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104 Rogers Communications Inc. 2004 Annual Report
The estimated fair values of the Company’s long-term debt and related derivative instruments as at December 31, 2004 and 2003 are
as follows:
2004 2003
Carrying Estimated Carrying Estimated
amount fair value amount fair value
Liability
Long-term debt $ 8,050,387 $ 8,370,328 $ 4,970,232 $ 5,382,622
Derivative instruments 626,896 945,767 338,147 385,285
$ 8,677,283 $ 9,316,095 $ 5,308,379 $ 5,767,907
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial
instruments. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore,
cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
At December 31, 2004, 93.1% of U.S. dollar-denominated debt (2003 – 67.8%) was protected from fluctuations in the foreign
exchange between the U.S. and Canadian dollars by the total derivative instruments.
The credit risk of the interest exchange agreements and cross-currency interest rate exchange agreements arises from the possibil-
ity that the counterparties to the agreements may default on their respective obligations under the agreements in instances where these
agreements have positive fair value for the Company. The Company assesses the creditworthiness of the counterparties in order to
minimize the risk of counterparty default under the agreements. All of the portfolio is held by financial institutions with a Standard &
Poors rating (or the equivalent) ranging from A+ to AA. The Company does not require collateral or other security to support the credit
risk associated with the interest exchange agreements and cross-currency interest rate exchange agreements due to the Company’s
assessment of the creditworthiness of the counterparties. The obligations under U.S. $5,135.3 million (2003 – U.S. $1,943.4 million) aggre-
gate notional amount of the cross-currency interest rate exchange agreements are secured by substantially all of the assets of the
respective subsidiary companies to which they relate and generally rank equally with the other secured indebtedness of such subsidiary
companies.
(vi) Long-term liabilities:
The carrying amounts of long-term liabilities approximate fair values as the interest rates approximate current rates.
(b) Other disclosures:
The Company does not have any significant concentrations of credit risk related to any financial asset.
20. COMMITMENTS:
(a) In the ordinary course of business and in addition to the amounts recorded on the consolidated balance sheets and disclosed
elsewhere in the notes, the Company has entered into agreements to acquire broadcasting rights to programs and films over the next
two years at a total cost of approximately $62.5 million.
(b) The Company has a 33.33% interest in each of Tech TV Canada and Biography Channel Canada, which are equity-accounted
investments. The Company has committed to fund its share of the losses and PP&E expenditures in these new channels to a maximum of
$8.8 million, through equity financing and shareholder loans. As at December 31, 2004, the Company has funded a total of $5.6 million.
(c) Pursuant to CRTC regulation, the Company is required 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 for-
mula, including gross broadcast revenues and the number of subscribers. The Company may elect to spend a portion of the above
amount for local television programming and may also elect to contribute a portion to another CRTC-approved independent production
fund. The Company estimates that its total contribution for 2005 will amount to approximately $29.5 million.
(d) The future minimum lease payments under operating leases for the rental of premises, distribution facilities, equipment and
microwave towers and commitments for player contracts and other contracts at December 31, 2004 are as follows:
Year ending December 31:
2005 $ 200,365
2006 178,760
2007 144,964
2008 91,926
2009 78,305
2010 and thereafter 107,130
$ 801,450
Rent expense for 2004 amounted to $134.2 million (2003 – $113.7 million).