KEY PERFORMANCE INDICATORS
OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION AND OPERATING MARGIN
For the nine-month period ended May 31, 2013, operating income before depreciation and amortization increased by 30.3% when compared to the same period of fiscal 2012 to reach $558.0 million and operating margin increased to 45.7% from 44.9%. As a result of the improvement of operating income before depreciation and amortization in the Canadian Cable services segment resulting essentially from cost reduction initiatives, management revised its April 10, 2013 projections for fiscal 2013. Operating income before depreciation and amortization is now expected to reach $780 million from $767 million and operating margin should increase to 46.0% from 45.2%. For further details, please consult the fiscal 2013 revised projections in the "Fiscal 2013 financial guidelines" section.
FREE CASH FLOW
For the nine-month period ended May 31, 2013, Cogeco Cable reports free cash flow of $96.2 million, compared to $63.8 million for the same period of the previous fiscal year, an increase of $32.5 million. This variance is mostly attributable to the improvement of operating income before depreciation and amortization from the Canadian cable services segment and Atlantic Broadband ("ABB") and Peer 1 Network Enterprises, Inc. ("PEER 1") acquisitions (the "recent acquisitions"), partly offset by the increase in financial expense, the recent acquisition costs as well as the increase in acquisition of property, plant and equipment.
PSU GROWTH AND PENETRATION OF SERVICE OFFERINGS
During the nine-month period ended May 31, 2013, PSU reached 2,470,164 of which 1,981,290 come from the Canadian cable services segment and 488,874 from the American cable services segment. PSU for the American cable services segment increased by 3,694 stemming primarily from additional HSI services, partly offset by losses in Television services. PSU for the Canadian cable services segment increased by 12,157 when compared to an increase of 64,705 PSU for the comparable period of the prior year, mainly as a result of service category maturity and a more competitive environment in the Television services. Cogeco Cable maintains targeted marketing initiatives to increase the penetration level of its services.
BUSINESS DEVELOPMENTS AND OTHER
On July 5, 2013, Cogeco Cable reduced its Term Revolving Facility from $750 million to $600 million and its Revolving Facility of its Secured Credit Facilities from $240 million to $190 million.
On June 27, 2013, Cogeco Cable completed, pursuant to a private placement, the issuance of US$215 million Senior Secured Notes bearing interest at 4.30% payable semi-annually and maturing on June 16, 2025. The net proceeds from this offering along with drawings under the Corporation's credit facilities will be used to repay, on July 29, 2013, all the outstanding amount of $300 million Senior Secured Debentures Series 1, due on June 9, 2014.
On January 31, 2013, Cogeco Cable completed the acquisition of 96.57% of the issued and outstanding shares of PEER 1 by way of takeover bid (the "offer") valued at approximately $649 million. On April 3, 2013, Cogeco Cable completed the acquisition of the remaining 3.43% of the issued and outstanding shares of PEER 1 for a cash consideration of $17 million pursuant to the compulsory acquisition provisions in Section 300 of the Business Corporations Act ("British Columbia"). In connection with the completion of the offer, Cogeco Cable has entered into secured credit facilities in the amount of approximately $650 million and maturing in 2017, with a syndicate of lenders. PEER 1 is one of the world's leading internet infrastructure providers, specializing in managed hosting, dedicated servers, cloud services and co-location. This acquisition enhances Cogeco Cable's footprint and builds on its strategic initiatives by increasing scale in an attractive industry segment with significant growth prospects in the state of the art data center platforms. The Corporation will also serve additional businesses worldwide, in addition to approximately 11,000 customers currently served, through 23 data centres and 21 points-of-presence across North America and Europe. PEER 1's primary network centre and head office remain located in Vancouver. For the purpose of segmented operating results, operating results from PEER 1 acquisition are incorporated in the Enterprise services segment. For further details on PEER 1 operating results, please refer to the "Enterprise services" section.
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