Cogeco Cable Reports Fiscal 2014 Fourth-Quarter Financial Results and Increases its Dividend

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

For the fourth quarter and fiscal 2014:

• Fourth-quarter revenue increased by $19.8 million, or 4.2%, to reach $490.2 million driven by growth of 2.1% in the Canadian cable services segment, of 9.0% in the American cable services segment and of 7.4% in the Enterprise data services segment. Revenue increased organically from all of our operating segments combined with favorable foreign exchange rates in our foreign operations. Fiscal 2014 revenue increased by $255.1 million, or 15.1%, to close at $1.9 billion compared to the same period of the prior year driven by growth of 2.4% in the Canadian cable services segment, of 46.3% in the American cable services segment and of 51.4% in the Enterprise data services segment. The increase is mainly attributable to the full year impact of Atlantic Broadband and Peer 1 Hosting(2) acquisitions (the "recent acquisitions") which both occurred during fiscal 2013 combined with the organic growth from all of our operating segments and favorable foreign exchange rates in our foreign operations;

• Adjusted EBITDA(1) increased by 3.7% to $230.8 million compared to the fourth quarter of fiscal 2013, and by 14.4% to $893.4 million compared to the prior year. The progression for both periods resulted mainly from the recent acquisitions, the improvement in all of our operating segments as well as the favorable foreign exchange rates for our foreign operations compared to the same period of last year;

• Operating margin(1) slightly decreased to 47.1% from 47.3% in the fourth quarter of fiscal 2014 and to 45.9% from 46.1% in fiscal 2014 compared to the same periods of the prior year mainly as a result of lower margin from the business activities of the Enterprise data services segment, partly offset by the improvement in the Canadian cable services segment;

• Profit for the period amounted to $63.8 million in the fourth quarter compared to $43.9 million in the comparable period of fiscal 2013. The increase is mostly attributable to the improvement of adjusted EBITDA explained above, combined with the decreases in integration, restructuring and acquisition costs and financial expense, party offset by the increase in income taxes. For the year ended August 31, 2014, profit for the year amounted to $209.4 million compared to $184.9 million for fiscal 2013. Profit progression for the year is mostly attributable to the improvement of the adjusted EBITDA explained above combined with the decreases in integration, restructuring and acquisition costs and income taxes, partly offset by the impairment of property, plant and equipment which occurred in the third and fourth quarters of fiscal 2014 in the Canadian cable and the Enterprise data services segments as well as the increase in depreciation and amortization expense essentially related to the recent acquisitions;

• Fourth-quarter free cash flow(1) decreased by $31.3 million to reach $22.2 million compared to $53.5 million in the comparable quarter of the prior year. The decrease for the period is mostly attributable to the increase in acquisition of property, plant and equipment and other assets due to the timing of certain initiatives that were delayed in the prior quarters of fiscal 2014, partly offset by the improvement of adjusted EBITDA combined with the decreases in integration, restructuring and acquisition costs and financial expense. Fiscal 2014 free cash flow increased by $125.3 million to reach $274.7 million, compared to $149.4 million in fiscal 2013. This variance is mostly attributable to the improvement of adjusted EBITDA and the decrease in integration, restructuring and acquisition costs, partly offset by the increase in acquisitions of property, plant and equipment, intangible and other assets;

• Fiscal 2014 fourth-quarter cash flow from operating activities reached $329.2 million compared to $228.2 million, an increase of $101.0 million, or 44.2%, compared to fiscal 2013 fourth quarter as a result of the improvement of adjusted EBITDA combined with the increase in changes in non-cash operating activities and the decrease in income taxes paid. Fiscal 2014 cash flow from operating activities reached $758.4 million compared to $545.0 million, an increase of $213.4 million, or 39.1%, compared to fiscal 2013. The increase is mostly attributable to the improvement of adjusted EBITDA as well as the increase in changes in non-cash operating activities and the decrease in income taxes paid;

• A quarterly eligible dividend of $0.30 per share was paid to the holders of subordinate and multiple voting shares, an increase of $0.04 per share, or 15.4%, compared to an eligible dividend of $0.26 per share paid in the fourth quarter of fiscal 2013. Dividends paid in fiscal 2014 totaled $1.20 per share compared to $1.04 per share in fiscal 2013;

• On October 31, 2014, Cogeco Cable declared a quarterly eligible dividend of $0.35 per share, an increase of 16.7% compared to the $0.30 an eligible dividend per share paid in the fourth quarter of fiscal 2014; and

• On August 27, 2014, the Corporation completed, pursuant to a private placement, the issuance of US$25 million ($27.2 million) Senior Secured Notes Series A net of transaction costs of $0.1 million, for net proceeds of $27.1 million and of US$150 million ($163.4 million) Senior Secured Notes Series B net of transaction costs of $0.9 million, for net proceeds of $162.5 million. The Senior Secured Notes Series A bear interest at 4.14% per annum payable semi- annually and mature on September 1, 2024, and the Senior Secured Notes Series B bear interest at 4.29% per annum payable semi-annually and mature on September 1, 2026. The Senior Secured Notes Series A and B are redeemable at any time at Cogeco Cable's option, in whole or in part, at 100% of the principal amount plus a make-whole premium. These Notes are indirectly secured by a first priority fixed and floating charge and a security interest on substantially all present and future real and personal property and undertaking of every nature and kind of the Corporation and certain of its subsidiaries.

(1)	The indicated terms do not have standardized definitions prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other companies. For more details, please consult the "Non-IFRS financial measures" section of the Management's discussion and analysis ("MD&A").
(2)	Peer 1 Hosting refers to Peer 1 Network (USA) Holdings Inc., Peer 1 (UK) Ltd. and Peer 1 Network Enterprises, Inc.

"Fiscal 2014's solid performance was driven mainly by effective cost control and organic growth in our three operating segments, Canadian cable, American cable and Enterprise data services, as well as by the inclusion of a full year of results from Atlantic Broadband and Peer 1 Hosting, both of which were acquired during the course of fiscal 2013," stated Louis Audet, President and Chief Executive Officer of Cogeco Cable Inc. "Our ability to grow profitably despite intense competition from existing and new players, changing market dynamics and rapid technology advances reflects our capacity to adapt effectively and offer compelling services and solutions to our customers." continued Mr. Audet.

"Moreover, I am particularly pleased with the outcome of the TiVo launch within our American cable segment, Atlantic Broadband. It has certainly contributed to our operating results in the United States this year. The upcoming launch of TiVo in the Canadian cable segment should continue to foster our growth given the positive customer acceptance observed in our American footprint." continued Mr. Audet.

"Our solid management teams are well in place and we strive to further strengthen and enhance our market position in all our operating segments, while remaining focused on reducing our leverage ratio. I am very confident that Cogeco Cable will continue on its growth path and deliver on its 2015 projections", concluded Louis Audet.

Fiscal 2015 Financial Guidelines

Cogeco Cable revised its fiscal 2015 preliminary financial guidelines, as issued on July 9, 2014, to take into consideration non- cash items to be excluded from the calculation of the free cash flow. Please consult the "Fiscal 2015 financial guidelines" section of the Corporation's 2014 Annual Report for further details.

(1)	The indicated terms do not have standardized definitions prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other companies. For more details, please consult the "Non-IFRS financial measures" section of the MD&A.

FINANCIAL HIGHLIGHTS

		Quarters ended						Years ended
(in thousands of dollars, except percentages and per share data)		August 31, 2014		August 31,2013 (2)		Change		August 31, 2014		August 31, 2013(2)		Change
		$		$		%		$		$		%
Operations
Revenue		490,155		470,386		4.2		1,947,591		1,692,466		15.1
Adjusted EBITDA		230,830		222,539		3.7		893,357		780,723		14.4
Operating margin		47.1	%	47.3	%			45.9	%	46.1	%
Impairment of property, plant and equipment		3,296		-		-		35,493		-		-
Profit for the period		63,848		43,870		45.5		209,441		184,895		13.3
Cash Flow
Cash flow from operating activities		329,195		228,230		44.2		758,368		545,010		39.1
Cash flow from operations(1)		187,276		161,581		15.9		690,148		557,581		23.8
Acquisitions of property, plant and equipment, intangible and other assets(3)		165,125		108,095		52.8		415,472		408,202		1.8
Free cash flow		22,151		53,486		(58.6	)	274,676		149,379		83.9
Financial Condition
Property, plant and equipment								1,830,971		1,854,155		(1.3	)
Total assets								5,173,741		5,149,211		0.5
Indebtedness(4)								2,744,746		2,944,182		(6.8	)
Shareholder's equity								1,508,256		1,342,940		12.3
Capital intensity(1)		33.7	%	23.0	%			21.3	%	24.1	%
Per Share Data(5)
Earnings per share
	Basic	1.31		0.90		45.6		4.30		3.80		13.2
	Diluted	1.30		0.89		46.1		4.26		3.78		12.7

(1)	The indicated terms do not have standardized definitions prescribed by IFRS and therefore, may not be comparable to similar measures presented by other companies. For more details, please consult the "Non-IFRS financial measures" section of the MD&A.
(2)	Comparative figures have been adjusted to comply with the adoption of IAS 19 Employee Benefits. For further details, please refer to Note 3 of the consolidated financial statements.
(3)	Fiscal 2013 fourth-quarter and fiscal 2013 acquisitions of property, plant and equipment, intangible and other assets include assets acquired under finance lease of $0.9 million that are excluded from the statements of cash flows.
(4)	Indebtedness is defined as the total of bank indebtedness, principal on long-term debt and obligations under derivative financial instruments.
(5)	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 Cable's future outlook and anticipated events, business, operations, financial performance, financial condition or results and, in some cases, can be identified by terminology such as "may"; "will"; "should"; "expect"; "plan"; "anticipate"; "believe"; "intend"; "estimate"; "predict"; "potential"; "continue"; "foresee", "ensure" or other similar expressions concerning matters that are not historical facts. In particular, statements regarding the Corporation's future operating results and economic performance and its objectives and strategies are forward- looking statements. These statements are based on certain factors and assumptions including expected growth, results of operations, performance and business prospects and opportunities, which Cogeco Cable believes are reasonable as of the current date. While management considers these assumptions to be reasonable based on information currently available to the Corporation, they may prove to be incorrect. The Corporation cautions the reader that the economic downturn experienced over the past few years makes forward-looking information and the underlying assumptions subject to greater uncertainty and that, consequently, they may not materialize, or the results may significantly differ from the Corporation's expectations. It is impossible for Cogeco Cable to predict with certainty the impact that the current economic uncertainties may have on future results. Forward-looking information is also subject to certain factors, including risks and uncertainties (described in the "Uncertainties and main risk factors" section of the Corporation's 2014 annual Management's Discussion and Analysis ("MD&A")) that could cause actual results to differ materially from what Cogeco Cable currently expects. These factors include namely risks pertaining to markets and competition, technology, regulatory developments, operating costs, information systems, disasters or other contingencies, financial risks related to capital requirements, human resources, controlling shareholder and holding structure, many of which are beyond the Corporation's control. Therefore, future events and results may vary significantly from what management currently foresees. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While management may elect to, the Corporation is under no obligation and does not undertake to update or alter this information at any particular time, except as may required by law.

All amounts are stated in Canadian dollars unless otherwise indicated. This press release should be read in conjunction with the MD&A included in the Corporation's 2014 Annual Report, the Corporation's consolidated financial statements and the notes thereto, prepared in accordance with the IFRS for the year ended August 31, 2014

RESULTS OVERVIEW

This analysis should be read in conjunction with the Corporation's 2014 Annual Report available on the SEDAR website at www.sedar.com or on the Corporation's website at www.cogeco.ca. Please refer to the Corporation's 2014 Annual Report for more details on the annual results.

FOURTH-QUARTER OPERATING RESULTS

OPERATING RESULTS

CONSOLIDATED

Quarters ended August 31,	2014		2013(1)		Change
(in thousands of dollars, except percentages)	$		$		%
Revenue	490,155		470,386		4.2
Operating expenses	259,325		247,847		4.6
Adjusted EBITDA	230,830		222,539		3.7
Operating margin	47.1	%	47.3	%

(1)	Comparative figures have been adjusted to comply with the adoption of IAS 19 Employee Benefits. For further details, please refer to Note 3 of the consolidated financial statements.

Fiscal 2014 fourth-quarter consolidated revenue improved by $19.8 million, or 4.2%, to reach $490.2 million compared to the prior year. For the fourth quarter ended August 31, 2014, consolidated operating expenses increased by $11.5 million, or 4.6%, at $259.3 million. As a result, consolidated adjusted EBITDA increased by $8.3 million, or 3.7%, to reach $230.8 million and consolidated operating margin slightly decreased to 47.1% compared to 47.3% in the fourth quarter of fiscal 2013.

CANADIAN CABLE SERVICES

CUSTOMER STATISTICS

		Quarters ended August 31, Net additions (losses)
	August 31, 2014	2014		2013
PSU	1,946,022	(10,422	)	(12,021	)
Television service customers	797,165	(10,666	)	(10,573	)
HSI service customers	679,584	2,782		159
Telephony service customers	469,273	(2,538	)	(1,607	)

Fiscal 2014 fourth-quarter PSU net losses amounted to 10,422 compared to 12,021 for the comparable period of the prior year, mainly as a result of service category maturity and competitive offers in the industry. Net customer losses for the Television service stood at 10,666 compared to 10,573 for the same period of last year. Television service customer net losses are mainly due to the promotional offers of competitors for the video services, service category maturity and the IPTV footprint growth from competitors. Fiscal 2014 fourth-quarter HSI service customers grew by 2,782 compared to 159 in the fourth quarter of the prior year. HSI net additions continue to stem from the enhancement of the product offering, the impact of the bundled offer of Television, HSI and Telephony services and promotional activities. Telephony service customers net losses stood at 2,538 customers compared to 1,607 customers for the same period of the prior year.

OPERATING RESULTS

Quarters ended August 31, (in thousands of dollars, except percentages)	2014 $		2013 (1) $		Change %
Revenue	315,404		308,886		2.1
Operating expenses	150,234		149,739		0.3
Adjusted EBITDA	165,170		159,147		3.8
Operating margin	52.4	%	51.5	%

(1)	Comparative figures have been adjusted to comply with the adoption of IAS 19 Employee Benefits. For further details, please refer to Note 3 of the consolidated financial statements.

Revenue

Fiscal 2014 fourth-quarter revenue increased by $6.5 million, or 2.1%, to reach $315.4 million compared to $308.9 million for the same period last year, primarily due to rate increases implemented in June 2013 and April 2014 in Québec and Ontario, partly offset by PSU losses.

Operating expenses

For the period ended August 31, 2014, operating expenses increased by $0.5 million, or 0.3%, to $150.2 million compared to $149.7 million for the same period last year. Operating expenses increased during the fourth quarter as a result of additional programming cost increases, partly offset by cost reduction initiatives and the restructuring activities which occurred in the fourth quarter of fiscal 2013 as well as in fiscal 2014.

Adjusted EBITDA and operating margin

As a result of revenue growth exceeding operating expenses, fiscal 2014 fourth-quarter adjusted EBITDA amounted to $165.2 million, or 3.8% higher than in the same period of the prior year. Operating margin increased to 52.4% from 51.5% compared to fiscal 2013 fourth quarter.

AMERICAN CABLE SERVICES

CUSTOMER STATISTICS

		Quarters ended August 31, Net additions (losses)
	August 31, 2014	2014		2013
PSU	496,162	488		(1,339	)
Television service customers	225,929	(1,231	)	(1,760	)
HSI service customers	189,869	1,074		938
Telephony service customers	80,364	645		(517	)

Fiscal 2014 fourth-quarter PSU net additions amounted to 488 compared to net losses of 1,339 for the comparable period of prior year. Net customer losses for the Television service stood at 1,231 compared to 1,760 for the comparable period of last year as a result of the deployment of TiVo's digital advanced television services, partly offset by seasonal variations resulting from the end of the school year for college and university students and the winter season residents returning home from late spring through the Fall in the Miami region. HSI net customers additions amounted to 1,074 compared to 938 for the same period of prior year mainly due to the launch of TiVo's services, additional marketing initiatives which focused on bundle package offerings, thus increasing overall demand for the HSI residential services and commercial HSI customers. The net customer additions for Telephony services stood at 645 compared to net losses of 517 in 2013.

OPERATING RESULTS

Quarters ended August 31, (in thousands of dollars, except percentages)	2014 $		2013 $		Change %
Revenue	99,638		91,411		9.0
Operating expenses	56,177		51,629		8.8
Adjusted EBITDA	43,461		39,782		9.2
Operating margin	43.6	%	43.5	%

Revenue

Fiscal 2014 fourth-quarter revenue increased by $8.2 million, or 9.0%, to reach $99.6 million compared to $91.4 million for the same period last year, primarily due to PSU growth, rate increases implemented in fiscal 2014 as well as favorable foreign exchange rates compared to the same period last year.

Fiscal 2014, fourth-quarter revenue in local currency amounted to US$92.0 million compared to US$88.1 million for the same period of 2013.

Operating expenses

For the period ended August 31, 2014, operating expenses increased by $4.5 million, or 8.8%, to $56.2 million. Operating expenses increased during the fourth quarter as a result of additional programming costs, the deployment of TiVo's digital advanced television services as well as marketing initiatives to improve PSU growth and by the appreciation of the US dollar over the Canadian dollar.

Operating expenses in local currency for the fourth quarter of fiscal 2014 amounted to US$51.9 million compared to US$49.8 million for the fourth quarter of fiscal 2013.

Adjusted EBITDA and operating margin

Fiscal 2014 fourth-quarter adjusted EBITDA increased by 9.2% to reach $43.5 million, compared to $39.8 million for the same period of last year as a result of the factors previously discussed. As a result of revenue growth exceeding operating expenses growth, operating margin for the 2014 fourth quarter slightly increase to 43.6% from 43.5% compared to the same period of last year.

Fiscal 2014 fourth-quarter adjusted EBITDA in local currency amounted to US$40.1 million compared to US$38.4 million for the same period last year.

ENTERPRISE DATA SERVICES

OPERATING RESULTS

Quarters ended August 31, (in thousands of dollars, except percentages)	2014 $		2013 $		Change %
Revenue	75,791		70,548		7.4
Operating expenses	50,491		43,649		15.7
Adjusted EBITDA	25,300		26,899		(5.9	)
Operating margin	33.4	%	38.1	%

Revenue

Fiscal 2014 fourth-quarter revenue reached $75.8 million compared to $70.5 million for the same period last year. Revenue increased due to the organic growth from colocation, managed and dedicated hosting and connectivity services as well as the appreciation of the US dollar and the British Pound against the Canadian dollar for our foreign operations. However, revenue has been negatively impacted by non recurring billing adjustments and credit notes mainly resulting from the findings of certification process that is underway as well as the continuous improvement of controls and procedures as a result of a year of integration, consolidation and further enhancement in the segment.

Operating expenses

For the fourth quarter of fiscal 2014, operating expenses increased by $6.8 million to $50.5 million due to the organic growth and the appreciation of the US dollar and the British Pound currency against the Canadian dollar. Moreover, operating expenses were also negatively impacted by non recurring additional costs such as the transformation of the sales force in order to enhance our market position combined with the continuous improvement of controls and procedures and other initiatives as a result of a year of integration, consolidation and further enhancement in the segment.

Adjusted EBITDA and operating margin

As a result of operating expenses growth exceeding revenue growth, fiscal 2014 fourth-quarter adjusted EBITDA decreased by $1.6 million to reach $25.3 million compared to the same period of the prior year. Fiscal 2014 fourth-quarter operating expenses have been negatively impacted by approximately $3.0 million with regards to the non recurring adjustments recorded in the fourth quarter. Consequently, operating margin decreased to 33.4% from 38.1% in the fourth quarter compared to the same period of the prior year.

CASH FLOW ANALYSIS

(1)	Comparative figures have been adjusted to comply with the adoption of IAS 19 Employee Benefits. For further details, please refer to Note 3 of the consolidated financial statements.

Fiscal 2014 fourth-quarter cash flow from operating activities reached $329.2 million compared to $228.2 million last year, an increase of $101.0 million, or 44.2% primarily due to the improvement of adjusted EBITDA of $8.3 million, the decrease of $13.6 million in income taxes paid as well as the increase of $70.6 million in cash inflows from non-cash operating activities as a result of a higher increase in trade and other payables compared to the same period of the prior year.

Fiscal 2014 fourth-quarter cash flow from operations reached $187.3 million compared to $161.6 million last year, an increase of $25.7 million, or 15.9%, primarily due to the improvement of adjusted EBITDA of $8.3 million combined with the decrease in financial expense as a result of a make-whole premium of $10.2 million on the early repayment of the Senior Secured Debentures Series 1 that occurred in the fourth quarter of fiscal 2013.

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

Investing activities, including acquisition of property, plant and equipment segmented according to the NCTA standard reporting categories, are as follows:

Quarters ended August 31, (in thousands of dollars)	2014 $	2013 $
Customer premise equipment(1)	42,956	16,459
Scalable infrastructure(2)	36,849	23,141
Line extensions	11,412	8,858
Upgrade / Rebuild	9,335	17,595
Support capital	13,243	8,376
Acquisition of property, plant and equipment - Canadian and American cable services	113,795	74,429
Acquisition of property, plant and equipment - Enterprise data services(3)	50,376	28,749
Acquisitions of property, plant and equipment	164,171	103,178
Acquisition of intangible and other assets - Canadian and American cable services	835	3,655
Acquisition of intangible and other assets - Enterprise data services	119	1,262
Acquisitions of intangible and other assets	954	4,917
	165,125	108,095

(1)	Includes mainly home terminal devices as well as new and replacement drops.
(2)	Includes mainly head-end equipment, digital video and telephony transport as well as HSI equipment.
(3)	For fiscal 2013, includes assets acquired under finance lease of $0.9 million that are excluded from the statement of cash flows.

For the three month period ended August 31, 2014, acquisition of property, plant and equipment amounted in the Canadian and American cable services segments to $113.8 million compared to $74.4 million in fiscal 2013 of which $93.5 million came from the Canadian cable services segment compared to $52.7 million for the comparable period of the prior year and $20.3 million came from the American cable services segment compared to $21.8 million for last year. The increases in both operating segments are due to the following factors:

• An increase in customer premise equipment mainly due to the acquisition of additional customer premise equipment occurred in the fourth quarter of fiscal 2014 in the Canadian cable services segment in view of the launch of TiVo digital advanced television services planned for November 3, 2014 in Ontario and in Spring of fiscal 2015 in Québec;

• An increase in scalable infrastructure to extend and improve network capacity in the areas served; and

• A decrease in upgrade and rebuild due to the deployment in fiscal 2012 and early fiscal 2013 of advanced technologies such as DOCSIS
3.0 and SDV in existing areas served.

Fiscal 2014 fourth-quarter acquisition of property, plant and equipment in the Enterprise data services segment, including the capital expenditures of the recent acquisition of Peer 1 Hosting, amounted to $50.4 million compared to $28.7 million in the comparable period of fiscal 2013. The increase is mainly due to the initial construction by Cogeco Data Services of all remaining pods (pods 2, 3, 4) at the Barrie data centre.

Acquisition of intangible and other assets is mainly attributable to reconnect and additional service activation costs as well as other customer acquisition costs. Fiscal 2014 fourth-quarter acquisition of intangible and other assets amounted to $1.0 million compared to $4.9 million for the fourth-quarter of fiscal 2013 mainly due to lower reconnect activities in the Canadian cable segment.

FREE CASH FLOW AND FINANCING ACTIVITIES

Fourth-quarter 2014 free cash flow amounted to $22.2 million, a decrease of $31.3 million compared to fourth-quarter of fiscal 2013, mainly as a result of the increase of $57.0 million in acquisitions of property, plant and equipment due to the timing of certain initiatives that were delayed between quarters during fiscal 2014, partly offset by the improvement of $8.3 million of adjusted EBITDA combined with the decreases of $16.0 million in financial expense and of $3.7 million in integration, restructuring and acquisition costs.

In the fourth quarter of fiscal 2014, Indebtedness level resulted in a cash decrease of $118.2 million, mainly due to the following reasons:

• the repayments of $240.2 million under the revolving facilities and of $58.0 million of long-term debt;

• the decrease of $9.4 million in bank indebtedness;

• the issuance, on August 27, 2014, of a private placement of $27.2 million (US$25 million) Senior Secured Notes Series A for net proceeds of $27.1 million, net of transaction costs of $0.1 million; and

• the issuance, on August 27, 2014 of a private placement of $163.4 million (US$150 million) Senior Secured Notes Series B for net proceeds of $162.5 million, net of transaction costs of $0.9 million.

In the fourth quarter of fiscal 2013, Indebtedness level resulted in a cash decrease of $110.5 million, mainly due to the issuance on June 27, 2013, of $225.3 million (US$215 million) Senior Secured Notes for net proceeds of $223.8 million, net of transaction costs of $1.5 million, offset by the repayment of the Senior Secured Debentures Series 1 of $300 million.

During the fourth quarter of fiscal 2014, a quarterly eligible dividend of $0.30 per share was paid to the holders of subordinate and multiple voting shares, totaling $14.6 million, when compared to an eligible dividend paid of $0.26 per share, or $12.6 million in the fourth quarter of fiscal 2013.

FISCAL 2015 FINANCIAL GUIDELINES

Cogeco Cable revised its fiscal 2015 preliminary financial guidelines with regards to the free cash flow, as issued on July 9, 2014, to take into consideration non-cash items of approximately $10 million to be excluded from the calculation.

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

For fiscal 2015, Cogeco Cable expects to achieve revenue of $2.03 billion, representing a growth of $82 million or 4.2% compared to fiscal 2014. In the Cable services segment, revenue should stem primarily from targeted marketing initiatives to improve penetration rates of HSI and Telephony services in the business sector while the penetration of residential Telephony and Television services should remain sluggish in the Canadian cable services, reflecting service category maturity and intense competition. Furthermore, the penetration of Digital video and HSI services should continue to benefit from customers' ongoing interest in TiVo's digital advanced television services in the American cable services segment as well as the launch of TiVo digital advanced television services in the Canadian cable services segment. Cable services segment will also benefit from the impact of rate increases in most of its services. In the Enterprise data services segment, revenue growth should stem primarily from managed and dedicated hosting and colocation services due to the expansion of the Barrie data centre facility as well as from the migration of services in the business portfolio that generate revenue with higher margins. In addition, the construction of the first pod of a new data centre facility in Kirkland, Montréal, is expected to be completed in the Spring of fiscal 2015 and should begin generating revenue. The revenue growth should also be driven by connectivity services as a result of network expansions and new customer installations.

Fiscal 2015 operating expenses are expected to expand by approximately $50 million, or 4.7%, compared to fiscal 2014 mainly due to additional expenditures to support the Enterprise data services segment growth, salary increases as well as the continuation of the marketing initiatives and retention strategies. These increases should be partly offset by cost reduction initiatives from improved systems and processes and by the restructuring activities that were completed in fiscal 2014.

For fiscal 2015, the Corporation expects adjusted EBITDA of $925 million, an increase of $32 million, or 3.6%, compared to fiscal 2014. The operating margin is expected to reach approximately 45.6% in fiscal 2015, compared to 45.9% for fiscal 2014, reflecting lower margins business activities from the Enterprise data services segment as well as operating expenses increasing slightly faster than the revenue.

Cogeco Cable expects the depreciation and amortization of property, plant and equipment and intangible assets to increase by $5 million for fiscal 2015, mainly from the increase in capital expenditures in fiscal 2015. Cash flows from operations should finance capital expenditures which are expected to reach $430 million compared to $415 million for fiscal 2014. Fiscal 2015 capital expenditures should increase mainly due to the completion of the expansion of the Barrie data centre facility and the construction of the first pod of a new data centre in Kirkland in the Enterprise data services segment.

Fiscal 2015 free cash flow is expected to amount to $280 million compared to fiscal 2014 free cash flow of $275 million due to the adjusted EBITDA growth, partly offset by additional capital expenditures. As a result, generated free cash flow will reduce Indebtedness net of cash and cash equivalent, thus improving the Corporation's net leverage ratios. Financial expense should amount to $125 million, a decrease of $5 million, or 3.8%, from lower Indebtedness level. Finally, profit for the year should reach approximately $260 million compared to $209 million for fiscal 2014.

Fiscal 2015 financial guidelines are as follows:

(1)	Free cash flow is calculated as adjusted EBITDA plus non-cash items of approximately $10 million and less, integration, restructuring and acquisition costs, financial expense, current income taxes and acquisitions of property, plant and equipment, intangible and other assets.
(2)	Fiscal 2014 free cash flow excludes non-cash items of approximately $15 million, mainly related to share-based payment and amortization of deferred transaction costs and discounts on long-term debt.

NON-IFRS FINANCIAL MEASURES

This section describes non-IFRS financial measures used by Cogeco Cable throughout this MD&A. It also provides reconciliations between these non-IFRS measures and the most comparable IFRS financial measures. These financial measures do not have standard definitions prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other companies. These measures include "cash flow from operations", "free cash flow", "adjusted EBITDA", "operating margin" and "capital intensity".

CASH FLOW FROM OPERATIONS AND FREE CASH FLOW

Cash flow from operations is used by Cogeco Cable's management and investors to evaluate cash flows generated by operating activities, excluding the impact of changes in non-cash operating activities, amortization of deferred transaction costs and discounts on long-term debt, income taxes paid, current income taxes, financial expense paid and financial expense. This allows the Corporation to isolate the cash flows from operating activities from the impact of cash management decisions. Cash flow from operations is subsequently used in calculating the non-IFRS measure, "free cash flow". Free cash flow is used, by Cogeco Cable's management and investors, to measure its ability to repay debt, distribute capital to its shareholders and finance its growth.

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

	Quarters ended				Years ended
	August 31, 2014		August 31, 2013 (1)		August 31, 2014		August 31, 2013 (1)
(in thousands of dollars)	$		$		$		$
Cash flow from operating activities	329,195		228,230		758,368		545,010
Changes in non-cash operating activities	(125,991	)	(55,377	)	(48,603	)	23,331
Amortization of deferred transaction costs and discounts on long-term debt	1,940		4,190		7,568		11,233
Income taxes paid	9,630		23,208		63,168		100,110
Current income taxes	(13,820	)	(10,769	)	(82,752	)	(84,676	)
Financial expense paid	19,038		20,801		122,620		91,343
Financial expense	(32,716	)	(48,702	)	(130,221	)	(128,770	)
Cash flow from operations	187,276		161,581		690,148		557,581

(1)	Comparative figures have been adjusted to comply with the adoption of IAS 19 Employee Benefits. For further details, please refer to Note 3 of the consolidated financial statements.

Free cash flow is calculated as follows:

	Quarters ended				Years ended
	August 31, 2014		August 31, 2013 (1)		August 31, 2014		August 31, 2013 (1)
(in thousands of dollars)	$		$		$		$
Cash flow from operations	187,276		161,581		690,148		557,581
Acquisition of property, plant and equipment	(164,171	)	(102,241	)	(400,846	)	(388,698	)
Acquisition of intangible and other assets	(954	)	(4,917	)	(14,626	)	(18,567	)
Assets acquired under finance leases	-		(937	)	-		(937	)
Free cash flow	22,151		53,486		274,676		149,379

(1)	Comparative figures have been adjusted to comply with the adoption of IAS 19 Employee Benefits. For further details, please refer to Note 3 of the consolidated financial statements.

ADJUSTED EBITDA AND OPERATING MARGIN

Adjusted EBITDA and operating margin are benchmarks commonly used in the telecommunications industry, as they allow comparisons with companies that have different capital structures and are more current measures since they exclude the impact of historical investments in assets. Adjusted EBITDA evolution assesses Cogeco Cable's ability to seize growth opportunities in a cost-effective manner, to finance its ongoing operations and to service its debt. Adjusted EBITDA is a proxy for cash flow from operations. Consequently, adjusted EBITDA is one of the key metrics used by the financial community to value the business and its financial strength. Operating margin is calculated by dividing adjusted EBITDA by revenue.

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

	Quarters ended				Years ended
	August 31, 2014		August 31, 2013 (1)		August 31, 2014		August 31, 2013 (1)
(in thousands of dollars, except percentages)	$		$		$		$
Profit for the period	63,848		43,870		209,441		184,895
Income taxes	16,272		11,159		53,184		62,774
Financial expense	32,716		48,702		130,221		128,770
Impairment of property, plant and equipment	3,296		-		35,493		-
Depreciation and amortization	113,742		114,103		460,282		382,714
Integration, restructuring and acquisitions costs	956		4,705		4,736		21,570
Adjusted EBITDA	230,830		222,539		893,357		780,723
Revenue	490,155		470,386		1,947,591		1,692,466
Operating margin	47.1	%	47.3	%	45.9	%	46.1	%

(1)	Comparative figures have been adjusted to comply with the adoption of IAS 19 Employee Benefits. For further details, please refer to Note 3 of the consolidated financial statements.

CAPITAL INTENSITY

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

Capital intensity is calculated as follows:

	Quarters ended				Years ended
	August 31, 2014		August 31, 2013		August 31, 2014		August 31, 2013
(in thousands of dollars, except percentages)	$		$		$		$
Acquisition of property, plant and equipment	164,171		102,241		400,846		388,698
Acquisition of intangible and other assets	954		4,917		14,626		18,567
Assets acquired under finance leases	-		937		-		937
Total acquisitions of property, plant and equipment, intangible and other assets	165,125		108,095		415,472		408,202
Revenue	490,155		470,386		1,947,591		1,692,466
Capital intensity	33.7	%	23.0	%	21.3	%	24.1	%

CUSTOMER STATISTICS

	August 31, 2014		May 31, 2014		February 28, 2014		November 30, 2013		August 31, 2013		August 31, 2012
PSU	2,442,184		2,452,118		2,454,627		2,464,932		2,467,657		1,975,054
CANADA	1,946,022		1,956,444		1,962,077		1,975,502		1,980,122		1,975,054
UNITED STATES	496,162		495,674		492,550		489,430		487,535		-
Television service customers	1,023,094		1,034,991		1,044,611		1,057,859		1,066,952		863,115
CANADA	797,165		807,831		815,852		827,649		834,771		863,115
Penetration as a percentage of homes passed	47.3	%	47.9	%	48.5	%	49.3	%	49.9	%	52.4	%
UNITED STATES	225,929		227,160		228,759		230,210		232,181		-
Penetration as a percentage of homes passed	43.7	%	43.8	%	44.2	%	44.5	%	44.9	%	-
HSI	869,453		865,597		857,786		848,897		838,445		640,455
CANADA	679,584		676,802		672,981		668,257		661,337		640,455
Penetration as a percentage of homes passed	40.3	%	40.2	%	40.0	%	39.8	%	39.5	%	38.8	%
UNITED STATES	189,869		188,795		184,805		180,640		177,108		-
Penetration as a percentage of homes passed	36.7	%	36.4	%	35.7	%	34.9	%	34.3	%	-
Telephony service customers	549,637		551,530		552,230		558,176		562,260		471,484
CANADA	469,273		471,811		473,244		479,596		484,014		471,484
Penetration as a percentage of homes passed	27.8	%	28.0	%	28.1	%	28.6	%	28.9	%	28.6	%
UNITED STATES	80,364		79,719		78,986		78,580		78,246		-
Penetration as a percentage of homes passed	15.5	%	15.4	%	15.3	%	15.2	%	15.1	%	-

QUARTERLY FINANCIAL HIGHLIGHTS

(1)	The addition of quarterly information may not correspond to the annual total due to rounding.
(2)	Per multiple and subordinate voting share.
(3)	Comparative figures have been adjusted to comply with the adoption of IAS 19 Employee Benefits. For further details, please refer to Note 3 of the consolidated financial statements.

SEASONAL VARIATIONS

Cogeco Cable's operating results are not generally subject to material seasonal fluctuations except as follows. In the Canadian and American cable services segments, the number of customers in the Television services and HSI services are generally lower in the second half of the fiscal year as a result of a decrease in economic activity due to the beginning of the vacation period, the end of the television season, and students leaving their campuses at the end of the school year. Cogeco Cable offers its services in several university and college towns such as Kingston, Windsor, St.Catharines, Hamilton, Peterborough, Trois-Rivières and Rimouski in Canada and in the Pennsylvania region, and to a lesser extent in South Carolina, Maryland and Delaware in United States. In the American cable services segment, Miami region is also subject to seasonal fluctuations due to the winter season residents returning home from late Spring through the Fall. Furthermore, the second, third and fourth quarter's operating margin is usually higher as very low or no management fees are paid to COGECO Inc. Under the Management Agreement, Cogeco Cable pays a fee equal to 2% of its total revenue subject to a maximum amount. As the maximum amount has been reached in the second quarters of fiscal 2014 and 2013, Cogeco Cable did not pay management fees in the second halves of either year.

ADDITIONAL INFORMATION

Additional information relating to the Corporation, including its 2014 Annual Report and Annual Information Form, is available on SEDAR website at www.sedar.com or on the Corporation's website at www.cogeco.ca.

ABOUT COGECO CABLE

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

Analyst Conference Call:	Monday, November 3, 2014 at 11:00 a.m. (Eastern Standard Time) Media representatives may attend as listeners only.
	Please use the following dial-in number to have access to the conference call by dialing five minutes before the start of the conference:
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