Seasonality and Quarterly
Financial Information

The following table shows condensed financial data for the previous eight quarters. This quarterly information is unaudited, but has been prepared on the same basis as the annual consolidated financial statements. We discuss the factors that caused our results to vary over the past eight quarters throughout this management discussion and analysis.

Our operating results are subject to seasonal fluctuations that materially impact quarter-to-quarter operating results. Excluding government appropriations, approximately one third of the Corporation’s total revenue and sources of funds comes from advertising revenue that tends to follow a seasonal pattern, with the second quarter of each financial year typically being the lowest because the summer season attracts fewer viewers.

Advertising revenue also varies according to general market and economic conditions and the programming schedule, with the third and fourth quarters generating the highest revenue. Lower revenues for the third and fourth quarters of 2012—2013, when compared to 2013—2014, were primarily due to the impact on advertising revenue of the NHL lockout and other programming reductions as part of our cost-reduction initiatives. The proportion of our advertising revenue to our total revenue and sources of funds will decrease after the end of CBC’s contract with the NHL in June 2014.

Expenses also tend to follow a seasonal pattern because they are influenced by the programming schedule. As the table above shows, expenses were relatively lower in the second quarters of 2013—2014 and 2012—2013. Operating expenses tend to be higher in the fourth quarter as the Corporation incurs costs preparing for the fall broadcasting season and completes project deliverables due by the end of the fiscal year. High expenses in the first quarter of 2012—2013 were mostly attributable to one-time restructuring initiatives associated with cost reductions following Federal Budget 2012 and with other financial pressures. Comparatively higher expenses in the third and fourth quarters of 2013—2014 are mainly due to higher programmin>g costs for both the coverage of the Sochi 2014 Olympics Games and the return of Hockey Night in Canada.

Government funding is recognized in the Corporation’s income based on budgeted net expenses for the quarter. Monthly and quarterly budgets are established from the annual budget approved by the Board of Directors at the beginning of each year, and reflect expected appropriation funding for the year and seasonal impacts on expenditures and self-generated revenue.

Other factors may impact net results from quarter to quarter. These may include foreign exchange gains or losses, changes to the fair value of derivative financial instruments, asset impairments and sales. When appropriate, these are recorded as non-operating items. As indicated in the table above, the Corporation recorded lower levels of non-operating gains and losses in 2013—2014 compared to 2012—2013.