Rogers 2006 Annual Report Download - page 84

80 R OGE RS COM MUN I C ATIO NS I NC . 2 0 0 6 AN NUAL R EPO R T
and has reclassified prior year figures to reflect this accounting,
resulting in a $148 million reduction of both revenue and cost
of sales in 2005. As a result of this reclassification, there was
no change to previously reported net income (loss), operating
income, reported cash flows or the amounts recorded in the
consolidated balance sheets.
(iv) In 2006, the Company adopted the provisions of Emerging Issues
Committee (“EIC”) Abstract 162, Stock-Based Compensation for
Employees Eligible to Retire Before the Vesting Date. Where a
stock-based compensation plan contains provisions that allow an
employee to continue vesting in a stock-based award after the
employee has retired, EIC 162 requires that the compensation
cost attributable to such an award be expensed immediately
for employees who are eligible to retire at the date of grant.
For an employee who will become eligible to retire during the
vesting period of an award, EIC 162 requires that compensation
cost be recognized as an expense over the period from the date
of grant to the date the employee becomes eligible to retire.
EIC 162 was applied retroactively to all stock-based compensa-
tion awards, with restatement of prior periods. The adoption of
EIC 162 resulted in an increase in the opening 2005 deficit and
contributed surplus of $4 million and an increase in 2005 stock-
based compensation expense of less than $1 million. For 2006,
the adoption of EIC 162 resulted in incremental stock-based
compensation of less than $1 million from that which would
otherwise have been recorded.
Certain other comparative figures have been reclassified to conform
with the current year’s presentation.
(C ) REVENUE RECOGNITION:
The Company’s principal sources of revenue and recognition of these
revenues for financial statement purposes are as follows:
(i) Monthly subscriber fees in connection with wireless and wireline
services, cable, telephony, Internet services, rental of equip-
ment, network services and media subscriptions are recorded as
revenue on a pro rata basis as the service is provided;
(ii) Revenue from airtime, roaming, long-distance and optional ser-
vices, pay-per-use services, video rentals, and other sales of products
are recorded as revenue as the services or products are delivered;
1 NAT URE OF THE BUSI NESS
Rogers Communications Inc. (“RCI”) is a Canadian communications
company, with substantially all of its operations and sales in Canada,
engaged in wireless voice, messaging and data services through
its wholly owned subsidiary, Rogers Wireless Communications Inc.
(“Wireless”); cable television, high-speed Internet access, cable
and circuit-switch telephony, data networking and video retailing
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(TABUL AR AMOUN T S IN MILLIONS OF C A NADIAN DOLL ARS , EXCEPT PE R SHA RE AM OUNTS)
YEAR S END ED DECEMBER 31, 2006 AND 2005
(“Rogers Retail”) through its wholly owned subsidiary, Rogers Cable
Inc. (“Cable”); and radio and television broadcasting, televised home
shopping, publishing, and sports entertainment through its wholly
owned subsidiary, Rogers Media Inc. (“Media”). RCI and its subsid-
iary companies are collectively referred to herein as the “Company”.
2 SIG NIFICANT AC COUN TING POLICI ES
(A) BASIS OF PRESENTATION:
The consolidated financial statements are prepared in accordance
with Canadian generally accepted accounting principles (“GAAP”)
and differ in certain significant respects from United States GAAP as
described in note 26.
The consolidated financial statements include the accounts of RCI
and its subsidiary companies. Intercompany transactions and bal-
ances are eliminated on consolidation.
Investments over which the Company is able to exercise significant
influence are accounted for by the equity method. Investments over
which the Company has joint control are accounted for by the pro-
portionate consolidation method. Other investments are recorded
at cost. Investments are written down when there is evidence that a
decline in value that is other than temporary has occurred.
(B) RESTATEMENT AND RECL ASSIFICATION OF COMPARATIVE
FIGURES:
(i) Applicable share and per share amounts have been retroactively
adjusted to reflect a two-for-one split of the Company’s Class A
Voting and Class B Non-Voting shares in December 2006. This
stock split is described in note 20(a)(ii).
(ii) During 2006, the Company completed a reorganization whereby
ownership of the operating subsidiaries of Rogers Telecom
Holdings Inc., a wholly owned subsidiary of the Company, was
transferred to Cable. The reorganization impacted the Company’s
management reporting resulting in changes to the Company’s
reportable segments. Effective January 2006, the following are
the reportable segments of the Company: Wireless, Media, Cable
and Internet, Rogers Business Solutions, Rogers Home Phone and
Rogers Retail (formerly known as Rogers Video). Comparative
figures are presented on this basis in note 3.
Effective 2007, Rogers Retail will be responsible for the opera-
tion of all retail stores owned by the Company.
(iii) During 2006, the Company determined that certain transactions
related to the sale of wireless equipment were historically
recorded as cost of equipment sales rather than as a reduction
of equipment revenue. The Company determined these transac-
tions should be reflected as a reduction of equipment revenue