Cogeco 2003 Annual Report Download - page 41

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Cogeco Cable Inc. 2003 39
16 Commitments and contingencies
Commitments
As at August 31, 2003, the Corporation and its subsidiaries are committed under lease agreements and other long term contracts
to make annual payment as follows:
2009
2004 2005 2006 2007 2008 and thereafter
$18,830 $ 16,196 $ 15,684 $ 13,472 $ 12,640 $ 15,381
Contingencies
The Corporation and its subsidiaries are involved in matters involving litigation arising out of the ordinary course and conduct of
its business. Although such matters cannot be predicted with certainty, management does not consider the Corporation’s exposure
to litigation to be material to these financial statements.
Disclosure of guarantees
In the normal course of business, the Corporation enters into agreements containing features that meet the criteria for a
guarantee including the following:
Businesses and assets disposal
In connection with the sale of businesses or assets, in addition to possible indemnification relating to failure to perform covenants
and breach of representations and warranties, the Corporation has agreed to indemnify the purchaser against claims related to
events which occurred prior to the sale. The term and amount of such indemnification will sometimes be limited by the agreement.
The nature of these indemnification agreements prevents the Corporation from estimating the maximum potential liability required
to be paid to guaranteed parties. In management’s opinion, the likelihood that a significant liability will be incurred under these
obligations is low. As at August 31, 2003, no liability has been recorded associated with these indemnifications.
Long-term debt
Under the terms of the Senior Secured Notes and the Second Secured Debentures Series A, the Corporation has agreed to
indemnify the other parties against changes in regulation relative to withholding taxes. These indemnifications extend for the
term of the related financings and do not provide any limit on the maximum potential liability. The nature of the indemnification
agreement prevents the Corporation from estimating the maximum potential liability it could be required to pay. As at
August 31, 2003, no liability has been recorded associated with these indemnifications.
17 Related party transactions
Cogeco Cable Inc. is a subsidiary of COGECO Inc., which holds 39.3% of the Corporation’s participating shares. COGECO Inc.
and the Corporation executed, on September 1, 1992, a management agreement under which the parent company agreed to
provide certain management, administrative, financial and strategic planning services. Under this agreement, the Corporation
pays management fees equal to 2% of its total revenue subject to a maximum amount. Management fee payments, as at
August 31, 2003, are limited to $7,869,000 ($7,710,000 in 2002) and are indexed annually based on the Consumer Price Index.
This limit could be increased under certain circumstances. During the year, the Corporation paid management fees amounting
to $7,869,000 ($7,710,000 in 2002) to COGECO Inc.
18 Comparative figures
Certain comparative figures have been reclassified in order to conform to the presentation adopted in 2003.