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ROGERS COMMUNICATIONS INC. 2007 ANNUAL REPORT 101
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A transition adjustment arising on the change from marked-to-
market accounting to hedge accounting was calculated as at July 1,
2004, resulting in a deferred transitional gain of $80 million. Upon
adoption of the new financial instruments accounting standards
on January 1, 2007, the unamortized transitional gain of $54 million
was eliminated, the impact of which was a decrease in opening
deficit of $37 million, net of income taxes of $17 million (note 2(h)(i)).
Amortization of the net transitional gain for the year ended
December 31, 2006, was $9 million.
In conjunction with the May 3, 2007, redemption of Wireless’
U.S. $550 million Floating Rate Senior Notes due 2010 and the
June 21, 2007, redemption of Wireless’ U.S. $155 million 9.75% Senior
Debentures due 2016, the Company incurred a net cash outlay of
$35 million on settlement of cross-currency interest rate exchange
agreements and forward contracts.
During 2006, cross-currency interest rate exchange agreements of
U.S. $327 million aggregate notional amount matured. Wireless
incurred a net cash outlay of $20 million upon settlement of these
cross-currency interest rate exchange agreements. An interest rate
exchange agreement of $30 million notional amount held by Cable
also matured.
All of the Company’s cross-currency interest rate exchange
agreements are unsecured obligations of RCI. In addition, RCCI and
RWP have provided unsecured guarantees for all of the Company’s
cross-currency interest rate exchange agreements (note 15(a)).
(B) FAIR VALUES:
The Company has determined the fair values of its financial
instruments as follows:
(i) The carrying amounts in the consolidated balance sheets of
accounts receivable, bank advances arising from outstanding
cheques and accounts payable and accrued liabilities
approximate fair values because of the short-term nature of
these financial instruments.
(ii) Investments:
The fair values of investments that are publicly traded are
determined by the quoted market values for each of the
investments (note 12). Management believes that the fair
values of other investments are not significantly different
from their carrying amounts.
(iii) Long-term receivables:
The fair values of long-term receivables approximate their
carrying amounts since the interest rates approximate current
market rates.
(iv) Long-term debt and derivative instruments:
The fair values of each of the Company’s public debt
instruments are based on the year-end trading values.
The fair value of the bank credit facility approximates its
carrying value since the interest rates approximate current
market rates.
The fair values of the Company’s interest exchange agreements,
cross-currency interest rate exchange agreements and other
derivative instruments are based on values quoted by the
counterparties to the agreements.
U.S. $ Exchange Cdn. $ Carrying Estimated
2006 notional rate notional value fair value
Cross-currency interest rate exchange agreements
accounted for as cash flow hedges $ 4,190 1.3313 $ 5,578 $ 710 $ 1,282
Cross-currency interest rate exchange agreements
not accounted for as hedges 285 1.1993 342 12 12
4,475 5,920 722 1,294
Transitional gain – – 54 –
4,475 5,920 776 1,294
Less current portion 275 1.1870 326 7 7
$ 4,200 $ 5,594 $ 769 $ 1,287