MANAGEMENT’S DISCUSSION  AN D ANALYSIS REVIEW OF CONSOLIDATED PERFORMANCE Restructuring, Acquisition and Other Expenses Depreciation and Amortization Expense Adjusted Operating Profit Impairment of Assets GLYPH<129> $67 million in goodwill GLYPH<129> $8 million in broadcast licences GLYPH<129> $5 million in program rights. There was no impairment of assets this year. In 2012, we recorded an $80 million impairment charge in the Media segment that included: GLYPH<129> our significant investment and roll out of new customer premise equipment, mostly NextBox 2.0 and 3.0 set-top boxes at Cable; these are now amortized over three years, compared to five years prior to 2012, which also contributed to the increase GLYPH<129> the timing of readiness of certain network and system initiatives, including the launch of our LTE network in various municipalities GLYPH<129> new property, plant and equipment and intangible assets resulting from our recent acquisitions in Cable, Business Solutions and Media. Depreciation and amortization expense were both higher this year mainly because of: GLYPH<129> vesting of stock options and share units GLYPH<129> changes in the market price of RCI Class B shares GLYPH<129> offset by the impact of the stock-based compensation derivative instruments that offset a portion of the price appreciation risk for our stock-based compensation program starting March 2013. See “Financial Risk Management” for information about Equity Derivatives. 1 Adjusted operating profit is a non-GAAP measure and should not be considered as a substitute or alternative for GAAP measures. It is not a defined term under IFRS and does not have a standard meaning, so may not be a reliable way to compare us to other companies. See “Non-GAAP Measures” for information about these measures, including how we calculate them. 2 As defined. See “Additional GAAP Measures”. GLYPH<129> $32 million in acquisition transaction costs (2012 – $3 million). GLYPH<129> $53 million in severance costs associated with the targeted restructuring of our employee base (2012 – $89 million) Stock-based compensation expense increased to $84 million from $77 million in 2012. Stock-based compensation of $84 million was mainly the result of the vesting of share-based options and units and the increase in the RCI Class B share price during the first two months of this year prior to entering into the Equity Derivatives. This section discusses our consolidated operating income, net income and other expenses that do not form part of the segment discussions above. We had a liability of $164 million at December 31, 2013 (2012 – $195 million) related to stock-based compensation recorded at its fair value, including stock options, restricted share units and deferred share units. We paid $101 million in 2013 (2012 – $76 million) to holders of stock options, restricted share units and deferred share units upon exercise. All stock options holders exercised their stock options through optional share appreciation rights (SARs). We use derivative instruments from time to time to manage our exposure to market-based fluctuations in our stock-based compensation expense. Restructuring, acquisition and other expenses associated with initiatives aimed at improving our cost structure mainly included: Please see “2013 Financial Results” for a discussion of the increase in adjusted operating profit this year. Our stock-based compensation expense for stock options (including stock appreciation rights), restricted share units and deferred share units is generally determined by: S tock-Based Compensation Expense n/m: not meaningful. Years ended December 31 (In millions of dollars) 2013 2012 Impact of vesting and change in price $76 $7 7 Equity derivatives, net of interest receipt 8 – Total stock-based compensation expense $ 84 $7 7 Years ended December 31 (In millions of dollars) 2013 2012 % Chg Depreciation $ 1,748 $ 1,678 4 Amortization 150 141 6 Total depreciation and amortization $ 1,898 $ 1,819 4 2013 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 51 Years ended December 31 (In millions of dollars) 2013 2012 % Chg Adjusted operating profit 1 $ 4,993 $ 4,834 3 Stock-based compensation expense (84) (77) 9 Restructuring, acquisition and other expenses (85) (92) (8) Depreciation and amortization (1,898) (1,819) 4 Impairment of assets – (80) n/m Operating income 2 2,926 2,766 6 Finance costs (742) (671) 11 Other income (expense) 81 250 (68) Income before income taxes 2,265 2,345 (3) Income tax expense (596) (620) (4) Net income from continuing operations 1,669 1,725 (3) Loss from discontinued operations – (32) n/m Net income $ 1,669 $ 1,693 (1)