2009 firstquarter amortization amounted to 63

Operatingcosts increased due to the servicing of additional RGU and the impact ofthe recent acquisitions in Canada.Operating income before amortizationOperating income before amortization increased by $22.4 million, or 23,to reach $119.7 million in the first quarter of fiscal 2009, as a resultof various rate increases, recent acquisitions, and RGU growth generatingadditional revenues which outpaced operating cost increases. CogecoCable's 2009 first-quarter operating margin increased to 40 from 38.6for the same period of fiscal 2008. The operating margin in Canadaincreased for the first quarter of 2009 to 41.6 compared to 40.7 and inEurope improved to 33.6 from 31.3 in the same period of the prior year.RELATED PARTY TRANSACTIONSCogeco Cable is a subsidiary of COGECO Inc., which holds 32.3 of theCorporation's equity shares, representing 82.7 of the votes attached tothe Corporation's voting shares. monthly management fees equal to 2 of itstotal 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 annualupwards adjustments based on increases in the Consumer Price Index inCanada. Accordingly, for fiscal 2009, management fees have been set at amaximum of $9 million, which is expected to be reached in the secondquarter. For fiscal 2008, management fees were set at a maximum of $8.7million, and were fully paid in the first six months of the year.Management fees for the first quarter of fiscal 2009 stood at $6 millioncompared to $5 million for the same period last year.Furthermore, Cogeco Cable granted 29,711 stock options to COGECO Inc.'semployees during the first quarter of fiscal 2009, compared to 22,683 forthe same period last year.

During the quarter ended November 30, 2008,Cogeco Cable charged COGECO Inc. an amount of less than $0.1 million withregards to Cogeco Cable's options granted to COGECO Inc.'s employees.Details regarding the management agreement and stock options granted toCOGECO Inc.'s employees are provided in the MD&A of the Corporation's2008 Annual Report. There were no other material related partytransactions during the quarter.FIXED CHARGESQuarters ended November 30,($000,except percentages)2008 2007(1) Change$$ (unaudited)(unaudited)Amortization 63,922 52,68721.3Financial expense23,394 15,87747.3(1) Certain comparative figures have been reclassified to conform to the current year's presentation to reflect the reclassificationofforeign exchange gains or losses from operating costs to financial expense.2009 first-quarter amortization amounted to $63.9 million compared to$52.7 million for the same period the year before. The increase is mainlydue to additional capital expenditures arising from customer premiseequipment acquisitions to sustain RGU growth in Canada and the deploymentof the Digital Television service in Portugal, and to the recentacquisitions.First-quarter financial expense increased by $7.5 million compared to thesame period in 2008 due to the rapid appreciation of the US dollar andthe Euro over the Canadian dollar, the increase in the level ofIndebtedness (defined as bank indebtedness, derivative financialinstruments and long-term debt) and by an increase in the average cost ofIndebtedness. More specifically, financial expense was adversely impactedby foreign exchange losses amounting to $3.8 million in the first quarterof fiscal 2009 as the majority of customer premise equipment is purchasedand subsequently paid in US dollars. For the correspondingperiod of the prior year, the Corporation recorded a foreign exchangegain of $1 million.INCOME TAXESFiscal 2009 first quarter income tax expense amounted to $8.9 millioncompared to $8.4 million in fiscal 2008, mainly due to the increase inoperating income before amortization surpassing that of the fixed charges.NET INCOMEFiscal 2009 first quarter net income amounted to $23.6 million, or $0.49per share, compared to $20.4 million, or $0.42 per share, for the sameperiod in 2008, an increase of 15.7 and 16.7, respectively.

Net incomeprogression has resulted mainly from the growth in operating incomebefore amortization exceeding that of fixed charges.CASH FLOW AND LIQUIDITY Quarters ended November 30,($000) 2008 2007$$- (unaudited)(unaudited)Operating activities Cash flow from operations(1)91,610 79,753 Changes in non-cash operating items(63,136) (34,408)- 28,474 45,345-Investing activities(2) (72,858) (58,070)-Financing activities(2)39,420(34,401)-Effect of exchange rate changes oncash and cash equivalents denominated in foreign currencies687 (153)-Net change in cash and cash equivalents(4,277) (47,279)Cash and cash equivalents,beginning of period 36,371 64,208-Cash and cash equivalents, end of period 32,094 16,929(1) Cash flow from operations does not have a standardized definition prescribed by Canadian GAAP and therefore,may not be comparable to similar measures presented by other companies. For more details, please consult the "Non-GAAP financial measures" section.(2) Excludes assets acquired under capital leases.Fiscal 2009 first quarter cash flow from operations reached $91.6million, 14.9 higher than the comparable period last year, primarily dueto the increase in operating income before amortization. Changes innon-cash operating items generated greater cash outflows compared to thesame period last year, mainly as a result of a decrease in accountspayable and accrued liabilities and in income tax liabilities. Thesignificant decrease in income tax liabilities is due to payments madeduring the first quarter of the 2009 fiscal year related to the 2008fiscal year.Investing activities, including capital expenditures segmented accordingto the National Cable Television Association (NCTA) standard reportingcategories, are as follows: Quarters ended November 30,($000) 2008 2007$$- (unaudited)(unaudited)Customer premise equipment (1) 31,824 23,796Scalable infrastructure12,5429,823Line extensions 4,2872,589Upgrade / Rebuild10,442 11,862Support capital 7,5112,657-Total capital expenditures(2)66,606 50,727-Deferred charges and others 7,1917,416-Total investing activities(2)73,797 58,143(1) Includes mainly new and replacement drops as well as home terminal devices.(2) Includes capital leases, which are excluded from the statements of cash flows.Fiscal 2009 first quarter total capital expenditures amounted to $66.6million, an increase of 31.3, when compared to the corresponding periodof last year, due to the following factors:- An increase in customer premise equipment capital spending resultingfrom RGU growth fuelled in part by increased interest for the HDTelevision service for the Canadian operations combined with thedeployment of Digital Television in Portugal;- An increase in support capital spending due to the acquisition of apower generator for the newly acquired Canadian data communicationssubsidiary;- An increase in scalable infrastructure capital spending mainly due tothe timing of the expansion and head-end improvements, system poweringand equipment reliability to sustain increased customer demand for HSIand Telephony services in Canada;- The appreciation of the US dollar and the Euro over the Canadian dollaralso had a significant impact on the total capital expenditures in thefirst quarter of 2009.Deferred charges and others are mainly attributable to reconnect costs.For the first quarter, the increase in deferred charge amounted to $7.2million compared to $7.4 million for the same period the year before.Slower RGU growth explained the lower increase recorded in fiscal 2009.In the first quarter, the Corporation generated free cash flow amountingto $17.8 million, compared to $21.6 million for the same period of thepreceding year.

The aggregate amount of total capital expenditures anddeferred charges increased by $15.7 million for the quarter endedNovember 30, 2008 compared to the corresponding period of last year dueto the factors explained above.In the first quarter of 2009, Indebtedness affecting cash increased by$45 million due to the reduction of non-cash operating items of $63.1million, partly offset by the free cash flow of $17.8 million.Indebtedness was increased through the issuance on October 1, 2008 ofSenior Secured Notes, Series A and Series B, maturing October 1, 2015 andOctober 1, 2018, respectively, for net proceeds of approximately $255million, net of the repayment of US$150 million Senior Secured NotesSeries A and the related derivative financial instrument of $88.7million, both maturing on October 31, 2008, for a total of $238.7million, and by an increase of $21.6 million in bank indebtedness. Duringthe first quarter of fiscal 2008, the level of Indebtedness affectingcash decreased by $32.6 million, essentially due to the free cash flow of$21.6 million, the reduction of $47.1 million in cash and cashequivalents partly used to offset the $34.4 million reduction in changesin non-cash operating items, and the increase of $3.1 million in capitalstock from the exercise of stock options. In addition, during the firstquarter of fiscal 2009, a dividend of $0.12 per share was paid to theholders of subordinate and multiple voting shares, totalling $5.8million, compared to a dividend of $0.10 per share, or $4.8 million theyear before.As at November 30, 2008, the Corporation had a working capital deficiencyof $334.8 million compared to $607.8 million as at August 31, 2008. Thedecrease in the deficiency is mainly attributable to the repayment of theUS$150 million Senior Secured Notes, Series A and the related derivativefinancial instrument for a total of $238.7 million on October 31, 2008,using the proceeds of issuance of the Senior Secured Notes Series A andB. As part of the usual conduct of its business, Cogeco Cable maintains aworking capital deficiency due to a low level of accounts receivable as alarge portion of the Corporation's customers pay before their servicesare rendered, unlike accounts payable and accrued liabilities, which arepaid after products are delivered or services are rendered, thus enablingthe Corporation to use cash and cash equivalents to reduce Indebtedness.At November 30, 2008, the Corporation had used $513.7 million of its $885million Term Facility for a remaining availability of $371.3 million.On October 1, 2008, the Corporation completed, pursuant to a privateplacement, the issue of US$190 million Senior Secured Notes Series Amaturing October 1, 2015, and $55 million Senior Secured Notes Series Bmaturing October 1, 2018. TheCorporation has entered into cross-currency swap agreements to fix theliability for interest and principal payments on the Senior Secured NotesSeries A in the amount of US$190 million, which bear interest at thecoupon rate of 7.00 per annum, payable semi-annually.