Shaw Communications Inc.
demographic assumptions. The cost and related accrued benefit obligation of the Companys
non-registered
pension plans are determined using actuarial
valuations. The actuarial valuations involve estimates and actuarial assumptions including discount rates and rate of compensation increase (financial assumptions) as well as mortality rates and retirement rates (demographic assumptions). Due to the
long-term nature of the
non-registered
pension plans, such estimates are subject to significant uncertainty. Remeasurements related to the effect of experience adjustments arise when the
non-registered
pension plans experience differs from the experience expected using the actuarial assumptions, such as mortality and retirement rates.
Shareholders equity decreased $197 million mainly due to a decrease in retained earnings of $545 million partially offset by an increase in
share capital of $259 million and accumulated other comprehensive income of $92 million. Share capital increased due to the issuance of 9,843,483 Class B
non-voting
participating shares
(Class B
Non-Voting
Shares) under the Companys option plan and Dividend Reinvestment Plan (DRIP). Retained earnings decreased due to dividends of $605 million, offset by
current year income of $60 million. Accumulated other comprehensive loss decreased due to the
re-measurement
recorded on employee benefit plans and a change in unrealized fair value of derivatives.
As at October 15, 2018, there were 484,931,716 Class B
Non-Voting
Shares, 10,012,393 Series A Shares,
1,987,607 Series B Shares and 22,420,064 Class A Shares issued and outstanding. As at October 15, 2018, 10,254,691 Class B
Non-Voting
Shares were issuable on exercise of outstanding options.
Shaw is traded on the Toronto and New York stock exchanges and is included in the S&P/TSX 60 Index (Trading Symbols: TSX SJR.B, SJR.PR.A, SJR.PR.B, NYSE SJR, and TSXV SJR.A). For more information, please visit www.shaw.ca.
Liquidity and capital resources
In the twelve-month period ended August 31, 2018, the Company generated $411 million of free cash flow. Shaw used its free cash flow along with
proceeds on issuance of Class B
Non-Voting
Shares of $43 million, proceeds from the sale of the Shaw Tracking business of $18 million, and cash on hand to pay common share dividends of
$384 million, fund the net working capital change of $107 million and pay restructuring costs of $177 million.
As at August 31, 2018,
the Company had $384 million of cash on hand and its $1.5 billion fully undrawn bank credit facility. The facility can be used for working capital and general corporate purposes.
On June 19, 2018, the Company established an accounts receivable securitization program with a Canadian financial institution which allows it to sell
certain trade receivables into the program. As at August 31, 2018, the proceeds of the sales were committed up to a maximum of $100 million (with $40 million currently drawn under the program). The Company continues to service and
retain substantially all of the risks and rewards relating to the trade receivables sold, and therefore, the trade receivables remain recognized on the Companys Consolidated Statement of Financial Position and the funding received is recorded
as a current liability (revolving floating rate loans) secured by the trade receivables. The buyers interest in the accounts receivable ranks ahead of the Companys interest and the program restricts it from using the trade receivables as
collateral for any other purpose. The buyer of the trade receivable has no claim on any of our other assets.
As at August 31, 2018, the net debt
leverage ratio for the Company is 1.9x, which is consistent with August 31, 2017. Having regard to prevailing competitive, operational and capital market conditions, the Board of Directors has determined that having this ratio in the range of
2.0 to 2.5x would be optimal leverage for the Company in the current environment. Should the ratio fall below this, other than on a temporary basis, the Board may choose to recapitalize back into this optimal range. The Board may also determine to
increase the Companys debt above these levels to finance specific strategic opportunities
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