Rogers 2006 Annual Report Download - page 111

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107
RO GER S CO MMU NIC AT ION S IN C . 20 0 6 ANN UA L RE POR T
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
23 COM MITM ENTS
(A) The Company is committed, under the terms of its licences
issued by Industry Canada, to spend 2% of certain revenues earned
in each year on research and development activities.
(B) During 2005, the Company announced a joint venture with Bell
Canada to build and manage a nationwide fixed wireless broadband
network. The companies will jointly and equally fund the initial net-
work deployment costs estimated at $200 million over a three-year
period. During 2006, the Company contributed its broadband wire-
less spectrum licence in the 2.5 GHz frequency range. The Company
is committed to contribute additional spectrum licences in 2007.
(C ) The Company enters into agreements with suppliers to provide
services and products that include minimum spend commitments.
The Company has agreements with certain telephone companies
that guarantee the long-term supply of network facilities and agree-
ments relating to the operations and maintenance of the network.
(D) 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 three years
at a total cost of approximately $53 million. In addition, the Company
has commitments to pay access fees over the next year totalling
approximately $19 million.
(E) In 2005, the Company was awarded a share of the broadcast
rights to the 2010 Olympic Winter Games and the 2012 Olympic
Summer Games at a cost of U.S. $31 million.
(F) 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
formula, including gross broadcast revenues and the number of sub-
scribers. 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 pro-
duction fund. The Company estimates that its total contribution for
2007 will amount to approximately $39 million.
In addition, the Company is required to pay a broadcasting license
fee which is based on the fee revenue of each undertaking. The
Company estimates that license fees for 2007 will amount to approxi-
mately $24 million.
(G) In addition to the items listed above, the future minimum lease
payments under operating leases for the rental of premises, distri-
bution facilities, equipment and microwave towers, commitments
for player contracts, purchase obligations and other contracts at
December 31, 2006 are as follows:
Year ending December 31:
2007 $ 1,026
2008 754
2009 594
2010 172
2011 104
2012 and thereafter 182
$ 2,832
Rent expense for 2006 amounted to $169 million (2005 – $194 million).
24 GUA RANT EES
In the normal course of business, the Company has entered into
agreements that contain features which meet the definition of a
guarantee under GAAP. A description of the major types of such
agreements is provided below:
(A) BUSINESS SALE AND BUSINESS COMBINATION AGREEMENTS:
As part of transactions involving business dispositions, sales of assets
or other business combinations, the Company may be required to pay
counterparties for costs and losses incurred as a result of breaches of
representations and warranties, intellectual property right infringe-
ment, loss or damages to property, environmental liabilities, changes
in laws and regulations (including tax legislation), litigation against
the counterparties, contingent liabilities of a disposed business or
reassessments of previous tax filings of the corporation that carries
on the business.
(B) SALES OF SERVICES:
As part of transactions involving sales of services, the Company may
be required to pay counterparties for costs and losses incurred as
a result of breaches of representations and warranties, changes in
laws and regulations (including tax legislation) or litigation against
the counterparties.
(C ) PURCHASES AND DEVELOPMENT OF ASSETS:
As part of transactions involving purchases and development of
assets, the Company may be required to pay counterparties for costs
and losses incurred as a result of breaches of representations and war-
ranties, loss or damages to property, changes in laws and regulations
(including tax legislation) or litigation against the counterparties.
(D) INDEMNIFIC ATIONS:
The Company indemnifies its directors, officers and employees against
claims reasonably incurred and resulting from the performance of