Exhibit 99.1

EX-99.1 2 d246549dex991.htm EXHIBIT 99.1 Exhibit 99.1

Exhibit 99.1

LOGO

Rogers Reports Third Quarter 2011 Financial and Operating Results

Third Quarter Adjusted EPS up 7% to $0.89, $492 Million of Free Cash Flow Generated;

Wireless Subscribers up 161,000 Driven by Record Number of New Smartphone Customers, While Wireless

Data Revenue Growth Strong at 28% and Wireless Network Margins Solid at 48%;

Cable Operations Revenue up 4% on Continued Subscriber Growth with Strong Margins of 44% Reflecting

Ongoing Realization of Cost Efficiencies;

Media Revenue up 10% Reflecting Top Line Growth Broadly Across Portfolio with Adjusted Operating Profit Growing 38%

TORONTO (October 26, 2011) — Rogers Communications Inc. today announced its consolidated financial and operating results for the three and nine months ended September 30, 2011, in accordance with International Financial Reporting Standards (“IFRS”).

Financial highlights are as follows:


	Three months ended September 30,						Nine months ended September 30,
(In millions of dollars, except per share amounts)	2011		2010		% Chg		2011		2010		% Chg

Operating revenue	$	3,149	$	3,111		1	$	9,251	$	9,004		3
Adjusted operating profit⁽¹⁾⁽²⁾		1,220		1,218		-		3,622		3,571		1
Adjusted net income⁽²⁾		485		479		1		1,375		1,340		3
Adjusted earnings per share⁽²⁾	$	0.89	$	0.83		7	$	2.51	$	2.30		9
Adjusted diluted earnings per share⁽²⁾	$	0.89	$	0.83		7	$	2.50	$	2.29		9

Operating profit⁽¹⁾	$	1,222	$	1,165		5	$	3,534	$	3,458		2
Net income		491		380		29		1,236		1,200		3
Earnings per share	$	0.91	$	0.66		38	$	2.26	$	2.06		10
Diluted earnings per share	$	0.87	$	0.66		32	$	2.24	$	2.05		9

(1)

Operating profit should not be considered as a substitute or alternative for operating income or net income, in each case determined in accordance with IFRS. See the section entitled “Reconciliation of Net Income to Operating Profit and Adjusted Operating Profit for the Period” for a reconciliation of operating profit and adjusted operating profit to operating income and net income under IFRS and the sections entitled “Key Performance Indicators and Non-GAAP Measures” and “Supplementary Information”.

(2)

For details on the determination of the ‘as adjusted’ amounts, which are Non-GAAP measures, see the sections entitled “Supplementary Information” and “Key Performance Indicators and Non-GAAP Measures”. The ‘as adjusted’ amounts presented above are reviewed regularly by management and our Board of Directors in assessing our performance and in making decisions regarding the ongoing operations of the business and the ability to generate cash flows. The ‘as adjusted’ amounts exclude (i) stock-based compensation expense (recovery); (ii) integration, restructuring and acquisition expenses; (iii) settlement of pension obligations; (iv) other items (net) and (v) in respect of net income and earnings per share, loss on the repayment of long-term debt and the related income tax impact of the above amounts.

“Rogers delivered a balanced set of financial and subscriber results in the third quarter, with continued growth in the face of an extremely competitive environment,” said Nadir Mohamed, President and Chief Executive Officer of Rogers Communications Inc. “The strength of our asset mix, combined with a focused execution on our priorities — wireless data growth, customer retention and managing our cost structure — enabled Rogers to generate continued strong margins and free cash flow while increasing the amount of cash returned to shareholders by double digits year-over-year.”

Highlights of the third quarter of 2011 include the following:

•

Generated consolidated quarterly revenue growth of 1%, with Wireless network revenue growth of 1%, Cable Operations revenue growth of 4%, and Media revenue growth of 10%, versus the same quarter last year. Adjusted operating profit increased by 38% at Media, but was offset by a 1% decline at Wireless primarily reflecting the upfront costs associated with a record number of new smartphone sales and


Rogers Communications Inc.		1		Third Quarter 2011

ongoing declines in voice ARPU, while adjusted operating profit at Cable Operations was relatively unchanged from the prior year period.

•

Wireless data revenue growth accelerated to 28% and net postpaid subscriber additions totalled 74,000, helping drive wireless data revenue to now comprise 36% of Wireless network revenue. During the third quarter, Wireless activated and upgraded 609,000 additional smartphones, of which approximately 42% were for subscribers new to Wireless, compared to 529,000 in the prior year quarter. This resulted in subscribers with smartphones, who typically generate ARPU nearly twice that of voice only subscribers, representing 52% of the overall postpaid subscriber base as at September 30, 2011, up from 37% as at September 30, 2010.

•

Rogers turned on Canada’s first Long Term Evolution (“LTE”) wireless network services across four of the country’s largest cities -- Toronto, Ottawa, Montreal and Vancouver -- giving more than 5.5 million Canadians access to the world’s fastest mobile network technology. LTE is a next generation wireless technology that enables unparalleled connectivity, capable of speeds that are between three and four times faster than HSPA+.

•

Wireless launched a set of innovative new wireless roaming solutions to help Canadians easily manage their data use while travelling outside of Canada. Another first in Canada, Rogers launched Roaming Data Passes that provide real-time data usage alerts while roaming abroad, giving cost certainty and peace of mind.

•

Rogers Remote TV Manager was introduced enabling Cable’s digital TV subscribers in Ontario the freedom and flexibility to search TV programming and manage PVR recordings online from anywhere with their computers, tablets and certain smartphones.

•

Cable launched its innovative new broadband-based Smart Home Monitoring offering, a first of its kind service in Canada that provides real-time home monitoring, control, viewing and alerts from computers or smartphones.

•

Media launched its CityNews Channel, a new 24-hour, interactive, local news channel in Toronto, as well as its reality TV competition series “Canada’s Got Talent” and its new Sportsnet Magazine, Canada’s first national biweekly sports magazine, leveraging the Rogers Sportsnet franchise and brand to connect readers with the premier source for sports features and opinion. Media also finalized an agreement to launch FX Canada.

•

Media relaunched the Setanta Sports service as Sportsnet World, providing Canadians with the world’s top international sports events including professional soccer, rugby and cricket.

•

Generated $492 million of consolidated free cash flow in the quarter, defined as adjusted operating profit less PP&E expenditures, interest on long-term debt (net of capitalization) and cash income taxes, up 4% from third quarter of 2010 and reflecting steady levels of adjusted operating profit, an increased level of PP&E expenditures and lower cash taxes. Free cash flow per share increased by 10% over the same period reflecting accretion from the ongoing share buyback program which has decreased the base of outstanding shares.

•

Repurchased 11.9 million RCI Class B Non-Voting shares during the quarter under our $1.5 billion share buyback authorization for $440 million, and paid dividends on our common shares of $194 million, in total returning $634 million of cash to shareholders, a 21% increase from third quarter of 2010.

This management’s discussion and analysis (“MD&A”), which is current as of October 25, 2011, should be read in conjunction with our Third Quarter 2011 Unaudited Interim Consolidated Financial Statements and Notes thereto, our 2010 Annual MD&A and our 2010 Audited Annual Consolidated Financial Statements and Notes thereto and other recent securities filings available on SEDAR at sedar.com or at rogers.com/investors.

The financial information presented herein has been prepared on the basis of International Financial Reporting Standards (“IFRS”) for interim financial statements and is expressed in Canadian dollars unless otherwise stated. Comparative amounts for 2010 included in this MD&A have been conformed to reflect our adoption of IFRS, with effect from January 1, 2010. Periods prior to January 1, 2010 have not been conformed and are prepared in


Rogers Communications Inc.		2		Third Quarter 2011

accordance with Canadian GAAP.

Concurrent with the impact of the transition to IFRS, we made certain changes to our reportable segments. Commencing January 1, 2011, the results of the former Rogers Retail segment are reported as follows: the results of the Video retailing portion are now presented as a separate operating sub-segment under the Cable segment, and the portions related to retail distribution of wireless and cable products and services are now included in the results of operations of Wireless and Cable Operations, respectively. In addition, certain intercompany transactions between the Rogers Business Solutions (“RBS”) segment and other operating segments, which were previously recorded as revenue in RBS and operating expenses in the other operating segments, are now recorded as cost recoveries in RBS beginning January 1, 2011. While there is no change to the consolidated results or to the adjusted operating profit of RBS, as a result of this second change, the reported revenue of RBS is lower as intercompany sales are no longer included. Comparative figures for 2010 have been reclassified to conform to the current year’s presentation of both changes discussed above.

As this MD&A includes forward-looking statements and assumptions, readers should carefully review the sections of this MD&A entitled “Caution Regarding Forward-Looking Statements, Risks and Assumptions”.

In this MD&A, the terms “we”, “us”, “our”, “Rogers” and “the Company” refer to Rogers Communications Inc. and our subsidiaries, which are reported in the following segments:

•

“Wireless”, which refers to our wireless communications operations, carried on by Rogers Communications Partnership (“RCP”);

•

“Cable”, which refers to our cable communications operations, carried on by RCP; and

•

“Media”, which refers to our wholly-owned subsidiary Rogers Media Inc. and its subsidiaries, including Rogers Broadcasting, which owns a group of 55 radio stations, the Citytv television network, the Sportsnet, Sportsnet ONE and Sportsnet World television networks, The Shopping Channel, the OMNI television stations, and Canadian specialty channels, including The Biography Channel Canada, G4 Canada, and Outdoor Life Network; Rogers Publishing, which publishes consumer and business magazines and trade journals; and Rogers Sports Entertainment, which owns the Toronto Blue Jays Baseball Club (“Blue Jays”) and Rogers Centre. Media also holds ownership interests in entities involved in specialty television content, television production and broadcast sales.

“RCI” refers to the legal entity Rogers Communications Inc., excluding our subsidiaries.

Substantially all of our operations are in Canada.

Throughout this MD&A, percentage changes are calculated using numbers rounded as they appear.


Rogers Communications Inc.		3		Third Quarter 2011

SUMMARIZED CONSOLIDATED FINANCIAL RESULTS

		$5,312			$5,312			$5,312			$5,312			$5,312			$5,312
		Three months ended September 30,									Nine months ended September 30,
(In millions of dollars, except per share amounts)	2011			2010⁽¹⁾			% Chg			2011			2010⁽¹⁾			% Chg

Operating revenue
Wireless	$	1,832		$	1,816			1		$	5,312		$	5,185			2
Cable
Cable Operations		826			798			4			2,471			2,379			4
RBS		96			115			(17	)		312			341			(9	)
Video		18			33			(45	)		60			111			(46	)
		940			946			(1	)		2,843			2,831			-
Media		407			369			10			1,183			1,045			13
Corporate items and eliminations		(30	)		(20	)		50			(87	)		(57	)		53
Total operating revenue		3,149			3,111			1			9,251			9,004			3

Adjusted operating profit (loss)⁽²⁾
Wireless		815			821			(1	)		2,366			2,469			(4	)
Cable
Cable Operations		367			367			-			1,146			1,047			9
RBS		19			11			73			66			28			136
Video		(7	)		(5	)		40			(16	)		(13	)		23
		379			373			2			1,196			1,062			13
Media		55			40			38			136			107			27
Corporate items and eliminations		(29	)		(16	)		81			(76	)		(67	)		13
Adjusted operating profit⁽²⁾		1,220			1,218			-			3,622			3,571			1
Stock-based compensation (expense) recovery⁽³⁾		19			(41	)		n/m			(30	)		(76	)		(61	)
Settlement of pension obligations⁽⁴⁾		-			-			n/m			(11	)		-			n/m
Integration, restructuring and acquisition expenses⁽⁵⁾		(17	)		(8	)		113			(47	)		(18	)		161
Other items, net⁽⁶⁾		-			(4	)		n/m			-			(19	)		n/m
Operating profit⁽²⁾		1,222			1,165			5			3,534			3,458			2
Other income and expense, net⁽⁷⁾		731			785			(7	)		2,298			2,258			2
Net income	$	491		$	380			29		$	1,236		$	1,200			3

Basic earnings per share⁽²⁾	$	0.91		$	0.66			38		$	2.26		$	2.06			10
Diluted earnings per share⁽²⁾	$	0.87		$	0.66			32		$	2.24		$	2.05			9

As adjusted:⁽²⁾
Net income	$	485		$	479			1		$	1,375		$	1,340			3
Basic earnings per share	$	0.89		$	0.83			7		$	2.51		$	2.30			9
Diluted earnings per share	$	0.89		$	0.83			7		$	2.50		$	2.29			9

Additions to PP&E⁽²⁾
Wireless	$	329		$	186			77		$	845		$	591			43
Cable
Cable Operations		190			177			7			517			454			14
RBS		13			11			18			42			25			68
Video		-			1			n/m			-			5			n/m
		203			189			7			559			484			15
Media		10			10			-			30			23			30
Corporate⁽⁸⁾		17			54			(69	)		40			145			(72	)
Total additions to PP&E	$	559		$	439			27		$	1,474		$	1,243			19

(1)

The comparative figures for 2010 have been reclassified to conform to the current period’s presentation. (i) Rogers adopted IFRS on January 1, 2011, effective January 1, 2010 and therefore comparative figures for 2010 are presented under IFRS. (ii) Commencing January 1, 2011, the results of the former Rogers Retail segment are segregated as follows: the results of operations of the Video business are presented as a separate operating segment and the former Rogers Retail segment results of operations related to wireless and cable products and services are included in the results of operations of Wireless and Cable Operations, respectively. In addition, commencing January 1, 2011, certain intercompany transactions between the RBS segment and other operating segments, which were previously recorded as revenue in RBS and operating expenses in the other operating segments, are recorded as cost recoveries in RBS and the comparative figures for 2010 have been reclassified to conform to the current period’s presentation.

(2)	As defined. See the sections entitled “Key Performance Indicators and Non-GAAP Measures” and “Supplementary Information”.

(3)	See the section entitled “Stock-based Compensation”.

(4)	Relates to the settlement of pension obligations for employees in the pension plans who had retired between January 1, 2009 and January 1, 2011, as a result of annuity purchases by the Company’s pension plans.

(5)	Costs incurred relate to (i) severances resulting from the targeted restructuring of our employee base and outsourcing of certain functions; (ii) transaction costs incurred and integration of acquired business; and (iii) the closure of certain Video stores and lease exit costs.

(6)	Relates to the resolution of obligations and accruals relating to prior periods.

(7)	See the section entitled “Reconciliation of Net Income to Operating Profit and Adjusted Operating Profit for the Period”.

(8)	See the section entitled “Additions to PP&E”.

n/m: not meaningful.


Rogers Communications Inc.		4		Third Quarter 2011

SEGMENT REVIEW

WIRELESS

Summarized Wireless Financial Results

		$1,707			$1,707			$1,707			$1,707			$1,707			$1,707
	Three months ended September 30,									Nine months ended September 30,
(In millions of dollars, except margin)	2011⁽¹⁾			2010⁽¹⁾			% Chg			2011⁽¹⁾			2010⁽¹⁾			% Chg

Operating revenue
Network revenue	$	1,707		$	1,692			1		$	4,960		$	4,885			2
Equipment sales		125			124			1			352			300			17
Total operating revenue		1,832			1,816			1			5,312			5,185			2

Operating expenses before the undernoted
Cost of equipment sales		319			341			(6	)		960			821			17
Other operating expenses		698			654			7			1,986			1,895			5
		1,017			995			2			2,946			2,716			8
Adjusted operating profit⁽²⁾		815			821			(1	)		2,366			2,469			(4	)
Stock-based compensation (expense) recovery⁽³⁾		3			(7	)		n/m			(5	)		(14	)		(64	)
Settlement of pension obligations⁽⁴⁾		-			-			n/m			(2	)		-			n/m
Integration, restructuring and acquisition expenses⁽⁵⁾		(5	)		(3	)		67			(13	)		(4	)		n/m
Other items, net⁽⁶⁾		-			-			n/m			-			(10	)		n/m
Operating profit⁽²⁾	$	813		$	811			-		$	2,346		$	2,441			(4	)

Adjusted operating profit margin as
% of network revenue⁽²⁾		47.7%			48.5%						47.7%			50.5%

Additions to PP&E⁽²⁾	$	329		$	186			77		$	845		$	591			43

Data revenue included in network revenue	$	611		$	476			28		$	1,725		$	1,327			30

(1)	The operating results of Cityfone Telecommunications Inc. (“Cityfone”) are included in the Wireless results of operations from the date of acquisition on July 9, 2010.

(2)	As defined. See the sections entitled “Key Performance Indicators and Non-GAAP Measures”.

(3)	See the section entitled “Stock-based Compensation”.

(4)	Relates to the settlement of pension obligations for employees in the pension plans who had retired between January 1, 2009 and January 1, 2011, as a result of annuity purchases by the Company’s pension plans.

(5)	Costs incurred relates to severances resulting from the targeted restructuring of our employee base and outsourcing of certain functions.

(6)	Relates to the resolution of obligations and accruals relating to prior periods.


Rogers Communications Inc.		5		Third Quarter 2011

Summarized Wireless Subscriber Results

		$61.79		$61.79		$61.79			$61.79		$61.79		$61.79
(Subscriber statistics in thousands,	Three months ended September 30,							Nine months ended September 30,
except ARPU, churn and usage)	2011		2010		Chg			2011		2010		Chg

Postpaid
Gross additions		380		387		(7	)		1,072		986		86
Net additions		74		125		(51	)		227		270		(43	)
Total postpaid retail subscribers⁽¹⁾		7,532		7,293		239			7,532		7,293		239
Monthly churn		1.36%		1.21%		0.15%			1.27%		1.12%		0.15%
Average monthly revenue per user (“ARPU”)⁽²⁾	$	72.08	$	74.47	$	(2.39	)	$	70.78	$	73.03	$	(2.25	)

Prepaid
Gross additions		258		217		41			654		510		144
Net additions		87		86		1			104		73		31
Total prepaid retail subscribers		1,756		1,588		168			1,756		1,588		168
Monthly churn		3.37%		2.84%		0.53%			3.68%		3.23%		0.45%
ARPU⁽²⁾	$	16.72	$	17.10	$	(0.38	)	$	15.71	$	16.10	$	(0.39	)

Total
Gross additions		638		604		34			1,726		1,496		230
Net additions		161		211		(50	)		331		343		(12	)
Total postpaid and prepaid retail subscribers⁽¹⁾		9,288		8,881		407			9,288		8,881		407
Monthly churn		1.73%		1.50%		0.23%			1.71%		1.49%		0.22%

Blended ARPU⁽²⁾	$	61.79	$	64.38	$	(2.59	)	$	60.64	$	63.04	$	(2.40	)
Blended average monthly minutes of usage		465		465		-			464		478		(14	)

(1)	In the second quarter of 2011, a change in operating policy resulted in a one-time decrease to the wireless postpaid subscriber base of approximately 20,000. These subscribers are not included in postpaid net additions or churn for the nine months ended September 30, 2011.

(2)	As defined. See the sections entitled “Key Performance Indicators and Non-GAAP Measures”.

Wireless Subscribers and Network Revenue

The combination of postpaid and prepaid gross subscriber additions in the three months ended September 30, 2011, reflects the strongest quarter of wireless subscriber gross additions ever on a combined basis. The year-over-year decrease in subscriber net additions for the quarter primarily reflects an increase in the level of postpaid churn associated with heightened competitive intensity. Included in postpaid gross additions are the highest number of new smartphone subscribers Wireless has ever added in a single quarter. The increase in prepaid subscriber gross additions primarily reflects sales activity from Wireless’ launch of its urban zone-based unlimited voice and text service, chatr, as well as prepaid wireless data plans for tablets and USB devices.

The increase in network revenue for the three and nine months ended September 30, 2011, compared to the corresponding periods of 2010, was driven predominantly by the continued growth of Wireless’ subscriber base and the increased adoption and usage of wireless data services, partially offset by a decrease in voice ARPU as discussed below.

For the three and nine months ended September 30, 2011, wireless data revenue increased by approximately 28% and 30% from the corresponding periods of 2010, to $611 million and $1,725 million, respectively. This growth in wireless data revenue reflects the continued penetration and growing usage of smartphone and wireless laptop and tablet devices which are driving increased usage of e-mail, wireless Internet access, text messaging and other wireless data services. For the three and nine months ended September 30, 2011, data revenue represented approximately 36% and 35%, respectively, of total network revenue, compared to approximately 28% and 27% in the corresponding periods of 2010.

For the three months ended September 30, 2011, Wireless activated and upgraded approximately 609,000 smartphones, compared to approximately 529,000 smartphones in the third quarter of 2010. This is the second highest number of smartphone activations and upgrades that Wireless has ever reported in a quarter. These smartphones were predominantly iPhone, BlackBerry and Android devices, of which approximately 42% were for subscribers new to Wireless, during the three months ended September 30, 2011. This resulted in subscribers with smartphones representing 52% of the overall postpaid subscriber base as at September 30, 2011, compared to 37% as at September 30, 2010. These subscribers generally commit to new multi-year-


Rogers Communications Inc.		6		Third Quarter 2011

term contracts, and typically generate ARPU nearly twice that of voice only subscribers.

Year-over-year postpaid ARPU decreased by 3%, which reflects declines in most categories of wireless voice revenues, offset by higher wireless data and feature revenues. The 14% decrease in the wireless voice component of postpaid ARPU is primarily due to the general level of competitive intensity in the wireless voice services market, which was largely offset by a 24% increase in wireless data ARPU. During the quarter, Wireless heightened its focus on initiatives aimed at slowing the decline of voice ARPU which has accelerated in recent quarters.

Wireless Equipment Sales

The year-over-year increase for the three and nine months ended September 30, 2011 in revenue from equipment sales, including activation fees and net of equipment subsidies, versus the corresponding periods of 2010, reflects the increase in the number of smartphone activations.

Wireless Operating Expenses

		$1,019			$1,019		$1,019			$1,019		$1,019		$1,019
	Three months ended September 30,								Nine months ended September 30,
(In millions of dollars)	2011			2010		% Chg			2011		2010		% Chg

Operating expenses
Cost of equipment sales	$	319		$	341		(6	)	$	960	$	821		17
Other operating expenses		698			654		7			1,986		1,895		5
Operating expenses before the undernoted		1,017			995		2			2,946		2,716		8
Stock-based compensation expense (recovery)⁽¹⁾		(3	)		7		n/m			5		14		(64	)
Settlement of pension obligations⁽²⁾		-			-		n/m			2		-		n/m
Integration, restructuring and acquisition expenses⁽³⁾		5			3		67			13		4		n/m
Other items, net⁽⁴⁾		-			-		n/m			-		10		n/m
Total operating expenses	$	1,019		$	1,005		1		$	2,966	$	2,744		8

(1)	See the section entitled “Stock-based Compensation”.

(2)	Relates to the settlement of pension obligations for employees in the pension plans who had retired between January 1, 2009 and January 1, 2011, as a result of annuity purchases by the Company’s pension plans.

(3)	Costs incurred relates to severances resulting from the targeted restructuring of our employee base and outsourcing of certain functions.

(4)	Relates to the resolution of obligations and accruals relating to prior periods.

The decrease in cost of equipment sales for the three months ended September 30, 2011, compared to the corresponding period of 2010, was the result of a reduction in the number of hardware upgrades by existing customers and a change in the mix of iPhones for upgrading subscribers. Also attributing to the decline in cost of equipment sales was a modest reduction in the net cost per upgrade unit as a result of changes to device upgrade policies earlier in 2011. The increase in cost of equipment sales for the nine months ended September 30, 2011 reflects a larger number of smartphone device upgrades versus the corresponding period of 2010.

Total retention spending, including subsidies on handset upgrades, was $173 million and $548 million in the three and nine months ended September 30, 2011, respectively, compared to $221 million and $532 million in the corresponding periods of 2010. The changes for the three and nine month periods primarily reflect the smartphone volume and cost changes discussed in the preceding paragraph.

The year-over-year increase in other operating expenses for the three months ended September 30, 2011, excluding retention spending discussed above was driven by higher network and service costs associated with a larger subscriber base as well as higher sales costs combined with the impact of certain one-time adjustments which reduced operating expenses in the third quarter of 2010. These increases were partially offset by savings resulting from cost reduction initiatives and scale efficiencies across various functions.

Wireless Adjusted Operating Profit

The 1% year-over-year decrease in adjusted operating profit and the 47.7% adjusted operating profit margin on network revenue (which excludes equipment sales revenue) for the three months ended September 30, 2011 primarily reflect the increase in the total operating expenses discussed above, partially offset by the increase in network revenue. Excluding the one-time adjustments in the third quarter of 2010, adjusted operating profit would have increased by 1%.


Rogers Communications Inc.		7		Third Quarter 2011

Wireless Additions to PP&E

Wireless additions to PP&E are classified into the following categories:


	Three months ended September 30,							Nine months ended September 30,
(In millions of dollars)	2011		2010		% Chg			2011		2010		% Chg

Additions to PP&E
Capacity	$	194	$	76		155		$	477	$	300		59
Quality		64		65		(2	)		157		181		(13	)
Network - other		10		10		-			37		23		61
Information technology and other		61		35		74			174		87		100
Total additions to PP&E	$	329	$	186		77		$	845	$	591		43

Wireless PP&E additions for the three months ended September 30, 2011 reflects spending on network capacity, such as radio channel additions, network core improvements and network enhancing features, including the continued deployment of our HSPA+ network and the initial construction and launch of our LTE network. Quality-related additions to PP&E are associated with upgrades to the network to enable higher throughput speeds in addition to improved network access associated activities, such as site build programs and network sectorization work. Moreover, Quality includes test and monitoring equipment and operating support system activities. Investments in Network – other are associated with network reliability and renewal initiatives, infrastructure upgrades and new product platforms. Information technology and other wireless specific system initiatives include billing and back-office system upgrades, and other facilities and equipment spending.

The increase in Wireless PP&E additions for the three and nine months ending September 30, 2011 is largely due to investments to build out the LTE network in Canada’s top four markets with the services now available in Ottawa, Toronto, Montreal, and Vancouver and spending on Information technology investments on our customer billing systems and platforms for new services.


Rogers Communications Inc.		8		Third Quarter 2011

CABLE

Summarized Cable Financial Results

		(38.9)			(38.9)			(38.9)			(38.9)			(38.9)			(38.9)
	Three months ended September 30,									Nine months ended September 30,
(In millions of dollars, except margin)	2011⁽¹⁾			2010⁽¹⁾			% Chg			2011⁽¹⁾			2010⁽¹⁾			% Chg

Operating revenue
Cable Operations⁽²⁾	$	826		$	798			4		$	2,471		$	2,379			4
RBS		96			115			(17	)		312			341			(9	)
Video		18			33			(45	)		60			111			(46	)
Total operating revenue		940			946			(1	)		2,843			2,831			-

Adjusted operating profit (loss) before the undernoted
Cable Operations⁽²⁾		367			367			-			1,146			1,047			9
RBS		19			11			73			66			28			136
Video		(7	)		(5	)		40			(16	)		(13	)		23
Adjusted operating profit⁽³⁾		379			373			2			1,196			1,062			13
Stock-based compensation (expense) recovery⁽⁴⁾		2			(6	)		n/m			(4	)		(12	)		(67	)
Settlement of pension obligations⁽⁵⁾		-			-			n/m			(5	)		-			n/m
Integration, restructuring and acquisition expenses⁽⁶⁾		(5	)		(5	)		-			(23	)		(13	)		77
Other items, net⁽⁷⁾		-			-			n/m			-			(5	)		n/m
Operating profit⁽³⁾	$	376		$	362			4		$	1,164		$	1,032			13

Adjusted operating profit (loss) margin⁽³⁾
Cable Operations⁽²⁾		44.4%			46.0%						46.4%			44.0%
RBS		19.8%			9.6%						21.2%			8.2%
Video		(38.9%)			(15.2%)						(26.7%)			(11.7%)

Additions to PP&E⁽³⁾
Cable Operations⁽²⁾	$	190		$	177			7		$	517		$	454			14
RBS		13			11			18			42			25			68
Video		-			1			n/m			-			5			n/m
Total additions to PP&E	$	203		$	189			7		$	559		$	484			15

(1)

The operating results of Kincardine Cable T.V. Ltd. (“Kincardine”) and Compton Cable T.V. Ltd. (“Compton”) are included in the Cable Operations results of operations from the dates of acquisition on July 30, 2010 and February 28, 2011, respectively. The operating results of Blink Communications Inc. (“Blink”) and Atria Networks LP (“Atria”) are included in the RBS results of operations from the dates of acquisition on January 29, 2010 and January 4, 2011, respectively.

(2)	Cable Operations segment includes Cable Television, Internet and Home Phone services.

(3)	As defined. See the sections entitled “Key Performance Indicators and Non-GAAP Measures”.

(4)	See the section entitled “Stock-based Compensation”.

(5)	Relates to the settlement of pension obligations for employees in the pension plans who had retired between January 1, 2009 and January 1, 2011, as a result of annuity purchases by the Company’s pension plans.

(6)

Costs incurred relate to (i) severance costs resulting from the targeted restructuring of our employee base and outsourcing of certain functions; (ii) acquisition transaction costs incurred and the integration of acquired businesses; and (iii) the closure of certain Video stores and lease exit costs.

(7)	Relates to the resolution of obligations and accruals relating to prior periods.

The following segment discussions provide a detailed discussion of the Cable operating results.


Rogers Communications Inc.		9		Third Quarter 2011

CABLE OPERATIONS

Summarized Financial Results

		$1,423			$1,423			$1,423			$1,423			$1,423			$1,423
	Three months ended September 30,									Nine months ended September 30,
(In millions of dollars, except margin)	2011⁽¹⁾			2010⁽¹⁾			% Chg			2011⁽¹⁾			2010⁽¹⁾			% Chg

Operating revenue
Cable Television	$	475		$	458			4		$	1,423		$	1,365			4
Internet		232			213			9			688			631			9
Home Phone		119			127			(6	)		360			383			(6	)
Total Cable Operations operating revenue		826			798			4			2,471			2,379			4

Operating expenses before the undernoted
Cost of equipment sales		7			8			(13	)		19			29			(34	)
Other operating expenses		452			423			7			1,306			1,303			-
		459			431			6			1,325			1,332			(1	)
Adjusted operating profit⁽²⁾		367			367			-			1,146			1,047			9
Stock-based compensation (expense) recovery⁽³⁾		2			(6	)		n/m			(4	)		(12	)		(67	)
Settlement of pension obligations⁽⁴⁾		-			-			n/m			(4	)		-			n/m
Integration, restructuring and acquisition expenses⁽⁵⁾		(3	)		(2	)		50			(6	)		(3	)		100
Other items, net⁽⁶⁾		-			-			n/m			-			(7	)		n/m
Operating profit⁽²⁾	$	366		$	359			2		$	1,132		$	1,025			10

Adjusted operating profit margin⁽²⁾		44.4%			46.0%						46.4%			44.0%

(1)	The operating results of Kincardine and Compton are included in the Cable Operations results of operations from the dates of acquisition on July 30, 2010 and February 28, 2011, respectively.

(2)	As defined. See the sections entitled “Key Performance Indicators and Non-GAAP Measures”.

(3)	See the section entitled “Stock-based Compensation”.

(4)	Relates to the settlement of pension obligations for employees in the pension plans who had retired between January 1, 2009 and January 1, 2011, as a result of annuity purchases by the Company’s pension plans.

(5)	Costs incurred relates to severances resulting from the targeted restructuring of our employee base and outsourcing of certain functions.

(6)	Relates to the resolution of obligations and accruals relating to prior periods.


Rogers Communications Inc.		10		Third Quarter 2011

Summarized Subscriber Results

		5,115			5,115			5,115			5,115			5,115			5,115
	Three months ended September 30,									Nine months ended September 30,
(Subscriber statistics in thousands)	2011			2010			Chg			2011			2010			Chg

Cable homes passed⁽¹⁾		3,740			3,688			52			3,740			3,688			52

Television
Net additions (losses)		9			7			2			(8	)		8			(16	)
Total television subscribers⁽¹⁾		2,303			2,309			(6	)		2,303			2,309			(6	)

*Digital cable*
Households, net additions		22			16			6			29			53			(24	)
Total digital cable households⁽¹⁾		1,767			1,719			48			1,767			1,719			48

Cable high-speed Internet
Net additions⁽²⁾		39			27			12			58			51			7
Total cable high-speed Internet subscribers⁽¹⁾⁽²⁾		1,768			1,673			95			1,768			1,673			95

Cable telephony lines
Net additions and migrations		16			20			(4	)		37			58			(21	)
Total cable telephony lines⁽¹⁾		1,044			995			49			1,044			995			49

Total cable service units⁽³⁾
Net additions		64			54			10			87			117			(30	)
Total cable service units		5,115			4,977			138			5,115			4,977			138

Circuit-switched lines
Net losses and migrations to cable telephony platform		(1	)		(12	)		11			(12	)		(39	)		27
Total circuit-switched lines⁽⁴⁾		1			83			(82	)		1			83			(82	)

(1)

On February 28, 2011, we acquired 6,000 television subscribers, 5,000 digital cable households, 4,000 cable high-speed Internet subscribers and 4,000 cable telephony lines from our acquisition of Compton. These subscribers are not included in net additions, but are included in the ending total balance for the three and nine months ended September 30, 2011. In addition, the acquisition resulted in an increase in cable homes passed of 9,000.

(2)

Effective April 1, 2011, approximately 20,000 wholesale cable Internet subscribers which were previously included in RBS are now included in Cable. The transfer of these 20,000 subscribers was recorded as an adjustment to the total subscriber base for the nine months ended September 30, 2011. Incremental subscriber activity for this base is included in net additions for the nine months ending September 30, 2011.

(3)	Total cable service units are comprised of television subscribers, cable high-speed Internet subscribers and cable telephony lines.

(4)

During the three and nine months ended September 30, 2011, approximately 1,000 and 33,000 circuit-switched lines, respectively, were migrated to third-party resellers, with the exception of approximately 3,000 which were migrated to RBS in the first quarter of 2011. These migrations are not included in net losses and migrations, but are included in the ending total balance for the three and nine months ended September 30, 2011.

Cable Television Revenue

The increase in Cable Television revenue for the three and nine months ended September 30, 2011, compared to the corresponding periods of 2010, reflects the timing of pricing changes made in March 2011 and August 2010, together with continued increase in penetration of our digital cable product offerings and greater usage of on-demand and pay-per-view services.

The digital cable subscriber base grew by 3% and represented 77% of the television subscriber base as at September 30, 2011, compared to 74% as at September 30, 2010. Increased demand from subscribers for the larger selection of digital content, video on-demand, HDTV and personal video recorder (“PVR”) equipment continues to contribute to the growth in the digital subscriber base and Cable Television revenue.

Cable Internet Revenue

The year-over-year increase in Internet revenue for the three and nine months ended September 30, 2011 reflects the increase in the Internet subscriber base, combined with the timing of Internet service pricing changes made in July 2010 and in March 2011. Also impacting the increase is the timing and mix of promotional programs and a general movement by subscribers towards higher end tiers and an increase in revenue from additional usage.

With the high-speed Internet base at approximately 1.8 million subscribers, Internet penetration is approximately


Rogers Communications Inc.		11		Third Quarter 2011

47% of the homes passed by our cable networks and 77% of our television subscriber base, as at September 30, 2011.

Home Phone Revenue

The year-over-year decrease in Home Phone revenue for the three and nine months ended September 30, 2011, reflects the declines in revenue associated with the legacy circuit-switched telephony base that Cable is in the final stages of divesting, which was partially offset by the increase in the cable telephony customer base combined with price changes in March 2011.

Excluding the impact of the declining circuit-switched telephony business that Cable is in the process of divesting as described below, the year-over-year revenue growth for Home Phone and for Cable Operations overall for the three months ended September 30, 2011 would have been 4% and 5%, respectively.

Cable telephony lines in service grew 5% from September 30, 2010 to September 30, 2011. At September 30, 2011, cable telephony lines represented 28% of the homes passed by our cable networks and 45% of television subscribers. The lower net additions of cable telephony lines in the three and nine months ended September 30, 2011, versus the corresponding periods of 2010, are the result of lower sales due to a combination of product maturation and increased competition.

Cable continues to focus principally on growing its on-net cable telephony line base. As a result, in Q3 2010, it announced that it was divesting the assets of its off-net circuit-switched telephony business where services cannot be provided over Rogers’ own cable network facilities. Under this arrangement, most of its co-location sites and related equipment were sold. In addition, the sale involved residential circuit-switched lines, with the customers served by these facilities being migrated to a third-party reseller starting late in the third quarter of 2010 and continuing over the first half of 2011. This is the principal driver of the decline of 82,000 in the legacy circuit-switched telephony base from September 30, 2010 to the current level of approximately 1,000. During the three and nine months ended September 30, 2011, approximately 1,000 and 33,000 circuit-switched lines, were migrated to third-party resellers, with the exception of 3,000 which were migrated to RBS in the first quarter of 2011. For the three and nine months ended September 30, 2011, the revenue reported by Cable Operations associated with the residential circuit-switched telephony business being divested totalled approximately $3 million and $13 million, respectively, whereas the circuit-switched telephony revenues in the three and nine months ended September 30, 2010 totalled approximately $15 million and $50 million, respectively.

Cable Operations Operating Expenses

The increase in Cable Operations’ operating expenses for the three months ended September 30, 2011, compared to the corresponding periods of 2010, was due to higher network and service costs associated with a larger subscriber base, programming, and sales and marketing activities combined with the impact of certain one-time adjustments which reduced operating expenses in the third quarter of 2010. These increases were offset by cost reduction and efficiency initiatives across various functions, with activity driven costs generally benefiting from the lower number of new customer additions and customer churn versus the same period in the prior year. Cable Operations continues to focus on implementing a program of permanent cost reduction and efficiency improvement initiatives to control the overall growth in operating expenses.

Cable Operations Adjusted Operating Profit

Cable Operations’ adjusted operating profit margins were 44.4% and 46.4% for the three and nine months ended September 30, 2011, respectively, compared to 46.0% and 44.0% in the corresponding periods of 2010. Excluding the one-time adjustments in the third quarter of 2010, adjusted operating profit would have increased by 3% and the adjusted operating profit margin would have been 44.6% for the three months ended September 30, 2010.


Rogers Communications Inc.		12		Third Quarter 2011

ROGERS BUSINESS SOLUTIONS

Summarized Financial Results

		19.8		19.8			19.8			19.8			19.8			19.8
	Three months ended September 30,								Nine months ended September 30,
(In millions of dollars, except margin)	2011⁽¹⁾		2010⁽¹⁾			% Chg			2011⁽¹⁾			2010⁽¹⁾			% Chg

Operating revenue	$	96	$	115			(17	)	$	312		$	341			(9	)

Operating expenses before the undernoted		77		104			(26	)		246			313			(21	)
Adjusted operating profit⁽²⁾		19		11			73			66			28			136
Settlement of pension obligations⁽³⁾		-		-			n/m			(1	)		-			n/m
Integration, restructuring and acquisition expenses⁽⁴⁾		-		(1	)		n/m			(6	)		(4	)		50
Operating profit⁽²⁾	$	19	$	10			90		$	59		$	24			146

Adjusted operating profit margin⁽²⁾		19.8%		9.6%						21.2%			8.2%

(1)	The operating results of Blink and Atria are included in the RBS results of operations from the dates of acquisition on January 29, 2010 and January 4, 2011, respectively.

(2)	As defined. See the sections entitled “Key Performance Indicators and Non-GAAP Measures”.

(3)	Relates to the settlement of pension obligations for employees in the pension plans who had retired between January 1, 2009 and January 1, 2011, as a result of annuity purchases by the Company’s pension plans.

(4)	Costs relate to (i) severance costs resulting from the targeted restructuring of our employee base; (ii) acquisition transaction costs incurred and the integration of acquired businesses; and (iii) lease exit costs.

Summarized Subscriber Results


	Three months ended September 30,							Nine months ended September 30,
(Subscriber statistics in thousands)	2011		2010		Chg			2011		2010		Chg

Local line equivalents⁽¹⁾
Total local line equivalents		129		153		(24	)		129		153		(24	)

Broadband data circuits⁽²⁾⁽³⁾
Total broadband data circuits		32		36		(4	)		32		36		(4	)

(1)

Local line equivalents include individual voice lines plus Primary Rate Interfaces (“PRIs”) at a factor of 23 voice lines each. The amount includes approximately nil and 3,000 circuit-switched lines which were migrated from Cable Operations to RBS during the three and nine months ended September 30, 2011, respectively.

(2)

Broadband data circuits are those customer locations accessed by data networking technologies including DOCSIS, DSL, E10/100/1000, OC 3/12 and DS 1/3. Effective April 1, 2011, approximately 20,000 circuits which were previously included in RBS are now included in Cable. These subscribers were removed from the ending balance for the three and nine months ended September 30, 2011.

(3)	On January 4, 2011, RBS acquired approximately 4,000 broadband data circuits from its acquisition of Atria, and these are reflected in the total amounts shown.

RBS Revenue

The decrease in RBS revenue for the three and nine months ended September 30, 2011, primarily reflects the planned decline in certain categories of lower margin legacy business, partially offset by the growth in next generation IP and other on-net services. RBS’ focus is primarily on IP-based services and increasingly on leveraging higher margin on-net and near-net revenue opportunities utilizing both the acquired Atria and Blink networks and Cable’s existing network facilities to expand offerings to the medium-sized enterprise, public sector and carrier markets. The lower margin legacy business, which includes long-distance, local and certain legacy data services, continues to decline and is down 37% for the quarter and 29% year to date. In comparison, the higher margin next generation business is up 5% and 7%, respectively. For the three and nine months ended September 30, 2011, the acquisition of Atria contributed revenue of $18 million and $55 million, respectively.

RBS Operating Expenses

Operating expenses decreased for the three and nine months ended September 30, 2011, compared to the corresponding periods of 2010 and reflects the planned decrease in legacy services related costs due to lower volumes and subscriber levels, permanent cost reductions resulting from a 2010 restructuring of the employee base, lower sales within certain customer segments, and operating efficiencies stemming from the integration of Blink and Atria.


Rogers Communications Inc.		13		Third Quarter 2011

RBS Adjusted Operating Profit

The year-over-year growth in adjusted operating profit reflects the acquisition of the higher margin Atria and Blink on-net data businesses and the RBS focus on growing its on-net next generation data revenue. This strategic shift has more than offset the declines in the lower margin legacy voice and data services. Cost reductions and efficiency initiatives across various functions have also contributed to higher operating profit and operating profit margins in the quarter. For the three and nine months ended September 30, 2011, the acquisition of Atria contributed adjusted operating profit of $11 million and $33 million, respectively, contributing to the growth of the next generation services market, including data and Internet.

VIDEO

Summarized Financial Results

		(38.9)			(38.9)			(38.9)			(38.9)			(38.9)			(38.9)
	Three months ended September 30,									Nine months ended September 30,
(In millions of dollars, except margin)	2011			2010			% Chg			2011			2010			% Chg

Operating revenue	$	18		$	33			(45	)	$	60		$	111			(46	)

Operating expenses before the undernoted		25			38			(34	)		76			124			(39	)
Adjusted operating loss⁽¹⁾		(7	)		(5	)		40			(16	)		(13	)		23
Integration, restructuring and acquisition expenses⁽²⁾		(2	)		(2	)		-			(11	)		(6	)		83
Other items, net⁽³⁾		-			-			n/m			-			2			n/m
Operating loss⁽¹⁾	$	(9	)	$	(7	)		29		$	(27	)	$	(17	)		59

Adjusted operating loss margin⁽¹⁾		(38.9%	)		(15.2%	)					(26.7%	)		(11.7%	)

(1)	As defined. See the sections entitled “Key Performance Indicators and Non-GAAP Measures”.

(2)	Costs relate to (i) severance costs resulting from the targeted restructuring of our employee base; and (ii) the closure of certain Video stores.

(3)	Relates to the resolution of accruals relating to prior periods.

Video Revenue

The results of the Video segment include our video and game sale and rental business which has and continues to be restructured and downsized coinciding with the declining market opportunity. The decrease in Video revenue for the three and nine months ended September 30, 2011, compared to the corresponding periods of 2010, was the result of a continued decline in video rental and sales activity and the reduction of nearly 20% in the number of store locations since the start of 2010.

Video Adjusted Operating Loss

The adjusted operating loss at Video increased for the three months and nine months ended September 30, 2011, compared to the corresponding periods of 2010, reflecting the trends in revenue and operating expenses above.


Rogers Communications Inc.		14		Third Quarter 2011

Cable Additions to PP&E

Cable additions to PP&E are classified into the following categories:


	Three months ended September 30,							Nine months ended September 30,
(In millions of dollars)	2011		2010		% Chg			2011		2010		% Chg

Additions to PP&E
Customer premise equipment	$	74	$	87		(15	)	$	155	$	199		(22	)
Scalable infrastructure		56		47		19			181		134		35
Line extensions		12		10		20			32		30		7
Upgrades and rebuild		4		6		(33	)		8		14		(43	)
Support capital		44		27		63			141		77		83
Total Cable Operations		190		177		7			517		454		14
RBS		13		11		18			42		25		68
Video		-		1		n/m			-		5		n/m
Total additions to PP&E	$	203	$	189		7		$	559	$	484		15

The Cable Operations segment categorizes its PP&E expenditures according to a standardized set of reporting categories that were developed and agreed to by the U.S. cable television industry and that facilitate comparisons of additions to PP&E between different cable companies. Under these industry definitions, Cable Operations additions to PP&E are classified into the following five categories:

•

Customer premise equipment (“CPE”), which includes the equipment for digital set-top terminals, Internet modems and associated installation costs;

•

Scalable infrastructure, which includes non-CPE costs to meet business growth and to provide service enhancements;

•

Line extensions, which includes network costs to enter new service areas;

•

Upgrades and rebuild, which includes the costs to modify or replace existing coaxial cable, fibre-optic equipment and network electronics; and

•

Support capital, which includes the costs associated with the purchase, replacement or enhancement of non-network assets.

Additions to Cable PP&E include continued investments in the cable network to enhance the customer experience through increased speed and performance of our Internet service and capacity enhancements to our digital network to allow for incremental HD and On-Demand services to be added.

The increase in Cable Operations PP&E for the three and nine months ended September 30, 2011, compared to the corresponding periods of 2010, resulted primarily from higher Scalable infrastructure and Support capital expenditures due to projects associated with increasing capacity on our Video platform and quality related investments on our Voice platform and timing of spend on project to de-risk our infrastructures. Support capital investments that contributed to the increase relate to customer billing systems and platforms for new services. Lower investments in Set Top Boxes due to lower subscriber activity and lower unit pricing contributed to the decrease in Customer premise equipment for the three and nine months ended September 30, 2011.

The increases in RBS PP&E additions for the three and nine months ended September 30, 2011 reflect the timing of expenditures on customer networks and support capital.


Rogers Communications Inc.		15		Third Quarter 2011

MEDIA

Summarized Media Financial Results

		13.5			13.5			13.5		13.5			13.5			13.5
	Three months ended September 30,								Nine months ended September 30,
(In millions of dollars, except margin)	2011⁽¹⁾			2010⁽¹⁾			% Chg		2011⁽¹⁾			2010⁽¹⁾			% Chg

Operating revenue	$	407		$	369			10	$	1,183		$	1,045			13

Operating expenses before the undernoted		352			329			7		1,047			938			12
Adjusted operating profit⁽²⁾		55			40			38		136			107			27
Stock-based compensation (expense) recovery⁽³⁾		2			(7	)		n/m		(5	)		(13	)		(62	)
Settlement of pension obligations⁽⁴⁾		-			-			n/m		(3	)		-			n/m
Integration, restructuring and acquisition expenses⁽⁵⁾		(7	)		-			n/m		(11	)		(1	)		n/m
Other items, net		-			(4	)		n/m		-			(4	)		n/m
Operating profit⁽²⁾	$	50		$	29			72	$	117		$	89			31

Adjusted operating profit margin⁽²⁾		13.5%			10.8%					11.5%			10.2%

Additions to PP&E⁽²⁾	$	10		$	10			-	$	30		$	23			30

(1)	The operating results of BV! Media Inc. (“BV Media”), BOUNCE, and BOB-FM are included in Media’s results of operations from the dates of acquisition on October 1, 2010, January 31, 2011 and January 31, 2011, respectively.

(2)	As defined. See the section entitled “Key Performance Indicators and Non-GAAP Measures”.

(3)	See the section entitled “Stock-based Compensation”.

(4)	Relates to the settlement of pension obligations for employees in the pension plans who had retired between January 1, 2009 and January 1, 2011, as a result of annuity purchases by the Company’s pension plans.

(5)	Costs incurred relate to (i) severance costs resulting from the targeted restructuring of our employee base; and (ii) acquisition transaction costs incurred and the integration of acquired businesses.

Media Revenue

The increases in Media’s revenue for the three and nine months ended September 30, 2011, respectively, compared to the corresponding periods of 2010, were mainly the result of increased advertising sales and new subscriber fees generated from Sportsnet ONE. For the three and nine months ended September 30, 2011, Radio, Sportsnet, Television, Sports Entertainment, and Digital Media all contributed to the growth in revenue and was partially offset by a decline at Publishing, primarily due to the disposition of a portion of the business publishing portfolio, and relatively flat year-over-year sales at The Shopping Channel. The slowing in the rate of Media’s revenue growth from the 13% in the second quarter of 2011 to the 10% in the current quarter in part reflects a slow down in advertising market activity stemming from apprehension associated with negative global economic news.

Media Operating Expenses

Media’s operating expenses increased for the three and nine months ended September 30, 2011, compared to the corresponding periods of 2010, primarily due to additional costs related to the acquisition of BV Media and planned Television programming.

Media Adjusted Operating Profit

The increase in Media’s adjusted operating profit for the three and nine months ended September 30, 2011, compared to the corresponding periods of 2010, primarily reflects the revenue and expense changes discussed above.

Media Additions to PP&E

Media’s PP&E additions during the nine months ended September 30, 2011 increased from the corresponding periods in 2010 due primarily to Television broadcast equipment additions related to the CRTC mandated digital transition and planned infrastructure upgrades.


Rogers Communications Inc.		16		Third Quarter 2011

RECONCILIATION OF NET INCOME TO OPERATING PROFIT AND ADJUSTED OPERATING PROFIT FOR THE PERIOD

The items listed below represent the consolidated income and expense amounts that are required to reconcile net income as defined under IFRS to the non-GAAP measures operating profit and adjusted operating profit for the period. See the section entitled “Supplementary Information” for a full reconciliation to adjusted operating profit, adjusted net income, and adjusted earnings per share. For details of these amounts on a segment-by-segment basis and for an understanding of intersegment eliminations on consolidation, the following section should be read in conjunction with Note 4 to the Unaudited Interim Consolidated Financial Statements entitled “Segmented Information”.

Net Income and Earnings Per Share

		$1,220			$1,220			$1,220			$1,220			$1,220			$1,220
	Three months ended September 30,									Nine months ended September 30,
(In millions of dollars)	2011			2010			% Chg			2011			2010			% Chg

Net income	$	491		$	380			29		$	1,236		$	1,200			3
Income tax expense		159			135			18			440			469			(6	)
Other income⁽¹⁾		(1	)		(2	)		(50	)		(11	)		(11	)		-
Finance costs:
Interest on long-term debt		167			167			-			499			505			(1	)
Loss on repayment of long-term debt		-			87			n/m			99			87			14
Foreign exchange loss (gain)		29			(14	)		n/m			18			(7	)		n/m
Change in fair value of derivative instruments		(43	)		9			n/m			(23	)		(4	)		n/m
Capitalized interest		(9	)		(2	)		n/m			(19	)		(2	)		n/m
Amortization of deferred transaction costs		2			6			(67	)		6			11			(45	)
Operating income		795			766			4			2,245			2,248			-
Depreciation and amortization		427			399			7			1,289			1,210			7
Operating profit		1,222			1,165			5			3,534			3,458			2
Stock-based compensation expense (recovery)		(19	)		41			n/m			30			76			(61	)
Settlement of pension obligations		-			-			n/m			11			-			n/m
Integration, restructuring and acquisition expenses		17			8			113			47			18			161
Other items, net		-			4			n/m			-			19			n/m
Adjusted operating profit	$	1,220		$	1,218			-		$	3,622		$	3,571			1

(1)	Other income includes share of the income in associates and joint ventures accounted for using the equity method, net of tax.

We recorded net income of $491 million and $1,236 million for the three and nine months ended September 30, 2011, respectively, or basic earnings per share of $0.91 and $2.26, and diluted earnings per share of $0.87 and $2.24, respectively, compared to net income of $380 million and $1,200 million, or basic earnings per share of $0.66 and $2.06, and diluted earnings per share of $0.66 and $2.05, respectively in the corresponding periods of 2010.

On an adjusted basis, we recorded net income of $485 million and $1,375 million for the three and nine months ended September 30, 2011, respectively, or basic adjusted earnings per share of $0.89 and $2.51, and diluted adjusted earnings per share of $0.89 and $2.50, respectively, compared to adjusted net income of $479 million and $1,340 million, or basic adjusted earnings per share of $0.83 and $2.30, and diluted adjusted earnings per share of $0.83 and $2.29, respectively in the corresponding periods of 2010.

Income Tax Expense

Our effective income tax rate for the three and nine months ended September 30, 2011 was 24.5% and 26.3%, respectively. The 2011 effective income tax rates differed from the 2011 statutory income tax rate of 28.0% primarily due to an income tax recovery of $13 million and $37 million resulting from the effect of tax rate changes for the three and nine months ended September 30, 2011.


Rogers Communications Inc.		17		Third Quarter 2011


	Three months ended September 30,						Nine months ended September 30,
(In millions of dollars)	2011			2010			2011			2010

Statutory income tax rate		28.0%			30.5%			28.0%			30.5%

Income before income taxes		$ 650			$ 515			$ 1,676			$ 1,669

Computed income tax expense		$ 182			$ 157			$ 469			$ 509
Increase (decrease) in income taxes resulting from:
Effect of tax rate changes		(13	)		(23	)		(37	)		(46	)
Non-deductible (taxable) items		(3	)		1			4			2
Other items		(7	)		-			4			4
Income tax expense		$ 159			$ 135			$ 440			$ 469
Effective income tax rate		24.5%			26.2%			26.3%			28.1%

With respect to cash income tax payments as opposed to accounting income tax expense, we expect to use substantially all of our remaining non-capital income tax loss carryforwards during 2011. As a result of the utilization of our non-capital income tax loss carryforwards as well as the elimination of the deferral of partnership income proposed in the 2011 Federal budget which was substantively enacted on October 4, 2011, we estimate our cash income tax payments will increase significantly in 2012 from the approximately $90 million we expect in 2011. While both of these items impact the timing of cash taxes, neither are expected to have a material impact to our income tax expense for accounting purposes. See the section entitled “Caution Regarding Forward-Looking Statements, Risks and Assumptions” below.

Interest on Long-Term Debt

The change in interest expense for the three and nine months ended September 30, 2011, compared to the corresponding periods of 2010, including the impact of cross-currency interest rate exchange agreements (“Debt Derivatives”), reflects the decrease in the weighted-average interest rate on long-term debt at September 30, 2011 compared to September 30, 2010, offset by an increase in the amount of debt compared to September 30, 2010, each a result of the refinancing activities completed in the third quarter of 2010 and in the first quarter of 2011. See the section entitled “Consolidated Liquidity and Capital Resources”.

Loss on Repayment of Long-Term Debt

During the three months ended September 30, 2011, there were no losses on repayment of long-term debt. During the nine months ended September 30, 2011, we recorded a loss on repayment of long-term debt of $99 million related to the redemption of two public debt issues. (See “Overview of Liquidity, Financing and Share Capital Activities — Debt Redemptions and Termination of Debt Derivatives”).

Foreign Exchange Gain (Loss)

During the three and nine months ended September 30, 2011, the Canadian dollar weakened by 8.4 cents and 5.4 cents respectively versus the U.S. dollar resulting in a foreign exchange loss of $29 million and $18 million respectively, primarily related to the US$350 million Senior Notes due 2038 for which the associated Debt Derivatives have not been designated as hedges for accounting purposes. During the three and nine months ended September 30, 2010, the Canadian dollar strengthened by 3.6 cents and 2.2 cents respectively versus the U.S. dollar, resulting in a foreign exchange gain of $14 million and $7 million respectively, also primarily related to the US$350 million Senior Notes due 2038 which are not designated as hedges for accounting purposes.

Change in Fair Value of Derivative Instruments

The change in the fair value of derivative instruments expense in the three and nine months ended September 30, 2011 was primarily the result of (i) a non-cash change in the fair value of the Debt Derivatives hedging our US$350 million Senior Notes due 2038 that have not been designated as hedges for accounting purposes and (ii) a non-cash gain pertaining to an estimate of the relative hedge ineffectiveness of Debt Derivatives


Rogers Communications Inc.		18		Third Quarter 2011

which have been designated as hedges for accounting purposes. The change in fair value of the Debt Derivatives was primarily caused by changes in the value of the Canadian dollar relative to that of the U.S. dollar. During the three and nine months ended September 30, 2011, the Canadian dollar weakened by 8.4 cents and 5.4 cents, respectively, versus the U.S. dollar. We have recorded the fair value of our Debt Derivatives using an estimated credit-adjusted mark-to-market valuation. For the impact, refer to the section entitled “Mark-to-Market Value of Derivatives”.

Operating Income

The increase in our operating income in the three months ended September 30, 2011, compared to the corresponding period of 2010, reflects the increase in revenue of $38 million offset by the growth in expenses of $9 million. For the nine months ended September 30, 2011, compared to the corresponding period of 2010, the growth in revenue of $247 million was offset by the growth in expenses of $250 million. See the section above entitled “Segment Review” for a detailed discussion of respective segment results.

Depreciation and Amortization Expense

The increase in depreciation and amortization expense for the three and nine months ended September 30, 2011, compared to the corresponding periods of 2010, primarily reflects an increase in amortization of certain intangible assets relating to our recent acquisitions and an increase in depreciation on PP&E additions.

Stock-based Compensation

A summary of stock-based compensation expense (recovery) is as follows:

		$(19)			$(19)		$(19)		$(19)
	Three months ended September 30,					Nine months ended September 30,
(In millions of dollars)	2011			2010		2011		2010

Wireless	$	(3	)	$	7	$	5	$	14
Cable		(2	)		6		4		12
Media		(2	)		7		5		13
Corporate		(12	)		21		16		37
	$	(19	)	$	41	$	30	$	76

At September 30, 2011, we had a liability of $182 million, compared to a liability of $217 million at September 30, 2010, related to stock-based compensation recorded at its fair value, including stock options, restricted share units and deferred share units. In the three and nine months ended September 30, 2011, $4 million and $28 million, as compared to $15 million and $49 million for the corresponding periods of 2010, respectively was paid to holders of stock options, restricted share units and deferred share units upon exercise using a cash settlement feature which we adopted for stock options in May 2007. The expense in a given period, which is included in operating costs under employee salaries and benefits, is generally a function of the vesting of options and units and a true up to the liability associated with changes to the fair value of the underlying options and units each reporting period.

Settlement of Pension Obligations

During the nine months ended September 30, 2011, we incurred a non-cash loss from the settlement of pension obligations of approximately $11 million resulting from a lump-sum contribution of approximately $18 million to our pension plans, following which the pension plans purchased approximately $68 million of annuities from insurance companies for all employees who had retired between January 1, 2009 and January 1, 2011. See the section entitled “Pension Plan Purchase of Annuities”.

Integration, Restructuring and Acquisition Expenses

During the three and nine months ended September 30, 2011, we incurred $17 million and $47 million, respectively, of integration, restructuring and acquisition expenses to improve our costs structure related to (i)


Rogers Communications Inc.		19		Third Quarter 2011

severance costs associated with the targeted restructuring of our employee base ($15 million and $31 million, respectively); (ii) acquisition transaction costs incurred and integration of acquired businesses ($nil and $4 million, respectively); and (iii) the closure of certain Rogers Video stores and lease exit costs ($2 million and $12 million, respectively).

Adjusted Operating Profit

As discussed above, the adjusted operating profit in Wireless decreased modestly, which was offset by the increases at Cable and Media for the three and nine months ended September 30, 2011, compared to the three and nine months ended September 30, 2010. For discussions of the results of operations of each of these segments, refer to the respective segment discussions above.

For the three months ended September 30, 2011, consolidated adjusted operating profit increased to $1,220 million, compared to $1,218 million in the corresponding period of the prior year. Consolidated adjusted operating profit for the three months ended September 30, 2011 and September 30, 2010, respectively, excludes (i) stock-based compensation expense (recovery) of ($19) million and $41 million; (ii) integration, restructuring and acquisition expenses of $17 million and $8 million; and (iii) other items of $nil and $4 million.

For the nine months ended September 30, 2011, consolidated adjusted operating profit increased to $3,622 million, compared to $3,571 million in the corresponding period of the prior year. Consolidated adjusted operating profit for the nine months ended September 30, 2011 and September 30, 2010, respectively, excludes (i) stock-based compensation expense of $30 million and $76 million; (ii) integration, restructuring and acquisition expenses of $47 million and $18 million; (iii) settlement of pension obligations of $11 million and $nil; and (iv) other items of $nil and $19 million.

For details on the determination of adjusted operating profit, which is a non-GAAP measure, see the sections entitled “Supplementary Information” and “Key Performance Indicators and Non-GAAP Measures”.

ADDITIONS TO PP&E

For details on the additions of PP&E for the Wireless, Cable and Media segments, refer to the section above entitled “Segment Review”.

Corporate Additions to PP&E

The corporate additions to PP&E of $17 million and $40 million for the three and nine months ended September 30, 2011, respectively, and $54 million and $145 million for the three and nine months ended September 30, 2010, respectively, were mainly related to spending on facilities in the current quarter and an enterprise-wide billing and business support systems initiative in the prior periods.

OVERVIEW OF LIQUIDITY, FINANCING AND SHARE CAPITAL ACTIVITIES

Consolidated Liquidity and Capital Resources

Operations

Three months ended September 30, 2011

For the three months ended September 30, 2011, cash generated from operations before changes in non-cash operating items, which is calculated by removing the effect of all non-cash items from net income, decreased to $1,239 million from $1,252 million in the corresponding period of 2010.

Taking into account the changes in non-cash operating working capital items, income taxes paid and interest paid for the three months ended September 30, 2011, cash generated from operations was $1,140 million, compared to $829 million in the corresponding period of 2010. The $311 million increase is primarily the result of a $258


Rogers Communications Inc.		20		Third Quarter 2011

million increase in non-cash operating working capital items and a $128 million decrease in income taxes paid, partially offset by a $62 million increase in interest paid. Total net funds generated or raised in the three months ended September 30, 2011 aggregated approximately $1,261 million, which comprised of the cash generated from operations together with the following:

•

$120 million net advances borrowed under the bank credit facility; and

•

$1 million from the issuance of Class B Non-Voting shares under the exercise of employee stock options.

Net funds used during the three months ended September 30, 2011 totalled approximately $1,216 million, the details of which include the following:

•

additions to PP&E of $521 million, including $38 million of related changes in non-cash working capital;

•

the payment of quarterly dividends of $194 million on our Class A Voting and Class B Non-Voting shares;

•

the purchase for cancellation of approximately 12 million Class B Non-Voting shares for an aggregate purchase price of approximately $440 million; and

•

payments for program rights of $52 million; and

•

other investments of $9 million.

Taking into account the opening bank advances of $69 million at the beginning of the period and the generation and uses of funds described above, the bank advances at September 30, 2011 were $24 million.

Nine months ended September 30, 2011

For the nine months ended September 30, 2011, cash generated from operations before changes in non-cash operating items, which is calculated by removing the effect of all non-cash items from net income, increased to $3,696 million from $3,668 million in the corresponding period of 2010.

Taking into account the changes in non-cash operating working capital items, income taxes paid and interest paid for the nine months ended September 30, 2011, cash generated from operations was $2,858 million, compared to $2,625 million in the corresponding period of 2010. The $233 million increase is primarily the result of a $103 million increase in non-cash operating working capital items and a $134 million decrease in income taxes paid, partially offset by a $32 million increase in interest paid. Total net funds generated or raised in the nine months ended September 30, 2011 aggregated approximately $4,829 million, which comprised of cash generated from operations together with the following:

•

the receipt of an aggregate $1.85 billion gross proceeds from the March 21, 2011 issuance of $1,450 million of 5.34% Senior Notes due 2021 and $400 million of 6.56% Senior Notes due 2041;

•

$120 million net advances borrowed under the bank credit facility; and

•

$1 million from the issuance of Class B Non-Voting shares under the exercise of employee stock options.

Net funds used during the nine months ended September 30, 2011 totalled approximately $4,808 million, the details of which include the following:

•

additions to PP&E of $1,595 million, including $121 million of related changes in non-cash working capital;

•

the payment of an aggregate $1,208 million for the March 21, 2011 redemption of two public debt issues maturing in 2012 (comprising $802 million principal and $76 million premiums) and


Rogers Communications Inc.		21		Third Quarter 2011

settlement of the associated Debt Derivatives and forward contracts (comprising $330 million net settlement paid on termination);

•

the payment of quarterly dividends of $568 million on our Class A Voting and Class B Non-Voting shares;

•

the purchase for cancellation of approximately 21 million Class B Non-Voting shares for an aggregate purchase price of $725 million;

•

acquisitions and other net investments aggregating $560 million, including $426 million to acquire Atria Networks, $40 million to acquire Compton, $38 million to acquire two radio stations in Edmonton, Alberta and London, Ontario, $16 million to acquire certain dealer stores, $15 million for a long-term deposit, $11 million to acquire the remaining ownership in a subsidiary, and other net investments of $10 million;

•

payments for program rights of $142 million; and

•

payments for transaction costs of $10 million.

Taking into account the opening bank advances of $45 million at the beginning of the period and the generation and uses of funds described above, the bank advances at September 30, 2011 were $24 million.

Financing

Our long-term debt instruments are described in Note 14 and Note 15 to the 2010 Annual Audited Consolidated Financial Statements and Note 10 and Note 14 to the Unaudited Interim Consolidated Financial Statements for the nine months ended September 30, 2011.

At September 30, 2011, $120 million of long-term debt was borrowed under our $2.4 billion bank credit facility.

Debt Issuances

On March 21, 2011, RCI issued in Canada $1,850 million aggregate principal amount of senior notes, comprised of $1,450 million of 5.34% Senior Notes due 2021 (the “2021 Notes”) and $400 million of 6.56% Senior Notes due 2041 (the “2041 Notes”). The 2021 Notes were issued at a discount of 99.954% for an effective yield of 5.346% per annum if held to maturity while the 2041 Notes were issued at par to yield 6.56% if held to maturity. RCI received aggregate net proceeds of approximately $1,840 million from the issuance of the 2021 Notes and the 2041 Notes after deducting the original issue discount, agents’ fees and other related expenses. The aggregate net proceeds from the 2021 Notes and the 2041 Notes were used to fund the March 2011 redemption of two public debt issues maturing in 2012 together with the termination of the associated Debt Derivatives, each as described below under “Debt Redemptions and Termination of Debt Derivatives”, and to partially repay outstanding advances under our bank credit facility.

Each of the 2021 Notes and the 2041 Notes are guaranteed by RCP and rank pari passu with all of RCI’s other senior unsecured notes and debentures and bank credit facility.

Debt Redemptions and Termination of Debt Derivatives

On March 21, 2011, RCI redeemed the entire U.S. $350 million principal amount of its 7.875% Senior Notes due 2012 (the “7.875% Notes”) and the entire U.S. $470 million principal amount of its 7.25% Senior Notes due 2012 (the “7.25% Notes” and, together with the “7.875% Notes”, the “2012 Notes”). RCI paid an aggregate of approximately $878 million for the redemption of the 2012 Notes (the “Redemptions”), including approximately $802 million aggregate principal amount for the 2012 Notes and $76 million for the premiums payable in connection with the Redemptions. Concurrently with RCI’s redemption of the 2012 Notes, RCI made a net payment of approximately $330 million to terminate the associated Debt Derivatives (the “Derivatives Termination”). As a result, the total cash expenditure associated with the Redemptions and the Derivatives Termination was approximately $1,208 million and RCI recorded a loss on repayment of


Rogers Communications Inc.		22		Third Quarter 2011

long-term debt of $99 million, comprised of the aggregate redemption premiums of $76 million, a net loss on the termination of the related Debt Derivatives of $22 million, and write-off of deferred financing costs of $2 million, offset by a write down of a previously recorded fair value increment of $1 million.

Pension Plans’ Purchase of Annuities

During the nine months ended September 30, 2011, we made a lump-sum contribution of approximately $18 million to our pension plans, following which the pension plans purchased approximately $68 million of annuities from insurance companies for all employees who had retired between January 1, 2009 and January 1, 2011. The purchase of the annuities relieves us of primary responsibility for, and eliminates significant risk associated with, the accrued benefit obligation for the retired employees. The non-cash loss arising from this transaction of approximately $11 million was recorded in the nine months ended September 30, 2011.

Normal Course Issuer Bid

On February 16, 2011, we announced that the Toronto Stock Exchange had accepted a notice filed by RCI of our intention to renew our NCIB for a further one year period commencing February 22, 2011 and ending February 21, 2012, and during such one year period we may purchase on the TSX up to the lesser of 39.8 million Class B Non-Voting shares and that number of Class B Non-Voting shares that can be purchased under the NCIB for an aggregate purchase price of $1.5 billion. The actual number of Class B Non-Voting shares purchased under the NCIB and the timing of such purchases will be determined by RCI considering market conditions, stock prices, its cash position, and other factors.

During the three months ended September 30, 2011, we purchased approximately 12 million Class B Non-Voting shares for an aggregate purchase price of $440 million under the NCIB. During the nine months ended September 30, 2011, we purchased approximately 21 million Class B Non-Voting shares for an aggregate purchase price of $725 million under the NCIB. Of the shares purchased under the NCIB during the nine months ended September 30, 2011, 9 million were purchased pursuant to private agreements between RCI and arm’s length third party sellers. Each of these purchases was made under issuer bid exemption orders issued by the Ontario Securities Commission and each is included in calculating the number of Class B Non-Voting shares that we may purchase pursuant to the NCIB.

Credit Ratings Upgrade

In October 2011, Moody’s Investors Service upgraded the rating for RCI’s senior unsecured debt to Baa1 (from Baa2) with a stable outlook.

Interest Rate and Foreign Exchange Management

Foreign Currency Forward Contracts

In July 2011, we entered into U.S. $720 million of foreign currency forward contracts to hedge the foreign exchange risk on certain forecast expenditures (“Expenditure Derivatives”). The Expenditure Derivatives fix the exchange rate on an aggregate U.S. $20 million per month of our forecast expenditures at an average exchange rate of Cdn $0.9643/U.S. $1 from August 2011 through July 2014. As at September 30, 2011, U.S. $680 million of these Expenditure Derivatives remain outstanding, all of which qualify as hedges for accounting purposes.

Economic Hedge Analysis

For the purposes of our discussion on the hedged portion of long-term debt, we have used non-GAAP measures in that we include all Debt Derivatives hedging our U.S. dollar-denominated debt, whether or not they qualify as hedges for accounting purposes, since all such Debt Derivatives are used for risk-management purposes only and are designated as hedges of specific debt instruments for economic purposes. As a result, the Canadian dollar equivalent of our U.S. dollar-denominated long-term debt illustrated in the


Rogers Communications Inc.		23		Third Quarter 2011

table below reflects the contracted foreign exchange rate for all of our Debt Derivatives regardless of qualifications for accounting purposes as a hedge.

At September 30, 2011, 100% of our U.S. dollar-denominated debt was hedged on an economic basis while 91.7% of our U.S. dollar-denominated debt was hedged on an accounting basis. The Debt Derivatives hedging our U.S. $350 million Senior Notes due 2038 do not qualify as hedges for accounting purposes.

Hedged Debt Position


(In millions of dollars, except percentages)	September 30, 2011				December 31, 2010

U.S. dollar-denominated long-term debt		U.S.	$	4,230		U.S.	$	5,050
Hedged with Debt Derivatives		U.S.	$	4,230		U.S.	$	5,050
Hedged exchange rate				1.1340				1.1697
Percent hedged⁽¹⁾				100.0%				100.0%

Amount of long-term debt at fixed rates:⁽²⁾
Total long-term debt		Cdn	$	10,467		Cdn	$	9,607
Total long-term debt at fixed rates		Cdn	$	10,347		Cdn	$	9,607
Percent of long-term debt fixed				98.9%				100.0%

Weighted average interest rate on long-term debt				6.27%				6.68%

(1)

Pursuant to the requirements for hedge accounting under IAS 39, Financial Instruments: Recognition and Measurement, on September 30, 2011 and December 31, 2010, RCI accounted for 91.7% and 93.1%, respectively, of its Debt Derivatives as hedges against designated U.S. dollar-denominated debt. As a result, on September 30, 2011 91.7% of U.S. dollar-denominated debt is hedged for accounting purposes versus 100% on an economic basis.

(2)	Long-term debt includes the effect of the Debt Derivatives.

Mark-to-Market Value of Derivatives

In accordance with IFRS, we have recorded our Debt Derivatives and our Expenditure Derivatives (together our “Derivatives”) using an estimated credit-adjusted mark-to-market valuation which is determined by increasing the treasury related discount rates used to calculate the risk-free estimated mark-to-market valuation by an estimated bond spread (“Bond Spread”) for the relevant term and counterparty for each Derivative. In the case of Derivatives accounted for as assets by Rogers (i.e. those Derivatives for which the counterparties owe Rogers), the Bond Spread for the bank counterparty was added to the risk-free discount rate to determine the estimated credit-adjusted value whereas, in the case of Derivatives accounted for as liabilities (i.e. those Derivatives for which Rogers owes the counterparties), Rogers’ Bond Spread was added to the risk-free discount rate. The estimated credit-adjusted values of the Derivatives are subject to changes in credit spreads of Rogers and its counterparties.

The effect of estimating the credit-adjusted fair value of Derivatives at September 30, 2011, versus the unadjusted risk-free mark-to-market value of Derivatives is illustrated in the table below. As at September 30, 2011, the credit-adjusted estimated net liability value of our Debt Derivatives was $342 million, which is $12 million more than the unadjusted risk-free mark-to-market net liability value. The credit-adjusted estimated net asset value of our Expenditure Derivatives was $61 million, which is $1 million less than the unadjusted risk-free mark-to-market net asset value.


Rogers Communications Inc.		24		Third Quarter 2011


(In millions of dollars)	Derivatives in an asset position (A)			Derivatives in a liability position (B)			Net asset (liability) position (A + B)

Debt Derivatives
Mark-to-market value - risk-free analysis	$	167		$	(497	)	$	(330	)
Mark-to-market value - credit-adjusted estimate (carrying value)		145			(487	)		(342	)
Difference, Debt Derivatives		(22	)		10			(12	)

Expenditure Derivatives
Mark-to-market value - risk-free analysis		62			-			62
Mark-to-market value - credit-adjusted estimate (carrying value)		61			-			61

Difference, Expenditure Derivatives		(1	)		-			(1	)

Total Difference	$	(23	)	$	10		$	(13	)

Long-term Debt Plus Net Derivative Liabilities

The aggregate of our long-term debt plus net derivatives liabilities related to our Debt Derivatives at the mark-to-market values using risk-free analysis (“the risk-free analytical value”) is used by us and many analysts to most closely represent the Company’s net debt-related obligations for valuation purposes, calculated as follows:


(In millions of dollars)	September 30, 2011		December 31, 2010

Long-term debt⁽¹⁾	$	10,104	$	8,723
Net derivative liabilities for Debt Derivatives at the risk-free analytical value⁽²⁾	$	330	$	917
Total	$	10,434	$	9,640

(1)	Before deducting fair value decrement arising from purchase accounting and deferred transaction costs.

(2)	Includes current and long-term portions.

We believe that the non-GAAP financial measure of long-term debt plus net derivative liabilities related to our Debt Derivatives at the risk-free analytical value provides the most relevant and practical measure of our outstanding net debt-related obligations. We use this non-GAAP measure internally to conduct valuation-related analysis and make capital structure-related decisions and it is reviewed regularly by management. This is also useful to investors and analysts in enabling them to analyze our enterprise and equity value and to assess various leverage ratios as performance measures. This non-GAAP measure does not have a standardized meaning and should be viewed as a supplement to, and not a substitute for, our results of operations or financial position reported under IFRS.

Outstanding Common Share Data

Set out below is our outstanding share data as at September 30, 2011 and at September 30, 2010. During the nine months ended September 30, 2011, we repurchased for cancellation 21 million Class B Non-Voting shares for an aggregate purchase price of $725 million. For additional information, refer to Note 18 of our 2010 Annual Audited Consolidated Financial Statements and to Note 12 of our Unaudited Interim Consolidated Financial Statements for the three and nine months ended September 30, 2011.


Rogers Communications Inc.		25		Third Quarter 2011


	September 30, 2011		September 30, 2010
Common shares⁽¹⁾

Class A Voting		112,462,014		112,462,014
Class B Non-Voting		422,231,128		453,155,899
Total Common shares		534,693,142		565,617,913

Options to purchase Class B Non-Voting shares

Outstanding options		11,696,564		12,328,192
Outstanding options exercisable		6,507,614		6,892,509

(1)

Holders of our Class B Non-Voting shares are entitled to receive notice of and to attend meetings of our shareholders, but, except as required by law or as stipulated by stock exchanges, are not entitled to vote at such meetings. If an offer is made to purchase outstanding Class A Voting shares, there is no requirement under applicable law or RCI’s constating documents that an offer be made for the outstanding Class B Non-Voting shares and there is no other protection available to shareholders under RCI’s constating documents. If an offer is made to purchase both Class A Voting shares and Class B Non-Voting shares, the offer for the Class A Voting shares may be made on different terms than the offer to the holders of Class B Non-Voting shares.

Dividends and Other Payments on Equity Securities

We declared and paid dividends on each of our outstanding Class A Voting and Class B Non-Voting shares, as follows:


Declaration date	Record date	Payment date	Dividend per share	Dividends paid (in millions)

February 16, 2010	March 5, 2010	April 1, 2010	$ 0.32	$188
April 29, 2010	May 14, 2010	July 2, 2010	$ 0.32	$187
August 18, 2010	September 9, 2010	October 1, 2010	$ 0.32	$184
October 26, 2010	November 18, 2010	January 4, 2011	$ 0.32	$179

February 15, 2011	March 18, 2011	April 1, 2011	$0.355	$195
April 27, 2011	June 15, 2011	July 4, 2011	$0.355	$194
August 17, 2011	September 15, 2011	October 3, 2011	$0.355	$190

In February 2011, the Board adopted a dividend policy which increased the annualized dividend rate from $1.28 to $1.42 per Class A Voting and Class B Non-Voting share effective immediately to be paid in quarterly amounts of 35.5 cents per share. Such quarterly dividends are only payable as and when declared by our Board and there is no entitlement to any dividend prior thereto.

COMMITMENTS AND CONTRACTUAL OBLIGATIONS

Our material obligations under firm contractual arrangements, including commitments for future payments under long-term debt arrangements and operating lease arrangements, are summarized in our 2010 Annual MD&A, and are further discussed in Notes 14, 15 and 23 of our 2010 Annual Audited Consolidated Financial Statements. Other than the issuance of the 2021 Notes and the 2041 Notes, the debt redemptions and terminations of Debt Derivatives and entering into our Expenditure Derivatives, each as described above under “Overview of Liquidity, Financing and Share Capital Activities”, there have been no significant changes to these material contractual obligations since December 31, 2010, except as follows:

In April 2011, the Company entered into an agreement to purchase network capital assets to be used in the building of the wireless network. The agreement has a four-year term, resulting in committed expenditures of $650 million.

GOVERNMENT REGULATION AND REGULATORY DEVELOPMENTS

The significant government regulations which impact our operations are summarized in our 2010 Annual MD&A. Significant developments regarding those regulations since our 2010 MD&A was published on


Rogers Communications Inc.		26		Third Quarter 2011

February 28, 2011 are as follows:

Consultation on the Renewal of Cellular and Personal Communications Services (“PCS”) Spectrum Licences

In March 2011, Industry Canada released its decisions regarding the renewal process for cellular and PCS licences that begin expiring in March 2011, thereby concluding the consultation process initiated in March 2009. Key decisions are:

•

At the end of the current licence term and where licencees are in compliance with all conditions of licence, new cellular and PCS licences will be issued with a term of 20 years; and

•

The current annual fee of $0.0351 per MHz per population of the licenced area will continue to apply to all cellular and PCS licences, including those initially assigned by auction. The Industry Canada Minister may review and amend the fees during the licence term after further consultation with licencees.

A decision regarding existing research and development conditions of licence will be released separately. Until such time, the current conditions of licence remain in effect.

Review of Broadcasting Regulations including Fee-for-Carriage and Distant Signal Fees

In February 2011, in a 2-1 split decision, the Federal Court of Appeal ruled that the CRTC has the authority to implement its proposed “value for signal” regime described in Broadcasting Decision 2010-167. Rogers filed for leave to appeal to the Supreme Court of Canada in May 2011 as did TELUS and Cogeco. In September 2011, the Supreme Court gave leave to appeal. The appeal is expected to be heard in 2012.

CRTC Review of Wholesale Internet Service Pricing and Usage-based Billing

In March 2011, the CRTC announced the proceeding to review the pricing of wholesale Internet services whereby reselling ISPs would be subject to additional charges when their end-users exceeded specific bandwidth caps would be expanded to include an oral public hearing commencing in July 2011. Final comments were filed on July 29, 2011.

Wireless Roaming Policy

In June 2011, in Telecom Decision CRTC 2011-360, the CRTC dismissed Globalive’s October 2010 complaint that claimed Rogers was providing an undue preference to itself in providing our chatr brand with seamless handoff for roaming and requested that seamless handoff be provided to Globalive’s mobile operator WIND. This type of roaming was not mandated in the Industry Canada conditions of licence. In August 2011, Globalive Wireless Management Corp. and The Public Interest Advocacy Centre (PIAC) filed, separately, applications requesting that the Commission review and vary its June 2011 Decision. Rogers filed its response opposing the applications on September 29, 2011 and the applicants filed reply comments on October 11, 2011.

CRTC Vertical Integration Policy Decision

In September 2011, the CRTC released Broadcasting Regulatory Policy CRTC 2011-601 (Policy) setting out the Commission’s decisions on its regulatory framework for vertical integration. Vertical integration refers to the ownership or control by one entity of both programming services, such as conventional television stations, or pay and specialty services, as well as distribution services, such as cable systems or direct-to-home (DTH) satellite services. The Policy:

•

Prohibits companies from offering television programs on an exclusive basis to their mobile or Internet subscribers. Any program broadcast on television, including hockey games and other live events, must be made available to competitors under fair and reasonable terms.

•

Allows companies to offer exclusive programming to their Internet or mobile customers provided that it is


Rogers Communications Inc.		27		Third Quarter 2011

produced specifically for an Internet portal or a mobile device.

•

Adopts a code of conduct to prevent anti-competitive behaviour and ensure all distributors, broadcasters and online programming services negotiate in good faith. To protect Canadians from losing a television service during negotiations, broadcasters must continue to provide the service in question and distributors must continue to offer it to their subscribers.

•

Directs the vertically integrated entities to report by April 2012 on how they have provided consumers with more choice and flexibility in the services to which they can subscribe through, for example, pick and pay models. If the Commission finds that insufficient progress has been made in this area a further proceeding will be held to impose obligations to achieve the desired results.

UPDATES TO RISKS AND UNCERTAINTIES

Our significant risks and uncertainties are discussed in our 2010 Annual MD&A, which was current as of February 28, 2011, and should be reviewed in conjunction with this interim quarterly MD&A.

KEY PERFORMANCE INDICATORS AND NON-GAAP MEASURES

We measure the success of our strategies using a number of key performance indicators that are defined and discussed in our 2010 Annual MD&A and this interim quarterly MD&A. These key performance indicators are not measurements under IFRS or Canadian GAAP, but we believe they allow us to appropriately measure our performance against our operating strategy as well as against the results of our peers and competitors. They include:

•

Network revenue and ARPU;

•

Subscriber counts and subscriber churn;

•

Operating expenses;

•

Cost of equipment sales;

•

Stock-based compensation expenses;

•

Integration, restructuring and acquisition expenses;

•

Operating profit;

•

Adjusted operating profit;

•

Adjusted net income;

•

Adjusted operating profit margin;

•

Free cash flow;

•

Additions to PP&E; and

•

Long-term debt plus net derivative liabilities (assets).

RELATED PARTY ARRANGEMENTS

We have entered into certain transactions with companies, the partners or senior officers of which are Directors of Rogers. During the three and nine months ended September 30, 2011, total amounts paid by us to these related parties, directly or indirectly, were $10 million and $28 million, respectively, compared to $9 million and $27 million for the three and nine months ended September 30, 2010, respectively. These payments were for legal services, printing and commissions paid on premiums for insurance coverage.

We have entered into certain transactions with our controlling shareholder and companies controlled by that controlling shareholder. These transactions are subject to formal agreements approved by the Audit Committee. Total amounts received from (paid to) these related parties, during the three and nine months ended September 30, 2011 and September 30, 2010 were less than $1 million, respectively.

These transactions are recorded at the amount agreed to by the related parties and are reviewed by the Audit Committee.


Rogers Communications Inc.		28		Third Quarter 2011

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

In our 2010 Annual Audited Consolidated Financial Statements and Notes thereto, as well as in our 2010 Annual MD&A, we have identified the accounting policies and estimates that are critical to the understanding of our business operations and our results of operations. On January 1, 2011, with the adoption of IFRS, the critical accounting policies and estimates of Wireless, Cable and Media have been updated to conform with this adoption. Please refer to Note 2 of our First and Third Quarter 2011 Unaudited Interim Consolidated Financial Statements for our adoption of IFRS and a detailed discussion regarding our significant accounting policies, application of critical accounting estimates and judgments, and recent accounting pronouncements.

NEW ACCOUNTING STANDARDS

Recent Accounting Pronouncements

International Financial Reporting Standards

In February 2008, the Accounting Standards Board (“AcSB”) confirmed that IFRS will be mandatory in Canada for profit-oriented publicly accountable entities for fiscal periods beginning on or after January 1, 2011. Our first annual IFRS financial statements will be for the year ending December 31, 2011 and will include the comparative period of 2010. Starting with the March 31, 2011 quarterly report, we have provided unaudited consolidated quarterly financial information in accordance with IFRS including comparative figures for 2010. Please refer to Note 3 of our First and Third Quarter 2011 Unaudited Interim Consolidated Financial Statements for a summary of the differences between our financial statements previously prepared under Canadian GAAP and to those under IFRS as at January 1, 2010, for the three and nine months ended September 30, 2010, and as at and for the year ended December 31, 2010.

IFRS 7, Financial Instrument: Disclosures

In October 2010, the IASB amended IFRS 7, Financial Instruments: Disclosures (“IFRS 7”). This amendment enhances the disclosure requirements for transfers of financial assets that result in derecognition. This amendment is effective for the Company’s interim and annual consolidated financial statements commencing January 1, 2012. The Company is assessing the impact of this new standard on its consolidated financial statements.

IAS 12, Deferred Tax: Recovery of Underlying Assets

In December 2010, the IASB amended IAS 12, Deferred Tax: Recovery of Underlying Assets (“IAS 12”). IAS 12 will now include a rebuttal presumption that determines the deferred tax on investment property measured using the fair value model from IAS 40 should be based on its carrying amount being recovered through sale. Also, the standard has also been amended to include the requirement that deferred tax on non-depreciable assets measured using the revaluation model in IAS 16 should be measured on the sale basis. This new standard is effective for the Company’s interim and annual consolidated financial statements commencing January 1, 2012. The Company is assessing the impact of this new standard on its consolidated financial statements.

IFRS 10, Consolidated Financial Statements

In May 2011, the IASB issued IFRS 10, Consolidated Financial Statements (“IFRS 10”). IFRS 10, which replaces the consolidation requirements of SIC-12 Consolidation-Special Purpose Entities and IAS 27 Consolidated and Separate Financial Statements, establishes principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities. This new standard is effective for the Company’s interim and annual consolidated financial statements commencing January 1, 2013. The Company is assessing the impact of this new standard on its consolidated financial statements.


Rogers Communications Inc.		29		Third Quarter 2011

IFRS 11, Joint Arrangements

In May 2011, the IASB issued IFRS 11, Joint Arrangements (“IFRS 11”). IFRS 11, which replaces the guidance in IAS 31, Interests in Joint Ventures, provides for a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form (as is currently the case). The standard addresses inconsistencies in the reporting of joint arrangements by requiring a single method to account for interests in jointly controlled entities. This new standard is effective for the Company’s interim and annual consolidated financial statements commencing January 1, 2013. The Company is assessing the impact of this new standard on its consolidated financial statements.

IFRS 12, Disclosure of Interests in Other Entities

In May 2011, the IASB issued IFRS 12, Disclosure of Interests in Other Entities (“IFRS 12”). IFRS 12 establishes new and comprehensive disclosure requirements for all forms of interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured entities. This new standard is effective for the Company’s interim and annual consolidated financial statements commencing January 1, 2013. The Company is assessing the impact of this new standard on its consolidated financial statements.

IFRS 13, Fair Value Measurement

In May 2011, the IASB issued IFRS 13, Fair Value Measurement (“IFRS 13”). IFRS 13 replaces the fair value guidance contained in individual IFRSs with a single source of fair value measurement guidance. The standard completes the IASB’s project to converge fair value measurement in IFRS and United States Generally Accepted Accounting Principles. This new standard is effective for the Company’s interim and annual consolidated financial statements commencing January 1, 2013. The Company is assessing the impact of this new standard on its consolidated financial statements.

IAS 1, Presentation of Financial Statements

In June 2011, the IASB amended IAS 1, Presentation of Financial Statements (“IAS 1”). This amendment retains the ‘one or two statement’ approach to presenting the Statements of Income and Comprehensive Income at the option of the entity and only revises the way other comprehensive income is presented. This new standard is effective for the Company’s interim and annual consolidated financial statements commencing January 1, 2013. The Company is assessing the impact of this new standard on its consolidated financial statements.

IAS 19, Employee Benefits

In June 2011, the IASB amended IAS 19, Employee Benefits (“IAS 19”). This amendment eliminated the use of the ‘corridor’ approach and instead mandates all remeasurement impacts be recognized in OCI. It also enhances the disclosure requirements, providing better information about characteristics of defined benefit plans and the risk that entities are exposed to through participation in those plans. This new standard is effective for the Company’s interim and annual consolidated financial statements commencing January 1, 2013. The Company is assessing the impact of this new standard on its consolidated financial statements.

IAS 27, Separate Financial Statements

In May 2011, the IASB amended IAS 27, Separate Financial Statements (“IAS 27”). This amendment removes the requirements for consolidated statements from IAS 27, and moves it over to IFRS 10 “Consolidated Financial Statements”. The amendment mandates that when a company prepares separate financial statements, investment in subsidiaries, associates, and jointly controlled entities are to be accounted for using either the cost method or in accordance with IFRS 9 “Financial Instruments”. Finally, this amendment determines the treatment for recognizing dividends, the treatment of certain group reorganizations, and some disclosure requirements. This new standard is effective for the Company’s interim and annual consolidated financial statements commencing January 1, 2013. The Company is assessing the impact of this new standard on its consolidated financial statements.


Rogers Communications Inc.		30		Third Quarter 2011

IAS 28, Investments in Associates and Joint Ventures

In May 2011, the IASB amended IAS 28, Investments in Associates and Joint Ventures (“IAS 28”). This amendment requires non-current assets held for sale and discontinued operations be measured using the equity method for any retained portion of an investment, until the portion is disposed of. The amendment also disallows remeasurement of the cessation of significant influence and joint ventures when there is a gain to profit or loss. This new standard is effective for the Company’s interim and annual consolidated financial statements commencing January 1, 2013. The Company is assessing the impact of this new standard on its consolidated financial statements.

IFRS 9, Financial Instruments

In October 2010, the IASB issued IFRS 9, Financial Instruments (“IFRS 9”). IFRS 9, which replaces IAS 39, Financial Instruments: Recognition and Measurement, establishes principles for the financial reporting of financial assets and financial liabilities that will present relevant and useful information to users of financial statements for their assessment of the amounts, timing and uncertainty of an entity’s future cash flows. This new standard is effective for the Company’s interim and annual consolidated financial statements commencing January 1, 2015. The Company is assessing the impact of this new standard on its consolidated financial statements.

CONTROLS AND PROCEDURES

There have been no changes in our internal controls over financial reporting during the third quarter of 2011 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

SEASONALITY

Our operating results are subject to seasonal fluctuations that materially impact quarter-to-quarter operating results, and thus one quarter’s operating results are not necessarily indicative of a subsequent quarter’s operating results.

Each of Wireless, Cable and Media has unique seasonal aspects to their businesses. For specific discussions of the seasonal trends affecting the Wireless, Cable and Media segments, please refer to our 2010 Annual MD&A.

2011 FINANCIAL AND OPERATING GUIDANCE

We have no specific revisions to the 2011 annual guidance ranges which we provided on a consolidated basis on February 16, 2011. See the section entitled “Caution Regarding Forward-Looking Statements, Risks and Assumptions” below.


Rogers Communications Inc.		31		Third Quarter 2011

SUPPLEMENTARY INFORMATION

Calculation of Adjusted Operating Profit, Net Income and Earnings Per Share and Free Cash Flow


(In millions of dollars, number of shares outstanding in millions)	Three months ended September 30,						Nine months ended September 30,
	2011			2010			2011			2010

Operating profit	$	1,222		$	1,165		$	3,534		$	3,458
Add (deduct):
Stock-based compensation expense (recovery)		(19	)		41			30			76
Settlement of pension obligations		-			-			11			-
Integration, restructuring and acquisition expenses		17			8			47			18
Other items, net		-			4			-			19
Adjusted operating profit	$	1,220		$	1,218		$	3,622		$	3,571

Net income	$	491		$	380		$	1,236		$	1,200
Add (deduct):
Stock-based compensation expense (recovery)		(19	)		41			30			76
Settlement of pension obligations		-			-			11			-
Integration, restructuring and acquisition expenses		17			8			47			18
Other items, net		-			4			-			19
Loss on repayment of long-term debt		-			87			99			87
Income tax impact of above items		(4	)		(41	)		(48	)		(60	)
Adjusted net income	$	485		$	479		$	1,375		$	1,340

Adjusted basic earnings per share:
Adjusted net income	$	485		$	479		$	1,375		$	1,340
Divided by: weighted average number of shares outstanding		542			574			547			582
Adjusted basic earnings per share	$	0.89		$	0.83		$	2.51		$	2.30

Adjusted diluted earnings per share:
Adjusted net income	$	485		$	479		$	1,375		$	1,340
Divided by: diluted weighted average number of shares outstanding		546			578			551			586
Adjusted diluted earnings per share	$	0.89		$	0.83		$	2.50		$	2.29

Basic earnings per share:
Net income	$	491		$	380		$	1,236		$	1,200
Divided by: weighted average number of shares outstanding		542			574			547			582
Basic earnings per share	$	0.91		$	0.66		$	2.26		$	2.06

Diluted earnings per share:
Net income	$	491		$	380		$	1,236		$	1,200
Effect on net income of dilutive securities		(15	)		-			-			-
Diluted net income	$	476		$	380		$	1,236		$	1,200
Divided by: diluted weighted average number of shares outstanding		546			578			551			586
Diluted earnings per share	$	0.87		$	0.66		$	2.24		$	2.05

Calculation of Free Cash Flow

Adjusted operating profit	$	1,220		$	1,218		$	3,622		$	3,571
Add (deduct):
PP&E expenditures		(559	)		(439	)		(1,474	)		(1,243	)
Interest on long-term debt, net of capitalization		(158	)		(165	)		(480	)		(503	)
Cash income taxes		(11	)		(139	)		(17	)		(151	)
Free cash flow	$	492		$	475		$	1,651		$	1,674


Rogers Communications Inc.		32		Third Quarter 2011

SUPPLEMENTARY INFORMATION

Quarterly Consolidated Financial Summary⁽¹⁾


	IFRS																					Cdn GAAP
	2011									2010												2009
(In millions of dollars, except per share amounts)	Q3			Q2			Q1			Q4			Q3			Q2			Q1			Q4
Operating revenue
Wireless	$	1,832		$	1,759		$	1,721		$	1,788		$	1,816		$	1,707		$	1,662		$	1,730
Cable		940			950			953			954			946			943			942			956
Media		407			437			339			416			369			386			290			393
Corporate items and eliminations		(30	)		(31	)		(26	)		(20	)		(20	)		(19	)		(18	)		(22	)
Total operating revenue		3,149			3,115			2,987			3,138			3,111			3,017			2,876			3,057
Adjusted operating profit (loss)⁽²⁾
Wireless		815			761			790			704			821			819			829			742
Cable		379			416			401			364			373			343			346			320
Media		55			91			(10	)		24			40			62			5			52
Corporate items and eliminations		(29	)		(26	)		(21	)		(28	)		(16	)		(30	)		(21	)		(13	)
Adjusted operating profit⁽²⁾		1,220			1,242			1,160			1,064			1,218			1,194			1,159			1,101
Stock-based compensation (expense) recovery		19			(41	)		(8	)		26			(41	)		(9	)		(26	)		(29	)
Settlement of pension obligations		-			(11	)		-			-			-			-			-			(30	)
Integration, restructuring and acquisition expenses		(17	)		(19	)		(11	)		(22	)		(8	)		(8	)		(2	)		(65	)
Other items, net		-			-			-			5			(4	)		-			(15	)		-
Contract termination fees		-			-			-			-			-			-			-			(7	)
Adjustment for CRTC Part II fees decision		-			-			-			-			-			-			-			79
Operating profit⁽²⁾		1,222			1,171			1,141			1,073			1,165			1,177			1,116			1,049
Depreciation and amortization		(427	)		(444	)		(418	)		(429	)		(399	)		(405	)		(406	)		(424	)
Impairment losses on goodwill, intangible assets and other long-term assets		-			-			-			(11	)		-			-			-			(18	)
Operating income		795			727			723			633			766			772			710			607
Interest on long-term debt		(167	)		(167	)		(165	)		(164	)		(167	)		(170	)		(168	)		(173	)
Loss on repayment of long-term debt		-			-			(99	)		-			(87	)		-			-			(7	)
Other income (expense), net		22			6			1			(24	)		3			23			(13	)		(29	)
Income tax expense		(159	)		(156	)		(125	)		(143	)		(135	)		(173	)		(161	)		(88	)
Net income	$	491		$	410		$	335		$	302		$	380		$	452		$	368		$	310

Add (deduct):
Stock-based compensation expense (recovery)		(19	)		41			8			(26	)		41			9			26			29
Settlement of pension obligations		-			11			-			-			-			-			-			30
Integration, restructuring and acquisition expenses		17			19			11			22			8			8			2			65
Other items, net		-			-			-			(5	)		4			-			15			-
Contract termination fees		-			-			-			-			-			-			-			7
Adjustment for CRTC Part II fees decision		-			-			-			-			-			-			-			(79	)
Debt issuance costs		-			-			-			-			-			-			-			6
Loss on repayment of long-term debt		-			-			99			-			87			-			-			7
Impairment losses on goodwill, intangible assets and other long-term assets		-			-			-			11			-			-			-			18
Income tax impact of above items		(4	)		(14	)		(30	)		(1	)		(41	)		(5	)		(14	)		(23	)
Income tax charge, cash-settled stock options		-			-			-			35			-			-			-			-
Adjusted net income⁽²⁾	$	485		$	467		$	423		$	338		$	479		$	464		$	397		$	370

Earnings per share:
Basic	$	0.91		$	0.75		$	0.60		$	0.54		$	0.66		$	0.78		$	0.62		$	0.51
Diluted	$	0.87		$	0.75		$	0.60		$	0.50		$	0.66		$	0.77		$	0.62		$	0.51

As adjusted⁽²⁾:
Earnings per share:
Basic	$	0.89		$	0.85		$	0.76		$	0.60		$	0.83		$	0.80		$	0.67		$	0.61
Diluted	$	0.89		$	0.85		$	0.76		$	0.60		$	0.83		$	0.79		$	0.67		$	0.61

Additions to PP&E⁽²⁾	$	559		$	520		$	395		$	591		$	439		$	439		$	365		$	571

(1)

This quarterly summary provides the quarterly results under the current period’s presentation. Commencing January 1, 2011, the results of the former Rogers Retail segment are segregated as follows: the results of operations of the Video business are presented as a separate operating segment and the former Rogers Retail segment results of operations related to wireless and cable products and services are included in the results of operations of Wireless and Cable Operations, respectively. In addition, commencing January 1, 2011, certain intercompany transactions between the Company’s RBS segment and other operating segments, which were previously recorded as revenue in RBS and operating expenses in the other operating segments, are recorded as cost recoveries in RBS. For these two changes, comparative figures for 2010 and 2009 have been reclassified to conform to the current period’s presentation.

(2)	As defined. See the section entitled “Key Performance Indicators and Non-GAAP Measures”.


Rogers Communications Inc.		33		Third Quarter 2011

SUPPLEMENTARY INFORMATION

SUMMARY FINANCIAL RESULTS OF LONG-TERM DEBT GUARANTORS

Our outstanding public debt, $2.4 billion bank credit facility and Derivatives are unsecured obligations of RCI, as obligor, and RCP, as co-obligor or guarantor, as applicable.

The following table sets forth the selected unaudited consolidating summary financial information for RCI for the periods identified below, presented with a separate column for: (i) RCI; (ii) RCP; (iii) our non-guarantor subsidiaries (“Other Subsidiaries”) on a combined basis; (iv) consolidating adjustments; and (v) the total consolidated amounts. Information for periods prior to July 1, 2010 has been presented as if the corporate reorganization (which occurred on July 1, 2010) had occurred on January 1, 2010. For further details in respect of the corporate reorganization, see the section entitled “Consolidated Liquidity and Financing” of our 2010 Annual MD&A.


	Three months ended September 30 (unaudited)⁽³⁾⁽⁴⁾
	RCI⁽¹⁾⁽²⁾						RCP⁽¹⁾⁽²⁾				Other Subsidiaries⁽²⁾					Consolidating Adjustments⁽²⁾						Total Consolidated Amounts
(In millions of dollars)	Sept. 30 2011			Sept. 30 2010			Sept. 30 2011		Sept. 30 2010		Sept. 30 2011		Sept. 30 2010			Sept. 30 2011			Sept. 30 2010			Sept. 30 2011		Sept. 30 2010

Statement of Income Data:
Revenue	$	27		$	23		$	2,762	$	2,757	$	421	$	390		$	(61	)	$	(59	)	$	3,149	$	3,111
Operating income (loss)		(22	)		(50	)		793		835		41		(18	)		(17	)		(1	)		795		766
Net income (loss)		491			380			795		825		215		118			(1,010	)		(943	)		491		380

	Nine months ended September 30 (unaudited)⁽³⁾⁽⁴⁾
	RCI⁽¹⁾⁽²⁾						RCP⁽¹⁾⁽²⁾				Other Subsidiaries⁽²⁾					Consolidating Adjustments⁽²⁾						Total Consolidated Amounts
(In millions of dollars)	Sept. 30 2011			Sept. 30 2010			Sept. 30 2011		Sept. 30 2010		Sept. 30 2011		Sept. 30 2010			Sept. 30 2011			Sept. 30 2010			Sept. 30 2011		Sept. 30 2010

Statement of Income Data:
Revenue	$	79		$	68		$	8,129	$	8,008	$	1,234	$	1,078		$	(191	)	$	(150	)	$	9,251	$	9,004
Operating income (loss)		(114	)		(126	)		2,327		2,392		83		17			(51	)		(35	)		2,245		2,248
Net income (loss)		1,236			1,200			2,293		2,499		658		174			(2,951	)		(2,673	)		1,236		1,200

	As at period end (unaudited)⁽³⁾⁽⁴⁾
	RCI⁽¹⁾⁽²⁾						RCP⁽¹⁾⁽²⁾				Other Subsidiaries⁽²⁾					Consolidating Adjustments⁽²⁾						Total Consolidated Amounts
(In millions of dollars)	Sept. 30 2011			Dec. 31 2010			Sept. 30 2011		Dec. 31 2010		Sept. 30 2011		Dec. 31 2010			Sept. 30 2011			Dec. 31 2010			Sept. 30 2011		Dec. 31 2010

Balance Sheet Data (at period end):
Current assets	$	363		$	650		$	4,252	$	2,828	$	1,956	$	1,671		$	(4,623	)	$	(3,286	)	$	1,948	$	1,863
Non-current assets		22,620			19,374			9,635		9,020		5,862		5,324			(21,869	)		(18,548	)		16,248		15,170
Current liabilities		4,864			3,139			1,794		2,045		850		969			(4,564	)		(3,182	)		2,944		2,971
Non-current liabilities		10,876			9,718			174		218		207		190			160			176			11,417		10,302

(1)	For the purposes of this table, investments in subsidiary companies are accounted for by the equity method.

(2)	Amounts recorded in current liabilities and non-current liabilities for the guarantors do not include any obligations arising as a result of being a guarantor or co-obligor, as the case may be, under any of RCI’s long-term debt.

(3)	Information for periods prior to July 1, 2010 has been presented as if the corporate reorganization (which occurred on July 1, 2010) had occurred on January 1, 2010.

(4)	Information prior to January 1, 2011 has been restated to reflect the adoption of IFRS and has been reclassified for a change in business strategy as described in this MD&A.


Rogers Communications Inc.		34		Third Quarter 2011

Caution Regarding Forward-Looking Statements, Risks and Assumptions

This MD&A includes forward-looking statements and assumptions concerning our business, its operations and its financial performance and condition approved by management on the date of this MD&A. These forward-looking statements and assumptions include, but are not limited to, statements with respect to our objectives and strategies to achieve those objectives, statements with respect to our beliefs, plans, expectations, anticipations, estimates or intentions, including guidance and forecasts relating to revenue, adjusted operating profit, PP&E expenditures, free cash flow, dividend payments, expected growth in subscribers and the services to which they subscribe, the cost of acquiring subscribers and the deployment of new services, the currently estimated financial impacts of converting to IFRS accounting standards, and all other statements that are not historical facts. Such forward-looking statements are based on current objectives, strategies, expectations and assumptions, most of which are confidential and proprietary, that we believe to be reasonable at the time including, but not limited to, general economic and industry growth rates, currency exchange rates, product pricing levels and competitive intensity, subscriber growth and usage rates, changes in government regulation, technology deployment, device availability, the timing of new product launches, content and equipment costs, the integration of acquisitions, industry structure and stability, and current guidance from accounting standard bodies with respect to the conversion to IFRS accounting standards.

Except as otherwise indicated, this MD&A and our forward-looking statements do not reflect the potential impact of any non-recurring or other special items or of any dispositions, monetizations, mergers, acquisitions, other business combinations or other transactions that may be considered or announced or may occur after the date of the financial information contained herein.

We caution that all forward-looking information, including any statement regarding our current intentions, is inherently subject to change and uncertainty and that actual results may differ materially from the assumptions, estimates or expectations reflected in the forward-looking information. A number of factors could cause actual results to differ materially from those in the forward-looking statements or could cause our current objectives and strategies to change, including but not limited to new interpretations from accounting standards bodies, economic conditions, technological change, the integration of acquisitions, unanticipated changes in content or equipment costs, changing conditions in the entertainment, information and communications industries, regulatory changes, litigation and tax matters, the level of competitive intensity and the emergence of new opportunities, many of which are beyond our control and current expectation or knowledge. Therefore, should one or more of these risks materialize, should our objectives or strategies change, or should any other factors underlying the forward-looking statements prove incorrect, actual results and our plans may vary significantly from what we currently foresee. Accordingly, we warn investors to exercise caution when considering any such forward-looking information herein and that it would be unreasonable to rely on such statements as creating any legal rights regarding our future results or plans. We are under no obligation (and we expressly disclaim any such obligation) to update or alter any forward-looking statements or assumptions whether as a result of new information, future events or otherwise, except as required by law.

Before making any investment decisions and for a detailed discussion of the risks, uncertainties and environment associated with our business, fully review the sections of this MD&A entitled “Updates to Risks and Uncertainties” and “Government Regulation and Regulatory Developments”, and also sections entitled “Risks and Uncertainties Affecting our Businesses” and “Government Regulation and Regulatory Developments” in our 2010 Annual MD&A. Our annual and quarterly reports can be found online at rogers.com, sedar.com and sec.gov or are available directly from Rogers.

About Rogers Communications Inc.

Rogers Communications is a diversified Canadian communications and media company. We are Canada’s largest provider of wireless voice and data communications services and one of Canada’s leading providers of cable television, high-speed Internet and telephony services. Through Rogers Media we are engaged in radio and television broadcasting, televised shopping, magazines and trade publications, sports


Rogers Communications Inc.		35		Third Quarter 2011

entertainment, and digital media. We are publicly traded on the Toronto Stock Exchange (TSX: RCI.A and RCI.B) and on the New York Stock Exchange (NYSE: RCI). For further information about the Rogers group of companies, please visit rogers.com.

Investment Community Contacts

Bruce M. Mann, 416.935.3532, bruce.mann@rci.rogers.com

Dan Coombes, 416.935.3550, dan.coombes@rci.rogers.com

Media Contact

Terrie Tweddle, 416.935.4727, terrie.tweddle@rci.rogers.com

Quarterly Investment Community Conference Call

As previously announced by press release, a live webcast of our quarterly results conference call with the investment community will be broadcast via the Internet at rogers.com/webcast beginning at 8:00 a.m. ET today, October 26, 2011. A rebroadcast of this teleconference will be available on the Events and Presentations page of Rogers’ Investor Relations website rogers.com/investors for a period of at least two weeks following the conference call.

# # #


Rogers Communications Inc.		36		Third Quarter 2011

Unaudited Interim Consolidated Financial Statements of

Rogers Communications Inc.

Three and nine months ended September 30, 2011 and 2010

Rogers Communications Inc.

Unaudited Interim Consolidated Statements of Income

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


	Three months ended September 30,						Nine months ended September 30,
	2011			2010			2011			2010

Operating revenue	$	3,149		$	3,111		$	9,251		$	9,004

Operating expenses:
Operating costs (note 5)		1,910			1,938			5,670			5,528
Integration, restructuring and acquisition costs (note 8)		17			8			47			18
Depreciation and amortization		427			399			1,289			1,210

Operating income		795			766			2,245			2,248

Finance costs (note 6)		(146	)		(253	)		(580	)		(590	)
Other income, net		–			2			7			4
Share of the income of associates and joint ventures accounted for using the equity method, net of tax		1			–			4			7

Income before income taxes		650			515			1,676			1,669

Income tax expense:
Current		96			2			375			221
Deferred		63			133			65			248
		159			135			440			469
Net income for the period	$	491		$	380		$	1,236		$	1,200

Earnings per share (note 9):
Basic	$	0.91		$	0.66		$	2.26		$	2.06
Diluted		0.87			0.66			2.24			2.05

See accompanying notes to unaudited interim consolidated financial statements.


Rogers Communications Inc.		1		Third Quarter 2011

Rogers Communications Inc.

Unaudited Interim Consolidated Statements of Comprehensive Income

(In millions of Canadian dollars)


	Three months ended September 30,						Nine months ended September 30,
	2011			2010			2011			2010

Net income for the period	$	491		$	380		$	1,236		$	1,200

Other comprehensive income (loss):
Defined benefit pension plans:
Actuarial loss		–			–			(10	)		–
Related income tax recovery		–			–			2			–
		–			–			(8	)		–

Change in fair value of available-for-sale investments:
Increase in fair value		29			30			108			31
Related income tax expense		(4	)		(4	)		(14	)		(4	)
		25			26			94			27

Cash flow hedging derivative instruments:
Change in fair value of derivative instruments		396			(205	)		216			(1	)
Reclassification to net income due to settlement of swaps		–			–			22			–
Reclassification to net income of foreign exchange gain (loss) on long-term debt		(325	)		174			(194	)		103
Reclassification to net income of accrued interest		17			25			55			76
Related income tax recovery (expense)		(35	)		5			(33	)		(34	)
		53			(1	)		66			144

Other comprehensive income for the period		78			25			152			171
Comprehensive income for the period	$	569		$	405		$	1,388		$	1,371

See accompanying notes to unaudited interim consolidated financial statements.


Rogers Communications Inc.		2		Third Quarter 2011

Rogers Communications Inc.

Unaudited Interim Consolidated Statements of Financial Position

(In millions of Canadian dollars)


	September 30, 2011		December 31, 2010

Assets

Current assets:
Accounts receivable	$	1,478	$	1,498
Other current assets		444		364
Current portion of derivative instruments (note 14)		26		1
		1,948		1,863

Property, plant and equipment		8,884		8,437
Goodwill		3,282		3,108
Intangible assets		2,682		2,514
Investments		994		878
Derivative instruments (note 14)		180		6
Other long-term assets		196		175
Deferred tax assets		30		52
	$	18,196	$	17,033

Liabilities and Shareholders’ Equity

Current liabilities:
Bank advances	$	24	$	45
Accounts payable and accrued liabilities		1,792		2,133
Income tax payable		739		376
Current portion of provisions		19		21
Current portion of derivative instruments (note 14)		40		67
Unearned revenue		330		329
		2,944		2,971

Provisions		62		62
Long-term debt (note 10)		10,034		8,654
Derivative instruments (note 14)		447		840
Other long-term liabilities		214		229
Deferred tax liabilities		660		517
		14,361		13,273

Shareholders’ equity (note 12)		3,835		3,760
	$	18,196	$	17,033

Subsequent event (note 12(a))

Commitments (note 16)

See accompanying notes to unaudited interim consolidated financial statements.


Rogers Communications Inc.		3		Third Quarter 2011

Rogers Communications Inc.

Unaudited Interim Consolidated Statements of Changes in Shareholders’ Equity

(In millions of Canadian dollars)

Nine months ended September 30, 2011


	Class A Voting shares				Class B Non-Voting shares						Share premium			Retained earnings			Available- for-sale financial assets reserve		Hedging reserve			Total shareholders’ equity
	Amount		Number of shares		Amount			Number of shares			Share premium			Retained earnings			Available- for-sale financial assets reserve		Hedging reserve			Total shareholders’ equity

			(000s)					(000s)

Balances, December 31, 2010	$	72		112,462	$	426			443,072		$	1,113		$	1,923		$	281	$	(55	)	$	3,760

Net income for the period		–		–		–			–			–			1,236			–		–			1,236
Other comprehensive income (loss):
Defined benefit pension plans, net of tax		–		–		–			–			–			(8	)		–		–			(8	)
Available-for-sale investments, net of tax		–		–		–			–			–			–			94		–			94
Derivative instruments, net of tax		–		–		–			–			–			–			–		66			66
Total other comprehensive income		–		–		–			–			–			(8	)		94		66			152

Comprehensive income for the period		–		–		–			–			–			1,228			94		66			1,388
Transactions with shareholders, recorded directly in equity:
Repurchase of Class B Non-Voting shares		–		–		(20	)		(20,905	)		(609	)		(96	)		–		–			(725	)
Dividends declared		–		–		–			–			–			(579	)		–		–			(579	)
Shares issued on exercise of stock options		–		–		2			64			–			–			–		–			2
Acquisition of non-controlling interests		–		–		–			–			–			(11	)		–		–			(11	)
Total transactions with shareholders		–		–		(18	)		(20,841	)		(609	)		(686	)		–		–			(1,313	)
Balances, September 30, 2011	$	72		112,462	$	408			422,231		$	504		$	2,465		$	375	$	11		$	3,835

Nine months ended September 30, 2010


	Class A Voting shares				Class B Non-Voting shares						Share premium			Retained earnings			Available- for-sale financial assets reserve		Hedging reserve			Total shareholders’ equity
	Amount		Number of shares		Amount			Number of shares			Share premium			Retained earnings			Available- for-sale financial assets reserve		Hedging reserve			Total shareholders’ equity

			(000s)					(000s)

Balances, January 1, 2010	$	72		112,462	$	456			479,948		$	2,304		$	1,302		$	192	$	(170	)	$	4,156

Net income for the period		–		–		–			–			–			1,200			–		–			1,200
Other comprehensive income (loss):
Available-for-sale investments, net of tax		–		–		–			–			–			–			27		–			27
Derivative instruments, net of tax		–		–		–			–			–			–			–		144			144
Total other comprehensive income		–		–		–			–			–			–			27		144			171

Comprehensive income for the period		–		–		–			–			–			1,200			27		144			1,371
Transactions with shareholders, recorded directly in equity:
Repurchase of Class B Non-Voting shares		–		–		(26	)		(26,949	)		(884	)		(55	)		–		–			(965	)
Dividends declared		–		–		–			–			–			(559	)		–		–			(559	)
Shares issued on exercise of stock options		–		–		6			157			–			–			–		–			6
Total transactions with shareholders		–		–		(20	)		(26,792	)		(884	)		(614	)		–		–			(1,518	)
Balances, September 30, 2010	$	72		112,462	$	436			453,156		$	1,420		$	1,888		$	219	$	(26	)	$	4,009

See accompanying notes to unaudited interim consolidated financial statements.


Rogers Communications Inc.		4		Third Quarter 2011

Rogers Communications Inc.

Unaudited Interim Consolidated Statements of Cash Flows

(In millions of Canadian dollars)


	Three months ended September 30,						Nine months ended September 30,
	2011			2010			2011			2010

Cash provided by (used in):

Operating activities:
Net income	$	491		$	380		$	1,236		$	1,200
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization		427			399			1,289			1,210
Program rights and Video rental amortization		52			52			152			157
Finance costs		146			253			580			590
Current income tax expense		96			2			375			221
Deferred taxes		63			133			65			248
Pension contributions, net of expense		(6	)		(5	)		(38	)		(25	)
Settlement of pension obligations		–			–			11			–
Stock-based compensation expense (recovery)		(19	)		41			30			76
Amortization of fair value decrement (increment) on long-term debt		–			1			1			(2	)
Share of the income of associates and joint ventures accounted for using the equity method, net of tax		(1	)		–			(4	)		(7	)
Other		(10	)		(4	)		(1	)		–
		1,239			1,252			3,696			3,668
Change in non-cash operating working capital items		156			(102	)		(268	)		(371	)
		1,395			1,150			3,428			3,297
Income taxes paid		(11	)		(139	)		(17	)		(151	)
Interest paid		(244	)		(182	)		(553	)		(521	)
		1,140			829			2,858			2,625

Investing activities:
Additions to property, plant and equipment (“PP&E”)		(559	)		(439	)		(1,474	)		(1,243	)
Change in non-cash working capital items related to PP&E		38			58			(121	)		(12	)
Acquisitions, net of cash and cash equivalents acquired		–			(45	)		(532	)		(177	)
Additions to program rights		(52	)		(24	)		(142	)		(109	)
Other		(9	)		(2	)		(28	)		22
		(582	)		(452	)		(2,297	)		(1,519	)


Rogers Communications Inc.		5		Third Quarter 2011

Rogers Communications Inc.

Unaudited Interim Consolidated Statements of Cash Flows

(In millions of Canadian dollars)


	Three months ended September 30,						Nine months ended September 30,
	2011			2010			2011			2010

Financing activities:
Issuance of long-term debt		240			2,425			3,650			2,475
Repayment of long-term debt		(120	)		(1,701	)		(2,482	)		(1,752	)
Premium on repayment of long-term debt		–			(79	)		(76	)		(79	)
Payment on settlement of cross-currency interest rate exchange agreement and forward contracts		–			(816	)		(1,208	)		(816	)
Proceeds on settlement of cross-currency interest rate exchange agreement and forward contracts		–			547			878			547
Transaction costs incurred		–			(8	)		(10	)		(8	)
Repurchase of Class B Non-Voting shares		(440	)		(335	)		(725	)		(965	)
Proceeds received on exercise of stock options		1			1			1			3
Dividends paid		(194	)		(187	)		(568	)		(550	)
		(513	)		(153	)		(540	)		(1,145	)

Change in cash and cash equivalents (bank advances)		45			224			21			(39	)
Cash and cash equivalents (bank advances), beginning of period		(69	)		115			(45	)		378
Cash and cash equivalents (bank advances), end of period	$	(24	)	$	339		$	(24	)	$	339

The change in non-cash operating working capital items is as follows:
(Increase)/Decrease in accounts receivable	$	53		$	(151	)	$	31		$	(110	)
(Increase)/Decrease in other assets		45			–			(90	)		(130	)
Increase/(Decrease) in accounts payable and accrued liabilities		62			77			(204	)		(113	)
Increase/(Decrease) in income tax payable		2			(5	)		5			(5	)
Increase/(Decrease) in unearned revenue		(6	)		(23	)		(10	)		(13	)
	$	156		$	(102	)	$	(268	)	$	(371	)

Cash and cash equivalents (bank advances) are defined as cash and short-term deposits, which have an original maturity of less than 90 days, less bank advances.

See accompanying notes to unaudited interim consolidated financial statements.


Rogers Communications Inc.		6		Third Quarter 2011

Rogers Communications Inc.

Notes to Unaudited Interim Consolidated Financial Statements

(Tabular amounts in millions of Canadian dollars, except per share amounts)

1.	Nature of the business:

Rogers Communications Inc. (“RCI” or the “Company”) is a diversified Canadian communications and media company, incorporated in Canada, with substantially all of its operations and sales in Canada. Through its Wireless segment (“Wireless”), RCI is engaged in wireless voice and data communications services. The Company’s Cable segment (“Cable”) consists of Cable Operations, Rogers Business Solutions (“RBS”) and Rogers Video (“Video”). Through Cable Operations, the Company provides television, high-speed Internet and telephony products primarily to residential customers; RBS provides local and long-distance telephone, enhanced voice and data networking services, and Internet access to medium and large Canadian businesses and governments; and Video offers digital video disc (“DVD”) and video game sales and rentals. The Company is engaged in radio and television broadcasting, televised shopping, magazines and trade publications, sports entertainment, and digital media through its Media segment (“Media”). RCI and its subsidiary companies are collectively referred to herein as the “Company”.

The Company’s registered office is located at 333 Bloor Street East, 10th Floor, Toronto, Ontario, M4W 1G9.

RCI Class A Voting and Class B Non-Voting shares are traded in Canada on the Toronto Stock Exchange (“TSX”) and its Class B Non-Voting shares are also traded on the New York Stock Exchange.

The unaudited interim consolidated financial statements of RCI for the three and nine months ended September 30, 2011 were approved by the Audit Committee on October 25, 2011.

2.	Significant accounting policies:

(a) Statement of compliance:

These unaudited interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”) and using the accounting policies the Company expects to adopt in its consolidated financial statements as at and for the year ending December 31, 2011. These accounting policies are disclosed in note 2 of the Company’s 2011 first quarter unaudited interim consolidated financial statements.

The Company has elected January 1, 2010 as the date of transition to IFRS (the “Transition Date”). IFRS 1, First-time Adoption of IFRS (“IFRS 1”), has been applied. An explanation of how the transition to IFRS has affected the consolidated financial statements is included in note 3. As these unaudited interim consolidated financial statements are prepared using IFRS, certain disclosures that are required to be included in the annual consolidated financial statements prepared in accordance with IFRS were included in notes 16 to 19 in the Company’s 2011 first quarter unaudited interim consolidated financial statements.

The policies applied in these unaudited interim consolidated financial statements are based on IFRS issued and outstanding as of October 25, 2011, the date the Audit Committee approved the unaudited interim consolidated financial statements. Any subsequent changes to IFRS that are given effect in the Company’s annual consolidated financial statements for the year ending December 31, 2011 could result in restatement of these unaudited interim consolidated financial statements, including the transition adjustments recognized on change-over to IFRS.

These unaudited interim consolidated financial statements should be read in conjunction with the Company’s 2010 annual consolidated financial statements prepared in accordance with Canadian generally accepted accounting principles (“GAAP”) and with the IFRS accounting policies, transition disclosures, and selected annual disclosures disclosed in notes 2, 3, and 16 to 19 of the Company’s 2011 first quarter unaudited interim consolidated financial statements.


Rogers Communications Inc.		7		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements

(b) Basis of presentation:

The unaudited interim consolidated financial statements include the accounts of the Company. Intercompany transactions and balances are eliminated on consolidation.

The unaudited interim consolidated financial statements have been prepared mainly under the historical cost convention. Other measurement bases used are described in the applicable notes. The Company’s financial year corresponds to the calendar year. The unaudited interim consolidated financial statements are prepared in millions of Canadian dollars.

Presentation of the unaudited interim consolidated statements of financial position differentiates between current and non-current assets and liabilities. The unaudited interim consolidated statements of income are presented using the nature classification for expenses.

Concurrent with the impact of the transition to IFRS described in note 3, the Company underwent a change in strategy which impacted the Company’s management reporting resulting in changes to the Company’s reportable segments. Commencing January 1, 2011, the results of the former Rogers Retail segment are segregated as follows: the results of operations of the Video business are presented as a separate operating segment and the former Rogers Retail segment results of operations related to wireless and cable products and services are included in the results of operations of Wireless and Cable Operations, respectively. In addition, certain intercompany transactions between the Company’s RBS segment and other operating segments, which were previously recorded as revenue in RBS and operating expenses in the other operating segments, are recorded as cost recoveries in RBS beginning January 1, 2011.

3.	Transition to IFRS:

The accounting policies set out in note 2 have been applied in preparing the financial statements for the three months and nine months ended September 30, 2011, the comparative information presented in these unaudited interim consolidated financial statements for the three and nine months ended September 30, 2010 and in preparation of an opening IFRS statement of financial position at January 1, 2010 (the Company’s date of transition to IFRS) and statements of financial position at September 30, 2010 and December 31, 2010. In preparing its opening IFRS statement of financial position, the Company has adjusted amounts reported previously in financial statements prepared in accordance with previous Canadian GAAP.


Rogers Communications Inc.		8		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements

Reconciliation of financial position and shareholders’ equity at September 30, 2010:


		Canadian GAAP		Reclassification for IFRS presentation		Note		Adjustments to shareholders’ equity		Note		IFRS balance

Assets

Current assets:
Cash and cash equivalents	$	344	$	(5	)	(f)	$	–			$	339
Accounts receivable		1,402		16		(f)		–				1,418
Other current assets		432		(1	)	(f)		–				431
Current portion of derivative instruments		2		–				–				2
Current portion of deferred tax assets		181		(181	)	(m)		–				–
		2,361		(171	)			–				2,190

Property, plant and equipment		8,291		(47	)	(f)		(10	)	(e)		8,234
Goodwill		3,101		(7	)	(f)		–				3,094
Intangible assets		2,688		(143	)	(f)		–				2,545
Investments		569		153		(f)		1		(i)		723
Derivative instruments		125		–				–				125
Other long-term assets		302		(9	)	(f),(g)		(143	)	(b)		150
Deferred tax assets		–		61		(f),(m)		–				61
	$	17,437	$	(163	)		$	(152	)		$	17,122

Liabilities and Shareholders’ Equity

Current liabilities:
Accounts payable and accrued liabilities	$	2,111	$	(138	)	(d),(f),(h)	$	14		(c)	$	1,987
Income tax payable		273		–				–				273
Current portion of provisions		–		10		(h)		5		(h)		15
Current portion of derivative instruments		59		–				–				59
Unearned revenue		268		58		(d)		(3	)	(d)		323
		2,711		(70	)			16				2,657

Provisions		–		35		(h)		19		(h)		54
Long-term debt		9,067		(10	)	(g)		(57	)	(g)		9,000
Derivative instruments		742		–				–				742
Other long-term liabilities		133		–				19		(b),(c),(f)		152
Deferred tax liabilities		659		(118	)	(m)		(33	)	(m)		508
		13,312		(163	)			(36	)			13,113

Shareholders’ equity		4,125		–				(116	)	(n)		4,009
	$	17,437	$	(163	)		$	(152	)		$	17,122


Rogers Communications Inc.		9		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements

Reconciliation of comprehensive income for the three months ended September 30, 2010:


	Canadian GAAP			Reclassification for IFRS presentation			Note		Adjustment			Note		IFRS

Operating revenue	$	3,118		$	(8	)		(f)	$	1			(d)	$	3,111

Operating expenses:
Operating costs		1,946			(4	)		(f)		(4	)		(c),(h)		1,938
Integration, restructuring and acquisition costs		8			–					–					8
Depreciation and amortization		401			(3	)		(f)		1			(e),(f)		399

Operating income		763			(1	)				4					766

Finance costs		(262	)		–					9			(e),(g),(j)		(253	)
Other income (expense), net		1			1			(k)		–					2
Share of the income of associates and joint ventures accounted for using the equity method, net of tax		–			–			(f),(k)		–					–

Income before income taxes		502			–					13					515

Income tax expense:
Current		2			–					–					2
Deferred		130			–					3			(m)		133
		132			–					3					135

Net income for the period		370			–					10					380

Other comprehensive income (loss):
Change in fair value of available-for–sale investments:
Increase in fair value		30			–					–					30
Related income tax expense		(4	)		–					–					(4	)
		26			–					–					26

Cash flow hedging derivative instruments:
Change in fair value of derivative instruments		(202	)		–					(3	)		(j)		(205	)
Reclassification to net income of foreign exchange loss on long-term debt		174			–					–					174
Reclassification to net income of accrued interest		25			–					–					25
Related income tax recovery		5			–					–					5
		2			–					(3	)				(1	)

Other comprehensive income for the period		28			–					(3	)				25
Comprehensive income for the period	$	398		$	–				$	7				$	405


Rogers Communications Inc.		10		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements

Reconciliation of comprehensive income for the nine months ended September 30, 2010:


	Canadian GAAP			Reclassification for IFRS presentation			Note		Adjustment			Note		IFRS

Operating revenue	$	9,034		$	(29	)		(f)	$	(1	)		(d)	$	9,004

Operating expenses:
Operating costs		5,548			(14	)		(f)		(6	)		(b),(c),(h)		5,528
Integration, restructuring and acquisition costs		18			–					–					18
Depreciation and amortization		1,215			(9	)		(f)		4			(e),(f)		1,210

Operating income		2,253			(6	)				1					2,248

Finance costs		(588	)		–					(2	)		(e),(g),(j)		(590	)
Other income (expense), net		5			(1	)		(k)		–					4
Share of the income of associates and joint ventures accounted for using the equity method, net of tax		–			7			(f),(k)		–					7

Income before income taxes		1,670			–					(1	)				1,669

Income tax expense:
Current		221			–					–					221
Deferred		248			–					–					248
		469			–					–					469

Net income for the period		1,201			–					(1	)				1,200

Other comprehensive income (loss):
Change in fair value of available-for-sale investments:
Increase in fair value		31			–					–					31
Related income tax expense		(4	)		–					–					(4	)
		27			–					–					27

Cash flow hedging derivative instruments:
Change in fair value of derivative instruments		(4	)		–					3			(j)		(1	)
Reclassification to net income of foreign exchange loss on long-term debt		103			–					–					103
Reclassification to net income of accrued interest		76			–					–					76
Related income tax expense		(33	)		–					(1	)		(m)		(34	)
		142			–					2					144

Other comprehensive income for the period		169			–					2					171
Comprehensive income for the period	$	1,370		$	–				$	1				$	1,371


Rogers Communications Inc.		11		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements

In addition to the changes required to adjust for the accounting policy differences described in the following notes, interest paid and income taxes paid have been moved into the body of the unaudited interim consolidated statements of cash flows as part of operating activities, whereas they were previously disclosed as supplementary information. There are no other material differences related to presentation of the unaudited interim consolidated statements of cash flows.

(a) Principal exemptions elected on transition to IFRS:

IFRS 1 sets out the requirements that the Company must follow when it adopts IFRS for the first time as the basis for preparing its consolidated financial statements. The Company established its IFRS accounting policies for the year ended December 31, 2011, and are applied retrospectively to the opening consolidated statement of financial position at the date of transition of January 1, 2010, except for specific exemptions available to the Company outlined as follows:

(i)

Business combinations:

The Company has elected to apply IFRS 3, Business Combinations (“IFRS 3”), retrospectively to all business combinations that took place on or after the date of transition, January 1, 2010. Under previous Canadian GAAP, the Company had elected to early adopt The Canadian Institute of Chartered Accountants’ Handbook Section 1582, Business Combinations, effective January 1, 2010, the requirements of which were converged with IFRS. As a condition under IFRS 1 of applying this exemption, goodwill relating to business combinations that occurred prior to January 1, 2010 was tested for impairment even though no impairment indicators were identified. No impairment existed at the date of transition.

(ii)

Leases:

The Company has elected to apply the transitional provisions in International Financial Reporting Interpretations Committee (“IFRIC”) 4, Determining Whether an Arrangement Contains a Lease, thereby determining whether the Company has any arrangements that exist at the date of transition to IFRS that contain a lease on the basis of facts and circumstances existing at January 1, 2010.

(iii)

Changes in existing decommissioning, restoration and similar liabilities included in the cost of PP&E:

The Company has elected to apply the exemption to full retrospective application of IFRIC 1, Changes in Existing Decommissioning, Restoration and Similar Liabilities. This election allows the Company to measure the impact of any changes to its decommissioning and restoration liabilities using estimates applicable at the date of transition to IFRS, and no adjustment was required to the opening consolidated statements of financial position as a result of applying this election and IFRIC 1.

(iv)

Borrowing costs:

The Company has elected to apply the transitional provisions of IAS 23, Borrowing Costs (“IAS 23”), prospectively from the date of transition.

(v)

Transfers of assets from customers:

The Company has elected to apply the transitional provisions of IFRIC 18, Transfers of Assets from Customers, prospectively from the date of transition.

(b) Employee benefits:

(i)

Upon adoption of IFRS, actuarial gains and losses are recognized immediately in other comprehensive income, as permitted by IAS 19, Employee Benefits (“IAS 19”). Under previous Canadian GAAP, the Company used the corridor method to amortize actuarial gains or losses over the average remaining service life of the employees. At the date of transition, all previously unrecognized cumulative actuarial gains and losses, including the unamortized transitional obligation,


Rogers Communications Inc.		12		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements

were recognized in retained earnings, resulting in a reduction of retained earnings of $149 million. Actuarial losses of $76 million were recognized in other comprehensive income for the year ended December 31, 2010.

(ii)

In compliance with IAS 19, past service costs are recognized immediately if vested, or on a straight-line basis over the average remaining vesting period if unvested. Under Canadian GAAP, past service costs were recognized over the expected average remaining service period of active employees expected to receive benefits under the plan. At the date of transition all previously unrecognized past service costs amounting to $9 million were fully vested and as such were recognized in retained earnings.

(iii)

Furthermore, IAS 19 requires that the defined benefit obligation and plan assets be measured at the annual statement of financial position date. Accordingly, the defined benefit obligation and plan assets have been measured at January 1, 2010 and December 31, 2010, resulting in an $8 million reduction to retained earnings at the transition date.

(iv)

In addition, IAS 19 and IFRIC 14, IAS 19, The Limit on a Defined Benefit Asset, Minimum Funding Requirement and their Interaction, limit the amount that can be recognized as an asset on the statement of financial position to the present value of available contribution reductions or refunds plus unrecognized actuarial losses and unrecognized past service costs. This restriction has resulted in a limit on the asset that can be recorded for one of the Company’s defined benefit plans, which results in a further reduction of $8 million that has been recognized in retained earnings at the transition date. For the year ended December 31, 2010, $4 million was recognized in other comprehensive income.

The impact arising from the changes is summarized as follows:


	Three months ended September 30, 2010		Nine months ended September 30, 2010

Consolidated statements of comprehensive income:
Operating costs		$ –		$ (3	)
Adjustment before income taxes		$ –		$ (3	)


				September 30, 2010

Consolidated statements of financial position:
Other long-term assets				$ (143	)
Other long-term liabilities				(28	)

Adjustment to retained earnings, before income taxes				(171	)
Related income tax effect				43
Adjustment to retained earnings				$ (128	)

The Company has granted stock-based compensation to employees. The Company applied IFRS 2 to its unsettled stock-based compensation arrangements at January 1, 2010 which requires that stock-based compensation be measured based on the fair values of the awards. Under previous Canadian GAAP, the Company accounted for these arrangements at intrinsic value.


Rogers Communications Inc.		13		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements

The impact arising from the change is summarized as follows:


	Three months ended September 30, 2010		Nine months ended September 30, 2010

Consolidated statements of comprehensive income:
Operating costs		$ 1		$ 2
Adjustment before income taxes		$ 1		$ 2


			September 30, 2010

Consolidated statements of financial position:
Accounts payable and accrued liabilities				$ (14	)
Other long-term liabilities				(3	)

Adjustment to retained earnings before income taxes				(17	)
Related income tax effect				4
Adjustment to retained earnings				$ (13	)

(d) Customer loyalty programs:

The Company applied IFRIC 13, Customer Loyalty Programs (“IFRIC 13”), retrospectively. IFRIC 13 requires that the fair value of the awards given to a customer be identified as a separate component of the initial sales transaction and the revenue be deferred until the awards are redeemed. Under previous Canadian GAAP, the Company took a liability-based approach in accounting for customer loyalty programs.

Consistent with the requirements of IFRS, the liability balance has been reclassified from accounts payable and accrued liabilities to unearned revenue upon transition. The impact arising from the change is summarized as follows:


	Three months ended September 30, 2010		Nine months ended September 30, 2010

Consolidated statements of comprehensive income:
Operating revenue		$ 1		$ (1	)
Adjustment before income taxes		$ 1		$ (1	)


			September 30, 2010

Consolidated statements of financial position:
Accounts payable and accrued liabilities				$ 58
Unearned revenue				(55	)

Adjustment to retained earnings before income taxes				3
Related income tax effect				(1	)
Adjustment to retained earnings				$ 2


Rogers Communications Inc.		14		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements

(e) Property, plant and equipment:

The Company has applied IAS 16, Property, Plant and Equipment, which requires that the Company identify the significant components of its PP&E and depreciate these parts separately over their respective useful lives which results in a more detailed approach than was used under previous Canadian GAAP. The Company has also applied IAS 23 which requires the capitalization of interest and other borrowing costs as part of the cost of certain qualifying assets which take a substantial period of time to get ready for its intended use. Under previous Canadian GAAP, the Company elected not to capitalize borrowing costs. The impact arising from these changes is summarized as follows:


	Three months ended September 30, 2010			Nine months ended September 30, 2010

Consolidated statements of comprehensive income:
Depreciation and amortization		$ –			$ 1
Finance costs - capitalized interest		(2	)		(2	)
Adjustment before income taxes		$ (2	)		$ (1	)


				September 30, 2010

Consolidated statements of financial position:
Property, plant and equipment					$ (10	)
Related income tax effect					3
Adjustment to retained earnings					$ (7	)

As noted above, the Company has elected to apply IAS 23 prospectively from the date of transition, January 1, 2010; consequently, there was no impact to the unaudited interim consolidated statements of financial position at that date.

(f) Joint ventures:

(i)

The Company applied IAS 31, Interests in Joint Ventures (“IAS 31”), at January 1, 2010. The Company has elected to use the equity method to recognize interests in joint ventures as described in note 2(c) to the Company’s 2011 first quarter unaudited interim consolidated financial statements. Previous Canadian GAAP required that the Company proportionately consolidate its interests in joint ventures. This change had no impact on the Company’s net assets and consequently is presented as a reclassification difference.

(ii)

IFRS requires that the Company immediately recognize any gains that arise on non-monetary contributions to a joint venture to the extent of the other venturers’ interest in the joint venture when certain conditions are met. Under previous Canadian GAAP these gains were deferred and amortized into income over the life of the assets contributed. The impact of this difference was to recognize $15 million of unamortized gains in opening retained earnings. Depreciation and amortization increased by $1 million and $3 million for the three months and nine months ended September 30, 2010, as a result of eliminating the amortization of the gain under previous Canadian GAAP.


Rogers Communications Inc.		15		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements

The impacts of applying IAS 31 are summarized as follows:


	Three months ended September 30, 2010			Nine months ended September 30, 2010

Consolidated statements of comprehensive income:
Operating revenue		$ 8			$ 29
Operating costs		(4	)		(14	)
Depreciation and amortization - change from proportionate consolidation		(3	)		(9	)
Depreciation and amortization - remove amortization of deferred gain		1			3
Share of the loss of associates and joint ventures accounted for using the equity method		(1	)		(6	)
Adjustment before income taxes		$ 1			$ 3


				September 30, 2010

Consolidated statements of financial position:
Cash and cash equivalents					$ (5	)
Accounts receivable					16
Other current assets					(1	)
Property, plant and equipment					(47	)
Goodwill					(7	)
Intangible assets					(143	)
Investments					153
Other long-term assets					1
Deferred tax assets					(2	)
Accounts payable and accrued liabilities					35
Other long-term liabilities - remove deferred gain					12

Adjustment to retained earnings before income taxes					12
Related income tax effect					(9	)
Adjustment to retained earnings					$ 3

(g) Financial instruments - transaction costs:

The Company has applied IAS 39, Financial Instruments: Recognition and Measurement (“IAS 39”), at January 1, 2010, which requires directly attributable costs to be added to certain acquired financial assets and liabilities and amortized to the statement of income over the life of the asset or liability. Under previous Canadian GAAP these costs were expensed as incurred. Unamortized transaction costs of $58 million related to the Company’s long-term debt were adjusted upon transition and unamortized discounts on long-term debt have been reclassified from other long-term assets to conform with IFRS presentation requirements.


Rogers Communications Inc.		16		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements

The impact of the change is summarized as follows:


	Three months ended September 30, 2010			Nine months ended September 30, 2010
Consolidated statements of comprehensive income:
Finance costs - amortization	$	6		$	11
Finance costs - debt issuance		(10	)		(10	)
Adjustment before income taxes	$	(4	)	$	1


	September 30, 2010
Consolidated statements of financial position:
Other long-term assets - reclassify unamortized discounts	$	(10	)
Long-term debt - reclassify unamortized discounts		10
Long-term debt - unamortized transaction costs		57
Adjustment to retained earnings before income taxes		57
Related income tax effect		(14	)
Adjustment to retained earnings	$	43

(h) Provisions:

IAS 37, Provisions, Contingent Liabilities and Contingent Assets (“IAS 37”), requires separate disclosure of provisions on the face of the statement of financial position and also requires recognition of a provision for onerous contracts; that is any contract where the costs to fulfill the contract exceed the benefits to be received under the contract, neither of which were required under previous Canadian GAAP. Therefore, upon transition, all provisions were reclassified from accounts payable and accrued liabilities and the Company recognized an onerous contract provision of $29 million. The impact of the changes is summarized as follows:


	Three months ended September 30, 2010			Nine months ended September 30, 2010
Consolidated statements of comprehensive income:
Operating costs	$	(5	)	$	(5	)
Adjustment before income taxes	$	(5	)	$	(5	)


Rogers Communications Inc.		17		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements


	September 30, 2010

Consolidated statements of financial position:
Accounts payable and accrued liabilities	$	45
Current portion of provisions - reclassification		(10	)
Current portion of provisions - onerous contract		(5	)
Provisions - reclassification		(35	)
Provisions - onerous contract		(19	)
Adjustment to retained earnings before income taxes		(24	)
Related income tax effect		7
Adjustment to retained earnings	$	(17	)

(i) Financial instruments - investments:

IAS 39 requires that the Company measure at fair value its investments in equity instruments that do not have a quoted market price in an active market classified as available-for-sale. Under previous Canadian GAAP, these investments were classified as available-for-sale and measured at cost, as cost closely approximated fair value. There was no impact of the change in the three and nine months ended September 30, 2010 in the statements of comprehensive income. The impact of this change is summarized as follows:


	September 30, 2010

Consolidated statements of financial position:
Investments	$	1
Available-for-sale equity reserve		(1	)
Adjustment to retained earnings	$	–

(j) Financial instruments - hedge accounting:

IAS 39 requires that the Company include credit risk when measuring the ineffective portion of its cross-currency interest rate exchange agreements. Under previous Canadian GAAP, the Company elected not to include credit risk in the determination of the ineffective portion of its cross-currency interest rate exchange agreements. The impact of this change is summarized as follows:


	Three months ended September 30, 2010			Nine months ended September 30, 2010

Consolidated statements of comprehensive income:
Finance costs - change in fair value of derivative instruments	$	(3	)	$	3
Change in fair value of derivative instruments		3			(3	)
Adjustment before income taxes	$	–		$	–


Rogers Communications Inc.		18		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements


	September 30, 2010

Consolidated statements of financial position:
Equity reserves - hedging	$	4
Adjustment to retained earnings before income taxes		4
Related income tax effect		(2	)
Adjustment to retained earnings	$	2

(k) Share of the income or loss of associates:

IAS 1, Presentation of Financial Statements (“IAS 1”), requires that the share of the income or loss of associates accounted for using the equity method are presented as a separate line item on the face of the statement of income, where previously this was included in other income. The impacts of applying IAS 1 are summarized as follows:


	Three months ended September 30, 2010			Nine months ended September 30, 2010

Consolidated statements of comprehensive income:
Other income, net of income taxes	$	(1	)	$	1
Share of the income (loss) of associates and joint venture accounted for using the equity method, net of income taxes		1			(1	)
Adjustment before income taxes	$	–		$	–

(l) Impairment of non-financial assets:

IAS 36, Impairment of Assets, uses a one-step approach for both testing for and measurement of impairment, with asset carrying values compared directly with the higher of fair value less costs to sell and value in use (which uses discounted future cash flows) and assets are tested for impairment at the level of cash generating units, which is the lowest level of assets that generate largely independent cash flows. Canadian GAAP however, uses a two-step approach to impairment testing: first comparing asset carrying values with undiscounted future cash flows to determine whether impairment exists; and then measuring any impairment by comparing asset carrying values with fair values, and assets are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities for impairment testing purposes. There was no impact to the consolidated statements of comprehensive income for the three and nine months ended September 30, 2010.

(m) Income taxes:

The above changes decreased the net deferred tax liability as follows:


Rogers Communications Inc.		19		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements


	Note			September 30, 2010

Employee benefits		(b	)	$	43
Stock-based compensation		(c	)		4
Customer loyalty programs		(d	)		(1	)
Property, plant and equipment		(e	)		3
Joint ventures		(f	)		(9	)
Financial instruments - transaction costs		(g	)		(14	)
Provisions		(h	)		7
Decrease in net deferred tax liability				$	33

The effect on the unaudited interim consolidated statements of comprehensive income for the three and nine months ended September 30, 2010 was to increase the previously reported tax charge for the period by $3 million and $1 million, respectively.

Under IFRS, all deferred tax balances are classified as non-current, regardless of the classification of the underlying assets or liabilities, or the expected reversal date of the temporary difference. The effect of this change, including the impact of netting deferred tax assets and liabilities, is to reclassify the current deferred tax asset of $220 million at January 1, 2010 and $181 million at September 30, 2010 to non-current and reclassify $87 million at January 1, 2010 and $63 million at September 30, 2010 from deferred tax liability to deferred tax asset.

IFRS requires that subsequent changes to the tax effect of items recorded in Other Comprehensive Income (“OCI”) in previous periods be also recorded in OCI, where previously this was recorded in the statement of income. The impact of this difference on transition is to reduce equity reserves by $16 million and increase opening retained earnings by $16 million.

(n) The above changes decreased (increased) shareholders’ equity (each net of related tax) as follows:


	Note			September 30, 2010

Adjustment to retained earnings				$	99
Equity reserves - available-for-sale investments		(i	)		(1	)
Equity reserves - hedging		(j	)		2
Income tax impact transferred to retained earnings					16
Adjustment to shareholders’ equity				$	116

4.	Segmented information:

Operating segments:

Management reviews the operations of the Company by business segments. Effective January 1, 2011, the results of the business segments are reclassified to reflect the change in strategy as described in note 2(b). These business segments are the primary operating segments and are described as follows:

(a)	Wireless - This segment provides retail and business voice and data wireless communications services.

(b)	Cable - This segment provides cable television, cable telephony and high speed Internet access and facilities based telecommunications services. The Cable business consists of the following three sub segments:


Rogers Communications Inc.		20		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements

(i)

Cable Operations segment which provides cable services, high speed Internet service and Rogers Home Phone;

(ii)

RBS segment offers local and long-distance telephone, enhanced voice and data services, and IP access to Canadian businesses and governments, as well as making some of these offerings available on a wholesale basis to other telecommunications providers; and

(iii)

Video segment operates a DVD and video game sale and rental business.

(c)	Media - This segment operates the Company’s radio and television broadcasting operations, consumer and trade publishing operations, televised home shopping service and Rogers Sports Entertainment.

The accounting policies of the segments are the same as those described in the significant accounting policies note 2 to the Company’s first quarter 2011 unaudited interim consolidated financial statements. The Company discloses segment operating results based on income before integration, restructuring and acquisition costs, stock-based compensation expense (recovery), loss on settlement of pension obligations, other items, depreciation and amortization, finance costs, other income (expense), share of income or (loss) of associates and joint ventures accounted for by equity method, and income taxes, consistent with internal management reporting. This measure of segment operating results differs from operating income in the unaudited interim consolidated statements of income. All of the Company’s reportable segments are substantially in Canada. Information by reportable segments is as follows:


		Three months ended September 30, 2011															Three months ended September 30, 2010
	Wireless			Cable			Media			Corporate items and eliminations			Consolidated totals			Wireless		Cable		Media		Corporate items and eliminations			Consolidated totals
Operating revenue	$	1,832		$	940		$	407		$	(30	)	$	3,149		$	1,816	$	946	$	369	$	(20	)	$	3,111

Operating costs*		1,017			561			352			(1	)		1,929			995		573		329		(4	)		1,893
		815			379			55			(29	)		1,220			821		373		40		(16	)		1,218
Integration, restructuring and acquisition costs		5			5			7			–			17			3		5		–		–			8
Stock-based compensation expense (recovery)*		(3	)		(2	)		(2	)		(12	)		(19	)		7		6		7		21			41
Other items, net*		–			–			–			–			–			–		–		4		–			4
		813			376			50			(17	)		1,222			811		362		29		(37	)		1,165

Depreciation and amortization		166			213			15			33			427			158		196		14		31			399

Operating income (loss)	$	647		$	163		$	35		$	(50	)		795		$	653	$	166	$	15	$	(68	)		766

Finance costs														(146	)											(253	)
Other income, net														–												2
Share of income of associates and joint ventures accounted for using equity method, net of income tax														1												–
Income before income taxes													$	650											$	515

Additions to PP&E	$	329		$	203		$	10		$	17		$	559		$	186	$	189	$	10	$	54		$	439

* Included with operating costs in unaudited interim consolidated statements of income.


Rogers Communications Inc.		21		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements


		Nine months ended September 30, 2011												Nine months ended September 30, 2010
	Wireless		Cable		Media		Corporate items and eliminations			Consolidated totals			Wireless		Cable		Media		Corporate items and eliminations			Consolidated totals
Operating revenue	$	5,312	$	2,843	$	1,183	$	(87	)	$	9,251		$	5,185	$	2,831	$	1,045	$	(57	)	$	9,004

Operating costs*		2,946		1,647		1,047		(11	)		5,629			2,716		1,769		938		10			5,433
		2,366		1,196		136		(76	)		3,622			2,469		1,062		107		(67	)		3,571
Integration, restructuring and acquisition costs		13		23		11		–			47			4		13		1		–			18
Stock-based compensation expense*		5		4		5		16			30			14		12		13		37			76
Settlement of pension obligations*		2		5		3		1			11			–		–		–		–			–
Other items, net*		–		–		–		–			–			10		5		4		–			19
		2,346		1,164		117		(93	)		3,534			2,441		1,032		89		(104	)		3,458

Depreciation and amortization		492		628		48		121			1,289			484		595		41		90			1,210

Operating income (loss)	$	1,854	$	536	$	69	$	(214	)		2,245		$	1,957	$	437	$	48	$	(194	)		2,248

Finance costs											(580	)											(590	)
Other income, net											7												4
Share of income of associates and joint ventures accounted for using equity method, net of income tax											4												7
Income before income taxes										$	1,676											$	1,669

Additions to PP&E	$	845	$	559	$	30	$	40		$	1,474		$	591	$	484	$	23	$	145		$	1,243

* Included with operating costs in unaudited interim consolidated statements of income.

The Company applies the same basis of accounting for transactions between reportable segments as transactions with external parties.


Rogers Communications Inc.		22		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements

In addition, Cable consists of the following reportable segments:


		Three months ended September 30, 2011											Three months ended September 30, 2010
	Cable Operations			Rogers Business Solutions		Video			Total Cable			Cable Operations		Rogers Business Solutions		Video			Total Cable
Operating revenue	$	826		$	96	$	18		$	940		$	798	$	115	$	33		$	946

Operating costs*		459			77		25			561			431		104		38			573
		367			19		(7	)		379			367		11		(5	)		373
Integration, restructuring and acquisition costs		3			–		2			5			2		1		2			5
Stock-based compensation expense (recovery)*		(2	)		–		–			(2	)		6		–		–			6
	$	366		$	19	$	(9	)		376		$	359	$	10	$	(7	)		362

Depreciation and amortization										213										196
Operating income									$	163									$	166

Additions to PP&E	$	190		$	13	$	–		$	203		$	177	$	11	$	1		$	189

* Included with operating costs in unaudited interim consolidated statements of income.
		Nine months ended September 30, 2011											Nine months ended September 30, 2010
	Cable Operations			Rogers Business Solutions		Video			Total Cable			Cable Operations		Rogers Business Solutions		Video			Total Cable
Operating revenue	$	2,471		$	312	$	60		$	2,843		$	2,379	$	341	$	111		$	2,831

Operating costs*		1,325			246		76			1,647			1,332		313		124			1,769
		1,146			66		(16	)		1,196			1,047		28		(13	)		1,062
Integration, restructuring and acquisition costs		6			6		11			23			3		4		6			13
Stock-based compensation expense*		4			–		–			4			12		–		–			12
Settlement of pension obligations*		4			1		–			5			–		–		–			–
Other items, net*		–			–		–			–			7		–		(2	)		5
	$	1,132		$	59	$	(27	)		1,164		$	1,025	$	24	$	(17	)		1,032

Depreciation and amortization										628										595
Operating income									$	536									$	437
Additions to PP&E	$	517		$	42	$	–		$	559		$	454	$	25	$	5		$	484

* Included with operating costs in unaudited interim consolidated statements of income.


Rogers Communications Inc.		23		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements

5.	Operating costs:


	Three months ended September 30,						Nine months ended September 30,
	2011			2010			2011			2010

Cost of equipment sales	$	326		$	349		$	979		$	850
Merchandise for resale		48			57			146			176
Other external purchases		1,098			1,072			3,194			3,164
Employee salaries and benefits		438			460			1,340			1,338
Settlement of pension obligations (note 11)		–			–			11			–
	$	1,910		$	1,938		$	5,670		$	5,528

6. Finance costs:
	Three months ended September 30,						Nine months ended September 30,
	2011			2010			2011			2010

Interest on long-term debt	$	167		$	167		$	499		$	505
Loss on repayment of long-term debt (note 10)		–			87			99			87
Foreign exchange loss (gain)		29			(14	)		18			(7	)
Change in fair value of derivative instruments		(43	)		9			(23	)		(4	)
Capitalized interest		(9	)		(2	)		(19	)		(2	)
Amortization of deferred transaction costs		2			6			6			11
	$	146		$	253		$	580		$	590

7.	Business combinations and divestitures:

(a) Atria Networks LP:

On January 4, 2011, the Company closed an agreement to purchase a 100% interest in Atria Networks LP (“Atria”) for cash consideration of $426 million. Atria, based in Kitchener, Ontario, owns and operates one of the largest fibre-optic networks in Ontario, delivering premier business Internet and data services. The acquisition will augment RBS’s small business and medium-sized business offerings by enhancing its ability to deliver on-net data centric services within and adjacent to Cable’s footprint.

The acquisition was accounted for using the acquisition method in accordance with IFRS 3 with the results of operations consolidated with those of the Company effective January 4, 2011 and has contributed incremental revenue of $55 million and an operating loss of $12 million (including depreciation and amortization of $44 million) for the nine months ended September 30, 2011. The acquisition transaction costs were approximately $3 million and have been charged to integration, restructuring and acquisition costs, of which $2 million was recognized in fiscal 2010 and $1 million was recognized in the nine months ended September 30, 2011.


Rogers Communications Inc.		24		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements

The final fair values of the assets acquired and liabilities assumed in the acquisition are as follows:


Fair value of consideration transferred	$	426

Current assets	$	10
PP&E		132
Customer relationships		200
Spectrum licence		4
Current liabilities		(17	)
Deferred tax liabilities		(52	)
Fair value of net identifiable assets acquired and liabilities assumed		277
Goodwill	$	149

Goodwill represents the expected operational synergies with the acquiree and/or intangible assets that do not qualify for separate recognition. The goodwill has been allocated to the RBS reporting segment and is not tax deductible.

The customer relationships are being amortized over a period of 5 years.

Included in current assets is the fair value of trade receivables of $6 million. The gross contractual amount of trade receivables due is $6 million, which is expected to be collected.

(b) BOUNCE FM:

On January 31, 2011, the Company closed an agreement to acquire the assets of Edmonton, Alberta radio station BOUNCE (CHBN-FM) for cash consideration of $22 million. The acquisition of this radio station was made to increase the Company’s presence in the Edmonton market. The acquisition was accounted for using the acquisition method in accordance with IFRS 3 with the results of operations consolidated with those of the Company effective January 31, 2011 and has contributed incremental revenue of $2 million and an operating loss of $1 million for the nine months ended September 30, 2011. The acquisition transaction costs were approximately $1 million and have been charged to integration, restructuring and acquisition costs.

The final fair values of the assets acquired and liabilities assumed in the acquisition are as follows:


Fair value of consideration transferred	$	22

Current assets	$	1
Broadcast licence		11
Brand name		1
Fair value of net identifiable assets acquired and liabilities assumed		13
Goodwill	$	9

On January 31, 2011, the Company closed an agreement to acquire the assets of London, Ontario radio station BOB-FM (CHST-FM) for cash consideration of $16 million. The acquisition of this radio station was made to enter into the London, Ontario market. The acquisition was accounted for using the acquisition method in accordance with IFRS 3 with the results of operations consolidated with those of the Company effective January 31, 2011 and has contributed incremental revenue of $3 million and operating income of


Rogers Communications Inc.		25		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements

$nil for the nine months ended September 30, 2011. The acquisition transaction costs were approximately $1 million and have been charged to integration, restructuring and acquisition costs.

The final fair values of the assets acquired and liabilities assumed in the acquisition are as follows:


Fair value of consideration transferred	$	16

Current assets	$	1
Broadcast licence		6
Brand name		1
Fair value of net identifiable assets acquired and liabilities assumed		8
Goodwill	$	8

(d) Compton Cable T.V. Ltd.:

On February 28, 2011, the Company closed an agreement to acquire the assets of Compton Cable T.V. Ltd. (“Compton”) for cash consideration of $40 million. Compton provides cable television, Internet and telephony services in Port Perry, Ontario and the surrounding area. The acquisition was made to enter into the Port Perry, Ontario market and is adjacent to the existing Cable footprint. The acquisition was accounted for using the acquisition method in accordance with IFRS 3 with the results of operations consolidated with those of the Company effective February 28, 2011 and has contributed incremental revenue of $5 million and an operating loss of $3 million (including depreciation and amortization of $5 million) for the nine months ended September 30, 2011.

The final fair values of the assets acquired and liabilities assumed in the acquisition are as follows:


Fair value of consideration transferred	$	40

Current assets	$	1
PP&E		10
Customer relationships		23
Current liabilities		(1	)
Fair value of net identifiable assets acquired and liabilities assumed		33
Goodwill	$	7

The customer relationships are being amortized over a period of 3 years.

(e) BV! Media Inc:

During the nine months ended September 30, 2011, the Company updated its valuation of certain net identifiable assets acquired for the BV! Media Inc. acquisition. This resulted in an increase in customer relationships of $2 million and a corresponding decrease in goodwill of $2 million from the amounts recorded and disclosed at December 31, 2010.


Rogers Communications Inc.		26		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements

The final fair values of the assets acquired and liabilities assumed in the acquisition are as follows:


Fair value of consideration transferred	$	24

Current assets	$	5
PP&E		4
Customer relationships		8
Current liabilities		(3	)
Deferred tax liabilities		(3	)
Fair value of net identifiable assets acquired and liabilities assumed		11
Goodwill	$	13

The customer relationships are being amortized over a period of 2 years.

(f) Other:

During the nine months ended September 30, 2011, the Company increased its ownership interest in a subsidiary from 53% to 100% for cash consideration of $11 million. The Company recognized this increase in the ownership interest of a previously controlled entity as a decrease in retained earnings of $11 million as the carrying amount of non-controlling interest was insignificant.

During the nine months ended September 30, 2011, the Company made another acquisition for cash consideration of approximately $16 million, which has been recorded as customer relationships. The customer relationships are being amortized over a period of 5 years.

(g) Pro forma disclosures:

Revenue and operating income for the combined Company for the current reporting period would not be materially different if all acquisitions had occurred at the beginning of the current reporting period.

8.	Integration, restructuring and acquisition costs:

During the three and nine months ended September 30, 2011, the Company incurred $17 million and $47 million, respectively, of integration, restructuring and acquisition costs related to: (i) severances resulting from the targeted restructuring of its employee base ($15 million and $31 million); (ii) the closure of certain Video stores and lease exit costs ($2 million and $12 million); and (iii) acquisition transaction costs and integration of acquired businesses and related restructuring ($nil and $4 million).


Rogers Communications Inc.		27		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements

The additions to the liabilities related to the integration, restructuring and acquisition activities and payments made against such liabilities during 2011 are as follows:


	As at December 31, 2010		Additions		Payments			As at September 30, 2011
Severances resulting from the targeted restructuring of the Company’s employee base	$	47	$	31	$	(32	)	$	46
Video store closures and lease exit costs		4		12		(10	)		6
Acquisition transaction costs and integration of acquired businesses		3		4		(5	)		2
	$	54	$	47	$	(47	)	$	54

The remaining liability of $54 million as at September 30, 2011, which is included in accounts payable and accrued liabilities, is expected to be paid over the next two years.

9.	Earnings per share:

The following table sets forth the calculation of basic and diluted earnings per share for the three and nine months ended September 30, 2011 and 2010:


	Three months ended September 30,				Nine months ended September 30,
	2011		2010		2011		2010

Numerator:
Net income for the period	$	491	$	380	$	1,236	$	1,200

Denominator (in millions):
Weighted average number of shares outstanding - basic		542		574		547		582

Effect of dilutive securities:
Employee stock options		4		4		4		4
Weighted average number of shares outstanding – diluted		546		578		551		586

Earnings per share:
Basic	$	0.91	$	0.66	$	2.26	$	2.06
Diluted		0.87		0.66		2.24		2.05

For the three months ended September 30, 2011, accounting for outstanding share-based payments under the equity-settled method of stock-based compensation was determined to be more dilutive. As a result, net income for the period was reduced by $15 million (2010 - $nil) in the diluted earnings per share calculation to account for these awards as if they were equity-settled. For the nine months ended September 30, 2011, the cash-settled method of stock-based compensation was determined to be more dilutive and as a result, no adjustment was required to net income used in the diluted earnings per share calculation (2010 - $nil).


Rogers Communications Inc.		28		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements

The total number of anti-dilutive options that were out of the money and therefore excluded from the calculation for the three and nine months ended September 30, 2011 was 1,521,244 and 1,600,529 (2010 - 1,406,540 and 1,410,290), respectively.

10.

Long-term debt:


	Due date		Principal amount		Interest rate		September 30, 2011			December 31, 2010

Bank credit facility						Floating		$ 120			$ –
Senior Notes**		2012	$	U.S. 350		7.875%		–			348
Senior Notes*		2012		U.S. 470		7.25%		–			468
Senior Notes**		2013		U.S. 350		6.25%		367			348
Senior Notes*		2014		U.S. 750		6.375%		786			746
Senior Notes**		2014		U.S. 350		5.50%		367			348
Senior Notes*		2015		U.S. 550		7.50%		577			547
Senior Notes**		2015		U.S. 280		6.75%		293			279
Senior Notes		2016		1,000		5.80%		1,000			1,000
Senior Notes		2018		U.S.1,400		6.80%		1,467			1,392
Senior Notes		2019		500		5.38%		500			500
Senior Notes		2020		900		4.70%		900			900
Senior Notes		2021		1,450		5.34%		1,450			–
Senior Debentures**		2032		U.S. 200		8.75%		210			199
Senior Notes		2038		U.S. 350		7.50%		367			348
Senior Notes		2039		500		6.68%		500			500
Senior Notes		2040		800		6.11%		800			800
Senior Notes		2041		400		6.56%		400			–
								10,104			8,723

Fair value decrement arising from purchase accounting								(4	)		(5	)

Deferred transaction costs								(66	)		(64	)
								$ 10,034			$ 8,654

(*)	Denotes senior notes originally issued by Rogers Wireless Inc. which are now unsecured obligations of RCI and for which Rogers Communications Partnership (“RCP”) is an unsecured co-obligor.

(**)	Denotes senior notes and debentures originally issued by Rogers Cable Inc. which are now unsecured obligations of RCI and for which RCP is an unsecured guarantor.

(a) Redemption of Senior Notes:

On March 21, 2011, the Company redeemed the entire outstanding principal amount of its U.S. $350 million ($342 million) 7.875% Senior Notes due 2012 at the prescribed redemption price of 107.882% of the principal amount effective on that date. The Company incurred a loss on the repayment of the Senior Notes aggregating $42 million, including aggregate redemption premiums of $27 million, a net loss on the termination of the associated swaps of $14 million due to amounts previously recognized in the hedging reserve in equity and a write-off of deferred financing costs of $1 million. Concurrently with this redemption, on March 21, 2011, the Company terminated the cross-currency interest rate exchange agreements (“Debt Derivatives”) aggregating U.S. $350 million notional principal amount associated with the redemption. The Company made a net payment of approximately $219 million to terminate these Debt Derivatives.


Rogers Communications Inc.		29		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements

On March 21, 2011, the Company redeemed the entire outstanding principal amount of its U.S. $470 million ($460 million) 7.25% Senior Notes due 2012 at the prescribed redemption price of 110.735% of the principal amount effective on that date. The Company incurred a loss on the repayment of the Senior Notes aggregating $57 million, including aggregate redemption premiums of $49 million, a net loss on the termination of the associated swaps of $8 million due to amounts previously recognized in the hedging reserve in equity, and a write-off of deferred financing costs of $1 million, and offset by a write-down of a previously recorded fair value increment of $1 million. Concurrently with this redemption, on March 21, 2011, the Company terminated the associated Debt Derivatives aggregating U.S. $470 million notional principal amount. The Company made a net payment of approximately $111 million to terminate these Debt Derivatives.

The total loss on repayment of the Senior Notes was $99 million for the nine months ended September 30, 2011.

As a result of these redemptions, the Company paid an aggregate of approximately $878 million, including approximately $802 million aggregate principal amount and $76 million for the premiums payable in connection with the redemptions. In addition, concurrently with the redemptions, the Company terminated the associated Debt Derivatives aggregating U.S. $820 million notional principal amount and made an aggregate net payment of approximately $330 million to terminate these Debt Derivatives.

(b) Issuance of Senior Notes:

On March 21, 2011, the Company issued $1,450 million of 5.34% Senior Notes which mature on March 22, 2021. The notes are redeemable, in whole or in part, at the Company’s option, at any time, subject to a certain prepayment premium. The net proceeds from the offering were approximately $1,442 million after deduction of the original issue discount and debt issuance costs.

On March 21, 2011, the Company issued $400 million of 6.56% Senior Notes which mature on March 22, 2041. The notes are redeemable, in whole or in part, at the Company’s option, at any time, subject to a certain prepayment premium. The net proceeds from the offering were approximately $398 million after deduction of the original issue discount and debt issuance costs.

Debt issuance costs of $10 million related to these debt issuances were incurred and capitalized in the nine months ended September 30, 2011.

11.

Pensions:

During the three and nine months ended September 30, 2011, the Company recorded pension expense in the amount of $10 million and $28 million (2010 - $7 million and $20 million), respectively. In addition, the expense related to unfunded supplemental executive retirement plans for the three and nine months ended September 30, 2011 was $1 million and $3 million (2010 - $1 million and $3 million), respectively.

12.

Shareholders’ equity:

(a) Dividends:

In February 2011, the Company’s Board of Directors adopted a dividend policy which increased the annualized dividend rate from $1.28 to $1.42 per Class A Voting share and Class B Non-Voting share effective immediately to be paid in quarterly amounts of $0.355 per share. Such quarterly dividends are only payable as and when declared by the Board of Directors and there is no entitlement to any dividend prior thereto.


Rogers Communications Inc.		30		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements

On February 15, 2011, the Board of Directors declared a quarterly dividend totalling $0.355 per share on each of its outstanding Class A Voting shares and Class B Non-Voting shares, which was paid on April 1, 2011, to shareholders of record on March 18, 2011, and is the first quarterly dividend to reflect the newly increased $1.42 per share annual dividend level.

On April 27, 2011, the Board of Directors declared a dividend of $0.355 per share which was paid on July 4, 2011, to the shareholders of record on June 15, 2011.

On August 17, 2011, the Board of Directors declared a dividend of $0.355 per share which was paid on October 3, 2011, to the shareholders of record on September 15, 2011.

(b) Normal course issuer bid:

In February 2011, the TSX accepted a notice filed by the Company of its intention to renew its prior normal course issuer bid (“NCIB”) for a further one-year period. The TSX notice provides that the Company may, during the 12-month period commencing February 22, 2011 and ending February 21, 2012, purchase on the TSX the lesser of 39.8 million Class B Non-Voting shares, representing approximately 9% of the then issued and outstanding Class B Non-Voting shares, and that number of Class B Non-Voting shares that can be purchased under the NCIB for an aggregate purchase price of $1,500 million. The actual number of Class B Non-Voting shares purchased, if any, and the timing of such purchases will be determined by the Company considering market conditions, share prices, its cash position, and other factors.

In the nine months ended September 30, 2011, the Company repurchased for cancellation an aggregate 20,905,126 Class B Non-Voting shares for an aggregate purchase price of $725 million, resulting in a reduction to stated capital, share premium and retained earnings of $20 million, $609 million and $96 million, respectively. An aggregate 11,905,126 of these shares were repurchased for cancellation directly under the NCIB for an aggregate purchase price of $440 million. The remaining 9,000,000 shares were repurchased for cancellation pursuant to private agreements between the Company and arm’s-length third party sellers for an aggregate purchase price of $285 million. These purchases were made under issuer bid exemption orders issued by the Ontario Securities Commission and are included in calculating the number of Class B Non-Voting shares that the Company may purchase pursuant to the NCIB.

13.

Stock-based compensation:

A summary of stock-based compensation expense (recovery), which is included in operating costs, is as follows:


	Three months ended September 30,					Nine months ended September 30,
	2011			2010		2011		2010

Stock options	$	(20	)	$	31	$	7	$	54
Restricted share units		3			7		17		17
Deferred share units		(2	)		3		6		5
	$	(19	)	$	41	$	30	$	76

During the three and nine months ended September 30, 2011, the Company granted nil and 1,133,600 (2010 - 56,800 and 1,331,225) stock options to employees, including nil and 552,300 stock options (2010 - nil and 572,025) and nil and 581,300 performance stock options (2010 - 56,800 and 759,200), respectively. As at September 30, 2011, 11,696,564 (December 31, 2010 - 11,841,680) stock options were outstanding.

The weighted average exercise price of stock options granted during the three and nine months ended September 30, 2011 was $nil and $34.36 per share (2010 - $37.30 and $34.66), respectively. The weighted average fair value of stock options granted during the three and nine months ended September 30, 2011 was


Rogers Communications Inc.		31		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements

$nil and $7.24 per share (2010 - $7.07 and $7.73), respectively. The weighted average exercise price of stock options exercised during the three and nine months ended September 30, 2011 was $19.87 and $18.04 per share (2010 - $15.13 and $15.06), respectively.

During the three and nine months ended September 30, 2011, the Company issued 98,758 and 836,546 (2010 - 111,297 and 800,194) restricted share units to employees, including 85,338 and 666,668 (2010 - 109,660 and 614,221) restricted share units and 13,420 and 169,878 (2010 - 1,637 and 185,973) performance restricted share units, respectively. As at September 30, 2011, 1,953,361 (December 31, 2010 - 1,616,370) restricted share units were outstanding. These restricted share units vest at the end of three years from the grant date.

During the three and nine months ended September 30, 2011, $4 million and $28 million (2010 - $15 million and $49 million) was paid to holders upon exercise of restricted share units, deferred share units and stock options using the cash settlement feature, respectively.

14.

Financial risk management and financial instruments:

The Company is exposed to credit risk, liquidity risk and market risk. The Company’s primary risk management objective is to protect its income and cash flows and, ultimately, shareholder value. Risk management strategies are designed and implemented to ensure the Company’s risks and the related exposures are consistent with its business objectives and risk tolerance.

In July 2011, the Company entered into foreign currency forward contracts (“Expenditure Derivatives”) to manage foreign exchange risk on certain forecasted expenditures. The Expenditure Derivatives fix the exchange rate on a aggregate U.S. $20 million per month of the Company’s forecast expenditures at an average exchange rate of Cdn$0.9643/U.S.$1 from August 2011 through July 2014. At September 30, 2011, U.S. $680 million of these Expenditure Derivatives remain outstanding, all of which are accounted for as hedges, with changes in fair value being recorded in other comprehensive income.

The effect of estimating the credit-adjusted fair value of the Debt Derivatives and the Expenditure Derivatives (together the “Derivatives”) at September 30, 2011 is illustrated in the table below. As at September 30, 2011, the credit-adjusted net liability position of the Company’s Derivatives portfolio was $281 million, which is $13 million more than the unadjusted risk-free mark-to-market net liability position.


	Derivatives in an asset position (A)			Derivatives in a liability position (B)			Net asset (liability) position (A) + (B)

Debt Derivatives:
Mark-to-market value - risk-free analysis	$	167		$	(497	)	$	(330	)
Mark-to-market value - credit-adjusted estimate (carrying value)		145			(487	)		(342	)
Difference, Debt Derivatives		(22	)		10			(12	)

Expenditure Derivatives:
Mark-to-market value - risk-free analysis		62			–			62
Mark-to-market value - credit-adjusted estimate (carrying value)		61			–			61
Difference, Expenditure Derivatives		(1	)		–			(1	)
Total Difference	$	(23	)	$	10		$	(13	)

Of the $13 million impact, $4 million was recorded in the unaudited interim consolidated statements of income related to Derivatives not accounted for as hedges and $9 million related to Derivatives accounted for as hedges was recorded in other comprehensive income.


Rogers Communications Inc.		32		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements

At September 30, 2011, 91.7% of the Company’s U.S. dollar-denominated long-term debt instruments were hedged against fluctuations in foreign exchange rates for accounting purposes. At September 30, 2011, details of the Derivative instruments net liability are as follows:


	U.S. $ notional		Exchange rate		Cdn. $ notional		Unadjusted mark-to- market value on a risk-free basis			Estimated fair value, being carrying amount on a credit risk adjusted basis

Debt Derivatives accounted for as cash flow hedges:
As assets		$ 1,975		1.0252	$	2,025	$	147		$	129
As liabilities		1,905		1.2668		2,413		(497	)		(487	)

Debt Derivatives not accounted for as hedges:
As assets		350		1.0258		359		20			16

Net mark-to-market liability Debt Derivatives								(330	)		(342	)

Expenditure Derivatives accounted for as cash flow hedges:
As assets		680		0.9643		656		62			61

Net mark-to-market liability							$	(268	)		(281	)


Less net current liability portion											(14	)
Net long-term liability portion										$	(267	)

During the three months ended September 30, 2011, $10 million (2010 - $2 million) related to hedge ineffectiveness was recognized as an increase in net income.

The long-term portion above comprises a derivative instruments liability of $447 million and a derivative instruments asset of $180 million as at September 30, 2011.

At December 31, 2010, 93.1% of the Company’s U.S. dollar-denominated long-term debt instruments were hedged against fluctuations in foreign exchange rates for accounting purposes. At December 31, 2010, details of the Debt Derivatives net liability are as follows:


Rogers Communications Inc.		33		Third Quarter 2011

Notes to Unaudited Interim Consolidated Financial Statements


	U.S. $ notional		Exchange rate		Cdn. $ notional		Unadjusted mark-to- market value on a risk-free basis			Estimated fair value, being carrying amount on a credit risk adjusted basis

Debt Derivatives accounted for as cash flow hedges:
As assets		$ 575		1.0250	$	589	$	7		$	7
As liabilities		4,125		1.2021		4,959		(918	)		(901	)
Net mark-to-market liability								(911	)		(894	)

Debt Derivatives not accounted for as hedges:
As liabilities		350		1.0258		359		(6	)		(6	)

Net mark-to-market liability							$	(917	)		(900	)


Less net current liability portion											(66	)
Net long-term liability portion										$	(834	)

15.

Related party transactions:

The Company has entered into certain transactions with companies, the partners or senior officers of which are Directors of the Company. During the three months and nine months ended September 30, 2011, total amounts paid by the Company to these related parties, directly or indirectly, were $10 million and $28 million (2010 - $9 million and $27 million), respectively. These payments were for legal services, printing and commissions paid on premiums for insurance coverage.

The Company entered into certain transactions with the ultimate controlling shareholder of the Company and companies controlled by the ultimate controlling shareholder of the Company. These transactions are subject to formal agreements approved by the Audit Committee. Total amounts received from (paid to) these related parties, during the three months and nine months ended September 30, 2011 and 2010 were less than $1 million, respectively.

These transactions are recorded at the amount agreed to by the related parties, and are reviewed by the Audit Committee.

16.

Commitments:

In April 2011, the Company entered into an agreement to purchase equipment to be used in the building of the wireless network. The agreement has a four-year term, resulting in committed expenditures of $650 million.


Rogers Communications Inc.		34		Third Quarter 2011