Cogeco 2005 Annual Report Download - page 29

THREE-YEAR ANNUAL AND
QUARTERLY FINANCIAL HIGHLIGHTS
Three-Year Financial Highlights
The 2003 financial highlights have been restated to reflect the
impact of the adoption of new accounting standards implemented
in 2004 regarding the timing of revenue recognition and certain
related costs and the classification of certain items such as revenue,
expense or capitalized costs. See the “Adoption of New Accounting
Standards – Revenue Recognition” section on page 16 for a detailed
description of these new accounting standards.
Years ended August 31, 2005 2004 2003
(in thousands of dollars, (restated)
except per share data) $$$
Revenue 554,404 526,480 489,194
Operating Income 227,521 203,246 175,609
Net income (loss) 28,721 (32,194) (124)
Per share data
Net income (loss) per share
Basic and diluted 0.72 (0.81) 0.00
Dividend
(1)
0.10 0.00 0.00
Free Cash Flow 45,267 43,534 2,406
Total assets 1,755,796 1,761,379 1,802,744
Long-term liabilities 914,315 956,956 972,087
(1)
Per multiple voting share and per subordinate voting share.
Quarterly Financial Highlights (Unaudited)
Cogeco Cable’s operating results are not generally subject to material
seasonal fluctuations. However, the loss in basic service customers
is usually greater, and the addition of HSI service customers is
generally lower in the third quarter, mainly because students leave
their campus at the end of the school year. Cogeco Cable offers its
services in several university and college towns such as Kingston,
Windsor, St.Catharines, Hamilton, Peterborough, Trois-Rivières
and Rimouski. Furthermore, the fourth quarter’s Operating Margin
is usually higher as lower management fees are paid to COGECO Inc.
Under the Management Agreement, Cogeco Cable pays a fee equal
to 2% of its total revenue subject to a maximum amount. Since the
maximum amount has been reached early in the fourth quarter of
fiscal 2004, and late in the third quarter of fiscal 2005, Cogeco Cable
has paid less or no management fees in the fourth quarters.
Cogeco Cable’s revenue has consistently grown over the last eight
quarters mainly as a result of improved HSI and digital services
penetration and rate increases. Furthermore, Cogeco Cable’s focus
on improving its Operating Margin has resulted in the margin
and cash flow from operations increasing every quarter, except
for the first quarters of fiscal 2004 and 2005 because management
fees paid to COGECO Inc. are higher in the first quarter. It is this
consistent financial performance quarter over quarter that has led
to strong shareholder value creation. The large net loss in the first
quarter of fiscal 2004 was attributable to non-cash adjustments
for amortization and income taxes totaling $41.6 million. Those
non-cash adjustments are discussed in “Fixed Charges” and “Income
Taxes” on page 22.
2005 2004
Quarters ended
(1)
Nov. 30 Feb. 28 May 31 Aug. 31 Nov. 30 Feb. 29 May 31 Aug. 31
(in thousands of dollars, (restated) (restated)
except percentages and per share data) $$$$$$$$
Revenue 135,766 138,389 140,071 140,178 129,489 131,574 132,364 133,053
Operating costs 79,857 80,328 79,054 79,458 79,713 78,576 78,419 78,500
Management fees –
COGECO Inc. 2,715 2,764 2,707 — 2,562 2,585 2,616 263
Operating Income 53,194 55,297 58,310 60,720 47,214 50,413 51,329 54,290
Operating Margin 39.2% 40.0% 41.6% 43.3% 36.5% 38.3% 38.8% 40.8%
Income (loss) before income taxes 7,056 9,469 12,960 17,256 (11,004) 3,291 4,845 7,943
Net income (loss) 3,827 5,613 8,245 11,036 (41,103) 588 1,852 6,469
Cash flow from operations 39,192 41,675 43,562 46,509 31,882 35,278 36,593 41,025
Net income (loss) per share
(2)
0.10 0.14 0.21 0.28 (1.03) 0.01 0.05 0.16
(1)
The addition of quarterly information may not correspond to the annual total given rounding.
(2)
Basic and diluted.
Cogeco Cable Inc. 2005
27
Management’s Discussion and Analysis