Quebecor Inc. (TSX: QBR.A)(TSX: QBR.B) ("Quebecor" or the
"Company") today reported its consolidated financial results for
the second quarter of 2010. Quebecor consolidates the financial
results of its Quebecor Media Inc. ("Quebecor Media") subsidiary,
in which it holds a 54.7% interest.
Second quarter 2010 highlights
-- Quebecor records revenues of $994.0 million, up $47.6 million (5.0%)
from the second quarter of 2009.
-- Operating income(1) up $38.3 million (12.1%) to $354.2 million.
-- Net income: $65.5 million ($1.02 per basic share), compared with $76.8
million ($1.19 per basic share) in the same period of 2009.
-- Adjusted income from continuing operations:(2) $68.5 million ($1.06
per basic share), compared with $56.3 million ($0.88 per basic share)
in the same period of 2009, an increase of $12.2 million ($0.18 per
basic share) or 21.7%.
-- Telecommunications segment: operating income up $31.3 million (13.5%).
Net customer base change in three-month period ended June 30, 2010:
+22,300 for cable telephone service, +10,100 for cable Internet
access, -4,000 for cable television service, reflecting a busier
moving season in Quebec in 2010 (and counting 22,100-customer increase
for Digital TV), +1,700 activated handsets on wireless telephone
service.
-- News Media segment's operating income up $4.0 million (7.2%), posting
significant growth for third consecutive quarter. Segment operating
income (expressed as a percentage of revenues) was 22.0% in second
quarter 2010 and 20.4% in 12-month period ended June 30, 2010.
-- Estimated $24.0 million additional savings generated by restructuring
initiatives in the News Media segment in the first half of 2010,
compared with the same period of 2009, for total annualized savings of
$90.0 million since the program began.
"Quebecor maintained its momentum in the second quarter of 2010,
posting increases in revenue and operating income," said Pierre
Karl Peladeau, President and Chief Executive Officer of Quebecor.
"Adjusted income from continuing operations, which reflects the
growth of the Company's operating activities, not counting unusual
or one-time items, was up 21.7%. The Telecommunications segment
spearheaded our second quarter growth with significant
year-over-year revenue and operating income increases, driven by
customer increases for all its services. We are pressing ahead with
the build-out of the Advanced Wireless Services ("AWS") network in
order to start it up this summer. As of June 30, 2010, all
switching services and platforms were installed and operational.
Siting and tower-sharing agreements had been signed for more than
95% of the antenna sites and the equipment was installed or being
installed at all those sites. We remain focused on our promise to
deliver a superior customer experience by rolling out a reliable,
effective wireless network which, combined with our other products
and exclusive content, will provide consumers with one-stop
solutions to all their telecommunications needs.
"Building on the third consecutive quarter of strong operating
income growth in the News Media segment, the Company is forging
ahead with its various convergence initiatives, including the
I.S.O. program, the operational integration of Canoe Inc.
("Canoe"), the startup of the Quebecor Media Network, the roll-out
of the QMI Agency and the creation of the QMI National Sales
Office.
(1) See "Operating income" under "Definitions."
(2) See "Adjusted income from continuing operations" under "Definitions."
Meanwhile, two new initiatives were introduced in the second
quarter of 2010. The illicoweb.tv service, launched in June 2010,
will offer Videotron Ltd. ("Videotron") customers who subscribe to
the Digital TV and Internet access services an exceptional range of
content via the Web, at no additional cost. The service will
gradually be expanded to include all the channels in the customer's
existing Digital TV package. And Sun TV News (The Sun TV News
Channel), the new English-language news and opinion specialty
channel we are planning to launch in the first quarter of 2011,
will add a high-potential niche to Quebecor's media portfolio.
"At the dawn of a new period of economic prosperity, Quebecor
intends to seize every opportunity to develop its integrated
business model in order to maximize its growth going forward."
Table 1
Quebecor second quarter financial highlights, 2006-2010
(in millions of Canadian dollars, except per share data)
--------------------------------------------------------------------------
2010 2009 2008 2007 2006
--------------------------------------------------------------------------
Revenues $ 994.0 $ 946.4 $ 949.9 $ 821.4 $ 744.4
Operating income(1) 354.2 315.9 276.9 230.6 205.9
Income from continuing operations 65.5 76.8 57.5 50.1 17.6
Net income 65.5 76.8 57.5 43.4 13.7
Adjusted income from continuing
operations(2) 68.5 56.3 41.5 37.7 30.4
Per basic share:
Income from continuing
operations 1.02 1.19 0.90 0.78 0.27
Net income 1.02 1.19 0.90 0.67 0.21
Adjusted income from continuing
operations(2) 1.06 0.88 0.61 0.59 0.47
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(1) See "Operating income" under "Definitions."
(2) See "Adjusted income from continuing operations" under "Definitions."
Analysis of second quarter 2010 results
-- Quebecor's revenues increased $47.6 million (5.0%) to $994.0 million.
-- Revenues increased in Telecommunications (by $55.7 million or
11.4% of segment revenues) mainly due to customer growth for all
services.
-- Revenues decreased in News Media (by $4.3 million or -1.6%),
mainly because of lower advertising revenues at the community
newspapers and lower circulation revenues, and in Leisure and
Entertainment ($2.2 million or -3.2%).
-- Operating income rose $38.3 million (12.1%) to $354.2 million due to
increases in Telecommunications ($31.3 million or 13.5% of segment
operating income), News Media ($4.0 million or 7.2%) and Broadcasting
($1.1 million or 4.4%).
-- Quebecor's net income totalled $65.5 million ($1.02 per basic share)
in the second quarter of 2010, compared with $76.8 million ($1.19 per
basic share) in the same period of 2009.
-- The $11.3 million ($0.17 per basic share) decrease was mainly due
to:
-- $31.2 million increase in income tax expense, reflecting the
unfavourable impact of unusual items, as well as higher pre-tax
income;
-- $16.7 million unfavourable variance in gains and losses on
valuation and translation of financial instruments;
-- $6.9 million increase in financial expenses, including the $6.3
million unfavourable impact on operating items of exchange rate
variances;
-- $6.7 million increase in amortization charge.
-- Partially offset by:
-- $38.3 million increase in operating income;
-- favourable variance in 2010 related to recognition in second
quarter 2009 of a $13.6 million non-cash charge for impairment of
goodwill and intangible assets.
-- Adjusted income from continuing operations: $68.5 million in the
second quarter of 2010 ($1.06 per basic share), compared with $56.3
million ($0.88 per basic share) in the same period of 2009, an
increase of $12.2 million ($0.18 per basic share) or 21.7%.
2010/2009 year-to-date comparison
-- Revenues: $1.94 billion, an increase of $92.4 million (5.0%).
-- Revenues increased in Telecommunications (by $106.5 million or
11.0% of segment revenues) essentially due to customer growth for
all services, and in Interactive Technologies and Communications
($1.4 million or 3.0%).
-- Revenues decreased in News Media (by $8.9 million or -1.7%),
mainly because of lower advertising revenues at the community
newspapers and lower circulation revenues, and in Leisure and
Entertainment ($5.0 million or -3.8%).
-- Operating income: $642.7 million, an increase of $54.6 million (9.3%).
-- Operating income rose in Telecommunications ($59.4 million or
13.0% of segment operating income), News Media ($14.3 million or
16.8%) and Interactive Technologies and Communications ($0.6
million or 35.3%).
-- Revenues decreased in Broadcasting (by $4.5 million or -12.0%) and
Leisure and Entertainment ($1.5 million or -26.8%).
-- Changes in the fair value of Quebecor Media and in Quebecor's stock
price resulted in an aggregate $19.2 million ($0.17 per basic share)
unfavourable variance in the stock-based compensation charge in the
first half of 2010 compared with the same period of 2009.
-- Net income: $103.8 million ($1.62 per basic share), compared with
$134.5 million ($2.09 per basic share) in the first half of 2009.
-- The $30.7 million ($0.47 per basic share) decrease was mainly due
to:
-- $35.5 million unfavourable variance in gains on valuation and
translation of financial instruments;
-- $26.1 million increase in income tax expense, resulting mainly
from unusual items;
-- $18.9 million increase in financial expenses, including the $14.1
million unfavourable impact on operating items of exchange rate
variances;
-- recognition in first half of 2010 of losses on debt refinancing
totalling $12.3 million;
-- $11.1 million increase in amortization charge.
-- Offset by:
-- $54.6 million increase in operating income;
-- favourable variance related to recognition in first half 2009 of a
$13.6 million non-cash charge for impairment of goodwill and
intangible assets.
-- Adjusted income from continuing operations: $115.3 million in the
first half of 2010 ($1.79 per basic share), compared with $99.4
million ($1.55 per basic share) in the same period of 2009, an
increase of $15.9 million ($0.24 per basic share) or 16.0%.
Financing activities
-- In May 2010, Osprey Media Publishing Inc. ("Osprey Media") paid down the
balance of its term credit facility and settled related hedge agreements
for a total cash consideration of $116.3 million. This transaction led
to the reclassification to income of a $1.9 million loss (excluding
income tax and non-controlling interest) previously recorded under other
comprehensive income. Osprey Media's credit facilities were cancelled on
June 30, 2010.
Dividends
On August 10, 2010, 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
21, 2010 to shareholders of record at the close of business on
August 27, 2010. This dividend is designated to be an eligible
dividend, as provided under subsection 89(14) of the Canadian
Income Tax Act and its provincial counterpart.
Detailed financial information
For a detailed analysis of Quebecor's second quarter 2010
results, please refer to the Management Discussion and Analysis and
consolidated financial statements of Quebecor, available on the
Company's website at:
www.quebecor.com/InvestorCenter/QIQuarterlyReports.aspx or from the
SEDAR filing service at www.sedar.com.
Conference call for investors and webcast
Quebecor will hold a conference call to discuss the second
quarter 2010 results of Quebecor and Quebecor Media on August 11,
2010, at 11:00 a.m. ET. There will be a question period reserved
for financial analysts. To access the conference call, please dial
1 877 293-8052, access code 58309#. A tape recording of the call
will be available from August 11 to September 11, 2010 by dialling
1 877 293-8133, access code 373576#. The conference call will also
be broadcast live on Quebecor's 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'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's public filings available at www.sedar.com and
www.quebecor.com including, in particular, the "Risks and
Uncertainties" section of Quebecor's Management Discussion and
Analysis for the year ended December 31, 2009.
The forward-looking statements in this press release reflect
Quebecor's expectations as of August 11, 2010 and are subject to
change after this 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 Inc. owns operating companies in
numerous media-related businesses: Videotron Ltd., an integrated
communications company engaged in cable television, interactive
multimedia development, Internet access services, cable telephony
and wireless telephone service; Sun Media Corporation, the largest
publisher of newspapers in Canada; Canoe Inc., operator of a
network of English- and French-language Internet properties 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;
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 publishers and
distributors Sogides Group Inc. and CEC Publishing 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.
DEFINITIONS
Operating income
In its analysis of operating results, the Company defines
operating income, as reconciled to net income under Canadian
generally accepted accounting principles ("GAAP"), as net income
before amortization, financial expenses, (loss) gain on valuation
and translation of financial instruments, charge for restructuring
of operations, impairment of assets and other special items, loss
on debt refinancing, impairment of goodwill and intangible assets,
income tax and non-controlling interest. 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 depreciation and amortization of tangible and 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 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.
Table 2 below reconciles Quebecor's operating income with the
closest Canadian GAAP measure.
Table 2
Reconciliation of the operating income measure used in this press release
to the net income measure used in the consolidated financial statements
(in millions of Canadian dollars)
Three months Six months
ended June 30 ended June 30
--------------------------------------------------------------------------
--------------------------------------------------------------------------
2010 2009 2010 2009
--------------------------------------------------------------------------
Operating income:
Telecommunications $ 264.0 $ 232.7 $ 515.7 $ 456.3
News Media 59.6 55.6 99.6 85.3
Broadcasting 26.2 25.1 33.0 37.5
Leisure and
Entertainment 4.2 4.8 4.1 5.6
Interactive Technologies
and Communications 1.3 1.3 2.3 1.7
Head Office (1.1) (3.6) (12.0) 1.7
--------------------------------------------------------------------------
354.2 315.9 642.7 588.1
Amortization (91.8) (85.1) (181.5) (170.4)
Financial expenses (69.9) (63.0) (141.8) (122.9)
(Loss) gain on valuation
and translation of
financial instruments (4.6) 12.1 (9.3) 26.2
Restructuring of
operations, impairment of
assets and other special
items (1.0) (0.8) (3.4) (4.2)
Loss on debt refinancing (1.9) - (12.3) -
Impairment of goodwill and
intangible assets - (13.6) - (13.6)
Income tax (54.1) (22.9) (78.4) (52.3)
Non-controlling interest (65.4) (65.8) (112.2) (116.4)
--------------------------------------------------------------------------
Net income $ 65.5 $ 76.8 $ 103.8 $ 134.5
--------------------------------------------------------------------------
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Adjusted income from continuing operations
The Company defines adjusted income from continuing operations,
as reconciled to net income under Canadian GAAP, as net income
before (loss) gain on valuation and translation of financial
instruments, charge for restructuring of operations, impairment of
assets and other special items, loss on debt refinancing and
impairment of goodwill and intangible assets, net of income tax and
non-controlling interest. Adjusted income from continuing
operations as defined above is not a measure of results that is
consistent with Canadian GAAP. It should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with Canadian GAAP. Management believes that adjusted
income from continuing operations is a meaningful measure that
provides an indication of the long-term profitability of the
Company's operating activities by eliminating the impact of unusual
or one-time items. The Company's definition of adjusted income from
continuing operations may not be identical to similarly titled
measures reported by other companies.
Table 3 provides a reconciliation of adjusted income from
continuing operations to the net income measure used in the
consolidated financial statements of Quebecor.
Table 3
Reconciliation of the adjusted income from continuing operations measure
used in this press release to the net income
measure used in the consolidated financial statements
(in millions of Canadian dollars)
Three months Six months
ended June 30 ended June 30
--------------------------------------------------------------------------
--------------------------------------------------------------------------
2010 2009 2010 2009
--------------------------------------------------------------------------
Adjusted income from
continuing operations $ 68.5 $ 56.3 $ 115.3 $ 99.4
(Loss) gain on valuation
and translation of
financial instruments (4.6) 12.1 (9.3) 26.2
Restructuring of
operations, impairment of
assets and other special
items (1.0) (0.8) (3.4) (4.2)
Loss on debt refinancing (1.9) - (12.3) -
Impairment of goodwill and
intangible assets - (13.6) - (13.6)
Income tax related to
adjustments(1) 1.7 27.8 6.6 35.3
Non-controlling interest
related to adjustments 2.8 (5.0) 6.9 (8.6)
--------------------------------------------------------------------------
Net income $ 65.5 $ 76.8 $ 103.8 $ 134.5
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(1) Includes the impact of fluctuations in tax rates applicable to
adjusted items, either for statutory reasons or in connection with tax
planning arrangements.
Average Monthly Revenue per User
ARPU is an industry metric that the Company uses to measure its
monthly cable television, Internet access, cable telephone and
wireless telephone revenues per average 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, cable telephone and wireless telephone revenues by
the average number of basic 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)
Three months ended Six months ended
(unaudited) June 30 June 30
--------------------------------------------------- ---------------------
2010 2009 2010 2009
--------------------------------------- ----------- ---------- ----------
--------------------------------------- ----------- ---------- ----------
Revenues
Telecommunications $ 543.1 $ 487.4 $ 1,071.4 $ 964.9
News Media 271.3 275.6 519.4 528.3
Broadcasting 110.9 111.5 220.5 221.3
Leisure and Entertainment 66.0 68.2 127.3 132.3
Interactive Technologies
and Communications 23.9 23.6 47.7 46.3
Inter-segment (21.2) (19.9) (44.2) (43.4)
----------- ----------- ---------- ----------
994.0 946.4 1,942.1 1,849.7
Operating expenses 639.8 630.5 1,299.4 1,261.6
Amortization 91.8 85.1 181.5 170.4
Financial expenses 69.9 63.0 141.8 122.9
Loss (gain) on valuation and
translation of financial
instruments 4.6 (12.1) 9.3 (26.2)
Restructuring of operations,
impairment of assets and
other special items 1.0 0.8 3.4 4.2
Loss on debt refinancing 1.9 - 12.3 -
Impairment of goodwill and
intangible assets - 13.6 - 13.6
----------- ----------- ---------- ----------
Income before income taxes
and non-controlling
interest 185.0 165.5 294.4 303.2
Income taxes:
Current 40.0 7.4 60.8 6.6
Future 14.1 15.5 17.6 45.7
----------- ----------- ---------- ----------
54.1 22.9 78.4 52.3
----------- ----------- ---------- ----------
130.9 142.6 216.0 250.9
Non-controlling interest (65.4) (65.8) (112.2) (116.4)
----------- ----------- ---------- ----------
Net income $ 65.5 $ 76.8 $ 103.8 $ 134.5
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
Earnings per share
Basic
Net income $ 1.02 $ 1.19 $ 1.62 $ 2.09
Diluted
Net income 1.00 1.19 1.59 2.09
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
Weighted average number of
shares outstanding (in
millions) 64.3 64.3 64.3 64.3
Weighted average number of
diluted shares (in
millions) 64.9 64.3 64.9 64.3
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
QUEBECOR INC. AND ITS
SUBSIDIARIES
SEGMENTED INFORMATION
(in millions of Canadian
dollars)
Three months ended Six months ended
(unaudited) June 30 June 30
----------------------------------------------------- ---------------------
----------------------------------------------------- ---------------------
2010 2009 2010 2009
------------------------------------------ ---------- ---------- ----------
Net income before amortization,
financial expenses, loss (gain)
on valuation and translation of
financial instruments,
restructuring of operations,
impairment of assets and other
special items, loss on debt
refinancing, impairment of
goodwill and intangible assets,
income taxes and non-
controlling interest
Telecommunications $ 264.0 $ 232.7 $ 515.7 $ 456.3
News Media 59.6 55.6 99.6 85.3
Broadcasting 26.2 25.1 33.0 37.5
Leisure and Entertainment 4.2 4.8 4.1 5.6
Interactive Technologies and
Communications 1.3 1.3 2.3 1.7
Head Office (1.1) (3.6) (12.0) 1.7
---------- ---------- ---------- ----------
$ 354.2 $ 315.9 $ 642.7 $ 588.1
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Amortization
Telecommunications $ 69.0 $ 62.1 $ 136.2 $ 124.1
News Media 14.8 15.2 29.5 29.9
Broadcasting 3.7 3.5 7.4 7.1
Leisure and Entertainment 2.5 2.4 4.8 4.8
Interactive Technologies and
Communications 1.0 1.1 1.9 2.2
Head Office 0.8 0.8 1.7 2.3
---------- ---------- ---------- ----------
$ 91.8 $ 85.1 $ 181.5 $ 170.4
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Additions to property, plant and
equipment
Telecommunications $ 155.3 $ 102.1 $ 283.5 $ 203.9
News Media 1.0 6.3 3.3 16.8
Broadcasting 4.9 3.5 8.5 8.5
Leisure and Entertainment 1.8 0.4 2.6 1.1
Interactive Technologies and
Communications 1.1 1.4 1.6 2.2
Head Office 0.8 1.4 1.2 2.0
---------- ---------- ---------- ----------
$ 164.9 $ 115.1 $ 300.7 $ 234.5
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Additions to intangible assets
Telecommunications $ 24.8 $ 24.6 $ 48.9 $ 45.0
News Media 3.0 0.9 5.7 2.8
Broadcasting 2.4 2.5 2.8 2.9
Leisure and Entertainment 2.7 1.2 4.1 2.4
---------- ---------- ---------- ----------
$ 32.9 $ 29.2 $ 61.5 $ 53.1
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Externally acquired intangible
assets $ 16.9 $ 18.5 $ 30.8 $ 30.0
Internally generated intangible
assets 16.0 10.7 30.7 23.1
---------- ---------- ---------- ----------
$ 32.9 $ 29.2 $ 61.5 $ 53.1
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions of Canadian
dollars)
Three months ended Six months ended
(unaudited) June 30 June 30
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2010 2009 2010 2009
-------------------------------------------------------------------------
Net income $ 65.5 $ 76.8 $ 103.8 $ 134.5
Other comprehensive income:
Unrealized gain (loss) on
translation of net
investments in foreign
operations 0.6 (1.2) (2.9) (1.3)
Gain (loss) on valuation of
derivative financial
instruments 76.3 (2.6) 103.1 3.8
Income taxes related to
derivative financial
instruments (16.1) 25.4 (17.5) 16.5
Non-controlling interest (27.4) (9.9) (37.4) (8.7)
Reclassification to income of
other comprehensive loss
related to derivative
financial instruments, net
of income taxes of $0.5
million and $2.5 million and
of non-controlling interest
of $0.7 million and $2.7
million, in the three and
six-month periods ended June
30, 2010, respectively 0.7 - 3.2 -
-------------------------------------------
34.1 11.7 48.5 10.3
---------- ---------- ---------- ----------
Comprehensive income $ 99.6 $ 88.5 $ 152.3 $ 144.8
-------------------------------------------
-------------------------------------------
QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in millions of Canadian dollars)
(unaudited)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accumula-
ted other
comprehen Total
Contribu- -sive share-
Capital ted Retained income holders'
stock surplus earnings (loss) equity
-------------------------------------- ---------- --------- -------------
Balance as of
December 31,
2008 $ 346.6 $ - $ 565.3 $ (27.5) $ 884.4
Net income - - 134.5 - 134.5
Dividends - - (6.4) - (6.4)
Related party
transactions - 4.8 - - 4.8
Other
comprehensive
income - - - 10.3 10.3
-------------------------------------- ---------- --------- -------------
Balance as of
June 30, 2009 346.6 4.8 693.4 (17.2) 1,027.6
Net income - - 143.2 - 143.2
Dividends - - (6.5) - (6.5)
Related party
transactions - (0.1) - - (0.1)
Other
comprehensive
income - - - 6.2 6.2
-------------------------------------- ---------- --------- -------------
Balance as of
December 31,
2009 346.6 4.7 830.1 (11.0) 1,170.4
Net income - - 103.8 - 103.8
Dividends - - (6.4) - (6.4)
Other
comprehensive
income - - - 48.5 48.5
-------------------------------------- ---------- --------- -------------
Balance as of
June 30, 2010 $ 346.6 $ 4.7 $ 927.5 $ 37.5 $ 1,316.3
-------------------------------------- ---------- --------- -------------
-------------------------------------- ---------- --------- -------------
QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions of
Canadian dollars)
Three months ended Six months ended
(unaudited) June 30 June 30
------------------------------------------------- ---------------------
------------------------------------------------- ---------------------
2010 2009 2010 2009
------------------------------------- ---------- ---------- ---------
Cash flows related to
operating activities
Net income $ 65.5 $ 76.8 $ 103.8 $ 134.5
Adjustments for:
Amortization of property,
plant and equipment 78.6 73.0 155.6 146.5
Amortization of
intangible assets and
other assets 13.2 12.1 25.9 23.9
Loss (gain) on valuation
and translation of
financial instruments 4.6 (12.1) 9.3 (26.2)
Amortization of financing
costs and long-term debt
discount 3.2 2.7 6.2 4.8
Loss on debt refinancing 1.9 - 12.3 -
Impairment of property,
plant and equipment and
other assets 5.7 - 5.7 -
Impairment of goodwill
and intangible assets - 13.6 - 13.6
Future income taxes 14.1 15.5 17.6 45.7
Non-controlling interest 65.4 65.8 112.2 116.4
Other (5.2) (4.0) (4.0) (2.1)
---------- ---------- ---------- ---------
247.0 243.4 444.6 457.1
Net change in non-cash
balances related to
operating activities (28.1) (36.4) (59.7) (124.8)
---------- ---------- ---------- ---------
Cash flows provided by
operating activities 218.9 207.0 384.9 332.3
---------- ---------- ---------- ---------
Cash flows related to
investing activities
Business acquisitions, net
of cash and cash
equivalents (0.1) (1.5) (1.1) (2.5)
Business disposals, net of
cash and cash equivalents 0.8 5.0 1.8 11.4
Additions to property,
plant and equipment (164.9) (115.1) (300.7) (234.5)
Additions to intangible
assets (32.9) (29.2) (61.5) (53.1)
Proceeds from disposals of
assets 45.9 0.5 47.3 1.0
Net change in temporary
investments - - 30.0 -
Other - (0.2) - -
---------- ---------- ---------- ---------
Cash flows used in
investing activities (151.2) (140.5) (284.2) (277.7)
---------- ---------- ---------- ---------
Cash flows related to
financing activities
Net change in bank
indebtedness 3.5 (7.8) 3.0 11.7
Issuance of long-term
debt, net of financing
fees (1.2) - 292.7 325.5
Net change under revolving
bank facilities (7.5) (16.3) 2.6 (221.9)
Repayments of long-term
debt (131.5) (9.9) (320.2) (23.9)
Settlement of hedging
contracts (1.5) - (32.4) -
Dividends (6.4) (6.4) (6.4) (6.4)
Dividends paid to non-
controlling shareholders (9.7) (9.2) (18.2) (18.3)
---------- ---------- ---------- ---------
Cash flows (used in)
provided by financing
activities (154.3) (49.6) (78.9) 66.7
---------- ---------- ---------- ---------
Net change in cash and cash
equivalents (86.6) 16.9 21.8 121.3
Effect of exchange rate
changes on cash and cash
equivalents denominated in
foreign currencies (0.3) (0.3) (1.0) (0.4)
Cash and cash equivalents
at beginning of period 407.7 114.3 300.0 10.0
---------- ---------- ---------- ---------
Cash and cash equivalents
at end of period $ 320.8 $ 130.9 $ 320.8 $ 130.9
---------- ---------- ---------- ---------
---------- ---------- ---------- ---------
Cash and cash equivalents
consist of
Cash $ 65.2 $ 38.2 $ 65.2 $ 38.2
Cash equivalents 255.6 92.7 255.6 92.7
---------- ---------- ---------- ---------
$ 320.8 $ 130.9 $ 320.8 $ 130.9
---------- ---------- ---------- ---------
---------- ---------- ---------- ---------
Non-cash investing
activities
Additions to property,
plant and equipment and
intangible assets
financed with accounts
payable $ 25.3 $ 7.1 $ 115.3 $ 53.3
---------------------------------------------
---------------------------------------------
Cash interest payments $ 117.6 $ 106.0 $ 154.9 $ 151.2
Cash income tax payments
(net of refunds) 9.5 3.7 27.2 8.8
---------- ---------- ---------- ---------
---------- ---------- ---------- ---------
QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions of Canadian dollars)
(unaudited)
June 30, 2010 December 31, 2009
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $ 320.8 $ 300.0
Cash and cash equivalents in trust 5.3 5.3
Temporary investments - 30.0
Accounts receivable 477.0 519.8
Income taxes 4.7 1.3
Inventories 172.9 176.1
Prepaid expenses 48.9 29.1
Future income taxes 44.6 49.8
------------------------------------
1,074.2 1,111.4
Property, plant and equipment 2,611.4 2,498.6
Intangible assets 1,084.4 1,052.7
Derivative financial instruments 99.0 49.0
Other assets 137.0 122.5
Future income taxes 17.3 12.5
Goodwill 3,505.4 3,506.1
------------------------------------
$ 8,528.7 $ 8,352.8
------------------------------------
------------------------------------
Liabilities and shareholders' equity
Current liabilities
Bank indebtedness $ 4.8 $ 1.8
Accounts payable and accrued
charges 677.3 794.6
Deferred revenue 241.1 234.7
Income taxes 47.2 16.3
Current portion of long-term debt 62.2 68.6
------------------------------------
1,032.6 1,116.0
Long-term debt 3,819.3 3,811.9
Derivative financial instruments 328.4 422.4
Other liabilities 157.3 129.4
Future income taxes 523.9 485.9
Non-controlling interest 1,350.9 1,216.8
Shareholders' equity
Capital stock 346.6 346.6
Contributed surplus 4.7 4.7
Retained earnings 927.5 830.1
Accumulated other comprehensive
income (loss) 37.5 (11.0)
------------------------------------
1,316.3 1,170.4
$ 8,528.7 $ 8,352.8
------------------------------------
------------------------------------
Contacts: Jean Francois Pruneau Vice President, Finance
514-380-4144 J. Serge Sasseville Vice President, Corporate and
Institutional Affairs 514-380-1864
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