Quebecor Inc.
TSX : QBR.A
TSX : QBR.B

Quebecor Inc.

August 05, 2008 08:01 ET

Quebecor Inc. Reports Consolidated Results for Second Quarter 2008

MONTREAL, QUEBEC--(Marketwire - Aug. 5, 2008) - Quebecor Inc. (TSX:QBR.A)(TSX:QBR.B) consolidates the financial results of its Quebecor Media Inc. subsidiary, in which it holds a 54.7% interest.

HIGHLIGHTS SINCE END OF FIRST QUARTER 2008

- Quebecor's second quarter 2008 revenues amount to $942.3 million, up $127.0 million (15.6%) from second quarter 2007.

- Operating income: up $46.3 million (20.1%) to $277.0 million.

- Income from continuing operations: up $7.4 million ($0.12 per basic share) or 14.8% to $57.3 million ($0.89 per basic share), compared with $49.9 million ($0.77 per basic share) in the same period of 2007.

- Adjusted income from continuing operations (excluding gains and losses on valuation and translation of financial instruments and the reserve for restructuring of operations): up $3.9 million ($0.07 per basic share) or 10.4% to $41.4 million ($0.65 per basic share) in second quarter 2008.

- Cable segment: operating income up $36.5 million (25.1%) . Quarter-over-quarter net customer growth: +51,300 for cable telephone service, +23,600 for cable Internet access, +7,800 for all cable television services combined (including 27,700 customer increase for illico Digital TV), +4,700 activated phones for wireless telephone service.

- Spectrum auction for third generation Advanced Wireless Services (AWS): Quebecor Media is successful bidder on 17 operating licences covering areas including all of Quebec for $554.6 million.

- Videotron Ltd. issues US$455.0 million aggregate principal amount of Senior Notes.

- Videotron amends senior secured credit facility to raise commitments from $450.0 million to $575.0 million and extend maturity date to April 2012.

- Agreement in principle on July 2, 2008 ends labour dispute at Le Journal de Quebec.

Quebecor's consolidated revenues from continuing operations increased by $127.0 million (15.6%) to $942.3 million in the second quarter of 2008. The most significant increases were in the following segments:

- Cable (up $75.6 million or 20.3% of segment revenues) reflecting continued customer growth for all services;

- Newspapers ($65.7 million or 27.2%) due primarily to the impact of the acquisition of Osprey Media Income Fund in August 2007;

- Broadcasting ($4.5 million or 4.2%).

Quebecor's operating income from continuing operations rose $46.3 million (20.1%) to $277.0 million, with increases in the following segments:

- Cable (up $36.5 million or 25.1% of segment operating income), due mainly to customer growth;

- Newspapers ($17.9 million or 32.7%) due primarily to the acquisition of Osprey Media.

"Once again, Quebecor's very positive results were spearheaded by robust numbers in the Cable segment, which continued to log strong customer growth for all its services," said Pierre Karl Peladeau, President and Chief Executive Officer of Quebecor Inc. "At the conclusion of the spectrum auction for Advanced Wireless Services, Quebecor Media held standing high bids on 17 operating licences, covering all of Quebec and part of the Toronto area. This is a key strategic development for Quebecor Media, since consumer demand for Advanced Wireless Services is expected to increase substantially in the coming years. With the addition of this product, Quebecor is poised to embark on a new round of growth by offering its Cable segment customers a still more complete and competitive array of cable and telecommunications services."



Quebecor Inc.
Second quarter financial highlights - 2004 to 2008
(in millions of Canadian dollars)
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2008 2007 2006 2005 2004
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Revenues $942.3 $815.3 $739.9 $669.1 $613.6
Operating income 277.0 230.7 207.2 194.5 191.3
Income from continuing operations(i) 57.3 49.9 17.7 60.8 3.9
Adjusted income from continuing
operations(i)(ii) 41.4 37.5 30.5 16.9 11.2
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(i) See "Quebecor Inc. - Discontinued operations" below.
(ii) See "Adjusted income from continuing operations" below.

- Quebecor's income from continuing operations was $57.3 million ($0.89 per
basic share) in the second quarter of 2008, compared with $49.9 million
($0.77 per basic share) in the second quarter of 2007. The increase of $7.4
million ($0.12 per basic share) was due primarily to:

- $46.3 million increase in operating income;

- favourable variation of $16.9 million in gains and losses on
valuation and translation of financial instruments, resulting
primarily from $16.5 million favourable change in accounting
estimates of the fair value of derivative financial instruments,
reflecting market developments and recent accounting guidelines.

Partially offset by:

- $24.1 million increase in financial expenses, mainly as a result of
higher indebtedness;

- $15.7 million increase in income tax expense and $11.7 million
increase in non-controlling interest.

Adjusted income from continuing operations

- Adjusted income from continuing operations equals income from continuing
operations excluding gains and losses on valuation and translation of
financial instruments and the reserve for restructuring of operations.
Adjusted income from continuing operations was $41.4 million in the
second quarter of 2008 ($0.65 per basic share), compared with $37.5
million ($0.58 per basic share) in the same period of 2007, an increase
of $3.9 million ($0.07 per basic share), or 10.4% .

Year-to-date

- Quebecor's consolidated revenues from continuing operations were $1.82
billion, an increase of $253.0 million (16.2%) . The most significant
revenue increases were in Cable ($147.4 million or 20.2% of segment
revenues), Newspapers ($112.8 million or 24.4%) and Broadcasting ($17.7
million or 8.9%), essentially due to the same factors as those noted
above in the discussion of the second quarter results.

- Quebecor's operating income from continuing operations was $533.4
million, an increase of $119.1 million (28.7%) . The largest increases
were in Cable ($83.4 million or 28.3% of segment operating income),
Newspapers ($29.2 million or 32.7%) and Broadcasting ($8.3 million or
33.5%) .

- Quebecor's income from continuing operations was $102.1 million ($1.59
per basic share) in the first half of 2008, compared with $53.1 million
($0.82 per basic share) in the same period of 2007. The increase of
$49.0 million ($0.77 per basic share) was mainly due to:

- $119.1 million increase in operating income;

- favourable variation of $46.5 million in gains and losses on valuation
and translation of financial instruments, resulting primarily from
$16.5 million favourable change in accounting estimates of the fair
value of derivative financial instruments, reflecting market
developments and recent accounting guidelines, and favourable
variations in the fair value of exchangeable debentures
($13.7 million) and of embedded derivatives and other instruments
($16.3 million).

Partially offset by:

- $39.7 million increase in financial expenses, mainly as a result of
higher indebtedness;

- $48.2 million increase in income tax expense and $21.6 million increase
in non-controlling interest.

Adjusted income from continuing operations

- Adjusted income from continuing operations equals income from continuing
operations excluding gains and losses on valuation and translation of
financial instruments and the reserve for restructuring of operations.
Adjusted income from continuing operations was $75.7 million in the first
half of 2008 ($1.19 per basic share), compared with $54.1 million ($0.84
per basic share) in the same period of 2007, an increase of $21.6 million
($0.35 per basic share) or 40.0% .


Dividend

On August 4, 2008, the Board of Directors of Quebecor declared a quarterly dividend of $0.05 per share on Class A Multiple Voting Shares and Class B Subordinate Voting Shares, payable on September 15, 2008 to shareholders of record at the close of business on August 21, 2008.

Quebecor Inc. - Discontinued operations

On January 21, 2008, Quebecor World Inc. and its U.S. subsidiaries were granted creditor protection under the Companies' Creditors Arrangement Act in Canada. On the same date, its U.S. subsidiaries also filed a petition under Chapter 11 of the United States Bankruptcy Code. Since that date, in accordance with generally accepted accounting principles, Quebecor's investment in Quebecor World has no longer been consolidated, Quebecor's investment in Quebecor World has been valued at zero, and Quebecor World's activities are considered discontinued operations for the purposes of Quebecor's consolidated financial statements.

Quebecor World's operating results have been restated and are reported in the financial statements under the item "Income (loss) from discontinued operations," and the cash flows provided by these operations have been restated and are reported in the financial statements under the item "Cash flows (used in) provided by discontinued operations."

The results of discontinued operations include the $17.7 million net loss (net of non-controlling interest) recognized by Quebecor World for the period of January 1 to 21, 2008, compared with a net loss of $27.4 million (net of non-controlling interest) reported in the first half of 2007.

At January 21, 2008, the Company's consolidated balance sheet included a net asset deficiency of $761.3 million, representing the excess of the liabilities and non-controlling interest related to Quebecor World over Quebecor World's assets. At January 21, 2008, the Company also had net losses accumulated in other comprehensive income in the amount of $326.5 million, net of income tax, consisting primarily in accumulated currency translation losses in connection with the net investment in Quebecor World. Therefore, the results of discontinued operations for the first quarter of 2008 also include a net gain of $399.7 million in respect of the difference between the reversal of the net asset deficiency and the reclassification in the results of the net losses accumulated in other comprehensive income as of the deconsolidation date, January 21, 2008, net of the $35.1 million decrease in future income tax assets related to the investment in Quebecor World.

These procedures will have no material impact on the operations of Quebecor Media.

Detailed financial information

For a detailed analysis of Quebecor Inc.'s results for the second quarter of 2008, please refer to the Management Discussion and Analysis and consolidated financial statements of Quebecor Inc., available on the Company's website at http://www.quebecor.com/InvestorCenter/QIQuarterlyReports.aspx or from the SEDAR filing service at http://www.sedar.com.

Conference call for investors and webcast

Quebecor Inc. will hold a conference call to discuss the second quarter 2008 results of Quebecor and Quebecor Media on August 5, 2008, at 11:00 a.m. EDT. There will be a question period reserved for financial analysts. To access the conference call, please dial 1 877 293-8052, access code 7746798#. A tape recording of the call will be available from August 5 through September 5, 2008, by dialling 1 877 293-8133, access code 668008#. The conference call will also be broadcast live on the Quebecor Inc. website at www.quebecor.com/InvestorCenter/QIConferenceCall.aspx. It is advisable to ensure the appropriate software is installed before accessing the call. Instructions and links to free player downloads are available at the Internet address shown above.

Forward-looking statements

The statements in this press release that are not historical facts are forward-looking statements and are subject to significant known and unknown risks, uncertainties and assumptions which could cause Quebecor Inc.'s actual results for future periods to differ materially from those set forth in the forward-looking statements. Forward-looking statements may be identified by the use of the conditional or by forward-looking terminology such as the terms "plans," "expects," "may," "anticipates," "intends," "estimates," "projects," "seeks," "believes" or similar terms, variations of such terms or the negative of such terms. Certain factors that may cause actual results to differ from current expectations include seasonality (including seasonal fluctuations in customer orders), operating risk (including fluctuations in demand for Quebecor's products and pricing actions by competitors), insurance risk, risks associated with capital investment (including risks related to technological development and equipment availability and breakdown), environmental risks, risks associated with labour agreements, risks associated with commodities and energy prices (including fluctuations in the cost and availability of raw materials), credit risk, financial risks, debt risks, risks related to interest rate fluctuations, foreign exchange risks, risks associated with government acts and regulations, risks related to changes in tax legislation, and changes in the general political and economic environment. Investors and others are cautioned that the foregoing list of factors that may affect future results is not exhaustive and that undue reliance should not be placed on any forward-looking statements. For more information on the risks, uncertainties and assumptions that could cause Quebecor's actual results to differ from current expectations, please refer to Quebecor Inc.'s public filings available at www.sedar.com and www.quebecor.com including, in particular, the "Risks and Uncertainties" section in Quebecor Inc.'s Management Discussion and Analysis for the year ended December 31, 2007.

The forward-looking statements in this press release reflect Quebecor's forecasts as of August 5, 2008, and are subject to change after that date. Quebecor expressly disclaims any obligation or intention to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.

The Company

Quebecor Inc. (TSX:QBR.A)(TSX:QBR.B) is a holding company with a 54.7% interest in Quebecor Media Inc, one of Canada's largest media groups. Quebecor Media owns operating companies in numerous media-related businesses: Videotron Ltd., the largest cable operator in Quebec and a major Internet Service Provider and provider of telephone and business telecommunications services; Sun Media Corporation, the largest publisher of newspapers in Canada; TVA Group Inc., operator of the largest French-language over-the-air television network in Quebec, a number of specialty channels, and the English-language over-the-air station Sun TV; Canoe Inc., operator of a network of English- and French-language Internet properties in Canada; Nurun Inc., a major interactive technologies and communications agency with offices in Canada, the United States, Europe and Asia; magazine publisher TVA Publishing Inc.; book publisher and distributor Quebecor Media Book Group Inc.; Archambault Group Inc. and TVA Films, companies engaged in the production, distribution and retailing of cultural products; Le SuperClub Videotron ltee, a DVD and console game rental and retail chain; and Quebecor MediaPages, publisher of print and online directories.



SEGMENTED ANALYSIS
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Quebecor Media Inc.
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Summary of results
(in millions of Canadian dollars)
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Three Months Six months
ended ended
June 30 June 30
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2008 2007 2008 2007
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Revenues $942.3 $815.3 $1,819.4 $1,566.4
Operating income 281.8 234.9 534.2 423.1
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Second quarter revenues and operating income - 2004 to 2008
(in millions of Canadian dollars)
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2008 2007 2006 2005 2004
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Revenues $942.3 $815.3 $739.9 $669.1 $613.6
Operating income 281.8 234.9 207.2 193.5 192.0
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Cable segment
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Second quarter 2008

Revenues: $447.5 million, an increase of $75.6 million (20.3%).

- Combined revenues from all cable television services increased
$21.6 million (11.9%) to $203.6 million due to the impact of customer
base growth, increases in some rates, the favourable impact of the
increase in the illico Digital TV customer base on revenues from
illico on Demand, pay TV, pay-per-view and set-top boxes, and
subscriber growth for the high definition package.

- Revenues from the illico Digital TV service, excluding related
services, increased $23.1 million (27.8%) to $106.3 million.
The performance of illico Digital TV more than compensated for
decreased revenues from analog cable television services.

- Revenues from Internet access services increased $21.9 million
(21.4%) to $124.2 million. The improvement was mainly due to customer
growth, as well as heavier consumption by existing customers and rate
increases.

- Revenues from cable telephone service increased $25.7 million (58.1%)
to $69.9 million, primarily because of customer growth as well as
higher long-distance revenues.

- Revenues from wireless telephone service increased $3.9 million to
$7.9 million due to customer growth.

- Revenues of Le SuperClub Videotron ltee increased $0.3 million (2.4%)
to $13.0 million, primarily because of higher retail sales, rental
revenues and royalties, partially offset by the unfavourable
impact of the sale of the StarStruck Entertainment chain.

Average monthly revenue per user: $81.59, compared with $69.95 in the same
quarter of 2007, an increase of $11.64 (16.6%).

Customer statistics - Net customer growth in second quarter 2008:

- cable telephone service: +51,300 (+55,000 in 2007);

- cable Internet access: +23,600 (+26,000 in 2007);

- all cable television services combined (i.e., net increase for analog
service and illico Digital TV): +7,800 (+1,800 in 2007), including
27,700 more customers for illico Digital TV (+26,200 in 2007);

- wireless telephone service: +4,700 activated phones (+10,400 in 2007).

Cable segment end-of-quarter customer numbers since end of December 2006
(in thousands of customers)

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June 08 March 08 Dec. 07 Sept. 07 June 07 March 07 Dec. 06
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Cable television:
Analog 829.5 849.4 869.9 896.0 905.4 929.8 948.8
Digital 830.5 802.8 768.2 720.3 679.1 652.9 623.6
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Total cable
television 1,660.0 1,652.2 1,638.1 1,616.3 1,584.5 1,582.7 1,572.4
Cable Internet 988.9 965.3 933.0 898.9 853.9 827.9 792.0
Cable telephone 742.9 691.6 636.4 573.8 503.7 448.7 397.8
Wireless
telephone 54.6 49.9 45.1 38.7 30.7 20.3 11.8
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Operating income: $182.2 million in the second quarter of 2008, an increase
of $36.5 million (25.1%).

- The increase was due primarily to:

- customer growth for all services;

- increases in some rates and in volumes;

- $13.0 million favourable variance in expenses related to Quebecor
Media's stock option plan, which are charged to its operating segments
as a direct charge to reflect participation by segment managers in the
plan and management fees.

Partially offset by:

- unfavourable variance of $16.7 million related to recognition in the
second quarter of 2008 of a $19.5 million charge for CRTC Part II
licence fees for the period of September 1, 2006 to June 30, 2008
following the Federal Court of Appeal decision of April 29, 2008.

- Excluding the favourable variation in the stock option expense, and if
the figures for prior periods are restated to reflect the Part II
licence fee adjustment, the segment's operating income increased 25.2%
in the second quarter of 2008, compared with 30.5% in the same quarter
of 2007.

Year-to-date

Revenues: $878.1 million, an increase of $147.4 million (20.2%)
essentially due to the same factors as those noted above in the
discussion of second quarter results.

Customer statistics -- Net customer growth in first half of 2008:

- Cable telephone service: +106,500 (+105,900 in 2007);

- Cable Internet access: +55,900 (+61,900 in 2007);

- All cable television services combined (i.e., net increase for analog
service and illico Digital TV): +21,900 (+12,100 in 2007), including
62,300 more customers for illico Digital TV (+55,500 in 2007);

- Wireless telephone service: +9,500 activated phones (+18,900 in 2007).

Operating income: $378.1 million, an increase of $83.4 million (28.3%).

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Newspapers segment
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Second quarter 2008

Revenues: $307.5 million, an increase of $65.7 million (27.2%).

- The increase was mainly due to the impact of the acquisition of Osprey
Media ($57.0 million), which closed in August 2007.

- Excluding the impact of that acquisition, combined revenues from
commercial printing and other sources increased 63.1%, advertising
revenues increased 1.5% and circulation revenues decreased 6.3%.

- The revenues of the urban dailies decreased 0.7% in the second quarter of
2008; excluding the acquisition of Osprey Media, the revenues of the
community newspapers increased 2.9%.

- In the urban dailies group, the revenues of the free dailies increased
34.6% due to strong results posted by the Vancouver, Montreal, Calgary
and Edmonton dailies.

Operating income: $72.6 million, an increase of $17.9 million (32.7%).

- The increase was due primarily to:

- impact of the acquisition of Osprey Media ($14.5 million);

- $3.7 million favourable impact of charges related to Quebecor Media's
stock option plan;

- lower newsprint costs.

Partially offset by:

- impact of the decrease in Sun Media Corporation's revenues, on a
comparable basis;

- expenditures related to the start-up of Quebecor MediaPages.

- The combined operating losses of the free dailies decreased 32.6% in the
second quarter of 2008.

Year-to-date

Revenues: $574.9 million, an increase of $112.8 million (24.4%) due mainly
to the acquisition of Osprey Media ($107.1 million), which closed in August
2007.

Operating income: $118.4 million, an increase of $29.2 million (32.7%).

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Broadcasting segment
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Second quarter 2008

Revenues: $111.0 million, an increase of $4.5 million (4.2%).

- Revenues from broadcasting operations increased $4.8 million, mainly
because of:

- higher advertising and other revenues at the TVA Network;

- higher subscription revenues and advertising revenues at the specialty
channels (Mystere, ARGENT, Prise 2, LCN, mentv, Mystery and Les idees
de ma maison).

- Distribution revenues decreased $0.8 million, mainly as a result of a
decrease in video revenues in comparison with the same period of 2007.

- Publishing revenues were flat in comparison with the same period of 2007.

Operating income: $21.7 million, a decrease of $0.4 million (-1.8%).

- Operating income from broadcasting operations decreased $1.4 million,
mainly because of:

- unfavourable variance of $4.9 million related to recognition in the
second quarter of 2008 of a $5.7 million charge for CRTC Part II
licence fees for the period of September 1, 2006 to June 30, 2008
following the Federal Court of Appeal decision of April 29, 2008;

- higher operating costs at the specialty channels;

- higher production costs at the TVA Network.

Partially offset by:

- favourable impact of increased revenues at the general-interest and
specialty channels;

- decreased selling and administrative expenses at the TVA Network.

- Operating income from distribution operations was flat in comparison with
the same period of 2007.

- Operating income from publishing operations increased by $1.1 million,
mainly as a result of reductions in advertising, marketing and
distribution expenses.

Year-to-date

Revenues: $217.5 million, an increase of $17.7 million (8.9%).

Operating income: $33.1 million, an increase of $8.3 million (33.5%).

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Leisure and Entertainment segment
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Second quarter 2008

Revenues: $63.7 million, a decrease of $18.0 million (-22.0%).

- 27.1% decrease in revenues at Quebecor Media Book Group Inc., due largely
to the loss of distribution contracts with two publishing houses and
decreased sales in the academic segment.

- 18.9% decrease in revenues at Archambault Group Inc., mainly because of
fewer CDs released and distributed and lower retail sales of music.

Operating income: $2.2 million, a decrease of $5.6 million (-71.8%)
compared with the second quarter of 2007 due primarily to the impact of
the revenue decrease.

Year-to-date

Revenues: $126.3 million, a decrease of $20.5 million (-14.0%).

Operating income: $0.6 million, a decrease of $7.0 million (-92.1%).

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Interactive Technologies and Communications segment
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Second quarter 2008

Revenues: $23.4 million, an increase of $1.5 million (6.8%).

- The increase was mainly due to:

- impact of increased volumes from customers in Europe, particularly
France, as well as in Asia, which was partially offset by a decrease in
volume from governmental organizations in Quebec.

Operating income: $1.8 million, an increase of $0.9 million (100.0%) due
primarily to the higher revenues and higher operating margins in Canada and
France.

Year-to-date

Revenues: $44.0 million, an increase of $1.1 million (2.6%).

Operating income: $1.1 million, a decrease of $0.3 million (-21.4%).

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Internet/Portals segment
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Second quarter 2008

Revenues: $13.2 million, an increase of $1.5 million (12.8%).

- 15.2% increase in revenues at special-interest portals, primarily
attributable to revenue growth at the autonet.ca site resulting mainly
from the acquisition of ASL Ltd. and higher revenues at the jobboom.com
site.

- 8.7% increase in revenues at the general-interest portals, due
essentially to new websites.

Operating income: $1.1 million, a decrease of $0.3 million (-21.4%) due
mainly to the impact of the cost of introducing a new business development
strategy and investment in new products.

Year-to-date

Revenues: $25.2 million, an increase of $2.1 million (9.1%).

Operating income: $1.3 million, a decrease of $1.8 million (-58.1%).

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Financing activities
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On April 15, 2008, Videotron issued US$455.0 million aggregate principal amount of Senior Notes for net proceeds of $449.3 million before financing expenses.

On April 8, 2008, Videotron amended its senior secured credit facility to increase commitments under the facility from $450.0 million to $575.0 million and extend the maturity date to April 2012. Videotron may further increase commitments under the facility by an additional $75.0 million subject to certain conditions, bringing the total to $650.0 million.

Quebecor Media made cash deposits in trust totalling $217.9 million in connection with the 3G spectrum auction.

DEFINITIONS

Operating income

In its analysis of operating results, the Company defines operating income or loss, as reconciled to net income under Canadian GAAP, as net income before amortization, financial expenses, gain (loss) on valuation and translation of financial instruments, reserve for restructuring of operations, income tax, non-controlling interest and the results of discontinued operations. Operating income as defined above is not a measure of results that is consistent with Canadian GAAP. It is not intended to be regarded as an alternative to other financial operating performance measures or to the statement of cash flows as a measure of liquidity. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with Canadian GAAP. Management believes that operating income is a meaningful measure of performance. The Company uses operating income in order to assess the performance of its investment in Quebecor Media. The Company's management and Board of Directors use this measure in evaluating its consolidated results as well as the results of the Company's operating segments. This measure eliminates the significant level of non-cash depreciation of tangible assets and amortization of certain intangible assets, and is unaffected by the capital structure or investment activities of the Company and its segments. Operating income is also relevant because it is a significant component of the Company's annual incentive compensation programs. A limitation of this measure, however, is that it does not reflect the periodic costs of capitalized tangible and intangible assets used in generating revenues in the Company's segments. The Company also uses other measures that do reflect such costs, such as cash flows from segment operations and free cash flows from operations. In addition, measures like operating income are commonly used by the investment community to analyze and compare the performance of companies in the industries in which the Company is engaged. The Company's definition of operating income may not be the same as similarly titled measures reported by other companies. The following table reconciles Quebecor's operating income with the closest Canadian GAAP measure.

Reconciliation of the operating income measure used in this report to the net income measure used in the consolidated financial statements



(in millions of Canadian dollars)
Three months ended Six months ended
June 30 June 30
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2008 2007 2008 2007
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Operating income:
Cable $ 182.2 $ 145.7 $ 378.1 $ 294.7
Newspapers 72.6 54.7 118.4 89.2
Broadcasting 21.7 22.1 33.1 24.8
Leisure and Entertainment 2.2 7.8 0.6 7.6
Interactive Technologies and
Communications 1.8 0.9 1.1 1.4
Internet/Portals 1.1 1.4 1.3 3.1
Head office (4.6) (1.9) 0.8 (6.5)
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277.0 230.7 533.4 414.3
Amortization (80.1) (72.0) (158.4) (142.1)
Financial expenses (79.5) (55.4) (152.4) (112.7)
Gain (loss) on valuation and
translation of financial
instruments 25.6 8.7 39.2 (7.3)
Reserve for restructuring of
operations (1.3) (5.1) (2.9) (12.1)
Income tax (26.2) (10.5) (70.3) (22.1)
Non-controlling interest (58.2) (46.5) (86.5) (64.9)
(Loss) income from discontinued
operations - (6.7) 383.3 (24.5)
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Net income $ 57.3 $ 43.2 $ 485.4 $ 28.6
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Average Monthly Revenue per User

Average monthly revenue per user (ARPU) is an industry metric that the
Company uses to measure its average cable, Internet and telephony revenues
per month per basic cable customer. ARPU is not a measurement that is
consistent with Canadian GAAP, and the Company's definition and calculation
of ARPU may not be the same as identically titled measurements reported by
other companies. The Company calculates ARPU by dividing its combined cable
television, Internet access and telephony revenues by the average number of
its basic cable customers during the applicable period, and then dividing
the resulting amount by the number of months in the applicable period.

QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

(in millions of Canadian dollars, except for earnings per share data)
(unaudited)

Three months Six months
ended June 30 ended June 30
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2008 2007 2008 2007
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REVENUES

Cable $447.5 $371.9 $878.1 $730.7
Newspapers 307.5 241.8 574.9 462.1
Broadcasting 111.0 106.5 217.5 199.8
Leisure and Entertainment 63.7 81.7 126.3 146.8
Interactive Technologies
and Communications 23.4 21.9 44.0 42.9
Internet/Portals 13.2 11.7 25.2 23.1
Head office and
inter-segment (24.0) (20.2) (46.6) (39.0)
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942.3 815.3 1,819.4 1,566.4
Cost of sales and selling
and administrative
expenses 665.3 584.6 1,286.0 1,152.1
Amortization 80.1 72.0 158.4 142.1
Financial expenses 79.5 55.4 152.4 112.7
(Gain) loss on valuation
and translation of
financial instruments (25.6) (8.7) (39.2) 7.3
Reserve for restructuring
of operations 1.3 5.1 2.9 12.1
-----------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND
NON-CONTROLLING INTEREST 141.7 106.9 258.9 140.1

Income taxes:
Current 3.4 (0.4) 2.3 (2.3)
Future 22.8 10.9 68.0 24.4
-----------------------------------------------------------------------
26.2 10.5 70.3 22.1
-----------------------------------------------------------------------
115.5 96.4 188.6 118.0
Non-controlling interest (58.2) (46.5) (86.5) (64.9)
-----------------------------------------------------------------------
INCOME FROM CONTINUING
OPERATIONS 57.3 49.9 102.1 53.1

Income (loss) from
discontinued operations - (6.7) 383.3 (24.5)
-----------------------------------------------------------------------
NET INCOME $57.3 $43.2 $485.4 $28.6
-----------------------------------------------------------------------
-----------------------------------------------------------------------

EARNINGS PER SHARE
Basic
From continuing operations $0.89 $0.77 $1.59 $0.82
From discontinued operations - (0.10) 5.96 (0.38)
Net income 0.89 0.67 7.55 0.44
Diluted
From continuing operations 0.88 0.76 1.58 0.81
From discontinued operations - (0.10) 5.96 (0.38)
Net income 0.88 0.66 7.54 0.43
-----------------------------------------------------------------------
-----------------------------------------------------------------------

Weighted average number of shares
outstanding (in millions) 64.3 64.3 64.3 64.3
-----------------------------------------------------------------------
-----------------------------------------------------------------------

Weighted average number of diluted
shares (in millions) 64.4 64.7 64.4 64.7
-----------------------------------------------------------------------
-----------------------------------------------------------------------




QUEBECOR INC. AND ITS SUBSIDIARIES
SEGMENTED INFORMATION

(in millions of Canadian dollars)
(unaudited)

Three months Six months
ended June 30 ended June 30
-----------------------------------------------------------------------
-----------------------------------------------------------------------
2008 2007 2008 2007
-----------------------------------------------------------------------

Income from continuing operations
before amortization, financial
expenses, (gain) loss on valuation
and translation of financial
instruments, reserve for
restructuring of operations,
income taxes and non-controlling
interest
Cable $182.2 $145.7 $378.1 $294.7
Newspapers 72.6 54.7 118.4 89.2
Broadcasting 21.7 22.1 33.1 24.8
Leisure and Entertainment 2.2 7.8 0.6 7.6
Interactive Technologies and
Communications 1.8 0.9 1.1 1.4
Internet/Portals 1.1 1.4 1.3 3.1
Head office (4.6) (1.9) 0.8 (6.5)
-----------------------------------------------------------------------
$277.0 $230.7 $533.4 $414.3
-----------------------------------------------------------------------
-----------------------------------------------------------------------

Amortization
Cable $57.0 $54.9 $113.5 $108.9
Newspapers 15.7 10.2 30.4 19.6
Broadcasting 3.5 3.4 6.9 6.6
Leisure and Entertainment 1.9 2.1 3.7 4.1
Interactive Technologies and
Communications 1.0 0.7 1.9 1.5
Internet/Portals 0.8 0.4 1.5 0.7
Head Office 0.2 0.3 0.5 0.7
-----------------------------------------------------------------------
$80.1 $72.0 $158.4 $142.1
-----------------------------------------------------------------------
-----------------------------------------------------------------------

Additions to property, plant and
equipment
Cable $105.7 $68.8 $202.1 $157.1
Newspapers 6.5 12.7 40.5 29.9
Broadcasting 4.9 2.8 7.4 6.3
Leisure and Entertainment 2.3 0.2 3.7 0.4
Interactive Technologies and
Communications 0.9 0.6 1.4 1.5
Internet/Portals 2.6 1.5 4.2 2.4
Head office 2.8 6.5 7.4 10.3
-----------------------------------------------------------------------
$125.7 $93.1 $266.7 $207.9
-----------------------------------------------------------------------
-----------------------------------------------------------------------




QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions of Canadian dollars)
(unaudited)

Three months Six months
ended June 30 ended June 30
-----------------------------------------------------------------------
-----------------------------------------------------------------------
2008 2007 2008 2007
-----------------------------------------------------------------------

Net income $57.3 $43.2 $485.4 $28.6

Other comprehensive income
(loss), net of income
taxes and non-controlling
interest:
Unrealized (loss) gain on
translation of net investments
in foreign operations (0.1) (0.7) 1.2 (0.8)
Unrealized (loss) gain on
derivative financial
instruments (31.9) 3.1 (22.1) 8.1
Other comprehensive loss from
discontinued operations - (69.0) - (75.5)
Reclassification to income
of other comprehensive
loss related to discontinued
operations - - 326.5 1.2
-----------------------------------------------------------------------
(32.0) (66.6) 305.6 (67.0)

-----------------------------------------------------------------------
COMPREHENSIVE INCOME $25.3 $(23.4) $791.0 $(38.4)
-----------------------------------------------------------------------
-----------------------------------------------------------------------


CONSOLIDATED STATEMENTS OF RETAINED EARNINGS

(in millions of Canadian dollars)
(unaudited)

Three months Six months
ended June 30 ended June 30
-----------------------------------------------------------------------
-----------------------------------------------------------------------
2008 2007 2008 2007
-----------------------------------------------------------------------

Balance at beginning of period,
as previously reported $816.4 $1,368.1 $412.1 $1,385.9

Cumulative effect of changes in
an accounting policy - - (20.6) -
-----------------------------------------------------------------------
Balance at beginning of period,
as revised 816.4 1,368.1 391.5 1,385.9

Net income 57.3 43.2 485.4 28.6
-----------------------------------------------------------------------
873.7 1,411.3 876.9 1,414.5

Discontinued operations -
Redemption of convertible notes - 8.3 - 8.3
Dividends (3.2) (3.2) (6.4) (6.4)
-----------------------------------------------------------------------
Balance at end of period $870.5 $1,416.4 $870.5 $1,416.4
-----------------------------------------------------------------------
-----------------------------------------------------------------------




QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions of Canadian dollars)
(unaudited)

Three months Six months
ended June 30 ended June 30
-----------------------------------------------------------------------
-----------------------------------------------------------------------
2008 2007 2008 2007
-----------------------------------------------------------------------

Cash flows related to
operations
Income from continuing
operations $57.3 $49.9 $102.1 $53.1
Adjustments for:
Amortization of property,
plant and equipment 74.1 69.7 146.8 137.4
Amortization of deferred
charges and other assets 6.0 2.3 11.6 4.7
(Gain) loss on valuation
and translation
of financial instruments (25.6) (8.7) (39.2) 7.3
Amortization of financing
costs and long-term
debt discount 2.3 1.0 4.3 2.0
Future income taxes 22.8 10.9 68.0 24.4
Non-controlling interest 58.2 46.5 86.5 64.9
Other 1.7 (0.4) 2.1 (2.9)
-----------------------------------------------------------------------
196.8 171.2 382.2 290.9
Net change in non-cash
balances related to
operations (10.0) (3.2) (157.3) (39.8)
-----------------------------------------------------------------------
Cash flows provided by
continuing operations 186.8 168.0 224.9 251.1
Cash flows provided by
discontinued operations - 96.7 20.5 174.1
-----------------------------------------------------------------------
Cash flows provided by
operations 186.8 264.7 245.4 425.2
-----------------------------------------------------------------------
Cash flows related to
investing activities
Business acquisitions,
net of cash and
cash equivalents (52.2) (1.8) (138.5) (5.8)
Business disposals, net
of cash and cash
equivalents - - 1.2 -
Additions to property,
plant and equipment (125.7) (93.1) (266.7) (207.9)
Additions to other assets (3.9) (1.2) (6.5) (1.3)
(Increase) decrease in
cash and cash equivalents
in trust and
temporary investments (218.0) 2.4 (218.0) 2.4
Other 2.3 1.8 1.4 4.6
-----------------------------------------------------------------------
Cash flows used in
continuing investing
activities (397.5) (91.9) (627.1) (208.0)
Cash flows used in
discontinued investing
activities and cash and
cash equivalents of
Quebecor World Inc. at the
date of deconsolidation - (60.4) (117.7) (113.6)
-----------------------------------------------------------------------
Cash flows used in
investing activities (397.5) (152.3) (744.8) (321.6)
-----------------------------------------------------------------------
Cash flows related to
financing activities
Net (decrease) increase
in bank indebtedness (14.4) (10.7) 23.1 (9.8)
Issuance of long-term
debt, net of financing
fees 449.3 2.0 449.8 10.3
Net repayments under
revolving bank facilities (208.1) (54.8) (54.8) (12.1)
Repayments of long-term
debt (4.5) (5.3) (12.9) (10.7)
Dividends (6.4) (3.2) (6.4) (6.4)
Dividends paid to
non-controlling
shareholders (0.8) (6.0) (1.5) (12.1)
Other - 0.7 2.6 0.8
-----------------------------------------------------------------------
Cash flows provided by
(used in) continuing
financing activities 215.1 (77.3) 399.9 (40.0)
Cash flows provided by
(used in) discontinued
financing activities - (16.3) 37.3 (7.2)
-----------------------------------------------------------------------
Cash flows provided by
(used in) financing
activities 215.1 (93.6) 437.2 (47.2)
-----------------------------------------------------------------------
Net increase (decrease)
in cash and cash
equivalents 4.4 18.8 (62.2) 56.4

Effect of exchange rate
changes on cash and cash
equivalents denominated
in foreign currencies (0.2) (21.6) 0.2 (37.1)
Cash and cash equivalents
at beginning of period 0.3 56.8 66.5 34.7
-----------------------------------------------------------------------
Cash and cash equivalents
at end of period $4.5 $54.0 $4.5 $54.0
-----------------------------------------------------------------------
-----------------------------------------------------------------------

Cash and cash equivalents
consist of
Cash $3.4 $22.0 $3.4 $22.0
Cash equivalents 1.1 32.0 1.1 32.0
-----------------------------------------------------------------------
$4.5 $54.0 $4.5 $54.0
-----------------------------------------------------------------------
-----------------------------------------------------------------------

Continuing operations
Cash interest payments $83.9 $53.8 $144.0 $112.3
Cash income tax payments
(net of refunds) 4.1 1.0 16.2 (1.3)
-----------------------------------------------------------------------
-----------------------------------------------------------------------




QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(in millions of Canadian dollars)
(unaudited)

June 30 December 31
-----------------------------------------------------------------------
-----------------------------------------------------------------------
2008 2007
-----------------------------------------------------------------------

ASSETS

CURRENT ASSETS
Cash and cash equivalents $4.5 $66.5
Cash and cash equivalents in trust and
temporary investments 223.4 5.4
Accounts receivable 468.0 1,513.4
Income taxes 8.9 25.9
Inventories and investments in televisual
products and movies 160.2 529.9
Prepaid expenses 43.1 51.1
Future income taxes 139.8 223.7
-----------------------------------------------------------------------
1,047.9 2,415.9

PROPERTY, PLANT AND EQUIPMENT 2,265.4 4,121.1
FUTURE INCOME TAXES 50.3 65.1
RESTRICTED CASH - 53.8
OTHER ASSETS 466.4 664.7
GOODWILL 4,142.6 4,417.8
-----------------------------------------------------------------------
$7,972.6 $11,738.4
-----------------------------------------------------------------------
-----------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
Bank indebtedness $40.0 $88.6
Accounts payable and accrued charges 599.1 1,715.1
Deferred revenue 209.0 222.7
Income taxes 6.4 58.0
Future income taxes - 1.2
Short-term secured financing - 453.5
Current portion of long-term debt 27.9 1,028.4
-----------------------------------------------------------------------
882.4 3,567.5

LONG-TERM DEBT 3,562.7 4,393.8
EXCHANGEABLE DEBENTURES 29.2 79.4
DERIVATIVE FINANCIAL INSTRUMENTS 487.6 599.8
OTHER LIABILITIES 114.1 407.6
FUTURE INCOME TAXES 432.0 514.7
PREFERRED SHARES OF A SUBSIDIARY - 175.0
NON-CONTROLLING INTEREST 1,263.7 1,563.7

SHAREHOLDERS' EQUITY
Capital stock 346.6 346.6
Retained earnings 870.5 412.1
Accumulated other comprehensive loss (16.2) (321.8)
-----------------------------------------------------------------------
1,200.9 436.9

-----------------------------------------------------------------------
$7,972.6 $11,738.4
-----------------------------------------------------------------------
-----------------------------------------------------------------------



Contact Information

  • Quebecor Inc.
    Luc Lavoie
    Executive Vice President, Corporate Affairs
    514-380-1974
    514-947-6672 (Mobile)
    lavoie.luc@quebecor.com
    or
    Quebecor Inc.
    Louis Morin
    Vice President and Chief Financial Office
    514-380-1912