EX-99.2 3 supp_q214.htm SUPPLEMENTARY FINANCIAL INFORMATION - SECOND QUARTER 2014 Supplementary Financial Information

Exhibit 99.2

 

 

BCE (1)
Consolidated Operational Data (2)

($ millions of Canadian dollars, except share amounts) (unaudited)

   Q2
2014		     Q2
2013		       $ change  

% change

       YTD
2014		     YTD
2013		       $ change  

% change

  

Operating revenues

   5,220     5,000       220   4.4 %     10,319     9,919       400   4.0 %

Operating costs (A)

   (3,008 )   (2,865 )     (143 ) (5.0 %)     (6,011 )   (5,745 )     (266 ) (4.6 %)

Post-employment benefit plans service cost

   (68 )   (69 )     1   1.4 %     (142 )   (146 )     4   2.7 %

Adjusted EBITDA (3)

   2,144     2,066       78   3.8 %     4,166     4,028       138   3.4 %

Adjusted EBITDA margin (3)

   41.1 %   41.3 %         (0.2 ) pts     40.4 %   40.6 %         0.2  pts

Severance, acquisition and other costs

   (54 )   (28 )     (26 ) (92.9 %)     (92 )   (61 )     (31 ) (50.8 %)

Depreciation

   (708 )   (681 )     (27 ) (4.0 %)     (1,407 )   (1,356 )     (51 ) (3.8 %)

Amortization

   (171 )   (161 )     (10 ) (6.2 %)     (338 )   (324 )     (14 ) (4.3 %)

Finance costs

                                                  

Interest expense

   (229 )   (228 )     (1 ) (0.4 %)     (464 )   (449 )     (15 ) (3.3 %)

Interest on post-employment benefit obligations

   (26 )   (38 )     12   31.6 %     (51 )   (75 )     24   32.0 %

Other (expense) income

   (13 )   (63 )     50   79.4 %     74     17       57   n.m.  

Income taxes

   (236 )   (196 )     (40 ) (20.4 %)     (467 )   (437 )     (30 ) (6.9 %)

Net earnings

   707     671       36   5.4 %     1,421     1,343       78   5.8 %

Net earnings attributable to:

                                                  

Common shareholders

   606     571       35   6.1 %     1,221     1,137       84   7.4 %

Preferred shareholders

   33     33       -   0.0 %     66     66       -   0.0 %

Non-controlling interest

   68     67       1   1.5 %     134     140       (6 ) (4.3 %)

Net earnings

   707     671       36   5.4 %     1,421     1,343       78   5.8 %

Net earnings per common share - basic

 $ 0.78   $ 0.74     $ 0.04   5.4 %   $ 1.57   $ 1.47     $ 0.10   6.8 %

Net earnings per common share - diluted

 $ 0.78   $ 0.74     $ 0.04   5.4 %   $ 1.57   $ 1.47     $ 0.10   6.8 %

Dividends per common share

 $ 0.6175   $ 0.5825     $ 0.035   6.0 %   $ 1.2350   $ 1.1650     $ 0.070   6.0 %

Average number of common shares outstanding - basic (millions)

   777.7     775.9                   777.1     775.8              

Average number of common shares outstanding - diluted (millions)

   778.6     776.6                   777.9     776.5              

Number of common shares outstanding (millions)

   778.1     775.9                   778.1     775.9              

Adjusted Net Earnings and EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings attributable to common shareholders

   606     571       35   6.1 %     1,221     1,137       84   7.4 %

Severance, acquisition and other costs

   38     21       17   81.0 %     61     44       17   38.6 %

Net gains on investments

   (4 )   (1 )     (3 ) n.m.       (16 )   (3 )     (13 ) n.m.  

Premiums on early redemption of debt

   -     3       (3 ) (100.0 %)     -     15       (15 ) (100.0 %)

Adjusted net earnings (3)

   640     594       46   7.7 %     1,266     1,193       73   6.1 %

Impact on net earnings per share

 $ 0.04   $ 0.03     $ 0.01   33.3 %   $ 0.06   $ 0.07     $ (0.01 ) (14.3 %)

Adjusted EPS (3)

$

0.82

 

$

0.77

 

 

$

0.05

 

6.5

%

 

$

1.63

 

$

1.54

 

 

$

0.09

 

5.8

%
                                                   

 

(A) Excludes post-employment benefit plans service cost
n.m. : not meaningful

BCE Supplementary Financial Information – Second Quarter 2014  Page 2

BCE
Consolidated Operational Data - Historical Trend

($ millions of Canadian dollars, except share amounts) (unaudited)

   YTD
2014		       Q2 14     Q1 14       Total
2013		       Q4 13     Q3 13     Q2 13     Q1 13  

Operating revenues

   10,319       5,220     5,099       20,400       5,382     5,099     5,000     4,919  

Operating costs (A)

   (6,011 )     (3,008 )   (3,003 )     (12,019 )     (3,312 )   (2,962 )   (2,865 )   (2,880 )

Post-employment benefit plans service cost

   (142 )     (68 )   (74 )     (292 )     (72 )   (74 )   (69 )   (77 )

Adjusted EBITDA

   4,166       2,144     2,022       8,089       1,998     2,063     2,066     1,962  

Adjusted EBITDA margin

   40.4 %     41.1 %   39.7 %     39.7 %     37.1 %   40.5 %   41.3 %   39.9 %

Severance, acquisition and other costs

   (92 )     (54 )   (38 )     (406 )     (48 )   (297 )   (28 )   (33 )

Depreciation

   (1,407 )     (708 )   (699 )     (2,734 )     (695 )   (683 )   (681 )   (675 )

Amortization

   (338 )     (171 )   (167 )     (646 )     (160 )   (162 )   (161 )   (163 )

Finance costs

                                                      

Interest expense

   (464 )     (229 )   (235 )     (931 )     (240 )   (242 )   (228 )   (221 )

Interest on post-employment benefit obligations

   (51 )     (26 )   (25 )     (150 )     (37 )   (38 )   (38 )   (37 )

Other income (expense)

   74       (13 )   87       (6 )     1     (24 )   (63 )   80  

Income taxes

   (467 )     (236 )   (231 )     (828 )     (226 )   (165 )   (196 )   (241 )

Net earnings

   1,421       707     714       2,388       593     452     671     672  

Net earnings attributable to:

                                                      

Common shareholders

   1,221       606     615       1,975       495     343     571     566  

Preferred shareholders

   66       33     33       131       33     32     33     33  

Non-controlling interest

   134       68     66       282       65     77     67     73  

Net earnings

   1,421       707     714       2,388       593     452     671     672  

Net earnings per common share - basic

 $ 1.57     $ 0.78   $ 0.79     $ 2.55     $ 0.64   $ 0.44   $ 0.74   $ 0.73  

Net earnings per common share - diluted

 $ 1.57     $ 0.78   $ 0.79     $ 2.54     $ 0.63   $ 0.44   $ 0.74   $ 0.73  

Dividends per common share

 $ 1.2350     $ 0.6175   $ 0.6175     $ 2.3300     $ 0.5825   $ 0.5825   $ 0.5825   $ 0.5825  

Average number of common shares outstanding - basic (millions)

   777.1       777.7     776.5       775.8       775.9     775.9     775.9     775.7  

Average number of common shares outstanding - diluted (millions)

   777.9       778.6     777.2       776.4       776.6     776.3     776.6     776.3  

Number of common shares outstanding (millions)

   778.1       778.1     777.3       775.9       775.9     775.9     775.9     775.9  

Adjusted Net Earnings and EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings attributable to common shareholders

   1,221       606     615       1,975       495     343     571     566  

Severance, acquisition and other costs

   61       38     23       299       33     222     21     23  

Net (gains) losses on investments

   (16 )     (4 )   (12 )     7       12     (2 )   (1 )   (2 )

Premiums on early redemption of debt

   -       -     -       36       -     21     3     12  

Adjusted net earnings

   1,266       640     626       2,317       540     584     594     599  

Impact on net earnings per share

 $ 0.06     $ 0.04   $ 0.02     $ 0.44     $ 0.06   $ 0.31   $ 0.03   $ 0.04  

Adjusted EPS

$

1.63

 

 

$

0.82

 

$

0.81

 

 

$

2.99

 

 

$

0.70

 

$

0.75

 

$

0.77

 

$

0.77

 

 

(A) Excludes post-employment benefit plans service cost

BCE Supplementary Financial Information – Second Quarter 2014  Page 3

BCE (1)
Segmented Data (2)

($ millions of Canadian dollars, except where otherwise indicated) (unaudited)

 Q2
2014		   Q2
2013		     $ change  

% change

     YTD
2014		   YTD
2013		     $ change  

% change

  

Revenues

                                      

Bell Wireless

 1,522   1,442     80   5.5 %   2,994   2,851     143   5.0 %

Bell Wireline

 2,485   2,506     (21 ) (0.8 %)   4,947   5,014     (67 ) (1.3 %)

Bell Media

 761   559     202   36.1 %   1,483   1,072     411   38.3 %

Inter-segment eliminations

 (119 ) (83 )   (36 ) (43.4 %)   (237 ) (165 )   (72 ) (43.6 %)

Total Bell

 4,649   4,424     225   5.1 %   9,187   8,772     415   4.7 %

Bell Aliant

 682   691     (9 ) (1.3 %)   1,358   1,375     (17 ) (1.2 %)

Inter-segment eliminations

 (111 ) (115 )   4   3.5 %   (226 ) (228 )   2   0.9 %

Total BCE

 5,220   5,000     220   4.4 %   10,319   9,919     400   4.0 %

Operating costs

                                      

Bell Wireless

 (855 ) (833 )   (22 ) (2.6 %)   (1,699 ) (1,657 )   (42 ) (2.5 %)

Bell Wireline

 (1,532 ) (1,527 )   (5 ) (0.3 %)   (3,064 ) (3,077 )   13   0.4 %

Bell Media

 (551 ) (403 )   (148 ) (36.7 %)   (1,123 ) (818 )   (305 ) (37.3 %)

Inter-segment eliminations

 119   83     36   43.4 %   237   165     72   43.6 %

Total Bell

 (2,819 ) (2,680 )   (139 ) (5.2 %)   (5,649 ) (5,387 )   (262 ) (4.9 %)

Bell Aliant

 (368 ) (369 )   1   0.3 %   (730 ) (732 )   2   0.3 %

Inter-segment eliminations

 111   115     (4 ) (3.5 %)   226   228     (2 ) (0.9 %)

Total BCE

 (3,076 ) (2,934 )   (142 ) (4.8 %)   (6,153 ) (5,891 )   (262 ) (4.4 %)

Adjusted EBITDA

                                      

Bell Wireless

 667   609     58   9.5 %   1,295   1,194     101   8.5 %

Margin

 43.8 % 42.2 %       1.6  pts   43.3 % 41.9 %       1.4  pts

Bell Wireline

 953   979     (26 ) (2.7 %)   1,883   1,937     (54 ) (2.8 %)

Margin

 38.4 % 39.1 %       (0.7 ) pts   38.1 % 38.6 %       (0.5 ) pts

Bell Media

 210   156     54   34.6 %   360   254     106   41.7 %

Margin

 27.6 % 27.9 %       (0.3 ) pts   24.3 % 23.7 %       0.6  pts

Total Bell

 1,830   1,744     86   4.9 %   3,538   3,385     153   4.5 %

Margin

 39.4 % 39.4 %       0.0  pts   38.5 % 38.6 %       (0.1 ) pts

Bell Aliant

 314   322     (8 ) (2.5 %)   628   643     (15 ) (2.3 %)

Margin

 46.0 % 46.6 %       (0.6 ) pts   46.2 % 46.8 %       (0.6 ) pts

Total BCE

 2,144   2,066     78   3.8 %   4,166   4,028     138   3.4 %

Margin

 41.1 % 41.3 %       (0.2 ) pts   40.4 % 40.6 %       (0.2 ) pts

Capital expenditures

                                      

Bell Wireless

 164   134     (30 ) (22.4 %)   281   256     (25 ) (9.8 %)

Capital Intensity (4)

 10.8 % 9.3 %       (1.5 ) pts   9.4 % 9.0 %       (0.4 ) pts

Bell Wireline

 595   523     (72 ) (13.8 %)   1,058   983     (75 ) (7.6 %)

Capital Intensity

 23.9 % 20.9 %       (3.0 ) pts   21.4 % 19.6 %       (1.8 ) pts

Bell Media

 32   16     (16 ) (100.0 %)   46   28     (18 ) (64.3 %)

Capital Intensity

 4.2 % 2.9 %       (1.3 ) pts   3.1 % 2.6 %       (0.5 ) pts

Total Bell

 791   673     (118 ) (17.5 %)   1,385   1,267     (118 ) (9.3 %)

Capital Intensity

 17.0 % 15.2 %       (1.8 ) pts   15.1 % 14.4 %       (0.7 ) pts

Bell Aliant

 146   157     11   7.0 %   281   285     4   1.4 %

Capital Intensity

 21.4 % 22.7 %       1.3  pts   20.7 % 20.7 %       0.0  pts

Total BCE

 937   830     (107 ) (12.9 %)   1,666   1,552     (114 ) (7.3 %)

Capital Intensity

 18.0 % 16.6 %       (1.4 ) pts   16.1 % 15.6 %       (0.5 ) pts

 

 

 

BCE Supplementary Financial Information – Second Quarter 2014  Page 4

BCE
Segmented Data - Historical Trend

($ millions of Canadian dollars, except where otherwise indicated) (unaudited)

 YTD
2014		     Q2 14   Q1 14     Total
2013		     Q4 13   Q3 13   Q2 13   Q1 13  

Revenues

                                      

Bell Wireless

 2,994     1,522   1,472     5,849     1,505   1,493   1,442   1,409  

Bell Wireline

 4,947     2,485   2,462     10,097     2,601   2,482   2,506   2,508  

Bell Media

 1,483     761   722     2,557     821   664   559   513  

Inter-segment eliminations

 (237 )   (119 ) (118 )   (394 )   (114 ) (115 ) (83 ) (82 )

Total Bell

 9,187     4,649   4,538     18,109     4,813   4,524   4,424   4,348  

Bell Aliant

 1,358     682   676     2,759     688   696   691   684  

Inter-segment eliminations

 (226 )   (111 ) (115 )   (468 )   (119 ) (121 ) (115 ) (113 )

Total BCE

 10,319     5,220   5,099     20,400     5,382   5,099   5,000   4,919  

Operating costs

                                      

Bell Wireless

 (1,699 )   (855 ) (844 )   (3,509 )   (976 ) (876 ) (833 ) (824 )

Bell Wireline

 (3,064 )   (1,532 ) (1,532 )   (6,303 )   (1,667 ) (1,559 ) (1,527 ) (1,550 )

Bell Media

 (1,123 )   (551 ) (572 )   (1,874 )   (591 ) (465 ) (403 ) (415 )

Inter-segment eliminations

 237     119   118     394     114   115   83   82  

Total Bell

 (5,649 )   (2,819 ) (2,830 )   (11,292 )   (3,120 ) (2,785 ) (2,680 ) (2,707 )

Bell Aliant

 (730 )   (368 ) (362 )   (1,487 )   (383 ) (372 ) (369 ) (363 )

Inter-segment eliminations

 226     111   115     468     119   121   115   113  

Total BCE

 (6,153 )   (3,076 ) (3,077 )   (12,311 )   (3,384 ) (3,036 ) (2,934 ) (2,957 )

Adjusted EBITDA

                                      

Bell Wireless

 1,295     667   628     2,340     529   617   609   585  

Margin

 43.3 %   43.8 % 42.7 %   40.0 %   35.1 % 41.3 % 42.2 % 41.5 %

Bell Wireline

 1,883     953   930     3,794     934   923   979   958  

Margin

 38.1 %   38.4 % 37.8 %   37.6 %   35.9 % 37.2 % 39.1 % 38.2 %

Bell Media

 360     210   150     683     230   199   156   98  

Margin

 24.3 %   27.6 % 20.8 %   26.7 %   28.0 % 30.0 % 27.9 % 19.1 %

Total Bell

 3,538     1,830   1,708     6,817     1,693   1,739   1,744   1,641  

Margin

 38.5 %   39.4 % 37.6 %   37.6 %   35.2 % 38.4 % 39.4 % 37.7 %

Bell Aliant

 628     314   314     1,272     305   324   322   321  

Margin

 46.2 %   46.0 % 46.4 %   46.1 %   44.3 % 46.6 % 46.6 % 46.9 %

Total BCE

 4,166     2,144   2,022     8,089     1,998   2,063   2,066   1,962  

Margin

 40.4 %   41.1 % 39.7 %   39.7 %   37.1 % 40.5 % 41.3 % 39.9 %

Capital expenditures

                                      

Bell Wireless

 281     164   117     639     226   157   134   122  

Capital Intensity

 9.4 %   10.8 % 7.9 %   10.9 %   15.0 % 10.5 % 9.3 % 8.7 %

Bell Wireline

 1,058     595   463     2,247     702   562   523   460  

Capital Intensity

 21.4 %   23.9 % 18.8 %   22.3 %   27.0 % 22.6 % 20.9 % 18.3 %

Bell Media

 46     32   14     115     64   23   16   12  

Capital Intensity

 3.1 %   4.2 % 1.9 %   4.5 %   7.8 % 3.5 % 2.9 % 2.3 %

Total Bell

 1,385     791   594     3,001     992   742   673   594  

Capital Intensity

 15.1 %   17.0 % 13.1 %   16.6 %   20.6 % 16.4 % 15.2 % 13.7 %

Bell Aliant

 281     146   135     570     147   138   157   128  

Capital Intensity

 20.7 %   21.4 % 20.0 %   20.7 %   21.4 % 19.8 % 22.7 % 18.7 %

Total BCE

 1,666     937   729     3,571     1,139   880   830   722  

Capital Intensity

 16.1 %   18.0 % 14.3 %   17.5 %   21.2 % 17.3 % 16.6 % 14.7 %

 

 

BCE Supplementary Financial Information – Second Quarter 2014  Page 5

Bell Wireless (1)

($ millions of Canadian dollars, except where otherwise indicated) (unaudited)

 Q2
2014		   Q2
2013		    

% change

     YTD
2014		   YTD
2013		    

% change

  

Bell Wireless

                              

Revenue

                              

Service

 1,404   1,328     5.7 %   2,768   2,631     5.2 %

Product

 105   99     6.1 %   199   192     3.6 %

Total external Bell Wireless revenues

 1,509   1,427     5.7 %   2,967   2,823     5.1 %

Inter-segment

 13   15     (13.3 %)   27   28     (3.6 %)

Total Bell Wireless operating revenues

 1,522   1,442     5.5 %   2,994   2,851     5.0 %

Operating costs

 (855 ) (833 )   (2.6 %)   (1,699 ) (1,657 )   (2.5 %)

Adjusted EBITDA

 667   609     9.5 %   1,295   1,194     8.5 %

Adjusted EBITDA margin (Total revenues)

 43.8 % 42.2 %   1.6  pts   43.3 % 41.9 %   1.4  pts

Adjusted EBITDA margin (Service revenues)

 47.5 % 45.9 %   1.6  pts   46.8 % 45.4 %   1.4  pts

Capital expenditures

164

 

134

 

 

(22.4

%)

 

281

 

256

 

 

(9.8

%)

Capital intensity

 10.8 % 9.3 %   (1.5 ) pts   9.4 % 9.0 %   (0.4 ) pts

Wireless gross activations

 383,345   421,647     (9.1 %)   735,074   792,864     (7.3 %)

Postpaid

 291,993   336,052     (13.1 %)   567,156   631,188     (10.1 %)

Wireless net activations

 41,431   43,566     (4.9 %)   25,753   34,609     (25.6 %)

Postpaid

 66,186   96,390     (31.3 %)   100,150   155,887     (35.8 %)

Wireless subscribers end of period (EOP)

 7,804,087   7,715,641     1.1 %   7,804,087   7,715,641     1.1 %

Postpaid

 6,777,842   6,580,932     3.0 %   6,777,842   6,580,932     3.0 %

Average revenue per unit (ARPU)($/month) (4)

 59.49   56.85     4.6 %   58.70   56.39     4.1 %

Churn (%) (average per month) (4)

 1.47 % 1.64 %   0.17  pts   1.52 % 1.65 %   0.13  pts

Prepaid

 3.48 % 3.71 %   0.23  pts   3.58 % 3.75 %   0.17  pts

Postpaid

 1.16 % 1.27 %   0.11  pts   1.20 % 1.26 %   0.06  pts

Cost of acquisition (COA) (4) ($/sub)

 403   402     (0.2 %)   422   403     (4.7 %)

 

BCE Supplementary Financial Information – Second Quarter 2014  Page 6

Bell Wireless - Historical Trend

($ millions of Canadian dollars, except where otherwise indicated) (unaudited)

 YTD
2014		     Q2 14   Q1 14     Total
2013		     Q4 13   Q3 13   Q2 13   Q1 13  

Bell Wireless

                                      

Revenue

                                      

Service

 2,768     1,404   1,364     5,362     1,359   1,372   1,328   1,303  

Product

 199     105   94     432     134   106   99   93  

Total external Bell Wireless revenues

 2,967     1,509   1,458     5,794     1,493   1,478   1,427   1,396  

Inter-segment

 27     13   14     55     12   15   15   13  

Total Bell Wireless operating revenues

 2,994     1,522   1,472     5,849     1,505   1,493   1,442   1,409  

Operating costs

 (1,699 )   (855 ) (844 )   (3,509 )   (976 ) (876 ) (833 ) (824 )

Adjusted EBITDA

 1,295     667   628     2,340     529   617   609   585  

Adjusted EBITDA margin (Total revenues)

 43.3 %   43.8 % 42.7 %   40.0 %   35.1 % 41.3 % 42.2 % 41.5 %

Adjusted EBITDA margin (Service revenues)

 46.8 %   47.5 % 46.0 %   43.6 %   38.9 % 45.0 % 45.9 % 44.9 %

Capital expenditures

281

 

 

164

 

117

 

 

639

 

 

226

 

157

 

134

 

122

 

Capital intensity

 9.4 %   10.8 % 7.9 %   10.9 %   15.0 % 10.5 % 9.3 % 8.7 %

Wireless gross activations

 735,074     383,345   351,729     1,694,055     462,469   438,722   421,647   371,217  

Postpaid

 567,156     291,993   275,163     1,332,423     368,154   333,081   336,052   295,136  

Wireless net activations

 25,753     41,431   (15,678 )   217,768     93,700   89,459   43,566   (8,957 )

Postpaid

 100,150     66,186   33,964     378,121     119,520   102,714   96,390   59,497  

Wireless subscribers EOP (A)

 7,804,087     7,804,087   7,762,656     7,778,334     7,778,334   7,805,100   7,715,641   7,672,075  

Postpaid (A)

 6,777,842     6,777,842   6,711,656     6,677,692     6,677,692   6,683,646   6,580,932   6,484,542  

Average revenue per unit (ARPU)($/month)

 58.70     59.49   57.90     57.25     57.92   58.30   56.85   55.92  

Churn (%)(average per month)

 1.52 %   1.47 % 1.58 %   1.60 %   1.59 % 1.50 % 1.64 % 1.65 %

Prepaid

 3.58 %   3.48 % 3.67 %   3.55 %   3.41 % 3.27 % 3.71 % 3.79 %

Postpaid

 1.20 %   1.16 % 1.24 %   1.25 %   1.29 % 1.20 % 1.27 % 1.25 %

Cost of acquisition (COA)($/sub)

 422     403   442     421     468   403   402   404  

 

(A) In Q4 2013, following a review of our wireless subscriber metrics, our 2013 postpaid subscriber base was reduced by 99,098 customers to exclude all machine-to-machine subscribers. Additionally, our postpaid subscriber base was reduced by 18,354 subscribers to adjust for customer deactivations and by 8,022 subscribers subsequent to a review of customer accounts. Our prepaid subscriber base was increased by 5,008 customers subsequent to a review of subscriber metrics.

 

BCE Supplementary Financial Information – Second Quarter 2014  Page 7

Bell Wireline (1)

($ millions of Canadian dollars, except where otherwise indicated) (unaudited)

 Q2
2014		   Q2
2013		    

% change

     YTD
2014		   YTD
2013		    

% change

  

Bell Wireline

                              

Data

 1,485   1,456     2.0 %   2,948   2,889     2.0 %

Local & access

 595   632     (5.9 %)   1,198   1,278     (6.3 %)

Long distance

 170   183     (7.1 %)   332   367     (9.5 %)

Equipment & other

 147   153     (3.9 %)   296   317     (6.6 %)

Total external revenues

 2,397   2,424     (1.1 %)   4,774   4,851     (1.6 %)

Inter-segment revenues

 88   82     7.3 %   173   163     6.1 %

Total Bell Wireline operating revenues

 2,485   2,506     (0.8 %)   4,947   5,014     (1.3 %)

Operating costs

 (1,532 ) (1,527 )   (0.3 %)   (3,064 ) (3,077 )   0.4 %

Adjusted EBITDA

 953   979     (2.7 %)   1,883   1,937     (2.8 %)

Adjusted EBITDA Margin

 38.4 % 39.1 %   (0.7 ) pts   38.1 % 38.6 %   (0.5 ) pts

Capital expenditures

595

 

523

 

 

(13.8

%)

 

1,058

 

983

 

 

(7.6

%)

Capital intensity

 23.9 % 20.9 %   (3.0 ) pts   21.4 % 19.6 %   (1.8 ) pts

High-speed Internet

                              

High-speed internet net activations

 3,638   2,446     48.7 %   19,265   6,398     n.m.  

High-speed internet subscribers EOP

 2,203,808   2,133,219     3.3 %   2,203,808   2,133,219     3.3 %

TV

                              

Net subscriber activations

 20,960   25,605     (18.1 %)   49,521   39,576     25.1 %

Fibe TV

 46,533   50,555     (8.0 %)   101,213   98,018     3.3 %

Total subscribers EOP

 2,327,954   2,195,559     6.0 %   2,327,954   2,195,559     6.0 %

Fibe TV

 580,643   346,316     67.7 %   580,643   346,316     67.7 %

Local

                              

Network access services (NAS)

                              

Residential

 2,518,822   2,774,667     (9.2 %)   2,518,822   2,774,667     (9.2 %)

Business

 2,516,146   2,650,824     (5.1 %)   2,516,146   2,650,824     (5.1 %)

Total

 5,034,968   5,425,491     (7.2 %)   5,034,968   5,425,491     (7.2 %)

Network access service net (losses)/activations

                              

Residential

 (67,969 ) (82,090 )   17.2 %   (133,607 ) (165,647 )   19.3 %

Business

 (38,079 ) (28,912 )   (31.7 %)   (73,674 ) (53,801 )   (36.9 %)

Total

 (106,048 ) (111,002 )   4.5 %   (207,281 ) (219,448 )   5.5 %

n.m. : not meaningful

BCE Supplementary Financial Information – Second Quarter 2014  Page 8

Bell Wireline - Historical Trend

($ millions of Canadian dollars, except where otherwise indicated) (unaudited)

 YTD
2014		     Q2 14   Q1 14     Total
2013		     Q4 13   Q3 13   Q2 13   Q1 13  

Bell Wireline

                                      

Data

 2,948     1,485   1,463     5,828     1,513   1,426   1,456   1,433  

Local & access

 1,198     595   603     2,497     606   613   632   646  

Long distance

 332     170   162     722     171   184   183   184  

Equipment & other

 296     147   149     707     222   168   153   164  

Total external revenues

 4,774     2,397   2,377     9,754     2,512   2,391   2,424   2,427  

Inter-segment revenues

 173     88   85     343     89   91   82   81  

Total Bell Wireline operating revenues

 4,947     2,485   2,462     10,097     2,601   2,482   2,506   2,508  

Operating costs

 (3,064 )   (1,532 ) (1,532 )   (6,303 )   (1,667 ) (1,559 ) (1,527 ) (1,550 )

Adjusted EBITDA

 1,883     953   930     3,794     934   923   979   958  

Adjusted EBITDA Margin

 38.1 %   38.4 % 37.8 %   37.6 %   35.9 % 37.2 % 39.1 % 38.2 %

Capital expenditures

1,058

 

 

595

 

463

 

 

2,247

 

 

702

 

562

 

523

 

460

 

Capital intensity

 21.4 %   23.9 % 18.8 %   22.3 %   27.0 % 22.6 % 20.9 % 18.3 %

High-speed Internet

                                      

High-speed internet net activations

 19,265     3,638   15,627     57,722     15,690   35,634   2,446   3,952  

High-speed internet subscribers EOP

 2,203,808     2,203,808   2,200,170     2,184,543     2,184,543   2,168,853   2,133,219   2,130,773  

TV

                                      

Net subscriber activations

 49,521     20,960   28,561     122,450     36,189   46,685   25,605   13,971  

Fibe TV

 101,213     46,533   54,680     231,132     60,301   72,813   50,555   47,463  

Total subscribers EOP

 2,327,954     2,327,954   2,306,994     2,278,433     2,278,433   2,242,244   2,195,559   2,169,954  

Fibe TV

 580,643     580,643   534,110     479,430     479,430   419,129   346,316   295,761  

Local

                                      

Network access services (NAS)

                                      

Residential

 2,518,822     2,518,822   2,586,791     2,652,429     2,652,429   2,715,710   2,774,667   2,856,757  

Business

 2,516,146     2,516,146   2,554,225     2,589,820     2,589,820   2,622,298   2,650,824   2,679,736  

Total

 5,034,968     5,034,968   5,141,016     5,242,249     5,242,249   5,338,008   5,425,491   5,536,493  

Network access service net (losses)/activations

                                      

Residential

 (133,607 )   (67,969 ) (65,638 )   (287,885 )   (63,281 ) (58,957 ) (82,090 ) (83,557 )

Business

 (73,674 )   (38,079 ) (35,595 )   (114,805 )   (32,478 ) (28,526 ) (28,912 ) (24,889 )

Total

 (207,281 )   (106,048 ) (101,233 )   (402,690 )   (95,759 ) (87,483 ) (111,002 ) (108,446 )

 

BCE Supplementary Financial Information – Second Quarter 2014  Page 9

 

BCE (1)
Net debt and other information (2)

BCE - Net debt and preferred shares

            

At June 30, 2014

     BCE      

($ millions of Canadian dollars, except where otherwise indicated) (unaudited)

            

 

    Bell      

 

Bell   Aliant   BCE  

Debt due within one year

 2,152   584   2,736  

Long-term debt

 13,768   2,382   16,150  

Preferred shares - BCE (A)

 1,698   -   1,698  

Cash and cash equivalents

 (77 ) (73 ) (150 )

Net debt (3)

 17,541   2,893   20,434  

 

Bell - Net debt and preferred shares

            

($ millions of Canadian dollars, except where otherwise indicated) (unaudited)

            

 

June 30,   March 31   Dec. 31  

 

2014   2014   2013  

Debt due within one year

 2,152   2,501   2,286  

Long-term debt

 13,768   13,784   13,765  

Preferred shares - BCE (A)

 1,698   1,698   1,698  

Cash and cash equivalents

 (77 ) (682 ) (319 )

Net Debt

 17,541   17,301   17,430  

Net Debt / Adjusted EBITDA (4)

2.47

 

2.46

 

2.49

 

Adjusted EBITDA /Net interest expense, excluding interest on post-employment benefit obligations and including 50% of preferred dividends (4)

 8.31   8.27   8.40  

 

Bell Media Inc. - Proportionate Information

                                    

($ millions of Canadian dollars, except where otherwise indicated) (unaudited) 

              Total                    
YTD 2014   Q2 2014   Q1 2014     2013     Q4 2013   Q3 2013   Q2 2013   Q1 2013  

Proportionate Net Debt

14

 

14

 

30

 

 

103

 

 

103

 

143

 

202

 

206

 

Proportionate Adjusted EBITDA

318

 

189

 

129

 

 

593

 

 

209

 

172

 

134

 

78

 

 

Cash Flow Information

                                    

($ millions of Canadian dollars, except where otherwise indicated) (unaudited) 

Q2   Q2               YTD   YTD          
2014   2013   $ change    

% change

     2014   2013   $ change  

% change

  

Free Cash Flow (FCF) (3)

                                    

Cash from operating activities, excluding acquisition costs paid

 1,589   1,567   22     1.4 %   2,477   2,393   84   3.5 %

Capital expenditures

 (791 ) (673 ) (118 )   (17.5 %)   (1,385 ) (1,267 ) (118 ) (9.3 %)

Dividends paid on preferred shares

 (31 ) (32 ) 1     3.1 %   (63 ) (58 ) (5 ) (8.6 %)

Dividends paid by subsidiaries to non-controlling interest

 -   (6 ) 6     100.0 %   -   (13 ) 13   100.0 %

Bell Aliant dividends to BCE

 48   47   1     2.1 %   48   95   (47 ) (49.5 %)

FCF

 815   903   (88 )   (9.7 %)   1,077   1,150   (73 ) (6.3 %)
                                     

 

Cash Flow Information - Historical Trend

                                    

($ millions of Canadian dollars, except where otherwise indicated) (unaudited)

 YTD   Q2   Q1     Total     Q4   Q3   Q2   Q1  

 

2014   2014   2014     2013     2013   2013   2013   2013  

Free Cash Flow (FCF)

                                    

Cash from operating activities, excluding acquisition costs paid

 2,477   1,589   888     5,521     1,649   1,479   1,567   826  

Capital expenditures

 (1,385 ) (791 ) (594 )   (3,001 )   (992 ) (742 ) (673 ) (594 )

Dividends paid on preferred shares

 (63 ) (31 ) (32 )   (127 )   (31 ) (38 ) (32 ) (26 )

Dividends paid by subsidiaries to non-controlling interest

 -   -   -     (13 )   -   -   (6 ) (7 )

Bell Aliant dividends to BCE

 48   48   -     191     48   48   47   48  

FCF

 1,077   815   262     2,571     674   747   903   247  

 

                                    

 

(A) Net debt includes 50% of preferred shares

 

 

BCE Supplementary Financial Information – Second Quarter 2014  Page 10

 

BCE (1)
Consolidated Statements of Financial Position (2)

 

  June 30     March 31     December 31  

($ millions of Canadian dollars, except where otherwise indicated) (unaudited)

   2014     2014     2013  

ASSETS

                  

Current assets

                  

Cash

   125     99     220  

Cash equivalents

   25     621     115  

Trade and other receivables

   2,860     2,861     3,043  

Inventory

   384     380     383  

Prepaid expenses

   541     503     415  

Assets held for sale

   195     193     719  

Other current assets

   131     193     175  

Total current assets

   4,261     4,850     5,070  

Non-current assets

                  

Property, plant and equipment

   20,911     20,671     20,743  

Intangible assets

   10,019     9,526     9,552  

Deferred tax assets

   218     199     165  

Investments in associates and joint ventures

   771     789     775  

Other non-current assets

   679     752     698  

Goodwill

   8,364     8,376     8,381  

Total non-current assets

   40,962     40,313     40,314  

Total assets

   45,223     45,163     45,384  

LIABILITIES

                  

Current liabilities

                  

Trade payables and other liabilities

   3,798     3,661     4,339  

Interest payable

   137     145     147  

Dividends payable

   556     555     466  

Current tax liabilities

   268     191     367  

Debt due within one year

   2,736     3,201     2,571  

Total current liabilities

   7,495     7,753     7,890  

Non-current liabilities

                  

Long-term debt

   16,150     16,010     16,341  

Deferred tax liabilities

   1,106     1,217     1,318  

Post-employment benefit obligation

   3,241     2,744     2,127  

Other non-current liabilities

   1,480     1,458     1,458  

Total non-current liabilities

   21,977     21,429     21,244  

Total liabilities

   29,472     29,182     29,134  
                   

EQUITY

                  

Equity attributable to BCE shareholders

                  

Preferred shares

   3,395     3,395     3,395  

Common shares

   13,726     13,688     13,629  

Contributed surplus

   2,614     2,605     2,615  

Accumulated other comprehensive (loss) income

   (2 )   28     14  

Deficit

   (5,146 )   (4,933 )   (4,642 )

Total Equity attributable to BCE shareholders

   14,587     14,783     15,011  

Non-controlling interest

   1,164     1,198     1,239  

Total equity

   15,751     15,981     16,250  

Total liabilities and equity

   45,223     45,163     45,384  

Number of common shares outstanding

 

778.1

 

 

777.3

 

 

775.9

 

 

BCE Supplementary Financial Information – Second Quarter 2014  Page 11

 

BCE (1)
Consolidated Cash Flow Data (2)

($ millions of Canadian dollars, except where otherwise indicated) (unaudited)

   Q2
2014		     Q2
2013		       $ change       YTD
2014		     YTD
2013		       $ change  

Net earnings

   707     671       36       1,421     1,343       78  

Adjustments to reconcile net earnings to cash flows from operating activities

                                          

Severance, acquisition and other costs

   54     28       26       92     61       31  

Depreciation and amortization

   879     842       37       1,745     1,680       65  

Post-employment benefit plans cost

   94     107       (13 )     193     221       (28 )

Net interest expense

   226     225       1       460     445       15  

Gains on investments

   (4 )   (1 )     (3 )     (16 )   (3 )     (13 )

Income taxes

   236     196       40       467     437       30  

Contributions to post-employment benefit plans

   (85 )   (76 )     (9 )     (173 )   (174 )     1  

Payments under other post-employment benefit plans

   (18 )   (18 )     -       (36 )   (36 )     -  

Severance and other costs paid

   (38 )   (45 )     7       (106 )   (94 )     (12 )

Acquisition costs paid

   (16 )   (8 )     (8 )     (30 )   (18 )     (12 )

Interest paid

   (231 )   (206 )     (25 )     (460 )   (402 )     (58 )

Income taxes paid (net of refunds)

   (110 )   (37 )     (73 )     (471 )   (185 )     (286 )

Net change in operating assets and liabilities

   156     190       (34 )     (254 )   (367 )     113  

Cash flows from operating activities

   1,850     1,868       (18 )     2,832     2,908       (76 )

Bell Aliant dividends paid to BCE

   48     47       1       48     95       (47 )

Capital expenditures

   (937 )   (830 )     (107 )     (1,666 )   (1,552 )     (114 )

Cash dividends paid on preferred shares

   (31 )   (32 )     1       (63 )   (58 )     (5 )

Cash dividends paid by subsidiaries to non-controlling interest

   (68 )   (74 )     6       (75 )   (147 )     72  

Acquisition costs paid

   16     8       8       30     18       12  

Bell Aliant Free Cash Flow

   (63 )   (84 )     21       (29 )   (114 )     85  

Free Cash Flow (3)

   815     903       (88 )     1,077     1,150       (73 )

Bell Aliant free cash flow, excluding dividends paid

   15     37       (22 )     (19 )   19       (38 )

Business acquisitions

   -     -       -       -     (5 )     5  

Acquisition costs paid

   (16 )   (8 )     (8 )     (30 )   (18 )     (12 )

Business dispositions

   -     1       (1 )     538     1       537  

Increase in investments

   -     (1 )     1       (6 )   (1 )     (5 )

Decrease in investments

   -     3       (3 )     -     5       (5 )

Acquisition of spectrum licences

   (453 )   -       (453 )     (566 )   -       (566 )

Other investing activities

   2     14       (12 )     3     14       (11 )

(Decrease) increase in notes payable and bank advances

   (443 )   (321 )     (122 )     158     17       141  

Reduction in securitized trade receivables

   -     -       -       -     (14 )     14  

Issue of long-term debt

   150     1,408       (1,258 )     183     2,415       (2,232 )

Repayment of long-term debt

   (136 )   (513 )     377       (551 )   (802 )     251  

Premiums on early redemption of debt

   -     (10 )     10       -     (27 )     27  

Cash dividends paid on common shares

   (480 )   (452 )     (28 )     (932 )   (892 )     (40 )

Issue of common shares

   9     -       9       41     13       28  

Issue of equity securities by subsidiaries to non-controlling interest

   -     -       -       -     230       (230 )

Other financing activities

   (33 )   (8 )     (25 )     (81 )   (26 )     (55 )

 

  (1,385 )   150       (1,535 )     (1,262 )   929       (2,191 )

Net (decrease) increase in cash and cash equivalents

   (570 )   1,053       (1,623 )     (185 )   2,079       (2,264 )

Cash and cash equivalents at beginning of period

   720     1,155       (435 )     335     129       206  

Cash and cash equivalents at end of period

   150     2,208       (2,058 )     150     2,208       (2,058 )
                                           

Other information

                                          

Free cash flow per share (3)

 $ 1.05   $ 1.16     $ (0.11 )   $ 1.39   $ 1.48     $ (0.09 )

Annualized cash flow yield (5)

   6.6 %   7.3 %     (0.7 ) pts     6.6 %   7.3 %     (0.7 ) pts
                                           

 

BCE Supplementary Financial Information – Second Quarter 2014  Page 12

 

BCE
Consolidated Cash Flow Data - Historical Trend

($ millions of Canadian dollars, except where otherwise indicated) (unaudited)

   YTD
2014		       Q2 14     Q1 14       Total
2013		       Q4 13     Q3 13     Q2 13     Q1 13  

Net earnings

   1,421       707     714       2,388       593     452     671     672  

Adjustments to reconcile net earnings to cash flows from operating activities

                                                      

Severance, acquisition and other costs

   92       54     38       406       48     297     28     33  

Depreciation and amortization

   1,745       879     866       3,380       855     845     842     838  

Post-employment benefit plans cost

   193       94     99       442       109     112     107     114  

Net interest expense

   460       226     234       924       239     240     225     220  

(Gains) losses on investments

   (16 )     (4 )   (12 )     7       12     (2 )   (1 )   (2 )

Income taxes

   467       236     231       828       226     165     196     241  

Contributions to post-employment benefit plans

   (173 )     (85 )   (88 )     (341 )     (83 )   (84 )   (76 )   (98 )

Payments under other post-employment benefit plans

   (36 )     (18 )   (18 )     (73 )     (18 )   (19 )   (18 )   (18 )

Severance and other costs paid

   (106 )     (38 )   (68 )     (203 )     (65 )   (44 )   (45 )   (49 )

Acquisition costs paid

   (30 )     (16 )   (14 )     (80 )     (30 )   (32 )   (8 )   (10 )

Interest paid

   (460 )     (231 )   (229 )     (879 )     (231 )   (246 )   (206 )   (196 )

Income taxes paid (net of refunds)

   (471 )     (110 )   (361 )     (470 )     (232 )   (53 )   (37 )   (148 )

Net change in operating assets and liabilities

   (254 )     156     (410 )     147       415     99     190     (557 )

Cash flows from operating activities

   2,832       1,850     982       6,476       1,838     1,730     1,868     1,040  

Bell Aliant dividends paid to BCE

   48       48     -       191       48     48     47     48  

Capital expenditures

   (1,666 )     (937 )   (729 )     (3,571 )     (1,139 )   (880 )   (830 )   (722 )

Cash dividends paid on preferred shares

   (63 )     (31 )   (32 )     (127 )     (31 )   (38 )   (32 )   (26 )

Cash dividends paid by subsidiaries to non-controlling interest

   (75 )     (68 )   (7 )     (283 )     (68 )   (68 )   (74 )   (73 )

Acquisition costs paid

   30       16     14       80       30     32     8     10  

Bell Aliant Free Cash Flow

   (29 )     (63 )   34       (195 )     (4 )   (77 )   (84 )   (30 )

Free Cash Flow

   1,077       815     262       2,571       674     747     903     247  

Bell Aliant free cash flow, excluding dividends paid

   (19 )     15     (34 )     4       (44 )   29     37     (18 )

Business acquisitions

   -       -     -       (2,850 )     (1 )   (2,844 )   -     (5 )

Acquisition costs paid

   (30 )     (16 )   (14 )     (80 )     (30 )   (32 )   (8 )   (10 )

Business dispositions

   538       -     538       1       -     -     1     -  

Increase in investments

   (6 )     -     (6 )     (3 )     (1 )   (1 )   (1 )   -  

Decrease in investments

   -       -     -       10       5     -     3     2  

Acquisition of spectrum licences

   (566 )     (453 )   (113 )     -       -     -     -     -  

Other investing activities

   3       2     1       12       -     (2 )   14     -  

Increase (decrease) in notes payable and bank advances

   158       (443 )   601       272       (240 )   495     (321 )   338  

Reduction in securitized trade receivables

   -       -     -       (14 )     -     -     -     (14 )

Issue of long-term debt

   183       150     33       4,438       15     2,008     1,408     1,007  

Repayment of long-term debt

   (551 )     (136 )   (415 )     (2,495 )     (178 )   (1,515 )   (513 )   (289 )

Premiums on early redemption of debt

   -       -     -       (55 )     -     (28 )   (10 )   (17 )

Cash dividends paid on common shares

   (932 )     (480 )   (452 )     (1,795 )     (452 )   (451 )   (452 )   (440 )

Issue of common shares

   41       9     32       13       -     -     -     13  

Issue of equity securities by subsidiaries to non-controlling interest

   -       -     -       230       -     -     -     230  

Other financing activities

   (81 )     (33 )   (48 )     (53 )     (16 )   (11 )   (8 )   (18 )

 

  (1,262 )     (1,385 )   123       (2,365 )     (942 )   (2,352 )   150     779  

Net (decrease) increase in cash and cash equivalents

   (185 )     (570 )   385       206       (268 )   (1,605 )   1,053     1,026  

Cash and cash equivalents at beginning of period

   335       720     335       129       603     2,208     1,155     129  

Cash and cash equivalents at end of period

   150       150     720       335       335     603     2,208     1,155  
                                                       

Other information

                                                      

Free cash flow per share

 $ 1.39     $ 1.05   $ 0.34     $ 3.31     $ 0.86   $ 0.97   $ 1.16   $ 0.32  

Annualized cash flow yield

   6.6 %     6.6 %   7.0 %     7.2 %     7.2 %   7.3 %   7.3 %   6.4 %

 

BCE Supplementary Financial Information – Second Quarter 2014  Page 13

 

Accompanying Notes

  We report our results of operations in four segments: Bell Wireless, Bell Wireline, Bell Media and Bell Aliant. Our reporting structure reflects how we manage our business and how we classify our operations for planning and measuring performance.
 
(1) Throughout this report, BCE means, as the context may require, either BCE Inc. or, collectively, BCE Inc., its subsidiaries, joint arrangements and associates; Bell means our Bell Wireless, Bell Wireline and Bell Media segments on an aggregate basis; and Bell Aliant means Bell Aliant Inc. and its subsidiaries and associates.
 
(2) On July 5, 2013, BCE acquired 100% of the issued and outstanding shares of Astral Media Inc. (Astral) . Astral is a media company that operates specialty and pay TV channels, radio stations, digital media properties and out-of-home advertising platforms.
 
(3) Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted EBITDA margin

Beginning with Q2 2014, we reference Adjusted EBITDA and Adjusted EBITDA margin as non-GAAP financial measures. These terms replace the previously referenced non-GAAP financial measures EBITDA and EBITDA margin. Our definition of Adjusted EBITDA and Adjusted EBITDA margin are unchanged from our former definition of EBITDA and EBITDA margin respectively. Accordingly, this change in terminology has no impact on our reported financial results for prior periods.

The terms Adjusted EBITDA and Adjusted EBITDA margin do not have any standardized meaning under International Financial Reporting Standards (IFRS). Therefore, they are unlikely to be comparable to similar measures presented by other issuers.

We define Adjusted EBITDA as operating revenues less operating costs (including post-employment benefit plans service cost). We define Adjusted EBITDA margin as Adjusted EBITDA divided by operating revenues.

We use Adjusted EBITDA and Adjusted EBITDA margin to evaluate the performance of our businesses as they reflect their ongoing profitability. We believe that certain investors and analysts use Adjusted EBITDA to measure a company’s ability to service debt and to meet other payment obligations or as a common measurement to value companies in the telecommunications industry. We believe that certain investors and analysts also use Adjusted EBITDA and Adjusted EBITDA margin to evaluate the performance of our businesses. Adjusted EBITDA also is one component in the determination of short-term incentive compensation for all management employees.

Adjusted EBITDA and Adjusted EBITDA margin have no directly comparable IFRS financial measure. Alternatively, Adjusted EBITDA may be reconciled to net earnings as shown in this document.

 Adjusted net earnings and Adjusted earnings per share (EPS)

The terms Adjusted net earnings and Adjusted EPS do not have any standardized meaning under IFRS. Therefore, they are unlikely to be comparable to similar measures presented by other issuers.

We define Adjusted net earnings as net earnings attributable to common shareholders before severance, acquisition and other costs, net (gains) losses on investments, and premiums on early redemption of debt. We define Adjusted EPS as Adjusted net earnings per BCE common share.

 

BCE Supplementary Financial Information – Second Quarter 2014  Page 14

 

Accompanying Notes

  We use Adjusted net earnings and Adjusted EPS and we believe that certain investors and analysts use these measures, among other ones, to assess the performance of our businesses without the effects of severance, acquisition and other costs, net (gains) losses on investments, and premiums on early redemption of debt, net of tax and non-controlling interest. We exclude these items because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. Excluding these items does not imply they are non-recurring.

The most comparable IFRS financial measures are net earnings attributable to common shareholders and EPS.

Free Cash Flow and Free Cash Flow per share

The terms free cash flow and free cash flow per share do not have any standardized meaning under IFRS. Therefore, they are unlikely to be comparable to similar measures presented by other issuers.

We define free cash flow as cash flows from operating activities, excluding acquisition costs paid and voluntary pension funding, plus dividends received from Bell Aliant, less capital expenditures, preferred share dividends, dividends paid by subsidiaries to non-controlling interest, and Bell Aliant free cash flow. We define free cash flow per share as follows:

Free cash flow
Average number of common shares outstanding

We consider free cash flow and free cash flow per share to be important indicators of the financial strength and performance of our businesses because they show how much cash is available to repay debt and reinvest in our company.

We believe that certain investors and analysts use free cash flow to value a business and its underlying assets. We believe that certain investors and analysts also use free cash flow and free cash flow per share to evaluate the financial strength and performance of our businesses.

For free cash flow, the most comparable IFRS financial measure is cash flows from operating activities.

Net debt

The term net debt does not have any standardized meaning under IFRS. Therefore, it is unlikely to be comparable to similar measures presented by other issuers.

We define net debt as debt due within one year plus long-term debt and 50% of preferred shares less cash and cash equivalents. We include 50% of outstanding preferred shares in our net debt as it is consistent with the treatment by certain credit rating agencies.

We consider net debt to be an important indicator of the company’s financial leverage because it represents the amount of debt that is not covered by available cash and cash equivalents. We believe that certain investors and analysts use net debt to determine a company’s financial leverage.

Net debt has no directly comparable IFRS financial measure, but rather is calculated using several asset and liability categories from the statements of financial position, as shown in this document.

 

BCE Supplementary Financial Information – Second Quarter 2014  Page 15

 

Accompanying Notes

(4) Key Performance Indicators (KPIs)

We use a number of KPIs to measure the success of our strategic imperatives. These KPIs are not accounting measures and may not be comparable to similar measures presented by other issuers.

Capital Intensity is capital expenditures divided by operating revenues.

Average revenue per user or subscriber (ARPU) represents the measurement of certain service revenues divided by the average subscriber base for the specified period.

Churn is the rate at which existing subscribers cancel their services, expressed as a percentage. Churn is calculated as the number of subscribers disconnected divided by the average subscriber base. It is a measure of monthly customer turnover.

Cost of acquisition (COA) is also referred to as subscriber acquisition costs. COA represents the total cost associated with acquiring a customer and includes costs such as hardware discounts, marketing and distribution costs. This measure is expressed per gross activation during a specified period.

Net debt to Adjusted EBITDA is Bell Net debt divided by Adjusted EBITDA. Net debt is debt due within one year plus long-term debt and 50% of preferred shares less cash and cash equivalents. For the purposes of calculating our net debt to Adjusted EBITDA ratio, Adjusted EBITDA is defined as twelve-month trailing Bell Adjusted EBITDA including dividends from Bell Aliant to BCE.

Adjusted EBITDA to net interest expense is Adjusted EBITDA divided by net interest expense. For the purposes of calculating our Adjusted EBITDA to net interest expense ratio, Adjusted EBITDA is defined as twelve-month trailing Bell Adjusted EBITDA including dividends from Bell Aliant to BCE. Net interest expense is twelve-month trailing Bell interest expense excluding interest on post-employment benefit obligations and including 50% of preferred dividends.
 
(5) Annualized cash flow yield is calculated as follows:

Trailing 12 month free cash flow
Number of common shares outstanding at end of period multiplied by share price at end of period

 

BCE Supplementary Financial Information – Second Quarter 2014  Page 16