Indicate by check mark whether
the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
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Shaw Communications Inc.
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Date: June 28, 2017
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By:
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/s/ Vito Culmone
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Name:
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Vito Culmone
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Title:
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Executive Vice President and Chief Financial Officer
Shaw Communications Inc.
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NEWS RELEASE
Shaw Announces Third Quarter and Year-to-Date Results
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Cable TV subscribers grow for the first time since 2010, with Consumer and Wireless divisions gaining 58,000 subscribers
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Addition of low-band spectrum is a significant milestone towards improving network coverage and quality across Alberta, British Columbia and Ontario
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Enhanced financial flexibility going forward with pro forma net debt to operating income before restructuring costs and amortization below 2.0x
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Calgary, Alberta (June 28, 2017)
Shaw Communications Inc. today announced consolidated financial and operating results for the quarter ended
May 31, 2017. Revenue from continuing operations for the quarter of $1.31 billion increased by 2.8% over the comparable period. Operating income before restructuring costs and amortization
1
for the quarter of $550 million decreased 0.5% over the comparable period.
Chief Executive Officer, Brad Shaw said, Strong subscriber growth in
both cable video and Internet reflects our continued focus on delivering leading customer service and innovative products to the market including WideOpen Internet 150 and BlueSky TV. The recently announced acquisition of spectrum will add
critical wireless capacity and capability to our network, adding to our foundation that will make us Canadas leading connectivity provider.
Mr. Shaw added, We are confident that the acquisition of 700 MHz and 2500 MHz spectrum from Quebecor Media Inc., combined with Freedoms
current portfolio of assets, will materially improve our customer experience and will further enable our ability to offer best-in-class converged network solutions. With our customers future connectivity needs at the heart of every strategic
decision we make, we are excited about the opportunity this additional spectrum presents and the compelling wireless experience we will continue to create for our existing and future customers.
In the quarter, Shaw delivered a net gain of over 38,000 revenue generating units (RGUs) in the Consumer division representing a substantial
improvement over the approximately 47,000 RGU losses in the third quarter of fiscal 2016. The Consumer divisions net gains in the quarter included the addition of approximately 20,000 Internet RGUs, 12,000 cable video RGUs, and 6,000 satellite
video RGUs. This trend of year-over-year improvement is attributed to strong Internet subscriber growth led by WideOpen Internet 150, compelling bundle and value plan offerings driving notable reductions in disconnects, and by the launch of BlueSky
TV across Shaws entire cable video footprint. This quarters subscriber result also represents the divisions first positive net video RGU quarter since the fourth quarter of fiscal 2010.
In Wireless, the Company continued to grow postpaid and prepaid wireless subscribers, gaining a combined 20,000 RGUs in the quarter, as compared to
approximately 22,000 RGUs in the third quarter of fiscal 2016. The LTE-A network deployment continued ahead of schedule, with upgrades now complete in the GTA, Hamilton, Vancouver, Edmonton and Calgary and with LTE roaming launched in Canada and in
the U.S. The handset lineup has continued to expand, with a total of nine handsets compatible with the AWS-3 LTE network, including LG, Samsung, Sony and ZTE. On April 25, 2017, Freedom Mobile launched another key enhancement with Wi-Fi
calling, which enables calls to be made at no cost from outside the cellular calling area, or at indoor locations.
Selected Financial Highlights
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Three months ended May 31,
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Nine months ended May 31,
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(millions of Canadian dollars except per share
amounts)
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2017
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2016
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Change
%
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2017
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2016
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Change
%
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Revenue
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1,311
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1,275
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2.8
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3,912
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3,553
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10.1
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Operating income before restructuring costs and amortization
1
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550
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553
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(0.5
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)
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1,625
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1,558
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4.3
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Operating margin
1
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42.0
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%
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43.4
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%
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(1.4pts
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)
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41.5
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%
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43.9
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%
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(2.4pts
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)
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Free cash flow
1
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132
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182
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(27.5
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)
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436
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473
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(7.8
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)
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Net income from continuing operations
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164
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74
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>100.0
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400
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326
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22.7
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Net income (loss) from discontinued operations, net of tax
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(31
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)
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630
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(30
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760
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Net income
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133
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704
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(81.1
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)
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370
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1,086
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(65.9
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)
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Basic earnings per share
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0.27
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1.44
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0.74
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2.21
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Diluted earnings per share
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0.27
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1.44
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0.74
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2.20
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(1)
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See definitions and discussion under Non-IFRS and additional GAAP measures in the accompanying MD&A.
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Operating income before restructuring costs and amortization for the three and nine month periods of $550 million and $1.63 billion, respectively, compared to
$553 million and $1.56 billion in fiscal 2016. The slight decrease in the quarter is attributed primarily to higher operating expenses in the Consumer division driven by costs related to marketing the launch of BlueSky TV and other corporate related
costs. Increases in the Wireless, Business Network Services and Business Infrastructure Services divisions substantially offset the year-over-year decline in the Consumer division.
Free cash flow for the three and nine month periods of $132 million and $436 million, respectively, compared to $182 million and $473 million in fiscal 2016.
The decrease in free cash flow was largely due to higher planned capital expenditures and by the loss of free cash flow generated in the prior year by the former Media division which was sold on April 1, 2016.
Net income for the current quarter of $133 million decreased $571 million relative to $704 million in the third quarter of fiscal 2016 mainly due to prior
year income from the discontinued Media and fleet tracking operations, and the gain on the sale of the Media operation in the amount of $630 million. Excluding discontinued operations, net income from continuing operations increased by $90 million
compared to the third quarter of fiscal 2016 driven primarily by lower non-operating costs.
On June 13, 2017, Shaw announced that it entered a share
purchase agreement with GI Partners portfolio company Peak 10 Holding Corporation to sell 100% of its wholly owned subsidiary, ViaWest, Inc. for US$1.675 billion (approximately C$2.3 billion). The transaction is subject to customary conditions,
including U.S. regulatory approval, and is expected to close by the end of fiscal 2017.
On June 13, 2017, Shaw also announced that it entered a
definitive agreement with Quebecor Media Inc. to acquire 700 MHz and 2500 MHz wireless spectrum licences held by Quebecors subsidiary, Videotron, for $430 million. The spectrum transaction is subject to customary closing conditions including
necessary regulatory approvals and is expected to close in the summer of 2017. The Company estimates capital expenditures associated with the deployment of the acquired spectrum to be approximately $350 million. The Company expects the majority of
the capital related to the network build to be incurred during fiscal 2018, which reinforces Shaws commitment to the wireless space, and improves its long-term wireless growth prospects.
Heading into the final quarter of fiscal 2017, the Company is refining its full year fiscal 2017 financial guidance for operating income before restructuring
costs and amortization to range between $2.135 and $2.160 billion, capital investment of approximately $1.35 billion and free cash flow of approximately $400 million. These refinements include the results of the Business Infrastructure Services
division, comprised primarily of ViaWest, Inc., through the end of fiscal 2017 and reflect a modest acceleration of capital spend associated primarily with strategic network enhancements and the evolving wireless
platform. Providing both the sale of ViaWest, Inc. and the acquisition of spectrum are completed in the near term, the Company expects its ratio of debt to operating income before restructuring
costs and amortization
1
to be below the low end of its target 2.0 to 2.5x and the $1.5 billion credit facility to be fully undrawn.
Mr. Shaw concluded, We have built a long term strategy to serve the connectivity needs of Canadians and will continue to focus on execution. Our
first step was the launch of WideOpen Internet 150, which transformed the marketplace by offering significantly faster speeds at affordable prices across 99% of our wireline footprint. Our next step was becoming the first in Canada to launch BlueSky
TV, a truly revolutionary viewing experience featuring TV you can talk to. And earlier this month, we took a bold step forward for our wireless business in acquiring spectrum that will enhance our network capabilities and our capacity to
offer affordable wireless service on a more robust network. Shaws business performance coupled with the recent announcements showcase an unwavering commitment to our growth strategy.
Shaw Communications Inc. is an enhanced connectivity provider. Our Consumer division serves consumers with broadband Internet, Shaw Go WiFi, video and digital
phone. Our Wireless division provides wireless voice and data services through an expanding and improving mobile wireless network infrastructure. The Business Network Services division provides business customers with Internet, data, WiFi,
telephony, and video services. The Business Infrastructure Services division, through ViaWest, provides hybrid IT solutions including colocation, cloud computing and security and compliance for North American enterprises.
Shaw is traded on the Toronto and New York stock exchanges and is included in the S&P/TSX 60 Index (Symbol: TSXSJR.B, SJR.PR.A, SJR.PR.B, NYSE
SJR, and TSXV SJR.A). For more information, please visit www.shaw.ca
The accompanying Managements Discussion and Analysis
(MD&A) forms part of this news release and the Caution concerning forward-looking statements applies to all the forward-looking statements made in this news release.
Shaw Communications Inc.
MANAGEMENTS DISCUSSION AND ANALYSIS
For the
three and nine months ended May 31, 2017
June 28, 2017
Contents
Advisories
The following
Managements Discussion and Analysis (MD&A), dated June 28, 2017, should be read in conjunction with the unaudited interim Consolidated Financial Statements and Notes thereto for the quarter ended May 31, 2017 and the
2016 Annual Consolidated Financial Statements, the Notes thereto and related MD&A included in the Companys 2016 Annual Report. The financial information presented herein has been prepared on the basis of International Financial Reporting
Standards (IFRS) for interim financial statements and is expressed in Canadian dollars unless otherwise indicated. References to Shaw, the Company, we, us or our mean Shaw
Communications Inc. and its subsidiaries and consolidated entities, unless the context otherwise requires.
Caution concerning forward-looking
statements
Statements included in this MD&A that are not historic constitute forward-looking statements within the meaning of
applicable securities laws. Such statements include, but are not limited to:
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statements about future capital expenditures;
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asset acquisitions and dispositions;
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financial guidance for future performance;
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business and technology strategies and measures to implement strategies;
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statements about the Companys equity investments, joint ventures and partnership arrangements including any statements about write-downs, losses and liabilities;
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competitive strengths; and
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expansion and growth of the Companys business and operations and other goals and plans.
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4
Shaw Communications Inc.
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 the Company 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. The Companys management believes that its assumptions and analysis in this MD&A are
reasonable and that the expectations reflected in the forward looking statements contained herein are also reasonable based on the information available on the date such statements are made and the process used to prepare the information. These
assumptions, many of which are confidential, include but are not limited to:
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general economic conditions;
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income tax and exchange rates;
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content and equipment costs;
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conditions and stability;
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the completion of any pending transactions (including the receipt of any regulatory approvals to complete any transactions); and
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the integration of recent acquisitions.
|
You should not place undue reliance on any forward-looking
statements. Many factors, including those not within the Companys control, may cause the Companys actual results to be materially different from the views expressed or implied by such forward-looking statements, including but not limited
to:
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general economic, market and business conditions;
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changes in the competitive environment in the markets in which the Company operates and from the development of new markets for emerging technologies;
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industry trends, technological developments, and other changing conditions in the entertainment, information and communications industries;
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the Companys ability to execute its strategic plans and capital projects;
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the Companys ability to close any transactions;
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the Companys ability to achieve cost efficiencies;
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technology, cyber security and reputational risks;
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opportunities that may be presented to and pursued by the Company;
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changes in laws, regulations and decisions by regulators that affect the Company or the markets in which it operates;
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the Companys status as a holding company with separate operating subsidiaries; and
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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 Company provides certain financial guidance for future performance as the Company believes that certain
investors, analysts and others utilize this and other forward-looking information in order to assess
5
Shaw Communications Inc.
the Companys expected operational and financial performance and as an indicator of its ability to service debt and pay dividends to shareholders. The
Companys 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, the Company 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. All forward looking statements contained in this MD&A are expressly qualified by this statement.
Non-IFRS and
additional GAAP measures
Certain measures in this MD&A do not have standard meanings prescribed by IFRS and are therefore considered non-IFRS
measures. These measures are provided to enhance the readers overall understanding of our financial performance or current financial condition. They are included to provide investors and management with an alternative method for assessing our
operating results in a manner that is focused on the performance of our ongoing operations and to provide a more consistent basis for comparison between periods. These measures are not in accordance with, or an alternative to, IFRS and do not have
standardized meanings. Therefore, they are unlikely to be comparable to similar measures presented by other entities.
Please refer to Non-IFRS and
additional GAAP measures in this MD&A for a discussion and reconciliation of non-IFRS measures, including operating income before restructuring costs and amortization and free cash flow.
6
Shaw Communications Inc.
Introduction
Strategic update
Shaw is focused to deliver long term growth and connect customers to the world through a best-in-class seamless connectivity experience. In 2016, Shaw
positioned itself as a leading enhanced connectivity provider through the acquisition of Freedom Mobile (formerly, WIND Mobile). The addition of a wireless business enabled the Company to combine the power of fibre, coax, Wi-Fi and wireless networks
to deliver a seamless experience of anytime and anywhere enhanced connectivity within its operating footprint. On June 13, 2017, Shaw announced that it has entered into a definitive agreement with Quebecor Media Inc. (Quebecor) to
acquire 700 MHz and 2500 MHz wireless spectrum licences, the Companys next step in executing on its long-term strategic plan which is centered on delivering exceptional customer experiences by leveraging and further developing a world-class
converged network and providing leading technology through best-in-class strategic partners.
Spectrum acquisition
The spectrum licences are being acquired for $430 million and comprise Quebecors 10 MHz licences of 700 MHz spectrum in each of British Columbia,
Alberta, and Southern Ontario, as well as 20 MHz licences of 2500 MHz spectrum in each of Vancouver, Edmonton, Calgary, and Toronto. The acquisition is subject to customary closing conditions and all necessary regulatory approvals from the Ministry
of Innovation, Science and Economic Development Canada (ISED), and under the Competition Act. The acquisition will be funded using a combination of cash on hand and Shaws existing credit facility, and is expected to close in the summer of
2017.
Shaw believes this incremental investment in the wireless business, particularly with the addition of the 700 MHz spectrum, will materially improve
the long-term wireless customer experience, and will further enable its ability to offer converged network solutions. Considering the acquisition of Freedom Mobile (formerly, WIND Mobile) in 2016, Shaw now has more synergistic investment
opportunities as a leading enhanced connectivity provider within its Canadian footprint.
Capital expenditures associated with the deployment of the
acquired spectrum are estimated to be approximately $350 million. The Company expects most of the capital related to the network build to be incurred during fiscal 2018, which reinforces Shaws commitment to the wireless space, and improves its
long-term wireless growth prospects.
Sale of ViaWest, Inc.
On June 13, 2017, Shaw also announced that it entered a share purchase agreement with GI Partners portfolio company Peak 10 Holding Corporation
(Peak 10) to sell 100% of its wholly-owned subsidiary ViaWest, Inc. (ViaWest). The purchase price of US$1.675 billion (approximately $2.3 billion) is comprised of all cash.
ViaWest was acquired by Shaw in 2014 marking a pivotal moment in Shaws history and provided a growth engine which has delivered, and continues to
deliver, strong results. The North American colocation and managed services industry is consolidating and scale is becoming an important factor for continued long-term success.
7
Shaw Communications Inc.
The transaction is subject to customary conditions, including U.S. regulatory approval and is expected to close by the end of fiscal 2017. The transaction is
not subject to financing. Shaw expects to realize net cash proceeds from the sale of approximately $900 million after the repayment of ViaWest level indebtedness of approximately US$580 million, repayment of the US$380 million Shaw credit facility
borrowings associated with the original investment and subsequent INetU acquisition, and estimated transaction expenses and taxes.
Shaws Business
Infrastructure Services division, through ViaWest, provides hybrid IT solutions including colocation, cloud computing and security and compliance for North American enterprises. See selected financial and operational highlights of the Business
Infrastructure Services division under Discussion of Operations.
See Outlook for a discussion of the financial condition of the
Company following the completion of the two transactions.
Shaws world-class converged network
Shaws broadband network strategy provides flexibility, cost efficiency and a speed advantage that continues to support the success of its Internet
offerings, including WideOpen Internet 150, the fastest widely available Internet speed provided in nearly every neighborhood across Shaws wireline footprint. The combination of this exceptional service with the tremendous value and pricing
stability offered through value plans have had a positive impact on customer retention. Shaws wireline and wireless network roadmap continues to progress with the DOCSIS 3.1 and the LTE-Advanced network upgrades targeted for completion by the
end of fiscal 2017.
LTE is now live across the Greater Toronto area, Hamilton, Vancouver, Edmonton and Calgary and LTE roaming recently launched in
Canada and in the U.S. The handset lineup has continued to expand, with a total of nine handsets compatible with the AWS-3 LTE network, including LG, Samsung, Sony and ZTE. On April 25, 2017 Freedom Mobile launched another key enhancement
with Wi-Fi calling, which enables calls to be made at no cost from outside its cellular calling area, or at indoor locations.
Global technology leader
BlueSky TV is now available everywhere Shaw offers cable video. Western Canadians are now able to enjoy a revolutionary TV experience made possible by
Shaws strategic partnership with Comcast. The Companys partnerships with global technology leaders, such as Comcast, will allow it to continue to access leading-edge technology in the global communications industry.
The BlueSky TV experience is more than just a new guide and set-top-box, it is an elegant system that listens, learns and curates content to provide an
exceptional viewing experience. Shaw is optimistic that BlueSky TV combined with WideOpen 150 and flexible TV packages will provide a compelling reason for consumers to stay and switch to Shaw.
Organizational initiatives
In the quarter, the Company
incurred a non-recurring restructuring charge in the amount of $43 million. These charges were attributed primarily to employee related costs associated with the integration of Freedom Mobile and other organization rationalization initiatives. These
initiatives included the announced closure of Shaw TV stations in Vancouver, Calgary and Edmonton and a planned realignment to integrate certain operational activities within the Consumer and Business Network Services divisions.
8
Shaw Communications Inc.
Selected financial and operational highlights
Basis of presentation
During the current quarter, the
Company entered an agreement to sell a group of assets comprising the operations of Shaw Tracking, a fleet tracking operation reported within the Companys Business Network Services segment, to an external party. The Company determined that the
assets and liabilities of the Shaw Tracking business met the criteria to be classified as a disposal group held for sale for the period ended May 31, 2017. On April 1, 2016, Shaw sold 100% of its wholly owned subsidiary Shaw Media Inc. to
Corus Entertainment Inc. Accordingly, the operating results and operating cash flows for the previously reported Shaw Tracking business and Media division are presented as discontinued operations separate from the Companys continuing
operations. This MD&A reflects the results of continuing operations, unless otherwise noted.
Financial Highlights
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|
Three months ended May 31,
|
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|
Nine months ended May 31
|
|
(millions of Canadian dollars except per share
amounts)
|
|
2017
|
|
|
2016
|
|
|
Change
%
|
|
|
2017
|
|
|
2016
|
|
|
Change
%
|
|
Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
1,311
|
|
|
|
1,275
|
|
|
|
2.8
|
|
|
|
3,912
|
|
|
|
3,553
|
|
|
|
10.1
|
|
Operating income before restructuring costs and amortization
(1)
|
|
|
550
|
|
|
|
553
|
|
|
|
(0.5
|
)
|
|
|
1,625
|
|
|
|
1,558
|
|
|
|
4.3
|
|
Operating margin
(1)
|
|
|
42.0
|
%
|
|
|
43.4
|
%
|
|
|
(1.4pts
|
)
|
|
|
41.5
|
%
|
|
|
43.9
|
%
|
|
|
(2.4pts
|
)
|
Net income from continuing operations
|
|
|
164
|
|
|
|
74
|
|
|
|
>100.0
|
|
|
|
400
|
|
|
|
326
|
|
|
|
22.7
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
(31
|
)
|
|
|
630
|
|
|
|
|
|
|
|
(30
|
)
|
|
|
760
|
|
|
|
|
|
Net income
|
|
|
133
|
|
|
|
704
|
|
|
|
(81.1
|
)
|
|
|
370
|
|
|
|
1,086
|
|
|
|
(65.9
|
)
|
Per share data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
0.33
|
|
|
|
0.14
|
|
|
|
|
|
|
|
0.80
|
|
|
|
0.66
|
|
|
|
|
|
Discontinued operations
|
|
|
(0.06
|
)
|
|
|
1.30
|
|
|
|
|
|
|
|
(0.06
|
)
|
|
|
1.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.27
|
|
|
|
1.44
|
|
|
|
|
|
|
|
0.74
|
|
|
|
2.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
0.33
|
|
|
|
0.14
|
|
|
|
|
|
|
|
0.80
|
|
|
|
0.66
|
|
|
|
|
|
Discontinued operations
|
|
|
(0.06
|
)
|
|
|
1.30
|
|
|
|
|
|
|
|
(0.06
|
)
|
|
|
1.54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.27
|
|
|
|
1.44
|
|
|
|
|
|
|
|
0.74
|
|
|
|
2.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average participating shares outstanding during period (millions)
|
|
|
492
|
|
|
|
482
|
|
|
|
|
|
|
|
490
|
|
|
|
478
|
|
|
|
|
|
Funds flow from continuing operations
(2)
|
|
|
392
|
|
|
|
402
|
|
|
|
(2.5
|
)
|
|
|
1,227
|
|
|
|
1,110
|
|
|
|
10.5
|
|
Free cash flow
(1)
|
|
|
132
|
|
|
|
182
|
|
|
|
(27.5
|
)
|
|
|
436
|
|
|
|
473
|
|
|
|
(7.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
See definitions and discussion under Non-IFRS and additional GAAP measures.
|
(2)
|
Funds flow from operations is before changes in non-cash balances related to operations as presented in the unaudited interim Consolidated Statements of Cash Flows.
|
9
Shaw Communications Inc.
S
ubscriber (or revenue generating unit (RGU)) highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
Three months ended
|
|
|
Change
Nine months ended
|
|
|
|
May 31,
2017
|
|
|
August 31,
2016
|
|
|
May 31,
2017
|
|
|
May 31,
2016
|
|
|
May 31,
2017
|
|
|
May 31,
2016
|
|
Consumer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Video Cable
|
|
|
1,663,710
|
|
|
|
1,671,059
|
|
|
|
12,921
|
|
|
|
(27,482
|
)
|
|
|
(7,349
|
)
|
|
|
(71,293
|
)
|
Video Satellite
|
|
|
776,825
|
|
|
|
790,574
|
|
|
|
6,531
|
|
|
|
3,847
|
|
|
|
(13,749
|
)
|
|
|
(15,082
|
)
|
Internet
|
|
|
1,838,964
|
|
|
|
1,787,642
|
|
|
|
20,892
|
|
|
|
(8,760
|
)
|
|
|
51,322
|
|
|
|
5,008
|
|
Phone
|
|
|
930,066
|
|
|
|
956,763
|
|
|
|
(1,827
|
)
|
|
|
(14,861
|
)
|
|
|
(26,697
|
)
|
|
|
(51,561
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consumer
|
|
|
5,209,565
|
|
|
|
5,206,038
|
|
|
|
38,517
|
|
|
|
(47,256
|
)
|
|
|
3,527
|
|
|
|
(132,928
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Network Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Video Cable
|
|
|
53,522
|
|
|
|
61,153
|
|
|
|
47
|
|
|
|
1,489
|
|
|
|
(7,631
|
)
|
|
|
(14,954
|
)
|
Video Satellite
|
|
|
30,991
|
|
|
|
30,994
|
|
|
|
(1,009
|
)
|
|
|
(2,734
|
)
|
|
|
(3
|
)
|
|
|
7
|
|
Internet
|
|
|
172,709
|
|
|
|
179,867
|
|
|
|
(435
|
)
|
|
|
458
|
|
|
|
(7,158
|
)
|
|
|
(2,104
|
)
|
Phone
|
|
|
319,637
|
|
|
|
301,328
|
|
|
|
7,253
|
|
|
|
5,094
|
|
|
|
18,309
|
|
|
|
10,695
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Business Network Services
|
|
|
576,859
|
|
|
|
573,342
|
|
|
|
5,856
|
|
|
|
4,307
|
|
|
|
3,517
|
|
|
|
(6,356
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireless
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postpaid
|
|
|
735,002
|
|
|
|
667,028
|
|
|
|
20,085
|
|
|
|
639,997
|
|
|
|
67,974
|
|
|
|
639,997
|
|
Prepaid
|
|
|
371,157
|
|
|
|
376,260
|
|
|
|
(111
|
)
|
|
|
363,472
|
|
|
|
(5,103
|
)
|
|
|
363,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Wireless
|
|
|
1,106,159
|
|
|
|
1,043,288
|
|
|
|
19,974
|
|
|
|
1,003,469
|
|
|
|
62,871
|
|
|
|
1,003,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Subscribers
|
|
|
6,892,583
|
|
|
|
6,822,668
|
|
|
|
64,347
|
|
|
|
960,520
|
|
|
|
69,915
|
|
|
|
864,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the quarter, the Company continued its momentum of improving subscriber trends with consolidated RGU net gains of 64,347.
Consumer RGUs in the third quarter of fiscal 2017 increased by 38,517, a substantial improvement over the 47,256 RGU losses in the third quarter of
fiscal 2016. The Consumer divisions net gains in the quarter included the addition of 12,921 cable video RGUs, 20,892 internet RGUs and 6,531 satellite video RGUs. The trend of year-over-year improvement is attributed to strong Internet
subscriber growth led by WideOpen Internet 150, compelling bundle and value plan offerings driving notable reductions in disconnects, and by the launch of BlueSky TV across Shaws entire cable video footprint. This quarters subscriber
result also represents the divisions first positive net video RGU quarter since the fourth quarter of fiscal 2010.
In Wireless, the Company added a
combined 19,974 postpaid and prepaid subscribers as compared to 33,427 RGUs gained in the second quarter of fiscal 2017 and approximately 22,000 RGUs gained in the third quarter of fiscal 2016, finishing the period with a total 1,106,159 RGUs.
Strong RGU results in consecutive quarters reflect the compelling value proposition of Freedom Mobiles offering to thousands of value-conscious Canadians.
10
Shaw Communications Inc.
Overview
Our fiscal 2017 third
quarter financial results represent improvements in consolidated revenue over the third quarter of fiscal 2016. For further discussion of divisional performance see Discussion of operations.
Highlights of the third quarter financial results are as follows.
Revenue
Revenue for the quarter of $1.31 billion
increased $36 million or 2.8% from $1.28 billion for the third quarter of 2016, highlighted by the following:
|
|
|
The year-over-year improvement in revenue was primarily due to growth in the Wireless division, contributing an incremental $22 million or 16.3% in revenue driven by higher postpaid and prepaid RGUs, increased handset
sales and improved average revenue per unit (ARPU).
|
|
|
|
The Business Network Services and Business Infrastructure Services divisions contributed a combined $19 million to the consolidated revenue improvements for the quarter driven primarily by customer growth. Consumer
division revenue for the period decreased $5 million or 0.5% compared to the third quarter of fiscal 2016.
|
Compared to the second quarter
of fiscal 2017, consolidated revenue for the quarter increased 1.2% or by $15 million. The increase in revenue over the prior quarter relates primarily to growth in the Wireless division driven by higher handset sales, added RGUs and improved ARPU.
Revenue for the nine-month period of $3.91 billion increased $359 million or 10.1% from $3.55 billion for the comparable period in fiscal 2016,
highlighted by the following:
|
|
|
The year-over-year improvement in revenue was primarily due to the Wireless division contributing revenues of $433 million for the nine-month period in fiscal 2017 as compared to $132 million in the three-month period
for fiscal 2016 following the acquisition of Freedom Mobile (formerly, WIND) on March 1, 2016.
|
|
|
|
Excluding the results of the Wireless division, revenue for the nine-month period from the combined Consumer, Business Network Services and Business Infrastructure Services divisions was up $52 million or 1.5%. Customer
acquisition was the primary driver of revenue growth in the Business Network Services and Business Infrastructure Services divisions. The Consumer divisions revenue was comparable to the prior year.
|
Operating income before restructuring costs and amortization
Third quarter operating income before restructuring costs and amortization of $550 million decreased slightly by $3 million or 0.5% from $553 million for the
third quarter of 2016, highlighted by the following:
|
|
|
The year-over-year improvements from the Wireless, Business Network Services and Business Infrastructure Services divisions were fully offset by the $26 million or 6.1% decrease from the Consumer division driven by
higher sales and marketing costs associated with the launch of BlueSky TV, promotional discounts, programming costs and lower RGUs as compared to the prior year.
|
Consolidated operating margin for the third quarter of 42.0% was down from 43.4% in the third quarter of fiscal 2016 due primarily to the impact of the lower
Consumer division margin driven by higher costs in the quarter.
11
Shaw Communications Inc.
Compared to the second quarter of fiscal 2017, operating income before restructuring costs and amortization for the current quarter was up $12 million driven
primarily by the Wireless division operating results.
For the nine-month period, operating income before restructuring costs and amortization of $1.63
billion increased $67 million or 4.3% from $1.56 billion for the comparable period, highlighted by the following:
|
|
|
The year-over-year improvement was primarily due to the Wireless division contributing $101 million over the nine-month period as compared to $29 million in fiscal 2016 over the three-month period following the
acquisition of Freedom Mobile (formerly, WIND) on March 1, 2016.
|
|
|
|
The combined operating income before restructuring costs and amortization increase of $35 million for the nine-month period in the Business Network Services and Business Infrastructure Services divisions was more than
fully offset by $40 million of lower operating income before restructuring costs and amortization in the Consumer division.
|
Free cash
flow
Free cash flow for the third quarter of $132 million decreased $50 million from $182 million for the third quarter of 2016.
|
|
|
Free cash flow decreased in the quarter as a result of higher planned capital expenditures of $36 million and $29 million lower free cash flow from discontinued operations primarily related to the former Media
operations. The decreases were partially offset by higher dividends from Corus of $8 million, $6 million lower interest and $3 million lower cash taxes.
|
Net Income
Net income of $133 million and $370
million for the three and nine months ended May 31, 2017, respectively, compared to $704 million and $1.09 billion for the same periods in fiscal 2016. The changes in net income are outlined in the following table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 31, 2017 net income compared to:
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
(millions of Canadian
dollars)
|
|
February 28,
2017
|
|
|
May 31,
2016
|
|
|
May 31,
2016
|
|
Increased (decreased) operating income before restructuring costs and amortization
(1)
|
|
|
12
|
|
|
|
(3
|
)
|
|
|
67
|
|
Decreased (increased) restructuring costs
|
|
|
(43
|
)
|
|
|
(20
|
)
|
|
|
(32
|
)
|
Increased amortization
|
|
|
(8
|
)
|
|
|
(24
|
)
|
|
|
(90
|
)
|
Decreased (increased) interest expense
|
|
|
1
|
|
|
|
5
|
|
|
|
7
|
|
Change in net other costs and revenue
(2)
|
|
|
38
|
|
|
|
155
|
|
|
|
135
|
|
Decreased (increased) income taxes
|
|
|
18
|
|
|
|
(23
|
)
|
|
|
(13
|
)
|
Decreased income from discontinued operations, net of tax
|
|
|
(32
|
)
|
|
|
(661
|
)
|
|
|
(790
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14
|
)
|
|
|
(571
|
)
|
|
|
(716
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
See definitions and discussion under Non-IFRS and additional GAAP measures.
|
(2)
|
Net other costs and revenue includes business acquisition costs, accretion of long-term liabilities and provisions, debt retirement costs, equity income and losses of an associate or joint venture and other losses as
detailed in the unaudited Consolidated Statements of Income.
|
Change in net other costs and revenue in the third quarter had a $38 million
favourable impact on net income compared to the second quarter of fiscal 2017 primarily due to a $15 provision reversal related to the wind down of shomi and $17 million higher equity income from our investment in Corus.
Change in net other costs and revenue in the third quarter had a $155 million favourable impact on net
12
Shaw Communications Inc.
income compared to the third quarter of fiscal 2016 primarily due to a decrease in year-over-year non-operating costs including the following; i) prior year
write-down and equity loss on the investment in shomi in the amount of $66 million, ii) prior year write-down of $20 million in respect of a private portfolio investment, and iii) $12 million business acquisition costs related to the acquisition of
Freedom Mobile (formerly, WIND). Also, in the current quarter, the company recorded a $15 million provision reversal related to the wind down of shomi and $36 million increase in the year-over-year equity income from our investment in Corus.
Outlook
Heading into the final
quarter of fiscal 2017, the Company is refining its full year fiscal 2017 financial guidance for operating income before restructuring costs and amortization to range between $2.135 and $2.160 billion, capital investment of approximately $1.35
billion and free cash flow of approximately $400 million.
These refinements include the results of the Business Infrastructure Services division,
comprised primarily of ViaWest, Inc., through the end of fiscal 2017 and reflect a modest acceleration of capital spend associated primarily with strategic network enhancements and the evolving wireless platform.
Providing both the sale of ViaWest and the acquisition of spectrum are completed in the near term, the Company expects its ratio of debt to operating income
before restructuring costs and amortization to be below the low end of its target 2.0 to 2.5 times and the $1.5 billion credit facility to be fully undrawn.
See Caution concerning forward-looking statements.
Non-IFRS and additional GAAP measures
The Companys 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 Companys continuous disclosure documents may also provide discussion and analysis of additional GAAP measures.
Additional GAAP measures include line items, headings, and sub-totals included in the financial statements.
The Company utilizes these measures in making
operating decisions and assessing its performance. Certain investors, analysts and others utilize these measures in assessing the Companys operational and financial performance and as an indicator of its ability to service debt and return cash
to shareholders. The non-IFRS financial measures and additional GAAP measures have not been presented as an alternative to net income or any other measure of performance required by IFRS.
Below is a discussion of the non-IFRS financial measures and additional GAAP measures used by the Company and provides a reconciliation to the nearest IFRS
measure or provides a reference to such reconciliation.
13
Shaw Communications Inc.
Operating income before restructuring costs and amortization
Operating income before restructuring costs and amortization is calculated as revenue less operating, general and administrative expenses. It is intended to
indicate the Companys ongoing ability to service and/or incur debt, and is therefore calculated before one-time items such as 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
(millions of Canadian dollars)
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Operating income from continuing operations
|
|
|
235
|
|
|
|
282
|
|
|
|
780
|
|
|
|
835
|
|
Add back (deduct):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring costs
|
|
|
43
|
|
|
|
22
|
|
|
|
54
|
|
|
|
22
|
|
Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred equipment revenue
|
|
|
(10
|
)
|
|
|
(13
|
)
|
|
|
(31
|
)
|
|
|
(43
|
)
|
Deferred equipment costs
|
|
|
30
|
|
|
|
33
|
|
|
|
90
|
|
|
|
104
|
|
Property, plant and equipment, intangibles and other
|
|
|
252
|
|
|
|
229
|
|
|
|
732
|
|
|
|
640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income before restructuring costs and amortization
|
|
|
550
|
|
|
|
553
|
|
|
|
1,625
|
|
|
|
1,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin
Operating margin is calculated by dividing operating income before restructuring costs and amortization by revenue.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
Change
%
|
|
|
2017
|
|
|
2016
|
|
|
Change
%
|
|
Consumer
|
|
|
43.1
|
%
|
|
|
45.7
|
%
|
|
|
(2.6pts
|
)
|
|
|
43.0
|
%
|
|
|
44.4
|
%
|
|
|
(1.4pts
|
)
|
Business Network Services
|
|
|
51.1
|
%
|
|
|
50.0
|
%
|
|
|
1.1pts
|
|
|
|
51.5
|
%
|
|
|
49.2
|
%
|
|
|
2.3pts
|
|
Business Infrastructure Services
|
|
|
38.5
|
%
|
|
|
38.4
|
%
|
|
|
0.1pts
|
|
|
|
37.5
|
%
|
|
|
36.7
|
%
|
|
|
0.8pts
|
|
Wireless
|
|
|
27.3
|
%
|
|
|
22.0
|
%
|
|
|
5.3pts
|
|
|
|
23.3
|
%
|
|
|
22.0
|
%
|
|
|
1.3pts
|
|
Income from discontinued operations before restructuring costs, amortization, taxes and other non-operating items
Income from discontinued operations before restructuring costs, amortization, taxes and other non-operating items is calculated as revenue less operating,
general and administrative expenses from discontinued operations. This measure is used in the determination of free cash flow.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
(millions of Canadian dollars)
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Income from discontinued operations, net of tax
|
|
|
(31
|
)
|
|
|
630
|
|
|
|
(30
|
)
|
|
|
760
|
|
Add back (deduct):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on divestiture, net of tax
|
|
|
|
|
|
|
(615
|
)
|
|
|
|
|
|
|
(615
|
)
|
Income taxes
|
|
|
|
|
|
|
10
|
|
|
|
1
|
|
|
|
58
|
|
Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, intangibles and other
|
|
|
1
|
|
|
|
1
|
|
|
|
2
|
|
|
|
14
|
|
Other non-operating items
|
|
|
32
|
|
|
|
16
|
|
|
|
32
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations before restructuring costs, amortization, taxes and other
non-operating items
|
|
|
2
|
|
|
|
42
|
|
|
|
5
|
|
|
|
236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
Shaw Communications Inc.
Free cash flow
The Company utilizes this measure to
assess the Companys ability to repay debt and pay dividends to shareholders. Free cash flow is calculated as free cash flow from continuing operations and free cash flow from discontinued operations.
Free cash flow from continuing operations
is comprised of operating income before restructuring costs and amortization adding dividends from equity
accounted associates, changes in receivable related balances with respect to customer equipment financing transactions as a cash item and deducting capital expenditures (on an accrual basis and net of proceeds on capital dispositions) and equipment
costs (net), interest, cash taxes paid or payable, dividends paid on the preferred shares, recurring cash funding of pension amounts net of pension expense and adjusted to exclude share-based compensation expense.
Free cash flow from continuing operations has not been reported on a segmented basis. Certain components of free cash flow from continuing operations,
including operating income before restructuring costs and amortization continue to be reported on a segmented basis. Capital expenditures and equipment costs (net) are reported on a combined basis for Consumer and Business Network Services due to
the common infrastructure and separately for Business Infrastructure Services and Wireless. Other items, including interest and cash taxes, are not generally directly attributable to a segment, and are reported on a consolidated basis.
Free cash flow from discontinued operations
is comprised of income from discontinued operations before restructuring costs, amortization, taxes and
other non-operating items after deducting capital expenditures (on an accrual basis and net of proceeds on capital dispositions), cash taxes paid or payable, program rights amortization on assets held for sale, cash amounts associated with funding
CRTC benefit obligations related to media acquisitions, recurring cash funding of pension amounts net of pension expense and excludes non-controlling interest amounts that are included in the income from discontinued operations before restructuring
costs, amortization, taxes and other non-operating items.
15
Shaw Communications Inc.
Free cash flow is calculated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
(millions of Canadian dollars)
|
|
2017
|
|
|
2016
|
|
|
Change
%
|
|
|
2017
|
|
|
2016
|
|
|
Change
%
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
|
|
|
930
|
|
|
|
935
|
|
|
|
(0.5
|
)
|
|
|
2,810
|
|
|
|
2,813
|
|
|
|
(0.1
|
)
|
Business Network Services
|
|
|
137
|
|
|
|
128
|
|
|
|
7.0
|
|
|
|
410
|
|
|
|
384
|
|
|
|
6.8
|
|
Business Infrastructure Services
|
|
|
96
|
|
|
|
86
|
|
|
|
11.6
|
|
|
|
277
|
|
|
|
248
|
|
|
|
11.7
|
|
Wireless
|
|
|
154
|
|
|
|
132
|
|
|
|
16.7
|
|
|
|
433
|
|
|
|
132
|
|
|
|
228.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,317
|
|
|
|
1,281
|
|
|
|
2.8
|
|
|
|
3,930
|
|
|
|
3,577
|
|
|
|
9.9
|
|
Intersegment eliminations
|
|
|
(6
|
)
|
|
|
(6
|
)
|
|
|
|
|
|
|
(18
|
)
|
|
|
(24
|
)
|
|
|
(25.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,311
|
|
|
|
1,275
|
|
|
|
2.8
|
|
|
|
3,912
|
|
|
|
3,553
|
|
|
|
10.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income before restructuring costs and amortization
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
|
|
|
401
|
|
|
|
427
|
|
|
|
(6.1
|
)
|
|
|
1,209
|
|
|
|
1,249
|
|
|
|
(3.2
|
)
|
Business Network Services
|
|
|
70
|
|
|
|
64
|
|
|
|
9.4
|
|
|
|
211
|
|
|
|
189
|
|
|
|
11.6
|
|
Business Infrastructure Services
|
|
|
37
|
|
|
|
33
|
|
|
|
12.1
|
|
|
|
104
|
|
|
|
91
|
|
|
|
14.3
|
|
Wireless
|
|
|
42
|
|
|
|
29
|
|
|
|
44.8
|
|
|
|
101
|
|
|
|
29
|
|
|
|
248.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
550
|
|
|
|
553
|
|
|
|
(0.5
|
)
|
|
|
1,625
|
|
|
|
1,558
|
|
|
|
4.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures and equipment costs
(net):
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer and Business Network Services
|
|
|
232
|
|
|
|
201
|
|
|
|
15.4
|
|
|
|
651
|
|
|
|
651
|
|
|
|
|
|
Business Infrastructure Services
|
|
|
33
|
|
|
|
35
|
|
|
|
(5.7
|
)
|
|
|
84
|
|
|
|
105
|
|
|
|
(20.0
|
)
|
Wireless
|
|
|
58
|
|
|
|
51
|
|
|
|
13.7
|
|
|
|
176
|
|
|
|
51
|
|
|
|
245.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
323
|
|
|
|
287
|
|
|
|
12.5
|
|
|
|
911
|
|
|
|
807
|
|
|
|
12.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow before the following
|
|
|
227
|
|
|
|
266
|
|
|
|
(14.7
|
)
|
|
|
714
|
|
|
|
751
|
|
|
|
(4.9
|
)
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
|
(73
|
)
|
|
|
(79
|
)
|
|
|
(7.6
|
)
|
|
|
(221
|
)
|
|
|
(227
|
)
|
|
|
(2.6
|
)
|
Cash taxes
|
|
|
(52
|
)
|
|
|
(55
|
)
|
|
|
(5.5
|
)
|
|
|
(139
|
)
|
|
|
(186
|
)
|
|
|
(25.3
|
)
|
Other adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends from equity accounted associates
|
|
|
22
|
|
|
|
14
|
|
|
|
57.1
|
|
|
|
65
|
|
|
|
14
|
|
|
|
364.3
|
|
Non-cash share-based compensation
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
|
|
3
|
|
|
|
2
|
|
|
|
50.0
|
|
Pension adjustment
|
|
|
4
|
|
|
|
3
|
|
|
|
33.3
|
|
|
|
8
|
|
|
|
(17
|
)
|
|
|
(147.1
|
)
|
Customer equipment financing
|
|
|
2
|
|
|
|
3
|
|
|
|
(33.3
|
)
|
|
|
6
|
|
|
|
7
|
|
|
|
(14.3
|
)
|
Preferred share dividends
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
(33.3
|
)
|
|
|
(6
|
)
|
|
|
(10
|
)
|
|
|
(40.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow from continuing operations
|
|
|
129
|
|
|
|
150
|
|
|
|
(14.0
|
)
|
|
|
430
|
|
|
|
334
|
|
|
|
28.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations before restructuring costs, amortization, taxes and other
non-operating items
|
|
|
2
|
|
|
|
42
|
|
|
|
|
|
|
|
5
|
|
|
|
236
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
2
|
|
|
|
(3
|
)
|
|
|
|
|
Cash taxes
|
|
|
|
|
|
|
12
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
(28
|
)
|
|
|
|
|
Program Rights
|
|
|
|
|
|
|
(14
|
)
|
|
|
|
|
|
|
|
|
|
|
(33
|
)
|
|
|
|
|
CRTC benefit obligation funding
|
|
|
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
(11
|
)
|
|
|
|
|
Non-controlling interests
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
(20
|
)
|
|
|
|
|
Pension adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow from discontinued operations
|
|
|
3
|
|
|
|
32
|
|
|
|
|
|
|
|
6
|
|
|
|
139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
|
|
|
132
|
|
|
|
182
|
|
|
|
(27.5
|
)
|
|
|
436
|
|
|
|
473
|
|
|
|
(7.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
See definitions and discussion under Non-IFRS and additional GAAP measures.
|
(2)
|
Per Note 4 to the unaudited interim Consolidated Financial Statements.
|
16
Shaw Communications Inc.
Discussion of operations
Consumer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
(millions of Canadian dollars)
|
|
2017
|
|
|
2016
|
|
|
Change %
|
|
|
2017
|
|
|
2016
|
|
|
Change %
|
|
Revenue
|
|
|
930
|
|
|
|
935
|
|
|
|
(0.5
|
)
|
|
|
2,810
|
|
|
|
2,813
|
|
|
|
(0.1
|
)
|
Operating income before restructuring costs and amortization
(1)
|
|
|
401
|
|
|
|
427
|
|
|
|
(6.1
|
)
|
|
|
1,209
|
|
|
|
1,249
|
|
|
|
(3.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin
(1)
|
|
|
43.1
|
%
|
|
|
45.7
|
%
|
|
|
(2.6pts
|
)
|
|
|
43.0
|
%
|
|
|
44.4
|
%
|
|
|
(1.4pts
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
See definitions and discussion under Non-IFRS and additional GAAP measures.
|
Consumer RGUs in the
second quarter increased by 38,517, a substantial improvement over the 47,256 RGU loss in the third quarter of fiscal 2016. This quarters Consumer RGU result represents the divisions first positive net video RGU quarter since the fourth
quarter of fiscal 2010. The trend of year-over-year subscriber improvement continues to be driven by strong Internet subscriber growth linked to the WideOpen Internet 150 offering combined with our new BlueSky TV offering and by notable reductions
in disconnects. The Companys network strength, strong value plan offerings and positive customer retention are also contributing positively to subscriber gains.
Revenue
|
|
|
Consumer revenue for the third quarter of fiscal 2017 decreased slightly by 0.5% compared to the third quarter of fiscal 2016. Higher revenue generated by August 2016 rate increases and incremental Internet RGUs were
fully offset by the impact of overall year-over-year reductions to phone, cable and satellite video RGUs.
|
|
|
|
As compared to the second quarter of fiscal 2017, the current quarter revenue decreased $3 million or 0.3%. The quarter-over-quarter decrease was primarily due to the impact of increased promotional discounts.
|
Operating income before restructuring costs and amortization
|
|
|
Operating income before restructuring costs and amortization for the quarter of $401 million was down 6.1% or $26 million from $427 million in the third quarter of fiscal 2016. Higher revenue from August 2016 rate
increases was more than fully offset by the impact of higher sales and marketing costs associated with the launch of BlueSky TV, promotional discounts, programming costs and lower RGUs as compared to the prior year.
|
|
|
|
As compared to the second quarter of fiscal 2017, operating income before restructuring costs and amortization for the current quarter was $2 million or 0.5% lower as the impact of increased RGUs and rate increases in
satellite video was more than fully offset by sales and marketing costs, and promotional discounts.
|
17
Shaw Communications Inc.
Business Network Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
(millions of Canadian dollars)
|
|
2017
|
|
|
2016
|
|
|
Change
%
|
|
|
2017
|
|
|
2016
|
|
|
Change
%
|
|
Revenue
|
|
|
137
|
|
|
|
128
|
|
|
|
7.0
|
|
|
|
410
|
|
|
|
384
|
|
|
|
6.8
|
|
Operating income before restructuring costs and amortization
(1)
|
|
|
70
|
|
|
|
64
|
|
|
|
9.4
|
|
|
|
211
|
|
|
|
189
|
|
|
|
11.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin
(1)
|
|
|
51.1
|
%
|
|
|
50.0
|
%
|
|
|
1.1pts
|
|
|
|
51.5
|
%
|
|
|
49.2
|
%
|
|
|
2.3pts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
See definitions and discussion under Non-IFRS and additional GAAP measures.
|
Revenue
|
|
|
Revenue of $137 million for the quarter was up $9 million or 7.0% over the comparable period. The core business, excluding satellite services, increased revenues 10.0% in the current quarter primarily due to continued
growth across the entire customer base.
|
|
|
|
As compared to the second quarter of fiscal 2017, excluding the impact of discontinued operations, revenue was comparable reflecting continued organic customer growth offset by price adjustments relating to our legacy
phone product.
|
Operating income before restructuring costs and amortization
|
|
|
Operating income before restructuring costs and amortization of $70 million for the quarter improved by $6 million or 9.4% over the comparable period. The improvements were driven primarily by increased revenue from
customer growth and migration from legacy products to higher margin Smart suite offerings.
|
|
|
|
As compared to the second quarter of fiscal 2017, operating income before restructuring costs and amortization for the quarter decreased by $2 million primarily driven by increased sales and marketing related costs.
|
Business Infrastructure Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
(millions of Canadian dollars)
|
|
2017
|
|
|
2016
|
|
|
Change
%
|
|
|
2017
|
|
|
2016
|
|
|
Change
%
|
|
Revenue
|
|
|
96
|
|
|
|
86
|
|
|
|
11.6
|
|
|
|
277
|
|
|
|
248
|
|
|
|
11.7
|
|
Operating income before restructuring costs and amortization
(1)
|
|
|
37
|
|
|
|
33
|
|
|
|
12.1
|
|
|
|
104
|
|
|
|
91
|
|
|
|
14.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin
(1)
|
|
|
38.5
|
%
|
|
|
38.4
|
%
|
|
|
0.1pts
|
|
|
|
37.5
|
%
|
|
|
36.7
|
%
|
|
|
0.8pts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
See definitions and discussion under Non-IFRS and additional GAAP measures.
|
Revenue
|
|
|
Revenue for the quarter increased $10 million or 11.6% over the third quarter of fiscal 2016. Excluding the effect of foreign exchange, revenue for the U.S. based operations increased by 6.9% to US$71 million for the
three-month period primarily due to continued organically generated customer growth.
|
|
|
|
As compared to the second quarter of fiscal 2017, revenue for the quarter increased slightly by $5 million or 5.5%. Excluding the effect of foreign exchange, revenue in the third quarter of fiscal 2017 for the U.S.
based operations increased by 2.3% over the second quarter of fiscal 2017.
|
18
Shaw Communications Inc.
Operating income before restructuring costs and amortization
|
|
|
Operating income before restructuring costs and amortization for the quarter improved $4 million or 12.1% over the comparable period. Excluding the effect of foreign exchange, operating income before restructuring costs
and amortization for the U.S. based operations increased by 7.3% to US$28 million for the three-month period. Year-over-year improvement was due primarily to customer growth.
|
|
|
|
As compared to the second quarter of fiscal 2017, operating income before restructuring costs and amortization for the current quarter was up 5.7% or $2 million driven by increased revenue and the impact of higher
seasonal costs incurred in the second quarter of fiscal 2017. Excluding the effect of foreign exchange, operating income before restructuring costs and amortization in the third quarter of fiscal 2017 for the U.S. based operations increased by 3.1%
over the second quarter of fiscal 2017.
|
Wireless
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
(millions of Canadian dollars)
|
|
2017
|
|
|
2016
|
|
|
Change
%
|
|
|
2017
|
|
|
2016
|
|
|
Change
%
|
|
Revenue
|
|
|
154
|
|
|
|
132
|
|
|
|
16.7
|
|
|
|
433
|
|
|
|
132
|
|
|
|
>100.0
|
|
Operating income before restructuring costs and amortization
(1)
|
|
|
42
|
|
|
|
29
|
|
|
|
44.8
|
|
|
|
101
|
|
|
|
29
|
|
|
|
>100.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin
(1)
|
|
|
27.3
|
%
|
|
|
22.0
|
%
|
|
|
5.3pts
|
|
|
|
23.3
|
%
|
|
|
22.0
|
%
|
|
|
1.3pts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
See definitions and discussion under Non-IFRS and additional GAAP measures.
|
The Wireless division
added nearly 20,000 RGUs in the quarter as compared to approximately 22,000 RGUs gained in the third quarter of fiscal 2016.
Revenue
|
|
|
Revenue of $154 million for the quarter was up $22 million or 16.7% over the comparable period. The increase in revenue was driven primarily by year-over-year growth in each postpaid and prepaid RGUs and due to improved
ARPU of $37.05 as compared to $36.30 in the third quarter of fiscal 2016.
|
|
|
|
As compared to the second quarter of fiscal 2017, revenue for the quarter increased by $14 million or 10% over the second quarter of fiscal 2017, the result of added RGUs and improved ARPU on higher rate plan mix as
compared to $36.44 ARPU in the prior quarter.
|
19
Shaw Communications Inc.
Operating income before restructuring costs and amortization
|
|
|
Operating income before restructuring costs and amortization of $42 million for the quarter improved by $13 million or 44.8% over the third quarter of fiscal 2016. The improvements were driven primarily by increased
revenue from added RGUs and improved ARPU in addition to reduced employee related costs offset partially by an increase in marketing, network and other commercial costs.
|
|
|
|
As compared to the second quarter of fiscal 2017, operating income before restructuring costs and amortization increased by $13 million or 44.8% over the second quarter of fiscal 2017, an improvement driven by the
increase in revenue and by higher prior quarter seasonal commercial costs, costs associated with the branding transition to Freedom Mobile and other promotional related costs.
|
Capital expenditures and equipment costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
(millions of Canadian dollars)
|
|
2017
|
|
|
2016
|
|
|
Change
%
|
|
|
2017
|
|
|
2016
|
|
|
Change
%
|
|
Consumer and Business Network Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New housing development
|
|
|
27
|
|
|
|
29
|
|
|
|
(6.9
|
)
|
|
|
74
|
|
|
|
79
|
|
|
|
(6.3
|
)
|
Success based
|
|
|
77
|
|
|
|
61
|
|
|
|
26.2
|
|
|
|
219
|
|
|
|
203
|
|
|
|
7.9
|
|
Upgrades and enhancements
|
|
|
102
|
|
|
|
80
|
|
|
|
27.5
|
|
|
|
275
|
|
|
|
277
|
|
|
|
(0.7
|
)
|
Replacement
|
|
|
6
|
|
|
|
12
|
|
|
|
50.0
|
|
|
|
19
|
|
|
|
30
|
|
|
|
(36.7
|
)
|
Building and other
|
|
|
20
|
|
|
|
19
|
|
|
|
5.3
|
|
|
|
64
|
|
|
|
62
|
|
|
|
3.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total as per Note 4 to the unaudited interim consolidated financial statements
|
|
|
232
|
|
|
|
201
|
|
|
|
15.4
|
|
|
|
651
|
|
|
|
651
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Infrastructure Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total as per Note 4 to the unaudited interim consolidated financial statements
|
|
|
33
|
|
|
|
35
|
|
|
|
(5.7
|
)
|
|
|
84
|
|
|
|
105
|
|
|
|
(20.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireless
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total as per Note 4 to the unaudited interim consolidated financial statements
|
|
|
58
|
|
|
|
51
|
|
|
|
13.7
|
|
|
|
176
|
|
|
|
51
|
|
|
|
245.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated total as per Note 4 to the unaudited interim consolidated financial
statements
|
|
|
323
|
|
|
|
287
|
|
|
|
12.5
|
|
|
|
911
|
|
|
|
807
|
|
|
|
12.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third quarter capital investment was $323 million, a $36 million or 12.5% increase over the comparable period, driven by added
capital expenditures of $21 million in broadband capacity expansion, $16 million in success based equipment and $7 million in the Wireless division. The increases were partially offset by $6 million of reduced network replacement activity.
Consumer and Business Network Services
|
|
|
Success based capital for the quarter of $77 million was $16 million higher than in the third quarter of fiscal 2016. The increase was driven by higher equipment costs in video associated with the BlueSky TV product,
purchases of advanced Internet Wi-Fi modems, and satellite digital network upgrade (DNU). The increases were partially offset by reduced installation costs in all product lines.
|
|
|
|
For the quarter, investment in the combined upgrades and enhancement and replacement categories was $108 million, a $16 million or 17.4% increase over the prior year driven by increased spend on network capacity
upgrades in support of enhanced broadband capacity, DOCSIS 3.1, and satellite DNU.
|
Business Infrastructure Services
|
|
|
Capital investment of $33 million for the quarter was comparable to the prior year with customer installation costs in existing facilities the main driver of investment.
|
20
Shaw Communications Inc.
Wireless
|
|
|
Capital investment of $176 million for the year and $58 million in the third quarter related primarily to investment for the continued improvement in network infrastructure, specifically the LTE-Advanced network rollout
readiness project across the network as well as capital investments in the upgrade of back office systems.
|
Discontinued operations
Shaw Tracking
During the current quarter, the
Company entered an agreement to sell a group of assets comprising the operations of Shaw Tracking, a fleet tracking operation reported within the Companys Business Network Services segment. The Company determined that the assets and
liabilities of the Shaw Tracking business met the criteria to be classified as a disposal group held for sale for the period ended May 31, 2017. Accordingly, the assets and liabilities of the Shaw Tracking business were reclassified in the
consolidated balance sheet at May 31, 2017 to current assets held for sale or current liabilities held for sale, respectively, as the sale of such assets and liabilities is expected within one year. In addition, the operating results and
operating cash flows of the business are presented as discontinued operations separate from the Companys continuing operations.
In connection with
the reclassification of assets and liabilities of the Shaw Tracking business as held for sale, the Company reviewed the carrying value of the resulting disposal group and determined it exceeded its fair value less cost to sell at May 31, 2017.
Accordingly, an impairment charge of $32 million was recorded during the quarter.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
(millions of Canadian dollars)
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Revenue
|
|
|
8
|
|
|
|
8
|
|
|
|
25
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating, general and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee salaries and benefits
|
|
|
2
|
|
|
|
2
|
|
|
|
5
|
|
|
|
5
|
|
Purchases of goods and services
|
|
|
4
|
|
|
|
4
|
|
|
|
15
|
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
6
|
|
|
|
20
|
|
|
|
18
|
|
Amortization
|
|
|
1
|
|
|
|
1
|
|
|
|
2
|
|
|
|
3
|
|
Impairment of goodwill / disposal group
|
|
|
32
|
|
|
|
17
|
|
|
|
32
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations before tax
|
|
|
(31
|
)
|
|
|
(16
|
)
|
|
|
(29
|
)
|
|
|
(13
|
)
|
Income taxes
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
(31
|
)
|
|
|
(16
|
)
|
|
|
(30
|
)
|
|
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21
Shaw Communications Inc.
Shaw Media
On April 1, 2016, Shaw sold 100% of its
wholly owned subsidiary Shaw Media Inc. to Corus, a related party subject to common voting control for $2.65 billion, comprised of $1.85 billion in cash and 71,364,853 Corus Class B non-voting participating shares. Accordingly, the operating results
and operating cash flows for the previously reported Media division are presented as discontinued operations separate from the Companys continuing operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
(millions of Canadian dollars)
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Revenue
|
|
|
|
|
|
|
88
|
|
|
|
|
|
|
|
610
|
|
Eliminations
(1)
|
|
|
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
(46
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81
|
|
|
|
|
|
|
|
564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating, general and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee salaries and benefits
|
|
|
|
|
|
|
16
|
|
|
|
|
|
|
|
109
|
|
Purchases of goods and services
|
|
|
|
|
|
|
32
|
|
|
|
|
|
|
|
272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48
|
|
|
|
|
|
|
|
381
|
|
Eliminations
(1)
|
|
|
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
(46
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41
|
|
|
|
|
|
|
|
335
|
|
Amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
|
|
Accretion of long-term liabilities and provisions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
Other losses
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations before tax and gain on divestiture
|
|
|
|
|
|
|
41
|
|
|
|
|
|
|
|
216
|
|
Income taxes
|
|
|
|
|
|
|
10
|
|
|
|
|
|
|
|
57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
|
|
|
|
31
|
|
|
|
|
|
|
|
159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on Divesture
|
|
|
|
|
|
|
662
|
|
|
|
|
|
|
|
662
|
|
Income taxes or gain
|
|
|
|
|
|
|
47
|
|
|
|
|
|
|
|
47
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
|
|
|
|
646
|
|
|
|
|
|
|
|
774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Eliminations relate to intercompany transactions between continuing and discontinued operations. The costs are included in continuing operations as they are expected to continue to be incurred subsequent to the
disposition.
|
Supplementary quarterly financial information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
Revenue
|
|
|
Operating
income before
restructuring
costs and
amortization
(1)
|
|
|
Net income from
continuing
operations
attributable to
equity shareholders
|
|
|
Net income
attributable
to equity
shareholders
|
|
|
Net income
(2)
|
|
|
Basic and
Diluted earnings
per share from
continuing
operations
|
|
|
Basic and
Diluted
earnings per
share
|
|
(millions of Canadian dollars except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third
|
|
|
1,311
|
|
|
|
550
|
|
|
|
164
|
|
|
|
133
|
|
|
|
133
|
|
|
|
0.33
|
|
|
|
0.27
|
|
Second
|
|
|
1,296
|
|
|
|
538
|
|
|
|
146
|
|
|
|
147
|
|
|
|
147
|
|
|
|
0.29
|
|
|
|
0.30
|
|
First
|
|
|
1,305
|
|
|
|
537
|
|
|
|
89
|
|
|
|
89
|
|
|
|
89
|
|
|
|
0.18
|
|
|
|
0.18
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth
|
|
|
1,297
|
|
|
|
547
|
|
|
|
143
|
|
|
|
154
|
|
|
|
154
|
|
|
|
0.29
|
|
|
|
0.31
|
|
Third
|
|
|
1,275
|
|
|
|
553
|
|
|
|
74
|
|
|
|
700
|
|
|
|
704
|
|
|
|
0.14
|
|
|
|
1.44
|
|
Second
|
|
|
1,143
|
|
|
|
500
|
|
|
|
115
|
|
|
|
156
|
|
|
|
164
|
|
|
|
0.23
|
|
|
|
0.32
|
|
First
|
|
|
1,135
|
|
|
|
505
|
|
|
|
137
|
|
|
|
209
|
|
|
|
218
|
|
|
|
0.28
|
|
|
|
0.43
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth
|
|
|
1,123
|
|
|
|
524
|
|
|
|
248
|
|
|
|
272
|
|
|
|
276
|
|
|
|
0.52
|
|
|
|
0.57
|
|
(1)
|
See definition and discussion under Non-IFRS and additional GAAP measures.
|
(2)
|
Net income attributable to both equity shareholders and non-controlling interests
|
22
Shaw Communications Inc.
In the third quarter of fiscal 2017, net income decreased $14 million compared to the second quarter of fiscal 2017 mainly due to current quarter restructuring
costs and losses on discontinued operations, net of tax, as well as increased amortization. The decrease was partially offset by an increase in operating income before restructuring costs and amortization, higher equity income from our investment in
Corus and lower income taxes. See Other income and expense items for further detail on non-operating items.
In the second quarter of fiscal
2017, net income increased $58 million compared to the first quarter of fiscal 2017 mainly due to a non-recurring provision related to the wind down of shomi operations recorded in the first quarter, partially offset by an increase in amortization
and income taxes. Also contributing to the increased net income were lower restructuring costs, partially offset by lower equity income from our investment in Corus. See Other income and expense items for further detail on non-operating
items.
In the first quarter of fiscal 2017, net income decreased $65 million compared to the fourth quarter of fiscal 2016 mainly due to a non-recurring
provision related to the wind down of shomi operations included in net other costs and revenue for the current quarter. Also contributing to the decreased net income was lower operating income before restructuring costs and amortization, higher
restructuring charges and lower income from discontinued operations, partially offset by $27 million equity income from our investment in Corus and lower income taxes. See Other income and expense items for further detail on
non-operating items.
In the fourth quarter of fiscal 2016 net income decreased $550 million compared to the third quarter of fiscal 2016 mainly due to
lower income from discontinued operations, net of tax, relating primarily to the gain on the divestiture of the former Media division recorded in the third quarter, decreased operating income before restructuring costs and amortization, and higher
income taxes. Partly offsetting the decrease in net income were decreases in net other costs and revenue and restructuring costs. Net other costs and revenue decreased primarily due to non-recurring charges recorded in the third quarter, including a
$17 million impairment of goodwill relating to the Tracking business, a $51 million impairment of the Companys joint venture investment in shomi, a $20 million write-down of a private portfolio investment, $12 million acquisition related costs
and a $10 million loss from an equity accounted associate.
Net income for the third quarter of fiscal 2016 increased $540 million compared to the second
quarter of fiscal 2016 mainly due to higher income from discontinued operations, net of tax, relating primarily to the gain on the divestiture of the former Media division, increased operating income before restructuring costs and amortization and
lower income taxes. Partly offsetting the net income improvement in the quarter were: i) decreased net other costs and revenue; ii) increased restructuring charges; and iii) increased amortization. Net other costs and revenue decreased primarily due
to a $17 million impairment of goodwill relating to the Shaw Tracking operations in the Business Network Services division, a $51 million impairment of the Companys shomi joint venture investment, a $20 million write-down of a private
portfolio investment and a $10 million loss from an equity accounted associate.
In the second quarter of fiscal 2016, net income decreased $54 million
compared to the first quarter of fiscal 2016 mainly due to decreased income from discontinued operations, net of tax, of $32 million, primarily due to the seasonality of the Media business reflected in income from discontinued operations, net of
tax, and net other costs and revenue of $13 million. Net other costs and revenue decreased primarily due to $8 million of costs recorded in the quarter related to the acquisition of Freedom Mobile (formerly, WIND) and INetU.
In the first quarter of fiscal 2016, net income decreased $58 million compared to the fourth quarter of 2015 mainly due to a change in net other costs and
revenues of $140 million and decrease in operating
23
Shaw Communications Inc.
income before restructuring costs and amortization of $17 million offset by an increase in income from discontinued operations, net of tax, of $51 million and
a decrease in income taxes of $50 million. Net other costs and revenue decreased primarily due to a fourth quarter fiscal 2015 gain on the sale of wireless spectrum of $158 million less the impact of a $27 million write-down of a private portfolio
investment in the same period offset by an increase in the equity loss of a joint venture interest in shomi of $5 million in the first quarter of fiscal 2016.
In the fourth quarter of fiscal 2015, net income increased $67 million primarily due to improved net other costs and revenue of $191 million partially offset
by lower income from discontinued operations, net of tax, of $44 million and higher income tax expense of $70 million. The improvement in net other costs and revenue items was due to the combined effect of the aforementioned sale of spectrum
licenses and write-down of a private portfolio investment during the fourth quarter and the $59 million net charge arising in the third quarter related to an impairment of goodwill, write-down of IPTV assets and proceeds received from the Shaw Court
insurance claim.
Other income and expense items
Amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
(millions of Canadian dollars)
|
|
2017
|
|
|
2016
|
|
|
Change
%
|
|
|
2017
|
|
|
2016
|
|
|
Change
%
|
|
Amortization revenue (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred equipment revenue
|
|
|
10
|
|
|
|
13
|
|
|
|
(23.1
|
)
|
|
|
31
|
|
|
|
43
|
|
|
|
(27.9
|
)
|
Deferred equipment costs
|
|
|
(30
|
)
|
|
|
(33
|
)
|
|
|
(9.0
|
)
|
|
|
(90
|
)
|
|
|
(104
|
)
|
|
|
(13.5
|
)
|
Property, plant and equipment, intangibles and other
|
|
|
(252
|
)
|
|
|
(229
|
)
|
|
|
10.0
|
|
|
|
(732
|
)
|
|
|
(640
|
)
|
|
|
14.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of property, plant and equipment, intangibles and other increased 10.0% and 14.4% for the three and nine months
ended May 31, 2017 over the comparable periods due to amortization of new expenditures exceeding the amortization of assets that became fully amortized during the periods, and only three months of Wireless division amortization included in the
prior year subsequent to the acquisition of Freedom Mobile (formerly WIND Mobile) on March 1, 2016.
Amortization of financing costs and Interest
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine Months ended May 31,
|
|
(millions of Canadian dollars)
|
|
2017
|
|
|
2016
|
|
|
Change
%
|
|
|
2017
|
|
|
2016
|
|
|
Change
%
|
|
Amortization of financing costs long-term debt
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
|
|
4
|
|
|
|
4
|
|
|
|
|
|
Interest expense
|
|
|
74
|
|
|
|
79
|
|
|
|
(6.3
|
)
|
|
|
222
|
|
|
|
229
|
|
|
|
(3.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense for the three and nine month periods ended May 31, 2017 was lower than the comparable periods due to
lower average outstanding debt balances in the current year.
Equity income (loss) of an associate or joint venture
For the three and nine month periods ended May 31, 2017 the Company recorded equity income of $26 million and $62 million related to its interest in
Corus, compared to equity losses of $10 million for the comparable periods. In the comparable periods, the Company also recorded equity losses of $15 million and $51 million, respectively, related to its interest in shomi.
24
Shaw Communications Inc.
Other losses
This category generally includes realized
and unrealized foreign exchange gains and losses on U.S. dollar denominated current assets and liabilities, gains and losses on disposal of property, plant and equipment and minor investments, and the Companys share of the operations of
Burrard Landing Lot 2 Holdings Partnership. For the nine months ended May 31, 2017, the category also includes a net $92 million provision in respect of the Companys investment in shomi which announced a wind down of operations during the
first quarter. In the comparable year, the category includes a write-down of $51 million in respect of the Companys investment in shomi, a write-down of $20 million in respect of a private portfolio investment and asset write-downs of $6
million.
Income taxes
Income taxes are higher in
the current year mainly due to an increase in net income from continuing operations and the impact of other adjustments.
Financial position
Total assets
were $15.4 billion at May 31, 2017 and August 31, 2016. Following is a discussion of significant changes in the consolidated statement of financial position since August 31, 2016.
Current assets decreased $148 million due to decreases in cash of $230 million and account receivable of $25 million, offset by increases in inventories of
$24 million, other current assets of $22 million and assets held for sale of $61 million. Cash decreased as the cash outlay for investing activities and financing activities exceeded the funds provided by operations. Inventories increased due to the
acquisition of additional customer equipment to support the newly-launched BlueSky TV service. Other current assets increased due to the timing of payments related to prepaid expenses. Assets held for sale include the assets of the Shaw Tracking
business for which the sale is expected to be completed within a year.
Investments and other assets increased $69 million primarily due to equity income
and other comprehensive income of associates related to the Companys investment in Corus. Property, plant and equipment increased $124 million due to capital investment in excess of amortization and the effect of foreign exchange rates on the
translation of ViaWest. Intangibles and goodwill decreased $25 million due to Shaw Tracking goodwill reclassified as held for sale partially offset by net software intangible additions and the ongoing effect of foreign exchange arising on
translation of ViaWest.
Current liabilities decreased $463 million during the year due to decreases in current portion of long-term debt of $400 million,
accounts payable and accrued liabilities of $69 million and income taxes payable of $87 million, partially offset by increases of $59 million in current provisions and $35 million in liabilities held for sale. Current portion of long-term debt
decreased due to the repayment of $400 million 5.7% senior note at maturity on March 2, 2017. Accounts payable and accruals decreased due to the timing of payment and fluctuations in various payables including capital expenditures and interest.
Income taxes payable decreased due to tax installment payments, partially offset by the current period provision. Current provisions increased primarily due to unpaid amounts relating to the provision for the wind down of the shomi investment and
restructuring.
Long-term debt increased $356 million due to the issuance of $300 million fixed rate senior notes at a rate of 3.80% due March 1,
2027, additional U.S. dollar borrowings by ViaWest under its bank credit facilities and the effect of foreign exchange rates on ViaWests debt and the Companys U.S. dollar
25
Shaw Communications Inc.
borrowings under its credit facility. The $300 million proceeds from the issuance of the fixed rate senior notes, together with cash on hand, was used to repay
the $400 million senior note due on March 2, 2017.
Shareholders equity increased $138 million primarily due to an increase in share capital of
$194 million and decrease in accumulated other comprehensive loss of $23 million, partly offset by a decrease in retained earnings of $75 million. Share capital increased due to the issuance of 7,123,282 Class B non-voting participating shares
(Class B Non-Voting Shares) under the Companys option plan and Dividend Reinvestment Plan (DRIP). As at June 15, 2017, share capital is as reported at May 31, 2017 with the exception of the issuance of a total
of 65,460 Class B Non-Voting Shares upon exercise of options under the Companys option plan. Retained earnings decreased due to dividends of $445 million, partially offset by current year earnings of $370 million. Accumulated other
comprehensive loss decreased due to the net effect of exchange differences arising on the translation of ViaWest and U.S. dollar denominated debt designated as a hedge of the Companys net investment in those foreign operations as well as
re-measurements recorded on employee benefit plans and the Companys share of other comprehensive income of associates.
Liquidity and capital resources
In the nine-month period ended May 31, 2017, the Company generated $436 million of free cash flow. Shaw used its free cash flow along with cash of $230
million, $300 million proceeds from a senior note issuance, borrowings of $33 million under ViaWests credit facility and proceeds on issuance of Class B Non-Voting Shares of $37 million to repay at maturity $400 million 5.7% senior notes, fund
the net working capital change of $180 million, pay common share dividends of $286 million, make $115 million in financial investments, pay $45 million in restructuring costs and pay $10 million in other net items.
As at May 31, 2017, the Company had $175 million of cash on hand, as well as approximately $980 million of available credit under its $1.5 billion bank
credit facility. On December 15, 2016, the Company amended the terms of this bank credit facility to extend the maturity date from December 2019 to December 2021. The facility is used for working capital and general corporate purposes.
The Company issued Class B Non-Voting Shares from treasury under its DRIP which resulted in cash savings and incremental Class B Non-Voting Shares of $149
million during the nine months ending May 31, 2017. On December 16, 2016, the Company amended its DRIP to permit eligible shareholders who are residents of the United States to enroll their Class A Participating Shares and Class B
Non-voting Participating Shares in the DRIP. Prior to this amendment, the DRIP was only available to eligible shareholders who were residents of Canada.
Shaws and ViaWests credit facilities are subject to customary covenants which include maintaining minimum or maximum financial ratios.
26
Shaw Communications Inc.
|
|
|
|
|
|
|
Covenant Limit
|
|
Shaw Credit Facilities
|
|
|
|
|
Total Debt to Operating Cash Flow
(1)
Ratio
|
|
|
< 5.00:1
|
|
Operating Cash Flow
(1)
to Fixed Charges
(2)
Ratio
|
|
|
> 2.00:1
|
|
ViaWest Credit Facilities
|
|
|
|
|
Total Net Leverage Ratio
(3)
|
|
|
£
6.50:1
|
|
(1)
|
Operating Cash Flow, for the purposes of the covenants, is calculated as net earnings before interest expense, depreciation, amortization and current and deferred income taxes, excluding profit or loss from investments
accounted for on an equity basis, for the most recently completed fiscal quarter multiplied by four, plus cash dividends and other cash distributions received in the most recently completed four fiscal quarters from investments accounted for on an
equity basis.
|
(2)
|
Fixed Charges are defined as the aggregate interest expense for the most recently completed fiscal quarter multiplied by four.
|
(3)
|
Total Net Leverage Ratio is calculated as the ratio of consolidated total debt under the facility as of the last day of the most recent completed four fiscal quarters to Consolidated Adjusted EBITDA of ViaWest for the
same period. Consolidated Adjusted EBITDA, for the purposes of the covenants, is calculated similar to Operating income before restructuring and amortization with adjustments for certain items such as one-time expenses and extraordinary items.
|
At May 31, 2017, 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.
Based on the aforementioned financing
activities, available credit facilities and forecasted free cash flow, the Company expects to have sufficient liquidity to fund operations and obligations, including maturing debt, 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.
Cash Flow from Operations
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
(millions of Canadian dollars)
|
|
2017
|
|
|
2016
|
|
|
Change
%
|
|
|
2017
|
|
|
2016
|
|
|
Change
%
|
|
Funds flow from operations
|
|
|
392
|
|
|
|
402
|
|
|
|
(2.5
|
)
|
|
|
1,227
|
|
|
|
1,110
|
|
|
|
10.5
|
|
Net change in non-cash balances related to operations
|
|
|
45
|
|
|
|
22
|
|
|
|
>100.0
|
|
|
|
(86
|
)
|
|
|
(27
|
)
|
|
|
(>100.0
|
)
|
Operating activities of discontinued operations
|
|
|
1
|
|
|
|
3
|
|
|
|
|
|
|
|
4
|
|
|
|
111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
438
|
|
|
|
427
|
|
|
|
2.6
|
|
|
|
1,145
|
|
|
|
1,194
|
|
|
|
(4.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended May 31, 2017, funds flow from operations decreased over the comparable periods primarily due
to higher restructuring costs and lower operating income before restructuring costs and amortization and lower income tax expense, partially offset by lower business acquisition costs. For the nine months ended May 31, 2017, funds flow from
operations increased over the comparable periods primarily due to higher operating income before restructuring costs and amortization, lower income tax expense and lower business acquisition costs, partially offset by higher restructuring costs in
the current year. For the nine-month period, funds flow from operations also included the impact of lower pension funding during the current year. The net change in non-cash working capital balances related to operations fluctuated over the
comparative periods due to changes in other current asset balances and the timing of payment of current income taxes payable and accounts payable and accrued liabilities.
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
(millions of Canadian dollars)
|
|
2017
|
|
|
2016
|
|
|
Increase
|
|
|
2017
|
|
|
2016
|
|
|
Increase
|
|
Cash flow used in investing activities
|
|
|
(395
|
)
|
|
|
(65
|
)
|
|
|
330
|
|
|
|
(1,040
|
)
|
|
|
(910
|
)
|
|
|
130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
Shaw Communications Inc.
The cash used in investing activities increased over the comparable periods due primarily to the $246 million net impact of the acquisition of Freedom Mobile
(formerly, WIND Mobile) and sale of Media in the prior year, and higher cash outlays for inventory and capital expenditures in the current year. The nine-month period also includes the $223 acquisition of INetU in the prior year.
Financing Activities
The changes in financing
activities during the comparative periods were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
(millions of Canadian dollars)
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Bank loans net borrowings
|
|
|
|
|
|
|
(25
|
)
|
|
|
|
|
|
|
69
|
|
ViaWests credit facility and finance lease obligations
|
|
|
4
|
|
|
|
(3
|
)
|
|
|
27
|
|
|
|
172
|
|
Repay 5.70% Senior unsecured notes
|
|
|
(400
|
)
|
|
|
|
|
|
|
(400
|
)
|
|
|
|
|
Issuance of 3.80% Senior unsecured notes
|
|
|
|
|
|
|
|
|
|
|
300
|
|
|
|
|
|
Repay CDN variable rate Senior notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(300
|
)
|
Issuance of 3.15% Senior unsecured notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300
|
|
Repay 6.15% Senior unsecured notes
|
|
|
|
|
|
|
(300
|
)
|
|
|
|
|
|
|
(300
|
)
|
Senior notes issuance cost
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
(2
|
)
|
Freedom Mobile finance lease obligations
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
Bank facility arrangement costs
|
|
|
(1
|
)
|
|
|
(5
|
)
|
|
|
(4
|
)
|
|
|
(11
|
)
|
Dividends
|
|
|
(98
|
)
|
|
|
(100
|
)
|
|
|
(292
|
)
|
|
|
(296
|
)
|
Issuance of Class B Non-Voting Shares
|
|
|
7
|
|
|
|
10
|
|
|
|
37
|
|
|
|
22
|
|
Financing activities of discontinued operations
|
|
|
|
|
|
|
(12
|
)
|
|
|
|
|
|
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(488
|
)
|
|
|
(435
|
)
|
|
|
335
|
|
|
|
(358
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounting standards
The MD&A included in the Companys August 31, 2016 Annual Report outlined critical accounting policies, including key estimates and assumptions
that management has made under these policies, and how they affect the amounts reported in the Consolidated Financial Statements. The MD&A also describes significant accounting policies where alternatives exist. The condensed interim
consolidated financial statements follow the same accounting policies and methods of application as the most recent annual consolidated financial statements except as described below.
Standards and amendments to standards issued but not yet effective
The Company has not yet adopted certain standards and amendments that have been issued but are not yet effective. The following pronouncements are being
assessed to determine their impact on the Companys results and financial position.
|
|
|
IFRIC 23,
Uncertainty over Income Tax Treatments
was issued in 2017 to clarify how to apply the recognition and measurement requirements in IAS 12 when there is uncertainty over income tax treatments. It is
required to be applied for annual periods commencing January 1, 2019.
|
28
Shaw Communications Inc.
Change in accounting policy
In November 2016, the IFRS
Interpretations Committee (the Committee) published a summary of its meeting discussion regarding a request to clarify how an entity determines the expected manner of recovery of an intangible asset with an indefinite useful life for the
purposes of measuring deferred tax in accordance with IAS 12
Income Taxes
. Although the Committee decided not to add this issue to its agenda, the Committee noted that an intangible asset with an indefinite useful life is not a
non-depreciable asset because a non-depreciable asset has an unlimited (or infinite) life, and that indefinite does not mean infinite. Consequently, the fact that an entity does not amortize an intangible asset with an indefinite useful life does
not necessarily mean that the entity will recover the carrying amount of that asset only through sale and not through use. As such, the Company changed retrospectively its accounting policy for the accounting of deferred tax on intangible assets
with indefinite useful lives to be in line with the Committee discussions.
The following table summarizes the impact of this change of accounting policy
on previously reported consolidated statements of financial position. The change of accounting policy did not have an impact on the previously reported consolidated statements of income or consolidated statements of cash flows.
Increase (decrease) to previously reported amounts:
|
|
|
|
|
|
|
|
|
|
|
As at August 31,
|
|
(millions of Canadian dollars)
|
|
2016
|
|
|
2015
|
|
Goodwill
|
|
|
143
|
|
|
|
182
|
|
Deferred income tax liabilities
|
|
|
740
|
|
|
|
779
|
|
Retained earnings
(1)
|
|
|
(597
|
)
|
|
|
(597
|
)
|
|
|
|
|
|
|
|
|
|
(1)
|
Included in Shareholders equity Common and preferred shareholders
|
Related Party Transactions
The
Companys transactions with related parties are discussed in its Managements Discussion and Analysis for the year ended August 31, 2016 under Related Party Transactions and under Note 27 of the Consolidated Financial
Statements of the Company for the year ended August 31, 2016. There has been no material change in the Companys transactions with related parties between August 31, 2016 and May 31, 2017.
Financial Instruments
There
has been no material change in the Companys risk management practices with respect to financial instruments between August 31, 2016 and May 31, 2017. See Known Events, Trends and Uncertainties Interest Rates, Foreign
Exchange Rates and Capital Markets in the Companys Managements Discussion and Analysis for the year ended August 31, 2016 and the section entitled Risk Management under Note 28 of the Consolidated Financial
Statements of the Company for the year ended August 31, 2016.
Risks and Uncertainties
The significant risks and uncertainties affecting the Company and its business are discussed in the Companys August 31, 2016 Annual Report under
Known Events, Trends, Risks and Uncertainties in Managements Discussion and Analysis.
29
Shaw Communications Inc.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of Canadian dollars)
|
|
May 31, 2017
|
|
|
August 31, 2016
|
|
|
August 31, 2015
|
|
|
|
|
|
|
(restated,
note 2
)
|
|
|
(restated,
note 2
)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
175
|
|
|
|
405
|
|
|
|
398
|
|
Accounts receivable
|
|
|
243
|
|
|
|
268
|
|
|
|
468
|
|
Inventories
|
|
|
89
|
|
|
|
65
|
|
|
|
60
|
|
Other current assets
|
|
|
160
|
|
|
|
138
|
|
|
|
78
|
|
Assets held for sale
[notes 3]
|
|
|
61
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
728
|
|
|
|
876
|
|
|
|
1,009
|
|
Investments and other assets
[notes 12 and 13]
|
|
|
922
|
|
|
|
853
|
|
|
|
97
|
|
Property, plant and equipment
|
|
|
4,731
|
|
|
|
4,607
|
|
|
|
4,220
|
|
Other long-term assets
|
|
|
263
|
|
|
|
275
|
|
|
|
259
|
|
Deferred income tax assets
|
|
|
4
|
|
|
|
6
|
|
|
|
14
|
|
Intangibles
|
|
|
7,457
|
|
|
|
7,450
|
|
|
|
7,459
|
|
Goodwill
|
|
|
1,283
|
|
|
|
1,315
|
|
|
|
1,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,388
|
|
|
|
15,382
|
|
|
|
14,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
875
|
|
|
|
944
|
|
|
|
887
|
|
Provisions
|
|
|
92
|
|
|
|
33
|
|
|
|
52
|
|
Income taxes payable
|
|
|
128
|
|
|
|
215
|
|
|
|
195
|
|
Unearned revenue
|
|
|
214
|
|
|
|
215
|
|
|
|
196
|
|
Current portion of long-term debt
[notes 7 and 12]
|
|
|
12
|
|
|
|
412
|
|
|
|
608
|
|
Liabilities held for sale
[note 3]
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,356
|
|
|
|
1,819
|
|
|
|
1,938
|
|
Long-term debt
[notes 7 and 12]
|
|
|
5,556
|
|
|
|
5,200
|
|
|
|
5,061
|
|
Other long-term liabilities
|
|
|
144
|
|
|
|
135
|
|
|
|
186
|
|
Provisions
|
|
|
57
|
|
|
|
53
|
|
|
|
10
|
|
Deferred credits
|
|
|
512
|
|
|
|
563
|
|
|
|
588
|
|
Deferred income tax liabilities
|
|
|
1,927
|
|
|
|
1,914
|
|
|
|
1,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,552
|
|
|
|
9,684
|
|
|
|
9,697
|
|
Shareholders equity
[notes 8 and 10]
|
|
|
|
|
|
|
|
|
|
|
|
|
Common and preferred shareholders
|
|
|
5,835
|
|
|
|
5,697
|
|
|
|
4,812
|
|
Non-controlling interests in subsidiaries
|
|
|
1
|
|
|
|
1
|
|
|
|
237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,836
|
|
|
|
5,698
|
|
|
|
5,049
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,388
|
|
|
|
15,382
|
|
|
|
14,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
30
Shaw Communications Inc.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
(millions of Canadian dollars)
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Revenue
[note 4]
|
|
|
1,311
|
|
|
|
1,275
|
|
|
|
3,912
|
|
|
|
3,553
|
|
Operating, general and administrative expenses
[note 6]
|
|
|
(761
|
)
|
|
|
(722
|
)
|
|
|
(2,287
|
)
|
|
|
(1,995
|
)
|
Restructuring costs
[notes 6 and 14]
|
|
|
(43
|
)
|
|
|
(22
|
)
|
|
|
(54
|
)
|
|
|
(22
|
)
|
Amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred equipment revenue
|
|
|
10
|
|
|
|
13
|
|
|
|
31
|
|
|
|
43
|
|
Deferred equipment costs
|
|
|
(30
|
)
|
|
|
(33
|
)
|
|
|
(90
|
)
|
|
|
(104
|
)
|
Property, plant and equipment, intangibles and other
|
|
|
(252
|
)
|
|
|
(229
|
)
|
|
|
(732
|
)
|
|
|
(640
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income from continuing operations
|
|
|
235
|
|
|
|
282
|
|
|
|
780
|
|
|
|
835
|
|
Amortization of financing costs long-term debt
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(4
|
)
|
|
|
(4
|
)
|
Interest expense
|
|
|
(74
|
)
|
|
|
(79
|
)
|
|
|
(222
|
)
|
|
|
(229
|
)
|
Business acquisition costs
|
|
|
|
|
|
|
(12
|
)
|
|
|
|
|
|
|
(21
|
)
|
Equity income (loss) of an associate or joint venture
|
|
|
26
|
|
|
|
(25
|
)
|
|
|
62
|
|
|
|
(61
|
)
|
Other gains (losses)
[note 15]
|
|
|
18
|
|
|
|
(74
|
)
|
|
|
(91
|
)
|
|
|
(82
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
|
204
|
|
|
|
91
|
|
|
|
525
|
|
|
|
438
|
|
Current income tax expense
[note 4]
|
|
|
41
|
|
|
|
44
|
|
|
|
115
|
|
|
|
164
|
|
Deferred income tax expense (recovery)
|
|
|
(1
|
)
|
|
|
(27
|
)
|
|
|
10
|
|
|
|
(52
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations
|
|
|
164
|
|
|
|
74
|
|
|
|
400
|
|
|
|
326
|
|
Income (loss) from discontinued operations, net of tax
[note 3]
|
|
|
(31
|
)
|
|
|
630
|
|
|
|
(30
|
)
|
|
|
760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
133
|
|
|
|
704
|
|
|
|
370
|
|
|
|
1,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity shareholders
|
|
|
164
|
|
|
|
74
|
|
|
|
400
|
|
|
|
326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity shareholders
|
|
|
(31
|
)
|
|
|
626
|
|
|
|
(30
|
)
|
|
|
740
|
|
Non-controlling interests in subsidiaries held for sale
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(31
|
)
|
|
|
630
|
|
|
|
(30
|
)
|
|
|
760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
[note 9]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
0.33
|
|
|
|
0.14
|
|
|
|
0.80
|
|
|
|
0.66
|
|
Discontinued operations
|
|
|
(0.06
|
)
|
|
|
1.30
|
|
|
|
(0.06
|
)
|
|
|
1.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.27
|
|
|
|
1.44
|
|
|
|
0.74
|
|
|
|
2.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
[note 9]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
0.33
|
|
|
|
0.14
|
|
|
|
0.80
|
|
|
|
0.66
|
|
Discontinued operations
|
|
|
(0.06
|
)
|
|
|
1.30
|
|
|
|
(0.06
|
)
|
|
|
1.54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.27
|
|
|
|
1.44
|
|
|
|
0.74
|
|
|
|
2.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
31
Shaw Communications Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
(millions of Canadian dollars)
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Net income
|
|
|
133
|
|
|
|
704
|
|
|
|
370
|
|
|
|
1,086
|
|
|
|
|
|
|
Other comprehensive income (loss)
[note 10]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may subsequently be reclassified to income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized fair value of derivatives designated as cash flow hedges
|
|
|
1
|
|
|
|
1
|
|
|
|
2
|
|
|
|
1
|
|
Adjustment for hedged items recognized in the period
|
|
|
(1
|
)
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
Share of other comprehensive income (loss) of associates
|
|
|
(3
|
)
|
|
|
(1
|
)
|
|
|
7
|
|
|
|
(1
|
)
|
Exchange differences on translation of a foreign operation
|
|
|
14
|
|
|
|
(36
|
)
|
|
|
28
|
|
|
|
(8
|
)
|
Exchange differences on US denominated debt hedging a foreign operation
|
|
|
(6
|
)
|
|
|
16
|
|
|
|
(12
|
)
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
(20
|
)
|
|
|
23
|
|
|
|
(3
|
)
|
Items that will not subsequently be reclassified to income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remeasurements on employee benefit plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
(17
|
)
|
|
|
(11
|
)
|
|
|
|
|
|
|
(17
|
)
|
Discontinued operations
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12
|
)
|
|
|
(28
|
)
|
|
|
23
|
|
|
|
(18
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
121
|
|
|
|
676
|
|
|
|
393
|
|
|
|
1,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity shareholders
|
|
|
121
|
|
|
|
672
|
|
|
|
393
|
|
|
|
1,048
|
|
Non-controlling interests in subsidiaries
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
121
|
|
|
|
676
|
|
|
|
393
|
|
|
|
1,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
32
Shaw Communications Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended May 31, 2017
|
|
|
|
Attributable to equity shareholders
|
|
|
|
|
|
|
|
[millions of Canadian dollars]
|
|
Share
capital
|
|
|
Contributed
surplus
|
|
|
Retained
earnings
(restated,
note 2
)
|
|
|
Accumulated
other
comprehensive
loss
|
|
|
Total
|
|
|
Equity
attributable to
non-controlling
interests
|
|
|
Total
equity
|
|
Balance as at September 1, 2016
|
|
|
3,799
|
|
|
|
42
|
|
|
|
1,908
|
|
|
|
(52
|
)
|
|
|
5,697
|
|
|
|
1
|
|
|
|
5,698
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
370
|
|
|
|
|
|
|
|
370
|
|
|
|
|
|
|
|
370
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
|
|
|
|
23
|
|
|
|
|
|
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
370
|
|
|
|
23
|
|
|
|
393
|
|
|
|
|
|
|
|
393
|
|
Dividends
|
|
|
|
|
|
|
|
|
|
|
(296
|
)
|
|
|
|
|
|
|
(296
|
)
|
|
|
|
|
|
|
(296
|
)
|
Dividend reinvestment plan
|
|
|
149
|
|
|
|
|
|
|
|
(149
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued under stock option plan
|
|
|
45
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
38
|
|
|
|
|
|
|
|
38
|
|
Share-based compensation
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at May 31, 2017
|
|
|
3,993
|
|
|
|
38
|
|
|
|
1,833
|
|
|
|
(29
|
)
|
|
|
5,835
|
|
|
|
1
|
|
|
|
5,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended May 31, 2016
|
|
|
|
Attributable to equity shareholders
|
|
|
|
|
|
|
|
[millions of Canadian dollars]
|
|
Share
capital
|
|
|
Contributed
surplus
|
|
|
Retained
earnings
(restated,
note 2
)
|
|
|
Accumulated
other
comprehensive
loss
|
|
|
Total
|
|
|
Equity
attributable to
non-controlling
interests
|
|
|
Total
equity
|
|
Balance as at September 1, 2015
|
|
|
3,500
|
|
|
|
45
|
|
|
|
1,286
|
|
|
|
(19
|
)
|
|
|
4,812
|
|
|
|
237
|
|
|
|
5,049
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
1,066
|
|
|
|
|
|
|
|
1,066
|
|
|
|
20
|
|
|
|
1,086
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18
|
)
|
|
|
(18
|
)
|
|
|
|
|
|
|
(18
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
1,066
|
|
|
|
(18
|
)
|
|
|
1,048
|
|
|
|
20
|
|
|
|
1,068
|
|
Dividends
|
|
|
|
|
|
|
|
|
|
|
(299
|
)
|
|
|
|
|
|
|
(299
|
)
|
|
|
|
|
|
|
(299
|
)
|
Dividend reinvestment plan
|
|
|
139
|
|
|
|
|
|
|
|
(139
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued under stock option plan
|
|
|
26
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
22
|
|
|
|
|
|
|
|
22
|
|
Share-based compensation
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
2
|
|
Business Acquisition
|
|
|
68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68
|
|
|
|
|
|
|
|
68
|
|
Distributions declared by subsidiaries
to non-controlling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12
|
)
|
|
|
(12
|
)
|
Derecognition /Transfer on sale of discontinued operations
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
4
|
|
|
|
|
|
|
|
(244
|
)
|
|
|
(244
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at May 31, 2016
|
|
|
3,733
|
|
|
|
43
|
|
|
|
1,910
|
|
|
|
(33
|
)
|
|
|
5,653
|
|
|
|
1
|
|
|
|
5,654
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33
Shaw Communications Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
(millions of Canadian dollars)
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds flow from continuing operations
[note 11]
|
|
|
392
|
|
|
|
402
|
|
|
|
1,227
|
|
|
|
1,110
|
|
Net change in non-cash balances related
to continuing operations
|
|
|
45
|
|
|
|
22
|
|
|
|
(86
|
)
|
|
|
(27
|
)
|
Operating activities of discontinued operations
|
|
|
1
|
|
|
|
3
|
|
|
|
4
|
|
|
|
111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
438
|
|
|
|
427
|
|
|
|
1,145
|
|
|
|
1,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment
[note 4]
|
|
|
(302
|
)
|
|
|
(257
|
)
|
|
|
(829
|
)
|
|
|
(740
|
)
|
Additions to equipment costs (net)
[note 4]
|
|
|
(21
|
)
|
|
|
(20
|
)
|
|
|
(58
|
)
|
|
|
(62
|
)
|
Additions to other intangibles
[note 4]
|
|
|
(27
|
)
|
|
|
(24
|
)
|
|
|
(74
|
)
|
|
|
(77
|
)
|
Net (additions) reductions to inventories
|
|
|
(14
|
)
|
|
|
4
|
|
|
|
(29
|
)
|
|
|
5
|
|
Business acquisitions, net of cash acquired
|
|
|
|
|
|
|
(1,552
|
)
|
|
|
|
|
|
|
(1,778
|
)
|
Proceeds on sale of discontinued operations, net of cash sold
|
|
|
|
|
|
|
1,798
|
|
|
|
|
|
|
|
1,798
|
|
Net additions to investments and other assets
|
|
|
(31
|
)
|
|
|
(12
|
)
|
|
|
(50
|
)
|
|
|
(55
|
)
|
Distributions received and proceeds from sale of investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
Proceeds on disposal of property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
Investing activities of discontinued operations
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
(9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(395
|
)
|
|
|
(65
|
)
|
|
|
(1,040
|
)
|
|
|
(910
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in long-term debt
|
|
|
7
|
|
|
|
1,300
|
|
|
|
333
|
|
|
|
1,897
|
|
Debt repayments
|
|
|
(403
|
)
|
|
|
(1,628
|
)
|
|
|
(409
|
)
|
|
|
(1,958
|
)
|
Bank facility arrangement costs
|
|
|
(1
|
)
|
|
|
(5
|
)
|
|
|
(4
|
)
|
|
|
(11
|
)
|
Issue of Class B Non-Voting Shares
[note 8]
|
|
|
7
|
|
|
|
10
|
|
|
|
37
|
|
|
|
22
|
|
Dividends paid on Class A Shares and Class B Non-Voting Shares
|
|
|
(96
|
)
|
|
|
(96
|
)
|
|
|
(286
|
)
|
|
|
(286
|
)
|
Dividends paid on Preferred Shares
|
|
|
(2
|
)
|
|
|
(4
|
)
|
|
|
(6
|
)
|
|
|
(10
|
)
|
Financing activities of discontinued operations
|
|
|
|
|
|
|
(12
|
)
|
|
|
|
|
|
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(488
|
)
|
|
|
(435
|
)
|
|
|
(335
|
)
|
|
|
(358
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of currency translation on cash balances
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in cash
|
|
|
(445
|
)
|
|
|
(74
|
)
|
|
|
(230
|
)
|
|
|
(74
|
)
|
Cash, beginning of the period
|
|
|
620
|
|
|
|
357
|
|
|
|
405
|
|
|
|
398
|
|
Cash, classified as assets held for sale at beginning of period
|
|
|
|
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash of continuing operations, end of the period
|
|
|
175
|
|
|
|
324
|
|
|
|
175
|
|
|
|
324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34
Shaw Communications Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
May 31, 2017 and 2016
[all amounts in millions of Canadian dollars, except share and per share amounts]
Shaw Communications Inc. (the Company) is a diversified Canadian
connectivity company whose core operating business is providing: Cable telecommunications and Satellite video services to residential customers (Consumer); data networking, Cable telecommunications, and Satellite video services to
businesses and public sector entities (Business Network Services); data centre colocation, cloud technology and managed IT solutions to businesses (Business Infrastructure Services); and wireless services for voice and data
communications (Wireless). The Companys shares are listed on the Toronto Stock Exchange (TSX), TSX Venture Exchange and New York Stock Exchange.
2.
|
BASIS OF PRESENTATION AND ACCOUNTING POLICIES
|
Statement of compliance
These condensed interim consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards
(IFRS) and in compliance with International Accounting Standard (IAS) 34
Interim Financial Reporting
as issued by the International Accounting Standards Board (IASB).
The condensed interim consolidated financial statements of the Company for the three and nine months ended May 31, 2017 were authorized for issue by the
Audit Committee on June 27, 2017.
Basis of presentation
These condensed interim consolidated financial statements have been prepared primarily under the historical cost convention except as detailed in the
significant accounting policies disclosed in the Companys consolidated financial statements for the year ended August 31, 2016 and are expressed in millions of Canadian dollars unless otherwise indicated. The condensed interim
consolidated statements of income are presented using the nature classification for expenses.
The notes presented in these condensed interim consolidated
financial statements include only significant events and transactions occurring since the Companys last fiscal year end and are not fully inclusive of all matters required to be disclosed by IFRS in the Companys annual consolidated
financial statements. As a result, these condensed interim consolidated financial statements should be read in conjunction with the Companys consolidated financial statements for the year ended August 31, 2016.
The condensed interim consolidated financial statements follow the same accounting policies and methods of application as the most recent annual consolidated
financial statements except as noted below.
Standards and amendments to standards issued but not yet effective
The Company has not yet adopted certain standards and amendments that have been issued but are not yet effective. The following pronouncements are being
assessed to determine their impact on the Companys results and financial position.
|
|
|
IFRIC 23,
Uncertainty over Income Tax Treatments
was issued in 2017 to clarify how to apply the recognition and measurement requirements in IAS 12 when there is uncertainty over income tax treatments. It is
required to be applied for annual periods commencing January 1, 2019.
|
Discontinued operations
The Company reports financial results for discontinued operations separately from continuing operations to distinguish the financial impact of disposal
transactions from ongoing operations. Discontinued operations reporting
35
Shaw Communications Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
May 31, 2017 and 2016
[all amounts in millions of Canadian dollars, except share and per share amounts]
occurs when the disposal of a component or a group of components of the Company
represents a strategic shift that will have a major impact on the Companys operations and financial results, and where the operations and cash flows can be clearly distinguished, operationally and for financial reporting purposes, from the
rest of the Company.
The results of discontinued operations are excluded from both continuing operations and business segment information in the interim
consolidated financial statements and the notes to the interim consolidated financial statements, unless otherwise noted, and are presented net of tax in the statement of income for the current and comparative periods. Refer to Note 3 Discontinued
Operations for further information regarding the Companys discontinued operations.
Change in accounting policy
In November 2016, the IFRS Interpretations Committee (the Committee) published a summary of its meeting discussion regarding a request to clarify
how an entity determines the expected manner of recovery of an intangible asset with an indefinite useful life for the purposes of measuring deferred tax in accordance with IAS 12
Income Taxes
. Although the Committee decided not to add this
issue to its agenda, the Committee noted that an intangible asset with an indefinite useful life is not a non-depreciable asset because a non-depreciable asset has an unlimited (or infinite) life, and that indefinite does not mean infinite.
Consequently, the fact that an entity does not amortize an intangible asset with an indefinite useful life does not necessarily mean that the entity will recover the carrying amount of that asset only through sale and not through use. As such, the
Company changed retrospectively its accounting policy for the accounting of deferred tax on intangible assets with indefinite useful lives to be in line with the Committee discussions.
The following table summarizes the impact of this change of accounting policy on previously reported consolidated statements of financial position. The change
of accounting policy did not have an impact on the previously reported consolidated statements of income or consolidated statements of cash flows.
|
|
|
|
|
|
|
|
|
Increase (decrease) to previously reported amounts
|
|
As at August 31,
|
|
|
|
2016
|
|
|
2015
|
|
Goodwill
|
|
|
143
|
|
|
|
182
|
|
Deferred income tax liabilities
|
|
|
740
|
|
|
|
779
|
|
Retained earnings
(1)
|
|
|
(597
|
)
|
|
|
(597
|
)
|
|
|
|
|
|
|
|
|
|
(1)
|
Included in Shareholders equity Common and preferred shareholders
|
3.
|
DISCONTINUED OPERATIONS
|
Shaw Tracking
During the quarter, the Company entered into an agreement to sell a group of assets comprising the operations of Shaw Tracking, a fleet tracking operation
reported within the Companys Business Network Services segment, for proceeds of approximately USD $20. The Company determined that the assets and liabilities of the Shaw Tracking business met the criteria to be classified as a disposal group
held for sale for the period ended May 31, 2017. Accordingly, the assets and liabilities of the Shaw Tracking business were reclassified in the consolidated balance sheet at May 31, 2017 to current assets held for sale or current
liabilities held for sale, respectively, as the sale of such assets and liabilities is expected within one year. In addition, the operating results and operating cash flows of the business are presented as discontinued operations separate from the
Companys continuing operations.
In connection with the reclassification of assets and liabilities of the Shaw Tracking business as held for sale,
the Company reviewed the carrying value of the resulting disposal group and determined it exceeded its fair value less cost to sell at May 31, 2017. Accordingly, an impairment charge of $32 was recorded during the quarter.
36
Shaw Communications Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
May 31, 2017 and 2016
[all amounts in millions of Canadian dollars, except share and per share amounts]
The following table summarizes the carrying value of the major classes of assets and
liabilities of the disposal group which were classified as held for sale as at May 31, 2017:
|
|
|
|
|
|
|
May 31, 2017
|
|
Accounts receivable
|
|
|
6
|
|
Inventories
|
|
|
5
|
|
Other current assets
|
|
|
1
|
|
Other long-term assets
|
|
|
25
|
|
Goodwill
|
|
|
24
|
|
|
|
|
|
|
Total assets of the discontinued operations classified as held for sale
|
|
|
61
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
5
|
|
Deferred credits
|
|
|
32
|
|
Deferred income tax liabilities
|
|
|
(2
|
)
|
|
|
|
|
|
Total liabilities of the discontinued operations classified as held for sale
|
|
|
35
|
|
|
|
|
|
|
A reconciliation of the major classes of line items related to Shaw Tracking constituting income from discontinued operations,
net of tax, as presented in the consolidated statements of income is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Revenue
|
|
|
8
|
|
|
|
8
|
|
|
|
25
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating, general and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee salaries and benefits
|
|
|
2
|
|
|
|
2
|
|
|
|
5
|
|
|
|
5
|
|
Purchases of goods and services
|
|
|
4
|
|
|
|
4
|
|
|
|
15
|
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
6
|
|
|
|
20
|
|
|
|
18
|
|
Amortization
|
|
|
1
|
|
|
|
1
|
|
|
|
2
|
|
|
|
3
|
|
Impairment of goodwill/disposal group
|
|
|
32
|
|
|
|
17
|
|
|
|
32
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations before tax
|
|
|
(31
|
)
|
|
|
(16
|
)
|
|
|
(29
|
)
|
|
|
(13
|
)
|
Income taxes
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of tax
|
|
|
(31
|
)
|
|
|
(16
|
)
|
|
|
(30
|
)
|
|
|
(14
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shaw Media
In the second
quarter of fiscal 2016, the Company announced it had entered into an agreement with Corus Entertainment Inc. (Corus), a related party subject to common voting control, to sell 100% of its wholly owned subsidiary Shaw Media Inc.
(Shaw Media) for a purchase price of approximately $2.65 billion comprised of $1.85 billion of cash and 71,364,853 Corus Class B non-voting participating shares. The transaction closed on April 1, 2016.
Although, through holding of the shares in Corus, the Company effectively retains an indirect, non-controlling interest in the former Media division
subsequent to the sale, the Company no longer has control over the division. Accordingly, the operating results and operating cash flows for the previously reported Media segment are presented as discontinued operations separate from the
Companys continuing operations.
37
Shaw Communications Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
May 31, 2017 and 2016
[all amounts in millions of Canadian dollars, except share and per share amounts]
A reconciliation of the major classes of line items related to Shaw Media constituting
income from discontinued operations, net of tax, as presented in the consolidated statements of income is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Revenue
|
|
|
|
|
|
|
88
|
|
|
|
|
|
|
|
610
|
|
Eliminations
(1)
|
|
|
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
(46
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81
|
|
|
|
|
|
|
|
564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating, general and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee salaries and benefits
|
|
|
|
|
|
|
16
|
|
|
|
|
|
|
|
109
|
|
Purchases of goods and
services
(2)
|
|
|
|
|
|
|
32
|
|
|
|
|
|
|
|
272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48
|
|
|
|
|
|
|
|
381
|
|
Eliminations
(1)
|
|
|
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
(46
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41
|
|
|
|
|
|
|
|
335
|
|
Restructuring costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
|
|
Accretion of long-term liabilities and provisions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
Other losses
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations before tax and gain on divestiture
|
|
|
|
|
|
|
41
|
|
|
|
|
|
|
|
216
|
|
Income taxes
|
|
|
|
|
|
|
10
|
|
|
|
|
|
|
|
57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net of tax, before gain on
divestiture
|
|
|
|
|
|
|
31
|
|
|
|
|
|
|
|
159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on Divestiture
|
|
|
|
|
|
|
662
|
|
|
|
|
|
|
|
662
|
|
Income taxes
|
|
|
|
|
|
|
47
|
|
|
|
|
|
|
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Discontinued Operations, Net of Tax
|
|
|
|
|
|
|
646
|
|
|
|
|
|
|
|
774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Eliminations relate to intercompany transactions between continuing and discontinued operations. The costs are included in continuing operations as they continue to be incurred subsequent to the disposition.
|
(2)
|
As of the date the Media division met the criteria to be classified as held for sale in the prior year, the Company ceased amortization of non-current assets of the division, including program rights, property, plant
and equipment, intangibles and other. Amortization that would otherwise have been taken in the three and nine month periods ended May 31, 2016 amounted to $15 and $35 for program rights and $2 and $6 for property, plant and equipment,
intangibles and other.
|
4.
|
BUSINESS SEGMENT INFORMATION
|
The Companys chief operating decision makers are the CEO, President
and CFO and they review the operating performance of the Company by segments which comprise Consumer, Business Network Services, Business Infrastructure Services and Wireless. The chief operating decision makers utilize operating income before
restructuring costs and amortization for each segment as a key measure in making operating decisions and assessing performance. The Consumer segment provides Cable telecommunications services including Video, Internet, Wi-Fi, Phone, and Satellite
Video to Canadian consumers. The Business Network Services segment provides data networking, video, voice and Internet services through a national fibre-optic backbone network and also provides satellite Video services to North American businesses
and public sector entities. The Business Infrastructure Services segment provides data centre colocation, cloud and managed services to North American and European businesses. The Wireless segment, formed by the acquisition of Freedom Mobile
(formerly, WIND Mobile) on March 1, 2016, provides wireless services for voice and data communications serving customers in Ontario, British Columbia and Alberta. All of the Companys reportable segments are substantially located in Canada
with the exception of Business Infrastructure Services, consisting primarily of ViaWest, which has operations located in the United States and Europe. Information on operations by segment is as follows:
38
Shaw Communications Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
May 31, 2017 and 2016
[all amounts in millions of Canadian dollars, except share and per share amounts]
Operating information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
|
|
|
930
|
|
|
|
935
|
|
|
|
2,810
|
|
|
|
2,813
|
|
Business Network Services
|
|
|
137
|
|
|
|
128
|
|
|
|
410
|
|
|
|
384
|
|
Business Infrastructure Services
|
|
|
96
|
|
|
|
86
|
|
|
|
277
|
|
|
|
248
|
|
Wireless
|
|
|
154
|
|
|
|
132
|
|
|
|
433
|
|
|
|
132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,317
|
|
|
|
1,281
|
|
|
|
3,930
|
|
|
|
3,577
|
|
Intersegment eliminations
|
|
|
(6
|
)
|
|
|
(6
|
)
|
|
|
(18
|
)
|
|
|
(24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,311
|
|
|
|
1,275
|
|
|
|
3,912
|
|
|
|
3,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income before restructuring costs and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
|
|
|
401
|
|
|
|
427
|
|
|
|
1,209
|
|
|
|
1,249
|
|
Business Network Services
|
|
|
70
|
|
|
|
64
|
|
|
|
211
|
|
|
|
189
|
|
Business Infrastructure Services
|
|
|
37
|
|
|
|
33
|
|
|
|
104
|
|
|
|
91
|
|
Wireless
|
|
|
42
|
|
|
|
29
|
|
|
|
101
|
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
550
|
|
|
|
553
|
|
|
|
1,625
|
|
|
|
1,558
|
|
Restructuring costs
|
|
|
(43
|
)
|
|
|
(22
|
)
|
|
|
(54
|
)
|
|
|
(22
|
)
|
Amortization
|
|
|
(272
|
)
|
|
|
(249
|
)
|
|
|
(791
|
)
|
|
|
(701
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
235
|
|
|
|
282
|
|
|
|
780
|
|
|
|
835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
|
|
|
52
|
|
|
|
55
|
|
|
|
139
|
|
|
|
186
|
|
Other/non-operating
|
|
|
(11
|
)
|
|
|
(11
|
)
|
|
|
(24
|
)
|
|
|
(22
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41
|
|
|
|
44
|
|
|
|
115
|
|
|
|
164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Capital expenditures accrual basis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer and Business Network Services
|
|
|
209
|
|
|
|
180
|
|
|
|
588
|
|
|
|
583
|
|
Business Infrastructure Services
|
|
|
33
|
|
|
|
35
|
|
|
|
84
|
|
|
|
105
|
|
Wireless
|
|
|
58
|
|
|
|
51
|
|
|
|
176
|
|
|
|
51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300
|
|
|
|
266
|
|
|
|
848
|
|
|
|
739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment costs (net of revenue)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer and Business Network Services
|
|
|
23
|
|
|
|
21
|
|
|
|
63
|
|
|
|
68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures and equipment costs (net)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer and Business Network Services
|
|
|
232
|
|
|
|
201
|
|
|
|
651
|
|
|
|
651
|
|
Business Infrastructure Services
|
|
|
33
|
|
|
|
35
|
|
|
|
84
|
|
|
|
105
|
|
Wireless
|
|
|
58
|
|
|
|
51
|
|
|
|
176
|
|
|
|
51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
323
|
|
|
|
287
|
|
|
|
911
|
|
|
|
807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment
|
|
|
302
|
|
|
|
257
|
|
|
|
829
|
|
|
|
740
|
|
Additions to equipment costs (net)
|
|
|
21
|
|
|
|
20
|
|
|
|
58
|
|
|
|
62
|
|
Additions to other intangibles
|
|
|
27
|
|
|
|
24
|
|
|
|
74
|
|
|
|
77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total of capital expenditures and equipment costs (net) per Consolidated Statements of Cash
Flows
|
|
|
350
|
|
|
|
301
|
|
|
|
961
|
|
|
|
879
|
|
Increase/decrease in working capital and other liabilities related to capital
expenditures
|
|
|
(29
|
)
|
|
|
(15
|
)
|
|
|
(55
|
)
|
|
|
(71
|
)
|
Decrease in customer equipment financing receivables
|
|
|
2
|
|
|
|
1
|
|
|
|
5
|
|
|
|
5
|
|
Less: Proceeds on disposal of property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital expenditures and equipment costs (net) reported by segments
|
|
|
323
|
|
|
|
287
|
|
|
|
911
|
|
|
|
807
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39
Shaw Communications Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
May 31, 2017 and 2016
[all amounts in millions of Canadian dollars, except share and per share amounts]
In September 2016, shomi, a joint venture of the Company and Rogers Communications Inc.,
announced the decision to wind down its operations with service ending on November 30, 2016. The Company recorded a provision of $107 in the first quarter relating to the wind down of the investment. In the current quarter, a reversal of $15 of
the provision was recorded, resulting in a aggregate provision of $92 for the year.
6.
|
OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES AND RESTRUCTURING COSTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Employee salaries and benefits
|
|
|
267
|
|
|
|
234
|
|
|
|
724
|
|
|
|
640
|
|
Purchase of goods and services
|
|
|
537
|
|
|
|
510
|
|
|
|
1,617
|
|
|
|
1,377
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
804
|
|
|
|
744
|
|
|
|
2,341
|
|
|
|
2,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 31, 2017
|
|
|
August 31, 2016
|
|
|
|
Long-term
debt at
amortized
cost
$
|
|
|
Adjustment
for finance
costs
$
|
|
|
Long-term
debt repayable
at maturity
$
|
|
|
Long-term
debt at
amortized
cost
$
|
|
|
Adjustment
for finance
costs
$
|
|
|
Long-term
debt repayable
at maturity
$
|
|
Corporate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank loans
(1)
|
|
|
511
|
|
|
|
|
|
|
|
511
|
|
|
|
498
|
|
|
|
|
|
|
|
498
|
|
Cdn fixed rate senior notes-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.70% due March 2, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
400
|
|
|
|
|
|
|
|
400
|
|
5.65% due October 1, 2019
|
|
|
1,247
|
|
|
|
3
|
|
|
|
1,250
|
|
|
|
1,246
|
|
|
|
4
|
|
|
|
1,250
|
|
5.50% due December 7, 2020
|
|
|
498
|
|
|
|
2
|
|
|
|
500
|
|
|
|
498
|
|
|
|
2
|
|
|
|
500
|
|
3.15% due February 19, 2021
|
|
|
298
|
|
|
|
2
|
|
|
|
300
|
|
|
|
298
|
|
|
|
2
|
|
|
|
300
|
|
4.35% due January 31, 2024
|
|
|
497
|
|
|
|
3
|
|
|
|
500
|
|
|
|
497
|
|
|
|
3
|
|
|
|
500
|
|
3.80% due March 1, 2027
|
|
|
298
|
|
|
|
2
|
|
|
|
300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.75% due November 9, 2039
|
|
|
1,419
|
|
|
|
31
|
|
|
|
1,450
|
|
|
|
1,418
|
|
|
|
32
|
|
|
|
1,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,768
|
|
|
|
43
|
|
|
|
4,811
|
|
|
|
4,855
|
|
|
|
43
|
|
|
|
4,898
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ViaWest credit facility
|
|
|
730
|
|
|
|
11
|
|
|
|
741
|
|
|
|
682
|
|
|
|
13
|
|
|
|
695
|
|
ViaWest other
|
|
|
28
|
|
|
|
|
|
|
|
28
|
|
|
|
31
|
|
|
|
|
|
|
|
31
|
|
Freedom Mobile other
|
|
|
2
|
|
|
|
|
|
|
|
2
|
|
|
|
4
|
|
|
|
|
|
|
|
4
|
|
Burrard Landing Lot 2 Holdings Partnership
|
|
|
40
|
|
|
|
|
|
|
|
40
|
|
|
|
40
|
|
|
|
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated debt
|
|
|
5,568
|
|
|
|
54
|
|
|
|
5,622
|
|
|
|
5,612
|
|
|
|
56
|
|
|
|
5,668
|
|
Less current portion
(2)
|
|
|
12
|
|
|
|
|
|
|
|
12
|
|
|
|
412
|
|
|
|
|
|
|
|
412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,556
|
|
|
|
54
|
|
|
|
5,610
|
|
|
|
5,200
|
|
|
|
56
|
|
|
|
5,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Bank loans include borrowings of USD $380 at May 31, 2017 (August 31, 2016 USD $380).
|
(2)
|
Current portion of long-term debt includes amounts due within one year in respect of ViaWests term loan, and ViaWests and Freedom Mobiles finance lease obligations and landlord debt.
|
In December 2016, the Company amended the terms of its bank credit facility to extend the maturity date from December 2019 to December 2021.
On February 28, 2017, the Company issued $300 senior notes at a rate of 3.80% due March 1, 2027, and on March 2, 2017 the Company repaid $400
5.70% senior notes at their maturity.
40
Shaw Communications Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
May 31, 2017 and 2016
[all amounts in millions of Canadian dollars, except share and per share amounts]
Changes in share capital during the nine months ended May 31, 2017 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A Shares
|
|
|
Class B Non-Voting
Shares
|
|
|
Series A
Preferred Shares
|
|
|
Series B
Preferred Shares
|
|
|
|
Number
|
|
|
$
|
|
|
Number
|
|
|
$
|
|
|
Number
|
|
|
$
|
|
|
Number
|
|
|
$
|
|
August 31, 2016
|
|
|
22,420,064
|
|
|
|
2
|
|
|
|
463,827,512
|
|
|
|
3,504
|
|
|
|
10,012,393
|
|
|
|
245
|
|
|
|
1,987,607
|
|
|
|
48
|
|
Issued upon stock option plan exercises
|
|
|
|
|
|
|
|
|
|
|
1,595,325
|
|
|
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued pursuant to dividend reinvestment plan
|
|
|
|
|
|
|
|
|
|
|
5,527,957
|
|
|
|
149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 31, 2017
|
|
|
22,420,064
|
|
|
|
2
|
|
|
|
470,950,794
|
|
|
|
3,698
|
|
|
|
10,012,393
|
|
|
|
245
|
|
|
|
1,987,607
|
|
|
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share calculations are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Numerator for basic and diluted earnings per share ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations
|
|
|
164
|
|
|
|
74
|
|
|
|
400
|
|
|
|
326
|
|
Deduct: dividends on Preferred Shares
|
|
|
(2
|
)
|
|
|
(3
|
)
|
|
|
(6
|
)
|
|
|
(11
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders from continuing operations
|
|
|
162
|
|
|
|
71
|
|
|
|
394
|
|
|
|
315
|
|
Net income from discontinued operations
|
|
|
(31
|
)
|
|
|
630
|
|
|
|
(30
|
)
|
|
|
760
|
|
Deduct: net income from discontinued operations attributable to non-controlling interests
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
(20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from discontinued operations attributable to common shareholders
|
|
|
(31
|
)
|
|
|
626
|
|
|
|
(30
|
)
|
|
|
740
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to common shareholders
|
|
|
131
|
|
|
|
697
|
|
|
|
364
|
|
|
|
1,055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator (millions of shares)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of Class A Shares and Class B Non-Voting Shares for basic earnings
per share
|
|
|
492
|
|
|
|
482
|
|
|
|
490
|
|
|
|
478
|
|
Effect of dilutive securities
(1)
|
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of Class A Shares and Class B Non-Voting Shares for diluted earnings
per share
|
|
|
493
|
|
|
|
483
|
|
|
|
491
|
|
|
|
479
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
0.33
|
|
|
|
0.14
|
|
|
|
0.80
|
|
|
|
0.66
|
|
Discontinued operations
|
|
|
(0.06
|
)
|
|
|
1.30
|
|
|
|
(0.06
|
)
|
|
|
1.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to common shareholders
|
|
|
0.27
|
|
|
|
1.44
|
|
|
|
0.74
|
|
|
|
2.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
0.33
|
|
|
|
0.14
|
|
|
|
0.80
|
|
|
|
0.66
|
|
Discontinued operations
|
|
|
(0.06
|
)
|
|
|
1.30
|
|
|
|
(0.06
|
)
|
|
|
1.54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to common shareholders
|
|
|
0.27
|
|
|
|
1.44
|
|
|
|
0.74
|
|
|
|
2.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 three and nine months ended May 31, 2017,
1,158,659 (2016 8,298,907) and 3,566,228 (2016 4,865,039) options were excluded from the diluted earnings per share calculation, respectively.
|
41
Shaw Communications Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
May 31, 2017 and 2016
[all amounts in millions of Canadian dollars, except share and per share amounts]
10.
|
OTHER COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE LOSS
|
Components of other comprehensive
income and the related income tax effects for the nine months ended May 31, 2017 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount
$
|
|
|
Income
taxes
$
|
|
|
Net
$
|
|
Items that may subsequently be reclassified to income
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized fair value of derivatives designated as cash flow hedges
|
|
|
3
|
|
|
|
(1
|
)
|
|
|
2
|
|
Adjustment for hedged items recognized in the period
|
|
|
(3
|
)
|
|
|
1
|
|
|
|
(2
|
)
|
Share of other comprehensive income of associates
|
|
|
7
|
|
|
|
|
|
|
|
7
|
|
Exchange differences on translation of a foreign operation
|
|
|
28
|
|
|
|
|
|
|
|
28
|
|
Exchange differences on translation of US denominated debt hedging a foreign operation
|
|
|
(12
|
)
|
|
|
|
|
|
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
|
|
|
|
|
|
|
|
23
|
|
Items that will not be subsequently be reclassified to income
|
|
|
|
|
|
|
|
|
|
|
|
|
Remeasurements on employee benefit plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
|
|
|
|
|
|
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of other comprehensive income and the related income tax effects for the three months ended May 31, 2017 are
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount
$
|
|
|
Income
taxes
$
|
|
|
Net
$
|
|
Items that may subsequently be reclassified to income
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized fair value of derivatives designated as cash flow hedges
|
|
|
2
|
|
|
|
(1
|
)
|
|
|
1
|
|
Adjustment for hedged items recognized in the period
|
|
|
(2
|
)
|
|
|
1
|
|
|
|
(1
|
)
|
Share of other comprehensive income of associates
|
|
|
(3
|
)
|
|
|
|
|
|
|
(3
|
)
|
Exchange differences on translation of a foreign operation
|
|
|
14
|
|
|
|
|
|
|
|
14
|
|
Exchange differences on translation of US denominated debt hedging a foreign operation
|
|
|
(6
|
)
|
|
|
|
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
5
|
|
Items that will not be subsequently be reclassified to income
|
|
|
|
|
|
|
|
|
|
|
|
|
Remeasurements on employee benefit plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
(23
|
)
|
|
|
6
|
|
|
|
(17
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18
|
)
|
|
|
6
|
|
|
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of other comprehensive income and the related income tax effects for the nine months ended May 31, 2016 are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount
$
|
|
|
Income
taxes
$
|
|
|
Net
$
|
|
Items that may subsequently be reclassified to income
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized fair value of derivativies designated as cash flow hedges
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
Share of other comprehensive income of associates
|
|
|
(1
|
)
|
|
|
|
|
|
|
(1
|
)
|
Exchange differences on translation of a foreign operation
|
|
|
(8
|
)
|
|
|
|
|
|
|
(8
|
)
|
Exchange differences on translation of US denominated debt hedging a foreign operation
|
|
|
5
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
(3
|
)
|
Items that will not be subsequently be reclassified to income
|
|
|
|
|
|
|
|
|
|
|
|
|
Remeasurements on employee benefit plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
(23
|
)
|
|
|
6
|
|
|
|
(17
|
)
|
Discontinued operations
|
|
|
2
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(24
|
)
|
|
|
6
|
|
|
|
(18
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42
Shaw Communications Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
May 31, 2017 and 2016
[all amounts in millions of Canadian dollars, except share and per share amounts]
Components of other comprehensive income and the related income tax effects for the
three months ended May 31, 2016 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount
$
|
|
|
Income
taxes
$
|
|
|
Net
$
|
|
Items that may subsequently be reclassified to income
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized fair value of derivatives designated as cash flows
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
Share of other comprehensive income of associates
|
|
|
(1
|
)
|
|
|
|
|
|
|
(1
|
)
|
Exchange differences on translation of a foreign operation
|
|
|
(36
|
)
|
|
|
|
|
|
|
(36
|
)
|
Exchange differences on translation of US denominated debt hedging a foreign operation
|
|
|
16
|
|
|
|
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(20
|
)
|
|
|
|
|
|
|
(20
|
)
|
Items that will not be subsequently be reclassified to income
|
|
|
|
|
|
|
|
|
|
|
|
|
Remeasurements on employee benefit plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
(15
|
)
|
|
|
4
|
|
|
|
(11
|
)
|
Discontinued operations
|
|
|
4
|
|
|
|
(1
|
)
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(31
|
)
|
|
|
3
|
|
|
|
(28
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive loss is comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
May 31, 2017
$
|
|
|
August 31, 2016
$
|
|
Items that may subsequently be reclassified to income
|
|
|
|
|
|
|
|
|
Change in unrealized fair value of derivatives designated as cash flow hedges
|
|
|
2
|
|
|
|
1
|
|
Share of other comprehensive income (loss) of associates
|
|
|
2
|
|
|
|
(5
|
)
|
Foreign currency translation adjustments
|
|
|
123
|
|
|
|
108
|
|
Items that will not be subsequently reclassified to income
|
|
|
|
|
|
|
|
|
Remeasurements on employee benefit plans:
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
(156
|
)
|
|
|
(156
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
(29
|
)
|
|
|
(52
|
)
|
|
|
|
|
|
|
|
|
|
11.
|
STATEMENTS OF CASH FLOWS
|
Disclosures with respect to the Consolidated Statements of Cash Flows are as
follows:
(i)
|
Funds flow from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Net income from continuing operations
|
|
|
164
|
|
|
|
74
|
|
|
|
400
|
|
|
|
326
|
|
Adjustments to reconcile net income to funds flow from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
273
|
|
|
|
252
|
|
|
|
794
|
|
|
|
708
|
|
Deferred income tax expense (recovery)
|
|
|
(1
|
)
|
|
|
(27
|
)
|
|
|
10
|
|
|
|
(52
|
)
|
Share-based compensation
|
|
|
1
|
|
|
|
1
|
|
|
|
3
|
|
|
|
2
|
|
Defined benefit pension plans
|
|
|
4
|
|
|
|
3
|
|
|
|
8
|
|
|
|
(17
|
)
|
Accretion of long-term liabilities and provisions
|
|
|
(1
|
)
|
|
|
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
Equity loss (income) of an associate or joint venture
|
|
|
(25
|
)
|
|
|
25
|
|
|
|
(62
|
)
|
|
|
61
|
|
Provision (recovery) for investment loss
|
|
|
(15
|
)
|
|
|
|
|
|
|
92
|
|
|
|
|
|
Loss on write-down of assets
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
8
|
|
Loss on write-down of investments
|
|
|
|
|
|
|
70
|
|
|
|
|
|
|
|
70
|
|
Other
|
|
|
(8
|
)
|
|
|
3
|
|
|
|
(17
|
)
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds flow from continuing operations
|
|
|
392
|
|
|
|
402
|
|
|
|
1,227
|
|
|
|
1,110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43
Shaw Communications Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
May 31, 2017 and 2016
[all amounts in millions of Canadian dollars, except share and per share amounts]
(ii)
|
Interest and income taxes paid and interest received and classified as operating activities are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Interest paid
|
|
|
96
|
|
|
|
131
|
|
|
|
250
|
|
|
|
280
|
|
Income taxes paid (net of refunds)
|
|
|
15
|
|
|
|
15
|
|
|
|
204
|
|
|
|
227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(iii)
|
Non-cash transactions:
|
The Consolidated Statements of Cash Flows exclude the following non-cash transactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Issuance of Class B Non-Voting Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend reinvestment plan
|
|
|
50
|
|
|
|
46
|
|
|
|
149
|
|
|
|
139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 judgement and, therefore, cannot be determined with precision. Changes in assumptions could
significantly affect the estimates.
Financial instruments
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.
(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.
The carrying value of long-term debt is at amortized cost based on the initial
fair value as determined at the time of issuance or at the time of a business acquisition. The fair value of publicly traded notes is based upon current trading values. The fair value of finance lease obligations is determined by discounting future
cash flows using a rate for loans with similar terms, conditions and maturity dates. The carrying value of bank credit facilities approximates fair value as the debt bears interest at rates that fluctuate with market values. Other notes and
debentures are valued based upon current trading values for similar instruments.
44
Shaw Communications Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
May 31, 2017 and 2016
[all amounts in millions of Canadian dollars, except share and per share amounts]
(iv)
|
Other long-term liabilities
|
The fair value of contingent consideration arising from a business
acquisition is determined by calculating the present value of the probability weighted assessment of the likelihood that revenue targets will be met and the estimated timing of such payments.
(v)
|
Derivative financial instruments
|
The fair value of US currency forward purchase contracts is
determined by an estimated credit-adjusted mark-to-market valuation using observable forward exchange rates at the end of reporting periods and contract forward rates.
The carrying values and estimated fair values of long-term debt and a contingent liability are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 31, 2017
|
|
|
August 31, 2016
|
|
|
|
Carrying
value
|
|
|
Estimated
fair value
|
|
|
Carrying
value
|
|
|
Estimated
fair value
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt (including current portion)
(1)
|
|
|
5,568
|
|
|
|
6,262
|
|
|
|
5,612
|
|
|
|
6,252
|
|
Contingent liability
(2)
|
|
|
1
|
|
|
|
1
|
|
|
|
2
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Level 2 fair value determined by valuation techniques using inputs based on observable market data, either directly or indirectly, other than quoted prices.
|
(2)
|
Level 3 fair value determined by valuation techniques using inputs that are not based on observable market data.
|
13.
|
INVESTMENTS AND OTHER ASSETS
|
Corus Entertainment Inc.
In connection with the sale of the Media division to Corus in 2016, the Company received 71,364,853 Corus Class B non-voting participating shares representing
approximately 37% of Corus total issued equity of Class A and Class B shares. The Company participates in Corus dividend reinvestment program for this initial investment in Corus Class B Shares. For the three and nine months ended
May 31, 2017, the Company received dividends of $22 (2016 $14) and $65 (2016 $14) from Corus, of which $20 (2016 $14) and $61 (2016 $14) were reinvested in additional Corus Class B shares, respectively. At
May 31, 2017, the Company owned 79,119,000 (2016 72,499,684) Corus Class B shares having a fair value of $1,056 (2016 $911) and representing 39% (2016 37%) of the total issued equity of Corus. The Companys weighted
average ownership of Corus for the period from September 1, 2016 to May 31, 2017 was 39% (April 1 to May 31, 2016 37%).
45
Shaw Communications Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
May 31, 2017 and 2016
[all amounts in millions of Canadian dollars, except share and per share amounts]
Summary financial information for Corus and reconciliation with the carrying amount of
the investment in the unaudited interim condensed consolidated balance sheets is as follows:
|
|
|
|
|
|
|
|
|
|
|
May 31, 2017
|
|
|
August 31, 2016
|
|
Current assets
|
|
|
587
|
|
|
|
470
|
|
Non-current assets
|
|
|
5,583
|
|
|
|
5,623
|
|
Current liabilities
|
|
|
(679
|
)
|
|
|
(532
|
)
|
Non-current liabilities
|
|
|
(2,905
|
)
|
|
|
(3,085
|
)
|
|
|
|
|
|
|
|
|
|
Net assets
|
|
|
2,586
|
|
|
|
2,476
|
|
Less: non-controlling interests
|
|
|
(160
|
)
|
|
|
(158
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
2,426
|
|
|
|
2,318
|
|
|
|
|
|
|
|
|
|
|
Carrying amount of the investment
|
|
|
883
|
|
|
|
817
|
|
|
|
|
|
|
|
|
|
|
Summarized statement of earnings of Corus:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended May 31,
|
|
|
Nine months ended May 31,
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Revenue
|
|
|
462
|
|
|
|
361
|
|
|
|
1,298
|
|
|
|
787
|
|
Net income attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders
|
|
|
67
|
|
|
|
(16
|
)
|
|
|
163
|
|
|
|
128
|
|
Non-controlling interest
|
|
|
9
|
|
|
|
5
|
|
|
|
25
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76
|
|
|
|
(11
|
)
|
|
|
188
|
|
|
|
135
|
|
Other comprehensive income, attributable to shareholders
|
|
|
(7
|
)
|
|
|
(4
|
)
|
|
|
20
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
69
|
|
|
|
(15
|
)
|
|
|
208
|
|
|
|
132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity income from associates
(1)
|
|
|
26
|
|
|
|
(10
|
)
|
|
|
62
|
|
|
|
(10
|
)
|
Other comprehensive income from equity accounted associates
(1)
|
|
|
(3
|
)
|
|
|
(1
|
)
|
|
|
7
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
|
|
|
|
(11
|
)
|
|
|
69
|
|
|
|
(11
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The Companys share of income and other comprehensive income reflect the weighted average proportion of Corus net income and other comprehensive income attributable to shareholders for the three and nine months
ended May 31, 2017 and for the two months ended May 31, 2016.
|
During 2016, the Company underwent a restructuring following a set of significant
asset realignment initiatives, including the acquisition of Freedom Mobile and the divestiture of Shaw Media.
During the current fiscal year, the Company
restructured certain operations within the Consumer segment and announced a realignment to integrate certain Consumer/Business Network Services operations and Freedom Mobile. In connection with the restructuring and realignment, the Company recorded
$54 primarily related to severance and employee related costs in respect of the approximate 360 affected employees. The majority of the remaining costs are expected to be paid in the current year. The continuity of the restructuring provisions is as
follows.
|
|
|
|
|
|
|
$
|
|
Balance as at September 1, 2016
|
|
|
4
|
|
Additions
|
|
|
54
|
|
Payments
|
|
|
(44
|
)
|
|
|
|
|
|
Balance as at May 31, 2017
|
|
|
14
|
|
|
|
|
|
|
46
Shaw Communications Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
May 31, 2017 and 2016
[all amounts in millions of Canadian dollars, except share and per share amounts]
In the current year, other losses include a provision of $92 in respect of the
Companys investment in shomi which announced a wind down of operations during the first quarter. In the prior year, other losses include a write-down of $51 in respect of the Companys investment in shomi, a write-down of $20 in respect
of a private portfolio investment and asset write-downs of $6. Other gains/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 Companys share of the operations of Burrard Landing Lot 2 Holdings Partnership.
Sale of ViaWest, Inc.
On June 13, 2017 the Company announced it had reached an agreement to sell 100% of its wholly owned subsidiary ViaWest, Inc. for cash proceeds of
approximately USD $1.68 billion. In connection with the sale, the Company intends to repay ViaWest debt of approximately USD $580 and amounts outstanding under the Companys bank credit facility of USD $380. ViaWest comprises substantially all
of the Business Infrastructure Services division of the Company. The Transaction is subject to customary conditions, including U.S. regulatory approval and is expected to close by the end of fiscal 2017.
Acquisition of wireless spectrum licences
On
June 13, 2017 the Company announced it had entered into a definitive agreement to acquire 700 MHz and 2500 MHz wireless spectrum licences for $430. The spectrum licences being acquired comprise 10 MHz licences of 700 MHz spectrum in each of
British Columbia, Alberta, and Southern Ontario, as well as 20 MHz licences of 2500 MHz spectrum in each of Vancouver, Edmonton, Calgary, and Toronto.
The purchase is subject to customary closing conditions and all necessary regulatory approvals from the Ministry of Innovation, Science and Economic
Development Canada (ISED), and under the Competition Act. The purchase will be funded using a combination of cash on hand and the Companys existing bank credit facility, and is expected to close in the Summer of 2017.
47