Cogeco 2003 Annual Report Download - page 16

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MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial expense went up because of the issuance in
November 2001 of Senior Secured Notes bearing a higher average
interest rate than the Term Facility and higher short-term interest
rates in fiscal 2003 on the Term Facility. The average interest rate
was 7.3% in fiscal 2003 compared to 7.1% in fiscal 2002.
Unusual Item
During fiscal 2003, the Corporation recorded no unusual
items. In fiscal 2002, Cogeco Cable incurred an expense of
$4.9 million before income taxes as a result of staff reductions.
Income Taxes
Income taxes for fiscal 2003 amounted to
$7.2 million compared to $4.9 million for fiscal 2002.
Current income taxes of $3.5 million in fiscal 2003 mainly
relate to the large corporation tax, which is computed on
the basis of the Corporation’s capital base. Since the
Corporation has accumulated non-capital income tax
losses of about $171.5 million as at August 31, 2003, most
of the income taxes arising from earnings are deferred.
Net Income
In fiscal 2003, net income from recurring
operations amounted to $7.9 million or $0.20 per share,
compared to $7.2 million or $0.18 per share in fiscal 2002.
In fiscal 2003, net income amounted to $7.9 million or
$0.20 per share, compared to $3.8 million or $0.10
per share in fiscal 2002.
During fiscal 2003 and 2002, 141,020 and 161,909
stock options were granted, respectively. As discussed in
Note 11 on page 35, Cogeco Cable has valued the granted options
since September 1, 2001 to provide the impact as if the value
of these options had been expensed. Accordingly, expensing
the options granted would have reduced net income by $389,000
in fiscal 2003 compared to $314,000 in fiscal 2002.
(4) Cash Flow Analysis
Operating Activities
Cash flow from operating activities includes Cash Flow,
net changes in non-cash working capital items and unusual items.
Cash Flow is greater than last year by $9.1 million or 8.2%
due to the growth in Operating Income. The impact of changes
in non-cash working capital items amounted to a cash inflow
of $18.8 million in fiscal 2003, compared to a cash inflow of
$16.4 million in fiscal 2002. The increased cash inflow from
working capital items is mainly related to accounts payable
and accrued liabilities rising by $11.7 million and income tax
receivable declining by $7.0 million in fiscal 2003. Unusual items
required a cash outflow of $4.9 million in fiscal 2002. On a per
14 Cogeco Cable Inc. 2003
Cash Flow is greater than last year
by $9.1 million or 8.2% due to the
growth in Operating Income.
Years ended August 31, 2003 2002
Cash Flow Analysis
Operating Activities
Cash Flow $120,260 $111,173
Net changes in non-cash working capital items 18,787 16,362
Unusual item —(4,925)
$139,047 $122,610
Investing Activities $(116,234) $(149,311)
Financing Activities $(22,813) $23,324
(in thousands of dollars)
$50
$100
$150
$200
Declining Capital Expenditures
& Deferred Charges
(in millions of dollars)
2000 2001 2002 2003 2004
Guideline