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112 ROGERS COMMUNICATIONS INC. 2007 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(D) The CRTC collects two different types of fees from broadcast
licencees. These are known as Part I and Part II fees. In 2003 and
2004, lawsuits were commenced in the Federal Court, alleging
that the Part II licence fees are taxes rather than fees and that the
regulations authorizing them are unlawful. On December 14, 2006,
the Federal Court ruled that the CRTC did not have the jurisdiction
to charge Part II fees. The Court ruled that licencees were not
entitled to a refund of past fees paid. Both the Crown and the
applicants have appealed this case to the Federal Court of Appeal.
The applicants are seeking an order requiring a refund of past fees
paid. The Crown is seeking to reverse the finding that Part II fees
are unlawful. On October 15, 2007, the CRTC sent a letter to all
broadcast licencees, including the Company, stating that the CRTC
The consolidated financial statements of the Company have been
prepared in accordance with GAAP as applied in Canada. In the
following respects, GAAP, as applied in the United States, differs
from that applied in Canada.
If United States GAAP were employed, comprehensive income for
the year ended December 31, 2007, would be adjusted as follows:
will not collect Part II licence fees due on November 30, 2007 and
subsequent years unless the Federal Court of Appeal or the Supreme
Court of Canada (should the case be appealed to that level) reverses
the Federal Court’s decision. The Federal Court of Appeal heard
the appeal on December 4 and 5, 2007, but has not yet rendered a
decision. The Company believes that it is unlikely that the Federal
Court’s decision will be reversed. As a result, an operating expense
recovery of $18 million, representing Part II fees accrued to June 30,
2007, and a future income tax charge of $7 million were recorded
during the year ended December 31, 2007.
(E) There exist certain other claims and potential claims against
the Company, none of which is expected to have a material adverse
effect on the consolidated financial position of the Company.
If United States GAAP were employed, net income for the years
ended December 31, 2007 and 2006 would be adjusted as follows:
26. CANADIAN AND UNITED STATES ACCOUNTING POLICY DIFFERENCES:
2007 2006
Net income for the year based on Canadian GAAP $ 637 $ 622
Gain on sale of cable systems (b) (4) (4)
Pre-operating costs capitalized (c) 4 5
Capitalized interest, net of related depreciation (d) 10 14
Financial instruments (f) 210 19
Stock-based compensation (g) 3 (2)
Income taxes (i) 125 128
Installation revenues and costs, net (j) (4) 1
Other 3 (3)
Net income for the year based on United States GAAP $ 984 $ 780
Net income per share based on United States GAAP:
Basic $ 1.54 $ 1.23
Diluted 1.53 1.22
2007
Comprehensive income for the year based on Canadian GAAP $ 901
Impact of United States GAAP differences on net income 347
Change in fair value of derivative instruments, net of income taxes of $100 (f) (126)
Change in funded status of pension plans for unrecognized amounts, net of income taxes of $6 (h) (15)
Comprehensive income for the year based on United States GAAP $ 1,107