TVA Group Inc.
TSX : TVA.B

TVA Group Inc.

February 16, 2009 12:32 ET

TVA Group Reports a 7.5% Decrease in Net Income for the Fourth Quarter Ended December 31, 2008

MONTREAL, CANADA--(Marketwire - Feb. 16, 2009) - TVA Group Inc. (TSX:TVA.B) announces that the Company reported net income of $14.4 million, or $0.60 per share, for the last quarter of 2008, compared with net income of $15.6 million, or $0.58 per share, for the corresponding quarter of 2007.

Operating highlights for the fourth quarter:



- Slight decrease in operating income(1) in the Television sector of
$244,000, or 1.2%, compared with the same quarter of 2007, mainly due to a
combination of the following:

- a 26% increase in operating income for specialty channels;

- an increase of $867,000 in the operating loss of SUN TV, the
conventional television station in Toronto, mainly as a result of
lower advertising revenues; and

- a 72% drop in operating income for the home shopping division also
resulting from a drop in sales during the quarter;

- Growth of 18% in the Publishing sector's operating income against the
same year-ago quarter, increasing from $1,594,000 in 2007 to $1,887,000 in
2008.

- Decrease in the Distribution sector's operating income from $1,502,000
for the fourth quarter of 2007 to $1,077,000 in 2008.

(1) Refer to operating income definition on the next page


As a result, the Company's consolidated operating income was $22.4 million, against operating income of $22.8 million for the same quarter of 2007, representing a decrease of 1.9%.

"Considering the economic situation and the difficult context in which conventional television finds itself, we are satisfied with our results for the last quarter despite the decline in our operating income and our net income against the same quarter last year. Faced with TQS network's singular situation and while making the most of its No. 1 position, TVA Network managed to maintain its advertising revenues for the last quarter. In addition, our specialty channels continued to grow, recording an 18% increase in operating revenues and a 26% increase in operating income," said Pierre Dion, President and Chief Executive Officer of TVA Group Inc.

"Advertising revenues in the Publishing sector declined severely in the fourth quarter compared with the same quarter of 2007. However, with the revenues generated by customized editions having almost doubled and with having pursued our stringent management of operating costs, we achieved a profit margin of nearly 10% compared to 8% in the same quarter of 2007 while having also protected our market shares. Finally, in the Distribution sector, lower sales of rights in the television market largely explain this business segment's weaker operating results for the fourth quarter," concluded Mr. Dion.

Cash flows from operating activities were $15.9 million for the fourth quarter, against $21.0 million for the corresponding year-ago period. This decrease is essentially due to the net change in non-cash working capital items, mainly in accounts payable and current income taxes.

Growth in fiscal 2008

For the fiscal year ended December 31, 2008, the Company's consolidated net income was $66.3 million, compared with $59.4 million for the previous fiscal year, reflecting growth of 11.6% . This increase was posted despite the different adjustments that were made to disputed regulatory fees over the last two years. For the same period, the Company generated net income of $44.8 million, or $1.77 per share, compared with $38.4 million, or $1.42 per share, for 2007.

Dividend

TVA Group's Board of Directors today declared a dividend of $0.05 per share, payable on March 18, 2009 to Class A and B shareholders of record as at March 3, 2009. This dividend is designated to be an eligible dividend, as provided under subsection 89(14) of the Canada Income Tax Act and its provincial counterpart.

The Company

TVA Group Inc., a subsidiary of Quebecor Media Inc., is an integrated communications company involved in television, the production and distribution of audiovisual products, and in magazine publishing. TVA Group is one of the largest private sector producers and the largest private sector broadcaster of French-language entertainment, information and public affairs programming, and magazine publishing in North America. TVA also operates SUN TV, a conventional station in Toronto. The Company's Class B shares are listed on the Toronto Stock Exchange under the ticker symbol TVA.B.

The annual consolidated financial statements with notes and the annual Management's Discussion and Analysis can be consulted on TVA's Web site at: www.tva.canoe.ca.

Definition of operating income

In its analysis of operating results, the Company defines operating income or operating loss as earnings (loss) before amortization, financial expenses, restructuring costs of operations, impairment of intangible assets, gain on acquisition and disposal of business, (recovery) income taxes, non-controlling interest and equity in income of companies subject to significant influence. Operating income or operating loss, as defined above, is not a measure of results that is consistent with Canadian Generally Accepted Accounting Principles ("GAAP"). Neither is it intended to be regarded as an alternative to other financial performance measures or to the statement of cash flows as a measure of liquidity. This measure is not intended to represent funds available for debt service, dividend payment, reinvestment or other discretionary uses, and should not be considered in isolation or as a substitute for other performance measures prepared in accordance with Canadian GAAP. Operating income is used by the Company because management believes it is a meaningful measurement of performance.

This measure is commonly used by senior management and the Board of Directors to evaluate the consolidated results of the Company and its sector's results. Measurements such as operating income are also commonly used by the investment community to analyze and compare the performance of companies in the industries in which we are engaged. The Company's definition of operating income may not be identical to similarly titled measures reported by other companies.

Forward-looking Information Disclaimer

The statements in this news release that are not historical facts may be forward-looking statements and are subject to important known and unknown risks, uncertainties and assumptions which could cause the Company's actual results for future periods to differ materially from those set forth in the forward-looking statements. Forward-looking statements generally can be identified by the use of the conditional, the use of forward-looking terminology such as "propose," "will," "expect," "may," "anticipate," "intend," "estimate," "plan," "foresee," "believe" or the negative of these terms or variations of them or similar terminology. Certain factors that may cause actual results to differ from current expectations include seasonality, operational risks (including pricing actions by competitors), capital investment risks, credit risks, government regulation risks, governmental assistance risks and general changes in the 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 the Company's actual results to differ from current expectations, please refer to the Company's public filings available at www.sedar.com and www.tva.canoe.ca including, in particular, the "Risks and Uncertainties" section of the Company's Management's Discussion and Analysis for the year ended December 31, 2008.

The forward-looking statements in this news release reflect the Company's expectations as of February 16, 2009, and are subject to change after this date. The Company 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, unless required by the applicable securities laws.



TVA GROUP INC.

Consolidated statements of income (unaudited)
(in thousands of dollars, except per share amounts)

--------------------------------------------------------------------------
--------------------------------------------------------------------------
Three-month periods Years ended
ended December 31 December 31
--------------------------------------------------------------------------
2008 2007 2008 2007
--------------------------------------------------------------------------

Operating revenues $126,960 $124,073 $436,723 $415,486
Operating, selling and
administrative expenses 104,597 101,279 370,421 356,105
Amortization of property, plant
and equipment, intangible assets
and deferred start-up costs 3,698 3,305 13,986 12,942
Financial expenses
(financial revenue) (253) 1,063 1,760 4,477
Restructuring costs of operations - (357) 184 1,382
--------------------------------------------------------------------------
Income before income taxes,
non-controlling interest and
share of income from companies
subject to significant influence $18,918 $18,783 $50,372 $40,580
Income taxes 5,416 3,722 8,259 5,714

Non-controlling interest (433) (474) (1,802) (2,651)

Share of income from companies
subject to significant influence (496) (71) (889) (867)
--------------------------------------------------------------------------

NET INCOME $14,431 $15,606 $44,804 $38,384

--------------------------------------------------------------------------
--------------------------------------------------------------------------

EARNINGS PER SHARE BASIC
AND DILUTED $0.60 $0.58 $1.77 $1.42
--------------------------------------------------------------------------
--------------------------------------------------------------------------




Consolidated statements of Comprehensive Income (unaudited)
(in thousands of dollars, except per share amounts)

--------------------------------------------------------------------------
--------------------------------------------------------------------------
Three-month periods Years ended
ended December 31 December 31
--------------------------------------------------------------------------
2008 2007 2008 2007
--------------------------------------------------------------------------

Net Income $14,431 $15,606 $44,804 $38,384

Unrealized loss on a derivative
financial instrument (net of
income taxes of $ 130) (304) - (304) -

--------------------------------------------------------------------------
COMPREHENSIVE INCOME $14,127 $15,606 $44,500 $38,384
--------------------------------------------------------------------------
--------------------------------------------------------------------------




Consolidated statements of retained earnings (unaudited)
(in thousands of dollars)

--------------------------------------------------------------------------
--------------------------------------------------------------------------
Years ended
December 31
--------------------------------------------------------------------------
2008 2007
--------------------------------------------------------------------------
Balance, at beginning of period $95,610 $62,631
Net income 44,804 38,384
Dividends paid (5,105) (5,405)
Share redemption - excess of purchase
price over net carrying value (36,208) -
--------------------------------------------------------------------------
Balance, end of period $99,101 $95,610
--------------------------------------------------------------------------
--------------------------------------------------------------------------



TVA GROUP INC.
Consolidated balance sheets
(unaudited)
(in thousands of dollars)

--------------------------------------------------------------------------
--------------------------------------------------------------------------
Dec. 31, 2008 Dec. 31, 2007
--------------------------------------------------------------------------
ASSETS
Current assets
Cash $5,262 $3,225
Accounts receivable 101,702 107,854
Current income tax assets 2,697 946
Investments in televisual products
and films 49,445 45,906
Inventories and prepaid expenses 6,215 5,969
Future income tax assets 2,363 4,629
--------------------------------------------------------------------------
167,684 168,529

Investments in televisual products
and films 35,952 27,253
Investments 32,148 31,571
Property, plant and equipment 88,590 77,275
Future income tax assets 80 2,319
Other assets 9,343 8,885
Licences and others intangible assets 69,715 69,732
Goodwill 71,981 71,981
--------------------------------------------------------------------------
$475,493 $457,545
--------------------------------------------------------------------------
--------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank overdraft $147 $2,435
Accounts payable and accrued liabilities 95,656 85,812
Current income tax liabilities 2,041 11,037
Broadcast and distribution rights payable 24,400 23,054
Deferred revenue 7,573 6,613
Deferred credit 366 471
--------------------------------------------------------------------------
130,183 129,422

Broadcast rights payable 5,021 3,965
Long-term debt 93,705 56,116
Future income tax liabilities 31,606 39,334
Others long term liabilities 550 731
Non-controlling interest and redeemable
preferred shares 11,656 13,458
--------------------------------------------------------------------------
272,721 243,026

Shareholders' equity
Capital stock 99,930 115,137
Contributed surplus 4,045 3,772
Retained earnings 99,101 95,610
Accumulated other comprehensive income (304) -
--------------------------------------------------------------------------
202,772 214,519
--------------------------------------------------------------------------
$475,493 $457,545
--------------------------------------------------------------------------
--------------------------------------------------------------------------





TVA GROUP INC.
Consolidated statements of cash flows
(unaudited)
(in thousands of dollars)

--------------------------------------------------------------------------
--------------------------------------------------------------------------
Three-month periods Years ended
ended December 31 December 31
--------------------------------------------------------------------------
2008 2007 2008 2007
--------------------------------------------------------------------------

CASH FLOWS FROM OPERATING
ACTIVITIES
Net income $14,431 $15,606 $44,804 $38,384
Non-cash items
Amortization 3,720 3,327 14,074 13,030
Share of income from companies
subject to significant influence (496) (71) (889) (867)
Non-controlling interest (433) (474) (1,802) (2,651)
Tax benefits relating to tax
deductions - - - (3,670)
Future income taxes 1,662 (3,348) (3,238) (4,680)
Others (54) (981) (624) (1,448)
--------------------------------------------------------------------------
Cash flows from current
operations 18,830 14,059 52,325 38,098
Net change in non-cash items (2,964) 6,938 (6,380) 21,946
--------------------------------------------------------------------------
Cash flows from operating
activities 15,866 20,997 45,945 60,044
--------------------------------------------------------------------------

CASH FLOWS FROM INVESTING
ACTIVITIES
Additions to property, plant
and equipment (6,530) (6,465) (21,881) (16,200)
Business acquisitions - - (105) (2,899)
Deferred start-up costs for
specialty channels 48 - (352) -
Changes in investments 226 24,475 (263) 24,701
--------------------------------------------------------------------------
Cash flows from investing
activities (6,256) 18,010 (22,601) 5,602
--------------------------------------------------------------------------

CASH FLOWS FROM FINANCING
ACTIVITIES
Bank overdraft (65) 420 (2,288) 2,435
(Decrease) increase in
long-term debt (4,666) (14,166) 37,501 (40,182)
Redemption of redeemable
preferred shares - (24 625) - (24 625)
Class B share redemption - - (51,415) -
Issuance of shares of a
subsidiary - 350 - 2,400
Dividends paid (1,201) (1,351) (5,105) (5,405)
--------------------------------------------------------------------------
Cash flows from financing
activities (5,932) (39,372) (21,307) (65,377)
--------------------------------------------------------------------------
Net change in cash 3,678 (365) 2,037 269
Cash, beginning of period 1,584 3,590 3,225 2,956
--------------------------------------------------------------------------
Cash, end of period $5,262 $3,225 $5,262 $3,225
--------------------------------------------------------------------------
--------------------------------------------------------------------------

SUPPLEMENTAL INFORMATION
Interests paid net of interests
income received $839 $923 $2,544 $4,054
Income taxes paid (received) 3,493 482 22,244 (2,673)
Additions to property, plant and
equipment funded by accounts
payable and accrued liabilities
at end of period $4,233 $1,453
--------------------------------------------------------------------------
--------------------------------------------------------------------------



TVA GROUP INC.
Segmented information
(in thousands of dollars)

The following table includes information on operating income, as well as
information on assets:

--------------------------------------------------------------------------
--------------------------------------------------------------------------
Three-month periods Years ended
ended December 31 December 31
--------------------------------------------------------------------------
2008 2007 2008 2007
--------------------------------------------------------------------------

Operating revenues

Television 102,118 $98,748 342,853 $321,045
Publishing 19,508 19,992 78,606 79,878
Distribution 6,891 6,725 19,236 19,828
Intersegment items (1,557) (1,392) (3,972) (5,265)
--------------------------------------------------------------------------
126,960 124,073 436,723 415,486

Operating, selling and
administrative expenses

Television 82,753 79,139 287,329 270,688
Publishing 17,621 18,398 69,300 72,049
Distribution 5,814 5,223 18,054 18,533
Intersegment items (1,591) (1,481) (4,262) (5,165)
--------------------------------------------------------------------------
104,597 101,279 370,421 356,105

Income before amortization,
financial expenses,
restructuring costs of
operations, income taxes,
non-controlling interest
and share of income from of
companies subject to significant
influence
Television 19,365 19,609 55,524 50,357
Publishing 1,887 1,594 9,306 7,829
Distribution 1,077 1,502 1,182 1,295
Intersegment items 34 89 290 (100)
--------------------------------------------------------------------------
22,363 $22,794 66,302 $59,381
--------------------------------------------------------------------------
--------------------------------------------------------------------------


The intersegment items mentioned above represent the elimination of normal
course business transactions made between the Company's business segments
regarding revenues, expenses and unrealized profit.

--------------------------------------------------------------------------
--------------------------------------------------------------------------
December 31, 2008 December 31, 2007
--------------------------------------------------------------------------

Total assets

Television $363,067 $342,283
Publishing 80,158 84,237
Distribution 21,006 19,763
Unallocated items 11,262 11,262
--------------------------------------------------------------------------
$475,493 $457,545
--------------------------------------------------------------------------
--------------------------------------------------------------------------


Contact Information

  • TVA Group Inc.
    Denis Rozon, CA
    Vice-President and Chief Financial Officer
    514-598-2808