Rogers 2008 Annual Report Download - page 29

ROGERS COMMUNICATIONS INC. 2008 ANNUAL REPORT 25
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
An overall economic slowdown in Canada, and particularly in
Ontario, has negatively impacted the results of our Wireless, Cable
and Media lines of business during 2008. The challenging economic
conditions have resulted in lower subscriber additions, predomi-
nantly in our Cable business, as well as declines of advertising,
roaming and other revenues. In response to these economic condi-
tions, we have taken action to restructure our employee base to
improve our cost structure going forward. The decline in advertising
revenue has lead to an impairment charge of $294 million related to
our conventional television business, which is fully described in the
section entitled ”Impairment Losses on Goodwill, Intangible Assets
and Other Long-Term Assets”. Despite the economic slowdown, we
are well positioned from a liquidity perspective with $1.8 billion in
available credit under our $2.4 billion committed bank credit facility
that does not mature until July 2013, and have no debt maturities
until May 2011.
Operating Highlights and Significant Developments in 2008
• Generated growth in annual revenue of 12%, while adjusted
operating profit grew 10% to $4,060 million
• WeclosedUS$1.75billionaggregateprincipalamountofinvest-
ment grade debt offerings on August 6, 2008, consisting of
US$1.4 billion of 6.8% Senior Notes due 2018, and US$350 million
7.5% Senior Notes due 2038. Proceeds of the offerings were used
in part to fund the $1.0 billion purchase of 20 MHz of Advanced
Wireless Services (“AWS”) spectrum in the spectrum auction.
• We purchased for cancellation 4,077,400 outstanding Class B
Non-Voting shares during the year for $136.7 million under Board
approval to repurchase up to $300 million of outstanding shares.
• In January 2008, we announced an increase in the annual
dividend from $0.50 to $1.00 per Class A Voting and Class B Non-
Voting share.
• InFebruary2009,weannouncedanincreaseintheannualdividend
from $1.00 to $1.16 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 ourselves as a grow-
ing communications company, while concurrently recognizing the
importance of returning meaningful portions of the growing cash
flows being generated by the business to shareholders.
• AtDecember31,2008wehadapproximately$1.8billioninavail-
able credit under our $2.4 billion committed bank credit facility
that matures July 2013. This liquidity position is also enhanced
by the fact that our earliest scheduled debt maturity is in May
2011. This financial position provides us with substantial liquidity
and flexibility, particularly given the current global credit market
challenges.
• InFebruary2009,ourBoardofDirectorsapprovedtherenewal
of a normal course issuer bid (“NCIB”) to repurchase up to
$300 million of our shares on the open market during the follow-
ing twelve months.
• TheCompany’sfounder,PresidentandChiefExecutiveOfcer
Edward S. “Ted” Rogers, passed away on December 2, 2008. Alan
Horn, Chairman of the Board of Rogers Communications Inc.,
was appointed by the Board to serve as acting Chief Executive
Officer as the Board performs a search, considering internal and
external candidates, for a permanent CEO.
• PriortohisdeathinDecember2008,EdwardS.“Ted”Rogerscon-
trolled RCI through his ownership of voting shares of a private
holding company. RCI has been informed that under Mr. Rogers’
estate arrangements, those voting shares, and consequently
voting control of RCI and its subsidiaries, passed to the Rogers Control
Trust, a trust of which the trust company subsidiary of a Canadian
chartered bank is Trustee and members of the family of the late
Mr. Rogers are beneficiaries. Private Rogers family holding com-
panies controlled by the Rogers Control Trust together own
approximately 90.9% of the Class A Voting shares of RCI and 7.5%
of the Class B Non-Voting shares. The governance structure of the
Rogers Control Trust comprises the Control Trust Chair (who acts
in effect as the chief executive of the Control Trust), the Control
Trust Vice-Chair, the corporate trustee, and a committee of advisors
(the Advisory Committee). The Advisory Committee members are
appointed in accordance with the estate arrangements and include
members of the Rogers family, trustees of a Rogers family trust and
other individuals, including certain directors of RCI.
Year Ended December 31, 2008 Compared to Year Ended
December 31, 2007
For the year ended December 31, 2008, Wireless, Cable and Media
represented 56%, 34% and 13% of our consolidated revenue,
respectively, offset by corporate items and eliminations of 3%.
Wireless, Cable and Media also represented 69%, 30% and 4% of
our consolidated adjusted operating profit, respectively, offset by
corporate items and eliminations of 3%.
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 discussions of Wireless, Cable and Media, refer
to the respective segment discussions below.