Rogers 2010 Annual Report Download - page 16

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
20 ROGERS COMMUNICATIONS INC. 2010 ANNUAL REPORT
We seek to exploit opportunities for Wireless, Cable and Media to
create bundled product and service offerings at attractive prices, in
addition to implementing cross-marketing and cross-promotion of
products and services to increase sales and enhance subscriber loyalty.
We also work to identify and implement areas of opportunity for our
businesses that will enhance operating efficiencies by sharing
infrastructure, corporate services and sales distribution channels. We
continue to develop brand awareness and promote the “Rogers” brand
as a symbol of quality and innovation.
In September 2009, we announced the further integration of our Cable
and Wireless businesses with the creation of a Communications Services
organization. This more streamlined organizational structure is
intended to facilitate faster time to market, deliver an enhanced and
more consistent customer experience, and improve the overall
effectiveness and efficiency of the Wireless and Cable businesses. This
more integrated operating approach also recognizes the continued
convergence of certain aspects of wireless and wireline networks and
services. In July2010, our shared services and substantially all of Cable
and Wireless operations were consolidated into Rogers Communications
Partnership. Segmented reporting continues to reflect the foregoing
Cable and Wireless services as separate product segments (See the
section entitled “July1,2010 Corporate Reorganization”).
CONSOLIDATED FINANCIAL AND OPERATING RESULTS
See the sections in this MD&A entitled “Critical Accounting Policies”,
“Critical Accounting Estimates” and “New Accounting Standards” and
also the Notes to the 2010 Audited Consolidated Financial Statements
for a discussion of critical and new accounting policies and estimates
as they relate to the discussion of our operating and financial
results below.
We measure the success of our strategies using a number of key
performance indicators as outlined in the section entitled “Key
Performance Indicators and Non-GAAP Measures”. These key
performance indicators are not measurements in accordance with
Canadian or U.S. GAAP and should not be considered as alternatives 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, operating profit, adjusted operating profit,
adjusted operating profit margin, adjusted net income, adjusted basic
and diluted net income per share and free cash flow. We believe that
the non-GAAP financial measures provided, which exclude: (i) stock-
based compensation expense (recovery); (ii) integration and
restructuring expenses; (iii) contract termination fees; (iv) an
adjustment for Canadian Radio-television and Telecommunications
Commission (“CRTC”) Part II fees related to prior periods; (v) settlement
of pension obligations; (vi) other items (net); and (vii) in respect of net
income and net income per share, debt issuance costs, loss on
repayment of long-term debt, impairment losses on goodwill,
intangible assets and other long-term assets 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.
The increased levels of competitive intensity have negatively impacted
the results of our Wireless and Cable businesses during 2010. This
includes higher subscriber churn and lower average revenue per user
(“ARPU”) at Wireless and a slowing in the number of new subscriber
additions and increased promotional and retention activity at Cable.
During 2010, Media has benefited from a rebound in the advertising
market. In response to the competitive intensity and economic
conditions, we restructured our organization and employee base to
improve our organizational efficiency and cost structure which resulted
in cost efficiencies during 2010.
We believe that we are well-positioned from both a leverage and a
liquidity perspective with a debt to adjusted operating profit ratio of
2.1. In addition, there were no advances outstanding under our entire
$2.4 billion fully committed multi-year bank credit facility at
December31,2010 and we have no scheduled debt maturities until
May2012.
20102009
2008
2009
200
8
201
0
$1,839$1,855$2,021
ADDITIONS TO
CONSOLIDATED PP&E
(In millions of dollars)
20102009
2008
2009
200
8
201
0
$17,018$17,082 $17,330
CONSOLIDATED TOTAL ASSETS
(In millions of dollars)