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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Amortization of brand names, customer relationships, roaming
agreements, and marketing agreements amounted to $143 million in
2011 (2010 – $87 million). Amortization of these intangible assets with
finite lives is included in depreciation and amortization in the
consolidated statements of income.
The costs of acquired program rights are amortized to other external
purchases in the consolidated statements of income over the expected
performances of the related programs and amounted to $57 million
in 2011 (2010 – $74 million).
(b) Impairment:
(i) Goodwill and indefinite life intangible assets:
The Company tested CGU’s with allocated goodwill and
indefinite life intangible assets for impairment during 2011 and
2010 as at October 1 of each calendar year. In assessing whether
or not there is impairment, the Company uses a combination of
approaches to determine the recoverable amount of a CGU,
including both the discounted cash flows and market
approaches. Under the discounted cash flows approach, the
Company estimates the discounted future cash flows for three to
eight years, depending on the CGU and valuation technique
used, and a terminal value. The future cash flows are based on
the Company’s estimates and include consideration for expected
future operating results, economic conditions and a general
outlook for the industry in which the CGU operates. The
discount rates used by the Company consider debt to equity
ratios and certain risk premiums. The terminal value is the value
attributed to the CGU’s operations beyond the projected time
period of the cash flows using a perpetuity rate based on
expected economic conditions and a general outlook for the
industry. Under the market approach, the Company estimates
the recoverable amount of the CGU using multiples of operating
performance standardized by the respective industry. The
Company has made certain assumptions for the discount and
terminal growth rates to reflect variations in expected future
cash flows. These assumptions may differ or change quickly
depending on economic conditions or other events. Therefore, it
is possible that future changes in assumptions may negatively
impact future valuations of CGUs and goodwill which would
result in further goodwill impairment losses.
The following tables gives an overview of the periods for which
the Company has provided cash flow projections, the method
used to determine recoverable amounts, the growth rates used
as the basis for the cash flow projections, and the pre-tax
discount rates applied to the cash flow projections for CGUs with
allocated goodwill or indefinite life intangible assets that are
significant to the Company’s total amount of goodwill and
indefinite life intangible assets, respectively:
Goodwill Spectrum
licences Recoverable
Method
Periods
used
(years)
Growth
rates
%
Pre-tax
Discount
rates %
Wireless $ 1,146 $ 1,875 Value in use 4 0.5 9.7
Cable
operations 1,000 – Value in use 4 1.0 9.7
(ii) Impairment losses:
During the year ended December 31, 2011, the Company
recorded no impairment charge.
During the year ended December 31, 2010, the Company
recorded an impairment charge in the Media segment of
$11 million relating to certain radio stations CGUs. Using the
value in use approach, the Company determined the recoverable
amount of the CGUs to be lower than its carrying value. The
recoverable amounts of the CGUs declined in 2010 primarily due
to the weakening of industry expectations in certain specific
radio markets.
14. INVESTMENTS:
December 31,
2011 December 31,
2010 January 1,
2010
Number Description Carrying
value Carrying
value Carrying
value
Publicly traded companies, at quoted market value:
Cogeco Cable Inc. December 31, 2011 -
10,687,925,
Subordinate Voting
Common shares $ 549 $ 438 $ 343
(December 31, 2010 -
10,687,925,
January 1, 2010 -
9,795,675) 289224 144
Cogeco Inc. December 31, 2011 -
5,969,390,
Subordinate Voting
Common shares
(December 31, 2010 -
5,969,390,
January 1, 2010 -
5,023,300)
Other publicly traded companies 12 13 9
850 675 496
Private companies, at fair market value 36 26 19
Investments in joint ventures and associates accounted for by the equity method 221 232 200
$ 1,107 $ 933 $ 715
108 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT