NON-IFRS FINANCIAL MEASURES
This section describes non-IFRS financial measures used by COGECO 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", "operating income before depreciation and amortization" and "operating margin".
CASH FLOW FROM OPERATIONS AND FREE CASH FLOW
Cash flow from operations is used by COGECO'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 tax expense, 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'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 November 30, 2012 2011(in thousands of dollars) $ $---------------------------------------------------------------------------Cash flow from operating activities (6,005) 9,570Changes in non-cash operating activities 87,508 74,686Amortization of deferred transaction costs and discounts on long-term debt 856 762Income taxes paid 44,248 37,984Current income tax expense (26,112) (21,319)Financial expense paid 18,309 20,834Financial expense (17,014) (17,778)---------------------------------------------------------------------------Cash flow from operations 101,790 104,739------------------------------------------------------------------------------------------------------------------------------------------------------Free cash flow is calculated as follows:------------------------------------------------------------------------------------------------------------------------------------------------------ Quarters ended November 30, 2012 2011(in thousands of dollars) $ $---------------------------------------------------------------------------Cash flow from operations 101,790 104,739Acquisition of property, plant and equipment (78,514) (74,460)Acquisition of intangible and other assets (4,641) (3,944)---------------------------------------------------------------------------Free cash flow 18,635 26,335------------------------------------------------------------------------------------------------------------------------------------------------------
