Cogeco 2013 Annual Report Download - page 45

44 COGECO CABLE INC. 2013 Management's discussion and analysis (“MD&A”)
Operating expenses
For the fourth quarter of fiscal 2013, operating expenses increased by $31.8 million to $43.6 million. Operating expenses increased for the period,
primarily due to PEER 1 recent acquisition as well as CDS's organic growth.
Operating income before depreciation and amortization and operating margin
As a result of revenue growth exceeding the increase in operating expenses, fiscal 2013 fourth-quarter operating income before depreciation and
amortization increased by $15.6 million to reach $26.9 million compared to the same period of the prior year. Operating margin decreased to
38.1% from 48.7% in the fourth quarter as a result of lower margin business activities from PEER 1.
CASH FLOW ANALYSIS
Quarters ended August 31, 2013 2012
(in thousands of dollars) $$
Operating activities
Cash flow from operations 161,695 126,946
Changes in non-cash operating activities 55,377 75,065
Amortization of deferred transaction costs and discounts on long-term debt (4,190) (747)
Income taxes paid (23,208) (15,090)
Current income tax expense 10,769 15,476
Financial expense paid (20,801) (14,324)
Financial expense 48,588 16,017
228,230 203,343
Investing activities (104,319) (124,480)
Financing activities (123,534) (12,803)
Effect of exchange rate changes on cash and cash equivalents denominated in foreign currencies 1,304 —
Net change in cash and cash equivalents from continuing operations 1,681 66,060
Cash and cash equivalents from continuing and discontinued operations, beginning of period 37,894 149,331
Cash and cash equivalents from continuing and discontinued operations, end of period 39,575 215,391
For fiscal 2013 fourth quarter, cash flow from operations reached $161.7 million compared to $126.9 million last year, an increase of $34.7 million,
or 27.4%, primarily due to the improvement of operating income before depreciation and amortization, partly offset by financial expense increase
and by the recent acquisition costs. In the fourth quarter of fiscal 2013, changes in non-cash operating activities generated cash inflows of $55.4
million compared to $75.1 million in the comparable period of fiscal 2012, mainly as a result of a lower decrease in trade and other payables,
partly offset by an increase in provisions compared to a decrease in the prior year.
ACQUISITIONS OF PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE AND OTHER ASSETS
Investing activities, including acquisition of property, plant and equipment segmented according to the National Cable Television Association
(“NCTA”) standard reporting categories, are as follows:
Quarters ended August 31, 2013 2012
(in thousands of dollars) $$
Customer premise equipment(1) 16,459 17,563
Scalable infrastructure(2) 23,141 37,997
Line extensions 8,858 5,750
Upgrade / Rebuild 17,595 15,106
Support capital 8,376 15,202
Acquisition of property, plant and equipment - Canadian and American cable services 74,429 91,618
Acquisition of property, plant and equipment - Enterprise services(3) 28,749 27,557
Acquisitions of property, plant and equipment 103,178 119,175
Acquisition of intangible and other assets - Canadian and American cable services 3,655 3,174
Acquisition of intangible and other assets - Enterprise services 1,262 2,043
Acquisitions of intangible and other assets 4,917 5,217
108,095 124,392
(1) Includes mainly home terminal devices as well as new and replacement drops.
(2) Includes mainly head-end equipment, digital video and telephony transport as well as HSI equipment.
(3) Includes assets acquired under finance lease of $0.9 million that are excluded from the statement of cash flows.