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Quebecor Inc. Reports Consolidated Results for First Quarter 2014

MONTREAL, QUEBEC -- (Marketwired) -- 05/08/14 -- Quebecor Inc. ("Quebecor" or "the Corporation") (TSX:QBR.A)(TSX:QBR.B) today reported its consolidated financial results for the first 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

First quarter 2014


--  Revenues up $11.4 million (1.1%) to $1.04 billion. 
    
--  Adjusted operating income(1): $346.5 million, up $21.5 million (6.6%)
    compared with the first quarter of 2013. 
    
--  Net income attributable to shareholders: $40.7 million ($0.33 per basic
    share) in the first quarter of 2014 compared with $35.6 million ($0.29
    per basic share) in the same period of 2013, a favourable variance of
    $5.1 million ($0.04 per basic share). 
    
--  Adjusted income from continuing operations(2): $49.3 million ($0.40 per
    basic share) in the first quarter of 2014, compared with $36.0 million
    ($0.29 per basic share) in the same period of 2013, an increase of $13.3
    million ($0.11 per basic share). 
    
--  The Telecommunications segment grew its revenues by $31.8 million (4.8%)
    and its adjusted operating income by $21.9 million (7.0%) in the first
    quarter of 2014. 
    
--  Videotron Ltd. ("Videotron") recorded first quarter 2014 revenue
    increases for all of its major services: Internet access ($13.6 million
    or 6.9%), mobile telephony ($11.7 million or 23.4%), cable telephony
    ($2.2 million or 1.9%), and cable television ($0.8 million or 0.3%). 
    
--  On April 28, 2014, Pierre Dion, President and Chief Executive Officer of
    TVA Group Inc. ("TVA Group"), was appointed President and Chief
    Executive Officer of Quebecor and Quebecor Media, replacing Robert
    Depatie who resigned as President and Chief Executive Officer of
    Quebecor, Quebecor Media and Videotron for health reasons. Pierre Dion
    will continue to serve as President and Chief Executive Officer of TVA
    Group until a successor is named. Manon Brouillette was named President
    and Chief Executive Officer of Videotron on May 7, 2014. 
    
--  On March 9, 2014, Pierre Karl Peladeau resigned all his positions on the
    Boards of Directors of Quebecor and its subsidiaries following his
    decision to enter politics. Subsequently, Sylvie Lalande was appointed
    Chairperson of the Board of TVA Group on March 10, 2014 and Francoise
    Bertrand was appointed Chairperson of the Board of Quebecor Media on
    March 12, 2014. 
    
--  Since March 28, 2014, Apple products have been included in the selection
    of mobile devices Videotron offers to its customers. A new illico app
    was released for the iPhone 4 and 5 (5C and 5S). It makes thousands of
    hours of content from some 50 television channels available free of
    charge to subscribers to Videotron's cable television service. 
    
--  On April 3, 2014, Videotron completed the acquisition of seven 700 MHz
    spectrum licences in the Industry Canada spectrum auction for a total
    consideration of $233.3 million. The licences for Canada's four most
    populous provinces make it possible to reach approximately 80% of
    Canada's population, more than 28 million people. 
    

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

"Quebecor exhibited solid growth in the first quarter of 2014 with a 6.6% increase in adjusted operating income and a 36.9% increase in adjusted income from continuing operations," noted Pierre Dion, President and Chief Executive Officer of Quebecor. "The growth was driven primarily by the Telecommunications segment, as well as by the favourable impact of the various refinancing operations completed at advantageous interest rates."

"Videotron posted outstanding results again in the first quarter of 2014," commented Manon Brouillette, President and Chief Operating Officer of Videotron. "Revenues grew $31.8 million or 4.8% and adjusted operating income rose $21.9 million or 7.0%. Average monthly revenue per user ("ARPU") was $121.72 in the first quarter of 2014, up $7.23 (6.3%) from the same period of 2013. The strong results demonstrated once again Videotron's ability to deliver the best experience to customers of all its services."

"Quebecor continued refocusing its news media activities," said Julie Tremblay, President and Chief Executive Officer of Sun Media Corporation. "Among other things, it withdrew from door-to-door distribution of weekly newspapers and flyers in Quebec and discontinued distribution of the Le Sac Plus doorknob bag in January 2014. With respect to results, the News Media segment's adjusted operating income increased slightly despite an 8.6% decrease in revenues, reflecting the positive impact of the numerous cost-control and repositioning initiatives taken over the past several years. These initiatives yielded $12.0 million in savings in the first quarter of 2014. The segment will continue focusing on its core businesses and on developing new content that can be brought to all platforms."

"In the Broadcasting segment, TVA Network's hit show La Voix was a phenomenal success in its second season, comparable to season 1," said Pierre Dion. "Ratings were exceptional throughout its run from January 19 to April 13, 2014. The weekly gala drew an average audience of more than 2.6 million viewers and an average market share of 56.9%. Under continuing adverse market conditions for traditional media, TVA Group's conventional and specialty channels had a combined market share of 32.8% during the Winter 2014 season, including 24.2% for TVA Network, more than its two main conventional rivals combined. During the same period, 20 of the 30 top-rated shows in Quebec were on the TVA Network. Adjusted operating income was negatively impacted in the first quarter of 2014 by the decline in advertising revenues, by higher content costs due, among other things, to the Quebec election campaign, and by certain non-recurring, retroactive indemnity costs. Finally, to expand its programming, TVA Sports reached long-term agreements during the quarter with prestigious properties such as Major League Baseball, the Canadian Hockey League and the Quebec Major Junior Hockey League."

"On the financial front, Videotron issued Senior Notes in the aggregate principal amount of US$600.0 million, bearing interest at an advantageous 5.375% rate, and used a portion of the proceeds to prepay US$260.0 million principal amount of its 9.125% Senior Notes," reported Jean-Francois Pruneau, Senior Vice President and Chief Financial Officer of Quebecor. "Quebecor Media redeemed and prepaid all of its 7.75% Senior Notes in the aggregate principal amount of US$380.0 million. These opportunistic financing transactions by Quebecor Media and Videotron will yield annual debt interest savings of approximately $20.0 million."

The members of the Board of Directors of Quebecor wish to express their gratitude to Robert Depatie, who has played an instrumental role in the Corporation's success for 13 years. They wish him well in his future projects.

"During the first quarter of 2014, Quebecor posted solid consolidated financial results and continued growth in the Telecommunications segment," said Pierre Dion. "By leveraging all its strengths, Quebecor will continue positioning itself to pursue its business development and profitability targets and create shareholder value."


Table 1                                                                     
Quebecor first quarter financial highlights, 2010 to 2014                   
(in millions of Canadian dollars, except per share data)                    
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                  2014      2013      2012     2011     2010
----------------------------------------------------------------------------
                                                                            
Revenues                     $ 1,038.1 $ 1,026.7 $ 1,035.7 $  964.2 $  924.4
Adjusted operating income        346.5     325.0     325.7    295.2    286.8
Income from continuing                                                      
 operations attributable to                                                 
 shareholders                     41.2      38.5      73.1     34.3     33.3
Net income attributable to                                                  
 shareholders                     40.7      35.6      71.4     33.2     34.4
Adjusted income from                                                        
 continuing operations            49.3      36.0      39.5     35.8     41.8
Per basic share(1):                                                         
  Income from continuing                                                    
   operations attributable to                                               
   shareholders                   0.33      0.31      0.57     0.27     0.26
  Net income attributable to                                                
   shareholders                   0.33      0.29      0.56     0.26     0.27
  Adjusted income from                                                      
   continuing operations          0.40      0.29      0.31     0.28     0.32
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1)  Per share data has 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 December 5, 2013, Quebecor Media announced the sale of 74 Quebec weeklies to Transcontinental Interactive Inc., a subsidiary of Transcontinental Inc., for a cash consideration of $75.0 million. The transaction is subject to approval by regulatory authorities. 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 $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.

2014/2013 first quarter comparison

Revenues: $1.04 billion, an $11.4 million (1.1%) increase.


--  Revenues increased in Telecommunications ($31.8 million or 4.8% of
    segment revenues). 
    
--  Revenues were flat in Interactive Technologies and Communications. 
    
--  Revenues decreased in News Media ($16.0 million or -8.6%), Broadcasting
    ($4.8 million or -4.2%), and Leisure and Entertainment ($2.7 million or
    -4.2%). 

Adjusted operating income: $346.5 million, a $21.5 million (6.6%) increase.


--  Adjusted operating income increased in Telecommunications ($21.9 million
    or 7.0% of segment adjusted operating income), Interactive Technologies
    and Communications ($1.3 million), News Media ($0.3 million or 2.0%),
    and Head Office ($7.1 million). The increase at Head Office was due to
    the change in the stock option expense. 
    
--  Adjusted operating income decreased in Broadcasting ($7.0 million) and
    Leisure and Entertainment ($2.1 million). 
    
--  The change in the fair value of Quebecor Media stock options resulted in
    a $1.9 million unfavourable variance in the stock-based compensation
    charge in the first 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 an $8.4 million favourable variance in the Corporation's
    stock-based compensation charge in the first quarter of 2014. 

Net income attributable to shareholders: $40.7 million ($0.33 per basic share) in the first quarter of 2014 compared with $35.6 million ($0.29 per basic share) in the same period of 2013, a favourable variance of $5.1 million ($0.04 per basic share).


--  The favourable variance was due primarily to: 
    
    --  $21.5 million increase in adjusted operating income; 
        
    --  $6.4 million decrease in financial expenses; 
        
    --  $3.8 million decrease in tax on income from continuing operations; 
        
    --  $3.2 million favourable variance in the loss related to discontinued
        operations; 
        
    --  $2.1 million decrease in income attributable to non-controlling
        interest. 

--  Partially offset by: 
    
    --  $18.7 million loss on debt refinancing recorded in the first quarter
        of 2014; 
        
    --  $7.6 million increase in the amortization charge; 
        
    --  $5.7 million unfavourable variance in gains on valuation and
        translation of financial instruments. 

Adjusted income from continuing operations: $49.3 million ($0.40 per basic share) in the first quarter of 2014 compared with $36.0 million ($0.29 per basic share) in the same period of 2013, an increase of $13.3 million ($0.11 per basic share).

Financing activities

The following financial transactions have been concluded since the end of 2013.


--  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 $646.4 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 due 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.

Dividends

On May 7, 2014, the Board of Directors of Quebecor declared a quarterly dividend of $0.025 per share on its Class A Multiple Voting Shares and Class B Subordinate Voting Shares, payable on June 17, 2014 to shareholders of record at the close of business on May 23, 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.

Detailed financial information

For a detailed analysis of Quebecor's first quarter 2014 results, please refer to the Management Discussion and Analysis and consolidated financial statements of Quebecor, available on the Corporation's website at 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 first quarter 2014 results on May 8, 2014, at 11:00 AM 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 16546#. A tape recording of the call will be available from May 8 to June 14, 2014 by dialing 1 877 293-8133, conference number 1155306, access code for participants 16546#. 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 May 8, 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: twitter.com/QuebecorMedia

DEFINITIONS

Adjusted operating income

In its analysis of operating results, the Corporation defines adjusted operating income, as reconciled to net income under International Financial Reporting Standards ("IFRS"), as net income before amortization, financial expenses, gain on valuation and translation of financial instruments, charge for restructuring of operations, impairment of assets and other special items, loss on debt refinancing, income taxes, and loss related to 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. In addition, measures like adjusted operating income are commonly used by the investment community to analyze and compare the performance of companies in the industries in which the Corporation is engaged. 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 income 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 income measure used in the condensed consolidated        
financial statements                                                        
(in millions of Canadian dollars)                                           
                                                Three months ended March 31 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                       2014            2013 
----------------------------------------------------------------------------
                                                                            
Adjusted operating (loss) income:                                           
  Telecommunications                            $     334.6     $     312.7 
  News Media                                           15.4            15.1 
  Broadcasting                                        (10.8)           (3.8)
  Leisure and Entertainment                            (2.0)            0.1 
  Interactive Technologies and Communications           2.6             1.3 
  Head Office                                           6.7            (0.4)
----------------------------------------------------------------------------
                                                      346.5           325.0 
Amortization                                         (169.6)         (162.0)
Financial expenses                                    (90.8)          (97.2)
Gain on valuation and translation of financial                              
 instruments                                            2.0             7.7 
Restructuring of operations, impairment of                                  
 assets and other special items                        (1.5)           (1.6)
Loss on debt refinancing                              (18.7)              - 
Income taxes                                          (18.5)          (22.3)
Loss from discontinued operations                      (0.7)           (3.9)
----------------------------------------------------------------------------
Net income                                      $      48.7     $      45.7 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Adjusted income from continuing operations

The Corporation defines adjusted income from continuing operations, as reconciled to net income attributable to shareholders under IFRS, as net income attributable to shareholders before gain on valuation and translation of financial instruments, charge for restructuring of operations, impairment of assets and other special items, loss on debt refinancing, net of income tax related to adjustments, net income attributable to non-controlling interests related to adjustments, and loss 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. In addition, this measure is commonly used by the investment community to analyze and compare corporate performance. 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 the net income attributable to shareholders measure 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 income attributable to shareholders  
measure used in the condensed consolidated financial statements            
(in millions of Canadian dollars)                                          
                                               Three months ended March 31 
---------------------------------------------------------------------------
---------------------------------------------------------------------------
                                                       2014           2013 
---------------------------------------------------------------------------
                                                                           
Adjusted income from continuing operations       $     49.3     $     36.0 
Gain on valuation and translation of                                       
 financial instruments                                  2.0            7.7 
Restructuring of operations, impairment of                                 
 assets and other special items                        (1.5)          (1.6)
Loss on debt refinancing                              (18.7)             - 
Income taxes related to adjustments(1)                  7.3           (3.3)
Net income attributable to non-controlling                                 
 interest related to adjustments                        2.8           (0.3)
Discontinued operations                                (0.5)          (2.9)
---------------------------------------------------------------------------
Net income attributable to shareholders          $     40.7     $     35.6 
---------------------------------------------------------------------------
---------------------------------------------------------------------------
                                                                           
(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 March 31 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                       2014            2013 
----------------------------------------------------------------------------
                                                                            
                                                                            
Revenues                                        $   1,038.1     $   1,026.7 
                                                                            
Employee costs                                        239.9           262.0 
Purchase of goods and services                        451.7           439.7 
Amortization                                          169.6           162.0 
Financial expenses                                     90.8            97.2 
Gain on valuation and translation of                                        
 financial instruments                                 (2.0)           (7.7)
Restructuring of operations, impairment of                                  
 assets and other special items                         1.5             1.6 
Loss on debt refinancing                               18.7               - 
                                            --------------------------------
                                                                            
Income before income taxes                             67.9            71.9 
                                                                            
Income taxes:                                                               
  Current                                               6.4            24.2 
  Deferred                                             12.1            (1.9)
                                            --------------------------------
                                                                            
                                                       18.5            22.3 
                                            --------------------------------
                                                                            
                                                                            
Income from continuing operations                      49.4            49.6 
                                                                            
Loss from discontinued operations                      (0.7)           (3.9)
                                            --------------------------------
                                                                            
                                                                            
Net income                                      $      48.7     $      45.7 
                                            --------------------------------
                                            --------------------------------
                                                                            
Income from continuing operations                                           
 attributable to                                                            
  Shareholders                                  $      41.2     $      38.5 
  Non-controlling interests                             8.2            11.1 
                                            --------------------------------
                                            --------------------------------
                                                                            
Net income attributable to                                                  
  Shareholders                                  $      40.7     $      35.6 
  Non-controlling interests                             8.0            10.1 
                                            --------------------------------
                                            --------------------------------
                                                                            
Earnings per share attributable to                                          
 shareholders                                                               
  Basic:                                                                    
    From continuing operations                  $      0.33     $      0.31 
    From discontinued operations                          -           (0.02)
    Net income                                         0.33            0.29 
  Diluted:                                                                  
    From continuing operations                         0.29            0.26 
    From discontinued operations                          -           (0.02)
    Net income                                         0.29            0.24 
                                            --------------------------------
                                            --------------------------------
                                                                            
Weighted average number of shares                                           
 outstanding (in millions)                            123.1           124.7 
Weighted average number of diluted shares                                   
 (in millions)                                        144.2           150.8 
                                            --------------------------------
                                            --------------------------------
                                                                            
                                                                            
                                                                            
QUEBECOR INC. AND ITS SUBSIDIARIES                                          
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME                             
(in millions of Canadian dollars)                                           
(unaudited)                                     Three months ended March 31 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                       2014            2013 
----------------------------------------------------------------------------
                                                                            
                                                                            
Net income                                      $      48.7     $      45.7 
                                                                            
Other comprehensive loss:                                                   
                                                                            
  Items that may be reclassified to income:                                 
    Gain on translation of net investments                                  
     in foreign operations                              1.9             1.1 
    Cash flow hedges:                                                       
      Loss on valuation of derivative                                       
       financial instruments                          (11.6)          (25.9)
      Deferred income taxes                            (7.7)            0.8 
                                                                            
  Reclassification to income:                                               
    Gain related to cash flow hedges                  (10.8)              - 
    Deferred income taxes                               0.4               - 
                                            --------------------------------
                                                      (27.8)          (24.0)
                                                                            
                                            --------------------------------
Comprehensive income                            $      20.9     $      21.7 
                                            --------------------------------
                                            --------------------------------
                                                                            
Comprehensive income attributable to                                        
  Shareholders                                  $      19.7     $      17.5 
  Non-controlling interests                             1.2             4.2 
                                            --------------------------------
                                            --------------------------------
                                                                            
                                                                            
                                                                            
QUEBECOR INC. AND ITS SUBSIDIARIES                                          
SEGMENTED INFORMATION                                                       
(in millions of Canadian dollars)                                           
(unaudited)                                                                 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                           Three months ended March 31, 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
                                                                    Leisure 
                                                                        and 
                          Telecommu-         News       Broad-       Enter- 
                           nications        Media      casting     tainment 
----------------------------------------------------------------------------
                                                                            
Revenues                $      692.7 $      169.2 $      108.9 $       61.6 
                                                                            
Employee costs                  92.2         61.9         35.8         14.6 
Purchase of goods and                                                       
 services                      265.9         91.9         83.9         49.0 
----------------------------------------------------------------------------
Adjusted operating                                                          
 income(1)                     334.6         15.4        (10.8)        (2.0)
                                                                            
Amortization                                                                
Financial expenses                                                          
Gain on valuation and                                                       
 translation of                                                             
 financial instruments                                                      
Restructuring of                                                            
 operations, impairment                                                     
 of assets and other                                                        
 special items                                                              
Loss on debt                                                                
 refinancing                                                                
----------------------------------------------------------------------------
Income before income                                                        
 taxes                                                                      
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Additions to property,                                                      
 plant and equipment    $      143.0 $        1.8 $        8.7 $        2.3 
                                                                            
Additions to intangible                                                     
 assets                         68.9          1.4          0.8          0.9 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
                                                                            

QUEBECOR INC. AND ITS SUBSIDIARIES                            
SEGMENTED INFORMATION                                         
(in millions of Canadian dollars)                             
(unaudited)                                                   
--------------------------------------------------------------
--------------------------------------------------------------
                                                              
                            Three months ended March 31, 2014 
--------------------------------------------------------------
--------------------------------------------------------------
                                                              
                        Interactive                           
                            Techno-         Head              
                         logies and       office              
                           Communi-   and Inter-              
                            cations     segments        Total 
--------------------------------------------------------------
                                                              
Revenues               $       35.1 $      (29.4)$    1,038.1 
                                                              
Employee costs                 24.4         11.0        239.9 
Purchase of goods and                                         
 services                       8.1        (47.1)       451.7 
--------------------------------------------------------------
Adjusted operating                                            
 income(1)                      2.6          6.7        346.5 
                                                              
Amortization                                            169.6 
Financial expenses                                       90.8 
Gain on valuation and                                         
 translation of                                               
 financial instruments                                   (2.0)
Restructuring of                                              
 operations, impairment                                       
 of assets and other                                          
 special items                                            1.5 
Loss on debt                                                  
 refinancing                                             18.7 
--------------------------------------------------------------
Income before income                                          
 taxes                                           $       67.9 
--------------------------------------------------------------
--------------------------------------------------------------
                                                              
Additions to property,                                        
 plant and equipment   $        0.5 $          - $      156.3 
                                                              
Additions to intangible                                       
 assets                           -         (0.2)        71.8 
--------------------------------------------------------------
--------------------------------------------------------------
                                                              
                                                              
                                                              
                                           Three months ended March 31, 2013
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
                                                                     Leisure
                                                                         and
                           Telecommu-         News       Broad-       Enter-
                            nications        Media      casting     tainment
----------------------------------------------------------------------------
                                                                            
Revenues                 $      660.9 $      185.2 $      113.7 $       64.3
                                                                            
Employee costs                   94.3         72.1         37.8         14.8
Purchase of goods and                                                       
 services                       253.9         98.0         79.7         49.4
----------------------------------------------------------------------------
Adjusted operating                                                          
 income(1)                      312.7         15.1         (3.8)         0.1
                                                                            
Amortization                                                                
Financial expenses                                                          
Gain on valuation and                                                       
 translation of                                                             
 financial instruments                                                      
Restructuring of                                                            
 operations, impairment                                                     
 of assets and other                                                        
 special items                                                              
----------------------------------------------------------------------------
Income before income                                                        
 taxes                                                                      
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
Additions to property,                                                      
 plant and equipment     $      145.6 $        2.2 $        5.4 $        0.5
                                                                            
Additions to intangible                                                     
 assets                          13.0          1.0          0.6          0.7
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            

                              Three months ended March 31, 2013 
----------------------------------------------------------------
----------------------------------------------------------------
                                                                
                          Interactive                           
                              Techno-         Head              
                           logies and       office              
                             Communi-   and Inter-              
                              cations     segments        Total 
----------------------------------------------------------------
                                                                
Revenues                 $       35.2 $      (32.6)$    1,026.7 
                                                                
Employee costs                   25.0         18.0        262.0 
Purchase of goods and                                           
 services                         8.9        (50.2)       439.7 
----------------------------------------------------------------
Adjusted operating                                              
 income(1)                        1.3         (0.4)       325.0 
                                                                
Amortization                                              162.0 
Financial expenses                                         97.2 
Gain on valuation and                                           
 translation of                                                 
 financial instruments                                     (7.7)
Restructuring of                                                
 operations, impairment                                         
 of assets and other                                            
 special items                                              1.6 
----------------------------------------------------------------
Income before income                                            
 taxes                                             $       71.9 
----------------------------------------------------------------
----------------------------------------------------------------
                                                                
                                                                
Additions to property,                                          
 plant and equipment     $        0.8 $        0.2 $      154.7 
                                                                
Additions to intangible                                         
 assets                             -          0.1         15.4 
----------------------------------------------------------------
----------------------------------------------------------------
                                                                

(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 income before amortization, financial expenses, gain on valuation and translation of financial instruments, restructuring of operations, impairment of assets and other special items, loss on debt refinancing, income taxes and loss from discontinued operations.


QUEBECOR INC. AND ITS SUBSIDIARIES                                          
CONSOLIDATED STATEMENTS OF EQUITY                                           
(in millions of Canadian dollars)                                           
(unaudited)                                                                 
                                                                            
                                                                            
----------------------------------------------------------------------------
                                        Equity attributable to shareholders 
                ------------------------------------------------------------
                                             Equity                         
                                          component             Accumulated 
                                                 of              other com- 
                  Capital  Contributed  convertible   Retained   prehensive 
                    stock      surplus   debentures   earnings         loss 
----------------------------------------------------------------------------
                                                                            
Balance as of                                                               
 December 31,                                                               
 2012            $  335.1 $        2.3 $      398.3 $    624.6 $      (50.3)
Net income              -            -            -       35.6            - 
Other                                                                       
 comprehensive                                                              
 loss                   -            -            -          -        (18.1)
Repurchase of                                                               
 Class B Shares      (1.2)           -            -       (5.0)           - 
Dividends               -            -            -       (3.1)           - 
----------------------------------------------------------------------------
Balance as of                                                               
 March 31, 2013     333.9          2.3        398.3      652.1        (68.4)
Net loss                -            -            -     (169.5)           - 
Other                                                                       
 comprehensive                                                              
 income                 -            -            -          -         45.3 
Repurchase of                                                               
 Class B Shares      (5.0)           -            -      (25.2)           - 
Dividends               -            -            -       (9.3)           - 
Business                                                                    
 acquisition            -            -            -          -            - 
----------------------------------------------------------------------------
Balance as of                                                               
 December 31,                                                               
 2013               328.9          2.3        398.3      448.1        (23.1)
Net income              -            -            -       40.7            - 
Other                                                                       
 comprehensive                                                              
 loss                   -            -            -          -        (21.0)
Repurchase of                                                               
 Class B Shares      (1.1)           -            -       (6.1)           - 
Acquisition of                                                              
 non-controlling                                                            
 interests              -            -            -       (0.1)           - 
Dividends               -            -            -       (3.1)           - 
----------------------------------------------------------------------------
Balance as of                                                               
 March 31, 2014  $  327.8 $        2.3 $      398.3 $    479.5 $      (44.1)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            

QUEBECOR INC. AND ITS SUBSIDIARIES                 
CONSOLIDATED STATEMENTS OF EQUITY                  
(in millions of Canadian dollars)                  
(unaudited)                                        
                                                   
                                                   
---------------------------------------------------
                           Equity                  
                     attributable                  
                          to non-                  
                      controlling            Total 
                        interests           equity 
                                                   
                                                   
---------------------------------------------------
                                                   
Balance as of                                      
 December 31,                                      
 2012            $          631.3 $        1,941.3 
Net income                   10.1             45.7 
Other                                              
 comprehensive                                     
 loss                        (5.9)           (24.0)
Repurchase of                                      
 Class B Shares                 -             (6.2)
Dividends                    (6.2)            (9.3)
---------------------------------------------------
Balance as of                                      
 March 31, 2013             629.3          1,947.5 
Net loss                    (42.2)          (211.7)
Other                                              
 comprehensive                                     
 income                      27.3             72.6 
Repurchase of                                      
 Class B Shares                 -            (30.2)
Dividends                   (18.8)           (28.1)
Business                                           
 acquisition                  0.3              0.3 
---------------------------------------------------
Balance as of                                      
 December 31,                                      
 2013                       595.9          1,750.4 
Net income                    8.0             48.7 
Other                                              
 comprehensive                                     
 loss                        (6.8)           (27.8)
Repurchase of                                      
 Class B Shares                 -             (7.2)
Acquisition of                                     
 non-controlling                                   
 interests                    0.1                - 
Dividends                    (6.3)            (9.4)
---------------------------------------------------
Balance as of                                      
 March 31, 2014  $          590.9 $        1,754.7 
---------------------------------------------------
---------------------------------------------------
                                                   
                                                   
QUEBECOR INC. AND ITS SUBSIDIARIES                                          
CONSOLIDATED STATEMENTS OF CASH FLOWS                                       
                                                                            
(in millions of Canadian dollars)                                           
(unaudited)                                                                 
                                                Three months ended March 31 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                       2014            2013 
----------------------------------------------------------------------------
                                                                            
Cash flows related to operating activities                                  
  Income from continuing operations             $      49.4     $      49.6 
  Adjustments for:                                                          
    Amortization of property, plant and                                     
     equipment                                        135.6           126.2 
    Amortization of intangible assets                  34.0            35.8 
    Gain on valuation and translation of                                    
     financial instruments                             (2.0)           (7.7)
    Loss on debt refinancing                           18.7               - 
    Amortization of financing costs and                                     
     long-term debt discount                            3.0             3.1 
    Deferred income taxes                              12.1            (1.9)
    Other                                               2.4             2.2 
                                            --------------------------------
                                                      253.2           207.3 
  Net change in non-cash balances related to                                
   operating activities                               (76.0)          (77.9)
                                            --------------------------------
Cash flows provided by continuing operating                                 
 activities                                           177.2           129.4 
                                            --------------------------------
Cash flows related to investing activities                                  
  Additions to property, plant and equipment         (156.3)         (154.7)
  Additions to intangible assets                      (71.8)          (15.4)
  Proceeds from disposals of assets                     0.8             1.2 
  Other                                                (0.6)            0.4 
                                            --------------------------------
Cash flows used in continuing investing                                     
 activities                                          (227.9)         (168.5)
                                            --------------------------------
Cash flows related to financing activities                                  
  Net change in bank indebtedness                      36.7            (0.3)
  Net change under revolving facilities                77.9            (5.7)
  Repayments of long-term debt                         (6.4)           (5.5)
  Settlement of hedging contracts                    (116.0)          (24.8)
  Repurchase of Class B Shares                         (7.2)           (6.2)
  Dividends paid to non-controlling                                         
   shareholders                                        (6.3)           (6.2)
                                            --------------------------------
Cash flows used in continuing financing                                     
 activities                                           (21.3)          (48.7)
                                            --------------------------------
                                                                            
Net change in cash and cash equivalents from                                
 continuing operations                                (72.0)          (87.8)
                                                                            
Cash flows used in discontinued operations             (0.4)           (6.1)
                                                                            
Effect of exchange rate changes on cash and                                 
 cash equivalents denominated in foreign                                    
 currencies                                             1.3               - 
Cash and cash equivalents at beginning of                                   
 period                                               476.6           228.7 
                                            --------------------------------
Cash and cash equivalents at end of period      $     405.5     $     134.8 
                                            --------------------------------
                                            --------------------------------
                                                                            
Cash and cash equivalents consist of                                        
  Cash                                          $     139.9     $      11.5 
  Cash equivalents                                    265.6           123.3 
                                            --------------------------------
                                                $     405.5     $     134.8 
                                            --------------------------------
                                            --------------------------------
                                                                            
                                                                            
Interest and taxes reflected as operating                                   
 activities                                                                 
  Cash interest payments                        $      29.6     $      24.6 
  Cash income tax payments (net of refunds)            67.5            36.3 
                                            --------------------------------
                                            --------------------------------
                                                                            
                                                                            
                                                                            
QUEBECOR INC. AND ITS SUBSIDIARIES                                          
CONSOLIDATED BALANCE SHEETS                                                 
                                                                            
(in millions of Canadian dollars)                                           
(unaudited)                                      March 31       December 31 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                     2014              2013 
----------------------------------------------------------------------------
                                                                            
                                                                            
Assets                                                                      
                                                                            
Current assets                                                              
  Cash and cash equivalents                   $     405.5     $       476.6 
  Accounts receivable                               506.5             566.3 
  Income taxes                                       25.3              18.0 
  Inventories                                       222.3             239.4 
  Prepaid expenses                                   60.9              48.2 
  Assets held for sale                               75.8              76.9 
                                          ----------------------------------
                                                  1,296.3           1,425.4 
                                                                            
Non-current assets                                                          
  Property, plant and equipment                   3,413.9           3,432.4 
  Intangible assets                                 856.1             824.8 
  Goodwill                                        3,062.2           3,061.5 
  Derivative financial instruments                  224.3             142.1 
  Deferred income taxes                              18.4              28.1 
  Other assets                                      114.1             102.1 
                                          ----------------------------------
                                                  7,689.0           7,591.0 
                                          ----------------------------------
Total assets                                  $   8,985.3     $     9,016.4 
                                          ----------------------------------
                                          ----------------------------------
                                                                            
Liabilities and equity                                                      
                                                                            
Current liabilities                                                         
  Bank indebtedness                           $      37.2     $         0.5 
  Accounts payable and accrued charges              638.3             717.7 
  Provisions                                         25.4              39.4 
  Deferred revenue                                  294.9             288.8 
  Income taxes                                       33.5              89.2 
  Derivative financial instruments                      -             116.2 
  Current portion of long-term debt                 101.3             101.2 
  Liabilities held for sale                           8.5               9.0 
                                          ----------------------------------
                                                  1,139.1           1,362.0 
                                                                            
Non-current liabilities                                                     
  Long-term debt                                  5,174.2           4,975.3 
  Derivative financial instruments                   65.8              77.3 
  Other liabilities                                 269.6             278.7 
  Deferred income taxes                             581.9             572.7 
                                          ----------------------------------
                                                  6,091.5           5,904.0 
Equity                                                                      
  Capital stock                                     327.8             328.9 
  Contributed surplus                                 2.3               2.3 
  Equity component of convertible                                           
   debentures                                       398.3             398.3 
  Retained earnings                                 479.5             448.1 
  Accumulated other comprehensive loss              (44.1)            (23.1)
                                          ----------------------------------
  Equity attributable to shareholders             1,163.8           1,154.5 
  Non-controlling interests                         590.9             595.9 
                                          ----------------------------------
                                                  1,754.7           1,750.4 
                                                                            
                                          ----------------------------------
Total liabilities and equity                  $   8,985.3     $     9,016.4 
                                          ----------------------------------
                                          ----------------------------------

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