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COGECO Reports Q4 and Fiscal 2012 Financial Results
- Achieves an increase of its revenue and operating income before depreciation and amortization(1) of 11% and 8%, respectively, for fiscal 2012;

MONTREAL, QUEBEC -- (Marketwire) -- 11/02/12 -- Today, COGECO Inc. (TSX:CGO) ("COGECO" or the "Corporation") announced its financial results for the fourth quarter of fiscal 2012 and fiscal year 2012, ended August 31, 2012, in accordance with the International Financial Reporting Standards ("IFRS").

For the fourth quarter and fiscal year 2012:


--  Revenue increased by 7.7% to reach $356.7 million, and by 11% to reach
    $1.406 billion; 

--  Operating income before depreciation and amortization increased by 7.3%
    to $163.6 million compared to the fourth quarter of fiscal 2011, and by
    8.4% to $606.8 million compared to prior fiscal year; 

--  Profit for the period from continuing operations amounted to $44.9
    million in the fourth quarter when compared to $63.9 million for the
    same period of the previous fiscal year. For fiscal 2012, profit for the
    year from continuing operations amounted to $174.2 million when compared
    to $197.9 million for fiscal 2011. Profit declined for the fourth
    quarter and fiscal 2012 and mostly attributable to the increase in
    depreciation and amortization expense due to the reduction of
    depreciation period for certain property plant and equipment combined
    with the increase in income taxes from the change in the corporate
    income tax rate recently announced by the Ontario government, partly
    offset by the increase in operating income before depreciation and
    amortization in the Cable sector; 

--  Profit for the period amounted to $44.9 million in the fourth quarter
    when compared to $70.1 million for the same period of the previous
    fiscal year. The decrease is mostly attributable to the Cable sector and
    due to an increase in income taxes expense stemming primarily from the
    increase in income taxes from the change in the corporate income tax
    rate recently announced by the Ontario government and the increase of
    depreciation and amortization expense due to the reduction of the
    depreciation period of certain property, plant and equipment. For fiscal
    2012, profit for the year amounted to $229.7 million when compared to a
    loss of $46.9 million for the prior year. The increase is mostly
    attributable to the write-off of the Cogeco Cable's net investment in
    the Portuguese subsidiary recorded through a non-cash impairment loss in
    the amount of $225.9 million during the third quarter of fiscal 2011 and
    the improvement of operating income before depreciation and
    amortization, partly offset by the increase of depreciation and
    amortization expense due to the reduction of the depreciation period of
    certain property, plant and equipment; 

--  In the fourth quarter, negative free cash flow (1) of $5 million was
    generated compared to positive free cash flow of $25.8 million in the
    comparable quarter of the prior year. For fiscal 2012, free cash flow
    amounted to $68.7 million, compared to $111.5 million in fiscal 2011.
    Free cash flow decreased in both periods over the prior year due to an
    increase in acquisitions of property, plant and equipment, intangible
    and other assets combined with the increase in income tax expense
    stemming primarily from the fiscal 2011 modifications to the corporate
    structure, partly offset by the increase in operating income before
    depreciation and amortization; 

--  A quarterly dividend of $0.18 per share was paid to the holders of
    subordinate and multiple voting shares, an increase of $0.04 per share,
    or 28.6%, when compared to a dividend of $0.14 per share paid in the
    fourth quarter of fiscal 2011. Dividend payments totalled $0.72 per
    share in fiscal 2012, compared to $0.50 per share in fiscal 2011, an
    increase of $0.22 per share, or 44%; 

--  In the Cable sector, primary service units ("PSU")(2) grew by 6,959 in
    the quarter and 71,664 in fiscal 2012, for a total of 1,969,133 PSU at
    August 31, 2012; 

--  On November 1, 2012, COGECO declared and eligible dividend of $0.19 per
    share, an increase of 5.6% when compared to the $0.18 dividend per share
    paid in the fourth quarter of fiscal 2012; 

--  On July 18, 2012, the Corporation's subsidiary, Cogeco Cable Inc.,
    announced an agreement to acquire all of the shares of Atlantic
    Broadband ("Atlantic") an independent cable system operator formed in
    2003 which, at August 31, 2012, was serving about 251,000 Television
    service customers providing Analogue and Digital Television, as well as
    High Speed Internet ("HSI") and Telephony services. Ranked the 13th-
    largest cable television system operator in the United States, Atlantic
    operates cable systems in Pennsylvania, Florida, Maryland, Delaware and
    South Carolina. The transaction is valued at US$1.36 billion and
    expected to be financed through a combination of cash on hand, a draw-
    down on its existing Term Revolving Facility of approximately US$550
    million and US$660 million of borrowings under a new committed non-
    recourse debt financing at Atlantic. The transaction is subject to usual
    closing conditions, including Hart-Scott-Rodino Antitrust Improvements
    Act approval, Federal Communications Commission ("FCC") approval, state
    and local regulatory approvals and other customary conditions. Cogeco
    Cable expects the transaction to close by the end of calendar 2012; 

--  On February 29, 2012, Cogeco Cable completed the sale of its Portuguese
    subsidiary, Cabovisao - Televisao por Cabo, S.A. ("Cabovisao") for a
    cash consideration of EUR45 million or approximately $59.3 million.
    Operating results from European operations have therefore been
    classified as discontinued operations; 

--  On January 19, 2012, the CRTC approved the sale of CJEC-FM and CFEL-FM
    which have been completed on January 30, 2012 and marked the end of the
    process established with the CRTC for the divestiture of these radio
    stations; and 


--  On December 6, 2011, COGECO Inc. concluded an agreement to acquire
    Metromedia CMR Plus Inc. ("Metromedia"), subject to customary closing
    adjustments and conditions. Metromedia is a Quebec company that operates
    an advertising representation house in the public transit sector.
    Metromedia represents over 100 public transit markets notably in
    Montreal, in other Quebec regions as well as in major cities and
    numerous markets in the rest of Canada. The transaction was completed on
    December 26, 2011. 

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

"The 2012 fiscal year was indelibly marked by major integration and consolidation activities in all our sectors. Results of our focus on effectively responding to our customers constantly growing expectations. Despite the considerable challenges we face in a highly competitive industry, Cogeco Cable reached most of its objectives including PSU growth along with the continuous improvement of our networks and processes", stated Louis Audet, President and Chief Executive Officer of COGECO Inc.

"Regarding radio, our media subsidiary, Cogeco Diffusion Inc., was very successful in consolidating its leadership position in the Quebec radio market. Based on the success of our talk radio stations in Montreal and Quebec City, Cogeco Diffusion extended this promising format to Trois-Rivieres, Gatineau and Sherbrooke in August, creating Quebec's largest private network of talk radio stations. I am pleased to report that the integration of our new transit system advertising representation house, Metromedia, is well on its way. With our new radio-transit advertising offering, COGECO is well positioned to fulfill the needs of its advertising partners."

"For fiscal 2013, our primary focus will be to continue to improve our processes, strengthen our competitive positioning and integrate Atlantic, the acquisition of which marks our entry in the United States. We look foward to the closing of this transaction, so that COGECO can put its expertise to work for Atlantic's 251,000 Television service customers and fully develops its great potential", added Mr. Audet.

Fiscal 2013 Financial Guidelines

COGECO's confirms its fiscal 2013 financial guidelines, as issued on July 11, 2012. Fiscal 2013 financial guidelines will be revised once the recently announced acquisition of Atlantic is concluded in the Cable sector. Please consult the "Fiscal 2013 financial guidelines" section of the Corporation's 2012 Annual Report for further details.

FINANCIAL HIGHLIGHTS


----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                     Quarters ended August 31,        Years ended August 31,
                      2012      2011   Change      2012      2011    Change 
(in thousands of                                                            
 dollars, PSU                                                               
 growth andper                                                              
 share data)             $         $        %         $         $         % 
----------------------------------------------------------------------------
Operations                                                                  
Revenue            356,685   331,045      7.7 1,406,353 1,267,286      11.0 
Operating income                                                            
 before                                                                     
 depreciation and                                                           
 amortization(1)   163,617   152,434      7.3   606,842   559,595       8.4 
Operating income    95,943   101,304     (5.3)  324,989   343,471      (5.4)
Profit for the                                                              
 period from                                                                
 continuing                                                                 
 operations         44,900    63,870    (29.7)  174,246   197,864     (11.9)
Profit (loss) for                                                           
 the period from                                                            
 discontinued                                                               
 operations              -     6,219        -    55,446  (244,736)        - 
Profit (loss) for                                                           
 the period         44,900    70,089    (35.9)  229,692   (46,872)        - 
Profit (loss) for                                                           
 the period                                                                 
 attributable to                                                            
 owners of the                                                              
 Corporation        13,889    23,317    (40.4)   77,051   (15,961)        - 
----------------------------------------------------------------------------
Cash Flow                                                                   
Cash flow from                                                              
 operating                                                                  
 activities        203,193   217,792     (6.7)  448,764   502,167     (10.6)
Cash flow from                                                              
 operations(1)     119,612   148,228    (19.3)  447,110   418,983       6.7 
Acquisitions of                                                             
 property, plant                                                            
 and equipment,                                                             
 intangible and                                                             
 other assets      124,638   122,441      1.8   378,369   307,490      23.1 
Free cash flow(1)   (5,026)   25,787        -    68,741   111,493     (38.3)
----------------------------------------------------------------------------
Financial                                                                   
 Condition                                                                  
Property, plant                                                             
 and equipment           -         -        - 1,343,904 1,272,251       5.6 
Total assets             -         -        - 3,103,919 2,871,648       8.1 
Indebtedness(2)          -         -        - 1,180,971 1,056,214      11.8 
Equity                                                                      
 attributable to                                                            
 owners of the                                                              
 Corporation             -         -        -   397,799   342,525      16.1 
----------------------------------------------------------------------------
PSU(3)growth         6,959    19,740    (64.7)   71,664   106,310     (32.6)
----------------------------------------------------------------------------
Per Share Data(4)                                                           
Earnings (loss)                                                             
 per share                                                                  
 attributable to                                                            
 owners of the                                                              
 Corporation                                                                
  From continuing                                                           
   and                                                                      
   discontinued                                                             
   operations                                                               
    Basic             0.83      1.39    (40.3)     4.61     (0.95)        - 
    Diluted           0.83      1.39    (40.3)     4.58     (0.95)        - 
  From continuing                                                           
   operations                                                               
    Basic             0.83      1.27    (34.6)     3.54      3.75      (5.6)
    Diluted           0.83      1.27    (34.6)     3.52      3.75      (6.1)
  From                                                                      
   discontinued                                                             
   operations                                                               
    Basic                -      0.12        -      1.07     (4.71)        - 
    Diluted              -      0.12        -      1.06     (4.71)        - 
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
(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 Results overview.                            
                                                                          
(2) Indebtedness is defined as the total of bank indebtedness, promissory 
    note payable, principal on long-term debt, balance due on business    
    acquisitions and obligations under derivative financial instruments.  
                                                                          
(3) Represents the sum of Television, HSI and Telephony service customers.
                                                                          
(4) Per multiple and subordinate voting share.                            

FORWARD-LOOKING STATEMENTS

Certain statements in this press release may constitute forward-looking information within the meaning of securities laws. Forward-looking information may relate to COGECO's future outlook and anticipated events, business, operations, financial performance, financial condition or results and, in some cases, can be identified by terminology such as "may"; "will"; "should"; "expect"; "plan"; "anticipate"; "believe"; "intend"; "estimate"; "predict"; "potential"; "continue"; "foresee", "ensure" or other similar expressions concerning matters that are not historical facts. In particular, statements regarding the 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 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 to predict with certainty the impact that the current economic uncertainties may have on future results. Forward-looking information is also subject to certain factors, including risks and uncertainties (described in the "Uncertainties and main risk factors" section of the Corporation's 2012 annual Management's Discussion and Analysis ("MD&A")) that could cause actual results to differ materially from what COGECO currently expects. These factors include technological changes, changes in market and competition, governmental or regulatory developments, general economic conditions, the development of new products and services, the enhancement of existing products and services, and the introduction of competing products having technological or other advantages, many of which are beyond the 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 consolidated financial statements of the 2012 Annual Report, 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 consolidated financial statements for the year ended August 31, 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 press release should be read in conjunction with the MD&A included in the Corporation's 2012 Annual Report, the Corporation's consolidated financial statements and the notes thereto as well as the information on the adjustments to the fiscal 2011 financial figures upon adoption of IFRS, explained in Note 28 of the consolidated financial statements for year ended August 31, 2012.

RESULTS OVERVIEW

This analysis should be read in conjunction with the Corporation's 2012 Annual Report available on SEDAR at www.sedar.com. Please refer to the Corporation's 2012 Annual Report for more details on annual results.

Operating results

Quarter ended august 31, 2012

Cable sector customer statistics


----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                     Net additions (losses) 
                                                  Quarters ended August 31, 
                                                          2012         2011 
----------------------------------------------------------------------------
PSU                                                      6,959       19,740 
Television service customers(1)                         (5,758)      (1,369)
HSI service customers                                    5,682        7,746 
Telephony service customers                              7,035       13,363 
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
(1) The net losses of Television service customers includes net additions 
    of 5,918 Digital Television service customers.                        

Fiscal 2012 fourth-quarter 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. Fourth quarter net customer losses for Television service customers stood at 5,758 when compared to 1,369 for the same period of the prior year due to the end of the school year for college and university students as well as the intense competition driving the telecommunications industry. Telephony service customers grew by 7,035 compared to 13,363 for the same period last year, and the number of net additions to the HSI service stood at 5,682 compared to 7,746 customers for the same period of the prior year. HSI and Telephony net additions continue to stem from the enhancement of the product offering, the impact of the bundled offer (Cogeco Complete Connection) of Television, HSI and Telephony services, and promotional activities. Additions to the Digital Television service which are included in the Television service customers, stood at 5,918 compared to 29,464 for the comparable period of the prior year. Digital Television service net additions are due to the deployment of Digital Terminal Adapters technology to migrate customers from analogue to digital services, the targeted marketing initiatives to improve penetration, the launch of new HD channels and the continuing interest for HD television service.

Consolidated operating results


----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Quarters ended August 31,                            2012     2011   Change 
(in thousands of dollars, except percentages)           $        $        % 
----------------------------------------------------------------------------
Revenue                                           356,685  331,045      7.7 
Operating expenses                                193,068  178,611      8.1 
------------------------------------------------------------------          
Operating income before depreciation and                                    
 amortization                                     163,617  152,434      7.3 
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Fiscal 2012 fourth-quarter consolidated revenue improved by $25.6 million, or 7.7%, to reach $356.7 million, when compared to the prior year. In the Cable segment, fourth-quarter revenue improved by $19 million, or 6.2%, as a result of PSU growth, rate increases in June and July 2012 as well as the acquisitions of QTI and MTO during the fourth quarter of fiscal 2011. In the fourth quarter of fiscal 2012, revenue from the radio and advertising representation house activities improved by $6.7 million, or 26.5%, mainly as a result of the recent acquisition of Metromedia.

For the fourth-quarter ended August 31, 2012, consolidated operating expenses increased by $14.5 million, or 8.1%, at $193.1 million. In the Cable segment, fourth-quarter operating expenses increased by $9.7 million, or 6.3%, mainly attributable to the PSU growth, the launch of new HD channels, additional programming costs and deployment and support costs related to the migration of Television service customers from analogue to digital. The increase is also due to the acquisition of QTI and MTO and to servicing new customers, partly offset by additional expenses in fiscal 2011 related to a one-time project development. Operating expenses from the radio, advertising representation house and head office activities grew by $4.7 million, or 19.5%, in the fourth quarter mainly as a result of the recent acquisition of Metromedia.

Fiscal 2012 fourth-quarter consolidated operating income before depreciation and amortization increased by $11.2 million, or 7.3%, to reach $163.6 million as a result of the Cable segment's operating results and the recent acquisition of Metromedia.

Cash flow analysis


----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Quarters ended August 31,                                    2012      2011 
(in thousands of dollars)                                       $         $ 
----------------------------------------------------------------------------
Operating activities                                                        
Cash flow from operations                                 119,612   148,228 
Changes in non-cash operating activities                   81,809    73,089 
Amortization of deferred transaction costs and discounts                    
 on long-term debt                                             (6)     (857)
Income taxes paid                                         (15,700)     (238)
Current income tax expense (recovery)                      15,798    (7,290)
Financial expense paid                                    (15,738)  (10,770)
Financial expense                                          17,418    15,630 
----------------------------------------------------------------------------
                                                          203,193   217,792 
Investing activities                                     (124,726) (253,473)
Financing activities                                      (16,041)    1,714 
----------------------------------------------------------------------------
Net change in cash and cash equivalents from continuing                     
 operations                                                62,426   (33,967)
Net change in cash and cash equivalents from                                
 discontinued operations(1)                                     -    (1,551)
Cash and cash equivalents from continuing and                               
 discontinued operations, beginning of period             153,097    90,734 
----------------------------------------------------------------------------
Cash and cash equivalents from continuing and                               
 discontinued operations, end of period                   215,523    55,216 
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
(1) For further details on the Corporation's cash flows attributable to   
    discontinued operations, please refer to the "Disposal of subsidiary  
    and discontinued operations" section.                                 

During the fourth quarter of 2012, cash flow from operations reached $119.6 million, 19.3% lower than the comparable period last year, primarily due to the increase in current income tax expense and defined benefit pension plans contributions, partly offset by the increase in operating income before depreciation and amortization. Changes in non-cash operating items generated cash inflows of $81.8 million compared to $73.1 million for the same period in fiscal 2011, mainly as a result of a higher increase in trade and other payables, partly offset by a decrease in provision compared to an increase in prior year.

Fiscal 2012 fourth-quarter investing activities amounted to $124.7 million, a decrease of 50.8% when compared to $253.5 million in the fourth quarter of the prior year. Fiscal 2011 fourth-quarter investing activities included the acquisitions, by Cogeco Cable, of QTI and MTO for a total of $131.2 million. The remaining increase in investing activities is mainly composed of acquisitions of property, plant and equipment, intangible and other assets in the Cable segment. Acquisition of intangible and other assets and others are mainly attributable to reconnect and additional service activation costs as well as other customer acquisition costs. For fiscal 2012 fourth-quarter, the acquisition of property, plant and equipment amounted to $119.4 million and acquisitions of intangible and other assets amounted to $5.2 million compared to $120.1 million and $2.3 million, respectively, for the same period of prior year.

In the fourth quarter of 2012, the Corporation generated negative free cash flows of $5 million compared to positive free cash flow of $25.8 million in the prior year. The decrease in free cash flow over the prior year is due to the difference in the recognition of current income tax expense compared to income tax recovery in prior year and the defined benefit pension plans contributions, partly offset by the increase of operating income before depreciation and amortization.

During the fourth quarter of fiscal 2012, the Corporation paid a dividend of $0.18 per share to the holders of subordinate and multiple voting shares totalling $3 million, compared to a quarterly dividend of $0.14 per share totalling $2.3 million in fiscal 2011. In addition, dividends paid by a subsidiary to non-controlling interest in the fourth quarter of fiscal 2012 amounted to $8.2 million compared to $6.6 million in the fourth quarter of the prior year.

Year ended august 31, 2012

Operating results


----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Years ended August 31,                          2012        2011      Change
(in thousands of dollars, except                                            
 percentages)                                      $           $           %
----------------------------------------------------------------------------
Revenue                                    1,406,353   1,267,286        11.0
Operating expenses                           799,511     707,691        13.0
----------------------------------------------------------------            
Operating income before depreciation and                                    
 amortization                                606,842     559,595         8.4
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Revenue

For the 2012 fiscal year, consolidated revenue increased by $139.1 million, or 11%, to reach $1.406 billion, when compared to the same period last year, primarily due to the Cable segment, the recent acquisition of Metromedia and the full year impact of the Quebec Radio Stations Acquisition.

Cable segment revenue increased by $93 million, or 7.9%, when compared to last year, primarily by PSU growth, rate increases as well as the acquisitions of MTO and QTI during the fourth quarter of fiscal 2011. For further details on Cogeco Cable's revenue, please refer to the "Cable segment" section.

Revenue from the radio and advertising representation house activities improved by $46.1 million, or 55.8%, when compared to last year, mainly as a result of the recent acquisition of Metromedia and the Quebec Radio Stations Acquisition.

Operating expenses

Fiscal 2012 consolidated operating expenses increased by $91.8 million, to reach $799.5 million, an increase of 13% compared to prior year. The increase in operating expenses is mainly attributable to the Cable segment, the recent acquisition of Metromedia as well as the full year impact of the Quebec Radio Stations Acquisition.

Cable segment operating expenses increased by $49 million, or 7.8%, when compared to last year. The increase in operating expenses 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 analogue to digital and the acquisitions of MTO and QTI. For further details on the Cogeco Cable's operating expenses, please refer to the "Cable segment" section.

Operating expenses from the radio, advertising representation house and head office activities grew by $42.8 million, or 55.2%, when compared to prior year. The increase in operating expenses is mainly attributable to the recent acquisition of Metromedia and the Quebec Radio Stations Acquisition.

Operating income before depreciation and amortization

Fiscal 2012 consolidated operating income before depreciation and amortization increased by $47.2 million, or 8.4% to reach $606.8 million. The Cable segment contributed $43.7 million to the consolidated increase. For further details on the Cogeco Cable's operating income before depreciation and amortization, please refer to the "Cable segment" section.

Cable segment

Operating results


----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Years ended August 31,                         2012        2011       Change
(in thousands of dollars, except                                            
 percentages)                                     $           $            %
----------------------------------------------------------------------------
Revenue                                   1,277,698   1,184,683          7.9
Operating expenses                          679,161     630,150          7.8
Management fees - COGECO Inc.                 9,485       9,172          3.4
----------------------------------------------------------------            
Operating income before depreciation and                                    
 amortization                               589,052     545,361          8.0
----------------------------------------------------------------            
Operating margin                               46.1%       46.0%            
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Revenue

For the 2012 fiscal year, consolidated revenue increased by $93 million, or 7.9%, to reach $1.278 billion, when compared to the same period last year, primarily by PSU growth, rate increases implemented in April and October 2011 and June and July 2012 combined with the acquisitions of QTI and MTO during the fourth quarter of fiscal 2011.

Operating expenses and management fees

Fiscal 2012 consolidated operating expenses increased by $49 million, to reach $679.2 million, an increase of 7.8% compared to prior year. The increase in operating expenses 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 analogue to digital and the acquisitions of QTI and MTO.

Management fees paid to COGECO Inc. amounted to $9.5 million, 3.4% higher when compared to $9.2 million in fiscal 2011.

Operating income before depreciation and amortization and operating margin

Fiscal 2012 consolidated operating income before depreciation and amortization increased by $43.7 million, or 8% to reach $589.1 million as a result of the higher growth from revenue than operating expenses. Fiscal 2012 consolidated operating margin increased to 46.1% from 46% in the comparable period of the prior year.

Disposal of subsidiary and discontinued operations

On February 29, 2012, Cogeco Cable completed the sale of its Portuguese subsidiary, Cabovisao, for a cash consideration of EUR45 million ($59.3 million). The selling price has been reduced by selling fees of approximately EUR8.5 million ($11.2 million) and contingent claims assumed up to a maximum amount of EUR5 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 of $48.2 million recorded in the consolidated statements of profit or loss.

The carrying value of assets and liabilities disposed were as follows:


----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
(In thousands of dollars)                                                 $ 
----------------------------------------------------------------------------
Cash and cash equivalents                                            13,041 
Trade and other receivables                                           7,693 
Income taxes receivable                                                 277 
Prepaid expenses and other                                            2,777 
Property, plant and equipment                                        38,931 
Trade 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, Cogeco Cable reclassified the current and prior year results and cash flows of the European operations, up to the date of disposal, as discontinued operations. The assets and liabilities of the discontinued operations have not been reclassified in the statements of financial position at August 31, 2011 and September 1, 2010.

The profit or loss of the discontinued operations were as follows:


----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                          Quarters ended August 31,  Years ended August 31, 
                                  2012         2011       2012         2011 
(In thousands of dollars)            $            $          $            $ 
----------------------------------------------------------------------------
Revenue                              -       43,306     80,546      172,277 
Operating expenses                   -       36,718     70,247      151,262 
Depreciation and                                                            
 amortization                        -          347      2,814       40,415 
----------------------------------------------------------------------------
Operating income (loss)              -        6,241      7,485      (19,400)
Financial expense                                                           
 (income)                            -           11       (155)         (74)
Impairment of goodwill               -            -          -       29,344 
Impairment of property,                                                     
 plant and equipment                 -            -          -      196,529 
Gain on disposal                     -            -     48,215            - 
----------------------------------------------------------------------------
Profit (loss) before                                                        
 income taxes                        -        6,230     55,855     (245,199)
Income taxes                         -           11        409         (463)
----------------------------------------------------------------------------
Profit (loss) for the                                                       
 period                              -        6,219     55,446     (244,736)
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------

The cash flows of the discontinued operations were as follows:


----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                          Quarters ended August 31,  Years ended August 31, 
                                  2012         2011        2012        2011 
(In thousands of dollars)            $            $           $           $ 
----------------------------------------------------------------------------
Net cash flows from                                                         
 operating activities                -        6,818      13,637      22,667 
Net cash flows from                                                         
 investing activities                -       (8,519)     36,826     (34,592)
Effect of exchange rate                                                     
 changes on cash and cash                                                   
 equivalents denominated                                                    
 in a foreign currency               -          150        (866)        588 
----------------------------------------------------------------------------
Net increase (decrease)                                                     
 in cash and cash                                                           
 equivalents                         -       (1,551)     49,597     (11,337)
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Non-ifrs financial measures

This section describes non-IFRS financial measures used by COGECO throughout this press release. 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" and "operating income before depreciation and amortization".

Cash flow from operations and free cash flow

Cash flow from operations is used by COGECO's management and investors to evaluate cash flows generated by operating activities, excluding the impact of changes in non-cash operating activities, amortization of deferred transaction costs and discounts on long-term debt, income taxes paid or received, current income tax expense or recovery, 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's management and investors, to measure its ability to repay debt, distribute capital to its shareholders and finance its growth.

The most comparable IFRS financial measure is cash flow from operating activities. Cash flow from operations is calculated as follows:


----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                        Quarters ended August 31,    Years ended August 31, 
                                2012         2011         2012         2011 
(in thousands of                                                            
 dollars)                          $            $            $            $ 
----------------------------------------------------------------------------
Cash flow from operating                                                    
 activities                  203,193      217,792      448,764      502,167 
Changes in non-cash                                                         
 operating activities        (81,809)     (73,089)       3,479      (17,041)
Amortization of deferred                                                    
 transaction costs and                                                      
 discounts on long-term                                                     
 debt                              6          857        3,363        3,759 
Income taxes paid                                                           
 (received)                   15,700          238       83,411       (1,457)
Current income tax                                                          
 recovery (expense)          (15,798)       7,290      (88,104)     (65,907)
Financial expense paid        15,738       10,770       65,325       71,075 
Financial expense            (17,418)     (15,630)     (69,128)     (73,613)
----------------------------------------------------------------------------
Cash flow from                                                              
 operations                  119,612      148,228      447,110      418,983 
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Free cash flow is calculated as follows:


----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                        Quarters ended August 31,    Years ended August 31, 
                               2012          2011         2012         2011 
(in thousands of                                                            
 dollars)                         $             $            $            $ 
----------------------------------------------------------------------------
Cash flow from                                                              
 operations                 119,612       148,228      447,110      418,983 
Acquisition of                                                              
 property, plant and                                                        
 equipment                 (119,421)     (120,104)    (362,582)    (296,618)
Acquisition of                                                              
 intangible and other                                                       
 assets                      (5,217)       (2,337)     (15,787)     (10,872)
----------------------------------------------------------------------------
Free cash flow               (5,026)       25,787       68,741      111,493 
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Operating income before depreciation and amortization

Operating income before depreciation and amortization is used by COGECO'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.

The most comparable IFRS financial measure is operating income. Operating income before depreciation and amortization is calculated as follows:


----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                          Quarters ended August 31,   Years ended August 31,
                                   2012        2011         2012        2011
(in thousands of dollars)             $           $            $           $
----------------------------------------------------------------------------
Operating income                 95,943     101,304      324,989     343,471
Depreciation and                                                            
 amortization                    65,699      52,020      279,770     203,792
Integration, restructuring                                                  
 and acquisitions costs           1,975        (890)       2,083      12,332
----------------------------------------------------------------------------
Operating income before                                                     
 depreciation and                                                           
 amortization                   163,617     152,434      606,842     559,595
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Supplementary quarterly financial information


--------------------------------------------------------------------------
--------------------------------------------------------------------------
                                                                          
                                                              Fiscal 2012 
Quarters ended(1)                Nov. 30    Feb. 29     May 31    Aug. 31 
(in thousands of dollars and                                              
 per share data)                       $          $          $          $ 
--------------------------------------------------------------------------
Revenue                          346,023    345,613    358,032    356,685 
Operating income before                                                   
 depreciation and                                                         
 amortization                    140,261    144,518    158,446    163,617 
Operating income                  74,642     58,931     95,473     95,943 
Income taxes                      12,340     13,372     22,278     33,625 
Profit for the period from                                                
 continuing operations            44,524     29,449     55,373     44,900 
Profit (loss) for the period                                              
 from discontinued operations      3,399     52,047          -          - 
Profit (loss) for the period      47,923     81,496     55,373     44,900 
Profit (loss) for the period                                              
 attributable to owners of                                                
 the Corporation                  18,770     25,089     19,303     13,889 
Cash flow from operating                                                  
 activities                        9,570    126,455    109,546    203,193 
Cash flow from operations        104,739    105,153    117,606    119,612 
Acquisitions of property,                                                 
 plant and equipment,                                                     
 intangible and other assets      78,404     87,186     88,141    124,638 
Free cash flow                    26,335     17,967     29,465     (5,026)
Earnings (loss) per share(2)                                              
 attributable to owners of                                                
 the Corporation                                                          
From continuing and                                                       
 discontinued operations                                                  
  Basic                             1.12       1.50       1.15       0.83 
  Diluted                           1.11       1.49       1.15       0.83 
From continuing operations                                                
  Basic                             1.06       0.50       1.15       0.83 
  Diluted                           1.05       0.50       1.15       0.83 
From discontinued operations                                              
  Basic                             0.07       1.00          -          - 
  Diluted                           0.06       0.99          -          - 
                                                                          
--------------------------------------------------------------------------
--------------------------------------------------------------------------
                                                                          

----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                 Fiscal 2011
Quarters ended(1)                Nov. 30     Feb. 28      May 31     Aug. 31
(in thousands of dollars and                                                
 per share data)                       $           $           $           $
----------------------------------------------------------------------------
Revenue                          298,451     307,532     330,258     331,045
Operating income before                                                     
 depreciation and                                                           
 amortization                    132,996     132,140     142,025     152,434
Operating income                  83,328      68,597      90,242     101,304
Income taxes                      18,473      12,465      19,252      21,804
Profit for the period from                                                  
 continuing operations            47,967      31,656      54,371      63,870
Profit (loss) for the period                                                
 from discontinued operations     (8,159)     (9,223)   (233,573)      6,219
Profit (loss) for the period      39,808      22,433    (179,202)     70,089
Profit (loss) for the period                                                
 attributable to owners of                                                  
 the Corporation                  16,391         634     (56,303)     23,317
Cash flow from operating                                                    
 activities                       52,378      90,891     141,106     217,792
Cash flow from operations         38,119     103,309     129,327     148,228
Acquisitions of property,                                                   
 plant and equipment,                                                       
 intangible and other assets      58,369      62,873      63,807     122,441
Free cash flow                   (20,250)     40,436      65,520      25,787
Earnings (loss) per share(2)                                                
 attributable to owners of                                                  
 the Corporation                                                            
From continuing and                                                         
 discontinued operations                                                    
  Basic                             0.98        0.04       (3.36)       1.39
  Diluted                           0.97        0.04       (3.36)       1.39
From continuing operations                                                  
  Basic                             1.14        0.22        1.13        1.27
  Diluted                           1.13        0.21        1.13        1.27
From discontinued operations                                                
  Basic                            (0.16)      (0.18)      (4.49)       0.12
  Diluted                          (0.16)      (0.18)      (4.49)       0.12
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
(1) The addition of quarterly information may not correspond to the annual
    total due to rounding.                                                
                                                                          
(2) Per multiple and subordinate voting share.                            

Seasonal variations

Cogeco Cable's operating results are not generally subject to material seasonal fluctuations except as follows. The customer growth in the Television service customers 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 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-Rivieres and Rimouski in Canada.

Additional information

Additional information relating to the Corporation, including its 2012 Annual Report and Annual Information Form, is available on SEDAR at www.sedar.com.

ABOUT COGECO

COGECO is a diversified communications corporation. Through its Cogeco Cable subsidiary, COGECO provides its residential customers with Analogue and Digital Television, HSI and Telephony services using its two-way broadband cable networks. 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, co-location services, managed IT services, cloud services and other advanced communication solutions. Through its subsidiary, Cogeco Diffusion, COGECO owns and operates 13 radio stations across most of Quebec with complementary radio formats serving a wide range of audiences as well as Cogeco News, its news agency. Cogeco Diffusion also operates Metromedia, an advertising representation house specialized in the public transit sector that holds exclusive advertising rights in the Province of Quebec where it also represents its business partners active across other Canadian markets. COGECO's subordinate voting shares are listed on the Toronto Stock Exchange (TSX:CGO). The subordinate voting shares of Cogeco Cable are also listed on the Toronto Stock Exchange (TSX:CCA).


Analyst Conference Call: Friday, November 2, 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: 1-800-820-0231          
                         International Access Number:  1-416-640-5926      
                         Confirmation Code: 7187134                        
                         By Internet at www.cogeco.ca/investors            
                                                                           
                         A rebroadcast of the conference call will be      
                         available until November 10, by dialling:         
                         Canada and US access number: 1 888-203-1112       
                         International access number: + 1 647-436-0148     
                         Confirmation code: 7187134                        

Cable segment customer statistics


----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                             2012         2011         2010 
----------------------------------------------------------------------------
                                                                            
Primary service units(1)                1,969,133    1,897,469    1,791,159 
----------------------------------------------------------------------------
                                                                            
Television service customers              863,115      877,985      874,505 
Penetration as a percentage of homes                                        
 passed                                      52.4%        54.1%        54.9%
----------------------------------------------------------------------------
                                                                            
Digital Television service customers      771,503      678,326      559,418 
Penetration as a percentage of homes                                        
 passed                                      46.8%        41.8%        35.1%
----------------------------------------------------------------------------
                                                                            
Analogue Television service customers      91,612      199,659      315,087 
Penetration as a percentage of homes                                        
 passed                                       5.6%        12.3%        19.8%
----------------------------------------------------------------------------
                                                                            
High Speed Internet service customers     634,534      601,214      559,057 
Penetration as a percentage of homes                                        
 passed                                      38.5%        37.1%        35.1%
----------------------------------------------------------------------------
                                                                            
Telephony service customers               471,484      418,270      357,597 
Penetration as a percentage of homes                                        
 passed                                      28.6%        25.8%        22.4%
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
 (1)Represents the sum of Television, High Speed Internet ("HSI") and     
    Telephony service customers.                                          

Contacts:
Source: COGECO Inc.
Pierre Gagne
Senior Vice President and Chief Financial Officer
Tel.: 514-764-4700

Information: Media
Rene Guimond
Vice-President, Public Affairs and Communications
Tel.: 514-764-4700

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