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42 COGECO CABLE INC. 2013 Management's discussion and analysis (“MD&A”)
FOURTH-QUARTER OPERATING RESULTS
OPERATING RESULTS
Consolidated
Quarters ended August 31, 2013 2012 Change
(in thousands of dollars, except percentages) $$ %
Revenue 470,386 324,768 44.8
Operating expenses 247,897 163,943 51.2
Operating income before depreciation and amortization 222,489 160,825 38.3
Operating margin 47.3% 49.5%
Fiscal 2013 fourth-quarter consolidated revenue improved by $145.6 million, or 44.8%, to reach $470.4 million compared to the prior year. For the
fourth-quarter ended August 31, 2013, consolidated operating expenses increased by $84.0 million, or 51.2%, at $247.9 million. As a result,
consolidated operating income before depreciation and amortization increased by $61.7 million, or 38.3%, to reach $222.5 million and consolidated
operating margin decreased to 47.3% compared to 49.5% in the fourth quarter of fiscal 2012.
CANADIAN CABLE SERVICES
Customer statistics
Quarters ended August 31,
Net additions (losses)
August 31,
2013 2013 2012
PSU 1,980,122 (12,021) 7,564
Television service customers 834,771 (10,573) (5,758)
HSI service customers(1) 661,337 159 6,287
Telephony service customers 484,014 (1,607)7,035
(1) In the fourth quarter of fiscal 2013, HSI customers have been adjusted upwards retroactively to comply with the industry practices and consequently, PSU have
been also adjusted.
Fiscal 2013 fourth-quarter PSU net losses amounted to 12,021 compared to net additions of 7,564 in the comparable period of the prior year mainly
as a result of service category maturity, competitive offers and tightening of our customer qualifications. For the fourth quarter of fiscal 2013 net
customer losses for Television service customers stood at 10,573 compared to 5,758 for the same period of the prior year. Television service
customer net losses are mainly due to promotional offers of competitors for the video service combined with the tightening of our customer credit
controls. Fiscal 2013 fourth-quarter HSI service customers grew by 159 compared to 6,287 in the fourth quarter of the prior year. Telephony service
customers net losses stood at 1,607 customers compared to net additions of 7,035 customers for the same period of the prior year.
Operating results
Quarters ended August 31, 2013 2012 Change
(in thousands of dollars, except percentages) $$ %
Revenue 308,886 301,992 2.3
Operating expenses 149,789 148,725 0.7
Operating income before depreciation and amortization 159,097 153,267 3.8
Operating margin 51.5% 50.8%
Revenue
Fiscal 2013 fourth-quarter revenue increased by $6.9 million, or 2.3%, to reach $308.9 million compared to the same period last year, primarily
due to rate increases implemented in June 2013 in Quebec and Ontario.
Operating expenses
For the period ended August 31, 2013, operating expenses increased by $1.1 million, or 0.7%, to $149.8 million. Operating expenses increased
during the fourth quarter as a result of additional staff to manage the PSU base, programming cost increases and incentive programs such as
bonuses, partly offset by cost reduction initiatives.