Rogers 2004 Annual Report Download

Download and view the complete annual report

Please find the complete 2004 Rogers annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 116

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116

YOUR WORLD RIGHT NOW
ROGERS COMMUNICATIONS INC.
2004 ANNUAL REPORT

Table of contents

  • Page 1
    YOUR WORLD RIGHT NOW ROGERS COMMUNICATIONS INC. 2004 ANNUAL REPORT

  • Page 2
    ...Canada's largest wireless voice and data communications services provider and the country's only carrier operating on the world standard GSM/GPRS technology platform. Rogers Cable is Canada's largest cable provider offering cable television, high-speed Internet access and video retailing, and plans...

  • Page 3
    YOUR WORLD RIGHT NOWâ„¢

  • Page 4
    CHECKING FLIGHT STATUS WIRELESSLY CHECKING OFFICE VOICEMAIL PURCHASING BLUE JAYS TICKETS WIRELESSLY SYNCHING CALENDAR ON PDA PACKED CHATELAINE AND FLARE MAGAZINES FOR FLIGHT

  • Page 5
    LISTENING TO CHFI RADIO PURCHASED TICKETS ONLINE WITH ROGERS™ YAHOO! ® HI-SPEED INTERNET VACATION INSPIRED BY TRAVEL SHOW ON CABLE PVR RECORDING FAVOURITE SHOW AT HOME ROAMS GLOBALLY WITH ROGERS GSM CELL PHONE BE INFORMED RIGHT NOW Rogers gives you what you need to make informed decisions in...

  • Page 6
    ... in touch with the office, and in touch with current events. At home, around town or around the globe - right now. EYEING AN HD TELEVISION FOR HIS ROGERS DIGITAL CABLE SERVICE LOOKS IN THE MALL, BUYS FROM THE SHOPPING CHANNEL PURCHASED ROGERS YAHOO! EXTREME INTERNET KIT SHOPPING TIPS FROM LOULOU...

  • Page 7
    ACCESSES DESKTOP WHILE SHOPPING SNAPS & EMAILS PICTURE OF OUTFIT TO FRIEND SHOPPING FOR GSM PHONE FOR OVERSEAS TRAVEL HEARD ABOUT BIG SALE ON JACKFM TEXT MESSAGING FRIENDS

  • Page 8
    ... IN HD SELECTING FROM THOUSANDS OF MOVIES ON VOD ENJOYS SEAMLESS WIRELESS COVERAGE IN THE YARD & AT THE COTTAGE BE ENTERTAINED RIGHT NOW Rogers knows that entertainment means something different to everyone. We satisfy your need to share and engage, to watch and listen, to play and to choose...

  • Page 9
    CABLE TV IN EVERY ROOM SUBSCRIBES TO WIRELESS FAMILY PLAN MANAGES OFFICE EMAIL ON BLACKBERRY PICKED UP DIGITAL CABLE BOX & A DVD AT ROGERS VIDEO TUNED TO 680NEWS

  • Page 10
    This is Your World, Right provide Canadians from innovative ways to be and to be entertained. convenience and enjoy lives every day in ways With Rogers, you won't it comes to the latest in tions, entertainment, and services. Be informed. Be Come join the world of

  • Page 11
    Now. At Rogers, we coast to coast with informed, to be in touch We add choice, value, ment to millions of uniquely Canadian. miss a thing when innovative communicainformation products and in touch. Be entertained. Rogers, right now.

  • Page 12
    ... - offers a wide range of innovative wireless products, services and solutions to exceed our customers' needs at home, at work and at play. We operate Canada's only GSM/GPRS network, the world standard for wireless communications technology. We've enhanced our network with EDGE technology, a next...

  • Page 13
    ... our cable network, Rogers Digital Phone service, giving customers a new choice and Rogers the ability to provide an even more complete bundle of communications and entertainment services all over our own facilities. HIGH-SPEED INTERNET VIDEO STORES Rogers Communications Inc. 2004 Annual Report...

  • Page 14
    ... in 2005, Rogers Media also assumed management of the Toronto Blue Jays, Canada's only Major League Baseball team, and their home field venue, Rogers Centre, formerly SkyDome. Before cable and wireless, it all began for Rogers more than 40 years ago with a single FM radio station in Toronto - and...

  • Page 15
    ... serve our communities. Through the Rogers Group of Funds, we are a major supporter of Canada's independent television and film producers. And, through our 31 community television stations, Rogers Television produces over 12,000 original hours of local programming annually, offering our communities...

  • Page 16
    ...% 3. Prepaid voice and data 4% 4. One-way messaging 1% Percentage of population network coverage (GSM/GPRS) Average monthly subscriber churn: Postpaid Prepaid 1 (3.7)% 4.3% ROGERS CABLE Cable Television, Digital Video and On-demand Devices, High-Speed Internet, Video Stores Rogers Cable is Canada...

  • Page 17
    ... privatization of Rogers Wireless, each of our core businesses - Wireless, Cable and Media - is now wholly-owned and this has simplified our capital structure. We have in many ways transformed Rogers Communications from a holding company into an operating company, while at the same time increasing...

  • Page 18
    ... one of Rogers Wireless' and Rogers Cable's top performing sales and distribution channels, and have diversified into quickly growing areas such as digital photo development. Our Rogers Video stores are, more than ever, a valuable "window on the community" for the Rogers group. ROGERS MEDIA COVERS...

  • Page 19
    ... Income Consolidated Statements of Deficit Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Directors and Corporate Officers Corporate Governance Overview Corporate Information 18 64 73 73 74 75 75 76 77 110 112 113 Rogers Communications Inc. 2004 Annual Report 17

  • Page 20
    ... POLICIES AND NON-GAAP MEASURES OVERVIEW OPERATING UNIT REVIEW FINANCING AND RISK MANAGEMENT ADDITIONAL FINANCIAL INFORMATION Our Business Our Strategy Significant Fourth Quarter 2004 Events Seasonality Competition Operating and Financial Results 19 19 20 Wireless Cable Media Blue Jays...

  • Page 21
    ... for Mobile Communications/General Packet Radio Service network, with Enhanced Data for GSM Evolution (" EDGE ") technology (" GSM/GPRS/EDGE ") network; in cable television, high-speed Internet access and video retailing through Canada's largest cable television provider, Cable; in radio, television...

  • Page 22
    ... closing of this transaction on October 13, 2004, our ownership of Wireless increased from 55.3% at September 30, 2004 to approximately 89.3%. The sale by AWE of its shares of Wireless did not impact or change the extensive North American wireless voice and data roaming capabilities between Wireless...

  • Page 23
    ... per share amounts and margin) Years Ended December 31, 2004 2003 %Chg Operating revenue1 Wireless Cable Media Blue Jays Corporate items and eliminations Total Operating expenses1 Wireless Cable Media Blue Jays Corporate items and eliminations Total Operating profit2 Wireless Cable Media Blue Jays...

  • Page 24
    ...) Years Ended December 31, 2004 2003 Operating profit Depreciation and amortization Operating income Interest on long-term debt and other Gain on sale of investments Writedown of investments Income (loss) from investments accounted for by the equity method Foreign exchange gain (loss) Change in...

  • Page 25
    ... REVIEW WIRELESS WIRELESS BUSINESS Wireless is the largest Canadian wireless communications service provider, serving more than 5.7 million subscribers at December 31, 2004, including over 5.5 million wireless voice and data subscribers and nearly 0.2 million one-way messaging (paging) subscribers...

  • Page 26
    ... or prepaid payment options. In addition, the GSM/GPRS/EDGE network provides customers with advanced high-speed wireless data services, including mobile access to the Internet, wireless e-mail, digital picture and video transmission, and two-way short messaging service ("SMS"). Wireless Distribution...

  • Page 27
    ... purposes of this discussion, revenue has been classified according to the following categories: • postpaid voice and data, revenues generated principally from • monthly fees, • airtime and long-distance charges, • optional service charges, Rogers Communications Inc. 2004 Annual Report 25

  • Page 28
    ... from monthly fees and usage charges; and • equipment revenue generated from the sale of hardware and accessories to independent dealers, agents and retailers, and directly to new and existing subscribers through direct fulfillment by its customer service groups, Rogers.com ebusiness website and...

  • Page 29
    ...2004. Postpaid voice and data gross subscriber additions in 2004 represented 78.5% of total gross activations and over 93.2% of Wireless' total net additions. Wireless has continued its strategy of targeting higher-value postpaid subscribers and selling prepaid handsets at higher price points, which...

  • Page 30
    ...paging subscribers, Wireless continues to view paging as a profitable but mature business and recognizes that churn will likely continue at relatively high rates as one-way messaging subscribers increasingly migrate to two-way messaging and converged voice and data services. Wireless Equipment Sales...

  • Page 31
    ..., network operations and information technology. Wireless also relies on employees of RCI in the area of, amongst other things, customer service call centres, for a material amount of services. These RCI employees are not included in the FTE levels that Wireless reports. Total remuneration...

  • Page 32
    ...An inability to enhance information technology systems to accommodate additional customer growth and support new products and services could have an adverse impact on Wireless' ability to acquire new subscribers, manage subscriber churn, produce accurate and timely subscriber bills, generate revenue...

  • Page 33
    ...public review, albeit expedited, of this matter within its planning period. Wireless' Business is Subject to Various Government Regulations that Could Adversely Affect its Business or Increase Costs or Competition The licencing, construction and operation of wireless communications systems in Canada...

  • Page 34
    .... Many of these stores provide customers with the additional ability to acquire Cable and Wireless products and services, to pay their cable television, Internet or Wireless bills and to pick up or return Rogers digital cable and Internet equipment. 32 Rogers Communications Inc. 2004 Annual Report

  • Page 35
    ...Future Shop and Best Buy. It also offers products and services and customer service on its e-business website, www.rogers.com. CABLE NETWORKS Cable's cable networks in Ontario and New Brunswick, with few exceptions, are interconnected to regional head-ends, where analog and digital channel lineups...

  • Page 36
    ...usage charges and the cost of operating Cable's Internet service; • Technical service expenses, which includes the costs of operating and maintaining its cable networks as well as certain customer service activities such as installations and repair; 34 Rogers Communications Inc. 2004 Annual Report

  • Page 37
    ... customers are able to experience Cable's extensive programming offering in 100% digital format, while at the same time retaining the ability to watch the analog channels on any cable outlet in the house without the need for extra digital boxes. Rogers Communications Inc. 2004 Annual Report 35

  • Page 38
    ...customer visit. At the end of 2004, many of the Rogers Video stores were integrated stores that offered access to a wide variety of cable, Internet and Rogers Wireless products and services, in addition to the core DVD and video rental and sales offerings. 36 Rogers Communications Inc. 2004 Annual...

  • Page 39
    ...costs of programming associated with the growth in digital cable subscribers and the cost related to the deployment of digital set-top terminals; increased costs directly related to servicing a growing base of Internet subscribers; increased pension expense; and the impact of expensing stock options...

  • Page 40
    ... business and financial condition. Cable Faces Substantial Competition Technological, regulatory and public policy trends have resulted in a more competitive environment for cable television service providers, Internet Service Providers ("ISPs") and video sales and rental services in Canada. Cable...

  • Page 41
    ... for the poles that they own. As a result, the costs of obtaining access to support structures of hydroelectric companies in each of their cable service areas could be substantially increased and could adversely affect Cable's operating results. Rogers Communications Inc. 2004 Annual Report 39

  • Page 42
    ... to enhance the information technology systems to accommodate additional customer growth and to support new products and services could have an adverse impact on Cable's ability to acquire new subscribers, manage subscriber churn, produce accurate and timely subscriber bills, generate revenue...

  • Page 43
    ... from analog to digital. MEDIA COMPETITION Broadcasting's radio stations compete with the other stations in their respective market areas as well as with other media such as newspapers, magazines, television, outdoor advertising, direct mail marketing and the Internet. Competition within the radio...

  • Page 44
    ... costs, production expenses, circulation expenses and other back-office type support functions. Summarized Media Financial Results (In millions of dollars, except margins) 2004 2003 %Chg Operating revenue Publishing Radio Television The Shopping Channel Corporate items, eliminations and other Total...

  • Page 45
    ...2005, The Shopping Channel intends to grow the selection of unique product offerings and various sales channels that have made it one of Canada's largest retailers while at the same time looking to reduce costs through further operating efficiencies. Rogers Communications Inc. 2004 Annual Report 43

  • Page 46
    ...'s business, financial condition or results of operations. Media Faces Increased Competition New programming or content services, as well as alternative media technologies, such as digital radio services, satellite radio, DTH satellite, wireless and wired pay television, Internet radio and video...

  • Page 47
    ...paper prices, printing costs or postage expenses to Publishing could have a material adverse effect on Media's business, results of operations or financial condition. Changes in Regulatory Policies May Adversely Affect Media's Business Media expects the CRTC to review the Commercial Radio Policy of...

  • Page 48
    ... Cable, excluding those directly related to cable telephony, primarily relate to the purchase and placement of CPE associated with new digital and Internet subscribers and scaleable infrastructure to expand the capacity and improve the performance of Cable's network. In 2005, Wireless expects total...

  • Page 49
    ..., we announced an agreement with Microcell to make an all cash tender offer of $35.00 per share to acquire Microcell. We completed the acquisition effective November 9, 2004. Including direct incremental acquisition costs of approximately $14.9 million, the purchase price totalled $1,318.4 million...

  • Page 50
    ..., the Canadian dollar equivalent of U.S. dollar-denominated long-term debt reï¬,ects the contracted foreign exchange rate for all our cross-currency interest rate exchange agreements regardless of qualification for accounting purposes analysis. 48 Rogers Communications Inc. 2004 Annual Report

  • Page 51
    ... include interest rate and cross-currency interest rate exchange agreements, foreign exchange forward contracts and, from time-totime, foreign exchange option agreements. All such agreements are used for risk management purposes only and are designated as a hedge of specific debt instruments for...

  • Page 52
    ... our business activities, except for Cable's Video Stores and the non-broadcasting operations of Media, are regulated by one or more of: the Canadian federal Department of Industry, on behalf of the Minister of Industry (Canada) (collectively "Industry Canada"), and the Canadian Radio-television and...

  • Page 53
    ... cable, radio, television and specialty services. Industry Canada The technical aspects of the operation of radio and television stations, the frequency-related operations of the cable television networks and the awarding and regulatory supervision of spectrum for cellular, messaging and other radio...

  • Page 54
    ..., the cable television programming services that we must distribute, the rates we may charge to provide access to our network by third parties, resale of our networks and roaming on to our networks, our operation and ownership of communications systems and our ability to acquire an interest...

  • Page 55
    ... including amounts payable to the copyright collectives, the Canadian programming production funds and expenditures related to its Internet service for Internet interconnectivity and usage charges. In addition, the Company estimates that Rogers Video will spend approximately $63.6 million in 2005 on...

  • Page 56
    ...: postpaid, prepaid, one-way messaging and wholesale. Postpaid includes voice-only and data-only subscribers, as well as subscribers with service plans integrating both voice and data. Customer Relationships Customer relationships, a term used in the Cable segment, is based on active subscribers to...

  • Page 57
    ...subscriber relationships, including retention costs, inter-carrier payments to roaming partners and longdistance carriers, programming related costs, the CRTC contribution levy, Internet and e-mail services and printing and production costs. In the wireless and cable industries in Canada, the demand...

  • Page 58
    ... related to subscriber acquisitions, retention and contract renewals, such as commissions, wireless equipment subsidies and the cost associated with the sale of Cable customer premise equipment, are expensed in the period incurred. A large percentage of the subscriber acquisition and retention costs...

  • Page 59
    ... churn of the underlying subscribers and judgments as to its applicability going forward. The useful lives of roaming agreements are based on estimates of the useful lives of the related network equipment. The impact on net income on a full-year basis of changing the useful lives of the finitelived...

  • Page 60
    ...these amounts were recorded as a sales expense in the case of a new subscriber and as an operating, general and administrative expense in the case of an existing subscriber. Costs for equipment provided under retention programs to existing subscribers 58 Rogers Communications Inc. 2004 Annual Report

  • Page 61
    ...; and • Wireless equipment costs for equipment provided under retention programs to existing subscribers are now recorded as cost of equipment sales. Previously, these amounts were recorded as operating, general and administrative expense. • Certain other recoveries from subscribers related to...

  • Page 62
    ... amortized over the customer relationship period. For U.S. GAAP purposes, installation revenues are immediately recognized in income to the extent of direct selling costs, with any excess deferred and amortized over the customer relationship period. 60 Rogers Communications Inc. 2004 Annual Report

  • Page 63
    ... of the Boards of Directors, advice and assistance in relationships with employee groups, internal audits, investor relations, purchasing and legal services. In return for these services, each of the subsidiaries has agreed to pay us fees, which, in the case of Cable and Media, is an amount equal...

  • Page 64
    ... its call centres. Wireless and Cable pay the Company commissions for new subscriptions, products and service options purchased by subscribers through the call centres. We are reimbursed for the cost of providing customer service based on the actual costs incurred. We, under the agreement, are...

  • Page 65
    ...them to share marketing and technology information and requires the parties to work together to develop networks with common features for their respective subscribers. This agreement may be terminated at any time by either party. No amounts are payable under the agreement. Roaming Agreement Wireless...

  • Page 66
    ...working capital amounts. 4 Restated for the change in accounting of foreign exchange translation. 5 Total long-term debt, including current portion, has been reclassified to exclude the effect of our cross-currency interest rate exchange agreements. 64 Rogers Communications Inc. 2004 Annual Report

  • Page 67
    ... of products and service offerings resulting in higher average revenue per customer visit. Wireless revenue and operating profit growth reflects the increasing number of wireless voice and data subscribers and the increase in blended postpaid and prepaid ARPU. Wireless has continued its strategy of...

  • Page 68
    ... Indicators Non-GAAP Measures - Operating Profit and Profit Margin" section. 4 Total long-term debt, including current portion, has been reclassified to exclude the effect of cross-currency interest rate exchange agreements for all periods. 66 Rogers Communications Inc. 2004 Annual Report

  • Page 69
    ... Indicators and Non-GAAP Measures - Operating Profit and Profit Margin" section. 4 Total long-term debt, including current portion, has been reclassified to exclude the effect of cross-currency interest rate exchange agreements for all periods. Rogers Communications Inc. 2004 Annual Report...

  • Page 70
    ...Radio Operating Profit Margin Television Operating Profit1 Divided by Revenue Television Operating Profit Margin The Shopping Channel Operating Profit1 Divided by Revenue The Shopping Channel Operating Profit Margin TOTAL MEDIA Operating Profit1 Divided by Revenue Total Media Operating Profit Margin...

  • Page 71
    ... $ Operating expense per Average Subscriber (monthly) Total expenses before sales and marketing costs Equipment margin loss (retention related) Divided by: Average total wireless subscribers $ $ $ $ One Way Messaging ARPU (monthly) One-way messaging revenue Divided by: Average prepaid subscribers...

  • Page 72
    ... policies, the impacts of purchase accounting, including amortization of the acquired intangibles and fair value increments, financings associated with the acquisition of Microcell and the impact of amortizing the deferred compensation expense arising on the exchange of stock options in Wireless...

  • Page 73
    ... Postpaid (voice and data) Prepaid One-way messaging Network revenue Equipment revenue Total operating revenue Operating expenses Cost of equipment sales Sales and marketing expenses Operating, general and administrative expenses Management fees Total operating expenses Operating profit Depreciation...

  • Page 74
    Rogers Wireless Communications Inc. Pro Forma Operating Metrics1 Years Ended December 31, 2004 and 2003 Unaudited (Subscriber statistics in thousands except ARPU and churn) 2004 2003 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Postpaid (Voice and Data) Gross additions Net additions Total postpaid ...

  • Page 75
    .... The internal control processes include management's communication to employees of policies that govern ethical business conduct. The Board of Directors is responsible for overseeing management's responsibility for financial reporting and is ultimately responsible for reviewing and approving the...

  • Page 76
    ... and equipment (note 5) Goodwill (note 6(a)) Intangible assets (note 6(b)) Investments (note 7) Deferred charges (note 8) Other long-term assets ...Rogers President and Chief Executive Officer H. Garfield Emerson Chairman of the Board of Directors 74 Rogers Communications Inc. 2004 Annual Report

  • Page 77
    ..., except per share amounts) Years ended December 31, 2004 and 2003 2004 2003 Operating revenue Cost of sales Sales and marketing expenses Operating, general and administrative expenses Depreciation and amortization Operating income Interest on long-term debt Gain on sale of investments Write...

  • Page 78
    ...,274 Investing activities: Additions to property, plant and equipment ("PP&E") Change in non-cash working capital related to PP&E Acquisition of Wireless (note 3(a)) Acquisition of Microcell Telecommunications Inc., net of cash acquired (note 3(b)) Investment in Toronto Blue Jays (note 7(a)) Other...

  • Page 79
    ...access and video retailing through its wholly-owned subsidiary, Rogers Cable Inc. ("Cable"), wireless voice, messaging and data services through its wholly-owned subsidiary Rogers Wireless Communications Inc. ("Wireless") (2003 - 55.8% ownership), in radio and television broadcasting, televised home...

  • Page 80
    ... lives are amortized on a straight-line basis annually over their estimated useful lives as follows: Subscriber base Brand name - Rogers Brand name - Fido Roaming agreements Player contracts 21/4 to 4 2/3 20 5 12 5 years years years years years The Company has tested goodwill and intangible assets...

  • Page 81
    ... and Internet services and equipment, and media subscriptions are recorded as revenue on a pro rata basis over the month; (ii) Revenue from wireless airtime, roaming, wireless long-distance and optional services, pay-per-view and video-on-demand services, video rentals and other transactional sales...

  • Page 82
    ...contribute a specified percentage of their regular earnings through regular payroll deductions. The designated administrator of the plan then purchases Class B Non-Voting shares of the Company on the open market on behalf of the employee. At the end of each quarter, the Company makes a contribution...

  • Page 83
    ... Internet services were recorded as revenue to the extent that direct selling costs were incurred. As a result of the adoption of these new accounting standards, the following changes to the classification of revenue and expenses have been made for all periods presented: • Wireless activation fees...

  • Page 84
    ... a provider of wireless telecommunications services in Canada. With this acquisition, the Company now operates the only Global System for Mobile communications ("GSM") network in Canada. Including direct incremental acquisition costs of approximately $14.9 million, the purchase price totaled $1,318...

  • Page 85
    ... subject to amortization include the subscriber base, brand names and roaming agreements for each of the Wireless and Microcell transactions, which are being amortized over their estimated useful lives as disclosed in note 2(f)(ii). A change in Rogers Communications Inc. 2004 Annual Report 83

  • Page 86
    ...Net book value Cost Cost Land and buildings Towers, head-ends and transmitters Distribution cable and subscriber drops Wireless network equipment Wireless network radio base station equipment Computer equipment and software Customer equipment Leasehold improvements Other equipment $ 349,029 670...

  • Page 87
    ... contracts associated with the Toronto Blue Jays and are being amortized over five years. (v) Roaming agreements are related to the value of roaming contracts associated with Microcell and Wireless (note 3). These agreements are being amortized over 12 years. Rogers Communications Inc. 2004 Annual...

  • Page 88
    ... traded companies Private companies (a) Toronto Blue Jays Baseball Club: On January 5, 2004, the Company paid the remaining amount related to the purchase of the 20% minority interest in the Blue Jays of approximately $39.1 million. This payment had no impact on the carrying value or the control of...

  • Page 89
    ...years, the Company agreed to pay $50.0 million in public benefits over seven years relating to the CRTC grant of a new television licence in Toronto, $6.0 million relating to the purchase of 13 radio stations and the remainder relating to a CRTC decision permitting the purchase of Sportsnet, Rogers...

  • Page 90
    ... years with a group of Canadian financial institutions. During December 2004, the Company repaid the bridge credit facility in full and cancelled the facility, resulting in a loss on repayment of debt of $7.9 million, comprising the deferred financing costs (note 11(e)). 88 Rogers Communications...

  • Page 91
    ... Notes, due 2011: On November 30, 2004, Wireless issued $460.0 million Senior Secured Notes which mature on December 15, 2011. These notes are redeemable, in whole or in part, at Wireless' option, at any time, subject to a certain prepayment premium. Rogers Communications Inc. 2004 Annual Report 89

  • Page 92
    ...: The fair value increment on long-term debt is a purchase accounting adjustment required by GAAP as a result of the acquisition of the shares of Wireless during 2004. Under GAAP, the purchase method of accounting requires that the assets and liabilities of an acquired enterprise be revalued to fair...

  • Page 93
    ... of payment to all existing and future senior indebtedness of Cable (including the Bank Credit Facility and the senior secured notes and debentures) and are not secured by the pledge of a senior bond. Interest is paid semi-annually on all of Cable's notes and debentures. Rogers Communications Inc...

  • Page 94
    ... investments, sales of assets and payment of dividends. In addition, the repayment dates of certain debt agreements may be accelerated if there is a change in control of the respective companies. At December 31, 2004, the Company is in compliance with all terms of the long-term debt agreements. 12...

  • Page 95
    ... stock: (i) Preferred shares: Rights and conditions: There are 400 million authorized Preferred shares without par value, issuable in series, with rights and terms of each series to be fixed by the Board of Directors prior to the issue of such series. Rogers Communications Inc. 2004 Annual Report...

  • Page 96
    ... business undertakings in Canada. The Company is authorized to refuse to register transfers of any shares of the Company to any person who is not a Canadian in order to ensure that the Company remains qualified to hold the licences referred to above. 94 Rogers Communications Inc. 2004 Annual Report

  • Page 97
    ...'s stock option plan provides senior employee participants an incentive to acquire an equity ownership interest in the Company over a period of time and, as a result, reinforces executives' attention on the long-term interest of the Company and its shareholders. Under the plan, options to purchase...

  • Page 98
    ... price at which the shares traded on The Toronto Stock Exchange on the trading day immediately prior to the purchase date or the closing price on a date that is approximately one year subsequent to the original issue date. Compensation expense recorded for the Company's employee share purchase plan...

  • Page 99
    ...terms of the program, employees of the Company can contribute a specified percentage of their regular earnings through regular payroll deductions. The designated administrator of the plan then purchases Class B Non-Voting shares of the Company on the open market on behalf of the employee. At the end...

  • Page 100
    ... on Series E Preferred shares Diluted earnings (loss) for the year Denominator (in thousands): Weighted average number of shares outstanding - basic Effect of dilutive securities: Employee stock options Series E Preferred shares Other Weighted average number of shares outstanding - diluted Earnings...

  • Page 101
    ... and equity securities, valued at market value. The following information is provided on pension fund assets measured at September 30 for the year ended December 31: 2004 2003 Plan assets, beginning of year Actual return on plan assets Contributions by employees Contributions by employer Benefits...

  • Page 102
    ...makes contributions to the plans to secure the benefits of plan members and invests in permitted investments using the target ranges established by the Pension Committee of the Company. The Pension Committee reviews actuarial assumptions on an annual basis. (c) Contributions: Employer Employee Total...

  • Page 103
    ... the Media operating segment commencing in 2005. Information by operating segment for the years ended December 31, 2004 and 2003 are as follows: Corporate items and eliminations Consolidated Total 2004 Wireless Cable Media Blue Jays Operating revenue $ 2,783,525 Cost of sales 509,540 Sales and...

  • Page 104
    ... external customers is comprised of the following: 2004 2003 Wireless: Postpaid (voice and data) Prepaid One-way messaging Equipment sales Cable: Cable Internet Video store operations Intercompany eliminations Media: Advertising Circulation and subscription Retail Other Blue Jays Corporate items...

  • Page 105
    ... officers of which are directors of the Company and/or its subsidiary companies. Total amounts paid by the Company to these related parties are as follows: 2004 2003 Legal services and commissions paid on premiums for insurance coverage Telecommunication and programming services Interest charges...

  • Page 106
    ... to make contributions to the Canadian Television Fund ("CTF"), which is a cable industry fund designed to foster the production of Canadian television programming. Contributions to the CTF are based on a formula, including gross broadcast revenues and the number of subscribers. The Company may...

  • Page 107
    ...: (a) The Company requires access to support structures and municipal rights of way in order to deploy its cable television facilities. In a 2003 decision, the Supreme Court of Canada determined that the CRTC does not have the jurisdiction to establish the terms and conditions of access to the...

  • Page 108
    ... States GAAP, the Company included the gain on sale of the cable television systems in income, net of related future income taxes. As a result of these transactions, amortization expense under United States GAAP was increased in subsequent years. 106 Rogers Communications Inc. 2004 Annual Report

  • Page 109
    ... options of Blue Jays' employees was calculated as at January 1, 2004 as nil. Prior to 2004, the Blue Jays' employees were not considered employees of the Company. Therefore, compensation expense of $1.2 million for the year ended December 31, 2003 under United States GAAP was determined using the...

  • Page 110
    ... in income to the extent of direct selling costs, with any excess deferred and amortized over the customer relationship period. (m) Loss on repayment of long-term debt: On March 26, 2004, the Company repaid long-term debt resulting in a loss on early repayment of long-term debt of $2.3 million. This...

  • Page 111
    ..., "Share-Based Payment", is effective for fiscal 2006 of the Company. This revised standard requires companies to recognize in the income statement, the grant-date fair value of stock options and other equity-based compensation issued to employees. The fair value of liability-classified awards is...

  • Page 112
    ... Wilson Chairman and Chief Executive Officer Scotia Capital Inc. CORPORATE GOVERNANCE OVERVIEW For information on our corporate governance structures, policies and practices, please visit the Corporate Governance section of the rogers.com website and also see page 112 of this annual report for an...

  • Page 113
    ... Rogers Cable Nadir H. Mohamed, CA President and Chief Executive Officer Rogers Wireless Anthony P. Viner President and Chief Executive Officer Rogers Media Ronan D. McGrath, CA President, Rogers Shared Operations and Chief Information Officer Alexander R. Brock Vice President, Business Development...

  • Page 114
    ... policies; Reviews the design and competitiveness of the Corporation's compensation and benefit programs; Reviews the Corporation's management development and succession planning for its senior executives; and Approves the compensation of senior executives and other employees above specified...

  • Page 115
    .... 333 Bloor Street East, 10th Floor Toronto, ON M4W 1G9 (416) 935-7777 CONTACT INFORMATION A copy of the Rogers Communications Inc. AIF is available on sedar.com, the Investor Relations section of the rogers.com website or on request by writing to the Corporate Office. SHARE INFORMATION Listed in...

  • Page 116
    YOUR WORLD RIGHT NOW ROGERS COMMUNICATIONS INC. 2004 ANNUAL REPORT TSX: RCI NYSE: RG YOUR WORLD RIGHT NOWâ„¢ www.rogers.com