Cogeco 2007 Annual Report Download - page 37

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Management’s Discussion and Analysis COGECO CABLE INC. 2007 35
REVENUE
For fi scal 2007, revenue amounted to $224.8 million, which is slightly below the Corporation’s 2007 guidelines provided
in the 2006 Annual Report considering the impact of the average exchange rate prevailing during the year. Monthly rate
increases of at most $3 (¤2) per HSI and Telephony customer, averaging $1 (¤0.70) per Basic Cable customer, took effect
on November 1, 2006, and a rate increase of $1 (¤0.70) per Basic Cable service customer took effect in March 2007.
The Portuguese ARPU stood at $63.66 for fi scal 2007 compared to $62.66 for one month of operations as a subsidiary
in 2006.
OPERATING COSTS
For fi scal 2007, Cabovisão’s operating costs amounted to $147 million, which is lower than the 2007 Corporation guidelines
provided in the 2006 Annual Report for its fi rst full year of operations as a subsidiary of Cogeco Cable, compared to
$11.9 million for the one month of operations in fi scal 2006.
OPERATING INCOME BEFORE AMORTIZATION
The operating income before amortization exceeded management’s objectives reaching $77.9 million for fi scal 2007,
$2.8 million better than the 2007 Corporation guidelines provided in the 2006 Annual Report, when excluding the effect
of the foreign exchange rate conversion used for the guidelines versus the current foreign exchange rate. The operating
margin stood at 34.6% compared to an objective of 33% for fi scal 2007.
NON-GAAP FINANCIAL MEASURES
This section describes non-GAAP fi nancial measures used by Cogeco Cable throughout this MD&A. It also provides
reconciliations between these non-GAAP measures and the most comparable GAAP fi nancial measures. These fi nancial
measures do not have standard defi nitions prescribed by Canadian GAAP and may not be comparable with similar measures
presented by other companies. These measures include “cash fl ow from operations” and “free cash fl ow”.
CASH FLOW FROM OPERATIONS
Cash fl ow from operations is used by Cogeco Cable’s management and investors to evaluate cash fl ow generated by operating
activities excluding the impact of changes in non-cash operating items. This allows the Corporation to isolate the cash
fl ow from operating activities from the impact of cash management decisions. Cash fl ow from operations is subsequently
used in calculating the non-GAAP measure, “free cash fl ow”. Cash fl ow from operations is calculated as follows:
YEARS ENDED AUGUST 31, 2007 2006
(in thousands of dollars) $ $
CASH FLOW FROM OPERATING ACTIVITIES 211,810 195,790
CHANGES IN NON-CASH OPERATING ITEMS 72,755 (1,051)
CASH FLOW FROM OPERATIONS 284,565 194,739