Rogers 2012 Annual Report Download - page 59

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MANAGEMENT’S DISCUSSION AND ANALYSIS
Consolidated Hedged Debt Position
(In millions of dollars, except percentages) December 31, 2012 December 31, 2011
U.S. dollar-denominated long-term debt U.S. $ 4,230 U.S. $ 4,230
Hedged with Debt Derivatives U.S. $ 4,230 U.S. $ 4,230
Hedged exchange rate 1.1340 1.1340
Percent hedged(1) 100.0% 100.0%
Amount of long-term debt at fixed rates:(2)
Total long-term debt Cdn $ 11,447 Cdn $ 10,597
Total long-term debt at fixed rates Cdn $ 11,447 Cdn $ 10,347
Percent of long-term debt fixed 100.0% 97.6%
Weighted average interest rate on long-term debt 6.06% 6.22%
(1) Pursuant to the requirements for hedge accounting under IAS 39, Financial Instruments: Recognition and Measurement, on December 31, 2012, and December 31, 2011, RCI
accounted for 91.7% of its Debt Derivatives as hedges against designated U.S. dollar-denominated debt. As a result, on December 31, 2012, 91.7% of U.S. dollar-
denominated debt is hedged for accounting purposes compared to 100% on an economic basis.
(2) Long-term debt includes the effect of the Debt Derivatives.
Mark-to-Market Value of Derivatives
In accordance with IFRS, we have recorded our Derivatives using an
estimated credit-adjusted mark-to-market valuation using treasury-
related discount rates together with an estimated bond spread for
the relevant term and counterparty for each Derivative. The
estimated credit-adjusted values of the Derivatives are subject to
changes in credit spreads of Rogers and its counterparties. At
December 31, 2012, details of the derivative instruments net liability
are as follows:
(In millions of dollars) U.S. $
notional Exchange
rate Cdn $
notional Fair
value
Debt Derivatives accounted for as cash flow hedges:
As assets $ 1,600 1.0252 $ 1,640 $ 34
As liabilities 2,280 1.2270 2,798 (561)
Debt Derivatives not accounted for as hedges:
As assets 350 1.0258 359 3
Net mark-to-market liability Debt Derivatives (524)
Expenditure Derivatives accounted for as cash flow hedges:
As assets 380 0.9643 366 13
Total (511)
Less net current liability portion (136)
Net long-term liability portion $ (375)
Long-Term Debt Plus Net Debt Derivative Liabilities
The aggregate of our long-term debt plus net Debt Derivative
liabilities at the estimated credit-adjusted mark-to-market valuation is
calculated as follows:
(In millions of dollars) December 31, 2012 December 31, 2011
Long-term debt(1) $ 10,858 $ 10,102
Net derivative liabilities
for Debt Derivatives(2) $ 524 $ 499
Total $ 11,382 $ 10,601
(1) Before deducting fair value decrement arising from purchase accounting and
deferred transaction costs.
(2) Includes current and long-term portions.
OUTSTANDING COMMON SHARE DATA
Set out below is our outstanding common share data at fiscal year-
end for 2012 and 2011. In 2012, we purchased an aggregate 9,637,230
Class B Non-Voting shares for cancellation pursuant to our NCIB for
approximately $350 million. For additional information, refer to
Note 21 to our 2012 Audited Consolidated Financial Statements.
Weighted average number of shares outstanding is used for the
purpose of the earnings per share calculation; refer to the section
“Key Performance Indicators and Non-GAAP Measures”.
December 31, 2012 December 31, 2011
Common shares(1)
Class A Voting 112,462,014 112,462,014
Class B Non-Voting 402,788,156 412,395,406
Total common shares 515,250,170 524,857,420
Options to purchase
Class B Non-Voting
shares
Outstanding options 8,734,028 10,689,099
Outstanding options
exercisable 4,638,496 5,716,945
(1) Holders of RCI’s 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.
2012 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 55