Net income has fluctuated quarter-over-quarter primarily as a result of the changes in operating income before amortization described above and the impact of the net change in non-operating items. In the third quarter of 2013, net income increased by $68 million due to increased operating income before amortization of $47 million, the gain on sale of the cablesystem in Hamilton, Ontario of $50 million and the gain on sale of the specialty channel ABC Spark of $9 million partially offset by higher income taxes of $30 million and acquisition and divestment costs of $8 million in respect of the transactions with Rogers and the acquisition of Envision. In the second quarter of 2013, net income decreased by $53 million primarily due to lower operating income before amortization of $63 million partially offset by lower income taxes of $5 million. In the first quarter of 2013, net income increased $102 million primarily due to higher operating income before amortization of $100 million. In the fourth quarter of 2012, net income decreased $115 million, primarily due to lower operating income before amortization of $66 million and increased income tax expense of $31 million. The fourth quarter also included a loss of $26 million in respect of the electrical fire at the Company's head office offset by a pension curtailment gain of $25 million. In the third quarter of 2012, net income increased $70 million due to higher operating income before amortization of $74 million and lower amortization of $9 million partially offset by increased income tax expense of $17 million. In the second quarter of 2012, net income decreased $24 million due to a decline in operating income before amortization of $73 million partially offset by lower income tax expense of $53 million. Net income increased $118 million in the first quarter of 2012 due to the combined impact of higher operating income before amortization of $85 million and income tax expense of $18 million in the first quarter and the loss from the wireless discontinued operations of $84 million and gain on redemption of debt of $23 million recorded in the preceding quarter. As a result of the aforementioned changes in net income, basic and diluted earnings per share have trended accordingly.
Update to critical accounting policies and estimates
The MD&A included in the Company's August 31, 2012 Annual Report outlined critical accounting policies including key estimates and assumptions that management has made under these policies and how they affect the amounts reported in the Consolidated Financial Statements. The MD&A also describes significant accounting policies where alternatives exist. The condensed interim consolidated financial statements follow the same accounting policies and methods of application as the most recent annual consolidated financial statements other than as set out below.
Adoption of recent accounting pronouncements
The Company adopted the following standards and amendments effective September 1, 2012:
(i) Employee Benefits
IAS 19, Employee Benefits (amended 2011), eliminates the existing option to defer actuarial gains and losses and requires changes from the remeasurement of defined benefit plan assets and liabilities to be presented in the statement of other comprehensive income. The significant amendments to IAS 19 which impact the Company are as follows:
-- Expected return on plan assets is replaced with interest income and calculated based on the discount rate used to measure the pension obligation; the difference between interest income and actual return on plan assets is recognized in other comprehensive income-- Immediate recognition of past service costs when plan amendments occur regardless of whether or not they are vested-- Plan administration costs, other than costs associated with managing plan assets, are required to be expensed-- Expanded disclosures including plan characteristics and risks arising from defined benefit plans