Cogeco 2003 Annual Report Download - page 22

MANAGEMENT’S DISCUSSION AND ANALYSIS
(8) Accounting Policies
Non-GAAP Measures
The following measures are commonly used in the
telecommunications industry for comparison purposes and
to assess the financial performance of the ongoing business.
These measures are not defined terms under GAAP.
Adoption of New Accounting Standards
in Fiscal 2003
Disclosure of guarantees
In February 2003, the Canadian Institute of Chartered
Accountants (“CICA”) issued Accounting Guideline 14 (“AcG-14”),
Disclosure of Guarantees, which requires a guarantor to disclose
the significant details of guarantees that have been given.
Information required under AcG-14 is presented in note 16
on page 39.
Adoption of New Accounting Standards
in Fiscal 2004
Hedging relationships
In December 2001, the CICA issued AcG-13, Hedging
relationships, which establishes the criteria for identification,
documentation and effectiveness of hedging relationships for
the purpose of applying hedge accounting. The Emerging Issues
Committee also issued in June 2002 EIC-28, Accounting for
trading speculative or non-hedging derivative financial
instruments. This EIC establishes that a derivative financial
instrument that does not qualify for hedge accounting under
AcG-13, should be recognized on the balance sheet at fair value,
with changes in fair value recognized in net income. These new
recommendations apply to financial instruments in effect in fiscal
years beginning on or after July 1, 2003. Since the Corporation
plans to comply with the requirements of AcG-13, the adoption of
these new recommendations is not expected to have a material
impact on the consolidated financial statements.
Impairment of long-lived assets
In December 2002, the CICA issued Handbook Section
3063, Impairment of long-lived assets, which modifies existing
guidance on long-lived assets impairment measurements and
establishes standards for the recognition, measurement and
disclosure of the impairment of long-lived assets. The new
standards require that an impairment loss be recognized when the
carrying amount of an asset exceeds the sum of the undiscounted
cash flows expected from this asset. These new recommendations
are effective for fiscal years beginning on or after April 1, 2003.
The Corporation expects that the adoption of these new
recommendations will not have a material impact on the
Corporation’s consolidated financial statements.
20 Cogeco Cable Inc. 2003
Measure
ARPU
Operating
Income
Cash Flow
Free Cash
Flow
Indebtedness
Definition
Average monthly revenue per basic service
customer is computed on the basis of annual
revenue divided by average basic service
customers during the year divided by twelve.
Operating income before depreciation and
amortization and unusual item.
Cash flow from operating activities before
changes in non-cash working capital items
and unusual item.
Free Cash Flow is defined as Cash Flow
less capital expenditures (including assets
acquired under capital leases) and increase
in deferred charges.
The sum of bank indebtedness, long-term debt
and deferred credit net of cash and cash
equivalents. The deferred credit represents
the amount payable under cross-currency
swaps entered into by Cogeco Cable to hedge
US dollars denominated long-term debt.