Bell says: (It appears a lot of stuff you used to see on balance sheets it not GAAP as in:
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 these items because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. 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 company’s pension plans. Excluding restructuring and other items does not imply they are necessarily non-recurring.
EBITDA allows us to compare our operating performance on a consistent basis. We believe that certain investors and analysts use EBITDA to measure a company’s ability to service debt and to meet other payment obligations, or as a common measurement to value companies in the telecommunications industry.
The most comparable Canadian GAAP financial measure is operating income. The following tables are reconciliations of operating income to EBITDA on a consolidated basis for BCE and Bell Canada.
BCE
2006 2005
Operating income
3,332 3,759
Amortization expense
3,129 3,061
Net benefit plans cost
513 359
Restructuring and other items
355 55
EBITDA
7,329 7,234
BELL CANADA
2006 2005
Operating income
3,353 3,755
Amortization expense
3,073 2,989
Net benefit plans cost
531 389
Restructuring and other items
332 54
EBITDA
7,289 7,187
operating income before restructuring and other items
The term operating income before restructuring and other items does not have any standardized meaning according to Canadian GAAP. It is therefore unlikely to be comparable to similar measures presented by other companies.
We use operating income before restructuring and other items, among other measures, to assess the operating performance of our ongoing businesses without the effects of restructuring and other items. We exclude these items because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. Excluding restructuring and other items does not imply they are necessarily non-recurring.
The most comparable Canadian GAAP financial measure is operating income. The following tables are reconciliations of operating income to operating income before restructuring and other items on a consolidated basis for BCE and Bell Canada.
BCE
2006 2005
Operating income
3,332 3,759
Restructuring and other items
355 55
Operating income before restructuring and other items
3,687 3,814
BELL CANADA
2006 2005
Operating income
3,353 3,755
Restructuring and other items
332 54
Operating income before restructuring and other items
3,685 3,809
net earnings before restructuring and other items, net gains on investments, and costs incurred to form bell aliant
The term net earnings before restructuring and other items, net gains on investments, and costs incurred to form Bell Aliant does not have any standardized meaning according to Canadian GAAP. It is therefore unlikely to be comparable to similar measures presented by other companies.
We use net earnings before restructuring and other items, net gains on investments and costs incurred to form Bell Aliant, among other measures, to assess the operating performance of our ongoing businesses without the effects of restructuring and other items, net gains on investments and costs incurred to form Bell Aliant. We exclude these items because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. Excluding these items does not imply they are necessarily non-recurring.
The most comparable Canadian GAAP financial measure is net earnings applicable to common shares. The following table is a reconciliation of net earnings applicable to common shares to net earnings before restructuring and other items, net gains on investments and costs incurred to form Bell Aliant on a consolidated basis and per BCE Inc. common share.
2006 2005
TOTAL PER SHARE TOTAL PER SHARE
Net earnings applicable to common shares
1,937 2.25 1,891 2.04
Restructuring and other items (1)
222 0.26 37 0.04
Net gains on investments (2)
(525) (0.61) (27) (0.03)
Other costs incurred to form Bell Aliant (3)
42 0.05 – –
Net earnings before restructuring and other items, net gains on investments, and costs incurred to form Bell Aliant
1,676 1.95 1,901 2.05
(1) Includes transaction costs associated with the formation of Bell Aliant. These costs relate mainly to investment banking, professional and consulting fees. In 2006, we incurred $138 million ($77 million after tax and non-controlling interest).
(2) Amounts for 2006 include the recognition of a future tax asset of $434 million, representing the tax-effected amount of approximately $2,341 million of previously unrecognized capital loss carryforwards as realization of the loss carryforwards now is more likely than not due to the anticipated gain on the sale of Telesat.
(3) Includes premium costs incurred by Bell Aliant on early redemption of long-term debt as a result of the formation of Bell Aliant. In 2006, we incurred $122 million ($42 million after tax and non-controlling interest).
free cash flow
The term free cash flow does not have any standardized meaning according to Canadian GAAP. It is therefore unlikely to be comparable to similar measures presented by other companies.
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 reinvest in our company. We present free cash flow consistently from period to period, which allows us to compare our financial performance on a consistent basis.
We believe that certain investors and analysts use free cash flow to value a business and its underlying assets.
The most comparable Canadian GAAP financial measure is cash from operating activities. The following table is a reconciliation of cash from operating activities to free cash flow on a consolidated basis.
2006 2005
Cash from operating activities
5,389 5,337
Capital expenditures
(3,133) (3,357)
Total dividends paid
(1,546) (1,450)
Other investing activities
(2) 39
Free cash flow
708 569
EC<:-} |
