Rogers Communications Inc. (ticker: RCI.B.TO, exchange: Toronto Stock Exchange (.TO))
News Release -
26-Jul-2001
Rogers announces second quarter 2001 results
TORONTO, July 26 /PRNewswire/ - ROGERS COMMUNICATIONS INC. (``RCI'' or the
``Company'') today announced its consolidated financial results for the second
quarter ended June 30, 2001.
Financial highlights, which are in thousands of Canadian dollars (except
per share amounts), are as follows:
------------------------------------
Three Months Ended June 30 2001 2000 % Change
-------------------------------------------------------------------------
Revenue $951,518 $871,649 9.2%
Operating income (1) 249,301 243,155 2.5%
Loss (96,310) (13,585) -
Loss per share (56 cents) (11 cents) -
Loss (excl. non-operating gains) $(91,608) $(17,668) -
Loss per share (excl.
non-operating gains) (53 cents) (13 cents) -
Capital expenditures $370,417 $252,352 46.8%
------------------------------------------------------------------------
------------------------------------
Six Months Ended June 30 2001 2000 % Change
------------------------------------------------------------------------
Revenue $1,838,013 $1,679,366 9.4%
Operating income (1) 453,977 451,029 0.7%
Net income (loss) (200,246) 5,688 -
Loss per share $(1.15) (6 cents) -
Loss (excl. non-operating gains) $(181,613) $(50,791) -
Loss per share (excl.
non-operating gains) $(1.06) (34 cents) -
Capital expenditures $687,243 $469,530 46.4%
------------------------------------------------------------------------
(1) Defined as operating income before integration costs on
cablesystems exchange (in 2001 results) and depreciation and
amortization.
In addition, operating highlights in the quarter included:
- All operating companies continued to experience strong revenue growth
with 8.5% growth at Wireless, 11.4% revenue growth at Cable and 6.3%
revenue growth at Media. Cable and Media both achieved double digit
operating income growth.
- Nadir Mohamed assumed the role of President and CEO of Wireless,
replacing Charles Hoffman. Nadir joined the Company in August 2000 and
brings with him many years of experience in the Canadian wireless
industry.
- The Company announced that it is proposing to acquire all of the
outstanding Class B Restricted Voting shares of Rogers Wireless
Communications Inc. owned by the public.
- Three financing initiatives were completed in the quarter at Wireless:
a US$500 million debt financing, a $423 million rights offering and an
amended $700 million bank credit facility. With these initiatives
complete, the Company estimates the funding requirements of Wireless
are met through the end of 2003.
- The Company reached an agreement effective April 1, 2001 with Rogers
Telecommunications Limited ("RTL"), a company controlled by Edward S.
(Ted) Rogers, under which $30 million will be invested into voting
preferred shares of an RCI subsidiary that will own the Toronto Blue
Jays Baseball Club ("Blue Jays"). As a result voting control will
move to RTL. Consequently, in the quarter, the Company is no longer
consolidating the results of the Blue Jays and is accounting for the
results using the equity method. RCI will continue to own 80% of the
common equity of the Toronto Blue Jays.
- Subsequent to June 30, 2001, the Company signed an agreement to
acquire an additional 40% ownership of Sportsnet (subject to
regulatory approval).
Commenting on the Company's results, RCI's President and CEO, Edward S.
(Ted) Rogers said, ``We are encouraged by the continued strong revenue growth
in each operating division and especially pleased with the operating income
growth at Cable. Cable continued to achieve double-digit revenue growth in the
quarter and, more importantly, operating income growth in excess of revenue
growth. Media results were also very strong and showed superior year-over-year
operating income growth in a challenging economic climate. Wireless operating income results were disappointing. However, the
improving trend in churn continued and Nadir Mohamed, Wireless' new CEO and
his management team are committed to improving operating performance.``
CONSOLIDATED RESULTS - SECOND QUARTER AND YEAR-TO-DATE
Three Months Ended Six Months Ended
June 30 June 30
(In millions -------------------------------------------------------
of dollars) 2001 2000 Chg % Chg 2001 2000 Chg % Chg
-------------------------------------------------------------------------
Revenue
-------
Wireless 410.6 378.4 32.2 8.5 788.3 727.2 61.1 8.4
Cable 353.6 317.5 36.1 11.4 700.5 627.8 72.7 11.6
Media 186.8 175.7 11.1 6.3 345.2 324.4 20.8 6.4
Corporate
Items and
Eliminations 0.5 - 0.5 - 4.0 - 4.0 -
-------------------------------------------------------------------------
Consolidated
Revenue 951.5 871.6 79.9 9.2 1,838.0 1,679.4 158.6 9.4
-------------------------------------------------------------------------
Operating
Income (1)
-----------
Wireless 102.7 114.9 (12.2) (10.6) 196.6 216.3 (19.7) (9.1)
Cable 128.7 111.4 17.3 15.5 253.8 221.3 32.5 14.7
Media 28.1 23.7 4.4 18.4 30.5 31.6 (1.1) (3.4)
Corporate
Items and
Eliminations (10.2) (6.8) (3.4) (50.0) (26.9) (18.2) (8.7)(47.8)
-------------------------------------------------------------------------
Consolidated
Operating
Income 249.3 243.2 6.1 2.5 454.0 451.0 3.0 0.7
-------------------------------------------------------------------------
(1) Defined as operating income before integration costs on cablesystems
exchange (in 2001 results) and depreciation and amortization
Each of the operating divisions experienced similar revenue growth to
that experienced in the first quarter of 2001. Total revenue increased by 9.2% versus the prior years quarter with 8.5%
revenue growth at Wireless, 11.4% revenue growth at Cable and 6.3% revenue
growth at Media. Consolidated operating income before integration costs on
cablesystems exchange, depreciation and amortization (``operating income'') for
the second quarter was $249.3 million, an increase of $6.1 million or 2.5%
from $243.2 million in the prior year. For the six month period, operating
income increased to $454 million from $451 million in the same period of the
prior year. In the second quarter, Cable and Media had year-over-year operating
income growth of 15.5% and 18.4%, while Wireless experienced a 10.6% decline.
Fixed Charges
Three Months Ended Six Months Ended
June 30 June 30
(In millions -------------------------------------------------------
of dollars) 2001 2000 Chg % Chg 2001 2000 Chg % Chg
-------------------------------------------------------------------------
Depreciation and
amortization 226.1 176.1 50.0 28.4 444.7 341.9 102.8 30.1
Interest Expense 103.4 95.1 8.3 8.7 202.1 183.0 19.1 10.4
-------------------------------------------------------------------------
Increased depreciation and amortization expense was primarily due to
capital spending of the Cable and Wireless companies and the resulting higher
fixed asset levels. Increased debt levels related to the capital build programs were the
primary reason for the increase in interest expense year-over-year.
Net Income / Loss
Three Months Ended June 30
------------------------------------------
(In millions of dollars,
except per share data) 2001 2000 Chg % Chg
------------------------------------------------------------------------
Net income (loss) (96.3) (13.6) (82.7) -
Net income (loss)
per share (56 cents) (11 cents) (45 cents) -
Loss (excl. non-
operating gains) (91.6) (17.7) (73.9) -
Loss per share (excl.
non-operating gains) (53 cents) (13 cents) (40 cents) -
Six Months Ended June 30
------------------------------------------
(In millions of dollars,
except per share data) 2001 2000 Chg % Chg
------------------------------------------------------------------------
Net income (loss) (200.2) 5.7 (205.9) -
Net income (loss)
per share ($1.15) (6 cents) ($1.09) -
Loss (excl. non-
operating gains) (181.6) (50.8) (130.8) -
Loss per share (excl.
non-operating gains) ($1.06) (34 cents) (72 cents) -
RCI recorded a loss of $96.3 million, or 56 cents per share (after
distributions on convertible preferred securities) compared to a loss of $13.6
million, or 11 cents per share (after distributions on convertible preferred
securities) in the second quarter of the prior year. Excluding non-operating
gains in both periods, RCI recorded a loss of $91.6 million or 53 cents per
share (after distributions on convertible preferred securities) compared to a
loss of $17.7 million or 13 cents per share (after distributions on
convertible preferred securities) in the second quarter of the prior year. Staffing At June 30, 2001, Rogers had approximately 13,600 employees an increase
of 900 employees from 12,700 employees reported at December 31, 2000 due to
the acquisition of Cable Atlantic and the sports franchises.
Wireless
--------
(Subscriber statistics Three Months Ended Six Months Ended
in thousands except June 30 June 30
ARPU and usage, -------------------------------------------------------
revenue in 2001 2000 Chg % Chg 2001 2000 Chg % Chg
millions
of dollars)
-------------------------------------------------------------------------
Total - Postpaid
and Prepaid
----------------
Wireless voice
services
revenue 351.6 310.8 40.8 13.1 672.1 604.2 67.9 11.2
Gross
additions 286.0 246.2 39.8 16.2 528.7 454.3 74.4 16.4
Net additions 110.0 98.1 11.9 12.1 184.3 148.1 36.2 24.4
Subscribers 2,698.2 2,301.2 397.0 17.3
Blended Average
Revenue per
User ("ARPU") 44.33 46.07 (1.74) (3.8) 43.10 45.49 (2.39) (5.3)
Postpaid
--------
Gross
additions 179.0 184.3 (5.3) (2.9) 338.5 330.7 7.8 2.4
Net additions 46.6 67.7 (21.1) (31.2) 80.5 87.1 (6.6) (7.6)
Subscribers 2,127.7 1,948.4 179.3 9.2
ARPU 53.06 52.53 0.53 1.0 51.32 51.73 (0.41) (0.8)
Average monthly
usage (minutes) 315 267 48 18.0 289 247 42 17.0
Prepaid
-------
Gross
additions 107.0 61.9 45.1 72.9 190.2 123.6 66.6 53.9
Net additions 63.4 30.4 33.0 108.6 103.8 61.1 42.7 69.9
Subscribers 570.5 352.8 217.7 61.7
ARPU 9.93 9.53 0.40 4.2 9.64 8.82 0.82 9.3
Total Wireless revenue increased $32.2 million or 8.5% in the second
quarter due to an increase of $40.8 million or 13.1% in wireless voice
services revenue partially offset by a decline of $7.7 million or 14.6% in
equipment sales revenue and a decline of 6.7% in messaging and data services
revenues. Gross revenues for the six month period increased by 8.4%. Wireless
voice services revenue increased by $68.0 million or 11.2%, while equipment
sales revenue declined by $6.1 million or 6.6%. Wireless voice services revenue growth of $40.8 million was driven by a
17.6% increase in the average number of wireless voice subscribers, and
partially offset by a 3.8% decline in blended ARPU compared to the second
quarter of the prior year. Similarly, for the six month period, wireless voice
services revenue increased $67.9 million or 11.2% versus the first six months
of 2000. Total gross subscriber additions of 286,000 in the quarter represented an
increase of 16.2% over the second quarter of the prior year. Total net
subscriber additions were 110,000 in the second quarter, an increase of 12.1%
over the second quarter of the prior year. Postpaid subscriber additions in the quarter represented 62.6% of the
total gross additions and 42.4% of the total net additions. Year-to-date,
postpaid subscriber additions accounted for 64.0% of the total gross additions
and 43.7% of the total net additions. The balance of gross and net additions
for the quarter and for the year-to-date was on prepaid service. The total
number of subscribers on digital service was approximately 1,660,000, or 62%
of the total wireless voice subscriber base. Blended voice monthly ARPU (prepaid and postpaid) was $44.33, down $1.74
or 3.8% from $46.07 in the second quarter of 2000. The decline in ARPU was due
to an increase in the proportion of subscribers on prepaid service. Prepaid
subscribers accounted for 21.1% of the total wireless voice subscriber base at
June 30, 2001 compared to 15.3% at June 30, 2000. Postpaid monthly ARPU was
$53.06, up $0.53 or 1.0% versus the prior year's second quarter. Prepaid
monthly ARPU was $9.93, up $0.40 or 4.2% versus the prior year's second
quarter.
Equipment Sales, Messaging and Data Services
Three Months Ended Six Months Ended
June 30 June 30
--------------------------------------------------------
(In millions
of dollars) 2001 2000 Chg % Chg 2001 2000 Chg % Chg
-------------------------------------------------------------------------
Equipment
revenue 45.1 52.8 (7.7) (14.6) 86.9 93.0 (6.1) (6.6)
Messaging and
data services
revenue 13.9 14.9 (1.0) (6.7) 29.2 30.0 (0.8) (2.7)
Revenue from Other Operations (including equipment sales, and messaging
and data services) was $59.0 million, a decrease of $8.7 million, or 12.9%
from the second quarter of the prior year. Revenue from equipment sales was $45.1 million, a decrease of $7.7
million from the second quarter of the prior year. The decline in equipment
sales, as compared to the same quarter in the prior year, is primarily
attributable to reductions in equipment prices and the timing of equipment
sales to distribution partners. Messaging and data services revenue decreased slightly to $13.9 million
from $14.9 million in the second quarter of the prior year due to declines in
one-way paging revenue.
Customer Satisfaction and Retention
Three Months Ended Six Months Ended
June 30 June 30
-------------------------------------------------------
2001 2000 Chg % Chg 2001 2000 Chg % Chg
-------------------------------------------------------------------------
Average monthly
wireless voice
churn:
Postpaid 2.10% 2.05% 0.05 2.4 2.18% 2.16% 0.02 0.9
Prepaid 2.78% 3.16% (0.38) (12.0) 2.86% 3.29% (0.43) (13.1)
Average monthly postpaid wireless voice subscriber churn was 2.10%,
slightly higher than 2.05% in the second quarter of the prior year, improved
from 2.25% in the first quarter of the current year. The continued decline in
churn highlights the success of the Company's refocused efforts and retention
programs. Churn reduction will continue to be a top priority.
Messaging and Data Subscribers
Three Months Ended Six Months Ended
(In thousands, June 30 June 30
except churn -------------------------------------------------------
and ARPU) 2001 2000 Chg % Chg 2001 2000 Chg % Chg
-------------------------------------------------------------------------
Gross additions 37.0 41.1 (4.1) (10.0) 66.8 78.2 (11.4) (14.6)
Net additions 0.9 (0.3) 1.2 - (13.8) (5.2) (8.6) -
Subscribers 430.2 446.8 (16.6) (3.7)
Average monthly
churn 2.81% 3.09% (0.28) (9.1) 3.11% 3.10% .01 0.3
ARPU - Paging 9.61 10.75 (1.14) (10.6) 10.01 10.95 (0.94) (8.6)
ARPU - Data and
two-way
messaging 24.71 20.80 3.91 18.8 26.65 17.07 9.58 56.1
Total messaging and data subscribers increased by 900 in the second
quarter, compared to a decline of 300 in the prior year's second quarter. Two-
way messaging subscribers totalled 23,700, as at June 30, 2001, substantially
higher than the 9,300 total as at June 30, 2000.
Operating Expenses
(In millions of Three Months Ended Six Months Ended
dollars, except June 30 June 30
per subscriber -------------------------------------------------------
statistics 2001 2000 Chg % Chg 2001 2000 Chg % Chg
-------------------------------------------------------------------------
Operating
expenses before
sales and
marketing 137.7 102.6 35.1 34.2 264.4 210.7 53.7 24.4
Sales and
marketing
expenses 125.1 108.2 16.9 15.6 240.3 207.1 33.2 16.0
Average monthly
operating
expenses
before sales
and marketing
costs per
subscriber 15 13 2 15.4 15 13 2 15.4
Total gross
additions
(Wireless voice,
messaging and
data) 323.0 287.3 35.7 12.4 595.6 532.6 63.0 11.8
Sales and
marketing cost
per gross
addition 387 377 10 2.7 403 389 14 3.6
Sales and
marketing cost
per gross
addition
excluding
retention costs 313 306 7 2.3 305 304 1 0.3
Total operating expenses before sales and marketing costs were $137.7
million, an increase of $35.1 million or 34.2% from $102.6 million in the
second quarter of 2000. Long-distance contribution expenses increased by $10.7
million, due to legislated changes from the Canadian Radio-television and
Telecommunications Commission (``CRTC''). The remainder of the increase relates
to higher expenses relative to the increased subscriber base. Sales and marketing costs were $125.1 million, an increase of $16.9
million or 15.6% from $108.2 million in the second quarter of 2000. This
increase is attributed mostly to a 12.4% increase in total Wireless gross
additions. Sales and marketing cost per wireless gross addition, including
retention costs, was $387 compared to $377 in the second quarter of 2000.
Excluding retention related costs of $11.0 million in both the current and
prior years' second quarter, sales and marketing cost per wireless gross
addition was $313, up 2.3% from $306 in the second quarter of the prior year.
Capital Expenditures
Three Months Ended Six Months Ended
June 30 June 30
(In millions -------------------------------------------------------
of dollars) 2001 2000 Chg % Chg 2001 2000 Chg % Chg
-------------------------------------------------------------------------
Capital
expenditures
(excluding
spectrum
licence costs) 217.4 119.8 97.6 81.5 377.9 209.9 168.0 80.0
Capital expenditures totalled $217.4 million, an increase of $97.6
million from the second quarter of 2000. Network related expenditures were
$185.2 million, of which approximately 65.0% related to the rollout of the GSM-
GPRS overlay, and the remainder for capacity and technical spending. The
Company added 57 new cell sites to the network in the quarter. The remaining
capital expenditures of $32.2 million related to information technology
initiatives as well as the expansion of call centres and other buildings.
Cable
-----
Three Months Ended Six Months Ended
(In millions June 30 June 30
of dollars, -------------------------------------------------------
except margin) 2001 2000 Chg % Chg 2001 2000 Chg % Chg
-------------------------------------------------------------------------
Core Cable
Revenue 262.6 244.4 18.2 7.4 520.0 485.5 34.5 7.1
High Speed
Internet
Revenue 39.8 25.9 13.9 53.7 75.4 48.5 26.9 55.4
Video Stores
Revenue 51.2 47.2 4.0 8.5 105.1 93.8 11.3 12.0
Total Cable
Revenue 353.6 317.5 36.1 11.4 700.5 627.8 72.7 11.6
Operating
income (1) 128.7 111.4 17.3 15.5 253.8 221.3 32.5 14.7
Core Cable
Operating
margin 42.5% 41.2% 1.3% - 42.5% 41.4% 1.1% -
@Home
Operating
margin 35.2% 30.1% 5.1% - 35.1% 30.2% 4.9% -
Total
Operating
margin 36.4% 35.1% 1.3% - 36.2% 35.2% 1.0% -
(1) defined as operating income before integration costs on cablesystems
exchange (in 2001 results) and depreciation and amortization
Cable revenue increased $36.1 million or 11.4% for the quarter and $72.7
million or 11.6% for the year-to-date. The integration of Cable Atlantic
contributed approximately $10.2 million of the revenue increase in the quarter
with the remaining $25.9 million increase attributable to organic growth. Increased digital penetration, rate increases and the acquisition of
Cable Atlantic contributed to the growth in Core Cable revenue of $18.2
million for the quarter and $34.5 million year-to-date. High Speed Internet revenue increased $13.9 million or 53.7% for the
quarter and $26.9 million or 55.4% year-to-date as a result of the 42.4%
increase in the subscriber base versus the prior year. Video stores revenue increased $4.0 million or 8.5% in the quarter and
$11.3 million or 12.0% year-to-date with the opening of five new stores in the
quarter, as well as higher average spending per customer visit in the current
year. Same store revenues have increased 4.7% in the current year. Operating income before depreciation, amortization and integration costs
on cablesystems exchange, increased $17.3 million or 15.5% in the quarter and
$32.5 million or 14.7% for the year-to-date. Cable Atlantic contributed
operating income of approximately $4.0 million in the second quarter and $6.5
million for the year-to-date. Operating margins continue to show improvement year-over-year reflecting
management's commitment to aggressively pursue operational efficiencies where
possible.
Three Months Ended Six Months Ended
(Subscriber June 30 June 30
statistics -------------------------------------------------------
in thousands) 2001 2000 Chg % Chg 2001 2000 Chg % Chg
-------------------------------------------------------------------------
Basic cable
subscribers 2,279.5 2,233.2 46.3 2.1
Basic cable,
net additions (17.3) (3.8) (13.5) - (11.6) (3.0) (8.6) -
@Home
subscribers 378.7 265.9 112.8 42.4
@Home, net
additions 31.8 50.2 (18.4) (37.6) 60.0 80.2 (20.2)(25.2)
Digital boxes
in service 238.0 111.4 126.6 113.6
Digital
households 203.7 91.2 112.5 123.4
Digital
households,
net additions 12.8 8.2 4.6 56.1 31.6 45.9 (14.3)(31.2)
VIP Customers 446.1 462.9 (16.8) (3.6)
VIP Customers,
net additions 42.7 16.5 26.2 158.8 86.8 74.3 12.5 16.8
Basic cable subscriber gains were achieved in the Greater Toronto area,
but were more than offset by losses in the other regions, resulting in a net
subscriber loss of 17,300 for the quarter. Seasonal (particularly student)
disconnects and competitive pressures were the main contributors to the net
loss in the quarter. At June 30, 2001, 84.9% of basic cable service customers also subscribed
to tier services, compared to 85.4% at June 30, 2000. Tier III is currently
available only in Ontario where the penetration levels have grown to 62.7% at
June 30, 2001 up from the 60.2% June 30, 2000. Cable ended the quarter with
446,100 VIP customers. Cable added 31,800 Rogers@Home net subscribers, 18,400 less than added
in the prior years second quarter. During the quarter, the Company focused its
efforts on ensuring customer service issues experienced by some of its
Rogers@Home customers were fully addressed. During the quarter a CD-Rom
toolkit was mailed to @Home subscribers allowing them to do their own
trouble-shooting. At June 30, 2001, Cable was able to market its high-speed
Internet access services to approximately 83% of homes passed (92% excluding
New Brunswick and Newfoundland). During the quarter Cable placed an additional 15,200 digital set-top
devices in service, ending the second quarter with 238,000 devices in 203,700
households.
Operating Expenses
Three Months Ended Six Months Ended
June 30 June 30
(In millions -------------------------------------------------------
of dollars) 2001 2000 Chg % Chg 2001 2000 Chg % Chg
-------------------------------------------------------------------------
Cable
operating
expenses 224.9 206.1 18.8 9.2 446.8 406.5 40.3 9.9
Operating expense increases for the second quarter included a $2.0
million increase in core cable operation expenses (primarily related to
increased program supplier costs and customer service costs), $6.2 million of
Cable Atlantic expenses, $6.8 million of @Home expenses (primarily related
to growth in subscriber base) and $3.8 million additional video store expenses
(primarily related to additional stores).
Capital Expenditures
Three Months Ended Six Months Ended
June 30 June 30
(In millions -------------------------------------------------------
of dollars) 2001 2000 Chg % Chg 2001 2000 Chg % Chg
-------------------------------------------------------------------------
Capital
Expenditures 151.4 124.9 26.5 21.2 302.7 243.8 (58.9)(11.3)
Network related expenditures in the quarter were $91.7 million. This is
increased over the first quarter of 2001 due to an increase in spending
related to the implementation of DOCSIS, @Home related network improvements
and ongoing 750Mhz/860Mhz rebuild as well as network expansion projects.
Included in the balance of the capital expenditures were the costs of
purchasing cable modems, digital set top boxes, and costs associated with
exchanging the digital technology in the Ontario cable systems acquired from
Shaw Communications Inc. Cablesystems Integration Costs Cable spent approximately $6.2 million on integration costs related to
the exchange of certain cable systems properties with Shaw and the acquisition
of Cable Atlantic. As at June 30, 2001, the Shaw integration activities are
complete. Cable Atlantic integration activities will continue over the next
two quarters with minimal costs.
Media
-----
Media revenues was $186.8 million in the quarter, a 6.3% increase, and
$345.2 million year-to-date, a 6.4% increase. The Shopping Channel and
Publishing divisions were the largest contributors to the increases. Operating income in the quarter increased $4.4 million, or 18.6% year-
over-year, however year-to-date operating income declined by $1.1 million or
3.4%. The year-to-date decline in operating income before depreciation and
amortization is primarily attributable to the iMedia restructuring charges
incurred in the first and second quarter.
Radio
Three Months Ended Six Months Ended
June 30 June 30
(In millions -------------------------------------------------------
of dollars) 2001 2000 Chg % Chg 2001 2000 Chg % Chg
-------------------------------------------------------------------------
Revenue 40.1 38.2 1.9 5.0 69.1 65.6 3.5 5.3
Operating income 14.3 13.5 0.8 5.9 16.5 15.7 0.8 5.1
Radio revenue increased $1.9 million, or 5.0% in the quarter and $3.5
million, or 5.3% year-to-date. The revenue increase is due mainly to strong
results at the Toronto, Ottawa and Winnipeg stations. Radio operating income increased $0.8 million for both the quarter and
year-to-date versus the prior year periods. During the quarter, the Abbotsford
application for AM to FM conversion was approved and a fall launch is planned.
CFMT
Three Months Ended Six Months Ended
June 30 June 30
(In millions -------------------------------------------------------
of dollars) 2001 2000 Chg % Chg 2001 2000 Chg % Chg
-------------------------------------------------------------------------
Revenue 14.0 14.0 - - 25.8 25.9 (0.1) (0.4)
Operating income 4.1 2.9 1.2 41.4 6.4 5.7 0.7 12.3
CFMT-TV (``CFMT''), Media's multilingual television station, reported
substantially the same revenues for both the second quarter and year-to-date
versus the prior years period. CFMT's operating income in the quarter was $4.1 million, an increase of
$1.2 million or 41.4%, and $6.4 million year-to-date, up $0.7 million or
12.3%. The increase in operating income in the quarter reflects the impact of
$1.5 million in expenses written-off in 2000 for the multicultural television
station application in Vancouver.
The Shopping Channel
Three Months Ended Six Months Ended
June 30 June 30
(In millions -------------------------------------------------------
of dollars) 2001 2000 Chg % Chg 2001 2000 Chg % Chg
-------------------------------------------------------------------------
Revenue 45.7 41.1 4.6 11.2 94.2 86.2 8.0 9.3
Operating
income 3.4 3.5 (0.1) (2.9) 7.5 8.0 (0.5) (6.3)
The Shopping Channel (``tsc'') revenue increased $4.6 million, or 11.2%, in
the quarter and $8.0 million, or 9.3% year-to-date. The Shopping Channel
continues to expand items shipped through both its conventional over-the-air
channel as well as its on-line retail store and catalogue channels. Non-
broadcast channels produced 19.2% of tSc's revenue, compared to 11.7% in the
second quarter of 2000. The Shopping Channel's operating income for the
quarter is down 2.9% versus the prior year's period, due mainly to higher on-
air distribution costs.
Publishing
Three Months Ended Six Months Ended
June 30 June 30
(In millions -------------------------------------------------------
of dollars) 2001 2000 Chg % Chg 2001 2000 Chg % Chg
-------------------------------------------------------------------------
Revenue 84.7 81.0 3.7 4.6 151.0 144.2 6.8 4.7
Operating
income 12.3 9.5 2.8 29.5 13.7 13.1 0.6 4.6
Revenue at the Publishing division grew by $3.7 million or 4.6% for the
quarter and $6.8 million or 4.7% year-to-date. Continued strong sales from the
Women's publications as well as the acquisition of Physicians Financial News
contributed to the quarterly and year-to-date revenue increases. Operating income in the quarter increased $2.8 million or 29.5% from the
second quarter of the prior year reflecting improved performance at several
key publications, a reduction of editorial costs due to a contribution from
the Canada Magazine Fund, offset by a restructuring charge at Maclean's. Year-
to-date, operating income increased marginally, by $0.6 million or 4.6%, over
the same period for the prior year.
iMedia
Three Months Ended Six Months Ended
June 30 June 30
(In millions -------------------------------------------------------
of dollars) 2001 2000 Chg % Chg 2001 2000 Chg % Chg
-------------------------------------------------------------------------
Revenue 2.3 1.4 0.9 64.3 5.2 2.5 2.7 108.0
Operating
income (3.6) (3.8) 0.2 5.2 (9.3) (7.6) (1.7) (22.3)
iMedia restructured its operations in the first quarter of 2001 with the
objective of focusing on its core Internet properties. iMedia has spent
approximately $3.0 million on restructuring activities with $1.3 million
incurred in the second quarter of this year. The objective of iMedia is to
continue to grow revenues in a cost-effective manner.
Sports
------
The Company has reached an agreement, effective April 1, 2001, with
Rogers Telecommunications Limited (RTL), a company controlled by Edward S.
(Ted) Rogers under which RTL has agreed to acquire $30 million of voting
preferred shares of an RCI Subsidiary that will own the Toronto Blue Jays.
These preferred shares will give RTL sufficient voting rights to control the
Blue Jays operations. As a result, the Company will no longer consolidate the
results of the Blue Jays but rather will account for the results on an equity
basis. RCI will continue to own 80% of the common equity of the Toronto Blue
Jays and will have the right, exercisable at any time, to purchase the
preferred shares at their issue price. In addition, RCI and RTL have agreed
that for the first three years the dividends on the preferred shares may be
satisfied in kind by RCI transferring tax deductions to RTL. The Blue Jays had an operating loss in the quarter of $24.8 million that
under the equity basis of accounting is reflected in Investment and Other
income in the Consolidated Statements of Income. Blue Jays results reflect the commitment by RCI to rebuild support for
the franchise in its first year of ownership. Average attendance in the
quarter was 1.8% ahead of the prior year and revenue of $57.8 million was
20.5% ahead of the prior year's second quarter. Costs in the quarter were
$82.5 million, an increase of $24.4 million, primarily due to increases in
players' salaries and exchange rates. Risks and Uncertainties The following items serve as an update to the risks and uncertainties
facing Rogers Communications as identified in the 2000 Annual Report: The CRTC has denied Bell Canada's appeal on contribution payments. As a
result, contribution payments made by all carriers for 2001 will be at 4.5% of
adjusted revenues. However, in a separate decision, the CRTC stated that the
2002 contribution payments for all carriers in 2002, including Wireless, are
likely to be 1.5% of adjusted revenues. As at the December 31, 2000, the CRTC had initiated a proceeding to
consider the appropriate terms and conditions, including rates of access to
municipal property in the City of Vancouver. The CRTC announced their decision
on January 25, 2001. The decision was generally favourable to carriers and
distribution undertakings. The Municipalities have sought and received leave
to appeal the CRTC decision on payments for municipal rights of way in
Vancouver. Cable requires access to support structures (poles and conduits) and
municipal rights of way in order to deploy its facilities. In September 1999,
the CRTC granted cable operators the right to access municipal electric poles
on the same terms and conditions as are set out in the individual expired
agreements, and at a fixed rate of $16 per pole per year. The municipal
hydroelectric companies launched an appeal of the CRTC's decision in the
Federal Court of Appeal. This court challenge sought to remove the ability of
the CRTC to regulate access to hydroelectric poles, which could lead to higher
rates for pole access. The Federal Court of Appeal recently released its
decision in the case involving hydro poles. The court ruled that section 43(5)
of the Telecommunications Act does not give the CRTC any power to set rates
regarding hydro poles, and that it only applies to cable and telephone poles.
This decision may mean that no agency regulates hydro pole rates in Ontario.
The Company may appeal the decision to the Supreme Court of Canada.
The
Ontario Energy Board may also have jurisdiction to set rates.
In the short
term, the Company may be subject to rate increases from some hydro companies.
Some agreements contain clauses requiring retroactive payments in the event
that a higher final rate is set or agreed to. The CRTC has issued a call for applications for an ethnic television
station in Vancouver and Rogers Broadcasting has filed such an application. Liquidity and Capital Resources Cash flow from operating activities after working capital decreased to
$144.2 million from $147.0 million in the second quarter of the prior year.
RCI's operating cash flow shortfall (defined as cash flow from operating
activities after working capital, capital expenditures and distributions on
convertible preferred securities) was $266.4 million in the second quarter of
2001 compared to $143.0 million in the second quarter of 2000.
The difference
is attributable to the increase in capital spending in the current quarter. At June 30, 2001, RCI's total long-term debt net of cash was $4.6
billion, an increase of approximately $900 million from $3.7 billion at
December 31, 2000. Long-term debt reflects the issuance of US$500 million
Senior Secured notes issued in the quarter by Wireless. Total capital
expenditures were $370.4 million, compared to $252.4 million in the second
quarter of the prior year. Rogers Communications Inc. is Canada's national communications company
engaged in cellular, Digital PCS, paging and data communications through
Rogers AT&T Wireless; in cable television, high-speed Internet access and
video retailing through Rogers Cable Inc., and in radio and television
broadcasting, tele-shopping, publishing and new media businesses through
Rogers Media Inc.
(see attached financial tables and notes to financial tables)
<<
Rogers Communications Inc.
Consolidated Statements of Income
Three months ended Six months ended
June 30, June 30,
(in thousands of dollars
except per share data) 2001 2000 2001 2000
-------------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue $ 951,518 $ 871,649 $ 1,838,013 $ 1,679,366
Operating, general
and administrative
expenses 702,217 628,494 1,384,036 1,228,337
-------------------------------------------------------------------------
Operating income
before the following: 249,301 243,155 453,977 451,029
Integration costs
on cablesystem exchange 6,165 - 15,962 -
Depreciation and
amortization 226,083 176,074 444,741 341,852
-------------------------------------------------------------------------
Operating income (loss) 17,053 67,081 (6,726) 109,177
Interest on long-term
debt (103,417) (95,125) (202,056) (183,035)
-------------------------------------------------------------------------
(86,364) (28,044) (208,782) (73,858)
Gain on sale of assets
and other investments 1,849 4,083 2,385 78,591
Investment and other
income (26,256) (2,438) (24,477) (4,233)
-------------------------------------------------------------------------
Income before income
taxes and non-controlling
interest (110,771) (26,399) (230,874) 500
-------------------------------------------------------------------------
Income taxes
Current 3,411 3,039 6,663 5,671
Future 4,259 (15,260) 7,778 (5,104)
-------------------------------------------------------------------------
7,670 (12,221) 14,441 567
-------------------------------------------------------------------------
Loss before non-controlling
interest (118,441) (14,178) (245,315) (67)
Non-controlling interest 22,131 593 45,069 5,755
-------------------------------------------------------------------------
Net income (loss) for
the period $ (96,310) $ (13,585) $ (200,246) $ 5,688
-------------------------------------------------------------------------
Earnings per share
Basic $ (0.56) $ (0.11) $ (1.15) $ (0.06)
Fully diluted $ (0.56) $ (0.11) $ (1.15) $ (0.06)
Average Class A and Class B
Shares outstanding for the period (thousands)
Basic 207,810 203,575
Fully diluted 215,292 213,057
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements.
Rogers Communications Inc.
Consolidated Statements of Cash Flows
Three months ended Six months ended
June 30, June 30,
(in thousands
of dollars) 2001 2000 2001 2000
-------------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash provided by
(used in):
Operating activities:
Net income for the
period $ (96,310) $ (13,585) $ (200,246) $ 5,688
Adjustments to
reconcile net
income to net cash
flows from operating
activities:
Depreciation and
amortization 226,083 176,074 444,741 341,852
Future income tax
expense 4,259 (15,260) 7,778 (5,104)
Non-controlling
interest (22,131) (593) (45,069) (5,755)
Gain on sale of
assets and other
investments (1,849) (4,083) (2,385) (78,591)
Share of income of
associated companies,
net 30,723 1,738 32,301 2,978
Accrued interest due
on repayment of
certain notes 2,475 2,237 4,882 4,413
Dividends from
associated companies 949 472 1,064 822
-------------------------------------------------------------------------
144,199 147,000 243,066 266,303
Change in:
Accounts receivable 38,034 (23,200) 88,187 7,246
Accounts payable and
accrued liabilities
and unearned revenue (91,186) (24,621) (99,823) (73,471)
Deferred charges and
other assets 21,192 18,400 (57,605) (14,840)
-------------------------------------------------------------------------
112,239 117,579 173,825 185,238
-------------------------------------------------------------------------
Financing activities:
Issue of long-term
debt, net 311,361 195,546 696,969 566,908
Financing costs
incurred (19,185) - (19,185) -
Funds received from
non-controlling
shareholders 11,586 - 167,302 -
Issue of capital
stock 4,227 4,037 11,135 12,411
Dividends on preferred
shares and
distribution on
convertible preferred
shares (8,250) (8,249) (16,514) (16,500)
-------------------------------------------------------------------------
299,739 191,334 839,707 562,819
-------------------------------------------------------------------------
Investing activities:
Additions to fixed
assets (370,417) (252,352) (687,243) (469,530)
Acquisition of
Spectrum licences - - (396,824) -
Proceeds on sale of
assets and other
investments 3,510 4,318 4,258 99,973
Investment in Cogeco
Inc. and Cogeco
Cable Inc. - (40,527) - (307,985)
Acquisitions of
subsidiary companies,
net of cash acquired (6,641) - (18,320) -
Other investments (39,053) (18,388) (39,777) (111,087)
-------------------------------------------------------------------------
(412,601) (306,949) (1,137,906) (788,629)
-------------------------------------------------------------------------
Increase (decrease) in
cash and cash equivalents (623) 1,964 (124,374) (40,572)
Cash and cash equivalents
(deficiency), beginning
of period 175,400 (28,599) 299,151 13,937
-------------------------------------------------------------------------
Cash and cash equivalents
(deficiency), end of
period $ 174,777 $ (26,635) $ 174,777 $ (26,635)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash and cash equivalents (deficiency) are defined as cash and short-term
deposits, which have an original maturity of less than 90 days, less bank
advances.
See accompanying Notes to Consolidated Financial Statements.
Rogers Communications Inc.
Consolidated Balance Sheets
June 30, December 31,
(in thousands of dollars) 2001 2000
-------------------------------------------------------------------------
(Unaudited) (Audited)
Assets
Fixed assets $ 4,398,582 $ 4,047,329
Goodwill, subscribers and licences 1,973,666 1,573,923
Investments 1,084,869 972,648
Cash and cash equivalents 174,777 299,151
Accounts receivable 413,616 501,553
Deferred charges 245,418 235,824
Other assets 269,049 235,867
-------------------------------------------------------------------------
$ 8,559,977 $ 7,866,295
-------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Liabilities
Long-term debt $ 4,746,347 $ 3,957,662
Accounts payable and accrued liabilities 920,082 1,127,996
Unearned revenue 91,881 104,467
Future income taxes 133,805 145,560
-------------------------------------------------------------------------
5,892,115 5,335,685
Non-controlling interest 271,206 114,432
Shareholders' equity 2,396,656 2,416,178
-------------------------------------------------------------------------
$ 8,559,977 $ 7,866,295
-------------------------------------------------------------------------
Rogers Communications Inc.
Consolidated Statements of Deficit
June 30, December 31,
(in thousands of dollars) 2001 2000
-------------------------------------------------------------------------
(Unaudited) (Audited)
Deficit, beginning of the period $ (63,041) $ (160,510)
Net income (loss) (200,246) 141,442
Dividends on Series B and Series E
Preferred shares, and on the Class A
Voting and Class B Non-Voting shares (14) (10,200)
Distribution on Convertible Preferred
Securities, net of income tax recovery
of $7,194 (2000 - $14,388) (9,306) (18,612)
Dividends accreted on Preferred Securities,
net of income tax recovery of $15,295
(2000 - $11,721) (19,786) (15,161)
-------------------------------------------------------------------------
Deficit, end of the period $ (292,393) $ (63,041)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements.
Rogers Communications Inc.
Notes to Consolidated Financial Statements
Six months ended June 30, 2001
1. Significant accounting policies
The interim consolidated financial statements include the accounts of
Rogers Communications Inc. (``RCI'') and its subsidiary companies (collectively
the ``Company''). These interim financial statements should be read in
conjunction with the most recently prepared annual financial statements. These interim consolidated financial statements follow the same
accounting policies and methods of application as the most recent annual
statements except as follows;
i. Effective January 1, 2001, the Company changed the estimated useful
lives of certain network equipment that will result in an increase in
depreciation expense of approximately $25 million for fiscal 2001. The
impact of this change for the three and six months ended June 30,
2001, was to increase depreciation expense by $6.1 million and $12.3
million respectively.
ii. Effective January 1, 2001, the Company adopted the "Earnings per
Share" standards issued by the Canadian Institute of Chartered
Accountants. The standard requires the use of the treasury stock
method for calculating fully diluted earnings per share consistent
with United States Generally Accepted Accounting Principles.
iii. Effective April 1, 2001, the Company reached an agreement with
Rogers Telecommunications Limited (RTL), a company controlled by
Edward S. (Ted) Rogers under which RTL has agreed to acquire $30
million of voting preferred shares of an RCI Subsidiary that will
own the Toronto Blue Jays. These preferred shares are will give RTL
will have sufficient voting rights to control the Blue Jays
operations. As a result, the Company will no longer consolidate the
results of the Blue Jays but rather will account for the results on
an equity basis. RCI will continue to own 80% of the common equity
of the Toronto Blue Jays and will have the right exercisable at any
time to purchase the preferred shares at their issue price. In
addition, RCI and RTL have agreed that for the first three years the
dividends on the preferred shares may be satisfied in kind by RCI
transferring an agreed amount of tax deductions to RTL.
2. Acquisitions
Details of net assets acquired, at fair value, and the consideration
given are as follows:
June 30, December 31,
(in thousands of dollars) 2001 2000
-------------------------------------------------------------------------
Fixed assets $ 42,498 $ 3,468
Investments acquired - 11,899
Goodwill 220,091 148,784
Other intangible assets - 119,926
Other assets 10,546 14,689
-------------------------------------------------------------------------
273,135 298,766
Accounts payable, accrued liabilities and
debt assumed 92,172 89,488
-------------------------------------------------------------------------
Total consideration $ 180,963 $ 209,278
-------------------------------------------------------------------------
Consideration comprised of:
Cash $ 18,320 $ 209,278
Class B Non-Voting shares 162,643 -
-------------------------------------------------------------------------
$ 180,963 $ 209,278
-------------------------------------------------------------------------
i. On February 7, 2001, the Company acquired the shares of Cable Atlantic
Inc., which had cable television systems serving approximately 75,600
basic subscribers in Newfoundland. The Company paid cash of
$16,300,000, net of cash acquired, and issued 4,170,330 Class B Non-
Voting shares. The purchase price is subject to certain working
capital and valuation changes. Additional RCI Class B Non-voting
shares may be required to be issued to the vendor contingent upon the
quoted market value of shares not reaching a weighted average price of
$48 for any 28 day consecutive period within two years of the closing
date. The Company also purchased the assets of Advisor Forum, which
arranges conferences and forums for the financial planning community
for cash of $2,020,000.
ii. In association with Wireless' participation in the Industry Canada
PCS Spectrum Auction, the Company subscribed to approximately 60.4%
of Wireless' $422.6 million Class B Restricted Voting Shares rights
offer for $255.3 million with non-controlling interest shareholders
funding $167.3 million. This transaction increased the Company's
ownership to 52.47% contributing an additional amount of $35.9
million to goodwill and minority interest.
3. Goodwill, spectrum licence and other intangible assets
June 30, December 31,
(in thousands of dollars) 2001 2000
-------------------------------------------------------------------------
Goodwill $ 1,927,329 $ 1,767,971
Spectrum licence 396,824 -
Intangible assets - 119,926
-------------------------------------------------------------------------
$ 2,324,153 $ 1,887,897
Less accumulated amortization 350,487 313,974
-------------------------------------------------------------------------
$ 1,973,666 $ 1,573,923
-------------------------------------------------------------------------
Wireless participated in the Industry Canada PCS Spectrum Auction that
was completed on February 1, 2001. Wireless purchased a total of 23 spectrum
licences, in 12 of 14 regions in Canada, providing the utilization of 10MHz of
spectrum for each licence in the 1.9GHz for a total of $396,824,000 including
incremental costs related to preparation and participation in the auction. The
spectrum will facilitate the additional capacity of existing wireless voice
communications services and the introduction of new wireless data
communication services. Each spectrum licence has a life of 10 years. The
accounting policy adopted by the Company is to amortize the value of the
licence over its 10 year term. The change in the accounting treatment for the Blue Jays from
consolidation to equity accounting as outlined in Note 1 (iii) resulted in
$217,553,000 for goodwill and other intangibles being removed from the
Company's balance sheet as at April 1, 2001.
4. Investments
(in thousands of dollars,
except share amounts) Number Description
-------------------------------------------------------------------------
(A) Publicly traded companies
AT&T Canada 25,002,100 Class B Deposit Receipts
Cogeco Cable Inc.
("Cogeco Cable") 4,253,800 Subordinate Voting Common
Cogeco Inc.("Cogeco") 2,724,800 Subordinate Voting Common
Liberate Technologies, Inc.
("Liberate") 1,271,888 Common
200,000 Warrants
Terayon Communications
Systems, Inc.("Terayon") 3,087,618 Common
Astral Communications Inc. 141,300 Class B Subordinate Voting
Bid.com International Inc.
("Bid.com") 202,300 Common
At Home Corporation 5,674,125 Warrants -vested
595,429 Warrants - not vested
Other
-------------------------------------------------------------------------
(B) Private technology companies
Futureway Communications,Inc. 6,117,648 Series 2 units
(C) Other
(D) Investments, at equity
Toronto Blue Jays
CTV SportsNet
Other
-------------------------------------------------------------------------
Market June 30, December
Value 2001 31, 2000
-------------------------------------------------------------------------
(A) Publicly traded companies
AT&T Canada 1,142,096 $ 450,104 $ 450,104
Cogeco Cable Inc.("Cogeco Cable") 122,722 187,167 187,167
Cogeco Inc.("Cogeco") 72,207 120,818 120,818
Liberate Technologies, Inc.
("Liberate") 20,894 19,064 20,938
1,215 - -
Terayon Communications
Systems, Inc.("Terayon") 28,348 - -
Astral Communications Inc. 8,478 1,697 1,697
Bid.com International Inc.
("Bid.com") 111 264 255
At Home Corporation - - -
- - -
Other 20,578 13,722 32,537
-------------------------------------------------------------------------
1,416,649 792,836 813,516
(B) Private technology companies
Futureway Communications,Inc. 26,170 26,161
Other 44,752 42,450
(C) Other 7,503 40,403
(D) Investments, at equity
Toronto Blue Jays 164,900 -
CTV SportsNet 35,382 37,781
Other 13,326 12,337
-------------------------------------------------------------------------
$1,084,869 $ 972,648
-------------------------------------------------------------------------
5. Long-term debt
Interest June 30, December 31,
(in thousands of dollars) Rate 2001 2000
-------------------------------------------------------------------------
(A) Corporate:
(i) Convertible Debentures,
due 2005 5-3/4% $ 292,061 $ 283,924
(ii) Senior Notes, due 2006 9-1/8% 82,932 81,975
(iii) Senior Notes, due 2006 10-1/2% 75,000 75,000
(iv) Senior Notes, due 2007 8-7/8% 294,964 292,245
(v) Senior Notes, due 2007 8-3/4% 165,000 165,000
(B) Wireless:
(i) Bank loan Floating - -
(ii) Senior Secured Notes,
due 2006 10-1/2% 160,000 160,000
(iii) Senior Secured Notes,
due 2007 8.30% 273,667 272,162
(iii) Senior Secured Notes,
due 2011 9-5/8% 770,400 -
(iv) Senior Secured Debentures,
due 2008 9-3/8% 433,121 433,121
(v) Senior Secured Debentures,
due 2016 9-3.4% 223,808 222,005
(vi) Senior Subordinated Notes,
due 2007 8.80% 326,306 322,543
(C) Cable:
(i) Bank loan Floating - -
(ii) Senior Secured Second Priority
Notes, due 2002 9-5/8% 116,389 116,389
(iii) Senior Secured Note
Due May 2002 Floating 300,000 300,000
(iv) Senior Secured Second Priority
Notes, due 2005 10% 412,288 412,146
(v) Senior Secured Second Priority
Debentures, due 2007 10% 146,223 146,223
(vi) Senior Secured Second Priority
Debentures, due 2012 10-1/8% 172,867 172,867
(vii) Senior Secured Second Priority
Debentures, due 2014 9.65% 300,000 300,000
(vii) Senior Subordinated
Debentures, due 2015 11% 164,398 164,264
(D) Media:
Bank loan Floating -
(E)Obligations under mortgages and
capital leases Various 36,923 37,798
-------------------------------------------------------------------------
$4,746,347 $3,957,662
-------------------------------------------------------------------------
In May 2001, the Company issued US$500 million of Senior Secured Notes
maturing on May 1, 2011. These notes are redeemable in whole or in part, at
the option of the company, at anytime, subject to a prepayment premium.
Interest is payable semi-annually on November 1st and May 1st. The Company also entered into an agreement to amend the Wireless bank
credit facility. Among other things, the amended bank credit facility provides
Wireless with a revolving credit facility of $700 million with no reduction
until April 30, 2006 and a final maturity on April 30, 2008.
6. Shareholders' Equity
June 30, December 31,
(in thousands of dollars, except share amounts) 2001 2000
-------------------------------------------------------------------------
Capital stock issued, at stated value:
Preferred shares:
Held by subsidiary companies
105,500 Series XXIII $ 105,500 $ 105,500
- Series XXVI (2000 -253,500) - 253,500
150,000 Series XXVII 150,000 150,000
30,000 Series XXIX 30,000 30,000
818,300 Series XXX 10,000 10,000
300,000 Series XXXI 300,000 300,000
300,000 Series XXXII 300,000 300,000
Held by members of the
Company's share purchase plans:
138,333 Series B (2000 - 160,221) 1,743 2,019
158,304 Series C (2000 - 170,852) 2,707 2,922
Common shares:
56,240,494 Class A Voting shares 72,320 72,320
153,096,419 Class B Non-Voting shares
(December 31, 2000 - 147,856,858) 248,748 240,235
-------------------------------------------------------------------------
1,221,018 1,466,496
Deduct:
Amounts receivable from employees under certain
share purchase plans, including $1,179
from officers (December 31, 2000 - $1,754) 3,386 4,249
Preferred shares of the Company
held by subsidiary companies 895,500 1,149,000
-------------------------------------------------------------------------
Total capital stock 322,132 313,247
Convertible preferred securities 576,000 576,000
Warrants to purchase Class B Non-Voting shares 24,000 24,000
Preferred securities 987,229 952,147
Contributed surplus 779,688 613,825
Deficit (292,393) (63,041)
--------------------------------------------------------------------------
$2,396,656 $2,416,178
-------------------------------------------------------------------------
During 2001, the Company completed the following stock transactions:
a) 21,875 Series B and 12,568 Series E Convertible Preferred shares with
a value of $491,000 were converted into 34,443 Class B Non-Voting
shares;
b) 4,170,330 Class B Non-Voting shares with a value of $6,776,000 were
issued as partial consideration for the acquisition of Cable Atlantic
Inc.;
c) 810,959 Class B Non-Voting shares were issued to employees upon the
exercise of options for cash of $5,676,000; and
d) 223,746 Class B Non-Voting shares were issued to employees pursuant to
Employee Share Purchase Plan for cash of $5,459,000.
As a result of the above transactions, $165,863,000 of the issued amounts
related to the Class B Non-Voting shares was recorded in contributed surplus.
7. Segmented Information
For the six months ended June 30, 2001
Corporate
(in thousands Items and Consolidated
of dollars) Wireless Cable Media Eliminations Totals
-------------------------------------------------------------------------
(Unaudited)
Revenue $ 788,272 $ 700,547 $ 345,248 $ 3,946 $ 1,838,013
Operating,
general and
administrative
expenses 591,658 446,755 314,740 30,883 1,384,036
-------------------------------------------------------------------------
Operating income
(loss) before
the undernoted: 196,614 253,792 30,508 (26,937) 453,977
Management fees 5,342 14,080 5,248 (24,670) -
Integration costs
on cablesystem
exchange - 15,962 - - 15,962
Depreciation and
amortization 192,155 207,091 18,810 26,685 444,741
-------------------------------------------------------------------------
Operating income (883) 16,659 6,450 (28,952) (6,726)
Interest Expense
Third party 89,453 81,133 (447) 31,917 202,056
Intercompany 13,517 (12,610) (11,619) 10,712 -
Gain on sale of
assets and
investments - - - (2,385) (2,385)
Other items,net (935) (1,340) 12,144 14,608 24,477
Income tax expense
(recovery) 3,632 2,275 536 7,998 14,441
Non-controlling
interest - - - (45,069) (45,069)
-------------------------------------------------------------------------
Net Income
(loss) for
the period $ (106,550)$ 52,799)$ 5,836 $ (46,733)$ (200,246)
-------------------------------------------------------------------------
Capital
expendi-
tures, net $ 377,943 $ 302,665 $ 9,252 $ (2,617)$ 687,243
-------------------------------------------------------------------------
Identifiable
assets $ 3,110,477 $ 3,398,259 $ 643,900 $ 1,407,341 $ 8,559,977
-------------------------------------------------------------------------
For the six months ended June 30, 2000
Corporate
(in thousands Items and Consolidated
of dollars) Wireless Cable Media Eliminations Totals
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(Unaudited)
Revenue $ 727,175 $ 627,843 $ 324,348 $ - $ 1,679,366
Operating,
general and
administrative
expenses 510,907 406,540 292,761 18,129 1,228,337
-------------------------------------------------------------------------
Operating income
(loss) before
the undernoted: 216,268 221,303 31,587 (18,129) 451,029
Management
fees 5,187 12,616 4,918 (22,721) -
Depreciation and
amortization 157,805 162,661 13,480 7,906 341,852
-------------------------------------------------------------------------
Operating
income 53,276 46,026 13,189 (3,314) 109,177
Interest Expense
Third party 62,635 80,057 789 39,554 183,035
Intercompany - (541) 4,837 (4,296) -
Gain on sale of
assets and
investments - (2,791) (1,292) (74,508) (78,591)
Other items,net 231 1,677 2,812 (487) 4,233
Income tax expense
(recovery) 2,260 (19,378) 1,320 16,365 567
Non-controlling
interest - - - (5,755) (5,755)
-------------------------------------------------------------------------
Net Income
(loss) for
the period $ (11,850)$ (12,998)$ 4,723 $ 25,813 $ 5,688
-------------------------------------------------------------------------
Capital
expendi-
tures, net $ 209,888 $ 243,777 $ 15,484 $ 381 $ 469,530
-------------------------------------------------------------------------
For the three months ended June 30, 2001
Corporate
(in thousands Items and Consolidated
of dollars) Wireless Cable Media Eliminations Totals
-------------------------------------------------------------------------
(Unaudited)
Revenue $ 410,587 $ 353,621 $ 186,835 $ 475 $ 951,518
Operating,
general and
administrative
expenses 307,858 224,940 158,713 10,706 702,217
-------------------------------------------------------------------------
Operating
income (loss)
before the
undernoted: 102,729 128,681 28,122 (10,231) 249,301
Management
fees 2,671 7,228 2,875 (12,774) -
Integration
costs on
cablesystem
exchange 6,165 6,165
Depreciation
and amortization 97,616 107,091 6,964 14,412 226,083
-------------------------------------------------------------------------
Operating income 2,442 8,197 18,283 (11,869) 17,053
Interest Expense
Third party 49,671 39,503 (234) 14,477 103,417
Intercompany 4,530 (4,602) (15,951) 16,023 -
Gain on sale
of assets and
investments - - - (1,849) (1,849)
Other items,net (1,151) (870) 10,276 18,001 26,256
Income tax
expense
(recovery) 1,816 1,070 591 4,193 7,670
Non-controlling
interest - - - (22,131) (22,131)
-------------------------------------------------------------------------
Net Income
(loss) for
the period $ (52,424) $ (26,904)$ 23,601 $ (40,583)$ (96,310)
-------------------------------------------------------------------------
Capital
expendi-
tures, net $ 217,380 $ 151,407 $ 5,072 $ (3,442)$ 370,417
-------------------------------------------------------------------------
For the three months ended June 30, 2000
Corporate
(in thousands Items and Consolidated
of dollars) Wireless Cable Media Eliminations Totals
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(Unaudited)
Revenue $ 378,447 $ 317,475 $ 175,727 $ - $ 871,649
Operating,
general and
administrative
expenses 263,574 206,078 151,985 6,857 628,494
-------------------------------------------------------------------------
Operating
income (loss)
before the
undernoted: 114,873 111,397 23,742 (6,857) 243,155
Management fees 2,593 6,380 2,682 (11,655) -
Depreciation
and amortization 79,806 84,896 7,145 4,227 176,074
-------------------------------------------------------------------------
Operating
income 32,474 20,121 13,915 571 67,081
Interest Expense
Third party 32,292 42,494 894 19,445 95,125
Intercompany - (2,994) 2,337 657 -
Gain on sale of
assets and
investments - (2,791) (1,292) - (4,083)
Other items,net 271 1,265 1,315 (413) 2,438
Income tax expense
(recovery) 1,132 (9,978) 862 (4,237) (12,221)
Non-controlling
interest - - - (593) (593)
-------------------------------------------------------------------------
Net Income
(loss) for
the period $ (1,221)$ (7,875)$ 9,799 $ (14,288)$ (13,585)
-------------------------------------------------------------------------
Capital
expendi-
tures, net $ 119,759 $ 124,867 $ 7,543 $ 183 $ 252,352
-------------------------------------------------------------------------
8. Commitments
i. The Company announced on June 12, 2001 that it is proposing to take
its Wireless subsidiary private by acquiring all of the outstanding
Class B Restricted Voting shares (the "RWCI Class B shares") of Rogers
Wireless Communications Inc. ("RWCI") owned by the public in
consideration for 1.1 Class B Non-Voting shares of the Company for
each RWCI Class B share held. The transaction is proposed to be
carried out by way of an amalgamation of RWCI and a newly incorporated
subsidiary of Rogers Communications and will require approval by a
majority of the votes cast by RWCI's minority shareholders (excluding
shares owned by Rogers Communications and AT&T Wireless Services Inc.
through JVII Partnership). The shares held by JVII Partnership will
not be acquired by RCI pursuant to the transaction. Rogers
Communications has requested that RWCI form a committee of independent
directors to review the proposed transaction and obtain a formal
valuation of the RWCI Class B Shares. Completion of the proposed
transaction is subject to customary conditions and the applicable
regulatory and RWCI shareholder approvals. Rogers Communications has
requested that the necessary RWCI shareholders' meeting be held as
soon as possible following the completion of the formal valuation of
the RWCI Class B Shares. Currently, Rogers Communications owns an
approximate 52.47% equity interest in RWCI, representing approximately
69% of RWCI's Class A Multiple Voting Shares and 21% of the RWCI Class
B Shares. If the transaction is completed, RWCI will become owned by
Rogers Communications and JVII Partnership alone. JVII Partnership
currently owns approximately 31% of the RWCI Class A Voting Shares and
40% of the RWCI Class B Shares.
ii. On June 12, 2001, the Company signed an agreement to sell its Alaska
cablesystems to General Communication, Inc. for US$19 million pending
regulatory approval. The Alaska cablesystems currently serve 7,300
customers in the communities of Palmer and Wasilla with more than
10,000 homes passed. General Communications, Inc. has agreed to pay
US$2,600 per basic cable subscriber, subject to certain adjustments.
This transaction is expected to result in a gain before income taxes
of approximately US$10 million.
9. Subsequent events
The Company concluded an agreement on July 12, 2001 to acquire effective
ownership and control of SportsNet subject to all necessary regulatory
approvals. The Company will pay approximately $123.4 million for this
incremental 40% stake in SportsNet and assume CTV Inc.'s share of the
shareholder loans. Upon completion of this transaction, the Company will own
80% of the voting shares of SportsNet. This news release may include certain forward-looking statements that
involve risks and uncertainties. The Company cautions that actual future
performance will be affected by a number of factors, including technological
change, regulatory change, and competitive factors many of which are beyond
the Company's control. Therefore future events and results may vary
substantially from what the Company currently foresees. Additional information
identifying risks and uncertainties is contained in the Company's most recent
Annual Information Form filed with the Ontario Securities Commission. For more information contact: A live and fully accessible Webcast of the quarterly results conference
call with analysts and investors will be broadcast via the Internet at
http://www.rogers.com/webcast beginning 11:00 a.m. ET. July 26, 2001. A re-
broadcast of this call will be available on the Webcast Archive page of the
Investor Info section of http://www.rogers.com.
|
Rogers Communications Inc.
