Rogers 2009 Annual Report Download - page 17

ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT 21
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
conditions and competitive intensity, we took decisive action
during 2009 to restructure our organization and employee base to
improve our cost structure going forward. To reflect these changes,
amongst other things, we incurred restructuring and impairment
charges which are fully described later in this MD&A.
Despite the economic slowdown, we are well-positioned from
both a leverage and a liquidity perspective with a debt to adjusted
operating profit ratio of 2.1. Debt is net of $0.4 billion of cash.
In addition, the entire $2.4 billion bank credit facility was available
to be drawn at December 31, 2009 with no debt maturities
until May 2011.
Operating Highlights and Significant Developments in 2009
• In March 200 9, we announce d the appointment of
Nadir Mohamed as President and Chief Executive Officer.
This appointment followed an extensive search carried out by
our Board of Directors following the December 2008 passing
of our founder and Chief Executive Officer, Ted Rogers. A
communications industry veteran with more than 25 years of
experience, Nadir Mohamed was previously President and Chief
Operating Officer of our Communications Group division, which
included our Wireless and Cable businesses.
• Generated7%WirelessnetworkandCableOperationsrevenue
growth, with consolidated annual revenue growth of 3%, while
adjusted operating profit grew 8% to $4,388 million and adjusted
operating profit margins expanded by 160 basis points to 37.4%.
• InMay2009,weannouncedthatwesetatargetcapitalstructure
leverage range of net debt to adjusted operating profit of 2.0
to 2.5 times. At the same time, we also announced an increase
in our authorized Class B Non-Voting share buyback program
from $300 million to the lesser of $1.5 billion or 48 million
Class B Non-Voting shares during the twelve month period end-
ing February 19, 2010 under which we purchased for cancellation
43.8 million outstanding Class B Non-Voting shares during 2009
for $1.3 billion.
• 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 leading Canadian communications and media
company, while concurrently recognizing the importance of
returning meaningful portions of our growing cash flows to
shareholders. We paid $704 million in dividends to shareholders
during the year.
• Weclosed$2.0billionaggregateprincipalamountofinvestment
grade debt offerings during the year, consisting of $1.0 billion of
5.80% Senior Notes due May 2016, $500 million of 5.38% Senior
Notes due November 2019 and $500 million of 6.68% Senior
Notes due November 2039. Among other things, proceeds of the
offerings were used to repay bank debt and redeem our US$400
million 8.00% Senior Subordinated Notes.
• We created a streamlined organizational structure with the
further integration of our Cable and Wireless businesses
to enable an enhanced customer experience, accelerated
time to market, heightened innovation and targeted sector
leading growth.
• For full year 2009, our free cash flow, defined as adjusted
operating profit less PP&E expenditures and interest, increased
29% to $1.9 billion.
• WeincreasedourownershippositioninCogecoCableInc.and
Cogeco Inc. with the acquisition of 3.2 million subordinate
voting common shares of Cogeco Cable Inc. and 1.6 million
subordinate voting common shares of Cogeco Inc. These
opportunistic purchases made for investment purposes increase
Rogers’ ownership of Cogeco Cable Inc. from approximately 14%
to 20% and of Cogeco Inc. from approximately 20% to 30%.
• AtDecember31,2009,wehadthefullamountinavailablecredit
under our $2.4 billion committed bank credit facility that matures
July 2013. This strong liquidity position is further enhanced by
the fact that our earliest scheduled debt maturity is in May 2011,
together providing us with substantial liquidity and flexibility.
• We announced in February 2010, that our Board of Directors
had approved a 10% increase in the annual dividend to $1.28
per share effective immediately, and that it has approved the
renewal of our normal course issuer bid (“NCIB”) program for
the repurchase of up to $1.5 billion of Rogers shares on the open
market during the next twelve months.
Year Ended December 31, 2009 Compared to Year Ended
December 31, 2008
For the year ended December 31, 2009, Wireless, Cable and Media
represented 57%, 34% and 12% of our consolidated revenue,
respectively, offset by corporate items and eliminations of 3%. On
the basis of consolidated adjusted operating profit, Wireless, Cable
and Media also represented 69%, 30% and 3%, respectively, offset
by corporate items and eliminations of 2%.
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%. On
the basis of consolidated adjusted operating profit, Wireless, Cable
and Media also represented 69%, 30% and 4%, respectively, offset
by corporate items and eliminations of 3%.
For detailed discussions of Wireless, Cable and Media, refer to the
respective segment discussions below.