Quebecor Inc. ("Quebecor" or the "Corporation")
(TSX:QBR.A)(TSX:QBR.B) today reported its consolidated financial
results for the third quarter of 2012. Quebecor consolidates the
financial results of its Quebecor Media Inc. ("Quebecor Media")
subsidiary. The Corporation's interest in Quebecor Media increased
from 54.7% to 75.4% on October 11, 2012 as a result of the purchase
of part of the interest held by CDP Capital d'Amerique
Investissement inc. ("CDP Capital"), a subsidiary of the Caisse de
depot et placement du Quebec.
Third quarter 2012 highlights
-- Revenues: $1.06 billion, up $44.3 million (4.4%) from the third quarter
of 2011.
-- Operating income(1) up $33.1 million (10.4%) to $352.8 million.
-- Net income attributable to shareholders: $18.6 million ($0.30 per basic
share), down $7.5 million ($0.11 per basic share) from $26.1 million
($0.41 per basic share) in the third quarter of 2011.
-- Adjusted income from continuing operations(2) $52.1 million ($0.83 per
basic share), up $12.1 million (30.2% or $0.20 per basic share) from
$40.0 million ($0.63 per basic share) in the third quarter of 2011.
-- Revenue increases in the third quarter of 2012 from all main services of
Videotron Ltd. ("Videotron"): Internet access ($18.5 million or 10.5%),
cable television ($16.3 million or 6.4%), mobile telephony service
($13.3 million or 41.8%) and cable telephony service ($4.1 million or
3.7%). Operating income up $34.5 million (12.5%).
-- Videotron's revenue generating units(3) up by 101,100 in the third
quarter of 2012 and by 264,600 (5.8%) in the 12-month period ended
September 30, 2012. Average monthly revenue per user(4) ("ARPU") up
$7.99 (7.7%) to $112.32 in the third quarter of 2012.
-- Purchase on October 11, 2012 of part of CDP Capital's interest in
Quebecor Media for a consideration of $1.50 billion, increasing the
Corporation's interest in Quebecor Media from 54.7% to 75.4%.
-- Total non-cash charge of $187.0 million for impairment of goodwill and
intangible assets, in accordance with International Financial Reporting
Standards ("IFRS") accounting valuation principles, reflecting
continuing weak market conditions in the newspaper and music industries.
-- New approach to management of newspaper publishing operations announced.
Comprehensive optimization of Sun Media Corporation's operational and
business processes will generate estimated annual savings of more than
$45.0 million.
(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, cable and
wireless Internet access and cable telephony service subscriptions,
plus subscriber connections to the mobile telephony service.
(4) See "Average monthly revenue per user" under "Definitions."
"The Corporation continued its growth in the third quarter of
2012 despite a fiercely competitive business environment in most of
its lines of business," said Pierre Karl Peladeau, President and
Chief Executive Officer of Quebecor. "It increased its revenues by
4.4%, its operating income by 10.4% and its adjusted income from
continuing operations by 30.2%, confirming the profitability of the
major investments made in recent years."
"We are very satisfied with the growth recorded by Videotron in
the third quarter of 2012," said Robert Depatie, President and
Chief Executive Officer of Videotron. "Revenues from Videotron's
main services were all up substantially, enhancing the
Telecommunications segment's operating income by $34.5 million, a
significant 12.5% increase. Videotron recorded a net increase of
101,100 revenue generating units and a 7.7% increase in average
monthly revenue per user compared with the same period of the
previous year. It is noteworthy that the cable television
subscriber losses recorded in the second quarter of 2012, during
the moving season, were almost entirely made up in the third
quarter of 2012. In the 12-month period ended September 30, 2012,
the total number of revenue generating units increased by 264,600
(5.8%). Subscriber additions to the mobile network since its launch
have contributed to customer growth and increase in profitability.
Videotron stands out among Canada's major telecommunications
carriers with the highest quarterly growth rate in operating
income."
"A major event that has occurred since the end of the second
quarter of 2012 will mark Quebecor's history: the purchase of part
of CDP Capital's interest in Quebecor Media for $1.50 billion,"
said Jean-Francois Pruneau, Chief Financial Officer of Quebecor.
"This transaction will enable the Corporation to benefit from the
growth we anticipate for this subsidiary in the coming years, while
continuing its partnership with CDP Capital. It was carried out in
accordance to the Corporation's fundamental financial objectives of
maintaining a sufficient level of operational and financial
flexibility. This transaction was a positive for both our financial
partner, which has supported us since the creation of Quebecor
Media in 2000, and our shareholders."
To allow the News Media segment the decision-making and
operational flexibility it needs to respond effectively to the
profound upheaval in the media industry around the world, Sun Media
Corporation undertook a comprehensive review of its approach and
business processes. Its innovative plan will streamline
decision-making and operational structures in order to achieve
greater efficiency in all activities, from the editorial to the
industrial operations. Sun Media Corporation is also planning to
redesign its sales activities to strengthen its business strategy.
At a time of negative growth in the industry, maintaining
reasonable cost-effectiveness is essential. This objective will be
achieved in the News Media segment through improved execution and
greater responsiveness to customer' needs and to local and national
business opportunities, combined with the estimated annual savings
of more than $45.0 million that will be generated by the new
program.
In summary, the third quarter of 2012 was marked by excellent
financial results and by ongoing restructuring and adaptation
efforts by the Corporation's segments. In addition, immediately
after the end of the quarter, the Corporation concluded one of the
largest financial transactions in the history of Quebecor Media
aimed at continuing the achievement of its business development,
profitability and growth objectives.
Table 1
Quebecor third quarter financial highlights, 2008 to 2012
(in millions of Canadian dollars, except per share data)
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2012(1) 2011(1) 2010(1) 2009(2) 2008(2)
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Revenues $ 1,059.1 $ 1,014.8 $ 969.9 $ 924.5 $ 915.0
Operating income 352.8 319.7 332.0 301.1 277.4
Net income from continuing
operations attributable
to shareholders 18.6 26.1 83.0 67.8 45.7
Net income attributable to
shareholders 18.6 26.1 83.0 69.4 45.7
Adjusted income from
continuing operations 52.1 40.0 56.1 52.9 42.5
Per basic share:
Net income from
continuing operations
attributable to
shareholders 0.30 0.41 1.29 1.06 0.71
Net income attributable
to shareholders 0.30 0.41 1.29 1.08 0.71
Adjusted income from
continuing operations 0.83 0.63 0.87 0.82 0.66
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(1) Financial figures for the third quarters of years 2010 to 2012 are
presented in accordance with IFRS.
(2) Financial figures for the third quarters of years 2008 and 2009 are
presented in accordance with Canadian Generally Accepted Accounting
Principles.
2012/2011 third quarter comparison
Revenues: $1.06 billion, an increase of $44.3 million
(4.4%).
-- Revenues increased in Telecommunications ($47.6 million or 7.8% of
segment revenues), Broadcasting ($9.7 million or 10.9%) and Interactive
Technologies and Communications ($3.8 million or 12.7%).
-- Revenues decreased in News Media ($7.6 million or -3.2%) and Leisure and
Entertainment ($0.8 million or -1.1%).
Operating income: $352.8 million, an increase of $33.1 million
(10.4%).
-- Operating income increased in Telecommunications ($34.5 million or 12.5%
of segment operating income), Broadcasting ($4.0 million or 133.3%) and
Head Office ($5.6 million). The increase at Head Office was caused
mainly by the favourable variance in the fair value of stock options.
-- Operating income decreased in News Media ($5.6 million or -19.2%),
Interactive Technologies and Communications ($2.8 million or -87.5%) and
Leisure and Entertainment ($2.6 million or -22.6%).
-- The change in the fair value of Quebecor Media stock options resulted in
a $2.4 million favourable variance in the stock-based compensation
charge in the third quarter of 2012 compared with the same period of
2011. The change in the fair value of Quebecor stock options resulted in
a $6.7 million favourable variance in the Corporation's stock-based
compensation charge in the third quarter of 2012.
Net income attributable to shareholders: $18.6 million ($0.30
per basic share) compared with $26.1 million ($0.41 per basic
share) in the third quarter of 2011, a decrease of $7.5 million
($0.11 per basic share).
-- The unfavourable variance was due primarily to:
-- recognition of a $187.0 million charge for impairment of goodwill
and intangible assets in the third quarter of 2012;
-- $36.8 million increase in charge for restructuring of operations,
impairment of assets and other special items;
-- $15.7 million increase in amortization charge.
Partially offset by:
-- $152.1 million favourable variance in gain on valuation and
translation of financial instruments;
-- $33.1 million increase in operating income;
-- recognition of a $34.8 million favourable adjustment to deferred
income taxes;
-- $6.5 million decrease in financial expenses.
Adjusted income from continuing operations: $52.1 million in the
third quarter of 2012 ($0.83 per basic share) compared with $40.0
million ($0.63 per basic share) in the same quarter of 2011, an
increase of $12.1 million ($0.20 per basic share).
2012/2011 year-to-date comparison
Revenues: $3.21 billion, an increase of $150.8 million
(4.9%).
-- Revenues increased in Telecommunications ($160.9 million or 9.0% of
segment revenues), Interactive Technologies and Communications ($24.8
million or 29.2%) and Broadcasting ($18.3 million or 5.8%).
-- Revenues decreased in News Media ($27.3 million or -3.7%) and Leisure
and Entertainment ($3.7 million or -1.8%).
Operating income: $1.03 billion, an increase of $60.3 million
(6.2%).
-- Operating income increased in Telecommunications ($110.5 million or
13.7% of segment operating income) and Interactive Technologies and
Communications ($1.0 million or 18.5%).
-- Operating income decreased in News Media ($26.6 million or -25.8%),
Leisure and Entertainment ($10.9 million or -57.4%), Broadcasting ($9.0
million or -30.1%), and Head Office ($4.7 million). The decrease at Head
Office mainly reflects the unfavourable variance in the fair value of
stock options.
-- The change in the fair value of Quebecor Media stock options resulted in
a $7.3 million unfavourable variance in the stock-based compensation
charge in the first nine months of 2012 compared with the same period of
2011. The change in the fair value of Quebecor stock options resulted in
a $7.6 million unfavourable variance in the Corporation's stock-based
compensation charge in the first nine months of 2012.
Net income attributable to shareholders: $158.5 million ($2.50
per basic share) compared with $115.6 million ($1.80 per basic
share) in the first nine months of 2011, an increase of $42.9
million ($0.70 per basic share).
-- The increase was due mainly to:
-- $269.4 million favourable variance in gain on valuation and
translation of financial instruments;
-- $60.3 million increase in operating income.
Partially offset by:
-- $201.5 million charge for impairment of goodwill and intangible
assets recorded in the first nine months of 2012;
-- $58.9 million increase in amortization charge;
-- $9.8 million increase in charge for restructuring of operations,
impairment of assets and other special items.
Adjusted income from continuing operations: $140.1 million in
the first nine months of 2012 ($2.22 per basic share) compared with
$135.9 million ($2.12 per basic share) in the same period of 2011,
an increase of $4.2 million ($0.10 per basic share).
Financing activities
-- The Corporation increased its interest in Quebecor Media further to the
closing of the following transactions on October 11, 2012:
-- Quebecor Media repurchased 20,351,307 of its common shares held by
CDP Capital for an aggregate purchase price of $1.0 billion paid in
cash. All the repurchased shares were cancelled;
-- Quebecor purchased 10,175,653 common shares of Quebecor Media held
by CDP Capital, in consideration of the issuance by Quebecor to CDP
Capital of $500.0 million aggregate principal amount of subordinated
debentures, bearing interest at 4 1/8% and maturing in 2018, which
are convertible into Class B Subordinate Voting Shares of Quebecor
("Class B Shares").
Following the completion of these transactions, Quebecor's
interest in Quebecor Media increased from 54.7% to 75.4% and CDP
Capital's interest decreased from 45.3% to 24.6%.
-- To carry out the purchase of 20,351,307 of its common shares for an
aggregate purchase price of $1.0 billion, Quebecor Media was able to
take advantage of favourable conditions on the debt markets. The
following financial operations were carried out by Quebecor Media as
part of this major transaction:
-- Issuance, on October 11, 2012, of US$850.0 million aggregate
principal amount of Senior Notes bearing interest at 5 3/4% and
maturing in 2023, and $500.0 million aggregate principal amount of
Senior Notes bearing interest at 6 5/8% and maturing in 2023, the
latter being one of the largest single-tranche high-yield offerings
ever completed in Canada;
-- Quebecor Media increased the size of the offering as a result of
oversubscription and favourable financing terms, which provided an
opportunity to extend the maturities of its credit instruments by
redeeming US$320.0 million in aggregate principal amount of its 7
3/4% Senior Notes issued in 2007 and maturing in 2016. This
transaction generated a loss on debt refinancing of approximately
$60.0 million (before income tax) to be recorded in the fourth
quarter of 2012.
Dividends
On November 12, 2012, the Board of Directors of Quebecor
declared a quarterly dividend of $0.05 per share on Class A
Multiple Voting Shares ("Class A shares") and Class B shares
payable on December 24, 2012 to shareholders of record at the close
of business on November 29, 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 9, 2012, the Corporation filed a normal course issuer
bid to purchase for cancellation a maximum of 980,357 Class A
shares, representing approximately 5% of the issued and outstanding
Class A shares, and a maximum of 4,351,276 Class B shares,
representing approximately 10% of the public float for Class B
shares as of July 31, 2012. Purchases can be made from August 13,
2012 to August 12, 2013 at prevailing market prices, on the open
market, through the facilities of the Toronto Stock Exchange. All
shares purchased under the bid have been or will be cancelled.
During the third quarter of 2012, the Corporation purchased and
cancelled 585,100 Class B shares for a total cash consideration of
$20.5 million. The excess of $16.1 million in the purchase price
over the carrying value of the repurchased Class B shares was
recorded as a reduction in retained earnings.
During the first nine months of 2012, the Corporation purchased
and cancelled 728,500 Class B shares for a total cash consideration
of $25.8 million. The excess of $20.3 million in the purchase price
over the carrying value of the repurchased Class B shares was
recorded as a reduction in retained earnings.
Detailed financial information
For a detailed analysis of Quebecor's third quarter 2012
results, please refer to the Management Discussion and Analysis and
consolidated financial statements of Quebecor, available on the
Corporation'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 its third
quarter 2012 results on November 13, 2012, at 11 a.m. EST. 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 November 13 to December 9, 2012 by dialling 1 877
293-8133, conference number 860735#, 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.
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 less than
www.sedar.comgreater than 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 November 13, 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
75.4% 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 telephony
and mobile telephony. 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 conventional television network in Quebec, a number
of specialty channels, and, through Sun Media Corporation, the
English-language SUN News 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 (Publications TVA Inc.), book publishing and
distribution (Sogides Group Inc., CEC Publishing Inc.), the
production, distribution and retailing of cultural products
(Archambault Group Inc., TVA Films), video game development
(BlooBuzz Studios, L.P.), DVD, Blu-ray disc and videogame rental
and retailing (Le SuperClub Videotron ltee), the printing and
distribution of community newspapers and flyers (Quebecor Media
Printing Inc., 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, impairment of goodwill and intangible assets, gain (loss) on
debt refinancing, and income taxes. 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. 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
continuing operating activities. 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 Quebecor's condensed consolidated
financial statements.
Table 2
Reconciliation of the operating income measure used in this press release to
the net income measure used in the condensed consolidated financial
statements
(in millions of Canadian dollars)
Three months ended Nine months ended
September 30 September 30
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2012 2011 2012 2011
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Operating income (loss):
Telecommunications $ 309.9 $ 275.4 $ 914.6 $ 804.1
News Media 23.5 29.1 76.5 103.1
Broadcasting 7.0 3.0 20.9 29.9
Leisure and
Entertainment 8.9 11.5 8.1 19.0
Interactive
Technologies and
Communications 0.4 3.2 6.4 5.4
Head Office 3.1 (2.5) 6.3 11.0
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352.8 319.7 1,032.8 972.5
Amortization (146.7) (131.0) (432.9) (374.0)
Financial expenses (76.9) (83.4) (239.2) (245.2)
Gain (loss) on valuation
and translation of
financial instruments 117.7 (34.4) 241.5 (27.9)
Restructuring of
operations, impairment
of assets and other
special items (39.7) (2.9) (28.8) (19.0)
Impairment of goodwill
and intangible assets (187.0) - (201.5) -
Gain (loss) on debt
refinancing - 2.7 (7.3) (6.6)
Income taxes (14.6) (21.4) (106.4) (81.2)
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Net income $ 5.6 $ 49.3 $ 258.2 $ 218.6
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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 gain (loss) on valuation and translation of financial
instruments, charge for restructuring of operations, impairment of
assets and other special items, impairment of goodwill and
intangible assets, and loss (gain) on debt refinancing, net of
income tax and net income (loss) attributable to non-controlling
interest. 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 condensed 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 condensed consolidated financial statements
(in millions of Canadian dollars)
Three months ended Nine months ended
September 30 September 30
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2012 2011 2012 2011
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Adjusted income from
continuing operations $ 52.1 $ 40.0 $ 140.1 $ 135.9
Gain (loss) on valuation and
translation of financial
instruments 117.7 (34.4) 241.5 (27.9)
Restructuring of operations,
impairment of assets and
other special items (39.7) (2.9) (28.8) (19.0)
Impairment of goodwill and
intangible assets (187.0) - (201.5) -
Gain (loss) on debt
refinancing - 2.7 (7.3) (6.6)
Income taxes related to
adjustments(1) 19.7 7.6 (6.8) 13.7
Net income attributable to
non-controlling interest
related to adjustments 55.8 13.1 21.3 19.5
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Net income attributable to
shareholders $ 18.6 $ 26.1 $ 158.5 $ 115.6
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(1) Includes impact of fluctuations in tax rates applicable to adjusted
items, either for statutory reasons or in connection with tax
transactions.
Average Monthly Revenue per User
ARPU is an industry metric that the Corporation uses to measure
its monthly cable television, Internet access, cable 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) Three months ended Nine months ended
(unaudited) September 30 September 30
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2012 2011 2012 2011
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Revenues
Telecommunications $ 659.2 $ 611.6 $ 1,956.8 $ 1,795.9
News Media 227.6 235.2 715.5 742.8
Broadcasting 99.0 89.3 332.2 313.9
Leisure and
Entertainment 73.0 73.8 203.0 206.7
Interactive
Technologies and
Communications 33.7 29.9 109.7 84.9
Inter-segment (33.4) (25.0) (107.7) (85.5)
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1,059.1 1,014.8 3,209.5 3,058.7
Cost of sales, selling
and administrative
expenses 706.3 695.1 2,176.7 2,086.2
Amortization 146.7 131.0 432.9 374.0
Financial expenses 76.9 83.4 239.2 245.2
(Gain) loss on valuation
and translation of
financial instruments (117.7) 34.4 (241.5) 27.9
Restructuring of
operations, impairment
of assets and other
special items 39.7 2.9 28.8 19.0
Impairment of goodwill
and intangible assets 187.0 - 201.5 -
(Gain) loss on debt
refinancing - (2.7) 7.3 6.6
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Income before income
taxes 20.2 70.7 364.6 299.8
Income taxes:
Current 10.4 0.2 36.2 (4.9)
Deferred 4.2 21.2 70.2 86.1
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14.6 21.4 106.4 81.2
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Net income $ 5.6 $ 49.3 $ 258.2 $ 218.6
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Attributable to:
Shareholders $ 18.6 $ 26.1 $ 158.5 $ 115.6
Non-controlling
interests (13.0) 23.2 99.7 103.0
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Earnings per share
attributable to
shareholders
Basic $ 0.30 $ 0.41 $ 2.50 $ 1.80
Diluted 0.30 0.40 2.49 1.77
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Weighted average number
of shares outstanding
(in millions) 63.1 63.9 63.4 64.2
Weighted average number
of diluted shares (in
millions) 63.2 64.5 63.5 64.8
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QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions of Canadian
dollars) Three months ended Nine months ended
(unaudited) September 30 September 30
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2012 2011 2012 2011
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Net income $ 5.6 $ 49.3 $ 258.2 $ 218.6
Other comprehensive income:
(Loss) gain on translation
of net investments in
foreign operations (2.9) 0.8 (3.7) 1.6
Cash flow hedges:
Gain on valuation of
derivative financial
instruments 5.8 19.4 31.2 13.4
Deferred income taxes 2.3 (10.0) 1.4 (7.1)
Defined benefit plans:
Net change in asset limit
or in minimum funding
liability - (0.1) - (0.3)
Deferred income taxes - - - 0.1
Reclassification to income:
Other comprehensive
income related to cash
flow hedges - 0.8 (3.3) 0.8
Deferred income taxes - (0.2) (1.2) (0.2)
----------------------------------------------
5.2 10.7 24.4 8.3
----------------------------------------------
Comprehensive income $ 10.8 $ 60.0 $ 282.6 $ 226.9
-----------------------------------------------
-----------------------------------------------
Attributable to:
Shareholders $ 21.5 $ 32.3 $ 171.9 $ 120.3
Non-controlling interests (10.7) 27.7 110.7 106.6
-----------------------------------------------
-----------------------------------------------
QUEBECOR INC. AND ITS SUBSIDIARIES
SEGMENTED INFORMATION
(in millions of Canadian
dollars) Three months ended Nine months ended
(unaudited) September 30 September 30
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2012 2011 2012 2011
----------------------------------------------------------------------------
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, impairment of
goodwill and intangible
assets, (gain) loss on
debt refinancing and
income taxes
Telecommunications $ 309.9 $ 275.4 $ 914.6 $ 804.1
News Media 23.5 29.1 76.5 103.1
Broadcasting 7.0 3.0 20.9 29.9
Leisure and
Entertainment 8.9 11.5 8.1 19.0
Interactive Technologies
and Communications 0.4 3.2 6.4 5.4
Head Office 3.1 (2.5) 6.3 11.0
--------------------------------------------------
$ 352.8 $ 319.7 $ 1,032.8 $ 972.5
--------------------------------------------------
--------------------------------------------------
Amortization
Telecommunications $ 123.2 $ 108.0 $ 359.9 $ 307.9
News Media 13.8 14.3 43.0 41.1
Broadcasting 5.5 4.4 16.1 12.8
Leisure and
Entertainment 2.4 2.4 7.5 6.8
Interactive Technologies
and Communications 1.0 0.9 3.8 2.5
Head Office 0.8 1.0 2.6 2.9
--------------------------------------------------
$ 146.7 $ 131.0 $ 432.9 $ 374.0
--------------------------------------------------
--------------------------------------------------
Additions to property,
plant and equipment
Telecommunications $ 174.5 $ 194.2 $ 519.5 $ 531.8
News Media 2.0 2.9 5.5 11.3
Broadcasting 5.8 7.1 17.9 22.5
Leisure and
Entertainment 1.8 2.4 3.6 4.0
Interactive Technologies
and Communications 0.8 0.5 3.0 3.7
Head Office 0.9 0.1 2.1 0.8
--------------------------------------------------
$ 185.8 $ 207.2 $ 551.6 $ 574.1
--------------------------------------------------
--------------------------------------------------
Additions to intangible
assets
Telecommunications $ 11.9 $ 17.7 $ 45.6 $ 49.4
News Media 3.1 2.7 9.2 8.1
Broadcasting 0.9 1.4 2.2 3.4
Leisure and
Entertainment 0.5 1.2 3.3 3.8
Inter-segment (0.4) - (1.4) -
--------------------------------------------------
$ 16.0 $ 23.0 $ 58.9 $ 64.7
--------------------------------------------------
--------------------------------------------------
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 income
----------------------------------------------------------------------------
Balance as of
December 31, 2010 $ 346.6 $ 0.9 $ 943.6 $ 13.7
Net income - - 115.6 -
Other comprehensive
income - - 0.1 4.6
Issuance of shares
of a subsidiary - - - -
Repurchase of Class
B shares (5.6) - (18.4) -
Dividends - - (9.6) -
----------------------------------------------------------------------------
Balance as of
September 30, 2011 341.0 0.9 1,031.3 18.3
Net income - - 85.4 -
Other comprehensive
loss - - (31.6) (9.7)
Repurchase of Class
B shares (1.5) - (4.7) -
Dividends - - (3.2) -
----------------------------------------------------------------------------
Balance as of
December 31, 2011 339.5 0.9 1,077.2 8.6
Net income - - 158.5 -
Other comprehensive
income - - - 13.4
Issuance of Class B
shares 3.6 1.5 - -
Repurchase of Class
B shares (5.5) - (20.3) -
Acquisition of non-
controlling
interests - (0.1) - -
Dividends - - (9.5) -
----------------------------------------------------------------------------
Balance as of
September 30, 2012 $ 337.6 $ 2.3 $ 1,205.9 $ 22.0
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Equity
attributable
to non-
controlling Total
interests equity
-------------------------------------------------
Balance as of
December 31, 2010 $ 1,346.9 $ 2,651.7
Net income 103.0 218.6
Other comprehensive
income 3.6 8.3
Issuance of shares
of a subsidiary 1.0 1.0
Repurchase of Class
B shares - (24.0)
Dividends (35.2) (44.8)
-------------------------------------------------
Balance as of
September 30, 2011 1,419.3 2,810.8
Net income 79.0 164.4
Other comprehensive
loss (42.6) (83.9)
Repurchase of Class
B shares - (6.2)
Dividends (11.3) (14.5)
-------------------------------------------------
Balance as of
December 31, 2011 1,444.4 2,870.6
Net income 99.7 258.2
Other comprehensive
income 11.0 24.4
Issuance of Class B
shares - 5.1
Repurchase of Class
B shares - (25.8)
Acquisition of non-
controlling
interests 0.1 -
Dividends (34.1) (43.6)
-------------------------------------------------
Balance as of
September 30, 2012 $ 1,521.1 $ 3,088.9
-------------------------------------------------
-------------------------------------------------
QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions of Canadian
dollars) Three months ended Nine months ended
(unaudited) September 30 September 30
----------------------------------------------------------------------------
2012 2011 2012 2011
----------------------------------------------------------------------------
Cash flows related to
operating activities
Net income $ 5.6 $ 49.3 $ 258.2 $ 218.6
Adjustments for:
Amortization of
property, plant and
equipment 112.6 99.5 331.2 285.4
Amortization of
intangible assets 34.1 31.5 101.7 88.6
(Gain) loss on
valuation and
translation of
financial
instruments (117.7) 34.4 (241.5) 27.9
Gain on business
disposals - - (12.9) -
Impairment of assets 7.5 0.3 7.5 1.5
Impairment of
goodwill and
intangible assets 187.0 - 201.5 -
(Gain) loss on debt
refinancing - (2.7) 7.3 6.6
Amortization of
financing costs and
long-term debt
discount 3.6 3.3 10.9 9.2
Deferred income
taxes 4.2 21.2 70.2 86.1
Other (0.6) 2.3 1.1 0.9
----------------------------------------------------
236.3 239.1 735.2 724.8
Net change in non-cash
balances related to
operating activities 142.3 141.1 108.8 (32.4)
----------------------------------------------------
Cash flows provided by
operating activities 378.6 380.2 844.0 692.4
----------------------------------------------------
Cash flows related to
investing activities
Business acquisitions,
net of cash and cash
equivalents - (5.6) (0.8) (55.7)
Business disposals,
net of cash and cash
equivalents 0.8 - 18.7 -
Additions to property,
plant and equipment (185.8) (207.2) (551.6) (574.1)
Additions to
intangible assets (16.0) (23.0) (58.9) (64.7)
Proceeds from
disposals of assets 3.7 2.5 6.1 7.5
Other 0.4 0.4 (0.6) 3.2
----------------------------------------------------
Cash flows used in
investing activities (196.9) (232.9) (587.1) (683.8)
----------------------------------------------------
Cash flows related to
financing activities
Net change in bank
indebtedness (4.8) 1.9 (2.7) (1.0)
Net change under
revolving credit
facilities 10.5 6.9 (12.4) (4.0)
Issuance of long-term
debt, net of
financing fees 34.9 294.9 822.5 614.8
Repayment of long-term
debt (40.3) (254.9) (749.3) (481.1)
Settlement of hedging
contracts 3.6 (54.8) (40.5) (160.2)
Issuance of Class B
shares - - 3.6 -
Repurchase of Class B
shares (20.5) (24.0) (25.8) (24.0)
Dividends (3.2) (6.4) (9.5) (9.6)
Dividends paid to non-
controlling interests (11.4) (11.4) (34.1) (35.2)
Other - 0.1 - 1.1
----------------------------------------------------
Cash flows used in
financing activities (31.2) (47.7) (48.2) (99.2)
----------------------------------------------------
Net change in cash and
cash equivalents 150.5 99.6 208.7 (90.6)
Effect of exchange rate
changes on cash and
cash equivalents
denominated in foreign
currencies (0.3) - (0.5) 0.3
Cash and cash
equivalents at
beginning of period 204.4 52.8 146.4 242.7
----------------------------------------------------
Cash and cash
equivalents at end of
period $ 354.6 $ 152.4 $ 354.6 $ 152.4
----------------------------------------------------
----------------------------------------------------
Cash and cash
equivalents consist of
Cash $ 29.7 $ 40.4 $ 29.7 $ 40.4
Cash equivalents 324.9 112.0 324.9 112.0
----------------------------------------------------
$ 354.6 $ 152.4 $ 354.6 $ 152.4
----------------------------------------------------
----------------------------------------------------
Interest and taxes
reflected as operating
activities
Cash interest payments $ 17.2 $ 22.9 $ 168.3 $ 186.1
Cash income tax
payments (net of
refunds) (1.5) (3.7) 6.0 30.3
----------------------------------------------------
QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions of Canadian dollars)
(unaudited) September 30 December 31
----------------------------------------------------------------------------
2012 2011
----------------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $ 354.6 $ 146.4
Accounts receivable 547.9 603.7
Income taxes 12.5 29.0
Inventories 260.3 283.6
Prepaid expenses 41.4 31.3
------------------------------
1,216.7 1,094.0
Non-current assets
Property, plant and equipment 3,352.8 3,211.1
Intangible assets 953.9 1,041.0
Goodwill 3,370.0 3,543.8
Derivative financial instruments 21.1 34.9
Deferred income taxes 27.7 20.6
Other assets 90.1 93.4
------------------------------
7,815.6 7,944.8
------------------------------
Total assets $ 9,032.3 $ 9,038.8
------------------------------
------------------------------
Liabilities and equity
Current liabilities
Bank indebtedness $ 1.5 $ 4.2
Accounts payable and accrued charges 710.5 776.5
Provisions 51.4 33.7
Deferred revenue 297.3 295.7
Income taxes 15.4 2.7
Derivative financial instruments 29.0 -
Current portion of long-term debt 176.2 114.5
------------------------------
1,281.3 1,227.3
Non-current liabilities
Long-term debt 3,369.4 3,688.3
Derivative financial instruments 302.0 315.4
Other liabilities 321.0 344.7
Deferred income taxes 669.7 592.5
------------------------------
4,662.1 4,940.9
Equity
Capital stock 337.6 339.5
Contributed surplus 2.3 0.9
Retained earnings 1,205.9 1,077.2
Accumulated other comprehensive income 22.0 8.6
------------------------------
Equity attributable to shareholders 1,567.8 1,426.2
Non-controlling interests 1,521.1 1,444.4
------------------------------
3,088.9 2,870.6
------------------------------
Total liabilities and equity $ 9,032.3 $ 9,038.8
------------------------------
------------------------------
Contacts: Jean-Francois Pruneau Chief Financial Officer Quebecor
Inc. and Quebecor Media Inc.jean-francois.pruneau@quebecor.com 514
380-4144 Martin Tremblay Vice President, Public Affairs Quebecor
Media Inc.martin.tremblay@quebecor.com 514 380-1985
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