Quebecor Inc. Reports Consolidated Results for Second Quarter 2014

Quebecor Inc. Reports Consolidated Results for Second Quarter 2014  MONTREAL, QUEBEC -- (Marketwired) -- 07/31/14 --   Quebecor Inc. ("Quebecor" or the "Corporation") (TSX: QBR.A)(TSX: QBR.B) today reported its consolidated financial results for the second quarter of 2014. Quebecor consolidates the financial results of its Quebecor Media Inc. ("Quebecor Media") subsidiary, in which it holds a 75.4% interest.   Highlights   Second quarter 2014        --  Revenues up $6.0 million (0.6%) to $1.07 billion.    --  Adjusted operating income(1) up $13.6 million (3.7%) to $385.9 million     despite the unfavourable impact on the comparative results of a one-time     $5.8 million adjustment to Canadian Radio-television and     Telecommunications Commission ("CRTC") fees in 2013.    --  Net loss attributable to shareholders: $54.8 million ($0.45 per basic     share) in the second quarter of 2014 compared with $93.6 million ($0.75     per basic share) in the same period of 2013, a favourable variance of     $38.8 million ($0.30 per basic share).    --  Adjusted income from continuing operations(2): $66.0 million ($0.54 per     basic share) in the second quarter of 2014, compared with $53.0 million     ($0.43 per basic share) in the same period of 2013, an increase of $13.0     million ($0.11 per basic share).    --  The Telecommunications segment grew its revenues by $20.7 million (3.1%)     and its adjusted operating income by $10.7 million (3.3%) in the second     quarter of 2014. Mobile telephony revenues were up $13.7 million or     25.8% and Internet access revenues were up $10.5 million or 5.1%.     --  The News Media segment's adjusted operating income was up $6.1 million     (20.8%) in the second quarter of 2014. The sale of 74 Quebec weeklies to     Transcontinental Interactive Inc ("Transcontinental Interactive"), a     subsidiary of Transcontinental Inc. ("Transcontinental"), for a cash     consideration of $75.0 million closed on June 1, 2014.    --  On April 28, 2014, Pierre Dion was appointed President and CEO of     Quebecor and Quebecor Media, replacing Robert Depatie, who resigned for     health reasons. Manon Brouillette was named President and CEO of     Videotron Ltd. ("Videotron") on May 7, 2014.    --  On June 19, 2014, at the Corporation's Annual Meeting of Shareholders,     the Right Honourable Brian Mulroney was named Chairman of the Board of     Quebecor.    --  On July 31, 2014. Quebecor announced the creation of Media Group, a new     segment dedicated to entertainment and news media. Media Group includes     the operations of TVA Group Inc. ("TVA Group"), Sun Media Corporation,     QMI Agency, QMI Out of Home, Quebecor Media Sales, Messageries     Dynamiques, and Quebecor Media Printing Inc. Julie Tremblay was named     President and CEO of the new segment. She will also serve as President     and CEO of TVA Group.    (1) See "Adjusted operating income" under "Definitions."                   (2) See "Adjusted income from continuing operations" under "Definitions."   "In the second quarter of 2014, Quebecor posted a $13.6 million increase in adjusted operating income and a 24.5% increase in adjusted income from continuing operations," noted Pierre Dion, President and CEO of Quebecor. "Once again, the strong results were propelled by the Telecommunications segment's performance, combined with successful cost-containment and reduction initiatives in our News Media segment and the positive impact of various refinancing operations completed at advantageous interest rates.   "The News Media segment will continue its repositioning with the creation of Media Group. The new entity will maximize our group's strengths by pooling its talents in order to provide even better, more diverse and more distinctive content. Media Group will enhance our capability to push content across all our platforms more effectively and more nimbly, taking the convergence strategy that undergirds our success to the next level."   "Videotron continued its growth in the second quarter of 2014, increasing its revenues by $20.7 million or 3.1%, and its adjusted operating income by $10.7 million, despite the $4.7 million unfavourable impact of CRTC fees," said Manon Brouillette, President and CEO of Videotron. "Average monthly revenue per user ("ARPU") rose to $123.61, up $6.37 (5.4%) from the second quarter of 2013. Our mobile telephony service made substantial gains, adding more than 100,000 subscriber connections over the past 12 months. Videotron continues to demonstrate its formidable capacity to innovate and launch new products, such as its new illico app for the iPad and a next-generation Wi-Fi router that is compatible with the latest wireless technology."   "The adjusted operating income of the News Media segment, now part of Media Group, jumped 20.8%, despite a 7.3% decrease in revenues," said Julie Tremblay, President and CEO of Media Group. "The numbers reflect the positive impact of the major cost-reduction and repositioning initiatives implemented over the past few years."   In the Broadcasting segment, on July 1, 2014 TVA Sports became the official French-language broadcaster of the National Hockey League for the next 12 years. TVA Group reached agreements with TELUS and Cogeco Cable Canada whereby TELUS and Cogeco customers will have access to TVA content on demand and to the TVA Sports and TVA Sports 2 specialty channels. TVA Group also announced that the successful television program La Voix will be back for a third season in winter 2015.   "Quebecor's solid year-to-date consolidated financial results were driven by the pursuit of its business plan in its growth sectors and the refocusing and transformation of its more traditional media outlets," said Pierre Dion. "The Corporation remains favourably positioned to achieve its business development, growth and profitability objectives in the second half of 2014 and subsequent quarters."         Table 1                                                                      Quebecor second quarter financial highlights, 2010 to 2014                   (in millions of Canadian dollars, except per share data)                     ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                               2014    2013(1)       2012       2011     2010 ----------------------------------------------------------------------------   Revenues                 $ 1,069.2  $ 1,063.2  $ 1,053.8  $ 1,019.9  $ 967.7 Adjusted operating income    385.9      372.3      358.1      356.8    348.6 (Loss) income from                                                            continuing operations                                                        attributable to                                                              shareholders                (61.2)    (119.7)      66.5       53.6     59.2 Net (loss) income                                                             attributable to                                                              shareholders                (54.8)     (93.6)      65.5       54.0     60.4 Adjusted income from                                                          continuing operations        66.0       53.0       48.2       58.3     61.3 Per basic share(2):                                                            (Loss) income from                                                            continuing operations                                                        attributable to                                                              shareholders              (0.50)     (0.96)      0.52       0.42     0.46   Net (loss) income                                                             attributable to                                                              shareholders              (0.45)     (0.75)      0.52       0.42     0.47   Adjusted income from                                                          continuing operations      0.54       0.43       0.38       0.45     0.48 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1) The financial figures for 2013 have been restated to reflect changes to      the accounting policy for the accounting of convertible debentures.      (2) The per basic share data have been retroactively adjusted to reflect the     two-for-one split of the Corporation's shares on August 14, 2013.         Discontinued operations  Quebecor Media announced that it was abandoning door-to-door distribution of community newspapers and flyers in Quebec and discontinuing distribution of the Le Sac Plus doorknob bag as of January 2014. On June 1, 2014, Quebecor Media finalized the sale of 74 Quebec weeklies to Transcontinental Interactive, a subsidiary of Transcontinental, for a cash consideration of $75.0 million. Quebecor Media sold its specialized websites Jobboom and Reseau Contact on June 1, 2013 for a total cash consideration of $59.2 million, net of disposed-of cash in the amount of $5.8 million. The operating results and cash flows related to those businesses, as well as the $7.9 million gain on the sale of the 74 Quebec weeklies and the $37.6 million gain on the sale of the two websites, were reclassified as discontinued operations in the consolidated statements of income and cash flows.  Changes in accounting policies  Although market participants submitted various interpretations to the IFRS Interpretations Committee, as per the report released by the Committee in May 2014, a financial instrument that is mandatorily convertible into a variable number of shares, subject to a cap and a floor, should be classified in its entirety as a liability. As such, the Corporation changed retrospectively its accounting policy for the accounting of its convertible debentures to be in line with the IFRS Interpretations Committee discussions.  2014/2013 second quarter comparison  Revenues: $1.07 billion, a $6.0 million (0.6%) increase.         --  Revenues increased in Telecommunications ($20.7 million or 3.1% of     segment revenues) and in Interactive Technologies and Communications     ($1.5 million or 4.2%).    --  Revenues decreased in News Media ($14.6 million or -7.3%), Leisure and     Entertainment ($3.2 million or -4.8%) and Broadcasting ($1.4 million or     -1.2%).   Adjusted operating income: $385.9 million, a $13.6 million (3.7%) increase.        --  Adjusted operating income increased in Telecommunications ($10.7 million     or 3.3% of segment adjusted operating income) and News Media ($6.1     million or 20.8%).     --  Adjusted operating income decreased in Leisure and Entertainment ($3.6     million), Broadcasting ($0.4 million or -2.3%) and Interactive     Technologies and Communications ($0.2 million or -4.5%).    --  The change in the fair value of Quebecor Media stock options resulted in     a $0.9 million unfavourable variance in the stock-based compensation     charge in the second quarter of 2014 compared with the same period of     2013. The change in the fair value of Quebecor stock options and the     impact of various transactions on the options issued under this program     resulted in a $6.8 million favourable variance in the Corporation's     stock-based compensation charge in the second quarter of 2014.  Net loss attributable to shareholders: $54.8 million ($0.45 per basic share) in the second quarter of 2014, compared with $93.6 million ($0.75 per basic share) in the same period of 2013, a favourable variance of $38.8 million ($0.30 per basic share).         --  The favourable variance was due primarily to:        --  $269.8 million favourable variance in gains and losses on valuation         and translation of financial instruments;        --  $18.9 million loss on debt refinancing recorded in the second         quarter of 2013;        --  $14.3 million decrease in financial expenses;        --  $13.6 million increase in adjusted operating income.           Partially offset by:       --  recognition of a $190.0 million non-cash charge for impairment of         goodwill and intangible assets, without any tax consequences, in the         second quarter of 2014;        --  $26.1 million unfavourable variance in the gain on discontinued         operations;        --  $6.0 million increase in the amortization charge.   In the second quarter of 2014, Quebecor Media recognized a $190.0 million non-cash goodwill impairment charge without any tax consequences in the News Media segment, in accordance with International Financial Reporting Standards ("IFRS") accounting valuation principles. The charge reflects the impact of the transition to digital and challenging market conditions in the newspaper industry.   Adjusted income from continuing operations: $66.0 million ($0.54 per basic share) in the second quarter of 2014, compared with $53.0 million ($0.43 per basic share) in the same period of 2013, an increase of $13.0 million ($0.11 per basic share).  2014/2013 year-to-date comparison  Revenues: $2.11 billion, a $17.4 million (0.8%) increase.         --  Revenues increased in Telecommunications ($52.5 million or 3.9% of     segment revenues) and in Interactive Technologies and Communications     ($1.4 million or 2.0%).    --  Revenues decreased in News Media ($30.6 million or -7.9%), Broadcasting     ($6.2 million or -2.7%), and Leisure and Entertainment ($5.9 million or     -4.5%).   Adjusted operating income: $732.4 million, a $35.1 million (5.0%) increase.        --  Adjusted operating income increased in Telecommunications ($32.6 million     or 5.1% of segment adjusted operating income), News Media ($6.5 million     or 14.7%), Interactive Technologies and Communications ($1.1 million or     19.3%) and Head Office ($8.1 million). The increase at Head Office was     caused mainly by the favourable variance in the fair value of stock     options.    --  Adjusted operating income decreased in Broadcasting ($7.5 million or     -55.6%) and Leisure and Entertainment ($5.7 million).    --  The change in the fair value of Quebecor Media stock options resulted in     a $2.8 million unfavourable variance in the stock-based compensation     charge in the first half of 2014 compared with the same period of 2013.     The change in the fair value of Quebecor stock options resulted in a     $15.2 million favourable variance in the Corporation's consolidated     stock-based compensation charge in the first half of 2014.  Net loss attributable to shareholders: $15.7 million ($0.13 per basic share) in the first half of 2014, compared with $100.1 million ($0.80 per basic share) in the same period of 2013, a favourable variance of $84.4 million ($0.67 per basic share).         --  The favourable variance was due primarily to:        --  $304.7 million favourable variance in gains and losses on valuation         and translation of financial instruments;        --  $35.1 million increase in adjusted operating income;        --  $20.5 million decrease in financial expenses.           Partially offset by:        --  recognition of a $190.0 million non-cash charge for impairment of         goodwill and intangible assets, without any tax consequences, in the         first half of 2014;        --  $22.9 million unfavourable variance in the gain on discontinued         operations;        --  $13.6 million increase in the amortization charge.   Adjusted income from continuing operations: $112.7 million in the first half of 2014 ($0.92 per basic share), compared with $86.7 million ($0.70 per basic share) in the same period of 2013, an increase of $26.0 million ($0.22 per basic share).  Financing  The following financial transactions have been concluded since the end of the first quarter of 2014:        --  On April 9, 2014, Videotron issued US$600.0 million aggregate principal     amount of 5.375% Senior Notes maturing on June 15, 2024, for net     proceeds of $654.5 million, net of financing fees of $7.8 million.     Videotron fully hedged the exchange risk on the new Senior Notes by     means of cross-currency interest rate swaps. It also converted the fixed     interest rate on a US$158.6 million tranche of the Senior Notes to a     floating rate.    --  Videotron used the proceeds from the April 9, 2014 issuance of Senior     Notes to prepay and withdraw on April 24, 2014 US$260 million principal     amount of its outstanding 9.125% Senior Notes, issued on March 5, 2009     and maturing on April 15, 2018, to repay drawings under its revolving     credit facility, to pay transaction fees and expenses, and for general     corporate purposes. Strong demand enabled Videotron to upsize the     offering with favorable pricing, which clearly demonstrates the strength     of the subsidiary's business and credit profile.    --  On April 25, 2014, Quebecor Media completed the redemption and early     repayment of all of its outstanding 7.75% Senior Notes in the aggregate     principal amount of US$380.0 million, issued on October 5, 2007 and     maturing on March 15, 2016, and unwound the hedges in an asset position.  Dividend  On July 30, 2014, the Board of Directors of Quebecor declared a quarterly dividend of $0.025 per share on its Class A Multiple Voting Shares ("Class A Shares") and Class B Subordinate Voting Shares ("Class B Shares"), payable on September 9, 2014 to shareholders of record at the close of business on August 5, 2014. This dividend is designated to be an eligible dividend, as provided under subsection 89(14) of the Canadian Income Tax Act and its provincial counterpart.  Normal course issuer bid  On July 30, 2014, the Board of Directors of Quebecor authorized the renewal of its normal course issuer bid for a maximum of 500,000 Class A Shares representing approximately 1.3% of issued and outstanding Class A Shares, and for a maximum of 2,000,000 Class B Shares representing approximately 2.4% of issued and outstanding Class B Shares as of July 29, 2014.   The purchases will be made from August 13, 2014 to August 12, 2015, at prevailing market prices, on the open market through the facilities of the Toronto Stock Exchange, and will be made in accordance with the requirements of said Exchange. All shares purchased under the bid will be cancelled. As of July 29, 2014, 39,000,672 Class A Shares and 83,875,792 Class B Shares were issued and outstanding.   The average daily trading volume of the Corporation's Class A Shares and Class B Shares from January 1, 2014 to June 30, 2014 was 870 Class A Shares and 412,399 Class B Shares. Consequently, the Corporation will be authorized to purchase a maximum of 1,000 Class A Shares and 103,099 Class B Shares during the same trading day, pursuant to its normal course issuer bid.   The Corporation believes that the repurchase of these shares under this normal course issuer bid is in the best interests of the Corporation and its shareholders.   Shareholders may obtain a copy of the Notice filed with the Toronto Stock Exchange, without charge, by contacting the Office of the Secretary of the Corporation at 514 380-1994.   Detailed financial information  For a detailed analysis of Quebecor's second quarter 2014 results, please refer to the Management Discussion and Analysis and consolidated financial statements of Quebecor, available on the Corporation's website at:  http://www.quebecor.com/en/quarterly_doc_quebecor_inc or from the SEDAR filing service at www.sedar.com.   Conference call for investors and webcast   Quebecor will hold a conference call to discuss its second quarter 2014 results on July 31, 2014, 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 for participants 45336#. A tape recording of the call will be available from July 31 to October 30, 2014 by dialling 1 877 293-8133, conference number 1161708, access code for participants 78620#. The conference call will also be broadcast live on Quebecor's website at www.quebecor.com/en/content/conference-call. It is advisable to ensure the appropriate software is installed before accessing the call. Instructions and links to free player downloads are available at the Internet address shown above.   Cautionary statement regarding forward-looking statements  The statements in this press release that are not historical facts are forward-looking statements and are subject to significant known and unknown risks, uncertainties and assumptions that could cause the Corporation'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 of Quebecor's Management Discussion and Analysis for the year ended December 31, 2013.   The forward-looking statements in this press release reflect Quebecor's expectations as of July 31, 2014, and are subject to change after that date. Quebecor expressly disclaims any obligation or intention to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.   The Corporation   Quebecor, a Canadian telecommunications, entertainment and news media leader, is one of the best-performing integrated communications companies in the industry. Driven by their determination to deliver the best possible customer experience, all of Quebecor's subsidiaries and brands are differentiated by their high-quality, multiplatform, convergent products and services.   Quebecor (TSX: QBR.A)(TSX: QBR.B) is firmly based in Quebec. It holds a 75.36% interest in Quebecor Media, which employs nearly 15,000 people in Canada.  A family business founded in 1950, Quebecor is strongly committed to the community. Every year, it actively supports people working with more than 400 organizations in the vital fields of culture, health, education, the environment, and entrepreneurship.   Visit our Web site: www.quebecor.com  Follow us on Twitter: www.twitter.com/QuebecorMedia   DEFINITIONS  Adjusted operating income  In its analysis of operating results, the Corporation defines adjusted operating income, as reconciled to net loss under IFRS, as net loss before amortization, financial expenses, gain (loss) on valuation and translation of financial instruments, charge for restructuring of operations, impairment of assets and other special items, charge for impairment of goodwill, loss on debt refinancing, income tax (expense) recovery, and income from discontinued operations. Adjusted operating income as defined above is not a measure of results that is consistent with IFRS. It is not intended to be regarded as an alternative to other financial operating performance measures or to the statement of cash flows as a measure of liquidity. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The Corporation uses adjusted operating income in order to assess the performance of its investment in Quebecor Media. The Corporation's management and Board of Directors use this measure in evaluating its consolidated results as well as the results of the Corporation's operating segments. This measure eliminates the significant level of impairment and amortization of tangible and intangible assets and is unaffected by the capital structure or investment activities of the Corporation and its segments.   Adjusted operating income is also relevant because it is a significant component of the Corporation's annual incentive compensation programs. A limitation of this measure, however, is that it does not reflect the periodic costs of tangible and intangible assets used in generating revenues in the Corporation's segments. The Corporation also uses other measures that do reflect such costs, such as cash flows from segment operations and free cash flows from continuing operating activities of the Quebecor Media subsidiary. The Corporation's definition of adjusted operating income may not be the same as similarly titled measures reported by other companies.  Table 2 below provides a reconciliation of adjusted operating income to net loss as disclosed in Quebecor's condensed consolidated financial statements.        Table 2                                                                      Reconciliation of the adjusted operating income measure used in this press   release to the net loss measure used in the condensed consolidated financial statements                                                                   (in millions of Canadian dollars)                                                                                Three months ended     Six months ended                                                 June 30              June 30  ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                        2014       2013      2014       2013  ----------------------------------------------------------------------------   Adjusted operating income (loss):                                              Telecommunications                $ 331.1   $  320.4   $ 665.7   $  633.1    News Media                           35.4       29.3      50.8       44.3    Broadcasting                         16.8       17.2       6.0       13.5    Leisure and Entertainment            (2.5)       1.1      (4.5)       1.2    Interactive Technologies and                                                  Communications                       4.2        4.4       6.8        5.7    Head Office                           0.9       (0.1)      7.6       (0.5) ----------------------------------------------------------------------------                                       385.9      372.3     732.4      697.3  Amortization                         (170.2)    (164.2)   (339.8)    (326.2) Financial expenses                    (87.5)    (101.8)   (181.8)    (202.3) Gain (loss) on valuation and                                                  translation of financial                                                     instruments                           20.8     (249.0)     23.7     (281.0) Restructuring of operations,                                                  impairment of assets and other                                               special items                         (9.4)      (7.6)    (10.9)      (9.2) Impairment of goodwill               (190.0)         -    (190.0)         -  Loss on debt refinancing                  -      (18.9)    (18.7)     (18.9) Income tax (expense) recovery         (32.9)      30.2     (50.4)       8.8  Income from discontinued                                                      operations                             8.5       34.6       7.8       30.7  ---------------------------------------------------------------------------- Net loss                            $ (74.8)  $ (104.4)  $ (27.7)  $ (100.8) ---------------------------------------------------------------------------- ----------------------------------------------------------------------------  Adjusted income from continuing operations  The Corporation defines adjusted income from continuing operations, as reconciled to net loss attributable to shareholders under IFRS, as net loss attributable to shareholders before gain on valuation and translation of financial instruments, charge for restructuring of operations, impairment of assets and other special items, impairment of goodwill and loss on debt refinancing, net of income tax related to adjustments and net loss attributable to non-controlling interests related to adjustments, before income from discontinued operations attributable to shareholders. Adjusted income from continuing operations, as defined above, is not a measure of results that is consistent with IFRS. It should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The Corporation uses adjusted income from continuing operations to analyze trends in the performance of its businesses. The above-listed items are excluded from the calculation of this measure because they impair the comparability of the financial results. Adjusted income from continuing operations is more representative for the purpose of forecasting income. The Corporation's definition of adjusted income from continuing operations may not be identical to similarly titled measures reported by other companies.    Table 3 provides a reconciliation of adjusted income from continuing operations to net loss attributable to shareholders used in Quebecor's condensed consolidated financial statements.        Table 3                                                                      Reconciliation of the adjusted income from continuing operations measure     used in this press release to the net loss attributable to shareholders      measure used in the condensed consolidated financial statements              (in millions of Canadian dollars)                                                                                Three months ended     Six months ended                                                 June 30              June 30  ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                         2014      2013      2014       2013  ----------------------------------------------------------------------------   Adjusted income from continuing                                               operations                          $  66.0   $  53.0   $ 112.7   $   86.7  Gain (loss) on valuation and                                                  translation of financial                                                     instruments                            20.8    (249.0)     23.7     (281.0) Restructuring of operations,                                                  impairment of assets and other                                               special items                          (9.4)     (7.6)    (10.9)      (9.2) Impairment of goodwill                (190.0)        -    (190.0)         -  Loss on debt refinancing                   -     (18.9)    (18.7)     (18.9) Income taxes related to                                                       adjustments(1)                          2.5      60.2       9.9       56.9  Net loss attributable to non-                                                 controlling interest related to                                              adjustments                            48.9      42.6      51.7       42.3  Discontinued operations                  6.4      26.1       5.9       23.1  ---------------------------------------------------------------------------- Net loss attributable to                                                      shareholders                        $ (54.8)  $ (93.6)  $ (15.7)  $ (100.1) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1) Includes impact of fluctuations in income tax applicable to adjusted         items, either for statutory reasons or in connection with tax                transactions.                                                             Average monthly revenue per user  ARPU is an industry metric that the Corporation uses to measure its monthly cable television, Internet access, cable and mobile telephony revenues per average basic cable customer. ARPU is not a measurement that is consistent with IFRS and the Corporation's definition and calculation of ARPU may not be the same as identically titled measurements reported by other companies. The Corporation calculates ARPU by dividing its combined cable television, Internet access, and cable and mobile telephony revenues by the average number of basic customers during the applicable period, and then dividing the resulting amount by the number of months in the applicable period.        QUEBECOR INC. AND ITS SUBSIDIARIES                                           CONSOLIDATED STATEMENTS OF INCOME                                            (in millions of Canadian                                                      dollars, except for earnings                                                 per share data)                                                             (unaudited)                       Three months ended       Six months ended                                               June 30                June 30  ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                     2014        2013       2014        2013  ----------------------------------------------------------------------------                                            (restated)             (restated)   Revenues                       $ 1,069.2  $  1,063.2  $ 2,107.3  $  2,089.9    Employee costs                     234.8       252.0      469.7       507.9  Purchase of goods and services     448.5       438.9      905.2       884.7  Amortization                       170.2       164.2      339.8       326.2  Financial expenses                  87.5       101.8      181.8       202.3  (Gain) loss on valuation and                                                  translation of financial                                                     instruments                       (20.8)      249.0      (23.7)      281.0  Restructuring of operations,                                                  impairment of assets and                                                     other special items                 9.4         7.6       10.9         9.2  Impairment of goodwill             190.0           -      190.0           -  Loss on debt refinancing               -        18.9       18.7        18.9                                ---------------------------------------------- (Loss) income before income                                                   taxes                             (50.4)     (169.2)      14.9      (140.3) Income taxes (recovery):                                                       Current                           26.8        30.4       33.2        54.6    Deferred                           6.1       (60.6)      17.2       (63.4)                               ----------------------------------------------                                     32.9       (30.2)      50.4        (8.8)                               ----------------------------------------------   Loss from continuing                                                          operations                        (83.3)     (139.0)     (35.5)     (131.5) Income from discontinued                                                      operations                          8.5        34.6        7.8        30.7                                ---------------------------------------------- Net loss                       $   (74.8) $   (104.4) $   (27.7) $   (100.8)                               ----------------------------------------------                               ---------------------------------------------- Loss from continuing                                                          operations attributable to                                                    Shareholders                 $   (61.2) $   (119.7) $   (21.6) $   (123.2)   Non-controlling interests        (22.1)      (19.3)     (13.9)       (8.3)                               ----------------------------------------------                               ---------------------------------------------- Net loss attributable to                                                       Shareholders                 $   (54.8) $    (93.6) $   (15.7) $   (100.1)   Non-controlling interests        (20.0)      (10.8)     (12.0)       (0.7)                               ----------------------------------------------                               ----------------------------------------------   Earnings per share                                                            attributable to shareholders                                                  Basic:                                                                         From continuing operations $   (0.50) $    (0.96) $   (0.18) $    (0.99)     From discontinued                                                             operations                     0.05        0.21       0.05        0.19      Net loss                       (0.45)      (0.75)     (0.13)      (0.80)   Diluted:                                                                       From continuing operations     (0.56)      (0.96)     (0.26)      (0.99)     From discontinued                                                             operations                     0.05        0.21       0.04        0.19      Net loss                       (0.51)      (0.75)     (0.22)      (0.80)                               ----------------------------------------------                               ----------------------------------------------   Weighted average number of                                                    shares outstanding (in                                                       millions)                         123.0       124.3      123.0       124.5  Weighted average number of                                                    diluted shares (in millions)      143.8       124.3      143.8       124.5                                ----------------------------------------------                               ----------------------------------------------   QUEBECOR INC. AND ITS SUBSIDIARIES                                           CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME                                (in millions of Canadian                                                      dollars)                                                                                                      Three months ended       Six months ended  (unaudited)                                  June 30                June 30  ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                     2014        2013       2014        2013  ----------------------------------------------------------------------------                                            (restated)             (restated)   Net loss                       $   (74.8) $   (104.4) $   (27.7) $   (100.8) Other comprehensive loss:                                                      Items that may be                                                             reclassified to income:                                                       (Loss) gain on translation                                                    of net investments in                                                        foreign operations             (2.1)        4.1       (0.2)        5.2      Cash flow hedges:                                                              Gain (loss) on valuation                                                      of derivative financial                                                      instruments                   3.3        (2.6)      (8.3)      (28.5)       Deferred income taxes          8.4        (4.2)       0.7        (3.4)   Reclassification to income:                                                    Gain related to cash flow                                                     hedges                            -        (6.5)     (10.8)       (6.5)     Deferred income taxes              -         0.2        0.4         0.2                                ----------------------------------------------                                      9.6        (9.0)     (18.2)      (33.0)                               ---------------------------------------------- Comprehensive loss             $   (65.2) $   (113.4) $   (45.9) $   (133.8)                               ----------------------------------------------                               ----------------------------------------------   Comprehensive loss                                                            attributable to                                                               Shareholders                 $   (47.6) $   (100.4) $   (29.5) $   (125.0)   Non-controlling interests        (17.6)      (13.0)     (16.4)       (8.8)                               ----------------------------------------------                               ----------------------------------------------   QUEBECOR INC. AND ITS SUBSIDIARIES                                           SEGMENTED INFORMATION                                                          (in millions of Canadian dollars)                                            (unaudited)                                                                  ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                              Three months ended June 30,2014 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                                                       Leisure                                                                          and                                  Telecommu-       News     Broad-     Enter-                                   nications      Media    casting   tainment  ----------------------------------------------------------------------------   Revenues                       $     695.2 $    186.6 $    113.8 $     62.8    Employee costs                        84.9       58.6       35.7       14.2  Purchase of goods and services       279.2       92.6       61.3       51.1  ---------------------------------------------------------------------------- Adjusted operating income(1)         331.1       35.4       16.8       (2.5) Amortization                                                                 Financial expenses                                                           Gain on valuation and                                                         translation of financial                                                     instruments                                                                 Restructuring of operations,                                                  impairment of assets and                                                     other special items                                                         Impairment of goodwill                                                       ---------------------------------------------------------------------------- Loss before income taxes                                                     ---------------------------------------------------------------------------- ----------------------------------------------------------------------------   Additions to property, plant                                                  and equipment                 $     156.0 $      0.7 $      5.6 $      1.5  Additions to intangible assets       186.1        0.7        0.7        2.3  ---------------------------------------------------------------------------- ----------------------------------------------------------------------------   --------------------------------------------------------------------------- ---------------------------------------------------------------------------                                            Three months ended June 30,2014  --------------------------------------------------------------------------- ---------------------------------------------------------------------------                                   Interactive                                                                     Techno-          Head                                                    logies and        office                                                      Communi-    and Inter-                                                       cations      segments          Total  ---------------------------------------------------------------------------   Revenues                       $         37.3 $       (26.5) $     1,069.2    Employee costs                           24.6          16.8          234.8  Purchase of goods and services            8.5         (44.2)         448.5  --------------------------------------------------------------------------- Adjusted operating income(1)              4.2           0.9          385.9  Amortization                                                         170.2  Financial expenses                                                    87.5  Gain on valuation and                                                        translation of financial                                                    instruments                                                         (20.8) Restructuring of operations,                                                 impairment of assets and                                                    other special items                                                   9.4  Impairment of goodwill                                               190.0  --------------------------------------------------------------------------- Loss before income taxes                                     $       (50.4) --------------------------------------------------------------------------- ---------------------------------------------------------------------------   Additions to property, plant                                                 and equipment                 $          0.3 $         0.2  $       164.3  Additions to intangible assets              -             -          189.8  --------------------------------------------------------------------------- ---------------------------------------------------------------------------                                                  Three months ended June 30, 2013                                                                 (restated) -------------------------------------------------------------------------- --------------------------------------------------------------------------                                                                      Leisure                                                                        and                                Telecommu-       News     Broad-     Enter-                                 nications      Media    casting   tainment -------------------------------------------------------------------------- Revenues                      $     674.5 $    201.2 $    115.2 $     66.0   Employee costs                       88.0       71.7       36.7       14.6 Purchase of goods and                                                       services                           266.1      100.2       61.3       50.3 -------------------------------------------------------------------------- A djusted operating income(1)        320.4       29.3       17.2        1.1 Amortization                                                               Financial expenses                                                         Loss on valuation and                                                       translation of financial                                                   instruments                                                               Restructuring of operations,                                                impairment of assets and                                                   other special items                                                       Loss on debt refinancing                                                   -------------------------------------------------------------------------- Loss before income taxes                                                   -------------------------------------------------------------------------- --------------------------------------------------------------------------   Additions to property, plant                                                and equipment                $     126.8 $      2.1 $      4.4 $      0.5 Additions to intangible                                                     assets                              10.6        2.8        0.4        2.2 -------------------------------------------------------------------------- --------------------------------------------------------------------------                                            Three months ended June 30, 2013                                                                 (restated)  -------------------------------------------------------------------------- --------------------------------------------------------------------------                                  Interactive                                                                    Techno-          Head                                                   logies and        office                                                     Communi-    and Inter-                                                      cations      segments          Total  -------------------------------------------------------------------------- Revenues                      $         35.8 $       (29.5) $     1,063.2    Employee costs                          23.4          17.6          252.0  Purchase of goods and                                                       services                                8.0         (47.0)         438.9  -------------------------------------------------------------------------- Adjusted operating income(1)             4.4          (0.1)         372.3  Amortization                                                        164.2  Financial expenses                                                  101.8  Loss on valuation and                                                       translation of financial                                                   instruments                                                        249.0  Restructuring of operations,                                                impairment of assets and                                                   other special items                                                  7.6  Loss on debt refinancing                                             18.9  -------------------------------------------------------------------------- Loss before income taxes                                    $      (169.2) -------------------------------------------------------------------------- --------------------------------------------------------------------------   Additions to property, plant                                                and equipment                $          0.4 $         0.8  $       135.0  Additions to intangible                                                     assets                                    -          (0.2)          15.8  -------------------------------------------------------------------------- --------------------------------------------------------------------------   QUEBECOR INC. AND ITS SUBSIDIARIES                                           SEGMENTED INFORMATION (continued)                                              (in millions of Canadian dollars)                                            (unaudited)                                                                  ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                                Six months ended June 30,2014 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                                                       Leisure                                                                          and                                 Telecommu-       News      Broad-     Enter-                                  nications      Media     casting   tainment  ----------------------------------------------------------------------------   Revenues                      $   1,387.9 $    355.8 $     222.7 $    124.4    Employee costs                      172.1      120.5        71.5       28.8  Purchase of goods and                                                         services                           550.1      184.5       145.2      100.1  ---------------------------------------------------------------------------- Adjusted operating income(1)        665.7       50.8         6.0       (4.5)   Amortization                                                                 Financial expenses                                                           Gain on valuation and                                                         translation of financial                                                     instruments                                                                 Restructuring of operations,                                                  impairment of assets and                                                     other special items                                                         Impairment of goodwill                                                       Loss on debt refinancing                                                     ---------------------------------------------------------------------------- Income before income taxes                                                   ---------------------------------------------------------------------------- ----------------------------------------------------------------------------   Additions to property, plant                                                  and equipment                $     299.0 $      2.5 $      14.3 $      3.8  Additions to intangible                                                       assets                             255.0        2.1         1.5        3.2  ---------------------------------------------------------------------------- ----------------------------------------------------------------------------   ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                               Six months ended June 30,2014  ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                   Interactive                                                                      Techno-           Head                                                    logies and         office                                                      Communi-     and Inter-                                                       cations       segments          Total  ----------------------------------------------------------------------------   Revenues                      $          72.4 $        (55.9) $     2,107.3    Employee costs                           49.0           27.8          469.7  Purchase of goods and                                                         services                                16.6          (91.3)         905.2  ---------------------------------------------------------------------------- Adjusted operating income(1)              6.8            7.6          732.4    Amortization                                                          339.8  Financial expenses                                                    181.8  Gain on valuation and                                                         translation of financial                                                     instruments                                                          (23.7) Restructuring of operations,                                                  impairment of assets and                                                     other special  items                                                   10.9  Impairment of goodwill                                                190.0  Loss on debt refinancing                                               18.7  ---------------------------------------------------------------------------- Income before income taxes                                    $        14.9  ---------------------------------------------------------------------------- ----------------------------------------------------------------------------   Additions to property, plant                                                  and equipment                $           0.8 $          0.2  $       320.6  Additions to intangible                                                       assets                                     -           (0.2)         261.6  ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                                 Six months ended June 30, 2013                                                                   (restated) ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                                                        Leisure                                                                          and                                 Telecommu-        News     Broad-     Enter-                                  nications       Media    casting   tainment ----------------------------------------------------------------------------   Revenues                       $   1,335.4 $     386.4 $    228.9 $    130.3   Employee costs                       176.2       143.8       74.5       29.4 Purchase of goods and services       526.1       198.3      140.9       99.7 ---------------------------------------------------------------------------- Adjusted operating income(1)         633.1        44.3       13.5        1.2   Amortization                                                                 Financial expenses                                                           Loss on valuation and                                                         translation of financial                                                     instruments                                                                 Restructuring of operations,                                                  impairment of assets and                                                     other special items                                                         Impairment of goodwill                                                       Loss on debt refinancing                                                     ---------------------------------------------------------------------------- Loss before income taxes                                                     ---------------------------------------------------------------------------- ----------------------------------------------------------------------------   Additions to property, plant                                                  and equipment                 $     272.4 $       4.3 $      9.8 $      1.0 Additions to intangible assets        23.6         3.8        1.0        2.9 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                               Six months ended June 30, 2013                                                                  (restated)  --------------------------------------------------------------------------- ---------------------------------------------------------------------------                                  Interactive                                                                     Techno-           Head                                                   logies and         office                                                     Communi-     and Inter-                                                      cations       segments          Total  ---------------------------------------------------------------------------   Revenues                       $        71.0  $       (62.1) $     2,089.9    Employee costs                          48.4           35.6          507.9  Purchase of goods and services          16.9          (97.2)         884.7  --------------------------------------------------------------------------- Adjusted operating income(1)             5.7           (0.5)         697.3    Amortization                                                         326.2  Financial expenses                                                   202.3  Loss on valuation and                                                        translation of financial                                                    instruments                                                         281.0  Restructuring of operations,                                                 impairment of assets and                                                    other special items                                                   9.2  Impairment of goodwill                                                   -  Loss on debt refinancing                                              18.9  --------------------------------------------------------------------------- Loss before income taxes                                     $      (140.3) --------------------------------------------------------------------------- ---------------------------------------------------------------------------   Additions to property, plant                                                 and equipment                 $         1.2  $         1.0  $       289.7  Additions to intangible assets             -           (0.1)          31.2  --------------------------------------------------------------------------- ---------------------------------------------------------------------------   (1) The Chief Executive Officer uses adjusted operating income as the            measure of profit to assess the performance of each segment. Adjusted        operating income is referred as a non-IFRS measure and is defined as net     loss before amortization, financial expenses, gain (loss) on valuation       and translation of financial instruments, restructuring of operations,       impairment of assets and other special items, impairment of goodwill,        loss on debt refinancing, income taxes and income from discontinued          operations.                                                                QUEBECOR INC. AND ITS SUBSIDIARIES                                           CONSOLIDATED STATEMENTS OF EQUITY                                              (in millions of Canadian dollars)                                            (unaudited)                                                                  ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                         Equity attributable to shareholders  ----------------------------------------------------------------------------                                                                   Accumulated                                                Equity             other com-                                 Contri-  component of             prehensive                      Capital      buted   convertible  Retained       income                        stock    surplus    debentures  earnings       (loss)  ----------------------------------------------------------------------------   Balance as of                                                                 December 31,                                                                 2012,as                                                                       previously                                                                   reported          $  335.1    $   2.3     $   398.3   $ 624.6    $   (50.3) Changes in                                                                    accounting                                                                   policies                 -          -        (398.3)     (2.0)           -  ---------------------------------------------------------------------------- Balance as of                                                                 December 31,                                                                 2012, as restated    335.1        2.3             -     622.6        (50.3) Net loss                  -          -             -    (100.1)           -  Other                                                                         comprehensive                                                                loss                     -          -             -         -        (24.9) Repurchase of                                                                 Class B Shares        (3.8)         -             -     (17.8)           -  Dividends                 -          -             -      (6.2)           -  Business                                                                      acquisition              -          -             -         -            -  ---------------------------------------------------------------------------- Balance as of June                                                            30, 2013             331.3        2.3             -     498.5        (75.2) Net loss                  -          -             -    (188.5)           -  Other                                                                         comprehensive                                                                income                   -          -             -         -         52.1  Repurchase of                                                                 Class B Shares        (2.4)         -             -     (12.4)           -  Dividends                 -          -             -      (6.2)           -  ---------------------------------------------------------------------------- Balance as of                                                                 December 31, 2013    328.9        2.3             -     291.4        (23.1) Net loss                  -          -             -     (15.7)           -  Other                                                                         comprehensive                                                                loss                     -          -             -         -        (13.8) Repurchase of                                                                 Class B Shares        (1.7)         -             -     (10.0)           -  Acquisition of                                                                non-controlling                                                              interests                -          -             -      (0.1)           -  Dividends                 -          -             -      (6.2)           -  ---------------------------------------------------------------------------- Balance as of June                                                            30, 2014          $  327.2    $   2.3     $       -   $ 259.4    $   (36.9) ---------------------------------------------------------------------------- ----------------------------------------------------------------------------   ----------------------------------------------------------------------------   ------------------                                                                                                     Equity                                                                 attributable                                                                           to                                                              non-controlling                        Total                                       interests                       equity  ----------------------------------------------------------------------------   Balance as of                                                                 December 31,                                                                 2012,as                                                                      previously                                                                   reported                            $   631.3                    $ 1,941.3  Changes in                                                                    accounting                                                                   policies                                    -                       (400.3) ---------------------------------------------------------------------------- Balance as of                                                                 December 31,                                                                 2012, as restated                       631.3                      1,541.0  Net loss                                  (0.7)                      (100.8) Other                                                                         comprehensive                                                                loss                                     (8.1)                       (33.0) Repurchase of                                                                 Class B Shares                              -                        (21.6) Dividends                                (12.5)                       (18.7) Business                                                                      acquisition                               0.3                          0.3  ---------------------------------------------------------------------------- Balance as of June                                                            30, 2013                                610.3                      1,367.2  Net loss                                 (31.4)                      (219.9) Other                                                                         comprehensive                                                                income                                   29.5                         81.6  Repurchase of                                                                 Class B Shares                              -                        (14.8) Dividends                                (12.5)                       (18.7) ---------------------------------------------------------------------------- Balance as of                                                                 December 31, 2013                       595.9                      1,195.4  Net loss                                 (12.0)                       (27.7) Other                                                                         comprehensive                                                                loss                                     (4.4)                       (18.2) Repurchase of                                                                 Class B Shares                              -                        (11.7) Acquisition of                                                                non-controlling                                                              interests                                 0.1                            -  Dividends                                (12.5)                       (18.7) ---------------------------------------------------------------------------- Balance as of June                                                            30, 2014                            $   567.1                    $ 1,119.1  ---------------------------------------------------------------------------- ----------------------------------------------------------------------------   QUEBECOR INC. AND ITS SUBSIDIARIES                                           CONSOLIDATED STATEMENTS OF CASH FLOWS                                        (in millions of Canadian                                                      dollars)                                                                                                      Three months ended       Six months ended  (unaudited)                                  June 30                June 30  ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                    2014         2013      2014         2013  ----------------------------------------------------------------------------                                           (restated)             (restated)    Cash flows related to                                                         operating activities                                                          Loss from continuing                                                          operations                   $  (83.3) $    (139.0) $  (35.5) $    (131.5)   Adjustments for:                                                               Amortization of property,                                                     plant and equipment          136.6        128.4     272.2        254.6      Amortization of intangible                                                    assets                        33.6         35.8      67.6         71.6      (Gain) loss on valuation                                                      and translation of                                                           financial instruments        (20.8)       249.0     (23.7)       281.0      Impairment of assets              -          1.3         -          1.7      Impairment of goodwill        190.0            -     190.0            -      Loss on debt refinancing          -         18.9      18.7         18.9      Amortization of financing                                                     costs and long-term debt                                                     discount                       1.9          3.2       4.9          6.3      Deferred income taxes           6.1        (60.6)     17.2        (63.4)     Other                          (1.2)        (2.0)      1.2         (0.2)                               ----------------------------------------------                                   262.9        235.0     512.6        439.0    Net change in non-cash                                                        balances related to                                                          operating activities           (48.9)       (93.0)   (121.4)      (167.6)                               ---------------------------------------------- Cash flows provided by                                                        continuing operating                                                         activities                       214.0        142.0     391.2        271.4                                ---------------------------------------------- Cash flows related to                                                         investing activities                                                          Business disposals               73.7         52.8      73.7         52.8    Additions to property, plant                                                  and equipment                 (164.3)      (135.0)   (320.6)      (289.7)   Additions to intangible                                                       assets                        (189.8)       (15.8)   (261.6)       (31.2)   Proceeds from disposals of                                                    assets                           1.9          9.7       2.7         10.9    Net change in cash held in                                                    trust                              -         (5.8)        -         (5.8)   Other                             0.2         (2.0)     (0.4)        (1.6)                               ---------------------------------------------- Cash flows used in continuing                                                 investing activities            (278.3)       (96.1)   (506.2)      (264.6)                               ---------------------------------------------- Cash flows related to                                                         financing activities                                                          Net change in bank                                                            indebtedness                   (36.8)         0.7      (0.1)         0.4    Net change under revolving                                                    facilities                     (78.9)        15.7      (1.0)        10.0    Issuance of long-term debt,                                                   net of financing fees          654.5        394.8     654.5        394.8    Repayments of long-term debt   (721.3)        (5.6)   (727.7)       (11.1)   Settlement of hedging                                                         contracts                       51.4         16.3     (64.6)        (8.5)   Repurchase of Class B Shares     (4.5)       (15.4)    (11.7)       (21.6)   Dividends                        (6.2)        (6.2)     (6.2)        (6.2)   Dividends paid to non-                                                        controlling shareholders        (6.2)        (6.3)    (12.5)       (12.5)                               ---------------------------------------------- Cash flows (used in) provided                                                 by continuing financing                                                      activities                      (148.0)       394.0    (169.3)       345.3                                ---------------------------------------------- Net change in cash and cash                                                   equivalents from continuing                                                  operations                      (212.3)       439.9    (284.3)       352.1  Cash flows provided by (used                                                  in) discontinued operations        1.0         (2.1)      0.6         (8.2) Effect of exchange rate                                                       changes on cash and cash                                                     equivalents denominated in                                                   foreign currencies                (0.5)         0.4       0.8          0.4  Cash and cash equivalents at                                                  beginning of period              405.5        134.8     476.6        228.7                                ---------------------------------------------- Cash and cash equivalents at                                                  end of period                 $  193.7  $     573.0  $  193.7  $     573.0                                ----------------------------------------------                               ----------------------------------------------   Cash and cash equivalents                                                     consist of                                                                    Cash                         $  106.4  $      70.7  $  106.4  $      70.7    Cash equivalents                 87.3        502.3      87.3        502.3                                ----------------------------------------------                                $  193.7  $     573.0  $  193.7  $     573.0                                ----------------------------------------------                               ----------------------------------------------   Interest and taxes reflected                                                  as operating activities                                                       Cash interest payments       $  144.1  $     161.0  $  173.7  $     185.6    Cash income tax payments                                                      (net of refunds)                10.9          9.0      78.4         45.3                                ----------------------------------------------                               ----------------------------------------------   QUEBECOR INC. AND ITS SUBSIDIARIES                                           CONSOLIDATED BALANCE SHEETS                                                    (in millions of Canadian dollars)                                            (unaudited)                               June 30  December 31  December 31  ---------------------------------------------------------------------------- ----------------------------------------------------------------------------                                              2014         2013         2012  ----------------------------------------------------------------------------                                                     (restated)   (restated)  Assets                                                                         Current assets                                                                 Cash and cash equivalents              $  193.7  $     476.6  $     228.7    Accounts receivable                       524.9        566.3        578.7    Income taxes                               12.6         18.0         10.6    Inventories                               221.2        239.4        255.5    Prepaid expenses                           56.1         48.2         38.0    Assets held for sale                          -         76.9            -                                          ------------------------------------                                           1,008.5      1,425.4      1,111.5  Non-current assets                                                             Property, plant and equipment           3,431.2      3,432.4      3,405.8    Intangible assets                       1,013.1        824.8        956.7    Goodwill                                2,871.4      3,061.5      3,371.6    Derivative financial instruments          119.0        142.1         35.7    Deferred income taxes                      18.1         28.1         23.9    Other assets                              105.6        102.1        102.6                                          ------------------------------------                                           7,558.4      7,591.0      7,896.3                                          ------------------------------------ Total assets                             $8,566.9  $   9,016.4  $   9,007.8                                          ------------------------------------                                         ------------------------------------   Liabilities and equity                                                         Current liabilities                                                            Bank indebtedness                      $    0.4  $       0.5  $       1.3    Accounts payable and accrued charges      554.5        706.1        793.8    Provisions                                 26.9         39.4         45.9    Deferred revenue                          300.3        288.8        289.0    Income taxes                               36.1         89.2         33.9    Derivative financial instruments              -        116.2         28.5    Current portion of long-term debt         101.1        101.2         22.2    Liabilities held for sale                     -          9.0            -                                          ------------------------------------                                           1,019.3      1,350.4      1,214.6  Non-current liabilities                                                        Long-term debt                          4,929.8      4,975.3      4,507.8    Derivative financial instruments          120.0         77.3        270.1    Convertible debentures                    500.0        500.0        500.0    Other liabilities                         275.5        319.4        350.0    Deferred income taxes                     603.2        598.6        624.3                                          ------------------------------------                                           6,428.5      6,470.6      6,252.2  Equity                                                                         Capital stock                             327.2        328.9        335.1    Contributed surplus                         2.3          2.3          2.3    Retained earnings                         259.4        291.4        622.6    Accumulated other comprehensive loss      (36.9)       (23.1)       (50.3)                                         ------------------------------------   Equity attributable to shareholders       552.0        599.5        909.7    Non-controlling interests                 567.1        595.9        631.3                                          ------------------------------------                                           1,119.1      1,195.4      1,541.0                                          ------------------------------------   Total liabilities and equity             $8,566.9  $   9,016.4  $   9,007.8                                          ------------------------------------                                         ------------------------------------     Contacts: Jean-Francois Pruneau Senior Vice President and Chief Financial Officer Quebecor Inc. and Quebecor Media Inc. jean-francois.pruneau@quebecor.com 514 380-4144  Martin Tremblay Vice President, Public Affairs Quebecor Media Inc. martin.tremblay@quebecor.com 514 380-1985    
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