Rogers 2008 Annual Report Download - page 45

Download and view the complete annual report

Please find page 45 of the 2008 Rogers annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 136

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136

ROGERS COMMUNICATIONS INC. 2008 ANNUAL REPORT 41
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OPER ATING HIGHLIGHTS FOR THE YEAR ENDED
DECEMBER 31, 2008
• Through organic growth and acquisitions, increased cable
telephony lines by 184,000, high-speed residential Internet sub-
scribers by 117,000, digital cable households by 197,000 and basic
cable subscribers by 25,000 in the year.
• HDTVdigitalcablesubscriberswereup37%fromDecember31,
2007 to December 31, 2008, to 568,000, while the number of pur-
chases of Rogers on Demand product increased by approximately
15% year-over-year.
• IndependentresearchrmcomScoreInc.foundRogersHi-Speed
Internet to be the fastest and most reliable Internet access service
Summarized Cable Financial Results
Years ended December 31,
(In millions of dollars, except margin) 2008 (1) 2007 (2) % Chg
Operating revenue
Cable Operations (3) $ 2,878 $ 2,603 11
RBS 526 571 (8)
Rogers Retail 417 393 6
Intercompany eliminations (12) (9) 33
Total operating revenue 3,809 3,558 7
Operating profit (loss) before the undernoted
Cable Operations (3) 1,171 1,008 16
RBS 59 12 n/m
Rogers Retail 3 (4) n/m
Adjusted operating profit (4) 1,233 1,016 21
Stock option plan amendment (5) – (113) n/m
Stock-based compensation recovery (expense) (5) 32 (11) n/m
Integration and restructuring expenses (6) (20) (38) (47)
Contract renegotiation fee (7) – (52) n/m
Adjustment for CRTC Part II fees decision (8) (25) – n/m
Operating profit (4) $ 1,220 $ 802 52
Adjusted operating profit (loss) margin (4)
Cable Operations (3) 40.7% 38.7 %
RBS 11.2% 2.1 %
Rogers Retail 0.7% (1.0) %
Additions to PP&E (4)
Cable Operations (3) $ 829 $ 710 17
RBS 36 83 (57)
Rogers Retail 21 21 –
Total additions to PP&E $ 886 $ 814 9
(1) The operating results of Aurora Cable are included in Cable’s results of operations from the date of acquisition on June 12, 2008.
(2) The operating results of Futureway are included in Cable’s results of operations from the date of acquisition on June 22, 2007.
(3) Cable Operations segment includes Core Cable services, Internet services and Rogers Home Phone services.
(4) As defined. See the sections entitled “Key Performance Indicators and Non-GAAP Measures” and “Supplementary Information: Non-GAAP Calculations”.
(5) See the section entitled “Stock-based Compensation”.
(6) Costs incurred relate to severances resulting from the restructuring of our employee base to improve our cost structure in light of the declining economic conditions, the integration of Call-Net, Futureway
and Aurora Cable, the restructuring of RBS, and the closure of certain Rogers Retail stores.
(7) One-time charge resulting from the renegotiation of an Internet-related services agreement.
(8) Relates to an adjustment for CRTC Part II fees related to prior periods. See the section entitled “Government Regulation and Regulatory Developments”.
• othergeneralandadministrativeexpenses;and
• expensesrelatedtothecorporatemanagementoftheRogers
Retail stores;
• CostofRogersRetailsales,whichiscomposedofstoremerchan-
dise and depreciation related to the acquisition of DVDs and
game rental assets.
In the cable industry in Canada, the demand for services, particularly
Internet, digital television and cable telephony services, continues
to grow and the variable costs associated with this growth, such
as commissions for subscriber activations, as well as the fixed costs
of acquiring new subscribers, are significant. As such, fluctuations
in the number of activations of new subscribers from period-to-
period result in fluctuations in sales and marketing expenses.
for residential customers in the Greater Toronto Area. The results,
which were based on over 120,000 network speed tests conducted
over a four month period in early 2008, showed that the Rogers
Hi-Speed Internet product delivers faster speeds across all service
tiers when compared to Cable’s primary DSL competitor.
• OnJune12,2008,weacquired100%oftheoutstandingsharesof
Aurora Cable. Aurora Cable passes approximately 26,000 homes
and provides cable television, Internet and telephony services
in the Town of Aurora and the community of Oak Ridges, in
Richmond Hill, Ontario.