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Press release from Marketwire

Cogeco Cable on Track to Meet 2012 Objectives

Thursday, April 12, 2012

Cogeco Cable on Track to Meet 2012 Objectives07:30 EDT Thursday, April 12, 2012MONTRÉAL, QUEBEC--(Marketwire - April 12, 2012) - Today, Cogeco Cable Inc. (TSX:CCA) ("Cogeco Cable" or the "Corporation") announced its financial results for the second quarter of fiscal 2012, ended February 29, 2012, in accordance with International Financial Reporting Standards ("IFRS"). For the second quarter and first six months of fiscal 2012:Revenue increased by 8.3% to reach $317.7 million, and by 9% to reach $633.2 million; Operating income before depreciation and amortization1 increased by 10.2% to $143.7 million when compared to the second quarter of fiscal 2011, and by 7.8% to $275.6 million when compared to the first half of the prior fiscal year; Operating margin1 increased to 45.2% from 44.4% in the quarter and decreased to 43.5% from 44% in the first six months when compared to the same periods of the prior year; Profit for the period from continuing operations amounted to $31.1 million in the second quarter when compared to $41.3 million for the same period of the previous fiscal year. For the first half of fiscal 2012, profit for the period from continuing operations amounted to $70.7 million when compared to $84.1 million for the first half of fiscal 2011. This variance is mostly attributable to the increase in depreciation and amortization expense due to the reduction of depreciation period for certain property, plant and equipment, partly offset by the increase in operating income before depreciation and amortization; On February 29, 2012, the Corporation completed the sale of its Portuguese subsidiary, Cabovisão - Televisão por Cabo, S.A. ("Cabovisão"), for a cash consideration of €45 million or approximately $59.3 million, which is subject to adjustments for certain contingent claims. Operating results from European operations have therefore been classified as discontinued operations. For the second quarter and first six months of fiscal 2012, profit for the period from discontinued operations amounted to $52 million and $55.4 million, respectively, compared to losses of $9.2 million and $17.4 million, respectively, for the same periods of the prior year. Profit for the period from discontinued operations in fiscal 2012 include the gain on disposal of $48.2 million recorded in the second quarter of fiscal 2012; Profit for the period increased by $51 million to reach $83.1 million in the second quarter when compared to $32.1 million for the same period of the previous fiscal year. For the first half of fiscal 2012, profit for the period increased by $59.4 million to reach $126.1 million when compared to $66.7 for the first half of fiscal 2011. This variance is mostly attributable to the gain on disposal of Cabovisão, partly offset by the increase of depreciation and amortization expense due to the reduction of depreciation period for certain property, plant and equipment; Free cash flow1 reached $18.4 million for the quarter compared to $53.6 million in the comparable quarter of the prior year. For the first six months, free cash flow amounted to $38.1 million, compared to $27.6 million in the first half of fiscal 2011. This variance is mostly attributable to the difference in the recognition of current income tax expense for both periods combined with the improvement of operating income before depreciation and amortization, partly offset by the increase in acquisition of property, plant and equipment; A quarterly dividend of $0.25 per share was paid to the holders of subordinate and multiple voting shares, an increase of $0.08 per share, or 47.1%, when compared to a dividend of $0.17 per share paid in the second quarter of fiscal 2011. Dividend payments in the first six months totalled $0.50 per share in fiscal 2012, compared to $0.34 per share in fiscal 2011; Primary service units ("PSU")2 grew by 12,280 net additions in the quarter and 58,459 net additions in the first six months, for a total of 1,955,928 PSU at February 29, 2012. "We are satisfied with Cogeco Cable's results for the second quarter of fiscal 2012. We are continuing to grow and our performance indicators remain on target to our objectives. Revenue is up, which is a reflection of the constant efforts of our teams to consistently satisfy our customers. The results confirm that we have reached our primary objective of sustained corporate growth and continuous improvement of our networks and our processes in spite of the challenges and issues we face in a highly competitive industry. While we see some signs of maturity in certain lines, we are confident we will achieve our objectives, including those related to the increase of our PSU," stated Louis Audet President and Chief Executive Officer of Cogeco Cable.1The 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.2Represents the sum of Television, High Speed Internet ("HSI") and Telephony service customers.FINANCIAL HIGHLIGHTSQuarters endedSix months endedFebruary 29,February 28,February 29,February 28,20122011Change20122011Change($000, except percentages andper share data)$$%$$%(unaudited)(unaudited)(unaudited)(unaudited)OperationsRevenue317,735293,4578.3633,159580,6619.0Operating income before depreciation and amortization1143,743130,39910.2275,566255,6357.8Operating margin145.2%44.4%-43.5%44.0%-Operating income59,49180,426(26.0)126,490156,143(19.0)Profit for the period from continuing operations31,08641,319(24.8)70,65384,068(16.0)Profit (loss) for the period from discontinued operations52,047(9,223)-55,446(17,382)-Profit for the period83,13332,096-126,09966,68689.1Cash FlowCash flow from operating activities from continuing operations120,96188,42036.8134,768138,229(2.5)Cash flow from operations1104,622114,682(8.8)201,665146,74537.4Acquisitions of property, plant and equipment and intangible assets86,23461,07941.2163,517119,09637.3Free cash flow118,38853,603(65.7)38,14827,64938.0Financial Condition2Property, plant and equipment---1,236,6441,254,217(1.4)Total assets---2,750,3642,712,6791.4Indebtedness3---1,070,012981,2149.0Shareholders' equity---1,112,6421,033,2527.7Primary service units4 growth12,28026,490(53.6)58,45968,266(14.4)Per Share Data5Earnings (loss) per shareFrom continuing and discontinued operationsBasic1.710.66-2.591.3789.1Diluted1.700.66-2.571.3787.6From continuing operationsBasic0.640.85(24.7)1.451.73(16.2)Diluted0.630.85(25.9)1.441.72(16.3)From discontinued operationsBasic1.07(0.19)-1.14(0.36)-Diluted1.06(0.19)-1.13(0.36)-1The 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.2At February 29, 2012 and August 31, 2011.3Indebtedness is defined as the total of bank indebtedness, principal on long-term debt, balance due on a business acquisition and obligations under derivative financial instruments.4Represents the sum of Television, High Speed Internet ("HSI") and Telephony service customers. 5Per multiple and subordinate voting share.FORWARD-LOOKING STATEMENTSCertain 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 2011 annual MD&A) that could cause actual results to differ materially from what Cogeco Cable currently expects. These factors include technological changes, changes in market and competition, governmental or regulatory developments, general economic conditions, the development of new products and services, the enhancement of existing products and services, and the introduction of competing products having technological or other advantages, many of which are beyond the Corporation's control. Therefore, future events and results may vary significantly from what management currently foresee. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While management may elect to, the Corporation is under no obligation (and expressly disclaims any such obligation), and does not undertake to update or alter this information before the next quarter.As described in note 1 to the condensed interim consolidated financial statements for the three and six-month periods ended February 29, 2012, Canadian Generally Accepted Accounting Principles ("GAAP"), which were previously used in preparing the consolidated financial statements, were replaced on the adoption of International Financial Reporting Standards ("IFRS") on January 1, 2011. The Corporation's condensed interim consolidated financial statements for the three and six-month periods ended February 29, 2012 have therefore been prepared in accordance with IFRS. Comparative figures for 2011 have also been restated. All amounts are stated in Canadian dollars unless otherwise indicated. This report should be read in conjunction with the Corporation's consolidated financial statements and MD&A for the fiscal year ended August 31, 2011 included in the Corporation's 2011 Annual Report. It should also be read in conjunction with the Corporation's condensed interim consolidated financial statements and MD&A for the first quarter of fiscal 2012 as well as the information on the adjustments to the fiscal 2011 financial figures upon adoption of IFRS, explained in Note 16 of the condensed interim consolidated financial statements for the three and six-month periods ended February 29, 2012.Corporate strategies and objectivesCogeco Cable Inc.'s ("Cogeco Cable" or the "Corporation") objectives are to improve profitability and create shareholder value. The strategies for reaching those objectives are sustained growth through the diversification and the improvement of products, services, clientele and territories, as well as the continuous improvement of networks and equipment and tight controls over costs and business processes. The Corporation measures its performance, with regard to these objectives by monitoring operating income before depreciation and amortization1, operating margin1, primary service units ("PSU")2growth and free cash flow1. During the first six months of fiscal 2012, the Corporation invested approximately $84.4 million in its network infrastructure and equipment to upgrade its capacity, improve its robustness and extend its territories in order to better serve and increase its service offerings for new and existing clientele. 1The 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.2Represents the sum of Television, High Speed Internet ("HSI") and Telephony service customers.PSU growth and penetration of service offeringsDuring the six-month period ended February 29, 2012, the number of PSU increased by 58,459 or 3.1%, to reach 1,955,928, mainly as a result of targeted marketing initiatives and of the continuing interest for high definition ("HD") television service. As of fiscal 2012, Cogeco Cable has modified its key performance indicator for growth to a PSU concept instead of a revenue-generating units ("RGU") concept. As a result of the sale of its Portuguese subsidiary as described below in the second quarter of fiscal 2012, Cogeco Cable has reduced its guidelines for PSU progression to 80,000 from the 90,000 for the fiscal 2012 year. The 90,000 original projections were presented in terms of RGU of 225,000 net additions in the Fiscal 2012 financial guidelines of the 2011 Annual Report. For further details, please consult the fiscal 2012 revised projections in the "Fiscal 2012 financial guidelines" section.Operating income before depreciation and amortization and operating margin First six months operating income before depreciation and amortization increased by 7.8% when compared to the same period of fiscal 2011 to reach $275.6 million and operating margin decreased to 43.5% from 44%. The decrease is mainly attributable to additional programming costs, deployment and support costs related to the migration of Television service customers from analog to digital and the acquisitions of MTO Telecom Inc. ("MTO") and Quiettouch Inc. ("QTI").Free cash flowFor the six-month period ended February 29, 2012, Cogeco Cable reports positive free cash flow of $38.1 million, compared to $27.6 million for the first half of the previous fiscal year, representing an increase of $10.5 million. This variance is mostly attributable to the difference in the recognition of current income tax expense for both periods combined with the improvement of operating income before depreciation and amortization, partly offset by the increase in acquisition of property, plant and equipment. Disposal of subsidiary and discontinued operationsOn February 29, 2012, the Corporation completed the sale of its Portuguese subsidiary, Cabovisão - Televisão por Cabo, S.A. ("Cabovisão") for a cash consideration of €45 million or approximately $59.3 million, which is subject to adjustments for certain contingent claims. Operating results from European operations have therefore been classified as discontinued operations. For further details on the European's operating results, please refer to the "Disposal of subsidiary and discontinued operations" section.OPERATING RESULTS FROM CONTINUING OPERATIONSQuarters endedSix months endedFebruary 29,February 28,February 29,February 28,20122011Change20122011Change($000, except percentages)$$%$$%(unaudited)(unaudited)(unaudited)(unaudited)Revenue317,735293,4578.3633,159580,6619.0Operating costs1171,649160,5306.9348,108315,85410.2Management fees - COGECO Inc.2,3432,528(7.3)9,4859,1723.4Operating income before depreciation and amortization143,743130,39910.2275,566255,6357.8Operating margin45.2%44.4%43.5%44.0%1Represents the sum of salaries, employee benefits and outsourced services as well as other external purchases included in the interim consolidated statements of profit or loss. RevenueFiscal 2012 second-quarter revenue rose by $24.3 million, or 8.3%, to reach $317.7 million, when compared to the prior year. For the first six months, revenue amounted to $633.2 million, an increase of $52.5 million, or 9% when compared to the first six months of fiscal 2011. The increase in revenue was driven by PSU growth, rate increases implemented in April and October 2011 combined with the acquisitions of MTO and QTI during the second half of fiscal 2011. Operating costsFor the second quarter of fiscal 2012, operating costs, excluding management fees payable to COGECO Inc., increased by $11.1 million, to reach $171.6 million, an increase of 6.9% compared to prior year. For the first half of the fiscal year, operating costs, excluding management fees payable to COGECO Inc., amounted to $348.1 million, an increase of $32.3 million, or 10.2%, when compared to the same period of fiscal 2011. The increase in operating costs is mainly attributable to servicing additional PSU, the launch of new HD channels, additional programming costs, deployment and support costs related to the migration of Television service customers from analog to digital and the acquisitions of MTO and QTI.Operating income before depreciation and amortization and operating marginFiscal 2012 second-quarter operating income before depreciation and amortization increased by $13.3 million, or 10.2% to reach $143.7 million, and by $19.9 million, or 7.8%, in the first six months to reach $275.6 million. Cogeco Cable's second-quarter operating margin increased to 45.2% from 44.4% in the comparable period of the prior year. For the first six months, the operating margin decreased to 43.5% from 44% in the first half of fiscal 2011.CUSTOMER STATISTICSNet additions (losses)% of Penetration1Quarters endedSix months endedFebruary 29,February 29,February 28,February 29,February 28,February 29,February 28,2012201220112012201120122011PSU1,955,92812,28026,49058,45968,266Television service customers 2873,326(9,111)(788)(4,659)6,25053.554.9HSI service customers626,0177,51810,55024,80327,42238.336.5Telephony service customers456,58513,87316,72838,31534,59427.924.41 As a percentage of Homes Passed.2 The number of Television service customers includes 752,642 Digital Television service customers. Fiscal 2012 second-quarter and first six months, PSU net additions were lower than in the comparable period of the prior year mainly as a result of category maturity, competitive offers and tightening of our credit controls and processes. For the second quarter and the first six months net customer losses for Television service customers stood at 9,111 and 4,659, respectively, compared to 788 and net additions of 6,250 for the same periods of the prior year. Television service customer net losses in the second quarter and the first six months of fiscal 2012 are mainly due to the competitive promotional offers for the video service combined with the tightening of our credit controls and processes. In the quarter, Telephony service customers grew by 13,873 compared to 16,728 for the same period last year, and the number of net additions to the HSI service stood at 7,518 customers compared to 10,550 customers in the second quarter of the prior year. HSI and Telephony net additions continue to stem from the enhancement of the product offering, the impact of the bundled offer (Cogeco Complete Connection) of Television, HSI and Telephony services, and promotional activities. For the three and six-month periods ended February 29, 2012, additions to the Digital Television service which are included in the Television service customers, stood at 25,423 and 74,316 compared to 26,450 and 55,364 for the comparable periods of the prior year. Digital Television service net additions are due to targeted marketing initiatives to improve penetration, the launch of new HD channels, the continuing interest for HD television service and the deployment of Digital Terminal Adapters technology to migrate customers from analog to digital services.PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONSFor the three and six-month periods ended February 29, 2012, profit for the period from continuing operations amounted to $31.1 million, or $0.64 per share, and $70.7 million, or $1.45 per share, respectively. For the comparable periods of fiscal 2011, profit for the period from continuing operations amounted to $41.3 million, or $0.85 per share in the quarter, and $84.1 million, or $1.73 per share in the first six months. This variance is mostly attributable to the increase of depreciation and amortization expense due to the reduction of depreciation period of certain property, plant and equipment, partly offset by the increase in operating income before depreciation and amortization and the decrease in financial expense. PROFIT FOR THE PERIOD FROM DISCONTINUED OPERATIONSFor the three and six-month periods ended February 29, 2012, profit for the period from discontinued operations amounted to $52 million and $55.4 million, respectively, compared to losses of $9.2 million and $17.4 million, respectively, for the same periods of the prior year. Profit for the period from discontinued operations in fiscal 2012 include the gain on disposal of $48.2 million recorded in the second quarter of fiscal 2012. For further details on the European operating results, please refer to the "Disposal of subsidiary and discontinued operations" section.PROFIT FOR THE PERIODFor the three and six-month periods ended February 29, 2012, profit for the period amounted to $83.1 million, or $1.71 per share, and $126.1 million, or $2.59 per share, respectively. For the comparable periods of fiscal 2011, profit for the period amounted to $32.1 million, or $0.66 per share in the quarter, and $66.7 million, or $1.37 per share in the first six months. Profit progression for the period has resulted mainly from the gain on disposal of the Portuguese subsidiary and the operating income before depreciation and amortization improvement, partly offset by the increase of depreciation and amortization expense due to the reduction of the depreciation period of certain property, plant and equipment.FINANCING ACTIVITIESIn 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 2011 Annual Report, have not materially changed since August 31, 2011, except as mentioned below.As a result of the sale of its Portuguese subsidiary, the letters of credits which were issued to guarantee the payment by Cabovisão of stamp taxes and withholding taxes have been released.On February 14, 2012, the Corporation completed pursuant to a public debt offering, the issue of $200 million Senior Secured Debentures Series 3. These Debentures mature on February 14, 2022 and bear interest at 4.925% per annum payable semi-annually. These debentures are indirectly secured by a first priority fixed and floating charge and a security interest on substantially all present and future real and personal property and undertaking of every nature and kind of the Corporation.On November 22, 2011, the Corporation renewed its credit agreement for a $750 million credit facility, with an option to increase to a total amount of up to $1 billion, subject to lenders' participation, in the form of a five year Term Revolving Facility. The renewed Term Revolving Facility was arranged by a group of financial institutions. The renewed Term Revolving Facility will mature on November 22, 2016, but may be extended by additional one-year periods on an annual basis, subject to lenders' approval. The Term Revolving Facility is indirectly secured by a first priority fixed and floating charge on substantially all present and future real and personal property and undertaking of every nature and kind of the Corporation 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.DIVIDEND DECLARATION At its April 11, 2012 meeting, the Board of Directors of Cogeco Cable declared a quarterly eligible dividend of $0.25 per share for multiple voting and subordinate voting shares, payable on May 9, 2012, to shareholders of record on April 25, 2012. 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.DISPOSAL OF SUBSIDIARY AND DISCONTINUED OPERATIONSOn February 29, 2012, the Corporation completed the sale of its Portuguese subsidiary for a cash consideration of €45 million ($59.3 million). The selling price has been reduced by selling fees of approximately €8.5 million ($11.2 million) and contingent claims assumed up to a maximum amount of €5 million ($6.6 million). The carrying value of the net liabilities disposed of on February 29, 2012 was $6.7 million resulting in a gain on disposal of $48.2 million recorded in the interim consolidated statements of profit or loss. The details of the assets and liabilities disposed of are as follows:($000)$(unaudited)Cash and cash equivalents13,041Trade and other receivables7,693Income taxes receivable277Prepaid expenses and other2,777Property, plant and equipment38,931Trade and other payables(42,514)Provisions(6,665)Deferred and prepaid revenue(411)Foreign currency translation adjustment(19,817)(6,688)As a result of the sale and in accordance with IFRS 5 - Non-Current Assets Held for Sale and Discontinued Operations, the Corporation reclassified the current and prior year results and cash flows of the European operations, up to the date of the disposal, as discontinued operations.Profit (loss) for the period from discontinued operations Quarters endedSix months endedFebruary 29,February 28,February 29,February 28,2012201120122011($000)$$$$(unaudited)(unaudited)(unaudited)(unaudited)Revenue39,03142,06180,54685,324Operating costs133,48037,91570,24776,907Depreciation and amortization1,52614,1162,81426,428Operating income (loss)4,025(9,970)7,485(18,011)Financial income445215578Gain on disposal48,215-48,215-Profit (loss) before income taxes52,284(9,918)55,855(17,933)Income taxes237(695)409(551)Profit (loss) for the period52,047(9,223)55,446(17,382)1 Represents the sum of salaries, employee benefits and outsourced services as well as other external purchases as described in Note 14 in the condensed interim consolidated financial statements. RevenueFiscal 2012 second-quarter and first six months revenue decreased by $3 million and $4.8 million, at $39 million and $80.5 million, respectively, compared to the same periods of prior year as a result of a decreased demand for services. Revenue from the European operations in the local currency for the 2012 second quarter and the first six months amounted to €29.5 million and €59.4 million, respectively, compared to €31.5 million and €62.7 million for the same periods of fiscal 2011. Operating costsFiscal 2012 second-quarter and first six months operating costs decreased by $4.4 million and $6.7 million, at $33.5 million and $70.2 million, respectively, compared to the same periods of prior year as a result of PSU losses and lower marketing initiatives. Operating costs of the European operations for the 2012 second quarter and the first six months in the local currency amounted to €25.3 million and €51.7 million, respectively, compared to €28.4 million and €56.5 million for the same periods of fiscal 2011. FISCAL 2012 FINANCIAL GUIDELINESConsolidatedGiving effect to the sale of its Portuguese subsidiary in the second quarter of fiscal 2012 and to the accelerated depreciation of certain property, plant and equipment, the Corporation revised its guidelines for the 2012 fiscal year. Other Canadian operations guidelines were essentially maintained as initially projected, except for the free cash flow described below. Management currently expects revenue to reach $1,285 million, a reduction of $170 million from the projections issued on October 25, 2011. PSU progression should reduce to 80,000 from the 90,000 original projection. Operating income before amortization should decrease by $20 million to reach $580 million. Operating margin should increase from 41.2% to 45.2%. Depreciation and amortization expense should increase from $235 million to $270 million to take into consideration the accelerated depreciation of property, plant and equipment, partly offset by the sale of the Portuguese subsidiary. Acquisitions of property, plant and equipment should be reduced by approximately $20 million and projected profit for the year is expected to increase by $10 million to stand at approximately $235 million. Free cash flow should decrease by approximately $15 million due to the impact of the 2011 federal budget measures limiting the tax deferrals resulting in an additional cash outflow for the Corporation. Revised projectionsProjectionsApril 11, 2012October 25, 2011Fiscal 2012Fiscal 2012(in millions of dollars, except net customer additions and operating margin)$$Financial guidelinesRevenue1,2851,455Operating income before depreciation and amortization580600Operating margin45.2%41.2%Depreciation and amortization270235Financial expense6565Current income taxes expense9075Profit for the year235225Acquisitions of property, plant and equipment and intangible assets340360Free cash flow85100Net customer additions guidelinesPSU80,00090,00011 The PSU net additions projections amounts in terms of RGU to 225,000 net additions as presented in the Fiscal 2012 financial guidelines of the 2011 Annual Report. NON-IFRS FINANCIAL MEASURESThis section describes non-IFRS financial measures from continuing operations used by Cogeco Cable throughout this MD&A. It also provides reconciliations between these non-IFRS measures and the most comparable IFRS financial measures. These financial measures do not have standard definitions prescribed by IFRS and therefore, may not be comparable to similar measures presented by other companies. These measures include "cash flow from operations", "free cash flow", "operating income before depreciation and amortization" and "operating margin". Cash flow from operations and free cash flow Cash flow from operations is used by Cogeco Cable's management and investors to evaluate cash flows generated by operating activities, excluding the impact of changes in non-cash operating activities, amortization of deferred transaction costs and discounts on long-term debt, income taxes paid or received, 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 endedSix months ended,February 29,February 28,February 29,February 28,2012201120122011($000)$$$$(unaudited)(unaudited)(unaudited)(unaudited)Cash flow from operating activities120,96188,420134,768138,229Changes in non-cash operating activities(3,179)23,71259,48982,358Amortization of deferred transaction costs and discounts on long-term debt6828651,3571,596Income taxes paid (received)17,6359453,817(2,736)Current income tax recovery (expense)(26,206)5,577(45,696)(72,419)Financial expense paid9,51720,11429,54740,500Financial expense(14,788)(24,100)(31,617)(40,783)Cash flow from operations104,622114,682201,665146,745Free cash flow is calculated as follows:Quarters endedSix months endedFebruary 29,February 28,February 29,February 28,2012201120122011($000)$$$$(unaudited)(unaudited)(unaudited)(unaudited)Cash flow from operations104,622114,682201,665146,745Acquisition of property, plant and equipment(83,588)(58,563)(156,927)(113,342)Acquisition of intangible assets(2,646)(2,516)(6,590)(5,754)Free cash flow18,38853,60338,14827,649Operating income before depreciation and amortization and operating marginOperating income before depreciation and amortization is used by Cogeco Cable's management and investors to assess the Corporation's ability to seize growth opportunities in a cost effective manner, to finance its ongoing operations and to service its debt. Operating income before depreciation and amortization is a proxy for cash flows from operations excluding the impact of the capital structure chosen, and is one of the key metrics used by the financial community to value the business and its financial strength. Operating margin is a measure of the proportion of the Corporation's revenue which is available, before income taxes, to pay for its fixed costs, such as interest on Indebtedness. Operating margin is calculated by dividing operating income before depreciation and amortization by revenue.The most comparable IFRS financial measure is operating income. Operating income before depreciation and amortization and operating margin are calculated as follows: Quarters endedSix months endedFebruary 29,February 28,February 29,February 28,2012201120122011($000, except percentages)$$$$(unaudited)(unaudited)(unaudited)(unaudited)Operating income59,49180,426126,490156,143Depreciation and amortization84,25249,973149,07699,492Operating income before depreciation and amortization143,743130,399275,566255,635Revenue317,735293,457633,159580,661Operating margin45.2%44.4%43.5%44.0%ABOUT COGECO CABLE Cogeco Cable (www.cogeco.ca) is a telecommunications corporation and is the second largest hybrid fibre coaxial cable operator in Ontario, and Québec. Through its two-way broadband cable networks, Cogeco Cable provides its residential customers with Audio, Analogue and Digital Television, as well as HSI and Telephony services. Cogeco Cable also provides to its commercial customers, through its subsidiary Cogeco Data Services, data networking, e-business applications, video conferencing, hosting services, Ethernet, private line, VoIP, HSI access, data storage, data security, co-location services, managed IT services, cloud services and other advanced communication solutions. Cogeco Cable's subordinate voting shares are listed on the Toronto Stock Exchange (TSX:CCA).ADDITIONAL INFORMATIONFor additional information relating to the Corporation, including its Annual Information Form, and for a detailed analysis of Cogeco Cable's results for the second quarter of 2012, please refer to the Management Discussion and Analysis and condensed consolidated financial statements of Cogeco Cable, available on the SEDAR website at www.sedar.com. Analyst Conference Call:Thursday, April 12, 2012 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 dialling five minutes before the start of the conference: Canada/USA Access Number: 1-866-321-8231International Access Number: 1-416-642-5213Confirmation Code: 4637099By Internet at www.cogeco.ca/investorsA rebroadcast of the conference call will be available until July 11, by dialling:Canada and US access number: 1 888-203-1112International access number: + 1 647-436-0148Confirmation code: 4637099FOR FURTHER INFORMATION PLEASE CONTACT: Pierre GagneSource: Cogeco Cable Inc.Senior Vice President and Chief Financial Officer514-764-4700ORRene GuimondInformation: MediaVice-President, Public Affairs and Communications514-764-4700