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52 COGECO CABLE INC. 2014 MD&A
The amendments to IAS 19 apply to contributions from employees or third parties to defined benefit plans. The objective of the amendments is
to simplify the accounting for contributions that are independent of the number of years of employee service, for example, employee contributions
that are calculated according to a fixed percentage of salary.
IFRIC 21 sets out the accounting for an obligation to pay a levy that is not income taxes. The interpretation addresses what an obligating event
is that gives rise to pay a levy and when should a liability be recognized.
The Corporation is in the process of determining the extent of the impact of these changes on its consolidated financial statements.
NON-IFRS FINANCIAL MEASURES
This section describes non-IFRS financial measures used by Cogeco Cable throughout this MD&A. It also provides reconciliations between these
non-IFRS measures and the most comparable IFRS financial measures. These financial measures do not have standard definitions prescribed
by IFRS and, therefore, may not be comparable to similar measures presented by other companies. These measures include “cash flow from
operations”, “free cash flow”, “adjusted EBITDA”, “operating margin” and "capital intensity".
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 activities, amortization of deferred transaction costs and discounts on long-term debt,
income taxes paid, current income taxes, financial expense paid and financial expense. This allows the Corporation to isolate the cash flows from
operating activities from the impact of cash management decisions. Cash flow from operations is subsequently used in calculating the non-IFRS
measure, “free cash flow”. Free cash flow is used, by Cogeco Cable’s management and investors, to measure its ability to repay debt, distribute
capital to its shareholders and finance its growth.
The most comparable IFRS measure is cash flow from operating activities. Cash flow from operations is calculated as follows:
Quarters ended Years ended
August 31,
2014 August 31,
2013
(1) August 31,
2014 August 31,
2013
(1)
(in thousands of dollars) $$$$
Cash flow from operating activities 329,195 228,230 758,368 545,010
Changes in non-cash operating activities (125,991) (55,377) (48,603) 23,331
Amortization of deferred transaction costs and discounts on long-term debt 1,940 4,190 7,568 11,233
Income taxes paid 9,630 23,208 63,168 100,110
Current income taxes (13,820) (10,769) (82,752) (84,676)
Financial expense paid 19,038 20,801 122,620 91,343
Financial expense (32,716) (48,702) (130,221) (128,770)
Cash flow from operations 187,276 161,581 690,148 557,581
(1) Comparative figures have been adjusted to comply with the adoption of IAS 19 Employee Benefits. For further details, please refer to Note 3 of the consolidated
financial statements.
Free cash flow is calculated as follows:
Quarters ended Years ended
August 31,
2014 August 31,
2013
(1) August 31,
2014 August 31,
2013
(1)
(in thousands of dollars) $$$$
Cash flow from operations 187,276 161,581 690,148 557,581
Acquisition of property, plant and equipment (164,171) (102,241) (400,846) (388,698)
Acquisition of intangible and other assets (954) (4,917) (14,626) (18,567)
Assets acquired under finance leases —(937) —(937)
Free cash flow 22,151 53,486 274,676 149,379
(1) Comparative figures have been adjusted to comply with the adoption of IAS 19 Employee Benefits. For further details, please refer to Note 3 of the consolidated
financial statements.