MONTREAL, CANADA announces that the Company reported net income
of $15.6 million, or $0.58 per share, for the fourth quarter of
2007, compared with a net loss of $13.0 million, or $0.48 per
share, for the corresponding quarter of 2006.
Operating highlights for the fourth quarter:
- Growth in operating income in the Television sector of $569,000, or 3.0%,
compared with the corresponding quarter of 2006, mainly due to the
following:
- decrease of 3.8% in TVA Network's operating income, against the
results for the same quarter of 2006;
- Significant increase in the operating income of the Shopping TVA home
shopping division; and
- decrease of 40.6% in the operating loss of SUN TV.
- The Publishing sector saw another significant jump in its operating
income over the corresponding quarter of last year, with an increase from
$305,000 in 2006 to $1,594,000 in 2007.
- For the third consecutive quarter, the Distribution sector significantly
improved its profitability, generating operating income of $1,502,000,
against an operating loss of $502,000 for the corresponding quarter of
2006.
As a result, the Company's consolidated operating income was
$22.8 million, against operating income of $18.9 million for the
same quarter of 2006, representing growth of 20.9%.
"We are pleased with the progress made for all our business
segments over the last fiscal year and in the last quarter.
However, the situation in the conventional television market
continues to be of great concern, as reflected by the 2.6% decline
in our advertising revenues from this market within the TVA Group
for the fourth quarter of 2007, in spite of the fact that TVA
Network has 25 of the 30 best-watched programs and is still No. 1,
seven days a week. The increase in our operating income from the
Television sector for the last quarter comes essentially from
operations other than those of the TVA Network. To support the
growth of our specialty channels, we are pleased to announce the
launch of a new specialty channel, Les Idees de ma maison, slated
for February 19, 2008. The new channel's four main themes are
renovation and do-it-yourself, cooking, design and decor, and
lifestyle," said Mr. Pierre Dion, President and Chief Executive
Officer of TVA Group Inc.
"In the Publishing sector, in spite of a context that required
an aggressive pricing strategy to counter the competition, the
stringent management of our operating costs allowed us to generate
a profit margin of 8.0%, compared with 1.5% for the same quarter of
2006, while continuing to protect our market shares. Finally, in
the Distribution sector, the successful exploitation of video
products and the higher volume of rights sold in the television
market largely explain the improvement in this business segment's
operating results for the fourth quarter," concluded Mr. Pierre
Dion.
Cash flows from operating activities were $21.0 million for the
fourth quarter, against $8.2 million for the corresponding year-ago
period. This increase is essentially due to the net change in
non-cash working capital items, mainly in accounts payable and
current income taxes.
Significant growth in fiscal 2007
For the year ended December 31, 2007, the Company's consolidated
operating income was $59.4 million, compared with $42.1 million for
the previous fiscal year, reflecting growth of 41.2%. For the same
period, the Company generated net income of $38.4 million, or $1.42
per share, compared with a net loss of $3.1 million, or $0.12 per
share, for 2006.
TVA Group's Board of Directors today declared a dividend of
$0.05 per share, payable on March 19, 2008 to Class A and B
shareholders of record as at March 4, 2008. This dividend is
designated to be an eligible dividend, as provided under subsection
89(14) of the Income Tax Act and its provincial counterpart.
TVA Group Inc., a subsidiary of Quebecor Media Inc., is an
integrated communications company involved in television, the
production and distribution of audiovisual products, and in
magazine publishing. TVA Group is one of the largest private sector
producers and the largest private sector broadcaster of
French-language entertainment, information and public affairs
programming, and magazine publishing in North America. TVA also
operates SUN TV, a general-interest station in Toronto. The
Company's Class B shares are listed on the Toronto Stock Exchange
under the ticker symbol TVA.B.
The unaudited consolidated financial statements with notes and
the annual Management's Discussion and Analysis can be consulted on
TVA's Web site at: www.tva.canoe.ca.
Definition of operating income
In its analysis of operating results, the Company defines
operating income or operating loss as earnings (loss) before
amortization, financial expenses, restructuring costs of
operations, impairment of intangible assets, gain on acquisition
and disposal of business, (recovery) income taxes, non-controlling
interest and equity in income of companies subject to significant
influence. Operating income or operating loss, as defined above, is
not a measure of results that is consistent with Canadian Generally
Accepted Accounting Principles ("GAAP"). Neither is it intended to
be regarded as an alternative to other financial performance
measures or to the statement of cash flows as a measure of
liquidity. This measure is not intended to represent funds
available for debt service, dividend payment, reinvestment or other
discretionary uses, and should not be considered in isolation or as
a substitute for other performance measures prepared in accordance
with Canadian GAAP. Operating income is used by the Company because
management believes it is a meaningful measurement of
performance.
This measure is commonly used by senior management and the Board
of Directors to evaluate the consolidated results of the Company
and its sector's results. Measurements such as operating income are
also commonly used by the investment community to analyze and
compare the performance of companies in the industries in which we
are engaged. The Company's definition of operating income may not
be identical to similarly titled measures reported by other
companies.
Forward-looking information disclaimer
The statements in this news release that are not historical
facts are forward-looking statements and are subject to important
known and unknown risks, uncertainties and assumptions which could
cause the Company's actual results for future periods to differ
materially from those set forth in the forward-looking statements.
Forward-looking statements generally can be identified by the use
of the conditional, the use of forward-looking terminology such as
"propose," "will," "expect," "may," "anticipate," "intend,"
"estimate," "plan," "foresee," "believe" or the negative of these
terms or variations of them or similar terminology. Certain factors
that may cause actual results to differ from current expectations
include seasonality, operational risks (including pricing actions
by competitors), capital investment risks, environmental risks,
credit risks, government regulation risks, governmental assistance
risks and general changes in the economic environment. Investors
and others are cautioned that the foregoing list of factors that
may affect future results is not exhaustive and that undue reliance
should not be placed on any forward-looking statements. For more
information on the risks, uncertainties and assumptions that could
cause the Company's actual results to differ from current
expectations, please refer to the Company's public filings
available at www.sedar.com and www.tva.canoe.ca including, in
particular, the "Risks and Uncertainties" section of the Company's
Management's Discussion and Analysis for the year ended December
31, 2007.
The forward-looking statements in this news release reflect the
Company's expectations as of February 18, 2008, and are subject to
change after this date. The Company expressly disclaims any
obligation or intention to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, unless required by the applicable securities
laws.
TVA GROUP INC.
Consolidated statements of income
(unaudited)
(in thousands of dollars, except per share amounts)
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Three-month periods Years
ended December 31 ended December 31
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2007 2006 2007 2006
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Operating revenues $124,073 $119,937 $415,486 $393,312
Operating, selling and
administrative expenses 101,279 101,078 356,105 351,256
Amortization of fixed
assets, intangible assets
and start-up costs 3,305 3,419 12,942 13,905
Financial expenses 1,063 1,359 4,477 5,308
Depreciation of intangible
assets (note 5) - 31,084 - 31,828
Restructuring costs of
operations (note 4) (357) (647) 1,382 507
Gain on business
acquisition (note 7) - (368) - (368)
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Income (loss) before
income taxes,
non-controlling
interest and equity
in income of companies
subject to significant
influence $18,783 $(15,988) $40,580 $(9,124)
Income taxes
(recovery) (note 6) 3,722 (2,792) 5,714 (2,591)
Non-controlling interest (474) (631) (2,651) (3,252)
Equity in (income) loss of
companies subject to
significant influence (71) 429 (867) (141)
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NET INCOME (NET LOSS) AND
COMPREHENSIVE INCOME $15 606 $(12,994) $38,384 $(3,140)
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EARNINGS (LOSS) PER SHARE
Basic and diluted
(note 10 c) $0.58 $(0.48) $1.42 $(0.12)
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See accompanying notes to consolidated financial statements
Consolidated statements of retained earnings
(unaudited)
(in thousands of dollars)
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Years
ended December 31
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2007 2006
--------------------------------------------------------------------------
Balance, at beginning of period $62,631 $71,280
Net income (net loss) 38,384 (3,140)
Dividends paid (5,405) (5,405)
Share redemption - excess of
purchase price over net
carrying value (note 10 b) - (104)
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Balance, at end of period $95,610 $62,631
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See accompanying notes to consolidated financial statements
TVA GROUP INC.
Consolidated balance sheets
(in thousands of dollars)
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Dec. 31, 2007 Dec. 31, 2006
(unaudited) (audited)
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ASSETS
Current assets
Cash $3,225 $2,956
Accounts receivable 107,854 103,637
Current income tax assets 946 8,992
Investments in televisual products and films 45,906 42,221
Inventories and prepaid expenses 5,969 6,259
Future income tax assets 4,629 4,267
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168,529 168,332
Investments in televisual products and films 27,253 27,186
Investments (note 8) 31,571 55,227
Fixed assets 77,275 74,038
Future income tax assets 2,319 3,448
Other assets 9,102 8,213
Licences and others intangible assets 69,732 69,589
Goodwill 71,981 71,868
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$457,762 $477,901
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank overdraft $2,435 $-
Accounts payable and accrued liabilities 85,812 76,589
Current income tax liabilities (note 6) 11,037 6,051
Broadcast and distribution rights payable 23,054 22,867
Deferred revenue 6,613 7,022
Deferred credit 471 864
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129,422 113,393
Broadcast rights payable 3,965 3,226
Long-term debt 56,333 96,515
Future income tax liabilities (note 6) 39,334 44,331
Others long term liabilities 731 610
Non-controlling interest and redeemable
preferred shares (note 8,9) 13,458 38,334
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243,243 296,409
SHAREHOLDERS' EQUITY
Capital stock (note 10) 115,137 115,137
Contributed surplus 3,772 3,724
Retained earnings 95,610 62,631
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214,519 181,492
Contingency (note 14)
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$457,762 $477,901
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See accompanying notes to consolidated financial statements
TVA GROUP INC.
Consolidated statements of cash flows
(unaudited)
(in thousands of dollars)
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Three-month periods Years
ended December 31 ended December 31
--------------------------------------------------------------------------
2007 2006 2007 2006
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CASH FLOWS FROM OPERATING
ACTIVITIES
Net income (net loss) $15,606 $(12,994) $38,384 $(3,140)
Non-cash items
Amortization 3,327 3,442 13,030 13,993
Equity in income of companies
subject to significant influence (71) 429 (867) (141)
Non-controlling interest (474) (631) (2,651) (3,252)
Tax benefits relating to tax
deductions (note 6) - - (3,670) -
Future income taxes (3,348) (3,892) (4,680) (5,853)
Impairment of an intangible
asset (note 5) - 31,084 - 31,828
Others (981) (3,546) (1,448) (3,444)
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Cash flows provided by current
operations 14,059 13,892 38,098 29,991
Net change in non-cash items 6,938 (5,708) 21,946 2,342
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Cash flows from operating
activities 20,997 8,184 60,044 32,333
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CASH FLOWS FROM INVESTING
ACTIVITIES
Additions to fixed assets (6,465) (3,627) (16,200) (9,028)
Business acquisition (note 7) - 818 (2,899) 818
Proceeds from disposal
of a business - - - 91
Deferred charges - (1) - (287)
Decrease in investments (note 8) 24,475 2,925 24,701 3,474
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Cash flows from investing
activities 18,010 115 5,602 (4,932)
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CASH FLOWS FROM FINANCING
ACTIVITIES
Bank overdraft 420 (11,177) 2,435 (12,284)
(Decrease) increase in
long-term debt (14,166) 4,064 (40,182) (10,583)
Redemption of redeemable
preferred shares (note 8) (24,625) (2,925) (24,625) (2,925)
Issuance of shares of a
subsidiary (note 9) 350 291 2,400 5,149
Class B share redemption
(note10 b) - - - (154)
Dividends paid (1,351) (1,351) (5,405) (5,405)
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Cash flows from financing
activities (39,372) (11,098) (65,377) (26,202)
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Net change in cash (365) (2,799) 269 1,199
Cash, at beginning 3,590 5,755 2,956 1,757
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Cash, at end $3,225 $2,956 $3,225 $2,956
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SUPPLEMENTAL INFORMATION
Interest paid 923 1,417 4,054 5,204
Income taxes paid (received) 482 (315) (2,673) 4,007
Additions to fixed assets
financed by accounts
payable and accrued
liabilities at end of
period 1,453 1,953
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See accompanying notes to consolidated financial statements
TVA GROUP INC.
Notes to consolidated financial statements
Three-month periods and Years ended December 31, 2007 and 2006
(unaudited)
(Amounts presented in the tables are expressed in thousands of
dollars, except per-share and per-option amounts)
1. FINANCIAL STATEMENT PRESENTATION
These consolidated financial statements have been prepared in
conformity with Canadian Generally Accepted Accounting Principles
("GAAP"). With the exception of the accounting policies presented
in Note 2 for the current quarter, the same accounting policies
described in the consolidated financial statements included in the
latest annual report of TVA Group Inc. ("the Company") have been
used. However, these consolidated financial statements do not
include all disclosures required under Canadian GAAP for an annual
report and accordingly should be read in conjunction with the
Company's latest annual consolidated financial statements and the
notes thereto.
Some of the Company's businesses experience significant
seasonality effects due to, among other things, seasonal
advertising patterns and their influence on people's viewing,
reading and listening habits. Because the Company depends on the
sale of advertising for a significant portion of its revenue,
operating results are also sensitive to prevailing economic
conditions, including changes in local, regional and national
economic conditions, particularly as they may affect advertising
expenditures. Accordingly, the results of operations for interim
periods should not necessarily be considered indicative of
full-year results due to the seasonality of certain operations.
2. CHANGES IN ACCOUNTING POLICIES
Effective January 1, 2007, the Company adopted the Canadian
Institute of Chartered Accountants (CICA) Handbook Section 1530,
Comprehensive Income and Section 3855, Financial Instruments --
Recognition and Measurement.
Changes in accounting policies in conformity with these new
accounting standards are as follows:
a) Comprehensive Income
Section 1530 introduces comprehensive income, which is
calculated by adding other comprehensive income to net income.
Other comprehensive income represents changes in shareholders'
equity arising from transactions and other events with non-owner
sources such as unrealized gains and losses on financial assets
classified as available-for-sale.
b) Financial Instruments
Section 3855 establishes standards for recognizing and measuring
financial assets, financial liabilities and derivatives. Under
these standards, financial instruments are now classified as
held-for-trading, available-for-sale, held-to-maturity,
receivables, or other financial liabilities and measurement in
subsequent periods depends on their classification. Transaction
costs are expensed as incurred for financial instruments classified
as held-for- trading. For other financial instruments, transaction
costs are capitalized on initial recognition and presented in
reduction of the underlying financial instruments.
Financial assets and financial liabilities held-for-trading are
measured at fair value with changes recognized in income.
Available-for-sale financial assets are measured at fair value or
at cost, in the case of financial assets that do not have a quoted
market price in an active market and changes in fair value are
recorded in comprehensive income. Financial assets
held-to-maturity, receivables, and other financial liabilities are
measured at amortized cost using the effective interest method of
amortization. The Company has classified its cash and cash
equivalent as held for trading. Trade receivables and receivables
from related parties were classified as receivables. Portfolio
investments include in the investments were classified as
available-for-sales. All of the Company's financial liabilities
were classified as other liabilities.
Derivative instruments are recorded as financial assets or
liabilities at fair value, including those derivatives that are
embedded in financial or non-financial contracts that are not
closely related to the host contracts. Changes in the fair values
of the derivatives are recognized in financial expenses with the
exception of derivatives designated in a cash flow hedge for which
hedge accounting is used. In accordance with the new standards, the
Company selected January 1, 2003 as its transition date for
embedded derivatives.
The adoption of these new sections did not have an significant
effect on the consolidated financial statements.
3. GOODWILL AND LICENCES
During the second quarter of 2007, the Company changed the date
of its annual impairment tests for its broadcasting licences and
goodwill from October 1 to April 1. Accordingly, the Company
performed its impairment tests for goodwill and broadcasting
licences on April 1 and concluded that there was no impairment to
be recorded.
4. RESTRUCTURING COSTS OF OPERATIONS
During the quarter, the Company recorded a provision for
restructuring costs of $303,000 following the elimination of
positions in its Television sector and revalued a provision,
leading to a reduction of the initial balance, for an amount of
$660,000, following the settlement of certain matters and based on
new information available to the Company.
Since the beginning of the fiscal year, the Company recorded a
provision for restructuring cost of $1,382,000, including a
provision of $1,281,000 relating to the elimination of positions in
the Television and Publishing sectors and a provision of $952,000
for new litigation relating to the production activities of its
former subsidiary, TVA Acquisition Inc. The Company reduced
liabilities initially recorded on certain productions of this
former subsidiary for an amount of $851,000.
During the fourth quarter of 2006, the Company recorded a
provision for a restructuring cost of $250,000 following the
announcement of the elimination of some ten positions in its
Television sector and and it reversed a portion of the provision
for restructuring costs relating to the production activities of
its former subsidiary, TVA Acquisition Inc., for an amount of
$897,000, following the settlement of certain matters and based on
new information available to the Company.
5. DEPRECIATION OF INTANGIBLE ASSETS
During the fourth quarter of 2006, in accordance with the
provisions of Section 3062 of the CICA handbook, Goodwill and
Others Intangible Assets, the Company performed the annual test for
impairment of its broadcast licences and goodwill. Based on the
results of these tests, the Company recorded a total depreciation
expense of $31,084,000, of which $23,119,000 was for SUN TV's
broadcast licence and $7,965,000 of goodwill. This depreciation
became necessary following the review of SUN TV business plan in
light of the market experience over the last two years and due to
pressure being exerted on the advertising revenues of conventional
broadcasters, including, the fragmentation of the television
market.
During the third quarter of 2006, the Company recorded its share
in the depreciation of an intangible asset, consisting in a
magazine operating licence owned in a joint venture amounting to
$744,000.
6. INCOME TAXES (RECOVERY)
During the fourth quarter of 2007, the Company recorded a
reduction in income taxes of $2,592,000 following the announcement
of a federal tax reduction brought into force by Bill C-28 on
December 14, 2007. Since the beginning of the year, the decrease in
future income tax expenses resulting from the federal tax reduction
represents an amount of $2,970,000.
During the second quarter of 2007, following the federal
government's adoption of Bill C-33, which provides for the
modification of the deduction multiple for tax deductions, the
Company recognized into income tax benefits an amount of $3,670,000
that had been recorded as a current income tax liability pending
the official enactment of the Bill by taxation authorities.
During the fourth quarter of 2006, the Company obtained from
Quebecor World Inc., a company under common control of its ultimate
parent, Quebecor Inc., tax deductions representing income taxes of
approximately $4,452,000. The total amount had been recorded as a
current income tax asset. Tax benefits amounting to $1,113,000
relating to the transaction had been recorded as current income tax
liabilities as at December 31, 2006, pending the official enactment
of the Bill by taxation authorities. In addition, the transaction
allowed the Company to realize a gain of $293,000 in 2006, which
was recorded as a contributed surplus. As at December 31, 2007, an
amount of $626,000 ($3,046,000 in 2006) payable to Quebecor World
Inc. is included in section "Account payables and accrued
liabilities".
7. ACQUISITION OF BUSINESS
Animal Hebdo inc.
On July 30, 2007, the Company acquired all of the issued and
outstanding shares in Animal Hebdo inc., the company that publishes
Animal magazine, for a total consideration of $274,000. The
purchase price allocation is completed and effective July 30, 2007,
the new magazine's operating income has been included in the
Company's consolidated statement of income.
SUN TV
On January 8, 2007, the Company made the final payment of the
purchase price for the conventional television station in Toronto,
SUN TV, including a working capital adjustment of $2,625,000.
On December 8, 2006, the Company (75%) and Sun Media Corporation
(25%), a company under common control of its ultimate parent,
Quebecor Inc., reached an agreement with CHUM Limited in respect of
the final settlement of the working capital that was part of the
purchase price for SUN TV Company. Pursuant to this settlement, the
Company recorded its share in the favourable adjustment of working
capital of $81,000. The final purchase price for the Company's
interest in SUN TV Company is $35,012,000, which represents the
$34,500,000 initial purchase price agreed plus a working capital
adjustment of $37,000 and transaction fees of $475,000.
Trustmedia inc.
On November 10, 2006, the Company acquired the totality of the
shares in Trustmedia Inc., 50% of which was held by a co-owning
shareholder, making it the sole shareholder in this company.
Following this transaction, the Company posted a gain of $368,000,
given that the purchase price was lower than the fair value of the
nets assets acquired. The net consideration resulting from this
transaction represents a cash inflow of $818,000. No taxes were
recorded on this gain since the result is a permanent
difference.
8. INVESTMENT
Convertible bonds with related party company
On December 20, 2007, a subsidiary of the Company, Sun TV
Company, owned at 75% and operating the television channel SUN TV,
entered into a fiscal consolidation reduction transaction created
July 12, 2005 with the Company and its non-controlling shareholder
Sun Media Corporation, a company under common control of its
ultimate parent, Quebecor Inc. To realize this transaction, Sun TV
Company received a partial repayment of the convertible bonds of
the shareholding companies in the amount of $98,600,000
($11,700,000 in 2006), of which Sun Media Corporation for
$24,625,000 ($2,925,000 in 2006). In return, Sun TV Company
repurchased 98,600 (11,700 in 2006) preferred shares redeemable at
the option of the holder, carrying a 10.85% fixed cumulative
dividend, of which 24,625 (2,925 in 2006) preferred shares from Sun
Media Corporation for an amount of $24,625,000 ($2,925,000 in
2006). This transaction results for the Company, on a consolidated
level, in a reduced long-term investment in convertible bonds of
$24,625,000 ($2,925,000 in 2006), and an equivalent reduction in
redeemable preferred shares disclosed under the heading
"Non-controlling interest and redeemable preferred shares
9. NON-CONTROLLING INTEREST
On December 19, 2007, a subsidiary of the Company, Sun TV
Company, in which the Company has a 75% interest and that operates
the SUN TV television station, obtained from its non-controlling
shareholder an investment in its capital stock of $350,000
($291,000 in 2006), bringing the investments obtained since the
beginning of 2007 to $2,400,000 ($5,149,000 in 2006). The
respective percentage interests in SUN TV Company remain
unchanged.
10.CAPITAL STOCK
a) Number of shares outstanding
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----------------------------------------------------------------
Dec. 31, 2007 Dec. 31, 2006
----------------------------------------------------------------
Class A common shares 4,320,000 4,320,000
Class B shares 22,704,848 22,704,848
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27,024,848 27,024,848
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----------------------------------------------------------------
b) Share redemption
During the year ended December 31, 2006, pursuant to its normal
course issuer bid programs, the Company redeemed for cancellation a
total of 9,800 non-voting Class B shares for a net cash
consideration of $154,000. As at December 31, 2006, all the shares
redeemed were cancelled.
During fiscal 2006, the Company filed a notice of intent to
redeem for cancellation between August 4, 2006 and August 3, 2007,
in the normal course of its activities, a maximum of 1,135,242
outstanding Class B shares not held by insiders at the beginning of
issuers bid. The Company redeemed its shares at the market price
plus brokerage fees. No shares have been redeem under this new
offer.
c) Earnings (loss) per share
The following table provides the calculation of basic and
diluted earnings (loss) per share:
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Three-month periods Years ended
ended December 31 December 31
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2007 2006 2007 2006
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Net income (Net loss) $15,606 $(12,994) $38,384 $(3,140)
Weighted average
number of shares
outstanding 27,024,848 27,024,848 27,024,848 27,025,666
Effect of dilutive
stock options 9,421 - 9,797 533
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Weighted average
number of diluted
shares outstanding 27,034,269 27,024,848 27,034,645 27,026,199
Basic and diluted
earnings (loss) per
share $0.58 $(0.48) $1.42 $(0.12)
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11.STOCK-BASED COMPENSATION AND OTHER STOCK-BASED PAYMENTS
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Three-month period Year
ended December 31, 2007 ended December 31, 2007
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Conventional Quebecor Conventional Quebecor
Class B Media Inc. Class B Media Inc.
stock stock stock stock
options options options options
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Balance at
beginning 445,827 123,596 489,695 129,118
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Granted 537,866 204,563 561,875 204,563
Cancelled - - (67,877) (5,522)
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Balance as at
Dec.31, 2007 983,693 328,159 983,693 328,159
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Of the options outstanding as at December 31, 2007, 84,082
conventional Class B stock options at an average exercise price of
$20.61 and 61,395 Quebecor Media Inc. stock options at an average
exercise price of $17.58 can be exercised.
12.GUARANTEES
The maximum exposure in respect of the guaranteed portion of the
residual values of certain assets under operating leases to the
benefit of the lessor is $938,000. As at December 31, 2007, the
Company did not record any liability related to these
guarantees.
13.PENSION PLANS AND OTHER RETIREMENT BENEFITS
The Company maintains defined benefit and defined contribution
pension plans for its employees. In addition, under an old plan,
the Company maintains for certain retired employees other
retirement benefits, such as health, life and dental insurance
plans. Total costs for these benefits are as follows:
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Three-month periods Years ended
ended December 31 December 31
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2007 2006 2007 2006
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Pension plans
Defined benefit plans $1,024 $939 $4,087 $3,606
Defined contribution plans 571 $465 2,214 $2,150
Other retirement benefits $47 $73 $186 $294
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14.CONTINGENCY
In 2003 and 2004, a number of companies, including TVA Group
Inc., brought a suit against the Crown before the Federal Court,
alleging that the Part II licence fees that broadcasters are
required to pay annually constitute, in fact and in law, taxes, not
fees. On December 14, 2006, the Federal Court decreed that these
fees did indeed constitute taxes, that the Canadian
Radio-television and Telecommunications Commission ("CRTC") was to
cease collection of such fees, and ordered that the plaintiff
companies would not be entitled to a reimbursement of the amounts
already paid. On October 1, 2007, the CRTC issued a document,
stating that it would adhere to the decision that was rendered and
that it would not collect, in 2007 or in any subsequent years, the
Part II licence fees payable on November 30 of each year unless a
Superior Court reversed the Federal Court decision. The plaintiffs
and the defendant both filed an appeal before the Federal Court of
Appeal. In December 2007, the appeal was heared and the judgment
should be rendered towards the end of the second quarter of 2008.
The reduction of theses fees in the operating expenses for the
period from September 1, 2006 to December 31, 2007 represents
$4,139,000. Depending on the outcome of the Federal Court of
Appeal's decision, the Company may be required to pay these fees
for 2007 and subsequent years. The management considers it more
unlikely than not that the decision will be overturned.
15. SEGMENTED INFORMATION
The following table includes information on operating income, as
well as information on assets:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Three-month periods Years ended
ended December 31 December 31
--------------------------------------------------------------------------
2007 2006 2007 2006
--------------------------------------------------------------------------
Operating revenues
Television $98,748 $96,040 $321,045 $309,317
Publishing 19,992 20,461 79,878 78,125
Distribution 6,725 5,475 19,828 14,369
Intersegment items (1,392) (2,039) (5,265) (8,499)
--------------------------------------------------------------------------
124,073 119,937 415,486 393,312
Operating, selling and
administrative expenses
Television 79,139 77,000 270,688 266,354
Publishing 18,398 20,156 72,049 76,767
Distribution 5,223 5,977 18,533 16,076
Intersegment items (1,481) (2,055) (5,165) (7,941)
---------------------------------------------------------------------------
101,279 101,078 356,105 351,256
Income before amortization,
financial expenses,
restructuring costs of
operations, income taxes
(recovery), non
controlling interest and
equity in income of
companies subject to
significant influence
Television 19,609 19,040 50,357 42,963
Publishing 1,594 305 7,829 1,358
Distribution 1,502 (502) 1,295 (1,707)
Intersegment items 89 16 (100) (558)
--------------------------------------------------------------------------
$22,794 $18,859 $59,381 $42,056
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--------------------------------------------------------------------------
The intersegment items mentioned above represent the elimination
of normal course business transactions made between the Company's
business segments regarding revenues, expenses and unrealized
profit.
-----------------------------------------------------
-----------------------------------------------------
December 31, 2007 December 31, 2006
-----------------------------------------------------
Total assets
Television $342,500 $362,597
Publishing 84,237 85,071
Distribution 19,763 18,971
Unallocated items 11,262 11,262
-----------------------------------------------------
$457,762 $477,901
-----------------------------------------------------
-----------------------------------------------------
16. COMPARATIVE FIGURES
Certain 2006 comparative figures have been reclassified to
conform to the basis of presentation adopted in 2007.
Contacts: TVA Group Inc. Denis Rozon, CA Vice-President and
Chief Financial Officer 514-598-2808 www.tva.canoe.ca
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