Cogeco 2006 Annual Report Download - page 38

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36 COGECO CABLE INC. 2006 Management’s Discussion and Analysis
CONSOLIDATED OUTLOOK
The revenue increase of approximately 41% to 42% should result primarily from the full-year impact of Cabovisão’s operations,
from a growth of between 202,000 to 222,000 RGUs. Cogeco Cable expects to achieve an operating income before
amortization of approximately $335 million to $338 million, generating an operating margin of about 38%.
Capital expenditures and deferred charges are expected to be at around $225 million to $230 million due to the inclusion
of Cabovisão’s operations and to RGU growth. Amortization should amount to $182 million. Financial expense should
increase by $30 million to reach $85 million as a result of the additional Indebtedness to fi nance the Cabovisão acquisition.
Management expects that cash fl ows generated by operations will fi nance capital expenditures and deferred charges. The
Corporation expects to generate free cash fl ow in the order of $20 million to $25 million due to the increase in operating
income before amortization. Free cash fl ow that is generated should be used primarily to reduce Indebtedness, thus
improving the Corporation’s leverage ratios. Net income of approximately $45 million should be achieved as a result of
growth in operating income before amortization exceeding the increase in fi xed charges.
ADDITIONAL INFORMATION
This MD&A was prepared on October 23, 2006. Additional information relating to the Corporation, including its Annual
Information Form, is available on the SEDAR Web site at www.sedar.com.