Cogeco Câble inc.
TSX : CCA

April 10, 2006 23:59 ET

Customer growth fuels near doubling of net income

MONTREAL, April 10 - Today, Cogeco Cable Inc. (TSX: CCA.SV)
announced its financial results for the second quarter of fiscal 2006, ended
February 28.

Superior results
----------------

Cogeco Cable's results continue to improve as demonstrated by an
increased number of customers in all major service categories. "We are pleased
with the trend of these results. We have improved our revenue by 6.8%,
operating income before amortization by 7.7% and net income by 81.7%,"
declared Mr. Louis Audet, President and Chief Executive Officer of Cogeco
Cable.

Continued growth in all major service categories
------------------------------------------------

Cogeco Cable reported solid customer growth in all major service
categories. "The number of basic service customers improved from a net loss of
751 to a net gain of 3,505 if we compare the second quarters of 2005 and 2006.
During the quarter, digital video and high-speed Internet (HSI) service
customers grew by about 24,500 and 17,500 customers respectively. Our digital
telephony offering is creating a snowball effect with more customers choosing
the bundled offer of two or three services. We are pleased to see more and
more customers enjoying our services and we are committed to bring them the
products and levels of service they deserve", concluded Mr. Audet.

Adjustment to our guidelines
----------------------------

Given the strong demand for basic, digital video and HSI services during
the first six months and various service enhancements offered recently, Cogeco
Cable has revised its guidelines to reflect the improved expectations of
management.


FINANCIAL HIGHLIGHTS

($000s, except
percentages and Quarters ended Six months ended
per share data) February 28, February 28,
(unaudited) (unaudited)
% %
2006 2005 Change 2006 2005 Change
--------- --------- ------ --------- --------- -------

Revenue $ 147,757 $ 138,389 6.8 $ 291,170 $ 274,155 6.2
Operating
income before
amortization 59,568 55,297 7.7 116,870 108,491 7.7

Net income 10,200 5,613 81.7 19,198 9,440 103.4

Cash flow
from
operations(1) 44,940 41,675 7.8 88,329 80,867 9.2
Less:
Capital
expenditures
and
increase in
deferred
charges 39,480 29,941 31.9 73,158 53,720 36.2
--------- --------- ------ --------- --------- -------
Free cash
flow(1) 5,460 11,734 (53.5) 15,171 27,147 (44.1)

Per share
data
Basic net
income $ 0.26 $ 0.14 85.7 $ 0.48 $ 0.24 100.0

(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.

MANAGEMENT'S DISCUSSION AND ANALYSIS

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" 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 "Uncertainty
and main risk factors" of the Corporation's 2005 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 Annual Report.
Throughout this discussion, all amounts are in Canadian dollars unless
otherwise indicated.

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 of products and services as well
as clientele, effective management of capital and tight cost control. The
Corporation measures its performance with regard to these objectives with
revenue growth, free cash flow and revenue-generating unit(*) (RGU) growth.
Below are the recent achievements in furtherance of Cogeco Cable's objectives.

- Digital video services:
- Addition of Treehouse On Demand and KIDZ On Demand to Cogeco
Cable's Ontario digital video offer, free of charge;
- Addition of the new cinépop channel to Cogeco Cable's Québec
digital video offer.
- Digital telephony service:
- The digital telephony service is now available to 38% of homes
passed in Cogeco Cable's territories;
- Deployment of digital telephony service in Chatham, Georgetown,
Waterdown and Milton, Ontario, and in Rimouski, Matane, Sept-Iles,
Port-Cartier and Baie-Comeau, Québec.
- High-speed Internet service:
- Cogeco Cable more than doubled its download speed for its Lite
product from 300 Kbps to 640 Kbps.
- Acquisition:
- In furtherance of its existing line of business and external
growth strategy, the Corporation continues to investigate cable
system acquisition opportunities, including cable systems located
outside Canada.

RGU growth

During the first six months, the number of RGUs increased by 8.6%. The
Corporation had anticipated RGU growth between 8% and 10% for all of fiscal
2006. Higher than anticipated HSI and digital video customer growth has
allowed Cogeco Cable to exceed the lower range of its objective in the first
six months of the fiscal year. Therefore, management has revised its
guidelines and now believes it will reach RGU growth between 10% and 11%.
Please consult "Fiscal 2006 financial guidelines" section for further details.

Revenue growth

During the first six months, revenue increased by 6.2%. The Corporation
had expected to reach revenue growth between 6% and 7% in fiscal 2006, and now
anticipates revenue growth between 7% and 8%. Please consult "Fiscal 2006
financial guidelines" section for further details.

Free cash flow

In the first six months, Cogeco Cable generated free cash flow of
$15.2 million. In light of the stronger than expected RGU growth in the first
six months of fiscal 2006, capital expenditures and deferred charges are
expected to surpass the $140 million guideline and reach $160 million.
Therefore free cash flow will be approximately $15 million less than the set
objective of $35 million to $40 million. Please consult "Fiscal 2006 financial
guidelines" section for further details.

CUSTOMER STATISTICS

Net additions (losses) % of
Quarters Six months Pene-
ended ended tration(1)
February 28, February 28, February 28,
-------------- --------------- ------------
February
28,
2006 2006 2005 2006 2005 2006 2005
-------- ------ ------ ------- ------ ----- -----
Revenue-
generating
units
(RGUs)(2) 1,463,612 55,109 23,538 115,879 65,897
Basic service
customers 835,841 3,505 (751) 14,408 6,992
HSI service
customers(3) 318,101 17,460 12,137 40,453 29,534 41.9 37.1
Digital video
service
customers(4) 293,166 24,547 12,152 45,962 29,371 35.8 28.5
Digital
telephony
service
customers 16,504 9,597 - 15,056 - 5.7 -
Digital
terminals(5) 372,168 37,299 17,310 68,284 39,152 45.4 34.3

(1) As a percentage of basic service customers in areas served.
(2) Represent the sum of basic service, digital video service, HSI
service and digital telephony service customers.
(3) The number of Internet customers in fiscal 2005 has been restated to
reflect the number of customers based on the billing dates, which are
distributed throughout the month, instead of the number of customers
as at the end of the quarter. This change resulted in a downward
adjustment of approximately 5,500 customers as at February 28, 2005.
Customers subscribing only to Internet services amounted to 59,292 as
at February 28, 2006 compared to 57,051 as at November 30, 2005.
(4) In fiscal 2005, the number of digital video service customers has
been restated to reflect changes brought about by our billing
improvement program, which has allowed us to identify digital video
service customer accounts that were not cancelled when they became
inactive. This change resulted in a downward adjustment of
approximately 6,400 customers as at February 28, 2005 and did not
affect the number of digital terminals.
(5) 58% of terminals as at February 28, 2006 were purchased compared to
74% one year earlier.


During the second quarter, RGU growth was higher than the same period
last year due to an increase in basic and digital telephony customers and
higher growth in HSI and digital video customers.
During the second quarter of fiscal 2006, the number of net additions of
HSI service customers stood at 17,460 compared to 12,137 for the same period
last year, an increase of 43.9%. Basic service customers went from a net loss
of 751 customers in the second quarter of 2005 to a net gain of
3,505 customers for the comparable period this year. These results are mainly
attributable to additional marketing initiatives such as outbound
telemarketing and promotional activities as well as digital telephony up-sell
activities and the bundled offer of three services.
The increase in the number of digital video service customers stems from
Cogeco Cable's attractive promotional offers and from the growing interest for
this technology among customers.
On February 28, 2006, 18,783 customers were subscribing to the digital
telephony service including pending orders compared to 9,115 customers
including pending orders as at November 30, 2005.

ACCOUNTING POLICIES AND ESTIMATES

There has been no significant change in Cogeco Cable's accounting
policies and estimates since August 31, 2005. A description of these policies
and estimates can be found in the Corporation's 2005 annual MD&A.

RELATED PARTY TRANSACTIONS

Cogeco Cable is a subsidiary of COGECO Inc., which holds 39.2% of the
Corporation's equity 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 2006,
management fees have been set at a maximum of $8.4 million. Cogeco Cable
granted 31,743 stock options to COGECO Inc.'s employees during the first
quarter of fiscal 2006, compared to 38,397 in the first quarter of fiscal
2005. The Corporation did not grant any stock options to COGECO Inc.'s
employees during the second quarter of fiscal 2006 and 2005. Further details
regarding the management agreement and stock options granted to COGECO Inc.'s
employees are provided in the Corporation's 2005 annual MD&A. There were no
other material related party transactions during the second quarters and first
six months of fiscal 2006 and 2005.

OPERATING RESULTS

($000s, except Quarters ended Six months ended
percentages) February 28, February 28,
% %
2006 2005 Change 2006 2005 Change
--------- --------- ------ --------- --------- -------

Revenue $ 147,757 $ 138,389 6.8 $ 291,170 $ 274,155 6.2

Operating
costs 85,232 80,328 6.1 168,475 160,185 5.2
Management fees
- COGECO Inc. 2,957 2,764 7.0 5,825 5,479 6.3

Operating income
before
amortization 59,568 55,297 7.7 116,870 108,491 7.7

Operating
margin 40.3% 40.0% 40.1% 39.6%


Revenue

Revenue for the second quarter and first six months of fiscal 2006 rose
by $9.4 million or 6.8% and by $17 million or 6.2% respectively, compared to
the same periods last year. Revenue growth during these periods is mainly
attributable to an increased number of customers in basic, digital video, HSI
and digital telephony services as well as to rate increases implemented in
June and August of 2005. Monthly rate increases of at most $3 per customer and
averaging $0.50 per basic service customer took effect on June 15, 2005 in
Ontario and on August 1, 2005 in Québec. The monthly rate for certain bundled
services has increased by $1 in Ontario, and other limited rate increases for
selective tier services were implemented in Québec. Furthermore, the August
2005 reduction in digital terminal rental rates was more than offset by a
greater number of customers renting digital terminals.

Operating Costs

For the second quarter and first six months of fiscal 2006, operating
costs, excluding management fees payable to COGECO Inc., rose by $4.9 million
or 6.1% and by $8.3 million or 5.2% respectively. Operating costs also include
network fees. Network fees increased by 5.8% and 4.1% during the second
quarter and first six months respectively, compared to the same periods last
year. These increases are mainly the result of the introduction of digital
telephony service, the Canadian Radio-television and Telecommunications
Commission mandated APTN wholesale rate increase and RGU growth, partly offset
by IP transport costs that have declined despite HSI customer growth. Other
operating costs increased in order to serve additional RGUs, including digital
telephony.

Operating Income before Amortization

For the second quarter and first six months of fiscal 2006, operating
income before amortization rose by 7.7% for each period, compared to the same
periods last year due to the increase in revenue outpacing the rise in
operating costs. Cogeco Cable had previously anticipated a reduction in its
operating margin due to the launch of digital telephony service. However, the
Corporation increased its operating margin to 40.3% and 40.1% in the second
quarter and first six months of fiscal 2006 respectively compared to 40% and
39.6% for the same periods last year as a result of better-than-expected net
additions of basic and HSI service customers and of some additional network
maintenance costs deferred to the second half of fiscal 2006.

FIXED CHARGES


($000s, except Quarters ended Six months ended
percentages) February 28, February 28,
% %
2006 2005 Change 2006 2005 Change
--------- --------- ------ --------- --------- -------

Amortization $ 28,656 $ 31,988 (10.4) $ 56,933 $ 64,232 (11.4)

Financial
expense $ 13,776 $ 13,840 (0.5) $ 27,358 $ 27,734 (1.4)


During the second quarter and first six months of fiscal 2006,
amortization amounted to $28.7 million and $ 56.9 million compared to
$32 million and $64.2 million for the same periods last year. Amortization
declined during these periods since many cable modems and digital terminals
were fully amortized.
For the second quarter and first six months of fiscal 2006, financial
expense decreased slightly compared to the same periods last year. This is due
to the lower level of Indebtedness (defined as bank indebtedness and long-term
debt) during these periods partially offset by increases in the short-term
interest rate on the Term Facility.

INCOME TAXES

In the second quarter and first six months of fiscal 2006, income taxes
amounted to $6.9 million and $13.4 million respectively, compared to
$3.9 million and $7.1 million for the same periods last year. The income tax
increases were mainly attributable to the growth in operating income before
amortization combined with the decline in fixed charges.

NET INCOME

Net income for the second quarter amounted to $10.2 million, or $0.26 per
share, compared to $5.6 million, or $0.14 per share, for the same period last
year. For the first half of fiscal 2006, net income amounted to $19.2 million,
or $0.48 per share compared to $9.4 million, or $0.24 per share for the same
period in fiscal 2005. Net income increases in these periods were attributable
to the growth in operating income before amortization combined with the
decline in fixed charges.

CASH FLOW AND LIQUIDITY

Quarters ended Six months ended
($000s) February 28, February 28,
2006 2005 2006 2005
------------ ------------ ------------ -------------
Operating
Activities
Cash flow from
operations $ 44,940 $ 41,675 $ 88,329 $ 80,867
Changes in
non-cash
operating
items (2,525) 10,552 (45,312) (22,454)
------------ ------------ ------------ -------------
$ 42,415 $ 52,227 $ 43,017 $ 58,413
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------

Investing
Activities(1) $ (58,363) $ (29,916) $ (92,041) $ (53,693)
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------

Financing
Activities(1) $ (4,735) $ (22,311) $ 48,963 $ (4,720)
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------
Net change in
cash and cash
equivalent $ (20,683) $ - $ (61) $ -
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------

(1) Excludes assets acquired under capital leases.


During the second quarter of fiscal 2006, cash flow from operations
reached $44.9 million or 7.8% higher than for the comparable period last year
due primarily to the increase in operating income before amortization. Changes
in non-cash operating items generated greater cash outflow than for the same
period last year, mainly as a result of relatively stable accounts payable and
accrued liabilities compared to an increase for the same period in fiscal
2005.
During the first six months of fiscal 2006, cash flow from operations
reached $88.3 million or 9.2% higher than for the same period last year due
primarily to the increase in operating income before amortization. Changes in
non-cash operating items generated greater cash outflow than last year mainly
as a result of a larger decrease in accounts payable and accrued liabilities
caused by increased capital expenditures incurred in late fiscal 2005.
Investing activities, including capital expenditures segmented according
to the National Cable Television Association (NCTA) standard reporting
categories, are as follows:

Quarters ended Six months ended
($000s) February 28, February 28,
2006 2005 2006 2005
------------ ------------ ------------ -------------
Customer Premise
Equipment(1) $ 14,183 $ 15,386 $ 29,606 $ 26,690
Scalable Infra-
structure 6,943 2,801 10,615 5,206
Line Extensions 2,291 1,991 4,843 4,768
Upgrade / Rebuild 9,632 5,938 16,606 10,384
Support Capital 2,647 693 4,039 1,335
------------ ------------ ------------ -------------
Total Capital
Expenditures(2) $ 35,696 $ 26,809 $ 65,709 $ 48,383
------------ ------------ ------------ -------------
Deferred charges
and others 3,776 3,107 7,441 5,310
------------ ------------ ------------ -------------
Increase in
restricted cash 20,322 - 20,322 -
------------ ------------ ------------ -------------
Total investing
activities $ 59,794 $ 29,916 $ 93,472 $ 53,693
------------ ------------ ------------ -------------

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


During the second quarter and first six months of fiscal 2006, the
increase related to capital expenditures is mainly due to the following
factors:

- The decrease in customer premise equipment in the second quarter of
fiscal 2006 results primarily from a decrease in digital terminals and
cable modems partially offset by more home terminal devices related to
the digital telephony service. Cogeco Cable utilized digital terminals
and cable modems that were in inventory at the end of the first
quarter of fiscal 2006 to meet the strong demand of the second
quarter. Fewer digital terminals and cable modems were received from
suppliers during the second quarter of fiscal 2006 as the inventory
level was tightly managed. For the first six months of fiscal 2006,
the increase in customer premise equipment results primarily from a
rise in the number of digital terminals rented to customers and a
greater ratio of digital terminals per digital home.

- The growth in scalable infrastructure is mainly attributable to the
support of the digital telephony rollout.

- Expenditures associated with the network upgrade and rebuild program
rose due to the acceleration of the program to expand the bandwidth to
750 MHz and 550 MHz for the Ontario and Québec networks, respectively,
and to improve network reliability. An increase in the number of
households with access to two-way service was also a factor. The
percentage of customers with access to two-way service rose from 87%
as at February 28, 2005 to 91% as at February 28, 2006.

The second quarter and first six months increases in deferred charges are
explained by higher reconnect costs attributable to the significant level of
RGU increase, which includes the digital telephony customer growth. During the
second quarter and first six months, the $20.3 million increase in restricted
cash is the result of a deposit in escrow. This deposit of 15 million euro was
intended for a potential acquisition within the Corporation's business
segment. The deposit is being returned with accumulated interest thereon.
Free cash flow of $5.5 million and $15.2 million were generated during
the second quarter and first six months of fiscal 2006 respectively as a
result of increased cash flow from operations partly offset by increased
capital expenditures and deferred charges. In the second quarter and first six
months of fiscal 2006, free cash flow declined compared to the same periods
last year. This is attributable to increased capital expenditures and deferred
charges to support digital telephony service and better-than-expected RGU
growth.
During the second quarter, the level of Indebtedness decreased by
$3.3 million mainly due to generated 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. For the same period last year, Indebtedness
declined by $21.8 million essentially due to generated free cash flow of
$11.7 million and an increase of $10.6 million in non-cash operating items. In
addition, a dividend of $0.04 per share for subordinate and multiple voting
shares, totalling $1.6 million, was paid during the second quarter of fiscal
2006 compared to a dividend of $0.02 per share or $0.8 million for the second
quarter of fiscal 2005.
During the first half of fiscal 2006, the level of Indebtedness grew by
$52 million mainly due to generated free cash flow of $15.2 million partly
offset by a decline in non-cash operating items of $45.3 million and an
increase in restricted cash of $20.3 million. For the same period last year,
Indebtedness declined by $3.8 million essentially due to generated free cash
flow of $27.1 million partly offset by a decline in non-cash operating items
of $22.5 million. Dividends totalling $3.2 million were paid during the first
six months of fiscal 2006 compared to $1.6 million for the same period the
year before.
As at February 28, 2006, Cogeco Cable had a working capital deficiency of
$108.8 million compared to $121.5 million as at August 31, 2005. This
improvement is mainly attributable to an increase in restricted cash and a
reduction in the level of accounts payable and accrued liabilities, as
discussed in the Financial Position section, partially offset by an increase
in the current portion of Indebtedness. This increase is explained by a
greater utilization of bank indebtedness and an increase in the current
portion of long-term debt as the Corporation's Term Facility matures in less
than a year. Cogeco Cable maintains a working capital deficiency due to low
accounts receivable since the majority of the Corporation's customers pay
before their services are rendered, unlike accounts payable and accrued
liabilities, which are paid after products or services are rendered.
Additionally, the Corporation generally uses cash and cash equivalents to
reduce Indebtedness.
As at February 28, 2006, the Corporation had utilized $30 million of its
Term Facility. During the second quarter, Cogeco Cable amended its Term
Facility so that the committed amount, which should have been reduced to
$95 million on January 31, 2006, is maintained at its prior level of
$270 million. Based on existing bank covenants, Cogeco Cable could have used
the entire committed amount under the Term Facility. Going forward, Cogeco
Cable expects to generate free cash flow and thus further reduce its leverage
ratio net of cash and cash equivalents.

FINANCIAL POSITION

Since August 31, 2005, there have been major changes to the "Fixed
assets", "Accounts payable and accrued liabilities," "Restricted cash", and
"Indebtedness" items on the balance sheet. The $19.3 million rise in fixed
assets was mainly related to increased capital expenditures as well as lower
amortization expense. Accounts payable and accrued liabilities declined by
$43.2 million as the use of working capital was tightly managed at fiscal 2005
year-end. Restricted cash and Indebtedness increased by $20.3 million and
$53.4 million, respectively, due to the factors previously discussed in the
"Cash Flow and Liquidity" section.
A description of Cogeco Cable's share data as of March 31, 2006 is
presented in the table below:

Number of Amount
shares/options ($000s)
-------------- -------------
Common Shares
Multiple voting shares 15,691,100 98,346
Subordinate voting shares 24,301,634 532,040

Options to Purchase Subordinate
Voting Shares
Outstanding options 716,148
Exercisable options 452,443


In the normal course of business, Cogeco Cable has incurred financial
obligations, primarily in the form of long-term debt, operating and capital
leases and guarantees. Cogeco Cable's obligations have not materially changed
since August 31, 2005 and are described in the 2005 annual MD&A.

DIVIDEND DECLARATION

At its April 7, 2006 meeting, the Board of Directors of Cogeco Cable
declared a quarterly dividend of $0.04 per share for subordinate and multiple
voting shares, payable on May 5, 2006, to shareholders on record on April 21,
2006.

FOREIGN EXCHANGE MANAGEMENT

Cogeco Cable has entered into cross-currency swap agreements to fix the
liability for interest and principal payments on its US$150 million Senior
Secured Notes. These agreements have the effect of converting the US interest
coupon rate of 6.83% per annum to an average Canadian dollar fixed interest
rate of 7.254% per annum. The exchange rate applicable to the principal
portion of the debt has been fixed at CDN$1.5910. Amounts due under the US$150
million Senior Secured Notes Series A decreased by CDN$7.6 million at the end
of the second quarter of fiscal 2006 compared to August 31, 2005 due to the
Canadian dollar's appreciation. Since the Senior Secured Notes Series A are
fully hedged, the fluctuation is fully offset by a variation in deferred
credit described in Note 6 of the second quarter interim financial statements.
The $68.2 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.

FISCAL 2006 FINANCIAL GUIDELINES

($ million, except Revised Projections, Original Projections
customer data) 10-Apr-06 24-Oct-05
---------------------- ---------------------
Financial Guidelines
Revenue 593 to 600 588 to 593
Operating income before
amortization 236 to 240 234 to 236
Operating margin About 40% About 40%
Financial expense 56 56
Amortization 116 115
Net income 40 39
Capital expenditures and
deferred charges 160 140
Free cash flow 20 to 25 35 to 40

Customer Addition Guidelines
Basic service 3,000 to 6,000 0 to 3,000
HSI service 47,000 to 49,000 32,000 to 37,000
Digital video service 59,000 to 62,000 47,000 to 52,000
Digital telephony service 32,000 to 37,000 32,000 to 37,000
Digital terminals 86,000 to 90,000 60,000 to 65,000
RGU 138,000 to 154,000 111,000 to 129,000


Given the stronger than expected demand for basic, digital video and HSI
services during the first six months and various service enhancements offered
recently, Cogeco Cable has revised upward its 2006 guideline for basic,
digital video and HSI customer additions. Subsequent to these adjustments,
projected revenue and operating income before amortization are being revised
upward. The operating margin should remain at about 40% as some additional
network maintenance expenses are expected to be spent during the second half
of fiscal 2006.
As a result of increased customer additions, Cogeco Cable will have to
purchase more digital terminals, cable modems and equipment and is raising its
capital expenditures and deferred charges as well as amortization guidelines
from $140 million to $160 million and $115 million to $116 million
respectively. The Corporation should generate free cash flow of $20 million to
$25 million as a result of higher anticipated operating income before
amortization offset by higher capital expenditures and deferred charges.
Projected net income should be at about $40 million.

RISK FACTORS AND UNCERTAINTIES

There have been no significant changes in the risk factors and
uncertainties facing Cogeco Cable as described in the Corporation's 2005
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
($000) February 28, February 28,
2006 2005 2006 2005
------------ ------------ ------------ -------------
Cash flow from
operating
activities $ 42,415 $ 52,227 $ 43,017 $ 58,413
Changes in non-
cash operating
items 2,525 (10,552) 45,312 22,454
------------ ------------ ------------ -------------
Cash flow from
operations $ 44,940 $ 41,675 $ 88,329 $ 80,867
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------


Free cash flow

Free cash flow is utilized, 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
($000) February 28, February 28,
2006 2005 2006 2005
------------ ------------ ------------ -------------
Cash flow from
operations $ 44,940 $ 41,675 $ 88,329 $ 80,867
Acquisition of
fixed assets (34,265) (26,809) (64,278) (48,383)
Increase in
deferred charges (3,784) (3,132) (7,449) (5,337)
Assets acquired
under capital
leases - as
per Note 8b) (1,431) - (1,431) -
------------ ------------ ------------ -------------
Free cash flow $ 5,460 $ 11,734 $ 15,171 $ 27,147
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------


ADDITIONAL INFORMATION

This MD&A was prepared on April 7, 2006. 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) is the second largest cable operator in both
Ontario and Québec, and ranks fourth in Canada in terms of the number of basic
cable service customers served. Cogeco Cable 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 infrastructure, Cogeco Cable provides its residential and
commercial customers with analog and digital video and audio services, high-
speed Internet access as well as digital telephony service. The Corporation
provides about 1,464,000 revenue-generating units to approximately 1,462,000
households in its service territory. Cogeco Cable's subordinate voting shares
are listed on the Toronto Stock Exchange (CCA.SV).

Analyst Conference Call: Monday April 10, 2006, at 12:30 p.m. EDT
By the Internet at www.cogeco.ca/investors
By telephone: 1 800 500-0311
(confirmation 4638890)
Media are invited to participate on a listen
mode only.
Re-broadcast of the call available until
April 18th: 1 888 203-1112
(confirmation 4638890)

(*) See customer statistics section for detailed explanations.


Supplementary Quarterly Financial Information

Quarters ended February 28, November 30,
-------------------------- ---------------------------
2006 2005 2005 2004
($000, except
percentages and
per share data)
Revenue $ 147,757 $ 138,389 $ 143,413 $ 135,766
Operating income
before
amortization 59,568 55,297 57,302 53,194
Operating margin 40.3% 40.0% 40.0% 39.2%
Amortization 28,656 31,988 28,277 32,244
Financial expense 13,776 13,840 13,582 13,894
Income taxes 6,936 3,856 6,445 3,229
Net income 10,200 5,613 8,998 3,827

Cash flow from
operations 44,940 41,675 43,389 39,192

Net income
per share $ 0.26 $ 0.14 $ 0.23 $ 0.10


Quarters ended August 31, May 31,
-------------------------- ---------------------------
2005 2004 2005 2004
($000, except
percentages and
per share data)
Revenue $ 140,178 $ 133,053 $ 140,071 $ 132,364
Operating income
before
amortization 60,720 54,290 58,310 51,329
Operating margin 43.3% 40.8% 41.6% 38.8%
Amortization 29,460 32,476 31,396 32,070
Financial expense 14,004 13,871 13,954 14,414
Income taxes 6,220 1,474 4,715 2,993
Net income 11,036 6,469 8,245 1,852

Cash flow from
operations 46,509 41,025 43,562 36,593

Net income
per share $ 0.28 $ 0.16 $ 0.21 $ 0.05

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-
Rivières and Rimouski. Furthermore, the fourth quarter's 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. Since the maximum amount was reached early in the
fourth quarter of fiscal 2004 and at the end of the third quarter of fiscal
2005, Cogeco Cable paid lower or no management fees during these quarters.


COGECO CABLE INC.
Customer Statistics
February 28, August 31,
2006 2005
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Homes Passed
Ontario 993,819 986,401
Québec 467,895 462,332
-------------------------------------------------------------------------
1,461,714 1,448,733
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Revenue Generating Units
Ontario 1,047,964 968,749
Québec 415,648 378,984
-------------------------------------------------------------------------
1,463,612 1,347,733
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic Service Customers
Ontario 591,318 581,631
Québec 244,523 239,802
-------------------------------------------------------------------------
835,841 821,433
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Discretionnary Service Customers
Ontario 466,998 461,038
Québec 189,421 183,320
-------------------------------------------------------------------------
656,419 644,358
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Pay TV Service Customers
Ontario 84,187 80,817
Québec 39,240 35,407
-------------------------------------------------------------------------
123,427 116,224
-------------------------------------------------------------------------
-------------------------------------------------------------------------
High Speed Internet Service Customers
Ontario 255,289 226,133
Québec 62,812 51,515
-------------------------------------------------------------------------
318,101 277,648
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Digital Video Customers
Ontario 190,593 159,734
Québec 102,573 87,470
-------------------------------------------------------------------------
293,166 247,204
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Digital Terminals
Ontario 260,268 209,662
Québec 111,900 94,222
-------------------------------------------------------------------------
372,168 303,884
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Digital Telephony
Ontario 10,764 1,251
Québec 5,740 197
-------------------------------------------------------------------------
16,504 1,448
-------------------------------------------------------------------------
-------------------------------------------------------------------------


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) 2006 2005 2006 2005
-------------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
Revenue
Service $ 147,172 $ 137,415 $ 289,931 $ 272,125
Equipment 585 974 1,239 2,030
-------------------------------------------------------------------------
147,757 138,389 291,170 274,155

Operating costs 85,232 80,328 168,475 160,185
Management fees
- COGECO Inc. 2,957 2,764 5,825 5,479
-------------------------------------------------------------------------

Operating income
before
amortization 59,568 55,297 116,870 108,491
Amortization
(note 2) 28,656 31,988 56,933 64,232
-------------------------------------------------------------------------

Operating income 30,912 23,309 59,937 44,259
Financial expense
(note 6) 13,776 13,840 27,358 27,734
-------------------------------------------------------------------------

Income before
income taxes 17,136 9,469 32,579 16,525
Income taxes
(note 3) 6,936 3,856 13,381 7,085

Net income $ 10,200 $ 5,613 $ 19,198 $ 9,440
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Earnings per
share (note 4)
Basic $ 0.26 $ 0.14 $ 0.48 $ 0.24
Diluted 0.25 0.14 0.48 0.24
-------------------------------------------------------------------------
-------------------------------------------------------------------------


COGECO CABLE INC.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS

Six months ended February 28,
-------------------------------------------------------------------------
(In thousands of dollars) 2006 2005
-------------------------------------------------------------------------
(unaudited) (unaudited)

Balance at beginning $ 58,604 $ 33,880

Net income 19,198 9,440

Dividends on multiple voting shares (1,256) (628)

Dividends on subordinate voting shares (1,944) (970)
-------------------------------------------------------------------------
Balance at end $ 74,602 $ 41,722
-------------------------------------------------------------------------
-------------------------------------------------------------------------


COGECO CABLE INC.
CONSOLIDATED BALANCE SHEETS

-------------------------------------------------------------------------
(In thousands of dollars) February 28, August 31,
2006 2005
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited) (audited)

Assets
Current
Cash and cash equivalents $ - $ 61
Restricted cash (note 5) 20,322 -
Accounts receivable 28,785 26,485
Income tax receivable 507 -
Prepaid expenses 4,515 3,946
-------------------------------------------------------------------------
54,129 30,492
-------------------------------------------------------------------------

Fixed assets 716,797 697,526
Deferred charges 34,689 38,226
Customer base 989,552 989,552
-------------------------------------------------------------------------
$ 1,795,167 $ 1,755,796
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Liabilities and Shareholders' equity
Liabilities
Current
Bank indebtedness $ 22,774 $ -
Accounts payable and accrued liabilities 81,907 125,090
Income tax liabilities - 678
Deferred and prepaid income 26,673 24,907
Current portion of long-term debt (note 6) 31,543 1,322
-------------------------------------------------------------------------
162,897 151,997
-------------------------------------------------------------------------

Long-term debt (note 6) 691,592 691,159
Deferred and prepaid income 10,681 10,522
Pension plans liabilities and accrued
employee benefits 2,109 1,903
Future income tax liabilities 221,874 210,731
-------------------------------------------------------------------------
1,089,153 1,066,312
-------------------------------------------------------------------------

Shareholders' equity
Capital stock (note 7) 630,386 630,220
Retained earnings 74,602 58,604
Contributed surplus - stock-based compensation 1,026 660
-------------------------------------------------------------------------
706,014 689,484
-------------------------------------------------------------------------
$ 1,795,167 $ 1,755,796
-------------------------------------------------------------------------
-------------------------------------------------------------------------


COGECO CABLE INC.
CONSOLIDATED STATEMENTS OF CASH FLOW

Three months ended Six months ended
February 28, February 28,
-------------------------------------------------------------------------
(In thousands
of dollars) 2006 2005 2006 2005
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)

Cash flow from
operating
activities
Net income $ 10,200 $ 5,613 $ 19,198 $ 9,440
Items not
affecting cash
and cash
equivalents
Amortization
(note 2) 28,656 31,988 56,933 64,232
Amortization
of deferred
financing costs 240 241 481 475
Future income
taxes (note 3) 5,523 3,531 11,143 6,135
Other 321 302 574 585
-------------------------------------------------------------------------
44,940 41,675 88,329 80,867
Changes in non-cash
operating items
(note 8a)) (2,525) 10,552 (45,312) (22,454)
-------------------------------------------------------------------------
42,415 52,227 43,017 58,413
-------------------------------------------------------------------------

Cash flow from
investing
activities
Acquisition of
fixed assets
(note 8b)) (34,265) (26,809) (64,278) (48,383)
Increase in
deferred charges (3,784) (3,132) (7,449) (5,337)
Increase in
restricted cash (20,322) - (20,322) -
Other 8 25 8 27
-------------------------------------------------------------------------
(58,363) (29,916) (92,041) (53,693)
-------------------------------------------------------------------------

Cash flow from
financing
activities
Increase (decrease)
in bank
indebtedness 7,128 (11,553) 22,774 9,775
Increase in
long-term debt - - 30,000 -
Repayment of
long-term debt (10,429) (10,270) (777) (13,537)
Issue of
subordinate voting
shares 166 311 166 640
Dividends on
multiple voting
shares (628) (314) (1,256) (628)
Dividends on
subordinate voting
shares (972) (485) (1,944) (970)
-------------------------------------------------------------------------
(4,735) (22,311) 48,963 (4,720)
-------------------------------------------------------------------------

Net change in cash
and cash
equivalents (20,683) - (61) -
Cash and cash
equivalents at
beginning 20,683 - 61 -
-------------------------------------------------------------------------
Cash and cash
equivalents at
end $ - $ - $ - $ -
-------------------------------------------------------------------------
-------------------------------------------------------------------------

See supplemental cash flow information in note 8.


COGECO CABLE INC.
Notes to Consolidated Financial Statements
February 28, 2006
(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,
2006 and August 31, 2005 as well as its results of operations and its cash
flow for the three and six month periods ended February 28, 2006 and 2005.
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, 2005. These unaudited interim
consolidated financial statements follow the same accounting policies as the
most recent annual consolidated financial statements.
The interim consolidated financial statements for the three and six month
periods ended February 28, 2005 have not been subject to a review by the
Corporation's external auditors.

2. Amortization

Three months ended Six months ended
February 28, February 28,
-------------------------------------------------------------------------
2006 2005 2006 2005
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)

Fixed assets $ 23,479 $ 26,484 $ 46,428 $ 52,788
Deferred charges 5,177 5,504 10,505 11,444
-------------------------------------------------------------------------
$ 28,656 $ 31,988 $ 56,933 $ 64,232
-------------------------------------------------------------------------
-------------------------------------------------------------------------

3. Income taxes

Three months ended Six months ended
February 28, February 28,
-------------------------------------------------------------------------
2006 2005 2006 2005
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)

Current $ 1,413 $ 325 $ 2,238 $ 950
Future 5,523 3,531 11,143 6,135
-------------------------------------------------------------------------
$ 6,936 $ 3,856 $ 13,381 $ 7,085
-------------------------------------------------------------------------
-------------------------------------------------------------------------

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

Three months ended Six months ended
February 28, February 28,
-------------------------------------------------------------------------
2006 2005 2006 2005
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)

Income tax at
combined income
tax rate of
35.09 % (34.96 %
in 2005) $ 6,013 $ 3,310 $ 11,432 $ 5,777
Loss or income
subject to lower
or higher tax
rates 100 171 92 265
Increase in income
taxes as a result
of increases in
substantially
enacted tax rates - - 162 -
Large corporation
tax 795 325 1,620 950
Other 28 50 75 93
-------------------------------------------------------------------------
Income tax at
effective income
tax rate $ 6,936 $ 3,856 $ 13,381 $ 7,085
-------------------------------------------------------------------------
-------------------------------------------------------------------------

4. Earnings per share

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

Three months ended Six months ended
February 28, February 28,
-------------------------------------------------------------------------
2006 2005 2006 2005
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)

Net income $ 10,200 $ 5,613 $ 19,198 $ 9,440
Weighted average
number of
multiple voting
and subordinate
voting shares
outstanding 39,989,807 39,963,076 39,987,182 39,949,327
Effect of dilutive
stock options (1) 162,319 160,067 178,767 137,415
-------------------------------------------------------------------------
Weighted average
number of diluted
multiple voting
and subordinate
voting shares
outstanding 40,152,126 40,123,143 40,165,949 40,086,742
-------------------------------------------------------------------------

Earnings per share
Basic $ 0.26 $ 0.14 $ 0.48 $ 0.24
Diluted 0.25 0.14 0.48 0.24
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) For the three and six month periods ended February, 2006,
143,248 stock options (19,906 and 91,424 in 2005) 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.

5. Restricted cash

Restricted cash represents a deposit in escrow of (euro) 15,000,000
intended for a potential acquisition within the Corporation's business
segment. The deposit is being returned with accumulated interest thereon.

6. Long-term debt

-------------------------------------------------------------------------
Interest February 28, August 31,
Maturity rate 2006 2005
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited) (audited)
Parent company
Term Facility(1) 2007 4.72(2) $ 30,000 $ -
Senior Secured
Debentures Series 1 2009 6.75 150,000 150,000
Senior - Secured Notes
Series A -
US $150 million 2008 6.83(3) 170,490 178,065
Series B 2011 7.73 175,000 175,000
Second Secured
Debentures Series A 2007 8.44 125,000 125,000
Deferred credit(4) 2008 - 68,160 60,585

Subsidiaries
Obligations under
capital leases 2010 5.87 - 8.36 4,485 3,831
-------------------------------------------------------------------------
723,135 692,481
Less current portion 31,543 1,322
-------------------------------------------------------------------------
$ 691,592 $ 691,159
-------------------------------------------------------------------------
-------------------------------------------------------------------------

(1) In January 2006, the Corporation amended its Term Facility so that
the committed amount, which should have been reduced to $95,000,000
on January 31, 2006, is maintained at its prior level of
$270,000,000.
(2) Average interest rate on debt as of February 28, 2006, including
stamping fees.
(3) 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.
(4) The deferred credit represents the amount which would have been
payable as at February 28, 2006 and August 31, 2005 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, 2006 amounted to $13,253,000 and $26,301,000 ($13,222,000 and
$26,466,000 in 2005).

7. Capital Stock

Authorized, an unlimited number

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

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

Multiple voting shares, 10 votes per share.

Subordinate voting shares, 1 vote per share.

-------------------------------------------------------------------------
February 28, August 31,
2006 2005
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited) (audited)
Issued

15,691,100 multiple voting shares $ 98,346 $ 98,346
24,301,634 subordinate voting shares
(24,293,486 as at August 31, 2005) 532,040 531,874
-------------------------------------------------------------------------
$ 630,386 $ 630,220
-------------------------------------------------------------------------
-------------------------------------------------------------------------

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

Six months ended Twelve months ended
February 28, 2006 August 31, 2005
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited) (audited)
-------------------------------------------------------------------------
Number of Number of
shares Amount shares Amount
-------------------------------------------------------------------------

Balance at
beginning 24,293,486 $ 531,874 24,232,815 $ 531,070
Shares issued for
cash under the
Employee Stock
Purchase Plan and
the Stock Option
Plan 8,148 166 60,671 742
Compensation expense
previously recorded
in contributed
surplus for
options exercised - - - 62
-------------------------------------------------------------------------
Balance at end 24,301,634 $ 532,040 24,293,486 $ 531,874
-------------------------------------------------------------------------
-------------------------------------------------------------------------


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 two quarters, the
Corporation granted 126,059 stock options (140,766 in 2005) with an exercise
price ranging from $25.12 to $29.05 ($21.50 in 2005) of which 31,743 stock
options (38,397 in 2005) were granted to COGECO Inc.'s employees. The
Corporation records compensation expense for options granted on or after
September 1, 2003. As a result, a compensation expense of $203,000 and
$366,000 ($121,000 and $219,000 in 2005) was recorded for the three and
six month periods ended February 28, 2006. 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 and 2005 would have been reduced to the following pro forma
amounts:

Three months ended Six months ended
February 28, February 28,
-------------------------------------------------------------------------
2006 2005 2006 2005
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
Net income
As reported $ 10,200 $ 5,613 $ 19,198 $ 9,440
Pro forma 10,180 5,517 19,158 9,248

Basic earnings
per share
As reported $ 0.26 $ 0.14 $ 0.48 $ 0.24
Pro forma 0.25 0.14 0.48 0.23

Diluted earnings
per share
As reported $ 0.25 $ 0.14 $ 0.48 $ 0.24
Pro forma 0.25 0.14 0.48 0.23
-------------------------------------------------------------------------
-------------------------------------------------------------------------

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

-------------------------------------------------------------------------
2006 2005
-------------------------------------------------------------------------
Expected dividend yield 1.27% 1.27%
Expected volatility 39% 43%
Risk-free interest rate 3.70% 3.70%
Expected life in years 4.0 4.0
-------------------------------------------------------------------------

The fair value of stock options granted for the six month period ended
February 28, 2006 was $9.44 ($7.46 in 2005) per option.
As at February 28, 2006, the Corporation had outstanding stock options
providing for the subscription of 716,148 subordinate voting shares. These
stock options can be exercised at various prices ranging from $7.05 to $40.75
and at various dates up to January 11, 2016.

8. Statements of cash flow

a) Changes in non-cash operating items

Three months ended Six months ended
February 28, February 28,
-------------------------------------------------------------------------
2006 2005 2006 2005
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)

Accounts
receivable $ (1,264) $ (464) $ (2,300) $ (1,135)
Income tax
receivable (221) - (507) -
Prepaid expenses (1,137) 92 (569) 695
Accounts payable
and accrued
liabilities 365 11,759 (43,183) (24,652)
Income tax
liabilities - (721) (678) (785)
Deferred and
prepaid income (268) (114) 1,925 3,423
-------------------------------------------------------------------------
$ (2,525) $ 10,552 $ (45,312) $ (22,454)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

b) Other information

Three months ended Six months ended
February 28, February 28,
-------------------------------------------------------------------------
2006 2005 2006 2005
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)

Fixed assets
acquisitions
through capital
leases $ 1,431 $ - $ 1,431 $ -
Interest paid 11,308 11,237 27,265 27,357
Income taxes paid 1,634 1,046 3,423 1,735
-------------------------------------------------------------------------


9. Employees future benefits

The Corporation and its subsidiaries offer their employees contributory
defined benefit pension plans, a defined contribution pension plan or a
collective registered retirement savings 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,
-------------------------------------------------------------------------
2006 2005 2006 2005
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)

Contributory
defined benefit
pension plans $ 222 $ 204 $ 396 $ 296
Defined
contribution
pension plan and
collective
registered
retirement
savings plan 376 322 759 662
-------------------------------------------------------------------------
$ 598 $ 526 $ 1,155 $ 958
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Contact Information

  • Media: Marie Carrier, Director, Corporate
    Communications, (514) 874-2600;

    Source: Cogeco Cable Inc.: Pierre Gagné,
    Vice President, Finance and Chief Financial Officer, (514) 874-2600