SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 6-K

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

Shaw Communications Inc.

(Translation of registrant’s name into English)

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

(Address of principal executive offices)

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

     Form 20-F  o  Form 40-F  þ

     Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  o

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

     Yes  o   No  þ

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

 

 

SIGNATURE

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

Date:		July 5, 2006
		Shaw Communications Inc.

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

NEWS RELEASE

Shaw Communications Inc. increases guidance and dividend based on
continued positive third quarter results.

Calgary, Alberta (June 30, 2006) – Shaw Communications Inc. today announced net income of $126.4 million or $0.58 per share for the third quarter ended May 31, 2006 compared to net income of $32.8 million or $0.14 per share for the same quarter last year. Net income for the first nine months of the year was $247.9 million or $1.14 per share, up from $83.3 million or $0.36 per share last year.

Net income in the current and comparable three and nine month periods included non-operating items which are more fully detailed in Management’s Discussions and Analysis (MD&A). These included tax recoveries in the first and third quarters of 2006 related to reductions in enacted income tax rates, a gain on the sale of a portfolio investment in the third quarter of 2006, as well as amounts in the comparable periods related to the retroactive adoption of a Canadian accounting standard. Excluding these non-operating items, net income for the three and nine month periods ended May 31, 2006 would have been $63.9 million and $152.1 million compared to net income of $34.6 million and $73.9 million in the comparable periods.¹

Commenting on the results, Jim Shaw, Chief Executive Officer of Shaw said, “We’re expanding our Digital Phone footprint and growing our customer base, improving service levels, and enhancing our product offerings to drive strong revenue and operating income growth. This focus has delivered another solid quarter of financial results for our shareholders.”

Consolidated service revenue of $626.7 million and $1.8 billion for the three and nine month periods, respectively, increased 11.9% and 11.0% over the comparable periods last year. Total service operating income before amortization² of $279.5 million and $802.8 million improved by 10.5% and 9.8%, respectively, over the comparable periods.

Digital Phone lines increased 50,294 for the quarter for a total of 168,963 Digital Phone lines at May 31. Customer gains were also posted across all other products. Internet and Digital increased by 21,654 and 14,733 subscribers respectively. Basic cable increased 2,248 and DTH added 4,283 subscribers. On a year-to-date basis customer gains in all products exceeded growth in the prior year: Internet and Digital added 112,674 and 61,623 subscribers, respectively, while basic cable increased 38,515 and DTH was up a total of 21,325.

Jim Shaw remarked: “Strong customer growth this quarter and year-to-date, particularly in Digital Phone and Internet, is a measure of our consistent delivery of exceptional service, value and reliability to our customers as well as the strength of the markets in which we operate. We believe that our focus on customer satisfaction will continue to differentiate us in the competitive triple-play market.”

Funds flow from operations³ increased to $221.1 million and $626.6 million for the quarter and year-to-date compared to $190.1 million and $537.0 million for the same periods last year.

Free cash flow² for the quarter and year-to-date were $96.5 million and $210.6 million compared to $89.3 million and $195.6 million for the same periods last year. Growth in service operating income before amortization and reduced interest expense, partially offset by higher capital expenditures, contributed to the improvements.

During the quarter, Shaw expanded Digital Phone coverage outside the Vancouver core area, into North and West Vancouver, Richmond and Whiterock, as well as Fort McMurray and the surrounding areas of both Calgary and Edmonton, including Airdrie, Cochrane, High River, Okotoks, St. Albert and Sherwood Park. The service was most recently rolled-out in Strathmore. Digital Phone service is now available to over 55% of homes passed. Digital Phone customers are completing on average over 2.7 million calls each day over Shaw’s reliable, private broadband network.

Cable division service revenue increased 13.7% for the quarter to $461.1 million and 12.8% on a year-to-date basis to $1.3 billion primarily as a result of customer growth and rate increases. Service operating income before amortization for the three and nine month periods increased 7.8% and 7.3% to $219.8 million and $640.7 million, respectively.

Satellite division’s service revenue increased 7.3% for the quarter to $165.6 million and 6.2% on a year-to-date basis to $486.1 million primarily due to rate increases and customer growth in DTH. Service operating income before amortization for the quarter increased by 22.0% to $59.8 million and by 20.7% to $162.1 million on a year-to-date basis. The improvement was largely due to growth in DTH revenues and reduced costs.

On May 9, 2006 the Company closed a $300 million offering of 6.15% senior notes due May 9, 2016. The net proceeds were used for debt repayment. In early June the Company amended its existing credit facility to extend the maturity date from April, 2009 to May, 2011 and implement new pricing terms effective May, 2007. Covenants and other material terms remain largely unchanged. On June 15, 2006 the Company announced its intention to redeem all of its outstanding Cdn. $150.0 million 8.875% Canadian Originated Preferred Securities. The redemption date is July 17, 2006.

Mr. Shaw announced revisions to guidance: “Based on the strength of this quarter and the current outlook for the fourth quarter, we now estimate that service operating income before amortization for fiscal 2006 will exceed $1.06 billion and that fiscal 2006 free cash flow will be in excess of $240 million. This represents an improvement in free cash flow of over $30 million from our previous guidance.”

“In fiscal 2007 we are planning to increase capital spending to continue our roll-out of Digital Phone and fund ongoing upgrades to support growth and the delivery of the next generation of services for our customers. As well, we will continue the projects related to facilities expansion and a new customer management and billing system. Our preliminary view calls for capital investment to range from $600 – $630 million. Consistent with last year, we plan to provide specific guidance on service operating income before amortization and free cash flow when we release our 2006 year-end results. In fiscal 2007, we plan to use free cash flow to pay dividends, repurchase shares and reduce debt. Our current view is that at least 25% of fiscal 2007 free cash flow will be used for debt reduction. Today our Board of Directors has increased the equivalent annual dividend rate on Shaw’s Class A Participating Shares and Class B Non-Voting Participating Shares by $0.06 per share which represents an increase of 11%. The equivalent annual dividend rate will be $0.595 per Class A Participating Share and $0.60 per Class B Non-Voting Participating Share, payable in monthly installments commencing September 29, 2006.”

In closing, Mr. Shaw noted: “We remain focused on the deployment of Digital Phone and driving growth through new product enhancements, bundled offers, and the delivery of exceptional customer service. These strategies have strengthened our financial position and built value for our shareholders.”

Shaw Communications Inc. is a diversified Canadian communications company whose core business is providing broadband cable television, Internet, Digital Phone, telecommunications services (through Big Pipe Inc.) and satellite direct-to-home services (through Star Choice Communications Inc.) to over three million customers. Shaw is traded on the Toronto and New York stock exchanges and is included in the S&P/TSX 60 Index (Symbol: TSX — SJR.B, NYSE — SJR).

This news release contains forward-looking statements, identified by words such as “anticipate”, “believe”, “expect”, “plan”, “intend” and “potential”. These statements are based on current conditions and assumptions and are not a guarantee of future events. Actual events could differ materially as a result of changes to Shaw’s plans and the impact of events, risks and uncertainties. For a discussion of these factors, refer to Shaw’s current annual information form, annual and quarterly reports to shareholders and other documents filed with regulatory authorities.

For further information, please contact:

Steve Wilson
Senior Vice President, Chief Financial Officer
Shaw Communications Inc.
403-750-4500

Shaw Communications Inc.

SHAREHOLDERS’ REPORT
THIRD QUARTER ENDING MAY 31, 2006

To Our Shareholders:

Service revenue for the three and nine months ended May 31, 2006 improved 11.9% and 11.0%, respectively, over the comparable periods. Consolidated service operating income before amortization¹ was up 10.5% and 9.8%, respectively. Free cash flow¹ for the quarter and year-to-date was $96.5 million and $210.6 million compared to $89.3 million and $195.6 million for the same periods last year.

Throughout this quarter, we continued to expand our Digital Phone service, grow our customer base, improve our service levels, and enhance our product offerings. Digital Phone lines increased 50,294 during the quarter for a total of 168,963 Digital Phone lines as at May 31. Customer gains were posted on all other product lines with Internet and Digital subscribers adding 21,654 and 14,733 subscribers, respectively. Basic cable increased 2,248 and DTH added 4,283 subscribers. On a year-to-date basis all products exceeded growth in the prior year: Internet and Digital subscribers were up 112,674 and 61,623, respectively, while basic cable increased 38,515 and DTH was up a total of 21,325.

During the quarter, we expanded our Digital Phone coverage outside the Vancouver core area, into North Vancouver, West Vancouver, Richmond and Whiterock, as well as Fort McMurray and the surrounding areas of both Calgary and Edmonton, including Airdrie, Cochrane, High River, Okotoks, St. Albert and Sherwood Park. We most recently expanded the service to include Strathmore. The service is now available to over 55% of homes passed and our managed broadband network is now completing on average over 2.7 million calls each day. We plan to continue the roll-outs throughout the remainder of fiscal 2006 and 2007 and by the end of fiscal 2007 plan to have the service available to over 80% of our homes passed. As a primary home line, Shaw Digital Phone offers unlimited local and long distance calling within Canada and the U.S. We enhanced our Digital Phone service in the quarter to include 1,000 international long distance minutes per month to some of the most popular destinations in Asia Pacific, Europe and the U.K. Our customers are receiving a high quality, fully featured phone service supported around the clock by our dedicated team.

We also enhanced our video on demand product offerings with the addition of content from Warner Bros. International and Eurocinema. Shaw Digital customers now have access to Warner Bros. extensive movie library including some of today’s most popular hit titles. Through Eurocinema, Shaw brings the world of foreign cinema to our customers with award-winning films that have never been seen before in Canada.

We recently announced the acquisition of two small cable systems that complement our existing cable properties in British Columbia. The acquisitions provide synergies with existing operations and represent growing markets. Both transactions are expected to close before August 31, 2006.

Shaw Communications Inc.

During the quarter we closed a $300 million offering of 6.15% senior notes due May 9, 2016. The net proceeds were used to repay existing bank indebtedness. In June, we amended our existing credit facility to extend the maturity date from April, 2009 to May, 2011 and implement new pricing terms effective May, 2007. Recently, we also announced our intention to redeem all of our outstanding Cdn. $150.0 million 8.875% Canadian Originated Preferred Securities. The redemption date is July 17, 2006.

We remain committed to the deployment of Digital Phone, driving growth through new product enhancements and bundled offers, along with the delivery of outstanding customer service and believe that these strategies will continue to increase shareholder value.

JR Shaw		Jim Shaw
Executive Chair		Chief Executive Officer

Shaw Communications Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS
MAY 31, 2006

June 21, 2006

Certain statements in this report may constitute forward-looking statements. Such forward-looking statements involve risks, uncertainties and other factors which may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Included herein is a “Caution Concerning Forward-Looking Statements” section which should be read in conjunction with this report.

The following should also be read in conjunction with Management’s Discussion and Analysis included in the Company’s August 31, 2005 Annual Report and the Consolidated Financial Statements and the Notes thereto and the unaudited interim Consolidated Financial Statements of the current quarter.

This report includes various schedules and reconciliations. Figures for 2005 reporting periods may have been restated. Details of the restatement are included in the section “Adoption of recent Canadian accounting pronouncements” included in this report.

CONSOLIDATED RESULTS OF OPERATIONS
THIRD QUARTER ENDING MAY 31, 2006
SELECTED FINANCIAL HIGHLIGHTS

		Three months ended May 31,												Nine months ended May 31,
										Change												Change
($000’s Cdn except per share amounts)		2006				2005				%				2006				2005				%
Operations:
Service revenue			626,654				559,883				11.9				1,827,396				1,646,852				11.0
Service operating income before amortization (1)			279,544				252,899				10.5				802,790				731,234				9.8
Funds flow from operations (2)			221,099				190,144				16.3				626,580				537,017				16.7
Net income			126,410				32,836				285.0				247,881				83,262				197.7
Per share data:
Earnings per share – basic and diluted		$	0.58			$	0.14							$	1.14			$	0.36
Weighted average participating shares outstanding during period (000’s)			217,625				228,680								218,093				230,214

SUBSCRIBER HIGHLIGHTS

						Growth
		Total				Three months ended May 31,								Nine months ended May 31,
		May 31, 2006				2006				2005				2006				2005
Subscriber statistics:
Basic cable customers			2,181,476				2,248				1,338				38,515				16,740
Digital customers			660,107				14,733				9,764				61,623				46,782
Internet customers (including pending installs)			1,280,737				21,654				27,034				112,674				107,321
DTH customers			865,987				4,283				6,252				21,325				7,999
Digital phone lines (including pending installs)			168,963				50,294				18,938				112,400				22,450

Shaw Communications Inc.

ADDITIONAL HIGHLIGHTS

•		Shaw continued to expand the footprint of Digital Phone outside the Vancouver core area, into North Vancouver, West Vancouver, Richmond and Whiterock, as well as Fort McMurray and the surrounding areas of both Calgary and Edmonton, including Airdrie, Cochrane, High River, Okotoks, St. Albert and Sherwood Park. The service was most recently rolled-out to Strathmore. During the quarter the Company added 50,294 Digital Phone lines and at May 31, 2006, the number of Digital Phone lines, including pending installations, was 168,963.
•		The Company attained customer growth across all business lines in the third quarter. Internet and Digital subscribers were up 1.7% and 2.3%, respectively, and Basic cable and DTH each posted modest increases. Internet penetration of basic is now at 58.7% up from 54.5% at August 31, 2005.
•		During the quarter the Company closed a $300 million offering of 6.15% senior notes due May 9, 2016. The net proceeds were used to repay existing bank indebtedness. On June 15, 2006 the Company announced its intention to redeem all of its outstanding Cdn. $150.0 million 8.875% Canadian Originated Preferred Securities. The redemption date is July 17, 2006.
•		Consolidated free cash flow1 of $96.5 million for the quarter and $210.6 million year-to-date improved $7.3 million and $15.0 million over the same periods last year. Free cash flow in the quarter was used to repay debt and pay dividends.

Consolidated Overview

Consolidated service revenue increased to $626.7 million and $1.8 billion for the three and nine month periods, respectively, up 11.9% and 11.0% over the same periods last year. These improvements were primarily due to customer growth and rate increases. Consolidated service operating income before amortization for the three and nine month periods increased by 10.5% and 9.8% over the comparable periods to $279.5 million and $802.8 million. The improvement over the comparative periods was primarily due to overall revenue growth and reduced costs in the satellite division. These improvements were partially offset by increased costs in the cable division, including expenditures incurred to support continued growth, deliver high quality customer service and to launch Digital Phone in new markets.

Net income was $126.4 million and $247.9 million for the three and nine months ended May 31, 2006, respectively, compared to $32.8 million and $83.3 million for the same periods last year. A number of significant non-operating items affected net income in each of the periods: During the first and third quarters of fiscal 2006, the Company recorded future tax recoveries related to a reduction in corporate income tax rates which contributed $31.4 million and $23.4 million, respectively, to net income. Also, during the third quarter of fiscal 2006 the Company reported a gain on the sale of a portfolio investment which contributed $37.3 million on an after-tax basis. Effective September 1, 2005 the Company retroactively adopted the amended Canadian Standard, Financial Instruments — Disclosure and Presentation, which classifies the Company’s

Shaw Communications Inc.

Canadian Originated Preferred Securities (“COPrS”) and the Zero Coupon Loan as debt instead of equity and treats the entitlements thereon as interest instead of dividends. The restatement of the comparative periods resulted in a decrease to previously reported net income of $10.4 million and $10.9 million, respectively, for the three and nine months ended May 31, 2005. The components making up the change for the three month period ended May 31, 2005 included an increase in the previously reported foreign exchange loss on unhedged long term debt of $4.2 million, and increased interest expense of $10.7 million, partially offset by decreased taxes of $4.6 million. The components making up the change for the nine month period ended May 31, 2005 included an increase in interest expense of $38.1 million and debt retirement costs of $6.3 million partially offset by an increase in the foreign exchange gain on unhedged long-term debt of $21.7 million and decreased taxes of $12.0 million. Outlined below are further details on these and other operating and non-operating components of net income for each quarter and nine month period. The fiscal 2006 tax recoveries related to reductions in corporate income tax rates recorded in the first and third quarters have been reflected as non-operating.

		Nine months ended												Nine months ended
						Operating net				Non-								Operating net				Non-
($000’s Cdn)		May 31, 2006				of interest				operating				May 31, 2005				of interest				operating
Operating income			427,198												321,607
Interest on long-term debt			(191,582	)											(199,987	)
Operating income after interest			235,616				235,616				—				121,620				121,620				—
Gain on sale of investments			47,135				—				47,135				1,138				—				1,138
Write-down of investments			(374	)			—				(374	)			(1,937	)			—				(1,937	)
Debt retirement costs			(8,123	)			—				(8,123	)			(6,311	)			—				(6,311	)
Foreign exchange gain on unhedged long-term debt			5,360				—				5,360				25,073				—				25,073
Fair value loss on foreign currency forward contracts			(360	)			—				(360	)			(14,531	)			—				(14,531	)
Other gains			5,644				—				5,644				5,062				—				5,062
Income before income taxes			284,898				235,616				49,282				130,114				121,620				8,494
Income tax expense (recovery)			36,824				83,496				(46,672	)			46,435				47,728				(1,293	)
Income before following			248,074				152,120				95,954				83,679				73,892				9,787
Equity loss on investees			(193	)			—				(193	)			(417	)			—				(417	)
Net income			247,881				152,120				95,761				83,262				73,892				9,370

Shaw Communications Inc.

		Three months ended												Three months ended
						Operating net				Non-								Operating net				Non-
($000’s Cdn)		May 31, 2006				of interest				operating				May 31, 2005				of interest				operating
Operating income			160,147												120,789
Interest on long-term debt			(63,756	)											(64,370	)
Operating income after interest			96,391				96,391				—				56,419				56,419				—
Gain on sale of investments			45,445				—				45,445				159				—				159
Write-down of investments			—				—				—				—				—				—
Debt retirement costs			—				—				—				—				—				—
Foreign exchange gain (loss) on unhedged long-term debt			1,008				—				1,008				(5,043	)			—				(5,043	)
Fair value gain on a foreign currency forward contract			—				—				—				1,518				—				1,518
Other gains			1,322				—				1,322				2,227				—				2,227
Income (loss) before income taxes			144,166				96,391				47,775				55,280				56,419				(1,139	)
Income tax expense (recovery)			17,711				32,525				(14,814	)			22,305				21,842				463
Income (loss) before following			126,455				63,866				62,589				32,975				34,577				(1,602	)
Equity loss on investees			(45	)			—				(45	)			(139	)			—				(139	)
Net income (loss)			126,410				63,866				62,544				32,836				34,577				(1,741	)

The changes in net income are outlined in the table below. The fluctuations in net other costs and revenue are mainly due to the gain realized on the sale of a portfolio investment in the current quarter. The impact of the foregoing and other changes to net income are outlined as follows:

		Increase of May 31, 2006
		net income compared to:
		Three months ended								Nine months ended
($millions Cdn)		February 28, 2006				May 31, 2005				May 31, 2005
Increased service operating income before amortization			11.6				26.6				71.6
Decreased amortization			6.6				12.7				34.0
Decreased interest expense			0.6				0.6				8.4
Change in net other costs and revenue(1)			53.4				49.1				41.0
Decreased income taxes			8.4				4.6				9.6
			80.6				93.6				164.6

Earnings per share were $0.58 and $1.14 for the quarter and nine months respectively, which represents a $0.44 and $0.78 improvement over the same periods last year. The improvement in the current quarter was due to higher net income of $93.6 million which included a $26.6 million increase in service operating income before amortization, and reduced amortization of $12.7 million. Decreased income taxes in the quarter of $4.6 million included the impact of a future tax recovery related to a reduction in corporate income tax rates of $23.4 million and the change in other costs and revenue of $49.1 million included a gain of $45.3 million on the sale of a portfolio investment in the current quarter. On a year-to-date basis, the improvement was due to increased net income of $164.6 million resulting mainly from increased service operating income before amortization of $71.6 million and decreased amortization and interest of $34.0 and $8.4 million, respectively. Other costs and revenue included the gain of $45.3 million on the sale of a

Shaw Communications Inc.

portfolio investment, and income taxes were lower by $9.6 million, benefiting from the $54.8 million in tax recoveries recorded in the first and third quarters.

Net income in the current quarter increased $80.6 million over the second quarter of fiscal 2006 benefiting from a gain of $45.3 million realized on the sale of a portfolio investment as well as a $23.4 million tax recovery related to a reduction in corporate income tax rates. Improved service operating income before amortization contributed an additional $11.6 million, primarily due to customer growth, and amortization was lower by $6.6 million.

Funds flow from operations was $221.1 million in the third quarter compared to $190.1 million in the comparable quarter, and on a year-to-date basis was $626.6 million compared to $537.0 million in 2005. The growth over the respective quarterly and year-to-date comparative periods was principally due to increased service operating income before amortization of $26.6 million and $71.6 million, respectively, and reduced interest expense of $0.6 million and $8.4 million, respectively.

Consolidated free cash flow for the quarter of $96.5 million improved $7.3 million over the comparable quarter. The increase in the quarter was due to increased service operating income before amortization partially offset by increased capital expenditures. The Cable division generated $67.3 million of free cash flow for the quarter, compared to $68.4 million in the comparable quarter. The Satellite division achieved free cash flow of $29.3 million for the quarter compared to free cash flow of $20.9 million in the same quarter last year.

The Company has announced revisions to Fiscal 2006 guidance and now estimates service operating income before amortization for fiscal 2006 will exceed $1.06 billion and free cash flow will be in excess of $240.0 million.

In fiscal 2007 the Company is planning to increase capital spending to continue the roll-out of Digital Phone and fund on-going upgrades to support growth and the delivery of the next generation of services for its customers. Shaw will also continue the projects related to facilities expansion and a new customer management and billing system. The Company’s preliminary view calls for capital investment to range from $600 – $630 million. Consistent with last year, the Company plans to provide specific guidance on service operating income before amortization and free cash flow with the release of the 2006 year-end results. In fiscal 2007, the Company plans to use free cash flow to pay dividends, repurchase shares and reduce debt. The current view is that at least 25% of free cash flow will be used for debt reduction Today, the Company’s Board of Directors has increased the equivalent annual dividend rate on Shaw’s Class A Participating Shares and Class B Non-Voting Participating Shares by $0.06 per share. The equivalent annual dividend rate will be $0.595 per Class A Participating Share and $0.60 per Class B Non-Voting Participating Share, payable in monthly installments commencing September 29, 2006.

On May 9, 2006 the Company closed a $300 million offering of 6.15% senior notes due May 9, 2016. The net proceeds were used for debt repayment. In early June the Company amended its existing credit facility to extend the maturity date from April, 2009 to May, 2011 and implement new pricing terms effective May, 2007. Covenants and other material terms remain largely unchanged. On June 15, 2006 the Company announced its intention to redeem all of its

Shaw Communications Inc.

outstanding Cdn. $150.0 million 8.875% Canadian Originated Preferred Securities. The redemption date is July 17, 2006.

During the quarter, Shaw did not purchase any of its Class B Non-Voting Shares for cancellation. During the nine months ended May 31, 2006 the Company repurchased 2,360,000 of its Class B Non-Voting Shares for cancellation for $58.0 million ($24.56 per share) and subsequent to the end of the quarter the Company repurchased an additional 454,900 Class B Non-Voting shares for cancellation for $13.9 million ($30.55 per share). Repurchases, on a year-to date basis, of 2,814,900 Class B Non-Voting shares represent approximately 1.3% of the Class B Non-Voting Shares outstanding at August 31, 2005.

Key Performance Drivers

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

The following contains a listing of 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.

Service operating income before amortization

The Company utilizes this measurement as it is a widely accepted financial indicator of a company’s ability to service and/or incur debt. In respect of the calculation of consolidated service operating income before amortization, it is presented as a sub-total line item in the Company’s unaudited interim Consolidated Statements of Income and Deficit. It is calculated as service revenue less operating, general and administrative expenses.

Free cash flow

The Company utilizes this measurement as it measures the Company’s ability to repay debt and return cash to shareholders. Consolidated free cash flow is calculated as follows:

		Three months ended May 31,								Nine months ended May 31,
($000’s Cdn)		2006				2005				2006				2005
Cable free cash flow (1)			67,250				68,395				158,704				162,606
Combined satellite free cash flow (1)			29,285				20,882				51,889				32,971
Consolidated			96,535				89,277				210,593				195,577

Shaw Communications Inc.

CABLE
FINANCIAL HIGHLIGHTS

		Three months ended May 31,												Nine months ended May 31,
										Change												Change
($000’s Cdn)		2006				2005				%				2006				2005				%
Service revenue (third party)			461,075				405,619				13.7				1,341,331				1,189,224				12.8
Service operating income before amortization (1)			219,766				203,903				7.8				640,664				596,873				7.3
Less:
Interest			52,689				53,540				(1.6	)			158,803				167,857				(5.4	)
Cash taxes on net income			1,035				1,818				(43.1	)			3,118				5,041				(38.1	)
Cash flow before the following:			166,042				148,545				11.8				478,743				423,975				12.9
Capital expenditures and equipment costs (net):
New housing development			19,448				22,885				(15.0	)			61,031				61,085				(0.1	)
Success based			20,742				12,216				70.0				68,535				45,061				52.1
Upgrades and enhancement			36,038				28,621				25.9				133,135				109,179				21.9
Replacement			7,930				9,279				(14.5	)			30,105				22,181				35.7
Buildings/other			14,634				7,149				104.7				27,233				23,863				14.1
Total as per Note 2 to the unaudited interim Consolidated Financial Statements			98,792				80,150				23.3				320,039				261,369				22.4
Free cash flow (1)			67,250				68,395				(1.7	)			158,704				162,606				(2.4	)
Operating margin			47.7	%			50.3	%			(2.6	)			47.8	%			50.2	%			(2.4	)

OPERATING HIGHLIGHTS

	•		Shaw continued to expand the footprint of Digital Phone outside the Vancouver core area, into North Vancouver, West Vancouver, Richmond and Whiterock, as well as Fort McMurray and the surrounding areas of both Calgary and Edmonton, including Airdrie, Cochrane, High River, Okotoks, St. Albert and Sherwood Park. During the quarter the Company added 50,294 Digital Phone lines and at May 31, 2006, the number of Digital Phone lines, including pending installations, was 168,963.
	•		Customer gains were posted on all product lines with Internet and Digital subscribers adding 21,654 and 14,733 subscribers, respectively. Basic cable increased 2,248. On a year-to-date basis Internet and Digital subscribers were up 112,674 and 61,623, respectively, while Basic cable increased 38,515. Internet penetration of basic is now at 58.7% up from 54.5% at August 31, 2005.
	•		Quarterly free cash flow of $67.3 million compares to $68.4 million in the same quarter last year.

Cable service revenue grew 13.7% and 12.8% over the comparable quarter and nine-month period last year to $461.1 million and $1.3 billion, respectively. The increases were primarily driven by customer growth and rate increases. Service operating income before amortization increased 7.8% and 7.3% for each of the comparable three and nine-month periods, respectively, to $219.8 million and $640.7 million. The investment in people and services to support ongoing service and product enhancements, as well as increased advertising and maintenance related service costs for software and equipment contributed to this reduced pace of growth.

Shaw Communications Inc.

Service revenue improved $11.9 million or 2.6% over the second quarter of fiscal 2006 as a result of customer growth and rate increases. Service operating income before amortization increased $6.4 million or 3.0% over this same period.

During the quarter, Shaw expanded its Digital Phone footprint outside the Vancouver core area, into North Vancouver, West Vancouver, Richmond and Whiterock, as well as Fort McMurray and the surrounding areas of both Calgary and Edmonton, including Airdrie, Cochrane, High River, Okotoks, St. Albert and Sherwood Park. The service is available to over 55% of homes passed and the Company’s managed broadband network is now completing over 2.6 million calls daily. The Company plans to continue the roll-outs throughout the remainder of fiscal 2006 and 2007 when it plans to have the service available to over 80% of homes passed.

Enhancements to video on demand product offerings occurred in the quarter with the addition of content from Warner Bros International and Eurocinema. Shaw Digital customers now have access to Warner Bros extensive movie library including some of today’s most popular hit titles. Through Eurocinema, Shaw brings the world of foreign cinema to its customers who will have access to feature works by legendary directors that have never been seen before in Canada. The Digital Phone service was enhanced in the quarter to include 1,000 international long distance minutes per month to some of the most popular destinations in Asia Pacific, Europe and the U.K. As a primary home line, Shaw Digital Phone offers unlimited local and long distance calling within Canada and the U.S. as well as the most popular calling features, such as Voicemail and Call Waiting.

Total capital spending increased $18.6 million and $58.7 million over the comparable three and nine month periods, respectively. The increase in success based spending for the three and nine month periods of $8.5 million and $23.5 million, respectively, was mainly due to Digital Phone line additions. Shaw invested $12.3 million in the third quarter of 2006 on Digital Phone compared to $12.5 million in the same quarter last year. Total spending to date on Digital Phone is now $128.1 million.

Spending in the upgrade and enhancement, and replacement categories was up a combined $6.1 million and $31.9 million, respectively, over the comparable three and nine months periods due to network upgrade projects to support digital phone and internet growth. The year-to-date period also included increased purchases related to new vehicles and spending on office equipment to support call centre expansions. Spending in new housing development decreased $3.4 million over the comparable quarter mainly due to lower capitalization of labour costs to this category in the current period, and on a year-to-date basis was consistent with the prior year. Spending in Buildings and Other was up a combined $7.5 million and $3.4 million, respectively, over the comparable three and nine months periods primarily due to increased facilities projects in the current quarter.

Shaw Communications Inc.

SUBSCRIBER STATISTICS

										May 31, 2006
										Three months ended								Nine months ended
														Change								Change
		May 31, 2006				August 31, 2005				Growth				%				Growth				%
CABLE:
Basic service:
Actual			2,181,476				2,142,961				2,248				0.1				38,515				1.8
Penetration as % of homes passed			65.9	%			66.1	%
Digital terminals			835,136				739,725				25,209				3.1				95,411				12.9
Digital customers			660,107				598,484				14,733				2.3				61,623				10.3
INTERNET:
Connected and scheduled			1,280,737				1,168,063				21,654				1.7				112,674				9.6
Penetration as % of basic			58.7	%			54.5	%
Standalone Internet not included in basic cable			154,609				135,580				3,375				2.2				19,029				14.0
DIGITAL PHONE:
Number of lines(1)			168,963				56,563				50,294				42.4				112,400				198.7

		Three months ended May 31,								Nine months ended May 31,
Churn(2)		2006				2005				2006				2005
Digital customers			3.6	%			4.0	%			10.4	%			10.8	%
Internet customers			4.1	%			4.1	%			10.3	%			10.8	%

The cable division gained customers across all product lines in the quarter. Basic cable increased 2,248 in the quarter compared to 1,338 in the same quarter last year. On a year-to-date basis, basic cable subscribers increased 38,515 compared to 16,740 last year. Digital customer growth for the quarter and year-to-date was 14,733 and 61,623, respectively, compared to 9,764 and 46,782 for the same periods last year. Internet customers increased by 21,654 during the third quarter compared to 27,034 in the same quarter last year. On a year-to-date basis the growth in internet customers of 112,674 is up over the gain of 107,321 last year. Shaw continues to increase its industry-leading penetration of Internet to 58.7% of basic, up from 54.5% at August 31, 2005. Digital Phone lines increased 50,294 during the quarter and as at May 31, 2006, Shaw had 168,963 Digital Phone lines. Of those customers with the Shaw Digital phone service, over 95% had more than one other Shaw service.

The Company recently announced the acquisition of two small cable systems that complement existing cable properties in British Columbia. The acquisitions provide synergies with existing operations and represent growing markets. Both transactions are expected to close before August 31, 2006.

Shaw Communications Inc.

SATELLITE (DTH and Satellite Services)

FINANCIAL HIGHLIGHTS

		Three months ended May 31,												Nine months ended May 31,
										Change												Change
($000’s Cdn)		2006				2005				%				2006				2005				%
Service revenue (third party)
DTH (Star Choice)			144,998				133,922				8.3				424,155				397,761				6.6
Satellite Services			20,581				20,342				1.2				61,910				59,867				3.4
			165,579				154,264				7.3				486,065				457,628				6.2
Service operating income before amortization (1)
DTH (Star Choice)			48,838				38,328				27.4				129,063				103,229				25.0
Satellite Services			10,940				10,668				2.5				33,063				31,132				6.2
			59,778				48,996				22.0				162,126				134,361				20.7
Less:
Interest (2)			10,706				10,408				2.9				31,692				31,336				1.1
Cash taxes on net income			35				77				(54.5	)			166				248				(33.1	)
Cash flow before the following:			49,037				38,511				27.3				130,268				102,777				26.7
Capital expenditures and equipment costs (net):
Success based (3)			15,878				16,975				(6.5	)			65,508				59,412				10.3
Transponders and other			3,874				654				492.4				12,871				10,394				23.8
Total as per Note 2 to the unaudited interim Consolidated Financial Statements			19,752				17,629				12.0				78,379				69,806				12.3
Free cash flow (1)			29,285				20,882				40.2				51,889				32,971				57.4
Operating Margin			36.1	%			31.8	%			4.3				33.3	%			29.4	%			3.9

OPERATING HIGHLIGHTS

	•		Free cash flow for the quarter was $29.3 million, an improvement of $8.4 million over the same quarter last year. For the nine month period free cash flow of $51.9 million represents an improvement of $18.9 million for the same period last year.
	•		Star Choice added 4,283 customers this quarter compared to an increase of 6,252 in the comparative period, and has added 21,325 customers on a year-to-date basis compared to an increase of 7,999 in the comparative period. Subscriber growth on a year to date basis is 2.5%.

Service revenue improved 7.3% and 6.2% over the comparable quarter and nine-month period last year to $165.6 million and $486.1 million, respectively. The increases were primarily driven by rate increases and customer growth. Service operating income before amortization increased 22.0% and 20.7% for each of the comparable three and nine-month periods, respectively, to $59.8 million and $162.1 million. Reduced marketing and distribution related expenses, lower bad debt, and the recovery of provisions in the second and third quarters of 2006 related to certain contractual matters all contributed to this growth.

Shaw Communications Inc.

Service revenue increased 2.2% over the second quarter of this year primarily due to the rate increase implemented in February, reduced promotional programming credits in the third quarter and customer growth. Service operating income before amortization increased 9.6% over this same quarter primarily due to increased revenues and reduced costs for marketing activities, sales and distribution, and bad debt.

Quarterly success based capital expenditures of $15.9 million decreased $1.1 million over the comparable period last year. The decrease was mainly due to reduced activations of new customers in the quarter. The current year-to-date amount of $65.5 million increased $6.1 million over the comparable period primarily due to increased shipment volumes to retailers and dealers as well as higher sales of second receivers. Spending in the Transponders and other category was up $3.2 million and $2.5 million, respectively, over the comparable three and nine month periods. The increase was due to the purchase of a license for the Satellite Services business.

This year, Star Choice has launched a number of new video channels, including two French-language channels, PRISE 2 and Cinépop, launched in the quarter. Other popular channels launched in the year include Turner Classic Movies, The Fight Network and Drive-In Classics. Star Choice delivers one of Canada’s largest channel selections with more than 420 all digital quality channels.

CUSTOMER STATISTICS

										May 31, 2006
										Three months ended								Nine months ended
		May 31, 2006				August 31, 2005				Growth				%				Growth				%
Star Choice customers (1)			865,987				844,662				4,283				0.5				21,325				2.5

		Three months ended May 31,								Nine months ended May 31,
Churn(2)		2006				2005				2006				2005
Star Choice customers			2.4	%			2.7	%			8.5	%			11.1	%

OTHER INCOME AND EXPENSE ITEMS:

Amortization

		Three months ended May 31,												Nine months ended May 31,
										Change												Change
($000’s Cdn)		2006				2005				%				2006				2005				%
Amortization revenue (expense) —
Deferred IRU revenue			3,136				3,126				—				9,409				9,865				(4.6	)
Deferred equipment revenue			20,662				17,560				17.7				58,542				53,369				9.7
Deferred equipment cost			(50,706	)			(50,265	)			0.9				(150,609	)			(160,607	)			(6.2	)
Deferred charges			(1,503	)			(1,562	)			(3.8	)			(4,086	)			(5,037	)			(18.9	)
Property, plant and equipment			(90,986	)			(100,969	)			(9.9	)			(288,848	)			(307,217	)			(6.0	)

Shaw Communications Inc.

The increase in amortization of deferred equipment revenue over the comparative periods is primarily due to growth in sales of higher priced HD digital equipment commencing in fiscal 2005. Amortization of deferred equipment costs decreased over the nine month period last year due to decreases in the cost of DTH equipment and continued strengthening of the Canadian dollar relative to the US dollar. Amortization of property, plant and equipment decreased over the comparative periods as the impact of assets becoming fully depreciated exceeded amortization on new capital purchases.

Interest

		Three months ended May 31,												Nine months ended May 31,
										Change												Change
($000’s Cdn)		2006				2005				%				2006				2005				%
Interest			63,756				64,370				(1.0	)			191,582				199,987				(4.2	)

Interest expense decreased over the comparative nine month period last year mainly as a result of lower average costs of borrowing.

Investment activity

In the third quarter, the Company realized a pre-tax gain of $45.3 million on the sale of of its investment in Canadian Hydro Developers, Inc. and disposed of a privately-held technology company resulting in a gain of $0.1 million. During the second quarter, the Company wrote-down an investment in a privately-held technology company resulting in a $0.4 million loss. In the first quarter, the Company sold its remaining 277,281 shares of Q9 Networks resulting in a pre-tax gain of $1.7 million.

In the second and third quarters of 2005, Shaw realized a gain of $1.1 million on the sale of certain investments and wrote-down an investment in a privately-held technology company resulting in a $1.9 million loss.

Foreign exchange gain (loss) on unhedged and hedged long-term debt

		Three months ended May 31,												Nine months ended May 31,
										Change												Change
($000’s Cdn)		2006				2005				%				2006				2005				%
Foreign exchange gain (loss) on unhedged long-term debt			1,008				(5,043	)			120.0				5,360				25,073				(78.6	)

Shaw records foreign exchange gains and losses on the translation of foreign denominated unhedged long-term debt, which at May 31, 2006 was comprised of US $28.6 million of bank loans. In addition, the Company recorded a foreign exchange gain on the US $172.5 million COPrS prior to entering into a US dollar forward purchase contract in the first quarter to hedge the redemption of the issue. The comparative periods also include gains (losses) on the previously outstanding US $142.5 million COPrS and Zero Coupon Loan. Subsequent to the end of the quarter, the Company amended its existing credit facility which included repayment of the US dollar denominated bank loans. Accordingly, the Company does not anticipate recording any further foreign exchange gains and losses on unhedged foreign currency denominated long-term debt.

Shaw Communications Inc.

Under generally accepted accounting principles, the Company is required to translate long-term debt at period-end foreign exchange rates. Because the Company follows hedge accounting, the resulting foreign exchange gains or losses on translating hedged long-term debt are included in deferred credits or deferred charges. As a result, the amount of hedged long-term debt that is reported under GAAP is often different than the amount at which the hedged debt would be settled under existing cross-currency interest rate agreements. As outlined in Note 3 to the unaudited interim Consolidated Financial Statements, 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 $412.4 million (August 31, 2005 — $329.8 million) which represents the corresponding hedged amounts included in deferred credits.

Fair value adjustments on a foreign currency forward contracts

The Company had a forward purchase contract which provided US funds required for the quarterly interest payments on the US denominated COPrS. This forward purchase contract was not designated as a hedge. Accordingly, the carrying value of this financial instrument was adjusted to reflect the current market value, which resulted in a pre-tax loss of $0.4 million (2005 — $18.8 million). In the second quarter, in line with the redemption of the US $172.5 million COPrS, the Company paid $15.8 million to unwind and cancel the contract. The comparative quarter also includes a gain of $4.3 million in respect of a US forward contract entered into to fund the principal repayment of the US $142.5 million COPrS in February 2005. The forward contract was not treated as a hedge for accounting purposes and as a result was required to be fair valued.

Debt retirement costs

The debt retirement costs arise on the write-off of deferred financing charges associated with the redemption of the US $172.5 million COPrS in the current year and the US $142.5 million COPrS in the prior year.

Other gains

This category consists mainly of realized and unrealized foreign exchange gains and losses on US dollar denominated current assets and liabilities, gains and losses on disposal of property, plant and equipment and the Company’s share of the operations of Burrard Landing Lot 2 Holdings Partnership. Due to fluctuations of the Canadian dollar relative to the US dollar, the Company recorded a foreign exchange gain of $0.2 million (2005 – loss of $0.6 million) for the quarter and $1.4 million (2005 — $1.0 million) for the nine month period.

Burrard Landing Lot 2 Holdings Partnership (the “Partnership”)

The Partnership was formed to build Shaw Tower (a mixed-use structure, with office/retail space and living/working space) in Vancouver. The Company records revenue and expenses in respect of the commercial activities of the building which have a nominal impact on net income. Residential construction of Shaw Tower was completed in the second quarter of fiscal 2006 and the Company has recorded year-to-date gains on the sale of residential units of $1.7 million

Shaw Communications Inc.

(2005 — $0.5 million). These amounts are included in “Other Gains” on the Consolidated Statements of Income and Deficit.

Income Taxes

Income taxes decreased over the comparative periods due to future income tax recoveries of $31.4 million and $23.4 million related to reductions in corporate income tax rates in the first and third quarters of 2006, respectively. This was partially offset by increased taxes on higher pre-tax income.

RISKS AND UNCERTAINTIES

There have been no material changes in any risks or uncertainties facing the Company since August 31, 2005.

FINANCIAL POSITION

Total assets at May 31, 2006 were $7.5 billion compared to $7.4 billion at August 31, 2005. Following is a discussion of significant changes in the consolidated balance sheet since August 31, 2005.

Current assets increased by $26.5 million due to increases in cash of $7.9 million, accounts receivable of $12.7 million and inventories of $4.6 million. Accounts receivable increased primarily due to customer growth and rate increases. Inventories were up mainly due to timing of purchases in order to ensure sufficient supply for increased activity.

Investments and other assets decreased by $23.6 million primarily due to the sale of the shares of Canadian Hydro Developers, Inc.

Property, plant and equipment increased by $17.8 million as current year capital expenditures exceeded amortization for the year.

Deferred charges increased by $12.8 million due to an increase in deferred equipment costs of $8.2 million and $19.2 million in financing costs (including deferred discounts totaling $8.5 million) incurred on the issuance of the $450 million and $300 million senior unsecured notes in the first quarter and third quarters respectively, partially offset by the write-off of $8.1 million of deferred financing costs upon redemption of the US $172.5 million 8.5% COPrS in December.

Current liabilities (excluding current portion of long-term debt) decreased by $15.3 million due to a decrease in accounts payable of $22.4 million and an increase in unearned revenue of $7.0 million. Accounts payable decreased primarily due to the timing of interest payments while unearned revenue increased due to customer growth and rate increases.

Total long-term debt decreased by $187.3 million as a result of a net decrease in bank line borrowings and Partnership debt of $647.4 million, repayment of the US $172.5 million 8.5% COPrS for $201.9 million, a decrease of $88.0 million relating to the translation of US denominated debt, partially offset by the issuance of $450 million and $300 million senior unsecured notes.

Shaw Communications Inc.

Other long-term liabilities decreased by $6.2 million due to payment of $15.8 million to unwind and cancel the foreign currency forward contract in respect of the entitlement payments on the US $172.5 million COPrS. This was partially offset by an increase in the pension liability.

Deferred credits increased by $92.3 million principally due to the increase in deferred foreign exchange gains on the translation of hedged US dollar denominated debt of $82.6 million and an increase of $17.1 million in deferred equipment revenue, both of which were partially offset by amortization of prepaid IRU rental of $9.4 million. Future income taxes increased by $33.5 million due to the future income tax expense recorded in the current year, which was partially offset by corporate rate reductions of $54.8 million.

Share capital decreased by $22.4 million, of which $22.9 million was due to the repurchase of 2,360,000 Class B Non-Voting Shares for cancellation for $58.0 million in the first quarter. The balance of the cost of the shares repurchased of $35.1 million was charged to the deficit. During the first three quarters, 53,000 Class A Shares were converted into 53,000 Class B Non-Voting Shares. As of June 21, 2006, share capital is as reported at May 31, 2006 with the exception of the Class B Non-Voting Shares which were 205,888,272 due to the repurchase of 454,900 Class B Non-Voting shares for cancellation at an average price of $30.55.

LIQUIDITY AND CAPITAL RESOURCES

In the current year, Shaw generated $210.6 million of consolidated free cash flow. Shaw used its free cash flow along with proceeds on the sale of various assets of $73.8 million, cash distributions from the Partnership of $8.2 million, and other net cash items of $1.7 million to repay $99.0 million in debt, purchase $58.0 million of Class B Non-Voting Shares for cancellation, pay common share dividends of $74.1 million, fund operating working capital of $28.1 million, pay $19.3 million in financing costs and pay $15.8 million to terminate a foreign currency forward contract.

On May 9, 2006, Shaw issued $300 million of senior unsecured notes at a rate of 6.15% due May 9, 2016. Net proceeds (after issue and underwriting expenses) of $289 million were used for repayment of unsecured bank loans. The notes were issued at a discount of $5.8 million. In conjunction with the issuance of the notes, the $100 million revolving credit facility established by the Company on February 1, 2006, which had not been drawn upon, was terminated.

On November 16, 2005, Shaw issued $450 million of senior unsecured notes at a rate of 6.10% due November 16, 2012. Net proceeds (after issue and underwriting expenses) of $441.5 million were used for debt repayment, including the redemption of the Series B COPrS on December 16, 2005, the repayment of unsecured bank loans, and for working capital purposes. The notes were issued at a discount of $2.7 million.

Pursuant to an amended normal course issuer bid expiring November 7, 2005 and a renewed normal course issuer bid expiring November 16, 2006, Shaw repurchased 2,360,000 of its Class B Non-Voting Shares for cancellation in the first quarter for $58.0 million. Subsequent to the end of the third quarter the Company repurchased an additional 454,900 Class B Non-Voting Shares for cancellation for $13.9 million. Repurchases, on a year-to date basis, of 2,814,900 Class B Non-Voting Shares represent approximately 1.3% of the Class B Non-Voting Shares outstanding at August 31, 2005.

Shaw Communications Inc.

Subsequent to the end of the quarter, the Company amended its existing credit facility to extend the maturity date from April 2009 to May 2011 and implement new pricing terms effective May 2007. In conjunction with the amendment, the remainder of the non-revolving term facilities, due in fiscal 2007, were repaid early. Covenants and other material terms remain largely unchanged.

At May 31, 2006, Shaw had access to $919.8 million of available credit facilities. Based on available credit facilities and forecasted free cash flow, the Company expects to have sufficient liquidity to fund operations and obligations during the current fiscal year. On a longer-term basis, Shaw expects to generate adequate free cash flow and to have sufficient borrowing capacity to finance foreseeable future business plans and refinance maturing debt.

CASH FLOW

Operating Activities

		Three months ended May 31												Nine months ended May 31,
										Change												Change
($000’s Cdn)		2006				2005				%				2006				2005				%
Funds flow from operations			221,099				190,144				16.3				626,580				537,017				16.7
Net decrease (increase) in non-cash working capital balances related to operations			(22,536	)			(10,794	)			108.8				(33,738	)			(25,681	)			31.4
			198,563				179,350				10.7				592,842				511,336				15.9

Funds flow from operations increased over comparative periods as a result of growth in service operating income before amortization and lower interest expense. The net change in non-cash working capital balances over the comparative quarter is mainly due to timing of payment of accounts payable and accrued liabilities. In the nine-month period, the change is mainly due to increases in accounts receivable and unearned revenue as a result of subscriber growth and rate increases.

Investing Activities

		Three months ended May 31,												Nine months ended May 31,
($000’s Cdn)		2006				2005				Increase				2006				2005				Increase
Cash flow used in investing activities			(48,488	)			(91,534	)			43,046				(340,925	)			(353,140	)			12,215

The cash used in investing activities was $43.0 million and $12.2 million lower in the current quarter and nine month period, respectively, mainly due to the higher proceeds on sale of investments and other assets, which was partially offset by increased expenditures on capital and deferred financing costs.

Shaw Communications Inc.

Financing Activities

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

		Three months ended May 31,								Nine months ended May 31,
(In $ millions Cdn)		2006				2005				2006				2005
Bank loans and bank indebtedness – net borrowings (repayments)			(411.2	)			346.1				(647.0	)			504.4
Proceeds on $300 million senior unsecured notes			300.0				—				300.0				—
Proceeds on $450 million senior unsecured notes			—				—				450.0				—
Dividends			(29.4	)			(16.0	)			(74.1	)			(48.3	)
Purchase of Class B Non-Voting Shares for cancellation			—				(135.4	)			(58.0	)			(159.4	)
Increase (decrease) in Partnership debt			(0.1	)			3.3				(0.3	)			15.6
Repayment of $275 million Senior Notes			—				(275.0	)			—				(275.0	)
Proceeds on bond forward			—				—				2.5				—
Issue of Class B Non-Voting Shares			0.3				—				0.4				—
Proceeds on prepayment of IRU			—				—				0.2				—
Cost to terminate foreign currency forward contract			—				—				(15.8	)			(12.2	)
Redemption of COPrS			—				—				(201.9	)			(172.4	)
			(140.4	)			(77.0	)			(244.0	)			(147.3	)

SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION

						Service
						operating								Basic and diluted				Funds flow
						income before								earnings per				from
( $000’s Cdn except per share amounts)		Service revenue				amortization(1)				Net income				share				operations(2)
2006
Third			626,654				279,544				126,410				0.58				221,099
Second			611,197				267,924				45,790				0.21				208,273
First			589,545				255,322				75,681				0.35				197,208
2005
Fourth			562,958				250,759				69,959				0.31				191,507
Third			559,883				252,899				32,836				0.14				190,144
Second			549,919				244,311				5,721				0.02				176,557
First			537,050				234,024				44,705				0.19				170,316
2004 (restated)
Fourth			531,821				239,212				32,555				0.14				176,029

Generally, service revenue and service operating income before amortization have grown quarter-over-quarter largely due to customer growth and rate increases. Net income has generally trended positively quarter-over-quarter as a result of a number of factors including the growth in service operating income before amortization described above, reductions of interest expense as a result of debt repayment and retirement, the impact of the net change in non-operating items such as gains on sale of investments, foreign currency fluctuations on unhedged US denominated debt, fair value adjustments on foreign currency forward contracts and the impact of corporate income tax rate reductions. The exception to the consecutive quarter-over-

Shaw Communications Inc.

quarter increases in net income is in the second quarters of both 2005 and 2006. Earnings declined by $39.0 million in the second quarter of 2005. In the first quarter of 2005, the Company recorded a net gain of $27.7 million in respect of the foreign exchange impact on unhedged long-term debt and fair value changes on a foreign currency forward contract while in the second quarter of 2005, the Company recorded a net loss of $13.6 million in respect of those same items. Net income declined by $29.9 million in the second quarter of 2006 due to the $31.4 million income tax recovery recorded in the first quarter in respect of corporate rate reductions. As a result of the aforementioned changes in net income, basic and diluted earnings per share have trended accordingly.

ACCOUNTING STANDARDS

Update to critical accounting policies

The Management’s Discussion and Analysis (“MD&A”) included in the Company’s August 31, 2005 Annual Report outlined critical accounting policies including key estimates and assumptions that management has made under these policies and how they affect the amounts reported in the Consolidated Financial Statements. The MD&A also describes significant accounting policies where alternatives exist. Also described therein were a number of new accounting policies that the Company was required to adopt in 2006 as a result of recent changes in Canadian accounting pronouncements. The ensuing discussion provides additional information as to the date that the Company was required to adopt the new standards, the methods of adoption permitted by the standards and the method chosen by the Company and the effect on the financial statements as a result of adopting the new policy.

Adoption of recent Canadian accounting pronouncements

     Equity Instruments

In the first quarter of 2006, the Company retroactively adopted the amended Canadian standard, Financial Instruments – Disclosure and Presentation, which requires obligations that may be settled at the issuer’s option by a variable number of the issuer’s own shares to be presented as liabilities, which is consistent with US standards. As a result, the Company’s COPrS and the Zero Coupon Loan have been classified as debt instead of equity and the entitlements thereon are treated as interest expense instead of dividends. In addition, such US denominated instruments are translated at period-end exchange rates and to the extent they are unhedged, the resulting gains and losses are included in the Consolidated Statements of Income. The impact on the Consolidated Balance Sheets at May 31, 2006 and August 31, 2005 and on the Consolidated Statements of Income and Cash Flows for the three and nine months ended May 31, 2006 and 2005 is as follows:

Shaw Communications Inc.

Increase (decrease)		May 31, 2006				August 31, 2005
($000’s Cdn)
Consolidated balance sheets:
Deferred charges			4,935				13,247
Long-term debt			250,000				454,775
Future income taxes			1,665				14,033
Equity instruments			(245,669	)			(498,194	)
Deficit			1,061				(42,633	)
Increase (decrease) in deficit:
Adjusted for change in accounting policy			(42,633	)			(36,403	)
Decrease in equity entitlements (net of income taxes)			(14,252	)			(31,318	)
Decrease in gain on redemption of COPrS			43,282				12,803
Decrease in gain on settlement of Zero Coupon Loan			—				4,921
Decrease in net income			14,664				7,364
			1,061				(42,633	)

		Three months ended May 31,								Nine months ended May 31,
($000’s Cdn except per share amounts)		2006				2005				2006				2005
Consolidated statements of income:
Increase in amortization			(34	)			(51	)			(189	)			(207	)
Increase in interest			(5,463	)			(10,714	)			(21,513	)			(38,149	)
Increase in debt retirement costs			—				—				(8,123	)			(6,311	)
Increase in foreign exchange gain (loss) on unhedged long-term debt			—				(4,238	)			2,881				21,736
Decrease in fair value loss on foreign currency forward contract			—				—				2,415				—
Decrease in income tax expense			1,992				4,573				9,865				11,990
Decrease in net income			(3,505	)			(10,430	)			(14,664	)			(10,941	)
Decrease in earnings per share (in $):			—				(0.02	)			—				—

		Three months ended May 31,								Nine months ended May 31,
Increase (decrease)		2006				2005				2006				2005
($000s Cdn)
Statement of cash flows:
Operating activities			(5,182	)			(8,229	)			(18,132	)			(28,209	)
Financing activities			5,182				8,229				18,132				28,209

      Non-monetary Transactions

In the first quarter of 2006, the Company prospectively adopted the new Canadian standard, Non-monetary Transactions, which requires application of fair value measurement to non-monetary transactions determined by a number of tests. The new standard is consistent with recently amended US standards. The application of these recommendations had no impact on the Company’s Consolidated Financial Statements.

Shaw Communications Inc.

CAUTION CONCERNING FORWARD LOOKING STATEMENTS

Certain statements included and incorporated by reference herein constitute forward-looking statements. When used, the words “anticipate”, “believe”, “expect”, “plan”, intend”, “target”, “guideline”, “goal”, and similar expressions are intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, references to future capital expenditures (including the amount and nature thereof), business strategies and measures to implement strategies, competitive strengths, goals, expansion and growth of Shaw’s business and operations, plans and references to the future success of Shaw. These forward-looking statements are based on certain assumptions and analyses made by Shaw in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances. However, whether actual results and developments will conform with the expectations and predictions of Shaw is subject to a number of risks and uncertainties, including, but not limited to, general economic, market or business conditions; the opportunities (or lack thereof) that may be presented to and pursued by Shaw; increased competition in the markets in which Shaw operates and from the development of new markets for emerging technologies; changes in laws, regulations and decisions by regulators in Shaw’s industries in both Canada and the United States; Shaw’s status as a holding company with separate operating subsidiaries; changing conditions in the entertainment, information and communications industries; risks associated with the economic, political and regulatory policies of local governments and laws and policies of Canada and the United States; and other factors, many of which are beyond the control of Shaw. Should one or more of these risks materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those as described herein. Consequently, all of the forward-looking statements made in this report and the documents incorporated by reference herein are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by Shaw will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Shaw.

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

Shaw Communications Inc.

CONSOLIDATED BALANCE SHEETS
(Unaudited)

[thousands of Canadian dollars]		May 31, 2006				August 31, 2005
						(Restated - note 1)
ASSETS
Current
Cash			9,625				1,713
Accounts receivable			127,394				114,664
Inventories			49,870				45,224
Prepaids and other			20,280				19,116
			207,169				180,717
Investments and other assets			12,665				36,229
Property, plant and equipment			2,207,075				2,189,235
Deferred charges			264,052				251,246
Intangibles
Broadcast licenses			4,684,647				4,684,647
Goodwill			88,111				88,111
			7,463,719				7,430,185
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current
Accounts payable and accrued liabilities			385,597				408,033
Income taxes payable			6,335				6,263
Unearned revenue			105,440				98,420
Current portion of long-term debt [note 3]			99,908				51,380
			597,280				564,096
Long-term debt [note 3]			2,912,384				3,148,162
Other long-term liabilities [note 9]			34,571				40,806
Deferred credits			1,102,995				1,010,723
Future income taxes			1,102,359				1,068,849
			5,749,589				5,832,636
Shareholders’ equity
Share capital [note 4]			2,001,785				2,024,173
Contributed surplus			3,877				1,866
Deficit			(291,861	)			(428,855	)
Cumulative translation adjustment			329				365
			1,714,130				1,597,549
			7,463,719				7,430,185

Shaw Communications Inc.

CONSOLIDATED STATEMENTS OF INCOME AND DEFICIT
(Unaudited)

		Three months ended May 31,								Nine months ended May 31,
[thousands of Canadian dollars except per share amounts]		2006				2005				2006				2005
						(Restated – note1)								(Restated-note 1)
Service revenue [note 2]			626,654				559,883				1,827,396				1,646,852
Operating, general and administrative expenses			347,110				306,984				1,024,606				915,618
Service operating income before amortization [note 2]			279,544				252,899				802,790				731,234
Amortization:
Deferred IRU revenue			3,136				3,126				9,409				9,865
Deferred equipment revenue			20,662				17,560				58,542				53,369
Deferred equipment cost			(50,706	)			(50,265	)			(150,609	)			(160,607	)
Deferred charges			(1,503	)			(1,562	)			(4,086	)			(5,037	)
Property, plant and equipment			(90,986	)			(100,969	)			(288,848	)			(307,217	)
Operating income			160,147				120,789				427,198				321,607
Interest on long-term debt [note 2]			(63,756	)			(64,370	)			(191,582	)			(199,987	)
			96,391				56,419				235,616				121,620
Gain on sale of investments			45,445				159				47,135				1,138
Write-down of investments			—				—				(374	)			(1,937	)
Foreign exchange gain (loss) on unhedged long-term debt			1,008				(5,043	)			5,360				25,073
Fair value gain (loss) on foreign currency forward contracts			—				1,518				(360	)			(14,531	)
Debt retirement costs			—				—				(8,123	)			(6,311	)
Other gains			1,322				2,227				5,644				5,062
Income before income taxes			144,166				55,280				284,898				130,114
Income tax expense			17,711				22,305				36,824				46,435
Income before the following			126,455				32,975				248,074				83,679
Equity loss on investees			(45	)			(139	)			(193	)			(417	)
Net income			126,410				32,836				247,881				83,262
Deficit, beginning of period, as previously reported			(388,906	)			(371,442	)			(471,488	)			(369,194	)
Adjustment for change in accounting policy [note 1]			—				40,794				42,633				36,403
Deficit, beginning of period, restated			(388,906	)			(330,648	)			(428,855	)			(332,791	)
			(262,496	)			(297,812	)			(180,974	)			(249,529	)
Reduction on Class B Non-Voting Shares purchased for cancellation [note 4]			—				(82,601	)			(35,085	)			(95,562	)
Amortization of opening fair value loss on a foreign currency forward contract			—				(93	)			(1,705	)			(3,102	)
Dividends -
Class A and Class B Non-Voting Shares			(29,365	)			(16,007	)			(74,097	)			(48,320	)
Deficit, end of period			(291,861	)			(396,513	)			(291,861	)			(396,513	)
Earnings per share [note 5]
Basic and diluted			0.58				0.14				1.14				0.36
[thousands of shares]
Weighted average participating shares outstanding during period			217,625				228,680				218,093				230,214
Participating shares outstanding, end of period			217,635				224,880				217,635				224,880

Shaw Communications Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

		Three months ended May 31,								Nine months ended May 31,
[thousands of Canadian dollars]		2006				2005				2006				2005
						(Restated - note 1)								(Restated - note 1)
OPERATING ACTIVITIES [note 6]
Funds flow from operations			221,099				190,144				626,580				537,017
Net increase in non-cash working capital balances related to operations			(22,536	)			(10,794	)			(33,738	)			(25,681	)
			198,563				179,350				592,842				511,336
INVESTING ACTIVITIES
Additions to property, plant and equipment [note 2]			(97,307	)			(78,648	)			(312,161	)			(263,062	)
Additions to equipment costs (net) [note 2]			(21,011	)			(22,494	)			(86,388	)			(87,780	)
Net reduction (addition) to inventories			12,425				2,777				(4,646	)			(8,927	)
Proceeds on sale of investments and other assets			70,777				6,836				84,439				12,213
Cost to terminate IRU			—				—				—				(283	)
Acquisition of investments			(2,904	)			—				(2,904	)			(5,265	)
Additions to deferred charges			(10,468	)			(5	)			(19,265	)			(36	)
			(48,488	)			(91,534	)			(340,925	)			(353,140	)
FINANCING ACTIVITIES
Decrease in bank indebtedness			(29,677	)			(3,433	)			—				(4,317	)
Increase in long-term debt			375,000				408,447				1,025,000				665,566
Long-term debt repayments			(456,696	)			(330,475	)			(1,124,286	)			(588,617	)
Cost to terminate foreign currency forward contract			—				—				(15,774	)			(12,200	)
Issue of Class B Non-Voting Shares, net of after-tax expenses			300				—				416				—
Proceeds on bond forward			—				—				2,486				—
Proceeds on prepayment of IRU			—				—				228				—
Purchase of Class B Non-Voting Shares for cancellation			—				(135,458	)			(57,954	)			(159,414	)
Dividends paid on Class A and Class B Non-Voting Shares			(29,365	)			(16,007	)			(74,097	)			(48,320	)
			(140,438	)			(76,926	)			(243,981	)			(147,302	)
Effect of currency translation on cash balances and cash flows			(12	)			3				(24	)			(1	)
Increase in cash			9,625				10,893				7,912				10,893
Cash, beginning of the period			—				—				1,713				—
Cash, end of the period			9,625				10,893				9,625				10,893