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38 COGECO CABLE INC. 2012 Management’s Discussion and Analysis (MD&A)
Free cash flow is calculated as follows:
Quarters ended August 31, Years ended August 31,
2012 2011 2012 2011
(in thousands of dollars) $ $ $ $
Cash flow from operations 126,946 144,699 441,686 417,367
A
cquisition of property, plant and equipment (119,175) (118,326) (359,581) (291,669)
A
cquisition of intangible and other assets (5,217) (2,337) (15,787) (10,872)
Free cash flow 2,554 24,036 66,318 114,826
OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION AND OPERATING MARGIN
Operating income before depreciation and amortization is used by Cogeco Cable’s management and investors to assess the Corporation’s
ability to seize growth opportunities in a cost effective manner, to finance its ongoing operations and to service its debt. Operating income
before depreciation and amortization is a proxy for cash flows from operations excluding the impact of the capital structure chosen, and is one
of the key metrics used by the financial community to value the business and its financial strength. Operating margin is a measure of the
proportion of the Corporation's revenue which is available, before income taxes, to pay for its fixed costs, such as interest on Indebtedness.
Operating margin is calculated by dividing operating income before depreciation and amortization by revenue.
The most comparable IFRS financial measure is operating income. Operating income before depreciation and amortization and operating
margin are calculated as follows:
Quarters ended August 31, Years ended August 31,
2012 2011 2012 2011
(in thousands of dollars, except percentages) $ $ $ $
Operating income 94,709 97,941 312,180 341,079
Depreciation and amortization 64,247 51,314 275,003 201,958
Integration, restructuring and acquisitions costs 1,869 2,324 1,869 2,324
Operating income before depreciation and amortization 160,825 151,579 589,052 545,361
Revenue 324,768 305,811 1,277,698 1,184,683
Operating margin 49.5% 49.6% 46.1% 46.0%
ADDITIONAL INFORMATION
This MD&A was prepared on November 1, 2012. Additional information relating to the Corporation, including its Annual Information Form, is
available on SEDAR at www.sedar.com.