Quebecor Inc. (TSX:QBR.A)(TSX:QBR.B) consolidates the financial results of its
Quebecor Media Inc. subsidiary, in which it holds a 54.7% interest.
HIGHLIGHTS SINCE END OF FIRST QUARTER 2008
- Quebecor's second quarter 2008 revenues amount to $942.3 million, up $127.0
million (15.6%) from second quarter 2007.
- Operating income: up $46.3 million (20.1%) to $277.0 million.
- Income from continuing operations: up $7.4 million ($0.12 per basic share) or
14.8% to $57.3 million ($0.89 per basic share), compared with $49.9 million
($0.77 per basic share) in the same period of 2007.
- Adjusted income from continuing operations (excluding gains and losses on
valuation and translation of financial instruments and the reserve for
restructuring of operations): up $3.9 million ($0.07 per basic share) or 10.4%
to $41.4 million ($0.65 per basic share) in second quarter 2008.
- Cable segment: operating income up $36.5 million (25.1%) .
Quarter-over-quarter net customer growth: +51,300 for cable telephone service,
+23,600 for cable Internet access, +7,800 for all cable television services
combined (including 27,700 customer increase for illico Digital TV), +4,700
activated phones for wireless telephone service.
- Spectrum auction for third generation Advanced Wireless Services (AWS):
Quebecor Media is successful bidder on 17 operating licences covering areas
including all of Quebec for $554.6 million.
- Videotron Ltd. issues US$455.0 million aggregate principal amount of Senior Notes.
- Videotron amends senior secured credit facility to raise commitments from
$450.0 million to $575.0 million and extend maturity date to April 2012.
- Agreement in principle on July 2, 2008 ends labour dispute at Le Journal de
Quebec.
Quebecor's consolidated revenues from continuing operations increased by $127.0
million (15.6%) to $942.3 million in the second quarter of 2008. The most
significant increases were in the following segments:
- Cable (up $75.6 million or 20.3% of segment revenues) reflecting continued
customer growth for all services;
- Newspapers ($65.7 million or 27.2%) due primarily to the impact of the
acquisition of Osprey Media Income Fund in August 2007;
- Broadcasting ($4.5 million or 4.2%).
Quebecor's operating income from continuing operations rose $46.3 million
(20.1%) to $277.0 million, with increases in the following segments:
- Cable (up $36.5 million or 25.1% of segment operating income), due mainly to
customer growth;
- Newspapers ($17.9 million or 32.7%) due primarily to the acquisition of Osprey
Media.
"Once again, Quebecor's very positive results were spearheaded by robust numbers
in the Cable segment, which continued to log strong customer growth for all its
services," said Pierre Karl Peladeau, President and Chief Executive Officer of
Quebecor Inc. "At the conclusion of the spectrum auction for Advanced Wireless
Services, Quebecor Media held standing high bids on 17 operating licences,
covering all of Quebec and part of the Toronto area. This is a key strategic
development for Quebecor Media, since consumer demand for Advanced Wireless
Services is expected to increase substantially in the coming years. With the
addition of this product, Quebecor is poised to embark on a new round of growth
by offering its Cable segment customers a still more complete and competitive
array of cable and telecommunications services."
Quebecor Inc.
Second quarter financial highlights - 2004 to 2008
(in millions of Canadian dollars)
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2008 2007 2006 2005 2004
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Revenues $942.3 $815.3 $739.9 $669.1 $613.6
Operating income 277.0 230.7 207.2 194.5 191.3
Income from continuing operations(i) 57.3 49.9 17.7 60.8 3.9
Adjusted income from continuing
operations(i)(ii) 41.4 37.5 30.5 16.9 11.2
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(i) See "Quebecor Inc. - Discontinued operations" below.
(ii) See "Adjusted income from continuing operations" below.
- Quebecor's income from continuing operations was $57.3 million ($0.89 per
basic share) in the second quarter of 2008, compared with $49.9 million
($0.77 per basic share) in the second quarter of 2007. The increase of $7.4
million ($0.12 per basic share) was due primarily to:
- $46.3 million increase in operating income;
- favourable variation of $16.9 million in gains and losses on
valuation and translation of financial instruments, resulting
primarily from $16.5 million favourable change in accounting
estimates of the fair value of derivative financial instruments,
reflecting market developments and recent accounting guidelines.
Partially offset by:
- $24.1 million increase in financial expenses, mainly as a result of
higher indebtedness;
- $15.7 million increase in income tax expense and $11.7 million
increase in non-controlling interest.
Adjusted income from continuing operations
- Adjusted income from continuing operations equals income from continuing
operations excluding gains and losses on valuation and translation of
financial instruments and the reserve for restructuring of operations.
Adjusted income from continuing operations was $41.4 million in the
second quarter of 2008 ($0.65 per basic share), compared with $37.5
million ($0.58 per basic share) in the same period of 2007, an increase
of $3.9 million ($0.07 per basic share), or 10.4% .
Year-to-date
- Quebecor's consolidated revenues from continuing operations were $1.82
billion, an increase of $253.0 million (16.2%) . The most significant
revenue increases were in Cable ($147.4 million or 20.2% of segment
revenues), Newspapers ($112.8 million or 24.4%) and Broadcasting ($17.7
million or 8.9%), essentially due to the same factors as those noted
above in the discussion of the second quarter results.
- Quebecor's operating income from continuing operations was $533.4
million, an increase of $119.1 million (28.7%) . The largest increases
were in Cable ($83.4 million or 28.3% of segment operating income),
Newspapers ($29.2 million or 32.7%) and Broadcasting ($8.3 million or
33.5%) .
- Quebecor's income from continuing operations was $102.1 million ($1.59
per basic share) in the first half of 2008, compared with $53.1 million
($0.82 per basic share) in the same period of 2007. The increase of
$49.0 million ($0.77 per basic share) was mainly due to:
- $119.1 million increase in operating income;
- favourable variation of $46.5 million in gains and losses on valuation
and translation of financial instruments, resulting primarily from
$16.5 million favourable change in accounting estimates of the fair
value of derivative financial instruments, reflecting market
developments and recent accounting guidelines, and favourable
variations in the fair value of exchangeable debentures
($13.7 million) and of embedded derivatives and other instruments
($16.3 million).
Partially offset by:
- $39.7 million increase in financial expenses, mainly as a result of
higher indebtedness;
- $48.2 million increase in income tax expense and $21.6 million increase
in non-controlling interest.
Adjusted income from continuing operations
- Adjusted income from continuing operations equals income from continuing
operations excluding gains and losses on valuation and translation of
financial instruments and the reserve for restructuring of operations.
Adjusted income from continuing operations was $75.7 million in the first
half of 2008 ($1.19 per basic share), compared with $54.1 million ($0.84
per basic share) in the same period of 2007, an increase of $21.6 million
($0.35 per basic share) or 40.0% .
Dividend
On August 4, 2008, the Board of Directors of Quebecor declared a quarterly
dividend of $0.05 per share on Class A Multiple Voting Shares and Class B
Subordinate Voting Shares, payable on September 15, 2008 to shareholders of
record at the close of business on August 21, 2008.
Quebecor Inc. - Discontinued operations
On January 21, 2008, Quebecor World Inc. and its U.S. subsidiaries were granted
creditor protection under the Companies' Creditors Arrangement Act in Canada. On
the same date, its U.S. subsidiaries also filed a petition under Chapter 11 of
the United States Bankruptcy Code. Since that date, in accordance with generally
accepted accounting principles, Quebecor's investment in Quebecor World has no
longer been consolidated, Quebecor's investment in Quebecor World has been
valued at zero, and Quebecor World's activities are considered discontinued
operations for the purposes of Quebecor's consolidated financial statements.
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 (used
in) provided by discontinued operations."
The results of discontinued operations include the $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 $27.4 million (net of
non-controlling interest) reported in the first half 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.
These procedures will have no material impact on the operations of Quebecor Media.
Detailed financial information
For a detailed analysis of Quebecor Inc.'s results for the second 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 or from the SEDAR
filing service at http://www.sedar.com.
Conference call for investors and webcast
Quebecor Inc. will hold a conference call to discuss the second quarter 2008
results of Quebecor and Quebecor Media on August 5, 2008, at 11:00 a.m. EDT.
There will be a question period reserved for financial analysts. To access the
conference call, please dial 1 877 293-8052, access code 7746798#. A tape
recording of the call will be available from August 5 through September 5, 2008,
by dialling 1 877 293-8133, access code 668008#. The conference call will also
be broadcast live on the Quebecor Inc. website at
www.quebecor.com/InvestorCenter/QIConferenceCall.aspx. It is advisable to ensure
the appropriate software is installed before accessing the call. Instructions
and links to free player downloads are available at the Internet address shown
above.
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 Quebecor Inc.'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
Quebecor'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, risks related to changes in tax legislation, and changes in the
general political and economic environment. 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 Quebecor's actual results to differ from current expectations,
please refer to Quebecor Inc.'s public filings available at www.sedar.com and
www.quebecor.com including, in particular, the "Risks and Uncertainties" section
in Quebecor Inc.'s Management Discussion and Analysis for the year ended
December 31, 2007.
The forward-looking statements in this press release reflect Quebecor's
forecasts as of August 5, 2008, and are subject to change after that date.
Quebecor 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; 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; Le SuperClub Videotron ltee, a DVD and console game rental
and retail chain; and Quebecor MediaPages, publisher of print and online
directories.
SEGMENTED ANALYSIS
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Quebecor Media Inc.
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Summary of results
(in millions of Canadian dollars)
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Three Months Six months
ended ended
June 30 June 30
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2008 2007 2008 2007
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Revenues $942.3 $815.3 $1,819.4 $1,566.4
Operating income 281.8 234.9 534.2 423.1
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Second quarter revenues and operating income - 2004 to 2008
(in millions of Canadian dollars)
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2008 2007 2006 2005 2004
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Revenues $942.3 $815.3 $739.9 $669.1 $613.6
Operating income 281.8 234.9 207.2 193.5 192.0
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Cable segment
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Second quarter 2008
Revenues: $447.5 million, an increase of $75.6 million (20.3%).
- Combined revenues from all cable television services increased
$21.6 million (11.9%) to $203.6 million due to the impact of customer
base growth, increases in some rates, the favourable impact of the
increase in the illico Digital TV customer base on revenues from
illico on Demand, pay TV, pay-per-view and set-top boxes, and
subscriber growth for the high definition package.
- Revenues from the illico Digital TV service, excluding related
services, increased $23.1 million (27.8%) to $106.3 million.
The performance of illico Digital TV more than compensated for
decreased revenues from analog cable television services.
- Revenues from Internet access services increased $21.9 million
(21.4%) to $124.2 million. The improvement was mainly due to customer
growth, as well as heavier consumption by existing customers and rate
increases.
- Revenues from cable telephone service increased $25.7 million (58.1%)
to $69.9 million, primarily because of customer growth as well as
higher long-distance revenues.
- Revenues from wireless telephone service increased $3.9 million to
$7.9 million due to customer growth.
- Revenues of Le SuperClub Videotron ltee increased $0.3 million (2.4%)
to $13.0 million, primarily because of higher retail sales, rental
revenues and royalties, partially offset by the unfavourable
impact of the sale of the StarStruck Entertainment chain.
Average monthly revenue per user: $81.59, compared with $69.95 in the same
quarter of 2007, an increase of $11.64 (16.6%).
Customer statistics - Net customer growth in second quarter 2008:
- cable telephone service: +51,300 (+55,000 in 2007);
- cable Internet access: +23,600 (+26,000 in 2007);
- all cable television services combined (i.e., net increase for analog
service and illico Digital TV): +7,800 (+1,800 in 2007), including
27,700 more customers for illico Digital TV (+26,200 in 2007);
- wireless telephone service: +4,700 activated phones (+10,400 in 2007).
Cable segment end-of-quarter customer numbers since end of December 2006
(in thousands of customers)
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June 08 March 08 Dec. 07 Sept. 07 June 07 March 07 Dec. 06
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Cable television:
Analog 829.5 849.4 869.9 896.0 905.4 929.8 948.8
Digital 830.5 802.8 768.2 720.3 679.1 652.9 623.6
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Total cable
television 1,660.0 1,652.2 1,638.1 1,616.3 1,584.5 1,582.7 1,572.4
Cable Internet 988.9 965.3 933.0 898.9 853.9 827.9 792.0
Cable telephone 742.9 691.6 636.4 573.8 503.7 448.7 397.8
Wireless
telephone 54.6 49.9 45.1 38.7 30.7 20.3 11.8
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Operating income: $182.2 million in the second quarter of 2008, an increase
of $36.5 million (25.1%).
- The increase was due primarily to:
- customer growth for all services;
- increases in some rates and in volumes;
- $13.0 million favourable variance in expenses related to Quebecor
Media's stock option plan, which are charged to its operating segments
as a direct charge to reflect participation by segment managers in the
plan and management fees.
Partially offset by:
- unfavourable variance of $16.7 million related to recognition in the
second quarter of 2008 of a $19.5 million charge for CRTC Part II
licence fees for the period of September 1, 2006 to June 30, 2008
following the Federal Court of Appeal decision of April 29, 2008.
- Excluding the favourable variation in the stock option expense, and if
the figures for prior periods are restated to reflect the Part II
licence fee adjustment, the segment's operating income increased 25.2%
in the second quarter of 2008, compared with 30.5% in the same quarter
of 2007.
Year-to-date
Revenues: $878.1 million, an increase of $147.4 million (20.2%)
essentially due to the same factors as those noted above in the
discussion of second quarter results.
Customer statistics -- Net customer growth in first half of 2008:
- Cable telephone service: +106,500 (+105,900 in 2007);
- Cable Internet access: +55,900 (+61,900 in 2007);
- All cable television services combined (i.e., net increase for analog
service and illico Digital TV): +21,900 (+12,100 in 2007), including
62,300 more customers for illico Digital TV (+55,500 in 2007);
- Wireless telephone service: +9,500 activated phones (+18,900 in 2007).
Operating income: $378.1 million, an increase of $83.4 million (28.3%).
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Newspapers segment
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Second quarter 2008
Revenues: $307.5 million, an increase of $65.7 million (27.2%).
- The increase was mainly due to the impact of the acquisition of Osprey
Media ($57.0 million), which closed in August 2007.
- Excluding the impact of that acquisition, combined revenues from
commercial printing and other sources increased 63.1%, advertising
revenues increased 1.5% and circulation revenues decreased 6.3%.
- The revenues of the urban dailies decreased 0.7% in the second quarter of
2008; excluding the acquisition of Osprey Media, the revenues of the
community newspapers increased 2.9%.
- In the urban dailies group, the revenues of the free dailies increased
34.6% due to strong results posted by the Vancouver, Montreal, Calgary
and Edmonton dailies.
Operating income: $72.6 million, an increase of $17.9 million (32.7%).
- The increase was due primarily to:
- impact of the acquisition of Osprey Media ($14.5 million);
- $3.7 million favourable impact of charges related to Quebecor Media's
stock option plan;
- lower newsprint costs.
Partially offset by:
- impact of the decrease in Sun Media Corporation's revenues, on a
comparable basis;
- expenditures related to the start-up of Quebecor MediaPages.
- The combined operating losses of the free dailies decreased 32.6% in the
second quarter of 2008.
Year-to-date
Revenues: $574.9 million, an increase of $112.8 million (24.4%) due mainly
to the acquisition of Osprey Media ($107.1 million), which closed in August
2007.
Operating income: $118.4 million, an increase of $29.2 million (32.7%).
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Broadcasting segment
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Second quarter 2008
Revenues: $111.0 million, an increase of $4.5 million (4.2%).
- Revenues from broadcasting operations increased $4.8 million, mainly
because of:
- higher advertising and other revenues at the TVA Network;
- higher subscription revenues and advertising revenues at the specialty
channels (Mystere, ARGENT, Prise 2, LCN, mentv, Mystery and Les idees
de ma maison).
- Distribution revenues decreased $0.8 million, mainly as a result of a
decrease in video revenues in comparison with the same period of 2007.
- Publishing revenues were flat in comparison with the same period of 2007.
Operating income: $21.7 million, a decrease of $0.4 million (-1.8%).
- Operating income from broadcasting operations decreased $1.4 million,
mainly because of:
- unfavourable variance of $4.9 million related to recognition in the
second quarter of 2008 of a $5.7 million charge for CRTC Part II
licence fees for the period of September 1, 2006 to June 30, 2008
following the Federal Court of Appeal decision of April 29, 2008;
- higher operating costs at the specialty channels;
- higher production costs at the TVA Network.
Partially offset by:
- favourable impact of increased revenues at the general-interest and
specialty channels;
- decreased selling and administrative expenses at the TVA Network.
- Operating income from distribution operations was flat in comparison with
the same period of 2007.
- Operating income from publishing operations increased by $1.1 million,
mainly as a result of reductions in advertising, marketing and
distribution expenses.
Year-to-date
Revenues: $217.5 million, an increase of $17.7 million (8.9%).
Operating income: $33.1 million, an increase of $8.3 million (33.5%).
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Leisure and Entertainment segment
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Second quarter 2008
Revenues: $63.7 million, a decrease of $18.0 million (-22.0%).
- 27.1% decrease in revenues at Quebecor Media Book Group Inc., due largely
to the loss of distribution contracts with two publishing houses and
decreased sales in the academic segment.
- 18.9% decrease in revenues at Archambault Group Inc., mainly because of
fewer CDs released and distributed and lower retail sales of music.
Operating income: $2.2 million, a decrease of $5.6 million (-71.8%)
compared with the second quarter of 2007 due primarily to the impact of
the revenue decrease.
Year-to-date
Revenues: $126.3 million, a decrease of $20.5 million (-14.0%).
Operating income: $0.6 million, a decrease of $7.0 million (-92.1%).
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Interactive Technologies and Communications segment
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Second quarter 2008
Revenues: $23.4 million, an increase of $1.5 million (6.8%).
- The increase was mainly due to:
- impact of increased volumes from customers in Europe, particularly
France, as well as in Asia, which was partially offset by a decrease in
volume from governmental organizations in Quebec.
Operating income: $1.8 million, an increase of $0.9 million (100.0%) due
primarily to the higher revenues and higher operating margins in Canada and
France.
Year-to-date
Revenues: $44.0 million, an increase of $1.1 million (2.6%).
Operating income: $1.1 million, a decrease of $0.3 million (-21.4%).
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Internet/Portals segment
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Second quarter 2008
Revenues: $13.2 million, an increase of $1.5 million (12.8%).
- 15.2% increase in revenues at special-interest portals, primarily
attributable to revenue growth at the autonet.ca site resulting mainly
from the acquisition of ASL Ltd. and higher revenues at the jobboom.com
site.
- 8.7% increase in revenues at the general-interest portals, due
essentially to new websites.
Operating income: $1.1 million, a decrease of $0.3 million (-21.4%) due
mainly to the impact of the cost of introducing a new business development
strategy and investment in new products.
Year-to-date
Revenues: $25.2 million, an increase of $2.1 million (9.1%).
Operating income: $1.3 million, a decrease of $1.8 million (-58.1%).
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Financing activities
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On April 15, 2008, Videotron issued US$455.0 million aggregate principal amount
of Senior Notes for net proceeds of $449.3 million before financing expenses.
On April 8, 2008, Videotron amended its senior secured credit facility to
increase commitments under the facility from $450.0 million to $575.0 million
and extend the maturity date to April 2012. Videotron may further increase
commitments under the facility by an additional $75.0 million subject to certain
conditions, bringing the total to $650.0 million.
Quebecor Media made cash deposits in trust totalling $217.9 million in
connection with the 3G spectrum auction.
DEFINITIONS
Operating income
In its analysis of operating results, the Company defines operating income or
loss, as reconciled to net income under Canadian GAAP, as net income before
amortization, financial expenses, gain (loss) on valuation and translation of
financial instruments, reserve for restructuring of operations, income tax,
non-controlling interest and the results of discontinued operations. Operating
income as defined above is not a measure of results that is consistent with
Canadian GAAP. It is not intended to be regarded as an alternative to other
financial operating performance measures or to the statement of cash flows as a
measure of liquidity. It should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with Canadian
GAAP. Management believes that operating income is a meaningful measure of
performance. The Company uses operating income in order to assess the
performance of its investment in Quebecor Media. The Company's management and
Board of Directors use this measure in evaluating its consolidated results as
well as the results of the Company's operating segments. This measure eliminates
the significant level of non-cash depreciation of tangible assets and
amortization of certain intangible assets, and is unaffected by the capital
structure or investment activities of the Company and its segments. Operating
income is also relevant because it is a significant component of the Company's
annual incentive compensation programs. A limitation of this measure, however,
is that it does not reflect the periodic costs of capitalized tangible and
intangible assets used in generating revenues in the Company's segments. The
Company also uses other measures that do reflect such costs, such as cash flows
from segment operations and free cash flows from operations. In addition,
measures like operating income are commonly used by the investment community to
analyze and compare the performance of companies in the industries in which the
Company is engaged. The Company's definition of operating income may not be the
same as similarly titled measures reported by other companies. The following
table reconciles Quebecor's operating income with the closest Canadian GAAP
measure.
Reconciliation of the operating income measure used in this report to the net
income measure used in the consolidated financial statements
(in millions of Canadian dollars)
Three months ended Six months ended
June 30 June 30
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2008 2007 2008 2007
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Operating income:
Cable $ 182.2 $ 145.7 $ 378.1 $ 294.7
Newspapers 72.6 54.7 118.4 89.2
Broadcasting 21.7 22.1 33.1 24.8
Leisure and Entertainment 2.2 7.8 0.6 7.6
Interactive Technologies and
Communications 1.8 0.9 1.1 1.4
Internet/Portals 1.1 1.4 1.3 3.1
Head office (4.6) (1.9) 0.8 (6.5)
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277.0 230.7 533.4 414.3
Amortization (80.1) (72.0) (158.4) (142.1)
Financial expenses (79.5) (55.4) (152.4) (112.7)
Gain (loss) on valuation and
translation of financial
instruments 25.6 8.7 39.2 (7.3)
Reserve for restructuring of
operations (1.3) (5.1) (2.9) (12.1)
Income tax (26.2) (10.5) (70.3) (22.1)
Non-controlling interest (58.2) (46.5) (86.5) (64.9)
(Loss) income from discontinued
operations - (6.7) 383.3 (24.5)
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Net income $ 57.3 $ 43.2 $ 485.4 $ 28.6
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Average Monthly Revenue per User
Average monthly revenue per user (ARPU) is an industry metric that the
Company uses to measure its average cable, Internet and telephony revenues
per month per basic cable customer. ARPU is not a measurement that is
consistent with Canadian GAAP, and the Company's definition and calculation
of ARPU may not be the same as identically titled measurements reported by
other companies. The Company calculates ARPU by dividing its combined cable
television, Internet access and telephony revenues by the average number of
its basic cable customers during the applicable period, and then dividing
the resulting amount by the number of months in the applicable period.
QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in millions of Canadian dollars, except for earnings per share data)
(unaudited)
Three months Six months
ended June 30 ended June 30
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2008 2007 2008 2007
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REVENUES
Cable $447.5 $371.9 $878.1 $730.7
Newspapers 307.5 241.8 574.9 462.1
Broadcasting 111.0 106.5 217.5 199.8
Leisure and Entertainment 63.7 81.7 126.3 146.8
Interactive Technologies
and Communications 23.4 21.9 44.0 42.9
Internet/Portals 13.2 11.7 25.2 23.1
Head office and
inter-segment (24.0) (20.2) (46.6) (39.0)
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942.3 815.3 1,819.4 1,566.4
Cost of sales and selling
and administrative
expenses 665.3 584.6 1,286.0 1,152.1
Amortization 80.1 72.0 158.4 142.1
Financial expenses 79.5 55.4 152.4 112.7
(Gain) loss on valuation
and translation of
financial instruments (25.6) (8.7) (39.2) 7.3
Reserve for restructuring
of operations 1.3 5.1 2.9 12.1
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INCOME BEFORE INCOME TAXES AND
NON-CONTROLLING INTEREST 141.7 106.9 258.9 140.1
Income taxes:
Current 3.4 (0.4) 2.3 (2.3)
Future 22.8 10.9 68.0 24.4
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26.2 10.5 70.3 22.1
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115.5 96.4 188.6 118.0
Non-controlling interest (58.2) (46.5) (86.5) (64.9)
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INCOME FROM CONTINUING
OPERATIONS 57.3 49.9 102.1 53.1
Income (loss) from
discontinued operations - (6.7) 383.3 (24.5)
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NET INCOME $57.3 $43.2 $485.4 $28.6
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EARNINGS PER SHARE
Basic
From continuing operations $0.89 $0.77 $1.59 $0.82
From discontinued operations - (0.10) 5.96 (0.38)
Net income 0.89 0.67 7.55 0.44
Diluted
From continuing operations 0.88 0.76 1.58 0.81
From discontinued operations - (0.10) 5.96 (0.38)
Net income 0.88 0.66 7.54 0.43
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Weighted average number of shares
outstanding (in millions) 64.3 64.3 64.3 64.3
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Weighted average number of diluted
shares (in millions) 64.4 64.7 64.4 64.7
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QUEBECOR INC. AND ITS SUBSIDIARIES
SEGMENTED INFORMATION
(in millions of Canadian dollars)
(unaudited)
Three months Six months
ended June 30 ended June 30
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2008 2007 2008 2007
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Income from continuing operations
before amortization, financial
expenses, (gain) loss on valuation
and translation of financial
instruments, reserve for
restructuring of operations,
income taxes and non-controlling
interest
Cable $182.2 $145.7 $378.1 $294.7
Newspapers 72.6 54.7 118.4 89.2
Broadcasting 21.7 22.1 33.1 24.8
Leisure and Entertainment 2.2 7.8 0.6 7.6
Interactive Technologies and
Communications 1.8 0.9 1.1 1.4
Internet/Portals 1.1 1.4 1.3 3.1
Head office (4.6) (1.9) 0.8 (6.5)
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$277.0 $230.7 $533.4 $414.3
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Amortization
Cable $57.0 $54.9 $113.5 $108.9
Newspapers 15.7 10.2 30.4 19.6
Broadcasting 3.5 3.4 6.9 6.6
Leisure and Entertainment 1.9 2.1 3.7 4.1
Interactive Technologies and
Communications 1.0 0.7 1.9 1.5
Internet/Portals 0.8 0.4 1.5 0.7
Head Office 0.2 0.3 0.5 0.7
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$80.1 $72.0 $158.4 $142.1
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Additions to property, plant and
equipment
Cable $105.7 $68.8 $202.1 $157.1
Newspapers 6.5 12.7 40.5 29.9
Broadcasting 4.9 2.8 7.4 6.3
Leisure and Entertainment 2.3 0.2 3.7 0.4
Interactive Technologies and
Communications 0.9 0.6 1.4 1.5
Internet/Portals 2.6 1.5 4.2 2.4
Head office 2.8 6.5 7.4 10.3
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$125.7 $93.1 $266.7 $207.9
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QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions of Canadian dollars)
(unaudited)
Three months Six months
ended June 30 ended June 30
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2008 2007 2008 2007
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Net income $57.3 $43.2 $485.4 $28.6
Other comprehensive income
(loss), net of income
taxes and non-controlling
interest:
Unrealized (loss) gain on
translation of net investments
in foreign operations (0.1) (0.7) 1.2 (0.8)
Unrealized (loss) gain on
derivative financial
instruments (31.9) 3.1 (22.1) 8.1
Other comprehensive loss from
discontinued operations - (69.0) - (75.5)
Reclassification to income
of other comprehensive
loss related to discontinued
operations - - 326.5 1.2
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(32.0) (66.6) 305.6 (67.0)
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COMPREHENSIVE INCOME $25.3 $(23.4) $791.0 $(38.4)
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CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(in millions of Canadian dollars)
(unaudited)
Three months Six months
ended June 30 ended June 30
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2008 2007 2008 2007
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Balance at beginning of period,
as previously reported $816.4 $1,368.1 $412.1 $1,385.9
Cumulative effect of changes in
an accounting policy - - (20.6) -
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Balance at beginning of period,
as revised 816.4 1,368.1 391.5 1,385.9
Net income 57.3 43.2 485.4 28.6
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873.7 1,411.3 876.9 1,414.5
Discontinued operations -
Redemption of convertible notes - 8.3 - 8.3
Dividends (3.2) (3.2) (6.4) (6.4)
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Balance at end of period $870.5 $1,416.4 $870.5 $1,416.4
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QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions of Canadian dollars)
(unaudited)
Three months Six months
ended June 30 ended June 30
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2008 2007 2008 2007
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Cash flows related to
operations
Income from continuing
operations $57.3 $49.9 $102.1 $53.1
Adjustments for:
Amortization of property,
plant and equipment 74.1 69.7 146.8 137.4
Amortization of deferred
charges and other assets 6.0 2.3 11.6 4.7
(Gain) loss on valuation
and translation
of financial instruments (25.6) (8.7) (39.2) 7.3
Amortization of financing
costs and long-term
debt discount 2.3 1.0 4.3 2.0
Future income taxes 22.8 10.9 68.0 24.4
Non-controlling interest 58.2 46.5 86.5 64.9
Other 1.7 (0.4) 2.1 (2.9)
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196.8 171.2 382.2 290.9
Net change in non-cash
balances related to
operations (10.0) (3.2) (157.3) (39.8)
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Cash flows provided by
continuing operations 186.8 168.0 224.9 251.1
Cash flows provided by
discontinued operations - 96.7 20.5 174.1
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Cash flows provided by
operations 186.8 264.7 245.4 425.2
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Cash flows related to
investing activities
Business acquisitions,
net of cash and
cash equivalents (52.2) (1.8) (138.5) (5.8)
Business disposals, net
of cash and cash
equivalents - - 1.2 -
Additions to property,
plant and equipment (125.7) (93.1) (266.7) (207.9)
Additions to other assets (3.9) (1.2) (6.5) (1.3)
(Increase) decrease in
cash and cash equivalents
in trust and
temporary investments (218.0) 2.4 (218.0) 2.4
Other 2.3 1.8 1.4 4.6
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Cash flows used in
continuing investing
activities (397.5) (91.9) (627.1) (208.0)
Cash flows used in
discontinued investing
activities and cash and
cash equivalents of
Quebecor World Inc. at the
date of deconsolidation - (60.4) (117.7) (113.6)
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Cash flows used in
investing activities (397.5) (152.3) (744.8) (321.6)
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Cash flows related to
financing activities
Net (decrease) increase
in bank indebtedness (14.4) (10.7) 23.1 (9.8)
Issuance of long-term
debt, net of financing
fees 449.3 2.0 449.8 10.3
Net repayments under
revolving bank facilities (208.1) (54.8) (54.8) (12.1)
Repayments of long-term
debt (4.5) (5.3) (12.9) (10.7)
Dividends (6.4) (3.2) (6.4) (6.4)
Dividends paid to
non-controlling
shareholders (0.8) (6.0) (1.5) (12.1)
Other - 0.7 2.6 0.8
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Cash flows provided by
(used in) continuing
financing activities 215.1 (77.3) 399.9 (40.0)
Cash flows provided by
(used in) discontinued
financing activities - (16.3) 37.3 (7.2)
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Cash flows provided by
(used in) financing
activities 215.1 (93.6) 437.2 (47.2)
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Net increase (decrease)
in cash and cash
equivalents 4.4 18.8 (62.2) 56.4
Effect of exchange rate
changes on cash and cash
equivalents denominated
in foreign currencies (0.2) (21.6) 0.2 (37.1)
Cash and cash equivalents
at beginning of period 0.3 56.8 66.5 34.7
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Cash and cash equivalents
at end of period $4.5 $54.0 $4.5 $54.0
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Cash and cash equivalents
consist of
Cash $3.4 $22.0 $3.4 $22.0
Cash equivalents 1.1 32.0 1.1 32.0
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$4.5 $54.0 $4.5 $54.0
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Continuing operations
Cash interest payments $83.9 $53.8 $144.0 $112.3
Cash income tax payments
(net of refunds) 4.1 1.0 16.2 (1.3)
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QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions of Canadian dollars)
(unaudited)
June 30 December 31
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2008 2007
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ASSETS
CURRENT ASSETS
Cash and cash equivalents $4.5 $66.5
Cash and cash equivalents in trust and
temporary investments 223.4 5.4
Accounts receivable 468.0 1,513.4
Income taxes 8.9 25.9
Inventories and investments in televisual
products and movies 160.2 529.9
Prepaid expenses 43.1 51.1
Future income taxes 139.8 223.7
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1,047.9 2,415.9
PROPERTY, PLANT AND EQUIPMENT 2,265.4 4,121.1
FUTURE INCOME TAXES 50.3 65.1
RESTRICTED CASH - 53.8
OTHER ASSETS 466.4 664.7
GOODWILL 4,142.6 4,417.8
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$7,972.6 $11,738.4
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Bank indebtedness $40.0 $88.6
Accounts payable and accrued charges 599.1 1,715.1
Deferred revenue 209.0 222.7
Income taxes 6.4 58.0
Future income taxes - 1.2
Short-term secured financing - 453.5
Current portion of long-term debt 27.9 1,028.4
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882.4 3,567.5
LONG-TERM DEBT 3,562.7 4,393.8
EXCHANGEABLE DEBENTURES 29.2 79.4
DERIVATIVE FINANCIAL INSTRUMENTS 487.6 599.8
OTHER LIABILITIES 114.1 407.6
FUTURE INCOME TAXES 432.0 514.7
PREFERRED SHARES OF A SUBSIDIARY - 175.0
NON-CONTROLLING INTEREST 1,263.7 1,563.7
SHAREHOLDERS' EQUITY
Capital stock 346.6 346.6
Retained earnings 870.5 412.1
Accumulated other comprehensive loss (16.2) (321.8)
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1,200.9 436.9
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$7,972.6 $11,738.4
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