Cogeco Cable Announces Strong Financial Results for the First Quarter of Fiscal 2013

MONTRÉAL, QUÉBEC--(Marketwire - Jan. 14, 2013) - 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, Cabovisão - Televisão por Cabo, S.A. ("Cabovisão"), 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 30^th;
  
  
• 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

			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	)
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	)
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
Primary service units ("PSU") growth (4)			15,080		46,179		(67.3	)
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		-

(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

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	)
Operating income before depreciation and amortization	147,126		131,823		11.6
Operating margin	44.9	%	41.8	%

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, Cabovisão - Televisão por Cabo, S.A. ("Cabovisão"), 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

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

						CANADA
				Net additions (losses)			% of penetration (1)
	Consolidated	USA	CANADA	Quarters ended November 30,				November 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

(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

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

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
Operating income before depreciation and amortization	9,818		8,565		14.6
Operating margin	41.8	%	39.4	%

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,				May 31,				February 29,		February 28,
(in thousands of dollars, except percentages and per share data)			2012		2011		2012		2011		2012		2011		2012		2011
			$		$		$		$		$		$		$		$
Revenue			327,911		315,424		324,768		305,811		319,771		298,211		317,735		293,457
Operating income before depreciation and amortization			147,126		131,823		160,825		151,579		152,661		138,147		143,743		130,399
Operating margin			44.9	%	41.8	%	49.5	%	49.6	%	47.7	%	46.3	%	45.2	%	44.4	%
Operating income			75,160		66,999		94,709		97,941		90,981		86,995		59,491		80,426
Income taxes			17,400		10,603		32,987		20,713		21,449		18,747		13,617		15,007
Profit for the period from continuing operations			42,160		39,567		45,705		62,745		53,159		52,352		31,086		41,319
Profit (loss) for the period from discontinued operations			-		3,399		-		6,219		-		(233,573	)	52,047		(9,223	)
Profit (loss) for the period			42,160		42,966		45,705		68,964		53,159		(181,221	)	83,133		32,096
Cash flow from operating activities			(280	)	13,807		203,343		211,847		112,275		142,009		120,961		88,420
Cash flow from operations			99,845		97,043		126,946		144,699		113,075		125,923		104,622		114,682
Acquisitions of property, plant and equipment, intangible and other assets			82,833		77,283		124,392		120,663		87,459		62,782		86,234		61,079
Free cash flow			17,012		19,760		2,554		24,036		25,616		63,141		18,388		53,603
Earnings (loss) per share(1)
	From continuing and discontinued operations
		Basic	0.87		0.88		0.94		1.42		1.09		(3.73	)	1.71		0.66
		Diluted	0.86		0.88		0.93		1.42		1.09		(3.73	)	1.70		0.66
	From continuing operations
		Basic	0.87		0.81		0.94		1.29		1.09		1.08		0.64		0.85
		Diluted	0.86		0.81		0.93		1.29		1.09		1.08		0.63		0.85
	From discontinued operations
		Basic	-		0.07		-		0.13		-		(4.80	)	1.07		(0.19	)
		Diluted	-		0.07		-		0.13		-		(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 Québec. 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 12^th 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 Call:	Tuesday, January 15, 2013 at 9:30 a.m. (Eastern 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