e6vk
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of April 2007
Shaw Communications Inc.
(Translation of registrants name into English)
Suite 900, 630 3rd Avenue S.W., Calgary, Alberta T2P 4L4 (403) 750-4500
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of
Form 20-F or Form 40-F:
Form 20-F o Form 40-F þ
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule 101(b)(1): o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule 101(b)(7): o
Indicate by check mark whether by furnishing the information contained in this Form, the
registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b)
under the Securities Exchange Act of 1934.
Yes o No þ
If Yes is marked, indicate below the file number assigned to the registrant in connection
with Rule 12g3-2(b): 82-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant, Shaw
Communications Inc., has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
|
|
Date: |
|
April 13, 2007
Shaw Communications Inc. |
|
|
|
|
|
By:
|
|
/s/ Steve Wilson |
|
|
|
|
Steve Wilson
|
|
|
|
|
Sr. V.P., Chief Financial Officer |
|
|
|
|
Shaw Communications Inc. |
|
|
NEWS RELEASE
Strong continued quarterly growth and dividend increase
Calgary, Alberta (April 13, 2007) Shaw Communications Inc. announced results for the second
quarter ended February 28, 2007. Consolidated service revenue of $685.7 million and $1.36 billion
for the three and six month periods improved 12.2% and 13.0%, respectively, over the comparable
periods last year. Total service operating income before amortization1 of $303.0 million
and $602.8 million increased by 13.1% and 15.2% respectively, over the same periods. Funds flow
from operations2 increased to $252.4 million for the quarter and $496.3 million for the
year-to-date compared to $208.3 million and $405.5 million in the same periods last year.
During the quarter customer growth continued across all products. Internet and Digital subscribers
increased by 40,694 to 1,389,333 and 28,641 to 725,528, respectively. Digital Phone lines increased
41,721 to 292,625. Basic subscribers were up 6,625 to 2,220,082 and DTH customers increased 928 to
872,562.
Jim Shaw, Chief Executive Officer, remarked: We are pleased with the performance across our
divisions and saw strong growth in revenue and service operating income before amortization. This
quarter we continued to drive performance through customer growth and as a result delivered solid
business metrics to our shareholders.
Free cash flow1 for the quarter was $100.4 million bringing the year to date amount to
$176.5 million. This compares to $82.0 million and $114.1 million for the same periods last year,
an improvement of $18.4 million and $62.4 million, respectively, despite an increase in capital
spending of over $20.0 million in each of the current three and six month periods. The growth in
free cash flow was primarily related to the increase in service operating income before
amortization.
Net income of $79.8 million or $0.37 per share for the second quarter ended February 28, 2007
compared to $45.8 million or $0.21 per share for the same quarter last year. Net income for the
first six months of the year was $160.9 million or $0.75 per share compared to $121.5 million and
$0.56 per share last year. The current and comparable three and six month periods included
non-operating items which are more fully detailed in Managements Discussions and Analysis (MD&A).
These included a tax recovery related to reductions in enacted income tax rates in the comparable
six month period. Excluding the non-operating items, net income for the three and six month
periods ended February 28, 2007 would have been $78.9 million and $159.9 million compared to net
income of $49.5 million and $88.3 million in the comparable periods.3
Shaw continued to roll-out Digital Phone during the quarter and the service is now available to
approximately 2.6 million homes, representing over 75% of homes passed. During the quarter the
Digital Phone footprint was expanded to include Kelowna, Kamloops and Penticton, all in British
Columbia, as well as Fort Saskatchewan and Canmore, both in Alberta. Most recently, the service
was rolled-out to Abbotsford and Chilliwack, British Columbia. During the quarter Shaw also
introduced a new telephony product, Shaw Digital Phone Lite. This new service includes a local
phone line, popular calling features, and long distance anytime calling at competitive per minute
rates.
The success of Digital Phone has been achieved, until this quarter, with one offer in the market.
With the introduction of Shaw Digital Phone Lite we now offer broader home phone services which
appeal to a larger customer base. This new offering is tailored for light long distance users and
gives our customers the opportunity to customize their home phone service to meet their needs.
said Jim Shaw.
Cable service revenue increased 14.5% for the quarter to $514.4 million and 15.1% on a year to date
basis to $1.01 billion. The improvement was driven by customer growth and rate increases. Service
operating income before amortization increased 14.4% to $244.2 million for the quarter and 14.5% to
$481.9 million for the six month period.
Satellite division service revenue increased 5.7% and 7.1% to $171.3 million and $343.1 million,
respectively, for the three and six month periods over the same periods last year primarily due to
rate increases and customer growth. Service operating income before amortization for the three and
six month periods increased 7.9% to $58.9 million and 18.1% to $120.9 million, respectively,
largely due to growth in DTH revenues.
Mr. Shaw announced revisions to the guidance: As a result of our performance for the first half of
the year and our outlook for the remaining two quarters, we anticipate service operating income
before amortization will exceed $1.2 billion. Consistent with previous guidance, fiscal 2007 free
cash flow is expected to be in excess of $310.0 million as we may accelerate certain capital
spending in order to ensure that we continue to meet customer demand and maintain the high
standards for delivery of services on our network.
Mr. Shaw continued, Our Board of Directors increased the equivalent annual dividend rate to $1.12
on Shaws Class B Non-Voting Participating shares and $1.115 on Shaws Class A Participating
shares. This represents an increase of 12% or $0.12 per share. Shaws dividends are declared and
paid on a monthly basis and this increase will commence June 30, 2007.
On March 2, 2007 the Company closed a $400 million offering of 5.70% senior notes due March 2,
2017. The net proceeds were used for debt repayment, working capital and general corporate
purposes.
In closing, Mr. Shaw summarized: We continue to see ongoing demand and prospects for growth across
all our products. We believe we are well positioned to capture this growth by offering value to our
customers across our triple play of entertainment and communications services. Our focus on
strengthening and enhancing current products, developing innovative new
2
offerings and investing in our network to ensure it is fully capable of delivering these offerings
is generating significant operating momentum and improved financial performance. We will continue
with this focus through the remainder of the year.
Shaw Communications Inc. is a diversified communications company whose core business is providing
broadband cable television, High-Speed Internet, Digital Phone, telecommunications services
(through Shaw Business Solutions) and satellite direct-to-home services (through Star Choice) to
3.2 million customers. Shaw is traded on the Toronto and New York stock exchanges and is included
in the S&P/TSX 60 Index (Symbol: TSX SJR.B, NYSE SJR).
This news release contains forward-looking statements, identified by words such as anticipate,
believe, expect, plan, intend and potential. These statements are based on current
conditions and assumptions and are not a guarantee of future events. Actual events could differ
materially as a result of changes to Shaws plans and the impact of events, risks and
uncertainties. For a discussion of these factors, refer to Shaws current annual information form,
annual and quarterly reports to shareholders and other documents filed with regulatory authorities.
For more information, please contact:
|
|
|
1 |
|
See definitions and discussion under Key Performance Drivers in MD&A. |
|
2 |
|
Funds flow from operations is before changes in non-cash working capital as presented in the
unaudited interim Consolidated Statement of Cash Flows. |
|
3 |
|
See reconciliation of Net Income in Consolidated Overview in MD&A |
3
Shaw Communications Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS
FEBRUARY 28, 2007
April 12, 2007
Certain statements in this report may constitute forward-looking statements. Such
forward-looking statements involve risks, uncertainties and other factors which may cause actual
results, performance or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such forward-looking statements.
Included herein is a Caution Concerning Forward-Looking Statements section which should be read
in conjunction with this report.
The following should also be read in conjunction with Managements Discussion and Analysis included
in the Companys August 31, 2006 Annual Report and the Consolidated Financial Statements and the
Notes thereto and the unaudited interim Consolidated Financial Statements of the current quarter.
CONSOLIDATED RESULTS OF OPERATIONS
SECOND QUARTER ENDING FEBRUARY 28, 2007
SELECTED FINANCIAL HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended February 28, |
|
Six months ended February 28, |
|
|
|
|
|
|
|
|
|
|
Change |
|
|
|
|
|
|
|
|
|
Change |
($000s Cdn except per share amounts) |
|
2007 |
|
2006 |
|
% |
|
2007 |
|
2006 |
|
% |
Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue |
|
|
685,730 |
|
|
|
611,197 |
|
|
|
12.2 |
|
|
|
1,356,736 |
|
|
|
1,200,742 |
|
|
|
13.0 |
|
Service operating income before amortization (1) |
|
|
303,038 |
|
|
|
267,924 |
|
|
|
13.1 |
|
|
|
602,825 |
|
|
|
523,246 |
|
|
|
15.2 |
|
Funds flow from operations (2) |
|
|
252,412 |
|
|
|
208,273 |
|
|
|
21.2 |
|
|
|
496,348 |
|
|
|
405,481 |
|
|
|
22.4 |
|
Net income |
|
|
79,751 |
|
|
|
45,790 |
|
|
|
74.2 |
|
|
|
160,889 |
|
|
|
121,471 |
|
|
|
32.5 |
|
Per share data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share basic |
|
$ |
0.37 |
|
|
$ |
0.21 |
|
|
|
|
|
|
$ |
0.75 |
|
|
$ |
0.56 |
|
|
|
|
|
diluted |
|
$ |
0.37 |
|
|
$ |
0.21 |
|
|
|
|
|
|
$ |
0.74 |
|
|
$ |
0.56 |
|
|
|
|
|
Weighted average participating shares outstanding
during period (000s) |
|
|
215,983 |
|
|
|
217,620 |
|
|
|
|
|
|
|
215,505 |
|
|
|
218,331 |
|
|
|
|
|
|
|
|
|
(1) |
|
See definition under Key Performance Drivers in Managements Discussion and
Analysis. |
|
(2) |
|
Funds flow from operations is before changes in non-cash working capital as
presented in the unaudited interim Consolidated Statement of Cash Flows. |
SUBSCRIBER HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Growth |
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
Total |
|
February 28, |
|
February 28, |
|
|
February 28, 2007 |
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
Subscriber statistics: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic cable customers |
|
|
2,220,082 |
|
|
|
6,625 |
|
|
|
6,838 |
|
|
|
19,289 |
|
|
|
36,267 |
|
Digital customers |
|
|
725,528 |
|
|
|
28,641 |
|
|
|
18,594 |
|
|
|
53,972 |
|
|
|
46,890 |
|
Internet customers
(including pending
installs) |
|
|
1,389,333 |
|
|
|
40,694 |
|
|
|
36,296 |
|
|
|
76,571 |
|
|
|
91,020 |
|
DTH customers |
|
|
872,562 |
|
|
|
928 |
|
|
|
6,843 |
|
|
|
3,354 |
|
|
|
17,042 |
|
Digital phone lines
(including pending
installs) |
|
|
292,625 |
|
|
|
41,721 |
|
|
|
28,018 |
|
|
|
79,918 |
|
|
|
62,106 |
|
|
4
Shaw Communications Inc.
ADDITIONAL HIGHLIGHTS
|
|
The expansion of Shaws Digital Phone footprint continued with
roll-outs during the quarter in Kelowna, Kamloops and Penticton,
all in British Columbia, as well as Fort Saskatchewan and Canmore,
both in Alberta. Most recently, the service was rolled-out to
Abbotsford and Chilliwack, British Columbia. As at February 28,
2007 the number of Digital Phone lines, including pending
installations, was 292,625. |
|
|
Internet penetration of basic now stands at 62.6% up from 59.6% at
August 31, 2006. Shaw added 40,694 Internet customers in the
quarter and now has 1,389,333 customers. Customer growth continued
across all other business lines with increases of 6,625 for Basic
cable, 28,641 for Digital, 41,721 for Digital Phone and 928 for
DTH in the second quarter. |
|
|
Consolidated service revenue of $685.7 million and $1.36 billion
for the three and six month periods, respectively, improved 12.2%
and 13.0% over the comparable periods last year and total service
operating income before amortization2 of $303.0 million
and $602.8 million increased by 13.1% and 15.2% respectively, over
the same periods. Consolidated free cash flow of $100.4 million
and $176.5 million year to date compares to $82.0 million and
$114.1 million for the same periods last year. |
|
|
Consolidated free cash flow1 of $100.4 million and
$176.5 million for the three and six month periods, respectively,
improved $18.4 million and $62.4 million over the same periods
last year. To date in fiscal 2007, free cash flow has been used to
repay debt and pay dividends. |
|
|
The Company increased the equivalent annual dividend rate to $1.12
on Shaws Class B Non-Voting Participating shares and $1.115 on
Shaws Class A Participating shares. This represents an increase
of 12% or $0.12 per share and will be payable in monthly
installments commencing June 30, 2007. |
|
|
On March 2, 2007 the Company closed a $400 million offering of
5.70% senior notes due March 2, 2017. The net proceeds were used
for debt repayment, working capital and general corporate
purposes. |
|
|
The Company recently completed the acquisition of several small
systems in British Columbia that complement existing cable
systems. The acquisition provides synergies with existing
operations and represents growing markets. |
Consolidated Overview
Consolidated service revenue of $685.7 million and $1.36 billion for the three and six month
periods, respectively, improved by 12.2% and 13.0% over the same periods last year. Increased
service revenue primarily resulted from customer growth and rate increases. Consolidated service
operating income before amortization for the three and six month periods increased by 13.1% and
15.2% over the comparable periods to $303.0 million and $602.8 million primarily due to overall
revenue growth. Increased expenditures incurred to support continued growth, the
delivery of quality customer service, enhancements to products, and the launch of Digital Phone in
new markets in the cable division partially offset these improvements.
5
Shaw Communications Inc.
Net income was $79.8 million and $160.9 million for the three and six months ended February 28,
2007, compared to $45.8 million and $121.5 million for the same periods last year. A number of
non-operating items affected net income in each of the quarters including a future tax recovery
recorded during the first quarter of fiscal 2006 related to a reduction in corporate income tax
rates which contributed $31.4 million to net income. Outlined below are further details on this
and other operating and non-operating components of net income for each quarter.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended |
|
Operating net |
|
Non- |
|
Six months ended |
|
Operating net |
|
Non- |
($000s Cdn) |
|
February 28, 2007 |
|
of interest |
|
operating |
|
February 28, 2006 |
|
of interest |
|
operating |
|
Operating income |
|
|
367,505 |
|
|
|
|
|
|
|
|
|
|
|
267,051 |
|
|
|
|
|
|
|
|
|
Interest on long-term debt |
|
|
(123,438 |
) |
|
|
|
|
|
|
|
|
|
|
(127,826 |
) |
|
|
|
|
|
|
|
|
|
Operating income after interest |
|
|
244,067 |
|
|
|
244,067 |
|
|
|
|
|
|
|
139,225 |
|
|
|
139,225 |
|
|
|
|
|
Gain on sale of investment |
|
|
415 |
|
|
|
|
|
|
|
415 |
|
|
|
1,690 |
|
|
|
|
|
|
|
1,690 |
|
Write-down of investment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(374 |
) |
|
|
|
|
|
|
(374 |
) |
Debt retirement costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,123 |
) |
|
|
|
|
|
|
(8,123 |
) |
Foreign exchange gain on
unhedged long-term debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,352 |
|
|
|
|
|
|
|
4,352 |
|
Fair value loss on foreign
currency forward contract |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(360 |
) |
|
|
|
|
|
|
(360 |
) |
Other gains |
|
|
562 |
|
|
|
|
|
|
|
562 |
|
|
|
4,322 |
|
|
|
|
|
|
|
4,322 |
|
|
Income before income taxes |
|
|
245,044 |
|
|
|
244,067 |
|
|
|
977 |
|
|
|
140,732 |
|
|
|
139,225 |
|
|
|
1,507 |
|
Income tax expense (recovery) |
|
|
84,356 |
|
|
|
84,119 |
|
|
|
237 |
|
|
|
19,113 |
|
|
|
50,971 |
|
|
|
(31,858 |
) |
|
Income before following |
|
|
160,688 |
|
|
|
159,948 |
|
|
|
740 |
|
|
|
121,619 |
|
|
|
88,254 |
|
|
|
33,365 |
|
Equity income (loss) on investees |
|
|
201 |
|
|
|
|
|
|
|
201 |
|
|
|
(148 |
) |
|
|
|
|
|
|
(148 |
) |
|
Net income |
|
|
160,889 |
|
|
|
159,948 |
|
|
|
941 |
|
|
|
121,471 |
|
|
|
88,254 |
|
|
|
33,217 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Operating net |
|
Non- |
|
Three months ended |
|
Operating net |
|
Non- |
($000s Cdn) |
|
February 28, 2007 |
|
of interest |
|
operating |
|
February 28, 2006 |
|
of interest |
|
operating |
|
Operating income |
|
|
183,735 |
|
|
|
|
|
|
|
|
|
|
|
141,898 |
|
|
|
|
|
|
|
|
|
Interest on long-term debt |
|
|
(61,597 |
) |
|
|
|
|
|
|
|
|
|
|
(64,384 |
) |
|
|
|
|
|
|
|
|
|
Operating income after interest |
|
|
122,138 |
|
|
|
122,138 |
|
|
|
|
|
|
|
77,514 |
|
|
|
77,514 |
|
|
|
|
|
Write-down of investment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(374 |
) |
|
|
|
|
|
|
(374 |
) |
Debt retirement costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,123 |
) |
|
|
|
|
|
|
(8,123 |
) |
Foreign exchange gain on
unhedged long-term debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
871 |
|
|
|
|
|
|
|
871 |
|
Other gains |
|
|
1,045 |
|
|
|
|
|
|
|
1,045 |
|
|
|
2,191 |
|
|
|
|
|
|
|
2,191 |
|
|
Income before income taxes |
|
|
123,183 |
|
|
|
122,138 |
|
|
|
1,045 |
|
|
|
72,079 |
|
|
|
77,514 |
|
|
|
(5,435 |
) |
Income tax expense (recovery) |
|
|
43,530 |
|
|
|
43,209 |
|
|
|
321 |
|
|
|
26,073 |
|
|
|
28,034 |
|
|
|
(1,961 |
) |
|
Income before following |
|
|
79,653 |
|
|
|
78,929 |
|
|
|
724 |
|
|
|
46,006 |
|
|
|
49,480 |
|
|
|
(3,474 |
) |
Equity income (loss) on investees |
|
|
98 |
|
|
|
|
|
|
|
98 |
|
|
|
(216 |
) |
|
|
|
|
|
|
(216 |
) |
|
Net income |
|
|
79,751 |
|
|
|
78,929 |
|
|
|
822 |
|
|
|
45,790 |
|
|
|
49,480 |
|
|
|
(3,690 |
) |
|
6
Shaw Communications Inc.
The changes in net income are outlined in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) of February 28, 2007 |
|
|
net income compared to: |
|
|
Three months ended |
|
Six months ended |
($millions Cdn) |
|
November 30, 2006 |
|
February 28, 2006 |
|
February 28, 2006 |
Increased service operating income before amortization |
|
|
3,251 |
|
|
|
35,114 |
|
|
|
79,579 |
|
Decreased (increased) amortization |
|
|
(3,286 |
) |
|
|
6,723 |
|
|
|
20,875 |
|
Decreased interest expense |
|
|
244 |
|
|
|
2,787 |
|
|
|
4,388 |
|
Change in net other costs and revenue (1) |
|
|
1,108 |
|
|
|
6,794 |
|
|
|
(181 |
) |
Decreased (increased) income taxes |
|
|
(2,704 |
) |
|
|
(17,457 |
) |
|
|
(65,243 |
) |
|
|
|
|
(1,387 |
) |
|
|
33,961 |
|
|
|
39,418 |
|
|
|
|
|
(1) |
|
Net other costs and revenue include: gain on sale of investment, write-down of
investment, foreign exchange gain on unhedged long-term debt, fair value loss on a foreign
currency forward contract, debt retirement costs, other gains and equity income (loss) on
investees as detailed in the unaudited interim Consolidated Statements of Income and Deficit. |
Earnings per share were $0.37 and $0.75 for the quarter and six months respectively which
represents a $0.16 and $0.19 improvement over the same periods last year. The improvement in the
current quarter was due to higher net income of $34.0 million and included increased service
operating income before amortization of $35.1 million and decreased amortization of $6.7 million.
The current quarter also benefited as debt retirement costs of $8.1 million were included in the
comparable quarter. These improvements were partially offset by increased income taxes of $17.5
million. The increased income taxes were due to higher service operating income before amortization
in the current quarter. On a year-to-date basis, the improvement was due to increased net income
of $39.4 million resulting primarily from increased service operating income before amortization of
$79.6 million, decreased amortization of $20.9 million and decreased interest expense of $4.4
million. These improvements were partially offset by increased income taxes of $65.2 million that
resulted from higher service operating income before amortization in the current period and a tax
recovery of $31.4 million in the comparable period related to reductions in corporate income tax
rates.
Net income in the current quarter decreased $1.4 million over the first quarter of fiscal 2007.
Funds flow from operations was $252.4 million in the second quarter compared to $208.3 million in
the comparable quarter, and on a year-to-date basis was $496.3 million compared to $405.5 million
in 2006. The growth over the respective quarterly and year-to-date comparative periods was
principally due to increased service operating income before amortization and reduced interest
expense.
Consolidated free cash flow for the quarter and year-to-date of $100.4 million and $176.5 million,
respectively, increased $18.4 million and $62.4 million over the comparable periods. The
improvement came despite increased capital spending of over $20.0 million in each of the current
three and six month periods and was primarily due to improved service operating income before
amortization. The Cable division generated $70.6 million of free cash flow for the quarter compared
to $59.5 million in the comparable period. The Satellite division achieved free cash flow of $29.7
million compared to free cash flow of $22.5 million in the same period last year.
7
Shaw Communications Inc.
As a result of the Companys performance for the first half of the year and the outlook for the
remaining two quarters, the Company anticipates service operating income before amortization will
exceed $1.2 billion. Consistent with previous guidance fiscal 2007 free cash flow is expected to be
in excess of $310.0 million as the Company may accelerate certain capital spending in order to meet
customer demand and maintain the high standards for delivery of services on our network.
Today Shaws Board of Directors increased the equivalent annual dividend rate to $1.12 on Shaws
Class B Non-Voting Participating shares and $1.115 on Shaws Class A Participating shares. This
represents an increase of 12% or $0.12 per share. Shaws dividends are declared and paid monthly
and this increase will commence June 30, 2007.
On March 2, 2007 the Company closed a $400 million offering of 5.70% senior notes due March 2,
2017. The net proceeds were used for debt repayment, working capital and general corporate
purposes.
Key Performance Drivers
The Companys continuous disclosure documents may provide discussion and analysis of non-GAAP
financial measures. These financial measures do not have standard definitions prescribed by
Canadian GAAP or US GAAP and therefore may not be comparable to similar measures disclosed by other
companies. The Company utilizes these measures in making operating decisions and assessing its
performance. Certain investors, analysts and others, utilize these measures in assessing the
Companys financial performance and as an indicator of its ability to service debt. These non-GAAP
financial measures have not been presented as an alternative to net income or any other measure of
performance required by Canadian or US GAAP.
The following contains a listing of the Companys use of non-GAAP financial measures and provides a
reconciliation to the nearest GAAP measurement or provides a reference to such reconciliation.
Service operating income before amortization and operating margin
Service operating income before amortization is calculated as service revenue less operating,
general and administrative expenses and is presented as a sub-total line item in the Companys
unaudited interim Consolidated Statements of Income and Deficit. It is intended to indicate the
Companys ability to service and/or incur debt, and therefore it is calculated before amortization
(a non-cash expense) and interest. Service operating income before amortization is also one of the
measures used by the investing community to value the business. Operating margin is calculated by
dividing service operating income before amortization by service revenue.
Free cash flow
The Company utilizes this measurement as it measures the Companys ability to repay debt and return
cash to shareholders. Free cash flow for cable and satellite is calculated as service operating
income before amortization, less interest, cash taxes on net income, capital expenditures (on an
accrual basis) and equipment costs (net). Consolidated free cash flow is calculated as
follows:
8
Shaw Communications Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
|
|
February 28, |
|
|
February 28, |
|
($000s Cdn) |
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Cable free cash flow (1) |
|
|
70,615 |
|
|
|
59,461 |
|
|
|
115,060 |
|
|
|
91,454 |
|
Combined satellite free cash flow (1) |
|
|
29,735 |
|
|
|
22,494 |
|
|
|
61,427 |
|
|
|
22,604 |
|
|
Consolidated |
|
|
100,350 |
|
|
|
81,955 |
|
|
|
176,487 |
|
|
|
114,058 |
|
|
|
|
|
(1) |
|
The reconciliation of free cash flow for both cable and satellite is
provided in the following segmented analysis. |
CABLE
FINANCIAL HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended February 28, |
|
Six months ended February 28, |
|
|
|
|
|
|
|
|
|
|
Change |
|
|
|
|
|
|
|
|
|
Change |
($000s Cdn) |
|
2007 |
|
2006 |
|
% |
|
2007 |
|
2006 |
|
% |
Service revenue (third party) |
|
|
514,416 |
|
|
|
449,195 |
|
|
|
14.5 |
|
|
|
1,013,611 |
|
|
|
880,256 |
|
|
|
15.1 |
|
|
Service operating income before amortization (1) |
|
|
244,164 |
|
|
|
213,383 |
|
|
|
14.4 |
|
|
|
481,933 |
|
|
|
420,898 |
|
|
|
14.5 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest |
|
|
51,465 |
|
|
|
53,245 |
|
|
|
(3.3 |
) |
|
|
102,855 |
|
|
|
106,114 |
|
|
|
(3.1 |
) |
Cash taxes on net income |
|
|
|
|
|
|
1,041 |
|
|
|
(100.0 |
) |
|
|
|
|
|
|
2,083 |
|
|
|
(100.0 |
) |
|
Cash flow before the following: |
|
|
192,699 |
|
|
|
159,097 |
|
|
|
21.1 |
|
|
|
379,078 |
|
|
|
312,701 |
|
|
|
21.2 |
|
|
Capital expenditures and equipment costs (net): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New housing development |
|
|
22,632 |
|
|
|
18,317 |
|
|
|
23.6 |
|
|
|
45,125 |
|
|
|
41,583 |
|
|
|
8.5 |
|
Success based |
|
|
17,588 |
|
|
|
24,483 |
|
|
|
(28.2 |
) |
|
|
37,916 |
|
|
|
47,793 |
|
|
|
(20.7 |
) |
Upgrades and enhancement |
|
|
61,051 |
|
|
|
38,126 |
|
|
|
60.1 |
|
|
|
138,199 |
|
|
|
97,097 |
|
|
|
42.3 |
|
Replacement |
|
|
9,207 |
|
|
|
12,040 |
|
|
|
(23.5 |
) |
|
|
18,489 |
|
|
|
22,175 |
|
|
|
(16.6 |
) |
Buildings/other |
|
|
11,606 |
|
|
|
6,670 |
|
|
|
74.0 |
|
|
|
24,289 |
|
|
|
12,599 |
|
|
|
92.8 |
|
|
Total as per Note 2 to the unaudited interim Consolidated
Financial Statements |
|
|
122,084 |
|
|
|
99,636 |
|
|
|
22.5 |
|
|
|
264,018 |
|
|
|
221,247 |
|
|
|
19.3 |
|
|
Free cash flow (1) |
|
|
70,615 |
|
|
|
59,461 |
|
|
|
18.8 |
|
|
|
115,060 |
|
|
|
91,454 |
|
|
|
25.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin |
|
|
47.5 |
% |
|
|
47.5 |
% |
|
|
|
|
|
|
47.5 |
% |
|
|
47.8 |
% |
|
|
(0.3 |
) |
|
|
|
|
(1) |
|
See definitions and discussion under Key Performance Drivers in Managements
Discussion and Analysis. |
OPERATING HIGHLIGHTS
|
|
The expansion of Shaws Digital Phone footprint continued with the
service now available to over 75% of homes passed and included
roll-outs during the quarter in Kelowna, Kamloops and Penticton,
all in British Columbia, as well as Fort Saskatchewan and Canmore,
both in Alberta. Most recently, the service was rolled-out to
Abbotsford and Chilliwack, British Columbia. During the quarter
the Company introduced a new Digital Phone product, Shaw Digital
Phone Lite and added 41,721 Digital Phone lines to total 292,625,
including pending installations, at February 28, 2007. |
|
|
|
Customer growth continued in the second quarter with increases of
6,625 for Basic cable, 28,641 for Digital, and 40,694 for
Internet. Internet penetration of basic now stands at 62.6% up
from 59.6% at August 31, 2006. |
9
Shaw Communications Inc.
|
|
The Company recently closed the acquisition of several small
systems in British Columbia that complement existing cable systems
adding approximately 5,000 cable subscribers. The acquisition
provides synergies with existing operations and represents growing
markets. |
Cable service revenue improved 14.5% and 15.1% over the respective quarter and six month period
last year. Customer growth, rate increases and the impact of acquisitions completed in the
immediately preceding two quarters accounted for the increase. Service operating income before
amortization grew 14.4% and 14.5% over the comparable three and six month periods. The increase was
driven by revenue growth, partially offset by increased costs resulting from expenditures incurred
to support continued growth, the delivery of quality customer service, and the launch of Digital
Phone.
Service revenue improved $15.2 million or 3.0% over the first quarter of fiscal 2007 as a result of
customer growth, the impact of acquisitions that were completed in the first quarter and rate
increases. Service operating income before amortization improved $6.4 million or 2.7% over this
same period mainly due to the revenue related growth.
Capital expenditures of $122.1 million and $264.0 million for the quarter and year-to-date
respectively, increased $22.4 million and $42.8 million over the comparable periods last year. Shaw
invested $23.1 million in the second quarter of 2007 on Digital Phone compared to $17.8 million in
the same quarter last year. The increase was mainly due to spending on new launches, increasing
softswitch capacity, and projects that will allow Shaw to operate independently as a Competitive
Local Exchange Carrier (CLEC). Total spending to date on Digital Phone is now $201.0 million.
Spending in the upgrade and enhancement category for the three and six month periods increased
$22.9 million and $41.1 million, respectively, over the same periods last year primarily due to
projects undertaken to increase network capacity to support digital phone and internet growth, and
upgrades to support Video-On-Demand (VOD), digital cable and high definition (HD) TV
initiatives. Spending in Buildings and Other was up $4.9 million and $11.7 million for the quarter
and year-to-date, respectively, over the same periods last year primarily due to initiatives to
upgrade certain corporate assets and various facilities projects.
Success based capital decreased over the comparable three and six month periods by $6.9 million and
$9.9 million, respectively. Digital Phone and Internet success based capital increased during the
current quarter as a result of customer growth and increased Internet promotions, however, this was
more than offset by reduced success based capital primarily related to digital cable terminal
(DCT) sales as a result of price increases implemented on sales units during the latter part of
fiscal 2006.
Throughout the past quarter Shaw continued to deliver on its strategy of enhancing the various
service offerings, and launching new products. In December, the Company introduced a Digital Phone
Lite product to the range of service offerings. This new service includes a local phone line,
popular calling features, and long distance anytime calling at competitive per minute rates. This
new service offering is tailored for light long distance users and gives customers the opportunity
to customize their home phone service to meet their needs.
10
Shaw Communication Inc.
The Company continues to expand its High Definition (HD) line-up, adding Showcase HD and National
Geographic HD in December. Shaw currently has over 150,000 HD capable cable customers.
SUBSCRIBER STATISTICS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 28, 2007 |
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
|
|
|
|
August 31, |
|
|
|
|
|
Change |
|
|
|
|
|
Change |
|
|
February 28, 2007 |
|
2006(1) |
|
Growth |
|
% |
|
Growth |
|
% |
|
|
|
CABLE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic service: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual |
|
|
2,220,082 |
|
|
|
2,200,793 |
|
|
|
6,625 |
|
|
|
0.3 |
|
|
|
19,289 |
|
|
|
0.9 |
|
Penetration as % of homes passed |
|
|
65.2 |
% |
|
|
65.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital terminals |
|
|
945,760 |
|
|
|
855,647 |
|
|
|
51,131 |
|
|
|
5.7 |
|
|
|
90,113 |
|
|
|
10.5 |
|
Digital customers |
|
|
725,528 |
|
|
|
671,556 |
|
|
|
28,641 |
|
|
|
4.1 |
|
|
|
53,972 |
|
|
|
8.0 |
|
|
|
INTERNET: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Connected and scheduled |
|
|
1,389,333 |
|
|
|
1,312,762 |
|
|
|
40,694 |
|
|
|
3.0 |
|
|
|
76,571 |
|
|
|
5.8 |
|
Penetration as % of basic |
|
|
62.6 |
% |
|
|
59.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Standalone Internet not included
in basic cable |
|
|
168,561 |
|
|
|
157,200 |
|
|
|
5,239 |
|
|
|
3.2 |
|
|
|
11,361 |
|
|
|
7.2 |
|
|
DIGITAL PHONE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of lines(1) |
|
|
292,625 |
|
|
|
212,707 |
|
|
|
41,721 |
|
|
|
16.6 |
|
|
|
79,918 |
|
|
|
37.6 |
|
|
|
|
|
(1) |
|
August 31, 2006 statistics are restated for comparative purposes to adjust
subscribers as if the acquisitions of the Whistler and Grand Forks cable systems in British
Columbia and the Kenora cable system in Ontario had occurred on that date. |
|
(2) |
|
Represents primary and secondary lines on billing plus pending installs. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended February 28, |
|
Six months ended February 28, |
Churn (3) |
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
|
|
Digital customers |
|
|
3.1 |
% |
|
|
3.3 |
% |
|
|
6.4 |
% |
|
|
6.7 |
% |
Internet customers |
|
|
2.8 |
% |
|
|
3.0 |
% |
|
|
6.4 |
% |
|
|
6.1 |
% |
|
|
|
|
(3) |
|
Calculated as the number of new customer activations less the net gain of
customers during the period divided by the average of the opening and closing customers for
the applicable period. |
11
Shaw Communication Inc.
SATELLITE (DTH and Satellite Services)
FINANCIAL HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended February 28, |
|
Six months ended February 28, |
|
|
|
|
|
|
|
|
|
|
Change |
|
|
|
|
|
|
|
|
|
Change |
($000s Cdn) |
|
2007 |
|
2006 |
|
% |
|
2007 |
|
2006 |
|
% |
|
|
|
|
Service revenue (third party)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DTH (Star Choice) |
|
|
150,293 |
|
|
|
141,413 |
|
|
|
6.3 |
|
|
|
300,485 |
|
|
|
279,157 |
|
|
|
7.6 |
|
|
Satellite Services |
|
|
21,021 |
|
|
|
20,589 |
|
|
|
2.1 |
|
|
|
42,640 |
|
|
|
41,329 |
|
|
|
3.2 |
|
|
|
|
|
171,314 |
|
|
|
162,002 |
|
|
|
5.7 |
|
|
|
343,125 |
|
|
|
320,486 |
|
|
|
7.1 |
|
|
|
Service operating income before amortization (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DTH (Star Choice) |
|
|
47,579 |
|
|
|
43,532 |
|
|
|
9.3 |
|
|
|
97,261 |
|
|
|
80,225 |
|
|
|
21.2 |
|
|
Satellite Services |
|
|
11,295 |
|
|
|
11,009 |
|
|
|
2.6 |
|
|
|
23,631 |
|
|
|
22,123 |
|
|
|
6.8 |
|
|
|
|
|
58,874 |
|
|
|
54,541 |
|
|
|
7.9 |
|
|
|
120,892 |
|
|
|
102,348 |
|
|
|
18.1 |
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest (2) |
|
|
9,776 |
|
|
|
10,777 |
|
|
|
(9.3 |
) |
|
|
19,870 |
|
|
|
20,986 |
|
|
|
(5.3 |
) |
|
Cash taxes on net income |
|
|
|
|
|
|
66 |
|
|
|
(100.0 |
) |
|
|
|
|
|
|
131 |
|
|
|
(100.0 |
) |
|
Cash flow before the following: |
|
|
49,098 |
|
|
|
43,698 |
|
|
|
12.4 |
|
|
|
101,022 |
|
|
|
81,231 |
|
|
|
24.4 |
|
|
|
Capital expenditures and equipment costs (net): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Success based (3) |
|
|
13,970 |
|
|
|
19,428 |
|
|
|
(28.1 |
) |
|
|
32,361 |
|
|
|
49,630 |
|
|
|
(34.8 |
) |
|
Transponders and other |
|
|
5,393 |
|
|
|
1,776 |
|
|
|
203.7 |
|
|
|
7,234 |
|
|
|
8,997 |
|
|
|
(19.6 |
) |
|
Total as per Note 2 to the unaudited interim Consolidated
Financial Statements |
|
|
19,363 |
|
|
|
21,204 |
|
|
|
(8.7 |
) |
|
|
39,595 |
|
|
|
58,627 |
|
|
|
(32.5 |
) |
|
|
Free cash flow (1) |
|
|
29,735 |
|
|
|
22,494 |
|
|
|
32.2 |
|
|
|
61,427 |
|
|
|
22,604 |
|
|
|
171.8 |
|
|
Operating Margin |
|
|
34.4 |
% |
|
|
33.7 |
% |
|
|
0.7 |
|
|
|
35.2 |
% |
|
|
31.9 |
% |
|
|
3.3 |
|
|
|
|
|
(1) |
|
See definitions and discussion under Key Performance Drivers in Managements
Discussion and Analysis. |
|
(2) |
|
Interest is allocated to the Satellite division based on the actual cost
of debt incurred by the Company to repay prior outstanding Satellite debt and to fund
accumulated cash deficits of Shaw Satellite Services and Star Choice. |
|
(3) |
|
Net of the profit on the sale of satellite equipment as it is viewed as a
recovery of expenditures on customer premise equipment. |
OPERATING HIGHLIGHTS
|
|
|
Free cash flow of $29.7 million and $61.4 million for the three and six month
periods, respectively, improved $7.2 million and $38.8 million over the same periods last
year. |
|
|
|
|
On February 1, 2007 Star Choice implemented rate increases on a number of its packages.
The increases, which were fully implemented in March, will generate additional revenue of
approximately $0.7 million per month. |
Service revenue improved 5.7% over the same quarter last year and 7.1% for the year-to-date
primarily as a result of rate increases and customer growth. Service operating income before
amortization increased 7.9% and 18.1% over the comparable three and six month periods,
respectively, to $58.9 million and $120.9 million. The improvement was primarily due to the growth
in service revenue and was partially offset by costs to increase transponder capacity. The
year-to-date period also benefited from recovery of provisions related to certain contractual
matters.
12
Shaw Communication Inc.
Service revenue decreased $0.5 million over the first quarter of fiscal 2007 primarily due to
increased programming credits. Service operating income before amortization declined $3.1 million
over this same quarter primarily due to the reduced revenues and various increased costs.
Capital expenditures of $19.4 million and $39.6 million for the quarter and year-to-date
respectively, decreased $1.8 million and $19.0 million over the comparable periods last year.
Quarterly and year-to-date success based capital expenditures of $14.0 million and $32.4 million,
respectively, declined $5.5 million and $17.3 million over the comparable periods mainly due to
favorable pricing on receivers and reduced activations. Current quarter spending in Transponders
and Other increased $3.6 million over the same period last year primarily due to current year
investments to upgrade certain Satellite Service technology and increased office equipment to
support call centre expansions. On a year-to-date basis, spending has decreased $1.8 million mainly
due to investments in the comparable period to add additional transponder capacity.
During the quarter, Star Choice announced plans to add a third call centre in Mississauga. The
Company currently operates two call centres in Calgary and Montreal. Star Choice also expanded
their channel line up with new HD programming adding Showcase HD and National Geographic HD. They
now offer 20 HD channels and have over 110,000 HD capable customers.
CUSTOMER STATISTICS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 28, 2007 |
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
February 28, 2007 |
|
August 31, 2006 |
|
Growth |
|
% |
|
Growth |
|
% |
|
|
|
|
|
|
|
|
|
|
|
Star Choice
customers
(1) |
|
|
872,562 |
|
|
|
869,208 |
|
|
|
928 |
|
|
|
0.1 |
|
|
|
3,354 |
|
|
|
0.4 |
|
|
|
|
|
(1) |
|
Including seasonal customers who temporarily suspend their service. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended February 28, |
|
Six months ended February 28, |
Churn (2) |
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
Star Choice customers |
|
|
2.4 |
% |
|
|
2.2 |
% |
|
|
5.6 |
% |
|
|
5.6 |
% |
|
|
|
|
(2) |
|
Calculated as the number of new customer activations less the net gain of
customers during the period divided by the average of the opening and closing customers for
the applicable period. |
13
Shaw Communication Inc.
OTHER INCOME AND EXPENSE ITEMS:
Amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended February 28, |
|
Six months ended February 28, |
|
|
|
|
|
|
|
|
|
|
Change |
|
|
|
|
|
|
|
|
|
Change |
($000s Cdn) |
|
2007 |
|
2006 |
|
% |
|
2007 |
|
2006 |
|
% |
|
Amortization revenue (expense) -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred IRU revenue |
|
|
3,136 |
|
|
|
3,136 |
|
|
|
|
|
|
|
6,273 |
|
|
|
6,273 |
|
|
|
|
|
Deferred equipment revenue |
|
|
25,771 |
|
|
|
19,511 |
|
|
|
32.1 |
|
|
|
48,989 |
|
|
|
37,880 |
|
|
|
29.3 |
|
Deferred equipment cost |
|
|
(50,166 |
) |
|
|
(50,326 |
) |
|
|
(0.3 |
) |
|
|
(99,136 |
) |
|
|
(99,903 |
) |
|
|
(0.8 |
) |
Deferred charges |
|
|
(1,236 |
) |
|
|
(1,325 |
) |
|
|
(6.7 |
) |
|
|
(2,473 |
) |
|
|
(2,583 |
) |
|
|
(4.3 |
) |
Property, plant and equipment |
|
|
(96,808 |
) |
|
|
(97,022 |
) |
|
|
(0.2 |
) |
|
|
(188,973 |
) |
|
|
(197,862 |
) |
|
|
(4.5 |
) |
|
The increase in amortization of deferred equipment revenue over the comparative periods is
primarily due to growth in sales of higher priced HD digital equipment commencing in fiscal 2005.
Amortization of property, plant and equipment decreased over the comparative six month period as
the impact of assets that became fully depreciated in fiscal 2006 exceeded amortization on new
capital purchases.
Interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended February 28, |
|
Six months ended February 28, |
|
|
|
|
|
|
|
|
|
|
Change |
|
|
|
|
|
|
|
|
|
Change |
($000s Cdn) |
|
2007 |
|
2006 |
|
% |
|
2007 |
|
2006 |
|
% |
|
Interest |
|
|
61,597 |
|
|
|
64,384 |
|
|
|
(4.3 |
) |
|
|
123,438 |
|
|
|
127,826 |
|
|
|
(3.4 |
) |
|
Interest expense decreased over the comparative periods as a result of lower average debt
levels.
Investment activity
During the current and comparative six month periods, the Company realized gains of $0.4 million
and $1.7 million, respectively, on the sale of minor interests in publicly traded companies.
Foreign exchange gain on unhedged and hedged long-term debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended February 28, |
|
|
|
|
|
Six months ended February 28, |
|
|
|
|
|
|
|
|
|
|
|
|
Change |
|
|
|
|
|
|
|
|
|
Change |
($000s Cdn) |
|
2007 |
|
2006 |
|
% |
|
2007 |
|
2006 |
|
% |
|
Foreign exchange
gain on unhedged
long-term debt |
|
|
|
|
|
|
871 |
|
|
|
(100 |
) |
|
|
|
|
|
|
4,352 |
|
|
|
(100 |
) |
|
In June 2006, the Company amended its existing credit facility and repaid US dollar
denominated bank loans. Until that time Shaw recorded foreign exchange gains on the translation of
foreign denominated unhedged bank debt. In addition, the Company recorded a foreign exchange gain
on the US $172.5 million COPrS prior to entering into a US dollar forward purchase contract in the
first quarter of 2006 to hedge the redemption of the issue.
14
Shaw Communication Inc.
Currently the Company does not have any foreign denominated unhedged long-term debt and therefore,
does not anticipate recording any further foreign exchange gains and losses.
Under Canadian generally accepted accounting principles (GAAP), the Company translates long-term
debt at period-end foreign exchange rates. Because the Company follows hedge accounting, the
resulting foreign exchange gains or losses on translating hedged long-term debt are included in
deferred credits or deferred charges. As a result, the amount of hedged long-term debt that is
reported under GAAP is often different than the amount at which the hedged debt would be settled
under existing cross-currency interest rate agreements. As outlined in Note 4 to the unaudited
interim Consolidated Financial Statements, if the rate of translation was adjusted to reflect the
hedged rates of the Companys cross-currency agreements (which fix the liability for interest and
principal), long-term debt would increase by $346.5 million (August 31, 2006 $408.7 million)
which represents the corresponding hedged amounts included in deferred credits.
Other gains and losses
This category consists mainly of realized and unrealized foreign exchange gains and losses on US
dollar denominated current assets and liabilities, gains and losses on disposal of property, plant
and equipment, and the Companys share of the operations of Burrard Landing Lot 2 Holdings
Partnership (the Partnership). Due to fluctuations of the Canadian dollar relative to the US
dollar, the Company recorded a foreign exchange loss of $0.6 million for the quarter (2006 nil),
and $1.9 million (2006 gain of $1.2 million) for the six month period.
Income Taxes
Income taxes increased over the comparative periods primarily due to the future income tax recovery
of $31.4 million related to reductions in corporate income tax rates recorded in the first quarter
of fiscal 2006 and increased income taxes on higher income in the current fiscal year.
RISKS AND UNCERTAINTIES
There have been no material changes in any risks or uncertainties facing the Company since August
31, 2006. A discussion of risks affecting the Company and its business is set forth in the
Companys August 31, 2006 Annual Report under the Introduction to the Business Known Events,
Trends, Risks and Uncertainties in Managements Discussion and Analysis.
FINANCIAL POSITION
Total assets at February 28, 2007 were $7.7 billion compared to $7.5 billion at August 31, 2006.
Following is a discussion of significant changes in the consolidated balance sheet since August 31,
2006.
Current assets increased by $38.5 million due to increases in accounts receivable of $21.7 million
and inventory of $15.6 million. Accounts receivable increased mainly due to customer growth, rate
increases and timing of equipment shipments to retailers. Inventories increased due to timing of
purchases, continued growth and to ensure adequate stock levels are on hand during a suppliers
plant relocation.
15
Shaw Communication Inc.
Investments and other assets decreased by $9.2 million due to the sale of an interest in a publicly
traded company.
Property, plant and equipment increased by $84.1 million as current year capital expenditures
exceeded amortization.
Deferred charges increased $10.2 million primarily due to an increase in deferred equipment costs
of $8.7 million.
Broadcast licenses increased by $67.4 million due to the acquisition of Whistler and Grand Forks
cable systems in British Columbia and the Kenora cable system in Ontario.
Current liabilities (excluding current portion of long-term debt) increased by $26.6 million due to
an increase in bank indebtedness of $21.8 million and unearned revenue of $6.2 million. Unearned
revenue increased due to customer growth and rate increases.
Total long-term debt decreased by $33.0 million as a result of repayment of bank borrowings and
Partnership debt of $95.2 million partially offset by an increase of $62.2 million relating to the
translation of hedged US denominated debt.
Deferred credits decreased by $49.3 million principally due to the decrease in deferred foreign
exchange gains on the translation of hedged US dollar denominated debt of $62.2 million offset by
an increase in deferred equipment revenue of $22.1 million. Future income taxes increased by $99.2
million due to the impact of cable system acquisitions and the future income tax expense recorded
in the current year.
Share capital increased by $59.7 million primarily due to the issuance of Class B Non-Voting
Shares. During the six months ended February 28, 2007, the Company issued 89,794 Class B
Non-Voting Shares for $3.0 million as partial consideration in respect of a cable system
acquisition and 1,707,302 Class B Non-Voting Shares were issued for $55.2 million under the
Companys option and warrant plans. As of March 31, 2007, share capital is as reported at February
28, 2007 with the exception of the issuance of 150,056 Class B Non-Voting Shares upon exercise of
options subsequent to the quarter end.
LIQUIDITY AND CAPITAL RESOURCES
In the current year, Shaw generated $176.5 million of consolidated free cash flow. Shaw used its
free cash flow along with proceeds on issuance of Class B Non-Voting Shares of $55.2 million,
proceeds on the sale of various assets of $10.3 million, and other net items of $9.2 million to
repay bank debt of 73.2 million, fund the cash component of cable systems acquisitions of $52.9
million, pay common share dividends of $86.2 million, purchase inventory of $15.6 million and fund
the net change in working capital requirements of $23.3 million.
On November 14, 2006, Shaw received the approval of the TSX to renew its normal course issuer bid
to purchase its Class B Non-Voting Shares for a further one year period. The Company is authorized
to acquire up to an additional 15,300,000 Class B Non-Voting Shares, representing approximately 10%
of the public float of Class B Non-Voting Shares, during the period November 17, 2006 to November
16, 2007.
16
Shaw Communication Inc.
On March 2, 2007, Shaw issued $400 million of senior unsecured notes at a rate of 5.7% due March 2,
2017. Net proceeds (after issue and underwriting expenses) of $394.8 million were used for
repayment of unsecured bank loans and general working capital purposes. The notes were issued at a
discount of $0.9 million.
At February 28, 2007, Shaw had access to $832.4 million of available credit facilities. Based on
available credit facilities and forecasted free cash flow, the Company expects to have sufficient
liquidity to fund operations and obligations during the current fiscal year. On a longer-term
basis, Shaw expects to generate free cash flow and have borrowing capacity sufficient to finance
foreseeable future business plans and to refinance maturing debt.
CASH FLOW
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended February 28, |
|
Six months ended February 28, |
|
|
|
|
|
|
|
|
|
|
Change |
|
|
|
|
|
|
|
|
|
Change |
($000s Cdn) |
|
2007 |
|
2006 |
|
% |
|
2007 |
|
2006 |
|
% |
|
Funds flow from operations |
|
|
252,412 |
|
|
|
208,273 |
|
|
|
21.2 |
|
|
|
496,348 |
|
|
|
405,481 |
|
|
|
22.4 |
|
Net decrease (increase)
in non-cash working
capital balances related
to operations |
|
|
37,989 |
|
|
|
10,991 |
|
|
|
245.6 |
|
|
|
(23,356 |
) |
|
|
(11,202 |
) |
|
|
(108.5 |
) |
|
|
|
|
290,401 |
|
|
|
219,264 |
|
|
|
32.4 |
|
|
|
472,992 |
|
|
|
394,279 |
|
|
|
20.0 |
|
|
Funds flow from operations increased over comparative periods as a result of growth in service
operating income before amortization and lower interest expense. The net change in non-cash
working capital balances over the comparative periods is mainly due to the timing of payment of
accounts payable and accrued liabilities.
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended February 28, |
|
Six months ended February 28, |
($000s Cdn) |
|
2007 |
|
2006 |
|
Increase |
|
2007 |
|
2006 |
|
Increase |
|
Cash flow used in
investing
activities |
|
|
(166,920 |
) |
|
|
(124,670 |
) |
|
|
(42,250 |
) |
|
|
(368,600 |
) |
|
|
(292,437 |
) |
|
|
(76,163 |
) |
|
The cash used in investing activities increased $42.2 million over the comparative quarter due
to higher expenditures on capital and inventory, partially offset by lower cash requirements for
equipment costs (net). The cash used in investing activities increased $76.2 million over the
comparative six month period due to cable system acquisitions and higher capital expenditures,
partially offset by lower cash requirements for equipment costs (net).
17
Shaw Communication Inc.
Financing Activities
The changes in financing activities during the comparative periods were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
February 28, |
|
February 28, |
(In $millions Cdn) |
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
Bank loans and bank indebtedness net repayments |
|
|
(115.8 |
) |
|
|
(65.3 |
) |
|
|
(73.2 |
) |
|
|
(235.7 |
) |
Proceeds on $450 million senior unsecured notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
450.0 |
|
Dividends |
|
|
(54.0 |
) |
|
|
(22.3 |
) |
|
|
(86.2 |
) |
|
|
(44.7 |
) |
Purchase of Class B Non-Voting Shares for cancellation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(58.0 |
) |
Repayment of Partnership debt |
|
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
(0.2 |
) |
|
|
(0.2 |
) |
Proceeds on bond forward |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.5 |
|
Issue of Class B Non-Voting Shares |
|
|
46.4 |
|
|
|
0.1 |
|
|
|
55.2 |
|
|
|
0.1 |
|
Proceeds on prepayment of IRU |
|
|
|
|
|
|
0.1 |
|
|
|
|
|
|
|
0.2 |
|
Cost to terminate foreign currency forward contract |
|
|
|
|
|
|
(15.8 |
) |
|
|
|
|
|
|
(15.8 |
) |
Redemption of COPrS |
|
|
|
|
|
|
(201.9 |
) |
|
|
|
|
|
|
(201.9 |
) |
|
|
|
|
(123.5 |
) |
|
|
(305.2 |
) |
|
|
(104.4 |
) |
|
|
(103.5 |
) |
|
SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service operating |
|
|
|
|
|
|
|
Funds flow |
|
|
|
Service |
|
income before |
|
|
|
|
|
Basic earnings |
|
from |
( $000s Cdn except per share amounts) |
|
revenue |
|
amortization(1) |
|
Net income |
|
per share(2) |
|
operations(3) |
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second |
|
|
685,730 |
|
|
|
303,038 |
|
|
|
79,751 |
|
|
|
0.37 |
|
|
|
252,412 |
|
First |
|
|
671,006 |
|
|
|
299,787 |
|
|
|
81,138 |
|
|
|
0.38 |
|
|
|
243,936 |
|
|
|
2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth |
|
|
631,888 |
|
|
|
275,127 |
|
|
|
210,369 |
|
|
|
0.97 |
|
|
|
220,617 |
|
|
Third |
|
|
626,654 |
|
|
|
279,544 |
|
|
|
126,410 |
|
|
|
0.58 |
|
|
|
221,099 |
|
|
Second |
|
|
611,197 |
|
|
|
267,924 |
|
|
|
45,790 |
|
|
|
0.21 |
|
|
|
208,273 |
|
|
First |
|
|
589,545 |
|
|
|
255,322 |
|
|
|
75,681 |
|
|
|
0.35 |
|
|
|
197,208 |
|
|
|
2005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth |
|
|
562,958 |
|
|
|
250,759 |
|
|
|
69,959 |
|
|
|
0.31 |
|
|
|
191,507 |
|
|
Third |
|
|
559,883 |
|
|
|
252,899 |
|
|
|
32,836 |
|
|
|
0.14 |
|
|
|
190,144 |
|
|
|
|
|
|
(1) |
|
See definition and discussion under Key Performance Drivers in Managements
Discussion and Analysis. |
|
(2) |
|
Diluted earnings per share equals basic earnings per share except in the fourth
quarter of 2006 where diluted earnings per share is $0.96. |
|
(3) |
|
Funds flow from operations is presented before changes in net non-cash working
capital as presented in the unaudited interim Consolidated Statements of Cash Flows. |
Generally, service revenue and service operating income before amortization have grown
quarter-over-quarter mainly due to customer growth and rate increases. Net income has generally
trended positively quarter-over-quarter as a result of the growth in service operating income
before amortization described above, reductions of interest expense as a result of debt repayment
and retirement, the impact of the net change in non-operating items such as gains on sale of
investments, foreign currency fluctuations on unhedged US denominated debt, fair value adjustments
on foreign currency forward contracts and the impact of corporate income tax rate reductions. The
exceptions to the consecutive quarter-over-quarter increases in net income are the second quarter
of 2006 and the first and second quarters of 2007. Net income declined by
18
Shaw Communication Inc.
$29.9 million in the second quarter of 2006 and by $129.2 million in the first quarter of 2007 due
to income tax recoveries primarily related to reductions in corporate income tax rates which
contributed $31.4 million and $150.0 million to net income in the first and fourth quarters of
2006, respectively. The decline in the second quarter of 2007 was marginal. As a result of the
aforementioned changes in net income, basic and diluted earnings per share have trended
accordingly.
ACCOUNTING STANDARDS
Update to critical accounting policies and estimates
The Managements Discussion and Analysis (MD&A) included in the Companys August 31, 2006 Annual
Report outlined critical accounting policies including key estimates and assumptions that
management has made under these policies and how they affect the amounts reported in the
Consolidated Financial Statements. The MD&A also describes significant accounting policies where
alternatives exist. The unaudited interim Consolidated Financial Statements follow the same
accounting policies and methods of application as the most recent annual consolidated financial
statements.
CAUTION CONCERNING FORWARD LOOKING STATEMENTS
Certain statements included and incorporated by reference herein may constitute forward-looking
statements. Such forward-looking statements involve risks, uncertainties and other factors which
may cause actual results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by such forward-looking
statements. When used, the words anticipate, believe, expect, plan, intend, target,
guideline, goal, and similar expressions generally identify forward-looking statements. These
forward-looking statements include, but are not limited to, references to future capital
expenditures (including the amount and nature thereof), financial guidance for future performance,
business strategies and measures to implement strategies, competitive strengths, goals, expansion
and growth of Shaws business and operations, plans and references to the future success of Shaw.
These forward-looking statements are based on certain assumptions and analyses made by Shaw in
light of its experience and its perception of historical trends, current conditions and expected
future developments as well as other factors it believes are appropriate in the circumstances.
However, whether actual results and developments will conform with expectations and predictions of
the Company is subject to a number of risks and uncertainties. These factors include include
general economic, market or business conditions; the opportunities (or lack thereof) that may be
presented to and pursued by Shaw; increased competition in the markets in which Shaw operates and
from the development of new markets for emerging technologies; changes in laws, regulations and
decisions by regulators in Shaws industries in both Canada and the United States; Shaws status as
a holding company with separate operating subsidiaries; changing conditions in the entertainment,
information and communications industries; risks associated with the economic, political and
regulatory policies of local governments and laws and policies of Canada and the United States; and
other factors, many of which are beyond the control of Shaw. Should one or more of these risks
materialize or should assumptions underlying the forward-looking statements prove incorrect, actual
results may vary materially from those as described herein. Consequently, all of the
forward-looking statements made in this report and the documents incorporated by reference herein
are qualified by these
19
Shaw Communication Inc.
cautionary statements, and there can be no assurance that the actual results or developments
anticipated by Shaw will be realized or, even if substantially realized, that they will have the
expected consequences to, or effects on, the Company.
You should not place undue reliance on any such forward-looking statements. Further, any
forward-looking statement (and such risks, uncertainties and other factors) speaks only as of the
date on which it was originally made and the Company expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any forward-looking statement contained in
this document to reflect any change in expectations with regard to those statements or any other
change in events, conditions or circumstances on which any such
statement is based, except
as required by law. New factors affecting the Company emerge from time to time, and it is not
possible for the Company to predict what factors will arise or when. In addition, the Company
cannot assess the impact of each factor on its business or the extent to which any particular
factor, or combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statement.
20
Shaw Communications Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
|
|
|
|
|
|
|
[thousands of Canadian dollars] |
|
February 28, 2007 |
August 31, 2006 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
159,793 |
|
|
|
138,142 |
|
Inventories |
|
|
69,564 |
|
|
|
53,994 |
|
Prepaids and other |
|
|
22,187 |
|
|
|
20,870 |
|
|
|
|
|
251,544 |
|
|
|
213,006 |
|
Investments and other assets |
|
|
8,823 |
|
|
|
17,978 |
|
Property, plant and equipment |
|
|
2,334,140 |
|
|
|
2,250,056 |
|
Deferred charges |
|
|
272,096 |
|
|
|
261,908 |
|
Intangibles |
|
|
|
|
|
|
|
|
Broadcast licenses |
|
|
4,758,862 |
|
|
|
4,691,484 |
|
Goodwill |
|
|
88,111 |
|
|
|
88,111 |
|
|
|
|
|
7,713,576 |
|
|
|
7,522,543 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY |
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
|
|
Bank indebtedness |
|
|
42,163 |
|
|
|
20,362 |
|
Accounts payable and accrued liabilities |
|
|
459,672 |
|
|
|
461,119 |
|
Income taxes payable |
|
|
4,985 |
|
|
|
4,918 |
|
Unearned revenue |
|
|
112,719 |
|
|
|
106,497 |
|
Current portion of long-term debt [note 4] |
|
|
297,223 |
|
|
|
449 |
|
|
|
|
|
916,762 |
|
|
|
593,345 |
|
Long-term debt [note 4] |
|
|
2,666,183 |
|
|
|
2,995,936 |
|
Other long-term liabilities [note 9] |
|
|
49,580 |
|
|
|
37,724 |
|
Deferred credits |
|
|
1,051,643 |
|
|
|
1,100,895 |
|
Future income taxes |
|
|
1,084,155 |
|
|
|
984,938 |
|
|
|
|
|
5,768,323 |
|
|
|
5,712,838 |
|
|
Shareholders equity |
|
|
|
|
|
|
|
|
Share capital [note 5] |
|
|
2,036,706 |
|
|
|
1,976,966 |
|
Contributed surplus [note 5] |
|
|
6,212 |
|
|
|
5,110 |
|
Deficit |
|
|
(98,021 |
) |
|
|
(172,701 |
) |
Cumulative translation adjustment |
|
|
356 |
|
|
|
330 |
|
|
|
|
|
1,945,253 |
|
|
|
1,809,705 |
|
|
|
|
|
7,713,576 |
|
|
|
7,522,543 |
|
|
See accompanying notes
21
Shaw Communications Inc.
CONSOLIDATED STATEMENTS OF INCOME AND DEFICIT
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
February 28, |
|
February 28, |
[thousands of Canadian dollars except per share amounts] |
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
Service revenue [note 2] |
|
|
685,730 |
|
|
|
611,197 |
|
|
|
1,356,736 |
|
|
|
1,200,742 |
|
Operating, general and administrative expenses |
|
|
382,692 |
|
|
|
343,273 |
|
|
|
753,911 |
|
|
|
677,496 |
|
|
Service operating income before amortization [note 2] |
|
|
303,038 |
|
|
|
267,924 |
|
|
|
602,825 |
|
|
|
523,246 |
|
Amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred IRU revenue |
|
|
3,136 |
|
|
|
3,136 |
|
|
|
6,273 |
|
|
|
6,273 |
|
Deferred equipment revenue |
|
|
25,771 |
|
|
|
19,511 |
|
|
|
48,989 |
|
|
|
37,880 |
|
Deferred equipment cost |
|
|
(50,166 |
) |
|
|
(50,326 |
) |
|
|
(99,136 |
) |
|
|
(99,903 |
) |
Deferred charges |
|
|
(1,236 |
) |
|
|
(1,325 |
) |
|
|
(2,473 |
) |
|
|
(2,583 |
) |
Property, plant and equipment |
|
|
(96,808 |
) |
|
|
(97,022 |
) |
|
|
(188,973 |
) |
|
|
(197,862 |
) |
|
Operating income |
|
|
183,735 |
|
|
|
141,898 |
|
|
|
367,505 |
|
|
|
267,051 |
|
Interest on long-term debt [note 2] |
|
|
(61,597 |
) |
|
|
(64,384 |
) |
|
|
(123,438 |
) |
|
|
(127,826 |
) |
|
|
|
|
122,138 |
|
|
|
77,514 |
|
|
|
244,067 |
|
|
|
139,225 |
|
Gain on sale of investment |
|
|
|
|
|
|
|
|
|
|
415 |
|
|
|
1,690 |
|
Write-down of investment |
|
|
|
|
|
|
(374 |
) |
|
|
|
|
|
|
(374 |
) |
Foreign exchange gain on unhedged long-term debt |
|
|
|
|
|
|
871 |
|
|
|
|
|
|
|
4,352 |
|
Fair value loss on a foreign currency forward contract |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(360 |
) |
Debt retirement costs |
|
|
|
|
|
|
(8,123 |
) |
|
|
|
|
|
|
(8,123 |
) |
Other gains |
|
|
1,045 |
|
|
|
2,191 |
|
|
|
562 |
|
|
|
4,322 |
|
|
Income before income taxes |
|
|
123,183 |
|
|
|
72,079 |
|
|
|
245,044 |
|
|
|
140,732 |
|
Income tax expense |
|
|
43,530 |
|
|
|
26,073 |
|
|
|
84,356 |
|
|
|
19,113 |
|
|
Income before the following |
|
|
79,653 |
|
|
|
46,006 |
|
|
|
160,688 |
|
|
|
121,619 |
|
Equity income (loss) on investees |
|
|
98 |
|
|
|
(216 |
) |
|
|
201 |
|
|
|
(148 |
) |
|
Net income |
|
|
79,751 |
|
|
|
45,790 |
|
|
|
160,889 |
|
|
|
121,471 |
|
Deficit, beginning of period |
|
|
(123,804 |
) |
|
|
(410,792 |
) |
|
|
(172,701 |
) |
|
|
(428,855 |
) |
Reduction on Class B Non-Voting Shares purchased for cancellation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(35,085 |
) |
Amortization of opening fair value loss on a foreign currency forward contract |
|
|
|
|
|
|
(1,612 |
) |
|
|
|
|
|
|
(1,705 |
) |
Dividends - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A and Class B Non-Voting Shares |
|
|
(53,968 |
) |
|
|
(22,292 |
) |
|
|
(86,209 |
) |
|
|
(44,732 |
) |
|
Deficit, end of period |
|
|
(98,021 |
) |
|
|
(388,906 |
) |
|
|
(98,021 |
) |
|
|
(388,906 |
) |
|
Earnings per share [note 6] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
0.37 |
|
|
|
0.21 |
|
|
|
0.75 |
|
|
|
0.56 |
|
Diluted |
|
|
0.37 |
|
|
|
0.21 |
|
|
|
0.74 |
|
|
|
0.56 |
|
|
[thousands of shares] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average participating shares outstanding during period |
|
|
215,983 |
|
|
|
217,620 |
|
|
|
215,505 |
|
|
|
218,331 |
|
Participating shares outstanding, end of period |
|
|
216,739 |
|
|
|
217,623 |
|
|
|
216,739 |
|
|
|
217,623 |
|
|
See accompanying notes
22
Shaw Communications Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
February 28, |
|
February 28, |
[thousands of Canadian dollars] |
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
OPERATING ACTIVITIES [note 7] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds flow from operations |
|
|
252,412 |
|
|
|
208,273 |
|
|
|
496,348 |
|
|
|
405,481 |
|
Net decrease (increase) in non-cash working capital balances related
to operations |
|
|
37,989 |
|
|
|
10,991 |
|
|
|
(23,356 |
) |
|
|
(11,202 |
) |
|
|
|
|
290,401 |
|
|
|
219,264 |
|
|
|
472,992 |
|
|
|
394,279 |
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment [note 2] |
|
|
(131,875 |
) |
|
|
(105,456 |
) |
|
|
(271,250 |
) |
|
|
(214,854 |
) |
Additions to equipment costs (net) [note 2] |
|
|
(19,014 |
) |
|
|
(26,632 |
) |
|
|
(38,812 |
) |
|
|
(65,377 |
) |
Net reduction (addition) to inventories |
|
|
(15,830 |
) |
|
|
1,916 |
|
|
|
(15,570 |
) |
|
|
(17,071 |
) |
Cable business acquisitions [note 3] |
|
|
(492 |
) |
|
|
|
|
|
|
(52,918 |
) |
|
|
|
|
Proceeds on sale of investments and other assets |
|
|
476 |
|
|
|
5,799 |
|
|
|
10,315 |
|
|
|
13,662 |
|
Additions to deferred charges |
|
|
(185 |
) |
|
|
(297 |
) |
|
|
(365 |
) |
|
|
(8,797 |
) |
|
|
|
|
(166,920 |
) |
|
|
(124,670 |
) |
|
|
(368,600 |
) |
|
|
(292,437 |
) |
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in bank indebtedness |
|
|
4,164 |
|
|
|
29,677 |
|
|
|
21,801 |
|
|
|
29,677 |
|
Increase in long-term debt |
|
|
25,000 |
|
|
|
125,000 |
|
|
|
60,000 |
|
|
|
650,000 |
|
Long-term debt repayments |
|
|
(145,111 |
) |
|
|
(421,999 |
) |
|
|
(155,221 |
) |
|
|
(667,590 |
) |
Cost to terminate foreign currency forward contract |
|
|
|
|
|
|
(15,774 |
) |
|
|
|
|
|
|
(15,774 |
) |
Issue of Class B Non-Voting Shares, net of after-tax expenses |
|
|
46,426 |
|
|
|
116 |
|
|
|
55,216 |
|
|
|
116 |
|
Proceeds on bond forward |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,486 |
|
Proceeds on prepayment of IRU |
|
|
|
|
|
|
76 |
|
|
|
|
|
|
|
228 |
|
Purchase of Class B Non-Voting Shares for cancellation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(57,954 |
) |
Dividends paid on Class A and Class B Non-Voting Shares |
|
|
(53,968 |
) |
|
|
(22,292 |
) |
|
|
(86,209 |
) |
|
|
(44,732 |
) |
|
|
|
|
(123,489 |
) |
|
|
(305,196 |
) |
|
|
(104,413 |
) |
|
|
(103,543 |
) |
|
Effect of currency translation on cash balances and cash flows |
|
|
8 |
|
|
|
(8 |
) |
|
|
21 |
|
|
|
(12 |
) |
|
Decrease in cash |
|
|
|
|
|
|
(210,610 |
) |
|
|
|
|
|
|
(1,713 |
) |
Cash, beginning of the period |
|
|
|
|
|
|
210,610 |
|
|
|
|
|
|
|
1,713 |
|
|
Cash, end of the period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash includes cash and term deposits
See accompanying notes
23
Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
February 28, 2007 and 2006
[all amounts in thousands of Canadian dollars, except per share amounts]
1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES
The unaudited interim Consolidated Financial Statements include the accounts of Shaw Communications
Inc. and its subsidiaries (collectively the Company). The notes presented in these unaudited
interim Consolidated Financial Statements include only significant events and transactions
occurring since the Companys last fiscal year end and are not fully inclusive of all matters
required to be disclosed in the Companys annual audited consolidated financial statements. As a
result, these unaudited interim Consolidated Financial Statements should be read in conjunction
with the Companys consolidated financial statements for the year ended August 31, 2006.
The unaudited interim Consolidated Financial Statements follow the same accounting policies and
methods of application as the most recent annual consolidated financial statements.
24
Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
February 28, 2007 and 2006
[all amounts in thousands of Canadian dollars, except per share amounts]
2. BUSINESS SEGMENT INFORMATION
The Company provides cable television services, high-speed Internet access, Digital Phone and
Internet infrastructure services (Cable); DTH satellite services (Star Choice); and, satellite
distribution services (Satellite Services). All of these operations are located in Canada.
Information on operations by segment is as follows:
Operating information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
February 28, |
|
February 28, |
|
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
Service revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable |
|
|
515,257 |
|
|
|
449,967 |
|
|
|
1,015,263 |
|
|
|
881,718 |
|
DTH |
|
|
151,990 |
|
|
|
142,662 |
|
|
|
303,682 |
|
|
|
281,467 |
|
Satellite Services |
|
|
21,896 |
|
|
|
21,474 |
|
|
|
44,390 |
|
|
|
43,099 |
|
|
Inter segment - |
|
|
689,143 |
|
|
|
614,103 |
|
|
|
1,363,335 |
|
|
|
1,206,284 |
|
Cable |
|
|
(841 |
) |
|
|
(772 |
) |
|
|
(1,652 |
) |
|
|
(1,462 |
) |
DTH |
|
|
(1,697 |
) |
|
|
(1,249 |
) |
|
|
(3,197 |
) |
|
|
(2,310 |
) |
Satellite Services |
|
|
(875 |
) |
|
|
(885 |
) |
|
|
(1,750 |
) |
|
|
(1,770 |
) |
|
|
|
|
685,730 |
|
|
|
611,197 |
|
|
|
1,356,736 |
|
|
|
1,200,742 |
|
|
Service operating income before amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable |
|
|
244,164 |
|
|
|
213,383 |
|
|
|
481,933 |
|
|
|
420,898 |
|
DTH |
|
|
47,579 |
|
|
|
43,532 |
|
|
|
97,261 |
|
|
|
80,225 |
|
Satellite Services |
|
|
11,295 |
|
|
|
11,009 |
|
|
|
23,631 |
|
|
|
22,123 |
|
|
|
|
|
303,038 |
|
|
|
267,924 |
|
|
|
602,825 |
|
|
|
523,246 |
|
|
Interest on long-term debt (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable |
|
|
51,465 |
|
|
|
53,245 |
|
|
|
102,855 |
|
|
|
106,114 |
|
DTH and Satellite Services |
|
|
9,776 |
|
|
|
10,777 |
|
|
|
19,870 |
|
|
|
20,986 |
|
Burrard Landing Lot 2 Holdings Partnership |
|
|
356 |
|
|
|
362 |
|
|
|
713 |
|
|
|
726 |
|
|
|
|
|
61,597 |
|
|
|
64,384 |
|
|
|
123,438 |
|
|
|
127,826 |
|
|
Cash taxes (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable |
|
|
|
|
|
|
1,041 |
|
|
|
|
|
|
|
2,083 |
|
DTH and Satellite Services |
|
|
|
|
|
|
66 |
|
|
|
|
|
|
|
131 |
|
|
|
|
|
|
|
|
|
1,107 |
|
|
|
|
|
|
|
2,214 |
|
|
|
|
|
(1) |
|
The Company reports interest and cash taxes on a segmented basis for Cable and
combined satellite only. It does not report interest and cash taxes on a segmented basis for
DTH and Satellite Services. |
25
Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
February 28, 2007 and 2006
[all amounts in thousands of Canadian dollars, except per share amounts]
Capital expenditures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
February 28, |
|
February 28, |
|
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
Capital expenditures accrual basis |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable |
|
|
109,777 |
|
|
|
88,344 |
|
|
|
242,047 |
|
|
|
197,931 |
|
Corporate |
|
|
8,110 |
|
|
|
4,867 |
|
|
|
17,161 |
|
|
|
9,083 |
|
|
Sub-total Cable including corporate |
|
|
117,887 |
|
|
|
93,211 |
|
|
|
259,208 |
|
|
|
207,014 |
|
Satellite (net of equipment profit) |
|
|
4,546 |
|
|
|
997 |
|
|
|
5,593 |
|
|
|
7,483 |
|
|
|
|
|
122,433 |
|
|
|
94,208 |
|
|
|
264,801 |
|
|
|
214,497 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment costs (net of revenue received) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable |
|
|
4,197 |
|
|
|
6,425 |
|
|
|
4,810 |
|
|
|
14,233 |
|
Satellite |
|
|
14,817 |
|
|
|
20,207 |
|
|
|
34,002 |
|
|
|
51,144 |
|
|
|
|
|
19,014 |
|
|
|
26,632 |
|
|
|
38,812 |
|
|
|
65,377 |
|
|
Capital expenditures and equipment costs (net) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable |
|
|
122,084 |
|
|
|
99,636 |
|
|
|
264,018 |
|
|
|
221,247 |
|
Satellite |
|
|
19,363 |
|
|
|
21,204 |
|
|
|
39,595 |
|
|
|
58,627 |
|
|
|
|
|
141,447 |
|
|
|
120,840 |
|
|
|
303,613 |
|
|
|
279,874 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to Consolidated Statements of Cash Flows |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment |
|
|
131,875 |
|
|
|
105,456 |
|
|
|
271,250 |
|
|
|
214,854 |
|
Additions to equipment costs (net) |
|
|
19,014 |
|
|
|
26,632 |
|
|
|
38,812 |
|
|
|
65,377 |
|
|
Total of capital expenditures and equipment costs (net) per
Consolidated Statements of Cash Flows |
|
|
150,889 |
|
|
|
132,088 |
|
|
|
310,062 |
|
|
|
280,231 |
|
Decrease in working capital related to capital expenditures |
|
|
(8,566 |
) |
|
|
(9,863 |
) |
|
|
(4,733 |
) |
|
|
3,138 |
|
Less: Partnership capital expenditures (1) |
|
|
|
|
|
|
(533 |
) |
|
|
|
|
|
|
(1,803 |
) |
Less: IRU prepayments (2) |
|
|
|
|
|
|
(60 |
) |
|
|
(7 |
) |
|
|
(161 |
) |
Less: Satellite equipment profit (3) |
|
|
(876 |
) |
|
|
(792 |
) |
|
|
(1,709 |
) |
|
|
(1,531 |
) |
|
Total capital expenditures and equipment costs (net)
reported by segments |
|
|
141,447 |
|
|
|
120,840 |
|
|
|
303,613 |
|
|
|
279,874 |
|
|
|
|
|
(1) |
|
Consolidated capital expenditures include the Companys proportionate
share of the Burrard Landing Lot 2 Holdings Partnership (Partnership) capital
expenditures which the Company is required to proportionately consolidate (see Note 1 to
the Companys 2006 Consolidated Financial Statements). As the Partnership is financed by
its own debt with no recourse to the Company, the Partnerships capital expenditures are
subtracted from the calculation of segmented capital expenditures and equipment costs
(net). |
|
(2) |
|
Prepayments on indefeasible rights to use (IRUs) certain specifically
identified fibres in amounts not exceeding the costs to build the fiber subject to the
IRUs are subtracted from the calculation of segmented capital expenditures and equipment
costs (net). |
|
(3) |
|
The profit from the sale of satellite equipment is subtracted from the
calculation of segmented capital expenditures and equipment costs (net) as the Company
views the profit on sale as a recovery of expenditures on customer premise equipment. |
26
Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
February 28, 2007 and 2006
[all amounts in thousands of Canadian dollars, except per share amounts]
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 28, 2007 |
|
|
Cable |
|
DTH |
|
Satellite Services |
|
Total |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
Segment assets |
|
|
6,078,390 |
|
|
|
862,463 |
|
|
|
532,805 |
|
|
|
7,473,658 |
|
|
|
|
|
|
Corporate assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
239,918 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,713,576 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31, 2006 |
|
|
Cable |
|
DTH |
|
Satellite Services |
|
Total |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
Segment assets |
|
|
5,891,103 |
|
|
|
859,941 |
|
|
|
536,044 |
|
|
|
7,287,088 |
|
|
|
|
|
|
Corporate assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
235,455 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,522,543 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
February 28, 2007 and 2006
[all amounts in thousands of Canadian dollars, except per share amounts]
3. CABLE BUSINESS ACQUISITIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 28, 2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
Accounts |
|
Issuance of Class B |
|
purchase |
|
|
Cash |
|
payable |
|
Non-Voting Shares |
|
price |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
Cable systems |
|
|
52,893 |
|
|
|
447 |
|
|
|
3,000 |
|
|
|
56,340 |
|
|
A summary of net assets acquired on cable business acquisitions, accounted for as purchases, is as
follows:
|
|
|
|
|
|
|
$ |
|
Identifiable net assets acquired at assigned fair values |
|
|
|
|
Property, plant and equipment |
|
|
6,588 |
|
Broadcast licenses |
|
|
67,378 |
|
|
|
|
|
73,966 |
|
|
Working capital deficiency |
|
|
2,801 |
|
Future income taxes |
|
|
14,825 |
|
|
|
|
|
17,626 |
|
|
Purchase price |
|
|
56,340 |
|
|
During the three months ended November 30, 2006, the Company purchased three cable systems serving
approximately 14,700 basic subscribers in British Columbia and Ontario. The $3,000 value of the
89,794 Class B Non-Voting Shares, issued as partial consideration for one of the acquisitions, was
determined based upon the average market price over the five day period prior to the date the terms
of the purchase were agreed to and announced. The purchase price allocation may be impacted by
settlement of final closing adjustments.
28
Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
February 28, 2007 and 2006
[all amounts in thousands of Canadian dollars, except per share amounts]
4. LONG-TERM DEBT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 28, 2007 |
|
August 31, 2006 |
|
|
|
|
|
|
Translated |
|
|
|
|
|
|
|
|
|
Translated |
|
|
|
|
|
|
Effective |
|
at period |
|
|
|
|
|
|
|
at year |
|
|
|
|
|
|
interest |
|
end |
|
Adjustment |
|
Translated |
|
end |
|
Adjustment |
|
Translated |
|
|
rates |
|
exchange |
|
for hedged |
|
at hedged |
|
exchange |
|
for hedged |
|
at hedged |
|
|
% |
|
rate |
|
debt (1) |
|
rate |
|
rate |
|
debt (1) |
|
rate |
|
|
|
|
|
|
|
|
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank loans (2) |
|
Fixed and variable |
|
185,000 |
|
|
|
|
|
|
185,000 |
|
|
|
280,000 |
|
|
|
|
|
|
|
280,000 |
|
Senior notes- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due November 16, 2012 |
|
|
6.11 |
|
|
|
450,000 |
|
|
|
|
|
|
|
450,000 |
|
|
|
450,000 |
|
|
|
|
|
|
|
450,000 |
|
Due May 9, 2016 |
|
|
6.34 |
|
|
|
300,000 |
|
|
|
|
|
|
|
300,000 |
|
|
|
300,000 |
|
|
|
|
|
|
|
300,000 |
|
Due October 17, 2007 |
|
|
7.40 |
|
|
|
296,760 |
|
|
|
|
|
|
|
296,760 |
|
|
|
296,760 |
|
|
|
|
|
|
|
296,760 |
|
US $440,000 due April 11, 2010 |
|
|
7.88 |
|
|
|
514,712 |
|
|
|
127,908 |
|
|
|
642,620 |
|
|
|
486,332 |
|
|
|
156,288 |
|
|
|
642,620 |
|
US $225,000 due April 6, 2011 |
|
|
7.68 |
|
|
|
263,205 |
|
|
|
92,633 |
|
|
|
355,838 |
|
|
|
248,693 |
|
|
|
107,145 |
|
|
|
355,838 |
|
US $300,000 due December 15, 2011 |
|
|
7.61 |
|
|
|
350,940 |
|
|
|
125,910 |
|
|
|
476,850 |
|
|
|
331,590 |
|
|
|
145,260 |
|
|
|
476,850 |
|
Due November 20, 2013 |
|
|
7.50 |
|
|
|
350,000 |
|
|
|
|
|
|
|
350,000 |
|
|
|
350,000 |
|
|
|
|
|
|
|
350,000 |
|
COPrS - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due September 30, 2027 |
|
|
8.54 |
|
|
|
100,000 |
|
|
|
|
|
|
|
100,000 |
|
|
|
100,000 |
|
|
|
|
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
2,810,617 |
|
|
|
346,451 |
|
|
|
3,157,068 |
|
|
|
2,843,375 |
|
|
|
408,693 |
|
|
|
3,252,068 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other subsidiaries and entities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Videon CableSystems Inc. 8.15% Senior |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debentures Series A due April 26, 2010 |
|
|
7.63 |
|
|
|
130,000 |
|
|
|
|
|
|
|
130,000 |
|
|
|
130,000 |
|
|
|
|
|
|
|
130,000 |
|
Burrard Landing Lot 2 Holdings
Partnership |
|
|
6.31 |
|
|
|
22,789 |
|
|
|
|
|
|
|
22,789 |
|
|
|
23,010 |
|
|
|
|
|
|
|
23,010 |
|
|
|
|
|
|
|
|
|
152,789 |
|
|
|
|
|
|
|
152,789 |
|
|
|
153,010 |
|
|
|
|
|
|
|
153,010 |
|
|
Total consolidated debt |
|
|
|
|
|
|
2,963,406 |
|
|
|
346,451 |
|
|
|
3,309,857 |
|
|
|
2,996,385 |
|
|
|
408,693 |
|
|
|
3,405,078 |
|
Less current portion (3) |
|
|
|
|
|
|
297,223 |
|
|
|
|
|
|
|
297,223 |
|
|
|
449 |
|
|
|
|
|
|
|
449 |
|
|
|
|
|
|
|
|
|
2,666,183 |
|
|
|
346,451 |
|
|
|
3,012,634 |
|
|
|
2,995,936 |
|
|
|
408,693 |
|
|
|
3,404,629 |
|
|
|
|
|
(1) |
|
Foreign denominated long-term debt is translated at the period-end foreign
exchange rates. Because the Company follows hedge accounting, the resulting exchange gains and
losses on translating hedged long-term debt are included in deferred charges or deferred
credits. If the rate of translation was adjusted to reflect the hedged rates of the Companys
cross-currency interest rate agreements (which fix the liability for interest and principal),
long-term debt would increase by $346,451 (August 31, 2006 $408,693) representing a
corresponding amount in deferred credits. The hedged rates on the Senior notes of US
$440,000, US $225,000 and US $300,000 are 1.4605, 1.5815 and 1.5895, respectively. |
|
(2) |
|
Availabilities under banking facilities are as follows at February 28, 2007: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating |
|
|
Total |
|
Bank loans (a) (b) |
|
credit facilities (a) |
|
|
$ |
|
$ |
|
$ |
|
|
|
Total facilities |
|
|
1,060,000 |
|
|
|
1,000,000 |
|
|
|
60,000 |
|
Amount drawn
(excluding letters
of credit of $428) |
|
|
227,163 |
|
|
|
185,000 |
|
|
|
42,163 |
|
|
|
|
|
|
|
832,837 |
|
|
|
815,000 |
|
|
|
17,837 |
|
|
|
|
29
Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
February 28, 2007 and 2006
[all amounts in thousands of Canadian dollars, except per share amounts]
|
(a) |
|
Bank loans represent liabilities classified as long-term debt. Operating
credit facilities are for terms less than one year and accordingly are classified as
bank indebtedness. |
|
|
(b) |
|
The $1 billion revolving credit facility is due May 31, 2011 and is unsecured
and ranks pari passu with the senior unsecured notes. |
(3) |
|
Current portion of long-term debt includes the Senior notes due October 17, 2007
and the amount due within one year on the Partnerships mortgage bonds. |
5. SHARE CAPITAL
Issued and outstanding
Changes in Class A and Class B Non-Voting Share capital in the six months ended February 28, 2007
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A Shares |
|
Class B Non-Voting Shares |
|
|
Number |
|
$ |
|
Number |
|
$ |
|
August 31, 2006 |
|
|
11,291,932 |
|
|
|
2,475 |
|
|
|
203,649,904 |
|
|
|
1,974,491 |
|
Class A Share conversion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock option plans exercises |
|
|
|
|
|
|
|
|
|
|
1,707,302 |
|
|
|
56,745 |
|
Issued in respect of acquisition |
|
|
|
|
|
|
|
|
|
|
89,794 |
|
|
|
3,000 |
|
Share issue costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5 |
) |
|
February 28, 2007 |
|
|
11,291,932 |
|
|
|
2,475 |
|
|
|
205,447,000 |
|
|
|
2,034,231 |
|
|
Stock option plan
In our 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 10
years from the date of grant. Twenty-five percent of the options are exercisable on each of the
first four anniversary dates from the date of the original grant. The options must be issued at
not less than the fair market value of the Class B Non-Voting Shares at the date of grant. The
maximum number of Class B Non-Voting Shares issuable under this plan and the warrant plan described
below may not exceed 16,000,000. To date, 1,762,768 Class B Non-Voting Shares have been issued
under these plans. During the three and six months ended February 28, 2007, 1,418,683 and
1,688,901 options were exercised for $46,172 and $54,847, respectively.
The changes in options for the six months ended February 28, 2007 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average |
|
|
|
|
|
|
exercise price |
|
|
Shares |
|
$ |
|
Outstanding at beginning of period |
|
|
9,558,801 |
|
|
|
32.60 |
|
Granted |
|
|
2,036,250 |
|
|
|
34.24 |
|
Forfeited |
|
|
(612,133 |
) |
|
|
33.16 |
|
Exercised |
|
|
(1,688,901 |
) |
|
|
32.47 |
|
|
Outstanding at end of period |
|
|
9,294,017 |
|
|
|
32.90 |
|
|
30
Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
February 28, 2007 and 2006
[all amounts in thousands of Canadian dollars, except per share amounts]
The following table summarizes information about the options outstanding at February 28, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number |
|
Weighted |
|
|
|
|
|
|
|
|
Outstanding |
|
average |
|
Weighted |
|
Number exercisable |
|
Weighted |
|
|
at |
|
remaining |
|
average |
|
at |
|
average |
Range of prices |
|
February 28, 2007 |
|
contractual life |
|
exercise price |
|
February 28, 2007 |
|
exercise price |
|
$17.37 |
|
|
10,000 |
|
|
|
6.64 |
|
|
$ |
17.37 |
|
|
|
7,500 |
|
|
$ |
17.37 |
|
$29.70 - $35.57 |
|
|
9,284,017 |
|
|
|
6.55 |
|
|
$ |
32.91 |
|
|
|
4,767,897 |
|
|
$ |
32.65 |
|
|
For all common share options granted to employees up to August 2003, had the Company determined
compensation costs based on the fair values at grant dates of the common share options consistent
with the method prescribed under CICA Handbook Section 3870, the Companys net income and earnings
per share would have been reported as the pro forma amounts indicated below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
February 28, |
|
February 28, |
|
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
Net income for the period |
|
|
79,751 |
|
|
|
45,790 |
|
|
|
160,889 |
|
|
|
121,471 |
|
Fair value of stock options |
|
|
30 |
|
|
|
468 |
|
|
|
60 |
|
|
|
935 |
|
|
Pro forma net income for the period |
|
|
79,721 |
|
|
|
45,322 |
|
|
|
160,829 |
|
|
|
120,536 |
|
Pro forma basic earnings per share |
|
|
0.37 |
|
|
|
0.21 |
|
|
|
0.75 |
|
|
|
0.55 |
|
|
Pro forma diluted earnings per share |
|
|
0.37 |
|
|
|
0.21 |
|
|
|
0.74 |
|
|
|
0.55 |
|
|
The weighted average estimated fair value at the date of the grant for common share options granted
was $6.42 per option (2006 $1.76 per option) and $6.45 per option (2006 $2.30 per option) for
the quarter and year-to-date, respectively. The fair value of each option granted was estimated on
the date of the grant using the Black-Scholes option-pricing model with the following assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
February 28, |
|
February 28, |
|
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
Dividend yield |
|
|
2.84 |
% |
|
|
2.25 |
% |
|
|
2.92 |
% |
|
|
1.96 |
% |
Risk-free interest rate |
|
|
3.99 |
% |
|
|
3.89 |
% |
|
|
3.99 |
% |
|
|
3.70 |
% |
Expected life of options |
|
4 years |
|
4 years |
|
4 years |
|
4 years |
Expected volatility factor of the future expected
market price of Class B Non-Voting Shares |
|
|
24.1 |
% |
|
|
20.6 |
% |
|
|
24.9 |
% |
|
|
22.2 |
% |
|
For the purposes of pro forma disclosures, the estimated fair value of the options is
amortized to expense over the options vesting period.
Other stock options
In conjunction with the acquisition of Satellite Services, holders of Satellite Services options
elected to receive 0.9 of a Shaw Class B Non-Voting Share in lieu of one Satellite Services share
which would have been received upon the exercise of an option under the Satellite Services plan.
At February 28, 2007 there were 18,668 Satellite Services options outstanding with an exercise
price of $7.75. The weighted average remaining contractual life of the Satellite Services options
is 1.3 years. At February 28, 2007,
31
Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
February 28, 2007 and 2006
[all amounts in thousands of Canadian dollars, except per share amounts]
18,668 Satellite Services options were exercisable into 16,801
Class B Non-Voting Shares of the Company at $8.61 per Class B Non-Voting Share. During the three
and six month periods ended February 28, 2007, 15,168 options were exercised into 13,651 Class B
Non-Voting Shares for $251 and 20,168 options were exercised into 18,151 Class B Non-Voting Shares
for $367, respectively.
Warrants
Prior to the Companys acquisition and consolidation of Satellite Services effective July 1, 2000,
Satellite Services and its subsidiary Star Choice had established a plan to grant warrants to
acquire Satellite Services common shares at a price of $22.50 per share to distributors and
dealers. The Company provided for this obligation (using $25 per equivalent Shaw Class B Non-Voting
Share) in assigning fair values to the assets and liabilities in the purchase equation on
consolidation based on the market price of the Shaw Class B Non-Voting Shares at that time.
Accordingly, the issue of the warrants under the plan had no impact on the earnings of the Company.
On September 1, 2006, 250 warrants were exercised for $6 and the remaining 5,350 warrants expired.
Contributed surplus
The changes in contributed surplus are as follows:
|
|
|
|
|
|
|
|
|
|
|
February 28, 2007 |
|
August 31, 2006 |
|
|
$ |
|
$ |
|
Balance, beginning of period |
|
|
5,110 |
|
|
|
1,866 |
|
Stock-based compensation |
|
|
2,627 |
|
|
|
3,272 |
|
Stock options exercised |
|
|
(1,525 |
) |
|
|
(28 |
) |
|
Balance, end of period |
|
|
6,212 |
|
|
|
5,110 |
|
|
6. EARNINGS PER SHARE
Earnings per share calculations are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
February 28, |
|
February 28, |
|
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
Numerator for basic and diluted earnings per share
($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
79,751 |
|
|
|
45,790 |
|
|
|
160,889 |
|
|
|
121,471 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator (thousands of shares) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of Class A and Class B Non-
Voting Shares for basic earnings per share |
|
|
215,983 |
|
|
|
217,620 |
|
|
|
215,505 |
|
|
|
218,331 |
|
Effect of dilutive securities |
|
|
1,942 |
|
|
|
|
|
|
|
1,270 |
|
|
|
|
|
|
Weighted average number of Class A and Class B Non-
Voting Shares for diluted earnings per share |
|
|
217,925 |
|
|
|
217,620 |
|
|
|
216,775 |
|
|
|
218,331 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
0.37 |
|
|
|
0.21 |
|
|
|
0.75 |
|
|
|
0.56 |
|
Diluted |
|
|
0.37 |
|
|
|
0.21 |
|
|
|
0.74 |
|
|
|
0.56 |
|
|
32
Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
February 28, 2007 and 2006
[all amounts in thousands of Canadian dollars, except per share amounts]
7. STATEMENTS OF CASH FLOWS
Disclosures with respect to the Consolidated Statements of Cash Flows are as follows:
(i) Funds flow from operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
February 28, |
|
February 28, |
|
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
Net income |
|
|
79,751 |
|
|
|
45,790 |
|
|
|
160,889 |
|
|
|
121,471 |
|
Non-cash items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred IRU revenue |
|
|
(3,136 |
) |
|
|
(3,136 |
) |
|
|
(6,273 |
) |
|
|
(6,273 |
) |
Deferred equipment revenue |
|
|
(25,771 |
) |
|
|
(19,511 |
) |
|
|
(48,989 |
) |
|
|
(37,880 |
) |
Deferred equipment cost |
|
|
50,166 |
|
|
|
50,326 |
|
|
|
99,136 |
|
|
|
99,903 |
|
Deferred charges |
|
|
1,236 |
|
|
|
1,325 |
|
|
|
2,473 |
|
|
|
2,583 |
|
Property, plant and equipment |
|
|
96,808 |
|
|
|
97,022 |
|
|
|
188,973 |
|
|
|
197,862 |
|
Future income tax expense |
|
|
43,530 |
|
|
|
24,966 |
|
|
|
84,356 |
|
|
|
16,899 |
|
Write-down of investment |
|
|
|
|
|
|
374 |
|
|
|
|
|
|
|
374 |
|
Gain on sale of investment |
|
|
|
|
|
|
|
|
|
|
(415 |
) |
|
|
(1,690 |
) |
Foreign exchange gain on unhedged long-term debt |
|
|
|
|
|
|
(871 |
) |
|
|
|
|
|
|
(4,352 |
) |
Equity loss (income) on investee |
|
|
(98 |
) |
|
|
216 |
|
|
|
(201 |
) |
|
|
148 |
|
Fair value loss on foreign currency forward contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
360 |
|
Debt retirement costs |
|
|
|
|
|
|
8,123 |
|
|
|
|
|
|
|
8,123 |
|
Stock option expense |
|
|
1,475 |
|
|
|
662 |
|
|
|
2,627 |
|
|
|
1,282 |
|
Defined benefit pension plan |
|
|
8,218 |
|
|
|
3,153 |
|
|
|
11,856 |
|
|
|
6,306 |
|
Other |
|
|
233 |
|
|
|
(166 |
) |
|
|
1,916 |
|
|
|
365 |
|
|
Funds flow from operations |
|
|
252,412 |
|
|
|
208,273 |
|
|
|
496,348 |
|
|
|
405,481 |
|
|
(ii) Changes in non-cash working capital balances related to operations include the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
February 28, |
|
February 28, |
|
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
Accounts receivable |
|
|
(5,198 |
) |
|
|
(8,420 |
) |
|
|
(20,795 |
) |
|
|
(23,080 |
) |
Prepaids and other |
|
|
(3,866 |
) |
|
|
(4,390 |
) |
|
|
(7,397 |
) |
|
|
(2,993 |
) |
Accounts payable and accrued liabilities |
|
|
46,777 |
|
|
|
24,262 |
|
|
|
(1 |
) |
|
|
8,136 |
|
Income taxes payable |
|
|
125 |
|
|
|
15 |
|
|
|
(600 |
) |
|
|
(7 |
) |
Unearned revenue |
|
|
151 |
|
|
|
(476 |
) |
|
|
5,437 |
|
|
|
6,742 |
|
|
|
|
|
37,989 |
|
|
|
10,991 |
|
|
|
(23,356 |
) |
|
|
(11,202 |
) |
|
33
Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
February 28, 2007 and 2006
[all amounts in thousands of Canadian dollars, except per share amounts]
(iii) Interest and income taxes paid (recovered) and classified as operating activities are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
February 28, |
|
February 28, |
|
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
Interest |
|
|
22,048 |
|
|
|
33,786 |
|
|
|
121,376 |
|
|
|
123,131 |
|
Income taxes |
|
|
(127 |
) |
|
|
1,095 |
|
|
|
592 |
|
|
|
2,225 |
|
|
(iv) Non-cash transaction:
The Consolidated Statements of Cash Flows exclude the following non-cash transaction:
|
|
|
|
|
|
|
|
|
|
|
Six months ended February 28, |
|
|
2007 |
|
2006 |
|
|
$ |
|
$ |
|
Issuance of Class B Non-Voting Shares on a cable system acquisition |
|
|
3,000 |
|
|
|
|
|
|
34
Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
February 28, 2007 and 2006
[all amounts in thousands of Canadian dollars, except per share amounts]
8. UNITED STATES ACCOUNTING PRINCIPLES
The unaudited interim Consolidated Financial Statements of the Company are prepared in Canadian
dollars in accordance with accounting principles generally accepted in Canada (Canadian GAAP).
The following adjustments and disclosures would be required in order to present these unaudited
interim Consolidated Financial Statements in accordance with accounting principles generally
accepted in the United States (US GAAP).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
February 28, |
|
February 28, |
|
|
2007 |
|
2006 |
|
2007 |
|
2006 |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
Net income using Canadian GAAP |
|
|
79,751 |
|
|
|
45,790 |
|
|
|
160,889 |
|
|
|
121,471 |
|
Add (deduct) adjustments for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred charges (2) |
|
|
2,898 |
|
|
|
5,019 |
|
|
|
9,685 |
|
|
|
(1,759 |
) |
Foreign exchange gains (losses) on hedged long-term debt (8) |
|
|
(26,634 |
) |
|
|
28,848 |
|
|
|
(62,243 |
) |
|
|
49,058 |
|
Reclassification of hedge gains (losses) from other
comprehensive income (7) |
|
|
26,634 |
|
|
|
(28,848 |
) |
|
|
62,243 |
|
|
|
(49,058 |
) |
Income tax effect of adjustments |
|
|
(891 |
) |
|
|
(1,732 |
) |
|
|
(2,978 |
) |
|
|
607 |
|
Effect of future income tax rate reductions on differences |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(785 |
) |
|
Net income using US GAAP |
|
|
81,758 |
|
|
|
49,077 |
|
|
|
167,596 |
|
|
|
119,534 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized foreign exchange gain (loss) on translation of
Self-sustaining foreign operations |
|
|
11 |
|
|
|
(13 |
) |
|
|
26 |
|
|
|
(20 |
) |
Unrealized gains on available-for-sale securities, net of tax (6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding gains arising during the period |
|
|
|
|
|
|
1,235 |
|
|
|
|
|
|
|
8,024 |
|
Less: reclassification adjustment for gains included in net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,371 |
) |
|
|
|
|
11 |
|
|
|
1,222 |
|
|
|
26 |
|
|
|
6,633 |
|
Adjustment to fair value of derivatives (7) |
|
|
35,187 |
|
|
|
(17,276 |
) |
|
|
77,368 |
|
|
|
(22,732 |
) |
Reclassification of derivative losses (gains) to income to offset
foreign exchange gains/losses on hedged long-term debt (7) |
|
|
(22,539 |
) |
|
|
23,872 |
|
|
|
(52,673 |
) |
|
|
40,596 |
|
Effect on future income tax rate reductions on differences |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,036 |
) |
|
|
|
|
12,659 |
|
|
|
7,818 |
|
|
|
24,721 |
|
|
|
23,461 |
|
|
Comprehensive income using US GAAP |
|
|
94,417 |
|
|
|
56,895 |
|
|
|
192,317 |
|
|
|
142,995 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share using US GAAP |
|
|
0.38 |
|
|
|
0.23 |
|
|
|
0.78 |
|
|
|
0.55 |
|
Comprehensive income per share using US GAAP |
|
|
0.44 |
|
|
|
0.26 |
|
|
|
0.89 |
|
|
|
0.65 |
|
|
35
Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
February 28, 2007 and 2006
[all amounts in thousands of Canadian dollars, except per share amounts]
Balance sheet items using US GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 28, 2007 |
|
August 31, 2006 |
|
|
Canadian |
|
US |
|
Canadian |
|
US |
|
|
GAAP |
|
GAAP |
|
GAAP |
|
GAAP |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
Deferred charges (2) (9) (10) |
|
|
272,096 |
|
|
|
186,663 |
|
|
|
261,908 |
|
|
|
164,053 |
|
Broadcast licenses (1) (4) (5) |
|
|
4,758,862 |
|
|
|
4,733,628 |
|
|
|
4,691,484 |
|
|
|
4,666,250 |
|
Other long-term liabilities (7) (10) |
|
|
49,580 |
|
|
|
530,899 |
|
|
|
37,724 |
|
|
|
612,306 |
|
Deferred credits (8) (9) |
|
|
1,051,643 |
|
|
|
695,380 |
|
|
|
1,100,895 |
|
|
|
679,652 |
|
Future income taxes |
|
|
1,084,155 |
|
|
|
1,042,510 |
|
|
|
984,938 |
|
|
|
933,990 |
|
Shareholders equity |
|
|
1,945,253 |
|
|
|
1,751,175 |
|
|
|
1,809,705 |
|
|
|
1,584,225 |
|
|
The cumulative effect of these adjustments on consolidated shareholders equity is as follows:
|
|
|
|
|
|
|
|
|
|
|
February 28, 2007 |
|
August 31, 2006 |
|
|
$ |
|
$ |
|
Shareholders equity using Canadian GAAP |
|
|
1,945,253 |
|
|
|
1,809,705 |
|
Amortization of intangible assets (1) |
|
|
(130,208 |
) |
|
|
(130,208 |
) |
Deferred charges (2) |
|
|
(1,464 |
) |
|
|
(8,171 |
) |
Equity in loss of investees (3) |
|
|
(35,710 |
) |
|
|
(35,710 |
) |
Gain on sale of subsidiary (4) |
|
|
16,052 |
|
|
|
16,052 |
|
Gain on exchange of cable television systems (5) |
|
|
50,063 |
|
|
|
50,063 |
|
Foreign exchange gains on hedged long-term debt (8) |
|
|
293,187 |
|
|
|
345,860 |
|
Reclassification of hedge losses from other
comprehensive income (7) |
|
|
(293,187 |
) |
|
|
(345,860 |
) |
Accumulated other comprehensive loss |
|
|
(92,455 |
) |
|
|
(117,176 |
) |
Cumulative translation adjustment |
|
|
(356 |
) |
|
|
(330 |
) |
|
Shareholders equity using US GAAP |
|
|
1,751,175 |
|
|
|
1,584,225 |
|
|
Included in shareholders equity is accumulated other comprehensive income (loss), which refers to
revenues, expenses, gains and losses that under US GAAP are included in comprehensive income (loss)
but are excluded from income (loss) as these amounts are recorded directly as an adjustment to
shareholders equity, net of tax. The Companys accumulated other comprehensive loss is comprised
of the following:
36
Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
February 28, 2007 and 2006
[all amounts in thousands of Canadian dollars, except per share amounts]
|
|
|
|
|
|
|
|
|
|
|
February 28, 2007 |
|
August 31, 2006 |
|
|
$ |
|
$ |
|
Accumulated other comprehensive income (loss) |
|
|
|
|
|
|
|
|
Unrealized foreign exchange gain on
translation of self-sustaining foreign
operations |
|
|
356 |
|
|
|
330 |
|
Fair value of derivatives (7) |
|
|
(78,419 |
) |
|
|
(103,114 |
) |
Minimum liability for pension plan (10) |
|
|
(14,392 |
) |
|
|
(14,392 |
) |
|
|
|
|
(92,455 |
) |
|
|
(117,176 |
) |
|
Areas of material difference between accounting principles generally accepted in Canada and the
United States and their impact on the unaudited interim Consolidated Financial Statements are as
follows:
(1) |
|
Amortization of intangibles prior to September 1, 2001 is required on a straight-line basis
for US GAAP purposes, instead of an increasing charge method. |
|
(2) |
|
US GAAP requires the excess of equipment cost deferrals over equipment revenue deferrals to
be expensed as incurred instead of being deferred and amortized. |
|
(3) |
|
Equity in loss of investees have been adjusted to reflect US GAAP. |
|
(4) |
|
Gain on a sale of a subsidiary that was not permitted to be recognized under Canadian GAAP
was required to be recognized under US GAAP. |
|
(5) |
|
Gain on an exchange of cable systems was required to be recorded under US GAAP but may not be
recorded under Canadian GAAP. |
|
(6) |
|
US GAAP requires equity securities included in investments to be carried at fair value rather
than cost as required by Canadian GAAP. |
|
(7) |
|
Under US GAAP, all derivatives are recognized in the balance sheet at fair value with gains
and losses recorded in income or comprehensive income (loss). |
|
(8) |
|
Foreign exchange gains (losses) on translation of hedged long-term debt are deferred under
Canadian GAAP but included in income (loss) for US GAAP. |
|
(9) |
|
US GAAP requires subscriber connection revenue and related costs to be recognized immediately
instead of being deferred and amortized. |
|
(10) |
|
The Companys unfunded non-contributory defined benefit pension plan for certain of its
senior executives had an accumulated benefit obligation of $79,902 as at August 31, 2006.
Under US GAAP, an additional minimum liability is to be recorded for the difference between
the accumulated benefit obligation and the accrued pension liability. The additional
liability is offset in deferred charges up to an amount not exceeding the unamortized past
service costs. The remaining difference is recognized in other comprehensive income (loss),
net of tax. Under Canadian GAAP, the accumulated benefit obligation and additional minimum
liability are not recognized. |
37
Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
February 28, 2007 and 2006
[all amounts in thousands of Canadian dollars, except per share amounts]
9. OTHER LONG-TERM LIABILITIES
Other long-term liabilities include the long-term portion of the Companys defined benefit pension
plan of $49,580 (August 31, 2006 $37,724). The total benefit costs expensed under the Companys
defined benefit pension were $8,910 (2006 $3,425), and $12,821 (2006 $6,850) for the three and
six months ended February 28, 2007 respectively.
10. SUBSEQUENT EVENT
On March 2, 2007, the Company issued $400,000 of senior unsecured notes at a rate of 5.70% due
March 2, 2017.
38
Form 52-109F2 Certification of Interim Filings
I, Jim Shaw, Chief Executive Officer of Shaw Communications Inc., certify that:
1. |
|
I have reviewed the interim filings (as this term is defined in Multilateral Instrument
52-109 Certification of Disclosure in Issuers Annual and Interim Filings) of Shaw
Communications Inc. (the issuer), for the interim period ending February 28, 2007; |
2. |
|
Based on my knowledge, the interim filings do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated or that is necessary to make a
statement not misleading in light of the circumstances under which it was made, with respect
to the period covered by the interim filings; |
3. |
|
Based on my knowledge, the interim financial statements together with the other financial
information included in the interim filings fairly present in all material respects the
financial condition, results of operations and cash flows of the issuer, as of the date and
for the periods presented in the interim filings; |
4. |
|
The issuers other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures and internal control over financial reporting for the
issuer, and we have: |
|
(a) |
|
designed such disclosure controls and procedures, or caused them to be designed
under our supervision, to provide reasonable assurance that material information
relating to the issuer, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which the interim
filings are being prepared; and |
|
|
(b) |
|
designed such internal control over financial reporting, or caused it to be
designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with the issuers GAAP; and |
5. |
|
I have caused the issuer to disclose in the interim MD&A any change in the issuers internal
control over financial reporting that occurred during the issuers most recent interim period
that has materially affected, or is reasonably likely to materially affect, the issuers
internal control over financial reporting. |
Date: April 13, 2007
|
|
|
(signed) Jim Shaw
|
|
|
|
|
|
Jim Shaw |
|
|
Chief Executive Officer |
|
|
Form 52-109F2 Certification of Interim Filings
I, Steve Wilson, Senior Vice President and Chief Financial Officer of Shaw Communications Inc.,
certify that:
1. |
|
I have reviewed the interim filings (as this term is defined in Multilateral Instrument
52-109 Certification of Disclosure in Issuers Annual and Interim Filings) of Shaw
Communications Inc. (the issuer), for the interim period ending February 28, 2007; |
2. |
|
Based on my knowledge, the interim filings do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated or that is necessary to make a
statement not misleading in light of the circumstances under which it was made, with respect
to the period covered by the interim filings; |
3. |
|
Based on my knowledge, the interim financial statements together with the other financial
information included in the interim filings fairly present in all material respects the
financial condition, results of operations and cash flows of the issuer, as of the date and
for the periods presented in the interim filings; |
4. |
|
The issuers other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures and internal control over financial reporting for the
issuer, and we have: |
|
(a) |
|
designed such disclosure controls and procedures, or caused them to be designed
under our supervision, to provide reasonable assurance that material information
relating to the issuer, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which the interim
filings are being prepared; and |
|
|
(b) |
|
designed such internal control over financial reporting, or caused it to be
designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with the issuers GAAP; and |
5. |
|
I have caused the issuer to disclose in the interim MD&A any change in the issuers internal
control over financial reporting that occurred during the issuers most recent interim period
that has materially affected, or is reasonably likely to materially affect, the issuers
internal control over financial reporting. |
Date: April 13, 2007
|
|
|
(signed) Steve Wilson
|
|
|
|
|
|
Steve Wilson |
|
|
Senior Vice President and Chief Financial Officer |