Cogeco Cable Announces Strong Financial Results for the First

Cogeco Cable Announces Strong Financial Results for the First Quarter
of Fiscal 2013 
- 11.6% growth of its operating income before depreciation and
amortization(1) 
- 8.1% revenue increase for its Enterprise services segment 
- 4% increase in its quarterly dividend compared to the same period
of last year 
MONTREAL, QUEBEC -- (Marketwire) -- 01/14/13 -- Today, Cogeco Cable
Inc. (TSX:CCA) ("Cogeco Cable" or the "Corporation") announced its
financial results for the first quarter of fiscal 2013, ended
November 30, 2012, in accordance with International Financial
Reporting Standards ("IFRS"). 
For the first quarter of fiscal 2013: 


 
--  Revenue increased by 4% to reach $327.9 million; 
    
--  Operating income before depreciation and amortization increased by 11.6%
    to $147.1 million when compared to the first quarter of fiscal 2012; 
    
--  Operating margin(1) increased to 44.9% from 41.8% in the quarter when
    compared to the same period of the prior year; 
    
--  Profit for the period from continuing operations amounted to $42.2
    million in the first quarter when compared to $39.6 million for the same
    period of the previous fiscal year. Profit progression for the quarter
    is mostly attributable to the increase in operating income before
    depreciation and amortization, partly offset by the acquisition costs
    related to the Atlantic Broadband ("ABB") acquisition and the increase
    in income taxes; 
    
--  Profit for the period amounted to $42.2 million in the first quarter
    when compared to $43 million for the same period of the previous fiscal
    year. This variation is mostly attributable to the increase in income
    taxes, acquisition costs related to the ABB acquisition and last year's
    profit from the disposition of the Portuguese subsidiary, Cabovisao -
    Televisao por Cabo, S.A. ("Cabovisao"), reported as discontinued
    operations and disposed of on February 29, 2012, partly offset by the
    improvement in operating income before depreciation and amortization; 
    
--  Free cash flow(1) reached $17 million for the quarter compared to $19.8
    million in the comparable quarter of the prior year. Free cash flow
    decreased in the first quarter over the prior year due to the increase
    in current income tax expense, the acquisition costs related to ABB
    acquisition as well as the increase in acquisition of property, plant
    and equipment, partly offset by the improvement of operating income
    before depreciation and amortization; 
    
--  A quarterly dividend of $0.26 per share was paid to the holders of
    subordinate and multiple voting shares, an increase of $0.01 per share,
    or 4%, when compared to a dividend of $0.25 per share paid in the first
    quarter of fiscal 2012; 
    
--  Fiscal 2013 first-quarter primary service units ("PSU")(2) grew by
    15,080 in Canada in the Cable services segment. At November 30, 2012,
    the total consolidated PSU amounted to 2,478,887 of which 494,674 comes
    from the conclusion of the acquisition of ABB on November 30th; 
    
--  On December 21, 2012, Cogeco Cable announced an agreement to acquire all
    of the issued and outstanding shares of PEER 1 Network Enterprises Inc.
    ("PEER 1") by way of takeover bid (the "offer") valued at approximately
    $635 million. The offer is supported by a committed financing from the
    National Bank of Canada in the amount of $650 million. PEER 1 is one of
    the world's leading internet infrastructure providers, specializing in
    managed hosting, dedicated servers, cloud services and co-location. This
    acquisition combined with Cogeco Cable's existing data centre facilities
    will increase the scale and scope by adding the capability to serve
    approximately 10,000 additional businesses worldwide through 19 data
    centres and 21 points-of-presence across North America and Europe. PEER
    1's primary network centre and head office are located in Vancouver. The
    offer will be subject to usual closing conditions and the Corporation
    expects the transaction to be completed in the second quarter of fiscal
    2013; 
    
--  On November 30, 2012, the Corporation completed the acquisition of ABB,
    an independent cable system operator formed in 2003, serving about
    495,000 PSU's and providing Analogue and Digital Television, as well as
    HSI and Telephony services. The transaction, valued at US$1.36 billion,
    was financed through a combination of cash on hand, a draw-down on the
    existing Term Revolving Facility of approximately US$588 million and
    US$660 million of borrowings under a new committed non-recourse debt
    financing at ABB. Ranked the 12th-largest cable television system
    operator in the United States, ABB operates cable systems in Western
    Pennsylvania, Southern Florida, Maryland, Delaware and South Carolina. 
    
 
(1)  The indicated terms do not have standard definitions prescribed by IFRS
     and therefore, may not be comparable to similar measures presented by  
     other companies. For more details, please consult the "Non-IFRS        
     financial measures" section of the Management's discussion and         
     analysis.                                                              
(2)  Represents the sum of Television, High Speed Internet ("HSI") and      
     Telephony service customers.                                           

 
"Today, the residential telecommunications market is maturing and
more competitive than ever. I am very pleased with our overall
positive results, clearly demonstrating that the combination of our
customer service efforts, our marketing strategies, along with our
strong cost control initiatives have produced the expected positive
effects on our financial results," declared Louis Audet, President
and Chief Executive Officer of Cogeco Cable. 
"Cogeco Data Services' ("CDS") results are very encouraging and
confirm the growth potential of the investments that we have made in
this promising sector." 
Louis Audet added: "As for our entry into the American market, it is
with great enthusiasm that we concluded the acquisition of ABB on
November 30, 2012. ABB and our residential / small and medium
business sector of Cogeco Cable have much in common, including the
expertise of both our management teams; we foresee good prospects for
the future. ABB's first quarterly financial results will be reported
next quarter." 
FINANCIAL HIGHLIGHTS 


 
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                                                Quarters ended November 30, 
(in thousands of dollars, except PSU                                        
 growth, percentages and per                                                
share data)                                    2012        2011      Change 
                                                  $           $           % 
----------------------------------------------------------------------------
Operations                                                                  
Revenue                                     327,911     315,424         4.0 
Operating income before depreciation and                                    
 amortization(1)                            147,126     131,823        11.6 
Operating margin(1)                            44.9%       41.8%          - 
Operating income                             75,160      66,999        12.2 
Profit for the period from continuing                                       
 operations                                  42,160      39,567         6.6 
Profit for the period from discontinued                                     
 operations                                       -       3,399           - 
Profit for the period                        42,160      42,966        (1.9)
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Cash Flow                                                                   
Cash flow from operating activities            (280)     13,807           - 
Cash flow from operations(1)                 99,845      97,043         2.9 
Acquisitions of property, plant and                                         
 equipment, intangible and other assets      82,833      77,283         7.2 
Free cash flow(1)                            17,012      19,760       (13.9)
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Financial Condition(2)                                                      
Property, plant and equipment             1,544,806   1,322,093        16.8 
Total assets                              4,331,597   2,908,079        49.0 
Indebtedness(3)                           2,333,766   1,069,112           - 
Shareholders' equity                      1,215,831   1,188,431         2.3 
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Primary service units ("PSU") growth(4)      15,080      46,179       (67.3)
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Per Share Data(5)                                                           
Earnings per share                                                          
  From continuing and discontinued                                          
   operations                                                               
    Basic                                      0.87        0.88        (1.1)
    Diluted                                    0.86        0.88        (2.3)
  From continuing operations                                                
    Basic                                      0.87        0.81         7.4 
    Diluted                                    0.86        0.81         6.2 
  From discontinued operations                                              
    Basic                                         -        0.07           - 
    Diluted                                       -        0.07           - 
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(1)  The indicated terms do not have standardized definitions prescribed by 
     International Financial Reporting Standards ("IFRS") and therefore, may
     not be comparable to similar measures presented by other companies. For
     more details, please consult the "Non-IFRS financial measures" section 
     of the Management's discussion and analysis ("MD&A").                  
(2)  At November 30, 2012 and August 31, 2012.                              
(3)  Indebtedness is defined as the total of bank indebtedness, principal on
     long-term debt, balance due on a business acquisition and obligations  
     under derivative financial instruments.                                
(4)  Represents the sum of Television, High Speed Internet ("HSI") and      
     Telephony service customers.                                           
(5)  Per multiple and subordinate voting share.                             

 
FORWARD-LOOKING STATEMENTS 
Certain statements in this Management's Discussion and Analysis
("MD&A") may constitute forward-looking information within the
meaning of securities laws. Forward-looking information may relate to
Cogeco Cable's future outlook and anticipated events, business,
operations, financial performance, financial condition or results
and, in some cases, can be identified by terminology such as "may";
"will"; "should"; "expect"; "plan"; "anticipate"; "believe";
"intend"; "estimate"; "predict"; "potential"; "continue"; "foresee",
"ensure" or other similar expressions concerning matters that are not
historical facts. In particular, statements regarding the
Corporation's future operating results and economic performance and
its objectives and strategies are forward-looking statements. These
statements are based on certain factors and assumptions including
expected growth, results of operations, performance and business
prospects and opportunities, which Cogeco Cable believes are
reasonable as of the current date. While management considers these
assumptions to be reasonable based on information currently available
to the Corporation, they may prove to be incorrect. The Corporation
cautions the reader that the economic downturn experienced over the
past few years makes forward-looking information and the underlying
assumptions subject to greater uncertainty and that, consequently,
they may not materialize, or the results may significantly differ
from the Corporation's expectations. It is impossible for Cogeco
Cable to predict with certainty the impact that the current economic
uncertainties may have on future results. Forward-looking information
is also subject to certain factors, including risks and uncertainties
(described in the "Uncertainties and main risk factors" section of
the Corporation's 2012 annual MD&A) that could cause actual results
to differ materially from what Cogeco Cable currently expects. These
factors include technological changes, changes in market and
competition, governmental or regulatory developments, general
economic conditions, the development of new products and services,
the enhancement of existing products and services, and the
introduction of competing products having technological or other
advantages, many of which are beyond the Corporation's control.
Therefore, f uture events and results may vary significantly from
what management currently foresee. The reader should not place undue
importance on forward-looking information and should not rely upon
this information as of any other date. While management may elect to,
the Corporation is under no obligation (and expressly disclaims any
such obligation), and does not undertake to update or alter this
information before the next quarter. 
All amounts are stated in Canadian dollars unless otherwise
indicated. This report should be read in conjunction with the
Corporation's condensed interim consolidated financial statements and
the notes thereto, prepared in accordance with the International
Financial Reporting Standards ("IFRS") and the MD&A included in the
Corporation's 2012 Annual Report. 
CORPORATE OBJECTIVES AND STRATEGIES 
Cogeco Cable Inc.'s ("Cogeco Cable" or the "Corporation") objectives
are to provide outstanding service to its customers, improve
profitability and create shareholder value. To achieve these
objectives, the Corporation has developed strategies that focus on
expanding its service offering, enhancing its existing services and
bundles, The Corporation measures its performance, with regard to
these objectives by monitoring operating income before depreciation
and amortization(1), operating margin(1), PSU(2) growth and free cash
flow(1). 
KEY PERFORMANCE INDICATORS 
OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION AND OPERATING
MARGIN 
First-quarter operating income before depreciation and amortization
increased by 11.6% when compared to the same period of fiscal 2012 to
reach $147.1 million and operating margin increased to 44.9% from
41.8%. As a result of the acquisition of Atlantic Broadband ("ABB"),
management revised upwards its November 1, 2012 projections for
fiscal 2013. Operating income before depreciation and amortization is
now expected to reach $735 million from $614 million and operating
margin should increase to 46.2% from 45.5%. For further details,
please consult the fiscal 2013 revised projections in the "Fiscal
2013 financial guidelines" section. 
FREE CASH FLOW 
For the three-month period ended November 30, 2012, Cogeco Cable
reports free cash flow of $17 million, compared to $19.8 million for
the first three months of the previous fiscal year, representing a
decrease of $2.7 million. This variance is mostly attributable to the
increase in current income tax expense, the acquisition costs related
to Atlantic Broadband ("ABB") acquisition as well as the increase in
acquisition of property, plant and equipment, partly offset by the
improvement of operating income before depreciation and amortization.
Giving effect to the acquisition of ABB, the revised guidelines of
operating income before depreciation and amortization and the
reduction in acquisition of property, plant and equipment in Canada,
management also revised its free cash flow projections from $105
million to $170 million. For further details, please consult the
fiscal 2013 revised projections in the "Fiscal 2013 financial
guidelines" section. 
PSU GROWTH AND PENETRATION OF SERVICE OFFERINGS 
During the three-month period ended November 30, 2012, PSU reach
2,478,887 of which 494,674 comes from the recently completed
acquisition of ABB. In the Cable Services segment in Canada, PSU
increased at a lower pace to 15,080, mainly as a result of a more
competitive environment and tightening of customer credit controls,
thus containing collection and bad debt expenses. Cogeco Cable
maintains targeted marketing initiatives to increase the penetration
level of its services and still benefits from the continuing interest
for high definition ("HD") television service. Consequently, and
combined with the acquisition of ABB, Cogeco Cable revised downwards
its guidelines from 50,000 PSU, as issued on November 1, 2012, to
35,000 PSU. PSU growth is expected to stem primarily from HSI and
Telephony services, the continued strong interest in Digital
Television services, enhanced service offerings, and through
promotional activities. For further details, please consult the
fiscal 2013 revised projections in the "Fiscal 2013 financial
guidelines" section. 
BUSINESS DEVELOPMENTS 
On December 21, 2012, Cogeco Cable announced an agreement to acquire
all of the issued and outstanding shares of PEER 1 Network
Enterprises Inc. ("PEER 1") by way of takeover bid (the "offer")
valued at approximately $635 million. The offer is supported by a
committed financing from the National Bank of Canada in the amount of
$650 million. PEER 1 is one of the world's leading internet
infrastructure providers, specializing in managed hosting, dedicated
servers, cloud services and co-location. This acquisition combined
with Cogeco Cable's existing data centre facilities will increase the
scale and scope by adding the capability to serve approximately
10,000 additional businesses worldwide through 19 data centres and 21
points-of-presence across North America and Europe. PEER 1's primary
network centre and head office are located in Vancouver. The offer
will be subject to usual closing conditions and the Corporation
expects the transaction to be completed in the second quarter of
fiscal 2013. 
On November 30, 2012, the Corporation completed the acquisition of
ABB, an independent cable system operator formed in 2003, serving
about 495,000 PSU's and providing Analogue and Digital Television, as
well as HSI and Telephony services. The acquisition is an attractive
entry point into the US market, providing a significant increase in
PSU base with further growth potential, a high quality network
infrastructure and the ability for the Corporation's management to
leverage its core knowledge and operational experience. The
transaction, valued at US$1.36 billion, was financed through a
combination of cash on hand, a draw-down on the existing Term
Revolving Facility of approximately US$588 million and US$660 million
of borrowings under a new committed non-recourse debt financing at
ABB. Ranked the 12th-largest cable television system operator in the
United States ("USA"), ABB operates cable systems in Western
Pennsylvania, Southern Florida, Maryland, Delaware and South
Carolina. 


 
(1)  The indicated terms do not have standardized definitions prescribed by 
     IFRS and therefore, may not be comparable to similar measures presented
     by other companies. For more details, please consult the "Non-IFRS     
     financial measures" section.                                           
(2)  Represents the sum of Television, High Speed Internet ("HSI") and      
     Telephony service customers.                                           

 
OPERATING AND FINANCIAL RESULTS 
OPERATING RESULTS 


 
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Quarters ended November 30,                    2012        2011      Change 
(in thousands of dollars, except                                            
 percentages)                                     $           $           % 
----------------------------------------------------------------------------
Revenue                                     327,911     315,424         4.0 
Operating expenses                          174,204     176,459        (1.3)
Management fees - COGECO Inc.                 6,581       7,142        (7.9)
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Operating income before depreciation and                                    
 amortization                               147,126     131,823        11.6 
----------------------------------------------------------------            
Operating margin                               44.9%       41.8%            
----------------------------------------------------------------------------
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REVENUE 
Fiscal 2013 first-quarter revenue increased by $12.5 million, or 4%,
to reach $327.9 million, when compared to the same period last year,
primarily by rate increases implemented in June and July 2012 and PSU
growth. For further details on the Corporation's revenue, please
refer to the "Cable services" and "Enterprise services" sections. 
OPERATING EXPENSES AND MANAGEMENT FEES 
For the first quarter of fiscal 2013, operating expenses decreased by
$2.3 million, to reach $174.2 million, a decrease of 1.3% compared to
the prior year. The decrease in operating expenses is mainly
attributable to deployment and support costs incurred in fiscal 2012
related to the migration of Television service customers from
analogue to digital, partly offset by PSU growth. For further details
on the Corporation's operating expenses, please refer to the "Cable
services" and "Enterprise services" sections. 
Management fees paid to COGECO Inc. amounted to $6.6 million, 7.9%
lower when compared to $7.1 million in fiscal 2012. Management fees
have decreased due to the sale of the Portuguese subsidiary,
Cabovisao - Televisao por Cabo, S.A. ("Cabovisao"), on February 29,
2012. For further details on the Corporation's management fees,
please refer to the "Related party transactions" section. 
OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION AND OPERATING
MARGIN 
Fiscal 2013 first-quarter operating income before depreciation and
amortization increased by $15.3 million, or 11.6%, to reach $147.1
million as a result of revenue growth and lower operating expenses.
Cogeco Cable's first-quarter operating margin increased to 44.9% from
41.8% in the comparable period of the prior year. For further details
on the Corporation's operating income before depreciation and
amortization and operating margin, please refer to the "Cable
services" and "Enterprise services" sections. 
FIXED CHARGES 


 
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Quarters ended November 30                      2012        2011     Change 
(in thousands of dollars, except                                            
 percentages)                                      $           $          % 
----------------------------------------------------------------------------
Depreciation and amortization                 64,666      64,824       (0.2)
Financial expense                             15,600      16,829       (7.3)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
For the first quarter of fiscal 2013, depreciation and amortization
expense was essentially the same at $64.7 million when compared to
$64.8 million for the same period of the prior year resulting, mainly
from higher acquisition of property, plant and equipment offset by
additional depreciation expense recorded in fiscal 2012 related to
the reduction of useful lives for certain home terminal devices. 
Fiscal 2013 first-quarter financial expense decreased by $1.2
million, or 7.3%, at $15.6 million, when compared to $16.8 million in
the prior year. Financial expense decrease is primarily attributable
to the foreign exchange loss of $1.5 million recorded in fiscal 2012. 
INCOME TAXES 
Fiscal 2013 first-quarter income tax expense amounted to $17.4
million, compared to $10.6 million in the prior year. The increase is
mostly attributable to the improvement in operating income before
depreciation and amortization and by a reduction in income taxes, in
fiscal 2012, from the implementation of certain tax measures of the
2011 federal budget limiting the tax deferrals for corporations with
a significant interest in a partnership. 
PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS 
For the three-month period ended November 30, 2012, profit for the
period from continuing operations amounted to $42.2 million, or $0.87
per share compared to $39.6 million, or $0.81 per share for the
comparable period of fiscal 2012. The variance for the quarter is
mostly attributable to the increase in operating income before
depreciation and amortization, partly offset by the acquisition costs
related to ABB acquisition and the increase in income taxes explained
above. 
PROFIT FOR THE PERIOD 
For the period ended November 30, 2012, profit for the period
amounted to $42.2 million, or $0.87 per share, compared to $43
million, or $0.88 per share, in fiscal 2012. This variation is mostly
attributable to the acquisition costs related to ABB acquisition, the
increase in income taxes explained above and the profit from the
Portuguese subsidiary reported as discontinued operations in fiscal
2012, partly offset by the improvement in operating income before
depreciation and amortization. 
FINANCING ACTIVITIES 
In the normal course of business, Cogeco Cable has incurred financial
obligations, primarily in the form of long-term debt, operating and
finance leases and guarantees. Cogeco Cable's obligations, as
discussed in the 2012 Annual Report, have not materially changed
since August 31, 2012, except as mentioned below. 
In connection with the acquisition of ABB on November 30, 2012, the
Corporation concluded, through two of its US subsidiaries, First Lien
Credit Facilities totalling US$710 million with a syndicate of banks
and other institutional lenders in three tranche and draw down by an
amount of US$660 million of which US$641.5 million was used to repay
ABB's secured debt and $US18.5 million to pay for some of the
transaction costs. The first tranche, a Term Loan A Facility
amounting to US$240 million, which will mature on November 30, 2017,
the second tranche, a Term Loan B Facility amounting to US$420
million, which will mature on November 30, 2019 and the third
tranche, a Revolving Credit Facility of US$50 million unused at
November 30, 2012, including a swingline of US$15 million, which will
mature on November 30, 2017. Interest rates on the First Lien Credit
Facilities are based on LIBOR plus the applicable margin, with a
LIBOR floor of 1.00% for the Term Loan B Facility. Starting on
December 31, 2013, the Term Loan A Facility is subject to quarterly
amortization of 1.25% in the first year, 2.5% in the second year and
3.0% in the third and fourth years. Starting on December 31, 2012,
the Term Loan B Facility is subject to quarterly amortization of
0.25% until its maturity date. In addition to the fixed amortization
schedule and commencing in the first quarter of fiscal 2015, loans
under the Term Loan Facilities shall be prepaid according to a
Prepayment Percentage of excess cash flow generated during the prior
fiscal year. The First Lien Credit Facilities are non-recourse to the
Corporation and its Canadian subsidiaries and are indirectly secured
by a first priority fixed and floating charge on substantially all
present and future real and personal property and undertaking of
every nature and kind of the Corporation's US subsidiaries. The
provisions under these facilities provide for restrictions on the
operations and activities of the Corporation's US subsidiaries.
Generally, the most significant restrictions relate to permitted
indebtedness and investments, distributions and maintenance of
certain financial ratios. 
DIVIDEND DECLARATION 
At its January 14, 2013 meeting, the Board of Directors of Cogeco
Cable declared a quarterly eligible dividend of $0.26 per share for
multiple voting and subordinate voting shares, payable on February
11, 2013, to shareholders of record on January 28, 2013. The
declaration, amount and date of any future dividend will continue to
be considered and approved by the Board of Directors of the
Corporation based upon the Corporation's financial condition, results
of operations, capital requirements and such other factors as the
Board of Directors, at its sole discretion, deems relevant. There is
therefore no assurance that dividends will be declared, and if
declared, the amount and frequency may vary. 
SEGMENTED OPERATING RESULTS 
The Corporation reports its operating results in two operating
segments: Cable services and Enterprise services. The reporting
structure reflects how the Corporation manages the business
activities to make decisions about resources to be allocated to the
segment and to assess its performance. 
CABLE SERVICES 
CUSTOMER STATISTICS 


 
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                                                        CANADA              
                                                    ----------              
                                                                        % of
                                                 Net additions   penetration
                                                      (losses)           (1)
                                                Quarters ended      November
          Consolidated       USA    CANADA        November 30,           30,
                        November                                            
                        30, 2012               2012       2011  2012    2011
----------------------------------------------------------------------------
PSU          2,478,887   494,674 1,984,213   15,080     46,179              
Television                                                                  
 service                                                                    
 customers   1,105,443   244,404   861,039   (2,076)     4,452  52.1    54.2
HSI                                                                         
 service                                                                    
 customers     817,019   171,640   645,379   10,845     17,285  39.0    38.0
Telephony                                                                   
 service                                                                    
 customers     556,425    78,630   477,795    6,311     24,442  28.9    27.2
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(1)  As a percentage of homes passed.                                       

 
Canada 
Fiscal 2013 first-quarter PSU net additions were lower than in the
comparable period of the prior year mainly as a result of service
category maturity, competitive offers and tightening of our customer
credit controls and processes. The net customer losses for Television
service customers stood at 2,076 compared to 4,452 net additions for
the same period of the prior year. Television service customer net
losses are mainly due to the promotional offers of competitors for
the video service combined with the tightening of our customer credit
controls. Fiscal 2013 first-quarter HSI service customers grew by
10,845 compared to 17,285 in the first quarter of the prior year, and
the number of net additions to the Telephony service stood at 6,311
customers compared to 24,442 customers for the same period of the
prior year. HSI and Telephony net additions continue to stem from the
enhancement of the product offering, the impact of the bundled offer
(Cogeco Complete Connection) of Television, HSI and Telephony
services, and promotional activities. 
OPERATING RESULTS 


 
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Quarters ended November 30,                    2012        2011      Change 
(in thousands of dollars, except                                            
 percentages)                                     $           $           % 
----------------------------------------------------------------------------
Revenue                                     304,815     293,679         3.8 
Operating expenses                          156,210     159,883        (2.3)
----------------------------------------------------------------            
Operating income before depreciation and                                    
 amortization                               148,605     133,796        11.1 
----------------------------------------------------------------            
Operating margin                               48.8%       45.6%            
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
Revenue 
Fiscal 2013 first-quarter revenue increased by $11.1 million, or
3.8%, to reach $304.8 million, when compared to the same period last
year, primarily due to the PSU growth and rate increases implemented
in June and July 2012. 
Operating expenses 
For the period ended November 30, 2012, operating expenses decreased
by $3.7 million, or 2.3%, at $156.2 million. This decrease is mainly
attributable to the deployment and support costs incurred in fiscal
2012 related to the migration of Television service customers from
analogue to digital, partly offset by PSU growth. 
Operating income before depreciation and amortization and operating
margin 
As a result of revenue growth exceeding the operating expenses,
fiscal 2013 first-quarter operating income before depreciation and
amortization amounted to $148.6 million, or 11.1% higher than in the
same period of the prior year. Operating margin increased to 48.8%
from 45.6% when compared to fiscal 2012 first-quarter. 
ENTERPRISE SERVICES 
OPERATING RESULTS 


 
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Quarters ended November 30,                    2012        2011       Change
(in thousands of dollars, except                                            
 percentages)                                     $           $            %
----------------------------------------------------------------------------
Revenue                                      23,500      21,745          8.1
Operating expenses                           13,682      13,180          3.8
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Operating income before depreciation and                                    
 amortization                                 9,818       8,565         14.6
----------------------------------------------------------------            
Operating margin                               41.8%       39.4%            
----------------------------------------------------------------------------
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Revenue 
Fiscal 2013 first-quarter revenue increased by $1.8 million, or 8.1%,
to reach $23.5 million, when compared to the same period last year,
primarily due the organic growth from data centre, managed IT and
connectivity services. 
Operating expenses 
For the first quarter of fiscal 2013, operating expenses increased by
$0.5 million, or 3.8%, to $13.7 million. The increase in operating
expenses is mainly attributable to servicing new customers. 
Operating income before depreciation and amortization and operating
margin 
As a result of revenue growth exceeding the increase in operating
expenses, fiscal 2013 first-quarter operating income before
depreciation and amortization amounted to $9.8 million, or 14.6%,
higher than the same period of the prior year. Operating margin
increased to 41.8% from 39.4% when compared to fiscal 2012
first-quarter. 
FISCAL 2013 FINANCIAL GUIDELINES 
Giving effect to the recent acquisition of ABB on November 30, 2012,
the Corporation revised its financial guidelines for the 2013 fiscal
year issued on November 1, 2012 to include a nine-month period of
ABB's financial projections. Projections for the Enterprise services
were maintained as initially projected. In the Cable services segment
in Canada, guidelines remained essentially the same, except for
revenue and acquisitions of property, plant and equipment which
should be lower than originally expected due to lower PSU growth as a
result of current uncertain economic environment, the service
category maturity and competitive offers. Nonetheless, management
expects revenue to reach $1.590 billion, representing a growth of
$240 million, or 17.8%, when compared to those issued on November 1,
2012. PSU progression should reduce from 50,000 to 35,000, including
ABB nine-month operations. Operating income before depreciation and
amortization should increase by $121 million to reach $735 million
reflecting the ABB acquisition and the cost reduction initiatives
implemented in Canada during the current fiscal year and,
consequently operating margin should increase from 45.5% to 46.2%.
Depreciation and amortization of property, plant and equipment and
intangible assets should increase from $290 million to $330 million
and acquisition of property, plant and equipment, intangible and
other assets should increase by $20 million to take into
consideration the ABB nine-month operations, partly offset by the
reduction in the Cable services segment in Canada. Financial expense
should amount to $96 million, an increase of $32 million, as a result
of the cost of financing of ABB acquisition. Fiscal 2013 free cash
flow is expected to amount to $170 million, an increase of $65
million, or 61.9%, when compared to the free cash flow projection
issued on November 1, 2012, stemming primarily from the nine-month
operations of ABB combined with the reduction in acquisitions of
property, plant and equipment, intangible and other assets explained
above. Profit for the year is expected to amount to $225 million, $35
million higher than the November 1, 2012 projections, mainly as a
result of the ABB's expected financial results for the nine-month
operations. 
Fiscal 2013 revised financial guidelines are as follows: 


 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                  Revised          Original 
                                              projections       projections 
                                         January 14, 2013  November 1, 2012 
                                              Fiscal 2013       Fiscal 2013 
(in millions of dollars, except net                                         
 customer additions and operating                                           
 margin)                                                $                 $ 
----------------------------------------------------------------------------
                                                                            
Financial guidelines                                                        
  Revenue                                           1,590             1,350 
  Operating income before depreciation                                      
   and amortization                                   735               614 
  Operating margin                                   46.2%             45.5%
  Depreciation and amortization                       330               290 
  Financial expense                                    96                64 
  Current income tax expense                           92                95 
  Profit for the year                                 225               190 
  Acquisitions of property, plant and                                       
   equipment, intangible and other                                          
   assets                                             370               350 
  Free cash flow(1)                                   170               105 
Net customer addition guidelines                                            
  PSU growth                                       35,000            50,000 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
(1)  Free cash flow is calculated as operating income before depreciation   
     and amortization less integration, restructuring and acquisition costs,
     financial expense, current income tax expense and acquisitions of      
     property, plant and equipment, intangible and other assets.            

 
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", "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 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 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 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 November 30, 
                                                       2012            2011 
(in thousands of dollars)                                 $               $ 
----------------------------------------------------------------------------
Cash flow from operating activities                    (280)         13,807 
Changes in non-cash operating activities             81,113          62,668 
Amortization of deferred transaction costs                                  
 and discounts on long-term debt                        740             675 
Income taxes paid                                    42,533          36,182 
Current income tax expense                          (25,091)        (19,490)
Financial expense paid                               16,430          20,030 
Financial expense                                   (15,600)        (16,829)
----------------------------------------------------------------------------
Cash flow from operations                            99,845          97,043 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Free cash flow is calculated as follows:                                    
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                Quarters ended November 30, 
                                                       2012            2011 
(in thousands of dollars)                                 $               $ 
----------------------------------------------------------------------------
Cash flow from operations                            99,845          97,043 
Acquisition of property, plant and equipment        (78,192)        (73,339)
Acquisition of intangible and other assets           (4,641)         (3,944)
----------------------------------------------------------------------------
Free cash flow                                       17,012          19,760 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION AND OPERATING
MARGIN 
Operating income before depreciation and amortization is used by
Cogeco Cable's management and investors to assess the Corporation's
ability to seize growth opportunities in a cost effective manner, to
finance its ongoing operations and to service its debt. Operating
income before depreciation and amortization is a proxy for cash flows
from operations excluding the impact of the capital structure chosen,
and is one of the key metrics used by the financial community to
value the business and its financial strength. Operating margin is a
measure of the proportion of the Corporation's revenue which is
available, before income taxes, to pay for its fixed costs, such as
interest on Indebtedness. Operating margin is calculated by dividing
operating income before depreciation and amortization by revenue. 
The most comparable IFRS financial measure is operating income.
Operating income before depreciation and amortization and operating
margin are calculated as follows: 


 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                Quarters ended November 30, 
                                                       2012            2011 
(in thousands of dollars, except                                            
 percentages)                                             $               $ 
----------------------------------------------------------------------------
Operating income                                     75,160          66,999 
Depreciation and amortization                        64,666          64,824 
Integration, restructuring and acquisitions                                 
 costs                                                7,300               - 
----------------------------------------------------------------------------
Operating income before depreciation and                                    
 amortization                                       147,126         131,823 
----------------------------------------------------------------------------
Revenue                                             327,911         315,424 
----------------------------------------------------------------------------
Operating margin                                       44.9%           41.8%
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION 


 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Quarters ended                           November 30,            August 31, 
(in thousands of dollars, except                                            
 percentages and per share data)      2012       2011       2012       2011 
                                         $          $          $          $ 
----------------------------------------------------------------------------
Revenue                            327,911    315,424    324,768    305,811 
Operating income before                                                     
 depreciation and amortization     147,126    131,823    160,825    151,579 
Operating margin                      44.9%      41.8%      49.5%      49.6%
Operating income                    75,160     66,999     94,709     97,941 
Income taxes                        17,400     10,603     32,987     20,713 
Profit for the period from                                                  
 continuing operations              42,160     39,567     45,705     62,745 
Profit (loss) for the period                                                
 from discontinued operations            -      3,399          -      6,219 
Profit (loss) for the period        42,160     42,966     45,705     68,964 
Cash flow from operating                                                    
 activities                           (280)    13,807    203,343    211,847 
Cash flow from operations           99,845     97,043    126,946    144,699 
Acquisitions of property, plant                                             
 and equipment, intangible and                                              
 other assets                       82,833     77,283    124,392    120,663 
Free cash flow                      17,012     19,760      2,554     24,036 
Earnings (loss) per share(1)                                                
  From continuing and                                                       
   discontinued operations                                                  
    Basic                             0.87       0.88       0.94       1.42 
    Diluted                           0.86       0.88       0.93       1.42 
  From continuing operations                                                
    Basic                             0.87       0.81       0.94       1.29 
    Diluted                           0.86       0.81       0.93       1.29 
  From discontinued operations                                              
    Basic                                -       0.07          -       0.13 
    Diluted                              -       0.07          -       0.13 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                        February   February 
Quarters ended                                May 31,        29,        28, 
(in thousands of dollars, except                                            
 percentages and per share data)      2012       2011       2012       2011 
                                         $          $          $          $ 
----------------------------------------------------------------------------
Revenue                            319,771    298,211    317,735    293,457 
Operating income before                                                     
 depreciation and amortization     152,661    138,147    143,743    130,399 
Operating margin                      47.7%      46.3%      45.2%      44.4%
Operating income                    90,981     86,995     59,491     80,426 
Income taxes                        21,449     18,747     13,617     15,007 
Profit for the period from                                                  
 continuing operations              53,159     52,352     31,086     41,319 
Profit (loss) for the period                                                
 from discontinued operations            -   (233,573)    52,047     (9,223)
Profit (loss) for the period        53,159   (181,221)    83,133     32,096 
Cash flow from operating                                                    
 activities                        112,275    142,009    120,961     88,420 
Cash flow from operations          113,075    125,923    104,622    114,682 
Acquisitions of property, plant                                             
 and equipment, intangible and                                              
 other assets                       87,459     62,782     86,234     61,079 
Free cash flow                      25,616     63,141     18,388     53,603 
Earnings (loss) per share(1)                                                
  From continuing and                                                       
   discontinued operations                                                  
    Basic                             1.09      (3.73)      1.71       0.66 
    Diluted                           1.09      (3.73)      1.70       0.66 
  From continuing operations                                                
    Basic                             1.09       1.08       0.64       0.85 
    Diluted                           1.09       1.08       0.63       0.85 
  From discontinued operations                                              
    Basic                                -      (4.80)      1.07      (0.19)
    Diluted                              -      (4.80)      1.06      (0.19)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
(1)  Per multiple and subordinate voting share.                             

 
ABOUT COGECO CABLE 
Cogeco Cable (www.cogeco.ca) is a telecommunications corporation and
is the second largest hybrid fibre coaxial cable operator in Ontario
and Quebec. Through its two-way broadband cable networks, Cogeco
Cable provides its residential customers with Analogue and Digital
Television, High Speed Internet ("HSI") and Telephony services.
Cogeco Cable is also present in the United States through its
subsidiary, Atlantic Broadband, whose head office is located in
Quincy, Massachusetts. Atlantic Broadband is ranked the 12th  largest
cable television system operator in the United States and, serves the
following areas: Western Pennsylvania, Southern Florida, Maryland,
Delaware and South Carolina. Cogeco Cable provides as well to its
commercial customers, through its subsidiary Cogeco Data Services,
data networking, e- business applications, video conferencing,
hosting services, Ethernet, private line, VoIP, HSI access, data
storage, data security, co-location services, managed IT services,
cloud services and other advanced communication solutions. Cogeco
Cable's subordinate voting shares are listed on the Toronto Stock
Exchange (TSX:CCA). 
ADDITIONAL INFORMATION 
For additional information relating to the Corporation, including its
Annual Information Form, and for a detailed analysis of Cogeco
Cable's results for the first quarter of 2013, please refer to the
Management Discussion and Analysis and condensed consolidated
financial statements of Cogeco Cable, available on the SEDAR website
at www.sedar.com. 


 
Analyst Conference    Tuesday, January 15, 2013 at 9:30 a.m. (Eastern       
Call:                 Standard Time) Media representatives may attend as    
                      listeners only.                                       
                                                                            
                      Please use the following dial-in number to have access
                      to the conference call by dialling five minutes before
                      the start of the conference:                          
                                                                            
                      Canada/USA Access Number: 1 800-820-0231              
                      International Access Number: + 1 416-640-5926         
                      Confirmation Code: 4571052                            
                      By Internet at www.cogeco.ca/investors                
                                                                            
                      A rebroadcast of the conference call will be available
                      until January 22, 2013, by dialling:                  
                                                                            
                      Canada and US access number: 1 888-203-1112           
                      International access number: + 1 647-436-0148         
                      Confirmation code: 4571052                            

Contacts:
Source:
Cogeco Cable Inc.
Pierre Gagne
Senior Vice President and Chief Financial Officer
514-764-4700 
Information:
Media
Rene Guimond
Vice-President, Public Affairs and Communications
514-764-4700
 
 
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