Cogeco 2002 Annual Report Download - page 36

Download and view the complete annual report

Please find page 36 of the 2002 Cogeco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 45

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45

Cogeco Cable Inc. 35
14. Financial instruments (continued)
Long-term debt
a) Financial expense under the terms of the Corporation’s Term Facility is based upon bankers’ acceptance
or bank prime rates. Therefore, carrying value is considered to represent fair market value for the Term
Facility.
b) The carrying values of obligations under capital leases and other items of the long-term debt approximate
fair value of these financial instruments.
c) 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.
d) The fair value of the derivative financial instruments is based upon available information about the financial
instruments and market conditions.
The estimated fair values of long-term debt instruments and derivative instruments are as follows:
2002 2001
Carrying Estimated Carrying Estimated
amount fair value amount fair value
Long-term debt $ 821,678 $ 787,255 $ 805,572 $ 799,205
Derivative financial instruments —
Asset (liability) position — 539 351 (778)
Fair value estimates are made at a specific point in time, based on relevant market information and inform a t i o n
about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters
of significant judgement and, therefore, cannot be determined with precision. Changes in assumptions could
significantly affect the estimates.
Credit risks
The Corporation’s credit risk arises from the possibility that counterparts to the cross-currency swap agreements
and currency swap agreement may default on their obligations. The Corporation reduces risk by completing
transactions with financial institutions that carry a credit rating equal or superior to A+. In addition, since the
Corporation has a large and diversified clientele, credit risk concentration from customers is minimal.
15. Statements of cash flow
a) Changes in non-cash working capital items
2002 2001
Accounts receivable $ 2,114 $ (8,616)
Income tax receivable (5,129) 3,170
Prepaid expenses 2,791 6,147
Accounts payable and accrued liabilities 17,062 (10,615)
Deferred and prepaid income (358) 5,011
Working capital deficiency related to business acquisitions —(4,592)
$ 16,480 $ (9,495)
b) Fixed assets
During the year, fixed assets acquisitions amounted to $122,105,000 ($166,369,000 in 2001), $782,000 ($777,000 in
2001) of which were acquired through leases. Disbursements for the purchase of fixed assets totaled
$121,323,000 ($165,592,000 in 2001).
c) Other information
2002 2001
Financial expense paid $ 46,767 $ 40,705
Income taxes paid 4,680 3,348
Shares issued for the acquisition of cable systems —145,293