Rogers 2009 Annual Report Download - page 117

ROGERS COMMUNICATIONS INC. 2009 ANNUAL REPORT 121
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(A) The Company is committed, under 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.
(B) The Company enters into agreements with suppliers to provide
services and products that include minimum spend commitments.
The Company has agreements with certain telecommunications
companies that guarantee the long-term supply of network facilities
and agreements relating to the operations and maintenance of
the network.
(C) In the ordinary course of business and in addition to the
amounts recorded on the consolidated balance sheets and disclosed
elsewhere in the notes, the Company has entered into agreements
to acquire broadcasting rights to programs and films over the next
five years at a total cost of approximately $387 million. In addition,
the Company has commitments to pay access fees over the next
year totalling approximately $18 million.
(D) Pursuant to CRTC regulation, the Company is required to make
contributions to the Canadian Television Fund (“CTF”), which is a
cable industry fund designed to foster the production of Canadian
television programming. Contributions to the CTF are based on
a formula, including gross broadcast revenues and the number
of subscribers. The Company may elect to spend a portion of the
above amount for local television programming and may also elect
to contribute a portion to another CRTC-approved independent
production fund. The Company estimates that its total contribution
for 2010 will amount to approximately $74 million.
(E) Pursuant to CRTC regulation, the Company is required to
pay certain telecom contribution fees. These fees are based on a
formula including certain types of revenue, including the majority
of wireless revenue. The Company estimates that these fees for 2010
will amount to approximately $50 million.
(F) Pursuant to Industry Canada regulation, the Company is
required to pay certain fees for the use of its licensed radio spectrum.
These fees are primarily based on the bandwidth and population
covered by the spectrum licence. The Company estimates that these
fees for 2010 will amount to $78 million.
(G) In addition to the items listed above, the future minimum
lease payments under operating leases for the rental of premises,
distribution facilities, equipment and microwave towers,
commitments for player contracts, purchase obligations and other
contracts, including outsourcing arrangements, at December 31,
2009 are as follows:
Year ending December 31:
2010 $ 850
2011 638
2012 412
2013 303
2014 274
2015 and thereafter 397
$ 2,874
Re nt e x p e n s e f o r 2 0 0 9 a m o u nt e d t o $181 mi lli o n
(2008 – $178 million).
These transactions are recorded at the exchange amount, being the
amount agreed to by the related parties, and are reviewed by the
Audit Committee.
In January 2010, with the approval of the Board of Directors, the
Company closed an agreement to sell the Company’s aircraft
to a private Rogers’ family holding company for cash proceeds
of U.S. $18 million. The terms of the sale were negotiated by a
Special Committee of the Board of Directors comprised entirely
of independent directors. The Special Committee was advised by
several independent parties knowledgeable in aircraft valuations
to ensure that the sale price was within a range that was reflective
of current market value. As the aircraft was held for sale at
December 31, 2009, an additional $5 million of depreciation was
recorded in 2009 to write down the net book value of the aircraft to
approximate the amount realized from the sale of the aircraft.
23. COMMITMENTS: