Quebecor Inc. Announces First Quarter 2008 Results
June 10 2008 - 12:26PM
Marketwired Canada
This press release discloses Quebecor Inc.'s (TSX:QBR.A)(TSX:QBR.B) consolidated
financial results for the first quarter ended March 31, 2008. It should be noted
that Quebecor Media Inc. reported its financial results for the first quarter of
2008 on May 6, 2008.
On January 21, 2008, Quebecor World Inc. placed itself under the protection of
the Companies' Creditors Arrangement Act in Canada and Chapter 11 of the United
States Bankruptcy Code. In accordance with generally accepted accounting
principles, Quebecor's investment in Quebecor World is no longer consolidated
since that date, the carrying value of Quebecor's investment in Quebecor World
has been reduced to zero and Quebecor World's activities are considered as
discontinued operations in the consolidated financial statements of Quebecor
Inc.
Quebecor World's operating results have been restated and are reported in the
financial statements under the item "Income (loss) from discontinued
operations," and the cash flows provided by these operations have been restated
and are reported in the financial statements under the item "Cash flows provided
by (used in) discontinued operations."
The procedures related to Quebecor World will have no material impact on the
operations of Quebecor Media.
Quebecor Inc. - Continuing operations
The consolidated revenues of Quebecor's continuing operations totalled $877.1
million, an increase of $126.0 million (16.8%). Revenue growth was strongest in
the following segments: Cable (up $71.8 million or 20.0%), reflecting continued
customer growth for all services; Newspapers ($47.1 million or 21.4%), due to
the impact of the acquisition of Osprey Media Income Fund ("Osprey Media") in
August 2007; and Broadcasting ($13.2 million or 14.1%).
Operating income from Quebecor's continuing operations increased by $72.8
million (39.7%) to $256.4 million, mainly as a result of increases in Cable
($46.9 million or 31.5%) due primarily to customer growth, Newspapers ($11.3
million or 32.8%) due to the acquisition of Osprey Media, and Broadcasting ($8.7
million). The fair values of Quebecor Media (based on market comparables) and
Quebecor's shares, decreased in the first quarter of 2008, compared with an
increase in the same period of 2007, resulting in a $24.6 million decrease in
the consolidated stock option expense, including $14.6 million at Quebecor.
Excluding the operating income of Osprey Media and the impact of the
consolidated stock option expense, the increase in operating income in the first
quarter of 2008 was 19.2%, the same year-over-year growth as in the same period
of 2007.
Quebecor recognized a $20.0 million unrealized gain on re-measurement of
debentures and of a portfolio investment in the first quarter of 2008 ($16.6
million after income tax), compared with an unrealized loss of $13.0 million in
the same quarter of 2007 ($10.7 million after income tax).
Financial expenses increased by $18.3 million to $79.6 million mainly because of
the $11.0 million impact of increased indebtedness mostly related to the
acquisition of Osprey Media, recognition of a $6.4 million loss on derivative
financial instruments and foreign currency translation ($2.2 million gain in the
first quarter of 2007) and a reduction in interest capitalized to fixed assets.
These factors were partially offset by recognition by Quebecor Media in the
first quarter of 2007 of a $5.2 million loss on re-measurement of the Additional
Amount payable, which was paid in July 2007.
Income from Quebecor's continuing operations totalled $44.8 million ($0.70 per
basic share) in the first quarter of 2008, compared with income from continuing
operations of $3.2 million ($0.05 per basic share) in the first quarter of 2007.
The increase of $41.6 million ($0.65 per basic share) was mainly due to the
$72.8 million increase in operating income and recognition of the $20.0 million
unrealized gain on re-measurement of exchangeable debentures and of a portfolio
investment (unrealized loss of $13.0 million in the same quarter of 2007), which
were partially offset by the $18.3 million increase in financial expenses and an
$8.2 million increase in amortization charges.
Excluding unusual items, i.e., the reserve for restructuring of operations and
the unrealized gain (loss) on re-measurement of debentures and of a portfolio
investment, income from continuing operations was $28.8 million in the first
quarter of 2008 ($0.45 per basic share), compared with $15.8 million ($0.25 per
basic share) in the same period of 2007, an increase of $13.0 million ($0.20 per
basic share).
Quebecor Inc. - Discontinued operations
The results of discontinued operations include a $17.7 million net loss (net of
non-controlling interest) recognized by Quebecor World for the period of January
1 to 21, 2008, compared with a net loss of $18.1 million (net of non-controlling
interest) reported in the first quarter of 2007.
At January 21, 2008, the Company's consolidated balance sheet included a net
asset deficiency of $761.3 million, representing the excess of the liabilities
and non-controlling interest related to Quebecor World over Quebecor World's
assets. At January 21, 2008, the Company also had net losses accumulated in
other comprehensive income in the amount of $326.5 million, net of income tax,
consisting primarily in accumulated currency translation losses in connection
with the net investment in Quebecor World. Therefore, the results of
discontinued operations for the first quarter of 2008 also include a net gain of
$399.7 million in respect of the difference between the reversal of the net
asset deficiency and the reclassification in the results of the net losses
accumulated in other comprehensive income as of the deconsolidation date,
January 21, 2008, net of the $35.1 million decrease in future income tax assets
related to the investment in Quebecor World.
Detailed financial information
For a detailed analysis of the results of Quebecor Inc. and its Quebecor Media
Inc. subsidiary for the first quarter of 2008, please refer to the Management
Discussion and Analysis and consolidated financial statements of Quebecor Inc.,
available on the Company's website at
http://www.quebecor.com/InvestorCenter/QIQuarterlyReports.aspx.
See also the Company's press release of May 6, 2008 concerning the results of
Quebecor Media Inc.
Quebecor Inc. and Quebecor Media documents are also available on the Company's
website at http://www.quebecor.com/InvestorCenter/QIQuarterlyReports.aspx and
for Quebecor Inc only, from the SEDAR filing service at http://www.sedar.com.
Forward-looking statements
The statements in this press release that are not historical facts are
forward-looking statements and are subject to significant known and unknown
risks, uncertainties and assumptions which could cause the Company's actual
results for future periods to differ materially from those set forth in the
forward-looking statements. Forward-looking statements may be identified by the
use of the conditional or by forward-looking terminology such as the terms
"plans," "expects," "may," "anticipates," "intends," "estimates," "projects,"
"seeks," "believes" or similar terms, variations of such terms or the negative
of such terms. Certain factors that may cause actual results to differ from
current expectations include seasonality (including seasonal fluctuations in
customer orders), operating risk (including fluctuations in demand for the
Company's products and pricing actions by competitors), insurance risk, risks
associated with capital investment (including risks related to technological
development and equipment availability and breakdown), environmental risks,
risks associated with labour agreements, risks associated with commodities and
energy prices (including fluctuations in the cost and availability of raw
materials), credit risk, financial risks, debt risks, risks related to interest
rate fluctuations, foreign exchange risks, risks associated with government acts
and regulations, and changes in the general political and economic environment.
The forward-looking statements in this document are made to provide investors
and the public with a better understanding of the Company's circumstances and
are based on assumptions the Company believes to be reasonable as of the day on
which they are made. Investors and others are cautioned that the foregoing list
of factors that may affect future results is not exhaustive and that undue
reliance should not be placed on any forward-looking statements. For more
information on the risks, uncertainties and assumptions that could cause the
Company's actual results to differ from current expectations, please refer to
the Company's public filings available at www.sedar.com and www.quebecor.com
including, in particular, the "Risks and Uncertainties" section of the
Management Discussion and Analysis for the year ended December 31, 2007 and the
"Risk Factors" section of the Company's 2007 Annual Information Form.
The forward-looking statements in this press release reflect the Company's
expectations as of June 10, 2008 and are subject to change after this date. The
Company expressly disclaims any obligation or intention to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by applicable securities laws.
The Company
Quebecor Inc. (TSX:QBR.A(TSX:QBR.B) is a holding company with a 54.7% interest
in Quebecor Media Inc., one of Canada's largest media groups. Quebecor Media
owns operating companies in numerous media-related businesses: Videotron Ltd.,
the largest cable operator in Quebec and a major Internet Service Provider and
provider of telephone and business telecommunications services; Sun Media
Corporation, the largest publisher of newspapers in Canada; Quebecor MediaPages,
a publisher of print and online directories; TVA Group Inc., operator of the
largest French-language over-the-air television network in Quebec, a number of
specialty channels, and the English-language over-the-air station Sun TV; Canoe
Inc., operator of a network of English- and French-language Internet properties
in Canada; Nurun Inc., a major interactive technologies and communications
agency with offices in Canada, the United States, Europe and Asia; magazine
publisher TVA Publishing Inc.; book publisher and distributor Quebecor Media
Book Group Inc.; Archambault Group Inc. and TVA Films, companies engaged in the
production, distribution and retailing of cultural products, and Le SuperClub
Videotron ltee, a DVD and console game rental and retail chain.
QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in millions of Canadian dollars, except for earnings per share data)
(unaudited)
Three months ended March 31
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2008 2007
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REVENUES
Cable $430.6 $358.8
Newspapers 267.4 220.3
Broadcasting 106.5 93.3
Leisure and Entertainment 62.6 65.1
Interactive Technologies and Communications 20.6 21.0
Internet/Portals 12.0 11.4
Head office and inter-segment (22.6) (18.8)
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877.1 751.1
Cost of sales and selling and
administrative expenses 620.7 567.5
Amortization 78.3 70.1
Financial expenses 79.6 61.3
Reserve for restructuring of operations 1.6 7.0
(Gain) loss on re-measurement of exchangeable
debentures and a portfolio investment (20.0) 13.0
Other (0.3) (1.0)
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INCOME BEFORE INCOME TAXES AND
NON-CONTROLLING INTEREST 117.2 33.2
Income taxes:
Current (1.1) (1.9)
Future 45.2 13.5
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44.1 11.6
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73.1 21.6
Non-controlling interest (28.3) (18.4)
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INCOME FROM CONTINUING OPERATIONS 44.8 3.2
Income (loss) from discontinued operations 383.3 (17.8)
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NET INCOME (LOSS) $428.1 $(14.6)
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EARNINGS PER SHARE
Basic and diluted
From continuing operations $0.70 $0.05
From discontinued operations 5.96 (0.28)
Net income (loss) 6.66 (0.23)
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Weighted average number of shares
outstanding (in millions) 64.3 64.3
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QUEBECOR INC. AND ITS SUBSIDIARIES
SEGMENTED INFORMATION
(in millions of Canadian dollars)
(unaudited)
Three months ended March 31
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2008 2007
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Income before amortization, financial
expenses, reserve for restructuring of
operations, (gain) loss on re-measurement
of exchangeable debentures and a
portfolio investment and other
Cable $195.9 $149.0
Newspapers 45.8 34.5
Broadcasting 11.4 2.7
Leisure and Entertainment (1.6) (0.2)
Interactive Technologies and Communications (0.7) 0.5
Internet/Portals 0.2 1.7
General corporate revenues (expenses) 5.4 (4.6)
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$256.4 $183.6
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Amortization
Cable $56.5 $54.0
Newspapers 14.7 9.4
Broadcasting 3.4 3.2
Leisure and Entertainment 1.8 2.0
Interactive Technologies and Communications 0.9 0.8
Internet/Portals 0.7 0.3
Head Office 0.3 0.4
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$78.3 $70.1
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Additions to property, plant and equipment
Cable $96.4 $88.3
Newspapers 34.0 17.2
Broadcasting 2.5 3.5
Leisure and Entertainment 1.4 0.2
Interactive Technologies and Communications 0.5 0.9
Internet/Portals 1.6 0.9
Head office 4.6 3.8
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$141.0 114.8
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QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions of Canadian dollars)
(unaudited)
Three months ended March 31
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2008 2007
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Net income (loss) $428.1 $(14.6)
Other comprehensive income (loss), net of
income taxes and non-controlling interest
Unrealized gain (loss) on translation of
net investments in foreign operations 1.3 (0.1)
Unrealized gain on derivative instruments 9.8 5.0
Other comprehensive loss from
discontinued operations - (6.5)
Reclassification to income of other
comprehensive loss related to discontinued
operations 326.5 1.2
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337.6 (0.4)
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COMPREHENSIVE INCOME (LOSS) $765.7 $(15.0)
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CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(in millions of Canadian dollars)
(unaudited)
Three months ended March 31
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2008 2007
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Balance at beginning of period,
as previously reported $412.1 $1,404.5
Cumulative effect of changes in an
accounting policy (20.6) -
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Balance at beginning of period, as revised 391.5 1,404.5
Net income (loss) 428.1 (14.6)
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819.6 1,389.9
Dividends (3.2) (3.2)
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Balance at end of period $816.4 $1,386.7
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QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions of Canadian dollars)
(unaudited)
Three months ended March 31
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2008 2007
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Cash flows related to operations
Income from continuing operations $44.8 $3.2
Adjustments for:
Amortization of property, plant
and equipment 72.7 67.7
Amortization of deferred charges and
other assets 5.6 2.4
Net loss (gain) on derivative instruments
and on foreign currency translation of
financial instruments 6.4 (2.2)
(Gain) loss on re-measurement of exchangeable
debentures and a portfolio investment (20.0) 13.0
Amortization of financing costs and
long-term debt discount 2.0 1.0
Loss on revaluation of the Additional
Amount payable - 5.2
Future income taxes 45.2 13.5
Non-controlling interest 28.3 18.4
Other 0.4 (2.5)
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185.4 119.7
Net change in non-cash balances related
to operations (143.3) (36.6)
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Cash flows provided by continuing operations 42.1 83.1
Cash flows provided by discontinued operations 20.5 77.4
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Cash flows provided by operations 62.6 160.5
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Cash flows related to investing activities
Business acquisitions, net of cash and
cash equivalents (86.3) (4.0)
Business disposals, net of cash and
cash equivalents 1.2 -
Additions to property, plant and equipment (141.0) (114.8)
Proceeds from disposal of assets 0.2 2.5
Other (7.7) 0.2
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Cash flows used in continuing
investing activities (233.6) (116.1)
Cash flows used in discontinued investing
activities and cash and cash equivalents
of Quebecor World Inc. at the date of
deconsolidation (117.7) (53.2)
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Cash flows used in investing activities (351.3) (169.3)
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Cash flows related to financing activities
Net increase in bank indebtedness 37.5 0.9
Issuance of long-term debt, net of
financing fees 0.5 8.3
Net borrowings under revolving bank
facilities 153.3 42.7
Repayments of long-term debt (8.4) (5.4)
Dividends - (3.2)
Dividends paid to non-controlling shareholders (0.7) (6.1)
Other 2.6 0.1
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Cash flows provided by continuing
financing activities 184.8 37.3
Cash flows provided by discontinued
financing activities 37.3 9.1
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Cash flows provided by financing activities 222.1 46.4
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Net (decrease) increase in cash and
cash equivalents (66.6) 37.6
Effect of exchange rate changes on cash
and cash equivalents denominated in foreign
currencies 0.4 (15.5)
Cash and cash equivalents at beginning
of period 66.5 34.7
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Cash and cash equivalents at end of period $0.3 $56.8
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Cash and cash equivalents consist of
Cash $ 0.1 $18.5
Cash equivalents 0.2 38.3
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$0.3 $56.8
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Continuing operations
Cash interest payments $60.1 $58.5
Cash income tax payments (net of refunds) 12.1 (2.3)
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QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions of Canadian dollars)
(unaudited)
March 31 December 31
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2008 2007
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ASSETS
CURRENT ASSETS
Cash and cash equivalents $0.3 $66.5
Restricted cash and cash equivalents and
temporary investments 5.4 5.4
Accounts receivable 467.9 1,513.4
Income taxes 7.3 25.9
Inventories and investments in televisual
products and movies 154.9 529.9
Prepaid expenses 41.0 51.1
Future income taxes 142.4 223.7
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819.2 2,415.9
PROPERTY, PLANT AND EQUIPMENT 2,211.4 4,121.1
FUTURE INCOME TAXES 54.6 65.1
RESTRICTED CASH - 53.8
OTHER ASSETS 507.1 664.7
GOODWILL 4,137.7 4,417.8
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$7,730.0 $11,738.4
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Bank indebtedness $54.4 $88.6
Accounts payable, accrued charges and
deferred revenue 801.7 1,937.8
Income taxes 7.1 58.0
Dividend payable 3.2 -
Future income taxes - 1.2
Short-term secured financing - 453.5
Current portion of long-term debt 24.9 1,028.4
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891.3 3,567.5
LONG-TERM DEBT 3,392.7 4,393.8
EXCHANGEABLE DEBENTURES 38.2 79.4
DERIVATIVE FINANCIAL INSTRUMENTS 419.9 599.8
OTHER LIABILITIES 115.3 407.6
FUTURE INCOME TAXES 422.1 514.7
PREFERRED SHARES OF A SUBSIDIARY - 175.0
NON-CONTROLLING INTEREST 1,271.7 1,563.7
SHAREHOLDERS' EQUITY
Capital stock 346.6 346.6
Retained earnings 816.4 412.1
Accumulated other comprehensive income (loss) 15.8 (321.8)
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1,178.8 436.9
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$7,730.0 $11,738.4
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