Cogeco 2009 Annual Report Download - page 44

Management’s discussion and analysis COGECO CABLE INC. 2009 43
OPERATING RESULTS
CANADA EUROPE CONSOLIDATED
QUARTERS ENDED AUGUST 31, 2009 2008
(1)
2009 2008
(1)
2009 2008
(1)
(in thousands of dollars, except percentages) $ $ $ $ $ $
REVENUE 255,590 220,760 52,217 64,148 307,807 284,908
OPERATING COSTS 115,612 123,700 41,715 39,208 157,327 162,908
OPERATING INCOME BEFORE AMORTIZATION 139,978 97,060 10,502 24,940 150,480 122,000
OPERATING MARGIN 54.8% 44.0% 20.1% 38.9% 48.9% 42.8%
(1) CERTAIN COMPARATIVE FIGURES HAVE BEEN RECLASSIFIED TO CONFORM TO THE CURRENT YEAR’S PRESENTATION. FINANCIAL INFORMATION FOR THE PREVIOUS
YEAR HAS BEEN RESTATED TO REFLECT THE PRESENTATION OF FOREIGN EXCHANGE GAINS OR LOSSES AS FINANCIAL EXPENSE INSTEAD OF OPERATING COSTS.
Fiscal 2009 fourth-quarter consolidated revenue improved by $22.9 million, or 8%, to reach $307.8 million, when compared to the
prior year. Driven by increased RGU combined with rate increases and the CDS acquisition in the last quarter of fiscal 2008, fourth-
quarter Canadian operations revenue went up by $34.8 million, or 15.8%, to reach $255.6 million. Fiscal 2009 fourth-quarter
European operations revenue decreased by $11.9 million, or 18.6%, at $52.2 million as a result of the difficult competitive
environment and intense promotions and advertising initiatives from competitors in the Portuguese market despite an increase in
RGU in the quarter and the favourable impact of the appreciation of the Euro over the Canadian dollar. Revenue from the European
operations in the local currency for the fourth quarter amounted to €33.3 million, a decrease of €7.3 million, or 17.9% when
compared to the prior year.
For the fourth quarter of fiscal 2009, operating costs decreased by $5.6 million at $157.3 million, a decrease of 3.4% compared to
the prior year. Operating costs decreased mostly due to the favourable impact of $19.8 million from the Part II licence fee settlement
agreement, partly offset by the impact of servicing additional RGU and the CDS acquisition in Canada, and in Europe, due to the
appreciation of the Euro over the Canadian dollar and an increase in the level of uncollectible customer accounts. Cabovisão has
put together initiatives at the end of the second quarter of 2009 to better manage its collection processes which management
expects will have a favourable impact on the level of bad debts in fiscal 2010.
Fiscal 2009 fourth-quarter operating income before amortization increased by $28.5 million, or 23.3%, to reach $150.5 million, as a
result of the favourable impact of $19.8 million from the Part II licence fee settlement agreement and RGU growth, the recent
acquisitions, various rate increases generating additional revenues and the operating cost decreases in the period. The operating
margin in Canada improved to 54.8% from 44%, mainly due to the $19.8 million impact from the Part II licence fee settlement
agreement, which offset the decrease in the European operating margin to 20.1% from 38.9%. The consolidated operating margin
for the fourth quarter increased to 48.9% compared to 42.8% in the fourth quarter of fiscal 2008.
CASH FLOW ANALYSIS
QUARTERS ENDED AUGUST 31, 2009 2008
(in thousands of dollars) $ $
OPERATING ACTIVITIES
CASH FLOW FROM OPERATIONS 115,219 99,547
CHANGES IN NON-CASH OPERATING ITEMS
66,819 44,201
182,038 143,748
INVESTING ACTIVITIES(1)
(97,987) (289,008)
FINANCING ACTIVITIES(1)
(87,651) 100,138
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS DENOMINATED IN FOREIGN CURRENCIES
546 6
NET CHANGE IN CASH AND CASH EQUIVALENTS (3,054) (45,116)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 42,512 81,487
CASH AND CASH EQUIVALENTS, END OF PERIOD 39,458 36,371
(1) EXCLUDES ASSETS ACQUIRED UNDER CAPITAL LEASES.