Shaw Communications, Inc. Annual Report 2014

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FY2014 Annual Report · Shaw Communications, Inc.

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Focused on
the future.

2014 Annual Report

122

123

Report to Shareholders

Management’s
Discussion and Analysis

Management’s
Responsibility for
Financial Statements
and Report on Internal
Control over
Financial Reporting

Independant Auditors’
Reports

Consolidated Financial
Statements

Notes to Consolidated
Financial Statements

Five Years in Review

Shareholders’
Information

124

Corporate Information

The Annual General Meeting
of Shareholders will be held
on January 14, 2015 at 11:00 am
(Mountain Time) at the
Shaw Barlow Trail Building,
2400 – 32 Avenue NE,
Calgary, Alberta.

Shaw Communications Inc.

2014 Annual Report

At Shaw, every decision we make, and every initiative we
launch, is driven by customer choice and the imperative
to bring quality, reliability, innovation and value to the
customer and viewer experience.

Shaw Communications Inc.

2014 Annual Report

Revenue*
Figures in billions

Dividends
Figures in millions

5.1

5.2

5.0

4.7

485

445

416

391

372

3.7

Operating income before
restructuring costs and
amortization*
Figures in billions

2.1

2.3

2.2

1.8

Free cash flow*
Figures in millions

698

617

604

515

482

*Financial information for fiscal 2010 is prepared in accordance with previous Canadian generally accepted accounting principles.

Shaw Communications Inc.
REPORT TO SHAREHOLDERS
August 31, 2014

Dear Fellow Shareholders:

Our performance in fiscal 2014 reflects our continued focus on the delivery of exceptional
experiences and leading technology to our customers and viewers, a disciplined focus on
operational efficiencies, and sound capital management creating value for all stakeholders.

We believe our past and future success has been, and will continue to be, a direct result of our
commitment to understand and meet the needs of our customers and viewers. During fiscal
2014 we have continued to take steps to evolve our business as we seize the opportunities and
address the challenges of today’s environment. The shift over the last several years in how
Canadians connect with one another and consume entertainment and other content continues
to change our business and the telecommunication landscape. To remain competitive, we have
chosen to become a network and content experience company.

We have leveraged the strength of our leading network infrastructure and our access to great
content to launch services that Canadians can enjoy on any device they choose. During the past
year we partnered to expand our offerings to include a music streaming service from Rdio and
online shopping through shop.ca, and we also launched several apps for mobile devices that
expanded our robust suite of TV Everywhere offerings. Most recently we launched video
streaming from shomi – a made-in-Canada on-line content experience service with cutting-edge
customization and an impressive depth of programming choice.

We are a leader in customer-friendly innovation. Shaw Go WiFi has brought an entirely new
connectivity experience to Western Canadians. As Canada’s largest WiFi network, Shaw Go WiFi
brings our customers seamless coverage through more than 45,000 access points. Our
customers have registered more than 1.25 million devices for use on Shaw Go WiFi.

We are identifying areas for growth that are meaningful for our customers today and in years to
come. In September 2014, we closed the acquisition of ViaWest, Inc., which provides us with a
growth platform in the attractive North American data centre sector and is a significant step in
expanding our
technology offerings for mid-market businesses in Western Canada. The
experience and expertise of the ViaWest management team will drive the next phase of that
business’ growth in the U.S. while accelerating the development of our domestic data centre
platform.

Shaw reaches virtually all Canadians through our business. We serve over three million
Canadian households with broadband Internet, WiFi, digital phone and video services, and we
deliver Global Television to almost all Canadian homes, along with the 19 specialty networks of
Shaw Media. We take seriously our responsibility to earn the trust and business of each of these
customers and viewers and know their loyalties are constantly tested in today’s dynamic
environment through fierce competition from an increasing number of networks, content and
service providers. We thrive on this rivalry, challenging ourselves everyday to better serve our
customers.

FINANCIAL AND OPERATIONAL PERFORMANCE

Our diligent cost management and disciplined pricing approach to the market continues to
resonate in our financial results.

In fiscal 2014, we delivered revenue and operating income before restructuring and
amortization growth of 2%. After considering the impact of acquisitions and dispositions,
operating income before restructuring and amortization growth was 3%. Free cash flow for the

Shaw Communications Inc.
REPORT TO SHAREHOLDERS
August 31, 2014

year rose to $698 million, an improvement of 15% over the prior year. In fiscal 2014, we also
increased our dividend by 8%, returning $485 million to shareholders.

During fiscal 2014 we continued to make the necessary capital investments, spending over $1
billion as we maintain, grow, and enhance our infrastructure, which includes one of North
America’s most extensive and advanced fibre networks.

Our capital structure and healthy liquidity position support investment grade ratings. We enter
2015 with solid cash flows and a strong balance sheet providing the financial flexibility to
capitalize on opportunities as they arise.

During fiscal 2014 we reorganized our management and implemented various initiatives
designed to improve our overall performance, enabling us to enhance efficiencies, standardize
best practices and drive accountability. We filled gaps in our leadership team with high caliber
talent from outside the Company, and most importantly, ended the year with a renewed
customer centric focus.

We are entering fiscal 2015 with a solid foundation across our business. We know that we
cannot afford to preserve the past. If we are to serve the growing and changing needs of our
customers and remain competitive with the proliferation of alternatives available, we need
products, services and solutions that look forward, that promote choice, and that go where the
consumer is going and not where that consumer has been. Whether it be on traditional linear TV
or new streaming technologies enabled by the Internet, Canadians want access to content
anytime they want, anywhere they are, and on the device that most suits their needs.

At Shaw, every decision we make, and every initiative we launch, is driven by customer choice
and the imperative to bring quality, reliability, innovation and value to the customer and viewer
experience.

OUR COMMUNITIES

We are proud to give back in the communities we serve. In fiscal 2014, Shaw contributed
approximately $60 million in cash and in-kind contributions to charitable and community
organizations working to make our neighbourhoods and cities better places for everyone.

We are also proud to be the founding title sponsor of the Shaw Charity Classic. In two short
years, this event has become the best on the Champions Tour showcasing golf’s greatest
players. This tournament has donated more than $4.5 million toward children’s charities in
Southern Alberta while giving thousands of people the chance to see world class golf in Calgary.

CONCLUSION AND OUTLOOK

The past year has been filled with change and opportunity for our business and our employees.
We expect nothing less as we look forward to fiscal 2015 and beyond.

The rapid changes in our industry have attracted the attention of regulators and policymakers in
Canada, and we are pleased to continue to work with them to identify and develop policies that
are in the best interests of Canadians. We appreciate the opportunity to participate in a variety
of forums, including the Let’s Talk TV proceedings launched by the Canadian Radio-television
and Telecommunications Commission, to provide our views and to emphasize our commitment
to our customers and viewers.

Shaw Communications Inc.
REPORT TO SHAREHOLDERS
August 31, 2014

Our 14,000 employees have proven they are among the best in our industry. Their commitment
to our customers and our viewers is unparalleled and we thank them for all that they have done
to create value and pride in our Company.

We are excited by the potential of our business in the future, and we are grateful for the
continued confidence and support of our fellow shareholders in Shaw Communications Inc.

In closing, we would like to acknowledge the significant contribution made by Paul Robertson,
who passed away September 2, 2014 after a courageous battle with cancer. Paul was an
inspiring leader, generously sharing his insight and wisdom with all around him. Paul’s passion
for the Canadian media industry, his warm personal leadership style and infectious sense of
humour made him truly one of a kind and we are honoured to have had him as part of our Shaw
Leadership Team.

[Signed]

JR Shaw
Executive Chair

[Signed]

Bradley S. Shaw
Chief Executive Officer

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

November 28, 2014

FORWARD

Tabular dollars are in millions of Canadian dollars, except per share amounts or unless
otherwise indicated. Management’s Discussion and Analysis should be read in conjunction with
the Consolidated Financial Statements.

INDEX

CONTENTS

Outline
I.

II.
III.
IV.
V.
VI.
VII.
VIII.

IX.

INTRODUCTION TO THE BUSINESS

A. Company overview – core business and strategies
B. Description of the business
C. Seasonality and other additional information concerning the business
D. Government regulations and regulatory developments
E. Key performance drivers
F. Critical accounting policies and estimates
G. Related party transactions
H. New accounting standards
I. Known events, trends, risks and uncertainties

SUMMARY OF QUARTERLY RESULTS
RESULTS OF OPERATIONS
FINANCIAL POSITION
CONSOLIDATED CASH FLOW ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
ADDITIONAL INFORMATION
COMPLIANCE WITH NYSE CORPORATE GOVERNANCE LISTING

STANDARDS
CERTIFICATION

Page

6
6
7
14
15
21
25
31
31
33
40
42
51
52
53
55

55
56

CAUTION CONCERNING FORWARD LOOKING STATEMENTS

Statements included in this Management’s Discussion and Analysis that are not historic
constitute “forward-looking statements” within the meaning of applicable securities laws. Such
statements include, but are not limited to, statements about future capital expenditures, asset
dispositions, financial guidance for future performance, business strategies and measures to
implement strategies, competitive strengths, expansion and growth of Shaw’s business and
operations and other goals and plans. They can generally be identified by words such as
“anticipate”, “believe”, “expect”, “plan”, “intend”, “target”, “goal” and similar expressions
(although not all forward-looking statements contain such words). All of the forward-looking
statements made in this report are qualified by these cautionary statements.

Forward-looking statements are based on 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 as of the
current date. These assumptions include, but are not limited to, general economic conditions,
interest and exchange rates, technology deployment, content and equipment costs, industry
recent
structure, conditions and stability, government
acquisitions. Many of these assumptions are confidential.

regulation and the integration of

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

You should not place undue reliance on any forward-looking statements. Many factors,
including those not within Shaw’s control, may cause Shaw’s actual results to be materially
different from the views expressed or implied by such forward-looking statements, including,
but not
limited to, general economic, market and business conditions; changes in the
competitive environment in the markets in which Shaw operates and from the development of
new markets for emerging technologies; industry trends and other changing conditions in the
entertainment,
information and communications industries; Shaw’s ability to execute its
strategic plans; opportunities that may be presented to and pursued by Shaw; changes in laws,
regulations and decisions by regulators that affect Shaw or the markets in which it operates;
Shaw’s status as a holding company with separate operating subsidiaries; and other factors
described in this report under the heading “Known events, trends, risks and uncertainties”. The
foregoing is not an exhaustive list of all possible factors. Should one or more of these risks
materialize, or should assumptions underlying the forward-looking statements prove incorrect,
actual results may vary materially from those described herein.

The Corporation provides certain financial guidance for future performance as the Corporation
believes that certain investors, analysts and others utilize this and other forward-looking
information in order to assess the Company’s expected operational and financial performance
and as an indicator of its ability to service debt and return cash to shareholders. The Company’s
financial guidance may not be appropriate for this or other purposes.

Any forward-looking statement speaks only as of the date on which it was originally made and,
except as required by law, Shaw expressly disclaims any obligation or undertaking to
disseminate any updates or revisions to any forward-looking statement to reflect any change in
related assumptions, events, conditions or circumstances.

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

INTRODUCTION TO THE BUSINESS

Company overview – core business and strategies

Shaw Communications Inc. (“Shaw” or the “Company” or “Corporation”) is a diversified
communications and media company. Shaw serves 3.2 million consumers and businesses
through a reliable and extensive fibre network. Shaw provides consumers with broadband
Internet, WiFi, Digital Phone, and cable and satellite television. Shaw Business, provides
businesses with Internet, data, telephony, television and fleet tracking services, and ViaWest
provides collocation, cloud and managed services. Shaw Media provides Canadians with
engaging programming content
television
networks, Global Television, and numerous specialty networks. Shaw provides customers with
high-quality entertainment, information and communications services, utilizing a variety of
distribution technologies.

through one of Canada’s largest conventional

Shaw’s business is encapsulated within its vision statement: “We, the leading entertainment
and communications company, deliver exceptional customer experience through outstanding
people sharing Shaw values.”

Shaw’s strategy is to maximize shareholder value through the generation of free cash flow.1 The
key elements of this strategy include: leveraging its network infrastructure and programming
assets to offer customers a wider variety of products and services; enhancing existing products
to provide greater value to customers; providing exceptional customer service; bundling product
offerings to provide value to both Shaw and the customer; and focusing on sound capital
management and operational efficiencies to maintain a competitive edge.

The strategy also includes promoting brand awareness, strengthening the Shaw name from
coast to coast. The Shaw brand is synonymous with diverse product offerings and high-quality
customer service.

During 2014 the Company operated three principal business segments: (1) Cable – comprised
of cable television, Internet, Digital Phone and Shaw Business operations; (2) Satellite –
comprised of direct-to-home (“DTH”) and Satellite Services; and (3) Media – comprised of
television broadcasting. As a percentage of Shaw’s consolidated revenues for the year ended
August 31, 2014, the Cable, Satellite and Media divisions represented approximately 63%,
16% and 21% of Shaw’s business, respectively. During 2014 Shaw’s businesses generated
consolidated revenues of $5.2 billion.

A fourth business segment, Wireless, was in the development/construction stage during 2010
and 2011. During 2008 the Company participated in the Canadian Advanced Wireless
Spectrum (“AWS”) auction and was successful in acquiring 20 megahertz of spectrum across
most of its cable footprint. In March 2010 the Company commenced activities on a traditional
wireless infrastructure build and late in 2011, after completing a strategic review of this
initiative, decided to not pursue a traditional wireless business. During 2013 the Company
entered into an agreement with Rogers Communications Inc. (“Rogers”) to grant Rogers an
option to acquire its wireless spectrum licenses. The potential option exercise for the sale of the
wireless spectrum licenses is subject to various regulatory approvals.

1 See definitions under key performance drivers on page 21.

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

During 2014, Shaw announced changes to the structure of its operating divisions to improve
overall efficiency while enhancing its ability to grow as the leading network and content
experience company. Shaw’s existing residential and enterprise services will be reorganized into
new Consumer and Business units, respectively, with no changes to the Media division. In
addition, in September 2014 the Company closed the acquisition of ViaWest, Inc. (“ViaWest”),
a US-based provider of data centre infrastructure, cloud technology and managed IT solutions.
ViaWest will continue to operate as a standalone unit. The Company expects to commence
reporting on the new divisions of Consumer, Shaw Business, ViaWest and Media in fiscal 2015.

The description of the Company’s operating business segments, including more specific details
for the last two fiscal years follows.

Description of the business

Cable

(i)
Shaw’s Cable operations provide Cable television, Internet, and Digital Phone services to
residential and business customers. These services are delivered through an extensive fibre
optic and co-axial cable distribution network.

Shaw’s strategy is to leverage its network by providing products and services beyond traditional
cable television. In past years, it enhanced the quality, depth and capacity of its plant and
network infrastructure through significant capital investments, and the plant and network is
essentially fully digital and two-way capable. These investments have enabled Shaw to expand
its service offerings to include digital programming, On Demand programming, High Definition
(“HD”) television, Internet, WiFi, various on-line or over-the-top (“OTT”) offerings, and Digital
Phone. In 2013 Shaw substantially completed a major upgrade of its co-axial cable network to
convert analog television tier services to digital and reuse the spectrum on the cable plant for
other purposes. The reclamation initiative was referred to as the Digital Network Upgrade
(“DNU”).

This upgrade significantly increased the capacity of the Shaw network and allows the Company
to expand its Internet, HD and On Demand offerings. Shaw’s investments in plant infrastructure
will also accommodate further growth opportunities. Shaw continues to invest in technology
initiatives to reclaim bandwidth and optimize the capacity and efficiency of its network,
including increasing the number of nodes in the network and using advanced encoding and
digital compression technologies such as MPEG-4.

To take advantage of potential administrative, operating and marketing synergies that arise from
larger, focused operations, Shaw has consolidated its position as the dominant provider of cable
services in Western Canada. Approximately 70% of the Company’s cable television subscribers
are clustered in and around five major urban markets in Western Canada: Vancouver and
Victoria, British Columbia; Calgary and Edmonton, Alberta; and Winnipeg, Manitoba. The
balance of Shaw’s subscribers are mainly in smaller regional clusters, linked via fibre either to
each other or to larger markets. These markets include the Okanagan region, British Columbia
(Kamloops, Kelowna, Penticton, Vernon); Saskatoon/Prince Albert/Moose Jaw/Swift Current,
Saskatchewan; and Thunder Bay/Sault Ste. Marie, Ontario.

In 2013, Shaw completed the disposition of Mountain Cablevision Limited (“Mountain Cable”),
a cable system located in Hamilton, Ontario.

Shaw has a customer-centric strategy designed to deliver high-quality customer service,
simplicity and value to its customers through various bundled service offerings for its Cable
television, Internet and Digital Phone services. The benefits of bundling to customers include

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

the convenience of “one-stop shopping” and value pricing. The benefits to Shaw include
retention of existing customers (churn reduction); attraction of new customers; incremental
penetration as customers upgrade to additional services offered in a bundle; and operational
efficiencies through centralized billing and customer care.

A more detailed description of each of the principal operations comprising the Company’s Cable
segment is set forth below.

Cable Television

The Company’s initial core business was cable television services, which today continues to
provide the customer base and physical infrastructure for much of the Company’s distribution
service businesses. The Company is one of the largest cable television providers in Canada. As
at August 31, 2014, Shaw served approximately 2.0 million cable television customers in five
provinces (British Columbia, Alberta, Saskatchewan, Manitoba and certain portions of Ontario).

The Company’s cable television business is operated through its extensive fibre optic and co-
axial cable distribution network. Shaw’s long haul fibre backbone and regional and metro
interconnect networks link its cable systems and subscribers together. Shaw receives originating
television signals at its various signal acquisition sites, then processes and distributes these
signals via its networks to customers’ homes in its cable serving areas. Digital cable customers
receive additional services via digital cable terminals (“DCTs”) which translate encrypted
signals delivered to customers’ homes over Shaw’s network. With the substantial completion of
the DNU, only legacy basic cable service is delivered via analog signals. Currently,
approximately 95% of Shaw’s cable customers are Digital cable customers.

Digital cable significantly expands the range of services that may be offered to a subscriber and
extends programming capacity. Digital cable also enhances picture and sound quality and
provides the platform from which Shaw has launched, and expects to continue to launch, new
revenue-generating video and interactive services. Shaw offers customers a variety of DCTs for
purchase or rent.

For its Digital subscribers, Shaw offers On Demand viewing options, including Pay-Per-View
(“PPV”), Video-on-Demand (“VOD”), and Subscription VOD (“SVOD”) services. The PPV service
allows customers to select and pay for specific programs which are available on various
channels with set start
times. The VOD and SVOD services enable customers to select
programming from a library of titles through an on-line ordering system or directly through the
set-top interactive program guide, and to view the programming on their television or on-line at
a time of their choosing, with pause, skip backward and skip forward functionality. On Demand
programming includes movies, sports, concerts and other special events, with prices dependent
on the nature of the programming. Shaw also offers a wide variety of free On Demand
programming including hit TV series, movies, events, music videos and more.

Of the Company’s cable television customers, over 1.3 million have HD capabilities. Shaw
continues to launch HD channels which offer superior picture detail and sound quality in a
format that fully utilizes the capabilities of wide screen, HD ready televisions. In support of HD,
Shaw offers for purchase or rent DCTs which support the decoding and processing of HD
content, as well as DCTs which incorporate HD and Personal Video Recorder (“PVR”) features
including the Gateway whole home HDPVR solution that connects to up to six TVs in a home.

In 2012, Shaw launched the first phase of its TV Everywhere service, Shaw Go, which allows
customers streaming access to TV shows, sporting events and movies on popular mobile
devices, including WiFi enabled tablets and smartphones. The Company now has more than 10

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

services available through Shaw Go, including Global Go, HISTORY Go, CTV Go and various
childrens, sports, movie and other entertainment programming. In 2014, Shaw also launched
its Gateway Go app, which allows customers to search, record and manage shows on their
Gateway whole home HDPVR from a range of popular mobile devices.

Internet

Leveraging its cable television infrastructure, Shaw provides high-speed Internet access services
to residential and business subscribers in almost all of its operating areas. The Company
currently offers a wide variety of residential Internet service levels to match the data speed,
usage and budget requirements of its subscribers. Similar to its residential Internet service,
Shaw also offers a variety of Internet services for small and medium business customers. As at
August 31, 2014, there were over 1.9 million subscribers to Shaw’s Internet access services.

In providing its Internet access services, Shaw leverages DOCSIS 3.0, a data over cable
technology, which has enabled the Company to increase the capabilities and reliability of its
network by increasing the capacity and throughput of both the upstream and downstream
portions of Shaw’s co-axial cable infrastructure. Upgrades and enhancements of its capital
infrastructure are ongoing, improving the capacity and reliability of the Company’s Internet
backbone and decreasing the average node size to reduce network congestion.

During 2014, Shaw continued the build out of its managed carrier-grade WiFi network, Shaw
Go WiFi, which extends a customer’s broadband experience beyond their home. The service was
launched in 2012 on a trial basis in select cities, and is now available in most areas served by
Shaw. In addition in 2014, Shaw reached agreements with a number of cities to expand Shaw
Go WiFi service to public areas within those cities. WiFi is in virtually all portable consumer
communication devices and customers are actively seeking WiFi hotspots to reduce wireless
data costs and improve their wireless broadband experience.

Shaw operates two internal Internet data centres in Calgary, Alberta and several smaller regional
centres. The data centres allow the Company to manage its Internet services exclusively,
providing e-mail service directly to its customers using “@shaw.ca” e-mail addresses,
provisioning web space, and managing backbone connectivity and peering arrangements with
other telecom providers. The data centres also host Shaw customers’ most popular web content
locally.

During 2014 the Company continued construction of a new internal data centre in Calgary that
will allow it to stay ahead of the technology curve by being able to handle new innovations as
they are adopted, such as the WiFi network initiative or new IP video technologies. The new
data centre will
incorporate energy efficient cooling systems allowing Shaw to reduce the
environmental impact of this facility. The data centre is planned to be complete in fiscal 2015.

Digital Phone

Shaw Digital Phone, a reliable, fully featured and affordable residential telephone service, is
currently offered in approximately 95% of homes passed. As at August 31, 2014, Shaw had
over 1.3 million Digital Phone lines (primary and secondary lines on billing).

Shaw Digital Phone offers packages tailored to meet the needs of residential subscribers with
to the residential
included long distance and calling features. Similar
varying levels of

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

packages, Shaw offers a variety of Shaw Business products for home based or smaller
businesses including managed and hosted private branch exchanges (“PBX”) and a primary rate
interface (“PRI”) service for medium and larger businesses.

Shaw Digital Phone utilizes DOCSIS technology similar to the Company’s Internet service.
Customers’ existing phone lines are connected into modems usually installed at the location of
the central wiring in the customers’ premises. The modem converts the voice conversation into
digital IP packets that are carried to an IP-based telephone switch. At this point, the packets
are transformed again into traditional telephone signals for connection to the public switched
telephone network or may be routed through the IP network to the called party.

Shaw Business

Using the Company’s national and regional fibre network, Shaw Business provides services to
Internet Service Providers (“ISPs”), cable companies,
small and medium size business,
broadcasters, governments and other organizations that require end-to-end Internet, data and
voice connectivity. Shaw Business is also a major account and wholesale provider offering third
parties advanced high speed data connectivity and Internet services in Canada and the United
States. Its offerings currently include data, voice and video transport and Internet connectivity
services. It also continues to establish public and private peering arrangements with high speed
connections to major North American, European and Asian network access points and other
tier-one backbone carriers.

In 2013, Shaw completed the acquisition of ENMAX Envision Inc. (“Envision”), a company
providing leading telecommunication services to Calgary business customers, for approximately
$225 million, excluding working capital adjustments. The transaction expanded Shaw’s
Business initiatives in Calgary and significantly enhanced the profile of Shaw Business in the
competitive Calgary marketplace.

The Shaw Business network includes multiple fibre capacity on two diverse cross-North America
routes. The Company’s southern route principally consists of approximately 6,400 route
kilometres (4,000 miles) of fibre located on routes between Vancouver (via Calgary, Winnipeg,
Chicago, Toronto and Buffalo) and New York City. The northern route consists of approximately
4,000 route kilometres (2,500 miles) of fibre between Edmonton (via Saskatoon, Winnipeg and
Thunder Bay) and Toronto. These routes, along with a number of secured capacity routes,
provide redundancy for the network. Shaw Business also utilizes a marine route consisting of
approximately 330 route kilometres (200 miles) located on two fibres from Seattle to Vancouver
(via Victoria), and has secured additional capacity on routes between a number of cities,
including Vancouver and Calgary, Vancouver and San Jose, Toronto and New York City, Seattle
and Vancouver and Edmonton and Toronto.

Satellite

(ii)
Shaw’s Satellite operations own and lease, directly and indirectly, satellite transponders that
receive and amplify digital signals and transmit them to receiving dishes located within the
footprint covered by the satellite. Shaw Direct and Satellite Services businesses share the
satellite infrastructure distributing digital video and audio signals to different markets
(residential and business), thereby allowing the Company to derive distinct revenue streams
from different customers using a common platform.

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

Satellite’s interest in these transponders is set forth in the table below.

Satellite

Anik G1

Anik F2

Anik F1R

Transponders

16 xKu-band

16 Ku-band
6 Ku-band
2 Ku-band (partial)

28 Ku-band
1 C-band

Intelsat Galaxy 16

1 Ku-band (partial)

Nature of Satellite
Interest

Leased

Owned
Leased
Leased

Leased
Leased

Leased

A more detailed description of each of the principal operations comprising the Company’s
Satellite segment is set forth below.

Shaw Direct

Shaw Direct is one of three DTH satellite operators licensed by the Canadian Radio-television
Telecommunications Commission (the “CRTC” or “Commission”) to deliver digital subscription
video and audio programming services from satellites directly to subscribers’ homes and
businesses. Shaw Direct began its national roll-out of digital DTH services in 1997 and as at
August 31, 2014 had approximately 880,000 subscribers.

The market
for Shaw Direct’s digital DTH services can be divided into three principal
categories: households not served by cable and typically having access to a limited number of
broadcast services; households underserved by cable (i.e. served by cable systems that offer
fewer than 80 channels); and households that receive full service cable (80 or more channels),
primarily in urban areas. Other potential customers include commercial,
institutional and
recreational facilities interested in video and audio programming. Shaw Direct subscribers have
the option of choosing from a menu of programming packages designed to target and
accommodate subscriber interests, primary language, income level and type of household. Such
packages are marketed through Shaw Direct and a nation-wide distribution network of third
party retail locations.

With the launch of Anik G1 in 2013, Shaw Direct’s satellite television services capacity
expanded by approximately 30 percent through the long term lease of 16 national transponders.
The new transponders provide bandwidth for expanded subscriber choice, including new HD
channels and other advanced services. The additional transponders also provide enhanced
in-orbit back-up capacity. Shaw Direct continues to
service quality, acting as important
its
transition to advanced modulation and encoding technology,
programming allowing it to increase its channel capacity.

including MPEG-4,

for

With three satellites (Anik F2, Anik F1R and Anik G1) whose signals are received by subscribers
through an elliptical dish, Shaw Direct offers over 650 digital video and audio channels,
including over 220 HD channels. Shaw Direct’s programming line-up offers the majority of
television services that are available in Canada,
including local over-the-air broadcasters,
national networks, specialty channels, U.S. and foreign channels, adult programming and
ethnic services. In addition, Shaw Direct offers a streaming VOD service through the satellite
receiver. Shaw Direct’s VOD service provides customers with access to over 10,000 movie and
TV titles and series. Shaw Go services are also available to Shaw Direct subscribers, which

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

allows customers streaming access to TV shows, sporting events and movies on popular mobile
devices, including WiFi enabled tablets and smartphones, and currently offers more than 10
services including Global Go, HISTORY Go, CTV Go and various childrens, sports, movie and
other entertainment programming.

Satellite Services

Satellite Services operations include two primary businesses, Shaw Broadcast Services and
Shaw Tracking.

Shaw Broadcast Services redistributes television and radio signals via satellite to cable
operators and other multi-channel system operators in Canada and the U.S., referred to as a
satellite relay distribution undertaking (“SRDU”), and provides uplink and network management
services for conventional and specialty broadcasters on a contract basis.

Shaw Broadcast Services currently provides SRDU and signal transport services to over 350
distribution undertakings, primarily cable operators, and redistributes approximately 500
television signals and over 100 audio signals in both English and French to multi-channel
system operators. Shaw Broadcast Services also offers HITS/QT and QT Plus (Headend In the
Sky/Quick Take), which allow small and medium size cable companies to offer digital signals to
subscribers with a substantially reduced capital outlay. HITS/QT and QT Plus facilitate
increased availability and penetration of digital services in Canada and add incremental
revenues to Shaw Broadcast Services from the additional services provided to smaller cable
companies.

Shaw Broadcast Services’ uplink and network management services include backhaul (transport
of signals to the uplink site), uplink (delivery of signal to the satellite so that it can be
distributed to cable operators and other distributors), bandwidth, authorization and signal
monitoring. Shaw Broadcast Services currently provides such services to over 130 specialty and
pay broadcasters across Canada, as well as to Canadian pay audio providers.

Shaw Tracking provides asset tracking and communication services to approximately 600
companies in the transportation industry in Canada, with approximately 45,000 vehicles using
its services. Shaw Tracking’s services capture all related information pertaining to an asset (i.e.
location, performance and productivity measures) and effectively integrate into a carrier’s fleet
management system. Via satellite, cellular, WiFi and Bluetooth networks, Shaw Tracking
provides immediate real time visibility to a company’s fleet and freight. Shaw’s services and
solutions target a wide variety of segments of transportation across Canada.

that

company

owned the

(iii) Media
Through a series of transactions in 2010 and 2011, Shaw acquired 100% of the broadcasting
business of Canwest Global Communications Corp. (“Canwest”) including CW Investments Co.,
the
acquired from Alliance Atlantis
Communications Inc. in 2007. The acquisition of Shaw’s Media business included the Global
Television Network (“Global”) and a leading portfolio of Specialty services. Technology is
driving change in the Canadian Broadcasting system, transforming content distribution and
viewership. This strategic acquisition allows Shaw to unite broadcasting services and content
with its advanced distribution platforms to offer customers strong choices in this rapidly
evolving landscape.

channels

specialty

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

The Canadian television broadcasting market is comprised of a number of English, French, and
third language stations and services that operate in different segments of the market. The
“Conventional” broadcast sector includes government owned public networks, such as the
Canadian Broadcasting Corporation (“CBC”), as well as privately owned station groups and
networks, such as Global and the CTV Television Network (“CTV” owned by BCE Inc.). The
“Specialty and Pay” sector includes Specialty television services, such as Showcase, History,
and HGTV Canada (all owned by Shaw), TSN (owned by BCE Inc.), and Sportsnet (owned by
Rogers), which provide special interest programming including news, sports, arts, lifestyle and
entertainment programming.

Global reaches approximately 95% of Canada’s population through 12 over-the-air (“OTA”)
conventional television stations. Global offers a programming mix of entertainment programs
and news that includes hit programs such as The Blacklist, Sleepy Hollow, Bones, NCIS,
NCIS:LA, Hawaii Five-O, Rookie Blue, Elementary and the reality series Survivor, Big Brother
and Big Brother Canada. Global offers news through its early-evening network newscast Global
National and delivers local news programs to a number of markets. Global expanded its news
line-up in 2012 and 2013 with the launch of morning news programming in Toronto, Regina,
Saskatoon, Winnipeg, Montreal and Halifax, and continues to focus on on-line and mobile
platforms to reach its audiences.

In 2014 Media announced the rebranding of

The Specialty television services owned and operated by the Media division comprise 19
including History, Food Network Canada, Showcase, HGTV Canada, Slice and
channels,
two existing
National Geographic Canada.
channels to FYI and Crime + Investigation which took place early in fiscal 2015. In 2013
Media launched Global News: BC1, a dedicated 24 hour all news Specialty channel in the
province of British Columbia and acquired the remaining equity interest
in TVtropolis
(subsequently rebranded DTOUR). During 2013 Media also entered into a number of
transactions with Corus Entertainment Inc. (“Corus”) to optimize its portfolio of specialty
channels, agreeing to sell its interests in ABC Spark and Historia and Series+ and to acquire an
additional 20% interest in Food Network Canada. The ABC Spark and Food Network Canada
transactions were completed during 2013 and the Historia and Series+ transaction closed in
2014.

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

The following table sets forth all of the Specialty services in which the Company holds an
interest:

Specialty Services Operated

Showcase
Slice
History
H2
HGTV Canada(1)
Food Network Canada(1)
Action
Lifetime
National Geographic Canada(2)
National Geographic Canada Wild(2)
BBC Canada(2)
FYI
IFC Canada
DIY(1)
DTOUR
MovieTime
DejaView
Crime + Investigation
Global News: BC1

(1)

(2)

Voting interest is 80.2%
Voting interest is 80%

% Equity Interest

100%
100%
100%
100%
67%
71%
100%
100%
50%
50%
50%
100%
100%
67%
100%
100%
100%
100%
100%

To meet the changing needs of its Conventional and Specialty viewing audiences, Media also
commenced the roll out of its TV Everywhere strategy in 2014 with the launch of Global Go and
HISTORY Go apps. These apps allow viewers to watch live TV, full episodes of select shows,
clips and video exclusives on popular mobile devices, including WiFi enabled tablets and
smartphones.

Late in fiscal 2014, Shaw Media partnered with Rogers to form shomi, a new SVOD/OTT service
having the latest most exclusive programming and selections personalized for viewers. The
service launched in beta in early November 2014.

(a)

Seasonality and other additional information concerning the business

Seasonality and customer dependency

Although financial results of the Cable and Satellite business segments are generally not
subject to significant seasonal fluctuations, subscriber activity may fluctuate from one quarter
to another. Subscriber activity may also be affected by competition and varying levels of
promotional activity undertaken by the Company. Shaw’s Cable and Satellite businesses
generally are not dependent upon any single customer or upon a few customers.

The Media business segment financial results are subject to fluctuations throughout the year
due to, among other things, seasonal advertising and viewing patterns. In general, advertising
revenues are higher during the fall, the first quarter, and lower during the summer months, the

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

fourth quarter. Expenses are incurred more evenly throughout the year. The Specialty services
are dependent on a small number of broadcast distribution undertakings (“BDUs”)
for
distribution of the services.

to environmental

(b)
Environmental matters
including those related to
Shaw’s operations are subject
electronic waste, printed paper and packaging. A number of provinces have enacted regulations
providing for the diversion of certain types of electronic and other waste through product
stewardship programs (“PSP”). Under a PSP, companies who supply designated products in or
into a province are required to participate in or develop an approved program for the collection
and recycling of designated materials and, in some cases, pay a per-item fee. Such regulations
have not had, and are not expected to have, a material effect on the Company’s earnings or
competitive position.

regulations,

Foreign operations

(c)
Shaw Business U.S. Inc., a wholly-owned subsidiary of the Company, has entered into an
indefeasible right of use (“IRU”) with respect to a portion of a United States fibre network and
Inc.
owns certain other
commenced revenue-generating operations in the United States in 2002. Its revenues for the
year ended August 31, 2014 were not material.

fibre and facilities in the United States. Shaw Business U.S.

In September 2014, the Company closed the acquisition of 100% of the shares of ViaWest, a
US-based provider of data centre infrastructure, cloud technology and managed IT solutions, for
an enterprise value of US $1.2 billion which was funded through a combination of cash on
hand, assumption of ViaWest debt, and a drawdown of US $330 million on the Company’s
credit facility. The ViaWest acquisition provides the Company with a growth platform in the
North American data centre sector and is another step in expanding technology offerings for
mid-market enterprises in Western Canada. ViaWest is headquartered in Denver, Colorado and
has 27 data centres in 8 key Western US markets.

Employees

(d)
As at August 31, 2014, the Company employed approximately 14,000 people.

Government regulations and regulatory developments

under

various Acts
(Canada)

Substantially all of the Corporation’s business activities are subject to regulations and policies
(Broadcasting Act
established
(“Broadcasting Act”),
(“Telecommunications Act”), Radiocommunication Act
Telecommunications Act
(Canada)
(“Copyright Act”)).
Broadcasting and telecommunications are generally administered by the CRTC under the
supervision of the Department of Canadian Heritage (“Canadian Heritage”) and Department of
Industry (“Industry Canada”), respectively.

(“Radiocommunication Act”) and Copyright Act

(Canada)

Pursuant to the Broadcasting Act, the CRTC is mandated to supervise and regulate all aspects
of the broadcasting system in a flexible manner. The Broadcasting Act requires BDUs to give
priority to the carriage of Canadian services and to provide efficient delivery of programming
services. The Broadcasting Act also sets out requirements for television broadcasters with
respect to Canadian content. Shaw’s businesses are dependent upon licenses (or operate
pursuant to an exemption order) granted and issued by the CRTC and Industry Canada.

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

Under the Telecommunications Act, the CRTC is responsible for ensuring that Canadians in all
regions of Canada have access to reliable and affordable telecommunication services of high-
quality. The CRTC has the authority to forbear from regulating certain services or classes of
services provided by a carrier if the CRTC finds that there is sufficient competition for that
service to protect the interests of users. All of Shaw’s telecommunication retail services have
been forborne from regulation and are not subject to price regulation. However, regulations do
impact certain terms and conditions under which these services are provided. On October 23,
2014, the Government tabled Bill C-43 which amends the Telecommunications Act to grant the
CRTC powers to impose administrative monetary penalties of up to $10 million for each
contravention of the Telecommunications Act or any regulation or CRTC decision pursuant to
the Telecommunications Act, and up to $15 million for each subsequent contravention.

The technical operating aspects of the Corporation’s businesses are also regulated by technical
requirements and performance standards established by Industry Canada, primarily under the
Telecommunications Act and the Radiocommunication Act.

to the Copyright Act,

Pursuant
the Copyright Board of Canada oversees the collective
administration of copyright royalties in Canada, including the review and approval of copyright
tariff royalties payable to copyright collectives by BDUs, television broadcasters and online
content services.

The sections below include a more detailed discussion of various regulatory matters and recent
developments specific to Shaw’s businesses.

its cable, DTH and SRDU undertakings,

Licensing and ownership
For each of
the Corporation holds a separate
broadcasting license or is exempt from licensing. In November 2010, the majority of cable
undertakings owned and operated by the Corporation were renewed by the CRTC for a five-year
period ending August 31, 2015. Shaw’s cable licenses for its undertakings serving British
Columbia, Alberta, Saskatchewan and Manitoba are scheduled for renewal
in 2015. The
licenses of the Corporation’s DTH and SRDU undertakings were renewed in 2013 by the CRTC
for a seven year period ending August 31, 2019. Shaw has never failed to obtain a license
renewal for its cable, DTH or SRDU undertakings.

The Company also holds a separate license for each of its conventional OTA television stations
and each specialty service. These CRTC broadcasting licenses must be renewed from time to
time and cannot be transferred without regulatory approval. The majority of the Corporation’s
licenses for its OTA television stations and specialty services were renewed for a five-year term
ending August 31, 2016. The renewal decision implemented an expenditure-based regulatory
regime, whereby the Corporation must expend a certain percentage of its prior-year revenues
from its conventional OTA and specialty services on Canadian content, and also on specific
categories of Canadian programs defined as “programs of national interest”. These obligations
are imposed on an individual license basis. With certain restrictions, the Corporation may share
these regulatory obligations between and among its various conventional OTA and specialty
licenses.

The potential for new or increased fees through regulation
Effective September 1, 2009, each licensed BDU was required to contribute 1.5% of its gross
revenues derived from broadcasting to the Local Programming Improvement Fund (“LPIF”) to
support local television stations operating in non-metropolitan markets. Exempt systems were
not required to contribute to the LPIF. In July 2012, the Commission determined that it was

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

inappropriate to maintain the LPIF in the long term and that it would phase out the LPIF over
the two subsequent broadcast years. Accordingly, for the 2012-2013 broadcast year, the LPIF
contribution rate was reduced from 1.5% to 1.0%. For the 2013-2014 broadcast year, the
LPIF contribution rate was further reduced to 0.5%. As of September 2014, the LPIF was
discontinued.

In 2011, pursuant to a change in its policy regarding the delivery of distant signals by licensed
BDUs, the CRTC introduced new Regulations requiring licensed cable BDUs to obtain the
consent of an OTA broadcaster to deliver its signal
in a distant market. Pursuant to the
Regulations, DTH distribution undertakings may distribute a local over-the-air television signal
without consent within the province of origin, but must obtain permission to deliver the over-
the-air television signal beyond the province of origin unless the DTH distribution undertaking is
required to carry the signal on its basic service. Broadcasters may assert a right to remuneration
for the distribution of their signals in distant markets on the basis of these Regulations.

Throne Speech and Government Direction
The Speech from the Throne, delivered on October 16, 2013 included a statement indicating
the Government believes Canadians should have more ability to choose unbundled
that
television channels, while protecting Canadian jobs. On November 14, the Minister of Canadian
Heritage released an Order-in-Council (“OIC”) requiring the CRTC to report to the Government
by April 30, 2014 on how the ability of Canadian consumers to subscribe to pay and specialty
television services on a service-by-service basis can be maximized, having regard to the
broadcasting and regulatory objectives of the Broadcasting Act as well as specific issues
including the effect of any proposed measures on: consumers with respect to their affordable
access to a variety of services, distribution undertakings, Canadian pay and specialty services
and Canadian independent producers. In addition, the OIC made it clear that any proposed
measures to maximize consumers’ ability to subscribe service-by-service ensure that the
majority of programming services received by subscribers remain Canadian and that Canadian
programming services, particularly local Canadian stations, continue to be given priority. The
CRTC responded to the OIC by reporting that it would reach conclusions on the Government’s
to a proceeding initially referred to as “a
questions in the decision rendered pursuant
conversation with Canadians” and later commonly referred to as “Let’s Talk TV”. This
proceeding is described below in more detail. Together, the Government’s articulated position
and the CRTC decision pursuant to the “Let’s Talk TV” hearing could lead to changes in the
regulatory requirements applicable to television programming and broadcasting distribution
undertakings and, in particular, those pertaining to the manner in which the basic service, as
well as packaging and standalone programming service options, are offered to customers.

CRTC Hearing on the Future of Television – Let’s Talk TV
As noted above, on October 24, 2013,
the Commission initiated a “conversation with
Canadians about the future of television”, which led to a major review of the regulatory and
policy framework for the Canadian television broadcasting system, during the course of calendar
2014. This proceeding became commonly known as the “Let’s Talk TV” proceeding. The
Commission’s proposals include: a mandatory all-Canadian small basic service; a requirement
to allow subscribers to select all discretionary services on a standalone (pick-and-pay) basis and
build their own custom packages of discretionary programming services (BDUs could still offer
pre-assembled packages); elimination of simultaneous substitution; expansion of the Code of
conduct for commercial arrangements and interactions to prohibit unreasonable penetration-
based rate cards, requirements to distribute a service on the same terms as at a prior date, and

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

most favored nation provisions; access provisions for non-vertically integrated programming
services; redefining broadcasting revenues of licensees to include revenues from programming
offered online or on other exempt platforms; modifying expenditure and exhibition requirements
for licensed television stations and specialty and pay services; eliminating genre exclusivity and
access rights for Category A pay and specialty services; and, introducing a BDU Code that would
govern the relationship between BDUs and their subscribers, consistent with applicable
provisions of the Wireless Code such as contract clarity, notice of changes to contract terms,
and cancellation fees. The proposed regulatory framework would come into force on
December 15, 2015. The Commission’s decision is expected late in calendar 2014. While the
outcome of the hearing (including the scope and implementation period for each proposal) is
uncertain, this review could lead to changes in the regulatory requirements applicable to
television programming and broadcasting distribution undertakings.

Act

Access rights
Shaw’s cable systems require access to support structures, such as poles, strand and conduits
of telecommunication carriers and electric utilities, in order to deploy cable facilities. Under the
Telecommunications
of
telecommunication carriers, including rates for third party use. The CRTC’s jurisdiction does not
extend to electrical utility support structures, which are regulated by provincial utility
authorities. Following a 2010 decision by the CRTC to significantly increase certain support
structure rental rates, the CRTC approved in July 2011 a new charge for the Corporation’s
attachments to the service poles of telecommunications carriers equal to the normal pole
charge.

jurisdiction

structures

support

CRTC

over

has

the

Under the Telecommunications Act, the Corporation may construct facilities in roadways and
other public places with the consent of the municipality. In 2011, the CRTC initiated a process
whereby a working group of industry and municipal representatives developed a non-binding
model municipal access agreement. In November 2013, the CRTC approved the consensus
recommendations of the working group for the model agreement and determined that certain
non-consensus items,
fees, and relocation costs, are to be
negotiated between a carrier and a municipality.

including indemnification,

New media and Internet
In June 2009 the CRTC issued its decision on “new media” by extending its exemption of new
media broadcasting undertakings for another five years. This exemption order was amended in
2012 and renamed the Exemption Order for Digital Media Broadcasting Undertakings. The
amended exemption order includes, inter alia, a reverse onus of proof in cases where it is
alleged that an exempt undertaking has conferred an undue preference or disadvantage, and a
prohibition on exempt undertakings offering television programming on an exclusive or
preferential basis in a manner that depends upon the subscription to a specific mobile or retail
internet access service.

including financial contribution requirements on ISPs,

Pursuant to the above-noted exemption order, the CRTC also decided against imposing any
to support
regulatory measures,
Canadian new media content
through a levy on the revenue of exempt digital media
undertakings. The CRTC is now considering, in the context of the Let’s Talk TV proceeding,
whether
licensees to include revenues from
programming offered online or on other exempt platform. A decision in the Let’s Talk TV
proceeding is expected late in calendar 2014.

to redefine the broadcasting revenues of

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

Shaw is mandated by the CRTC to provide Third Party Internet Access (“TPIA”) service, which
enables independent ISPs to provide Internet services at premises served by Shaw’s network. In
2011, the CRTC reviewed the billing model for TPIA services, TPIA rates and whether usage
based billing may be applied to TPIA services. In the decision that followed its review (the
“Wholesale Internet Access Decision”), the CRTC approved two billing models, a flat-rate model
in which the TPIA rate includes access and usage and a capacity-based model in which access
and capacity usage are billed separately. Shaw is currently approved to provide TPIA service
under the flat-rate model although Shaw may elect to move to a capacity-based model in the
future. The CRTC is currently reviewing the regulatory regime for several wholesale competitor
services, including TPIA, through a public consultation that launched in October 2013 and will
culminate in a public hearing starting in late November 2014.

In September 2013, a consortium of independent ISPs filed an application with the CRTC
requesting changes to the TPIA service. If the CRTC mandates the changes to TPIA as
requested in the application, this would require Shaw to dedicate additional resources to
address specific service order processing, IT system and billing system changes.

including requirements to obtain consent prior

In late 2010 Parliament passed Canada’s anti-spam legislation (“CASL”), which, together with
regulations passed pursuant to CASL, sets out a comprehensive regulatory regime regarding on-
line commerce,
to sending commercial
electronic messages and installing computer programs. CASL is administered primarily by the
CRTC, and non-compliance may result in fines of up to $10 million. The first phase of CASL,
pertaining to the sending of commercial electronic messages, came into force in July 2014. To
ensure compliance with CASL, Shaw reviewed and updated its current practices with respect to
marketing and other communications with customers. Computer program installation provisions
of CASL will come into effect on January 15, 2015. Shaw is reviewing and updating its
practices regarding computer program installations in order to comply.

Shaw and other telecommunications providers had expected that they would need to review and
potentially upgrade their interception and other systems to comply with anticipated lawful
access requirements. In February 2013, the Government announced that it would not be
the
proceeding with its planned lawful access legislation, Bill C-30, An Act
Investigating and Preventing Criminal Electronic Communications Act (the “Bill”) and related
plan to amend the Criminal Code and other Acts. The Government indicated that its decision
not to proceed was in response to the expressed concerns of Canadians regarding the Bill. The
legislation would have required telecommunications service providers to provide subscriber
information without a warrant and for ISPs to establish and maintain capabilities to facilitate
the lawful
interception of information transmitted by telecommunications and to provide
information about subscribers to law enforcement agencies.

to enact

In November 2013 the Government introduced Bill C-13, An Act to amend the Criminal Code,
the Canada Evidence Act, the Competition Act and the Mutual Legal Assistance in Criminal
Matters Act (the “Bill C-13”) which would, if passed, expand the lawful access powers of the
Government and introduce new requirements for telecommunications providers to preserve and
produce subscriber information. Consistent with the Government’s decision not to proceed with
Bill C-30, almost all of the newly proposed measures under Bill C-13 are subject to judicial
oversight and do not require the provision of information without a warrant or discharge of a
burden of proof. However, should the requirements of Bill C-13 become law, Shaw and other
telecommunications providers will need to review and potentially upgrade their interception and
other systems to comply with new lawful access requirements.

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

In its 3 Year Work Plan, the CRTC has scheduled reviews of Competitor Quality of Service and
Basic Telecommunications Services, each of which may have a direct impact on Shaw’s
operations. With respect to Competitor Quality of Service, the CRTC will undertake a process to
review the competitor quality of service indicators and the rate rebate plan for competitors to
ensure alignment with the overall wholesale services framework which is currently under review.
With respect to Basic Telecommunication Services, the CRTC will initiate a comprehensive
review to determine what services (e.g. voice and broadband) are required by all Canadians to
fully participate in the digital economy and whether there should be changes to the subsidy
regime and national contribution mechanism.

Digital transition
In July 2009 the CRTC identified the major markets where it expected conventional television
broadcasters to convert their full-power OTA analog transmitters to digital transmitters by
August 31, 2011. The conversion from analog to digital freed up spectrum for government
auction.

The Corporation completed the digital transition in all mandatory markets as of August 31,
2011. Since then, the Corporation has been converting transmitters in non-mandatory markets
and expects to complete these conversions in 2016.

Vertical integration
The Commission recognizes that vertical integration can be beneficial and that it also has
potential to enable preferential treatment. In view of increasing industry consolidation and
vertical integration, the CRTC issued a vertical integration policy in September 2011. The
policy introduced new safeguards in addition to various regulatory mechanisms that already
exist, including a prohibition on vertically integrated undertakings from offering television
programming on an exclusive or otherwise preferential basis in a manner that is dependent on
the subscription to a specific mobile or retail Internet access service, and a reverse onus of
proof in cases where undue preference is alleged in connection with the terms of distribution of
any programming service. Measures also include a code of conduct governing commercial
relations and interactions between and among broadcast distributors, programmers and new
media undertakings, and a standstill requirement prohibiting a distribution undertaking from
changing the terms of distribution or carriage pending the resolution of a dispute.

The CRTC imposed certain parts of the code as conditions of license upon BCE in its recent
acquisition of Astral Media Inc. Uncertainty remains as to the extent to which the CRTC will
seek to impose such conditions of licence and the ultimate impact of the CRTC decision
introducing the new safeguards and to formalize code of conduct requirements as conditions of
license. The code of conduct is applied on a case-by-case basis when disputes arise and may be
revised pursuant to the Let’s Talk TV proceeding discussed above. Existing or new safeguards
could have an impact on the Corporation.

Limits on non-Canadian ownership and control for broadcasting undertakings
Non-Canadians are permitted to own and control, directly or indirectly, up to 33.3% of the
voting shares and 33.3% of the votes of a holding company that has a subsidiary operating
company licensed under the Broadcasting Act. In addition, up to 20% of the voting shares and
20% of the votes of the licensee may be owned and controlled, directly or indirectly, by non-
Canadians. As well, the chief executive officer (CEO) and not less than 80% of the board of
directors of the licensee must be resident Canadians. There are no restrictions on the number of
non-voting shares that may be held by non-Canadians at either the holding company or licensee

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

level. Neither the holding company nor the licensee may be controlled in fact by non-
Canadians, the determination of which is a question of fact within the jurisdiction of the CRTC.

The same restrictions apply to certain Canadian carriers pursuant to the Telecommunications
Act and associated regulations and the Radiocommunication Act and associated regulations,
except that there is no requirement that the CEO be a resident Canadian. In March 2012, the
government announced its intention to amend the Telecommunications Act to remove Canadian
ownership requirements for wire-line and wireless telecommunications carriers with annual
revenues from the provision of telecommunications services in Canada that represent less than
10% of the total annual revenues, as determined by the CRTC. These amendments were passed
as part of the federal budget bill in June 2012 and may lead to greater levels of competition in
the Canadian telecommunications market.

The Corporation’s Articles contain measures to ensure the Corporation is able to remain
compliant with applicable Canadian ownership requirements and its ability to obtain, amend or
renew a license to carry on any business. Shaw must file a compliance report annually with the
CRTC confirming that it is eligible to operate in Canada as a telecommunications common
carrier.

AWS spectrum transfers
On June 28, 2013 the Minister of Industry announced a new framework for the review of
spectrum license transfers. Under the new framework, all spectrum transfer reviews, including
include
the review of
consideration of a number of factors, including the overall distribution of license holdings in the
licensed spectrum band and other commercial mobile spectrum bands in the licensed area, the
relative utility and substitutability of the licensed spectrum and the change in spectrum
concentration levels that would result from the transfer. The reviews by Industry Canada and the
Competition Bureau of the proposed transfer of Shaw’s AWS spectrum to Rogers are ongoing.

the proposed transfer of Shaw’s AWS spectrum to Rogers, will

Key performance drivers

Shaw measures the success of its strategies using a number of key performance drivers which
are outlined below,
including a discussion as to their relevance, definitions, calculation
methods and underlying assumptions.

FINANCIAL MEASURES:

Revenue

i)
Revenue is a measurement determined in accordance with International Financial Reporting
Standards (“IFRS”). It represents the inflow of cash, receivables or other consideration arising
from the sale of products and services. Revenue is net of items such as trade or volume
discounts, agency commissions and certain excise and sales taxes. It is the base on which free
cash flow, a key performance driver, is determined; therefore, it measures the potential to
deliver free cash flow as well as indicating growth in a competitive market place.

The Company’s continuous disclosure documents may provide discussion and analysis of non-
IFRS financial measures. These financial measures do not have standard definitions prescribed
by IFRS and therefore may not be comparable to similar measures disclosed by other
companies. The Company’s continuous disclosure requirements may also provide discussion
and analysis of additional GAAP measures. Additional GAAP measures include line items,
headings and sub-totals included in financial statements. The Company utilizes these measures

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

in making operating decisions and assessing its performance. Certain investors, analysts and
others utilize these measures in assessing the Company’s operational and financial performance
and as an indicator of its ability to service debt and return cash to shareholders. These non-
IFRS measures and additional GAAP measures have not been presented as an alternative to net
income or any other measure of performance or liquidity prescribed by IFRS. The following
contains a description of the Company’s use of non-IFRS financial measures and additional
GAAP measures and provides a reconciliation to the nearest IFRS measure or provides a
reference to such reconciliation.

Operating income before restructuring costs and amortization

ii)
Operating income before restructuring costs and amortization is calculated as revenue less
operating, general and administrative expenses. It is intended to indicate the Company’s ability
to service and/or
is calculated before one-time items like
restructuring costs, amortization (a non-cash expense) and interest. Operating income before
restructuring costs and amortization is also one of the measures used by the investing
community to value the business.

incur debt, and therefore it

Relative increases period-over-period in operating income before restructuring costs and
amortization and in operating margin are indicative of the Company’s success in delivering
valued products and services, and engaging programming content to its customers in a cost-
effective manner.

($ millions Cdn)

Operating income
Add back (deduct):

Restructuring costs
Amortization:

Deferred equipment revenue
Deferred equipment costs
Property, plant and equipment, intangibles and other

Year ended August 31,

2014

2013

1,439

1,366

–

(69)
142
692

(121)
257
718

Operating income before restructuring costs and amortization

2,262

2,220

iii) Operating margin
Operating margin is calculated by dividing operating income before restructuring costs and
amortization by revenue.

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

Free cash flow

iv)
The Company uses free cash flow as a measure of the Company’s ability to repay debt and
return cash to shareholders. Consolidated free cash flow is calculated as follows:

($millions Cdn)

Revenue

Cable
Satellite
Media

Intersegment eliminations

Operating income before restructuring costs and amortization(1)

Cable
Satellite
Media

Capital expenditures and equipment costs (net):

Cable
Accelerated capital fund investment(1)

Adjusted Cable
Satellite
Media

Total
Free cash flow before the following
Less

Interest
Cash taxes
Other adjustments:

Non-cash share-based compensation
CRTC benefit obligation funding
Non-controlling interests
Pension adjustment
Customer equipment financing
Preferred share dividends

Free cash flow

Operating margin(1)

Cable
Satellite
Media

(1)

See key performance drivers on page 21.

Year ended August 31,

2014

2013

Change
%

3,365
878
1,096

5,339
(98)

5,241

1,632
277
353

2,262

988
(240)

748
89
18

855

3,266
860
1,106

5,232
(90)
5,142

1,582
285
353

2,220

3.0
2.1
(0.9)

2.0
8.9
1.9

3.2
(2.8)
–

1.9

867
14.0
(110) >100.0

757
123
31

911

(1.2)
(27.6)
(41.9)

(6.1)

7.5

1,407

1,309

(264)
(359)

(308)
(300)

(14.3)
19.7

3
(58)
(31)
(5)
18
(13)

(40.0)
5
11.5
(52)
(39)
(20.5)
12 >100.0
(10) >100.0
–
(13)

698

604

15.6

48.5%
31.5%
32.2%

48.4%
0.1
33.1% (1.6)
0.3
31.9%

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

Free cash flow is calculated as operating income before restructuring costs and amortization,
less interest, cash taxes paid or payable, capital expenditures (on an accrual basis and net of
proceeds on capital dispositions and adjusted to exclude amounts funded through the
accelerated capital
fund) and equipment costs (net), adjusted to exclude share-based
compensation expense, less cash amounts associated with funding the new and assumed CRTC
benefit obligations related to the acquisition of Shaw Media as well as excluding non-controlling
interest amounts that are consolidated in the operating income before restructuring costs and
amortization, capital expenditure and cash tax amounts. Free cash flow also includes changes
in receivable related balances with respect to customer equipment financing transactions as a
cash item, and is adjusted for recurring cash funding of pension amounts net of pension
expense. Dividends paid on the Company’s Cumulative Redeemable Rate Reset Preferred
Shares are also deducted.

Free cash flow has not been reported on a segmented basis. Certain components of free cash
flow including operating income before restructuring costs and amortization, capital
expenditures (on an accrual basis net of proceeds on capital dispositions) and equipment costs
(net), CRTC benefit obligation funding, and non-controlling interest amounts continue to be
reported on a segmented basis. Other items, including interest and cash taxes, are not generally
directly attributable to a segment, and are reported on a consolidated basis.

For free cash flow purposes the Company considers the initial $300 million supplemental
executive retirement plan funding in the prior year to be a financing transaction and has not
included the amount funded or the related cash tax recovery in the free cash flow calculation.

Accelerated capital fund

v)
During 2013, the Company established a notional fund, the accelerated capital fund, of up to
$500 million with proceeds received, and to be received, from several strategic transactions.
The accelerated capital initiatives are being funded through this fund and not cash generated
from operations. Key investments include the completion of the Calgary internal data centre,
further digitization of the network and additional bandwidth upgrades, development of IP
delivery of video, expansion of the WiFi network, and additional innovative product offerings
related to Shaw Go and other applications to provide an enhanced customer experience. Details
on the accelerated capital fund and investment are as follows:

Estimated year of spend
($millions Cdn)

Fund Opening Balance
Accelerated capital investment

Fund Closing Balance, August 31, 2014

2013

2014

2015

Total

110 240 150 500
– 350
110 240

–

– 150 150

STATISTICAL MEASURES:
Subscriber counts (or Revenue Generating Units (“RGUs”)), including penetration and bundled
customers
The Company measures the count of its customers in Cable and DTH (Shaw Direct). Video cable
subscribers include residential customers, multiple dwelling units (“MDUs”) and commercial
customers. A residential subscriber who receives at a minimum, basic cable service, is counted
as one subscriber. In the case of MDUs, such as apartment buildings, each tenant with a
minimum of basic cable service is counted as one subscriber, regardless of whether invoiced
individually or having services included in his or her rent. Each building site of a commercial

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

customer (e.g., hospitals, hotels or retail franchises) that is receiving at a minimum, basic cable
service, is counted as one subscriber. Internet customers include all modems on billing and
Digital Phone lines includes all phone lines on billing. All subscriber counts exclude
complimentary accounts but include promotional accounts.

Shaw Direct measures its count of subscribers in the same manner as Cable counts its Video
customers, except that it also includes seasonal customers who have indicated their intention to
reconnect within 180 days of disconnection.

RGUs represent the number of products sold to customers and includes Video (Cable and DTH
subscribers), Internet customers, and Digital Phone lines. As at August 31, 2014 the Company
had approximately 6.1 million RGUs.

Subscriber counts, or RGUs, and penetration statistics measure market share and also indicate
the success of bundling and pricing strategies.

Critical accounting policies and estimates

The Company prepared its Consolidated Financial Statements in accordance with IFRS as
issued by the International Accounting Standards Board (“IASB”). An understanding of the
Company’s accounting policies is necessary for a complete analysis of results,
financial
position, liquidity and trends. Refer to Note 2 to the Consolidated Financial Statements for
additional information on accounting policies. The following section discusses key estimates
and assumptions that management has made under IFRS and how they affect the amounts
reported in the Consolidated Financial Statements and notes. Following is a discussion of the
Company’s critical accounting policies:

Revenue and expense recognition

Revenue is considered earned as services are performed, provided that at
the time of
performance, ultimate collection is reasonably assured. Such performance is regarded as having
been achieved when reasonable assurance exists regarding the measurement of
the
consideration that will be derived from rendering the service. Revenue from cable, Internet,
Digital Phone and DTH customers includes subscriber service revenue when earned. The
revenue is considered earned as the period of service relating to the customer billing elapses.

The Company has multiple deliverable arrangements comprised of upfront fees (subscriber
connection fee revenue and/or customer premise equipment revenue) and related subscription
revenue. The Company determined that the upfront fees charged to customers do not constitute
separate units of accounting; therefore, these revenue streams are assessed as an integrated
package.

With Shaw Media, subscriber revenue is recognized monthly based on subscriber levels.
Advertising revenues are recognized in the period in which the advertisements are aired or
displayed on the Company’s digital properties and recorded net of agency commissions as these
amounts are paid directly to the agency or advertiser. When a sales arrangement includes
multiple advertising spots, the proceeds are allocated to individual advertising spots under the
arrangement based on relative fair values.

Subscriber connection fee revenue
Connection fees have no stand alone value to the customer separate and independent of the
Company providing additional subscription services, therefore the connection fee revenue must
be deferred and recognized systematically over the periods that the subscription services are

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

earned. There is no specified term for which the customer will receive the related subscription
service, therefore the Company has considered its customer churn rate and other factors, such
as competition from new entrants, to determine the deferral period of three years.

Subscriber connection and installation costs
The costs of physically connecting a new home are capitalized as part of the Company’s
distribution system as the service potential of the distribution system is enhanced by the ability
to generate future subscriber revenue. Costs of disconnections are expensed as incurred as the
activity does not generate future revenue.

Customer premise equipment revenue and costs
Customer premise equipment available for sale, which generally includes DCT and DTH
equipment, has no stand alone value to the customer separate and independent of the Company
providing additional subscription services. Therefore the equipment revenue is deferred and
recognized systematically over the periods that the subscription services are earned. As the
equipment sales and the related subscription revenue are considered one transaction,
recognition of the equipment revenue commences once the subscriber service is activated.
There is no specified term for which the customer will receive the related subscription service,
therefore the Company has considered various factors including customer churn, competition
from new entrants, and technology changes to determine the deferral period of three years.

In conjunction with equipment revenue, the Company also incurs incremental direct costs
which include equipment and related installation costs. These direct costs cannot be separated
from the undelivered subscription service included in the multiple deliverable arrangement.
Under IAS 2 “Inventories”, these costs represent inventoriable costs and are deferred and
amortized over the period of three years, consistent with the recognition of the related
revenue. The equipment and installation costs generally exceed the amounts
equipment
received from customers on the sale of equipment (the equipment is sold to the customer at a
subsidized price). The Company defers the entire cost of the equipment, including the subsidy
portion, as it has determined that this excess cost will be recovered from future subscription
revenues and that the investment by the customer in the equipment creates value through
increased retention.

Shaw Tracking equipment revenue and costs
Shaw Tracking equipment revenue is recognized over the period of the related service contract
for airtime, which is generally five years.

In conjunction with Shaw Tracking equipment revenue, the Company incurs incremental direct
costs including equipment costs. These direct costs cannot be separated from the undelivered
tracking service included in the multiple deliverable arrangement. Under IAS 2 “Inventories”,
these costs represent inventoriable costs and are deferred and amortized over the period of five
years, consistent with the recognition of the related tracking equipment revenue.

Shaw Business installation revenue and expenses
The Company also receives installation revenues in its Shaw Business operation on contracts
with commercial customers which are deferred and recognized as revenue on a straight-line
basis over the related service contract, generally spanning two to ten years. Direct and
incremental costs associated with the service contract, in an amount not exceeding the upfront
installation revenue, are deferred and recognized as an operating expense on a straight-line
basis over the same period.

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

Income statement classification
The Company distinguishes amortization of deferred equipment
revenue and deferred
equipment costs from the revenue and expenses recognized from ongoing service activities on
its income statement. Equipment revenue and costs are deferred and recognized over the
anticipated term of the related future revenue (i.e., the monthly service revenue) with the
period of recognition spanning three to five years. As a result, the amortization of deferred
equipment revenue and deferred equipment costs are non-cash items on the income statement,
similar to the Company’s amortization of deferred IRU revenue, which the Company also
segregates from ongoing revenue. Further, within the lifecycle of a customer relationship, the
customer generally purchases customer premise equipment at the commencement of the
customer relationship, whereas the subscription revenue represents a continuous revenue
stream throughout that customer relationship. Therefore, the segregated presentation provides a
clearer distinction within the income statement between cash and non-cash activities and
between up-front and continuous revenue streams, which assists financial statement readers to
predict future cash flows from operations.

Allowance for doubtful accounts

ii)
The majority of the Company’s revenues are earned from selling on credit to individual
subscribers. Because there are some customers who do not pay their debts, selling on credit
necessarily involves credit losses. The Company is required to make an estimate of an
appropriate allowance for doubtful accounts on its receivables. In determining its estimate, the
Company considers factors such as the number of days the account is past due, whether or not
the customer continues to receive service, the Company’s past collection history and changes in
business circumstances. The estimated allowance required is a matter of judgement and the
actual loss eventually sustained may be more or less than the estimate, depending on events
which have yet to occur and which cannot be foretold, such as future business, personal and
economic conditions. Conditions causing deterioration or improvement in the aging of accounts
receivable and collections will increase or decrease bad debt expense.

iii)

Property, plant and equipment and other intangibles – capitalization of direct labour and
overhead

The cost of property, plant and equipment and other intangibles includes direct construction or
development costs (such as materials and labour) and overhead costs directly attributable to
the construction or development activity. The Company capitalizes direct labour and direct
overhead incurred to construct new assets, upgrade existing assets and connect new
subscribers. These costs are capitalized as they are directly attributable to the acquisition,
construction, development or betterment of the networks or other intangibles. Repairs and
maintenance expenditures are charged to operating expenses as incurred.

Direct labour and overhead costs are capitalized in three principal areas:

such as engineering and information technology

Corporate departments
(“IT”):
Engineering is primarily involved in overall planning and development of the cable/
Internet/Digital Phone infrastructure. Labour and overhead costs directly related to these
activities are capitalized as the activities directly relate to the planning and design of the
construction of the distribution system. The IT department devotes considerable efforts
towards the development of systems to support Digital Phone, WiFi, and projects related
to new customer management, billing and operating support systems. Labour costs
directly related to these and other projects are capitalized.

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

Cable regional construction departments, which are principally involved in constructing,
rebuilding and upgrading the cable/Internet/Digital Phone infrastructure: Labour and
overhead costs directly related to the construction activity are capitalized as the activities
directly relate to the construction or upgrade of the distribution system. Capital projects
include, but are not limited to, projects such as the new subdivision builds, increasing
network capacity for Internet, Digital Phone and VOD by reducing the number of homes
fed from each node, and upgrades of plant capacity, including the DNU project, and the
WiFi build.

Subscriber-related activities such as installation of new drops and Internet and Digital
Phone services: The labour and overhead directly related to the installation of new
services are capitalized as the activity involves the installation of capital assets (i.e.,
wiring, software, etc.) which enhance the service potential of the distribution system
through the ability to earn future revenues. Costs associated with service calls,
collections, disconnects and reconnects that do not involve the installation of a capital
asset are expensed.

Amounts of direct labour and direct overhead capitalized fluctuate from year to year depending
on the level of customer growth and plant upgrades for new services. In addition, the level of
capitalization fluctuates depending on the proportion of
labour versus external
contractors used in construction projects.

internal

The percentage of direct labour capitalized in many cases is determined by the nature of
employment in a specific department. For example, a significant portion of labour and direct
overhead of the cable regional construction departments is capitalized as a result of the nature
of the activity performed by those departments. Capitalization is also based on piece rate work
performed by unit-based employees which is tracked directly. In some cases, the amount of
capitalization depends on the level of maintenance versus capital activity that a department
performs. In these cases, an analysis of work activity is applied to determine this percentage
split.

Amortization policies and useful lives

iv)
The Company amortizes the cost of property, plant and equipment and other intangibles over
the estimated useful service lives of the items. These estimates of useful
lives involve
considerable judgment. In determining these estimates, the Company takes into account
industry trends and company-specific factors, including changing technologies and expectations
for the in-service period of these assets. On an annual basis, the Company reassesses its
existing estimates of useful lives to ensure they match the anticipated life of the technology
from a revenue-producing perspective. If technological change happens more quickly or in a
different way than the Company has anticipated, the Company may have to shorten the
estimated life of certain property, plant and equipment or other intangibles which could result
in higher amortization expense in future periods or an impairment charge to write down the
value of property, plant and equipment or other intangibles.

Intangibles

v)
The excess of the cost of acquiring cable and satellite and media businesses over the fair value
of related net identifiable tangible and intangible assets acquired is allocated to goodwill. Net
identifiable intangible assets acquired consist primarily of amounts allocated to broadcast
rights and licenses which represent identifiable assets with indefinite useful lives.

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

Broadcast rights and licenses in the cable and satellite businesses are comprised of broadcast
authorities including licenses and exemptions from licensing that allow access to homes and
subscribers in a specific area that are identified on a business combination with respect to the
acquisition of shares or assets of a BDU.

Broadcast licenses in the media business are licenses to operate conventional and specialty
services that are identified on a business combination with respect to the acquisition of shares
or assets of a broadcasting undertaking.

The Company has concluded that the broadcast rights and licenses have indefinite useful lives
since there are no legal, regulatory, contractual, economic or other factors that would prevent
the Company’s license renewals or limit the period over which these assets will contribute to
the Company’s cash flows. Goodwill and broadcast rights and licenses are not amortized but are
assessed for impairment on an annual basis in accordance with IAS 36 “Impairment”.

The Company also owns AWS licenses that are required to operate a wireless system in Canada.
The AWS licenses have indefinite lives and are subject to an annual review for impairment by
comparing the estimated fair value to the carrying amount. In late 2011 Shaw decided not to
pursue a conventional wireless build. In 2013 the Company entered into an agreement with
Rogers granting Rogers an option to acquire its wireless spectrum licenses. The potential option
exercise for the sale of the wireless spectrum licenses is subject to various regulatory approvals.

Program rights represent licensed rights acquired to broadcast television programs on the
Company’s conventional and specialty television channels and program advances are in respect
of payments for programming prior to the window license start date. For licensed rights, the
Company records a liability for program rights and corresponding asset when the license period
has commenced and all of the following conditions have been met: (i) the cost of the program is
known or reasonably determinable, (ii) the program material has been accepted by the Company
in accordance with the license agreement and (iii) the material is available to the Company for
telecast. Program rights are expensed on a systematic basis generally over the estimated
exhibition period as the programs are aired and are included in operating, general and
administrative expenses.

Other intangibles include software that is not an integral part of the related hardware, customer
relationships as well as a trademark and brands. Software is amortized on a straight-line basis
over their estimated useful
lives ranging from three to ten years. Customer relationships
represent the value of customer contracts and relationships acquired in a business combination
and are amortized on a straight-line basis over the estimated useful life of 15 years.

Asset impairment

vi)
The Company tests goodwill and indefinite-life intangibles for impairment annually (as at
March 1) and when events or changes in circumstances indicate that the carrying value may be
impaired. The recoverable amount of each cash-generating unit (“CGU”) is determined based
on the higher of the CGU’s fair value less costs to sell and its value in use. A CGU is the
smallest identifiable group of assets that generate cash flows that are independent of the cash
inflows from other assets or groups of assets. The Company’s cash generating units are
consistent with its reporting segments, Cable, Satellite and Media. Where the recoverable
amount of the CGU is less than its carrying amount, an impairment loss is recognized.
Impairment losses relating to goodwill cannot be reversed in future periods. The results of the
impairment tests are provided in Note 10 to the Consolidated Financial Statements.

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

vii) Employee benefit plans
As at August 31, 2014, Shaw had non-registered defined benefit pension plans for key senior
executives and designated executives and various registered defined benefit plans for certain
unionized and non-unionized employees. The amounts reported in the financial statements
relating to the defined benefit pension plans are determined using actuarial valuations that are
based on several assumptions including the discount rate and rate of compensation increase.
While the Company believes these assumptions are reasonable, differences in actual results or
changes in assumptions could affect employee benefit obligations and the related income
statement
impact. The differences between actual and assumed results are immediately
recognized in other comprehensive income/loss. The most significant assumption used to
calculate the net employee benefit plan expense is the discount rate. The discount rate is the
interest rate used to determine the present value of the future cash flows that is expected will
be needed to settle employee benefit obligations and is also used to calculate the interest
income on plan assets. It is based on the yield of long-term, high-quality corporate fixed income
investments closely matching the term of the estimated future cash flows and is reviewed and
adjusted as changes required. The following table illustrates the increase on the accrued
benefit obligation and pension expense of a 1% decrease in the discount rate:

Accrued Benefit
Obligation at
End of Fiscal 2014

Pension Expense
Fiscal 2014

Weighted Average Discount Rate – Non-registered Plans
Weighted Average Discount Rate – Registered Plans
Impact of: 1% decrease ($millions) – Non-registered Plans
Impact of: 1% decrease ($millions) – Registered Plans

4.00%
4.09%

$ 85
$ 31

4.75%
4.84%
4
2

$
$

viii) Deferred income taxes
The Company has recognized deferred income tax assets and liabilities for the future income
tax consequences attributable to differences between the financial statement carrying amounts
of assets and liabilities and their respective tax bases. Deferred tax assets are also recognized in
respect of losses of certain of the Company’s subsidiaries. The deferred income tax assets and
liabilities are measured using enacted or substantially enacted tax rates expected to apply to
taxable income in the years in which the temporary differences are expected to reverse or the
tax losses are expected to be utilized. Realization of deferred income tax assets is dependent
upon generating sufficient taxable income during the period in which the temporary differences
are deductible. The Company has evaluated the likelihood of realization of deferred income tax
assets based on forecasts of taxable income of future years, existing tax laws and tax planning
strategies. Significant changes in assumptions with respect to internal forecasts or the inability
to implement tax planning strategies could result in future impairment of these assets.

Commitments and contingencies

ix)
The Company is subject to various claims and contingencies related to lawsuits, taxes and
losses are
commitments under contractual and other commercial obligations. Contingent
recognized by a charge to income when it is likely that a future event will confirm that an asset
has been impaired or a liability incurred at the date of the financial statements and the amount
can be reasonably estimated. Contractual and other commercial obligations primarily relate to
network fees, program rights and operating lease agreements for use of transmission facilities,

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

including maintenance of satellite transponders and lease of premises in the normal course of
business. Significant changes in assumptions as to the likelihood and estimates of the amount
of a loss could result in recognition of additional liabilities.

Related party transactions

Related party transactions are reviewed by Shaw’s Corporate Governance and Nominating
Committee, comprised of independent directors. The following sets forth certain transactions in
which the Company is involved.

Corus

The Company and Corus are subject to common voting control. During the year, network,
advertising and programming fees were paid to various Corus subsidiaries. The Company
provided uplink of television signals, programming content, Internet services and lease of
circuits to various Corus subsidiaries. In addition, the Company provided Corus with television
advertising spots in return for radio and television advertising.

During 2013, the Company entered into a number of transactions with Corus to optimize its
portfolio of specialty channels. Shaw agreed to sell to Corus its 49% interest in ABC Spark and
50% interest in its two French-language channels, Historia and Series+. In addition, Corus
agreed to sell to Shaw its 20% interest in Food Network Canada. The ABC Spark and Food
Network Canada transactions closed during 2013 while Historia and Series+ closed in fiscal
2014.

Burrard Landing Lot 2 Holdings Partnership
The Company has a 33.33% interest in the Partnership. During the current year, the Company
paid the Partnership for
located in
Vancouver, BC, is the Company’s headquarters for its lower mainland operations.

lease of office space in Shaw Tower. Shaw Tower,

Specialty channels
The Company previously held interests in a number of specialty television channels which were
either subject to joint control or significant influence, including Historia and Series+. During
the current year the Company paid network fees to these channels.

Key management personnel and Board of Directors
Key management personnel consist of the most senior executive team and along with the Board
of Directors have the authority and responsibility for directing and controlling the activities of
the Company. In addition to compensation provided to key management personnel and the
Board of Directors for services rendered, the Company transacts with companies related to
remote control units, network
certain Board members primarily for
programming and installation of equipment.

the purchase of

New accounting standards

Shaw has adopted or will adopt a number of new accounting policies as a result of recent
changes in IFRS as issued by the IASB. The ensuing discussion provides additional information
as to the date that Shaw is or was required to adopt the new standards, the methods of
adoption permitted by the standards, the method chosen by Shaw, and the effect on the
financial statements as a result of adopting the new policies. The adoption or future adoption of
these accounting policies has not and is not expected to result in changes to the Company’s
current business practices.

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

The Company adopted the following standards and amendments effective September 1, 2013:

Adoption of recent accounting pronouncements

The adoption of the following standards and amendments effective September 1, 2013 had no
impact on the Company’s consolidated financial statements other than additional disclosure
requirements.

IFRS 10 Consolidated Financial Statements replaces previous consolidation guidance and
outlines a single consolidation model that identifies control as the basis for consolidation
of all types of entities.
IFRS 11 Joint Arrangements replaces IAS 31 Interests in Joint Ventures and SIC 13 Jointly
Controlled Entities – Non-Monetary Contributions by Venturers. The new standard classifies
joint arrangements as either joint operations or joint ventures.
IFRS 12 Disclosure of Interests in Other Entities sets out required disclosures on
application of IFRS 10, IFRS 11 and IAS 28 (amended 2011).
IAS 27 Separate Financial Statements was amended in 2011 for the issuance of IFRS 10
and retains the same guidance for separate financial statements.
IAS 28 Investments in Associates was amended in 2011 for changes based on issuance
of IFRS 10 and IFRS 11 and provides guidance on accounting for joint ventures, as
defined by IFRS 11, using the equity method.
IFRS 13 Fair Value Measurement defines fair value, provides guidance on its
fair value
determination and introduces consistent
measurements.

requirements for disclosure of

The Company has elected to early adopt the amendments to IAS 36 Impairment of Assets for
the year ended August 31, 2014. The amendments limit the requirement to disclose the
recoverable amount to assets (including goodwill) for which an impairment loss was recognized
or reversed in the period, instead of the recoverable amount for each CGU to which significant
goodwill or indefinite-life intangible assets have been allocated. Under the amendments,
recoverable amount is required to be disclosed only when an impairment loss has been
recognized or reversed.

Standards, interpretations and amendments to standards issued but not yet effective

The Company has not yet adopted certain standards, interpretations and amendments that have
been issued but are not yet effective. The following pronouncements are being assessed to
determine their impact on the Company’s results and financial position.

IFRIC 21 Levies provides guidance on when to recognize a financial liability imposed by a
government, if the levy is accounted for in accordance with IAS 37 Provisions, Contingent
Liabilities and Contingent Assets, or where the timing and amount of the levy is certain.
This interpretation is effective for the annual period commencing September 1, 2014 and
is not expected to have an impact on the Company’s financial statements.
Clarification of Acceptable Methods of Depreciation and Amortization (Amendments to
IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets) prohibits revenue
from being used as a basis to depreciate property, plant and equipment and significantly
limits use of revenue-based amortization for intangible assets. The amendments are to be
applied prospectively for the annual period commencing September 1, 2016.

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

IFRS 15 Revenue from Contracts with Customers, was issued in May 2014 and replaces
IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programs,
IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfers of Assets
from Customers and SIC-31 Revenue – Barter Transactions Involving Advertising Services.
The new standard requires revenue to be recognized to depict the transfer of promised
goods or services to customers in an amount that reflects the consideration expected to
be received in exchange for those goods or services. The principles are to be applied in
the following five steps: (1) identify the contract(s) with a customer, (2) identify the
performance obligations in the contract, (3) determine the transaction price, (4) allocate
the transaction price to the performance obligations in the contract, and (5) recognize
revenue when (or as) the entity satisfies a performance obligation. The new standard is to
be applied either retrospectively or on a modified retrospective basis and is effective for
the annual period commencing September 1, 2017.
IFRS 9 Financial Instruments: Classification and Measurement replaces IAS 39 Financial
Instruments and applies a principal-based approach to the classification and
measurement of financial assets and financial liabilities, including an expected credit
loss model
for calculating impairment, and includes new requirements for hedge
accounting. The standard is required to be applied retrospectively for the annual period
commencing September 1, 2018.

Change in accounting estimates

lives of its property, plant and
During the current year, the Company reviewed the useful
equipment as well as the amortization period for amounts deferred under multiple element
arrangements, including equipment revenue and associated equipment costs and connection
fees. The review resulted in changes in the amortization period for amounts deferred under
lives of certain assets effective
multiple element arrangements and estimated useful
September 1, 2013. As a result, cable and telecommunication distribution system assets are
amortized on a straight-line basis over 5 to 20 years, and digital cable terminals and modems
on a straight-line basis over 2 to 5 years. The amortization period for amounts deferred and
amortized on a straight-line basis under multiple element arrangements is 3 years. The impact
of the changes has been accounted for prospectively. The changes in estimates in respect of
unamortized balances at August 31, 2013 resulted in decreases to revenue and amortization as
summarized below.

($millions Cdn)

Revenue

Amortization

Deferred equipment revenue
Deferred equipment costs
Property, plant and equipment, intangibles and other

Year ended
August 31, 2014

29
66
63

Known events, trends, risks and uncertainties

I.
The Company is subject to a number of risks and uncertainties which could have a material
Included herein is a “Caution Concerning
adverse effect on its future profitability.
Forward-Looking Statements” section which should be read in conjunction with this report.

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

The risks and uncertainties discussed below highlight the more important and relevant factors
that could significantly affect the Company’s operations. They do not represent an exhaustive
list of all potential issues that could affect the financial results of the Company. The principal
risks relate to:

Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š

Competition, technological change and regulatory regime
Economic conditions
Interest rates, foreign exchange rates, and capital markets
Litigation
Uninsured risks of loss
Reliance on suppliers
Programming expenses
Unionized labour
Holding company structure
Control of the Company by the Shaw family
Information systems and internal business processes
Dividend payments
Acquisitions and other strategic transactions

Competition, technological change and regulatory regime

i)
Cable and satellite providers and television broadcasters operate in an open and competitive
marketplace. Shaw’s businesses face competition from regulated and unregulated entities
utilizing existing or new communications technologies and from illegal services. In addition, the
rapid deployment of new technologies, services and products has reduced the traditional lines
between telecommunications, Internet and broadcasting services and expands further the
competitive landscape. Shaw may face competition in the future from other technologies being
developed or yet to be developed. While Shaw continually seeks to strengthen its competitive
position through investments in infrastructure, technology, programming and customer service,
there can be no assurance that these investments will be sufficient to maintain Shaw’s market
share or performance in the future.

CABLE TELEVISION AND DTH
Shaw’s cable television and DTH systems currently compete or may in the future compete with
other distributors of video and audio signals, including other DTH satellite services, satellite
master antenna systems, multipoint distribution systems (“MDS”), other competitive cable
television undertakings and telephone companies offering video service. As noted above, Shaw
also competes with unregulated internet services, illegal satellite services including grey and
black market offerings, unregulated video services and offerings available over high-speed
internet connections. Continued improvements in the quality of streaming video over the
internet and the availability of television shows and movies online increases competition to
Shaw’s cable television and DTH businesses.

The Company expects that competition will continue to increase and there can be no assurance
that such increased competition will not have a material adverse effect on Shaw’s results of
operations. The Company also expects increased IPTV competition across Canada with respect
to its DTH Satellite services.

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

INTERNET
There are a number of different types of ISPs offering residential and business Internet services
that compete or may compete in the future with Shaw’s Internet services. These include
independent service providers, ILECs, wireless providers, and electricity transmission and
distribution companies.

High-speed Internet access services are principally provided through cable modem and digital
subscriber line (“DSL”) technology. Internet services through cable modem technology are
primarily provided by cable companies, although the CRTC has also authorized third-party ISPs
to access cable companies’ facilities, such as Shaw’s, to deliver high-speed Internet services.

Although operating in a competitive environment, Shaw expects that consumer demand for
Internet access services and for bandwidth-intensive applications on the Internet (including
streaming video, digital downloading and interactive gaming) will lead to continued demand for
high-speed Internet services. Shaw continues to expand the capacity of its network to handle
the anticipated increases in demand, however there can be no assurance that network capacity
will continue to meet the increasing demand of its customers.

DIGITAL PHONE
The competitors of Shaw Digital Phone include ILECs, Competitive Local Exchange Carriers
(“CLECs”), non-facilities-based Voice over Internet Protocol (“VoIP”) providers and wireless
providers. Several of such competitors have larger operational and financial resources than the
Corporation and are well established with residential customers in their respective markets. In
addition, there is a continuing trend toward households opting to rely on wireless voice services
in place of landline services such as Digital Phone. These developments may negatively affect
the business and prospects of Shaw’s Digital Phone.

INTERNET INFRASTRUCTURE
Through Shaw Business, Shaw competes with other telecommunications carriers in providing
high-speed broadband communications services (data and video transport and Internet
connectivity services)
telecommunications providers. The
ISPs and other
telecommunications services industry in Canada is highly competitive, rapidly evolving and
subject to constant change. Competitors of Shaw Business include ILECs, competitive access
providers, CLECs, ISPs, private networks built by large end users and other telecommunications
companies. In addition, the development and implementation of new technologies by others
could give rise to significant competition.

to businesses,

SATELLITE SERVICES
In its Canadian SRDU business, Satellite Services faces competition principally from one other
operating SRDU operator in Canada. In February 2010, another company was licensed by the
CRTC to provide both DTH and SRDU services in Canada, but has not yet commenced service.
Satellite Services also faces competition from the expansion of fibre distribution systems
delivering distant US and Canadian conventional television signals into territories previously
served only by SRDU operators.

MEDIA
The OTA and Specialty television business and the advertising markets in which they operate
are highly competitive. Numerous broadcast and specialty television networks, as well as online
advertising platforms and websites, compete for advertising revenues. The Company’s ability to
compete successfully depends on a number of factors, including its ability to secure popular

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

including non-linear rights in addition to
television programming rights for all platforms,
traditional linear broadcast rights, and achieve high distribution levels. The Company expects
that competition will continue to increase and there can be no assurance that increased
competition will not have a material adverse effect on Shaw’s results of operations.

IMPACT OF REGULATION
As more fully discussed under Government regulations and regulatory developments, a majority
of the Corporation’s business activities are subject to regulations and policies administered by
Industry Canada and/or the CRTC. The Corporation’s operations and results are affected by
changes in regulations, policies and decisions, including changes in interpretation of existing
regulations by courts, the government or the regulators,
in particular the CRTC, Industry
Canada, the Competition Bureau and the Copyright Board. This regulation relates to, and may
have an impact on, among other things, licensing, competition, programming carriage and
terms of carriage, strategic transactions and the potential for new or increased fees. Changes in
the regulatory regime may adversely affect the operations and performance of the Company.

Economic conditions

ii)
Canada’s economy is affected by uncertainty in global financial and equity markets and
slowdowns in global economic growth. Advertising revenues are affected by prevailing economic
conditions. Changes in economic conditions may affect discretionary consumer spending,
resulting in increased or decreased demand for Shaw’s product offerings as well as advertising
airtime and rates. There can be no assurance that current or future events caused by volatility
in domestic or international economic conditions or a decline in economic growth will not have
an adverse effect on the Company’s business and operating results.

Interest rates, foreign exchange rates and capital markets

iii)
Shaw has the following financial risks in its day-to-day operations:

(a)

Interest rates: Due to the capital-intensive nature of Shaw’s operations, the Company
utilizes
structure. The primary
components of this structure include:

long-term financing extensively

in its capital

1. Banking facilities as more fully described in Note 13 to the Consolidated

Financial Statements.

2. Various Canadian denominated senior notes and debentures with varying
maturities issued in the public markets as more fully described in Note 13 to the
Consolidated Financial Statements.

Interest on bank indebtedness is based on floating rates while the senior notes are
primarily fixed-rate obligations. If required, Shaw utilizes its credit facility to finance
day-to-day operations and, depending on market conditions, periodically converts the
bank loans to fixed-rate instruments through public market debt issues. Increases in
interest rates could have a material adverse effect on the Company’s cash flows.

As at August 31, 2014, 94% of Shaw’s consolidated long-term debt was fixed with
respect to interest rates.

(b) Foreign exchange: In September 2014, the Company closed the acquisition of 100%
of the shares of US-based ViaWest for an enterprise value of US $1.2 billion which
was funded through a combination of cash on hand, assumption of ViaWest debt, and
facility. Shaw’s net
a drawdown of US $330 million on the Company’s credit
investment in ViaWest is exposed to foreign exchange risk related to fluctuations in

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

exchange rates between the Canadian and US dollar. This risk is mitigated by the US
dollar denominated debt which is designated as a hedge of the net investment.

Upon completion of the ViaWest acquisition in September 2014, a portion of the
Company’s revenues and operating expenses are incurred in US dollars. In addition
certain of the Company’s capital expenditures are incurred in US dollars. Fluctuations
in the value of the Canadian dollar relative to the US dollar could have a material
effect on the Company’s business and operating results.

(c) Capital markets: The Company requires ongoing access to capital markets to support
its operations. Changes in capital market conditions, including significant changes in
market interest rates or lending practices, or changes in Shaw’s credit ratings, may
have a material adverse effect on the Company’s ability to raise or refinance short-term
or long-term debt, and thus on its financial position and ability to operate.

Shaw manages its exposure to floating interest rates through maintaining a balance of fixed and
floating rate debt. To mitigate some of the foreign exchange uncertainty with respect to capital
expenditures, the Company regularly enters into forward contracts in respect of US dollar
commitments. In order to minimize the risk of counterparty default under its swap agreements,
Shaw assesses the creditworthiness of its swap counterparties. Further information concerning
the policy and use of derivative financial instruments is contained in Notes 2 and 28 to the
Consolidated Financial Statements.

Litigation

iv)
The Company and its subsidiaries are involved in litigation matters arising in the ordinary
course and conduct of its business. Although management does not expect that the outcome of
these matters will have a material adverse effect on the Corporation, there can be no assurance
that these matters, or other matters that arise in the future, will not have an adverse effect on
the Corporation’s business and operating results.

Uninsured risks of loss

v)
The Company relies on three satellites (Anik F2, Anik F1R and Anik G1) owned by Telesat
Canada (“Telesat”) to conduct its Satellite business. The Company owns certain transponders
on Anik F2 and has long-term capacity service agreements in place in respect of transponders
on Anik F1R, Anik F2 and Anik G1. The Company’s interests in these transponders are only
insurable indirectly through the satellite owner. In the case of transponders on Anik F1R and
Anik F2, the Company does not maintain any indirect insurance coverage as it believes the
costs are uneconomic relative to the benefit which could otherwise be derived through an
arrangement with Telesat. In the case of Anik G1, Telesat is committed to maintaining
insurance on the satellite for five years from its April 2013 launch. As collateral for the
transponder capacity pre-payments that were made by the Company to facilitate the
construction of the satellite, the Company maintains a security interest in the transponder
capacity and any related insurance proceeds that Telesat recovers in connection with an insured
loss event.

The Company does not maintain business interruption insurance covering damage or loss to one
or more of the satellites as it believes the premium costs are uneconomic relative to the risk of
satellite failure. Transponder capacity is available to the Company on an unprotected, non-
preemptible basis, in both the case of the Anik F2 transponders that are owned by Shaw and

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

the Anik F1R, Anik F2 and Anik G1 transponders that are secured through capacity service
agreements. The Company has priority access to spare transponders on Anik F1R, Anik F2 and
Anik G1 in the case of interruption, subject to availability. In the event of satellite failure,
service will only be restored as capacity becomes available. Restoration of satellite service on
another satellite may require repositioning or re-pointing of customers’ receiving dishes, an
upgrade of their set-top box or customers may require a larger dish. The Anik G1 satellite has a
switch feature that allows whole channel services (transponders and available spares) to be
switched from extended Ku-band to Ku-band, which provides the Company with limited back-up
to restore failed whole channel services on Anik F1R. Satellite failure could negatively affect
levels of customer service and customer relationships and may result in a material adverse
effect on the Company’s business and results of operations.

The Company’s business may be interrupted by network failures, including those caused by fire
damage, natural disaster, power loss, hacking, computer viruses, disabling devices, acts of war
or terrorism and other events. This could negatively affect levels of customer service and
customer relationships and may result in a material adverse effect on the Company’s business
and operating results. The Company protects its network through a number of measures
including physical and information technology security, ongoing maintenance and placement of
insurance on its network equipment and data centers. The Company self-insures the plant in
the cable distribution system as it believes the premium costs are uneconomic relative to the
risk of failure of the plant in the cable distribution system. The risk of loss is mitigated as most
of the cable plant is located underground. In addition, it is likely that network damage caused
by any one incident would be limited by geographic area and therefore resulting business
interruption and financial damages would be limited. Further, the Company has back-up
disaster recovery plans in the event of network failure and redundant capacity for certain
portions of the system. In the past, the Company has successfully recovered from network
damage caused by natural disasters without significant cost or disruption of service. Although
the Company has taken steps to reduce this risk, there can be no assurance that major network
disruptions will not occur.

Reliance on suppliers

vi)
Shaw’s business is connected to or relies on other telecommunication carriers and certain other
utilities. Any of the events described in the preceding paragraph, as well as labour strikes and
other work disruptions, bankruptcies,
technical difficulties or other events affecting the
business operations of these carriers or utilities may have an adverse effect on the Company’s
business and operating results.

The Company sources its customer premise and capital equipment and capital builds from
certain key suppliers. While the Company has alternate sources for most of its purchases, the
loss of a key supplier could adversely affect the Company in the short term.

vii) Programming expenses
Shaw’s programming expenses for cable and DTH continue to be one of the most significant
single expense items. Costs continue to increase, particularly for sports programming. In
addition, as the Company adds programming or distributes existing programming to more of the
subscriber base, programming expenses increase. Although the Company has been successful
at reducing the impact of these increases through sale of additional services or increasing
subscriber rates, there can be no assurance that the Company will continue to be able to do so
and operating results may be impacted.

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

the most significant expenses is also programming costs.

Increased
In Media one of
competition in the television broadcasting industry, developments affecting producers and
distributors of programming content, changes in viewer preferences and other developments
could impact both the availability and cost of programming content. Although the Corporation
has processes to effectively manage these costs, programming content may be purchased for
broadcasting one to two years in advance, making it more difficult to predict how such content
will perform.

viii) Unionized labour
Approximately 50% of the Media division employees are employed under one of five collective
agreements represented by three unions. If labour disruptions occur,
it is possible large
numbers of employees may be involved and that the Media business may be disrupted. Shaw is
currently negotiating one collective agreement and the remaining four agreements have been
renewed and are in effect for the next one to three years.

Holding company structure

ix)
Substantially all of Shaw’s business activities are operated by its subsidiaries. As a holding
company, the Company’s ability to meet its financial obligations is dependent primarily upon
the receipt of interest and principal payments on intercompany advances, management fees,
cash dividends and other payments from its subsidiaries together with proceeds raised by the
Company through the issuance of equity and the incurrence of debt, and from proceeds
received on the sale of assets. The payment of dividends and the making of loans, advances
and other payments to the Company by its subsidiaries may be subject to statutory or
contractual restrictions, are contingent upon the earnings of those subsidiaries and are subject
to various business and other considerations.

Control of the Company by the Shaw family

x)
As at October 31, 2014, JR Shaw and members of his family and the corporations owned and/
or controlled by JR Shaw and members of his family (the “Shaw Family Group”) own
approximately 79% of the outstanding Class A Shares of the Company. The Class A Shares are
the only shares entitled to vote in all shareholder matters. All of the Class A Shares held by the
Shaw Family Group are subject to a voting trust agreement entered into by such persons. The
voting rights with respect to such Class A Shares are exercised by the representative of a
committee of five trustees. Accordingly, the Shaw Family Group is, and as long as it owns a
majority of the Class A Shares will continue to be, able to elect a majority of the Board of
Directors of the Company and to control the vote on matters submitted to a vote of the
Company’s Class A shareholders.

Information systems and internal business processes

xi)
Many aspects of the Company’s business depend to a large extent on various IT systems and
software and internal business processes. Shaw also undertakes ongoing initiatives to update
and improve these systems and processes. Although the Company has taken steps to reduce
these risks, there can be no assurance that potential failures of, or deficiencies in, these
systems, processes or change initiatives will not have an adverse effect on the Corporation’s
business and operating results.

xii) Dividend payments
The Company currently pays monthly common share dividends in amounts approved on a
quarterly basis by the Board of Directors. At the current approved dividend amount, the

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

Company would pay approximately $510 million in common share dividends during 2015
(before taking into account the Company’s dividend reinvestment plan (“DRIP”), see further
details on page 54). While the Company expects to generate sufficient free cash flow in 2015
to fund these dividend payments, if actual results are different from expectations there can be
no assurance that the Company will continue common share dividend payments at the current
level.

xiii) Acquisitions and other strategic transactions
The Company may from time to time make acquisitions and enter
into other strategic
transactions. In connection with these acquisitions and strategic transactions, Shaw may fail to
realize the anticipated benefits,
incur unanticipated expenses and/or have difficulty
incorporating or integrating the acquired business, the occurrence of which could have a
material adverse effect on the Company.

II.

SUMMARY OF QUARTERLY RESULTS

Quarter
($millions Cdn except per share amounts)
2014
Fourth
Third
Second
First

Total
2013
Fourth
Third
Second
First

Total

Operating
income
before
restructuring
costs and
amortization(1)

Net income
attributable
to equity
shareholders

Net
income(2)

Basic
earnings
per share

Diluted
earnings
per share

525
601
528
608

2,262

496
585
538
601

2,220

187
219
215
236

857

111
239
172
224

746

192
228
222
245

887

117
250
182
235

784

0.40
0.47
0.46
0.51

1.84

0.24
0.52
0.38
0.50

1.64

0.40
0.47
0.46
0.51

1.84

0.24
0.52
0.38
0.49

1.63

Revenue

1,263
1,342
1,274
1,362

5,241

1,246
1,326
1,251
1,319

5,142

See key performance drivers on page 21.

(1)
(2) Net income attributable to both equity shareholders and non-controlling interests.

Quarterly revenue and operating income before restructuring costs and amortization are
primarily impacted by the seasonality of the Media division and fluctuate throughout the year
due to a number of factors including seasonal advertising and viewing patterns. Typically, the
Media business has higher revenue in the first quarter driven by the fall launch of season
premieres and high demand and the third quarter which is impacted by season finales and mid
season launches. Advertising revenue typically declines in the summer months of the fourth
quarter when viewership is generally lower.

Net income has fluctuated quarter-over-quarter primarily as a result of the changes in operating
income before restructuring costs and amortization described above and the impact of the net
change in non-operating items. In the fourth quarter of 2014, net income decreased by $36
million primarily due to lower operating income before restructuring costs and amortization of

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

$76 million partially offset by the impact of the restructuring announced during the previous
quarter. In the third quarter of 2014, net income increased $6 million due to higher operating
income before restructuring costs and amortization of $73 million and lower interest and
amortization expense totaling $25 million partially offset by restructuring expenses of $53
million and reduction in net other revenue items of $41 million. The reduction in net other
revenue items was primarily due to the gain on sale of media assets of $49 million net of the
$8 million of debt retirement costs recorded in the second quarter. In the second quarter of
2014, net income decreased $23 million due to lower operating income before restructuring
costs and amortization of $80 million and increased amortization of $8 million partially offset
by an improvement in net other non-operating items of $36 million and lower income tax
expense of $24 million. In the first quarter of 2014, net income increased $128 million due to
increased operating income before restructuring costs and amortization of $112 million, a
reduction in net non-operating items of $21 million and lower amortization of $29 million
partially offset by higher income taxes of $36 million. The reduction in amortization is due to
changes in estimated useful lives of certain property, plant and equipment as well as a change
in the amortization period for deferred equipment
revenue and the associated deferred
equipment costs. Net other non-operating items decreased due to a refund of $5 million in
respect of excess money from the Canwest CCAA plan implementation fund received in the first
quarter and the write-down of a real estate property of $14 million in the fourth quarter. In the
fourth quarter of 2013, net income decreased $133 million due to lower operating income
before restructuring costs and amortization of $89 million and reduction in net other revenue
items of $67 million partially offset by lower income taxes of $34 million. The reduction in net
other revenue items was mainly due to the gain on sale of Mountain Cable of $50 million
recorded in the third quarter and write-down of a real estate property of $14 million in the
fourth quarter. In the third quarter of 2013, net income increased $68 million due to increased
the
operating income before restructuring costs and amortization of $47 million,
aforementioned gain on sale of Mountain Cable and the gain on sale of the specialty channel
ABC Spark partially offset by higher
income taxes of $30 million and acquisition and
divestment costs in respect of the transactions with Rogers and the acquisition of Envision. In
the second quarter of 2013, net income decreased $53 million primarily due to lower operating
income before restructuring costs and amortization of $63 million partially offset by lower
income taxes of $5 million. As a result of the aforementioned changes in net income, basic and
diluted earnings per share have trended accordingly.

The following further assists in explaining the trend of quarterly revenue and operating income
before restructuring costs and amortization:

Growth in subscriber statistics as follows:

Subscriber Statistics

First

Second

Third

Fourth

First

Second

Third

Fourth

2014

2013

Video customers
Internet customers
Digital Phone lines
DTH customers

(29,619) (20,758) (12,075) (20,166) (23,877) (29,525) (26,578) (29,522)
4,157 10,564
4,722
(835)

2,746 12,767 12,399 11,983
1,351
(9,323)

1,114 16,750 13,225 17,719
(6,606)
(2,930)

4,834
(5,608)

8,075
(1,405)

(4,021)

1,328

5,637

7,675

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

III. RESULTS OF OPERATIONS

OVERVIEW OF FISCAL 2014 CONSOLIDATED RESULTS

($millions Cdn except per share amounts)
Operations:

Revenue
Operating income before restructuring costs and

amortization(1)
Operating margin(1)
Funds flow from operations(2)
Net income
Free cash flow(1)

Balance sheet:

Total assets
Long-term financial liabilities

2014

2013

2012

Change

2014
%

2013
%

5,241

5,142

4,998

1.9

2.9

2,262
2,127
2,220
43.2% 43.2% 42.6%
1,524
1,380
887
784
698
604

1.9
4.4
–
0.6
1,299 10.4
6.2
761 13.1
3.0
482 15.6 25.3

13,250 12,732 12,722

Long-term debt (including current portion)
Derivative instruments
Other financial liabilities

4,690
–
5

4,818
–
53

5,263
1
4

Per share data:

Earnings per share

Basic
Diluted

1.84
1.84

1.64
1.63

1.62
1.61

Weighted average number of participating shares

outstanding during period (millions)

457

448

441

Cash dividends declared per share

Class A
Class B

1.0775 1.0050 0.9550
1.0800 1.0075 0.9575

(1)
(2)

See key performance drivers on page 21.
Funds flow from operations is presented before changes in non-cash working capital as
presented in the Consolidated Statements of Cash Flows.

Highlights
Š
Š
Š
Š

Š
Š

Net income was $887 million for the year compared to $784 million in 2013.
Earnings per share were $1.84 compared to $1.64 in 2013.
Revenue for the year improved 1.9% to $5.24 billion from $5.14 billion last year.
Operating income before restructuring costs and amortization of $2.26 billion was
up 1.9% over last year’s amount of $2.22 billion.
Consolidated free cash flow was $698 million compared to $604 million in 2013.
During 2014 the Company increased the dividend rate on Shaw’s Class A
Participating Shares and Class B Non-Voting Participating Shares to an equivalent
dividend rate of $1.0975 and $1.10 respectively. Dividends paid in 2014 were
$485 million.

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

On January 28, 2014 the Company issued $500 million senior unsecured notes at
a rate of 4.35% due January 31, 2024 and $300 million floating rate senior
unsecured notes due February 1, 2016. The floating rate senior notes bear interest
at an annual rate equal to three month CDOR plus 0.69%. The net proceeds from
the issuances were used to redeem the $600 million senior unsecured notes due
June 2, 2014 and for working capital and general corporate purposes.
In April 2014 the Company announced changes to the structure of its operating
divisions to improve overall efficiency while enhancing its ability to grow as the
leading network and content experience company. Commencing in fiscal 2015,
Shaw’s residential and enterprise services are reorganized into new Consumer and
Business units, respectively, with no changes to the Media division. In connection
with the restructuring of its operations, the Company recorded $58 million primarily
in respect of the approximate 400 management and non-customer facing roles
which were affected by the organizational changes. The anticipated annual savings,
net of hires to support the new structure, is approximately $50 million.
During 2014 Shaw entered into a marketing, content and promotion partnership
with Rdio, Inc. (“Rdio”) a leading digital music service with a catalog of over
20 million songs. The service allows users to listen anywhere – the web, phone, or
offline – and complements Shaw’s broadband and Shaw Go WiFi services. As part of
the arrangement Shaw made a financial investment in Rdio’s holding company,
Pulser Media Inc. (“Pulser”). In addition, Shaw also made a minority investment in
SHOP.CA, one of Canada’s leading on-line ecommerce destinations.
During fiscal 2014 and 2013, the Company entered into a number of transactions
as follows:
Š

the shares of ViaWest

In late fiscal 2014, the Company announced it had entered into agreements
for an enterprise value of
to acquire 100% of
US $1.2 billion. ViaWest is headquartered in Denver, Colorado and has
27 data centres in 8 key Western U.S. markets providing collocation, cloud
and managed services. On September 2, 2014, the Company closed the
acquisition which was funded through a combination of cash on hand,
assumption of ViaWest debt and a drawdown of US $330 million on the
Company’s credit facility. The ViaWest acquisition provides the Company with
a growth platform in the North American data centre sector and is another
step in expanding technology offerings for mid-market enterprises in Western
Canada.
During the current year, the Company partnered with Rogers to form shomi, a
new subscription video-on-demand service having the latest most exclusive
shows and selections personalized for viewers. The service was launched in
beta in early November 2014.
During 2013, the Company entered into agreements with Rogers to sell to
Rogers its shares in Mountain Cable and grant to Rogers an option to acquire
its wireless spectrum licenses; and, to purchase from Rogers its 33.3%
interest in TVtropolis General Partnership (“TVtropolis”). The sale of Mountain
Cable and the purchase of TVtropolis closed during 2013, after the respective
regulatory approvals were received. The potential option exercise for the sale
of
to various regulatory
approvals. The net proceeds of these transactions approximates $700 million.

the wireless spectrum licenses is still subject

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

During 2013, the Company entered into a number of transactions with Corus,
a related party subject to common voting control. In a series of agreements to
optimize its portfolio of specialty channels, Shaw agreed to sell to Corus its
49% interest in ABC Spark and 50% interest in its two French-language
channels, Historia and Series+. In addition, Corus agreed to sell to Shaw its
20% interest
in Food Network Canada. Shaw received net proceeds of
$93 million from these transactions. The ABC Spark and Food Network
Canada transactions closed during 2013 while Historia and Series+ closed in
2014.
In 2013, the Company acquired Envision, a company providing leading
telecommunication services to Calgary business customers, for approximately
$225 million.

During 2013, the Company established a notional fund, the accelerated capital
fund, of up to $500 million with proceeds received, and to be received, from the
aforementioned strategic transactions with each of Rogers and Corus. Accelerated
capital initiatives are being funded through this fund and not cash generated from
operations. Key investments include the completion of the Calgary internal data
centre, further digitization of the network and additional bandwidth upgrades,
development of IP delivery of video, expansion of the WiFi network, and additional
innovative product offerings related to Shaw Go and other applications to provide an
enhanced customer experience. Approximately $110 million was invested in fiscal
2013, $240 million in fiscal 2014, and $150 million is expected to be invested in
fiscal 2015.
The Company continued to expand on its TV Everywhere content strategy launching
Global Go and a number of Shaw Go apps during fiscal 2014, giving subscribers
on-the-go access to their favorite programming. Shaw also continued to invest in
and build awareness of Shaw Go WiFi and as at August 31, 2014 had over 45,000
hotspots and 1.25 million devices registered on the network, reflecting the value of
the service to customers.

Revenue and operating expenses

Consolidated revenue of $5.24 billion and operating income before restructuring costs and
amortization of $2.26 billion both improved 1.9% over 2013. Revenue growth in the Cable
division, primarily driven by pricing adjustments and growth in Business, was partially reduced
by lower video subscribers, increased programming costs and higher employee related amounts.
The marginal revenue decline in the Media division, primarily due to reduced advertising
revenues partially offset by increased subscriber revenues as well as the favorable impact of a
retroactive adjustment related to distant signal retransmission royalties, was offset through
various expense reductions. Revenue growth in the satellite division, primarily due to pricing
adjustments, was more than offset by higher programming expenses and increased operating
costs related to the new Anik G1 satellite which launched in the third quarter of fiscal 2013.
Within all segments, the prior year benefited from a one-time adjustment to align certain
broadcast license fees with the CRTC billing period totaling approximately $14 million.

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

Amortization

($millions Cdn)

Amortization revenue (expense) –
Deferred equipment revenue
Deferred equipment costs
Property, plant and equipment, intangibles and other

2014

2013

Change
%

69
(142)
(692)

121
(257)
(718)

(43.0)
(44.7)
(3.6)

Amortization of deferred equipment revenue and deferred equipment costs decreased over the
comparable year primarily due to the impact of the change in the amortization period for
amounts in respect of customer premise equipment from two to three years.

intangibles and other decreased over the
Amortization of property, plant and equipment,
comparable year as the amortization of new expenditures was more than offset by the impact of
assets that became fully depreciated and the effect of changes in useful lives of certain assets.

Amortization of financing costs and Interest expense

($millions Cdn)

Amortization of financing costs – long-term debt
Interest expense

2014

2013

3
266

4
309

Change
%

(25.0)
(13.9)

Interest expense decreased over the comparable year primarily due to the combined impact of a
lower average debt level and reduced average cost of borrowing.

Other income and expenses

($millions Cdn)

Gain on sale of media assets
Gain on sale of cablesystem
Acquisition and divestment costs
Gain on sale of associate
Accretion of long-term liabilities and provisions
Debt retirement costs
Other losses

Increase
(decrease)
in
income

2014

2013

49
–
(4)
–
(6)
(8)
(6)

–
50
(8)
7
(9)
–
(26)

49
(50)
4
(7)
3
(8)
20

During 2013, the Company agreed to sell its 50% interest in its two French-language channels,
Historia and Series+, to Corus, a related party subject to common voting control. The sale of
Historia and Series+ closed on January 1, 2014 and the company recorded proceeds of
$141 million and a gain of $49 million.

During 2013, the Company closed the sale of Mountain Cable in Hamilton, Ontario to Rogers.
The Company received proceeds, after working capital adjustments, of $398 million and
recorded a gain of $50 million.

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

The Company incurred $4 million of acquisition related costs in fiscal 2014 for professional
fees paid to lawyers, consultants and advisors in respect of the acquisition of ViaWest which
closed subsequent to year end.

In 2013, the Company incurred $8 million of costs in respect of the acquisition of Envision and
the transactions with Rogers related to the sale of Mountain Cable, grant of an option to acquire
the wireless spectrum licenses and purchase from Rogers its interest in TVtropolis.

During 2013, the Company recorded a gain of $7 million on the sale of its interest in ABC
Spark to Corus.

The Company records accretion expense in respect of the discounting of certain long-term
liabilities and provisions which are accreted to their estimated value over their respective terms.
The expense is primarily in respect of CRTC benefit obligations.

On February 18, 2014, the Company redeemed the $600 million 6.50% senior notes due
June 2, 2014. In connection with the early redemption, the Company incurred costs of
$7 million and wrote-off the remaining finance costs of $1 million.

Other losses generally includes realized and unrealized foreign exchange gains and losses on
US dollar denominated current assets and liabilities, gains and losses on disposal of property,
plant and equipment and minor investments, and the Company’s share of the operations of
Burrard Landing Lot 2 Holdings Partnership. During the prior year, the category included
amounts related to the electrical fire and resulting water damage to Shaw Court that occurred
during the fourth quarter of 2012. In fiscal 2013, the Company received insurance advances of
$5 million related to its insurance claim and incurred costs of $13 million in respect of ongoing
recovery activities. In addition, during the fourth quarter of the prior year, the Company decided
to discontinue further construction of a real estate project which resulted in a write-down of
$14 million. During the current year, the category includes additional proceeds of $6 million
related to the aforementioned insurance claim and also includes a refund of $5 million in
respect of excess money from the Canwest CCAA plan implementation fund and a write-down of
$6 million in respect of discontinued capital projects.

Income tax expense

The income tax expense was calculated using current statutory income tax rates of 26.0% for
2014 and 25.9% for 2013 and was adjusted for the reconciling items identified in Note 23 to
the Consolidated Financial Statements.

Earnings per share

($millions Cdn except per share amounts)

Net income
Weighted average number of participating

shares outstanding during period (millions)

Earnings per share

Basic
Diluted

2014

2013

Change
%

887

784 13.1

457

448

2.0

1.84 1.64
1.84 1.63

12.2
12.9

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

Net income

Net income was $887 million in 2014 compared to $784 million in 2013. The year-over-year
changes are summarized in the table below.

Net income increased $103 million over the prior year. The current year benefitted from higher
operating income before restructuring costs and amortization, lower amortization and interest
expense and improved net other costs and revenue, partially offset by higher income taxes and
restructuring costs. Net other costs and revenue in both years was impacted by various items
including gains on sales of media and cable assets as well as write-downs of assets while the
prior year also included amounts in respect of recovery activities related to damage at Shaw
Court.

($millions Cdn)

Increased operating income before restructuring costs and amortization
Restructuring costs
Decreased amortization
Decreased interest expense
Change in other net costs and revenue(1)
Increased income taxes

42
(58)
90
43
11
(25)

103

(1) Net other costs and revenue includes gains on sales of media assets and cablesystem,
acquisition and divestment costs, gain on sale of associate, accretion of long-term
liabilities and provisions, debt retirement costs and other losses as detailed in the
Consolidated Statements of Income.

SEGMENTED OPERATIONS REVIEW

CABLE

FINANCIAL HIGHLIGHTS

($millions Cdn)

Revenue

2014

2013

3,365

3,266

Operating income before restructuring costs and amortization(1)

1,632

1,582

Capital expenditures and equipment costs (net):(6)

Change
%

3.0

3.2

New housing development(2)
Success-based(3)
Upgrades and enhancement(4)
Replacement(5)
Buildings and other

Operating margin(1)

(1)

See key performance drivers on page 21.

94
234
364
49
247

988

–
203 15.3
(4.2)
380
6.5
46
144 71.5

867 14.0

48.5% 48.4%

0.1

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

(2) Build out of mainline cable and the addition of drops in new subdivisions.
(3)

Capital and equipment costs (net) related to the acquisition of new customers, including
installation of internet and digital phone modems, DCTs and commercial drops for Shaw
Business customers.

(4) Upgrades to the plant and build out of the fibre backbone.
(5) Normal replacement of aged assets such as drops, vehicles and other equipment.
(6)

Amounts in 2014 and 2013 include $240 million and $110 million, respectively, related
to certain capital investments that are being funded from the accelerated capital fund.

OPERATING HIGHLIGHTS

Revenue and operating income before restructuring costs and amortization improved
3.0% and 3.2%, respectively, over last year.
Internet customers were up 39,895 to 1,930,401 and Digital Phone lines increased
15,374 totaling 1,375,334 as at August 31, 2014. Video subscribers decreased 82,618.

Cable revenue of $3.36 billion improved 3.0% over last year. Price adjustments along with
growth in Business, including the Envision acquisition, and Internet were partially offset by
lower Video subscribers and the impact of the divestiture of Mountain Cable in the prior year.

Operating income before restructuring costs and amortization of $1.63 billion improved 3.2%
over the prior year. The net revenue improvement, along with lower marketing expenses and the
reduction in the LPIF from 1.0% to 0.5%, were partially offset by increased programming costs
and higher employee related expenses. The prior year also benefitted from a favorable
adjustment of approximately $7 million to align certain broadcast license fees with the CRTC
billing period.

Capital investment of $988 million increased $121 million over the prior year. The current year
included $240 million of investment funded through the accelerated capital fund while the
prior year spend was $110 million. The accelerated capital fund initiatives included continued
investment on the new data centre, network capacity, next generation delivery systems, and
expediting the WiFi infrastructure build.

Success-based spend was $31 million higher than the prior year due to Video equipment
included offers and higher WiFi modem purchases, partially reduced by lower Digital Phone
modem purchases.

Investment in Upgrades and enhancement and Replacement categories combined of $413
million was lower by $13 million due to prior year investment in the DNU project. Significant
investment continued in upgrades to improve internet bandwidth capacity and congestion, WiFi
network build, business customer growth and IPTV video systems.

Investment in Buildings and other was up $103 million compared to last year due to higher
spending on the new internal data centre and Shaw Court refurbishment.

Shaw continues to invest in the largest WiFi network in Canada, now with over 45,000 hotspots
located in businesses and municipalities from Victoria, British Columbia to Sault Ste. Marie,
Ontario. Shaw’s carrier-grade network allows Shaw Internet customers, while on the go, to
access and stream internet content, including Shaw Go Apps.

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

VIDEO:
Connected

SUBSCRIBER STATISTICS

2014

2013

Growth

Change
%

1,957,629 2,040,247 (82,618)

(4.0)

Penetration as a % of homes passed

47.8%

50.9%

INTERNET:
Connected

Stand-alone Internet not included in video

Penetration as a % of video (excluding

Standalone Internet)

DIGITAL PHONE:

Number of lines(1)

1,930,401 1,890,506
320,724

392,387

2.1
39,895
71,663 22.3

78.6%

76.9%

1,375,334 1,359,960

15,374

1.1

(1) Represents primary and secondary lines on billing.

SATELLITE

FINANCIAL HIGHLIGHTS

($millions Cdn)

Revenue

Operating income before restructuring costs and amortization(1)

Capital expenditures and equipment costs (net):

Success-based(2)
Transponders
Buildings and other

Operating margin(1)

2014

2013

878

277

860

285

Change
%

2.1

(2.8)

79
–
10
89

88
(10.2)
23 >100.0
(16.7)
12
(27.6)
123

31.5% 33.1%

(1.6)

See key performance drivers on page 21.

(1)
(2) Net of the profit on the sale of satellite equipment as it is viewed as a recovery of

expenditures on customer premise equipment.

OPERATING HIGHLIGHTS

Revenue improved 2.1% over the prior year to $878 million while operating income
before restructuring costs and amortization declined 2.8% to $277 million.
Shaw Direct subscribers decreased 22,942 to 880,623 at August 31, 2014.

Revenue of $878 million was up 2.1% over last year primarily due to rate adjustments partially
offset by customer declines. Operating income before restructuring costs and amortization of
$277 million decreased from $285 million last year primarily due revenue related
improvements offset by higher fees related to programming services and operating costs related
to the Anik G1 transponders launched in the third quarter last year. The prior year also
benefitted from a favorable adjustment of approximately $4 million to align certain broadcast
license fees with the CRTC billing period.

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

Total capital investment of $89 million for the current year declined from $123 million last
year. Success based capital was down primarily due to lower customer growth. The decrease in
Transponders reflects the final payment related to Anik G1 in the prior year while the decline in
Buildings and other relates to higher investment last year in various uplink equipment.

During the year, Shaw Direct launched a number of new HD and SD channels and currently
offers over 650 channels of which more than 220 are HD.

SUBSCRIBER STATISTICS

Shaw Direct customers(1)

2014

2013

Growth

880,623 903,565 (22,942)

(1)

Including seasonal customers who temporarily suspend their service.

MEDIA

FINANCIAL HIGHLIGHTS

($millions Cdn)

Revenue

2014

2013

Change
%

1,096

1,106

(0.9)

Operating income before restructuring costs amortization(1)

353

–

Capital expenditures:

Broadcast and transmission
Buildings/other

Other adjustments:

CRTC benefit obligation funding
Non-controlling interests

Operating margin(1)

10
8

13 (23.1)
18 (55.6)

31 (41.9)

(58)
(31)

(52) 11.5
(20.5)
(39)
32.2% 31.9%
0.3

(1)

See key performance drivers on page 21.

OPERATING HIGHLIGHTS

2014 revenue of $1.10 billion and operating income before restructuring costs and
amortization of $353 million compared to $1.11 billion and $353 million, respectively, for the
prior year. Revenues declined due to reduced advertising revenues and the impact of the
disposition of Historia and Series+. This was partially offset by increased subscriber and other
revenues that included a retroactive adjustment of $6 million related to Global’s share of
royalties for distant signal transmission for the years 2009 through 2013. Operating income
before restructuring costs and amortization was unchanged year-over-year as the current year
revenue decline was offset through various lower expenses including employee related and
marketing. The prior year also benefitted from a favorable adjustment of approximately $3
million to align certain broadcast license fees with the CRTC billing period.

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

Global delivered solid programming results throughout the year with new programs such as The
Blacklist and returning favourites including the NCIS franchise, Bones and Survivor. The
conventional fall programming premiered through the month of September and into October
with a solid returning line-up combined with new drama programming.

Throughout the year, Media’s specialty portfolio held solid positions in the channel rankers in
the Adult 25-54 category and closed out the year with 3 of the Top 10 analog channels and 5
of the Top 10 digital channels. In late fiscal 2014, Shaw Media announced the rebranding of
two existing channels to FYI and Crime + Investigation which took place early in fiscal 2015.

During 2014, Global News retained the number one position in the Vancouver, Calgary and
Edmonton markets, while continued focus on on-line and mobile audiences has maintained
Globalnews.ca as Canada’s fastest growing major news site. Global News continues to receive
recognition for the quality of its journalism and public service and was honoured during the
including Global Calgary
current year with numerous awards from various organizations,
receiving the prestigious “Best Local Newscast in Canada” award. In addition, Globalnews.ca
won the 2013 Eppy Award for the best overall news website design, surpassing major Canadian
and US news sites. In August 2014 Shaw filed an application with the CRTC for a new Category
C hybrid national and local all news channel.

Higher capital investment was incurred in fiscal 2013 to support various initiatives including
the launch of BC1 Regional News Channel, completion of the DTV transition in mandated
markets, and various facility investments.

IV. FINANCIAL POSITION

Total assets were $13.2 billion at August 31, 2014 compared to $12.7 billion at August 31,
2013. Following is a discussion of significant changes in the consolidated statement of
financial position since August 31, 2013.

Current assets increased $138 million primarily due to increases in cash, accounts receivable
and inventories of $215 million, $7 million and $23 million, respectively partially offset by a
decrease in assets held for sale of $105 million upon closing the sale of Historia and Series+ in
the second quarter. Cash increased as funds provided by operations exceeded cash outlays for
investing and financing activities. Accounts receivable increased due to timing of collection of
advertising and other receivables while inventories were higher due to timing of equipment
purchases.

Investments and other assets increased $50 million due to various financial
including the investments in Pulser and SHOP.CA.

investments

Property, plant and equipment increased $282 million primarily as a result of current year
capital investment exceeding amortization.

Other long-term assets decreased $23 million primarily due to lower deferred equipment costs
and related customer equipment financing receivables.

Intangibles increased $45 million mainly due to additional investments in software intangibles
and acquired program rights and advances exceeding the amortization for the current year.

Current liabilities decreased $809 million due to the repayment of the promissory note of $48
million, a decline in the current portion of long-term debt of $950 million, a decrease in
liabilities associated with assets held for sale of $14 million and lower accounts payable and

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

accrued liabilities of $31 million which were partially offset by increases in provisions of $18
million, income taxes payable of $205 million and unearned revenue of $11 million. The
current portion of long-term debt decreased due to the repayment of the 7.5% $350 million
senior notes which were due in November 2013 and early redemption of the 6.5% $600
million senior notes which were due June 2014. Liabilities associated with assets held for sale
decreased as the sale of Historia and Series+ closed during the second quarter at which time
the Company settled the promissory note that had been owing to Corus. Accounts payable and
accruals declined due to a decrease in CRTC benefit obligations as well as timing of payment
and fluctuations in various payables. During the current year, the Company funded the
remaining expenditure commitments in respect of the fiscal 2007 CRTC benefit obligation
which the Company had assumed as part of the media acquisition in 2010. Provisions
increased primarily due to the restructuring while income taxes payable increased due to the
current year expense partially offset by net tax installment payments. Unearned revenue was
higher primarily due to an increase in advance bill payments.

Long-term debt increased $822 million due to the issuance of 4.35% $500 million senior
notes and $300 million floating rate senior notes and the refinancing of the Partnership’s
mortgage debt.

Other long-term liabilities increased $28 million due to an increase in employee benefit plans,
primarily as a result of actuarial
losses, partially offset by a decrease in CRTC benefit
obligations.

Deferred credits decreased $10 million due to amortization of deferred IRU revenue.

Deferred income tax liabilities, net of deferred income tax assets, decreased $63 million due to
the current year income tax recovery.

Shareholders’ equity increased $524 million primarily due to increases in share capital of $227
million and retained earnings of $347 million partially offset by an increase in accumulated
other comprehensive loss of $46 million. Share capital
increased due to the issuance of
9,199,784 Class B Non-Voting Shares under the Company’s option plan and DRIP. As of
November 15, 2014, share capital is as reported at August 31, 2014 with the exception of the
issuance of a total of 1,951,937 Class B Non-Voting Shares under the DRIP and upon exercise
of options under the Company’s option plan. Retained earnings increased due to current year
earnings of $857 million partially offset by dividends of $510 million. Accumulated other
comprehensive loss increased due to the remeasurements recorded on employee benefit plans.

V. CONSOLIDATED CASH FLOW ANALYSIS

Operating activities

($millions Cdn)

Funds flow from operations
Net change in non-cash working capital balances

2014

2013

Change
%

1,524
216

1,380

10.4
(11) >100.0

1,740

1,369

27.1

Funds flow from operations increased over the comparative year due to improved operating
income before restructuring costs and amortization, lower interest expense and a decrease in
program rights purchases in the current year as well as the initial $300 million supplemental

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

executive retirement plan funding in the prior year, all of which were partially offset by the
restructuring amounts and higher current income tax expense in the current year. The net
change in non-cash working capital balances related to operations fluctuated over
the
comparative year due to the timing of payment of current income taxes payable and accounts
payable and accrued liabilities as well as fluctuations in accounts receivable.

Investing activities

($millions Cdn)

Cash flow used in investing activities

2014

2013

Increase

(1,029)

(642)

387

The cash used in investing activities increased over last year primarily due to the net cash
receipt in respect of the transactions with Rogers partially offset by the acquisition of Envision
in the comparative period and higher cash outlays for capital expenditures in the current year
partially offset by the proceeds on the sale of Historia and Series+ which closed on January 1,
2014.

Financing activities

The changes in financing activities during 2014 and 2013 were as follows:

($millions Cdn)

Issuance of 4.35% senior unsecured notes
Issuance of floating rate senior unsecured notes
Redeem 6.5% senior unsecured notes
Repay 7.5% senior unsecured notes
Repay 6.1% senior unsecured notes
Repay promissory note
Prepay Partnership mortgage
Partnership mortgage loan proceeds
Senior notes issuance costs
Debt retirement costs
Dividends
Issuance of Class B Non-Voting Shares
Distributions paid to non-controlling interests
Contributions received from non-controlling interests
Repayment Partnership debt

Year ended August 31,

2014

2013

500
300
(600)
(350)
–
(48)
(19)
40
(4)
(7)
(352)
70
(26)
–
–

(496)

–
–
–
–
(450)
–
–
–
–
–
(332)
69
(19)
1
(1)

(732)

VI. LIQUIDITY AND CAPITAL RESOURCES

In the current year, the Company generated $698 million of free cash flow. Shaw used its free
cash flow along with $800 million of proceeds from the two senior unsecured note issuances,
net proceeds from the transactions with Corus of $93 million, proceeds on issuance of Class B
Non-Voting Shares of $70 million and the net working capital and inventory reduction of $180
million to repay the 7.5% $350 million senior notes, redeem the 6.5% $600 million senior

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

notes, pay common share dividends of $339 million, fund $240 million of accelerated capital
spend, pay $45 million of restructuring costs, make $52 million in financial investments and
increase cash balances $215 million.

To allow for timely access to capital markets, the Company filed a short form base shelf
prospectus with securities regulators in Canada and the U.S. on May 13, 2013. The shelf
prospectus allows for the issue up to an aggregate $4 billion of debt and equity securities over a
25 month period. Pursuant to the shelf prospectus, on January 31, 2014 the Company issued
$500 million senior notes at a rate of 4.35% due January 31, 2024 and $300 million floating
rate senior notes due February 1, 2016. The floating rate senior notes bear interest at an
annual rate equal to three month CDOR plus 0.69%. The net proceeds from the issuances were
used to redeem the $600 million senior notes due June 2, 2014 and for working capital and
general corporate purposes.

On December 5, 2013 Shaw received the approval of the TSX to renew its normal course issuer
bid to purchase its Class B Non-Voting Shares for a further one year period. The Company is
authorized to acquire up to 20,000,000 Class B Non-Voting Shares during the period from
December 9, 2013 to December 8, 2014. No shares have been repurchased during the current
year.

The Company’s DRIP allows holders of Class A Shares and Class B Non-Voting Shares who are
residents of Canada to automatically reinvest monthly cash dividends to acquire additional
Class B Non-Voting Shares. Class B Non-Voting Shares distributed under the Company’s DRIP
are new shares issued from treasury at a 2% discount from the 5 day weighted average market
price immediately preceding the applicable dividend payment date. The DRIP has resulted in
cash savings and incremental Class B Non-Voting Shares of $146 million during fiscal 2014.

Subsequent to year end, the Company used a combination of cash on hand, assumption of
ViaWest debt and US $330 million of credit facility borrowings to finance the acquisition of
ViaWest.

Based on available credit facilities and forecasted free cash flow, the Company expects to have
sufficient liquidity to fund operations and obligations during the upcoming fiscal year. On a
longer-term basis, Shaw expects to generate free cash flow and have borrowing capacity
sufficient to finance foreseeable future business plans and refinance maturing debt.

Debt structure and financial policy

Shaw structures its borrowings generally on a stand-alone basis. The borrowings of Shaw are
unsecured. While certain non-wholly owned subsidiaries are subject to contractual restrictions
which may prevent the transfer of funds to Shaw, there are no similar restrictions with respect
to wholly-owned subsidiaries of the Company.

Shaw’s borrowings are subject to covenants which include maintaining minimum or maximum
financial ratios. At August 31, 2014, Shaw is in compliance with these covenants and based on
current business plans, the Company is not aware of any condition or event that would give rise
to non-compliance with the covenants over the life of the borrowings. As at August 31, 2014,
the ratio of debt to operating income before restructuring costs and amortization for the
Corporation is 1.9 times.

Having regard to prevailing competitive, operational and capital market conditions, the Board of
Directors has determined that having this ratio in the range of 2.0 to 2.5 times would be

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

optimal leverage for the Corporation in the current environment. Should the ratio fall below this,
on an other than temporary basis, the Board may choose to recapitalize back into this optimal
range. The Board may also determine to increase the Corporation’s debt above these levels to
finance specific strategic opportunities such as a significant acquisition or repurchase of Class
B Non-Voting Participating Shares in the event that pricing levels were to drop precipitously.

Off-balance sheet arrangement and guarantees

Guarantees
Generally it is not the Company’s policy to issue guarantees to non-controlled affiliates or third
parties; however, it has entered into certain agreements as more fully described in Note 25 to
the Consolidated Financial Statements. As disclosed thereto, Shaw believes it is remote that
these agreements would require any cash payment.

Contractual obligations
The amounts of estimated future payments under the Company’s contractual obligations at
August 31, 2014 are detailed in the following table.

CONTRACTUAL OBLIGATIONS

Payments due by period

($millions Cdn)

Long-term debt(1)
Operating obligations(2)
Purchase obligations(3)
Other obligations(4)

Total

8,142
1,899
75
5

Within
1 year

267
737
59
–

1,506
482
14
5

2 – 3 years

4 – 5 years

More than
5 years

5,930
361
–
–

6,291

439
319
2
–

760

10,121 1,063

2,007

(1)
(2)

(3)
(4)

Includes principal repayments and interest payments.
Includes maintenance and lease of satellite transponders, program related agreements,
lease of transmission facilities and premises and exclusive rights to use intellectual
property in Canada.
Includes capital expenditure and inventory purchase commitments.
Includes other non-current financial liabilities and is in respect of program rights.

VII. ADDITIONAL INFORMATION

Additional information relating to Shaw, including the Company’s Annual Information Form
dated November 28, 2014, can be found on SEDAR at www.sedar.com.

VIII. COMPLIANCE WITH NYSE CORPORATE GOVERNANCE LISTING STANDARDS

Disclosure of the Company’s corporate governance practices which differ from the New York
Stock Exchange (“NYSE”) corporate governance listing standards are posted on Shaw’s website,
www.shaw.ca
Investors/Corporate Governance/Compliance with NYSE Corporate
Governance Listing Standards).

(under

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014

IX. CERTIFICATION

The Company’s Chief Executive Officer and Senior Vice President, Finance have filed
certifications regarding Shaw’s disclosure controls and procedures and internal control over
financial reporting.

As at August 31, 2014, the Company’s management, together with its Chief Executive Officer
and Senior Vice President, Finance, has evaluated the effectiveness of the design and operation
of each of the Company’s disclosure controls and procedures and internal control over financial
reporting. Based on these evaluations, the Chief Executive Officer and Senior Vice President,
Finance have concluded that the Company’s disclosure controls and procedures and the
Company’s internal control over financial reporting are effective.

There were no changes in the Company’s internal controls over financial reporting during the
fiscal year that have materially affected or are reasonably likely to materially affect Shaw’s
internal controls over financial reporting.

The design of any system of controls and procedures is based in part upon certain assumptions
about the likelihood of certain events. There can be no assurance that any design will succeed
in achieving its stated goals under all potential future conditions, regardless of how remote.

Shaw Communications Inc.
MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS AND
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

November 28, 2014

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING

The accompanying consolidated financial statements of Shaw Communications Inc. and all the
information in this annual report are the responsibility of management and have been approved
by the Board of Directors.

The financial statements have been prepared by management in accordance with International
Financial Reporting Standards. When alternative accounting methods exist, management has
chosen those it deems most appropriate in the circumstances. Financial statements are not
precise since they include certain amounts based on estimates and judgments. Management
has determined such amounts on a reasonable basis in order to ensure that the financial
statements are presented fairly,
respects. Management has prepared the
information presented elsewhere in the annual report and has ensured that it is
financial
consistent with the financial statements.

in all material

Management has a system of internal controls designed to provide reasonable assurance that
the financial statements are accurate and complete in all material respects. The internal control
system includes an internal audit function and an established business conduct policy that
applies to all employees. Management believes that the systems provide reasonable assurance
that transactions are properly authorized and recorded, financial information is relevant, reliable
and accurate and that the Company’s assets are appropriately accounted for and adequately
safeguarded.

The Board of Directors is responsible for ensuring management fulfils its responsibilities for
financial reporting and is ultimately responsible for reviewing and approving the financial
statements. The Board carries out this responsibility through its Audit Committee.

reporting issues;

The Audit Committee is appointed by the Board and its directors are unrelated and
independent. The Committee meets periodically with management, as well as the external
auditors, to discuss internal controls over the financial reporting process, auditing matters and
that each party is properly discharging its
financial
responsibilities; and, to review the annual report, the financial statements and the external
auditors’ report. The Audit Committee reports its findings to the Board for consideration when
approving the financial statements for issuance to the shareholders. The Committee also
considers, for review by the Board and approval by the shareholders, the engagement or
re-appointment of the external auditors.

to satisfy itself

The financial statements have been audited by Ernst & Young LLP, the external auditors, in
accordance with Canadian generally accepted auditing standards on behalf of the shareholders.
Ernst & Young LLP has full and free access to the Audit Committee.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining an adequate system of internal
control over financial reporting. Internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting and the preparation
of the financial statements for external purposes in accordance with generally accepted
accounting principles.

Due to its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements on a timely basis. Also, projections of any of the effectiveness of internal

Shaw Communications Inc.
MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS AND
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

control are subject to the risk that the controls may become inadequate because of changes in
conditions or that the degree of compliance with the policies and procedures may deteriorate.
Therefore, even those systems determined to be effective can provide only reasonable assurance
with respect to the financial statement preparation and presentation.

Management conducted an evaluation of the effectiveness of the system of internal control over
financial reporting based on the framework in “Internal Control – Integrated Framework” issued
by the Committee of Sponsoring Organizations of the Treadway Commission 1992 framework.
Based on this evaluation, management concluded that the Company’s system of internal control
over financial reporting was effective as at August 31, 2014.

[Signed]

Brad Shaw
Chief Executive Officer

Rhonda Bashnick
Senior Vice President,
Finance

Shaw Communications Inc.
INDEPENDENT AUDITORS’ REPORT OF REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders of
Shaw Communications Inc.

We have audited the accompanying consolidated financial statements of Shaw Communications
Inc., which comprise the consolidated statements of financial position as at August 31, 2014
and 2013, and the consolidated statements of income, comprehensive income, changes in
shareholders’ equity and cash flows for the years ended August 31, 2014 and 2013, and a
summary of significant accounting policies and other explanatory information.

Management’s responsibility for the consolidated financial statements

Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with International Financial Reporting Standards as issued
by the International Accounting Standards Board, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are
free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on
our audits. We conducted our audits in accordance with Canadian generally accepted auditing
standards and the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the consolidated financial statements. The procedures selected depend on the
judgment, including the assessment of the risks of material misstatement of the
auditors’
consolidated financial statements, whether due to fraud or error.
In making those risk
assessments, the auditors consider internal control relevant to the entity’s preparation and fair
presentation of the consolidated financial statements in order to design audit procedures that
are appropriate in the circumstances. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial statements,
evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by management, as well as evaluating the overall presentation of
the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate
to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the
financial position of Shaw Communications Inc. as at August 31, 2014 and 2013, and its
financial performance and its cash flows for the years ended August 31, 2014 and 2013 in
accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board.

Other matter

We have also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), Shaw Communication Inc.’s internal control over financial
reporting as of August 31, 2014, based on the criteria established in Internal
Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission 1992 framework and our report dated November 28, 2014 expressed an
unqualified opinion on Shaw Communications Inc.’s internal control over financial reporting.

Calgary, Canada
November 28, 2014

Chartered Accountants

Shaw Communications Inc.
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROLS UNDER STANDARDS OF THE
PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD (UNITED STATES)

To the Shareholders of
Shaw Communications Inc.

We have audited Shaw Communications Inc.’s internal control over financial reporting as at
August 31, 2014, based on the criteria established in Internal Control – Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission 1992
framework (the COSO criteria). Shaw Communications Inc.’s management is responsible for
maintaining effective internal control over financial reporting, and for its assessment of the
effectiveness of
reporting included in the accompanying
Management Report on Internal Control over Financial Reporting. Our responsibility is to express
an opinion on the Company’s internal control over financial reporting based on our audit.

internal control over

financial

We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists,
testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the
circumstances. We believe our audit provides a reasonable basis for our opinion.

financial

reporting and the preparation of

reporting includes those policies and procedures that

A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of
financial
statements for external purposes in accordance with International Financial Reporting Standards
as issued by the International Accounting Standards Board (IFRS). A company’s internal control
over
(1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in accordance with IFRS,
and that receipts and expenditures of the company are being made only in accordance with
authorization of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Shaw Communications Inc. maintained, in all material respects, effective
internal control over financial reporting as at August 31, 2014, based on the COSO criteria.

We have also audited, in accordance with Canadian generally accepted auditing standards and
the standards of the Public Accounting Oversight Board (United States), the consolidated
statements of financial position of Shaw Communications Inc. as at August 31, 2014 and
2013, and the consolidated statements of
income, comprehensive income, changes in
shareholders’ equity and cash flows for the years ended August 31, 2014 and 2013, and our
report dated November 28, 2014 expressed an unqualified opinion thereon.

Calgary, Canada
November 28, 2014

Chartered Accountants

Shaw Communications Inc.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

[millions of Canadian dollars]

ASSETS
Current
Cash
Accounts receivable [note 4]
Inventories [note 5]
Other current assets [note 6]
Derivative instruments [note 28]
Assets held for sale [note 3]

Investments and other assets [notes 7 and 28]
Property, plant and equipment [note 8]
Other long-term assets [note 9]
Deferred income tax assets [note 23]
Intangibles [note 10]
Goodwill [note 10]

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current
Accounts payable and accrued liabilities [note 11]
Provisions [note 12]
Income taxes payable
Unearned revenue
Promissory note [note 3]
Current portion of long-term debt [notes 13 and 28]
Liabilities associated with assets held for sale [note 3]

Long-term debt [notes 13 and 28]
Other long-term liabilities [notes 14 and 26]
Provisions [note 12]
Deferred credits [note 15]
Deferred income tax liabilities [note 23]

Commitments and contingencies [notes 13, 25, 26 and 31]
Shareholders’ equity
Common and preferred shareholders
Non-controlling interests in subsidiaries

See accompanying notes
On behalf of the Board:
[Signed]
JR Shaw
Director

[Signed]
Michael O’Brien
Director

August 31,
2014
$

August 31,
2013
$

637
493
119
73
–
11

1,333
60
3,652
283
26
7,198
698

422
486
96
72
3
116

1,195
10
3,370
306
–
7,153
698

13,250

12,732

828
44
341
183
–
–
–

1,396
4,690
251
9
862
1,105

8,313

859
26
136
172
48
950
14

2,205
3,868
223
9
872
1,142

8,319

4,702
235

4,937

4,182
231

4,413

13,250

12,732

Shaw Communications Inc.
CONSOLIDATED STATEMENTS OF INCOME

Years ended August 31 [millions of Canadian dollars
except per share amounts]

Revenue [note 24]
Operating, general and administrative expenses [note 21]
Restructuring costs [notes 12 and 21]
Amortization –

Deferred equipment revenue [note 15]
Deferred equipment costs [note 9]
Property, plant and equipment, intangibles and other [notes 8, 9, 10

and 15]
Operating income
Amortization of financing costs – long-term debt [note 13]
Interest expense [notes 13 and 24]
Gain on sale of media assets [note 3]
Gain on sale of cablesystem [note 3]
Acquisition and divestment costs [notes 3 and 31]
Gain on sale of associate [note 3]
Accretion of long-term liabilities and provisions
Debt retirement costs [note 13]
Other losses [note 22]
Income before income taxes
Current income tax expense [note 23]
Deferred income tax expense (recovery) [note 23]

Net income

Net income attributable to:
Equity shareholders
Non-controlling interests in subsidiaries

Earnings per share [note 18]
Basic
Diluted

See accompanying notes

2014
$

2013
$

5,241
5,142
(2,979) (2,922)
–

(58)

69
(142)

121
(257)

(692)

(718)

1,439
(3)
(266)
49
–
(4)
–
(6)
(8)
(6)

1,195
354
(46)

1,366
(4)
(309)
–
50
(8)
7
(9)
–
(26)

1,067
162
121

887

784

857
30

887

746
38

784

1.84
1.84

1.64
1.63

Shaw Communications Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years ended August 31 [millions of Canadian dollars]

Net income
Other comprehensive income (loss) [note 20]
Items that may subsequently be reclassified to income:

Change in unrealized fair value of derivatives designated as cash flow hedges
Adjustment for hedged items recognized in the period
Unrealized loss on available-for-sale investment

Items that will not be subsequently reclassified to income:

Remeasurements on employee benefit plans

Comprehensive income

Comprehensive income attributable to:
Equity shareholders
Non-controlling interests in subsidiaries

See accompanying notes

2014
$

887

2013
$

784

3
(5)
(2)

(4)

(42)

(46)

4
(1)
–

841

790

811
30

841

752
38

790

Shaw Communications Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Year ended August 31, 2014

[millions of Canadian dollars]

Balance as at September 1,

2013
Net income
Other comprehensive loss

Comprehensive income
Dividends
Dividend reinvestment plan
Shares issued under stock

option plan

Share-based compensation
Distributions declared by
subsidiaries to non-
controlling interests

Balance as at August 31,

Attributable to equity shareholders

Share
capital

Contributed
surplus

Retained
earnings

Accumulated
other
comprehensive
loss

2,955
–
–

–
–
146

81
–

72
–
–

–
–
–

(11)
3

–

1,242
857
–

857
(364)
(146)

–
–

–

(87)
–
(46)

(46)
–
–

–
–

–

Equity
attributable
to non-
controlling
interests

231
30
–

30
–
–

–
–

Total

4,182
857
(46)

811
(364)
–

70
3

Total
equity

4,413
887
(46)

841
(364)
–

70
3

–

(26)

2014

3,182

1,589

(133)

4,702

235

4,937

Year ended August 31, 2013

[millions of Canadian dollars]

Balance as at September 1,

2012
Net income
Other comprehensive loss

Comprehensive income
Dividends
Dividend reinvestment plan
Shares issued under stock

option plan

Share-based compensation
Distributions declared by
subsidiaries to non-
controlling interests
Contribution from non-

controlling interest [note 27]

Acquisition of non-controlling

interests [note 3]

Balance as at August 31,

2013

See accompanying notes

Attributable to equity shareholders

Share
capital

Contributed
surplus

Retained
earnings

Accumulated
other
comprehensive
loss

2,750
–
–

–
–
126

79
–

–

77
–
–

–
–
–

(10)
5

–

1,019
746
–

746
(341)
(126)

–
–

–

(56)

(93)
–
6

6
–
–

–
–

–

Equity
attributable
to non-
controlling
interests

281
38
–

38
–
–

–
–

Total
equity

4,034
784
6

790
(341)
–

69
5

(19)

Total

3,753
746
6

752
(341)
–

69
5

–

(56)

(70)

(126)

2,955

1,242

(87)

4,182

231

4,413

Shaw Communications Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended August 31 [millions of Canadian dollars]

OPERATING ACTIVITIES [note 29]
Funds flow from operations
Net change in non-cash working capital balances related to operations

INVESTING ACTIVITIES
Additions to property, plant and equipment [note 24]
Additions to equipment costs (net) [note 24]
Additions to other intangibles [note 24]
Net decrease (increase) to inventories
Proceeds on sale of media assets [note 3]
Proceeds on sale of cablesystem [note 3]
Divestment costs [note 3]
Proceeds on wireless spectrum license option [note 3]
Refundable deposit on wireless spectrum license [note 3]
Business acquisitions, net of cash acquired [note 3]
Proceeds on disposal of property, plant and equipment [notes 24

and 29]

Additions to investments and other assets [note 3]

FINANCING ACTIVITIES
Increase in long-term debt
Debt repayments
Debt retirement costs [note 13]
Senior notes issuance costs [note 13]
Repayment of promissory note [note 3]
Issue of Class B Non-Voting Shares
Dividends paid on Class A Shares and Class B Non-Voting Shares
Dividends paid on Series A Preferred Shares
Distributions paid to non-controlling interests in subsidiaries
Contribution received from non-controlling interest [note 27]

Increase (decrease) in cash
Cash, beginning of year

Cash, end of year

See accompanying notes

2014
$

2013
$

1,524
216

1,740

1,380
(11)

1,369

(976)
(56)
(84)
(23)
141
–
–
–
–
–

21
(52)

(802)
(132)
(69)
6
–
398
(5)
50
200
(222)

3
(69)

(1,029)

(642)

840
(969)
(7)
(4)
(48)
70
(339)
(13)
(26)
–

(496)

215
422

637

590
(1,041)
–
–
–
69
(319)
(13)
(19)
1

(732)

(5)
427

422

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

1. CORPORATE INFORMATION

(the “Company”)

Shaw Communications Inc.
is a diversified Canadian communications
company whose core operating business is providing broadband cable television services,
Internet, Digital Phone and telecommunications services (“Cable”); Direct-to-home (DTH)
satellite services and satellite distribution services (“Satellite”); and programming content
(“Media”).

The Company was incorporated under the laws of the Province of Alberta on December 9, 1966
under the name Capital Cable Television Co. Ltd. and was subsequently continued under the
Business Corporations Act (Alberta) on March 1, 1984 under the name Shaw Cablesystems Ltd.
Its name was changed to Shaw Communications Inc. on May 12, 1993. The Company’s shares
are listed on the Toronto and New York Stock Exchanges. The registered office of the Company
is located at Suite 900, 630 – 3rd Avenue S.W., Calgary, Alberta, Canada T2P 4L4.

2. BASIS OF PRESENTATION AND ACCOUNTING POLICIES

Statement of compliance

These consolidated financial statements of the Company have been prepared in accordance
with International Financial Reporting Standards (“IFRS”) as issued by the International
Accounting Standards Board (“IASB”).

The consolidated financial statements of the Company for the years ended August 31, 2014
and 2013, were approved by the Board of Directors and authorized for issue on November 28,
2014.

Basis of presentation

These consolidated financial statements have been prepared primarily under the historical cost
convention and are expressed in millions of Canadian dollars unless otherwise indicated. Other
measurement bases used are outlined below and in the applicable notes. The consolidated
statements of income are presented using the nature classification for expenses.

Basis of consolidation

(i)

Subsidiaries

The consolidated financial statements include the accounts of the Company and those of its
subsidiaries, which are entities over which the Company has control. Control exists when the
Company has power over an investee, is exposed to or has rights to variable returns from its
involvement and has the ability to affect those returns. Intercompany transactions and balances
are eliminated on consolidation. The results of operations of subsidiaries acquired during the
period are included from their respective dates of acquisition, being the time at which the
Company obtains control. Consolidation of a subsidiary ceases when the Company loses control.
A change in ownership interests of a subsidiary, without a loss of control, is accounted for as an
equity transaction. The Company assesses control through share ownership and voting rights.

Non-controlling interests arise from business combinations in which the Company acquires less
the time of acquisition, non-controlling interests are
than 100% ownership interest. At

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

measured at either fair value or their proportionate share of the fair value of acquiree’s
identifiable assets. The Company determines the measurement basis on a transaction by
transaction basis. Subsequent to acquisition, the carrying amount of non-controlling interests is
increased or decreased for their share of changes in equity.

(ii)

Joint operations

A joint operation is a type of joint arrangement whereby the parties that have joint control of the
arrangement have rights to the assets and obligations for the liabilities, relating to the joint
arrangement. Joint control is the contractually agreed sharing of control of an arrangement,
which exists only when decisions about the relevant activities require unanimous consent of the
parties sharing control. The consolidated financial statements include the Company’s
proportionate share of the assets, liabilities, revenues, and expenses of its interests in joint
operations.

The Company’s joint operations include a 33.33% interest in the Burrard Landing Lot 2
Holdings Partnership (the “Partnership”) and until January 1, 2014, 50% interest in Historia
and Series+ s.e.nc (“Historia and Series+”).

The Partnership owns and leases commercial space in Shaw Tower in Vancouver, BC, which is
the Company’s headquarters for its lower mainland operations. In classifying its 33.33%
interest in the Partnership as a joint operation, the Company considered the terms and
conditions of the partnership agreement and other facts and circumstances including the
primary purpose of Shaw Tower which is to provide lease space to the partners.

Historia and Series+ are two Canadian French-language specialty television channels. The
Company classified its 50% interest as a joint operation after considering the terms and
conditions of the partnership agreement and other facts and circumstances including the
significant obligations that arise with respect to the CRTC broadcasting licenses which are
required to operate the channels and which are held at the partner level.

Investments in associates and joint ventures

Associates are entities over which the Company has significant influence. Significant influence
is the power to participate in the operating and financial policies of the investee, but is not
control or joint control.

A joint venture is a type of joint arrangement whereby the parties that have joint control of the
arrangement have rights to the net assets of the joint arrangement. Joint control
is the
contractually agreed sharing of control of an arrangement, which exists only when decisions
about the relevant activities require unanimous consent of the parties sharing control.

Investments in associates and joint ventures are accounted for using the equity method.
Investments of this nature are recorded at original cost and adjusted periodically to recognize
the Company’s proportionate share of the associate’s or joint venture’s net income/loss and
other comprehensive income/loss after the date of investment, additional contributions made
and dividends received.

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

Revenue and expenses

The Company has multiple deliverable arrangements comprised of upfront fees (subscriber
connection and installation fee revenue and/or customer premise equipment revenue) and
related subscription revenue. Upfront fees charged to customers do not constitute separate
units of accounting, therefore these revenue streams are assessed as an integrated package.

(i)

Revenue

Revenue from cable, Internet, Digital Phone and DTH customers includes subscriber revenue
earned as services are provided. Satellite distribution services and telecommunications service
revenue is recognized in the period in which the services are rendered to customers. Affiliate
subscriber revenue is recognized monthly based on subscriber levels. Advertising revenues are
recognized in the period in which the advertisements are broadcast and recorded net of agency
commissions as these amounts are paid directly to the agency or advertiser. When a sales
arrangement includes multiple advertising spots, the proceeds are allocated to individual
advertising spots under the arrangement based on relative fair values.

Subscriber connection fees received from customers are deferred and recognized as revenue on
a straight-line basis over three years. Direct and incremental initial selling, administrative and
connection costs related to subscriber acquisitions are recognized as an operating expense as
incurred. The costs of physically connecting a new home are capitalized as part of the
distribution system and costs of disconnections are expensed as incurred.

Installation revenue received on contracts with commercial business customers is deferred and
recognized as revenue on a straight-line basis over the related service contract, which generally
span two to ten years. Direct and incremental costs associated with the service contract, in an
amount not exceeding the upfront installation revenue, are deferred and recognized as an
operating expense on a straight-line basis over the same period.

(ii)

Deferred equipment revenue and deferred equipment costs

Revenue from sales of DTH equipment and DCTs is deferred and recognized on a straight-line
basis over three years commencing when subscriber service is activated. The total cost of the
equipment,
including installation, represents an inventoriable cost which is deferred and
recognized on a straight-line basis over the same period. The DCT and DTH equipment is
generally sold to customers at cost or a subsidized price in order to expand the Company’s
customer base.

Revenue from sales of satellite tracking hardware and costs of goods sold is deferred and
recognized on a straight-line basis over the related service contract for monthly service charges
for air time, which is generally five years. The amortization of the revenue and cost of sale of
satellite service equipment commences when goods are shipped.

Recognition of deferred equipment revenue and deferred equipment costs is recorded as
revenue amortization and deferred equipment costs amortization,
deferred equipment
respectively.

(iii) Deferred IRU revenue

Prepayments received under indefeasible right to use (“IRU”) agreements are amortized on a
straight-line basis into income over the term of the agreement and included in amortization of
property, plant and equipment, intangibles and other in the consolidated statements of income.

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

Cash

Cash is presented net of outstanding cheques. When the amount of outstanding cheques and
the amount drawn under the Company’s revolving term facility are greater than the amount of
cash, the net amount is presented as bank indebtedness.

Allowance for doubtful accounts

The Company maintains an allowance for doubtful accounts for the estimated losses resulting
from the inability of its customers to make required payments. In determining the allowance,
the Company considers factors such as the number of days the account is past due, whether or
not the customer continues to receive service, the Company’s past collection history and
changes in business circumstances.

Inventories

Inventories include subscriber equipment such as DCTs and DTH receivers, which are held
pending rental or sale at cost or at a subsidized price. When subscriber equipment is sold, the
equipment revenue and equipment costs are deferred and amortized over three years. When the
subscriber equipment
is transferred to property, plant and equipment and
amortized over its useful life. Inventories are determined on a first-in, first-out basis, and are
stated at cost due to the eventual capital nature as either an addition to property, plant and
equipment or deferred equipment costs.

is rented,

Property, plant and equipment

Property, plant and equipment are recorded at purchase cost. Direct labour and other directly
attributable costs incurred to construct new assets, upgrade existing assets and connect new
subscribers are capitalized as well as borrowing costs on qualifying assets. In addition, any
asset removal and site restoration costs in connection with the retirement of assets are
capitalized. Repairs and maintenance expenditures are charged to operating expense as
incurred. Amortization is recorded on a straight-line basis over the estimated useful lives of
assets as follows:

Asset

Cable and telecommunications distribution system
Digital cable terminals and modems
Satellite audio, video and data network equipment and DTH receiving

equipment

Transmitters, broadcasting and communication equipment
Buildings
Data processing
Other

Estimated useful life

5-20 years
2-5 years

3-15 years
5-15 years
15-40 years
3-4 years
3-20 years

The Company reviews the estimates of lives and useful lives on a regular basis.

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

Assets held for sale

Non-current assets and disposal groups are classified as held for sale when specific criteria are
met and are measured at the lower of carrying amount and estimated fair value less costs to
sell. Assets held for sale are not amortized and are reported separately on the statement of
financial position.

Other long-term assets

Other long-term assets primarily include (i) equipment costs, as described in the revenue and
expenses accounting policy, deferred and amortized on a straight-line basis over three to five
years, (ii) credit facility arrangement fees amortized on a straight-line basis over the term of the
facility, (iii) long-term receivables, (iv) network capacity leases, and (v) the non-current portion
of prepaid maintenance and support contracts.

Intangibles

The excess of the cost of acquiring cable, satellite and media businesses over the fair value of
related net identifiable tangible and intangible assets acquired is allocated to goodwill. Net
identifiable intangible assets acquired consist of amounts allocated to broadcast rights and
licenses, trademarks, brands, program rights, customer relationships and software assets.
identifiable assets with
Broadcast
indefinite useful
lives. Spectrum licenses were acquired in Industry Canada’s auction of
licenses for advanced wireless services and have an indefinite life.

trademarks and brands represent

rights and licenses,

Customer relationships represent the value of customer contracts and relationships acquired in
a business combination and are amortized on a straight-line basis over the estimated useful life
of 15 years.

Software that is not an integral part of the related hardware is classified as an intangible asset.
Internally developed software assets are recorded at historical cost and include direct material
and labour costs as well as borrowing costs on qualifying assets. Software assets are amortized
on a straight-line basis over estimated useful
lives ranging from three to ten years. The
Company reviews the estimates of lives and useful lives on a regular basis.

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

Borrowing costs

The Company capitalizes borrowing costs on qualifying assets, for which the commencement
date is on or after September 1, 2010, that take more than one year to construct or develop
using the Company’s weighted average cost of borrowing which approximated 6.25% (2013 –
6.5%).

Impairment

(i)

Goodwill and indefinite-life intangibles

The Company tests goodwill and indefinite-life intangibles for impairment annually (as at
March 1) and when events or changes in circumstances indicate that the carrying value may be
impaired. The recoverable amount of each cash-generating unit (“CGU”) is determined based
on the higher of the CGU’s fair value less costs to sell (“FVLCS”) and its value in use (“VIU”). A
CGU is the smallest identifiable group of assets that generate cash flows that are independent
of the cash inflows from other assets or groups of assets. The Company’s cash generating units
are consistent with its reporting segments, Cable, Satellite and Media. Where the recoverable
amount of the CGU is less than its carrying amount, an impairment loss is recognized.
Impairment losses relating to goodwill cannot be reversed in future periods.

(ii)

Non-financial assets with finite useful lives

For non-financial assets, such as property, plant and equipment and finite-life intangible
assets, an assessment is made at each reporting date as to whether there is an indication that
an asset may be impaired. If any indication exists, the recoverable amount of the asset is
determined based on the higher of FVLCS and VIU. Where the carrying amount of the asset
exceeds its recoverable amount, the asset is considered impaired and written down to its
recoverable amount. Previously recognized impairment losses are reviewed for possible reversal
at each reporting date and all or a portion of the impairment is reversed if the asset’s value has
increased.

CRTC benefit obligations

The fair value of CRTC benefit obligations committed as part of business acquisitions are
initially recorded at the present value of amounts to be paid net of any expected incremental
cash inflows. The obligation is subsequently adjusted for the incurrence of related expenditures,
the passage of time and for revisions to the timing of the cash flows. Changes in the obligation
due to the passage of time are recorded as accretion of long-term liabilities and provisions in
the income statement.

Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive) as
a result of a past event, it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation. The timing or amount of the outflow may still be uncertain. Provisions
are measured using the best estimate of the expenditure required to settle the present
obligation at the end of the reporting period, taking into account risks and uncertainties
associated with the obligation. Provisions are discounted where the time value of money is
considered material.

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

(i)

Asset retirement obligations

The Company recognizes the fair value of a liability for an asset retirement obligation in the
period in which it is incurred, on a discounted basis, with a corresponding increase to the
carrying amount of property and equipment, primarily in respect of transmitter sites. This cost
is amortized on the same basis as the related asset. The liability is subsequently increased for
the passage of time and the accretion is recorded in the income statement as accretion of long-
term liabilities and provisions. The discount rates applied are subsequently adjusted to current
rates as required at the end of reporting periods. Revisions due to the estimated timing of cash
flows or the amount required to settle the obligation may result in an increase or decrease in
the liability. Actual costs incurred upon settlement of the obligation are charged against the
liability to the extent recorded.

(ii)

Restructuring provisions

Restructuring provisions, primarily in respect of employee termination benefits, are recognized
when a detailed plan for the restructuring exists and a valid expectation has been raised to
those affected that the plan will be carried out.

(iii) Other provisions

Provisions for disputes, legal claims and contingencies are recognized when warranted. The
Company establishes provisions after
(if
applicable), expected availability of insurance or other recourse and other available information.

taking into consideration legal assessments

Deferred credits

Deferred credits primarily include: (i) prepayments received under IRU agreements amortized
on a straight-line basis into income over the term of the agreement, (ii) equipment revenue, as
described in the revenue and expenses accounting policy, deferred and amortized over three
years to five years, (iii) connection fee revenue and upfront installation revenue, as described in
the revenue and expenses accounting policy, deferred and amortized over two to ten years, (iv) a
deposit on a future fibre sale, and (v) amounts received in respect of granting an option to
acquire its wireless spectrum licenses.

Income taxes

The Company accounts for income taxes using the liability method, whereby deferred income
tax assets and liabilities are determined based on differences between the financial reporting
and tax bases of assets and liabilities measured using substantively enacted tax rates and laws
that will be in effect when the differences are expected to reverse. Deferred tax assets and
liabilities are offset if there is a legally enforceable right to offset and they relate to income
taxes levied by the same authority in the same taxable entity. Income tax expense for the period
is the tax payable for the period using tax rates substantively enacted at the reporting date, any
adjustments to taxes payable in respect of previous years and any change during the period in
deferred income tax assets and liabilities, except to the extent that they relate to a business
combination or divestment, items recognized directly in equity or in other comprehensive
income. The Company records interest and penalties related to income taxes in income tax
expense.

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

Tax credits and government grants

The Company has access to a government program which supports local programming produced
by conventional television stations. In addition, the Company receives tax credits primarily
related to its research and development activities. Government
financial assistance is
recognized when management has reasonable assurance that the conditions of the government
programs are met and accounted for as a reduction of related costs, whether capitalized and
amortized or expensed in the period the costs are incurred.

Foreign currency translation

Transactions originating in foreign currencies are translated into Canadian dollars at the
exchange rate at the date of the transaction. Monetary assets and liabilities are translated at the
period-end rate of exchange and non-monetary items are translated at historic exchange rates.
The net foreign exchange loss recognized on the translation and settlement of current monetary
assets and liabilities was $8 (2013 – $3) and is included in other losses.

Financial instruments other than derivatives

Financial instruments have been classified as loans and receivables, assets available-for-sale,
assets held-for-trading or financial liabilities. Cash has been classified as held-for-trading and is
recorded at fair value with any change in fair value immediately recognized in income (loss).
Other financial assets are classified as available-for-sale or as loans and receivables. Available-
for-sale assets are carried at
fair value with changes in fair value recorded in other
comprehensive income (loss) until realized. Available-for-sale equity instruments not quoted in
an active market and where fair value cannot be reliably measured are recorded at cost less
impairment. Loans and receivables and financial liabilities are carried at amortized cost. None
of the Company’s financial assets are classified as held-to-maturity and none of its financial
liabilities are classified as held-for-trading.

Finance costs and discounts associated with the issuance of debt securities are netted against
the related debt instrument and amortized to income using the effective interest rate method.
Accordingly, long-term debt accretes over time to the principal amount that will be owing at
maturity.

Derivative financial instruments

these financial

The Company uses derivative financial instruments, such as foreign currency forward purchase
contracts, to manage risks from fluctuations in foreign exchange rates. All derivative financial
instruments are recorded at fair value in the statement of financial position. Where permissible,
the Company accounts for
instruments as hedges which ensures that
counterbalancing gains and losses are recognized in income in the same period. With hedge
accounting, changes in the fair value of derivative financial instruments designated as cash flow
hedges are recorded in other comprehensive income (loss) until the variability of cash flows
relating to the hedged asset or liability is recognized in income (loss). When an anticipated
transaction is subsequently recorded as a non-financial asset, the amounts recognized in other
comprehensive income (loss) are reclassified to the initial carrying amount of the related asset.
Where hedge accounting is not permissible or derivatives are not designated in a hedging
they are classified as held-for-trading and the changes in fair value are
relationship,
immediately recognized in income (loss).

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

Instruments that have been entered into by the Company to hedge exposure to foreign currency
risk are reviewed on a regular basis to ensure the hedges are still effective and that hedge
accounting continues to be appropriate.

Fair value measurements

Fair value estimates are made at a specific point in time, based on relevant market information
and information about the financial instrument. These estimates are subjective in nature and
involve uncertainties and matters of significant
therefore, cannot be
determined with precision. Changes in assumptions could significantly affect the estimates.

judgement and,

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair
value that are either observable or unobservable. Observable inputs reflect assumptions market
participants would use in pricing an asset or liability based on market data obtained from
independent sources while unobservable inputs reflect a reporting entity’s pricing based upon
their own market assumptions.

The fair value hierarchy consists of the following three levels:

Level 1

Inputs are quoted prices in active markets for identical assets or liabilities.

Level 2

Inputs for the asset or liability are based on observable market data, either directly or
indirectly, other than quoted prices.

Level 3

Inputs for the asset or liability are not based on observable market data.

The Company determines whether transfers have occurred between levels in the fair value
hierarchy by assessing the impact of events and changes in circumstances that could result in a
transfer at the end of each reporting period.

Employee benefits

The Company accrues its obligations under its employee benefit plans, net of plan assets. The
cost of pensions and other retirement benefits earned by certain employees is actuarially
determined using the projected benefit method pro-rated on service and management’s best
estimate of salary escalation and retirement ages of employees. Past service costs from plan
statement.
initiation and amendments
Remeasurements include actuarial gains or losses and the return on plan assets (excluding
interest income). Actuarial gains and losses occur because assumptions about benefit plans
relate to a long time frame and differ from actual experiences. These assumptions are revised
based on actual experience of the plans such as changes in discount rates, expected retirement
ages and projected salary increases. Remeasurements are recognized in other comprehensive
income (loss) on an annual basis, at a minimum, and on an interim basis when there are
significant changes in assumptions.

recognized immediately

in the

income

are

August 31 is the measurement date for the Company’s employee benefit plans. The last
actuarial valuations for
the various plans were performed effective
December 31, 2013 and the next actuarial valuations for funding purposes are effective
December 31, 2014.

funding purposes for

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

Share-based compensation

The Company has a stock option plan for directors, officers, employees and consultants to the
Company. The options to purchase shares must be issued at not less than the fair value at the
date of grant. Any consideration paid on the exercise of stock options, together with any
contributed surplus recorded at the date the options vested, is credited to share capital. The
Company calculates the fair value of share-based compensation awarded to employees using
the Black-Scholes option pricing model. The fair value of options are expensed and credited to
contributed surplus over the vesting period of the options using the graded vesting method.

The Company has a restricted share unit (“RSU”) plan for officers and employees of the
Company. RSUs vest on the second anniversary of the grant date and compensation is
recognized on a straight-line basis over the two year vesting period. RSUs will be settled in cash
and the obligation for RSUs is measured at the end of each period at fair value using the Black-
Scholes option pricing model and the number of outstanding RSUs.

The Company has a deferred share unit (“DSU”) plan for its Board of Directors. Compensation
cost is recognized immediately as DSUs vest when granted. DSUs will be settled in cash and
the obligation is measured at the end of each period at fair value using the Black-Scholes
option pricing model and the number of outstanding DSUs.

The Company has an employee share purchase plan (the “ESPP”) under which eligible
employees may contribute to a maximum of 5% of their monthly base compensation. The
Company contributes an amount equal to 25% of the participant’s contributions.

Earnings per share

Basic earnings per share is based on net income attributable to equity shareholders adjusted for
dividends on preferred shares and is calculated using the weighted average number of Class A
Shares and Class B Non-Voting Shares outstanding during the period. Diluted earnings per
In
share is calculated by considering the effect of all potentially dilutive instruments.
calculating diluted earnings per share, any proceeds from the exercise of stock options and
other dilutive instruments are assumed to be used to purchase Class B Non-Voting Shares at
the average market price during the period.

Guarantees

The Company discloses information about certain types of guarantees that it has provided,
including certain types of indemnities, without regard to whether it will have to make any
payments under the guarantees.

Estimation uncertainty and critical judgements

The preparation of consolidated financial statements in conformity with IFRS requires
management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during the period.
Actual results could differ from those estimates and significant changes in assumptions could
cause an impairment in assets. The following require the most difficult, complex or subjective
judgements which result from the need to make estimates about the effects of matters that are
inherently uncertain.

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

Estimation uncertainty

The following are key assumptions concerning the future and other key sources of estimation
uncertainty that could impact the carrying amount of assets and liabilities and results of
operations in future periods:

(i)

Allowance for doubtful accounts

The Company is required to make an estimate of an appropriate allowance for doubtful
accounts on its receivables. The estimated allowance required is a matter of judgement and the
actual loss eventually sustained may be more or less than the estimate, depending on events
which have yet to occur and which cannot be foretold, such as future business, personal and
economic conditions.

(ii)

Property, plant and equipment

The Company is required to estimate the expected useful
lives of its property, plant and
equipment. These estimates of useful lives involve significant judgement. In determining these
estimates, the Company takes into account industry trends and company-specific factors,
including changing technologies and expectations for the in-service period of these assets.
Management’s judgement is also required in determination of the amortization method, the
residual value of assets and the capitalization of labour and overhead.

(iii) Business combinations – purchase price allocation

Purchase price allocations involve uncertainty because management is required to make
assumptions and judgements to estimate the fair value of the identifiable assets acquired and
liabilities assumed in business combinations. Fair value estimates are based on quoted market
prices and widely accepted valuation techniques, including discounted cash flow (“DCF”)
analysis. Such estimates include assumptions about
inputs to the valuation techniques,
industry economic factors and business strategies.

(iv)

Impairment

The Company estimates the recoverable amount of its CGUs using a FVLCS calculation based
on a DCF analysis. Significant judgements are inherent in this analysis including estimating the
amount and timing of the cash flows attributable to the broadcast rights and licenses, the
selection of an appropriate discount rate, and the identification of appropriate terminal growth
rate assumptions. In this analysis the Company estimates the discrete future cash flows
associated with the intangible asset for five years and determines a terminal value. The future
cash flows are based on the Company’s estimates of future operating results, economic
conditions and the competitive environment. The terminal value is estimated using both a
perpetuity growth assumption and a multiple of operating income before restructuring costs and
amortization. The discount rates used in the analysis are based on the Company’s weighted
average cost of capital and an assessment of the risk inherent in the projected cash flows. In
analyzing the FVLCS determined by the DCF analysis, the Company also considers a market
approach determining a recoverable amount for each unit and total entity value determined
using a market capitalization approach. Recent market transactions are taken into account,
when available. The key assumptions used to determine the recoverable amounts, including a
sensitivity analysis, are included in note 10. The DCF analysis uses significant unobservable
inputs and is therefore considered a level 3 fair value measurement.

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

(v)

Employee benefit plans

The amounts reported in the financial statements relating to the defined benefit pension plans
are determined using actuarial valuations that are based on several assumptions including the
discount
rate and rate of compensation increase. While the Company believes these
assumptions are reasonable, differences in actual results or changes in assumptions could
affect employee benefit obligations and the related income statement impact. The most
significant assumption used to calculate the net employee benefit plan expense is the discount
rate. The discount rate is the interest rate used to determine the present value of the future
cash flows that is expected will be needed to settle employee benefit obligations. It is based on
the yield of long-term, high-quality corporate fixed income investments closely matching the
term of the estimated future cash flows and is reviewed and adjusted as changes required.

(vi)

Income taxes

tax uncertainties,

The Company is required to estimate income taxes using substantively enacted tax rates and
laws that will be in effect when the differences are expected to reverse. In determining the
the Company applies a probable weighted average
measurement of
methodology. Realization of deferred income tax assets is dependent on generating sufficient
taxable income during the period in which the temporary differences are deductible. Although
realization is not assured, management believes it is more likely than not that all recognized
deferred income tax assets will be realized based on reversals of deferred income tax liabilities,
projected operating results and tax planning strategies available to the Company and its
subsidiaries.

(vii) Contingencies

The Company is subject to various claims and contingencies related to lawsuits, taxes and
commitments under contractual and other commercial obligations. Contingent
losses are
recognized by a charge to income when it is likely that a future event will confirm that an asset
has been impaired or a liability incurred at the date of the financial statements and the amount
can be reasonably estimated. Significant changes in assumptions as to the likelihood and
estimates of the amount of a loss could result in recognition of additional liabilities.

Critical judgements

The following are critical judgements apart from those involving estimation:

(i)

Determination of a CGU

Management’s judgement is required in determining the Company’s cash generating units for
the impairment assessment of
its indefinite-life intangible assets. The CGUs have been
determined considering operating activities and asset management and are consistent with the
Company’s reporting segments, Cable, Satellite and Media.

(ii)

Broadcast rights and licenses and spectrum licenses – indefinite-life assessment

The Company’s businesses are dependent upon broadcast licenses (or operate pursuant to an
exemption order) granted and issued by the CRTC. In addition, the Company holds AWS
licenses to operate a wireless system in Canada. While these licenses must be renewed from
time to time, the Company has never failed to do so. In addition, there are currently no legal,
regulatory or competitive factors that limit the useful lives of these assets.

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

Adoption of recent accounting pronouncements

The adoption of the following standards and amendments effective September 1, 2013 had no
impact on the Company’s consolidated financial statements other than additional disclosure
requirements.

IFRS 11 Joint Arrangements replaces IAS 31 Interests in Joint Ventures and SIC 13
Jointly Controlled Entities – Non-Monetary Contributions by Venturers. The new standard
classifies joint arrangements as either joint operations or joint ventures.

IFRS 12 Disclosure of Interests in Other Entities sets out required disclosures on
application of IFRS 10, IFRS 11 and IAS 28 (amended 2011).

IAS 27 Separate Financial Statements was amended in 2011 for the issuance of IFRS 10
and retains the same guidance for separate financial statements.

IAS 28 Investments in Associates was amended in 2011 for changes based on issuance
of IFRS 10 and IFRS 11 and provides guidance on accounting for joint ventures, as
defined by IFRS 11, using the equity method.

IFRS 13 Fair Value Measurement defines fair value, provides guidance on its
determination and introduces consistent
fair value
measurements.

requirements for disclosure of

Standards, interpretations and amendments to standards issued but not yet effect

The Company has not yet adopted certain standards and interpretations that have been issued
but are not yet effective. The following pronouncements are being assessed to determine the
impact on the Company’s results and financial position.

Clarification of Acceptable Methods of Depreciation and Amortization (Amendments to
IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets) prohibits revenue
from being used as a basis to depreciate property, plant and equipment and significantly

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

limits use of revenue-based amortization for intangible assets. The amendments are to be
applied prospectively for the annual period commencing September 1, 2016.

IFRS 9 Financial Instruments: Classification and Measurement replaces IAS 39 Financial
Instruments and applies a principal-based approach to the classification and
measurement of financial assets and financial liabilities, including an expected credit
for calculating impairment, and includes new requirements for hedge
loss model
accounting. The standard is required to be applied retrospectively for the annual period
commencing September 1, 2018.

Change in accounting estimates

During the current year, the Company reviewed the useful
lives of its property, plant and
equipment as well as the amortization period for amounts deferred under multiple element
arrangements, including equipment revenue and associated equipment costs and connection
fees. The review resulted in changes in the amortization period for amounts deferred under
multiple element arrangements and estimated useful
lives of certain assets effective
September 1, 2013. As a result, cable and telecommunication distribution system assets are
amortized on a straight-line basis over 5 to 20 years, and digital cable terminals and modems
on a straight-line basis over 2 to 5 years. The amortization period for amounts deferred and
amortized on a straight-line basis under multiple element arrangements is 3 years. The impact
of the changes has been accounted for prospectively. The changes in estimates in respect of
unamortized balances at August 31, 2013 resulted in decreases to revenue and amortization as
summarized below.

($millions Cdn)

Revenue

Amortization

Deferred equipment revenue
Deferred equipment costs
Property, plant and equipment, intangibles and other

Year ended
August 31, 2014

29
66
63

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

3. PURCHASE AND SALE OF ASSETS, BUSINESS ACQUISITION, AND

ASSETS HELD FOR SALE

Purchase and sale of assets

Transactions with Corus Entertainment Inc. (“Corus”)

During 2013 the Company entered into a series of agreements with Corus (see note 27) to
optimize its portfolio of specialty channels. Effective April 30, 2013, the Company sold to
Corus its 49% interest in ABC Spark and acquired from Corus its 20% interest in Food Network
Canada. In addition,
in its two
French-language channels, Historia and Series+. The sale of Historia and Series+ closed on
January 1, 2014.

the Company agreed to sell

to Corus its 50% interest

Historia and Series+

Historia and Series+ represented a disposal group within the media segment and accordingly,
were not presented as discontinued operations in the statement of income. Sale proceeds of
$141 included $2 in respect of working capital adjustments. The Historia and Series+ assets
and liabilities disposed of in fiscal 2014 and classified as held for sale in the statement of
financial position at August 31, 2013 are as follows:

Accounts receivable
Other current assets
Intangibles
Goodwill

Accounts payable and accrued liabilities
Deferred income tax liability

2014
$

2013
$

5
4
93
4

4
5
92
4

106 105

2
12

Food Network Canada and ABC Spark

In 2013 the acquisition of an additional 20% interest in Food Network Canada increased the
Company’s ownership to 71%. The difference between the consideration of $67 and carrying
value of the interest acquired of $47 has been charged to retained earnings.

The Company recorded proceeds, including working capital adjustments, of $19 and gain on
sale of associate of $7 on the disposition of its 49% interest in ABC Spark.

The Company issued a non-interest bearing promissory note of $48 to satisfy the net
consideration in respect of these transactions. The promissory note was settled in fiscal 2014
in connection with the closing of the sale of Historia and Series+ to Corus.

Transactions with Rogers Communications Inc. (“Rogers”)

During 2013, the Company entered into agreements with Rogers to sell to Rogers its shares in
Mountain Cablevision Limited (“Mountain Cable”) and grant to Rogers an option to acquire its

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

wireless spectrum licenses as well as to purchase from Rogers its 33.3% interest in TVtropolis
General Partnership (“TVtropolis”). The sale of Mountain Cable closed on April 30, 2013 and
the acquisition of the additional interest in TVtropolis closed on June 30, 2013. The exercise of
the option and the sale of the wireless spectrum licenses is still subject to various regulatory
approvals. The transactions are strategic in nature allowing the Company to use a portion of the
net proceeds to accelerate various capital investments to improve and strengthen its network
advantage.

The Company incurred costs of $5 in respect of the transactions with Rogers. These costs have
been expensed and are included in acquisition and divestment costs in the statement of
income.

Mountain Cable

Mountain Cable had approximately 40,000 video customers in its operations based in
Hamilton, Ontario. It represented a disposal group within the cable operating segment and
accordingly, was not presented as discontinued operations in the statement of income.

The Company received proceeds of $398 in cash on the sale of the Mountain Cable and
recorded a gain of $50. The assets and liabilities disposed of were as follows:

Accounts receivable
Property, plant and equipment
Other long-term assets
Intangibles
Goodwill

Accounts payable and accrued liabilities
Income tax payable
Unearned revenue
Deferred credits
Deferred income taxes

2
65
3
245
81

396

1
1
2
2
42

Wireless spectrum licenses

The wireless spectrum licenses are not classified as assets held for sale as the exercise of the
option and the sale of the wireless spectrum licenses is subject to various regulatory approvals.
The Company received $50 in respect of the purchase price of the option to acquire the
wireless spectrum licenses. The amount is recorded in deferred credits and will be included as
part of the proceeds received on exercise of the option and sale of the wireless spectrum
licenses, or alternatively as a gain if the option is not exercised and expires. In addition, the
Company received a $200 refundable deposit in respect of the option exercise price. The
deposit has been recorded in deferred credits and will be included as part of the proceeds
received on exercise of the option and sale of the wireless spectrum licenses or refunded to
Rogers if the option is not exercised and expires.

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

TVtropolis

The acquisition of Rogers’ 33.3% interest in TVtropolis increased the Company’s ownership to
100%. The difference between the consideration of $59, which was initially paid as a deposit
pending regulatory approval of the transaction, and the carrying value of the interest acquired of
$23 has been charged to retained earnings.

Business acquisition

On April 30, 2013, the Company acquired Enmax Envision Inc. (“Envision”), a wholly-owned
subsidiary of ENMAX Corporation, for $222 in cash. Envision provides telecommunication
services to business customers in Calgary. The purpose of the transaction is to expand on the
Company’s business initiatives and enhance the profile of its telecommunications services in
the competitive Calgary business marketplace.

Envision contributed approximately $12 of revenue and $1 of net income for the four month
period in fiscal 2013. If the acquisition had occurred on September 1, 2012, revenue and net
income would have been approximately $33 and $4, respectively. Acquisition related costs of
$3 to effect the transaction have been incurred and are included in acquisition and divestment
costs in the statement of income.

A summary of net assets and allocation of consideration is as follows:

Accounts receivable
Other current assets
Property, plant and equipment
Intangibles(1)
Goodwill(2)

Accounts payable and accrued liabilities
Unearned revenue
Deferred credits
Deferred income tax liability

3
1
73
87
68

232
1
2
5
2

222

(1)

Intangibles is comprised of customer relationships and are being amortized over 15 years.

(2) Goodwill represents the combined value of growth expectations, an assembled workforce
and expected synergies and efficiencies from integrating the operations with the
Company’s existing business. Goodwill of $66 is deductible for income tax purposes.

Assets held for sale

A real estate property of $11, being the estimated fair value less costs to sell, has been
classified as held for sale in the statement of financial position at August 31, 2014 and 2013.
The estimated fair value has been determined by a commercial real estate service by means of

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

an income capitalization approach using the market rental rate for the area and an appropriate
capitalization rate range net of estimated costs of $8 to complete the property to base building
specifications and is considered a level 3 valuation. The income capitalization approach has
been used as it’s an accepted approach used by real estate investors to value income producing
properties when income is not expected to vary significantly over time.

4. ACCOUNTS RECEIVABLE

Subscriber and trade receivables
Due from related parties [note 27]
Miscellaneous receivables

Less allowance for doubtful accounts

2014
$

506
–
19

525
(32)

493

2013
$

496
1
16

513
(27)

486

Included in operating, general and administrative expenses is a provision for doubtful accounts
of $38 (2013 – $26).

INVENTORIES

Subscriber equipment
Other

Subscriber equipment
equipment.

2014
$

114
5

119

2013
$

93
3

includes DTH equipment, DCTs and related customer premise

6. OTHER CURRENT ASSETS

Program rights
Tax indemnity
Prepaid expenses and other

2014
$

2013
$

17
1
55

18
1
53

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

INVESTMENTS AND OTHER ASSETS

Publicly traded company
Investments in private entities

2014
$

2013
$

7
53

–
10

During 2014, the Company recorded an unrealized loss of $2 in respect of its investment in a
publicly traded company (see note 20).

The Company has a portfolio of minor investments in various private entities.

During 2013, the Company sold its 49% interest in ABC Spark. The Company’s interest in the
results of operations of ABC Spark, which was accounted for using the equity method, is
summarized as follows:

Revenue
Expenses

Proportionate share of net income

8. PROPERTY, PLANT AND EQUIPMENT

2013
$

3
(3)

–

Cable and telecommunications

distribution system

Digital cable terminals and modems
Satellite audio, video and data network

August 31, 2014
Accumulated
amortization
$

Net book
value
$

Cost
$

August 31, 2013
Accumulated
amortization
$

Net book
value
$

Cost
$

4,728
833

2,377
483

2,351 4,576
734

350

2,321
393

2,255
341

and DTH receiving equipment

186

103

149

Transmitters, broadcasting,

communications and production
equipment

Land and buildings
Data processing and other
Assets under construction

104
441
396
307

50
181
169
–

54
260
227
307

100
447
372
148

39
168
173
–

61
279
199
148

6,995

3,343

3,652 6,526

3,156

3,370

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

Changes in the net carrying amounts of property, plant and equipment for 2014 and 2013 are
summarized as follows:

Cable and telecommunications

distribution system

Digital cable terminals and modems
Satellite audio, video and data
network and DTH receiving
equipment

Transmitters, broadcasting,
communications and
production equipment

Land and buildings
Data processing and other
Assets under construction

August 31,
2013
Net book
value
$

Additions
$

Transfer
$

Amortization
$

Disposals
$

Writedown
$

August 31,
2014
Net book
value
$

2,255
341

444
209

61
279
199
148

3,370

10
2
38
223

969

2
–

–

–
–
62
(64)

–

(341)
(200)

(6)
–

(3)
–

2,351
350

(27)

–

103

(17)
(20)
(50)
–

(655)

–
(1)
(20)
–

(27)

–
–
(2)
–

(5)

54
260
227
307

3,652

August 31,
2012

Business
acquisition
and
divestment
$

Net book
value
$

Additions
$

Transfer
$

Amortization
$

Disposals
$

Cable and

telecommunications
distribution system
Digital cable terminals

and modems

Satellite audio, video and
data network and DTH
receiving equipment

Transmitters,

broadcasting,
communications and
production equipment

Land and buildings
Data processing and other
Assets under construction

2,187

453

352

(5)

160

–

(402)

(166)

–

(13)

(1)

64
302
206
107

3,242

–
(3)
(1)
–

13
11
49
129

833

–
–
5
(64)

–

(16)
(24)
(58)
–

(679)

–
(6)
(2)
–

(9)

August 31,
2013

Writedown
and
transfer to
assets held
for sale
$

Net book
value
$

–

–
(1)
–
(24)

(25)

2,255

341

61
279
199
148

3,370

In 2014, the Company recognized a loss of $1 (2013 – $6) on the disposal of property, plant
and equipment.

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

9. OTHER LONG-TERM ASSETS

Equipment costs subject to a deferred revenue arrangement
Customer equipment financing receivables
Credit facility arrangement fees
Other

2014
$

247
12
2
22

283

2013
$

255
23
2
26

306

Amortization provided in the accounts for 2014 amounted to $142 (2013 – $258) and was
recorded as amortization of deferred equipment costs and other amortization.

10. INTANGIBLES AND GOODWILL

Broadcast rights and licenses

Cable systems
DTH and satellite services
Television broadcasting

Program rights and advances
Goodwill

Non-regulated satellite services
Cable and telecommunications systems
Television broadcasting

Wireless spectrum licenses
Other intangibles

Software
Customer relationships
Trademark and brands

Net book value

2014
$

2013
$

4,015 4,015
1,013 1,013
1,313 1,313

6,341 6,341
282

293

88
73
537

698
191

256
79
38

373

88
73
537

698
191

216
85
38

339

7,896 7,851

Broadcast rights and licenses, trademark, brands and wireless spectrum licenses have been
assessed as having indefinite useful lives. While licenses must be renewed from time to time,
the Company has never failed to do so. In addition, there are currently no legal, regulatory,
competitive or other factors that limit the useful lives of these assets.

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

The changes in the carrying amount of intangibles with indefinite useful lives, and therefore not
subject to amortization, are as follows:

September 1, 2012
Business acquisition [note 3]
Business divestment [note 3]
Transfer to assets held for sale [note 3]

August 31, 2013 and 2014

Intangibles subject to amortization are as follows:

Broadcast
rights and
licenses
$

6,675
–
(245)
(89)

6,341

Trademark and
brands
$

Goodwill
$

Wireless
spectrum
licenses
$

41
–

(3)

715
68
(81)
(4)

698

191
–
–
–

191

August 31, 2013
Accumulated
amortization
$

Net book
value
$

Program rights and advances
Software
Software under construction
Customer relationships

Less current portion of program

rights

Cost
$

699
227
168
87

1,181

August 31, 2014
Accumulated
amortization
$

Net book
value
$

389
139
–
8

536

310
88
168
79

645

628

Cost
$

1,023
252
108
87

1,470

723
144
–
2

869

The changes in the carrying amount of intangibles subject to amortization are as follows:

September 1, 2012
Business acquisition [note 3]
Additions
Transfers
Amortization
Disposals
Transfer to assets held for sale

August 31, 2013
Additions
Transfers
Amortization
Write-down

August 31, 2014

Program rights
and advances Software

119
–
37
2
(49)
(1)
–

108
20
4
(43)
(1)

274
–
432
–
(401)
–
(5)

300
414
–
(404)
–

310

Software under
construction
$

Customer
relationships
$

76
–
34
(2)
–
–
–

108
64
(4)
–
–

168

–
87
–
–
(2)
–
–

85
–
–
(6)
–

300
108
108
85

601

583

Total
$

469
87
503
–
(452)
(1)
(5)

601
498
–
(453)
(1)

645

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

Impairment testing of indefinite-life intangibles and goodwill

The Company conducted its annual impairment test on goodwill and indefinite-life intangibles
as at March 1, 2014 and the recoverable amount of each of the cash generating units exceeded
their carrying value by a significant amount.

In August 2011 the Company discontinued construction of a traditional wireless network and
during fiscal 2013, granted an option to Rogers to acquire the AWS licenses for $350 (see note
3). As the price exceeds the carrying value of the AWS licenses and considering recent
spectrum transactions in North America, the carrying value of the licenses continues to be
appropriate.

A hypothetical decline of 10% and 20% in the recoverable amount of the broadcast rights and
licenses for each cash generating unit as at March 1, 2014 would not result in any impairment
loss. Further, any changes in economic conditions since the impairment testing conducted as at
March 1, 2014 do not represent events or changes in circumstance that would be indicative of
impairment at August 31, 2014.

Significant estimates inherent to this analysis include discount rates and the terminal value. At
March 1, 2014, the estimates that have been utilized in the impairment tests reflect any
changes in market conditions and are as follows:

Cable
Satellite
Media

Terminal value

Post-tax
discount rate

Terminal growth rate

Terminal operating
income before
restructuring costs and
amortization multiple

8.0%
9.5%
8.5%

1.0%
0.0%
0.0%

6.00X
4.50X
6.50X

A sensitivity analysis of significant estimates is conducted as part of every impairment
test. With respect to the impairment tests performed in the third quarter, the estimated decline
in recoverable amount for the sensitivity of significant estimates is as follows:

Estimated decline in recoverable amount

Terminal value

1% increase in
discount rate

1% decrease in
terminal growth rate

0.5 times decrease in
terminal operating
income before
restructuring costs and
amortization multiple

9.0%
7.0%
8.0%

5.0%
n/a
n/a

3.0%
3.0%
2.0%

Cable
Satellite
Media

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

11. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Trade
Program rights
CRTC benefit obligations
Accrued liabilities
Accrued network fees
Interest and dividends
Related parties [note 27]

12. PROVISIONS

September 1, 2012
Additions
Reversal
Payments

August 31, 2013
Additions
Reversal
Payments

August 31, 2014

Current
Long-term

August 31, 2013

Current
Long-term

August 31, 2014

2014
$

44
74
30
335
107
215
23

828

Asset
retirement
obligations Restructuring(1) Other

8
1
–
–

9
–
–
–

–
9

–
–
–
–

–
58
–
(45)

–
–

–

13
–

19
9
(1)
(1)

26
12
(4)
(3)

26
–

31
–

2013
$

71
70
50
324
102
219
23

859

Total
$

27
10
(1)
(1)

35
70
(4)
(48)

26
9

44
9

(1) During the current year, the Company announced changes to the structure of its operating
units to improve overall efficiency while enhancing its ability to grow as the leading
network and content experience company. In connection with the restructuring of its
the approximate
operations,
400 management and non-customer
the
organizational changes. The majority of the $13 of remaining costs are expected to be
paid within the next six months.

the Company recorded $58 primarily in respect of

facing roles which were affected by

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

13. LONG-TERM DEBT

Corporate
Cdn fixed rate senior notes-

7.50% due November 20, 2013
6.50% due June 2, 2014
6.15% due May 9, 2016
5.70% due March 2, 2017
5.65% due October 1, 2019
5.50% due December 7, 2020
4.35% due January 31, 2024
6.75% due November 9, 2039

Cdn variable rate senior notes-

Due February 1, 2016

Other
Burrard Landing Lot 2 Holdings Partnership

Total consolidated debt
Less current portion (2)

2014

2013

Effective
interest
rates
%

Long-term
debt at
amortized
cost(1)
$

Adjustment
for
finance
costs(1)
$

Long-term
debt
repayable at
maturity
$

Long-term
debt at
amortized
cost(1)
$

Adjustment
for
finance
costs(1)
$

Long-term
debt
repayable at
maturity
$

7.50
6.56
6.34
5.72
5.69
5.55
4.35
6.89

–
–
298
398
1,244
497
497
1,417

4,351

299

4,650

4.68

4,690
–

4,690

–
–
2
2
6
3
3
33

–

50
–

–
–
300
400
1,250
500
500
1,450

350
599
296
398
1,243
496
–
1,417

4,400

4,799

300

–

4,700

4,799

4,740
–

4,740

4,818
950

3,868

–
1
4
2
7
4
–
33

–

51
1

350
600
300
400
1,250
500
–
1,450

4,850

–

4,850

4,869
951

3,918

(1)

(2)

Long-term debt is presented net of unamortized discounts and finance costs.

Current portion of long-term debt at August 31, 2013 included the 7.50% senior notes,
the 6.50% senior notes and the amount due within one year on the Partnership’s
mortgage bonds.

Corporate

Bank loans

During 2012, a syndicate of banks provided the Company with an unsecured $1 billion credit
facility which includes a maximum revolving term or swingline facility of $50 and matures in
January 2017. The credit facility has a feature whereby the Company may request an additional
$500 of borrowing capacity so long as no event of default or pending event of default has
occurred and is continuing or would occur as a result of the increased borrowings. No lender
has any obligation to participate in the requested increase unless it agrees to do so at its sole
discretion. Funds are available to the Company in both Canadian and US dollars. At August 31,
2014, $1 has been drawn as committed letters of credit against the revolving term facility.
Interest rates fluctuate with Canadian prime and bankers’ acceptance rates, US bank base rates
and LIBOR rates. Excluding the revolving term facility, the effective interest rate on actual
borrowings under the credit facility during 2013 was 3.49%. No amounts were drawn under the
credit facility during 2014. The effective interest rate on the revolving term facility for 2014
was 3% (2013 – 3%).

Subsequent to year end, the Company borrowed US $330 under its credit facility (see note 31).

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

Senior notes

The senior notes are unsecured obligations and rank equally and ratably with all existing and
future senior indebtedness. The fixed rate notes are redeemable at the Company’s option at any
time, in whole or in part, prior to maturity at 100% of the principal amount plus a make-whole
premium.

On January 31, 2014, the Company issued $500 senior notes at a rate of 4.35% due
January 31, 2024 and $300 floating rate senior rates due February 1, 2016. The $300 senior
notes bear interest at an annual rate equal to three month CDOR plus 0.69%.

Other

Burrard Landing Lot 2 Holdings Partnership (the “Partnership”)

The Company has a 33.33% interest in the Partnership which built the Shaw Tower project
with office/retail space and living/working space in Vancouver, BC. In the fall of 2004, the
commercial construction of the building was completed and at that time, the Partnership issued
ten year 6.31% secured mortgage bonds in respect of the commercial component of the Shaw
Tower. In February 2014, the Partnership refinanced its debt. The Partnership received a
mortgage loan and used the proceeds to prepay the outstanding balance of the previous
mortgage and loan excess funds to each of its partners. The mortgage loan matures on
November 1, 2024 and bears interest at 4.683% compounded semi-annually with interest only
payable for the first five years. The mortgage loan is collateralized by the property and the
commercial rental income from the building with no recourse to the Company.

Debt retirement costs

On February 18, 2014, the Company redeemed the 6.50% senior notes. In connection with the
early redemption, the Company incurred costs of $7 and wrote-off the remaining finance costs
of $1.

Debt covenants

The Company and its subsidiaries have undertaken to maintain certain covenants in respect of
the credit agreements and trust indentures described above. The Company and its subsidiaries
were in compliance with these covenants at August 31, 2014.

Long-term debt repayments

Mandatory principal repayments on all
thereafter are as follows:

long-term debt in each of the next five years and

2015
2016
2017
2018
2019
Thereafter

–
600
400
–
–
3,740

4,740

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

Interest expense

Interest expense – long-term debt
Amortization of senior notes discounts
Interest income – short-term (net)
Capitalized interest

14. OTHER LONG-TERM LIABILITIES

Pension liabilities [note 26]
CRTC benefit obligations
Post retirement liabilities [note 26]
Program rights liabilities
Other

15. DEFERRED CREDITS

IRU prepayments
Equipment revenue
Connection fee and installation revenue
Proceeds on wireless spectrum license option [note 3]
Refundable deposit on wireless spectrum license [note 3]
Deposit on future fibre sale
Other

2014
$

281
2
(5)
(12)

266

2013
$

314
2
(2)
(5)

309

2014
$

174
48
18
5
6

251

2014
$

461
128
19
50
200
2
2

862

2013
$

123
77
15
5
3

223

2013
$

472
131
14
50
200
2
3

872

Amortization of deferred credits for 2014 amounted to $89 (2013 – $144) and was recorded in
the accounts as described below.

IRU agreements are in place for periods ranging from 21 to 60 years and are being amortized to
income over the agreement periods. Amortization in respect of the IRU agreements for 2014
amounted to $12 (2013 – $13) and was recorded as other amortization. Amortization of
equipment revenue for 2014 amounted to $69 (2013 – $121). Amortization of connection fee
and installation revenue for 2014 amounted to $8 (2013 – $11) and was recorded as revenue.

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

16. SHARE CAPITAL

Authorized

The Company is authorized to issue a limited number of Class A voting participating shares
(“Class A Shares”) of no par value, as described below, and an unlimited number of Class B
non-voting participating shares (“Class B Non-Voting Shares”) of no par value, Class 1 preferred
shares, Class 2 preferred shares, Class A preferred shares and Class B preferred shares.

The authorized number of Class A Shares is limited, subject to certain exceptions, to the lesser
of that number of shares (i) currently issued and outstanding and (ii) that may be outstanding
after any conversion of Class A Shares into Class B Non-Voting Shares.

2014

2013

Number of securities

22,420,064

22,520,064 Class A Shares

439,606,326 430,306,542 Class B Non-Voting Shares
12,000,000 Series A Preferred Shares

12,000,000

474,026,390 464,826,606

Class A Shares and Class B Non-Voting Shares

2014
$

2
2,887
293

3,182

2013
$

2
2,660
293

2,955

Class A Shares are convertible at any time into an equivalent number of Class B Non-Voting
Shares. In the event that a take-over bid is made for Class A Shares, in certain circumstances,
the Class B Non-Voting Shares are convertible into an equivalent number of Class A Shares.

Changes in Class A Share capital and Class B Non-Voting Share capital in 2014 and 2013 are
as follows:

September 1, 2012
Stock option exercises
Dividend reinvestment plan

August 31, 2013
Class A Share conversions
Stock option exercises
Dividend reinvestment plan

August 31, 2014

Series A Preferred Shares

Class A Shares
Number

Class B Non-Voting Shares

Number

22,520,064 2
–
–

–
–

22,520,064 2
(100,000) –
–
–

–
–

421,188,697 2,455
79
126

3,564,856
5,552,989

430,306,542 2,660
–
81
146

100,000
3,431,548
5,768,236

22,420,064 2

439,606,326 2,887

The Cumulative Redeemable Rate Reset Preferred Shares, Series A (“Series A Preferred
Shares”) represent a series of class 2 preferred shares and are classified as equity since
redemption, at $25.00 per Series A Preferred Share, is at the Company’s option and payment
of dividends is at the Company’s discretion.

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

Share transfer restriction

The Articles of the Company empower the directors to refuse to issue or transfer any share of
the Company that would jeopardize or adversely affect the right of Shaw Communications Inc.
or any subsidiary to obtain, maintain, amend or renew a license to operate a broadcasting
undertaking pursuant to the Broadcasting Act (Canada).

17. SHARE-BASED COMPENSATION

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
ten years from the date of grant. Options granted up to August 31, 2014 vest evenly on the
anniversary dates from the original grant date at either 25% per year over four years or 20% per
year over five years. The options must be issued at not less than the fair market value of the
Class B Non-Voting Shares at the date of grant. The maximum number of Class B Non-Voting
Shares issuable under the plan may not exceed 52,000,000. As at August 31, 2014,
24,760,910 Class B Non-Voting Shares have been issued under the plan.

The changes in options are as follows:

Outstanding, beginning of year
Granted
Forfeited
Exercised(1)

2014

2013

Weighted
average
exercise
price
$

Number

Weighted
average
exercise
price
$

Number

21.71
19,555,441
1,633,000
25.76
(1,279,330) 22.12
(3,431,548) 20.46

21,162,672
2,777,000

21.09
23.07
(819,375) 21.06
(3,564,856) 19.24

Outstanding, end of year

16,477,563

22.34

19,555,441

21.71

(1)

The weighted average Class B Non-Voting Share price for the options exercised was $26.12.

The following table summarizes information about the options outstanding at August 31, 2014:

Range of prices

$16.30 – $22.27
$22.28 – $26.99

Options outstanding

Options exerciseable

Weighted
average
remaining
contractual
life

Weighted
average
exercise
price

Number
exercisable

Weighted
average
exercise
price

Number
outstanding

7,700,283
8,777,280

5.13
5.04

19.74
24.62

6,177,783
6,095,280

19.54
24.54

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

The weighted average estimated fair value at the date of the grant for common share options
granted for the year ended August 31, 2014 was $2.61 (2013 – $2.53) per option. The fair
value of each option granted was estimated on the date of the grant using the Black-Scholes
option pricing model with the following weighted-average assumptions:

Dividend yield
Risk-free interest rate
Expected life of options
Expected volatility factor of the future expected market price of Class B

Non-Voting Shares

2014

2013

4.18% 4.37%
1.61% 1.37%
5 years
5 years

19.6% 21.7%

Expected volatility has been estimated based on the historical share price volatility of the
Company’s Class B Non-Voting Shares.

Restricted share unit plan

The Company has an RSU plan whereby RSUs are granted to eligible employees and officers of
the Company. An RSU is a right that tracks the value of one Class B Non-Voting Share and
permits the holder to receive a cash payment equal to the market value once RSUs are vested.
Market value is determined by the average of the closing prices of the Class B Non-Voting
Shares on the Toronto Stock Exchange for the five trading days preceding the applicable
payment date as determined by the Company. When cash dividends are paid on Class B Non-
Voting Shares, holders are credited with RSUs equal to the dividend. RSUs do not have voting
rights as there are no shares underlying the plan.

The RSUs granted during 2011 vested during 2013 and the Company paid $6 to settle the
obligation. During 2013, $3 was recorded as compensation expense.

Deferred share unit plan

The Company has a DSU plan for its Board of Directors whereby directors can elect to receive
their annual cash compensation, or a portion thereof, in DSUs. In addition, the Company may
adjust and/or supplement directors’ compensation with periodic grants of DSUs. A DSU is a
right that tracks the value of one Class B Non-Voting Share. Holders will be entitled to a cash
payout when they cease to be a director. The cash payout will be based on market value of a
Class B Non-Voting Share at the time of payout. When cash dividends are paid on Class B Non-
Voting Shares, holders are credited with DSUs equal to the dividend. DSUs do not have voting
rights as there are no shares underlying the plan.

During 2014, $3 was recognized as compensation expense (2013 – $4). The carrying value and
intrinsic value of DSUs at August 31, 2014 was $13 and $11, respectively (August 31,
2013 – $10 and $8, respectively).

Employee share purchase plan

The Company’s ESPP provides employees with an incentive to increase the profitability of the
Company and a means to participate in that increased profitability. Generally, all non-unionized
full time or part time employees of the Company are eligible to enroll in the ESPP. Under the

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

ESPP, eligible employees may contribute to a maximum of 5% of
compensation. The Company contributes an amount equal
contributions.

to 25% of

their monthly base
the employee’s

During 2014, $5 was recorded as compensation expense (2013 – $5).

18. EARNINGS PER SHARE

Earnings per share calculations are as follows:

Numerator for basic and diluted earnings per share ($)
Net income
Deduct: net income attributable to non-controlling interests in subsidiaries
Deduct: dividends on Series A Preferred Shares

Net income attributable to common shareholders

Denominator (millions of shares)
Weighted average number of Class A Shares and Class B Non-Voting Shares

for basic earnings per share

Effect of potentially dilutive securities(1)

Weighted average number of Class A Shares and Class B Non-Voting Shares

for diluted earnings per share

Earnings per share
Basic
Diluted

2014

2013

887
(30)
(14)

784
(38)
(13)

843

733

457
2

448
2

459

450

1.84 1.64
1.84 1.63

(1)

The earnings per share calculation does not take into consideration the potential dilutive
effect of certain stock options since their impact is anti-dilutive. For the year ended
August 31, 2014, 1,729,227 options were excluded from the diluted earnings per share
calculation (2013 – 8,201,720).

19. DIVIDENDS

Common share dividends

The holders of Class A Shares and Class B Non-Voting Shares are entitled to receive such
dividends as the Board of Directors determines to declare on a share-for-share basis, as and
when any such dividends are declared or paid. The holders of Class B Non-Voting Shares are
entitled to receive during each dividend period, in priority to the payment of dividends on the
Class A Shares, an additional dividend at a rate of $0.0025 per share per annum. This
additional dividend is subject to proportionate adjustment in the event of future consolidations
or subdivisions of shares and in the event of any issue of shares by way of stock dividend. After
payment or setting aside for payment of the additional non-cumulative dividends on the Class B
Non-Voting Shares, holders of Class A Shares and Class B Non-Voting Shares participate
equally, share for share, as to all subsequent dividends declared.

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

Preferred share dividends

Holders of the Series A Preferred Shares are entitled to receive, as and when declared by the
Company’s Board of Directors, a cumulative quarterly fixed dividend yielding 4.50% annually
for the initial period ending June 30, 2016. Thereafter, the dividend rate will be reset every five
years at a rate equal to the then current 5-year Government of Canada bond yield plus 2.00%.
Holders of Series A Preferred Shares will have the right, at their option, to convert their shares
into Cumulative Redeemable Floating Rate Preferred Shares, Series B (the “Series B Preferred
Shares”), subject to certain conditions, on June 30, 2016 and on June 30 every five years
thereafter. The Series B Preferred Shares also represent a series of Class 2 preferred shares and
holders will be entitled to receive cumulative quarterly dividends, as and when declared by the
Company’s Board of Directors, at a rate set quarterly equal to the then current three-month
Government of Canada Treasury Bill yield plus 2.00%.

Dividend reinvestment plan

The Company has a Dividend Reinvestment Plan (“DRIP”) that allows holders of Class A Shares
and Class B Non-Voting Shares who are residents of Canada to automatically reinvest monthly
cash dividends to acquire additional Class B Non-Voting Shares. Class B Non-Voting Shares
distributed under the Company’s DRIP are new shares issued from treasury at a 2% discount
from the 5 day weighted average market price immediately preceding the applicable dividend
payment date.

Dividends declared

The dividends per share recognized as distributions to common shareholders for dividends
declared during the year ended August 31, 2014 and 2013 are as follows:

Class A Voting Share

Class B Non-Voting Share

Class A Voting Share

Class B Non-Voting Share

2014

2013

1.0775

1.0800

$1.0050

$1.0075

The dividends per share recognized as distributions to holders of Series A Preferred Shares was
$1.125 during each of the years ended August 31, 2014 and 2013.

On June 26, 2014, the Company declared dividends of $0.28125 per Series A Preferred Share
which were paid on September 30, 2014. The total amount paid was $3 of which $1 was not
recognized as at August 31, 2014.

On October 23, 2014, the Company declared dividends of $0.091458 per Class A Voting Share
and $0.091667 per Class B Non-Voting Share payable on each of December 30,
2014, January 29, 2015 and February 26, 2015 to shareholders of record at the close of
business on December 15, 2014, January 15, 2015 and February 13, 2015, respectively.

On October 23, 2014, the Company declared dividends of $0.28125 per Series A Preferred
Share payable on December 31, 2014 to holders of record at the close of business on
December 15, 2014.

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

20. OTHER COMPREHENSIVE INCOME (LOSS) AND ACCUMULATED OTHER

COMPREHENSIVE LOSS

Components of other comprehensive loss and the related income tax effects for 2014 are as
follows:

Items that may subsequently be reclassified to income
Change in unrealized fair value of derivatives designated as

cash flow hedges

Adjustment for hedged items recognized in the period
Unrealized loss on available-for-sale investment

Items that will not be subsequently reclassified to income
Remeasurements on employee benefit plans

Amount
$

Income taxes
$

Net
$

3
(6)
(2)

(5)

(58)

(63)

–
1
–

3
(5)
(2)

(4)

(42)

(46)

Components of other comprehensive income and the related income tax effects for 2013 are as
follows:

Items that may subsequently be reclassified to income
Change in unrealized fair value of derivatives designated as

cash flow hedges

Adjustment for hedged items recognized in the period

Items that will not be subsequently reclassified to income
Remeasurements on employee benefit plans

Amount
$

Income taxes
$

Net
$

5
(1)

(1)
–

(1)

(2)

4
(1)

Accumulated other comprehensive loss is comprised of the following:

Items that may subsequently be reclassified to income
Fair value of derivatives
Unrealized loss on available-for-sale investment

Items that will not be subsequently reclassified to income
Remeasurements on employee benefit plans

2014
$

2013
$

–
(2)

2
–

(131)

(133)

(89)

(87)

100

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

21. OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES AND

RESTRUCTURING COSTS

Employee salaries and benefits
Purchases of goods and services

22. OTHER LOSSES

2014
$

945
2,092

2013
$

900
2,022

3,037

2,922

Other losses generally includes realized and unrealized foreign exchange gains and losses on US
dollar denominated current assets and liabilities, gains and losses on disposal of property, plant
and equipment and minor investments, and the Company’s share of the operations of Burrard
Landing Lot 2 Holdings Partnership. During the prior year, the category included amounts
related to the electrical fire and resulting water damage to the Company’s head office in
Calgary, Alberta that occurred during the fourth quarter of 2012. In fiscal 2013, the Company
received insurance advances of $5 related to its claim and incurred costs of $13 in respect of
ongoing recovery activities.
the Company decided to
In addition, during the prior year,
discontinue further construction of a real estate project which resulted in a write-down of $14.
During the current year, the category includes additional proceeds of $6 related to the
aforementioned insurance claim and also includes a refund of $5 from the Canwest CCAA plan
implementation fund and a write-down of $6 in respect of discontinued capital projects.

23. INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for
income tax purposes. The Company’s net deferred tax liability consists of the following:

Deferred tax assets
Deferred tax liabilities

Net deferred tax liability

2014
$

2013
$

–
(1,105) (1,142)

(1,079) (1,142)

101

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

Significant changes recognized to deferred income tax assets (liabilities) are as follows:

Property, plant
and equipment
and software
assets
$

Broadcast
rights,
licenses,
trademark
and
brands
$

Partnership
income
$

Non-capital
loss carry-
forwards
$

Accrued
charges
$

Foreign
exchange on
long-term debt
and fair value
of derivative
instruments
$

Balance at

September 1, 2012
Recognized in statement

(133)

(840)

(271)

137

of income

(18)

(14)

(27)

(63)

Recognized in other

comprehensive loss
Recognized on business
disposition and other

Balance at August 31,

2013

Recognized in statement

of income

Recognized in other

–

(140)

(813)

(267)

(37)

(5)

107

comprehensive income

–

Balance at August 31,

2014

(177)

(818)

(160)

–

Total
$

(1,071)

(121)

(2)

(3)

(1)

–

(1)

–

(1)

(1,142)

(19)

–

(1,079)

The Company has capital loss carryforwards of approximately $61 for which no deferred income
tax asset has been recognized in the accounts. These capital losses can be carried forward
indefinitely.

in its
The Company has taxable temporary differences associated with its investment
subsidiaries. No deferred tax liabilities have been provided with respect to such temporary
differences as the Company is able to control the timing of the reversal and such reversal is not
probable in the foreseeable future.

The income tax expense differs from the amount computed by applying Canadian statutory rates
to income before income taxes for the following reasons:

Current statutory income tax rate

Income tax expense at current statutory rates
Net increase (decrease) in taxes resulting from:

Non-taxable portion of capital gains
Effect of tax rate changes
Recognition of previously unrecognized tax losses
Other

Income tax expense

102

2014
$

2013
$

26.0% 25.9%

311

276

(8)
–
(1)
6

–
10
(12)
9

308

283

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

Due to Canadian provincial enacted corporate income tax rate changes, the statutory income tax
rate for the Company increased from 25.9% in 2013 to 26.0% in 2014.

The components of income tax expense are as follows:

Current income tax expense
Current income tax recovery from recognition of previously unrecognized tax

losses

Deferred tax expense (recovery) related to temporary differences
Deferred tax expense from tax rate changes

Income tax expense

2014
$

2013
$

355 174

(1)

(12)

354 162
(46) 111
10

–

308 283

103

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

24. BUSINESS SEGMENT INFORMATION

The Company’s operating segments are Cable, Media and Satellite, all of which are
substantially located in Canada. The accounting policies of the segments are the same as those
described in the summary of significant accounting policies. Management evaluates divisional
performance based on revenue and operating income before charges such as restructuring costs
and amortization. During 2014, the Company announced that its residential and enterprise
services currently included in the Cable and Satellite segments will be realigned into new
Consumer and Business segments. The Company expects to commence reporting under the
operating segments of Consumer, Business and Media in fiscal 2015.

Revenue

Operating income before restructuring costs and amortization
Restructuring costs(1)
Amortization(1)

Operating income

2014

Cable
$

Media
$

Satellite
$

3,365

1,096

1,632

353

878

277

Operating income before restructuring costs and amortization as % of

revenue

48.5% 32.2% 31.5%

964
24

988

18
–

42
47

Interest(1)
Burrard Landing Lot 2 Holdings Partnership

Cash taxes(1)
Corporate/other

Capital expenditures and equipment costs (net) by segment
Capital expenditures
Equipment costs (net)

Reconciliation to Consolidated Statements of Cash Flows
Additions to property, plant and equipment
Additions to equipment costs (net)
Additions to other intangibles

Total of capital expenditures and equipment costs (net) per Consolidated

Statements of Cash Flows

Decrease in working capital and other liabilities related to capital

expenditures

Decrease in customer equipment financing receivables
Less: Proceeds on disposal of property, plant and equipment
Less: Satellite services equipment profit(2)

Total capital expenditures of equipment costs (net) reported by segments

See notes following 2013 business segment table.

104

Intersegment
eliminations
$

Total
$

(98)

5,241

–

–
–

–

2,262
(58)
(765)

1,439

43.2%

264
2

266

359
(5)

354

1,024
71

1,095

976
56
84

1,116

(7)
15
(26)
(3)

1,095

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

2013

Revenue

Operating income before amortization
Amortization(1)

Operating income

Cable
$

Media
$

Satellite
$

3,266

1,106

1,582

353

860

285

Operating income before amortization as % of revenue

48.4% 31.9% 33.1%

Interest(1)
Burrard Landing Lot 2 Holdings Partnership

Cash taxes(1)
Corporate/other

Capital expenditures and equipment costs (net) by segment
Capital expenditures
Equipment costs (net)

Reconciliation to Consolidated Statements of Cash Flows
Additions to property, plant and equipment
Additions to equipment costs (net)
Additions to other intangibles

Total of capital expenditures and equipment costs (net) per Consolidated

Statements of Cash Flows

Increase in working capital related to capital expenditures
Increase in customer equipment financing receivables
Less: Proceeds on disposal of property, plant and equipment
Less: Satellite services equipment profit(2)

Total capital expenditures of equipment costs (net) reported by segments

825
42

867

31
–

42
81

123

Intersegment
eliminations
$

Total
$

(90)

5,142

–

–
–

–

2,220
(854)

1,366

43.2%

308
1

309

300
(138)

162

898
123

1,021

802
132
69

1,003
33
(9)
(3)
(3)

1,021

(1)

(2)

The Company does not report restructuring costs, amortization, interest or cash taxes on a
segmented basis.

The profit from the sale of satellite equipment is subtracted from the calculation of
segmented capital expenditures and equipment costs (net) as the Company views the
profit on sale as a recovery of expenditures on customer premise equipment.

25. COMMITMENTS AND CONTINGENCIES

Commitments

(i)

The Company owns and leases Ku-band and C-band transponders on the Anik F1R, Anik
F2 and Anik G1 satellites. As part of the Ku-band transponder agreements with Telesat
Canada, the Company is committed to paying annual transponder maintenance and
license fees for each transponder from the time the satellite becomes operational for a
period of 15 years.

105

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

(ii)

The Company has various long-term operating commitments as follows:

2015
2016 – 2019
Thereafter

Comprised of:

Program related agreements
Lease of transmission facilities, circuits and premises
Lease and maintenance of transponders
Exclusive rights to use intellectual property
Other (primarily maintenance and support contracts)

737
801
361

1,899

771
452
571
71
34

1,899

Included in operating, general and administrative expenses are transponder maintenance
expenses of $80 (2013 – $66) and rental expenses of $107 (2013 – $99).

(iii) At August 31, 2014, the Company had capital expenditure commitments in the normal
course of business of $45. The commitments are primarily in respect of 2015 and 2016.

(iv) As part of the CRTC decisions approving the acquisition of the broadcasting businesses in
2012 and 2011, the Company is required to contribute approximately $182 in new
benefits to the Canadian broadcasting system over seven years. The obligations have been
recorded in the income statement at fair value, being the sum of the discounted future
net cash flows using appropriate discount rates. At August 31, 2014, the remaining
expenditure commitments in respect of these obligations is $88 which will be funded over
future years through fiscal 2019.

(v)

In late fiscal 2014,
the Company partnered with Rogers to form shomi, a new
subscription video-on-demand service which launched in beta in early November 2014.
The Company’s initial capital commitment is $67 of which, $29 was funded subsequent
to year end.

Contingencies

The Company and its subsidiaries are involved in litigation matters arising in the ordinary
course and conduct of its business. Although resolution of such matters cannot be predicted
with certainty, management does not consider the Company’s exposure to litigation to be
material to these consolidated financial statements.

Guarantees

In the normal course of business the Company enters into indemnification agreements and has
issued irrevocable standby letters of credit and commercial surety bonds with and to third parties.

106

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

Indemnities

Many agreements related to acquisitions and dispositions of business assets include
indemnification provisions where the Company may be required to make payment to a vendor or
purchaser for breach of contractual terms of the agreement with respect to matters such as
litigation, income taxes payable or refundable or other ongoing disputes. The indemnification
period usually covers a period of two to four years. Also, in the normal course of business, the
Company has provided indemnifications in various commercial agreements, customary for the
telecommunications industry, which may require payment by the Company for breach of
contractual terms of the agreement. Counterparties to these agreements provide the Company
with comparable indemnifications. The indemnification period generally covers, at maximum,
the period of the applicable agreement plus the applicable limitations period under law.

these indemnification agreements is not

The maximum potential amount of future payments that the Company would be required to
reasonably quantifiable as certain
make under
indemnifications are not
into
the Company enters
indemnification agreements only when an assessment of the business circumstances would
indicate that the risk of loss is remote. At August 31, 2014, management believes it is remote
that the indemnification provisions would require any material cash payment.

to limitation. However,

subject

The Company indemnifies its directors and officers against any and all claims or losses
reasonably incurred in the performance of their service to the Company to the extent permitted
by law.

Irrevocable standby letters of credit and commercial surety bonds

The Company and certain of its subsidiaries have granted irrevocable standby letters of credit
and commercial surety bonds, issued by high rated financial institutions, to third parties to
indemnify them in the event the Company does not perform its contractual obligations. As of
August 31, 2014, the guarantee instruments amounted to $4. The Company has not recorded
any additional liability with respect to these guarantees, as the Company does not expect to
make any payments in excess of what is recorded on the Company’s consolidated financial
statements. The guarantee instruments mature at various dates during fiscal 2015.

26. EMPLOYEE BENEFIT PLANS

Defined contribution pension plans

The Company has defined contribution pension plans for its non-union employees and, for the
majority of these employees, contributes 5% of eligible earnings to the maximum amount
deductible under the Income Tax Act. For union employees, the Company contributes amounts
up to 9.8% of earnings to the individuals’ registered retirement savings plans. Total pension
costs in respect of these plans were $37 (2013 – $35) of which $24 (2013 – $23) was
expensed and the remainder capitalized.

107

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

Defined benefit pension plans

The Company has two non-registered retirement plans for designated executives and senior
executives and several registered pension plans for certain employees in the media business.
The following is a summary of the accrued benefit liabilities recognized in the statement of
financial position.

Unregistered plans

Accrued benefit obligation
Fair value of plan assets

Registered plans

Accrued benefit obligation
Fair value of plan assets

Accrued benefit liabilities and deficit

2014
$

2013
$

493 406
330 302

163 104

171 152
160 133

174 123

The plans expose the Company to a number of risks, of which the most significant are as
follows:

(i)

(ii)

Volatility in market conditions: The accrued benefit obligations are calculated using
discount rates with reference to bond yields closely matching the term of the estimated
cash flows while many of the assets are invested in other types of assets. If plan assets
underperform these yields, this will result in a deficit. Changing market conditions in
conjunction with discount rate volatility will result in volatility of the accrued benefit
liabilities. To minimize some of the investment risk, the Company has established long-
term funding targets where the time horizon and risk tolerance are specified.

Selection of accounting assumptions: The calculation of the accrued benefit obligations
involves projecting future cash flows of the plans over a long time frame. This means that
assumptions used can have a material impact on the statements of financial position and
comprehensive income because in practice, future experience of the plans may not be in
line with the selected assumptions.

Non-registered pension plans

The Company provides a supplemental executive retirement plan (“SERP”) for certain of its
senior executives. Benefits under this plan are based on the employees’ length of service and
their highest three-year average rate of eligible pensionable earnings during their years of
service. In 2012, the Company closed the plan to new participants and amended the plan to
freeze base salary levels at August 31, 2012 for purposes of determining eligible pensionable
earnings. The plan was also amended to provide funding of up to 90% of the accrued benefit
obligation over a period of six years. Employees are not required to contribute to this plan.
Subsequent
the Company made contributions of $25 to a Retirement
to year end,
Compensation Arrangement Trust (“RCA”).

108

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

During fiscal 2013, the Company established an executive retirement plan (“ERP”) for certain
executives not covered by the SERP. Benefits under this plan are comprised of defined
contribution and defined benefit components and are based on the employees’ length of service
as well as final average earnings during their years of service. Employees are not required to
contribute to this plan. Annually the employer is to fund 90% of the accrued benefit obligation.
Subsequent to year end, the Company made contributions of $2 to an RCA.

The table below shows the change in benefit obligation and funding status and the fair value of
plan assets.

Accrued benefit obligation, beginning of year
Current service cost
Past service cost
Interest cost
Payment of benefits to employees
Remeasurements:

Effect of changes in demographic assumptions
Effect of changes in financial assumptions
Effect of experience adjustments

Accrued benefit obligation, end of year

Fair value of plan assets, beginning of year
Employer contributions
Interest income
Payment of benefits
Return on plan assets, excluding interest income

Fair value of plan assets, end of year

Accrued benefit liability and plan deficit, end of year

SERP
$

ERP
$

2014
Total
$

SERP
$

ERP
$

404
9
–
19
(10)

1
51
13

487

302
13
15
(10)
8

328

159

2
3
–
–
–

–
1
–

–
2
–
–
–

406 378
8
4
17
(9)

12
–
19
(10)

1
52
13

12
(15)
9

493 404

302

–
15 300
15
13
(10)
(9)
8
(2)

330 302

163 102

–
2
–
–
–

–
–
–

–
–
–
–
–

–

2013
Total
$

378
10
4
17
(9)

12
(15)
9

406

–
300
13
(9)
(2)

302

104

The weighted average duration of the defined benefit obligation of the SERP and ERP at
August 31, 2014 is 15.9 years and 23.4 years, respectively.

The underlying plan assets of the SERP and ERP at August 31, 2014 are invested in the
following:

Cash and cash equivalents
Fixed income securities
Equity securities – Canadian
Equity securities – Foreign

All fixed income and equity securities have a quoted price in active market.

109

SERP
$

ERP
$

163
90
24
51

328

1
–
–
1

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

The tables below show the significant weighted-average assumptions used to measure the
pension obligation and cost for the plans.

Accrued benefit obligation

Discount rate
Rate of compensation increase

Benefit cost for the year

Discount rate
Rate of compensation increase

2014
SERP
%

2014
ERP
%

2013
SERP
%

2013
ERP
%

4.00
4.00
5.00(1) 3.00

4.75
4.75
5.00(1) 3.00

2014
SERP
%

2014
ERP
%

2013
SERP
%

2013
ERP
%

4.75
4.75
5.00(1) 3.00

4.50
4.20
5.00(1) 3.00

(1)

Applies only to incentive compensation component of eligible pensionable earnings.

The calculation of the accrued benefit obligation is sensitive to the assumptions above. A one
percentage point decrease in the discount rate would have increased the accrued benefit
obligation at August 31, 2014 by $85. A one percentage point increase in the rate of
compensation increase would have increased the accrued benefit obligation by $16.

When calculating the sensitivity of the defined benefit obligation to significant actuarial
assumptions, the present value of the defined benefit obligation has been calculated using the
projected benefit method which is the same method that is applied in calculating the defined
benefit liability recognized in the statement of financial position. The sensitivity analysis
presented above may not be representative of the actual change in the accrued benefit
obligation as it is unlikely that the change in assumptions would occur in isolation of one
another as some assumptions may be correlated.

The net pension benefit plan expense, which is included in employee salaries and benefits
expense, is comprised of the following components:

Current service cost
Past service cost
Interest cost
Interest income

Pension expense

Registered pension plans

SERP
$

ERP
$

9
–
19
(15)

3
–
–
–

2014
Total
$

12
–
19
(15)

SERP
$

ERP
$

8
4
17
(13)

2
–
–
–

2013
Total
$

10
4
17
(13)

The Company has a number of funded defined benefit pension plans which provide pension
benefits to certain unionized and non-unionized employees in the media business. Benefits
under these plans are based on the employees’ length of service and final average salary. These
plans are regulated by the Office of the Superintendent of Financial Institutions, Canada in
accordance with the provisions of the Pension Benefits Standards Act and Regulations. The
regulations set out minimum standards for funding the plans.

110

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

The table below shows the change in the benefit obligations, change in fair value of plan assets
and the funded status of these defined benefit plans.

Accrued benefit obligation, beginning of year
Current service cost
Interest cost
Employee contributions
Payment of benefits to employees
Remeasurements:

Effect of changes in demographic assumptions
Effect of changes in financial assumptions
Effect of experience adjustments

Accrued benefit obligation, end of year

Fair value of plan assets, beginning of year
Employer contributions
Employee contributions
Interest income
Payment of benefit
Administrative expenses paid from plan assets
Return on plan assets, excluding interest income

Fair value of plan assets, end of year

Accrued benefit liability and plan deficit, end of year

2014
$

152
5
7
1
(10)

1
15
–

171

133
12
1
7
(10)
(1)
18

160

2013
$

149
5
7
1
(7)

5
(4)
(4)

152

116
13
1
6
(7)
(1)
5

133

The weighted average duration of the defined benefit obligation at August 31, 2014 is
16.7 years.

The plan assets at August 31, 2014 are comprised of investments in pooled funds as follows:

Equity – Canadian
Equity – Foreign
Fixed income – Canadian

The underlying securities in the pooled funds have quoted prices in an active market.

40
21
99

160

111

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

The tables below show the significant weighted-average assumptions used to measure the
pension obligation and cost for these plans.

Accrued benefit obligation

Discount rate
Rate of compensation increase

Benefit cost for the year

Discount rate
Rate of compensation increase

2014
%

2013
%

4.09 4.84
3.00 3.50

2014
%

2013
%

4.84 4.67
3.50 3.50

The calculation of the accrued benefit obligation is sensitive to the assumptions above. A one
percentage point decrease in the discount rate would have increased the accrued benefit
obligation at August 31, 2014 by $31. A one percentage point increase in the rate of
compensation increase would have increased the accrued benefit obligation by $6.

The net pension benefit plan expense, which is included in employee salaries and benefits
expense, is comprised of the following components:

Current service cost
Interest cost
Interest income
Administrative expenses

Pension expense

2014
$

2013
$

5
7
(7)
1

5
7
(6)
1

112

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

Other benefit plans

The Company has post employment benefits plans that provide post retirement health and life
insurance coverage to certain retirees in the media business and are funded on a pay-as-you-go
basis. The table below shows the change in the accrued post-retirement obligation which is
recognized in the statement of financial position.

Accrued benefit obligation and plan deficit, beginning of year
Current service cost
Interest cost
Payment of benefits to employees
Remeasurements:

Effect of changes in demographic assumptions
Effect of changes in financial assumptions

2014
$

2013
$

15
1
1
(1)

–
2

19
–
1
(1)

(4)
–

Accrued benefit obligation and plan deficit, end of year

The weighted average duration of the benefit obligation at August 31, 2014 is 18.0 years.

The post-retirement benefit plan expense, which is included in employee salaries and benefits
expense, is $2 (2013 – $1) and is comprised of current service and interest cost.

The discount rates used to measure the post-retirement benefit cost for the year and the
accrued benefit obligation as at August 31, 2014 were 4.75% and 4.00%, respectively (2013
– 4.50% and 4.75%, respectively). A one percentage point decrease in the discount rate would
have increased the accrued benefit obligation at August 31, 2014 by $4.

Employer contributions

The Company’s estimated contributions to the defined benefit plans in fiscal 2015 are $38.

27. RELATED PARTY TRANSACTIONS

Controlling shareholder

The majority of the Class A Shares are held by JR Shaw, members of his family and the
companies owned and/or controlled by them (the “Shaw Family Group”). All of the Class A
Shares held by the Shaw Family Group are subject to a voting trust agreement entered into by
such persons. The Shaw Family Group is represented as Directors, Senior Executive and
Corporate Officers of the Company.

During the prior year, the Company and the Shaw Family Group formed a partnership to make
equity investments in companies with new and emerging technologies that have the potential to
provide future benefit to the Company. The Shaw Family Group contributed $1 for its 20%
interest in the partnership.

113

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

Significant investments in subsidiaries

The following are the significant subsidiaries of the Company, all of which are incorporated in
Canada.

Shaw Cablesystems Limited
Shaw Cablesystems G.P.
Shaw Envision Inc.
Shaw Telecom Inc.
Shaw Telecom G.P.
Shaw Satellite Services Inc.
Star Choice Television Network Incorporated
Shaw Satellite G.P.
Shaw Media Inc.
Shaw Television Limited Partnership

Key management personnel and Board of Directors

Ownership Interest

August 31,
2014

August 31,
2013

100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

Key management personnel consist of the most senior executive team and along with the Board
of Directors have the authority and responsibility for planning, directing and controlling the
activities of the Company.

Compensation

The compensation expense of key management personnel and Board of Directors is as follows:

Short-term employee benefits
Post-employment pension benefits
Share-based compensation

Transactions

2014
$

2013
$

42
17
3

39
17
6

The Company paid $2 (2013 – $3) for direct sales agent, collection, marketing, installation and
maintenance services to a company controlled by a Director of the Company.

During the year, the Company paid $7 (2013 – $7) for remote control units to a supplier where
Directors of the Company hold positions on the supplier’s board of directors.

During the year, network fees of $12 (2013 – $nil) were paid to a programmer where a Director
of the Company holds a position on the programmer’s board of directors.

At August 31, 2013, the Company had $3 owing in respect of these transactions (2013 – $1).

114

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

Other related parties

The Company has entered into certain transactions and agreements in the normal course of
business with certain of its related parties. These transactions are measured at the exchange
amount, which is the amount of consideration established and agreed to by the related parties.

Corus

The Company and Corus are subject to common voting control. During the year, network fees of
$120 (2013 – $125), advertising fees of $1 (2013 – $1) and programming fees of $1 (2013 –
$1) were paid to various Corus subsidiaries and entities subject to significant influence. In
addition, the Company provided administrative, advertising and other services for $1 (2013 –
$nil), uplink of television signals for $5 (2013 – $5), Internet services and lease of circuits for
$1 (2013 – $1) and programming content of $1 (2013 – $1). At August 31, 2014, the
Company had a net of $20 owing in respect of these transactions (2013 – $21) and
commitments in respect of network program agreements of $15 which are included in the
amounts disclosed in note 25.

During 2013 the Company sold to Corus its 49% interest in ABC Spark and acquired from
Corus its 20% interest in Food Network Canada. The Company had a non-interest bearing
promissory note of $48 owing to Corus at August 31, 2013 in respect of these transactions. In
addition, the Company agreed to sell to Corus its 50% interest in its two French-language
channels, Historia and Series+. The sale of Historia and Series+ closed in 2014 (see note 3) at
which time the Company settled the aforementioned promissory note.

The Company provided Corus with television advertising spots in return for radio and television
advertising. No monetary consideration was exchanged for these transactions and no amounts
were recorded in the accounts.

Burrard Landing Lot 2 Holdings Partnership

During the year, the Company paid $10 (2013 – $10) to the Partnership for lease of office
space in Shaw Tower. Shaw Tower, located in Vancouver, BC, is the Company’s headquarters for
its lower mainland operations. At August 31, 2014, the Company had a remaining commitment
of $101 in respect of the office space lease which is included in the amounts disclosed in note
25.

Specialty Channels

The Company previously held interests in a number of specialty television channels which were
subject to either joint control or significant influence. The Company paid network fees of $1
(2013 – $2) and provided uplink of television signals of $nil (2013 – $1) to these channels
during the year.

28. FINANCIAL INSTRUMENTS
Fair values

The fair value of financial instruments has been determined as follows:

(i)

Current assets and current liabilities

The fair value of financial instruments included in current assets and current liabilities
approximates their carrying value due to their short-term nature.

115

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

(ii)

Investments and other assets and Other long-term assets

The fair value of publicly traded investments is determined by quoted market prices.
Investments in private entities which do not have quoted market prices in an active
market and whose fair value cannot be readily measured are carried at cost. No
published market exists for such investments. These equity investments have been made
as they are considered to have the potential to provide future benefit to the Company and
accordingly, the Company has no current intention to dispose of these investments in the
near term. The fair value of long-term receivables approximates their carrying value as
they are recorded at the net present values of their future cash flows, using an
appropriate discount rate.

(iii)

Long-term debt

The carrying value of long-term debt is at amortized cost based on the initial fair value as
determined at the time of issuance. The fair value of publicly traded notes is based upon
current trading values. Other notes and debentures are valued based upon current
trading values for similar instruments.

(vi)

Other long-term liabilities

The fair value of program rights payable, estimated by discounting future cash flows,
approximates their carrying value.

(v)

Derivative financial instruments

The fair value of US currency forward purchase contracts is determined using an
estimated credit-adjusted mark-to-market valuation.

The carrying values and estimated fair values of derivative financial instruments, an investment
in a publicly traded company and long-term debt are as follows:

Assets
Derivative financial instruments(2)
Investment in publicly traded company(1)

Liabilities
Long-term debt(1)

August 31, 2014

August 31, 2013

Carrying
value
$

Estimated
fair value
$

Carrying
value
$

Estimated
fair value
$

–
7

3
–

4,690

5,390

4,818

5,275

(1)

(2)

Level 1 fair value – determined by quoted market prices.

Level 2 fair value – determined by valuation techniques using inputs based on observable
market data, either directly or indirectly, other than quoted prices.

As at August 31, 2013, US currency forward purchase contracts qualified as hedging
instruments and were designated as cash flow hedges.

116

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

Risk management

The Company is exposed to various market risks including currency risk and interest rate risk,
as well as credit risk and liquidity risk associated with financial assets and liabilities. The
Company has designed and implemented various risk management strategies, discussed further
below, to ensure the exposure to these risks is consistent with its risk tolerance and business
objectives.

Market risk

Market risk is the risk that the fair value or cash flows of a financial instrument will fluctuate as
a result of changes in market prices,
including foreign exchange and interest rates, the
Company’s share price and market price of publicly traded investments.

Currency risk

Certain of the Company’s capital expenditures and equipment costs are incurred in US dollars,
while its revenue is primarily denominated in Canadian dollars. Decreases in the value of the
Canadian dollar relative to the US dollar could have an adverse effect on the Company’s cash
flows. To mitigate some of the uncertainty in respect to capital expenditures and equipment
costs,
the Company regularly enters into forward contracts in respect of US dollar
commitments. With respect to 2014, the Company entered into forward contracts to purchase
US $135 over a period of 12 months commencing in September 2013 at an average exchange
rate of 1.0403 Cdn. At August 31, 2014 the Company had no forward contracts in respect of
US dollar commitments.

Interest rate risk

Due to the capital-intensive nature of its operations, the Company utilizes long-term financing
extensively in its capital structure. The primary components of this structure are a banking
facility and various Canadian senior notes with varying maturities issued in the public markets
as more fully described in note 13.

Interest on the Company’s banking facility is based on floating rates, while the senior notes are
primarily fixed-rate obligations. The Company utilizes its credit facility to finance day-to-day
operations and, depending on market conditions, periodically converts the bank loans to fixed-
rate instruments through public market debt issues. As at August 31, 2014, 94% of the
Company’s consolidated long-term debt was fixed with respect to interest rates.

Sensitivity analysis

The Company held no foreign exchange forward contracts at August 31, 2014. A portion of the
Company’s accounts receivables and accounts payable and accrued liabilities is denominated in
US dollars; however, due to their short-term nature, there is no significant market risk arising
from fluctuations in foreign exchange rates.

Interest on the Company’s banking facility is based on floating rates and the variable rate senior
notes are based on CDOR. There is no significant market risk arising from interest rates
fluctuating by reasonably possible amounts from their actual values at August 31, 2014.

117

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

A change of one dollar in the market price per share of the Company’s publicly traded
investment would change other comprehensive loss by $1 at August 31, 2014.

At August 31, 2014, a one dollar change in the Company’s Class B Non-Voting Shares would
not have had an impact on net income in respect of the Company’s DSU plan.

Credit risk

Accounts receivable in respect of Cable and Satellite divisions are not subject to any significant
concentrations of credit risk due to the Company’s large and diverse customer base. For the
Media division, a significant portion of sales are made to advertising agencies which results in
some concentration of credit risk. At August 31, 2014, approximately 61% (2013 – 59%) of
the $201 (2013 – $196) of advertising receivables is due from the ten largest accounts. The
largest amount due from an advertising agency is $20 (2013 – $19) which is approximately
10% (2013 – 10%) of advertising receivables. As at August 31, 2014, the Company had
accounts receivable of $493 (August 31, 2013 – $486), net of the allowance for doubtful
accounts of $32 (August 31, 2013 – $27). The Company maintains an allowance for doubtful
accounts for the estimated losses resulting from the inability of its customers to make required
payments. In determining the allowance, the Company considers factors such as the number of
days the subscriber account is past due, whether or not the customer continues to receive
service, the Company’s past collection history and changes in business circumstances. As at
August 31, 2014, $129 (August 31, 2013 – $135) of accounts receivable is considered to be
past due, defined as amounts outstanding past normal credit
terms and conditions.
Uncollectible accounts receivable are charged against the allowance account based on the age
of the account and payment history. The Company believes that its allowance for doubtful
accounts is sufficient to reflect the related credit risk.

The Company mitigates the credit risk of advertising receivables by performing initial and
ongoing credit evaluations of advertising customers. Credit is extended and credit limits are
determined based on credit assessment criteria and credit quality. In addition, the Company
mitigates credit risk of subscriber receivables through advance billing and procedures to
downgrade or suspend services on accounts that have exceeded agreed credit terms.

Credit risks associated with US currency contracts arise from the inability of counterparties to
meet the terms of the contracts. In the event of non-performance by the counterparties, the
Company’s accounting loss would be limited to the net amount that it would be entitled to
receive under the contracts and agreements. In order to minimize the risk of counterparty
default under its swap agreements, the Company assesses the creditworthiness of its swap
counterparties.

Liquidity risk

Liquidity risk is the risk that the Company will experience difficulty in meeting obligations
associated with financial liabilities. The Company manages its liquidity risk by monitoring cash
flow generated from operations, available borrowing capacity, and by managing the maturity
profiles of its long-term debt.

118

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

The Company’s undiscounted contractual maturities as at August 31, 2014 are as follows:

Within one year
1 to 3 years
3 to 5 years
Over 5 years

Accounts
payable and
accrued
liabilities(1)
$

Other
long-term
liabilities
$

Long-term
debt
repayable at
maturity
$

828
–
–
–

828

–
5
–
–

–
1,000
–
3,740

4,740

Interest
payments
$

267
506
439
2,190

3,402

(1)

Includes accrued interest and dividends of $215.

29. CONSOLIDATED STATEMENTS OF CASH FLOWS

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

(i)

Funds flow from operations

Net income
Adjustments to reconcile net income to funds flow from operations:
Amortization
Program rights
Deferred income tax expense (recovery)
CRTC benefit obligation funding
Gain on sale of media assets [note 3]
Gain on sale of cablesystem [note 3]
Divestment costs [note 3]
Gain on sale of associate [note 3]
Share-based compensation
Defined benefit pension plans
Accretion of long-term liabilities and provisions
Debt retirement costs [note 13]
Write-down of properties [note 22]
Other

2014
$

2013
$

887

784

768
(10)
(46)
(58)
(49)
–
–
–
3
(5)
6
8
6
14

858
(31)
121
(52)
–
(50)
5
(7)
4
(288)
9
–
14
13

Funds flow from operations

1,524 1,380

119

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

(ii)

Interest and income taxes paid and interest and distributions received and classified as
operating activities are as follows:

Interest paid
Income taxes paid (net of refunds)
Interest received
Distributions received

(iii) Non-cash transactions

2014
$

283
137
5
1

2013
$

317
154
2
2

The Consolidated Statements of Cash Flows exclude the following non-cash transactions:

Issuance of Class B Non-Voting Shares:
Dividend reinvestment plan [note 19]

Non-monetary exchange:

Exchange of fibre assets for network capacity leases

Lease transaction:

Capitalization of transponders under lease renewal

Issuance of promissory note:

Transactions with a related party [notes 3 and 27]

30. CAPITAL STRUCTURE MANAGEMENT
The Company’s objectives when managing capital are:

2014
$

2013
$

146

126

–

(i)

(ii)

(iii)

to maintain a capital structure which optimizes the cost of capital, provides flexibility and
diversity of funding sources and timing of debt maturities, and adequate anticipated
liquidity for organic growth and strategic acquisitions;

to maintain compliance with debt covenants; and

to manage a strong and efficient capital base to maintain investor, creditor and market
confidence.

The Company defines capital as comprising all components of shareholders’ equity (other than
non-controlling interests and amounts in accumulated other comprehensive income/loss), long-
term debt (including the current portion thereof), and bank indebtedness less cash and cash
equivalents.

Cash and cash equivalents
Long-term debt repayable at maturity
Share capital
Contributed surplus
Retained earnings

120

August 31, 2014
$

August 31, 2013
$

(637)
4,740
3,182
64
1,589

8,938

(422)
4,869
2,955
72
1,242

8,716

Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2014 and 2013
[all amounts in millions of Canadian dollars except share and per share amounts]

The Company manages its capital structure and makes adjustments to it in light of changes in
economic conditions and the risk characteristics of underlying assets. The Company may also
from time to time change or adjust its objectives when managing capital
in light of the
the relative importance of
Company’s business circumstances, strategic opportunities, or
competing objectives as determined by the Company. There is no assurance that the Company
will be able to meet or maintain its currently stated objectives.

The Company’s banking facility is subject to covenants which include maintaining minimum or
maximum financial ratios, including total debt to operating cash flow and operating cash flow to
fixed charges. At August 31, 2014, the Company is in compliance with these covenants and
based on current business plans and economic conditions, the Company is not aware of any
condition or event that would give rise to non-compliance with the covenants.

The Company’s overall capital structure management strategy remains unchanged from the
prior year.

31. SUBSEQUENT EVENT

On September 2, 2014, the Company closed the acquisition of 100% of the shares of ViaWest,
Inc, (“ViaWest”) for an enterprise value of US $1.2 billion which was funded through a
combination of cash on hand, assumption of ViaWest debt and a drawdown of US $330 on the
Company’s credit facility. The ViaWest acquisition provides the Company with a growth platform
in the North American data centre sector and is another step in expanding technology offerings
for mid-market enterprises in Western Canada. The Company is currently in the process of
completing the purchase price allocation which it expects to include in its interim financial
statements for the first quarter of fiscal 2015. The operating results of ViaWest will be included
in the Company’s consolidated financial statements from the date of acquisition. In connection
with the transaction, the Company incurred $4 of acquisition related costs in fiscal 2014 for
professional fees paid to lawyers, consultants and advisors and had a contingent liability of $6
at August 31, 2014 in respect of such fees.

121

Shaw Communications Inc.
FIVE YEARS IN REVIEW
August 31, 2014

($millions except per share amounts)

Revenue
Cable
Satellite
Media

Intersegment

Operating income before restructuring

costs and amortization(1)

Cable
Satellite
Media

Restructuring costs
Amortization

Operating income

Net income(4)

Net income attributable to equity

shareholders(4)

Earnings per share

Basic
Diluted

IFRS
2014

IFRS
2013

IFRS
2012

IFRS
2011

Canadian
GAAP
2010(3)

3,365
878
1,096

5,339
(98)

3,266
860
1,106

3,193
844
1,053

3,096
827
891

2,932
805
–

5,232
(90)

5,090
(92)

4,814
(73)

3,737
(19)

5,241

5,142

4,998

4,741

3,718

1,632
277
353

2,262
(58)
(765)

1,582
285
353

2,220
–
(854)

1,502
293
332

2,127
–
(808)

1,510
289
252

2,051
–
(735)

1,453
307
–

1,760
–
(656)

1,439

1,366

1,319

1,316

1,104

887

784

761

559

534

857

746

728

540

534

1.84
1.84

1.64
1.63

1.62
1.61

1.23
1.23

Funds flow from operations(2)

1,524

1,380

1,299

1,433

1,377

Statement of Financial Position
Total assets
Long-term debt (including current portion)

Cash dividends paid per share
Class A
Class B

13,250 12,732 12,722 12,588 10,154
3,982
5,263

5,257

4,818

4,690

1.058
1.060

0.993
0.995

0.942
0.945

0.897
0.900

0.858
0.860

(1)
(2)

(3)

(4)

See key performance drivers on page 21.
Funds flow from operations is presented before changes in non-cash working capital as
presented in the Consolidated Statements of Cash Flows. Excludes cash used in operating
activities in respect of discontinued operations of $10 and $1 in 2011 and 2010,
respectively.
Comparative period for fiscal 2010 is reported under Canadian GAAP and has not been
restated in accordance with IFRS.
Excludes loss from discontinued operations of $89 and $1 for 2011 and 2010,
respectively.

122

Shaw Communications Inc.
SHAREHOLDERS’ INFORMATION
August 31, 2014

Share Capital and Listings

The Company is authorized to issue a limited number of Class A participating and an unlimited
number of Class B Non-Voting participating shares. The authorized number of Class A Shares is
limited, subject to certain exceptions, to the lesser of that number of such shares (i) currently
issued and outstanding; and (ii) that may be outstanding after any conversion of Class A Shares
into Class B Non-Voting Shares. At August 31, 2014, the Company had 22,420,064 Class A
Shares and 439,606,326 Class B Non-Voting Shares outstanding. The Class A Shares are listed
on the TSX Venture Stock Exchange under the symbol SJR.A. The Class B Non-Voting Shares
are listed on the Toronto Stock Exchange under SJR.B and on the New York Stock Exchange
under the symbol SJR. The Series A Preferred Shares are listed on the Toronto Stock Exchange
under the symbol SJR.PR.A.

Trading Range of Class B Non-Voting Shares on the Toronto Stock Exchange

Quarter

September 1, 2013 to August 31, 2014
First
Second
Third
Fourth

Closing price, August 31, 2014

Share Splits

High Close

Low Close

Total
Volume

25.49
26.03
27.34
27.95

23.92
24.41
25.48
26.25

46,219,235
64,436,621
43,542,516
41,824,057

27.39

There have been four splits of the Company’s shares; July 30, 2007 (2 for 1), February 7,
2000 (2 for 1), May 18, 1994 (2 for 1), and September 23, 1987 (3 for 1). In addition, as a
result of the Arrangement referred to in the Management Information Circular dated July 22,
1999, a Shareholder’s Adjusted Cost Base (ACB) was reduced for tax purposes.

123

Shaw Communications Inc.
CORPORATE INFORMATION
August 31, 2014

Willard (Bill) H. Yuill(2)
Chairman and Chief
Executive Officer
The Monarch Corporation

(1) Audit Committee
(2) Human Resources and

Compensation
Committee

(3) Corporate Governance

and Nominating
Committee

(4) Executive Committee

SENIOR OFFICERS
JR Shaw
Executive Chair

Jim Shaw
Vice Chair

Bradley S. Shaw
Chief Executive Officer

Peter J. Bissonnette
President

Steve Wilson
Executive Vice President,
Corporate Development and
Chief Financial Officer

Jay Mehr
Executive Vice President
and Chief Operating Officer

Barbara Williams
Executive Vice President,
Broadcasting & President,
Shaw Media

AUDITORS
Ernst & Young LLP

PRIMARY BANKER
The Toronto-Dominion Bank

TRANSFER AGENTS
CST Trust Company,
Calgary, AB
Phone: 1-800-387-0825

DEBENTURE TRUSTEE
Computershare Trust
Company of Canada
100 University Avenue,
9th Floor
Toronto, ON M5J 2Y1
service@computershare.com
Phone : 1-800-564-6253

FURTHER INFORMATION
Financial analysts, portfolio
managers, other investors
and interested parties may
contact the Company at
(403) 750-4500 or visit
Shaw’s website at
www.shaw.ca for further
information.

To receive additional copies
of this Annual Report,
please fax your request to
(403) 750-7469 or email
investor.relations@sjrb.ca

All trademarks used in this
annual report are used with
the permission of the
owners of such trademarks.

Rhonda D. Bashnick
Senior Vice President,
Finance

Peter A. Johnson
Senior Vice President,
General Counsel and
Corporate Secretary

HONORARY SECRETARY:
Louis A. Desrochers, CM, AOE,
Q.C., LLD

CORPORATE OFFICE
Shaw Communications Inc.
Suite 900, 630 – 3rd Avenue
S.W., Calgary, Alberta
Canada T2P 4L4
Phone: (403) 750-4500
Website: www.shaw.ca

CORPORATE GOVERNANCE
Information concerning
Shaw’s corporate
governance policies are
contained in the
Information Circular and is
also available on Shaw’s
website, www.shaw.ca

Information concerning
Shaw’s compliance with the
corporate governance listing
standards of the New York
Stock Exchange is available
in the investors section on
Shaw’s website,
www.shaw.ca

INTERNET HOME PAGE
Shaw’s Annual Report,
Annual Information Form,
Quarterly Reports, Press
Releases and other relevant
investor information are
available electronically on
the Internet at www.shaw.ca

DIRECTORS

JR Shaw(4)
Executive Chair
Shaw Communications Inc.

Peter J. Bissonnette
President
Shaw Communications Inc.

Adrian L. Burns(3)(4)
Corporate Director

George F. Galbraith(3)
Corporate Director

Dr. Richard R. Green(2)
Corporate Director

Dr. Lynda Haverstock(3)
Corporate Director

Gregory John Keating(1)
Chairman and Chief
Executive Officer
Altimax Venture Capital

Michael W. O’Brien(3)(4)
Corporate Director

Paul K. Pew(1)
Co-Founder and Co-CEO
G3 Capital Corp.

Jeffrey C. Royer(1)
Private Investor

Bradley S. Shaw(4)
Chief Executive Officer
Shaw Communications Inc.

Jim Shaw
Vice Chair
Shaw Communications Inc.

JC Sparkman(2)(4)
Corporate Director

Carl E. Vogel(1)
Private Investor; Senior
Advisor to DISH Network

Sheila C. Weatherill(2)
Corporate Director

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