PRESS RELEASE For immediate release COGECO ANNOUNCES THE FINANCIAL

PRESS RELEASE For immediate release COGECO ANNOUNCES THE FINANCIAL RESULTS FOR THE SECOND QUARTER OF FISCAL YEAR 2002 Montreal, April 8, 2002. – COGECO Inc. announced today the financial results for the second quarter of fiscal 2002. OPERATING RESULTS Financial highlights for the three months and six months ended February 28 are: THREE MONTHS ENDED FEBRUARY 28, SIX MONTHS ENDED FEBRUARY 28, (unaudited) 2001 $117,724 40,733 34.6% 23,568 13,658 $12,257 548 $0.76 0.03 (unaudited) 2001 $233,148 82,809 35.5% 45,246 27,005 $62,575 3,589 $3.87 0.22 ($000 except percentage and net earnings per share) Revenue Operating income (1) Operating margin Depreciation & amortization Financial expense Net income Net income excluding unusual items Earnings per share - basic Earnings per share excluding unusual items basic (1) 2002 $123,729 46,070 37.2% 23,841 15,856 $36,452 2,445 $2.24 0.15 % Change 5.1 13.1 1.2 16.1 2002 $249,697 92,919 37.2% 47,005 29,893 $39,162 6,498 $2.41 0.40 % Change 7.1 12.2 3.9 10.7 Before depreciation and amortization and unusual items. -2- Consolidated revenue increased by $6.0 million or 5% in the second quarter and by $16.5 million or 7% in the first six-month period of fiscal 2002 compared to the same periods last year. The cable and media sectors have both contributed to the increased revenue in the second quarter and in the first six-month period of fiscal 2002. Revenue in the cable sector increased by 2% and 6% in the second quarter and in the first six-month period of fiscal 2002 respectively, compared to the same periods last year. With regard to the media sector, revenue increased by 40% and 20% in the second quarter and in the first six-month period of fiscal 2002 respectively, compared to the same periods last year. In the second quarter of fiscal 2002, half of the media sector’s revenue increase was attributable to the acquisition of TQS inc. last February 15th and the other half was mainly attributable to television advertising related to the Winter Olympics and growth in radio revenue. Operating income before depreciation and amortization increased by 13% and 12% for the second quarter and the first six months of fiscal 2002 compared to the same periods last year. The operating margin before depreciation and amortization increased from 34.6% in the second quarter of fiscal 2001 to 37.2% in the second quarter of fiscal 2002, and from 35.5% in the first six-month period of fiscal 2001 to 37.2% in the first six-month period of fiscal 2002. Operating margin improvement stems from both the cable and media sector. The cable sector’s operating income before depreciation and amortization increased by 9% for the second quarter and by 10% for the first six months of fiscal 2002 compared to the same periods last year. Cogeco Cable’s focus on improving operating margin before depreciation and amortization resulted in the margin increasing from 35.1% in the second quarter of fiscal 2001 to 37.3% in the second quarter of fiscal 2002, and from 35.2% in the first six-month period of fiscal 2001 to 36.8% in the first six-month period of fiscal 2002. With regard to the media sector, operating margin before depreciation and amortization was 20.7% in the second quarter of fiscal 2001 compared to 32.7% in the second quarter of fiscal 2002, and 32.4% in the first six-month period of fiscal 2001 compared to 36.4% in the first six-month period of fiscal 2002. In the second quarter of fiscal 2002, the increased margin mainly results from television advertising related to the Winter Olympics and increased margin of the radio stations. Depreciation and amortization increased by 1% and financial expense by 16% for the second quarter of fiscal 2002. Depreciation and amortization increased by 4% and financial expense by 11% for the first six months of fiscal 2002. The increase in depreciation resulted from the cable system modernization program, the capital expenditures related to high-speed Internet access and digital services, and recent cable system acquisitions. As a result of the adoption by the Company of the new accounting requirements of the Canadian Institute of Chartered Accountants, broadcasting licences and customer base ceased to be amortized effective September 1, 2001. Amortization of broadcasting licences and customer base amounted to $2.5 million ($2.2 million after income taxes) and $4.9 million ($4.2 million after income taxes) in the second quarter and the first six months respectively of fiscal 2001. Financial expense has increased as a result of debt incurred in connection with recent cable system acquisitions and capital expenditures exceeding internally generated cash flow from recurring operations, as well as higher average interest rate on Senior Secured Notes issued last November 1st by Cogeco Cable. For the second quarter of fiscal 2002, the unusual item stemmed from a gain on dilution of $34.0 million resulting from the transfer of COGECO’s six television stations and its interest of approximately 13% in TQS to a new venture owned 60% by COGECO and 40% by Bell Globemedia (see recent developments for description of the new venture). A charge of $4.9 million was recorded as an unusual item in the first quarter of fiscal 2002 as a result of staffing reduction at Cogeco Cable. For the second quarter of fiscal 2001, the unusual item stemmed from a gain on dilution of $11.7 million resulting from the issuance of 1.5 million -3- subordinate voting shares of Cogeco Cable. For the first six months of fiscal 2001, the unusual item stemmed from a gain on dilution of $59.0 million resulting from the issuance of 6.3 million subordinate voting shares of Cogeco Cable. Net income for the second quarter of fiscal 2002, excluding unusual items, amounted to $2.4 million, or $0.15 per share, compared to net income, excluding unusual items, of $0.5 million, or $0.03 per share, for the same period last year. Net income for the second quarter of fiscal 2002 amounted to $36.5 million, or $2.24 per share, compared to net income of $12.3 million, or $0.76 per share, for the same period last year. Net income for the first sixmonth period of fiscal 2002, excluding unusual items, amounted to $6.5 million or $0.40 per share compared to a net income, excluding unusual items, of $3.6 million or $0.22 per share for the same period last year. Net income for the first six-month period of fiscal 2002 amounted to $39.2 million, or $2.41 per share, compared to a net income of $62.6 million, or $3.87 per share, for the same period last year. CASH FLOW AND CAPITAL RESOURCES For the second quarter of fiscal 2002, cash flow from recurring operations was down by 1%, from $27.8 million to $27.6 million. On a per share basis, cash flow from recurring operations decreased to $1.70 from $1.72. For the first six-month period of fiscal 2002, cash flow from recurring operations was up by 5%, from $56.4 million to $59.2 million. On a per share basis, cash flow from recurring operations increased from $3.48 to $3.65. For the second quarter of fiscal 2002, capital expenditures and deferred charges (mostly related to digital terminal sale subsidies) decreased from $42.0 million to $37.5 million and for the first six-month period of fiscal 2002, capital expenditures and deferred charges decreased from $102.4 million to $80.2 million. On November 1, 2001, Cogeco Cable completed, pursuant to a private placement, the issue of 6.83% Series A Senior Secured Notes for US $150 million maturing October 31, 2008, and 7.73% Series B Senior Secured Notes for CDN $175 million maturing October 31, 2011. Net proceeds of approximately CDN $410 million, after underwriters’ fees and other expenses, have been applied to reduce Cogeco Cable’s bank debt. In addition, Cogeco Cable completed a cross-currency swap agreement to fully hedge its financial obligations with respect to the US denominated Series A Senior Secured Notes. Taking into consideration this cross-currency swap agreement, the interest rate effectively incurred by Cogeco Cable for the Series A Senior Secured Notes is 7.254%. RECENT DEVELOPMENTS On February 15, 2002, COGECO and Bell Globemedia Inc. completed their joint acquisition of Quebecor’s 86% interest in the TQS television network and stations. The new venture, with a 60% proprietary interest by COGECO and 40% by Bell Globemedia, regroups the TQS network, TQS’s stations in Montreal, Quebec City, its repeater station in Rimouski as well as Cogeco Radio-Television’s six stations in Sherbrooke, Trois-Rivières and Chicoutimi/Jonquière. COGECO has transferred to the new entity its six television stations, its interest of approximately 13% in TQS and $3.2 million in cash for a total consideration of $107.6 million. -4- RISK FACTORS AND UNCERTAINTIES There have been no material changes in the uncertainties and main risk factors facing the Company since the year ended August 31, 2001, except for resolution of the risk factors attributable to Excite@Home and the television affiliation agreement with the Canadian Broadcasting Corporation (“CBC”). On November 16, 2001, Cogeco Cable completed the transition of its high-speed Internet service to become a fully integrated service and ceased to do business with Excite@Home, which was in financial difficulty. Cogeco Radio-Television and the CBC reached an agreement last January establishing a renewed television affiliation agreement, which agreement will be effective starting September 1, 2002, and will bind the parties at least until August 31, 2008. Uncertainties and main risk factors are described in the Company’s Annual Report. DIVIDEND DECLARATION At its meeting of April 5, 2002, the Board of Directors of COGECO declared a quarterly dividend of $0.0525 per share for subordinate voting shares and multiple voting shares, payable on May 3, 2002, to shareholders on record on April 19, 2002. CABLE SECTOR CUSTOMER STATISTICS The number of basic service customers has decreased by 13,270, which represents approximately 1.5% of the total customer base, since November 30, 2001. However, as at February 28, 2002, the number of customers to the high-speed Internet access service stood at 143,472, an increase of 19,183 customers or 15% during the quarter. Moreover, an additional 11,166 digital terminals were put in service, thus bringing the number of terminals in service to 130,734 at the end of the second quarter of fiscal 2002, a 9% increase. Leveraging on this digital platform, Cogeco Cable launched some 50 new digital specialty services, which had a penetration rate of 24% of the digital customer base as at February 28, 2002. With those highspeed Internet customer and digital terminal additions, Cogeco Cable has increased its target for August 31, 2002. Cogeco Cable expects that it will serve approximately 155,000 high-speed Internet customers and 145,000 digital terminals by the end of fiscal 2002. As at February 28, 2002, high-speed Internet penetration as a percentage of 2-way homes passed was 15% in Ontario and 9% in Quebec (13% on a consolidated basis) and digital service penetration as a percentage of the offered base was 15%. As at February 28, 2002, 80% of homes passed were bi-directional and digital services were offered to close to 100% of customers in Ontario and approximately 73% in Quebec. As at February 28, 2002, 226,745 customers had subscribed to Cogeco Cable’s offering of bundled services, up from 215,818 customers as at November 30, 2001. 44% of customers subscribing to the service bundles had the digital service. FORWARD-LOOKING FINANCIAL EXPECTATIONS The forward-looking statements below involve risks and uncertainties. Future results will be affected by a number of factors related to technology, markets, competition and regulation including those described in the uncertainties and main risk factors section of the Company’s Annual Report. Therefore, actual results may be materially different from those expressed or implied by such forward-looking statements. -5- Cable Sector As a result of the cable sector’s basic and extended tier service customer losses during the second quarter, management has further modified its fiscal 2002 projections. The losses are mainly attributable to increased direct-to-home satellite competitive pressures. Canadian satellite providers are making significant investments to build market share and the “black market” share, resulting from US and Canadian satellite signal piracy, is expanding as well. As customer satisfaction and retention remain Cogeco Cable’s key focus, management has made some pricing adjustments required in the circumstances. Cogeco Cable expects to achieve revenue growth of approximately 2%, which should be realized mainly from acquisitions completed in fiscal 2001. Internal revenue growth generated mainly from rate increases in the second semester of fiscal 2001 and growth in penetration of high-speed Internet access will mostly be offset by loss of revenue related to basic and extended tier customer losses. Cogeco Cable expects that its operating margin before depreciation and amortization will improve gradually during fiscal 2002 as a result of an ongoing cost reduction due to process improvement plans. Furthermore, net monthly savings from having transitioned in Ontario from Excite@Home to a fully integrated high-speed Internet service are expected to be approximately $2.50 per high-speed Internet customer by the end of fiscal 2002. Cogeco Cable expects to achieve an operating margin before depreciation and amortization of approximately 38% in fiscal 2002. Media Sector Mainly as a result of the acquisition of TQS inc. in partnership with Bell Globemedia last February 15th, revenue is expected to double in fiscal 2002. The media sector expects to achieve operating income margin before depreciation and amortization of approximately 20% in fiscal 2002. The reduced margin results from TQS inc.’s lower margin. COGECO is active in the communications sector. Through its Cogeco Cable subsidiary, COGECO provides nearly 1 million units of cable distribution and telecommunication services (defined as basic service customers and Internet customers) to approximately 1,366,000 households passed in its service areas. Through its Cogeco Radio-Television subsidiary, COGECO operates the TQS network, six TQS television stations, three CBC affiliated television stations, in partnership with Bell Globemedia, as well as wholly owned radio stations 105.7 Rythme FM in Montreal and FM 93 in Quebec City. COGECO’s subordinate voting shares are listed on the Toronto Stock Exchange (CGO). The subordinate voting shares of Cogeco Cable Inc. are also listed on the Toronto Stock Exchange (CCA). Certain statements in this press release may constitute forward-looking statements that involve risks and uncertainties. Future results will be affected by a number of factors with respect to technology, markets, competition and regulation including factors described in the section “Uncertainties and main risk factors” of the Company’s Annual Report. Therefore, actual results may be materially different from those expressed or implied by such forward-looking statements. - 30 Source: COGECO Inc. Pierre Gagné Vice President, Finance and Chief Financial Officer Tel.: (514) 874-2600 -6- Information: BDDS│WEBER Shandwick Lise Perras Tel.: (514) 393-1180 McGee + Associates Patrick McGee Tel.:(905) 271-3626 Conference Call: Discussion of quarterly results on April 8, 2002, at 4:30 p.m. ET Broadcast via the Internet at www.cogeco.com COGECO INC. Cable Statistics February 28, 2002 Homes Passed Ontario Quebec 934,935 430,737 1,365,672 Basic Service Customers Ontario Quebec 608,628 247,175 855,803 Discretionary Service Customers - Tier 1 Ontario Quebec 482,428 169,412 651,840 Discretionary Service Customers - Tier 2 Ontario Quebec 416,482 2,140 418,622 Discretionary Service Customers - Tier 3 Ontario Quebec 359,079 2,117 361,196 Pay-TV Service Customers Ontario Quebec -7August 31, 2001 930,324 428,556 1,358,880 622,612 256,154 878,766 507,589 176,437 684,026 429,043 3,162 432,205 364,531 2,229 366,760 * * 84,074 30,047 114,121 80,392 28,234 108,626 Internet Service Customers High-Speed Cable Modem Ontario Quebec 118,368 25,104 143,472 88,038 19,900 107,938 Digital Customers Ontario Quebec 78,023 39,002 117,025 65,572 30,677 96,249 Digital Terminals Ontario Quebec 90,031 40,703 130,734 74,615 30,677 105,292 Customers of bundled services Ontario Quebec * Available to customers who have the Digital Video Service. 177,228 49,517 226,745 153,672 34,254 187,926 -8- COGECO INC. CONSOLIDATED STATEMENTS OF INCOME (unaudited) Three months ended February 28 Six months ended February 28 (In thousands of dollars, except per share data) Revenue Operating costs Operating income before depreciation and amortization Depreciation and amortization (note 2) Operating income before unusual items Unusual items (note 4) Operating income Financial expense Income before income taxes and the following items Income taxes Current Future $ 2002 123,729 $ 77,659 46,070 23,841 22,229 34,007 56,236 15,856 40,380 2001 117,724 76,991 40,733 23,568 17,165 11,722 28,887 13,658 15,229 $ 2002 249,697 156,778 92,919 47,005 45,914 29,082 74,996 29,893 45,103 $ 2001 233,148 150,339 82 809 45,246 37,563 58,999 96,562 27,005 69,557 3,408 (211) 3,197 731 $ 36,452 $ 2,445 (129) 3,239 3,110 (147) 9 12,257 548 $ 5,252 972 6,224 (283) 39,162 6,498 $ 681 6,212 6,893 71 18 62,575 3,589 Non-controlling interest Share of earnings of an affiliated company Net income Net income excluding unusual items Earnings per share (note 8) Basic Diluted Earnings per share excluding unusual items (note 8) Basic Diluted Weighted average number of outstanding multiple voting shares and subordinate voting shares $ 2.24 $ 2.21 0.15 0.15 0.76 0.74 0.03 0.03 $ 2.41 2.38 0.40 0.39 $ 3.87 3.79 0.22 0.22 16,239,754 16,193,716 16,237,370 16,185,570 -9- COGECO INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Three months ended February 28 Six months ended February 28 (In thousands of dollars, except per share data) Cash flow from operating activities $ Net income Unusual items net of related income taxes and non-controlling interest Net income from recurring operations Items not affecting cash and cash equivalents Depreciation and amortization Amortization of long-term financing costs Future income taxes Future income taxes related to unusual items Non-controlling interest Portion of unusual items attributable to non-controlling interest Other Cash flow from recurring operations Change in non-cash working capital items 2002 2001 2002 2001 36,452 (34,007) 2,445 23,841 601 (211) 731 145 27,552 (1,608) 25,944 $ 12,257 (11,709) 548 23,568 430 3,239 (147) 170 27,808 (36,676) (8,868) $ 39,162 (32,664) 6,498 47,005 1,031 972 1,513 (283) 2,069 398 59,203 (38,431) 20,772 $ 62,575 (58,986) 3,589 45,246 860 6,212 71 414 56,392 (50,414) 5,978 Cash flow from investing activities Acquisition of fixed assets Increase in deferred charges Acquisition of investments Business acquisitions (note 3) Other (28,698) (8,763) (80) (64,292) (85) (101,918) (42,028) (288) (23,323) 283 (65,356) (66,407) (13,833) (3,385) (64,292) 161 (147,756) (102,389) (385) (65,804) 957 (167,621) Cash flow from financing activities Increase in long-term debt Repayment of long-term debt Issues of subordinate voting shares Dividends on multiple voting shares Dividends on subordinate voting shares Issue of subordinate voting shares by a subsidiary to noncontrolling interest, net of issue costs Purchase of subordinate voting shares for cancellation Purchase of subordinate voting shares for cancellation by a subsidiary Contribution from non-controlling interest of a subsidiary Dividends paid by a subsidiary to non-controlling interest 332 (17,365) 136 (97) (755) 132 (6) 72,415 54,792 (21,182) (17,125) $ $ (38,307) 1.70 1.67 $ $ 99,255 (5,895) 507 (100) (750) 449 93,466 19,242 (36,534) (17,292) 1.72 1.68 $ $ 430,437 (414,888) 136 (194) (1,510) 132 (6) 72,415 86,522 (40,462) 2,155 (38,307) 3.65 3.59 $ $ 121,989 (74,884) 507 (200) (1,499) 96,211 (220) (631) 141,273 (20,370) 3,078 (17,292) 3.48 3.41 Net change in cash and cash equivalents Cash and cash equivalents at beginning Cash and cash equivalents at end Cash flow per share from recurring operations Basic Diluted - 10 - COGECO INC. CONSOLIDATED BALANCE SHEETS February 28 August 31 (In thousands of dollars) 2002 (unaudited) 2001 (audited) Assets Fixed assets Broadcasting licences and customer base Deferred charges Investments Cash and cash equivalents Accounts receivable Broadcasting rights Prepaid expenses $ 767,617 1,065,620 32,808 6,808 71,631 22,108 8,633 1,975,225 $ 730,378 1,019,132 22,893 10,032 2,155 48,860 7,239 $ Liabilities and Shareholders' equity Liabilities Long-term debt and term facilities (note 6) Bank indebtedness Accounts payable and accrued liabilities Deferred and prepaid income Future income tax liabilities Non-controlling interest $ $ 1,840,689 853,561 38,307 86,895 17,230 165,299 470,523 1,631,815 $ 832,121 90,407 17,413 171,853 432,073 1,534,867 Shareholders' equity Capital stock (note 7) Retained earnings 114,468 228,942 343,410 $ 1,975,225 114,335 191,487 305,822 $ 1,840,689 - 11 - COGECO INC. CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (unaudited) Six months ended February 28 (In thousands of dollars) 2002 2001 Balance at beginning Changes in accounting policies Net income Excess of price paid over the attributed value of shares redeemed Dividends on multiple voting shares Dividends on subordinate voting shares Balance at end $ 191,487 39,162 (3) (194) (1,510) $ 129,753 (2,195) 62,575 (200) (1,499) $ 228,942 $ 188,434 - 12 - COGECO INC. Notes to Consolidated Financial Statements (unaudited) (amounts in tables are in thousands of dollars, except 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, contain all adjustments necessary to present fairly the financial position of Cogeco Inc. as at February 28, 2002 and August 31, 2001 as well as its results of operations and its cash flow for the three-months and six-months periods ended February 28, 2002 and 2001. While management believes that the disclosures presented are adequate, these unaudited interim consolidated financial statements and notes should be read in conjunction with Cogeco Inc.’s annual consolidated financial statements. These unaudited interim consolidated financial statements follow the same accounting policies as the most recent annual consolidated financial statements, except for the adoption of new accounting recommendations on broadcasting licences and customer base (see note 2). 2. Accounting policies A. Changes in accounting policies During fiscal year 2002, the Company adopted prospectively the new CICA recommendations of Handbook section 3062 - Goodwill and other intangible assets. Under the new section, goodwill and intangible assets with a deemed indefinite life are no longer amortized but tested for impairment annually, or more frequently, if changes in circumstances indicate a potential impairment. As a result of adopting the new recommendations, the Company ceased to amortize its broadcasting licences and customer base effective September 1, 2001. Section 3062 also requires the Company to perform a transitional assessment of whether there is an indication that intangible assets with an indefinite useful life are impaired as at September 1, 2001. The Company has completed its assessment and concluded that no impairment existed as at September 1, 2001. The following table shows the effect of applying the new recommendations on net income and basic and diluted earnings per share for the last fiscal year: Three months ended February 28 2001 Net income Amortization of broadcasting licences and customer base, net of income taxes Adjusted net income Earnings per share Amortization of broadcasting licences and customer base per share, net of income taxes Adjusted earnings per share basic Adjusted earnings per share diluted B. Foreign currency translation Assets and liabilities denominated in foreign currency are translated in Canadian dollars at exchange rates prevailing at the balance sheet date for monetary items and at transaction date for non-monetary items. Income and expenses are translated at average rates prevailing during the period. Exchange gains and losses on translating long-term debt are included in deferred credits or deferred charges. Other exchange gains and losses are included in net income for the period. $ $ $ $ $ 12,257 2,212 14,469 0.76 0.14 0.90 0.88 $ $ $ $ $ Six months ended February 28 2001 62,575 4,217 66,792 3.87 0.26 4.13 4.04 - 13 - COGECO INC. Notes to Consolidated Financial Statements (unaudited) (amounts in tables are in thousands of dollars, except per share data) C. Derivative financial instruments The Company’s subsidiary, Cogeco Cable Inc., uses a currency swap agreement as a derivative financial instrument to manage risks from fluctuations in exchange rates. The instrument is only used for risk management purposes. The Company accounts for the financial instrument under the accrual method, as a hedge and accordingly, the carrying value of the financial instrument is not adjusted to reflect it’s current market value. Net receipts or payments arising for the derivative instrument is recognized in financial expense. D. Broadcasting rights Broadcasting rights are contractual rights allowing limited broadcast of televisual products or movies, generally on a pre-determined period. These broadcasting rights are recorded at the time the agreement comes into effect and the product is ready for broadcast. These rights are amortized upon broadcast based on the cost of televisual product or movie, using an amortization method based on future expected revenues. The value of broadcasting rights is reduced when a permanent impairment in value is recognized. 3. Business acquisitions On February 15, 2002, the Company’s subsidiary, Cogeco Radio Television inc., completed the acquisition of an 86% interest in television network TQS in partnership with Bell Globemedia to increase their ownership to 99%. Cogeco Radio Television inc. contributed it’s television assets and it’s 13% interest in TQS while Bell Globemedia contributed cash of $72,415,000. As a result of this transaction, Cogeco Radio Television inc. owns a 60% indirect interest in TQS. As at February 28, 2001, the Company’s subsidiary, Cogeco Cable Inc., had completed the following transactions: a) In September 2000, the acquisition of all the outstanding shares of Câblo Distribution G inc., Télécâble Provincial inc. and Lindsay CATV System Limited. b) In November 2000, the acquisition of all the outstanding shares of Cablevue (Quinte) Limited and related companies and of Médiacâble inc. c) In January 2001, the acquisition of all the outstanding shares of Harrowby Communications Inc. and related companies. d) In February 2001, the acquisition of all the outstanding shares of Muskoka Cable Systems Limited and related companies and Huntsville Cable Services Limited and Décibel inc. - 14 - COGECO INC. Notes to Consolidated Financial Statements (unaudited) (amounts in tables are in thousands of dollars, except per share data) 3. Business acquisitions (cont’d) The net assets acquired and the consideration for these transactions are as follows: Three months ended February 28 Six months ended February 28 2002 Assets acquired Working capital deficiency Fixed assets Deferred charges Investments Broadcasting rights Goodwill and intangible assets 2001 2002 2001 $ (6,441) $ 13,347 201 22,911 46,315 76,333 (3,414) 23,169 247 57,675 77,677 $ (6,441) 13,347 201 22,911 46,315 76,333 $ (4,592) 39,127 266 167,799 202,600 Assumed liabilities Future income taxes Long-term debt Non-controlling interest (7,515) 12,569 193 5,247 71,086 6,794 64,292 $ 77,677 54,354 23,323 (7,515) 12,569 193 5,247 71,086 6,794 64,292 889 25 914 201,686 135,882 65,804 Net assets acquired Investment previously accounted for Paid in Cogeco Cable Inc. shares Paid in cash $ $ $ The allocation of the purchase price related to the acquisition of TQS is preliminary and is subject to change following the completion of the valuation of assets acquired and liabilities assumed. Other costs related to the acquisition were still unknown at the time of the financial statements and will be adjusted during the next quarter. 4. Unusual items In the second quarter of 2002, the Company realized a gain on dilution of $34,007,000 resulting from the issuance of common shares by a subsidiary of Cogeco Radio Television inc. in connection with the acquisition of TQS (note 3). In the first quarter of 2002, the Company’s subsidiary, Cogeco Cable Inc., pursued its staffing reduction program. As a result, a charge of $4,925,000 has been recorded as an unusual item for the payment of employee severances. As at February 28, 2001, the unusual item stemmed from a gain on dilution of $59,021,000 resulting from the issuance of approximately 6.3 million subordinate voting shares of Cogeco Cable Inc. and a loss on an investment writeoff of $22,000. - 15 - COGECO INC. Notes to Consolidated Financial Statements (unaudited) (amounts in tables are in thousands of dollars, except per share data) 5. Segmented Information The Company’s activities are divided into two business segments: Cable and Media. The Cable segment is comprised of all cable operations and the Media segment is comprised of radio and television operations. The principal financial information per business segment is presented in the table below: Head Office Cable Three months ended February 28, Revenue Operating costs Operating income before depreciation and amortization Depreciation and amortization Operating income before unusual items Unusual items Financial expense Income taxes 41,505 23,250 18,255 15,656 1,617 38,236 22,828 15,408 13,273 2,411 4,088 553 3,535 34,007 907 956 1,851 645 1,206 893 45 477 38 439 (707) 624 646 95 551 11,722 (508) 654 46,070 23,841 22,229 34,007 15,856 3,197 40,733 23,568 17,165 11,722 13,658 3,110 $ 2002 111,214 $ 69,709 2001 108,802 $ 70,566 2002 12,515 $ 8,427 Media 2001 8,922 $ 7,071 and eliminations 2002 - $ (477) 2001 (646) $ Consolidated 2002 123,729 $ 77,659 2001 117,724 76,991 Net assets employed Acquisition of fixed assets $ 1,745,119 $ 28,468 1,609,983 $ 41,520 117,731 $ 230 36,877 $ 495 8,250 $ - 13,613 13 $ 1,871,100 $ 28,698 1,660,473 42,028 Head Office Cable Six months ended February 28, Revenue Operating costs Operating income before depreciation and amortization Depreciation and amortization Operating income before unusual items Unusual items Financial expense Income taxes $ 2002 224,797 $ 142,097 2001 212,476 $ 137,614 2002 24,900 $ 15,846 Media 2001 20,672 $ 13,981 and eliminations 2002 - $ (1,165) 2001 (1,256) $ Consolidated 2002 249,697 $ 156,778 2001 233,148 150,339 82,700 45,905 36,795 (4,925) 29,479 3,084 74,862 43,775 31,087 26,175 4,813 9,054 1,024 8,030 34,007 1,802 1,720 6,691 1,291 5,400 1,795 556 1,165 76 1,089 (1,388) 1,420 1,256 180 1,076 58,999 (965) 1,524 92,919 47,005 45,914 29,082 29,893 6,224 82,809 45,246 37,563 58,999 27,005 6,893 Net assets employed Acquisition of fixed assets $ 1,745,119 $ 65,843 1,609,983 $ 101,679 117,731 $ 564 36,877 $ 686 8,250 $ - 13,613 24 $ 1,871,100 $ 66,407 1,660,473 102,389 - 16 - COGECO INC. Notes to Consolidated Financial Statements (unaudited) (amounts in tables are in thousands of dollars, except per share data) 6. Long-term debt and term facilities Maturity Interest rate February 28 2001 (unaudited) Parent company Term facility Other Subsidiaries Term facility Senior Secured Debentures, Series 1 Second Secured Debentures, Series A Senior – Secured Notes Series A – US $150 million Series B Obligations under capital leases Preferred shares (2) Other 2008 2011 2005 2006 6.83 7.73 5.75 – 13.45 $ (1) (2) August 31 2001 (audited) $ 15,000 2,549 518,000 150,000 125,000 4,485 7,120 967 $ 823,121 2005 2007 2009 2007 3.74% (1) 3.14 (1) 6.75 8.44 $ 15,000 3,064 134,000 150,000 125,000 240,300 175,000 2,360 7,120 1,717 853,561 Average interest rate on debt as of February 28, 2002, including stamping fees. 7,120,000 preferred shares 5.5% cumulative dividend, redeemable and retractable to a maximum of $1,400,000 annually beginning in 2002. Bank indebtedness and lines of credit On February 15, 2002, the term facility and the operating line of credit of the Company were restructured. Following this restructuring, the term facility and the operating line of credit are secured by a first fixed and floating charge on the assets of the Company and certain of its subsidiaries except for permitted encumbrances, including purchase money obligations subject to a maximum amount. The provisions under these facilities provide for restrictions on the operations and activities of the Company. Generally, the most significant restrictions are related to permitted investments, dividends on common shares as well as incurrence and maintenance of certain financial ratios primarily linked to operating cash flow, financial expense, total indebtedness and shareholders’ equity. The term facility of $40 million, provided by a syndicate of financial institutions, can be extended for an additional year at each anniversary date of the facility, subject to lenders’ approval. If the approval is not obtained, the term facility is convertible in a 2-year term facility. The term facility requires commitment fees and interest rates are based, at the Company’s option, on bankers’ acceptance or bank prime rates. The operating line of credit of $5 million also requires commitment fees and interest rates are based on bank prime rates. - 17 - COGECO INC. Notes to Consolidated Financial Statements (unaudited) (amounts in tables are in thousands of dollars, except per share data) 6. Long-term debt and term facilities (cont’d) Senior Secured Notes The Senior Secured Notes are senior secured obligations and rank equally and rateably with all existing and future senior indebtedness. The Notes are redeemable at the Company’s subsidiary, Cogeco Cable Inc., option at any time, in whole or in part, prior to maturity at 100% of the principal amount plus a make-whole premium. The Company’s subsidiary, Cogeco Cable Inc., has entered on November 1, 2001, into cross-currency interest rate agreements to fix the liability for interest and principal payments on the Senior Notes US $150 million which have an interest coupon rate of 6.83%. These agreements have resulted in an effective interest rate of 7.25% on the Canadian $ equivalent of the US debt. The exchange rate applicable to the principal portion of the debt has been fixed at $1.5910 Canadian. 7. Capital Stock and Stock Option Plan Capital Stock Authorized, an unlimited number of: Preferred shares of first and second rank, issuable in series and non-voting, except when specified in the Articles of Incorporation of the Company or in the Law. Multiple voting shares, 20 votes per share. Subordinate voting shares, 1 vote per share. February 28 2002 (unaudited) Issued 1,849,900 multiple voting shares 14,392,253 subordinate voting shares $ $ 12 114,456 114,468 $ $ 12 114,323 114,335 August 31 2001 (audited) - 18 - COGECO INC. Notes to Consolidated Financial Statements (unaudited) (amounts in tables are in thousands of dollars, except per share data) 7. Capital Stock and Stock Option Plan (cont’d) During the period, subordinate voting share transactions were as follows: February 28 2002 (unaudited) Number of shares Balance at beginning Shares issued for cash under the Employee Stock Purchase Plan and the Stock Option Plan Conversion of multiple voting shares to subordinate voting shares Purchase of shares for cancellation Balance at end 14,385,113 7,440 (300) 14,392,253 $ $ Amount 114,323 136 (3) 114,456 August 31 2001 (audited) Number of shares 14,269,524 57,589 58,000 14,385,113 $ $ Amount 113,686 637 114,323 Stock Option Plan As at February 28, 2002, the Company had outstanding stock options providing for the subscription of 649,576 subordinate voting shares. These stock options can be exercised at various prices from $4.725 to $37.50 and at various dates up to October 19, 2011. 8. Earnings per share The following table provides a reconciliation between basic and diluted earnings per share: Three months ended February 28 2002 2001 Net income Net income excluding unusual items net of related income taxes and non-controlling interest Weighted average number of multiple voting shares and subordinate voting shares outstanding Effect of dilutive stock options Weighted average number of diluted multiple voting shares and subordinate voting shares outstanding Earnings per share Basic Diluted Earnings per share excluding unusual items Basic Diluted $ $ 36,452 2,445 $ 12,257 548 $ Six months ended February 28 2002 2001 39,162 6,498 $ 62,575 3,589 16,239,754 235,493 16,475,247 16,193,716 330,459 16,524,175 16,237,370 235,493 16,472,863 16,185,570 330,459 16,516,029 2.24 2.21 $ 0.76 0.74 $ 2.41 2.38 $ 3.87 3.79 0.15 0.15 0.03 0.03 0.40 0.39 0.22 0.22