Rogers Reports Fourth Quarter 2009 Financial and Operating Results
Adjusted Operating Profit up 14% as Revenue Grows to Over $3 Billion
and Margins Expand in each of Wireless, Cable and Media;
Wireless Data Revenue Growth Continues to be Robust at 45%;
7% Increases in Wireless Network and Cable Operations Revenue
Combine with Cost Reduction Initiatives Drive Adjusted Operating
Profit Growth of 16% and 8%, Respectively;
Increases in TV Advertising and The Shopping Channel Sales
Combined with Cost Reduction Initiatives Drive 13% Adjusted Operating
Profit Growth at Media;
Capex Reductions Together with Adjusted Operating Profit Growth
Drive $329 Million Year-over-Year Increase in Consolidated Fourth
Quarter Free Cash Flow;
Share Buybacks and Dividends Return $607 Million of Cash to
Shareholders During the Quarter
TORONTO, Feb. 17 /CNW/ - Rogers Communications Inc. today announced its unaudited consolidated financial and operating results for the three months and twelve months ended December 31, 2009.
Financial highlights are as follows:
-------------------------------------------------------------------------
Three months ended Twelve months ended
(In millions of December 31, December 31,
dollars, except per ---------------------------------------------------
share amounts) 2009 2008 % Chg 2009 2008 % Chg
-------------------------------------------------------------------------
Operating revenue $ 3,057 $ 2,941 4 $ 11,731 $ 11,335 3
Operating profit(1) 1,049 902 16 4,316 4,078 6
Net income (loss) 310 (138) n/m 1,478 1,002 48
Basic and diluted
net income (loss)
per share $ 0.51 $ (0.22) n/m $ 2.38 $ 1.57 52
As adjusted:(2)
Operating profit(1) $ 1,101 $ 968 14 $ 4,388 $ 4,060 8
Net income 370 164 125 1,556 1,260 23
Basic and diluted
net income per
share $ 0.61 $ 0.26 135 $ 2.51 $ 1.98 27
-------------------------------------------------------------------------
(1) Operating profit should not be considered as a substitute or
alternative for operating income or net income, in each case
determined in accordance with Canadian generally accepted accounting
principles ("GAAP"). See the section entitled "Reconciliation of Net
Income to Operating Profit and Adjusted Operating Profit for the
Period" for a reconciliation of operating profit and adjusted
operating profit to operating income and net income under Canadian
GAAP and the section entitled "Key Performance Indicators and
Non-GAAP Measures".
(2) For details on the determination of the 'as adjusted' amounts, which
are non-GAAP measures, see the sections entitled "Supplementary
Information" and "Key Performance Indicators and Non-GAAP Measures".
The 'as adjusted' amounts presented above are reviewed regularly by
management and our Board of Directors in assessing our performance
and in making decisions regarding the ongoing operations of the
business and the ability to generate cash flows. The 'as adjusted'
amounts exclude (i) stock-based compensation (recovery) expense; (ii)
integration and restructuring expenses; (iii) contract termination
fees; (iv) adjustment for Canadian Radio-television and
Telecommunications Commission ("CRTC") Part II fees decision;
(v) pension settlement; and (vi) in respect of net income and net
income per share, debt issuance costs, loss on repayment of long-term
debt, impairment losses on goodwill, intangible assets, and other
long-term assets and the related income tax impact of the above
amounts.
n/m: not meaningful.
"Against a tough economic backdrop, we delivered solid financial and operating results during the fourth quarter," said Nadir Mohamed, President and Chief Executive Officer, Rogers Communications Inc. "Importantly, the results show a healthy balance of growth, cost control, improved churn and a double-digit increase in cash flow generation."
"2009 was a solid year for Rogers, we returned increasing amounts of cash to shareholders and we delivered on our commitments," continued Mr. Mohamed. "Looking ahead, we are extremely well positioned with a terrific asset mix and strong customer demand for our products and services. The dividend increase and the renewal of our share buyback program for 2010 underline our continued confidence in the strategic position of the Company."
Highlights of the fourth quarter of 2009 include the following:
- Generated 7% Wireless network and Cable Operations revenue growth,
offset partially by lower wireless equipment sales, resulting in
consolidated quarterly revenue growth of 4%. Wireless, Cable
Operations and Media adjusted operating profit increased by 16%, 8%,
and 13% respectively, partially offset by the declines at RBS and
Retail.
- Wireless network revenue growth was fuelled by data revenue growth of
45% and postpaid net subscriber additions of 109,000. Wireless data
revenue now comprises 24% of Wireless network revenue and was helped
by the activation of approximately 400,000 additional smartphone
devices during the quarter, predominantly iPhone, BlackBerry and
Android devices, of which approximately 40% were for subscribers new
to Wireless. Subscribers with smartphones now represent 31% of the
overall postpaid subscriber base, up from 19% from the same quarter
last year, and generate ARPU nearly twice that of voice only
subscribers. The growth in subscribers and data revenues was
partially offset by ongoing economic and competitive pressures on
roaming, long-distance and other usage-based revenue items.
- Additions of digital cable and Internet subscribers at Cable both
improved sequentially from the previous quarter, but have slowed from
the previous year reflecting the negative economic and employment
trends in Ontario where 90% of Cable's market is concentrated.
Increasing levels of product maturity have also contributed to
slowing subscriber growth with Internet subscriber penetration at 71%
of television subscribers, digital penetration at 72% of television
households, and residential voice-over-cable telephony penetration at
41% of television subscribers.
- Cable enhanced its position in the small business market with the
launch of innovative business-grade communications services designed
specifically for the Canadian small and medium enterprises segment
providing multi-line small businesses with access to a suite of
leading-edge telephony solutions including line hunting and
simultaneous ringing.
- Cable furthered its lead as Canada's premium video entertainment
provider with the addition of 13 new high-definition channels ("HD")
to its already robust content lineup, bringing the Rogers Cable
offering to more than 100 fully dedicated HD channels and over 470 HD
Movies, specials and TV shows On Demand. Rogers Cable customers can
now receive up to four times more HD content choices than are
available through Canadian satellite TV offerings.
- Cable launched TV Call Display, a new product enhancement to its
Rogers Home Phone and Rogers Digital TV service allowing incoming
calls to be displayed and managed on customers' TV screens, including
the option to send calls directly to their Rogers voicemail with
their TV remote control.
- Cable introduced the Rogers On Demand Online portal, Canada's
definitive online destination for primetime and specialty TV
programming, movies, sports and web-only extras. By expanding the TV
experience to the Internet, our Cable, Internet and Wireless
customers can now enjoy their TV anywhere, anytime with a rapidly
expanding library of top programming wherever they have an Internet
connection in Canada.
- Media began to see an upward inflection on a year-over-year basis in
its quarterly advertising revenues at its broadcast TV division, as
well as in discretionary consumer purchases at The Shopping Channel.
- We closed a $1.0 billion investment grade debt offering, consisting
of $500 million of 5.38% Senior Notes due November 2019 and $500
million of 6.68% Senior Notes due November 2039. Among other things,
proceeds of the offering were used to redeem our US$400 million 8.00%
Senior Subordinated Notes due 2012 at the prescribed redemption price
of 102%.
- We increased our ownership position in Cogeco Cable Inc. and Cogeco
Inc. with the acquisition of 3.2 million subordinate voting common
shares of Cogeco Cable Inc. and 1.6 million subordinate voting common
shares of Cogeco Inc. These investments increase Rogers' ownership of
Cogeco Cable Inc. from approximately 14% to 20% and of Cogeco Inc.
from approximately 20% to 30%.
- We repurchased 13.4 million RCI Class B Non-Voting shares for $430
million during the quarter under our $1.5 billion share buyback
program and paid dividends on our common shares totalling $177
million.
- For the full year 2009, our free cash flow, defined as adjusted
operating profit less PP&E expenditures and interest, increased 29%
to $1.9 billion. For the year, we repurchased 43.8 million of our
common shares for $1.35 billion and paid dividends totalling $704
million, in total returning $2.1 billion in cash to shareholders.
- We also announced today that our Board of Directors has approved a
10% increase in the annual dividend to $1.28 per share effective
immediately, and that it has approved the renewal of our normal
course issuer bid ("NCIB") program for the repurchase of up to $1.5
billion of RCI shares on the open market during the next twelve
months.
This earnings release should be read in conjunction with our 2008 Annual MD&A and our 2008 Annual Audited Consolidated Financial Statements and Notes thereto, as well as our 2009 quarterly interim financial statements and other recent securities filings available on SEDAR at www.sedar.com. As this earnings release includes forward-looking statements and assumptions, readers should carefully review the sections of this release entitled "Caution Regarding Forward-Looking Statements, Risks and Assumptions".
In this earnings release, the terms "we", "us", "our", "Rogers" and "the Company" refer to Rogers Communications Inc. and our subsidiaries, which are reported in the following segments:
- "Wireless", which refers to our wireless communications operations,
including Rogers Wireless Partnership ("RWP") and Fido Solutions Inc.
("Fido");
- "Cable", which refers to our cable communications operations,
including Rogers Cable Communications Inc. ("RCCI") and its
subsidiary, Rogers Cable Partnership; and
- "Media", which refers to our wholly-owned subsidiary Rogers Media
Inc. and its subsidiaries, including Rogers Broadcasting, which owns
a group of 54 radio stations, the Citytv television network, the
Rogers Sportsnet television network, The Shopping Channel, the OMNI
television stations, and Canadian specialty channels including The
Biography Channel Canada, G4TechTV and Outdoor Life Network; Rogers
Publishing, which publishes approximately 70 magazines and trade
journals; and Rogers Sports Entertainment, which owns the Toronto
Blue Jays Baseball Club ("Blue Jays") and Rogers Centre. Media also
holds ownership interests in entities involved in specialty
television content, television production and broadcast sales.
"RCI" refers to the legal entity Rogers Communications Inc., excluding our subsidiaries.
Substantially all of our operations are in Canada.
Throughout this earnings release, percentage changes are calculated using numbers rounded as they appear.
SUMMARIZED CONSOLIDATED FINANCIAL RESULTS (Unaudited)
-------------------------------------------------------------------------
Three months ended Twelve months ended
(In millions of December 31, December 31,
dollars, except per ---------------------------------------------------
share amounts) 2009 2008 % Chg 2009 2008 % Chg
-------------------------------------------------------------------------
Operating revenue
Wireless $ 1,734 $ 1,655 5 $ 6,654 $ 6,335 5
Cable
Cable Operations 795 741 7 3,074 2,878 7
RBS 124 132 (6) 503 526 (4)
Rogers Retail 110 117 (6) 399 417 (4)
Corporate items
and eliminations (10) (5) 100 (28) (12) 133
---------------------------------------------------
1,019 985 3 3,948 3,809 4
Media 393 394 - 1,407 1,496 (6)
Corporate items and
eliminations (89) (93) (4) (278) (305) (9)
---------------------------------------------------
Total 3,057 2,941 4 11,731 11,335 3
---------------------------------------------------
---------------------------------------------------
Adjusted operating
profit(1)
Wireless 744 639 16 3,042 2,806 8
Cable
Cable Operations 322 298 8 1,298 1,171 11
RBS 5 14 (64) 35 59 (41)
Rogers Retail (2) 1 n/m (9) 3 n/m
---------------------------------------------------
325 313 4 1,324 1,233 7
Media 52 46 13 119 142 (16)
Corporate items and
eliminations (20) (30) (33) (97) (121) (20)
---------------------------------------------------
Adjusted operating
profit(1) 1,101 968 14 4,388 4,060 8
Stock-based
compensation
recovery (expense)(2) (29) (25) 16 33 100 (67)
Settlement of pension
obligations(3) (30) - n/m (30) - n/m
Integration and
restructuring
expenses(4) (65) (41) 59 (117) (51) 129
Contract termination
fees(5) (7) - n/m (19) - n/m
Adjustment for CRTC
Part II fees
decision(6) 79 - n/m 61 (31) n/m
---------------------------------------------------
Operating profit(1) 1,049 902 16 4,316 4,078 6
Other income and
expense, net(7) 739 1,040 (29) 2,838 3,076 (8)
---------------------------------------------------
Net income (loss) $ 310 $ (138) n/m $ 1,478 $ 1,002 48
---------------------------------------------------
---------------------------------------------------
Basic and diluted net
income (loss) per
share $ 0.51 $ (0.22) n/m $ 2.38 $ 1.57 52
As adjusted:(1)
Net income $ 370 $ 164 125 $ 1,556 $ 1,260 23
Basic and diluted
net income per
share $ 0.61 $ 0.26 135 $ 2.51 $ 1.98 27
Additions to property,
plant and equipment
("PP&E")(1)
Wireless $ 266 $ 310 (14) $ 865 $ 929 (7)
Cable
Cable Operations 202 336 (40) 642 829 (23)
RBS 10 11 (9) 37 36 3
Rogers Retail 5 9 (44) 14 21 (33)
---------------------------------------------------
217 356 (39) 693 886 (22)
Media 21 32 (34) 62 81 (23)
Corporate(8) 67 85 (21) 235 125 88
---------------------------------------------------
Total $ 571 $ 783 (27) $ 1,855 $ 2,021 (8)
-------------------------------------------------------------------------
(1) As defined. See the sections entitled "Supplementary Information" and
"Key Performance Indicators and Non-GAAP Measures".
(2) See the section entitled "Stock-based Compensation".
(3) Relates to the settlement of pension obligations for all employees in
the pension plans who had retired as of January 1, 2009 as a result
of annuity purchases by the Company's pension plans.
(4) In the three months ended December 31, 2009, costs incurred relate to
i) severances resulting from the targeted restructuring of our
employee base to combine the Cable and Wireless businesses into a
communications organization and to improve our cost structure in
light of the current economic and competitive conditions; ii)
severances and restructuring expenses related to the outsourcing of
certain information technology functions; iii) the integration of
Futureway Communications Inc. ("Futureway") and Aurora Cable TV
Limited ("Aurora Cable"); and iv) the closure of certain Rogers
Retail stores. In the three months ended December 31, 2008, costs
incurred relate to i) the restructuring of our employee base to
improve our cost structure in light of the declining economic
conditions; ii) the integration of Futureway and Call-Net Enterprises
Inc. ("Call-Net"); iii) the restructuring of Rogers Business
Solutions ("RBS"); and iv) the closure of certain Rogers Retail
stores.
(5) Relates to the termination and release of certain Blue Jays players
from the remaining term of their contracts.
(6) Relates to an adjustment for CRTC Part II fees related to prior
periods. For the three months ended December 31, 2009, the
$79 million adjustment represents the reversal of Part II fees for
the period from September 1, 2006 to August 31, 2009. For the year
ended December 31, 2009, the $61 million adjustment represents the
reversal of Part II fees for the period from September 1, 2006 to
December 31, 2008. The remaining $18 million was related to the
period from January 1, 2009 to August 31, 2009, and has been recorded
as a credit within adjusted operating profit.
(7) See the section entitled "Reconciliation of Net Income to Operating
Profit and Adjusted Operating Profit for the Period".
(8) The corporate additions to PP&E included $53 million for the three
months ended December 31, 2009 and $31 million for the three months
ended December 31, 2008, both of which related to spending on an
enterprise-wide billing and business support system initiative.
n/m: not meaningful.
SEGMENT REVIEW
WIRELESS
--------
Summarized Wireless Financial Results
-------------------------------------------------------------------------
Three months ended Twelve months ended
(In millions of December 31, December 31,
dollars, except ---------------------------------------------------
margin) 2009 2008 % Chg 2009 2008 % Chg
-------------------------------------------------------------------------
Operating revenue
Postpaid $ 1,524 $ 1,428 7 $ 5,948 $ 5,558 7
Prepaid 74 70 6 297 285 4
---------------------------------------------------
Network revenue 1,598 1,498 7 6,245 5,843 7
Equipment sales 136 157 (13) 409 492 (17)
---------------------------------------------------
Total operating
revenue 1,734 1,655 5 6,654 6,335 5
---------------------------------------------------
Operating expenses
before the undernoted
Cost of equipment
sales 308 326 (6) 1,059 1,005 5
Sales and marketing
expenses 186 214 (13) 630 691 (9)
Operating, general
and administrative
expenses 496 476 4 1,923 1,833 5
---------------------------------------------------
990 1,016 (3) 3,612 3,529 2
---------------------------------------------------
Adjusted operating
profit(1) 744 639 16 3,042 2,806 8
Stock-based
compensation recovery
(expense)(2) (5) (4) 25 - 5 n/m
Settlement of pension
obligations(3) (3) - n/m (3) - n/m
Integration and
restructuring
expenses(4) (19) (14) 36 (33) (14) 136
---------------------------------------------------
Operating profit(1) $ 717 $ 621 15 $ 3,006 $ 2,797 7
---------------------------------------------------
---------------------------------------------------
Adjusted operating
profit margin as %
of network revenue(1) 46.6% 42.7% 48.7% 48.0%
Additions to PP&E(1) $ 266 $ 310 (14) $ 865 $ 929 (7)
-------------------------------------------------------------------------
(1) As defined. See the sections entitled "Key Performance Indicators and
Non-GAAP Measures" and "Supplementary Information".
(2) See the section entitled "Stock-based Compensation".
(3) Relates to the settlement of pension obligations for all employees in
the pension plans who had retired as of January 1, 2009 as a result
of annuity purchases by the Company's pension plans.
(4) In the three months ended December 31, 2009, costs incurred relate to
severances resulting from the targeted restructuring of our employee
base to combine the Cable and Wireless businesses into a
communications organization and to severances and restructuring
expenses related to the outsourcing of certain information technology
functions. In the three months ended December 31, 2008, costs
incurred relate to the restructuring of our employee base to improve
our cost structure in light of the declining economic conditions.
Summarized Wireless Subscriber Results
-------------------------------------------------------------------------
(Subscriber
statistics in Three months ended Twelve months ended
thousands, except December 31, December 31,
ARPU, churn and ------------------------------------------------------
usage) 2009 2008 % Chg 2009 2008 % Chg
-------------------------------------------------------------------------
Postpaid
Gross
additions(1) 334 369 (35) 1,377 1,341 36
Net additions 109 158 (49) 528 537 (9)
Total postpaid
retail
subscribers 6,979 6,451 528 6,979 6,451 528
Average monthly
revenue per
user
("ARPU")(2) $ 73.42 $ 74.83 $(1.41) $ 73.93 $ 75.41 $(1.48)
Average monthly
minutes of
usage 588 596 (8) 585 589 (4)
Monthly churn 1.08% 1.12% (0.04%) 1.06% 1.10% (0.04%)
Prepaid
Gross additions 146 173 (27) 582 632 (50)
Net additions 19 41 (22) 24 67 (43)
Total prepaid
retail
subscribers 1,515 1,491 24 1,515 1,491 24
Average monthly
minutes of
usage 119 127 (8) 121 131 (10)
ARPU(2) $ 16.39 $ 15.91 $ 0.48 $ 16.73 $ 16.65 $ 0.08
Monthly churn 2.80% 3.03% (0.23%) 3.15% 3.31% (0.16%)
Total Postpaid and
Prepaid
Gross additions 480 542 (62) 1,959 1,973 (14)
Net additions 128 199 (71) 552 604 (52)
Total postpaid
and prepaid
retail
subscribers 8,494 7,942 552 8,494 7,942 552
Monthly churn 1.39% 1.47% (0.08%) 1.44% 1.51% (0.07%)
Blended ARPU(2) $ 63.23 $ 63.79 $(0.56) $ 63.59 $ 64.34 $(0.75)
Blended average
monthly minutes
of usage 502 508 (6) 500 502 (2)
-------------------------------------------------------------------------
(1) During the third quarter of 2008, an adjustment associated with
laptop wireless data card ("data card") subscribers resulted in the
addition of approximately 11,000 subscribers to Wireless' postpaid
subscriber base. This adjustment is included in gross additions for
the twelve months ended December 31, 2008. Beginning in the third
quarter of 2008, data cards are included in the gross additions for
postpaid subscribers.
(2) As defined. See the section entitled "Key Performance Indicators and
Non-GAAP Measures". As calculated in the "Supplementary Information"
section.
Wireless Subscribers and Network Revenue
The year-over-year decrease in subscriber additions for the fourth quarter primarily reflects slower overall market growth, increased competitive intensity in certain segments of the market, and the unusually high number of additions during the second half of 2008 following the launch of the iPhone in Canada.
The increase in network revenue for the three months ended December 31, 2009, compared to the corresponding period of 2008, was driven predominantly by the continued growth of Wireless' postpaid subscriber base and the adoption of wireless data services. Year-over-year, blended ARPU declined by 0.9%, which reflects the impact of declines in roaming and out-of-plan usage revenues as customers curtail travel and adjust their wireless usage during the economic recession. These reductions in roaming and out-of-plan usage caused a decline in the voice component of postpaid ARPU compared to the corresponding period of 2008, which was in turn largely offset by the significant growth in wireless data.
For the three months ended December 31, 2009, wireless data revenue increased by approximately 45% over the corresponding period of 2008, to $384 million. This growth in wireless data revenue reflects the continued penetration and growing usage of smartphone and wireless laptop devices which are driving the use of text messaging and e-mail, wireless Internet access and other wireless data services. For the three months ended December 31, 2009, data revenue represented approximately 24% of total network revenue, compared to 18% in the corresponding period of 2008.
Wireless' success in the continued year-over-year reduction of postpaid churn reflects targeted customer retention activities and continued enhancements in network coverage and quality.
Wireless activated approximately 400,000 smartphone devices, predominately iPhone 3G, BlackBerry and Android devices, during the three months ended December 31, 2009. Subscribers with smartphones represented 31% of the overall postpaid subscriber base as at December 31, 2009, compared to 19% as at December 31, 2008. These subscribers have committed to new multi-year-term contracts, and generate ARPU nearly twice that of voice only subscribers.
Wireless Equipment Sales
The year-over-year decrease in the equipment sales component of revenue, including activation fees and net of equipment subsidies, for the three months ended December 31, 2009, versus the corresponding period of 2008, reflects the lower volume of activations and modest reduction in hardware upgrades in the quarter.
Wireless Operating Expenses
-------------------------------------------------------------------------
Three months ended Twelve months ended
December 31, December 31,
(In millions of ---------------------------------------------------
dollars) 2009 2008 % Chg 2009 2008 % Chg
-------------------------------------------------------------------------
Operating expenses
Cost of equipment
sales $ 308 $ 326 (6) $ 1,059 $ 1,005 5
Sales and marketing
expenses 186 214 (13) 630 691 (9)
Operating, general
and administrative
expenses 496 476 4 1,923 1,833 5
---------------------------------------------------
Operating expenses
before the undernoted 990 1,016 (3) 3,612 3,529 2
Stock-based
compensation
expense (recovery)(1) 5 4 25 - (5) n/m
Settlement of pension
obligations(2) 3 - n/m 3 - n/m
Integration and
restructuring
expenses(3) 19 14 36 33 14 136
---------------------------------------------------
Total operating
expenses $ 1,017 $ 1,034 (2) $ 3,648 $ 3,538 3
-------------------------------------------------------------------------
(1) See the section entitled "Stock-based Compensation".
(2) Relates to the settlement of pension obligations for all employees in
the pension plans who had retired as of January 1, 2009 as a result
of annuity purchases by the Company's pension plans.
(3) In the three months ended December 31, 2009, costs incurred relate to
severances resulting from the targeted restructuring of our employee
base to combine the Cable and Wireless businesses into a
communications organization and to severances and restructuring
expenses related to the outsourcing of certain information technology
functions. In the three months ended December 31, 2008, costs
incurred relate to the restructuring of our employee base to improve
our cost structure in light of the declining economic conditions.
The decrease in cost of equipment sales for the three months ended December 31, 2009, compared to the corresponding period of 2008, was primarily the result of a modestly lower volume of hardware upgrades by existing subscribers versus the prior period.
Sales and marketing expenses decreased 13% compared to the prior year quarter due to lower sales volumes as well as savings resulting from cost cutting initiatives.
The year-over-year increase in operating, general and administrative expenses for the fourth quarter, excluding retention spending discussed below, was driven by a combination of growth in the Wireless subscriber base and increases in information technology and customer care, predominately offset by savings related to operating and scale efficiencies across various functions.
Total retention spending, including subsidies on handset upgrades, was $153 million in the three months ended December 31, 2009, compared to $176 million in the corresponding period of 2008. The retention spending for the three months ended December 31, 2009 decreased compared to the corresponding period of 2008 as a result of a modestly lower amount of upgrade activity by existing subscribers versus the prior period.
Wireless Adjusted Operating Profit
The 16% year-over-year increase in adjusted operating profit and adjusted operating profit margin of 46.6% on network revenue (which excludes equipment sales revenue) for the three months ended December 31, 2009 primarily reflects the increase in network revenue and the decrease in the total operating expenses discussed above.
Wireless Additions to Property, Plant and Equipment ("PP&E")
Wireless additions to PP&E are classified into the following categories:
-------------------------------------------------------------------------
Three months ended Twelve months ended
December 31, December 31,
(In millions of ---------------------------------------------------
dollars) 2009 2008 % Chg 2009 2008 % Chg
-------------------------------------------------------------------------
Additions to PP&E
High-Speed Packet
Access ("HSPA") $ 101 $ 76 33 $ 345 $ 315 10
Network - capacity 82 54 52 239 200 20
Network - other 36 108 (67) 152 262 (42)
Information
technology and
other 47 72 (35) 129 152 (15)
---------------------------------------------------
Total additions to
PP&E $ 266 $ 310 (14) $ 865 $ 929 (7)
-------------------------------------------------------------------------
Additions to Wireless PP&E reflect spending on network capacity, such as radio channel additions and network enhancing features. Additions to PP&E associated with the deployment of our HSPA network were mainly for the continued roll-out to various markets across Canada along with upgrades to the network to enable higher throughput speeds. Other network-related PP&E additions included national site build activities, test and monitoring equipment, network sectorization work, operating support system activities, investments in network reliability and renewal initiatives, infrastructure upgrades, and new product platforms. Information technology and other wireless specific system initiatives included billing and back-office system upgrades, and other facilities and equipment spending.
HSPA spending for the three months ended December 31, 2009 increased over the same period of the prior year due to the rollout of services of up to 21 Mbps in major urban centres. Capacity spending increased over the prior year period due to the acquisition of IP transmission interfaces and augmentation to the radio access network to meet demand for migrations from GSM to HSPA due to the continued adoption of 3G devices. Offsetting these increases from the corresponding period of the prior year was lower spending on enhancements to services and capabilities included in other network additions due to lower site build activity.
CABLE
-----
Summarized Cable Financial Results
-------------------------------------------------------------------------
Three months ended Twelve months ended
(In millions of December 31, December 31,
dollars, except ---------------------------------------------------
margin) 2009 2008 % Chg 2009 2008 % Chg
-------------------------------------------------------------------------
Operating revenue
Cable Operations(2) $ 795 $ 741 7 $ 3,074 $ 2,878 7
RBS 124 132 (6) 503 526 (4)
Rogers Retail 110 117 (6) 399 417 (4)
Intercompany
eliminations (10) (5) 100 (28) (12) 133
---------------------------------------------------
Total operating
revenue 1,019 985 3 3,948 3,809 4
---------------------------------------------------
Adjusted operating
profit (loss) before
the undernoted
Cable Operations(2) 322 298 8 1,298 1,171 11
RBS 5 14 (64) 35 59 (41)
Rogers Retail (2) 1 n/m (9) 3 n/m
---------------------------------------------------
Adjusted operating
profit(3) 325 313 4 1,324 1,233 7
Stock-based
compensation
recovery (expense)(4) (9) (7) 29 12 32 (63)
Settlement of pension
obligations(5) (11) - n/m (11) - n/m
Integration and
restructuring
expenses(6) (29) (10) 190 (46) (20) 130
Adjustment for CRTC
Part II fees
decision(7) 60 - n/m 46 (25) n/m
---------------------------------------------------
Operating profit(3) $ 336 $ 296 14 $ 1,325 $ 1,220 9
---------------------------------------------------
---------------------------------------------------
Adjusted operating
profit (loss)
margin(3)
Cable Operations(2) 40.5% 40.2% 42.2% 40.7%
RBS 4.0% 10.6% 7.0% 11.2%
Rogers Retail (1.8%) 0.9% (2.3%) 0.7%
Additions to PP&E(3)
Cable Operations(2) $ 202 $ 336 (40) $ 642 $ 829 (23)
RBS 10 11 (9) 37 36 3
Rogers Retail 5 9 (44) 14 21 (33)
---------------------------------------------------
Total additions to
PP&E $ 217 $ 356 (39) $ 693 $ 886 (22)
-------------------------------------------------------------------------
(1) The operating results of Aurora Cable are included in Cable's results
of operations from the date of acquisition on June 12, 2008.
(2) Cable Operations segment includes Core Cable services, Internet
services and Rogers Home Phone services.
(3) As defined. See the sections entitled "Key Performance Indicators and
Non-GAAP Measures" and "Supplementary Information".
(4) See the section entitled "Stock-based Compensation".
(5) Relates to the settlement of pension obligations for all employees in
the pension plans who had retired as of January 1, 2009 as a result
of annuity purchases by the Company's pension plans.
(6) In the three months ended December 31, 2009, costs incurred relate to
i) severances resulting from the targeted restructuring of our
employee base to combine the Cable and Wireless businesses into a
communications organization and to severances and restructuring
expenses related to the outsourcing of certain information technology
functions; ii) the integration of Futureway and Aurora Cable; and
iii) the closure of certain Rogers Retail stores. In the three months
ended December 31, 2008, costs incurred relate to i) severances
resulting from the restructuring of our employee base to improve our
cost structure in light of the declining economic conditions; ii) the
integration of Futureway, Aurora Cable and Call-Net; iii) the
restructuring of RBS; and iv) the closure of certain Rogers Retail
stores.
(7) Relates to an adjustment for CRTC Part II fees related to prior
periods. For the three months ended December 31, 2009, the $60
million adjustment represents the reversal of Part II fees for the
period from September 1, 2006 to August 31, 2009. For the year ended
December 31, 2009, the $46 million adjustment represents the reversal
of Part II fees for the period from September 1, 2006 to December 31,
2008. The remaining $14 million was related to the period from
January 1, 2009 to August 31, 2009, and has been recorded as a credit
within adjusted operating profit.
The following segment discussions provide a detailed discussion of the Cable operating results.
CABLE OPERATIONS
Summarized Financial Results
-------------------------------------------------------------------------
Three months ended Twelve months ended
(In millions of December 31, December 31,
dollars, except ---------------------------------------------------
margin) 2009 2008 % Chg 2009 2008 % Chg
-------------------------------------------------------------------------
Operating revenue
Core Cable $ 465 $ 430 8 $ 1,780 $ 1,669 7
Internet 202 182 11 781 695 12
Rogers Home Phone 128 129 (1) 513 514 -
---------------------------------------------------
Total Cable Operations
operating revenue 795 741 7 3,074 2,878 7
---------------------------------------------------
Operating expenses
before the undernoted
Sales and marketing
expenses 61 58 5 243 248 (2)
Operating, general
and administrative
expenses 412 385 7 1,533 1,459 5
---------------------------------------------------
473 443 7 1,776 1,707 4
---------------------------------------------------
Adjusted operating
profit(1) 322 298 8 1,298 1,171 11
Stock-based
compensation recovery
(expense)(2) (8) (7) 14 12 30 (60)
Settlement of pension
obligations(3) (10) - n/m (10) - n/m
Integration and
restructuring
expenses(4) (20) (7) 186 (31) (9) n/m
Adjustment for CRTC
Part II fees
decision(5) 60 - n/m 46 (25) n/m
---------------------------------------------------
Operating profit(1) $ 344 $ 284 21 $ 1,315 $ 1,167 13
---------------------------------------------------
---------------------------------------------------
Adjusted operating
profit margin(1) 40.5% 40.2% 42.2% 40.7%
-------------------------------------------------------------------------
(1) As defined. See the sections entitled "Key Performance Indicators and
Non-GAAP Measures" and "Supplementary Information".
(2) See the section entitled "Stock-based Compensation".
(3) Relates to the settlement of pension obligations for all employees in
the pension plans who had retired as of January 1, 2009 as a result
of annuity purchases by the Company's pension plans.
(4) In the three months ended December 31, 2009, costs incurred relate to
i) severances resulting from the targeted restructuring of our
employee base to combine the Cable and Wireless businesses into a
communications organization and to severances and restructuring
expenses related to the outsourcing of certain information technology
functions; and ii) the integration of Futureway and Aurora Cable. In
the three months ended December 31, 2008, costs incurred relate to
i) severances resulting from the restructuring of our employee base
to improve our cost structure in light of the declining economic
conditions; and ii) the integration of Futureway, Aurora Cable, and
Call-Net.
(5) Relates to an adjustment for CRTC Part II fees related to prior
periods. For the three months ended December 31, 2009, the $60
million adjustment represents the reversal of Part II fees for the
period from September 1, 2006 to August 31, 2009. For the year ended
December 31, 2009, the $46 million adjustment represents the reversal
of Part II fees for the period from September 1, 2006 to December 31,
2008. The remaining $14 million was related to the period from
January 1, 2009 to August 31, 2009, and has been recorded as a credit
within adjusted operating profit.
Summarized Subscriber Results
-------------------------------------------------------------------------
Three months ended Twelve months ended
(Subscriber December 31, December 31,
statistics in ---------------------------------------------------
thousands) 2009 2008(1) Chg 2009 2008(1) Chg
-------------------------------------------------------------------------
Cable homes passed(2) 3,635 3,547 88 3,635 3,547 88
Television
Net additions
(losses)(3) 3 4 (1) (24) 9 (33)
Total Television
subscribers(4) 2,296 2,320 (24) 2,296 2,320 (24)
Digital Cable
Households, net
additions 39 61 (22) 114 191 (77)
Total households(4) 1,664 1,550 114 1,664 1,550 114
Cable High-speed
Internet
Net additions(5) 22 22 - 48 109 (61)
Total Internet
subscribers
(residential)(4)
(5)(6) 1,619 1,571 48 1,619 1,571 48
Cable telephony lines
Net additions and
migrations(7) 28 40 (12) 97 182 (85)
Total Cable
telephony lines(4) 937 840 97 937 840 97
-------------------------------------------------------------------------
Circuit-switched lines
Net losses and
migrations(7) (19) (39) 20 (91) (119) 28
Total
circuit-switched
lines 124 215 (91) 124 215 (91)
-------------------------------------------------------------------------
(1) Certain of the comparative figures have been reclassified to conform
to the current year presentation.
(2) Since December 31, 2008, a change in subscriber reporting resulted in
a cumulative decrease to cable homes passed of approximately 171,000.
(3) During 2008, a reclassification of certain subscribers had the impact
of increasing television net additions by approximately 16,000. In
addition, television net subscriber additions for the twelve months
ended December 31, 2008 reflect the impact of the conversion of a
large municipal housing authority's cable TV arrangement with Rogers
from a bulk to an individual tenant pay basis, which had the impact
of reducing television subscribers by approximately 5,000.
(4) On June 12, 2008, we acquired approximately 16,000 television
subscribers, 11,000 high-speed Internet subscribers, 6,000 digital
cable households and 2,000 cable telephony lines from Aurora Cable.
These subscribers are not included in net additions for the twelve
months ended December 31, 2008.
(5) Cable high-speed Internet subscriber base excludes ADSL subscribers
of 5,000 and 10,000 at December 31, 2009 and 2008, respectively. In
addition, net additions exclude ADSL subscriber losses of 1,000 and
2,000 in the three months ended December 31, 2009 and 2008,
respectively.
(6) During 2008, a change in subscriber reporting resulted in the
reclassification of approximately 4,000 high-speed Internet
subscribers from RBS' broadband data circuits to Cable Operations'
high-speed Internet subscriber base. These subscribers are not
included in net additions for the three and twelve months ended
December 31, 2008.
(7) Includes approximately 2,000 and 21,000 migrations from
circuit-switched to cable telephony for the three months ended
December 31, 2009 and 2008, respectively.
Increased levels of penetration for many of Cable's products and a level of increased competitive intensity, combined with an economic recession in Ontario, which drove a slowdown in new home construction and high rates of unemployment, resulted in lower net additions of most of our cable products in the three months ended December 31, 2009, compared to the corresponding period of 2008. The impact of this recession has affected sales of Cable's products as customers move residences less and the growth in new home construction has slowed significantly, which historically are two of Cable's largest sources of new product sales. In response to these conditions, Cable has implemented strategic cost reduction and efficiency improvement initiatives to enable a sustained reduction of operating costs.
Core Cable Revenue
Within Cable Operations, the increase in Core Cable revenue for the three months ended December 31, 2009, compared to the corresponding period of 2008, reflects the continued increasing penetration of our digital cable product offerings. Additionally, the impact of certain price changes introduced during the previous twelve months to both our analog and digital cable services contributed to the growth in revenue.
Cable continues to lead the Canadian cable industry in digital penetration. The digital cable subscriber base grew by 7% from December 31, 2008 to December 31, 2009, to 72% of television households, compared to 67% as at December 31, 2008. Increased demand from subscribers for digital content, HDTV and personal video recorder ("PVR") equipment continue to drive the growth in the digital subscriber base.
Cable Internet Revenue
The year-over-year increase in Internet revenues for the three months ended December 31, 2009, primarily reflects the increase in the Internet subscriber base, combined with Internet services price changes made during the previous twelve months and incremental revenue from additional usage charges for customers who exceed monthly gigabyte allowances associated with their respective plans.
With the high-speed Internet base now at approximately 1.6 million subscribers, Internet penetration is approximately 45% of the homes passed by our cable networks and 71% of our television subscriber base.
Rogers Home Phone Revenue
The Rogers Home Phone revenue for the three months ended December 31, 2009, reflects the year-over-year growth in the cable telephony customer base comprised of cable telephony revenue growth of approximately 12% for the quarter, offset by the ongoing decline of the legacy circuit-switched telephony and long-distance only customer bases. The lower net additions of cable telephony lines in the fourth quarter of 2009 versus the corresponding period of 2008 reflects a decline of approximately 19,000 circuit-switched customer migrations in 2009, as the majority of eligible customers had been migrated by the end of 2008.
Cable telephony lines in service grew 12% from December 31, 2008 to December 31, 2009. At December 31, 2009, cable telephony lines represented 26% of the homes passed by our cable networks and 41% of television subscribers.
Cable continues to focus principally on growing its on-net cable telephony line base. As part of this on-net focus, Cable continued to significantly de-emphasize circuit-switched sales through 2009 and intensified its efforts to convert circuit-switched lines that are within the cable territory onto its cable telephony platform. Of the 28,000 net line additions to cable telephony during the fourth quarter of 2009, approximately 2,000 were migrations of lines from our legacy circuit-switched platform to our cable telephony platform. Because of the strategic decision in early 2008 to de-emphasize sales of the circuit-switched telephony product outside of the cable footprint, Cable expects that circuit-switched net line losses will continue as that base of subscribers continues to contract over time.
Excluding the impact of the shrinking circuit-switched telephony business, the year-over-year revenue growth for Rogers Home Phone and Cable Operations for the fourth quarter ended December 31, 2009 would have been 12% and 10%, respectively.
Cable Operations Operating Expenses
The increase in Cable Operations' operating expenses for the three months ended December 31, 2009 compared to the corresponding period of 2008 was primarily driven by the increases in the digital cable, Internet and Rogers Home Phone subscriber bases, resulting in higher costs associated with programming and other content, network operations, and increases in information technology costs. Partially offsetting these increases was a reduction in certain other costs resulting from lower volumes of subscriber net additions in the fourth quarter of 2009 and cost reduction and efficiency initiatives across various functions. Cable Operations continues to focus on implementing a program of permanent cost reduction and efficiency improvement initiatives to control the overall growth in operating expenses.
Cable Operations Adjusted Operating Profit
The year-over-year growth in adjusted operating profit was primarily the result of the revenue growth described above, combined with decreased activity levels and cost efficiencies. As a result, Cable Operations adjusted operating profit margins increased to 40.5% for the three months ended December 31, 2009, compared to 40.2% in the corresponding period of 2008.
Other Cable Operations Developments
In October 2009, the CRTC amended its regulation relating to Part II fees. These fees going forward will be approximately one-third less than the historical rate of approximately $21 million annually. For the three months ended December 31, 2009, the $60 million adjustment represents the reversal of Part II fees for the period from September 1, 2006 to August 31, 2009. For the twelve months ended December 31, 2009, the $46 million adjustment represents the reversal of Part II fees for the period from September 1, 2006 to December 31, 2008. The remaining $14 million was related to the period from January 1, 2009 to August 31, 2009, and has been recorded as a credit within adjusted operating profit.
ROGERS BUSINESS SOLUTIONS
Summarized Financial Results
-------------------------------------------------------------------------
Three months ended Twelve months ended
(In millions of December 31, December 31,
dollars, except ---------------------------------------------------
margin) 2009 2008 % Chg 2009 2008 % Chg
-------------------------------------------------------------------------
RBS operating revenue $ 124 $ 132 (6) $ 503 $ 526 (4)
Operating expenses
before the undernoted
Sales and marketing
expenses 7 7 - 26 26 -
Operating, general
and administrative
expenses 112 111 1 442 441 -
---------------------------------------------------
119 118 1 468 467 -
---------------------------------------------------
Adjusted operating
profit(1) 5 14 (64) 35 59 (41)
Stock-based
compensation recovery
(expense)(2) (1) - n/m (1) 1 n/m
Integration and
restructuring
expenses(3) (2) (2) - (3) (6) (50)
---------------------------------------------------
Operating profit(1) $ 2 $ 12 (83) $ 31 $ 54 (43)
---------------------------------------------------
---------------------------------------------------
Adjusted operating
profit margin(1) 4.0% 10.6% 7.0% 11.2%
-------------------------------------------------------------------------
(1) As defined. See the sections entitled "Key Performance Indicators and
Non-GAAP Measures" and "Supplementary Information".
(2) See the section entitled "Stock-based Compensation".
(3) In the three months ended December 31, 2009, costs incurred relate to
severances resulting from the targeted restructuring of our employee
base to combine the Cable and Wireless businesses into a
communications organization and to severances and restructuring
expenses related to the outsourcing of certain information technology
functions. In the three months ended December 31, 2008, costs
incurred relate to i) severances resulting from the restructuring of
our employee base to improve our cost structure in light of the
declining economic conditions; and ii) the integration and Call-Net;
and iii) the restructuring of RBS.
Summarized Subscriber Results
-------------------------------------------------------------------------
Three months ended Twelve months ended
(Subscriber December 31, December 31,
statistics in ---------------------------------------------------
thousands) 2009 2008 Chg 2009 2008 Chg
-------------------------------------------------------------------------
Local line
equivalents(1)
Total local line
equivalents 169 197 (28) 169 197 (28)
Broadband data
circuits(2)(3)
Total broadband
data circuits 36 34 2 36 34 2
-------------------------------------------------------------------------
(1) Local line equivalents include individual voice lines plus Primary
Rate Interfaces ("PRIs") at a factor of 23 voice lines each.
(2) Broadband data circuits are those customer locations accessed by data
networking technologies including DOCSIS, DSL, E10/100/1000, OC 3/12
and DS 1/3.
(3) During the first quarter of 2008, a change in subscriber reporting
resulted in the reclassification of approximately 4,000 high-speed
Internet subscribers from RBS' broadband data circuits to Cable
Operations' high-speed Internet subscriber base. These subscribers
are not included in net additions for 2008.
RBS Revenue
The decrease in RBS revenues reflects the ongoing decline in the legacy business partially offset by an increase in long-distance revenue. RBS is focused on leveraging on-net revenue opportunities utilizing Cable's existing network facilities as well as maintaining its existing medium enterprise customer base while growing the carrier business. RBS continues to manage profitability of existing enterprise customers. For the three months ended December 31, 2009, RBS data and local revenues declined, which was partially offset by an increase in long-distance revenue, compared to the corresponding period of 2008.
RBS Operating Expenses
Operating, general and administrative expenses were relatively unchanged for the three months ended December 31, 2009, compared to the corresponding period of 2008. An increase in long-distance costs due to higher call volumes and country mix resulted in higher operating costs which were offset by lower data and local carriers charges.
Sales and marketing expenses were relatively unchanged for the three months ended December 31, 2009, compared to the corresponding period of 2008, and reflect cost control initiatives and targeted marketing within the medium and large enterprise and carrier segments.
RBS Adjusted Operating Profit
RBS adjusted operating profit has declined year over year for the three months ended December 31, 2009 due to the decrease in revenues as RBS transitions away from its legacy data and local revenues. As RBS is focusing its attention on growing future revenue streams from on-net IP technologies in voice and data it is investing in incremental operating costs to support that growth and therefore offsetting the cost declines from the legacy side of the business.
ROGERS RETAIL
Summarized Financial Results
-------------------------------------------------------------------------
Three months ended Twelve months ended
(In millions of December 31, December 31,
dollars, except -------------------------------------------------
margin) 2009 2008 % Chg 2009 2008 % Chg
-------------------------------------------------------------------------
Rogers Retail
operating revenue $ 110 $ 117 (6) $ 399 $ 417 (4)
---------------------------------------------------
Operating expenses
before the undernoted 112 116 (3) 408 414 (1)
---------------------------------------------------
Adjusted operating
(loss) profit(1) (2) 1 n/m (9) 3 n/m
Stock-based
compensation
recovery(2) - - n/m 1 1 -
Settlement of pension
obligations(3) (1) - n/m (1) - n/m
Integration and
restructuring
expenses(4) (7) (1) n/m (12) (5) 140
---------------------------------------------------
Operating (loss)
profit(1) $ (10) $ - n/m $ (21) $ (1) n/m
---------------------------------------------------
---------------------------------------------------
Adjusted operating
(loss) profit
margin(1) (1.8%) 0.9% (2.3%) 0.7%
-------------------------------------------------------------------------
(1) As defined. See the sections entitled "Key Performance Indicators and
Non-GAAP Measures".
(2) See the section entitled "Stock-based Compensation".
(3) Relates to the settlement of pension obligations for all employees in
the pension plans who had retired as of January 1, 2009 as a result
of annuity purchases by the Company's pension plans.
(4) In the three months ended December 31, 2009, costs incurred relate to
i) severances resulting from the targeted restructuring of our
employee base to combine the Cable and Wireless businesses into a
communications organization; and ii) the closure of certain Rogers
Retail stores. In the three months ended December 31, 2008, costs
incurred relate to i) severances resulting from the restructuring of
our employee base to improve our cost structure in light of the
declining economic conditions; and ii) the closure of certain Rogers
Retail stores.
Rogers Retail Revenue
The decrease in Rogers Retail revenue for the three months ended December 31, 2009, compared to the corresponding period of 2008, was the result of a continued decline in video rental and sales, combined with a lower volume of iPhone upgrades in 2009 by existing Wireless customers versus the prior year period, partially offset by strong sales of cable products.
Rogers Retail Adjusted Operating (Loss) Profit
Adjusted operating (loss) profit at Rogers Retail decreased for the three months ended December 31, 2009, compared to the corresponding period of 2008, reflecting the trends noted above.
CABLE ADDITIONS TO PP&E
The Cable Operations segment categorizes its PP&E expenditures according to a standardized set of reporting categories that were developed and agreed to by the U.S. cable television industry and which facilitate comparisons of additions to PP&E between different cable companies. Under these industry definitions, Cable Operations additions to PP&E are classified into the following five categories:
- Customer premise equipment ("CPE"), which includes the equipment for
digital set-top terminals, Internet modems and associated
installation costs;
- Scalable infrastructure, which includes non-CPE costs to meet
business growth and to provide service enhancements, including many
of the costs to-date of the cable telephony initiative;
- Line extensions, which includes network costs to enter new service
areas;
- Upgrades and rebuild, which includes the costs to modify or replace
existing coaxial cable, fibre-optic equipment and network
electronics; and
- Support capital, which includes the costs associated with the
purchase, replacement or enhancement of non-network assets.
Summarized Cable PP&E Additions
-------------------------------------------------------------------------
Three months ended Twelve months ended
December 31, December 31,
(In millions of ---------------------------------------------------
dollars) 2009 2008 % Chg 2009 2008 % Chg
-------------------------------------------------------------------------
Additions to PP&E
Customer premise
equipment $ 40 $ 113 (65) $ 185 $ 284 (35)
Scalable
infrastructure 91 111 (18) 259 279 (7)
Line extensions 12 17 (29) 40 48 (17)
Upgrades and rebuild 5 19 (74) 20 35 (43)
Support capital 54 76 (29) 138 183 (25)
---------------------------------------------------
Total Cable Operations 202 336 (40) 642 829 (23)
RBS 10 11 (9) 37 36 3
Rogers Retail 5 9 (44) 14 21 (33)
---------------------------------------------------
$ 217 $ 356 (39) $ 693 $ 886 (22)
-------------------------------------------------------------------------
Additions to Cable PP&E include continued investments in the cable network to continue to enhance customer experience through increased speed and performance of our Internet service and capacity enhancements to our digital network to allow for incremental HD and On-Demand services to be added.
The decline in Cable Operations PP&E additions for the three months ended December 31, 2009 compared to the corresponding period in 2008 resulted primarily from lower spending associated with lower levels of subscriber additions.
The RBS PP&E additions for the three months ended December 31, 2009 were relatively flat compared to the corresponding period of 2008.
Rogers Retail PP&E additions are attributable to improvements made to certain retail locations.
MEDIA
-----
Summarized Media Financial Results
-------------------------------------------------------------------------
Three months ended Twelve months ended
(In millions of December 31, December 31,
dollars, except ---------------------------------------------------
margin) 2009 2008 % Chg 2009 2008(1)(2) % Chg
-------------------------------------------------------------------------
Operating revenue $ 393 $ 394 - $ 1,407 $ 1,496 (6)
---------------------------------------------------
Operating expenses
before the undernoted 341 348 (2) 1,288 1,354 (5)
---------------------------------------------------
Adjusted operating
profit(3) 52 46 13 119 142 (16)
Stock-based
compensation
recovery (expense)(4) (5) (5) - 8 17 (53)
Settlement of pension
obligations(5) (15) - n/m (15) - n/m
Integration and
restructuring
expenses(6) (14) (11) 27 (35) (11) n/m
Contract termination
fees(7) (7) - n/m (19) - n/m
Adjustment for CRTC
Part II fees
decision(8) 19 - n/m 15 (6) n/m
---------------------------------------------------
Operating profit(3) $ 30 $ 30 - $ 73 $ 142 (49)
---------------------------------------------------
---------------------------------------------------
Adjusted operating
profit margin(3) 13.2% 11.7% 8.5% 9.5%
Additions to
property, plant and
equipment(3) $ 21 $ 32 (34) $ 62 $ 81 (23)
-------------------------------------------------------------------------
(1) The operating results of channel m are included in Media's results of
operations from the date of acquisition on April 30, 2008.
(2) The operating results of Outdoor Life Network are included in Media's
results of operations from the date of acquisition on July 31, 2008.
(3) As defined. See the section entitled "Key Performance Indicators and
Non-GAAP Measures".
(4) See the section entitled "Stock-based Compensation".
(5) Relates to the settlement of pension obligations for all employees in
the pension plans who had retired as of January 1, 2009 as a result
of annuity purchases by the Company's pension plans.
(6) In the three months ended December 31, 2009 and December 31, 2008,
costs incurred relate to severances resulting from the targeted
restructuring of our employee base to improve our cost structure in
light of the current economic and competitive conditions.
(7) Relates to the termination and release of certain Blue Jays players
from the remaining term of their contracts.
(8) Relates to an adjustment for CRTC Part II fees related to prior
periods. For the three months ended December 31, 2009, the
$19 million adjustment represents the reversal of Part II fees for
the period from September 1, 2006 to August 31, 2009. For the year
ended December 31, 2009, the $15 million adjustment represents the
reversal of Part II fees for the period from September 1, 2006 to
December 31, 2008. The remaining $4 million was related to the period
from January 1, 2009 to August 31, 2009, and has been recorded as a
credit within adjusted operating profit.
Media Revenue
Overall Media revenue for the three months ended December 31, 2009 was flat as compared to the corresponding period of 2008. Despite the challenging economic environment, certain of Media's divisions began to experience an inflection in the advertising sales and consumer spending for the first time in several quarters. Television, Sportsnet and The Shopping Channel delivered year-over-year increases in revenues driven by significant prime time ratings improvements, increased subscriber fees and improvements in consumer discretionary spending. Media's Publishing, Radio and Sports Entertainment divisions reported revenue declines, although the year over year advertising sales declines in Radio moderated this quarter.
Media Operating Expenses
The decrease in Media's operating expenses for the three months ended December 31, 2009, compared to the corresponding period of 2008 were driven by focused cost reduction programs across all of Media's divisions and lower variable costs associated with printing and production at Publishing. This was partially offset by cost of goods sold increases at The Shopping Channel associated with higher sales volumes and certain planned increases in programming costs at Television.
Media Adjusted Operating Profit
The increase in Media's adjusted operating profit for the three months ended December 31, 2009, compared to the corresponding period of 2008, primarily reflects the revenue and expense changes discussed above.
The challenging economic conditions experienced since early 2008 have resulted in a weakening of revenue expectations for certain parts of our broadcasting portfolio. As a result of these challenging conditions and the decline experienced in advertising revenues, we recorded a non-cash impairment charge of $18 million related to certain of our broadcast assets. See the section entitled "Impairment Losses on Goodwill, Intangible Assets and Other Long-Term Assets" for further details.
Media Additions to PP&E
Media's PP&E additions in the three months ended December 31, 2009, declined from the corresponding period in 2008 due to cost containment initiatives. A significant portion of Media's additions reflect the construction of a new television production facility for the combined Ontario operations of Citytv and OMNI which was completed in the fourth quarter of 2009.
Other Media Developments
In October 2009, the CRTC amended its regulation relating to Part II fees. These fees going forward will be approximately one-third less than the historical rate of approximately $6 million annually. For the three months ended December 31, 2009, the $19 million adjustment represents the reversal of Part II fees for the period from September 1, 2006 to August 31, 2009. For the year ended December 31, 2009, the $15 million adjustment represents the reversal of Part II fees for the period from September 1, 2006 to December 31, 2008. The remaining $4 million was related to the period from January 1, 2009 to August 31, 2009, and has been recorded as a credit within adjusted operating profit.
RECONCILIATION OF NET INCOME TO OPERATING PROFIT AND ADJUSTED OPERATING
PROFIT FOR THE PERIOD
The items listed below represent the consolidated income and expense amounts that are required to reconcile net income as defined under Canadian GAAP to the non-GAAP measures operating profit and adjusted operating profit for the period. See the "Supplementary Information" section for a full reconciliation to adjusted operating profit, adjusted net income, and adjusted net income per share. For details of these amounts on a segment-by-segment basis and for an understanding of intersegment eliminations on consolidation, the following section should be read in conjunction with the tables in the Supplemental Information section entitled "Segmented Information".
-------------------------------------------------------------------------
Three months ended Twelve months ended
December 31, December 31,
(In millions of ---------------------------------------------------
dollars) 2009 2008 % Chg 2009 2008 % Chg
-------------------------------------------------------------------------
Net income (loss) $ 310 $ (138) n/m $ 1,478 $ 1,002 48
Income tax expense 88 87 1 502 424 18
Other (income) expense,
net (1) (3) (67) (6) (28) (79)
Change in the fair
value of derivative
instruments 37 (43) n/m 65 (64) n/m
Loss on repayment of
long-term debt 7 - n/m 7 - n/m
Foreign exchange (gain)
loss (13) 77 n/m (136) 99 n/m
Debt issuance costs 6 - n/m 11 16 (31)
Interest on long-term
debt 173 157 10 647 575 13
---------------------------------------------------
Operating income 607 137 n/m 2,568 2,024 27
Impairment losses on
goodwill, intangible
assets and other
long-term assets 18 294 (94) 18 294 (94)
Depreciation and
amortization 424 471 (10) 1,730 1,760 (2)
---------------------------------------------------
Operating profit 1,049 902 16 4,316 4,078 6
Stock-based
compensation
expense (recovery) 29 25 16 (33) (100) (67)
Settlement of pension
obligations 30 - n/m 30 - n/m
Integration and
restructuring
expenses 65 41 59 117 51 129
Contract termination
fees 7 - n/m 19 - n/m
Adjustment for CRTC
Part II fees decision (79) - n/m (61) 31 n/m
---------------------------------------------------
Adjusted operating
profit $ 1,101 $ 968 14 $ 4,388 $ 4,060 8
-------------------------------------------------------------------------
Net Income (Loss) and Net Income (Loss) Per Share
We recorded net income of $310 million for the three months ended December 31, 2009, or basic and diluted net income per share of $0.51, compared to net loss of $138 million, or basic and diluted net loss per share of $0.22, in the corresponding period in 2008.
On an adjusted basis, we recorded net income of $370 million for the three months ended December 31, 2009, or basic and diluted adjusted net income per share of $0.61, compared to net income of $164 million, or basic and diluted net income per share of $0.26 in the corresponding period in 2008.
Income Tax Expense
Our effective income tax rate for the three months ended December 31, 2009 was 22.1%. This differed from the 2009 statutory income tax rate of 33.2% primarily due to an income tax recovery of $27 million resulting from reductions in substantively enacted tax rates.
The effective income tax rate for the three months ended December 31, 2008 was (170.6%). The effective income tax rate differed from the 2008 statutory income tax rate of 32.7% primarily due to a future income tax charge of $64 million relating to an increase in the valuation allowance recorded in respect of realized and unrealized capital losses and a $51 million increase to recognize that impairment losses on goodwill and intangible assets are not deductible for income tax purposes.
-------------------------------------------------------------------------
Three months ended Twelve months ended
December 31, December 31,
-------------------------------------------
(In millions of dollars) 2009 2008 2009 2008
-------------------------------------------------------------------------
Statutory income tax rates 33.2% 32.7% 32.3% 32.7%
-------------------------------------------------------------------------
Income before income taxes $ 398 $ (51) $ 1,980 $ 1,426
Income tax expense (recovery)
at statutory income tax rate
on income before income taxes $ 132 $ (17) $ 640 $ 466
Increase (decrease) in income
taxes resulting from:
Ontario income tax
harmonization credit - - - (65)
Change in valuation allowance (3) 64 (64) 19
Effect of tax rate changes (27) (11) (58) (33)
Impairment losses on goodwill
and intangible assets not
deductible for income tax
purposes - 51 - 51
Other items (14) - (16) (14)
-------------------------------------------
Income tax expense $ 88 $ 87 $ 502 $ 424
-------------------------------------------------------------------------
Effective income tax rate 22.1% (170.6%) 25.4% 29.7%
-------------------------------------------------------------------------
Change in Fair Value of Derivative Instruments
The change in the fair value of derivative instruments in the three months ended December 31, 2009 was primarily the result of: i) the $30 million non-cash write-off of the recorded value of the prepayment option for our Senior Subordinated Notes due 2012 which were redeemed in December 2009 (see section entitled "Overview of Liquidity, Financing and Share Capital Activities - Financing"); ii) the $10 million non-cash change in the fair value of the cross-currency interest rate exchange agreements ("Derivatives") hedging our US$350 million Senior Notes due 2038 that have not been designated as hedges for accounting purposes; and iii) the $2 million non-cash gain recorded on certain U.S. dollar forward contracts. This change in fair value of the Derivatives was primarily caused by changes in the value of the Canadian dollar relative to that of the U.S. dollar. During the three months ended December 31, 2009, the Canadian dollar strengthened by 2.1 cents versus the U.S. dollar. We have recorded the fair value of our Derivatives using an estimated credit-adjusted mark-to-market valuation. The impact of such valuation is illustrated in the section entitled "Fair Value of Derivatives".
Foreign Exchange Gain (Loss)
During the three months ended December 31, 2009, the Canadian dollar strengthened by 2.1 cents versus the U.S. dollar resulting in a foreign exchange gain of $13 million, primarily related to US$750 million of our U.S. dollar-denominated long-term debt that is not hedged for accounting purposes, comprised of the US$400 million of Subordinated Notes due 2012 which were not hedged and which were redeemed in December 2009, and the US$350 million Senior Notes due 2038 for which the associated Derivatives have not been designated as hedges for accounting purposes. During the corresponding period of 2008, the Canadian dollar weakened by 16.4 cents versus the U.S. dollar and resulted in a foreign exchange loss of $77 million during the three months ended December 31, 2008.
Debt Issuance Costs
During the three months ended December 31, 2009, we recorded debt issuance costs of $6 million for transaction costs incurred in connection with the $500 million of 5.38% Senior Notes and $500 million of 6.68% Senior Notes offerings that closed in November 2009. See the section entitled "Overview of Liquidity, Financing and Share Capital Activities - Financing" for further details.
Interest on Long-Term Debt
The $16 million increase in interest expense for the three months ended December 31, 2009, compared to the corresponding period of 2008, is primarily due to the increase in long-term debt at December 31, 2009 compared to December 31, 2008, including the impact of Derivatives.
Operating Income
The increase in operating income in the three months ended December 31, 2009, compared to the corresponding periods of 2008, reflects the growth in revenue and the reduction of expenses discussed above. See the section entitled "Segment Review" for a detailed discussion of respective segment results.
Impairment Losses on Goodwill, Intangible Assets and Other Long-Term Assets
In the fourth quarter of 2009, we determined that the fair value of a radio station licence of Media was lower than its carrying value. This primarily resulted from the weakening of advertising revenues in a local market. As a result, we recorded a non-cash impairment charge of $4 million related to one of our Ontario radio licences. In addition, and also related to declines in advertising revenue, we recorded an impairment charge of $14 million related to our OMNI television network with the following components: $1 million related to the broadcast licences and $13 million related to other long-lived assets.
In the fourth quarter of 2008, we determined that the fair value of the conventional television business of Media was lower than its carrying value. This primarily resulted from weakening of industry expectations and declines in advertising revenues amidst the slowing economy. As a result, we recorded an aggregate non-cash impairment charge of $294 million with the following components: $154 million related to goodwill, $75 million related to broadcast licences and $65 million related to intangible assets and other long-term assets.
Depreciation and Amortization Expense
The change in depreciation and amortization expense for the three months ended December 31, 2009, compared to the corresponding period of 2008, primarily reflects the increase in depreciation on PP&E offset by the decrease in amortization of intangible assets that were fully amortized recently.
Stock-based Compensation
A summary of stock-based compensation (recovery) expense is as follows:
-------------------------------------------
Stock-based Compensation Expense (Recovery)
Included in Operating, General and
Administrative Expenses
-------------------------------------------------------------------------
Three months ended Twelve months ended
December 31, December 31,
-------------------------------------------
(In millions of dollars) 2009 2008 2009 2008
-------------------------------------------------------------------------
Wireless $ 5 $ 4 $ - $ (5)
Cable 9 7 (12) (32)
Media 5 5 (8) (17)
Corporate 10 9 (13) (46)
-------------------------------------------
$ 29 $ 25 $ (33) $ (100)
-------------------------------------------------------------------------
At December 31, 2009, we had a liability of $178 million, compared to a liability of $278 million at December 31, 2008, related to stock-based compensation recorded at its intrinsic value, including stock options, restricted share units and deferred share units. In the three months ended December 31, 2009, $30 million was paid to holders of stock options, restricted share units and deferred share units upon exercise using a cash settlement feature which we adopted for stock options in May 2007. In the three months ended December 31, 2008, $41 million was paid to holders of stock options, restricted share units and deferred share units upon exercise using the cash settlement feature. The expense (recovery) in a given period is generally a function of the vesting of options and units and a true up to the liability associated with changes to the underlying price of the RCI Class B Non-voting shares.
Integration and Restructuring Expenses
During the three months ended December 31, 2009, we incurred $65 million of restructuring expenses related to i) severances resulting from the targeted restructuring of our employee base to combine the Cable and Wireless businesses into a communications organization and to improve our cost structure in light of the current economic and competitive conditions ($62 million); ii) severances and restructuring expenses related to the outsourcing of certain information technology functions ($2 million); and iii) the closure of certain retail stores ($1 million).
Contract Termination Fees
During the three months ended December 31, 2009, the Blue Jays terminated and released certain players from the remaining term of their contracts, which resulted in a $7 million charge to operating profit.
Adjusted Operating Profit
As discussed above, the adjusted operating profit in Wireless, Cable and Media all increased for the three months ended December 31, 2009 compared to the three months ended December 31, 2008. For discussions of the results of operations of each of these segments, refer to the respective segment sections above.
For the three months ended December 31, 2009, consolidated adjusted operating profit increased to $1,101 million, from $968 million in the corresponding period of the prior year. Consolidated adjusted operating profit for the three months ended December 31, 2009 and December 31, 2008, respectively, excludes: (i) stock-based compensation expense of $29 million and $25 million; (ii) integration and restructuring expenses of $65 million and $41 million; (iii) contract termination fees of $7 million and $nil; (iv) settlement of pension obligations of $30 million and $nil; and (v) adjustment for CRTC Part II fees decision of $(79) million and $nil.
For details on the determination of adjusted operating profit, which is a non-GAAP measure, see the sections entitled "Supplementary Information" and "Key Performance Indicators and Non-GAAP Measures".
ADDITIONS TO PP&E
For details on the additions of PP&E for the Wireless, Cable and Media segments, refer to the section entitled "Segment Review".
Corporate Additions to PP&E
The corporate additions to PP&E included $53 million for the three months ended December 31, 2009 and $31 million for the three months ended December 31, 2008 both of which related to spending associated with an enterprise-wide billing and business support system initiative.
OVERVIEW OF LIQUIDITY, FINANCING AND SHARE CAPITAL ACTIVITIES
Consolidated Liquidity and Capital Resources
Operations
For the three months ended December 31, 2009, cash generated from operations before changes in non-cash operating working capital items, which is calculated by eliminating the effect of all non-cash items from net income, increased to $869 million from $795 million in the corresponding period of 2008. The $74 million increase is primarily the result of a $133 million increase in adjusted operating profit, most notably offset by the $24 million increase in the integration and restructuring charge and $16 million increase in interest expense.
Taking into account the changes in non-cash working capital items for the three months ended December 31, 2009, cash generated from operations was $1,007 million, compared to $831 million in the corresponding period of 2008. The cash generated from operations of $1,007 million, together with the following items, resulted in total net funds of approximately $2,010 million generated or raised in the three months ended December 31, 2009:
- receipt of $1.0 billion aggregate proceeds from the November 2009
issuance of our $500 million 5.38% Senior Notes due 2019 and $500
million 6.68% Senior Notes due 2039;
- receipt of $2 million in net proceeds from the settlement of the
US$408 million aggregate amount of forward contracts relating to the
redemption of our US$400 million 8.00% Senior Subordinated Notes due
2012; and
- receipt of $1 million from the issuance of Class B Non-Voting shares
under the exercise of employee stock options.
Net funds used during the three months ended December 31, 2009 totalled approximately $1,795 million, the details of which include funding:
- additions to PP&E of $535 million, net of $36 million of related
changes in non-cash working capital;
- the payment of quarterly dividends of $177 million on our Class A
Voting and Class B Non-Voting shares;
- the purchase for cancellation of 13,435,400 Class B Non-Voting shares
for an aggregate purchase price of $430 million;
- redemption of our US$400 million 8.00% Senior Subordinated Notes due
2012 for Canadian equivalent $424 million principal repayment amount
and $8 million repayment premium;
- the purchase of 3.2 million shares of Cogeco Cable Inc. and
1.6 million shares of Cogeco Inc. for an aggregate purchase price of
$163 million;
- payments for program rights of $54 million; and
- acquisitions and other net investments aggregating $4 million.
Taking into account the cash and equivalents of $168 million at the beginning of the period and the cash sources and uses described above, the cash and cash equivalents at December 31, 2009 were $383 million.
Financing
Our long-term debt instruments are described in Note 14 to the 2008 Annual Audited Consolidated Financial Statements.
On November 4, 2009 RCI issued in Canada $500 million principal amount of 5.38% Senior Notes due 2019 (the "2019 Notes") and $500 million principal amount of 6.68% Senior Notes due 2039 (the "2039 Notes"). The 2019 Notes were issued at a discount of 99.931% for an effective yield of 5.389% per year and the 2039 Notes were issued at a discount of 99.897% for an effective yield of 6.688% per year. RCI received aggregate net proceeds of $993 million from the issuance of the 2019 Notes and the 2039 Notes after deducting the respective issue discount, underwriting commission and other related expenses. The 2019 Notes and the 2039 Notes are unsecured and are guaranteed on an unsecured basis by each of Rogers Wireless Partnership and Rogers Cable Communications Inc. and rank pari passu with all of RCI's other senior unsecured and unsubordinated notes and debentures and any amounts outstanding from time to time under our bank credit facility.
In addition, on December 15, 2009 RCI redeemed the entire outstanding principal amount of our US$400 million (Cdn$424 million) 8.00% Senior Subordinated Notes due 2012 at the prescribed redemption price of 102% of the principal amount, or US$408 million (Cdn$432 million). As a result, we incurred a net loss on repayment of long-term debt of $7 million, which is expensed in the consolidated statement of income, comprising the $8 million cash payment for the 2% redemption premium, partially offset by a corresponding $1 million non-cash write-down of the related fair value increment arising from purchase accounting.
At December 31, 2009, there were no advances outstanding under our $2.4 billion bank credit facility and the full amount is available to be drawn, excluding letters of credit of $47 million.
During the three months ended September 30, 2009, RCI made a lump-sum contribution of $61 million to its pension plans, following which the pension plans purchased $172 million of annuities from insurance companies for employees who had retired as of January 1, 2009. The purchase of the annuities relieves the Company of the primary responsibility for and, eliminates significant risks associated with, the accrued benefit obligation for the retired employees. The non-cash settlement loss arising from this settlement of pension obligations was $30 million and was recorded in the quarter ending December 31, 2009.
Shelf Prospectuses
In order to maintain financial flexibility, in November 2007 we filed shelf prospectuses with securities regulators to qualify debt securities of RCI for sale in Canada and/or in the United States. These shelf prospectuses were scheduled to expire in December 2009. To replace these expiring shelf prospectuses, in November 2009, we filed two new shelf prospectuses with securities regulators to qualify debt securities of RCI, one for the sale of up to Cdn$4 billion of debt securities in Canada and the other for the sale of up to US$4 billion in the United States and Ontario. These new shelf prospectuses expire in December 2011. The notice set forth in this paragraph does not constitute an offer of any securities for sale.
Normal Course Issuer Bid
In February 2009, we filed a NCIB authorizing us to repurchase up to the lesser of 15 million of our Class B Non-Voting shares and that number of Class B Non-Voting shares that can be purchased under the NCIB for an aggregate purchase price of $300 million. This NCIB, which expires on February 19, 2010, replaced a previously filed NCIB which expired in January 2009.
In May 2009, we amended the NCIB filed in February 2009 to provide that we may, during the twelve month period commencing February 20, 2009 and ending February 19, 2010, purchase on the TSX up to the lesser of 48 million of our Class B Non-Voting shares and that number of Class B Non-Voting shares that can be purchased under the NCIB for an aggregate purchase price of $1.5 billion.
During the three months ended December 31, 2009, we purchased an aggregate 13,435,400 Class B Non-Voting shares for an aggregate purchase price of $430 million. An aggregate 1,051,000 of these shares comprising $34 million of the aggregate purchase price were purchased and recorded in the fourth quarter but were settled in early January 2010. In addition, 1,350,000 of the shares were purchased by RCI pursuant to a private agreement between RCI and a certain arm's-length third party seller for a purchase price of $40 million. This purchase was made under issuer bid exemption orders issued by the Ontario Securities Commission and is included in calculating the number of Class B Non-Voting shares that RCI may purchase pursuant to the NCIB. For the full year ended December 31, 2009, we purchased an aggregate 43,776,200 Class B Non-Voting shares for an aggregate purchase price of $1,347 million.
On February 17, 2010, we announced that the Toronto Stock Exchange has accepted a notice filed by RCI of our intention to renew our NCIB for our Class B Non-Voting shares for a further one-year period commencing February 22, 2010 and ending February 21, 2011, and which during such one-year period we may purchase on the TSX up to the lesser of 43.6 million Class B Non-Voting shares and that number of Class B Non-Voting shares that can be purchased under the NCIB for an aggregate purchase price of $1.5 billion. The actual number of Class B Non-Voting shares purchased under the NCIB and the timing of such purchases will be determined by management considering market conditions, stock prices, our cash position, and other factors.
Interest Rate and Foreign Exchange Management
Economic Hedge Analysis
For the purposes of our discussion on the hedged portion of long-term debt, we have used non-GAAP measures in that we include all Derivatives, whether or not they qualify as hedges for accounting purposes, since all such Derivatives are used for risk management purposes only and are designated as a hedge of specific debt instruments for economic purposes. As a result, the Canadian dollar equivalent of U.S. dollar-denominated long-term debt reflects the contracted foreign exchange rate for all of our Derivatives regardless of qualifications for accounting purposes as a hedge.
On December 15, 2009, we redeemed the entire outstanding principal amount of our US$400 million 8.00% Senior Subordinated Notes due 2012, which were not hedged on an economic basis nor on an accounting basis. As a result of the redemption of these unhedged Senior Subordinated Notes due 2012, on December 31, 2009, 100% of our U.S. dollar-denominated debt was hedged on an economic basis while 94% of our U.S. dollar-denominated debt was hedged on an accounting basis. The Derivatives hedging our US$350 million 7.50% Senior Notes due 2038 do not qualify as hedges for accounting purposes.
Consolidated Hedged Position
-------------------------------------------------------------------------
(In millions of dollars,
except percentages) December 31, 2009 December 31, 2008
-------------------------------------------------------------------------
U.S. dollar-denominated
long-term debt US $ 5,540 US $ 5,940
Hedged with Derivatives US $ 5,540 US $ 5,540
Hedged exchange rate 1.2043 1.2043
Percent hedged 100.0%(1) 93.3%
-------------------------------------------------------------------------
Amount of long-term debt(2)
at fixed rates:
Total long-term debt Cdn $ 9,307 Cdn $ 8,383
Total long-term debt at
fixed rates Cdn $ 9,307 Cdn $ 7,798
Percent of long-term debt fixed 100.0% 93.0%
-------------------------------------------------------------------------
Weighted average interest rate
on long-term debt 7.27% 7.29%
-------------------------------------------------------------------------
(1) Pursuant to the requirements for hedge accounting under Canadian
Institute of Chartered Accountants ("CICA") Handbook Section 3865,
Hedges, on December 31, 2009, RCI accounted for 93.5% of its
Derivatives as hedges against designated U.S. dollar-denominated
debt. As a result, 93.7% of our U.S. dollar-denominated debt is
hedged for accounting purposes versus 100% on an economic basis.
(2) Long-term debt includes the effect of the Derivatives.
Fair Value of Derivatives
In accordance with Canadian GAAP, we have recorded our Derivatives using an estimated credit-adjusted mark-to-market valuation which is determined by increasing the treasury-related discount rates used to calculate the risk-free estimated mark-to-market valuation by an estimated bond spread ("Bond Spread") for the relevant term and counterparty for each instrument. In the case of Derivatives accounted for as assets (i.e. those Derivatives for which the counterparties owe Rogers), the Bond Spread for the bank counterparty was added to the risk-free discount rate to determine the estimated credit-adjusted value whereas, in the case of Derivatives accounted for as liabilities (i.e. those instruments for which we owe the counterparties), Rogers' Bond Spread was added to the risk-free discount rate. The estimated credit-adjusted values of the Derivatives are subject to changes in our credit spreads and those of our counterparties.
The effect of estimating the credit-adjusted fair value of Derivatives at December 31, 2009 versus the unadjusted risk-free mark-to-market value of Derivatives is illustrated in the table below. As at December 31, 2009, the credit-adjusted estimated net liability value of Rogers' Derivatives portfolio was $1,002 million, which is $25 million less than the unadjusted risk-free mark-to-market net liability value.
-------------------------------------------------------------------------
Derivatives
Derivatives in a Net
in an asset liability liability
position position position
(In millions of dollars) (A) (B) (A + B)
-------------------------------------------------------------------------
Mark-to-market value -
risk-free analysis $ 94 $ (1,121) $ (1,027)
-------------------------------------------------------------------------
Mark-to-market value -
credit-adjusted estimate
(carrying value) $ 82 $ (1,084) $ (1,002)
-------------------------------------------------------------------------
Difference $ (12) $ 37 $ 25
-------------------------------------------------------------------------
Long-term Debt Plus Net Derivative Liabilities
The aggregate of our long-term debt plus net derivative liabilities at the mark-to-market values using risk-free analysis ("the risk-free analytical value") is used by us and many analysts to most closely represent our net debt-related obligations for valuation purposes, and is calculated as follows:
-------------------------------------------------------------------------
December 31, December 31,
(In millions of dollars) 2009 2008
-------------------------------------------------------------------------
Long-term debt(1) $ 8,464 $ 8,507
Net derivative liabilities at the
risk-free analytical value(1) $ 1,027 $ 144
-------------------------------------------------------------------------
Total $ 9,491 $ 8,651
-------------------------------------------------------------------------
(1) Includes current and long-term portions.
We believe that the non-GAAP financial measure of long-term debt plus net derivative liabilities (assets) at the risk-free analytical value provides the most relevant and practical measure of our outstanding net debt-related obligations. We use this non-GAAP measure internally to conduct valuation-related analysis and make capital structure-related decisions and it is reviewed regularly by management. It is also useful to investors and analysts in enabling them to analyze the enterprise and equity value of the Company and to assess various leverage ratios as performance measures. This non-GAAP measure does not have a standardized meaning and should be viewed as a supplement to, and not a substitute for, our results of operations or financial position reported under Canadian and U.S. GAAP.
Outstanding Common Share Data
Set out below is our outstanding share data as at December 31, 2009 and December 31, 2008. As discussed above, we announced on May 19, 2009 an increase to our Class B Non-Voting share buy back program authorization from $300 million to the lesser of $1.5 billion or 48 million Class B shares during the twelve month period commencing February 20, 2009 and ending February 19, 2010. In the year ended December 31, 2009 we had repurchased 43,776,200 Class B shares for cancellation for an aggregate total of approximately $1,347 million.
-------------------------------------------------------------------------
December 31, December 31,
2009 2008
-------------------------------------------------------------------------
Common Shares(1)
Class A Voting 112,462,014 112,462,014
Class B Non-Voting(2) 479,948,041 523,429,539
---------------------------
Total Common Shares 592,410,055 635,891,553
---------------------------
---------------------------
-------------------------------------------------------------------------
Options to purchase Class B Non-Voting shares
Outstanding options 13,467,096 13,841,620
Outstanding options exercisable 8,149,361 9,228,740
-------------------------------------------------------------------------
(1) Holders of our Class B Non-Voting shares are entitled to receive
notice of and to attend meetings of our shareholders, but, except as
required by law or as stipulated by stock exchanges, are not entitled
to vote at such meetings. If an offer is made to purchase outstanding
Class A Voting shares, there is no requirement under applicable law
or RCI's constating documents that an offer be made for the
outstanding Class B Non-Voting shares and there is no other
protection available to shareholders under RCI's constating
documents. If an offer is made to purchase both Class A Voting shares
and Class B Non-Voting shares, the offer for the Class A Voting
shares may be made on different terms than the offer to the holders
of Class B Non-Voting shares.
(2) The outstanding Class B Non-Voting shares as at December 31, 2009
reflects the cancellation of an aggregate 1,051,000 shares purchased
pursuant to the NCIB during the three months ended December 31, 2009
but which settled in early January 2010.
Dividends and Other Payments on Equity Securities
We declared and paid dividends on each of our outstanding Class A Voting and Class B Non-Voting shares, as follows:
-------------------------------------------------------------------------
Dividend Dividends
per paid (in
Declaration date Record date Payment date share millions)
-------------------------------------------------------------------------
February 21, 2008 March 6, 2008 April 1, 2008 $0.25 $160
April 29, 2008 May 13, 2008 July 2, 2008 $0.25 $160
August 19, 2008 September 3, 2008 October 1, 2008 $0.25 $159
October 28, 2008 November 25, 2008 January 2, 2009 $0.25 $159
February 17, 2009 March 6, 2009 April 1, 2009 $0.29 $184
April 29, 2009 May 15, 2009 July 2, 2009 $0.29 $184
August 20, 2009 September 9, 2009 October 1, 2009 $0.29 $177
October 27, 2009 November 20, 2009 January 2, 2010 $0.29 $175
-------------------------------------------------------------------------
On February 17, 2009, our Board of Directors adopted a dividend policy which increased the annualized dividend rate from $1.00 to $1.16 per Class A Voting and Class B Non-Voting share effective immediately to be paid in quarterly amounts of $0.29 per share. Such quarterly dividends are only payable as and when declared by our Board and there is no entitlement to any dividend prior thereto.
On February 17, 2010, our Board of Directors adopted a dividend policy which increased the annualized dividend rate from $1.16 to $1.28 per Class A Voting and Class B Non-Voting share effective immediately to be paid in quarterly amounts of $0.32 per share.
2010 FINANCIAL AND OPERATING GUIDANCE
The following table outlines guidance ranges and assumptions for selected 2010 financial metrics. This information is forward-looking and should be read in conjunction with the section below entitled "Caution Regarding Forward-Looking Statements, Risks and Assumptions" and in related disclosures, for the various economic, competitive, and regulatory assumptions and factors that could cause actual future financial and operating results to differ from those currently expected.
Full Year 2010 Guidance --------- --------------------
---------------------------------------- 2009 2010
(Millions of dollars) Actual Guidance
---------------------------------------- --------- --------------------
Consolidated
Adjusted operating profit(1) $ 4,388 Up 2% to 7%
Additions to PP&E(2) $ 1,855 Flat to up 5%
Pre-tax free cash flow(3) $ 1,886 Up 3% to 8%
Cash Income Taxes
Assumptions for the timing and amount
of cash income tax payments(4) $ 8 ~$150
---------------------------------------- --------- --------------------
Supplemental Detail(5) --------- --------------------
---------------------------------------- 2009
(Millions of dollars) Actual 2010
---------------------------------------- --------- --------------------
Wireless
Network revenue $ 6,245 Up 3% to 6%
Adjusted operating profit(1) $ 3,042 Up 2% to 6%
Cable Operations
Revenue(6) $ 3,074 Up 3% to 6%
Adjusted operating profit(1) $ 1,298 Up 4% to 8%
Media
Revenue $ 1,407 Up 4% to 9%
Adjusted operating profit(1) $ 119 Up 6% to 16%
---------------------------------------- --------- --------------------
(1) Excludes stock-based compensation expense (recovery), integration and
restructuring expenses, contract termination fees, adjustment for
CRTC Part II fees decision, and settlement of pension obligations.
(2) In addition to Wireless, Cable Operations and Rogers Media PP&E
expenditures, consolidated additions to PP&E includes expenditures
related to billing system development and corporately owned real
estate.
(3) Pre-tax free cash flow is defined as adjusted operating profit less
PP&E expenditures and interest expense and is not a term defined
under Canadian GAAP.
(4) Management currently expects that its 2011 cash income tax payments
will not exceed the 2010 guidance and that it will not be fully cash
taxable until 2012.
(5) This supplemental detail does not represent part of our formal 2010
guidance, and is provided for informative purposes only. Any updates
over the course of 2010 would only be made to the consolidated level
guidance ranges provided above.
(6) Includes cable television, residential high-speed Internet and
residential telephony services; excludes Rogers Business Solutions
and Rogers Retail.
KEY PERFORMANCE INDICATORS AND NON-GAAP MEASURES
SUPPLEMENTARY INFORMATION
Calculations of Wireless Non-GAAP Measures
-------------------------------------------------------------------------
(In millions of dollars,
subscribers in thousands, Three months ended Twelve months ended
except ARPU figures and December 31, December 31,
adjusted operating -------------------------------------------
profit margin) 2009 2008 2009 2008
-------------------------------------------------------------------------
Postpaid ARPU (monthly)
Postpaid (voice and data)
revenue $ 1,524 $ 1,428 $ 5,948 $ 5,558
Divided by: average postpaid
wireless voice and data
subscribers 6,919 6,361 6,705 6,142
Divided by: 3 months for the
quarter and 12 months for
the year-to-date 3 3 12 12
-------------------------------------------
$ 73.42 $ 74.83 $ 73.93 $ 75.41
-------------------------------------------------------------------------
Prepaid ARPU (monthly)
Prepaid (voice and data)
revenue $ 74 $ 70 $ 297 $ 285
Divided by: average prepaid
subscribers 1,505 1,467 1,479 1,426
Divided by: 3 months for the
quarter and 12 months for
the year-to-date 3 3 12 12
-------------------------------------------
$ 16.39 $ 15.91 $ 16.73 $ 16.65
-------------------------------------------------------------------------
Blended ARPU (monthly)
Voice and data revenue $ 1,598 $ 1,498 $ 6,245 $ 5,843
Divided by: average wireless
voice and data subscribers 8,424 7,828 8,184 7,568
Divided by: 3 months for the
quarter and 12 months for
the year-to-date 3 3 12 12
-------------------------------------------
$ 63.23 $ 63.79 $ 63.59 $ 64.34
-------------------------------------------------------------------------
Adjusted operating profit
margin
Adjusted operating profit $ 744 $ 639 $ 3,042 $ 2,806
Divided by: network revenue 1,598 1,498 6,245 5,843
-------------------------------------------
Adjusted operating profit
margin 46.6% 42.7% 48.7% 48.0%
-------------------------------------------------------------------------
SUPPLEMENTARY INFORMATION
Calculations of Cable Non-GAAP Measures
-------------------------------------------------------------------------
Three months ended Twelve months ended
(In millions of dollars, December 31, December 31,
except adjusted operating -------------------------------------------
profit margin) 2009 2008 2009 2008
-------------------------------------------------------------------------
Cable Operations adjusted
operating profit margin:
Adjusted operating profit $ 322 $ 298 $ 1,298 $ 1,171
Divided by revenue 795 741 3,074 2,878
-------------------------------------------
Cable Operations adjusted
operating profit margin 40.5% 40.2% 42.2% 40.7%
-------------------------------------------------------------------------
RBS adjusted operating profit
margin:
Adjusted operating profit $ 5 $ 14 $ 35 $ 59
Divided by revenue 124 132 503 526
-------------------------------------------
RBS adjusted operating profit
margin 4.0% 10.6% 7.0% 11.2%
-------------------------------------------------------------------------
SUPPLEMENTARY INFORMATION
Calculation of Adjusted Operating Profit, Net Income and Earnings Per
Share
-------------------------------------------------------------------------
Three months ended Twelve months ended
(In millions of dollars, December 31, December 31,
number of shares outstanding -------------------------------------------
in millions) 2009 2008 2009 2008
-------------------------------------------------------------------------
Operating profit $ 1,049 $ 902 $ 4,316 $ 4,078
Add (deduct):
Stock-based compensation
expense (recovery) 29 25 (33) (100)
Settlement of pension
obligations 30 - 30 -
Integration and restructuring
expenses 65 41 117 51
Contract termination fees 7 - 19 -
Adjustment for CRTC Part II
fees decision (79) - (61) 31
-------------------------------------------
Adjusted operating profit $ 1,101 $ 968 $ 4,388 $ 4,060
-------------------------------------------
-------------------------------------------
Net income (loss) $ 310 $ (138) $ 1,478 $ 1,002
Add (deduct):
Stock-based compensation
expense (recovery) 29 25 (33) (100)
Settlement of pension
obligations 30 - 30 -
Integration and restructuring
expenses 65 41 117 51
Contract termination fees 7 - 19 -
Adjustment for CRTC Part II
fees decision (79) - (61) 31
Loss on repayment of
long-term debt 7 - 7 -
Impairment losses on goodwill,
intangible assets and other
long-term assets 18 294 18 294
Debt issuance costs 6 - 11 16
Income tax impact (23) (58) (30) (34)
-------------------------------------------
Adjusted net income $ 370 $ 164 $ 1,556 $ 1,260
-------------------------------------------
-------------------------------------------
Adjusted basic and diluted
earnings per share:
Adjusted net income $ 370 $ 164 $ 1,556 $ 1,260
Divided by: weighted average
number of shares outstanding 603 636 621 638
-------------------------------------------
Adjusted basic and diluted
earnings per share $ 0.61 $ 0.26 $ 2.51 $ 1.98
-------------------------------------------------------------------------
SUPPLEMENTARY INFORMATION
Quarterly Consolidated Financial Summary
2009
-------------------------------------------------------------------------
(In millions of dollars,
except per share amounts) Q1 Q2 Q3 Q4
-------------------------------------------------------------------------
Income Statement
Operating Revenue
Wireless $ 1,544 $ 1,616 $ 1,760 $ 1,734
Cable 968 972 989 1,019
Media 284 366 364 393
Corporate and eliminations (49) (63) (77) (89)
-------------------------------------------------------------------------
2,747 2,891 3,036 3,057
-------------------------------------------------------------------------
Operating profit (loss) before
the undernoted
Wireless 710 742 846 744
Cable 324 332 329 325
Media (10) 37 36 52
Corporate and eliminations (19) (28) (30) (20)
-------------------------------------------------------------------------
1,005 1,083 1,181 1,101
Stock-based compensation
recovery (expense)(1) 81 (13) (6) (29)
Settlement of pension
obligations(2) - - - (30)
Integration and restructuring
expenses(3) (4) (37) (11) (65)
Contract termination fees(4) - - (12) (7)
Adjustment for CRTC Part II
fees decision(5) - - - 79
-------------------------------------------------------------------------
Operating profit(6) 1,082 1,033 1,152 1,049
Depreciation and amortization 444 446 416 424
Impairment losses on goodwill,
intangible assets and other
long-term assets(7) - - - 18
-------------------------------------------------------------------------
Operating income 638 587 736 607
Interest on long-term debt (152) (156) (166) (173)
Debt issuance costs - (5) - (6)
Other income (expense) (17) 73 44 (30)
Income tax expense (160) (125) (129) (88)
-------------------------------------------------------------------------
Net income (loss) for the
period $ 309 $ 374 $ 485 $ 310
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net income (loss) per share:
Basic $ 0.49 $ 0.59 $ 0.79 $ 0.51
Diluted $ 0.49 $ 0.59 $ 0.79 $ 0.51
Additions to property, plant
and equipment(6) $ 359 $ 434 $ 491 $ 571
-------------------------------------------------------------------------
2008
-------------------------------------------------------------------------
(In millions of dollars,
except per share amounts) Q1 Q2 Q3 Q4
-------------------------------------------------------------------------
Income Statement
Operating Revenue
Wireless $ 1,431 $ 1,522 $ 1,727 $ 1,655
Cable 925 938 961 985
Media 307 409 386 394
Corporate and eliminations (54) (66) (92) (93)
-------------------------------------------------------------------------
2,609 2,803 2,982 2,941
-------------------------------------------------------------------------
Operating profit (loss) before
the undernoted
Wireless 705 769 693 639
Cable 303 304 318 313
Media 2 52 43 46
Corporate and eliminations (26) (36) (29) (30)
-------------------------------------------------------------------------
984 1,089 1,025 968
Stock-based compensation
recovery (expense)(1) 116 (53) 62 (25)
Settlement of pension
obligations(2) - - - -
Integration and restructuring
expenses(3) (5) (3) (2) (41)
Contract termination fees(4) - - - -
Adjustment for CRTC Part II
fees decision(5) - (37) - -
-------------------------------------------------------------------------
Operating profit(6) 1,095 996 1,085 902
Depreciation and amortization 440 420 429 471
Impairment losses on goodwill,
intangible assets and other
long-term assets(7) - - - 294
-------------------------------------------------------------------------
Operating income 655 576 656 137
Interest on long-term debt (138) (133) (147) (157)
Debt issuance costs - - (16) -
Other income (expense) (3) 11 16 (31)
Income tax expense (170) (153) (14) (87)
-------------------------------------------------------------------------
Net income (loss) for the
period $ 344 $ 301 $ 495 $ (138)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net income (loss) per share:
Basic $ 0.54 $ 0.47 $ 0.78 $ (0.22)
Diluted $ 0.54 $ 0.47 $ 0.78 $ (0.22)
Additions to property, plant
and equipment(6) $ 321 $ 481 $ 436 $ 783
-------------------------------------------------------------------------
(1) See the section entitled "Stock-based Compensation".
(2) Relates to the settlement of pension obligations for all employees in
the pension plans who had retired as of January 1, 2009 as a result
of annuity purchases by the Company's pension plans.
(3) Costs incurred relate to severances resulting from the targeted
restructuring of our employee base to combine the Cable and Wireless
businesses into a communications organization and to improve our cost
structure in light of the current economic and competitive
conditions, severances and restructuring expenses related to the
outsourcing of certain information technology functions, the
integration of Call-Net, Futureway and Aurora Cable, the
restructuring of RBS, and the closure of certain Rogers Retail
stores.
(4) Relates to the termination and release of certain Blue Jays players
from the remaining term of their contracts.
(5) Relates to an adjustment for CRTC Part II fees related to prior
periods. The adjustments related to Part II CRTC fees are applicable
to the quarters in which they occur and only partially impact the
full years.
(6) As defined. See the section entitled "Key Performance Indicators and
Non-GAAP Measures".
(7) In the fourth quarter of 2009 and 2008, we determined that the fair
values of certain broadcasting assets were lower than their carrying
values. This primarily resulted from weakening industry expectations
and declines in advertising revenues amidst the slowing economy. As a
result, we recorded an aggregate non-cash impairment charge of $18
million in 2009 with the following components: $5 million related to
broadcast licences and $13 million related to other long-term assets;
and $294 million in 2008 with the following components: $154 million
related to goodwill, $75 million related to broadcast licences and
$65 million related to intangible assets and other long-term assets.
Adjusted Quarterly Consolidated Financial Summary(1)
2009
-------------------------------------------------------------------------
(In millions of dollars,
except per share amounts) Q1 Q2 Q3 Q4
-------------------------------------------------------------------------
Income Statement
Operating Revenue
Wireless $ 1,544 $ 1,616 $ 1,760 $ 1,734
Cable 968 972 989 1,019
Media 284 366 364 393
Corporate and eliminations (49) (63) (77) (89)
-------------------------------------------------------------------------
2,747 2,891 3,036 3,057
-------------------------------------------------------------------------
Adjusted operating profit
(loss)(2)
Wireless 710 742 846 744
Cable 324 332 329 325
Media (10) 37 36 52
Corporate and eliminations (19) (28) (30) (20)
-------------------------------------------------------------------------
1,005 1,083 1,181 1,101
Depreciation and amortization 444 446 416 424
-------------------------------------------------------------------------
Adjusted operating income 561 637 765 677
Interest on long-term debt (152) (156) (166) (173)
Other income (expense) (17) 73 44 (23)
Income tax expense (136) (142) (138) (111)
-------------------------------------------------------------------------
Adjusted net income for the
period $ 256 $ 412 $ 505 $ 370
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Adjusted net income per share:
Basic $ 0.40 $ 0.65 $ 0.82 $ 0.61
Diluted $ 0.40 $ 0.65 $ 0.82 $ 0.61
Additions to property, plant
and equipment(2) $ 359 $ 434 $ 491 $ 571
-------------------------------------------------------------------------
2008
-------------------------------------------------------------------------
(In millions of dollars,
except per share amounts) Q1 Q2 Q3 Q4
-------------------------------------------------------------------------
Income Statement
Operating Revenue
Wireless $ 1,431 $ 1,522 $ 1,727 $ 1,655
Cable 925 938 961 985
Media 307 409 386 394
Corporate and eliminations (54) (66) (92) (93)
-------------------------------------------------------------------------
2,609 2,803 2,982 2,941
-------------------------------------------------------------------------
Adjusted operating profit
(loss)(2)
Wireless 705 769 693 639
Cable 303 304 318 313
Media 2 52 43 46
Corporate and eliminations (26) (36) (29) (30)
-------------------------------------------------------------------------
984 1,089 1,025 968
Depreciation and amortization 440 420 429 471
-------------------------------------------------------------------------
Adjusted operating income 544 669 596 497
Interest on long-term debt (138) (133) (147) (157)
Other income (expense) (3) 11 16 (31)
Income tax expense (133) (183) - (145)
-------------------------------------------------------------------------
Adjusted net income for the
period $ 270 $ 364 $ 465 $ 164
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Adjusted net income per share:
Basic $ 0.42 $ 0.57 $ 0.73 $ 0.26
Diluted $ 0.42 $ 0.57 $ 0.73 $ 0.26
Additions to property, plant
and equipment(2) $ 321 $ 481 $ 436 $ 783
-------------------------------------------------------------------------
(1) This quarterly summary has been adjusted to exclude stock-based
compensation (recovery) expense, integration and restructuring
expenses, contract termination fees, adjustments to CRTC Part II fees
related to prior periods, pension settlement, debt issuance costs,
loss on repayment of long-term debt, impairment losses on goodwill,
intangible asset and other long-term assets and the income tax impact
related to the above items. See the section entitled "Key Performance
Indicators and Non-GAAP Measures".
(2) As defined. See the section entitled "Key Performance Indicators and
Non-GAAP Measures".
Rogers Communications Inc.
Unaudited Consolidated Statements of Income
Three months ended Twelve months ended
(In millions of dollars, December 31, December 31,
except per share amounts) 2009 2008 2009 2008
------------------------------ ---------- ---------- ---------- ---------
Operating revenue $ 3,057 $ 2,941 $ 11,731 $ 11,335
Operating expenses:
Cost of sales 397 408 1,380 1,303
Sales and marketing 330 381 1,207 1,334
Operating, general and
administrative 1,186 1,209 4,681 4,569
Settlement of pension
obligations 30 - 30 -
Integration and restructuring 65 41 117 51
Depreciation and amortization 424 471 1,730 1,760
Impairment losses on goodwill,
intangible assets and other
long-term assets 18 294 18 294
------------------------------ ---------- ---------- ---------- ---------
Operating income 607 137 2,568 2,024
Interest on long-term debt (173) (157) (647) (575)
Debt issuance costs (6) - (11) (16)
Foreign exchange gain (loss) 13 (77) 136 (99)
Loss on repayment of long-term
debt (7) - (7) -
Change in fair value of
derivative instruments (37) 43 (65) 64
Other income, net 1 3 6 28
------------------------------ ---------- ---------- ---------- ---------
Income (loss) before income
taxes 398 (51) 1,980 1,426
Income tax expense (recovery):
Current 104 1 215 3
Future (16) 86 287 421
------------------------------ ---------- ---------- ---------- ---------
Net income (loss) for the
period $ 310 $ (138) $ 1,478 $ 1,002
------------------------------ ---------- ---------- ---------- ---------
------------------------------ ---------- ---------- ---------- ---------
Net income per share:
Basic and diluted $ 0.51 $ (0.22) $ 2.38 $ 1.57
------------------------------ ---------- ---------- ---------- ---------
Rogers Communications Inc.
Unaudited Consolidated Statements of Cash Flows
Three months ended Twelve months ended
December 31, December 31,
(In millions of dollars) 2009 2008 2009 2008
------------------------------ ---------- ---------- ---------- ---------
Cash provided by (used in):
Operating activities:
Net income (loss) for the
period $ 310 $ (138) $ 1,478 $ 1,002
Adjustments to reconcile net
income to net cash flows
from operating activities:
Depreciation and
amortization 424 471 1,730 1,760
Impairment losses on
goodwill, intangible
assets, and other
long-term assets 18 294 18 294
Program rights and Rogers
Retail rental amortization 55 43 174 146
Future income taxes (16) 86 287 421
Unrealized foreign exchange
loss (gain) (12) 53 (126) 65
Loss on repayment of
long-term debt 7 - 7 -
Change the fair value of
derivative instruments 37 (43) 65 (64)
Settlement of pension
obligations 30 - 30 -
Pension contributions,
net of expense (10) (9) (102) (22)
Stock-based compensation
expense (recovery) 29 25 (33) (100)
Amortization of fair value
increment of long-term debt (1) (1) (5) (5)
Other (2) 14 3 3
------------------------------ ---------- ---------- ---------- ---------
869 795 3,526 3,500
Change in non-cash operating
working capital items 138 36 264 (215)
------------------------------ ---------- ---------- ---------- ---------
1,007 831 3,790 3,285
------------------------------ ---------- ---------- ---------- ---------
Investing activities:
Additions to property, plant
and equipment (571) (783) (1,855) (2,021)
Change in non-cash working
capital items related to
property, plant and equipment 36 147 (55) 40
Acquisition of spectrum
licences - - (40) (1,008)
Investment in Cogeco Inc. and
Cogeco Cable Inc. (163) - (163) -
Acquisitions, net of cash and
cash equivalents acquired 5 - (11) (191)
Additions to program rights (54) (55) (185) (150)
Other (9) 15 (15) 15
------------------------------ ---------- ---------- ---------- ---------
(756) (676) (2,324) (3,315)
Financing activities:
Issuance of long-term debt 1,050 675 2,875 4,474
Repayment of long-term debt (474) (655) (1,885) (3,335)
Premium on repayment of
long-term debt (8) - (8) -
Payment on re-couponing of
cross-currency interest rate
exchange agreements - - - (375)
Payment on settlement of
cross-currency interest rate
exchange agreements and
forward contracts (431) (969) (431) (969)
Proceeds on settlement of
cross-currency interest rate
exchange agreements and
forward contracts 433 970 433 970
Repurchase of Class B
Non-Voting shares (430) - (1,347) (137)
Issuance of capital stock on
exercise of stock options 1 1 3 3
Dividends paid (177) (159) (704) (559)
------------------------------ ---------- ---------- ---------- ---------
(36) (137) (1,064) 72
------------------------------ ---------- ---------- ---------- ---------
Increase in cash and cash
equivalents 215 18 402 42
Cash and cash equivalents
(deficiency), beginning of
period 168 (37) (19) (61)
------------------------------ ---------- ---------- ---------- ---------
Cash and cash equivalents
(deficiency), end of period $ 383 $ (19) $ 383 $ (19)
------------------------------ ---------- ---------- ---------- ---------
------------------------------ ---------- ---------- ---------- ---------
Supplemental cash flow
information:
Income taxes paid $ 7 $ - $ 8 $ 1
Interest paid 178 162 632 532
------------------------------ ---------- ---------- ---------- ---------
------------------------------ ---------- ---------- ---------- ---------
Cash and cash equivalents (deficiency) are defined as cash and short-term
deposits which have an original maturity of less than 90 days, less bank
advances.
Change in Non-Cash Working Capital Items
Three months ended Twelve months ended
December 31, December 31,
(In millions of dollars) 2009 2008 2009 2008
------------------------------ ---------- ---------- ---------- ---------
Cash provided by (used in):
Decrease (increase) in accounts
receivable $ (72) $ (92) $ 93 $ (166)
Decrease (increase) in other
assets 60 (105) 76 (176)
Increase in accounts payable
and accrued liabilities 130 220 50 115
Increase in unearned revenue 20 13 45 12
------------------------------ ---------- ---------- ---------- ---------
$ 138 $ 36 $ 264 $ (215)
------------------------------ ---------- ---------- ---------- ---------
Rogers Communications Inc.
Unaudited Consolidated Balance Sheets
December 31, December 31,
(In millions of dollars) 2009 2008
----------------------------------------------------------- ------------
Assets
Current assets
Cash and cash equivalents $ 383 $ -
Accounts receivable 1,310 1,403
Other current assets 338 442
Current portion of derivative instruments 4 -
Future income tax assets 220 451
----------------------------------------------------------- ------------
2,255 2,296
Property, plant and equipment 8,197 7,898
Goodwill 3,018 3,024
Intangible assets 2,643 2,761
Investments 547 343
Derivative instruments 78 507
Other long-term assets 280 253
----------------------------------------------------------- ------------
$ 17,018 $ 17,082
----------------------------------------------------------- ------------
----------------------------------------------------------- ------------
Liabilities and Shareholders' Equity
Liabilities
Current liabilities
Bank advances, arising from outstanding
cheques $ - $ 19
Accounts payable and accrued liabilities 2,383 2,412
Current portion of long-term debt 1 1
Current portion of derivative instruments 80 45
Unearned revenue 284 239
----------------------------------------------------------- ------------
2,748 2,716
Long-term debt 8,463 8,506
Derivative instruments 1,004 616
Other long-term liabilities 133 184
Future income tax liabilities 397 344
----------------------------------------------------------- ------------
12,745 12,366
Shareholders' equity 4,273 4,716
----------------------------------------------------------- ------------
$ 17,018 $ 17,082
----------------------------------------------------------- ------------
SUPPLEMENTARY INFORMATION
Investments
December 31, December 31,
(In millions of dollars) 2009 2008
----------------------------------------------------------- ------------
Carrying Carrying
Value Value
----------------------------------------------------------- ------------
Publicly traded companies, at quoted
market value:
Cogeco Cable Inc. 9,795,675 Subordinate Voting
Common shares
(2008 - 6,595,675) $ 343 $ 228
Cogeco Inc. 5,023,300 Subordindate Voting
Common shares
(2008 - 3,399,800) 144 85
Other publicly traded companies 9 6
----------------------------------------------------------- ------------
496 319
Private companies, at cost 18 17
Investments accounted for by the equity method 33 7
----------------------------------------------------------- ------------
$ 547 $ 343
----------------------------------------------------------- ------------
Long-term debt
(In millions of Due Principal Interest December 31, December 31,
dollars) date amount Rate 2009 2008
------------------------------------------------------------ ------------
Corporate:
Bank credit
facility Floating $ - $ 585
Senior Notes 2016 $ 1,000 5.80% 1,000 -
Senior Notes 2018 U.S. 1,400 6.80% 1,471 1,714
Senior Notes 2019 500 5.38% 500 -
Senior Notes 2038 U.S. 350 7.50% 368 429
Senior Notes 2039 500 6.68% 500 -
Formerly Rogers Wireless Inc.:
Senior Notes 2011 U.S. 490 9.625% 515 600
Senior Notes 2011 460 7.625% 460 460
Senior Notes 2012 U.S. 470 7.25% 494 575
Senior Notes 2014 U.S. 750 6.375% 788 918
Senior Notes 2015 U.S. 550 7.50% 578 673
Senior
Subordinated
Notes 2012 U.S. 400 8.00% - 490
Fair value
increment
arising from
purchase
accounting 6 12
Formerly Rogers Cable Inc.:
Senior Notes 2011 175 7.25% 175 175
Senior Notes 2012 U.S. 350 7.875% 368 429
Senior Notes 2013 U.S. 350 6.25% 368 429
Senior Notes 2014 U.S. 350 5.50% 368 429
Senior Notes 2015 U.S. 280 6.75% 294 343
Senior
Debentures 2032 U.S. 200 8.75% 210 245
Capital leases and other Various 1 1
------------------------------------------------------------ ------------
8,464 8,507
Less current portion 1 1
------------------------------------------------------------ ------------
$ 8,463 $ 8,506
------------------------------------------------------------ ------------
Shareholders' Equity
Class A Class B
Voting Shares Non-Voting Shares
----------------------- ---------------------
Number of Number of
Amount shares Amount shares
(In millions of dollars, ---------------------------------------------
except number of shares) (000s) (000s)
-------------------------------------------------------------------------
Balances, January 1, 2009 $ 72 112,462 $ 488 523,430
Net income for the year - - - -
Shares issued on exercise of
stock options - - 9 294
Dividends declared - - - -
Repurchase of Class B
Non-Voting shares - - (41) (43,776)
Other comprehensive income - - - -
-------------------------------------------------------------------------
Balances, December 31, 2009 $ 72 112,462 $ 456 479,948
-------------------------------------------------------------------------
Accumulated
other
compre- Total
hensive share-
Contributed Retained income holders'
surplus earnings (loss) equity
(In millions of dollars, ---------------------------------------------
except number of shares)
-------------------------------------------------------------------------
Balances, January 1, 2009 $ 3,560 $ 691 $ (95) $ 4,716
Net income for the year - 1,478 - 1,478
Shares issued on exercise of
stock options - - - 9
Dividends declared - (721) - (721)
Repurchase of Class B
Non-Voting shares (1,256) (50) - (1,347)
Other comprehensive income - - 138 138
-------------------------------------------------------------------------
Balances, December 31, 2009 $ 2,304 $ 1,398 $ 43 $ 4,273
-------------------------------------------------------------------------
Calculation of Net Income (Loss) Per Share
Three months ended Twelve months ended
(In millions, except per December 31, December 31,
share amounts) 2009 2008 2009 2008
------------------------------ ---------- ---------- ---------- ---------
Numerator:
Net income (loss) for the
period, basic and diluted $ 310 $ (138) $ 1,478 $ 1,002
------------------------------ ---------- ---------- ---------- ---------
------------------------------ ---------- ---------- ---------- ---------
Denominator (in millions):
Weighted average number of
shares outstanding - basic
and diluted 603 636 621 638
------------------------------ ---------- ---------- ---------- ---------
------------------------------ ---------- ---------- ---------- ---------
Net income (loss) per share:
Basic and diluted $ 0.51 $ (0.22) $ 2.38 $ 1.57
------------------------------ ---------- ---------- ---------- ---------
Segmented Information
For the Three Months Ended December 31, 2009
Corporate
items and Consol-
(In millions of elimin- idated
dollars) Wireless Cable Media ations Totals
-------------------------------------------------------------------------
Operating revenue $ 1,734 $ 1,019 $ 393 $ (89) $ 3,057
Cost of sales 308 61 51 (23) 397
Sales and marketing 186 112 56 (24) 330
Operating, general and
administrative 496 521 234 (22) 1,229
-------------------------------------------------------------------------
744 325 52 (20) 1,101
Settlement of pension
obligations 3 11 15 1 30
Integration and
restructuring 19 29 14 3 65
Stock-based compensation
expense 5 9 5 10 29
Contract termination
fees - - 7 - 7
Adjustment for CRTC
Part II fees decision - (60) (19) - (79)
-------------------------------------------------------------------------
717 336 30 (34) 1,049
Depreciation and
amortization 171 204 16 33 424
Impairment losses on
goodwill, intangible
assets and other
long-term assets - - 18 - 18
-------------------------------------------------------------------------
Operating income (loss) $ 546 $ 132 $ (4) $ (67) $ 607
---------------------------------------
---------------------------------------
Interest on long-term
debt (173)
Debt issuance costs (6)
Loss on repayment of
long-term debt (7)
Foreign exchange gain 13
Change in fair value of
derivative instruments (37)
Other income 1
-------------------------------------------------------------------------
Income before income
taxes $ 398
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Additions to PP&E $ 266 $ 217 $ 21 $ 67 $ 571
-------------------------------------------------------------------------
-------------------------------------------------------------------------
For the Three Months Ended December 31, 2008
Corporate
items and Consol-
(In millions of elimin- idated
dollars) Wireless Cable Media ations Totals
-------------------------------------------------------------------------
Operating revenue $ 1,655 $ 985 $ 394 $ (93) $ 2,941
Cost of sales 326 59 49 (26) 408
Sales and marketing 214 115 79 (27) 381
Operating, general and
administrative 476 498 220 (10) 1,184
-------------------------------------------------------------------------
639 313 46 (30) 968
Integration and
restructuring 14 10 11 6 41
Stock-based
compensation expense 4 7 5 9 25
-------------------------------------------------------------------------
621 296 30 (45) 902
Depreciation and
amortization 178 206 19 68 471
Impairment losses on
goodwill, intangible
assets and other
long-term assets - - 294 - 294
-------------------------------------------------------------------------
Operating income (loss) $ 443 $ 90 $ (283) $ (113) $ 137
---------------------------------------
---------------------------------------
Interest on long-term
debt (157)
Foreign exchange loss (77)
Change in fair value of
derivative instruments 43
Other income 3
-------------------------------------------------------------------------
Loss before income taxes $ (51)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Additions to PP&E $ 310 $ 356 $ 32 $ 85 $ 783
-------------------------------------------------------------------------
Segmented Information
For the Twelve Months Ended December 31, 2009
Corporate
items and Consol-
(In millions of elimin- idated
dollars) Wireless Cable Media ations Totals
-------------------------------------------------------------------------
Operating revenue $ 6,654 $ 3,948 $ 1,407 $ (278) $ 11,731
Cost of sales 1,059 201 167 (47) 1,380
Sales and marketing 630 446 209 (78) 1,207
Operating, general and
administrative 1,923 1,977 912 (56) 4,756
-------------------------------------------------------------------------
3,042 1,324 119 (97) 4,388
Settlement of pension
obligations 3 11 15 1 30
Integration and
restructuring 33 46 35 3 117
Contract termination fees - - 19 - 19
Stock-based compensation
recovery - (12) (8) (13) (33)
Adjustment for CRTC
Part II fees decision - (46) (15) - (61)
-------------------------------------------------------------------------
3,006 1,325 73 (88) 4,316
Depreciation and
amortization 660 808 63 199 1,730
Impairment losses on
goodwill, intangible
assets and other
long-term assets - - 18 - 18
-------------------------------------------------------------------------
Operating income (loss) $ 2,346 $ 517 $ (8) $ (287) $ 2,568
---------------------------------------
---------------------------------------
Interest on long-term
debt (647)
Debt issuance costs (11)
Loss on repayment of
long-term debt (7)
Foreign exchange gain 136
Change in fair value of
derivative instruments (65)
Other income 6
-------------------------------------------------------------------------
Income before income
taxes $ 1,980
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Additions to PP&E $ 865 $ 693 $ 62 $ 235 $ 1,855
-------------------------------------------------------------------------
-------------------------------------------------------------------------
For the Twelve Months Ended December 31, 2008
Corporate
items and Consol-
(In millions of elimin- idated
dollars) Wireless Cable Media ations Totals
-------------------------------------------------------------------------
Operating revenue $ 6,335 $ 3,809 $ 1,496 $ (305) $ 11,335
Cost of sales 1,005 197 178 (77) 1,303
Sales and marketing 691 466 269 (92) 1,334
Operating, general and
administrative 1,833 1,913 907 (15) 4,638
-------------------------------------------------------------------------
2,806 1,233 142 (121) 4,060
Integration and
restructuring 14 20 11 6 51
Stock-based compensation
recovery (5) (32) (17) (46) (100)
Adjustment for CRTC Part
II fees decision - 25 6 - 31
-------------------------------------------------------------------------
2,797 1,220 142 (81) 4,078
Depreciation and
amortization 588 791 76 305 1,760
Impairment losses on
goodwill, intangible
assets and other
long-term assets - - 294 - 294
-------------------------------------------------------------------------
Operating income (loss) $ 2,209 $ 429 $ (228) $ (386) $ 2,024
---------------------------------------
---------------------------------------
Interest on long-term
debt (575)
Debt issuance costs (16)
Foreign exchange loss (99)
Change in fair value of
derivative instruments 64
Other income 28
-------------------------------------------------------------------------
Income before income
taxes $ 1,426
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Additions to PP&E $ 929 $ 886 $ 81 $ 125 $ 2,021
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Segmented Information
For the Three Months Ended December 31, 2009
Cable
-------------------------------------------------
Corporate
items and
(In millions of Cable Rogers elimin- Total
dollars) Operations RBS Retail ations Cable
-------------------------------------------------------------------------
Operating revenue $ 795 $ 124 $ 110 $ (10) $ 1,019
Cost of sales - - 61 - 61
Sales and marketing 61 7 45 (1) 112
Operating, general and
administrative 412 112 6 (9) 521
-------------------------------------------------------------------------
322 5 (2) - 325
Settlement of pension
obligations 10 - 1 - 11
Integration and
restructuring 20 2 7 - 29
Stock-based
compensation expense 8 1 - - 9
Adjustment for CRTC
Part II fees decision (60) - - - (60)
-------------------------------------------------------------------------
344 2 (10) - 336
Depreciation and
amortization 204
-------------------------------------------------------------------------
Operating income $ 132
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Additions to PP&E $ 202 $ 10 $ 5 $ - $ 217
-------------------------------------------------------------------------
-------------------------------------------------------------------------
For the Three Months Ended December 31, 2008
Cable
-------------------------------------------------
Corporate
items and
(In millions of Cable Rogers elimin- Total
dollars) Operations RBS Retail ations Cable
-------------------------------------------------------------------------
Operating revenue $ 741 $ 132 $ 117 $ (5) $ 985
Cost of sales - - 59 - 59
Sales and marketing 58 7 50 - 115
Operating, general and
administrative 385 111 7 (5) 498
-------------------------------------------------------------------------
298 14 1 - 313
Integration and
restructuring 7 2 1 - 10
Stock-based
compensation expense 7 - - - 7
-------------------------------------------------------------------------
284 12 - - 296
Depreciation and
amortization 206
-------------------------------------------------------------------------
Operating income $ 90
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Additions to PP&E $ 336 $ 11 $ 9 $ - $ 356
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Segmented Information
For the Twelve Months Ended December 31, 2009
Cable
-------------------------------------------------
Corporate
items and
(In millions of Cable Rogers elimin- Total
dollars) Operations RBS Retail ations Cable
-------------------------------------------------------------------------
Operating revenue $ 3,074 $ 503 $ 399 $ (28) $ 3,948
Cost of sales - - 201 - 201
Sales and marketing 243 26 182 (5) 446
Operating, general and
administrative 1,533 442 25 (23) 1,977
-------------------------------------------------------------------------
1,298 35 (9) - 1,324
Settlement of pension
obligations 10 - 1 - 11
Integration and
restructuring 31 3 12 - 46
Stock-based compensation
(recovery) expense (12) 1 (1) - (12)
Adjustment for CRTC
Part II fees decision (46) - - - (46)
-------------------------------------------------------------------------
1,315 31 (21) - 1,325
Depreciation and
amortization 808
-------------------------------------------------------------------------
Operating income $ 517
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Additions to PP&E $ 642 $ 37 $ 14 $ - $ 693
-------------------------------------------------------------------------
-------------------------------------------------------------------------
For the Twelve Months Ended December 31, 2008
Cable
-------------------------------------------------
Corporate
items and
(In millions of Cable Rogers elimin- Total
dollars) Operations RBS Retail ations Cable
-------------------------------------------------------------------------
Operating revenue $ 2,878 $ 526 $ 417 $ (12) $ 3,809
Cost of sales - - 197 - 197
Sales and marketing 248 26 192 - 466
Operating, general and
administrative 1,459 441 25 (12) 1,913
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1,171 59 3 - 1,233
Integration and
restructuring 9 6 5 - 20
Stock-based compensation
recovery (30) (1) (1) - (32)
Adjustment for CRTC
Part II fees decision 25 - - - 25
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1,167 54 (1) - 1,220
Depreciation and
amortization 791
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Operating income $ 429
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Additions to PP&E $ 829 $ 36 $ 21 $ - $ 886
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Audited Full Year 2009 Financial Statements
In late February 2010, we intend to file with securities regulators in Canada and the U.S. our Audited Annual Consolidated Financial Statements and Notes thereto for the year ended December 31, 2009 and MD&A in respect of such annual financial statements. Notification of such filings will be made by a press release and such statements will be made available on the rogers.com, sedar.com, and sec.gov websites or upon request.
Caution Regarding Forward-Looking Statements, Risks and Assumptions
This earnings release includes forward-looking statements and assumptions concerning our business, its operations and its financial performance and condition approved by management on the date of this earnings release. These forward-looking statements and assumptions include, but are not limited to, statements with respect to our objectives and strategies to achieve those objectives, statements with respect to our beliefs, plans, expectations, anticipations, estimates or intentions, including guidance and forecasts relating to revenue, adjusted operating profit, PP&E expenditures, free cash flow, expected growth in subscribers and the services to which they subscribe, the cost of acquiring subscribers and the deployment of new services and all other statements that are not historical facts. Such forward-looking statements are based on current objectives, strategies, expectations and assumptions, most of which are confidential and proprietary, that we believe to be reasonable at the time including, but not limited to, general economic and industry growth rates, currency exchange rates, product pricing levels and competitive intensity, subscriber growth and usage rates, changes in government regulation, technology deployment, device availability, the timing of new product launches, content and equipment costs, the integration of acquisitions, and industry structure and stability.
Except as otherwise indicated, this earnings release and our forward-looking statements do not reflect the potential impact of any non-recurring or other special items or of any dispositions, monetizations, mergers, acquisitions, other business combinations or other transactions that may be considered or announced or may occur after the date of the financial information contained herein.
We caution that all forward-looking information, including any statement regarding our current intentions, is inherently subject to change and uncertainty and that actual results may differ materially from the assumptions, estimates or expectations reflected in the forward-looking information. A number of factors could cause actual results to differ materially from those in the forward-looking statements or could cause our current objectives and strategies to change, including but not limited to economic conditions, technological change, the integration of acquisitions, unanticipated changes in content or equipment costs, changing conditions in the entertainment, information and communications industries, regulatory changes, litigation and tax matters, the level of competitive intensity and the emergence of new opportunities, many of which are beyond our control and current expectation or knowledge. Therefore, should one or more of these risks materialize, should our objectives or strategies change, or should any other factors underlying the forward-looking statements prove incorrect, actual results and our plans may vary significantly from what we currently foresee. Accordingly, we warn investors to exercise caution when considering any such forward-looking information herein and that it would be unreasonable to rely on such statements as creating any legal rights regarding our future results or plans. We are under no obligation (and we expressly disclaim any such obligation) to update or alter any forward-looking statements or assumptions whether as a result of new information, future events or otherwise, except as required by law.
Before making any investment decisions and for a detailed discussion of the risks, uncertainties and environment associated with our business, see the MD&A sections of our 2008 Annual Report entitled "Risks and Uncertainties Affecting Our Businesses" (found on pages 61 to 66), as well as the "Updates to Risks and Uncertainties" and "Government Regulation and Regulatory Developments" sections of our Third Quarter 2009 MD&A. Our annual and quarterly reports can be found online at rogers.com, sedar.com, and sec.gov or are available directly from Rogers.
About the Company
We are a diversified Canadian communications and media company. We are engaged in wireless voice and data communications services through Rogers Wireless, Canada's largest wireless provider. Through Rogers Cable we are one of Canada's largest providers of cable television services as well as high-speed Internet access, telephony services and video retailing. Through Rogers Media, we are engaged in radio and television broadcasting, televised shopping, magazines and trade publications, and sports entertainment. We are publicly traded on the Toronto Stock Exchange (TSX: RCI.a and RCI.b) and on the New York Stock Exchange (NYSE: RCI).
For further information about the Rogers group of companies, please visit www.rogers.com.
Quarterly Investment Community Conference Call
As previously announced by press release, a live Webcast of our quarterly results conference call with the investment community will be broadcast via the Internet at rogers.com/webcast beginning at 8:00 a.m. ET today, February 17, 2010. A rebroadcast of this teleconference will be available on the Webcast Archive page of the Investor Relations section of rogers.com for a period of at least two weeks following the conference call.
For further information: Investment Community Contacts: Bruce M. Mann, (416) 935-3532, [email protected]; Dan Coombes, (416) 935-3550, [email protected]; Media Contacts: Wireless and Cable: Terrie Tweddle, (416) 935-4727, [email protected]; Media and Regulatory: Jan Innes, (416) 935-3525, [email protected]
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