Rogers 2006 Annual Report Download - page 27

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RO GER S CO MMU NIC AT ION S IN C . 20 0 6 ANN UA L RE POR T
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
in respect of LCT in 2006. The recovery of $5 million recorded in 2006
relates primarily to the reduction of certain amounts previously
accrued for income tax.
We recorded net future income tax expense in 2006 of $61 million.
Future income tax expense resulted primarily from the utilization of
non-capital loss carryforwards, the benefit of which had previously
been recognized, net of a reduction of the valuation allowance for
future income tax assets. Based on management’s assessment of the
expected realization of future income tax assets during 2006, we
reduced the valuation allowance recorded against certain future
income tax assets by $468 million to reflect that it is more likely than
not that the future income tax assets will be realized. Approximately
$300 million of the reduction in the valuation allowance related to
future income tax assets arising from acquisitions. Accordingly, the
benefit related to these assets has been reflected as a reduction of
goodwill in the amount of $209 million and a reduction of other
intangible assets in the amount of $91 million.
Net Income (Loss) and Earnings (Loss) per Share
We recorded net income of $622 million in 2006, or basic earnings per
share of $0.99 (diluted – $0.97), compared to a net loss of $45 million
or a basic and diluted loss per share of $0.08 in 2005. This increase in
net income was primarily due to the growth in operating profit as dis-
cussed above, as well as the decrease in interest on long-term debt.
EMPLOYEES
Employee remuneration represents a material portion of our
expenses. At December 31, 2006, we had approximately 22,500
full-time equivalent employees (“FTEs”) across all of our operating
groups, including our shared services organization and corporate
office, representing an increase of approximately 1,500 from the level
at December 31, 2005. The increase is primarily due to an increase
in our shared services, partially offset by reductions associated with
the integration of Call-Net during the year. Total remuneration paid
to employees (both full and part-time) in 2006 was approximately
$1,462 million, an increase of $241 million from $1,221 million in 2005.
BASIS OF PRO FORMA INFORMATION
Certain financial and operating data information and tables in this
MD&A has been prepared on a pro forma basis as if the acquisition of
Call-Net had occurred on January 1, 2004. Such information is based
on our historical financial statements, the historical financial state-
ments of Call-Net and the accounting for this business combination.
Although we believe this presentation provides certain relevant
contextual and comparative information for existing operations,
the unaudited pro forma consolidated financial and operating
data presented in this document is for illustrative purposes only
and does not purport to represent what the results of operations
actually would have been if the acquisition of Call-Net had occurred
on January 1, 2004, nor does it purport to project the results of oper-
ations for any future period.
This pro forma information reflects, among other things, adjust-
ments to Call-Net’s historically reported financial information to
conform to our accounting policies and the impacts of purchase
accounting. The pro forma adjustments are based upon certain esti-
mates and assumptions that we believe are reasonable. Accounting
policies used in the preparation of these statements are those dis-
closed in our 2006 Audited Consolidated Financial Statements and
Notes thereto.