Edgar Filing: SHAW COMMUNICATIONS INC

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934

For the month of January 2010

Shaw Communications Inc.

(Translation of registrant’s name into English)

Suite 900, 630 – 3^rd Avenue S.W., Calgary, Alberta T2P 4L4 (403) 750-4500

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F o Form 40-F þ

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): o

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): o

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o No þ

If “ Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant, Shaw Communications Inc., has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Date:		January 14, 2010 Shaw Communications Inc.



By:	/s/ Steve Wilson
	Steve Wilson
	Sr. V.P., Chief Financial Officer Shaw Communications Inc.

NEWS RELEASE

Shaw announces first quarter results

Calgary, Alberta (January 14, 2010) - Shaw Communications Inc. announced results for the first quarter ended November 30, 2009. Consolidated service revenue for the three month period of $906 million was up 11% over the same period last year. Service operating income before amortization¹of $475 million improved 29% over the comparable period. Excluding a one-time CRTC Part II fee recovery the increase in service operating income before amortization was almost 9%. Funds flow from operations² was $339 million for the quarter compared to $312 million in the same period last year.

During the quarter Digital customers were up 88,259 to 1,409,983, and Internet and Digital Phone lines grew by 36,242 to 1,744,577 and 61,461 to 923,365, respectively. Basic customers declined by 1,416 and DTH customers increased 1,097.

Free cash flow¹ for the quarter was $165 million compared to $114 million for the same period last year. The improvement was primarily due to increased service operating income before amortization and lower capital investment both of which were partially offset by cash taxes.

Chief Executive Officer and Vice Chair Jim Shaw stated, “Our first quarter is off to a solid start. Through high quality customer service, attractive and compelling product choice, and valuable bundled service offerings, we continue to successfully compete in the current landscape.”

Net income of $114 million or $0.26 per share for the quarter ended November 30, 2009 compared to $123 million or $0.29 per share for the same quarter last year. All periods included non-operating items which are more fully detailed in Management’s Discussions and Analysis (MD&A).³ The current period included debt retirement costs and amounts related to financial instruments of $82 million and $45 million, respectively. Excluding the non-operating items, net income for the current three month period ended November 30, 2009 would have been $180 million compared to $122 million in the same period last year.

Service revenue in the Cable division was up 13% for the three month period to $709 million. The improvement was primarily driven by customer growth, including acquisitions, and rate increases. Service operating income before amortization was up 26% including a one-time Part II fee recovery. Excluding the one-time recovery, the growth was over 9%.

Service revenue in the Satellite division was $197 million, up 5% over the comparable period last year. Service operating income before amortization for the quarter was $94 million compared to $65 million for the same period last year. Excluding the impact of the one-time Part II fee recovery the growth was 4%.

During the quarter the Company completed the acquisition of Mountain Cablevision operating in Hamilton, Ontario adding approximately 41,000 Basic cable customers, including 24,000 Digital subscribers, as well as 30,000 Internet subscribers, and 32,000 Digital Phone lines.

On October 1, 2009 the Company closed a $1.25 billion offering of 5.65% senior notes due October 1, 2019. The net proceeds were used to early repay near term maturing debt, including US$440 million Senior Notes and US$225 million Senior Notes on October 13, 2009 and US$300 million Senior Notes on October 20, 2009.

On November 9, 2009 the Company closed a $650 million offering of 6.75% Senior Notes due November 9, 2039.

Mr. Shaw continued, “The successful debt offerings at attractive rates completed during the quarter demonstrate the financial and operational strength of the business. Our solid balance sheet and moderate risk profile have allowed us to use current economic circumstances and capital market conditions to our advantage to strengthen our capital structure and lower costs.”

In November 2009 Shaw received approval from the TSX to renew its normal course issuer bid (“NCIB”) to purchase Class B Non-Voting Shares for a further one year period. In the current quarter the Company repurchased 1,500,000 Class B Non-Voting Shares for $28 million and subsequent to the quarter end, Shaw repurchased a further 3,000,000 Class B Non-Voting Shares for $60 million.

Today, Shaw’s Board of Directors will be reviewing the current dividend rate. Should any changes be made, they will be confirmed by separate press release.

Mr. Shaw concluded “Our performance is on track. Our strong management team continues to execute on strategic initiatives to deliver long term sustainable growth. With this focus, our commitment to customer service, and the strength of our delivery system including our network infrastructure and employee base we believe we are positioned to deliver another solid year of financial and operational performance. During fiscal 2010 we also plan to take initial steps to commence wireless activities, with build out planned over the next several years.”

Shaw Communications Inc. is a diversified communications company whose core business is providing broadband cable television, High-Speed Internet, Digital Phone, telecommunications services (through Shaw Business Solutions) and satellite direct-to-home services (through Shaw Direct). The Company serves 3.4 million customers, including over 1.7 million Internet and 900,000 Digital Phone customers, through a reliable and extensive network, which comprises 625,000 kilometres of fibre. Shaw is traded on the Toronto and New York stock exchanges and is included in the S&P/TSX 60 Index (Symbol: TSX – SJR.B, NYSE – SJR).

The accompanying Management’s Discussion and Analysis forms part of this news release and the “Caution Concerning Forward Looking Statements” applies to all forward-looking statements made in this news release.

For more information, please contact:

Shaw Investor Relations
Investor.relations@sjrb.ca


1		See definitions and discussion under Key Performance Drivers in MD&A.

2		Funds flow from operations is before changes in non-cash working capital balances related to operations as presented in the unaudited interim Consolidated Statements of Cash Flows.

3		See reconciliation of Net Income in Consolidated Overview in MD&A

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS
NOVEMBER 30, 2009

January 14, 2009

Certain statements in this report may constitute forward-looking statements. Included herein is a “Caution Concerning Forward-Looking Statements” section which should be read in conjunction with this report.

The following should also be read in conjunction with Management’s Discussion and Analysis included in the Company’s August 31, 2009 Annual Report including the Consolidated Financial Statements and the Notes thereto and the unaudited interim Consolidated Financial Statements and the Notes thereto of the current quarter.

CONSOLIDATED RESULTS OF OPERATIONS
FIRST QUARTER ENDING NOVEMBER 30, 2009

Selected Financial Highlights


	Three months ended November 30,
							Change
	2009			2008			%

($000’s Cdn except per share amounts)
Operations:
Service revenue		905,934			817,468			10.8
Service operating income before amortization ^{(1) (2)}		474,952			368,330			28.9
Operating margin^{(1) (2) (3)}		52.4	%		45.1	%		7.3
Funds flow from operations ⁽⁴⁾		338,952			311,967			8.6
Net income ⁽²⁾		114,229			123,474			(7.5	)
Per share data:
Earnings per share — basic and diluted	$	0.26		$	0.29
Weighted average participating shares outstanding during period (000’s)		432,507			427,764


⁽¹⁾		See definition under Key Performance Drivers in Management’s Discussion and Analysis.

⁽²⁾		Service operating income before amortization, Operating margin, and Net income for the comparative 2008 period have been restated from $367,797, 45.0% and $123,077, respectively, as a result of the retrospective adoption of CICA Handbook Section 3064, “Goodwill and Intangible Assets”. See update to critical accounting policies and estimates on page 19.

⁽³⁾		If service operating income before amortization for the three months ended November 30, 2009 was adjusted to exclude the one-time CRTC Part II recovery, operating margin would decrease to 44.1%.

⁽⁴⁾		Funds flow from operations is before changes in non-cash working capital balances related to operations as presented in the unaudited interim Consolidated Statements of Cash Flows.

Subscriber Highlights


			Growth
	Total		Three months ended November 30,
	November 30, 2009		2009			2008

Subscriber statistics:

Basic cable customers		2,329,612		(1,416	)		9,198
Digital customers		1,409,983		88,259			60,717
Internet customers (including pending installs)		1,744,577		36,242			31,152
Digital phone lines (including pending installs)		923,365		61,461			56,597
DTH customers		902,038		1,097			448

Shaw Communications Inc.

Additional Highlights

•

Consolidated service revenue of $905.9 million for the quarter improved 10.8% over the comparable period last year. Total service operating income before amortization of $475.0, including a one-time Part II fee recovery of $75.3 million, was up 28.9% over the comparable period.

•

Consolidated free cash flow¹ for the quarter was $165.4 million compared to $114.0 million for the same period last year.

•

On October 1, 2009 the Company closed a $1.25 billion offering of 5.65% Senior Notes due October 1, 2019. The net proceeds were used to early redeem Shaw’s US$440 million Senior Notes and US$225 million Senior Notes on October 13, 2009, and its US$300 million Senior Notes on October 20, 2009.

•

On November 9, 2009 the Company closed a $650 million offering of 6.75% Senior Notes due November 9, 2039.

•

In November 2009 Shaw renewed its NCIB to purchase Class B Non-Voting Shares for a further one year period. In the quarter the Company repurchased 1,500,000 Class B Non-Voting Shares for $27.9 million and subsequent to the quarter end repurchased a further 3,000,000 Class B Non-Voting Shares for $59.8 million.

Consolidated Overview

Consolidated service revenue of $905.9 million for the quarter improved 10.8% over the same period last year. The improvement was primarily due to customer growth and rate increases. Consolidated service operating income before amortization for the three month period was up 28.9% over the comparable period to $475.0 million. The increase was driven by a one-time CRTC Part II fee recovery and the revenue related improvements, partially offset by higher employee related and other costs associated with growth including marketing and sales activities as well as the impact of the new Local Programming Improvement Fund (“LPIF”) fees. Excluding the one-time Part II fee recovery, the improvement was 8.5%.

On October 7, 2009 the Government of Canada and members of the broadcasting industry that are required to pay Part II license fees announced they had entered into a settlement agreement on the Part II license fee issue. The agreement resulted in the government agreeing that it will not seek Part II license fees owing for the fiscal years 2007, 2008 and 2009 that were not collected due to the ongoing legal dispute. In return, members of the broadcasting industry, including Shaw, discontinued their appeal before the Supreme Court of Canada challenging the validity of the fees. In October 2009 the Company recorded a recovery of $75.3 million, before taxes, for the Part II fees that had been accrued for the past three years and will not be collected pursuant to the agreement.


¹		See definitions and discussion under Key Performance Drivers in Management’s Discussion and Analysis.

Shaw Communications Inc.

Net income was $114.2 million for the quarter compared to $123.5 million for the same period last year. Non-operating items affected net income in both periods including debt retirement and amounts related to financial instruments in the current period of $81.6 million and $44.6 million, respectively. Outlined below are further details on these and other operating and non-operating components of net income for each period.


	Three months ended								Three months ended ⁽¹⁾
				Operating net		Non-						Operating net		Non-
($000’s Cdn)	November 30, 2009			of interest		operating			November 30, 2008			of interest		operating

Operating income		315,854								233,269
Amortization of financing costs — long-term debt		(1,101	)							(946	)
Interest expense — debt		(62,064	)							(57,210	)

Operating income after interest		252,689			252,689		—			175,113			175,113		—
Debt retirement costs		(81,585	)		—		(81,585	)		—			—		—
Loss on financial instruments		(44,645	)		—		(44,645	)		—			—		—
Other gains		8,717			—		8,717			1,682			—		1,682

Income (loss) before income taxes		135,176			252,689		(117,513	)		176,795			175,113		1,682
Current income tax expense		94,578			67,006		27,572			—			—		—
Future income tax expense (recovery)		(73,631	)		5,551		(79,182	)		53,454			52,941		513

Income (loss) before following		114,229			180,132		(65,903	)		123,341			122,172		1,169
Equity income on investee		—			—		—			133			—		133

Net income (loss)		114,229			180,132		(65,903	)		123,474			122,172		1,302


⁽¹⁾		Restated for the retrospective adoption of CICA Handbook Section 3064, “Goodwill and Intangible Assets”. See update to critical accounting policies and estimates on page 19.

The changes in net income are outlined in the table below.


	November 30, 2009 net income compared to:
	Three months ended
	August 31, 2009			November 30, 2008

(000’s Cdn)
Increased service operating income before amortization		80,052			106,622
Increased amortization		(1,012	)		(24,192	)
Decreased (increased) interest expense		336			(4,854	)
Change in net other costs and revenue ⁽¹⁾		(118,341	)		(119,328	)
Decreased income taxes		28,929			32,507

		(10,036	)		(9,245	)


⁽¹⁾		Net other costs and revenue includes debt retirement costs, loss on financial instruments, other gains and equity income on investee as detailed in the unaudited interim Consolidated Statements of Income and Retained Earnings.

Basic earnings per share was $0.26 for the quarter compared to $0.29 in the same period last year. The current three month period benefitted from higher service operating income before amortization of $106.6 million and lower taxes of $32.5 million, the total of which was more than offset by the change in net other costs and revenue of $119.3 million. The higher service operating income before amortization included a one-time Part II fee recovery of $75.3 million. The reduced taxes were due to lower net income before taxes in the current period and also included a tax recovery of $17.6 million related to reductions in corporate income tax rates. The change in net other costs and revenue was due to debt retirement costs and amounts related to financial instruments in the current period associated with the early redemption of the three series of US senior notes.

Shaw Communications Inc.

Net income in the current quarter decreased $10.0 million compared to the fourth quarter of fiscal 2009 mainly due to increased service operating income before amortization, including the one-time part II fee recovery, along with lower income taxes, being more than offset by the debt retirement costs and amounts related to financial instruments incurred in the current quarter and higher amortization.

Funds flow from operations was $339.0 million in the current three month period compared to $312.0 million last year. The increase was primarily due to improved service operating income before amortization in the current quarter partially offset by current income taxes.

Consolidated free cash flow for the quarter of $165.4 million compared to $114.0 million in the same period last year. Improved service operating income and lower capital investment in the current three month period of $106.6 million and $12.3 million, respectively, was partially offset by current quarter cash taxes of $67.0 million. The Cable division generated $121.9 million of free cash flow for the quarter compared to $76.3 million in the comparable period. The Satellite division achieved free cash flow of $43.6 million compared to $37.7 million last year.

Key Performance Drivers

The Company’s continuous disclosure documents may provide discussion and analysis of non-GAAP financial measures. These financial measures do not have standard definitions prescribed by Canadian GAAP or US GAAP and therefore may not be comparable to similar measures disclosed by other companies. The Company utilizes these measures in making operating decisions and assessing its performance. Certain investors, analysts and others, utilize these measures in assessing the Company’s operational and financial performance and as an indicator of its ability to service debt and return cash to shareholders. These non-GAAP financial measures have not been presented as an alternative to net income or any other measure of performance required by Canadian or US GAAP.

The following contains a listing of non-GAAP financial measures used by the Company and provides a reconciliation to the nearest GAAP measurement or provides a reference to such reconciliation.

Service operating income before amortization and operating margin

Service operating income before amortization is calculated as service revenue less operating, general and administrative expenses and is presented as a sub-total line item in the Company’s unaudited interim Consolidated Statements of Income and Retained Earnings. It is intended to indicate the Company’s ability to service and/or incur debt, and therefore it is calculated before amortization (a non-cash expense) and interest. Service operating income before amortization is also one of the measures used by the investing community to value the business. Operating margin is calculated by dividing service operating income before amortization by service revenue.

Free cash flow

The Company utilizes this measurement as it measures the Company’s ability to repay debt and return cash to shareholders.

Shaw Communications Inc.

Free cash flow for cable and satellite is calculated as service operating income before amortization, less interest, cash taxes paid or payable, capital expenditures (on an accrual basis and net of proceeds on capital dispositions) and equipment costs (net).

Commencing in 2010, for the purpose of determining free cash flow, Shaw will exclude stock-based compensation expense, reflecting the fact that it is not a reduction in the Company’s cash flow. This practice is also more in line with the Company’s North American peers who report free cash flow.

Consolidated free cash flow is calculated as follows:


	Three months ended November 30,
	2009		2008⁽²⁾

($000’s Cdn)
Cable free cash flow ⁽¹⁾		121,860		76,280
Combined satellite free cash flow ⁽¹⁾		43,568		37,693

Consolidated free cash flow		165,428		113,973


(1)		Reconciliations of free cash flow for both cable and satellite are provided under “Cable - Financial Highlights” and “Satellite — Financial Highlights”.

(2)		Free cash flow for the three months ended November 30, 2008 has not been restated to exclude stock based compensation. Cable free cash flow for this period has been restated from $75,747 for the retrospective adoption of CICA Handbook Section 3064, “Goodwill and Intangible Assets”. See update to critical accounting policies and estimates on page 19.

Shaw Communications Inc.

CABLE
FINANCIAL HIGHLIGHTS


	Three months ended November 30,
							Change
	2009			2008 ⁽³⁾			%
($000’s Cdn)
Service revenue (third party)		708,510			629,354			12.6

Service operating income before amortization ⁽¹⁾		381,102			303,708			25.5
Less:
Interest expense		55,166			50,304			9.7
Cash taxes		48,005			—			100.0

Cash flow before the following:		277,931			253,404			9.7

Capital expenditures and equipment costs (net):
New housing development		21,730			24,107			(9.9	)
Success based		50,350			33,437			50.6
Upgrades and enhancement		62,169			69,132			(10.1	)
Replacement		12,578			15,140			(16.9	)
Buildings/other		13,258			35,308			(62.5	)

Total as per Note 2 to the unaudited interim Consolidated Financial Statements		160,085			177,124			(9.6	)

Free cash flow before the following		117,846			76,280			54.5
Add back:
Non-cash stock based compensation		4,014			—			100.0

Free cash flow ⁽¹⁾		121,860			76,280			59.8


Operating margin ⁽²⁾		46.9	%		48.3	%		(1.4	)


⁽¹⁾		See definitions and discussion under Key Performance Drivers in Management’s Discussion and Analysis.

⁽²⁾		Adjusted to exclude the CRTC Part II fee recovery in the three months ended November 30, 2009. Service operating income before amortization, Free cash flow, and Operating margin for the comparative 2008 period have been restated from $303,175, $75,747 and 48.2%, respectively for the retrospective adoption of CICA Handbook Section 3064, “Goodwill and Intangible Assets”. See update to critical accounting policies and estimates on page 19.

Operating Highlights

•

Cable service revenue for the quarter of $708.5 million was up 12.6% over the same period last year. Service operating income before amortization of $381.1 million, including a one-time Part II fee recovery, increased 25.5% over the comparable three month period.

•

During the quarter the Company completed the acquisition of Mountain Cablevision operating in Hamilton, Ontario adding approximately 41,000 Basic cable customers, including 24,000 Digital subscribers, 30,000 Internet subscribers, and 32,000 Digital Phone lines.

•

During the quarter Basic cable subscribers declined 1,416. Digital customers increased 88,259 during the three month period to 1,409,983. Since launching the digital rental program in the fall of 2008, Shaw’s Digital penetration of Basic has increased from approximately 40.0% at August 31, 2008 to 60.5% at November 30, 2009.

•

Digital Phone lines increased 61,461 during the quarter to 923,365 lines and Internet was up 36,242 to total 1,744,577 as at November 30, 2009. Internet penetration of Basic now stands at almost 75%, one of the highest in North America.

Shaw Communications Inc.

Cable service revenue for the quarter of $708.5 million was up 12.6% over the same period last year. Customer growth, including acquisitions, and rate increases accounted for the improvement. Service operating income before amortization of $381.1 million increased 25.5% over the comparable three month period. The increase was due to a one-time Part II fee recovery and the revenue driven improvements, partially offset by higher employee related and other costs associated with growth including marketing and sales activities as well as the impact of the LPIF fees. Excluding the impact of the Part II fee recovery, the improvement was 9.5%.

Service revenue was up $26.0 million or 3.8% over the fourth quarter of fiscal 2009 primarily due to rate increases and the acquisition of the Hamilton cable system. Service operating income before amortization improved $52.7 million over this same period primarily due to the Part II fee recovery and revenue related growth, partially reduced by increased employee related expenses, marketing costs, and the impact of the LPIF fees.

Total capital investment of $160.1 million for the quarter was $17.0 million lower than the same period last year.

Success-based capital increased $16.9 million over the comparable quarter. Digital success-based capital was up in the current period primarily due to increased rental activity as well as higher customer activations.

Taken together, investment in the upgrades and enhancement category and replacement category declined $9.5 million for the quarter compared to the same period last year. The prior period included higher spending on internet speed upgrade projects which was partially offset by investment in the current quarter related to video-on-demand (“VOD”) growth and internet capacity expansion.

Investment in Buildings and Other decreased $22.1 million compared to the same period last year. The decline was primarily related to higher spending in the comparable quarter on facilities projects to relocate certain Calgary employees to the Shaw campus facility, as well as IT related projects to upgrade back office and customer support systems.

Shaw Communications Inc.

Subscriber Statistics


							November 30, 2009
							Three months ended
	November 30, 2009			August 31, 2009⁽¹⁾			Growth			Change%
CABLE:
Basic service:
Actual		2,329,612			2,331,028			(1,416	)		(0.1	)
Penetration as % of homes passed		62.5	%		62.9	%
Digital customers		1,409,983			1,321,724			88,259			6.7


INTERNET:
Connected and scheduled		1,744,577			1,708,335			36,242			2.1
Penetration as % of basic		74.9	%		73.3	%
Standalone Internet not included in basic cable		244,732			238,710			6,022			2.5

DIGITAL PHONE:
Number of lines ⁽²⁾		923,365			861,904			61,461			7.1


⁽¹⁾		August 31, 2009 figures are restated for comparative purposes as if the acquisition of the Hamilton cable system in Ontario had occurred on that date.

⁽²⁾		Represents primary and secondary lines on billing plus pending installs.

Shaw continues to build on its long-standing commitment to deliver attractive and compelling products and services to its customers. During the quarter the Company expanded its channel line up to include Nickelodeon, one of the world’s leading entertainment brands for children, as well as History HD, The Score HD and various cultural programming additions. Shaw also expanded its VOD offerings, enhanced the VOD on-line ordering system, and launched a new PVR expander that adds 1 terabyte of memory allowing for recording of up to an additional 600 hours of digital programming.

The Company also increased the internet speed of Shaw High Speed Lite almost four-fold to 1Mbps, and launched High-Speed Nitro, the new 100 Mbps Internet service, in Vancouver, Calgary and Edmonton. This premium speed Internet product is now available in 6 major centres including Victoria, Winnipeg and Saskatoon.

Shaw Communications Inc.

SATELLITE (DTH and Satellite Services)
FINANCIAL HIGHLIGHTS


	Three months ended November 30,
							Change
	2009			2008			%
($000’s Cdn)
Service revenue (third party)
DTH (Shaw Direct)		177,352			165,776			7.0
Satellite Services		20,072			22,338			(10.1	)

		197,424			188,114			4.9

Service operating income before amortization ⁽¹⁾
DTH (Shaw Direct)		83,751			52,489			59.6
Satellite Services		10,099			12,133			(16.8	)

		93,850			64,622			45.2
Less:
Interest expense ⁽²⁾		6,563			6,563			—
Cash taxes on net income		19,001			—			100.0

Cash flow before the following:		68,286			58,059			17.6

Capital expenditures and equipment costs (net):
Success based ⁽³⁾		23,040			19,481			18.3
Buildings and other		2,084			885			135.5

Total as per Note 2 to the unaudited interim Consolidated Financial Statements		25,124			20,366			23.4

Free cash flow before the following		43,162			37,693			14.5
Add back:
Non-cash stock option expense		406			—			100.0

Free cash flow ⁽¹⁾		43,568			37,693			15.6

Operating Margin ⁽⁴⁾		34.1	%		34.4	%		(0.3	)


⁽¹⁾		See definitions and discussion under Key Performance Drivers in Management’s Discussion and Analysis.

⁽²⁾		Interest is allocated to the Satellite division based on the actual cost of debt incurred by the Company to repay Satellite debt and to fund accumulated cash deficits of Shaw Satellite Services and Shaw Direct.

⁽³⁾		Net of the profit on the sale of satellite equipment as it is viewed as a recovery of expenditures on customer premise equipment.

⁽⁴⁾		Adjusted to exclude the CRTC Part II fee recovery in the three months ended November 30, 2009.

Operating Highlights

•

Free cash flow of $43.6 million for the quarter compares to $37.7 million in the same period last year.

•

During the quarter Shaw Direct added 1,097 customers and as at November 30, 2009 DTH customers now total 902,038.

Service revenue of $197.4 million for the three month period was up 4.9% over the same period last year. The improvement was primarily due to rate increases and customer growth partially offset by lower revenues in the Satellite services division related to various contract renegotiations.

Service operating income before amortization for the quarter of $93.9 million compared to $64.6 million for the same period last year. In addition to the one-time Part II fee recovery, the improvement was mainly due to the revenue related growth partially offset by higher marketing, employee related, and LPIF costs.

Shaw Communications Inc.

Service operating income before amortization increased $27.3 million over the fourth quarter primarily due to the one-time Part II fee recovery.

Total capital investment of $25.1 million for the quarter increased over the prior year spend of $20.4 million. Success based capital was higher mainly due to increased activations as well as lower customer pricing. The increase in Buildings and Other was mainly due to the relocation and expansion of the Montreal call centre.

During the quarter Shaw Direct added several new HD channels including AMC, The Score, and History.

Subscriber Statistics

Three months ended

November 30, 2009

Change

November 30, 2009

August 31, 2009

Growth

DTH customers ⁽¹⁾

902,038

900,941

1,097

0.1


⁽¹⁾		Including seasonal customers who temporarily suspend their service.

OTHER INCOME AND EXPENSE ITEMS

Amortization


	Three months ended November 30,
							Change
	2009			2008			%

($000’s Cdn)
Amortization revenue (expense) —
Deferred IRU revenue		3,137			3,137			—
Deferred equipment revenue		31,261			33,037			(5.4	)
Deferred equipment costs		(59,509	)		(60,429	)		(1.5	)
Deferred charges		(256	)		(256	)		—
Property, plant and equipment		(124,639	)		(103,589	)		20.3
Other intangibles		(9,092	)		(6,961	)		30.6

Amortization of property, plant and equipment and other intangibles increased over the comparable period as the amortization of capital expenditures exceeded the impact of assets that became fully depreciated.

Amortization of financing costs and Interest expense


	Three months ended November 30,
					Change
	2009		2008		%

($000’s Cdn)
Amortization of financing costs — long-term debt		1,101		946		16.4
Interest expense — debt		62,064		57,210		8.5

Shaw Communications Inc.

Interest expense increased over the comparative period as a result of a higher average debt level partially offset by a lower average cost of borrowing resulting from changes in various components of long-term debt.

Debt retirement costs

During the quarter, the Company redeemed all of its outstanding US $440 million 8.25% senior notes due April 11, 2010, US $225 million 7.25% senior notes due April 6, 2011 and US $300 million 7.20% senior notes due December 15, 2011. In connection with the early redemption, the Company incurred costs of $79.5 million and wrote-off the remaining discount and finance costs of $2.1 million. The Company used proceeds from its $1.25 billion senior notes issuance in early October 2009 to fund the cash requirements for the redemptions. The refinancing of the three series of US senior notes has reduced the Company’s annual interest expense by approximately $35.0 million.

Loss on financial instruments

On redemption of the US senior notes, the Corporation unwound and settled a portion of the principal components of two of the associated cross-currency agreements and entered into offsetting currency swap transactions and amended agreements for the outstanding notional principal amounts. The associated interest component of the cross-currency interest rate exchange agreements remains outstanding. These contracts no longer qualify as cash flow hedges and the related loss in accumulated other comprehensive loss of $50.1 million was reclassified to net income. In addition, all subsequent changes in the value of these agreements will be recorded in net income. During the first quarter, a gain of $5.5 million was recorded.

Other gains

This category 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 the Company’s share of the operations of Burrard Landing Lot 2 Holdings Partnership (“the Partnership”). In addition, the first quarter of the prior year includes a gain of $10.8 million on cancellation of a bond forward contract.

Income taxes

Income taxes fluctuated over the comparative period due to lower net income before taxes in the current period and a current quarter tax recovery of $17.6 million related to reductions in corporate income tax rates.

RISKS AND UNCERTAINTIES

The significant risks and uncertainties affecting the Company and its business are discussed in the Company’s August 31, 2009 Annual Report under the Introduction to the Business — Known Events, Trends, Risks and Uncertainties in Management’s Discussion and Analysis.

Shaw Communications Inc.

FINANCIAL POSITION

Total assets at November 30, 2009 were $9.9 billion compared to $8.9 billion at August 31, 2009. Following is a discussion of significant changes in the consolidated balance sheet since August 31, 2009.

Current assets (excluding the derivative instrument) increased $242.9 million due to increases in cash and cash equivalents of $197.4 million, accounts receivable of $19.3 million, inventories of $9.8 million and future income taxes of $16.8 million. Cash and cash equivalents were up due to excess funds from the $650 million senior note issuance. Accounts receivable were up due to rate increases, subscriber growth and higher equipment shipments to retailers while inventories increased due to timing of equipment purchases to ensure sufficient supply for the holiday season. Future income taxes increased due to the timing of various temporary differences in the current quarter.

Derivative instruments (current and non-current) of $146.5 million arose upon payment of $145.9 million to enter into offsetting currency swap transactions for the outstanding notional principal amounts (i.e. end of swap notional exchanges) under certain of the remaining cross-currency interest rate exchange agreements.

Investments decreased by $30.7 million due to reclassifying $190.9 million of spectrum license deposits to intangibles partially offset by the purchase of a Government of Canada bond for $159.0 million.

Property, plant and equipment increased $79.5 million as current year capital investment and amounts acquired on the Mountain Cable acquisition exceeded amortization.

Broadcast rights and goodwill increased $245.0 million and $81.0 million, respectively due to the acquisition of Mountain Cable in Hamilton, Ontario.

Spectrum licenses of $190.9 million arose in the first quarter as the Company received its ownership compliance decision from Industry Canada and was granted its AWS licenses.

Current liabilities (excluding current portion of long-term debt and derivative instruments) increased $30.0 million due to a decrease in accounts payable of $65.1 million offset by increases in income taxes payable of $84.0 million and unearned revenue of $11.0 million. Accounts payable and accrued liabilities declined due to the impact of the Part II fee recovery and timing of interest payments, the total of which was partially offset by increased trade and other payables. Income taxes payable were up due to the current year income tax expense and unearned revenue increased due to customer growth, rate increases and the acquisition of Mountain Cable.

Total long-term debt increased $828.4 million as a result of $1.88 billion in net proceeds on the $1.25 billion and $650.0 million senior note issuances partially offset by the payment of $1.02 billion on the early redemption of US $440 million senior notes, US $225 million senior notes and US $300 million senior notes and a decrease of $40.5 million relating to the translation of these US denominated senior notes prior to the redemption dates. The current portion of long-

Shaw Communications Inc.

term debt decreased due to the early redemption of US $440 million senior notes due in April 2010.

Other long-term liabilities increased by $165.0 million due to the reclassification of $158.1 million from derivative instruments in respect to the liability for the principal components of the US $300,000 amended cross-currency interest exchange agreements.

Derivative instruments (including current portion) decreased $260.4 million due to the payment of $146.1 million to unwind and settle a portion of the principal component of two of the cross-currency interest rate exchange agreements related to the US senior notes and the aforementioned reclassification of $158.1 million which was partially offset by the current period derivative loss, including $40.5 million in respect of the foreign exchange loss on the notional amounts of the derivatives relating to the hedged on long-term debt prior to the redemption dates.

Deferred credits decreased $5.9 million mainly due to amortization of deferred IRU revenue of $3.1 million.

Future income taxes increased $32.7 million due to the acquisition of Mountain Cable partially offset by the current period tax recovery which included a recovery related to reductions in corporate income tax rates.

Share capital increased by $120.4 million primarily due to the issuance of 6,141,250 Class B Non-Voting Shares in connection with the acquisition of Mountain Cable for $120.0 million and the issuance of 483,630 Class B Non-Voting Shares under the Company’s option plans for $8.5 million partially offset by the repurchase of 1,500,000 Class B Non-Voting Shares for $27.9 million of which $8.1 million reduced stated share capital and $19.8 million was charged against retained earnings. As of December 31, 2009, share capital is as reported at November 30, 2009 with the exception of the issuance of 792,143 Class B Non-Voting Shares upon exercise of options subsequent to the quarter end and repurchase of 3,000,000 Class B Non-Voting Shares for cancellation. Accumulated other comprehensive loss decreased primarily due to reclassifying the remaining losses on the cross-currency interest rate exchange agreements into income upon redemption of the underlying US denominated long-term debt.

LIQUIDITY AND CAPITAL RESOURCES

In the current quarter, the Company generated $165.4 million of consolidated free cash flow. Shaw used its free cash flow along with net proceeds of $1.88 billion from its two senior notes offerings and proceeds on issuance of Class B Non-Voting Shares of $7.9 million to redeem the three series of US dollar denominated senior notes for $1.02 billion, pay $291.9 million on cross-currency interest rate swap agreements, pay $79.5 million in debt retirement costs, purchase $27.9 million of Class B Non-Voting Shares for cancellation, pay common share dividends of $90.8 million, purchase the Hamilton cable system for $155.3 million, purchase a Government of Canada bond for $159.0 million, increase cash and short-term securities of $197.7 million and fund other items totaling $37.6 million.

During the quarter, the Company redeemed all of its outstanding US $440 million 8.25% senior notes due April 11, 2010 and US $225 million 7.25% due April 6, 2011 on October 13, 2009,

Shaw Communications Inc.

and its US $300 million 7.20% senior notes due December 15, 2011 on October 20, 2009. The net proceeds from the $1.25 billion 5.65% senior note issuance due 2019 were used to fund the majority of the cash requirements for the redemptions including the make-whole premiums and payments in respect of the associated cross-currency interest rate exchange agreements. The Company also issued $650.0 million senior notes at a rate of 6.75% due 2039. The net proceeds from this offering were used for working capital and general corporate purposes while excess funds are held in cash and cash equivalents as well as invested in a Government of Canada bond.

On November 16, 2009, Shaw received the approval of the TSX to renew its normal course issuer bid to purchase its Class B Non-Voting Shares for a further one year period. The Company is authorized to acquire up to 35,000,000 Class B Non-Voting Shares during the period November 19, 2009 to November 18, 2010. During the first quarter, the Company repurchased 1,500,000 Class B Non-Voting Shares for $27.9 million.

At November 30, 2009, Shaw held $651 million in cash and short-term securities and had access to $1 billion of available credit facilities. Based on cash balances, available credit facilities and forecasted free cash flow, the Company expects to have sufficient liquidity to fund operations and obligations during the current 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

Operating Activities


	Three months ended November 30,
							Change
	2009			2008			%

($000’s Cdn)
Funds flow from operations		338,952			311,967			8.6
Net increase in non-cash working capital balances related to operations		(5,393	)		(6,947	)		22.4

		333,559			305,020			9.4

Funds flow from operations increased over the comparative year mainly due to growth in service operating income before amortization partially offset by current income tax expense. The net increase in non-cash working capital balances is comparable to the previous quarter as the reduction in accounts payable and accrued liabilities due to the reversal of the previously accrued Part II fees was offset by an increase in current taxes payable as the Company became cash taxable in the fourth quarter of the prior year.

Investing Activities


	Three months ended November 30,
	2009			2008			Increase

($000’s Cdn)
Cash flow used in investing activities		(519,898	)		(326,421	)		193,477

Shaw Communications Inc.

The cash used in investing activities increased over the comparable quarter due to the acquisition of Mountain Cable in Hamilton, Ontario, investing certain excess funds from the $650.0 million senior notes issuance in a Government of Canada bond, higher cash outlays for capital expenditures all of which were partially offset by the impact of the final cash outlay in the first quarter of the prior year in respect of deposits for the wireless spectrum licenses. In addition, the comparative quarter benefitted from proceeds on cancellation of certain US dollar forward purchase contracts.

Financing Activities

The changes in financing activities during the comparative periods were as follows:


	Three months ended November 30,
	2009			2008

(In $millions Cdn)
Bank loans and bank indebtedness — net borrowings		—			122.3
Issuance of Cdn $1.25 billion 5.65% senior notes		1,246.0			—
Issuance of Cdn $650 million 6.75% senior notes		645.6			—
Senior notes issuance costs		(9.0	)		—
Redemption of US $440 million 8.25% senior notes		(465.5	)		—
Redemption of US $225 million 7.25% senior notes		(238.1	)		—
Redemption of US $300 million 7.20% senior notes		(312.6	)		—
Payments on cross-currency agreements		(291.9	)		—
Debt retirement costs		(79.5	)		—
Dividends		(90.8	)		(85.6	)
Repayment of Partnership debt		(0.1	)		(0.1	)
Issue of Class B Non-Voting Shares		7.9			7.5
Purchase of Class B Non-Voting Shares for cancellation		(27.9	)		(33.6	)
Proceeds on cancellation of bond forward contract		—			10.8

		384.1			21.3

Shaw Communications Inc.

SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION


			Service operating						Funds flow
	Service		income before				Basic earnings		from
	revenue		amortization⁽¹⁾⁽³⁾		Net income ⁽³⁾		per share ⁽³⁾⁽⁴⁾		operations ⁽²⁾

($000’s Cdn except per share amounts)
2010
First		905,934		474,952		114,229		0.26		338,952
2009
Fourth		872,919		394,900		124,265		0.29		321,319
Third		861,382		395,547		132,151		0.31		356,046
Second		839,144		381,832		156,585		0.37		334,508
First		817,468		368,330		123,474		0.29		311,967
2008
Fourth		805,700		370,406		133,032		0.31		321,276
Third		792,149		356,688		128,560		0.30		310,984
Second		763,182		350,388		298,985		0.69		304,293


⁽¹⁾		See definition and discussion under Key Performance Drivers in Management’s Discussion and Analysis.

⁽²⁾		Funds flow from operations is presented before changes in net non-cash working capital balances related to operations as presented in the unaudited interim Consolidated Statements of Cash Flows.

⁽³⁾		2009 and 2008 are restated for the retrospective adoption of CICA Handbook Section 3064, “Goodwill and Intangible Assets”. See update to critical accounting policies and estimates on page 19.

⁽⁴⁾		Diluted earnings per share equals basic earnings per share except for the second quarter of 2009 where diluted earnings per share is $0.36.

Generally, service revenue and service operating income before amortization have grown quarter-over-quarter mainly due to customer growth and rate increases. Net income has fluctuated quarter-over-quarter primarily as a result of the growth in service operating income before amortization described above, the impact of the net change in non-operating items such as debt retirement costs, loss on financial instruments, and the impact of corporate income tax rate reductions. Net income declined by $10.0 million in the first quarter of 2010 mainly due to debt retirement costs of $81.6 million in respect of the US senior note redemptions and the loss on financial instruments of $44.6 million, the total of which was partially offset by higher service operating income before amortization of $80.1 million (which includes the impact of the one-time Part II fee recovery of $75.3 million) and lower income taxes of $28.9 million. The lower income taxes were due to lower net income before taxes and a current period income tax recovery of $17.6 million related to reductions in corporate income tax rates. During the second quarters of 2009 and 2008, the Company recorded future tax recoveries related to reductions in corporate income tax rates which contributed $22.6 million and $188.0 million, respectively, to net income. Net income declined by $24.4 million in the third quarter of 2009 and $170.4 million in the third quarter of 2008 primarily due to the tax recoveries recorded in each of the immediately preceding quarters. The decline in net income in the first and fourth quarters of 2009 of $9.6 million and $7.9 million, respectively is mainly due to an increase in amortization expense. As a result of the aforementioned changes in net income, basic and diluted earnings per share have trended accordingly.

Shaw Communications Inc.

ACCOUNTING STANDARDS

Update to critical accounting policies and estimates

The Management’s Discussion and Analysis (“MD&A”) included in the Company’s August 31, 2009 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. Also described therein was a new accounting policy that the Company is required to adopt in fiscal 2010 as a result of changes in Canadian accounting pronouncements. The unaudited interim Consolidated Financial Statements follow the same accounting policies and methods of application as the most recent annual consolidated financial statements other than as set out below.

Goodwill and intangible assets

In 2010, the Company adopted CICA Handbook Section 3064, “Goodwill and Intangible Assets”, which replaces Sections 3062, “Goodwill and Other Intangible Assets”, and 3450, “Research and Development Costs”. Section 3064 establishes standards for the recognition, measurement, presentation and disclosure of goodwill and intangible assets. As a result, connection costs that had been previously deferred and amortized, no longer meet the recognition criteria for intangible assets. In addition, the new standard requires computer software, that is not an integral part of the related hardware, to be classified as an intangible asset.

The provisions of Section 3064 were adopted retrospectively with restatement of prior periods. The impact on the Consolidated Balance Sheets as at November 30, 2009 and August 31, 2009 and on the Consolidated Statements of Income and Retained Earnings for the three months ended November 30, 2009 and 2008 is as follows:


	Increase (decrease)
	November 30, 2009			August 31, 2009
	$			$

Consolidated balance sheets:
Property, plant and equipment		(104,798	)		(105,180	)
Deferred charges		(3,182	)		(3,383	)
Intangibles		104,798			105,180
Future income taxes		(813	)		(863	)
Retained earnings		(2,369	)		(2,520	)


Decrease in retained earnings:
Adjustment for change in accounting policy		(2,520	)		(3,756	)
Increase in net income		151			1,236

		(2,369	)		(2,520	)

Shaw Communications Inc.


	Three months ended
	November 30, 2009			November 30, 2008
	$			$
Consolidated statements of income:
Decrease in operating, general and administrative expenses		201			533
Decrease in amortization of property, plant and equipment		9,092			6,961
Increase in amortization of other intangibles		(9,092	)		(6,961	)
Increase in income tax expense		(50	)		(136	)

Increase in net income and comprehensive income		151			397

Increase in earnings per share		—			—

Recent accounting pronouncements:

International Financial Reporting Standards (IFRS)


Phase		Description and status
Impact assessment and planning		This phase includes establishment of a project team and high-level review to determine potential significant differences under IFRS as compared to Canadian GAAP. This phase has been completed and as a result, the Company has developed a transition plan and a preliminary timeline to comply with the changeover date while recognizing that project activities and timelines may change as a result of unexpected developments.

Design and development — key elements		This phase includes (i) an in-depth review to identify and assess accounting and reporting differences, (ii) evaluation and selection of accounting policies, (iii) assessment of impact on information systems, internal controls, and business activities, and (iv) training and communication with key stakeholders. The Company has completed its preliminary identification and assessment of accounting and reporting differences and evaluation of accounting policies is in progress. The preliminary assessment of the impact on information systems has been completed and the design phase of system changes is underway. In addition, training has been provided to certain key employees involved in or directly impacted by the conversion process.

Implementation		This phase includes integration of solutions into processes and financial systems that are required for the conversion to IFRS and parallel reporting during the year prior to transition including proforma financial statements and note disclosures. Process solutions will incorporate required revisions to internal controls during the changeover and on an on-going basis.

Shaw Communications Inc.

2010 GUIDANCE

The Company’s preliminary view with respect to 2010 guidance was provided coincident with the release of its fourth quarter results on October 23, 2009. It called for consolidated service operating income before amortization to increase by 14% or more including the impact of a one-time CRTC Part II fee recovery and free cash flow to be comparable to 2009 after considering the full year impact of cash taxes and continued capital investment. Excluding the impact of the Part II fee recovery and the expected contribution from Mountain Cable this represents an organic growth rate of approximately 8%. There are no revisions to the guidance at this time.

Certain important assumptions for 2010 guidance purposes include: customer growth continuing generally in line with historical trends; stable pricing environment for Shaw’s products relative to today’s rates; no significant market disruption or other significant changes in competition or regulation that would have a material impact; cash income taxes to be paid or payable in 2010; and a stable regulatory fee and rate environment. While the Company does anticipate continued weaker economic conditions in Western Canada, it does not see any material changes to its business at this time.

See the section below entitled “Caution Concerning Forward-Looking Statements”.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements included and incorporated by reference herein may constitute forward-looking statements. Such forward-looking statements involve risks, uncertainties and other factors which may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used, the words “anticipate”, “believe”, “expect”, “plan”, “intend”, “target”, “guideline”, “goal”, and similar expressions generally identify forward-looking statements. These forward-looking statements include, but are not limited to, references to future capital expenditures (including the amount and nature thereof), financial guidance for future performance, business strategies and measures to implement strategies, competitive strengths, goals, expansion and growth of Shaw’s business and operations, plans and references to the future success of Shaw. These forward-looking statements are based on certain assumptions, some of which are noted above, and analyses made by Shaw in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances as of the current date. These assumptions include but are not limited to general economic and industry growth rates, currency exchange rates, technology deployment, content and equipment costs, and industry structure and stability.

Whether actual results and developments will conform with expectations and predictions of the Company is subject to a number of factors including, but not limited to, general economic, market or business conditions; the opportunities that may be available to Shaw; Shaw’s ability to execute its strategic plans; changes in the competitive environment in the markets in which Shaw operates and from the development of new markets for emerging technologies; changes in laws, regulations and decisions by regulators that affect Shaw or the markets in which it operates in both Canada and the United States; Shaw’s status as a holding company with separate operating subsidiaries; changing conditions in the entertainment, information and communications

Shaw Communications Inc.

industries; risks associated with the economic, political and regulatory policies of local governments and laws and policies of Canada and the United States; and other factors, many of which are beyond the control of Shaw. 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 as described herein. Consequently, all of the forward-looking statements made in this report and the documents incorporated by reference herein are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by Shaw will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company.

You should not place undue reliance on any such forward-looking statements. The Company utilizes forward-looking statements in assessing its performance. Certain investors, analysts and others, utilize the Company’s financial guidance and other forward-looking information in order to assess the Company’s expected operational and financial performance and as an indicator of its ability to service debt and return cash to shareholders. The Company’s financial guidance may not be appropriate for other purposes.

Any forward-looking statement (and such risks, uncertainties and other factors) speaks only as of the date on which it was originally made and the Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained in this document to reflect any change in expectations with regard to those statements or any other change in events, conditions or circumstances on which any such statement is based, except as required by law. New factors affecting the Company emerge from time to time, and it is not possible for the Company to predict what factors will arise or when. In addition, the Company cannot assess the impact of each factor on its business or the extent to which any particular factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.

Shaw Communications Inc.

CONSOLIDATED BALANCE SHEETS
(unaudited)


[thousands of Canadian dollars]	November 30, 2009			August 31, 2009
				Restated – note 1
ASSETS
Current
Cash and cash equivalents		451,288			253,862
Short-term securities		199,662			199,375
Accounts receivable		213,771			194,483
Inventories		62,109			52,304
Prepaids and other		35,055			35,688
Derivative instrument [note 10]		88,695			—
Future income taxes		38,727			21,957

		1,089,307			757,669
Derivative instrument [note 10]		57,757			—
Investments and other assets [note 10]		164,168			194,854
Property, plant and equipment		2,795,894			2,716,364
Deferred charges		255,254			256,355
Intangibles
Broadcast rights [note 3]		5,061,153			4,816,153
Spectrum licenses [note 1]		190,912			—
Goodwill [note 3]		169,106			88,111
Other intangibles		104,798			105,180

		9,888,349			8,934,686


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current
Accounts payable and accrued liabilities		498,054			563,110
Income taxes payable		109,344			25,320
Unearned revenue		144,790			133,798
Current portion of long-term debt [note 4]		531			481,739
Derivative instruments [note 10]		122,795			173,050

		875,514			1,377,017
Long-term debt [note 4]		3,978,376			2,668,749
Other long-term liabilities [note 9]		269,995			104,964
Derivative instruments [note 10]		82,437			292,560
Deferred credits		653,185			659,073
Future income taxes		1,369,530			1,336,859

		7,229,037			6,439,222


Shareholders’ equity
Share capital [note 5]		2,234,279			2,113,849
Contributed surplus [note 5]		41,779			38,022
Retained earnings		385,852			382,227
Accumulated other comprehensive loss [note 7]		(2,598	)		(38,634	)

		2,659,312			2,495,464

		9,888,349			8,934,686

See accompanying notes

Shaw Communications Inc.

CONSOLIDATED STATEMENTS OF INCOME AND
RETAINED EARNINGS
(unaudited)


	Three months ended November 30,
[thousands of Canadian dollars except per share amounts]	2009			2008
				Restated – note 1
Service revenue [note 2]		905,934			817,468
Operating, general and administrative expenses		430,982			449,138

Service operating income before amortization [note 2]		474,952			368,330
Amortization:
Deferred IRU revenue		3,137			3,137
Deferred equipment revenue		31,261			33,037
Deferred equipment costs		(59,509	)		(60,429	)
Deferred charges		(256	)		(256	)
Property, plant and equipment		(124,639	)		(103,589	)
Other intangibles		(9,092	)		(6,961	)

Operating income		315,854			233,269
Amortization of financing costs — long-term debt		(1,101	)		(946	)
Interest expense — debt [note 2]		(62,064	)		(57,210	)

		252,689			175,113
Debt retirement costs		(81,585	)		—
Loss on financial instruments [note 10]		(44,645	)		—
Other gains		8,717			1,682

Income before income taxes		135,176			176,795
Current income tax expense		94,578			—
Future income tax expense (recovery)		(73,631	)		53,454

Income before the following		114,229			123,341
Equity income on investee		—			133

Net income		114,229			123,474
Retained earnings, beginning of period		384,747			226,408
Adjustment for adoption of new accounting policy [note 1]		(2,520	)		(3,756	)

Retained earnings, beginning of period restated		382,227			222,652
Reduction on Class B Non-Voting Shares purchased for cancellation [note 5]		(19,789	)		(25,017	)
Dividends — Class A Shares and Class B Non-Voting Shares		(90,815	)		(85,569	)

Retained earnings, end of period		385,852			235,540

Earnings per share [note 6]
Basic and diluted		0.26			0.29

[thousands of shares]
Weighted average participating shares outstanding during period		432,507			427,764
Participating shares outstanding, end of period		435,363			427,200

See accompanying notes

Shaw Communications Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
(unaudited)


	Three months ended November 30,
[thousands of Canadian dollars]	2009			2008
				Restated – note 1
Net income		114,229			123,474

Other comprehensive income (loss) [note 7]
Change in unrealized fair value of derivatives designated as cash flow hedges		(51,435	)		153,482
Realized gains on cancellation of forward purchase contracts		—			9,314
Adjustment for hedged items recognized in the period		9,444			7,088
Reclassification of foreign exchange loss (gain) on hedging derivatives to income to offset foreign exchange adjustments on US denominated debt		34,940			(144,720	)
Reclassification of remaining losses on hedging derivatives to income upon early redemption of hedged US denominated debt		42,658			—
Unrealized gain on available-for-sale investment		430			—
Unrealized foreign exchange gain (loss) on translation of a self-sustaining foreign operation		(1	)		94

		36,036			25,258

Comprehensive income		150,265			148,732

Accumulated other comprehensive loss, beginning of period		(38,634	)		(57,674	)
Other comprehensive income		36,036			25,258

Accumulated other comprehensive loss, end of period		(2,598	)		(32,416	)

See accompanying notes

Shaw Communications Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)


	Three months ended November 30,
[thousands of Canadian dollars]	2009			2008
				Restated – note 1
OPERATING ACTIVITIES [note 8]
Funds flow from operations		338,952			311,967
Net increase in non-cash working capital balances related to operations		(5,393	)		(6,947	)

		333,559			305,020

INVESTING ACTIVITIES
Additions to property, plant and equipment [note 2]		(158,820	)		(136,859	)
Additions to equipment costs (net) [note 2]		(27,760	)		(34,427	)
Additions to other intangibles [note 2]		(9,528	)		(11,251	)
Proceeds on cancellation of US forward purchase contracts		—			13,384
Net addition to inventories		(9,555	)		(5,638	)
Deposits on wireless spectrum licenses		—			(152,465	)
Cable business acquisition [note 3]		(155,334	)		(36	)
Purchase of Government of Canada bond [note 10]		(158,968	)		—
Proceeds on disposal of property, plant and equipment [note 2]		67			871

		(519,898	)		(326,421	)

FINANCING ACTIVITIES
Increase in bank indebtedness		—			27,317
Increase in long-term debt, net of discounts		1,891,656			171,615
Senior notes issuance costs		(9,057	)		—
Long-term debt repayments		(1,016,302	)		(76,739	)
Payments on cross-currency agreements [note 10]		(291,920	)		—
Debt retirement costs		(79,488	)		—
Proceeds on cancellation of bond forward contract		—			10,757
Issue of Class B Non-Voting Shares [note 5]		7,870			7,506
Purchase of Class B Non-Voting Shares for cancellation [note 5]		(27,892	)		(33,574	)
Dividends paid on Class A Shares and Class B Non-Voting Shares		(90,815	)		(85,569	)

		384,052			21,313

Effect of currency translation on cash balances and cash flows		—			88

Increase in cash		197,713			—
Cash, beginning of the period		453,237			—

Cash, end of the period		650,950			—

Cash includes cash, cash equivalents and short-term securities

See accompanying notes

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

November 30, 2009 and 2008
[all amounts in thousands of Canadian dollars, except per share amounts]

1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES

The unaudited interim Consolidated Financial Statements include the accounts of Shaw Communications Inc. and its subsidiaries (collectively the “Company”). The notes presented in these unaudited interim Consolidated Financial Statements include only significant events and transactions occurring since the Company’s last fiscal year end and are not fully inclusive of all matters required to be disclosed in the Company’s annual audited consolidated financial statements. As a result, these unaudited interim Consolidated Financial Statements should be read in conjunction with the Company’s consolidated financial statements for the year ended August 31, 2009.

The unaudited 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.

Spectrum licenses

During the first quarter, the Company received its ownership compliance decision from Industry Canada and was granted its Advanced Wireless Spectrum (“AWS”) licenses. Accordingly, the deposits on spectrum licenses were then reclassified from Investments and other assets to Intangibles. AWS licenses have indefinite useful lives and are not amortized but will be subject to an annual review for impairment by comparing the estimated fair value to the carrying amount.

Adoption of recent accounting pronouncements

Goodwill and intangible assets

Effective September 1, 2009, the Company adopted CICA Handbook Section 3064, “Goodwill and Intangible Assets”, which replaces Sections 3062, “Goodwill and Other Intangible Assets”, and 3450, “Research and Development Costs”. Section 3064 establishes standards for the recognition, measurement, presentation and disclosure of goodwill and intangible assets. As a result, connection costs that had been previously deferred and amortized, no longer meet the recognition criteria for intangible assets. In addition, the new standard requires computer software, that is not an integral part of the related hardware, to be classified as an intangible asset.


	Increase (decrease)
	November 30, 2009			August 31, 2009
	$			$

Consolidated balance sheets:
Property, plant and equipment		(104,798	)		(105,180	)
Deferred charges		(3,182	)		(3,383	)
Intangibles		104,798			105,180
Future income taxes		(813	)		(863	)
Retained earnings		(2,369	)		(2,520	)


Decrease in retained earnings:
Adjustment for change in accounting policy		(2,520	)		(3,756	)
Increase in net income		151			1,236

		(2,369	)		(2,520	)

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

November 30, 2009 and 2008
[all amounts in thousands of Canadian dollars, except per share amounts]


	Three months ended
	November 30, 2009			November 30, 2008
	$			$

Consolidated statements of income:
Decrease in operating, general and administrative expenses		201			533
Decrease in amortization of property, plant and equipment		9,092			6,961
Increase in amortization of other intangibles		(9,092	)		(6,961	)
Increase in income tax expense		(50	)		(136	)

Increase in net income and comprehensive income		151			397

Increase in earnings per share		—			—

The cash outflows for additions to other intangibles have been reclassified from property, plant and equipment and presented separately in the Consolidated Statements of Cash Flows for the three months ended November 30, 2009 and 2008.

Recent accounting pronouncements

International Financial Reporting Standards (IFRS)

In February 2008, the CICA Accounting Standards Board (AScB) confirmed that Canadian publicly accountable enterprises will be required to adopt International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB), for fiscal periods beginning on or after January 1, 2011. These standards require the Company to begin reporting under IFRS in the first quarter of fiscal 2012 with comparative data for the prior year. The Company has developed its plan and has completed the preliminary identification and assessment of the accounting and reporting differences under IFRS as compared to Canadian GAAP. Evaluation of accounting policies is in progress; however, at this time, the full impact of adopting IFRS is not reasonably estimable or determinable.

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

November 30, 2009 and 2008
[all amounts in thousands of Canadian dollars, except per share amounts]

2. BUSINESS SEGMENT INFORMATION

The Company provides cable television services, high-speed Internet access, Digital Phone and Internet infrastructure services (“Cable”); DTH satellite services (Shaw Direct); and, satellite distribution services (“Satellite Services”). All of these operations are substantially located in Canada. Information on operations by segment is as follows:

Operating information


	Three months ended November 30,
	2009			2008
	$			$

Service revenue
Cable		709,747			630,408
DTH		179,764			168,481
Satellite Services		20,947			23,213

		910,458			822,102

Inter segment —
Cable		(1,237	)		(1,054	)
DTH		(2,412	)		(2,705	)
Satellite Services		(875	)		(875	)

		905,934			817,468

Service operating income before amortization ⁽²⁾
Cable		381,102			303,708
DTH		83,751			52,489
Satellite Services		10,099			12,133

		474,952			368,330

Interest ⁽¹⁾
Cable		55,166			50,304
DTH and Satellite Services		6,563			6,563
Burrard Landing Lot 2 Holdings Partnership		335			343

		62,064			57,210


Cash taxes ⁽¹⁾
Cable		48,005			—
DTH and Satellite Services		19,001			—
Other/non-operating		27,572			—

		94,578			—


⁽¹⁾		The Company reports interest and cash taxes on a segmented basis for Cable and combined satellite only. It does not report interest or cash taxes on a segmented basis for DTH and Satellite Services.

⁽²⁾		The three months ended November 30, 2009 includes the impact of a one-time CRTC Part II fee recovery of $48,662 for Cable and $26,570 for combined satellite.

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

November 30, 2009 and 2008
[all amounts in thousands of Canadian dollars, except per share amounts]

Capital expenditures


	Three months ended November 30,
	2009			2008
	$			$

Capital expenditures accrual basis
Cable		145,230			140,380
Corporate		10,801			23,889

Sub-total Cable including corporate		156,031			164,269
Satellite (net of equipment profit)		1,418			132

		157,449			164,401


Equipment costs (net of revenue received)
Cable		4,054			12,855
Satellite		23,706			20,234

		27,760			33,089

Capital expenditures and equipment costs (net)
Cable		160,085			177,124
Satellite		25,124			20,366

		185,209			197,490



Reconciliation to Consolidated Statements of Cash Flows
Additions to property, plant and equipment		158,820			136,859
Additions to equipment costs (net)		27,760			34,427
Additions to other intangibles		9,528			11,251

Total of capital expenditures and equipment costs (net) per Consolidated Statements of Cash Flows		196,108			182,537
Increase (decrease) in working capital related to capital expenditures		(10,127	)		18,000
Less: Realized gains on cancellation of US dollar forward purchase contracts ⁽¹⁾		—			(1,338	)
Less: Proceeds on disposal of property, plant and equipment		(67	)		(871	)
Less: Satellite equipment profit ⁽²⁾		(705	)		(838	)

Total capital expenditures and equipment costs (net) reported by segments		185,209			197,490


⁽¹⁾		During the first quarter of the prior year, the Company realized gains totaling $13,384 on cancellation of certain of its US dollar forward purchase contracts in respect of capital expenditures and equipment costs. The gains are included in other comprehensive income and reclassified to the initial carrying amount of capital assets or equipment costs when the assets are recognized.

⁽²⁾		The profit from the sale of satellite equipment is subtracted from the calculation of segmented capital expenditures and equipment costs (net) as the Company views the profit on sale as a recovery of expenditures on customer premise equipment.

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

November 30, 2009 and 2008
[all amounts in thousands of Canadian dollars, except per share amounts]

Assets

November 30, 2009

Cable

DTH

Satellite Services

Total

Segment assets

7,015,482

858,682

491,698

8,365,862

Corporate assets

1,522,487

Total assets

9,888,349


	August 31, 2009
	Cable		DTH		Satellite Services		Total
	$		$		$		$

Segment assets		6,599,120		855,283		498,720		7,953,123

Corporate assets								981,563

Total assets								8,934,686

3. BUSINESS ACQUISITION


	November 30, 2009
							Total
					Issuance of Class B		purchase
	Cash ⁽¹⁾		Accounts payable		Non-Voting Shares		price
	$		$		$		$

Cable system		160,404		278		120,000		280,682


⁽¹⁾		The cash consideration paid, net of cash acquired of $5,070, was $155,334.

A summary of net assets acquired on the Hamilton cable business acquisition, accounted for as a purchase, is as follows:


	$

Net assets acquired at assigned fair values
Investments		206
Property, plant and equipment		54,750
Broadcast rights		245,000
Goodwill, not deductible for tax		80,995

		380,951
Working capital deficiency		(27,494	)
Future income taxes		(72,775	)

		280,682

The Company closed the purchase of all of the outstanding shares of Mountain Cablevision in Hamilton, Ontario in late October 2009. The cable system serves approximately 41,000 basic subscribers and results of operations have been included commencing November 1, 2009. The purchase price allocation may be impacted by settlement of final closing adjustments.

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

November 30, 2009 and 2008
[all amounts in thousands of Canadian dollars, except per share amounts]

4. LONG-TERM DEBT


			November 30, 2009						August 31, 2009
									Translated		Adjustment
			Long-term				Long-term		at year		for hedged
	Effective		debt at		Adjustment		debt		end		debt and		Long-term
	interest		amortized		for finance		repayable at		exchange		finance		debt repayable
	rates		cost ⁽¹⁾		costs ⁽¹⁾		maturity		rate ⁽¹⁾		costs ⁽¹⁾ ⁽²⁾		at maturity
	%		$		$		$		$		$		$

Corporate
Senior notes-
Cdn $600,000 6.50% due June 2, 2014		6.56		594,110		5,890		600,000		593,824		6,176		600,000
Cdn $400,000 5.70% due March 2, 2017		5.72		395,765		4,235		400,000		395,646		4,354		400,000
Cdn $450,000 6.10% due November 16, 2012		6.11		447,063		2,937		450,000		446,836		3,164		450,000
Cdn $300,000 6.15% due May 9, 2016		6.34		292,235		7,765		300,000		291,987		8,013		300,000
Cdn $1,250,000 5.65% due October 1, 2019 ⁽³⁾		5.69		1,240,162		9,838		1,250,000		—		—		—
Cdn $650,000 6.75% due November 9, 2039 ⁽⁴⁾		6.80		641,659		8,341		650,000		—		—		—
US $440,000 8.25% due April 11, 2010 ⁽²⁾		7.88		—		—		—		481,198		161,422		642,620
US $225,000 7.25% due April 6, 2011 ⁽²⁾		7.68		—		—		—		245,632		110,206		355,838
US $300,000 7.20% due December 15, 2011 ⁽²⁾		7.61		—		—		—		327,512		149,338		476,850
Cdn $350,000 7.50% due November 20, 2013		7.50		346,568		3,432		350,000		346,380		3,620		350,000

				3,957,562		42,438		4,000,000		3,129,015		446,293		3,575,308


Other subsidiaries and entities
Burrard Landing Lot 2 Holdings Partnership		6.31		21,345		97		21,442		21,473		101		21,574

Total consolidated debt				3,978,907		42,535		4,021,442		3,150,488		446,394		3,596,882
Less current portion ⁽⁵⁾				531		19		550		481,739		161,422		643,161

				3,978,376		42,516		4,020,892		2,668,749		284,972		2,953,721


⁽¹⁾		Long-term debt, excluding bank loans, is presented net of unamortized discounts, finance costs and bond forward proceeds of $42,535 (August 31, 2009 — $27,761).

⁽²⁾		Foreign denominated long-term debt was translated at the year-end foreign exchange rate of 1.095 Cdn. If the rate of translation had been adjusted to reflect the hedged rates of the Company’s cross-currency interest rate agreements (which fixed the liability for interest and principal), long-term debt would have increased by $418,633. The US senior notes were redeemed in October 2009.

⁽³⁾		On October 1, 2009 the Company issued $1,250,000 of senior notes at a rate of 5.65%. The effective rate is 5.69% due to the discount on issuance. The senior notes are unsecured obligations that rank equally and ratably with all existing and future senior unsecured indebtedness. The notes are redeemable at the Company’s option at any time in whole or in part, prior to maturity at 100% of the principal plus a make-whole premium.

⁽⁴⁾		On November 9, 2009, the Company issued $650,000 of senior notes at a rate of 6.75%. The effective rate is 6.80% due to the discount on issuance. The senior notes are unsecured obligations that rank equally and ratably with all existing and future senior unsecured indebtedness. The notes are redeemable at the Company’s option at any time, in whole or in part, prior to maturity at 100% of the principal plus a make-whole premium.

⁽⁵⁾		Current portion of long-term debt at November 30, 2009 includes the amount due within one year on the Partnership’s mortgage bonds.

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

November 30, 2009 and 2008
[all amounts in thousands of Canadian dollars, except per share amounts]

5. SHARE CAPITAL

Issued and outstanding

Changes in Class A Share and Class B Non-Voting Share capital during the quarter ended November 30, 2009 are as follows:


	Class A Shares				Class B Non-Voting Shares
	Number		$		Number			$

August 31, 2009		22,520,064		2,468		407,717,782			2,111,381
Issued upon stock option plan exercises		—		—		483,630			8,533
Issued in respect of an acquisition (note 2)		—		—		6,141,250			120,000
Purchase of shares for cancellation		—		—		(1,500,000	)		(8,103	)

November 30, 2009		22,520,064		2,468		412,842,662			2,231,811

Purchase of shares for cancellation

During the quarter ended November 30, 2009, the Company purchased 1,500,000 Class B Non-Voting Shares for cancellation for $27,892 of which $8,103 reduced the stated capital of the Class B Non-Voting Shares and $19,789 was charged against retained earnings.

Stock option plan

Under a stock option plan, directors, officers, employees and consultants of the Company are eligible to receive stock options to acquire Class B Non-Voting Shares with terms not to exceed 10 years from the date of grant. Options granted up to November 30, 2009 vest evenly on the anniversary dates from the original grant at either 25% per year over four years or 20% per year over five years. The options must be issued at not less than the fair market value of the Class B Non-Voting Shares at the date of grant. The maximum number of Class B Non-Voting Shares issuable under the plan may not exceed 52,000,000. To date 11,725,246 Class B Non-Voting Shares have been issued under the plan. During the three months ended November 30, 2009, 483,630 options were exercised for $7,870.

The changes in options for the three months ended November 30, 2009 are as follows:


				Weighted average
				exercise price
	Number			$

Outstanding, beginning of period		23,714,667			20.21
Granted		376,000			18.79
Forfeited		(195,323	)		20.32
Exercised		(483,630	)		16.27

Outstanding, end of period		23,411,714			20.26

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

November 30, 2009 and 2008
[all amounts in thousands of Canadian dollars, except per share amounts]

The following table summarizes information about the options outstanding at November 30, 2009:


	Number		Weighted
	outstanding		average		Weighted		Number exercisable		Weighted
	at		remaining		average		at		average
Range of prices	November 30, 2009		contractual life		exercise price		November 30, 2009		exercise price

$8.69		20,000		3.89	$	8.69		20,000	$	8.69
$14.85 - $22.27		15,266,214		6.48	$	18.05		7,998,736	$	16.85
$22.28 - $26.20		8,125,500		7.76	$	24.45		3,960,375	$	24.45

The weighted average estimated fair value at the date of the grant for common share options granted was $2.94 per option (2008 — $4.08 per option) for the quarter. The fair value of each option granted was estimated on the date of the grant using the Black-Scholes option-pricing model with the following assumptions:


	Three months ended November 30,
	2009			2008

Dividend yield		4.47	%		3.49	%
Risk-free interest rate		2.40	%		3.24	%
Expected life of options	5 years			5 years
Expected volatility factor of the future expected market price of Class B Non-Voting Shares		26.6	%		24.6	%

Contributed surplus

The changes in contributed surplus are as follows:


	Three months ended
	November 30, 2009
	$

Balance, beginning of period		38,022
Stock-based compensation		4,420
Stock options exercised		(663	)

Balance, end of period		41,779

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

November 30, 2009 and 2008
[all amounts in thousands of Canadian dollars, except per share amounts]

6. EARNINGS PER SHARE

Earnings per share calculations are as follows:


	Three months ended November 30,
	2009		2008

Numerator for basic and diluted earnings per share ($)
Net income		114,229		123,474


Denominator (thousands of shares)
Weighted average number of Class A Shares and Class B Non-Voting Shares for basic earnings per share		432,507		427,764
Effect of dilutive securities		1,241		2,655

Weighted average number of Class A Shares and Class B Non-Voting Shares for diluted earnings per share		433,748		430,419


Earnings per share ($)
Basic		0.26		0.29
Diluted		0.26		0.29

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

November 30, 2009 and 2008
[all amounts in thousands of Canadian dollars, except per share amounts]

7. OTHER COMPREHENSIVE INCOME (LOSS) AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Components of other comprehensive income (loss) and the related income tax effects for the three months ended November 30, 2009 are as follows:

Amount

Income taxes

Net

Change in unrealized fair value of derivatives designated as cash flow hedges

(61,820

)

10,385

(51,435

)

Adjustment for hedged items recognized in the period

13,196

(3,752

)

9,444

Reclassification of foreign exchange loss on hedging derivatives to income to offset foreign exchange gain on US denominated debt

40,505

(5,565

)

34,940

Reclassification of remaining losses on hedging derivatives to income upon early redemption of hedged US denominated debt

50,121

(7,463

)

42,658

Unrealized gain on available-for-sale investment

495

(65

)

430

Unrealized foreign exchange loss on translation of a self-sustaining foreign operation

)

—

)

42,496

(6,460

)

36,036

Components of other comprehensive income (loss) and the related income tax effects for the three months ended November 30, 2008 are as follows:


	Amount			Income taxes			Net
	$			$			$

Changes in unrealized fair value of derivatives designated as cash flow hedges		179,684			(26,202	)		153,482
Proceeds on cancellation of forward purchase contracts		13,384			(4,070	)		9,314
Adjustment for hedged items recognized in the period		8,097			(1,009	)		7,088
Reclassification of foreign exchange gain on hedging derivatives to income to offset foreign exchange loss on US denominated debt		(168,875	)		24,155			(144,720	)
Unrealized foreign exchange gain on translation of a self-sustaining foreign operations		94			—			94

		32,384			(7,126	)		25,258

Accumulated other comprehensive income (loss) is comprised of the following:


	November 30, 2009			August 31, 2009
	$			$

Unrealized foreign exchange gain on translation of a self-sustaining foreign operation		349			350
Unrealized gain on available-for-sale investment		430			—
Fair value of derivatives		(3,377	)		(38,984	)

		(2,598	)		(38,634	)

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

November 30, 2009 and 2008
[all amounts in thousands of Canadian dollars, except per share amounts]

8. STATEMENTS OF CASH FLOWS

Disclosures with respect to the Consolidated Statements of Cash Flows are as follows:

(i)

Funds flow from operations


	Three months ended November 30,
	2009			2008
	$			$

Net income		114,229			123,474
Non-cash items:
Amortization
Deferred IRU revenue		(3,137	)		(3,137	)
Deferred equipment revenue		(31,261	)		(33,037	)
Deferred equipment costs		59,509			60,429
Deferred charges		256			256
Property, plant and equipment		124,639			103,589
Other intangibles		9,092			6,961
Financing costs — long-term debt		1,101			946
Future income tax expense (recovery)		(73,631	)		53,454
Equity income on investee		—			(133	)
Debt retirement costs		81,585			—
Stock-based compensation		4,420			4,231
Defined benefit pension plan		6,969			6,513
Gain on cancellation of bond forward		—			(10,757	)
Loss on financial instruments		44,645			—
Other		536			(822	)

Funds flow from operations		338,952			311,967

(ii)

Changes in non-cash working capital balances related to operations include the following:


	Three months ended November 30,
	2009			2008
	$			$

Accounts receivable		(18,566	)		(15,886	)
Prepaids and other		(1,250	)		340
Accounts payable and accrued liabilities		(77,758	)		2,714
Income taxes payable		87,302			(37	)
Unearned revenue		4,879			5,922

		(5,393	)		(6,947	)

(iii)

Interest and income taxes paid and classified as operating activities are as follows:


	Three months ended November 30,
	2009		2008
	$		$

Interest		95,047		94,608
Income taxes		55		19

Shaw Communications Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

November 30, 2009 and 2008
[all amounts in thousands of Canadian dollars, except per share amounts]

(iv)

Non-cash transaction:

The Consolidated Statements of Cash Flows exclude the following non-cash transaction:


	Three months ended November 30,
	2009		2008
	$		$

Issuance of Class B Non-Voting Shares on a cable system acquisition		120,000		—

9. OTHER LONG-TERM LIABILITIES

Other long-term liabilities include the long-term portion of the Company’s defined benefit pension plan of $111,933 and the liability of $158,062 with respect to the principal components of the US $300,000 amended cross-currency interest rate agreements. The total benefit costs expensed under the Company’s defined benefit pension was $7,331 for the three months ended November 30, 2009 (2008 - $6,875).

10. FINANCIAL INSTRUMENTS

During the first quarter, the Company redeemed all of its outstanding US $440,000 8.25% senior notes due April 11, 2010, US $225,000 7.25% senior notes due April 6, 2011 and US $300,000 7.20% senior notes due December 15, 2011. In conjunction with the redemption of the US $440,000 and US $225,000 senior notes, the Company paid $146,065 to unwind and settle a portion of the principal component of two of the associated cross-currency interest rate swaps and simultaneously entered into offsetting currency swap transactions for the remaining outstanding notional principal amounts (i.e. the end of swap notional exchanges) and paid $145,855 in respect of these offsetting swap transactions. The derivatives have been classified as held for trading as they are not accounted for as hedging instruments. In addition, upon redemption of the US $300,000 senior notes, the Company entered into amended agreements with the counterparties of the cross-currency agreements to fix the settlement of the principal liability on December 15, 2011 at $162,150. As a result, there is no further foreign exchange rate exposure in respect of the principal component of the cross-currency interest rate exchange agreements.

Upon redemption of the underlying hedged US denominated debt, the associated cross-currency interest rate exchange agreements no longer qualify as cash flow hedges and the remaining loss in accumulated other comprehensive loss of $50,121 was reclassified to the income statement. All subsequent changes in the value of the above noted agreements will be recorded in the income statement. During the first quarter, a gain of $5,476 was recorded.

The Government of Canada bond purchased during the first quarter has been classified as available-for-sale and is recorded at its estimated fair value.