Shaw Communications Announces Continued Strong Growth in Customer Base, Revenue, Earnings and Free Cash Flow.

Business Editors/High-Tech Writers

CALGARY Calgary (kăl`gərē), city (1991 pop. 710,677), S Alta., Canada, at the confluence of the Bow and Elbow rivers. The largest city in Alberta and the fastest-growing major city in Canada, Calgary is a corporate, transportation, and financial , Alberta--(BUSINESS WIRE)--April 2, 2004

Shaw Communications Shaw Communications Inc. (TSX: SJR.NV.B NYSE: SJR) is a Canadian telecomunications company headquartered in Calgary, Alberta.

The company was founded by J.R. Shaw in 1966 as Capital Cable Television Co Ltd.. Inc. (NYSE NYSE

See: New York Stock Exchange : SJR SJR Senate Joint Resolution
SJR Superjoint Ritual (band)
SJR St John Rigby (Catholic Sixth Form College)
SJR Signal-To-Jammer Ratio
SJR Saint Joseph Regional High School (USA) ) (TSX TSX Toronto Stock Exchange (TSE before April, 2002)
TSX Transfer from Stack Pointer to Index
TSX True Space Extension : SJR.B) today announced increased revenue, operating income Operating Income

The profit realized from a business' own operations.

Notes:
This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. before amortization, net income and free cash flow for the quarter ended February February: see month. 29, 2004 over the comparable quarter last year. Moreover, the satellite division reached a significant milestone “Milemarker” redirects here. For the American indie rock band, see Milemarker (band).

A milestone or kilometre sign is one of a series of numbered markers placed along a road at regular intervals, typically at the side of the road or in a median. with the achievement of positive free cash flow on a run-rate basis in the month of February. Further, the Company recorded its second consecutive quarter of profitability with net income of $17.1 million. Earnings per share for the quarter improved to $0.03 compared to a

loss of $0.13 for the same quarter last year and $0.07 for the first six months compared to a loss of $0.25 for the first half last year.

In commenting on the results, Jim Shaw Jim Shaw is the name of:

Jim Shaw (artist), artist and musician
Jim Shaw, Australian actor
Jim Shaw (businessman), Canadian businessman
Jim Shaw (baseball player), athlete
Jim Shaw (hockey player), athlete

, Chief Executive Officer said, "We continue to achieve new milestones. Last year we achieved positive free cash flow on a consolidated con·sol·i·date
v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates

v.tr.
1. To unite into one system or whole; combine: basis; in the first quarter of this year we posted positive net income for the first time in three years; and this quarter the satellite division delivered positive free cash flow on a run-rate basis for the first time," said Jim Shaw, Chief Executive Officer of Shaw.

Excluding the US cable systems sold on June June: see month. 30, 2003, consolidated revenue improved 5.3% over the comparative quarter and year to date period. Again, excluding the effects of the US cable sale, consolidated operating income before amortization increased by 16.4% and 20.1% respectively. Consolidated revenue, including the US cable systems, increased by 1.8% to $530.7 million over the comparable quarter last year and first half revenue of $1,052.6 million was 1.7% higher than the first half of last year.

"Management's focus on growing our customer base, improving our service levels and improving our product offering and bundling bundling, courtship custom, thought to have originated in Holland and the British Isles. It was extended to America, particularly to New England, and most widely practiced in the years prior to the Revolution of 1776. strategies led to strong top line revenue results. This revenue growth, combined with cost containment cost containment,
n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. measures, resulted in another quarter of solid double-digit dou·ble-dig·it
adj.
Being between 10 and 99 percent: double-digit inflation.  operating income growth," said Mr. Shaw.

Cash flow from operations Cash flow from operations

A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses for the quarter was $161.8 million or $0.66 per share compared to $127.4 million or $0.51 per share in the same quarter last year, an increase of 27.0%. On a year to date basis the cash flow from operations was $324.5 million or $1.32 per share compared to $240.3 million or $0.95 per share, representing an increase of 35.0%.

Quarterly and year to date consolidated net free cash flow of $83.0 million and $148.8 million represent significant improvements over $10.1 million and negative $3.8 million for the respective periods last year.

"Our management team and staff continue to achieve the performance targets set for them," said Mr. Shaw. "Their dedication, creativity and focus on the customer have delivered impressive free cash flow growth for the first half which clearly puts us on track to deliver our targeted free cash flow of $275 million," said Mr. Shaw.

Customer growth continued in the second quarter. Internet Internet

Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the customers grew by 35,305 and digital customers grew by 15,778 while basic cable service customers remained relatively constant which is consistent with seasonal trends. The DTH (Direct-To-Home) Typically refers to satellite TV broadcasting directly to a dish antenna on the roof of a house. See DBS. division has put the customer service issues of the first quarter behind them as evidenced by the growth of 6,483 customers in the second quarter. This growth was achieved during a quarter when price increases were implemented on most of the DTH programming packages.

"We stuck to the basics of providing our customers exceptional service and value through bundling of products resulting in approximately ap·prox·i·mate
adj.
1. Almost exact or correct: the approximate time of the accident.

2. 41% of our customers taking advantage of some bundle To sell hardware and software as a combined product or to combine several software packages for sale as a single unit. Contrast with unbundle. See bundled software and bundling. of Shaw products and services. This attention to customer preference and the savings associated with buying bundled bun·dle
n.
1. A group of objects held together, as by tying or wrapping.

2. Something wrapped or tied up for carrying; a package.

3. Biology A cluster or strand of closely bound muscle or nerve fibers. services has once again translated into solid customer growth," said Jim Shaw.

The satellite division improved free cash flow to negative $1.1 million compared to negative $33.7 million for the same quarter last year. Operating income before amortization increased by 77.3% and 78.4% over the same quarter and six month period last year.

"The satellite division reached a significant turning point with the achievement of free cash flow on a run-rate basis during the quarter. We are extremely pleased to see our hard work and investment in satellite begin to achieve positive free cash flow" said Jim Shaw.

Shaw Communications Inc. repurchased, during the quarter, 1,003,000 Class B Non-Voting non-voting adj non-voting shares → azioni fpl senza diritto di voto  shares at an average of $19.99 per share in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.^[]

As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with a normal course issuer bid for a total year to date repurchase re·pur·chase
tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es
To buy (something) again.

n.
The act of buying something that one previously sold or owned.

Noun 1. of 2,096,500 at an average price of $19.97.

The Board of Directors increased the quarterly dividend by $0.02 for the Class A Participating Shares and Class B Non-Voting Participating Shares effective March 31, 2004. The Class A Participating Share dividend and the Class B Non-Voting Participating Share dividend will now be $0.04875 and $0.05 on a quarterly basis and $0.195 and $0.20 respectively on an annual basis.

During the quarter, Shaw registered with the CRTC CRTC Canadian Radio-Television & Telecommunications Commission
CRTC Combat Readiness Training Center
CRTC Cathode Ray Tube Controller
CRTC China Railway Telecommunications Center
CRTC Cold Region Test Center
CRTC Continuously Regenerated Trap Column as a Competitive Local Exchange Carrier ("CLEC (Competitive Local Exchange Carrier) An organization offering local telephone service that is not one of the traditional telephone companies. The Telecommunications Act of 1996 allowed competition to the incumbent telcos (ILECs), enabling new companies (CLECs) "). CLEC status will entitle en·ti·tle
tr.v. en·ti·tled, en·ti·tling, en·ti·tles
1. To give a name or title to.

2. To furnish with a right or claim to something: Shaw to interconnect (1) To attach one device to another.

(2) A physical port (plug, socket) or wireless port (transmitter, receiver) used to attach one device to another. with incumbent Refers to an entity that is currently in power. For example, in politics, the "incumbent senator" is the person who holds that office today. An "incumbent company" is an organization that has been providing goods and services for some time. See ILEC. telephone companies and long distance providers on an equal basis. In addition, as a registered CLEC, Shaw will be able to provide E911 service, local number portability "LNP" redirects here. For the airport in Virginia with that IATA code, see Lonesome Pine Airport. For the compound InP, see Indium phosphide.

Local number portability, (LNP) for fixed lines, and full mobile number portability (giving customers the ability to port their existing telephone number), access to new telephone numbers and a variety of other traditional telephone functions such as caller ID A telephone company service that sends the caller's telephone number between the first and second ring of the call. If the calling number is not blocked, the calling number is displayed on the handset or base station of the called party. , call waiting and call forwarding call forwarding
n.
A telephone service that enables a customer to have an incoming call automatically rerouted to another extension.

Noun 1. . This is an important step in the development of our voice-over-IP ("VOIP (Voice Over IP) A digital telephone service that uses the public Internet as well as private backbones instead of the traditional telephone network. Many companies, including Vonage, 8x8 and AT&T (CallVantage), typically offer calling within the country for a ") strategy.

"Our team is fully engaged in developing, planning and implementing our voice product. We remain very excited about the prospects of offering our customers the "triple play" bundle of voice, video and data," said Mr. Shaw.

"2003 was an outstanding year for Shaw in achieving positive free cash flow -- and 2004 has started off well and shows even greater potential. No matter how you look at our businesses, we're we're

Contraction of we are.

we're we are producing solid, balanced growth. Our basic cable customer base as well as our digital, Internet and DTH subscriber subscriber,
n the person, usually the employee, who represents the family unit in relation to the prepayment plan. Other family members are
dependents. Also called
certificate holders or
enrollees. base is growing. We've we've

Contraction of we have.

we've have achieved solid growth rates Growth Rates

The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures.

Notes:
Remember, historically high growth rates don't always mean a high rate of growth looking into the future. in revenue, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become and free cash flow both in our cable and satellite operations and on a consolidated basis, we are profitable. Overall, our traditional lines of business remain strong while VOIP presents exciting growth prospects," concluded Mr. Shaw.

Shaw Communications Inc. is a diversified diversified (di·verˑ·s Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. communications company Communications Company is a communications unit of the United States Marine Corps. They are part of Combat Logistics Regiment 37 , 3rd Marine Logistics Group (3MLG) and III Marine Expeditionary Force (III MEF). The unit is based out of the Marine Corps Base Camp Smedley D. whose core business is providing broadband broadband

Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). cable television, Internet and satellite direct-to-home See DTH. ("DTH") services to approximately 2.9 million customers. Shaw is traded on the Toronto Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing and New York stock exchanges New York Stock Exchange (NYSE)

World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. and is included in the S&P/TSX 60 index. (Symbol: TSX - SJR.B, NYSE - SJR)



SHAREHOLDERS REPORT
SECOND QUARTER ENDING FEBRUARY 29, 2004

SELECTED FINANCIAL HIGHLIGHTS
CONSOLIDATED RESULTS OF OPERATIONS
SECOND QUARTER ENDING FEBRUARY 29, 2004



              Three months ended             Six months ended
--------------------------------------------------------------------
              February  February Change   February   February Change
              29, 2004  28, 2003      %   29, 2004   28, 2003      %
--------------------------------------------------------------------
($000's Cdn.
 except per
 share
 amounts)
Operations:

 Revenue       530,701   521,379    1.8  1,052,568  1,034,762    1.7

 Operating
  income
  before
  amortization
  (1)          224,864   200,251   12.3    450,527    389,300   15.7

 Cash flow
  from
  operations   161,788   127,427   27.0    324,466    240,287   35.0

 Net income
  (loss)        17,086   (19,747) 186.5     37,015    (38,732) 195.6

Per share data:

 Cash flow
  per share
  - basic
  (2)(3)        $ 0.66    $ 0.51            $ 1.32     $ 0.95

 Earnings
  (loss)
  per share
  - basic and
  diluted (2)   $ 0.03   ($ 0.13)           $ 0.07    ($ 0.25)

 Weighted
  average
  participating
  shares
  outstanding
  during
  period
  (000's)      230,286   231,848           231,042    231,848
--------------------------------------------------------------------

(1) Operating income before amortization is presented because it is a widely accepted financial indicator Indicator

Anything used to predict future financial or economic trends.

Notes:
In the context of technical analysis, an indicator is a mathematical calculation based on a securities price and/or volume. The result is used to predict future prices. of a company's ability to service and/or and/or
conj.
Used to indicate that either or both of the items connected by it are involved.

Usage Note: And/or is widely used in legal and business writing. incur To become subject to and liable for; to have liabilities imposed by act or operation of law.

Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. debt. Operating income before amortization is not a measurement in accordance with Canadian or US GAAP GAAP

See: Generally Accepted Accounting Principles

GAAP

See generally accepted accounting principles (GAAP). and should not be considered as an alternative to net income or any other measure of performance required by Canadian or US GAAP. This non-GAAP measure has no standardized standardized

pertaining to data that have been submitted to standardization procedures.

standardized morbidity rate
see morbidity rate.

standardized mortality rate
see mortality rate. meaning and is unlikely to be comparable to similar measures presented by other issuers.

(2) After deducting entitlements on the equity instruments, net of income taxes, amounting to $10,271 or $0.04 per share (2003 - $9,908 or $0.04 per share) and $19,926 or $0.09 per share (2003 - $20,051 or $0.09 per share) for the quarter and year to date respectively.

(3) Cash flow per share is presented because it provides a measure of the maximum potential distribution to shareholders on a per share basis. It is calculated by dividing cash flow from operations as presented in the Consolidated Statements of Cash Flows adjusted for (2) above, divided by the weighted average number of participating shares outstanding during the period. Cash flow per share is not a measurement in accordance with Canadian or US GAAP and should not be considered as an alternative to earnings per share or any other measure of performance as required by Canadian or US GAAP. This non-GAAP measure has no standardized meaning and is unlikely to be comparable to similar measures presented by other issuers.

OPERATING HIGHLIGHTS

-- Consolidated free cash flow was $83.0 million in the second

quarter compared to free cash flow of $10.1 million in the

same quarter last year.

-- Cable division free cash flow was $84.1 million compared to

$43.7 million in the same quarter last year.

-- The satellite division reached a significant milestone by

becoming free cash flow positive on a run rate basis in the

second quarter. This reduced divisional negative free cash

flow from $33.7 million in the second quarter last year to

$1.1 million this quarter.

-- The digital and Internet customer base continued to grow in

the second quarter with increases of 15,778 and 35,305

respectively. Consistent with seasonal trends, the basic cable

customer base remained stable during the quarter at 2,073,699

with year to date growth of 21,780. DTH customers increased by

6,483 during the second quarter. Bundling services for

customers continues to grow with approximately 41% of

customers now subscribing subscribing - subscribe to a bundled service. This reduces

churn churn: see butter. and builds longer term relationships with customers.

-- Net income was $17.1 million for the quarter compared with a

loss of $19.7 million for the same quarter last year. This is

the second consecutive quarter that the Company generated

positive net income.

-- Earnings per share was $0.03 compared with a loss of $0.13 for

the same quarter last year.

-- Shaw repurchased 1,003,000 Class B Non-Voting Shares at an

average cost of $19.99 per share pursuant to a normal course

issuer bid in the second quarter.

Shaw continued its growth in free cash flow with steady and disciplined growth of its customer base in the second quarter of 2004. Shaw expects to meet its consolidated free cash flow guidance target of $275 million.

Our pipeline of product and service innovation remains strong, our operating plans are solid, and our staff continue to deliver outstanding performances. Shaw continues to perform as a top broadband service provider An ISP, telephone company, cable company or other carrier that offers high-speed communications to homes and businesses, typically for Internet access. Cable modems, DSL and T1 lines are the common technologies. See broadband, cable modem, DSL and T1. , with a diverse product portfolio, powerful distribution systems, and a deep understanding of its customers.

We expect all our businesses will leverage these competitive advantages to deliver on their 2004 plans.



JR Shaw                                      Jim Shaw
Executive Chair                              Chief Executive Officer

MANAGEMENT'S DISCUSSION AND ANALYSIS Management's discussion and analysis (MD&A)

A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial

FEBRUARY 29, 2004

Certain statements in this report may constitute forward-looking statements forward-looking statement

A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . 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 Inferred from circumstances; known indirectly.

In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward-looking statements. Included herein is a "Caution Concerning Forward-Looking Statements" section which should be read in conjunction conjunction, in astronomy
conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with this report.

The following should also be read in conjunction with the Management's Discussion and Analysis included in the Company's August 31, 2003 Annual Report and Financial Statements and the Notes thereto there·to
adv.
1. To that, this, or it.

2. Archaic In addition to that; furthermore.

thereto
Adverb

Formal

1. to that or it

2. .

Consolidated Overview

Consolidated revenue increased by 1.8% over the same quarter last year and by 1.7% on a year to date basis. Excluding the US cable systems which were sold effective June 30, 2003, consolidated revenue improved 5.3% over the same quarter and six-month period last year. Revenue growth resulted from the continued growth in customer base, rate increases, and increased sales of additional services, such as digital, high-definition television high-definition television (HDTV)

Any system producing significantly greater picture resolution than that of the ordinary 525-line (625-line in Europe) television screen. Conventional television transmits signals in analog form. ("HDTV (High Definition TV) A set of digital television (DTV) standards that offer the highest resolution and sharpest picture. Although some HDTV sets are available in standard (rather square) screen sizes, the overwhelming majority of sets are wide screen, which eliminates ") and increased Video-on-Demand The ability to deliver a movie, sports event or other video program to a TV set whenever the customer requests it. Video-on-demand (VOD) typically refers to free and paid programs from the cable TV companies or the telephone companies that offer video over DSL lines. ("VOD See video-on-demand.

VoD - video on demand ") offerings.

Operating income before amortization in both the three and six months ended February 29, 2004 increased 12.3% and 15.7% respectively compared to the same periods last year. During the quarter the Company settled a legal suit in respect of an alleged breach of contract terms. The amount of the settlement in excess of the Company's provision thereto of $6.5 million was expensed in the current quarter. Excluding the US cable systems, the litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute.

When a person begins a civil lawsuit, the person enters into a process called litigation. settlement in the current year and the satellite restructuring charge restructuring charge

The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. in the prior year, the increase in operating income before amortization was 19.8% and 20.2% for the three and six months ended respectively. The increase in operating income resulted from a continued successful effort to grow revenue, save costs and restructure all divisions. Cash flow from operations increased by 27.0% and 35.0% for the comparative three and six-month periods due to increased operating income before amortization and reduced interest expense.

Net income was $17.1 million and $37.0 million for the three and six months ended February 29, 2004 compared to a loss of $19.7 million and $38.7 million for the same periods last year. The increase in net income of $36.8 million in the second quarter was primarily the result of an increase in operating income before amortization of $24.6 million and decreased interest expense of $11.0 million. Likewise the increase in net income of $75.7 million for the six-month period is principally due to increased operating income before amortization and decreased interest expense of $61.2 million and $22.1 million respectively.

Reclassifications and Recent Canadian Accounting Pronouncements

As more fully describe in Note 1 to the Consolidated Financial Statements Consolidated Financial Statements

The combined financial statements of a parent company and its subsidiaries.

Notes:
Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge , the Company reclassified its DTH customer premise equipment sold to retailers not yet activated activated

a state of being more than usually active. In biological systems this is usually brought about by chemical or electrical means. Commonly said of pharmaceutical and chemical products. , net of working capital, to deferred charges. The balance sheet reclassification Reclassification

The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. has no impact on earnings.

Also described in Note 1 to the Consolidated Financial Statements are new accounting principles that the Company will be required to adopt in future periods starting as early as the third quarter of 2004.



Cable

FINANCIAL HIGHLIGHTS


              Three months ended             Six months ended
--------------------------------------------------------------------
              February  February Change   February   February Change
              29, 2004  28, 2003      %   29, 2004   28, 2003      %
--------------------------------------------------------------------
--------------------------------------------------------------------
($000's Cdn)
Revenue
 (third
  party)(1)    376,423   373,341    0.8    747,645    741,363    0.8
--------------------------------------------------------------------
--------------------------------------------------------------------
Operating
 income
 before
 amortization
 (2)           195,740   180,172    8.6    388,511    355,753    9.2
Less:
 Interest       43,416    48,602  (10.7)    87,417     97,428  (10.3)
 Entitlements
  on equity
  instruments,
  net of
  current
  taxes         10,271     9,908    3.7     19,926     20,051   (0.6)
 Cash taxes
  on net
  income         7,108     8,450  (15.9)    15,360     17,669  (13.1)
--------------------------------------------------------------------
 Cash flow
  before the
  following:   134,945   113,212   19.2    265,808    220,605   20.5
--------------------------------------------------------------------
Capital
 expenditures
 and equipment
 subsidies:
  New housing
   development  12,258    21,451  (42.9)    30,256     46,698  (35.2)
   Success
   based        12,202    23,373  (47.8)    24,813     48,497  (48.8)
  Upgrades and
   enhancement  23,194    16,164   43.5     40,921     34,187   19.7
  Replacement    1,178     3,574  (67.0)     5,082      7,780  (34.7)

  Buildings/
   other         1,989     4,908  (59.5)     4,236     11,469  (63.1)
--------------------------------------------------------------------
Total as
 per Note
 2 to the
 Consolidated
 Financial
 Statements     50,821    69,470  (26.8)   105,308    148,631  (29.1)
--------------------------------------------------------------------
Free cash
 flow (3)       84,124    43,742   92.3    160,500     71,974  123.0
--------------------------------------------------------------------
--------------------------------------------------------------------

Operating
 margin           52.0%     48.3%   3.7       52.0%      48.0%   4.0
--------------------------------------------------------------------
--------------------------------------------------------------------

(1) Includes equipment revenue on the sale of DCT (Discrete Cosine Transform) An algorithm that is widely used for data compression. Similar to Fast Fourier Transform, DCT converts data (pixels, waveforms, etc.) into sets of frequencies. The first frequencies in the set are the most meaningful; the latter, the least. and modem modem [modulator/demodulator], an external device or internal electronic circuitry used to transmit and receive digital data over a communications line normally used for analog signals. equipment of $6,826 (2003 - $6,497) and $14,810 (2003 - $14,196) for the three and six months ended February 29, 2004 respectively.

(2) Operating income before amortization is presented because it is a widely accepted financial indicator of a company's ability to service and/or incur debt. Operating income before amortization is not a measurement in accordance with Canadian or US GAAP and should not be considered as an alternative to net income or any other measure of performance required by Canadian or US GAAP. This non-GAAP measure has no standardized meaning and is unlikely to be comparable to similar measures presented by other issuers.

(3) Free cash flow is presented because it is an indicator of a company's ability to repay debt. Free cash flow is not a measurement in accordance with Canadian or US GAAP and should not be considered as an alternative to net income or any other measure of performance required by Canadian or US GAAP. This non-GAAP measure has no standardized meaning and is unlikely to be comparable to similar measures presented by other issuers.

HIGHLIGHTS FOR THE QUARTER

-- Cable generated free cash flow of $84.1 million in the second

quarter compared to $43.7 million last year and $76.4 million

in the first quarter of the current year.

-- During the quarter, Shaw introduced High Definition television

(HDTV) services in central and Northern Vancouver Island Vancouver Island (1991 pop. 579,921), 12,408 sq mi (32,137 sq km), SW British Columbia, Canada, in the Pacific Ocean; largest island off W North America. It is c.285 mi (460 km) long and c. ,

Duncan Duncan, city (1990 pop. 21,732), seat of Stephens co., SW Okla., in an oil, farm, and cattle area; inc. 1892. There is an oil industry, and electronics, concrete, and apparel are manufactured. During the late 19th cent. , Cowichan Valley Cowichan Valley is a region around the Cowichan River and Cowichan Lake on Vancouver Island, in British Columbia, Canada. There is some debate as to the origin of the name Cowichan, which many believe to be an anglicized form of the First Nations tribal name Quw'utsun. , Thompson Thompson, city, Canada
Thompson, city (1991 pop. 14,977), central Man., Canada, on the Burntwood River. A mining town, it developed after large nickel deposits were discovered in the area in 1956. Okanagan This article is about the region in Canada. For other uses of the term, see Okanogan.

The Okanagan (IPA: [o kə ˈnɑ ɡn̩]), also known as the Okanagan Valley and sometimes as , Chilliwack Chilliwack (chĭl`ĭwăk), district municipality (1991 pop. 49,531), SW British Columbia, Canada, on the Fraser River. It is an agricultural, dairying, and logging center. The main industry is food processing. region

and Winnipeg Winnipeg, city, Canada
Winnipeg (wĭn`ĭpĕg), city (1991 pop. 616,790), provincial capital, SE Man., Canada, at the confluence of the Red and Assiniboine rivers. .

-- During February, Shaw started to apply rate increases of $1 to

$2 per month on most of its packages in most of its service

areas. The increases are expected to generate additional

monthly revenue of approximately $1.5 million when fully

implemented by the end of May 2004.

Cable revenue increased 0.8% over the same quarter last year and on a year to date basis. Excluding the US cable systems sold on June 30, 2003, cable revenue increased 5.8% and 5.9% for the three and six months respectively. This was due to rate increases and customer growth in all areas. Operating income before amortization increased by 8.6% and 9.2% respectively. Excluding the US cable systems, operating income before amortization increased by 13.1% and 13.7% for the three and six months respectively. A combination of revenue growth and cost reduction programs, including decreased bandwidth bandwidth

Measurement of the capacity of a communications signal. For digital signals, the bandwidth is the data speed or rate, measured in bits per second (bps). For analog signals, it is the difference between the highest and lowest frequency components, measured in hertz costs in the Big Pipe division, accounted for the improvement. The Big Pipe division has reduced bandwidth costs by approximately two-thirds over the last two years by serving as the primary Internet backbone (communications, networking) Internet backbone - High-speed networks that carry Internet traffic.

These communications networks are provided by companies such as AT&T, GTE, IBM, MCI, Netcom, Sprint, UUNET and consist of high-speed links in the T1, T3, OC1 and OC3 ranges. for Shaw's broadband Internet See broadband. customers and through the development of over 400 peering relationships throughout North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. .

Recently Shaw successfully negotiated four-year renewals for five of its technical bargaining units A bargaining unit in labor relations is a group of employees with a clear and identifiable community of interests who are (under U.S. law) represented by a single labor union in collective bargaining and other dealings with management. in the Lower Mainland The Lower Mainland is the name that residents of British Columbia apply to the region surrounding the City of Vancouver. According to the 2001 census, over 2.2 million people live in the region; sixteen of the province's thirty most populous municipalities are located there . The TWU TWU Texas Woman's University
TWU Transport Workers Union
TWU Trinity Western University
TWU Two Worlds United
TWU Texas Wesleyan University
TWU Transport Workers Union of America
TWU Telecommunications Workers Union agreements for Vancouver Vancouver, city, Canada
Vancouver, city (1991 pop. 471,844), SW British Columbia, Canada, on Burrard Inlet of the Strait of Georgia, opposite Vancouver Island and just N of the Wash. border. and Surrey Surrey, county (1991 pop. 997,000), 653 sq mi (1,691 sq km), SE England. The county seat is Guildford. The North Downs cross the county from east to west. To the north the land slopes gently downward to the Thames, into which flow the Wey and the Mole, Surrey's expire expire /ex·pire/ (ek-spi´er)
1. to exhale.

2. to die.

ex·pire
v.
1. To breathe one's last breath; die.

2. To exhale. March 23rd 2008, and the IBW IBW Ideal body weight, see there agreements for North Vancouver North Vancouver, city (1991 pop. 38,436), SW British Columbia, Canada, on Burrard Inlet of the Strait of Georgia, opposite Vancouver, of which it is a suburb. Shipbuilding, woodworking, and the shipping of grain, lumber, and ore are the chief industries. , White Rock and Fraser Fraser, river, Canada
Fraser, chief river of British Columbia, Canada, c.850 mi (1,370 km) long. It rises in the Rocky Mts., at Yellowhead Pass, near the British Columbia–Alta. line and flows northwest through the Rocky Mt. expire May 2009. These bargaining units represent approximately 300 technical employees in their regions. The successful extension of these labour contracts will facilitate Shaw's continued delivery of exceptional customer service and will be key in ensuring the smooth deployment Installing, setting up, testing and running. This military term, which means the placement of troops and equipment in the field, is widely used with computers as an alternate to the word "implementation. of new services, such as VOIP and ongoing maintenance and upgrade activity.

Capital expenditures decreased 26.8% over the same quarter last year as a result of lower spending in all major categories, with the exception of increased spending of $7.0 million in upgrades and enhancements, which is in line with our plans for fiscal 2004. Shaw is now in the process of upgrading its plant to 860 MHz (MegaHertZ) One million cycles per second. It is used to measure the transmission speed of electronic devices, including channels, buses and the computer's internal clock. A one-megahertz clock (1 MHz) means some number of bits (16, 32, 64, etc. from the current 550/750 MHz capacity. The increase in plant capacity will accommodate future growth of Shaw's VOD, HDTV and multimedia offerings. The upgrade activity is currently focused in Vancouver. We anticipate that we will complete the upgrade to 860 MHz over four years while maintaining current levels of capital expenditure spending. Success-based capital spending capital spending

Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. decreased as a result of the strengthening of the Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin"
loonie

dollar - the basic monetary unit in many countries; equal to 100 cents and due to the lower unit cost of the DOCSISTM 2.0 modems deployed in Vancouver, Calgary, Edmonton Edmonton (ĕd`məntən), city (1991 pop. 616,741), provincial capital, central Alta., Canada, on the North Saskatchewan River. The center of the largest metropolitan area in Alberta, Edmonton, known as the "Gateway to the North," is located and Winnipeg. By the end of fiscal 2004, 90% of our systems will be DOCSISTM compliant

For other meanings, see compliant. Or mistype for complaint?

Compliant is an American industrial rock band that was formed in Chicago, Illinois and is headed by frontman David Downs. . New housing development and replacement capital spending decreased $9.2 million and $2.4 million respectively as a result of the divestment divestment to strip one's investment from an entity. of the US cable systems in June 2003 and better management of construction projects. Building expenditures decreased as a result of completion of major projects last year. The reduction in capital spending has not impaired See assistive technology. customer growth as shown by the subscriber growth achieved during the quarter.

SUBSCRIBER STATISTICS



                                        Three months      Six months
                                               ended           ended
--------------------------------------------------------------------
                 February      August         Change          Change
                 29, 2004    31, 2003  Growth      %  Growth       %
--------------------------------------------------------------------
CABLE:
Basic
 service:
  Actual        2,073,699   2,051,919    (114)     -  21,780     1.1
   Penetration
   as % of
   homes passed      68.1%       68.2%

Full cable
 service:
  Tier I        1,652,600   1,639,187  (2,042)  (0.1) 13,413     0.8
  Penetration
   as % of
   basic             79.7%       79.9%

  Tier II       1,584,311   1,565,041     983    0.1  19,270     1.2
  Penetration
   as % of
   basic             76.4%       76.3%

  Tier III      1,435,593   1,398,450  10,770    0.8  37,143     2.7
  Penetration
   as % of
   basic             69.2%       68.2%

  Digital
   terminals      571,147     527,256  22,438    4.1  43,891     8.3
  Digital
   customers(1)   494,290     462,860  15,778    3.3  31,430     6.8
--------------------------------------------------------------------

INTERNET:
Connected
 and
 scheduled        969,565     886,220  35,305    3.8  83,345     9.4
Penetration
 as % of
 basic               46.8%       43.2%
Standalone
 Internet not
 included
 In basic
 cable            115,737     102,708   5,835    5.3  13,029    12.7
--------------------------------------------------------------------

(1) The August 31, 2003 digital customer count was restated to
    exclude customers with digital boxes who do not receive digital
    services.

Consistent with the second quarter of last year, basic cable subscribers remained relatively unchanged during the quarter and is reflective Refers to light hitting an opaque surface such as a printed page or mirror and bouncing back. See reflective media and reflective LCD. of seasonality in the business. Continued maintenance of the basic customer base is a significant accomplishment considering the entry of new competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. in the Winnipeg and Saskatoon Saskatoon (săskət

n`), city (1991 pop. 186,058), S central Sask., Canada, on the South Saskatchewan River. market. Shaw continued its successful campaign of offering promotional analogue (electronics) analogue - (US: "analog") A description of a continuously variable signal or a circuit or device designed to handle such signals. The opposite is "discrete" or "digital". basic service packages to standalone stand·a·lone
adj.
Self-contained and usually independently operating: a standalone computer terminal. Internet customers and other potential customers. The intent of the offer was to encourage these customers to develop viewing habits that recognize the value of a monthly cable subscription and to continue as customers at the end of the promotional period.

Despite increased anti-competitive pricing pressure from other Internet service providers Internet service provider (ISP)

Company that provides Internet connections and services to individuals and organizations. For a monthly fee, ISPs provide computer users with a connection to their site (see data transmission), as well as a log-in name and password. , Shaw maintained a healthy rate of growth of its Internet customer base of 3.8% or 35,305 compared to 5.1% or 41,717 for the same quarter last year. To ensure continued growth in this highly competitive market, Shaw focused on delivering excellent customer care, which includes support 24/7/365, and management of its network to deliver a high-quality reliable service to its customers. Digital customer growth was 15,778 or 3.3% compared to 14,300 or 3.3% in the same quarter last year.

At the end of the second quarter, approximately 41.1% of Shaw customers subscribed Subscribed

Newly issued securities that an investor has agree to, or stated his intent to, buy in a public offering prior to the issue date. When an investor uses rights, he expects to own the designated number of shares they have subscribed to once the offering is completed. to bundled services compared to 35.0% in the same quarter last year. The attractiveness of the bundled packages is enhanced by Shaw's ability to offer services like VOD and new services such as HDTV. Shaw's bundling strategy is a particularly effective customer retention tool for its digital customers as shown by the decline in churn rate (1) The percentage of customers who cancel their online, cellphone or other subscription service during a certain time period.

(2) The percentage of employees who leave the company during a certain time period. See churning. .



                           Three months ended       Six months ended
--------------------------------------------------------------------
                        February     February    February   February
Churn(1)                29, 2004     28, 2003    29, 2004   28, 2003
--------------------------------------------------------------------
Digital customers(2)         3.5%         6.1%        7.3%      11.4%
Internet customers(2)        3.5%         5.2%        7.3%       9.7%
--------------------------------------------------------------------

(1) 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.

(2) Shaw first published churn statistics in the fourth quarter of
    2003. A review of the data and methodology results in the fourth
    quarter churn for Internet and digital being 5.5% and 5.0%
    respectively. It should also be noted that any comparison of
    quarterly churn on a sequential basis could be impacted by
    seasonality and market programs.

COMBINED SATELLITE (DTH and Satellite Services)

FINANCIAL HIGHLIGHTS


              Three months ended             Six months ended
--------------------------------------------------------------------
              February  February Change   February  February  Change
              29, 2004  28, 2003      %   29, 2004  28, 2003       %
--------------------------------------------------------------------
($000s Cdn)
Revenue
 (third
 party)        154,278   148,038    4.2    304,923   293,399     3.9
--------------------------------------------------------------------
--------------------------------------------------------------------
Operating
 income
 before
 amortization
 and
 restructuring
 charge (1)     35,608    20,079   77.3     68,500    38,397    78.4
Less:
 Interest       11,773    17,563  (33.0)    23,909    36,032   (33.6)
 Cash taxes
  on net
  income           137       186  (26.3)       312       461   (32.3)
--------------------------------------------------------------------
Cash flow
 before
 capital
 expenditures   23,698     2,330  917.1     44,279     1,904 2,225.6
--------------------------------------------------------------------
Capital
 expenditures
 and
 equipment
 subsidies:
 Success
  based        24,450    35,184  (30.5)    55,007    76,146   (27.8)
 Other            357       835  (57.2)       966     1,503   (35.7)
--------------------------------------------------------------------
Total as per
 Note 2 to
 the
 Consolidated
 Financial
  Statements    24,807    36,019  (31.1)    55,973    77,649   (27.9)
--------------------------------------------------------------------
Free cash
 flow (2)       (1,109)  (33,689)  96.7    (11,694)  (75,745)   84.6
--------------------------------------------------------------------
--------------------------------------------------------------------

(1) Operating income before amortization is presented because it is
    a widely accepted financial indicator of a company's ability to
    service and/or incur debt. Operating income before amortization
    is not a measurement in accordance with Canadian or US GAAP and
    should not be considered as an alternative to net income or any
    other measure of performance required by Canadian or US GAAP.
    This non-GAAP measure has no standardized meaning and is unlikely
    to be comparable to similar measures presented by other issuers.

(2) Free cash flow is presented because it represents a company's
    ability to repay debt. Free cash flow is not a measurement in
    accordance with Canadian or US GAAP and should not be considered
    as an alternative to net income or any other measure of
    performance required by Canadian or US GAAP. This non-GAAP
    measure has no standardized meaning and is unlikely to be
    comparable to similar measures presented by other issuers.

The Satellite division reached a significant milestone with the generation of positive free cash flow on a run rate basis during the quarter. The Satellite division was cash flow negative $1.1 million in the current quarter compared to negative $33.7 million in 2003. On a year to date basis the division was cash flow negative $11.7 million compared to negative $75.7 million in the same period last year. The improvement resulted from improved economies of scale on a larger DTH subscriber base, rate increases, reduced success-based expenditures due to lower customer activations and reduced interest expense as a result of last year's redemption The liberation of an estate in real property from a mortgage.

Redemption is the process by which land that has been mortgaged or pledged is bought back or reclaimed. It is accomplished through a payment of the debt owed or a fulfillment of the other conditions. of the US $150 million senior secured notes of Star Choice and this year's repayment Repayment

The act of paying back a debt.

Notes:
Everyone has to repay their debts eventually.
See also: Debt, Defeasance, Loan of the $250 million Cancom structured note.



DTH (Star Choice)

FINANCIAL HIGHLIGHTS

              Three months ended             Six months ended
--------------------------------------------------------------------
              February  February Change   February   February Change
              29, 2004  28, 2003      %   29, 2004   28, 2003      %
--------------------------------------------------------------------
($000s Cdn)
Revenue
 (third
 party)(1)     130,989   122,762    6.7    258,973    242,049    7.0
Operating
 income
 before
 amortization   24,359    10,042  142.6     46,562     17,548  165.3
Operating
 margin           18.6%      8.2%  10.4       18.0%       7.2%  10.8
--------------------------------------------------------------------
(1) Includes equipment revenue on sale of DTH equipment of $7,655
    (2003 - $12,168) and $16,489 (2003 - $25,402) for the quarter
    and year to date respectively.



Customer Statistics

                                        Three months      Six months
                                               ended           ended
--------------------------------------------------------------------
                 February      August         Change          Change
                 29, 2004    31, 2003  Growth      %  Growth       %
--------------------------------------------------------------------

Star Choice
 customers(1)     814,053     808,526   6,483    0.8%  5,527     0.7%
--------------------------------------------------------------------
(1) Including seasonal customers who temporarily suspend their
    service.


                           Three months ended       Six months ended
--------------------------------------------------------------------
Churn(2)                February     February    February   February
                        29, 2004     28, 2003    29, 2004   28, 2003
--------------------------------------------------------------------
Star Choice customers        3.6%         4.1%        9.6%       9.6%
--------------------------------------------------------------------
(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.

HIGHLIGHTS FOR THE QUARTER

-- DTH resolved the customer service issues reported in the first

quarter and as evidenced by the addition of 6,483 customers

during quarter. DTH growth continues to face increased

competition from cable and continued "black-market black-mar·ket
tr.v. black-mar·ket·ed, black-mar·ket·ing, black-mar·kets
To trade (something) in the black market.

Adj. 1. " theft of

satellite programming.

-- Operating income before amortization at Star Choice was $24.4

million compared to $10.0 million in the second quarter of

fiscal 2003.

-- Effective February 1, 2004, the monthly fee on most

programming packages increased by $3. This should result in an

expected revenue increase of approximately $2 million per

month when fully implemented by the end of March 2004.

Revenue, excluding equipment sales, increased by 11.5% over the same quarter last year and 11.9% for the six-month period as a result of subscriber growth and rate increases. These factors, combined with the impact of cost reductions, increased focus on direct sales, continued cost savings from the conversion to Shaw's billing system and decreased costs as a result of last year's restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). enabled Star Choice to generate operating income of $24.4 million in the current quarter compared to $10.0 million last year. On a year to date basis, operating income was $46.6 million compared to $17.5 million last year.



Satellite Services

FINANCIAL HIGHLIGHTS

                                        Three months      Six months
                                               ended           ended
--------------------------------------------------------------------
                 February     August          Change          Change
                 29, 2004   31, 2003  Growth       %  Growth       %
--------------------------------------------------------------------
($000's Cdn)
Revenue
 (third
 party)            23,289     25,276    (7.9) 45,950  51,350   (10.5)
Operating
 income
 before
 amortization      11,249     10,037    12.1  21,938  20,849     5.2
Operating
 margin              48.3%      39.7%    8.6    47.7%   40.6%    7.1
--------------------------------------------------------------------

Excluding the Business Television division sold effective March 21, 2003, revenue increased 5.2% and 2.6% over the same quarter and six months ended last year. The increase is due to increased Tracking and Uplink (1) Transmitting from an earth station to a satellite. Contrast with downlink.

(2) A port on a network device that is used to connect to another network device rather than a client or server. See MDI port. revenue. On the same basis, operating income before amortization increased 16.1% and 10.1% respectively due to increased revenue and due to lower costs as a result of various cost savings initiatives.



OTHER INCOME AND EXPENSE ITEMS:

Fixed Charges

              Three months ended             Six months ended
--------------------------------------------------------------------
              February  February Change   February   February Change
              29, 2004  28, 2003      %   29, 2004   28, 2003      %
--------------------------------------------------------------------
($000s Cdn)
Amortization -
 Property,
  plant and
  equipment     99,268   105,102   (5.6)   202,816    212,780   (4.7)
 Deferred
  charges       42,489    48,231  (11.9)    80,582     88,982   (9.4)
--------------------------------------------------------------------
Total
 amortization  141,757   153,333   (7.5)   283,398    301,762   (6.1)

Amortization
 of deferred
 IRU revenue    (2,832)   (2,952)  (4.1)    (5,915)    (5,905)   0.2

Interest        55,189    66,165  (16.6)   111,326    133,460  (16.6)
--------------------------------------------------------------------
--------------------------------------------------------------------

Amortization on property, plant and equipment decreased over the comparative periods primarily due to the sale of the US cable systems. Amortization of deferred charges decreased over the comparative periods primarily due to lower amortization of deferred financing costs resulting from the repayment of the Big Pipe and Cancom bank facilities.

Amortization of deferred indefeasible That which cannot be defeated, revoked, or made void. This term is usually applied to an estate or right that cannot be defeated.

indefeasible adj. cannot be altered or voided, usually in reference to an interest in real property. right of use ("IRU Iru (ī`r

), in the Bible, Caleb's eldest son. ") revenue remained relatively unchanged.

Interest charges decreased over the same periods last year as a result of reduced consolidated debt levels which occurred primarily in the latter portion of 2003 when Shaw began generating positive free cash flow on a consolidated basis and on repayment of debt with the sale of the US cable systems on June 30, 2003. In addition, Shaw's weighted average cost of borrowing decreased from 7.6% as at February 28, 2003 to 7.3% as at February 29, 2004 as a result of debt restructuring Debt Restructuring

A method used by companies with outstanding debt obligations to alter the terms of the debt agreements in order to achieve some advantage.

Notes: including the repayment of the US $150 million Senior unsecured Unsecured

A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. notes of Star Choice, the $250 million Cancom structured notes, the Cancom credit facility and the Cancom subordinated Subordinated

A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. credit facility.

Foreign exchange gain (loss) on unhedged and hedged hedge
n.
1. A row of closely planted shrubs or low-growing trees forming a fence or boundary.

2. A line of people or objects forming a barrier: a hedge of spectators along the sidewalk. long-term debt Long-Term Debt

Loans and financial obligations lasting over one year.

Notes:
For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt.

Shaw records foreign exchange gains and losses on the translation of foreign denominated unhedged long-term debt, which at February 29, 2004 was comprised of US $54.4 million of bank debt. As a result of fluctuations of the Canadian dollar relative to the US dollar, the Company recorded a foreign exchange loss of $2.0 million for the quarter and a gain of $2.8 million for the six-months ended February 29, 2004. In the comparative quarter and six months ended, the foreign exchange gains of $16.8 million and $15.5 million resulted from the strengthening of the Canadian dollar relative to the US dollar on the translation of foreign denominated unhedged debt which included the Star Choice US $150 million Senior unsecured notes.

As required by generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records.

Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP") long-term debt is required to be translated at the period-end and year-end year-end also year·end
n.
The end of a year.

adj.
Occurring or done at the end of the year: a year-end audit.

Noun 1. foreign exchange rates. The resulting foreign exchange gains or losses on translating hedged long-term debt is 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 final amounts that the hedged debt would be settled at under existing cross-currency interest rate agreements. As outlined in Note 3 to the Consolidated Financial Statements, if the rate of translation was adjusted to reflect the hedged rates of the Company's cross-currency interest rate agreements (which fix the liability for interest and principle) long-term debt would increase by $186.4 million (2003 - $138.1 million) which represents the corresponding deferred foreign exchange gain included in deferred credits.

Debt restructuring costs

In November November: see month. 2003, the Company issued $350 million of Senior unsecured notes at 7.5% and used the net proceeds Net Proceeds

The amount received after all costs are deducted from the sale of a piece of property or security.

Notes:
In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). to repay its $350 million credit facility due February 10, 2006. The Company incurred $2.4 million in debt restructuring costs in connection with the repayment comprised of approximately $1.0 million on the cancellation cancellation (See: cancel)

CANCELLATION. Its general acceptation, is the act of crossing a writing; it is used sometimes to signify the manual operation of tearing or destroying the instrument itself. Hyde v. Hyde, 1 Eq. Cas. Abr. 409; Rob. of a related interest rate hedge on the $350 million and approximately $1.4 million on the write-off Write-Off

A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of deferred financing charges on the credit facility. The debt restructuring resulted in the extension of Shaw's credit horizon another 8 years on $350 million of debt at a fixed rate of 7.5%.

RISKS AND UNCERTAINTIES

There have been no material changes in any risks or uncertainties facing the Company since the year ended August 31, 2003.

FINANCIAL POSITION

Overview

Total assets at February 29, 2004 were $7.5 billion compared to $7.6 billion at August 31, 2003. The following discussion describes the significant changes in the balance sheet since August 31, 2003.

Current assets Current Assets

Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. decreased by $12.8 million principally due to a reduction in prepaids and other of $9.4 million resulting from the timing of payments of property taxes and prepaid interest Prepaid interest

An asset account showing interest that has been paid in advance, which is expensed and charged to the borrower's P & L statement.

prepaid interest and a decrease in cash and term deposits of $4.4 million.

Property, plant and equipment decreased by $97.5 million primarily resulting from current year amortization being in excess of capital expenditures.

Deferred charges decreased by $6.3 million resulting primarily from a net increase in equipment subsidies of $6.7 million.

Current liabilities Current Liabilities

Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. , excluding the current portion of long term debt, decreased by $11.9 million primarily due to payment of significant capital expenditure accruals Accruals

Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. at August 31, 2003 and due to the payment of the litigation settlement described previously.

Long-term debt, including current portion, decreased by $121.4 million resulting from the net repayment of Shaw Communications Inc. and Cancom debt of $78.8 million and a decrease of $51.1 million relating to relating to relate prep → concernant

relating to relate prep → bezüglich +gen, mit Bezug auf +acc the translation of the U.S. denominated debt. This was offset by an increase in the Burrard Burrard can mean many things:

One of the Burrard Baronets, including
Sir Harry Burrard, 1st Baronet of Lymington (1755–1813), a British General

Landing Lot 2 Holdings Partnership debt of $8.5 million.

Deferred credits increased by $44.9 million primarily from a $48.3 million increase in foreign exchange gains on the translation of hedged U.S. denominated debt which was offset by $5.9 million in amortization of prepaid pre·pay
tr.v. pre·paid, pre·pay·ing, pre·pays
To pay or pay for beforehand.

pre·payment n. IRU rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. revenue. Future income taxes increased by $10.7 million due to the future income tax expense in the current year.

Share capital decreased by $19.9 million primarily as a result of the repurchase of 2,096,500 Class B Non-Voting Shares for cancellation.

LIQUIDITY AND CAPITAL RESOURCES

Last year, Shaw strengthened its financial position through the sale of non-strategic assets, including the sale of the US cable assets and through the generation of consolidated free cash flow of $96.8 million. Shaw continued its focus on strengthening its financial position with the generation of $148.8 million of free cash flow for the six months ended February 29, 2004. Shaw used its free cash flow to purchase $41.9 million of Class B Non-Voting Shares for cancellation, pay dividends on Class A and Class B Non-Voting Shares of $13.8 million, pay the previously mentioned litigation fees of $6.5 million, pay financing costs and restructuring fees of $7.8 million and to repay net debt of Shaw Communications Inc. and Cancom of $78.8 million.

Shaw received approval from The Toronto Stock Exchange Toronto Stock Exchange (TSE)

Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. ("TSX") to make a normal course issuer bid to purchase its Class B Non-Voting Shares for the period November 7, 2003 to November 6, 2004. Under the bid, Shaw is authorized au·thor·ize
tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es
1. To grant authority or power to.

2. To give permission for; sanction: to acquire up to 11,000,000 Class B Non-Voting Shares, representing approximately 5% of the issued and outstanding Class B Non-Voting Shares. The purchase and cancellation of outstanding Class B Non-Voting Shares under the bid may represent an opportunity to provide capital appreciation and market stability for the benefit of Shaw's shareholders. Pursuant to the normal course issuer bid, during the quarter Shaw repurchased 1,003,000 of its Class B Non-Voting Shares for cancellation for $20.1 million for a year to date total of 2,096,500 Class B Non-Voting Shares for a total of $41.9 million.

The Company also improved its financial flexibility in 2004 through the continued reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. of its debt. During the first quarter, Shaw issued $350 million in Senior unsecured notes at a rate of 7.5% due November 20, 2013. The net proceeds (after issue expenses and underwriting Underwriting

1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt).

2. The process of issuing insurance policies. expenses) from the issuance of the notes were $343.1 million and were used to repay the $350 million credit facility due February 10, 2006. Shaw cancelled can·cel
v. can·celed also can·celled, can·cel·ing also can·cel·ling, can·cels also can·cels

v.tr.
1. To cross out with lines or other markings. See Synonyms at erase.

2. its interest rate hedge for the $350 million facility incurring in·cur
tr.v. in·curred, in·cur·ring, in·curs
1. To acquire or come into (something usually undesirable); sustain: incurred substantial losses during the stock market crash.

2. costs of approximately $1.0 million. As a result of the debt restructuring, Shaw was able to extend $350 million of its credit horizon another 8 years at a fixed rate of 7.5%.

On December December: see month. 15, 2003, Shaw repaid the $250 million Cancom Structured Note with $22 million in cash and the drawdown Drawdown

The peak to trough decline during a specific record period of an investment or fund. It is usually quoted as the percentage between the peak to the trough.

Notes: of its own credit facility. Shaw has access to approximately $0.9 billion of available credit facilities credit facilities npl → facilidades fpl de crédito

credit facilities npl → facilités fpl de paiement

credit facilities  based on existing bank covenants and will have access to these facilities for the foreseeable fore·see
tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees
To see or know beforehand: foresaw the rapid increase in unemployment. future. Based on the existing business performance which generates positive free cash flow after meeting day-to-day day-to-day
adj.
1. Occurring on a routine or daily basis: the day-to-day movements of the stock market.

2. operating expenses Operating expenses

The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. (including capital expenditures), access to available credit facilities and scheduled long-term debt repayments, Shaw expects to have sufficient liquidity to meet both current and foreseeable future commitments.



CASH FLOW

Operating Activities

              Three months ended             Six months ended
--------------------------------------------------------------------
              February  February Change   February   February Change
              29, 2004  28, 2003      %   29, 2004   28, 2003      %
--------------------------------------------------------------------
($000s Cdn)
Cash flow
 from
 operations    161,788   127,427   27.0    324,466    240,287   35.0
Net change
 in non-cash
 working
 capital
 balances
 related to
 operations     24,591    10,134  142.7      7,632     24,778  (69.2)
--------------------------------------------------------------------
               186,379   137,561   35.5    332,098    265,065   25.3
--------------------------------------------------------------------
--------------------------------------------------------------------

Cash flow from operations increased primarily from strong growth in profitability in the Cable and DTH divisions and reduced interest expense. Cash flow from working capital increased in the quarter primarily due to timing of interest payments. Scheduled interest payments are more heavily weighted towards the first and third quarters, and were approximately $46.8 million higher in the first quarter versus the second quarter.



Investing Activities

              Three months ended             Six months ended
--------------------------------------------------------------------
            February  February           February  February
            29, 2004  28, 2003 Increase  29, 2004  28, 2003 Increase
--------------------------------------------------------------------
($000s Cdn)
Cash flow
 used in
 investing
 activities  (85,661)  (76,964)  (8,697) (193,500) (214,872)  21,372
--------------------------------------------------------------------
--------------------------------------------------------------------

During the three months ended February 29, 2004 the principal use of cash was for capital expenditures, equipment subsidies and inventory amounting in total to $85.4 million (2003 - $73.2 million). In the six months ended February 29, 2004, the total cash outlay for these items was $186.4 million compared to $214.3 million in the same period last year.



Financing Activities

The changes in financing activities during the comparative periods
were as follows:


                           Three months ended       Six months ended
--------------------------------------------------------------------
                         February    February   February    February
                         29, 2004    28, 2003   29, 2004    28, 2003
--------------------------------------------------------------------
(In $millions Cdn)
Repayment of $350
 million credit
 facility                       -           -     (350.0)          -
Repayment of $250
 million Structured
 Note                      (250.0)          -     (250.0)          -
Proceeds on $350
 million Senior notes           -           -      350.0           -
Bank loans and bank
 indebtedness - net
 borrowings (repayments)    175.6       (74.0)     171.3       (52.1)
Repayment of Cancom
 credit facility                -      (324.0)         -      (324.0)
Proceeds on term loan           -       350.0          -       350.0
Purchase of Class B
 Non-Voting Shares for
 cancellation               (20.1)          -      (41.9)          -
Dividends and equity
 entitlements               (15.3)      (13.8)     (32.8)      (25.4)
Debt restructuring costs        -           -       (1.0)          -
Proceeds on prepayment
 of IRU                         -           -        2.9           -
Increase in Partnership
 bank loans                   4.2         3.6        8.5         3.6
--------------------------------------------------------------------
                           (105.6)      (58.2)    (143.0)      (47.9)
--------------------------------------------------------------------
--------------------------------------------------------------------

CAUTION CONCERNING FORWARD LOOKING STATEMENTS

Certain statements included and incorporated by reference herein constitute forward-looking statements. When used, the words "anticipate", "believe", "expect", "plan", intend", "target", "guideline guideline Medtalk A series of recommendations by a body of experts in a particular discipline. See Cancer screening guidelines, Cardiac profile guidelines, Gatekeeper guidelines, Harvard guidelines, Transfusion guidelines. ", "goal", and similar expressions are intended to 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), business strategies and measures to implement strategies, competitive strengths, goals, expansion and growth of Shaw's 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact.
2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . However, whether actual results and developments will conform with the expectations and predictions of Shaw is subject to a number of risks and uncertainties, including, but not limited to, 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 Shaw's industries in both Canada and the United States The United States and Canada share a unique legal relationship. U.S. law looks northward with a mixture of optimism and cooperation, viewing Canada as an integral part of U.S. economic and environmental policy. ; Shaw's status as a holding company with separate operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. ; changing conditions in the entertainment, information and communications industries communications industry, broadly defined, the business of conveying information. Although communication by means of symbols and gestures dates to the beginning of human history, the term generally refers to mass communications. ; risks associated with the economic, political and regulatory reg·u·late
tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates
1. To control or direct according to rule, principle, or law.

2. 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 ma·te·ri·al·ize
v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es

v.tr.
1. To cause to become real or actual: By building the house, we materialized a dream. , or should assumptions underlying the forward-looking statements prove incorrect Incorrect means to not be correct and may also refer to:

Politically incorrect
Incorrectly formatted data, a computer error

See also

Correctness
Anomalously numbered roads in Great Britain
Disputes in English grammar (Incorrect English)

, our 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 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, Shaw.

You should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement (and such risks, uncertainties and other factors) speak only as of the date on which it was originally made and we expressly disclaim dis·claim
v. dis·claimed, dis·claim·ing, dis·claims

v.tr.
1. To deny or renounce any claim to or connection with; disown.

2. To deny the validity of; repudiate.

3. any obligation or undertaking to disseminate dis·sem·i·nate
v. dis·sem·i·nat·ed, dis·sem·i·nat·ing, dis·sem·i·nates

v.tr.
1. To scatter widely, as in sowing seed.

2. any updates or revisions ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents

Title Author
The Resonance of Light James Alan Gardner
Out of China Julie E. to any forward-looking statement contained in this document to reflect any change in our 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 emerge from time to time, and it is not possible for us predict what factors will arise or when. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.



CONSOLIDATED BALANCE SHEETS

                                      February 29,         August 31,
(thousands of Canadian dollars)              2004               2003
--------------------------------------------------------------------
                                       (Unaudited)          (Audited)
                                                           Restated-
                                                          see note 1
ASSETS
Current
 Cash and term deposits                    16,391             20,753
 Accounts receivable                      143,660            143,920
 Inventories                               56,661             55,364
 Prepaids and other                         7,336             16,783
--------------------------------------------------------------------
                                          224,048            236,820
 Investments and other assets              49,814             49,415
 Property, plant and equipment          2,318,169          2,415,662
 Deferred charges                         179,647            185,987
 Intangibles
  Broadcast licenses                    4,627,880          4,627,728
  Goodwill                                 78,948             78,948
--------------------------------------------------------------------
                                        7,478,506          7,594,560
--------------------------------------------------------------------
--------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
 Accounts payable and accrued
  liabilities                             398,225            413,712
 Income taxes payable                      19,502             15,725
 Unearned revenue                          89,197             89,359
 Current portion of long-term
  debt (note 3)                            26,542            271,520
--------------------------------------------------------------------
                                          533,466            790,316
 Long-term debt (note 3)                2,769,162          2,645,548
 Deferred credits                         780,204            735,353
 Future income taxes                      938,975            928,277
--------------------------------------------------------------------
                                        5,021,807          5,099,494
--------------------------------------------------------------------
Shareholders' equity
 Share capital (note 4)                 2,815,005          2,834,878
 Contributed surplus                          103                  -
 Deficit                                 (358,873)          (340,294)
 Cumulative translation
  adjustment                                  464                482
--------------------------------------------------------------------
                                        2,456,699          2,495,066
--------------------------------------------------------------------
                                        7,478,506          7,594,560
--------------------------------------------------------------------
--------------------------------------------------------------------

See accompanying notes



CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND DEFICIT

                            Three months ended     Six months ended
(thousands of Canadian     February   February   February   February
 dollars except per              29,        28,        29,        28,
 share amounts)                2004       2003       2004       2003
--------------------------------------------------------------------
                               (Unaudited)           (Unaudited)

Revenue (note 2)            530,701    521,379  1,052,568  1,034,762
Operating, general and
 administrative expenses    305,837    321,128    602,041    645,462
--------------------------------------------------------------------
Operating income before
 amortization (note 2)      224,864    200,251    450,527    389,300
 Amortization of
  deferred charges and
  property, plant and
  equipment                (141,757)  (153,333)  (283,398)  (301,762)
 Amortization of
  deferred IRU revenue        2,832      2,952      5,915      5,905
--------------------------------------------------------------------
Operating income             85,939     49,870    173,044     93,443
 Interest                   (55,189)   (66,165)  (111,326)  (133,460)
--------------------------------------------------------------------
                             30,750    (16,295)    61,718    (40,017)
 Gain on sale of
  investments                     -          4          -        117
 Gain on redemption of
  SHELS                           -     44,179          -     44,179
 Foreign exchange gain
  (loss) on unhedged
  long-term debt             (1,990)    16,786      2,842     15,501
 Debt restructuring
  costs                           -          -     (2,428)         -
 Provision for loss on
  sale of assets                  -    (53,800)         -    (53,800)
 Other revenue (expense)       (573)      (802)     1,028        941
--------------------------------------------------------------------
Income (loss) before
 income taxes                28,187     (9,928)    63,160    (33,079)
 Income tax expense          11,010      8,352     26,135      3,659
--------------------------------------------------------------------
Income (loss) before
 the following               17,177    (18,280)    37,025    (36,738)
 Equity loss on
  investees                     (91)    (1,467)       (10)    (1,994)
--------------------------------------------------------------------
Net income (loss)            17,086    (19,747)    37,015    (38,732)
Deficit beginning of
 period                    (348,342)  (269,865)  (340,294)  (240,737)
Reduction on Class B
 Non-Voting Shares
 purchased for
 cancellation               (10,468)         -    (21,834)         -
Dividends -
 Class A and Class B
  Non-Voting Shares          (6,878)    (5,768)   (13,834)    (5,768)
 Equity instruments (net
  of income taxes)          (10,271)    (9,908)   (19,926)   (20,051)
--------------------------------------------------------------------
Deficit end of period      (358,873)  (305,288)  (358,873)  (305,288)
--------------------------------------------------------------------
--------------------------------------------------------------------
Loss per share (note 5)
 Basic and diluted             0.03      (0.13)      0.07      (0.25)
--------------------------------------------------------------------
(thousands of shares)
Weighted average
 participating shares
 outstanding during
 period                     230,286    231,848    231,042    231,848
Participating shares
 outstanding, end of
 period                     229,769    231,848    229,769    231,848
--------------------------------------------------------------------

See accompanying notes



CONSOLIDATED STATEMENTS OF CASH FLOWS

                             Three months ended     Six months ended
                          ------------------------------------------
                           February   February   February   February
(thousands of                    29,        28,        29,        28,
 Canadian dollars)             2004       2003       2004       2003
--------------------------------------------------------------------
                                 (Unaudited)           (Unaudited)
OPERATING ACTIVITIES
 (note 6)
Cash flow from
 operations                 161,788    127,427    324,466    240,287
Net change in non-cash
 working capital
 balances related to
 operations                  24,591     10,134      7,632     24,778
--------------------------------------------------------------------
                            186,379    137,561    332,098    265,065
--------------------------------------------------------------------
INVESTING ACTIVITIES
 Additions to property,
  plant and equipment
  (note 2)                  (58,040)   (52,097)  (116,278)  (151,250)
 Additions to equipment
  subsidies (note 2)        (29,435)   (48,391)   (64,297)   (93,602)
 Net reduction
  (increase) to
  inventories                 2,040     27,289     (5,790)    30,506
 Cable systems
  acquisitions                    -       (957)      (145)    (1,311)
 Proceeds on sale of
  investments and other
  assets                        318       (145)       625      4,127
 Cost on redemption of
  SHELS                           -       (430)         -       (430)
 Acquisition of
  investments                  (439)      (485)      (711)    (1,147)
 Additions to deferred
  charges                      (105)    (1,748)    (6,904)    (1,765)
--------------------------------------------------------------------
                            (85,661)   (76,964)  (193,500)  (214,872)
--------------------------------------------------------------------
FINANCING ACTIVITIES
 Decrease in bank
  indebtedness                    -    (18,112)         -     (2,303)
 Increase in long-term
  debt                      204,706    387,657    606,966    473,849
 Long-term debt
  repayments               (275,000)  (414,000)  (677,236)  (494,000)
 Debt restructuring
  costs                           -          -       (969)         -
 Proceeds on prepayment
  of IRU                          -          -      2,850          -
 Purchase of Class B
  Non-Voting shares for
   cancellation             (20,055)         -    (41,872)         -
 Issue of Class B
  Non-Voting Shares             165          -        165          -
 Dividends paid -
  Class A and Class B
   Non-Voting Shares         (6,878)    (5,768)   (13,834)    (5,768)
  Equity instruments, net
   of current taxes          (8,485)    (8,023)   (19,023)   (19,629)
--------------------------------------------------------------------
                           (105,547)   (58,246)  (142,953)   (47,851)
--------------------------------------------------------------------
Effect of currency
 translation on cash
 balances and cash flows          7       (122)        (7)      (113)
--------------------------------------------------------------------
Increase (decrease) in
 cash                        (4,822)     2,229     (4,362)     2,229
Cash, beginning of the
 period                      21,213          -     20,753          -
--------------------------------------------------------------------
--------------------------------------------------------------------
Cash, end of the period      16,391      2,229     16,391      2,229
--------------------------------------------------------------------
--------------------------------------------------------------------

Cash includes cash and term deposits

See accompanying notes



Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

February 29, 2004 and February 28, 2003
(all amounts in thousands of Canadian dollars, except per share
 amounts)

1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES

The interim consolidated financial statements include the accounts of Shaw Communications Inc. and its subsidiaries (collectively the "Company"). The notes presented in these interim consolidated financial statements include only significant events and transactions occurring since the Company's last fiscal year and are not fully inclusive of inclusive of
prep.
Taking into consideration or account; including. all matters normally disclosed dis·close
tr.v. dis·closed, dis·clos·ing, dis·clos·es
1. To expose to view, as by removing a cover; uncover.

2. To make known (something heretofore kept secret). in the Company's annual audited consolidated financial statements. As a result, these interim consolidated financial statements should be read in conjunction with the Company's consolidated financial statements for the year ended August 31, 2003.

The interim consolidated financial statements follow the same accounting policies and methods of application as the most recent annual consolidated financial statements except as noted in the following changes.

Adoption of recent Canadian accounting pronouncements

Stock-based compensation and other stock-based payments

Commencing September September: see month. 1, 2003, the Company prospectively adopted the amended a·mend
v. a·mend·ed, a·mend·ing, a·mends

v.tr.
1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive.

2. Canadian standard for stock-based compensation and other stock-based payments which now requires that all stock-based compensation awards be accounted for at fair value. No restatement Restatement

A revision in a company's earlier financial statements.

Notes:
The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of prior periods was required as a result of adoption of the amended standard.

Reclassification

During the quarter, the Company reclassified DTH customer premise equipment inventory sold to retailers not yet activated, net of related working capital, to deferred charges. Previously when inventory was sold to retailers at a subsidized sub·si·dize
tr.v. sub·si·dized, sub·si·diz·ing, sub·si·diz·es
1. To assist or support with a subsidy.

2. To secure the assistance of by granting a subsidy. price, the inventory item remained classified as inventory and the cash received on sale was recorded as unearned revenue Unearned Revenue

When an individual or company receives money for a service or product that has yet to be fulfilled.

Notes:
For example, prepayment on a lease contract - the revenue is a liability until it has been earned.
See also: Earned Income, Passive Income . Upon activation activation /ac·ti·va·tion/ (ak?ti-va´shun)
1. the act or process of rendering active.

2. the transformation of a proenzyme into an active enzyme by the action of a kinase or another enzyme.

3. , the inventory net of the cash received was transferred to deferred charges as an equipment subsidy subsidy, financial assistance granted by a government or philanthropic foundation to a person or association for the purpose of promoting an enterprise considered beneficial to the public welfare. and was deferred and amortized over two years. The Company reviewed the terms of its sales contracts Sales Contract

Contract between a seller and buyer for the sale of goods, services, or both. with its retailers and believes the classification as a deferred charge is more appropriate as the risks and rewards of the inventory has passed to the retailer upon the sale. The Company has continued its policy of recording the sale of equipment upon activation of the subscriber service. In addition, the deferred equipment subsidy is deferred and amortized over two years when the subscriber service is activated. As a result in the change of accounting presentation, accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying has increased by $3,197 (2003 - $2,922), inventory has decreased by $26,704 (2003 - $26,423), deferred charges has increased by $16,860 (2003 - $16,942) and unearned revenue has decreased by $6,647 (2003 - $6,559). There is no impact on earnings as a result of this change.

Recent Canadian accounting pronouncements

Revenue arrangements with multiple deliverables

The Emerging Issues Committee (EIC EIC Editor-In-Chief
EIC Euro Info Centre (DIN)
EIC Earned Income Credit
EIC Excellence in Cities (UK)
EIC Enterprise Interaction Center (Interactive Intelligence) ) recently issued Abstract 142, "Revenue Arrangements with Multiple Deliverables", which the Company must adopt either prospectively or retroactively ret·ro·ac·tive
adj.
Influencing or applying to a period prior to enactment: a retroactive pay increase.

[French rétroactif, from Latin with restatement beginning March 1, 2004. This Abstract is consistent with the U.S. standard with the same title, and addresses both when and how an arrangement involving multiple deliverables should be divided into separate units of accounting and how the arrangement's consideration should be allocated among separate units. The Company has determined that in both its cable and satellite divisions that it has multiple deliverables of subscriber connection fee revenue, customer premise equipment revenue and related subscription revenue. The Company believes that the upfront fees charged to customers in respect of connection fees and customer premise equipment do not have standalone value to the customer as the service and equipment have no utility to the purchaser separate and independent of the subscription for video services. As a result, these multiple revenue streams must be assessed as an integrated package under the guidance of EIC 141 outlined below.

Revenue recognition

Concurrent At the same time. It implies that multiple processes are taking place simultaneously. See concurrent operation. with EIC 142, the EIC issued Abstract 141, "Revenue Recognition", which the Company must adopt either prospectively or retroactively with restatement beginning March 1, 2004. This Abstract was issued to summarize sum·ma·rize
intr. & tr.v. sum·ma·rized, sum·ma·riz·ing, sum·ma·riz·es
To make a summary or make a summary of.

sum principles set forth in the SEC's Staff Accounting Bulletin 101, Revenue Recognition in Financial Statements. The Abstract provides general interpretative in·ter·pre·ta·tive
adj.
Variant of interpretive.

in·terpre·ta guidance on the application of CICA CICA Competition In Contracting Act of 1984 (USA)
CICA Canadian Institute of Chartered Accountants
CICA Competition In Contracting Act
CICA Criminal Injuries Compensation Authority (UK) 3400, Revenue. The Company is still assessing the impact of adopting this Abstract.

Generally accepted accounting principles

In June 2003, the CICA released Handbook

For the handbook about Wikipedia, see .

This article is about reference works. For the subnotebook computer, see .

"Pocket reference" redirects here.

Section 1100, "Generally Accepted Accounting Principles". This Section establishes standards for financial reporting in accordance with Canadian GAAP, and describes what constitutes Canadian GAAP and its sources. This section also provides guidance on sources to consult when selecting accounting policies and determining appropriate disclosures when a matter is not dealt with explicitly ex·plic·it
adj.
1.
a. Fully and clearly expressed; leaving nothing implied.

b. Fully and clearly defined or formulated: "generalizations that are powerful, precise, and explicit" in the primary sources of GAAP. The new standard specifies that industry practice does not constitute GAAP unless they are consistent with the primary source of GAAP. The new standard is effective on a prospective basis beginning September 1, 2004. The Company is currently evaluating the impact of adoption on its consolidated financial statements.

2. BUSINESS SEGMENT INFORMATION

The Company provides cable television services, high-speed Internet See broadband. access and Internet infrastructure services (Big Pipe) ("Cable"); DTH (Star Choice) satellite services; and, satellite distribution services. All of these operations are located in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of except for two small cable television systems located in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. which were sold effective June 30, 2003. Information on operations by segment is as follows:



Revenue and operating income before amortization

                     Three months ended         Six months ended
                  --------------------------------------------------
                  February 29, February 28, February 29, February 28,
                         2004         2003         2004         2003
                            $            $            $            $
--------------------------------------------------------------------
Revenue
 Cable                377,075      374,162      748,901      742,665
 DTH                  132,201      124,321      261,397      244,657
 Satellite
  services             26,789       29,759       52,950       60,309
--------------------------------------------------------------------
                      536,065      528,242    1,063,248    1,047,631
Inter segment -
 Cable                   (652)        (821)      (1,256)      (1,302)
 DTH                   (1,212)      (1,559)      (2,424)      (2,608)
 Satellite
  services             (3,500)      (4,483)      (7,000)      (8,959)
--------------------------------------------------------------------
                      530,701      521,379    1,052,568    1,034,762
--------------------------------------------------------------------
--------------------------------------------------------------------
Operating income
 before
 amortization
 Cable                195,740      180,172      388,511      355,753
 DTH                   24,359       10,042       46,562       17,548
 Satellite
  services             11,249       10,037       21,938       20,849
 Litigation
  settlement           (6,484)           -       (6,484)           -
 Satellite
  restructuring             -            -            -       (4,850)
--------------------------------------------------------------------
                      224,864      200,251      450,527      389,300
--------------------------------------------------------------------
--------------------------------------------------------------------



Capital expenditures

                     Three months ended         Six months ended
                  --------------------------------------------------
                  February 29, February 28, February 29, February 28,
                         2004         2003         2004         2003
                            $            $            $            $
--------------------------------------------------------------------
Capital expenditures
 accrual basis
 Cable                 40,485       41,724       84,158       89,661
 Corporate              6,198        7,565       12,702       15,730
--------------------------------------------------------------------
 Sub-total Cable
  including corporate  46,683       49,289       96,860      105,391
--------------------------------------------------------------------
 DTH                    4,382        9,628        9,120       30,038
 Satellite services       133          835          422        1,503
--------------------------------------------------------------------
 Sub-total Satellite    4,515       10,463        9,542       31,541
--------------------------------------------------------------------
Total capital
 expenditures accrual
 basis                 51,198       59,752      106,402      136,932
Change in working
 capital related to
 capital expenditures   6,842       (7,655)       9,876       14,318
--------------------------------------------------------------------
Additions to
 property, plant and
 equipment per
 Consolidated
 Statements of Cash
 Flows                 58,040       52,097      116,278      151,250
--------------------------------------------------------------------
--------------------------------------------------------------------

Equipment subsidies
 Cable                  9,143       22,835       17,866       47,494
 Satellite             20,292       25,556       46,431       46,108
--------------------------------------------------------------------
Additions to
 equipment subsidies
 per Consolidated
 Statements of Cash
 Flows                 29,435       48,391       64,297       93,602
--------------------------------------------------------------------
--------------------------------------------------------------------

Free cash flow
 calculations:
Cable:
 Capital expenditures
  on an accrual basis
  as above             46,683       49,289       96,860      105,391
 Equipment subsidies
  as above              9,143       22,835       17,866       47,494
 Less: Partnership
  capital expenditures
  (1)                  (4,206)      (2,654)      (8,465)      (4,254)
 Less: IRU
  prepayments (2)        (799)           -         (953)           -
--------------------------------------------------------------------
Capital expenditures
 and equipment
 subsidies per free
 cash flow statement   50,821       69,470      105,308      148,631
--------------------------------------------------------------------
--------------------------------------------------------------------

Satellite:
 Capital expenditures
  on an accrual basis
  as above              4,515       10,463        9,542       31,541
 Equipment subsidies
  as above             20,292       25,556       46,431       46,108
--------------------------------------------------------------------
Capital expenditures
 and equipment
 subsidies per free
 cash flow statement   24,807       36,019       55,973       77,649
--------------------------------------------------------------------
--------------------------------------------------------------------

(1) Consolidated capital expenditures include the Company's 38.3%
    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 Company's 2003 Consolidated Financial Statements). As the
    Partnership is financed by its own credit facility, this is a
    non-cash item for the Company for the purposes of calculating
    free cash flow.

(2) The Company received prepayments in respect of its grant of an
    indefeasible right to use certain specifically identified fibres
    built during the period. These prepayments are recorded as
    deferred revenue and are amortized over the period of the related
    IRU. For the purposes of calculating free cash flow, these
    prepayments are presented as a reduction of cash required for
    capital expenditures.


Assets

                                      February 29, 2004
                         -------------------------------------------
                                               Satellite
                             Cable        DTH   services       Total
                                 $          $          $           $
--------------------------------------------------------------------
Segment assets           5,759,137    946,454    537,568   7,243,159
--------------------------------------------------------
--------------------------------------------------------
Corporate assets                                             235,347
                                                           ---------
                                                           ---------
Total assets                                               7,478,506
                                                           ---------
                                                           ---------


                                       August 31, 2003
                         -------------------------------------------
                                               Satellite
                             Cable        DTH   services       Total
                                 $          $          $           $
--------------------------------------------------------------------
Segment assets           5,849,064    958,951    556,844   7,364,859
--------------------------------------------------------
--------------------------------------------------------
Corporate assets                                             229,701
                                                        ------------
                                                        ------------
Total assets                                               7,594,560
                                                        ------------
                                                        ------------


3. LONG-TERM DEBT

                                       February 29, 2004
                         -------------------------------------------
                                    Translated
                                     at period
                         Effective         end Adjustment Translated
                          interest    exchange     hedged  at hedged
                           rates %        rate     debt(1)      rate
--------------------------------------------------------------------
                                             $          $          $

Corporate
                         Fixed and
Bank loans (2)            variable     425,219          -    425,219
Senior notes-
 Due April 11, 2005           7.05     275,000          -    275,000
 Due October 17, 2007         7.40     300,000          -    300,000
 US $440,000 due
  April 11, 2010              7.88     587,708     54,912    642,620
 US $225,000 due
  April 6, 2011               7.68     300,532     55,306    355,838
 US $300,000 due
  December 15, 2011           7.61     400,710     76,140    476,850
 Due November 20, 2013(3)     7.50     350,000          -    350,000
--------------------------------------------------------------------
                                     2,639,169    186,358  2,825,527
--------------------------------------------------------------------
--------------------------------------------------------------------

Cancom
Structured Note, due
 December 15, 2003 (4)        7.00           -          -          -
--------------------------------------------------------------------
Other subsidiaries
 and entities
Videon CableSystems
 Inc. 8.15% Senior
 Debentures Series A
 due April 26, 2010           7.63     130,000          -    130,000
Burrard Landing Lot 2
 Holdings Partnership(5)  Variable      26,535          -     26,535
--------------------------------------------------------------------
                                       156,535          -    156,535
--------------------------------------------------------------------
Total consolidated
 debt                                2,795,704    186,358  2,982,062
Less current portion(6)                 26,542          -     26,542
--------------------------------------------------------------------
                                     2,769,162    186,358  2,955,520
--------------------------------------------------------------------
--------------------------------------------------------------------


                                       August 31, 2003
                         -------------------------------------------
                                    Translated
                                       at year
                                           end Adjustment Translated
                                      exchange     hedged  at hedged
                                          rate     debt(1)      rate
--------------------------------------------------------------------
                                             $          $          $
Corporate

Bank loans (2)                         606,798          -    606,798
Senior notes-
 Due April 11, 2005                    275,000          -    275,000
 Due October 17, 2007                  300,000          -    300,000
 US $440,000 due
  April 11, 2010                       609,708     32,912    642,620
 US $225,000 due
  April 6, 2011                        311,783     44,055    355,838
 US $300,000 due
  December 15, 2011                    415,710     61,140    476,850
 Due November 20, 2013(3)                    -          -          -
--------------------------------------------------------------------
                                     2,518,999    138,107  2,657,106
--------------------------------------------------------------------
--------------------------------------------------------------------
Cancom
Structured Note, due
 December 15, 2003 (4)                 250,000          -    250,000
--------------------------------------------------------------------
Other subsidiaries and
 entities
 Videon CableSystems
  Inc. 8.15% Senior
  Debentures Series A
  due April 26, 2010                   130,000          -    130,000
 Burrard Landing Lot 2
  Holdings Partnership(5)               18,069          -     18,069
--------------------------------------------------------------------
                                       148,069          -    148,069
--------------------------------------------------------------------
Total consolidated
 debt                                2,917,068    138,107  3,055,175
Less current portion(6)                271,520          -    271,520
--------------------------------------------------------------------
                                     2,645,548    138,107  2,783,655
--------------------------------------------------------------------
--------------------------------------------------------------------

(1) As required by GAAP, foreign denominated long-term debt is to be
    translated at the period-end and year-end rates and 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
    Company's cross-currency interest rate agreements (which fix the
    liability for interest and principle), long-term debt would
    increase by $186,358 (2003 - $138,107) representing the amount of
    the corresponding deferred foreign exchange gain included in
    deferred credits. The hedged rates on the Senior notes of US $440
    million, US $225 million and US $300 million are 1.4605, 1.5815
    and 1.5895 respectively.

(2) Availabilities under banking facilities are as follows at
    February 29, 2004:


                             Total   Operating  Revolving     Term(a)
                                 $           $          $          $
                        --------------------------------------------
Total facilities         1,354,219      60,000  1,092,500    201,719
Amount drawn
 (excluding letters of
  credit of $2,351)        425,219           -    223,500    201,719
                        --------------------------------------------
                           929,000      60,000    869,000          -
                        --------------------------------------------
                        --------------------------------------------


The amount available under the revolving facility amortizes such that
the facility expires April 30, 2007 as follows:


Date                              Amount Available
--------------------------------------------------
April 30, 2004                           1,035,000
October 31, 2004                           948,750
April 30, 2005                             862,500
October 31, 2005                           718,750
April 30, 2006                             575,000
October 31, 2006                           287,500
April 30, 2007                                   -
--------------------------------------------------

(a) Amortizes on the same basis as the revolving facility.


(3) On November 20, 2003 the Company issued $350 million of senior
    notes at a rate of 7.50%. The senior notes are unsecured
    obligations and rank equally and ratably with all existing and
    future senior indebtedness. The notes are redeemable at the
    Company's option at any time, in whole or in part, prior to
    maturity at 100% of the principal plus a make-whole premium.

(4) The structured note was repaid on December 15, 2003 with cash and
    the drawdown of bank loans.

(5) Effective November 3, 2003, the Partnership entered into an
    interest rate hedge to fix the interest rate at 5.125% plus a
    stamping fee on $58 million of the loan until October 1, 2004.

(6) Current portion of long-term debt includes the current portion of
    the term facilities.


4.   SHARE CAPITAL

Issued and outstanding

                                             February 29,  August 31,
                                                    2004        2003
--------------------------------------------------------------------
--------------------------------------------------------------------
Number of Securities                                   $           $
--------------------------------------------------------------------

February 29,  August 31,
       2004        2003
-----------------------

 11,359,932  11,360,432  Class A Shares            2,490       2,491
218,409,092 220,496,092  Class B Non-Voting
                          Shares               2,087,592   2,107,464
--------------------------------------------------------------------
229,769,024 231,856,524                        2,090,082   2,109,955
--------------------------------------------------------------------
                        EQUITY INSTRUMENTS
                        COPrS -
  5,700,000   5,700,000  8.45% Series A US
                          $142.5 million due
                          Sept. 30, 2046         192,871     192,871
    100,000     100,000  8.54% Series B Cdn
                          $100 million due
                          Sept. 30, 2027          98,467      98,467
  6,900,000   6,900,000  8.50% Series US
                          $172.5 million due
                          Sept. 30, 2097         252,525     252,525
  6,000,000   6,000,000  8.875% Series Cdn
                          $150 million due
                          Sept. 28, 2049         147,202     147,202
--------------------------------------------------------------------
                                                 691,065     691,065
--------------------------------------------------------------------
                         Zero Coupon Loan
                          - US $22.8 million      33,858      33,858
--------------------------------------------------------------------
                                               2,815,005   2,834,878
--------------------------------------------------------------------
--------------------------------------------------------------------

On March 31, 2004, 3,737,780 Class B Non-Voting Shares of the Company were issued in respect of the Monarch A data capture program from Datawatch Corporation, Chelmsford, MA, (www.datawatch.com), that is used to transfer data from mainframe and minicomputer reports to the PC. It uses report files that contain data ready to print. acquisition described in Note 8 to the Consolidated Financial Statements.

Purchase of shares for cancellation

In the six months ended the Company purchased 2,096,500 Class B Non-Voting Shares for cancellation for $41,872, of which $20,038 reduced the stated capital stated capital

See legal capital. of the Class B Non-Voting Shares and $21,834 increased the deficit.

Stock option plan

Under a stock option plan, directors, officers, employees and consultants of the Company are eligible to receive stock options to acquire Class B Non-Voting Shares with terms not to exceed 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 their 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.



The changes in options are as follows:

                                         Six months ended
                             ---------------------------------------
                               February 29, 2004   February 28, 2003

                                        Weighted            Weighted
                                         average             average
                                        exercise            exercise
                                           price               price
                                Shares         $     Shares        $
--------------------------------------------------------------------
Outstanding at beginning
 of period                   7,607,500     32.58  8,303,000    32.58
Granted                        654,750     32.39    583,000    32.62
Forfeited                     (493,500)    32.72   (879,000)   32.66
--------------------------------------------------------------------
Outstanding at end of period 7,768,750     32.55  8,007,000    32.58
--------------------------------------------------------------------
--------------------------------------------------------------------

The following table summarizes information about the options
outstanding at February 29, 2004:

              Number      Weighted                 Number
         outstanding       average  Weighted  exercisable   Weighted
Range             at     remaining   average           at    average
of       February 29,  contractual  exercise  February 29,  exercise
Prices          2004          life     price         2004      price
--------------------------------------------------------------------
$17.37        10,000           9.7     17.37            -          -
$29.70
 - $34.70  7,758,750           7.2     32.55    4,437,402      32.38
--------------------------------------------------------------------
--------------------------------------------------------------------

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 pre·scribe
v. pre·scribed, pre·scrib·ing, pre·scribes

v.tr.
1. To set down as a rule or guide; enjoin. See Synonyms at dictate.

2. To order the use of (a medicine or other treatment). under CICA Handbook Section 3870, the Company's net income (loss) and earnings (loss) per share would have been reported as the pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts.

The phrase pro forma amounts indicated below:



                     Three months ended         Six months ended
                  --------------------------------------------------
                  February 29, February 28, February 29, February 28,
                         2004         2003         2004         2003
--------------------------------------------------------------------
Net income (loss)
 for the period        17,086      (19,747)      37,015      (38,732)
Pro forma income
 (loss) for the
 period                12,912      (24,914)      28,667      (49,067)
Pro forma earnings
 (loss) per share        0.01        (0.15)        0.04        (0.30)
--------------------------------------------------------------------
--------------------------------------------------------------------

The weighted average estimated fair value at the date of the grant for common share options granted was $2.20 per option (2003 - $2.38 per option) and $1.89 per option (2003 $1.75 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 option pricing model

A mathematical formula for determining the price at which an option should trade. The model expresses the value of an option as a function of the value of the underlying asset, length of time until maturity, exercise price, yields on with the following assumptions:



                     Three months ended         Six months ended
                  --------------------------------------------------
                  February 29, February 28, February 29, February 28,
                         2004         2003         2004         2003
--------------------------------------------------------------------
Dividend yield           1.01%        0.31%        0.85%        0.27%
Risk-free
 interest rate           3.72%        2.87%        3.77%        3.00%
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                  40.6%        44.5%        39.0%        44.5%
--------------------------------------------------------------------
--------------------------------------------------------------------

For the purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting Vesting

The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account.

Notes: period on a straight-line straight-line
adj.
1. Lying in a straight line.

2. Relating to a device whose linkage produces or copies motion in straight lines.

3. basis.

Other stock options

In conjunction with the acquisition of Cancom, holders of Cancom options elected e·lect
v. e·lect·ed, e·lect·ing, e·lects

v.tr.
1. To select by vote for an office or for membership.

2. To pick out; select: elect an art course. to receive 0.9 of a Shaw Class B Non-Voting Shares in lieu of Instead of; in place of; in substitution of. It does not mean in addition to. one Cancom share which would be received upon the exercise of a Cancom option under the Cancom option plan.

At February 29, 2004 there were 68,002 Cancom options outstanding with exercise prices between $7.75 and $23.25 and a weighted average price of $12.37. The weighted average remaining contractual life of the Cancom options is 3.5 years. At February 29, 2004, 63,002 Cancom options were exercisable into 56,702 Class B Non-Voting Shares of the Company at a weighted average price of $12.78 per Class B Non-Voting Share.

Warrants

Prior to the Company's acquisition and consolidation of Cancom effective July July: see month. 1, 2000, Cancom and its subsidiary Star Choice had established a distributor and dealer warrant plan to grant Cancom warrants to acquire Cancom shares at a price of $22.50 per Cancom common share. The Company provided for this obligation (using $25 per equivalent Shaw Class B Non-Voting Share) in assigning as·sign
tr.v. as·signed, as·sign·ing, as·signs
1. To set apart for a particular purpose; designate: assigned a day for the inspection.

2. 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 plans had no impact on the earnings of the Company.

A total of 248,205 warrants remain under the plan and vest evenly over a four year period. At February 29, 2004, 181,641 warrants had vested vested adj. referring to having an absolute right or title, when previously the holder of the right or title only had an expectation. Examples: after 20 years of employment Larry Loyal's pension rights are now vested. (See: vest, vested remainder) .



5. EARNINGS (LOSS) PER SHARE

Earnings (loss) per share calculations are as follows:

                     Three months ended         Six months ended
                  --------------------------------------------------
                  February 29, February 28, February 29, February 28,
                         2004         2003         2004         2003
--------------------------------------------------------------------
Net income (loss)      17,086      (19,747)      37,015      (38,732)
Equity entitlements,
 net of tax           (10,271)      (9,908)     (19,926)     (20,051)
--------------------------------------------------------------------
                        6,815      (29,655)      17,089      (58,783)
--------------------------------------------------------------------
--------------------------------------------------------------------

Earnings (loss)
 per share - basic
 and diluted             0.03        (0.13)        0.07        (0.25)
--------------------------------------------------------------------
--------------------------------------------------------------------

Weighted average
 number of Class A
 and B Non-Voting
 Shares used as
 denominator in
 above calculations
 (thousands of
  shares)             230,286      231,848      231,042      231,848
--------------------------------------------------------------------
--------------------------------------------------------------------

Class B Non-Voting Shares issuable under the terms of the Company's stock option plans and outstanding warrants are anti-dilutive (increase earnings per share or decrease loss per share) and are therefore not included in calculating diluted di·lute
tr.v. di·lut·ed, di·lut·ing, di·lutes
1. To make thinner or less concentrated by adding a liquid such as water.

2. To lessen the force, strength, purity, or brilliance of, especially by admixture. earnings (loss) per share.



6. STATEMENTS OF CASH FLOWS

Additional disclosures with respect to the Consolidated Statements of
Cash Flows are as follows:

(i) Cash flow from operations


                     Three months ended         Six months ended
                  --------------------------------------------------
                  February 29, February 28, February 29, February 28,
                         2004         2003         2004         2003
                            $            $            $            $
--------------------------------------------------------------------
Net income (loss)      17,086      (19,747)      37,015      (38,732)
Non-cash items:
 Amortization of
  deferred charges
  and property, plant
  and equipment       141,757      153,333      283,398      301,762
 Amortization of
  deferred IRU
  revenue              (2,832)      (2,952)      (5,915)      (5,905)
 Future income taxes
  expense (recovery)    3,765         (284)      10,463      (14,471)
 Gain on sale of
  investments               -           (4)           -         (117)
 Gain on redemption
  of SHELS                  -      (44,179)           -      (44,179)
 Foreign exchange
  loss (gain) on
  unhedged
  long-term debt        1,990      (16,786)      (2,842)     (15,501)
 Provision for loss on
  sale of U.S. assets       -       53,800            -       53,800
 Equity loss on
  investees                91        1,467           10        1,994
 Debt restructuring
  costs                     -            -        2,428            -
 Stock option expense      77            -          103            -
 Other                   (146)       2,779         (194)       1,636
--------------------------------------------------------------------
Cash flow from
 operations           161,788      127,427      324,466      240,287
--------------------------------------------------------------------
--------------------------------------------------------------------


(ii) Changes in non-cash working capital balances related to
     operations include the following:

                     Three months ended         Six months ended
                  --------------------------------------------------
                  February 29, February 28, February 29, February 28,
                         2004         2003         2004         2003
                            $            $            $            $
--------------------------------------------------------------------

Accounts receivable      (883)       4,768          276       21,040
Prepaids and other      1,029        5,456        9,453        9,450
Accounts payable and
 accrued liabilities   17,324      (14,548)      (6,445)     (19,378)
Income taxes payable    3,361        1,890        4,525        2,457
Unearned revenue        3,760       12,568         (177)      11,209
--------------------------------------------------------------------
                           24,591   10,134        7,632       24,778
--------------------------------------------------------------------
--------------------------------------------------------------------


(iii) Interest and income taxes paid (recovered) and classified as
 operating activities are as follows:

                     Three months ended         Six months ended
                  --------------------------------------------------
                  February 29, February 28, February 29, February 28,
                         2004         2003         2004         2003
                            $            $            $            $
--------------------------------------------------------------------
Interest               29,279       50,383      105,340      132,644
Income taxes             (478)       1,635          333        3,169
--------------------------------------------------------------------
--------------------------------------------------------------------

7. UNITED STATES ACCOUNTING PRINCIPLES

The 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 consolidated financial statements in accordance with accounting principles generally accepted in the United States ("U.S. GAAP").



                     Three months ended         Six months ended
                  --------------------------------------------------
                  February 29, February 28, February 29, February 28,
                         2004         2003         2004         2003
                            $            $            $            $
--------------------------------------------------------------------
Net income (loss)
 using Canadian GAAP   17,086      (19,747)      37,015      (38,732)
 Add (deduct)
  adjustments for:
  Deferred
   charges (2)         13,127       (7,230)       8,318      (20,089)
  Foreign exchange
   gains (losses)(3)  (11,528)      25,516       15,750       23,562
  Equity in loss
   of investees(4)          -        1,527            -        1,764
  Entitlements on
   equity
   instruments(8)     (15,562)     (16,243)     (31,134)     (32,871)
  Income tax effect
   of adjustments       2,641        4,267        5,379       15,689
--------------------------------------------------------------------
Net income (loss)
 using U.S. GAAP        5,764      (11,910)      35,328      (50,677)
--------------------------------------------------------------------
--------------------------------------------------------------------

Unrealized foreign
 exchange gain (loss)
 on translation of
 self-sustaining
 foreign operations        18       (8,141)         (18)      (7,608)
Unrealized gains on
 available-for-sale
 securities, net of
 tax(7)
 Unrealized holding
  gains (losses)
  arising during
  the period            2,277       (2,263)       3,463         (735)
 Less: reclassification
  adjustments for gains
  included in net income    -      (36,578)           -      (36,671)
--------------------------------------------------------------------
                        2,295      (46,982)       3,445      (45,014)
Adjustment to fair
 value of
 derivatives (9)       25,539      (41,172)     (51,670)     (42,719)
Foreign exchange gain
 (losses) on hedged
 long-term debt (10)  (28,962)      64,095       39,565       59,189
--------------------------------------------------------------------
                       (1,128)     (24,059)      (8,660)     (28,544)
--------------------------------------------------------------------
Comprehensive
 income (loss)
 using U.S. GAAP        4,636      (35,969)      26,668      (79,221)
--------------------------------------------------------------------
--------------------------------------------------------------------

Earnings (loss)
 per share using
 U.S. GAAP               0.03        (0.05)        0.15        (0.22)
Comprehensive
 earnings (loss)
 per share
 using U.S. GAAP         0.02        (0.16)        0.12        (0.34)
--------------------------------------------------------------------
--------------------------------------------------------------------


Balance sheet items using U.S. GAAP

                                February 29,            August 31,
                                    2004                   2003
                           -----------------------------------------
                           Canadian        U.S.  Canadian       U.S.
                               GAAP       GAAP       GAAP       GAAP
                                  $          $          $          $
--------------------------------------------------------------------

Investments and other
 assets (7)                    49,814    78,240    49,415     74,758
Deferred charges(2)(10)(11)   179,647    72,021   185,987     70,044
Broadcast licenses(1)(5)(6) 4,627,880 4,602,646 4,627,728  4,602,494
Accounts payable and
 accrued liabilities (11)     398,225   429,213   413,712    444,700
Deferred credits (10)         780,204   593,847   735,353    597,246
Derivative instrument
 liability(9)                       -   232,466         -    168,757
Future income taxes           938,975   899,192   928,277    885,259
Long-term debt(8)           2,769,162 3,470,408 2,645,548  3,363,685
Shareholders' equity        2,456,699 1,613,705 2,495,066  1,642,475
--------------------------------------------------------------------

The cumulative effect of these adjustments on consolidated
shareholders' equity is as follows:

                                       February 29,        August 31,
                                              2004              2003
                                                 $                 $
--------------------------------------------------------------------

Shareholders' equity using
 Canadian GAAP                           2,456,699         2,495,066
Amortization of intangible assets (1)     (123,542)         (123,542)
Deferred charges (2)                       (39,549)          (44,973)
Equity in loss of investees (4)            (36,202)          (36,202)
Gain on sale of subsidiary (5)              13,822            13,822
Gain on sale of cable
 television systems (6)                     47,501            47,501
Equity instruments (8)                    (695,790)         (709,540)
Accumulated other comprehensive
 income (loss)                              (8,770)              825
Cumulative translation adjustment             (464)             (482)
--------------------------------------------------------------------
Shareholders' equity using U.S. GAAP     1,613,705         1,642,475
--------------------------------------------------------------------
--------------------------------------------------------------------

Included in shareholders' equity Shareholders' Equity

A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. is accumulated other comprehensive income In 1997 the Financial Accounting Standards Board issued a Statement on Financial Accounting Standards entitled “Comprehensive Income”. This statement required all income statement items to be reported either as a regular item in the income statement and or a special item as , which refers to revenues, expenses, gains and losses that under U.S. 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 Company's accumulated other comprehensive income (loss) is comprised of the following:



                                       February 29,        August 31,
                                              2004              2003
                                                 $                 $
--------------------------------------------------------------------
Accumulated other comprehensive
 income (loss)
Unrealized foreign exchange gain on
 translation of self-sustaining
 foreign operations                            464               482
Unrealized gains on investments (7)         23,249            20,721
Fair value of derivatives (9)             (183,368)         (131,698)
Foreign exchange gains on hedged
 long-term debt (10)                       152,813           113,248
Minimum liability for pension plan (11)     (1,928)           (1,928)
--------------------------------------------------------------------
                                            (8,770)              825
--------------------------------------------------------------------
--------------------------------------------------------------------

Areas of material difference between accounting principles generally accepted in Canada and the United States and their impact on the consolidated financial statements are as follows:

(1) Amortization of intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. 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 all costs associated with launch and start-up Start-up

The earliest stage of a new business venture. activities and equipment subsidies to be expensed as incurred instead of being deferred and amortized.

(3) US GAAP requires exchange gains (losses) on translation of equity instruments treated as debt as described in item 8 below, to be included in income or expense.

(4) Equity in loss of investees have been adjusted to reflect US GAAP.

(5) 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.

(6) Gain on an exchange of cable systems was required to be recorded under US GAAP but may not be recorded under Canadian GAAP.

(7) US GAAP requires equity securities included in investments to be carried at fair value rather than cost as required by Canadian GAAP.

(8) US GAAP treats equity instruments classified as equity under Canadian GAAP as debt and the related interest as an expense rather than a dividend.

(9) Under US GAAP, all derivatives derivatives

In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. are recognized in the balance sheet at fair value with gains and losses recorded in income or comprehensive income. Under Canadian GAAP, derivatives are not recognized in the balance sheet.

(10) Foreign exchange gains (losses) on translation of hedged long-term debt are deferred under Canadian GAAP but included in comprehensive income (loss) for US GAAP.

(11) The Company's new unfunded non-contributory non-contributory adj non-contributory pension scheme or (US) plan → sistema di pensionamento con i contributi interamente a carico del datore di lavoro defined benefit pension plan for certain of its senior executives has an accumulated benefit obligation Accumulated Benefit Obligation (ABO)

An approximate measure of the liability of a pension plan in the event of a termination at the date the calculation is performed. Related: Projected benefit obligation. of $40,667. Under US GAAP, an additional minimum liability is to be recorded for the difference between the accumulated benefit obligation and the accrued ac·crue
v. ac·crued, ac·cru·ing, ac·crues

v.intr.
1. To come to one as a gain, addition, or increment: interest accruing in my savings account.

2. 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, net of tax. Under Canadian GAAP, the accumulated benefit obligation and additional minimum liability are not recognized.

8. SUBSEQUENT EVENTS

Effective March 31, 2004, the Company completed the purchase of certain cable systems of Monarch Cablesystems Ltd. for approximately $90 million including approximately $25 million in cash and $65 million through the issuance of 3,737,780 Class B Non-Voting Shares of Shaw valued at $17.39 per share.

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Publication:	Business Wire
Geographic Code:	1CANA
Date:	Apr 2, 2004
Words:	13232
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Topics:	Satellite communications services Satellite communications services industry

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