Cogeco Cable Inc. Posts Solid Third Quarter Results for Fiscal 2014

MONTRÉAL, QUÉBEC--(Marketwired - July 9, 2014) - Today, Cogeco Cable Inc. (TSX:CCA) ("Cogeco Cable" or the "Corporation") announced its financial results for the third quarter of fiscal 2014, ended May 31, 2014, in accordance with International Financial Reporting Standards ("IFRS").

For the third quarter and first nine months of fiscal 2014:

• Third quarter revenue increased by $32.0 million, or 6.9%, to reach $496.4 million driven by growth of 3.5% in the Canadian cable services segment, of 12.2% in the American cable services segment and of 15.3% in the Enterprise services segment. Revenue increased organically from all of our operating units combined with favorable foreign exchange rates in our foreign operations. For the nine-month period ended May 31, 2014, revenue reached close to $1.5 billion, an increase of $235.4 million, or 19.3% driven by growth of 2.4% in the Canadian cable services segment, of 65.7% in the American cable services segment and of 75.4% in the Enterprise services segment. Revenue increased mainly attributable to the full year impact of the acquisitions of Atlantic Broadband and Peer 1 Hosting⁽²⁾ ("the recent acquisitions") which both occurred during fiscal 2013 combined with the organic growth from all of our operating segments and favorable foreign exchange rates in our foreign operations;

• Adjusted EBITDA⁽¹⁾ increased by 6.6% to $229.4 million compared to the third quarter of fiscal 2013, and by 18.7% to $662.5 million for the first nine months compared to the same period of the prior year. The rapid progression for both periods resulted mainly from the recent acquisitions, the improvement in all of our operating segments as well as the favorable foreign exchange rates for our foreign operations compared to the same period of last year;

• Operating margin⁽¹⁾ slightly decreased to 46.2% in the quarter and to 45.5% in the first nine months compared to 46.3% and 45.7% for the same periods of the prior year as a result of lower margins from the business activities of the American cable services and Enterprise services segments;

• During the third quarter of fiscal 2014, the Corporation's subsidiary, Cogeco Cable Canada, recognized an impairment of $32.2 million of property, plant and equipment, capitalized wages and borrowing costs related to an Internet Protocol Television ("IPTV") solution project on which its Canadian cable services segment had worked. As a result of the unexpected performance issues encountered with the platform, it had to be abandoned by Cogeco Cable Canada.

Subsequently, in order to enhance its competitiveness, Cogeco Cable Canada has concluded a partnership with TiVo Inc. ("TiVo"), a global leader in next-generation television services that enable viewers to consume content across all screens in and out-of-the home to be launched at Cogeco Cable Canada by mid-fiscal 2015. The TiVo solution was successfully launched in the first half of fiscal 2014 at the Corporation's Atlantic Broadband subsidiary with great customer acceptance;

• Profit for the third quarter amounted to $35.5 million compared to $48.1 million in fiscal 2013. The decline for the quarter is attributable to the impairment of property, plant and equipment explained above, partly offset by the improvement of the adjusted EBITDA. For the first nine months of fiscal 2014, profit for the period amounted to $145.6 million compared to $141.0 million for the comparable period of the prior year. Profit progression for the period is mostly attributable to the improvement of the adjusted EBITDA explained above combined with the decrease in integration, restructuring and acquisition costs, partly offset by the impairment of property, plant and equipment also explained above as well as the increases in financial expense and depreciation and amortization expense essentially related to the recent acquisitions;

• Third quarter free cash flow⁽¹⁾ increased by $48.1 million to reach $91.1 million compared to $43.0 million in the third quarter of fiscal 2013. This increase is mainly due to the improvement of adjusted EBITDA and the decrease in acquisitions of property, plant and equipment due to the timing of certain initiatives. For the first nine months, free cash flow increased by $156.6 million to reach $252.5 million compared to $95.9 million for the same period of fiscal 2013. This variance is mostly attributable to the improvement of adjusted EBITDA, the decrease in acquisitions of property, plant and equipment due to the timing of certain initiatives as well as the decrease in integration, restructuring and acquisition costs, partly offset by the increase in financial expense due to higher indebtedness level from the recent acquisitions;

• Fiscal 2014 third-quarter cash flow from operating activities reached $184.4 million compared to $167.0 million, an increase of $17.5 million, or 10.5%, compared to fiscal 2013 third-quarter. The increase is mainly attributable to the improvement of the adjusted EBITDA and the increase in changes in non-cash operating activities, partly offset by the increase in financial expense paid. For the first nine months of fiscal 2014, cash flow from operating activities reached $429.2 million compared to $316.8 million, an increase of $112.4 million, or 35.5%, compared to the same period in fiscal 2013. The increase is mostly attributable to the improvement of the adjusted EBITDA as well as the decreases in integration, restructuring and acquisitions costs and in income tax paid, partly offset by the increase in financial expense paid; and

• A quarterly dividend of $0.30 per share was paid to the holders of subordinate and multiple voting shares, an increase of $0.04 per share, or 15.4%, compared to a dividend of $0.26 per share paid in the third quarter of fiscal 2013. Dividend payments in the first nine months totaled $0.90 per share in fiscal 2014 compared to $0.78 per share in the comparable period of fiscal 2013.

(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)	Peer 1 Hosting refers to Peer 1 Network (USA) Holdings Inc., Peer 1 (UK) Ltd. and Peer 1 Network Enterprises, Inc.

"We continue to be pleased with our solid quarterly results. The improvement of our adjusted EBITDA, in these highly competitive industries, stemmed from generating more revenue from current and new customers while maintaining appropriate cost controls. This enabled us to keep growing and achieving the Corporation's financial objectives," declared Louis Audet, President and Chief Executive Officer of Cogeco Cable Inc.

"Moreover, I am delighted that we were able to build on the success achieved by the TiVo video platform at our Atlantic Broadband subsidiary by extending our partnership to bring this world leading platform to our Canadian customers at our Cogeco Cable Canada subsidiary. We expect to launch by mid-fiscal 2015. Excluding the impact of the impairment related to the prior attempt at developing an alternate IPTV video platform, we expect to meet our Fiscal 2014 guidance" concluded Louis Audet.

ABOUT COGECO CABLE

Cogeco Cable Inc. (www.cogeco.ca) is a telecommunications corporation. It is the 11th largest cable operator in North America operating in Canada under the Cogeco Cable Canada name in Quebec and Ontario, and in the United States under the Atlantic Broadband name in Western Pennsylvania, South Florida, Maryland/Delaware and South Carolina. Its two-way broadband fibre networks provide to its residential and business customers analogue and digital television, high speed Internet and telephony services. Through its subsidiaries Cogeco Data Services and Peer 1 Hosting, Cogeco Cable Inc. provides to its commercial customers a suite of information technology services (colocation, managed and dedicated hosting, managed IT, cloud and connectivity services), with 20 data centres, extensive fibre networks in Montreal and Toronto as well as points-of-presence in North America and Europe. Cogeco Cable Inc.'s subordinate voting shares are listed on the Toronto Stock Exchange (TSX:CCA).

Analyst Conference Call:	Thursday, July 10, 2014 at 11:00 a.m. (Eastern Daylight Time)
	Media representatives may attend as listeners only.
	Please use the following dial-in number to have access to the conference call by dialing five minutes before the start of the conference:
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	International Access Number: + 1 416-640-5926
	Confirmation Code: 2083261
	By Internet at www.cogeco.ca/investors
	A rebroadcast of the conference call will be available until July 16, 2014, by dialing:
	Canada and United States access number: 1 888-203-1112
	International access number: + 1 647-436-0148
	Confirmation code: 2083261

FINANCIAL HIGHLIGHTS 

		Quarters ended						Nine months ended
(in thousands of dollars, except percentages and per share data)		May 31,		May 31,				May 31,		May 31,
		2014		2013 (2)		Change		2014		2013 (2)		Change
		$		$		%		$		$		%
Operations
Revenue		496,448		464,497		6.9		1,457,436		1,222,080		19.3
Adjusted EBITDA(1)		229,389		215,182		6.6		662,527		558,184		18.7
Operating margin(1)		46.2	%	46.3	%	-		45.5	%	45.7	%	-
Impairment of property, plant and equipment		32,197		-		-		32,197		-		-
Profit for the period		35,514		48,079		(26.1	)	145,593		141,025		3.2
Profit for the period attributable to owners of the Corporation		35,514		47,877		(25.8	)	145,593		141,025		3.2
Cash Flow
Cash flow from operating activities		184,435		166,976		10.5		429,173		316,780		35.5
Cash flow from operations(1)		175,595		155,868		12.7		502,872		396,000		27.0
Acquisitions of property, plant and equipment, intangible and other assets		84,452		112,841		(25.2	)	250,347		300,107		(16.6	)
Free cash flow(1)		91,143		43,027		-		252,525		95,893		-
Financial Condition(3)
Property, plant and equipment		-		-		-		1,773,325		1,854,155		(4.4	)
Total assets		-		-		-		5,206,189		5,254,419		(0.9	)
Indebtedness(4)		-		-		-		2,858,303		2,944,182		(2.9	)
Shareholders' equity		-		-		-		1,456,730		1,342,940		8.5
Capital intensity(1)		17.0	%	24.3	%	-		17.2	%	24.6	%	-
Per Share Data(5)
Earnings per share
	Basic	0.73		0.98		(25.5	)	2.99		2.90		3.1
	Diluted	0.72		0.98		(26.5	)	2.96		2.88		2.8

(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)	Comparative figures have been adjusted to comply with the adoption of IAS 19 - Employee Benefits. For further details, please refer to Note 2 of the condensed interim consolidated financial statements.
(3)	At May 31, 2014 and August 31, 2013.
(4)	Indebtedness is defined as the aggregate of bank indebtedness, principal on long-term debt and obligations under derivative financial instruments.
(5)	Per multiple and subordinate voting share.

MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)

Three and nine-month periods ended May 31, 2014

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 2013 annual MD&A as well as in the present MD&A) that could cause actual results to differ materially from what Cogeco Cable currently expects. These factors include namely risks pertaining to markets and competition, technology, regulatory developments, operating costs, information systems, disasters or other contingencies, financial risks related to capital requirements, human resources, controlling shareholder and holding structure, many of which are beyond the Corporation'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 Corporation is under no obligation and does not undertake to update or alter this information at any particular time, except as may required by law.

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 for the three and nine-month periods ended May 31, 2014, prepared in accordance with the International Financial Reporting Standards ("IFRS") and the MD&A included in the Corporation's 2013 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 and enhancing its existing services or bundles, improving the networks, improving customer experience and business processes as well as keeping a sound capital management and a strict control over spending. The Corporation measures its performance, with regard to these objectives by monitoring adjusted EBITDA⁽¹⁾, operating margin⁽¹⁾, free cash flow⁽¹⁾ and capital intensity⁽¹⁾.

KEY PERFORMANCE INDICATORS

ADJUSTED EBITDA AND OPERATING MARGIN

For the nine-month period ended May 31, 2014, adjusted EBITDA increased by 18.7% to reach $662.5 million compared to the same period of fiscal 2013 and operating margin slightly decreased to 45.5% from 45.7%. Improvement in the adjusted EBITDA is mainly attributable to the full impact of the acquisitions of Atlantic Broadband and Peer 1 Hosting⁽²⁾ (the "recent acquisitions") which occurred at the end of the first quarter and in the second quarter of fiscal 2013, respectively, combined with the favorable foreign exchange rates benefiting our foreign operations as well as the organic growth in the Canadian cable services segment.

FREE CASH FLOW

For the nine-month period ended May 31, 2014, Cogeco Cable reported free cash flow of $252.5 million, an increase of $156.6 million compared to $95.9 million for the same period of the previous fiscal year. This variance is mostly attributable to the improvement of adjusted EBITDA explained above, the decrease in acquisitions of property, plant and equipment due to the timing of certain initiatives as well as the decrease in integration, restructuring and acquisition costs, partly offset by the increase in financial expense due to higher indebtedness level from the recent acquisitions.

CAPITAL INTENSITY AND ACQUISITIONS OF PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE AND OTHER ASSETS

During the nine-month period ended May 31, 2014, the acquisitions of property, plant and equipment, intangible and other assets amounted to $250.3 million and revenue close to $1.5 billion for a capital intensity ratio of 17.2% compared to 24.6% in the comparable period of the prior year. Capital intensity ratio has declined mainly as result of higher revenue for the first nine months of fiscal 2014 as a result of the full impact of the recent acquisitions combined with lower acquisitions of property, plant and equipment, intangible and other assets due to the timing of certain initiatives compared to the same period of the prior year. For further details on the Corporation's capital expenditures please refer to the "Cash flow analysis" section.

BUSINESS DEVELOPMENTS AND OTHER

During the third quarter of fiscal 2014, the Corporation's subsidiary, Cogeco Cable Canada, recognized an impairment of $32.2 million of property, plant and equipment, capitalized wages and borrowing costs related to an Internet Protocol Television ("IPTV") solution project on which its Canadian cable services segment had worked. As a result of the unexpected performance issues encountered with the platform, it had to be abandoned by Cogeco Cable Canada. Subsequently, in order to enhance its competitiveness, Cogeco Cable Canada has concluded a partnership with TiVo Inc. ("TiVo"), a global leader in next-generation television services that enable viewers to consume content across all screens in and out-of-the home to be launched at Cogeco Cable Canada by mid-fiscal 2015. The TiVo solution was successfully launched in the first half of fiscal 2014 at the Corporation's Atlantic Broadband subsidiary with great customer acceptance.

On June 30, 2014, Cogeco Cable's subsidiary, Atlantic Broadband, amended its First Lien Credit Facilities. Pursuant to the amendment, US$15 million of the Term Loan A Facility was converted into the Revolving Facility. In addition, the Revolving Facility was increased by US$35 million of which the proceeds were used to reimburse a portion of the Term Loan B. Giving effect to this amendment, the combined amounts borrowed under the Term Loan A, Term Loan B and the Revolving Facility have not changed. All other terms and conditions related to covenants, interest rates and maturity remained the same. In connection with the amendment, transaction costs of US$0.4 million were incurred which are expected to be more than off-set by interest expense savings over the next year.

(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)	Peer 1 Hosting refers to Peer 1 Network (USA) Holdings Inc., Peer 1 (UK) Ltd. and Peer 1 Network Enterprises, Inc.

OPERATING AND FINANCIAL RESULTS

OPERATING RESULTS

	Quarters ended					Nine months ended
	May 31, 2014		May 31, 2013 (1)		Change	May 31, 2014		May 31, 2013 (1)		Change
(in thousands of dollars, except percentages)	$		$		%	$		$		%
Revenue	496,448		464,497		6.9	1,457,436		1,222,080		19.3
Operating expenses	267,059		249,315		7.1	785,235		654,327		20.0
Management fees - COGECO Inc.	-		-		-	9,674		9,569		1.1
Adjusted EBITDA	229,389		215,182		6.6	662,527		558,184		18.7
Operating margin	46.2	%	46.3	%		45.5	%	45.7	%

(1)	Comparative figures have been adjusted to comply with the adoption of IAS 19 - Employee Benefits. For further details, please refer to Note 2 of the condensed interim consolidated financial statements.

REVENUE

Fiscal 2014 third-quarter revenue increased by $32.0 million, or 6.9%, to reach $496.4 million driven by growth of 3.5% in the Canadian cable services segment, of 12.2% in the American cable services segment and of 15.3% in the Enterprise services segment. Revenue increased organically from all of our operating units combined with favorable foreign exchange rates for our foreign operations. For the nine-month period ended May 31, 2014, revenue reached approximately $1.5 billion, an increase of $235.4 million, or 19.3% driven by growth of 2.4% in the Canadian cable services segment, of 65.7% in the American cable services segment and of 75.4% in the Enterprise services segment. Revenue increased mainly attributable to the full year impact of the recent acquisitions which both occurred during fiscal 2013 combined with the organic growth from all of our operating segments and favorable foreign exchange rates in our foreign operations. For further details on the Corporation's revenue, please refer to the "Segmented operating results" section.

OPERATING EXPENSES AND MANAGEMENT FEES

For the third quarter of fiscal 2014, operating expenses increased by $17.7 million, to reach $267.1 million, an increase of 7.1% compared to the prior year. For the first nine months of the fiscal year, operating expenses amounted to $785.2 million, an increase of $130.9 million, or 20.0%, compared to the same period of fiscal 2013. Operating expenses increased was due to the full year impact of the recent acquisitions and the appreciation of the US dollar and British Pound currency compared to the Canadian dollar. For further details on the Corporation's operating expenses, please refer to the "Segmented operating results" section.

For the third quarter of fiscal 2014 and 2013, there was no management fees paid to COGECO Inc. For the first nine months of the fiscal year 2014, management fees paid to COGECO Inc. amounted to $9.7 million, 1.1% higher compared to $9.6 million in the comparable period of fiscal 2013. For further details on the Corporation's management fees, please refer to the "Related party transactions" section.

ADJUSTED EBITDA AND OPERATING MARGIN

For the three and nine-month periods ended May 31, 2014, adjusted EBITDA increased by $14.2 million, or 6.6%, to reach $229.4 million, and by $104.3 million, or 18.7%, to reach $662.5 million, respectively, compared to the comparable periods of the prior year. The increase for the quarter is mainly attributable to the improvement from all our operating segments as well as the favorable foreign exchange rates for our foreign operations compared to the same periods of last year while the increase for the first nine months is largely attributable to the full year impact of the recent acquisitions. Cogeco Cable's third-quarter operating margin slightly decreased to 46.2% from 46.3% and to 45.5% from 45.7% for the first nine months of fiscal 2014 compared to the comparable periods of the prior year essentially due to lower margin business activities from the American cable services and Enterprise services segments. For further details on the Corporation's adjusted EBITDA and operating margin, please refer to the "Segmented operating results" section.

FIXED CHARGES

	Quarters ended				Nine months ended
	May 31,	May 31,			May 31,	May 31,
	2014	2013 (1)	Change		2014	2013 (1)	Change
(in thousands of dollars, except percentages)	$	$	%		$	$	%
Depreciation and amortization	117,653	111,445	5.6		346,540	268,611	29.0
Financial expense	32,038	35,146	(8.8	)	97,505	80,068	21.8

(1)	Comparative figures have been adjusted to comply with the adoption of IAS 19 - Employee Benefits. For further details, please refer to Note 2 of the condensed interim consolidated financial statements.

For the three and nine-month periods ended May 31, 2014, depreciation and amortization expense amounted to $117.7 million and $346.5 million, respectively, compared to $111.4 million and $268.6 million for the same periods of the prior year. The increase for the quarter is mostly attributable to the appreciation of the US dollar and the British Pound currency compared to the Canadian dollar. The increase for the first nine months of fiscal 2014 results mainly from the full year impact of the recent acquisitions, which occurred at the end of the first quarter and in the second quarter of fiscal 2013 and by currency appreciation of the US dollar and the British Pound compared to the Canadian dollar.

Fiscal 2014 third-quarter financial expense decreased by 8.8% to $32.0 million compared to $35.1 million in fiscal 2013 third-quarter as a result of a lower indebtedness level. For the first nine months of fiscal 2014, financial expense increased by $17.4 million, or 21.8%, at $97.5 million, compared to $80.1 million in the prior year as a result of the full year impact of financing costs related to the recent acquisitions.

IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT

During the third quarter of fiscal 2014, the Corporation's subsidiary, Cogeco Cable Canada, recognized an impairment of $32.2 million of property, plant and equipment, capitalized wages and borrowing costs related to an IPTV solution project on which its Canadian Cable services segment had worked. As a result of the unexpected performance issues encountered with the platform, it had to be abandoned by Cogeco Cable Canada.

INCOME TAXES

For the three and nine-month periods ended May 31, 2014, income tax expense amounted to $8.8 million and $36.9 million, respectively, compared to $18.4 million and $51.6 million, respectively, for the comparable periods in the prior year. The decrease is mostly attributable to the impairment of property, plant and equipment, the increase in fixed charges as well as the favorable impact of the tax structure following the recent acquisitions, partly offset by the improvement in adjusted EBITDA.

PROFIT FOR THE PERIOD

For the third quarter of fiscal 2014, profit for the period amounted to $35.5 million, or $0.73 per share, compared to $48.1 million, or $0.98 per share last year. The decline for the quarter is attributable to the impairment of property, plant and equipment explained above, partly offset by the improvement of the adjusted EBITDA. For the nine-month period ended May 31, 2014, profit for the period amounted to $145.6 million, or $2.99 per share, compared to $141.0 million, or $2.90 for the comparable period. Profit progression for the period is mostly attributable to the improvement of the adjusted EBITDA explained above as well as the decrease in integration, restructuring and acquisition costs, partly offset by the impairment of property, plant and equipment and the increase in fixed charges explained above.

CUSTOMER STATISTICS

				Consolidated
				Net additions (losses)				Net additions (losses)
	Consolidated	UNITED STATES	CANADA	Quarters ended				Nine months ended
		May 31, 2014		May 31, 2014		May 31, 2013		May 31, 2014		May 31, 2013
PSU (1)	2,452,118	495,674	1,956,444	(2,509	)	(1,079	)	(15,539	)	20,783
Television service customers	1,034,991	227,160	807,831	(9,620	)	(8,407	)	(31,961	)	(21,143	)
HSI service customers	865,597	188,795	676,802	7,811		4,603		27,152		27,340
Telephony service customers	551,530	79,719	471,811	(700	)	2,725		(10,730	)	14,586

(1)	Represents the sum of Television, High Speed Internet ("HSI") and Telephony service customers.

At May 31, 2014, PSU reached 2,452,118 of which 1,956,444 came from the Canadian cable services segment and 495,674 came from the American cable services segment. For the three and nine-month periods ended May 31, 2014, PSU net losses stood at 2,509 and 15,539, respectively, compared to 1,079 and net additions of 20,783 for the comparable periods of fiscal 2013. Fiscal 2014 third-quarter and first nine months net losses for Television service customers stood at 9,620 and 31,961 compared to 8,407 and 21,143, HSI service customers grew by 7,811 and 27,152 compared to 4,603 and 27,340 and the Telephony service customers net losses stood at 700 and 10,730 compared to net additions of 2,725 and 14,586 for the comparable periods of fiscal 2013. HSI net additions continued to stem from the enhancement of the product offering and the positive impact of the bundle offer.

In the Canadian cable services segment, PSU decreased by 5,633 for the third-quarter of fiscal 2014, compared to a decrease of 1,013 for the comparable period last year. For the first nine months of fiscal 2014, PSU decreased by 23,678, compared to an increase of 17,089 for the comparable period in 2013. The decrease is explained by service category maturity and a much more competitive environment for all services.

In the American cable services segment, PSU increased by 3,124 for the third-quarter of fiscal 2014, compared to a decrease of 66 for the same period of prior year. For the first nine months of fiscal 2014, PSU increased by 8,139, compared to an increase of 3,694 for the comparable period in 2013. The increase is explained by additional HSI and Telephony services, offset by losses in the Television service.

RELATED PARTY TRANSACTIONS

Cogeco Cable Inc. is a subsidiary of COGECO Inc., which holds 32.0% of the Corporation's equity shares, representing 82.5% of the Corporation's voting shares. On September 1, 1992, Cogeco Cable Inc. executed a management agreement with COGECO Inc. under which the parent company agreed to provide certain executive, administrative, legal, regulatory, strategic and financial planning services and additional services to the Corporation and its subsidiaries (the "Management Agreement"). These services are provided by COGECO Inc.'s senior executives, including the President and Chief Executive Officer, the Senior Vice President and Chief Financial Officer, the Vice President, Corporate Affairs, Chief Legal Officer and Secretary, the Vice President, Regulatory Affairs and Copyright, the Vice President, Corporate Development, the Vice President and Treasurer, the Vice President, Public Affairs and Communications and the Vice President, Internal Audit and Risk Management. No direct remuneration is payable to such senior executives by the Corporation. However, the Corporation granted 84,250 stock options (71,233 in 2013) to these senior executives as senior executives of Cogeco Cable during the first nine months of fiscal year 2014. During the third quarter and first nine months of fiscal 2014, the Corporation charged COGECO Inc. amounts of $124,000 and $286,000 ($99,000 and $275,000 in 2013) with regards to the Corporation's stock options granted to these senior executives.

During the first nine months of fiscal 2014 the Corporation also granted 12,550 (12,280 in 2013) Incentive Share Units ("ISUs") to these senior executives as senior executives of Cogeco Cable. During the third quarter and first nine months of fiscal 2014, the Corporation charged COGECO Inc. amounts of $122,000 and $440,000 ($117,000 and $336,000 in 2013) with regards to the Corporation's ISUs granted to these senior executives.

Under the Management Agreement, the Corporation pays monthly fees equal to 2% of its total revenue to COGECO Inc. for the above-mentioned services. The management fees are subject to annual upward adjustment based on increases in the Consumer Price Index in Canada. This limit can be increased under certain circumstances upon request to that effect by COGECO Inc. For fiscal year 2014, management fees have been set at a maximum of $9.7 million ($9.6 million in 2013), which were paid within the first half of the fiscal year. For fiscal year 2013, management fees were also fully paid in the first half of the year. In addition, the Corporation reimburses COGECO Inc.'s out-of-pocket expenses incurred with respect to services provided to the Corporation under the Management Agreement.

Details regarding the Management Agreement and stock options and ISUs granted to COGECO Inc.'s senior executives are provided in the Corporation's 2013 Annual Report.

There were no other material related party transactions during the periods covered.

CASH FLOW ANALYSIS

	Quarters ended				Nine months ended
	May 31,		May 31,		May 31,		May 31,
	2014		2013 (2)		2014		2013(2)
(in thousands of dollars)	$		$		$		$
Cash flow from operations(1)	175,595		155,868		502,872		396,000
Changes in non-cash operating activities	15,397		(2,526	)	(77,388	)	(78,708	)
Amortization of deferred transaction costs and discounts on long-term debt	(1,898	)	(3,580	)	(5,628	)	(7,043	)
Income taxes paid	(15,995	)	(16,894	)	(53,538	)	(76,902	)
Current income tax expense	22,162		25,789		68,932		73,907
Financial expense paid	(42,864	)	(26,827	)	(103,582	)	(70,542	)
Financial expense	32,038		35,146		97,505		80,068
Cash flow from operating activities	184,435		166,976		429,173		316,780
Cash flow from investing activities	(84,427	)	(135,161	)	(249,742	)	(2,305,469	)
Cash flow from financing activities	(123,719	)	(31,688	)	(189,870	)	1,809,398
Effect of exchange rate changes on cash and cash equivalents denominated inforeign currencies	(535	)	1,089		1,390		1,794
Net change in cash and cash equivalents	(24,246	)	1,216		(9,049	)	(177,497	)
Cash and cash equivalents, beginning of the period	54,772		36,678		39,575		215,391
Cash and cash equivalents, end of the period	30,526		37,894		30,526		37,894

(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)	Comparative figures have been adjusted to comply with the adoption of IAS 19 - Employee Benefits. For further details, please refer to Note 2 of the condensed interim consolidated financial statements.

OPERATING ACTIVITIES

Fiscal 2014 third-quarter cash flow from operating activities reached $184.4 million compared to $167.0 million, an increase of $17.5 million, or 10.5%, compared to fiscal 2013 third-quarter. The increase is mainly explained by the improvement of adjusted EBITDA of $14.2 million and by the increase of $17.9 million in non-cash operating activities as a result of an increase in trade and other payables compared to a decrease in the comparable period, partly offset by a lower decrease in trade and other receivables compared to the prior year and an increase of financial expense paid of $16.0 million. For the first nine months of fiscal 2014, cash flow from operating activities reached $429.2 million compared to $316.8 million, an increase of $112.4 million, or 35.5%, compared to the same period in fiscal 2013. The increase is mainly explained by the improvement of adjusted EBITDA of $104.3 million combined with a decrease of $23.4 million in income taxes paid and a decrease of $13.1 million in integration, restructuring and acquisition costs, partly offset by an increase of financial expense paid of $33.0 million.

For the three and nine-month periods ended May 31, 2014, cash flow from operations amounted to $175.6 million and $502.9 million, respectively, compared to $155.9 million and $396.0 million for the comparable periods in fiscal 2013, representing increases of $19.7 million, or 12.7%, and $106.9 million, or 27.0%, respectively. For both periods, the increases are mainly explained by the improvement of adjusted EBITDA of $14.2 million and $104.3 million, respectively.

INVESTING ACTIVITIES

For the three and nine-month periods ended May 31, 2014, investing activities amounted to $84.4 million and $249.7 million, respectively, mainly due to the acquisitions of property, plant and equipment, intangible and other assets. For the comparable periods of fiscal 2013, investing activities amounted to $135.2 million and $2.3 billion explained below.

BUSINESS COMBINATIONS IN FISCAL 2013

On January 31, 2013 and on April 3, 2013, the Corporation acquired 100% of the issued and outstanding shares of Peer 1 Hosting one of the world's leading internet infrastructure providers, specializing in managed hosting, dedicated servers, cloud services and colocation. During the second quarter of fiscal 2014, the Corporation finalized the purchase price allocation of Peer 1 Hosting which had no impact on the statement of profit or loss and comprehensive income for the three and nine-month periods ended May 31, 2013. The impact of the finalization on the statement of financial position at August 31, 2013, increased income tax receivable by $0.7 million, increased deferred tax assets by $4.4 million, decreased intangibles assets by $0.9 million, decreased goodwill by $2.8 million, increased deferred tax liabilities by $2.5 million and decreased accumulated other comprehensive income by $1.2 million.

On November 30, 2012, the Corporation completed the acquisition of all the outstanding shares of Atlantic Broadband, an independent cable system operator formed in 2003, providing Analogue and Digital Television, as well as HSI and Telephony services to residential and small and medium business customers. During the first quarter of fiscal 2014 the Corporation finalized the purchase price allocation of Atlantic Broadband which remained unchanged since the last adjustments made in the fourth quarter of fiscal 2013.

The final purchase price allocations of Atlantic Broadband and Peer 1 Hosting are as follows:

		Peer 1		Atlantic
		Hosting		Broadband		TOTAL
		Final		Final		Final
		$		$		$
Consideration
Paid
	Purchase of shares	494,796		337,779		832,575
	Working capital adjustments	-		5,415		5,415
	Repayment of secured debts and settlement of options outstanding	170,872		1,021,854		1,192,726
		665,668		1,365,048		2,030,716
Net assets acquired
Cash and cash equivalents		10,840		5,480		16,320
Restricted cash		8,729		-		8,729
Trade and other receivables		12,772		12,012		24,784
Prepaid expenses and other		3,855		1,370		5,225
Income tax receivable		2,797		3,907		6,704
Other assets		2,462		-		2,462
Property, plant and equipment		150,013		302,211		452,224
Intangible assets		144,231		711,418		855,649
Goodwill		410,454		522,215		932,669
Deferred tax assets		8,872		98,592		107,464
Trade and other payables assumed		(26,512	)	(27,620	)	(54,132	)
Provisions		-		(721	)	(721	)
Deferred and prepaid revenue and other liabilities assumed		(3,388	)	(7,697	)	(11,085	)
Long-term debt assumed		(1,735	)	-		(1,735	)
Deferred tax liabilities		(57,722	)	(256,119	)	(313,841	)
		665,668		1,365,048		2,030,716

ACQUISITIONS OF PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE AND OTHER ASSETS

Investing activities, including acquisition of property, plant and equipment segmented according to the National Cable Television Association ("NCTA") standard reporting categories, are as follows:

	Quarters ended		Nine months ended
	May 31,	May 31,	May 31,	May 31,
	2014	2013	2014	2013
(in thousands of dollars)	$	$	$	$
Customer premise equipment(1)	25,327	18,000	68,872	55,874
Scalable infrastructure(2)	17,867	21,512	53,341	78,428
Line extensions	5,677	5,961	17,095	14,081
Upgrade / Rebuild	6,658	10,924	17,225	26,574
Support capital	6,979	4,552	15,711	14,935
Acquisition of property, plant and equipment - Cable services(3)	62,508	60,949	172,244	189,892
Acquisition of property, plant and equipment - Enterprise services(4)	17,001	47,376	64,431	96,565
Acquisitions of property, plant and equipment	79,509	108,325	236,675	286,457
Acquisition of intangible and other assets - Cable services(3)	3,368	3,933	10,513	12,048
Acquisition of intangible and other assets - Enterprise services(4)	1,575	583	3,159	1,602
Acquisitions of intangible and other assets	4,943	4,516	13,672	13,650
	84,452	112,841	250,347	300,107

(1)	Includes mainly home terminal devices as well as new and replacement drops.
(2)	Includes mainly head-end equipment, digital video and telephony transport as well as HSI equipment.
(3)	Fiscal 2013 nine-months period include only six months of operating results of American cable services.
(4)	Fiscal 2013 nine-month period includes only four month of operating results of Peer 1 Hosting.

For the three and nine-month periods ended May 31, 2014, acquisition of property, plant and equipment in the Cable services amounted to $62.5 million and $172.2 million compared to $60.9 million and $189.9 million for the comparable periods of fiscal 2013, respectively.

In the Canadian cable services, fiscal 2014 third-quarter acquisition of property, plant and equipment amounted to $39.6 million, a decrease of 16.9% when compared to $47.6 million in the third quarter of the prior year. For the nine-month period ended May 31, 2014, acquisition of property, plant and equipment amounted to $120.9 million, a decrease of 26.0% when compared to the prior year.

For the third quarter of fiscal 2014, acquisition of property, plant and equipment in the American cable services segment amounted to $22.9 million compared to $13.3 million for the same period of fiscal 2013. For the nine-month period ended May 31, 2014, acquisition of property, plant and equipment amounted to $51.4 million compared to $26.5 million in the prior year as a result of nine months of operating results compared to six months in fiscal 2013.

The decreases in the Canadian and American cable services segments are mainly attributable to the following factors:

• A decrease in the quarter and for the nine-month period ended May 31, 2014 in scalable infrastructure and network upgrades and rebuild due to the deployment in fiscal 2012 and early fiscal 2013 of advanced technologies such as DOCSIS 3.0 and Switched Digital Video in existing areas served; and

• An increase in customer premise equipment for the three and nine-month periods ended May 31, 2014 mainly due to the launch of TiVo's digital entertainment services in the American cable services segment.

Fiscal 2014 third-quarter and first nine months acquisition of property, plant and equipment in the Enterprise services segment amounted to $17.0 million and $64.4 million compared to $47.4 million and $96.6 million for the same periods of fiscal 2013, respectively. The decrease for both periods is mainly due to the construction of a new data centre facility in Barrie (north of Toronto), Canada, in fiscal 2013 and the timing of initiatives.

Acquisition of intangible and other assets are mainly attributable to reconnect and additional service activation costs as well as other customer acquisition costs. For the third quarter and the first nine months of fiscal 2014, the acquisition of intangible and other assets amounted to $4.9 million and $13.7 million compared to $4.5 million and $13.7 million for the same periods last year, respectively.

FREE CASH FLOW AND FINANCING ACTIVITIES

For the third quarter of fiscal 2014, free cash flow amounted to $91.1 million, an increase of $48.1 million compared to fiscal 2013. This increase is mainly due to the improvement of adjusted EBITDA and the decrease in acquisitions of property, plant and equipment due to the timing of certain initiatives. For the nine-month period, free cash flow amounted to $252.5 million, $156.6 million higher than the same period of last year. This variance is mostly attributable to the improvement of adjusted EBITDA, the decrease in acquisitions of property, plant and equipment due to the timing of certain initiatives as well as the decrease in integration, restructuring and acquisition costs, partly offset by the increase in financial expense due to higher indebtedness level from the recent acquisitions.

In the third quarter of fiscal 2014, a cash decrease of $109.6 million was mainly due to a lower Indebtedness from the repayments under the revolving facilities of $112.6 million. In the third quarter of fiscal 2013, a cash decrease of $17.2 million was mainly due to a higher level of Indebtedness from the issuance of $300 million Senior Secured Debentures Series "4" (the "Debentures") for a net proceed of $297.1 million, net of transaction costs of $2.9 million and the issuance of $410.4 million (US$400 million) Senior Unsecured Notes (the "2020 Notes") for a net proceed of $402.6 million (US$392.4 million), net of transaction costs of $7.8 million (US$7.6 million). In addition, Cogeco Cable used the net proceeds under the Debentures and the 2020 Notes to repay the Canadian Term Facility amounting to $175 million, the US Term Facility amounting to $230.8 million (US$225 million), the $114.7 million Revolving loan in connection with the acquisition of Peer 1 Hosting and the $192.4 million Term Revolving Facility.

For the nine-month period of fiscal 2014, a cash decrease of $142.8 million was mainly due to a lower level of Indebtedness from the repayments under the revolving facilities of $128.2 million and of long-term debt amounting to $10.9 million. For the nine-month period of fiscal 2013, a cash increase of $1.9 billion was mainly due to a higher level of Indebtedness provided from the issuance of the 2020 Notes and the Debentures, described above, as well as draw-down on the existing Term Revolving Facility of $411.9 million (US$420 million) including the repayments made during the quarter explained above and the new First Lien Credit Facilities of $637.4 million (US$660 million for a net proceed of US$641.5 million, net of transaction costs of US$18.5 million) to finance the acquisition of Atlantic Broadband as well the draw-down of $125.1 million, under Secured Credit Facilities to finance the acquisition of Peer 1 Hosting, net of the repayments made during the third quarter explained above.

During the third quarter of fiscal 2014, a quarterly dividend of $0.30 per share was paid to the holders of subordinate and multiple voting shares, totaling $14.6 million, compared to a dividend paid of $0.26 per share, or $12.6 million in the third quarter of fiscal 2013. Dividend payments in the first nine months totaled $0.90 per share, or $43.9 million, compared to $0.78 per share, or $37.9 million the year before.

As at May 31, 2014, the Corporation had a working capital deficiency of $160.3 million compared to $223.5 million at August 31, 2013. The $63.2 million deficiency reduction is mainly due to a decrease of $85.5 million in trade and other payables, partly offset by an increase of income tax liabilities of $20.2 million as a result of generated free cash flow. As part of the usual conduct of its business, Cogeco Cable maintains a working capital deficiency due to a low level of accounts receivable since a large proportion of the Corporation's customers pay before their services are rendered, unlike trade and other payables, which are usually paid after products are delivered or services are rendered, thus enabling the Corporation to use cash and cash equivalents to reduce Indebtedness.

At May 31, 2014, the Corporation had used $476.2 million of its $800 million amended and restated Term Revolving Facility for a remaining availability of $323.8 million. In addition, two subsidiaries of the Corporation also benefit from a Revolving Facility of $108.4 million (US$100 million) related to its acquisition of Atlantic Broadband, of which $1.1 million (US$1.0 million) was used at May 31, 2014 for a remaining availability of $107.3 million (US$99 million).

FINANCIAL POSITION

Since August 31, 2013, the following balances have changed significantly: "property, plant and equipment", "goodwill", "trade and other payables", "income tax liabilities", "long-term debt" and "deferred tax liabilities".

Property, plant and equipment decreased by $80.8 million due to the impairment of property, plant and equipment of $32.2 million as well as depreciation expense exceeding the acquisitions discussed in the "Cash flow analysis" section, taking into account the impact of the US dollar and British Pound currency appreciation against the Canadian dollar. Goodwill increased by $29.3 million as a result of the US dollar and the British Pound currency appreciation against the Canadian dollar during the first nine months of fiscal 2014. The decrease of $85.5 million in trade and other payables is related to the timing of payments made to suppliers. The income tax liabilities increase of $20.2 million is due to the excess of current income tax expense over income tax paid. The decrease of $28.3 million in deferred tax liabilities results from the impairment of property, plant and equipment and the increase in current income taxes. The decrease of $82.0 million in long-term debt is due to the factors previously discussed in the "Cash flow analysis" section, partly offset by the appreciation of the US dollar and British Pound currency compared to the Canadian dollar.

OUTSTANDING SHARE DATA

A description of Cogeco Cable's share data at June 30, 2014 is presented in the table below. Additional details are provided in note 12 of the condensed interim consolidated financial statements.

		Amount
	Number of	(in thousands
	shares/options	of dollars)
Common shares
Multiple voting shares	15,691,100	98,346
Subordinate voting shares	33,367,186	909,678
Options to purchase subordinate voting shares
Outstanding options	797,356
Exercisable options	297,899

FINANCING

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 2013 Annual Report, have not materially changed since August 31, 2013, except as mentioned below.

On November 22, 2013, the Corporation amended and restated its Term Revolving Facility of $800 million with a syndicate of lenders. The maturity was extended until January 22, 2019 and can be further extended annually. The amendments reduced the margin for the calculation of the interest rate and reduced restrictions on some covenants. The amended and restated Term Revolving Facility also replaced Cogeco Cable's Secured Credit Facilities coming to maturity on January 27, 2017 which was fully repaid on November 22, 2013. This amended and restated Term Revolving Facility is comprised of two tranches: a first tranche, a Canadian tranche, amounting to $788 million and the second tranche, a UK tranche, amounting to $12 million. Both Cogeco Cable and Peer 1 (UK) Ltd. can borrow under the UK tranche. The Canadian tranche is available in Canadian dollars, US dollars, Euros and British Pounds and interest rates are based on banker's acceptance, US dollar base rate loans, LIBOR loans in US dollars, Euros or British Pounds, plus the applicable margin. The UK tranche is available in British Pounds and interest rates are based on British Pounds base rate loans and British Pounds LIBOR loans. The Term Revolving Facility is indirectly secured by first priority fixed and floating charges and a security interest on substantially all present and future real and personal properties and undertaking of every nature and kind of the Corporation and certain of its subsidiaries, and provides for certain permitted encumbrances, including purchased money obligations, existing funded obligations and charges granted by any subsidiary prior to the date when it becomes a subsidiary, subject to a maximum amount. The provisions under this facility provide for restrictions on the operations and activities of the Corporation. Generally, the most significant restrictions relate to permitted investments and dividends on multiple and subordinate voting shares, as well as incurrence and maintenance of certain financial ratios primarily linked to operating income before amortization, financial expense and total indebtedness.

FINANCIAL MANAGEMENT

The Corporation has entered into cross-currency swap agreements to set the liability for interest and principal payments on its US$190 million Senior Secured Notes Series A maturing on October 1, 2015. These agreements have the effect of converting the U.S. interest coupon rate of 7.00% per annum to an average Canadian dollar interest rate of 7.24% per annum. The exchange rate applicable to the principal portion of the debt has been fixed at $1.0625 per US dollar. The Corporation elected to apply cash flow hedge accounting on these derivative financial instruments. During the first nine months of fiscal 2014, amounts due under the US$190 million Senior Secured Notes Series A increased by $5.9 million due to the US dollar's appreciation relative to the Canadian dollar. The fair value of cross-currency swaps asset increased by a net amount of $6.1 million, of which an increase of $5.9 million offsets the foreign exchange loss on the debt denominated in US dollars. The difference of $0.2 million was recorded as an increase of other comprehensive income. During the first nine months of fiscal 2013, amounts due under the US$190 million Senior Secured Notes Series A increased by $9.7 million due to the US dollar's appreciation over the Canadian dollar. The fair value of cross- currency swaps liability decreased by a net amount of $9.3 million, of which a decrease of $9.7 million offsets the foreign exchange loss on the debt denominated in US dollars. The difference of $0.4 million was recorded as a decrease of other comprehensive income.

In addition, on July 22, 2013, Cogeco Cable had entered into interest rate swap agreements to fix the interest rate on US$200 million of its LIBOR based loans. These agreements have the effect of converting the floating US LIBOR base rate at an average fixed rate of 0.39625% under the Term Revolving Facility until July 25, 2015. The Corporation elected to apply hedge accounting on these derivative financial instruments. During the first nine months of fiscal 2014, the fair value of interest rate swaps asset decreased by a net amount of $0.8 million which was recorded as a decrease of other comprehensive income.

The sensitivity of the Corporation's annual financial expense to a variation of 1% in the interest rate applicable to these facilities is approximately $6.4 million based on the current debt at May 31, 2014.

Furthermore, the Corporation's investment in foreign operations is exposed to market risk attributable to fluctuations in foreign currency exchange rates, primarily changes in the values of the Canadian dollar versus the US dollar and British Pound. This risk was mitigated since the major part of the purchase prices for Atlantic Broadband and Peer 1 Hosting were borrowed directly in US dollars and British Pounds. At May 31, 2014, the investments for Atlantic Broadband and Peer 1 Hosting amounted to US$1.1 billion and £62.7 million while long-term debt hedging these investments were US$859.5 million and £56.0 million. The exchange rates used to convert the US dollar currency and British Pound currency into Canadian dollars for the statement of financial position accounts at May 31, 2014 were $1.0842 per US dollar and $1.8173 per British Pound compared to $1.0530 per US dollar and $1.6318 per British Pound at August 31, 2013. The impact of a 10% fluctuation in the exchange rates of the US dollar and British Pound into Canadian dollars would change other comprehensive income by approximately $26.9 million.

Since the Corporation's condensed interim consolidated financial statements are expressed in Canadian dollars but a portion of its business is conducted in US dollar and British Pound currency, exchange rate fluctuations can increase or decrease the Corporation's operating results. For the three and nine-month periods ended May 31, 2014, the average rates prevailing used to convert the operating results of the American cable services and a portion of the Enterprise services were as follows:

	Quarters ended			Nine months ended
	May 31,	May 31,		May 31,	May 31,
	2014	2013	Change	2014	2013	Change
	$	$	%	$	$	%
US dollar vs Canadian dollar	1.0997	1.0211	7.7	1.0759	1.0091	6.6
British Pound vs Canadian dollar	1.8405	1.5545	18.4	1.7664	1.5565	13.5

The following tables highlight in Canadian dollars, the impact of a 10% increase in the US dollar or British Pound against the Canadian dollar as the case may be, of Cogeco Cable's operating results for the three and nine-month periods ended May 31, 2014:

	Canadian cable services			American cable services		Enterprise services
		Exchange			Exchange		Exchange
	As	rate		As	rate	As	rate
Quarter ended May 31, 2014	reported	impact		reported	impact	reported	impact
(in thousands of dollars)	$	$		$	$	$	$
Revenue	317,072	-		101,435	10,144	78,573	3,846
Operating expense	153,337	522		56,610	5,661	54,407	3,187
Adjusted EBITDA	163,735	(522	)	44,825	4,483	24,166	659
Acquisitions of property, plant and equipment, intangible and other assets	42,455	1,433		23,421	2,343	18,576	802

	Canadian cable services			American cable services		Enterprise services
		Exchange			Exchange		Exchange
	As	rate		As	rate	As	rate
Nine months ended May 31, 2014	reported	impact		reported	impact	reported	impact
(in thousands of dollars)	$	$		$	$	$	$
Revenue	939,750	-		292,032	29,193	227,284	11,195
Operating expenses	463,882	1,704		162,396	16,226	150,062	8,567
Adjusted EBITDA	475,868	(1,704	)	129,636	12,967	77,222	2,628
Acquisitions of property, plant and equipment, intangible and other assets	130,046	4,954		52,711	5,238	67,590	2,918

DIVIDEND DECLARATION

At its July 9, 2014 meeting, the Board of Directors of Cogeco Cable declared a quarterly eligible dividend of $0.30 per share for multiple voting and subordinate voting shares, payable on August 6, 2014, to shareholders of record on July 23, 2014. 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 three operating segments: Canadian cable services, American 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.

CANADIAN CABLE SERVICES

CUSTOMER STATISTICS

		Net additions (losses)								% of penetration(1)
		Quarters ended				Nine months ended
	May 31,	May 31,		May 31,		May 31,		May 31,		May 31,	May 31,
	2014	2014		2013		2014		2013		2014	2013
PSU(2)	1,956,444	(5,633	)	(1,013	)	(23,678	)	17,089
Television service customers	807,831	(8,021	)	(7,363	)	(26,940	)	(17,771	)	47.9	50.7
HSI service customers	676,802	3,821		3,412		15,465		20,723		40.2	39.7
Telephony service customers	471,811	(1,433	)	2,938		(12,203	)	14,137		28.0	29.1

(1)	As a percentage of homes passed.
(2)	Represents the sum of Television, HSI and Telephony service customers.

Fiscal 2014 third-quarter and first nine months PSU net losses amounted to 5,633 and 23,678 compared to net losses of 1,013 and net additions of 17,089 for the comparable periods of the prior year, mainly as a result of service category maturity, competitive offers in the industry and tightening of our customer qualifications. For the third quarter and first nine months of fiscal 2014, net customer losses for Television service stood at 8,021 and 26,940 compared to 7,363 and 17,771 for the same periods last year. Television service customer net losses are mainly due to the promotional offers of competitors for the video service, service category maturity and the IPTV footprint growth from competitors. For the third quarter and first nine months of fiscal 2014, net additions for HSI service customers stood at 3,821 and 15,465, respectively, compared to 3,412 and 20,723 for the comparable periods of fiscal 2013. HSI net additions continue to stem from the enhancement of the product offering, the impact of the bundled offer of Television, HSI and Telephony services, and promotional activities. Net losses for the Telephony service amounted to 1,433 and 12,203, respectively, for the third quarter and first nine months of fiscal 2014, compared to net additions of 2,938 and 14,137 for the same periods of prior year.

Furthermore, as at May 31, 2014, 69% (68% in 2013) of the Canadian cable services customers subscribed to two or more services. The distribution of customers by number of services for the Canadian cable services were: 31% who subscribe to the single play (32% in 2013), 33% to the double play (31% in 2013) and 36% to the triple play (37% in 2013).

OPERATING RESULTS

	Quarters ended					Nine months ended
	May 31,		May 31,			May 31,		May 31,
	2014		2013 (1)		Change	2014		2013 (1)		Change
(in thousands of dollars, except percentages)	$		$		%	$		$		%
Revenue	317,072		306,401		3.5	939,750		917,389		2.4
Operating expenses	153,337		153,238		0.1	463,882		465,218		(0.3	)
Adjusted EBITDA	163,735		153,163		6.9	475,868		452,171		5.2
Operating margin	51.6	%	50.0	%		50.6	%	49.3	%

(1)	Comparative figures have been adjusted to comply with the adoption of IAS 19 - Employee Benefits. For further details, please refer to Note 2 of the condensed interim consolidated financial statements.

Revenue

Fiscal 2014 third-quarter revenue increased by $10.7 million, or 3.5%, to reach $317.1 million, compared to the same period last year. For the first nine months, revenue amounted to $939.8 million, an increase of 2.4% compared to the first nine months of fiscal 2013. Revenue increase is mainly attributable to rate increases implemented in June 2013 and April 2014 in Quebec and Ontario, partly offset by PSU losses.

Operating expenses

For the third quarter ended May 31, 2014, operating expenses remained essentially the same at $153.3 million compared to $153.2 million last year. For the first nine months, operating expenses amounted to $463.9 million, a decrease of $1.3 million compared to the same period of the prior year. The decrease is mainly attributable to cost reduction initiatives and the restructuring activities which occurred in the fourth quarter of fiscal 2013 and in the first nine months of fiscal 2014.

Adjusted EBITDA and operating margin

Fiscal 2014 third-quarter adjusted EBITDA amounted to $163.7 million, or 6.9% higher than in the same period of the prior year. For the first nine months of fiscal 2014, adjusted EBITDA amounted to $475.9 million, or 5.2% higher than the comparable period of the prior year. Both increases in adjusted EBITDA are mainly attributable to revenue growth exceeding operating expenses. Consequently, operating margin increased to 51.6% from 50.0% compared to fiscal 2013 third-quarter and to 50.6% from 49.3% for the first nine months of fiscal 2014 compared to the prior year.

AMERICAN CABLE SERVICES

On November 30, 2012, the Corporation completed the acquisition of Atlantic Broadband, an independent cable system operator formed in 2003 and providing Analogue and Digital Television, as well as HSI and Telephony services. Atlantic Broadband operates cable systems in Western Pennsylvania, Southern Florida, Maryland/Delaware and South Carolina.

CUSTOMER STATISTICS

				Net additions (losses)						% of penetration(1)
		Quarters ended				Nine months ended
	May 31,	May 31,		May 31,		May 31,		May 31,		May 31,	May 31,
	2014	2014		2013		2014		2013		2014	2013
PSU(2)	495,674	3,124		(66	)	8,139		3,694
Television service customers	227,160	(1,599	)	(1,044	)	(5,021	)	(3,372	)	43.8	45.3
HSI service customers	188,795	3,990		1,191		11,687		6,617		36.4	34.1
Telephony service customers	79,719	733		(213	)	1,473		449		15.4	15.2

(1)	As a percentage of homes passed.
(2)	Represents the sum of Television, HSI and Telephony service customers.

Fiscal 2014 third-quarter and first nine months PSU net additions amounted to 3,124 and 8,139, respectively, compared to net losses of 66 and net additions of 3,694 for the comparable periods of the prior year. The comparable figures for the first nine months of the prior year include only six months of operating results since the acquisition of Atlantic Broadband occurred at the end of first quarter of fiscal 2013. Net customer losses for the Television service stood at 1,599 and 5,021, respectively, for the third quarter and first nine months of fiscal 2014, compared to net losses of 1,044 and 3,372 for the comparable periods of last year as a result of competitive offers in the industry. For the third quarter and first nine months of fiscal 2014, net customer additions for HSI service amounted to 3,990 and 11,687 compared to 1,191 and 6,617 for the same periods of the prior year mainly due to additional marketing initiatives which focused on bundle package offerings, thus increasing overall demand for the HSI residential services as well as increased commercial HSI customers. The net customer additions for Telephony service stood at 733 and 1,473 for the three and nine-month periods ended May 31, 2014, compared to net losses of 213 and net additions of 449 for the same periods of fiscal 2013.

Furthermore, as at May 31, 2014, 59% (59% in 2013) of the American cable services customers subscribed to two or more services. The distribution of customers by number of services for the American cable services were: 41% who subscribe to the single play (41% in 2013), 38% to the double play (37% in 2013) and 21% to the triple play (22% in 2013).

OPERATING RESULTS

	Quarters ended					Nine months ended
	May 31,		May 31,			May 31,		May 31,
	2014		2013		Change	2014		2013		Change
(in thousands of dollars, except percentages)	$		$		%	$		$		%
Revenue	101,435		90,394		12.2	292,032		176,244		65.7
Operating expenses	56,610		49,145		15.2	162,396		95,774		69.6
Adjusted EBITDA	44,825		41,249		8.7	129,636		80,470		61.1
Operating margin	44.2	%	45.6	%		44.4	%	45.7	%

Revenue

Fiscal 2014 third-quarter revenue increased by $11.0 million, or 12.2%, to reach $101.4 million compared to the same period last year. Revenue increased due to the PSU growth, rate increases implemented in fiscal 2014 as well as favorable foreign exchange rates compared to last year. For the first nine months, revenue amounted to $292.0 million, an increase of $115.8 million compared to the first nine months of fiscal 2013. This increase is mainly due to nine months of operating results included in fiscal 2014 compared to six months for the comparable period since Atlantic Broadband was acquired at the end of the first quarter of fiscal 2013, on November 30, 2012.

For the third quarter and first nine months of fiscal 2014, revenue in local currency amounted to US$92.2 million and US$271.4 million, compared to US$88.5 million and US$174.6 million for the same periods last year.

Operating expenses

Fiscal 2014 third-quarter operating expenses amounted to $56.6 million, an increase of 15.2% compared to the same period last year. The increase is mainly attributable to servicing additional PSU, additional programming costs, the deployment of TiVo's digital entertainment services as well as marketing initiatives to improve PSU growth and by the appreciation of the US dollar over the Canadian dollar. For the first nine months, operating expenses amounted to $162.4 million, an increase of $66.6 million compared to the first nine months of fiscal 2013. This increase is mainly due to nine months of operating results included in fiscal 2014 compared to six months for the comparable period since Atlantic Broadband was acquired at the end of the first quarter of fiscal 2013, on November 30, 2012.

Operating expenses in local currency for the for the third quarter and first nine months of fiscal 2014 amounted to US$51.5 million and US$150.8 million, compared to US$48.1 million and US$94.9 million for the comparable periods of last year.

Adjusted EBITDA and operating margin

Fiscal 2014 third-quarter adjusted EBITDA increased by 8.7% to reach $44.8 million compared to last year as a result of the factors previously discussed. For the first nine months of fiscal 2014, adjusted EBITDA amounted to $129.6 million compared to $80.5 million for the same period of fiscal 2013 as a result of nine months of operating results compared to six months for the comparable period and to the factors previously discussed. As a result of operating expenses growth exceeding revenue growth, operating margin for the three and nine-month periods ended May 31, 2014 decreased to 44.2% from 45.6% and to 44.4% from 45.7% for the comparable periods of the prior year.

Fiscal 2014 third-quarter adjusted EBITDA in local currency amounted to US$40.8 million compared to US$40.4 million for the same period last year and US$120.5 million compared to US$79.7 million for the first nine months of fiscal 2013.

ENTERPRISE SERVICES

	Quarters ended					Nine months ended
	May 31,		May 31,			May 31,		May 31,
	2014		2013		Change	2014		2013		Change
(in thousands of dollars, except percentages)	$		$		%	$		$		%
Revenue	78,573		68,130		15.3	227,284		129,610		75.4
Operating expenses	54,407		44,710		21.7	150,062		82,063		82.9
Adjusted EBITDA	24,166		23,420		3.2	77,222		47,547		62.4
Operating margin	30.8	%	34.4	%		34.0	%	36.7	%

OPERATING RESULTS

Revenue

Fiscal 2014 third-quarter revenue increased by $10.4 million, or 15.3%, to reach $78.6 million, compared to the same period last year. Revenue increased due to the organic growth from data centre, managed IT and connectivity services as well as the appreciation of the US dollar and the British Pound against the Canadian dollar for our foreign operations. For the first nine months of fiscal 2014, revenue amounted to $227.3 million, an increase of $97.7 million compared to fiscal 2013. The increase is mainly due to the full year impact of the acquisition of Peer 1 Hosting which occurred during the second quarter of fiscal 2013 combined with the organic growth from data centre, managed IT and connectivity services and favorable foreign exchange rates for our foreign operations compared to last year. Revenue for the quarter and the first nine months of fiscal 2014 of Peer 1 Hosting have been negatively impacted by non recurring billing adjustments and credit notes as a result of improved controls and procedures related to the certification process that is still underway.

Operating expenses

For the third quarter of fiscal 2014 operating expenses increased by $9.7 million, to $54.4 million due to the organic growth combined with the appreciation of the US dollar and the British Pound against the Canadian dollar. For the first nine months of fiscal 2014, operating expenses amounted to $150.1 million, an increase of $68.0 million compared to last year due to the full year impact of Peer 1 Hosting acquisition, the organic growth as well as the appreciation of the US dollar and the British Pound against the Canadian dollar. During the third quarter of fiscal 2014, Peer 1 Hosting reviewed and enhanced its collection process resulting in an increase in the impairment of trade and other receivables. Furthermore, Peer 1 Hosting incurred non recurring additional costs with regards to certain initiatives.

Adjusted EBITDA and operating margin

As a result of revenue growth exceeding the increase in operating expenses, fiscal 2014 third-quarter adjusted EBITDA increased by $0.7 million, or 3.2%, to reach $24.2 million and by $29.7 million, or 62.4%, in the first nine months to reach $77.2 million, compared to the same periods of the prior year. The above non-recurring revenue and operating expenses items have negatively impacted the adjusted EBITDA by approximately $3.0 million for the third quarter ended May 31, 2014. Operating margin decreased to 30.8% from 34.4% in the third quarter and to 34.0% from 36.7% for the first nine months compared to fiscal 2013 as a result of lower margins business activities from Peer 1 Hosting as well as non recurring adjustments recorded in the third quarter.

FISCAL 2014 REVISED FINANCIAL GUIDELINES

Giving effect to the impairment of property, plant and equipment of $32.2 million which occurred during the third quarter of fiscal 2014 in the Canadian cable services segment as well as additional integration, restructuring and acquisitions costs related to restructuring activities, Cogeco Cable revised downwards its fiscal 2014 projected profit for the year compared to the one issued on April 9, 2014. Profit for the year is now expected to reach $210 million, a decrease of $25 million, or 10.6%, compared to the April 9, 2014 projections.

Fiscal 2014 revised financial guidelines are as follows:

		July 9, 2014		April 9, 2014
		Fiscal 2014		Fiscal 2014
(in millions of dollars, except operating margin and capital intensity)		$		$
Financial guidelines
	Revenue	1,955		1,955
	Adjusted EBITDA	895		895
	Operating margin	45.8	%	45.8	%
	Integration, restructuring and acquisition costs	4		-
	Depreciation and amortization	470		470
	Financial expense	130		130
	Current income tax expense	96		100
	Profit for the year	210		235
	Acquisitions of property, plant and equipment, intangible and other assets	425		425
	Free cash flow(1)	240		240
	Capital intensity	21.7	%	21.7	%

(1)	Free cash flow is calculated as adjusted EBITDA less, integration, restructuring and acquisition costs, financial expense, current income tax expense and acquisitions of property, plant and equipment, intangible and other assets.

FISCAL 2015 PRELIMINARY FINANCIAL GUIDELINES

Fiscal 2015 preliminary financial guidelines take into consideration the current uncertain global economic and the intense competitive environment that prevails in Canada, the United States and Europe by the incumbent telecommunications or IT infrastructure providers, as the case may be. In addition, these preliminary financial guidelines are supported by Cogeco Cable's objectives which are to improve profitability to create shareholder value. Cogeco Cable focus on customer's needs by offering services at attractive prices, expanding its offering with respect to geography and by diversifying its product and services. As the Corporation operates in an industry characterized by rapid technological innovation which requires substantial capital, Cogeco Cable will continue the expansion and upkeep maintenance of its networks and data centre facilities as well as the launch and expansion of new or additional services. The Corporation recognizes that customer service is a key brand attribute that has potential to differentiate its services compared to its competitors and that superior customer service earns their loyalty and retention. As the cost containment is a core element of financial performance and remains a key factor to maintain strong operating margins, Cogeco Cable intends to continue executing its strategy of tight operating and capital cost controls and rigorous customer-related processes.

For fiscal 2015, Cogeco Cable expects to achieve revenue of $2.03 billion, representing a growth of $75 million or 3.8% compared to the revised fiscal 2014 projection issued on July 9, 2014. In the Cable services segment, revenue should stem primarily from targeted marketing initiatives to improve penetration rates of HSI and Telephony services in the commercial and business sector while the penetration of residential Telephony and Television services should slow in the Canadian cable services, reflecting service category maturity and intense competition. Furthermore, Digital video and HSI services should continue to benefit from customers' ongoing interest in TiVo's digital entertainment services in the American cable services segment as well as the projected launch of TiVo services in the Canadian cable services segment. Cable services segment will also benefit from the impact of rate increases in most of its services. In the Enterprise services segment, revenue growth should stem primarily from managed hosting and colocation services due to the expansion of Barrie data centre facility as well as from the migration of services in the portfolio that generate revenue with higher margins. In addition, the construction of a new data centre facility in Kirkland, Montreal, is expected to be completed in the first half of fiscal 2015 and should begin generating revenue. The revenue growth should also be driven by connectivity services as a result of network expansions and new customer installations.

Fiscal 2015 operating expenses are expected to expand by approximately $45 million, or 4.2%, compared to the 2014 revised projections due to additional expenditures to support the Enterprise services segment growth, salary increases as well as the continuation of the marketing initiatives and retention strategies. These increases should be partly offset by cost reduction initiatives from improved systems and processes and by the restructuring activities that were completed in fiscal 2014.

For fiscal 2015, the Corporation expects adjusted EBITDA of $925 million, an increase of $30 million, or 3.4%, compared to the 2014 revised projections. The operating margin is expected to reach approximately 45.6% in fiscal 2015, compared to the revised projections for the 2014 fiscal year of 45.8%, reflecting lower margins business activities from the Enterprise services segment as well as operating expenses increasing slightly faster than the revenue.

Cogeco Cable expects the depreciation and amortization of property, plant and equipment and intangible assets to decrease by $5 million for fiscal 2015, mainly from the increase in capital expenditures with longer useful lives resulting in lower depreciation and amortization expense for fiscal 2015. Cash flows from operations should finance capital expenditures which are expected to reach $430 million compared to $425 million for the 2014 revised projections. Fiscal 2015 capital expenditures should increase mainly due to the completion of the expansion of the Barrie data centre facility and the construction of a new data centre in Kirkland in the Enterprise services segment.

Fiscal 2015 free cash flow is expected to amount to $270 million, an increase of $30 million, or 12.5% compared to the projected free cash flow of $240 million due to the adjusted EBITDA growth, partly offset by additional capital expenditures. As a result, generated free cash flow will reduce Indebtedness net of cash and cash equivalent, thus improving the Corporation's net leverage ratios. Financial expense should amount to $125 million, a decrease of $5 million, or 3.8%, from lower Indebtedness level. Finally, profit for the year should reach approximately $260 million compared to $210 million for the 2014 revised projections.

Fiscal 2015 preliminary financial guidelines are as follows:

		Preliminary		Revised projections
		projections		July 9, 2014
		Fiscal 2015		Fiscal 2014
(in millions of dollars, except operating margin and capital intensity)		$		$
Financial guidelines
	Revenue	2,030		1,955
	Adjusted EBITDA	925		895
	Operating margin	45.6	%	45.8	%
	Integration, restructuring and acquisition costs	-		4
	Depreciation and amortization	465		470
	Financial expense	125		130
	Current income tax expense	100		96
	Profit for the year	260		210
	Acquisitions of property, plant and equipment, intangible and other assets	430		425
	Free cash flow(1)	270		240
	Capital intensity	21.2	%	21.7	%

(1)	Free cash flow is calculated as adjusted EBITDA less, integration, restructuring and acquisition costs, financial expense, current income tax expense and acquisitions of property, plant and equipment, intangible and other assets.

CONTROLS AND PROCEDURES

Internal control over financial reporting ("ICFR") is a process designed to provide reasonable, but not absolute, assurance regarding the reliability of financial reporting and of the preparation of financial statements for external purposes in accordance with IFRS. The President and Chief Executive Officer ("CEO") and the Senior Vice President and Chief Financial Officer ("CFO"), together with Management, are responsible for establishing and maintaining adequate disclosure controls and procedures ("DC&P") and ICFR, as defined in National Instrument 52-109. Cogeco Cable's internal control framework is based on the criteria published in the updated version released in May 2013 of the report Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

The CEO and CFO, supported by Management, evaluated the design of the Corporation's DC&P and ICFR as at May 31, 2014, and concluded that, as described below, there exists a material weakness in ICFR at Peer 1 Hosting. A material weakness in ICFR exists if there exists a deficiency or combination of deficiencies in ICFR such that there is a reasonable possibility that a material misstatement of the annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

Cogeco Cable acquired 96.57% of the issued and outstanding shares of Peer 1 Hosting on January 31, 2013 pursuant to the public offer made by Cogeco Cable, through its indirectly wholly-owned subsidiary 0957926 B.C. LTD. The remaining shares of Peer 1 Hosting were acquired on April 3, 2013. Management has been working diligently since the acquisition to complete its review of the design of ICFR at Peer 1 Hosting. Despite these efforts, Management has not to date completed its review. During the course of the portion of the review that has been completed, Management identified certain deficiencies in ICFR at Peer 1 Hosting principally relating to the financial statements close and inadequate segregation of duties over certain information system access controls.

Management has committed additional resources in order to complete the review of Peer 1 Hosting's ICFR and bring them in line with Cogeco Cable's design standards by 2014 calendar year, and has progressed in terms of the implementation of a number of measures to address the deficiencies described above. More specifically, Management has implemented several detailed review processes that provide for a more granular level of analysis. Moreover, access rights are being adjusted to reflect proper segregation of duties, and a series of corporate policies have been introduced to enhance Peer 1 Hosting's overall control environment. The Corporation cannot currently assess the potential impact of any further design deficiencies which may be identified during the completion of its review of Peer 1 Hosting's ICFR.

Based on the review completed to date, the CEO and the CFO believe that (i) the Corporation's interim filings for the three and nine-month periods ended May 31, 2014 do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, and (ii) the interim financial report together with the other financial information included in the interim filings fairly present, in all material respects, the financial condition, financial performance and cash flows of Cogeco Cable for the three and nine-month periods ended May 31, 2014.

Peer 1 Hosting represents 10% of revenue, -16% of profit for the period, 15% of total assets, 21% of current assets, 15% of non current assets, 7% of current liabilities and 17% of non current liabilities of the condensed consolidated interim financial statements for the nine-month period ended May 31, 2014.

UNCERTAINTIES AND MAIN RISK FACTORS

A detailed description of the uncertainties and main risk factors faced by Cogeco Cable can be found in the 2013 Annual Report, available at www.sedar.com and www.cogeco.ca. Except as described below, there has been no significant change in the uncertainties and main risk factors faced by the Corporation since August 31, 2013.

On October 24, 2013, the Canadian Radio-television and Telecommunications Commission ("CRTC") issued Broadcasting Notice of Invitation inviting Canadians to express their views on the future of the television system in Canada. The initial phases of the "Let's Talk TV" public proceeding and the issuance by the federal government on November 11, 2013 of Order in Council PC 2013-1167 directing the CRTC to report on the ability of Canadian consumers to subscribe to pay and specialty television services on a service-by-service basis have led to the issuance by the CRTC on April 24, 2014 of Notice of Public Hearing CRTC 2014-190 setting up a proposed new broadcasting regulatory approach. If adopted at the conclusion of this proceeding, the new regulatory framework would provide, among other things, that broadcasting distribution undertakings ("BDUs") offer to their customers: a) a small basic service comprised only of local television stations, mandatory services under subsection 9(1) (h) of the Broadcasting Act, as well as the relevant provincial educational services, the community channel and the provincial legislature service in the area served by the BDU; and b) all other licensed or exempted programming services and non-Canadian services as discretionary services on a pick-and-pay and on a build-your-own-package basis. BDUs would however be allowed to continue offering discretionary programming services in pre-assembled packages to subscribers in the same manner as they do now. This new regulatory framework would have a significant impact on the broadcasting distribution business of Cogeco Cable and other BDUs by forcing the removal of American conventional television networks and of popular sports and other specialty services from the basic service tier and requiring the handling of pick-and-pay and build-your- own-package options for all discretionary programming services. On June 27, 2014, Cogeco Cable filed a comprehensive intervention with the CRTC as part of this proceeding and has requested to appear at a public hearing to be held by the CRTC starting on September 8, 2014. At this time, it is not possible to determine the final outcome of this important regulatory proceeding, the timetable for its implementation or its impact on the broadcasting distribution activities and future financial outlook of Cogeco Cable.

On November 26, 2013, Rogers Communications and the National Hockey League ("NHL") announced that they had concluded a twelve-year comprehensive broadcast and multimedia licensing agreement respecting all national rights to NHL games on all platforms in all languages in Canada, beginning with the 2014-2015 season. Rogers Communications also announced that it had selected CBC and TVA for separate sublicensing deals for English-language broadcasts of "Hockey Night in Canada" and all national French-language multimedia rights, respectively. The Corporation has concluded multi-years agreements for the distribution of the Sportsnet and TVA Sport specialty programming services which include NHL hockey games in their respective programming. These agreements are factored into the financial guidelines issued by Cogeco Cable.

FUTURE ACCOUNTING DEVELOPMENTS IN CANADA

A number of new standards, interpretations and amendments to existing standards issued by the International Accounting Standard Board ("IASB") are effective for annual periods starting on or after January 1, 2013 and have been applied in preparing the condensed interim consolidated financial statements for the three and nine-month periods ended May 31, 2014.

NEW ACCOUNTING STANDARDS

The Corporation adopted the following new accounting standards on September 1, 2013. The impacts of the application of this standard are described in Note 2 of the condensed interim consolidated financial statements.

• Amendment to IAS 19, Employee Benefits : The principal difference in the amended standard is that the expected long-term rate of return on plan assets will no longer be used to calculate the defined benefit pension costs. The defined benefit pension costs concepts of "interest cost" and "expected return on plan assets" are replaced by the concept of "net interest" calculated by applying the discount rate to the net liability or asset. The net interest cost takes into account the change any contributions and benefit payments have on the net defined benefit liability or asset during the period.

The Corporation also adopted the following standards on September 1, 2013 which had no impact on the condensed interim consolidated financial statements.

•	Amendments to IFRS 7 Financial Instruments: Disclosures
•	IFRS 10 Consolidated Financial Statements
•	IFRS 12 Disclosure of Interest in Other Entities
•	IFRS 13 Fair Value Measurement

CHANGES IN CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There has been no significant change in Cogeco Cable's accounting policies, estimates and future accounting pronouncements since August 31,
2013. A description of the Corporation's policies and estimates can be found in the 2013 Annual Report, available at www.sedar.com and www.cogeco.ca.

NON-IFRS FINANCIAL MEASURES

This section describes non-IFRS financial measures used by Cogeco Cable throughout this MD&A. It also provides reconciliations between these non-IFRS measures and the most comparable IFRS financial measures. These financial measures do not have standard definitions prescribed by IFRS and therefore, may not be comparable to similar measures presented by other companies. These measures include "cash flow from operations", "free cash flow", "adjusted EBITDA" 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				Nine months ended
	May 31,		May 31,		May 31,		May 31,
	2014		2013 (1)		2014		2013 (1)
(in thousands of dollars)	$		$		$		$
Cash flow from operating activities	184,435		166,976		429,173		316,780
Changes in non-cash operating activities	(15,397	)	2,526		77,388		78,708
Amortization of deferred transaction costs and discounts on long-term debt	1,898		3,580		5,628		7,043
Income taxes paid	15,995		16,894		53,538		76,902
Current income tax expense	(22,162	)	(25,789	)	(68,932	)	(73,907	)
Financial expense paid	42,864		26,827		103,582		70,542
Financial expense	(32,038	)	(35,146	)	(97,505	)	(80,068	)
Cash flow from operations	175,595		155,868		502,872		396,000

(1)	Comparative figures have been adjusted to comply with the adoption of IAS 19 - Employee Benefits. For further details, please refer to Note 2 of the condensed interim consolidated financial statements.

Free cash flow is calculated as follows:

	Quarters ended				Nine months ended
	May 31,		May 31,		May 31,		May 31,
	2014		2013 (1)		2014		2013 (1)
(in thousands of dollars)	$		$		$		$
Cash flow from operations	175,595		155,868		502,872		396,000
Acquisition of property, plant and equipment	(79,509	)	(108,325	)	(236,675	)	(286,457	)
Acquisition of intangible and other assets	(4,943	)	(4,516	)	(13,672	)	(13,650	)
Free cash flow	91,143		43,027		252,525		95,893

(1)	Comparative figures have been adjusted to comply with the adoption of IAS 19 - Employee Benefits. For further details, please refer to Note 2 of the condensed interim consolidated financial statements.

ADJUSTED EBITDA AND OPERATING MARGIN

Adjusted EBITDA 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. Adjusted EBITDA 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 adjusted EBITDA by revenue.

The most comparable IFRS financial measure is profit for the period. Adjusted EBITDA and operating margin are calculated as follows:

	Quarters ended				Nine months ended
	May 31,		May 31,		May 31,		May 31,
	2014		2013 (1)		2014		2013 (1)
(in thousands of dollars, except percentages)	$		$		$		$
Profit for the period	35,514		48,079		145,593		141,025
Income taxes	8,801		18,411		36,912		51,615
Financial expense	32,038		35,146		97,505		80,068
Impairment of property, plant and equipment	32,197		-		32,197		-
Depreciation and amortization	117,653		111,445		346,540		268,611
Integration, restructuring and acquisitions costs	3,186		2,101		3,780		16,865
Adjusted EBITDA	229,389		215,182		662,527		558,184
Revenue	496,448		464,497		1,457,436		1,222,080
Operating margin	46.2	%	46.3	%	45.5	%	45.7	%

(1)	Comparative figures have been adjusted to comply with the adoption of IAS 19 - Employee Benefits. For further details, please refer to Note 2 of the condensed interim consolidated financial statements.

CAPITAL INTENSITY

Capital intensity is used by Cogeco Cable's management and investors to assess the Corporation's investment in capital expenditures in order to support a certain level of revenue. Capital intensity ratio is defined as amount spent for acquisitions of property, plant and equipment, intangible and other assets divided by revenue.

Capital intensity is calculated as follows:

	Quarters ended				Nine months ended
	May 31,		May 31,		May 31,		May 31,
	2014		2013		2014		2013
(in thousands of dollars, except percentages)	$		$		$		$
Acquisition of property, plant and equipment	79,509		108,325		236,675		286,457
Acquisition of intangible and other assets	4,943		4,516		13,672		13,650
Total capital expenditures	84,452		112,841		250,347		300,107
Revenue	496,448		464,497		1,457,436		1,222,080
Capital intensity	17.0	%	24.3	%	17.2	%	24.6	%

SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION

Quarters ended	May 31,				February 28,				November 30,				August 31,
(in thousands of dollars, except			(2)				(2)				(2)		(2)
percentages and per share data)	2014		2013		2014		2013		2013		2012		2013		2012
	$		$		$		$		$		$		$		$
Revenue	496,448		464,497		486,008		429,672		474,980		327,911		470,386		324,768
Adjusted EBITDA	229,389		215,182		221,616		195,826		211,522		147,176		222,539		160,825
Operating margin	46.2	%	46.3	%	45.6	%	45.6	%	44.5	%	44.9	%	47.3	%	49.5	%
Impairment of property, plant and equipment	32,197		-		-		-		-		-		-		-
Income taxes	8,801		18,411		14,838		15,821		13,273		17,383		11,159		32,987
Profit for the period	35,514		48,079		60,381		50,833		49,698		42,113		43,870		45,705
Profit for the period attributable to owners of the Corporation	35,514		47,877		60,381		51,035		49,698		42,113		43,870		45,705
Cash flow from operating activities	184,435		166,976		181,628		150,084		63,110		(280	)	228,230		203,343
Cash flow from operations	175,595		155,868		174,013		140,401		153,264		99,731		161,581		126,946
Acquisitions of property, plant and equipment, intangible and other assets	84,452		112,841		80,806		104,433		85,089		82,833		108,095		124,392
Free cash flow	91,143		43,027		93,207		35,968		68,175		16,898		53,486		2,554
Capital intensity	17.0	%	24.3	%	16.6	%	24.3	%	17.9	%	25.3	%	23.0	%	38.3	%
Earnings per share(1)
Basic	0.73		0.98		1.24		1.05		1.02		0.87		0.90		0.94
Diluted	0.72		0.98		1.23		1.04		1.01		0.86		0.89		0.93

(1)	Per multiple and subordinate voting share.
(2)	These figures have been adjusted to comply with the adoption of IAS 19 - Employee Benefits.

SEASONAL VARIATIONS

Cogeco Cable's operating results are not generally subject to material seasonal fluctuations except as follows. In the Canadian and American cable services segment the number of customers in the Television service and HSI service are 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 season, 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 in the Pennsylvania region, and to a lesser extent in South Carolina, Maryland/Delaware in the United States. In the American cable services segment, the Miami region is also subject to seasonal fluctuations due to the winter season residents returning home from late Spring through the Fall. Furthermore, the second, third and fourth quarter's operating margin is usually higher as very low or no management fees are paid to COGECO Inc. Under the Management Agreement, Cogeco Cable pays a fee equal to 2% of its total revenue subject to a maximum amount. As the maximum amount has been reached in the second quarter of fiscal 2014, Cogeco Cable will not pay management fees in the second half of fiscal 2014. Similarly, as the maximum amount was paid in the first six months of fiscal 2013, Cogeco Cable paid no management fees in the second half of the previous fiscal year.

ADDITIONAL INFORMATION

This MD&A was prepared on July 9, 2014. Additional information relating to the Corporation, including its Annual Information Form, is available on the SEDAR website at www.sedar.com.

	Jan Peeters	Louis Audet
	Chairman of the Board	President and Chief Executive Officer

Cogeco Cable Inc.

Montréal, Québec

July 9, 2014