EX-3 4 suppq209.htm SUPPLEMENTARY FINANCIAL INFORMATION - Q2 2009 BCE Inc. Supplementary Financial Information – Second Quarter 2009

EXHIBIT 3

 

BCE Inc. (1)
Consolidated Operational Data

($ millions, except per share amounts) (unaudited)

  Q2       Q2                   YTD       YTD              
  2009       2008       $ change   % change       2009       2008       $ change   % change  

Operating revenues

  4,302       4,394       (92 ) (2.1 %)     8,639       8,760       (121 ) (1.4 %)

Cost of revenue, exclusive of depreciation and amortization

  (1,029 )     (1,071 )     42   3.9 %     (2,116 )     (2,128 )     12   0.6 %

Selling, general and administrative expenses (A)

  (1,393 )     (1,509 )     116   7.7 %     (2,798 )     (2,996 )     198   6.6 %

Net benefit plans cost

  (88 )     (70 )     (18 ) (25.7 %)     (176 )     (141 )     (35 ) (24.8 %)

EBITDA (3)

  1,792       1,744       48   2.8 %     3,549       3,495       54   1.5 %

EBITDA margin (4)

  41.7 %     39.7 %         2.0  pts     41.1 %     39.9 %         1.2  pts

Depreciation

  (629 )     (612 )     (17 ) (2.8 %)     (1,254 )     (1,235 )     (19 ) (1.5 %)

Amortization of intangible assets

  (192 )     (175 )     (17 ) (9.7 %)     (385 )     (370 )     (15 ) (4.1 %)

Restructuring and other

  (146 )     (71 )     (75 ) n.m.       (255 )     (354 )     99   28.0 %

Operating income

  825       886       (61 ) (6.9 %)     1,655       1,536       119   7.7 %

Other (expense) income

  (25 )     5       (30 ) n.m.       (23 )     27       (50 ) n.m.  

Interest expense

  (179 )     (193 )     14   7.3 %     (370 )     (391 )     21   5.4 %

Pre-tax earnings from continuing operations

  621       698       (77 ) (11.0 %)     1,262       1,172       90   7.7 %

Income taxes

  (167 )     (195 )     28   14.4 %     (314 )     (304 )     (10 ) (3.3 %)

Non-controlling interest

  (79 )     (88 )     9   10.2 %     (162 )     (162 )     -   0.0 %

Earnings from continuing operations

  375       415       (40 ) (9.6 %)     786       706       80   11.3 %

Discontinued operations

  (3 )     (23 )     20   87.0 %     (8 )     (25 )     17   68.0 %

Net earnings

  372       392       (20 ) (5.1 %)     778       681       97   14.2 %

Dividends on preferred shares

  (26 )     (31 )     5   16.1 %     (55 )     (62 )     7   11.3 %

Net earnings applicable to common shares

  346       361       (15 ) (4.2 %)     723       619       104   16.8 %

Net earnings per common share – basic

                                                     

Continuing operations

$ 0.46     $ 0.48     $ (0.02 ) (4.2 %)   $ 0.94     $ 0.80     $ 0.14   17.5 %

Discontinued operations

$ (0.01 )   $ (0.03 )   $ 0.02   66.7 %   $ (0.01 )   $ (0.03 )   $ 0.02   66.7 %

Net earnings

$ 0.45     $ 0.45     $ -   0.0 %   $ 0.93     $ 0.77     $ 0.16   20.8 %

Net earnings per common share – diluted

                                                     

Continuing operations

$ 0.46     $ 0.48     $ (0.02 ) (4.2 %)   $ 0.94     $ 0.80     $ 0.14   17.5 %

Discontinued operations

$ (0.01 )   $ (0.03 )   $ 0.02   66.7 %   $ (0.01 )   $ (0.03 )   $ 0.02   66.7 %

Net earnings

$ 0.45     $ 0.45     $ -   0.0 %   $ 0.93     $ 0.77     $ 0.16   20.8 %

Dividends per common share

$ 0.385     $ -     $ 0.385   n.m.     $ 0.770     $ 0.365     $ 0.405   n.m.  

Average number of common shares outstanding – basic (millions)

  769.0       805.6                   778.6       805.4              

Average number of common shares outstanding – diluted (millions)

  769.0       807.2                   778.6       807.1              
                                                       

The following items are included in net earnings:

                                                     

Net gains (losses) on investments

                                                     

Continuing operations

  -       4       (4 ) (100.0 %)     1       2       (1 ) (50.0 %)

Discontinued operations

  (3 )     (20 )     17   85.0 %     (3 )     (20 )     17   85.0 %

Restructuring and other

  (98 )     (48 )     (50 ) n.m.       (168 )     (245 )     77   31.4 %

Total

  (101 )     (64 )     (37 ) (57.8 %)     (170 )     (263 )     93   35.4 %

Impact on net earnings per share

$ (0.13 )   $ (0.08 )   $ (0.05 ) (62.5 %)   $ (0.22 )   $ (0.33 )   $ 0.11   33.3 %

Adjusted EPS (3)

$ 0.58     $ 0.53     $ 0.05   9.4 %   $ 1.15     $ 1.10     $ 0.05   4.5 %
                                                       
(A) Excludes net benefit plans cost                                                      

n.m. : not meaningful

                                                     

BCE Inc. Supplementary Financial Information – Second Quarter 2009 Page 2

BCE Inc.
Consolidated Operational Data – Historical Trend

($ millions, except per share amounts) (unaudited)

  YTD                       Total                            
  2009         Q2 09     Q1 09       2008       Q4 08     Q3 08     Q2 08     Q1 08  

Operating revenues

  8,639         4,302     4,337       17,685       4,483     4,442     4,394     4,366  

Cost of revenue, exclusive of depreciation and amortization

  (2,116 )       (1,029 )   (1,087 )     (4,390 )     (1,174 )   (1,088 )   (1,071 )   (1,057 )

Selling, general and administrative expenses (A)

  (2,798 )       (1,393 )   (1,405 )     (6,039 )     (1,528 )   (1,515 )   (1,509 )   (1,487 )

Net benefit plans cost

  (176 )       (88 )   (88 )     (250 )     (40 )   (69 )   (70 )   (71 )

EBITDA

  3,549         1,792     1,757       7,006       1,741     1,770     1,744     1,751  

EBITDA margin

  41.1 %       41.7 %   40.5 %     39.6 %     38.8 %   39.8 %   39.7 %   40.1 %

Depreciation

  (1,254 )       (629 )   (625 )     (2,537 )     (683 )   (619 )   (612 )   (623 )

Amortization of intangible assets

  (385 )       (192 )   (193 )     (730 )     (186 )   (174 )   (175 )   (195 )

Restructuring and other

  (255 )       (146 )   (109 )     (871 )     (207 )   (310 )   (71 )   (283 )

Operating income

  1,655         825     830       2,868       665     667     886     650  

Other (expense) income

  (23 )       (25 )   2       (252 )     (281 )   2     5     22  

Interest expense

  (370 )       (179 )   (191 )     (791 )     (207 )   (193 )   (193 )   (198 )

Pre-tax earnings from continuing operations

  1,262         621     641       1,825       177     476     698     474  

Income taxes

  (314 )       (167 )   (147 )     (469 )     (84 )   (81 )   (195 )   (109 )

Non-controlling interest

  (162 )       (79 )   (83 )     (323 )     (70 )   (91 )   (88 )   (74 )

Earnings from continuing operations

  786         375     411       1,033       23     304     415     291  

Discontinued operations

  (8 )       (3 )   (5 )     (90 )     (41 )   (24 )   (23 )   (2 )

Net earnings (loss)

  778         372     406       943       (18 )   280     392     289  

Dividends on preferred shares

  (55 )       (26 )   (29 )     (124 )     (30 )   (32 )   (31 )   (31 )

Net earnings (loss) applicable to common shares

  723         346     377       819       (48 )   248     361     258  

Net earnings (loss) per common share – basic

                                                       

Continuing operations

$ 0.94     $   0.46   $ 0.48     $ 1.13     $ (0.01 ) $ 0.34   $ 0.48   $ 0.32  

Discontinued operations

$ (0.01 )   $   (0.01 ) $ -     $ (0.11 )   $ (0.05 ) $ (0.03 ) $ (0.03 ) $ -  

Net earnings

$ 0.93     $   0.45   $ 0.48     $ 1.02     $ (0.06 ) $ 0.31   $ 0.45   $ 0.32  

Net earnings (loss) per common share – diluted

                                                       

Continuing operations

$ 0.94     $   0.46   $ 0.48     $ 1.12     $ (0.01 ) $ 0.33   $ 0.48   $ 0.32  

Discontinued operations

$ (0.01 )   $   (0.01 ) $ -     $ (0.11 )   $ (0.05 ) $ (0.03 ) $ (0.03 ) $ -  

Net earnings

$ 0.93     $   0.45   $ 0.48     $ 1.01     $ (0.06 ) $ 0.30   $ 0.45   $ 0.32  

Dividends per common share

$ 0.770     $   0.385   $ 0.385     $ 0.730     $ 0.365   $ -   $ -   $ 0.365  

Average number of common shares outstanding – basic (millions)

  778.6         769.0     788.3       805.8       806.4     806.0     805.6     805.3  

Average number of common shares outstanding – diluted (millions)

  778.6         769.0     788.3       807.2       806.9     808.3     807.2     807.1  
                                                         

The following items are included in net earnings (loss):

                                                       

Net gains (losses) on investments

                                                       

Continuing operations

  1         -     1       (358 )     (346 )   (14 )   4     (2 )

Discontinued operations

  (3 )       (3 )   -       (62 )     (26 )   (16 )   (20 )   -  

Restructuring and other

  (168 )       (98 )   (70 )     (572 )     (117 )   (210 )   (48 )   (197 )

Total

  (170 )       (101 )   (69 )     (992 )     (489 )   (240 )   (64 )   (199 )

Impact on net earnings per share

$ (0.22 )   $   (0.13 ) $ (0.09 )   $ (1.23 )   $ (0.61 ) $ (0.29 ) $ (0.08 ) $ (0.25 )

Adjusted EPS

$ 1.15     $   0.58   $ 0.57     $ 2.25     $ 0.55   $ 0.60   $ 0.53   $ 0.57  

(A) Excludes net benefit plans cost

BCE Inc. Supplementary Financial Information – Second Quarter 2009 Page 3

BCE Inc.
Segmented Data (2)

($ millions, except where otherwise indicated) (unaudited)

Q2   Q2               YTD   YTD            
2009   2008     $ change   % change     2009   2008     $ change   % change  
                                       

Revenues

                                     

Bell Wireline

2,575   2,627     (52 ) (2.0 %)   5,167   5,282     (115 ) (2.2 %)

Bell Wireless

1,104   1,120     (16 ) (1.4 %)   2,182   2,171     11   0.5 %

Inter-segment eliminations

(51 ) (64 )   13   20.3 %   (99 ) (122 )   23   18.9 %

Total Bell

3,628   3,683     (55 ) (1.5 %)   7,250   7,331     (81 ) (1.1 %)

Bell Aliant

790   835     (45 ) (5.4 %)   1,614   1,691     (77 ) (4.6 %)

Inter-segment eliminations

(116 ) (124 )   8   6.5 %   (225 ) (262 )   37   14.1 %

Total BCE Inc.

4,302   4,394     (92 ) (2.1 %)   8,639   8,760     (121 ) (1.4 %)
                                       

EBITDA

                                     

Bell Wireline

982   966     16   1.7 %   1,974   1,978     (4 ) (0.2 %)

Margin

38.1 % 36.8 %       1.3  pts   38.2 % 37.4 %       0.8  pts

Bell Wireless

468   442     26   5.9 %   902   852     50   5.9 %

Margin

42.4 % 39.5 %       2.9  pts   41.3 % 39.2 %       2.1  pts

Total Bell

1,450   1,408     42   3.0 %   2,876   2,830     46   1.6 %

Margin

40.0 % 38.2 %       1.8  pts   39.7 % 38.6 %       1.1  pts

Bell Aliant

342   336     6   1.8 %   673   665     8   1.2 %

Margin

43.3 % 40.2 %       3.1  pts   41.7 % 39.3 %       2.4  pts

Total BCE Inc.

1,792   1,744     48   2.8 %   3,549   3,495     54   1.5 %

Margin

41.7 % 39.7 %       2.0  pts   41.1 % 39.9 %       1.2  pts
                                       

Operating income

                                     

Bell Wireline

290   370     (80 ) (21.6 %)   639   551     88   16.0 %

Bell Wireless

338   316     22   7.0 %   638   609     29   4.8 %

Total Bell

628   686     (58 ) (8.5 %)   1,277   1,160     117   10.1 %

Bell Aliant

197   200     (3 ) (1.5 %)   378   376     2   0.5 %

Total BCE Inc.

825   886     (61 ) (6.9 %)   1,655   1,536     119   7.7 %
                                       

Capital expenditures

                                     

Bell Wireline

455   479     24   5.0 %   807   868     61   7.0 %

Capital Intensity (5)

17.7 % 18.2 %       0.5  pts   15.6 % 16.4 %       0.8  pts

Bell Wireless

224   104     (120 ) n.m.     354   171     (183 ) n.m.  

Capital intensity

20.3 % 9.3 %       (11.0 ) pts   16.2 % 7.9 %       (8.3 ) pts

Total Bell

679   583     (96 ) (16.5 %)   1,161   1,039     (122 ) (11.7 %)

Capital Intensity

18.7 % 15.8 %       (2.9 ) pts   16.0 % 14.2 %       (1.8 ) pts

Bell Aliant

121   127     6   4.7 %   229   222     (7 ) (3.2 %)

Capital Intensity

15.3 % 15.2 %       (0.1 ) pts   14.2 % 13.1 %       (1.1 ) pts

Total BCE Inc.

800   710     (90 ) (12.7 %)   1,390   1,261     (129 ) (10.2 %)

Capital Intensity

18.6 % 16.2 %       (2.4 ) pts   16.1 % 14.4 %       (1.7 ) pts
                                       

BCE Inc. Supplementary Financial Information – Second Quarter 2009 Page 4

BCE Inc.
Segmented Data – Historical Trend

($ millions, except where otherwise indicated) (unaudited)

YTD               Total                    
2009     Q2 09   Q1 09     2008     Q4 08   Q3 08   Q2 08   Q1 08  
                                       

Revenues

                                     

Bell Wireline

5,167     2,575   2,592     10,640     2,726   2,632   2,627   2,655  

Bell Wireless

2,182     1,104   1,078     4,479     1,133   1,175   1,120   1,051  

Inter-segment eliminations

(99 )   (51 ) (48 )   (248 )   (61 ) (65 ) (64 ) (58 )

Total Bell

7,250     3,628   3,622     14,871     3,798   3,742   3,683   3,648  

Bell Aliant

1,614     790   824     3,321     813   817   835   856  

Inter-segment eliminations

(225 )   (116 ) (109 )   (507 )   (128 ) (117 ) (124 ) (138 )

Total BCE Inc.

8,639     4,302   4,337     17,685     4,483   4,442   4,394   4,366  
                                       

EBITDA

                                     

Bell Wireline

1,974     982   992     3,868     937   953   966   1,012  

Margin

38.2 %   38.1 % 38.3 %   36.4 %   34.4 % 36.2 % 36.8 % 38.1 %

Bell Wireless

902     468   434     1,770     444   474   442   410  

Margin

41.3 %   42.4 % 40.3 %   39.5 %   39.2 % 40.3 % 39.5 % 39.0 %

Total Bell

2,876     1,450   1,426     5,638     1,381   1,427   1,408   1,422  

Margin

39.7 %   40.0 % 39.4 %   37.9 %   36.4 % 38.1 % 38.2 % 39.0 %

Bell Aliant

673     342   331     1,368     360   343   336   329  

Margin

41.7 %   43.3 % 40.2 %   41.2 %   44.3 % 42.0 % 40.2 % 38.4 %

Total BCE Inc.

3,549     1,792   1,757     7,006     1,741   1,770   1,744   1,751  

Margin

41.1 %   41.7 % 40.5 %   39.6 %   38.8 % 39.8 % 39.7 % 40.1 %
                                       

Operating income

                                     

Bell Wireline

639     290   349     902     226   125   370   181  

Bell Wireless

638     338   300     1,241     294   338   316   293  

Total Bell

1,277     628   649     2,143     520   463   686   474  

Bell Aliant

378     197   181     725     145   204   200   176  

Total BCE Inc.

1,655     825   830     2,868     665   667   886   650  
                                       

Capital expenditures

                                     

Bell Wireline

807     455   352     1,966     625   473   479   389  

Capital Intensity

15.6 %   17.7 % 13.6 %   18.5 %   22.9 % 18.0 % 18.2 % 14.7 %

Bell Wireless

354     224   130     493     229   93   104   67  

Capital intensity

16.2 %   20.3 % 12.1 %   11.0 %   20.2 % 7.9 % 9.3 % 6.4 %

Total Bell

1,161     679   482     2,459     854   566   583   456  

Capital Intensity

16.0 %   18.7 % 13.3 %   16.5 %   22.5 % 15.1 % 15.8 % 12.5 %

Bell Aliant

229     121   108     529     168   139   127   95  

Capital Intensity

14.2 %   15.3 % 13.1 %   15.9 %   20.7 % 17.0 % 15.2 % 11.1 %

Total BCE Inc.

1,390     800   590     2,988     1,022   705   710   551  

Capital Intensity

16.1 %   18.6 % 13.6 %   16.9 %   22.8 % 15.9 % 16.2 % 12.6 %

BCE Inc. Supplementary Financial Information – Second Quarter 2009 Page 5

Bell Wireline (2)

 

Q2   Q2           YTD   YTD        

($ millions, except where otherwise indicated) (unaudited)

2009   2008     % change     2009   2008     % change  

Bell Wireline

                             

Local & access

796   845     (5.8 %)   1,601   1,702     (5.9 %)

Long distance

271   298     (9.1 %)   549   596     (7.9 %)

Data

919   894     2.8 %   1,831   1,798     1.8 %

Video

389   356     9.3 %   776   712     9.0 %

Equipment & other

119   143     (16.8 %)   252   296     (14.9 %)

Total external revenues

2,494   2,536     (1.7 %)   5,009   5,104     (1.9 %)

Inter-segment revenues

81   91     (11.0 %)   158   178     (11.2 %)

Total Bell Wireline operating revenue

2,575   2,627     (2.0 %)   5,167   5,282     (2.2 %)

Operating expenses

(1,593 ) (1,661 )   4.1 %   (3,193 ) (3,304 )   3.4 %

EBITDA

982   966     1.7 %   1,974   1,978     (0.2 %)

EBITDA Margin

38.1 % 36.8 %   1.3  pts   38.2 % 37.4 %   0.8  pts

Operating income

290   370     (21.6 %)   639   551     16.0 %
                               

Capital expenditures

455   479     5.0 %   807   868     7.0 %

Capital intensity

17.7 % 18.2 %   0.5  pts   15.6 % 16.4 %   0.8  pts
                               

Local

                             

Network access services (NAS) (k)

                             

Residential

4,053   4,375     (7.4 %)   4,053   4,375     (7.4 %)

Business

3,147   3,233     (2.7 %)   3,147   3,233     (2.7 %)

Total

7,200   7,608     (5.4 %)   7,200   7,608     (5.4 %)

Network access service net (losses)/activations (k)

                             

Residential

(100 ) (125 )   20.0 %   (178 ) (231 )   22.9 %

Business

(32 ) (7 )   n.m.     (58 ) (20 )   n.m.  

Total

(132 ) (132 )   0.0 %   (236 ) (251 )   6.0 %

Long Distance (LD)

                             

Conversation minutes (M)

2,915   2,985     (2.3 %)   5,766   5,915     (2.5 %)

Average revenue per minute ($)

0.084   0.089     (5.6 %)   0.085   0.091     (6.6 %)

Internet

                             

High Speed Internet net activations (k)

2   (1 )   n.m.     8   9     (11.1 %)

High Speed Internet subscribers EOP (k)

2,062   2,013     2.4 %   2,062   2,013     2.4 %

Video (DTH and VDSL)

                             

Video EBITDA

91   47     93.6 %   183   124     47.6 %

Net subscriber activations (k)

20   8     n.m.     32   9     n.m.  

Total subscribers EOP (k)

1,884   1,831     2.9 %   1,884   1,831     2.9 %

ARPU (6) ($/month)

68.98   64.47     7.0 %   68.91   64.56     6.7 %

Churn (7) (%) (average per month)

1.1 % 1.1 %
 
0.0  pts
 
1.1 % 1.1 %
 
0.0  pts

BCE Inc. Supplementary Financial Information – Second Quarter 2009 Page 6

Bell Wireline – Historical Trend

($ millions, except where otherwise indicated) (unaudited)

YTD               Total                    
2009     Q2 09   Q1 09     2008     Q4 08   Q3 08   Q2 08   Q1 08  

Bell Wireline

                                     

Local & access

1,601     796   805     3,360     825   833   845   857  

Long distance

549     271   278     1,165     279   290   298   298  

Data

1,831     919   912     3,723     1,011   914   894   904  

Video

776     389   387     1,450     375   363   356   356  

Equipment & other

252     119   133     574     143   135   143   153  

Total external revenues

5,009     2,494   2,515     10,272     2,633   2,535   2,536   2,568  

Inter-segment revenues

158     81   77     368     93   97   91   87  

Total Bell Wireline operating revenue

5,167     2,575   2,592     10,640     2,726   2,632   2,627   2,655  

Operating expenses

(3,193 )   (1,593 ) (1,600 )   (6,772 )   (1,789 ) (1,679 ) (1,661 ) (1,643 )

EBITDA

1,974     982   992     3,868     937   953   966   1,012  

EBITDA Margin

38.2 %   38.1 % 38.3 %   36.4 %   34.4 % 36.2 % 36.8 % 38.1 %

Operating income

639     290   349     902     226   125   370   181  
                                       

Capital expenditures

807     455   352     1,966     625   473   479   389  

Capital intensity

15.6 %   17.7 % 13.6 %   18.5 %   22.9 % 18.0 % 18.2 % 14.7 %
                                       

Local

                                     

Network access services (NAS) (k)

                                     

Residential (A)

4,053     4,053   4,153     4,231     4,231   4,303   4,375   4,500  

Business (B)

3,147     3,147   3,179     3,205     3,205   3,233   3,233   3,240  

Total

7,200     7,200   7,332     7,436     7,436   7,536   7,608   7,740  

Network access service net (losses)/activations (k)

                                     

Residential

(178 )   (100 ) (78 )   (375 )   (72 ) (72 ) (125 ) (106 )

Business (B)

(58 )   (32 ) (26 )   (48 )   (28 ) -   (7 ) (13 )

Total

(236 )   (132 ) (104 )   (423 )   (100 ) (72 ) (132 ) (119 )

Long Distance (LD)

                                     

Conversation minutes (M)

5,766     2,915   2,851     11,771     3,003   2,853   2,985   2,930  

Average revenue per minute ($)

0.085     0.084   0.085     0.089     0.082   0.093   0.089   0.093  

Internet

                                     

High Speed Internet net activations (k)

8     2   6     50     8   33   (1 ) 10  

High Speed Internet subscribers EOP (k)

2,062     2,062   2,060     2,054     2,054   2,046   2,013   2,014  

Video (DTH and VDSL)

                                     

Video EBITDA

183     91   92     282     82   76   47   77  

Net subscriber activations (k)

32     20   12     30     14   7   8   1  

Total subscribers EOP (k)

1,884     1,884   1,864     1,852     1,852   1,838   1,831   1,823  

ARPU ($/month)

68.91     68.98   68.84     65.37     67.15   65.20   64.47   64.65  

Churn (%) (average per month)

1.1 %   1.1 % 1.1 %   1.2 %   1.3 % 1.4 % 1.1 % 1.1 %
 
(A)

At the beginning of Q1 2008, an adjustment of 44k was made to our NAS count, reflecting an extensive review of our historical customer account records.
(B)

In Q1 2008, we adjusted our beginning-of-period business NAS customer base to write-off 273k lines following formal notification received from a major wholesale customer in Q4 2007 that it was in the process of migrating all of its subscribers onto its own network facilities.

BCE Inc. Supplementary Financial Information – Second Quarter 2009 Page 7

Bell Wireless (2)

($ millions, except where otherwise indicated) (unaudited)

Q2   Q2           YTD   YTD        
2009   2008     % change     2009   2008     % change  

Bell Wireless

                             

Revenue

                             

Service

1,005   1,008     (0.3 %)   1,991   1,964     1.4 %

Product

88   99     (11.1 %)   170   181     (6.1 %)

Total external Bell Wireless revenues

1,093   1,107     (1.3 %)   2,161   2,145     0.7 %

Inter-segment

11   13     (15.4 %)   21   26     (19.2 %)

Total Bell Wireless operating revenues

1,104   1,120     (1.4 %)   2,182   2,171     0.5 %

Operating expenses

(636 ) (678 )   6.2 %   (1,280 ) (1,319 )   3.0 %

EBITDA

468   442     5.9 %   902   852     5.9 %

EBITDA margin (Total revenues)

42.4 % 39.5 %   2.9  pts   41.3 % 39.2 %   2.1  pts

EBITDA margin (Service revenues)

46.6 % 43.8 %   2.8  pts   45.3 % 43.4 %   1.9  pts

Operating Income

338   316     7.0 %   638   609     4.8 %
                               

Capital expenditures

224   104     n.m.     354   171     n.m.  

Capital intensity

20.3 % 9.3 %   (11.0 ) pts   16.2 % 7.9 %   (8.3 ) pts
                               

Wireless gross activations (A) (k)

404   391     3.3 %   770   742     3.8 %

Post-paid

244   253     (3.6 %)   454   451     0.7 %

Wireless net activations (A) (k)

45   83     (45.8 %)   75   117     (35.9 %)

Post-paid

64   111     (42.3 %)   99   139     (28.8 %)

Wireless subscribers EOP (A) (k)

6,572   6,332     3.8 %   6,572   6,332     3.8 %

Post-paid

4,844   4,595     5.4 %   4,844   4,595     5.4 %

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

52.05   54.27     (4.1 %)   51.79   53.30     (2.8 %)

Pre-paid

16.41   17.48     (6.1 %)   15.89   16.99     (6.5 %)

Post-paid

62.58   66.19     (5.5 %)   62.46   65.24     (4.3 %)

Churn (%) (B) (average per month)

1.7 % 1.6 %   (0.1 ) pts   1.7 % 1.6 %   (0.1 ) pts

Pre-paid

3.3 % 3.0 %   (0.3 ) pts   3.1 % 2.9 %   (0.2 ) pts

Post-paid

1.3 % 1.1 %   (0.2 ) pts   1.3 % 1.2 %   (0.1 ) pts

Usage per subscriber (B) (min/month)

316   305     3.6 %   304   293     3.8 %

Cost of acquisition (COA) (B) (8) ($/sub)

356   417     14.6 %   375   407     7.9 %
 
(A) Total wireless gross activations, net activations and EOP subscribers include 100% of Virgin Mobile’s subscribers.
(B)

Wireless average revenue per unit, churn, usage per subscriber and cost of acquisition reflect only the 50% portion of Virgin Mobile’s results that are consolidated.

 

BCE Inc. Supplementary Financial Information – Second Quarter 2009  Page 8

 

Bell Wireless – Historical Trend

($ millions, except where otherwise indicated) (unaudited)

YTD               Total                    
2009     Q2 09   Q1 09     2008     Q4 08   Q3 08   Q2 08   Q1 08  

Bell Wireless

                                     

Revenue

                                     

Service

1,991     1,005   986     4,059     1,033   1,062   1,008   956  

Product

170     88   82     375     90   104   99   82  

Total external Bell Wireless revenues

2,161     1,093   1,068     4,434     1,123   1,166   1,107   1,038  

Inter-segment

21     11   10     45     10   9   13   13  

Total Bell Wireless operating revenues

2,182     1,104   1,078     4,479     1,133   1,175   1,120   1,051  

Operating expenses

(1,280 )   (636 ) (644 )   (2,709 )   (689 ) (701 ) (678 ) (641 )

EBITDA

902     468   434     1,770     444   474   442   410  

EBITDA margin (Total revenues)

41.3 %   42.4 % 40.3 %   39.5 %   39.2 % 40.3 % 39.5 % 39.0 %

EBITDA margin (Service revenues)

45.3 %   46.6 % 44.0 %   43.6 %   43.0 % 44.6 % 43.8 % 42.9 %

Operating Income

638     338   300     1,241     294   338   316   293  

 

                                      

Capital expenditures

354     224   130     493     229   93   104   67  

Capital intensity

16.2 %   20.3 % 12.1 %   11.0 %   20.2 % 7.9 % 9.3 % 6.4 %

 

                                      

Wireless gross activations (A) (k)

770     404   366     1,651     470   439   391   351  

Post-paid

454     244   210     970     252   267   253   198  

Wireless net activations (A) (k)

75     45   30     351     117   117   83   34  

Post-paid

99     64   35     332     80   113   111   28  

Wireless subscribers EOP (A) (B) (C) (k)

6,572     6,572   6,527     6,497     6,497   6,449   6,332   6,250  

Post-paid

4,844     4,844   4,780     4,745     4,745   4,708   4,595   4,478  

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

51.79     52.05   51.52     54.29     54.22   56.30   54.27   52.32  

Pre-paid

15.89     16.41   15.38     17.14     16.40   18.19   17.48   16.50  

Post-paid

62.46     62.58   62.34     66.09     65.69   68.17   66.19   64.27  

Churn (%) (D) (average per month)

1.7 %   1.7 % 1.6 %   1.6 %   1.7 % 1.6 % 1.6 % 1.6 %

Pre-paid

3.1 %   3.3 % 2.9 %   3.1 %   3.3 % 3.2 % 3.0 % 2.8 %

Post-paid

1.3 %   1.3 % 1.2 %   1.2 %   1.3 % 1.1 % 1.1 % 1.3 %

Usage per subscriber (D) (min/month)

304     316   293     301     310   302   305   281  

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

375     356   397     395     373   398   417   396  
 
(A)

Total wireless gross activations, net activations and EOP subscribers include 100% of Virgin Mobile’s subscribers.
(B) The Q2 2008 beginning of period wireless subscriber base was decreased by 1k (postpaid increased by 6k while pre-paid decreased by 7k) as a result of the integration of Aliant Mobility’s billing system.
(C) The Q4 2008 Wireless subscriber base reflected the removal of 37k analog subscribers (11k postpaid, 26k prepaid) due to the decommissioning of the analog network. Additionally, the tightening of Virgin Mobile Canada credit and activation processes resulted in 32k Virgin postpaid subscribers being removed from the subscriber base. These adjustments are not included in the net activation or churn metrics.
(D)

Wireless average revenue per unit, churn, usage per subscriber and cost of acquisition reflect only the 50% portion of Virgin Mobile’s results that are consolidated.

 

BCE Inc. Supplementary Financial Information – Second Quarter 2009  Page 9

 

     BCE Inc.
Net debt and other information (2)

BCE Inc. – Net debt and preferreds

           

 

            

At June 30, 2009

    BCE Inc.      

(unaudited)

           

($ millions, except where otherwise indicated)

           

 

    Bell      

 

Bell   Aliant   BCE Inc.  

Debt due within one year

1,077   94   1,171  

Long-term debt

7,825   2,748   10,573  

Securitization of accounts receivable

1,140   165   1,305  

Preferred shares – BCE

2,770   -   2,770  

Cash and cash equivalents

(1,749 ) (15 ) (1,764 )

Net debt

11,063   2,992   14,055  

Bell – Balance Sheet Information

           

(unaudited)

           

($ millions, except where otherwise indicated)

June 30   March 31 *  Dec. 31 * 

 

2009   2009   2008  

 

            

Debt due within one year

1,077   1,788   1,878  

Long-term debt

7,825   7,685   7,648  

Securitization of accounts receivable

1,140   1,108   1,140  

Preferred shares – BCE

2,770   2,770   2,770  

Cash and cash equivalents

(1,749 ) (2,339 ) (3,045 )

Net Debt

11,063   11,012   10,391  

 

            

Net Debt: Trailing 12 month EBITDA, including Bell Aliant distributions to BCE

1.85   1.86   1.75  

EBITDA, including Bell Aliant distributions to BCE: Net interest, securitization costs and preferred dividends (trailing 12 months)

8.34   8.24   8.33  

 

* Includes $650 million BCE debt.

Cash Flow Information

                                 

(unaudited)

Q2   Q2             YTD   YTD          

($ millions, except where otherwise indicated)

2009   2008   $ change   % change     2009   2008   $ change   % change  
                                   

Free Cash Flow (FCF)

                                 

Cash from operating activities

1,181   1,193   (12 ) (1.0 %)   1,904   1,914   (10 ) (0.5 %)

Capital expenditures

(679 ) (583 ) (96 ) (16.5 %)   (1,161 ) (1,039 ) (122 ) (11.7 %)

Other investing activities

(28 ) -   (28 ) n.m.     (42 ) 3   (45 ) n.m.  

Dividends paid on preferred shares

(27 ) (32 ) 5   15.6 %   (55 ) (67 ) 12   17.9 %

Bell Aliant distributions to BCE

73   74   (1 ) (1.4 %)   146   145   1   0.7 %

FCF

520   652   (132 ) (20.2 %)   792   956   (164 ) (17.2 %)
                                   

Cash Flow Information – Historical Trend

                                     

(unaudited)

YTD     Q2   Q1     Total     Q4   Q3   Q2   Q1  

($ millions, except where otherwise indicated)

2009     2009   2009     2008     2008   2008   2008   2008  
                                       

Free Cash Flow (FCF)

                                     

Cash from operating activities

1,904     1,181   723     4,716     1,460   1,342   1,193   721  

Capital expenditures

(1,161 )   (679 ) (482 )   (2,459 )   (854 ) (566 ) (583 ) (456 )

Other investing activities

(42 )   (28 ) (14 )   (729 )   -   (732 ) -   3  

Dividends paid on preferred shares

(55 )   (27 ) (28 )   (129 )   (31 ) (31 ) (32 ) (35 )

Bell Aliant distributions to BCE

146     73   73     290     72   73   74   71  

FCF

792     520   272     1,689     647   86   652   304  
                                       

BCE Inc. Supplementary Financial Information – Second Quarter 2009  Page 10

 

BCE Inc.
Consolidated Balance Sheet Data

 

June 30     March 31     December 31  

($ millions, except where otherwise indicated) (unaudited)

2009     2009     2008  

ASSETS

               

Current assets

               

Cash and cash equivalents

1,764     2,359     3,054  

Accounts receivable

1,443     1,670     1,832  

Future income taxes

88     88     86  

Inventory

304     268     272  

Prepaid and other expenses

479     447     303  

Current assets of discontinued operations

5     39     31  

Total current assets

4,083     4,871     5,578  

Capital assets

               

Property, plant and equipment

19,313     19,255     19,407  

Finite-life intangible assets

2,625     2,700     2,695  

Indefinite-life intangible assets

3,724     3,710     3,697  

Total capital assets

25,662     25,665     25,799  

Other long-term assets

2,552     2,662     2,613  

Goodwill

5,659     5,663     5,659  

Non-current assets of discontinued operations

8     15     14  

Total assets

37,964     38,876     39,663  

LIABILITIES

               

Current liabilities

               

Accounts payable and accrued liabilities

3,083     3,140     3,531  

Interest payable

120     167     139  

Dividends payable

338     345     337  

Debt due within one year

1,171     2,196     2,201  

Current liabilities of discontinued operations

15     30     19  

Total current liabilities

4,727     5,878     6,227  

Long-term debt

10,573     10,133     10,099  

Other long-term liabilities

4,939     4,908     4,946  

Total liabilities

20,239     20,919     21,272  

Non-controlling interest

1,063     1,072     1,080  

SHAREHOLDERS’ EQUITY

               

Preferred shares

2,770     2,770     2,770  

Common shareholders’ equity

               

Common shares

12,921     13,148     13,525  

Treasury stock

-     (95 )   (86 )

Contributed surplus

2,488     2,505     2,531  

Accumulated other comprehensive income

69     102     39  

Deficit

(1,586 )   (1,545 )   (1,468 )

Total common shareholders’ equity

13,892     14,115     14,541  

Total shareholders’ equity

16,662     16,885     17,311  

Total liabilities and shareholders’ equity

37,964     38,876     39,663  

Number of common shares outstanding

767.2     780.6     803.1  

BCE Inc. Supplementary Financial Information – Second Quarter 2009  Page 11

 

BCE Inc.
Consolidated Cash Flow Data

($ millions, except where otherwise indicated) (unaudited)

  Q2       Q2               YTD       YTD          
  2009       2008       $ change       2009       2008       $ change  

Cash flows from operating activities

                                             

Net earnings

  372       392       (20 )     778       681       97  

Less: Losses from discontinued operations, net of income taxes and non-controlling interest

  (3 )     (23 )     20       (8 )     (25 )     17  

Earnings from continuing operations

  375       415       (40 )     786       706       80  

Adjustments to reconcile earnings from continuing operations to cash flows from operating activities

                                             

Depreciation and amortization of intangible assets

  821       787       34       1,639       1,605       34  

Net benefit plans cost

  88       70       18       176       141       35  

Restructuring and other

  146       71       75       255       354       (99 )

(Gains) losses on investments

  -       -       -       (2 )     2       (4 )

Future income taxes

  (5 )     92       (97 )     (18 )     25       (43 )

Non-controlling interest

  79       88       (9 )     162       162       -  

Contributions to employee pension plans

  (92 )     (48 )     (44 )     (184 )     (92 )     (92 )

Other employee future benefit plan payments

  (23 )     (24 )     1       (47 )     (47 )     -  

Payments of restructuring and other

  (105 )     (29 )     (76 )     (182 )     (53 )     (129 )

Operating assets and liabilities

  192       117       75       (184 )     (362 )     178  

 

  1,476       1,539       (63 )     2,401       2,441       (40 )

Bell Aliant distributions to BCE

  73       74       (1 )     146       145       1  

Capital expenditures

  (800 )     (710 )     (90 )     (1,390 )     (1,261 )     (129 )

Other investing activities

  (27 )     2       (29 )     (40 )     5       (45 )

Cash dividends paid on preferred shares

  (27 )     (32 )     5       (55 )     (67 )     12  

Cash distributions paid by subsidiaries to non-controlling interest

  (92 )     (92 )     -       (184 )     (182 )     (2 )

Bell Aliant Free Cash Flow

  (83 )     (129 )     46       (86 )     (125 )     39  

Free Cash Flow (3)

  520       652       (132 )     792       956       (164 )

Bell Aliant undistributed Free Cash Flow

  10       55       (45 )     (60 )     (20 )     (40 )

Business acquisitions

  (1 )     (24 )     23       (21 )     (55 )     34  

Business dispositions

  -       -       -       -       (10 )     10  

Going-private costs

  (1 )     (8 )     7       (7 )     (17 )     10  

Increase in investments

  (1 )     (2 )     1       (1 )     (4 )     3  

Decrease in investments

  -       1       (1 )     -       1       (1 )

(Decrease) increase in notes payable and bank advances

  (238 )     (50 )     (188 )     (150 )     15       (165 )

Issue of long-term debt

  1,348       50       1,298       1,348       50       1,298  

Repayment of long-term debt

  (1,586 )     (182 )     (1,404 )     (1,680 )     (284 )     (1,396 )

Cash dividends paid on common shares

  (301 )     (293 )     (8 )     (595 )     (587 )     (8 )

Issue of common shares

  1       15       (14 )     2       16       (14 )

Repurchase of common shares

  (337 )     -       (337 )     (894 )     -       (894 )

Other financing activities

  (31 )     (10 )     (21 )     (41 )     (22 )     (19 )

 

  (1,137 )     (448 )     (689 )     (2,099 )     (917 )     (1,182 )

Cash flows (used in) from continuing operations

  (617 )     204       (821 )     (1,307 )     39       (1,346 )

Cash flows from (used in) discontinued operations activities

  1       (5 )     6       (7 )     (16 )     9  

Cash flows from discontinued investing activities

  17       -       17       17       -       17  

Net (decrease) increase in cash and cash equivalents

  (599 )     199       (798 )     (1,297 )     23       (1,320 )

Cash and cash equivalents at beginning of period

  2,365       2,482       (117 )     3,063       2,658       405  

Cash and cash equivalents at end of period

  1,766       2,681       (915 )     1,766       2,681       (915 )

Consists of:

                                             

Cash and cash equivalents of continuing operations

  1,764       2,675       (911 )     1,764       2,675       (911 )

Cash and cash equivalents of discontinued operations

  2       6       (4 )     2       6       (4 )

Total

  1,766       2,681       (915 )     1,766       2,681       (915 )
                                               

Other information

                                             

Cash flow per share (9)

$ 0.88     $ 1.03     $ (0.15 )  

$

1.30     $ 1.47     $ (0.17 )

Annualized cash flow yield (10)

  8.3 %     8.1 %     0.2  pts     8.3 %     8.1 %     0.2  pts

Common dividend payout (11)

  66.4 %     0.0 %     66.4  pts     67.0 %     33.2 %     33.8  pts
                                               

BCE Inc. Supplementary Financial Information – Second Quarter 2009  Page 12

 

BCE Inc.
Consolidated Cash Flow Data – Historical Trend

($ millions, except where otherwise indicated) (unaudited)

  YTD                       Total                                  
  2009       Q2 09       Q1 09       2008       Q4 08       Q3 08       Q2 08       Q1 08  

Cash flows from operating activities

                                                             

Net earnings

  778       372       406       943       (18 )     280       392       289  

Less: Losses from discontinued operations, net of income taxes and non-controlling interest

  (8 )     (3 )     (5 )     (90 )     (41 )     (24 )     (23 )     (2 )

Earnings from continuing operations

  786       375       411       1,033       23       304       415       291  

Adjustments to reconcile earnings from continuing operations to cash flows from operating activities

                                                             

Depreciation and amortization of intangible assets

  1,639       821       818       3,267       869       793       787       818  

Net benefit plans cost

  176       88       88       250       40       69       70       71  

Restructuring and other

  255       146       109       871       207       310       71       283  

(Gains) losses on investments

  (2 )     -       (2 )     308       292       14       -       2  

Future income taxes

  (18 )     (5 )     (13 )     129       127       (23 )     92       (67 )

Non-controlling interest

  162       79       83       323       70       91       88       74  

Contributions to employee pension plans

  (184 )     (92 )     (92 )     (232 )     (91 )     (49 )     (48 )     (44 )

Other employee future benefit plan payments

  (47 )     (23 )     (24 )     (96 )     (24 )     (25 )     (24 )     (23 )

Payments of restructuring and other

  (182 )     (105 )     (77 )     (305 )     (168 )     (84 )     (29 )     (24 )

Operating assets and liabilities

  (184 )     192       (376 )     360       471       251       117       (479 )

 

  2,401       1,476       925       5,908       1,816       1,651       1,539       902  

Bell Aliant distributions to BCE

  146       73       73       290       72       73       74       71  

Capital expenditures

  (1,390 )     (800 )     (590 )     (2,988 )     (1,022 )     (705 )     (710 )     (551 )

Other investing activities

  (40 )     (27 )     (13 )     (726 )     1       (732 )     2       3  

Cash dividends paid on preferred shares

  (55 )     (27 )     (28 )     (129 )     (31 )     (31 )     (32 )     (35 )

Cash distributions paid by subsidiaries to non-controlling interest

  (184 )     (92 )     (92 )     (366 )     (92 )     (92 )     (92 )     (90 )

Bell Aliant Free Cash Flow

  (86 )     (83 )     (3 )     (300 )     (97 )     (78 )     (129 )     4  

Free Cash Flow

  792       520       272       1,689       647       86       652       304  

Bell Aliant undistributed Free Cash Flow

  (60 )     10       (70 )     10       25       5       55       (75 )

Business acquisitions

  (21 )     (1 )     (20 )     (56 )     (1 )     -       (24 )     (31 )

Business dispositions

  -       -       -       (10 )     -       -       -       (10 )

Going-private costs

  (7 )     (1 )     (6 )     (163 )     2       (148 )     (8 )     (9 )

Increase in investments

  (1 )     (1 )     -       (8 )     (3 )     (1 )     (2 )     (2 )

Decrease in investments

  -       -       -       1       -       -       1       -  

(Decrease) increase in notes payable and bank advances

  (150 )     (238 )     88       1       (40 )     26       (50 )     65  

Issue of long-term debt

  1,348       1,348       -       50       -       -       50       -  

Repayment of long-term debt

  (1,680 )     (1,586 )     (94 )     (502 )     (124 )     (94 )     (182 )     (102 )

Cash dividends paid on common shares

  (595 )     (301 )     (294 )     (587 )     -       -       (293 )     (294 )

Issue of common shares

  2       1       1       50       23       11       15       1  

Repurchase of common shares

  (894 )     (337 )     (557 )     (92 )     (92 )     -       -       -  

Issue of equity securities by subsidiaries to non-controlling interest

  -       -       -       1       -       1       -       -  

Other financing activities

  (41 )     (31 )     (10 )     15       45       (8 )     (10 )     (12 )

 

  (2,099 )     (1,137 )     (962 )     (1,290 )     (165 )     (208 )     (448 )     (469 )

Cash flows (used in) from continuing operations

  (1,307 )     (617 )     (690 )     399       482       (122 )     204       (165 )

Cash flows (used in) from discontinued operations activities

  (7 )     1       (8 )     (21 )     (1 )     (4 )     (5 )     (11 )

Cash flows from discontinued investing activities

  17       17       -       29       -       29       -       -  

Cash flows used in discontinued financing activities

  -       -       -       (2 )     -       (2 )     -       -  

Net (decrease) increase in cash and cash equivalents

  (1,297 )     (599 )     (698 )     405       481       (99 )     199       (176 )

Cash and cash equivalents at beginning of period

  3,063       2,365       3,063       2,658       2,582       2,681       2,482       2,658  

Cash and cash equivalents at end of period

  1,766       1,766       2,365       3,063       3,063       2,582       2,681       2,482  

Consists of:

                                                             

Cash and cash equivalents of continuing operations

  1,764       1,764       2,359       3,054       3,054       2,576       2,675       2,476  

Cash and cash equivalents of discontinued operations

  2       2       6       9       9       6       6       6  

Total

  1,766       1,766       2,365       3,063       3,063       2,582       2,681       2,482  
                                                               

Other information

                                                             

Cash flow per share

$ 1.30     $ 0.88     $  0.42     $ 3.62     $ 0.98     $ 1.17     $  1.03     $ 0.44  

Annualized cash flow yield

  8.3 %     8.3 %     8.5 %     8.4 %     8.4 %     5.7 %     8.1 %     7.6 %

Common dividend payout

  67.0 %     66.4 %     67.5 %     32.4 %     66.4 %     0.0 %     0.0 %     64.0 %

BCE Inc. Supplementary Financial Information – Second Quarter 2009  Page 13

Accompanying Notes

(1) Throughout this report, BCE means BCE Inc., its subsidiaries and joint ventures; Bell means our Bell Wireline and Bell Wireless segments on an aggregate basis; and Bell Aliant means Bell Aliant Regional Communications Income Fund and its affiliated entities.
 
(2) We report our results of operations in three segments: Bell Wireline, Bell Wireless and Bell Aliant. Our reporting structure reflects how we manage our business and how we classify our operations for planning and measuring performance. Accordingly, we operate and manage our reportable segments as strategic business units organized by products and services.

During the third quarter of 2008, certain elements of our operating segments were realigned to reflect changes in our management accountabilities for operations. Our reportable segments did not change.
 
(3) Non-GAAP Financial Measures

EBITDA
The term EBITDA (earnings before interest, taxes, depreciation and amortization of intangible assets) does not have any standardized meaning according to Canadian generally accepted accounting principles (GAAP). It is therefore unlikely to be comparable to similar measures presented by other companies.

We define EBITDA as operating revenues less cost of revenue, selling, general and administrative expenses and net benefit plans costs, meaning it represents operating income before depreciation, amortization of intangible assets and restructuring and other.

We use EBITDA, among other measures, to assess the operating performance of our ongoing businesses without the effects of depreciation, amortization of intangible assets and restructuring and other. 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 depreciation and amortization of intangible assets because it largely depends on the accounting methods and assumptions a company uses, as well as non-operating factors, such as the historical cost of capital assets. Excluding restructuring and other does not imply they are 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 valuation measurement in the telecommunications industry.

The most comparable Canadian GAAP financial measure is operating income.

Adjusted earnings per share (EPS)
The term adjusted EPS 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 define adjusted EPS as EPS before restructuring and other and net losses (gains) on investments.
 

BCE Inc. Supplementary Financial Information – Second Quarter 2009  Page 14

Accompanying Notes

 

 

We use adjusted EPS among other measures, to assess the operating performance of our ongoing businesses without the effects of after-tax restructuring and other and net losses (gains) on investments. We exclude these items because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. Excluding these items does not imply they are non-recurring.

The most comparable Canadian GAAP financial measure is EPS.

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 define free cash flow as cash from operating activities and distributions received from Bell Aliant less capital expenditures, preferred share dividends, distributions paid by subsidiaries to non-controlling interest, other investing activities and Bell Aliant free cash flow.

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 present free cash flow on a consistent basis 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 when valuing a business and its underlying assets.

The most comparable Canadian GAAP financial measure is cash from operating activities.
 
(4)

EBITDA margin is calculated as follows:

EBITDA
Operating revenues
 
(5)

Capital Intensity is calculated as follows:

Capital expenditures
Operating revenues
 
(6) Average revenue per unit (ARPU) represents the measurement of the average revenue generated by each unit, expressed as a rate per month for the year.
 
(7) Churn is the rate at which existing subscribers cancel their services. Churn is calculated as the number of subscribers disconnected divided by the average subscriber base.
 
(8) Cost of acquisition (COA) is also referred to as subscriber acquisition costs. This measure is expressed per gross activation. It includes costs associated with acquiring a customer such as hardware subsidies, marketing and distribution costs.
 

BCE Inc. Supplementary Financial Information – Second Quarter 2009  Page 15

Accompanying Notes

 

(9)

Cash flow per share is calculated as follows:

Cash flow from operating activities less capital expenditures
Average number of common shares outstanding
 
(10)

Annualized cash flow yield is calculated as follows:

Trailing 12 month free cash flow
Number of common shares outstanding at end of period multiplied by share price at end of period
 
(11)

Common dividend payout is calculated as follows:

Dividends per common share
Adjusted EPS
 

BCE Inc. Supplementary Financial Information – Second Quarter 2009  Page 16