Quebecor Inc. Reports Consolidated Results for 2008

Market Wire, February, 2009

Quebecor Inc. (TSX: QBR.A) (TSX: QBR.B) today reported its consolidated financial results for the 2008 financial year and the fourth quarter of 2008. Quebecor consolidates the financial results of its Quebecor Media Inc. subsidiary, in which it holds a 54.7% interest.

2008 Highlights

- Quebecor reports revenues of $3.73 billion, an increase of $364.2 million (10.8%) from 2007.

- Operating income(1): up $171.7 million (18.1%) to $1.12 billion.

- Net income: $187.3 million ($2.91 per basic share) in 2008, compared with a net loss of $969.2 million ($15.07 per basic share) in 2007.

- Adjusted income from continuing operating activities(2): up $45.1 million (33.7%) to $178.8 million ($2.78 per basic share) in 2008.

- Cable segment: operating income up $154.5 million (24.0%). Customer growth in 2008: 215,600 for cable telephone service, 130,800 for cable Internet access, 77,500 for cable television service (including 159,100 customer increase for illico Digital TV), 18,300 activated phones for wireless telephone service.

- Quebecor Media confirmed in 2008 its intention to invest between $800.0 million and $1 billion in its new Advanced Wireless Services (AWS) network over the next four years, including $554.6 million already disbursed in 2008 for the purpose of acquiring 17 operating licences.

- $671.2 million non-cash charge of impairment of goodwill and mastheads, primarily in the Newspapers segment, due to industry challenges and the difficult economic environment. Restructuring initiatives totalling $54.6 million announced in order to adapt to market conditions and reduce staff.

"Quebecor succeeded in growing its revenues and operating income in 2008," noted Pierre Karl Peladeau, President and Chief Executive Officer of Quebecor. "The progress was spearheaded by the strong results of its Cable segment, which continued logging solid subscriber growth for all its services. Indeed, in the fourth quarter of 2008, the segment registered the largest quarterly customer increase for illico Digital TV since the service was introduced in 1999. At the same time, the Newspapers segment is being impacted by the dramatic industry-wide changes of the past several years and the troubled financial and economic environment, which together are negatively affecting its advertising revenues. As a result, a 10% staff reduction was announced in the Newspapers segment in December 2008. As well, a significant non-cash charge for impairment of goodwill and intangible assets was recorded in income.

(1) See "Operating income" under "Definitions".

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

"Quebecor remains a highly diversified communications and media company that is responsive to customer needs and committed to its business development and growth strategy. We remain confident that Quebecor Media's decision in 2008 to invest in an Advanced Wireless Services network will pay off in the medium term and the long term. This strategy will enable the company to deliver its exclusive original content on new platforms and will position Quebecor Media as a still more integrated business equipped to offer consumers a full line of high-calibre services at competitive prices, and to offer its business partners new possibilities.

"As a highly integrated media group, we see not only major challenges in the digital era but also, and most importantly, exciting business opportunities. Our strategy is not to simply adapt to the new economy but to proactively and creatively exploit its full potential. I believe the future belongs to consumer-driven businesses that give consumers exactly what they want in terms of information and entertainment, when they want and on the platform they want. This is precisely the vision we are embracing in all our lines of business, for this is the road to profitability in the future."

Table 1
Quebecor Inc. financial highlights - 2004-2008
(in millions of Canadian dollars, except per share data)
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                              2008      2007      2006      2005     2004
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Revenues                  $3,730.1  $3,365.9  $2,998.6  $2,695.4 $2,456.8
Operating income(a)        1,121.0     949.3     788.5     732.9    697.7
Net  income (loss)           187.3    (969.2)    (93.9)     69.7    112.2
Adjusted income from
 continuing
 operations(b)(c)            178.8     133.7      97.7      55.3     44.7
Per basic share:
  Net income (loss)           2.91    (15.07)    (1.46)     1.08     1.74
  Adjusted income from
   continuing
   operations(b)(c)           2.78      2.08      1.52      0.86     0.69
-------------------------------------------------------------------------
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(a) See "Operating income" under "Definitions".
(b) See "Quebecor Inc. - Discontinued operations".
(c) See "Adjusted income from continuing operations" under "Definitions".

Analysis of 2008 results

- Quebecor's consolidated revenues from continuing operations increased
  $364.2 million (10.8%) to $3.73 billion. Revenues rose mainly in the
  following segments:
  - Cable (by $251.6 million or 16.2% of segment revenues), reflecting
    customer growth for all services;
  - Newspapers ($107.5 million or 10.0%), due primarily to the impact of
    the acquisition of Osprey Media Income Fund (Osprey Media) in August
    2007;
  - Broadcasting ($21.2 million or 5.1%).

- Quebecor's operating income from continuing operations grew $171.7
  million (18.1%) to $1.12 billion, mainly because of an increase in the
  Cable segment ($154.5 million or 24.0% of segment operating income)
  resulting primarily from customer growth.

- Quebecor's net income was $187.3 million ($2.91 per basic share) in 2008,
  compared with a net loss of $969.2 million ($15.07 per basic share) in
  2007. The favourable variance of $1.16 billion ($17.98 per basic share)
  was mainly due to:
  - $1.63 billion favourable variance in operating results of discontinued
     operations(3);
  - $171.7 million increase in operating income.
  Partially offset by:
  - recognition in the fourth quarter of 2008 of a non-cash impairment
    charge totalling $671.2 million, including $631.0 million without any
    tax consequences, for goodwill and intangible assets, primarily in the
    Newspapers segment ($361.1 million net of income tax and non-
    controlling interest);
  - $119.2 million decrease in the gain on valuation and translation of
    financial instruments;
  - $48.4 million increase in income tax expense;
  - $45.8 million increase in financial expenses due to higher average
    indebtedness;
  - $43.4 million increase in the charge for restructuring of operating
    activities, impairment of assets and other special items, primarily in
    the Newspapers segment.

- Adjusted income from continuing operating activities: $178.8 million in
  2008 ($2.78 per basic share), compared with $133.7 million ($2.08 per
  basic share) in 2007, an increase of $45.1 million ($0.70 per basic
  share), or 33.7%.

(3) See "Quebecor Inc. - Discontinued operations."

Analysis of fourth quarter 2008 operating results

- Quebecor's consolidated revenues from continuing operations rose $37.7
  million (3.9%) to $1.00 billion. Revenues increased mainly in the Cable
  segment (by $46.2 million or 10.8% of segment revenues), reflecting
  customer growth for all services.

- Quebecor's operating income from continuing operations grew $32.0 million
  (11.5%) to $310.1 million. The largest increase was in the Cable segment
  ($42.4 million or 24.1% of segment operating income) resulting primarily
  from customer growth.

- Net loss of $343.7 million ($5.34 per basic share) in the fourth quarter
  of 2008, compared with a net loss of $962.6 million ($14.96 per basic
  share) in the fourth quarter of 2007. The favourable variance of $618.9
  million ($9.62 per basic share) was due primarily to:
  - favourable impact on the comparative numbers for 2008 of the $1.10
    billion loss related to discontinued operations recognized in the
    fourth quarter of 2007;
  - $32.0 million increase in operating income.
  Partially offset by:
  - recognition of a non-cash impairment charge totalling $671.2 million,
    including $631.0 million without any tax consequences, for goodwill and
    intangible assets ($361.1 million net of income tax and non-controlling
    interest);
  - $122.2 million unfavourable variance in gain on valuation and
    translation of financial instruments;
  - $53.8 million unfavourable variance in the charge for restructuring of
    operations, impairment of assets and other special items.

- Adjusted income from continuing operations: $60.7 million in the fourth
  quarter of 2008 ($0.95 per basic share), compared with $37.5 million
  ($0.58 per basic share) in the fourth quarter of 2007, an increase of
  $23.2 million ($0.37 per basic share) or 61.9%.