Cogeco 2007 Annual Report Download - page 72

Download and view the complete annual report

Please find page 72 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

18) RELATED PARTY TRANSACTIONS
Cogeco Cable Inc. is a subsidiary of COGECO Inc., which holds 32.5% of the Corporation’s equity shares, representing
82.8% of the Corporation’s voting shares. On September 1, 1992, Cogeco Cable Inc. executed a management agreement
with COGECO Inc. under which the parent company agreed to provide certain executive, administrative, legal, regulatory,
strategic and fi nancial planning services and additional services to the Corporation and its subsidiaries (the “Management
Agreement”). These services are provided by COGECO Inc.’s offi cers, including the President and Chief Executive Offi cer,
the Vice President, Finance and Chief Financial Offi cer and the Vice President, Corporate Affairs. No direct remuneration
is payable to such offi cers by the Corporation. However, the Corporation granted 319,647 stock options (31,743 in 2006)
to COGECO Inc.’s employees during fi scal year 2007, of which 262,400 stock options were conditional to the achievement
of certain yearly fi nancial objectives by the Portuguese subsidiary, Cabovisão—Televisão por Cabo, S.A. During fi scal 2007,
the Corporation charged COGECO Inc. an amount of $315,000 with regards to the Corporation’s options granted to
COGECO Inc.’s employees.
Under the Management Agreement, the Corporation pays monthly fees equal to 2% of its total revenue to COGECO Inc.
for the above mentioned services. In 1997, the management fee was capped at $7,000,000 per year, subject to annual
upward adjustment based on increases in the Consumer Price Index in Canada. This limit can be increased under certain
circumstances upon request to that effect by COGECO Inc. For fi scal year 2007, the limit and the amount paid to COGECO
Inc. in management fees was $8,568,000 ($8,392,000 in 2006). In addition, the Corporation reimburses COGECO Inc.’s
out-of-pocket expenses incurred with respect to services provided to the Corporation under the Management Agreement.
19) NON-MONETARY TRANSACTIONS
During fi scal year 2007, the Corporation has entered into non-monetary transactions for an amount of $4,206,000 ($701,000
in 2006). Related revenue and operating costs of an equivalent amount were recorded.
20) GOVERNMENTAL ASSISTANCE
The Corporation received an amount of $1,706,000 of tax credits related to research and development costs. These credits
were accounted for in deduction of the related expenses.
70 COGECO CABLE INC. 2007 Notes to Consolidated Financial Statements