Quebecor Inc. Reports Consolidated Results for Third Quarter 2009

Printing now limited to 54.7% stake in Quebecor Media Network, provider of flyer printing and distribution services;

Sourcec: Quebecor Inc. -- Graphic Arts Online, November 8, 2009

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

Highlights since end of second quarter 2009

- Quebecor records revenues of $918.4 million, up $10.3 million (1.1%) from third quarter 2008.

- Operating income (1): up $23.6 million (8.5%) to $301.0 million.

- Net income: $69.4 million ($1.08 per basic share), up $23.7 million ($0.37 per basic share) or 51.9% from $45.7 million ($0.71 per basic share) in the same period of 2008.

- Adjusted income from continuing operating activities (2): $52.9 million ($0.82 per basic share), up $10.4 million ($0.16 per basic share), or 24.5%, from $42.5 million ($0.66 per basic share) in the same period of 2008.

- Telecommunications segment: operating income up $34.7 million (17.3%). Customer growth in third quarter 2009: +44,300 for cable telephone service, +35,500 for cable Internet access, +27,100 for cable television service (including 52,100-customer increase for illico Digital TV), +6,300 activated phones for wireless telephone service.

- illico Digital TV service provided by Videotron Ltd. ("Videotron") passes million-subscriber mark.

- Restructuring and other cost-reduction initiatives in News Media segment generate estimated savings of $45.0 million in first nine months of 2009.

"Quebecor's results trended strongly upward in the third quarter of 2009 with a 51.9% increase in net income to $69.4 million, or $1.08 per basic share," said Pierre Karl Peladeau, President and Chief Executive Officer of Quebecor. "Videotron again posted a significant increase in operating income, reflecting customer growth for all its services for the 17th consecutive quarter. At the same time, Videotron is pressing ahead with its advanced wireless services network project. As of September 30, 2009, all service and switching platforms had been installed, as well as the interconnections with Videotron's existing network. The build-out of antenna sites is proceeding on schedule. For nearly 60% of these sites, leases have been signed or tower-sharing requests accepted and the equipment is being installed. Meanwhile, in the News Media segment, cost-cutting efforts continued to pay off. Total year-to-date savings generated by these initiatives are estimated at $45.0 million."Analysis of third quarter 2009 results
- Quebecor's revenues increased $10.3 million (1.1%) to $918.4 million.
  - Revenues increased in the following segments: Telecommunications (by    $50.8 million or 11.2% of segment revenues) mainly because of customer    growth for all services, and in Leisure and Entertainment ($4.8 million    or 6.4%).
  - Revenues decreased in News Media ($41.6 million or -14.7%) due    essentially to lower advertising revenues, Broadcasting ($3.1 million    or -3.4%) and Interactive Technologies and Communications ($0.4 million    or -1.9%).
- Operating income increased $23.6 million (8.5%) to $301.0 million, due  primarily to an increase in the Telecommunications segment ($34.7 million  or 17.3% of segment operating income). Operating income rose $3.2 million (36.8%) in the Leisure and Entertainment segment and decreased $7.7  million (-14.6%) in News Media.
- Quebecor's net income totalled $69.4 million ($1.08 per basic share),  compared with $45.7 million ($0.71 per basic share) in the same period of  2008, an increase of $23.7 million ($0.37 per basic share) or 51.9%.
- The increase was mainly due to:
  - $26.7 million favourable variance in gain on valuation and translation    of financial instruments resulting primarily from the fluctuation in    the fair value of early settlement options;
  - $23.6 million increase in operating income;
  - $8.1 million decrease in financial expenses.
  Partially offset by:
  - $21.7 million increase in non-controlling interest;
  - $9.7 million increase in amortization charge;
  - $3.0 million increase in income tax expense.
- Adjusted income from continuing operating activities: $52.9 million in  the third quarter of 2009 ($0.82 per basic share), compared with $42.5  million ($0.66 per basic share) in the same period of 2008, an increase  of $10.4 million ($0.16 per basic share) or 24.5%.
Analysis of year-to-date operating results
- Quebecor's revenues totalled $2.75 billion, an increase of $26.5 million (1.0%).
  - Revenues increased in the following segments: Telecommunications (by    $137.6 million or 10.3% of segment revenues), Leisure and Entertainment   ($10.8 million or 5.4%), Interactive Technologies and Communications   ($1.9 million or 2.9%) and Broadcasting ($0.7 million or 0.2%).
  - Revenues decreased in News Media (by $123.7 million or -14.1%).
- Operating income increased $78.1 million (9.6%) to $889.1 million, due  primarily to an increase in the Telecommunications segment ($112.2  million or 19.4% of segment operating income). Operating income decreased  in News Media (by $42.1 million or -24.4%).
  The increase in operating income includes an $18.0 million favourable  variance (including $13.9 million in the Telecommunications segment and  $4.1 million in the Broadcasting segment) related to recognition during  the first nine months of 2008 of a retroactive provision for Canadian  Radio-television and Telecommunications Commission ("CRTC") Part II  licence fees ("Part II fees").
- Quebecor's net income was $203.9 million ($3.17 per basic share),  compared with $531.6 million ($8.27 per basic share) in the same period  of 2008.
- Favourable variances in the following items:
  - $78.1 million increase in operating income;
  - $38.2 million decrease in financial expenses;
  - $15.4 million decrease in income tax expense;
  - $13.7 million favourable variance in gain on valuation and translation    of financial instruments;
were outweighed by:
  - recognition in first quarter of 2008 of income from discontinued    operations in the amount of $383.3 million, compared with $1.6 million    in the third quarter of 2009;
  - $51.2 million increase in non-controlling interest;
  - $22.8 million increase in amortization charge;
  - recognition of a $13.6 million non-cash impairment charge for goodwill    and intangible assets during the first nine months of 2009.
- Adjusted income from continuing operating activities: $152.3 million for  the first nine months of 2009 ($2.37 per basic share), compared with  $118.6 million ($1.85 per basic share) in the same period of 2008, an  increase of $33.7 million ($0.52 per basic share) or 28.4%.
 


Event after end of third quarter 2009

With respect to the Part II fees payable to the CRTC, Videotron and TVA Group Inc. ("TVA Group") agreed on an out-of-court settlement on October 7, 2009 whereby they withdrew their legal challenge and monetary claims, and the government agreed not to claim the unpaid Part II fees for the period of September 1, 2006 through August 31, 2009. In view of this settlement, Quebecor will reverse in the fourth quarter of 2009 provisions totalling $42.8 million for unpaid Part II fees as of August 31, 2009. Under the out-of-court settlement, the government also undertook to recommend that the CRTC amend its regulations to limit the amount of the Part II fees for periods subsequent to August 31, 2009. To date, however, the current regulatory rate remains applicable to Quebecor and will continue to apply until such time as it is amended by the CRTC.

Dividends

On November 4, 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 December 15, 2009 to shareholders of record at the close of business on November 20, 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 third quarter of 2009, please refer to the Management Discussion and Analysis and consolidated financial statements of Quebecor, available on the Quebecor's website at http://www.quebecor.com/InvestorCenter/QIQuarterlyReports.aspx