Cogeco 2007 Annual Report Download - page 66

Download and view the complete annual report

Please find page 66 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

12) CAPITAL STOCK (continued)
DEFERRED SHARE UNIT PLAN
In April 2007, the Corporation established a deferred share unit plan (“DSU Plan”) to assist in the attraction and retention
of qualifi ed individuals to serve on the Board of the Corporation. Each existing or new member of the Board may elect to
be paid a percentage of the annual retainer in the form of deferred share units (“DSUs”) with the balance, if any, being
paid in cash. The number of DSUs that a member is entitled to receive is based on the average closing price of the
subordinate shares on the Toronto Stock Exchange for the twenty consecutive trading days immediately preceding the day
preceding the date of grant. Dividend equivalents are awarded with respect to DSUs in a member’s account on the same
basis as if the member was a shareholder of record of subordinate shares on the relevant record date, and the dividend
equivalents are credited to the individual’s account as additional DSUs. DSUs are redeemable upon an individual ceasing
to be a member of the Board or in the event of the death of a member.
13) FOREIGN CURRENCY TRANSLATION ADJUSTMENT
The change in the foreign currency translation adjustment included in shareholders’ equity is the result of the fl uctuation
in the exchange rates on translation of net investments in self-sustaining foreign subsidiaries and foreign exchange gains or
losses related to long-term debt denominated in foreign currency used to hedge net investments. The net change in foreign
currency translation adjustment for 2007 and 2006 is as follows:
2007 2006
(amounts are in thousands of dollars) $ $
EFFECT OF EXCHANGE RATE VARIATION ON TRANSLATION
OF NET INVESTMENTS IN SELF-SUSTAINING FOREIGN SUBSIDIARIES (3,512) (12,412)
EFFECT OF EXCHANGE RATE VARIATION ON TRANSLATION OF LONG-TERM DEBT
DESIGNATED AS HEDGE OF NET INVESTMENTS IN SELF-SUSTAINING SUBSIDIARIES
NET OF INCOME TAXES OF $18,000 ($1,703,000 IN 2006) 402 7,960
(3,110) (4,452)
14) FINANCIAL INSTRUMENTS
FAIR VALUE
The Corporation uses the following methods and assumptions to evaluate fair market value of fi nancial instruments:
Cash and cash equivalents, restricted cash, accounts receivable and accounts payable and accrued liabilities
The carrying amount in the consolidated balance sheets approximates fair value because of the short-term nature of these
instruments.
Long-term debt
a) Financial expense under the terms of the Corporation’s Term Facility is based on bankers’ acceptance, LIBOR, EURIBOR,
bank prime rate loan or U.S. base rate loan plus stamping fees. Therefore, the carrying value is considered to represent fair
market value for the Term Facility.
b)
The fair value of the Senior Secured Debentures Series 1, Senior Secured Notes Series A and B and Second Secured Debentures
Series A is based upon current trading values for similar fi nancial instruments.
64 COGECO CABLE INC. 2007 Notes to Consolidated Financial Statements