Rogers 2014 Annual Report Download - page 87

MANAGEMENT’S DISCUSSION AND ANALYSIS
NON-GAAP MEASURES
We use the following non-GAAP measures. These are reviewed regularly by management and our Board in assessing our performance and
making decisions regarding the ongoing operations of our business and its ability to generate cash flows. Some or all of these measures may also
be used by investors, lending institutions, and credit rating agencies as an indicator of our operating performance, our ability to incur and service
debt, and as a measurement to value companies in the telecommunications sector. These are not recognized measures under GAAP and do not
have standardized meaning under IFRS, so they may not be a reliable way to compare us to other companies.
Non-GAAP
measure Why we use it How we calculate it
Most
comparable
IFRS financial
measure
Adjusted operating
profit and related
margin
• To evaluate the performance of our businesses, and when making
decisions about the ongoing operations of the business and our
ability to generate cash flows.
• We believe that certain investors and analysts use adjusted
operating profit to measure our ability to service debt and to meet
other payment obligations.
• We also use it as one component in determining short-term
incentive compensation for all management employees.
Adjusted operating profit:
Net income
add back
income taxes, other expense
(income), finance costs,
depreciation and amortization,
impairment of assets, stock-based
compensation, and restructuring,
acquisition and other expenses.
Adjusted operating profit margin:
Adjusted operating profit
divided by
Operating revenue (network
revenue for Wireless)
Net income
Adjusted net income
Adjusted basic and
diluted earnings per
share
• To assess the performance of our businesses before the effects of
these items, because they affect the comparability of our financial
results and could potentially distort the analysis of trends in business
performance.
• Excluding these items does not imply they are non-recurring.
Net income
add back
stock-based compensation,
restructuring, acquisition and other
expenses, impairment of assets,
gain on sale of investment, loss on
repayment of long-term debt, and
income tax adjustments on these
items including adjustments due to
legislative change.
Net income
Earnings per share
Free cash flow • An important indicator of our financial strength and performance
because it shows how much cash we have available to repay debt
and reinvest in our company.
• We believe that some investors and analysts use free cash flow to
value a business and its underlying assets.
Adjusted operating profit
minus
additions on property, plant and
equipment, interest on borrowings
net of interest capitalized, and cash
income taxes.
Cash provided by
operating activities
Adjusted net debt • To conduct valuation-related analysis and make decisions about
capital structure.
• We believe this helps investors and analysts analyze our enterprise
and equity value and assess our leverage.
Total long-term debt
plus
current portion of long-term debt,
deferred transaction costs and
discounts, net debt derivative
assets or liabilities, and short-term
borrowings
minus
cash and cash equivalents.
Long-term debt
Adjusted net debt /
adjusted operating
profit
• To conduct valuation-related analysis and make decisions about
capital structure.
• We believe this helps investors and analysts analyze our enterprise
and equity value and assess our leverage.
Adjusted net debt (defined above)
divided by
Adjusted operating profit (defined
above)
Long-term debt
divided by net income
2014 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 83