Quebecor Inc. (TSX: QBR.A)(TSX: QBR.B)("Quebecor" or "the
Corporation") today reported its consolidated financial results for
the second quarter of 2011 and announced a normal course issuer
bid. Quebecor consolidates the financial results of its Quebecor
Media Inc. ("Quebecor Media") subsidiary, in which it holds a 54.7%
interest.
Quebecor adopted International Financial Reporting Standards
("IFRS") on January 1, 2011. The Corporation's condensed
consolidated financial statements for the three-month and six-month
periods ended June 30, 2011 have therefore been prepared in
accordance with IFRS and comparative figures for 2010 have been
restated.
Second quarter 2011 highlights
-- Quebecor records revenues of $1.05 billion, up $59.4 million (6.0%) from
the second quarter of 2010.
-- Operating income(1): up $6.6 million (1.9%) to $358.5 million.
-- Net income attributable to shareholders: $55.2 million ($0.86 per basic
share) compared with $60.8 million ($0.95 per basic share) in the second
quarter of 2010, down $5.6 million ($0.09 per basic share) or -9.2%.
-- Adjusted income from continuing operations(2): $60.0 million ($0.93 per
basic share), compared with $62.9 million ($0.98 per basic share) in the
second quarter of 2010, down $2.9 million ($0.05 per basic share) or
-4.6%.
-- Videotron Ltd. ("Videotron") revenue-generating units(3): up 52,700 from
the previous quarter, compared with a 30,100-unit increase in the second
quarter of 2010; up 283,900 (6.9%) during the 12-month period ended June
30, 2011.
-- Videotron net customer base change during three-month period ended June
30, 2011: +45,900 subscriber connections to mobile telephone service,
+11,800 customers for cable telephone service, +2,900 for cable Internet
access, -7,900 for cable television services (including 26,700 customer
increase for Digital TV). All the cable television customers lost during
the second-quarter moving season were recovered by July 15, 2011.
-- Subscriber connections to Videotron's 4G network: 203,800 as of June 30,
2011, including 133,200 new connections and 70,600 migrations from the
mobile virtual network operator ("MVNO") service.
"Quebecor posted revenue and operating income growth in the
second quarter of 2011," said Pierre Karl Peladeau, President and
Chief Executive Officer of Quebecor. "Attesting to the success of
the Corporation's investment and development strategy, revenues
grew in all business segments despite aggressive competition in
many of those segments.
"In a fiercely competitive industry, Videotron continues to
stand out and grow its customer base. Videotron had a total of
4,419,400 revenue-generating units(3) as of June 30, 2011, an
increase of 52,700 from the end of the previous quarter, 75.1% more
than the increase in the corresponding period of 2010. Videotron
added 45,900 subscriber connections to its mobile services network
in the second quarter of 2011, exceeding targets. By June 30, 2011,
Videotron's 4G network was available to more than six million
people.
"Introducing a new product entails significant capital
expenditures and the revenues generated during the first months
following a launch are not always sufficient to cover the higher
expenses. Nevertheless, our debt ratios have been advantageously
maintained since we embarked on our capital expenditures program
for the mobile telephone network. In addition, the
Telecommunications segment increased its operating income by $9.7
million (3.7%) in the second quarter of 2011.
1. See "Operating income" under "Definitions."
2. See "Adjusted income from continuing operations" under "Definitions."
3. Revenue-generating units are the sum of cable television, Internet
access and cable telephone service subscriptions, plus subscriber
connections to the mobile telephone service.
"The Corporation pressed ahead with its investment plan in the
News Media segment with a view to increasing and diversifying its
revenue streams. Several contracts were finalized during the second
quarter of 2011, including a contract between Quebecor Media
Printing Inc. and The Jean Coutu Group (PJC) Inc. and one between
the QMI National Sales Office and Omnicom Group Inc. The
Corporation continued investing in its News Media segment in order
to adjust to the new market environment. While the spending is
impacting the segment's financial results for now, it is essential
to our long-term growth.
"The Corporation seized new business opportunities during the
second quarter. Quebecor Media acquired the Montreal Junior Hockey
Club and plans to relocate it to Blainville-Boisbriand, a northern
suburb of Montreal, Quebec. Quebecor Media's majority interest in a
Quebec Major Junior Hockey League team, to be known as the
Blainville-Boisbriand Armada, will give access to content for its
existing and future content delivery platforms, particularly in
view of the upcoming launch of the TVA Sports channel in early fall
2011. TVA Sports has also signed long-term broadcasting agreements
with a number of leading sport properties that have strong fan
followings. TVA Group Inc. ("TVA Group") has also recruited
high-profile sports columnist Rejean Tremblay, who will comment on
sports for several Quebecor Media properties.
"At the same time, we have enriched our service offerings in our
Broadcasting segment with the launch of the new Mlle digital
channel, a multiplatform brand designed specifically for women, and
the launch of the English-language news and opinion specialty
channel Sun TV News ("Sun News").
"We are continuing implementation of our multiplatform content
development strategy in niches with strong growth prospects."
Table 1
Quebecor second quarter financial highlights, 2007 to 2011
(in millions of Canadian dollars, except per share data)
----------------------------------------------------------------------------
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2011(1) 2010(1) 2009(2) 2008(2) 2007(2)
----------------------------------------------------------------------------
Revenues $ 1,053.4 $ 994.0 $ 946.4 $ 949.9 $ 821.4
Operating income(3) 358.5 351.9 315.9 276.9 230.6
Net income from continuing
operations attributable
to shareholders 55.2 60.8 76.8 57.5 50.1
Net income attributable to
shareholders 55.2 60.8 76.8 57.5 43.4
Adjusted income from
continuing operations(4) 60.0 62.9 56.3 41.5 37.7
Per basic share:
Net income from
continuing operations
attributable to
shareholders 0.86 0.95 1.19 0.90 0.78
Net income attributable
to shareholders 0.86 0.95 1.19 0.90 0.67
Adjusted income from
continuing
operations(4) 0.93 0.98 0.88 0.61 0.59
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1. Financial figures for the second quarters of 2010 and 2011 are presented
in accordance with IFRS.
2. Financial figures for the second quarters of 2007 to 2009 are presented
in accordance with Canadian Generally Accepted Accounting Principles
("GAAP").
3. See "Operating income" under "Definitions."
4. See "Adjusted income from continuing operations" under "Definitions."
2011/2010 second quarter comparison
Revenues: $1.05 billion, an increase of $59.4 million
(6.0%).
-- Revenues increased in all business segments: Telecommunications ($53.4
million or 9.7% of segment revenues), Broadcasting ($6.6 million or
6.0%), Leisure and Entertainment ($5.5 million or 8.3%), Interactive
Technologies and Communications ($4.3 million or 18.0%) and News Media
($0.7 million or 0.3%).
Operating income: $358.5 million, an increase of $6.6 million
(1.9%).
-- Operating income increased in Telecommunications ($9.7 million or 3.7%
of segment operating income) and Leisure and Entertainment ($2.1 million
or 50.0%).
-- Operating income decreased in News Media ($11.2 million or -19.7%) and
Broadcasting ($4.6 million or -17.1%).
-- Operating income was flat in Interactive Technologies and
Communications.
-- The change in the fair value of Quebecor Media stock options resulted in
a $6.8 million favourable variance in the stock-based compensation
charge in the second quarter of 2011 compared with the same period of
2010. The change in the fair value of Quebecor stock options resulted in
a $9.6 million favourable variance in the Corporation's stock-based
compensation charge in the second quarter of 2011.
-- Excluding the impact of the consolidated stock-based compensation
charge, and if the figures for prior periods were restated to
retroactively reflect the reversal in the fourth quarter of 2009 of the
accumulated Canadian Radio-television and Telecommunications Commission
("CRTC") Part II licence fee provision, operating income would have
decreased 2.8% in the second quarter of 2011, compared with a 10.6%
increase in the same period of 2010.
Net income attributable to shareholders: $55.2 million ($0.86
per basic share) compared with $60.8 million ($0.95 per basic
share) in the second quarter of 2010, a decrease of $5.6 million
($0.09 per basic share) or -9.2%.
-- The decrease was mainly due to:
-- $29.9 million increase in amortization charge;
-- $7.9 million increase in charge for restructuring of operations,
impairment of assets and other special items.
-- Partially offset by:
-- $6.6 million increase in operating income.
Adjusted income from continuing operations: $60.0 million in the
second quarter of 2011 ($0.93 per basic share) compared with $62.9
million ($0.98 per basic share) in the same quarter of 2010, a
decrease of $2.9 million ($0.05 per basic share) or -4.6%.
2011/2010 year-to-date comparison
Revenues: $2.04 billion, an increase of $101.8 million
(5.2%).
-- Revenues increased in Telecommunications ($102.9 million or 9.5% of
segment revenues), Interactive Technologies and Communications ($7.3
million or 15.3%), Leisure and Entertainment ($5.6 million or 4.4%) and
Broadcasting ($4.1 million or 1.9%).
-- Revenues decreased in News Media ($1.9 million or -0.4%).
Operating income: $652.8 million, an increase of $10.5 million
(1.6%).
-- Operating income increased in Telecommunications (by $9.1 million or
1.8% of segment operating income) and Leisure and Entertainment ($3.5
million or 87.5%).
-- Operating income decreased in News Media ($21.6 million or -22.6%) and
Broadcasting ($5.7 million or -17.5%).
-- The change in the fair value of Quebecor Media stock options resulted in
an $11.6 million favourable variance in the stock-based compensation
charge in the first half of 2011 compared with the same period of 2010.
The change in the fair value of Quebecor stock options resulted in a
$26.9 million favourable variance in the Corporation's stock-based
compensation charge in the first half of 2011.
-- Excluding the impact of the consolidated stock-based compensation
charge, and if the figures for prior periods were restated to
retroactively reflect the reversal in the fourth quarter of 2009 of the
accumulated CRTC Part II licence fee provision, operating income would
have decreased 4.2% in the first half of 2011, compared with an 11.2%
increase in the same period of 2010.
Net income attributable to shareholders: $89.5 million ($1.39
per basic share) compared with $95.7 million ($1.49 per basic
share) in the first half of 2010, a decrease of $6.2 million ($0.10
per basic share) or -6.5%.
-- The decrease was mainly due to:
-- $61.8 million increase in amortization charge;
-- $15.0 million increase in charge for restructuring of operations,
impairment of assets and other special items.
-- Partially offset by:
-- $15.8 million favourable variance in gains and losses on valuation
and translation of financial instruments;
-- $10.5 million increase in operating income;
-- $3.0 million decrease in loss on debt refinancing.
Adjusted income from continuing operations: $95.9 million in the
first half of 2011 ($1.49 per basic share) compared with $106.3
million ($1.65 per basic share) in the first half of 2010, a
decrease of $10.4 million ($0.16 per basic share) or -9.8%.
Financing activities
On July 5, 2011, Videotron issued 6 7/8% Senior Notes maturing
on July 15, 2021 in the aggregate principal amount of $300.0
million, for a net principal amount of $294.9 million, net of
financing fees of $5.1 million. The net proceeds were used to
finance the early repayment and withdrawal of US$255.0 million
principal amount of Videotron's 6 7/8% Senior Notes maturing in
2014 and the settlement and cancellation of related hedges, for a
total disbursement of $303.1 million. On July 20, 2011, Videotron
amended its $575.0 million revolving credit facility to extend the
expiry date from April 2012 to July 2016 and modify some of the
terms and conditions.
Dividends
On August 9, 2011, 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
20, 2011 to shareholders of record at the close of business on
August 26, 2011. This dividend is designated to be an eligible
dividend, pursuant to subsection 89(14) of the Canadian Income Tax
Act and its provincial counterpart.
Notice of intention to make a normal course issuer bid
The Board of Directors of Quebecor has authorized a normal
course issuer bid for a maximum of 985,233 Class A Multiple Voting
Shares ("Class A shares") representing approximately 5% of the
issued and outstanding Class A shares, and for a maximum of
4,453,304 Class B Subordinate Voting Shares ("Class B shares")
representing approximately 10% of the public float of the Class B
shares as of August 2, 2011.
The purchases will be made from August 12, 2011 to August 10,
2012, at prevailing market prices, on the open market through the
facilities of the Toronto Stock Exchange, and will be made in
accordance with the requirements of said Exchange. All shares
purchased under the bid will be cancelled. As of August 2, 2011,
19,704,670 Class A shares and 44,533,042 Class B shares were issued
and outstanding.
The average daily trading volume of the Class A and Class B
shares of the Corporation from February 1, 2011 to July 31, 2011
was 810 Class A shares and 77,619 Class B shares. Consequently, the
Corporation will be authorized to purchase a maximum of 1,000 Class
A shares and 19,404 Class B shares during the same trading day
pursuant to its normal course issued bid.
The Corporation believes that the repurchase of these shares
under this normal course issuer bid is in the best interest of the
Corporation and its shareholders.
During the last 12 months, the Corporation has not purchased any
Class A or Class B shares.
Shareholders may obtain a copy of the Notice filed with the
Toronto Stock Exchange, without charge, by contacting the
Secretary"s office of the Corporation at (514) 380-1994
Detailed financial information
For a detailed analysis of Quebecor's results for the second
quarter of 2011, please refer to the Management Discussion and
Analysis and consolidated financial statements of Quebecor,
available on the Corporation'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 its second
quarter 2011 results on August 10, 2011, 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
58308#. A tape recording of the call will be available from August
10 to September 10, 2011 by dialling 1 877 293-8133, conference
number 617812#, access code 58308#. 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.
Cautionary Statement Regarding 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, 2010.
The forward-looking statements in this press release reflect
Quebecor's expectations as of August 10, 2011 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 Corporation
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 with more than 16,000 employees. Quebecor Media Inc.'s
operating subsidiaries include Videotron Ltd., an integrated
communications company engaged in cable television, interactive
multimedia development, Internet access services, cable telephone
service and mobile telephone service; Sun Media Corporation, the
largest publisher of newspapers in Canada; Canoe Inc., operator of
a Canadian network of English- and French-language Internet
properties; TVA Group Inc., operator of the largest French-language
conventional television network in Quebec, a number of specialty
channels, and the English-language Sun News channel; and Nurun
Inc., a major interactive technologies and communications agency
with offices in Canada, the United States, Europe and Asia.
Quebecor Media Inc. is engaged in magazine publishing (TVA
Publishing Inc.); book publishing and distribution (Sogides Group
Inc. and CEC Publishing Inc.); production, distribution and
retailing of entertainment products (Archambault Group Inc. and TVA
Films); rental and retailing of DVDs, Blu-ray discs and console
games (Le SuperClub Videotron ltee); printing and distribution of
community newspapers and flyers (Quebecor Media Printing Inc. and
Quebecor Media Network Inc.); production and dissemination of news
content (QMI Agency); marketing of multiplatform advertising
packages (QMI Sales); and print and online directories (Quebecor
MediaPagestm).
DEFINITIONS
Operating Income
In its analysis of operating results, the Corporation uses
operating income, as reported in its consolidated statement of
income, to assess its financial performance. The Corporation's
management and Board of Directors use this measure in evaluating
the Corporation's consolidated results and the results of its
operating segments. This measure is unaffected by the capital
structure or investment activities of the Corporation and its
segments. Operating income is also relevant because it is a
significant component of the Corporation's annual incentive
compensation programs. Operating income is defined as an additional
IFRS measure.
Previously, under Canadian GAAP, operating income was a non-GAAP
measure. The Corporation defined operating income as net income in
accordance with Canadian GAAP before amortization, financial
expenses, gain (loss) on valuation and translation of financial
instruments, charge for restructuring of operations, impairment of
assets and other special items, loss on debt refinancing, income
tax, and net income attributable to non-controlling interests.
Operating income as used by the Corporation may not be the same
as similarly titled measures reported by other companies.
Adjusted Income from Continuing Operations
The Corporation defines adjusted income from continuing
operations, as reconciled to net income attributable to
shareholders under IFRS, as net income attributable to shareholders
before (loss) gain on valuation and translation of financial
instruments, charge for restructuring of operations, impairment of
assets and other special items, and loss on debt refinancing, net
of income tax and net income attributable to non-controlling
interests. Adjusted income from continuing operations, as defined
above, is not a measure of results that is consistent with IFRS. It
should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS. Adjusted
income from continuing operations eliminates the impact of unusual
or one-time items. The Corporation's definition of adjusted income
from continuing operations may not be identical to similarly titled
measures reported by other companies.
Table 2 provides a reconciliation of adjusted income from
continuing operations to the net income attributable to
shareholders measure used in Quebecor's condensed consolidated
financial statements.
Table 2
Reconciliation of the adjusted income from continuing operations measure
used in this press release to the net income attributable to shareholders
measure used in the condensed consolidated financial statements
(in millions of Canadian dollars)
Three months ended Six months ended
June 30 June 30
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2011 2010 2011 2010
----------------------------------------------------------------------------
Adjusted income from continuing
operations $ 60.0 $ 62.9 $ 95.9 $ 106.3
(Loss) gain on valuation and
translation of financial
instruments (4.0) (4.6) 6.5 (9.3)
Restructuring of operations,
impairment of assets and other
special items (6.6) 1.3 (16.1) (1.1)
Loss on debt refinancing - (1.9) (9.3) (12.3)
Income tax related to adjustments(1) 1.7 1.1 6.1 6.0
Net income attributable to non-
controlling interests related to
adjustments 4.1 2.0 6.4 6.1
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Net income attributable to
shareholders $ 55.2 $ 60.8 $ 89.5 $ 95.7
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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 Corporation uses to measure
its monthly cable television, Internet access, cable telephone and
mobile telephone revenues per average basic cable customer. ARPU is
not a measurement that is consistent with IFRS and the
Corporation's definition and calculation of ARPU may not be the
same as identically titled measurements reported by other
companies. The Corporation calculates ARPU by dividing its combined
cable television, Internet access, cable telephone and mobile
telephone revenues by the average number of 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
--------------------------------------------------------------------------
2011 2010 2011 2010
--------------------------------------------------------------------------
Revenues
Telecommunications $ 601.1 $ 547.7 $ 1,184.3 $ 1,081.4
News Media 267.5 266.8 507.6 509.5
Broadcasting 117.5 110.9 224.6 220.5
Leisure and Entertainment 71.5 66.0 132.9 127.3
Interactive Technologies and
Communications 28.2 23.9 55.0 47.7
Inter-segment (32.4) (21.3) (60.5) (44.3)
--------------------------------------------
1,053.4 994.0 2,043.9 1,942.1
Cost of sales, selling and
administrative expenses 694.9 642.1 1,391.1 1,299.8
--------------------------------------------
Operating income 358.5 351.9 652.8 642.3
Amortization 121.5 91.6 243.0 181.2
Financial expenses 80.4 81.5 161.8 163.8
Loss (gain) on valuation and
translation of financial
instruments 4.0 4.6 (6.5) 9.3
Restructuring of operations,
impairment of assets and
other special items 6.6 (1.3) 16.1 1.1
Loss on debt refinancing - 1.9 9.3 12.3
--------------------------------------------
Income before income taxes 146.0 173.6 229.1 274.6
Income taxes:
Current (5.5) 40.0 (5.1) 60.8
Deferred 45.5 11.2 64.9 13.6
--------------------------------------------
40.0 51.2 59.8 74.4
--------------------------------------------
Net income $ 106.0 $ 122.4 $ 169.3 $ 200.2
--------------------------------------------
--------------------------------------------
Net income attributable to:
Shareholders $ 55.2 $ 60.8 $ 89.5 $ 95.7
Non-controlling interests 50.8 61.6 79.8 104.5
--------------------------------------------
--------------------------------------------
Earnings per share
attributable to shareholders
Basic
Net income $ 0.86 $ 0.95 $ 1.39 $ 1.49
Diluted
Net income $ 0.85 $ 0.93 $ 1.37 $ 1.46
--------------------------------------------
--------------------------------------------
Number of shares outstanding
(in millions) 64.3 64.3 64.3 64.3
Number of diluted shares (in
millions) 65.0 64.9 65.0 64.9
--------------------------------------------
--------------------------------------------
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
----------------------------------------------------------------------------
2011 2010 2011 2010
----------------------------------------------------------------------------
Net income $ 106.0 $ 122.4 $ 169.3 $ 200.2
Other comprehensive income :
Gain (loss) on translation
of net investments in
foreign operations 0.3 0.6 0.8 (2.9)
Cash flow hedges:
(Loss) gain on valuation
of derivative financial
instruments (6.8) 76.3 (6.0) 103.1
Deferred income taxes 0.7 (16.1) 2.9 (17.5)
Defined benefit plans:
Net change in asset limit
or in minimum funding
liability (0.1) (1.4) (0.2) (2.8)
Deferred income taxes 0.1 0.4 0.1 0.8
Reclassification to income
of other comprehensive
loss related to hedges,
net of income taxes of
$0.5 million and 2.5
million in the three-month
and six-month periods
ended June 30, 2010 - 1.4 - 5.9
-----------------------------------------------
(5.8) 61.2 (2.4) 86.6
-----------------------------------------------
Comprehensive income $ 100.2 $ 183.6 $ 166.9 $ 286.8
-----------------------------------------------
-----------------------------------------------
Comprehensive income
attributable to:
Shareholders $ 51.8 $ 94.5 $ 88.0 $ 143.5
Non-controlling interests 48.4 89.1 78.9 143.3
-----------------------------------------------
-----------------------------------------------
QUEBECOR INC. AND ITS SUBSIDIARIES
SEGMENTED INFORMATION
(in millions of Canadian
dollars)
Three months ended Six months ended
(unaudited) June 30 June 30
--------------------------------------------------------------------------
2011 2010 2011 2010
--------------------------------------------------------------------------
Operating income
Telecommunications $ 274.2 $ 264.5 $ 528.7 $ 519.6
News Media 45.7 56.9 74.0 95.6
Broadcasting 22.3 26.9 26.9 32.6
Leisure and Entertainment 6.3 4.2 7.5 4.0
Interactive Technologies and
Communications 1.3 1.3 2.2 2.3
Head Office 8.7 (1.9) 13.5 (11.8)
------------------------------------------
$ 358.5 $ 351.9 $ 652.8 $ 642.3
------------------------------------------
------------------------------------------
Amortization
Telecommunications $ 99.6 $ 69.0 $ 199.9 $ 136.2
News Media 13.8 14.6 26.8 29.2
Broadcasting 4.3 3.7 8.4 7.4
Leisure and Entertainment 2.1 2.5 4.4 4.8
Interactive Technologies and
Communications 0.8 1.0 1.6 1.9
Head Office 0.9 0.8 1.9 1.7
------------------------------------------
$ 121.5 $ 91.6 $ 243.0 $ 181.2
------------------------------------------
------------------------------------------
Additions to property, plant and
equipment
Telecommunications $ 161.8 $ 152.4 $ 340.4 $ 278.6
News Media 2.5 1.0 8.4 3.3
Broadcasting 6.5 4.9 15.4 8.5
Leisure and Entertainment 1.2 1.8 1.6 2.6
Interactive Technologies and
Communications 2.2 1.1 3.2 1.6
Head Office 0.3 0.8 0.7 1.2
------------------------------------------
$ 174.5 $ 162.0 $ 369.7 $ 295.8
------------------------------------------
------------------------------------------
Additions to intangible assets
Telecommunications $ 13.0 $ 16.1 $ 28.9 $ 31.8
News Media 3.3 3.0 5.4 5.7
Broadcasting 1.2 2.4 2.0 2.8
Leisure and Entertainment 1.4 2.7 2.6 4.1
------------------------------------------
$ 18.9 $ 24.2 $ 38.9 $ 44.4
------------------------------------------
------------------------------------------
Externally acquired intangible
assets 8.7 8.2 15.5 13.7
Internally generated intangible
assets 10.2 16.0 23.4 30.7
------------------------------------------
$ 18.9 $ 24.2 $ 38.9 $ 44.4
------------------------------------------
------------------------------------------
QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(in millions of Canadian dollars)
(unaudited)
----------------------------------------------------------------------------
Equity attributable to shareholders
--------------------------------------------------------------
Accumulated
other com-
Capital Contributed Retained prehensive
stock surplus earnings loss
----------------------------------------------------------------------------
Balance as of
December 31,
2009 as
previously
reported
under
Canadian GAAP $ 346.6 $ 4.7 $ 830.1 $ (11.0)
IFRS
adjustments - (2.7) (73.5) 1.0
----------------------------------------------------------------------------
Balance as of
January 1,
2010 346.6 2.0 756.6 (10.0)
Net income - - 95.7 -
Other
comprehensive
income - - - 47.8
Dividends - - (6.4) -
----------------------------------------------------------------------------
Balance as of
June 30, 2010 346.6 2.0 845.9 37.8
Net income - - 129.6 -
Other
comprehensive
loss - - - (49.5)
Acquisition of
non-
controlling
interests - (1.1) - -
Dividends - - (6.5) -
----------------------------------------------------------------------------
Balance as of
December 31,
2010 346.6 0.9 969.0 (11.7)
Net income - - 89.5 -
Other
comprehensive
loss - - - (1.5)
Issuance of
shares of a
subsidiary to
non-
controlling
shareholders - - - -
Dividends - - (6.4) -
----------------------------------------------------------------------------
Balance as of
June 30, 2011 $ 346.6 $ 0.9 $ 1,052.1 $ (13.2)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------
Equity
attributable
to non-
controlling
interests Total equity
----------------------------------------------
Balance as of
December 31,
2009 as
previously
reported
under
Canadian GAAP $ - $ 1,170.4
IFRS
adjustments 1,162.6 1,087.4
----------------------------------------------
Balance as of
January 1,
2010 1,162.6 2,257.8
Net income 104.5 200.2
Other
comprehensive
income 38.8 86.6
Dividends (18.2) (24.6)
----------------------------------------------
Balance as of
June 30, 2010 1,287.7 2,520.0
Net income 126.8 256.4
Other
comprehensive
loss (41.9) (91.4)
Acquisition of
non-
controlling
interests (1.9) (3.0)
Dividends (23.8) (30.3)
----------------------------------------------
Balance as of
December 31,
2010 1,346.9 2,651.7
Net income 79.8 169.3
Other
comprehensive
loss (0.9) (2.4)
Issuance of
shares of a
subsidiary to
non-
controlling
shareholders 1.0 1.0
Dividends (23.8) (30.2)
----------------------------------------------
Balance as of
June 30, 2011 $ 1,403.0 $ 2,789.4
----------------------------------------------
----------------------------------------------
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
----------------------------------------------------------------------------
2011 2010 2011 2010
----------------------------------------------------------------------------
Cash flows related to operating
activities
Net income $ 106.0 $ 122.4 $ 169.3 $ 200.2
Adjustments for:
Amortization of
property, plant and
equipment 92.9 78.4 185.9 155.3
Amortization of
intangible assets 28.6 13.2 57.1 25.9
Loss (gain) on
valuation and
translation of
financial instruments 4.0 4.6 (6.5) 9.3
Impairment of assets 0.3 5.7 1.2 5.7
Loss on debt
refinancing - 1.9 9.3 12.3
Amortization of
financing costs and
long-term debt
discount 2.9 3.2 5.9 6.2
Deferred income taxes 45.5 11.2 64.9 13.6
Other (0.8) (7.5) (1.4) (6.3)
---------------------------------------------
279.4 233.1 485.7 422.2
Net change in non-cash
balances related to
operating activities (137.9) (25.8) (173.5) (59.3)
---------------------------------------------
Cash flows provided by
operating activities 141.5 207.3 312.2 362.9
---------------------------------------------
Cash flows related to investing
activities
Business acquisitions, net
of cash and cash
equivalents (5.0) (0.1) (50.1) (1.1)
Business disposals, net of
cash and cash equivalents - 0.8 - 1.8
Additions to property,
plant and equipment (174.5) (162.0) (369.7) (295.8)
Additions to intangible
assets (18.9) (24.2) (38.9) (44.4)
Proceeds from disposals of
assets 4.0 45.9 5.0 47.3
Net change in temporary
investments - - - 30.0
Net change in cash and cash
equivalents in trust 1.9 - 4.8 -
Other (1.6) - (2.0) -
---------------------------------------------
Cash flows used in investing
activities (194.1) (139.6) (450.9) (262.2)
---------------------------------------------
Cash flows related to financing
activities
Net change in bank
indebtedness 0.3 3.5 (2.9) 3.0
Net change under revolving
credit facilities (2.6) (7.5) (10.9) 2.6
Issuance of long-term debt,
net of financing fees - (1.2) 319.9 292.7
Repayment of long-term debt (1.3) (131.5) (226.2) (320.2)
Settlement of hedging
contracts - (1.5) (105.4) (32.4)
Dividends (3.2) (6.4) (3.2) (6.4)
Dividends paid to non-
controlling shareholders (12.5) (9.7) (23.8) (18.2)
Other 1.0 - 1.0 -
---------------------------------------------
Cash flows used in financing
activities (18.3) (154.3) (51.5) (78.9)
---------------------------------------------
Net change in cash and cash
equivalents (70.9) (86.6) (190.2) 21.8
Effect of exchange rate changes
on cash and cash equivalents
denominated in foreign
currencies 0.1 (0.3) 0.3 (1.0)
Cash and cash equivalents at
beginning of period 123.6 407.7 242.7 300.0
---------------------------------------------
Cash and cash equivalents at
end of period $ 52.8 $ 320.8 $ 52.8 $ 320.8
---------------------------------------------
---------------------------------------------
Cash and cash equivalents
consist of
Cash $ - $ 65.2 $ - $ 65.2
Cash equivalents 52.8 255.6 52.8 255.6
---------------------------------------------
$ 52.8 $ 320.8 $ 52.8 $ 320.8
---------------------------------------------
---------------------------------------------
Non-cash investing activities
Net change in additions to
property, plant and
equipment and intangible
assets financed with
accounts payable $ (8.9) $ (25.3) $ 27.9 $ (7.7)
Interest and taxes reflected as
operating activities
Cash interest payments $ 127.1 $ 117.6 $ 163.2 $ 154.9
Cash income tax payments
(net of refunds) 20.1 9.5 34.0 27.2
---------------------------------------------
---------------------------------------------
QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions of Canadian dollars)
(unaudited) June 30 December 31
--------------------------------------------------------------------------
2011 2010
--------------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $ 52.8 $ 242.7
Cash and cash equivalents in trust 0.5 5.3
Accounts receivable 588.3 588.5
Income taxes 13.8 6.4
Inventories 235.1 245.2
Prepaid expenses 46.8 38.0
------------------------------
937.3 1,126.1
Non-current assets
Property, plant and equipment 2,970.6 2,812.9
Intangible assets 1,026.4 1,029.1
Goodwill 3,534.9 3,505.2
Derivative financial instruments 15.0 28.7
Deferred income taxes 23.7 20.3
Other assets 97.3 93.8
------------------------------
7,667.9 7,490.0
------------------------------
Total assets $ 8,605.2 $ 8,616.1
------------------------------
------------------------------
Liabilities and equity
Current liabilities
Bank indebtedness $ 2.8 $ 5.7
Accounts payable and accrued charges 664.4 753.6
Provisions 36.7 72.2
Deferred revenue 250.3 275.1
Income taxes 2.3 33.6
Current portion of long-term debt 15.2 30.8
------------------------------
971.7 1,171.0
Non-current liabilities
Long-term debt 3,609.3 3,587.3
Derivative financial instruments 451.8 479.9
Other liabilities 266.2 274.0
Deferred income taxes 516.8 452.2
------------------------------
4,844.1 4,793.4
Equity
Capital stock 346.6 346.6
Contributed surplus 0.9 0.9
Retained earnings 1,052.1 969.0
Accumulated other comprehensive loss (13.2) (11.7)
------------------------------
Equity attributable to shareholders 1,386.4 1,304.8
Non-controlling interests 1,403.0 1,346.9
------------------------------
2,789.4 2,651.7
------------------------------
Total liabilities and equity $ 8,605.2 $ 8,616.1
------------------------------
------------------------------
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