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MANAGEMENT’S DISCUSSION AND ANALYSIS
Adjusted Operating Profit, Net Income, Earnings Per Share and Free Cash Flow Calculations
Years ended December 31,
(In millions of dollars, except per share amounts; number of shares outstanding in millions) 2012 2011
Operating income $ 2,766 $ 2,865
Add:
Depreciation and amortization 1,819 1,743
Impairment of assets 80 –
Operating profit $ 4,665 $ 4,608
Add (deduct):
Stock-based compensation expense 77 64
Integration, restructuring and acquisition expenses 92 56
Settlement of pension obligations –11
Adjusted operating profit $ 4,834 $ 4,739
Net income from continuing operations $ 1,732 $ 1,590
Add (deduct):
Stock-based compensation expense 77 64
Integration, restructuring and acquisition expenses 92 56
Settlement of pension obligations –11
Loss on repayment of long-term debt –99
Impairment of assets 80 –
Gain on spectrum distribution (233) –
Income tax impact of above items (14) (56)
Income tax adjustment, legislative tax change 54 (28)
Adjusted net income $ 1,788 $ 1,736
Adjusted basic earnings per share:
Adjusted net income $ 1,788 $ 1,736
Divided by: weighted average number of shares outstanding 519 543
Adjusted basic earnings per share $ 3.45 $ 3.20
Adjusted diluted earnings per share:
Adjusted net income $ 1,788 $ 1,736
Divided by: diluted weighted average number of shares outstanding 522 547
Adjusted diluted earnings per share $ 3.43 $ 3.17
Basic earnings per share:
Net income from continuing operations $ 1,732 $ 1,590
Net income $ 1,700 $ 1,563
Divided by: weighted average number of shares outstanding 519 543
Basic earnings per share - continuing operations $ 3.34 $ 2.93
Basic earnings per share $ 3.28 $ 2.88
Diluted earnings per share:
Net income from continuing operations $ 1,732 $ 1,590
Effect on net income of dilutive securities ––
Diluted net income from continuing operations $ 1,732 $ 1,590
Net income $ 1,700 $ 1,563
Effect on net income of dilutive securities ––
Diluted net income $ 1,700 $ 1,563
Divided by: diluted weighted average number of shares outstanding 522 547
Diluted earnings per share - continuing operations $ 3.32 $ 2.91
Diluted earnings per share $ 3.26 $ 2.86
Free Cash Flow
Adjusted operating profit $ 4,834 $ 4,739
Add (deduct):
PP&E expenditures (2,142) (2,127)
Interest on long-term debt, net of capitalization (663) (639)
Pre-tax free cash flow 2,029 1,973
Cash income taxes (380) (99)
After-tax free cash flow $ 1,649 $ 1,874
76 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT