Rogers 2015 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 indicators of our operating performance, of our
ability to incur and service debt, and as measurements to value companies in the telecommunications sector. These are not recognized
measures under GAAP and do not have standard meanings under IFRS, so 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
Adjusted operating
profit 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 (deduct)
income taxes, other expense
(income), finance costs,
restructuring, acquisition and other,
depreciation and amortization,
stock-based compensation, and
impairment of assets.
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 the
noted 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.
Adjusted net income:
Net income
add (deduct)
stock-based compensation,
restructuring, acquisition and other,
impairment of assets, (gain) on sale
of investments, (gain) on
acquisitions, loss on non-controlling
interest purchase obligations, loss
on repayment of long-term debt,
and income tax adjustments on
these items, including adjustments
as a result of legislative changes.
Adjusted basic and diluted earnings
per share:
Adjusted net income
divided by
basic and diluted weighted average
shares outstanding.
Net income
Basic and diluted
earnings per share
Free cash flow •To show how much cash we have available to repay debt and reinvest
in our company, which is an important indicator of our financial
strength and performance.
•We believe that some investors and analysts use free cash flow to
value a business and its underlying assets.
Adjusted operating profit
deduct
additions to property, plant and
equipment, interest on borrowings
net of capitalized interest, 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
add (deduct)
current portion of long-term debt,
deferred transaction costs and
discounts, net debt derivative
(assets) liabilities, credit risk
adjustment related to net debt
derivatives, bank advances (cash
and cash equivalents) and short-
term borrowings.
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
12 months trailing adjusted
operating profit (defined above).
Long-term debt
divided by net income
2015 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 85