Rogers 2011 Annual Report Download - page 27

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MANAGEMENT’S DISCUSSION AND ANALYSIS
Operating Highlights and Significant Developments in 2011
• Generated revenue growth of 2% at Wireless, 4% at Cable
Operations and 10% at Media, with consolidated annual revenue
growth of 2%. Adjusted operating profit grew 2% to $4,716
million with adjusted operating profit margins of 37.9%.
• In February 2011, we renewed our normal course issuer bid
(“NCIB”) to repurchase up to the lesser of $1.5 billion or
39.8 million Class B Non-Voting shares during the twelve-month
period ending February 21, 2012, under which we purchased for
cancellation 31 million Class B Non-Voting shares during 2011 for
$1.1 billion.
• In February 2011, we increased the annualized dividend from $1.28
to $1.42 per Class A Voting and Class B Non-Voting share, paying
out $758 million in dividends to shareholders during the year.
• We closed $1.85 billion aggregate principal amount of investment
grade debt offerings during the year, consisting of $400 million of
6.56% Senior Notes due 2041 and $1,450 million of 5.34% Senior
Notes due 2021. Among other things, proceeds of the offerings
were used to repay bank debt and redeem both of our public debt
issues maturing in 2012, including US$470 million of 7.25% Senior
Notes and US$350 million of 7.875% Senior Notes. In total, we
reduced our weighted average cost of borrowing to 6.22% at
December 31, 2011 from 6.68% at December 31, 2010.
• We closed the acquisition of Atria Networks, one of Ontario’s
largest fibre-optic networks, which augments Rogers Business
Solutions’ enterprise offerings by further enhancing its ability to
deliver on-net data centric services within and adjacent to Cable’s
footprint.
• Rogers announced that it, along with Bell Canada, is jointly
acquiring a net 75 percent equity interest in Maple Leaf Sports and
Entertainment (“MLSE”) being sold by the Ontario Teachers’
Pension Plan. The investment advances Rogers’ strategy to deliver
highly sought-after content anywhere, anytime, on any platform
across our advanced broadband and wireless networks and our
media assets, while continuing to strengthen and enhance the
value of our Sportsnet media brands. Rogers’ net cash
commitment, following a planned leveraged recapitalization of
MLSE, will total approximately $533 million, representing a 37.5
percent equity interest in MLSE, and will be funded with currently
available liquidity.
• Free cash flow, defined as adjusted operating profit less property,
plant, and equipment (“PP&E”) expenditures, interest on long-term
debt (net of capitalization) and cash income taxes, decreased by
7% from 2010 levels to $1.9 billion due to higher PP&E
expenditures.
• At December 31, 2011, we had only $250 million of advances
borrowed under our $2.4 billion committed bank credit facility that
matures in July 2013. This strong liquidity position is further
enhanced by the fact that our earliest scheduled debt maturity is in
June 2013, together providing us with substantial liquidity and
flexibility.
• Subsequent to the end of 2011, in February 2012, we announced
that our Board of Directors had approved an 11% increase in the
annualized dividend to $1.58 per share effective immediately, and
that it has approved the renewal of our NCIB share buyback
program authorizing the repurchase of up to $1.0 billion of Rogers
shares on the open market during the next twelve months.
Year Ended December 31, 2011 Compared to Year Ended
December 31, 2010
For the year ended December 31, 2011, Wireless, Cable and Media
represented 57%, 30% and 13% of our consolidated revenue,
respectively (2010 – 57%, 31% and 12%). On the basis of consolidated
adjusted operating profit, Wireless, Cable and Media also represented
63%, 33% and 4%, respectively (2010 – 67%, 30%, and 3%).
(%)
2011 CONSOLIDATED REVENUE BY SEGMENT
WIRELESS 57%
MEDIA 13%
CABLE 30%
(%)
2011 CONSOLIDATED ADJUSTED OPERATING PROFIT BY SEGMENT
WIRELESS 63%
MEDIA 4%
CABLE 33%
($)
ADJUSTED EPS
$2.51$2.91$3.22
2009 20102011
For detailed discussions of Wireless, Cable and Media, refer to the
respective segment discussions below.
2011 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 23