Cogeco 2011 Annual Report Download - page 75

Download and view the complete annual report

Please find page 75 of the 2011 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 89

  • 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
  • 89

74 COGECO CABLE INC. 2011 Consolidated financial statements
2011 2010
(in thousands of dollars) $ $
Defined benefit pension costs
Current service cost 1,310 1,012
Past service cost 99 11
Interest cost 1,101 994
A
ctual return on plan assets (158) (636)
A
ctuarial loss on obligation 2,106 1,867
Cost before adjustments to recognize the long-term nature of employee future benefits 4,458 3,248
Difference between past service cost and amortization of past service cost (13) 74
Difference between expected return and actual return on plan assets (588) (58)
Difference between actuarial loss and amortization of net actuarial loss (1,815) (1,756)
Net benefit cost 2,042 1,508
Plan assets consist of:
2011 2010
% %
Equity securities 61 54
Debt securities 38 45
Other 1 1
Total 100 100
The significant weighted average assumptions used in measuring the Corporation’s pension and other obligations are as follows:
2011 2010
% %
Accrued benefit obligation
Discount rate 4.70 5.50
Rate of compensation increase 3.00 3.25
Defined benefit pension costs
Discount rate 5.50 6.25
Expected long-term rate of return on plan assets 6.25 6.75
Rate of compensation increase 3.25 4.50
17. Financial and capital management
A) Financial management
Management’s objectives are to protect the Corporation and its subsidiaries against material economic exposures and variability of results, and
against certain financial risks including credit risk, liquidity risk, interest rate risk and foreign exchange risk.
Credit risk
Credit risk represents the risk of financial loss for the Corporation if a customer or counterparty to a financial asset fails to meet its contractual
obligations. The Corporation is exposed to credit risk arising from the derivative financial instruments, cash and cash equivalents and trade
accounts receivable, the maximum exposure of which is represented by the carrying amounts reported on the balance sheet.
Credit risk from the derivative financial instruments arises from the possibility that counterparties to the cross-currency swaps agreements
may default on their obligations in instances where these agreements have positive fair values for the Corporation. The Corporation reduces
this risk by completing transactions with financial institutions that carry a credit rating equal to or superior to its own credit rating. The
Corporation assesses the creditworthiness of the counterparties in order to minimize the risk of counterparties default under the agreements. At
August 31, 2011, management believes that the credit risk relating to its swaps is minimal, since the lowest credit rating of the counterparties to
the agreements was A.