Cogeco 2012 Annual Report Download - page 27

26 COGECO CABLE INC. 2012 Management’s Discussion and Analysis (MD&A)
FINANCIAL POSITION
During the year ended August 31, 2012, there have been significant changes to the balances of “cash and cash equivalents”, “income taxes
receivable”, “property, plant and equipment”, “trade and other payables”, “income tax liabilities”, “long-term debt” and “accumulated other
comprehensive income”.
The increase in cash and cash equivalents by an amount of $159.9 million and of long-term debt by $89.4 million are due to factors previously
discussed in the “Cash flow analysis” section. Income taxes receivable decreased by $26 million and income tax liabilities by $18.2 million
primarily due to the timing of the recognition of income tax liabilities as a result of modifications made to the corporate structure combined with
the increase in operating income before depreciation and amortization. The $67.9 million increase in property, plant and equipment reflects
acquisitions discussed in the “Cash flow analysis” section net of the depreciation and amortization expense, partly offset by the sale of the
Portuguese subsidiary. The $19.3 million decrease in trade and other payables is related to the timing of payments made to suppliers
combined with the sale of the Portuguese subsidiary in the second quarter of fiscal 2012. The $19.4 million reduction in the accumulated other
comprehensive income is mostly due to the realization of the foreign currency translation adjustment attributable to the sale of Cabovisão.
CAPITAL RESOURCES AND LIQUIDITY
CAPITAL STRUCTURE
The table below summarizes debt-related financial ratios over the last two fiscal years and the fiscal 2013 guidelines.
Years ended August 31,
2013
Guidelines(1) 2012 2011
A
verage cost of indebtedness(2) 5.9% 5.9% 5.9%
Fixed rate indebtedness(3) 100% 100% 88%
A
verage term: long-term debt (in years) 4.3 5.3 5.0
Net secured indebtedness(4) / operating income before depreciation and amortization 1.2 1.3 1.5
Net indebtedness(5) / operating income before depreciation and amortization 1.3 1.4 1.7
Operating income before depreciation and amortization / financial expense 9.6 9.2 7.7
(1) Fiscal 2013 guidelines do not include the recently announced acquisition of Atlantic. See the “Fiscal 2013 financial guidelines” section on page 36 for further
details.
(2) Excludes amortization of financing fees and commitments fees.
(3) Taking into consideration the interest rate swap in effect at August 31, 2012.
(4) Net secured indebtedness is defined as the total of principal on long-term debt and obligations under derivative financial instruments, less cash and cash
equivalents and principal on Senior Unsecured Debenture.
(5) Net indebtedness is defined as the total of principal on long-term debt, balance due on a business acquisition and obligations under derivative financial
instruments, less cash and cash equivalents.
For fiscal 2012, the average tenure of the long-term debt increased as a result of the issuance of the Senior Secured Debentures Series 3
described above.
In fiscal 2013, the financial leverage ratios relating to net indebtedness and net secured indebtedness over operating income before
depreciation and amortization should decline slightly due to the projected increase in operating income before depreciation and amortization,
combined with a reduction in Indebtedness from the free cash flow. The financial expense coverage ratio should increase as a result of the
projected increase in operating income before depreciation and amortization. See “Fiscal 2013 financial guidelines” section on page 36 for
further details.