Shaw 2014 Annual Report Download - page 45

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014
$76 million partially offset by the impact of the restructuring announced during the previous
quarter. In the third quarter of 2014, net income increased $6 million due to higher operating
income before restructuring costs and amortization of $73 million and lower interest and
amortization expense totaling $25 million partially offset by restructuring expenses of $53
million and reduction in net other revenue items of $41 million. The reduction in net other
revenue items was primarily due to the gain on sale of media assets of $49 million net of the
$8 million of debt retirement costs recorded in the second quarter. In the second quarter of
2014, net income decreased $23 million due to lower operating income before restructuring
costs and amortization of $80 million and increased amortization of $8 million partially offset
by an improvement in net other non-operating items of $36 million and lower income tax
expense of $24 million. In the first quarter of 2014, net income increased $128 million due to
increased operating income before restructuring costs and amortization of $112 million, a
reduction in net non-operating items of $21 million and lower amortization of $29 million
partially offset by higher income taxes of $36 million. The reduction in amortization is due to
changes in estimated useful lives of certain property, plant and equipment as well as a change
in the amortization period for deferred equipment revenue and the associated deferred
equipment costs. Net other non-operating items decreased due to a refund of $5 million in
respect of excess money from the Canwest CCAA plan implementation fund received in the first
quarter and the write-down of a real estate property of $14 million in the fourth quarter. In the
fourth quarter of 2013, net income decreased $133 million due to lower operating income
before restructuring costs and amortization of $89 million and reduction in net other revenue
items of $67 million partially offset by lower income taxes of $34 million. The reduction in net
other revenue items was mainly due to the gain on sale of Mountain Cable of $50 million
recorded in the third quarter and write-down of a real estate property of $14 million in the
fourth quarter. In the third quarter of 2013, net income increased $68 million due to increased
operating income before restructuring costs and amortization of $47 million, the
aforementioned gain on sale of Mountain Cable and the gain on sale of the specialty channel
ABC Spark partially offset by higher income taxes of $30 million and acquisition and
divestment costs in respect of the transactions with Rogers and the acquisition of Envision. In
the second quarter of 2013, net income decreased $53 million primarily due to lower operating
income before restructuring costs and amortization of $63 million partially offset by lower
income taxes of $5 million. As a result of the aforementioned changes in net income, basic and
diluted earnings per share have trended accordingly.
The following further assists in explaining the trend of quarterly revenue and operating income
before restructuring costs and amortization:
Growth in subscriber statistics as follows:
2014 2013
Subscriber Statistics First Second Third Fourth First Second Third Fourth
Video customers (29,619) (20,758) (12,075) (20,166) (23,877) (29,525) (26,578) (29,522)
Internet customers 2,746 12,767 12,399 11,983 5,637 7,675 4,157 10,564
Digital Phone lines 1,351 8,075 4,834 1,114 16,750 13,225 17,719 4,722
DTH customers (9,323) (1,405) (5,608) (6,606) (4,021) 1,328 (2,930) (835)
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