Cogeco Câble inc.
TSX : CCA

January 17, 2005 08:31 ET

Cogeco Cable Inc. reports profits, strong growth in customer base, operating income and Free Cash Flow

MONTREAL, Jan. 17 - Cogeco Cable Inc. (TSX: CCA.SV)
disclosed today its financial results for the first quarter of fiscal 2005,
ended November 30, 2004.

"Growth of our basic-service and digital-service customers was higher
than the same period last year while the addition of high-speed Internet
connections was slightly lower. Thanks to new services such as top-end
security services, included free of charge with our Standard and Pro high-
speed Internet packages, we have further strengthened the competitiveness of
our high-speed Internet service offer. Cogeco Cable currently offers the
fastest and most secure high-speed Internet service on the market. In
addition, our enhanced video-on-demand offer as well as the introduction of
subscription video-on-demand, have reinforced Cogeco Cable's position as a
leader in its markets," said Louis Audet, President and CEO of Cogeco Cable
Inc.

"Our financial performance continues to improve with net income generated
of $3.8 million. Our operating income before amortization improved 12.7% due
to increased revenue, tighter cost control and an effective marketing strategy
with Free Cash Flow up 32%. Fiscal 2005 has started on solid ground and is
following the expected course," concluded Louis Audet.



FINANCIAL HIGHLIGHTS

Three months ended November 30,
(unaudited)

2004 2003 %
($000s, except percentages (restated Change
and per share data) (1))
________ __________ ________

Revenue $ 135,766 $ 129,489 4.8
Operating income before amortization 53,194 47,214 12.7

Net income (loss) 3,827 (41,103) --

Cash flow from operations 39,192 31,882 22.9
Less:
Capital expenditures and
increase in deferred charges 23,779 20,204 17.7
Free Cash Flow (2) 15,413 11,678 32.0

Per share data
Basic net income (loss) $ 0.10 $ (1.03) --
Cash flow from operations 0.98 0.80 22.5


(1) During the third quarter of fiscal 2004, Cogeco Cable adopted new
accounting standards regarding the timing of revenue recognition and
certain related costs and the classification of certain items such as
revenue, expense or capitalized costs. These changes were made on a
retroactive basis in accordance with Abstracts 141 and 142 issued by
the Canadian Institute of Chartered Accountants' (CICA) Emerging
Issues Committee (EIC). See "Accounting Policies and Estimates" of
the accompanying Management's Discussion and Analysis (MD&A) for a
detailed description of these new accounting standards implemented on
a retroactive basis.

(2) Free Cash Flow is defined as cash flow from operations less capital
expenditures (including assets acquired under capital leases - as per
Note 7 b) in the accompanying Financial Statements - not reflected in
the statements of cash flow) and increase in deferred charges. Free
Cash Flow is not a defined term under Generally Accepted Accounting
Principles (GAAP) and should be treated accordingly.

MANAGEMENT'S DISCUSSION AND ANALYSIS

Certain statements in this analysis may constitute forward-looking
statements that involve risks and uncertainties. Future results will be
affected by a number of factors with respect to technology, markets,
competition and regulations including factors described in the section
"Uncertainties and main risk factors" of the Corporation's 2004 annual
MD&A. Therefore, actual results may be materially different from those
expressed or implied by such forward-looking statements.

This analysis should be read in conjunction with the Corporation's
financial statements and the notes thereto prepared in accordance with
Canadian GAAP and the MD&A included in the Corporation's Annual Report.
Throughout this discussion, all amounts are in Canadian dollars unless
otherwise indicated.


CUSTOMER STATISTICS
Net additions % of Penetra-
tion(1)
First Quarter November 30,
____________ _____________
November 30,
2004 2004 2003 2004 2003
____ ____ ____ ____ ____
Revenue-generating
units(2) 1,319,254 41,937 37,560 N/A N/A
Basic-service customers 831,598 7,743 7,239 N/A N/A
High-speed Internet
customers(3) 261,825 16,799 17,439 36.2 30.6
Digital terminals(4) 261,913 21,842 15,617 32.2 24.5


(1) As a percentage of basic-service customers in areas served.
(2) Including basic-service, Internet-service and digital-service
customers.
(3) Including pending orders, the number would amount to 264,064 as at
November 30, 2004 compared to 250,029 as at August 31, 2004.
Customers subscribing only to Internet services amounted to 54,584 as
at November 30, 2004 compared to 49,691 customers as at August 31,
2004.
(4) 77% of terminals as at November 30, 2004 were purchased, the same
% as a year earlier.


In the first quarter, revenue-generating units were higher than the same
period last year due to better digital-service customer growth and greater
basic-service customer gains. The strong growth in digital-service customers
is mainly attributable to the success of an attractive digital terminal rental
plan launched last June and August in Ontario and Québec, respectively and the
addition of MoviePix to the digital pay television service in Ontario. The
rollout of subscription video-on-demand and High Definition (HD) services to
86% and 67% of the customer base respectively this fall should contribute to
the future growth of digital services. The HD coverage will increase in the
coming months once the service is offered to most of Québec's customer base.

High-speed Internet customer additions were slightly lower than last year
due to a normal slowing-down of demand as the penetration rate increases. To
enhance the competitiveness of its Internet service, Cogeco Cable will offer
top-end security services free of charge to all Standard and Pro high-speed
Internet customers in the coming months. The Internet security services
include anti-virus, personal firewall, parental control and anti-spam, and
will position Cogeco Cable's offering as the fastest and most secure Internet
service on the market.

ACCOUNTING POLICIES AND ESTIMATES

Revenue Recognition

During the third quarter of fiscal 2004, Cogeco Cable adopted the CICA's
EIC Abstracts 141 and 142 issued in December 2003, regarding the timing of
revenue recognition and certain related costs and the classification of
certain items such as revenue, expense or capitalized costs. Consequently,
Cogeco Cable adopted the following changes on a retroactive basis:



- Installation revenues are now deferred and amortized over the average
life of a customer subscription, which is four years. Previously, these
revenues were recognized immediately as they were considered a partial
recovery of direct selling costs incurred. Upon billing, the portion of
unearned revenue is now recorded as deferred and prepaid income.

- The costs to reconnect customers are now recorded as deferred charges
up to a maximum amount not exceeding the revenue generated by the
reconnect activity, which are included in installation revenues, and
amortized over the average life of a customer subscription, which is
four years. Previously, these costs, which include materials, direct
labour and certain overhead charges, were capitalized to fixed assets
and generally amortized over a period of five years.

- Revenue from the sale of home terminal devices at a subsidized price,
which were recorded as a partial recovery of costs, are now recorded as
equipment revenue with an equal amount included in operating costs.

- The portion of advertising expense incurred to expand the digital and
high-speed Internet customer base that used to be recorded as a
deferred charge is now recorded as an operating cost.

The above changes had the following impact on our financial results for
the first quarter of fiscal 2004:


($000s, except percentages Before After
and per share data) restatement restatement
___________ ___________

Revenue $ 128,072 $ 129,489
Operating income before amortization 50,232 47,214
Operating margin 39.2% 36.5%
Amortization 42,280 43,313
Income taxes 33,314 30,099
Net loss (40,267) (41,103)
Basic net loss per share (1.01) (1.03)


Amortization of Long-term Assets

In the first quarter of fiscal 2004, the Corporation reviewed the useful
life of its digital terminals, cable modems and certain other long-term
assets. The useful life of digital terminals was reduced from seven to five
years while the useful life of cable modems was reduced from seven to three
years. These changes in accounting estimates, applied prospectively, increased
amortization expense by $14 million in the first quarter of fiscal 2004.

Asset Retirement Obligations

In March 2003, the CICA issued Handbook section 3110, Asset Retirement
Obligations, which provides guidance for the recognition, measurement and
disclosure of liabilities for asset retirement obligations and the associated
asset retirement costs. Certain of Cogeco Cable's lease agreements contain
provisions requiring the Corporation to restore facilities or remove equipment
in the event that the lease agreement is not renewed. However, Cogeco Cable
expects to renew most of its lease agreements related to the continued
operation of the cable business and consequently, the liabilities related to
the removal provisions on non-renewed leases, if any, are considered not
material to the consolidated financial statements. In addition, in the
unlikely event that some of these lease agreements are not renewed, the
liability would be difficult to estimate since there is a wide range of
potential expiration dates for these lease agreements.

No other significant changes in critical accounting policies and
estimates occurred since August 31, 2004 and such policies and estimates are
described in the Corporation's 2004 annual MD&A.

RELATED PARTY TRANSACTIONS

Cogeco Cable is a subsidiary of COGECO, which holds 39.3% of the
Corporation's equity shares. Under a management agreement, the Corporation
pays to COGECO monthly fees equal to 2% of its total revenue for certain
executive, administrative, legal, regulatory, strategic and financial planning
services and additional services. For fiscal 2005, the management fee has been
set at a maximum of $8.2 million. Cogeco Cable granted 38,397 stock options to
COGECO Inc.'s employees during the first quarter of fiscal 2005 compared to
34,237 for the same period last year. Further details regarding the management
agreement and stock options granted to COGECO Inc.'s employees are provided in
the Corporation's 2004 annual MD&A. There were no other material related party
transactions during the first quarters of fiscal 2004 and 2005.



OPERATING RESULTS
Three months ended November 30,

($000s, except percentages) 2004 2003 %
(restated) Change
____ _________ ______
Revenue $ 135,766 $ 129,489 4.8

Operating costs 79,857 79,713 0.2
Management fees - COGECO Inc. 2,715 2,562 6.0

Operating income before amortization 53,194 47,214 12.7

Operating margin 39.2% 36.5%


Revenue

Revenue for the first quarter rose by $6.3 million or 4.8% compared to
the same period last year. This growth is mainly attributable to increases in
basic-service customer rates and the improved high-speed Internet access
penetration rate, as mentioned in the "Customer Statistics" section. An
average monthly rate increase of approximately $0.74 per basic-analog-service
customer has been implemented effective June 15 in Ontario and August 1st in
Québec. A monthly digital basic rate hike of $4 was also implemented in
Québec. In addition, the monthly rate for the pay television package rose by
$3, and other limited selective tier service rate increases have been
implemented in Ontario.

Operating Costs

Network fees for the first quarter have increased slightly compared to
the same period in fiscal 2004. This rise is due to improved penetration of
bundled services partly offset by lower IP transport costs. IP transport costs
have declined despite a 17.6% increase in high-speed Internet customers since
last year. Network fees as a percentage of revenue have declined. Even though
customer care expenses have increased as a result of a 7.6% year-over-year
expansion of revenue-generating units, total other operating costs have
declined because of tighter cost control and a more targeted marketing
strategy.

Operating Income before Amortization

Operating income before amortization improved by 12.7% in the first
quarter compared to the same period in fiscal 2004, as a result of revenue
growth, continued cost control and targeted marketing. Cogeco Cable's
operating margin jumped from 36.5% to 39.2%.



FIXED CHARGES
Three months ended November 30,

($000s, except percentages) 2004 2003 %
(restated) Change
____ __________ ______
Amortization $ 32,244 $ 43,313 (25.6)
Financial expense 13,894 14,905 (6.8)


Amortization in the first quarter amounted to $32.2 million compared to
$29.3 million for the same period last year, excluding the effect of a
$14 million increase in amortization related to a revision in the estimated
useful lives of home terminal devices and certain other long-term assets.
Increased amortization stemmed mainly from capital expenditures linked to
digital services.

For the first quarter, financial expense decreased compared to the same
period last year. The reason for this decline is that the level of
Indebtedness (defined as bank indebtedness and long-term debt) during the
first quarter was lower compared to the same period last year due to Free Cash
Flow generated and short-term interest rates on the Term Facility were also
lower.

INCOME TAXES

Income taxes in the first quarter amounted to $3.2 million compared to
$2.5 million for the same period last year excluding the effect of a net
income tax adjustment of $27.6 million. This increase is mainly attributable
to growth in operating income before amortization.

During the first quarter of fiscal 2004, the Ontario government announced
that corporate income tax rates would increase to 14% effective January 1,
2004. Prior to this announcement the tax rate was to decline from 11% in 2004
to 8% in 2007. As a result, a $32.5 million non-cash adjustment was recorded
for future income tax liabilities. This amount was partly offset by a non-cash
reduction of future income taxes of $4.9 million related to the decline in
carrying value of home terminal devices and certain other long-term assets.

NET INCOME (LOSS)

Net income for the first quarter amounted to $3.8 million, or $0.10 per
share, compared to a net loss of $41.1 million, or $1.03 per share, for the
same period last year. The net loss was attributable to amortization and
income taxes non-cash adjustments totaling $41.6 million as previously
discussed. Excluding these elements, the Corporation would have recorded a net
income of $0.5 million in the first quarter of fiscal 2004.



CASH FLOW AND LIQUIDITY
Three months ended November 30,

($000s) 2004 2003
(restated)
___________ ___________
Operating Activities
Cash flow from operations $ 39,192 $ 31,882
Changes in non-cash working
capital items and long-term
deferred and prepaid income (33,006) (32,046)
___________ ___________
$ 6,186 $ (164)
___________ ___________
___________ ___________

Investing Activities (1) $ (23,777) $ (20,105)
___________ ___________
___________ ___________

Financing Activities $ 17,591 $ 20,269
___________ ___________
___________ ___________

(1) Excludes assets acquired under capital leases.


For the first quarter, cash flow from operations was greater than last
year by $7.3 million or 22.9% mainly due to growth in operating income before
amortization. Changes in non-cash working capital items and long-term deferred
and prepaid income increased cash outflow by $1 million compared to last year.

Investing activities related to capital expenditures and the increase in
deferred charges, including assets acquired under capital leases, rose by $3.6
million during the first quarter. The $3.3 million decline in deferred charges
is mainly attributable to lower equipment subsidies given that most of the new
digital customers have decided to rent their terminals during the quarter.
Capital expenditures, segmented according to the National Cable Television
Association (NCTA) standard reporting categories, are as follows:



Three months ended November 30,
($000s) 2004 2003
(restated)
___________ ___________
Customer Premise Equipment (1) $ 11,304 $ 6,372
Scalable Infrastructure 2,405 1,313
Line Extensions 2,777 2,220
Upgrade / Rebuild 4,446 3,875
Support Capital 642 968
___________ ___________
Total Capital Expenditures (2) $ 21,574 $ 14,748
___________ ___________
___________ ___________

(1) Includes mainly new and replacement drops but also digital terminals
and cable modems.
(2) Includes capital leases, which are excluded in the statements of cash
flow.


During the first quarter, capital expenditures rose by $6.8 million,
mainly as a result of an increase in expenditures related to digital
terminals. The number of digital terminals rented by Cogeco Cable's customers
increased as a result of an attractive rental plan launched during the fourth
quarter of fiscal 2004.

Free Cash Flow of $15.4 million was generated during the first quarter as
a result of increasing cash flow from operations partly offset by increased
capital expenditures.

Long-term debt and bank indebtedness increased by $18.1 million mainly
due to a $33 million decline in non-cash working capital items and long-term
deferred and prepaid income partly offset by generated Free Cash Flow of $15.4
million. During the first quarter of last year, long-term debt and bank
indebtedness grew by $20.3 million because of a $32 million decline in non-
cash working capital items and long-term deferred and prepaid income partly
offset by generated Free Cash Flow of $11.7 million. A dividend of $0.02 per
share for subordinate and multiple voting shares, totaling $0.8 million, was
paid during the quarter, a first since fiscal 2001.

As at November 30, 2004, the Corporation had utilized $55 million of its
$270 million Term Facility. Going forward, Cogeco Cable expects to generate
higher Free Cash Flow and thus further reduce its leverage ratios.

DIVIDEND DECLARATION AND NORMAL COURSE ISSUER BID

At its January 14, 2005 meeting, the Board of Directors of Cogeco Cable
declared a quarterly dividend of $0.02 per share for subordinate and multiple
voting shares, payable on February 11, 2005, to shareholders on record on
January 28, 2005.

On December 13, 2004, Cogeco Cable renewed its normal course issuer bid
under which it can acquire up to 250,000 subordinate voting shares for
cancellation representing 1.03% of the outstanding shares of this class.
During the first quarter of fiscal 2005, Cogeco Cable did not acquire any of
its shares.

FINANCIAL POSITION

Since August 31, 2004, significant changes in the balance sheet include
accounts payable and accrued liabilities and Indebtedness. Accounts payable
and accrued liabilities declined by $36.4 million as use of working capital
was managed tightly at fiscal year-end. Indebtedness increased by $18.1
million due to the factors discussed in the "Cash Flow and Liquidity" section
discussed previously.

A description of Cogeco Cable's share data as of December 31, 2004 is
presented in the table below:



Number of Amount
shares/options ($000s)
______________ ___________
Common Shares
Multiple voting shares 15,691,100 98,346
Subordinate voting shares 24,269,165 531,510
Options to Purchase Subordinate Voting Shares
Outstanding options 615,044
Exercisable options 328,219


In the normal course of business, Cogeco Cable has incurred financial
obligations, primarily in the form of long-term debt, operating and capital
leases and guarantees. Cogeco Cable's obligations have not materially changed
since August 31, 2004 and are described in the 2004 annual MD&A.

FOREIGN EXCHANGE MANAGEMENT

Cogeco Cable has entered into cross-currency swap agreements to fix the
liability for interest and principal payments on its US$150 million Senior
Secured Notes. These agreements have the effect of converting the US interest
coupon rate of 6.83% per annum to an average Canadian dollar fixed interest
rate of 7.254% per annum. The exchange rate applicable to the principal
portion of the debt has been fixed at CDN$1.5910. Amounts due under the
US$150 million Senior Secured Notes Series A declined by CDN$19 million during
the first quarter due to the strengthening of the Canadian dollar. Since the
Senior Secured Notes Series A are fully hedged, the decline is fully offset by
an increase in deferred credit described in Note 4 in the first quarter
interim financial statements. The $60.8 million deferred credit represents the
difference between the quarter-end exchange rate and the exchange rate on the
cross-currency swap agreements, which determines the liability for interest
and principal payments on the Senior Secured Notes Series A.

FISCAL 2005 FINANCIAL GUIDELINES

During the year, Cogeco Cable will continue to focus on the following
objectives: 1) expand its customer base through targeted marketing, a
competitive product offering and superior customer service; 2) increase the
efficiency of its processes with a view to better serve its customers and
drive down its costs; and 3) generally prioritize investments providing
increased return on investment.

Since economic and industry factors described in the 2004 annual MD&A
remain substantially unchanged, management is maintaining its fiscal 2005
financial and customer guidance and as a result still expects to generate Free
Cash Flow of $45 to $50 million. In 2005, Cogeco Cable plans to gradually
launch digital telephony. Since the business plan has not been finalized, this
service's revenue and operating expense are not included in the financial
guidelines. However, initial capital expenditures of $5 million have been
included in the guidelines.

RISK FACTORS AND UNCERTAINTIES

There has been no significant change in the risk factors and
uncertainties facing Cogeco Cable as described in the Corporation's 2004
annual MD&A.

ADDITIONAL INFORMATION

This MD&A was prepared on January 14, 2005. Additional information
relating to the Corporation, including its Annual Information Form, is
available on the SEDAR Web site at www.sedar.com .

ABOUT COGECO CABLE

Cogeco Cable is the second largest cable operator in both Ontario and
Québec, and ranks fourth in Canada in terms of the number of basic-service
customers served. Cogeco Cable provides about 1,319,000 revenue-generating
units to approximately 1,430,000 households in its service territory. Through
its two-way broadband cable infrastructure, Cogeco Cable provides its
residential and commercial customers with analog and digital video and audio
services, as well as high-speed Internet access. Cogeco Cable's subordinate
voting shares are listed on the Toronto Stock Exchange (CCA.SV).



Analyst Conference Call: Monday January 17, 2005, at 11:00 a.m. ET
By the Internet at www.cogeco.ca/investors
By telephone: 1-800-406-5356, confirmation
(pound key) 968223
Media are invited to participate on a
listen mode only.


Supplementary Quarterly Financial Information

Quarters ended November 30, August 31,
_______________________ _______________________
2004 2003 2004 2003
($000, except (restated) (restated)
percentages and
per share data)

Revenue $ 135,766 $ 129,489 $ 133,053 $ 126,483
Operating income
before amortization 53,194 47,214 54,290 48,249
Operating margin 39.2% 36.5% 40.8% 38.1%
Amortization 32,244 43,313 32,476 28,989
Financial expense 13,894 14,905 13,871 14,704
Income taxes 3,229 30,099 1,474 2,390
Net income (loss) 3,827 (41,103) 6,469 2,166
Cash flow from
operations 39,192 31,882 41,025 32,573
Net income (loss)
per share $ 0.10 $ (1.03) $ 0.16 $ 0.05

Quarters ended May 31, February
_______________________ _______________________
2004 2003 29, 2004 28, 2003
($000, except (restated) (restated) (restated)
percentages and
per share data)

Revenue $ 132,364 $ 122,473 $ 131,574 $ 121,558
Operating income
before amortization 51,329 44,513 50,413 42,759
Operating margin 38.8% 36.3% 38.3% 35.2%
Amortization 32,070 27,614 32,355 27,240
Financial expense 14,414 15,396 14,767 15,485
Income taxes 2,993 1,471 2,703 860
Net income (loss) 1,852 32 588 (826)
Cash flow from
operations 36,593 28,722 35,278 26,953
Net income (loss)
per share $ 0.05 $ 0.00 $ 0.01 $ (0.02)



Cogeco Cable's operating results are not generally subject to material
seasonal fluctuations. However, the loss in basic-service customers is usually
greater, and the addition of high-speed Internet customers is generally lower
in the third quarter, mainly because students leave their campus 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. Furthermore, the fourth quarter's
operating margin is usually higher as lower management fees are paid to COGECO
Inc. Under a 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 early in the fourth quarter of fiscal 2004 and 2003, Cogeco Cable paid
lower management fees as a result.

The large net loss in the first quarter of fiscal 2004 was attributable
to non-cash adjustments for amortization and income taxes totaling $41.6
million. These non-cash adjustments are discussed in the "Fixed Charges" and
"Income Taxes" sections.



COGECO CABLE INC.
Customer Statistics
November 30, August 31,
2004 2004
_________________________________________________________________________
_________________________________________________________________________
Homes Passed
Ontario 976,974 972,964
Quebec 453,520 450,292
_________________________________________________________________________
1,430,494 1,423,256
_________________________________________________________________________
_________________________________________________________________________
Revenue-Generating Units
Ontario 956,492 923,046
Quebec 362,762 354,271
_________________________________________________________________________
1,319,254 1,277,317
_________________________________________________________________________
_________________________________________________________________________
Basic-Service Customers
Ontario 590,632 584,686
Quebec 240,966 239,169
_________________________________________________________________________
831,598 823,855
_________________________________________________________________________
_________________________________________________________________________
Discretionnary-Service Customers
Ontario 470,380 463,217
Quebec 180,731 178,022
_________________________________________________________________________
651,111 641,239
_________________________________________________________________________
_________________________________________________________________________
Pay-TV Service Customers
Ontario 78,362 80,567
Quebec 33,797 32,246
_________________________________________________________________________
112,159 112,813
_________________________________________________________________________
_________________________________________________________________________
High-Speed Internet Service Customers
Ontario 217,427 203,692
Quebec 44,398 41,334
_________________________________________________________________________
261,825 245,026
_________________________________________________________________________
_________________________________________________________________________
Digital Customers
Ontario 148,433 134,668
Quebec 77,398 73,768
_________________________________________________________________________
225,831 208,436
_________________________________________________________________________
_________________________________________________________________________
Digital Terminals
Ontario 179,450 161,731
Quebec 82,463 78,340
_________________________________________________________________________
261,913 240,071


COGECO CABLE INC.
CONSOLIDATED STATEMENTS OF INCOME

Three months ended November 30
_________________________________________________________________________
(In thousands of dollars, except per share data) 2004 2003
(restated)
_________________________________________________________________________
_________________________________________________________________________
(unaudited) (unaudited)

Revenue
Service $ 134,710 $ 127,448
Equipment 1,056 2,041
_________________________________________________________________________
135,766 129,489

Operating costs 79,857 79,713
Management fees - COGECO Inc. 2,715 2,562
_________________________________________________________________________
Operating income before amortization 53,194 47,214
Amortization 32,244 43,313
_________________________________________________________________________
Operating income 20,950 3,901
Financial expense 13,894 14,905
_________________________________________________________________________
Income (loss) before income taxes 7,056 (11,004)
Income taxes (note 3) 3,229 30,099
_________________________________________________________________________
Net income (loss) $ 3,827 $ (41,103)
_________________________________________________________________________
_________________________________________________________________________
Earnings (loss) per share (note 6)
Basic and diluted $ 0.10 $ (1.03)


COGECO CABLE INC.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS


Three months ended November 30
_________________________________________________________________________
(In thousands of dollars) 2004 2003
(restated)
_________________________________________________________________________
_________________________________________________________________________
(unaudited) (unaudited)

Balance at beginning
As previously reported $ 33,880 $ 95,677
Changes in accounting policies (note 2c)) - (29,603)
_________________________________________________________________________
As restated 33,880 66,074
Net income (loss) 3,827 (41,103)
Dividends on multiple voting shares (314) -
Dividends on subordinate voting shares (485) -
_________________________________________________________________________
_________________________________________________________________________
Balance at end $ 36,908 $ 24,971
_________________________________________________________________________
_________________________________________________________________________


COGECO CABLE INC.
CONSOLIDATED BALANCE SHEETS
_________________________________________________________________________
November 30, August 31,
(In thousands of dollars) 2004 2004
(unaudited) (audited)

Assets

Current
Accounts receivable $ 31,710 $ 31,039
Prepaid expenses 3,932 4,535
_________________________________________________________________________
35,642 35,574
_________________________________________________________________________
Fixed assets 683,230 687,960
Deferred charges 44,324 48,293
Customer base 989,552 989,552
_________________________________________________________________________
$1,752,748 $1,761,379
_________________________________________________________________________
_________________________________________________________________________
Liabilities and Shareholders' equity

Liabilities

Current
Bank indebtedness $ 26,738 $ 5,410
Accounts payable and accrued liabilities 72,991 109,402
Income tax liabilities 780 844
Deferred and prepaid income 25,237 22,778
Current portion of long-term debt (note 4) 2,415 2,455
_________________________________________________________________________
128,161 140,889
_________________________________________________________________________
Long-term debt (note 4) 747,041 750,268
Deferred and prepaid income 10,737 9,659
Pension plan liabilities and
accrued employee benefits 1,679 1,506
Future income tax liabilities 198,127 195,523
_________________________________________________________________________
1,085,745 1,097,845
_________________________________________________________________________
Shareholders' equity

Capital stock (note 5) 629,745 629,416
Retained earnings 36,908 33,880
Contributed surplus - stock-based compensation 350 238
_________________________________________________________________________
667,003 663,534
_________________________________________________________________________
$1,752,748 $1,761,379
_________________________________________________________________________
_________________________________________________________________________


COGECO CABLE INC.
CONSOLIDATED STATEMENTS OF CASH FLOW


Three months ended November 30
_________________________________________________________________________
(In thousands of dollars) 2004 2003
(restated)
_________________________________________________________________________
_________________________________________________________________________
(unaudited) (unaudited)

Cash flow from operating activities
Net income (loss) $ 3,827 $ (41,103)
Items not affecting cash and cash equivalents
Amortization 32,244 43,313
Amortization of deferred financing costs 234 326
Future income taxes (note 3) 2,604 29,174
Other 283 172
_________________________________________________________________________
Cash flow from operations 39,192 31,882
Changes in non-cash working
capital items and long-term
deferred and prepaid income (note 7a)) (33,006) (32,046)
_________________________________________________________________________
6,186 (164)
_________________________________________________________________________

Cash flow from investing activities
Acquisition of fixed assets (note 7b)) (21,574) (14,649)
Increase in deferred charges (2,205) (5,456)
Other 2 -
_________________________________________________________________________
(23,777) (20,105)
_________________________________________________________________________

Cash flow from financing activities
Increase in bank indebtedness 21,328 15,460
Increase in long-term debt - 5,000
Repayment of long-term debt (3,267) (207)
Issue of subordinate voting shares 329 16
Dividends on multiple voting shares (314) -
Dividends on subordinate voting shares (485) -
_________________________________________________________________________
17,591 20,269
_________________________________________________________________________

Net change in cash and cash equivalents
and cash and cash equivalents at end $ - $ -
_________________________________________________________________________
_________________________________________________________________________
See supplemental cash flow information in note 7.


COGECO CABLE INC.
Notes to Consolidated Financial Statements
November 30, 2004
(amounts in tables are in thousands of dollars, except per share data)

1. Basis of Presentation

In the opinion of management, the accompanying unaudited interim
consolidated financial statements, prepared in accordance with
Canadian generally accepted accounting principles, contain all
adjustments necessary to present fairly the financial position of
Cogeco Cable Inc. as at November 30, 2004 and August 31, 2004 as well
as its results of operations and its cash flow for the three month
periods ended November 30, 2004 and 2003.
While management believes that the disclosures presented are adequate,
these unaudited interim consolidated financial statements and notes
should be read in conjunction with Cogeco Cable Inc.'s annual
consolidated financial statements. These unaudited interim
consolidated financial statements follow the same accounting policies
as the most recent annual consolidated financial statements.
These interim consolidated financial statements have not been subject
to a review by the Corporation's external auditors.

2. Recent accounting pronouncements and changes in accounting policies

a) Asset retirement obligations

In March 2003, the Canadian Institute of Chartered Accountants
("CICA") issued Handbook section 3110, Asset Retirement Obligations,
which provides guidance for the recognition, measurement and
disclosure of liabilities for asset retirement obligations and the
associated asset retirement costs. The standard applies to legal or
contractual obligations associated with the retirement of a tangible
long-lived asset that result from acquisition, construction,
development or normal operations. The standard requires the
Corporation to record the fair value of a liability for an asset
retirement obligation in the year in which it is incurred and when a
reasonable estimate of fair value can be made. The standard describes
the fair value of a liability for an asset retirement obligation as
the amount at which that liability could be settled in a current
transaction between willing parties, that is, other than in a forced
or liquidation transaction. The Corporation is subsequently required
to allocate that asset retirement cost to the expense using a
systematic and rational method over the asset's useful life. The
standard applies to fiscal years beginning on or after January 1,
2004. Certain of our lease agreements contain provision requiring us
to restore facilities or remove equipment in the event that the lease
agreement is not renewed. However, we expect to renew most of our
leases agreements related to the continued operation of our cable
business and consequently, the liabilities related to the removal
provisions on non-renewed lease, if any, are considered not material
to these consolidated financial statements. In addition, in the
unlikely event that some of these lease agreements are not renewed,
the liability would be difficult to estimate since there is a wide
range of potential expiration dates for these lease agreements.

b) Amortization of long-term assets

In 2003, the Corporation reviewed the useful life of its decoders and
modems, commonly referred to as home terminal devices, and of certain
other long-term assets. The useful life of decoders was changed from
seven to five years while the useful life of modems was changed from
seven to three years. These changes in accounting estimates, applied
prospectively, increased amortization expense by $14.0 million in the
first quarter of last fiscal year.

c) Revenue recognition

On December 17, 2003, the Emerging Issues Committee issued EIC-141,
Revenue recognition, which provides general interpretative guidance on
the application of CICA 3400, Revenue, and summarizes the principles
set forth in "Staff Accounting Bulletin" No. 101 ("SAB 101") published
in the United States. In addition, EIC-141 also provides additional
guidance on the capitalization of direct incremental costs in
connection with up-front revenues. At the same time, the committee
also issued EIC-142, Revenue arrangements with multiple deliverables,
which addresses how to determine when an arrangement involving
multiple deliverables contains more than one unit of accounting and if
so, how the arrangement consideration should be measured and allocated
among each separate unit of accounting.
During the third quarter of last fiscal year, the Corporation applied
these new recommendations and determined that it has multiple revenue
arrangements comprised of installation services, sales of home
terminal devices and related subscription services. Based on the
criteria of EIC-142, the Corporation determined that the sale of home
terminal devices is considered a single unit of accounting of a
multiple element arrangement, while installation and related
subscription services must be assessed as an integrated package. In
addition, certain direct incremental costs in connection with
installation revenues may be deferred over the same term as the
related revenue. Accordingly, the following changes were adopted
retroactively:

- Installation revenues are now deferred and amortized over the
average life of a customer subscription, which is four years.
Previously, these revenues were recognized immediately as they
were considered as a partial recovery of direct selling costs
incurred. Upon billing, the portion of unearned revenue is now
recorded as deferred and prepaid income;

- The costs to reconnect customers are now recorded as deferred
charges up to a maximum amount not exceeding the revenues
generated by the reconnect activity, which are included in
installation revenues, and amortized over the average life of a
customer subscription, which is four years. Previously, these
costs, which include materials, direct labor and certain overhead
charges were capitalized to fixed assets and generally amortized
over a period of five years;

- Revenue from the sale of home terminal devices at a subsidized
price, which were recorded as a partial recovery of costs, are now
recorded as equipment revenue with an equal amount included in
operating costs;

- The portion of advertising expense incurred to expand the digital
and high-speed Internet customer base that used to be recorded as
deferred charges is now recorded as operating costs.

These changes have been applied retroactively and had the following
impact on the Corporation's consolidated statements of income for the
three month period ended November 30, 2003:

_________________________________________________________________________
Before After
restatement restatement
_________________________________________________________________________
_________________________________________________________________________
(unaudited) (unaudited)

Revenue $ 128,072 $ 129,489
Operating costs 75,278 79,713
Amortization 42,280 43,313
Income taxes 33,314 30,099
Net loss (40,267) (41,103)
_________________________________________________________________________
Loss per share
Basic and diluted $ (1.01) $ (1.03)
_________________________________________________________________________
_________________________________________________________________________

Also, retained earnings have been reduced by $29.6 million as at
September 1, 2003 following these changes.

3. Income taxes

Three months ended November 30
_________________________________________________________________________
2004 2003
(restated)
_________________________________________________________________________
_________________________________________________________________________
(unaudited) (unaudited)

Current $ 625 $ 925
Future 2,604 29,174
_________________________________________________________________________
$ 3,229 $ 30,099
_________________________________________________________________________
_________________________________________________________________________


The following table provides the reconciliation between statutory federal
and provincial income taxes and the effective consolidated income tax
rate:

Three months ended November 30
_________________________________________________________________________
2004 2003
(restated)
_________________________________________________________________________
_________________________________________________________________________
(unaudited) (unaudited)

Income tax at combined income tax rate
of 35.0% (35.8% in 2003) $ 2,467 $ (3,941)
Loss or income subject to lower or
higher tax rates 94 62
Increase in income taxes as a result of
change in substantially enacted tax rates - 32,483
Large corporation tax 625 925
Other 43 570
_________________________________________________________________________
Income tax at effective income tax rate $ 3,229 $ 30,099
_________________________________________________________________________
_________________________________________________________________________


4. Long-term debt

_________________________________________________________________________
Interest November 30, August 31,
Maturity rate 2004 2004
_________________________________________________________________________
_________________________________________________________________________
(unaudited) (audited)

Parent company
Term Facility 2007 3.72%(1) $ 55,000 $ 58,000
Senior Secured Debentures
Series 1 2009 6.75 150,000 150,000
Senior - Secured Notes
Series A - US $150 million 2008 6.83(2) 177,900 196,950
Series B 2011 7.73 175,000 175,000
Second Secured Debentures
Series A 2007 8.44 125,000 125,000
Deferred credit(3) 2008 - 60,750 41,700

Subsidiaries
Obligations under capital
leases 2008 5.87 - 9.11 2,886 3,153
Preferred shares(4) 2006 - 2,920 2,920
_________________________________________________________________________
749,456 752,723
Less current portion 2,415 2,455
_________________________________________________________________________
$ 747,041 $ 750,268
_________________________________________________________________________
_________________________________________________________________________

(1) Average interest rate on debt as of November 30, 2004, including
stamping fees.
(2) Cross-currency swap agreements have resulted in an effective interest
rate of 7.254% on the Canadian dollar equivalent of the U.S.
denominated debt.
(3) The deferred credit represents the amount which would have been
payable as at November 30, 2004 and August 31, 2004 under
cross-currency swaps entered into by the Corporation to hedge Senior
Secured Notes Series A denominated in US dollars.
(4) 2,920,000 preferred shares, 5.5% cumulative dividend, redeemable and
retractable to a maximum of $1,400,000 annually.


5. Capital Stock

Authorized, an unlimited number

Class A Preference shares, without voting rights, redeemable by the
Corporation and retractable at the option of the holder at any time at
a price of $1 per share, carrying a cumulative preferential cash
dividend at a rate of 11% of the redemption price per year.

Class B Preference shares, without voting rights, issuable in series.

Multiple voting shares, 10 votes per share.

Subordinate voting shares, 1 vote per share.

_________________________________________________________________________
November 30, August 31,
2004 2004
_________________________________________________________________________
_________________________________________________________________________
(unaudited) (audited)
Issued

15,691,100 multiple voting shares $ 98,346 $ 98,346
24,263,956 subordinate voting shares
(24,232,815 as at August 31, 2004) 531,399 531,070
_________________________________________________________________________

$ 629,745 $ 629,416
_________________________________________________________________________
_________________________________________________________________________

During the period, subordinate voting shares transactions were as
follows:

Three months ended Twelve months ended
November 30, 2004 August 31, 2004
_________________________________________________________________________
_________________________________________________________________________
(unaudited) (audited)
_________________________________________________________________________
Number of Number of
shares Amount shares Amount
_________________________________________________________________________

Balance at beginning 24,232,815 $ 531,070 24,190,043 $ 530,669
Shares issued for cash
under the Employee Stock
Purchase Plan and the
Stock Option Plan 31,141 329 42,772 401
_________________________________________________________________________
Balance at end 24,263,956 $ 531,399 24,232,815 $ 531,070
_________________________________________________________________________
_________________________________________________________________________

Stock-based plans

The Corporation established for the benefit of its employees and
those of its subsidiaries, an Employee Stock Purchase Plan and a
Stock Option Plan for certain executives which are described in the
financial statements for the year ended August 31, 2004. During the
first quarter, the Corporation granted 140,766 stock options (118,480
in 2003) with an exercise price of $21.50 ($16.80 in 2003) of which
38,397 stock options (34,237 in 2003) were granted to COGECO Inc.
employees. The Corporation records compensation expense for options
granted on or after September 1, 2003. As a result, a compensation
expense of $98,000 ($49,000 in 2003) was recorded for the three month
period ended November 30, 2004. If compensation cost had been
recognized using the fair value-based method at the grant date for
options granted between September 1, 2001 and August 31, 2003, the
Corporation's net income (loss) and earnings (loss) per share for the
three month periods ended November 30, 2004 and 2003 would have been
reduced (increased) to the following pro forma amounts:

Three months ended November 30
_________________________________________________________________________
2004 2003
(restated)
_________________________________________________________________________
_________________________________________________________________________
(unaudited) (unaudited)
Net income (loss)
As reported $ 3,827 $ (41,103)
Pro forma 3,731 (41,199)

Basic and diluted earnings (loss) per share
As reported $ 0.10 $ (1.03)
Pro forma 0.09 (1.03)
_________________________________________________________________________
_________________________________________________________________________

The fair value of each option granted was estimated on the grant date for
purposes of determining stock-based compensation expense and pro forma
disclosures using the Binomial option pricing model based on the
following assumptions:

_________________________________________________________________________
2004 2003
_________________________________________________________________________
Expected dividend yield 1.27% 1.27%
Expected volatility 43% 49%
Risk-free interest rate 3.70% 4.04%
Expected life in years 4.0 3.9
_________________________________________________________________________

The fair value of stock options granted for the three month period ended
November 30, 2004 was $7.46 per option ($6.62 in 2003).

As at November 30, 2004, the Corporation had outstanding stock options
providing for the subscription of 615,044 subordinate voting shares.
These stock options can be exercised at various prices ranging from $7.05
to $40.75 and at various dates up to October 14, 2014.


6. Earnings (loss) per share

Three months ended November 30
_________________________________________________________________________
2004 2003
(restated)
_________________________________________________________________________
_________________________________________________________________________
(unaudited) (unaudited)

Net income (loss) $ 3,827 $ (41,103)

Weighted average number of multiple voting
and subordinate voting shares outstanding 39,935,729 39,881,813
Effect of dilutive stock options(1) 114,763 -
_________________________________________________________________________
Weighted average number of diluted multiple
voting and subordinate voting shares
outstanding 40,050,492 39,881,813
_________________________________________________________________________

Earnings (loss) per share
Basic and diluted $ 0.10 $ (1.03)
_________________________________________________________________________
_________________________________________________________________________

(1) The weighted average dilutive potential number of subordinate voting
shares, which were antidilutive for the three month period ended
November 30, 2003, amounted to 87,170 shares. Stock options to
purchase 162,942 shares (322,161 in 2003) in the three month period
ended November 30, 2004 were outstanding, but were not included in
the computation of diluted earnings per share since the exercise
price of the stock options was greater than the average share price
of the subordinate voting shares and, therefore, the effect would
have been antidilutive.

7. Statements of cash flow

a) Changes in non-cash working capital items and long-term deferred and
prepaid income

Three months ended November 30
_________________________________________________________________________
2004 2003
(restated)
_________________________________________________________________________
_________________________________________________________________________
(unaudited) (unaudited)

Accounts receivable $ (671) $ 911
Prepaid expenses 603 529
Accounts payable and accrued liabilities (36,411) (35,178)
Income tax liabilities (64) 798
Deferred and prepaid income 3,537 894
_________________________________________________________________________
$ (33,006) $ (32,046)
_________________________________________________________________________
_________________________________________________________________________

b) Other information

Three months ended November 30
_________________________________________________________________________
2004 2003
_________________________________________________________________________
_________________________________________________________________________
(unaudited) (unaudited)

Fixed assets acquisitions through
capital leases $ - $ 99
Interest paid 16,120 17,048
Income taxes paid 689 127
_________________________________________________________________________
_________________________________________________________________________

8. Employees future benefits

The Corporation and its subsidiaries offer their employees
contributory defined benefit pension plans, a defined contribution
pension plan or a collective registered retirement savings plans which
are described in the financial statements for the year ended
August 31, 2004. The total expenses related to these plans are as
follows:

Three months ended November 30
_________________________________________________________________________
2004 2003
_________________________________________________________________________
_________________________________________________________________________
(unaudited) (unaudited)

Defined benefit pension plans $ 92 $ 75
Defined contribution pension plan and
collective registered retirement savings plan 340 360
_________________________________________________________________________
$ 432 $ 435
_________________________________________________________________________
_________________________________________________________________________

9. Comparative figures

Certain comparative figures have been reclassified in order to conform
with the presentation adopted in the current period.

Contact Information

  • Media, Marie Carrier, Director, Corporate
    Communications, (514) 874-2600; Source: Cogeco Cable Inc., Pierre Gagné,
    Vice President, Finance and Chief Financial Officer, (514) 874-2600