Shaw 2010 Annual Report Download - page 51

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Highlights
kNet income was $532.7 million for the year compared to $536.5 million in 2009 and
$673.2 million in 2008.
kEarnings per share were $1.23 compared to $1.25 in 2009 and $1.56 in 2008.
kService revenue for the year improved 9.6% to $3.72 billion from $3.39 billion last year
and $3.10 billion in 2008.
kService operating income before amortization of $1.76 billion was up 14.2% over last
year’s amount of $1.54 billion and $1.41 billion in 2008.
kConsolidated free cash flow increased to $515.1 million from $506.1 million in 2009
and $455.3 million in 2008.
kDuring 2010, 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
$0.878 and $0.88 respectively. Dividends paid in 2010 increased almost 6% over
2009 to $372.1 million.
kThe Company repurchased for cancellation 6,100,000 Class B Non-Voting Shares for
$118.1 million during 2010.
kIn October 2009 the Company closed a $1.25 billion offering of 5.65% senior notes
due October 1, 2019. The net proceeds were used to repay near maturing debt
including its US$440 million senior notes, US$255 million senior notes, and
US$300 million senior notes.
kOn November 9, 2009, the Company issued $650 million senior notes as a rate of
6.75% due 2039. The net proceeds were used for working capital and general corporate
purposes.
kIn April 2010 Shaw announced its intention to move forward on the rollout of its
Wireless strategy with planned launches anticipated to commence late in calendar
2011.
kIn May 2010 Shaw announced that it had entered into agreements to acquire 100% of
the broadcasting business of Canwest including CW Media, the company that owns the
specialty channels acquired from Alliance Atlantis Communications Inc. in 2007. The
total consideration, including debt assumed, is approximately $2.0 billion.
Revenue and operating expenses
2010 vs. 2009
Consolidated service revenue of $3.72 billion for the year improved 9.6% over last year. The
improvement was primarily due to customer growth, including from acquisitions, and rate increases.
Consolidated service operating income before amortization was up 14.2% over the comparable
period to $1.76 billion. The improvement was due to the revenue related growth, partially offset by
higher employee related and other costs associated with the increased subscriber base including
marketing and sales activities, as well as the impact of the new LPIF fees. The current twelve month
period also benefitted from a one-time CRTC Part II fee recovery. Excluding this one-time recovery,
the year-to-date improvement was 9.3%.
Subscriber growth continued in the year. Digital customers were up almost 330,000 subscribers
increasing digital penetration of Basic to over 70%, up from 57% at August 31, 2009. A significant
milestone was also reached in 2010 as the Company surpassed 1,000,000 Digital Phone lines.
47
Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2010