Rogers 2008 Annual Report Download - page 58

54 ROGERS COMMUNICATIONS INC. 2008 ANNUAL REPORT
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
DIVIDENDS AND OTHER
PAYMENTS ON RCI EQUITY
SECURITIES
Our dividend policy is reviewed
periodically by the RCI Board
of Directors (“the Board”). The
declaration and payment of divi-
dends are at the sole discretion of
the Board and depend on, among
other things, our financial condi-
tion, general business conditions,
legal restrictions regarding the
payment of dividends by us, some
of which are referred to below,
and other factors that the Board
may, from time-to-time, consider
to be relevant. As a holding com-
pany with no direct operations,
we rely on cash dividends and
Fair Market Value Asset and Liability for Cross-Currency Swaps
In accordance with Canadian GAAP, we have recorded our Cross-
Currency Swaps at an estimated credit-adjusted mark-to-market
valuation which was determined by increasing the treasury-related
discount rates used to calculate the risk-free estimated mark-to-
market valuation by an estimated credit default swap spread (“CDS
Spread”) for the relevant term and counterparty for each Cross-
Currency Swap. In the case of Cross-Currency Swaps accounted for
as assets by Rogers (i.e. – those Cross-Currency Swaps for which
the counterparties owe Rogers), the CDS Spread for the bank
counterparty was added to the risk-free discount rate to deter-
mine the estimated credit-adjusted value whereas, in the case of
Cross-Currency Swaps accounted for as liabilities (i.e. - those Cross-
Currency Swaps for which Rogers owes the counterparties), Rogers’
CDS Spread was added to the risk-free discount rate. The estimated
credit-adjusted values of the Cross-Currency Swaps are subject to
changes in credit spreads of Rogers and its counterparties. In 2007,
we recorded our Cross-Currency Swaps at the estimated risk-free
fair value.
The effect of estimating the credit-adjusted fair value of Cross-
Currency Swaps at December 31, 2008 is illustrated in the table below.
As at December 31, 2008, the net liability of Rogers’ Cross-Currency
Swap portfolio increased by $10 million to $154 million versus the
net liability calculated on an unadjusted mark-to-market basis. The
increase in the net liability is a result of the estimated fair value of
the Cross-Currency Swaps accounted for as assets decreasing by
$65 million while the estimated fair value of the Cross-Currency
Swaps accounted for as liabilities decreased by $55 million.
Of the $10 million impact, $7 million was recorded in the consoli-
dated statement of income related to Cross-Currency Swaps not
accounted for as hedges and $3 million related to hedges was
recorded in other comprehensive income.
OUTSTANDING COMMON SHARE DATA
Set forth below is our outstanding common share data as at
December 31, 2008. For additional information, refer to Note 18 to
our 2008 Audited Consolidated Financial Statements.
Swaps Swaps
accounted accounted Net liability
for as for as position
(In millions of dollars) assets (A) liabilities (B) (A+B)
Mark-to-market value – risk free analysis $ 572 $ (716) $ (144)
Mark-to-market value – credit-adjusted estimate (carrying value) $ 507 $ (661) $ (154)
Difference $ (65) $ 55 $ (10)
December 31, 2008
Common Shares outstanding (1)
Class A Voting 112,462,014
Class B Non-Voting 523,429,539
Options to purchase Class B Non-Voting shares
Outstanding options 13,841,620
Outstanding options exercisable 9,228,740
(1) Holders of our Class B Non-Voting shares are entitled to receive notice of and to attend meetings of our shareholders, but, except as required by law or as stipulated by stock exchanges, are not entitled
to vote at such meetings. If an offer is made to purchase outstanding Class A Voting shares, there is no requirement under applicable law or RCI’s constating documents that an offer be made for the
outstanding Class B Non-Voting shares and there is no other protection available to shareholders under RCI’s constating documents. If an offer is made to purchase both Class A Voting shares and Class B
Non-Voting shares, the offer for the Class A Voting shares may be made on different terms than the offer to the holders of Class B Non-Voting shares.
other payments from our subsidiaries and our own cash balances
and debt to pay dividends to our shareholders. The ability of our
subsidiaries to pay such amounts to us is subject to the various risks
as outlined in this MD&A. All dividend amounts have been restated
to reflect a two-for-one split of our Class B Non-Voting and Class A
Voting shares in December 2006.
In February 2009, the Board adopted a dividend policy which
increased the annual dividend rate from $1.00 to $1.16 per Class A
Voting and Class B Non-Voting share effective immediately to be
paid in quarterly amounts of $0.29 per share. Such quarterly divi-
dends are only payable as and when declared by our Board and
there is no entitlement to any dividend prior thereto.
In addition, on February 17, 2009, the Board declared a quarterly
dividend totalling $0.29 per share on each of its outstanding Class
B Non-Voting shares and Class A Voting shares, such dividend to be
paid on April 1, 2009, to shareholders of record on March 6, 2009,
and is the first quarterly dividend to reflect the newly increased
$1.16 per share annual dividend level.
20082007
$1.00$0.50$0.16
ANNUALIZED DIVIDENDS
PER SHARE AT YEAR END
200
7
2008
2006