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

Quebecor Inc.

August 06, 2009 06:30 ET

Quebecor Inc. Reports Consolidated Results for Second Quarter 2009

MONTREAL, QUEBEC--(Marketwire - Aug. 6, 2009) - Quebecor Inc. ("Quebecor") (TSX:QBR.A) (TSX:QBR.B) today reported its consolidated financial results for the second quarter of 2009. Quebecor consolidates the financial results of its Quebecor Media Inc. subsidiary ("Quebecor Media"), in which it holds a 54.7% interest.

Quebecor Media has renamed two of its business segments to better reflect its comprehensive product line: the Cable segment has become the Telecommunications segment and the Newspapers segment has become the News Media segment.

Highlights since end of first quarter 2009

- Quebecor records revenues of $939.4 million, down $2.9 million (-0.3%) from second quarter 2008.

- Operating income(1): up $39.0 million (14.1%) to $315.9 million.

- Net income: $76.8 million ($1.19 per basic share), up $19.3 million (33.6%) from $57.5 million ($0.90 per basic share) in the same period of 2008.

- Adjusted income from continuing operating activities(2): $56.3 million in second quarter 2009 ($0.88 per basic share), up $14.8 million ($0.23 per basic share), or 35.7%, from $41.5 million ($0.65 per basic share) in the same period of 2008.

- Telecommunications segment: operating income up $50.5 million (27.7%). Customer growth in second quarter 2009: +43,900 for cable telephone service, +20,600 for cable Internet access, +3,400 for cable television service (including 27,100 customer increase for illico Digital TV), +5,500 activated phones for wireless telephone service.

- Roaming agreements with wireless providers Rogers Communications Inc. ("Rogers") and T-Mobile USA, Inc.: Videotron Ltd. ("Videotron") will be able to serve future customers for its Advanced Wireless Services ("AWS") in Canada and in the United States.

- Tower-sharing agreements with Rogers and Bell Mobility in Quebec and in the Ottawa area: Videotron will be able to build network at anticipated cost.

(1)See "Operating income" under "Definitions."

(2)See "Adjusted income from continuing operations" under "Definitions."

"In what continues to be a constantly challenging economic and financial environment, Quebecor's net income grew 33.6% in the second quarter of 2009 to $76.8 million, or $1.19 per basic share," said Pierre Karl Peladeau, President and Chief Executive Officer of Quebecor. "Once again, the improved results are being driven by the Telecommunications segment, which significantly increased its operating income; Videotron registered customer growth for all its services for the 16th consecutive quarter. At the same time, Videotron is pushing ahead with its AWS project: it has reached roaming and tower-sharing agreements, which will enable it to build out its network within budget, offer customers service of the highest quality across Canada and the United States, and limit the proliferation of towers in Quebec. Meanwhile, in our News Media segment, the restructuring programs and other cost reduction initiatives launched in late 2008 have already generated estimated savings of $25.0 million in the first half of 2009. They are expected to yield still greater savings in the second half of the year."



Table 1
Quebecor second quarter financial highlights, 2005-2009
(in millions of Canadian dollars, except per share data)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2009 2008 2007 2006 2005
-------------------------------------------------------------------------
Revenues $ 939.4 $ 942.3 $ 815.3 $ 739.9 $ 669.1
Operating
income(1) 315.9 276.9 230.6 205.9 194.0
Income from
continuing
operations 76.8 57.5 50.1 17.6 60.8
Net income 76.8 57.5 43.4 13.7 56.2
Adjusted income
from continuing
operating
activities(2) 56.3 41.5 37.7 30.4 16.9
Per share data:
Income from
continuing
operations 1.19 0.90 0.78 0.27 0.95
Net income 1.19 0.90 0.67 0.21 0.87
Adjusted income
from continuing
operating
activities(2) 0.88 0.65 0.59 0.47 0.26
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1)See "Operating income" under "Definitions."
(2)See "Adjusted income from continuing operating activities" under
"Definitions."



Analysis of second quarter 2009 results

- Quebecor's revenues decreased $2.9 million (-0.3%) to $939.4 million.

- Revenues increased in the following segments: Telecommunications (by
$39.9 million or 8.9% of segment revenues) mainly because of customer
growth for all services; Leisure and Entertainment ($4.5 million or
7.1%); and Broadcasting ($0.5 million or 0.5%).

- Revenues decreased in News Media (by $49.5 million or -15.6%) almost
entirely as a result of lower advertising revenues.

- Operating income increased $39.0 million (14.1%) to $315.9 million, due
primarily to an increase in the Telecommunications segment ($50.5 million
or 27.7% of segment operating income) resulting mainly from customer
growth. Operating income more than doubled in the Leisure and
Entertainment segment, rising $2.7 million. Operating income decreased
$18.1 million (-24.6%) in News Media.

The increase in operating income includes a $21.6 million favourable
variance (including $16.7 million in the Telecommunications segment and
$4.9 million in the Broadcasting segment) related to retroactive
recognition in the second quarter of 2008 of a provision for Canadian
Radio-television and Telecommunications Commission ("CRTC") Part II
licence fees.

- Quebecor's net income totalled $76.8 million ($1.19 per basic share),
compared with $57.5 million ($0.90 per basic share) in the same period of
2008, an increase of $19.3 million (33.6%).

- The increase was mainly due to:

- $39.0 million increase in operating income;

- $17.1 million decrease in financial expenses.

Offset by:

- recognition in the second quarter of 2009 of a $13.6 million
non-cash charge for impairment of goodwill and intangible assets;

- $13.5 million unfavourable variance in the gain on valuation and
translation of financial instruments;

- $7.5 million increase in non-controlling interest;

- $5.5 million increase in amortization charge.

- Adjusted income from continuing operating activities: $56.3 million in
the second quarter of 2009 ($0.88 per basic share), compared with $41.5
million ($0.65 per basic share) in the same period of 2008, an increase
of $14.8 million ($0.23 per basic share), or 35.7%.

Analysis of year-to-date results

- Quebecor's revenues increased $16.2 million (0.9%) to $1.84 billion.

- Revenues increased in the following segments: Telecommunications (by
$86.8 million or 9.9% of segment revenues), Leisure and Entertainment
($6.0 million or 4.8%), Broadcasting ($3.8 million or 1.7%) and
Interactive Technologies and Communications ($2.3 million or 5.2%).

- Revenues decreased in News Media (by $82.1 million or -13.8%).

- Operating income increased $54.5 million (10.2%) to $588.1 million, due
primarily to an increase in the Telecommunications segment ($77.5 million
or 20.5% of segment operating income). Operating income decreased in News
Media (by $34.4 million or -28.7%).

- Quebecor's year-to-date net income totalled $134.5 million ($2.09 per
basic share) compared with $485.9 million ($7.56 per basic share) in the
same period of 2008.

- Favourable variances in the following items:

- $54.5 million increase in operating income;

- $30.1 million decrease in financial expenses;

- $18.4 million decrease in income tax expense.

Outweighed by:

- recognition in the first quarter of 2008 of income from discontinued
operations in the amount of $383.3 million;

- $29.5 million increase in non-controlling interest;

- recognition in the first half of 2009 of $13.6 million non-cash
charge for impairment of goodwill and intangible assets;

- $13.1 million increase in amortization charge;

- $13.0 million unfavourable variance in the gain on valuation and
translation of financial instruments.

- Adjusted income from continuing operating activities: $99.4 million in
the first half of 2009 ($1.55 per basic share), compared with $76.1
million ($1.19 per basic share) in the same period of 2008, an increase
of $23.3 million ($0.36 per basic share) or 30.6%.


Dividends

On August 5, 2009, 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, 2009 to shareholders of record at the close of business on August 21, 2009. This dividend is designated to be an eligible dividend, as provided under subsection 89(14) of the Canadian Income Tax Act and its provincial counterpart.

Detailed financial information

For a detailed analysis of Quebecor's results for the second quarter of 2009, 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/InvestorCenter/QIQuarterlyReports.aspx or from the SEDAR filing service at http://www.sedar.com .

Conference call for investors and webcast

Quebecor will hold a conference call to discuss the second quarter 2009 results of Quebecor and Quebecor Media on August 6, 2009, at 10:30 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 77467#. A tape recording of the call will be available from August 6 to September 12, 2009 by dialling 1 877 293-8133, access code 895426#. The conference call will also be broadcast live on Quebecor's website at www.quebecor.com/InvestorCenter/QIConferenceCall.aspx . It is advisable to ensure the appropriate software is installed before accessing the call. Instructions and links to free player downloads are available at the Internet address shown above.

Forward-looking statements

The statements in this press release that are not historical facts are forward-looking statements and are subject to significant known and unknown risks, uncertainties and assumptions which could cause Quebecor's actual results for future periods to differ materially from those set forth in the forward-looking statements. Forward-looking statements may be identified by the use of the conditional or by forward-looking terminology such as the terms "plans," "expects," "may," "anticipates," "intends," "estimates," "projects," "seeks," "believes" or similar terms, variations of such terms, or the negative of such terms. Certain factors that may cause actual results to differ from current expectations include seasonality (including seasonal fluctuations in customer orders), operating risk (including fluctuations in demand for Quebecor's products and pricing actions by competitors), insurance risk, risks associated with capital investment (including risks related to technological development and equipment availability and breakdown), environmental risks, risks associated with labour agreements, risks associated with commodities and energy prices (including fluctuations in the cost and availability of raw materials), credit risk, financial risks, debt risks, risks related to interest rate fluctuations, foreign exchange risks, risks associated with government acts and regulations, risks related to changes in tax legislation, and changes in the general political and economic environment. Investors and others are cautioned that the foregoing list of factors that may affect future results is not exhaustive and that undue reliance should not be placed on any forward-looking statements. For more information on the risks, uncertainties and assumptions that could cause Quebecor's actual results to differ from current expectations, please refer to Quebecor's public filings available at www.sedar.com and www.quebecor.com including, in particular, the "Risks and Uncertainties" section in Quebecor's Management Discussion and Analysis for the year ended December 31, 2008.

The forward-looking statements in this press release reflect Quebecor's expectations as of August 6, 2009, 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., an integrated communications company engaged in cable television, interactive multimedia development, Internet access services, cable telephony and wireless telephone service; Sun Media Corporation, the largest publisher of newspapers in Canada; Canoe Inc., operator of a network of English- and French-language Internet properties in Canada; TVA Group Inc., operator of the largest French-language over-the-air television network in Quebec, a number of specialty channels, and the English-language over-the-air station Sun TV; Nurun Inc., a major interactive technologies and communications agency with offices in Canada, the United States, Europe and Asia; magazine publisher TVA Publishing Inc.; book publishers and distributors Sogides Group Inc. and CEC Publishing Inc.; Archambault Group Inc. and TVA Films, companies engaged in the production, distribution and retailing of cultural products; Le SuperClub Videotron ltee, a DVD and console game rental and retail chain; and Quebecor MediaPages, publisher of print and online directories.


DEFINITIONS

Operating income

In its analysis of operating results, the Company defines operating income or loss, as reconciled to net income under Canadian generally accepted accounting principles ("Canadian GAAP"), as net income before amortization, financial expenses, gain on valuation and translation of financial instruments, charge for restructuring of operations and other special items, impairment of goodwill and intangible assets, 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 depreciation and amortization of tangible and intangible assets and is unaffected by the capital structure or investment activities of the Company and its segments. Operating income is also relevant because it is a significant component of the Company's annual incentive compensation programs. A limitation of this measure, however, is that it does not reflect the periodic costs of tangible and intangible assets used in generating revenues in the Company's segments. The Company also uses other measures that do reflect such costs, such as cash flows from segment operations and free cash flows from operations. In addition, measures such as 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 identical to similarly titled measures reported by other companies.

Table 2 below reconciles Quebecor's operating income with the closest Canadian GAAP measure.



Table 2
Reconciliation of the operating income measure used in this press release
to the net income measure used in the consolidated financial statements
(in millions of Canadian dollars)
Three months ended Six months ended
June 30 June 30
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2009 2008 2009 2008
-------------------------------------------------------------------------

Operating income:
Telecommunications $ 232.7 $ 182.2 $ 456.3 $ 378.8
News Media 55.6 73.7 85.3 119.7
Broadcasting 25.1 21.7 37.5 32.7
Leisure and
Entertainment 4.8 2.1 5.6 0.5
Interactive
Technologies and
Communications 1.3 1.8 1.7 1.1
Head Office (3.6) (4.6) 1.7 0.8
-------------------------------------------------------------------------
315.9 276.9 588.1 533.6
Amortization (85.1) (79.6) (170.4) (157.3)
Financial expenses (63.0) (80.1) (122.9) (153.0)
Gain on valuation and
translation of
financial instruments 12.1 25.6 26.2 39.2
Restructuring of
operations and other
special items (0.8) (0.7) (4.2) (2.3)
Impairment of goodwill
and intangible assets (13.6) - (13.6) -
Income tax (22.9) (26.3) (52.3) (70.7)
Non-controlling
interest (65.8) (58.3) (116.4) (86.9)
Income from
discontinued
operations - - - 383.3
-------------------------------------------------------------------------
Net income $ 76.8 $ 57.5 $ 134.5 $ 485.9
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Adjusted income from continuing operating activities

The Company defines adjusted income from continuing operating activities, as reconciled to net income under Canadian GAAP, as net income before gain on valuation and translation of financial instruments, charge for restructuring of operations and other special items, impairment of goodwill and intangible assets, and the results of discontinued operations, net of income tax and non-controlling interest. Adjusted income from continuing operating activities as defined above is not a measure of results that is consistent with Canadian GAAP. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with Canadian GAAP. Management believes that adjusted income from continuing operating activities is a meaningful measure that provides an indication of the long-term profitability of the Company's operating activities by eliminating the impact of unusual or one-time items. The Company's definition of adjusted income from continuing operating activities may not be identical to similarly titled measures reported by other companies.

Table 3 provides a reconciliation of adjusted income from continuing operating activities to the net income measure used in the consolidated financial statements of Quebecor.



Table 3
Reconciliation of the adjusted income from continuing operating activities
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
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2009 2008 2009 2008
-------------------------------------------------------------------------

Adjusted income from
continuing operating
activities $ 56.3 $ 41.5 $ 99.4 $ 76.1
Gain on valuation and
translation of
financial instruments 12.1 25.6 26.2 39.2
Restructuring of
operations and other
special items (0.8) (0.7) (4.2) (2.3)
Impairment of goodwill
and intangible assets (13.6) - (13.6) -
Income tax related to
adjustments(1) 27.7 0.7 35.2 (6.0)
Non-controlling
interest related to
adjustments (4.9) (9.6) (8.5) (4.4)
Income from
discontinued
operations - - - 383.3
-------------------------------------------------------------------------
Net income $ 76.8 $ 57.5 $ 134.5 $ 485.9
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1)Includes the impact of fluctuations in tax rates applicable to
adjusted items, for statutory reasons or in connection with tax
planning arrangements.


Average Monthly Revenue per User

ARPU is an industry metric that the Company uses to measure its average cable, Internet, cable telephone and wireless telephone revenues per month per customer. ARPU is not a measurement that is consistent with Canadian GAAP and the Company's definition and calculation of ARPU may not be the same as identically titled measurements reported by other companies. The Company calculates ARPU by dividing its combined cable television, Internet access, cable telephone and wireless telephone revenues by the average number of 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 June 30 Six months ended June 30
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2009 2008 2009 2008
-------------------------------------------------------------------------
(restated) (restated)

Revenues

Telecommunications $ 487.4 $ 447.5 $ 964.9 $ 878.1
News Media 268.7 318.2 514.2 596.3
Broadcasting 111.5 111.0 221.3 217.5
Leisure and
Entertainment 68.2 63.7 132.3 126.3
Interactive
Technologies and
Communications 23.6 23.4 46.3 44.0
Head Office and
inter-segment (20.0) (21.5) (43.4) (42.8)
-------------------------------------------------------------------------
939.4 942.3 1,835.6 1,819.4

Cost of sales and
selling and
administrative
expenses 623.5 665.4 1,247.5 1,285.8
Amortization 85.1 79.6 170.4 157.3
Financial expenses 63.0 80.1 122.9 153.0
Gain on valuation and
translation of
financial instruments (12.1) (25.6) (26.2) (39.2)
Restructuring of
operations and other
special items 0.8 0.7 4.2 2.3
Impairment of goodwill
and intangible assets 13.6 - 13.6 -
-------------------------------------------------------------------------
Income before income
taxes and non-
controlling interest 165.5 142.1 303.2 260.2

Income taxes:
Current 7.4 3.4 6.6 2.3
Future 15.5 22.9 45.7 68.4
-------------------------------------------------------------------------
22.9 26.3 52.3 70.7
-------------------------------------------------------------------------
142.6 115.8 250.9 189.5
Non-controlling
interest (65.8) (58.3) (116.4) (86.9)
-------------------------------------------------------------------------

Income from continuing
operations 76.8 57.5 134.5 102.6

Income from
discontinued
operations - - - 383.3
-------------------------------------------------------------------------
Net income $ 76.8 $ 57.5 $ 134.5 $ 485.9
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Earnings per share
Basic
From continuing
operations $ 1.19 $ 0.90 $ 2.09 $ 1.60
From discontinued
operations - - - 5.96
Net income 1.19 0.90 2.09 7.56
Diluted
From continuing
operations $ 1.19 $ 0.89 $ 2.09 $ 1.59
From discontinued
operations - - - 5.96
Net income 1.19 0.89 2.09 7.55
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average number
of shares outstanding
(in millions) 64.3 64.3 64.3 64.3
Weighted average number
of diluted shares
(in millions) 64.3 64.4 64.3 64.4
-------------------------------------------------------------------------
-------------------------------------------------------------------------



QUEBECOR INC. AND ITS SUBSIDIARIES
SEGMENTED INFORMATION

(in millions of Canadian dollars)
(unaudited)
Three months ended June 30 Six months ended June 30
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2009 2008 2009 2008
-------------------------------------------------------------------------
(restated) (restated)

Income from continuing
operations before
amortization,
financial expenses,
gain on valuation
and translation of
financial instruments,
restructuring of
operations and other
special items,
impairment of
goodwill and
intangible assets,
income taxes and non-
controlling interest
Telecommunications $ 232.7 $ 182.2 $ 456.3 $ 378.8
News Media 55.6 73.7 85.3 119.7
Broadcasting 25.1 21.7 37.5 32.7
Leisure and
Entertainment 4.8 2.1 5.6 0.5
Interactive
Technologies and
Communications 1.3 1.8 1.7 1.1
Head Office (3.6) (4.6) 1.7 0.8
-------------------------------------------------------------------------
$ 315.9 $ 276.9 $ 588.1 $ 533.6
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Amortization
Telecommunications $ 62.1 $ 56.7 $ 124.1 $ 112.7
News Media 15.2 16.5 29.9 31.9
Broadcasting 3.5 3.3 7.1 6.6
Leisure and
Entertainment 2.4 1.9 4.8 3.7
Interactive
Technologies and
Communications 1.1 1.0 2.2 1.9
Head Office 0.8 0.2 2.3 0.5
-------------------------------------------------------------------------
$ 85.1 $ 79.6 $ 170.4 $ 157.3
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Additions to property,
plant and equipment
Telecommunications $ 102.1 $ 96.7 $ 203.9 $ 183.2
News Media 6.3 8.7 16.8 43.0
Broadcasting 3.5 3.8 8.5 5.6
Leisure and
Entertainment 0.4 2.3 1.1 3.7
Interactive
Technologies and
Communications 1.4 0.9 2.2 1.4
Head Office 1.4 2.8 2.0 7.4
-------------------------------------------------------------------------
$ 115.1 $ 115.2 $ 234.5 $ 244.3

-------------------------------------------------------------------------
Additions to
intangible assets
Telecommunications $ 24.6 $ 8.4 $ 45.0 $ 18.9
News Media 0.9 0.5 2.8 3.3
Broadcasting 2.5 1.1 2.9 1.8
Leisure and
Entertainment 1.2 2.8 2.4 2.8
-------------------------------------------------------------------------
$ 29.2 $ 12.8 $ 53.1 $ 26.8
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Externally acquired
intangible assets $ 18.5 $ 2.8 $ 30.0 $ 9.5
Internally generated
intangible assets 10.7 10.0 23.1 17.3
-------------------------------------------------------------------------
$ 29.2 $ 12.8 $ 53.1 $ 26.8
-------------------------------------------------------------------------
-------------------------------------------------------------------------



QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions of Canadian dollars)
(unaudited)
Three months ended June 30 Six months ended June 30
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2009 2008 2009 2008
-------------------------------------------------------------------------
(restated) (restated)

Net income $ 76.8 $ 57.5 $ 134.5 $ 485.9

Other comprehensive
income (loss), net of
income taxes and non-
controlling interest:

Unrealized (loss)
gain on translation
of net investments
in foreign
operations (0.8) (0.1) (0.8) 1.2
Gain (loss) on
valuation of
derivative financial
instruments 12.5 (31.9) 11.1 (22.1)

Reclassification to
income of other
comprehensive loss
related to
discontinued
operations - - - 326.5
-------------------------------------------------------------------------
11.7 (32.0) 10.3 305.6

-------------------------------------------------------------------------
Comprehensive income $ 88.5 $ 25.5 $ 144.8 $ 791.5
-------------------------------------------------------------------------
-------------------------------------------------------------------------



QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(in millions of Canadian dollars)
(unaudited)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Accumulated Total
other share-
Capital Contributed Retained compre- holders'
stock surplus earnings hensive loss equity
--------------------------------------------------------------------------

Balance as of
December 31, 2007,
as previously
reported $ 346.6 $ - $ 391.5 $(321.8) $ 416.3
Cumulative effect
of changes in
accounting
policies - - (1.3) - (1.3)
--------------------------------------------------------------------------

Balance as of
December 31, 2007,
as restated 346.6 - 390.2 (321.8) 415.0
Net income - - 485.9 - 485.9
Dividends - - (6.4) - (6.4)
Other comprehensive
income - - - 305.6 305.6
--------------------------------------------------------------------------

Balance as of June
30, 2008, as
restated 346.6 - 869.7 (16.2) 1,200.1
Net loss - - (297.9) - (297.9)
Dividends - - (6.5) - (6.5)
Other comprehensive
loss - - - (11.3) (11.3)
--------------------------------------------------------------------------

Balance as of
December 31, 2008,
as restated 346.6 - 565.3 (27.5) 884.4
Net income - - 134.5 - 134.5
Dividends - - (6.4) - (6.4)
Related party
transactions - 4.8 - - 4.8
Other comprehensive
income - - - 10.3 10.3
--------------------------------------------------------------------------
Balance as of June
30, 2009 $ 346.6 $ 4.8 $ 693.4 $ (17.2) $ 1,027.6
--------------------------------------------------------------------------
--------------------------------------------------------------------------



QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions of Canadian dollars)
(unaudited)
Three months ended June 30 Six months ended June 30
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2009 2008 2009 2008
-------------------------------------------------------------------------
(restated) (restated)

Cash flows related to
operations
Income from
continuing
operations $ 76.8 $ 57.5 $ 134.5 $ 102.6
Adjustments for:
Amortization of
property, plant
and equipment 73.0 69.6 146.5 138.1
Amortization of
intangible assets
and other assets 12.1 10.0 23.9 19.2
Impairment of
goodwill and
intangible assets 13.6 - 13.6 -
Gain on valuation
and translation
of financial
instruments (12.1) (25.6) (26.2) (39.2)
Amortization of
financing costs
and long-term debt
discount 2.7 2.3 4.8 4.3
Future income taxes 15.5 22.9 45.7 68.4
Non-controlling
interest 65.8 58.3 116.4 86.9
Other (4.0) 1.7 (2.1) 2.1
-------------------------------------------------------------------------
243.4 196.7 457.1 382.4
Net change in non-
cash balances
related to
operations (36.4) (10.0) (124.8) (157.3)
-------------------------------------------------------------------------
Cash flows provided
by continuing
operations 207.0 186.7 332.3 225.1
Cash flows provided
by discontinued
operations - - - 20.5
Cash flows provided by
operations 207.0 186.7 332.3 245.6
-------------------------------------------------------------------------
Cash flows related to
investing activities
Business acquisitions,
net of cash and cash
equivalents (1.5) (52.2) (2.5) (138.5)
Business disposals,
net of cash and cash
equivalents 5.0 - 11.4 1.2
Additions to property,
plant and equipment (115.1) (115.2) (234.5) (244.3)
Additions to
intangible assets (29.2) (12.8) (53.1) (26.8)
Increase in cash and
cash equivalents in
trust - (218.0) - (218.0)
Other 0.3 0.8 1.0 (0.9)
Cash flows used in
continuing investing
activities (140.5) (397.4) (277.7) (627.3)
Cash flows used in
discontinued
investing activities
and cash and cash
equivalents of
Quebecor World at
the date of
deconsolidation - - - (117.7)
-------------------------------------------------------------------------
Cash flows used in
investing activities (140.5) (397.4) (277.7) (745.0)
-------------------------------------------------------------------------
Cash flows related to
financing activities
Net (decrease)
increase in bank
indebtedness (7.8) (14.4) 11.7 23.1
Issuance of long-
term debt, net of
financing fees - 449.3 325.5 449.8
Net repayments
under revolving
bank facilities (16.3) (208.1) (221.9) (54.8)
Repayments of
long-term debt (9.9) (4.5) (23.9) (12.9)
Dividends (6.4) (6.4) (6.4) (6.4)
Dividends paid to
non-controlling
shareholders (9.2) (0.8) (18.3) (1.5)
Other - - - 2.6
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Cash flows (used in)
provided by
continuing financing
activities (49.6) 215.1 66.7 399.9
Cash flows provided
by discontinued
financing activities - - - 37.3
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Cash flows (used in)
provided by financing
activities (49.6) 215.1 66.7 437.2
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Net increase (decrease)
in cash and cash
equivalents 16.9 4.4 121.3 (62.2)

Effect of exchange
rate changes on cash
and cash equivalents
denominated in foreign
currencies (0.3) (0.2) (0.4) 0.2
Cash and cash
equivalents at
beginning of period 114.3 0.3 10.0 66.5
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Cash and cash
equivalents at end
of period $ 130.9 $ 4.5 $ 130.9 $ 4.5
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Cash and cash
equivalents
consist of
Cash $ 38.2 $ 3.4 $ 38.2 $ 3.4
Cash equivalents 92.7 1.1 92.7 1.1
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$ 130.9 $ 4.5 $ 130.9 $ 4.5
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Continuing operations
Cash interest
payments $ 92.7 $ 83.9 $ 151.2 $ 144.0
Cash income tax
payments (net of
refunds) 3.7 4.1 8.8 16.2
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QUEBECOR INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(in millions of Canadian dollars)
(unaudited)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
June 30 December 31
2009 2008
-------------------------------------------------------------------------
(restated)

Assets

Current assets
Cash and cash equivalents $ 130.9 $ 10.0
Cash and cash equivalents in trust 5.3 5.3
Accounts receivable 440.8 484.6
Income taxes 4.6 9.4
Inventories and programs, broadcast and
distribution rights 165.2 189.3
Prepaid expenses 54.1 31.5
Future income taxes 54.2 115.2
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855.1 845.3

Property, plant and equipment 2,353.8 2,272.9
Intangible assets 1,008.6 985.9
Derivative financial instruments 194.8 317.9
Other assets 115.1 105.9
Future income taxes 8.9 12.3
Goodwill 3,506.8 3,516.7
-------------------------------------------------------------------------
$ 8,043.1 $ 8,056.9
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-------------------------------------------------------------------------

Liabilities and shareholders' equity

Current liabilities
Bank indebtedness $ 24.0 $ 12.3
Accounts payable and accrued charges 616.4 788.6
Deferred revenue 233.3 224.0
Income taxes 6.7 9.8
Current portion of long-term debt 137.1 42.3
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1,017.5 1,077.0

Long-term debt 4,159.5 4,407.1
Derivative financial instruments 199.3 117.3
Exchangeable debentures and other liabilities 118.7 117.0
Future income taxes 434.0 469.1
Non-controlling interest 1,086.5 985.0

Shareholders' equity
Capital stock 346.6 346.6
Contributed surplus 4.8 -
Retained earnings 693.4 565.3
Accumulated other comprehensive loss (17.2) (27.5)
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1,027.6 884.4

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$ 8,043.1 $ 8,056.9
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Contact Information

  • Quebecor Inc.
    Jean-Francois Pruneau
    Vice President, Finance
    514-380-4144
    or
    Quebecor Inc.
    Isabelle Dessureault
    Vice President, Public Affairs
    514-380-7501