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EXHIBIT 12.3
ROGERS WIRELESS INC.
COMPUTATION OF FINANCIAL RATIOS (1)
(in thousands of Canadian dollars)
CANADIAN GAAP
Year Ended December 31,
1999 2000 2001 2002 2003
---- ---- ---- ---- ----
Operating profit (2) (A) $ 412,483 $ 400,550 $ 401,261 $ 516,681 $ 716,289
Interest expense (B) 161,804 128,040 184,330 195,150 193,607
Senior debt (C) 1,103,482 1,121,213 1,963,274 2,077,200 1,978,160
Total debt (D) 1,553,536 1,869,981 2,355,683 2,410,075 2,209,603
Total debt to operating profit (D) / (A) 3.77 4.67 5.87 4.66 3.08
Senior debt to operating profit (C) / (A) 2.68 2.80 4.89 4.02 2.76
Operating profit to total interest expense (A) / (B) 2.55 3.13 2.18 2.65 3.70
Footnote references:
(1) We believe that operating profit as previously defined, together with the
related total debt, senior debt and interest expense ratios, are measures that
are commonly reported and widely used by analysts, investors and other
interested parties in the wireless communications industry. Accordingly, this
information has been disclosed herein to permit a more complete comparative
operating performance and capitalization relative to other companies in our
industry. These indicators should not be considered as a substitute or
alternative for net income or cash flow in accordance with Canadian GAAP or U.S.
GAAP.
(2) We define operating profit as net income before depreciation and
amortization, interest expense, income taxes and non-operating items, which
include foreign exchange gain (loss) and investment and other income and the
2002 net recovery related to the change in estimates of sales tax and CRTC
contribution liabilities. Operating profit is a standard measure used in the
communications industry to assist in understanding and comparing operating
results and is often referred to by our competitors as EBITDA (earnings before
interest, taxes, depreciation and amortization) or OIBDA (operating income
before depreciation and amortization). We believe this is an important measure
as it allows us to assess our ongoing businesses without the impact of
depreciation or amortization expenses as well as non-operating factors. It is
intended to indicate our ability to incur or service debt, invest in property,
plant and equipment ("PP&E") and allow us to compare our company to our
competitors who have different capital or organizational structures. This
measure is not a defined term under GAAP.
(3) Total debt includes long-term debt and all inter-company subordinated debt
but does not include inter-company deeply subordinated debt. The following table
sets forth, for the periods indicated, our outstanding iner-company subordinated
debt owing to RCI and RWCI:
Year Ended December 31,
-----------------------
1999 2000 2001 2002 2003
---- ---- ---- ---- ----
(in thousands of dollars)
Inter-company subordinated debt owing to RCI $ -- $284,450 $ -- $ -- $--
Inter-company subordinated debt owing to RWCI 139,744 141,775 50,000 50,000 --
-------- -------- -------- -------- ---
Total inter-company subordinated debt $139,744 $426,225 $ 50,000 $ 50,000 $--
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In July 2003, we issued 10 Class A Common Shares to RWCI for consideration of
$91.2 million, comprised of the set-off of the $50.0 million inter-company
subordinated debt owing to RWCI, the set-off of an aggregate $32.9 million of
inter-company amounts payable to RWCI and $8.3 million paid in cash.
Our inter-company deeply subordinated debt, all of which was owed to RWCI, is
excluded from total debt because under the terms of our outstanding indebtedness
all payments on inter-company deeply subordinated debt are restricted payments,
treated in the same manner as dividends on our common shares.
Reconciliation of Long-Term Debt to Total and Senior Debt
Year Ended December 31,
-----------------------
1999 2000 2001 2002 2003
---- ---- ---- ---- ----
(in thousands of dollars)
Long-term debt as per consolidated
financial statements $ 1,413,792 $ 1,443,756 $ 2,305,683 $ 2,360,075 $ 2,209,603
Inter-company subordinated debt as shown above 139,744 426,225 50,000 50,000 --
----------- ----------- ----------- ----------- -----------
Total debt 1,553,536 1,869,981 2,355,683 2,410,075 2,209,603
Inter-company subordinated debt (139,744) (426,225) (50,000) (50,000) --
Senior subordinated notes (310,310) (322,543) (342,409) (282,875) (231,443)
----------- ----------- ----------- ----------- -----------
Senior debt $ 1,103,482 $ 1,121,213 $ 1,963,274 $ 2,077,200 $ 1,978,160
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