Cogeco 2009 Annual Report Download - page 78

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Consolidated financial statements COGECO CABLE INC. 2009 77
The following table summarizes the contractual maturities of the financial liabilities and related capital amounts:
2010 2011 2012 2013 2014 Thereafter Total
$ $ $ $ $ $ $
ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES
244,173 – – – – – 244,173
LONG-TERM DEBT
(1)
41,031 172,104 175,000 – 300,000 363,050 1,051,185
DERIVATIVE FINANCIAL INSTRUMENTS
CASH OUTFLOWS (CANADIAN DOLLAR)
– – – – – 201,875 201,875
CASH INFLOWS (CANADIAN DOLLAR
EQUIVALENT OF US DOLLAR)
– – – – – (208,050)
(208,050)
OBLIGATIONS UNDER CAPITAL LEASES
(2)
4,224 3,273 2,258 852 – – 10,607
289,428 175,377 177,258 852 300,000 356,875 1,299,790
(1) PRINCIPAL EXCLUDING OBLIGATIONS UNDER CAPITAL LEASES.
(2) INCLUDING INTEREST.
The following table is a summary of interest payable on long-term debt (excluding interest on capital leases) that are due for each of
the next five years and thereafter, based on the principal and interest rate prevailing on the current debt at August 31, 2009 and
their respective maturities:
INTEREST RATE RISK
The Corporation is exposed to interest rate risks for both fixed interest rate and floating interest rate instruments. Fluctuations in
interest rates will have an effect on the valuation and collection or repayment of these instruments. At August 31, 2009, all of the
Corporation’s long-term debt was at fixed rate, except for the Corporation’s Term Facility. However, on January 21, 2009, the
Corporation entered into a swap agreement with a financial institution to fix the floating benchmark interest rate with respect to the
Euro-denominated Term Loan facilities for a notional amount of €111.5 million. The interest swap rate to hedge the Term Loans has
been fixed at 2.08% until their maturity of July 28, 2011. The notional value of the swap will decrease in line with the amortization
schedule of the Term Loans. In addition to the interest swap rate of 2.08%, the Corporation will continue to pay the applicable
margin on these Term Loans in accordance with the Term Facility. The Corporation elected to apply cash flow hedge accounting on
this derivative financial instrument. The sensitivity of the Corporation’s annual financial expense to a variation of 1% in the interest
rate applicable to the Term Facility is approximately $0.6 million based on the current debt at August 31, 2009 and taking into
consideration the effect of the interest rate swap agreement.
FOREIGN EXCHANGE RISK
The Corporation is exposed to foreign exchange risk related to its long-term debt denominated in US dollars. In order to mitigate this
risk, the Corporation has established guidelines whereby currency swap agreements can be used to fix the exchange rates
applicable to its US dollar denominated long-term debt. All such agreements are exclusively used for hedging purposes.
Accordingly, on October 2, 2008, the Corporation entered into cross-currency swap agreements to set the liability for interest and
principal payments on its US$190 million Senior Secured Notes Series A issued on October 1, 2008. These agreements have the
1
2010 2011 2012 2013 2014 Thereafter Total
1
$ $ $ $ $ $ $
INTEREST PAYMENTS ON LONG-TERM DEBT
58,718 58,065 44,784 42,530 38,067 53,621 295,785
INTEREST PAYMENTS ON DERIVATIVE
FINANCIAL INSTRUMENTS
18,766
17,445
14,614
14,614
14,614
15,831
95,884
INTEREST RECEIPTS ON DERIVATIVE
FINANCIAL INSTRUMENTS
(16,400)
(15,816)
(14,564)
(14,564)
(14,564)
(15,776)
(91,684)
1
61,084 59,694 44,834 42,580 38,117 53,676 299,985