##### Table of Contents








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##### 



Shaw Communications
 ANNUAL REPORT
 August 31, 2007
   SHAW
    COMMUNICATIONS INC.
    ANNUAL REPORT
   
 CONTENTS

PageReport to Shareholders

1Managements Discussion and Analysis

4Managements Responsibility for Financial
    Statements and Report on Internal Control
    over Financial Reporting

45Independent Auditors Reports

47Consolidated Financial Statements

49Notes to Consolidated Financial Statements

52Five Years in Review

92Shareholders Information

93Corporate Information

96




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##### Table of Contents



Shaw Communications Inc.
    REPORT TO SHAREHOLDERS
    August 31, 2007
      FINANCIAL
    HIGHLIGHTS
    
    Consolidated service revenue increased 13% over last year from
    $2.46 billion to $2.77 billion.
    Total consolidated service operating income before
    amortization1
    improved 15% from $1.08 billion to $1.24 billion.
    Funds flow from
    operations2
    was up 21% from $847 million to $1.03 billion.
    Free cash
    flow1
    grew by 34% from $265 million to $356 million, despite
    an increase in capital investment from $558 million last
    year to $640 million this year.    DELIVERING
    OPERATIONAL EXCELLENCE
              OUR
    STRATEGIC FOCUS IS OUR CUSTOMER
   1




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##### Table of Contents



Shaw Communications Inc.
    REPORT TO SHAREHOLDERS
    August 31, 2007
      line-up
    STRENGTHENING
    OUR FINANCIAL POSITION
            THE
    FUTURE LOOKS BRIGHT
   2




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##### Table of Contents



Shaw Communications Inc.
    REPORT TO SHAREHOLDERS
    August 31, 2007
    [Signed]

[Signed]JR Shaw

Jim ShawExecutive Chair

Chief Executive OfficerShaw Communications Inc.

Shaw Communications Inc.      1
    
    See definitions under key
    performance drivers in Managements Discussion and Analysis.2
    
    Funds flow from operations is
    presented before changes in non-cash working capital as
    presented in the Consolidated Statements of Cash Flows. 3




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##### 



Shaw Communications Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
  November
    22, 2007
  FORWARD
      INDEX
   
  CONTENTS

PageOutlineI.



INTRODUCTION TO THE BUSINESS


6A.

Company overview  core business and strategies


6B.

Seasonality


8C.

Key performance drivers


9D.

Critical accounting policies and estimates


11E.

Related party transactions


16F.

New accounting standards


16G.

Known events, trends, risks and uncertainties


17II.



SUMMARY OF QUARTERLY RESULTS


25III.



RESULTS OF OPERATIONS


27IV.



FINANCIAL POSITION


39V.



CONSOLIDATED CASH FLOW ANALYSIS


40VI.



LIQUIDITY AND CAPITAL RESOURCES


41VII.



ADDITIONAL INFORMATION


43VIII.



COMPLIANCE WITH NYSE CORPORATE GOVERNANCE
    LISTING STANDARDS


43IX.



CERTIFICATION


44    CAUTION
    CONCERNING FORWARD LOOKING STATEMENTS
  forward-looking
 4




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
     5




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
  I.      INTRODUCTION
    TO THE BUSINESS
  A.    Company
    overview  core business and strategies
  i)      Shaw
    Communications Inc.
   1 best-in-class 24/7/365
    ii)      Cable
   Video-on-Demand
    tm tm
    1
 6




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
      tm tm
  E-911, 24/7/365
      line-up
 7




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
        iii)      Satellite
       B.
    Seasonality   8




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
    C.      Key
    performance drivers
    FINANCIAL
    MEASURES:
 i)      Service
    revenue
   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 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 financial performance and as an
    indicator of its ability to service debt and return cash to
    shareholders. These non-GAAP measures have not been presented as
    an alternative to net income or any other measure of performance
    or liquidity prescribed by Canadian or US GAAP. The following
    contains a listing of the Companys use of non-GAAP
    financial measures and provides a reconciliation to the nearest
    GAAP measurement or provides a reference to such
    reconciliation.
  ii)      Service
    operating income before amortization and operating
    margin
 and/or
   9




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
  iii)      Free
    cash flow
   2007


2006


2005($000s Cdn)Cable free cash
    flow(1)


237,601



193,398



228,617Satellite free cash
    flow(2)


118,591



72,047



48,702Consolidated free cash flow


356,192



265,445



277,319    (1)
    The reconciliation of free cash flow for cable is provided on
    page 32.(2)
    The reconciliation of free cash flow for satellite is provided
    on page 37.    STATISTICAL
    MEASURES:
 i)      Subscriber
    counts, including penetration and bundled
    customers
        10




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
  ii)      Customer
    churn
   D.      Critical
    accounting policies and estimates
    i)      Revenue
    and expense recognition
   and/or
   11




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
          Income
    statement classification
   Subscriber
    connection and installation costs
  12




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
    ii)      Allowance
    for doubtful accounts
   iii)      Property,
    plant and equipment  capitalization of direct labour
    and overhead
     1.
    Corporate departments such as engineering and information
    technology. Engineering is primarily involved in overall
    planning and development of the cable/Internet/Digital Phone
    infrastructure. Labour and overhead costs directly related to
    this activity are capitalized as the activities directly relate
    to the planning and design of the construction of the
    distribution system. Over the past several years the information
    technology department has devoted considerable efforts towards
    the development of systems to support Digital Phone and during
    2006 began projects related to a new customer management and
    billing system. Labour costs directly related to these and other
    projects were capitalized.2.
    Cable regional construction departments, which are principally
    involved in constructing, rebuilding and upgrading the
    cable/Internet infrastructure. Labour and overhead costs
    directly related to the construction activity are capitalized as
    the activities directly relate to the construction or upgrade of
    the distribution system. Capital projects include, but are not
    limited to, projects such as new subdivision builds, increasing
    network capacity for internet, Digital Phone and VOD by reducing
    the number of homes fed from each node, and upgrades of plant
    capacity.3.
    Subscriber-related activities such as installation of new drops
    and Internet services. The labour and overhead directly related
    to the installation of new services are capitalized as the
    activity involves the installation of capital assets
    (i.e., wiring, filters, software, etc.) which enhance the
    service potential of the distribution system through the ability
    to earn future service revenues. Costs associated with service
    calls, collections, disconnects and reconnects that do not
    involve the installation of a capital asset are expensed. 13




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
       iv) Property,
    plant and equipment  capitalization of
    interest
   v) Depreciation
    policies and useful lives
   vi) Asset
    impairment
  14




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
    vii) Employment
    benefit plans
   Accrued BenefitObligation at


Pension ExpenseEnd of Fiscal 2007


Fiscal 2007Discount Rate


5.50%



5.25%Impact of: 1% decrease ($000s Cdn)


34,315



4,175   viii) Future
    income taxes
   ix) Commitments
    and contingencies
  15




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
    E. Related
    party transactions
    Normal
    course transactions
   Corus
    Entertainment Inc. (Corus)
   Burrard
    Landing Lot 2 Holdings Partnership
   Other
    transactions
 The Company
    has entered into the following transaction with Corus:
    F.  New
    accounting standards
      (i) Financial
    Instruments
  16




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
            (ii) Accounting
    changes
   G.   Known
    events, trends, risks and uncertainties
      
    Competition and technological change, including change in
    regulatory risks
    Interest rate, foreign exchange, and capital market risks
    Contingencies
    Uninsured risks of loss
    Reliance on suppliers 17




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
  
    Holding Company structure
    Control of Shaw by the Shaw family
    Information systems and internal business processes
    Dividend payments  i) Competition
    and technological change
   CABLE
    TELEVISION AND DTH
            18




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
    line-ups,
  INTERNET
   dial-up dial-up
  dial-up
       19




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
    SATELLITE
    SERVICES
   INTERNET
    INFRASTRUCTURE
   DIGITAL PHONE
          20




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
      IMPACT OF
    REGULATION
   ii) Interest
    rate, foreign exchange, market value and capital market
    risks
 A-1.
    (a)
    Interest rates: Due to the capital-intensive nature of
    Shaws operations, the Company utilizes long-term financing
    extensively in its capital structure. The primary components of
    this structure are:  1.
    Banking facilities as more fully described in Note 9 to the
    Consolidated Financial Statements. 21




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
   2.
    Various Canadian and US denominated senior notes and debentures
    with varying maturities issued in the public and private markets
    as more fully described in Note 9 to the Consolidated
    Financial Statements.3.
    Canadian Originated Preferred Securities (COPrS)
    issued in Canadian dollars with an original term of
    30 years as more fully described in Note 9 to the
    Consolidated Financial Statements.      (b)
    Foreign exchange: As the Company has grown it has accessed US
    capital markets for a portion of its borrowings. Since
    Shaws revenues and assets are primarily denominated in
    Canadian dollars, it faces significant potential foreign
    exchange risks in respect of the servicing of the interest and
    principal components of its US dollar denominated debt. In view
    of this, the Companys policy with respect to US debt is
    that at least 70% of the amounts maturing within the next ten
    years be hedged to protect against exchange fluctuations, and at
    August 31, 2007, 100% of such maturities were hedged. The
    Company utilizes cross-currency swaps, where appropriate, to
    hedge its exposures on US dollar denominated bank and debenture
    indebtedness.      (c)
    Capital markets: The Company requires ongoing access to capital
    markets to support its operations. Changes in capital market
    conditions, including significant changes in market interest
    rates or lending practices, may have a material adverse effect
    on the Companys ability to raise or refinance short-term
    or long-term debt, and thus on its financial position and
    ability to operate. 22




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
   iii) Contingencies
   iv) Uninsured
    risks of loss
     back-up
  v) Reliance
    on suppliers
  23




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
    vi) Holding
    company structure
   vii) Control
    of Shaw by the Shaw family
 and/or
  viii) Information
    systems and internal business processes
   ix) Dividend
    payments
  24




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
  II. SUMMARY
    OF QUARTERLY RESULTS
  Service





Basicoperating income





earnings


Funds flowService


before





per


fromQuarter

revenue


amortization(1)


Net income


share(2)


operations(3)(In $000s Cdn except per share amounts)2007Fourth


715,471



326,052



135,932



0.31



272,545Third


702,238



310,748



91,658



0.21



259,470Second


685,730



303,038



79,751



0.18



252,412First


671,006



299,787



81,138



0.19



243,936Total


2,774,445



1,239,625



388,479



0.90



1,028,3632006Fourth


631,888



275,127



210,369



0.49



220,617Third


626,654



279,544



126,410



0.29



221,099Second


611,197



267,924



45,790



0.11



208,273First


589,545



255,322



75,681



0.17



197,208Total


2,459,284



1,077,917



458,250



1.05



847,197   (1)
    See key performance drivers on page 9.(2)
    Diluted earnings per share equals basic earnings per share
    except for total fiscal 2007 and in the fourth quarter of 2006
    where diluted earnings per share is $0.89 and $0.48,
    respectively.(3)
    Funds flow from operations is presented before changes in net
    non-cash working capital as presented in the Consolidated
    Statement of Cash Flows.     25




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
    Growth in
    subscriber statistics as follows:
  2007


2006Subscriber Statistics

First


Second


Third


Fourth


First


Second


Third


FourthBasic cable customers


12,664



6,625



3,289



(2,057
)


29,429



6,838



2,248



2,766Digital customers


25,331



28,641



20,875



15,709



28,296



18,594



14,733



9,630Internet customers


35,877



40,694



27,873



29,857



54,724



36,296



21,654



25,907Digital Phone Lines


38,197



41,721



51,128



41,604



34,088



28,018



50,294



43,744DTH


2,426



928



5,337



1,686



10,199



6,843



4,283



3,221   Significant
    acquisitions and divestitures:
 
    The acquisitions of several cable systems in British Columbia
    and Ontario, serving a total of approximately 22,000 customers,
    were completed in the fourth quarter of fiscal 2006 and during
    2007. In 2007, these systems generated service operating income
    before amortization of approximately $7.5 million over the
    amounts reported in 2006.  New
    Product Launch:
 
    The initial product launch of Shaw Digital Phone service was in
    Calgary on February 14, 2005 and through the remainder of
    2005 the Company did additional launches in Edmonton and
    Winnipeg. Shaw has continued to expand its Digital Phone service
    area to all major markets and at the end of fiscal 2007 the
    service was available to over 80% of homes passed. 26




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
   III. RESULTS
    OF OPERATIONS
  OVERVIEW
    OF FISCAL 2007 CONSOLIDATED RESULTS
  Change2007


20062007


2006


2005


%


%(In $000s Cdn except per share amounts)Operations:Service revenue


2,774,445



2,459,284



2,209,810



12.8



11.3Service operating income before
    amortization(1)


1,239,625



1,077,917



981,993



15.0



9.8Service operating
    margin(1)


44.7%



43.8%



44.4%Funds flow from
    operations(2)


1,028,363



847,197



728,524



21.4



16.3Net income


388,479



458,250



153,221



(15.2
)


199.1Free cash
    flow(1)


356,192



265,445



277,319



34.2



(4.3
)Balance sheet:Total assets


8,163,739



7,661,543



7,430,185Long-term financial liabilities (including current portion of
    long-term debt)


3,125,398



3,034,109



3,240,348Per share data:Income per share  basic

$
0.90


$
1.05


$
0.34Income per share  diluted

$
0.89


$
1.05


$
0.34Weighted average number of participating shares outstanding
    during period (000s)


432,493



435,332



456,420Cash dividends paid per shareClass A


0.462



0.235



0.153Class B


0.465



0.238



0.155    (1)
    See key performance drivers on page 9.(2)
    Funds flow from operations is presented before changes in
    non-cash working capital as presented in the Consolidated
    Statements of Cash Flows.  Highlights
  
    Net income was $388.5 million for the year compared to
    income of $458.3 million in 2006 and $153.2 million in
    2005.
    Earnings per share were $0.90 compared to $1.05 in 2006 and
    $0.34 in 2005.
    Service revenue for the year improved to $2.77 billion from
    $2.46 billion last year and $2.21 billion in 2005.
    Service operating income before amortization of
    $1.24 billion was up over last years amount of
    $1.08 billion in 2006 and $982.0 million in 2005.
    Consolidated free cash flow increased to $356.2 million
    from $265.4 million in 2006 and $277.3 million in 2005.
    Shareholders approved a two-for-one stock split of the
    Companys outstanding Class A Participating Shares and
    Class B Non-Voting Participating Shares which became
    effective on July 30, 2007. 27




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
  
    During 2007, the Company increased the dividend rate on
    Shaws Class A Participating Shares and Class B
    Non-Voting Participating Shares to an equivalent dividend rate
    of $0.6575 and $0.66, respectively. Dividends paid in 2007
    increased 95% over 2006. Most recently, the Company increased
    the equivalent annual dividend rate on its Class A
    Participating Shares and Class B Non-Voting Participating
    Shares by 9% to $0.7175 and $0.72, respectively. This new rate
    is effective commencing with the monthly dividend paid on
    December 28, 2007.
    In March 2007, the Company closed a $400 million offering
    of 5.70% senior notes due March 2, 2017.
    The footprint of Digital Phone continued to expand with the
    service now being available to over 80% of homes passed. During
    2007 the Company added 172,650 Digital Phone lines and at
    August 31, 2007, the number of Digital Phone lines,
    including pending installations, was 385,357.
    The Shaw customer base continued to grow with increases of
    20,521 for basic cable (2006  41,281); 90,556 for
    digital (2006  71,253); 134,301 for Internet
    (2006  138,581); and 10,377 (2006  24,546)
    for DTH.
    The Company repurchased for cancellation 4,408,400 Class B
    Non-Voting Shares for $104.8 million ($23.76 per share)
    during 2007.  Revenue
    and operating expenses
  2007 vs.
    2006
     2006 vs.
    2005
    28




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
  Amortization
  Change2007


20062007


2006


2005


%


%(In $000s Cdn)Amortization revenue (expense) Deferred IRU revenue


12,547



12,546



12,999







(3.5
)Deferred equipment revenue


104,997



80,256



71,677



30.8



12.0Deferred equipment costs


(203,597
)


(200,218
)


(210,477
)


1.7



(4.9
)Deferred charges


(5,153
)


(5,328
)


(6,595
)


(3.3
)


(19.2
)Property, plant and equipment


(381,909
)


(385,607
)


(408,866
)


(1.0
)


(5.7
)       Interest
  Change2007

20062007

2006

2005

%

%(In $000s Cdn)Interest


245,043



254,303



262,949



(3.6
)


(3.3
)     Gain on
    sale of investments
  Increase (decrease) in income2007

2006

2005

2007

2006(In $000s Cdn)Gain on sale of investments


415



50,315



32,163



(49,900
)


18,152    29




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
  Other
    income and expenses
 Increase (decrease)in income2007


2006


2005


2007


2006(In $000s Cdn)Debt retirement costs






(12,248
)


(6,311
)


12,248



(5,937
)Foreign exchange gain on unhedged long-term debt






5,369



40,518



(5,369
)


(35,149
)Fair value loss on forward currency forward contracts






(360
)


(19,342
)


360



18,982Other gains


9,105



6,205



9,079



2,900



(2,874
)           Income
    tax expense
     Investment
    in Burrard Landing Lot 2 Holdings Partnership
  30




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
    Net
    income per share
  Change2007


20062007


2006


2005


%


%(In $000s Cdn except per share amounts)Net income


388,479



458,250



153,221



(15.2
)


199.1Divided by weighted average number of participating shares
    outstanding during period (000s)


432,493



435,332



456,420



(0.7
)


(4.6
)Income per share  basic

$
0.90


$
1.05


$
0.34



(14.3
)


208.8Income per share  diluted

$
0.89


$
1.05


$
0.34



(15.2
)


208.8     Net
    income
   2007


2006(In $millions Cdn)Increased service operating income before amortization


161.7



95.9Decreased amortization of deferred net equipment costs and
    revenue and
    IRU revenue


21.3



18.4Decreased amortization of deferred charges and property, plant
    and equipment


3.8



24.5Decreased interest expense


9.3



8.6Change in other net costs and
    revenue(1)


(39.4
)


(6.4
)Decreased (increased) income taxes


(226.5
)


164.0(69.8
)


305.0   (1)
    Other net costs and revenue include gain on sale of investments,
    debt retirement costs, foreign exchange gain on unhedged
    long-term debt, fair value loss on foreign currency forward
    contracts, equity income (loss) on investees and other gains as
    detailed in the Consolidated Statements of Income and Deficit. 31




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
   SEGMENTED
    OPERATIONS REVIEW
  CABLE
  FINANCIAL
    HIGHLIGHTS
  Change2007


20062007


2006


2005


%


%($000s Cdn)Service revenue (third party)


2,082,652



1,808,583



1,598,369



15.2



13.2Service operating income before
    amortization(1)


995,694



857,466



797,583



16.1



7.5Less:Interest


205,062



210,758



220,388



(2.7
)


(4.4
)Cash taxes on net income






1,761



5,410



(100.0
)


(67.4
)Cash flow before the following:


790,632



644,947



571,785



22.6



12.8Capital expenditures and equipment subsidies


553,031



451,549



343,168



22.5



31.6Free cash
    flow(1)


237,601



193,398



228,617



22.9



(15.4
)Operating
    margin(1)


47.8%



47.4%



49.9%



0.4



(2.5
)   (1)
    See key performance drivers on page 9.  2007 vs.
    2006
  OPERATING
    HIGHLIGHTS
  
    Digital Phone lines grew by 172,650 to 385,357. Service
    expansion continued in the year with the service now being
    available to over 80% of homes passed.
    Internet penetration of basic exceeds 65% and as at
    August 31, 2007 Shaw had 1,451,756 customers, adding
    134,301 in the year. Digital customers increased by 90,556 to
    763,140 and Basic cable subscribers were up by 20,521 to
    2,226,841.
    During 2007, the Company completed acquisitions of several cable
    systems that complement existing operations, adding
    approximately 20,000 cable subscribers.
    Free cash flow for 2007 of $237.6 million compares to
    $193.4 million last year.
    The Company implemented rate increases on most stand-alone
    services, packages, and on specialty services in September 2006
    and July 2007. The increases generated additional monthly
    revenue of approximately $5.0 million and
    $6.5 million, respectively, once fully implemented.     32




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
  line-up,
        2006 vs.
    2005
  OPERATING
    HIGHLIGHTS
  
    The Company added 43,744 Digital Phone lines and at
    August 31, 2006, the number of Digital Phone lines,
    including pending installations, was 212,707. The expansion of
    Shaws Digital Phone footprint continued with the service
    rolled out during 2006 in Victoria, Vancouver,
    Fort McMurray and other smaller areas including the
    surrounding areas of Calgary and Edmonton.
    Internet penetration of basic at August 31, 2006 was almost
    60%, up from 54.5% at August 31, 2005. Shaw had in excess
    of 1.3 million Internet customers having added 138,581 in
    2006. Digital subscribers were up 71,253 and Basic cable posted
    a 41,281 increase.
    Commencing in October 2005, Shaw introduced rate increases on
    most stand-alone services, packages, and on specialty services.
    The increases generated additional revenue of approximately
    $3.8 million per month once fully implemented in November
    2005.
    Shaw announced the acquisition of several cable systems that
    complement existing operations including Pemberton Cable,
    Saltspring Cablevision, Whistler Cable and Grand Forks, all
    operating in British Columbia, as well as Norcom
    Telecommunications Limited operating in Kenora, Ontario. These
    cable systems provide synergies with existing operations and
    represent growing markets.     33




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
      CAPITAL
    EXPENDITURES AND EQUIPMENT SUBSIDIES  CABLE
  Change2007


20062007


2006


2005


%


%(In $000s Cdn)Capital expenditures and equipment subsidies:New housing
    development(1)


90,016



79,230



79,656



13.6



(0.5
)Success-based(2)


82,238



87,365



60,320



(5.9
)


44.8Upgrades and
    enhancement(3)


254,786



192,875



140,776



32.1



37.0Replacement(4)


44,489



38,807



30,181



14.6



28.6Buildings and other


81,502



53,272



32,235



53.0



65.3553,031



451,549



343,168



22.5



31.6     (1)
    Build out of mainline cable and the addition of drops in new
    subdivisions.(2)
    Capital and equipment subsidies related to the acquisition of
    new customers, including installation of internet and digital
    phone modems, DCTs, filters and commercial drops for Shaw
    Business Solutions customers.(3)
    Upgrades to the plant and build out of fiber backbone to reduce
    use of leased circuits and costs to decrease node size and
    Digital Phone capital.(4)
    Normal replacement of aged assets such as drops, vehicles and
    other equipment. 34




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
   2007 vs.
    2006
   2006 vs.
    2005
   SUBSCRIBER
    STATISTICS
  2007


2006Change





Change2007


2006(1)


2005(1)


Growth


%


Growth


%CABLE:Basic subscribers


2,226,841



2,206,320



2,165,039



20,521



0.9



41,281



1.9Penetration as a % of homes passed


64.6%



65.4%



66.0%Digital customers


763,140



672,584



601,331



90,556



13.5



71,253



11.8Digital deployment (DCTs)


1,016,564



856,797



743,420



159,767



18.6



113,377



15.3INTERNET:Connected and scheduled installations


1,451,756



1,317,455



1,178,874



134,301



10.2



138,581



11.8Penetration as % of basic


65.2%



59.7%



54.5%Stand-alone Internet not included in basic cable


182,569



158,475



138,154



24,094



15.2



20,321



14.7DIGITAL PHONENumber of
    lines(2)


385,357



212,707



56,563



172,650



81.2



156,144



276.1   (1)
    August 31, 2006 and 2005 are restated for comparative
    purposes as if the acquisition of cable systems in British
    Columbia and Ontario had occurred on that date.(2)
    Represents primary and secondary lines on billing plus pending
    installs.   35




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
        Churn(1)

2007


2006


2005Digital customers


14.3
%


14.7
%


15.1
%Internet customers


15.2
%


14.9
%


15.1
%   (1)
    Calculated as the number of new customer activations less the
    net gain of customers during the period divided by the average
    of the opening and closing customers for the applicable period.
    See key performance drivers on page 9. 36




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
   SATELLITE
    (DTH and Satellite Services)
  FINANCIAL
    HIGHLIGHTS
  Change2007


20062007


2006


2005


%


%($000s Cdn)DTH (Star Choice)


605,176



567,807



530,729



6.6



7.0Satellite Services


86,617



82,894



80,712



4.5



2.7Service revenue (third party)


691,793



650,701



611,441



6.3



6.4Service operating income before
    amortization(1)DTH (Star Choice)


196,404



175,401



141,687



12.0



23.8Satellite Services


47,527



45,050



42,723



5.5



5.4243,931



220,451



184,410



10.7



19.5Less:Interest(2)


38,563



42,100



41,384



(8.4
)


1.7Cash taxes on net income






98



334



(100.0
)


(70.7
)Cash flow before the following


205,368



178,253



142,692



15.2



24.9Less capital expenditures and equipment subsidies:Success-based


73,504



85,341



82,780



(13.9
)


3.1Transponders and other


13,273



20,865



11,210



(36.4
)


86.186,777



106,206



93,990



(18.3
)


13.0Free cash
    flow(1)


118,591



72,047



48,702



64.6



47.9Operating margin


35.3%



33.9%



30.2%



1.4



3.7   (1)
    See key performance drivers on page 9.(2)
    Interest is allocated to the Satellite division based on the
    actual cost of debt incurred by the Company to repay prior
    outstanding Satellite debt and to fund accumulated cash deficits
    of Satellite Services and Star Choice.  CUSTOMER
    STATISTICS
  2007


2006


2005Star Choice
    Customers(1)


879,585



869,208



844,662   (1)
    Including seasonal customers who temporarily suspend their
    service.  Churn(2)

2007


2006


2005Star Choice customers


11.3
%


11.5
%


14.6
%   (2)
    Calculated as the number of new customer activations less the
    net gain of customers during the period divided by the average
    of the opening and closing customers for the applicable period.
    See key performance drivers on page 9. 37




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
   SATELLITE
    (DTH and Satellite Services)
  2007 vs.
    2006
  OPERATING
    HIGHLIGHTS
  
    Free cash flow of $118.6 million for 2007 increased from
    $72.0 million in 2006.
    During the year Star Choice added 10,377 customers and as at
    August 31, 2007 customers now total 879,585.
    Rate increases were implemented on most of DTHs
    programming packages. The rate increases, which were effective
    September 2006 for some package types and February 2007 for
    others, generated additional monthly revenue of approximately
    $1.5 million and $0.7 million, respectively, once
    fully implemented.          2006
    vs. 2005
  OPERATING
    HIGHLIGHTS
  
    Free cash flow for the year was $72.0 million compared to
    $48.7 million for 2005.
    DTH added 24,546 customers in 2006 compared to 16,759 in the
    previous year.
    Star Choice received the SQM Group Inc 2005 award for the
    highest customer satisfaction rating, for customer contact in a
    call centre, within the Telecommunications and TV Industry.
    Rate increases were implemented on most of DTHs
    programming packages. The rate increases were effective
    September 1, 2005 for some package types and
    February 1, 2006 for others. Each of the September and
    February rate increases generated additional revenue of
    approximately $0.8 million per month effective in the month
    implemented.
    Customer churn decreased to 11.5% compared to 14.6% in 2005. 38




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
       line-up.
  French-language line-up
  IV.
    FINANCIAL
    POSITION               39




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
          V.
    CONSOLIDATED
    CASH FLOW ANALYSIS  Operating
    activities
  Change2007


20062007


2006


2005


%


%(In $000s Cdn)Funds flow from operations


1,028,363



847,197



728,524



21.4



16.3Net increase in non-cash working
    capital balances related to operations


(28,350
)


(324
)


(86
)


(>100.0
)


(276.7
)1,000,013



846,873



728,438



18.1



16.3     Investing
    activities
  Increase2007


2006


2005


2007


2006(In $000s Cdn)Cash flow used in investing activities


(719,777
)


(489,096
)


(380,032
)


(230,681
)


(109,064
)    40




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
    Financing
    activities
    2007


2006


2005(In $ millions Cdn)Redemption of COPrS






(351.9
)


(172.4
)Cost to terminate foreign currency forward contracts


(0.4
)


(15.8
)


(12.2
)Repayment of $275 million Senior notes










(275.0
)Settlement of Zero Coupon Loan










(27.9
)Bank loans and bank indebtedness  net borrowings
    (repayments)


(300.4
)


(496.3
)


505.6Purchase of Class B Non-Voting Shares for cancellation


(104.8
)


(146.6
)


(287.1
)Dividends


(201.2
)


(103.3
)


(70.5
)Proceeds on bond forward


0.2



2.5



Issuance of Class B Non-Voting Shares


92.1



2.3



0.2Proceeds on prepayments of IRU






0.2



1.2Repayment of Partnership debt


(0.4
)


(0.4
)


(8.6
)Proceeds on $300 million senior unsecured notes






300.0



Proceeds on $450 million senior unsecured notes






450.0



Proceeds on $400 million senior unsecured notes


400.0







Repayment of long-term debt acquired on business acquisition






(0.2
)


Cash flow used in financing activities


(114.9
)


(359.5
)


(346.7
)   VI.
    LIQUIDITY
    AND CAPITAL RESOURCES       41




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
                Debt
    structure
     42




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
    Off-balance
    sheet arrangement and guaranteesGuarantees
   Financial
    instruments
   Contractual
    obligations
   CONTRACTUAL
    OBLIGATIONS
  Payments due by periodWithin








More thanTotal


1 year


2-3 years


4-5 years


5 years(In $000s Cdn)Long-term debt


3,068,554



297,238



595,779



555,693



1,619,844Operating lease obligations
    (maintenance and lease of satellite transponders, lease of
    transmission facilities and lease of premises)


942,293



109,565



200,839



191,432



440,457Purchase obligations


8,384



4,384



4,000







Other long-term obligations


50,940



1,448



5,973



7,762



35,7574,070,171



412,635



806,591



754,887



2,096,058   VII.
    ADDITIONAL
    INFORMATION  www.sedar.com.
  VIII.
    COMPLIANCE
    WITH NYSE CORPORATE GOVERNANCE LISTING STANDARDS  www.shaw.ca
 43




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##### Table of Contents



Shaw Communications
    Inc.
 MANAGEMENTS DISCUSSION
    AND ANALYSIS
 August 31, 2007
    IX.
    CERTIFICATION         44




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##### Table of Contents



Shaw
    Communications Inc.
 MANAGEMENTS
    RESPONSIBILITY FOR FINANCIAL STATEMENTS AND REPORT ON INTERNAL
    CONTROL OVER FINANCIAL REPORTING
    August 31, 2007
  November 22,
    2007
  MANAGEMENTS
    RESPONSIBILITY FOR FINANCIAL REPORTING
              MANAGEMENTS
    REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
     45




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##### Table of Contents



[Signed]

[Signed]Jim ShawChief Executive Officer

Steve WilsonSenior Vice President and
    Chief Financial Officer  46




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##### Table of Contents



Shaw
    Communications Inc.
  INDEPENDENT
    AUDITORS REPORT ON FINANCIAL STATEMENTS
 Under Canadian Generally Accepted
    Auditing Standards and the Standards of the Public Company
    Accounting Oversight Board (United States)
   Shaw Communications Inc.
  Shaw
    Communications Inc.
        Calgary, Canada
    October 24, 2007

-s- Ernst & Young LLPChartered Accountants  47




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##### Table of Contents



Shaw
    Communications Inc.
  INDEPENDENT
    AUDITORS REPORT ON INTERNAL CONTROL OVER FINANCIAL
    REPORTING
 Under the Standards of the Public
    Company Accounting Oversight Board (United States)
   Shaw Communications Inc.
              Calgary, Canada
    October 24, 2007

-s- Ernst & Young LLPChartered Accountants  48




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##### Table of Contents



Shaw
    Communications Inc.
  CONSOLIDATED
    BALANCE SHEETS
     2007


2006[thousands of Canadian dollars]

$


$ASSETS[note 9]CurrentCash and cash equivalents


165,310



Accounts receivable [note 3]


155,499



138,142Inventories [note 4]


60,601



53,994Prepaids and other


23,834



20,870Future income taxes [note 14]


185,000



139,000590,244



352,006Investments and other assets [note 5]


7,881



17,978Property, plant and equipment [note 6]


2,422,900



2,250,056Deferred charges [note 7]


278,525



261,908Intangibles [note 8]Broadcast rights


4,776,078



4,691,484Goodwill


88,111



88,1118,163,739



7,661,543LIABILITIES AND SHAREHOLDERS EQUITYCurrentBank indebtedness [note 9]






20,362Accounts payable and accrued liabilities [notes 13 and
    17]


441,444



461,119Income taxes payable


4,304



4,918Unearned revenue


118,915



106,497Current portion of long-term debt [note 9]


297,238



449861,901



593,345Long-term debt [note 9]


2,771,316



2,995,936Other long-term liability [note 17]


56,844



37,724Deferred credits [note 10]


1,151,724



1,100,895Future income taxes [note 14]


1,327,914



1,123,9386,169,699



5,851,838Commitments and contingencies[notes 9, 16 and
    17]Shareholders equityShare capital [note 11]Class A Shares


2,473



2,475Class B Non-Voting Shares


2,050,687



1,974,491Contributed surplus [note 11]


8,700



5,110Deficit


(68,132
)


(172,701
)Cumulative translation adjustment [note 12]


312



3301,994,040



1,809,7058,163,739



7,661,543   See accompanying notes
    [Signed]

[Signed]JR Shaw

Don MazankowskiDirector

Director  49




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##### Table of Contents



Shaw
    Communications Inc.
  CONSOLIDATED
    STATEMENTS OF INCOME
    AND DEFICIT
     [thousands of Canadian dollars

2007


2006


2005except per share amounts]

$


$


$Service revenue[note 15]


2,774,445



2,459,284



2,209,810Operating, general and administrative expenses


1,534,820



1,381,367



1,227,817Service operating income before amortization[note 15]


1,239,625



1,077,917



981,993Amortization Deferred IRU revenue [note 10]


12,547



12,546



12,999Deferred equipment revenue [note 10]


104,997



80,256



71,677Deferred equipment costs [note 7]


(203,597
)


(200,218
)


(210,477
)Deferred charges [note 7]


(5,153
)


(5,328
)


(6,595
)Property, plant and equipment [note 6]


(381,909
)


(385,607
)


(408,866
)Operating income


766,510



579,566



440,731Interest [notes 7, 9 and 10]


(245,043
)


(254,303
)


(262,949
)521,467



325,263



177,782Gain on sale of investments [note 5]


415



50,315



32,163Debt retirement costs [notes 7 and 9]






(12,248
)


(6,311
)Foreign exchange gain on unhedged long-term debt






5,369



40,518Fair value loss on foreign currency forward contracts






(360
)


(19,342
)Other gains [note 1]


9,105



6,205



9,079Income before income taxes


530,987



374,544



233,889Income tax expense (recovery) [note 14]


142,871



(83,662
)


80,382Income before the following


388,116



458,206



153,507Equity income (loss) on investees [note 5]


363



44



(286
)Net income


388,479



458,250



153,221Deficit, beginning of year


(172,701
)


(428,855
)


(332,791
)Reduction on Class B Non-Voting Shares purchased for
    cancellation [note 11]


(82,702
)


(97,056
)


(175,575
)Amortization of opening fair value loss on a foreign currency
    forward contract [note 7]






(1,705
)


(3,195
)Dividends  Class A Shares and Class B
    Non-Voting Shares


(201,208
)


(103,335
)


(70,515
)Deficit, end of year


(68,132
)


(172,701
)


(428,855
)Earnings per share[note 11]Basic


$0.90



$1.05



$0.34Diluted


$0.89



$1.05



$0.34   See accompanying notes
 50




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##### Table of Contents



Shaw
    Communications Inc.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
     2007


2006


2005[thousands of Canadian dollars]

$


$


$OPERATING ACTIVITIES [note 20]Funds flow from operations


1,028,363



847,197



728,524Net increase in non-cash working capital balances related to
    operations


(28,350
)


(324
)


(86
)1,000,013



846,873



728,438INVESTING ACTIVITIESAdditions to property, plant and equipment [note 15]


(554,565
)


(423,855
)


(336,888
)Additions to equipment costs (net) [note 15]


(96,516
)


(107,929
)


(115,668
)Net increase to inventories


(6,607
)


(8,770
)


(1,648
)Cable business acquisitions [note 2]


(72,361
)


(5,829
)


Proceeds on sale of investments and other assets


15,970



88,143



79,899Costs to terminate IRU










(283
)Acquisition of investments






(9,392
)


(5,265
)Additions to deferred charges [note 7]


(5,698
)


(21,464
)


(179
)(719,777
)


(489,096
)


(380,032
)FINANCING ACTIVITIESIncrease (decrease) in bank indebtedness


(20,362
)


20,362



(4,317
)Proceeds on prepayment of IRU






228



1,216Increase in long-term debt


460,000



1,295,000



755,566Long-term debt repayments


(340,449
)


(1,414,067
)


(729,592
)Cost to terminate foreign currency forward contract
    [note 9]


(370
)


(15,774
)


(12,200
)Proceeds on bond forward


190



2,486



Issue of Class B Non-Voting Shares, net of after-tax
    expenses


92,058



2,274



228Purchase of Class B Non-Voting Shares for cancellation
    [note 11]


(104,763
)


(146,640
)


(287,063
)Dividends paid on Class A Shares and Class B
    Non-Voting Shares


(201,208
)


(103,335
)


(70,515
)(114,904
)


(359,466
)


(346,677
)Effect of currency translation on cash balances and cash
    flows


(22
)


(24
)


(16
)Increase (decrease) in cash and cash equivalents


165,310



(1,713
)


1,713Cash and cash equivalents, beginning of year






1,713



Cash and cash equivalents, end of year


165,310







1,713   See accompanying notes
 51




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##### Table of Contents



Shaw
    Communications Inc.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
   
  1.
    SIGNIFICANT
    ACCOUNTING POLICIES      Basis of
    consolidation
        2007


2006$


$Working capital


720



1,103Deferred charges


139



158Property, plant and equipment


18,808



19,49519,667



20,756Debt


22,561



23,010Proportionate share of net liabilities


(2,894
)


(2,254
)   2007


2006


2005$


$


$Operating, general and administrative expenses


1,829



1,829



1,464Amortization


(707
)


(714
)


(579
)Interest


(1,418
)


(1,445
)


(1,177
)Other gains


735



2,588



7,470Proportionate share of income before income taxes


439



2,258



7,178Cash flow provided by operating activities


1,284



74



1,310Cash flow provided by investing activities






8,848



18,023Cash flow used in financing activities


(449
)


(422
)


(8,637
)Proportionate share of increase in cash


835



8,500



10,696  52




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##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
  Investments
  and/or
  Revenue
    and expenses
  (i)
    Service
    revenue        (ii)
    Deferred
    equipment revenue and deferred equipment costs       53




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##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
  (iii)
    Deferred
    IRU revenue    Cash and
    cash equivalents
    Inventories
  first-in,
  Property,
    plant and equipment
    Asset

Estimated useful lifeCable and telecommunications distribution system

6-15 yearsDigital cable terminals and modems

5-7 yearsSatellite audio, video and data network equipment and DTH
    receiving equipment

4-10 yearsBuildings

20-40 yearsData processing

4 yearsOther

3-10 years     Deferred
    charges
   54




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##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
    Intangibles
      Deferred
    credits
    Interest
    capitalization
    Income
    taxes
    Foreign
    currency translation
   55




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##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
          Derivative
    financial instruments
      Employee
    benefit plans
   56




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##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
      Stock-based
    compensation
      Earnings
    per share
    Guarantees
    Use of
    estimates and measurement uncertainty
   57




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##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
    Recent
    Canadian accounting pronouncements
  (i)
    Financial
    instruments            58




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##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
  (ii)
    Accounting
    changes    2.
    BUSINESS
    ACQUISITIONS AND DIVESTITURE  Cable
    business acquisitions
  2007Issuance of Class B


TotalNon-Voting


purchaseCash


Shares


price$


$


$(i) Cable systems


72,336



3,000



75,336   2006TotalpurchaseCash

Accounts payable

price$

$

$(ii) Cable systems


5,829



25



5,854     2007


2006$


$Identifiable net assets acquired at assigned fair valuesProperty, plant and equipment


8,232



957Broadcast rights [note 8]


84,594



6,83792,826



7,794Working capital deficiency


2,973



129Long-term debt






218Future income taxes


14,517



1,59317,490



1,940Purchase price


75,336



5,854   (i)
    During 2007, the Company purchased four cable systems serving
    approximately 20,200 basic subscribers in British Columbia and
    Ontario. The $3,000 value of the 179,588 Class B Non-Voting
    Shares, issued as partial consideration for one of the
    acquisitions, was determined based upon the average market price
    over a short period prior to the date the terms of the purchase
    were agreed to and announced. 59




---



##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
   (ii)
    Effective June 30, 2006 and July 31, 2006, the Company
    purchased two cable systems serving approximately 1,800 basic
    subscribers in British Columbia.  Divestiture
    3.
    ACCOUNTS
    RECEIVABLE  2007


2006$


$Subscriber and trade receivables


161,765



155,583Due from officers and employees


230



339Due from related parties [note 18]


841



1,318Miscellaneous receivables


7,842



8,981170,678



166,221Less allowance for doubtful accounts


(15,179
)


(28,079
)155,499



138,142     4.
    INVENTORIES  2007

2006$

$Subscriber equipment


57,628


51,203Other


2,973


2,79160,601


53,994     5.
    INVESTMENTS
    AND OTHER ASSETS  2007

2006$

$Investments, at cost net of write-downs:Investments in publicly traded companies (market value
    2006$9,645)





9,392Investments in private technology companies


1,295


1,295Other assets:Employee home relocation mortgages and loans
    [note 18]


4,746


5,446Other


1,840


1,8457,881


17,978  60




---



##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
  Canadian
    Hydro
    Q9
    Networks
    Investments
    at equity
      2007


2006


2005$


$


$Specialty channel networks






(91
)


(346
)Other


363



135



60363



44



(286
)   Motorola
    Other
   61




---



##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
  6.
    PROPERTY,
    PLANT AND EQUIPMENT  2007


2006Accumulated


Net book





Accumulated


Net bookCost


amortization


value


Cost


amortization


value$


$


$


$


$


$Cable and telecommunications distribution system


3,336,559



1,562,989



1,773,570



3,046,373



1,371,765



1,674,608Digital cable terminals and modems


283,215



153,746



129,469



410,637



303,959



106,678Satellite audio, video and data network equipment and DTH
    receiving equipment


176,809



99,177



77,632



348,119



255,277



92,842Buildings


268,475



83,141



185,334



254,048



70,068



183,980Data processing


126,672



58,147



68,525



104,900



50,883



54,017Other assets


195,793



105,686



90,107



187,323



104,953



82,3704,387,523



2,062,886



2,324,637



4,351,400



2,156,905



2,194,495Land


34,109







34,109



33,112







33,112Assets under construction


64,154







64,154



22,449







22,4494,485,786



2,062,886



2,422,900



4,406,961



2,156,905



2,250,056     7.
    DEFERRED
    CHARGES  2007


2006Accumulated


Net book





Accumulated


Net bookCost


amortization


value


Cost


amortization


value$


$


$


$


$


$Equipment costs


622,811



399,695



223,116



616,627



409,060



207,567Financing costs and credit facility
    arrangement fees


56,573



21,037



35,536



66,486



29,985



36,501Connection and installation costs


32,349



24,187



8,162



40,214



27,388



12,826Other


11,814



103



11,711



5,370



356



5,014723,547



445,022



278,525



728,697



466,789



261,908    62




---



##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
  8.
    INTANGIBLES  Carrying amount2007


2006$


$Broadcast rightsCable systems


3,792,946



3,708,352DTH and satellite services


983,132



983,1324,776,078



4,691,484Goodwill  non-regulated satellite services


88,111



88,111Net book value


4,864,189



4,779,595     Broadcast rights


Goodwill$


$August 31, 2005


4,684,647



88,111Business acquisitions [note 2]


6,837



August 31, 2006


4,691,484



88,111Business acquisitions [note 2]


84,594



August 31, 2007


4,776,078



88,111  63




---



##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
  9.
    LONG-TERM
    DEBT  2007


2006Translated








Translatedat year-end


Adjustment


Translated


at year-end


Adjustment


TranslatedEffective

exchange


for hedged


at hedged


exchange


for hedged


at hedgedinterest rates

rate


debt(1)


rate


rate


debt(1)


rate%

$


$


$


$


$


$CorporateBank loans

Fixed and
    variable














280,000







280,000Senior notes 5.70% Senior notes due March 2, 2017

5.72


400,000







400,000











6.10% Senior notes due November 16, 2012

6.11


450,000







450,000



450,000







450,0006.15% Senior notes due May 9, 2016

6.34


300,000







300,000



300,000







300,0007.40% Senior notes due October 17, 2007

7.40


296,760







296,760



296,760







296,760US $440,000 8.25% Senior notes due April 11, 2010

7.88


464,728



177,892



642,620



486,332



156,288



642,620US $225,000 7.25% Senior notes due April 6, 2011

7.68


237,645



118,193



355,838



248,693



107,145



355,838US $300,000 7.20% Senior notes due
    December 15, 2011

7.61


316,860



159,990



476,850



331,590



145,260



476,8507.50% Senior notes due November 20, 2013

7.50


350,000







350,000



350,000







350,000COPrS Due September 30, 2027

8.54


100,000







100,000



100,000







100,0002,915,993



456,075



3,372,068



2,843,375



408,693



3,252,068Other subsidiaries and entitiesVideon CableSystems Inc.
    8.15% Senior Debentures Series A due
    April 26, 2010

7.63


130,000







130,000



130,000







130,000Burrard Landing Lot 2 Holdings Partnership

6.31


22,561







22,561



23,010







23,010152,561







152,561



153,010







153,010Total consolidated debt




3,068,554



456,075



3,524,629



2,996,385



408,693



3,405,078Less current portion




297,238







297,238



449







4492,771,316



456,075



3,227,391



2,995,936



408,693



3,404,629   (1)
    Foreign denominated long-term debt is translated at the year-end
    rate. If the rate of translation was adjusted to reflect the
    hedged rates of the Companys cross-currency interest rate
    agreements (which fix the liability for interest and principal),
    long-term debt would increase by $456,075 (2006 
    $408,693) representing the amount of the corresponding deferred
    foreign exchange gain in deferred credits (see note 10).    Corporate
  Bank
    loans
   64




---



##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
        Senior
    notes
        US Senior




Effectivenote principal

Coupon rate


interest rate


Exchange rate$

%


%


Cdn $ vs US$440,000


8.25



7.88



1.4605225,000


7.25



7.68



1.5815300,000


7.20



7.61



1.5895   COPrS
   65




---



##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
      Satellite
    Services
    Other
    subsidiaries and entities
  Videon CableSystems Inc. (Videon)
      Burrard
    Landing Lot 2 Holdings Partnership
    Debt
    retirement costs
   66




---



##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
      Debt
    covenants
    Long-term
    debt repayments
    Exchange rateAt year-end


adjusted forexchange rate


hedged rates$


$2008


297,238



297,2382009


509



5092010


595,270



773,1622011


238,221



356,4142012


317,472



477,462Thereafter


1,619,844



1,619,8443,068,554



3,524,629   10.
    DEFERRED
    CREDITS  2007


2006Accumulated


Net book





Accumulated


Net bookAmount


amortization


value


Amount


amortization


value$


$


$


$


$


$IRU prepayments


629,119



81,611



547,508



629,119



69,064



560,055Foreign exchange gains on translating hedged long-term debt
    [note 9]


456,075







456,075



408,693







408,693Equipment revenue


331,980



199,252



132,728



277,317



165,972



111,345Connection fee and installation revenue


37,007



27,174



9,833



42,797



28,600



14,197Fair value adjustment on debt assumed on acquisition


6,084



4,354



1,730



6,084



3,684



2,400Bond forward proceeds


2,486



636



1,850



2,486



281



2,205Deposit on future fiber sale


2,000







2,000



2,000







2,0001,464,751



313,027



1,151,724



1,368,496



267,601



1,100,895  67




---



##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
      11.
    SHARE
    CAPITAL  Authorized
        Number of securities




2007


20062007

2006




$


$22,563,064


22,583,864


Class A Shares


2,473



2,475408,770,759


407,299,808


Class B Non-Voting Shares


2,050,687



1,974,491431,333,823


429,883,672





2,053,160



1,976,966   Class A
    Shares and Class B Non-Voting Shares
   68




---



##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
    Class B Non-VotingClass A Shares


SharesNumber


$


Number


$August 31, 2004


22,719,864



2,490



440,218,744



2,132,943Class A Share conversions


(30,000
)


(3
)


30,000



3Purchase of shares for cancellation










(23,011,000
)


(111,488
)Stock option exercises










30,266



228August 31, 2005


22,689,864



2,487



417,268,010



2,021,686Class A Share conversions


(106,000
)


(12
)


106,000



12Purchase of shares for cancellation










(10,239,800
)


(49,584
)Stock option exercises










165,598



2,377August 31, 2006


22,583,864



2,475



407,299,808



1,974,491Class A Share conversions


(20,800
)


(2
)


20,800



2Purchase of shares for cancellation










(4,408,400
)


(22,061
)Stock option exercises










5,678,963



95,398Issued in respect of acquisition










179,588



3,000Share issue costs














(143
)August 31, 2007


22,563,064



2,473



408,770,759



2,050,687     Stock
    option plan
     69




---



##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
    2007


2006


2005Weighted





Weighted





Weightedaverage





average





averageexercise





exercise





exerciseprice





price





priceNumber


$


Number


$


Number


$Outstanding, beginning of year


19,117,602



16.30



16,904,500



16.30



15,694,000



16.28Granted


6,693,500



19.03



5,539,000



16.31



3,566,000



16.31Forfeited


(2,594,140
)


17.56



(3,216,000
)


16.32



(2,355,500
)


16.19Exercised


(5,642,161
)


16.28



(109,898
)


15.92







Outstanding, end of year


17,574,801



17.08



19,117,602



16.30



16,904,500



16.30     Options outstanding


Options exercisableNumber


Weighted


Weighted


Number


Weightedoutstanding at


average


average


exercisable at


averageAugust 31,


remaining


exercise


August 31,


exerciseRange of prices

2007


contractual life


price


2007


price$8.69


20,000



6.14


$
8.69



15,000


$
8.69$14.85  $22.27


16,522,801



6.27


$
16.76



8,221,935


$
16.32$22.28  $22.32


1,032,000



9.75


$
22.32







     2007


2006


2005$


$


$Net income


388,479



458,250



153,221Fair value of stock option grants


119



1,870



5,772Pro forma net income


388,360



456,380



147,449Pro forma basic earnings per share


0.90



1.05



0.32Pro forma diluted earnings per share


0.89



1.04



0.32     2007


2006


2005Dividend yield


2.79
%


1.91
%


1.47
%Risk-free interest rate


4.12
%


3.98
%


3.54
%Expected life of options


4 years



4 years



4 yearsExpected volatility factor of the future expected market price
    of Class B Non-Voting Shares


26.0
%


20.4
%


36.7
%  70




---



##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
    Other
    stock options
      Warrants
      Contributed
    surplus
    2007


2006$


$Balance, beginning of year


5,110



1,866Stock-based compensation


6,787



3,272Stock options exercised


(3,197
)


(28
)Balance, end of year


8,700



5,110   Dividends
   71




---



##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
      Share
    transfer restriction
    Earnings
    per share
    2007


2006


2005Numerator for basic and diluted earnings per share($)


388,479



458,250



153,221Denominator (thousands of shares)Weighted average number of Class A Shares and Class B
    Non-Voting
    Shares for basic earnings per share


432,493



435,332



456,420Effect of potentially dilutive securities


3,249







Weighted average number of Class A Shares and Class B
    Non-Voting
    Shares for diluted earnings per share


435,742



435,332



456,420Earnings per share($)Basic


0.90



1.05



0.34Diluted


0.89



1.05



0.34     12.
    FOREIGN
    CURRENCY CUMULATIVE TRANSLATION ADJUSTMENT  2007


2006$


$Balance, beginning of year


330



365Current years deferred translation adjustment


(18
)


(35
)Balance, end of year


312



330  72




---



##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
  13.
    ACCOUNTS
    PAYABLE AND ACCRUED LIABILITIES  2007


2006$


$Trade


41,871



63,374Accrued liabilities


192,435



188,242Accrued network fees


100,468



116,077Interest


86,504



75,412Related parties [note 18]


18,718



16,926Current portion of pension plan liability [note 17]


1,448



1,088441,444



461,119   14.
    INCOME
    TAXES    2007


2006$


$Future income tax liabilities:Property, plant and equipment


133,225



101,670Broadcast rights


1,015,800



1,012,448Partnership income


281,208



259,4751,430,233



1,373,593Future income tax assets:Non-capital loss carryforwards


280,628



381,756Deferred charges


6,691



5,335Investments






1,564287,319



388,655Net future income tax liability


1,142,914



984,938Current portion of future income tax asset


185,000



139,000Future income tax liability


1,327,914



1,123,938      73




---



##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
    2007


2006


2005$


$


$Current statutory income tax rate


33.75%



33.75%



35.50%Income tax expense at current statutory rates


179,208



126,409



83,031Increase (decrease) in taxes resulting from:Large corporations tax






1,859



5,730Non-taxable portion of foreign exchange gains or losses and
    amounts on sale/write-down of assets and investments


(95
)


(9,077
)


(9,903
)Valuation allowance


(9,941
)


(29,091
)


Effect of future tax rate reductions


(25,535
)


(175,752
)


Originating temporary differences recorded at future tax rates
    expected to be in effect when realized


(3,040
)


750



(67
)Other


2,274



1,240



1,591Income tax expense (recovery)


142,871



(83,662
)


80,382     2007


2006


2005$


$


$Current tax expense






1,859



5,744Future income tax expense related to origination and reversal of
    temporary differences


178,347



119,322



74,638Future income tax recovery resulting from rate changes and
    valuation allowance


(35,476
)


(204,843
)


Income tax expense (recovery)


142,871



(83,662
)


80,382   15.
    BUSINESS
    SEGMENT INFORMATION      74




---



##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
  2007SatelliteCable


DTH


Satellite Services


Total


Total$


$


$


$


$Service revenue  total


2,086,066



611,713



90,117



701,830



2,787,896Intersegment


(3,414
)


(6,537
)


(3,500
)


(10,037
)


(13,451
)2,082,652



605,176



86,617



691,793



2,774,445Service operating income before amortization


995,694



196,404



47,527



243,931



1,239,625Service operating income as % of external revenue


47.8%



32.5%



54.9%



35.3%



44.7%Interest(1)


205,062



n/a



n/a



38,563



243,625Burrard Landing Lot 2 Holdings Partnership


















1,418245,043Cash
    taxes(1)


















Segment assets


6,300,834



894,893



529,411



1,424,304



7,725,138Corporate assets


















438,601Total assets


















8,163,739Capital expenditures and equipment subsidies by segmentCapital expenditures


533,485



3,958



5,849



9,807



543,292Equipment subsidies


19,546



76,970







76,970



96,516553,031



80,928



5,849



86,777



639,808Reconciliation to Consolidated Statement of Cash FlowsAdditions to property, plant and equipment


















554,565Additions to equipment costs (net)


















96,516Total of capital expenditures and equipment 
    costs (net) per Consolidated Statements of 
    Cash Flows


















651,081Decrease in working capital related to capital expenditures


















(7,678
)Less: IRU
    prepayments(3)


















(7
)Less: Satellite services equipment
    profit(4)


















(3,588
)Total capital expenditures and equipment subsidies reported by
    segments


















639,808     75




---



##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
  2006SatelliteCable


DTH


Satellite Services


Total


Total$


$


$


$


$Service revenue  total


1,811,579



573,100



86,434



659,534



2,471,113Intersegment


(2,996
)


(5,293
)


(3,540
)


(8,833
)


(11,829
)1,808,583



567,807



82,894



650,701



2,459,284Service operating income before amortization


857,466



175,401



45,050



220,451



1,077,917Service operating income as  % of external revenue


47.4%



30.9%



54.3%



33.9%



43.8%Segment
    interest(1)


210,758



n/a



n/a



42,100



252,858Burrard Landing Lot 2 Holdings Partnership


















1,445Total interest


















254,303Cash
    taxes(1)


1,761



n/a



n/a



98



1,859Segment assets


5,965,103



896,941



564,044



1,460,985



7,426,088Corporate assets


















235,455Total assets


















7,661,543Capital expenditures and equipment subsidies by segmentCapital expenditures


432,156



5,598



12,072



17,670



449,826Equipment subsidies


19,393



88,536







88,536



107,929451,549



94,134



12,072



106,206



557,755Reconciliation to Consolidated Statements of Cash FlowsAdditions to property, plant and equipment


















423,855Additions to equipment costs (net)


















107,929Total of capital expenditures and equipment costs (net) per
    Consolidated Statements of Cash Flows


















531,784Increase in working capital related to capital expenditures


















31,343Less: Partnership capital
    expenditures(2)


















(1,803
)Less: IRU
    prepayments(3)


















(281
)Less: Satellite services equipment
    profit(4)


















(3,288
)Total capital expenditures and equipment subsidies reported by
    segments


















557,755    76




---



##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
  2005SatelliteCable


DTH


Satellite Services


Total


Total$


$


$


$


$Service revenue  total


1,601,126



535,333



90,152



625,485



2,226,611Intersegment


(2,757
)


(4,604
)


(9,440
)


(14,044
)


(16,801
)1,598,369



530,729



80,712



611,441



2,209,810Service operating income before amortization


797,583



141,687



42,723



184,410



981,993Service operating income as % of external revenue


49.9%



26.7%



52.9%



30.2%



44.4%Segment
    interest(1)


220,388



n/a



n/a



41,384



261,772Burrard Landing Lot 2 Holdings Partnership


















1,177Total interest


















262,949Cash
    taxes(1)


5,410



n/a



n/a



334



5,744Segment assets


5,788,468



877,397



534,278



1,411,675



7,200,143Corporate assets


















230,042Total assets


















7,430,185Capital expenditures and equipment
    subsidies by segmentCapital expenditures


313,056



2,049



6,385



8,434



321,490Equipment subsidies


30,112



85,556







85,556



115,668343,168



87,605



6,385



93,990



437,158Reconciliation to Consolidated Statements
    of Cash FlowsAdditions to property, plant and equipment


















336,888Additions to equipment costs (net)


















115,668Total of capital expenditures and equipment costs (net) per
    Consolidated Statements of Cash Flows


















452,556Increase in working capital related to capital expenditures


















4,378Less: Partnership capital
    expenditures(2)


















(15,045
)Less: IRU
    prepayments(3)


















(1,198
)Less: Satellite services equipment
    profit(4)


















(3,533
)Total capital expenditures and equipment subsidies reported
    by segments


















437,158   (1)
    The Company reports interest and cash taxes on a segmented basis
    for Cable and combined satellite only. It does not report
    interest and cash taxes on a segmented basis for DTH and
    Satellite Services.(2)
    Consolidated capital expenditures include the Companys
    proportionate share of the Partnerships capital
    expenditures which the Company is required to proportionately
    consolidate (see note 1). As the Partnership is financed by
    its own debt facility with limited recourse to the Company, the
    Partnerships capital expenditures are subtracted from the
    calculation of segmented capital expenditures and equipment
    subsidies.(3)
    Prepayments on IRUs in amounts not exceeding the costs to build
    the fiber subject to the IRUs are subtracted from the
    calculation of segmented capital expenditures and equipment
    subsidies.(4)
    The profit from the sale of satellite equipment is subtracted
    from the calculation of segmented capital expenditures and
    equipment subsidies as the Company views the profit on sale as a
    recovery of expenditures on customer premise equipment. 77




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##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
   16.
    COMMITMENTS
    AND CONTINGENCIES  Commitments
  (i)
    During prior years, the Company, through its subsidiaries,
    purchased 28 Ku-band transponders on the Anik F1 satellite and
    18 Ku-band transponders on the Anik F2 satellite from Telesat
    Canada. In addition, the Company leases a number of C-band and
    Ku-band transponders. Under the Ku-band F1 and F2 transponder
    purchase agreements, the Company is committed to paying an
    annual transponder maintenance fee for each transponder acquired
    from the time the satellite becomes operational for a period of
    15 years.(ii)
    The Company has various long-term commitments for the
    maintenance and lease of satellite transponders, lease of
    transmission facilities, and lease of premises as follows:  $2008


109,5652009


103,3372010


97,5022011


96,7732012


94,659Thereafter


440,457942,293     (iii)
    At August 31, 2007, the Company had capital expenditure
    commitments of $8,384 covering a three-year period.  Contingencies
      Guarantees
   78




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##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
  Indemnities
        Irrevocable
    standby letters of credit and performance bonds
    17.
    PENSION
    PLANS  Defined
    contribution pension plans
    Defined
    benefit pension plan
   79




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##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
    2007


2006$


$Accrued benefit obligation, beginning of year


111,086



100,004Current service cost


2,956



2,271Interest cost


6,129



5,088Actuarial losses


13,881



4,811Past service cost


25,767



Payment of benefits to employees


(1,328
)


(1,088
)Accrued benefit obligation, end of year


158,491



111,086Plan value of assets, end of year






Plan deficit, end of year


(158,491
)


(111,086
)   Reconciliation of accrued
    benefit obligation to Consolidated Balance

2007

2006Sheet accrued pension benefit liability

$

$Balance of unamortized pension obligation:Unamortized past service costs


38,479


20,275Unamortized actuarial loss


61,720


51,999100,199


72,274Accrued pension benefit liability recognized in Consolidated
    Balance Sheet:Accounts payable and accrued liabilities


1,448


1,088Long-term liability


56,844


37,72458,292


38,812Accrued benefit obligation, end of year as above


158,491


111,086     2007

2006Accrued benefit
    obligation

%

%Discount rate


5.50


5.25Rate of compensation increase


5.00


5.00   2007

2006

2005Benefit cost for the
    year

%

%

%Discount rate


5.25


5.00


6.25Rate of compensation increase


5.00


4.00


3.00  80




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##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
    2007


2006


2005$


$


$Current service cost


2,956



2,271



996Interest cost


6,129



5,088



3,930Past service cost


25,767







Actuarial losses


13,881



4,811



34,330Difference between amortization of actuarial loss recognized for
    the year and actual actuarial loss on the accrued benefit
    obligation for the year


(9,721
)


(1,036
)


(32,579
)Difference between amortization of past service costs recognized
    for the year and actual past service costs on the accrued
    benefit obligation for the year


(18,204
)


2,567



2,567Pension expense


20,808



13,701



9,244       $2008


1,4482009


2,0382010


3,9352011


3,9002012


3,8622013  2017


35,757   18.
    RELATED
    PARTY TRANSACTIONS    Normal
    course transactions
    Corus Entertainment Inc. (Corus)
   81




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##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
      Burrard
    Landing Lot 2 Holdings Partnership
    Other
        Other
    transactions
       82




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##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
  19.
    FINANCIAL
    INSTRUMENTS  Fair
    values
    (i)
    Current assets and current liabilities    (ii)
    Investments and other assets  a)
    The fair value of publicly traded shares included in this
    category is determined by the closing market values for those
    investments.b)
    The carrying value of other investments in this category
    approximates their fair value.  (iii)
    Long-term debt  a)
    The carrying value of bank loans approximates their fair value
    because interest charges under the terms of the bank loans are
    based upon current Canadian bank prime and bankers
    acceptance rates and on US bank base and LIBOR rates.  b)
    The fair value of publicly traded notes is based upon current
    trading values. Other notes and debentures are valued based upon
    current trading values for similar instruments.  (iv)
    Derivative financial instruments      2007


2006Carrying


Estimated


Carrying


Estimatedvalue


fair value


value


fair value$


$


$


$Long-term debt


3,068,554



3,101,732



2,996,385



3,087,729Derivative financial instruments Interest exchange agreements














1,996Cross-currency interest rate exchange agreements






510,731







517,121US currency purchase and purchase option contracts






15,948







14,4083,068,554



3,628,411



2,996,385



3,621,254    83




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##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
      Credit
    risks
      20.
    CONSOLIDATED
    STATEMENTS OF CASH FLOWS    (i)
    Funds flow from operations  2007


2006


2005$


$


$Net income


388,479



458,250



153,221Non-cash items:Amortization Deferred IRU revenue


(12,547
)


(12,546
)


(12,999
)Deferred equipment revenue


(104,997
)


(80,256
)


(71,677
)Deferred equipment costs


203,597



200,218



210,477Deferred charges


5,153



5,328



6,595Property, plant and equipment


381,909



385,607



408,866Future income tax expense (recovery)


142,871



(85,521
)


74,638Write-down of investments






519



1,937Gain on sale of investments


(415
)


(50,315
)


(32,163
)Equity loss (income) on investees


(363
)


(44
)


286Debt retirement costs






12,248



6,311Fair value loss on foreign currency forward contracts






360



19,342Foreign exchange gain on unhedged long-term debt






(5,369
)


(40,518
)Stock-based compensation


6,787



3,272



1,454Defined benefit pension plan


19,120



12,612



8,178Other


(1,231
)


2,834



(5,424
)Funds flow from operations


1,028,363



847,197



728,524  84




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##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
  (ii)
    Changes in non-cash working capital balances related to
    operations include the following:  2007


2006


2005$


$


$Accounts receivable


(16,435
)


(23,561
)


4,907Prepaids and other


(9,563
)


(5,741
)


(2,043
)Accounts payable and accrued liabilities


(14,435
)


22,338



(5,965
)Income taxes payable


661



(1,348
)


690Unearned revenue


11,422



7,988



2,325(28,350
)


(324
)


(86
)   (iii)
    Interest and income taxes paid (recovered) and classified as
    operating activities are as follows:  2007

2006

2005$

$

$Interest


231,513



245,404


287,906Income taxes


(717
)


3,203


5,091   (iv)
    Non-cash transactions    2007

2006

2005$

$

$Class B Non-Voting Shares issued on acquisitions
    [note 2]


3,000





   21.
    UNITED
    STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES   85




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##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
  (a)
    Reconciliation
    to US GAAP  2007


2006


2005$


$


$Net income using Canadian GAAP


388,479



458,250



153,221Add (deduct) adjustments for:Deferred charges (2)


5,672



15,362



28,371Foreign exchange gains on hedged long-term debt (3)


47,382



78,937



121,494Reclassification of hedge losses from other comprehensive income
    (8)


(47,382
)


(78,937
)


(121,494
)Fair value loss on foreign currency forward contract (8)










(7,700
)Capitalized interest (11)


2,244







Income taxes (12)


(10,461
)


(8,990
)


(7,375
)Net income using US GAAP


385,934



464,622



166,517Unrealized foreign exchange loss on translation of
    self-sustaining foreign operations


(18
)


(35
)


(79
)Unrealized gains on available-for-sale securities, net of tax
    (7)Unrealized holding gains arising during the year










26,923Less: reclassification adjustments for gains included in net
    income






(29,728
)


(21,074
)Adjustment to fair value of derivatives (8)


5,730



(62,843
)


(186,398
)Reclassification of derivative losses to income to offset
    foreign exchange gains on hedged long-term debt (8)


40,215



74,632



99,930Minimum liability for pension plan (10)


5,813



2,848



(11,433
)51,740



(15,126
)


(92,131
)Comprehensive income using US GAAP


437,674



449,496



74,386Earnings per share  basic and dilutedEarnings per share using US GAAP


0.89



1.07



0.36  86




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##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
  Consolidated
    Balance Sheet items using US GAAP
  2007


2006Canadian


US


Canadian


USGAAP


GAAP


GAAP


GAAP$


$


$


$Property, plant and equipment (11)


2,422,900



2,425,144



2,250,056



2,250,056Deferred charges (2) (9) (10)


278,525



170,881



261,908



164,053Broadcast rights (1) (5) (6)


4,776,078



4,750,844



4,691,484



4,666,250Other long-term liabilities (8) (10)


56,844



683,722



37,724



612,306Deferred credits (3) (9)


1,151,724



687,913



1,100,895



679,652Future income taxes


1,327,914



1,271,791



1,123,938



1,072,990Shareholders equity:Share capital


2,053,160



2,053,160



1,976,966



1,976,966Contributed surplus


8,700



8,700



5,110



5,110Deficit


(68,132
)


(178,652
)


(172,701
)


(280,675
)Accumulated other comprehensive loss






(126,746
)






(117,176
)Cumulative translation adjustment


312







330



Total shareholders equity


1,994,040



1,756,462



1,809,705



1,584,225     2007


2006$


$Shareholders equity using Canadian GAAP


1,994,040



1,809,705Amortization of intangible assets (1)


(130,208
)


(130,208
)Deferred charges (2)


(4,215
)


(8,171
)Equity in loss of investees (4)


(35,710
)


(35,710
)Gain on sale of subsidiary (5)


16,052



16,052Gain on sale of cable systems (6)


50,063



50,063Foreign exchange gains on hedged long-term debt (3)


386,075



345,860Reclassification of hedge losses from other comprehensive income
    (8)


(386,075
)


(345,860
)Capitalized interest (11)


1,566



Income taxes (12)


(8,068
)


Accumulated other comprehensive loss


(126,746
)


(117,176
)Cumulative translation adjustment


(312
)


(330
)Shareholders equity using US GAAP


1,756,462



1,584,225    87




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##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
    2007


2006$


$Unrealized foreign exchange gain on translation of
    self-sustaining foreign operations


312



330Fair value of derivatives (8)


(57,169
)


(103,114
)Pension liability (10)


(69,889
)


(14,392
)Accumulated other comprehensive income


(126,746
)


(117,176
)     (1)
    Amortization of intangible assets    (2)
    Deferred charges    (3)
    Foreign exchange gains on hedged long-term debt    (4)
    Equity in loss of investees      (5)
    Gain on sale of subsidiary   88




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##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
    (6)
    Gain on sale of cable systems      (7)
    Unrealized gains (losses) on investments      (8)
    Derivative instruments and hedging activities    (9)
    Subscriber connection fee revenue and related costs    (10)
    Pension liability   89




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##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
      (11)
    Under US GAAP, interest costs are capitalized as part of the
    historical cost of acquiring certain qualifying assets which
    require a period of time to prepare for their intended use.
    Interest capitalization is not required under Canadian GAAP.(12)
    Income taxes reflects the tax effect of the differences
    identified above, the impact of future income tax rate
    reductions on those differences and an adjustment for the tax
    benefit related to capital losses that cannot be recognized for
    US GAAP.  (b)
    Stock-based
    compensation    2007


2006


2005$


$


$Net income, US GAAP

As reported


385,934



464,622



166,517Pro forma


385,815



462,752



160,745Net income per share, US GAAP

As reported


0.89



1.07



0.36Pro forma


0.89



1.06



0.35   (c)
    Advertising
    costs    (d)
    Recent
    accounting pronouncements     90




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##### Table of Contents



Shaw Communications
    Inc.
  NOTES TO CONSOLIDATED
    FINANCIAL STATEMENTS
  
  22.
    COMPARATIVE
    CONSOLIDATED FINANCIAL STATEMENTS      23.
    SUBSEQUENT
    EVENT   91




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##### Table of Contents



Shaw
    Communications Inc.  FIVE
    YEARS IN REVIEW
    August 31, 2007
  2007


2006


2005


2004


2003($000s except per share amounts)Service revenueCable


2,082,652



1,808,583



1,598,369



1,491,569



1,459,833DTH


605,176



567,807



530,729



505,637



450,176Satellite


86,617



82,894



80,712



82,543



88,4122,774,445



2,459,284



2,209,810



2,079,749



1,998,421Service operating income (loss) before
    amortization(1)Cable


995,694



857,466



797,583



779,579



727,458DTH


196,404



175,401



141,687



111,150



52,814Satellite


47,527



45,050



42,723



41,690



38,619Corporate restructuring and inventory write-down


















(13,250
)Litigation settlements














(6,484
)


12,0001,239,625



1,077,917



981,993



925,935



817,641Net income (loss)


388,479



458,250



153,221



70,870



(37,177
)Earnings (loss) per shareBasic


0.90



1.05



0.34



0.16



(0.08
)Diluted


0.89



1.05



0.34



0.16



(0.08
)Funds flow from
    operations(2)


1,028,363



847,197



728,524



654,585



494,573Balance sheetTotal assets


8,163,739



7,661,543



7,430,185



7,576,720



7,730,929Long-term debt (including current portion)


3,068,554



2,996,385



3,199,542



3,344,258



3,635,205Cash dividends declared per shareClass A


0.462



0.235



0.153



0.078



0.023Class B


0.465



0.238



0.155



0.080



0.025     (2)
    Funds flow from operations is presented before changes in
    non-cash working capital as presented in the Consolidated
    Statements of Cash Flows. 92




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##### Table of Contents



Shaw
    Communications Inc.
    SHAREHOLDERS INFORMATION
    August 31, 2007
  Share
    Capital and Listings
    Trading
    Range of Class B Non-Voting Shares on the Toronto Stock
    Exchange
  TotalQuarter

High Close


Low Close


VolumeSeptember 1, 2006 to August 31, 2007First

$
18.42


$
16.11



95,738,626Second

$
21.91


$
17.58



98,670,574Third

$
23.15


$
20.13



69,179,760Fourth

$
26.50


$
22.25



107,732,215Closing price, August 31, 2007

$24.52


371,321,175   Share
    Splits
  www.shaw.ca
 93




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##### Table of Contents



Shaw
    Communications Inc.
    CORPORATE INFORMATION
    August 31, 2007
  DIRECTORS
  JR
    Shaw (4)
 Executive Chair
 Shaw Communications Inc.
  Adrian L.
    Burns (3)
 Corporate Director
  James F.
    Dinning (3)
 Non-Executive Chairman
 Western Financial Group Inc.
  George F.
    Galbraith (1)(3)
 Corporate Director
  Dr. Lynda
    Haverstock (3)
 President and Chief Executive
    Officer of Tourism
    Saskatchewan
  Ronald V.
    Joyce (4)
 Corporate Director
  Gregory John
    Keating (1)
 Corporate Director
  Rt. Hon. Donald F.
 Mazankowski (3)(4)
 Corporate Director
  Michael W.
    OBrien (1)
 Corporate Director
  Harold A.
    Roozen (2)
 President and Chief
 Executive Officer,
 CCI Thermal
 Technologies Inc.
  Jeffrey C.
    Royer (2)
 Corporate Director
  Bradley S. Shaw
 Senior Vice President,
 Operations
 Shaw Communications Inc.
  Jim Shaw
 Chief Executive Officer
 Shaw Communications Inc.
  JC
    Sparkman (2)(4)
 Corporate Director
  Carl E.
    Vogel (1)
 President and Vice Chairman
 EchoStar Communications
    Corporation
  Willard (Bill) H.
    Yuill (2)
 Chairman
 The Monarch Corporation
  SENIOR OFFICERS
  JR Shaw
 Executive Chair
  Jim Shaw
 Chief Executive Officer
  Rhonda D. Bashnick
 Vice President, Finance
  Peter J. Bissonnette
 President
  Michael DAvella
 Senior Vice President,
    Planning
  Bradley S. Shaw
 Senior Vice President,
    Operations
  Ken C.C. Stein
 Senior Vice President,
 Corporate and Regulatory
    Affairs
  Steve Wilson
 Senior Vice President and
 Chief Financial Officer
  CORPORATE SECRETARY:
 Douglas J. Black, QC
  HONORARY SECRETARY:
 Louis Desrochers, CM, AOE, QC,
    LLD
  (1)
    Audit Committee(2)
    Human Resources
    Committee(3)
    Corporate Governance
    Committee(4)
    Executive Committee  CORPORATE OFFICE
  Shaw Communications Inc.
 Suite 900, 630 
    3rd
    Avenue S.W., Calgary, Alberta
 Canada T2P 4L4
 Phone:
    (403) 750-4500
 Fax:
    (403) 750-4501
 Website: www.shaw.ca
  CORPORATE GOVERNANCE
 Information concerning
    Shaws corporate governance policies are contained in
 the Information Circular and is
    also available on Shaws website, www.shaw.ca.
  Information concerning
    Shaws compliance with the corporate governance listing
 standards of the New York Stock
    Exchange is available in the investor relations
 section on Shaws website,
    www.shaw.ca.
  INTERNET HOME PAGE
 Shaws Annual Report, Annual
    Information Form, Quarterly Reports, Press
 Releases and other relevant
    investor relations information are available electronically on
    the Internet at www.shaw.ca.
  AUDITORS
 Ernst & Young LLP
  PRIMARY BANKER
 The Toronto-Dominion Bank
  TRANSFER AGENTS
  CIBC Mellon Trust Company
 Calgary, AB
 Phone: 1-800-387-0825
  The Bank of New York Mellon
 Jersey City, NJ
 Phone:
    1-800-522-6645
  DEBENTURE TRUSTEES
 Computershare Trust
 Company of Canada
 100 University Avenue,
 9th
    Floor
 Toronto, ON M5J 2Y1
 service@computershare.com
 Phone :
    1-800-564-6253
 Fax: 1-888-453-0330 or
 416-263-9394
  Bank of New York
 101 Barclay Street, Floor 4E
 New York, NY 10288
 Phone
    1-800-438-5473
 Fax:
    212-815-5802
  FURTHER INFORMATION
 Financial analysts, portfolio
    managers, other investors and interested parties may contact the
    Company at
    (403) 750-4500
    or visit Shaws website at www.shaw.ca for further
    information.
  To receive additional copies of
    this Annual Report, please fax your request to
    (403) 750-7469
    or email
 investor.relations@sjrb.ca .
  For further inquiries relating to
    Shaws philanthropic practices, please call
 (403) 750-7498.
  All trademarks used in this annual
    report are used with the permission of the
 owners of such trademarks.
  94




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##### Table of Contents