SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule
13a-16 or 15d-16 under
the Securities Exchange Act of 1934
For the month of: November 2004 | Commission
File Number: 1-8481 |
BCE
Inc.
(Translation of Registrants name into English)
1000,
rue de La Gauchetière Ouest, Bureau 3700, Montréal, Québec
H3B 4Y7, (514) 397-7000
(Address of principal executive offices)
Indicate by check mark whether the Registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F | Form 40-F | X
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Indicate by check mark whether the Registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes | No | X
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Only the BCE Inc. Management's Discussion and Analysis for the quarter ended September 30, 2004 and the BCE Inc. unaudited interim consolidated financial statements for the quarter ended September 30, 2004, included on pages 2 to 30 and 31 to 41, respectively, of the BCE Inc. 2004 Third Quarter Shareholder Report filed with this Form 6-K, and the document entitled "Reconciliation of Canadian Generally Accepted Accounting Principles ("GAAP") to United States GAAP" filed with this Form 6-K as Appendix A, are incorporated by reference in the registration statements filed by BCE Inc. with the Securities and Exchange Commission on Form F-3 (Registration No. 333-12130), Form S-8 (Registration No. 333-12780), Form S-8 (Registration No. 333-12802) and Form S-8 (Registration No. 333-12804). Except for the foregoing, no other document or portion of document filed with this Form 6-K is incorporated by reference in BCE Inc.s registration statements. Notwithstanding any reference to BCEs Web site on the World Wide Web in the documents attached hereto, the information contained in BCEs site or any other site on the World Wide Web referred to in BCEs site is not a part of this Form 6-K and, therefore, is not filed with the Securities and Exchange Commission.
CONTENTS | ||
MD&A | 2 | |
3 | ||
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4 | ||
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9 | ||
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21 | ||
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27 | ||
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30 | ||
Supplementary Financial Information | 30 | |
Consolidated Financial Statements | 31 | |
Notes to Consolidated Financial Statements | 34 |
In this MD&A, we,
us, our and BCE mean
BCE Inc., its subsidiaries and joint ventures.
A statement we make is forward-looking when it uses what
we know and expect today to make a statement about the future. |
Managements Discussion and Analysis This managements discussion and analysis of financial condition and results of operations (MD&A) comments on BCEs operations, financial condition and cash flows for the three months (Q3) and nine months (YTD) ended September 30, 2004 and 2003. ABOUT FORWARD-LOOKING STATEMENTS Securities laws encourage
companies to disclose forward-looking information so that investors
can get a better understanding of the companys future prospects
and make informed investment decisions.
Risks that could cause our actual results to materially differ from our current expectations are discussed in this MD&A including, in particular, in Risks That Could Affect Our Business. |
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We define EBITDA as operating revenues less operating expenses, which means it represents operating income before amortization expense, net benefit plans cost, and restructuring and other items. |
NON-GAAP FINANCIAL MEASURES EBITDAThe
term, EBITDA (earnings before interest, taxes, depreciation and amortization),
does not have any standardized meaning prescribed by Canadian generally
accepted accounting principles (GAAP). It is therefore unlikely to be
comparable to similar measures presented by other companies. EBITDA
is presented on a consistent basis from period to period. |
2 2004 Quarterly Report Bell Canada Enterprises
EBITDA should not be confused with net cash flows from operating activities. The most comparable Canadian GAAP financial measure is operating income which is discussed in the Financial Results Analysis section of this MD&A. The tables below are reconciliations of EBITDA to operating income on a consolidated basis for BCE and Bell Canada. | ||||||||||
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BCE |
Q3 2004 | Q3 2003 | YTD 2004 | YTD 2003 | ||||||
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EBITDA |
1,936 | 1,895 | 5,733 | 5,563 | ||||||
Amortization expense |
(769 | ) | (801 | ) | (2,305 | ) | (2,325 | ) | ||
Net benefit plans cost |
(61 | ) | (44 | ) | (189 | ) | (129 | ) | ||
Restructuring and other items |
(1,081 | ) | (1 | ) | (1,098 | ) | (1 | ) | ||
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Operating income |
25 | 1,049 | 2,141 | 3,108 | ||||||
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Bell Canada |
Q3 2004 | Q3 2003 | YTD 2004 | YTD 2003 | ||||||
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EBITDA |
1,856 | 1,817 | 5,432 | 5,270 | ||||||
Amortization expense |
(734 | ) | (758 | ) | (2,199 | ) | (2,228 | ) | ||
Net benefit plans cost |
(55 | ) | (46 | ) | (173 | ) | (135 | ) | ||
Restructuring and other items |
(1,080 | ) | (1 | ) | (1,096 | ) | (1 | ) | ||
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Operating income (loss) |
(13 | ) | 1,012 | 1,964 | 2,906 | |||||
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We define free cash flow as cash from operating activities after capital expenditures, total dividends and other investing activities. |
FREE CASH FLOW
The term, free cash
flow, does not have any standardized meaning prescribed by Canadian GAAP.
It is therefore unlikely to be comparable to similar measures presented
by other companies. Free cash flow is presented on a consistent basis
from period to period. |
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Video services are television services provided to customers through our direct-to-home (DTH) satellites or by very high-speed digital subscriber line (VDSL) equipment. |
About
Our Business BCE
is Canadas largest communications company. Starting in the first
quarter of 2004, we report our results of operations under five segments:
Consumer, Business, Aliant, Other Bell Canada and Other BCE. |
3 2004 Quarterly Report Bell Canada Enterprises
The
Other Bell Canada segment includes Bell Canadas wholesale
business, and the financial results of Télébec Limited Partnership
(Télébec), NorthernTel Limited Partnership (NorthernTel)
and Northwestel Inc. (Northwestel). Our wholesale business provides
local telephone, long distance, data and other services to competitors
who resell these services. Télébec, NorthernTel and Northwestel
provide telecommunications services to less populated areas in Québec,
Ontario and Canadas northern territories. |
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This section reviews the key measures we use to assess our performance and how our results in Q3 2004 compare to our results in Q3 2003. |
Overall, this quarter
we continued to build momentum on our strategic initiatives and on growing
our business profitably. We improved our revenue growth rate for the third
consecutive quarter reaching 3.3% at BCE and 1.2% at Bell Canada. At the
same time we improved our operating income margins by 0.4 percentage points,
excluding restructuring and other items. We achieved solid operating performance
resulting in strong earnings contribution before restructuring and other
items and substantial free cash flow. In addition, significant accomplishments
in the quarter included Bell Canadas negotiation of a new four-year
labour agreement with its technicians represented by the Communications,
Energy and Paperworkers Union of Canada (CEP), the implementation
of our employee departure program, where some five thousand employees
will be leaving Bell Canada, and in September, Aliant Telecom Inc.
negotiated a new collective agreement with its unionized employees, putting
an end to a labour disruption that began in April. While these items help
lay an important foundation for future success, the voluntary departure
program and Aliants labour disruption had a significant negative
impact on our earnings results this quarter, reflected through restructuring
and other items and increased strike related costs. |
4 2004 Quarterly Report Bell Canada Enterprises
In
the Other Bell Canada segment, while the market remains challenging
for our wholesale business, the trend of a slowing rate of decline continued
in Q3. In fact revenues from our wholesale business were essentially flat
compared to last year and, before restructuring and other items, operating
income increased in the quarter, departing from the declines experienced
in the previous quarters of this year. Bell Globemedia continues to perform well, driven by strengthening advertising revenues reflecting strong television ratings as CTV Television held 17 of the top 20 regularly scheduled programs (Adult age: 25 to 54) during the summer season and 15 of the top 20 programs in the first two weeks of the fall season. Our share of CGIs revenues increased over last year, primarily as a result of CGIs acquisition of American Management Systems Incorporated Inc. (AMS) in May 2004. |
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CUSTOMER CONNECTIONS
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OPERATING REVENUES Revenues reached $4,781 million for the third quarter of 2004 reflecting a year-over-year increase of 3.3% and a third consecutive quarter of improved rate of growth. At Bell Canada this was primarily driven by higher Consumer revenues resulting from strong wireless, Internet access and video services, partly offset by estimated revenue declines impacted by the labour disruption at Aliant, which began in April this year and ended in September. In addition, revenue growth also reflected an increase in the Other BCE segment, particularly higher revenues at CGI resulting from its acquisition of AMS. Excluding the estimated $17 million revenue decline resulting from the Aliant labour disruption, revenues for the quarter increased 3.7% over last year.
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5 2004 Quarterly Report Bell Canada Enterprises
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OPERATING INCOME AND EBITDA We realized operating
income increases in the quarter of $17 million in our consumer segment
and $52 million from our business segment. Total operating income
for the quarter was $25 million, down $1,024 million from the
third quarter last year as a result of the recognition of restructuring
and other items in
the amount of $1,081 million in the quarter. The restructuring and
other items mainly related to the employee departure program which was
announced in June of this year encompassing a total of 5,052 employees
who will be leaving Bell Canada. In addition, the labour disruption
at Aliant had an estimated negative impact of approximately $34 million
on operating income for the quarter. Excluding the impacts of the restructuring
and other items and the Aliant labour disruption, operating income increased
$90 million or 8.6% reflecting revenue growth, productivity gains
and lower amortization expense which more than offset higher costs associated
with volume increases and a higher net benefit plans cost over last year.
Operating income margin improved 1.1 percentage points to 23.8% reflecting
the benefit of our cost containment focus. NET EARNINGS / EARNINGS PER SHARE Net earnings applicable
to common shares for Q3 2004 were $82 million, or $0.09 per
common share. This compared to net earnings of $446 million, or $0.49
per common share in the third quarter last year. Included in this quarters
net earnings were net losses of $402 million, or $0.43 per common
share, resulting from the after tax restructuring and other items of $725 million
or $0.78 per share relating mainly to the employee departure program announced
in June of this year, partly offset by net gains of $325 million
or $0.35 per share relating to net gains on the sale of our 16% investment
in Manitoba Telecom Services Inc. (MTS) and our remaining 3.24% interest
in YPG General Partner Inc. This compared to net gains on the sale
of investments and restructuring and other items of $14 million in
the third quarter of 2003. |
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CAPITAL EXPENDITURES Capital expenditures for the third quarter totalled $811 million slightly up from the same period last year, while remaining essentially stable at 17% as a percentage of revenues. The increase of $20 million in capital expenditures reflected a mix of higher spending towards growth areas of the business and reduced spending in the legacy areas. Approximately 40% of the year-to-date capital spending represented investments on our strategic initiatives such as the migration to one national IP-Multi-Protocol Label System |
6 2004 Quarterly Report Bell Canada Enterprises
(MPLS)
network, our VDSL strategy, our DSL footprint expansion facilitated through
the rollout of fibre-to-the-node and productivity initiatives. CASH FROM OPERATING ACTIVITIES AND FREE CASH FLOW Cash from operating activities for Q3 2004 totalled $1,828 million, up $10 million compared to the same period last year. The increase in cash from operating activities resulted from higher cash earnings and the receipt of $75 million in the quarter resulting from the settlement of lawsuits against MTS and Allstream Inc. at the end of Q2 2004 which more than offset increased working capital requirements associated with the introduction of the new billing platform for our wireless customers in May of this year. As anticipated, a higher level of accounts receivable resulted from planned billing delays which arose during the billing migration process and continued throughout the third quarter. By mid October invoicing delays associated with the new billing platform were resolved and accounts receivable balances are expected to return to more normal levels by year-end. |
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Free cash flow of $673 million this quarter brought our year-to-date free cash flow to $999 million. Our net debt to total capitalization ratio improved to 42.1% at the end of the quarter from 44.0% at December 31, 2003, reflecting net debt reduction. The net debt improvement resulted primarily from year-to-date positive free cash flow of $999 million and net cash proceeds of $584 million from the sale of our 15.96% interest in MTS, $315 million from the sale of our 63.9% interest in Emergis and $123 million from the sale of our remaining 3.24% interest in YPG General Partner Inc. This was partly offset by business acquisitions totalling $952 million relating to the purchase of MTSs 40% interest in Bell West and acquisitions at CGI and Bell Canada. EXECUTING ON OUR PRIORITIES Setting the Standard
in Internet Protocol (IP)
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7 2004 Quarterly Report Bell Canada Enterprises
Simplicity and Service Olympic Partnership Sale of MTS |
8 2004 Quarterly Report Bell Canada Enterprises
Labour
Agreements Employee departure
program |
This section provides detailed information and analysis about our performance in Q3 and YTD 2004 compared to Q3 and YTD 2003. It focuses on our consolidated operating results and provides financial information for each of our reportable operating segments. |
Financial
Results Analysis OPERATING REVENUES |
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Q3 2004 | Q3 2003 | % change |
YTD 2004 | YTD 2003 | % change |
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Consumer |
1,908 | 1,838 | 3.8 | % | 5,591 | 5,335 | 4.8 | % | ||||||
Business |
1,440 | 1,440 | | % | 4,316 | 4,311 | 0.1 | % | ||||||
Aliant |
497 | 514 | (3.3 | %) | 1,527 | 1,532 | (0.3 | %) | ||||||
Other Bell Canada |
486 | 478 | 1.7 | % | 1,428 | 1,547 | (7.7 | %) | ||||||
Inter-segment eliminations |
(125 | ) | (115 | ) | (8.7 | %) | (378 | ) | (357 | ) | (5.9 | %) | ||
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Bell Canada |
4,206 | 4,155 | 1.2 | % | 12,484 | 12,368 | 0.9 | % | ||||||
Other BCE |
682 | 596 | 14.4 | % | 2,061 | 1,900 | 8.5 | % | ||||||
Inter-segment eliminations |
(107 | ) | (124 | ) | 13.7 | % | (341 | ) | (349 | ) | 2.3 | % | ||
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Total operating revenues |
4,781 | 4,627 | 3.3 | % | 14,204 | 13,919 | 2.0 | % | ||||||
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BY SEGMENT Consumer |
9 2004 Quarterly Report Bell Canada Enterprises
a year ago. In addition, this quarter we did not see the benefit of the August 2003 power outage in Ontario which contributed to increased long distance minute usage and wireless usage in the third quarter last year. Wireless |
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Video Data |
10 2004 Quarterly Report Bell Canada Enterprises
Consumer DSL net additions this quarter were lower than Q3 2003 due to the impact of the double-cohort reflecting the change in the Ontario education system whereby two graduating classes entered university in the same year causing a lift in net additions in Q3 2003 which did not recur this year. Bell Sympatico value-added services such as MSN Premium, Desktop Anti-Virus and Desktop Firewall added 20,000 subscriptions this quarter and 166,000 for the first nine months of 2004, for a total count of 453,000 as at September 30, 2004 more than double the end of period subscriptions of last year. Since August, Sympatico customers can receive free Parental control services to make the Internet safer for kids. Bell Sympatico VAS net additions reflected the reduction of paid parental control which was more than offset by the increase in the MSN Premium Service. Wireline |
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Business Enterprise |
11 2004 Quarterly Report Bell Canada Enterprises
There were also two important contract wins with the Government of Québec. The first involves the renewal of a contract for the integration and operation of the provinces digital land records and registry documents platform and is worth $25 million over two years. In this contract, Bells role has grown from being just the connectivity provider to now including the systems integration and network management functions. Our work on this project earned us the first prize in the Government On-line category at the 2004 Awards of Excellence of the Québec Public Administration Institute. The second contract, worth $2.5 million, is for the implementation of an electronic authentication security system and reinforces Bell Canadas position as a leading provider of VAS. SMB Bell West |
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Aliant Aliant segment revenues of $497 million for the quarter and $1,527 million year-to-date, declined 3.3% and 0.3%, respectively, compared to the same periods last year. In addition, the labour disruption that commenced on April 23, 2004 and concluded on September 20, 2004, negatively impacted the quarter and year-to-date revenues by an estimated $17 million and $26 million, respectively. This represents estimated fewer new installations, fewer wireless and Internet activations, slower product sales, less data growth and promotional long distance rates. Strong wireless and Internet services growth for the quarter and on a year-to-date basis were more than offset by declines in other areas due to the on-going impact of regulatory restriction, competition and technological substitution. Strong wireless revenue growth of 14.6% in the quarter and 16.1% on a year-to-date basis over the same periods last year was driven by a 9% increase in Aliants wireless customer base, including a 30% increase in digital customers, reflecting the positive response to the extensive dealer supported network, pricing offers and the expansion of digital cellular service into new areas. In addition, ARPU was up $3 for both the quarter and on a year-to-date basis compared to the same periods last year, reflecting the impacts of a higher percentage of customers subscribing to digital service, higher usage and increased customer adoption of features. Intense long distance competition, Aliants inability to maintain win-back efforts during the labour disruption and substitution of long distance calling with Internet and wireless options by customers resulted in long distance revenue declines for the quarter and on a year-to-date basis. Consumer minute volumes were down due to customer losses to competition and the capping of minutes on certain long-distance plans in late 2003. Business long distance pricing declines continued to reflect the impact of competitive pressures, as did long distance volume declines, in addition to a reduction of contact centre activity. |
12 2004 Quarterly Report Bell Canada Enterprises
Data
revenues for the quarter and on a year-to-date basis declined slightly
as higher Internet revenues were more than offset by other data revenue
declines which were impacted by the scaleback of marketing and sales efforts
during the labour disruption, as well as the continued rationalization
of circuit networks by customers. The continued increase in Internet revenues
stemmed from increased popularity of enhanced services and subscriber
growth of 6%, reflecting 23% growth in Aliants high-speed Internet
customer base. The higher subscriber base reflected the expansion of high-speed
Internet service into new areas, attractive introductory offers, an emphasis
on bundling with other products and services and a focus on dealer and
on-line sales channels. Other Bell Canada |
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Other BCE | ||||||||||||||
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Q3 2004 | Q3 2003 | % change |
YTD 2004 | YTD 2003 | % change |
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Bell Globemedia | 302 | 296 | 2.0 | % | 1,015 | 988 | 2.7 | % | ||||||
Telesat | 91 | 84 | 8.3 | % | 260 | 246 | 5.7 | % | ||||||
CGI | 277 | 203 | 36.5 | % | 745 | 630 | 18.3 | % | ||||||
Other | 12 | 13 | (7.7 | %) | 41 | 36 | 13.9 | % | ||||||
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Other BCE revenues | 682 | 596 | 14.4 | % | 2,061 | 1,900 | 8.5 | % | ||||||
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The
Other BCE segment revenues grew by 14.4% this quarter to $682 million
compared to Q3 2003. On a year-to-date basis, this segments
revenues grew by 8.5% to $2,061 million compared to the same period
last year. In each case, revenue growth was driven by CGIs acquisition
of AMS in May 2004 as well as higher revenues at Bell Globemedia
and Telesat. |
13 2004 Quarterly Report Bell Canada Enterprises
BY BELL CANADA CONSOLIDATED PRODUCT LINES | ||||||||||||||
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Q3 2004 | Q3 2003 | % change |
YTD 2004 | YTD 2003 | % change |
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Local and access |
1,395 | 1,410 | (1.1 | %) | 4,175 | 4,200 | (0.6 | %) | ||||||
Long distance |
589 | 641 | (8.1 | %) | 1,767 | 1,942 | (9.0 | %) | ||||||
Wireless |
727 | 645 | 12.7 | % | 2,076 | 1,803 | 15.1 | % | ||||||
Data |
915 | 906 | 1.0 | % | 2,677 | 2,762 | (3.1 | %) | ||||||
Video |
213 | 192 | 10.9 | % | 631 | 559 | 12.9 | % | ||||||
Terminal sales and other |
367 | 361 | 1.7 | % | 1,158 | 1,102 | 5.1 | % | ||||||
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Total Bell Canada Consolidated |
4,206 | 4,155 | 1.2 | % | 12,484 | 12,368 | 0.9 | % | ||||||
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Local
and Access |
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Long
Distance |
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Wireless |
14 2004 Quarterly Report Bell Canada Enterprises1
We
gained 109,000 new customers for the quarter compared to net additions
of 124,000 in Q3 2003. Net additions were down from Q3 2003,
largely as a result of less aggressive in-store promotional handset pricing
offered during the third quarter compared to last year. Net additions
of 296,000 on a year-to-date basis were also lower than the 325,000 for
the same period last year mainly due to our conscious decision to focus
on ensuring service levels and the orderly billing migration of existing
customers onto our new billing platform implemented this May rather than
aggressively pursuing growth. |
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Data See discussion under Consumer Segment Terminal Sales and Other |
15 2004 Quarterly Report Bell Canada Enterprises
OPERATING INCOME | ||||||||||||||
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Q3 2004 | Q3 2003 | % change |
YTD 2004 | YTD 2003 | % change |
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Consumer |
569 | 552 | 3.1 | % | 1,655 | 1,548 | 6.9 | % | ||||||
Business |
245 | 193 | 26.9 | % | 713 | 582 | 22.5 | % | ||||||
Aliant |
71 | 104 | (31.7 | %) | 245 | 307 | (20.2 | %) | ||||||
Other Bell Canada |
(898 | ) | 163 | n.m. |
(649 | ) | 469 | n.m. |
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Bell Canada Consolidated |
(13 | ) | 1,012 | n.m. |
1,964 | 2,906 | (32.4 | %) | ||||||
Other BCE |
38 | 37 | 2.7 | % | 177 | 202 | (12.4 | %) | ||||||
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Total operating income |
25 | 1,049 | (97.6 | %) | 2,141 | 3,108 | (31.1 | %) | ||||||
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n.m.: not meaningful |
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CONSOLIDATED OPERATING INCOME Despite Consumer operating
income increases in the quarter of $17 million and $107 million
on a year-to-date basis and Business operating income increases of $52 million
in the quarter and $131 million on a year-to-date basis, our total operating
income of $25 million for the third quarter and $2,141 million
on a year-to-date basis reflected declines of $1,024 million and
$967 million, respectively, compared to the same periods last year.
These decreases resulted mainly from the recognition of restructuring
charges of $985 million related to our employee departure program
and other charges of $96 million consisting primarily of closure
costs for excess facilities, various asset write-downs and other provisions. |
16 2004 Quarterly Report Bell Canada Enterprises
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relating
to the completion of the purchase price allocation relating to the repurchase
of SBC Communications Inc.s (SBC) 20% interest in Bell Canada,
resulting in an increase in capital assets. These impacts more than offset
the increase in our capital asset base driven by prior year capital expenditures. OPERATING INCOME BY SEGMENT Consumer |
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Business |
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Aliant |
17 2004 Quarterly Report Bell Canada Enterprises
The
estimated impact of the labour disruption on operating income during the
third quarter and on a year-to-date basis was approximately $34 million
and $55 million, respectively. This reflected an estimated negative
impact on revenue for the third quarter of $17 million and $26 million
on a year-to-date basis. As well, operating expenses were negatively impacted
by an estimated $20 million in the quarter and $32 million year-to-date.
Costs incurred in the second quarter of 2004 consisted primarily
of security requirements and property repairs to enable operations to
continue with relatively few interruptions and to ensure the safety of
employees, as well as up-front costs to train and equip employees for
their new roles. In the second quarter there was a minimal impact on salaries
and benefits as overtime costs incurred were offset by unionized employee
salary savings. However, in the third quarter of 2004, overtime wages
exceeded unionized salary savings as Aliant stepped up to the challenge
of increased customer demand during a traditionally busy period. The magnitude
of security costs in the third quarter was similar to those incurred in
the second quarter, although costs per day decreased as there were a larger
number of days impacted by the labour disruption in the third quarter.
Generally, costs were higher than anticipated in the third quarter as
the labour disruption lasted over a longer period and continued over the
back-to-school period. |
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Other
Bell Canada Other BCE |
18 2004 Quarterly Report Bell Canada Enterprises
OTHER ITEMS | ||||||||||||||
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Q3 2004 | Q3 2003 | % change |
YTD 2004 | YTD 2003 | % change |
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Operating income |
25 | 1,049 | (97.6 | %) | 2,141 | 3,108 | (31.1 | %) | ||||||
Other income |
333 | 1 | n.m. |
393 | 48 | 718.8 | % | |||||||
Interest expense |
(253 | ) | (270 | ) | 6.3 | % | (758 | ) | (839 | ) | 9.7 | % | ||
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Pre-tax earnings from continuing operations |
105 | 780 | (86.5 | %) | 1,776 | 2,317 | (23.3 | %) | ||||||
Income taxes |
44 | (282 | ) | 115.6 | % | (511 | ) | (788 | ) | 35.2 | % | |||
Non-controlling interest |
(47 | ) | (45 | ) | (4.4 | %) | (134 | ) | (144 | ) | 6.9 | % | ||
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Earnings from continuing operations |
102 | 453 | (77.5 | %) | 1,131 | 1,385 | (18.3 | %) | ||||||
Discontinued operations |
(2 | ) | 11 | (118.2 | %) | 28 | 30 | (6.7 | %) | |||||
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Net earnings |
100 | 464 | (78.4 | %) | 1,159 | 1,415 | (18.1 | %) | ||||||
Dividends on preferred shares |
(18 | ) | (18 | ) | |
(53 | ) | (50 | ) | (6.0 | %) | |||
Premium on redemption of preferred shares |
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| (7 | ) | 100.0 | % | ||||||
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Net earnings applicable to common shares |
82 | 446 | (81.6 | %) | 1,106 | 1,358 | (18.6 | %) | ||||||
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EPS |
0.09 | 0.49 | (81.6 | %) | 1.20 | 1.49 | (19.5 | %) | ||||||
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n.m.: not meaningful |
EPS
decreased by $0.40 to $0.09 in Q3 2004, compared to Q3 2003,
which reflects the restructuring and other items of $0.78, partly offset
by improvements in EBITDA of $0.04, net gains on investments of $0.35
and a decline in interest expense of $0.01. Other income of $333 million in Q3 2004 and $393 million on a year-to-date basis in 2004 represent significant increases of $332 million and $345 million, respectively, compared to the same periods last year. In Q3 2004, we recognized:
On a year-to-date basis, we also had higher miscellaneous income, partly offset by foreign exchange gains in 2003. In April 2003, we entered into forward contracts to hedge U.S.$200 million of long-term debt at Bell Canada that had not been hedged previously. This removed the foreign currency risk on the principal amount of that debt, which has since minimized the effect of foreign exchange. INTEREST EXPENSEInterest expense of $253 million in Q3 2004 and $758 million on a year-to-date basis in 2004 represent a 6.3% and a 9.7% decline, respectively, compared to the same periods last year. This resulted from $1.8 billion of debt repayments (net of issues) year-over-year. The decline in average debt levels was driven mainly by positive free cash flows. The average interest rate in Q3 2004 was 7.2% and on a year-to-date basis in 2004 was 7.1%, which is comparable to the same periods last year. |
19 2004 Quarterly Report Bell Canada Enterprises
INCOME TAXES
In Q3 2004, we had pre-tax earnings from continuing operations of $105 million and an income tax recovery of $44 million. The income tax recovery resulted from:
On a year-to-date basis, income taxes decreased $277 million to $511 million compared to the same period last year. The decrease was mainly from lower pre-tax earnings (excluding the gains on sale of MTS, YPG General Partner Inc. and the non-deductible restructuring charges) and the reduction in the statutory income tax rate to 34.3% in 2004 from 35.4% in 2003. As a result of these items, the effective tax rate was 28.8% on a year-to-date basis in 2004 compared to 34.0% in the same period last year. NON-CONTROLLING INTEREST Non-controlling interest
of $47 million in Q3 2004 represents a 4.4% increase compared
to the same period last year. The increase was mainly due to the purchase
of Bell West and higher earnings at Bell Globemedia, partly
offset by lower earnings at Aliant as a result of the strike. On August
3, 2004, we acquired full ownership of Bell West by completing
the purchase of MTSs 40% interest in Bell West. In May 2004, our
board of directors approved the sale of our 63.9% interest in Emergis.
In June 2004, BCE completed the sale of its interest in Emergis by
way of a secondary public offering. |
20 2004 Quarterly Report Bell Canada Enterprises
This section tells you how we manage our cash and capital resources to carry out our strategy and deliver financial results. It provides an analysis of our financial condition, cash flows and liquidity on a consolidated basis. |
Financial
and Capital Management CAPITAL STRUCTURE |
|||||
|
||||||
September 30, | December 31, | |||||
2004 | 2003 | |||||
|
||||||
Debt due within one year |
1,516 | 1,519 | ||||
Long-term debt |
12,076 | 12,381 | ||||
Less: Cash and cash equivalents |
(1,386 | ) | (585 | ) | ||
|
||||||
Total net debt |
12,206 | 13,315 | ||||
Non-controlling interest |
2,904 | 3,403 | ||||
Total shareholders equity |
13,879 | 13,573 | ||||
|
||||||
Total capitalization |
28,989 | 30,291 | ||||
|
||||||
Net debt to capitalization |
42.1 | % | 44.0 | % | ||
|
||||||
Outstanding share data (in millions) |
||||||
Common shares at end of period |
924.9 | 924.0 | ||||
Stock options at end of period |
29.5 | 25.8 | ||||
|
Our
net debt to capitalization ratio was 42.1% at the end of Q3 2004,
an improvement from 44.0% at the end of Q4 2003. This reflected lower
net debt and higher total shareholders equity, partly offset by
lower non-controlling interest. |
21 2004 Quarterly Report Bell Canada Enterprises
SUMMARY OF CASH FLOWS | ||||||||||
|
||||||||||
|
Q3 2004 | Q3 2003 | YTD 2004 | YTD 2003 | ||||||
|
||||||||||
Cash from operating activities |
1,828 | 1,818 | 4,212 | 4,370 | ||||||
Capital expenditures |
(811 | ) | (791 | ) | (2,318 | ) | (2,088 | ) | ||
Other investing activities |
(2 | ) | 155 | 133 | 69 | |||||
Preferred dividends |
(21 | ) | (14 | ) | (64 | ) | (39 | ) | ||
Dividends paid by subsidiaries to non-controlling interest |
(44 | ) | (38 | ) | (133 | ) | (137 | ) | ||
|
||||||||||
Free cash flow from operations, before common dividends |
950 | 1,130 | 1,830 | 2,175 | ||||||
Common dividends |
(277 | ) | (259 | ) | (831 | ) | (770 | ) | ||
|
||||||||||
Free cash flow from operations, after common dividends |
673 | 871 | 999 | 1,405 | ||||||
Business acquisitions |
(646 | ) | (3 | ) | (952 | ) | (73 | ) | ||
Business dispositions |
4 | 55 | 20 | 55 | ||||||
Change in investments accounted for under the cost and equity methods |
695 | 1 | 693 | 7 | ||||||
Net issuance of equity instruments |
8 | 5 | 16 | 167 | ||||||
Net issuance (repayment) of debt instruments |
85 | (179 | ) | (217 | ) | (301 | ) | |||
Financing activities of subsidiaries with third parties |
(4 | ) | (15 | ) | (57 | ) | 39 | |||
Cash provided by discontinued operations |
12 | 30 | 196 | 17 | ||||||
Other |
(18 | ) | 56 | (34 | ) | (5 | ) | |||
|
||||||||||
Net increase in cash and cash equivalents |
809 | 821 | 664 | 1,311 | ||||||
|
CASH FROM OPERATING
ACTIVITIES Cash
from operating activities increased 0.6% or $10 million to $1,828 million
in Q3 2004, compared to Q3 2003, with the receipt of a $75 million
settlement payment from MTS being almost entirely offset by unfavourable
changes in working capital. Working capital in Q3 2004 has been impacted
by the new billing platform which resulted in anticipated delays in invoicing
at quarter-end. Working capital is expected to return to a more normalized
level by year end. We continue to make
investments to expand and update our networks and to meet customer demand
for new services. Capital expenditures were $811 million in Q3 2004,
or 17.0% of revenues. This was relatively stable compared with capital
expenditures of $791 million, or 17.1% of revenues, for the same
period last year. In the first nine months of 2004, capital expenditures
were $2.3 billion, or 16.3% of revenues, up from $2.1 billion,
or 15.0% of revenues, for the same period last year. The increase reflects
a mix of higher spending in the growth businesses and reduced spending
in the legacy areas. In addition, the increase in capital expenditures
for the quarter reflected construction of Telesats new satellites,
the main one being Anik F2. Declines in capital spending at Aliant
resulted from the work disruption. |
22 2004 Quarterly Report Bell Canada Enterprises
OTHER INVESTING
ACTIVITIES Cash
from other investing activities of $133 million in the first nine
months of 2004 included $179 million of insurance proceeds that
Telesat received for a malfunction on the Anik F1 satellite.
We paid a dividend
of $0.30 per common share in Q3 2004. This was the same as the dividend
we paid in Q3 2003. We invested $646 million
in business acquisitions in Q3 2004. This consisted entirely of Bell Canadas
acquisition of MTSs 40% interest in Bell West. Bell Canada
now owns 100% of Bell West.
We invested $73 million in business acquisitions during the first nine months of 2003. This consisted mainly of our proportionate share of the cash paid for CGIs acquisition of Cognicase Inc. BUSINESS DISPOSITIONSWe received $55 million for business dispositions during the first nine months of 2003 for Bell Canadas sale of its 89.9% ownership interest in Certen Inc. (Certen). Bell Canada received $89 million in cash, which was reduced by $34 million of Certens cash and cash equivalents at the time of sale. CHANGE IN INVESTMENTS ACCOUNTED FOR UNDER THE COST AND EQUITY METHODS In Q3 2004, we sold our remaining 3.24% interest in YPG General Partner Inc. for net cash proceeds of $123 million and our 15.96% interest in MTS for net cash proceeds of $584 million. EQUITY INSTRUMENTSDuring the first nine months of 2003, BCE Inc. issued 20 million Series AC preferred shares for $510 million and redeemed 14 million Series U preferred shares for $357 million, which included a $7 million premium on redemption. |
23 2004 Quarterly Report Bell Canada Enterprises
DEBT INSTRUMENTS
We issued $85 million
of debt (net of repayments) in Q3 2004. We made $217 million
of debt repayments (net of issues) in the first nine months of 2004.
The repayments were mainly at Bell Canada, BCE Inc. and Bell
Globemedia. At Bell Canada, the repayments included the Series M-15 debentures
for $500 million and the Series DU debentures for $126 million.
In addition, in 2004, BCE Inc. redeemed all of its outstanding
Series P retractable preferred shares for $351 million. The issuances
were mainly at Bell Canada and Bell Globemedia. At Bell Canada,
the issuances included the Series M-17 debentures for $450 million.
At Bell Globemedia, the issuances included $300 million of senior
notes. CASH RELATING TO DISCONTINUED OPERATIONS In the first nine months of 2004, cash provided by discontinued operations of $196 million consisted mainly of the net cash proceeds of $315 million from the sale of our investment in Emergis which were partly offset by the deconsolidation of Emergis cash on hand of $137 million at December 31, 2003. |
||
CREDIT RATINGS In June 2004 Standard & Poors (S&P) upgraded BCE Inc.s preferred shares rating. The table below lists BCE Inc.s and Bell Canadas key credit ratings at November 2, 2004. |
||||||||||||||
|
||||||||||||||
BCE Inc. | Bell Canada | |||||||||||||
|
||||||||||||||
S&P | DBRS | Moodys | S&P | DBRS | Moodys | |||||||||
|
||||||||||||||
Commercial paper |
A-1 (mid) / stable | R-1 (low) / stable | P-2 / stable | A-1 (mid) / stable | R-1 (mid) / stable | P-2 / stable | ||||||||
Extendable commercial notes |
A-1 (mid) / stable | R-1 (low) / stable | | A-1 (mid) / stable | R-1 (mid) / stable | | ||||||||
Long-term debt |
A- / stable | A / stable | Baa-1 / stable | A / stable | A (high) / stable | A-3 / stable | ||||||||
Preferred shares |
P-2 (high) / stable | Pfd-2 / stable | | P-2 (high) / stable | Pfd-2 (high) / stable | | ||||||||
|
LIQUIDITY Our ability to generate
cash in the short term and in the long term, when needed, and to provide
for planned growth and to fund development activities, depends on our
sources of liquidity and on our cash requirements. Commitment under
deferral account Employee departure
program Provision for contract
loss |
24 2004 Quarterly Report Bell Canada Enterprises
is accounted for using the percentage of completion method. During the second quarter of 2004, as part of our regular update of the estimated costs to complete construction of the network, potential cost overruns were identified. Construction is to be complete in late 2004. The costs of this last phase of construction are higher than previously estimated, due to changes necessitated in construction methods to connect individual government buildings to the network and higher average costs of construction. We recorded a provision of $110 million for this contract in the second quarter of 2004. Our estimated costs to complete are unchanged at September 30, 2004. Agreement to purchase
Canadian operations of 360networks Corporation RECENT DEVELOPMENTS IN LEGAL PROCEEDINGS This section provides a description of new legal proceedings involving BCE and of recent developments in certain of the legal proceedings involving BCE described in the BCE 2003 AIF as subsequently updated in BCE Inc.s 2004 First Quarter MD&A dated May 4, 2004 (BCE 2004 First Quarter MD&A) and BCE Inc.s 2004 Second Quarter MD&A dated August 3, 2004 (BCE 2004 Second Quarter MD&A). LAWSUITS RELATED TO BELL CANADA Potential Class
Action Concerning Wireless Access Charges Potential
class Action concerning Bell Mobility Billing system
|
25 2004 Quarterly Report Bell Canada Enterprises
While no one can predict the outcome of any legal proceeding, based on information currently available, we believe that we have strong defences and we intend to vigorously defend our position. Bell Distribution Inc.
lawsuit LAWSUITS RELATED TO TELEGLOBE INC. (TELEGLOBE) Teleglobe lending
syndicate lawsuit U.S.$1.09 billion (down from approximately U.S.$1.19 billion), plus interest and costs, representing approximately 87% (down from approximately 95%) of the US$1.25 billion that the members of that lending syndicate advanced to Teleglobe and Teleglobe Holdings (U.S.) Corporation. Teleglobe unsecured
creditors lawsuit LAWSUITS RELATED TO BELL CANADA INTERNATIONAL INC. (BCI) BCI common shareholders
lawsuits
|
26 2004 Quarterly Report Bell Canada Enterprises
LAWSUITS RELATED TO BELL GLOBEMEDIA As indicated in the BCE 2003 AIF, on February 5, 2001, Bell Globemedia Publishing Inc., a subsidiary of Bell Globemedia, was added as a defendant to a $100 million class action lawsuit relating to copyright infringement. The claim is that the defendants (which include The Globe and Mail newspaper and magazines it publishes) do not have the right to archive and publish certain freelanced and employee material from the newspaper or magazines in any format other than print. On October 3, 2001, the Ontario Superior Court of Justice rejected the plaintiffs motion for partial summary judgment (including the rejection of a requested injunction at this stage) on certain proposed common issues. The plaintiff appealed this decision, and the defendants cross-appealed some issues. The Ontario Court of Appeal provided its majority decision on October 6, 2004, and affirmed the initial refusal of summary judgement. Both the plaintiff and the defendants have 60 days from October 6, 2004 to apply for leave to appeal to the Supreme Court of Canada. Risks That Could Affect Our Business A risk is the possibility
that an event might happen in the future that could have a negative effect
on the financial condition, results of operations, cash flows or business
of one or more BCE group companies. Part of managing our business is to
understand what these potential risks could be and to minimize them where
we can.
|
27 2004 Quarterly Report Bell Canada Enterprises
For
a more complete description of the risks that could affect our business,
please see the BCE 2004 First Quarter MD&A, as updated in the
BCE 2004 Second Quarter MD&A and this MD&A, filed by BCE Inc.
with the Canadian securities commissions (available on BCE Inc.s
site at www.bce.ca and on SEDAR at www.sedar.com) and with the U.S. Securities
and Exchange Commission (SEC) under Form 6-K (available on EDGAR at www.sec.gov).
Please
see Recent Developments in Legal Proceedings in
this MD&A, in the BCE 2004 First Quarter MD&A and in the BCE 2004
Second Quarter MD&A for a description of new legal proceedings involving
us and of recent developments, since the BCE 2003 AIF, in the principal
legal proceedings involving us. UPDATES TO THE DESCRIPTION OF RISKS |
28 2004 Quarterly Report Bell Canada Enterprises
have been presented under the same headings and in the same order contained in the section entitled Risks That Could Affect Our Business set out in the BCE 2004 First Quarter MD&A. RISKS THAT COULD AFFECT ALL BCE GROUP COMPANIES RENEGOTIATING LABOUR AGREEMENTSA new collective agreement between Bell Canada and the CEP, representing approximately 7,100 craft and services employees, was signed on August 19, 2004 and will expire in November 2007. As well, a collective agreement between Aliant Telecom Inc. (a wholly-owned subsidiary of Aliant) and the CATU, representing approximately 4,300 employees, was signed on September 16, 2004 and will expire on December 31, 2007. Accordingly, the actual or potential adverse effects of the events preceding the execution of these collective agreements have now ceased to exist. RISKS THAT COULD AFFECT CERTAIN BCE GROUP COMPANIES BELL CANADA COMPANIES
Changes to Wireline Regulations Application seeking
consistent regulation Licences for Broadcasting
|
29 2004 Quarterly Report Bell Canada Enterprises
Southern Ontario and Québec. The CRTC held a public hearing, as required under the Broadcasting Act, in August 2004. Cable operators were seeking delays to the licensing and other conditions that would inhibit Bell Canadas ability to compete with them. A decision is expected in November 2004. TELESAT Anik F2 We have prepared our
consolidated financial statements according to Canadian GAAP. See Note
1 to the consolidated financial statements for more information about
the accounting policies we used to prepare our financial statements. Supplementary Financial Information The table below shows selected consolidated financial data for the eight most recently completed quarters. |
||||||||||||||||||
|
||||||||||||||||||
2004 |
2003 | 2002 | ||||||||||||||||
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | |||||||||||
|
||||||||||||||||||
Operating revenues |
4,781 | 4,782 | 4,641 | 4,818 | 4,627 | 4,673 | 4,619 | 4,974 | ||||||||||
Operating income |
25 | 1,105 | 1,011 | 1,013 | 1,049 | 1,078 | 981 | 649 | ||||||||||
Earnings from continuing operations |
102 | 544 | 485 | 486 | 453 | 466 | 466 | 790 | ||||||||||
Discontinued operations |
(2 | ) | 27 | 3 | (86 | ) | 11 | 12 | 7 | 922 | ||||||||
Net earnings |
100 | 571 | 488 | 400 | 464 | 478 | 473 | 1,712 | ||||||||||
Net earnings applicable to common shares |
82 | 554 | 470 | 386 | 446 | 461 | 451 | 1,696 | ||||||||||
Included in net earnings: | ||||||||||||||||||
Net gains on investments | ||||||||||||||||||
Continuing operations |
325 | | | 84 | | | | 1,230 | ||||||||||
Discontinued operations |
(2 | ) | 31 | 7 | (94 | ) | 8 | | | 911 | ||||||||
Restructuring and other items |
(725 | ) | 16 | (1 | ) | (9 | ) | 6 | | | (251 | ) | ||||||
Impairment charge |
| | | | | | | (527 | ) | |||||||||
Net earnings per common share: |
||||||||||||||||||
Continuing operations basic |
0.09 | 0.57 | 0.51 | 0.50 | 0.48 | 0.49 | 0.49 | 0.87 | ||||||||||
Continuing operations diluted |
0.08 | 0.57 | 0.51 | 0.50 | 0.47 | 0.49 | 0.49 | 0.86 | ||||||||||
Net earnings basic |
0.09 | 0.60 | 0.51 | 0.41 | 0.49 | 0.50 | 0.50 | 1.88 | ||||||||||
Net earnings diluted |
0.08 | 0.60 | 0.51 | 0.41 | 0.48 | 0.50 | 0.50 | 1.85 | ||||||||||
Average number of common shares outstanding (millions) |
924.6 | 924.3 | 924.1 | 923.4 | 921.5 | 919.3 | 917.1 | 909.1 | ||||||||||
|
30 2004 Quarterly Report Bell Canada Enterprises
Consolidated
Financial Statements Consolidated Statements of Operations |
|||||||||||
|
|||||||||||
For the period ended September 30 | Three months |
Nine months |
|||||||||
(in $ millions, except share amounts) (unaudited) | 2004 | 2003 | 2004 | 2003 | |||||||
|
|||||||||||
Operating revenues | 4,781 | 4,627 | 14,204 | 13,919 | |||||||
|
|||||||||||
Operating expenses |
(2,845 | ) | (2,732 | ) | (8,471 | ) | (8,356 | ) | |||
Amortization expense |
(769 | ) | (801 | ) | (2,305 | ) | (2,325 | ) | |||
Net benefit plans cost (Note 4) |
(61 | ) | (44 | ) | (189 | ) | (129 | ) | |||
Restructuring and other items (Note 5) |
(1,081 | ) | (1 | ) | (1,098 | ) | (1 | ) | |||
|
|||||||||||
Total operating expenses | (4,756 | ) | (3,578 | ) |
(12,063 | ) | (10,811 | ) | |||
|
|||||||||||
Operating income |
25 | 1,049 | 2,141 | 3,108 | |||||||
Other income (Note 6) |
333 | 1 | 393 | 48 | |||||||
Interest expense |
(253 | ) | (270 | ) | (758 | ) | (839 | ) | |||
|
|||||||||||
Pre-tax earnings from continuing operations |
105 | 780 | 1,776 | 2,317 | |||||||
Income taxes |
44 | (282 | ) | (511 | ) | (788 | ) | ||||
Non-controlling interest |
(47 | ) | (45 | ) | (134 | ) | (144 | ) | |||
|
|||||||||||
Earnings from continuing operations |
102 | 453 | 1,131 | 1,385 | |||||||
Discontinued operations (Note 7) |
(2 | ) | 11 | 28 | 30 | ||||||
|
|||||||||||
Net earnings |
100 | 464 | 1,159 | 1,415 | |||||||
Dividends on preferred shares |
(18 | ) | (18 | ) | (53 | ) | (50 | ) | |||
Premium on redemption of preferred shares |
| | | (7 | ) | ||||||
|
|||||||||||
Net earnings applicable to common shares |
82 | 446 | 1,106 | 1,358 | |||||||
|
|||||||||||
Net earnings per common share basic |
|||||||||||
Continuing operations |
0.09 | 0.48 | 1.17 | 1.46 | |||||||
Discontinued operations |
| 0.01 | 0.03 | 0.03 | |||||||
Net earnings |
0.09 | 0.49 | 1.20 | 1.49 | |||||||
Net earnings per common share diluted |
|||||||||||
Continuing operations |
0.08 | 0.47 | 1.16 | 1.45 | |||||||
Discontinued operations |
| 0.01 | 0.03 | 0.03 | |||||||
Net earnings |
0.08 | 0.48 | 1.19 | 1.48 | |||||||
Dividends per common share |
0.30 | 0.30 | 0.90 | 0.90 | |||||||
Average number of common shares outstanding basic (millions) |
924.6 | 921.5 | 924.4 | 919.3 | |||||||
|
Consolidated Statements of Deficit | ||||||||||
|
||||||||||
For the period ended September 30 | Three months |
Nine months |
||||||||
(in $ millions) (unaudited) | 2004 | 2003 | 2004 | 2003 | ||||||
|
||||||||||
Balance at beginning of period, as previously reported | (5,368 |
) | (6,079 |
) | (5,830 |
) | (6,435 |
) | ||
Accounting policy change for asset retirement obligations (Note 1) | | (7 | ) | (7 | ) | (7 | ) | |||
|
||||||||||
Balance at beginning of period, as restated | (5,368 | ) | (6,086 | ) | (5,837 | ) | (6,442 | ) | ||
Consolidation of variable interest entity |
| (25 | ) | | (25 | ) | ||||
Net earnings |
100 | 464 | 1,159 | 1,415 | ||||||
Dividends declared on common shares |
(277 | ) | (277 | ) | (832 | ) | (828 | ) | ||
Dividends declared on preferred shares |
(18 | ) | (18 | ) | (53 | ) | (50 | ) | ||
Premium on redemption of preferred shares |
| | | (7 | ) | |||||
Other |
| (2 | ) | | (7 | ) | ||||
|
||||||||||
Balance at end of period | (5,563 | ) | (5,944 | ) | (5,563 | ) | (5,944 | ) | ||
|
31 2004 Quarterly Report Bell Canada Enterprises
Consolidated Balance Sheets | ||||||
|
||||||
September 30 | December 31 | |||||
(in $ millions) (unaudited) | 2004 | 2003 | ||||
|
||||||
ASSETS | ||||||
Current assets | ||||||
Cash and cash equivalents |
1,386 | 585 | ||||
Accounts receivable |
2,491 | 2,061 | ||||
Other current assets |
892 | 739 | ||||
Current assets of discontinued operations |
| 280 | ||||
|
||||||
Total current assets | 4,769 | 3,665 | ||||
Capital assets | 21,111 | 21,114 | ||||
Other long-term assets | 2,494 | 3,459 | ||||
Indefinite-life intangible assets | 2,910 | 2,910 | ||||
Goodwill | 8,368 | 7,761 | ||||
Non-current assets of discontinued operations | 50 | 511 | ||||
|
||||||
Total assets | 39,702 | 39,420 | ||||
|
||||||
LIABILITIES | ||||||
Current liabilities | ||||||
Accounts payable and accrued liabilities |
4,537 | 3,534 | ||||
Debt due within one year |
1,516 | 1,519 | ||||
Current liabilities of discontinued operations |
| 285 | ||||
|
||||||
Total current liabilities | 6,053 | 5,338 | ||||
Long-term debt | 12,076 | 12,381 | ||||
Other long-term liabilities | 4,790 | 4,705 | ||||
Non-current liabilities of discontinued operations | | 20 | ||||
|
||||||
Total liabilities | 22,919 | 22,444 | ||||
|
||||||
Non-controlling interest | 2,904 | 3,403 | ||||
|
||||||
SHAREHOLDERS EQUITY | ||||||
Preferred shares | 1,670 | 1,670 | ||||
|
||||||
Common shareholders equity | ||||||
Common shares |
16,765 | 16,749 | ||||
Contributed surplus |
1,052 | 1,037 | ||||
Deficit |
(5,563 | ) | (5,837 | ) | ||
Currency translation adjustment |
(45 | ) | (46 | ) | ||
|
||||||
Total common shareholders equity | 12,209 | 11,903 | ||||
|
||||||
Total shareholders equity | 13,879 | 13,573 | ||||
|
||||||
Total liabilities and shareholders equity | 39,702 | 39,420 | ||||
|
32 2004 Quarterly Report Bell Canada Enterprises
Consolidated Statements of Cash Flows | ||||||||||
|
||||||||||
For the period ended September 30 | Three months |
Nine months |
||||||||
(in $ millions) (unaudited) | 2004 | 2003 | 2004 | 2003 | ||||||
|
||||||||||
Cash flows from operating activities |
||||||||||
Earnings from continuing operations |
102 | 453 | 1,131 | 1,385 | ||||||
Adjustments to reconcile earnings from continuing operations to cash flows from operating activities: |
||||||||||
Amortization expense |
769 | 801 | 2,305 | 2,325 | ||||||
Net benefit plans cost |
61 | 44 | 189 | 129 | ||||||
Restructuring and other items (non-cash portion) |
1,149 | (4 | ) | 1,164 | (4 | ) | ||||
Net gains on investments |
(325 | ) | | (331 | ) | | ||||
Future income taxes |
(183 | ) | 134 | (96 | ) | 211 | ||||
Non-controlling interest |
47 | 45 | 134 | 144 | ||||||
Contributions to employee pension plans |
(32 | ) | (46 | ) | (88 | ) | (73 | ) | ||
Other employee future benefit plan payments |
(13 | ) | (22 | ) | (59 | ) | (64 | ) | ||
Other |
(27 | ) | 26 | (3 | ) | (10 | ) | |||
Changes in non-cash working capital |
280 | 387 | (134 | ) | 327 | |||||
|
||||||||||
Cash from operating activities |
1,828 | 1,818 | 4,212 | 4,370 | ||||||
|
||||||||||
Cash flows from investing activities |
||||||||||
Capital expenditures |
(811 | ) | (791 | ) | (2,318 | ) | (2,088 | ) | ||
Business acquisitions |
(646 | ) | (3 | ) | (952 | ) | (73 | ) | ||
Business dispositions |
4 | 55 | 20 | 55 | ||||||
Decrease in investments accounted for under the cost and equity methods |
695 | 1 | 693 | 7 | ||||||
Other |
(2 | ) | 155 | 133 | 69 | |||||
|
||||||||||
Cash used in investing activities |
(760 | ) | (583 | ) | (2,424 | ) | (2,030 | ) | ||
|
||||||||||
Cash flows from financing activities |
||||||||||
Increase (decrease) in notes payable and bank advances |
173 | (73 | ) | 123 | (242 | ) | ||||
Issue of long-term debt |
10 | 17 | 1,410 | 1,881 | ||||||
Repayment of long-term debt |
(98 | ) | (123 | ) | (1,750 | ) | (1,940 | ) | ||
Issue of common shares |
8 | 5 | 16 | 14 | ||||||
Issue of preferred shares |
| | | 510 | ||||||
Redemption of preferred shares |
| | | (357 | ) | |||||
Issue of equity securities by subsidiaries to non-controlling interest |
| 24 | 7 | 113 | ||||||
Redemption of equity securities by subsidiaries from non-controlling interest |
(4 | ) | (39 | ) | (64 | ) | (74 | ) | ||
Cash dividends paid on common shares |
(277 | ) | (259 | ) | (831 | ) | (770 | ) | ||
Cash dividends paid on preferred shares |
(21 | ) | (14 | ) | (64 | ) | (39 | ) | ||
Cash dividends paid by subsidiaries to non-controlling interest |
(44 | ) | (38 | ) | (133 | ) | (137 | ) | ||
Other |
(18 | ) | 56 | (34 | ) | (5 | ) | |||
|
||||||||||
Cash used in financing activities |
(271 | ) | (444 | ) | (1,320 | ) | (1,046 | ) | ||
|
||||||||||
Cash provided by continuing operations |
797 | 791 | 468 | 1,294 | ||||||
Cash provided by discontinued operations |
12 | 30 | 196 | 17 | ||||||
|
||||||||||
Net increase in cash and cash equivalents |
809 | 821 | 664 | 1,311 | ||||||
Cash and cash equivalents at beginning of period |
577 | 796 | 722 | 306 | ||||||
|
||||||||||
Cash and cash equivalents at end of period |
1,386 | 1,617 | 1,386 | 1,617 | ||||||
|
||||||||||
Consists of: | ||||||||||
Cash and cash equivalents of continuing operations |
1,386 | 1,476 | 1,386 | 1,476 | ||||||
Cash and cash equivalents of discontinued operations |
| 141 | | 141 | ||||||
|
||||||||||
Total | 1,386 | 1,617 | 1,386 | 1,617 | ||||||
|
33 2004 Quarterly Report Bell Canada Enterprises
The interim consolidated financial statements should be read
in conjunction with BCE Inc.s annual consolidated financial
statements for the year ended December 31, 2003, on pages 64
to 101 of BCE Inc.s 2003 annual report. |
Notes
to Consolidated Financial Statements NOTE 1. SIGNIFICANT ACCOUNTING POLICIES We have prepared the consolidated financial statements in accordance with Canadian generally accepted accounting principles (GAAP) using the same basis of presentation and accounting policies as outlined in Note 1 to the annual consolidated financial statements for the year ended December 31, 2003, except as noted below. Comparative figures
Change in accounting
policy
Stock-based compensation
plans Starting in the first quarter
of 2004, we report our results of operations under five segments:
Consumer, Business, Aliant, Other Bell Canada
and Other BCE. Our reporting structure reflects how we manage
our business and how we classify our operations for planning and measuring
performance. |
34 2004 Quarterly Report Bell Canada Enterprises
NOTE 2. SEGMENTED INFORMATION (continued) | |||||||||||
|
|||||||||||
Three months |
Nine months |
||||||||||
For the period ended September 30 | 2004 | 2003 | 2004 | 2003 | |||||||
|
|||||||||||
Operating revenues | |||||||||||
Consumer | External | 1,893 | 1,821 | 5,552 | 5,296 | ||||||
Inter-segment | 15 | 17 | 39 | 39 | |||||||
|
|||||||||||
1,908 | 1,838 | 5,591 | 5,335 | ||||||||
|
|||||||||||
Business | External | 1,400 | 1,373 | 4,139 | 4,099 | ||||||
Inter-segment | 40 | 67 | 177 | 212 | |||||||
|
|||||||||||
1,440 | 1,440 | 4,316 | 4,311 | ||||||||
|
|||||||||||
Aliant | External | 467 | 478 | 1,421 | 1,422 | ||||||
Inter-segment | 30 | 36 | 106 | 110 | |||||||
|
|||||||||||
497 | 514 | 1,527 | 1,532 | ||||||||
|
|||||||||||
Other Bell Canada | External | 435 | 442 | 1,294 | 1,439 | ||||||
Inter-segment | 51 | 36 | 134 | 108 | |||||||
|
|||||||||||
486 | 478 | 1,428 | 1,547 | ||||||||
|
|||||||||||
Inter-segment eliminations Bell Canada | (125 | ) | (115 | ) | (378 | ) | (357 | ) | |||
|
|||||||||||
Bell Canada | 4,206 | 4,155 | 12,484 | 12,368 | |||||||
|
|||||||||||
Other BCE | External | 586 | 513 | 1,798 | 1,663 | ||||||
Inter-segment | 96 | 83 | 263 | 237 | |||||||
|
|||||||||||
682 | 596 | 2,061 | 1,900 | ||||||||
|
|||||||||||
Inter-segment eliminations Other | (107 | ) | (124 | ) | (341 | ) | (349 | ) | |||
|
|||||||||||
Total operating revenues | 4,781 | 4,627 | 14,204 | 13,919 | |||||||
|
|||||||||||
Operating income | |||||||||||
Consumer | 569 | 552 | 1,655 | 1,548 | |||||||
Business | 245 | 193 | 713 | 582 | |||||||
Aliant | 71 | 104 | 245 | 307 | |||||||
Other Bell Canada | (898 | ) | 163 | (649 | ) | 469 | |||||
|
|||||||||||
Bell Canada | (13 | ) | 1,012 | 1,964 | 2,906 | ||||||
Other BCE | 38 | 37 | 177 | 202 | |||||||
|
|||||||||||
Total operating income | 25 | 1,049 | 2,141 | 3,108 | |||||||
Other income | 333 | 1 | 393 | 48 | |||||||
Interest expense | (253 | ) | (270 | ) | (758 | ) | (839 | ) | |||
Income taxes | 44 | (282 | ) | (511 | ) | (788 | ) | ||||
Non-controlling interest | (47 | ) | (45 | ) | (134 | ) | (144 | ) | |||
|
|||||||||||
Earnings from continuing operations | 102 | 453 | 1,131 | 1,385 | |||||||
|
35 2004 Quarterly Report Bell Canada Enterprises
The consolidated statements of operations include the results of acquired businesses from the date they were acquired.
|
NOTE 3. BUSINESS
ACQUISITIONS During the first nine months of 2004, we made a number of business acquisitions, which included:
The table below provides a summary of the consideration received and the consideration given for all business acquisitions. In all cases, the purchase price allocation is based on estimates. The final purchase price allocation for each business acquisition is expected to be complete within twelve months from the acquisition date. Of the goodwill acquired:
|
|
|
||||||||||
40% interest in Bell West |
BCE’s proportionate share of AMS |
All other business acquisitions |
Total |
|||||||
|
||||||||||
Consideration received: |
||||||||||
Non-cash working capital |
| (70 | ) | 5 | (65 | ) | ||||
Capital assets |
| 101 | 13 | 114 | ||||||
Goodwill |
385 | 150 | 126 | 661 | ||||||
Long-term debt |
| | (2 | ) | (2 | ) | ||||
Other long-term liabilities |
| (13 | ) | | (13 | ) | ||||
Non-controlling interest |
261 | | | 261 | ||||||
|
||||||||||
646 | 168 | 142 | 956 | |||||||
Cash and cash equivalents (bank indebtedness) at acquisition |
| 20 | (3 | ) | 17 | |||||
|
||||||||||
Net assets acquired |
646 | 188 | 139 | 973 | ||||||
|
||||||||||
|
||||||||||
Consideration given: |
||||||||||
Cash |
645 | 182 | 134 | 961 | ||||||
Acquisition costs |
1 | 6 | 1 | 8 | ||||||
Future cash payment |
| | 4 | 4 | ||||||
|
||||||||||
646 | 188 | 139 | 973 | |||||||
|
36 2004 Quarterly Report Bell Canada Enterprises
NOTE 4. EMPLOYEE BENEFIT PLANS The table below shows the components of the net benefit plans cost. |
||||||||||||||||||
|
||||||||||||||||||
Three months |
Nine months |
|||||||||||||||||
Pension benefits | Other benefits | Pension benefits | Other benefits | |||||||||||||||
For the period ended September 30 |
2004 | 2003 | 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | ||||||||||
|
||||||||||||||||||
Current service cost |
58 | 55 | 7 | 8 | 182 | 166 | 23 | 23 | ||||||||||
Interest cost on accrued |
||||||||||||||||||
benefit obligation |
201 | 190 | 26 | 26 | 604 | 568 | 78 | 78 | ||||||||||
Expected return on plan assets |
(237 | ) | (233 | ) | (2 | ) | (2 | ) | (714 | ) | (701 | ) | (7 | ) | (7 | ) | ||
Amortization of past service costs |
2 | 2 | | | 7 | 7 | | | ||||||||||
Amortization of net actuarial losses |
8 | 6 | 1 | | 24 | 17 | 1 | | ||||||||||
Amortization of transitional (asset) obligation |
(11 | ) | (11 | ) | 7 | 7 | (33 | ) | (33 | ) | 22 | 22 | ||||||
Increase (decrease) in valuation allowance |
1 | (3 | ) | | | 2 | (9 | ) | | | ||||||||
Other |
| (1 | ) | | | | (2 | ) | | | ||||||||
|
||||||||||||||||||
Net benefit plans cost |
22 | 5 | 39 | 39 | 72 | 13 | 117 | 116 | ||||||||||
|
||||||||||||||||||
The table below shows the amounts we contributed to the pension plans and the post-employment benefit payments made to beneficiaries. |
||||||||||||||||||
|
||||||||||||||||||
Three months |
Nine months |
|||||||||||||||||
Pension benefits | Other benefits | Pension benefits | Other benefits | |||||||||||||||
For the period ended September 30 |
2004 | 2003 | 2004 | 2003 | 2004 | 2003 | 2004 | 2003 | ||||||||||
|
||||||||||||||||||
Aliant |
16 | 34 | 1 | 1 | 54 | 51 | 3 | 3 | ||||||||||
Bell Canada |
5 | 4 | 12 | 21 | 14 | 9 | 56 | 61 | ||||||||||
Bell Globemedia |
8 | 6 | | | 13 | 8 | | – | ||||||||||
BCE Inc. | 3 | 2 | | | 7 | 5 | | | ||||||||||
|
||||||||||||||||||
Total |
32 | 46 | 13 | 22 | 88 | 73 | 59 | 64 | ||||||||||
|
||||||||||||||||||
NOTE 5. RESTRUCTURING AND OTHER ITEMS | ||||||||||
|
||||||||||
Three months | Nine months | |||||||||
For the period ended September 30 |
2004 | 2003 | 2004 | 2003 | ||||||
|
||||||||||
Employee departure program |
(985 | ) | | (985 | ) | | ||||
Settlement with MTS |
| | 75 | | ||||||
Provision for contract loss |
| | (110 | ) | | |||||
Other charges |
(96 | ) | (1 | ) | (78 | ) | (1 | ) | ||
|
||||||||||
Restructuring and other items |
(1,081 | ) | (1 | ) | (1,098 | ) | (1 | ) | ||
|
||||||||||
Employee
departure program |
37 2004 Quarterly Report Bell Canada Enterprises
NOTE 5. RESTRUCTURING AND OTHER ITEMS (continued) The table below provides a summary of the costs recognized in the third quarter of 2004, as well as the corresponding liability at September 30, 2004. |
||||
|
||||
Employee departure program costs |
985 | |||
Less: |
||||
Cash payments |
(5 | ) | ||
Pension and other post-retirement benefits reclassified to: |
||||
Other long-term assets |
(660 | ) | ||
Other long-term liabilities |
(11 | ) | ||
|
||||
Balance in accounts payable and accrued liabilities at September 30, 2004 |
309 | |||
|
||||
Settlement with MTS
Provision for
contract loss Other charges |
38 2004 Quarterly Report Bell Canada Enterprises
NOTE 6. OTHER INCOME | ||||||||||
|
||||||||||
Three months | Nine months | |||||||||
For the period ended September 30 | 2004 | 2003 | 2004 | 2003 | ||||||
|
||||||||||
Net gains on investments | 325 | | 331 | | ||||||
Foreign currency gains (losses) | (2 | ) | (6 | ) | (4 | ) | 32 | |||
Other | 10 | 7 | 66 | 16 | ||||||
|
||||||||||
Other income | 333 | 1 | 393 | 48 | ||||||
|
In the third quarter of 2004, net gains on investments of $325 million included:
|
NOTE 7. DISCONTINUED OPERATIONS |
|
||||||||||
Three months | Nine months | |||||||||
For the period ended September 30 |
2004 | 2003 | 2004 | 2003 | ||||||
|
||||||||||
Emergis |
(2 | ) | 11 | 25 | 24 | |||||
Other |
| | 3 | 6 | ||||||
|
||||||||||
Net gain (loss) from discontinued operations |
(2 | ) | 11 | 28 | 30 | |||||
|
The table below provides a summarized statement of operations for the discontinued operations. | ||||||||||
|
||||||||||
Three months | Nine months | |||||||||
For the period ended September 30 |
2004 | 2003 | 2004 | 2003 | ||||||
|
||||||||||
Revenue |
| 244 | 128 | 765 | ||||||
|
||||||||||
Operating gain (loss) from discontinued operations, before tax |
| 33 | (52 | ) | 76 | |||||
Gain (loss) from discontinued operations, before tax |
(2 | ) | (1 | ) | 72 | 10 | ||||
Income tax expense on operating gain (loss) |
| (12 | ) | (11 | ) | (23 | ) | |||
Income tax recovery (expense) on gain (loss) |
| 2 | (3 | ) | (1 | ) | ||||
Non-controlling interest |
| (11 | ) | 22 | (32 | ) | ||||
|
||||||||||
Net gain (loss) from discontinued operations |
(2 | ) | 11 | 28 | 30 | |||||
|
Emergis provides eBusiness solutions
to the financial services industry in North America and the health industry
in Canada. It automates transactions between companies and allows them
to interact and transact electronically. |
Sale
of Emergis |
39 2004 Quarterly Report Bell Canada Enterprises
NOTE 8. STOCK-BASED COMPENSATION PLANS Restricted share units (RSUs) |
||||
|
||||
Number of | ||||
RSUs | ||||
|
||||
Outstanding, January 1, 2004 |
| |||
Granted |
1,944,735 | |||
Expired/forfeited |
(30,437 | ) | ||
|
||||
Outstanding, September 30, 2004 |
1,914,298 | |||
|
||||
For the three months and nine months ended September 30, 2004, we recorded compensation expense for RSUs of $7 million and $17 million, respectively. |
BCE Inc. stock options |
||||||
|
||||||
Weighted | ||||||
Number | average | |||||
of shares | exercise price | |||||
|
||||||
Outstanding, January 1, 2004 |
24,795,545 | $32 | ||||
Granted |
5,589,476 | $30 | ||||
Exercised |
(828,659 | ) | $17 | |||
Expired/forfeited |
(918,373 | ) | $34 | |||
|
||||||
Outstanding, September 30, 2004 |
28,637,989 | $32 | ||||
|
||||||
Exercisable, September 30, 2004 |
14,404,039 | $33 | ||||
|
Teleglobe stock options |
||||||
|
||||||
Number | Weighted | |||||
of BCE Inc. | average | |||||
shares | exercise price | |||||
|
||||||
Outstanding, January 1, 2004 |
955,175 | $21 | ||||
Exercised |
(102,828 | ) | $18 | |||
Expired/forfeited |
(24,685 | ) | $43 | |||
|
||||||
Outstanding and exercisable, September 30, 2004 |
827,662 | $21 | ||||
|
Assumptions used in stock option pricing model |
|
||||||||||
Three months | Nine months | |||||||||
For the period ended September 30 |
2004 | 2003 | 2004 | 2003 | ||||||
|
||||||||||
Compensation expense ($ millions) |
9 | 7 | 23 | 19 | ||||||
Number of stock options granted |
139,700 | 410,000 | 5,589,476 | 5,928,051 | ||||||
Weighted average fair value per option granted ($) |
3 | 7 | 3 | 6 | ||||||
Weighted average assumptions |
||||||||||
Dividend yield |
4.3 | % | 3.7 | % | 4.0 | % | 3.6 | % | ||
Expected volatility |
26 | % | 30 | % | 27 | % | 30 | % | ||
Risk-free interest rate |
3.7 | % | 3.6 | % | 3.1 | % | 4.0 | % | ||
Expected life (years) |
3.5 | 4.5 | 3.5 | 4.5 | ||||||
|
||||||||||
Starting in 2004, most of the stock options granted contain specific performance targets that must be met before the option can be exercised. This is reflected in the calculation of the weighted average fair value per option granted. |
40 2004 Quarterly Report Bell Canada Enterprises
NOTE 9. COMMITMENTS AND CONTINGENCIES Agreement to
purchase Canadian operations of 360networks Corporation Litigation Teleglobe unsecured
creditors lawsuit |
41 2004 Quarterly Report Bell Canada Enterprises
BCE Inc. 1000, rue de La Gauchetière Ouest Bureau 3700 Montréal (Québec) H3B 4Y7 www.bce.ca Communications
|
This document has been filed by BCE Inc. with Canadian securities commissions and the U.S. Securities and Exchange Commission. It can be found on BCE Inc.’s Web site at www.bce.ca, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov or is available upon request from: Investor Relationse-mail: investor.relations@bce.ca tel: 1 800 339-6353 fax: (514) 786-3970 |
For
further information concerning the Dividend Reinvestment and Stock Purchase
Plan (DRP), direct deposit of dividend payments, the elimination of multiple
mailings or the receipt of quarterly reports, please contact: Computershare
Trust |
|||
PRINTED
IN CANADA 04-10 BCE-3E |
BCE Investor Relations
Sophie Argiriou | 514-786-8145 |
sophie.argiriou@bell.ca |
George Walker | 514-870-2488 |
george.walker@bell.ca |
Roland Ribotti | 514-870-9034 |
roland.ribotti@bell.ca |
BCE
Consolidated(1)
Consolidated
Operational Data
($
millions, except per share amounts) |
Q3 2004 |
|
Q3 2003 |
|
$
change |
|
%
change |
|
|
YTD September 2004 |
|
YTD September 2003 |
|
|
$
change |
|
%change |
|
||||||
Operating revenues | 4,781 |
|
4,627 |
|
154 |
|
3.3% |
|
14,204 |
|
13,919 |
|
|
285 |
|
2.0% |
||||||||
Operating expenses | (2,845 |
) |
(2,732 |
) |
(113 |
) |
(4.1% |
) |
|
(8,471 |
) |
(8,356 |
) |
|
(115 |
) |
(1.4% |
)
|
||||||
EBITDA(2) | 1,936 |
|
1,895
|
|
41 |
|
2.2% |
|
|
5,733 |
|
5,563 |
|
|
170 |
|
3.1% |
|
||||||
EBITDA margin(3) | 40.5% |
|
41.0% |
(0.5
pts |
) |
40.4% |
40.0% |
0.4
pts |
|
|||||||||||||||
Amortization expense | (769 |
) |
(801 |
) |
32 |
|
4.0% |
|
|
(2,305 |
) |
(2,325 |
) |
|
20 |
0.9% |
|
|||||||
Net benefit plans cost | (61 |
) |
|
(44 |
)
|
|
(17 |
) |
(38.6% |
)
|
|
(189 |
) |
(129 |
) |
|
(60 |
) |
(46.5% |
) |
||||
Restructuring and other items |
(1,081 |
) |
|
(1 |
) |
|
(1,080 |
) |
n.m. |
|
|
(1,098 |
) |
(1 |
) |
|
(1,097 |
) |
n.m. |
|
||||
Operating income | 25
|
|
1,049 |
|
(1,024 |
) |
(97.6%
|
) |
|
2,141 |
|
3,108 |
|
|
(967
|
) |
(31.1%
|
) |
||||||
Other income |
333 |
|
1 |
|
332 |
|
n.m. |
|
|
393 |
|
48 |
|
|
345 |
|
n.m. |
|
||||||
Interest expense | (253 |
) |
|
(270 |
) |
|
17 |
|
6.3% |
|
|
(758 |
) |
(839 |
) |
|
81 |
|
9.7% |
|
||||
Pre-tax earnings from continuing operations | 105 |
|
780 |
|
(675 |
) |
(86.5%
|
) |
|
1,776 |
|
2,317
|
|
|
(541) |
|
(23.3% |
) |
||||||
Income taxes | 44 |
|
|
(282 |
)
|
|
326 |
n.m. |
|
(511 |
)
|
(788 |
)
|
|
277 |
35.2% |
||||||||
Non-controlling interest | (47 |
) |
|
(45 |
)
|
|
(2 |
) |
(4.4% |
) |
|
(134 |
) |
(144 |
) |
|
10 |
|
6.9% |
|
||||
Earnings from continuing operations | 102 |
|
453 |
|
(351 |
) |
(77.5% |
) |
|
1,131 |
|
1,385 |
|
|
(254) |
|
(18.3%
|
) |
||||||
Discontinued operations | (2 |
) |
|
11 |
|
(13 |
) |
n.m. |
|
|
28 |
|
30 |
|
|
(2 |
) |
(6.7% |
) |
|||||
Net earnings | 100
|
|
464 |
|
(364 |
) |
(78.4%
|
) |
|
1,159
|
|
1,415 |
|
|
(256 |
) |
(18.1%
|
) |
||||||
Dividends on preferred shares | (18 |
) |
|
(18 |
) |
|
- |
|
0.0% |
|
|
(53 |
) |
(50 |
) |
|
(3 |
) |
(6.0% |
) |
||||
Premium on redemption of preferred shares | -
|
|
-
|
|
-
|
|
n.m.
|
|
|
-
|
|
(7 |
) |
|
7 |
|
n.m. |
|
||||||
Net earnings applicable to common shares | 82 |
|
446 |
|
(364 |
) |
(81.6%
|
) |
|
1,106 |
|
1,358 |
|
|
(252 |
) |
(18.6% |
) |
||||||
|
|
|
|
|||||||||||||||||||||
Net earnings per common share - basic | |
|||||||||||||||||||||||
Continuing operations | $
|
0.09 |
$
|
0.48 |
$ |
(0.39 |
) |
(81.3%
|
) |
$ |
1.17 |
$ |
1.46 |
$
|
(0.29 |
) |
(19.9%
|
) |
||||||
Discontinued operations | $
|
- |
$ |
0.01
|
$
|
(0.01 |
) |
n.m.
|
$ |
0.03 |
$ |
0.03 |
$ |
- |
0.0%
|
|||||||||
Net earnings | $ |
0.09
|
$
|
0.49 |
$ |
(0.40 |
) |
(81.6%
|
) |
$ |
1.20 |
$ |
1.49 |
$ |
(0.29 |
) |
(19.5%
|
) |
||||||
Net earnings per common share - diluted | |
|||||||||||||||||||||||
Continuing operations |
$ |
0.08 |
$
|
0.47 |
$ |
(0.39 |
) |
(83.0%
|
) |
$ |
1.16 |
$ |
1.45 |
$ |
(0.29 |
) |
(20.0% |
) |
||||||
Discontinued operations | $ |
- |
$ |
0.01
|
$
|
(0.01 |
) |
n.m. |
$ |
0.03 |
$ |
0.03 |
$
|
- |
0.0%
|
|||||||||
Net earnings | $ |
0.08 |
$ |
0.48 |
$ |
(0.40 |
) |
(83.3%
|
) |
$ |
1.19 |
$
|
1.48 |
$ |
(0.29 |
) |
(19.6%
|
) |
||||||
Dividends per common share | $ |
0.30
|
$ |
0.30
|
$ |
- |
0.0% |
$ |
0.90 |
$ |
0.90 |
$ |
- |
0.0%
|
||||||||||
Average number of common shares outstanding - basic (millions) | 924.6 |
921.5 |
924.4 |
919.3 |
||||||||||||||||||||
|
|
|
|
|
|
||||||||||||||||||||||
The following items are included in net earnings: | ||||||||||||||||||||||||
Net gains on sale of investments and dilution gains | ||||||||||||||||||||||||
Continuing operations | 325 |
- |
325 |
- |
||||||||||||||||||||
Discontinued operations |
(2 |
) |
8 |
36 |
8 |
|||||||||||||||||||
Restructuring and other items | (725 |
) |
6 |
(710 |
) |
6 |
||||||||||||||||||
Total | (402 |
) |
14
|
(349 |
) |
14 |
||||||||||||||||||
Impact on net earnings per share | $ |
(0.43 |
) |
$
|
0.01 |
$
|
(0.37 |
)
|
$
0.01 |
|||||||||||||||
|
|
n.m. : not meaningful
BCE Inc. Supplementary Financial Information - Third Quarter 2004 Page 2
BCE Consolidated(1)
Consolidated Operational
Data Historical Trend
YTD |
Total |
||||||||||||||||||||||||||
($ millions, except per share amounts) | 2004 |
Q3
04 |
Q2
04 |
Q1
04 |
2003 |
Q4
03 |
Q3
03 |
Q2
03 |
Q1
03 |
||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
Operating revenues | 14,204 |
4,781 |
4,782 |
4,641 |
18,737 |
4,818 |
4,627 |
4,673 |
4,619 |
||||||||||||||||||
Operating expenses | (8,471 |
) | (2,845 |
) | (2,829 |
) | (2,797 |
) | (11,327 |
) | (2,971 |
) | (2,732 |
) | (2,778 |
) | (2,846 |
) | |||||||||
|
|
|
|
||||||||||||||||||||||||
EBITDA(2) | 5,733 |
1,936 |
1,953 |
1,844 |
7,410 |
1,847 |
1,895 |
1,895 |
1,773 |
||||||||||||||||||
EBITDA margin(3) | 40.4% |
40.5% |
40.8% |
39.7% |
39.5% |
38.3% |
41.0% |
40.6% |
38.4% |
||||||||||||||||||
Amortization expense | (2,305 |
) | (769 |
) | (769 |
) | (767 |
) | (3,100 |
) | (775 |
) | (801 |
) | (774 |
) | (750 |
) | |||||||||
Net benefit plans cost | (189 |
) | (61 |
) | (65 |
) | (63 |
) | (175 |
) | (46 |
) | (44 |
) | (43 |
) | (42 |
) | |||||||||
Restructuring and other items | (1,098 |
) | (1,081 |
) | (14 |
) | (3 |
) | (14 |
) | (13 |
) | (1 |
) | -
|
- |
|||||||||||
|
|
|
|
||||||||||||||||||||||||
Operating income | 2,141 |
25 |
1,105 |
1,011 |
4,121 |
1,013 |
1,049 |
1,078 |
981 |
||||||||||||||||||
Other income | 393 |
333
|
24 |
36 |
175 |
127 |
1 |
2 |
45 |
||||||||||||||||||
Interest expense | (758 |
) | (253 |
) | (253 |
) | (252 |
) | (1,105 |
) | (266 |
) | (270 |
) | (289 |
) | (280 |
) | |||||||||
|
|
|
|
||||||||||||||||||||||||
Pre-tax earnings from continuing operations | 1,776 |
105 |
876 |
795 |
3,191 |
874 |
780 |
791 |
746 |
||||||||||||||||||
Income taxes |
(511 |
) | 44 |
(293 |
) | (262 |
) |
(1,119 |
) | (331 |
) |
(282 |
) |
(268 |
) | (238 |
) | ||||||||||
Non-controlling interest | (134 |
) |
(47 |
) | (39 |
) | (48 |
) | (201 |
) | (57 |
) | (45 |
) |
(57 |
) | (42 |
) | |||||||||
Earnings from continuing operations | 1,131 |
102 |
544 |
485 |
1,871
|
486 |
453 |
466 |
466 |
||||||||||||||||||
Discontinued operations | 28 |
(2) |
27 |
3
|
(56 |
) | (86 |
) | 11 |
12
|
7 |
||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
Net earnings | 1,159 |
100 |
571 |
488 |
1,815 |
400 |
464 |
478
|
473 |
||||||||||||||||||
Dividends on preferred shares | (53 |
) | (18
|
) | (17 |
) | (18 |
) |
(64 |
) | (14 |
) | (18 |
) | (17 |
) |
(15 |
) | |||||||||
Premium on redemption of preferred shares |
- |
- |
- |
- |
(7 |
) |
- |
- |
- |
(7 |
) | ||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
Net earnings applicable to common shares |
1,106 |
82 |
554
|
470 |
1,744 |
386 |
446 |
461 |
451 |
||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
Net earnings per common share - basic | |||||||||||||||||||||||||||
Continuing operations |
$ |
1.17 |
$
|
0.09 |
$ |
0.57
|
$ |
0.51 |
$
|
1.96 |
$ |
0.50 |
$
|
0.48 |
$ |
0.49 |
$ |
0.49 |
|||||||||
Discontinued operations | $ |
0.03 |
$ |
-
|
$ |
0.03 |
$
|
-
|
$ |
(0.06 |
) | $
|
(0.09 |
) | $ |
0.01 |
$
|
0.01 |
$ |
0.01
|
|||||||
Net earnings | $ |
1.20 |
$ |
0.09 |
$ |
0.60 |
$ |
0.51 |
$ |
1.90
|
$
|
0.41 |
$ |
0.49 |
$ |
0.50 |
$
|
0.50
|
|||||||||
Net earnings per common share - diluted | |||||||||||||||||||||||||||
Continuing operations | $
|
1.16 |
$
|
0.08 |
$
|
0.57
|
$ |
0.51 |
$ |
1.95
|
$
|
0.50
|
$
|
0.47 |
$ |
0.49 |
$
|
0.49 |
|||||||||
Discontinued operations |
$ |
0.03
|
$
|
-
|
$
|
0.03
|
$ |
- |
$ |
(0.06 |
) | $ |
(0.09 |
) |
$ |
0.01 |
$ |
0.01 |
$ |
0.01 |
|||||||
Net earnings |
$ |
1.19
|
$ |
0.08 |
$
|
0.60
|
$
|
0.51 |
$ |
1.89 |
$ |
0.41 |
$ |
0.48 |
$ |
0.50 |
$
|
0.50 |
|||||||||
Dividends per common share |
$ |
0.90 |
$ |
0.30 |
$
|
0.30 |
$ |
0.30 |
$
|
1.20
|
$
|
0.30
|
$ |
0.30 |
$ |
0.30
|
$ |
0.30 |
|||||||||
Average number of common shares outstanding - basic (millions) |
924.4 |
924.6
|
924.3
|
924.1
|
920.3
|
923.4 |
921.5 |
919.3 |
917.1 |
||||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
The following items are included in net earnings: | |||||||||||||||||||||||||||
Net
gains on sale of investments and dilution gains |
|||||||||||||||||||||||||||
Continuing operations |
325 |
325 |
- |
- |
84 |
84 |
- |
-
|
-
|
||||||||||||||||||
Discontinued operations |
36 |
(2 |
) |
31 |
7 |
(86 |
) |
(94 |
) |
8 |
- |
- |
|||||||||||||||
Restructuring and other items | (710 |
) |
(725 |
)
|
16
|
(1 |
)
|
(3 |
) |
(9 |
) |
6 |
- |
- |
|||||||||||||
|
|
|
|
||||||||||||||||||||||||
Total |
(349 |
) |
(402 |
) |
47 |
6 |
(5 |
) |
(19 |
) |
14 |
- |
- |
||||||||||||||
Impact on net earnings per share | $ |
(0.37 |
) |
$ |
(0.43 |
)
|
$
|
0.05 |
$ |
0.01 |
$ |
- |
$ |
(0.01 |
) |
$ |
0.01 |
$ |
- |
$ |
-
|
||||||
|
|
|
|
BCE Inc. Supplementary Financial Information - Third Quarter 2004 Page 3
BCE
Consolidated(1)
Segmented Data
($ millions, except where otherwise indicated) |
Q3 2004 |
Q3 2003 |
$ change |
% change |
YTD September 2004 |
YTD |
$ change |
%change |
|||||||||
|
|
|
|
||||||||||||||
Revenues | |||||||||||||||||
Consumer | 1,908
|
1,838
|
70 |
3.8% |
5,591 |
5,335 |
256 |
4.8% |
|||||||||
Business |
1,440 |
1,440 |
- |
0.0% |
4,316 |
4,311 |
5 |
0.1% |
|||||||||
Aliant | 497 |
514 |
(17 |
) |
(3.3% |
) |
1,527 |
1,532 |
(5 |
) |
(0.3% |
) |
|||||
Other Bell Canada | 486 |
478 |
8
|
1.7% |
1,428 |
1,547 |
(119 |
) |
(7.7%
|
) |
|||||||
Inter-segment eliminations | (125
|
) |
(115 |
) |
(10 |
) |
(8.7% |
)
|
(378 |
) |
(357 |
) |
(21 |
) |
(5.9%
|
) |
|
Total Bell Canada | 4,206 |
4,155 |
51 |
1.2% |
12,484
|
12,368 |
116 |
0.9% |
|||||||||
Other BCE | |||||||||||||||||
Bell Globemedia | 302 |
296 |
6 |
2.0% |
1,015 |
988 |
27 |
2.7% |
|||||||||
Advertising | 209 |
201 |
8
|
4.0% |
735 |
695 |
40 |
5.8% |
|||||||||
Subscriber | 73 |
73 |
- |
0.0% |
221 |
222 |
(1 |
) |
(0.5% |
) |
|||||||
Production and Sundry | 20 |
22 |
(2 |
) |
(9.1% |
) |
59 |
71 |
(12 |
) |
(16.9% |
) |
|||||
Telesat | 91 |
84 |
7 |
8.3% |
260 |
246 |
14 |
5.7% |
|||||||||
CGI | 277 |
203 |
74 |
36.5% |
745 |
630 |
115 |
18.3% |
|||||||||
Other | 12 |
13 |
(1 |
) |
(7.7% |
) |
41 |
36 |
5 |
13.9% |
|||||||
Total Other BCE | 682 |
596 |
86 |
14.4% |
2,061 |
1,900 |
161 |
8.5%
|
|||||||||
Inter-segment eliminations |
(107 |
)
|
(124 |
) |
17 |
13.7%
|
(341 |
) |
(349 |
) |
8 |
2.3% |
|||||
|
|
|
|
||||||||||||||
Total revenues |
4,781 |
4,627 |
154 |
3.3% |
14,204 |
13,919 |
285 |
2.0% |
|||||||||
|
|
|
|
||||||||||||||
|
|
|
|
||||||||||||||
Operating income | |||||||||||||||||
Consumer | 569 |
552 |
17 |
3.1% |
1,655 |
1,548 |
107 |
6.9% |
|||||||||
Business | 245 |
193 |
52 |
26.9% |
713 |
582 |
131 |
22.5% |
|||||||||
Aliant | 71 |
104 |
(33 |
) |
(31.7% |
) |
245 |
307 |
(62 |
) |
(20.2% |
) |
|||||
Other Bell Canada | (898 |
) |
163 |
(1,061 |
) |
n.m. |
(649 |
) |
469 |
(1,118 |
) |
n.m. |
|||||
Total Bell Canada | (13 |
) |
1,012 |
(1,025 |
) |
n.m. |
1,964 |
2,906 |
(942 |
) |
(32.4% |
) |
|||||
Other BCE | |||||||||||||||||
Bell Globemedia | 23 |
20 |
2 |
10.0% |
137 |
101 |
35 |
34.7% |
|||||||||
Telesat | 39 |
28 |
11 |
39.3% |
104 |
91 |
13 |
14.3% |
|||||||||
CGI | 24 |
23 |
1 |
4.3% |
70 |
69 |
1 |
1.4% |
|||||||||
Other | (48 |
) |
(34 |
) |
(13 |
) |
(38.2% |
) |
(134 |
) |
(59 |
) |
(74 |
) |
n.m. |
||
Total Other BCE | 38 |
37 |
1 |
2.7% |
177 |
202 |
(25 |
) |
(12.4% |
) |
|||||||
|
|
|
|
||||||||||||||
Total Operating income | 25 |
1,049 |
(1,024 |
) |
(97.6% |
) |
2,141 |
3,108 |
(967 |
) |
(31.1% |
) |
|||||
|
|
|
|
||||||||||||||
|
|
|
|
||||||||||||||
Capital expenditures(4) | |||||||||||||||||
Consumer | 406 |
307 |
(99 |
) |
(32.2% |
) |
1,022 |
802 |
(220 |
)
|
(27.4% |
) |
|||||
Business | 154 |
228 |
74 |
32.5% |
609 |
650 |
41 |
6.3% |
|||||||||
Aliant | 51 |
92 |
41 |
44.6% |
181 |
236 |
55 |
23.3% |
|||||||||
Other Bell Canada | 125 |
81 |
(44 |
) |
(54.3% |
) |
229 |
213 |
(16 |
) |
(7.5% |
) |
|||||
Total Bell Canada | 736 |
708 |
(28 |
) |
(4.0% |
) |
2,041 |
1,901 |
(140 |
)
|
(7.4% |
) |
|||||
Other BCE | |||||||||||||||||
Telesat | 64 |
64 |
-
|
0.0% |
217 |
116 |
(101 |
) |
(87.1% |
) |
|||||||
Other |
11 |
19 |
8 |
42.1% |
60 |
71 |
11 |
15.5% |
|||||||||
|
|
|
|
||||||||||||||
Total capital expenditures | 811 |
791 |
(20 |
) |
(2.5% |
) |
2,318 |
2,088 |
(230 |
) |
(11.0% |
) |
|||||
|
|
|
|
||||||||||||||
|
|
|
|
BCE
Consolidated(1)
Segmented
Data Historical Trend
YTD |
Total |
||||||||||||||||||||||||||
($ millions, except per share amounts) | 2004 |
Q3
04 |
Q2
04 |
Q1
04 |
2003 |
Q4
03 |
Q3
03 |
Q2
03 |
Q1
03 |
||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||
Consumer | 5,591
|
1,908
|
1,858
|
1,825 |
7,203 |
1,868 |
1,838
|
1,768
|
1,729 |
||||||||||||||||||
Business | 4,316 |
1,440 |
1,441 |
1,435 |
5,827 |
1,516 |
1,440 |
1,452 |
1,419 |
||||||||||||||||||
Aliant | 1,527
|
497 |
526 |
504 |
2,059 |
527 |
514 |
517 |
501 |
||||||||||||||||||
Other Bell Canada |
1,428 |
486 |
468 |
474 |
2,015 |
468 |
478 |
517 |
552 |
||||||||||||||||||
Inter-segment eliminations |
(378) |
(125)
|
(121) |
(132) |
(490) |
(133) |
(115)
|
(124)
|
(118) |
||||||||||||||||||
Total Bell Canada | 12,484
|
4,206
|
4,172 |
4,106 |
16,614 |
4,246 |
4,155 |
4,130 |
4,083 |
||||||||||||||||||
Other BCE | |||||||||||||||||||||||||||
Bell Globemedia |
1,015 |
302 |
371
|
342 |
1,363 |
375 |
296 |
357 |
335 |
||||||||||||||||||
Advertising |
735 |
209 |
277 |
249 |
978 |
283 |
201 |
259 |
235 |
||||||||||||||||||
Subscriber |
221 |
73 |
74 |
74 |
291 |
69 |
73
|
75
|
74 |
||||||||||||||||||
Production and Sundry |
59 |
20 |
20 |
19 |
94 |
23 |
22 |
23 |
26 |
||||||||||||||||||
Telesat |
260 |
91 |
85 |
84 |
345 |
99 |
84 |
83 |
79 |
||||||||||||||||||
CGI | 745 |
277 |
251 |
217 |
838 |
208 |
203 |
211 |
216 |
||||||||||||||||||
Other | 41 |
12 |
18 |
11 |
51 |
15 |
13 |
13 |
10 |
||||||||||||||||||
Total Other BCE | 2,061
|
682 |
725 |
654 |
2,597 |
697 |
596 |
664 |
640 |
||||||||||||||||||
Inter-segment eliminations | (341)
|
(107) |
(115) |
(119)
|
(474)
|
(125)
|
(124) |
(121) |
(104) |
||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
Total revenues |
14,204 |
4,781 |
4,782 |
4,641 |
18,737
|
4,818 |
4,627 |
4,673 |
4,619 |
||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
Operating income | |||||||||||||||||||||||||||
Consumer |
1,655 |
569
|
560
|
526 |
2,019
|
471 |
552 |
503 |
493 |
||||||||||||||||||
Business |
713 |
245 |
227 |
241 |
781 |
199 |
193 |
199 |
190 |
||||||||||||||||||
Aliant |
245 |
71 |
92 |
82 |
415 |
108
|
104
|
122 |
81 |
||||||||||||||||||
Other Bell Canada |
(649) |
(898) |
138 |
111 |
621 |
152 |
163 |
144 |
162 |
||||||||||||||||||
Total Bell Canada |
1,964 |
(13) |
1,017 |
960 |
3,836 |
930 |
1,012 |
968 |
926 |
||||||||||||||||||
Other BCE | |||||||||||||||||||||||||||
Bell Globemedia | 137 |
23 |
74 |
40 |
167 |
66 |
20 |
62 |
19 |
||||||||||||||||||
Telesat |
104 |
39 |
34 |
31 |
124 |
33 |
28 |
31 |
32 |
||||||||||||||||||
CGI | 70 |
24 |
25 |
21 |
91 |
22 |
23 |
24 |
22 |
||||||||||||||||||
Other | (134)
|
(48) |
(45) |
(41) |
(97) |
(38)
|
(34) |
(7) |
(18) |
||||||||||||||||||
Total Other BCE |
177 |
38
|
88
|
51
|
285 |
83 |
37 |
110 |
55 |
||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
Total Operating Income |
2,141 |
25 |
1,105 |
1,011 |
4,121 |
1,013 |
1,049 |
1,078 |
981 |
||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
Capital expenditures(4) | |||||||||||||||||||||||||||
Consumer |
1,022 |
406
|
354 |
262
|
1,287 |
485 |
307 |
287 |
208 |
||||||||||||||||||
Business |
609 |
154 |
258 |
197
|
936
|
286
|
228 |
229
|
193 |
||||||||||||||||||
Aliant | 181 |
51 |
45 |
85 |
333 |
97 |
92 |
73 |
71 |
||||||||||||||||||
Other Bell Canada | 229 |
125
|
58
|
46
|
336 |
123 |
81 |
70 |
62 |
||||||||||||||||||
Total Bell Canada |
2,041 |
736 |
715 |
590
|
2,892
|
991 |
708 |
659 |
534 |
||||||||||||||||||
Other BCE | |||||||||||||||||||||||||||
Telesat |
217 |
64 |
88 |
65 |
159
|
43
|
64
|
16
|
36 |
||||||||||||||||||
Other | 60 |
11 |
23 |
26 |
116 |
45 |
19 |
31 |
21 |
||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
Total capital expenditures | 2,318
|
811 |
826 |
681 |
3,167 |
1,079 |
791 |
706 |
591 |
||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
|
|
|
|
BCE Inc. Supplementary Financial Information - Third Quarter 2004 Page 5
BCE
Consolidated(1)
Consolidated Balance Sheet Data
September
30 |
June
30 |
March 31 |
December 31 |
|||||
($ millions, except where otherwise indicated) | 2004 |
2004 |
2004 |
2003 |
||||
|
|
|
|
|||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | 1,386 |
577 |
1,135
|
585 |
||||
Accounts receivable | 2,491 |
2,292 |
2,267
|
2,061 |
||||
Other current assets | 892 |
900 |
869 |
739 |
||||
Current assets of discontinued operations | - |
8 |
447 |
280 |
||||
|
|
|
|
|||||
Total current assets | 4,769 |
3,777 |
4,718
|
3,665 |
||||
Capital assets | 21,111 |
20,995 |
20,833 |
21,114 |
||||
Other long-term assets | 2,494 |
3,609 |
3,475
|
3,459 |
||||
Indefinite-life intangible assets | 2,910
|
2,910 |
2,910 |
2,910 |
||||
Goodwill | 8,368 |
7,987 |
7,803
|
7,761 |
||||
Non-current assets of discontinued operations | 50
|
50
|
310 |
511 |
||||
|
|
|
|
|||||
Total assets | 39,702 |
39,328 |
40,049 |
39,420 |
||||
|
||||||||
LIABILITIES | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | 4,537
|
3,648
|
3,602
|
3,534
|
||||
Debt due within one year | 1,516
|
1,030
|
1,156 |
1,519 |
||||
Current liabilities of discontinued operations |
- |
-
|
214 |
285
|
||||
|
|
|
|
|||||
Total current liabilities | 6,053 |
4,678 |
4,972 |
5,338
|
||||
Long-term debt | 12,076 |
12,492 |
13,112
|
12,381 |
||||
Other long-term liabilities | 4,790 |
4,884 |
4,768 |
4,705 |
||||
Non-current liabilities of discontinued operations |
- |
- |
20 |
20 |
||||
|
|
|
|
|||||
Total liabilities | 22,919 |
22,054 |
22,872
|
22,444
|
||||
|
|
|
|
|||||
Non-controlling interest |
2,904 |
3,203 |
3,385 |
3,403 |
||||
|
|
|
|
|||||
SHAREHOLDERS' EQUITY | ||||||||
Preferred shares | 1,670
|
1,670
|
1,670
|
1,670 |
||||
|
|
|
|
|||||
Common shareholders' equity | ||||||||
Common shares | 16,765
|
16,757
|
16,753 |
16,749 |
||||
Contributed surplus |
1,052 |
1,043
|
1,045
|
1,037
|
||||
Deficit |
(5,563) |
(5,368) |
(5,645) |
(5,837)
|
||||
Currency translation adjustment |
(45) |
(31) |
(31)
|
(46)
|
||||
Total common shareholders' equity |
12,209 |
12,401
|
12,122
|
11,903
|
||||
Total shareholders' equity | 13,879
|
14,071
|
13,792
|
13,573
|
||||
Total liabilities and shareholders' equity | 39,702
|
39,328 |
40,049 |
39,420 |
||||
Number of common shares outstanding | 924.9 |
924.5 |
924.2 |
924.0 |
||||
|
||||
Key ratios | ||||
Net debt : Total Capitalization |
42.1% |
42.8%
|
43.3%
|
44.0%
|
Net debt : Trailing 12 month EBITDA |
1.61 |
1.72
|
1.76
|
1.80
|
EBITDA : Interest (trailing 12 month) |
7.40 |
7.24 |
6.95 |
6.71 |
|
BCE Inc. Supplementary Financial Information - Third Quarter 2004 Page 6
BCE
Consolidated
Consolidated Cash Flow Data
YTD |
YTD |
||||||||||||||||||
Q3 |
Q3
|
September |
September |
||||||||||||||||
($ millions, except where otherwise indicated) | 2004 |
2003 |
$
change |
2004 |
2003 |
$
change |
|||||||||||||
|
|
|
|
||||||||||||||||
Cash flows from operating activities | |||||||||||||||||||
Earnings from continuing operations | 102
|
453 |
(351 |
) |
1,131 |
1,385 |
(254 |
) |
|||||||||||
Adjustments to reconcile earnings from continuing | |||||||||||||||||||
operations to cash flows from operating activities: | |||||||||||||||||||
Amortization expense | 769
|
801
|
(32 |
) |
2,305 |
2,325 |
(20 |
) |
|||||||||||
Net benefit plans cost |
61 |
44 |
17 |
189 |
129
|
60 |
|||||||||||||
Restructuring and other items (non-cash portion) |
1,149 |
(4 |
) |
1,153 |
1,164 |
(4 |
)
|
1,168 |
|||||||||||
Net gains on investments |
(325 |
) |
- |
(325 |
)
|
(331 |
) |
- |
(331 |
) |
|||||||||
Future income taxes |
(183 |
)
|
134 |
(317 |
) |
(96 |
) |
211 |
(307 |
) |
|||||||||
Non-controlling interest |
47 |
45 |
2 |
134 |
144 |
(10 |
) |
||||||||||||
Contributions to employee pension plans |
(32 |
) |
(46 |
)
|
14
|
(88 |
) |
(73 |
)
|
(15 |
) |
||||||||
Other employee future benefit plan payments |
(13 |
) |
(22 |
) |
9 |
(59 |
) |
(64 |
) |
5 |
|||||||||
Other |
(27 |
)
|
26 |
(53 |
) |
(3 |
)
|
(10 |
) |
7 |
|||||||||
Change in non-cash working capital | 280 |
387 |
(107 |
)
|
(134 |
) |
327 |
(461 |
) |
||||||||||
|
|
|
|
||||||||||||||||
1,828
|
1,818 |
10 |
4,212 |
4,370 |
(158 |
) |
|||||||||||||
|
|
|
|
||||||||||||||||
Capital expenditures |
(811 |
) |
(791 |
) |
(20 |
) |
(2,318 |
) |
(2,088 |
) |
(230 |
) |
|||||||
Other investing items |
(2 |
)
|
155 |
(157 |
)
|
133
|
69 |
64 |
|||||||||||
Cash preferred dividends |
(21 |
) |
(14 |
) |
(7 |
)
|
(64 |
) |
(39 |
)
|
(25 |
) |
|||||||
Cash dividends paid by subsidiaries to non-controlling interest |
(44 |
)
|
(38 |
) |
(6 |
) |
(133 |
) |
(137 |
)
|
4 |
||||||||
|
|
|
|
||||||||||||||||
Free Cash Flow from operations, before common dividends(2) | 950 |
1,130
|
(180 |
)
|
1,830 |
2,175 |
(345 |
) |
|||||||||||
Cash common dividends |
(277 |
)
|
(259 |
) |
(18 |
) |
(831 |
)
|
(770 |
) |
(61 |
) |
|||||||
|
|
|
|
||||||||||||||||
Free Cash Flow from operations, after common dividends(2) | 673
|
871 |
(198 |
) |
999 |
1,405 |
(406 |
) |
|||||||||||
Business acquisitions |
(646 |
) |
(3 |
) |
(643 |
) |
(952 |
) |
(73 |
) |
(879 |
) |
|||||||
Business dispositions | 4
|
55 |
(51 |
) |
20 |
55 |
(35 |
) |
|||||||||||
Decrease
in investments accounted for under the cost and equity methods |
695 |
1 |
694 |
693 |
7
|
686 |
|||||||||||||
|
|
|
|
||||||||||||||||
Free Cash Flow after investments and divestitures |
726 |
924
|
(198 |
) |
760
|
1,394
|
(634 |
) |
|||||||||||
|
|
|
|
||||||||||||||||
Other financing activities | |||||||||||||||||||
Increase (decrease) in notes payable and bank advances | 173
|
(73 |
) |
246 |
123 |
(242 |
)
|
365 |
|||||||||||
Issue of long-term debt |
10 |
17 |
(7 |
) |
1,410 |
1,881 |
(471 |
) |
|||||||||||
Repayment of long-term debt | (98 |
)
|
(123 |
) |
25 |
(1,750 |
)
|
(1,940 |
) |
190
|
|||||||||
Issue of common shares |
8 |
5 |
3 |
16 |
14 |
2 |
|||||||||||||
Issue of preferred shares |
- |
- |
- |
-
|
510 |
(510 |
) |
||||||||||||
Redemption of preferred shares |
- |
- |
- |
- |
(357 |
)
|
357 |
||||||||||||
Issue
of equity securities by subsidiaries to non-controlling interest |
-
|
24
|
(24)
|
7
|
113 |
(106 |
) |
||||||||||||
Redemption
of equity securities by subsidiaries from non-controlling interest |
(4 |
)
|
(39 |
)
|
35 |
(64 |
)
|
(74 |
)
|
10
|
|||||||||
Other | (18 |
) |
56 |
(74 |
) |
(34 |
)
|
(5 |
) |
(29 |
) |
||||||||
|
|
|
|
||||||||||||||||
71 |
(133 |
) |
204 |
(292 |
) |
(100 |
)
|
(192 |
) |
||||||||||
|
|
|
|
||||||||||||||||
Cash provided by (used in) continuing operations |
797 |
791 |
6 |
468
|
1,294 |
(826 |
) |
||||||||||||
Cash provided by (used in) discontinued operations |
12 |
30 |
(18 |
) |
196 |
17 |
179 |
||||||||||||
|
|
|
|
||||||||||||||||
Net increase (decrease) in cash and cash equivalents |
809 |
821 |
(12 |
)
|
664
|
1,311 |
(647 |
) |
|||||||||||
Cash and cash equivalents at beginning of period |
577 |
796 |
(219 |
) |
722 |
306
|
416 |
||||||||||||
|
|
|
|
||||||||||||||||
Cash and cash equivalents at end of period | 1,386
|
1,617 |
(231 |
)
|
1,386 |
1,617 |
(231 |
) |
|||||||||||
|
|
|
|
||||||||||||||||
Consists of: | |||||||||||||||||||
Cash and cash equivalents of continuing operations |
1,386 |
1,476
|
(90 |
) |
1,386 |
1,476 |
(90 |
) |
|||||||||||
Cash and cash equivalents of discontinued operations |
- |
141 |
(141 |
) |
- |
141 |
(141 |
) |
|||||||||||
|
|
|
|
||||||||||||||||
Total |
1,386 |
1,617 |
(231 |
) |
1,386 |
1,617 |
(231 |
)
|
|||||||||||
|
|
|
|
|
|||||||||||||||||||
Other information | |||||||||||||||||||
Capital expenditures as a percentage of revenues | 17.0%
|
17.1% |
0.1 pts |
16.3% |
15.0%
|
(1.3)
pts |
|||||||||||||
Cash flow per share(5) |
$ |
1.10 |
$ |
1.11 |
$ |
(0.01) |
$
|
2.05
|
$ |
2.48
|
$ |
(0.43) |
|||||||
Annualized cash flow yield(6) | 15.1%
|
16.8% |
(1.7) pts |
9.7% |
10.8%
|
(1.1)
pts |
|||||||||||||
Common dividend payout | 337.8%
|
58.1% |
279.7 pts |
75.1% |
56.7%
|
18.4
pts |
|||||||||||||
|
BCE Inc. Supplementary Financial Information - Third Quarter 2004 Page 7
BCE
Consolidated
Consolidated
Cash Flow Data Historical Trend
($ millions, except where otherwise indicated) | YTD 2004 |
Q3
04 |
Q2
04 |
Q1
04 |
Total 2003 |
Q4
03 |
Q3
03 |
Q2
03 |
Q1
03 |
||||||||||||||||||
|
|
|
|
|
|
||||||||||||||||||||||
Cash flows from operating activities | |
||||||||||||||||||||||||||
Earnings from continuing operations | 1,131 |
102 |
544 |
485 |
1,871 |
486 |
453 |
466 |
466 |
||||||||||||||||||
Adjustments to reconcile earnings from continuing operations to cash flows from operating activities: |
|||||||||||||||||||||||||||
Amortization expense | 2,305 |
769 |
769 |
767 |
3,100 |
775 |
801 |
774 |
750 |
||||||||||||||||||
Net benefit plans cost | 189 |
61 |
65 |
63 |
175 |
46 |
44 |
43 |
42 |
||||||||||||||||||
Restructuring and other items (non-cash portion) | 1,164 |
1,149 |
13 |
2 |
6 |
10 |
(4 |
) |
- |
- |
|||||||||||||||||
Net gains on investments | (331 |
) |
(325 |
) |
(1 |
) |
(5 |
) |
(68 |
) |
(68 |
) |
- |
- |
- |
||||||||||||
Future income taxes | (96 |
) |
(183 |
) |
33
|
54
|
418
|
207 |
134
|
99
|
(22 |
)
|
|||||||||||||||
Non-controlling interest | 134 |
47 |
39
|
48
|
201
|
57 |
45 |
57
|
42 |
||||||||||||||||||
Contributions
to employee pension plans |
(88 |
)
|
(32 |
) |
(27 |
) |
(29 |
) |
(160 |
)
|
(87 |
) |
(46 |
) |
(21 |
) |
(6 |
) |
|||||||||
Other employee future benefit plan payments | (59 |
)
|
(13 |
) |
(22 |
) |
(24 |
) |
(87 |
)
|
(23 |
) |
(22 |
) |
(21 |
) |
(21 |
) |
|||||||||
Other | (3 |
) |
(27 |
)
|
(20 |
)
|
44 |
(60 |
) |
(50 |
)
|
26 |
(85 |
)
|
49 |
||||||||||||
Change in non-cash working capital | (134 |
) |
280 |
(269 |
)
|
(145 |
)
|
572
|
245 |
387
|
75
|
(135 |
) |
||||||||||||||
|
|
|
|
||||||||||||||||||||||||
4,212 |
1,828 |
1,124 |
1,260 |
5,968 |
1,598 |
1,818 |
1,387
|
1,165 |
|||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
Capital expenditures | (2,318 |
)
|
(811 |
)
|
(826 |
) |
(681 |
) |
(3,167 |
) |
(1,079 |
)
|
(791 |
)
|
(706 |
)
|
(591 |
) |
|||||||||
Other investing items | 133 |
(2 |
) |
116
|
19 |
62 |
(7 |
) |
155 |
(44 |
)
|
(42 |
) |
||||||||||||||
Cash preferred dividends | (64 |
)
|
(21 |
) |
(21 |
)
|
(22 |
)
|
(61 |
)
|
(22 |
) |
(14 |
)
|
(14 |
) |
(11 |
) |
|||||||||
Cash dividends paid by subsidiaries to non-controlling interest | (133 |
)
|
(44 |
) |
(47 |
)
|
(42 |
)
|
(184 |
)
|
(47 |
) |
(38 |
)
|
(55 |
) |
(44 |
) |
|||||||||
|
|
|
|
||||||||||||||||||||||||
Free Cash Flow from operations, before common dividends(2) | 1,830 |
950 |
346 |
534 |
2,618
|
443 |
1,130
|
568
|
477
|
||||||||||||||||||
Cash common dividends | (831 |
)
|
(277 |
) |
(277 |
)
|
(277 |
)
|
(1,029 |
)
|
(259 |
)
|
(259 |
) |
(254 |
)
|
(257 |
) |
|||||||||
|
|
|
|
||||||||||||||||||||||||
Free Cash Flow from operations, after common dividends(2) | 999 |
673 |
69
|
257
|
1,589 |
184 |
871
|
314
|
220 |
||||||||||||||||||
Business acquisitions | (952 |
) |
(646 |
)
|
(247 |
)
|
(59 |
)
|
(115 |
)
|
(42 |
) |
(3 |
)
|
(7 |
) |
(63 |
) |
|||||||||
Business dispositions | 20 |
4 |
-
|
16
|
55 |
- |
55 |
- |
- |
||||||||||||||||||
Decrease (increase) in investments accounted for under the cost and equity methods | 693 |
695 |
(8 |
) |
6
|
163 |
156 |
1 |
(1 |
)
|
7 |
||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
Free Cash Flow after investments and divestitures | 760 |
726 |
(186 |
) |
220
|
1,692 |
298
|
924
|
306
|
164 |
|||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
Other financing activities | |||||||||||||||||||||||||||
Increase (decrease) in notes payable and bank advances | 123 |
173 |
(69 |
) |
19 |
(295 |
) |
(53 |
) |
(73 |
)
|
(55 |
)
|
(114 |
) |
||||||||||||
Issue of long-term debt | 1,410 |
10 |
74
|
1,326
|
1,986 |
105 |
17
|
72
|
1,792 |
||||||||||||||||||
Repayment of long-term debt | (1,750 |
)
|
(98 |
) |
(718 |
)
|
(934 |
)
|
(3,472 |
)
|
(1,532 |
) |
(123 |
)
|
(1,457 |
) |
(360 |
) |
|||||||||
Issue of common shares | 16 |
8 |
4 |
4 |
19
|
5
|
5
|
4
|
5 |
||||||||||||||||||
Issue of preferred shares | - |
- |
-
|
-
|
510 |
- |
-
|
-
|
510 |
||||||||||||||||||
Redemption of preferred shares | - |
- |
-
|
-
|
(357 |
) |
- |
-
|
-
|
(357 |
) |
||||||||||||||||
Issue of equity securities and convertible debentures by subsidiaries to non-controlling interest | 7 |
- |
-
|
7
|
132
|
19
|
24
|
16 |
73 |
||||||||||||||||||
Redemption of equity securities by subsidiaries from non-controlling interest | (64 |
) |
(4 |
) |
(17 |
) |
(43 |
) |
(108 |
) |
(34 |
) |
(39 |
) |
(16 |
)
|
(19 |
)
|
|||||||||
Other | (34 |
) |
(18 |
) |
32
|
(48 |
) |
(46 |
) |
(41 |
)
|
56
|
(59 |
) |
(2 |
) |
|||||||||||
|
|
|
|
||||||||||||||||||||||||
(292 |
) |
71 |
(694 |
) |
331
|
(1,631 |
)
|
(1,531 |
) |
(133 |
) |
(1,495 |
)
|
1,528 |
|||||||||||||
|
|
|
|
||||||||||||||||||||||||
Cash provided by (used in) continuing operations | 468 |
797 |
(880 |
) |
551
|
61 |
(1,233 |
)
|
791
|
(1,189 |
)
|
1,692 |
|||||||||||||||
Cash provided by (used in) discontinued operations | 196 |
12 |
(54 |
) |
238 |
355 |
338
|
30 |
(3 |
) |
(10 |
) |
|||||||||||||||
|
|
|
|
||||||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 664 |
809 |
(934 |
) |
789
|
416
|
(895 |
) |
821
|
(1,192 |
) |
1,682 |
|||||||||||||||
Cash and cash equivalents at beginning of period | 722 |
577 |
1,511
|
722 |
306
|
1,617
|
796
|
1,988
|
306 |
||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
Cash and cash equivalents at end of period | 1,386 |
1,386 |
577
|
1,511
|
722 |
722
|
1,617
|
796
|
1,988 |
||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
Consists of: | |||||||||||||||||||||||||||
Cash and cash equivalents of continuing operations | 1,386 |
1,386 |
577
|
1,135 |
585
|
585
|
1,476
|
684
|
1,855 |
||||||||||||||||||
Cash and cash equivalents of discontinued operations | - |
- |
-
|
376 |
137
|
137
|
141
|
112
|
133 |
||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
Total | 1,386 |
1,386 |
577
|
1,511 |
722
|
722
|
1,617
|
796
|
1,988 |
||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
Other information | |||||||||||||||||||||||||||
Capital expenditures as a percentage of revenues | 16.3%
|
17.0%
|
17.3%
|
14.7% |
16.9%
|
22.4%
|
17.1%
|
15.1%
|
12.8% |
||||||||||||||||||
Cash flow per share(5) | $ |
2.05 |
$ |
1.10 |
$
|
0.32 |
$ |
0.63
|
$ |
3.04
|
$ |
0.56
|
$ |
1.11
|
$ |
0.74
|
$ |
0.63
|
|||||||||
Annualized cash flow yield(6) | 9.7% |
15.1% |
5.6%
|
8.4%
|
9.8%
|
6.8%
|
16.8%
|
8.0%
|
7.6% |
||||||||||||||||||
Common dividend payout | 75.1%
|
337.8%
|
50.0%
|
58.9%
|
59.0%
|
67.1%
|
58.1%
|
55.1%
|
57.0% |
BCE Inc. Supplementary Financial Information - Third Quarter 2004 Page 8
Proportionate Net Debt, Preferreds and EBITDA
BCE Corporate and Bell Canada Net debt and preferreds |
At September
30, 2004 ($ millions, except where otherwise indicated) |
Bell
Canada (excl. Aliant) |
Aliant |
Bell
Canada Statutory |
Inter-company eliminations |
Total Bell Canada |
BCE
Inc. Corporate |
||||||||
Bank indebtedness / (cash and cash equivalents) | (92 |
) |
(407 |
) |
(499 |
)
|
- |
(499 |
) |
(684 |
) |
|||
Long-term debt | 8,473 |
889 |
9,362 |
(397 |
)
|
8,965 |
2,000 |
|||||||
Debt due within one year |
1,556 |
102 |
1,658 |
(181 |
)
|
1,477 |
- |
|||||||
Long-term note receivable from BCH | (498 |
) |
- |
(498 |
)
|
498 |
- |
- |
||||||
PPA fair value increment (7) | - |
- |
- |
- |
124 |
- |
||||||||
Net debt | 9,439 |
584 |
10,023 |
(80 |
)
|
10,067 |
1,316 |
|||||||
Preferred shares - Bell Canada (8) | 1,100 |
-
|
1,100
|
- |
1,100
|
-
|
||||||||
Preferred shares - Aliant (8) | -
|
172
|
172 |
- |
172 |
-
|
||||||||
Perpetual Preferred shares - BCE |
- |
- |
- |
-
|
- |
1,670 |
||||||||
Nortel common shares at market |
- |
- |
- |
- |
- |
(60 |
)
|
|||||||
|
|
|||||||||||||
Net debt and preferreds | 10,539 |
756 |
11,295 |
(80 |
) |
11,339 |
2,926 |
|||||||
|
|
Proportionate net debt and preferreds, Trailing EBITDA |
For the quarter ended September 30, 2004 ($ millions, except where otherwise indicated) |
% owned by BCE |
Propor- tionate net debt and preferreds |
TOTAL
EBITDA |
PROPORTIONATE
EBITDA
|
|||||||||||||||||||||||||
Q3 04 | Q2 04 | Q1 04 | Q4 03 | Trailing | Q3 04 | Q2 04 | Q1 04 | Q4 03 | Trailing | ||||||||||||||||||||
|
|||||||||||||||||||||||||||||
Bell Canada (excluding Aliant) | 100%
|
10,583 |
*
|
1,669 |
1,612 |
1,549 |
1,514 |
6,344 |
1,669 |
1,612 |
1,549 |
1,514 |
6,344 |
||||||||||||||||
Aliant | 53.5% |
404 |
187 |
209 |
206 |
217 |
819 |
100 |
112
|
110
|
116 |
438 |
|||||||||||||||||
|
|
|
|||||||||||||||||||||||||||
Total
Bell Canada Consolidated |
10,987 |
1,856 |
1,821 |
1,755 |
1,731 |
7,163 |
1,769 |
1,724 |
1,659 |
1,630 |
6,782 |
||||||||||||||||||
Other BCE | |||||||||||||||||||||||||||||
Bell Globemedia | 68.5% |
398 |
43 |
93 |
56 |
83 |
275 |
22 |
54 |
34 |
50 |
160 |
|||||||||||||||||
Telesat | 100% |
195 |
60 |
54
|
54 |
55 |
223 |
60 |
54
|
54
|
55 |
223 |
|||||||||||||||||
CGI | 28.9% |
83 |
38 |
37 |
31 |
32 |
138 |
38 |
37 |
31 |
32 |
138 |
|||||||||||||||||
Corporate and other | 100% |
2,940 |
(35 |
)
|
(31 |
) |
(32 |
) |
(35 |
) |
(133 |
) |
(35 |
) |
(31 |
)
|
(32 |
)
|
(35 |
) |
(133 |
) |
|||||||
|
|
|
|
|
|||||||||||||||||||||||||
Total Other BCE | 100% |
3,616 |
106 |
153
|
109
|
135
|
503 |
85 |
114 |
87 |
102 |
388 |
|||||||||||||||||
Inter-segment eliminations | (26 |
)
|
(21 |
) |
(20 |
) |
(19 |
) |
(86 |
) |
(26 |
)
|
(21 |
)
|
(20 |
)
|
(19 |
)
|
(86 |
) |
|||||||||
|
|
|
|||||||||||||||||||||||||||
Total | 14,603 |
1,936 |
1,953 |
1,844 |
1,847 |
7,580 |
1,828 |
1,817 |
1,726 |
1,713 |
7,084 |
||||||||||||||||||
|
|
|
* Calculated the following way: Bell Canada (excl. Aliant) net debt and preferred of $10,539 million minus $80 million of inter-company eliminations plus $124 million PPA fair value increment.
BCE inc. Supplementary Financial Information - Third Quarter 2004 Page 9
($
millions, except where otherwise indicated) |
Q3 2004 |
Q3 2003 |
$ change |
%
change |
YTD September 2004 |
YTD September 2003 |
$ change |
%
change |
||||||||||||
|
|
|
||||||||||||||||||
Revenues | ||||||||||||||||||||
Local and access | 1,395 |
1,410 |
(15 |
) |
(1.1 |
%) |
4,175 |
4,200 |
(25 |
)
|
(0.6 |
%) |
||||||||
Long distance | 589 |
641 |
(52 |
)
|
(8.1 |
%)
|
1,767 |
1,942 |
(175 |
)
|
(9.0 |
%)
|
||||||||
Wireless |
727 |
645 |
82 |
12.7 |
%
|
2,076 |
1,803 |
273 |
15.1 |
% |
||||||||||
Data | 915 |
906 |
9 |
1.0 |
% |
2,677 |
2,762 |
(85 |
) |
(3.1 |
%) |
|||||||||
Video | 213 |
192 |
21
|
10.9 |
% |
631 |
559 |
72 |
12.9 |
% |
||||||||||
Terminal sales and other | 367 |
361 |
6 |
1.7 |
%
|
1,158 |
1,102 |
56 |
5.1 |
% |
||||||||||
|
|
|
|
|
||||||||||||||||
Total operating revenues | 4,206 |
4,155 |
51 |
1.2 |
% |
12,484 |
12,368 |
116 |
0.9 |
%
|
||||||||||
Operating expenses | (2,350 |
)
|
(2,338 |
) |
(12 |
) |
(0.5 |
%) |
(7,052 |
) |
(7,098 |
)
|
46 |
0.6 |
% |
|||||
|
|
|
|
|||||||||||||||||
EBITDA |
1,856 |
1,817 |
39 |
2.1 |
% |
5,432 |
5,270 |
162 |
3.1 |
% |
||||||||||
|
|
|
|
|||||||||||||||||
EBITDA margin (%) | 44.1 |
% |
43.7 |
% |
0.4
pts |
43.5 |
% |
42.6 |
%
|
|
0.9
pts |
|||||||||
|
|
|
||||||||||||||||||
Amortization expense | (734 |
) |
(758 |
) |
24 |
3.2 |
% |
(2,199 |
)
|
(2,228 |
) |
29 |
1.3 |
% |
||||||
Net benefit plans cost | (55 |
) |
(46 |
) |
(9 |
)
|
(19.6 |
%) |
(173 |
)
|
(135 |
)
|
(38 |
)
|
(28.1 |
%) |
||||
Restructuring and other items | (1,080 |
)
|
(1 |
)
|
(1,079 |
)
|
n.m. |
(1,096 |
) |
(1 |
)
|
(1,095 |
)
|
n.m. |
||||||
|
|
|
|
|||||||||||||||||
Operating income (loss) | (13 |
)
|
1,012 |
(1,025 |
) |
n.m.
|
1,964 |
2,906 |
(942 |
) |
(32.4 |
%) |
||||||||
Other income | 114 |
3 |
111 |
n.m.
|
163 |
82 |
81 |
98.8 |
% |
|||||||||||
Interest expense |
(215 |
) |
(239 |
)
|
24 |
10.0 |
% |
(651 |
)
|
(714 |
) |
63 |
8.8 |
% |
||||||
|
|
|
||||||||||||||||||
Pre-tax earnings (loss) from continuing operations | (114 |
)
|
776 |
(890 |
) |
n.m. |
1,476 |
2,274 |
(798 |
) |
(35.1 |
%) |
||||||||
Income taxes |
75 |
(196 |
) |
271 |
n.m. |
(366 |
) |
(578 |
)
|
212 |
36.7 |
% |
||||||||
Non-controlling interest | 2 |
(13 |
)
|
15 |
n.m. |
1 |
|
(54 |
) |
55 |
n.m. |
|||||||||
|
|
|
|
|||||||||||||||||
Earnings (loss) from continuing operations | (37 |
)
|
567 |
(604 |
) |
n.m. |
1,111 |
1,642 |
(531 |
) |
(32.3 |
%) |
||||||||
Discontinued operations |
- |
- |
- |
n.m. |
- |
6 |
(6 |
) |
n.m. |
|||||||||||
|
|
|
|
|||||||||||||||||
Net earnings (loss) |
(37 |
)
|
567 |
(604 |
) |
n.m. |
1,111 |
1,648 |
(537 |
) |
(32.6 |
%) |
||||||||
Dividends on preferred shares | (16 |
)
|
(17 |
)
|
1 |
5.9 |
% |
(49 |
) |
(49 |
)
|
- |
0.0 |
% |
||||||
Interest on equity-settled notes |
- |
- |
- |
n.m. |
- |
(25 |
)
|
25 |
n.m. |
|||||||||||
|
|
|
|
|||||||||||||||||
Net earnings (loss) applicable to common shares | (53 |
)
|
550 |
(603 |
) |
n.m. |
1,062 |
1,574 |
(512 |
) |
(32.5 |
%) |
||||||||
|
|
|||||||||||||||||||
Other information | ||||||||||||||||||||
Cash flow information | ||||||||||||||||||||
Free Cash Flow (FCF) | ||||||||||||||||||||
Cash from operating activities | 1,756 |
1,728 |
28 |
1.6 |
% |
4,040 |
3,819 |
221 |
5.8 |
% |
||||||||||
Capital expenditures |
(736 |
) |
(708 |
) |
(28 |
) |
(4.0 |
%) |
(2,041 |
) | (1,901 |
) | (140 |
) |
(7.4 |
%) |
||||
Dividends and distributions |
(445 |
) |
(465 |
) |
20 |
4.3 |
% |
(1,385 |
) |
(1,558 |
) | 173 |
11.1 |
% |
||||||
Interest on equity-settled notes |
- |
- |
- |
n.m. |
- |
(47 |
) | 47 |
n.m. |
|||||||||||
Other investing items |
1 |
52 |
(51 |
) |
(98.1 |
%) |
(7 |
) |
44 |
(51 |
) | n.m. |
||||||||
|
||||||||||||||||||||
Total | 576 |
607 |
(31 |
) |
(5.1 |
%) |
607 |
357 |
250 |
(70.0 |
%) |
|||||||||
Capital expenditures as a percentage of revenues (%) | 17.5 |
% | 17.0 |
% | (0.5)
|
pts
|
16.3 |
% | 15.4 |
% | (0.9)
|
pts |
||||||||
Balance Sheet Information | September
30 |
December
31 |
||||||||||||||||||
2004
|
2003
|
|||||||||||||||||||
|
|
|||||||||||||||||||
Capital Structure Net Debt |
||||||||||||||||||||
Long-term debt | 9,362 |
10,024
|
||||||||||||||||||
Debt due within one year |
1,658 |
1,165
|
||||||||||||||||||
Less: Cash and cash equivalents |
(499 |
) |
(398 |
) | ||||||||||||||||
Total Net Debt | 10,521
|
10,791
|
||||||||||||||||||
Non-controlling interest | 1,230 |
1,627 |
||||||||||||||||||
Total shareholders' equity | 9,150 |
9,520
|
||||||||||||||||||
Total Capitalization | 20,901 |
21,938
|
||||||||||||||||||
Net Debt: Total Capitalization | 50.3 |
% | 49.2 |
% | ||||||||||||||||
Net Debt: Trailing 12 month EBITDA | 1.47 |
1.54
|
||||||||||||||||||
EBITDA : Interest (trailing 12 month) |
8.12 |
7.41
|
||||||||||||||||||
Bell
Canada Consolidated (1)
Operational Data - Historical Trend
($ millions, except where otherwise indicated) | YTD
2004 |
Q3
04
|
Q2
04
|
Q1
04
|
Total
2003 |
Q4
03
|
Q3
03
|
Q2
03
|
Q1
03
|
|||||||||||||
Revenues | ||||||||||||||||||||||
Local and access | 4,175 |
1,395 |
1,401
|
1,379 |
5,601 |
1,401
|
1,410
|
1,404
|
1,386 |
|||||||||||||
Long distance | 1,767 |
589 |
572 |
606 |
2,544
|
602
|
641
|
615
|
686
|
|||||||||||||
Wireless |
2,076 |
727 |
698 |
651 |
2,461
|
658 |
645 |
607 |
551 |
|||||||||||||
Data |
2,677 |
915 |
870 |
892 |
3,717 |
955 |
906 |
936 |
920 |
|||||||||||||
Video |
631 |
213 |
211 |
207 |
759
|
200 |
192 |
190 |
177
|
|||||||||||||
Terminal sales and other |
1,158 |
367 |
420
|
371
|
1,532
|
430
|
361 |
378 |
363 |
|||||||||||||
|
|
|
|
|||||||||||||||||||
Total operating revenues |
12,484 |
4,206 |
4,172 |
4,106 |
16,614
|
4,246
|
4,155
|
4,130
|
4,083 |
|||||||||||||
Operating expenses |
(7,052 |
)
|
(2,350 |
)
|
(2,351 |
)
|
(2,351 |
) |
(9,613 |
) |
(2,515 |
) |
(2,338 |
) |
(2,370 |
) |
(2,390 |
)
|
||||
|
|
|
|
|||||||||||||||||||
EBITDA |
5,432 |
1,856 |
1,821
|
1,755
|
7,001
|
1,731
|
1,817
|
1,760
|
1,693
|
|||||||||||||
EBITDA margin (%) | 43.5 |
% |
44.1 |
% |
43.6 |
% |
42.7 |
% |
42.1 |
% |
40.8 |
% |
43.7 |
% |
42.6 |
%
|
41.5 |
% |
||||
Amortization expense | (2,199 |
) |
(734 |
) |
(733 |
)
|
(732 |
) |
(2,970 |
) |
(742 |
) |
(758 |
)
|
(747 |
)
|
(723 |
) |
||||
Net benefit plans cost | (173 |
) |
(55 |
) |
(58 |
)
|
(60 |
) |
(181 |
)
|
(46 |
) |
(46 |
)
|
(45 |
) |
(44 |
) |
||||
Restructuring and other items | (1,096 |
)
|
(1,080 |
)
|
(13 |
) |
(3 |
)
|
(14 |
) |
(13 |
) |
(1 |
)
|
-
|
-
|
||||||
|
|
|
|
|||||||||||||||||||
Operating income (loss) | 1,964 |
(13 |
)
|
1,017
|
960
|
3,836 |
930 |
1,012
|
968
|
926
|
||||||||||||
Other income | 163 |
114 |
19
|
30
|
217
|
135
|
3
|
35
|
44 |
|||||||||||||
Interest expense |
(651 |
) |
(215 |
)
|
(216 |
) |
(220 |
) |
(945 |
)
|
(231 |
) |
(239 |
) |
(232 |
) |
(243 |
) |
||||
|
|
|
|
|||||||||||||||||||
Pre-tax earnings (loss) from continuing operations | 1,476 |
(114 |
)
|
820
|
770
|
3,108
|
834
|
776
|
771
|
727 |
||||||||||||
Income taxes | (366 |
) |
75 |
|
(245 |
) |
(196 |
)
|
(787 |
)
|
(209 |
) |
(196 |
)
|
(199 |
) |
(183 |
) |
||||
Non-controlling interest |
1 |
|
2 |
|
9 |
(10 |
) |
(53 |
)
|
1 |
(13 |
) |
(22 |
) |
(19 |
)
|
||||||
|
|
|
|
|||||||||||||||||||
Earnings (loss) from continuing operations | 1,111 |
(37 |
)
|
584 |
564
|
2,268
|
626 |
567 |
550 |
525
|
||||||||||||
Discontinued operations | -
|
-
|
- |
- |
59 |
53 |
- |
5 |
1 |
|||||||||||||
|
|
|
|
|||||||||||||||||||
Net earnings (loss) | 1,111 |
(37 |
)
|
584 |
564
|
2,327
|
679
|
567
|
555 |
526 |
||||||||||||
Dividends on preferred shares |
(49 |
) |
(16 |
) |
(17 |
) |
(16 |
) |
(58 |
) |
(9 |
) |
(17 |
) |
(16 |
) |
(16 |
) |
||||
Interest on equity-settled notes |
- |
- |
- |
- |
(25 |
) |
- |
- |
(10 |
)
|
(15 |
) |
||||||||||
|
|
|
|
|||||||||||||||||||
Net earnings (loss) applicable to common shares |
1,062 |
(53 |
)
|
567 |
548 |
2,244 |
670
|
550
|
529
|
495 |
||||||||||||
|
|
|
|
|||||||||||||||||||
Other information | ||||||||||||||||||||||
Cash flow information | ||||||||||||||||||||||
Free Cash Flow (FCF) | ||||||||||||||||||||||
Cash from operating activities |
4,040 |
1,756 |
1,089
|
1,195
|
5,366 |
1,547 |
1,728 |
1,229 |
862 |
|||||||||||||
Capital expenditures |
(2,041 |
) |
(736 |
) |
(715 |
) |
(590 |
) |
(2,892 |
) |
(991 |
) |
(708 |
) |
(659 |
) |
(534 |
) |
||||
Dividends and distributions | (1,385 |
) |
(445 |
) |
(437 |
) |
(503 |
) |
(2,081 |
) |
(523 |
) |
(465 |
) |
(704 |
) |
(389 |
) |
||||
Interest on equity-settled notes | - |
- |
- |
- |
(47 |
) |
- |
-
|
(24 |
) |
(23 |
) |
||||||||||
Other investing items |
(7 |
) |
1 |
|
(1 |
) |
(7 |
) |
47
|
3 |
52 |
(5 |
) |
(3 |
) |
|||||||
|
|
|
|
|||||||||||||||||||
Total | 607 |
576 |
(64 |
) |
95 |
393 |
36 |
607 |
(163 |
) |
(87 |
) |
||||||||||
|
|
|
|
|||||||||||||||||||
Capital expenditures as a percentage of revenues (%) | 16.3 |
% |
17.5 |
% |
17.1 |
%
|
14.4 |
% |
17.4 |
% |
23.3 |
% |
17.0 |
% |
16.0 |
% |
13.1 |
% |
||||
Balance Sheet Information |
September
30 |
June
30 |
March
31 |
December 31 |
||||||||||||||||||
Capital Structure |
2004 |
2004
|
2004
|
2003
|
||||||||||||||||||
|
|
|||||||||||||||||||||
Net Debt | ||||||||||||||||||||||
Long-term debt | 9,362 |
9,674 |
10,331 |
10,024 |
||||||||||||||||||
Debt due within one year | 1,658
|
1,269 |
1,111 |
1,165 |
||||||||||||||||||
Less: Cash and cash equivalents |
(499 |
)
|
(422 |
) |
(1,112 |
) |
(398 |
) |
||||||||||||||
|
||||||||||||||||||||||
Total Net Debt | 10,521 |
10,521 |
10,330 |
10,791 |
||||||||||||||||||
Non-controlling interest | 1,230 |
1,559 |
1,608 |
1,627 |
||||||||||||||||||
Total shareholders' equity | 9,150 |
9,851 |
9,682 |
9,520 |
||||||||||||||||||
|
|
|||||||||||||||||||||
Total Capitalization | 20,901 |
21,931 |
21,620
|
21,938 |
||||||||||||||||||
|
|
|||||||||||||||||||||
Net Debt: Total Capitalization | 50.3 |
% |
48.0 |
% |
47.8 |
% |
49.2 |
% |
||||||||||||||
Net Debt : Trailing 12 month EBITDA | 1.47 |
1.48 |
1.46 |
1.54 |
||||||||||||||||||
EBITDA : Interest (trailing 12 month) | 8.12 |
7.86 |
7.66 |
7.41 |
BCE Inc. Supplementary Financial Information - Third Quarter 2004 Page 11
Bell
Canada Consolidated
(1)
Statistical Data
Q3 2004
|
Q3
2003
|
%
change
|
YTD
September 2004 |
YTD
September 2003 |
%
change |
||||||||
|
|
|
|
||||||||||
Wireline | |||||||||||||
Local | |||||||||||||
Network access services (k) | |||||||||||||
Residential | 8,427 |
8,539 |
(1.3 |
%) | |||||||||
Business |
4,535 |
4,549 |
(0.3 |
%) | |||||||||
|
|
|
|||||||||||
Total | 12,962 |
13,088 |
(1.0 |
%) | |||||||||
SmartTouch feature revenues ($M) | 234 |
239 |
(2.1 |
%) |
706 |
715 |
(1.3 |
%) | |||||
Long Distance (LD) | |||||||||||||
Conversation minutes (M) | 4,435 |
4,664 |
(4.9 |
%)
|
13,511 |
14,447 |
(6.5 |
%) | |||||
Average revenue per minute ($) | 0.120 |
0.128 |
(6.3 |
%) |
0.119 |
0.124 |
(4.0 |
%) | |||||
|
|||||||||||||
Data | |||||||||||||
Equivalent access lines (9) (k) - Ontario and Quebec | |||||||||||||
Digital equivalent access lines (k) | 4,197 |
3,771 |
11.3 |
% | |||||||||
Internet subscribers (10) (k) | |||||||||||||
DSL High Speed Internet net activations (k) | 96 |
104 |
(7.7 |
%) |
284 |
281 |
1.1 |
% |
|||||
DSL High Speed Internet subscribers (k) | 1,766 |
1,391 |
27.0 |
% |
|||||||||
Dial-up Internet subscribers (k) |
775 |
892 |
(13.1 |
%)
|
|||||||||
|
|
|
|||||||||||
2,541 |
2,283 |
11.3 |
% |
||||||||||
Wireless | |
||||||||||||
Cellular & PCS Net activations (k) | |||||||||||||
Pre-paid | 14 |
23 |
(39.1 |
%) |
54 |
68 |
(20.6 |
%) |
|||||
Post-paid | 95 |
101 |
(5.9 |
%)
|
242 |
257 |
(5.8 |
%) |
|||||
|
|
|
|
||||||||||
109
|
124 |
(12.1 |
%) |
296 |
325 |
(8.9 |
%) | ||||||
Cellular & PCS subscribers (k) | |||||||||||||
Pre-paid | 1,113 |
1,026 |
8.5 |
% | |||||||||
Post-paid | 3,595 |
3,197 |
12.4 |
% | |||||||||
4,708 |
4,223 |
11.5 |
% | ||||||||||
Average revenue per unit (ARPU) ($/month) | 50
|
50 |
0.0 |
% |
49 |
47 |
4.3 |
% |
|||||
Pre-paid |
12 |
13 |
(7.7 |
%) |
12 |
12 |
0.0 |
% |
|||||
Post-paid | 63 |
62 |
1.6 |
% |
61 |
59 |
3.4 |
% |
|||||
Churn (%) (average per month) |
1.2 |
% |
1.4 |
% | 0.2 |
pts |
1.3 |
% | 1.4 |
% | 0.1
|
pts |
|
Pre-paid | 1.9 |
% |
1.8 |
% |
(0.1) |
pts |
1.9 |
% |
1.8 |
% |
(0.1) |
pts |
|
Post-paid | 1.0 |
%
|
1.3 |
% | 0.3 |
pts |
1.1 |
% | 1.3 |
% | 0.2
|
pts |
|
Usage per subscriber (min/month) | n/a
|
|
231 |
|
n/a
|
|
n/a |
224 |
|
n/a
|
|||
Cost of acquisition (COA) (11) ($/sub) | 381 |
|
425 |
|
10.4 |
% |
415 |
418 |
|
0.7 |
% |
||
Wireless EBITDA ($ millions) |
334 |
|
251 |
|
33.1 |
% |
913 |
689 |
|
32.5 |
% |
||
Wireless EBITDA margin (12) | 45.4 |
% |
38.0 |
% |
7.4 |
pts |
43.4 |
% | 37.2 |
% |
6.2 |
pts |
|
Wireless capital expenditures ($ millions) | 95 |
|
88 |
|
(8.0 |
%)
|
237 |
239 |
|
0.8 |
% |
||
|
|
|
|
||||||||||
Paging subscribers (k) | |
|
|
449 |
549 |
|
(18.2 |
%) |
|||||
Paging average revenue per unit ($/month) | 10 |
|
10 |
|
0.0 |
% |
10
|
10 |
|
0.0 |
% |
||
|
|||||||||||||
Video (DTH and VDSL) | |||||||||||||
Total subscribers (k) | |
1,460 |
|
1,352 |
|
8.0 |
% | ||||||
Net subscriber activations (k) | 33 |
|
17 |
|
94.1 |
% |
73 |
|
48 |
|
52.1 |
% | |
ARPU ($/month) | 48 |
|
47 |
|
2.1 |
% |
48 |
|
46 |
|
4.3 |
% | |
COA ($/sub) | 548 |
|
507 |
|
(8.1 |
%) |
586 |
|
512 |
|
(14.5 |
%) | |
Video EBITDA ($ millions) | (16 |
) |
(9 |
) |
(77.8 |
%) |
(15 |
) |
(24 |
) |
37.5 |
% |
|
Churn (%) (average per month) | 1.1 |
% |
1.4 |
% |
0.3 |
pts |
1.0 |
% |
1.2 |
% |
0.2 |
pts |
|
|
BCE Inc Supplementary Financial Information - Third Quarter 2004 Page 12
Bell
Canada Consolidated
(1)
Statistical Data Historical Trend
YTD
2004 |
Q3
04
|
Q2
04
|
Q1
04
|
Total
2003
|
Q4
03
|
Q3
03
|
Q2
03
|
Q1
03
|
|||||||||||
|
|
|
|
||||||||||||||||
Wireline | |||||||||||||||||||
Local | |||||||||||||||||||
Network access services (k) | |||||||||||||||||||
Residential | 8,427 |
8,390 |
8,476 |
8,511
|
8,539
|
8,504
|
8,566
|
||||||||||||
Business | 4,535 |
4,548
|
4,541
|
4,540
|
4,549
|
4,564
|
4,577 |
||||||||||||
|
|
||||||||||||||||||
Total | 12,962 |
12,938 |
13,017 |
13,051 |
13,088 |
13,068
|
13,143
|
||||||||||||
SmartTouch feature revenues ($M) | 706 |
234 |
235 |
237 |
955 |
240 |
239 |
239 |
237 |
||||||||||
Long Distance (LD) | |||||||||||||||||||
Conversation minutes (M) | 13,511 |
4,435 |
4,498 |
4,578 |
19,132
|
4,685
|
4,664
|
4,911 |
4,872 |
||||||||||
Average revenue per minute ($) | 0.119
|
0.120 |
0.118
|
0.120
|
0.124
|
0.122
|
0.128
|
0.120
|
0.124 |
||||||||||
Data | |||||||||||||||||||
Equivalent access lines (9) (k) - Ontario and Quebec | |||||||||||||||||||
Digital equivalent access lines (k) | 4,197 |
4,083
|
3,983 |
3,867 |
3,771 |
3,708 |
3,704 |
||||||||||||
Internet subscribers (10) (k) | |||||||||||||||||||
DSL High Speed Internet net activations (k) | 284 |
96 |
73
|
115
|
372
|
91
|
104 |
81 |
96
|
||||||||||
DSL High Speed Internet subscribers (k) | 1,766 |
1,670
|
1,597
|
1,482 |
1,391
|
1,287
|
1,206 |
||||||||||||
Dial-up Internet subscribers (k) | 775 |
807 |
836 |
869
|
892
|
911
|
940
|
||||||||||||
|
|
||||||||||||||||||
2,541 |
2,477 |
2,433
|
2,351
|
2,283
|
2,198
|
2,146 |
|||||||||||||
Wireless | |||||||||||||||||||
Cellular & PCS Net activations (k) | |||||||||||||||||||
Pre-paid | 54 |
14 |
17 |
23
|
101
|
33
|
23
|
27
|
18
|
||||||||||
Post-paid | 242 |
95 |
78 |
69 |
413
|
156
|
101
|
104 |
52 |
||||||||||
|
|
|
|
||||||||||||||||
296 |
109 |
95 |
92
|
514
|
189
|
124
|
131 |
70 |
|||||||||||
Cellular & PCS subscribers (k) | |||||||||||||||||||
Pre-paid | 1,113 |
1,099
|
1,082
|
1,059 |
1,026 |
1,003 |
976 |
||||||||||||
Post-paid | 3,595 |
3,500 |
3,422 |
3,353
|
3,197
|
3,096
|
2,992 |
||||||||||||
|
|
||||||||||||||||||
4,708 |
4,599
|
4,504 |
4,412 |
4,223 |
4,099 |
3,968 |
|||||||||||||
Average revenue per unit (ARPU) ($/month) | 49 |
50 |
50 |
47 |
48
|
50
|
50
|
48
|
45
|
||||||||||
Pre-paid | 12 |
12 |
11 |
11 |
12 |
12 |
13 |
12 |
11
|
||||||||||
Post-paid | 61 |
63 |
62
|
59
|
60
|
62 |
62 |
60 |
56 |
||||||||||
Churn (%) (average per month) | 1.3 |
% |
1.2 |
% |
1.3 |
%
|
1.3 |
% |
1.4 |
% |
1.4 |
% |
1.4 |
% |
1.4 |
%
|
1.4 |
% |
|
Pre-paid | 1.9 |
% |
1.9 |
%
|
1.9 |
% |
1.7 |
% |
1.9 |
%
|
1.8 |
% |
1.8 |
% |
1.9 |
% |
1.9 |
% |
|
Post-paid | 1.1 |
% |
1.0 |
% |
1.1 |
%
|
1.1 |
% |
1.3 |
% |
1.2 |
% |
1.3 |
% |
1.3 |
% |
1.3 |
% |
|
Usage per subscriber (min/month) | n/a
|
n/a |
n/a |
223 |
228 |
240
|
231
|
237 |
203 |
||||||||||
Cost of acquisition (COA) (11) ($/sub) | 415 |
381 |
413
|
455 |
426 |
445
|
425
|
435
|
387 |
||||||||||
Wireless EBITDA ($ millions) | 913 |
334 |
317 |
262
|
918
|
229 |
251
|
219
|
219
|
||||||||||
Wireless EBITDA margin (12) | 43.4 |
% |
45.4 |
% |
44.9 |
% |
39.6 |
% |
36.3 |
% |
34.0 |
% |
38.0 |
% |
35.3 |
%
|
38.4 |
% |
|
Wireless capital expenditures ($ millions) | 237 |
95 |
77
|
65
|
408
|
169 |
88 |
81
|
70 |
||||||||||
Paging subscribers (k) | 449 |
469
|
493
|
524 |
549
|
581
|
606 |
||||||||||||
Paging average revenue per unit ($/month) | 10 |
10 |
10
|
10
|
10 |
10
|
10
|
10
|
10 |
||||||||||
|
|||||||||||||||||||
Video (DTH and VDSL) | |||||||||||||||||||
Total subscribers (k) | 1,460 |
1,427 |
1,403
|
1,387
|
1,352 |
1,335 |
1,317
|
||||||||||||
Net subscriber activations (k) | 73 |
33
|
24
|
16
|
83
|
35
|
17
|
18
|
13
|
||||||||||
ARPU ($/month) | 48 |
48 |
49 |
48
|
46
|
48 |
47
|
47
|
44 |
||||||||||
COA ($/sub) | 586 |
548 |
570 |
661
|
532
|
581 |
507 |
533 |
493 |
||||||||||
Video EBITDA ($ millions) | (15 |
)
|
(16 |
)
|
- |
1
|
(45 |
)
|
(21 |
)
|
(9 |
)
|
(9 |
)
|
(6 |
) |
|||
Churn (%) (average per month) | 1.0 |
% |
1.1 |
%
|
1.0 |
% |
0.9 |
%
|
1.1 |
%
|
1.0 |
%
|
1.4 |
% |
1.1 |
% |
1.0 |
%
|
|
BCE Inc. Supplementary Financial Information - Third Quarter 2004 Page 13
Accompanying Notes
(1) | We have reclassified some of the figures for the comparative period to make them consistent with the current period's presentation. |
(2) | Non-GAAP Financial Measures |
EBITDA | |
The term, EBITDA (earnings before interest, taxes, depreciation and amortization), does not have any standardized meaning prescribed by Canadian generally accepted accounting principles (GAAP). It is therefore unlikely to be comparable to similar measures presented by other companies. EBITDA is presented on a consistent basis from period to period. | |
We define EBITDA as operating revenues less operating expenses, which means it represents operating income before amortization expense, net benefit plans cost, and restructuring and other items. | |
We use EBITDA, among other measures, to assess the operating performance of our ongoing businesses without the effects of amortization expense, net benefit plans cost, and restructuring and other items. We exclude amortization expense and net benefit plans cost because they largely depend on the accounting methods and assumptions a company uses, as well as non-operating factors, such as the historical cost of capital assets and the fund performance of a companys pension plans. We exclude restructuring and other items because they are transitional in nature. | |
EBITDA allows us to compare our operating performance on a consistent basis. We believe that certain investors and analysts use EBITDA to measure a companys ability to service debt and to meet other payment obligations, or as a common valuation measurement in the telecommunications industry. | |
EBITDA should not be confused with net cash flows from operating activities. The most comparable Canadian GAAP financial measure is operating income. | |
FREE CASH FLOW | |
The term, free cash flow, does not have any standardized meaning prescribed by Canadian GAAP. It is therefore unlikely to be comparable to similar measures presented by other companies. Free cash flow is presented on a consistent basis from period to period. | |
We define free cash flow as cash from operating activities after capital expenditures, total dividends and other investing activities. | |
We consider free cash flow to be an important indicator of the financial strength and performance of our business because it shows how much cash is available to repay debt and to reinvest in our company. We believe that certain investors and analysts use free cash flow when valuing a business and its underlying assets. | |
The most comparable Canadian GAAP financial measure is cash from operating activities. | |
(3) | EBITDA margin is calculated as follows: |
EBITDA | |
Operating revenues | |
(4) | Total Wireless capital expenditures are included in the Consumer segment. |
(5) | Cash flow per share is calculated as follows: |
Cash flow from operations less capital expenditures | |
Average number of common shares outstanding during the period | |
(6) | Annualized cash flow yield is calculated as follows: |
Free cash flow before common dividends | |
Number of common shares outstanding at end of period multiplied by share price at end of period |
BCE Inc. Supplementary Financial Information Third Quarter 2004 Page 14
Accompanying Notes (continued)
(7) |
Reflects an increase in the total Bell Canada debt as a result of the
completion of the purchase price allocation (PPA) relating to the repurchase
of SBCs 20% interest in Bell Canada, which resulted in an increase
in long-term debt of $165 million. This increase in long-term debt will
be applied against interest expense ($4 million in Q3 2004) over the remaining
terms of the related long-term debt. |
(8) |
At the BCE Consolidated level, 3rd Party Preferred Shares reflected
in the financial statements of subsidiaries are included in non-controlling
interest on the balance sheet. |
(9) |
Digital equivalent access lines are derived by converting low capacity
data lines (DS-3 and lower) to the equivalent number of voice grade access
lines. Broadband equivalent access lines are derived by converting high
capacity data lines (higher than DS-3) to the equivalent number of voice
grade access lines. |
Conversion
factors |
|
DS-0 | 1 |
Basic ISDN | 2 |
Primary ISDN | 23 |
DS-1, DEA | 24
|
DS-3 | 672 |
OC-3 |
2,016 |
OC-12 |
8,064 |
OC-48 |
32,256 |
OC-192 | 129,024 |
10 Base T | 155 |
100 Base T | 1,554
|
Gigabit E | 15,554
|
(10) |
DSL High Speed Internet subscribers include consumer, business and wholesale.
Dial-up Internet subscribers include consumer and business. |
(11) |
Includes allocation of selling costs from Bell Canada and excludes costs
of migrating from analog to digital. Cost of Acquisition (COA) per subscriber
is reflected on a consolidated basis. |
(12) | Wireless
EBITDA margins are calculated based on total Wireless operating revenues
(i.e. external revenues as shown on pages 10 and 11 plus inter-company
revenues). |
BCE Inc. Supplementary Financial Information Third Quarter 2004 Page 15
Appendix A Reconciliation of Canadian Generally Accepted Accounting Principles | |
(GAAP) to United States GAAP | |
We
have prepared the interim consolidated financial statements according
to Canadian GAAP. The tables that follow are a reconciliation of significant
differences relating to the statement of operations and total shareholders
equity reported according to Canadian GAAP and United States GAAP. |
|
STATEMENTS OF OPERATIONS |
|
|||||||||
For the period ended September 30 |
Three
months |
Nine
months |
|||||||
|
|||||||||
($ million, except share amounts) (unaudited) | 2004 |
2003 |
2004 |
2003 |
|||||
|
|||||||||
Canadian GAAP Earnings from continuing operations | 102
|
453
|
1,131
|
1,385 |
|||||
Adjustments | |||||||||
Deferred costs (a) | 5
|
1
|
11
|
2 |
|||||
Employee future benefits (b) | (20 |
) |
(32 |
) |
(61 |
) |
(95 |
) |
|
Derivative instruments (k) | -
|
(16 |
) |
- |
(12 |
) |
|||
Other | - |
(12 |
) |
-
|
(11 |
) |
|||
|
|||||||||
United States GAAP Earnings from continuing operations | 87
|
394
|
1,081
|
1,269 |
|||||
Discontinued operations United States GAAP (h) | (2 |
) |
11
|
86
|
31 |
||||
Cumulative effect of change in accounting policy (l) | - |
(25 |
) |
-
|
(25 |
) |
|||
|
|||||||||
United States GAAP Net earnings | 85
|
380
|
1,167
|
1,275
|
|||||
Dividends on preferred shares (k) | (24 |
) |
(20 |
) |
(70 |
) |
(52 |
) |
|
Premium on redemption of preferred shares | -
|
- |
- |
(7 |
) |
||||
|
|||||||||
United States GAAP- Net earnings applicable to common shares | 61
|
360
|
1,097
|
1,216
|
|||||
|
|||||||||
Other comprehensive earnings items | |||||||||
Change in currency translation adjustment | (14 |
) |
(9 |
) |
1
|
(80 |
) |
||
Change in unrealized gain on investments (i) | (224 |
) |
15
|
(11 |
) |
18
|
|||
|
|||||||||
Comprehensive earnings | (177 |
) |
366
|
1,087
|
1,154 |
||||
|
|||||||||
Net earnings per common share basic | |||||||||
Continuing operations | 0.07
|
0.41
|
1.09
|
1.32 |
|||||
Discontinued operations and change in accounting policy | (0.01 |
) |
(0.02 |
) |
0.10
|
- |
|||
Net earnings | 0.06 |
0.39 |
1.19 |
1.32 |
|||||
Net earnings per common share diluted | |||||||||
Continuing operations | 0.07 |
0.41 |
1.09 |
1.32
|
|||||
Discontinued operations and change in accounting policy | -
|
(0.02 |
) |
0.09
|
- |
||||
Net earnings |
0.07 |
0.39 |
1.18 |
1.32
|
|||||
Dividends per common share | 0.30
|
0.30 |
0.90 |
0.90
|
|||||
Average number of common shares | |||||||||
outstanding (millions) | 924.6 |
921.5 |
924.4 |
919.3 |
|||||
Appendix A Reconciliation of Canadian Generally Accepted Accounting Principles | |
(GAAP) to United States GAAP |
STATEMENTS
OF ACCUMULATED OTHER COMPREHENSIVE LOSS
|
||||
September
30 |
December
31 |
|||
($ millions) (unaudited) | 2004 |
2003 |
||
|
||||
Currency translation adjustment | (45 |
) |
(46 |
) |
Additional minimum pension liability (b) | (121 |
) | (121 |
) |
Unrealized gain on investments (i) | 5
|
16
|
||
|
||||
Accumulated Other Comprehensive loss | (161 |
) | (151 |
) |
|
RECONCILIATION OF TOTAL SHAREHOLDERS EQUITY
|
|||||
($ millions) (unaudited) | September
30 |
December
31 |
|||
2004 |
2003 |
||||
|
|||||
Canadian GAAP | 13,879
|
13,573 |
|||
Adjustments | |||||
Deferred costs (a) | (60 |
)
|
(77 |
) |
|
Employee future benefits (b) | (371 |
)
|
(260 |
) |
|
Gain on disposal of investments and on reduction | |||||
of ownership in subsidiary companies (c) | 163
|
163
|
|||
Other | 114
|
132
|
|||
Tax effect of the above adjustments (f) | 23
|
(16 |
) |
||
Non-controlling interest effect of the above adjustments (g) | 61
|
55
|
|||
Discontinued operations (h) | -
|
(58 |
) |
||
Unrealized gain on investments (i) | 5
|
16 |
|||
|
|||||
United States GAAP | 13,814 |
13,528 |
|||
|
(a)
Deferred costs
Under Canadian GAAP, certain expenses can be deferred and amortized if they
meet certain criteria. Under United States GAAP, these costs are expensed as
incurred.
(b)
Future benefits for employees
The accounting for future benefits for employees under Canadian GAAP and
United States GAAP is essentially the same, except for the recognition of certain
unrealized gains and losses.
Canadian GAAP requires companies to recognize a pension valuation allowance for any excess of the accrued benefit asset over the expected future benefit. Changes in the pension valuation allowance are recognized in the consolidated statement of operations. United States GAAP does not specifically address pension valuation allowances. The United States regulators have interpreted this to be a difference between Canadian and United States GAAP.
2
Appendix A Reconciliation of Canadian Generally Accepted Accounting Principles | |
(GAAP) to United States GAAP |
The table below shows the components of the net benefit plans cost before taxes and non-controlling interest under United States GAAP:
|
||||||||||||||||
|
Three
months |
Nine
months |
||||||||||||||
|
|
|
||||||||||||||
|
Pension
benefits |
Other benefits |
Pension
benefits |
Other
benefits |
||||||||||||
|
|
|
|
|
||||||||||||
For
the period ended September 30 |
2004 |
2003 |
2004 |
2003 |
2004 |
2003 |
2004 |
2003 |
||||||||
|
||||||||||||||||
Current
service cost |
58
|
55 |
7 |
8 |
182 |
166 |
23 |
23 |
||||||||
Interest
cost on accrued benefit obligation |
201 |
|
190
|
|
26 |
|
26 |
|
604 |
|
568
|
|
78 |
|
78 |
|
Expected
return on plan assets |
(230 |
) |
(218 |
) |
(2 |
) |
(2 |
) |
(688 |
) |
(654 |
) |
(7 |
) |
(7 |
) |
Amortization
of past service costs |
2
|
|
2
|
|
|
|
|
|
7 |
|
7 |
|
|
|
|
|
Amortization
of net actuarial losses |
39 |
45 |
1 |
|
112 |
129 |
1 |
|
||||||||
Amortization
of transitional (asset) obligation |
(11 |
) |
(11 |
) |
7
|
|
7 |
|
(33 |
) |
(33 |
) |
22 |
|
22 |
|
Other |
|
|
|
|
|
(2 |
) |
|
|
|||||||
|
||||||||||||||||
Net
benefit plans cost |
59 |
63 |
39 |
39
|
184 |
181 |
117 |
116 |
||||||||
|
Under United States GAAP, an additional minimum liability is recorded for the excess of the unfunded accumulated benefit obligation over the recorded pension benefits liability. An offsetting intangible asset equal to the unrecognized prior service costs is recorded. Any difference is recorded as a reduction in accumulated other comprehensive income.
(c) Gains
or losses on investments
Under Canadian GAAP and United States GAAP, gains or losses on investments
are calculated in a similar manner. Differences in Canadian GAAP and United
States GAAP, however, may cause the underlying carrying value of the investment
to be different. This will cause the resulting gain or loss to be different.
(d) Equity
income
Under Canadian GAAP, we account for our joint venture investment in CGI
using the proportionate consolidation method. Effective July 2003, as a result
of the new agreement with CGI, we present CGI as an equity investment under
United States GAAP. Our proportionate share of CGIs operating results
for the three months and nine months ended September 30, 2004 were:
|
operating revenues of $277 million and $745 million, respectively, of
which $47 million and $121 million, respectively was with subsidiaries
of BCE Inc |
| operating
expenses of $239 million and $639 million, respectively of which $5 million
and $19 million, respectively was to subsidiaries of BCE Inc. |
| amortization expense of $14 million and $36 million, respectively |
| interest expense of $1 million and $3 million, respectively |
| other income of $1 million and $3 million, respectively |
| income tax expense of $9 million and $26 million, respectively |
| discontinued operations of nil and $3 million, respectively. |
(e) Interest expense
Under Canadian GAAP, convertible debentures are separated into a debt component
and an equity component. Over time, the debt component is increased to reach
its original face value at maturity by recognizing an accretion expense as part
of interest expense. Under United States GAAP, convertible debentures that do
not have certain characteristics are recorded as long-term debt and no accretion
expense is recognized.
(f) Income
taxes
The income tax adjustment reflects the impact on income taxes of all of
the United States GAAP adjustments that we describe above. The accounting for
income taxes under Canadian GAAP and United States GAAP is essentially the same,
except that:
| income
tax rates of enacted or substantively enacted tax law are used to calculate
future income tax assets and liabilities under Canadian GAAP |
| only income tax rates of enacted tax law can be used under United States GAAP. |
3
Appendix A Reconciliation of Canadian Generally Accepted Accounting Principles | |
(GAAP) to United States GAAP |
(g)
Non-controlling interest
The non-controlling interest adjustment represents the impact of all of
the United States GAAP adjustments on non-controlling interest.
(h) Discontinued
operations
Differences between Canadian GAAP and United States GAAP will cause the
historical carrying values of the net assets of discontinued operations to be
different.
(i) Change
in unrealized gain on investments
Our portfolio investments are recorded at cost under Canadian GAAP. They
would be classified as available-for-sale under United States GAAP
and would be carried at fair value with any unrealized gains or losses included
in other comprehensive loss, net of tax.
(j) Accounting
for stock-based compensation
In December 2002, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 148, Accounting for
Stock-Based Compensation Transition and Disclosure. It applies to
fiscal years ending after December 15, 2002. It amends the transitional provisions
of SFAS No. 123 for companies that choose to recognize stock-based compensation
under the fair value-based method of SFAS No. 123, instead of choosing to continue
following the intrinsic value method of Accounting Principles Board Opinion
(APB) No. 25.
We adopted the fair value-based method of accounting on a prospective basis, effective January 1, 2002.
Under SFAS No. 123, however, we are required to make pro forma disclosures of net earnings, and basic and diluted earnings per share, assuming that the fair value-based method of accounting had been applied from the date that SFAS No. 123 was adopted.
The table below shows the stock-based compensation expense and pro forma net earnings using the Black-Scholes pricing model.
Three
months
|
Nine
months
|
|||||||
For the period ended September 30 (unaudited) | 2004 |
2003 |
2004 |
2003 |
||||
Net earnings, as reported | 85 |
380 |
1,167
|
1,275 |
||||
Compensation cost included in net earnings | 16
|
8
|
40 |
22 |
||||
Total compensation cost | (18 |
) | (13 |
) | (47 |
) | (38 |
) |
|
||||||||
Pro forma net earnings |
83 |
375 |
1,160
|
1,259 |
||||
Pro forma net earnings per common share basic | 0.07
|
0.39
|
1.18
|
1.30 |
||||
Pro forma net earnings per common share diluted | 0.07
|
0.39
|
1.18
|
1.30 |
||||
4
Appendix A Reconciliation of Canadian Generally Accepted Accounting Principles | |
(GAAP) to United States GAAP |
(k) Accounting
for derivative instruments and hedging activities (SFAS 133)
On January 1, 2001, we adopted SFAS 133, Accounting for Derivatives Instruments
and Hedging Activities, as amended by SFAS 138. Under this standard, all
derivatives must be recorded on the balance sheet at fair value under United
States GAAP. In addition, certain economic hedging strategies, such as using
dividend rate swaps to hedge preferred share dividends and hedging SCPs, no
longer qualify for hedge accounting under United States GAAP.
The change in the fair value of derivative contracts that no longer qualify for hedge accounting under United States GAAP is reported in net earnings.
We elected to settle the dividend rate swaps used to hedge $510 million of BCE Inc. Series AA preferred shares and $510 million of BCE Inc. Series AC preferred shares in the third quarter of 2003. These dividend rate swaps, in effect, converted the fixed-rate dividends on these preferred shares to floating-rate dividends. They were to mature in 2007. As a result of the early settlement, we received total proceeds of $83 million in cash. After the settlement, all of our derivative contracts qualify for hedge accounting.
Under Canadian GAAP, the proceeds are being deferred and amortized against the dividends on these preferred shares over the remaining original terms of the swaps. Under United States GAAP, these dividend rate swaps did not qualify for hedge accounting and were recorded on the balance sheet at fair value. As a result, the amortization of the deferred gain under Canadian GAAP is reversed for United States GAAP purposes.
l) Impact
of adopting new accounting standards
Consolidation of variable interest entities
Effective July 1, 2003, we adopted FASB Interpretation (FIN) No. 46, Consolidation
of Variable Interest Entities, on a prospective basis. This interpretation clarifies
how to apply Accounting Research Bulletin No. 51, Consolidated Financial Statements,
to variable interest entities when equity investors are not considered to have
a controlling financial interest or they have not invested enough equity to
allow the entity to finance its activities without additional subordinated financial
support from other parties.
We determined a transitional loss of $25 million net of tax in the third quarter of 2003. We recorded it as a cumulative effect of a change in accounting policy as of July 1, 2003, as required by the transitional provisions of FIN No. 46. Under Canadian GAAP, the transitional loss is recorded as an adjustment to retained earnings. See Note 1, Significant accounting policies, in our 2003 annual report for a summary of how this affected our consolidated financial statements.
5
Certification
of Interim Filings
during Transition Period
I, Michael J. Sabia, President and Chief Executive Officer of BCE Inc., certify that:
1. | I
have reviewed the interim filings (as this term is defined in Multilateral
Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim
Filings) of BCE Inc. (the issuer) for the interim period ending September
30, 2004; |
2. | Based
on my knowledge, the interim filings do not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
or that is necessary to make a statement not misleading in light of the
circumstances under which it was made, with respect to the period covered
by the interim filings; and |
3. | Based
on my knowledge, the interim financial statements together with the other
financial information included in the interim filings fairly present in
all material respects the financial condition, results of operations and
cash flows of the issuer, as of the date and for the periods presented
in the interim filings. |
Dated: November 2, 2004 | By: |
(signed) Michael J. Sabia |
Michael J. Sabia President and Chief Executive Officer BCE Inc. |
Certification
of Interim Filings
during Transition Period
I, Siim A. Vanaselja, Chief Financial Officer of BCE Inc., certify that:
1. |
I have reviewed the interim filings (as this term is defined in Multilateral
Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim
Filings) of BCE Inc. (the issuer) for the interim period ending September
30, 2004; |
2. |
Based on my knowledge, the interim filings do not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
or that is necessary to make a statement not misleading in light of the
circumstances under which it was made, with respect to the period covered
by the interim filings; and |
3. |
Based on my knowledge, the interim financial statements together with
the other financial information included in the interim filings fairly
present in all material respects the financial condition, results of operations
and cash flows of the issuer, as of the date and for the periods presented
in the interim filings. |
Dated: November 2, 2004 | By: |
(signed) Siim A. Vanaselja |
Siim A. Vanaselja Chief Financial Officer BCE Inc. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BCE Inc. | |
(signed) Michael T. Boychuk | |
|
|
Michael T. Boychuk | |
Senior Vice-President and Treasurer | |
Date: November 3, 2004 |