EX-99.2 3 supp_q315.htm SUPPLEMENTARY FINANCIAL INFORMATION - THIRD QUARTER 2015 Supplementary Financial Information

Exhibit 99.2

 

 

BCE (1)
Consolidated Operational Data (2)

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

 

Q3
2015		  

 

Q3
2014		       $ change   % change    

 

YTD
2015		  

 

YTD
2014		       $ change   % change  

Operating revenues

 

5,345  

 

5,195    

 

150   2.9 %  

 

15,911  

 

15,514       397   2.6 %

Operating costs (A)

 

(3,089 )

 

(3,014 )  

 

(75 ) (2.5 %)  

 

(9,220 )

 

(9,025 )     (195 ) (2.2 %)

Post-employment benefit plans service cost

 

(69 )

 

(66 )  

 

(3 ) (4.5 %)  

 

(213 )

 

(208 )     (5 ) (2.4 %)

Adjusted EBITDA (3)

 

2,187  

 

2,115    

 

72   3.4 %  

 

6,478  

 

6,281       197   3.1 %

Adjusted EBITDA margin (3)

 

40.9 %

 

40.7 %  

 

    0.2  pts  

 

40.7 %

 

40.5 %         0.2  pts

Severance, acquisition and other costs

 

(46 )

 

(66 )  

 

20   30.3 %  

 

(294 )

 

(158 )     (136 ) (86.1 %)

Depreciation

 

(727 )

 

(739 )  

 

12   1.6 %  

 

(2,159 )

 

(2,146 )     (13 ) (0.6 %)

Amortization

 

(133 )

 

(116 )  

 

(17 ) (14.7 %)  

 

(394 )

 

(454 )     60   13.2 %

Finance costs

 

   

 

     

 

         

 

   

 

               

Interest expense

 

(227 )

 

(227 )  

 

-   0.0 %  

 

(683 )

 

(691 )     8   1.2 %

Interest on post-employment benefit obligations

 

(27 )

 

(25 )  

 

(2 ) (8.0 %)  

 

(82 )

 

(76 )     (6 ) (7.9 %)

Other income

 

35  

 

2    

 

33   n.m.    

 

58  

 

76       (18 ) (23.7 %)

Income taxes

 

(271 )

 

(241 )  

 

(30 ) (12.4 %)  

 

(736 )

 

(708 )     (28 ) (4.0 %)

Net earnings

 

791  

 

703    

 

88   12.5 %  

 

2,188  

 

2,124       64   3.0 %

Net earnings attributable to:

 

   

 

     

 

         

 

   

 

               

Common shareholders

 

739  

 

600    

 

139   23.2 %  

 

2,030  

 

1,821       209   11.5 %

Preferred shareholders

 

38  

 

31    

 

7   22.6 %  

 

115  

 

97       18   18.6 %

Non-controlling interest

 

14  

 

72    

 

(58 ) (80.6 %)  

 

43  

 

206       (163 ) (79.1 %)

Net earnings

 

791  

 

703    

 

88   12.5 %  

 

2,188  

 

2,124       64   3.0 %

Net earnings per common share - basic

$

 0.87  

$

 0.77    

$

 0.10   13.0 %  

$

 2.40  

$

 2.34     $ 0.06   2.6 %

Net earnings per common share - diluted

$

 0.87  

$

 0.77    

$

 0.10   13.0 %  

$

 2.40  

$

 2.34     $ 0.06   2.6 %

Dividends per common share

$

 0.6500  

$

 0.6175    

$

 0.0325   5.3 %  

$

 1.9500  

$

 1.8525     $ 0.0975   5.3 %

Average number of common shares outstanding - basic (millions)

 

848.9  

 

782.1    

 

         

 

845.0  

 

778.8              

Average number of common shares outstanding - diluted (millions)

 

850.1  

 

783.0    

 

         

 

846.3  

 

779.6              

Number of common shares outstanding (millions)

 

849.4  

 

828.3    

 

         

 

849.4  

 

828.3              

Adjusted Net Earnings and EPS

 

   

 

     

 

         

 

   

 

               

Net earnings attributable to common shareholders

 

739  

 

600    

 

139   23.2 %  

 

2,030  

 

1,821       209   11.5 %

Severance, acquisition and other costs

 

35  

 

45    

 

(10 ) (22.2 %)  

 

215  

 

106       109   n.m.  

Net losses (gains) on investments

 

16  

 

-    

 

16   n.m.    

 

(22 )

 

(16 )     (6 ) (37.5 %)

Early debt redemption costs

 

-  

 

3    

 

(3 ) (100.0 %)  

 

7  

 

3       4   n.m.  

Adjusted net earnings (3)

 

790  

 

648    

 

142   21.9 %  

 

2,230  

 

1,914       316   16.5 %

Impact on net earnings per share

$

 0.06  

$

 0.06    

 

-   0.0 %  

$

 0.24  

$

 0.12     $ 0.12   100.0 %

Adjusted EPS (3)

$

 0.93  

$

 0.83    

$

 0.10   12.0 %  

$

 2.64  

$

 2.46     $ 0.18   7.3 %

 

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

BCE Supplementary Financial Information - Third Quarter 2015 Page 2

BCE
Consolidated Operational Data - Historical Trend

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

 

YTD
2015		       Q3 15     Q2 15     Q1 15       TOTAL
2014		       Q4 14     Q3 14     Q2 14     Q1 14  

Operating revenues

 

15,911       5,345     5,326     5,240       21,042       5,528     5,195     5,220     5,099  

Operating costs (A)

 

(9,220 )     (3,089 )   (3,061 )   (3,070 )     (12,463 )     (3,438 )   (3,014 )   (3,008 )   (3,003 )

Post-employment benefit plans service cost

 

(213 )     (69 )   (68 )   (76 )     (276 )     (68 )   (66 )   (68 )   (74 )

Adjusted EBITDA

 

6,478       2,187     2,197     2,094       8,303       2,022     2,115     2,144     2,022  

Adjusted EBITDA margin

 

40.7 %     40.9 %   41.3 %   40.0 %     39.5 %     36.6 %   40.7 %   41.1 %   39.7 %

Severance, acquisition and other costs

 

(294 )     (46 )   (24 )   (224 )     (216 )     (58 )   (66 )   (54 )   (38 )

Depreciation

 

(2,159 )     (727 )   (720 )   (712 )     (2,880 )     (734 )   (739 )   (708 )   (699 )

Amortization

 

(394 )     (133 )   (134 )   (127 )     (572 )     (118 )   (116 )   (171 )   (167 )

Finance costs

 

                                                         

Interest expense

 

(683 )     (227 )   (230 )   (226 )     (929 )     (238 )   (227 )   (229 )   (235 )

Interest on post-employment benefit obligations

 

(82 )     (27 )   (28 )   (27 )     (101 )     (25 )   (25 )   (26 )   (25 )

Other income (expense)

 

58       35     43     (20 )     42       (34 )   2     (13 )   87  

Income taxes

 

(736 )     (271 )   (290 )   (175 )     (929 )     (221 )   (241 )   (236 )   (231 )

Net earnings

 

2,188       791     814     583       2,718       594     703     707     714  

Net earnings attributable to:

 

                                                         

Common shareholders

 

2,030       739     759     532       2,363       542     600     606     615  

Preferred shareholders

 

115       38     39     38       137       40     31     33     33  

Non-controlling interest

 

43       14     16     13       218       12     72     68     66  

Net earnings

 

2,188       791     814     583       2,718       594     703     707     714  

Net earnings per common share - basic

$

 2.40     $ 0.87   $ 0.90   $ 0.63     $ 2.98     $ 0.64   $ 0.77   $ 0.78   $ 0.79  

Net earnings per common share - diluted

$

 2.40     $ 0.87   $ 0.90   $ 0.63     $ 2.97     $ 0.63   $ 0.77   $ 0.78   $ 0.79  

Dividends per common share

$

 1.9500     $ 0.6500   $ 0.6500   $ 0.6500     $ 2.4700     $ 0.6175   $ 0.6175   $ 0.6175   $ 0.6175  

Average number of common shares outstanding - basic (millions)

 

845.0       848.9     844.9     841.0       793.7       837.7     782.1     777.7     776.5  

Average number of common shares outstanding - diluted (millions)

 

846.3       850.1     846.2     842.6       794.6       838.9     783.0     778.6     777.2  

Number of common shares outstanding (millions)

 

849.4       849.4     848.6     841.9       840.3       840.3     828.3     778.1     777.3  

Adjusted Net Earnings and EPS

 

                                                         

Net earnings attributable to common shareholders

 

2,030       739     759     532       2,363       542     600     606     615  

Severance, acquisition and other costs

 

215       35     16     164       148       42     45     38     23  

Net (gains) losses on investments

 

(22 )     16     (40 )   2       (8 )     8     -     (4 )   (12 )

Early debt redemption costs

 

7       -     -     7       21       18     3     -     -  

Adjusted net earnings

 

2,230       790     735     705       2,524       610     648     640     626  

Impact on net earnings per share

$

 0.24     $ 0.06   $ (0.03 ) $ 0.21     $ 0.20     $ 0.08   $ 0.06   $ 0.04   $ 0.02  

Adjusted EPS

$

 2.64     $ 0.93   $ 0.87   $ 0.84     $ 3.18     $ 0.72   $ 0.83   $ 0.82   $ 0.81  

 

(A) Excludes post-employment benefit plans service cost

BCE Supplementary Financial Information - Third Quarter 2015 Page 3

BCE (1)
Segmented Data (2)

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

Q3
2015

   Q3
2014		     $ change   % change    

YTD
2015

   YTD
2014		     $ change   % change  

Revenues

 

                 

 

               

Bell Wireless

1,772

   1,621     151   9.3 %  

5,106

   4,656     450   9.7 %

Bell Wireline

3,028

   3,046     (18 ) (0.6 %)  

9,097

   9,114     (17 ) (0.2 %)

Bell Media

692

   665     27   4.1 %  

2,158

   2,148     10   0.5 %

Inter-segment eliminations

(147

 ) (137 )   (10 ) (7.3 %)  

(450

 ) (404 )   (46 ) (11.4 %)

Total

5,345

   5,195     150   2.9 %  

15,911

   15,514     397   2.6 %

Operating costs

 

                 

 

               

Bell Wireless

(1,014

 ) (921 )   (93 ) (10.1 %)  

(2,919

 ) (2,632 )   (287 ) (10.9 %)

Bell Wireline

(1,782

 ) (1,813 )   31   1.7 %  

(5,345

 ) (5,399 )   54   1.0 %

Bell Media

(509

 ) (483 )   (26 ) (5.4 %)  

(1,619

 ) (1,606 )   (13 ) (0.8 %)

Inter-segment eliminations

147

   137     10   7.3 %  

450

   404     46   11.4 %

Total

(3,158

 ) (3,080 )   (78 ) (2.5 %)  

(9,433

 ) (9,233 )   (200 ) (2.2 %)

Adjusted EBITDA

 

                 

 

               

Bell Wireless

758

   700     58   8.3 %  

2,187

   2,024     163   8.1 %

Margin

42.8

 % 43.2 %       (0.4 ) pts  

42.8

 % 43.5 %       (0.7 ) pts

Bell Wireline

1,246

   1,233     13   1.1 %  

3,752

   3,715     37   1.0 %

Margin

41.1

 % 40.5 %       0.6  pts  

41.2

 % 40.8 %       0.4  pts

Bell Media

183

   182     1   0.5 %  

539

   542     (3 ) (0.6 %)

Margin

26.4

 % 27.4 %       (1.0 ) pts  

25.0

 % 25.2 %       (0.2 ) pts

Total

2,187

   2,115     72   3.4 %  

6,478

   6,281     197   3.1 %

Margin

40.9

 % 40.7 %       0.2  pts  

40.7

 % 40.5 %       0.2  pts

Capital expenditures

 

                 

 

               

Bell Wireless

184

   182     (2 ) (1.1 %)  

523

   469     (54 ) (11.5 %)

Capital Intensity (4)

10.4

 % 11.2 %       0.8  pts  

10.2

 % 10.1 %       (0.1 ) pts

Bell Wireline

716

   756     40   5.3 %  

2,068

   2,089     21   1.0 %

Capital Intensity

23.6

 % 24.8 %       1.2  pts  

22.7

 % 22.9 %       0.2  pts

Bell Media

27

   37     10   27.0 %  

77

   83     6   7.2 %

Capital Intensity

3.9

 % 5.6 %       1.7  pts  

3.6

 % 3.9 %       0.3  pts

Total

927

   975     48   4.9 %  

2,668

   2,641     (27 ) (1.0 %)

Capital Intensity

17.3

 % 18.8 %       1.5  pts  

16.8

 % 17.0 %       0.2  pts

 

BCE Supplementary Financial Information - Third Quarter 2015 Page 4

BCE
Segmented Data - Historical Trend

(In millions of Canadian dollars, except where otherwise indicated) (unaudited) YTD
2015		     Q3 15   Q2 15   Q1 15     Total
2014		     Q4 14   Q3 14   Q2 14   Q1 14  

Revenues

                                          

Bell Wireless

 5,106     1,772   1,697   1,637     6,327     1,671   1,621   1,543   1,492  

Bell Wireline

 9,097     3,028   3,042   3,027     12,324     3,210   3,046   3,049   3,019  

Bell Media

 2,158     692   740   726     2,937     789   665   761   722  

Inter-segment eliminations

 (450 )   (147 ) (153 ) (150 )   (546 )   (142 ) (137 ) (133 ) (134 )

Total

 15,911     5,345   5,326   5,240     21,042     5,528   5,195   5,220   5,099  

Operating costs

                                          

Bell Wireless

 (2,919 )   (1,014 ) (980 ) (925 )   (3,703 )   (1,071 ) (921 ) (862 ) (849 )

Bell Wireline

 (5,345 )   (1,782 ) (1,777 ) (1,786 )   (7,379 )   (1,980 ) (1,813 ) (1,796 ) (1,790 )

Bell Media

 (1,619 )   (509 ) (525 ) (585 )   (2,203 )   (597 ) (483 ) (551 ) (572 )

Inter-segment eliminations

 450     147   153   150     546     142   137   133   134  

Total

 (9,433 )   (3,158 ) (3,129 ) (3,146 )   (12,739 )   (3,506 ) (3,080 ) (3,076 ) (3,077 )

Adjusted EBITDA

                                          

Bell Wireless

 2,187     758   717   712     2,624     600   700   681   643  

Margin

 42.8 %   42.8 % 42.3 % 43.5 %   41.5 %   35.9 % 43.2 % 44.1 % 43.1 %

Bell Wireline

 3,752     1,246   1,265   1,241     4,945     1,230   1,233   1,253   1,229  

Margin

 41.2 %   41.1 % 41.6 % 41.0 %   40.1 %   38.3 % 40.5 % 41.1 % 40.7 %

Bell Media

 539     183   215   141     734     192   182   210   150  

Margin

 25.0 %   26.4 % 29.1 % 19.4 %   25.0 %   24.3 % 27.4 % 27.6 % 20.8 %

Total

 6,478     2,187   2,197   2,094     8,303     2,022   2,115   2,144   2,022  

Margin

 40.7 %   40.9 % 41.3 % 40.0 %   39.5 %   36.6 % 40.7 % 41.1 % 39.7 %

Capital expenditures

                                          

Bell Wireless

 523     184   188   151     687     218   182   168   119  

Capital Intensity

 10.2 %   10.4 % 11.1 % 9.2 %   10.9 %   13.0 % 11.2 % 10.9 % 8.0 %

Bell Wireline

 2,068     716   696   656     2,893     804   756   737   596  

Capital Intensity

 22.7 %   23.6 % 22.9 % 21.7 %   23.5 %   25.0 % 24.8 % 24.2 % 19.7 %

Bell Media

 77     27   30   20     137     54   37   32   14  

Capital Intensity

 3.6 %   3.9 % 4.1 % 2.8 %   4.7 %   6.8 % 5.6 % 4.2 % 1.9 %

Total

 2,668     927   914   827     3,717     1,076   975   937   729  

Capital Intensity

 16.8 %   17.3 % 17.2 % 15.8 %   17.7 %   19.5 % 18.8 % 18.0 % 14.3 %

 

BCE Supplementary Financial Information - Third Quarter 2015 Page 5

Bell Wireless (1) (2)

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

Q3
2015

   Q3
2014		     % change    

YTD
2015

   YTD
2014		     % change  

Bell Wireless

 

             

 

           

Revenues

 

             

 

           

Service

1,619

   1,495     8.3 %  

4,658

   4,312     8.0 %

Product

143

   117     22.2 %  

419

   316     32.6 %

Total external Bell Wireless revenues

1,762

   1,612     9.3 %  

5,077

   4,628     9.7 %

Inter-segment

10

   9     11.1 %  

29

   28     3.6 %

Total Bell Wireless operating revenues

1,772

   1,621     9.3 %  

5,106

   4,656     9.7 %

Operating costs

(1,014

 ) (921 )   (10.1 %)  

(2,919

 ) (2,632 )   (10.9 %)

Adjusted EBITDA

758

   700     8.3 %  

2,187

   2,024     8.1 %

Adjusted EBITDA margin (Total revenues)

42.8

 % 43.2 %   (0.4 ) pts  

42.8

 % 43.5 %   (0.7 ) pts

Adjusted EBITDA margin (Service revenues)

46.8

 % 46.8 %   0.0  pts  

47.0

 % 46.9 %   0.1  pts

Capital expenditures

184

   182     (1.1 %)  

523

   469     (11.5 %)

Capital intensity

10.4

 % 11.2 %   0.8  pts  

10.2

 % 10.1 %   (0.1 ) pts

Wireless gross activations

424,164

   431,460     (1.7 %)  

1,150,497

   1,181,166     (2.6 %)

Postpaid

353,652

   331,851     6.6 %  

950,445

   908,752     4.6 %

Wireless net activations

58,543

   83,636     (30.0 %)  

64,739

   110,098     (41.2 %)

Postpaid

77,655

   91,779     (15.4 %)  

174,061

   193,834     (10.2 %)

Wireless subscribers end of period (EOP)

8,183,367

   8,035,130     1.8 %  

8,183,367

   8,035,130     1.8 %

Postpaid

7,284,108

   6,991,927     4.2 %  

7,284,108

   6,991,927     4.2 %

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

65.34

   61.59     6.1 %  

62.89

   59.57     5.6 %

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

1.49

 % 1.45 %   (0.04 ) pts  

1.49

 % 1.50 %   0.01  pts

Prepaid

2.98

 % 3.14 %   0.16  pts  

3.36

 % 3.44 %   0.08  pts

Postpaid

1.31

 % 1.20 %   (0.11 ) pts  

1.24

 % 1.20 %   (0.04 ) pts

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

446

   420     (6.2 %)  

444

   420     (5.7 %)

 

 

BCE Supplementary Financial Information - Third Quarter 2015 Page 6

Bell Wireless - Historical Trend

(In millions of Canadian dollars, except where otherwise indicated) (unaudited) YTD
2015		     Q3 15   Q2 15   Q1 15     TOTAL
2014		     Q4 14   Q3 14   Q2 14   Q1 14  

Bell Wireless

                                          

Revenues

                                          

Service

 4,658     1,619   1,539   1,500     5,806     1,494   1,495   1,429   1,388  

Product

 419     143   149   127     483     167   117   105   94  

Total external Bell Wireless revenues

 5,077     1,762   1,688   1,627     6,289     1,661   1,612   1,534   1,482  

Inter-segment

 29     10   9   10     38     10   9   9   10  

Total Bell Wireless operating revenues

 5,106     1,772   1,697   1,637     6,327     1,671   1,621   1,543   1,492  

Operating costs

 (2,919 )   (1,014 ) (980 ) (925 )   (3,703 )   (1,071 ) (921 ) (862 ) (849 )

Adjusted EBITDA

 2,187     758   717   712     2,624     600   700   681   643  

Adjusted EBITDA margin (Total revenues)

 42.8 %   42.8 % 42.3 % 43.5 %   41.5 %   35.9 % 43.2 % 44.1 % 43.1 %

Adjusted EBITDA margin (Service revenues)

 47.0 %   46.8 % 46.6 % 47.5 %   45.2 %   40.2 % 46.8 % 47.7 % 46.3 %

Capital expenditures

 523     184   188   151     687     218   182   168   119  

Capital intensity

 10.2 %   10.4 % 11.1 % 9.2 %   10.9 %   13.0 % 11.2 % 10.9 % 8.0 %

Wireless gross activations

 1,150,497     424,164   384,973   341,360     1,643,451     462,285   431,460   391,382   358,324  

Postpaid

 950,445     353,652   317,809   278,984     1,291,207     382,455   331,851   297,374   279,527  

Wireless net activations

 64,739     58,543   22,110   (15,914 )   193,596     83,498   83,636   42,898   (16,436 )

Postpaid

 174,061     77,655   61,033   35,373     311,954     118,120   91,779   67,951   34,104  

Wireless subscribers EOP

 8,183,367     8,183,367   8,124,824   8,102,714     8,118,628     8,118,628   8,035,130   7,951,494   7,908,596  

Postpaid

 7,284,108     7,284,108   7,206,453   7,145,420     7,110,047     7,110,047   6,991,927   6,900,148   6,832,197  

ARPU ($/month)

 62.89     65.34   62.48   60.83     59.92     60.97   61.59   59.35   57.75  

Churn (%)(average per month)

 1.49 %   1.49 % 1.49 % 1.47 %   1.52 %   1.57 % 1.45 % 1.47 % 1.58 %

Prepaid

 3.36 %   2.98 % 3.48 % 3.60 %   3.44 %   3.43 % 3.14 % 3.49 % 3.68 %

Postpaid

 1.24 %   1.31 % 1.23 % 1.18 %   1.22 %   1.29 % 1.20 % 1.15 % 1.24 %

COA ($/subscriber)

 444     446   434   452     441     495   420   403   439  

 

BCE Supplementary Financial Information - Third Quarter 2015 Page 7

Bell Wireline (1) (2)

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

Q3
2015

   Q3
2014		     % change    

YTD
2015

   YTD
2014		     % change  

Bell Wireline

 

             

 

           

Data

1,770

   1,722     2.8 %  

5,301

   5,145     3.0 %

Local & access

818

   855     (4.3 %)  

2,469

   2,582     (4.4 %)

Long distance

207

   229     (9.6 %)  

627

   688     (8.9 %)

Equipment & other

181

   186     (2.7 %)  

528

   543     (2.8 %)

Total external revenues

2,976

   2,992     (0.5 %)  

8,925

   8,958     (0.4 %)

Inter-segment revenues

52

   54     (3.7 %)  

172

   156     10.3 %

Total Bell Wireline operating revenues

3,028

   3,046     (0.6 %)  

9,097

   9,114     (0.2 %)

Operating costs

(1,782

 ) (1,813 )   1.7 %  

(5,345

 ) (5,399 )   1.0 %

Adjusted EBITDA

1,246

   1,233     1.1 %  

3,752

   3,715     1.0 %

Adjusted EBITDA Margin

41.1

 % 40.5 %   0.6  pts  

41.2

 % 40.8 %   0.4  pts

Capital expenditures

716

   756     5.3 %  

2,068

   2,089     1.0 %

Capital intensity

23.6

 % 24.8 %   1.2  pts  

22.7

 % 22.9 %   0.2  pts

High-speed Internet

 

             

 

           

High-speed Internet net activations

57,888

   64,254     (9.9 %)  

116,144

   108,380     7.2 %

High-speed Internet subscribers EOP (A) (B)

3,374,239

   3,245,016     4.0 %  

3,374,239

   3,245,016     4.0 %

TV

 

             

 

           

Net subscriber activations

25,914

   37,578     (31.0 %)  

69,594

   111,170     (37.4 %)

Internet Protocol Television (IPTV)

67,908

   74,450     (8.8 %)  

179,237

   199,960     (10.4 %)

Total subscribers EOP (A) (B)

2,700,710

   2,600,418     3.9 %  

2,700,710

   2,600,418     3.9 %

IPTV (A) (B)

1,108,699

   857,473     29.3 %  

1,108,699

   857,473     29.3 %

Local

 

             

 

           

Network Access Services (NAS)

 

             

 

           

Residential (A) (B)

3,591,813

   3,872,840     (7.3 %)  

3,591,813

   3,872,840     (7.3 %)

Business

3,203,763

   3,351,017     (4.4 %)  

3,203,763

   3,351,017     (4.4 %)

Total (A) (B)

6,795,576

   7,223,857     (5.9 %)  

6,795,576

   7,223,857     (5.9 %)

NAS net losses

 

             

 

           

Residential

(78,354

 ) (70,782 )   (10.7 %)  

(220,043

 ) (248,497 )   11.5 %

Business

(29,722

 ) (37,270 )   20.3 %  

(111,481

 ) (123,215 )   9.5 %

Total

(108,076

 ) (108,052 )   0.0 %  

(331,524

 ) (371,712 )   10.8 %

 

(A) Our Q1 2015 Internet, IPTV, total TV, and NAS subscriber base included a beginning of period adjustment to reduce the number of subscribers by 7,505, 2,236, 7,702, and 4,409, respectively, for deactivations as a result of the CRTC’s decision to eliminate the 30-day notice period required to cancel services.
(B) Subsequent to a review of our subscriber metrics, our Q1 2015 beginning of period Internet, IPTV and total TV subscriber base was reduced by 31,426, 1,849 and 3,790, respectively, while our NAS base was increased by 657 subscribers. These adjustments primarily consisted of older balances.

BCE Supplementary Financial Information - Third Quarter 2015 Page 8

Bell Wireline - Historical Trend

(In millions of Canadian dollars, except where otherwise indicated) (unaudited) YTD
2015		     Q3 15   Q2 15   Q1 15     TOTAL
2014		     Q4 14   Q3 14   Q2 14   Q1 14  

Bell Wireline

                                          

Data

 5,301     1,770   1,774   1,757     6,978     1,833   1,722   1,725   1,698  

Local & access

 2,469     818   827   824     3,420     838   855   860   867  

Long distance

 627     207   207   213     922     234   229   233   226  

Equipment & other

 528     181   174   173     791     248   186   179   178  

Total external revenues

 8,925     2,976   2,982   2,967     12,111     3,153   2,992   2,997   2,969  

Inter-segment revenues

 172     52   60   60     213     57   54   52   50  

Total Bell Wireline operating revenues

 9,097     3,028   3,042   3,027     12,324     3,210   3,046   3,049   3,019  

Operating costs

 (5,345 )   (1,782 ) (1,777 ) (1,786 )   (7,379 )   (1,980 ) (1,813 ) (1,796 ) (1,790 )

Adjusted EBITDA

 3,752     1,246   1,265   1,241     4,945     1,230   1,233   1,253   1,229  

Adjusted EBITDA Margin

 41.2 %   41.1 % 41.6 % 41.0 %   40.1 %   38.3 % 40.5 % 41.1 % 40.7 %

Capital expenditures

 2,068     716   696   656     2,893     804   756   737   596  

Capital intensity

 22.7 %   23.6 % 22.9 % 21.7 %   23.5 %   25.0 % 24.8 % 24.2 % 19.7 %

High-speed Internet

                                          

High-speed Internet net activations

 116,144     57,888   18,606   39,650     160,390     52,010   64,254   17,544   26,582  

High-speed Internet subscribers EOP (A) (B)

 3,374,239     3,374,239   3,316,351   3,297,745     3,297,026     3,297,026   3,245,016   3,180,762   3,163,218  

TV

                                          

Net subscriber activations

 69,594     25,914   16,690   26,990     153,360     42,190   37,578   33,369   40,223  

IPTV

 179,237     67,908   50,466   60,863     276,034     76,074   74,450   59,132   66,378  

Total subscribers EOP (A) (B)

 2,700,710     2,700,710   2,674,796   2,658,106     2,642,608     2,642,608   2,600,418   2,562,840   2,529,471  

IPTV (A) (B)

 1,108,699     1,108,699   1,040,791   990,325     933,547     933,547   857,473   783,023   723,891  

Local

                                          

NAS

                                          

Residential (A) (B)

 3,591,813     3,591,813   3,670,167   3,745,986     3,815,608     3,815,608   3,872,840   3,943,622   4,031,682  

Business

 3,203,763     3,203,763   3,233,485   3,271,175     3,315,244     3,315,244   3,351,017   3,388,287   3,431,147  

Total (A) (B)

 6,795,576     6,795,576   6,903,652   7,017,161     7,130,852     7,130,852   7,223,857   7,331,909   7,462,829  

NAS net losses

                                          

Residential

 (220,043 )   (78,354 ) (75,819 ) (65,870 )   (305,729 )   (57,232 ) (70,782 ) (88,060 ) (89,655 )

Business

 (111,481 )   (29,722 ) (37,690 ) (44,069 )   (158,988 )   (35,773 ) (37,270 ) (42,860 ) (43,085 )

Total

 (331,524 )   (108,076 ) (113,509 ) (109,939 )   (464,717 )   (93,005 ) (108,052 ) (130,920 ) (132,740 )

 

(A) Our Q1 2015 Internet, IPTV, total TV, and NAS subscriber base included a beginning of period adjustment to reduce the number of subscribers by 7,505, 2,236, 7,702, and 4,409, respectively, for deactivations as a result of the CRTC’s decision to eliminate the 30-day notice period required to cancel services.
(B) Subsequent to a review of our subscriber metrics, our Q1 2015 beginning of period Internet, IPTV and total TV subscriber base was reduced by 31,426, 1,849 and 3,790, respectively, while our NAS base was increased by 657 subscribers. These adjustments primarily consisted of older balances.

BCE Supplementary Financial Information - Third Quarter 2015 Page 9

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

BCE - Net debt and preferred shares                
(In millions of Canadian dollars, except where otherwise indicated) (unaudited)                

 

September 30

   June 30   March 31   December 31  

 

2015

   2015   2015   2014  

Debt due within one year

6,416

   5,058   4,712   3,743  

Long-term debt

14,444

   15,443   16,612   16,355  

Preferred shares - BCE (A)

2,002

   2,002   2,002   2,002  

Cash and cash equivalents

(622

 ) (169 ) (1,125 ) (566 )

Net Debt (3)

22,240

   22,334   22,201   21,534  

Net Debt / Adjusted EBITDA (4)

2.62

   2.65   2.65   2.59  

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

8.58

   8.53   8.52   8.38  
                 

 

Bell Media Inc. - Proportionate Information                                    

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

YTD
2015

   Q3
2015		   Q2
2015		   Q1
2015		   Total
2014		   Q4
2014		   Q3
2014		   Q2
2014		   Q1
2014		  

Proportionate Net Debt

-

   -   -   -   -   -   -   14   30  

Proportionate Adjusted EBITDA

473

   161   191   121   657   181   158   189   129  
                                     

 

Cash Flow Information                                    
(In millions of Canadian dollars, except where otherwise indicated) (unaudited) 

Q3
2015

   Q3
2014		   $ change     % change    

YTD
2015

   YTD
2014		   $ change   % change  

Free Cash Flow (FCF) (3)

 

                 

 

             

Cash from operating activities, excluding acquisition costs paid

1,911

   1,644   267     16.2 %  

4,897

   4,121   776   18.8 %

Capital expenditures

(927

 ) (825 ) (102 )   (12.4 %)  

(2,668

 ) (2,210 ) (458 ) (20.7 %)

Dividends paid on preferred shares

(37

 ) (31 ) (6 )   (19.4 %)  

(113

 ) (94 ) (19 ) (20.2 %)

Dividends paid by subsidiaries to non-controlling interest

(26

 ) (1 ) (25 )   n.m.    

(33

 ) (1 ) (32 ) n.m.  

Bell Aliant dividends to BCE

-

   47   (47 )   (100.0 %)  

-

   95   (95 ) (100.0 %)

FCF

921

   834   87     10.4 %  

2,083

   1,911   172   9.0 %
                                     

 

Cash Flow Information - Historical Trend                                          
(In millions of Canadian dollars, except where otherwise indicated) (unaudited)

YTD
2015

     Q3
2015		   Q2
2015		   Q1
2015		     Total
2014		     Q4
2014		   Q3
2014		   Q2
2014		   Q1
2014		  

FCF

 

                                       

Cash from operating activities, excluding acquisition costs paid

4,897

     1,911   1,889   1,097     5,680     1,559   1,644   1,589   888  

Capital expenditures

(2,668

 )   (927 ) (914 ) (827 )   (3,245 )   (1,035 ) (825 ) (791 ) (594 )

Dividends paid on preferred shares

(113

 )   (37 ) (37 ) (39 )   (134 )   (40 ) (31 ) (31 ) (32 )

Dividends paid by subsidiaries to non-controlling interest

(33

 )   (26 ) (7 ) -     (2 )   (1 ) (1 ) -   -  

Voluntary defined benefit pension plan contribution

-

     -   -   -     350     350   -   -   -  

Bell Aliant dividends to BCE

-

     -   -   -     95     -   47   48   -  

FCF

2,083

     921   931   231     2,744     833   834   815   262  
                                           

 

(A) Net debt includes 50% of preferred shares
n.m. : not meaningful

BCE Supplementary Financial Information - Third Quarter 2015 Page 10

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

(In millions of Canadian dollars, except where otherwise indicated) (unaudited)   September 30
2015		     June 30
2015		     March 31
2015		     December 31
2014		  

ASSETS

                        

Current assets

                        

Cash

   84     131     127     142  

Cash equivalents

   538     38     998     424  

Trade and other receivables

   2,766     2,758     2,781     3,069  

Inventory

   450     405     403     333  

Prepaid expenses

   452     528     522     379  

Other current assets

   287     232     249     201  

Total current assets

   4,577     4,092     5,080     4,548  

Non-current assets

                        

Property, plant and equipment

   21,709     21,513     21,347     21,327  

Intangible assets

   10,977     10,886     10,332     10,224  

Deferred tax assets

   93     131     162     162  

Investments in associates and joint ventures

   1,125     1,088     790     776  

Other non-current assets

   810     833     989     875  

Goodwill

   8,377     8,376     8,376     8,385  

Total non-current assets

   43,091     42,827     41,996     41,749  

Total assets

   47,668     46,919     47,076     46,297  

LIABILITIES

                        

Current liabilities

                        

Trade payables and other liabilities

   4,015     4,053     4,007     4,398  

Interest payable

   148     141     143     145  

Dividends payable

   566     565     561     534  

Current tax liabilities

   158     157     74     269  

Debt due within one year

   6,416     5,058     4,712     3,743  

Total current liabilities

   11,303     9,974     9,497     9,089  

Non-current liabilities

                        

Long-term debt

   14,444     15,443     16,612     16,355  

Deferred tax liabilities

   1,717     1,559     1,352     1,321  

Post-employment benefit obligation

   2,296     2,101     2,803     2,772  

Other non-current liabilities

   1,423     1,462     1,493     1,521  

Total non-current liabilities

   19,880     20,565     22,260     21,969  

Total liabilities

   31,183     30,539     31,757     31,058  

EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Equity attributable to BCE shareholders

                        

Preferred shares

   4,004     4,004     4,004     4,004  

Common shares

   17,181     17,142     16,790     16,717  

Contributed surplus

   1,153     1,137     1,121     1,141  

Accumulated other comprehensive income

   105     87     124     97  

Deficit

   (6,264 )   (6,306 )   (7,027 )   (7,013 )

Total Equity attributable to BCE shareholders

   16,179     16,064     15,012     14,946  

Non-controlling interest

   306     316     307     293  

Total equity

   16,485     16,380     15,319     15,239  

Total liabilities and equity

   47,668     46,919     47,076     46,297  

Number of common shares outstanding

   849.4     848.6     841.9     840.3  

 

BCE Supplementary Financial Information - Third Quarter 2015 Page 11

BCE (1)
Consolidated Cash Flow Data (2)

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

 

Q3
2015		  

 

Q3
2014		       $ change    

 

YTD
2015		  

 

YTD
2014		       $ change  

Net earnings

 

791  

 

703       88    

 

2,188  

 

2,124       64  

Adjustments to reconcile net earnings to cash flows from operating activities

 

   

 

             

 

   

 

           

Severance, acquisition and other costs

 

46  

 

66       (20 )  

 

294  

 

158       136  

Depreciation and amortization

 

860  

 

855       5    

 

2,553  

 

2,600       (47 )

Post-employment benefit plans cost

 

96  

 

91       5    

 

295  

 

284       11  

Net interest expense

 

225  

 

225       -    

 

677  

 

685       (8 )

Loss (gains) on investments

 

19  

 

-       19    

 

(73 )

 

(16 )     (57 )

Income taxes

 

271  

 

241       30    

 

736  

 

708       28  

Contributions to post-employment benefit plans

 

(76 )

 

(82 )     6    

 

(249 )

 

(255 )     6  

Payments under other post-employment benefit plans

 

(18 )

 

(18 )     -    

 

(56 )

 

(54 )     (2 )

Severance and other costs paid

 

(45 )

 

(40 )     (5 )  

 

(146 )

 

(146 )     -  

Acquisition costs paid

 

(33 )

 

(33 )     -    

 

(133 )

 

(63 )     (70 )

Interest paid

 

(225 )

 

(214 )     (11 )  

 

(682 )

 

(674 )     (8 )

Income taxes paid (net of refunds)

 

(66 )

 

(92 )     26    

 

(518 )

 

(563 )     45  

Net change in operating assets and liabilities

 

33  

 

180       (147 )  

 

(122 )

 

(74 )     (48 )

Cash flows from operating activities

 

1,878  

 

1,882       (4 )  

 

4,764  

 

4,714       50  

Bell Aliant dividends paid to BCE

 

-  

 

47       (47 )  

 

-  

 

95       (95 )

Capital expenditures

 

(927 )

 

(975 )     48    

 

(2,668 )

 

(2,641 )     (27 )

Cash dividends paid on preferred shares

 

(37 )

 

(31 )     (6 )  

 

(113 )

 

(94 )     (19 )

Cash dividends paid by subsidiaries to non-controlling interest

 

(26 )

 

(69 )     43    

 

(33 )

 

(144 )     111  

Acquisition costs paid

 

33  

 

33       -    

 

133  

 

63       70  

Bell Aliant Free Cash Flow

 

-  

 

(53 )     53    

 

-  

 

(82 )     82  

Free Cash Flow

 

921  

 

834       87    

 

2,083  

 

1,911       172  

Bell Aliant free cash flow, excluding dividends paid

 

-  

 

6       (6 )  

 

-  

 

(13 )     13  

Business acquisitions

 

(2 )

 

(10 )     8    

 

(286 )

 

(10 )     (276 )

Acquisition costs paid

 

(33 )

 

(33 )     -    

 

(133 )

 

(63 )     (70 )

Business dispositions

 

2  

 

186       (184 )  

 

409  

 

724       (315 )

Acquisition of spectrum licences

 

(5 )

 

-       (5 )  

 

(534 )

 

(566 )     32  

Other investing activities

 

(13 )

 

1       (14 )  

 

(15 )

 

(2 )     (13 )

Increase in notes payable and bank advances

 

555  

 

443       112    

 

672  

 

601       71  

(Reduction) increase in securitized trade receivables

 

(305 )

 

-       (305 )  

 

10  

 

-       10  

Issue of long-term debt

 

-  

 

1,243       (1,243 )  

 

502  

 

1,426       (924 )

Repayment of long-term debt

 

(108 )

 

(117 )     9    

 

(977 )

 

(668 )     (309 )

Cash dividends paid on common shares

 

(551 )

 

(480 )     (71 )  

 

(1,617 )

 

(1,412 )     (205 )

Privatization of Bell Aliant

 

-  

 

(804 )     804    

 

-  

 

(804 )     804  

Issue of common shares

 

7  

 

2       5    

 

64  

 

43       21  

Other financing activities

 

(15 )

 

(15 )     -    

 

(122 )

 

(96 )     (26 )

 

 

(468 )

 

422       (890 )  

 

(2,027 )

 

(840 )     (1,187 )

Net increase in cash and cash equivalents

 

453  

 

1,256       (803 )  

 

56  

 

1,071       (1,015 )

Cash and cash equivalents at beginning of period

 

169  

 

150       19    

 

566  

 

335       231  

Cash and cash equivalents at end of period

 

622  

 

1,406       (784 )  

 

622  

 

1,406       (784 )
                                           

Other information

 

   

 

             

 

   

 

           

Free cash flow per share (3)

$

 1.09  

$

 1.06     $ 0.03    

$

 2.47  

$

 2.45     $ 0.02  

Annualized cash flow yield (5)

 

6.3 %

 

6.5 %     (0.2 ) pts  

 

6.3 %

 

6.5 %     (0.2 ) pts
                                           

 

BCE Supplementary Financial Information - Third Quarter 2015 Page 12

BCE
Consolidated Cash Flow Data - Historical Trend

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

 

YTD
2015		       Q3 15     Q2 15     Q1 15       TOTAL
2014		       Q4 14     Q3 14     Q2 14     Q1 14  

Net earnings

 

2,188       791     814     583       2,718       594     703     707     714  

Adjustments to reconcile net earnings to cash flows from operating activities

 

                                                         

Severance, acquisition and other costs

 

294       46     24     224       216       58     66     54     38  

Depreciation and amortization

 

2,553       860     854     839       3,452       852     855     879     866  

Post-employment benefit plans cost

 

295       96     96     103       377       93     91     94     99  

Net interest expense

 

677       225     229     223       921       236     225     226     234  

(Gains) losses on investments

 

(73 )     19     (94 )   2       (10 )     6     -     (4 )   (12 )

Income taxes

 

736       271     290     175       929       221     241     236     231  

Contributions to post-employment benefit plans

 

(249 )     (76 )   (92 )   (81 )     (683 )     (428 )   (82 )   (85 )   (88 )

Payments under other post-employment benefit plans

 

(56 )     (18 )   (18 )   (20 )     (73 )     (19 )   (18 )   (18 )   (18 )

Severance and other costs paid

 

(146 )     (45 )   (52 )   (49 )     (190 )     (44 )   (40 )   (38 )   (68 )

Acquisition costs paid

 

(133 )     (33 )   (48 )   (52 )     (131 )     (68 )   (33 )   (16 )   (14 )

Interest paid

 

(682 )     (225 )   (230 )   (227 )     (907 )     (233 )   (214 )   (231 )   (229 )

Income taxes paid (net of refunds)

 

(518 )     (66 )   (119 )   (333 )     (743 )     (180 )   (92 )   (110 )   (361 )

Net change in operating assets and liabilities

 

(122 )     33     187     (342 )     365       439     180     156     (410 )

Cash flows from operating activities

 

4,764       1,878     1,841     1,045       6,241       1,527     1,882     1,850     982  

Bell Aliant dividends paid to BCE

 

-       -     -     -       95       -     47     48     -  

Capital expenditures

 

(2,668 )     (927 )   (914 )   (827 )     (3,717 )     (1,076 )   (975 )   (937 )   (729 )

Cash dividends paid on preferred shares

 

(113 )     (37 )   (37 )   (39 )     (134 )     (40 )   (31 )   (31 )   (32 )

Cash dividends paid by subsidiaries to non-controlling interest

 

(33 )     (26 )   (7 )   -       (145 )     (1 )   (69 )   (68 )   (7 )

Acquisition costs paid

 

133       33     48     52       131       68     33     16     14  

Voluntary defined benefit pension plan contribution

 

-       -     -     -       350       350     -     -     -  

Bell Aliant Free Cash Flow

 

-       -     -     -       (77 )     5     (53 )   (63 )   34  

Free Cash Flow

 

2,083       921     931     231       2,744       833     834     815     262  

Bell Aliant free cash flow, excluding dividends paid

 

-       -     -     -       (18 )     (5 )   6     15     (34 )

Business acquisitions

 

(286 )     (2 )   (284 )   -       (18 )     (8 )   (10 )   -     -  

Acquisition costs paid

 

(133 )     (33 )   (48 )   (52 )     (131 )     (68 )   (33 )   (16 )   (14 )

Voluntary defined benefit pension plan contribution

 

-       -     -     -       (350 )     (350 )   -     -     -  

Business dispositions

 

409       2     407     -       720       (4 )   186     -     538  

Acquisition of spectrum licences

 

(534 )     (5 )   (429 )   (100 )     (566 )     -     -     (453 )   (113 )

Other investing activities

 

(15 )     (13 )   (7 )   5       11       13     1     2     (5 )

Increase (decrease) in notes payable and bank advances

 

672       555     (574 )   691       469       (132 )   443     (443 )   601  

Increase (reduction) in securitized trade receivables

 

10       (305 )   315     -       -       -     -     -     -  

Issue of long-term debt

 

502       -     -     502       1,428       2     1,243     150     33  

Repayment of long-term debt

 

(977 )     (108 )   (723 )   (146 )     (1,113 )     (445 )   (117 )   (136 )   (415 )

Early debt redemption costs

 

-       -     -     -       (4 )     (4 )   -     -     -  

Cash dividends paid on common shares

 

(1,617 )     (551 )   (547 )   (519 )     (1,893 )     (481 )   (480 )   (480 )   (452 )

Privatization of Bell Aliant

 

-       -     -     -       (989 )     (185 )   (804 )   -     -  

Issue of common shares

 

64       7     19     38       49       6     2     9     32  

Other financing activities

 

(122 )     (15 )   (16 )   (91 )     (108 )     (12 )   (15 )   (33 )   (48 )

 

 

(2,027 )     (468 )   (1,887 )   328       (2,513 )     (1,673 )   422     (1,385 )   123  

Net increase (decrease) in cash and cash equivalents

 

56       453     (956 )   559       231       (840 )   1,256     (570 )   385  

Cash and cash equivalents at beginning of period

 

566       169     1,125     566       335       1,406     150     720     335  

Cash and cash equivalents at end of period

 

622       622     169     1,125       566       566     1,406     150     720  
                                                             

Other information

 

                                                         

Free cash flow per share

$

 2.47     $ 1.09   $ 1.11   $ 0.27     $ 3.46     $ 1.01   $ 1.06   $ 1.05   $ 0.34  

Annualized cash flow yield

 

6.3 %     6.3 %   6.3 %   6.0 %     6.1 %     6.1 %   6.5 %   6.6 %   7.0 %

 

BCE Supplementary Financial Information - Third Quarter 2015 Page 13

Accompanying Notes

  Beginning January 1, 2015, we report our results of operations in three segments: Bell Wireless, Bell Wireline and Bell Media. Our reporting structure reflects how we manage our business and how we classify our operations for planning and measuring performance.
 
(1) Throughout this report, we, us, our, the company and BCE mean, as the context may require, either BCE Inc. or, collectively, BCE Inc., its subsidiaries, joint arrangements and associates; and Bell Aliant means, as the context may require, until December 31, 2014, either Bell Aliant Inc. or, collectively, Bell Aliant Inc. and its subsidiaries and associates, or, after December 31, 2014 and up to, and including, June 30, 2015, either Bell Aliant Regional Communications Inc. or, collectively, Bell Aliant Regional Communications Inc. and its subsidiaries and associates.
 
(2) On October 31, 2014, BCE completed the acquisition of all the issued and outstanding shares of Bell Aliant that it did not already own, therefore eliminating the 55.9% ownership interest held by non-controlling interest. Beginning January 1, 2015, the results of operation of our former Bell Aliant segment are included within our Bell Wireless and Bell Wireline segments, with prior periods restated for comparative purposes.
 
(3) Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted EBITDA margin

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

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

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

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

Adjusted net earnings and Adjusted earnings per share (EPS)

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

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

 

BCE Supplementary Financial Information - Third Quarter 2015 Page 14

Accompanying Notes

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

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

Free Cash Flow and Free Cash Flow per share

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

As of November 1, 2014, BCE’s Free Cash Flow includes 100% of Bell Aliant’s Free Cash Flow rather than cash dividends received from Bell Aliant. We define Free Cash Flow as cash flows from operating activities, excluding acquisition costs paid and voluntary pension funding, less capital expenditures, preferred share dividends and dividends paid by subsidiaries to non-controlling interest.

Prior to November 1, 2014, Free Cash Flow was defined as cash flows from operating activities, excluding acquisition costs paid and voluntary pension funding, plus dividends received from Bell Aliant, less capital expenditures, preferred share dividends, dividends paid by subsidiaries to non-controlling interest and Bell Aliant Free Cash Flow.

We define Free Cash Flow per share as follows:

Free Cash Flow
Average number of common shares outstanding

We consider Free Cash Flow and Free Cash Flow per share to be important indicators of the financial strength and performance of our businesses because they show how much cash is available to pay dividends, repay debt and reinvest in our company.

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

For Free Cash Flow, the most comparable IFRS financial measure is cash flows from operating activities.

Net debt

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

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

 

BCE Supplementary Financial Information - Third Quarter 2015 Page 15

Accompanying Notes

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

Net Debt has no directly comparable IFRS financial measure, but rather is calculated using several asset and liability categories from the statements of financial position, as shown in this document.
 
(4) Key Performance Indicators (KPIs)

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

Capital Intensity is capital expenditures divided by operating revenues.

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

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

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

Net Debt to Adjusted EBITDA

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

Adjusted EBITDA to net interest expense

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

Trailing 12 month Free Cash Flow
Number of common shares outstanding at end of period multiplied by share price at end of period
 

 

BCE Supplementary Financial Information - Third Quarter 2015 Page 16