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ROGERS COMMUNICATIONS INC.
2012 ANNUAL REPORT
Creating World-Leading
Internet Experiences
Creating World-Leading
Internet Experiences
WIRELESS CABLE MEDIA

Table of contents

  • Page 1
    Creating World-Leading Internet Experiences RogeRs CommuniCations inC. 2012 annual RepoRt WiReless CaBle meDia

  • Page 2
    ...carrier customers. Rogers media is Canada's premier group of category-leading broadcast, specialty, print and online media assets, with businesses in radio UPLOAD and television broadcasting, televised shopping, sports entertainment, magazine and trade journal ACCESS publishing and digital media. We...

  • Page 3
    ... per share annualized dividend rate at year-end total assets long-term debt (includes current portion) shareholders' equity market capitalization of equity Wireless subscribers (000s) Cable subscribers (000s) internet subscribers (000s) Cable telephony subscribers (000s) number of employees 11...

  • Page 4
    ...2011 2012 2010 F Y2012 REVENUE: $12.5 billion F Y2012 REVENUE: $7.3 billion $12.5 Billion WIRELESS 58% CABLE 26% $7.3 Billion POSTPAID VOICE 52% DATA 37% MEDIA 13% BuSINESS SOLuTIONS 3% EQuIPMENT 8% PREPAID VOICE 3% XT 3.0 2011 RogeRs CommuniCations VE INSPIRE STREAMI NETWORK SHARE...

  • Page 5
    ... TELEVISION 51% INTERNET 27% HOME PHONE 13% $1.62 Billion TELEVISION 40% SPORTS ENTERTAINMENT 13% R ADIO 14% THE SHOPPING CHANNEL 16% BuSINESS SOLuTIONS 9% PuBLISHING 14% DIGITAL 3% XT 0.19 2012 CaBle anD Business solutions VE INSPIRE STREAMI DOWNLOAD SURF RELIABLE NETWORK SHARE SECURE...

  • Page 6
    ... extend their Rogers wireless phone number to their computer, tablet and home phone, allowing them to text, talk and video chat with other Rogers One Number users from anywhere. And our new Rogers Anyplace TV Mobile app gives customers access to an even wider range of news, sports, movies, episodic...

  • Page 7
    ... offerings and pricing tiers, reducing complexity for our customers and improving the efficiency of our sales and service teams. These new wireless data-centric plans generally offer a range of wireless data usage allowance and data plan sharing options, combined with unlimited voice and text, to...

  • Page 8
    ... acquisition of theScore Television Network - a national specialty TV service and Canada's third-largest specialty sports channel that provides sports news, information and highlights, and live event programming. GIVING BACK We successfully implemented a number of cost management and productivity...

  • Page 9
    ...; managing expenses, and working closely with key suppliers. dRIVE FUTURE GROWTh OPPORTUNITIES Continue to develop targeted new growth areas of our business, including machine-to-machine communications, mobile commerce and video, sports, business communications services, local and digital media...

  • Page 10
    06 ROGERS COmmUNICATIONS INC. 2012 ANNuAL REPORT

  • Page 11
    ..., and home phone without interruption; manage e-mails, text messages and voicemail; hold live video chats; and combine and sync contacts from across multiple devices - no matter where they are. WIRELESS VOICE & dATA SmARTPhONES & TABLETS hOmE & BUSINESS TELEPhONY mOBILE INTERNET SOCIAL mEdIA...

  • Page 12
    ..., or receive talking text messages on the home phone. Wireless customers can also use Rogers one number to switch calls among their computer, home phone and wireless device without interruption; manage e-mails; text messages and voicemail; hold live video chats; and combine and sync contacts from...

  • Page 13
    2012 ANNuAL REPORT ROGERS COmmUNICATIONS INC. 09

  • Page 14
    10 ROGERS COmmUNICATIONS INC. 2012 ANNuAL REPORT

  • Page 15
    ... plans and options that allow users to share buckets of voice and data, connect directly with team members, establish wireless backup for point-of-sale and other systems, and roam frequently with cost certainty. For hundreds of thousands of smaller businesses located in and around Rogers' cable...

  • Page 16
    ... their wireless device, computer, and home phone without interruption; manage e-mails, text messages and voicemail; hold live video chats; and combine and sync contacts from across multiple devices. and Rogers' new smart home monitoring service provides a complete monitoring, automation and security...

  • Page 17
    2012 ANNuAL REPORT ROGERS COmmUNICATIONS INC. 13

  • Page 18
    14 ROGERS COmmUNICATIONS INC. 2012 ANNuAL REPORT

  • Page 19
    .... We also sponsor a range of community events in support of organizations such as the toronto hospital for sick Children, easter seals and many more. our 39 Rogers tV cable stations produce thousands of hours of local programming involving over 29,000 community groups, donating coverage of local...

  • Page 20
    ... of the performance of the Board and its committees. 16 ROGERS COmmUNICATIONS INC. 2012 ANNuAL REPORT LIVE NEXT INSPIRE INSPIRE RELIABLE NETWORK T U N E S LIVE INSP STREAMI SURF DOWNLOAD CORPORATE GOVERNANCE RELIABLE NETWORK SHARE pension SECURE CONNECT INSPIRE POST FREEDOM CONN...

  • Page 21
    ... and copies of our annual information circular and proxy, go to rogers.com/governance 2012 ANNuAL REPORT ROGERS COmmUNICATIONS INC. 17 LIVE NEXT INSPIRE INSPIRE RELIABLE NETWORK T U N E S LIVE INSP STREAMI DOWNLOAD SURF RELIABLE NETWORK SHARE SECURE CONNECT INSPIRE POST FREEDOM...

  • Page 22
    ... Business, Corporate Development, Rogers Communications * management directors are pictured on the following page. 18 ROGERS COmmUNICATIONS INC. 2012 ANNuAL REPORT LIVE NEXT INSPIRE RELIABLE NETWORK T U N E S LI INSP STREAMI SURF DOWNLOAD dIRECTORS RELIABLE NETWORK SHARE SECURE CONNECT...

  • Page 23
    ... and Chief Human Resources Officer For detailed biographical information of Rogers' Directors and executive officers, go to rogers.com/governance 24 melinda m. Rogers Senior Vice President, Strategy and Development 25 Terrie L. Tweddle Vice President, Corporate Communications 2012 ANNuAL REPORT...

  • Page 24
    ... and shareholder value, and the financial strength to continue to deliver long-term growth. LEAdER IN CANAdIAN COmmUNICATIONS INdUSTRY Canada's largest wireless carrier and a leading cable television provider, offering a "quadruple play" of wireless, television, internet and telephony services to...

  • Page 25
    ... Long-Term Liabilities Pensions Shareholders' Equity Stock Options, Share Units and Share Purchase Plans Related Party Transactions Guarantees Commitments and Contingent Liabilities Subsequent Events 51 57 68 116 CORPORATE AND SHAREHOLDER INFORMATION 2012 ANNUAL REPORT ROGERS COMMUNICATIONS...

  • Page 26
    ... rates, product pricing levels and competitive intensity, subscriber growth, usage and churn rates, changes in government regulation, technology deployment, device availability, the timing of new product launches, content and equipment costs, the integration of acquisitions and industry structure...

  • Page 27
    ... Internet, telephony, wired telecom and data networking services to businesses. We are also active in television and radio broadcasting, televised shopping, sports entertainment, digital media, and consumer, trade and professional publications. Almost all of our operations and sales are in Canada...

  • Page 28
    ... at Cable. Adjusted operating profit rose 2% to $4,834 million, with adjusted operating profit margins of 39% resulting from revenue increase and cost efficiencies. • Revenues from wireless data services increased 17% to $2,722 million, from $2,325 million in 2011. • Postpaid wireless subscriber...

  • Page 29
    ... RBS 2012 Media 2010 Wireless 2011 Cable & RBS 2012 Media CONSOLIDATED TOTAL ASSETS (In millions of dollars) ADDITIONS TO CONSOLIDATED PP&E (In millions of dollars) $17,033 $18,362 $19,618 $1,821 $2,127 $2,142 2010 2011 2012 2010 2011 2012 2012 ANNUAL REPORT ROGERS COMMUNICATIONS...

  • Page 30
    ..., information and transactional experiences across any device, place or time. ROGERS COMMUNICATIONS INC. WIRELESS CABLE BUSINESS SOLUTIONS MEDIA We report our 2012 results by our four lines of business - Wireless, Cable, RBS and Media - which reflects how we manage our operations and...

  • Page 31
    ...national high-speed fiber, cable and wireless network backbone. Services are sold through a direct enterprise sales force, wholesale carrier network services team and third-party channel partners. Contracts for services are typically signed with customers on 1 to 5 year terms. Optical Wave, Internet...

  • Page 32
    ... way businesses operate. Wireless has invested in several areas to serve the changing needs of its customers. Wireless network nodes are interconnected using fibreoptic and broadband microwave transmission. New technologies have been deployed to enable unique new services, such as Rogers One Number...

  • Page 33
    ... as of December 31, 2012. • Our modern wireless and broadband networks allow us to deploy innovative products and services. • Our Canadian broadcast, sports, print and digital media assets provide unique content for our communications products. • The Rogers brand is extremely well recognized...

  • Page 34
    ... and related television assets. theScore is a national specialty TV service that provides sports news, information, highlights and live event programming and is Canada's third-largest specialty sports channel with 6.6 million television subscribers. The acquisition builds on Rogers' rich history in...

  • Page 35
    ... service times for our sales and support teams. Our new data-centric plans offer unlimited voice and text along with a range of data usage and data plan sharing options to meet the varying needs of our customers. We unveiled a new retail store concept and design for our Rogers Plus stores. The new...

  • Page 36
    ... commerce, local and digital media services, home automation and business communications services. Cash income taxes were below the low end of our targeted 2012 range due to income tax planning and containment strategies. These savings further contributed to consolidated free cash flow generation...

  • Page 37
    ... FINANCIAL RESULTS Years ended December 31, (In millions of dollars, except per share amounts) 2012 2011 % Chg 2 1 (13) 1 5 1 1 4 3 6 1 2 4 4 n/m (71) - (8) 3 8 8 Operating revenue Wireless Cable RBS Media Corporate items and intercompany eliminations Total operating revenue Adjusted operating...

  • Page 38
    ..., promoting new data and voice services to existing customers, and retaining customers through enhanced service, subsidized handset upgrades and other value-added capabilities. > Demand for Sophisticated Data Applications The ongoing development of more sophisticated wireless networks, devices and...

  • Page 39
    ..., due to successful cost management initiatives, we also generated an increase in year-over-year adjusted operating profit. Data revenues continue to grow at double-digit rates as our smartphone customers' demands for data availability increase. 2012 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 35

  • Page 40
    ... any point during their contract term. • Wireless redesigned and simplified its wireless offers and pricing tiers, reducing the complexity and service times for our sales and support teams. These new plans offer unlimited voice and text and a range of wireless data usage and device sharing options...

  • Page 41
    ...generally at or below our cost to independent dealers, agents and retailers, and directly to subscribers through fulfillment by Wireless' customer service groups, websites and telesales. The increase in revenue from equipment sales for 2012 versus 2011, including activation fees and net of equipment...

  • Page 42
    ... cable television services (such as VOD and SVOD, pay television packages, PVR and HDTV programming, and streaming video to multiple non-TV devices), increasingly fast tiers of Internet access and widespread home phone services to residential and small business customers. > Increased Competition...

  • Page 43
    ... the speed CABLE TOTAL REVENUE (In millions of dollars) CABLE SERVICE REVENUE BREAKDOWN (In millions of dollars) $3,190 $3,309 $3,358 1,803 848 506 1,878 926 478 1,868 998 477 2010 2011 2012 2010 Television 2011 Internet 2012 Home Phone 2012 ANNUAL REPORT ROGERS COMMUNICATIONS INC...

  • Page 44
    ...per view service fees and video on demand service fees; and (iii) rental of digital cable set-top terminals. The decrease in Cable Television revenue in 2012 reflects the increased competitive intensity in our operating territory, which has led to increased retention and promotional pricing activity...

  • Page 45
    ... services and supportive dynamic network infrastructures. The year-over-year growth in adjusted operating profit was driven by the revenue increases, resulting in expanded adjusted operating profit margins of 47.8% in 2012, compared to 46.8% in 2011. 2012 ANNUAL REPORT ROGERS COMMUNICATIONS...

  • Page 46
    ..., public sector and carrier markets. The lower margin off-net legacy business, which includes long distance, local and certain legacy data services, continues to decline as expected and was down 32% year-over-year. $40 $86 $89 2010 2011 2012 42 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT

  • Page 47
    ... is a national specialty TV service that provides sports news, information, highlights and live event programming. It is Canada's third-largest specialty sports channel with 6.6 million television subscribers. The acquisition builds on Rogers' rich history in sports broadcasting and reinforces our...

  • Page 48
    ... increased by approximately 3% year-over-year. Media Adjusted Operating Profit obtained, at which point control over theScore Media business will transfer to Rogers. Score Media owns theScore Television Network, a national specialty TV service providing sports news, information, highlights and live...

  • Page 49
    ...-owned and operated company in the program. Stock-based compensation expense increased to $77 million, from $64 million in 2011, mainly related to the stock price increase of $5.91 during 2012. The expense in a given period is generally determined by the vested options and units valued at the...

  • Page 50
    ...$ (664) $ 2011 (668) (99) (6) 14 29 (8) (738) % Chg 3 n/m n/m n/m (3) 13 (10) Interest on long-term debt Loss on repayment of long-term debt Foreign exchange (loss) gain Change in fair value of derivative instruments Capitalized interest Other Total finance costs During 2012, we acquired certain...

  • Page 51
    ...partially offset by increase in depreciation and amortization of $76 million. 2012 $ 1,123 832 61 55 71 $2,142 2011 $1,192 748 55 61 71 $2,127 % Chg (6) 11 11 (10) - 1 Additions to PP&E Wireless Cable RBS Media Corporate Total additions to PP&E 2012 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 47

  • Page 52
    ...LTE network, offset by lower HSPA+ capacity investments and the timing of spend on cell site construction, customer billing systems and the development costs of the Rogers One Number service incurred in the prior year. 2012 ADDITIONS TO PP&E (%) The Cable segment capital expenditures increased year...

  • Page 53
    ... Total operating revenue Adjusted operating profit (loss)(1) Wireless Cable RBS Media Corporate items and intercompany eliminations Adjusted operating profit(1) Stock-based compensation (expense) recovery Integration, restructuring and acquisition expenses Settlement of pension obligations Operating...

  • Page 54
    .... The quarterly trends in Cable services revenue and operating profit increases are primarily due to greater penetration and usage of its Internet, digital and telephony products and services, combined with pricing changes made over the past year. 50 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT

  • Page 55
    ...136 million of related changes in non-cash working capital; • net investments of $707 million for acquiring theScore and our 37.5% interest in MLSE; and • payments of program rights and other investments of $121 million. 2010 2011 2012 2010 2011 2012 Cash Used in Financing Activities Cash used...

  • Page 56
    ...program or issuing equity, all depending on market conditions. In addition, we may refinance a portion of existing debt subject to market conditions and other factors. There is no assurance that this will or can be done. 2.1x 2.2x 2.3x 2010 2011 2012 52 ROGERS COMMUNICATIONS INC. 2012 ANNUAL...

  • Page 57
    ... from Moody's all represent investment grade ratings. Employee Benefit Plan Funding Rogers has two outstanding shelf prospectuses with securities regulators to qualify debt securities of RCI, one for the sale of up to $4 billion of debt securities in Canada and the other for the sale of up to US...

  • Page 58
    ...2013 January 2, 2014 INTEREST RATE AND FOREIGN EXCHANGE MANAGEMENT Foreign Currency Forward Contracts RATIO OF ADJUSTED OPERATING PROFIT TO INTEREST In July 2011, we entered into an aggregate... hedges for accounting purposes. Debt 2010 2011 2012 54 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT

  • Page 59
    ...fair value decrement arising from purchase accounting and deferred transaction costs. Includes current and long-term portions. 8,734,028 4,638,496 10,689,099 5,716,945 OUTSTANDING COMMON SHARE DATA Set out below is our outstanding common share data at fiscal yearend for 2012 and 2011. In 2012, we...

  • Page 60
    ... Financial Statements. Material Obligations under Firm Contractual Arrangements (In millions of dollars) Less Than 1 Year 1-3 Years 4-5 Years After 5 Years Total Long-term debt(1) Debt Derivative instruments(2) Operating leases Player contracts Purchase obligations(3) Program rights Pension...

  • Page 61
    ... cancellation fees that can be charged to customers, the use of security deposits and the cancellation and renewal rights of the consumers. The amendments also established new provisions on the sale of prepaid cards and the disclosure of related costs. 2012 ANNUAL REPORT ROGERS COMMUNICATIONS INC...

  • Page 62
    ... as on conditions of licence for spectrum in the 2500-2690 MHz band. Roaming and Network Sharing Policy WIRELESS REGULATION AND REGULATORY DEVELOPMENTS Consultation on the Renewal of Cellular and Personal Communications Services ("PCS") Spectrum Licences In March 2011, Industry Canada released its...

  • Page 63
    ... 2013. the reselling ISP was put in place. A fixed monthly access fee per end user of the reselling ISP as well as one-time installation and maintenance fees will apply in addition to the usage charge. The new rate structure came into effect in February 2012. Applications to the CRTC to review and...

  • Page 64
    ... company already holds more than the maximum 40 MHz of spectrum limit to bid in this auction. The outcomes of both of these auctions may serve to increase competition at Wireless. 60 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT The Canadian market for enterprise network and communications services...

  • Page 65
    ... in markets across Canada. New technologies such as online web information services, music downloading, portable media players and online music streaming services also compete for radio stations' audience share. The Shopping Channel competes with various retail stores, catalogue retailers, Internet...

  • Page 66
    ... business and contribute to a better world. From developing responsible products to engaging employees, investing in communities and tackling climate change, Rogers is firmly committed to corporate social responsibility ("CSR"). In fact, CSR is becoming ever more important to our growth, competitive...

  • Page 67
    ... in managing the risk. Regular updates on the key risks and the related ongoing risk mitigation activities are communicated to Enterprise Risk Management and the responsible Senior Leadership Team. Risk assessment is being formally incorporated into Rogers' strategic planning, business planning and...

  • Page 68
    ... our employees and critical elements of the network infrastructure and information technology systems are concentrated in three Ontario locations: our corporate offices in Toronto and Brampton, and an operations facility in Markham. In the event that 64 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT...

  • Page 69
    ... execute our business strategy. Income and Indirect Tax Amounts May Materially Differ from the Amounts Expected 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...

  • Page 70
    ... company's long-term strategy and direction. As of December 31, 2012, private Rogers family holding 66 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT Wireless has relationships with a small number of essential network infrastructure and handset vendors, over which it has no operational or financial...

  • Page 71
    ... the New Brunswick Public Utilities Board. If Cable Is Unable to Maintain Sustainable Security Measures to Prevent Unauthorized Access to Digital Boxes or Internet Modems, Cable Could Experience a Decline in Revenues Unfavourable channel placement could negatively affect the results of The Shopping...

  • Page 72
    ...industry trends and company-specific factors, including changing technologies and expectations for the in-service period of certain assets. On an annual basis, we reassess our existing estimates of useful 68 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT Indefinite-lived intangible assets, including...

  • Page 73
    ... Compensation Our employee stock option plans attach cash-settled share appreciation rights ("SARs") to all new and previously granted options. The SAR feature allows the option holder to elect to receive in cash an amount equal to the intrinsic value, instead of exercising the option and acquiring...

  • Page 74
    ... financial statements. IFRS 11, Joint Arrangements In June 2011, the IASB amended IAS 19, Employee Benefits ("IAS 19"). This amendment eliminates the concept of return on plan assets and interest cost and replaces them with a net interest cost that is calculated by multiplying the discount rate...

  • Page 75
    .... Total amounts paid to these related parties, directly or indirectly, are as follows: Years ended December 31, (In millions of dollars) 2012 2011 % Chg Printing, legal services and commission paid on premiums for insurance coverage $ 43 $ 41 - 2012 ANNUAL REPORT ROGERS COMMUNICATIONS INC...

  • Page 76
    ...$ $ $ $ $ $ $ $ $ Ratios: Revenue growth Adjusted operating profit growth Debt/adjusted operating profit(2) Dividends declared per share Key business indicators: Blended ARPU Wireless subscribers Total television subscribers Total cable high-speed internet subscribers Total cable telephony lines...

  • Page 77
    ...their last revenue-generating usage. We report wireless subscribers in two categories: postpaid and prepaid. Postpaid and prepaid include voice-only subscribers, dataonly subscribers, and subscribers with service plans integrating both voice and data. Internet, Home Phone and RBS subscribers include...

  • Page 78
    ... managing our business and in allowing investors and analysts to assess the underlying changes in our business over time. Operating Profit and Operating Profit Margin $ $ Blended ARPU (monthly) Voice and data revenue Divided by: average wireless voice and data subscribers Divided by: twelve months...

  • Page 79
    ... instead of total revenue because network revenue better reflects Wireless' core business activity of providing wireless services. The following table illustrates the adjusted operating profit margin calculations for Wireless, Cable, RBS and Media. 2012 $ 4,834 12,486 38.7% $ 2011 4,739 12...

  • Page 80
    ... share - continuing operations Diluted earnings per share Free Cash Flow Adjusted operating profit Add (deduct): PP&E expenditures Interest on long-term debt, net of capitalization Pre-tax free cash flow Cash income taxes After-tax free cash flow 76 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT

  • Page 81
    ... for by the equity method. Amounts recorded in current liabilities and non-current liabilities for RCP do not include any obligations arising as a result of being a guarantor or co-obligor, as the case may be, under any of RCI's long-term debt. 2012 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 77

  • Page 82
    ... the revenue generated per customer per month. ARPU is an important indicator of a wireless or cable business' operating performance. • ATM (Asynchronous Transfer Mode): A high-speed data switching protocol that packs digital information into cells that are switched throughout a network over...

  • Page 83
    ...television network to carry two-way, digital traffic for extremely fast Internet access, cable telephony (i.e., home phone service) and hundreds of channels of digital television. • Hotspot: The WiFi wireless access point in a public place such as a café, train station, airport, commercial office...

  • Page 84
    ... allows any user with a WiFi enabled device to connect to a wireless access point at multi-megabit speeds, typically between 11 Mbps and 50 Mbps depending upon the type of technology chosen and how many users are using the network at a given time. 80 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT

  • Page 85
    ... the years ended December 31, 2012 and 2011 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. Chartered Accountants, Licensed Public Accountants Toronto, Canada February 14, 2013 2012 ANNUAL REPORT ROGERS COMMUNICATIONS INC...

  • Page 86
    CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF INCOME (IN MILLIONS OF CANADIAN DOLLARS, EXCEPT PER SHARE AMOUNTS) Years ended December 31, Note 3(b) 2012 $ 12,486 $ 2011 12,346 Operating revenue Operating expenses: Operating costs Integration, restructuring and acquisition costs ...

  • Page 87
    ... to income: Defined benefit pension plans Actuarial loss Related income tax recovery Items that will not be reclassified to net income Items that may subsequently be reclassified to income: Change in fair value of available-for-sale investments Increase (decrease) in fair value Related income tax...

  • Page 88
    ...Guarantees Commitments and contingent liabilities Subsequent events The accompanying notes are an integral part of the consolidated financial statements. 25 26 27 On behalf of the Board: Alan D. Horn, CA Director John H. Clappison, FCA Director 84 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT

  • Page 89
    ... B Non-Voting shares Number of shares Amount (000s) Share premium Retained earnings Available-for-sale Total financial Hedging shareholders' assets reserve reserve equity Balances, January 1, 2012 Net income for the year Other comprehensive income (loss): Defined benefit pension plans, net of...

  • Page 90
    ... of cross-currency interest rate exchange agreement and forward contracts Transaction costs incurred related to long-term debt Repurchase of Class B Non-Voting shares Proceeds received on exercise of stock options Dividends paid Cash used in financing activities Change in cash and cash equivalents...

  • Page 91
    ... office is located at 333 Bloor Street East, Toronto, Ontario, M4W 1G9. As of December 31, 2012, the Company reported the results of four segments: Wireless, Cable, Business Solutions ("RBS"), and Media. Through Wireless, the Company is engaged in wireless voice and data communications services...

  • Page 92
    ... monthly subscriber fees in connection with wireless, cable, telephony and Internet services, rental of equipment, network services and media subscriptions are recorded as revenue as the service is provided; revenue from airtime, data services, roaming, long-distance and optional services, pay-per...

  • Page 93
    ... cost using the effective interest method. Such liabilities include bank advances, accounts payable and accrued liabilities, and long-term debt. (iii) Fair value: Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial...

  • Page 94
    ... interest method over the life of the long-term debt to which they relate. 90 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT (i) Pension benefits: The Company provides both contributory and non-contributory defined benefit pension plans, which provide employees with a lifetime monthly pension upon...

  • Page 95
    ... Company's network are capitalized to PP&E, and interest costs which are capitalized during construction and development of certain PP&E. The cost of new cable subscriber installation costs are capitalized to cable and wireless network and is depreciated over the useful lives of the related assets...

  • Page 96
    ... changes in the market demand for the products and services that the asset helps generate. Intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives as follows: Brand names Customer relationships Roaming agreements Marketing agreements...

  • Page 97
    ...value measurements. IAS 19, Employee Benefits In June 2011, the IASB amended IAS 19, Employee Benefits ("IAS 19"). This amendment eliminates the concept of return on plan assets and interest cost (income) and replaces them with a net interest cost that is calculated by multiplying the discount rate...

  • Page 98
    ... consolidated statements of income. All of the Company's reportable segments are substantially in Canada. Information by reportable segments is as follows, which is regularly reported to the chief operating decision makers: Year ended December 31, 2012 Wireless Cable RBS Media Corporate items and...

  • Page 99
    ...follows: 2012 2011 6. DISCONTINUED OPERATIONS: Wireless: Postpaid Prepaid Network revenue Equipment sales Total Wireless Cable: Cable television Internet Home phone Service revenue Equipment sales Total Cable RBS: Next generation Legacy Service revenue Equipment sales Total RBS Media: Advertising...

  • Page 100
    ... activities and payments made against such liabilities during 2012 are as follows: As at December 31, 2011 Additions Payments As at December 31, 2012 Severances resulting from the targeted restructuring of the Company's employee base Acquisition transaction costs and integration of acquired...

  • Page 101
    ... foreign jurisdictions Deductible temporary differences in foreign jurisdictions $ 44 34 45 $ 41 45 45 $ 123 $ 131 The Company has taxable temporary differences associated with its investment in Canadian domestic subsidiaries. No deferred tax 2012 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 97

  • Page 102
    ... network, customer premise equipment, computer equipment and software assets. As a result, cable and wireless network is amortized on a straight-line basis at rates between 3 and 30 years, customer premise equipment is amortized on a straight-line basis 98 ROGERS COMMUNICATIONS INC. 2012 ANNUAL...

  • Page 103
    ... amortization Goodwill Indefinite life intangible assets: Spectrum licences Broadcast licences Finite life intangible assets: Brand names Customer relationships Roaming agreements Marketing agreements Acquired program rights Total intangible assets Total goodwill and intangible assets $ 3,436...

  • Page 104
    ... operates. The discount rates used by the Company consider debt to equity 100 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT Wireless Cable $ 1,146 $ 2,231 Value in use 1,000 - Value in use 5 5 0.5 1.0 8.3 9.2 (ii) Impairment losses: During the year ended December 31, 2012, the Company recorded...

  • Page 105
    ... of operations until CRTC final approval is obtained, at which point control over theScore Media business will transfer to Rogers. Score Media owns theScore Television Network, a national specialty TV service providing sports news, information, highlights and live event programming across Canada...

  • Page 106
    ...million after the deduction of the original issue discount and debt issuance costs. Debt issuance costs of $9 million related to these notes are included as deferred transaction 102 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT In March 2011, the Company redeemed the outstanding principal amount of...

  • Page 107
    ... returns to its shareholders. The Company defines capital that it manages as shareholders' equity (which is comprised of issued capital, share premium, retained earnings, hedging reserve and available-for-sale financial assets reserve) and long-term debt. The Company manages its capital structure...

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    ...5 years More than 5 years Interest payments $ 686 $ 1,168 1 to 3 years $ 901 4 to 5 years $ 3,929 Market risk is the risk that changes in market prices, such as fluctuations in the market prices of the Company's publicly traded investments, the Company's share price, foreign exchange rates...

  • Page 109
    ...Current liability Long-term liability (144) (417) (561) Net mark-to-market liability $ (511) $ In 2012, a $4 million decrease in estimated fair value (2011 - $6 million increase) related to hedge ineffectiveness was recognized in net income. 2012 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 105

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    ...-derivative held-to-maturity financial assets during the years ended December 31, 2012 and 2011. 106 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT On December 31, 2012 the Company entered into an accounts receivable securitization program with a Canadian financial institution which will enable it...

  • Page 111
    ... for these benefits for the Company's funded plans at December 31, 2012 and 2011 are as follows: 2012 2011 2012 2011 Plan cost: Service cost Interest cost Expected return on plan assets Net pension expense Plan settlements Total pension cost recognized in the consolidated statements of income...

  • Page 112
    ... of pension obligations of approximately $11 million recorded in operating costs on the consolidated statement of income. (e) Historical information: 2012 2011 2010 History of annual experience (gains) and losses: Funded plan: Actuarial loss on plan liabilities Effect of asset ceiling limit Total...

  • Page 113
    ... NCIB. (d) Available-for-sale financial assets reserve: 22. SHAREHOLDERS' EQUITY: (a) Capital stock: There are 400 million authorized preferred shares without par value, issuable in series, with rights and terms of each series to be fixed by the Board of Directors prior to the issue of such series...

  • Page 114
    ... compensation expense at December 31, 2012 related to stock-option plans was $11 million (2011 - $9 million), and will be recorded in the consolidated statements of income over the next four years as the options vest. (b) Restricted share units: Company. Under the terms of the plan, RSUs are issued...

  • Page 115
    ... Corporate Officers of the Company who are primarily responsible for planning, directing and controlling the Company's business activities. (i) Compensation: The compensation expense associated with key management for employee services was included in employee salaries and benefits as follows: 2012...

  • Page 116
    .... Rogers Media Inc. FIDO Solutions Inc. Rogers Communications Partnership Rogers Broadcasting Limited Rogers Publishing Limited Blue Jays Holdco Inc. Joint ventures and associates: Inukshuk Wireless Inc. Dome Productions Inc. Maple Leaf Sports & Entertainment The annual financial statement reporting...

  • Page 117
    ... on the consolidated financial position of the Company. (i) 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. The...

  • Page 118
    ... is the first quarterly dividend to reflect the newly increased $1.74 per share annual dividend level. (d) On January 14, 2013 the Company received initial funding on the accounts receivable securitization program of $400 million (note 19(f)). (b) 114 ROGERS COMMUNICATIONS INC. 2012 ANNUAL REPORT

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    NOTE S NOTES 2012 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 115

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    CORPORATE ANd ShAREhOLdER INFORmATION CORPORATE OFFICES Rogers Communications Inc. 333 Bloor Street East, 10th floor Toronto, Ontario M4W 1G9 416-935-7777 CUSTOmER SERVICE ANd PROdUCT INFORmATION 888-764-3771 or rogers.com ShAREhOLdER SERVICES If you are a registered shareholder and have inquiries ...

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    So what's next? If you're with Rogers, you'll be the first to know.

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    RogeRs.Com WiReless CaBle meDia