Shaw Communications Announces Third Quarter Results-Continued Strong Growth in Free Cash Flow and Customer Levels, Part 3 of 3.Business Editors/High-Tech Writers Part 3 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 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 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 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. accounting pronouncements (i) Foreign currency translation Commencing September September: see month. 1, 2002, the Company retroactively ret·ro·ac·tive adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin 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 foreign currency translation which is consistent with U.S. standards and eliminates the deferral deferral - Waiting for quiet on the Ethernet. and amortization method of accounting for unrealized translation gains and losses on non-current monetary assets and liabilities Monetary assets and liabilities Assets and liabilities with contractual payoffs. that are not 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. and requires exchange gains and losses to be included in net income in the period they are incurred. Upon adoption of this amended standard September 1, 2002, deferred unamortized foreign exchange losses net of gains amounting to $12,378 (net of taxes) were eliminated and charged against the opening retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. as at September 1, 2001. As prior years were restated upon adoption, the Company's net loss decreased by $11,581 ($0.05 per share) and $5,674 ($0.03 per share) for the prior year quarter and year to date respectively. (ii) Stock-based compensation and other stock-based payments Commencing September 1, 2002, the Company adopted the new Canadian New Canadian Noun Canad a recent immigrant to Canada standard for stock-based compensation and other stock-based payments which requires that all stock-based awards granted to non-employees be accounted for at fair value. With limited exceptions relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc direct awards of stock, awards required or expected to be settled in cash and stock appreciation rights, the new standard permits the Company to continue its current policy of not recording any compensation cost on the grant of stock options to employees. 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 the adoption of the new standard. See note 5 for full disclosure as required by this standard. 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. To be consistent with other practices throughout the Company, in fiscal 2003 the Company retroactively changed the presentation of equipment revenue and cost of sales in respect of 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 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. cost to 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 subscribers. Prior to fiscal 2003, Shaw accounted for the price charged to the 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. for a DCT or modem as a cost recovery on the equipment provided as part of the service connection process. The price charged to the subscriber for a DCT or modem is now recorded as equipment revenue offset by an equal cost of sale. As a result of the change in accounting presentation, cable revenue and expenses have increased by $6,416 (2002 - $3,126) and $20,612 (2002 - $21,983) respectively for the three and nine month periods ended May 2003. The three and nine months ended May 2002 have been restated by $4,000 and $20,600 respectively to net DTH (Direct-To-Home) Typically refers to satellite TV broadcasting directly to a dish antenna on the roof of a house. See DBS. dealer discounts against revenue. Previously these discounts were included in expense. There is no impact on 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. or earnings as a result of these changes. 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. . Information on operations by segment is as follows:
Operating revenue and income (loss) before amortization
Three months ended Nine months ended
May 31, May 31,
-----------------------------------------
2003 2002 2003 2002
$ $ $ $
-----------------------------------------------------------------
Revenue
Cable 377,067 356,993 1,119,732 1,028,477
DTH 121,628 109,414 366,285 309,158
Satellite services 29,497 30,303 89,806 90,460
-----------------------------------------------------------------
528,192 496,710 1,575,823 1,428,095
Inter segment -
Cable (664) (471) (1,966) (1,237)
DTH (1,311) - (3,919) -
Satellite services (4,558) (3,508) (13,517) (10,925)
-----------------------------------------------------------------
521,659 492,731 1,556,421 1,415,933
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-----------------------------------------------------------------
Operating income
(loss) before
amortization(1)
Cable 185,428 160,127 541,181 435,033
DTH 15,010 399 32,558 (16,367)
Satellite services 10,411 11,231 31,260 33,392
Corporate
restructuring - - - (4,600)
Satellite
restructuring - - (4,850) -
DTH write-down of
inventory (4,400) - (4,400) -
-----------------------------------------------------------------
206,449 171,757 595,749 447,458
-----------------------------------------------------------------
-----------------------------------------------------------------
(1) Operating income (loss) 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 (loss)
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.
Capital expenditures
Three months ended Nine months ended
May 31, May 31,
----------------------------------------
2003 2002 2003 2002
$ $ $ $
-----------------------------------------------------------------
Capital expenditures
accrual basis
Cable 38,574 86,948 128,235 467,825
Corporate(1) 12,763 13,772 28,493 69,142
-----------------------------------------------------------------
Sub-total Cable
including corporate 51,337 100,720 156,728 536,967
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DTH 819 17,444 30,857 61,077
Satellite services 385 16,148 1,888 20,365
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Sub-total Satellite 1,204 33,592 32,745 81,442
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Total capital
expenditures accrual
basis 52,541 134,312 189,473 618,409
Change in working
capital related to
capital expenditures (410) 56,855 13,908 45,314
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Capital expenditures
cash flow 52,131 191,167 203,381 663,723
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-----------------------------------------------------------------
Equipment subsidies
Cable 13,001 2,621 60,495 46,438
Satellite 22,593 13,469 68,701 57,561
-----------------------------------------------------------------
35,594 16,090 129,196 103,999
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-----------------------------------------------------------------
Total capital
expenditures on an
accrual basis
including equipment
subsidies
Cable 64,338 103,341 217,223 583,405
Satellite 23,797 47,061 101,446 139,003
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88,135 150,402 318,669 722,408
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(1) Includes the Company's 38.3% proportionate share or $3,066 and
$7,320 for the quarter and year to date respectively, of capital
expenditures in respect of the Burrard Landing Lot 2 Holdings
Partnership ("Partnership") which the Company is required to
proportionately consolidate (see Note 1 to the Company's 2002
Consolidated Financial Statements.) As the Partnership is
financed by its own credit facility, this is a non-cash item for
the Company.
Assets
May 31, 2003
----------------------------------------------------
Cable DTH Satellite Total
services
$ $ $ $
--------------------------------------------------------------------
Segment assets 6,213,064 990,355 563,656 7,767,075
---------------------------------------------------------
---------------------------------------------------------
Corporate assets 219,220
---------
---------
Total assets 7,986,295
---------
---------
August 31, 2002
----------------------------------------------------
Cable DTH Satellite Total
services
$ $ $ $
--------------------------------------------------------------------
Segment assets 6,520,696 996,503 637,371 8,154,570
---------------------------------------------------------
---------------------------------------------------------
Corporate assets 344,259
---------
---------
Total assets 8,498,829
---------
---------
3. INTANGIBLES
The changes in the carrying amount of intangibles for the nine months
ended May 31, 2003 are as follows:
Broadcast licenses Goodwill
$ $
--------------------------------------------------------------------
Balance as of September 1, 2002 4,877,256 145,865
Business acquisition 3,634 -
Business divestiture - (16,917)
Write-down of goodwill (50,000)
Estimated loss on sale of U.S. assets (80,000) -
--------------------------------------------------------------------
Balance as of May 31, 2003 4,800,890 78,948
--------------------------------------------------------------------
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4. LONG-TERM DEBT (1)
Effective May 31, August 31,
Interest rates 2003 2002
% $ $
--------------------------------------------------------------------
Corporate
Bank loans Fixed and 689,214 425,106
variable
Senior notes -
Due April 11, 2005 7.05 275,000 275,000
Due October 17, 2007 7.40 300,000 300,000
U.S. $440 million due
April 11, 2010 7.88 602,140 685,872
U.S. $225 million due
April 6, 2011 7.68 307,912 350,729
U.S. $300 million due
December 15, 2011 7.61 410,550 467,640
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2,584,816 2,504,347
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Cancom
Bank loans (2) Variable - 253,800
Subordinated credit facility Variable - 40,000
Structured Note, due
December 15, 2003 7.00 250,000 250,000
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250,000 543,800
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Star Choice
U.S. $150 million Senior
secured notes 13.00 205,275 233,820
--------------------------------------------------------------------
Other subsidiaries
Videon CableSystems Inc.
8.15% Senior Debentures
Series "A" due April 26, 2010 7.63 130,000 130,000
Big Pipe Ventures, L.P. Variable - 50,000
Burrard Landing Lot 2
Partnership Variable 14,429 7,670
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144,429 187,670
--------------------------------------------------------------------
Total consolidated debt 3,184,520 3,469,637
Less current portion (3) 271,421 -
--------------------------------------------------------------------
2,913,099 3,469,637
--------------------------------------------------------------------
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(1) Availabilities under banking facilities are as follows at
May 31, 2003:
Total Operating Revolving Term(a) Term(2)
$ $ $ $ $
-------------------------------------------------
Total facilities 1,779,213 65,000 1,150,000 214,213 350,000
Amount drawn
(excluding letters
of credit) 689,213 - 125,000 214,213 350,000
-------------------------------------------------
1,090,000 65,000 1,025,000 - -
-------------------------------------------------
-------------------------------------------------
The amount available under the revolving facility amortizes such that
the facility expires April 30, 2007:
Date Amount Available %
--------------------------------------------------------
February 28, 2003 $ 1,150,000 100
October 31, 2003 1,092,500 95
April 30, 2004 1,035,000 90
October 31, 2004 948,750 82.5
April 30, 2005 862,500 75
October 31, 2005 718,750 62.5
April 30, 2006 575,000 50
October 31, 2006 287,500 25
April 30, 2007 - 0
(a) Amortizes on the same basis as the revolving facility.
(2) A syndicate of banks has provided the Company with an unsecured
term loan in the amount of $350,000 due February 10, 2006. The
proceeds of the loan were invested in preferred shares of Cancom,
which in turn used the proceeds to repay in full the amounts
outstanding under its $350,000 senior credit facility. Cancom's
credit facility was then cancelled. The loan is subject to
essentially the same terms and conditions as the Company's
existing unsecured credit facility. During the current quarter,
the Company entered into interest rate hedges to fix the
interest rate at 5.95% for the duration of the loan.
(3) Current portion of long term debt includes the Cancom Structured
Note and current portion of the term facilities.
5. SHARE CAPITAL
Issued and outstanding
Number of Securities
--------------------------
May 31, August 31, May 31, August 31,
2003 2002 2003 2002
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $
11,362,232 11,373,972 Class A Shares 2,491 2,493
220,485,292 220,473,552 Class B non-voting
Shares 2,107,369 2,107,367
---------------------------------------------------------------------
231,847,524 231,847,524 2,109,860 2,109,860
---------------------------------------------------------------------
EQUITY INSTRUMENTS
COPrS -
5,700,000 5,700,000 8.45% Series A
U.S. $142.5 million
due Sept. 30, 2046 192,871 192,871
100,000 100,000 8.54% Series B
due Sept. 30, 2027 98,467 98,467
6,900,000 6,900,000 8.50% Series
U.S. $172.5 million
due Sept. 30, 2097 252,525 252,525
6,000,000 6,000,000 8.875% Series
due Sept. 28, 2049 147,202 147,202
---------------------------------------------------------------------
691,065 691,065
---------------------------------------------------------------------
SHELS -
- 33,923 Series III -
U.S. $33.9 million - 50,342
- 28,853 Series IV -
U.S. $28.9 million - 42,726
- 57,583 Series V -
U.S $57.6 million - 90,481
---------------------------------------------------------------------
- 183,549
---------------------------------------------------------------------
Zero Coupon Loan -
U.S. $22.8 million 33,858 33,858
---------------------------------------------------------------------
2,834,783 3,018,332
---------------------------------------------------------------------
---------------------------------------------------------------------
The Series V SHELS SHELS Shuttle Hitchhiker Experiment Launch System SHELS Shuttle Hitchhiker Ejectable Launch System were redeemed re·deem tr.v. re·deemed, re·deem·ing, re·deems 1. To recover ownership of by paying a specified sum. 2. To pay off (a promissory note, for example). 3. on February February: see month. 28, 2003 by delivering the underlying security of 5,326,827 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. The proceeds 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 Terayon shares was recorded using the SHELS historical cost which resulted in a gain of $44,179 on 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 SHELS. The Series III and IV SHELS were redeemed on May 31, 2003 by delivering the underlying security of 1,452,506 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. The proceeds on the surrender of the Liberate shares was recorded using the SHELS historical cost which resulted in a gain of $44,561 and $30,781 on redemption of the SHELS III and IV, respectively. 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 non-voting adj non-voting shares → azioni fpl senza diritto di voto 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 in the nine months ended May 31, 2003 are as follows:
Weighted average
exercise price
Shares $
----------------------------------------------------------------
Outstanding at August 21, 2002 8,303,000 32.58
Granted 858,000 32.62
Exercised - -
Forfeited (1,194,000) 32.65
----------------------------------------------------------------
Outstanding at May 31, 2003 7,967,000 32.58
----------------------------------------------------------------
----------------------------------------------------------------
The following table summarizes information about the options
outstanding at May 31, 2003:
Weighted
Number average Weighted Number Weighted
outstanding remaining average exercisable average
Range of at May 31, contractual exercise at May 31, exercise
Prices 2003 life price 2003 price
---------------------------------------------------------------------
29.70 -
34.08 7,967,000 7.68 32.58 3,994,831 32.53
---------------------------------------------------------------------
---------------------------------------------------------------------
For common share options granted to employees, had the Company determined compensation costs based on the "fair values" at grant dates of the common share options granted 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 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) Handbook
This article is about reference works. For the subnotebook computer, see .
A financial projection based on assumptions. amounts indicated below:
Three months ended Nine months ended
May 31, 2003 May 31, 2003
--------------------------------------------------------------------
Net loss for the period (13,240) (51,972)
Proforma loss for the period (18,607) (67,674)
Proforma loss per share (0.12) (0.42)
--------------------------------------------------------------------
--------------------------------------------------------------------
The weighted average estimated "fair value" at the date of the grant for common share options granted for the nine months ended May 31, 2003 was $1.39 per share. 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 Nine months ended
May 31, 2003 May 31, 2003
--------------------------------------------------------------------
Dividend yield 0.38% 0.34%
Risk-free interest rate 3.30% 3.02%
Expected life of options 4 years 4 years
Expected volatility factor of
the future expected market price
of Class B non-voting Shares 36.5% 41.7%
--------------------------------------------------------------------
--------------------------------------------------------------------
For the purposes of proforma 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 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 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 Share in lieu of Instead of; in place of; in substitution of. It does not mean in addition to. one Cancom share which would have been received upon the exercise of an option under the Cancom plan. At May 31, 2003, there were 88,002 Cancom options outstanding with exercise prices between $7.75 and $23.25 and a weighted average price of $12.50. The weighted average remaining contractual life of the Cancom options is 3.1 years. At May 31, 2003, 53,666 Cancom options were exercisable into 48,299 Class B non-voting Shares of the Company at a weighted average price of $15.63 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 plan to grant warrants to acquire Cancom common shares at a price of $22.50 per share to distributors and dealers. The Company provided for this obligation (using $25 per equivalent Shaw Class B non-voting Share) in assigning 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 plan had no impact on the earnings of the Company. A total of 262,807 warrants remain outstanding under the plan and vest evenly over a four year period. At May 31, 2003, 122,929 of these 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) .
6. LOSS AND CASH FLOW PER SHARE
Loss and cash flow per share calculations are as follows:
Three months ended Nine months ended
May 31, May 31,
----------------------------------------
2003 2002 2003 2002
$ $ $ $
-----------------------------------------------------------------
Loss per share
Net loss (13,240) (79,328) (51,972) (211,971)
Equity entitlements,
net of tax (10,007) (10,704) (30,058) (32,354)
-----------------------------------------------------------------
(23,247) (90,032) (82,030) (244,325)
-----------------------------------------------------------------
-----------------------------------------------------------------
Loss per share -
basic and diluted (0.10) (0.39) (0.35) (1.05)
-----------------------------------------------------------------
-----------------------------------------------------------------
Cash flow per share
Cash flow from
operations 138,339 98,559 378,626 224,851
Equity entitlements,
net of tax (10,007) (10,704) (30,058) (32,354)
-----------------------------------------------------------------
128,332 87,855 348,568 192,497
-----------------------------------------------------------------
-----------------------------------------------------------------
Cash flow per share
Basic 0.55 0.38 1.50 0.83
Diluted 0.47 0.36 1.28 0.83
-----------------------------------------------------------------
-----------------------------------------------------------------
Weighted average
number of Class A and
B non-voting
Shares used as
denominator in above
calculations
(thousands of shares) 231,848 231,839 231,848 231,812
-----------------------------------------------------------------
-----------------------------------------------------------------
Class B non-voting Shares issuable under the terms of the Company's stock option plans are anti-dilutive (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. loss per share. Diluted cash flow per share The diluted cash flow per share is calculated by adding back the dividends net of tax on the equity entitlements and by adding to the weighted average number of Class A and Class B non-voting Shares outstanding during the period, the number of shares that would be issued (three months ended May 31, 2003 and 2002 - 63,785,000 and 42,029,000 respectively; nine months ended May 31, 2003 and 2002 - 64,282,000 and 36,952,000 respectively) to settle the principal element of the equity instruments based on the opening market prices on the Class B non-voting Shares. 7. STATEMENTS OF CASH FLOWS Additional disclosures with respect to the 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: Statements of Cash Flows are as follows:
(i) Cash flow from operations
Three months ended Nine months ended
May 31, May 31,
-----------------------------------------
2003 2002 2003 2002
$ $ $ $
-----------------------------------------------------------------
Net loss (13,240) (79,328) (51,972) (211,971)
Non-cash items:
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)
Future income taxes 10,483 (30,017) (3,988) (91,988)
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 (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 (23,935) (15,335) (39,436) (4,725)
Provision for loss on
sale and write-down
of assets 80,000 - 130,000 -
Equity (income) loss
on investees (53) 18,176 1,941 52,790
Other (732) (210) 904 (1,136)
-----------------------------------------------------------------
Cash flow from
operations 138,339 98,559 378,626 224,851
-----------------------------------------------------------------
-----------------------------------------------------------------
(ii) Changes in non-cash working capital balances related to
operations include the following:
Three months ended Nine months ended
May 31, May 31,
-----------------------------------------
2003 2002 2003 2002
$ $ $ $
-----------------------------------------------------------------
Accounts receivable 12,218 (285) 40,764 30,654
Prepaids and other (2,132) 6,956 3,745 (1,140)
Accounts payable and
accrued liabilities (21,342) (49,236) (40,720) (95,444)
Income taxes payable (495) 579 1,962 9,587
Unearned revenue (3,998) 5,702 3,278 9,173
-----------------------------------------------------------------
(15,749) (36,284) 9,029 (47,170)
-----------------------------------------------------------------
-----------------------------------------------------------------
(iii) Interest and income taxes paid (recovered) and classified as
operating activities are as follows:
Three months ended Nine months ended
May 31, May 31,
-----------------------------------------
2003 2002 2003 2002
$ $ $ $
-----------------------------------------------------------------
Interest 81,347 92,572 213,991 206,756
Income taxes 1,904 (766) 5,073 (4,918)
-----------------------------------------------------------------
-----------------------------------------------------------------
8. UNITED STATES ACCOUNTING PRINCIPLES The consolidated financial statements of the Company are prepared in Canadian dollars 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 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 accounting principles generally accepted in Canada ("Canadian GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (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 Nine months ended
May 31, May 31,
-----------------------------------------
2003 2002 2003 2002
$ $ $ $
-----------------------------------------------------------------
Net loss using
Canadian GAAP (13,240) (79,328) (51,972) (211,971)
Add (deduct)
adjustments for:
Deferred charges (2) (1,939) 23,713 (20,036) 14,906
Foreign exchange
gains (3) 147,841 94,720 243,585 40,793
Equity in loss of
investees (4) - (6,338) 2,001 (20,014)
Entitlements on
equity instruments
(8) (16,404) (17,841) (49,275) (53,925)
Adjustment to
write-down of GT
Group Telecom Inc. - 28,374 - 28,374
Income tax effect of
adjustments (19,516) (22,417) (17,774) 7,423
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Net income (loss)
using U.S. GAAP 96,742 20,883 106,529 (194,414)
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Unrealized foreign
exchange loss on
translation of
self-sustaining
foreign operations (11,154) (7,348) (18,762) (1,527)
Unrealized gains on
available-for-sale
securities, net of
tax (7)
Unrealized holding
gains (losses)
arising during the
period 780 (4,821) 45 35,206
Less:
reclassification
adjustments for gains
included in net
income (59,208) (181,649) (95,879) (180,425)
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(69,582) (193,818) (114,596) (146,746)
Adjustment to fair
value of
derivatives (9) (138,003) (58,506) (180,722) (27,439)
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(207,585) (252,324) (295,318) (174,185)
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Comprehensive loss
using U.S. GAAP (110,843) (231,441) (188,789) (368,599)
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Net income (loss) per
share using U.S. GAAP 0.42 0.09 0.46 (0.84)
Comprehensive loss
per share using U.S.
GAAP (0.48) (1.00) (0.81) (1.59)
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Balance sheet items using U.S. GAAP
May 31, August 31,
2003 2002
------------------ -------------------
Canadian U.S. Canadian U.S.
GAAP GAAP GAAP GAAP
$ $ $ $
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Investments and
other assets(7) 42,099 65,446 133,602 280,231
Derivative instruments
asset(9) - - - 110,096
Deferred charges (2)(3) 181,258 44,093 219,916 59,532
Broadcast licenses
(1)(5)(6) 4,800,890 4,775,656 4,877,256 4,852,022
Deferred credits (3) 762,148 607,443 633,259 618,941
Derivative instruments
liability (9) - 115,454 - -
Future income taxes 1,001,978 975,833 1,004,559 1,007,287
Long-term debt (8) 3,184,520 3,896,847 3,469,637 4,433,869
Shareholders' equity 2,488,999 1,703,016 2,779,108 1,897,573
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The cumulative effect of these adjustments on consolidated
shareholders' equity is as follows:
May 31, August 31,
2003 2002
$ $
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Shhareholders' equity using
Canadian GAAP 2,488,999 2,779,108
Amortization of intangible
assets (1) (123,542) (123,542)
Deferred charges (2) (41,428) (30,308)
Foreign exchange gains (losses) (3) 127,587 (22,998)
Equity in loss of investees (4) (59,469) (61,110)
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) (705,024) (942,848)
Accumulated other comprehensive
income (loss) (85,946) 216,194
Write-down of GT Group Telecom
Inc.(10) 23,267 23,267
Cumulative translation adjustment 17,249 (1,513)
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Shareholders' equity using
U.S. GAAP 1,703,016 1,897,573
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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 is comprised of the following:
May 31, August 31,
2003 2002
$ $
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Unrealized foreign exchange gain
(loss) on translation of
self-sustaining foreign
operations (17,249) 1,513
Unrealized gains on investments (7) 19,382 122,038
Fair value of derivatives (9) (88,079) 92,643
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(85,946) 216,194
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Areas of material difference between accounting principles generally accepted in 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. and their impact on the consolidated financial statements are as follows:
(1) Amortization of intangibles prior to September 1, 2001 is
required on a straight-line basis for U.S. GAAP purposes,
instead of an increasing charge method.
(2) U.S. GAAP requires all costs associated with launch and start-up
activities and equipment subsidies to be expensed as incurred
instead of being deferred and amortized.
(3) U.S. GAAP requires exchange gains (losses) on translation of all
long-term debt, including those unhedged 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 U.S.
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 U.S. GAAP.
(6) Gain on an exchange of cable systems was required to be recorded
under U.S. GAAP but may not be recorded under Canadian GAAP.
(7) U.S. GAAP requires equity securities included in investments to
be carried at fair value rather than cost as required by Canadian
GAAP.
(8) U.S. 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 U.S. GAAP, all derivatives 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) Write-down of GT Group Telecom Inc. has been adjusted due to a
lower investment carrying value under U.S. GAAP.
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