Shaw 2009 Annual Report Download

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A year of growth thanks to
our customers, our people
and our values.
A year of growth thanks to
our customers, our people
and our values.
2009 ANNUAL REPORT
ACCOUNTABLE
BALANCE
CUSTOMER FOCUSED
INTEGRITY
LOYALTY
POSITIVE, CAN DO ATTITUDE
TEAM PLAYER

Table of contents

  • Page 1
    A A year year of of growth growth thanks thanks to to our our customers, customers, our our people people and and our our values. values. ACCOUNTABLE BALANCE CUSTOMER FOCUSED INTEGRITY LOYALTY POSITIVE, CAN DO ATTITUDE TEAM PLAYER 2009 ANNUAL REPORT

  • Page 2
    ...Statements Notes to Consolidated Financial Statements Five Years in Review Shareholders' Information Corporate Information The Annual General Meeting of Shareholders will be held on January 14, 2010 at 11:00 am (Mountain Time) at the Shaw Barlow Trail Building, 2400 - 32 Avenue NE, Calgary, Alberta...

  • Page 3
    Shaw grew this year: Loyal customers stayed with us while new ones arrived. We stuck with our commitment to exceptional customer service and they rewarded us with their business. Our customers know that they can approach us every day of the year, all day and night. We realize that a product is only ...

  • Page 4
    05 06 07 08 09 REVENUE (in billions) 2.2 2.5 2.8 3.1 3.4 05 06 07 08 09 EBITDA (in billions) 1.0 1.1 1.2 1.4 1.5 05 06 07 08 09 FREE CASH FLOW (in millions) 277 265 356 453 504 05 06 07 08 09 71 103 201 304 352 DIVIDENDS (in millions)

  • Page 5
    ... new products and services, high levels of reliability, same day/next day installation, service enhancements, competitive value pricing, and exceptional customer service. Customers are the cornerstone of our business. INNOVATION DELIVERS IMPROVED PRODUCTS AND SERVICES FOR CUSTOMERS Technology...

  • Page 6
    Shaw Communications Inc. REPORT TO SHAREHOLDERS August 31, 2009 k We continued to enhance our HD offerings adding popular channels and future expansion capacity to meet the growing demand for HDTV. We now carry 56 HD channels and offer over 500 HD titles through VOD and PPV. We expanded our Digital...

  • Page 7
    Shaw Communications Inc. REPORT TO SHAREHOLDERS August 31, 2009 The foundation of our service delivery system includes our dedicated employee base and our technologically advanced broadband network. Our commitment to customer service along with the personal dedication of our over 10,000 employees ...

  • Page 8
    ... the business Government regulations and regulatory developments Key performance drivers Critical accounting policies and estimates Related party transactions New accounting standards Known events, trends, risks and uncertainties SUMMARY OF QUARTERLY RESULTS RESULTS OF OPERATIONS FINANCIAL POSITION...

  • Page 9
    ... pursued by Shaw; increased competition in the markets in which Shaw operates and from the development of new markets for emerging technologies; changes in laws, regulations and decisions by regulators in Shaw's industries in both Canada and the United States; Shaw's status as a holding company with...

  • Page 10
    ... communications company whose core business is providing broadband cable television, Internet, Digital Phone, telecommunications services (through Shaw Business Solutions) and satellite direct-to-home services (through Shaw Direct) to approximately 3.4 million customers. It provides customers...

  • Page 11
    ... existing network and expand its service offerings to include digital programming, Pay-Per-View ("PPV), Video-on-Demand ("VOD"), High Definition Television ("HD"), Internet, and Digital Phone. Shaw's continued investment in plant infrastructure will accommodate further growth opportunities. The home...

  • Page 12
    ... Rate Interface ("PRI") service for the medium to larger business. Shaw has a customer-centric strategy designed to deliver high-quality customer service, simplicity and value to its customers through various bundled service offerings for its video, Internet and Digital Phone products. Delivering...

  • Page 13
    ... trucking industry, and integration and management of satellite data networks with landbased telecommunications. Shaw Direct and Satellite Services share a common satellite infrastructure. The DTH and Satellite Services businesses distribute digital video and audio signals to different markets...

  • Page 14
    ... Company also offers VOD services under the name Shaw Video-on-Demand. Its VOD service enables customers to select programming from a library of titles through an on-line ordering system or directly through the interactive program guide, and to view the programming on their television at a time of...

  • Page 15
    ... arrangements into the United States. The centres also host Shaw customers' most popular web content locally. Digital Phone The Company launched its fully featured residential telephone service under the brand name Shaw Digital Phone in 2005. Shaw Digital Phone combines local, long distance and the...

  • Page 16
    ... received by customers through an elliptical dish, as at August 31, 2009, Shaw Direct offered over 450 digital video and audio channels with a programming line-up offering the majority of television services that are available in Canada, including local over-the-air broadcasters, national networks...

  • Page 17
    ... its service offerings, Shaw Direct added 12 HD channels during 2009 and as at August 31, 2009 offered 54 HD channels. Shaw Broadcast Services Shaw Broadcast Services redistributes television and radio signals via satellite to cable operators and other multi-channel system operators in Canada and...

  • Page 18
    Shaw Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2009 television season ends. Subscriber growth in the Satellite business segment is also affected by vacation schedules as customers reconnect and disconnect DTH services at summer homes. Further, customers who vacation in ...

  • Page 19
    ... its gross revenues derived from Broadcasting to the Local Programming Improvement Fund ("LPIF") to support local television stations operating in non-metropolitan markets. The CRTC has indicated that it will consider the appropriate long-term provisions for the LPIF. Exempt systems are not required...

  • Page 20
    Shaw Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2009 contributions to the LPIF and other payments or requirements with respect to the carriage and delivery of local over-the-air television stations by cable and DTH services. The hearing in connection with this proceeding was...

  • Page 21
    ...operating company licensed under the Broadcasting Act. In addition, up to 20% of the voting shares and 20% of the votes of the licensee may be owned and controlled, directly or indirectly, by non-Canadians. As well, the chief executive officer (CEO) and not less than 80% of the board of directors of...

  • Page 22
    ... accounting principles ("GAAP"). It represents the inflow of cash, receivables or other consideration arising from the sale of products and services. Service revenue is net of items such as trade or volume discounts and certain excise and sales taxes. It is the base on which free cash flow, a key...

  • Page 23
    ... phone lines on billing plus scheduled installations due to the growth nature of these products. All subscriber counts exclude complimentary accounts but include promotional accounts. Cable measures penetration for basic services as a percentage of homes passed and, in the case of all other services...

  • Page 24
    ...fee revenue and/or customer premise equipment revenue) and related subscription revenue. The Company determined that the upfront fees charged to customers do not constitute separate units of accounting; therefore, these revenue streams are assessed as an integrated package. Subscriber connection fee...

  • Page 25
    ... related tracking equipment revenue. Shaw Business Solutions The Company also receives installation revenues in its Shaw Business Solutions operation on contracts with commercial customers which are deferred and recognized as service revenue on a straight-line basis over the related service contract...

  • Page 26
    ... involved in overall planning and development of the cable/Internet/Digital Phone infrastructure. Labour and overhead costs directly related to this activity are capitalized as the activities directly relate to the planning and design of the construction of the distribution system. Over the past...

  • Page 27
    ... not limited to, projects such as new subdivision builds, increasing network capacity for Internet, Digital Phone and VOD by reducing the number of homes fed from each node, and upgrades of plant capacity. 3. Subscriber-related activities such as installation of new drops and Internet services. The...

  • Page 28
    ... test for impairment of the broadcast rights to ensure testing is performed at the appropriate level. The Company has identified two reporting units that have remained unchanged for a period exceeding 5 years: k k Cable systems DTH and satellite services Asset Impairment vii) Goodwill impairment...

  • Page 29
    ... a defined benefit pension plan for key senior executives. The amounts reported in the financial statements relating to the defined benefit pension plan are determined using actuarial valuations that are based on several assumptions. The valuation uses management's assumptions for the discount rate...

  • Page 30
    ...is usually based on the yield on long-term, high-quality corporate fixed income investments and is determined at the end of every year. The following table illustrates the increase on the accrued benefit obligation and pension expense of a 1% decrease in the discount rate: Accrued Benefit Obligation...

  • Page 31
    ... of office space in Shaw Tower. Shaw Tower, located in Vancouver, BC, is the Company's headquarters for its lower mainland operations. I. New accounting standards Shaw has adopted or will adopt a number of new accounting policies as a result of recent changes in Canadian accounting pronouncements...

  • Page 32
    ...in-depth review to identify and assess accounting and reporting differences, (ii) evaluation and selection of accounting policies, (iii) assessment of impact on information systems, internal controls, and business activities, and (iv) training and communication with key stakeholders. The Company has...

  • Page 33
    ...companies offering video service. To a lesser extent, Shaw's cable television systems compete with the direct reception by antenna of unencrypted over-the-air local and regional broadcast television signals. As noted above, Shaw also competes with unregulated internet services, and illegal satellite...

  • Page 34
    ...technologies to increase channel capacity, to expand the range and quality of its services, and to enhance its programming and communication service offerings including, for example, VOD, interactive television, full digital line-ups, HD, Internet and Digital Phone. Shaw's ability to offer its cable...

  • Page 35
    ... television stations to more remote locations without the use of satellite transmission. INTERNET INFRASTRUCTURE Through Shaw Business Solutions, Shaw competes with other telecommunications carriers in providing high-speed broadband communications services (data and video transport and Internet...

  • Page 36
    ... converts the bank loans to fixed-rate instruments through public market debt issues. As at August 31, 2009, 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 for a portion of its...

  • Page 37
    ... at an average rate 1.4078. Further information concerning the policy and use of derivative financial instruments is contained in Note 1 to the Consolidated Financial Statements. (c) Capital markets: The Company requires ongoing access to capital markets to support its operations. Changes in capital...

  • Page 38
    ... security, ongoing maintenance and placement of insurance on its network equipment and data centers. The Company self-insures the plant in the cable and Internet distribution system as the cost of insurance is generally prohibitive. The risk of loss is mitigated as most of the cable plant is located...

  • Page 39
    ... Shaw Group is, and as long as it owns a majority of the Class A Shares will continue to be, able to elect a majority of the Board of Directors of the Company and to control the vote on matters submitted to a vote of the Company's Class A shareholders. viii) Information systems and internal business...

  • Page 40
    ... of quarterly service revenue and service operating income before amortization: Growth in subscriber statistics as follows: 2009 Subscriber Statistics First Second Third Fourth First Second 2008 Third Fourth Basic cable customers Digital customers Internet customers Digital Phone lines DTH 9,198...

  • Page 41
    ...Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2009 k k The initial product launch of Shaw Digital Phone service was in Calgary on February 14, 2005. Since this initial launch Shaw has continued to expand its Digital Phone service area and at the end of fiscal 2009 the service...

  • Page 42
    ... costs related to growth. Throughout 2009 subscriber growth was solid. The Company's focus on Digital deployment, combined with the consumers increased demand for HDTV, drove record Digital growth during the year. Shaw added over 388,000 new subscribers increasing its Digital penetration of Basic...

  • Page 43
    ... increases in amortization of deferred equipment revenue and deferred equipment costs is primarily due to the continued growth in sales of higher priced digital equipment up to February 2009, at which time the Company launched a new HD rental program as part of its focus on growing the HD customer...

  • Page 44
    ... the reconciling items identified in Note 14 to the Consolidated Financial Statements. Future income tax recoveries of $22.6 million, $188.0 million and $25.5 million related to reductions in corporate income tax rates were recorded in 2009, 2008 and 2007 respectively. The significant growth in net...

  • Page 45
    ... Cdn) 2009 2008 Increased service operating income before amortization Increased amortization of deferred net equipment costs and revenue and IRU revenue Increased amortization of deferred charges, financing costs and property, plant and equipment Decreased (increased) interest expense Change in...

  • Page 46
    ... and rate increases accounted for the improvement. Service operating income before amortization of $1.27 billion increased 10.1%. The improvement was driven by revenue related growth partially offset by higher employee costs and other expenses, including marketing, sales activities, and equipment...

  • Page 47
    ...to over 90% of Basic customers and over 30% had taken the service. In 2008 the Company introduced Shaw Digital Phone Basic, an offering for customers requiring limited phone features. The service includes a local phone line, Caller ID, and long distance at competitive rates. Shaw offers a variety of...

  • Page 48
    ... of drops in new subdivisions. (2) Capital and equipment costs (net) related to the acquisition of new customers, including installation of internet and digital phone modems, DCTs, filters and commercial drops for Shaw Business Solutions customers. (3) Upgrades to the plant and build out of fibre...

  • Page 49
    ... operating groups located in other areas of the city at one campus style location. Success-based capital increased $20.5 million over 2007. Digital success-based capital was up as a result of reduced customer pricing on certain digital equipment and higher sales volume. Digital Phone success-based...

  • Page 50
    Shaw Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2009 SATELLITE (DTH and Satellite Services) FINANCIAL HIGHLIGHTS Change ($000's Cdn) 2009 2008 2007 2009 % 2008 % DTH (Shaw Direct) Satellite Services Service revenue (third party) Service operating income before amortization ...

  • Page 51
    ... due to investments made in 2007 to upgrade certain Satellite Service technology and office equipment to support call centre expansions as well as spending related to HD expansion projects. During 2008 Shaw Direct added 17 HD channels and increased its HD customer base by approximately 100,000. 47

  • Page 52
    ... 2009 $600 million senior note issuance. Prepaids increased due to timing of payments for certain expenditures while accounts receivable were up due to subscriber growth and rate increases. Future income taxes declined due to the use of non-capital loss carryforwards. Property, plant and equipment...

  • Page 53
    ...in non-cash working capital balances is primarily due to timing of collection of accounts receivable and payment of accounts payable and accrued liabilities in addition to the provision for current taxes payable in 2009 as the Company became cash taxable. Investing activities Increase (In $000's Cdn...

  • Page 54
    ... cash payment of $152.5 million related to deposits on wireless spectrum licenses and purchase the Campbell River cable system for $46.3 million. The remaining $453.2 million was held in cash and short-term securities. To allow for timely access to capital markets, Shaw filed a short form base shelf...

  • Page 55
    ...or maximum financial ratios. At August 31, 2009, Shaw is in compliance with these covenants and based on current business plans, the Company is not aware of any condition or event that would give rise to non-compliance with the covenants over the life of the borrowings. Off-balance sheet arrangement...

  • Page 56
    ... posted on Shaw's website, www.shaw.ca (under Investor Relations/Corporate Governance/Other Corporate Governance Information/Compliance with NYSE Corporate Governance Listing Standards). IX. CERTIFICATION The Company's Chief Executive Officer and Senior Vice President & Chief Financial Officer have...

  • Page 57
    ... 2009 MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING The accompanying consolidated financial statements of Shaw Communications Inc. and all the information in this annual report are the responsibility of management and have been approved by the Board of Directors. The financial statements have...

  • Page 58
    .... Based on this evaluation, management concluded that the Company's system of internal control over financial reporting was effective as at August 31, 2009. [Signed] [Signed] Jim Shaw Chief Executive Officer and Vice Chair Steve Wilson Senior Vice President and Chief Financial Officer 54

  • Page 59
    ... accordance with the standards of the Public Company Accounting Oversight Board (United States), Shaw Communications Inc.'s internal control over financial reporting as of August 31, 2009, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring...

  • Page 60
    ...of the Public Company Accounting Oversight Board (United States) To the Shareholders of Shaw Communications Inc. We have audited Shaw Communication Inc.'s internal control over financial reporting as of August 31, 2009, based on criteria established in Internal Control - Integrated Framework issued...

  • Page 61
    Shaw Communications Inc. CONSOLIDATED BALANCE SHEETS As at August 31 [thousands of Canadian dollars] 2009 $ 2008 $ ASSETS Current Cash and cash equivalents Short-term securities Accounts receivable [note 3] Inventories [note 4] Prepaids and other Future income taxes [note 14] Investments and other...

  • Page 62
    Shaw Communications Inc. CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (DEFICIT) Years ended August 31 [thousands of Canadian dollars except per share amounts] 2009 $ 2008 $ 2007 $ Service revenue [note 15] Operating, general and administrative expenses Service operating income before ...

  • Page 63
    Shaw Communications Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Years ended August 31 [thousands of Canadian dollars] 2009 $ 2008 $ 2007 $ Net income Other comprehensive income (loss) [note 12] Change in unrealized fair value of derivatives...

  • Page 64
    ... costs Proceeds on cancellation of US forward purchase contracts [note 15] Net decrease (increase) to inventories Deposits on wireless spectrum licenses [note 5] Cable business acquisitions [note 2] Proceeds on disposal of property, plant and equipment and other assets Additions to deferred charges...

  • Page 65
    ... and New York Stock Exchanges. The Company is a diversified Canadian communications company whose core operating business is providing broadband cable television services, Internet, Digital Phone, and telecommunications services ("Cable"); Direct-to-home ("DTH") satellite services (Shaw Direct) and...

  • Page 66
    ... to customers at cost or a subsidized price in order to expand the Company's customer base. Revenue from sales of satellite tracking hardware and costs of goods sold are deferred and recognized on a straight-line basis over the related service contract for monthly service charges for air time, which...

  • Page 67
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] (iii) Deferred IRU revenue Prepayments received under indefeasible right to use ("IRU") agreements are amortized on a ...

  • Page 68
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] Property, plant and equipment Property, plant and equipment are recorded at purchase cost. Direct labour and direct ...

  • Page 69
    ... received under IRU agreements amortized on a straight-line basis into income over the term of the agreement; (ii) equipment revenue, as described in the revenue and expenses accounting policy, deferred and amortized over two years to five years; (iii) connection fee revenue and upfront installation...

  • Page 70
    ... are revised based on actual experience of the plan such as changes in discount rates, expected retirement ages and projected salary increases. Actuarial gains (losses) are amortized on a straight-line basis over EARSL which for active employees covered by the defined benefit pension plan is 11...

  • Page 71
    ...value of the accrued pension benefits. The last actuarial valuation of the pension plan was performed August 31, 2009. Stock-based compensation The Company has a stock option plan for directors, officers, employees and consultants to the Company. The options to purchase shares must be issued at not...

  • Page 72
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] Adoption of recent Canadian accounting pronouncements (i) Inventories Effective September 1, 2008, the Company adopted...

  • Page 73
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] 2. BUSINESS ACQUISITIONS 2009 Cash purchase price $ (i) Cable systems 2007 Issuance of Class B Non-Voting Shares $ ...

  • Page 74
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] 3. ACCOUNTS RECEIVABLE 2009 $ 2008 $ Subscriber and trade receivables Due from officers and employees Due from ...

  • Page 75
    ..., PLANT AND EQUIPMENT Cost $ 2009 Accumulated amortization $ Net book value $ Cost $ 2008 Accumulated amortization $ Net book value $ Cable and telecommunications distribution system Digital cable terminals and modems Satellite audio, video and data network equipment and DTH receiving equipment...

  • Page 76
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] 8. INTANGIBLES Carrying amount 2009 $ 2008 $ Broadcast rights Cable systems DTH and satellite services Goodwill - ...

  • Page 77
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] 9. LONG-TERM DEBT 2009 Translated Adjustment for Long-term hedged debt at year-end Effective debt and repayable at ...

  • Page 78
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] 2009 was held in cash and short-term securities and a portion of the proceeds from the $400,000 senior notes issuance ...

  • Page 79
    ...The Company has a 33.33% interest in the Partnership which built the Shaw Tower project with office/retail space and living/working space in Vancouver, BC. In the fall of 2004, the commercial construction of the building was completed and at that time, the Partnership issued 10 year secured mortgage...

  • Page 80
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] 10. DEFERRED CREDITS 2009 Amount $ IRU prepayments Equipment revenue Connection fee and installation revenue Deposit ...

  • Page 81
    ... over the stated value of the shares amounting to $25,017 (2008 - $74,963; 2007 - $82,702) charged to retained earnings (deficit). Stock option plan Under a stock option plan, directors, officers, employees and consultants of the Company are eligible to receive stock options to acquire Class B Non...

  • Page 82
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] The changes in options in 2009, 2008 and 2007 are as follows: 2009 Weighted average exercise price $ 2008 Weighted ...

  • Page 83
    ... CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] Contributed surplus The changes in contributed surplus are as follows: 2009 $ 2008 $ Balance, beginning of year Stock-based compensation Stock options...

  • Page 84
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] Options to purchase 23,714,667 Class B Non-Voting Shares were outstanding under the Company's stock option plan at ...

  • Page 85
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] Accumulated other comprehensive income (loss) is comprised of the following: August 31, 2009 $ August 31, 2008 $ ...

  • Page 86
    ... of the Company's future income tax liabilities and assets are as follows: 2009 $ 2008 $ Future income tax liabilities: Property, plant and equipment Broadcast rights Partnership income Future income tax assets: Non-capital loss carryforwards Deferred charges Foreign exchange on long-term debt...

  • Page 87
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] The income tax expense or recovery differs from the amount computed by applying Canadian statutory rates to income ...

  • Page 88
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] 15. BUSINESS SEGMENT INFORMATION The Company's operating segments are Cable, DTH and Satellite Services, all of which ...

  • Page 89
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] 2008 Satellite Cable $ 2,379,361 (3,775) 2,375,586 Service operating income before amortization Service operating ...

  • Page 90
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] 2007 Satellite Cable $ Service revenue - total Intersegment 2,086,066 (3,414) 2,082,652 Service operating income before...

  • Page 91
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] (3) Prepayments on IRUs in amounts not exceeding the costs to build the fibre subject to the IRUs are subtracted from ...

  • Page 92
    ... TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] Indemnities Many agreements related to acquisitions and dispositions of business assets include indemnification provisions where the Company may be...

  • Page 93
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] to the plan. The plan is unfunded. There are no minimum required contributions and no discretionary contributions are ...

  • Page 94
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] The table below shows the components of the net benefit plan expense. 2009 $ 2008 $ 2007 $ Current service cost ...

  • Page 95
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] provided cable system distribution access and affiliate broadcasting services to Corus Custom Networks, the advertising...

  • Page 96
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] 19. FINANCIAL INSTRUMENTS Fair values The fair value of financial instruments has been determined as follows: (i) ...

  • Page 97
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] Fair value estimates are made at a specific point in time, based on relevant market information and information about ...

  • Page 98
    ... or suspend services on accounts that have exceeded agreed credit terms. The Company has mitigated the credit risk of holding short-term securities by investing funds in a Government of Canada treasury bill. Credit risks associated with cross-currency interest rate exchange agreements and US...

  • Page 99
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] Liquidity risk Liquidity risk is the risk that the Company will experience difficulty in meeting obligations associated...

  • Page 100
    ... equipment costs Deferred charges Property, plant and equipment Financing costs - long term debt Future income tax expense Equity loss (income) on investee Debt retirement costs Stock-based compensation Defined benefit pension plan Net customs duty recovery on equipment costs Gain on cancellation...

  • Page 101
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] (iv) Non-cash transactions The Consolidated Statements of Cash Flows exclude the following non-cash transactions: 2009...

  • Page 102
    ... Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] fixed charges. At August 31, 2009, the Company is in compliance with these covenants and based on current business plans...

  • Page 103
    ... dollars except share and per share amounts] Consolidated Balance Sheet items using US GAAP 2009 Canadian GAAP $ US GAAP $ Canadian GAAP $ 2008 US GAAP $ Property, plant and equipment(10) Deferred charges(2)(8) Broadcast rights(1)(5)(6) Income taxes payable Current portion of long-term debt(2) Long...

  • Page 104
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] (2) Deferred charges and credits The excess of equipment costs over equipment revenues are deferred and amortized under...

  • Page 105
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] (7) Derivative instruments and hedging activities Under US GAAP, all derivatives are recognized in the Consolidated ...

  • Page 106
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] (c) (i) Adoption of new accounting pronouncements Fair Value Measurements Effective September 1, 2008, the Company ...

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    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] The following table presents the gains and losses, excluding tax effects, for 2009 on derivatives designated as cash ...

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    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] (d) Recent accounting pronouncements Business Combinations Effective September 1, 2009, the Company will adopt SFAS ...

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    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2009, 2008 and 2007 [all amounts in thousands of Canadian dollars except share and per share amounts] The Company closed the purchase of Mountain Cablevision in Hamilton, Ontario in late October, 2009. Pursuant to the ...

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    ...IN REVIEW August 31, 2009 ($000's except per share amounts) 2009 2008 2007 2006 2005 Service revenue Cable DTH Satellite Service operating income before amortization(1) Cable DTH Satellite Net income Earnings per share Basic Diluted Funds flow from operations(2) Balance sheet Total assets Long-term...

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    Shaw Communications Inc. SHAREHOLDERS' INFORMATION August 31, 2009 Share Capital and Listings The Company is authorized to issue a limited number of Class A participating and an unlimited number of Class B Non-Voting participating shares. The authorized number of Class A Shares is limited, subject ...

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    ...ca Information concerning Shaw's compliance with the corporate governance listing standards of the New York Stock Exchange is available in the investor relations section on Shaw's website, www.shaw.ca INTERNET HOME PAGE Shaw's Annual Report, Annual Information Form, Quarterly Reports, Press Releases...

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    We, the leading entertainment and communications company, deliver exceptional customer experience through outstanding people sharing Shaw Values.