Cogeco 2010 Annual Report Download - page 41

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40 COGECO CABLE INC. 2010 Management’s Discussion and Analysis (MD&A)
Consolidated
Projections
Fiscal 2011
Actuals
Fiscal 2010
(in millions of dollars, except percentages and RGU growth) $ $
Financial guidelines
Revenue 1,340 1,281
Operating income before amortization 530 510
Operating margin 39.6% 39.8%
A
mortization 275 259
Financial expense 70 65
Current income taxes 65 (41)
Net income 120 157
Capital expenditures and increase in deferred charges 340 320
Free cash flow 55 175
Net customer addition guidelines
RGU growth 250,000 287,111
Non-GAAP financial measures
This section describes non-GAAP financial measures used by Cogeco Cable throughout this MD&A. It also provides reconciliations between
these non-GAAP measures and the most comparable GAAP financial measures. These financial measures do not have standard definitions
prescribed by Canadian GAAP and therefore, may not be comparable to similar measures presented by other companies. These measures
include “cash flow from operations”, “free cash flow”, “operating income before amortization”, “operating margin”, “adjusted net income” and
“adjusted earnings per share”.
Cash flow from operations and free cash flow
Cash flow from operations is used by Cogeco Cable’s management and investors to evaluate cash flows generated by operating activities
excluding the impact of changes in non-cash operating items. This allows the Corporation to isolate the cash flow from operating activities from
the impact of cash management decisions. Cash flow from operations is subsequently used in calculating the non-GAAP measure, “free cash
flow”. Free cash flow is used by Cogeco Cable’s management and investors to measure the Corporation’s ability to repay debt, distribute
capital to its shareholders and finance its growth.
The most comparable Canadian GAAP financial measure is cash flow from operating activities. Cash flow from operations is calculated as
follows:
Quarters ended August 31, Years ended August 31,
2010 2009
(1)
2010 2009
(1)
(in thousands of dollars) $ $ $ $
Cash flow from operating activities 194,414 175,450 417,284 415,169
Changes in non-cash operating items (67,390) (66,819) 77,530 (30,963)
Cash flow from operations 127,024 108,631 494,814 384,206
(1) Certain comparative figures have been reclassified to conform to the current year’s presentation. Financial information has been restated to reflect the
application of the CICA Handbook Section 3064. Please refer to the “Critical accounting policies and estimates” section on page 11 for more details.