Cogeco Communications

Press release details

COGECO CABLE POSTS GROWTH FOR THE FOURTH QUARTER OF FISCAL 2009

PRESS RELEASE
For immediate release
Cogeco Cable posts growth for the fourth quarter of fiscal 2009
Montréal, October 30, 2009 Today, Cogeco Cable Inc. (TSX: CCA) (“Cogeco Cable” or the “Corporation”) announced
its financial results for the fourth quarter and 2009 fiscal year ended August 31, 2009.
For the fourth quarter and fiscal 2009:
Fourth quarter 2009 consolidated revenue increased by 8% to reach $307.8 million, when compared to the
corresponding period of the prior year. Driven by increased revenue-generating units (“RGU”)
(1)
combined with
rate increases and the financial results generated by the acquisition of Cogeco Data Services Inc. (the “CDS
acquisition”) in the last quarter of fiscal 2008, fourth-quarter Canadian operations revenue went up by
$34.8 million, or 15.8%. Fiscal 2009 fourth-quarter European operations revenue decreased by $11.9 million, or
18.6%, to $52.2 million as a result of the difficult competitive environment and intense promotions and
advertising initiatives from competitors in the Portuguese market, despite an increase in RGU in the quarter and
the favourable impact of the appreciation of the Euro over the Canadian dollar. For the 2009 fiscal year,
consolidated revenue grew by 13.1% to reach $1,217.8 million;
Fiscal 2009 fourth-quarter operating income before amortization
(2)
increased by $28.5 million, or 23.3%, to reach
$150.5 million, as a result of the favourable impact of $19.8 million from the settlement of the Part II licence fees
payable to the Canadian Radio-television and Telecommunications Commission (“CRTC”) for the 2007 to 2009
fiscal years (the “Part II licence fee settlement agreement”), RGU growth, the CDS acquisition and various rate
increases generating additional revenues. For fiscal 2009, consolidated operating income before amortization
grew by 17.7% to reach $524.4 million;
During fiscal 2009, a $399.6 million non-cash impairment loss on the Corporation’s investment in its Portuguese
subsidiary, Cabovisão
Televisão por Cabo, S.A. (“Cabovisão”) was recorded as a result of competitive
pressure resulting in customer losses that were more severe than originally anticipated. Net of related income
taxes, the impairment loss amounted to $383.6 million (the “impairment loss”);
Fourth-quarter 2009 consolidated net income amounted to $46.6 million compared to $31.9 million for the
corresponding period of the prior year. Excluding the favourable impacts from the reduction of withholding and
stamp tax contingent liabilities in the amount of $5.2 million in Europe and from the $13.4 million, net of related
income taxes, with respect to the Part II licence fee settlement agreement in Canada, adjusted net income
(2)
would have amounted to $28 million, a decrease of $3.9 million, or 12.1% compared to $31.9 million for the
fourth quarter of fiscal 2008;
Consolidated net loss amounted to $256.7 million for fiscal 2009 compared to net income of $133.3 million in the
prior year. Excluding the impairment loss of $383.6 million and the favourable impacts from the reduction of
withholding and stamp tax contingent liabilities in the amount of $16.1 million in Europe and of $13.4 million, net
of related income taxes, from the Part II licence fee settlement agreement in Canada, as well as an unfavourable
impact of $6.1 million from the utilization of Cabovisão’s pre-acquisition tax losses, adjusted net income
would
have amounted to $103.6 million, a decrease of $5.7 million, or 5.2% compared to $109.3 million for fiscal 2008;
Free cash flow
(2)
reached $14.8 million for the quarter, representing a decrease of 30% over the prior year. The
decrease in free cash flow is due to an increase in capital expenditures which exceeded the increase in cash
flow from operations
(2)
. Free cash flow stands at $95.4 million for fiscal 2009, a decrease of 3.5% over fiscal
2008.
(1)
Represents the sum of Basic Cable, High Speed Internet (“HSI”), Digital Television and Telephony service customers.
(2)
The indicated terms do not have standard definitions prescribed by Canadian Generally Accepted Accounting Principles (“GAAP”) and therefore, may not be
comparable to similar measures presented by other companies. For more details, please consult the “Non-GAAP financial measures” section of the Results
overview.
- 2 -
Consolidated operating margin
(1)
increased to 48.9%
(2)
for the quarter compared to 42.8% for the corresponding
period of the prior year, and increased to 43.1% during fiscal 2009 from 41.4% the year before. The fourth
quarter operating margin in Canada improved to 54.8%
(2)
from 44% which offset the decrease in the European
operating margin to 20.1% from 38.9%. Fiscal 2009 operating margin in Canada improved to 46.7%
(2)
from
42.9% and decreased to 27.5% from 36.2% in Europe.
RGU grew by 48,170 net additions in the quarter and 175,364 net additions in the fiscal year, for a total of
2,892,238 RGU at August 31, 2009.
“Despite the economic difficulties that marked fiscal 2009, we are pleased with Cogeco Cable’s financial results, with most
key performance indicators surpassing our expectations. Our Canadian operations enjoyed solid growth, with RGU
additions of 167,955 for the year, exceeding by far our guidelines. In our European operations, Cabovisão has
implemented far-reaching strategies to counter the severe competitive pressure in that market. Management believes that
the turnaround phase is solidly underway, with RGU additions of 20,430 during the fourth quarter of 2009. As always,
customer satisfaction remains our focus, and our new Canadian operational structure and the many enhancements made
to our service offerings in fiscal 2009, will pave the way for growth in fiscal 2010”, declared Louis Audet, President and
CEO of Cogeco Cable.
Fiscal 2010 Financial Guidelines
The Corporation issued its 2010 financial guidelines, maintaining revenue outlook at about $1,250 million. Operating
income before amortization should decrease from $500 million to approximately $481 million, a reduction of $19 million
compared to our preliminary projections due to an increase in operating costs from the application of CICA Handbook
Section 3064 Goodwill and intangible assets. Capital expenditures and the increase in deferred charges should also
decrease by $19 million, from $360 million to $341 million from the application of CICA Handbook Section 3064. Free
cash flow should remain the same at approximately $125 million. Please consult the “Fiscal 2010 financial guidelines”
section of the Corporation’s 2009 annual report for further details.
(1)
Operating margin does not have a standard defin ition prescribed by Canadian GAAP and therefore, may not be comparable to similar measures presented by
other companies. For more details, please consult the “Non-GAAP financial measures” section of the Results overview.
(2)
Includes the favourable impact of $19.8 million from the Part II licence fee settlement agreement.
- 3 -
FINANCIAL HIGHLIGHTS
Quarters ended August 31, Years ended August 31,
2009 2008
(1)
Change 2009 2008
(1)
Change
($000, except percentages, per share data and RGU
growth)
$ $ % $ $ %
(unaudited) (unaudited) (audited) (audited)
Revenue 307,807 284,908 8.0 1,217,837 1,076,787 13.1
Operating income before amort iz ati o n
(2)
150,480 122,000 23.3 524,395 445,452 17.7
Operating margin
(2)
48.9% 42.8% – 43.1% 41.4%
Operating income 78,129 60,586 29.0 253,965 217,153 17.0
Impairment of goodwill and intan gi bl e ass ets – – 399,648 – –
Net income (l oss) 46,573 31,866 46.2 (256,675) 133,282 –
Adjusted net income
(2)
27,998 31,866 (12.1) 103,592 109,280 (5.2)
Cash flow from operating activities 182,038 143,748 26.6 431,688 392,883 9.9
Cash flow from operations
(2)
115,219 99,547 15.7 400,725 360,402 11.2
Capital expenditures and increase in deferred charges 100,460 78,472 28.0 305,313 261,512 16.7
Free cash flow
(2)
14,759 21,075 (30.0) 95,412 98,890 (3.5)
RGU growth
(3)
48,170 41,100 17.2 175,364 231,209 (24.2)
Earnings (loss) per share
Basic 0.96 0.66 45.5 (5.29) 2.75 –
Diluted 0.96 0.65 47.7 (5.29) 2.73 –
Adjusted earnings per share
(2)
Basic 0.58 0.66 (12.1) 2.13 2.25 (5.3)
Diluted 0.58 0.65 (10.8) 2.13 2.24 (4.9)
(1)
Certain comparativ e figures hav e be en reclas sified to c onfor m to the c urrent year’s pres ent ation to ref lect the reclas sification of foreign exchange g ains or los ses
from operating costs to financial expense.
(2)
The indicated terms do not have standardized definitions prescribed by Canadian GAAP and therefore, may not be comparable to similar measures presented by
other companies. For more details, please consult the “Non-GAAP financial measures” section of the Results overview.
(3)
Revenue generating units (“RGU”) represent the sum of Basic Cable, High Speed Internet (“HSI”), Digital Television and Telephony service customers. The
number of Digital Television servic e customers in Euro pe has been res tated in the four th quarter of fiscal 2009 in or der to conf orm to the industry definition of a
RGU. This restatement increased the number of customers at the end of the second quarter by 34,785 and at the end of the third quarter by 33,869.
- 4 -
FORWARD-LOOKING STATEMENTS
Certain statements in this press release may constitute forward-looking information within the meaning of securities laws.
Forward-looking information may relate to Cogeco 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 current adverse
economic conditions make forward-looking information and the underlying assumptions subject to greater uncertainty and
that, consequently, they may not materialize, or the results may significantly differ from the Corporation’s expectations. It
is impossible for Cogeco Cable to predict with certainty the impact that the current economic downturn 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 2009 annual Management’s Discussion and Analysis
(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, except
as required by Law.
This analysis should be read in conjunction with the Corporation’s consolidated financial statements, and the notes
thereto, prepared in accordance with Canadian Generally Accepted Accounting Principles and the MD&A included in the
Corporation’s 2009 Annual Report. Throughout this discussion, all amounts are in Canadian dollars unless otherwise
indicated.
- 5 -
RESULTS OVERVIEW
This analysis should be read in conjunction with the Corporation’s 2009 Annual Report available on SEDAR at
www.sedar.com.
CANADIAN OPERATION S
CUSTOMER STATISTICS
Net additions (losses) % of Penetration
(1)
Quarters ended August 31, Years ended August 31, August 31,
August 31, 2009 2009 2008 2009 2008 2009 2008
RGU
(2)
2,159,863 27,740 42,909 167,955 203,400 NA NA
Basic Cable service customers 864,805 (924)
(1,476)
7,711 7,937 NA NA
HSI service customers
(3)
515,052 5,619 8,799 41,585 57,631 62.0 57.7
Digital Television service custo mers 498,398 9,674 16,150 56,652 61,867 58.5 52.4
Telephony service customers
(4)
281,608 13,371 19,436 62,007 75,965 36.1 30.5
(1)
As a percentage of Basic Cable service customers in areas served.
(2)
Represents the sum of Basic Cable, High Speed Internet (“HSI”), Digital Television and Telephony service customers.
(3)
Customers subscribing to the HSI service without the Basic Cable service totalled 78,056 as at August 31, 2009 compared to 75,433 as at August 31, 200 8.
(4)
Customers subscribing to the Telephony service without the Basic Cable service totalled 24,698 as at August 31, 2009 compared to 17,752 as at
August 31, 2008.
In Canada, fourth-quarter 2009 RGU net additions were lower than for the corresponding periods last year and reflect an
early sign of maturation in some services. The number of net losses for Basic Cable stood at 924 customers compared to
1,476 customers for the corresponding period of the prior year. Fourth-quarter Basic Cable service customer losses are
usual and due to seasonal variations. In the quarter, Telephony customers grew by 13,371 compared to 19,436 in the
prior year. The lower growth is mostly attributable to the increased penetration in areas where the service is already
offered and to fewer new areas where the service was launched. The number of net additions to HSI service stood at
5,619 customers compared to 8,799 in the fourth quarter of fiscal 2008. The growth in HSI customer net additions
continues to stem from the enhancement of the product offering, the impact of the bundled offer (Cogeco Complete
Connection) of Cable Television, HSI and Telephony services, and promotional activities. The Digital Television service
net additions stood at 9,674 customers compared to 16,150 customers in the prior year, due to more targeted marketing
initiatives in the second half of fiscal 2008 to improve penetration and to the continuing strong interest for the High
Definition (“HD”) Television service.
OPERATING RESULTS
Quarters ended August 31, Years ended August 31,
2009 2008
(1)
Change 2009 2008
(1)
Change
($000, except percentages) $ $ % $ $ %
(unaudited) (unaudited) (audited) (audited)
Revenue 255,590 220,760 15.8 984,745 833,097 18.2
Operating costs 115,612 123,700 (6.5)
515,450 467,266 10.3
Management fees – COGECO Inc. – –
9,019 8,714 3.5
Operating income before amort iz ati o n
(2)
139,978 97,060 44.2
460,276 357,117 28.9
Operating margin
(2)
54.8% 44.0% 46.7% 42.9%
(1)
Certain comparativ e figures hav e be en reclas sified to c onfor m to the c urrent year’s pres ent ation to ref lect the reclas sification of foreign exchange g ains or los ses
from operating costs to financial expense.
(2)
The indicated terms do not have standardized definitions prescribed by Canadian GAAP and therefore, may not be comparable to similar measures presented by
other companies. For more details, please consult the “Non-GAAP financial measures” section.
Driven by increased RGU combined with rate increases and the CDS acquisition in the last quarter of fiscal 2008, fourth-
quarter Canadian operations revenue went up by $34.8 million, or 15.8%, to reach $255.6 million. Operating costs
decreased by $8.1 million, or 6.5%, at $115.6 million mostly due to the favourable impact of $19.8 million from the Part II
licence fee settlement agreement, partly offset by the impact of servicing additional RGU and the CDS acquisition. Fiscal
2009 fourth-quarter operating income before amortization increased by $42.9 million, or 44.2%, to reach $140 million, as a
result of revenue growth and operating cost decreases as described above. The operating margin in Canada improved to
- 6 -
54.8% from 44%, mainly as a result of the favourable impact of $19.8 million from the Part II licence fee settlement
agreement.
EUROPEAN OPERATIONS
CUSTOMER STATISTICS
Net additions (losses) % of Penetration
(1)
Quarters ended August 31, Years ended August 31, August 31,
August 31, 2009 2009 2008 2009 2008 2009 2008
RGU
(2)
732,375 20,430 (1,809)
7,409
27,809
NA NA
Basic Cable service customers 259,480 (5,318)
(4,456)
(36,655)
2,132
NA NA
HSI service customers
(3)
143,614 1,430 (5,009)
(15,687)
(722)
55.3
53.8
Digital Tele vision service customers
(2)(4)
102,753 23,456 9,982 78,301
24,452
39.6
8.3
Telephony service customers
(5)
226,528 862 (2,326)
(18,550)
1,947 87.3 82.8
(1)
As a percentage of Basic Cable service customers in areas served.
(2)
The number of Digita l Television se rvice customers in Europ e has been restate d in the fourth quarter o f fiscal 2009 in ord er to conform to the industry definit ion
of a RGU. This restatement increased the number of customers at the end of the second quarter by 34,785 and at the end of the third quarter by 33,869.
(3)
Customers subscribing to the HSI service without the Basic Cable service totalled 7,554 as at August 31, 2009 compared to 8,176 as at August 31, 2008.
(4)
The Digital Television service was launched in the third quarter of fiscal 2008.
(5)
Customers subscribing to the Telephony service without the Basic Cable service totalled 8,160 as at August 31, 2009 compared to 10,201 as at
August 31, 2008.
In Europe, fourth-quarter of 2009 was marked by a continuing difficult competitive environment in the Iberian Peninsula,
intense promotions and advertising initiatives from competitors for their new respective third leg of the triple-play service in
the Portuguese market. These factors were the main contributors to net customer losses in the Basic Cable service, and
low customer additions in the HSI and Telephony services. The Digital Television service was launched during the third
quarter of 2008, with net additions of 23,456 customers in the fourth quarter of fiscal 2009, compared to 9,982 in the
fourth quarter of fiscal 2008. Fiscal 2009 fourth quarter Basic Cable service customers decreased by 5,318 customers
compared to a decrease of 4,456 customers in the comparable period of the prior year. HSI service customers increased
by 1,430 customers compared to a decrease of 5,009 customers for the corresponding period in fiscal 2008. Telephony
service increased by 862 customers compared to a decrease of 2,326 customers for the corresponding period of the
preceding year. Cabovisão has launched new channels and retention strategies, as well as new marketing and other
operating initiatives which should re duce customer attrition in the upcoming quarters.
OPERATING RESULTS
Quarters ended August 31, Years ended August 31,
2009 2008
(1)
Change 2009 2008
(1)
Change
($000, except percentages) $ $ % $ $ %
(unaudited) (unaudited) (audited) (audited)
Revenue 52,217 64,148 (18.6) 233,092 243,690 (4.3)
Operating costs 41,715 39,208 6.4
168,973 155,355 8.8
Operating income before amort iz ati o n 10,502 24,940 (57.9)
64,119 88,335 (27.4)
Operating margin 20.1% 38.9% 27.5% 36.2%
(1)
Certain comparativ e figures hav e be en reclas sified to c onfor m to the c urrent year’s pres ent ation to ref lect the reclas sification of foreign exchange g ains or los ses
from operating costs to financial expense.
European operations revenue decreased by $11.9 million, or 18.6%, at $52.2 million as a result of the difficult competitive
environment and intense promotions and advertising initiatives from competitors in the Portuguese market despite an
increase in RGU in the quarter and the favourable impact of the appreciation of the Euro over the Canadian dollar.
Revenue from the European operations in the local currency for the fourth quarter amounted to €33.3 million, a decrease
of €7.3 million, or 17.9% when compared to the prior year. Operating costs increased by $2.5 million, or 6.4%, due to the
appreciation of the Euro over the Canadian dollar and an increase in the amount of bad debts. Cabovisão put together
initiatives at the end of the second quarter of 2009 to better manage its collection processes which management expects
will have a favourable impact on the level of bad debts in fiscal 2010. The operating margin for the European operations
margin decreased to 20.1% from 38.9% due to the elements described above.
- 7 -
NON-GAAP FINANCI AL MEASURES
This section describes non-GAAP financial measures used by Cogeco Cable throughout this Press release. It also
provides reconciliations between these non-GAAP measures and the most comparable GAAP financial measures. These
financial measures do not have standard definitions prescribed by Canadian GAAP and 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 amortization”, “operating margin”, “adjusted net income” and “adjusted earni ngs per share”.
Cash flow from operations and fr ee 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 items. 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-GAAP 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.
Cash flow from operations is calculated as follows:
Quarters ended August 31, Years ended August 31,
2009 2008 2009 2008
($000) $ $ $ $
(unaudited) (unaudited) (audited) (audited)
Cash flow from operating activities 182,038 143,748 431,688 392,883
Changes in non-cash operating items (66,819)
(44,201)
(30,963)
(32,481)
Cash flow from operations 115,219 99,547 400,725 360,402
Free cash flow is calculated as follows:
Quarters ended August 31, Years ended August 31,
2009 2008 2009 2008
($000) $ $ $ $
(unaudited) (unaudited) (audited) (audited)
Cash flow from operations 115,219 99,547 400,725 360,402
Acquisition of fixed assets (89,069)
(68,379)
(273,360)
(228,441)
Increase in deferred charges (9,050)
(7,035)
(27,292)
(27,596)
Assets acquired under capital leases (2,341)
(3,058)
(4,661)
(5,475)
Free cash flow 14,759 21,075 95,412 98,890
Operating income before amortization and opera ting margin
Operating income before 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 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 left over, before income
taxes, to pay for its fixed costs, such as interest on Indebtedness
(1)
. Operating margin is calculated by dividing operating
income before amortizatio n by revenue.
(1)
Indebtedness is defined as the total of bank indebtedness, principal on long-term debt and obligations under derivative financial instruments.
- 8 -
The most comparable Canadian GAAP financial measure is operating income. Operating income before amortization and
operating margin are calculated as follows:
Quarters ended August 31, Years ended August 31,
2009 2008
(1)
2009 2008
(1)
($000, except percentages) $ $ $ $
(unaudited) (unaudited) (audited) (audited)
Operating income 78,129 60,586 253,965 217,153
Amortization 72,351 61,414 270,430 228,299
Operating income before amortization 150,480 122,000 524,395 445,452
Revenue 307,807 284,908 1,217,837 1,076,787
Operating Margin 48.9% 42.8% 43.1% 41.4%
(1)
Certain comparativ e figures hav e be en reclas sified to c onfor m to the c urrent year’s pres ent ation to ref lect the reclas sificati o n of f oreign exc hange g ains or los ses
from operating costs to financial expense.
Adjusted net income and adjusted earnings per share
Adjusted net income and adjusted earnings per share are used by Cogeco Cable’s management and investors to
evaluate what would have been the net income and earnings per share excluding the impairment of goodwill and
intangible assets, non-recurring tax adjustments and the Part II licence fee settlement agreement. This allows the
Corporation to isolate the unusual adjustments in order to evaluate net income and earnings per share from ongoing
activities.
The most comparable Canadian GAAP financial measures are net income and earnings per share. Adjusted net income
and adjusted earning s per share are calculated as follows:
Quarters ended August 31, Years ended August 31,
2009 2008 2009 2008
($000) $ $ $ $
(unaudited) (unaudited) (audited) (audited)
Net income (loss) 46,573 31,866 (256,675)
133,282
Adjustments:
Impairment of goodwill and intangible assets net of related income
taxes 383,630
Non-recurring tax adjustments:
Reduction of withholding and stamp tax contingent liabilities (5,200)
(16,130)
Utilization of pre-acquisition tax losses 6,142
Reduction of Canadian federal income tax rates (24,002)
Part II licence fee settlement agreement net of related income taxes (13,375)
(13,375)
Adjusted net income 27,998 31,866 103,592 109,280
Weighted average number of multiple voting and subordinate voting
shares outstanding 48,558,526 48,506,369 48,545,296 48,472,364
Effect of dilutive stock options
53,138 265,925 125,326 287,694
Weighted average number of diluted multiple voting and subordinate
voting shares outstanding 48,611,664 48,772,294 48,670,622 48,760,058
Adjusted earnings per share
Basic 0.58 0.66 2.13 2.25
Diluted 0.58 0.65 2.13 2.24
- 9 -
ADDITIONAL INFORMATION
Additional information relating to the Corporation, including its 2009 Annual Report and Annual Information Form, is
available on SEDAR at www.sedar.com.
ABOUT COGE CO CABLE
Cogeco Cable (www.cogeco.ca) is a telecommunications company, the second largest cable operator in Ontario, Québec
and Portugal in terms of the number of Basic Cable service customers served. 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, data networking, e-business
applications, video conferencing, hosting services, Ethernet, private line, VoIP, HSI access, dark fibre, data storage, data
security and co-location services and other advanced communication solutions. Cogeco Cable’s subordinate voting
shares are listed on the Toronto Stock Exchange (TSX: CCA).
– 30
Source: Cogeco Cable Inc.
Pierre Gagné
Senior Vice President and Chief Financial Officer
Tel.: 514-764-4700
Information: Media
Marie Carrier
Director, Corporate Communications
Tel.: 514-764-4700
Analyst Conference Call: Friday, October 30, 2009 at 11:00 A.M. (EDT)
Media representatives may attend as listeners only.
Please use the following dial-in number to have access to the conference call by dialing
ten minutes before the start of the conference:
Canada/USA Access Nu mber: 1 888 300-0053
International Access Number: + 1 647 427-3420
Confirmation Code: 30223367
A rebroadcast of the conference call will be available until November 6, by dialing:
Canada and US Access Number: 1 800 839-9868
International Access Number: + 1 402 220-4283
Confirmation code: 30223367
- 10 -
Supplementary Quarterly Financial Information
(unaudited)
Fiscal 2009
Fiscal 2008
Quarters ended
(1)
Nov. 30
Feb. 28
May 31
Aug. 31
Nov. 30
(2)
Feb. 29
(2)
May 31
(2)
Aug. 31
(2)(3)
($000, except percentages and per share data)
$
$
$
$
$ $ $
$
Revenue
299,438 304,920 305,672 307,807 251,833 265,102 274,944 284,908
Operating income before amort iz ati o n
(4)
119,723 125,461 128,731 150,480 97,302 108,658 117,492 122,000
Operating margin
(4)
40.0% 41.1% 42.1% 48.9% 38.6% 41.0% 42.7% 42.8%
Operating income
55,801 58,817 61,218 78,129 44,615 52,669 59,283 60,586
Impairment of goodwill and intan gi bl e ass ets
– 399,648 – – – –
Net income (l oss)
23,551 (358,569) 31,770 46,573 20,363 49,911 31,142 31,866
Adjusted net income
23,551 25,061 26,982 27,998 20,363 25,909 31,142 31,866
Cash flow from operating activities
28,474 118,440 102,736 182,038 45,345 90,991 112,799 143,748
Cash flow from operations
(4)
91,610 99,086 94,810 115,219 79,753 85,273 95,829 99,547
Free cash flow
(4)
17,797 30,965 31,891 14,759 21,609 19,305 36,901 21,075
Earnings (loss) per share
(5)
Basic 0.49 (7.39)
0.65 0.96 0.42 1.03 0.64 0.66
Diluted 0.48 (7.39)
0.65 0.96 0.42 1.02 0.64 0.65
Adjusted earnings per share
(4)(5)
Basic 0.49 0.52 0.56 0.58 0.42 0.53 0.64 0.66
Diluted 0.48 0.51 0.55 0.58 0.42 0.53 0.64 0.65
(1)
The addition of quarterly information may not correspond to the annual total given rounding.
(2)
Certain com parative figures have be en reclassified to c onform to the current year’s pres entation to reflect the reclas sification o f foreign exchange gains or losses
from operating costs to financial expense.
(3)
Includes the results of CDS since the date of acquisition of control on July 31, 2008.
(4)
The indicated t erms do not have stand ardized definitions presc ribed by Canadian Generally Accepted Accounting Principl es (“GAAP”) and ther efore, may not be
comparable to similar measures presented by other companies. For more details, please consult the “Non-GAAP financial measures” section of the Results
overview.
(5)
Per multiple and subordinate voting share.
SEASONAL VARIATIONS
Cogeco Cable’s operating results are not generally subject to material seasonal uctuations. However, the loss in Basic
Cable service customers is usually greater, and the addition of HSI service customers is generally lower, in the second
half of the fiscal year as a result of a decrease in economic activity due to the beginning of the vacation period, the end of
the television seasons, and students leaving their campuses at the end of the school year. Cogeco Cable offers its
services in several university and college towns such as Kingston, Windsor, St. Catharines, Hamilton, Peterborough,
Trois-Rivières and Rimouski in Canada, and Aveiro, Covilhã, Evora, Guarda and Coimbra in Portugal. Furthermore, the
third and fourth quarter’s operating margin is usually higher as 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. Since
the maximum amount was reached in the second quarters of fiscal 2009 and
2008, Cogeco Cable has paid no
management fees in the second halves of fiscal 2009 and 2008.
- 11 -
Customer Statistics
(unaudited)
August 31, 2009 August 31, 2008
Homes passed
Ontario 1,049,818 1,029,121
Québec 515,327 502,490
Canada 1,565,145 1,531,611
Portugal 905,129
(1)
895,923
Total 2,470,274 2,427,534
Revenue generating units
Ontario 1,483,324 1,387,054
Québec 676,539 604,854
Canada 2,159,863 1,991,908
Portugal 732,375 724,966
Total 2,892,238 2,716,874
Basic Cable service customers
Ontario 597,651 596,229
Québec 267,154 260,865
Canada 864,805 857,094
Portugal 259,480 296,135
Total 1,124,285 1,153,229
High Speed Internet service customers
Ontario 374,906 352,553
Québec 140,146 120,914
Canada 515,052 473,467
Portugal 143,614 159,301
Total 658,666 632,768
Digital Television service customers
Ontario 326,227 288,345
Québec 172,171 153,401
Canada 498,398 441,746
Portugal 102,753 24,452
Total 601,151 466,198
Telephony service customer s
Ontario 184,540 149,927
Québec 97,068 69,674
Canada 281,608 219,601
Portugal 226,528 245,078
Total 508,136 464,679
(1)
The Corporation is currently assessing the number of homes passed.