Shaw 2013 Annual Report Download - page 27

S
haw
C
ommunications Inc
.
MANA
G
EMENT’
S
DI
SCUSS
I
O
N AND ANALY
S
I
S
August
31
,
2013
F
ree cash
f
low
i
s calculated as o
p
erat
i
n
gi
ncome be
f
ore amort
i
zat
i
on, less
i
nterest, cash taxes
paid or payable, capital expenditures (on an accrual basis and net of proceeds on capita
l
d
ispositions and adjusted to exclude amounts funded through the accelerated capital fund) an
d
e
q
u
ip
ment costs
(
net
)
,ad
j
usted to exclude share-based com
p
ensat
i
on ex
p
ense, less cash
amounts associated with funding the new and assumed CRTC benefit obligations related to the
ac
q
uisition of Shaw Media as well as excludin
g
non-controllin
g
interest amounts that are
consol
i
dated
i
n the o
p
erat
i
n
gi
ncome be
f
ore amort
i
zat
i
on, ca
pi
tal ex
p
end
i
ture and cash tax
amounts. Free cash flow also includes changes in receivable related balances with respect t
o
customer equipment financing transactions as a cash item, and is adjusted for recurring cash
f
und
i
n
g
o
fp
ens
i
on amounts net o
fp
ens
i
on ex
p
ense. D
i
v
i
dends
p
a
i
d on the
C
om
p
an
y
’s
Cu
m
u
l
at
iv
e
R
edee
m
ab
l
e
R
ate
R
eset
Pr
e
f
e
rr
ed S
h
a
r
es a
r
ea
l
so deducted.
F
ree cash flow has not been reported on a segmented basis. Certain components of free cash
f
low includin
g
o
p
eratin
g
income before amortization, ca
p
ital ex
p
enditures (on an accrual basi
s
n
et o
fp
roceeds on ca
pi
tal d
i
s
p
os
i
t
i
ons
)
and e
q
u
ip
ment costs
(
net
)
,
C
RT
C
bene
fi
t obl
ig
at
i
on
f
unding, and non-controlling interest amounts continue to be reported on a segmented basis.
Other items, includin
g
interest and cash taxes, are not
g
enerall
y
directl
y
attributable to
a
se
g
ment, and are re
p
orted on a consol
i
dated bas
i
s
.
F
or free cash flow
p
ur
p
oses the Com
p
an
y
considers the initial $300 million su
pp
lementa
l
execut
i
ve ret
i
rement plan
f
und
i
ng to be a
fi
nanc
i
ng transact
i
on and has not
i
ncluded the
amount funded or the related cash tax recovery in the free cash flow calculation
.
i
v
)
Accelerated cap
i
tal
f
un
d
The Company established a notional fund, the accelerated capital fund, of up to $500 million
with proceeds received, and to be received, from several strategic transactions with each o
f
R
o
g
ers and
C
orus. The accelerated ca
pi
tal
i
n
i
t
i
at
i
ves w
i
ll be
f
unded throu
g
hth
i
s
f
und and no
t
cash generated
f
rom operat
i
ons. Key
i
nvestments
i
nclude the complet
i
on o
f
the
C
algary dat
a
centre, further digitization of the network and additional bandwidth upgrades, development of
I
P del
i
ver
y
o
f
v
i
deo, ex
p
ans
i
on o
f
the W
i
F
i
network, and add
i
t
i
onal
i
nnovat
i
ve
p
roduct o
ff
er
i
n
gs
related to
S
haw
G
o and other appl
i
cat
i
ons to prov
i
de an enhanced customer exper
i
ence. It
is
expected up to a total of
$
500 million will be invested in fiscal 2013, 2014 and 2015
,
s
p
endin
g
a
pp
roximatel
y
$110 million, $250 million and $140 million in each of the res
p
ective
years.
D
eta
i
ls on the accelerated cap
i
tal
f
und and
i
nvestment dur
i
ng
2013
are as
f
ollows:
E
stimated year of spend 2013 2014 2015 Tota
l
(
$millions Cdn
)
F
und
Op
en
i
n
g
Balance
110 2
5
01
4
0
5
00
A
ccelerated ca
p
ital investment
1
10 – – 110
F
und Closing Balance, August 31, 2013 – 250 140 390
S
TATI
S
TI
C
AL MEA
SU
RE
S:
S
ubscriber counts (or revenue generating units), including penetration and bundled customer
s
The
C
om
p
an
y
measures the count o
fi
ts customers
i
n
C
able and DTH
(S
haw D
i
rect
)
.V
i
deo cable
subscribers include residential customers, multiple dwelling units (“MDUs”) and commercia
l
customers. A residential subscriber who receives at a minimum
,
basic cable service
,
is counte
d
as one subscr
i
ber. In the case o
f
MDUs, such as a
p
artment bu
i
ld
i
n
g
s, each tenant w
i
th
a
m
inimum of basic cable service is counted as one subscriber, regardless of whether invoiced
individually or having services included in his or her rent. Each building site of a commercia
l
23