1. 1 SHAW FINANCIAL LITERACY Breakout Session International and Investment Accounting March 24, 2015 Jim Kirkpatrick – Vice President of Corporate Finance Samantha Hartill – International Accounting Manager

2. Sub-title Goes Here 2 International Accounting International Entities: –Luxembourg Singapore Hong Kong China India –Chile –Australia –Dubai

3. Sub-title Goes Here 3 International Accounting Terms / Concepts Foreign Currency Forward Contracts Currently, we bill in US dollars, Canadian dollars, Australian dollars, British pounds, Euros and the Chinese Yuan Only significant foreign currency is the Canadian dollar The company’s Treasury Department enters into Canadian Dollar Forward Contracts to protect us from significant changes in exchange rates

4. Sub-title Goes Here 4 International Accounting Terms / Concepts (continued) –Translation – multi-currencies involved; must translate the results into US dollars –Transfer Pricing Shaw must sell our foreign companies that we own at the same margin as other non-owned companies in the same country / region Why? Prevents companies for shifting profitability to countries where tax rates are lower Shaw contracts with a third-party to perform a transfer pricing study which concludes the margin we must recognize on sales to our foreign subsidiaries

5. Sub-title Goes Here 5 International Accounting China Specific Issues –China is highly regulated – as a result, expenses incurred in the US on China’s behalf can’t be automatically billed to China –Advancing money to China –Must be treated as a customer of Shaw US

6. Sub-title Goes Here Accounting for Investments in Other Businesses The method Shaw must use to account for a controlling stake (50 percent or greater) or less-than-controlling stake (less than 50 percent) in another business depends on how much of that other business we own. 6

7. Sub-title Goes Here Accounting for Investments in Other Businesses Investment of less than 20 percent of the company –GAAP defines it as a "passive" investment -- meaning it isn't big enough to exert major influence over that company's policies and direction. –This means the cost of the investment is put on the balance sheet as an investment and we do not recognize any portion of their earnings in our income statement. 7

8. Sub-title Goes Here Accounting for Investments in Other Businesses Investment of between 20 percent and 49.99 percent of the company –The investment is considered to have "significant influence." –This means Shaw must recognize our portion of the earnings of the income statement. For example, if Shaw owns 49% of the company and it makes $100,000 for a month, Shaw recognizes $49,000 in the income statement under the line item “Equity in Joint Venture” or “Equity in Unconsolidated Investees”. Additionally, the investment account on the balance sheet will increase by the same amount. 8

9. Sub-title Goes Here Accounting for Investments in Other Businesses Investment of 50 percent or greater of the company –Shaw is considered to have control of the company and the financial results must be “consolidated” in the Shaw financial statements. –“Consolidated” means the income statement and balance sheet will be added into our results each month and appropriate eliminations must be made. 9

10. Sub-title Goes Here Accounting for Investments in Other Businesses Consolidation example: –Shaw owns 70% of a company and it has $5 million of revenues and $4 million of cost of a month, so its net income is $1 million. These amounts are included in the Shaw financial statements even though we do not own 100% of the company. –We make an adjustment at the bottom of the income statement to back out the portion of the net earnings that we do not own. In the example above, the company had $1 million in net income for the month. Since we own 70%, we must reduce our income by 30% or $300,000. –This deduction is made on a line called “Income to Noncontrolling Interest” and is actually a reduction of our income since, up until this point in the financial statement, we have recognized 100% of their income. 10

11. Sub-title Goes Here Questions? 11