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ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT
Defi ning
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Table of contents

  • Page 1
    Defining Next ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT

  • Page 2
    ...-speed Internet access, and telephony products for residential and business customers, and operating a retail distribution chain which offers Rogers branded wireless and home entertainment services. Rogers Media is Canada's premier group of category-leading broadcast, specialty, print and on-line...

  • Page 3
    ... programming across Canada; and The Shopping Channel, Canada's only nationally televised shopping service. Media's Publishing group produces 70 well-known consumer magazines and trade and professional publications in Canada. Media's Sports Entertainment assets include the Toronto Blue Jays Baseball...

  • Page 4
    ... grew operating profit and free cash flow, expanded our profit margins and returned increasing amounts of cash to you, our shareholders. We continued to invest in the future while improving our cost structure today. We demonstrated the underlying strength, durability and stability of our company. As...

  • Page 5
    ... to view Rogers as the leader in Canada. In 2009 we launched the next generation HSPA+ network, the first in North America, offering customers wireless speeds up to 21.1 Mbps, nearly triple those previously available. On the cable side Rogers launched a 50 Mbps high-speed Internet service on our new...

  • Page 6
    ... years old > Sent 219 texts yesterday > More Facebook friends than she can count > Chats with mom online twice a week SCORED CHOICE OUTFITS FROM THE SHOPPING CHANNEL ONLINE RESEARCH IS REALLY FAST WITH ROGERS ROCKET STICK > Acing Chem 101 4 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT ROGERS...

  • Page 7
    ... away. At home with Rogers, families come together around the fastest, most reliable Internet service and thousands of viewing choices enabled by on-demand digital cable TV. With the most in on-demand, sports, movies, episodic, specialty, multicultural and high definition programming, TV has never...

  • Page 8
    ... architect > Loft down payment almost there > Still on the quest for the city's best Thai E-MAIL EVERYWHERE WORKS W S AT THE CAFÉ H MOBILE INTERNET WITH UPLOADS LATEST PICS INSTANTLY TO FLICKR 8 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT 9

  • Page 9
    ... PLUS INTERNET, READY TO GROW NAME: Michael > 38 years old > Trades stocks and bonds > Unwinds with kayaking > Coaches daughter's hockey > Made VP on fast track 140 STAYING UP-TO-DATE WITH 680 NEWS ADVERTISES WITH ROGERS BROADCASTING 130 120 10 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT...

  • Page 10
    ... night. Rogers sponsors a range of community events to help organizations such as the Hospital for Sick Children, Easter Seals, and many more. Our 34 Rogers TV cable stations produce more than 15,000 hours of local programming involving over 29,000 community groups, including coverage of local...

  • Page 11
    ... of communications and entertainment products and services that are increasingly becoming necessities in today's world. Strong Single-Digit Revenue Growth Drove 7% top-line growth in core Wireless Network and Cable Operations businesses Margin Expansion Expanded adjusted operating profit margins...

  • Page 12
    ...employee data) 2009 2008 20 07 2006 2005 Revenue Adjusted operating profit Adjusted operating profit margin Adjusted net income Adjusted basic earnings per share Annualized dividend rate at year-end Total assets Long-term debt (includes current portion) Shareholders' equity Number of employees...

  • Page 13
    ...Net Income 24 Wireless 31 Cable 40 Media 42 Reconciliation of Net Income to Operating Profit Consolidated Liquidity and Financing 45 Liquidity and Capital Resources 48 Interest Rate and Foreign Exchange Management 50 Outstanding Common Share Data 50 Dividends on RCI Equity Securities 51 Commitments...

  • Page 14
    ... and Operating Results 2010 Financial and Operating Guidance Wireless Cable Media Reconciliation of Net Income to Operating Profit Liquidity and Capital Resources Interest Rate and Foreign Exchange Management Outstanding Common Share Data Dividends and Other Payments on RCI Equity Securities...

  • Page 15
    ... largest wireless provider. Through Cable, we are one of Canada's largest providers of cable television services as well as high-speed Internet access, telephony services and video retailing. Through Media, we are engaged in radio and television broadcasting, televised shopping, magazines and trade...

  • Page 16
    ...opportunities for Wireless, Cable and Media to create bundled product and service offerings at attractive prices, in addition to implementing cross-marketing and cross-promotion of products and services to increase sales and enhance subscriber loyalty. We also work to identify and implement areas of...

  • Page 17
    ... structure with the further integration of our Cable and Wireless businesses to enable an enhanced customer experience, accelerated time to market, heightened innovation and targeted sector leading growth. • For full year 2009, our free cash flow, defined as adjusted operating...

  • Page 18
    ...Financial Results Years ended December 31, (In millions of dollars, except per share amounts) 20 09 20 08 % Chg Operating revenue Wireless Cable Cable Operations RBS Rogers Retail Corporate items and eliminations Media Corporate items and eliminations Total Adjusted operating profit(1) Wireless...

  • Page 19
    ..., contract termination fees, adjustment for CRTC Part II fees decision, and settlement of pension obligations. (3) Consolidated additions to PP&E include expenditures related to billing system development, Rogers Media and corporately owned real estate in addition to Wireless and Cable Operations PP...

  • Page 20
    ...data and messaging services including related handsets and devices, across Canada. Wireless voice services are available in either postpaid or prepaid payment options. In addition, the network provides customers with advanced high-speed wireless data services, including mobile access to the Internet...

  • Page 21
    ..., news, sports, financial information and services, shopping services, photos, music, applications, and streaming video clips, mobile television and other functions. Wireless believes that the introduction of such new applications will drive continued growth of wireless data services. Increased...

  • Page 22
    ... channels, Industry Canada licencing fees associated with spectrum utilization, inter-carrier payments to roaming partners and long-distance carriers, CRTC contribution levy and all other expenses incurred to operate the business on a day-to-day basis. 26 ROGERS COMMUNICATIONS INC. 2009 ANNUAL...

  • Page 23
    ... costs incurred relate to severances resulting from the restructuring of our employee base to improve our cost structure in light of the declining economic conditions. Wireless Operating Highlights for the Year Ended December 31, 20 09 • Network revenue increased by 7% to $6,245 million in 2009...

  • Page 24
    ... $3,824 $4,261 $4,416 WIRELESS DATA REVENUE (In millions of dollars) 5,914 1,424 6,451 1,491 6,979 1,515 $5,154 $5,843 $6,245 $683 $946 $1,366 2007 Postpaid 2008 Prepaid 2009 2007 2008 2009 2007 2008 2009 2007 2008 2009 28 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT

  • Page 25
    ... of certain information technology functions. For the year ended December 31, 2008, costs incurred relate to severances resulting for the restructuring of our employee base to improve our cost structure in light of the declining economic conditions. ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT 29

  • Page 26
    ... from the corresponding period of the prior year was lower spending on enhancements to services and capabilities included in other network additions due to lower site build activity. WIRELESS ADDITIONS TO PP&E (%) Other 15% HSPA 40% Network 45% 30 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT

  • Page 27
    ...receive free long-distance calling to other Rogers Wireless, Rogers Home Phone and Fido customers. At December 31, 2009, Cable's voice-over-cable telephony services were available to approximately 99% of homes passed by its network. Cable offers multi-product bundles at discounted rates, which allow...

  • Page 28
    ..., field agents, direct mail, television advertising, its own direct sales force, exclusive and non-exclusive agents, as well as through business associations. Cable also offers products and services and customer service via our e-business website, rogers. com. The information contained in or...

  • Page 29
    ... as other customer acquisition costs, such as sales support and commissions as well as costs of operating, advertising and promoting the Rogers Retail chain; ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT The availability of television shows and movies streaming over the Internet has become a direct...

  • Page 30
    ...the corporate management of the Rogers Retail stores; • Cost of Rogers Retail sales, which is composed of store merchandise and depreciation related to the acquisition of DVD and game rental assets. In the cable industry in Canada, the demand for services, particularly Internet, digital...

  • Page 31
    ...470 HD Movies, specials and TV shows On Demand. Rogers Cable customers can now receive four times more HD content choices than are available through Canadian satellite TV offerings. • Cable launched TV Call Display, a new product enhancement to its Rogers Home Phone and Rogers Digital TV service...

  • Page 32
    ...December 31, 2008. Increased demand from subscribers for digital content, HDTV and personal video recorder ("PVR") equipment, combined with marketing campaigns which package cable television, high-speed Internet and Rogers Home Phone services, contributed to the growth in the digital subscriber base...

  • Page 33
    ... OF HOMES PASSED (In thousands) 656 840 937 CABLE SUBSCRIBER BREAKDOWN (In thousands) 2,295 1,353 1,451 656 2,320 1,550 1,571 840 2,296 1,664 1,619 937 18% 24% 26% 2007 2008 2009 2007 Television Internet 2008 Digital Home Phone 2009 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT 37

  • Page 34
    ... reporting resulted in the reclassification of approximately 4,000 high-speed Internet subscribers from RBS' broadband data circuits to Cable Operations' high-speed Internet subscriber base. These subscribers are not included in net additions for 2008. 38 ROGERS COMMUNICATIONS INC. 2009 ANNUAL...

  • Page 35
    ... Company's pension plans. For the year ended December 31, 2009, costs incurred relate to i) severances resulting from the targeted restructuring of our employee base to combine the Cable and Wireless businesses into a communications organization; and ii) the closure of certain Rogers Retail stores...

  • Page 36
    ... licenced a small number of new, over-the-air stations and a significant number of new digital television services. The new services, additional licences and the new formats combine to fragment the market for existing radio and television operators. 40 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT

  • Page 37
    ...cost structure in light of the current economic and competitive conditions. (7) Relates to the termination and release of certain Blue Jays players from the remaining term of their contracts. (8) Relates to an adjustment for CRTC Part II fees related to prior periods. Media Operating Revenue Media...

  • Page 38
    ... expense (recovery) Settlement of pension obligations Integration and restructuring expenses Contract termination fees Adjustment for CRTC Part II fees decision Adjusted operating profit 42 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT $ 1,478 $ 502 (6) 65 7 (136) 11 647 2,568 18 1,730 4,316...

  • Page 39
    ... are not deductible for income tax purposes, and an income tax recovery of $33 2007 2008 2009 million reï¬,ecting the effect of scheduled tax rate changes. We also recorded an increase of $19 million in our valuation allowance to offset the increase in foreign tax assets due to foreign exchange...

  • Page 40
    ... During the year ended December 31, 2009, we incurred $117 million of integration and restructuring expenses related to: i) severances resulting from the targeted restructuring of our employee base to 44 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT combine our Cable and Wireless businesses into...

  • Page 41
    ... in our shared services staffing and customer facing functions were partially offset by reductions associated with operational efficiencies and the integration of our Cable and Wireless organizations during the year and reductions in Media associated with improvements to its cost structure. Total...

  • Page 42
    ... on the TSX up to the lesser of 48 million of RCI's Class B Non-Voting shares and that number of Class B Non-Voting shares that can be purchased under the NCIB for an aggregate purchase price of $1.5 billion. 2007 2008 2009 2007 2008 2009 46 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT

  • Page 43
    ... repayments on all long-term debt in the next five years totals $3,537 million, comprised of $1 million of capital leases due in 2010, $1,150 million principal repayments due in 2011, $862 million principal repayments due in 2012, 2007 2008 2009 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT 47

  • Page 44
    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS securities inasmuch as such ratings do not comment as to market price or suitability for a particular investor. There is no assurance that any rating will remain in effect for any given period of time, or that any...

  • Page 45
    ... measure internally to conduct valuation-related analysis and make capital structure related decisions and it is reviewed regularly by management. It is also useful to investors and analysts in enabling them to analyze the enterprise and equity value of the Company and to assess various leverage...

  • Page 46
    ..., and other factors that the Board may at any point consider to be relevant. As a holding company with no direct operations, we rely on cash dividends and other payments from our subsidiaries and our own cash balances and debt to pay dividends to our shareholders. The ability of our subsidiaries...

  • Page 47
    ...PER SHARE AT YEAR END ($) CASH RETURNED TO SHAREHOLDERS (In millions of dollars) $0.50 $1.00 $1.16 Share buybacks: $1,347 $2,114 Dividends: $704 In addition, on February 17, 2010, the Board declared a quarterly dividend totalling 2007 2008 2009 $0.32 per share on each of its outstanding Class...

  • Page 48
    ... carriers, which includes the regulation of Wireless' mobile voice and data operations and Cable's Internet and telephone services. Under the Telecommunications Act, the CRTC has the power to forbear from regulating certain services or classes of services provided by individual carriers. If the...

  • Page 49
    ... also introduce new provisions on the sale of prepaid cards and the disclosure of the costs of the services and products they advertise. The Amendments will come into force no later than June 30, 2010. In December 2006, the Minister of Industry issued a Policy Direction on Telecommunications to the...

  • Page 50
    ...concerning issues such as research and development and licence terms. Again, no policy has been released to date. Consultation on Transition to Broadband Radio Service ("BRS" ) in the Band 250 0 -2696 MHz New entrants are defined as carriers with less than 10% of Canada's wireless revenue. Roaming...

  • Page 51
    ... 2008, the CRTC released its Decision on the Review of Broadcasting Regulations proceeding initiated by Broadcasting Notice of Public Hearing 2007-10. The CRTC issued new policy frameworks for cable and satellite companies and pay and specialty services aimed at streamlining existing packaging rules...

  • Page 52
    ... alleging copyright infringement. The ISP would then forward these notices to its customers. This would have been similar 56 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT In a broad proceeding addressing Internet wholesale services for both ILECs and cable companies initiated by Telecom Notice of

  • Page 53
    ... spring of 2010. The Rogers group would include the Citytv and OMNI conventional television stations and the specialty services Rogers Sportsnet, G4TechTV Canada, OLN and The Biography Channel Canada. COMPETITION IN OUR BUSINESSES In February 2008, the Copyright Board reaffirmed the rates it set...

  • Page 54
    ... of U.S. direct broadcast satellite services. In addition and importantly, the availability of television shows and movies streaming over the Internet has become a direct competitor to Canadian cable television systems. 58 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT Rogers' radio stations compete...

  • Page 55
    ...the market in which we operate, or introduce competing services. Any of these factors could reduce our market share or decrease our revenue or increase churn. Wireless anticipates some ongoing re-pricing of the existing subscriber base as lower pricing offered to attract new customers is extended to...

  • Page 56
    ...the cable television programming services that we must distribute, wireless and wireline interconnection agreements, the rates we may charge to provide access to our network by third parties, resale of our networks and roaming on to our networks, our operation and ownership of communications systems...

  • Page 57
    ... in Saskatchewan under that province's Class Actions Act against providers of wireless communications services in Canada. The proceeding involves allegations of, among other things, breach of contract, misrepresentation and false advertising in relation to the 9-1-1 fee charged by us and the other...

  • Page 58
    ... AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS In August 2004, a proceeding under the Class Actions Act (Saskatchewan) was commenced against providers of wireless communications in Canada relating to the system access fee charged by wireless carriers to some of their customers. In...

  • Page 59
    ...could impact the quality of Wireless' service or impede network development and expansion. Long-Distance Equal Access Could Increase Competition. Occasionally, media and other reports have highlighted alleged links between radio frequency emissions from wireless handsets and various health concerns...

  • Page 60
    ... to skip advertising aired on the television networks. The emergence of subscriberbased satellite and digital radio products could change radio audience listening habits and negatively impact the results of Media's radio stations. Certain audiences are also migrating to the Internet as more...

  • Page 61
    ... operating profit margin by dividing operating profit by total revenue, except in the case of Wireless. For Wireless, operating profit margin is calculated by dividing operating profit by network revenue. Network revenue is used in the calculation, ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT...

  • Page 62
    ... as revenue as the services or products are delivered; • Revenue from the sale of wireless and cable equipment is recorded when the equipment is delivered and accepted by the independent dealer or subscriber in the case of direct sales. Equipment subsidies related to new and existing...

  • Page 63
    ... Discounts provided to customers related to combined purchases of Wireless, Cable, and Media products and services are charged directly to the revenue for the products and services to which they relate. Capitalization of Direct Labour and Overhead During construction of new assets, direct...

  • Page 64
    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Capitalization of Direct Labour and Overhead Certain direct labour and indirect costs associated with the acquisition, construction, development or betterment of our networks are capitalized to PP&E. The ...

  • Page 65
    ... the Impact on Fair Value of Derivatives Rogers' Derivatives are recorded using an estimated credit-adjusted mark-to-market valuation which is determined by increasing the treasury-related discount rates used to calculate the risk-free estimated mark-to-market valuation by an estimated Bond Spread...

  • Page 66
    ... conversion to IFRS. During the fourth quarter, we have finalized the changes to our systems and processes required for implementation to ensure we are ready for our conversion strategy to produce a parallel set of IFRS financial records in 2010. 70 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT

  • Page 67
    ... changes as necessary. • Communicate conversion plan and progress internally and externally. • Contracts updated/renegotiated by the end of 2010. • Communication at all levels throughout the conversion process. • Preliminary assessment of impacts on other areas of the business completed...

  • Page 68
    ..., January 1, 2010. The Company intends to apply this election and consequently, the Company does not expect to have an adjustment on its opening IFRS balance sheet. Joint Ventures IAS 19, Employee Benefits, ("IAS 19") requires the past service cost element of defined benefit plans be expensed on...

  • Page 69
    ...customer loyalty programs. We have adopted a liability approach for our customer loyalty program offered to Fido subscribers. The current policy is to classify the liability for loyalty points as an accrued liability on the balance sheet and to record the net cost of the program in equipment revenue...

  • Page 70
    ... and are at market terms and conditions. In January 2010, with the approval of the Board of Directors, we closed an agreement to sell our aircraft to a private Rogers' family holding company for cash proceeds of US$18 million. The terms of the sale were negotiated by a Special Committee of the...

  • Page 71
    ... ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FIVE-YEAR SUMMARY OF CONSOLIDATED FINANCIAL RESULTS Years ended December 31, (in millions of dollars, except per share amounts) 20 09 20 08 20 07 2006 2005 Income and Cash Flow: Revenue Wireless Cable Media Corporate and eliminations...

  • Page 72
    ... as strong growth in roaming revenues from visitors to Canada utilizing our GSM network. Cable Operations services revenue and operating profit increased primarily due to price increases, increased penetration of its digital products and incremental programming packages, and the scaling and rapid...

  • Page 73
    ... by the Company's pension plans. (3) Costs incurred relate to severances resulting from the restructuring of our employee base to combine the Cable and Wireless businesses into a communications organization and to improve our cost structure in light of the current economic and competitive conditions...

  • Page 74
    ...'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Adjusted Quarterly Consolidated Financial Summary (1) 20 09 (in millions of dollars, except per share amounts) 2008 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Operating Revenue Wireless Cable Media Corporate and eliminations $ 1,544...

  • Page 75
    ... of dollars (unaudited) Years ended December 31 (unaudited) Total Consolidated Amounts De c. 3 1 2009 De c . 31 20 08 D ec. 31 20 07 De c. 3 1 2 00 9 D ec. 31 20 08 D ec. 3 1 20 07 Statement of Income Data: Revenue Operating Income (loss) Net income (loss) Balance Sheet Data (at period end...

  • Page 76
    ... by total revenue RCI adjusted operating profit margin WIRELESS: Adjusted operating profit Divided by network revenue Wireless adjusted operating profit margin CABLE: Cable Operations: Adjusted operating profit Divided by revenue Cable Operations adjusted operating profit margin Rogers Business...

  • Page 77
    ... and data) revenue Divided by: average prepaid subscribers Divided by: 12 months $ Blended ARPU (monthly) Voice and data revenue Divided by: average wireless voice and data subscribers Divided by: 12 months $ Adjusted operating profit margin Adjusted operating profit Divided by: network revenue...

  • Page 78
    ... and Chief Financial Officer AUDITORS' REPORT TO THE SHAREHOLDERS We have audited the consolidated balance sheets of Rogers Communications Inc. as at December 31, 2009 and 2008 and the consolidated statements of income, shareholders' equity, comprehensive income and cash ï¬,ows for the years then...

  • Page 79
    ...569 - 51 1,760 294 2,024 (575) (16) (99) - 64 28 1,426 215 287 502 3 421 424 1,002 Net income for the year Net income per share (note 8): Basic and diluted See accompanying notes to consolidated financial statements. $ 1,478 $ $ 2.38 $ 1.57 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT 83

  • Page 80
    ... 24) Canadian and United States accounting policy differences (note 25) Subsequent events (notes 22 and 26) See accompanying notes to consolidated financial statements. On behalf of the Board: Alan D. Horn, CA Director Ronald D. Besse Director 84 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT

  • Page 81
    ... of shares (000s) Contributed surplus Years ended December 31, 2009 and 2008 Amount Amount Accumulated Total Retained other shareholders' earnings comprehensive equity (Restated income (Restated note 2(p)(i)) (loss) note 2(p)(i)) Balances, December 31, 2007 $ Change in accounting policy related...

  • Page 82
    ...146) 1,122 (1,274) 110 (42) (188) 43 (145) 857 Other comprehensive income (loss) before income taxes Related income tax recovery 135 3 138 Comprehensive income for the year See accompanying notes to consolidated financial statements. $ 1,616 $ 86 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT

  • Page 83
    ... (19) Change in non-cash operating working capital items (note 20(a)) 264 3,790 Investing activities: Additions to property, plant and equipment ("PP&E") Change in non-cash working capital items related to PP&E Acquisition of spectrum licences Investment in Cogeco Inc. and Cogeco Cable Inc. (note...

  • Page 84
    ... and media company, with substantially all of its operations and sales in Canada. RCI is engaged in wireless voice and data communications services through its Wireless segment ("Wireless"); cable television, high-speed Internet access, telephony, data networking and retailing of wireless, cable and...

  • Page 85
    ... date, due to changes in the market value of the underlying Class B Non-Voting shares, are recorded as a charge to income in the period incurred. The payment amount is established as of the vesting date of the award. The employee share accumulation plan allows employees to voluntarily participate in...

  • Page 86
    ...-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 otherthan-temporary impairment has occurred, in which case the 90 ROGERS COMMUNICATIONS INC. 2009 ANNUAL...

  • Page 87
    ... which case, the implied fair value of the reporting unit's goodwill, determined in the same ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT The cost of pensions is actuarially determined using the projected benefit method prorated on service and management's best estimate of expected plan investment...

  • Page 88
    ...for impairment during 2009 and recorded a write-down of $13 million related to the OMNI Canadian Radio-television and Telecommunication Commission ("CRTC") commitments asset (note 13). The Company tested long-lived assets with finite useful lives for impairment during 2008 and recorded a write-down...

  • Page 89
    ... Standards Board ("AcSB") published a new strategic plan that significantly affects financial repor ting requirements for Canadian public companies. The AcSB strategic plan outlines the convergence of Canadian GAAP with IFRS over an expected five-year transitional period. In February 2008, the...

  • Page 90
    ..., interest on long-term debt, debt issuance 2 00 9 Corporate items and Consolidated Media eliminations totals 2008 Corporate items and Consolidated Media eliminations totals Wireless Cable Wireless Cable Operating revenue Cost of sales Sales and marketing Operating, general and administrative...

  • Page 91
    ...reportable segments: 2 00 9 Cable Operations Rogers Business Solutions Corporate Rogers items and Retail eliminations Total Cable Cable Operations Rogers Business Solutions Corporate Rogers items and Retail eliminations 2008 Total Cable Operating revenue Cost of sales Sales and marketing Operating...

  • Page 92
    ... of 2008. In addition, the Company contributed $10 million to simultaneously pay down certain credit facilities of Aurora Cable. Aurora Cable provides cable television, Internet and telephony services in the Town of Aurora and the community of Oak Ridges, in Richmond Hill, Ontario. The acquisition...

  • Page 93
    ... properties and 100% of the shares of the legal entities holding the operations of the Citytv network of five television stations in Canada, from CTVglobemedia Inc. for cash consideration of $405 million, including acquisition costs. The acquisition was accounted for using the purchase method, with...

  • Page 94
    ... 31, Payments 2009 2008 severances to improve Company's cost structure 2009 severances to improve Company's cost structure in Media and combine Cable and Wireless ongoing activities Severances related to RBS restructuring costs Outsourcing of certain information technology functions Retail store...

  • Page 95
    ... allowance Effect of tax rate changes Ontario harmonization credit Impairment losses on goodwill and intangible assets not deductible for tax Other items Income tax expense $ 32.3% 640 $ (64) (58) - - (16) $ 502 $ 32.7% 466 19 (33) (65) 51 (14) 424 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT...

  • Page 96
    ..., general and administrative expenses over the expected 338 $ performances of the related programs and amounted to $131 million in 2009 (2008 - $103 million). Cost of sales includes $1,337 million (2008 - $1,260 million) of inventory costs. 100 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT

  • Page 97
    ... advertising revenues. As a result, the Company recorded a goodwill impairment charge of $154 million related to its conventional television reporting unit, which is included in the Company's Media operating segment. In assessing whether or not there is an impairment, the Company uses a combination...

  • Page 98
    ... summary of the changes to goodwill is as follows: 20 09 2008 Opening balance Acquisition of K-Rock and Kix Country (note 4(a)(i)) Adjustments to Outdoor Life Network purchase price allocation (note 4(b)(i)) Acquisition of Aurora Cable (note 4(b)(ii)) Acquisition of channel m (note 4(b)(iii)) Other...

  • Page 99
    ... This resulted in a $6 million increase in advertising bookings. 12. INVESTMENTS: 2009 Number Description Carrying value 2008 Carrying value Publicly traded companies, at quoted market value: Cogeco Cable Inc. 9,795,675 (2008 - 6,595,675) Subordinate Voting Common shares $ Cogeco Inc. 5,023,300...

  • Page 100
    ... value during impairment testing (note 11(a)(ii)). During 2008, the CRTC commitments increased by $24 million, due to the CRTC grant of two new television licences ($10 million over seven years) and one new radio station ($1 million over six years), and the acquisition of channel m ($8 million over...

  • Page 101
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 14. LONG-TERM DEBT: Due date Principal amount Interest rate 2009 2008 Corporate: Bank credit facility Senior Notes Senior Notes Senior Notes Senior Notes Senior Notes Formerly Rogers Wireless Inc.: Senior Notes Senior Notes Senior Notes Senior Notes ...

  • Page 102
    ... Company's Derivatives also mature (note 15(d)(iii)). (H) FOREIGN EXCHANGE: Foreign exchange gains related to the translation of long-term debt recorded in the consolidated statements of income totalled $126 million (2008 - loss of $65 million). 106 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT

  • Page 103
    ... of the Company's bank credit facility was approximately $2.4 billion (2008 - $1.8 billion), excluding letters of credit of $47 million. Utilizations include advances borrowed under the bank credit facility and issuances of letters of credit. ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT 107

  • Page 104
    ...-based compensation expense is impacted by the change in the price of the Company's Class B Non-Voting shares during the life of the option. At December 31, 2009, a $1 change in the market price of the Company's Class B Non-Voting shares would have 108 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT

  • Page 105
    ... (B) Net liability position (A) + (B) As at December 31, 2008 Mark-to-market value - risk-free analysis Mark-to-market value - credit-adjusted estimate (carrying value) Difference $ 572 $ 507 65 $ (716) $ (661) (55) $ (144) (154) (10) $ ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT 109

  • Page 106
    ... relative to the U.S. dollar would have resulted in a $4 million change in the carrying value of long-term debt at December 31, 2009. In addition, this would have resulted in a $3 million change in net income, net of income taxes of $1 million. 110 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT

  • Page 107
    ... been accrued in the consolidated balance sheets relating to these types of indemnifications or guarantees at December 31, 2009 or 2008. Historically, the Company has not made any significant payments under these indemnifications or guarantees. ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT 111

  • Page 108
    ...gain on contribution of spectrum licences, net of accumulated amortization of $10 million (2008 - $6 million) (note 5) Restricted share units Liabilities related to stock options Other $ 45 $ 18 11 29 14 12 2 2 63 33 29 26 18 9 2 4 184 $ 133 $ 112 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT

  • Page 109
    ... of year Service cost Interest cost Benefits paid Contributions by employees Actuarial loss (gain) Obligation being settled (d) Accrued benefit obligations, end of year $ 622 $ 21 43 (32) 21 23 (172) 526 $ 689 28 40 (26) 21 (130) - 622 $ ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT 113

  • Page 110
    ... to the plans to secure the benefits of plan members and invests in permitted investments using the target ranges established by the Pension Committee of the Company. The Pension Committee reviews actuarial assumptions on an annual basis. 114 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT

  • Page 111
    ... plans for the next 10 fiscal years are as follows: 2010 2011 2012 2013 2014 $ 19 20 21 23 25 108 149 $ 257 Next five years Certain subsidiaries have defined contribution plans with total pension expense of $2 million in 2009 (2008 - $2 million). ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT...

  • Page 112
    ...,000,000 of the Company's Class B Non-Voting shares and that number of Class B Non-Voting shares that can be purchased under the NCIB for an aggregate purchase price of $300 million for a period of one year. During 2008 and 2009, the Company declared and paid the following dividends on each of its...

  • Page 113
    ... by the Management Compensation Committee on the date of grant. The exercise price for options is equal to the fair market value of the Class B Non-Voting shares determined as the five-day average before the grant date as quoted on the TSX. ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT 117

  • Page 114
    ... of the Company to participate in the growth and development of the Company. Under the terms of the plan, restricted share units are issued to the participant and the units issued vest over a period not to exceed three years from the grant date. 118 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT

  • Page 115
    ... expense related to the employee share accumulation plan amounted to $17 million (2008 - $14 million) for the year ended December 31, 2009. 20. CONSOLIDATED STATEMENTS OF CASH FLOWS AND SUPPLEMENTAL INFORMATION: (A) CHANGE IN NON-CASH OPERATING WORKING CAPITAL ITEMS: 2009 2008 Decrease...

  • Page 116
    ... assets and the Company's working capital requirements. In order to maintain or adjust its capital structure, the Company, upon approval from its Board of Directors, may issue or repay long-term debt, issue shares, repurchase shares, pay dividends or undertake other activities as deemed appropriate...

  • Page 117
    ...the terms of its licences issued by Industry Canada, to spend 2% of certain wireless revenues earned in each year on research and development activities over the license period. The Company enters into agreements with suppliers to provide services and products that include minimum spend commitments...

  • Page 118
    ...province's Class Actions Act against providers of wireless communications services in Canada. The proceeding involves allegations of, among other things, breach of contract, misrepresentation and false advertising in relation to the 911 fee charged by the Company and the other wireless communication...

  • Page 119
    ...(e) Pension liability (f), (k) Income taxes (g) Installation revenues and costs, net (h) Other Shareholders' equity based on United States GAAP $ 4,273 $ (8) 101 85 49 13 (165) (14) 16 (7) 4,343 $ 4,716 (8) 105 79 43 8 (107) (25) 12 (7) 4,816 $ ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT 123

  • Page 120
    ... value of goodwill acquired in a contemporaneous acquisition of certain cable television systems. Under United States GAAP, the Company included the $101 million gain on sale of the cable television systems in income, net of related income taxes. 124 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT

  • Page 121
    ...fined benefit postretirement plans on the balance sheet with changes recorded in other comprehensive income (loss). For the year ended December 31, 2009, under United States GAAP, the Company recorded a decrease of $45 million (2008 - increase of ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT 125

  • Page 122
    ...'s supplemental unfunded pension benefits for certain executives was $32 million (2008 - $27 million). The total accumulated other comprehensive loss associated with the supplemental plan amounts to $3 million (2008 - nil), on a pre-tax basis. 126 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT

  • Page 123
    ..., if any, and the timing of such purchases will be determined by the Company considering market conditions, share prices, its cash position, and other factors. In February 2010, the Company's Board of Directors adopted a dividend policy which increases the annual dividend rate from $1.16 to $1.28...

  • Page 124
    ... corporate governance processes that strike a healthy balance of being supportive of the business' continued success, making common business sense, and benefiting all shareholders." Alan D. Horn Chairman of the Board Rogers Communications Inc. 128 ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT

  • Page 125
    ... the Directors and management act in the interests of all Rogers' shareholders - an approach that has helped ensure the continuance of strong independent family-founded Canadian companies." Peter C. Godsoe Lead Director Rogers Communications Inc. ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT 129

  • Page 126
    ... LLP Edward S. Rogers* Deputy Chairman and Executive Vice President Emerging Business, Corporate Development Rogers Communications Loretta A. Rogers Company Director Martha L. Rogers Dr. of Naturopathic Medicine Melinda M. Rogers* Senior Vice President, Strategy and Development Rogers Communications...

  • Page 127
    ..., Rogers Media William W. Linton, CA Executive Vice President, Finance and Chief Financial Officer Rogers Communications Edward S. Rogers Deputy Chairman and Executive Vice President Emerging Business, Corporate Development Rogers Communications Robert F. Berner Executive Vice President Network and...

  • Page 128
    ... and Shareholder Information CORPOR ATE OFFICES STOCK EXCHANGE LISTINGS Rogers Communications Inc. 333 Bloor Street East, 10th Floor Toronto, Ontario M4W 1G9 416-935-7777 or www.rogers.com CUSTOMER SERVICE AND PRODUC T INFORMATION Toronto Stock Exchange (TSX): RCI.a - Class A Voting shares (CUSIP...

  • Page 129
    "The best is yet to come." Ted Rogers 1933-2008

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    Defining Next ROGERS.COM