Shaw 2012 Annual Report Download - page 87

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Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2012 and 2011
[all amounts in millions of Canadian dollars except share and per share amounts]
(1) The Company acquired a remaining tax indemnity amount of $21 as part of the
acquisition. The indemnity arose in 2007 as part of Canwest’s acquisition of Specialty
services where a wholly-owned subsidiary of CW Media entered into an agreement
pursuant to which certain of the parties agreed to indemnify the company in respect of
certain tax liabilities. A corresponding income tax liability was also assumed which
according to the terms of the agreement, will be recovered from other parties to the
agreement if and when the liabilities are settled.
(2) Intangibles include broadcast licenses, brands, program rights, a trademark and software
assets.
(3) Goodwill comprises the value of expected efficiencies from combining programming
content and distribution businesses into vertically integrated operations, growth
expectations and an assembled workforce.
(4) Current debt was comprised of a US $390 term loan. Shortly after closing the acquisition,
the Company repaid the term loan including breakage of the related currency swaps.
(5) Long-term debt is comprised of US $338 13.5% senior unsecured notes due 2015. The
notes were subsequently redeemed (see note 13).
(6) Non-controlling interests in certain of the subsidiary specialty channels were assumed as
part of the acquisition and are recorded at their proportionate share of the fair value of
identifiable net assets acquired.
(ii) Cable systems
A summary of net assets acquired and allocation of the consideration is as follows:
2011
$
Net assets acquired at assigned fair values
Property, plant and equipment 9
Broadcast rights [note 10] 24
Goodwill, not deductible for tax [note 10] 5
38
Other liability 2
Cash purchase price 36
During 2011, the Company purchased the assets of several cable systems serving approximately
7,300 basic subscribers in the interior of British Columbia. These assets were purchased as
they compliment the Company’s existing surrounding cable systems. Goodwill comprises the
value of expected synergies and future growth opportunities. The transaction has been
accounted for using the acquisition method and results of operations have been included from
their respective acquisition dates. These assets contributed approximately $2 of revenue and
$1 of operating income before amortization in 2011.
Discontinued operations
During late 2011, the Company completed a strategic review of its wireless business
opportunity including the potential value of wireless with its other operating segments, the rapid
83