Shaw 2014 Annual Report Download

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Focused on
the future.
2014 Annual Report

Table of contents

  • Page 1
    Focused on the future. 2014 Annual Report

  • Page 2
    ... Financial Statements Five Years in Review Shareholders' Information Corporate Information 59 63 68 122 123 124 The Annual General Meeting of Shareholders will be held on January 14, 2015 at 11:00 am (Mountain Time) at the Shaw Barlow Trail Building, 2400 - 32 Avenue NE, Calgary, Alberta.

  • Page 3
    Shaw Communications Inc. 2014 Annual Report At Shaw, every decision we make, and every initiative we launch, is driven by customer choice and the imperative to bring quality, reliability, innovation and value to the customer and viewer experience.

  • Page 4
    Shaw Communications Inc. 2014 Annual Report Revenue* Figures in billions Dividends Figures in millions 5.0 4.7 5.1 5.2 445 372 391 416 485 3.7 10 11 12 13 14 10 11 12 13 14 Operating income before restructuring costs and amortization* Figures in billions 2.1 1.8 2.1 2.2 2.3 Free ...

  • Page 5
    ... households with broadband Internet, WiFi, digital phone and video services, and we deliver Global Television to almost all Canadian homes, along with the 19 specialty networks of Shaw Media. We take seriously our responsibility to earn the trust and business of each of these customers and viewers...

  • Page 6
    ...for our business and our employees. We expect nothing less as we look forward to fiscal 2015 and beyond. The rapid changes in our industry have attracted the attention of regulators and policymakers in Canada, and we are pleased to continue to work with them to identify and develop policies that are...

  • Page 7
    ...have done to create value and pride in our Company. We are excited by the potential of our business in the future, and we are grateful for the continued confidence and support of our fellow shareholders in Shaw Communications Inc. In closing, we would like to acknowledge the significant contribution...

  • Page 8
    ... Company overview - core business and strategies Description of the business Seasonality and other additional information concerning the business Government regulations and regulatory developments Key performance drivers Critical accounting policies and estimates Related party transactions New...

  • Page 9
    ...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; opportunities that may be...

  • Page 10
    ... Shaw brand is synonymous with diverse product offerings and high-quality customer service. During 2014 the Company operated three principal business segments: (1) Cable - comprised of cable television, Internet, Digital Phone and Shaw Business operations; (2) Satellite - comprised of direct-to-home...

  • Page 11
    ... Jaw/Swift Current, Saskatchewan; and Thunder Bay/Sault Ste. Marie, Ontario. In 2013, Shaw completed the disposition of Mountain Cablevision Limited ("Mountain Cable"), a cable system located in Hamilton, Ontario. Shaw has a customer-centric strategy designed to deliver high-quality customer service...

  • Page 12
    ... Video Recorder ("PVR") features including the Gateway whole home HDPVR solution that connects to up to six TVs in a home. In 2012, Shaw launched the first phase of its TV Everywhere service, Shaw Go, which allows customers streaming access to TV shows, sporting events and movies on popular mobile...

  • Page 13
    ... Gateway Go app, which allows customers to search, record and manage shows on their Gateway whole home HDPVR from a range of popular mobile devices. Internet Leveraging its cable television infrastructure, Shaw provides high-speed Internet access services to residential and business subscribers in...

  • Page 14
    ... with high speed connections to major North American, European and Asian network access points and other tier-one backbone carriers. In 2013, Shaw completed the acquisition of ENMAX Envision Inc. ("Envision"), a company providing leading telecommunication services to Calgary business customers, for...

  • Page 15
    ..., primary language, income level and type of household. Such packages are marketed through Shaw Direct and a nation-wide distribution network of third party retail locations. With the launch of Anik G1 in 2013, Shaw Direct's satellite television services capacity expanded by approximately 30 percent...

  • Page 16
    ... Corp. ("Canwest") including CW Investments Co., the company that owned the specialty channels acquired from Alliance Atlantis Communications Inc. in 2007. The acquisition of Shaw's Media business included the Global Television Network ("Global") and a leading portfolio of Specialty services...

  • Page 17
    ... to a number of markets. Global expanded its news line-up in 2012 and 2013 with the launch of morning news programming in Toronto, Regina, Saskatoon, Winnipeg, Montreal and Halifax, and continues to focus on on-line and mobile platforms to reach its audiences. The Specialty television services owned...

  • Page 18
    ... Global Go and HISTORY Go apps. These apps allow viewers to watch live TV, full episodes of select shows, clips and video exclusives on popular mobile devices, including WiFi enabled tablets and smartphones. Late in fiscal 2014, Shaw Media partnered with Rogers to form shomi, a new SVOD/OTT service...

  • Page 19
    ... 27 data centres in 8 key Western US markets. (d) Employees As at August 31, 2014, the Company employed approximately 14,000 people. D. Government regulations and regulatory developments Substantially all of the Corporation's business activities are subject to regulations and policies established...

  • Page 20
    ... for new or increased fees through regulation Effective September 1, 2009, each licensed BDU was required to contribute 1.5% of its gross revenues derived from broadcasting to the Local Programming Improvement Fund ("LPIF") to support local television stations operating in non-metropolitan markets...

  • Page 21
    ... television channels, while protecting Canadian jobs. On November 14, the Minister of Canadian Heritage released an Order-in-Council ("OIC") requiring the CRTC to report to the Government by April 30, 2014 on how the ability of Canadian consumers to subscribe to pay and specialty television services...

  • Page 22
    ... period for each proposal) is uncertain, this review could lead to changes in the regulatory requirements applicable to television programming and broadcasting distribution undertakings. Access rights Shaw's cable systems require access to support structures, such as poles, strand and conduits...

  • Page 23
    ... MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2014 Shaw is mandated by the CRTC to provide Third Party Internet Access ("TPIA") service, which enables independent ISPs to provide Internet services at premises served by Shaw's network. In 2011, the CRTC reviewed the billing model for TPIA services...

  • Page 24
    ... on the subscription to a specific mobile or retail Internet access service, and a reverse onus of proof in cases where undue preference is alleged in connection with the terms of distribution of any programming service. Measures also include a code of conduct governing commercial relations and...

  • Page 25
    ... change in spectrum concentration levels that would result from the transfer. The reviews by Industry Canada and the Competition Bureau of the proposed transfer of Shaw's AWS spectrum to Rogers are ongoing. E. Key performance drivers Shaw measures the success of its strategies using a number of key...

  • Page 26
    ... the Company's success in delivering valued products and services, and engaging programming content to its customers in a costeffective manner. ($ millions Cdn) Year ended August 31, 2014 2013 Operating income Add back (deduct): Restructuring costs Amortization: Deferred equipment revenue Deferred...

  • Page 27
    ... Cash taxes Other adjustments: Non-cash share-based compensation CRTC benefit obligation funding Non-controlling interests Pension adjustment Customer equipment financing Preferred share dividends Free cash flow Operating margin(1) Cable Satellite Media (1) See key performance drivers on page 21. 23...

  • Page 28
    ..., expansion of the WiFi network, and additional innovative product offerings related to Shaw Go and other applications to provide an enhanced customer experience. Details on the accelerated capital fund and investment are as follows: Estimated year of spend ($millions Cdn) 2013 2014 2015 Total Fund...

  • Page 29
    Shaw Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2014 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 30
    ... recognition of the related equipment revenue. The equipment and installation costs generally exceed the amounts received from customers on the sale of equipment (the equipment is sold to the customer at a subsidized price). The Company defers the entire cost of the equipment, including the subsidy...

  • Page 31
    ... 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 systems. Labour costs directly related...

  • Page 32
    ... as the activities directly relate to the construction or upgrade of the distribution system. Capital projects include, but are not limited to, projects such as the new subdivision builds, increasing network capacity for Internet, Digital Phone and VOD by reducing the number of homes fed from...

  • Page 33
    ... system in Canada. The AWS licenses have indefinite lives and are subject to an annual review for impairment by comparing the estimated fair value to the carrying amount. In late 2011 Shaw decided not to pursue a conventional wireless build. In 2013 the Company entered into an agreement with Rogers...

  • Page 34
    ..., high-quality corporate fixed income investments closely matching the term of the estimated future cash flows and is reviewed and adjusted as changes required. The following table illustrates the increase on the accrued benefit obligation and pension expense of a 1% decrease in the discount rate...

  • Page 35
    ... in a number of specialty television channels which were either subject to joint control or significant influence, including Historia and Series+. During the current year the Company paid network fees to these channels. Key management personnel and Board of Directors Key management personnel consist...

  • Page 36
    Shaw Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2014 The Company adopted the following standards and amendments effective September 1, 2013: Adoption of recent accounting pronouncements The adoption of the following standards and amendments effective September 1, 2013 had no...

  • Page 37
    ... in May 2014 and replaces IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programs, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers and SIC-31 Revenue - Barter Transactions Involving Advertising Services. The new standard...

  • Page 38
    ... satellite services including grey and black market offerings, unregulated 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...

  • Page 39
    ... developments may negatively affect the business and prospects of Shaw's Digital Phone. INTERNET INFRASTRUCTURE Through Shaw Business, Shaw competes with other telecommunications carriers in providing high-speed broadband communications services (data and video transport and Internet connectivity...

  • Page 40
    ...for new or increased fees. Changes in the regulatory regime may adversely affect the operations and performance of the Company. ii) Economic conditions Canada's economy is affected by uncertainty in global financial and equity markets and slowdowns in global economic growth. Advertising revenues are...

  • Page 41
    ... to facilitate the construction of the satellite, the Company maintains a security interest in the transponder capacity and any related insurance proceeds that Telesat recovers in connection with an insured loss event. The Company does not maintain business interruption insurance covering damage or...

  • Page 42
    Shaw Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2014 the Anik F1R, Anik F2 and Anik G1 transponders that are secured through capacity service agreements. The Company has priority access to spare transponders on Anik F1R, Anik F2 and Anik G1 in the case of interruption, ...

  • Page 43
    Shaw Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2014 In Media one of the most significant expenses is also programming costs. Increased competition in the television broadcasting industry, developments affecting producers and distributors of programming content, changes in ...

  • Page 44
    Shaw Communications Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS August 31, 2014 Company would pay approximately $510 million in common share dividends during 2015 (before taking into account the Company's dividend reinvestment plan ("DRIP"), see further details on page 54). While the Company expects ...

  • Page 45
    ... for deferred equipment revenue and the associated deferred equipment costs. Net other non-operating items decreased due to a refund of $5 million in respect of excess money from the Canwest CCAA plan implementation fund received in the first quarter and the write-down of a real estate property of...

  • Page 46
    ... before restructuring costs and amortization of $2.26 billion was up 1.9% over last year's amount of $2.22 billion. Consolidated free cash flow was $698 million compared to $604 million in 2013. During 2014 the Company increased the dividend rate on Shaw's Class A Participating Shares and Class...

  • Page 47
    ...-on-demand service having the latest most exclusive shows and selections personalized for viewers. The service was launched in beta in early November 2014. Å During 2013, the Company entered into agreements with Rogers to sell to Rogers its shares in Mountain Cable and grant to Rogers an option to...

  • Page 48
    ... invested in fiscal 2015. The Company continued to expand on its TV Everywhere content strategy launching Global Go and a number of Shaw Go apps during fiscal 2014, giving subscribers on-the-go access to their favorite programming. Shaw also continued to invest in and build awareness of Shaw Go WiFi...

  • Page 49
    ... voting control. The sale of Historia and Series+ closed on January 1, 2014 and the company recorded proceeds of $141 million and a gain of $49 million. During 2013, the Company closed the sale of Mountain Cable in Hamilton, Ontario to Rogers. The Company received proceeds, after working capital...

  • Page 50
    ... of Envision and the transactions with Rogers related to the sale of Mountain Cable, grant of an option to acquire the wireless spectrum licenses and purchase from Rogers its interest in TVtropolis. During 2013, the Company recorded a gain of $7 million on the sale of its interest in ABC Spark...

  • Page 51
    ...OPERATIONS REVIEW CABLE FINANCIAL HIGHLIGHTS ($millions Cdn) 2014 2013 Change % Revenue Operating income before restructuring costs and amortization(1) Capital expenditures and equipment costs (net):(6) New housing development(2) Success-based(3) Upgrades and enhancement(4) Replacement(5) Buildings...

  • Page 52
    ...401 and Digital Phone lines increased 15,374 totaling 1,375,334 as at August 31, 2014. Video subscribers decreased 82,618. (4) (5) (6) Cable revenue of $3.36 billion improved 3.0% over last year. Price adjustments along with growth in Business, including the Envision acquisition, and Internet were...

  • Page 53
    ... partially offset by customer declines. Operating income before restructuring costs and amortization of $277 million decreased from $285 million last year primarily due revenue related improvements offset by higher fees related to programming services and operating costs related to the Anik...

  • Page 54
    ... in Buildings and other relates to higher investment last year in various uplink equipment. During the year, Shaw Direct launched a number of new HD and SD channels and currently offers over 650 channels of which more than 220 are HD. SUBSCRIBER STATISTICS 2014 2013 Growth Shaw Direct customers...

  • Page 55
    ... deferred equipment costs and related customer equipment financing receivables. Intangibles increased $45 million mainly due to additional investments in software intangibles and acquired program rights and advances exceeding the amortization for the current year. Current liabilities decreased $809...

  • Page 56
    ... to current year earnings of $857 million partially offset by dividends of $510 million. Accumulated other comprehensive loss increased due to the remeasurements recorded on employee benefit plans. V. CONSOLIDATED CASH FLOW ANALYSIS Operating activities ($millions Cdn) 2014 2013 Change % Funds flow...

  • Page 57
    ... 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 ($millions Cdn) 2014 2013 Increase Cash flow...

  • Page 58
    ... 31, 2014 notes, pay common share dividends of $339 million, fund $240 million of accelerated capital spend, pay $45 million of restructuring costs, make $52 million in financial investments and increase cash balances $215 million. To allow for timely access to capital markets, the Company filed...

  • Page 59
    ....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 ("NYSE") corporate governance listing standards are posted on Shaw's website, www.shaw.ca (under Investors/Corporate...

  • Page 60
    ... Shaw's disclosure controls and procedures and internal control over financial reporting. As at August 31, 2014, the Company's management, together with its Chief Executive Officer and Senior Vice President, Finance, has evaluated the effectiveness of the design and operation of each of the Company...

  • Page 61
    .... The internal control system includes an internal audit function and an established business conduct policy that applies to all employees. Management believes that the systems provide reasonable assurance that transactions are properly authorized and recorded, financial information is relevant...

  • Page 62
    ... Organizations of the 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, 2014. [Signed] [Signed] Brad Shaw Chief Executive Officer Rhonda Bashnick Senior Vice...

  • Page 63
    ... financial position of Shaw Communications Inc. as at August 31, 2014 and 2013, and its financial performance and its cash flows for the years ended August 31, 2014 and 2013 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. 59

  • Page 64
    ... 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, 2014, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring...

  • Page 65
    ... 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, 2014, based on the criteria established in Internal Control - Integrated Framework issued...

  • Page 66
    ...2013, and the consolidated statements of income, comprehensive income, changes in shareholders' equity and cash flows for the years ended August 31, 2014 and 2013, and our report dated November 28, 2014 expressed an unqualified opinion thereon. Calgary, Canada November 28, 2014 Chartered Accountants...

  • Page 67
    ...31, 2014 $ August 31, 2013 $ [millions of Canadian dollars] ASSETS Current Cash Accounts receivable [note 4] Inventories [note 5] Other current assets [note 6] Derivative instruments [note 28] Assets held for sale [note 3] Investments and other assets [notes 7 and 28] Property, plant and equipment...

  • Page 68
    Shaw Communications Inc. CONSOLIDATED STATEMENTS OF INCOME Years ended August 31 [millions of Canadian dollars except per share amounts] 2014 $ 2013 $ Revenue [note 24] Operating, general and administrative expenses [note 21] Restructuring costs [notes 12 and 21] Amortization - Deferred equipment ...

  • Page 69
    ...: Change in unrealized fair value of derivatives designated as cash flow hedges Adjustment for hedged items recognized in the period Unrealized loss on available-for-sale investment Items that will not be subsequently reclassified to income: Remeasurements on employee benefit plans Comprehensive...

  • Page 70
    ... Dividends Dividend reinvestment plan Shares issued under stock option plan Share-based compensation Distributions declared by subsidiaries to noncontrolling interests Contribution from noncontrolling interest [note 27] Acquisition of non-controlling interests [note 3] Balance as at August 31, 2013...

  • Page 71
    ... Net change in non-cash working capital balances related to operations INVESTING ACTIVITIES Additions to property, plant and equipment [note 24] Additions to equipment costs (net) [note 24] Additions to other intangibles [note 24] Net decrease (increase) to inventories Proceeds on sale of media...

  • Page 72
    ... name was 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...

  • Page 73
    ... and conditions of the partnership agreement and other facts and circumstances including the primary purpose of Shaw Tower which is to provide lease space to the partners. Historia and Series+ are two Canadian French-language specialty television channels. The Company classified its 50% interest as...

  • Page 74
    ... 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 charges for air time...

  • Page 75
    ... 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 revenue...

  • Page 76
    ... lives. Spectrum licenses were acquired in Industry Canada's auction of licenses for advanced wireless services and have an indefinite life. Program rights represent licensed rights acquired to broadcast television programs on the Company's conventional and specialty television channels and program...

  • Page 77
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2014 and 2013 [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 78
    ..., (iii) connection fee revenue and upfront installation revenue, as described in the revenue and expenses accounting policy, deferred and amortized over two to ten years, (iv) a deposit on a future fibre sale, and (v) amounts received in respect of granting an option to acquire its wireless spectrum...

  • Page 79
    ... per share amounts] 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 80
    ... of each reporting period. Employee benefits The Company accrues its obligations under its employee benefit plans, net of plan assets. The cost of pensions and other retirement benefits earned by certain employees is actuarially determined using the projected benefit method pro-rated on service and...

  • Page 81
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2014 and 2013 [all amounts in millions of Canadian dollars except share and per share amounts] Share-based compensation The Company has a stock option plan for directors, officers, employees and consultants to the Company...

  • Page 82
    ..., plant and equipment. These estimates of useful lives involve significant judgement. In 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. Management...

  • Page 83
    ... been determined considering operating activities and asset management and are consistent with the Company's reporting segments, Cable, Satellite and Media. (ii) Broadcast rights and licenses and spectrum licenses - indefinite-life assessment The Company's businesses are dependent upon broadcast...

  • Page 84
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2014 and 2013 [all amounts in millions of Canadian dollars except share and per share amounts] Adoption of recent accounting pronouncements The adoption of the following standards and amendments effective September 1, ...

  • Page 85
    ... in May 2014 and replaces IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programs, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers and SIC-31 Revenue - Barter Transactions Involving Advertising Services. The new standard...

  • Page 86
    ... 2014 in connection with the closing of the sale of Historia and Series+ to Corus. Transactions with Rogers Communications Inc. ("Rogers") During 2013, the Company entered into agreements with Rogers to sell to Rogers its shares in Mountain Cablevision Limited ("Mountain Cable") and grant to Rogers...

  • Page 87
    ...of income. 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 Intangibles Goodwill Accounts payable and accrued...

  • Page 88
    ... 30, 2013, the Company acquired Enmax Envision Inc. ("Envision"), a wholly-owned subsidiary 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...

  • Page 89
    ... building specifications and is considered a level 3 valuation. The income capitalization approach has been used as it's an accepted approach used by real estate investors to value income producing properties when income is not expected to vary significantly over time. 4. ACCOUNTS RECEIVABLE 2014...

  • Page 90
    ... distribution system 4,728 Digital cable terminals and modems 833 Satellite audio, video and data network and DTH receiving equipment 186 Transmitters, broadcasting, communications and production equipment 104 Land and buildings 441 Data processing and other 396 Assets under construction 307...

  • Page 91
    ...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 other Assets under construction 2,255 341 444...

  • Page 92
    ... in the accounts for 2014 amounted to $142 (2013 - $258) and was recorded as amortization of deferred equipment costs and other amortization. 10. INTANGIBLES AND GOODWILL 2014 $ 2013 $ Broadcast rights and licenses Cable systems DTH and satellite services Television broadcasting Program rights and...

  • Page 93
    ...698 191 - - - 191 Cost $ August 31, 2014 Accumulated Net book amortization value $ $ Cost $ August 31, 2013 Accumulated Net book amortization value $ $ Program rights and advances Software Software under construction Customer relationships Less current portion of program rights 699 227 168 87...

  • Page 94
    ... March 1, 2014, the estimates that have been utilized in the impairment tests reflect any changes in market conditions and are as follows: Terminal value Terminal operating income before restructuring costs and Terminal growth rate amortization multiple Post-tax discount rate Cable Satellite Media...

  • Page 95
    ... [all amounts in millions of Canadian dollars except share and per share amounts] 11. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 2014 $ 2013 $ Trade Program rights CRTC benefit obligations Accrued liabilities Accrued network fees Interest and dividends Related parties [note 27] 44 74 30 335 107 215...

  • Page 96
    ... per share amounts] 13. LONG-TERM DEBT 2014 2013 Long-term Adjustment Long-term Long-term Adjustment Long-term debt for debt debt at for Effective debt at interest amortized finance repayable at amortized finance repayable at maturity costs(1) maturity cost(1) costs(1) rates cost(1 Corporate Cdn...

  • Page 97
    ...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 6.31% secured mortgage bonds in respect of the commercial component of the Shaw Tower. In February 2014...

  • Page 98
    ... 26] CRTC benefit obligations Post retirement liabilities [note 26] Program rights liabilities Other 174 48 18 5 6 251 123 77 15 5 3 223 15. DEFERRED CREDITS 2014 $ 2013 $ IRU prepayments Equipment revenue Connection fee and installation revenue Proceeds on wireless spectrum license option [note...

  • Page 99
    ... A Shares. Changes in Class A Share capital and Class B Non-Voting Share capital in 2014 and 2013 are as follows: Class A Shares Number $ Class B Non-Voting Shares Number $ September 1, 2012 Stock option exercises Dividend reinvestment plan August 31, 2013 Class A Share conversions Stock option...

  • Page 100
    ... 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 the date of grant. Options granted up to August 31, 2014 vest evenly on the anniversary dates from the original...

  • Page 101
    ... grant using the Black-Scholes option pricing model with the following weighted-average assumptions: 2014 2013 Dividend yield Risk-free interest rate Expected life of options Expected volatility factor of the future expected market price of Class B Non-Voting Shares 4.18% 1.61% 5 years 19.6% 4.37...

  • Page 102
    ... $5 was recorded as compensation expense (2013 - $5). 18. EARNINGS PER SHARE Earnings per share calculations are as follows: 2014 2013 Numerator for basic and diluted earnings per share ($) Net income Deduct: net income attributable to non-controlling interests in subsidiaries Deduct: dividends on...

  • Page 103
    ...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 has a Dividend Reinvestment Plan ("DRIP") that allows holders of Class A Shares and Class B Non...

  • Page 104
    ... comprised of the following: 2014 $ 2013 $ Items that may subsequently be reclassified to income Fair value of derivatives Unrealized loss on available-for-sale investment Items that will not be subsequently reclassified to income Remeasurements on employee benefit plans - (2) (131) (133) 2 - (89...

  • Page 105
    ...and resulting water damage to the Company's head office in Calgary, Alberta that occurred during the fourth quarter of 2012. In fiscal 2013, the Company received insurance advances of $5 related to its claim and incurred costs of $13 in respect of ongoing recovery activities. In addition, during the...

  • Page 106
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2014 and 2013 [all amounts in millions of Canadian dollars except share and per share amounts] Significant changes recognized to deferred income tax assets (liabilities) are as follows: Broadcast rights, Property, plant ...

  • Page 107
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2014 and 2013 [all amounts in millions of Canadian dollars except share and per share amounts] Due to Canadian provincial enacted corporate income tax rate changes, the statutory income tax rate for the Company increased ...

  • Page 108
    ... residential and enterprise services currently included in the Cable and Satellite segments will be realigned into new Consumer and Business segments. The Company expects to commence reporting under the operating segments of Consumer, Business and Media in fiscal 2015. 2014 Cable $ Revenue Operating...

  • Page 109
    ... Flows Increase 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(2) Total capital expenditures of equipment costs (net) reported by segments...

  • Page 110
    ... of these obligations is $88 which will be funded over future years through fiscal 2019. In late fiscal 2014, the Company partnered with Rogers to form shomi, a new subscription video-on-demand service which launched in beta in early November 2014. The Company's initial capital commitment is $67 of...

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    ...31, 2014 and 2013 [all amounts in millions 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 required to make payment to a vendor or purchaser for...

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    ... of Canadian dollars except share and per share amounts] Defined benefit pension plans 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...

  • Page 113
    ... below shows the change in benefit obligation and funding status and the fair value of plan assets. SERP $ ERP $ 2014 Total $ SERP $ ERP $ 2013 Total $ Accrued benefit obligation, beginning of year Current service cost Past service cost Interest cost Payment of benefits to employees Remeasurements...

  • Page 114
    ...per share amounts] The tables below show the significant weighted-average assumptions used to measure the pension obligation and cost for the plans. Accrued benefit obligation 2014 SERP % 2014 ERP % 2013 SERP % 2013 ERP % Discount rate Rate of compensation increase 4.00 4.00 5.00(1) 3.00 2014 SERP...

  • Page 115
    ...and per share amounts] The table below shows the change in the benefit obligations, change in fair value of plan assets and the funded status of these defined benefit plans. 2014 $ 2013 $ Accrued benefit obligation, beginning of year Current service cost Interest cost Employee contributions Payment...

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    ... of Canadian dollars except share and per share amounts] The tables below show the significant weighted-average assumptions used to measure the pension obligation and cost for these plans. Accrued benefit obligation 2014 % 2013 % Discount rate Rate of compensation increase Benefit cost for the year...

  • Page 117
    ...and per share amounts] Other benefit plans The Company has post employment benefits plans that provide post retirement health and life insurance coverage to certain retirees in the media business and are funded on a pay-as-you-go basis. The table below shows the change in the accrued post-retirement...

  • Page 118
    ...: 2014 $ 2013 $ Short-term employee benefits Post-employment pension benefits Share-based compensation 42 17 3 62 39 17 6 62 Transactions The Company paid $2 (2013 - $3) for direct sales agent, collection, marketing, installation and maintenance services to a company controlled by a Director of...

  • Page 119
    ... consideration was exchanged for these transactions and no amounts were recorded in the accounts. Burrard Landing Lot 2 Holdings Partnership During the year, the Company paid $10 (2013 - $10) to the Partnership for lease of office space in Shaw Tower. Shaw Tower, located in Vancouver, BC, is...

  • Page 120
    ...do not have quoted market prices in an active market and whose fair value cannot be readily measured are carried at cost. No published market exists for such investments. These equity investments have been made as they are considered to have the potential to provide future benefit to the Company and...

  • Page 121
    ... a result of changes in market prices, including foreign exchange and interest rates, the Company's share price and market price of publicly traded investments. Currency risk Certain of the Company's capital expenditures and equipment costs are incurred in US dollars, while its revenue is primarily...

  • Page 122
    ... 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, 2014, $129 (August 31, 2013 - $135) of accounts receivable is considered to...

  • Page 123
    Shaw Communications Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2014 and 2013 [all amounts in millions of Canadian dollars except share and per share amounts] The Company's undiscounted contractual maturities as at August 31, 2014 are as follows: Accounts payable and accrued ...

  • Page 124
    ...: 2014 $ 2013 $ Issuance of Class B Non-Voting Shares: Dividend reinvestment plan [note 19] Non-monetary exchange: Exchange of fibre assets for network capacity leases Lease transaction: Capitalization of transponders under lease renewal Issuance of promissory note: Transactions with a related...

  • Page 125
    ...with a growth platform in the North American data centre sector and is another step in expanding technology offerings for mid-market enterprises in Western Canada. The Company is currently in the process of completing the purchase price allocation which it expects to include in its interim financial...

  • Page 126
    Shaw Communications Inc. FIVE YEARS IN REVIEW August 31, 2014 ($millions except per share amounts) IFRS 2014 IFRS 2013 IFRS 2012 IFRS 2011 Canadian GAAP 2010(3) Revenue Cable Satellite Media Intersegment Operating income before restructuring costs and amortization(1) Cable Satellite Media ...

  • Page 127
    ...Preferred Shares are listed on the Toronto Stock Exchange under the symbol SJR.PR.A. Trading Range of Class B Non-Voting Shares on the Toronto Stock Exchange Quarter High Close Low Close Total Volume September 1, 2013 to August 31, 2014 First Second Third Fourth Closing price, August 31, 2014 Share...

  • Page 128
    ...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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