Shaw 2011 Annual Report Download - page 51

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Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2011
Highlights
ŠNet income from continuing operations was $562.1 million for the year compared
to $533.8 million in 2010 and $536.5 million in 2009.
ŠEarnings per share from continuing operations were $1.24 compared to $1.23 in
2010 and $1.25 in 2009.
ŠRevenue for the year improved 27.5% to $4.74 billion from $3.72 billion last year
and $3.39 billion in 2009.
ŠOperating income before amortization of $2.03 billion was up 15.4% over last
year’s amount of $1.76 billion and $1.54 billion in 2009.
ŠConsolidated free cash flow increased to $603.0 million from $515.1 million in
2010 and $506.1 million in 2009.
ŠDuring 2011 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 $0.917 and $0.92 respectively. Dividends paid in 2011 increased
approximately 5% over 2010 to $391.3 million.
ŠIn October 2010 Shaw completed its acquisition of the broadcasting business of
Canwest including CW Media, the company that owned the specialty channels
acquired from Alliance Atlantis Communications Inc. in 2007. The total
consideration, including debt assumed, was approximately $2.0 billion.
ŠOn December 7, 2010 the Company issued $500 million senior notes at a rate of
5.5% due December 7, 2020 and issued an additional $400 million under the
reopened 6.75% senior notes due November 9, 2039. The net proceeds from the
notes issuances were used to repay borrowings under the Company’s $1 billion
revolving credit facility.
ŠOn February 17, 2011 the Company issued an additional $400 million under the
reopened 6.75% senior notes due November 9, 2039. The net proceeds were used
for working capital and general corporate purposes as well as to partially repay
borrowings under the revolving credit facility while excess funds are held in cash
and cash equivalents.
ŠIn March 2011 Shaw implemented various cost saving initiatives including staff
reductions and a review of overhead expenses to drive efficiencies and enhance
competitiveness.
ŠOn May 31, 2011 the Company issued 12,000,000 Cumulative Redeemable Rate
Reset Preferred Shares, Series A (“Preferred Shares”) at a price of $25.00 per
Preferred Share for aggregate gross proceeds of $300.0 million. The net proceeds
were used for working capital and general corporate purposes while excess funds are
held in cash and cash equivalents.
ŠShaw recently announced its intent to provide a managed Wi-Fi network that will
extend a customer’s broadband experience beyond their home.
Revenue and operating expenses
2011 vs. 2010
Consolidated revenue of $4.74 billion for the twelve month period improved 27.5% over the
prior year. The improvement was primarily due to the acquisition of Shaw Media, as well as rate
increases and growth in the Cable and Satellite divisions. Consolidated operating income before
amortization for the twelve month period of $2.03 billion increased 15.4% over last year. The
current period benefitted from the acquisition of Shaw Media as well as core revenue related
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