NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2013 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 115 2013 2012 Current asset $ 73 $ 8 Long-term asset 148 42 221 50 Current liability (63) (144) Long-term liability (83) (417) (146) (561) Net mark-to-market asset (liability) $ 75 $ (511) December 31, 2013 US $ notional Exchange rate Cdn $ notional Fair value Debt Derivatives accounted for as cash flow hedges: As assets $ 4,250 1.0285 $ 4,371 $ 184 As liabilities 2,130 1.0769 2,294 (133) Net mark-to-market asset Debt Derivatives 51 Equity Derivatives not accounted for as cash flow hedges: As liabilities (13) Expenditure Derivatives accounted for as cash flow hedges: As assets 900 1.0262 923 37 Net mark-to-market asset $ 75 December 31, 2012 US $ 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 cash flow 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 Net mark-to-market liability $ (511) US $ Hedging effect Effective date US$ principal/ notional amount Maturity date Coupon rate Fixed hedged Cdn$ interest rate 1 Fixed Canadian equivalent March 7, 2013 US $ 500 2023 3.00% 3.60% $ 515 March 7, 2013 US $ 500 2043 4.50% 4.60% $ 515 Subtotal US $ 1,000 $ 1,030 October 2, 2013 US $ 850 2023 4.10% 4.59% $ 877 October 2, 2013 US $ 650 2043 5.45% 5.61% $ 671 Subtotal US $ 1,500 $ 1,548 1 Converting from a fixed US$ coupon rate to a weighted average Cdn$ fixed rate. New Debt Derivatives to Hedge Senior Notes Issued in 2013 The table below shows derivative instruments asset and derivative instruments liability reflected in our consolidated statements of financial position. In 2013, we recorded a $4 million increase to net income related to hedge ineffectiveness (2012 – $4 million decrease). We use cross currency interest exchange agreements to hedge the foreign exchange risk on all of the principal and interest obligations of our US dollar-denominated senior notes and debentures. We use Debt Derivatives for risk-management purposes only. We completed the following transactions related to our Debt Derivatives in 2013: At December 31, 2013, all of our US dollar-denominated long-term debt instruments were hedged against fluctuations in foreign exchange rates for accounting purposes (2012 – 91.7%). The tables below show our Derivatives net asset (liability) position at December 31, 2013 and 2012. Debt Derivatives Derivative Instruments GLYPH<129> entered into new Debt Derivatives to hedge senior notes issued during the year, GLYPH<129> terminated existing Debt Derivatives and entered into Debt Derivatives with different terms to hedge existing senior notes, and GLYPH<129> settled Debt Derivatives related to senior notes that matured during the year. All of our currently outstanding Debt Derivatives have been designated as effective hedges against foreign exchange risk for accounting purposes as described below.