CONTINUED GROWTH FOR COGECO CABLE IN THE FIRST QUARTER AND UPWARD REVISION OF ITS FISCAL 2010 GUIDELINES

PRESS RELEASE

For immediate release

Continued growth for Cogeco Cable in the first quarter and

upward revision of its fiscal 2010 guidelines

Montréal, January 13, 2010 – Today, Cogeco Cable Inc. (TSX: CCA) (“Cogeco Cable” or the “Corporation”) announced

its financial results for the first quarter of fiscal 2010, ended Novem ber 30, 2009.

For the first quarter of fiscal 2010:

• Revenue increased by 6% to reach $317.4 million;

• Operating income before amortization

(1)

grew by 5.9% to reach $122.6 million;

• Net income amounted to $56.7 million. Excluding a favourable income tax adjustment of $29.8 million related to

the reduction of Ontario provincial corporate income tax rates, adjusted net income

(1)

would have amounted to

$26.9 million, an increase of $3.9 million, or 17.2%, compared to $22.9 million for the first quarter of fiscal 2009;

• Free cash flow

(1)

reached $62 million for the quarter, representing an increase of $44.2 million when compared

to the first quarter of fiscal 2009;

• Operating margin

(1)

for the quarter remained the same as the in the prior year at 38.6%;

• Revenue-generating units (“RGU”)

(2)

grew by 89,785 net additions in the quarter, for a total of 2,982,023 RGU at

November 30, 2009.

“Cogeco Cable’s financial results for the first quarter of fiscal 2010 exhibit continued RGU, revenue and operating income

before amortization progression for the Corporation. Our Canadian operations have grown at a steady pace, as

demonstrated by net additions of 63,172 RGU. In our European operations, the first quarter results evidence that our

customer base has begun to stabilize as a result of the customer retention and acquisition plans implemented in response

to the difficult competitive environment experienced in the prior year, with a growth of 26,613 RGU. In light of these

positive results, management has revised most of its guidelines for the 2010 fiscal year. Projected RGU growth, revenue,

operating income before amortization, net income and free cash flow have been increased to reflect the impact and the

expected trend generated by the favourable financial results in the first quarter of the year”, declared Louis Audet,

President and CEO of Cogeco Cable.

(1)

The indicated terms do not have standard definitions prescribed by Canadian Generally Accepted Accounting Principles (“GAAP”) and therefore, may not be

comparable to similar measures presented by other companies. For more details, please consult the “Non-GAAP financial measures” section of the

Management’s discussion and analysis.

(2)

Represents the sum of Basic Cable, High Speed Internet (“HSI”), Digital Television and Telephony service customers.

- 2 -

FINANCIAL HIGHLIGHTS

Quarters ended November 30,

2009 2008

(1)

Change

($000, except percentages and per share data) $ $ %

(unaudited) (unaudited)

Operations

Revenue 317,365 299,438 6.0

Operating income before amort iz ati o n

(2)

122,606 115,730 5.9

Operating margin

(2)

38.6% 38.6%

Operating income 57,041 54,984 3.7

Net income 56,666 22,945 –

Adjusted net income

(2)

26,884 22,945 17.2

Cash Flow

Cash flow from operating activities (3,618) 24,481 –

Cash flow from operations

(2)

130,229 87,617 48.6

Free cash flow

(2)

62,008 17,797 –

Financial Condition

(3)

Total assets 2,632,154 2,630,912 –

Indebtedness

(4)

1,114,860 1,054,506 5.7

Shareholders’ equity 1,059,243 1,007,384 5.1

Per Share Data

(5)

Earnings per share

Basic 1.17 0.47 –

Diluted

1.16 0.47 –

Adjusted earnings per share

(2)

Basic

0.55 0.47 17.0

Diluted

0.55 0.47 17.0

(1)

Certain comparativ e figures have been restated to reflect the application of the Canadian Institute of Chartered Accountants (“ CICA”) Handbook Section 3064.

Please refer to the “Accounting policies and estimates” section of the Management’s discussion and analysis for more details.

(2)

The indicated terms do not have standardiz ed def inition s prescr ibed by Canadia n Generally Acc epted Accounting Pri nciples (“GAAP ”) and therefo re, may not be

comparable to similar measures presented by other companies. For more details, please consult the “Non-GAAP financial measures” section of the

Management’s discussion and analysis.

(3)

At November 30, 2009 and August 31, 2009.

(4)

Indebtedness is defined as the total of bank indebtedness, principal on long-term debt and obligations under derivative financial instruments.

(5)

Per multiple and subordinate voting share.

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FORWARD-LOOKING STATEMENTS

Certain statements in this press release may constitute forward-looking information within the meaning of securities laws.

Forward-looking information may relate to Cogeco Cable’s future outlook and anticipated events, business, operations,

financial performance, financial condition or results and, in so me 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

the Corporation’s future operating results and economic performance and its 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 Cogeco Cable believes are reasonable as of

the current date. While management considers these assumptions to be reasonable based on information currently

available to the Corporation, they may prove to be incorrect. The Corporation cautions the reader that the current adverse

economic conditions ma ke forward-looking information and the underlying assumptions subject to greater uncertainty and

that, consequently, they may not materialize, or the results may significantly differ from the Corporation’s expectations. It

is impossible for Cogeco Cable to predict with certainty the impact that the current economic downturn may have on future

results. Forward-looking information is also subject to certain factors, including risks and uncertainties (described in the

“Uncertainties and main risk factors” section of the Corporation’s 2009 annual Management’s Discussion and Analysis

(MD&A)) that could cause actual results to differ materially from what Cogeco Cable currently expects. 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 the

Corporation’s control. Therefore, future events and results may vary significantly from what management currently

foresee. The reader should not place undue importance on forward-looking information and should not rely upon this

information as of any other date. While management may elect to, the Corporation is under no obligation (and expressly

disclaims any such obligation), and doe s not undertake to update or alter this information before the next quarter.

This analysis should be read in conjunction with the Corporation’s consolidated financial statements, and the notes

thereto, prepared in accordance with Canadian Generally Accepted Accounting Principles and the MD&A included in the

Corporation’s 2009 Annual Report. Throughout this discussion, all amounts are in Canadian dollars unless otherwise

indicated.

MANAGEMENT’S DISCUSSION AND ANALYSIS (“MD&A”)

CORPORATE STRATEGI ES AND OBJECTIVES

Cogeco Cable Inc.’s (“Cogeco Cable” or the “Corporation”) objectives are to improve profitability and create shareholder

value. The strategies for reaching those objectives are sustained growth through the diversification and the improvement

of products, services, clientele and territories, as well as the continuous improvement of networks and equipment and tight

controls over costs and business processes. The Corporation measures its performance, with regard to these objectives

by monitoring revenue growth, revenue-generating units (“RGU”)

(1)

growth and free cash flow

(2)

During the first quarter of fiscal 2010, the Corporation invested approximately $28.7 million in its network infrastructure

and equipment to upgrade its capacity, improve its robustness and extend its territories in order to better serve and

increase its service offerings for new and existing clientele. Furthermore, the Corporation has maintained its vigilance

over operating costs, which increased at the same pace as the growth in revenue despite the increase in operating costs

in the European operations related to customer retention strategies put in place in the second half of fiscal 2009.

RGU growth and penetrat ion of service offerings

During the first three months ended November 30, 2009, the number of RGU increased by 89,785, or 3.1%, to reach

2,982,023 RGU, in line to surpass the Corporation’s RGU growth projections of 125,000 net additions issued on

October 29, 2009. In light of this performance, management has revised its guidelines and RGU growth is now expected

to reach 150,000 net additions for the fiscal year ended August 31, 2010, representing an increase of 5% when compared

to the prior year. Please consult the revised proje ctio ns in the “Fiscal 2010 financial guidelines” section for further detai ls.

(1)

Represents the sum of Basic Cable, High speed internet (“HSI”), Digital Television and Telephony service customers.

(2)

Free cash flow does not have a s tandardized definition pre scribed by Canadian Generally Accepted Accounting Principles (“GAA P”) and therefore, may not be

comparable to similar measures presented by other companies. For more details, please consult the “Non-GAAP financial measures” section.

- 4 -

Revenue growth

First-quarter revenue increased by $17.9 million, or 6%, when compared to the same period of the prior year, to reach

$317.4 million, and management expects to attain $1,290 million for the 2010 fiscal year, which represents an increase of

$40 million when compared to the projections of $1,250 million issued on October 29, 2009. Please consult the revised

projections in the “Fiscal 2010 finan cial guidelines” section for further details.

Free cash flow

In the first three months ended November 30, 2009, Cogeco Cable generated free cash flows of $62 million compared to

$17.8 million for the same period last year, representing an increase of $44.2 million. Free cash flow growth for the

quarter is mainly due to an increase in cash flow from operations

(1)

, including the reduction in current income taxes

stemming from modifications made to the corporate structure and by decreases in capital expenditures. Management has

revised its free cash flow guidelines to $135 million for the 2010 fiscal year, an increase of $10 million, or 8%, when

compared to the guideline of $125 million issued on October 29, 2009. Please consult the revised projections in the

“Fiscal 2010 financial guid elines” section for further details.

OPERATING RESULTS – CONSOLIDATED OVERVIEW

Quarters ended November 30,

2009 2008

(1)

Change

($000, except percentages) $ $ %

(unaudited) (unaudited)

Revenue 317,365 299,438 6.0

Operating costs 188,418 177,727 6.0

Management fees - COGECO Inc.

6,341 5,981 6.0

Operating income before amort iz ati o n

(2)

122,606 115,730 5.9

Operating margin

(2)

38.6% 38.6%

(1)

Certain comparativ e figures have been restated to reflect the application of the Canadian Institute of Chartered Accountants (“ CICA”) Handbook Section 3064.

Please refer to the “Accounting policies and estimates” section for more details.

(2)

The indicated terms do not have standardized definitions prescribed by Canadian GAAP and therefore, may not be comparable to similar measures presented by

other companies. For more details, please consult the “Non-GAAP financial measures” section.

Revenue

Fiscal 2010 first-quarter revenue improved by $17.9 million, or 6%, to reach $317.4 million when compared to the prior

year. Driven by increased RGU, the introduction of HSI usage billing and rate increases implemented at the end of fiscal

2009, first-quarter Canadian operations revenue went up by $27 million, or 11.4% over the comparable period of the prior

year.

Fiscal 2010 first-quarter European operations revenue decreased by $9.1 million, or 14.6%, at $53 million, compared to

the same period of the prior year, mainly due to a lower number of Basic Cable service customers compared to the same

period of last year and to the impact of retention strategies implemented in the second half of fiscal 2009 in order to

reduce customer attrition, partly offset by the strength of the Euro compared to the Canadian dollar. Revenue from the

European operations in the local currency for the first quarter amounted to €33.7 million, a decrease of €6.5 million, or

16.1% compared to the same period of the prio r year.

(1)

The indicated terms do not have standardized definitions prescribed by Canadian GAAP and therefore, may not be comparable to similar measures presented by

other companies. For more details, please consult the “Non-GAAP financial measures” section.

- 5 -

Operating costs

For the first three months of fiscal 2010, operating costs, excluding management fees payable to COGECO Inc.,

increased by $10.7 million to reach $188.4 million, an increase of 6% compared to the prior year. Operating costs in the

Canadian operations increased due to the servicing of additional RGU and the additional levy amounting to 1.5% of gross

Cable Television service revenue imposed by the Canadian Radio-television and Telecommunications Commission

(“CRTC”) in order to finance a new Local Programming Improvement Fund (“LPIF”) for the benefit of conventional

television broadcasters operating local stations in Canada. In Europe, operating costs increased due to marketing

initiatives, including the launch of new channels, and the appreciation of the Euro over the Canadian dollar, partly offset

by cost reduction initiatives, such as a headcount red uction plan.

Operating income before amortization and opera ting margin

Fiscal 2010 first quarter operating income before amortization increased by $6.9 million, or 5.9%, to reach $122.6 million,

as a result of RGU growth, the introduction of HSI usage billing and rate increases generating additional revenues which

outpaced the increase in operating costs. Cogeco Cable’s first quarter operating margin remained the same when

compared to the prior year, amounting to 38.6%. The operating margin in Canada improved to 42.5% from 40%, which

offset the decrease in the European operating margin to 19.2% from 33.5%.

RELATED PARTY TRAN SACTIONS

Cogeco Cable is a subsidiary of COGECO Inc., which holds 32.3% of the Corporation’s equity shares, representing

82.7% of the votes attached to 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 an annual adjustment based on the increase in the Cons umer Price Index in Canad a. Accord ingly, for

fiscal 2010, management fees have been set at a maximum of $9 million, which management expects to reach in the

second quarter of the fiscal year. For fiscal 2009, management fees were set at a maximum of $9 million, and were fully

paid in the first six months of the year.

Cogeco Cable granted 33,266 stock options to COGECO Inc.’s employees during the first three months of fiscal 2010,

compared to 29,711 for the same period last year. During the first quarter Cogeco Cable charged COGECO Inc. an

amount of $0.1 million with regards to Cogeco Cable’s options granted to COGECO Inc.’s employees, essentially the

same amount as in the comparable period of the prior year. Details regarding the management agreement and stock

options granted to COGECO Inc.’s em ployees are provided in the Corp oration’s 2009 Annual Report.

Furthermore, Cogeco Cable established an incentive share unit plan for senior executives and designated employees.

During the first three months, the Corporation granted 9,981 Incentive Share Units to COGECO Inc.’s employees and

charged COGECO Inc. an amount of $9,000 with regards to the Corporation’s Incentive Share Units granted to

COGECO Inc.’s employees.

There were no other material related party transaction s during the quarter.

FIXED CHARGES

Quarters ended November 30,

2009 2008

(1)

Change

($000, except percentages) $ $ %

(unaudited) (unaudited)

Amortization 65,565 60,746 7.9

Financial expens e

16,141 23,394 (31.0)

(1)

Certain comparative figures have been restated to reflect the application of the CICA Handbook Section 3064. Please refer to the “Accounting policies and

estimates” section for more details.

- 6 -

First-quarter 2010 amor tization amounted to $65.6 million, compared to $60.7 million for the same period of the prior year.

The increase is mainly due to additional capital expenditures arising from customer premise equipment acquisitions to

sustain RGU and to the appreciation of the Euro currency over the Canadian dollar.

First-quarter financial expense amounted to $16.1 million compared to $23.4 million in the first quarter of the prior year.

The financial expense of the current quarter includes a foreign exchange gain of $0.5 million, compared to a foreign

exchange loss of $3.8 million in the prior year. The loss in the prior year was essentially due to the unusually high US

dollar volatility, as the majority of customer premise equipment is purchased and subsequently paid in US dollars. The

remaining decrease of $3 million is due to interest rate reductions and a decrease in Indebtedness (defined as the total of

bank indebtedness, principal on long-term debt and obligations under derivative financial instruments) when compared

with the comparable quarter of the previous fiscal year.

INCOME TAXES

Fiscal 2010 first-quarter income tax recovery amounted to $15.8 million which includes the impact of the reduction in

corporate income tax rates announced on March 26, 2009 by the Ontario provincial government and considered

substantively enacted on November 16, 2009 (the “reduction of Ontario provincial corporate income tax rates”). These

lower corporate income tax rates reduced future income tax expense by $29.8 million in the first three months of

fiscal 2010. Excluding the effect of this reduction, income tax expense would have amounted to $14 million for the first

three months of fiscal 2010, compared to $8.6 million for the first three months of fiscal 2009. The increase in income tax

expense in fiscal 2010 is mainly due to the improvement in operating income before amortization surpassing that of the

fixed charges in the Canadian operation s.

NET INCOME

Fiscal 2010 first quarter net income amounted to $56.7 million, or $1.17 per share. Net income for the first quarter of fiscal

2010 includes the favourable impact of $29.8 million from the reduction of Ontario provincial corporate income tax rates

described above. Excluding the impact of the income tax adjustments, adjusted net income

(1)

would have amounted to

$26.9 million, or $0.55 per share

(1)

, compared to $22.9 million, or $0.47 per share in the prior year, representing increases

of 17.2% and 17%, respectively. Please consult the “Non-GAAP financial measures” section for further details. Net

income progression for the quarter has resulted from the growth of the Canadian operations’ financial results, partly offset

by the decline in the financial European operating results as previously discussed.

CASH FLOW AND LIQUIDITY

Quarters ended November 30,

2009 2008

(1)

($000) $ $

(unaudited) (unaudited)

Operating activities

Cash flow from operations

(2)

130,229 87,617

Changes in non-cash operating items (133,847)

(63,136)

(3,618)

24,481

Investing activities

(3)

(68,060)

(68,865)

Financing activities

(3)

49,495 39,420

Effect of exchange rate changes on cash and cash equivalents denominated

in foreign currencies

202 687

Net change in cash and cash equivalents

(21,981)

(4,277)

Cash and cash equivalents, beginning of period

39,458 36,371

Cash and cash equivalents, end of period

17,477 32,094

(1)

Certain comparative figures have been restated to reflect the application of the CICA Handbook Section 3064. Please refer to the “Accounting policies and

estimates” section for more details.

(2)

Cash flow from operations does not have a standardized definition prescribed by Canadian GAAP and therefore, may not be comparable to similar measures

presented by other companies. For more details, please consult the “Non-GAAP financial measures” section.

(1)

The indicated terms do not have standardized definitions prescribed by Canadian GAAP and therefore, may not be comparable to similar measures presented by

other companies. For more details, please consult the “Non-GAAP financial measures” section.

- 7 -

(3)

Excludes assets acquired under capital leases.

Fiscal 2010 first quarter cash flow from operations reached $130.2 million, 48.6% higher than the comparable period last

year, primarily due to the reduction in current income taxes stemming from modifications made to the corporate structure,

the increase in operating income before amortization and the reduction in financial expense. Changes in non-cash

operating items required cash outflows of $133.8 million, mainly as a result of decreases in accounts payable and accrued

liabilities and income tax liabilities and an increase in income taxes receivable. In the prior year, the cash outflows of

$63.1 million were mainly the result of a decrease in accounts payable and accrued liabilities and in income tax liabilities.

The significant decreases in income tax liabilities in both fiscal years are due to payments made during the first quarter of

the current year related to the prior fiscal year.

Investing activities, including capital expenditures segmented according to the National Cable Television Association

(“NCTA”) standard re porting categories, are as follows:

Quarters ended November 30,

2009 2008

(1)

($000) $ $

(unaudited) (unaudited)

Customer premise equipmen t

(2)

33,475 31,824

Scalable infrastructure 12,827 12,542

Line extensions 5,434 4,287

Upgrade / Rebuild 10,470 10,442

Support capital 2,951 7,511

Total capital expenditures

(3)

65,157 66,606

Increase in deferred charges and others 3,044 3,198

Total investing activities

(3)

68,201 69,804

(1)

Certain comparative figures have been restated to reflect the application of the CICA Handbook Section 3064. Please refer to the “Accounting policies and

estimates” section for more details.

(2)

Includes mainly home terminal devices as well as new and replacement drops.

(3)

Includes capital leases, which are excluded from the statements of cash flows.

Fiscal 2010 first quarter total capital expenditures amounted to $65.2 million, a decrease of 2.2%, when compared to the

corresponding period of last year, due to the following factors:

• A decrease in support capital spending as the prior year included the acquisition of a power generator for the

Canadian data comm unications subsidiary;

• An increase in customer premise equipment spending which reflects higher RGU growth and the appreciation of

the Euro over the Canadian dollar.

Deferred charges and others are mainly attributable to reconnect costs. For the first quarter, the increase in deferred

charges and others amounted to $3 million, essentially the same when compared to $3.2 million for the same period of

the prior year.

In the first quarter, Cogeco Cable generated free cash flows of $62 million compared to $17.8 million in the prior year,

representing an increase of $44.2 million. The growth in free cash flow for the quarter is mainly due to an increase in cash

flow from operations, including the reduction in current income taxes stemming from modifications made to the corporate

structure and the decrease in capital expenditures. The aggregate amount of total capital expenditures and deferred

charges and others decreased by $1.6 million for the quarter ended November 30, 2009 compared to the corresponding

period of the prior year due to the factors explained above.

- 8 -

In the first quarter of 2010, Indebtedness affecting cash increased by $58 million mainly due to the decrease in non-cash

operating items of $133.8 million and the dividend payment of $6.8 million described below, partly offset by the free cash

flow of $62 million and the decrease in cash and cash equivalents of $22 million. Indebtedness mainly increased through

an increase of $44.3 million in bank indebtedness and a net amount of $14.9 million drawn on the Corporation’s revolving

loans. In the first quarter of 2009, Indebtedness affecting cash increased by $45 million due to the reduction of non-cash

operating items of $63.1 million, partly offset by the free cash flow of $17.8 million. Indebtedness was increased through

the issuance of Senior Secured Notes, Series A and Series B, for net proceeds of approximately $255 million, net of the

repayment of US$150 million Senior Secured Notes Series A and the related derivative financial instrument for a total of

$238.7 million, and by an increase of $21.6 million in bank indebtedness.

During the first quarter of fiscal 2010, a dividend of $0.14 per share was paid to the holders of subordinate and multiple

voting shares, totalling $6.8 million, compared to a dividend of $0.12 per share, or $5.8 million the year before.

As at November 30, 2009, the Corporation had a working capital deficiency of $193.5 million compared to $240.9 million

as at August 31, 2009. The decrease in the deficiency is mainly attributable to reductions in accounts payable and

accrued liabilities due to the timing of payments made to suppliers and in income tax liabilities stemming from income tax

payments relating to the 2009 fiscal year, and to an increase in income taxes receivable as a result of modifications made

to the corporate structure. These decreases have been partially offset by the increase in bank indebtedness and the

decreases in cash and cash equivalents resulting from the above mentioned payments, and by the increase in the current

portion of future income tax liabilities also stemming from the modifications made to the corporate structure. As part of the

usual conduct of its business, Cogeco Cable maintains a working capital deficiency due to a low level of accounts

receivable as a large portion of the Corporation’s customers pay before their services are rendered, unlike accounts

payable and accrued liabilities, which are paid after products are delivered or services are rendered, thus enabling the

Corporation to use cash and cash equivalents to reduce Indebtedness.

At November 30, 2009, the Corporation had used $268.6 million of its $862.5 million Term Facility for a remaining

availability of $593.9 million.

On October 1, 2008, the Corporation completed, pursuant to a private placement, the issuance of US$190 million Senior

Secured Notes Series A maturing October 1, 2015, and $55 million Senior Secured Notes Series B maturing

October 1, 2018. The Senior Secured Notes Series B bear interest at the coupon rate of 7.60% per annum, payable semi-

annually. The Corporation has entered into cross-currency swap agreements to fix the liability for interest and principal

payments on the Senior Secured Notes Series A in the amount of US$190 million, which bear interest at the coupon rate

of 7.00% per annum, payable semi-annually. Taking into account these agreements, the effective interest rate on the

Senior Secured Notes Series A is 7.24% and the exchange rate applicable to the principal portion of the US dollar-

denominated debt has been fixed at $1.0625 per US dollar.

FINANCIAL POSITION

Since August 31, 2009, there have been significant changes to the balances of “accounts payable and accrued liabilities”,

“income taxes receivable”, “income tax liabilities”, “future income tax liabilities”, “fixed assets”, “bank indebtedness”, “long-

term debt”, “derivative financial instruments” and “cash and cash equivalents”.

The $70.1 million decrease in accounts payable and accrued liabilities is related to the timing of payments made to

suppliers. The increases of $20.6 million in income taxes receivable and $20.2 million in the current portion of future

income tax liabilities are mainly due to modifications made to the corporate structure. The $40.3 million decrease in

income tax liabilities is due to income tax payments made in the first quarter of the 2010 fiscal year relating to the 2009

fiscal year. The $17.8 million decrease in long-term future income tax liabilities is mainly due to reduction of Ontario

provincial corporate income tax rates. The $6.3 million increase in fixed assets is mainly related to capital expenditures to

sustain RGU growth. The increases of $44.3 million in bank indebtedness, $8.8 million in long-term debt and $5.9 million

in net derivative financial instrument liabilities, and the decrease of $22 million in cash and cash equivalents are due to the

factors previously discussed in the “Cash Flow and Liquidity” section and the fluctuations in foreign exchange and interest

rates.

- 9 -

A description of Cogeco Cable’s share data as of December 31, 2009 is presented in the table below:

Number of shares/options Amount

($000)

Common shares

Multiple voting shares

Subordinate voting shares

15,691,100

32,867,426

98,346

891,715

Options to purchase Subordinate voting shares

Outstanding options

Exercisable options

770,042

543,213

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, as discussed in the 2009 Annual Report, have

not materially changed sin ce Augu st 31, 2009.

DIVIDEND DECLARATION

At its January 12, 2010 meeting, the Board of Directors of Cogeco Cable declared a quarterly eligible dividend of

$0.14 per share for subordinate and multiple voting shares, payable on February 9, 2010, to shareholders of record on

January 26, 2010. The declaration, amount and date of any future dividend will continue to be considered and approved

by the Board of Directors of the Corporation based upon the Corporation’s financial condition, results of operations, capital

requirements and such other factors as the Board of Directors, at its sole discretion, deems relevant. There is therefore no

assurance that dividends will be declar ed, and if declared, the amount and frequency may vary.

FINANCIAL MANAGEME NT

During fiscal 2009, the Corporation entered into a swap agreement with a financial institution to fix the floating benchmark

interest rate with respect to the Euro-denominated Term Loan facilities for a notional amount of €111.5 million. The

interest rate swap to hedge the Term Loans has been fixed at 2.08% until their maturity at July 28, 2011. The notional

value of the swap will decrease in line with the amortization schedule of the Term Loans and stood at €95.8 million at

November 30, 2009. In addition to the interest rate swap of 2.08%, Cogeco Cable will continue to pay the applicable

margin on these Term Loans in accordance with its Term Facility. In the first three months of the fiscal year, the fair value

of interest rate swap decreased by $0.1 million, which is recorded as a decrease of other comprehensive income net of

income taxes.

In the previous fiscal year, Cogeco Cable entered into cross-currency swap agreements to set the liability for interest and

principal payments on its US$190 million Senior Secured Notes, Series A maturing in October 1, 2015. These agreements

have the effect of converting the U.S. interest coupon rate of 7.00% per annum to an average Canadian dollar interest

rate of 7.24% per annum. The exchange rate applicable to the principal portion of the debt has been ﬁxed at $1.0625 per

US dollar. In the first quarter of the 2010 fiscal year, amounts due under the US$190 million Senior Secured Notes

Series A decreased by $7.5 million due to the US dollar’s depreciation compared to the Canadian dollar. The fair value of

cross-currency swaps decreased by a net amount of $5.8 million, of which $7.5 million offsets the foreign exchange gain

on the debt denominated in US dollars. The difference of $1.7 million was recorded as an increase of other

comprehensive income, net of income taxes of $1.1 million.

The Corporation’s net investment in the self-sustaining foreign subsidiary, Cabovisão – Televisão por Cabo, S.A.

(“Cabovisão”), is exposed to market risk attributable to fluctuations in foreign currency exchange rates, 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

Cabovisão was borrowed directly in Euros. This debt is designated as a hedge of the net investment in self-sustaining

foreign subsidiaries and accordingly, the Corporation realized a foreign exchange gain of $0.6 million in the first three

months of fiscal 2010 which is presented in other comprehensive income. The exchange rate used to convert the Euro

into Canadian dollars for the balance sheet accounts at November 30, 2009 was $1.5852 per Euro compared to $1.5698

per Euro at August 31, 2009. The average exchange rate prevailing during the first quarter used to convert the operating

results of the European operations was $1.5732 per Euro, compared to $1.5462 per Euro for the same period of the prior

year.

- 10 -

The following table shows the Canadian dollar impact of a 10% change in the average exchange rate of the Euro currency

into Canadian dollars on European operating results for the first quarter e nded November 30, 2009:

Quarter ended November 30, 2009 As reported

Exchange rate

impact

($000) $ $

(unaudited) (unaudited)

Revenue 53,005 5,301

Operating income before amort iz ati o n 10,176 1,018

Net loss (11,693)

(1,169)

The Corporation is also impacted by foreign currency exchange rates, primarily changes in the values of the US dollar

relative to the Canadian dollar with regards to purchases of equipment, as the majority of customer premise equipment is

purchased and subsequently paid in US dollars. Please consult the “Fixed charges” section of this MD&A and the Foreign

Exchange Risk section in note 13 of the consolidated financial statements for further details.

CANADIAN OPERATION S

CUSTOMER STATISTICS

Net additions % of Penetration

(1)

November 30, Quarters ended November 30, November 30,

2009 2009 2008 2009 2008

RGU 2,223,035 63,172 65,463 – –

Basic Cable service customers

873,724 8,919 8,833 – –

HSI service custome r s 532,558 17,506 19,509 64.5 59.6

Digital Television service customers 514,504 16,106 18,220 59.8 54.0

Telephony service customers 302,249 20,641 18,901 38.0 31.6

(1)

As a percentage of Basic Cable service customers in areas served.

Fiscal 2010 first quarter RGU net additions were essentially the same as the comparable period of the prior year, and the

Canadian operations continue to generate RGU growth despite early signs of maturation of some of its services. The

number of net additions for Basic Cable service customers stood at 8,919 compared to 8,833 for the same period of the

prior year, mainly due to the beginning of the school year for college and university students and from expansions in the

network. In the quarter, Telephony service customers grew by 20,641 compared to 18,901 for the same period last year,

and the number of net additions to HSI service stood at 17,506 customers for the quarter, compared to 19,509 customers

for the same period last year. HSI and Telephony net additions continue to stem from the enhancement of the product

offering, the impact of the bundled offer (Cogeco Complete Connection) of Television, HSI and Telephony services, and

promotional activities. Telephony service coverage, as a percentage of homes passed, is now above 90% compared to

87% at November 30, 2008. The Digital Television service net additions stood at 16,106 customers compared to

18,220 customers for the first quarter, and are due to targeted marketing initiatives to improve penetration and to the

continuing strong interest for high definition (“HD”) television servi c e.

- 11 -

OPERATING RESULTS

Quarters ended November 30,

2009 2008

(1)

Change

($000, except percentages) $ $ %

(unaudited) (unaudited)

Revenue 264,360 237,374 11.4

Operating costs 145,589 136,477 6.7

Management fees – COGECO Inc. 6,341 5,981 6.0

Operating income before amort iz ati o n 112,430 94,916 18.5

Operating margin 42.5% 40.0%

(1)

Certain comparative figures have been restated to reflect the application of the CICA Handbook Section 3064. Please refer to the “Accounting policies and

estimates” section for more details.

Revenue

First quarter revenue rose by $27 million, or 11.4%, to reach $264.4 million mainly due to the introduction of HSI usage

billing, RGU growth and the impact of rate increases implemented in the second half of fiscal 2009 in Ontario, averaging

$1.00 per Basic Cabl e service customer.

Operating costs

For the first three months of fiscal 2010, operating costs excluding management fees payable to COGECO Inc. increased

by $9.1 million, or 6.7%, to reach $145.6 million. The increase in operating costs is mainly attributable to servicing

additional RGU and to the additional levy amounting to 1.5% of gross Cable Television service revenue imposed by the

CRTC in order to finance the LPIF.

Operating income before amortization

Operating income before amortization rose by $17.5 million, or 18.5%, to reach $112.4 million in the first quarter. The

operating income before amortization has risen due to the increased revenue outpacing the operating costs growth.

Cogeco Cable’s Canadian operations’ first-quarter operating margin increased to 42.5% compared to 40% for the same

period in the prior year.

EUROPEAN OPERATIONS

CUSTOMER STATISTICS

Net additions (losses) % of Penetration

(1)

November 30, Quarters ended November 30, November 30,

2009 2009 2008 2009 2008

RGU

758,988 26,613 (12,749) – –

Basic Cable service customers

258,918 (562)

(8,035) – –

HSI service custome r s

148,823 5,209 (5,209) 57.5 53.5

Digital Television service customers

118,867 16,114 5,397 45.9 10.4

Telephony service customers

232,380 5,852 (4,902) 89.8 83.4

(1)

As a percentage of Basic Cable service customers in areas served.

- 12 -

In the first quarter of fiscal 2010, net additions have begun to stabilize and reflect the benefits of the Corporation’s

customer retention and acquisition strategies launched at the end of the 2009 fiscal year in order to reduce the customer

attrition brought on by the difficult competitive landscape in Portugal and economic environment in the Iberian Peninsula

throughout the previous fiscal year. Fiscal 2010 first quarter Basic Cable service customers decreased by 562 customers

compared to a decrease of 8,035 customers in the comparable period of the prior year. HSI service customers increased

by 5,209 customers compared to a decrease of 5,209 customers in the first three months of fiscal 2009. The number of

Digital Television service customers grew by 16,114 customers in the first quarter of the current fiscal year compared to

5,397 customers in the first quarter of the prior year. Telephony service customers increased by 5,852 customers

compared to a loss of 4,902 customers for the same period of the preceding year.

OPERATING RESULTS

Quarters ended November 30,

2009 2008

(1)

Change

($000, except percentages) $ $ %

(unaudited) (unaudited)

Revenue 53,005 62,064 (14.6)

Operating costs 42,829 41,250 3.8

Operating income before amort iz ati o n 10,176 20,814 (51.1)

Operating margin 19.2% 33.5%

(1)

Certain comparative figures have been restated to reflect the application of the CICA Handbook Section 3064. Please refer to the “Accounting policies and

estimates” section for more details.

Revenue

Fiscal 2010 first-quarter revenue decreased by $9.1 million, or 14.6%, at $53 million, due to lower Basic Cable service

customers compared to the same period of last year and to the impact of retention strategies implemented in the second

half of fiscal 2009 in order to reduce customer attrition, partly offset by the strength of the Euro compared to the Canadian

dollar. Revenue from the European operations in the local currency for the first quarter amounted to €33.7 million, a

decrease of €6.5 million, or 16.1%, when compared to the prior year.

Operating costs

For the first quarter, operating costs increased by $1.6 million to reach $42.8 million, an increase of 3.8% compared to the

prior year. The increase in operating costs is mainly attributable to marketing initiatives, including the launch of new

channels, and to the unfavourable impact of the appreciation of the Euro over the Canadian dollar, partly offset by cost

reduction initiatives implemented by Cabovisão, such as a headcount reduction plan. Operating costs from the European

operations for the first three months of fiscal 2010 in the local currency amounted to €27.2 million, an increase of

€0.6 million, or 2.2% when compared to the first three months of the prior year.

Operating income before amortization

For the first quarter, operating income before amortization decreased to $10.2 million from $20.8 million for the same

period of the prior year, representing a decrease of $10.6 million, or 51.1%, mainly due to increases in operating costs

and decreases in revenue. European operations’ operating margin decreased for the first quarter to 19.2% from 33.5% in

the prior year. Operating income before amortization in the local currency amounted to €6.5 million for the first quarter, a

decrease of €7 million, or 52.1%, when compared to operating income before amortization of €13.5 million for the first

three months of the prior year.

FISCAL 2010 FINANCIAL GUIDELINES

Given the improved performance of the Corporation during the first quarter, the expected trend for fiscal 2010 and the

Ontario provincial corporate income tax rate reductions announced on March 26, 2009 and considered substantively

enacted on November 16, 2009, management has revised most of its guidelines for the 2010 fiscal year.

- 13 -

Management has revised upwards its guidelines to reflect better the HSI usage billing and the charge back of LPIF costs

to our Canadian Cable Tele vision service customers. RGU growth should also increase due to the continued demand for

cable telecommunications services. In addition, the projected foreign currency exchange rate from the Euro to the

Canadian dollar is revised upwards. During the last segment of fiscal 2009, Cabovisão launched new channels and

implemented retention strategies, which combined with new marketing and other operating initiatives, have helped reduce

customer attrition since their implementation. However, Cabovisão is still facing fierce competition in the Portuguese

market.

Subsequent to these adjustments, projected revenue, operating income before amortization and net income were revised

upwards. The increase in projected revenue to $1,290 million from $1,250 million should come from both the Canadian

and European operations. The operating income before amortization should increase to $505 million from $481 million,

operating margin should increase to 39.1% from 38.5 % and net income should i ncrease to about $125 million.

As a result of the revised projections, free cash flow is now expected to reach $135 million from the $125 million initially

projected.

Consolidated

Revised Projections Projections

January 12, 2010 October 29, 2009

(in millions of dollars, except RGU growth and operating margin) Fiscal 2010 Fiscal 2010

Financial guidelines

Revenue 1,290 1,250

Operating income before amort iz ati o n 505 481

Operating margin 39.1% 38.5%

Amortization 273 273

Financial expens e 69 70

Current income taxes (40) (55)

Net income 125 80

Capital expenditures and increase in deferred charges 341 341

Free cash flow 135 125

RGU growth 150,000 125,000

The exchange rate used for the fiscal 2010 revised projections is $1.55 per Euro compared to $1.50 per Euro for the

October 29, 2009 projections.

CONTROLS AND PRO CEDURES

The President and Chief Executive Officer (“CEO”) and the Senior Vice President and Chief Financial Officer (“CFO”),

together with management, are responsible for establis hing and maintaining adequate disclosure controls and procedures

and internal controls over financial reporting, as defined in NI 52-109. Cogeco Cable’s internal control framework is based

on the criteria published in the report “Internal Control-Integrated Framework” issued by the Committee of Sponsoring

Organizations of the Treadway Commission and is designed to provide reasonable assurance regarding the reliability of

financial reporting and the preparation of financial statements for external purposes in accordance with Canadian GAAP.

The CEO and CFO, supported by management, evaluated the design of the Corporation’s disclosure controls and

procedures and internal controls over financial reporting as of November 30, 2009, and have concluded that they were

adequate.

UNCERTAINTIES AND M AIN RISK FACTO RS

There has been no significant change in the uncertainties and main risk factors faced by the Corporation since

August 31, 2009. A detailed description of the uncertainties and main risk factors faced by Cogeco Cable can be found in

the 2009 Annual Report.

- 14 -

ACCOUNTING POLICIES AND ESTIMATES

There has been no significant change in Cogeco Cable’s accounting policies, estimates and future accounting

pronouncements since August 31, 2009, except as described below. A description of the Corporation’s policies and

estimates can be found in the 2009 Annual Report.

Goodwill and intangible assets

In February 2008, the CICA issued Section 3064, Goodwill and intangible assets, replacing Section 3062, Goodwill and

other intangible assets and Section 3450, Research and development costs. The new Section established standards for

the recognition, measurement, presentation and disclosure of goodwill subsequent to its initial recognition and of

intangible assets by profit-oriented enterprises. Standards concerning goodwill remained unchanged from the standards

included in the previous Section 3062. The new Section was applicable to interim and annual financial statements relating

to fiscal years beginning on or after October 1, 2008, with retroactive application. The adoption of Section 3064 eliminated

the deferral of new service launch costs which are now recognized as an expense when they are incurred. Reconnect and

additional services activation costs are capitalized up to an amount not exceeding the revenue generated by the

reconnect activity. Consequently, the Corporation adjusted opening retained earnings on a retroactive basis and the prior

period comparative figures have been restated. The adoption of this new section had the following impacts on the

Corporation’s consolidated financial statements:

Consolidated statement of income

Increase (decrease) Quarter ended November 30, 2008

($000) $

(unaudited)

Operating costs 3,993

Amortization of deferred charges

(3,176)

Future income tax expens e

(211)

Net income (606)

Consolidated balance shee t s

Increase (decrease) August 31, 2009 Septemb er 1, 200 8

($000) $ $

(unaudited) (unaudited)

Deferred charges (34,491)

(32,325)

Future income tax liabili ties

(10,212)

(9,599)

Retained earnings (deficit) (24,279)

(22,726)

FUTURE ACCOUNTING PRO NOUN CEMENTS

Harmonization of Canadian and International accounting standards

Throughout the quarter, the Corporation has continued its project for the transition from Canadian GAAP to International

Financial Reporting Standards (“IFRS”). The conversion project is progressing according to the established plan and the

Corporation expects to meet its target date for migration. Please refer to the 2009 Annual Report for more details.

NON-GAAP FINANCI AL 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 therefore, may not be comparable to

similar measures presented by other companies. These measures include “cash flow from operations”, “free cash flow”,

“operating income before amortization”, “operating margin”, “adjusted net income” and “adjusted earnings per share”.

- 15 -

Cash flow from operations and fr ee cash flow

Cash flow from operations is used by Cogeco Cable’s management and investors to evaluate cash flows generated by

operating activities, excluding the impact of changes in non-cash operating items. This allows the Corporation to isolate

the cash flows 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”. 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.

Cash flow from operations is calculated as follows:

Quarters ended November 30,

2009 2008

(1)

($000) $ $

(unaudited) (unaudited)

Cash flow from operating activities (3,618)

24,481

Changes in non-cash operating items

133,847 63,136

Cash flow from operations 130,229 87,617

(1)

Certain comparative figures have been restated to reflect the application of the CICA Handbook Section 3064. Please refer to the “Accounting policies and

estimates” section for more details.

Free cash flow is calculated as follows:

Quarters ended November 30,

2009 2008

(1)

($000) $ $

(unaudited) (unaudited)

Cash flow from operations 130,229 87,617

Acquisition of fixed assets

(65,016)

(65,667)

Increase in deferred charges

(3,064)

(3,214)

Assets acquired under capital leases – as per note 11 c)

(141)

(939)

Free cash flow 62,008 17,797

(1)

Certain comparative figures have been restated to reflect the application of the CICA Handbook Section 3064. Please refer to the “Accounting policies and

estimates” section for more details.

Operating income before amortization and opera ting margin

Operating income before 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 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 left over, before income

taxes, to pay for its fixed costs, such as interest on Indebtedness. Operating margin is calculated by dividing operating

income before amortizatio n by revenue.

- 16 -

The most comparable Canadian GAAP financial measure is operating income. Operating income before amortization and

operating margin are calculated as follows:

Quarters ended November 30,

2009 2008

(1)

($000, except percentages) $ $

(unaudited) (unaudited)

Operating income 57,041 54,984

Amortization 65,565 60,746

Operating income before amortization 122,606 115,730

Revenue 317,365 299,438

Operating Margin 38.6% 38.6%

(1)

Certain comparative figures have been restated to reflect the application of the CICA Handbook Section 3064. Please refer to the “Accounting policies and

estimates” section for more details.

Adjusted net income and adjusted earnings per share

Adjusted net income and adjusted earnings per share are used by Cogeco Cable’s management and investors to

evaluate what would have been the net income and earnings per share excluding unusual adjustments. This allows the

Corporation to isolate the unusual adjustments in order to evaluate the net income and earnings per share from ongoing

activities.

The most comparable Canadian GAAP financial measures are net income and earnings per share. Adjusted net income

and adjusted earning s per share are calculated as foll ows:

Quarters ended November 30,

2009 2008

(1)

($000) $ $

(unaudited) (unaudited)

Net income 56,666 22,945

Adjustment for the reduction of Ontario provincial corporate income tax rates (29,782)

Adjusted net income 26,884 22,945

Weighted average number of multiple voting and subordinate voting shares outstanding

48,550,216 48,523,769

Effect of dilutive stock options

81,872 212,875

Effect of dilutive incentive share units

8,310 –

Weighted average number of diluted multiple voting and subordinate voting shares outstanding

48,640,398 48,736,644

Adjusted earnings per share

Basic 0.55 0.47

Diluted 0.55 0.47

(1)

Certain comparative figures have been restated to reflect the application of the CICA Handbook Section 3064. Please refer to the “Accounting policies and

estimates” section for more details.

ADDITIONAL INFORMATION

This MD&A was prepared on January 12, 2010. Additional information relating to the Corporation, including its Annual

Information Form, is available on the SEDAR website at www.sedar.com.

- 17 -

ABOUT COGE CO CABLE

Cogeco Cable (www.cogeco.ca) is a telecommunications company, the second largest cable operator in Ontario, Québec

and Portugal in terms of the number of Basic Cable service customers served. Through its two-way broadband cable

networks, Cogeco Cable provides its residential customers with Audio, Analogue and Digital Television, as well as HSI

and Telephony services. Cogeco Cable also provides, to its commercial customers, data networking, e-business

applications, video conferencing, hosting services, Ethernet, private line, VoIP, HSI access, dark fibre, data storage, data

security and co-location services and other advanced communication solutions. Cogeco Cable’s subordinate voting

shares are listed on the Toronto Stock Exchange (TSX: CCA).

– 30 –

Source: Cogeco Cable Inc.

Pierre Gagné

Senior Vice President and Chief Financial Officer

Tel.: 514-764-4700

Information: Media

Marie Carrier

Director, Corporate Communications

Tel.: 514-764-4700

Analyst Conference Call: Wednesday, January 13, 2010 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

five minutes before the start of the conference:

Canada/USA Access Nu mber: 1 888 300-0053

International Access Number: + 1 647 427-3420

Confirmation Code: 5342110

By Internet at www.cogeco.ca/investors

A rebroadcast of the conference call will be available until January 20, by dialling:

Canada and USA access number: 1 800 642-1687

International access number: + 1 706 645-9291

Confirmation code: 5342110

- 18 -

Supplementary Quarterly Financial Information

(unaudited)

Quarters ended November 30, August 31, May 31, February 28 / 29,

2009 2008

(1)

2009

(1)

2008

(1)(2)

2009

(1)

2008

(1)(2)

2009

(1)

2008

(1)(2)

($000, except percentages and

per share data) $ $ $ $ $ $ $ $

Revenue 317,365 299,438 307,807 284,908 305,672 274,944 304,920 265,102

Operating income before

amortization

(2)

122,606 115,730 143,892 117,538 125,951 112,925 122,303 105,028

Operating margin

(2)

38.6% 38.6% 46.7% 41.3% 41.2% 41.1% 40.1% 39.6%

Operating income 57,041 54,984 75,624 58,802 62,086 57,552 59,105 52,057

Impairment of goodwill and

intangible assets – – – – – – 399,648 –

Income taxes (15,766) 8,645 22,005 9,617 26,357 10,443 (207)

(14,502)

Net income (l oss) 56,666 22,945 44,698 30,433 32,453 29,735 (358,324)

49,423

Adjusted net income

(3)

26,884 22,945 26,123 30,433 27,665 29,735 25,306 49,423

Cash flow from operating

activities (3,618) 24,481 175,450 139,286 99,956 108,232 115,282 87,361

Cash flow from operations

(3)

130,229 87,617 108,631 95,085 92,030 91,262 95,928 81,643

Free cash flow

(3)

62,008 17,797 14,759 21,075 31,891 36,901 30,965 19,305

Earnings (loss) per share

(4)

Basic 1.17 0.47 0.92 0.63 0.67 0.61 (7.38)

1.02

Diluted 1.16 0.47 0.92 0.62 0.67 0.61 (7.38)

1.01

Adjusted earnings per share

(3)(4)

Basic 0.55 0.47 0.54 0.63 0.57 0.61 0.52 1.02

Diluted 0.55 0.47 0.54 0.62 0.57 0.61 0.52 1.01

(1)

Certain comparativ e figures have been restated to reflect the application of the Canadian Institute of Chartered Accountants (“ CICA”) Handbook Section 3064.

Please refer to the “Accounting policies and estimates” section of the Management’s discussion and analysis for more details.

(2)

Certain comparative figures have been reclassified to reflect the reclassification of foreign exchange gains or losses from operating costs to financial expense.

(3)

The indicated terms do not have standardiz ed def inition s prescr ibed by Canadia n Generally Acc epted Accounting Pri nciples (“GAAP ”) and therefo re, may not be

comparable to similar measures presented by other companies. For more details, please consult the “Non-GAAP financial measures” section of the

Management’s discussion and analysis.

(4)

Per multiple and subordinate voting share.

SEASONAL VARIATIONS

Cogeco Cable’s operating results are not generally subject to material seasonal ﬂuctuations. However, the loss in Basic

Cable service customers is usually greater, and the addition of HSI service customers is generally lower, in the second

half of the fiscal year as a result of a decrease in economic activity due to the beginning of the vacation period, the end of

the television seasons, and students leaving their 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 in Canada, and Aveiro, Covilhã, Evora, Guarda and Coimbra in Portugal. Furthermore, the

third and fourth quarter’s operating margin is usually higher as no management fees are paid to COGECO Inc. Under the

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 in the second quarter of fiscal 2009, Cogeco Cable paid no management fees in the

second half of fiscal 2009. For further details, please consult the “Related party transactions” section of the Management’s

discussion and analysi s.

- 19 -

Customer Statistics

(unaudited)

November 30, 2009 Augus t 31, 20 09

Homes passed

Ontario 1,052,470 1,049,818

Québec 518,163 515,327

Canada 1,570,633 1,565,145

Portugal

(1)

905,197 905,129

Total 2,475,830 2,470,274

Homes connected

(2)

Ontario 667,017 658,690

Québec 288,535 285,944

Canada 955,552 944,634

Portugal 268,202 269,022

Total 1,223,754 1,213,656

Revenue-generating units

Ontario 1,526,556 1,483,324

Québec 696,479 676,539

Canada 2,223,035 2,159,863

Portugal 758,988 732,375

Total 2,982,023 2,892,238

Basic Cable service customers

Ontario 604,028 597,651

Québec 269,696 267,154

Canada 873,724 864,805

Portugal 258,918 259,480

Total 1,132,642 1,124,285

High Speed Internet service customers

Ontario 387,497 374,906

Québec 145,061 140,146

Canada 532,558 515,052

Portugal 148,823 143,614

Total 681,381 658,666

Digital Television service customers

Ontario 336,270 326,227

Québec 178,234 172,171

Canada 514,504 498,398

Portugal 118,867 102,753

Total 633,371 601,151

Telephony service customer s

Ontario 198,761 184,540

Québec 103,488 97,068

Canada 302,249 281,608

Portugal 232,380 226,528

Total 534,629 508,136

(1)

The Corporation is currently assessing the number of homes passed.

(2)

Includes Basic Cable service customers and HSI and Telephony service customers who do not subscribe to other cable services.

- 20 -

COGECO CABLE INC.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

Three months ended November 30,

(In thousands of dollars, except per share data)

2009 2008

$ $

(restated, see note 1)

Revenue

Service

315,333 297,393

Equipment

2,032 2,045

317,365 299,438

Operating costs

188,418 177,727

Management fees – COGECO Inc.

6,341 5,981

Operating income before amortization

122,606 115,730

Amortization (note 3)

65,565 60,746

Operating income

57,041 54,984

Financial expense (note 4)

16,141 23,394

Income before income taxes

40,900 31,590

Income taxes (note 5)

(15,766)

8,645

Net income

56,666 22,945

Earnings per share (note 6)

Basic

1.17 0.47

Diluted

1.16 0.47

- 21 -

COGECO CABLE INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

Three months ended November 30,

(In thousands of dollars)

2009

2008

(restated, see note 1)

Net income

56,666

22,945

Other comprehensive income

Unrealized gains (losses) on derivative financial instruments designated as cash flow hedges, net of

income tax recovery

of $2,141,000 (income tax expense of $3,387,000 in 2008)

(3,769)

25,789

Reclassification to net income of realized losses (gains) on derivative financial instruments

designated as cash flow hedges, net of income tax recovery of $1,007,000 (income tax expense of

$4,323,000 in 2008)

6,479

(28,391)

Unrealized gains on translation of a net investment in self-sustaining foreign subsidiaries

2,726

6,080

Unrealized losses on translation of long-term debts designated as hedges of a net investment in self-

sustaining foreign subsidiaries

(2,091)

(3,359)

3,345

119

Comprehensive income

60,011

23,064

- 22 -

COGECO CABLE INC.

CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (DEFICIT)

(unaudited)

Three months ended November 30,

(In thousands of dollars) 2009

2008

(restated, see note 1)

Balance at beginning, as reported 17,172

297,150

Changes in accounting policies (note 1) (24,279)

(22,726)

Balance at beginning, as restated (7,107)

274,424

Net income 56,666

22,945

Dividends on multiple voting shares (2,197)

(1,883)

Dividends on subordinate voting shares (4,601)

(3,940)

Balance at end 42,761

291,546

- 23 -

COGECO CABLE INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

(In thousands of dollars)

November 30, 2009

August 31, 2009

(restated, see note 1)

Assets

Current

Cash and cash equivalents (note 11 b)) 17,477

39,458

Accounts receivable 63,392

60,051

Income taxes receivable 25,255

4,700

Prepaid expenses 15,542

14,337

Future income tax assets 4,934

4,275

126,600

122,821

Fixed assets 1,308,488

1,302,238

Deferred charges 23,902

24,052

Intangible assets (note 7) 1,021,241

1,022,434

Goodwill (note 7) 149,615

153,695

Derivative financial instruments ─

4,236

Future income tax assets 2,308

1,436

2,632,154

2,630,912

Liabilities and Shareholders’ equity

Liabilities

Current

Bank indebtedness 44,336

─

Accounts payable and accrued liabilities 174,043

244,173

Income tax liabilities 761

41,020

Deferred and prepaid revenue 36,059

33,877

Current portion of long-term debt (note 8) 44,661

44,674

Future income tax liabilities 20,209

─

320,069

363,744

Long-term debt (note 8) 1,018,589

1,009,788

Derivative financial instruments 3,842

2,168

Deferred and prepaid revenue and other liabilities 12,918

12,900

Pension plan liabilities and accrued employees benefits 3,454

3,113

Future income tax liabilities 214,039

231,815

1,572,911

1,623,528

Shareholders’ equity

Capital stock (note 9) 990,061

990,061

Treasury shares (1,744)

─

Contributed surplus 5,239

4,849

Retained earnings (deficit) 42,761

(7,107)

Accumulated other comprehensive income (note 10) 22,926

19,581

1,059,243

1,007,384

2,632,154

2,630,912

- 24 -

COGECO CABLE INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

Three months ended November 30,

(In thousands of dollars)

2009

2008

(restated, see note 1)

Cash flow from operating activities

Net income

56,666

22,945

Adjustments for:

Amortization (note 3)

65,565

60,746

Amortization of deferred transaction costs and discounts on long-term debt

748

648

Future income taxes (note 5)

6,421

2,700

Stock-based compensation

459

Loss on disposal of fixed assets

223

Other

272

299

130,229

87,617

Changes in non-cash operating items (note 11 a))

(133,847)

(63,136)

(3,618)

24,481

Cash flow from investing activities

Acquisition of fixed assets (note 11 c))

(65,016)

(65,667)

Increase in deferred charges

(3,064)

(3,214)

Other

(68,060)

(68,865)

Cash flow from financing activities

Increase in bank indebtedness

44,336

21,631

Net increase under the term facility

14,916

8,297

Issuance of long-term debt, net of discounts and transaction costs

─

254,771

Repayment of long-term debt and settlement of derivative financial instruments

(1,215)

(239,734)

Issue of subordinate voting shares

─

278

Acquisition of treasury shares (note 9)

(1,744)

─

Dividends on multiple voting shares

(2,197)

(1,883)

Dividends on subordinate voting shares

(4,601)

(3,940)

49,495

39,420

Effect of exchange rate changes on cash and cash equivalents denominated in foreign currencies

202

687

Net change in cash and cash equivalents

(21,981)

(4,277)

Cash and cash equivalents at beginning

39,458

36,371

Cash and cash equivalents at end

17,477

32,094

See supplemental cash flow information in note 11.

- 25 -

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2009

(unaudited)

(amounts in tables are in thousands of dollars, except number of shares and 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 (“GAAP”), present fairly the financial position of

Cogeco Cable Inc. (“the Corporation”) as at November 30, 2009 and August 31, 2009 as well as its results of

operations and its cash flows for the three month periods ended November 30, 2009 and 2008.

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, 2009. These unaudited interim consolidated financial statements follow the

same accounting policies as the most recent annual consolidated financial statements, except for the adoption of the

new accounting policies described below.

Goodwill and intangible assets

In February 2008, the CICA issued Section 3064, Goodwill and intangible assets, replacing Section 3062, Goodwill

and other intangible assets and Section 3450, Research and development costs. The new Section established

standards for the recognition, measurement, presentation and disclosure of goodwill subsequent to its initial

recognition and of intangible assets by profit-oriented enterprises. Standards concerning goodwill remained

unchanged from the standards included in the previous Section 3062. The new Section was applicable to interim and

annual financial statements relating to fiscal years beginning on or after October 1, 2008, with retroactive

application. The adoption of Section 3064 eliminated the deferral of new service launch costs which are now

recognized as an expense when they are incurred. Reconnect and additional services activation costs are capitalized

up to an amount not exceeding the revenue generated by the reconnect activity. Consequently, the Corporation

adjusted opening retained earnings on a retroactive basis and the prior period comparative figures have been

restated. The adoption of this new section had the following impacts on the Corporation’s consolidated financial

statements:

Consolidated statement of income

Three months ended November 30, 2008

Increase (decrease) $

Operating costs 3,993

Amortization of deferred charges (3,176)

Future income tax expense (211)

Net income (606)

Consolidated balance shee ts

August 31, 2009 September 1, 2008

Increase (decrease) $ $

Deferred charges (34,491) (32,325)

Future income tax liabilities (10,212) (9,599)

Retained earnings (deficit) (24,279) (22,726)

- 26 -

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2009

(unaudited)

(amounts in tables are in thousands of dollars, except number of shares and per share data)

2. Segmented Information

The Corporation’s activities are comprised of Cable Television, High Speed Internet (“HSI”), Telephony and other

telecommunications services. The Corporation considers its Cable Television, HSI, Telephony and other

telecommunications activities as a single operating segment. The Corporation’s activities are carried out in Canada

and in Europe.

The principal financi al information per business segment is pre sente d in the table below:

Canada Europe Consolidated

Three months ended November 30, 2009

2008

2009

2008

2009

2008

(restated)

Revenue 264,360

237,374

53,005

62,064

317,365

299,438

Operating costs 145,589

136,477

42,829

41,250

188,418

177,727

Management fees − COGECO Inc. 6,341

5,981

─

6,341

5,981

Operating income before amortization 112,430

94,916

10,176

20,814

122,606

115,730

Amortization 45,414

40,204

20,151

20,542

65,565

60,746

Operating income (loss) 67,016

54,712

(9,975)

272

57,041

54,984

Financial expense (revenue) 15,875

23,405

266

(11)

16,141

23,394

Income taxes (17,218)

10,177

1,452

(1,532)

(15,766)

8,645

Net income (loss) 68,359

21,130

(11,693)

1,815

56,666

22,945

Total assets

(1)

2,277,280

2,262,639

354,874

368,273

2,632,154

2,630,912

Fixed assets

(1)

1,022,353

1,011,767

286,135

290,471

1,308,488

1,302,238

Intangible assets

(1)

1,021,241

1,022,434

─

1,021,241

1,022,434

Goodwill

(1)

116,243

33,372

37,452

149,615

153,695

Acquisition of fixed assets

(2)

52,148

55,751

13,009

10,855

65,157

66,606

(1)

At November 30, 2009 and August 31, 2009.

(2)

Includes capital leases that are excluded from the consolidated statements of cash flows.

- 27 -

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2009

(unaudited)

(amounts in tables are in thousands of dollars, except number of shares and per share data)

3. Amortization

Three months ended November 30,

2009 2008

$ $

(restated)

Fixed assets 61,565 54,270

Deferred charges 2,807 2,607

Intangible assets 1,193 3,869

65,565 60,746

4. Financial expense

Three months ended November 30,

2009 2008

$ $

Interest on long-term debt 15,819 20,027

Foreign exchange losses (gains) (488) 3,784

Amortization of deferred transaction costs 407 407

Other 403 (824)

16,141 23,394

5. Income Taxes

Three months ended November 30,

2009 2008

$ $

(restated)

Current (22,187) 5,945

Future 6,421 2,700

(15,766) 8,645

- 28 -

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2009

(unaudited)

(amounts in tables are in thousands of dollars, except number of shares and per share data)

5. Income Taxes (continued)

The following table provides the reconciliation between Canadian statutory federal and provincial income taxes and

the consolidated income tax expense:

Three months ended November 30,

2009 2008

$ $

(restated)

Income before income taxes 40,900 31,590

Combined income tax rate 31.51 % 32.56 %

Income taxes at combined income tax rate 12,888 10,285

Adjustment for losses or income subject to lower or higher tax rates

(2,378) (227)

Decrease in future income taxes as a result of decrease in substantively

enacted tax rates

(29,782)

─

Utilization of pre-acquisition tax losses 4,432 ─

Income taxes arising from non-deductible expenses 203 77

Effect of foreign income tax rate differences 247 (1,604)

Other (1,376) 114

Income taxes at effective income tax rate (15,766) 8,645

6. Earnings per Share

The following table provides the recon ciliation between basic and diluted earnings per share:

Three months ended November 30,

2009 2008

$ $

(restated)

Net income 56,666 22,945

Weighted average number of multiple voting and subordinate voting shares outstanding 48,550,216 48,523,769

Effect of dilutive stock options

(1)

81,872 212,875

Effect of dilutive incentive share units 8,310 ─

Weighted average number of diluted multiple voting and subordinate voting shares outstanding 48,640,398 48,736,644

Earnings per share

Basic 1.17 0.47

Diluted 1.16 0.47

(1)

For the three month period ended November 30, 2009, 269,857 stock options (109,497 in 2008) were excluded from the calculation of diluted earnings per

share as the exercise price of the options was greater than the average share price of the subordinate voting shares.

- 29 -

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2009

(unaudited)

(amounts in tables are in thousands of dollars, except number of shares and per share data)

7. Goodwill and Other Intangible Assets

November 30, 2009 August 31, 2009

$ $

Customer relationships 31,689 32,882

Customer base

989,552 989,552

1,021,241 1,022,434

Goodwill

149,615 153,695

1,170,856 1,176,129

a) Intangible assets

During the first three months, intangible assets variations were as follows:

Customer

relationships

Customer

base

Total

$ $ $

Balance as at August 31, 2009 32,882 989,552 1,022,434

Amortization (1,193) ─ (1,193)

Balance as at November 30, 2009 31,689 989,552 1,021,241

b) Goodwill

During the first three months, goodwill variation was as follows:

Balance as at August 31, 2009 153,695

Recognition of pre-acquisition tax losses (4,432)

Foreign currency translation adjustment 352

Balance as at November 30, 2009 149,615

On November 25, 2009, the Corporation’s subsidiary, Cabovisão-Televisão por Cabo, S.A., received approval to its

request for preservation of tax losses for the years preceeding the 2006 taxation year. Accordingly, the recognition of

these pre-acquisition tax losses in the three month period ended November 30, 2009, has reduced goodwill by

approximately $4.4 million.

- 30 -

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2009

(unaudited)

(amounts in tables are in thousands of dollars, except number of shares and per share data)

8. Long-Term Debt

Maturity

Interest rate November 30, 2009 August 31, 2009

% $

Parent company

Term Facility

Term loan – €78,413,625 2011

1.19

(1)(2)

123,949

122,674

Term loan – €17,358,700 2011

1.19

(1)(2)

27,423

27,142

Revolving loan – €40,000,000 2011

1.19

(1)

63,408

62,792

Revolving loan 2011

2.25 15,000

─

Senior Secured Notes Series B 2011

7.73 174,582

174,530

Senior Secured Notes

Series A – US$190 million 2015

7.00 199,169

206,606

Series B 2018

7.60 54,584

54,576

Senior Secured Debentures Series 1 2014

5.95 296,922

296,860

Senior Unsecured Debenture 2018

5.94 99,791

99,786

Subsidiaries

Obligations under capital leases 2013

6.73 – 9.93 8,422

9,496

1,063,250

1,054,462

Less current portion 44,661

44,674

1,018,589

1,009,788

(1)

Interest rate on debt as at November 30, 2009, including stamping fees.

(2)

On January 21, 2009, the Corporation entered into a swap agreement with a financial institution to fix the floating benchmark interest rate with respect to

the Euro-denominated Term Loan facilities for a notional amount of €111.5 million. The interest swap rate to hedge the Term Loans has been fixed at

2.08% until their maturity on July 28, 2011. The notional value of the swap will decrease in line with the amortization schedule of the Term Loans. In

addition to the interest swap rate of 2.08%, the Corporation will continue to pay the applicable margin on these Term Loans in accordance with the Term

Facility.

- 31 -

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2009

(unaudited)

(amounts in tables are in thousands of dollars, except number of shares and per share data)

9. 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 i ssue d in series.

Multiple voting shares, 10 votes per share.

Subordinate voting shares, 1 vote per share.

Issued

November 30, 2009 August 31, 2009

$ $

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

32,867,426 subordinate voting shares 891,715 891,715

990,061 990,061

Stock-based plans

The Corporation offers, 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 three months of 2010, the Corporation granted 63,695 stock options

(133,381 in 2008) with an exercise price of $31.82 ($34.46 in 2008) of which 33,266 stock options (29,711 in 2008)

were granted to COGECO Inc.’s employees. During the first three months of 2010, the Corporation charged COGECO

Inc. an amount of $115,000 ($12,000 in 2008) with regards to the Corporation’s options granted to COGECO Inc.’s

employees. As a result, a compensation expense of $222,000 ($89,000 in 2008) was recorded for the three month

period ended November 30, 2009.

The weighted average fair value of stock options granted for the three month period ended November 30, 2009 was

$8.11 ($8.96 in 2008) per option. The weighted average 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:

2009 2008

% %

Expected dividend yield

1.49 1.40

Expected volatility

29 29

Risk-free interest rate

2.67 4.22

Expected life in years

4.8 4.0

- 32 -

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2009

(unaudited)

(amounts in tables are in thousands of dollars, except number of shares and per share data)

9. Capital Stock (continued)

At November 30, 2009, the Corporation had outstanding stock options providing for the subscription of 770,042

subordinate voting shares. These stock options can be exercised at various prices ranging from $7.05 to $49.82 and

at various dates up to October 29, 2019.

Effective October 29, 2009, the Corporation established a senior executive and designated employee incentive share

unit plan. According to the plan, senior executives and designated employees periodically receive a given number of

units (“Incentive Share Units”) which entitle the participant to receive subordinate voting shares of the Corporation

after three years less one day from the date of grant. During the first three months of 2010, the Corporation granted

55,094 Incentive Share Units of which 9,981 Incentive Share Units were granted to COGECO Inc.’s employees. The

Corporation establishes the value of the compensation related to the Incentive Share Units granted based on the fair

value of the Corporation’s subordinate voting shares at the date of grant and a compensation expense is recognized

over the vesting period, which is three years. A Trust was created for the purpose of purchasing these shares on the

stock market in order to guard against stock price fluctuation. The Corporation instructed the trustee to purchase

55,094 subordinate voting shares of the Corporation on the stock market. These shares were purchased for a cash

consideration aggregating $1,744,000 and are held in trust for the participants until they are fully vested. The Trust,

considered as a variable interest entity, is consolidated in the Corporation’s financial statements with the value of the

acquired shares presented as treasury shares in reduction of capital stock. A compensation expense of $44,000 was

recorded for the three month period ended November 30, 2009 related to this plan. During the first three months of

2010, the Corporation charged COGECO Inc. an amount of $9,000 with regard to the Corporation’s Incentive Share

Units granted to COGECO Inc.’s employees.

The Corporation also offers a deferred share unit plan (“DSU Plan”) which is described in the Corporation’s annual

consolidated financial statements. During the first quarter, the Corporation did not award any deferred share units to

the participants in connection with the DSU Plan. A compensation expense of $69,000 (reduction of expense of

$45,000 in 2008) was recorded for the three month period ended November 30, 2009 for the liability related to this

plan.

10. Accumulated Other Comprehensive Income

Translation of a net

investment in self-

sustaining foreign

subsidiaries

Cash flow hedges

Total

$ $ $

Balance as at August 31, 2009 23,610 (4,029) 19,581

Other comprehensive income 635 2,710 3,345

Balance as at November 30, 2009 24,245 (1,319) 22,926

- 33 -

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2009

(unaudited)

(amounts in tables are in thousands of dollars, except number of shares and per share data)

11. Statements of Cash Flows

a) Changes in non-cash operating items

Three months ended November 30,

2009 2008

$ $

Accounts receivable (3,252) (1,565)

Income taxes receivable (20,531) (3,833)

Prepaid expenses (1,174) 1,397

Accounts payable and accrued liabilities (70,809) (43,459)

Income tax liabilities (40,279) (16,902)

Deferred and prepaid revenue and other liabilities 2,198 1,226

(133,847) (63,136)

b) Cash and cash equivalents

November 30, 2009 August 31, 2009

$ $

Cash 7,173 23,760

Cash equivalents

(1)

10,304 15,698

17,477 39,458

(1)

Term deposit of €6,500,000, 0.30%, maturing on December 4, 2009 (€10,000,000, 0.67%, maturing on September 14, 2009 at August 31, 2009).

c) Other information

Three months ended November 30,

2009 2008

$ $

Fixed asset acquisitions through capital leases 141 939

Financial expense paid 20,938 21,497

Income taxes paid 38,624 26,686

- 34 -

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2009

(unaudited)

(amounts in tables are in thousands of dollars, except number of shares and per share data)

12. Employees Future Benefits

The Corporation and its Canadian 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 rel ated to these plans are as follows:

Three months ended November 30,

2009 2008

$ $

Contributory defined benefit pension plans 377 346

Defined contribution pension plan and collective registered

retirement savings plan

1,095

896

1,472 1,242

13. Financial and Capital Management

a) Financial management

Management’s objectives are to protect Cogeco Cable Inc. and its subsidiaries against material economic exposures

and variability of results, and against certain financial risks including credit risk, liquidity risk, interest rate risk and

foreign exchange risk.

Credit risk

Credit risk represents the risk of financial loss for the Corporation if a customer or counterparty to a financial asset

fails to meet its contractual obligations. The Corporation is exposed to credit risk arising from the derivative financial

instruments, cash and cash equivalents and trade accounts receivable, the maximum exposure of which is

represented by the carrying amounts reported on the balance sheet.

Credit risk from the derivative financial instruments arises from the possibility that counterparties to the cross-currency

swap and interest rate swap agreements may default on their obligations in instances where these agreements have

positive fair values for the Corporation. The Corporation reduces this risk by completing transactions with financial

institutions that carry a credit rating equal to or superior to its own credit rating. The Corporation assesses the

creditworthiness of the counterpa rties in order to minimize the risk of counterparties default under the agreements. At

November 30, 2009, management believes that the credit risk relating to its swaps is minimal, since the lowest credit

rating of the counterparties to the agreements i s “A”.

Cash and cash equivalents consist mainly of highly liquid investments, such as money market deposits. The

Corporation has deposited the cash and cash equivalents with reputable financial institutions, from which

management believes the risk of loss to be remote.

- 35 -

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2009

(unaudited)

(amounts in tables are in thousands of dollars, except number of shares and per share data)

13. Financial and Capital Management (continued)

The Corporation is also exposed to credit risk in relation to its trade accounts receivable. In the current global

economic environment, the Corporation’s credit exposure is higher but it is difficult to predict the impact this could

have on the Corporation’s account receivable balances. To mitigate such risk, the Corporation continuously monitors

the financial condition of its customers and reviews the credit history or worthiness of each new major customer. At

November 30, 2009, no customer balance represents a significant portion of the Corporation’s consolidated trade

receivables. The Corporation establishes an allowance for doubtful accounts based on specific credit risk of its

customers by examining such factors as the number of overdue days of the customer’s balance outstanding as well

as the customer’s collection history. The Corporation believes that its allowance for doubtful accounts is sufficient to

cover the related credit risk. The Corporation has credit policies in place and has established various credit controls,

including credit checks, deposits on accounts and advance billing, and has also established procedures to suspend

the availability of services when customers have fully ut ilized approved credit limits or have violated existing payment

terms. Since the Corporation has a large and diversified clientele dispersed throughout its market area in Canada and

Portugal, there is no significant concentration of credit risk. The following table provides further details on the

Corporation’s accounts receivable balances:

November 30, 2009 August 31, 2009

$ $

Trade accounts receivable 72,224 67,848

Allowance for doubtful accounts

(15,784) (16,399)

56,440 51,449

Other accounts receivable

6,952 8,602

63,392 60,051

The following table provides further details on trade accounts receivable, net of allowance for doubtful accounts.

Trade accounts receivable past due is defined as amount outstanding beyond normal credit terms and conditions for

the respective customers. A large portion of the Corporation’s customers are billed in advance and are required to pay

before their services are rendered. The Corporation considers amount outstanding at the due date as trade accounts

receivable past due.

November 30, 2009 August 31, 2009

$ $

Net trade accounts receivable not past due 42,131 39,892

Net trade accounts receivable past due

14,309 11,557

56,440 51,449

- 36 -

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2009

(unaudited)

(amounts in tables are in thousands of dollars, except number of shares and per share data)

13. Financial and Capital Management (continued)

Liquidity risk

Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they become due. The

Corporation manages liquidity risk through the management of its capital structure and access to different capital

markets. It also manages liquidity risk by continuously monitoring actual and projected cash flows to ensure sufficient

liquidity to meet its obligations when due. At November 30, 2009, the available amount of the Corporation’s Term

Facility was $593.9 million. Management believes that the committed Term Facility will, until its maturity in July 2011,

provide sufficient liquidity to manage its long-term debt maturities and support working capital requi rements.

The following table summa rize s the contractual maturities of the financial liabilities and related capital amounts:

2010 2011 2012 2013 2014 Thereafter Total

$ $ $ $ $ $ $

Bank indebtedness 44,336 ─ ─ ─ ─ ─ 44,336

Accounts payable and accrued liabilities 174,043 ─ ─ ─ ─ ─ 174,043

Long-term debt

(1)

56,434 173,793 175,000 ─ 300,000 355,564 1,060,791

Derivative financial instruments

Cash outflows (Canadian dollar) ─ ─ ─ ─ ─ 201,875 201,875

Cash inflows (Canadian dollar

equivalent of US dollar)

─

(200,564)

Obligations under capital leases

(2)

2,873 3,313 2,298 889 35 ─ 9,408

277,686 177,106 177,298 889 300,035 356,875 1,289,889

(1)

Principal excluding obligations under capital leases.

(2)

Including interest.

The following table is a summary of interest payable on long-term debt (excluding interest on capital leases) that are

due for each of the next five years and thereafter, based on the principal amount and interest rate prevailing on the

current debt at November 30, 2009 and their respective maturities:

2010 2011 2012 2013 2014 Thereafter Total

$ $ $ $ $ $ $

Interest payments on long-term debt 43,554 57,425 44,260 42,005 37,543 53,054 277,841

Interest payments on derivative

financial instruments

14,081 17,473 14,614 14,614 14,614 15,831 91,227

Interest receipts on derivative financial

instruments

(11,841) (15,241) (14,039) (14,039) (14,039) (15,209) (84,408)

45,794 59,657 44,835 42,580 38,118 53,676 284,660

- 37 -

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2009

(unaudited)

(amounts in tables are in thousands of dollars, except number of shares and per share data)

13. Financial and Capital Management (continued)

Interest rate risk

The Corporation is exposed to interest rate risks for both fixed interest rate and ﬂoating interest rate instruments.

Fluctuations in interest rates will have an effect on the valuation and collection or repayment of these instruments. At

November 30, 2009, all of the Corporation’s long-term debt was at fixed rate, except for the Corporation’s Term

Facility. However, on January 21, 2009, the Corporation entered into a swap agreement with a financial institution to

fix the floating benchmark interest rate with respect to the Euro-denominated Term Loan facilities for a notional

amount of €111.5 million. The interest swap rate to hedge the Term Loans has been fixed at 2.08% until their maturity

on July 28, 2011. The notional value of the swap will decrease in line with the amortization schedule of the Term

Loans. In addition to the interest swap rate of 2.08%, the Corporation will continue to pay the applicable margin on

these Term Loans in accordance with the Term Facility. The Corporation elected to apply cash flow hedge accounting

on this derivative financial instrument. The sensitivity of the Corporation’s annual financial expense to a variation of

1% in the interest rate applicable to the Term Facility is approximately $0.8 million based on the current debt at

November 30, 2009 and taking into consideration the effect of the interest rate swap agreement.

Foreign exchange risk

The Corporation is exposed to foreign exchange risk related to its long-term debt denominated in US dollars. In order

to mitigate this risk, the Corporation has established guidelines whereby currency swap agreements can be used to fix

the exchange rates applicable to its US dollar denominated long-term debt. All such agreements are exclusively used

for hedging purposes. Accordingly, on October 2, 2008, the Corporation entered into cross-currency swap agreements

to set the liability for interest and principal payments on its US$190 million Senior Secured Notes Series A issued on

October 1, 2008. These agreements have the effect of converting the US interest coupon rate of 7.00% per annum to

an average Canadian dollar interest rate of 7.24% per annum. The exchange rate applicable to the principal portion of

the debt has been fixed at $1.0625. The Corporation elected to apply cash flow hedge accounting on these derivative

financial instruments.

The Corporation is also exposed to foreign exchange risk on cash and cash equivalents, bank indebtedness and

accounts payable denominated in US dollars or Euros. At November 30, 2009, cash and cash equivalents

denominated in US dollars amounted to US$2,309,000 (US$5,555,000 at August 31, 2009) while accounts payable

denominated in US dollars amounted to US$4,014,000 (US$14,997,000 at August 31, 2009). At November 30, 2009,

Euro-denominated cash and cash equivalents amounted to €607,000 (bank indebtedness of €299,000 at August 31,

2009) while accounts payable denominated in Euros amounted to €146,000 (€26,000 at August 31, 2009). Due to

their short-term nature, the risk arising from fluctuations in foreign exchange rates is usually not significant. The

impact of a 10% change in the foreign exchange rates (US dollar and Euros) would change financial expense by

approximately $0.1 million.

Furthermore, the Corporation’s net investment in self-sustaining foreign subsidiaries is exposed to market risk

attributable to fluctuations in foreign currency exchange rates, 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 Cabovisão-Televisão por Cabo,

S.A. was borrowed directly in Euros. At November 30, 2009, the net investment amounted to €175,302,000

(€183,220,000 at August 31, 2009) while long-term debt denominated in Euros amounted to €135,772,000

(€135,772,000 at August 31, 2009). The exchange rate used to convert the Euro currency into Canadian dollars for

the balance sheet accounts at November 30, 2009 was $1.5852 per Euro compared to $1.5698 per Euro at

August 31, 2009. The impact of a 10% change in the exchange rate of the Euro into Canadian dollars would change

financial expense by approximately $0.5 million and other comprehensive income by approximately $6.3 million.

- 38 -

COGECO CABLE INC.

Notes to Consolidated Financial Statements

November 30, 2009

(unaudited)

(amounts in tables are in thousands of dollars, except number of shares and per share data)

13. Financial and Capital Management (continued)

Fair value

Fair value is the amount at which willing parties would accept to exchange a financial instrument based on the current

market for instruments with the same risk, principal and remaining maturity. Fair values are estimated at a specific

point in time, by discounting expected cash flows at rates for debts of the same remaining maturities and conditions.

These estimates are subjective in nature and involve uncertainties and matters of significant judgement, and

therefore, cannot be determined with precision. In addition, income taxes and other expenses that would be incurred

on disposition of these financial instruments are not reflected in the fair values. As a result, the fair values are not

necessarily the net amounts that would be realized if these instruments were settled.

The carrying value of all the Corporation’s financial instruments approximates fair value, except as otherwise noted in

the following table:

November 30, 2009 August 31, 2009

Carrying value Fair value Carrying value Fair value

$ $ $ $

Long-term debt 1,063,250 1,154,307 1,054,462 1,116,829

b) Capital management

The Corporation’s objectives in managing capital are to ensure sufficient liquidity to support the capital requirements

of its various businesses, including growth opportunities. The Corporation manages its capital structure and makes

adjustments in light of general economic conditions, the risk characteristics of the underlying assets and the

Corporation’s working capital requirements. Management of the capital structure involves the issuance of new debt,

the repayment of existing debts using cash generated by operations and the level of distribution to shareholders.

The capital structure of the Corporation is composed of shareholders’ equity, bank indebtedness, long-term debt and

assets or liabilities related to derivative financial instruments.

The provisions under the Term Facility provide for restrictions on the operations and activities of the Corporation.

Generally, the most significant restrictions relate to permitted investments and dividends on multiple and subordinate

voting shares, as well as incurrence and maintenance of certain financial ratios primarily linked to the operating

income before amortization, financial expense and total indebtedness. At November 30, 2009, and August 31, 2009,

the Corporation was in compliance with all of its debt covenants and was not subject to any other externally imposed

capital requirements.

The following table summarizes certain of the key ratios used to monitor and manage the Corporation’s capital

structure:

November 30, 2009 August 31, 2009

(restated)

Net indebtedness

(1)

/ Shareholders’ equity 1.0 1.0

Net indebtedness

(1)

/ Operating income before amortization

(2)

2.1 2.0

Operating income before amortization

(2)

/ Financial expense

(2)

8.2 7.3

(1)

Net indebtedness is defined as the total of bank indebtedness, principal on long-term debt and obligations under derivative financial instruments, less cash

and cash equivalents.

(2)

Calculation based on operating income before amortization for the last twelve month period ended November 30, 2009, and August 31, 2009.

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CONTINUED GROWTH FOR COGECO CABLE IN THE FIRST QUARTER AND UPWARD REVISION OF ITS FISCAL 2010 GUIDELINES

SUSTAINABILITY

Cogeco Fund

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