Rogers 2008 Annual Report Download - page 131

ROGERS COMMUNICATIONS INC. 2008 ANNUAL REPORT 127
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(F) STOCK-BASED COMPENSATION:
As a result of the amendment to the stock option plans on May 28,
2007, all of the Company’s outstanding stock options can now be
settled in cash at the discretion of the employee or director (note
19(a)(i)). Under United States GAAP, the cost of stock-based awards
that are settled in cash, or may be settled in cash at the discretion of
the employee or director, are required to be measured at fair value
on each reporting date. Under Canadian GAAP, the liability and
compensation cost for these awards are measured at the intrinsic
value of the awards at each reporting date. In addition, under
United States GAAP, the fair value is amortized to expense on a
straight-line basis over the vesting period or, as applicable, over
the period in which the employee is eligible to retire, whichever
is shorter. Under Canadian GAAP, the intrinsic value is amortized
to expense over the graded vesting period or, as applicable, over
the period in which the employee is eligible to retire, whichever
is shorter. As a result, stock-based compensation expense would
be increased by $32 million under United States GAAP for the
year ended December 31, 2008 (2007 – decreased by $3 million),
resulting from remeasuring the fair value of stock-based awards at
the greater of the grant date fair value and the reporting date fair
value.
At December 31, 2008, the recorded liability for these awards is
$8 million lower under United States GAAP than recorded under
Canadian GAAP (2007 – $33 million).
(G) PENSION LIABILITY RELATED TO FUNDED STATUS OF
PENSION PLANS:
Under United States GAAP, the Company was required to adopt
the recognition and disclosure provisions of FASB Statement No.
158, Employers’ Accounting for Defined Benefit Pension and Other
Postretirement Plans (“FAS 158”), as at December 31, 2006. Under
FAS 158, the Company is required to recognize the funded status
of defined benefit postretirement plans on the balance sheet with
changes recorded in other comprehensive income (loss). For the year
ended December 31, 2008, under United States GAAP, the Company
recorded an increase of $16 million (2007 – decrease of $15 million)
to other comprehensive income, net of income taxes of $6 million
(2007 – $6 million) to reflect the current period increase in the funded
status differences.
To comply with the requirements of FAS 158, the Company adopted
December 31, as its measurement date effective December 31, 2008,
without remeasuring the plan assets and obligations at January 1,
2008. This resulted in a decrease in retained earnings of $4 million
($6 million less income taxes of $2 million), with a corresponding
increase of $6 million to the Company’s pension liability.
(H) INCOME TAXES:
Included in the caption “Income taxes” is the tax effect of various
adjustments where appropriate. In addition, in 2007, the deferred
tax liability of $254 million related to the historical outside basis
difference of the Company’s investment in Rogers Wireless Inc. was
reversed as a result of the amalgamation of Rogers Wireless Inc.
and RCI. This resulted in an increase to income in 2007 under United
States GAAP of $254 million.
United States GAAP requires the valuation allowance to be allocated
on a pro rata basis between current and non-current future tax
assets for the relevant tax jurisdiction. This GAAP difference would
result in a decrease in current future tax assets under United States
GAAP of $37 million and a decrease in non-current future tax
liabilities of the same amount.
(I) INSTALLATION REVENUES AND COSTS, NET:
For Canadian GAAP purposes, cable installation revenues for both
new connects and re-connects are deferred and amortized over the
customer relationship period. For United States GAAP purposes,
installation revenues are immediately recognized in income to
the extent of direct selling costs, with any excess deferred and
amortized over the customer relationship period.
(J) CONSOLIDATED STATEMENTS OF CASH FLOWS:
(i) Canadian GAAP permits the disclosure of a subtotal of the
amount of funds provided by operations before changes in
non-cash operating working capital items in the consolidated
statements of cash flows. United States GAAP does not permit
this subtotal to be included.
(ii) Canadian GAAP permits bank advances to be included in the
determination of cash and cash equivalents in the consolidated
statements of cash flows. United States GAAP requires that
bank advances be reported as financing cash flows. As a result,
under United States GAAP, the total increase in cash and cash
equivalents in 2008 in the amount of $42 million reflected
in the consolidated statements of cash flows would be nil
and cash provided by financing activities would increase by
$42 million. The total decrease in cash and cash equivalents in
2007 in the amount of $42 million reflected in the consolidated
statements of cash flows would be nil and cash used in
financing activities would be increased by $42 million.
(K) OTHER DISCLOSURES:
United States GAAP requires the Company to disclose accrued
liabilities, which is not required under Canadian GAAP. Accrued
liabilities included in accounts payable and accrued liabilities as at
December 31, 2008, were $1,712 million (2007 – $1,659 million). At
December 31, 2008, accrued liabilities in respect of PP&E totalled
$130 million (2007 – $133 million), accrued interest payable totalled
$142 million (2007 – $87 million), accrued liabilities related to payroll
totalled $388 million (2007 – $592 million), and CRTC commitments
totalled $64 million (2007 – $2 million).