Cogeco 2007 Annual Report Download - page 38

Download and view the complete annual report

Please find page 38 of the 2007 Cogeco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 88

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88

36 COGECO CABLE INC. 2007 Management’s Discussion and Analysis
FREE CASH FLOW
Free cash fl ow is used by Cogeco Cable’s management and investors to measure the Corporation’s ability to repay Indebtedness,
distribute capital to its shareholders and to fi nance its growth. Free cash fl ow is calculated as follows:
YEARS ENDED AUGUST 31, 2007 2006
(in thousands of dollars) $ $
CASH FLOW FROM OPERATIONS 284,565 194,739
ACQUISITION OF FIXED ASSETS (220,882) (140,941)
INCREASE IN DEFERRED CHARGES (30,042) (20,607)
ASSETS ACQUIRED UNDER CAPITAL LEASES—AS PER NOTE 15 B) ON PAGE 66 (3,084) (2,898)
FREE CASH FLOW 30,557 30,293
THREE-YEAR ANNUAL FINANCIAL HIGHLIGHTS
AND QUARTERLY FINANCIAL HIGHLIGHTS
THREE-YEAR FINANCIAL HIGHLIGHTS
YEARS ENDED AUGUST 31, 2007 2006 2005
(in thousands of dollars, except per share data) $ $ $
REVENUE 938,880 620,001 554,404
OPERATING INCOME BEFORE AMORTIZATION 370,753 252,978 227,521
NET INCOME 84,691 65,556 28,721
FREE CASH FLOW 30,557 30,293 45,267
TOTAL ASSETS 2,714,339 2,602,603 1,755,796
LONG-TERM LIABILITIES 1,290,095 1,420,378 914,315
PER SHARE DATA
NET INCOME PER SHARE
BASIC(1) 1.96 1.64 0.72
DILUTED(1) 1.94 1.63 0.72
DIVIDEND(1) 0.24 0.16 0.10
(1) PER MULTIPLE VOTING SHARE AND PER SUBORDINATE VOTING SHARE.
QUARTERLY FINANCIAL HIGHLIGHTS
Cogeco Cable’s operating results are not generally subject to material seasonal fl uctuations. However, the loss in Basic Cable
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 in Canada.
Furthermore, the third and fourth quarter’s operating margin is usually higher as no 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 was reached in the second quarter of fi scal 2007 and the third quarter of
fi scal 2006, Cogeco Cable has paid no management fees in the fourth quarters of fi scal 2007 and 2006 as well as the
third quarter of fi scal 2007.