Rogers 2004 Annual Report Download - page 95

93
Rogers Communications Inc. 2004 Annual Report
U.S. $ Exchange Cdn. $ Carrying Estimated
2003 notional rate notional amount fair value
Cross-currency interest rate exchange
agreements accounted for as hedges $ 1,943,437 1.4647 $ 2,846,480 $ 334,784 $ 381,922
Interest exchange agreements not accounted
for as hedges – – 30,000 3,363 3,363
$ 1,943,437 $ 2,876,480 $ 338,147 $ 385,285
Effective January 1, 2004, the Company determined that it would not account for its cross-currency interest rate exchange agreements
as hedges for accounting purposes and consequently began to account for such derivatives on a mark-to-market basis, with resulting
gains or losses recorded in or charged against income.
The Company adjusted the carrying value of these instruments from $338.1 million at December 31, 2003 to their fair value of
$385.3 million on January 1, 2004. The corresponding transitional loss of $47.2 million was deferred and was being amortized to income
over the remaining life of the underlying debt instruments.
Effective July 1, 2004, the Company met the requirements for hedge accounting under AcG-13 for certain of its derivative instru-
ments, and consequently, on a prospective basis, began to treat approximately U.S. $2,773.4 million notional amount of the aggregate
U.S. $2,885.3 million, or 96.1% of these exchange agreements, as hedges for accounting purposes on U.S. $2,773.4 million of U.S. dollar-
denominated debt.
A transition adjustment arising on the change from mark-to-market accounting to hedge accounting was calculated as at July 1,
2004, resulting in a deferred transitional gain of $80.0 million. This transitional gain is being amortized to income over the shorter of the
remaining life of the debt and the term of the exchange agreements.
Amortization of the net transitional gain for the year ended December 31, 2004 was $3.2 million.
On November 30, 2004, the Company entered into an additional aggregate U.S. $1,700.0 million notional principal amount of cross-
currency interest rate exchange agreements that meet the requirements of hedge accounting as hedges against foreign exchange
fluctuations under AcG-13.
13. SHAREHOLDERS’ EQUITY:
2004 2003
Capital stock:
Preferred shares:
Held by subsidiary companies:
Nil Series XXVII (2003 – 60,000) $ – $ 60,000
Nil Series XXX (2003 – 818,300) – 10,000
Nil Series XXXI (2003 – 300,000) – 300,000
– 370,000
Held by members of the Company’s share purchase plans:
Nil Series E Convertible Preferred shares (2003 – 104,488) – 1,787
– 371,787
Common shares:
56,235,394 Class A Voting shares (2003 – 56,235,394) 72,313 72,313
218,979,074 Class B Non-Voting shares (2003 – 177,241,646) 355,793 287,978
428,106 360,291
428,106 732,078
Deduct:
Amounts receivable from employees under certain share purchase plans – 1,186
Preferred shares of the Company held by subsidiary companies – 370,000
– 371,186
Total capital stock 428,106 360,892
Convertible Preferred Securities (note 13(b)) 576,000 576,000
Contributed surplus 2,288,669 1,169,924
Deficit (416,731) (339,436)
2,447,938 1,406,488
$ 2,876,044 $ 1,767,380
(a) Capital 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.