Revenue Grows 3% to $3.2
Billion with Growth in Wireless, Cable and
Media;
Wireless Adjusted Operating Profit Margin Grows to 49.2%
and Customer Base Expands with 98,000 Wireless Postpaid Net
Subscriber Additions;
Cable Adjusted Operating Profit Margin Expands to 49.5%
Reflecting Continued Revenue Growth and Additions of Internet and
Cable Phone Subscribers;
Strategic Acquisitions of Mountain Cable, theScore and
Blackiron Data Centres all Completed During the
Quarter;
Consolidated Adjusted Operating Profit Grows 2% and
Adjusted Diluted Earnings Per Share Up 5% Reflecting Top Line
Growth and Continued Efficiency Improvements
TORONTO, July 24, 2013 /PRNewswire/ - Rogers
Communications Inc., a leading diversified Canadian communications
and media company, today announced its unaudited consolidated
financial and operating results for the second quarter ended
June 30, 2013, in accordance with
International Financial Reporting Standards ("IFRS").
Financial highlights from continuing
operations are as follows:
| |
|
|
|
|
|
|
|
| |
Three months ended June 30, |
|
Six months ended June 30, |
| (In millions of
dollars, except per share amounts) |
2013 |
2012 |
% Chg |
|
2013 |
2012 |
% Chg |
| |
|
|
|
|
|
|
|
| Operating revenue |
$
3,212 |
$
3,106 |
3 |
|
$
6,239 |
$
6,049 |
3 |
| As adjusted(1): |
|
|
|
|
|
|
|
| |
Operating profit(1) |
1,306 |
1,276 |
2 |
|
2,485 |
2,370 |
5 |
| |
Net income(1) |
497 |
478 |
4 |
|
911 |
838 |
9 |
| |
Diluted earnings per share(1) |
0.96 |
0.91 |
5 |
|
1.76 |
1.59 |
11 |
| |
|
|
|
|
|
|
|
| Pre-tax free cash
flow(1) |
602 |
656 |
(8) |
|
1,145 |
1,144 |
- |
| |
|
|
|
|
|
|
|
| Operating income |
828 |
789 |
5 |
|
1,490 |
1,372 |
9 |
| Net income |
532 |
413 |
29 |
|
885 |
737 |
20 |
| Diluted earnings per share |
0.93 |
0.77 |
21 |
|
1.69 |
1.38 |
22 |
| Cash provided by operating
activities |
1,061 |
1,079 |
(2) |
|
1,866 |
1,607 |
16 |
| |
|
| (1) |
For details on the determination of the 'adjusted' amounts and
pre-tax free cash flow, which are non-GAAP measures, see the
section "Non-GAAP Measures". The items do not have any standardized
meaning under IFRS and are therefore unlikely to be comparable to
similar measures presented by other companies. |
"During the second quarter, we delivered both
revenue and earnings growth while successfully leveraging our
superior networks to deliver strong data growth across both our
broadband cable and wireless platforms," said Nadir Mohamed, President and Chief Executive
Officer of Rogers Communications Inc. "At the same time, we
also drove further margin expansion at our Wireless, Cable and
Business Solutions divisions and continued to make significant
investments in our networks and service infrastructure.
Despite a heightened level of regulatory activity in the Canadian
wireless communications sector, we remain steadfastly focused on
the execution of our strategy and the delivery of the most
innovative products and reliable service to our customers."
Operating Highlights of the Second Quarter of 2013 include
the following:
Revenue Growth Continues
- Consolidated revenue growth of 3% reflects revenue growth of
3%, in each of Wireless and Cable, and 7% revenue growth in Media
compared to the same quarter last year.
- Wireless data revenue grew by 18% and now comprises 46% of
Wireless network revenue. Wireless activated and upgraded 678,000
smartphones, of which approximately 37% were for subscribers new to
Wireless. Customers with smartphones now represent 72% of Wireless
overall postpaid subscribers.
Continued Cost Efficiency Gains Drive Strong
Margins
- Consolidated adjusted operating profit increased year-over-year
by 2%. This increase was primarily driven by a 3% increase at
Wireless, 7% increase at Cable, and 14% increase at RBS, offset by
a 19% decrease at Media.
- Consolidated adjusted operating profit margin of 40.7% was
driven by strong adjusted operating profit margins of 49.2% at
Wireless and 49.5% at Cable. Adjusted net income improved 4% from
the same quarter last year and adjusted diluted earnings per share
of $0.96 was up 5%.
- Consolidated operating income increased year-over-year by 5%
driven by an increase in adjusted operating profit and a decrease
in integration, restructuring and acquisition expenses, offset by
an increase in stock-based compensation expense. Net income from
continuing operations grew 29% and diluted earnings per share was
up 21%.
Continued to Enhance our Leading Networks to
Monetize Rapid Data Growth
- Closed on the acquisition of Mountain Cablevision Ltd.
("Mountain Cable"). Mountain Cable delivers cable television,
Internet and telephony services in the Hamilton, Ontario area, which is contiguous to
Cable's service area, and includes approximately 59,000 homes
passed.
- Acquired Blackiron Data ULC ("Blackiron"), which provides RBS
the ability to enhance its suite of enterprise-level data centre
and cloud computing services along with its current suite of
fibre-based network connectivity services.
- Announced network sharing agreements with Manitoba Telecom and
Videotron, enabling Rogers to bring LTE to more customers and at
faster speeds in the Provinces of Quebec and Manitoba and the Ottawa region.
Customer Experience Further Enriched
- Introduced Rogers First Rewards, a new and innovative loyalty
program, to reward customers for their business. Rogers First
Rewards allows customers to get more of what they want by earning
points on their eligible purchases that can be redeemed for a wide
selection of Rogers' products and services.
- Launched "Connected for Success", a new broadband Internet
pilot project that will provide affordable broadband Internet,
computers and software to residents of Toronto Community Housing
social housing as part of the Rogers Youth Fund program. This will
bring more lower-income youth online and give them the tools and
resources needed to experience the benefits of connectivity.
- SamKnows, an independent world leader in broadband performance
testing, confirmed through in-home testing that Rogers delivers, on
average, 100% or more of advertised download speeds on its most
popular Internet packages, better than most providers that have
been tested in the U.S and European countries.
- Launched our "worry free" $7.99
per day U.S. wireless data roaming plan, with twice the data
capacity (50 MB) typically used by consumers for wireless Internet
per day.
Media Focus on Sports and Content
- Launched Sportsnet 360, which is comprised of the acquired
rebranded Score Media Inc. ("theScore") assets. The acquisition of
theScore received final regulatory approval in the second
quarter.
- Completed the sale of Rogers' non-controlling one-third
interest in TVtropolis to Shaw Communications Inc. ("Shaw").
Balance Sheet and Credit Rating
Strength
- In May 2013, each of Fitch
Ratings and Standard and Poor's Rating Service upgraded each of
their respective ratings for our senior unsecured debt to BBB+ from
BBB with a stable outlook.
- Rogers generated $602 million of
consolidated pre-tax free cash flow in the quarter, reflecting
increased adjusted operating profit, which was partially offset by
an increase in capital expenditures. Cash provided by operating
activities was $1,061 million for the
quarter.
- Repaid our outstanding U.S. $350
million aggregate principal amount of 6.25% Senior Notes due
June 2013 and terminated the related
Debt Derivatives, and reduced our overall average cost of debt
capital to 5.64% at June 30, 2013
from 6.06% at June 30, 2012.
- Returned $246 million of cash to
shareholders by paying out a cash dividend on our common shares of
$224 million, up 9% from the second
quarter of last year, and repurchased 546,674 RCI Class B
Non-Voting shares during the final days of the quarter for
$22 million under our $500 million share buyback authorization.
This earnings release is a summary of our second
quarter 2013 results, and should be read in conjunction with our
second quarter 2013 MD&A, our second quarter 2013 Unaudited
Interim Condensed Consolidated Financial Statements and Notes
thereto, our 2012 Annual MD&A and our 2012 Audited Annual
Consolidated Financial Statements and Notes thereto, and our other
recent filings with securities regulatory authorities, which are
available on SEDAR at sedar.com or EDGAR at sec.gov. This earnings
release was reviewed by our Audit Committee of the Board of
Directors.
The financial information presented herein has
been prepared on the basis of IFRS for interim financial statements
and is expressed in Canadian dollars unless otherwise stated.
This earnings release contains non-GAAP measures
such as adjusted operating profit, adjusted net income, adjusted
basic and diluted earnings per share, pre-tax free cash flow and
after-tax free cash flow. These non-GAAP measures should not
be considered as a substitute or alternative for GAAP
measures. See the section "Non-GAAP Measures" for a
reconciliation of these measures, which do not have any
standardized meaning under IFRS and are therefore unlikely to be
comparable to similar measures presented by other companies.
As this earnings release includes
forward-looking statements and assumptions, readers should
carefully review the section of this earnings release entitled
"Caution Regarding Forward-Looking Statements, Risks and
Assumptions".
In this earnings release, the terms "we", "us",
"our", "Rogers", "Rogers Communications" and "the Company" refer to
Rogers Communications Inc. and our subsidiaries: Wireless, Cable,
Business Solutions ("RBS") and Media.
CONSOLIDATED FINANCIAL RESULTS
| |
|
|
|
|
|
|
|
| |
Three months ended
June 30, |
|
Six months ended June
30, |
| (In millions of dollars, except per
share amounts) |
2013 |
2012 |
% Chg |
|
2013 |
2012 |
% Chg |
| |
|
|
|
|
|
|
|
| Operating revenue |
|
|
|
|
|
|
|
| |
Wireless |
$ 1,813 |
$ 1,765 |
3 |
|
$ 3,573 |
$ 3,471 |
3 |
| |
Cable |
870 |
843 |
3 |
|
1,731 |
1,668 |
4 |
| |
RBS |
90 |
90 |
- |
|
183 |
177 |
3 |
| |
Media |
470 |
440 |
7 |
|
811 |
794 |
2 |
| |
Corporate items and intercompany eliminations |
(31) |
(32) |
(3) |
|
(59) |
(61) |
(3) |
| Total operating revenue |
3,212 |
3,106 |
3 |
|
6,239 |
6,049 |
3 |
| |
|
|
|
|
|
|
|
| Adjusted operating profit |
|
|
|
|
|
|
|
| |
Wireless |
821 |
796 |
3 |
|
1,586 |
1,533 |
3 |
| |
Cable |
431 |
403 |
7 |
|
860 |
781 |
10 |
| |
RBS |
25 |
22 |
14 |
|
48 |
40 |
20 |
| |
Media |
64 |
79 |
(19) |
|
57 |
65 |
(12) |
| |
Corporate items and intercompany eliminations |
(35) |
(24) |
(46) |
|
(66) |
(49) |
(35) |
| Adjusted operating
profit(1) |
1,306 |
1,276 |
2 |
|
2,485 |
2,370 |
5 |
| |
|
|
|
|
|
|
|
| Operating income |
828 |
789 |
5 |
|
1,490 |
1,372 |
9 |
| |
|
|
|
|
|
|
|
| Net income from continuing
operations |
532 |
413 |
29 |
|
885 |
737 |
20 |
| |
|
|
|
|
|
|
|
| Diluted earnings per share -
continuing operations |
0.93 |
0.77 |
21 |
|
1.69 |
1.38 |
22 |
| |
|
|
|
|
|
|
|
| Adjusted net
income(1) |
$ 497 |
$ 478 |
4 |
|
$ 911 |
$ 838 |
9 |
| |
|
|
|
|
|
|
|
| Adjusted diluted earnings per
share(1) |
0.96 |
0.91 |
5 |
|
1.76 |
1.59 |
11 |
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| Total additions to PP&E |
$ 525 |
$ 458 |
15 |
|
$ 989 |
$ 907 |
9 |
| |
|
|
|
|
|
|
|
| Pre-tax free cash
flow(1) |
602 |
656 |
(8) |
|
1,145 |
1,144 |
- |
| After-tax free cash
flow(1) |
505 |
633 |
(20) |
|
933 |
1,049 |
(11) |
| Cash provided by operating
activities |
1,061 |
1,079 |
(2) |
|
1,866 |
1,607 |
16 |
|
(1) |
Adjusted operating profit, adjusted net income, adjusted
diluted earnings per share, pre-tax free cash flow and after-tax
free cash flow are non-GAAP measures and should not be considered
as a substitute or alternative for GAAP measures, in each case
determined in accordance with IFRS. See the section "Non-GAAP
Measures" for a reconciliation of these measures, which do not have
any standardized meaning under IFRS and are therefore unlikely to
be comparable to similar measures presented by other
companies. |
CONSOLIDATED REVIEW
Consolidated Revenue
For the three months ended June 30, 2013, total operating revenue increased
by $106 million from the
corresponding period of 2012 to $3,212
million. Of this $106 million
increase, Wireless contributed $48
million mainly from Wireless subscriber and data usage
revenue growth, Cable contributed $27
million mainly from Internet and phone revenue growth, Media
contributed $30 million mainly from
Sportsnet revenue growth. The acquisitions of Mountain Cable,
theScore and Blackiron provided $26
million of revenue in the quarter: $11 million for Cable, $7
million for Media and $8
million for RBS.
For the six months ended June 30, 2013, total operating revenue increased
by $190 million from the
corresponding period of 2012 to $6,239
million. Of this $190 million
increase, Wireless contributed $102
million, Cable contributed $63
million, RBS contributed $6
million and Media contributed $17
million. For discussions of the results of operations of
each of these segments, refer to the respective segment discussions
below.
Consolidated Adjusted Operating
Profit
Consolidated adjusted operating profit increased
$30 million, or 2%, for the three
months ended June 30, 2013, compared
to the corresponding period of 2012. Of this $30 million increase, Wireless contributed
$25 million, Cable contributed
$28 million and RBS contributed
$3 million. This increase was offset
by declines of $15 million in Media
and $11 million from corporate items
and intercompany eliminations. The acquisitions of Mountain Cable,
theScore and Blackiron provided $12
million of adjusted operating profit in the quarter:
$7 million for Cable, $3 million for Media and $2 million for RBS.
Consolidated adjusted operating profit increased
$115 million, or 5%, for the six
months ended June 30, 2013, compared
to the corresponding period of 2012. Of this $115 million increase, Wireless contributed
$53 million, Cable contributed
$79 million and RBS contributed
$8 million. This increase was offset
by declines of $8 million in Media
and $17 million from corporate items
and intercompany eliminations. For discussions of the results of
operations of each of these segments, refer to the respective
segment discussions below. Adjusted operating profit is a non-GAAP
measure. See the section "Non-GAAP Measures" for a reconciliation
of this measure.
Consolidated Operating Income
For the three and six months ended June 30, 2013, consolidated operating income
increased by $39 million and
$118 million respectively, compared
to the corresponding periods of 2012, mainly due to the revenue and
adjusted operating profit changes described above and the changes
in integration, restructuring and acquisition expenses and
stock-based compensation expense.
Consolidated Net Income From Continuing
Operations
For the three months ended June 30, 2013, net income from continuing
operations increased by $119 million
from the corresponding period of 2012 to $532 million, mainly the result of a $39 million increase in operating income, a gain
of $47 million arising on the sale of
our one-third interest in TVtropolis, and a decrease in income tax
expense of $53 million, which is
related to legislative tax changes recorded in the second quarter
of 2012.
For the six months ended June 30, 2013, net income from continuing
operations increased by $148 million
from the corresponding period of 2012 to $885 million. The increase in net income is
mainly the result of a $118 million
increase in operating income and a gain of $47 million recorded on the sale of our one-third
interest in TVtropolis.
SEGMENT REVIEW
WIRELESS
Summarized Wireless Financial
Results
| |
|
|
|
|
|
|
|
| |
Three months ended June 30, |
|
Six months ended June 30, |
| (In millions of dollars, except
margin) |
2013 |
2012 |
% Chg |
|
2013 |
2012 |
% Chg |
| |
|
|
|
|
|
|
|
| Operating revenue |
|
|
|
|
|
|
|
| |
Network revenue |
$ 1,670 |
$ 1,652 |
1 |
|
$ 3,353 |
$ 3,264 |
3 |
| |
Equipment sales |
143 |
113 |
27 |
|
220 |
207 |
6 |
| Total operating revenue |
1,813 |
1,765 |
3 |
|
3,573 |
3,471 |
3 |
| |
|
|
|
|
|
|
|
| Operating expenses |
|
|
|
|
|
|
|
| |
Cost of equipment(1) |
(378) |
(324) |
17 |
|
(727) |
(648) |
12 |
| |
Other operating expenses |
(614) |
(645) |
(5) |
|
(1,260) |
(1,290) |
(2) |
| |
(992) |
(969) |
2 |
|
(1,987) |
(1,938) |
3 |
| Adjusted operating profit |
$ 821 |
$ 796 |
3 |
|
$ 1,586 |
$ 1,533 |
3 |
| |
|
|
|
|
|
|
|
| Adjusted operating profit margin
as |
|
|
|
|
|
|
|
| |
% of network revenue |
49.2% |
48.2% |
|
|
47.3% |
47.0% |
|
| |
|
|
|
|
|
|
|
| Additions to PP&E |
$ 191 |
$ 215 |
(11) |
|
$ 430 |
$ 438 |
(2) |
| |
|
|
|
|
|
|
|
| Data revenue included in network
revenue |
$ 764 |
$ 649 |
18 |
|
$ 1,526 |
$ 1,276 |
20 |
| |
|
|
|
|
|
|
|
| Data revenue as a % of network
revenue |
46% |
39% |
|
|
46% |
39% |
|
| (1) |
Cost of equipment includes the cost of equipment sales and
direct channel subsidies. |
Summarized Wireless Subscriber
Results
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| (Subscriber statistics in
thousands, |
Three months ended June 30, |
|
Six months ended June 30, |
| except ARPU and churn) |
2013 |
2012 |
Chg |
|
2013 |
2012 |
Chg |
| |
|
|
|
|
|
|
|
| Postpaid |
|
|
|
|
|
|
|
| |
Gross additions |
374 |
350 |
24 |
|
693 |
684 |
9 |
| |
Net additions |
98 |
87 |
11 |
|
130 |
134 |
(4) |
| |
Total postpaid subscribers |
7,976 |
7,708 |
268 |
|
7,976 |
7,708 |
268 |
| |
Monthly churn |
1.17% |
1.15% |
0.02 pts |
|
1.19% |
1.20% |
(0.01) pts |
| |
Monthly average revenue per user
("ARPU")(1) |
$ 67.36 |
$ 68.46 |
$ (1.10) |
|
$ 67.94 |
$ 67.92 |
$
0.02 |
| |
|
|
|
|
|
|
|
| Prepaid |
|
|
|
|
|
|
|
| |
Gross additions |
126 |
156 |
(30) |
|
244 |
310 |
(66) |
| |
Net losses |
(56) |
(46) |
(10) |
|
(149) |
(118) |
(31) |
| |
Total prepaid subscribers |
1,442 |
1,643 |
(201) |
|
1,442 |
1,643 |
(201) |
| |
Monthly churn |
4.13% |
4.04% |
0.09 pts |
|
4.31% |
4.18% |
0.13 pts |
| |
ARPU(1) |
$ 15.79 |
$ 15.91 |
$ (0.12) |
|
$ 15.18 |
$ 15.43 |
$ (0.25) |
| |
|
|
|
|
|
|
|
| Blended ARPU(1) |
$ 59.30 |
$ 59.10 |
$ 0.20 |
|
$ 59.48 |
$ 58.36 |
$ 1.12 |
| |
Data ARPU |
27.13 |
23.20 |
3.93 |
|
27.07 |
22.80 |
4.27 |
| |
Voice ARPU |
32.17 |
35.90 |
(3.73) |
|
32.41 |
35.56 |
(3.15) |
| (1) |
As defined. See the section "Key Performance Indicators". |
Wireless Subscribers and Network
Revenue
During the second quarter, gross postpaid
subscriber additions increased by 7% to 374,000 and net postpaid
subscriber additions increased by 13% to 98,000.
For the three months ended June 30, 2013, Wireless activated and upgraded
approximately 678,000 smartphones, compared to approximately
629,000 in the second quarter of 2012. This addition of smartphones
increased the percentage of subscribers with smartphones to 72% of
Wireless' total postpaid subscriber base at June 30, 2013, compared to 63% at June 30, 2012. These subscribers generate
significantly higher ARPU, are less likely to churn than
non-smartphone subscribers and typically commit to multi-year term
contracts.
The increase in Wireless network revenue for the
three months ended June 30, 2013,
compared to the corresponding period of 2012, reflects the net
additions in Wireless' postpaid subscriber base and the increased
adoption and usage of wireless data services.
For the three and six months ended June 30, 2013, wireless data revenue increased by
approximately 18% and 20% from the corresponding periods of 2012 to
$764 million and $1,526 million, respectively. This growth in
wireless data revenue reflects the continued penetration and
growing usage of smartphones, tablet devices and wireless laptops,
which drive increased usage of e-mail, wireless Internet access,
text messaging, data roaming, and other wireless data services. For
the three months ended June 30, 2013,
wireless data revenue represented approximately 46% of total
network revenue, compared to approximately 39% in the corresponding
period of 2012.
Blended ARPU for the quarter ended June 30, 2013 increased modestly, compared to the
corresponding period of 2012, reflecting the aforementioned growth
in wireless data revenue, offset by the continued decline of
wireless voice ARPU. The wireless data component of blended ARPU
increased by 16.9%, partially offset by a 10.4% decline in the
wireless voice component.
The sequential deceleration in wireless data
revenue and ARPU growth rates from the first quarter reflects, in
part, a combination of the impact of new lower priced US and
international data roaming plans that were introduced midway
through the quarter, along with the impact of heightened in-quarter
promotions that offer introductory months of free service.
Wireless Equipment Sales
The increase in revenue from equipment sales for
the three and six months ended June 30,
2013, compared to the corresponding period of 2012,
primarily reflects an increase in gross subscriber additions,
smartphone activations and the mix of smartphones activated towards
higher value devices.
Wireless Operating Expenses
The increase in cost of equipment for the three
and six months ended June 30, 2013,
compared to the corresponding periods of 2012, was primarily the
result of the increased number and mix of higher cost smartphone
sales to new customers and upgrades for existing customers. During
the three and six months ended June 30,
2013, we activated 8% and 6%, respectively, more smartphones
with a higher average cost per device than in the same periods last
year.
Total retention spending, including subsidies on
handset upgrades, was $208 million
and $455 million respectively, in the
three months and six months ended June 30,
2013, compared to $200 million
and $408 million in the corresponding
periods of 2012. The increase primarily reflects a higher number of
hardware upgrades by existing subscribers than during the same
periods last year and a shift in the mix of smartphones activated
towards higher value devices.
Other operating expenses, decreased by
$30 million for both the three and
six months ended June 30, 2013,
excluding retention spending discussed above, compared to the same
periods of the prior year resulting from cost management and
productivity initiatives across various functions. Wireless
continues to implement cost reductions and efficiency improvement
initiatives.
Wireless Adjusted Operating
Profit
The 3% year-over-year increase in adjusted
operating profit and the 49.2% adjusted operating profit margin on
network revenue (which excludes equipment sales revenue) for the
three months ended June 30, 2013
primarily reflect the growth of network revenue in the period,
coupled with cost management and efficiency improvements as
discussed above.
CABLE
Summarized Financial Results
| |
|
|
|
|
|
|
|
| |
Three months ended June 30, |
|
Six months ended June 30, |
| (In
millions of dollars, except margin) |
2013(1) |
2012 |
% Chg |
|
2013(1) |
2012 |
% Chg |
| |
|
|
|
|
|
|
|
| Operating revenue |
|
|
|
|
|
|
|
| |
|
Television |
$
457 |
$
475 |
(4) |
|
$ 915 |
$
940 |
(3) |
| |
|
Internet |
287 |
245 |
17 |
|
564 |
486 |
16 |
| |
|
Phone |
125 |
120 |
4 |
|
248 |
236 |
5 |
| |
Service revenue |
869 |
840 |
3 |
|
1,727 |
1,662 |
4 |
| |
Equipment sales |
1 |
3 |
(67) |
|
4 |
6 |
(33) |
| Total Cable operating
revenue |
870 |
843 |
3 |
|
1,731 |
1,668 |
4 |
| |
|
|
|
|
|
|
|
| Operating expenses |
|
|
|
|
|
|
|
| |
Cost of equipment |
- |
(6) |
n/m |
|
(2) |
(9) |
(78) |
| |
Other operating expenses |
(439) |
(434) |
1 |
|
(869) |
(878) |
(1) |
| |
(439) |
(440) |
- |
|
(871) |
(887) |
(2) |
| Adjusted operating profit |
$ 431 |
$ 403 |
7 |
|
$ 860 |
$ 781 |
10 |
| |
|
|
|
|
|
|
|
| Adjusted operating profit margin |
49.5% |
47.8% |
|
|
49.7% |
46.8% |
|
| |
|
|
|
|
|
|
|
| Additions to PP&E |
$
267 |
$
199 |
34 |
|
$ 448 |
$
387 |
16 |
(1) |
The operating results of Mountain
Cable are included in the Cable results of operations from the date
of acquisition on May 1, 2013. |
n/m: not meaningful.
Summarized Subscriber Results
| |
|
|
|
|
|
|
|
| |
Three months ended June 30, |
|
Six months ended June 30, |
| (Subscriber statistics in
thousands) |
2013 |
2012 |
Chg |
|
2013 |
2012 |
Chg |
| |
|
|
|
|
|
|
|
| Cable homes passed |
3,909 |
3,777 |
132 |
|
3,909 |
3,777 |
132 |
| |
|
|
|
|
|
|
|
| Television |
|
|
|
|
|
|
|
| |
Net losses |
(35) |
(21) |
(14) |
|
(60) |
(42) |
(18) |
| |
Total television subscribers(1) |
2,194 |
2,255 |
(61) |
|
2,194 |
2,255 |
(61) |
| |
|
|
|
|
|
|
|
| Internet |
|
|
|
|
|
|
|
| |
Net additions |
6 |
9 |
(3) |
|
32 |
22 |
10 |
| |
Total Internet subscribers(1) |
1,930 |
1,815 |
115 |
|
1,930 |
1,815 |
115 |
| |
|
|
|
|
|
|
|
| Phone |
|
|
|
|
|
|
|
| |
Net additions |
17 |
8 |
9 |
|
34 |
9 |
25 |
| |
Total phone subscribers(1) |
1,145 |
1,061 |
84 |
|
1,145 |
1,061 |
84 |
| |
|
|
|
|
|
|
|
| Total service
units(1)(2) |
|
|
|
|
|
|
|
| |
Net additions (losses) |
(12) |
(4) |
(8) |
|
6 |
(11) |
17 |
| |
Total service units |
5,269 |
5,131 |
138 |
|
5,269 |
5,131 |
138 |
| (1) |
On May 1, 2013, we acquired 40,000 television subscribers,
38,000 digital cable households, 34,000 cable high-speed Internet
subscribers and 37,000 cable telephony lines from our acquisition
of Mountain Cable. These subscribers are not included in net
additions, but are included in the ending total balance for June
30, 2013. In addition, the acquisition resulted in an increase in
homes passed of 59,000. |
| (2) |
Total service units are comprised of television subscribers,
Internet subscribers and phone subscribers. |
Cable Acquisition
In January 2013,
the Company announced a multi-part strategic transaction with Shaw
to acquire Shaw's cable system in Hamilton, Ontario - Mountain Cable and to
secure an option to purchase Shaw's Advanced Wireless Services
spectrum holdings in 2014. As part of the agreement, Shaw
also acquired Rogers' one-third equity interest in specialty
channel, TVtropolis.
On May 1, 2013,
Cable closed on a portion of the multi-part agreement with Shaw to
purchase 100% of Mountain Cable and in accordance with the terms of
the multi-part agreement with Shaw, we advanced $398 million. Mountain Cable provides cable
television, Internet and telephony services to an area covering
approximately 59,000 homes in and around Hamilton, Ontario.
Television Subscribers and Revenue
The decrease in television revenue for the three
and six months ended June 30, 2013,
compared to the corresponding periods of 2012, was primarily driven
by the year-over-year decline in television subscribers combined
with the impact of promotional and retention pricing activity
associated with heightened competition, partially offset by pricing
changes made over the past year. Excluding the impact of the
acquisition of Mountain Cable on May 1,
2013, television revenue for the three and six months ended
June 30, 2013 would have declined by
5% and 3%, respectively, compared to the corresponding periods of
2012.
The sequential slowing from the first quarter of
Cable's revenue growth was impacted by the timing of pricing
changes made across Cable's products in January 2013 versus in March 2012, and had an impact of increasing the
overall revenue growth rate in the first quarter of 2013 on a
non-recurring basis by approximately $8
million or 1%.
Our digital cable subscriber base represents 82%
of our total television subscriber base as at June 30, 2013, compared to 79% as at June 30, 2012. A larger selection of digital
content, video on-demand, HDTV and PVR equipment continues to
contribute to the increasing penetration of the digital subscriber
base as a percentage of our total television subscriber base.
Internet Subscribers and Revenue
The year-over-year increase in Internet revenue
for the three and six months ended June 30,
2013, compared to the corresponding periods in 2012,
reflects the increase in our Internet subscriber base, combined
with a general movement to higher end speed and usage tiers,
combined with Internet service pricing changes made during the
previous twelve months. Excluding the impact of the acquisition of
Mountain Cable on May 1, 2013,
Internet revenue growth for the three and six months ended
June 30, 2013 would have been 15%,
compared to each of the corresponding periods of 2012.
With our Internet customer base at 1.9 million
subscribers, Internet penetration is approximately 49% of the homes
passed by our cable network and 88% of our television subscriber
base as at June 30, 2013, compared to
48% and 80% as at June 30, 2012,
respectively.
Phone Subscribers and Revenue
The increase in Phone revenues for the three and
six months ended June 30, 2013,
compared to the corresponding periods of 2012, primarily reflects
the increase in our Phone customer base, partially offset by
promotional pricing activity. Excluding the impact of the
acquisition of Mountain Cable on May 1,
2013, Phone revenue growth for the three and six months
ended June 30, 2013 would have been
2% and 4%, respectively, compared to the corresponding periods of
2012.
Phone lines in service grew 8% from June 30, 2012 to June 30,
2013 and now represent 29% of the homes passed by our cable
network and 52% of television subscribers, compared to 28% and 47%
at June 30, 2012, respectively.
Cable Operating Expenses
Cable's operating expenses were relatively flat
for the three months ended June 30,
2013 and decreased by 2% for the six months ended
June 30, 2013, compared to the
corresponding periods of 2012. The decrease was driven by continued
efficiency initiatives and the shifting revenue mix across Cable's
product set towards higher margin services. Cable continues to
implement efficiency improvement initiatives. Excluding the impact
of the acquisition of Mountain Cable on May
1, 2013, Cable operating expenses for the three and six
months ended June 30, 2013 would have
declined 1% and 2%, respectively, compared to each of the
corresponding periods of 2012.
Cable Adjusted Operating
Profit
The year-over-year increase in adjusted
operating profit for the three and six months ended June 30, 2013 was driven principally by increased
service revenue coupled with efficiency initiatives as discussed
above, resulting in an expanded adjusted operating profit margin of
49.5% and 49.7% for the three and six months ended June 30, 2013, compared to 47.8% and 46.8%,
respectively, in the corresponding periods of 2012. Excluding the
impact of the acquisition of Mountain Cable on May 1, 2013, adjusted operating profit growth for
the three and six months ended June 30,
2013 would have been 5% and 9%, respectively, compared to
the corresponding periods of 2012.
RBS
Summarized Financial Results
| |
|
|
|
|
|
|
|
| |
Three months ended June 30, |
|
Six months ended June 30, |
| (In
millions of dollars, except margin) |
2013(1) |
2012 |
% Chg |
|
2013(1) |
2012 |
% Chg |
| |
|
|
|
|
|
|
|
| Operating revenue |
|
|
|
|
|
|
|
| |
|
Next generation |
$ 52 |
$ 43 |
21 |
|
$ 96 |
$ 78 |
23 |
| |
|
Legacy |
37 |
46 |
(20) |
|
77 |
96 |
(20) |
| |
Service revenue |
89 |
89 |
- |
|
173 |
174 |
(1) |
| |
Equipment sales |
1 |
1 |
- |
|
10 |
3 |
n/m |
| Total RBS operating
revenue |
90 |
90 |
- |
|
183 |
177 |
3 |
| |
|
|
|
|
|
|
|
| Operating expenses |
(65) |
(68) |
(4) |
|
(135) |
(137) |
(1) |
| Adjusted operating profit |
$ 25 |
$ 22 |
14 |
|
$ 48 |
$ 40 |
20 |
| |
|
|
|
|
|
|
|
| Adjusted operating profit margin |
27.8% |
24.4% |
|
|
26.2% |
22.6% |
|
| |
|
|
|
|
|
|
|
| Additions to PP&E |
$ 31 |
$ 15 |
107 |
|
$ 46 |
$ 30 |
53 |
(1) The operating results of Blackiron are included in the
RBS results of operations from the date of acquisition on April 17,
2013. |
RBS Acquisition
On April 17, 2013,
we announced the acquisition of Blackiron from Primus
Telecommunications Canada Inc. for cash consideration of
$198 million. Blackiron is a provider
of data centre and cloud computing services in Canada. The purchase of Blackiron enables RBS
to further enhance its suite of enterprise-level data centre and
cloud computing services. Canadian businesses will benefit from a
single provider able to ensure end-to-end security and reliability
of mission-critical business applications.
RBS Revenue
RBS operating revenue was unchanged for the
three months ended June 30, 2013
compared to the corresponding period of the prior year, and
increased 3% for the six months ended June
30, 2013 due to increased revenue from the next generation
services as well as a non-recurring low margin equipment sale
during the first quarter. This growth was partially offset by the
continued planned decrease in revenue from legacy services. RBS'
focus is primarily on IP-based services and increasingly on
leveraging higher margin on-net and near-net next generation
service revenue opportunities, utilizing existing network
facilities to expand offerings to the medium and large-sized
enterprise, public sector and carrier markets. Revenue from the
declining lower margin off-net legacy business generally includes
local and long-distance voice services and legacy data services.
During the second quarter, higher margin next generation on-net
revenues increased by 21% and by 23% on a year-to-date basis and
now represents 58% of total RBS service revenue. Excluding the
acquisition of Blackiron on April 17,
2013, RBS revenue for the three and six months ended
June 30, 2013 would have declined by
8% and 1%, respectively, compared to the corresponding periods of
2012.
RBS Operating Expenses
Operating expenses decreased by 4% and 1%,
respectively for the three and six months ended June 30, 2013, compared to the corresponding
periods in 2012. This decline was driven by a decrease in the
legacy service-related costs due to lower volumes, as well as
ongoing initiatives to improve costs and productivity. RBS has
continued to focus on implementing a program of cost reduction and
efficiency improvement initiatives to control the overall growth in
operating expenses and to increase adjusted operating profit
margin. Excluding the acquisition of Blackiron on April 17, 2013, RBS operating expenses for the
three and six months ended June 30,
2013 would have declined by 12% and 6%, respectively,
compared to the corresponding periods of 2012.
RBS Adjusted Operating Profit
The year-over-year increase in adjusted
operating profit for the three and six months ended June 30, 2013 was 14% and 20%, respectively,
compared to the corresponding periods of 2012. This increase
reflects growth in the higher margin next generation business,
coupled with cost efficiencies. As a result, RBS' adjusted
operating profit margins grew to 27.8% and 26.2% for the three and
six months ended June 30, 2013,
respectively, from 24.4% and 22.6% in the corresponding periods in
2012. Excluding the acquisition of Blackiron on April 17, 2013, adjusted operating profit growth
for the three and six months ended June 30,
2013 would have been 5% and 15%, respectively, compared to
the corresponding periods of 2012.
MEDIA
Summarized Media Financial
Results
| |
|
|
|
|
|
|
|
| |
Three months ended June 30, |
|
Six months ended June 30, |
| (In millions of dollars, except
margin) |
2013(1) |
2012 |
% Chg |
|
2013(1) |
2012 |
% Chg |
| |
|
|
|
|
|
|
|
| Operating revenue |
$ 470 |
$ 440 |
7 |
|
$ 811 |
$ 794 |
2 |
| |
|
|
|
|
|
|
|
| Operating expenses |
(406) |
(361) |
12 |
|
(754) |
(729) |
3 |
| Adjusted operating
profit |
$ 64 |
$ 79 |
(19) |
|
$ 57 |
$ 65 |
(12) |
| |
|
|
|
|
|
|
|
| Adjusted operating profit
margin |
13.6% |
18.0% |
|
|
7.0% |
8.2% |
|
| |
|
|
|
|
|
|
|
| Additions to PP&E |
$ 16 |
$ 11 |
45 |
|
$ 27 |
$ 21 |
29 |
(1) |
The operating results of theScore
are included in the Media results of operations from the date of
acquisition on April 30, 2013. |
Media Acquisition
On April 30, 2013,
we finalized the purchase of Score Media Inc. ("theScore") for
$167 million after final regulatory
approval was received from the Canadian Radio-television and
Telecommunications Commission. theScore was Canada's third largest specialty sports
channel with 6.6 million television subscribers. theScore was
subsequently rebranded to Sportsnet 360.
Media Revenue
The increase in Media's revenue reflects
increases in distribution revenue generated by the Sportsnet
properties and other specialty channels, as well as higher sales at
The Shopping Channel and higher attendance at Blue Jays games.
Excluding the impact of revenue generated by the acquisition of
theScore on April 30, 2013, revenue
growth would have been 5% and 1%, respectively, compared to the
corresponding three and six month periods of 2012.
Media Operating Expenses
The increase in Media's operating expenses
reflects higher player salaries at the Toronto Blue Jays, and
increased programming spending at Sportsnet due to the increased
NHL games aired on Sportsnet as a result of the NHL lockout earlier
in the season, which together approximated $35 million of additional expenses versus the
prior year, partially offset by cost management initiatives.
Excluding the impact of the acquisition of theScore and the
residual impacts from the NHL lockout, Media operating expenses
would have increased 7% and 2%, respectively, compared to the
corresponding three and six month periods of 2012.
Media Adjusted Operating
Profit
The decline in Media's adjusted operating profit
for the three and six months ended June 30,
2013, compared to the corresponding periods of 2012,
primarily reflects the revenue and expense changes discussed above.
Excluding the impacts of the acquisition of theScore and the
residual impacts from the NHL lockout, the change in adjusted
operating profit for the three and six months ended June 30, 2013, compared to the corresponding
periods of 2012, would have been a decrease of 8% and 0%,
respectively.
ADDITIONS TO PP&E
| |
|
|
|
|
|
|
|
| |
Three
months ended June 30, |
|
Six months ended June 30, |
| (In millions of dollars) |
2013 |
2012 |
% Chg |
|
2013 |
2012 |
% Chg |
| |
|
|
|
|
|
|
|
| Additions to PP&E |
|
|
|
|
|
|
|
| |
Wireless |
$ 191 |
$ 215 |
(11) |
|
$ 430 |
$ 438 |
(2) |
| |
Cable |
267 |
199 |
34 |
|
448 |
387 |
16 |
| |
RBS |
31 |
15 |
107 |
|
46 |
30 |
53 |
| |
Media |
16 |
11 |
45 |
|
27 |
21 |
29 |
| |
Corporate |
20 |
18 |
11 |
|
38 |
31 |
23 |
| Total additions to
PP&E |
$ 525 |
$ 458 |
15 |
|
$ 989 |
$ 907 |
9 |
Wireless Additions to PP&E
Wireless additions to PP&E decreased for the
three and six months ended June 30,
2013, compared to the corresponding periods in 2012, due to
timing of the continued deployment of our LTE network as well as
ongoing upgrades to the network to improve the LTE and HSPA+ user
experience and improve network quality and reliability.
Cable Additions to PP&E
The increase in Cable additions to PP&E for
the three and six months ended June 30,
2013, compared to the corresponding periods in 2012,
reflects the timing of certain initiatives related to service
enhancements on our video and data platforms, as well as higher
investments in customer premise equipment related to the rollout of
Nextbox 2.0 digital set-top boxes and analog to digital subscriber
migration activities.
The analog to digital strategic migration will
continue to further strengthen the customer experience and, once
complete, will enable the reclamation of significant amounts of
network capacity, as well as reduce network operating and
maintenance costs. The analog to digital migration, expected to be
completed in 2015, entails incremental PP&E as each of the
remaining analog homes are fitted with digital converters and
various analog filtering equipment is removed.
RBS Additions to PP&E
RBS' PP&E additions for the three and six
months ended June 30, 2013 increased
compared to the corresponding periods in 2012, due to increased
expenditures on customer specific network expansions.
Media Additions to PP&E
Media's PP&E additions during the three and
six months ended June 30, 2013
reflect expenditures on digital and broadcast systems, as well as
upgrades for Sports Entertainment facilities.
2013 FINANCIAL AND OPERATING GUIDANCE
We have no specific revisions at this time to
the 2013 annual consolidated guidance ranges that we provided as at
February 14, 2013. See the section
entitled "Caution Regarding Forward-Looking Statements, Risks and
Assumptions" below and in our 2012 Annual MD&A.
NON-GAAP MEASURES
Adjusted operating profit, free cash flow and
the 'adjusted' amounts presented below 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. These measures do
not have standardized meanings prescribed by IFRS and therefore may
not be comparable to similar measures presented by other issuers.
These measures are also used by investors and lending institutions
as an indicator of our operating performance, our ability to incur
and service debt, and as measurement to value companies in the
telecommunications industry. We have reconciled these non-GAAP
measures to their most directly comparable measure calculated in
accordance with IFRS in the tables below.
- Adjusted operating profit or loss and related margin;
- Adjusted net income;
- Adjusted basic and diluted earnings per share;
- Pre-tax and after-tax free cash flow; and
- Adjusted net debt.
Reconciliation of Non-GAAP Measures
Adjusted operating profit:
The term adjusted operating profit does not have
any standardized meaning under IFRS. Therefore, it is unlikely to
be comparable to similar measures presented by other companies. We
define adjusted operating profit as operating income before
stock-based compensation expense, integration, restructuring and
acquisition expenses, impairment of assets and depreciation and
amortization. We use adjusted operating profit to evaluate the
performance of our businesses and in making decisions regarding the
ongoing operations of the business and the ability to generate cash
flows. We believe that certain investors and analysts use adjusted
operating profit to measure our ability to service debt and to meet
other payment obligations. Adjusted operating profit also is one
component in the determination of short-term incentive compensation
for all management employees. The most comparable IFRS financial
measure is operating income. The following table provides a
reconciliation of operating income to adjusted operating
profit.
| |
|
|
|
|
|
| |
Three
months ended June 30, |
|
Six months
ended June 30, |
| (In millions of dollars) |
2013 |
2012 |
|
2013 |
2012 |
| |
|
|
|
|
|
| Operating income |
$
828 |
$
789 |
|
$
1,490 |
$
1,372 |
| Add (deduct): |
|
|
|
|
|
| |
Depreciation and amortization |
463 |
466 |
|
913 |
929 |
| |
Stock-based compensation expense (recovery) |
1 |
(12) |
|
59 |
(6) |
| |
Integration, restructuring and acquisition
expenses |
14 |
33 |
|
23 |
75 |
| Adjusted operating profit |
$
1,306 |
$
1,276 |
|
$
2,485 |
$
2,370 |
Adjusted net income and adjusted basic and
diluted earnings per share:
The terms adjusted net income and adjusted basic
and diluted earnings per share do not have any standardized meaning
under IFRS. Therefore, they are unlikely to be comparable to
similar measures presented by other companies. We define adjusted
net income as net income before stock-based compensation expense,
integration, restructuring and acquisition expenses, losses on
redemption of long-term debt, impairment of assets, gain on
spectrum distribution, gain on sale of investments, and the related
income tax impacts of the preceding items and the legislative tax
rate changes. We use adjusted net income and adjusted earnings per
share, among other measures, to assess the performance of our
businesses without the effects of the preceding items because they
affect the comparability of our financial results and could
potentially distort the analysis of trends in business performance.
Excluding these items does not imply they are non-recurring. The
most comparable IFRS financial measures are net income and earnings
per share. The following table is a reconciliation of net income to
adjusted net income on a consolidated basis.
| |
|
|
|
|
|
| |
Three
months ended June 30, |
|
Six months
ended June 30, |
| (In millions of dollars) |
2013 |
2012 |
|
2013 |
2012 |
| |
|
|
|
|
|
| Net income from continuing
operations |
$
532 |
$
413 |
|
$
885 |
$
737 |
| Add (deduct): |
|
|
|
|
|
| |
Stock-based compensation expense |
1 |
(12) |
|
59 |
(6) |
| |
Integration, restructuring and acquisition
expenses |
14 |
33 |
|
23 |
75 |
| |
Gain on sale of investment |
(47) |
- |
|
(47) |
- |
| Income tax impact of above items |
(11) |
(10) |
|
(17) |
(22) |
| Income tax adjustment, legislative tax
change |
8 |
54 |
|
8 |
54 |
| Adjusted net income |
$
497 |
$
478 |
|
$
911 |
$
838 |
Free cash flow:
The terms pre-tax and after-tax free cash flow
do not have any standardized meanings under IFRS. Therefore, they
are unlikely to be comparable to similar measures presented by
other companies. We define pre-tax free cash flow as adjusted
operating profit less property, plant and equipment expenditures
and interest expense on long-term debt (net of
capitalization). After-tax free cash flow is pre-tax free
cash flow less cash income taxes paid. We consider free cash flow
to be an important indicator of the financial strength and
performance of our business because it shows the amount of cash
that is available to repay debt and reinvest in our company. We
believe that certain investors and analysts use free cash flow to
value a business and its underlying assets. The most comparable
IFRS financial measure is cash flows from operating activities. The
following table is a reconciliation of cash flows from operating
activities to free cash flow on a consolidated basis.
| |
|
|
|
|
|
| |
Three
months ended June 30, |
|
Six months
ended June 30, |
| (In millions of dollars) |
2013 |
2012 |
|
2013 |
2012 |
| |
|
|
|
|
|
| Cash provided by operating
activities |
$
1,061 |
$
1,079 |
|
$
1,866 |
$
1,607 |
| Add (deduct): |
|
|
|
|
|
| |
PP&E expenditures |
(525) |
(458) |
|
(989) |
(907) |
| |
Interest on long-term debt expense, net of
capitalization |
(179) |
(162) |
|
(351) |
(319) |
| |
Integration, restructuring and acquisition
expenses |
14 |
33 |
|
23 |
75 |
| |
Cash income taxes |
97 |
23 |
|
212 |
95 |
| |
Interest paid |
125 |
87 |
|
347 |
332 |
| |
Other adjustments |
9 |
54 |
|
37 |
261 |
| Pre-tax free cash flow |
602 |
656 |
|
1,145 |
1,144 |
| |
Cash income taxes |
(97) |
(23) |
|
(212) |
(95) |
| After-tax free cash flow |
$
505 |
$
633 |
|
$
933 |
$
1,049 |
Adjusted net debt:
The term adjusted net debt does not have any
standardized meaning under IFRS. Therefore, it is unlikely to be
comparable to similar measures presented by other companies. We
define adjusted net debt as long-term debt before deferred
transactions costs, plus Debt Derivatives, short-term borrowings
less cash and cash equivalents. We use adjusted net debt to conduct
valuation-related analysis and make capital structure related
decisions. We believe this is useful to investors and analysts in
enabling them to analyze our enterprise and equity value and to
assess various leverage ratios as performance measures. The most
comparable IFRS financial measure is long-term debt. The following
table provides a reconciliation of long-term debt to adjusted net
debt.
| |
|
|
| (In millions of dollars) |
June 30, 2013 |
December 31, 2012 |
| |
|
|
| Long-term debt |
$
10,547 |
$
10,441 |
| Current portion of long-term debt |
1,157 |
348 |
| |
11,704 |
10,789 |
| Add (deduct): |
|
|
| |
Net derivative liabilities for Debt
Derivatives |
211 |
524 |
| |
Deferred transaction costs |
79 |
69 |
| |
Short-term borrowings |
650 |
- |
| |
Cash and cash equivalents |
(875) |
(213) |
| Adjusted net debt |
$
11,769 |
$
11,169 |
| Rogers Communications
Inc. |
| Unaudited Interim Condensed
Consolidated Statements of Income |
| (In millions of Canadian dollars,
except per share amounts) |
| |
| |
|
Three months
ended |
|
|
Six months
ended |
| |
|
June 30, |
|
|
June 30, |
| |
|
2013 |
|
2012 |
|
|
2013 |
|
2012 |
| Operating revenue |
$ |
3,212 |
$ |
3,106 |
|
$ |
6,239 |
$ |
6,049 |
| Operating expenses: |
|
|
|
|
|
|
|
|
|
| |
Operating costs |
|
1,907 |
|
1,818 |
|
|
3,813 |
|
3,673 |
| |
Integration, restructuring and
acquisition costs |
|
14 |
|
33 |
|
|
23 |
|
75 |
| |
Depreciation and
amortization |
|
463 |
|
466 |
|
|
913 |
|
929 |
| Operating income |
|
828 |
|
789 |
|
|
1,490 |
|
1,372 |
| Finance costs |
|
(185) |
|
(159) |
|
|
(366) |
|
(319) |
| Other income, net |
|
60 |
|
7 |
|
|
70 |
|
15 |
| Income before income taxes |
|
703 |
|
637 |
|
|
1,194 |
|
1,068 |
| Income tax expense |
|
171 |
|
224 |
|
|
309 |
|
331 |
| Net income for the period from |
|
|
|
|
|
|
|
|
|
| |
continuing operations |
|
532 |
|
413 |
|
|
885 |
|
737 |
| Loss from discontinued
operations, |
|
|
|
|
|
|
|
|
|
| |
net of tax |
|
- |
|
(13) |
|
|
- |
|
(32) |
| Net income for the period |
$ |
532 |
$ |
400 |
|
$ |
885 |
$ |
705 |
| Earnings per share - basic: |
|
|
|
|
|
|
|
|
|
| |
Earnings per share from |
|
|
|
|
|
|
|
|
|
| |
|
continuing operations |
$ |
1.03 |
$ |
0.79 |
|
$ |
1.72 |
$ |
1.41 |
| |
Loss per share from |
|
|
|
|
|
|
|
|
|
| |
|
discontinued operations |
|
- |
|
(0.02) |
|
|
- |
|
(0.06) |
| Earnings per share - basic |
$ |
1.03 |
$ |
0.77 |
|
$ |
1.72 |
$ |
1.35 |
| Earnings per share - diluted: |
|
|
|
|
|
|
|
|
|
| |
Earnings per share from |
|
|
|
|
|
|
|
|
|
| |
|
continuing operations |
$ |
0.93 |
$ |
0.77 |
|
$ |
1.69 |
$ |
1.38 |
| |
Loss per share from |
|
|
|
|
|
|
|
|
|
| |
|
discontinued operations |
|
- |
|
(0.02) |
|
|
- |
|
(0.06) |
| Earnings per share - diluted |
$ |
0.93 |
$ |
0.75 |
|
$ |
1.69 |
$ |
1.32 |
| Rogers Communications
Inc. |
| Unaudited Interim Condensed
Consolidated Statements of Financial Position |
| (In millions of Canadian
dollars) |
| |
| |
|
June 30, |
|
|
December 31, |
| |
|
2013 |
|
|
2012 |
| Assets |
|
|
|
|
|
| Current assets: |
|
|
|
|
|
| |
Cash and cash equivalents |
$ |
875 |
|
$ |
213 |
| |
Accounts receivable |
|
1,416 |
|
|
1,536 |
| |
Other current assets |
|
567 |
|
|
464 |
| |
Current portion of derivative
instruments |
|
43 |
|
|
8 |
| |
|
2,901 |
|
|
2,221 |
| Property, plant and equipment |
|
9,848 |
|
|
9,576 |
| Goodwill |
|
3,648 |
|
|
3,215 |
| Intangible assets |
|
3,219 |
|
|
2,951 |
| Investments |
|
1,408 |
|
|
1,484 |
| Derivative instruments |
|
127 |
|
|
42 |
| Other long-term assets |
|
324 |
|
|
98 |
| Deferred tax assets |
|
26 |
|
|
31 |
| |
$ |
21,501 |
|
$ |
19,618 |
| Liabilities and Shareholders' Equity |
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
| |
Short-term borrowings |
$ |
650 |
|
$ |
- |
| |
Accounts payable and accrued liabilities |
|
1,986 |
|
|
2,135 |
| |
Income tax payable |
|
78 |
|
|
24 |
| |
Current portion of provisions |
|
6 |
|
|
7 |
| |
Current portion of long-term debt |
|
1,157 |
|
|
348 |
| |
Current portion of derivative instruments |
|
269 |
|
|
144 |
| |
Unearned revenue |
|
344 |
|
|
344 |
| |
|
4,490 |
|
|
3,002 |
| Provisions |
|
34 |
|
|
31 |
| Long-term debt |
|
10,547 |
|
|
10,441 |
| Derivative instruments |
|
135 |
|
|
417 |
| Other long-term liabilities |
|
438 |
|
|
458 |
| Deferred tax liabilities |
|
1,603 |
|
|
1,501 |
| |
|
17,247 |
|
|
15,850 |
| Shareholders' equity |
|
4,254 |
|
|
3,768 |
| |
$ |
21,501 |
|
$ |
19,618 |
| Rogers Communications Inc. |
| Unaudited Interim Condensed Consolidated
Statements of Cash Flows |
| (In millions of Canadian dollars) |
| |
| |
|
Three months
ended |
|
|
Six months ended |
| |
|
June 30, |
|
|
June 30, |
| |
|
2013 |
|
2012 |
|
|
2013 |
|
2012 |
| Cash provided by (used in): |
|
|
|
|
|
|
|
|
|
| Operating activities: |
|
|
|
|
|
|
|
|
|
| |
Net income for the period |
$ |
532 |
$ |
400 |
|
$ |
885 |
$ |
705 |
| |
Adjustments to reconcile net |
|
|
|
|
|
|
|
|
|
| |
|
income to net cash flows |
|
|
|
|
|
|
|
|
|
| |
|
provided by operating activities: |
|
|
|
|
|
|
|
|
|
| |
|
|
Depreciation and amortization |
|
463 |
|
466 |
|
|
913 |
|
929 |
| |
|
|
Gain on sale of
investment
|
|
(47) |
|
- |
|
|
(47) |
|
- |
| |
|
|
Program rights amortization |
|
11 |
|
27 |
|
|
24 |
|
49 |
| |
|
|
Finance
costs
|
|
185 |
|
159 |
|
|
366 |
|
319 |
| |
|
|
Income tax expense |
|
171 |
|
220 |
|
|
309 |
|
321 |
| |
|
|
Pension contributions, net of expense |
|
(14) |
|
(14) |
|
|
(17) |
|
(18) |
| |
|
|
Stock-based compensation expense
(recovery)
|
|
1 |
|
(12) |
|
|
59 |
|
(6) |
| |
|
|
Other |
|
(9) |
|
(4) |
|
|
(10) |
|
(12) |
| |
|
1,293 |
|
1,242 |
|
|
2,482 |
|
2,287 |
| |
Change in
non-cash operating working capital items |
|
(10) |
|
(53) |
|
|
(57) |
|
(253) |
| |
|
1,283 |
|
1,189 |
|
|
2,425 |
|
2,034 |
| |
Interest paid |
|
(125) |
|
(87) |
|
|
(347) |
|
(332) |
| |
Income taxes paid |
|
(97) |
|
(23) |
|
|
(212) |
|
(95) |
| Cash provided by operating
activities |
|
1,061 |
|
1,079 |
|
|
1,866 |
|
1,607 |
| Investing activities: |
|
|
|
|
|
|
|
|
|
| |
Additions to property, plant and
equipment ("PP&E") |
|
(525) |
|
(458) |
|
|
(989) |
|
(907) |
| |
Change in non-cash working capital
items related to PP&E |
|
(83) |
|
(7) |
|
|
(135) |
|
(102) |
| |
Acquisitions, net of cash and |
|
|
|
|
|
|
|
|
|
| |
cash
equivalents
acquired
|
|
(341) |
|
- |
|
|
(591) |
|
- |
| |
Spectrum license option
deposit
|
|
(200) |
|
- |
|
|
(250) |
|
- |
| |
Proceeds on sale of
investment
|
|
- |
|
- |
|
|
59 |
|
- |
| |
Additions to program rights |
|
(12) |
|
(3) |
|
|
(26) |
|
(21) |
| |
Other |
|
(1) |
|
(8) |
|
|
(25) |
|
(14) |
| Cash used in investing
activities |
|
(1,162) |
|
(476) |
|
|
(1,957) |
|
(1,044) |
| Financing activities: |
|
|
|
|
|
|
|
|
|
| |
Issuance of long-term
debt |
|
- |
|
1,500 |
|
|
1,030 |
|
2,090 |
| |
Repayment of long-term debt |
|
(356) |
|
(890) |
|
|
(356) |
|
(1,240) |
| |
Payment on settlement of |
|
|
|
|
|
|
|
|
|
| |
cross-currency
interest rate exchange |
|
|
|
|
|
|
|
|
|
| |
agreement and
forward contracts |
|
(766) |
|
- |
|
|
(766) |
|
- |
| |
Proceeds on settlement of |
|
|
|
|
|
|
|
|
|
| |
cross-currency
interest rate exchange |
|
|
|
|
|
|
|
|
|
| |
agreement and
forward contracts |
|
662 |
|
- |
|
|
662 |
|
- |
| |
Transaction costs
incurred |
|
(2) |
|
(9) |
|
|
(17) |
|
(9) |
| |
Repurchase of Class B Non-Voting
shares |
|
(22) |
|
(350) |
|
|
(22) |
|
(350) |
| |
Proceeds on short-term
borrowings |
|
250 |
|
- |
|
|
650 |
|
- |
| |
Dividends paid |
|
(224) |
|
(207) |
|
|
(428) |
|
(394) |
| Cash provided (used) by financing
activities |
|
(458) |
|
44 |
|
|
753 |
|
97 |
| Change in cash and cash
equivalents |
|
(559) |
|
647 |
|
|
662 |
|
660 |
| Cash and cash equivalents, beginning
of period |
|
1,434 |
|
(44) |
|
|
213 |
|
(57) |
| Cash and cash equivalents, end of
period |
$ |
875 |
$ |
603 |
|
$ |
875 |
$ |
603 |
| The change in non-cash operating
working capital items is as follows: |
|
|
|
|
|
|
|
|
|
| |
Accounts receivable |
$ |
(23) |
$ |
(50) |
|
$ |
150 |
$ |
200 |
| |
Other current assets |
|
(73) |
|
(59) |
|
|
(118) |
|
(211) |
| |
Accounts payable and accrued
liabilities |
|
98 |
|
61 |
|
|
(85) |
|
(249) |
| |
Unearned revenue |
|
(12) |
|
(5) |
|
|
(4) |
|
7 |
| |
$ |
(10) |
$ |
(53) |
|
$ |
(57) |
$ |
(253) |
Caution Regarding Forward-Looking Statements, Risks and
Assumptions
This earnings release includes "forward-looking
information" within the meaning of applicable securities laws and
assumptions concerning, among other things our business, its
operations and its financial performance and condition approved by
management on the date of this earnings release. This
forward-looking information and these assumptions include, but are
not limited to, statements with respect to our objectives and
strategies to achieve those objectives, as well as statements with
respect to our beliefs, plans, expectations, anticipations,
estimates or intentions. This forward-looking information also
includes, but is not limited to, guidance and forecasts relating to
revenue, adjusted operating profit, property plant and equipment
expenditures, cash income tax payments, free cash flow, dividend
payments, expected growth in subscribers and the services to which
they subscribe, the cost of acquiring subscribers and the
deployment of new services continued cost reductions and efficiency
improvements, and all other statements that are not historical
facts. The words "could", "expect", "may", "anticipate", "assume",
"believe", "intend", "estimate", "plan", "project", "guidance", and
similar expressions are intended to identify statements containing
forward-looking information, although not all forward-looking
statements include such words. Conclusions, forecasts and
projections set out in forward-looking information are based on our
current objectives and strategies and on estimates and other
factors and expectations and assumptions, most of which are
confidential and proprietary, that we believe to be reasonable at
the time applied, but may prove to be incorrect, including, but not
limited to: general economic and industry growth rates, currency
exchange rates, product pricing levels and competitive intensity,
subscriber growth, usage and churn rates, changes in government
regulation, technology deployment, device availability, the timing
of new product launches, content and equipment costs, the
integration of acquisitions, 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 the statement containing
the forward-looking information is made.
We caution that all forward-looking information,
including any statement regarding our current objectives,
strategies and intentions and any factor, assumptions, estimate or
expectation underlying the forward-looking information, is
inherently subject to change and uncertainty and that actual
results may differ materially from those expressed or implied by
the forward-looking information. A number of risks, uncertainties
and other factors could cause actual results and events to differ
materially from those expressed or implied in the forward-looking
information or could cause our current objectives, strategies and
intentions to change, including but not limited to: new
interpretations and new accounting standards from accounting
standards bodies, 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 these factors are beyond our control and
current expectation or knowledge. Should one or more of these
risks, uncertainties or other factors materialize, our objectives,
strategies or intentions change, or any other factors or
assumptions underlying the forward-looking information prove
incorrect, our actual results and our plans could vary
significantly from what we currently foresee. Accordingly, we warn
investors to exercise caution when considering statements
containing forward-looking information and that it would be
unreasonable to rely on such statements as creating 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 statements containing forward-looking information or the
factors or assumptions underlying them, whether as a result of new
information, future events or otherwise, except as required by law.
All of the forward-looking information in this earnings release is
qualified by the cautionary statements herein.
Before making any investment decisions and for a
detailed discussion of the risks, uncertainties and environment
associated with our business, fully review the sections of our
second quarter MD&A entitled "Update to Risks and
Uncertainties" and "Government Regulation and Regulatory
Developments" and also fully review the "Operating Environment"
sections entitled "Risks and Uncertainties Affecting our
Businesses" and "Government Regulation and Regulatory Developments"
in our 2012 Annual MD&A. Our annual and quarterly reports can
be found online at rogers.com/investors, sedar.com and sec.gov or
are available directly from Rogers.
About Rogers Communications Inc.
Rogers Communications is a diversified public
Canadian communications and media company. We are Canada's largest provider of wireless
communications services and one of Canada's leading providers of cable
television, high-speed Internet and telephony services. Through
Rogers Media, we are engaged in radio and television broadcasting,
televised shopping, magazines and trade publications, sports
entertainment, and digital media. 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 rogers.com. Information
contained in or connected to our website is not part of and not
incorporated into this earnings release.
Quarterly Investment Community Conference
Call
As previously announced by press release, a live
webcast of our quarterly results teleconference with the investment
community will be broadcast via the Internet at rogers.com/webcast
beginning at 8:30 a.m. ET today,
July 24, 2013. A rebroadcast of this
teleconference will be available on the Events and Presentations
page of Rogers' Investor Relations website, rogers.com/investors,
for a period of at least two weeks following the
teleconference.
SOURCE Rogers Communications Inc.