Rogers 2013 Annual Report Download - page 65

MANAGEMENT’S DISCUSSION AND ANALYSIS
FINANCIAL CONDITION
Capital Resources
Our capital resources consist primarily of cash flow from operations,
cash and cash equivalents, available lines of credit, funds available
under our accounts receivable securitization program and issuances of
long-term debt.
This information is forward-looking and should be read in conjunction
with “About forward-looking information” and “Risks and
Uncertainties Affecting Our Business” and other disclosure about
various economic, competitive and regulatory assumptions, factors and
risks that could cause our actual future financial and operating results
to differ from those currently expected.
We anticipate generating a net cash surplus in 2014 from our cash from
operations. We expect that we will have sufficient capital resources to
satisfy our cash funding requirements in 2014, including the funding of
dividends on our common shares, repayment of maturing long-term
debt and other financing activities, investing activities, and other
requirements, taking into account our opening cash balance, cash from
operations, the amount available under our $2.0 billion bank credit
facility, and our accounts securitization program and from the issuance
of short-term and, or long-term debt from time to time. At
December 31, 2013, there were no significant restrictions on the flow
of funds between Rogers and its subsidiary companies.
We believe that we can satisfy foreseeable additional funding
requirements by issuing additional debt financing, which, depending on
market conditions, could include restructuring our existing bank credit
and letter of credit facilities, issuing public or private debt, amending
the terms of our accounts receivable securitization program or issuing
equity. We may also refinance a portion of existing debt depending on
market conditions and other factors. There is no assurance, however,
that this will or can be done.
Bank Credit and Letter of Credit Facilities
We have $2.5 billion of bank credit and letter of credit facilities. Each of
these facilities is unsecured and guaranteed by Rogers Communications
Partnership and ranks equally with all of our senior notes and
debentures. The terms of our bank credit facility are committed by the
participating financial institutions until it expires in July 2017. As at
December 31, 2013, there were no advances outstanding under our
$2.0 billion bank credit facility and there were letters of credit totalling
$0.5 billion outstanding under our letter of credit facilities.
Liquidity
We had approximately $4.5 billion of available liquidity at December 31,
2013, as compared to $3.1 billion available at December 31, 2012:
• $2.3 billion in cash and cash equivalents (2012 – $0.2 billion)
• $2.0 billion available under our bank credit facility (2012 – $2.0 billion)
• $0.2 billion available under the $0.9 billion accounts receivable
securitization program (2012 – $0.9 billion).
Covenants
We are currently in compliance with all covenants under our debt
instruments. At December 31, 2013, there were no financial leverage
covenants in effect other than those under our bank credit and letter of
credit facilities (see Terms and conditions under Note 18 to the 2013
audited consolidated financial statements).
Credit Ratings
Credit ratings provide an independent measure of credit quality of an
issue of securities, and can affect our ability to obtain short-term and
long-term financing and the terms of the financing. If rating agencies
lower the credit ratings on our debt, particularly a downgrade below
investment grade, it could adversely affect our cost of financing and
access to liquidity and capital.
We have engaged each of Fitch Ratings (Fitch), Moody’s Investors
Service (Moody’s) and Standard & Poor’s Ratings Services (Standard &
Poor’s) to rate our public debt issues. In May 2013, each of Fitch and
Standard & Poor’s upgraded RCI’s senior unsecured debt to BBB+ (from
BBB) with a stable outlook. Moody’s comparably equivalent rating of
Baa1 with a stable outlook has not changed from last year.
The table below shows the credit ratings on our borrowings received
from the rating agencies as of December 31, 2013:
2013
Corporate credit issuer
default rating Senior unsecured debt
Standard and Poor’s BBB+ with a stable outlook BBB+ with a stable outlook
Fitch BBB+ with a stable outlook BBB+ with a stable outlook
Moody’s Baa1, stable outlook Baa1, stable outlook
Ratings for debt instruments across the universe of composite rates
range from AAA (Standard & Poor’s and Fitch) or Aaa (Moody’s)
representing the highest quality of securities rated, to D (Standard &
Poor’s), C (Moody’s) and Substantial Risk (Fitch) for the lowest quality of
securities rated.
Credit ratings are not recommendations for investors to purchase, hold
or sell the rated securities, nor are they a comment on market price or
investor suitability. There is no assurance that a rating will remain in
effect for a given period of time, or that a rating will not be revised or
withdrawn entirely by a rating agency if it believes circumstances
warrant it. The ratings on our senior debt provided by Standard &
Poor’s, Fitch and Moody’s are investment grade ratings.
RATIO OF ADJUSTED OPERATING PROFIT TO INTEREST
2013
2012
2011
6.8x
6.8x
7.1x
2013 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 61