Cogeco 2006 Annual Report Download - page 27

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Management’s Discussion and Analysis COGECO CABLE INC. 2006 25
NET INCOME
In fi scal 2006, net income amounted to $65.6 million, or $1.64 per share, compared to $28.7 million, or $0.72 per share,
in fi scal 2005. Excluding the non-cash adjustment for income tax rate change amounting to $20 million in 2006, the net
income for 2006 would have been $45.6 million or $1.14 per share.
During fi scal years 2006 and 2005, stock options for 136,059 and 140,766 subordinate voting shares were granted, respectively.
The Corporation recorded compensation expense for options granted on or after September 1, 2003. As discussed in Note
11 on page 56, if compensation cost had been recognized using the fair-value-based method at the grant date for options
granted between September 1, 2001 and August 31, 2003, Cogeco Cable’s net income for fi scal 2006 and 2005 would
have been reduced by $81,000 and $384,000 respectively.
CASH FLOW ANALYSIS
YEARS ENDED AUGUST 31, 2006 2005
(in thousands of dollars) $ $
OPERATING ACTIVITIES
CASH FLOW FROM OPERATIONS 194,739 170,938
CHANGES IN NON-CASH OPERATING ITEMS 1,051 23,657
195,790 194,595
INVESTING ACTIVITIES(1) (739,022) (123,703)
FINANCING ACTIVITIES(1) 615,400 (70,831)
NET CHANGE IN CASH AND CASH EQUIVALENTS 72,168 61
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS DENOMINATED IN FOREIGN CURRENCIES (713) —)
CASH AND CASH EQUIVALENTS AT BEGINNING 61 —)
CASH AND CASH EQUIVALENTS AT END 71,516 61
( 1 ) EXCLUDES ASSETS ACQUIRED UNDER CAPITAL LEASES.
OPERATING ACTIVITIES
Cash fl ow from operations was greater than last year by $23.8 million or 13.9%, primarily due to the increase in operating
income before amortization.
Changes in non-cash operating items amounted to a cash infl ow of $1.1 million in fi scal 2006, compared to a cash infl ow
of $23.7 million in fi scal 2005. The decrease in cash infl ow from non-cash operating items is mainly related to an increase
in accounts payable and accrued liabilities of $1.7 million compared to an increase of $15.7 million the year before as a
result of the capital expenditures program completed late in fi scal 2005. Increases in accounts receivable and prepaid
expenses have also contributed to the lower cash infl ow in fi scal 2006 compared to fi scal 2005. On a per share basis, cash
fl ow from operations increased from $4.28 in fi scal 2005 to $4.87 in fi scal 2006, mainly as a result of improved operating
income before amortization.