Cogeco 2004 Annual Report Download - page 46

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
44 Cogeco Cable Inc. 2004
10 LOSS PER SHARE
The following table provides a reconciliation between basic and diluted loss per share:
2004 2003
(amounts are in thousands of dollars, except number of shares and per share data) (restated)
$$
Net loss 32,194 124
Weighted average number of multiple voting
and subordinate voting shares outstanding 39,901,595 39,881,871
Effect of dilutive stock options
(1)
——
Weighted average number of diluted multiple voting
and subordinate voting shares outstanding 39,901,595 39,881,871
Loss per share
Basic and diluted 0.81 0.00
(1)
The weighted average dilutive potential number of subordinate voting shares, which were antidilutive for the year ended August 31, 2004, amounted to 105,910
shares
(59,001 shares in 2003). Stock options to purchase 233,724 shares (233,615 shares in 2003) for the year ended August 31, 2004, were outstanding, but were
not included
in the computation of diluted loss per share since the exercise price of the stock options was greater than the average share price of the subordinate
voting shares,
and, therefore, the effect would have been antidilutive.
11 FINANCIAL INSTRUMENTS
Description of derivative financial instruments
Foreign exchange forward contracts
In June 2003, the Corporation entered into foreign exchange forward contracts to hedge a portion of anticipated purchases in US dollars.
These foreign exchange forward contracts expired at different dates until August 16, 2004. The exchange rate of these forward contracts
was CDN $1.3873. As at August 31, 2003, these foreign exchange forward contracts had a nominal value of $13,301,000.
Fair value
The Corporation uses the following methods and assumptions to evaluate fair market value of financial instruments:
Accounts receivable, bank indebtedness and accounts payable and accrued liabilities
The carrying amount in the consolidated balance sheets approximates fair value because of the short-term nature of these instruments.
Long-term debt
a)
Financial expense under the terms of the Corporation’s Term Facility is based upon bankers’ acceptance plus stamping fees or
bank prime rates plus a prime margin. Therefore, carrying value is considered to represent fair market value for the Term Facility.
b) The fair value of the Senior Secured Debentures Series 1, Senior Secured Notes Series A and B, and Second Secured Debentures Series A,
is based upon current trading values for similar financial instruments.
c)
The carrying values of obligations under capital leases and other items of the long-term debt approximate fair value of these financial
instruments due to their terms.
d)
The fair value of the derivative financial instruments is based upon available information about the financial instruments and
market
conditions.