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ROGERS COMMUNICATIONS INC. 2007 ANNUAL REPORT 21
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Canadian or U.S. GAAP and should not be considered as alterna-
tives to net income or any other measure of performance under
Canadian or U.S. GAAP. The non-GAAP measures presented in
this MD&A include, among other measures, adjusted operating
profit, adjusted operating profit margin, adjusted net income,
and adjusted basic and diluted net income per share. We believe
that the non-GAAP financial measures provided, which exclude:
(i) the impact of the one-time non-cash charge resulting from the
introduction of a cash settlement feature related to employee
stock options; (ii) stock-based compensation expense; (iii) inte-
gration and restructuring expenses; (iv) the impact of a one-time
charge resulting from the renegotiation of an Internet-related
services agreement; and (v) in respect of net income and net
income per share, loss on repayment of long-term debt and the
related income tax impacts of the above items, provide for a more
effective analysis of our operating performance. See the sections
entitled “Key Performance Indicators and Non-GAAP Measures”
and “Supplementary Information: Non-GAAP Calculations” for
further details.
Operating Highlights and Significant Developments in 2007
• WecompletedtheamalgamationofRCIwithitswhollyowned
Cable and Wireless holding company subsidiaries, with RCI
assuming all the rights and obligations under the outstanding
Cable and Wireless public debt indentures and cross-currency
interest rate exchange agreements. As part of the amalgamation
process, RCI entered into a new unsecured $2.4 billion bank credit
facility. This amalgamation was effected principally to simplify
our corporate structure to enable the streamlining of reporting
and compliance obligations.
• We achievedinvestmentgradecreditstatusasaresultofthe
upgrade of our corporate debt ratings by credit rating agencies
Fitch, Moody’s and Standard & Poor’s.
• We introduced a cash settlement feature for outstanding
employee stock options to tax efficiently deploy cash to mitigate
dilution that would otherwise occur upon the exercise of such
options. The introduction of this cash settlement feature in
the second quarter resulted in a one-time non-cash charge for
accounting purposes of $452 million partially offset by a related
future income tax benefit of $160 million.
• We redeemed Wireless’ US$550 million principal amount of
Floating Rate Senior Notes due 2010 at the stipulated redemption
price of 102.00% and its US$155 million principal amount of 9.75%
Senior Debentures due 2016 at a redemption price of 128.42%.
• WerepaidatmaturityCable’s$450millionaggregateprincipal
amount of 7.60% Senior Secured Notes.
• Weannouncedanincreaseintheannualdividendfrom$0.16to
$0.50 per Class A Voting and Class B Non-Voting share. In addi-
tion, subsequent to the year-end, we announced an increase in
the annual dividend from $0.50 to $1.00 per Class A Voting and
Class B Non-Voting share. This reflects our Board of Directors’
continued confidence in the strategies that we have employed
to position ourself as a growing and increasingly profitable
communications company, while concurrently recognizing the
importance of returning meaningful portions of the growing
cash flows being generated by the business to shareholders.
• WeannouncedaNormalCourseIssuerBid(“NCIB”)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.
Year Ended December 31, 2007 Compared to Year Ended
December 31, 2006
For the year ended December 31, 2007, Wireless, Cable and Media
represented 54%, 35% and 13% of our consolidated revenue,
respectively, offset by corporate items and eliminations of 2%.
Wireless, Cable and Media also represented 70%, 27% and 5% of
our consolidated adjusted operating profit, respectively, offset by
corporate items and eliminations of 2%. For more detailed discus-
sions of Wireless, Cable and Media, refer to the respective segment
discussions below.