Shaw 2013 Annual Report Download

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2013
Annual Report

Table of contents

  • Page 1
    2013 Annual Report

  • Page 2
    ... Financial Statements Five Years in Review Shareholders' Information Corporate Information 58 62 67 123 124 125 The Annual General Meeting of Shareholders will be held on January 14, 2014 at 11:00 am (Mountain Time) at the Shaw Barlow Trail Building, 2400 - 32 Avenue NE, Calgary Alberta.

  • Page 3
    Shaw Communications Inc. 2013 Annual Report Shaw is committed to providing customers with a communications ecosystem characterized by leading technology, networks, content, products and services. As customers demand connectivity and content, Shaw will deliver to them at home, and on the go, with ...

  • Page 4
    Shaw Communications Inc. 2013 Annual Report Revenue* Figures in billions 5.0 4.7 5.1 Dividends Figures in millions 445 352 372 391 416 3.7 3.4 09 10 11 12 13 09 10 11 12 13 Operating income before amortization* Figures in billions 2.1 1.8 2.1 2.2 Free cash flow* Figures in millions ...

  • Page 5
    ... local Canadian channels. Shaw Media's leading specialty portfolio continues to delight customers. Throughout the year Global delivered solid programming, with a number of shows in the top ten, and Global News maintained the number one position in the Vancouver, Calgary and Edmonton markets. Further...

  • Page 6
    ...are closed, is planned for reinvestment back into the core business accelerating various strategic capital investments. Finally, in April we closed the acquisition of ENMAX Envision Inc. ("Envision"), a company providing leading telecommunication services to Calgary business customers. Shaw Business...

  • Page 7
    ... the Financial Post's Top 10 Best Companies to Work For. We look forward to the challenges and rewards ahead and we thank all of our fellow shareholders of Shaw Communications Inc. for your support and confidence. [Signed] JR Shaw Executive Chair [Signed] Bradley S. Shaw Chief Executive Officer 3

  • 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
    ...changes in the competitive environment in the markets in which Shaw operates and from the development of new markets for emerging technologies; industry trends and other changing conditions in the entertainment, information and communications industries; Shaw's ability to execute its strategic plans...

  • Page 10
    ... Canadian communications and media company, providing consumers with broadband cable television, High-Speed Internet, Home Phone, telecommunications services (through Shaw Business), satellite direct-to-home services (through Shaw Direct) and engaging programming content (through Shaw Media). Shaw...

  • Page 11
    ...a cable system located in Hamilton, Ontario. 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 Cable television, Internet and Digital Phone services. The benefits of bundling...

  • Page 12
    .... The PPV service allows customers to select and pay for specific programs which are available on various channels with different start times. The VOD and SVOD services enable customers to select programming from a library of titles through an on-line ordering system or directly through the set-top...

  • Page 13
    ... centre is planned to be complete in fiscal 2015. Digital Phone In 2005 Shaw entered the "triple play" market of voice, video and data services with the launch of Shaw Digital Phone, a reliable, fully featured and affordable residential telephone service. Since then, the Company expanded its Digital...

  • Page 14
    ... network access points and other tier-one backbone carriers. During 2013, Shaw completed the acquisition of ENMAX Envision Inc. ("Envision"), a company providing leading telecommunication services to Calgary business customers, for approximately $225 million, excluding working capital adjustments...

  • Page 15
    ...-the-air broadcasters, national networks, specialty channels, U.S. and foreign channels, adult programming and ethnic services. In addition, during 2012 Shaw Direct began to offer a streaming VOD service through the satellite receiver. Shaw Direct's VOD service currently provides customers with 11

  • Page 16
    ... August 31, 2013 access to over 10,000 movie and TV titles and series. Shaw Direct continues to transition to advanced modulation and encoding technology, including MPEG-4, for its programming allowing it to increase its channel capacity. Satellite Services Satellite Services operations include two...

  • Page 17
    ...news programming in Toronto, Regina, Saskatoon and Winnipeg, and in 2013 with the launch of morning news programming in Montreal and Halifax. The Specialty television services owned and operated by the Media division comprise 19 channels, including History, Food Network Canada, Showcase, HGTV Canada...

  • Page 18
    Shaw Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2013 The following table sets forth all of the Specialty services in which the Company holds an interest: Specialty Services Operated % Equity Interest Showcase Slice History H2 HGTV Canada Food Network Canada Action Lifetime ...

  • Page 19
    ... efficient delivery of programming services. The Broadcasting Act also sets out requirements for television broadcasters with respect to Canadian content. Shaw's businesses are dependent upon licenses (or operate pursuant to an exemption order) granted and issued by the CRTC and Industry Canada...

  • Page 20
    ... to the Local Programming Improvement Fund ("LPIF") to support local television stations operating in non-metropolitan markets. Exempt systems were not required to contribute to the LPIF. In July 2012, the Commission determined that it was inappropriate to maintain the LPIF in the long term and that...

  • Page 21
    ... to changes in the regulatory requirements applicable to television programming and broadcasting distribution undertakings, in particular those pertaining to the manner in which packaging and standalone programming service options are offered to customers. Throne Speech and Government Direction The...

  • Page 22
    ... in the application, this would require Shaw to dedicate additional resources to address specific service order processing, IT system and billing system changes. In late 2010 Parliament passed anti-spam legislation, which has not yet come into force. Canada's anti-spam legislation ("CASL") sets out...

  • Page 23
    ...to review and potentially upgrade their interception and other systems to comply with new lawful access requirements. In early 2013 the CRTC initiated a proceeding to consider introducing mandated Video Relay Services ("VRS") in Canada. VRS allows deaf, hard-of-hearing and speech impaired persons to...

  • Page 24
    ... any business. Shaw must file a compliance report annually with the CRTC confirming that it is eligible to operate in Canada as a telecommunications common carrier. AWS spectrum transfers On June 28, 2013 the Minister of Industry announced a new framework for the review of spectrum license transfers...

  • Page 25
    ... products and services, and engaging programming content to its customers in a cost-effective manner. ($ millions Cdn) Year ended August 31, 2013 2012 Operating income Add back (deduct) amortization: Deferred equipment revenue Deferred equipment costs Property, plant and equipment, intangibles and...

  • Page 26
    ... 31, Change 2013 2012 % ($millions Cdn) Revenue Cable Satellite Media Intersegment eliminations Operating income before amortization(1) Cable Satellite Media Capital expenditures and equipment costs (net): Cable Accelerated capital fund investment(1) Adjusted Cable Satellite Media Total Free cash...

  • Page 27
    ...cash amounts associated with funding the new and assumed CRTC benefit obligations related to the acquisition of Shaw Media as well as excluding non-controlling interest amounts that are consolidated in the operating income before amortization, capital expenditure and cash tax amounts. Free cash flow...

  • Page 28
    Shaw Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2013 customer (e.g., hospitals, hotels or retail franchises) that is receiving at a minimum, basic cable service, is counted as one subscriber. Internet customers include all modems on billing and Digital Phone lines includes ...

  • Page 29
    ... 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 to determine the...

  • Page 30
    ... activity. The Company capitalizes direct labour and direct overhead incurred to construct new assets, upgrade existing assets and connect new subscribers. These costs are capitalized as they are directly attributable to the acquisition, construction, development or betterment of the networks...

  • Page 31
    ... the activities directly relate to the planning and design of the construction of the distribution system. The IT department devotes considerable efforts towards the development of systems to support Digital Phone, WiFi, and projects related to new customer management, billing and operating support...

  • Page 32
    ... option exercise for the sale of the wireless spectrum licenses is subject to various regulatory approvals and is expected to occur in fiscal 2015. Program rights represent licensed rights acquired to broadcast television programs on the Company's conventional and specialty television channels...

  • Page 33
    ... benefit plans As at August 31, 2013, Shaw had non-registered defined benefit pension plans for key senior executives and designated executives and various registered defined benefit plans for certain unionized and non-unionized employees. The amounts reported in the financial statements relating...

  • Page 34
    ... paid network fees and provided uplink of television signals to these channels. Key management personnel and Board of Directors Key management personnel consist of the most senior executive team and along with the Board of Directors have the authority and responsibility for directing and controlling...

  • Page 35
    ... to key management personnel and the Board of Directors for services rendered, the Company transacts with companies related to certain Board members primarily for the purchase of remote control units and agency services for direct sales and related installation of equipment. H. New accounting...

  • Page 36
    ... results of the Company. The principal risks relate to Competition, technological change and regulatory regime Economic conditions Interest rates, foreign exchange rates, and capital markets Litigation Uninsured risks of loss Reliance on suppliers Programming expenses Unionized labour Holding...

  • Page 37
    ... video services and offerings available over high-speed internet connections. Continued improvements in the quality of streaming video over the internet and the availability of television shows and movies online increases competition to Shaw's cable television and DTH businesses. The Company expects...

  • Page 38
    ...the CRTC, Industry Canada, the Competition Bureau and the Copyright Board. This regulation relates to, and may have an impact on, among other things, licensing, competition, programming carriage and terms of carriage, strategic transactions and the potential for new or increased fees. Changes in the...

  • Page 39
    ... access to capital markets to support its operations. Changes in capital market conditions, including significant changes in market interest rates or lending practices, or changes in Shaw's credit ratings, may have a material adverse effect on the Company's ability to raise or refinance short-term...

  • Page 40
    ... maintenance and placement of insurance on its network equipment and data centers. The Company self-insures the plant in the cable 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, it...

  • Page 41
    ... customer premise and capital equipment and capital builds from certain key suppliers. While the Company has alternate sources for most of its purchases, the loss of a key supplier could adversely affect the Company in the short term. vii) Programming expenses Shaw's programming expenses for cable...

  • Page 42
    ... in, these systems, processes or change initiatives will not have an adverse effect on the Corporation's business and operating results. xii) Dividend payments The Company currently pays monthly common share dividends in amounts approved on a quarterly basis by the Board of Directors. At the...

  • Page 43
    ... higher employee related costs, mainly related to bringing the new customer service centres on line, as well as higher marketing, sales and programming costs. The third and fourth quarters of 2012 benefited from improved operating income before amortization in the Cable business. Net income has...

  • Page 44
    ... Company now combined the reporting of Basic cable and Digital cable as a Video customer. Subscriber numbers have been restated for comparative purposes to remove approximately 41,000 Video customers, 34,000 Internet customers and 38,000 Digital phone lines as a result of the sale of Mountain Cable...

  • Page 45
    ... See key performance drivers on page 20. Funds flow from operations is presented before changes in non-cash working capital as presented in the Consolidated Statements of Cash Flows. Highlights Net income was $784 million for the year compared to $761 million in 2012. Earnings per share were...

  • Page 46
    Shaw Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2013 Å During the current year, the Company entered into a number of transactions as follows: Å The Company entered into agreements with Rogers to sell to Rogers its shares in Mountain Cable; and grant to Rogers an option to ...

  • Page 47
    ... in the satellite division, primarily due to rate increases, was reduced by higher expenses including employee related, programming, operating costs related to the new Anik G1 satellite, and sales and marketing. Within all segments, the current annual period benefited from a one-time adjustment to...

  • Page 48
    ... Company received proceeds, after working capital adjustments, of $398 million and recorded a gain of $50 million. The Company incurred $8 million of costs in respect of the acquisition of Envision and the transactions with Rogers related to the sale of Mountain Cable, grant of an option to acquire...

  • Page 49
    Shaw Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2013 Earnings per share (In $millions Cdn except per share amounts) 2013 2012 Change % Net income Weighted average number of participating shares outstanding during period (millions) Earnings per share Basic Diluted Net income...

  • Page 50
    Shaw Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2013 SEGMENTED OPERATIONS REVIEW CABLE FINANCIAL HIGHLIGHTS ($millions Cdn) 2013 2012 Change % Revenue Operating income before amortization(1) Capital expenditures and equipment costs (net):(6) New housing development(2) ...

  • Page 51
    ... Pass and most recently, Global Go. Shaw customers have the added benefit of being able to access content on Shaw's WiFi network, now with over 30,000 locations. The Company's focus on building out its business products continued during the year and Shaw received Metro Ethernet Forum (MEF) Carrier...

  • Page 52
    ...Internet customers and 38,000 Digital phone lines as a result of the sale of Mountain Cable. Represents primary and secondary lines on billing. SATELLITE FINANCIAL HIGHLIGHTS(1) ($millions Cdn) 2013 2012 Change % Revenue Operating income before amortization(2) Capital expenditures and equipment...

  • Page 53
    ...% of customers have equipment capable of accessing HD programming. Shaw Direct also offers streaming VOD to the satellite receiver with almost 10,000 available titles. MEDIA FINANCIAL HIGHLIGHTS ($millions Cdn) 2013 2012 Change % Revenue Operating income before amortization(1) Capital expenditures...

  • Page 54
    ..., Lifetime and MovieTime held the top 4 digital positions. DTOUR, a new lifestyle channel, launched in late August adding to Shaw Media's portfolio of specialty channels. Global News continues to maintain the number one position in the Vancouver, Calgary and Edmonton markets and was the go to source...

  • Page 55
    ... resolution of the related income tax liabilities. Property, plant and equipment increased $128 million primarily as a result of current year capital investment and the acquisition of Envision exceeding amortization and the impact of the sale of Mountain Cable. Other long-term assets decreased $25...

  • Page 56
    ... The net change in non-cash working capital balances related to operations fluctuated over the comparative year due to the timing of payment of current income taxes payable and accounts payable and accrued liabilities as well as fluctuations in accounts receivable. Investing activities (In $millions...

  • Page 57
    ...-registered defined benefit pension plan, pay common share dividends of $319 million, purchase Envision for $222 million, invest an additional net $31 million in program rights and fund $110 million of accelerated capital spend. Due to timing, the net proceeds from the Rogers transactions have been...

  • Page 58
    ...the life of the borrowings. As at August 31, 2013, the ratio of debt to operating income before amortization for the Corporation is 2.3 times. Having regard to prevailing competitive, operational and capital market conditions, the Board of Directors has determined that having this ratio in the range...

  • Page 59
    ... Corporate Governance Listing Standards). IX. CERTIFICATION The Company's Chief Executive Officer and Chief Financial Officer have filed certifications regarding Shaw's disclosure controls and procedures and internal control over financial reporting. As at August 31, 2013, the Company's management...

  • Page 60
    ... November 29, 2013 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...

  • Page 61
    ... Treadway Commission 1992 framework. Based on this evaluation, management concluded that the Company's system of internal control over financial reporting was effective as at August 31, 2013. [Signed] [Signed] Brad Shaw Chief Executive Officer Steve Wilson Senior Vice President and Chief Financial...

  • Page 62
    ... position as at August 31, 2013 and 2012, and the consolidated statements of income, comprehensive income, changes in shareholders' equity and cash flows for the years ended August 31, 2013 and 2012, and a summary of significant accounting policies and other explanatory information. Management...

  • Page 63
    ... with the standards of the Public Company Accounting Oversight Board (United States), Shaw Communication Inc.'s internal control over financial reporting as of August 31, 2013, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring...

  • Page 64
    ... PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD (UNITED STATES) To the Shareholders of Shaw Communications Inc. We have audited Shaw Communications Inc.'s internal control over financial reporting as at August 31, 2013, based on the criteria established in Internal Control - Integrated Framework issued...

  • Page 65
    ... and the standards of the Public Accounting Oversight Board (United States), the consolidated statements of financial position of Shaw Communications Inc. as at August 31, 2013 and 2012, and the consolidated statements of income, comprehensive income, changes in shareholders' equity and cash flows...

  • Page 66
    Shaw Communications Inc. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION [millions of Canadian dollars] August 31, 2013 $ August 31, 2012 $ ASSETS Current Cash Accounts receivable [note 4] Inventories [note 5] Other current assets [note 6] Derivative instruments [note 28] Assets held for sale [notes ...

  • Page 67
    Shaw Communications Inc. CONSOLIDATED STATEMENTS OF INCOME Years ended August 31 [millions of Canadian dollars except per share amounts] 2013 $ 2012 $ Revenue [note 24] Operating, general and administrative expenses [note 21] Amortization - Deferred equipment revenue [note 15] Deferred equipment ...

  • Page 68
    Shaw Communications Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years ended August 31 [millions of Canadian dollars] 2013 $ 2012 $ Net income Other comprehensive income (loss) [note 20] Items that may subsequently be reclassified to income: Change in unrealized fair value of derivatives ...

  • Page 69
    ... Balance as at September 1, 2011 Net income Other comprehensive loss Comprehensive income (loss) Dividends Dividend reinvestment plan Shares issued under stock option plan Share-based compensation Distributions declared by subsidiaries to non-controlling interests Balance as at August 31, 2012...

  • Page 70
    Shaw Communications Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended August 31 [millions of Canadian dollars] 2013 $ 2012 $ OPERATING ACTIVITIES [note 29] Funds flow from operations Net change in non-cash working capital balances related to operations INVESTING ACTIVITIES Additions to ...

  • Page 71
    ... changed to Shaw Communications Inc. on May 12, 1993. The Company's shares are listed on the Toronto and New York Stock Exchanges. The registered office of the Company is located at Suite 900, 630 - 3rd Avenue S.W., Calgary, Alberta, Canada T2P 4L4. 2. BASIS OF PRESENTATION AND ACCOUNTING POLICIES...

  • Page 72
    ... share of the associate's net income or losses after the date of investment, additional contributions made and dividends received. Investments where the Company doesn't exercise significant influence are accounted for at fair value unless investments don't have quoted market prices in an active...

  • Page 73
    ... equipment is generally sold 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 is deferred and recognized on a straight-line basis over the related service contract for monthly service...

  • Page 74
    ... 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 equipment is sold, the equipment...

  • Page 75
    ... fair value less costs to sell. Assets held for sale are not amortized and are reported separately on the statement of financial position. Other long-term assets Other long-term assets primarily include (i) equipment costs, as described in the revenue and expenses accounting policy, deferred and...

  • Page 76
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2013 and 2012 [all amounts in millions of Canadian dollars except share and per share amounts] Borrowing costs The Company capitalizes borrowing costs on qualifying assets, for which the commencement date is on or after ...

  • Page 77
    ... income tax expense. Tax credits and government grants The Company has access to a government program which supports local programming produced by conventional television stations. In addition, the Company receives tax credits primarily related to its research and development activities. Government...

  • Page 78
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2013 and 2012 [all amounts in millions of Canadian dollars except share and per share amounts] recognized when management has reasonable assurance that the conditions of the government programs are met and accounted for ...

  • Page 79
    ..., 2012 and the next actuarial valuations for funding purposes are effective December 31, 2013. Share-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 less than the fair value...

  • Page 80
    ... measured at the end of each period at fair value using the BlackScholes option pricing model and the number of outstanding RSUs. The Company has a deferred share unit ("DSU") plan for its Board of Directors. Compensation cost is recognized immediately as DSUs vest when granted. DSUs will be settled...

  • Page 81
    ... 10. (v) Employee benefit plans The amounts reported in the financial statements relating to the defined benefit pension plans are determined using actuarial valuations that are based on several assumptions including the discount rate and rate of compensation increase. While the Company believes...

  • Page 82
    ... dollars except share and per share amounts] rate. The discount rate is the interest rate used to determine the present value of the future cash flows that is expected will be needed to settle employee benefit obligations. It is based on the yield of long-term, high-quality corporate fixed income...

  • Page 83
    ...associated with managing plan assets, are required to be expensed Expanded disclosures including plan characteristics and risks arising from defined benefit plans Å Å Å The Company early adopted the amended standard with retrospective restatement which resulted in an increase in other long-term...

  • Page 84
    ... of ENMAX Corporation, for $222 in cash. Envision provides telecommunication services to business customers in Calgary. The purpose of the transaction is to expand on the Company's business initiatives and enhance the profile of its telecommunications services in the competitive Calgary business...

  • Page 85
    ... Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2013 and 2012 [all amounts in millions of Canadian dollars except share and per share amounts] A summary of net assets and allocation of consideration is as follows: $ Accounts receivable Other current assets Property, plant...

  • Page 86
    ... specialty channels. Purchase and sale of assets Transactions with Rogers Communications Inc. ("Rogers") During the current year, the Company entered into agreements with Rogers to sell to Rogers its shares in Mountain Cablevision Limited ("Mountain Cable") and grant to Rogers an option to acquire...

  • Page 87
    ... of Canadian dollars except share and per share amounts] The Company received proceeds of $398 in cash on the sale of the Mountain Cable and recorded a gain of $50. The assets and liabilities disposed of were as follows: $ Accounts receivable Property, plant and equipment Other long-term assets...

  • Page 88
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2013 and 2012 [all amounts in millions of Canadian dollars except share and per share amounts] Food Network Canada and ABC Spark The acquisition of an additional 20% interest in Food Network Canada increased the Company...

  • Page 89
    ...equipment includes DTH equipment, DCTs and related customer premise equipment. 6. OTHER CURRENT ASSETS 2013 $ 2012 $ Program rights Tax indemnity Prepaid expenses and other 18 1 53 72 21 17 51 89 7. INVESTMENTS AND OTHER ASSETS 2013 $ 2012 $ Investments, at equity: Specialty channel networks...

  • Page 90
    ...Net book Cost amortization Value $ $ $ Cable and telecommunications distribution system 4,576 Digital cable terminals and modems 734 Satellite audio, video and data network and DTH Receiving equipment 149 Transmitters, broadcasting, communications and Production equipment 100 Land and buildings 447...

  • Page 91
    ... Amortization Disposals for sale Value Cable and telecommunications distribution system Digital cable terminals and modems Satellite audio, video and data network and DTH Receiving equipment Transmitters, broadcasting, communications and Production equipment Land and buildings Data processing and...

  • Page 92
    ... in the accounts for 2013 amounted to $258 (2012 - $232) and was recorded as amortization of deferred equipment costs and other amortization. 10. INTANGIBLES AND GOODWILL 2013 $ 2012 $ Broadcast rights and licenses Cable systems DTH and satellite services Television broadcasting Program rights and...

  • Page 93
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2013 and 2012 [all amounts in millions of Canadian dollars except share and per share amounts] The changes in the carrying amount of intangibles with indefinite useful lives, and therefore not subject to amortization, are...

  • Page 94
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2013 and 2012 [all amounts in millions of Canadian dollars except share and per share amounts] The changes in the carrying amount of intangibles subject to amortization are as follows: Program rights Software under ...

  • Page 95
    ... rate terminal growth rate multiple Cable Satellite Media 9% 8% 8% 5% 4% n/a 3% 3% 2% 11. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 2013 $ 2012 $ Trade Program rights CRTC benefit obligations Accrued liabilities Accrued network fees Interest and dividends Related parties [note 27] Current...

  • Page 96
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2013 and 2012 [all amounts in millions of Canadian dollars except share and per share amounts] 12. PROVISIONS Asset retirement obligations $ 8 - - - 8 1 - - 9 - 8 8 - 9 9 Other $ 18 6 (1) (4) 19 9 (1) (1) 26 19 - 19 26 -...

  • Page 97
    ... Partnership 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 ten year...

  • Page 98
    ... of senior notes discounts Interest income - short-term (net) Capitalized interest 314 2 (2) (5) 309 334 2 (3) (3) 330 14. OTHER LONG-TERM LIABILITIES 2013 $ 2012 $ Pension liabilities [note 26] CRTC benefit obligations Post retirement liabilities [note 26] Program rights liabilities Other 123...

  • Page 99
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2013 and 2012 [all amounts in millions of Canadian dollars except share and per share amounts] 15. DEFERRED CREDITS 2013 $ 2012 $ IRU prepayments Equipment revenue Connection fee and installation revenue Proceeds on ...

  • Page 100
    ... pursuant to the Broadcasting Act (Canada). 17. SHARE-BASED COMPENSATION 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 ten years from...

  • Page 101
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2013 and 2012 [all amounts in millions of Canadian dollars except share and per share amounts] The changes in options are as follows: 2013 Weighted average exercise price $ 2012 Weighted average exercise price $ Number ...

  • Page 102
    ... $5, respectively). Employee share purchase plan The Company's ESPP provides employees with an incentive to increase the profitability of the Company and a means to participate in that increased profitability. Generally, all non-unionized full time or part time employees of the Company are eligible...

  • Page 103
    ... when declared by the Company's Board of Directors, a cumulative quarterly fixed dividend yielding 4.50% annually for the initial period ending June 30, 2016. Thereafter, the dividend rate will be reset every five years at a rate equal to the then current 5-year Government of Canada bond yield plus...

  • Page 104
    ...preferred shares and holders will be entitled to receive cumulative quarterly dividends, as and when declared by the Company's Board of Directors, at a rate set quarterly equal to the then current three-month Government of Canada Treasury Bill yield plus 2.00%. Dividend reinvestment plan The Company...

  • Page 105
    ... Items that will not be subsequently reclassified to income Remeasurements on employee benefit plans 2 (89) (87) (1) (92) (93) 21. OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES 2013 $ 2012 $ Employee salaries and benefits Purchases of goods and services 900 2,022 2,922 835 2,036 2,871 101

  • Page 106
    ... at the Company's head office in Calgary, Alberta. The loss of $26 includes $6 of costs in respect of restoration and recovery activities, including amounts incurred in the relocation of employees, and a write-down of $20 related to the damages sustained to the building and its contents. Insurance...

  • Page 107
    ... dollars except share and per share amounts] Significant changes recognized to deferred income tax assets (liabilities) are as follows: Broadcast rights, Property, plant licenses, and equipment trademark and software and Partnership assets brands income $ $ $ Foreign exchange on long-term debt...

  • Page 108
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2013 and 2012 [all amounts in millions of Canadian dollars except share and per share amounts] The income tax expense differs from the amount computed by applying Canadian statutory rates to income before income taxes for...

  • Page 109
    ... FINANCIAL STATEMENTS August 31, 2013 and 2012 [all amounts in millions of Canadian dollars except share and per share amounts] 24. BUSINESS SEGMENT INFORMATION The Company's operating segments are Cable, Media and Satellite, all of which are substantially located in Canada. The accounting policies...

  • Page 110
    ...Flows Decrease in working capital related to capital expenditures Increase in customer equipment financing receivables Less: Proceeds on disposal of property, plant and equipment Less: Satellite services equipment profit(3) Total capital expenditures of equipment costs (net) reported by segments 282...

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    ... FINANCIAL STATEMENTS August 31, 2013 and 2012 [all amounts in millions of Canadian dollars except share and per share amounts] (ii) The Company has various long-term operating commitments as follows: $ 2014 2015-2018 Thereafter 745 906 645 2,296 Comprised of: $ Program related agreements...

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    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2013 and 2012 [all amounts in millions of Canadian dollars except share and per share amounts] Company has provided indemnifications in various commercial agreements, customary for the telecommunications industry, which ...

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    ... The Company has two non-registered retirement plans for designated executives and senior executives and several registered pension plans for certain employees in the media business. The following is a summary of the accrued benefit liabilities recognized in the statement of financial position. 2013...

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    ... FINANCIAL STATEMENTS August 31, 2013 and 2012 [all amounts in millions of Canadian dollars except share and per share amounts] During the current year, the Company established an executive retirement plan ("ERP") for certain executives not covered by the SERP. Benefits under this plan are...

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    ... losses in the income statement. Registered pension plans The Company has a number of funded defined benefit pension plans which provide pension benefits to certain unionized and non-unionized employees in the media business. Benefits under these plans are based on the employees' length of service...

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    ...STATEMENTS August 31, 2013 and 2012 [all amounts in millions of Canadian dollars except share and per share amounts] accordance with the provisions of the Pension Benefits Standards Act and Regulations. The regulations set out minimum standards for funding the plans. The table below shows the change...

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    ... may be correlated. The net pension benefit plan expense, which is included in employee salaries and benefits expense, is comprised of the following components: 2013 $ 2012 $ Current service cost Interest cost Interest income Administrative expenses Pension expense 5 7 (6) 1 7 4 7 (7) 1 5 113

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    ... the media business and are funded on a pay-as-you-go basis. The table below shows the change in the accrued post-retirement obligation which is recognized in the statement of financial position. 2013 $ 2012 $ Accrued benefit obligation, beginning of year Current service cost Interest cost Payment...

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    ...and responsibility for planning, directing and controlling the activities of the Company. Compensation The compensation expense of key management personnel and Board of Directors is as follows: 2013 $ 2012 $ Short-term employee benefits Post-employment pension benefits Share-based compensation 39...

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    ...office space lease which is included in the amounts disclosed in note 25. Specialty Channels The Company either currently holds or previously held interests in a number of specialty television channels which are subject to either joint control or significant influence. The Company paid network fees...

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    ... quoted market prices in an active market and whose fair value cannot be readily measured are carried at cost. The fair value of long-term receivables approximates their carrying value as they are recorded at the net present values of their future cash flows, using an appropriate discount rate. (iii...

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    ... contracts to purchase US $85 over a period of 12 months commencing in September 2013 at an average exchange rate of 1.0212 Cdn in respect of capital expenditures and equipment costs. Interest rate risk Due to the capital-intensive nature of its operations, the Company utilizes long-term financing...

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    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2013 and 2012 [all amounts in millions of Canadian dollars except share and per share amounts] the $196 (2012 - $182) of advertising receivables is due from the ten largest accounts. The largest amount due from an ...

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    ...flow from operations 2013 $ 2012 $ Net income Adjustments to reconcile net income to funds flow from operations: Amortization Program rights Deferred income tax expense (recovery) CRTC benefit obligations [note 3] CRTC benefit obligation funding Gain on sale of cablesystem [note 3] Divestment costs...

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    ...Statements of Cash Flows exclude the following non-cash transactions: 2013 $ 2012 $ Issuance of Class B Non-Voting Shares: Dividend reinvestment plan [note 19] Issuance of promissory note: Transactions with a related party [notes 3 and 27] 126 48 98 - 30. CAPITAL STRUCTURE MANAGEMENT The Company...

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    ...compliance with these covenants and based on current business plans and economic conditions, the Company is not aware of any condition or event that would give rise to non-compliance with the covenants. The Company's overall capital structure management strategy remains unchanged from the prior year...

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    ... Cable Satellite(2) Media Amortization Operating income Net income(5) Net income attributable to equity shareholders(5) Earnings per share Basic Diluted Funds flow from operations(3) Statement of Financial Position Total assets Long-term debt (including current portion) Cash dividends paid per share...

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    Shaw Communications Inc. SHAREHOLDERS' INFORMATION August 31, 2013 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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    ...www.shaw.ca Information concerning Shaw's compliance with the corporate governance listing standards of the New York Stock Exchange is available in the investors 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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