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ROGERS COMMUNICATIONS INC. 2007 ANNUAL REPORT 65
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The impact of the adoption of these standards on opening accu-
mulated other comprehensive income and on opening deficit at
January 1, 2007, was as follows:
A new statement entitled “Consolidated Statement of
Comprehensive Income” was added to our Consolidated Financial
Statements and includes net income as well as other comprehen-
sive income. Accumulated other comprehensive income forms part
of shareholders’ equity.
Impact upon Income tax
adoption impact Net impact
Available-for-sale investments (a) $ 213 $ (2) $ 211
Derivative instruments (b) (561) 136 (425)
Opening accumulated other comprehensive income $ (348) $ 134 $ (214)
Impact upon Income tax
adoption impact Net impact
Ineffective portion of hedging derivatives (b) $ (10) $ 2 $ (8)
Early repayment option (c) 19 (6) 13
Deferred transitional gain (e) 54 (17) 37
Transaction costs (f) (59) 20 (39)
Opening deficit $ 4 $ (1) $ 3
(a) Under these standards, all of our financial assets are classified
as available-for-sale or as loans and receivables. Available-for-
sale investments are carried at fair value on the balance sheet,
with changes in fair value recorded in other comprehensive
income, until such time as the investments are disposed of or
an other than temporary impairment has occurred, in which
case the impairment is recorded in income. Loans and receiv-
ables and all financial liabilities are carried at amortized cost
using the effective interest method. Upon adoption, we have
determined that none of our financial assets are classified as
held-for-trading or held-to-maturity and none of our finan-
cial liabilities are classified as held-for-trading. The impact
of the classification provisions of the new standards was an
adjustment of $213 million to bring the carrying value of avail-
able-for-sale investments to fair value, with a corresponding
increase in opening accumulated other comprehensive income
of $211 million, net of income taxes of $2 million.
For the year ended December 31, 2007, the impact of the
classification provisions of the new standards was an increase
in the carrying value of available-for-sale investments of
$140 million, with a corresponding increase in other compre-
hensive income. In addition, realized gains of $2 million were
reclassified out of accumulated other comprehensive income
and recognized in the Consolidated Statements of Income
upon disposal of an investment.
(b) All derivatives, including embedded derivatives that must be
separately accounted for, are measured at fair value, with
changes in fair value recorded in the Consolidated Statements
of Income unless they are effective cash flow hedging
instruments. The changes in fair value of cash flow hedging
derivatives are recorded in other comprehensive income,
to the extent effective, until the variability of cash flows
relating to the hedged asset or liability is recognized in the
Consolidated Statements of Income. Any hedge ineffective-
ness is recognized in the Consolidated Statements of Income
immediately. The impact of remeasuring hedging derivatives
on the Consolidated Financial Statements on January 1, 2007,
was an increase in derivative instruments of $561 million. This
also resulted in a decrease in opening accumulated other
comprehensive income of $425 million, net of income taxes of
$136 million, and an increase in opening deficit of $8 million,
net of income taxes of $2 million, representing the ineffective
portion of hedging relationships.
The impact of remeasuring hedging derivatives on the
Consolidated Financial Statements for the year ended
December 31, 2007, was an increase in other comprehensive
income of $126 million, including income taxes of $100 million,
and an increase in net income of $1 million related to hedge
ineffectiveness.
The foreign exchange loss reclassified from comprehensive
income for the year ended December 31, 2007, exactly offset
the foreign exchange gains recognized in the Consolidated
Statements of Income related to the carrying value of U.S. dollar-
denominated debt.
(c) As a result of the application of these standards, we separated
the early repayment option on one of our debt instruments
and recorded the fair value of $19 million related to this
embedded derivative on the Consolidated Balance Sheet on
January 1, 2007, with a corresponding decrease in opening
deficit of $13 million, net of income taxes of $6 million. The fair
value of this embedded derivative at December 31, 2007, was
$13 million and the decrease in the fair value of $6 million was
recorded in the Consolidated Statements of Income for the
year ended December 31, 2007.
(d) We reviewed significant contracts entered into on or after
January 1, 2003, and determined there are no significant
non-financial derivatives that require separate fair value rec-
ognition on the Consolidated Balance Sheet on the transition
date and at December 31, 2007.