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Rogers Communications Inc. (ticker: RCI.B.TO, exchange: Toronto Stock Exchange (.TO))
News Release -
20-Apr-1999
Rogers Announces First Quarter 1999 Results
TORONTO, April 20 /CNW/ - ROGERS COMMUNICATIONS INC. (RCI) today
announced its consolidated financial results for the first quarter ended March
31, 1999.
Financial highlights, which are in thousands of Canadian dollars, (except
per share amounts), are as follows:
| Three Months Ended March 31 |
|
1999 |
1998 |
Percent Change |
| Revenue |
$709,298 |
$677,860 |
4.6% |
| Operating income before depreciation and amortization |
199,094 |
192,219 |
3.6% |
| Net income (loss) |
46,946 |
(18,864) |
NA |
| Net income (loss) per share |
23 cents |
(15 cents) |
NA |
Commenting on the Company's results, RCI's President and CEO, Edward S.
(Ted) Rogers said, "I am pleased with the excellent progress the RCI group
made in the first quarter. Cablesystems reported another quarter of strong
revenue growth and operating margins, while Rogers@Home customers continue
to sign up at the rate of over 2,000 per week. Media continues to benefit from
strong advertising markets, launched several new magazines, and acquired
CISS-FM in Toronto, subject to CRTC approval. Wireless added almost four times
as many customers in the first quarter of 1999 as it did in the first quarter
of the prior year and reported increased operating income despite essentially
flat revenue growth. The focus is now clearly on sales and revenue growth at
Wireless. With some of the lowest operating costs in the industry, Wireless is
well positioned to turn revenue growth into operating income growth."
"Subsequent to the end of the first quarter, we also announced some
significant changes to the structure of the senior management team at RCI. In
particular, John H. Tory has been appointed to the position of President and
Chief Executive Officer of Rogers Cablesystems Ltd., and Tony Viner becomes
President and Chief Executive Officer of Rogers Media Inc. Both of these
appointments will strengthen Rogers Communications Inc."
CONSOLIDATED RESULTS -
FIRST QUARTER 1999 VS. 1998
During the first quarter of 1999, consolidated revenue was $709.3
million, an increase of $31.4 million or 4.6% from $677.9 million in the first
quarter of the prior year. This year-over-year increase is due to a 10.5%
increase in Cablesystems' revenue and an 18.5% increase in Media revenue,
partially offset by the exclusion of the results of Telecom which was sold in
June 1998. Consolidated operating income before depreciation and amortization
was $199.1 million, an increase of $6.9 million or 3.6% from $192.2 million in
the first quarter of the prior year.
Excluding the results of Rogers Telecom (which were included in the 1998
results but not in the 1999 result) RCI had consolidated revenue growth of
$47.0 million, or 7.1% and consolidated operating income before depreciation
and amortization growth of $12.9 million, or 6.9% compared to the first
quarter of the prior year.
Fixed Charges
Depreciation and amortization was $140.7 million, an increase of $6.1
million, or 4.5% from $134.6 million in the first quarter of 1998. Interest
expense was $123.9 million, a decrease of $6.9 million or 5.2% from $130.8
million in the first quarter of 1998, primarily due to lower average debt
balances.
Net Income and Loss
RCI recorded net income of $46.9 million, or 23 cents per share (after
preferred dividends) compared to a loss of $18.9 million, or 15 cents per
share (after preferred dividends) in the first quarter of the prior year.
Excluding non-operating gains in both periods, RCI recorded a loss of $69.2
million, or 42 cents per share (after preferred dividends) compared to a loss
of $59.7 million, or 38 cents per share (after preferred dividends) in the
first quarter of the prior year.
Wireless
Wireless' revenue was $296.2 million, down $0.8 million or 0.3% from
$297.1 million in the first quarter of the prior year. The decline in revenue
was due to a decline in equipment sales and paging revenue, partially offset
by a small increase in cellular revenue. Operating income before depreciation
and amortization was $94.2 million, up $5.7 million or 6.3% from $88.5 million
in the first quarter of the prior year.
Average monthly cellular revenue per customer was $47.08, down $6.26 or
11.7% from $53.34 in the first quarter of the prior year, in part due to the
impact of pre-paid services. Average monthly usage during the period was 184
minutes, down 6.6% from 197 minutes in the first quarter of the prior year.
Monthly cellular operating expenses before sales and marketing costs on a
per customer basis, were $15.89, a decline of $2.81 or 15.0% from $18.70 in
the first quarter of the prior year. This decrease in monthly operating cost
per customer is due to substantially lower operating costs related to fraud
and bad debt expense.
Sales and marketing costs (including migration costs) measured on a per
gross addition basis were $504, a decrease of $306 or 37.8% from $810 in the
first quarter of the prior year. The decreased cost per gross addition is the
result of strong sales in the quarter, including prepaid cellular, which has
essentially no variable acquisition cost, an overall reduction of hardware
subsidies and reduced advertising versus the prior years first quarter.
Wireless added 62,600 cellular customers (net of disconnects) in the
first quarter, compared to 12,800 in the first quarter of the prior year. At
March 31, 1999, Wireless had a total of 1,800,300 cellular customers, of which
approximately 600,000 were on Digital PCS, representing approximately 33% of
the total cellular customer base, and 145,000 were on the prepaid cellular
service, ``Pay As You Go''. In the quarter, prepaid service accounted for
16.6% of the gross subscriber additions and 39.3% of the net subscriber
additions.
The average monthly disconnect or ``churn'' rate for cellular was 1.74%,
down slightly from the 1.79% reported in the first quarter of the prior year.
The cumulative number of paging and data customers at March 31, 1999, was
259,700, a decline of 100 in the quarter. The average monthly churn rate for
paging and data was 2.95% as compared to 3.39% in the first quarter of the
prior year.
Cablesystems
Cablesystems revenue was $274.6 million, an increase of $26.2 million, or
10.5% from $248.4 million reported in the first quarter of the prior year.
Operating income before depreciation and amortization was $98.7 million, an
increase of $4.9 million or 5.2% from $93.8 million in the first quarter of
the prior year.
The gain in Cablesystems revenue primarily reflects higher revenue in
core cable TV operations. The revenue increase in core cable TV operations is
due primarily to improved penetration of the higher revenue tier III service
and the effect of tier and basic rate increases in March 1998 and 1999
respectively. Cablesystems revenue also increased due to increases in Video
Store revenue and the inclusion of revenue from Rogers@Home service. Prior
to the first quarter of 1999, the results of the Rogers@Home division were
deferred due to the early stage of its development.
At March 31, 1999, approximately 87.7% of basic cable service customers
also subscribed to tier (formerly called ``Cable Plus'') services, the same
level as at March 31, 1998. The tier penetration breakdown at March 31, 1999
is as follows: 13.0% subscribed to tier I (formerly Cable Plus Original and
Select), 23.0% subscribed to tier II (formerly Cable Plus Combo), and 51.7%
subscribed to tier III (formerly Cable Plus Ultimate). At March 31, 1998 the
tier penetration breakdown between tiers I, II, and III was 18.7%, 39.8%, and
29.2% respectively. At March 31, 1999, Cablesystems had 2,236,600 basic cable
customers, a decline of only 700 from December 31, 1998.
Video Stores reported revenue of $43.0 million, an increase of $5.1
million or 13.3% from $37.9 million reported in the first quarter of the prior
year, primarily due to the increase in the number of stores and the revenue
sharing arrangements now in place with six major U.S. film studios. Video
Stores opened three stores and closed two in the quarter, ending the quarter
with a total of 213 stores, as compared to 196 stores at March 31, 1998.
Cablesystems continues to report solid operating margins in its core
cable TV business, with margins of 43.0% in both the first quarter of 1999 and
1998. During the first quarter, Cablesystems added 21,800 Rogers@Home
customers, ending the quarter with 76,000 customers. At March 31, 1999,
Cablesystems was able to market its high-speed Internet access service to
approximately 2.3 million homes, or approximately 84% of Cablesystems' 2.8
million homes passed.
Media
Media reported revenue of $138.5 million, an increase of $21.7 million or
18.5% from $116.8 million in the first quarter of the prior year. Operating
income before depreciation and amortization was $11.8 million, an increase of
$2.9 million or 33.6% from $8.9 million in the first quarter of the prioryear.
Radio and television broadcasting results continued to be strong, with
substantial gains in operating income in Radio, at the Shopping Channel, and
at CFMT-TV in Toronto. During the quarter, Media reached an agreement to
acquire CISS-FM in Toronto, subject to the approval of the CRTC. Through a
Local Management Agreement, Media has taken over the day to day operation of
CISS-FM. This represents the second acquisition relating to Media's strategy
of taking advantage of changes in the regulations, which now allow multiple
licence ownership in major Canadian markets.
Publishing operating income declined in the quarter despite a 7.3%
increase in revenue compared to the first quarter of the prior year. This is
largely attributable to investments that were made in the quarter to
strengthen existing franchises and launch new publications. Chatelaine
magazine was relaunched in the quarter and the re-invigorated product has
received favourable reviews from readers and advertisers.
Revenues from Media's on-line media properties increased by 83% compared
to the first quarter of the prior year and pageviews and traffic continue to
build on the existing stable of businesses. The company concluded the
termination of its licence agreement with Yahoo! Inc. in the quarter and
received a payment of US$18 million as a result of this termination, which was
reported in other income.
Liquidity and Capital Resources
Cash flow from operating activities increased to $106.8 million from
$65.9 million in the first quarter of the prior year. RCI's operating cash
flow shortfall (defined as cash flow from operating activities after working
capital, capital expenditures, and preferred share dividends) was $155.5
million in the first quarter of 1999.
At March 31, 1999, RCI's total long-term debt was $5.287 billion, an
increase of $33.3 million from $5.254 billion at December 31, 1998. RCI's
capital expenditures were $163.6 million, compared to $134.1 million in the
first quarter of the prior year.
During the first quarter, RCI sold shares of At Home Corporation and of
Bid.com for a gain on sale of approximately $89 million. In addition, RCI
purchased CISS-FM (subject to CRTC approval) and made an additional investment
in CTV SportsNet.
Rogers Communications Inc. (Toronto: RCI.A and RCI.B; NYSE: RG) is
Canada's national communications company engaged in cellular, Digital PCS,
paging and data communications through its 81% owned subsidiary Cantel
Mobile Communications Inc., in cable television, high-speed Internet access,
and video retailing through its wholly-owned subsidiary Rogers Cablesystems
Limited, and in radio and television broadcasting, tele-shopping, publishing
and new media businesses through its wholly-owned subsidiary Rogers Media Inc.
(see attached financial tables)
Consolidated Statements of Income
(in thousands of dollars except per share data)
|
Three Months Ended March 31 |
| |
1999 (Unaudited) |
1998 (Unaudited) |
| Revenue |
| Wireless |
$ 296,225 |
$ 297,063 |
| Cablesystems |
274,607 |
248,419 |
| Telecom |
- |
15,547 |
| Media |
138,466 |
116,831 |
|
$ 709,298 |
$ 677,860 |
|
|
|
|
Operating income before depreciation and amortization:
|
| Wireless |
$ 94,151 |
$ 88,542 |
| Cablesystems |
98,712 |
93,830 |
| Telecom |
- |
6,013 |
| Corporate |
(5,599) |
(5,021) |
|
|
|
|
199,094 |
192,219 |
| |
| Depreciation and amortization |
140,739 |
134,619 |
|
|
|
| |
| Operating income |
58,355 |
57,600 |
| Interest expense |
(123,910) |
(130,766) |
| Gain on sale of assets and other investments |
89,181 |
43,199 |
| Investment and other income |
32,127 |
2,399 |
|
|
|
| |
| Income (loss) before income taxes |
55,753 |
(27,568) |
| Income taxes |
(8,807) |
8,704 |
|
|
|
| |
| Net income (loss) for the period |
$ 46,946 |
$(18,864) |
|
|
|
| |
| Earnings (loss) per share |
| Basic |
| Net income (loss) for the period |
$ 0.23 |
$ (0.15) |
| Fully Diluted |
| Net income (loss) for the period |
$ 0.20 |
* |
| Average Class A and Class B |
| Shares outstanding for the period (thousands) |
178,663 |
178,226 |
|
|
|
* Fully diluted earnings per share are not disclosed for 1998, as they are anti-dilutive.
Consolidated Statements of Cash Flows
(in thousands of dollars except per share data)
|
Three Months Ended March 31 |
| |
1999 (Unaudited) |
1998 (Unaudited) |
| Cash flows from operating activities: |
| Net income (loss) for the period |
$ 46,946 |
$(18,864) |
| Adjustments to reconcile net income (loss) to net cash flow: |
| Depreciation and amortization |
140,739 |
134,619 |
| Deferred income tax expense (reduction) |
6,660 |
(11,820) |
| Accrued interest due on repayment of certain notes |
2,132 |
4,454 |
| Gain on sale of assets and other investments |
(89,181) |
(43,199) |
| Share of income of associated companies, net |
(1,055) |
(172) |
| Dividends from associated companies |
517 |
848 |
|
|
|
|
106,758 |
65,866 |
| Changes in: |
| Accounts Receivable |
14,400 |
42,862 |
| Accounts payable, accrued liabilities and unearned revenue |
(57,486) |
(45,531) |
| Deferred charges and other assets |
(49,701) |
(30,018) |
|
|
|
| |
13,971 |
33,179 |
| Cash flows from financing activities: |
| Issue of long-term debt, net |
66,903 |
40,379 |
| Financing costs incurred |
- |
(371) |
| Issue of capital stock |
2,220 |
- |
| Dividends on preferred shares |
(5,844) |
(7,248) |
|
|
|
| |
63,279 |
32,760 |
| Cash flows from investing activities: |
| Additions to fixed assets |
(163,604) |
(134,107) |
| Proceeds on sale of assets and other investments |
89,440 |
93,057 |
| Other investments |
(39,586) |
11,147 |
|
|
|
| |
(113,750) |
(29,903) |
|
|
|
| Increase (decrease) in cash and cash equivalents |
(36,500) |
36,036 |
| Cash and cash equivalents, beginning of period |
(1,383) |
(11,299) |
|
|
|
| |
| Cash and cash equivalents, end of period |
$ (37,883) |
$ 24,737 |
| Cash and cash equivalents are defined as cash and short-term deposits less operating bank loans and bank advances. |
Rogers Communications Inc. Segmented Information
Three months ended March 31, 1999
(in thousands of dollars)
| |
Wireless |
Cable |
Media |
Corporate items and eliminations |
Consolidated Totals |
| (Unaudited) |
| Revenue |
$296,225 |
$274,607 |
$138,466 |
- |
$709,298 |
| Operating, general and administrative expenses |
202,074 |
175,895 |
126,636 |
5,599 |
510,204 |
|
|
|
|
|
|
| Operating income (loss) before the undernoted: |
94,151 |
98,712 |
11,830 |
(5,599) |
199,094 |
| Management fees |
2,463 |
5,524 |
2,107 |
(10,094) |
- |
| Depreciation and amortization |
68,499 |
62,281 |
4,117 |
5,842 |
140,739 |
|
|
|
|
|
|
| Operating income |
23,189 |
30,907 |
5,606 |
(1,347) |
58,355 |
| Interest Expense: |
| Third party |
41,821 |
50,626 |
318 |
31,145 |
123,910 |
| Intercompany |
4,607 |
15,307 |
597 |
(20,511) |
- |
| |
| Gain on sale of assets and investments |
- |
(88,469) |
(712) |
- |
(89,181) |
| Other items, net |
13 |
(1,354) |
(26,998) |
(3,788) |
(32,127) |
| Income tax expense (recovery) |
1,132 |
774 |
(2,763) |
9,664 |
8,807 |
|
|
|
|
|
|
| Net Income (loss) for the period |
$(24,384) |
$54,023 |
$35,164 |
$(17,857) |
$46,946 |
|
|
|
|
|
|
| Capital expenditures |
$88,839 |
$72,897 |
$1,810 |
$58 |
$163,604 |
|
|
|
|
|
|
| Identifiable assets |
$2,051,091 |
$2,656,766 |
$408,992 |
$1,338,601 |
$6,455,450 |
|
|
|
|
|
|
Rogers Communications Inc. Segmented Information
Three months ended March 31, 1999
(in thousands of dollars)
| |
Wireless |
Cable |
Media |
Corporate items and eliminations |
Consolidated Totals |
| (Unaudited) |
| Revenue |
$297,063 |
$248,419 |
$116,831 |
$15,547 |
$677,860 |
| Operating, general and administrative expenses |
208,521 |
154,589 |
107,976 |
14,555 |
485,641 |
|
|
|
|
|
|
| Operating income before the undernoted: |
88,542 |
93,830 |
8,855 |
992 |
192,219 |
| Management fees |
2,380 |
4,994 |
1,773 |
(9,147) |
- |
| Depreciation and amortization |
62,508 |
57,552 |
3,730 |
10,829 |
134,619 |
|
|
|
|
|
|
| Operating income |
23,654 |
31,284 |
3,352 |
(690) |
57,600 |
| Interest Expense: |
39,100 |
57,309 |
- |
34,357 |
130,766 |
| |
3,103 |
(5,567) |
4,616 |
(2,152) |
- |
| Gain on sale of assets and investments |
- |
(10,175) |
(33,024) |
- |
(43,199) |
| Other items, net |
18 |
(109) |
2,316 |
(4,624) |
(2,399) |
| Income tax expense (recovery) |
1,132 |
(13,984) |
795 |
3,353 |
(8,704) |
|
|
|
|
|
|
| Net Income (loss) for the period |
$(19,699) |
$3,810 |
$28,649 |
$(31,624) |
$(18,864) |
|
|
|
|
|
|
| Capital expenditures |
$65,080 |
$48,714 |
$2,026 |
$18,287 |
$134,107 |
|
|
|
|
|
|
Balance Sheets
(in thousands of dollars)
| |
March 31, 1999 (Unaudited) |
December 31, 1998 (Unaudited) |
| Assets |
| Fixed assets |
$ 3,275,622 |
$ 3,234,634 |
| Subscribers and licences |
1,337,007 |
1,342,360 |
| Goodwill |
189,693 |
190,514 |
| Investments |
721,485 |
674,615 |
| Accounts receivable |
286,281 |
300,681 |
| Deferred charges |
286,281 |
300,681 |
| Other assets |
392,121 |
436,314 |
|
|
|
| |
$ 6,455,450 |
$ 6,384,853 |
| Liabilities and Shareholders' Equity (Deficiency) |
| Liabilities: |
| Long-term debt |
$ 5,287,375 |
$ 5,254,044 |
| Bank advances |
37,883 |
1,383 |
| Accounts payable and accrued liabilities |
884,015 |
957,796 |
| Unearned revenue |
116,995 |
100,718 |
| Deferred income taxes |
119,115 |
112,437 |
|
|
|
| |
6,445,383 |
6,426,378 |
| Shareholders' equity (deficiency) |
10,067 |
(41,525) |
|
|
|
| |
$ 6,455,450 |
$ 6,384,853 |
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:
David A. Robinson
Vice President, Financial Planning and Investor Relations
Rogers Communications Inc.
Phone: (416) 935-3550
Fax: (416) 935-3597
|
Richard J. Harvey
Director, Investor Relations
Rogers Communications Inc.
Phone: (416) 935-3552
Fax: (416) 935-3597
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