usually covers a period of two to four years. Also, in the normal course of business, the Company has provided indemnifications
in various commercial agreements, customary for the telecommunications industry, which may require payment by the Company
for breach of contractual terms of the agreement. Counterparties to these agreements provide the Company with comparable
indemnifications. The indemnification period generally covers, at maximum, the period of the applicable agreement plus the
applicable limitations period under law.
The maximum potential amount of future payments that the Company would be required to make under these indemnification
agreements is not reasonably quantifiable as certain indemnifications are not subject to limitation. However, the Company
enters into indemnification agreements only when an assessment of the business circumstances would indicate that the risk of
loss is remote. At August 31, 2015, management believes it is remote that the indemnification provisions would require any
material cash payment.
The Company indemnifies its directors and officers against any and all claims or losses reasonably incurred in the performance
of their service to the Company to the extent permitted by law.
92 Shaw Communications Inc. 2015 Annual Report