COGECO SUSTAINS GROWTH FOR THE FOURTH QUARTER OF FISCAL 2009
PRESS RELEASE
For immediate release
COGECO sustains growth for the fourth quarter of fiscal 2009
Montréal, October 30, 2009 – Today, COGECO Inc. (TSX: CGO) (“COGECO” or the “Company”) announced its financial
results for the fourth quarter and 2009 fiscal year ended August 31, 2009.
For the fourth quarter and fiscal 2009:
• Fiscal 2009 fourth-quarter consolidated revenue increased by 8% to reach $316.3 million, when compared to the
corresponding period of the prior year. Revenue in the cable subsidiary, Cogeco Cable Inc. (“Cogeco Cable”),
driven by increased revenue-generating units (“RGU”)
(1)
combined with rate increases and the financial results
generated by the acquisition of Cogeco Data Services Inc. (the “CDS acquisition”) in the Canadian operations,
went up by $22.9 million, or 8%. For the fiscal year 2009, consolidated revenue grew by 13% to reach
$1,252.8 million;
• Fiscal 2009 fourth-quarter operating income before amortization
(2)
increased by $29.2 million, or 23.9%, to reach
$151.2 million. The cable sector contributed to an increase of $28.5 million as a result of the favourable impact
of $19.8 million from the settlement of the Part II licence fees payable to the Canadian Radio-television and
Telecommunications Commission (“CRTC”) for the 2007 to 2009 fiscal years (the “Part II licence fee settlement
agreement”) and RGU growth, the CDS acquisition and various rate increases generating additional revenues
which outpaced other operating cost increases in the period. For fiscal 2009, consolidated operating income
before amortization grew by 18.5% to reach $532 million;
• During fiscal 2009, a $399.6 million non-cash impairment loss (the “impairment loss”) on Cogeco Cable’s
investment in its Portuguese subsidiary, Cabovisão
– Televisão por Cabo, S.A. (“Cabovisão”) was recorded as a
result of competitive pressure resulting in customer losses that were more severe than origi nally anticipated;
• Fourth quarter of 2009 consolidated net income amounted to $15.2 million compared to $9.7 million for the
corresponding period of the prior year. Excluding the favourable impacts from the reduction of withholding and
stamp tax contingent liabilities in the amount of $1.7 million in Europe and from the $5.3 million with respect to
the Part II licence fee settlement agreement in Canada, both net of related income taxes and non-controlling
interest, adjusted net income
(2)
would have amounted to $8.2 million, a decrease of $1.4 million, or 14.6%
compared to the fourth quarter of fiscal 2008;
• Fiscal 2009 net loss amounted to $78.5 million, or $4.69 per share, compared to a net income of $25.1 million,
or $1.50 per share for the prior year. Net loss for fiscal 2009 was affected by the impairment loss of
$399.6 million recorded on Cogeco Cable’s investment in Cabovisão. Net of related income taxes and non-
controlling interest, the impairment loss reduced net income by $124 million. Furthermore, the net loss in the
cable sector includes an unfavourable impact of $2 million from the utilization of Cabovisão’s pre-acquisition tax
losses and a favourable impact from the reduction of withholding and stamp tax contingent liabilities in the
amount of $5.2 million described above, also in Cabovisão, both net of non-controlling interest, and a favourable
impact of $5.3 million from the Part II licence fee settlement agreement net of related income taxes and non-
controlling interest. Net income of the prior year included a loss from discontinued operations of $18.1 million
and an income tax adjustment, as described in the “Income taxes” section of the Company’s 2 009 Annual report,
which, net of non-controlling interest, increased the prior year net income by $7.9 million. Excluding the effect of
(1)
Represents the sum of Basic Cable, High Speed Internet (“HSI”), Digital Television and Telephony service customers.
(2)
The indicated terms do not have a standardized definition prescribed by Canadian Generally Accepted Accounting Principles (“GAAP”) and therefore, may not be
comparable to similar measures presented by other companies. For further details, please consult the “Non-GAAP financial measures” section of the Results
overview.
- 2 -
these items, adjusted net income for fiscal 2009 would have amounted to $36.9 million, or $2.20 per share
(1)
,
compared to $35.3 million, or $2.11 per share in 2008, increases of 4.6% and 4.3%, resp ectively;
• Free cash flow
(1)
reached $14.7 million for the fourth quarter, representing a decrease of 29.7% over the prior
year. The decrease in free cash flow is due to an increase in capital expenditures which exceeded the increase
in cash flow from operations. Free cash flow stands at $101 million for fiscal 2009, an increase of 0.6% over
fiscal 2008;
• Operating margin
(1)
increased to 47.8%
(2)
for the fourth quarter compared to 41.7% in the corresponding period
of the prior year, and increased to 42.5%
(2)
during fiscal 2009 from 40.5% the year before. In the cable sector,
the operating margin in Canada improved to 54.8%
(2)
from 44% which offset the decrease in the European
operating margin to 20.1% from 38.9% and fiscal 2009 operating margin in Canada improved to 46.7%
(2)
from
42.9% and decreased to 27.5% from 36.2% in Europe;
• In the cable sector, RGU grew by 48,1 70 net additions in the quarter and 175,364 net additions in the fiscal year,
for a total of 2,892,238 RGU at August 31, 2009.
“Despite the economic difficulties that marked fiscal 2009, we are pleased with COGECO’s year-end financial results, with
most key performance indicators surpassing our expectations. In the cable sector, our Canadian operations enjoyed a
solid growth, with RGU additions of 167,955 for the year, exceeding by far our guidelines. In our European operations,
Cabovisão has implemented far-reaching strategies to counter the severe competitive pressure in that market.
Management believes that the turnaround phase is solidly underway. As always, customer satisfaction remains our focus,
and Cogeco Cable’s new Canadian operational structure and the many enhancements made to the service offerings in
fiscal 2009, will pave the way for growth in fiscal 2010. As for the radio sector, Rythme FM is still the first choice in
Montréal in 2009 and the Trois-Rivières market is also at the top since last May. In these difficult times, radio is more than
ever a good choice for announcers; and our audiences like what we offer them either on Rythme FM network and on the
FM 93 station in Québec City”, declared Loui s Audet, President and CEO of COGECO.
Fiscal 2010 Financial Guidelines
The Company issued its 2010 financial guidelines, maintaining revenue outlook at about $1,285 million. Operating income
before amortization should decrease from $505 million to approximately $486 million, a reduction of $19 million compared
to our preliminary projections due to an increase in operating costs in the cable sector from the application of CICA
Handbook Section 3064 Goodwill and intangible assets. Capital expenditures and the increase in deferred charges should
also decrease by $19 million, from $360 million to $341 million from the application of CICA Handbook Section 3064. Free
cash flow should remain the same to approximately $130 million. Please consult the “Fiscal 2010 financial guidelines”
section of the Company’s 2009 an nual report for further details.
(1)
The indicated terms do not have a standardized definition prescribed by Canadian GAAP and therefore, may not be comparable to similar measures presented by
other companies. For further details, please consult the “Non-GAAP financial measur es” section of the Results overview.
(2)
Includes the favourable impact from the Part II licence fee settlement agreement of $21.3 million, $19.8 million of which stems from cable sector.
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FINANCIAL HIGHLIGHTS
Quarters ended August 31, Years ended August 31,
2009 2008
(1)
Change 2009 2008
(1)
Change
($000, except percentages, per share data and RGU
growth)
$ $ % $ $ %
(unaudited) (unaudited) (audited) (audited)
Revenue 316,284 292,873 8.0 1,252,794 1,108,900 13.0
Operating income from contin ui ng op erati ons before
amortization
(2)
151,242 122,019 23.9 532,013 448,922 18.5
Operating margin
(2)
47.8% 41.7% – 42.5% 40.5% –
Operating income from contin ui ng op erati ons 78,744 60,244 30.7 261,013 219,198 19.1
Impairment of goodwill and intan gi bl e assets – – – 399,648 – –
Income (loss) from continuing operations 15,233 9,656 57.8 (78,525) 43,165 –
Loss from discontinued operations – – – – (18,057) –
Net income (l oss) 15,233 9,656 57.8 (78,525) 25,108 –
Adjusted net income
(2)
8,249 9,656 (14.6) 36,895 35,256 4.6
Cash flow from operating activities from continuing
operations
183,620 146,052 25.7 437,223 398,491 9.7
Cash flow from operations from continuing operations
(2)
115,332 99,969 15.4 406,807 362,788 12.1
Capital expenditures and increase in deferred charges 100,590 78,988 27.3 305,789 262,352 16.6
Free cash flow
(2)
14,742 20,981 (29.7) 101,018 100,436 0.6
RGU growth
(3)
48,170 41,100 17.2 175,364 231,209 (24.2)
Earnings (loss) per share
Basic
Income (loss) from continuing operations 0.91 0.58 56.9 (4.69) 2.59 –
Loss from discontinued operations – – – – (1.08) –
Net income (l oss) 0.91 0.58 56.9 (4.69) 1.50 –
Adjusted earnings per share
(2)
0.49 0.58 (15.5)
2.20 2.11 4.3
Diluted
Income (loss) from continuing operations 0.91 0.58 56.9 (4.69) 2.58 –
Loss from discontinued operations – – – – (1.08) –
Net income (l oss) 0.91 0.58 56.9 (4.69) 1.50 –
Adjusted earnings per share
(2)
0.49 0.58 (15.5)
2.20 2.11 4.3
(1)
Certain comparativ e figures hav e be en reclas sified to c onfor m to the c urrent year’s pres ent ation to ref lect the reclas sification of foreig n exc hange g ains or los ses
from operating costs to financial expense.
(2)
The indicated terms do not have standardized definitions prescribed by Canadian GAAP and therefore, may not be comparable to similar measures presented by
other companies. For more details, please consult the “Non-GAAP financial measures” section of the Results overview.
(3)
Revenue generating units (“RGU”) represent the sum of Basic Cable, High Speed Internet (“HSI”), Digital Television and Telephony service customers. The
number of Digital Television servic e customers in Euro pe has been res tated in the four th quarter of fiscal 2009 in or der to conf orm to the industry definition of a
RGU. This restatement increased the number of customers at the end of the second quarter by 34,785 and at the end of the third quarter by 33,869.
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FORWARD-LOOKING STATEMENTS
Certain statements in this press release may constitute forward-looking information within the meaning of securities laws.
Forward-looking information may relate to COGECO’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 Company’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 believes are reasonable as of the
current date. While management considers these assumptions to be reasonable based on information currently available
to the Company, they may prove to be incorrect. The Company cautions the reader that the current adverse economic
conditions make 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 Company’s expectations. It is
impossible for COGECO to predict with certainty the impact that the current economic downtown 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 Company’s 2009 annual Management’s Discussion and Analysis
(MD&A) that could cause actual results to differ materially from what COGECO 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 Company’s
control. Therefore, future events and results may vary significantly from what management currently foresees. 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 Company is under no obligation (and expressly disclaims any such
obligation), and does not undertake to update or alter this information before the next quarter, except as required by Law.
This analysis should be read in conjunction with the Company’s consolidated financial statements, and the notes thereto,
prepared in accordance with Canadian GAAP and the MD&A included in the Company’s 2009 Annual Report. Throughout
this discussion, all amounts are in Canadian dollars unless otherwi se indicated.
- 5 -
RESULTS OVERVIEW
This analysis should be read in conjunction with the Company’s 2009 Annual Report available on SEDAR at
www.sedar.com.
CUSTOMER STATISTICS
Net additions (losses)
August 31, 2009
Quarters ended august 31, 2009
Canada
Europe
Consolidated
Canada Europe
Consolidated
RGU
(1)(2)
2,159,863 732,375
2,892,238 27,740 20,430 48,170
Basic Cable se rvice customers
864,805 259,480
1,124,285 (924) (5,318) (6,242)
HSI service customers
515,052 143,614
658,666 5,619 1,430 7,049
Digital Tele vision service customers
(2)
498,398 102,753
601,151 9,674 23,456 33,130
Telephony service customers
281,608 226,528
508,136 13,371 862 14,233
Net additions (losses)
August 31, 2008
Quarters ended august 31, 2008
Canada
Europe
Consolidated
Canada Europe
Consolidated
RGU
1,991,908 724,966
2,716,874 42,909 (1,809) 41,100
Basic Cable se rvice customers
857,094 296,135
1,153,229 (1,476) (4,456) (5,932)
HSI service customers
473,467 159,301
632,768 8,799 (5,009) 3,790
Digital Tele vision service customers
(3)
441,746 24,452
466,198 16,150 9,982 26,132
Telephony service customers
219,601 245,078
464,679 19,436 (2,326) 17,110
(1)
Represents the sum of Basic Cable, High Speed Internet (“HSI”), Digital Television and Telephony service customers.
(2)
The number of Digita l Television se rvice customers in Europ e has been restate d in the fourth quarter o f fiscal 2009 in ord er to conform to the industry definit ion
of a RGU. This restatement increased the number of customers at the end of the second quarter by 34,785 and at the end of the third quarter by 33,869.
(3)
In the European operations, the Digital Television service was launched in the third quarter of fiscal 2008.
In the cable sector, Canadian operations’ fourth-quarter 2009 RGU net additions were lower than for the corresponding
periods last year and reflect an early sign of maturation in some services. The number of net losses for Basic Cable stood
at 924 customers compared to 1,476 customers for the corresponding period of the prior year. Fourth-quarter Basic Cable
service customer losses are usual and due to seasonal variations. In the quarter, Telephony customers grew by 13,371
compared to 19,436 in the prior year. The lower growth is mostly attributable to the increased penetration in areas where
the service is already offered and to fewer new areas where the service was launched. The number of net additions to
HSI service stood at 5,619 customers compared to 8,799 in the fourth quarter of fiscal 2008. The growth in HSI customer
net additions continues to stem from the enhancement of the product offering, the impact of the bundled offer (Cogeco
Complete Connection) of Cable Television, HSI and Telephony services, and promotional activities. The Digital Television
service net additions stood at 9,674 customers compared to 16,150 customers in the prior year, due to more targeted
marketing initiatives in the second half of fiscal 2008 to improve penetration and to the continuing strong interest for the
High Definition (“HD”) Television service .
In Europe, fourth-quarter of 2009 was marked by a continuing difficult competitive environment in the Iberian Peninsula,
recurring intense promotions and advertising initiatives from competitors for their new respective third leg of the triple-play
service in the Portuguese market. These factors were the main contributors to net customer losses in the Basic Cable
service, and low customer additions in the HSI and Telephony services. The Digital Television service was launched
during the third quarter of 2008, with net additions of 23,456 customers in the fourth quarter of fiscal 2009, compared to
9,982 in the fourth quarter of fiscal 2008. Fiscal 2009 fourth quarter Basic Cable service customers decreased by 5,318
customers compared to a decrease of 4,456 customers in the comparable period of the prior year. HSI service customers
increased by 1,430 customers compared to a decrease of 5,009 customers for the corresponding period in fiscal 2008.
Telephony service increased by 862 customers compared to a decrease of 2,326 customers for the corresponding
periods of the preceding year. Cabovisão has launched new channels and retention strategies, as well as new marketing
and other operating initiatives which should reduce customer attrition in the upcoming quarters.
- 6 -
OPERATING RESULTS – CONSOLIDATED OVERVIEW
Quarters ended August 31, Years ended August 31,
2009 2008
(1)
Change 2009 2008
(1)
Change
($000, except percentages) $ $ % $ $ %
(unaudited) (unaudited) (audited) (audited)
Revenue 316,284 292,873 8.0 1,252,794 1,108,900 13.0
Operating costs 165,042 170,854 (3.4) 720,781 659,978 9.2
Operating income from contin ui ng op erati ons before
amortization
(2)
151,242 122,019 23.9 532,013 448,922 18.5
Operating margin
(2)
47.8% 41.7% 42.5% 40.5%
(1)
Certain comparativ e figures have b een rec lass ified t o c onform to t he cur rent y ear ’s present atio n. Fina ncial informat ion for the prev ious y ear has been r estate d to
reflect the presentation of foreign exchange gains or losses as financial expense instead of operating costs.
(2)
The indicated terms do not have standardized definitions prescribed by Canadian GAAP and therefore, may not be comparable to similar measures presented by
other companies. For more details, please consult the “Non-GAAP financial measures” section.
Consolidated revenue for the fourth quarter rose by $23.4 million, or 8%, when compared to the corresponding period last
year. Cable revenue, driven by increased RGU combined with rate increases and the CDS acquisition in the Canadian
operations, went up by $22.9 million, or 8%. Other sector revenue increased by $0.5 m illion, or 6.4%, in the fourth quarter
of 2009 due to favourable ratings for the Company’s radio stations.
Operating costs decreased by $5.8 million at $165 million, or 3.4%, compared to the fourth quarter of fiscal 2008, mainly
due to the cable sector. The decrease in operating costs in the cable sector is primarily attributable to the favourable
impact of $19.8 million from the Part II licence fee settlement agreement, partly offset by the impact of servicing additional
RGU and the CDS acquisition in Canada, and in Europe, due to the appreciation of the Euro over the Canadian dollar and
an increase in the amount of bad debts. Cabovisão has put together initiatives at the end of the second quarter of 2009 to
better manage its collection processes which management expects will have a favourable impact on the level of bad debts
in fiscal 2010.
Operating income before amortization grew by $29.2 million, or 23.9%, to reach $151.2 million in the fourth quarter 2009,
compared to $122 million for the corresponding period last year. The increase, mainly in the cable sector, results from the
favourable impact of $19.8 million from the Part II licence fee settlement agreement, RGU growth, the CDS acquisition
and various rate increases generating additional revenues which outpaced other operating cost increases. The
Company’s fourth quarter operating margin increased to 47.8% from 41.7% for the corresponding period of the prior year,
mainly as a result of the favourable impact of $21.3 million from the Part II licence fee settlement agreement which
impacted both the cable sector a nd the radio activities.
- 7 -
NON-GAAP FINANCI AL MEASURES
This section describes non-GAAP financial measures used by COGECO throughout this Press release. It also provides
reconciliations between these non-GAAP measures and the most comparable GAAP financial measures. These financial
measures do not have standard definitions prescribed by Canadian GAAP and may not be comparable with similar
measures presented by other companies. These measures include “cash flow from operations from continuing
operations”, “free cash flow”, “operating income from continuing operations before amortization”, “operating margin”,
“adjusted net income”, and “adjusted e arnings per share”.
Cash flow from operations from continuing operations and free cash flow
Cash flow from operations from continuing 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 items. This allows the
Company to isolate the cash flows from operating activities from the impact of cash management decisions. Cash flow
from operations from continuing operations is subsequently used in calculating the non-GAAP measure “free cash flow”.
Free cash flow is used by COGECO’s management and investors to measure COGECO’s ability to repay debt, distribute
capital to its shareholders and finance its growth.
The most comparable Canadian GAAP financial measure is cash flow from operating activities from continuing
operations. Cash flow from operations from continuing operations is calculated as follows:
Quarters ended August 31, Years ended August 31,
2009 2008 2009 2008
($000) $ $ $ $
(unaudited) (unaudited) (audited) (audited)
Cash flow from operating activities from continuing operations 183,620 146,052 437,223 398,491
Changes in non-cash operating items (68,288) (46,083) (30,416) (35,703)
Cash flow from operations from continuing operations 115,332 99,969 406,087 362,788
Free cash flow is calculated as follows:
Quarters ended August 31, Years ended August 31,
2009 2008 2009 2008
($000) $ $ $ $
(unaudited) (unaudited) (audited) (audited)
Cash flow from operations from continuing operations 115,332 99,969 406,807 362,788
Acquisition of fixed assets (89,199) (68,895) (273,733) (229,181)
Increase in deferred charges (9,050) (7,035) (27,292) (27,696)
Assets acquired under capital leases (2,341) (3,058) (4,764) (5,475)
Free cash flow 14,742 20,981 101,018 100,436
- 8 -
Operating income from continuing operation s before amortization and operating margin
Operating income from continuing operations before amortization is used by COGECO’s management and investors to
assess the Company’s ability to seize growth opportunities in a cost effective manner, to finance its ongoing operations
and to service its debt. Operating income from continuing operations before 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
Company's revenue which is left over, before taxes, to pay for its fixed costs, such as interest on Indebtedness
(1)
.
Operating margin is calculated by dividing operating income from continuing operations before amortization by revenue.
The most comparable Canadian GAAP financial measure is operating income from continuing operations. Operating
income from continuing operations before amorti zation and operating margin are calculated as follows:
Quarters ended August 31, Years ended August 31,
2009 2008
(1)
2009 2008
(1)
($000, except percentages) $ $ $ $
(unaudited) (unaudited) (audited) (audited)
Operating income from continuing operations 78,744 60,244 261,013 219,198
Amortization 72,498 61,775 271,000 229,724
Operating income from continuing operations before amortization 151,242 122,019 532,013 448,922
Revenue 316,284 292,873 1,252,794 1,108,900
Operating margin 47.8% 41.7% 42.5% 40.5%
(1)
Certain comparativ e figures have b een rec lass ified t o c onform to t he cur rent y ear ’s present atio n. Fina ncial informat ion for the prev ious y ear has been r estate d to
reflect the presentation of foreign exchange gains or losses as financial expense instead of operating costs.
Adjusted net income and adjusted earnings per share
Adjusted net income and adjusted earnings per share are used by COGECO’s management and investors to evaluate
what would have been the net income and earnings per share excluding the impairment of goodwill and intangible assets,
non-recurring tax adjustments and the Part II licence fee settlement agreement, all net of non-controlling interest, and the
loss from discontinued operations. This allows the Company to isolate the unusual adjustments in order to evaluate the
net income and earnings per sh are from ongoing activities.
(1)
Indebtedness is defined as the total of bank indebtedness, principal on long-term debt and obligations under derivative financial instruments.
- 9 -
The most comparable Canadian GAAP financial measures are net income and earnings per share. Adjusted net income
and adjusted earning s per share are calculated as foll ows:
Quarters ended August 31, Years ended August 31,
2009 2008 2009 2008
($000) $ $ $ $
(unaudited) (unaudited) (audited) (audited)
Net income (loss) 15,233 9,656 (78,525)
25,108
Adjustments:
Impairment of goodwill and intangible assets net of related income
taxes and non-controlling inte rest – – 123,951 –
Non-recurring tax adjustments net of non-controlling interest:
Reduction of withholding and stamp tax contingent liabilities (1,680)
– (5,211)
–
Utilization of pre-acquisition tax losses – – 1,984 –
Reduction of Canadian federal income tax rates – – – (7,909)
Part II licence fee settlement agree m ent net of rela ted inc ome tax es and
non-controlling interest (5,304) – (5,304) –
Loss from discontinued operations – – – 18,057
Adjusted net income 8,249 9,656 36,895 35,256
Weighted average number of multiple voting and subordinate voting
shares outstanding 16,785,330 16,709,946 16,756,610 16,684,809
Effect of dilutive stock options
730 30,427 8,757 60,299
Weighted average number of diluted multiple voting and subordinate
voting shares outstanding 16,786,060 16,740,373 16,765,367 16,745,108
Adjusted earnings per share
Basic 0.49 0.58 2.20 2.11
Diluted 0.49 0.58 2.20 2.11
ADDITIONAL INFORMATION
Additional information relating to the Company, including its 2009 Annual Report and Annual Information Form, is
available on the SEDAR website at www.sedar.com.
ABOUT COGECO
COGECO is a diversified communications company. Through its Cogeco Cable subsidiary, COGECO provides its
residential customers with Audio, Analogue and Digital Television, as well as HSI and Telephony services using its two-
way broadband cable networks. Cogeco Cable also provides, to its commercial customers, data networking, e-business
applications, video conferencing, hosting services, Ethernet, private line, VoIP, HSI access, dark fibre, data storage, data
security and co-location services and other advanced communication solutions. Through its Cogeco Diffusion subsidiary,
COGECO owns and operates the RYTHME FM radio stations in Montréal, Québec City, Trois-Rivières and Sherbrooke,
as well as the FM 93 radio station in Québec City. COGECO’s subordinate voting shares are listed on the Toronto Stock
Exchange (TSX: CGO). The subordinate voting shares of Cogeco Cable are also listed on the Toronto Stock Exchange
(TSX: CCA)
– 30 –
- 10 -
Source: Cogeco Cable Inc.
Pierre Gagné
Senior Vice President and Chief Financial Officer
Tel.: 514-764-4700
Information: Media
Marie Carrier
Director, Corporate Communications
Tel.: 514-764-4700
Analyst Conference Call: Friday, October 30, 2009 at 11:00 A.M. (EDT)
Media representatives may attend as listeners only.
Please use the following dial-in number to have access to the conference call by dialing
ten minutes before the start of the conference:
Canada/USA Access Nu mber: 1 888 300-0053
International Access Number: + 1 647 427-3420
Confirmation Code: 30223367
A rebroadcast of the conference call will be available until November 6, by dialing:
Canada and US Access Number: 1 800 839-9868
International Access Number: + 1 402 220-4283
Confirmation code: 30223367
- 11 -
Supplementary Quarterly Financial Information
(unaudited)
Fiscal 2009
Fiscal 2008
Quarters ended
(1)
Nov. 30
Feb. 28
May 31
Aug. 31
Nov. 30
(2)
Feb. 29
(2)
May 31
(2)
Aug. 31
(2)(3)
($000, except percentages and per share data) $
$
$
$
$ $
$
$
Revenue 308,375
311,825
316,310
316,284
260,255 271,894
283,878
292,873
Operating income from contin ui ng op erati ons before
amortization
(4)
124,704
126,663
129,404
151,242
100,174 109,523
117,206
122,019
Operating margin
(4)
40.4%
40.6%
40.9%
47.8%
38.5% 40.3%
41.3%
41.7%
Operating income from contin ui ng op erati ons 60,641
59,878
61,750
78,744
47,135 53,177
58,642
60,244
Impairment of goodwill and intan gi bl e ass ets –
399,648
–
–
– –
–
–
Net income (loss) from continuing operations 11,053
(115,291)
10,480
15,233
7,656 16,315
9,538
9,656
Net loss from discontinued operations –
–
–
–
(17,632)
(425)
–
–
Net income (l oss) 11,053
(115,291)
10,480
15,233
(9,976)
15,890
9,538
9,656
Adjusted net income
(4)
11,053
8,660
8,933
8,249
7,656 8,406
9,538
9,656
Cash flow from operating activities from continuing operations 30,470
120,480
102,653
183,620
46,604 92,942
112,893
146,052
Cash flow from operations from continuing operations
(4)
95,626
100,351
95,498
115,332
81,377 85,374
96,068
99,969
Free cash flow
(4)
21,771
32,089
32,416
14,742
22,974 19,374
37,107
20,981
Earnings (loss) per share
(5)
Basic
Income (loss) from continuing operations 0.66
(6.89)
0.63
0.91
0.46 0.98
0.57
0.58
Loss from discontinued operations –
–
–
–
(1.06)
(0.03)
–
–
Net income (l oss) 0.66
(6.89)
0.63
0.91
(0.60)
0.95
0.57
0.58
Adjusted net income
(4)
0.66
0.52
0.53
0.49
0.46 0.50
0.57
0.58
Diluted
Income (loss) from continuing operations 0.66
(6.89)
0.63
0.91
0.46 0.97
0.57
0.58
Loss from discontinued operations –
–
–
–
(1.06)
(0.03)
–
–
Net income (l oss) 0.66
(6.89)
0.63
0.91
(0.60)
0.95
0.57
0.58
Adjusted net income
(4)
0.66
0.52
0.53
0.49
0.46 0.50
0.57
0.58
(1)
The addition of quarterly information may not correspond to the annual total given rounding.
(2)
Certain comparativ e figures have bee n reclassified to c onform to the current year’s presentation to refl ect the reclassific ation of for eign exchange g ains or losses
from operating costs to financial expense.
(3)
Includes the results of CDS since the date of acquisition of control on July 31, 2008.
(4)
The indicated terms do not have s tandardized definitions pres cribed by Canadian Generally Accepted Accounting Pri nciples (“GAAP” ) and therefore, may not b e
comparable to similar measures presented by other companies. For more details, please consult the “Non-GAAP financial measures” section of the Results
overview.
(5)
Per multiple and subordinate voting share
SEASONAL VARIATIONS
Cogeco Cable’s operating results are not generally subject to material seasonal fluctuations. However, the loss in Basic
Cable service customers is usually greater, and the addition of HSI service customers is generally lower, in the second
half of the fiscal year as a result of a decrease in economic activity due to the beginning of the vacation period, the end of
the television seasons, and students leaving their campuses at the end of the school year. Cogeco Cable offers its
services in several university and college towns such as Kingston, Windsor, St. Catharines, Hamilton, Peterborough,
Trois-Rivières and Rimouski in Canada, and Aveiro, Covilhã, Evora, Guarda and Coimbra in Portugal. Furthermore, the
operating margin in the third and fourth quarters is generally higher as the maximum amount payable to COGECO under
the management agreement is usually reached in the second quarter of the year. As part of the management agreement
between Cogeco Cable and COGECO, Cogeco Cable pays management fees to COGECO equivalent to 2% of its
revenue subject to an annual maximum amount, which is adjusted annually to reflect the increase in the Canadian
Consumer Price index. For fiscal 2009 and 2008, the maximum amounts of $9 million and $8.7 million, respectively, were
attained in the second quarters and therefore, no management fees were paid in the third or fourth quarters of the 2009
and 2008 fiscal years.
- 12 -
Cable Customer Statistics
(unaudited)
August 31, 2009 August 31, 2008
Homes passed
Ontario 1,049,818 1,029,121
Québec 515,327 502,490
Canada 1,565,145 1,531,611
Portugal 905,129
(1)
895,923
Total 2,470,274 2,427,534
Revenue generating units
Ontario 1,483,324 1,387,054
Québec 676,539 604,854
Canada 2,159,863 1,991,908
Portugal 732,375 724,966
Total 2,892,238 2,716,874
Basic Cable service customers
Ontario 597,651 596,229
Québec 267,154 260,865
Canada 864,805 857,094
Portugal 259,480 296,135
Total 1,124,285 1,153,229
High Speed Internet service customers
Ontario 374,906 352,553
Québec 140,146 120,914
Canada 515,052 473,467
Portugal 143,614 159,301
Total 658,666 632,768
Digital Television service customers
Ontario 326,227 288,345
Québec 172,171 153,401
Canada 498,398 441,746
Portugal 102,753 24,452
Total 601,151 466,198
Telephony service customer s
Ontario 184,540 149,927
Québec 97,068 69,674
Canada 281,608 219,601
Portugal 226,528 245,078
Total 508,136 464,679
(1)
Cogeco Cable is currently assessing the number of homes passed.