Offer to purchase CLEARNET.pdf - About TELUS

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TELUS CORPORATION PRO FORMA CONSOLIDATED BALANCE SHEET As at June 30, 2000 (unaudited) TELUS Combined Pro Forma Adjustments Pro Forma Corporation Clearnet 2(a) (millions) 2(b) Consolidated Assets Current Assets Cash and temporary investments .......... $ 101.4 $ 299.5 $ 400.9 $ — $ 400.9 Accounts receivable ................... 870.2 73.5 943.7 — 943.7 Inventories .......................... 51.5 39.2 90.7 — 90.7 Current portion of future income taxes ..... 182.4 — 182.4 — 182.4 Prepaid expenses and other .............. 143.6 40.4 184.0 — 184.0 1,349.1 452.6 1,801.7 — 1,801.7 Property, plant & equipment, net ........... Other Assets 6,223.7 1,207.3 7,431.0 — 7,431.0 Future income taxes ................... 404.5 — 404.5 740.0 1,144.5 Goodwill and other intangibles ........... 462.0 — 462.0 4,833.6 5,295.6 Investments and other ................. 255.2 296.3 551.5 97.3 648.8 1,121.7 296.3 1,418.0 5,670.9 7,088.9 $8,694.5 $1,956.2 $10,650.7 $5,670.9 $16,321.6 Liabilities Current Liabilities Accounts payable & accrued liabilities ...... $ 865.3 $ 203.7 $ 1,069.0 $ — $ 1,069.0 Dividends payable .................... 83.7 — 83.7 — 83.7 Advance billings & customer deposits ...... 167.6 — 167.6 — 167.6 Short-term obligations ................. 1,137.4 — 1,137.4 — 1,137.4 2,254.0 203.7 2,457.7 — 2,457.7 Long-term debt ........................ 1,727.1 2,428.8 4,155.9 2,690.2 6,846.1 Other long-term liabilities ................ 153.2 — 153.2 — 153.2 Non-controlling interest .................. Shareholders’ Equity (Deficiency) 83.4 — 83.4 — 83.4 Common equity ...................... 4,407.1 (821.4) 3,585.7 3,125.8 6,711.5 Preference and preferred shares .......... 69.7 — 69.7 — 69.7 Convertible debentures ................. — 145.1 145.1 (145.1) — 4,476.8 (676.3) 3,800.5 2,980.7 6,781.2 $8,694.5 $1,956.2 $10,650.7 $5,670.9 $16,321.6 II-16
TELUS CORPORATION NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS June 30, 2000 (unaudited) 1. BASIS OF PRESENTATION The accompanying unaudited pro forma consolidated financial statements for TELUS Corporation have been prepared in accordance with Canadian generally accepted accounting principles and are based on: • the unaudited consolidated financial statements of TELUS Corporation (‘‘TELUS’’) for the six months ended June 30, 2000; and • the unaudited consolidated financial statements of Clearnet Communications Inc. (‘‘Clearnet’’) for the six months ended June 30, 2000. The unaudited pro forma consolidated financial statements are not necessarily indicative of the results that actually would have occurred, or the results expected in future periods, had the events reflected herein occurred on the dates indicated. No attempt has been made to calculate or estimate the effect of any potential synergies or harmonization of accounting policies between the two companies. 2. ASSUMPTIONS AND ADJUSTMENTS The pro forma consolidated financial statements have been prepared from the following assumptions and adjustments: (a) Combination assumptions The business combination between TELUS and Clearnet has been accounted for using the purchase method. The pro forma statement of income reflects the purchase as though it had occurred on January 1, 2000. The pro forma balance sheet reflects the purchase as if it had occurred on June 30, 2000. • The purchase transaction comprises the acquisition of all the outstanding shares of Clearnet, including exercisable options, warrants and convertible debentures, for $2,304.3 million in cash and 53.85 million non-voting common shares of TELUS. The total purchase price (including an estimated $30 million of related acquisition costs) is $4,638.7 million. The cash component of the purchase will be funded by debt issued by TELUS for approximately $2,334.3 million. The 53.85 million TELUS common shares are assumed to have been issued at $42.7888 each for total proceeds of $2,304.4 million. (b) Pro Forma adjustments Balance Sheet • A future income tax asset of $740 million has been recorded representing the value of tax loss carry forwards in Clearnet that will be available to reduce future taxable income in TELUS after certain reorganization arrangements have been completed. • Other assets have increased by $97.3 million of debt issuance costs associated with replacement debt for Clearnet. • Long-term debt has increased by: 1) $2,334.3 million borrowed to fund part of the purchase; 2) a $355.9 million estimated fair market value adjustment to Clearnet debt, which is based upon the company’s debt repayment plans and the expected market rates for debt with similar terms and conditions. II-17
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No securities commission or similar
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QUESTIONS AND ANSWERS ABOUT THE OFF
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outstanding voting shares of Clearn
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WHERE YOU CAN OBTAIN MORE INFORMATI
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SUMMARY The following is a summary
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Commitment to Accept the Offers by
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Selected Historical and Pro Forma C
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DEFINITIONS In the accompanying Sum
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‘‘Governmental Entity’’ mea
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‘‘Shareholders Agreements’’
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Shares and the amount of cash recei
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shares into the Depositary’s acco
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the person or persons specified by
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(l) neither TELUS nor the Banks bec
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condition of the Offers specified u
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(f) the Holdco Shareholder properly
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Notice of any determination regardi
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The Offers are not being made to, n
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On July 14, 2000, Darren Entwistle,
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espect of such Acquisition Proposal
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etter positioned to take advantage
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The funds obtained pursuant to the
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part of its national strategy, TELU
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to require holders of TELUS Non-Vot
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‘‘Dividends’’ in TELUS’ A
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systems. Change in the regulation o
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(b) the management proxy circular o
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COMMITMENTS TO ACQUIRE SECURITIES O
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the proposed transaction is likely
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ACQUISITION OF CLEARNET SHARES NOT
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least equal in value to the conside
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Beneficial owners of Clearnet Conve
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separately dispose of the balance o
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also be taxable Canadian property w
Page 69 and 70: No brokerage fees or commissions wi
Page 71 and 72: CONSENT OF AUDITORS To: British Col
Page 73 and 74: CERTIFICATE OF 612459 B.C. LTD. The
Page 75 and 76: MANAGEMENT’S REPORT Management is
Page 77 and 78: TELUS CORPORATION (FORMERLY BCT.TEL
Page 87 and 88: 4. FINANCING COSTS TELUS CORPORATIO
Page 105 and 106: SCHEDULE II TELUS CORPORATION UNAUD
Page 107 and 108: COMPILATION REPORT To the Directors
Page 109 and 110: TELUS CORPORATION PRO FORMA CONSOLI
Page 111 and 112: TELUS CORPORATION NOTES TO THE PRO
Page 119: TELUS CORPORATION PRO FORMA CONSOLI
Page 127 and 128: SCHEDULE III TELUS CORPORATION U.S.
Page 129 and 130: The following table restates the ma
Page 131 and 132: ANNEX A ADDITIONAL INFORMATION ADDI
Page 133 and 134: Fares F. Salloum President — Inte
Page 135 and 136: Officers Name and Position held wit
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