Rogers 2011 Annual Report Download - page 52

MANAGEMENT’S DISCUSSION AND ANALYSIS
• the payment of an aggregate $1,208 million for the March 21, 2011
redemption of U.S. $350 million ($342 million) 7.875% Senior Notes
and U.S. $470 million ($460 million) 7.25% Senior Notes maturing
in 2012 (comprising $802 million principal and $76 million
premiums) and settlement of the associated Debt Derivatives and
forward contracts (comprising $330 million net settlement paid on
termination);
• the payment of quarterly dividends in the aggregate amount of
$758 million on our Class A Voting and Class B Non-Voting shares;
• the purchase for cancellation of approximately 31 million
Class B Non-Voting shares for an aggregate purchase price of
$1,099 million;
• acquisitions and other net investments aggregating $559 million,
including $426 million to acquire Atria, $40 million to acquire
Compton, $38 million to acquire two radio stations in Edmonton,
Alberta and London, Ontario, $16 million to acquire certain dealer
stores, $15 million for a long-term deposit, $11 million to acquire
the remaining ownership in Setanta Sports, and other net
investments of $13 million;
• payments for program rights of $56 million; and
• payments for transaction costs of $10 million.
Taking into account the opening cash deficiency balance of
$45 million at the beginning of the year and the cash sources and
uses described above, the cash deficiency at December 31, 2011,
represented by bank advances, was $57 million.
2011 USES OF CASH
2011
$5,906
Cash PP&E expenditures: $2,216
Redemption of long-term debt: $1,208
Repurchase of shares: $1,099
Dividends: $758
Acquisitions and other net investments: $559
Additions to program rights: $56
Transaction costs: $10
(In millions of dollars)
(In millions of dollars)
CONSOLIDATED CASH FLOW
FROM OPERATIONS
$3,526$3,880 $3,956
2009 20102011
Financing
Our long-term debt instruments and related derivatives are described
in Note 17 and Note 18 to the 2011 Audited Consolidated Financial
Statements. During 2011, the following financing activities took place.
Debt Issuances
On March 21, 2011, RCI issued in Canada $1,850 million aggregate
principal amount of Senior Notes, comprised of $1,450 million of
5.34% Senior Notes due 2021 (the “2021 Notes”) and $400 million of
6.56% Senior Notes due 2041 (the “2041 Notes”). The 2021 Notes
were issued at a discount of 99.954% for an effective yield of
5.346% per annum if held to maturity while the 2041 Notes were
issued at par to yield 6.56% if held to maturity. RCI received
aggregate net proceeds of approximately $1,840 million from the
issuance of the 2021 Notes and the 2041 Notes after deducting the
original issue discount, agents’ fees and other related expenses. The
aggregate net proceeds from the 2021 Notes and the 2041 Notes
were used to fund the March 2011 redemption of two public debt
issues maturing in 2012 together with the termination of the
associated Debt Derivatives, each as described below under “Debt
Redemptions and Termination of Debt Derivatives”, and to partially
repay outstanding advances under our bank credit facility.
Each of the 2021 Notes and the 2041 Notes are guaranteed by RCP
and rank pari passu with all of RCI’s other senior unsecured notes and
debentures and bank credit facility.
Debt Redemptions and Termination of Debt Derivatives
On March 21, 2011, RCI redeemed the entire U.S. $350 million
principal amount of its 7.875% Senior Notes due 2012 (the “7.875%
Notes”) and the entire U.S. $470 million principal amount of its 7.25%
Senior Notes due 2012 (the “7.25% Notes” and, together with the
“7.875% Notes”, the “2012 Notes”). RCI paid an aggregate amount of
approximately $878 million for the redemption of the 2012 Notes (the
“Redemptions”), including approximately $802 million aggregate
principal amount for the 2012 Notes and $76 million for the
premiums payable in connection with the Redemptions. Concurrently
with RCI’s redemption of the 2012 Notes, RCI made a net payment of
approximately $330 million to terminate the associated Debt
Derivatives (the “Derivatives Termination”). As a result, the total cash
expenditure associated with the Redemptions and the Derivatives
Termination was approximately $1,208 million and RCI recorded a loss
on repayment of long-term debt of $99 million, comprised of the
aggregate redemption premiums of $76 million, a net loss on the
termination of the related Debt Derivatives of $22 million, and
write-off of deferred financing costs of $2 million, offset by a write
down of a previously recorded fair value increment of $1 million.
48 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT