MANAGEMENT’S DISCUSSION  AN D ANALYSIS Useful Lives MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING AND DISCLOSURE CONTROLS AND PROCEDURES Other Information ACCOUNTING POLICIES Critical Accounting Estimates Fair Value Impairment of Assets Capitalizing Direct Labour, Overhead and Interest Management is responsible for establishing and maintaining adequate internal controls over financial reporting. Our internal control system is designed to give management and the Board reasonable assurance that our financial statements are prepared and fairly presented in accordance with Generally Accepted Accounting Principles. The system assures all transactions are authorized by management, assets are safeguarded and financial records are reliable. Management also takes steps to assure the flow of information and communication is effective, and monitors performance and our internal control procedures. Management assessed the effectiveness of our internal controls over financial reporting as of December 31, 2013, based on the criteria set out in the Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and concluded that it was effective at that date. Our independent auditor, KPMG LLP, issued an audit report stating that, as of December 31, 2013, we had effective internal controls over financial reporting in all material respects, based on the same criteria. All internal control systems, however, no matter how well designed, have inherent limitations, and even systems that have been determined to be effective can only provide reasonable assurance about the preparation and presentation of financial statements. There were no changes in 2013 that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. Management makes judgments, estimates and assumptions that affect how accounting policies are applied and the amounts we report in assets, liabilities, revenue and expenses and our related disclosure about contingent assets and liabilities. Significant changes in our assumptions, including those related to our future business plans and cash flows, could cause our actual results to be materially different. These estimates are critical to our business operations and understanding our results of operations. We may need to use additional judgment because of the sensitivity of the methods and assumptions used in determining the asset, liability, revenue and expense amounts. We use considerable judgment to estimate the fair value of tangible and intangible assets acquired and liabilities assumed in an acquisition, using the best available information including information from financial markets. This may include discounted cash flow analyses which utilize key assumptions such as discount rates, attrition rates, and terminal growth rates to estimate future earnings. Actual results may differ from these estimates. We depreciate the cost of property, plant and equipment over their estimated useful lives by considering industry trends and company- specific factors, including changing technologies and expectations for the in-service period of certain assets at the time. We reassess our estimates of useful lives annually or when circumstances change to ensure they match the anticipated life of the technology from a revenue-producing perspective. If technological change happens more quickly, or in a different way than anticipated, we might have to reduce the estimated life of property, plant and equipment, which could result in a higher depreciation expense in future periods or an impairment charge to write down the value. We will change our depreciation methods, depreciation rates or asset useful lives if they are different from our previous estimates. We recognize the effect of these changes in net income prospectively. Our intangible assets have increased mainly because of acquisitions. We amortize the cost of intangible assets with finite lives over their estimated useful lives. We use judgment to determine the life of these assets, analyzing all relevant factors, including the expected usage of the asset, the typical life cycle of the asset and anticipated changes in the market demand for the products and services that the asset helps generate. We do not amortize intangible assets with indefinite lives (spectrum and broadcast licences) because there is no foreseeable limit to the period that these assets are expected to generate net cash inflows for us. After review of the competitive, legal, regulatory and other factors, it is our view that these factors do not limit the useful lives of our spectrum and broadcast licences. The table below shows the impact that changing the useful lives of the finite-lived intangible assets by one year would have on annual net income: We will change our depreciation methods, depreciation rates or asset useful lives if they are determined to be different from our previous estimates. We recognize the effect of these changes in net income prospectively. Certain direct labour and indirect costs associated with the acquisition, construction, development or improvements of our networks are capitalized to property, plant and equipment. The capitalized amounts are calculated based on estimated costs of projects that are capital in nature, and are generally based on a rate per hour. In addition, interest costs are capitalized during development and construction of certain property, plant and equipment. Capitalized amounts increase the cost of the asset and result in a higher depreciation expense in future periods. Indefinite-lived intangible assets (including goodwill and spectrum and/ or broadcast licences) and definite life assets (including property, plant and equipment and other intangible assets) are assessed for impairment 2013 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 79 (In millions of dollars) Amortization Period Increase in Net Income if Life Increased by 1 year Decrease in Net Income if Life Decreased by 1 year Brand Names 5 – 20 years $ 1 $ (1) Customer Relationships 3 – 10 years $ 19 $ (31) Roaming Agreements 12 years $ 3 $ (4) Marketing Agreements 3 years $ 1 $ (2)