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EXHIBIT 12.3
ROGERS CABLE INC.
COMPUTATION OF FINANCIAL RATIOS (1)
Year Ended December 31,
1999 2000 2001 2002 2003
------------ ------------ ----------- ----------- -----------
AMOUNTS UNDER CANADIAN GAAP
Operating profit (2) (a) $ 388,049 $ 431,833 $ 488,024 $ 531,735 $ 628,089
Interest expense (b) $ 292,993 $ 192,025 $ 174,626 $ 213,332 $ 240,670
Senior debt (3) (c) $ 1,156,518 $ 1,455,446 $ 1,452,175 $ 2,181,649 $ 2,518,733
Total debt (3) (d) $ 1,870,349 $ 1,619,710 $ 2,102,743 $ 2,557,555 $ 2,671,852
Total debt to operating profit (2) (3) (d) / (a) 4.82 3.75 4.31 4.81 4.25
Senior debt to operating profit (2) (3) (c) / (a) 2.98 3.37 2.98 4.10 4.01
Operating profit to total interest expense (2) (4) (6) (a) / (b) 1.62 2.25 2.79 2.49 2.61
Footnote references:
(1) We believe that operating profit as defined below, 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 cable 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, loss on repayment of debt,
dividend income, writedown of investments, gains on sales of
subsidiaries and investments, and other income and the 2002 workforce
reduction costs as well as the 2000 and 2001 cable system integration
and At Home termination costs. In the case of operating profit for each
of the cable and video segments, we exclude management fees from the
calculation. Operating profit is a standard measure used in the cable
and communications industry to assist in understanding and comparing
operating results and is often referred to by our competitors as
earnings before interest, taxes, depreciation and amortization (EBITDA)
or operating income before depreciation and amortization (OBIDA). We
believe this is an important measure because it allows us to assess our
ongoing businesses without the impact of depreciation or amortization
expenses as well as non-operating and other factors. It is intended to
indicate our ability to incur or service debt, invest in PP&E and
allows us to compare our company to our competitors who have different
capital or organizational structures. This measure is not a defined
term under Canadian GAAP or U.S. GAAP.
(3) Senior debt includes secured long term debt and operating bank loans
but does not include subordinated debt, inter-company subordinated debt
or inter-company deeply subordinated debt. Total debt includes the
senior debt described above together with inter-company subordinated
debt and subordinated debt but does not include inter-company deeply
subordinated debt. Inter-company deeply subordinated debt (all of which
was owed to RCI) has been excluded from total debt because, under the
terms of our various credit facilities, all payments on such debt are
restricted payments treated in the same manner as dividends on our
common shares. For a more complete discussion, see the section entitled
"Description of Other Indebtedness -- Inter-Company Debt".
The following table sets forth, for the periods indicated, a
reconciliation of long-term debt to total and senior debt:
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 $ 1,320,349 $ 1,619,710 $ 1,617,143 $ 2,353,055 $ 2,671,852
Inter-company subordinated
debt as discussed below 550,000 - 485,600 204,500 -
------------ ------------ ------------ ------------ ------------
Total debt 1,870,349 1,619,710 2,102,743 2,557,555 2,671,852
Inter-company subordinated debt (550,000) - (485,600) (204,500) -
Subordinated debt (163,831) (164,264) (164,968) (171,406) (153,119)
------------ ------------ ------------ ------------ ------------
Senior debt $ 1,156,518 $ 1,455,446 $ 1,452,175 $ 2,181,649 $ 2,518,733
============ ============ ============ ============ ============
In 1999, we issued net $890,358,000 of additional inter-company
subordinated debt to RCI and amended $100,000,000 of inter-company
subordinated debt owing to RCI into $100,000,000 of inter-company
deeply subordinated debt owing to RCI. We then converted $603,358,000
of outstanding inter-company subordinated debt owing to RCI into Class
B Common Shares which were issued by us to RCI. As a result of all of
the above, a total of $550,000,000 of inter-company subordinated debt
owing to RCI was outstanding at December 31, 1999. During 2000, we
issued net $82,100,000 of additional inter-company subordinated debt
owing to RCI and converted the total outstanding $632,100,000 of
inter-company subordinated debt owing to RCI into Class B Common Shares
issued by us to RCI. During 2001, we issued net $485,600,000 of
additional inter-company subordinated debt owing to RCI, all of which
was repaid in 2002. We subsequently issued net $204,500,000 of
additional inter-company subordinated debt owing to RCI in 2002. During
the year ended December 31, 2003, we made a net repayment to RCI of
$204,500,000 of inter-company subordinated debt, so that the ending
balance at December 31, 2003 was nil. For a more complete discussion,
see the section entitled "Description of Other Indebtedness --
Inter-Company Debt" and Note 11 to our audited consolidated financial
statements.
(4) Consolidated interest expense under Canadian GAAP for each of the five
years ended December 31, 2003 is comprised as follows:
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1999 2000 2001 2002 2003
-------- -------- -------- -------- -----------
(IN THOUSANDS OF DOLLARS)
Interest expense on inter-company deeply
subordinated debt $ 53,558 $ - $ - $ - $ -
Interest expense on inter-company
subordinated debt 55,895 33,901 12,036 4,687 2,867
Third party interest expense 183,540 158,124 162,590 208,645 237,803
-------- -------- -------- -------- -----------
Consolidated interest expense $292,993 $192,025 $174,626 $213,332 $ 240,670
======== ======== ======== ======== ===========
(5) During 1999, we issued an additional $23,558,000 of inter-company
deeply subordinated debt owing to RCI in consideration for the payment
of accrued interest owing on account of inter-company deeply
subordinated debt. Also during 1999, the aggregate outstanding
$733,261,000 of inter-company deeply subordinated debt owing to RCI was
converted into Class B Common Shares which we issued to RCI. For a more
complete discussion, see the section entitled "Description of Other
Indebtedness -- Inter-Company Debt".
(6) For purposes of this ratio, interest expense excludes interest expense
on inter-company deeply subordinated debt.