Rogers 2014 Annual Report Download - page 117

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The table below shows derivative instruments asset and derivative
instruments liability reflected in our Consolidated Statements of
Financial Position.
(In millions of dollars) 2014 2013
Current asset 136 73
Long-term asset 788 148
924 221
Current liability (40) (63)
Long-term liability (11) (83)
(51) (146)
Net mark-to-market asset 873 75
In 2014, we recorded a $2 million decrease to net income related to
hedge ineffectiveness (2013 – $4 million increase).
Debt derivatives
We completed the following transactions related to our debt
derivatives in 2014 and 2013:
• entered into new debt derivatives to hedge senior notes issued;
• settled maturing debt derivatives in conjunction with the repayment
or repurchase of related senior notes; and
• terminated existing debt derivatives and entered into new debt
derivatives with different terms to hedge existing senior notes.
All of our currently outstanding debt derivatives have been designated
as effective hedges against specific foreign exchange risk for
accounting purposes as described above.
New debt derivatives to hedge new senior notes
During 2014 and 2013, we entered into the following debt derivatives
to hedge senior notes issued during the year.
(In millions of
dollars, except
for coupon and
interest rates)
Effective date
US$ Hedging effect
Principal/
notional
amount
(US$)
Maturity
date
Coupon
rate
Fixed
hedged
Cdn$
interest
rate 1
Equivalent
(Cdn$)
March 10, 2014 750 2044 5.00% 4.99% 832
March 7, 2013 500 2023 3.00% 3.62% 515
March 7, 2013 500 2043 4.50% 4.60% 515
Subtotal 1,000 1,030
October 2, 2013 850 2023 4.10% 4.59% 877
October 2, 2013 650 2043 5.45% 5.61% 671
Subtotal 1,500 1,548
Total for 2013 2,500 2,578
1Converting from a fixed US$ coupon rate to a weighted average Cdn$ fixed rate.
Matured debt derivatives
During 2014 and 2013, the following debt derivatives matured in
conjunction with the repayment or repurchase of the related senior
notes (see note 30).
(In millions of dollars)
Maturity date
Notional Amount
(US$)
Net cash
settlement (proceeds)
(Cdn$)
March 1, 2014 750 (61)
March 15, 2014 350 26
Total for 2014 1,100 (35)
June 17, 2013 350 104
Terminated and replaced debt derivatives
During 2013, we terminated existing debt derivatives and entered into new debt derivatives with different terms to hedge existing senior notes.
(In millions of dollars) Terminated debt derivatives New debt derivatives Hedging effect
Termination date
Notional
amount
(US$)
Original
maturity
date
Cash
settlement
(Cdn$) 1
Date
entered
Derivative
amount
(US$)
Net
maturity
date
Fixed
weighted
average 2
Fixed
Canadian
equivalent 3
March 6, 2013 350 2018 – March 6, 2013 350 2038 7.62% 359
Sept. 27, 2013 1,075 2014-2015 263 Sept. 27, 2013 1,075 2014-2015 7.42% 1,110
1Seenote30
2Converting from a fixed US$ coupon rate to a weighted average Cdn$ fixed rate
3Converting from a fixed US$ principal amount to a fixed Cdn$ principal amount.
The March 6, 2013 termination is related to debt derivatives hedging
the US$350 million senior notes due 2038 (2038 Notes). The debt
derivatives that were terminated on March 6, 2013 were not
designated as effective hedges for accounting purposes and had an
original term of 10 years to August 15, 2018. The new debt derivatives
hedge the foreign exchange risk associated with the principal and
interest obligations on the 2038 Notes to their maturity at market rates
ontherespectivedatesofthetransactionsandaredesignatedas
effective hedges for accounting purposes.
The September 27, 2013 termination is related to debt derivatives
hedging senior notes that were scheduled to mature in 2014 and
2015. Only the fixed foreign exchange rate differed between the new
debt derivatives and the terminated debt derivatives. All other terms
are the same as the terminated debt derivatives they replaced. Before
the debt derivatives were terminated on September 27, 2013, changes
in their fair value were recorded in other comprehensive income and
were periodically reclassified to net income to offset foreign exchange
gains or losses on the related debt or to modify interest expense to its
hedged amount. On the termination date, the balance in the hedging
reserve related to these debt derivatives was a $10 million loss.
$1 million of this related to future periodic exchanges of interest and
will be recorded in net income over the remaining life of the related
2014 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 113