Rogers 2005 Annual Report Download - page 66

62 ROGERS 2005 ANNUAL REPORT . MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Risks and Uncertainties
Our business is subject to risks and uncertainties that could result in a material adverse effect on our business and finan-
cial results. A discussion of the risks and uncertainties specific to RCI as a holding company, as well as a discussion of the
specific risks and uncertainties associated with each of our businesses, are outlined below.
Corporate Risks and Uncertainties Specific to RCI as a Holding Company
OU R HO L DI N G C O MP A NY ST R U CT U RE MA Y LI M IT OUR AB I LI T Y T O M E ET OUR FI N AN C IAL OB L IG A T IO N S
As a holding company, our ability to meet our financial obligations is dependent primarily upon the receipt of interest
and principal payments on intercompany advances, management fees, cash dividends and other payments from our
subsidiaries together with proceeds raised by us through the issuance of equity and debt and from the sale of assets.
Substantially all of our business activities are operated by our subsidiaries, other than certain centralized func-
tions such as payables, remittance processing, call centres and certain shared information technology functions. All of
our subsidiaries are distinct legal entities and have no obligation, contingent or otherwise, to make funds available to
us whether by dividends, interest payments, loans, advances or other payments, subject to payment arrangements on
intercompany advances and management fees. In addition, the payment of dividends and the making of loans, advances
and other payments to us by these subsidiaries are subject to statutory or contractual restrictions, are contingent upon
the earnings of those subsidiaries and are subject to various business and other considerations. The subsidiaries are par-
ties to various agreements, including certain loan agreements, that restrict the ability of the respective subsidiaries to
pay cash dividends or make advances or other payments to us.
WE A RE CO N TR O L LE D B Y O N E S H AR E HO L D ER
As at December 31, 2005, we had outstanding 56,233,894 RCI Class A Voting shares. To the knowledge of our directors
and officers, the only person or corporation beneficially owning, directly or indirectly, or exercising control or direc-
tion over more than 10% of our outstanding voting shares is Edward S. Rogers. As of December 31, 2005, Edward S.
Rogers beneficially owned or controlled 51,116,099 RCI Class A Voting shares, representing approximately 90.9% of the
issued and outstanding RCI Class A shares, which class is the only class of issued shares carrying the right to vote in all
circumstances. Accordingly, Edward S. Rogers is able to elect all of our Board of Directors and to control the vote on
matters submitted to a vote of our shareholders.
TH E OP E RA T IO N OF OU R B U S IN E SS RE Q U IR E S S UBS T AN T IA L CA P IT A L, AND TH E RE IS N O G UA R A NT E E T HA T
FI N A NC I NG WI L L B E A V AI L A BL E T O M E E T T HO S E R E QU I RE M ENT S
The operation of our networks, the marketing and distribution of our products and services and future technology
upgrades of the networks will require substantial capital resources. We had approximately $7.7 billion of long-term debt
outstanding at December 31, 2005. Our PP&E spending on a consolidated basis in 2005 was over $1.3 billion. Other signifi-
cant additions to PP&E are also expected to be incurred during 2006 and in the future.
The actual amount of PP&E expenditures required to finance our operations and network development may
vary materially from our estimates. We may incur significant additional capital expenditures in the future as a result
of unforeseen delays in the development of our networks, cost overruns, customer demand, unanticipated expenses,
regulatory changes or other events that affect our businesses, and may need to obtain additional funds as a result of
these unforeseen events. We anticipate that additional debt financing may be needed to fund cash requirements in the
future. We cannot predict whether such financing will be available, what the terms of such additional financing would
be or whether existing debt agreements would allow additional financing at that time. If we cannot obtain additional
financing when needed, we will have to delay, modify or abandon some of our plans. This could slow our growth and
negatively impact our ability to compete.