Rogers 2007 Annual Report Download - page 96

92 ROGERS COMMUNICATIONS INC. 2007 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In March 2007, the Company contributed its 2.3 GHz and 3.5 GHz
spectrum licences with a carrying value of $11 million to a 50%
owned joint venture for non-cash consideration of $58 million.
Accordingly, the carrying value of spectrum licences has been
reduced by $5 million in 2007. A deferred gain of $24 million, being
the portion of the excess of fair value over carrying value related to
the other non-related venturer’s interest in the spectrum licences
contributed by the Company, was recorded on contribution of these
spectrum licences. This deferred gain is recorded in other long-term
liabilities and is being amortized to income over seven years, of which
$2 million was recognized in 2007. In addition to a cash contribution
of $8 million, the other venturer also contributed its 2.3 GHz and
3.5 GHz spectrum licences valued at $50 million to the joint venture.
The Company recorded an increase in spectrum licences and cash of
$25 million and $4 million, respectively, related to its proportionate
share of the contribution by the other venturer.
6. INTEGRATION AND RESTRUCTURING EXPENSES:
7. INCOME TAXES:
2007 2006
Future income tax assets:
Non-capital income tax loss carryforwards $ 680 $ 981
Capital loss carryforwards 16 21
Deductions relating to long-term debt and other transactions denominated in foreign currencies 100 41
Investments – 52
PP&E and inventory 11 46
Liability for stock-based compensation 148 –
Other deductible differences 131 125
Total future income tax assets 1,086 1,266
Less valuation allowance 119 150
967 1,116
Future income tax liabilities:
Investments (6) –
Goodwill and intangible assets (441) (407)
Other taxable differences (30) (23)
Total future income tax liabilities (477) (430)
Net future income tax asset 490 686
Less current portion 594 387
Long-term future income tax assets (liabilities) $ (104) $ 299
As a result of the 2005 acquisition of Call-Net Enterprises Inc.
(“Call-Net”) and the 2004 acquisition of Fido Inc. (“Fido”), the
Company has incurred certain integration costs that did not qualify
to be included as part of the purchase price allocation as a liability
assumed on acquisition. As a result, these costs are recorded within
operating expenses. These expenses include various severance,
consulting and other incremental restructuring costs directly related
to the acquisitions. During 2007, the Company incurred integration
expenses of $14 million related to the Call-Net acquisition. During
2006, the Company incurred $9 million in integration expenses
related to the Call-Net acquisition and $3 million in integration
expenses related to the Fido acquisition.
The income tax effects of temporary differences that give rise to
significant portions of future income tax assets and liabilities are
as follows:
During 2007, the Company incurred $24 million of restructuring
expenses related to RBS, of which $20 million is related to severances
resulting from staff reductions to reflect a reduction in customer
acquisition efforts related to enterprise and larger business
segments. Included in accounts payable and accrued liabilities as
at December 31, 2007, is $12 million related to the severances, which
will be paid in 2008.
During 2006, the Company closed 21 of its Rogers Retail stores in
Ontario and Quebec. The costs to exit these stores included lease
terminations and involuntary severance costs totalling $3 million, as
well as a write-down of the related PP&E totalling $3 million for the
year ended December 31, 2006.