Shaw 2015 Annual Report Download - page 24

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Shaw Communications Inc.
Management’s Discussion and Analysis
August 31, 2015
Relative increases period-over-period in operating income before restructuring costs and amortization and in operating margin
are indicative of the Company’s success in delivering valued products and services, and engaging programming content to its
customers in a cost-effective manner.
Year ended August 31,
(millions of Canadian dollars) 2015 2014
Operating income 1,432 1,439
Add back (deduct):
Restructuring costs 52 58
Amortization:
Deferred equipment revenue (78) (69)
Deferred equipment costs 164 142
Property, plant and equipment, intangibles and other 809 692
Operating income before restructuring costs and amortization 2,379 2,262
Operating margin
Operating margin is calculated by dividing operating income before restructuring costs and amortization by revenue.
Free cash flow
Free cash flow is calculated as operating income before restructuring costs and amortization, less interest, cash taxes paid or
payable, capital expenditures (on an accrual basis and net of proceeds on capital dispositions and adjusted to exclude amounts
funded through the accelerated capital fund) and equipment costs (net), adjusted to exclude share-based compensation
expense, less 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
restructuring costs and amortization, capital expenditure and cash tax amounts. Free cash flow also includes changes in
receivable related balances with respect to customer equipment financing transactions as a cash item, and is adjusted for
recurring cash funding of pension amounts net of pension expense. Dividends paid on the Company’s Cumulative Redeemable
Rate Reset Preferred Shares are also deducted.
Free cash flow has not been reported on a segmented basis. Certain components of free cash flow including operating income
before restructuring costs and amortization, CRTC benefit obligation funding, and non-controlling interest amounts continue to
be reported on a segmented basis. Capital expenditures (on an accrual basis net of proceeds on capital dispositions) and
equipment costs (net) are reported on a combined basis for Consumer and Business Network Services due to the common
infrastructure while Business Infrastructure Services and Media are separately reported. Other items, including interest and
cash taxes, are not generally directly attributable to a segment, and are reported on a consolidated basis.
22 Shaw Communications Inc. 2015 Annual Report