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2003 Annual Report Rogers Communications Inc.
82
Notes to Consolidated Financial Statements
2003. On January 5, 2004, the Company acquired the 20% minority interest for approximately $39.1 million. This obligation
has been recorded as a liability by the Company. The 20% minority interest owner of the Blue Jays is not required to fund
operating losses of the Blue Jays and, as a result, as required under GAAP, the Company has recorded 100% of the operat-
ing losses of the Blue Jays since acquisition.
Effective April 1, 2001, Rogers Telecommunications Ltd. (“RTL”), a company controlled by the controlling share-
holder of the Company, acquired the Class A Preferred Shares of the subsidiary of RCI that owns the Blue Jays (“Blue Jays
Holdco”) for $30.0 million. These Class A Preferred Shares are voting, redeemable for cash of $30.0 million plus any accrued
unpaid dividends at the option of Blue Jays Holdco at any time after September 14, 2004. Any such redemption requires
the consent of a committee of the board of Blue Jays Holdco, comprising directors that are not related to RTL, RTL’s affili-
ates or its controlling shareholder and requires the prior written consent of the Board of Directors of the Company. These
Class A Preferred Shares may be acquired by the Company at its option at any time. The Class A Preferred Shares pay
cumulative dividends at a rate of 9.167% per annum. For periods up to July 31, 2004, Blue Jays Holdco may satisfy the
cumulative dividends on its Class A Preferred Shares in kind by transferring to RTL income tax loss carryforwards, having
an agreed value equal to the amount of the dividends. Until July 2004, such agreed value is equal to 10% of the amount of
the tax losses. During 2003, Blue Jays Holdco satisfied the dividend by transferring income tax loss carryforwards to RTL
of approximately $24.0 million (2002 – $27.0 million) with an agreed upon value of $2.4 million (2002 – $2.7 million).
As a result of the issuance of the Class A Preferred Shares of Blue Jays Holdco to RTL, the Company does not con-
trol the Blue Jays. Accordingly, effective April 1, 2001, the Company accounts for its investment in Blue Jays Holdco by the
equity method.
RCI agreed at the time of purchase with Major League Baseball that it will: (i) perform or cause the Toronto Blue
Jays Baseball Club (the “Club”) to perform all of the terms imposed by Major League Baseball acting under the scope of its
authority; (ii) perform or cause the Club to perform all duties and obligations of the Club under the governing documents
of Major League Baseball and under those agreements to which Major League Baseball entities are parties; and
(iii) assume and perform or cause the Club to perform all liabilities and obligations of the Club asserted by any party
against any Major League Baseball entity.
If E.S. Rogers is unable to exercise control over the Blue Jays and Major League Baseball (“MLB”) determines that a
sale or transfer of a control interest in the Blue Jays has occurred, then MLB is entitled to take such action as it considers
necessary in accordance with its guidelines, rules and regulations.
The change in the investment in Blue Jays Holdco is the result of cash contributions of $29.4 million (2002 –
$40.6 million) offset by the equity losses of $56.5 million (2002 – $101.7 million).
Condensed consolidated financial information of Blue Jays Holdco is presented below:
2003 2002
Assets
Cash and accounts receivable $ 11,942 $ 18,897
Deferred compensation 22,061 26,961
Goodwill 95,509 95,509
Player contracts 32,530 67,458
Other assets 26,504 25,944
$ 188,546 $ 234,769
Liabilities and Shareholders’ Equity
Accounts payable and accrued liabilities $ 31,234 $ 43,471
Deferred obligations 37,609 44,892
68,843 88,363
Shareholders’ equity 119,703 146,406
$ 188,546 $ 234,769
Revenue $ 133,510 $ 131,682
Operating expenses (152,599) (186,088)
(19,089) (54,406)
Depreciation and amortization (36,270) (41,615)
Interest expense (1,143) (1,272)
Write-down of investments – (4,449)
Loss for the year $ (56,502) $ (101,742)
(b) Cogeco Cable Inc.:
In March 2003, the Company entered into agreements to purchase 3.0 million Subordinate Voting shares of Cogeco Cable
Inc. (“Cogeco”) in exchange for 2.7 million Class B Non-Voting shares of the Company from a group of investors unaffiliated