Cogeco 2007 Annual Report Download - page 30

28 COGECO CABLE INC. 2007 Management’s Discussion and Analysis
Dividends of $0.24 per share, totalling $10.3 million, were paid during fi scal 2007 compared to dividends of $0.16 per
share, totalling $6.4 million, the year before.
FINANCIAL POSITION
Since August 31, 2006, there have been major changes to “Fixed assets”, “Goodwill”, “Intangible assets”, “Accounts
receivable”, “Accounts payable and accrued liabilities”, “Cash and cash equivalents”, “Foreign currency translation
adjustment”, “Future income tax liabilities”, “Future income tax assets”, “Indebtedness” and “Capital stock”.
The $98 million rise in fi xed assets is mainly related to increased capital expenditures to sustain RGU growth and by the
appreciation of the euro currency over the Canadian dollar. The decrease of $79.5 million in goodwill stems from the
fi nalization of the purchase price allocation of the acquisition of Cabovisão, which gave rise to the valuation at an amount
of $71.7 million of intangible assets, partly offset by the appreciation of the euro currency over the Canadian dollar. The
$3.2 million increase in accounts receivable is essentially due to an increase in the general level of receivables related to
the revenue growth and to the appreciation of the euro currency over the Canadian dollar. The $72.6 million and $7.3 million
reductions in accounts payable and accrued liabilities and cash and cash equivalents respectively, are related to payments
made with regards to the acquisition of Cabovisão. The $1.3 million increase in foreign currency translation adjustment is
the result of the appreciation of the euro currency over the Canadian dollar. The $48.4 million increase in future income
tax liabilities is mainly due to the recognition of future income taxes of $29.4 million related to intangible assets, and to
the difference between fair market value and net book value of tangible assets acquired in Portugal and by the growth in
operating income before amortization for the Canadian operations. The $18 million in future income tax assets is related
to non-capital loss carry forwards for the Canadian operations that will benefi t the Corporation in the coming year. Finally,
Indebtedness decreased by $289.1 million and capital stock increased by $353.9 million as a result of the factors previously
discussed in the “Cash Flow Analysis” section on page 24.
CAPITAL RESOURCES AND LIQUIDITY
CAPITAL STRUCTURE
The table below summarizes debt-related fi nancial ratios over the last two fi scal years and the fi scal 2008 guidelines:
YEARS ENDED AUGUST 31, 2008 2007 2006
GUIDELINES(1)
$ $ $
AVERAGE COST OF INDEBTEDNESS 6.5% 6.3% 6.5%
FIXED RATE INDEBTEDNESS 55% 55% 53%
AVERAGE TERM: LONG-TERM DEBT 1.9 years 2.9 years 3.7 years
NET INDEBTEDNESS(2)/SHAREHOLDERS’ EQUITY 0.7 0.8 1.7(3)
NET INDEBTEDNESS(2)/OPERATING INCOME BEFORE AMORTIZATION 2.1 2.6 4.9(3)
OPERATING INCOME BEFORE AMORTIZATION/FINANCIAL EXPENSE 5.9 4.4 4.4(3)
(1) SEE THE “FISCAL 2008 FINANCIAL GUIDELINES” SECTION ON PAGE 38 FOR FURTHER DISCUSSION.
(2) INDEBTEDNESS NET OF CASH AND CASH EQUIVALENTS.
(3) CABOVISÃO’S 2006 FINANCIAL RESULTS ARE FOR A ONE-MONTH OPERATION.