MONTREAL, QUEBEC (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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Contacts: Quebecor Inc. Louis Morin Vice President and Chief
Financial Officer 514-380-1912 Quebecor Inc. Luc Lavoie Executive
Vice President, Corporate Affairs 514-380-1974 514-947-6672
(Mobile) lavoie.luc@quebecor.com
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