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 April 2011

Commission File Number: 001-14684

Shaw Communications Inc.

(Translation of registrant’s name into English)

Suite 900, 630 — 3rd 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-

The information contained in this report on Form 6-K and any exhibits hereto shall be deemed filed with the Securities and Exchange Commission (“SEC”) solely for purpose of being and hereby are incorporated by reference into and as part of the Registration Statement on Form F-10 (File No. 333-170416) filed by the registrant under the Securities Act of 1933, as amended.

 

 

SIGNATURE

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

NEWS RELEASE

Shaw announces second quarter financial and operating results

Calgary, Alberta (April 13, 2011) — Shaw Communications Inc. announced results for the second quarter ended February 28, 2011. Consolidated revenue for the quarter and year-to-date of $1.20 billion and $2.28 billion, respectively, was up 29% and 24% over the comparable periods last year. Total operating income before amortization¹ of $495 million and $968 million, respectively, improved 16% and 8% over the same periods last year.

Free cash flow¹ for the three and six month periods was $167 million and $312 million, respectively, compared to $130 million and $295 million for the comparable periods last year. The current quarter increased over the prior period due to the addition of Shaw Media and higher free cash flow from the Cable division. The current six month period included free cash flow from Shaw Media, for the period October 27 to February 28, partially offset by the one-time CRTC Part II fee recovery last year.

Chief Executive Officer Brad Shaw said, “Our industry is transforming and competition in our core business continues. We have taken decisive and immediate steps to streamline our organizational structure. In this changing landscape managing costs and operating efficiently are essential. The recent actions taken, combined with our advanced delivery networks and leading portfolio of Media assets, ongoing innovation and technology enhancements position us for continued long term growth. None of these measures reduce in any way our commitment to an exceptional customer experience.”

Approximately 550 employee positions were eliminated, including 150 at the management level. The restructuring cost estimate is $25 — $30 million and the expected annual savings, including other expense reductions identified to date, is in excess of $50 million.

Mr. Shaw continued “We are also evolving our service offerings in-step with our customers, responding to their desire for more choice, value and freedom to choose. We recently launched the Shaw Plan Personalizer, enabling customers to customize their core entertainment service needs and receive everyday value. We believe this will also have a positive impact on promotional activity and operating margins.

Net income of $167 million or $0.37 per share for the quarter ended February 28, 2011 compared to $139 million or $0.32 per share for the same period last year. Net income for the first six months of the year was $188 million or $0.41 per share compared to $253 million or $0.58 per share last year. All periods included non-operating items which are more fully detailed in Management’s Discussions and Analysis (MD&A).² The current year-to-date period included a charge of $139 million for the discounted value of the $180 million CRTC benefit obligation related to the acquisition of Shaw Media, as well as business acquisition, integration and restructuring expenses of $61 million. The prior six month period included debt retirement costs and amounts related to financial instruments of $82 million and $46 million, respectively. Excluding the non-operating items, net income for the three and six month periods ended February 28, 2011 would have been $159 million and $318 million respectively, compared to $139 million and $320 million in the same periods last year.

Revenue in the Cable division was up 5% and 6% for the three and six month periods, respectively, to $769 million and $1.53 billion. The improvement was primarily driven by rate increases and growth. Operating income before amortization for the quarter of $364 million was up 3% over the comparable quarter. Excluding the one-time CRTC Part II fee recovery last year, operating income before amortization for the year-to-date period increased 4%.

Revenue in the Satellite division was $204 million and $410 million for the quarter and year-to-date periods, respectively, up 2% over each of the comparable periods. Operating income before amortization for the current three month period of $70 million was consistent with the same period last year. Excluding the one-time Part II fee recovery, operating income before amortization for the year-to-date period of $140 million improved 1% over the same period last year.

Quarterly revenue and operating income before amortization in the Media division was $244 million and $65 million, respectively. Revenue and operating income before amortization for the period from October 27, 2010 to February 28, 2011 was $369 million and $122 million, respectively. For informational purposes, on a comparative basis to last year, Media revenues for each of the three and full six month periods were up approximately 8%, and operating income before amortization, excluding the impact of the one-time Part II fee recovery last year, improved 16% and 18%, respectively.

On December 7, 2010 Shaw closed an offering of $900 million in senior unsecured notes, including $500 million principal amount of 5.50% notes due 2020, as well as an additional $400 million from its reopened offering of 6.75% notes due 2039. The net proceeds were used for repayment of debt incurred under Shaw’s credit facility to complete the acquisition of the broadcasting assets of Canwest and effect the subsequent related debt refinancing.

On February 17, 2011 Shaw closed an offering of $400 million in senior unsecured notes from a further reopened offering of its 6.75% notes due 2039. The net proceeds were used for repayment of debt incurred under Shaw’s credit facility to complete the acquisition of the broadcasting assets of Canwest and effect the subsequent related debt refinancing as well as for working capital and general corporate purposes.

“The competitive environment has moderated revenue growth this year in our core business and presented an increased level of risk to our forecast. The recent initiatives undertaken to drive efficiencies through focused cost containment and reductions currently have us on track to achieve our financial guidance including consolidated fiscal 2011 free cash flow of approximately $600 million. We plan to continue to make adjustments in our business as necessary to meet the changing circumstances.” said Mr. Shaw.

Mr. Shaw continued, “With the rapid development of wireless technology, including long-term evolution (“LTE”) options, and the dynamics within the wireless industry evolving at a swift pace, we are currently evaluating technology and strategic alternatives with respect to our wireless initiatives. We plan to slow our wireless build activities as we carefully consider all options in advance of the launch of a wireless service. We continue to focus heavily on the strength of our core business and intend to make important investments in new technology platforms, digital reclamation and broadband capacity in order to ensure we maintain our technological leadership. We are building Shaw for the future and are closely monitoring the business and regulatory environment. We are flexible and will continue to meet challenges and seize opportunities in this dynamic environment.”

Shaw Communications Inc. is a diversified communications and media company, providing consumers with broadband cable television, High-Speed Internet, Home Phone, telecommunications services (through Shaw Business), satellite direct-to-home services (through Shaw Direct) and engaging programming content (through Shaw Media). Shaw serves 3.4 million customers, through a reliable and extensive fibre network. Shaw Media operates one of the largest conventional television networks in Canada, Global Television, and 19 specialty networks including HGTV Canada, Food Network Canada, History Television and Showcase. 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

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS
FEBRUARY 28, 2011

April 13, 2011

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, 2010 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
SECOND QUARTER ENDING FEBRUARY 28, 2011

Selected Financial Highlights

		Three months ended February 28,												Six months ended February 28,
										Change												Change
($000’s Cdn except per share amounts)		2011				2010				%				2011				2010				%
Operations:
Revenue			1,196,611				929,142				28.8				2,275,516				1,835,076				24.0
Operating income before amortization (1)			494,524				424,825				16.4				967,878				899,777				7.6
Operating margin (1) (2) (3)			41.3	%			45.7	%			(4.4	)			42.5	%			44.9	%			(2.4	)
Funds flow from operations (4)			382,957				358,206				6.9				647,337				697,158				(7.1	)
Net income			167,299				138,712				20.6				187,631				252,941				(25.8	)
Per share data:
Earnings per share — basic and diluted		$	0.37			$	0.32							$	0.41			$	0.58
Weighted average participating shares outstanding during period (000’s)			434,425				432,960								434,107				432,733

Subscriber Highlights

		Total				Three months ended February 28,								Six months ended February 28,
		February 28, 2011				2011				2010				2011				2010
Subscriber statistics:
Basic cable customers			2,313,104				(13,662	)			(1,055	)			(21,204	)			(2,471	)
Digital customers			1,748,538				35,403				98,544				97,619				186,803
Internet customers (including pending installs)			1,848,390				10,772				26,735				29,524				62,977
Digital phone lines (including pending installs)			1,178,660				32,512				54,922				82,354				116,383
DTH customers			906,433				2,176				1,071				637				2,168

Shaw Communications Inc.

Additional Highlights

•

Revenue of $1.20 billion and $2.28 billion for the three and six month periods improved 28.8% and 24.0% over the comparable periods last year.

•

Free cash flow1 for the quarter and year-to-date periods was $166.9 million and $312.0 million, respectively, compared to $129.5 million and $294.9 million for the same periods last year.

•

On December 7, 2010 Shaw closed an offering of $900 million in senior unsecured notes, including $500 million principal amount of 5.50% notes due 2020, as well as an additional $400 million of its reopened offering of 6.75% notes due 2039.

•

On January 13, 2011 the Board of Directors approved a 5% increase in the equivalent annual dividend rate to $0.92 on Shaw’s Class B Non-Voting Participating shares and $0.9175 on Shaw’s Class A Participating shares. This new rate was effective commencing with the monthly dividends paid on March 30, 2011.

•

On February 17, 2011 Shaw closed an offering of $400 million in senior unsecured notes from a further reopened offering of 6.75% notes due 2039.

•

In March 2011 Shaw implemented various cost saving initiatives including staff reductions and a review of overhead expenses to drive efficiencies and enhance competitiveness.

Consolidated Overview

Consolidated revenue of $1.20 billion and $2.28 billion for the three and six month periods, respectively, improved 28.8% and 24.0% over the same periods last year. The improvement was primarily due to the acquisition of Shaw Media, as well as rate increases and growth in the Cable and Satellite divisions.

Consolidated operating income before amortization for the three and six month periods of $494.5 million and $967.9 million, respectively, increased 16.4% and 7.6% over the same periods last year. Both periods benefitted from the acquisition of Shaw Media as well as core revenue related growth, partially offset by increased employee related, sales and marketing, and programming costs. The current year-to-date period also included the impact of the retroactive support structure rate increases. The prior year-to-date period benefitted from a one-time CRTC Part II fee recovery of $75.3 million.

Net income was $167.3 million and $187.6 million for the three and six months ended February 28, 2011, respectively, compared to $138.7 million and $252.9 million for the same periods last year. Non-operating items affected net income in both periods. The current year-to-date period included a charge of $139.1 million for the discounted value of the $180.0 million CRTC benefit obligation, net of incremental revenues, related to the Media acquisition, as well as business acquisition, integration and restructuring expenses of $60.9 million. The prior year-to-date period included debt retirement costs and amounts related to financial instruments of $81.6 million and $46.1 million, respectively. Outlined below are further details on these and other operating and non-operating components of net income for each period.

Shaw Communications Inc.

		Six months ended				Operating net				Non-				Six months ended				Operating net				Non-
($000’s Cdn)		February 28, 2011				of interest				operating				February 28, 2010				of interest				operating
Operating income			595,905												575,317
Amortization of financing costs — long-term debt			(2,109	)											(2,053	)
Interest expense — debt			(153,932	)											(123,710	)
Operating income after interest			439,864				439,864				—				449,554				449,554				—
Debt retirement costs			—				—				—				(81,585	)			—				(81,585	)
Gain on repurchase of debt			9,981				—				9,981				—				—				—
CRTC benefit obligation			(139,098	)			—				(139,098	)			—				—				—
Business acquisition, integration and restructuring expenses			(60,882	)			—				(60,882	)			—				—				—
Loss on derivative instruments			(22,764	)			—				(22,764	)			(45,296	)			—				(45,296	)
Accretion of long-term liabilities			(5,813	)			—				(5,813	)			(853	)			—				(853	)
Foreign exchange gain on unhedged long-term debt			22,585				—				22,585				—				—				—
Other gains			6,532				—				6,532				9,355				—				9,355
Income (loss) before income taxes			250,405				439,864				(189,459	)			331,175				449,554				(118,379	)
Current income tax expense (recovery)			111,850				126,200				(14,350	)			105,281				117,004				(11,723	)
Future income tax expense (recovery)			(35,242	)			(4,384	)			(30,858	)			(27,047	)			13,037				(40,084	)
Income (loss) before following			173,797				318,048				(144,251	)			252,941				319,513				(66,572	)
Equity income on investees			13,834				—				13,834				—				—				—
Net income (loss)			187,631				318,048				(130,417	)			252,941				319,513				(66,572	)

		Three months ended				Operating net				Non-				Three months ended				Operating net				Non-
($000’s Cdn)		February 28, 2011				of interest				operating				February 28, 2010				of interest				operating
Operating income			303,293												259,463
Amortization of financing costs — long-term debt			(1,089	)											(952	)
Interest expense — debt			(85,237	)											(61,646	)
Operating income after interest			216,967				216,967				—				196,865				196,865				—
Gain on repayment of debt			9,981				—				9,981				—				—				—
Business acquisition, integration and restructuring expenses			(2,778	)			—				(2,778	)			—				—				—
Loss on derivative instruments			(21,353	)			—				(21,353	)			(864	)			—				(864	)
Accretion of long-term liabilities			(3,880	)			—				(3,880	)			(640	)			—				(640	)
Foreign exchange gain on unhedged long-term debt			19,267				—				19,267				—				—				—
Other gains			4,103				—				4,103				638				—				638
Income (loss) before income taxes			222,307				216,967				5,340				195,999				196,865				(866	)
Current income tax expense (recovery)			56,508				66,600				(10,092	)			10,703				49,998				(39,295	)
Future income tax expense (recovery)			(1,291	)			(8,450	)			7,159				46,584				7,487				39,097
Income (loss) before following			167,090				158,817				8,273				138,712				139,380				(668	)
Equity income on investees			209				—				209				—				—				—
Net income (loss)			167,299				158,817				8,482				138,712				139,380				(668	)

Shaw Communications Inc.

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

		February 28, 2011 net income compared to:
		Three months ended								Six months ended
(000’s Cdn)		November 30, 2010				February 28, 2010				February 28, 2010
Increased operating income before amortization			21,170				69,699				68,101
Increased amortization			(10,558	)			(26,006	)			(47,569	)
Increased interest expense			(16,542	)			(23,591	)			(30,222	)
Change in net other costs and revenue (1)			186,723				6,415				(57,246	)
Decreased (increased) income taxes			(33,826	)			2,070				1,626
			146,967				28,587				(65,310	)

Basic earnings per share were $0.37 and $0.41 for the quarter and six months, respectively compared to $0.32 and $0.58 in the same periods last year. The improvement in the quarter was primarily due to increased operating income before amortization of $69.7 million partially offset by higher amortization and interest expense of $26.0 million and $23.6 million, respectively. The year-to-date decrease was primarily due to higher net other costs and revenue of $57.2 million and increased amortization and interest of $47.6 million and $30.2 million, respectively, partially offset by improved operating before amortization of $68.1 million. The change in net other costs and revenue was primarily due to amounts related to the CRTC benefit obligation and various acquisition, integration and restructuring costs in the current period partially offset by debt retirement costs and amounts related to financial instruments associated with the early redemption of the three series of US senior notes in the prior year. The prior six month period operating income before amortization included a one-time CRTC Part II fee recovery of $75.3 million which was offset in the current period by amounts related to Shaw Media and growth in the Cable and Satellite divisions.

Net income in the current quarter increased $147.0 million compared to the first quarter of fiscal 2011 mainly due to decreased net other costs and revenue of $186.7 million resulting from the CRTC benefit obligation and various acquisition, integration and restructuring costs relating to the Media acquisition that were incurred in the prior quarter.

Free cash flow for the quarter and year-to-date periods of $166.9 million and $312.0 million, respectively, compared to $129.5 million and $294.9 million in the same periods last year. The improvement in the current quarter was mainly due to increased operating income before amortization related to the acquisition of the Media division as well as growth in the Cable division, partially reduced by higher interest and taxes. The year-to-date improvement was due to the Shaw Media acquisition and growth in the Cable and Satellite divisions, partially reduced by a one time Part II fee recovery last year. The Cable division generated $108.8 million of free cash flow for the quarter compared to $93.9 million in the comparable period. The Satellite division achieved free cash flow of $33.9 million for the three month period compared to $35.6 million last year. The Media division generated $24.2 million of free cash flow for the quarter.

Shaw Communications Inc.

On December 7, 2010 Shaw closed an offering of $900 million in senior unsecured notes, including $500 million principal amount of 5.50% notes due 2020, as well as an additional $400 million from its reopened offering of 6.75% notes due 2039. The net proceeds were used for repayment of debt incurred under Shaw’s credit facility to complete the acquisition of the broadcasting assets of Canwest and effect the subsequent related debt refinancing.

On December 21, 2010 Shaw completed the repurchase of US $51.6 million of the 13.5% Senior Notes due 2015 (the “2015 Notes”). As a result of a change of control triggered due to the acquisition of the Media business, an offer to purchase all of the 2015 Notes outstanding was required (the “Change of Control Offer”). An aggregate of US $51.6 million face amount of the 2015 Notes was tendered to the Change of Control Offer and were purchased for cancellation for an aggregate price of approximately $60.0 million, including accrued interest. The Change of Control Offer expired on December 15, 2010 and no further purchases are required.

On February 17, 2011 Shaw closed an offering of $400 million in senior unsecured notes from a further reopened offering of 6.75% notes due 2039. The net proceeds were used for repayment of debt incurred under Shaw’s credit facility to complete the acquisition of the broadcasting assets of Canwest and effect the subsequent related debt refinancing as well as for working capital and general corporate purposes.

In March 2011 Shaw implemented various cost saving initiatives including staff reductions and a review of overhead expenses to drive efficiencies and enhance competitiveness. Approximately 550 employee positions were eliminated, including 150 at the management level. The restructuring cost estimate for these initiatives is approximately $25 — $30 million and the expected annual savings is in excess of $50 million. The majority of the staff reductions were in the Cable division, representing approximately 5% of the divisions’ employee workforce.

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.

Operating income before amortization and operating margin

Operating income before amortization is calculated as 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. 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 operating income before amortization by revenue.

Shaw Communications Inc.

Free cash flow

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

Free cash flow for cable and satellite is calculated as 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) and adjusted to exclude stock-based compensation expense.

Commencing in 2011 with respect to the new Media segment, free cash flow will be determined as detailed above and in addition, Shaw will deduct cash amounts associated with funding the new and assumed CRTC benefit obligation related to the acquisition of Shaw Media as well as exclude the non-controlling interest amounts that are consolidated in the operating income before amortization, capital expenditure and cash tax amounts.

Free cash flow is calculated as follows:

		Three months ended February 28,								Six months ended February 28,
($000’s Cdn)		2011				2010 (2)				2011				2010 (2)
Cable free cash flow (1)			108,839				93,914				186,753				214,924
Combined satellite free cash flow (1)			33,940				35,606				61,032				80,024
Media free cash flow (1)			24,164				—				64,179				—
Free cash flow			166,943				129,520				311,964				294,948

Shaw Communications Inc.

CABLE
FINANCIAL HIGHLIGHTS

		Three months ended February 28,												Six months ended February 28,
										Change												Change
($000’s Cdn)		2011				2010 (3)				%				2011				2010 (3)				%
Revenue			769,403				733,436				4.9				1,527,234				1,443,183				5.8
Operating income before amortization (1)			363,710				354,473				2.6				711,565				734,725				(3.2	)
Capital expenditures and equipment costs (net):
New housing development			20,515				20,711				(0.9	)			46,139				42,441				8.7
Success based			42,706				58,152				(26.6	)			105,681				108,502				(2.6	)
Upgrades and enhancement			62,550				62,815				(0.4	)			124,083				124,984				(0.7	)
Replacement			11,016				13,732				(19.8	)			22,755				26,310				(13.5	)
Buildings/other			19,831				14,348				38.2				35,340				27,606				28.0
Total as per Note 2 to the unaudited interim Consolidated Financial Statements			156,618				169,758				(7.7	)			333,998				329,843				1.3
Free cash flow before the following			207,092				184,715				12.1				377,567				404,882				(6.7	)
Less:
Interest expense			(57,900	)			(54,752	)			5.7				(108,847	)			(109,918	)			(1.0	)
Cash taxes			(43,625	)			(39,999	)			9.1				(89,000	)			(88,004	)			1.1
Other adjustments:
Non-cash stock based compensation			3,272				3,950				(17.2	)			7,033				7,964				(11.7	)
Free cash flow (1)			108,839				93,914				15.9				186,753				214,924				(13.1	)
Operating margin (2)			47.3	%			48.3	%			(1.0	)			46.6	%			47.5	%			(0.9	)

Operating Highlights

•

Digital customers increased 35,403 during the quarter to 1,748,538. Shaw’s Digital penetration of Basic is now 75.6%, up from 70.7% and 56.7% at August 31, 2010 and 2009, respectively.

•

Digital Phone lines increased 32,512 during the three month period to 1,178,660 lines and Internet was up 10,772 to total 1,848,390 as at February 28, 2011. During the quarter Basic cable subscribers decreased 13,662.

Cable revenue for the three and six month periods of $769.4 million and $1.53 billion improved 4.9% and 5.8%, respectively over the comparable periods last year. The quarter and year-to-date growth was driven by rate increases and customer growth in Digital Phone and Internet partially offset by higher promotional activity.

Operating income before amortization of $363.7 million for the quarter improved 2.6% over the same period last year. The year-to-date amount of $711.6 million increased 3.7% over last year excluding the prior period one-time CRTC Part II fee recovery of $48.7 million. The revenue related growth in both periods was partially reduced by higher employee amounts, increased programming costs, and higher marketing and sales expenses. Both periods were also impacted by the CRTC decision approving a retroactive rate increase in support structure charges by ILECs with the year-to-date period including the impact of the retroactive increase and the current quarter reflecting the ongoing higher costs.

Shaw Communications Inc.

Revenue increased $11.6 million over the first quarter of fiscal 2011 primarily due to customer growth as well as higher demand for VOD movies and PPV events partially offset by increased promotional activity. Operating income before amortization improved $15.9 million over this same period primarily due to revenue related growth and lower marketing and sales costs partially offset by higher employee costs. The prior quarter also included the retroactive impact of the support structure rate increase.

Total capital investment of $156.6 million for the quarter decreased $13.1 million over the same period last year. Capital investment for the six month period of $334.0 million was $4.2 million higher than the same period last year.

Success based capital declined $15.4 million over the comparable three month period due to lower HDPVR rental activity and decreased spend on Digital Phone modems. Year-to-date success based capital is marginally lower than the same period last year as a result of reduced investment in Digital Phone modems partially offset by lower retail pricing for HDPVRs.

Investment in Upgrades and enhancement and Replacement categories combined decreased by $3.0 million and $4.5 million for the quarter and year-to-date periods, respectively, compared to the same periods last year. Both the current quarter and year-to-date investment included higher spending on fibre expansion and node segmentation offset by lower spending on Digital Phone equipment, bulk stock purchasing, and automotive.

Investment in Buildings and Other was up $5.5 million and $7.7 million for the comparable three and six month periods. The increases are mainly due to higher investment in various facilities projects and costs related to upgrading billing and provisioning systems. The year-to-date spend is partially offset by proceeds on the sale of certain redundant real estate assets in the first quarter of 2011.

Spending in new housing development increased $3.7 million over the comparable six months last year mainly due to higher activity.

As at February 28, 2011 Shaw had 1,848,390 Internet customers which represents a 79.9% penetration of Basic. During the quarter Shaw announced that it would conduct customer consultation sessions on the future of internet allowances and usage billing to obtain feedback to allow the Company to build pricing and packaging options that deliver choice, quality and value to all Shaw customers.

Recently, Shaw announced the launch of the Shaw Plan Personalizer enabling customers to customize their home entertainment service needs and receive everyday value. Customers can start with a core home entertainment and communications package that includes Extreme Internet, Personal TV, hardware options and Personal Home Phone Basic and then customize the plan to how they want it. Shaw is continuing to evolve to meet customers’ needs.

Shaw Communications Inc.

During the quarter Shaw continued to grow its Digital customer base and Digital penetration of Basic at February 28, 2011 was 75.6%, up from 70.7% at August 31, 2010. Shaw now has approximately 835,000 HD capable customers who have access to over 120 HD channels and even greater choice through 1,200 HD titles through Shaw VOD.

Subscriber Statistics

										February 28, 2011
										Three months ended								Six months ended
														Change								Change
		February 28, 2011				August 31, 2010(1)				Growth				%				Growth				%
CABLE:
Basic service:
Actual			2,313,104				2,334,308				(13,662	)			(0.6	)			(21,204	)			(0.9	)
Penetration as % of homes passed			60.3	%			61.4	%
Digital customers			1,748,538				1,650,919				35,403				2.1				97,619				5.9
INTERNET:
Connected and scheduled			1,848,390				1,818,866				10,772				0.6				29,524				1.6
Penetration as % of basic			79.9	%			77.9	%
Standalone Internet not included in basic cable			216,886				233,426				(8,192	)			(3.6	)			(16,540	)			(7.1	)
DIGITAL PHONE:
Number of lines (2)			1,178,660				1,096,306				32,512				2.8				82,354				7.5

Shaw Communications Inc.

SATELLITE (DTH and Satellite Services)
FINANCIAL HIGHLIGHTS

		Three months ended February 28,												Six months ended February 28,
										Change												Change
($000’s Cdn)		2011				2010 (5)				%				2011				2010 (5)				%
Revenue
DTH (Shaw Direct)			184,174				179,602				2.5				369,553				359,366				2.8
Satellite Services			19,789				20,666				(4.2	)			40,583				41,613				(2.5	)
			203,963				200,268				1.8				410,136				400,979				2.3
Operating income before amortization (1)
DTH (Shaw Direct)			60,055				59,735				0.5				119,128				143,461				(17.0	)
Satellite Services			10,160				10,617				(4.3	)			20,596				21,591				(4.6	)
			70,215				70,352				(0.2	)			139,724				165,052				(15.3	)
Capital expenditures and equipment costs (net):
Success based (3)			16,622				17,343				(4.2	)			40,174				40,383				(0.5	)
Buildings and other			713				1,239				(42.5	)			1,501				3,323				(54.8	)
Total as per Note 2 to the unaudited interim Consolidated Financial Statements			17,335				18,582				(6.7	)			41,675				43,706				(4.6	)
Free cash flow before the following			52,880				51,770				2.1				98,049				121,346				(19.2	)
Less:
Interest expense (2)			(6,562	)			(6,562	)			—				(12,827	)			(13,125	)			(2.3	)
Cash taxes			(12,775	)			(9,999	)			27.8				(25,000	)			(29,000	)			(13.8	)
Other adjustments:
Non-cash stock option expense			397				397				—				810				803				0.9
Free cash flow (1)			33,940				35,606				(4.7	)			61,032				80,024				(23.7	)
Operating Margin (4)			34.4	%			35.1	%			(0.7	)			34.1	%			34.5	%			(0.4	)

Operating Highlights

•

During the quarter Shaw Direct added 2,176 customers and as at February 28, 2011 DTH customers total 906,433.

•

Free cash flow for the quarter of $33.9 million compares to $35.6 million in the same period last year.

Revenue of $204.0 million and $410.1 million for the three and six month periods, respectively, was up 1.8% and 2.3% over the same periods last year. The improvement was primarily due to rate increases partially reduced by higher promotional activity. Operating income before amortization for the quarter of $70.2 million compared to the same quarter last year. The revenue related growth in the quarter was offset by higher programming costs. For the year-to-date period, excluding the one-time Part II fee recovery of $26.6 million, operating income before amortization improved 0.9%.

Shaw Communications Inc.

Compared to the first quarter, operating income before amortization improved $0.7 million primarily due to customer rate increases.

Total capital investment of $17.3 million for the quarter declined modestly compared to $18.6 million in the same period last year. The year-to-date investment of $41.7 million decreased over the prior year spend of $43.7 million. Buildings and other was lower mainly due to expenditures in the prior year related to call centre expansion.

During the quarter Shaw Direct added the HGTV HD channel in addition to the 13 HD channels added in the first quarter and now offers 79 HD channels to over 430,000 HD capable customers.

Recently, Shaw Direct announced the launch of its new online VOD library accessible anywhere in Canada that allows customers to watch hundreds of movies and TV shows on-the-go on their computer.

Subscriber Statistics

										February 28, 2011
										Three months ended								Six months ended
														Change								Change
		February 28, 2011				August 31, 2010				Growth				%				Growth				%
DTH customers (1)			906,433				905,796				2,176				0.2				637				—

Shaw Communications Inc.

MEDIA
FINANCIAL HIGHLIGHTS

		Three months ended				October 27, 2010 to
($000’s Cdn)		February 28, 2011				February 28, 2011
Revenue			243,931				369,328
Operating income before amortization (1)			65,475				122,247
Capital expenditures:
Broadcast and transmission			2,079				3,161
Buildings/other			3,200				4,242
Total as per Note 2 to the unaudited interim Consolidated Financial Statements			5,279				7,403
Free cash flow before the following			60,196				114,844
Less:
Interest expense (2)			(15,337	)			(21,821	)
Cash taxes			(10,200	)			(12,200	)
Other adjustments:
Non-cash stock based compensation			243				243
CRTC benefit obligation funding			(4,718	)			(7,026	)
Non-controlling interests			(6,020	)			(9,861	)
Free cash flow (1)			24,164				64,179
Operating margin			26.8	%			33.1	%

Operating Highlights

Revenue in the Media division for the second quarter was $243.9 million and operating income before amortization was $65.5 million. Advertising revenue in the quarter was driven by strength in the Automotive, Retail and Entertainment Equipment sectors. For informational purposes, on a comparative basis to Q2 last year, Media revenues for the three months were up approximately 8% and operating income before amortization improved 16%. The current period saw strong advertiser demand for inventory as ad dollars displaced by last year’s Olympics returned. The 53^rd Annual Grammy Awards were also a success with ad revenues up approximately 50% over last year.

During the quarter Shaw Media experienced continued success with the innovative Global iPad application which has consistently ranked in the top 5 in the Free Entertainment Category, offering viewers an exciting way to access the network’s library of premium content.

Capital investment in the quarter continued on various projects including the Digital TV transition, which is on track for the analog to digital upgrade in the CTRC mandated markets by August 31, 2011, as well as upgrades of aging production equipment and certain new infrastructure to allow migration off platforms previously shared with the former Canwest Publishing division. The integration of various back-office infrastructure is also underway and is expected to be fully transitioned over the next 6 months.

Shaw Communications Inc.

During the quarter management continued to work through the alignment of Shaw Media with the broader Shaw organization. The organizational alignment is now substantially complete and the Shaw Media team has emerged re-focused and energized.

WIRELESS
FINANCIAL HIGHLIGHTS

		February 28, 2011
($000’s Cdn)		Three months ended				Six months ended
Operating expenditures			4,876				5,658
Interest expense (1)			5,114				9,787
Capital expenditures (as per Note 2 to the unaudited interim Consolidated Financial Statements)			32,109				55,450
Total expenditures on Wireless infrastructure build			42,099				70,895

•

During the quarter the Company continued its Wireless infrastructure build and invested $42.1 million on this strategic initiative.

During the six month period Shaw continued equipment purchasing, site acquisition and physical construction of cell sites.

OTHER INCOME AND EXPENSE ITEMS

Amortization

		Three months ended February 28,												Six months ended February 28,
										Change												Change
($000’s Cdn)		2011				2010				%				2011				2010				%
Amortization revenue (expense) -
Deferred IRU revenue			3,136				3,136				—				6,273				6,273				—
Deferred equipment revenue			25,715				30,482				(15.6	)			53,033				61,743				(14.1	)
Deferred equipment costs			(49,892	)			(58,140	)			(14.2	)			(101,998	)			(117,649	)			(13.3	)
Deferred charges			(256	)			(256	)			—				(512	)			(512	)			—
Property, plant and equipment			(157,866	)			(131,741	)			19.8				(306,695	)			(256,380	)			19.6
Other intangibles			(12,068	)			(8,843	)			36.5				(22,074	)			(17,935	)			23.1

Amortization of deferred equipment revenue and deferred equipment costs decreased over the comparative periods due to the sales mix of equipment, changes in customer pricing on certain equipment and the impact of equipment rental programs.

Amortization of property, plant and equipment and other intangibles increased over the comparable periods as the amortization of capital expenditures exceeded the impact of assets that became fully depreciated and the effect of Shaw Media in the current year.

Shaw Communications Inc.

Amortization of financing costs and Interest expense

		Three months ended February 28,												Six months ended February 28,
										Change												Change
($000’s Cdn)		2011				2010				%				2011				2010				%
Amortization of financing costs — long-term debt			1,089				952				14.4				2,109				2,053				2.7
Interest expense			85,237				61,646				38.3				153,932				123,710				24.4

Interest expense increased over the comparative periods as a result of the Canwest broadcasting business acquisition. Approximately $1 billion was required to complete the transaction including repayment of the CW Media term loan and breakage of related currency swaps. In addition, US $338.3 million 13.5% senior unsecured notes were assumed as part of the acquisition.

Debt retirement costs

During the first quarter of the prior year, 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.

Gain on repurchase of debt

As a result of a change of control triggered on the acquisition of the Media business, an offer to purchase all of the US $338.3 million 13.5% senior unsecured notes at a cash price equal to 101% was required. An aggregate US $51.6 million face amount was tendered under the offer and purchased by the Company for cancellation during the second quarter. As a result, the Company recorded a gain of $10 million in respect of the purchase and cancellation. The gain resulted from recognizing the remaining unamortized acquisition date fair value adjustment of $10.5 million in respect of the US $51.6 million net of the 1% repurchase premium of $0.5 million. The Change of Control Offer expired on December 15, 2010 and no further purchases are required.

CRTC benefit obligation

As part of the CRTC decision approving the Media acquisition, the Company is required to contribute approximately $180 million in new benefits to the Canadian broadcasting system over the next seven years. Most of this contribution will be used to create new programming on Shaw Media services, construct digital transmission towers and provide a satellite solution for over-the-air viewers whose local television stations do not convert to digital. The fair value of the obligation on the acquisition date of $139.1 million was determined by discounting future net cash flows using a 5.75% discount rate and has been recorded in the income statement.

Shaw Communications Inc.

Business acquisition, integration and restructuring expenses

The Company incurred costs in respect of the acquisition of the broadcasting businesses of Canwest and organizational restructuring which amounted to $2.8 million and $60.9 million for the three and six months ended February 28, 2011, respectively. Amounts include acquisition related costs to effect the acquisition, such as professional fees paid to lawyers and consultants. The integration and restructuring costs relate to integrating the new businesses and increasing organizational effectiveness for future growth as well as package costs for the former CEO.

Loss on derivative instruments

For derivative instruments where hedge accounting is not permissible or derivatives are not designated in a hedging relationship, the Company records changes in the fair value of derivative instruments in the income statement. In addition, the Media senior unsecured notes have a variable prepayment option which represents an embedded derivative that is accounted for separately at fair value. The total loss recorded in respect of all such derivative instruments was $21.4 million and $22.8 million for the three and six months ended February 28, 2011, respectively, compared to $0.9 million and $45.3 million in the same periods last year. The comparative period also included a loss of $50.1 million which was reclassified from accumulated other comprehensive loss in respect of the cross-currency interest rate exchange agreements that no longer qualified as cash flow hedges when the US senior notes were redeemed in October 2009.

Accretion of long-term liabilities

The Company records accretion expense in respect of the discounting of certain long-term liabilities which are accreted to their estimated value over their respective terms. The expense is primarily in respect of CRTC benefit obligations as well as the liability which arose in 2010 when the Company entered into amended agreements with the counterparties to certain cross-currency agreements to fix the settlement of the principal portion of the swaps in December 2011.

Foreign exchange gain on unhedged long-term debt

In conjunction with the acquisition of the broadcasting businesses of Canwest, the Company assumed a US $389.6 million term loan and US $338.3 million senior unsecured notes. Shortly after closing the acquisition, the Company repaid the term loan including breakage of the related cross currency interest rate swaps. During the second quarter, the Company repurchased and cancelled US $51.6 million face amount of the senior secured notes. As a result of fluctuations of the Canadian dollar relative to the US dollar, a foreign exchange gain of $19.3 million and $22.6 million was recorded for the three and six months ended February 28, 2011, respectively.

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”).

Shaw Communications Inc.

Income taxes

Income taxes were comparable to the same periods last year as the impact of lower net income before income taxes in the current period was offset by an income tax recovery of $17.6 million related to reductions in corporate income tax rates recorded in the first quarter of 2010.

Equity income on investees

During the first quarter, the Company recorded income of $13.4 million in respect of its 49.9% equity interest in CW Media for the period September 1 to October 26, 2010. On October 27, 2010, the Company acquired the remaining equity interest in CW Media as part of its purchase of all the broadcasting assets of Canwest. Results of operations are consolidated effective October 27, 2010. The equity income was comprised of approximately $19.6 million of operating income before amortization partially offset by interest expense of $4.5 million and other net costs of $1.7 million. The remaining equity income on investees is in respect of interests in several specialty channels.

RISKS AND UNCERTAINTIES

The significant risks and uncertainties affecting the Company and its business are discussed in the Company’s August 31, 2010 Annual Report under the Introduction to the Business — Known Events, Trends, Risks and Uncertainties in Management’s Discussion and Analysis. Developments of note since then are as follows:

Access rights — Support Structure Rates

On December 2, 2010 the CRTC issued its decision on rates for third party use of telecommunication carrier support structures and generally approved rate increases, retroactive to July 2009, for the majority of the ILECs that participated.

FINANCIAL POSITION

Total assets at February 28, 2011 were $12.5 billion compared to $10.2 billion at August 31, 2010. Following is a discussion of significant changes in the consolidated balance sheet since August 31, 2010.

Current assets increased by $688.6 million primarily due to increases in cash and cash equivalents of $122.2 million, accounts receivable of $287.0 million, inventories of $36.2 million and prepaids and other of $234.9 million. Cash and cash equivalents increased as the net funds provided by operating and financing activities, including proceeds from the issuance of $1.3 billion of senior notes, exceeded the cash outlay on capital expenditures and the Canwest broadcasting business acquisition. Accounts receivable and prepaids and other increased primarily as a result of the Media acquisition while inventories were higher due to timing of equipment purchases.

The derivative instrument of $8.5 million is in respect of the senior unsecured notes assumed by the Company as part of the Media acquisition. The notes are due in 2015 and have a variable prepayment option at a premium of 106.75 in August 2011 which declines on a straight-line basis to par in 2013.

Shaw Communications Inc.

Investments and other assets decreased by $725.8 million due to the acquisition of remaining equity interest in CW Media which is now consolidated as a 100% owned subsidiary and expensing of acquisition related costs partially offset by investments in several specialty channels purchased in the Media acquisition.

Property, plant and equipment and other intangibles increased by $169.8 million and $87.2 million, respectively as current year capital investment and amounts acquired on the Media acquisition exceeded amortization.

Deferred charges increased by $12.7 million due to higher deferred equipment costs and prepaid maintenance and support contracts.

Broadcast rights and licenses, and goodwill increased $1.4 billion and $671.6 million, respectively, due to the acquisition of the Canwest broadcasting businesses.

Program rights and advances of $96.0 million arose on the acquisition of the Canwest broadcasting businesses.

Current liabilities were up $135.6 million due to increases in accounts payable of $97.1 million, other liability of $160.0 million and derivative instruments of $20.5 million partially offset by a decrease in income taxes payable of $144.5 million. Accounts payable and accrued liabilities increased primarily due to the impact of the Media acquisition partially offset by a reduction in trade and other payables mainly in respect of timing of payment of capital expenditures. Income taxes payable decreased due to funding income tax amounts partially offset by current year tax expense and amounts assumed on the Media acquisition. Derivative instruments increased by $20.5 million due to new US currency forward purchase contracts entered into during the current year as well as reclassifying amounts from non-current liabilities based on settlement dates. The other liability is the obligation in respect of the principal component of the US $300 million amended cross-currency interest rate agreements which has been reclassified from noncurrent liabilities as it settles in December 2011.

Long-term debt increased $1.7 billion primarily as a result of the Canwest broadcasting business acquisition. Approximately $1 billion was required to complete the acquisition, including repayment of the CW Media term loan and breakage of related currency swaps. The acquisition was initially funded by borrowings under the Company’s revolving credit facility, the majority of which was repaid with the net proceeds from the $900 million senior notes offerings in December. As part of the acquisition, the Company assumed CW Media’s US $338.3 million 13.5% senior unsecured notes and subsequently repurchased and cancelled US $51.6 million face amount. In addition, the Company issued $400 million senior notes in February 2011.

Other long-term liabilities increased by $77.1 million mainly due to the non-current portion of CRTC benefit obligations as well as benefit plans as a result of the Media acquisition partially offset by the aforementioned reclassification of the obligation in respect of the principal component of the US $300 million amended cross-currency interest rate agreements.

Shaw Communications Inc.

Derivatives decreased by $6.5 million as amounts have been reclassified to current liabilities based on settlement dates.

Future income taxes increased $259.6 million due to the Media acquisition partially offset by current year tax recovery.

Share capital increased $26.4 million due to the issuance of 1,430,629 Class B Non-Voting Shares under the Company’s option plan. As of March 31, 2011, share capital is as reported at February 28, 2011 with the exception of the issuance of 206,985 Class B Non-Voting Shares upon exercise of options subsequent to the quarter end. Contributed surplus increased due to stock-based compensation expense recorded in the current year. Accumulated other comprehensive income decreased due settlement of the forward purchase contracts in respect of the closing of the acquisition of the Canwest broadcasting businesses. Non-controlling interests arose in the first quarter due to a number of non-wholly owned specialty channels acquired as part of the Media acquisition.

LIQUIDITY AND CAPITAL RESOURCES

In the current year, the Company generated $312 million of free cash flow. Shaw used its free cash flow along with net proceeds of $1.27 billion from its three senior notes issuances, revolving credit facility borrowings of $75 million, proceeds on issuance of Class B Non-Voting Shares of $24.2 million and other net items of $50.3 million to pay $981.2 million to complete the Canwest broadcasting business acquisition including repayment of the CW Media term loan and breakage of related currency swaps, fund the net change in working capital requirements and inventory of approximately $389.0 million, pay common share dividends of $191.0 million, fund $70.9 million of Wireless expenditures, pay $56.4 million to repurchase and cancel a portion of the Media senior unsecured notes, purchase the Lake Broadcasting cable system for $3.5 million and increase cash and cash equivalents by $39.1 million.

Within thirty days of closing of the Media acquisition, a subsidiary of CW Media was required to make a change of control offer at a cash price equal to 101% of the obligations under the US 13.5% senior unsecured notes due 2015 issued by it in accordance with a related indenture dated as of July 3, 2008. As a result, on November 15, 2010, an offer was made to purchase all of the notes for an effective purchase price of US $1,145.58 for each US $1,000 face amount. An aggregate of US $51.6 million face amount was tendered under the offer and purchased by the Company for cancellation for an aggregate price of approximately $60 million, including accrued interest. The change of control offer expired on December 15, 2010 and no further purchases are required.

Shaw Communications Inc.

To allow for timely access to capital markets, the Company filed a short form base shelf prospectus with securities regulators in Canada and the U.S. on November 18, 2010. The shelf prospectus allows for the issue of up to an aggregate $4 billion of debt and equity securities over a 25 month period. Pursuant to this shelf prospectus, the Company completed three senior notes offerings in the second quarter totalling $1.3 billion as follows:

•

On December 7, 2010 the Company issued $500 million senior notes at a rate of 5.5% due December 7, 2020 and issued an additional $400 million under the reopened 6.75% senior notes due November 9, 2039. The effective rate on the $500 million senior notes and $400 million senior notes is 5.548% and 6.963%, respectively, due to discounts on the issuances. The net proceeds from the notes issuances were used to repay borrowings under the Company’s $1 billion revolving credit facility. In conjunction with the senior notes issuances, the unsecured $500 million revolving credit facility was cancelled. No amounts had been drawn under this facility.

•

On February 17, 2011 the Company issued an additional $400 million under the reopened 6.75% senior notes due November 9, 2039. The effective rate is 6.961% due to the discount on issuance. The net proceeds were used for working capital and general corporate purposes as well as to partially repay borrowings under the revolving credit facility while excess funds are being held in cash and cash equivalents.

On November 25, 2010 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 37,000,000 Class B Non-Voting Shares during the period December 1, 2010 to November 30, 2011.

At February 28, 2011, the Company held $339 million in cash and cash equivalents and had access to $974 million of available credit facilities. Based on 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 February 28,												Six months ended February 28,
										Change												Change
($000’s Cdn)		2011				2010				%				2011				2010				%
Funds flow from operations			382,957				358,206				6.9				647,337				697,158				(7.1	)
Net decrease (increase) in non-cash working capital balances related to operations			(48,167	)			21,382				>(100.0	)			(250,660	)			15,989				>(100.0	)
			334,790				379,588				(11.8	)			396,677				713,147				(44.4	)

Funds flow from operations increased over the comparative quarter due to the combined impact of higher operating income before amortization adjusted for non-cash program rights expenses partially offset by higher interest expense and current income taxes. Funds flow from operations decreased over the comparative six month period as the impact of the aforementioned items was more than offset by the realized loss on the mark-to-market payments to terminate the cross-currency interest rate exchange agreements in conjunction with repayment of the CW Media term loan and the acquisition, integration and restructuring costs in the current year. The net change in non-cash working capital balances over the comparable periods is primarily due to funding of income tax amounts in the current year, the timing of payment of various trade and other payables and the seasonal advertising impact of the new Media division on accounts receivable.

Shaw Communications Inc.

Investing Activities

		Three months ended February 28,												Six months ended February 28,
($000’s Cdn)		2011				2010				Increase				2011				2010				Increase
Cash flow used in investing activities			(231,848	)			(196,007	)			35,841				(995,538	)			(715,905	)			279,633

The cash used in investing activities increased over the comparable quarter due to higher capital expenditures and increased cash requirements for inventories. The current six month period was impacted by the aforementioned items as well as amounts paid to complete the acquisition of the broadcasting businesses of Canwest partially offset by the cash outlay in the comparative period for the Mountain Cablevision acquisition and investing certain excess funds in a Government of Canada bond.

Financing Activities

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

		Three months ended February 28,								Six months ended February 28,
(In $millions Cdn)		2011				2010				2011				2010
Bank loans — net borrowings (repayments)			(925.0	)			—				75.0				—
Issuance of Cdn $500 million 5.50% senior notes			498.2				—				498.2				—
Issuance of Cdn $800 million 6.75% senior notes			778.9				—				778.9				—
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			(7.5	)			(0.9	)			(7.5	)			(9.9	)
Repayment of CW Media US $389.6 million term loan			—								(394.9	)			—
Repurchase US $51.6 million of CW Media 13.5% senior notes			(56.4	)			—				(56.4	)			—
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	)
Senior notes repurchase premium			(0.6	)			—				(0.6	)			—
Dividends paid to common shareholders			(95.6	)			(90.9	)			(191.0	)			(181.8	)
Dividends paid to non-controlling interests			(4.5	)			—				(4.5	)			—
Repayment of Partnership debt			(0.2	)			(0.2	)			(0.3	)			(0.3	)
Issue of Class B Non-Voting Shares			6.6				17.6				24.2				25.5
Purchase of Class B Non-Voting Shares for cancellation			—				(90.2	)			—				(118.1	)
			193.9				(164.6	)			721.1				219.4

Shaw Communications Inc.

SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION

						Operating								Basic and diluted				Funds flow
						income before								earnings per				from
($000’s Cdn except per share amounts)		Revenue				amortization (1)				Net income (3)				share				operations (2)
2011
Second			1,196,611				494,524				167,299				0.37				382,957
First			1,078,905				473,354				20,332				0.04				264,380
2010
Fourth			938,872				423,152				121,575				0.28				327,435
Third			943,632				435,822				158,216				0.37				350,810
Second			929,142				424,825				138,712				0.32				358,206
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

Generally, revenue and operating income before amortization have grown quarter-over-quarter mainly due to customer growth and rate increases with the exception of the second and fourth quarters of 2010. In the fourth quarter of 2010, revenue and operating income before amortization declined by $4.8 million and $12.7 million, respectively, due to customer growth offset by timing of On-Demand events, increased promotional activity and timing of certain expenses including maintenance and costs related to customer growth. Operating income before amortization decreased by $50.1 million in the second quarter of 2010 due to the impact of the one-time Part II fee recovery of $75.3 million recorded in the previous quarter.

Net income has fluctuated quarter-over-quarter primarily as a result of the growth in operating income before amortization described above, the impact of the net change in non-operating items such as debt retirement costs and loss on derivative instruments, and the impact of corporate income tax rate reductions. The first quarter of the current year was also impacted by the acquisition of the Canwest broadcasting businesses. As a result, net income declined by $101.2 million in the first quarter of 2011 as the higher operating income before amortization of $50.2 million due to the contribution from the new Media division and lower income taxes of $32.1 million were offset by the CRTC benefit obligation of $139.1 million and acquisition, integration and restructuring costs of $58.1 million. Net income increased by $147.0 million in the second quarter of 2011 due to the impact of the Canwest broadcasting business acquisition in the immediately preceding quarter and higher operating income before amortization and foreign exchange gain on unhedged long-term debt, the total of which was partially offset by increases in interest expense, loss on derivative instruments and income tax expense. 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, the loss on derivative instruments of $44.4 million, the total of which was partially offset by higher 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

Shaw Communications Inc.

taxes and an income tax recovery of $17.6 million related to reductions in corporate income tax rates in the first quarter of 2010. Net income increased by $24.5 million in the second quarter of 2010 due to the aforementioned items recorded in the previous quarter and the impact of customer growth, the Mountain Cablevision acquisition and lower costs including employee related and marketing expenses all of which were partially offset by increased taxes on higher net income before taxes. During the third quarter of 2010, net income increased by $19.5 million mainly due to higher operating income before amortization and lower amortization. Net income declined by $36.6 million in the fourth quarter of 2010 due to lower operating income before amortization of $12.7 million and higher amortization expense of $14.7 million. The decline in net income in the fourth quarter of 2009 of $7.9 million 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.

ACCOUNTING STANDARDS

Update to critical accounting policies and estimates

The Management’s Discussion and Analysis (“MD&A”) included in the Company’s August 31, 2010 Annual Report outlined critical accounting policies including key estimates and assumptions that management has made under these policies and how they affect the amounts reported in the Consolidated Financial Statements. The MD&A also describes significant accounting policies where alternatives exist. The 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 as follows.

Adoption of accounting policies for Shaw Media

The following accounting policies have been adopted for the Company’s new television broadcasting operations (Shaw Media).

Revenue

Subscriber revenue is recognized monthly based on subscriber levels. Advertising revenues are recognized in the period in which the advertisements are broadcast and recorded net of agency commissions as these amounts are paid directly to the agency or advertiser. When a sales arrangement includes multiple advertising spots, the proceeds are allocated to individual advertising spots under the arrangement based on relative fair values.

Program Rights and Advances

Program rights represent licensed rights acquired to broadcast television programs on the Company’s conventional and specialty television channels and program advances are in respect of payments for programming prior to the window license start date. For licensed rights, the Company records a liability for program rights and corresponding asset when the license period has commenced and all of the following conditions have been met: (i) the cost of the program is known or reasonably determinable, (ii) the program material has been accepted by the Company in accordance with the license agreement and (iii) the material is available to the Company for telecast. Program rights are expensed on a systematic basis over the estimated exhibition period as the programs are aired and are included in operating, general and administrative expenses. If program rights are not scheduled, they are considered impaired and are written off.

Shaw Communications Inc.

CRTC Benefit Obligations

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

Asset Retirement Obligations

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

Embedded Derivative Instruments

Derivatives embedded in other financial instruments or contracts are separated from their host contracts and separately accounted for as derivatives when their economic characteristics and risks are not closely related to the host contract, they meet the definition of a derivative and the combined instrument or contract is not measured at fair value. The Company records embedded derivatives at fair value with changes recognized in the income statement as loss/gain on derivative instruments.

Adoption of recent accounting pronouncements

Business Combinations

Effective September 1, 2010, the Company early adopted CICA Handbook Section 1582 “Business Combinations”, which replaces Section 1581 “Business Combinations”. The differences which arise from the new accounting standard relate to details in applying the acquisition method. The significant changes that result include (i) a change in the measurement date for equity instruments issued by the acquirer from a few days before and after the announcement date to the acquisition date, (ii) contingent consideration is recognized at fair value and subsequently remeasured at each reporting date until settled, (iii) future adjustments to income tax estimates are recorded in income whereas previously, certain changes were recorded in goodwill, (iv) acquisition related costs, other than costs to issue debt or equity instruments, and acquisition related restructuring costs must be expensed, (v) for business combinations completed in stages, identifiable net assets are recognized at fair value when control is obtained and a gain or loss is recognized for the difference in fair value and carrying value of the previously held equity interests, (vi) the fair value of identifiable assets and liabilities attributable to non-controlling interests must be recognized, and (vii) non-controlling interests are recorded at either fair value or their proportionate share of the fair value of identifiable net assets acquired.

Shaw Communications Inc.

Consolidated Financial Statements and Non-controlling Interests

Effective September 1, 2010, the Company early adopted CICA Handbook Section 1601 “Consolidated Financial Statements” and Section 1602 “Non-controlling Interests” which replace Section 1600 “Consolidated Financial Statements”. The new standards provide guidance for the preparation of financial statements and accounting for a non-controlling interest in a subsidiary in consolidated financial statements subsequent to a business combination. For presentation and disclosure purposes, non-controlling interests are classified as a separate component of shareholders’ equity. In addition, net income and comprehensive income is attributed to the Company’s shareholders and to non-controlling interests rather than reflecting the non-controlling interests as a deduction to arrive at net income and comprehensive income.

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 table below outlines the phases involved in the changeover to 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.

Shaw Communications Inc.

Phase		Description and status
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.
		During 2009, the Company completed its preliminary identification and assessment of accounting and reporting differences. In addition, training was provided to certain key employees involved in or directly impacted by the conversion process.
		During 2010, the assessment of the impact on information systems and design phase of system changes have been completed and the implementation phase has commenced. The Company has completed further in-depth evaluations of those areas initially identified as being potential accounting and reporting differences, as well as the evaluation of IFRS 1 elections/exemptions which are discussed below.
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.

In the period leading up to the changeover, the AcSB will continue to issue accounting standards that are converged with IFRS, thus mitigating the impact of the adoption of IFRS at the changeover date. The International Accounting Standards Board (“IASB”) will also continue to issue new accounting standards during the conversion period and, as a result, the final impact of IFRS on the Company’s consolidated financial statements will only be measured once all IFRS applicable at the conversion date are known.

The Company’s adoption of IFRS will require the application of IFRS 1, First-Time Adoption of International Financial Reporting Standards (“IFRS 1”), which provides guidance for an entity’s initial adoption of IFRS. IFRS 1 generally requires that an entity apply all IFRS effective at the end of its first IFRS reporting period retrospectively. However, IFRS 1 does include certain mandatory exceptions and limited optional exemptions in specified areas of certain standards from this general requirement. Management is assessing the exemptions available under IFRS 1 and their impact on the Company’s future financial position. On adoption of IFRS, the significant optional exemptions being considered by the Company are as follows:

Shaw Communications Inc.

Exemption		Application of exemption
Business combinations		The Company expects to apply IFRS 3 prospectively from its transition date and elect not to restate any business combinations that occurred prior to September 1, 2010.
Employee benefits		The Company expects to elect to recognize cumulative actuarial gains and losses arising from all of its defined benefit plans as at September 1, 2010 in opening retained earnings.
Borrowing costs		The Company expects to elect to apply IAS 23 “Borrowing Costs” prospectively from September 1, 2010.

Management is in the process of quantifying the expected material differences between IFRS and the current accounting treatment under Canadian GAAP. Set out below are the key areas where changes in accounting policies are expected that may impact the Company’s consolidated financial statements. The list and comments should not be regarded as a complete list of changes that will result from the transition to IFRS. It is intended to highlight those areas management believes to be most significant. However, the IASB has significant ongoing projects that could affect the ultimate differences between Canadian GAAP and IFRS and their impact on the Company’s consolidated financial statements. Consequently, management’s analysis of changes and policy decisions have been made based on its expectations regarding the accounting standards that we anticipate will be effective at the time of transition. The future impacts of IFRS will also depend on the particular circumstances prevailing in those years. At this stage, management is not able to reliably quantify the impacts expected on the Company’s consolidated financial statements for these differences. Please see the section entitled “Cautionary statement regarding forward-looking statements”.

The following significant differences between Canadian GAAP and IFRS have been identified that are expected to impact the Company’s financial statements. This is not an exhaustive list of all of the changes that could occur during the transition to IFRS. At this time, the comprehensive impact of the changeover on the Company’s future financial position and results of operations is not yet determinable.

The Company continues to monitor and assess the impact of evolving differences between Canadian GAAP and IFRS, since the IASB is expected to continue to issue new accounting standards during the transition period. As a result, the final impact of IFRS on the Company’s consolidated financial statements can only be measured once all the applicable IFRS at the conversion date are known.

Shaw Communications Inc.

Differences with respect to recognition, measurement, presentation and disclosure of financial information are expected to be in the following key accounting areas:

Key accounting area		Differences from Canadian GAAP, with potential impact for the Company
Presentation of Financial Statements (IAS 1)		IAS 1 requires additional disclosures in the notes to financial statements.
Share-based Payments (IFRS 2)		IFRS 2 requires cash-settled awards to employees be measured at fair value at the initial grant date and re-measured at fair value at the end of each reporting period. IFRS 2 also requires the fair value of stock-based compensation awards to be recognized using a graded vesting method based on the vesting period of the options.
Income Taxes (IAS 12)		IAS 12 recognition and measurement criteria for deferred tax assets and liabilities may differ.
Employee Benefits (IAS 19)		IAS 19 requires past service costs of defined benefit plans to be expensed on an accelerated basis, with vested past service costs immediately expensed and unvested past service costs amortized on a straight line basis until benefits become vested.
		IAS 19 has an accounting policy choice that allows the Company to recognize actuarial gains and losses using one of the following methods:

•

in net income using the corridor approach amortized over the expected average remaining working lives,

•

in net income on a systematic basis for faster recognition, including immediate recognition of all actuarial gains and losses, or

•

to recognize them in other comprehensive income, as they occur.

		The Company is currently reviewing the impact of the accounting policy choice for recognition of actuarial gains and losses.
Interests in Joint Ventures (IAS 31)		Although IAS 31 currently permits the use of proportionate consolidation for joint venture interests, proposed changes are expected to be finalized prior to transition to require joint venture interests to be accounted for using the equity method.
Impairment of Assets (IAS 36)		IAS 36 uses a one-step approach for the identification and measurement of impairment of assets. The carrying value of assets is compared to the greater of its fair value less costs to sell and value in use, which is based on the net present value of future cash flows. Impairment of assets, other than goodwill, is reversed in a subsequent period if circumstances change such that the previously determined impairment is reduced or eliminated.
Provisions, Contingent Liabilities and Contingent Assets (IAS 37)		IAS 37 uses a different threshold for recognition of a contingent liability that could impact the timing of when a provision may be recorded.
Intangible Assets (IAS 38)		IAS 38 prohibits the amortization of indefinite-lived intangibles and reinstatement of previous amortization is required.

Shaw Communications Inc.

2011 GUIDANCE

With respect to 2011 guidance, the Company expects continued growth in the core Cable and Satellite business and on a preliminary basis, expects that the growth rate of core consolidated operating income before amortization will decline modestly compared to last year’s organic growth rate of approximately 7.5% as a result of competitive market pressures and higher programming costs. Capital investment is expected to decline and cash taxes are estimated to increase.

Overall, preliminary 2011 free cash flow guidance of approximately $550 million provided on October 22, 2010 for the core Cable and Satellite business has not changed. The competitive environment has moderated revenue growth this year in the core business and presented an increased level of risk to the guidance. The recent initiatives undertaken to drive efficiencies through focused cost containment and reductions currently have the Company on track to meet guidance.

As previously provided on January 13, 2011 it is expected that the new Media assets will generate approximately $75 million of free cash flow for the 10 month period of inclusion during fiscal 2011, before considering cash funding of the CRTC benefit obligation amounts. Over the next 7 years the benefit obligation funding is approximately $275 million comprising $180 million from the Shaw acquisition and $95 million remaining from the Canwest acquisition of the Specialty services in 2007. After considering the estimated 2011 CRTC benefit obligation cash funding, Media is expected to contribute approximately $50 million of free cash flow and consolidated fiscal 2011 free cash flow is estimated to approximate $600 million.

The investment associated with the Wireless build is being tracked and reported separately from the free cash flow generated from ongoing operations.

Certain important assumptions for 2011 guidance purposes include: continued overall customer growth; 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; stable advertising demand and rates; cash income taxes to be paid or payable in 2011; and a stable regulatory environment.

See the following section 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.

Shaw Communications Inc.

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 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]		February 28, 2011				August 31, 2010
ASSETS
Current
Cash and cash equivalents			338,951				216,735
Accounts receivable			483,367				196,415
Inventories			89,978				53,815
Prepaids and other			268,703				33,844
Derivative instruments			68,402				66,718
Future income taxes			34,769				27,996
			1,284,170				595,523
Derivative instrument			8,502				—
Investments and other assets			17,516				743,273
Property, plant and equipment			3,174,416				3,004,649
Deferred charges			245,545				232,843
Intangibles
Broadcast rights and licenses [note 3]			6,446,369				5,061,153
Program rights and advances			95,986				—
Spectrum licenses			190,912				190,912
Goodwill [note 3]			840,760				169,143
Other intangibles			243,620				156,469
			12,547,796				10,153,965
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current
Accounts payable and accrued liabilities			720,145				623,070
Income taxes payable			26,034				170,581
Unearned revenue			148,104				145,491
Current portion of long-term debt [note 4]			575				557
Current portion of derivative instruments			100,228				79,740
Other liability [note 9]			159,961				—
			1,155,047				1,019,439
Long-term debt [note 4]			5,651,081				3,981,671
Other long-term liabilities [note 9]			368,580				291,500
Derivative instruments			—				6,482
Deferred credits			631,143				632,482
Future income taxes			1,711,414				1,451,859
			9,517,265				7,383,433
Shareholders’ equity
Share capital [note 5]			2,276,889				2,250,498
Contributed surplus [note 5]			60,768				53,330
Retained earnings			444,875				457,728
Accumulated other comprehensive income (loss) [note 7]			(2,664	)			8,976
Non-controlling interests			250,663				—
			3,030,531				2,770,532
			12,547,796				10,153,965