Quebecor Inc. ("Quebecor" or the "Company") (TSX:QBR.A)(TSX:QBR.B)
today reported its full year and fourth quarter consolidated
financial results for 2011. 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 consolidated
financial statements for the full year and fourth quarter of 2011
have therefore been prepared in accordance with IFRS and
comparative data for 2010 have been restated. For more information,
see "Transition to IFRS" below.
Highlights
2011 financial year:
-- Revenues: up $206.5 million (5.2%) to $4.21 billion in 2011 due to
sustained growth in the Telecommunications segment.
-- Operating income(1): up $8.3 million (0.6%) from 2010 to $1.34 billion.
-- Net income attributable to shareholders: $201.0 million ($3.14 per basic
share), down $24.3 million ($0.36 per basic share) from $225.3 million
($3.50 per basic share) in 2010.
-- Adjusted income from continuing operations(2): $191.5 million in 2011
($2.99 per basic share), down $29.1 million ($0.43 per basic share) from
$220.6 million ($3.42 per basic share) in 2010.
-- Videotron Ltd. ("Videotron") added 375,800 revenue-generating units(3),
its largest annual customer growth since 2008 and a 39.3% increase over
the growth recorded in 2010:
-- Net increase of 49,900 cable television customers in 2011 (34,600 in
2010), including a 181,200-subscriber increase for the digital
service (135,500 in 2010), the strongest annual growth for the
digital service since its launch in 1999. Total revenues from cable
television services passed the $1 billion mark.
-- Net increase of 80,400 customers for the cable Internet access
service (81,500 in 2010).
-- Net increase of 91,000 customers for the cable telephony service
(100,300 in 2010).
-- Net increase of 154,500 subscriber connections for the mobile
telephony service. As of December 31, 2011, Videotron's 4G network
was available to nearly seven million people in Quebec and eastern
Ontario.
(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.
Fourth quarter 2011:
-- Revenues: $1.15 billion in the fourth quarter of 2011, up $59.8 million
(5.5%) from the same quarter of 2010.
-- Operating income: $369.2 million, an increase of $10.1 million (2.8%).
-- Net income attributable to shareholders: $85.4 million ($1.34 per basic
share) compared with $46.6 million ($0.72 per basic share) in the fourth
quarter of 2010, an increase of $38.8 million ($0.62 per basic share).
-- Adjusted income from continuing operations: $55.6 million in the fourth
quarter of 2011 ($0.87 per basic share), compared with $58.2 million
($0.90 per basic share) in the fourth quarter of 2010, a decrease of
$2.6 million ($0.03 per basic share).
"Quebecor grew its revenues by $206.5 million or 5.2% in 2011,
mainly because of the sustained performance of our
Telecommunications segment," commented Pierre Karl Peladeau,
President and Chief Executive Officer of Quebecor. "Videotron
achieved its largest annual customer base growth in three years,
with a 39.3% increase over the growth recorded in 2010. The strong
performance was due, among other things, to effective bundling
strategies at a time when over-the-air analog television
broadcasting was coming to an end. With respect to financial
results, the Telecommunications segment's operating income was up
$51.5 million (4.9%) from 2010, despite additional operating costs
generated by the new mobile telephony service launched in September
2010. At the end of 2011, there were 290,600 subscriber connections
to the mobile service, including 154,900 subscriber additions in
2011. It was a remarkable year in all respects for all of the
Telecommunications segment's services.
"In our News Media and Broadcasting segments, we continued
developing our business proposition to local, provincial and
national advertisers in 2011. In view of ongoing technological
change and the proliferation of media and content delivery
channels, we decided to adapt our offerings to changing and
converging communications methods and channels. The contracts
signed by our National Sales Offices in Ontario and Quebec now
combine the development, production and implementation of full,
innovative, convergent advertising and marketing plans.
Capitalizing on the strength of their well-known brands and
leveraging all forms of media creativity, our National Sales
Offices now offer advertisers one-stop shopping. We now have the
ability to run a multimedia communications campaign on all of
Quebecor Media's platforms in order to create a promotional event
that can reach target audiences quickly and on a massive scale.
"The launch of the Le Sac Plus door-knob bag in August 2011 also
illustrates our ability to interact with consumers. The contracts
to print the Jean Coutu Group (PJC) Inc. pharmacy chain's flyers
and to distribute them in the door-knob bag demonstrate the
complementary fit among Quebecor Media's multiproduct offerings. In
addition to distributing all of Quebecor Media's community
newspapers in Quebec, the Le Sac Plus bag contains advertising
materials such as flyers, leaflets, product samples, and other
value-added promotions every week.
"Keeping pace with changes in communications channels and
methods, the new Le Journal de Montreal and Le Journal de Quebec
websites launched in February 2012 offer an exceptional user
experience, in line with Sun Media Corporation's innovative
Internet approach, already implemented at other dailies. While the
new sites reflect the tone and style that have made the print
versions of the newspapers successful, they offer more videos and
photos, as well as increased opportunities for interaction with
columnists, leveraging Quebecor Media's full potential for
convergence.
"For its part, TVA Group Inc. ("TVA Group") continued
diversifying and expanding its product line-up in 2011 by launching
a number of specialty channels: the English-language news and
opinion channel Sun News Network ("Sun News"), TVA Sports, and the
women's channel Mlle. TVA Group signed agreements with, among
others, Bell and Rogers Communications Inc. in 2011 and 2012,
securing carriage of a number of its specialty channels on Canada's
largest cable providers.
"The News Media and Broadcasting segments' financial results
were affected in 2011 by the major investments required for product
and service launches, and by the impact of increased competition
and of the economic climate on the advertising market. Management
considers these investments to be necessary in order to diversify
the Corporation's activities beyond its traditional lines of
business and to optimize the significant expertise it has developed
over the decades.
"Alongside our revenue-stimulation initiatives, we launched new
restructuring and cost-containment efforts in our News Media
segment in the fourth quarter of 2011. We introduced measures that
will reduce Sun Media Corporation's staff by 400 employees and
should yield annual savings in excess of $20.0 million. However, at
the corporate level, those headcount reductions were more than
offset by the creation of approximately 1,000 jobs in our
Telecommunications segment.
"With respect to corporate expansion, the acquisition of Les
Hebdos Monteregiens in early 2011 strengthened Quebecor Media's
distribution network in Quebec. The acquisition of an interest in a
Quebec Major Junior Hockey League team in June 2011 will make new
content available on the Corporation's various media platforms.
Also, in September 2011, Quebecor Media's Nurun Inc. ("Nurun")
subsidiary acquired a digital agency located in San Francisco,
U.S.A., that has extensive expertise in brand promotion and
interactive product development. Finally, in February 2012, a joint
venture with Saguenay-area entrepreneurs created BlooBuzz Studios
L.P., a company engaged in the booming business of video game
development for occasional players; Quebecor Media is thus entering
a new market that is growing at a spectacular pace, particularly on
mobile platforms.
"As we review the events of 2011, we must also note the final
agreement on management and naming rights to the future arena in
Quebec City, for an initial 25-year period. Quebecor Media now has
all the tools it needs to pursue its goals, which are to manage a
world-class multipurpose center and to bring a National Hockey
League team to Quebec City.
"Several financial operations were completed in 2011 and early
2012 to extend the maturity dates of Quebecor's debt, increasing it
from a weighted average of 4.9 years as at December 31, 2010 to 6.6
years as at December 31, 2011, considering, on a pro forma basis,
the operations carried out at the beginning of 2012. These
transactions will also yield annual savings in financial expenses
estimated at $30.0 million. We are gratified by the confidence the
financial markets have shown in us.
"In conclusion, the many achievements of 2011 and early 2012
have laid solid foundations for several promising projects at
Quebecor and its subsidiaries. We are looking to the future with
confidence and optimism", concluded Pierre Karl Peladeau.
Table 1
Quebecor 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)
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Revenues $ 4,206.6 $ 4,000.1 $ 3,806.4 $ 3,759.4 $ 3,390.6
Operating
income(3) 1,341.7 1,333.4 1,276.7 1,121.1 948.8
Income (loss)
from continuing
operations
attributable to
shareholders 201.0 225.3 276.1 (195.3) 273.3
Net income (net
loss)
attributable to
shareholders 201.0 225.3 277.7 188.0 (968.5)
Adjusted income
from continuing
operations(4) 191.5 220.6 236.3 179.4 134.4
Per basic share:
Income (loss)
from
continuing
operations
attributable
to
shareholders 3.14 3.50 4.30 (3.04) 4.25
Net income
(net loss)
attributable
to
shareholders 3.14 3.50 4.32 2.92 (15.06)
Adjusted
income from
continuing
operations(4) 2.99 3.42 3.68 2.79 2.09
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(1) Financial figures for 2010 and 2011 are presented in accordance with
IFRS.
(2) Financial figures for 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 financial year comparison
Revenue: $4.21 billion, an increase of $206.5 million
(5.2%).
-- Revenues increased in Telecommunications ($201.9 million or 9.1% of
segment revenues), Interactive Technologies and Communications ($22.9
million or 23.4%), Leisure and Entertainment ($10.4 million or 3.4%),
and News Media ($3.4 million or 0.3%).
-- Revenues decreased in Broadcasting ($2.7 million or -0.6%).
-- Inter-segment revenues also show an unfavorable variance of $29.4
million due to new activities in 2011.
Operating income: $1.34 billion, an increase of $8.3 million
(0.6%).
-- Operating income increased in Telecommunications ($51.5 million or 4.9%)
and in Interactive Technologies and Communications ($1.9 million or
31.7%).
-- Operating income decreased in News Media ($41.3 million or -21.6% of
segment operating income), Broadcasting ($24.4 million or -32.6%), and
Leisure and Entertainment ($1.0 million or -3.6%).
-- The change in the fair value of Quebecor Media stock options resulted in
a $12.8 million favourable variance in the stock-based compensation
charge in 2011 compared with 2010. The fair value of the options
decreased in 2011, whereas it increased in 2010. The change in the fair
value of Quebecor stock options resulted in a $31.2 million favourable
variance in the Corporation's stock-based compensation charge in 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 2.6% in 2011, compared with an 8.2% increase in 2010.
Net income attributable to shareholders: $201.0 million ($3.14
per basic share) compared with $225.3 million ($3.50 per basic
share) in 2010, a decrease of $24.3 million ($0.36 per basic
share).
-- The decrease was mainly due to:
-- $113.0 million increase in amortization charge.
-- Partially offset by:
-- $8.5 million favourable variance in gain on valuation and
translation of financial instruments;
-- $8.3 million increase in operating income;
-- $6.9 million decrease in charge for restructuring of operations,
impairment of assets and other special items;
-- $5.7 million decrease in loss on debt refinancing.
Adjusted income from continuing operations: $191.5 million in
2011 ($2.99 per basic share) compared with $220.6 million ($3.42
per basic share) in 2010, an increase of $29.1 million ($0.43 per
basic share).
2011/2010 fourth quarter comparison
Revenues: $1.15 billion, an increase of $59.8 million
(5.5%).
-- Revenues increased in Telecommunications ($43.6 million or 7.4% of
segment revenues), Leisure and Entertainment ($8.6 million or 8.8%),
News Media ($8.6 million or 3.2%), and Interactive Technologies and
Communications ($8.1 million or 29.0%).
-- Revenues decreased in Broadcasting ($1.8 million or -1.3%).
Operating income: $369.2 million, an increase of $10.1 million
(2.8%).
-- Operating income increased in Telecommunications ($31.5 million or 12.0%
of segment operating income).
-- Operating income was flat in Interactive Technologies and
Communications.
-- Operating income decreased in News Media ($10.8 million or -18.7%),
Broadcasting ($8.6 million or -29.5%), and Leisure and Entertainment
($3.7 million or -32.7%).
-- The change in the fair value of Quebecor Media stock options resulted in
a $0.3 million favourable variance in the stock-based compensation
charge in the fourth quarter of 2011, compared with the same period of
2010. The change in the fair value of Quebecor stock options resulted in
an 8.3 million favourable variance in the Corporation's stock-based
compensation charge in the fourth 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 CRTC Part II licence fee provision, operating income would
have increased 0.4% in the fourth quarter of 2011, compared with a 3.8%
increase in the same period of 2010.
Net income attributable to shareholders: $85.4 million ($1.34
per basic share) compared with $46.6 million ($0.72 per basic
share) in the fourth quarter of 2010, an increase of $38.8 million
($0.62 per basic share).
-- The variance was mainly due to:
-- gain on valuation and translation of financial instruments: $82.5
million in the fourth quarter of 2011 compared with a $23.6 million
loss in the same quarter of 2010, a favourable variance of $106.1
million;
-- $12.2 million favourable variance in the charge for restructuring of
operations, impairment of assets and other special items;
-- $10.1 million increase in operating income.
-- Partially offset by:
-- $18.2 million increase in amortization charge.
Adjusted income from continuing operations: $55.6 million in the
fourth quarter of 2011 ($0.87 per basic share), compared with $58.2
million ($0.90 per basic share) in the fourth quarter of 2010, a
decrease of $2.6 million ($0.03 per basic share).
Financing activities
-- On March 14, 2012, Videotron issued US$800.0 million aggregate principal
amount of Senior Notes bearing interest at 5.0%, for a net proceeds of
approximately $787.6 million, net of estimated financing fees of $11.9
million.
-- On February 29, 2012, Quebecor Media announced the initiation of a cash
tender offer to purchase up to US$260.0 million in aggregate principal
amount of its 7.75% Senior Notes due March 15, 2016. The total
consideration for each US$1,000.0 principal amount of Senior Notes
tendered and purchased is US$1,028.33 for Senior Notes tendered at or
prior to March 14, 2012, or US$1,025.83 for Senior Notes tendered after
that date but prior to March 28, 2012, plus accrued and unpaid interest.
-- On February 29, 2012, Videotron issued a notice of redemption for any
and all of its outstanding 6.825% Senior Notes due January 15, 2014. The
redemption price is 100.0% of the principal amount of the notes
redeemed, plus accrued and unpaid interest, and the redemption date will
be March 30, 2012. The purchase will be carried out on Senior Notes that
not have been tendered and purchased under the Videotron cash tender
offer announced on February 29, 2012.
-- On February 29, 2012, Videotron announced the initiation of a cash
tender offer to purchase any and all of its outstanding 6.825% Senior
Notes due January 15, 2014. The total consideration for each US$1,000.0
principal amount of Senior Notes tendered and purchased is US$1,001.25
for Senior Notes tendered at or prior to March 13, 2012, or US$1,000.0
for Senior Notes tendered after that date but prior to March 28, 2012,
plus accrued and unpaid interest.
-- On February 24, 2012, TVA Group amended its bank credit facilities to
extend the maturity of its $100.0 million revolving credit facility from
December 2012 to February 2017.
-- On February 3, 2012, Sun Media Corporation repaid the $37.6 million
balance on its term loan credit facility and terminated all its credit
facilities. Sun Media Corporation's liabilities no longer include any
long-term debt.
-- On January 25, 2012, Quebecor Media amended its bank credit facilities
to extend the maturity of its $100.0 million revolving credit facility
from January 2013 to January 2016 and added a new $200.0 million
revolving credit facility "C," also maturing in January 2016.
-- 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 to
amend some of the terms and conditions.
-- On July 5, 2011, Videotron issued 6 7/8% Senior Notes maturing in 2021
in the aggregate principal amount of $300.0 million, for a net principal
amount of $294.8 million. The net proceeds were used to finance the
early repayment and withdrawal of US$255.0 million in the principal
amount of Videotron's 6 7/8% Senior Notes maturing in 2014, and to
settle the related hedges.
-- The conditions of the exchangeable debentures, Series 2001 and Series
Abitibi, were amended in February and June 2011 respectively to reduce
the interest rate from 1.50% to 0.10% on the notional principal amount
of the debentures. Other related conditions have not changed and remain
applicable. In September 2011, the Corporation redeemed exchangeable
debentures, Series 2001, in the notional principal amount of $135.0
million for nil consideration.
-- On January 5, 2011, Quebecor Media completed an issuance of Senior Notes
in the aggregate principal amount of $325.0 million, for net proceeds of
$319.9 million. The Notes bear interest at a rate of 7 3/8% and mature
in 2021. Quebecor Media used the net proceeds from the placement
primarily to finance the early repayment and withdrawal, on February 15,
2011, of all of Sun Media Corporation's outstanding 7 5/8% Senior Notes
maturing in 2013, in the aggregate principal amount of US$205.0 million,
and to finance the settlement and cancellation of related hedges.
Dividends
On March 14, 2012, the Board of Directors of Quebecor declared a
quarterly dividend of $0.05 per share on its Class A Multiple
Voting Shares and Class B Subordinate Voting Shares, payable on
April 24, 2012 to shareholders of record at the close of business
on March 30, 2012. 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.
Normal course issuer bid
On August 10, 2011, the Corporation filed a normal course issuer
bid for a maximum of 985,233 ("Class A shares") representing
approximately 5% of issued and outstanding Class A shares, and for
a maximum of 4,453,304 ("Class B shares") representing
approximately 10% of the public float of Class B shares as of
August 2, 2011. The purchases can 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. All shares
purchased under the bid are, or will be cancelled.
In 2011, the Corporation purchased and cancelled 928,100 Class B
shares for a total cash consideration of $30.2 million. The excess
of $23.1 million of the purchase price over the carrying value of
Class B shares repurchased was recorded in a reduction to retained
earnings.
Detailed financial information
For a detailed analysis of Quebecor's full year and fourth
quarter 2011 results, please refer to the Management Discussion and
Analysis and consolidated financial statements of Quebecor,
available on the Company's website at:
http://www.quebecor.com/en/quarterly_doc_quebecor_inc or from the
SEDAR filing service at www.sedar.com.
Conference call for investors and webcast
Quebecor will hold a conference call to discuss Quebecor's full
year and fourth quarter 2011 results on March 15, 2012, at 11:00
a.m. EDST. There will be a question period reserved for financial
analysts. To access the conference call, please dial 1 877
293-8052, access code for participants 58308#. A tape recording of
the call will be available from March 15 to June 13, 2012 by
dialling 1 877 293-8133, conference number 766307#, access code for
participants 58308#. The conference call will also be broadcast
live on Quebecor's website at
www.quebecor.com/en/content/conference-call. 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.
Transition to IFRS
On January 1, 2011, Canadian GAAP, as used by publicly
accountable enterprises, were fully converged into IFRS. Prior to
the adoption of IFRS, for all periods up to and including the year
ended December 31, 2010, the Corporation's consolidated financial
statements were prepared in accordance with Canadian GAAP. IFRS
uses a conceptual framework similar to Canadian GAAP, but there are
significant differences related to recognition, measurement and
disclosures.
The date of the opening balance sheet under IFRS and the date of
transition to IFRS are January 1, 2010. The financial data for 2010
have therefore been restated. The Corporation is also required to
apply IFRS accounting policies retrospectively to determine its
opening balance sheet, subject to certain exemptions. However, the
Corporation is not required to restate figures for periods prior to
January 1, 2010 that were previously prepared in accordance with
Canadian GAAP.
The significant accounting policies under IFRS are disclosed in
Note 1 to the consolidated financial statements for the year ended
December 31, 2011. Note 29 describes the adjustments made by the
Corporation in preparing its IFRS opening consolidated balance
sheet as of January 1, 2010 and in restating its previously
published Canadian GAAP consolidated financial statements for the
year ended December 31, 2010. Note 29 also provides details on
exemption choices made by the Corporation with respect to the
general principle of retrospective application of IFRS.
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 that 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, 2011.
The forward-looking statements in this press release reflect
Quebecor's expectations as of March 15, 2012, 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.,
through its subsidiary Videotron Ltd., is an integrated
communications company engaged in cable television, interactive
multimedia development, Internet access services, cable telephone
services and mobile telephone services. Through Sun Media
Corporation, Quebecor Media Inc. is the largest publisher of
newspapers in Canada. It also operates Canoe.ca and its network of
English- and French-language Internet properties in Canada. In the
broadcasting sector, Quebecor Media Inc. operates, through TVA
Group Inc., the number one French-language general-interest
television network in Quebec, a number of specialty channels, and
the Sun News English-language channel. Another subsidiary of
Quebecor Media Inc., Nurun Inc., is a major interactive
technologies and communications agency with offices in Canada, the
United States, Europe and Asia. Quebecor Media Inc. is also active
in magazine publishing (TVA Publishing Inc.), video game
development (BlooBuzz Studios, L.P.), book publishing and
distribution (Sogides Group Inc. and CEC Publishing Inc.), the
production, distribution and retailing of cultural products
(Archambault Group Inc. and TVA Films), DVD, Blu-ray disc and
videogame rental and retailing (Le SuperClub Videotron Ltd.), the
printing and distribution of regional newspapers and flyers
(Quebecor Media Printing Inc. and Quebecor Media Network Inc.),
news content production and distribution (QMI Agency),
multiplatform advertising solutions (QMI Sales) and the publishing
of printed and online directories, through Quebecor
MediaPages(TM).
DEFINITIONS
Operating Income
In its analysis of operating results, the Corporation defines
operating income, as reconciled to net income under IFRS, as net
income 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, and income tax. Operating income
as defined above is not a measure of results that is consistent
with IFRS. 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 IFRS. Management believes
that operating income is a meaningful measure of performance. The
Corporation uses operating income in order to assess the
performance of its investment in Quebecor Media. The Corporation's
management and Board of Directors use this measure in evaluating
its consolidated results as well as the results of the
Corporation'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 Corporation and its segments.
Operating income is also relevant because it is a significant
component of the Corporation'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 Corporation's segments. The
Corporation 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
Corporation is engaged. The Corporation's definition of operating
income may not be the same as similarly titled measures reported by
other companies.
Table 2 below provides a reconciliation of operating income with
net income as disclosed in the Corporation's consolidated financial
statements.
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)
Year ended Three months ended
December 31 December 31
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2011 2010 2011 2010
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Operating (loss) income:
Telecommunications $ 1,098.8 $ 1,047.3 $ 294.7 $ 263.2
News Media 150.1 191.4 47.0 57.8
Broadcasting 50.5 74.9 20.6 29.2
Leisure and Entertainment 26.6 27.6 7.6 11.3
Interactive Technologies
and Communications 7.9 6.0 2.5 2.5
Head Office 7.8 (13.8) (3.2) (4.9)
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1,341.7 1,333.4 369.2 359.1
Amortization (512.2) (399.2) (138.2) (120.0)
Financial expenses (322.9) (322.6) (77.7) (80.1)
Gain (loss) on valuation and
translation of financial
instruments 54.6 46.1 82.5 (23.6)
Restructuring of operations,
impairment of assets and
other special items (30.2) (37.1) (11.2) (23.4)
Loss on debt refinancing (6.6) (12.3) - -
Income taxes (141.4) (151.7) (60.2) (14.1)
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Net income $ 383.0 $ 456.6 $ 164.4 $ 97.9
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Adjusted income from continuing operating activities
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 gain (loss) 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. The
Corporation's definition of adjusted income from continuing
operating activities 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 attributable to
shareholders measure used in Quebecor's consolidated financial
statements.
Table 3
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 consolidated financial statements
(in millions of Canadian dollars)
Year ended Three months ended
December 31 December 31
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2011 2010 2011 2010
----------------------------------------------------------------------------
Adjusted income from
continuing operations $ 191.5 $ 220.6 $ 55.6 $ 58.2
Gain (loss) on valuation
and translation of
financial instruments 54.6 46.1 82.5 (23.6)
Restructuring of
operations, impairment
of assets and other
special items (30.2) (37.1) (11.2) (23.4)
Loss on debt refinancing (6.6) (12.3) - -
Income taxes related to
adjustment(1) (3.8) 7.9 (17.5) 19.5
Net income attributable
to non-controlling
interest related to
adjustments (4.5) 0.1 (24.0) 15.9
----------------------------------------------------------------------------
Net income attributable
to shareholders $ 201.0 $ 225.3 $ 85.4 $ 46.6
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(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 telephony and
mobile telephony 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 telephony and mobile
telephony 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)
(unaudited)
Three months ended Twelve months ended
December 31 December 31
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2011 2010 2011 2010
----------------------------------------------------------------------------
Revenues
Telecommunications $ 634.8 $ 591.2 $ 2,430.7 $ 2,228.8
News Media 275.6 267.0 1,018.4 1,015.0
Broadcasting 131.6 133.4 445.5 448.2
Leisure and Entertainment 106.2 97.6 312.9 302.5
Interactive Technologies
and Communications 36.0 27.9 120.9 98.0
Inter-segment (36.3) (29.0) (121.8) (92.4)
------------------------------------------------
1,147.9 1,088.1 4,206.6 4,000.1
Cost of sales, selling and
administrative expenses 778.7 729.0 2,864.9 2,666.7
Amortization 138.2 120.0 512.2 399.2
Financial expenses 77.7 80.1 322.9 322.6
(Gain) loss on valuation and
translation of financial
instruments (82.5) 23.6 (54.6) (46.1)
Restructuring of operations,
impairment of assets and
other special items 11.2 23.4 30.2 37.1
Loss on debt refinancing - - 6.6 12.3
------------------------------------------------
Income before income taxes 224.6 112.0 524.4 608.3
Income taxes:
Current (12.8) (9.5) (17.7) 56.4
Deferred 73.0 23.6 159.1 95.3
------------------------------------------------
60.2 14.1 141.4 151.7
------------------------------------------------
Net income $ 164.4 $ 97.9 $ 383.0 $ 456.6
------------------------------------------------
------------------------------------------------
Net income attributable to
Shareholders $ 85.4 $ 46.6 $ 201.0 $ 225.3
Non-controlling interests 79.0 51.3 182.0 231.3
------------------------------------------------
------------------------------------------------
Earnings per share
attributable to
shareholders
Basic $ 1.34 $ 0.72 $ 3.14 $ 3.50
Diluted 1.34 0.70 3.11 3.44
------------------------------------------------
------------------------------------------------
Weighted average number of
shares outstanding (in
millions) 63.5 64.3 64.0 64.3
Weighted average number of
diluted shares (in
millions) 63.8 65.0 64.4 65.1
------------------------------------------------
------------------------------------------------
QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions of Canadian dollars)
(unaudited)
Three months ended Twelve months ended
December 31 December 31
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2011 2010 2011 2010
----------------------------------------------------------------------------
Net income $ 164.4 $ 97.9 $ 383.0 $ 456.6
Other comprehensive loss:
(Loss) gain on translation
of net investments in
foreign operations - (1.1) 1.6 (2.9)
Cash flow hedges:
(Loss) gain on valuation
of derivative financial
instruments (22.9) (52.4) (9.5) 43.0
Deferred income taxes 5.1 11.1 (2.0) (2.7)
Defined benefit plans:
Acturial loss and net
change in asset limit
and in minimumfunding
liability (89.7) (61.1) (90.0) (65.3)
Deferred income taxes 23.6 16.0 23.7 17.2
Reclassification to
income:
Other comprehensive loss
related to cash flow
hedges - - 0.8 8.4
Deferred income taxes - - (0.2) (2.5)
------------------------------------------------
(83.9) (87.5) (75.6) (4.8)
------------------------------------------------
Comprehensive income $ 80.5 $ 10.4 $ 307.4 $ 451.8
------------------------------------------------
------------------------------------------------
Comprehensive income
attributable to
Shareholders $ 44.1 $ (1.1) $ 164.4 $ 223.6
Non-controlling interests 36.4 11.5 143.0 228.2
------------------------------------------------
------------------------------------------------
QUEBECOR INC. AND ITS SUBSIDIARIES
SEGMENTED INFORMATION
(in millions of Canadian dollars)
(unaudited)
Three months ended Twelve months ended
December 31 December 31
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2011 2010 2011 2010
----------------------------------------------------------------------------
Net income before
amortization, financial
expenses, (gain) loss on
valuation and translation
of financial instruments,
restructuring of
operations, impairment of
assets and other special
items, loss on debt
refinancing and income
taxes
Telecommunications $ 294.7 $ 263.2 $ 1,098.8 $ 1,047.3
News Media 47.0 57.8 150.1 191.4
Broadcasting 20.6 29.2 50.5 74.9
Leisure and Entertainment 7.6 11.3 26.6 27.6
Interactive Technologies
and Communications 2.5 2.5 7.9 6.0
Head Office (3.2) (4.9) 7.8 (13.8)
------------------------------------------------
$ 369.2 $ 359.1 $ 1,341.7 $ 1,333.4
------------------------------------------------
------------------------------------------------
Amortization
Telecommunications $ 113.5 $ 95.1 $ 421.4 $ 305.0
News Media 14.9 16.4 56.0 61.4
Broadcasting 5.0 4.2 17.8 15.5
Leisure and Entertainment 1.9 2.5 8.7 9.8
Interactive Technologies
and Communications 1.7 0.9 4.2 3.9
Head Office 1.2 0.9 4.1 3.6
------------------------------------------------
$ 138.2 $ 120.0 $ 512.2 $ 399.2
------------------------------------------------
------------------------------------------------
Additions to property, plant
and equipment
Telecommunications $ 196.6 $ 190.6 $ 725.3 $ 651.4
News Media 2.4 4.4 13.7 11.4
Broadcasting 8.0 6.7 30.5 18.5
Leisure and Entertainment 2.3 0.8 6.3 4.2
Interactive Technologies
and Communications 0.6 0.6 4.3 2.6
Head Office 0.1 0.6 0.9 2.4
------------------------------------------------
$ 210.0 $ 203.7 $ 781.0 $ 690.5
------------------------------------------------
------------------------------------------------
Additions to intangible
assets
Telecommunications $ 20.7 $ 23.7 $ 73.2 $ 71.9
News Media 2.7 4.5 10.8 12.0
Broadcasting 2.4 1.8 5.8 5.9
Leisure and Entertainment 0.2 (0.4) 1.8 5.4
------------------------------------------------
$ 26.0 $ 29.6 $ 91.6 $ 95.2
------------------------------------------------
------------------------------------------------
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) income
----------------------------------------------------------------------------
Balance as of
December 31, 2009
aspreviously
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 - - 225.3 -
Other comprehensive
(loss) income - - (25.4) 23.7
Acquisition of non-
controlling
interests - (1.1) - -
Dividends - - (12.9) -
----------------------------------------------------------------------------
Balance as of
December 31, 2010 346.6 0.9 943.6 13.7
Net income - - 201.0 -
Other comprehensive
loss - - (31.5) (5.1)
Issuance of shares
of a subsidiary - - - -
Repurchase of Class
B shares (7.1) - (23.1) -
Dividends - - (12.8) -
----------------------------------------------------------------------------
Balance as of
December 31, 2011 $ 339.5 $ 0.9 $ 1,077.2 $ 8.6
----------------------------------------------------------------------------
----------------------------------------------------------------------------
QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(in millions of Canadian dollars)
(unaudited)
----------------------------------------------------------------
----------------------------------------------------------------
Equity
attributable
to non-
controlling Total
interests equity
----------------------------------------------------------------
Balance as of
December 31, 2009
aspreviously
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 231.3 456.6
Other comprehensive
(loss) income (3.1) (4.8)
Acquisition of non-
controlling
interests (1.9) (3.0)
Dividends (42.0) (54.9)
----------------------------------------------------------------
Balance as of
December 31, 2010 1,346.9 2,651.7
Net income 182.0 383.0
Other comprehensive
loss (39.0) (75.6)
Issuance of shares
of a subsidiary 1.0 1.0
Repurchase of Class
B shares - (30.2)
Dividends (46.5) (59.3)
----------------------------------------------------------------
Balance as of
December 31, 2011 $ 1,444.4 $ 2,870.6
----------------------------------------------------------------
----------------------------------------------------------------
QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions of Canadian dollars)
(unaudited)
Three months ended Twelve months ended
December 31 December 31
----------------------------------------------------------------------------
2011 2010 2011 2010
----------------------------------------------------------------------------
Cash flows related to
operating activities
Net income $ 164.4 $ 97.9 $ 383.0 $ 456.6
Adjustments for:
Amortization of
property, plant and
equipment 105.9 91.9 391.3 325.4
Amortization of
intangible assets 32.3 28.1 120.9 73.8
(Gain) loss on valuation
and translation of
financial instruments (82.5) 23.6 (54.6) (46.1)
Impairment of assets - 0.8 1.5 11.9
Loss on debt refinancing - - 6.6 12.3
Amortization of
financing costs and
long-term debt discount 3.6 3.2 12.8 12.5
Deferred income taxes 73.0 23.6 159.1 95.3
Other (3.0) (1.1) (2.1) (7.9)
------------------------------------------------
293.7 268.0 1,018.5 933.8
Net change in non-cash
balances related to
operating activities (117.6) (114.3) (152.2) (123.9)
------------------------------------------------
Cash flows provided by
operating activities 176.1 153.7 866.3 809.9
------------------------------------------------
Cash flows related to
investing activities
Business acquisitions, net
of cash and cash
equivalents - - (55.7) (3.1)
Additions to property,
plant and equipment (210.0) (203.7) (781.0) (690.5)
Additions to intangible
assets (26.0) (29.6) (91.6) (95.2)
Proceeds from disposals of
assets 4.5 3.4 12.0 53.0
Net change in temporary
investments - - - 30.0
Other - (0.7) 3.2 1.7
------------------------------------------------
Cash flows used in investing
activities (231.5) (230.6) (913.1) (704.1)
------------------------------------------------
Cash flows related to
financing activities
Net change in bank
indebtedness (0.5) 1.9 (1.5) 3.9
Net change under revolving
facilities 6.7 (14.4) 2.7 (11.9)
Issuance of long-term
debt, net of financing
fees 71.0 - 685.8 292.7
Repayment of long-term
debt (6.8) (17.0) (487.9) (359.5)
Settlement of hedging
contracts - - (160.2) (32.4)
Repurchase of Class B
shares (6.2) - (30.2) -
Dividends (3.2) (3.3) (12.8) (12.9)
Dividends paid to non-
controlling shareholders (11.3) (11.9) (46.5) (42.0)
Other (0.1) - 1.0 -
------------------------------------------------
Cash flows provided by (used
in) financing activities 49.6 (44.7) (49.6) (162.1)
------------------------------------------------
Net change in cash and cash
equivalents (5.8) (121.6) (96.4) (56.3)
Effect of exchange rate
changes on cash and cash
equivalents denominated in
foreign currencies (0.2) (0.2) 0.1 (1.0)
Cash and cash equivalents at
beginning of period 152.4 364.5 242.7 300.0
------------------------------------------------
Cash and cash equivalents at
end of period $ 146.4 $ 242.7 $ 146.4 $ 242.7
------------------------------------------------
------------------------------------------------
Cash and cash equivalents
consist of
Cash $ 29.9 $ 122.1 $ 29.9 $ 122.1
Cash equivalents 116.5 120.6 116.5 120.6
------------------------------------------------
$ 146.4 $ 242.7 $ 146.4 $ 242.7
------------------------------------------------
------------------------------------------------
Non-cash investing
activities
Net change in additions to
property, plant and
equipment and intangible
assets financed with
accounts payable $ (55.4) $ 8.9 $ (26.7) $ (16.4)
------------------------------------------------
------------------------------------------------
Interest and taxes reflected
as operating activities
Cash interest payments $ 134.4 $ 117.3 $ 320.5 $ 306.0
Cash income tax payments
(net of refunds) 0.4 2.9 30.7 37.0
------------------------------------------------
------------------------------------------------
QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions of Canadian dollars)
(unaudited)
December 31 December 31
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2011 2010
----------------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $ 146.4 $ 242.7
Cash and cash equivalents in trust 0.3 5.3
Accounts receivable 603.4 588.5
Income taxes 29.0 6.4
Inventories 283.6 245.2
Prepaid expenses 31.3 38.0
--------------------------------
1,094.0 1,126.1
Non-current assets
Property, plant and equipment 3,211.1 2,805.7
Intangible assets 1,041.0 1,036.3
Goodwill 3,543.8 3,505.2
Derivative financial instruments 34.9 28.7
Deferred income taxes 20.6 20.3
Other assets 93.4 93.8
--------------------------------
7,944.8 7,490.0
--------------------------------
Total assets $ 9,038.8 $ 8,616.1
--------------------------------
--------------------------------
Liabilities and equity
Current liabilities
Bank indebtedness $ 4.2 $ 5.7
Accounts payable and accrued charges 776.5 753.6
Provisions 33.7 72.2
Deferred revenue 295.7 275.1
Income taxes 2.7 33.6
Current portion of long-term debt 114.5 30.8
--------------------------------
1,227.3 1,171.0
Non-current liabilities
Long-term debt 3,688.3 3,587.3
Derivative financial instruments 315.4 479.9
Other liabilities 344.7 274.0
Deferred income taxes 592.5 452.2
--------------------------------
4,940.9 4,793.4
Equity
Capital stock 339.5 346.6
Contributed surplus 0.9 0.9
Retained earnings 1,077.2 943.6
Accumulated other comprehensive income 8.6 13.7
--------------------------------
Equity attributable to shareholders 1,426.2 1,304.8
Non-controlling interests 1,444.4 1,346.9
--------------------------------
2,870.6 2,651.7
--------------------------------
Total liabilities and equity $ 9,038.8 $ 8,616.1
--------------------------------
--------------------------------
Contacts: Jean-François Pruneau Chief Financial Officer Quebecor
Inc. and Quebecor Media Inc. 514
380-4144jean-francois.pruneau@quebecor.com J. Serge Sasseville Vice
President, Corporate and Institutional Affairs Quebecor Media Inc.
514 380-1864serge.sasseville@quebecor.com
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