Rogers 2012 Annual Report Download - page 79

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MANAGEMENT’S DISCUSSION AND ANALYSIS
Adjusted Operating Profit, Adjusted Operating Profit Margin,
Adjusted Net Income, Adjusted Basic and Diluted Earnings per
Share, and Pre-tax Free Cash Flow
We define adjusted operating profit as operating profit excluding:
(i) stock-based compensation expense; (ii) integration, restructuring
and acquisition expenses; and (iii) settlement of pension obligations.
In addition, adjusted net income and adjusted earnings per share
excludes loss on repayment of long-term debt, impairment of assets,
gain on spectrum distribution, and the related income tax impacts of
the preceding items and the legislative tax change. We define pre-tax
free cash flow as adjusted operating profit less PP&E expenditures
and interest on long-term debt (net of capitalization).
Adjusted operating profit and adjusted operating profit margins,
which are reviewed regularly by management and our Board of
Directors, are also useful in assessing our performance and in making
decisions regarding the ongoing operations of the business and the
ability to generate cash flows.
These non-GAAP measures should be viewed as a supplement to, and
not a substitute for, our results of operations reported under IFRS. A
reconciliation of these non-GAAP financial measures to operating
profit, net income and earnings per share is included in this section
under “Adjusted Operating Profit, Net Income, Earnings Per Share
and Free Cash Flow Calculations”.
We calculate adjusted operating profit margin by dividing adjusted
operating profit by total revenue, except in the case of Wireless. For
Wireless, adjusted operating profit margin is calculated by dividing
adjusted operating profit by network revenue. Network revenue is
used in the calculation instead of total revenue because network
revenue better reflects Wireless’ core business activity of providing
wireless services. The following table illustrates the adjusted
operating profit margin calculations for Wireless, Cable, RBS and
Media.
Adjusted Operating Profit Margin Calculations
Years ended December 31,
(In millions of dollars, except for margins) 2012 2011
RCI:
Adjusted operating profit $ 4,834 $ 4,739
Divided by total revenue 12,486 12,346
RCI adjusted operating profit margin 38.7% 38.4%
WIRELESS:
Adjusted operating profit $ 3,063 $ 3,036
Divided by network revenue 6,719 6,601
Wireless adjusted operating profit
margin 45.6% 46.0%
CABLE:
Adjusted operating profit $ 1,605 $ 1,549
Divided by revenue 3,358 3,309
Cable adjusted operating profit margin 47.8% 46.8%
ROGERS BUSINESS SOLUTIONS:
Adjusted operating profit $89$86
Divided by revenue 351 405
Rogers Business Solutions adjusted
operating profit margin 25.4% 21.2%
MEDIA:
Adjusted operating profit $ 190 $ 180
Divided by revenue 1,620 1,611
Media adjusted operating profit margin 11.7% 11.2%
2012 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 75