Cogeco Câble inc.
TSX : CCA

April 11, 2007 17:03 ET

Continued Strong Growth at Cogeco Cable

MONTREAL, QUEBEC--(CCNMatthews - April 11, 2007) - Today, Cogeco Cable Inc. (TSX:CCA) announced its financial results for the second quarter ended February 28, 2007.

Convincing results

Cogeco Cable has continued to exceed its last financial projections during the second quarter. Revenue-generating units (RGUs) grew by 84,399, compared to 55,109 for the same period last year. For the Canadian operations, RGUs increased by 64,133 compared to 55,109 for the same period last year, an increase of 16%. For the Portuguese operations, with net additions of 20,266 RGUs, the total now stands at 670,571.

On a consolidated basis, revenue increased by 57%, standing at $232 million, operating income before amortization by 45.7%, reaching $86.8 million, and net income by 51%, reaching $15.4 million.

"We are exceeding our projections of last January. All our operating units are well positioned to provide premium customer service together with a very competitive offering. We are very pleased with the progression we are experiencing, thanks to our Portuguese subsidiary and the improvement in the penetration of all our services including Digital Telephony in Canada," said Mr. Louis Audet, President and CEO of Cogeco Cable.

Improved 2007 projections

Considering the improved performance of the Corporation during the first six months of fiscal 2007, management has revised upwards its projections for the fiscal year 2007. Consolidated revenue should reach $945 million, operating income before amortization $365 million and net income should stand at $60 million.

"The Corporation has recently implemented rate increases in Canada and in Portugal. In addition, debt reduction from the issuance in early February of subordinate voting shares will reduce financial expense. The combination of these factors improves Cogeco Cable revenue, operating income before amortization and net income," concluded Mr. Audet.



FINANCIAL HIGHLIGHTS

Quarters ended February 28,
(unaudited)
($000s, except percentages
and per share data) 2007 2006 % Change
--------- --------------------

Revenue $ 231,952 $147,757 57.0

Operating income before amortization 86,791 59,568 45.7

Net income
15,407 10,200 51.0
Cash flow from operations (1) 62,264 44,940 38.5
Less:
Capital expenditures and
increase in deferred charges 52,844 39,480 33.9
--------- ----------
Free cash flow (1) 9,420 5,460 72.5

Per share data
Basic net income $0.37 $0.26 42.3


Six months ended February 28,
(unaudited)
($000s, except percentages
and per share data) 2007 2006 % Change
------- ---------- --------

Revenue $453,954 $291,170 55.9

Operating income before amortization 170,453 116,870 45.8

Net income
27,942 19,198 45.5
Cash flow from operations (1) 124,324 88,329 40.8
Less:
Capital expenditures and
increase in deferred charges 127,227 73,158 73.9
------- ----------
Free cash flow (1) (2,903) 15,171 -

Per share data
Basic net income $0.69 $0.48 43.8

(1) Cash flow from operations and free cash flow do not have standard
definitions prescribed by Canadian generally accepted accounting
principles (GAAP) and should be treated accordingly. For more details,
please consult the Non-GAAP financial measures section.


FORWARD-LOOKING STATEMENT

Certain statements in this press release may constitute forward-looking information within the meaning of securities laws. Forward-looking information may relate to our future outlook and anticipated events, our business, our operations, our financial performance, our financial condition or our 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 our future operating results and economic performance and our 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 we believe are reasonable as of the current date. While we consider these assumptions to be reasonable based on information currently available to us, they may prove to be incorrect. Forward-looking information is also subject to certain factors, including risks and uncertainties (described in "Uncertainties and main risk factors" of the Corporation's 2006 annual MD&A) that could cause actual results to differ materially from what we currently expect. These factors include technological changes, changes in market and competition, governmental or regulatory developments, general economic conditions, the development of new products and services, the enhancement of existing products and services, and the introduction of competing products having technological or other advantages, many of which are beyond our control. Therefore, future events and results may vary significantly from what we currently foresee. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While we may elect to, we are under no obligation (and expressly disclaim any such obligation) and do not undertake to update or alter this information before next quarter.

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 2006 Annual Report. Throughout this discussion, all amounts are in Canadian dollars unless otherwise indicated.


MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)

CORPORATE STRATEGIES AND OBJECTIVES

Cogeco Cable's objectives are to improve profitability and create shareholder value. The strategies for reaching those objectives are constant corporate growth through the diversification and improvement of products and services as well as clientele and territories; effective management of capital; and tight cost control and business processes. The Corporation measures its performance with regard to these objectives with revenue growth, RGU(1) growth and free cash flow(2). Below are the recent achievements in furtherance of Cogeco Cable's objectives.



Continuous improvement of the service offering and a larger customer base
Canadian operations
- Digital Television services:
- Addition to Cogeco On Demand of "Academie de hockey McDonald"
in Quebec;
- Signature of an agreement with Twentieth Century Fox Film
Corporation for the VOD offering;
- Addition of three HD channels to the HD offering in Ontario
- Digital Telephony service:
- Available to 74% of homes passed in Cogeco Cable's territories,
as at February 28, 2007;
- Since January 11, 2007, deployment of the Digital Telephony service
in Leamington, Kingsville and Brockville in Ontario, as well as
Asbestos in Quebec.
- High Speed Internet service:
- Access to F-Secure security service to Cogeco Cable business
customers, free of charge;
- Access to Wi-Fi connection for Cogeco Cable Ontario customers in
Burlington, Oakville and Hamilton.

Portuguese operations and its integration
- Cabovisao - Televisao por Cabo, S.A. (Cabovisao) is in the process of
completing its plan to launch its Digital Television service during
fiscal 2007;
- The integration process is essentially completed.

Continuous improvement of networks and equipment

- During the first six months of fiscal 2007, the Corporation has invested
approximately $49 million in its infrastructure including head-ends and
upgrade/rebuild.

Effective management of capital

- On February 2, 2007, the Corporation issued 5 million subordinate voting
shares at a price of $38.50 for total net proceeds of $184.2 million
which was used to reduce long-term debt;
- The Corporation reimbursed its $125 million 8.44% Second Secured
Debentures due July 31, 2007, as well as a portion of its $900 million
Term Facility including its bank indebtedness from the proceeds of the
subordinate voting share issue.

(1) See "Customer statistics" section for detailed explanations.
(2) See "Non-GAAP financial measures" section for explanations.


Tight control over costs, business processes

- The first six months of fiscal 2007 operating costs, excluding
management fees of the Canadian operations, increased by 19.9%
essentially in line with revenue growth during the same period;
- The design of internal controls over financial reporting as per National
Instrument 52-109 is still underway. As discussed in the 2006 annual
MD&A, the Corporation had identified certain material weaknesses in the
design of internal controls over financial reporting and there have been
no changes to the identified material weaknesses since August 31, 2006.
The documentation and remediation of internal controls are progressing.


RGU growth

During the first six months of fiscal 2007, the consolidated number of RGUs increased by 9% to reach almost 2.4 million units, en route towards the achievement of the Corporation's January 2007 revised projections of 13% to 14% for this fiscal year.

Revenue growth

In the second quarter of fiscal 2007, revenue increased by $84.2 millions to reach $232 million. During the first six months, revenue increased by $162.8 million to reach $454 million. For fiscal 2007, the Corporation had expected to reach revenue growth of $305 million for a total of $925 million for fiscal 2007 and now anticipates revenue growth of $325 million to reach $945 million. Management has revised its guidelines to reflect price increases to occur in Canada and in Portugal and the strengthening of the euro currency over the Canadian dollar. Please consult the "Fiscal 2007 financial guidelines" section for further details.

Free cash flow

In the second quarter of fiscal 2007, Cogeco Cable generated free cash flow of $9.4 million, compared to $5.5 million for the same period last year. For the six month period ended February 28, 2007, the Corporation generated a negative free cash flow of $2.9 million compared to a positive free cash flow of $15.2 million for the same period the year before, mainly due to higher capital expenditures necessary to sustain RGU growth. The increase in capital expenditures in the semester also includes the acquisition of customer premise equipment amounting to approximately $10 million to serve expected RGU growth in the coming months. Capital expenditures and deferred charges amounted to $52.8 million of which $42 million was intended to support Canadian operations and the remainder was earmarked for the Portuguese operations. Considering the strong demand for HSI and Digital Telephony services in Canada in the first six months of fiscal 2007, the Corporation has revised the level of capital expenditures required in its infrastructure to increase its capacity. Fiscal 2007 capital expenditures and deferred charges are now expected to reach $260 million. The revised free cash flow for fiscal 2007 should be approximately $15 million. Please consult the "Fiscal 2007 financial guidelines" section for further details.



OPERATING RESULTS -- CONSOLIDATED OVERVIEW

Quarters ended February 28,
($000s, except percentages) %
2007 2006 Change
---------- -------- -------

Revenue $231,952 $147,757 57.0

Operating costs 141,033 85,232 65.5

Management fees - COGECO Inc. 4,128 2,957 39.6

Operating income before amortization 86,791 59,568 45.7

Operating margin 37.4% 40.3%



Six months ended February 28,
($000s, except percentages) %
2007 2006 Change
---------- -------- ------

Revenue $453,954 $291,170 55.9

Operating costs 274,933 168,475 63.2

Management fees - COGECO Inc. 8,568 5,825 47.1

Operating income before amortization 170,453 116,870 45.8

Operating margin 37.5% 40.1%


Revenue

In the second quarter of fiscal 2007, consolidated revenue grew by $84.2 million, or 57%, to reach $232 million and by $162.8 million, or 55.9% to reach $454 million for the first six months of 2007. These increases are mainly due to strong RGU growth, to the consolidation of the financial results of the Portuguese operations acquired on August 1, 2006 and rate increases. Canadian operations revenue, driven by an increased number of customers in basic, HSI, Digital Telephony and Digital Television services as well as rate increases, went up by $27.2 million, or 18.4% in the second quarter and by $51.7 million, or 17.8%, in the first six months. The Portuguese operations revenue amounted to $57 million for the second quarter of fiscal 2007 and to $111.1 million for the first six month of fiscal 2007.

Operating costs

For the second quarter and the first six months of fiscal 2007, operating costs excluding management fees payable to COGECO Inc. increased by $55.8 million and $106.5 million to reach $141 million and $274.9 million respectively, an increase of 65.5% and 63.2% compared to last year. The increase in operating costs is mainly attributable to the inclusion of the operating costs of Cabovisao, the increased penetration of Digital Telephony service and to servicing additional RGU in Canada.

Operating income before amortization

For the second quarter and the first six months of fiscal 2007, operating income before amortization increased by $27.2 million, or 45.7%, to reach $86.8 million and by $53.6 million, or 45.8% to reach $170.5 million, as a result of RGU growth, Cabovisao acquisition and rate increases outpacing increases in operating costs. Cogeco Cable's second quarter and first six months' operating margins declined from 40.3% to 37.4% and from 40.1% to 37.5% respectively as a result of the Digital Telephony deployment in Canada and the consolidation of the Portuguese operations lower operating margin. Considering the improved performance of the Corporation during the first six months of fiscal 2007, management has revised upwards its projections for the fiscal year 2007. Therefore, operating income before amortization should increase to $365 million. Please consult the "Fiscal 2007 financial guidelines" section for further details.

RELATED PARTY TRANSACTIONS

Cogeco Cable is a subsidiary of COGECO Inc., which holds 34.7% of the Corporation's equity shares, representing 84.2% of the Corporation's voting shares. Under a management agreement, the Corporation pays COGECO Inc. monthly management fees equal to 2% of its total revenue for certain executive, administrative, legal, regulatory, strategic and financial planning, and additional services. In 1997, management fees were capped at $7 million per year, subject to annual upward adjustments based on increases in the Consumer Price Index in Canada. Accordingly, for fiscal 2007, management fees have been set at a maximum of $8.6 million, which has been reached in the second quarter, compared to $5.8 million for the same period last year. Most of the increase of $2.8 million is due to the revenue generated from the acquisition of Cabovisao. Furthermore, Cogeco Cable granted 319,647 stock options to COGECO Inc.'s employees during the first half of fiscal 2007, compared to 31,743 for the same period last year. Of these 319,647 stock options, 262,400 are conditional on the achievement of certain yearly financial objectives by the Portuguese subsidiary, Cabovisao, over a period of three years. Details regarding the management agreement and stock options granted to COGECO Inc.'s employees are provided in the MD&A of the Corporation's 2006 annual report. There were no other material related party transactions during the three and six month periods ended February 28, 2007 and 2006.



FIXED CHARGES
Quarters ended February 28,
($000s, except percentages) 2007 2006 % Change
------- ------- --------
Amortization $43,572 $28,656 52.1

Financial expense 23,551 13,776 71.0


Six months ended February 28,
($000s, except percentages) 2007 2006 % Change
------- ------- --------
Amortization $87,881 $56,933 54.4

Financial expense 44,772 27,358 63.7


For the second quarter and first six months of fiscal 2007, amortization amounted to $43.6 million and to $87.9 million respectively, compared to $28.7 million and $56.9 million for the same periods the year before. The increase in amortization expense for both periods of fiscal 2007 compared to fiscal 2006 is due to the consolidation of the financial results of Cabovisao and to the increased capital expenditures arising from the customer growth resulting in higher demand for customer premise equipment, scalable infrastructure, upgrade/rebuild, support capital and deferred charges for the Canadian operations.

During the second quarter and first six months of fiscal 2007, financial expense increased by $9.8 million and $17.4 million respectively, compared to the same periods in fiscal 2006. This is due to the higher level of Indebtedness (defined as bank indebtedness and long-term debt) required to finance the acquisition of the Portuguese subsidiary, Cabovisao and a one-time charge of $2.6 million in the second quarter related to the early repayment of the Second Secured Debentures Series A. The Corporation has revised its guidelines to reflect the impact of the share issuance on the financial expense. Please consult the "Fiscal 2007 financial guidelines" section for further details.

INCOME TAXES

For the second quarter of fiscal 2007, income taxes amounted to $4.3 million compared to $6.9 million in fiscal 2006. For the first six months of fiscal 2007, income taxes amounted to $9.9 million compared to $13.4 million for the same period last year. The decrease in income taxes for fiscal 2007 is mainly due to the Canadian operations and is attributable to the elimination of Canadian federal capital tax on January 1, 2006 and to the recognition of benefits related to prior years' minimum income tax paid.

NET INCOME

Net income for the second quarter amounted to $15.4 million, or $0.37 per share, compared to $10.2 million, or $0.26 per share, for the same period last year. For the first half of fiscal 2007, net income amounted to $27.9 million, or $0.69 per share compared to $19.2 million or $0.48 per share for the same period in fiscal 2006. Net income increases in these periods were attributable to the growth in operating income before amortization partly offset by the fixed charges increases.



CASH FLOW AND LIQUIDITY
Quarters ended Six months ended
February 28, February 28,
($000s) 2007 2006 2007 2006
--------- ---------- ---------- ---------
Operating Activities
Cash flow from operations $62,264 $44,940 $124,324 $88,329
Changes in non-cash
operating items (6,607) (2,525) (78,516) (45,312)
--------- ---------- ---------- ---------
$55,657 $42,415 $45,808 $43,017
--------- ---------- ---------- ---------
--------- ---------- ---------- ---------

Investing Activities(1) $(52,183) $(58,363) $(126,253) $(92,041)
--------- ---------- ---------- ---------
--------- ---------- ---------- ---------

Financing Activities(1) $15,485 $(4,735) $45,180 $48,963
--------- ---------- ---------- ---------
--------- ---------- ---------- ---------

Net change in cash and
cash equivalents $18,959 $(20,683) $(35,265) $(61)
Effect of exchange rate
changes on cash and
cash equivalents
denominated in
foreign currencies 1,644 - 3,260 -
Cash and cash
equivalents at
beginning 18,908 20,683 71,516 61
--------- ---------- ---------- ---------
Cash and cash
equivalents at end $39,511 - $39,511 -
--------- ---------- ---------- ---------
--------- ---------- ---------- ---------

(1) Excludes assets acquired under capital leases.


During the second quarter 2007, cash flow from operations reached $62.3 million, 38.5% higher than for the comparable period last year, primarily due to the increase in operating income before amortization partly offset by the increase in financial expense. Changes in non-cash operating items generated greater cash outflows than for the same period last year, mainly as a result of increases in accounts and income tax receivables, partly offset by an increase in accounts payable and accrued liabilities.

During the first six months of fiscal year 2007, cash flow from operations reached $124.3 million, an increase of 40.8% compared to the same period the year before, primarily due to the growth in operating income before amortization partly offset by the increase in financial expense. Changes in non-cash operating items generated greater cash outflows than for the same period last year, mainly as a result of a decrease in accounts payable and accrued liabilities from non recurring payments made by the Portuguese subsidiary in accordance with the terms of the acquisition, and increases in accounts and income tax receivables.

On March 9, 2007, the Corporation and Cable Satisfaction International Inc. have come to an agreement for a final adjustment of the working capital which was still outstanding since the date of acquisition, and consequently, the preliminary goodwill has been reduced by $3.3 million. The remaining adjustment to the purchase price is due to the re-evaluation of costs related to the acquisition of Cabovisao.



Investing activities, including capital expenditures segmented according
Cable to the National Television Association (NCTA) standard reporting
categories, are as follows:

Quarters ended Six months ended
February 28, February 28,
($000s) 2007 2006 2007 2006
------- ---------- -------- ----------

Customer Premise
Equipment(1) $17,786 $14,183 $57,203 $29,606
Scalable Infrastructure 8,774 6,943 20,760 10,615
Line Extensions 2,649 2,291 5,200 4,843
Upgrade / Rebuild 17,176 9,632 28,031 16,606
Support Capital 413 2,647 2,775 4,039
------- ---------- -------- ----------
Total Capital
Expenditures(2) $46,798 $35,696 $113,969 $65,709
------- ---------- -------- ----------
Deferred charges and
others 7,409 3,776 14,604 7,441
------- ---------- -------- ----------
Increase (decrease) in
restricted cash 3 20,322 (88) 20,322
------- ---------- -------- ----------
Total investing
activities $54,210 $59,794 $128,485 $93,472
------- ---------- --------- ---------

(1) Includes mainly new and replacement drops as well as home terminal
devices.
(2) Includes capital leases, which are excluded from the statements of
cash flow.


During the second quarter and first six months of fiscal 2007, capital expenditures increased compared to last year mainly as a result of the integration of Cabovisao and the following factors:

- The increase in customer premise equipment expenditures resulted from a greater demand for HSI and Digital Telephony services, from a rise in the number of digital terminals rented to customers and from a greater ratio of digital terminals per digital home. Furthermore, customer premise equipment representing approximately $10 million was acquired by the Corporation during the first semester to serve expected RGU growth in the coming months.

- The growth in capital expenditures for scalable infrastructure was mainly attributable to the support of the Digital Telephony roll-out for the Canadian operations.

- The increase in capital expenditures associated with the network upgrade and rebuild program for the Canadian operations was due to the acceleration of the program to expand the bandwidth to 750 MHz and 550 MHz for the Ontario and Quebec networks, respectively, and to improve network reliability. An increase in the number of households with access to two-way service was also a factor and the percentage of customers with access to two-way service rose from 91% as at February 28, 2006 to 93% as at February 28, 2007.

The Portuguese operations capital expenditures amounted to $10.8 million and $20.4 million, respectively, for the second quarter and the first six months of fiscal 2007, essentially to support RGU growth.

The second quarter and first six months of fiscal 2007 increases in deferred charges are explained by higher reconnect costs attributable to the significant level of RGU growth.

In the second quarter of fiscal 2007, the Corporation generated free cash flow in the amount of $9.4 million compared to $5.5 million the preceding year. For the first six months of fiscal 2007, the Corporation incurred a deficit in free cash flow in the amount of $2.9 million compared to a surplus of $15.2 million for the same period the year before. The second quarter free cash flow increase over the same period last year is due to growth in operating income before amortization, partly offset by higher level of capital expenditures and deferred charges to serve RGU growth and to support Digital Telephony service roll-out and by the increase in financial expense. The first six months free cash flow decrease compared to the same period in 2006 is due to a higher level of capital expenditures (including the acquisition of customer premise equipment amounting to approximately $10 million to serve RGU growth in the coming months), deferred charges generated by RGU growth and to support the Digital Telephony service roll-out and by the increase in financial expense, partly offset by the growth in operating income before amortization.

On February 2, 2007, the Corporation announced the completion of a public offering of 5,000,000 subordinate voting shares for gross proceeds of $192.5 million. The offering resulted in net proceeds to Cogeco Cable of approximately $184.2 million which was used to reduce long-term indebtedness and working capital deficiency.

During the second quarter of fiscal 2007, the level of Indebtedness decreased by $170.5 million. On February 2, 2007, the Corporation gave a notice of redemption and offered to purchase all of its 8.44% Second Secured Debentures, Series A, in the aggregate principal amount of $125 million due July 31, 2007 (the "Notes"). As at February 28, 2007, $89.3 million of the Notes have been repaid and the remainder was repaid on March 5, 2007. The decrease in Indebtedness was also due to the repayment of a portion of the Corporation's Term Facility amounting to $51.4 million and to the repayment of its bank indebtedness at the amount of $29.3 million. For the same period last year, Indebtedness decreased by $3.3 million mainly due to free cash flow of $5.5 million, a net decrease in cash and cash equivalents of $20.7 million, partly offset by a decline in non-cash operating items of $2.5 million and an increase in restricted cash of $20.3 million. In addition, a dividend of $0.06 per share for subordinate and multiple voting shares, totalling $2.4 million, was paid during the second quarter of fiscal 2007 compared to a dividend of $0.04 per share or $1.6 million for the second quarter of fiscal 2006.

During the first half of fiscal 2007, the level of Indebtedness decreased by $139.5 million mainly due to the repayment of the Notes for $89.3 million and the repayment of $49.1 million of the Corporation's Term Facility. For the same period last year, Indebtedness grew by $52 million mainly due to a decline in non-cash operating items of $45.3 million and an increase in restricted cash of $20.3 million partly offset by generated free cash flow of $15.2 million . In addition, dividends totalling $4 million were paid during the first six months of fiscal 2007 compared to $3.2 million for the same period the year before.

As at February 28, 2007, the working capital deficiency was reduced by an amount of $130.4 million mainly as a result of the $125 million portion of the net proceeds of the share issuance being used to reimburse $89.3 million of the Senior Secured debentures Series A on February 12, 2007. The remaining portion of $35.7 million, presented as cash and cash equivalents as at February 28, 2007, was used to reimburse the remainder of these debentures, on March 5, 2007. Cogeco Cable maintains a working capital deficiency due to a low level of accounts receivable since the majority of the Corporation's customers pay before their services are rendered, contrary to accounts payable and accrued liabilities, which are paid after products or services are rendered. In addition, the Corporation generally uses cash and cash equivalents to reduce Indebtedness.

As at February 28, 2007, the Corporation had used $617.2 million of its $900 million Term Facility.

FINANCIAL POSITION

Since August 31, 2006, there have been major changes to "Fixed Assets", "Preliminary Goodwill", "Accounts Payable and accrued liabilities", "Accounts receivable", "Indebtedness", "Cash and cash equivalents", "Capital Stock" and "Foreign currency translation adjustment".

The $63.4 million rise in fixed assets is mainly related to increased capital expenditures to sustain RGU growth during the first six months as well as anticipated growth in the coming months. The increase of $32.8 million in preliminary goodwill is mainly the result of the appreciation of the euro currency over the Canadian dollar partly offset by adjustments of $6 million to the purchase price following the resolution of the working capital adjustments and the reevaluation of costs related to the acquisition of Cabovisao. The $14.1 million increase in accounts receivable is essentially due to an increase in the general level of receivables in line with the revenue growth, the resolution of the working capital adjustments and to the euro currency appreciation over the Canadian dollar. The $58.5 million and $32 million reductions in accounts payable and accrued liabilities and cash and cash equivalents respectively, are related to payments made with regards to the acquisition of Cabovisao. The $15.9 million increase in foreign currency translation adjustment is the result of the appreciation of the euro currency over the Canadian dollar. Indebtedness decreased by $94.2 million as a result of the factors previously discussed in the "Cash Flow and Liquidity" section. Finally, capital stock increased by $197.5 million mostly due to the completion of a public offering of 5,000,000 subordinate voting shares for gross proceeds of $192.5 million.



A description of Cogeco Cable's share data as of March 31, 2007 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 29,547,444 729,651

Options to Purchase Subordinate Voting Shares
Outstanding options 1,058,144
Exercisable options 359,994


The number of outstanding options has increased significantly during the first six months of fiscal 2007. With regards to the acquisition of Cabovisao - Televisao por Cabo, S.A., the Corporation granted 376,000 conditional stock options with an exercise price of $26.63. These options vest over a period of three years beginning one year after the day such options are granted and are exercisable over ten years. The vesting of these options is conditional to the achievement of certain yearly financial objectives by the Portuguese subsidiary over a period of three years.

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, discussed in the 2006 annual MD&A, have not materially changed since August 31, 2006 except for the repayment of the $125 million Second Secured Debentures Series A and the partial repayment of $49.1 million of the $900 million Term Facility discussed in the Cash Flow and Liquidity section. Furthermore, during the second quarter of fiscal 2007, the Corporation has guaranteed the payment by Cabovisao of certain taxes for municipal rights of way assessed by the Municipality of Seixal in Portugal for the years 2004 and 2005 totalling EUR5.7 million (the "Tax Amounts"), which are currently being challenged by Cabovisao. Trustworthy financial guarantees were required under applicable Portuguese law in order for Cabovisao to challenge the Tax Amounts and withhold payment thereof until a final judgment no longer subject to appeal is rendered by the Portuguese courts having jurisdiction in this matter. As a result, the Corporation may be required to pay, upon written demand by the Municipality of Seixal, the required amounts following final judgment up to a maximum aggregate amount of EUR5.7 million, should Cabovisao fail to pay such required amounts.

DIVIDEND DECLARATION

At its April 11, 2007 meeting, the Board of Directors of Cogeco Cable declared a quarterly eligible dividend of $0.06 per share for subordinate and multiple voting shares, payable on May 9, 2007, to shareholders of record on April 25, 2007.

FOREIGN EXCHANGE MANAGEMENT

Cogeco Cable has entered into cross-currency swap agreements to set 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 increased by CDN$9.7 million at the end of the second quarter compared to August 31, 2006 due to the Canadian dollar's depreciation. Since the Senior Secured Notes Series A are fully hedged, the fluctuation is offset by a variation in deferred credit described in Note 7 of the second quarter 2007 interim financial statements. The CDN$63.2 million deferred credit represents the difference between the quarter-end exchange rate and the exchange rate on the cross-currency swap agreements, which determine the liability for interest and principal payments on the Senior Secured Notes Series A.

As noted in the MD&A of the 2006 annual report, the Corporation's investment in the Portuguese subsidiary, Cabovisao, is exposed to market risk attributable to fluctuations in foreign currency exchange rate, primarily changes in the values of the Canadian dollar versus the euro. This risk is mitigated since the major part of the purchase price for Cabovisao was borrowed directly in euros. This debt is designated as a hedge of net investments in self-sustaining foreign subsidiaries and accordingly the Corporation realized a foreign exchange gain of CDN$15.9 million in the first six months of fiscal 2007 which is deferred and recorded in the foreign currency translation adjustment. The exchange rate used to convert the euro currency into Canadian dollar for the balance sheet accounts as at February 28, 2007 was $1.5479 per euro compared to $1.4156 per euro as at August 31, 2006. The average exchange rate used to convert the operating results of the Portuguese operations for the second quarter and the first six months of fiscal 2007 were $1.5146 per euro and $1.4818 per euro, respectively.



CANADIAN OPERATIONS

CUSTOMER STATISTICS
Net additions
Quarters ended Six months ended
February 28, February 28,
---------------------------------------
February 28,
2007 2007 2006 2007 2006
---------------------------------------------------
RGUs(2) 1,713,084 64,133 55,109 157,148 115,879
Basic service
customers 854,694 5,277 3,505 21,517 14,408
HSI service
customers(3) 392,443 20,428 17,460 49,363 40,453
Digital Television
service customers 362,549 13,961 24,547 35,185 45,962
Digital Telephony
service customers 103,398 24,467 9,597 51,083 15,056


% of Penetration(1)(4)

February 28,
-----------------------
2007 2006
-----------------------
RGUs(2)
Basic service customers
HSI service customers(3) 49.3 41.9
Digital Television service customers 43.3 35.8
Digital Telephony service customers 16.2 5.7


(1) As a percentage of basic service customers in areas served.
(2) Represent the sum of basic service, HSI service, Digital Television
service and Digital Telephony service customers.
(3) Customers subscribing only to Internet services totalled 63,884 as at
February 28, 2007 compared to 59,292 as at February 28, 2006.
(4) An audit of homes passed in Ontario has been completed during the
first quarter of fiscal 2007 and, as a result, the number of homes
passed has been reduced by 42,386.


All services generated higher growth in the second quarter of 2007 compared to the same period last year, except for the Digital Television service. During the second quarter, Digital Telephony customers grew by 24,467 to reach 103,398 compared to a growth of 9,597 for the same period last year. This growth is mostly attributable to the launch of the service in new markets. Coverage of homes passed has now reached 74% compared to 34% last year. The net additions of basic service customers in the second quarter reached 5,277, compared to 3,505 for the same period last year. The number of net additions of HSI service stood at 20,428 compared to 17,460 for the same period last year. The growth of HSI and basic service customers compared to the same period last year is mostly due to the enhancement of the product offering, the impact of the bundled offer of Television, HSI and Digital Telephony services (Cogeco Complete Connection), and promotional activities.

The net additions of Digital Television service customers stood at 13,961 compared to 24,547 for the same period last year. The decrease in net additions this quarter compared to the same quarter last year reflects a maturing of the digital TV segment following a period of robust growth, especially in the second quarter of fiscal 2006. Nevertheless, customers continue to demonstrate strong interest in HD technology. Secondly, the Corporation adjusted the service offering and price gap differential between analog TV services and Digital Television services in the second half of fiscal 2006 which has also contributed to a moderation of the strong growth experienced in the first half of fiscal 2006.



OPERATING RESULTS
Quarters ended February 28,
($000s, except percentages) 2007 2006 %
Change
---------- -------------------

Revenue $174,926 $147,757 18.4

Operating costs 103,795 85,232 21.8

Management fees - COGECO Inc. 4,128 2,957 39.6

Operating income before amortization 67,003 59,568 12.5

Operating margin 38.3% 40.3%


Six months ended February 28,
($000s, except percentages) 2007 2006 %
Change
---------- --------------------

Revenue $342,857 $291,170 17.8

Operating costs 201,955 168,475 19.9

Management fees - COGECO Inc. 8,568 5,825 47.1

Operating income before amortization 132,334 116,870 13.2

Operating margin 38.6% 40.1%


Revenue

For the second quarter and the first six months, revenue rose by $27.2 million and $51.7 million to reach $174.9 million and $342.9 million respectively, an increase of 18.4% and 17.8% compared to fiscal 2006. This growth is explained mainly by an increase in the number of HSI, Digital Telephony, Digital Television and basic service customers as mentioned in the "Customer Statistics" section, together with rate increases implemented in June and August of 2006. Monthly rate increases of at most $3 per customer and averaging $2 per basic service customer took effect on June 15, 2006 in Ontario and on August 1, 2006 in Quebec.

Operating costs

For the second quarter and the first six months, operating costs, excluding management fees payable to COGECO Inc., increased by $18.6 million and $33.5 million to reach $103.8 million and $202 million respectively, an increase of 21.8% and 19.9% compared to last year. The increase in operating costs is mainly attributable to the increased penetration of Digital Telephony service and to servicing additional RGUs.

Operating income before amortization

For the second quarter and the first six months of fiscal 2007, operating income before amortization rose from $59.6 million to $67 million and from $116.9 million to $132.3 million respectively, representing increases of 12.5% and 13.2%, compared to the same periods last year. The rise in operating income before amortization is the result of increased revenue outpacing the rise in operating costs. Cogeco Cable's operating margin for the Canadian operations decreased from 40.3% to 38.3% in the second quarter of fiscal 2007 and from 40.1% to 38.6% in the first six months of fiscal 2007, mainly as a result of the deployment of the Digital Telephony service.




PORTUGUESE OPERATIONS

CUSTOMER STATISTICS
% of
Net additions Penetration(1)
Quarter Six months
ended ended
February 28, February 28, February 28, February 28,
2007 2007 2007 2007
-------------------------------------------------------
RGUs(2) 670,571 20,266 41,530
Basic service
customers 283,553 6,606 13,859
HSI service
customers 151,663 7,308 15,385 53.5
Telephony service
customers 235,355 6,352 12,286 83.0


(1) As a percentage of basic service customers in areas served.
(2) Represent the sum of basic service, HSI service and Telephony service
customers.


For the second quarter, all services generated customer growth in line with
the Corporation's guidelines. Basic service grew by 6,606 customers, HSI by
7,308 customers and Telephony by 6,352 customers.


OPERATING RESULTS
Quarter ended Six months ended
February 28, February 28,
($000s, except percentages)
2007 2007
----------- ---------

Revenue $57,026 $111,097

Operating costs 37,238 72,978

Operating income before amortization 19,788 38,119

Operating margin 34.7% 34.3%


Revenue

Revenue for the second quarter and the first six months of fiscal 2007 amounted to $57 million and $111.1 million respectively, which is slightly higher than management's expectations, even when excluding the impact of the average exchange rate of the euro compared to the Canadian dollar. The average exchange rate used to convert the operating results of the foreign subsidiaries was $1.5146 per euro for the second quarter of fiscal 2007 and $1.4818 per euro for the first six month period compared to $1.45 per euro as per management's revised projections last January. Monthly rate increases of at most $3 (EUR2) per HSI and Telephony customer, averaging $1 per basic customer, took effect on November 1, 2006.

Operating costs

For the second quarter and the first six months, operating costs amounted to $37.2 million and to $73 million, which is lower than management's expectations.

Operating income before amortization

For the second quarter and the first six months of fiscal 2007, operating income before amortization stood at $19.8 million and $38.1 million respectively, which is better-than-projected, even when excluding the favourable impact of the average exchange rate. The operating margin for the Portuguese operations stood at 34.7% in the second quarter of fiscal 2007, which is an improvement compared to 33.9% in the first quarter of the same fiscal year. The operating margin for the first six months stood at 34.3%.

FISCAL 2007 FINANCIAL GUIDELINES

Given the improved performance of the Corporation during the first six months of fiscal 2007, management has revised upward its guidelines for the fiscal year 2007 to reflect rate increases in Canada and in Portugal, the strengthening of the euro currency over the Canadian dollar, the impact of the share issuance, the repayment of long-term debt and the reduction of financial expense.

Subsequent to these adjustments, projected revenue, operating income before amortization and net income were revised upward, operating margin should increase to about 39% and financial expense should decrease following the repayment of long-term debt. The increase in projected revenue should come essentially from the Canadian operations mainly due to the strong RGU growth during the first six months of fiscal 2007 as well as rate increases of $3 per Digital Television customer, representing approximately $1 per basic service customer, effective in March 2007 in Ontario and in April 2007 in Quebec. Furthermore, Analog Value Pack rate will also increase by $1.50 per customer in April 2007 in Ontario. For the Portuguese operations, rate increases of approximately EUR0.65 (CDN$1) per basic service customer were implemented effective in March 2007. These rate increases should generate approximately $6.8 million of additional revenue during the current fiscal year. The revised guidelines reflect the improvement of the euro currency compared to the Canadian dollar and as a result, for guideline purposes, the euro is converted at an average rate of $1.50 per euro while the Corporation was using an average rate of $1.45 per euro last January.

Management is also raising its guidance for capital expenditures and deferred charges from $255 million to $260 million to increase the capacity of its infrastructure to sustain growth. The Corporation should generate free cash flow of $15 million and projected net income should stand at about $60 million.

In furtherance of its existing line of business and external growth strategy, the Corporation may investigate further cable system acquisition opportunities, including cable systems located outside Canada over time.



Consolidated

($ million, except Revised Projections Revised Projections
customer data) April 11, 2007 January 10, 2007
Fiscal 2007 Fiscal 2007
----------------------------------------
Financial Guidelines
Revenue 945 925
Operating income before
amortization 365 355
Operating margin About 39% About 38%
Financial expense 85 87
Amortization 192 192
Net income 60 48
Capital expenditures and
deferred charges 260 255
Free cash flow 15 10 to 15

Customer Addition Guidelines
Basic service 37,000 to 40,000 37,000 to 40,000
HSI service 85,000 to 90,000 85,000 to 90,000
Digital Television service 60,000 to 65,000 60,000 to 65,000
Telephony service 105,000 to 110,000 105,000 to 110,000
RGUs 287,000 to 305,000 287,000 to 305,000

Canadian operations
Revised Projections Revised Projections
($ million, except April 11, 2007 January 10, 2007
customer data) Fiscal 2007 Fiscal 2007
----------------------------------------
Financial Guidelines
Revenue 713 701
Operating income before
amortization 286 280
Operating margin About 40% About 40%
Capital expenditures and
deferred charges 215 210

Customer Addition Guidelines
Basic service 12,000 to 15,000 12,000 to 15,000
HSI service 60,000 to 65,000 60,000 to 65,000
Digital Television service 60,000 to 65,000 60,000 to 65,000
Telephony service 80,000 to 85,000 80,000 to 85,000
RGUs 212,000 to 230,000 212,000 to 230,000

Portuguese operations
Revised Projections Revised Projections
($ million, except April 11, 2007 January 10, 2007
customer data) Fiscal 2007 Fiscal 2007
----------------------------------------

Financial Guidelines
Revenue 232 224
Operating income before
amortization 79 75
Operating margin About 34% About 33%
Capital expenditures and
deferred charges 45 45

Customer Addition Guidelines
Basic service 25,000 25,000
HSI service 25,000 25,000
Telephony service 25,000 25,000
RGUs 75,000 75,000

The exchange rate used for April 2007 projections is $1.50 per euro
compared to $1.45 per euro for January 2007 projections.


UNCERTAINTIES AND MAIN RISK FACTORS

There has been no significant change in the risk factors and uncertainties facing Cogeco Cable as described in the Corporation's MD&A of the 2006 annual report.

ACCOUNTING POLICIES AND ESTIMATES

There has been no significant change in Cogeco Cable's accounting policies and estimates and future accounting pronouncements since August 31, 2006. A description of these policies and estimates can be found in the Corporation's 2006 annual MD&A.

NON-GAAP FINANCIAL MEASURES

This section describes Non-GAAP financial measures used by Cogeco Cable throughout this MD&A. It also provides reconciliations between these Non-GAAP measures and the most comparable GAAP financial measures. These financial measures do not have standard definitions prescribed by Canadian GAAP and may not be comparable with similar measures presented by other companies. These measures include "cash flow from operations" and "free cash flow".

Cash flow from operations

Cash flow from operations is used by Cogeco Cable's management and investors to evaluate cash flow generated by operating activities excluding the impact of changes in non-cash operating items. This allows the Corporation to isolate the cash flow from operating activities from the impact of cash management decisions. Cash flow from operations is subsequently used in calculating the Non-GAAP measure, "free cash flow". Cash flow from operations is calculated as follows:



Quarters ended Six months ended
February 28, February 28,
($ 000) 2007 2006 2007 2006
-------- ---------- -------- ----------
Cash flow from operating
activities $55,657 $42,415 $45,808 $43,017
Changes in non-cash
operating
items 6,607 2,525 78,516 45,312
-------- ---------- -------- ----------
Cash flow from operations $62,264 $44,940 $124,324 $88,329
-------- ---------- -------- ----------
-------- ---------- -------- ----------

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. Free cash flow is calculated as follows:

Quarters ended Six months ended
February 28, February 28,
($ 000) 2007 2006 2007 2006
----------- --------- ---------- ---------
Cash flow from
operations $62,264 $44,940 $124,324 $88,329
Acquisition of fixed
assets (44,771) (34,265) (111,737) (64,278)
Increase in deferred
charges (6,046) (3,784) (13,258) (7,449)
Assets acquired under
capital leases -- as per
Note 10 b) (2,027) (1,431) (2,232) (1,431)
----------- --------- ---------- ---------
Free cash flow $9,420 $5,460 $(2,903) $15,171
----------- --------- ---------- ---------
----------- --------- ---------- ---------


ADDITIONAL INFORMATION

This MD&A was prepared on April 11, 2007. 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 (www.cogeco.ca), a telecommunications company offering a diverse range of services to its customers in Canada and in Portugal, is the second largest cable operator in Ontario, Quebec and Portugal, in terms of the number of basic cable service customers served. The Corporation invests in state-of-the-art broadband network facilities, delivers a wide range of services over these facilities with great speed and reliability at attractive prices, and strives to provide both superior customer care and growing profitability to satisfy its customers' varied electronic communication needs. Through its two-way broadband cable networks, Cogeco Cable provides its residential and commercial customers with analog and digital video and audio services, high speed Internet access as well as telephony services. The Corporation provides about 1,713,000 revenue-generating units (RGUs) to approximately 1,448,000 homes passed in its Canadian service territory and about 671,000 RGUs to approximately 835,000 homes passed in its Portuguese service territory. Cogeco Cable's subordinate voting shares are listed on the Toronto Stock Exchange (CCA).



Analyst Conference Call: Thursday, April 12, 2007 at 11:00 a.m. (EST)
Media representatives may attend as listeners
only.

Please use the following dial-in number to
have access to the Conference call by
dialling 10 minutes before the start of the
Conference:

Canada/USA Access Number: 1 800 967-7134
International Access Number: +1 719 457-2625
Confirmation Code: 8541008
By Internet at: www.cogeco.ca/investors

A rebroadcast of the conference call will be
available until April 26, 2007
by dialling:
Canada and USA access number: 1 888 203-1112
International access number: + 1 719 457-0820
Confirmation code: 8541008



Supplementary Quarterly Financial Information

Quarters ended February 28, November 30,
2007(1) 2006 2006(1) 2005
-------------------- ------------------
($000, except percentages
and per share data)

Revenue $231,952 $147,757 $222,002 $143,413
Operating income before
amortization 86,791 59,568 83,662 57,302
Operating margin 37.4% 40.3% 37.7% 40.05
Amortization 43,572 28,656 44,309 28,277
Financial expense 23,551 13,776 21,221 13,582
Income taxes 4,261 6,936 5,597 6,445
Net income 15,407 10,200 12,535 8,998

Cash flow from operations 62,264 44,940 62,060 43,389

Net income per share $0.37 $0.26 $0.31 $0.23


Quarters ended August 31, May 31,
2006(1) 2005 2006 2005
------------------ -----------------
($000, except percentages
and per share data)

Revenue $174,875 $140,178 $153,956 $140,071
Operating income before
amortization 72,864 60,720 63,244 58,310
Operating margin 41.7% 43.3% 41.1% 41.6%
Amortization 34,801 29,460 29,048 31,396
Financial expense 16,374 14,004 13,634 13,954
Income taxes (12,298) 6,220 8,191 4,715
Net income 33,987 11,036 12,371 8,245

Cash flow from operations 56,714 46,509 49,696 43,562

Net income per share $0.85 $0.28 $0.31 $0.21

(1) Include operating results of Cabovisao since the date of acquisition
of control on August 1, 2006.


Cogeco Cable's operating results are not generally subject to material seasonal fluctuations. However, the loss of basic service customers is usually greater, and the addition of HSI customers is generally lower in the third quarter, mainly due to students leaving campuses at the end of the school year. Cogeco Cable offers its services in several university and college towns such as Kingston, Windsor, St.Catharines, Hamilton, Peterborough, Trois-Rivieres and Rimouski. Furthermore, the third and fourth quarters' operating margin is usually higher as lower or no 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.



COGECO CABLE INC.
Customer Statistics
February 28, August 31,
2007 2006
-------------------------------------------------------------------------
Homes Passed
Ontario (1) 968 455 1 002 187
Quebec 479 818 474 717
---------------------------
Canada 1 448 273 1 476 904
Portugal 835 461 826 369
---------------------------
Total 2 283 734 2 303 273
---------------------------
---------------------------

Revenue Generating Units
Ontario 1 212 796 1 104 157
Quebec 500 288 451 779
---------------------------
Canada 1 713 084 1 555 936
Portugal 670 571 629 041
---------------------------
Total 2 383 655 2 184 977
---------------------------
---------------------------

Basic Service Customers
Ontario 603 077 587 289
Quebec 251 617 245 888
---------------------------
Canada 854 694 833 177
Portugal 283 553 269 694
---------------------------
Total 1 138 247 1 102 871
---------------------------
---------------------------

Discretionnary Service Customers
Ontario 473 010 463 783
Quebec 200 537 192 895
---------------------------
Canada 673 547 656 678
Portugal - -
---------------------------
Total 673 547 656 678
---------------------------
---------------------------

Pay TV Service Customers
Ontario 88 756 84 425
Quebec 42 241 38 455
---------------------------
Canada 130 997 122 880
Portugal 53 926 54 089
---------------------------
Total 184 923 176 969
---------------------------
---------------------------

High Speed Internet Service Customers
Ontario 303 471 269 328
Quebec 88 972 73 752
---------------------------
Canada 392 443 343 080
Portugal 151 663 136 278
---------------------------
Total 544 106 479 358
---------------------------
---------------------------

Digital Video Service Customers
Ontario 235 424 213 556
Quebec 127 125 113 808
---------------------------
Canada 362 549 327 364
Portugal - -
---------------------------
Total 362 549 327 364
---------------------------
---------------------------

Telephony Service Customers
Ontario 70 824 33 984
Quebec 32 574 18 331
---------------------------
Canada 103 398 52 315
Portugal 235 355 223 069
---------------------------
Total 338 753 275 384
---------------------------
---------------------------

(1) An audit of homes passed in Ontario has been completed during the
first quarter of fiscal 2007 and, as a result, the number of homes
passed has been reduced by 42,386


COGECO CABLE INC.
CONSOLIDATED STATEMENTS OF INCOME

Three months ended Six months ended
February 28, February 28,
--------------------------------------------------------------------------
(In thousands of
dollars, except per
share data) 2007 2006 2007 2006
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)

Revenue
Service $230,870 $147,172 $451,984 $289,931
Equipment 1,082 585 1,970 1,239
--------------------------------------------------------------------------
231,952 147,757 453,954 291,170

Operating costs 141,033 85,232 274,933 168,475
Management fees --
COGECO Inc. 4,128 2,957 8,568 5,825
--------------------------------------------------------------------------

Operating income
before amortization 86,791 59,568 170,453 116,870
Amortization (note 3) 43,572 28,656 87,881 56,933
--------------------------------------------------------------------------

Operating income 43,219 30,912 82,572 59,937
Financial expense
(note 7) 23,551 13,776 44,772 27,358
--------------------------------------------------------------------------

Income before income
taxes 19,668 17,136 37,800 32,579
Income taxes (note 4) 4,261 6,936 9,858 13,381
--------------------------------------------------------------------------

Net income $15,407 $10,200 $27,942 $19,198
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Earnings per share
(note 5)
Basic $0.37 $0.26 $0.69 $0.48
Diluted 0.37 0.25 0.68 0.48
--------------------------------------------------------------------------
--------------------------------------------------------------------------



COGECO CABLE INC.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS

Six months ended February 28,
--------------------------------------------------------------------------
(In thousands of dollars) 2007 2006
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(unaudited) (unaudited)

Balance at beginning $117,760 $58,604

Net income 27,942 19,198

Subordinate voting shares issue costs, net of
related income taxes of $2,553 (5,713) -

Dividends on multiple voting shares (1,569) (1,256)

Dividends on subordinate voting shares (2,434) (1,944)
--------------------------------------------------------------------------

Balance at end $135,986 $74,602
--------------------------------------------------------------------------
--------------------------------------------------------------------------



COGECO CABLE INC.
CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------
February 28, August 31,
(In thousands of dollars) 2007 2006
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(unaudited) (audited)
Assets
Current
Cash and cash equivalents $39,511 $71,516
Restricted cash 526 569
Accounts receivable 57,830 43,728
Income tax receivable 3,092 -
Prepaid expenses 5,957 6,265
--------------------------------------------------------------------------
106,916 122,078
--------------------------------------------------------------------------

Income tax receivable 1,277 -
Fixed assets 1,084,918 1,021,538
Deferred charges 49,281 47,327
Customer base (note 6) 989,552 989,552
Preliminary goodwill (note 6) 454,884 422,108
--------------------------------------------------------------------------
$2,686,828 $2,602,603
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Liabilities and Shareholders' equity
Liabilities
Current
Accounts payable and accrued liabilities $224,575 $283,087
Income tax liabilities 850 444
Deferred and prepaid income 28,032 26,652
Current portion of long-term debt (note 7) 38,031 126,851
--------------------------------------------------------------------------
291,488 437,034
--------------------------------------------------------------------------

Long-term debt (note 7) 1,184,745 1,190,126
Deferred and prepaid income 11,713 10,525
Pension plan liabilities and accrued
employees benefits 2,709 2,091
Future income tax liabilities 219,046 217,636
--------------------------------------------------------------------------
1,709,701 1,857,412
--------------------------------------------------------------------------

Shareholders' equity
Capital stock (note 8) 827,997 630,458
Contributed surplus -- stock-based
compensation 1,708 1,425
Retained earnings 135,986 117,760
Foreign currency translation adjustment (note 9) 11,436 (4,452)
--------------------------------------------------------------------------
977,127 745,191
--------------------------------------------------------------------------
$2,686,828 $2,602,603
--------------------------------------------------------------------------
--------------------------------------------------------------------------


COGECO CABLE INC.
CONSOLIDATED STATEMENTS OF CASH FLOW

Three months ended Six months ended
February 28, February 28,
--------------------------------------------------------------------------
(In thousands of
dollars) 2007 2006 2007 2006
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
Cash flow from
operating activities
Net income $15,407 $10,200 $27,942 $19,198
Items not
affecting
cash and cash
equivalents
Amortization (note 3) 43,572 28,656 87,881 56,933
Amortization of
deferred
financing costs 535 240 1,181 481
Future income
taxes (note 4) 1,763 5,523 5,674 11,143
Other 987 321 1,646 574
--------------------------------------------------------------------------
62,264 44,940 124,324 88,329
Changes in
non-cash
operating items
(note 10a)) (6,607) (2,525) (78,516) (45,312)
--------------------------------------------------------------------------
55,657 42,415 45,808 43,017
--------------------------------------------------------------------------

Cash flow from
investing
activities
Acquisition of
fixed
assets (note 10b)) (44,771) (34,265) (111,737) (64,278)
Increase in
deferred
charges (6,046) (3,784) (13,258) (7,449)
Decrease
(increase) in
restricted cash (3) (20,322) 88 (20,322)
Costs related to
business acquisition (1,385) - (1,385) -
Other 22 8 39 8
--------------------------------------------------------------------------
(52,183) (58,363) (126,253) (92,041)
--------------------------------------------------------------------------

Cash flow from
financing activities
Increase
(decrease) in
bank indebtedness (29,322) 7,128 - 22,774
Increase in
long-term debt - - - 30,000
Repayment of
long-term debt (141,217) (10,429) (139,472) (777)
Issue of
subordinate
voting shares 196,693 166 196,921 166
Subordinate
voting shares
issue costs (8,266) - (8,266) -
Dividends on
multiple voting
shares (941) (628) (1,569) (1,256)
Dividends on
subordinate
voting shares (1,462) (972) (2,434) (1,944)
--------------------------------------------------------------------------
15,485 (4,735) 45,180 48,963
--------------------------------------------------------------------------

Net change in
cash and cash
equivalents 18,959 (20,683) (35,265) (61)
Effect of
exchange
rate changes on
cash and cash
equivalents
denominated in
foreign currencies 1,644 - 3,260 -
Cash and cash
equivalents at
beginning 18,908 20,683 71,516 61
--------------------------------------------------------------------------
Cash and cash
equivalents at end $39,511 - $39,511 -
--------------------------------------------------------------------------
--------------------------------------------------------------------------

See supplemental cash flow information in note 10.


Notes to Consolidated Financial Statements
February 28, 2007
(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 February 28, 2007 and August 31, 2006 as well as its results of operations and its cash flow for the three and the six month periods ended February 28, 2007 and 2006.

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 for the year ended August 31, 2006. These unaudited interim consolidated financial statements follow the same accounting policies as the most recent annual consolidated financial statements.

2. Segmented Information

The Corporation's activities are comprised of cable, high-speed Internet access and telephony services. The Corporation considers its cable distribution, high-speed Internet access and telephony activities as a single operating segment. The Corporation's activities are carried out in Canada and in Portugal.

The Portugal segment includes operating results since the date of the acquisition of control on August 1, 2006.

The principal financial information per business segment is presented in the tables below:



Canada Portugal
-----------------------------------------------------------------------
Three months ended
February 28,
(unaudited) 2007 2006 2007 2006
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Revenue $174,926 $147,757 $57,026 -
Operating costs 103,795 85,232 37,238 -
Management fees 4,128 2,957 - -
Operating income
before
amortization 67,003 59,568 19,788 -
Amortization 31,063 28,656 12,509 -
Operating income 35,940 30,912 7,279 -
Financial expense 23,301 13,776 250 -
Income taxes 3,239 6,936 1,022 -
Net income 9,400 10,200 6,007 -
-----------------------------------------------------------------------
Net assets
employed
(1)(2) $1,730,822 $1,649,631 $652,175 $561,192
Total assets (2) 1,871,921 1,842,312 814,907 760,291
Fixed assets (2) 781,958 741,024 302,960 280,514
Preliminary
goodwill (2) - - 454,884 422,108
Acquisition of
fixed assets 35,990 35,696 10,808 -
-----------------------------------------------------------------------
-----------------------------------------------------------------------



Consolidated
-----------------------------------------------------------------------
Three months ended
February 28,
(unaudited) 2007 2006
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Revenue $231,952 $147,757
Operating costs 141,033 85,232
Management fees 4,128 2,957
Operating income before
amortization 86,791 59,568
Amortization 43,572 28,656
Operating income 43,219 30,912
Financial expense 23,551 13,776
Income taxes 4,261 6,936
Net income 15,407 10,200
-----------------------------------------------------------------------
Net assets
employed
(1) (2) $2,382,997 $2,210,823
Total assets (2) 2,686,828 2,602,603
Fixed assets (2) 1,084,918 1,021,538
Preliminary goodwill (2) 454,884 422,108
Acquisition of fixed
assets 46,798 35,696
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(1) Total assets less cash and cash equivalents, accounts payable and
accrued liabilities, and deferred and prepaid income.
(2) As at February 28, 2007 and August 31, 2006.


Canada Portugal
-----------------------------------------------------------------------
Six months ended
February 28,
(unaudited) 2007 2006 2007 2006
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Revenue $342,857 $291,170 $111,097 -
Operating costs 201,955 168,475 72,978 -
Management fees 8,568 5,825 - -
Operating income
before
amortization 132,334 116,870 38,119 -
Amortization 62,767 56,933 25,114 -
Operating income 69,567 59,937 13,005 -
Financial expense 45,065 27,358 (293) -
Income taxes 7,457 13,381 2,401 -
Net income 17,045 19,198 10,897 -
---------------------------------------------------------------------
Net assets
employed(1)(2) $1,730,822 $1,649,631 $652,175 $561,192
Total assets(2) 1,871,921 1,842,312 814,907 760,291
Fixed assets(2) 781,958 741,024 302,960 280,514
Preliminary
goodwill (2) - - 454,884 422,108
Acquisition of
fixed assets 93,578 65,709 20,391 -
-----------------------------------------------------------------------



Consolidated
-----------------------------------------------------------------------
Six months ended February 28,
(unaudited) 2007 2006
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Revenue $453,954 $291,170
Operating costs 274,933 168,475
Management fees 8,568 5,825
Operating income before
amortization 170,453 116,870
Amortization 87,881 56,933
Operating income 82,572 59,937
Financial expense 44,772 27,358
Income taxes 9,858 13,381
Net income 27,942 19,198
-----------------------------------------------------------------------
Net assets employed (1) (2) $2,382,997 $2,210,823
Total assets (2) 2,686,828 2,602,603
Fixed assets (2) 1,084,918 1,021,538
Preliminary goodwill (2) 454,884 422,108
Acquisition of fixed assets 113,969 65,709
-----------------------------------------------------------------------

(1) Total assets less cash and cash equivalents, accounts payable and
accrued liabilities, and deferred and prepaid income.
(2) As at February 28, 2007 and August 31, 2006.


3. Amortization

Three months ended Six months ended
February 28, February 28,
-----------------------------------------------------------------------
2007 2006 2007 2006
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)

Fixed assets $38,495 $23,479 $77,758 $46,428

Deferred charges 5,077 5,177 10,123 10,505
-----------------------------------------------------------------------
$43,572 $28,656 $87,881 $56,933
-----------------------------------------------------------------------
-----------------------------------------------------------------------


4. Income Taxes

Three months ended Six months ended
February 28, February 28,
-----------------------------------------------------------------------
2007 2006 2007 2006
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)

Current $2,498 $1,413 $4,184 $2,238

Future 1,763 5,523 5,674 11,143
-----------------------------------------------------------------------
$4,261 $6,936 $9,858 $13,381
-----------------------------------------------------------------------
-----------------------------------------------------------------------

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


Three months ended Six months ended
February 28, February 28,
-----------------------------------------------------------------------
2007 2006 2007 2006
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)

Income before
income taxes $19,668 $17,136 $37,800 $32,579

Combined income
tax rate 34.80 % 35.09 % 34.96 % 35.09 %

Income taxes at
combined income
tax rate $6,844 $6,013 $13,215 $11,432

Loss or income
subject to lower
or higher tax rates 284 100 234 92

Increase in
income taxes as
a result of
increase in
substantially
enacted tax
rates - - - 162

Large corporation
tax - 795 - 1,620

Effect of
foreign income
tax rate
differences (1,425) - (2,249) -

Benefit related
to prior years'
minimum income
tax paid (1,475) - (1,475) -

Other 33 28 133 75
-----------------------------------------------------------------------
Income taxes at
effective income
tax rate $4,261 $6,936 $9,858 $13,381
-----------------------------------------------------------------------
-----------------------------------------------------------------------


5. Earnings per Share

The following table provides a reconciliation between basic and diluted
earnings per share:


Three months ended Six months ended
February 28, February 28,
-----------------------------------------------------------------------
2007 2006 2007 2006
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)

Net income $15,407 $10,200 $27,942 $19,198

Weighted average
number of
multiple voting
and subordinate
voting shares
outstanding 41,562,381 39,989,807 40,778,102 39,987,182

Effect of
dilutive
stock
options (1) 342,020 162,319 283,161 178,767
-----------------------------------------------------------------------
Weighted average
number of diluted
multiple voting
and subordinate
voting shares
outstanding 41,904,401 40,152,126 41,061,263 40,165,949
-----------------------------------------------------------------------

Earnings per share

Basic $0.37 $0.26 $0.69 $0.48

Diluted 0.37 0.25 0.68 0.48
-----------------------------------------------------------------------
-----------------------------------------------------------------------

(1) For the three and six month periods ended February 28, 2007, 1,082
and 71,411 stock options (143,248 in 2006) were excluded from the
calculation of diluted earnings per share since the exercise price of
the options was greater than the average share price of the
subordinate voting shares.


6. Customer Base and Preliminary Goodwill

-----------------------------------------------------------------------
Customer Preliminary
base goodwill
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(unaudited) (unaudited)

Balance as at August 31, 2006 $989,552 $422,108

Adjustment to the purchase price - (5,955)

Foreign currency translation adjustment - 38,731
-----------------------------------------------------------------------
Balance as at February 28, 2007 $989,552 $454,884
-----------------------------------------------------------------------
-----------------------------------------------------------------------


On March 9, 2007, the Corporation and Cable Satisfaction International Inc. came to an agreement for a final adjustment to the working capital which was outstanding since the date of acquisition. According to the agreement, the Corporation has recorded an account receivable of an amount of 2,194,000 euros which was received on March 16, 2007 and as a result, the purchase price was reduced accordingly. The remaining adjustment to the purchase price is due to the reevaluation of costs related to the acquisition of Cabovisao--Televisao por Cabo, S.A. ("Cabovisao").

In addition, as mentioned in the Corporation's 2006 annual consolidated financial statements, management is currently carrying out a more specific analysis and changes will be made to the allocation of the excess of consideration over net assets acquired as the information becomes available. For example, since the measurement of the fair value of fixed assets had not yet been completed at the time of the preliminary allocation, fixed assets have been presented at cost. The measurement of indefinite and finite-lived intangible assets is also under way. Furthermore, in accordance with the Portuguese Companies Income Tax Code, accumulated tax losses cannot be deducted if the ownership of at least 50% of the social capital changes from the moment when the tax losses were generated, unless an authorization is granted before such change in the ownership takes place. To this effect, a request for preservation of tax losses was filed by Cabovisao on July 28, 2006. These losses have not been included in the preliminary purchase price allocation. As a result, the actual amounts allocated to the identifiable assets acquired and liabilities assumed and the related operating results will vary according to the amounts initially recorded, and such differences could be significant.



7. Long-Term Debt

-----------------------------------------------------------------------
Interest February 28, August 31,
Maturity rate 2007 2006
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(unaudited) (audited)
Parent company

Term Facility

Term loan 2011 5.46 (1) $150,000 $150,000

Term loan -
euros 17,358,700 2011 4.94 (1) 26,869 24,573

Revolving loan
Euro currency -
euros 284,500,000
(euros 317,000,000
as at August
31, 2006) 2011 4.94 (1) 440,378 448,745

Senior Secured
Debentures Series 1 2009 6.75 150,000 150,000

Senior -
Secured Notes

Series A --
US $150 million 2008 6.83 (2) 175,470 165,795

Series B 2011 7.73 175,000 175,000

Second Secured
Debentures Series A 2007 (3) 8.44 35,743 125,000

Deferred credit (4) 2008 - 63,180 72,855

Subsidiaries

Obligations under
capital leases 2010 6.32 - 8.18 6,136 5,009
-----------------------------------------------------------------------
1,222,776 1,316,977

Less: current portion 38,031 126,851
-----------------------------------------------------------------------
$1,184,745 $1,190,126
-----------------------------------------------------------------------
-----------------------------------------------------------------------

(1) Average interest rate on debt as at February 28, 2007, 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) On February 2, 2007, the Corporation gave a notice of redemption to
purchase on March 5, 2007 all of its 8.44% Second Secured Debentures
Series A (the "Notes") in the aggregate principal amount of
$125,000,000. Concurrently, the Corporation also made an offer to
purchase for cancellation on February 12, 2007, all of the validly
issued and held Notes upon receipt by the Trustee of a written notice
of acceptance by the holders of Notes. As a result, a total of
$89,257,000 of Notes were redeemed on February 12, 2007, for a total
cash consideration of $91,038,000. The remaining Notes of $35,743,000
were redeemed on March 5, 2007, for a total cash consideration of
$36,550,000. The excess of the redemption price over the aggregate
principal amount was recorded as financial expense.

(4) The deferred credit represents the amount which would have been
payable as at February 28, 2007 and August 31, 2006 under cross-
currency swaps entered into by the Corporation to hedge Senior Secured
Notes Series A denominated in US dollars.


Interest on long-term debt for the three and six month periods ended February 28, 2007 amounted to $22,333,000 and $42,579,000 ($13,253,000 and $26,301,000 in 2006).

8. 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, could be issued in series.

Multiple voting shares, 10 votes per share.

Subordinate voting shares, 1 vote per share.



-----------------------------------------------------------------------
February 28, August 31,
2007 2006
-----------------------------------------------------------------------
(unaudited) (audited)
Issued

15,691,100 multiple voting shares $98,346 $98,346

29,547,444 subordinate voting shares
(24,308,112 as at August 31, 2006) 729,651 532,112
-----------------------------------------------------------------------
$827,997 $630,458
-----------------------------------------------------------------------
-----------------------------------------------------------------------

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

Six months Twelve months
ended ended
-----------------------------------------------------------------------
February 28, August 31,
2007 2006
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(unaudited) (audited)
-----------------------------------------------------------------------
Number of Number of
shares Amount shares Amount
-----------------------------------------------------------------------
Balance at
beginning 24,308,112 $532,112 24,293,486 $531,874

Shares issue
for cash
consideration 5,000,000 192,500 - -

Shares issued
for cash under
the Employee
Stock Purchase
Plan and the
Stock Option
Plan 239,332 4,421 14,626 228

Compensation
expense
previously
recorded in
contributed
surplus for
options
exercised - 618 - 10
-----------------------------------------------------------------------
Balance at
end 29,547,444 $729,651 24,308,112 $532,112
-----------------------------------------------------------------------
-----------------------------------------------------------------------


On February 2, 2007, the Corporation issued 5,000,000 subordinate voting shares for a total consideration of $192,500,000. Proceeds of this offering, net of issue costs, amounted to $184,234,000.

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 Corporation's annual consolidated financial statements. During the first six months, the Corporation granted 200,874 stock options (126,059 in 2006) with an exercise price of $26.63 to $33.12 ($25.12 to $29.05 in 2006) of which 57,247 stock options (31,743 in 2006) were granted to COGECO Inc.'s employees. The Corporation also granted 376,000 conditional stock options with an exercise price of $26.63 of which 262,400 stock options were granted to COGECO Inc.'s employees. These options vest over a period of three years beginning one year after the day such options are granted and are exercisable over ten years. The vesting of these options is conditional to the achievement of certain yearly financial objectives by the Portuguese subsidiary, Cabovisao-Televisao por Cabo, S.A., over a period of three years. The Corporation records compensation expense for options granted on or after September 1, 2003. As a result, a compensation expense of $640,000 and $901,000 ($203,000 and $366,000 in 2006) was recorded for the three and six month periods ended February 28, 2007. If compensation expense 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 and earnings per share for the three and six month periods ended February 28, 2006 would have been reduced to the following pro forma amounts:



Three months Six months
ended ended
-----------------------------------------------------------------------
February 28, February 28,
2006 2006
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(unaudited) (unaudited)
Net income

As reported $10,200 $19,198

Pro forma 10,180 19,158

Basic earnings per share

As reported $0.26 $0.48

Pro forma 0.25 0.48

Diluted earnings per share

As reported $0.25 0.48

Pro forma 0.25 0.48
-----------------------------------------------------------------------
-----------------------------------------------------------------------

The fair value of stock options granted for the six month period ended
February 28, 2007 was $7.38 ($9.44 in 2006) per option. The fair value of
each option granted was estimated at the grant date for purposes of
determining stock-based compensation expense using the Binomial option
pricing model based on the following assumptions:

-----------------------------------------------------------------------
2007 2006
-----------------------------------------------------------------------
Expected dividend yield 1.27 % 1.27 %
Expected volatility 32 % 39 %
Risk-free interest rate 4.05 % 3.70 %
Expected life in years 4.0 4.0
-----------------------------------------------------------------------


As at February 28, 2007, the Corporation had outstanding stock options providing for the subscription of 1,058,144 subordinate voting shares. These stock options, which include 376,000 conditional stock options, can be exercised at various prices ranging from $7.05 to $40.75 and at various dates up to January 10, 2017.

9. Foreign Currency Translation Adjustment

The change in the foreign currency translation adjustment included in shareholders' equity is the result of the fluctuation in the exchange rates on translation of net investments in self-sustaining foreign operations and foreign exchange gains or losses related to long-term debt denominated in foreign currency used to hedge net investments. The net change in foreign currency translation adjustment is as follows:



Six months Twelve months
ended ended
-----------------------------------------------------------------------
February 28, August 31,
2007 2006
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(unaudited) (audited)
Effect of exchange rate variation on
translation of net investments in self
sustaining foreign subsidiaries $44,646 $(12,412)

Effect of exchange rate variation on
translation of long-term debt designated
as hedge of net investments in
self-sustaining subsidiaries (net of
income taxes of $1,703,000 for the twelve
month period ended August 31, 2006) (33,210) 7,960
-----------------------------------------------------------------------
$11,436 $(4,452)
-----------------------------------------------------------------------
-----------------------------------------------------------------------


10. Statements of Cash Flow

a) Changes in non-cash operating items

Three months ended Six months ended
February 28, February 28,
-----------------------------------------------------------------------
2007 2006 2007 2006
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)

Accounts
receivable $(5,786) $(1,264) $(9,039) $(2,300)

Income tax
receivable (2,672) (221) (4,265) (507)

Prepaid expenses 767 (1,137) 407 (569)

Accounts
payable and
accrued
liabilities 5,409 365 (68,506) (43,183)

Income tax
liabilities (2,933) - 347 (678)

Deferred and
prepaid
income (1,392) (268) 2,540 1,925
-----------------------------------------------------------------------
$(6,607) $(2,525) $(78,516) $(45,312)
-----------------------------------------------------------------------
-----------------------------------------------------------------------


b) Other information

Three months ended Six months ended
February 28, February 28,
-----------------------------------------------------------------------
2007 2006 2007 2006
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)

Fixed asset
acquisitions
through
capital leases $2,027 $1,431 $2,232 $1,431

Interest paid 19,852 11,308 43,984 27,265

Income taxes paid 6,775 1,634 7,664 3,423
-----------------------------------------------------------------------
-----------------------------------------------------------------------


11. Employee 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 plan which are described in the
Corporation's annual consolidated financial statements. The total
expenses related to these plans are as follows:


Three months ended Six months ended
February 28, February 28,
-----------------------------------------------------------------------
2007 2006 2007 2006
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)

Contributory
defined benefit
pension plans $230 $222 $460 $396

Defined
contribution
pension plan
and
collective
registered
retirement
savings plan 497 376 1,025 759
-----------------------------------------------------------------------
$727 $598 $1,485 $1,155
-----------------------------------------------------------------------
-----------------------------------------------------------------------


12. Guarantees

During the second quarter, the Corporation has guaranteed the payment by Cabovisao of certain taxes for municipal rights of way assessed by the Municipality of Seixal in Portugal for the years 2004 and 2005 totalling euros 5.7 million (the "Tax Amounts"), which are currently being challenged by Cabovisao. Trustworthy financial guarantees were required under applicable Portuguese law in order for Cabovisao to challenge the Tax Amounts and withhold payment thereof until a final judgment no longer subject to appeal is rendered by the Portuguese courts having jurisdiction in this matter. As a result, the Corporation may be required to pay, upon written demand by the Municipality of Seixal, the required amounts following final judgment up to a maximum aggregate amount of ?5.7 million, should Cabovisao fail to pay such required amounts.

Contact Information

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