Shaw 2010 Annual Report Download

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Together is
Amazing.
Together is
Amazing.
Annual Report 2010Annual Report 2010
ACCOUNTABLE
BALANCE
CUSTOMER FOCUSED
INTEGRITY
LOYALTY
POSITIVE, CAN DO ATTITUDE
TEAM PLAYER
PLACEHOLDER FOR OFC

Table of contents

  • Page 1
    Together is Together is Amazing. Amazing. ACCOUNTABLE BALANCE CUSTOMER FOCUSED INTEGRITY LOYALTY POSITIVE, CAN DO ATTITUDE TEAM PLAYER Annual Report Annual Report 2010 2010

  • 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 13, 2011 at 11:00 am (Mountain Time) at the Shaw Barlow Trail Building, 2400 - 32 Avenue NE, Calgary, Alberta...

  • Page 3
    ... been more committed to providing exceptional customer service while creating best in class products and services. We are committed to the communities where we live and work and to our 13,000 employees who make it possible. We are working together, one team - one Shaw, towards an amazing future.

  • Page 4
    06 07 08 09 10 REVENUE (in billions) 2.5 2.8 3.1 3.4 3.7 06 07 08 09 10 EBITDA (in billions) 1.1 1.2 1.4 1.5 1.8 06 07 08 09 10 265 356 455 506 515 FREE CASH FLOW (in millions) 06 07 08 09 10 103 201 304 352 372 DIVIDENDS (in millions)

  • Page 5
    ...was successful in acquiring Canwest's broadcast TV network, content ownership and specialty services ("Media"). After receiving all Court and regulatory approvals, the acquisition closed and we launched Shaw Media, our newest business unit, on October 27, 2010. We are excited about the opportunities...

  • Page 6
    Shaw Communications Inc. REPORT TO SHAREHOLDERS August 31, 2010 k We continued to grow the broadband business adding 110,000 Internet customers. We have increased the penetration rate and now the equivalent of 78% of Basic subscribers use our Internet service. Digital Phone is a great success; we ...

  • Page 7
    Shaw Communications Inc. REPORT TO SHAREHOLDERS August 31, 2010 decisions that have, and will continue to favorably impact your investment in our Company. He will continue to provide his experience, judgment and wisdom to serve all our stakeholders as Vice Chair of the Board of Directors. Shaw has ...

  • Page 8
    .... RESULTS OF OPERATIONS IV. FINANCIAL POSITION V. CONSOLIDATED CASH FLOW ANALYSIS VI. LIQUIDITY AND CAPITAL RESOURCES VII. ADDITIONAL INFORMATION VIII. COMPLIANCE WITH NYSE CORPORATE GOVERNANCE LISTING STANDARDS IX. CERTIFICATION CAUTION CONCERNING FORWARD LOOKING STATEMENTS I. 6 6 6 10 15 16 21...

  • Page 9
    ... strategic plans, 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
    ... The Shaw brand is synonymous with diverse product offerings and exceptional customer service. During 2010 the Company operated two principal business segments: (1) Cable - comprised of cable television, Internet, Digital Phone and Business Solutions operations; and (2) Satellite comprised of direct...

  • 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") including three dimensional ("3D") HD, Internet, and Digital Phone. Shaw's continued investment in plant infrastructure will accommodate...

  • Page 12
    ... Shaw has provided Internet access services to residential and small business subscribers in its cable television systems through its technologically advanced broadband network. In the majority of its Internet serving areas, the Company currently offers five levels of Internet service: High-Speed...

  • Page 13
    ... offered under the brand "Shaw Business Solutions". and Shaw Business Solutions was established in 2000 to develop and manage the fibre network that serves as the primary Internet backbone for the Company's broadband Internet customers and to provide Internet, data and voice connectivity services...

  • Page 14
    Shaw Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2010 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 (residential and business), thereby ...

  • Page 15
    ... which support the decoding and processing of HD content, as well as DCTs which incorporate HD and Personal Video Recorder (PVR) features. Shaw offers over 70 channels of interactive, impulse PPV to its digital subscribers. Its PPV offering allows customers to select and pay for specific programs...

  • Page 16
    ... requiring limited phone features. The service includes a local phone line, caller ID and long distance at competitive rates. Shaw Digital Phone utilizes PacketCable technology and DOCSIS specifications. Customers' existing phone lines are connected into modems usually installed at the location of...

  • Page 17
    ..., Shaw Business Solutions is focused on being a major account and wholesale provider offering third parties advanced high speed data connectivity and Internet services in Canada and the United States. Its offerings currently include data, voice and video transport and Internet connectivity services...

  • Page 18
    ... Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2010 December 2009 policy decision from Industry Canada and further strengthens the capabilities of the country's competitive satellite distribution sector. The new capacity will increase Shaw Direct's satellite television services...

  • Page 19
    ... programming. The Global Television Network reaches approximately 98% of the total broadcast market in Canada through 12 over-the-air ("OTA") conventional television stations. The Speciality television services owned and operated in the Media division include a leading portfolio of 19 channels...

  • Page 20
    ... it may also be affected by competition and varying levels of promotional activity undertaken by the Company. Shaw's Cable and Satellite businesses generally are not dependent upon any single customer or upon a few customers. The Media segment financial results are subject to fluctuations throughout...

  • Page 21
    ..., are not rate regulated. The potential for new or increased fees through regulation Effective September 1, 2009, each licensed BDU contributes 1.5% of its gross revenues derived from Broadcasting to the Local Programming Improvement Fund ("LPIF") to support local television stations operating in...

  • Page 22
    ...issue a report to the Government providing recommendations that take into account the impact that a signal carriage compensation regime would have on consumers and affordable access to broadcast programming, and the impact of any such regime on the communications industry as it adapts to the digital...

  • Page 23
    ... industry in October 2009. In July 2010 the proposed amendments were introduced by the Commission. Digital Phone, New Media and Internet Regulation of the incumbent local exchange carriers ("ILECs"), competitors of Shaw's Digital Phone business, is now largely governed by the current Government...

  • Page 24
    Shaw Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2010 provision of local phone service in high cost areas. It is possible that the Commission could require Shaw to provide local telephone and high-speed broadband services and to extend its facilities to serve unserved areas ...

  • Page 25
    ... Corporation's benefits commitment will be directed primarily to the production of Canadian television and new media content (including new local news in several markets) for use by Shaw Media services, as well as conversion of Shaw Media's broadcast transmitters to digital in small markets. Limits...

  • Page 26
    Shaw Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2010 FINANCIAL MEASURES: i) Service revenue Service revenue is a measurement determined in accordance with Canadian and US generally accepted accounting principles ("GAAP"). It represents the inflow of cash, receivables or ...

  • Page 27
    Shaw Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2010 equipment costs (net). All of the line items used in the free cash flow calculation are as reported on a segmented basis in the Company's Note 15 to the Consolidated Financial Statements. Segmented service operating income...

  • Page 28
    ... equipment revenue commences once the subscriber service is activated. There is no specified term for which the customer will receive the related subscription service, therefore the Company has considered various factors including customer churn, competition from new entrants, and technology changes...

  • Page 29
    ... 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 30
    ... 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. Subscriber-related activities such as installation of new drops and Internet services. The labour and overhead directly related...

  • Page 31
    ...determining 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. On an annual basis, the Company reassesses its existing estimates of useful lives to ensure they match...

  • Page 32
    ...5 years: k k Cable systems DTH and satellite services During 2010 the Company commenced wireless activities and identified this as a separate reporting unit. AWS licenses are required to operate a wireless system in Canada. The AWS licenses have indefinite lives and are subject to an annual review...

  • Page 33
    ... amortization multiple would cause the fair value to decline by less than 16%. Carrying amount 2010 2009 $ $ Broadcast rights Cable systems DTH and satellite services Goodwill Non-regulated satellite services Cable system Wireless spectrum licenses Net book value viii) Employment benefit plans...

  • Page 34
    ...changes in assumptions could affect employee benefit obligations and the related income statement impact. The Company accounts for differences between actual and assumed results by recognizing differences in benefit obligations and plan performance over the working lives of the employees who benefit...

  • Page 35
    ... to common voting control. During the year, network, advertising and programming fees were paid to various Corus subsidiaries. The Company provided cable system distribution access, administrative services, uplinking of television signals and Internet services and lease of circuits to various Corus...

  • Page 36
    ...Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2010 The provisions of Section 3064 were adopted retrospectively with restatement of prior periods. The impact on the Consolidated Balance Sheets as at August 31, 2010 and August 31, 2009 and on the Consolidated Statements of Income...

  • Page 37
    ... systems, internal controls, and business activities, and (iv) training and communication with key stakeholders. During 2009, the Company completed its preliminary identification and assessment of accounting and reporting differences. In addition, training was provided to certain key employees...

  • Page 38
    ...the key areas where changes in accounting policies are expected that may impact the Company's consolidated financial statements. The list and comments should not be regarded as a complete list of changes that will result from the transition to IFRS. It is intended to highlight those areas management...

  • Page 39
    Shaw Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2010 determinable. Management expects to complete this assessment in time for parallel recording of financial information in accordance with IFRS beginning September 1, 2010. The Company continues to monitor and assess the ...

  • Page 40
    ... do not represent an exhaustive list of all potential issues that could affect the financial results of the Company. The principal risks include: k k k Competition and technological change, including change in regulatory risks Interest rate, foreign exchange, capital market and economic conditions...

  • Page 41
    ...its competitive position. In addition, Shaw plans to continue to deploy new 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...

  • Page 42
    ... The Shaw Direct DTH business faces a similar competitive environment as cable television companies. Competitors include Bell TV (formerly Bell ExpressVu, the only other licensed DTH satellite service currently operating in Canada), cable television companies, grey and black market satellite service...

  • Page 43
    ... prospects of Shaw Digital Phone. MEDIA The OTA and Specialty television business and the advertising markets in which they operate are highly competitive. Numerous broadcast and specialty television networks compete for advertising revenues. The CRTC has also substantially increased the number of...

  • Page 44
    Shaw Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2010 successfully depends on a number of factors, including its ability to secure popular television programs and achieve high distribution levels. The Company expects that competition will continue to increase and there can be...

  • Page 45
    ... 2010 at an average exchange rate of 1.0172 Cdn in respect of the closing of the Canwest acquisition. 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...

  • Page 46
    ... 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 underground. In addition...

  • Page 47
    ... JR 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. x) Information systems and internal business...

  • Page 48
    Shaw Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2010 xi) Dividend payments The Company currently pays monthly dividends in amounts approved on a quarterly basis by the Board of Directors. At the current approved dividend amount, the Company would pay approximately $380.0 ...

  • Page 49
    ... corporate income tax rates in the first quarter of 2010. Net income increased by $24.5 million in the second quarter of 2010 due to the aforementioned items recorded in the previous quarter and the impact of customer growth, the Mountain Cable acquisition and lower costs including employee related...

  • Page 50
    ... The acquisition of the Hamilton cablesystem serving approximately 41,000 Basic cable customers, including 24,000 Digital subscribers, 30,000 Internet subscribers and 32,000 Digital Phone lines was completed in the first quarter of fiscal 2010. In 2010 this system generated service operating income...

  • Page 51
    ... The improvement was due to the revenue related growth, partially offset by higher employee related and other costs associated with the increased subscriber base including marketing and sales activities, as well as the impact of the new LPIF fees. The current twelve month period also benefitted from...

  • Page 52
    ... improvements partially offset by higher employee and other 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...

  • Page 53
    ...-currency interest rate exchange agreements remains outstanding. As these contracts no longer qualify as cash flow hedges, the related loss in accumulated other comprehensive loss of $50.1 million was reclassified to net income. Subsequent changes in the value of these agreements is recorded in net...

  • Page 54
    Shaw Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2010 Note 14 to the Consolidated Financial Statements. Future income tax recoveries of $17.6 million, $22.6 million and $188.0 million related to reductions in corporate income tax rates were recorded in 2010, 2009 and 2008, ...

  • Page 55
    ... the Company completed the acquisition of Mountain Cablevision operating in Hamilton, Ontario adding approximately 41,000 Basic cable customers, including 24,000 Digital subscribers, 30,000 Internet subscribers, and 32,000 Digital Phone lines. Cable service revenue for the year improved 11.3% to...

  • Page 56
    ..., 2009 and 2008, respectively. Shaw now has over 725,000 HD capable customers. The Company strives to offer leading edge products and services and is preparing for limited trials of Gigabit Internet, a technology that is delivered over Fibre-to-the-Home and is 10x faster than Shaw's High-Speed Nitro...

  • Page 57
    ... 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 58
    ... support systems. The 2009 year also benefitted from proceeds on the sale of redundant facilities. SUBSCRIBER STATISTICS 2010 2010 2009(1) 2008(1) Growth Change % 2009 Growth Change % CABLE: Basic subscribers Penetration as a % of homes passed Digital customers INTERNET: Connected and scheduled...

  • Page 59
    Shaw Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2010 SATELLITE (DTH and Satellite Services) FINANCIAL HIGHLIGHTS Change ($000's Cdn) 2010 2009 2008 2010 % 2009 % DTH (Shaw Direct) Satellite Services Service revenue (third party) Service operating income before amortization...

  • Page 60
    ... through leading technology, innovative programming and high quality customer service. During the current year Shaw Direct introduced a new HD PVR with advanced features and launched a number of HD channels including CNN HD and Global Toronto HD. Shaw Direct now offers 65 HD channels to its...

  • Page 61
    ... was successful in acquiring 20 megahertz of spectrum across most of its cable footprint for a cost of $190.9 million. In early September 2009 the Company received its ownership compliance decision from Industry Canada and was granted its AWS licenses. In March 2010 the Company commenced activities...

  • Page 62
    ... by the impact of the Part II fee recovery. Income taxes payable was up due to the current year income tax expense and unearned revenue increased due to the acquisition of Mountain Cable, customer growth and rate increases. Total long-term debt increased $831.7 million as a result of $1.88 billion...

  • Page 63
    ... rate exchange agreements into income upon redemption of the underlying US denominated long-term debt. V. CONSOLIDATED CASH FLOW ANALYSIS Change (In $000's Cdn) 2010 2009 2008 2010 % 2009 % Operating activities Funds flow from operations Net decrease in non-cash working capital balances related...

  • Page 64
    ... Shares for cancellation, pay common share dividends of $372.1 million, purchase the Hamilton cable system for $158.8 million and invest $96.7 million in the Wireless infrastructure build. To allow for timely access to capital markets, Shaw filed a short form base shelf prospectus with securities...

  • Page 65
    Shaw Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2010 Pursuant to this shelf prospectus, the Company completed three senior note offerings totaling $2.5 billion as follows: k k k On March 27, 2009, Shaw issued $600 million of senior notes at a rate of 6.50% due June 2, ...

  • Page 66
    ...relating to Shaw, including the Company's Annual Information Form dated November 5, 2010, can be found on SEDAR at www.sedar.com. VIII. COMPLIANCE WITH NYSE CORPORATE GOVERNANCE LISTING STANDARDS Disclosure of the Company's corporate governance practices which differ from the New York Stock Exchange...

  • Page 67
    Shaw Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2010 the Company's disclosure controls and procedures and the Company's internal control over financial reporting are effective. There were no changes in the Company's internal controls over financial reporting during the ...

  • Page 68
    ... 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 been prepared by management in accordance with Canadian generally accepted accounting...

  • Page 69
    ..." issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company's system of internal control over financial reporting was effective as at August 31, 2010. [Signed] [Signed] Jim Shaw Chief Executive Officer and...

  • Page 70
    ... of the Public Company Accounting Oversight Board (United States) To the Shareholders of Shaw Communications Inc. We have audited the Consolidated Balance Sheets of Shaw Communications Inc. as at August 31, 2010, and 2009 and the Consolidated Statements of Income and Retained Earnings (Deficit...

  • Page 71
    ... of the Public Company Accounting Oversight Board (United States), the Consolidated Balance Sheets of Shaw Communications Inc. as at August 31, 2010 and 2009, Consolidated Statements of Income and Retained Earnings (Deficit), Comprehensive Income and Accumulated Other Comprehensive Income (Loss) and...

  • Page 72
    Shaw Communications Inc. CONSOLIDATED BALANCE SHEETS As at August 31 [thousands of Canadian dollars] 2010 $ 2009 $ Restated - note 1 ASSETS Current Cash and cash equivalents Short-term securities Accounts receivable [note 3] Inventories [note 4] Prepaids and other Derivative instruments [note 19] ...

  • Page 73
    Shaw Communications Inc. CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (DEFICIT) Years ended August 31 [thousands of Canadian dollars except per share amounts] 2010 $ 2009 $ Restated - note 1 2008 $ Restated - note 1 Service revenue [note 15] Operating, general and administrative expenses...

  • Page 74
    Shaw Communications Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Years ended August 31 [thousands of Canadian dollars] 2010 $ 2009 $ Restated - note 1 2008 $ Restated - note 1 Net income Other comprehensive income (loss) [note 12] Change in ...

  • Page 75
    ... on equipment 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] Purchase of Government of Canada bond Proceeds on sale of Government of Canada bond...

  • Page 76
    ... the Toronto 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...

  • Page 77
    ... 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 is generally...

  • Page 78
    ...or not the customer continues to receive service, the Company's past collection history and changes in business circumstances. Inventories Inventories include subscriber equipment such as DCTs and DTH receivers, which are held pending rental or sale at cost or at a subsidized price. When subscriber...

  • Page 79
    ... CONSOLIDATED FINANCIAL STATEMENTS August 31, 2010, 2009 and 2008 [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 overhead incurred to construct new...

  • Page 80
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2010, 2009 and 2008 [all amounts in thousands of Canadian dollars except share and per share amounts] Other intangibles include computer software that is not an integral part of the related hardware. Other intangibles are...

  • Page 81
    ... dollars except share and per share amounts] have been classified as held-for-trading and are recorded at fair value with any change in fair value immediately recognized in income (loss). Other financial assets are classified as available-for-sale or as loans and receivables. Available-for-sale...

  • Page 82
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2010, 2009 and 2008 [all amounts in thousands of Canadian dollars except share and per share amounts] Employee benefit plans The Company accrues its obligations and related costs under its employee benefit plans. The ...

  • Page 83
    ...of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates. Key areas of estimation, where management has made difficult, complex or subjective judgments...

  • Page 84
    ...thousands of Canadian dollars except share and per share amounts] Year ended August 31, 2010 $ 2009 $ 2008 $ Consolidated statements of income: Decrease (increase) in operating, general and administrative expenses Decrease in amortization of property, plant and equipment Increase in amortization of...

  • Page 85
    ... on cable business acquisitions, accounted for as purchases, is as follows: 2010 $ 2009 $ Identifiable net assets acquired at assigned fair values Investments Property, plant and equipment Broadcast rights [note 8] Goodwill, not deductible for tax [note 8] Working capital deficiency Future income...

  • Page 86
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2010, 2009 and 2008 [all amounts in thousands of Canadian dollars except share and per share amounts] 3. ACCOUNTS RECEIVABLE 2010 $ 2009 $ Subscriber and trade receivables Due from officers and employees Due from ...

  • Page 87
    ... Canada and was granted its AWS licenses. Accordingly, the deposits on spectrum licenses were reclassified to Intangible assets. CW Media On May 3, 2010 the Company announced that it had entered into agreements to acquire 100% of the broadcasting business of Canwest Global Communications Corp...

  • Page 88
    ... AND EQUIPMENT Cost $ 2010 Accumulated amortization $ Net book value $ Cost $ 2009 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 Buildings...

  • Page 89
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2010, 2009 and 2008 [all amounts in thousands of Canadian dollars except share and per share amounts] 8. INTANGIBLES Carrying amount 2010 2009 $ $ Broadcast rights Cable systems DTH and satellite services Goodwill Non-...

  • Page 90
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2010, 2009 and 2008 [all amounts in thousands of Canadian dollars except share and per share amounts] Other intangibles is comprised of computer software and is subject to amortization. Cost $ Computer software Assets ...

  • Page 91
    ... 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 87

  • Page 92
    ... Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2010, 2009 and 2008 [all amounts in thousands of Canadian dollars except share and per share amounts] mortgage bonds in respect of the commercial component of the Shaw Tower. The bonds bear interest at 6.31% compounded semi-annually and are...

  • Page 93
    ... Amortization of connection fee and installation revenue for 2010 amounted to $5,002 (2009 - $7,647; 2008 - $11,218) and was recorded as service revenue. 11. SHARE CAPITAL Authorized The Company is authorized to issue a limited number of Class A voting participating shares ("Class A Shares") of no...

  • Page 94
    ...(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-Voting Shares with terms not to exceed 10 years from the date of grant. Options granted up to August 31, 2010 vest evenly...

  • Page 95
    ... expected market price of Class B Non-Voting Shares Other stock options 4.52% 2.52% 5 years 25.9% 4.28% 1.94% 5 years 26.5% 2.92% 4.21% 5 years 24.5% In conjunction with the acquisition of Satellite Services, holders of Satellite Services options elected to receive 0.9 of one of the Company...

  • Page 96
    ... CONSOLIDATED FINANCIAL STATEMENTS August 31, 2010, 2009 and 2008 [all amounts in thousands of Canadian dollars except share and per share amounts] Contributed surplus The changes in contributed surplus are as follows: 2010 $ 2009 $ Balance, beginning of year Stock-based compensation Stock options...

  • Page 97
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2010, 2009 and 2008 [all amounts in thousands of Canadian dollars except share and per share amounts] Options to purchase 23,993,150 Class B Non-Voting Shares were outstanding under the Company's stock option plan at ...

  • Page 98
    ... Fair value of derivatives 349 8,627 8,976 350 (38,984) (38,634) 13. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 2010 $ 2009 $ Trade Accrued liabilities Accrued network fees Interest Related parties [note 18] Current portion of pension plan liability [note 17] 125,517 274,334 100,703 85,211 35,857...

  • Page 99
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2010, 2009 and 2008 [all amounts in thousands of Canadian dollars except share and per share amounts] 14. INCOME TAXES Future income taxes reflect the net tax effects of temporary differences between the carrying amounts...

  • Page 100
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2010, 2009 and 2008 [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 101
    ... FINANCIAL STATEMENTS August 31, 2010, 2009 and 2008 [all amounts in thousands of Canadian dollars except share and per share amounts] 15. BUSINESS SEGMENT INFORMATION The Company's operating segments are Cable, Wireless, DTH and Satellite Services, all of which are substantially located in Canada...

  • Page 102
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2010, 2009 and 2008 [all amounts in thousands of Canadian dollars except share and per share amounts] 2009 Satellite Cable $ Service revenue - total Intersegment 2,635,832 (4,850) 2,630,982 Service operating income before...

  • Page 103
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2010, 2009 and 2008 [all amounts in thousands of Canadian dollars except share and per share amounts] 2008 Satellite Cable $ Service revenue - total Intersegment 2,379,361 (3,775) 2,375,586 Service operating income before...

  • Page 104
    ... an annual transponder maintenance fee for each transponder acquired from the time the satellite becomes operational for a period of 15 years. The Company has various long-term commitments of which the majority are for the maintenance and lease of satellite transponders, program related agreements...

  • Page 105
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2010, 2009 and 2008 [all amounts in thousands of Canadian dollars except share and per share amounts] Guarantees In the normal course of business the Company enters into indemnification agreements and has issued ...

  • Page 106
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2010, 2009 and 2008 [all amounts in thousands of Canadian dollars except share and per share amounts] Defined benefit pension plan The Company provides a non-contributory defined benefit pension plan for certain of its ...

  • Page 107
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2010, 2009 and 2008 [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. 2010 $ 2009 $ 2008 $ Current service cost ...

  • Page 108
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2010, 2009 and 2008 [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 109
    ... are valued based upon current trading values for similar instruments. (v) Derivative financial instruments The fair value of cross-currency interest rate exchange agreements and US currency forward purchase contracts is determined using an estimated credit-adjusted mark-to-market valuation. 105

  • Page 110
    ...859,834 Derivative financial instruments have maturity dates throughout fiscal 2011 and 2012. As at August 31, 2010, US currency forward purchase contracts qualified as hedging instruments and were designated as cash flow hedges. The cross-currency interest rate exchange agreements did not qualify...

  • Page 111
    ... 31, 2010 Quoted prices in active markets for identical instrument (Level 1) $ Significant other observable inputs (Level 2) $ Significant unobservable inputs (Level 3) $ Carrying value $ Assets Cross-currency interest rate exchange agreement US currency forward purchase contracts Liabilities...

  • Page 112
    ... FINANCIAL STATEMENTS August 31, 2010, 2009 and 2008 [all amounts in thousands of Canadian dollars except share and per share amounts] they are not accounted for as hedging instruments. In addition, upon redemption of the US $300,000 senior notes, the Company entered into amended agreements...

  • Page 113
    ...were not designated as hedges. Gain (loss) recognized in income 2010 2009 $ $ Location Cross-currency interest rate exchange agreements US currency forward purchase contracts Risk management Loss on financial instruments Other gains 4,958 - - (78) The Company is exposed to various market risks...

  • Page 114
    ...foreign exchange forward contracts and cross-currency interest rate exchange agreements and would have changed net income by $3,759 net of tax (2009 - $nil) and other comprehensive income by $18,378 net of tax (2009 - $17,092). A portion of the Company's accounts receivables and accounts payable and...

  • Page 115
    ... factors such as the number of days the subscriber account is past due, whether or not the customer continues to receive service, the Company's past collection history and changes in business circumstances. As at August 31, 2010, $79,434 (2009 - $77,256) of accounts receivable is considered to be...

  • Page 116
    ...,068 - - (22,267) - 1,850 1,222,895 Changes in non-cash working capital balances related to operations include the following: 2010 $ 2009 $ 2008 $ Accounts receivable Prepaids and other Accounts payable and accrued liabilities Income taxes payable Unearned revenue (1,217) (2,211) (76,608) 156,748...

  • Page 117
    ... that the Company will be able to meet or maintain its currently stated objectives. On November 16, 2009, Shaw received the approval of the TSX to renew its normal course issuer bid to purchase its Class B Non-Voting Shares for a further one year period. The Company is authorized to acquire up to...

  • Page 118
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2010, 2009 and 2008 [all amounts in thousands of Canadian dollars except share and per share amounts] on current business plans and economic conditions, the Company is not aware of any condition or event that would give ...

  • Page 119
    ... FINANCIAL STATEMENTS August 31, 2010, 2009 and 2008 [all amounts in thousands of Canadian dollars except share and per share amounts] Consolidated Balance Sheet items using US GAAP 2010 Canadian GAAP $ US GAAP $ Canadian GAAP $ 2009 US GAAP $ Investments(3) Property, plant and equipment...

  • Page 120
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2010, 2009 and 2008 [all amounts in thousands of Canadian dollars except share and per share amounts] The estimated pension amount that will be amortized from accumulated other comprehensive loss into income in 2011 ...

  • Page 121
    ... have been recorded at the fair value of the shares in HomeStar Services Inc. This would have resulted in a gain on disposition of the consideration the Company exchanged for its investment in Star Choice and an increase in the acquisition cost for Star Choice. (6) Gain on sale of cable systems The...

  • Page 122
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2010, 2009 and 2008 [all amounts in thousands of Canadian dollars except share and per share amounts] (c) Adoption of new accounting pronouncement Business Combinations Effective September 1, 2009, the Company adopted ...

  • Page 123
    ...2010 2009(3) 2008(3) 2007(3) 2006(3) Service revenue Cable DTH Satellite Service operating income (expenditures) before amortization(1) Cable DTH Satellite Wireless Net income Earnings per share Basic Diluted Funds flow from operations(2) Balance sheet Total assets Long-term debt (including current...

  • Page 124
    ... listed on the Toronto Stock Exchange under SJR.B and on the New York Stock Exchange under the symbol SJR. Trading Range of Class B Non-Voting Shares on the Toronto Stock Exchange Quarter High Close Low Close Total Volume September 1, 2009 to August 31, 2010 First Second Third Fourth Closing price...

  • Page 125
    ...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.