Shaw Communications Announces Third Quarter Results-Continued Strong Growth in Free Cash Flow and Customer Levels, Part 2 of 3.Business Editors/High-Tech Writers Part 2 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)--June 27, 2003 In the current quarter, the Liberate (Liberate Technologies, San Mateo, CA) A software company that specialized in the information appliance field. Formerly Network Computer, Inc. (NCI), a spin-off from Oracle in 1996, it changed its name in 1999. shares were surrendered to settle the SHELS SHELS Shuttle Hitchhiker Experiment Launch System SHELS Shuttle Hitchhiker Ejectable Launch System III and IV equity linked debentures, resulting in a gain of $75.3 million ($61.8 million after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. ). In the prior quarter, the Terayon Terayon Communication Systems, Inc. is a company that sells equipment to broadband service providers for delivering broadband voice, video and data services to residential and business subscribers. shares were surrendered to settle the SHELS V equity linked debentures, resulting in a gain of $44.2 million ($36.2 million after-tax). The settlement of the three series of SHELS will improve annual cash flow by approximately $3.5 million (before-tax) with the elimination of the annual dividend entitlements. During the three and nine months ended May 31, 2002, the At Home shares were surrendered to settle the SHELS I and II equity linked debentures. For the three and nine months ended May 31, 2003, the gain on sale of investments primarily relates to the sale of 1,100,000 Cogeco Cogeco (TSX: CGO) is a Canadian media and communications company. The corporation first entered the television business in the mid-1950s with the launch of a Radio-Canada affiliate in Trois-Rivières, CKTM. shares. For the nine months ended May 31, 2002, the gain on sale of investments of $2.6 million primarily related to the sale of approximately 673,000 Terayon shares. The dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. loss of $0.6 million in 2002 arose due to the issuance of equity by GT subsequent to Shaw's investment, which reduced Shaw's ownership in that company to approximately 23.2% at November November: see month. 30, 2001 from 23.3% at August 31, 2001. Write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of investments As part of the Company's annual review of its investments, a $15.0 million write-down of the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of a number of investments was recorded in the current quarter. Loss on sale of satellite assets In the current year, the Company sold its Star Choice Business Television division for $6.5 million which resulted in a $3.8 million loss. The loss in the prior year relates to the sale of the Company's SRDU SRDU Satellite Relay Distribution Undertaking SRDU Spring Revel Downunder (Sydney, Australia gaming event) SRDU Secondary Reports Distribution Unit 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. in the Caribbean.
Fixed Charges
Three months ended May 31,
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Increase
2003 2002 (decrease) %
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($000s Cdn)
Amortization -
Property, plant and
equipment 107,324 113,111 (5,787) (5.1)
Deferred charges 42,898 42,159 739 1.8
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Total amortization 150,222 155,270 (5,048) (3.3)
Amortization of
deferred IRU revenue (2,953) (1,632) 1,321 80.9
Interest 63,299 67,301 (4,002) (5.9)
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Nine months ended May 31,
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Increase
2003 2002 (decrease) %
-----------------------------------------------------------------
($000s Cdn)
Amortization -
Property, plant and
equipment 320,104 305,970 14,134 4.6
Deferred charges 131,880 134,390 (2,510) (1.9)
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Total amortization 451,984 440,360 11,624 2.6
Amortization of
deferred IRU revenue (8,858) (8,328) 530 6.4
Interest 196,759 199,213 (2,454) (1.2)
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Amortization on property, plant and equipment decreased over the comparative quarter due to equipment becoming fully depreciated Fully depreciated An asset that has already been charged with the maximum amount of depreciation allowed by the IRS for accounting purposes. fully depreciated Of or relating to a fixed asset that has been depreciated to a book value of zero. in the prior quarter as well as the effect of the 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. of modems to inventory in June June: see month. 2002. Amortization of property, plant and equipment increased over the comparative nine month period due to the high level of cable and 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 capital expenditures over the past few years as well as the effect of Star Choice retaining ownership of satellite dishes satellite dish n. A dish antenna used to receive and transmit signals relayed by satellite. satellite dish A parabolic antenna used to receive signals relayed by satellite. on new installations effective September September: see month. 2001. Consequently, DTH (Direct-To-Home) Typically refers to satellite TV broadcasting directly to a dish antenna on the roof of a house. See DBS. equipment subsidies decreased which resulted in lower amortization of deferred charges in the current year. However, this decrease was partially offset by amortization of the modem subsidies resulting from the Modem Purchase program introduced in June 2002. Star Choice 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 "Simple Satellite" program in the prior quarter; as a result customers will own the satellite dishes. This will result in an increase in equipment subsidies offset by a similar decline in capital expenditures. The quarterly and year to date increase in amortization of deferred IRU Iru (ī`r  ), in the Bible, Caleb's eldest son. revenue is due to additional fiber activated activateda 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. under the terms of the agreements during 2001 and 2002. Interest expense decreased by $4.0 million over the comparative three month period primarily due to decreased borrowings under the Shaw facility and decreased vendor financing Vendor Financing The lending of money by a company to one of its customers so that the customer can buy products from it. By doing this, the company increases its sales even though it is basically buying its own products. interest. Interest decreased by $2.5 million over the comparative nine month period primarily as a result of terminating $210 million of interest rate swaps Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. in March 2002 and was partially offset by interest on higher borrowing levels earlier in the year that were required mainly to finance capital expenditures and equipment subsidies throughout the prior year. Provision for loss on sale and write-down of assets Due to the decline in value of U.S. cable television systems in the last year, a loss is expected on the disposition of the Company's Texas and Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and cable systems. As a result, in the prior quarter a provision of $50.0 million, representing management's best estimate of the loss, was recognized in respect of these systems. A further provision of $30.0 million has been recognized in the current quarter 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 since February February: see month. 28, 2003. Further exchange rate fluctuations and closing adjustments may impact the final results. As a result of the annual review of the valuation of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , based on discounted cash flow analysis, a downward adjustment of $50 million to the carrying value of goodwill recorded in the accounts has been recognized in the current quarter.
Equity income (loss) on investees
Three months ended May 31, Nine months ended May 31,
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Increase Increase
in in
2003 2002 income 2003 2002 income
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($000s Cdn)
Total 53 (18,176) 18,229 (1,941) (52,790) 50,849
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The equity income (loss) on investees in the current year is in respect of Shaw's interest in specialty channels A specialty channel (or speciality channel) is a television channel which consists of programming focused on a single type or targeted at a specific demographic. while the equity loss in the prior year is primarily in respect of its interest in GT. The Company wrote off its investment in GT in the third quarter of 2002 and will not be recording further equity losses based on the reorganization of GT. RISKS AND UNCERTAINTIES There have been no material changes in any risks or uncertainties facing the Company since the year ended August 31, 2002. Further to our disclosure in our first quarter release dated January January: see month. 15, 2003 concerning the status of the Anik F1 satellite, Telesat has provided the following update in its press release of February 4, 2003: "Telesat announced today that it has signed a contract with Astrium, Europe's largest space company, for a new satellite targeted for launch in 2005 to replace the Anik F1 satellite and ensure continuity of service for its customers. The new satellite, Anik F1R, will carry telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. , broadcasting and Internet services." Based on the foregoing, we do not anticipate any incremental cost Incremental Cost The encompassing change that a company experiences within its balance sheet due to one additional unit of production. Notes: Incremental cost is the overall change that a company experiences by producing one additional unit of good. to the Company or disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. to our DTH and satellite services customers. Further to our disclosure in our Fourth Quarter 2002 Release, dated October October: see month. 17, 2002, concerning the possible launch of a new Mexican New Mexico Abbr. NM or N.M. or N.Mex. A state of the southwest United States on the Mexican border. It was admitted as the 47th state in 1912. satellite (operated by Satmex), we have learned that the Governments of 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 and Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. intend to conclude a new Satellite Coordination coordination /co·or·di·na·tion/ (ko-or?di-na´shun) the harmonious functioning of interrelated organs and parts. co·or·di·na·tion n. 1. The harmonious adjustment or interaction of parts. Agreement to accommodate the operation of a new Mexican satellite network according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the terms and parameters included in the 2000 Coordination Agreement. This would ensure that the operation of a new Mexican satellite will not interfere with the Anik satellites used by Star Choice. As a result, Shaw no longer considers this issue as a significant potential risk to Star Choice's DTH operations. FINANCIAL POSITION Overview Total assets at May 31, 2003 were $8.0 billion compared to $8.5 billion at August 31, 2002. The following discussion describes the significant changes in the balance sheet since August 31, 2002. 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 $60.0 million principally due to a $42.5 million reduction in 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 and $30.5 million decrease in inventories offset by increased cash of $16.8 million. The decrease in accounts receivables is primarily due to collection of miscellaneous receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed , payment received on the Access Communications
Access Communications Co-operative Ltd. Inc. promissory note promissory note, unconditional written promise to pay a certain sum of money at a definite time to bearer or to a specified person on his order. Promissory notes are generally used as evidence of debt. and a decrease in 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. receivables. Inventories have decreased primarily as a result of sales of modems but no purchases. Investments decreased by $91.5 million as a result of the $61.9 million reduction on the surrender To give up, return, or yield. The word surrender presupposes the possession or ownership of the thing that is to be returned or given up. It indicates a transfer of title as well as possession, but it does not express or in any way suggest the transaction of a sale of the Liberate and Terayon shares on the settlement of the SHELS, the $15 million write-down of investments and $12.6 million on the sale of the Cogeco shares. Property, plant and equipment decreased by $179.1 million primarily due to current year amortization being in excess of capital expenditures. Deferred charges decreased by $38.7 million due to a $43.3 million decrease in foreign exchange losses on the translation of U.S. denominated debt as a result of the strengthening of the Canadian dollar since August 31, 2002, amortization of financing and other costs of $18.9 million and a net increase in equipment subsidies of $21.5 million. Broadcast licenses decreased by $76.4 million primarily due to the $80.0 million estimated loss on sale of the U.S. cable systems. Goodwill decreased by $66.9 million due to $16.9 million on the sale of Star Choice Business Television and the $50 million write-down of goodwill. 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 current portion of long term debt) decreased by $63.6 million due to a reduction in accounts payable and accrued liabilities Accrued liabilities are liabilities which have occurred, but have not been paid or logged under accounts payable during an accounting period; in other words, obligations for goods and services provided to a company for which invoices have not yet been received. of $65.0 million primarily arising from 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. from August 31, 2002, repayments under the vendor financing facility and timing of interest payments. 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. (including current portion) decreased by $285.1 million due to the net repayment of the Company's credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities of $62.0 million and a decrease of $223.1 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. Deferred credits increased by $128.9 million primarily due to a $140.4 million increase in foreign exchange gains on the translation of U.S. denominated debt which was offset by $8.9 million in amortization of prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. IRU rental revenue.Share capital decreased by $183.5 million as a result of the settlement of the SHELS III and IV equity linked debentures by delivery of the Liberate shares and settlement of SHELS V equity linked debentures by delivery of the Terayon shares. Currency translation adjustment decreased by $18.8 million due to the effect of the strengthening Canadian dollar on the translation of the U.S. cable operations. LIQUIDITY AND CAPITAL RESOURCES The Company's financial condition continues to be a significant strength for Shaw. Our future liquidity depends on three factors: free 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 , access to available credit facilities and sale of non-strategic assets. First, we continue to make significant progress in growing free cash flow and the Cable division has already exceeded its fiscal year target of $105 million of free cash flow. Further, the satellite division, including satellite services and DTH, has made significant progress in reducing its cash management requirements, and is making substantial progress towards becoming free cash flow positive. As we continue growing free cash flow, it will become an increasing source of liquidity. Second, Shaw has access to approximately $1 billion of available credit facilities from its existing bank syndicate Syndicate organized crime unit throughout major cities of the United States. [Am. Hist.: NCE, 2018] See : Gangsterism . In addition, during the prior quarter we refinanced Cancom's credit facility through a $350 million term loan obtained by Shaw from a new syndicate of banks, which includes a number of banks who are part of Shaw's main banking syndicate. Shaw invested the proceeds in preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. of Cancom which then used the funds to repay all outstanding amounts under Cancom's senior credit facility, which was then cancelled. During the current quarter, the Company entered into interest rate hedges to fix the interest rate at 5.95% for the duration of this loan. The refinancing Refinancing An extension and/or increase in amount of existing debt. underscores the continued confidence that Shaw's lenders have in the Company and is expected to generate annual interest savings of approximately $5 million. In the current quarter, Shaw repaid and cancelled Cancom's $40 million subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. credit facility. Based on current rates, this is expected to generate approximately $2 million of interest savings over the next year. And finally, with respect to the sale of non-strategic assets to increase liquidity, Shaw has entered into agreements to sell its U.S. cable assets with approximately 71,000 subscribers for gross proceeds of Cdn. $260 million. The transactions are expected to close on June 30th and proceeds from the sale will be used to repay debt. With existing and anticipated strong growth in cash flow from operations, access to approximately $1 billion of available credit facilities and pending sale of the U.S. cable assets, Shaw is in an excellent position to finance its growth and at the same time improve its debt to cash flow ratios.
CASH FLOW
Operating Activities
Three months ended May 31,
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2003 2002 Increase %
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($000s Cdn)
Cash flow from
operations 138,339 98,559 39,780 40.4
Net change in
non-cash working
capital balances (15,749) (36,284) 20,535 56.6
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122,590 62,275 60,315 96.9
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Nine months ended May 31,
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2003 2002 Increase %
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($000s Cdn)
Cash flow from
operations 378,626 224,851 153,775 68.4
Net change in
non-cash working
capital balances 9,029 (47,170) 56,199 119.1
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387,655 177,681 209,974 118.2
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Cash flow from operations increased mainly as a result of the strong growth in profitability in the Cable and DTH divisions. Cash flow from working capital increased over the comparative periods primarily due to the timing of payments of accounts payable and accruals.
Investing Activities
Three months ended May 31, Nine months ended May 31,
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2003 2002 Decrease 2003 2002 Decrease
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($000s Cdn)
Cash flow used
in investing
activities (55,174) (198,482) 143,308 (270,046) (707,972) 437,926
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During the three months ended May 31, the principal use of cash was for capital expenditure, and equipment subsidies amounting to $87.7 million (2002 - $207.3 million). In the nine months ended May 31, 2003, the total cash outlay for these items was $332.6 million compared to $767.7 million in the same period last year. Last year's cash outflows were offset by proceeds of $89.5 million on the sale of CKY CKY Camp Kill Yourself (band) CKY Conakry, Guinea - Conakry (Airport Code) and WTN WTN Watertown (Wisconsin) WTN Working Telephone Number WTN World Television Network WTN Wright Technology Network WTN World Timber Network WTN Womens' Television Network (Canada) .
Financing Activities
Three months ended May31, Nine months ended May 31,
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2003 2002 Decrease 2003 2002 Decrease
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($000s Cdn)
Cash flow
provided by
(used in)
financing
activities (52,870) 127,162 (180,032) (100,721) 546,857 (647,578)
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During the current quarter, the cash used in financing activities was $52.9 million. This was comprised primarily of increased borrowings of $28.1 million offset by debt repayments of $70.0 million and dividend payments of $11.0 million. The debt repayments included $30 million under Shaw's facility and Cancom's $40 million subordinated credit facility. During the nine months ended May 2003, the cash used in financing activities was $100.7 million and was comprised of current quarter financing activities described above and a net cash outlay of $47.9 million in the first two quarters. The $47.9 million used in financing activities was due to increased borrowings of $473.8 million offset by total debt repayments of $494.0 million and $25.4 million in dividend payments. The $473.8 million of increased borrowings included draws of $70.2 million under Cancom's facility prior to 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. , a $50.0 million draw under the Shaw facility and proceeds of $350 million received under Shaw's new term loan. Shaw used the proceeds from the loan to invest in preferred shares of Cancom which in turn used the funds to repay $324.0 million outstanding under its credit facility. The $50.0 million draw under Shaw's facility was to repay the Big Pipe facility and in addition, Shaw repaid $120.0 million under its credit facility. During the quarter ended May 2002, financing activities provided $127.2 million in cash. This was comprised mainly of increased borrowings of $125.0 million and $50.0 million under the Shaw and Cancom facilities respectively, offset by debt repayment of $25.0 million under the Shaw facility, dividend payments of $13.6 million and a payment of $9.4 million to terminate Terminate (terminat.exe) was a shareware modem terminal and host program for MS-DOS and compatible operating systems developed from the early to the late 1990s by the Dane Bo Bendtsen. The last release (5. $210 million of interest rate swaps. During the nine months ended May 2002, financing activities provided $546.9 million in cash and was primarily comprised of the May 2002 quarter financing activities described above in addition to the $419.7 million in cash provided in the first two quarters. The $419.7 million was comprised mainly of $839.5 million in borrowings and $90.5 million from the issuance of the SHELS V offset by $483.0 million in debt repayments under the Shaw facility and dividend payments of $26.2 million. The $839.5 million of increased borrowings include draws under the Shaw and Cancom facilities of $220.0 million and $135.0 million respectively and the issuance of US $300 million notes (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). of approximately CDN $476.9 million). The proceeds of the notes were used in part to repay debt under the Shaw facility. CAUTION CONCERNING FORWARD LOOKING STATEMENTS Certain statements included and incorporated by reference herein 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. . 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, 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 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
May 31, August 31,
(thousands of Canadian dollars) 2003 2002
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(Unaudited) (Audited)
ASSETS (Restated - note 1)
Current
Cash and term deposits 16,786 -
Accounts receivable 144,997 187,505
Inventories 98,295 128,811
Prepaids and other 24,432 28,177
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284,510 344,493
Investments and other assets 42,099 133,602
Property, plant and equipment 2,598,590 2,777,697
Deferred charges 181,258 219,916
Intangibles (note 3)-
Broadcast licenses 4,800,890 4,877,256
Goodwill 78,948 145,865
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7,986,295 8,498,829
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness - 2,303
Accounts payable and accrued
liabilities 446,057 511,106
Income taxes payable 11,089 10,631
Unearned revenue 91,504 88,226
Current portion of long-term debt
(note 4) 271,421 -
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820,071 612,266
Long-term debt (note 4) 2,913,099 3,469,637
Deferred credits 762,148 633,259
Future income taxes 1,001,978 1,004,559
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5,497,296 5,719,721
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Shareholders' equity
Share capital (note 5) 2,834,783 3,018,332
Deficit (328,535) (240,737)
Cumulative translation adjustment (17,249) 1,513
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2,488,999 2,779,108
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7,986,295 8,498,829
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See accompanying notes
CONSOLIDATED STATEMENTS OF LOSS AND RETAINED EARNINGS (DEFICIT)
Three months ended Nine months ended
May 31, May 31,
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(thousands of Canadian
dollars except per
share amounts) 2003 2002 2003 2002
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(Unaudited)(Unaudited)(Unaudited)(Unaudited)
(Restated (Restated
- note 1) - note 1)
Revenue (note 2) 521,659 492,731 1,556,421 1,415,933
Operating, general
and administrative
expenses 315,210 320,974 960,672 968,475
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Operating income
before amortization
(note 2) 206,449 171,757 595,749 447,458
Amortization of
deferred charges and
property, plant and
equipment (150,222) (155,270) (451,984) (440,360)
Amortization of
deferred IRU revenue 2,953 1,632 8,858 8,328
-----------------------------------------------------------------
Operating income 59,180 18,119 152,623 15,426
Interest (63,299) (67,301) (196,759) (199,213)
-----------------------------------------------------------------
(4,119) (49,182) (44,136) (183,787)
Gain on sale of
investments 1,111 247 1,228 2,604
Write-down of GT
Group Telecom Inc. - (268,928) - (268,928)
Write-down of
investments (15,000) - (15,000) -
Gain on redemption of
SHELS (note 5) 75,342 218,327 119,521 218,327
Dilution loss on
issuance of stock by
equity investee - - - (571)
Loss on sale of
satellite assets - (1,281) (3,800) (1,281)
Foreign exchange gain
on unhedged long-term
debt (note 1) 23,935 15,335 39,436 4,725
Provision for loss on
sale and write-down
of assets (note 3) (80,000) - (130,000) -
Other revenue 4,329 3,861 5,270 6,734
-----------------------------------------------------------------
Income (loss) before
income taxes 5,598 (81,621) (27,481) (222,177)
Income tax recovery
(expense) (18,891) 20,469 (22,550) 62,996
-----------------------------------------------------------------
Loss before the
following (13,293) (61,152) (50,031) (159,181)
Equity income (loss)
on investees 53 (18,176) (1,941) (52,790)
-----------------------------------------------------------------
Net loss (13,240) (79,328) (51,972) (211,971)
Retained earnings
(deficit) beginning
of period as
previously reported (305,288) (42,323) (230,327) 111,830
Adjustment for change
in accounting policy
(note 1) - (18,285) (10,410) (12,378)
-----------------------------------------------------------------
Retained earnings
(deficit), beginning
of period restated (305,288) (60,608) (240,737) 99,452
Dividends -
Class A and Class B
non-voting Shares - - (5,768) (5,767)
Equity instruments
(net of income taxes) (10,007) (10,704) (30,058) (32,354)
-----------------------------------------------------------------
Deficit end of period (328,535) (150,640) (328,535) (150,640)
-----------------------------------------------------------------
-----------------------------------------------------------------
Loss per share (note 6)
Basic and diluted (0.10) (0.39) (0.35) (1.05)
-----------------------------------------------------------------
(thousands of shares)
Weighted average
participating shares
outstanding during
period 231,848 231,839 231,848 231,812
Participating shares
outstanding, end of
period 231,848 231,848 231,848 231,848
-----------------------------------------------------------------
See accompanying notes
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended Nine months ended
May 31, May 31,
-------------------------------------------
(thousands of
Canadian dollars
except per share amounts) 2003 2002 2003 2002
-----------------------------------------------------------------
(Unaudited)(Unaudited)(Unaudited)(Unaudited)
(Restated (Restated
- note 1) - note 1)
OPERATING ACTIVITIES
(note 7)
Cash flow from
operations 138,339 98,559 378,626 224,851
Net change in
non-cash working
capital balances
related to operations (15,749) (36,284) 9,029 (47,170)
-----------------------------------------------------------------
122,590 62,275 387,655 177,681
-----------------------------------------------------------------
INVESTING ACTIVITIES
Additions to
property, plant and
equipment (52,131) (191,167) (203,381) (663,723)
Additions to
equipment subsidies (35,594) (16,090) (129,196) (103,999)
Net reduction to
inventories 14,077 20,096 44,583 1,108
Cable systems
acquisitions (815) (1,624) (2,126) (5,848)
Proceeds (costs) on
sale of satellite
assets 6,461 (876) 6,461 (876)
Proceeds on sale of
investments and other
assets 15,974 1,048 20,101 12,653
Costs on redemption
of SHELS (1,683) (3,134) (2,113) (3,134)
Acquisition of
investments (1,202) (6,227) (2,349) (21,313)
Proceeds received on
assets held for sale - - - 89,500
Additions to deferred
charges (261) (508) (2,026) (12,340)
-----------------------------------------------------------------
(55,174) (198,482) (270,046) (707,972)
-----------------------------------------------------------------
FINANCING ACTIVITIES
Decrease in bank
indebtedness - - (2,303) (1,789)
Increase in long-term
debt 28,110 175,000 501,959 1,014,520
Long-term debt
repayments (70,000) (25,000) (564,000) (508,000)
Payment on swap
terminations - (9,400) - (9,400)
Issue of equity
instruments, net of
after-tax expenses - (8) - 90,483
Issue of Class B
non-voting shares - 158 - 791
Dividends paid -
Class A and Class B
non-voting Shares - - (5,768) (5,767)
Equity instruments,
net of current taxes (10,980) (13,588) (30,609) (33,981)
-----------------------------------------------------------------
(52,870) 127,162 (100,721) 546,857
-----------------------------------------------------------------
Effect of currency
translation on cash
balances and cash
flows 11 (143) (102) (61)
Increase in cash 14,557 (9,188) 16,786 16,505
Cash, beginning of
the period 2,229 25,693 - -
-----------------------------------------------------------------
-----------------------------------------------------------------
Cash, end of the
period 16,786 16,505 16,786 16,505
-----------------------------------------------------------------
-----------------------------------------------------------------
Cash flow from
operations per share
(note 6)
Basic 0.55 0.38 1.50 0.83
Diluted 0.47 0.36 1.28 0.83
-----------------------------------------------------------------
-----------------------------------------------------------------
Cash includes cash and term deposits
See accompanying notes
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
May 31, 2003 and 2002
(all amounts in thousands of Canadian dollars, except per share
amounts)
1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES The interim 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 include the accounts of 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. 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 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, 2002. (MORE TO FOLLOW) |
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