Quebecor, Inc Annual Report 2000

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FY2000 Annual Report · Quebecor, Inc

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ANNUAL REPORT

2000

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Table of Contents

General Information

Financial Highlights

Overview of Quebecor

Message to Shareholders

QUEBECOR MEDIA INC.

Interview with Pierre Karl Péladeau

Newspapers

Web Integration/Technology

Internet/Portals

Leisure and Entertainment

Broadcasting

QUEBECOR WORLD INC.

Printing

FINANCIAL SECTION

OUR COVER

In 2000, Quebecor reorganized its corporate structure
and marshalled its forces around two operational poles:
industrial operations, spearheaded by Quebecor World,
and media operations, consolidated under Quebecor Media.

After creating Quebecor World, the world’s largest com-
mercial printer, Quebecor is building Quebecor Media, a
Canadian platform for convergence which will capture
synergies among the Company’s media properties and
provide a springboard for international expansion.

ANNUAL MEETING
Shareholders are invited to attend the Annual Meeting of Shareholders to be
held at 10:00 a.m. on Thursday, May 3, 2001 in the Ballroom of the Montreal
Marriott Château Champlain, 1 Place du Canada, Montreal, Quebec.

STOCK EXCHANGE LISTINGS
The Class A Multiple Voting Shares and the Class B Subordinate Voting Shares
are listed on the Toronto Stock Exchange under the ticker symbols QBR.A and
QBR.B, respectively.

REGISTRAR AND TRANSFER AGENT:
Computershare Trust Company of Canada
Place Montreal Trust
1800 McGill College
Montreal, Quebec
H3A 3K9

TRANSFER OFFICES:
• Toronto
• Vancouver
• United States (American Securities Transfer & Trust Inc. – Denver, CO)

AUDITORS
KPMG LLP

INFORMATION
For further information or to obtain copies of the Annual Report and the Annual
Information Form, please contact the Department of Investor Relations and
Corporate Communications of the Company at (514) 877-5130,
or address correspondence to:
612 St. Jacques Street
Montreal, Quebec
H3C 4M8
Web Site: http://www.quebecor.com

Vous pouvez vous procurer une copie française de ce rapport annuel à l’adresse
indiquée ci-dessus.

DUPLICATE COMMUNICATIONS
Shareholders who receive more than one copy of a document, particularly of the
Annual Report or the quarterly reports, are requested to notify Montreal Trust
Company at (514) 982-7555 or 1 800 564-6253.

CURRENCY
All dollar amounts appearing in this Annual Report are in Canadian dollars,
except if another currency is specifically mentioned.

CREDITS
Graphic Design: St. Remy Media Inc.
Printing: Quebecor World Graphique-Couleur
Photography: Guy Tessier

ISBN: 2-922430-07-3
Legal Deposit – Bibliothèque nationale du Québec, 2001
Legal Deposit – National Library of Canada, 2001

Printed in Canada

Highlights

Years ended December 31, 2000, 1999 and 1998
(in millions of Canadian dollars, except per share data)

Operations

Revenues

2000

1999

1998

(Restated)

$ 10,914.8

8,440.3

6,173.5

Operating income before amortization, financial expenses, gains on dilution and

reserve for restructuring of operations and other special charges

1,790.1

1,309.3

Contribution to net income

Continued operations

Goodwill amortization

Non-recurring items

Discontinued operation

Net income

203.1

(66.8)

702.0

246.1

1,084.4

181.9

(41.1)

296.0

40.5

477.3

Cash provided by continued operations

1,447.6

1,105.9

852.3

146.5

(18.4)

–

44.2

172.3

647.4

2.24

(0.28)

–

0.68

2.64

0.44

21.99

64.7

3.14

(1.03)

10.86

3.81

16.78

0.51

43.21

64.6

2.80

(0.63)

4.57

0.63

7.37

0.48

26.57

64.6

$ (1,785.8)

556.3

612.9

2,792.2

17,603.3

1,716.0

15,246.9

1,423.7

9,889.6

52,000

60,000

39,000

9.0 %

48.1 %

11.6 %

30.4 %

11.1 %

13.0 %

Per share data

Contribution to net income

Continued operations

Goodwill amortization

Non-recurring items

Discontinued operation

Net income

Dividends

Shareholders' equity

Number of shares outstanding at year-end (in millions)

Financial position

Working capital

Shareholders’ equity

Total assets

Employees

Return on average equity

Continued operations

Total

REVENUE GROWTH (in millions of dollars)

12,000

10,000

8,000

6,000

4,000

10,914.8

8,440.3

6,173.5

5,303.5

4,656.0

1996

1997

1998

1999

2000

Quebecor Inc. 1

Overview of Quebecor

QUEBECOR MEDIA INC.

Operations

Newspapers
Sun Media Corporation

Leisure and Entertainment
Groupe Archambault inc.

Publicor
Book Sector

Le SuperClub Vidéotron

Web Integration/Technology
Nurun Inc.

Mindready Solutions Inc.
Internet/Portals
CANOE
Netgraphe Inc.

• 2nd largest newspaper group in Canada
• Publishes 8 urban dailies and 190 community newspapers

• Largest chain of music stores in Eastern Canada
• 12 megastores
• 3 e-commerce sites: archambault.ca, camelot.ca, paragraphbooks.com
• Major Quebec magazine publisher, also engaged in contract publishing
• Largest group of publishing houses in Quebec
• Specializes in general literature, textbooks, legal texts, contract publishing
• Largest chain of video stores in Quebec
• 166 stores
• 30% of the Quebec market

• A network of offices in North America, Europe, Latin America
• Online marketing, e-commerce, automated publishing solutions,

intranets and extranets, Web sites, systems integration
• Test engineering and real-time communications solutions

• Two extensive networks of portals and special-interest sites
• canoe.ca and canoe.qc.ca in Canada, canoe.fr in France and

micanoa.com in Spain

• Infinit.com portal and toile.qc.ca search engine
• Over 210 million page views per month on the CANOE and

Netgraphe networks

Cable Television and Broadcasting
Vidéotron ltée
TVA Group Inc.

After the acquisition of Groupe Vidéotron in October 2000,
Quebecor Media filed an application with the CRTC for
the transfer of the operating licenses of Vidéotron ltée
(cable television) and TVA Group Inc. (broadcasting).
In the event of a favourable decision by the
CRTC expected in June 2001, these assets will be added to
Quebecor Media’s properties.

Revenues
(in millions of dollars)

$ 850

Employees
5,900

$ 225

1,650

$ 127

1,200

300

2000 HIGHLIGHTS

Integration of
World Color Press
begins

Quebecor World
Quebecor World

US$500 million contract
with Pacific Bell extended

Quebecor makes offer
for Groupe Vidéotron

Groupe Archambault
acquires Camelot-Info

Mindready Solutions signs
5-year service agreement with
Nortel Networks

January

February

March

April

May

June

$1 billion contract with
Sears Canada extended

Quebecor sells its interest in
Donohue to Abitibi-Consolidated
and becomes its major shareholder

2 Quebecor Inc.

Que-Net Media™ created

Nurun enters into a strategic
partnership with Antártica Group
of Chile

QUEBECOR WORLD INC.

Quebecor World
Quebecor W
Quebecor Worldorld

Plants/Countries

Operations

Revenues
(in millions of dollars)

Employees

Over 160 plants and
related facilities
• 16 countries

• The only truly global printer
• Over 85 acquisitions in one decade
• Lines of business: magazines, advertising inserts and newspaper

supplements, catalogues, specialty printing and direct mail, books,
digital premedia services, logistics, directories

• Largest printer of magazines in the world:
over 1,000 titles, 2 billion copies per year

• International sales force

North America

8,195

36,000

Europe

Latin America

Over 125 plants:
• Canada
• United States

27 plants
• Austria
• Finland
• France
• Spain
• Sweden
• Switzerland
• United Kingdom

7 plants:
• Argentina
• Brazil
• Chile
• Colombia
• Mexico
• Peru

• Magazines: 46% of the top 125 titles in North America
• Catalogues: 27 million per day
• Books: one billion per year
• Directories: 180 million per year
• 15 Que-Net Media™ business centres
• Logistics Services specialized in the distribution of

printed materials; largest shipper into the U.S. postal system

• The largest rotogravure network in Europe
• Electronic B2B procurement centre for raw

materials (paper, ink) in Fribourg, Switzerland

1,322

5,800

• One of the largest printers in Latin America
• Strategic alliances with leading printers

and publishers: Listel Listas Telefonicas, Editora Abril, Gráfica
Melhoramentos, Gráfica Monte Alban, Editorial Antártica

166

1,300

Quebecor makes a
public takeover bid
for Groupe Vidéotron

Acquisition of Groupe
Vidéotron closes

Mindready Solutions
listed on the Toronto
Stock Exchange

July

August

September

October

November

December

10-year contract with Editora Abril S.A. in
Brazil and construction of new printing plant

TQS network put up for sale

canoe.fr launched in France

US$142 million contract with
Listel Listas Telefonicas S.A. in
Brazil to print directories

Quebecor Inc. 3

Message to Shareholders

Quebecor has marshalled its forces around two
operational poles: Quebecor World and Quebecor Media

Quebecor made impressive progress in the year

2000. The highlight of the year was the
takeover of Groupe Vidéotron ltée in October,
the Company’s largest media acquisition to date.
The transaction will have a decisive impact on
Quebecor’s development. It equips us to begin devel-
oping one of the most powerful platforms for
media convergence in Canada, which will provide
a springboard for international expansion going
forward. We will build on this foundation to
strengthen the positioning of our products and
generate additional revenues by distributing our
content through new channels. We are confident
that this carefully considered strategic decision is
the best way to secure the Company’s long-term
growth and enhance shareholder value.

Two major operating units:
Quebecor World and Quebecor Media
In 2000, Quebecor streamlined its operating struc-
ture and marshalled its forces around two opera-
tional poles: the industrial pole, spearheaded by
Quebecor World Inc., the world’s largest commer-
cial printer with 43,000 employees and 160 print-
ing plants in 16 countries, and the media pole, orga-
nized under Quebecor Media Inc., an operating
subsidiary which will eventually have 225 offices
and business centres employing more than 15,000
people, concentrated in North America and also includ-
ing operations in many countries. Pending a decision
by the Canadian Radio-Television and Telecommu-
nications Commission (CRTC) on the transfer of
Vidéotron’s licenses for cable television (Vidéotron
ltée) and broadcasting (TVA Group) to Quebecor,
expected in June 2001, we have begun the process
of consolidating our other media properties within
Quebecor Media.

Quebecor Inc.’s revenues increased 29% to
$10.9 billion for the year ended December 31, 2000.
Earnings before interest, taxes, depreciation and amorti-
zation (EBITDA) from continued operations amounted
to $1.8 billion in 2000, up 37% over 1999. The increase
was due primarily to the exceptional contributions
of our subsidiaries Quebecor World in the printing
segment and Sun Media Corporation in the news-
paper segment, both of which posted record results.

Net income from continued operations
(before amortization of goodwill and effect of non-
recurring items) increased by nearly 12% to
$203.1 million or $3.14 per share in 2000, com-
pared with $181.9 million or $2.80 per share in 1999.
Three non-recurring items had an impact on net
income: 1) a $246 million gain derived primarily
from the sale of Donohue to Abitibi-Consolidated
Inc. in the second quarter; 2) non-recurring charges
totalling $100.4 million, including write-offs of
goodwill; and 3) $802 million gains on dilution
resulting mainly from the issuance of capital stock
by subsidiary Quebecor Media in the fourth quarter.
Consequently, Quebecor’s net income including
these items totalled $1.08 billion or $16.78 per share
in 2000. In 1999, net income totalled $477.3 million,
or $7.37 per share, including non-recurring items
such as gains on dilution resulting from share issues
by subsidiaries and restructuring reserves recognized
by two subsidiaries.

Responsible debt management
The acquisition of Vidéotron had a predictable impact
on the Company’s indebtedness and on some of its
financial ratios. In February 2001, to enhance its
financial position, Quebecor announced the sale of
2.5 million subordinate voting shares in Quebecor
World and the issuance of 25-year debentures con-
vertible into 12.5 million subordinate voting shares
of the subsidiary. These moves reduced Quebecor’s
debt by nearly half a billion dollars.

Quebecor has always exercised responsible and
rigorous management in all aspects of its operations,
particularly debt levels. In the past, we had to take
on debt to acquire Donohue in 1987, Maxwell Graphics
in 1989, Sun Media Corporation in 1999, and World
Color Press, also in 1999. These acquisitions helped
make Quebecor the leader it is today. We are con-
fident that, in the medium term, the Vidéotron deal
will prove to be an important addition to our string
of successful acquisitions. The significant cash flow
generated by our operations and the sale of some
assets that do not fit into our development plans
should allow us to reduce the Company’s debt, despite
the sharp economic downturn in the fourth
quarter of 2000.

Quebecor Inc.

Solid fundamentals
Quebecor’s stock price fluctuated considerably in 2000.
It was driven up by the rally in tech stocks in early
2000 and then fell back in the second half. As at
December 31, 2000, the intrinsic value of our inter-
est in Quebecor World and Abitibi-Consolidated, less
Quebecor Inc.’s debt, equalled nearly $28 per share
on a non-consolidated basis. At that price, therefore,
shareholders were getting Quebecor Inc.’s interest in
Quebecor Media as a premium. We consider the gap
between the intrinsic value of Quebecor’s assets and
its stock market valuation to be unwarranted. The
Company’s exceptionally rich and diverse array of
industrial and media properties defines the real value
of an investment in Quebecor Inc.

A track record of success
Throughout its history, Quebecor has consistently
seized opportunities for growth while practising sound
financial management. We have successfully
expanded in many lines of business:
• commercial printing, with the phenomenal
growth of our operations since 1988 and the
creation of Quebecor World;
• forestry products, with our interest in Donohue
over more than a dozen years;
• newspapers, with the acquisition of Sun Media
Corporation in 1999;
• broadcasting, where we succeeded in turning
around TQS’s financial position in the space of three
years and significantly increasing its market share,
although Quebecor had no prior experience in this
area;
• Web integration, where we have expanded the
scope of our operations to serve major international
corporations;
• Internet properties, where we have rolled out a
bilingual network in Canada and are now moving
into other countries and other languages.

In the past, we have proved our ability to expand
into new lines of business and develop them cre-
atively and profitably. We have the expertise, the
resources and the management teams to succeed in
analogue and digital cable television, high-speed
Internet access and Web TV. Quebecor Media will
stay at the innovative cutting edge and capitalize
on the fit between its various media properties, to
the benefit of its customers and the general public.

Acknowledgements
We would like, once again, to thank the directors
of Quebecor Inc. and all the Company’s employees
in 17 countries for their personal and professional
commitment to the organization’s success. We pay
tribute in particular to the Quebecor World man-
agement team, which did exceptional work, surpassing
the ambitious targets in the integration plan adopted
when Quebecor Printing and World Color Press
merged. We are grateful to our shareholders for their
support in this period of turmoil on capital mar-
kets. We assure them that Quebecor management
remains fully committed to a single objective:
maximizing shareholder value.

Jean Neveu

Jean Neveu
Chairman of the Board

Pierre Karl Péladeau

Pierre Karl Péladeau
President and Chief Executive Officer

Pierre Karl Péladeau
President and Chief
Executive Officer

Jean Neveu
Chairman of the Board

Quebecor Inc.

FROM TOP TO BOTTOM AND LEFT TO RIGHT

Jean Neveu
Chairman of the Board

Pierre Karl Péladeau
President and
Chief Executive Officer

Érik Péladeau
Vice Chairman of the Board

Monique Leroux
Senior Executive Vice President
and Chief Operating Officer

Claude Hélie
Executive Vice President
and Chief Financial Officer

Luc Lavoie
Executive Vice President,
Corporate Affairs

Sylvie Cordeau
Executive Advisor,
Office of the President

AN EMERGING FORCE IN

THE MEDIA UNIVERSE

Quebecor Media, a subsidiary of

Quebecor Inc., was created in 2000. It

includes our assets in newspaper, magazine

and book publishing; Web integration and

technology; Internet portals and content;

QUEBECOR
MEDIA

and distribution and retail. Quebecor Media

is building one of the most powerful

platforms for media convergence in Canada

in order to capture the synergies among all

of our media properties, including (subject

to regulatory approval) our new cable

television and broadcasting assets.

Interview with
Pierre Karl Péladeau

Acquisition of Groupe Vidéotron

know well. Quebecor’s strategy in com-
mercial printing, newspaper publishing,
forestry products, Web integration and
Internet portals has always been the
same: to develop solid local and regional
foundations before tackling the national
market and, in businesses where it was
appropriate, world markets. This strategy
has yielded excellent results to date and
we intend to continue along the same
successful path in the future.

media universe. Sooner or later, a content
producer that does not control the distri-
bution of its product is likely to be
marginalized by these giants, which are
much more fully integrated. Combining
content and Internet access will create
optimal business opportunities for all our
customers on a multitude of platforms.
This road is more difficult because it is
untrodden but it offers the best prospects
for future growth for Quebecor.

You say Quebecor Media must be part
of the trend towards media convergence.
How does it intend to achieve this?
All the recent examples of convergence
in the telecom and media industries have
had one thing in common: they involved
combining content and access. The
acquisition of Vidéotron by Quebecor is
consistent with this trend. The principal
advantage of convergence for a company
like Quebecor is that it enables us to
offer our customers advertising strategies
that embrace a wide range of media. It
lets us enhance impact for our advertis-
ers through cross-promotions in our
dailies, our magazines, our television
network and our Internet portals.
Vidéotron’s technology will also make us
a driving force in the next big thing in
high tech: Internet-based telephony and
Internet-based television, or Web TV.
Finally, it will let us diversify our rev-
enue sources by adding, first of all,
recurring revenues from subscriptions,
and then the fees and commissions we
will collect on the e-commerce transac-
tions supported by our interactive cable
capabilities.

Couldn’t Quebecor have remained
solely a content provider?
The creation of media powerhouses in the
United States and Europe is reshaping the

The acquisition of Vidéotron was made
through a new subsidiary called
Quebecor Media. What is this company?
In 2000, Quebecor decided to reor-
ganize its operations into two large
units: Quebecor World for industrial
operations and Quebecor Media for
media operations. To create Quebecor
Media, Quebecor joined forces with
Caisse de dépôt et placement du Québec,
Quebecor’s financial partner in the
acquisition of Maxwell Graphics’ plants
in the late 1980s and of Sun Media
Corporation in 1999. Quebecor and
Capital Communications CDP, a wholly
owned subsidiary of Caisse de dépôt et
placement du Québec, hold 55% and
45% of Quebecor Media respectively.

How was the acquisition financed?
Quebecor Media spent $5.7 billion to
acquire Vidéotron, cover charges related
to the transaction and make a monetary
advance to Vidéotron. To finance the
deal, Quebecor contracted a bank loan
of $0.9 billion drawn under credit
facilities and injected the money into
Quebecor Media. Quebecor Media itself
invested $2.1 billion obtained by means
of a bank loan. The remaining $2.7 bil-
lion was raised through a subscription
for Quebecor Media stock by Capital
Communications CDP.

Last October, Quebecor Media closed
the acquisition of Groupe Vidéotron.
Tell us about that deal.
Vidéotron, a leader in cable television in
Canada, commands the latest technology.
It is the largest cable provider in Quebec
and the third-largest in Canada. Vidéotron
owns quality properties in communica-
tions segments that are complementary
to Quebecor’s businesses: cable televi-
sion, interactive television and Internet
access. In all, the company has over
1.5 million subscribers to its basic cable
service, over 85,000 subscribers to digital
cable television and 205,000 Internet
subscribers, 75% of whom have high-
speed service. Vidéotron’s subsidiary,
TVA Group, is engaged in broadcasting
through the TVA Network, the distribu-
tion of television content and films
through TVA International, and maga-
zine publishing through TVA Publishing.

Why did you consider this
acquisition to be timely?
Vidéotron has the technological
infrastructure we need to become a fully
integrated company and join the global
trend toward media convergence. Our
shareholders know that Quebecor is
recognized for the depth, diversity and
richness of its content, distributed on
print and electronic platforms. But to
create a truly integrated global media
and communications company, we
needed to control our own distribution
network in order to ensure optimal
dissemination of our content.

You speak of creating a global media
company but Vidéotron’s operations
are currently confined to Quebec.
Isn’t that a contradiction?
You have to start somewhere. Vidéotron
was a natural partner in a market we

Quebecor Inc.

Is Quebecor already exercising
full control over Groupe
Vidéotron’s assets?
No, not entirely. Vidéotron’s non-
regulated operations are being incorpo-
rated into Quebecor Media, in accor-
dance with the business plan. The prop-
erties in question are the SuperClub
Vidéotron chain of video stores and the
Web publisher Netgraphe. However,
Vidéotron’s core businesses, the cable
television provider Vidéotron ltée and
the broadcasting operation TVA Group,
are regulated by the Canadian Radio-
Television and Telecommunications
Commission, the CRTC. For these prop-
erties, we are waiting for a CRTC deci-
sion on the transfer of the operating
licenses.

In the meantime, who is running
these companies?
In accordance with CRTC regulations,
they are under the control of trustees
appointed by Quebecor. For this pur-
pose, we are fortunate to be able to
count on veteran managers who enjoy
our full confidence. The trustee for the
cable television operations is Serge
Gouin, President and Chief Executive
Officer of Vidéotron from 1987 to 1996.
He is supported in his duties by the
entire Vidéotron team. The trustee for
the broadcasting operations is Richard
Drouin, former President of Hydro-
Québec and currently Chairman of
Abitibi-Consolidated. Our properties
are in good hands.

Quebecor has announced it intends
to divest itself of the TQS television
network. Why?
Regretfully, this is a decision we were
forced to make. We were very satisfied
with the TQS network’s growing market

share and its financial results, but after
consulting with the appropriate authori-
ties, we concluded that we had no
choice. However, the sale of TQS is
conditional upon the CRTC's approval
for the transfer of the operating license
for the TVA television network. If the
CRTC should decide to transfer TVA’s
operating licenses to Quebecor, and if
TQS has not yet been sold at that time,
Quebecor has pledged to place TQS
under the control of trustees until it is
sold.

Does Quebecor intend to keep all
of Groupe Vidéotron’s assets?
No. We have announced our intention
to divest ourselves of three properties
that do not fit in with our long-term
development strategy: business tele-
communications provider Vidéotron
Télécom, remote surveillance company
Protectron, and Vidéotron’s interest in
wireless telephone service provider
Microcell. The process of selling these
properties is already under way, or will
begin as soon as market conditions are
favourable.

How will the acquisition of Vidéotron
help advance Quebecor’s convergence
strategy?
Our strategy basically rests on this
equation: cable television + the Internet
= Web TV. As far as cable television is
concerned, Vidéotron’s cable operations
will position us in an industry with
excellent revenue prospects. When it
comes to the Internet, Vidéotron has
cutting-edge high-speed connection
technology. As for Web TV, we will
build on Vidéotron’s net.tv service,
which will let users watch television
and simultaneously surf the Web via a
high-speed connection. This is the way

of the future. Web TV will help create
a host of synergies with our other
media properties and a multitude of
e-commerce opportunities for the major
retail chains that Quebecor World and
Nurun already serve.

What are the main challenges
Quebecor faces in carrying out its
convergence strategy?
Media convergence must demonstrate
that it can generate value for Quebecor’s
customers and shareholders. The first
challenge is getting different entities,
such as information content producers
and an Internet access provider, to work
together. Quebecor has been working for
years to maximize the potential syner-
gies between its various companies and
has been quite successful. The second
challenge is to make international
inroads into the Internet economy,
which, as we know, has no borders. We
have an impressive track record when it
comes to global expansion, particularly
in the commercial printing industry,
where we built up the world’s largest
commercial printer, Quebecor World, in
the space of a decade.

Will Quebecor’s convergence strategy
benefit shareholders?
In this strategic effort, as in all the
others Quebecor has undertaken in the
course of its history, our aim will be
to maximize value for the customers
who use our services and for the
shareholders who own Quebecor stock.
Quebecor’s focus on the interests of
shareholders is part of its corporate
history and culture. Shareholder value
is an absolute priority of which we will
never lose sight.

Quebecor Inc.

Newspapers

Sun Media increases profit margins
despite higher newsprint costs

Le Journal de Montréal:
the top daily newspaper
in Quebec.

Sun Media Corporation posted excellent results
in its second full year of existence since
Quebecor brought all its daily, local and regional
newspapers together under this entity.

Sun Media, the second-largest newspaper
group in Canada, recorded revenues of
$850.1 million in 2000, compared with
$827.1 million in 1999, a 2.8% increase, even
though fiscal 1999 included an extra week
(53 weeks). Earnings before interest, taxes, depre-
ciation and amortization (EBITDA) from con-
tinued operations increased 9.6% to $205.3 mil-
lion in 2000. It is noteworthy that Sun Media
increased its profit margin from 22.7% in 1999
to 24.2% in 2000 despite an average increase
of approximately 10% in the cost of newsprint.
In addition to its excellent operating results,
Sun Media substantially improved asset
management by reducing its debt by $115 mil-
lion during the fiscal year.

Under the inspired leadership of its new
President and Chief Operating Officer,
Pierre Francœur, Sun Media enhanced its
profitability by eliciting
innovative initiatives from
employees and from the
Corporation’s various sec-
tors in order to increase sales
and reduce operating costs.
The results have met our
expectations and Quebecor
is grateful to all the
employees who con-
tributed to the success of
this effort.

Weekday
readership

176,800

156,000

177,000

976,500

717,200

128,800

192,600

234,400

2,759,300

Sun Media’s urban
dailies shine
The combined revenues of
our urban dailies increased

Sun Media
urban dailies – readership

Urban dailies

Le Journal de Montréal

Le Journal de Québec

The Ottawa Sun

The Toronto Sun

The London Free Press

The Winnipeg Sun

The Edmonton Sun

The Calgary Sun

Total

Source : NADbank, 2000

Quebecor Inc.

by 3.6%. Advertising revenues increased by 7.6%
after adjusting for the effect of the 53rd week
in fiscal 1999. This was a very strong perfor-
mance in view of the vigorous competition in
some urban markets, including Toronto once
again. Our effective operating cost-containment
strategies produced a substantial 5.7% increase
in combined EBITDA for our urban dailies.

In 2000, Sun Media’s major dailies took
numerous initiatives to increase advertising and
distribution revenues. For example, they
launched a variety of special sections designed
to appeal to readers’ interests. They also
invested in product quality; some modernized
their equipment and acquired advanced tech-
nology. The focus was on increasing revenue,
reader loyalty, circulation, print quality and,
of course, earnings, which grew in line with
our targets.

Sun Tabs Network makes gains
The Sun Tabs Network, created to promote
national advertising sales in the Sun Media
tabloids, scored significant successes in 2000.
Total revenues for all departments increased
by 6%, adjusted for the 53rd week in fiscal
1999, while national revenues rose 18%. The
Sun Tabs Network landed major customers in
several segments, including the automobile
industry, financial services, microcomputers and
telecommunications.

Community newspapers: increased profits
and new sources of revenue
The community newspapers division, headed by
Bill Dempsey, posted another excellent perfor-
mance in 2000, highlighted by a 10% year-
over-year increase in operating income, on a
comparative basis. The division includes over
190 publications across Canada and in Florida.

A regional advertising network –
from coast to coast
The Bowes Newspaper Network (BNN) is the local
and regional counterpart of the Sun Tabs
Network. BNN provides one-stop service for
national advertisers that want exposure in
markets with a population under 100,000,
where one-third of Canadians live. In 2000, BNN
relocated its offices to London, Ontario, while
keeping a sales team in Edmonton. BNN has
successfully developed strategies to take advan-
tage of the business opportunities generated by
the booming Internet advertising market and
will continue to do so in the future.

Quebec weeklies increase operating
income by 20%
The operating income of Sun Media’s Quebec
weeklies rose 20% in 2000. The excellent
results are due primarily to stringent cost-
containment. All our Quebec weeklies are now
on the Web and new Internet initiatives are
planned to stimulate the segment’s revenues.

U.S. publications
Florida Sun Publications likewise posted
increased revenues. Printing contracts obtained
after the acquisition of a new printing press
accounted for one-half of the company’s
EBITDA.

Effective distribution networks
Messageries Dynamiques, the largest distribu-
tor of dailies, magazines and other print and

electronic media in Quebec, was also part of Sun
Media Corporation’s success in 2000. Messageries
Dynamiques exceeded its earnings targets for
the fiscal year ended December 31, 2000 despite
a substantial increase in operating costs gen-
erated in large part by spiralling gasoline
prices. Finally, Dynamic Press Group, owned in
partnership with The News Group, a division of
The Jim Pattison Group of Vancouver, increased
its volume of business by 25% in comparison
with the previous year.

Weekly circulation of
Sun Media newspapers

Provinces

Maritimes

Quebec

Ontario

Manitoba

Saskatchewan

Alberta

British Colombia
Total Canada
Florida

Urban dailies and
community newspapers
distributed per week

8,000

3,602,000

4,552,000

491,000

45,000

1,654,000

36,000
10,388,000
246,000

Some of Sun Media’s
8 urban dailies and
190 community
newspapers.

Quebecor Inc.

Web Integration/Technology

Supporting our customers wherever their business
development endeavours may lead them

Nurun Inc. posted a healthy increase in revenues
in fiscal 2000, expanded geographically into
new markets and landed contracts with major
corporations around the world. Its telecom-
munications subsidiary, Mindready Solutions
Inc., floated an IPO.

Nurun recorded revenues of $127.5 mil-
lion in 2000, nearly a six-fold increase over
1999. EBITDA from continued operations was
$0.1 million, compared with $1.3 million in
the previous year. The drop in EBITDA from
continued operations was due to slimmer
profit margins, pressure on revenues and the
slumping Internet economy.

To adapt to changing conditions in the
business environment, Nurun management
took responsible action to reduce operating
costs and improve its balance sheet. The
Company announced a major financial reor-
ganization, including a $53.9 million write-
off of goodwill. The reorganization positions
Nurun more effectively to pursue its devel-
opment. In response to the new environment

in the Web integration market, we have
reorganized our management team to give
Nurun an administrative structure which is
more rigorous and better suited to the respon-
sibilities of a public company. Jacques-Hervé
Roubert, Founding President of Cythère S.A.,
has been appointed President and Chief
Executive Officer of Nurun; Andrew Church,
previously with Quebecor World USA, has
become Chief Financial Officer. These two
executives will give Nurun the benefit of a
wealth of experience acquired with “old
economy” businesses. In its current stage of
development, Nurun must assign a more impor-
tant role to people who are endowed not only
with vision but also with managerial skills.
This is a priority on which Quebecor and the
Nurun Board of Directors agree.

Strategic partnership between
Nurun and Quebecor World
In June 2000, Nurun made a strategic agree-
ment with Quebecor World to support

In 2000, Nurun adopted
a new corporate name
and logo.

Equipped to support our customers around the world

Nurun is set up to serve its customers wherever they may be in the world.

With a network of offices in North America, Europe and Latin America,
and alliances in Asia, Nurun can support its customers wherever the

development of their business may lead them. Here is a partial list of the main
customers Nurun has the privilege to serve:

• 3M
• Air Canada
• Air France
• Archambault
• Biotherm
• Boise Cascade Office

Products

• Bolsa de comercio
• CANOE
• Club Med
• Evian

• Financial Post
• General Motors
• Gillette
• Gouvernement

du Québec

• Groupe Danone
• Helena Rubinstein
• IBM
• International Air Transport

Association (IATA)

• L’Oréal

• Lotus
• Luxgallery
• MTV Italia
• Nortel Networks
• Rona
• Star Alliance
• Thomas Cook
• Universal Studios

Quebecor Inc.

Seven acquisitions in the year 2000

N urun made a num-

ber of acquisitions
in fiscal 2000 to

entrench its leadership in
Canada, improve its posi-
tioning in North America
and Europe, and enter the
Latin American market.

January 31 -
EntreVision, a Canadian
leader in Web-based
business solutions
and e-commerce,
with offices in Toronto
and Boston.

January

Quebecor World’s offering of value-added
high-tech services for its customer base of major
retail chains. Nurun intends to capitalize on
its alliance with Quebecor World to spur its
growth in the U.S.

A world network for
world-class customers
Nurun is growing its business by rolling out
its expert services in global markets and
building long-term relationships with major
corporations. It made seven strategic acqui-
sitions in the year 2000 to consolidate its
leadership in Canada and strengthen its
positioning in other markets.

To respond to changing customer needs,
Nurun plans to open new offices in Europe,
the U.S. and Latin America, and to continue
expanding its service offerings in Asia through
strategic partnerships with companies that share
its vision. Nurun and Mindready Solutions
employ over 1,200 people in a network of offices
on three continents.

Mindready Solutions listed on
the Toronto Stock Exchange

In 2000, Nurun spun off its

Telecommunications Division to
create a new subsidiary, Mindready
Solutions. Mindready justified the expres-
sion of confidence from its principal
shareholder by quickly becoming
a driving force in the market for test
engineering and real-time communica-
tions solutions for embedded systems,
expanding through internal growth
and acquisitions. The year’s highlights
included:

March – Acquisition of Beltron
Technologies Inc., a company providing
a variety of software and specialized
electronics solutions.

June – Five-year services agreement
with Nortel Networks for the provision
of test engineering services. Under the
agreement, Nortel subscribed for an
equity participation of $10 million in
the share capital of Mindready.

June and August – Acquisition of
Andrew Duncan & Associates (ADA) Ltd.
and of CCS Electronics (UK) Ltd., two
UK-based test-engineering companies.

October – Acquisition of Yelo Ltd.,
a test-engineering firm based in
Northern Ireland.

December – Mindready Solutions
entered a new phase in its long-term
development when it became a public
company listed on the Toronto Stock
Exchange, trading under the ticker
symbol TSE: MNY. Mindready
Solutions was one of the few
Canadian high-tech firms to success-
fully float an initial public offering
during this period, despite the difficult
market conditions.

February 11 - Cythère,
a European Internet
leader and the largest
independent Web
agency in France, with
offices in Paris and
New York.

March 14 - digIT
Interactive, a specialist
in online marketing
and distribution-
channel management,
with offices in Toronto
and Ottawa.

April 10 - Flow
Systems Corporation,
a leader in catalogue
content management
and automated publish-
ing solutions for manu-
facturers and distribu-
tors, based in Chicago.

June 30 - Imagix
multimédia,
one of the largest
multimedia and
audiovisual production
companies in the
Quebec City area.

July 11 - Quam SRL,
a new media firm engaged
in strategic consulting,
Web site and portal cre-
ation and graphics, inter-
active marketing, Internet
advertising and promotion,
based in Milan, Italy.

August 8 - MSM Interactive,
an e-commerce and Web inte-
gration company based in
Santiago, Chile. This acquisi-
tion was made jointly with
Antártica Group, Quebecor’s
partner in commercial printing
in Latin America since 1997.

February

March

April

June

July

August

Quebecor Inc.

Internet/Portals

The consolidation of the Internet properties
of Canoe and Netgraphe will create Canada’s largest
Web-based information and services network

The Internet Portals segment includes the prop-
erties of CANOE and, since the acquisition of
Groupe Vidéotron by Quebecor Media on
October 23, 2000, the properties of Netgraphe,
a company listed on the Toronto Stock
Exchange under the symbol TSE: WWW.
CANOE, the top online desti-
nation in Canada, is a bilingual,
integrated media/Internet services
network. Netgraphe, the largest
Internet publisher in Quebec,
creates, acquires and administers
high-traffic Web sites. Hugues
Simard, President and
Chief Executive Officer of
CANOE and Netgraphe,
is responsible for the
development of
the
Internet segment.

Quebecor Media’s
Internet Portals segment
posted
revenues of
$11.6 million in 2000,
compared with $3.6 mil-
lion in 1999. The operating loss before inter-
est, taxes, depreciation and amortization from
continued operations totalled $21.6 million in
2000, compared with a loss of $10.4 million
in the previous year. This performance failed
to meet our expectations and management took
aggressive action during the year to turn the
situation around. In a forward-looking move,
CANOE rationalized its workforce and oper-
ations at the beginning of the third quarter,
becoming one of the first Internet companies
in North America to do so. CANOE and
Netgraphe announced further cost reductions
in early 2001 in order to bring their cost
structures in line with their real revenue
growth potential.

A year of achievement
The CANOE network opened two beachheads
in international markets in 2000. In September,
it launched the French-language canoe.fr
portal in Paris and in December, it launched
the Spanish micanoa.com portal in Madrid. Like
the English- and French-language CANOE por-
tals in Canada, these Internet properties have
on-site teams of journalists to cover general
news and offer a variety of online services.
Also in 2000, CANOE completed the roll-
out of its network of city sites in eight major
Canadian cities. Called ICI in Montreal and

Snapshot of CANOE
and Netgraphe

•Local sites in Canada’s major cities:

icimontreal.com, iciquebec.com, fyicalgary.com,
fyiedmonton.com, fyiwinnipeg.com,
fyiottawa.com, fyilondon.com, fyitoronto.com;
• National sites: canoe.ca, canoe.qc.ca, toile.qc.ca

and infinit.com;

• International properties: canoe.fr in France and

micanoa.com in Spain;

• Special-interest sites such as: jobboom.com,
webfin.com, autonet.ca, matchcontact.com,
multimedium.com and megagiciel.com.

Quebec City and FYI in Ottawa, Toronto, London,
Winnipeg, Calgary and Edmonton, the city sites
are located in the eight cities in which Sun
Media publishes daily newspapers. They carry
local and regional news and community-focused
content that complement CANOE’s national
news, services and e-commerce platform.

Finally, CANOE was the catalyst for a host
of synergies within the Quebecor Media
family of companies. In Quebec, CANOE
took part in a variety of cross-promotions with

Home pages of the
infinit.com portal
and toile.qc.ca
search engine,
both designed
by Netgraphe.

Quebecor Inc.

CANOE and Netgraphe
click with Web users

Pages views
(million/month)
Stickiness (1)
(minutes/user/month)

CANOE
133.9

Netgraphe
78.2

38.0

33.2

Source: MediaMetrix, December 2000

(1) Canoe,qc,ca only

Publicor magazines, Le Journal de Montréal,
Le Journal de Québec and the TQS television
network. In the rest of Canada, CANOE pur-
sued linkages with Sun Media newspapers in
order to generate synergies.

The year’s achievements also included an
agreement in principle between Netgraphe and
9 Telecom, the French subsidiary of Telecom
Italia, concerning 9 Telecom’s use in France,
in co-branding on its mageos.com site, of the
directory, guides and search capacity of
Zeguide.fr/France.toile.com, developed by
Netgraphe.

Internet users stick with CANOE
and Netgraphe
According to the MediaMetrix Canada ratings,
our portals are the leaders in stickiness, the amount
of time a visitor spends on a site. Canoe.qc.ca
ranked first in Canada with an average of
38.0 minutes per user per month, far ahead of
the major U.S. and international portals such as
AOL, Yahoo, Altavista, MSN, Lycos, and so forth.
Vidéotron’s infinit.com portal ranked third with
33.2 minutes per user per month, while Canoe.ca,
the English-Canadian version of CANOE,
averaged 24.4 minutes. In the highly competi-
tive portal market, these are impressive figures.
They show that our content speaks to Web users.

CANOE + Netgraphe add up
to an emerging powerhouse
In March 2001, Netgraphe announced that its
Board of Directors had accepted Quebecor

The CANOE network
is growing fast: its
web of portals now
covers Canada (in
English and French),
France and Spain.

Media’s proposal to merge the assets of CANOE
and Netgraphe. The consolidation of the Internet
properties of CANOE and Netgraphe within
Quebecor Media will create the largest Canadian
news and services network on the Web, a
player with the critical mass to compete with
the best in North America.

CANOE and Netgraphe receive
three prestigious awards

At the sixth annual Boomerang awards,

held in Montreal on November 29,
2000, CANOE received two awards.

It took top honours in the “general-interest
portal” category and its RATIO-Finances site
won in the “financial services or financial
information Web site” category. CANOE is
not only one of Canada’s most popular
networks but is also recognized for the
quality, depth and relevance of its content.
Meanwhile, Netgraphe’s jobboom.com
site was awarded the Boomerang in the
“special-interest Web site” category.

Quebecor Inc.

Leisure and Entertainment

46% increase in operating income

sive results in 2000. No fewer than 777 titles
were published, reissued or reprinted. Earnings
increased in line with projections.

Quebecor’s publishing houses, which
together form the largest publisher in Quebec,
released more than 40 best sellers in the gen-
eral literature category, including a dozen
titles published by Éditions du Trécarré. Libre
Expression maintained its reputation for putting
out Quebec best sellers, notably with the pub-
lication of Black by Paul Ohl. Éditions CEC
remained the leader in textbook publishing,
releasing over 60 successful titles and positioning
itself in the market created by the education
reform in Quebec. Specialty content and infor-
mation technology provider St. Remy Media
carried out a host of projects for blue-chip cus-
tomers such as Home Depot, Weber and
Masterfile. Wilson & Lafleur, an institution which
has been serving the legal community for
91 years, innovated by releasing Le manuel
de l’étudiant, a new collection intended
specifically for law students.

The Leisure and Entertainment segment of
Quebecor Media, posted revenues of $225.4 mil-
lion in 2000, an 8% increase over the previous
year. EBITDA from continued operations
amounted to $13.0 million in 2000,
up 46% from the $8.9 million
reported in the previous year.
The sharp increase in earnings was
due to the robust performance of
all our operations: book and
magazine publishing, distribution,
and retailing of music and videos.
The Leisure and Entertainment
segment now includes the results
of the Le SuperClub Vidéotron
chain, acquired by Quebecor
Media on October 23, 2000.

Our lines of business
and publishing houses:

• General literature and

contract publishing: Éditions
Quebecor inc., Éditions Libre
Expression ltée, Éditions
Internationales Alain
Stanké ltée, Éditions
Logiques inc. and Éditions
du Trécarré inc.

• Legal: Wilson & Lafleur ltée,
Wilson & Lafleur & Martel
• Academic: Éditions CEC,

Éditions FPR

• Contract publishing:
St. Remy Media Inc.
• Marketing: Diffusion

Communications Quebecor Inc.

Books
The Quebecor Media family of
publishing houses, headed by
André Rousseau, Vice-President,
Book Sector, reported impres-

Some of our best
sellers in 2000.

Quebecor Inc.

Constantly pursuing opportunities for synergies

• L’agenda guide 2001 des franchises au Québec: a franchise
guide published by Éditions Logiques and Publicor’s Occasions
d’Affaires magazine.
• 101 années de vedettariat au Québec: a history of show
business in Quebec published by Trécarré, in collaboration
with Le Journal de Montréal and Échos Vedettes.

• Sur le toit du monde; à la conquête de
l’Éverest: the story of an expedition to the top of
Mount Everest, written by Journal de Montréal
reporters and published by Trécarré.
• Horticulture posters based on Trécarré publica-
tions, inserted into 10 Saturday editions of
Le Journal de Montréal.

with a market share of more than
80%. In 2000, Publicor successfully
repositioned itself in the business magazines seg-
ment by creating two distinct products:
Occasions d’Affaires, a bimonthly for new
entrepreneurs, and the Guide des franchises, a
reference source on franchising in Quebec.

In the burgeoning contract publishing busi-
ness, turnkey service was provided for cor-
porate magazines such as Les Idées Réno-Dépôt
(for Réno-Dépôt), The BuildingBox Home
Ideas (for Réno-Dépôt’s new Ontario opera-
tion), Sympatico (Bell), Bonne Santé (Média

The Quebecor
family of pub-
lishing houses:
Year 2000
snapshot
•Titles: 777
•Pages: 216,006

pages of original
content

•Copies sold:

3,364,623, or
9,218 per day

Per-issue readership

Title
Échos Vedettes
Filles d’aujourd’hui
Décoration Chez-Soi
Clin d’œil
Rénovation Bricolage
Les idées de ma maison
Femmes Plus

Readers per issue
363,000
310,000
268,000
262,000
217,000
211,000
185,000

Our magazines hit the target

Annual circulation
3.5 million
3.4 million

Publicor
Échos Vedettes
Source: Print Measurement Bureau, 2000
Note: Each year, Publicor also publishes a dozen special editions and
seasonal magazines which reach over 1.5 million readers.

Quebecor Inc.

In 2001, we will
work to grow our mar-
ket share in Quebec and
to establish partnerships with com-
panies that can help us improve our
positioning in the Canadian market
and our foreign sales, which climbed
20% in 2000. Among our family of
publishing houses, Les Éditions
Quebecor reported the strongest
growth in foreign markets.

Quebecor Communications acquired a
majority interest in 2000 in DM Diffusion
Multimédia inc. Multimedia distribution and
marketing operations have been consolidated
under DM Diffusion Multimédia, which has
become Canada’s largest distributor of French-
language multimedia products to the schools
and the general public. Québec-Livres continues
to distribute and market French-language
books across Canada.

Magazines
In 2000, Quebecor Media’s magazines segment,
headed by Claire Syril and her team, posted its
best results of the past 10 years. Revenues from
newsstand sales and advertising both increased
substantially. The strong performance of our mag-
azines in 2000 was primarily due to the effec-
tiveness of the prospecting efforts of the adver-
tising sales force and creative marketing and
cross-promotions with other Quebecor Media
operations. All our products also conducted
highly successful subscription drives.

In the women’s segment, the year marked
the 20th anniversary of Clin d’œil, the leading
fashion and beauty magazine in Quebec. Our
decorating monthlies Idées de ma maison,
Décoration Chez-Soi and Rénovation-Bricolage
continued to dominate the Quebec market

Publicor
publishes mass
circulation
magazines.

Our magazines go online

Our magazines continued to seek syner-

gies with other Quebecor companies.
A noteworthy example was the launch

of the DÉCO Maison Passion decorating
section on CANOE’s French-language portal

network in 2000.

Pratique) and 100% Vacances
(Tours Mont-Royal/ Nouvelles
Frontières).

Communications Gratte-
Ciel ltée, a subsidiary of
Quebecor Media, publishes the
arts and entertainment week-
lies Montreal MIRROR and
ICI Montréal, distributed free of charge at over
2,000 locations in the Montreal area. Both
publications increased the number of pages
per issue and their advertising ratios. They
reported growth in market share and in adver-
tising revenues.

Finally, the leading Quebec celebrity news
weekly Échos Vedettes, which has become a
Quebec institution, posted a 31% increase in
advertising sales in 2000.

Music
In 2000, Groupe Archambault, headed by
Rosaire Archambault, President and Chief

Quebecor Inc.

Executive Officer, and Natalie Larivière,
Executive Vice-President, continued devel-
oping its chain of megastores and made two
acquisitions:
• Camelot-Info inc., a chain of computer book-
stores which operates five outlets in Canada
and the camelot.ca e-commerce site;
• Paragraph Book Store Inc., operator of the
largest independent English-language bookstore
in Quebec and of the paragraphbooks.com
e-commerce site.

The two transactions strengthened Groupe
Archambault’s position in music, books and
software. On the technical front, Archambault
rolled out the new version of its transactional

80% of Le
SuperClub
Vidéotron’s revenues
are generated by
video, DVD and
game rentals.
The remaining 20%
comes from sales of
new and previously
viewed videos and
other products.

Le SuperClub Vidéotron snapshot

•166 stores, including 118 franchise locations
•30% of Quebec’s video rental market
•22 million rentals per year
•1.3 million active members

site, archambault.ca. In a
recent survey by MediaMetrix
Canada, archambault.ca ranked
fourth among French-language
e-commerce sites in number of visitors and
among the top 10 online stores in Canada.
Finally, at the Rencontres profession-
nelles de l’industrie québécoise du disque et
de la radio music industry awards, held in
February 2000, Archambault received the
award for “best music chain store" for the fourth
year in a row.

Exclusive distribution and subdistribution
In 2000, Distribution Select, Musicor and
Musicor Vidéo signed new exclusive distribution
contracts with major Canadian independent
record labels. In the subdistribution business,
Distribution Trans-Canada signed an exclusive
agreement to supply 110 Uniprix drugstores
with CDs and videos.

Available at
archambault.ca

• 182,000 CDs
• 243,300 books
• 27,500 videos
• 6,700 DVDs
• 45 MP3 albums

Le SuperClub Vidéotron
The acquisition of Groupe Vidéotron added
the SuperClub Vidéotron banner to Quebecor
Media’s properties. Le SuperClub Vidéotron
is the largest chain of video stores in Quebec,
with 166 locations and nearly 30% of the
market, compared with approximately 7% for
its closest rival. Richard Soly is President and
Chief Executive Officer of Le SuperClub
Vidéotron.

During 2000, Le SuperClub Vidéotron
added 20 points of sale. The company also
signed a supply agreement with a third major
U.S. studio on a revenue-sharing basis. The
agreement contributed to the growth of rental
revenues. Le SuperClub Vidéotron also repo-
sitioned its brand with a successful advertising
campaign, under the theme “Des tonnes de
copies… pis ça, ça énerve."

Over 80% of Le SuperClub Vidéotron
locations are in Vidéotron ltée’s cable televi-
sion service area, making the outlets
ideal showcases for Vidéotron’s cable
products and new services: subscriptions
to cable, digital TV and Videoway, and
related services. The company is also
positioned to realize provisioning and dis-
tribution system synergies with Groupe
Archambault.

Quebecor is proud to be associated with
this respected, well-established brand.
We intend to contribute to the future growth
of Le SuperClub Vidéotron.

One of our 12 Archambault megastores:
a vast selection of CDs, sheet music, books,
videos, newspapers, magazines and more.

Quebecor Inc.

Broadcasting

Remarkable growth in market share

License renewals:
A vote of confidence
from the CRTC

In a decision released on October 27,

2000, the Canadian Radio-Television
and Telecommunications Commission

(CRTC) recognized TQS’ efforts by
renewing the licenses of the TQS
network, CFJP-TV in Montreal, its
transmitter CJPC-TV in Rimouski, and
CFAP-TV in Quebec City for seven years.
TQS management and staff welcomed
the decision as the fruit of the human
and financial investments made in the
network and as a vote of confidence in
the future of this distinctive voice in
Quebec television. This decision justifies
the faith we have always had in TQS.

Fiscal 2000 was the TQS television network’s
best year since it was acquired by Quebecor
in 1997. Together, the strategies implemented
by the management team with respect to
finance and management, programming, and
sales and marketing generated excellent results.

TQS’ revenues totalled $59.9 million in 2000,
up 23% from $48.6 million in the previous year.
The operating loss before interest, taxes, depre-
ciation and amortization was reduced by 56%
from $7.8 million in 1999 to $3.4 million in 2000.
TQS posted an operating profit in the second
and fourth quarters of 2000 in the amounts of
$2.5 million and $1.1 million respectively.

"Black sheep" grabs lion’s share
of supper-hour ratings
After regaining the trust and respect of the
viewing audience, advertisers, creative talent and
business people, TQS management and
employees pressed ahead with their efforts to
improve the network’s positioning in Quebec’s
television market. The results were soon
evident. Since Quebecor acquired TQS in 1997,
the network has achieved remarkable growth

TV technicians at work
in the studio.

Quebecor Inc.

in market share, particularly in the last two years.
In 2000, TQS registered record ratings in
the Montreal market. The 5 p.m. newscast,
anchored by Jean-Luc Mongrain, broke
through the million-viewer mark, a first in the
network’s history. According to the BBM sur-
vey released at the beginning of January 2001,
TQS, branded as the “black sheep" of Quebec
television, topped the supper-hour ratings in
Quebec Monday through Friday, having
increased its audience during the coveted time
slot by 40%.

In the space of barely three years, TQS’
business strategy has radically transformed the
network’s image in the industry. Having
increased the network’s market share and
improved its financial position, the TQS
management team was able to take much more

aggressive steps to create value while steering
the company toward profitability, as the excel-
lent results for the last quarter of 2000 show.

Our thanks to a superb team
After three years of fruitful partnership, we have
regretfully been forced to put the TQS network
up for sale, in view of the acquisition of
Vidéotron ltée and TVA Group by Quebecor
Media. Quebecor management salutes the
admirable work of the TQS management team
and all the employees who have made such an
important contribution to the network’s
success. Managers and employees gave the
best of themselves and succeeded in turning TQS
around, accomplishing one of the most remark-
able feats of its kind in the history of Canadian
broadcasting. We are deeply grateful to them.

Total population (aged 2 and over), Monday through Sunday, 6 a.m. to 2 a.m.

15.1

14.1

12.2

12.2 12.1

11.7

11.0

13.2 13.1

9.9 10.3

10.2 9.8

9.5

TQS market share

Since Quebecor acquired
TQS in 1997, its market
share has shown
significant growth.

Fall
1997

Spring
1998

Fall
1998

Spring
1999

Fall
1999

Spring
2000

Fall
2000

18 to 49 age group

11.1 11.3

11.7

10.6

11.0

14.0

13.6

14.1

14.0

13.3

12.6

16.0

14.6

BBM – TQS - Mtl

Nielsen:
Province
of Quebec

Fall
1997

Spring
1998

Fall
1998

Spring
1999

Fall
1999

Spring
2000

Fall
2000

Quebecor Inc.

FROM TOP TO BOTTOM AND LEFT TO RIGHT

Jean Neveu
Chairman of the Board

Charles G. Cavell
President and Chief
Executive Officer

Pierre Karl Péladeau
Vice Chairman of the Board

Christian M. Paupe
Executive Vice President, Chief
Administration Officer and Chief
Financial Officer

Christopher H. Rudge
Chairman and Chief Executive
Officer, Que-Net Media™ and
Executive Vice President
Marketing, Communications and
International Development

Marc L. Reich
Chairman of the Board, President
and Chief Executive Officer,
Quebecor World North America

John Bertuccini
President General Manager,
Quebecor World Europe

Guy Trahan
President,
Quebecor World Latin America

THE WORLD’S LARGEST COMMERCIAL

PRINTER – AND STILL GROWING

Quebecor’s industrial subsidiary, Quebecor

World, created from the merger of two

companies built up through 85-plus

acquisitions over a period of ten years,

dominates the world market for commercial

printing with revenues in the area of

QUEBECOR
WORLD

$10 billion per year. Quebecor World

operates an extensive network of over

160 plants in North America, Europe,

Latin America and Asia. It has 43,000

employees in 16 countries.

PRINTING

Record revenues, earnings,
cash flow and profit margin

Quebecor World posted remarkable results in
2000, the first full fiscal year since the acqui-
sition of World Color Press, Inc. Quebecor
World’s revenues, earnings, cash flow and
profit margin all hit record highs. Revenues
increased 32% to $9.68 billion. Earnings
before interest, taxes, depreciation and amor-
tization from continued operations climbed 41%
to $1.59 billion. This record profit was real-
ized even as the Company was tackling the
challenges of the World Color Press takeover,
the largest merger in the history of commer-
cial printing. Cash-flow from operations
amounted to $1.44 billion. That cash-flow
generation capacity enabled management to
considerably improve the Company’s balance
sheet. As of December 31, 2000, the major

portion of the bank loans contracted at the time
of the World Color Press acquisition in August
1999 had been paid down.

Synergy savings projections increase
from US$50 million to US$110 million
The smooth integration of its North American
operations contributed strongly to Quebecor
World’s exceptional results. Under the vision-
ary leadership of Charles G. Cavell, President
and Chief Executive Officer, the Quebecor World
team capitalized on the Company’s size,
diverse product line, geographic scope and
ability to deploy new technologies. At the end
of fiscal 2000, the projected US$50 million in
annual cost savings had already been surpassed.
The Company has revised its savings target

Quebecor World’s
market share
indicates strong
growth potential

5.2%

North America:
a $160 billion market

Europe:
a $135 billion market

Latin America:
a $12 billion market

An employee of Quebecor
World Chicago. The plant
prints magazines and
catalogues for the entire
American market.

Quebecor Inc.

for 2002 upward to US$110 million, more than
double the original figure.

Successful reorganization
During 2000, Quebecor World reorganized its
North American plants and created two mega-
facilities, one in Buffalo, New York, to print
paperbacks and inserts for mass-circulation
newspapers, and the other in Effingham,
Illinois, to print direct mail materials. With its
concentration of presses of the same type,
Quebecor World was able to improve customer
service by providing more efficient response
and reducing lead time.

Quebecor World’s investments in new
technologies also yielded positive results. The
installation of a four-colour press at its Merced,
California, plant resulted in a US$500 million
contract extension with Pacific Bell for the
printing of directories.

Revenues by product

Sales teams in all major
world markets

T he European market is at the core of

our business development strategy.
Customers who do business with us

globally now account for a significant portion
of our business growth in Europe. Our sales
teams based in North America, Europe and
Latin America give our customers access to
Quebecor World’s entire network.
During fiscal 2000, Quebecor
World produced catalogues and
inserts for international
customers such as
retailers Office
Depot in North
America and IKEA
in Europe, and
Learning Tree
International.

28%

Revenues by region

6% 6%

12%

14%

18%

16%

($ million)
(cid:2) Magazines

Advertising inserts and
newspaper supplements

(cid:2) Catalogues

Specialty printing and
direct mail materials

Books

Directories

(cid:2) Que-Net Media™ and
Logistics Services

2,699

1,734

1,582

1,367

1,174

524

603

14%

84%

($ million)
(cid:2) North America

Europe

(cid:2) Latin America

8,195
1,322

166

Revenue growth
($ million)

9,683

7,362

5,644

4,821

4,241

1996

1997

1998

1999

2000

10,000

8,000

6,000

4,000

2,000

Quebecor Inc.

(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
Que-Net Media™: Moving into digital

In April 2000, Quebecor World created a new division, Que-

Net Media™, to respond to customers’ changing needs for
premedia services.
With the creation of Que-Net Media™, Quebecor World has
claimed a leadership position in integrated business solutions. The
Company’s full array of digital and premedia assets are now con-
centrated in an extensive network of 15 North American business
centres digitally linked to the Company’s 160 printing plants. The
centres provide catalogue publishers, retailers and publishing
houses with digital and conventional photographic services, auto-
mated publishing and content-management solutions.

Originally created to meet the needs of Quebecor World’s tra-
ditional printing customers, Que-Net Media™ is now developing
its own business niche. For example,
it used virtual photography to create
360º images of the interiors of Hard
Rock Cafés around the world. The
results can be viewed at
hardrock.com.

The experts at Que-Net Media™ create, manage and
archive digital content and images.

Quebecor Inc.

Ever faster, better, more economical
Quebecor World’s numerous technological
initiatives included three major strategic
projects:
• The Company developed an electronic pro-
visioning system to supply all its plants from
its global procurement centre in Fribourg,
Switzerland. Demand for products such as ink
and paper has now been aggregated across the
Company’s plants, generating substantial
economies of scale.
• Quebecor World began talks with several
major players in the commercial printing and
publishing industries to create platforms to
support digital data transfer between publishers
and printers.
• The Company created Quebecor World
Logistics Services to offer expedited delivery
service. In less than a year, the service has estab-
lished itself as the most sophisticated printed
materials transport system in the market and
has become the largest shipper into the U.S.
postal system.

Improved performance in Europe
A new management team and an effective
rationalization program helped improve our
results in fiscal 2000. In the course of the year,
Quebecor World reorganized in order to
create a pan-European platform.

Two major contracts signed in
Latin America
In 2000, the Company opened a new phase
in its plan to create a platform of the Americas
by expanding into Brazil, the sixth Latin
American country in which Quebecor World
has operations.

The move was made possible by a major
new contract with Editora Abril S.A., the largest

Print: Still the cornerstone of communications

H as the Internet

sounded the death
knell of print? Not at

all. On the contrary, the
Internet has contributed to
a boom in print products,
particularly in Quebecor
World’s areas of excellence:
magazines, catalogues and
direct mail materials.

Print is still the most
effective medium for attract-
ing traffic to e-commerce
sites and establishing credibil-
ity. It is always up to date,
constantly incorporating
new technologies in order
to deliver what advertisers
want: effective, profitable,

targeted advertising to pro-
mote their brands.

Future prospects for print

products have never been
brighter. Realizing them will
demand superior management
capabilities combined with
extensive financial capacities
and the ability to use new
technologies to upgrade pro-
duction processes. Quebecor
World possesses these capa-
bilities. They have made us
the largest, best-performing
commercial printer in the
world. We are proud of that
status and intend to build
on it in the future.

magazine publisher in Latin America. Under
the 10-year US$170 million contract, Quebecor
World will print 83 million magazines per year
for Editora Abril. To fulfill the contract, the
Company began construction in the fall of its
first Brazilian printing plant in Recife, Brazil’s
fourth-largest city.

Quebecor World announced it would double
the area of the Recife plant when it landed
another major Brazilian contract with Listel
Listas Telefonicas S.A., Brazil’s largest publisher
of telephone directories (a subsidiary of U.S.-
based BellSouth Corporation). Under the
US$142 million contract, also for a term of
10 years, Quebecor World will print directories
at its plants in Recife and Lima, Peru.

Still growing
With the process of integrating World Color

nearly complete, we are on the lookout for new
growth opportunities. Quebecor World’s
strength and exceptional positioning have made
it the global industry leader. Numerous devel-
opment opportunities will inevitably arise
and more acquisitions can be expected.
Despite its impressive size, the Company
occupies less than 5% of the fragmented
world commercial printing market.

Quebecor World intends to continue its
geographic expansion in the United States and
Latin America, two markets with strong
growth potential, and in Europe, where the
Company wants to consolidate its position as
the only continental printer. The Company’s next
challenge will be to capitalize on the strength
of its global network by drawing on the extraor-
dinary calibre of its people and its industry-
leading technology and production methods.

Print:
Always
current.

Quebecor Inc.

FINANCIAL SECTION

28 Quebecor Inc.

MANAGEMENT’S DISCUSSION AND ANALYSIS

SELECTED FINANCIAL DATA

SELECTED QUARTERLY FINANCIAL DATA

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS

AUDITORS’ REPORT TO THE SHAREHOLDERS OF QUEBECOR INC.

CONSOLIDATED STATEMENTS OF INCOME

CONSOLIDATED STATEMENTS OF RETAINED EARNINGS

CONSOLIDATED STATEMENTS OF CASH FLOWS

CONSOLIDATED BALANCE SHEETS

SEGMENTED INFORMATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DIVIDENDS AND STOCK MARKET PRICE

Page

Quebecor Inc.

Management’s
Discussion and Analysis

COMPANY'S STRUCTURE
Year 2000 was marked by the set up of a new,
rebalanced corporate structure which will help us
marshal our forces around two major segments: the
industrial segment, consisting of Quebecor World’s
commercial printing operations, and the media
segment, with the Company’s new subsidiary,
Quebecor Media. Quebecor Media is laying the
foundations for what will be a solid framework for
convergence and an effective lever for crystallizing
the synergies among all our media operations. This
new structure is the result of significant transactions
that took place during the year.

Firstly, on April 18, 2000, pursuant to agree-
ments between Abitibi-Consolidated Inc., Donohue
Inc. and Quebecor Inc., Abitibi-Consolidated pur-
chased all the outstanding shares of Donohue for
a consideration in cash and in shares of Abitibi-
Consolidated. Quebecor transferred its controlling
interest in Donohue in exchange for $317 million
in cash and an equity interest of approximately 11%
in Abitibi-Consolidated. The transaction was recorded
as a reverse take-over of Abitibi-Consolidated by
Donohue, as the latter's shareholders received a
sufficient number of Abitibi-Consolidated shares to
enable them to acquire control of this company.
As a result of this transaction, and since Quebecor
does not control nor exercise a significant influence
over Abitibi-Consolidated, the Forest Products seg-
ment was considered as a discontinued operation as
of the first quarter of 2000. Prior years statements of
income and of cash flows were restated accordingly.
In October 2000, Quebecor transferred to
Quebecor Media all the shares of its wholly owned
subsidiary, Quebecor Communications Inc. This trans-
fer was completed following the distribution to
Quebecor of TQS’s shares (Broadcasting segment).
The assets of Quebecor Communications, which were
transferred as part of this transaction, include: a
70% equity interest in Sun Media Corporation
(Newspaper segment), a 57% equity interest in Nurun

Inc. (Web Integration/Technology), all the assets of
the Internet/Portals segment (including, among
others, the Canadian, French and Spanish portals of
the CANOE network) and all the assets of the Books,
Magazines and Music segment, now known as the
Leisure and Entertainment segment. Concurrently,
Quebecor Media issued new shares to Capital
Communications CDP, a subsidiary of Caisse de dépôt
et placement du Québec, representing a 45.28%
equity interest in the Quebecor Media subsidiary.

Pursuant to this transaction, Quebecor Media
completed, on October 23, 2000, the strategic
acquisition of Le Groupe Vidéotron Ltée. The main
assets of Groupe Vidéotron include those of
Vidéotron ltée (cable television), Groupe TVA Inc.
(broadcasting), which two business segments are
subject to the approval of regulatory authorities,
Netgraphe Inc. (Internet/Portals) and Le SuperClub
Vidéotron Ltd. (a chain of video outlets). Vidéotron
Télécom Ltée and Protectron Inc., subsidiaries
operating respectively in the fields of data trans-
mission and remote supervision, do not represent
strategic assets and are held for resale. The details
of the acquisition of Groupe Vidéotron are presented
in the “Investing Activities” section.

As a result of these transactions, Quebecor, through
its direct and indirect interests in several companies,
now operates in six different segments. It has a con-
trolling interest in several companies, namely, in
Quebecor World, Quebecor Media and TQS. Quebecor
Media holds a controlling interest in Sun Media
Corporation, Nurun, Groupe TVA and Netgraphe, and
is the sole shareholder of Vidéotron, Quebecor New
Media and Quebecor Communications.

Quebecor World operates in the printing indus-
try. It is the largest commercial printing company
in the world and is a leader in most of its major
product categories, which include: magazines,
retail inserts, directories, catalogues, specialty
printing and direct mail, books, premedia, logis-
tics, technical and other-value added services. It has

Quebecor Inc.

facilities in the United States, Canada, France, the
United Kingdom, Spain, Switzerland, Sweden,
Finland, Austria, Brazil, Chile, Argentina, Peru,
Colombia, Mexico and India.

Sun Media Corporation publishes and distributes
daily and weekly newspapers as well as monthly
and specialty publications throughout Canada and
in the State of Florida in the United States. It is
the second-largest newspapers publisher in Canada
in terms of circulation.

Quebecor Communications is active in the Leisure
and Entertainment segment and operates in the fields
of publishing (books and magazines), distribution
and retail sales (books and records), as well as in
the sale and rental of videocassettes. Its operations
are concentrated in Quebec.

Nurun is active in the Web Integration/
Technology segment. It provides e-commerce
solutions through a combination of strategy, tech-
nology integration, IP (Internet Protocol) solutions
and creativity on the Internet. Nurun operates in
Canada, the United States, Latin America and
Europe.

TQS operates a general-interest French-language

television network in the province of Quebec.

Quebecor, through its controlling interest in
Quebecor New Media and Netgraphe, operates Internet
sites in Canada and Europe including French, English
and Spanish portals, as well as specialty Web sites.
Quebecor’s share in the earnings of certain sub-
sidiaries has varied over the past three years. As
at December 31, 1998, Quebecor’s share in the earn-
ings of Quebecor World stood at 48.55%. However,
following a public share issue by Quebecor World,
Quebecor’s share declined to 45.85% in May 1999.
Following the merger of World Color Press, Inc.,
for which a portion of the consideration was paid
through the issuance of capital stock of Quebecor
World, in October 1999, Quebecor’s interest was
reduced to 38.05%. This level was maintained up
to December 31, 1999, and did not significantly

change in 2000, standing at 38.46% as at
December 31, 2000. In October 2000, Quebecor sold
a 45.28% interest in Quebecor Media to Capital
Communications CDP, thus retaining a 54.72%
interest. Given the decrease in the interest held by
Quebecor in Quebecor Media, the 57.47% interest
in Nurun, acquired on November 1, 1999, declined
to 31.45% as at December 31, 2000. Also, Quebecor’s
share in Sun Media Corporation was reduced from
70%, as at December 31, 1999, to 38.30% as at
December 31, 2000.

Quebecor exercises direct and indirect controlling
interests in five public companies. As at December
31, 2000, Quebecor held directly or indirectly
84.83%, 57.47%, 99.88%, 59.96% and 82.43% of
the voting rights of Quebecor World, Nurun,
Groupe TVA, Netgraphe and Mindready Solutions
Inc. respectively.

OPERATING RESULTS
The results for the years ended December 31, 2000
and 1998 cover a 52-week operating period, where-
as the results for the year ended December 31, 1999
cover a 53-week operating period. The Company
achieved record net income of $1,084.4 million, or
$16.78 per share, an increase of $607.1 million when
compared with net income of $477.3 million, or $7.37
per share, in 1999. Net income for the year ended
December 31, 1998 was $172.3 million, or $2.64
per share.

The financial statements for the years ended
December 31, 1999 and 1998 were restated pursuant
to the application of two new accounting standards
related to the accounting for income taxes and
employee future benefits issued by the Canadian
Institute of Chartered Accountants which came into
effect on January 1, 2000.

In addition, as previously mentioned, pursuant
to the disposal of its interest in Donohue, the
Company withdrew from the Forest Products seg-
ment. For accounting purposes, this withdrawal is

Quebecor Inc.

considered as a discontinuation of operation;
therefore, the results of operations and cash flows
for the year 2000 and prior years are not included
in the consolidated revenues, expenses and cash flows,
but are presented separately, net of taxes, in the
consolidated statement of income and in the con-
solidated statements of cash flows. The gain on
disposal, net of income taxes of $94.2 million,
amounted to $235 million, or $3.64 per share.

When a subsidiary of Quebecor issues shares in
its capital stock, the parent company's interest in the
subsidiary may decrease. Such a decrease causes a
dilution that, for accounting purposes, is consid-
ered as a disposal of interest. Consequently, gains
or losses on dilution, represented by the difference
between the book value of the interest thus trans-
ferred to third parties and the proceeds of the share
issue, are recognized. These gains or losses are
presented separately in the consolidated statement
of income. In 2000, the Company posted gains on
dilution of $816.1 million, or $12.63 per share. In
fact, the Company sold its interest in Quebecor
Communications to a newly created subsidiary,
Quebecor Media, in consideration for shares of the
new subsidiary. The subsidiary issued shares to Capital
Communications CDP for a consideration of
$2,759.1 million. The Company’s interest in this sub-
sidiary decreased from 100% to 54.72%, and the
gain on dilution added to income amounted to
$796.1 million. In 2000, Mindready a subsidiary
of Nurun, proceeded to an initial public offering
which generated another gain on dilution of
$20 million. In 1999, share issues by Quebecor World
and Sun Media Corporation produced gains on dilu-
tion totalling $376.6 million, or $5.82 per share.

Results for the year ended December 31, 2000
were impacted by certain other non-recurring
items amounting to $106.0 million. A write-down
of temporary investments and other assets of
$58.6 million was recorded to mark them to market
as at December 31, 2000. Quebecor World recorded

a special charge of $41.6 million in connection with
difficult market conditions in Europe and the
implementation of a digital premedia strategy. This
includes charges relating to employee terminations
and write-down of assets. In addition, Quebecor World
made a reversal of a provision of $45.7 million
recorded in 1999, as anticipated cut-back programs
were no longer necessary, given the significant increase
in production capacity requirements. During the year,
the Web Integration/Technology segment recorded
a non-monetary compensation charge of $40.2 mil-
lion in connection with shares subject to escrow
agreements with shareholders/sellers of certain
acquired businesses. Further write-downs of assets
and provisions for restructuring were recorded by
Quebecor Communications and its subsidiaries, as
well as by the head office regarding, namely, the
closure of certain business units for an amount of
$11.3 million. Non-recurring expenses net of
income taxes and non-controlling interest totalled
$100.4 million, or $1.56 per share.

Furthermore, given that revenues from the
Internet segment, more particularly revenues from
advertising and online shopping penetration,
progressed at a much slower pace than expected,
management reviewed the net realizable value of
goodwill and determined that a write-down of
$54 million was required. This write-down was
calculated based on an assessment of undiscounted
expected future cash flows and reflects manage-
ment’s best estimates and assumptions, given a
sustained growth in revenues.

Results for the year ended December 31, 1999
were impacted by certain other non-recurring
items. Quebecor World recorded a special charge
of $268 million in connection with a far-reaching
restructuring project in the United States and
Europe. This charge includes a write-down of
certain assets, a provision for compensation,
benefits and other personnel costs, as well as
certain other non-recurring expenses. Quebecor

Quebecor Inc.

Communications, Quebecor New Media and the
parent company also recorded non-recurring
expenses totalling approximately $10 million for
the write-off and write-down of certain assets,
primarily goodwill and fixed assets for which it was
determined that a permanent impairment in value
has arisen. Non-recurring expenses net of income
taxes and non-controlling interest totalled $80.6
million, or $1.25 per share.

Excluding the gains on dilution, non-recurring
expenses and results of discontinued operation
mentioned above, consolidated net income would have
attained $136.3 million or $2.11 per share in 2000,
compared with $140.8 million or $2.17 per share in
1999 and $128.1 million or $1.96 per share in 1998.
Net income from non-consolidated subsidiaries
were recorded from the date of acquisition, on October
23, 2000, and amounted to $0.3 million after amor-
tization of goodwill of $24.3 million. These subsidiaries
will be consolidated on a retroactive basis to
January 1st, 2001, upon approval of a change
of control of Vidéotron and Groupe TVA by the
Canadian Radio-television and Telecommunications
Commission (CRTC). Management is confident that
approval will be given during the second quarter of 2001.
Since 1999, Canadian accounting standards allow
an entity to present net income and earnings per
share amounts before amortization and write-
down of goodwill. In this respect, given the numer-
ous acquisitions made by the Company in 2000 and
in prior years, management believes that income
before amortization and write-down of goodwill is
more representative of operating results. Excluding
gains on dilution, non-recurring expenses, and net
results of discontinued operation, net income
before amortization and write-down of goodwill is
as follows: $203.1 million or $3.14 per share in 2000,
compared with $181.9 million or $2.80 per share
in 1999 and $146.5 million or $2.24 per share in
1998. The increase in earnings per share before amor-
tization and write-down of goodwill was therefore

12.1% in 2000, compared with 25.0% in 1999.

The 2000 and 1999 growth in earnings per share
before amortization and write-down of goodwill is
a result of significantly higher contributions from
Quebecor World and Sun Media Corporation. An
analysis of operating results by business segment
is presented below.

Quebecor’s earnings per share are less sensi-
tive to fluctuations in the exchange rate of the
Canadian dollar against the US dollar, due to the
disposal of its interest in Donohue and the increased
impact of Quebecor World on the results of the
Company. Most of Donohue’s sales were stated in
US dollars while operating expenses were essentially
stated in Canadian dollars, whereas, following the
acquisition of World Color Press, Inc. (“WCP”),
Quebecor World’s revenues and expenses stated
in US dollars were more balanced. Thus, every vari-
ation of CDN$0.01 in the average exchange rate
would have had a negligible impact on earnings per
share for the year ended December 31, 2000.

Printing
During 2000, Quebecor World continued its strategy
of focusing on the integration of its operations, from
North American and International perspectives, and
on maximizing of free cash flow from operations.
In 1999, the subsidiary acquired WCP. This
transaction was the largest ever in the printing
industry. The total cost of the transaction was
US$2.7 billion, including WCP’s debt and the
value of the Quebecor World shares issued as part
of the transaction. In light of the foregoing, the
printing subsidiary consolidated WCP’s results
from August 20, 1999, and recorded a non-controlling
interest representing 49.6% of WCP’s outstanding
common shares for the period from August 20, 1999
to October 8, 1999, the date of the merger between
WCP and Quebecor World.

In 2000, the subsidiary completed its program
initiated during 1998 to exit non-core operations.

Quebecor Inc.

In August 2000, the subsidiary sold the operating
assets of its North American CD-ROM replication
business, and, in October 1999, the operating
assets of its BA Banknote division.

During the year, the subsidiary’s revenues and
operating income reached record levels. This is the
ninth consecutive year in which Quebecor World has
recorded growth in both its revenues and operating
income.

In 2000, consolidated revenues increased by
$2,321.6 million or 32% to $9,683.1 million from
prior year revenues of $7,361.5 million. The growth
in revenues had reached 30% in 1999 as compared
with 1998. These increases were due primarily to
the acquisition of WCP in August 1999, as discussed
above. The greatest proportion of sales stated in US
dollars, as compared with the subsidiary’s overall
operations, also contributed significantly to the
increase in revenues, stated in Canadian dollars, in
2000. Magazine printing remained the largest
market in terms of revenues, accounting for 28%
of total revenues in 2000, and 29% in 1999. In 2000,
Quebecor World focused on pre-media business and
created the new entity Que-Net Media™. In addi-
tion, despite the sale of the CD-ROM replication,
the bank notes, the check and credit card businesses,
the subsidiary’s premedia, logistics and other-
value added services remained stable due to
increased focus on identifying items from other
revenue categories. The variation in revenues from
retail inserts is also partially explained by the decrease
in demand in the American market during the last
quarter of 2000.

Operating income before amortization, financial
expenses (“EBITDA”) from continued operations
increased by 41% or $461.3 million to $1,588.7 mil-
lion in 2000. On the same basis, in 1999, the oper-
ating margin was $1,127.4 million. The improvement
in the EBITDA from continued operations, which
increased from 15.3% in 1999 to 16.4% in 2000,
stems mainly from the contribution of business

acquisitions and efficiency gains resulting from the
retooling of certain US plants. The operating income
also benefited from organic growth. In 2000, oper-
ating income from Europe was unfavourably
impacted by foreign exchange translation and
fixed costs related to the shutdown of plants
during the first half of 2000. North American oper-
ating income improved to 11.4% in 2000 from 9.8%
in 1999, despite the sale of the North American CD-
ROM replication in 2000, and the operating assets
of BA Banknote in 1999.

Revenues from North America represented
84% (United States 68% and Canada 16%) of
Quebecor World’s total year 2000 revenues.
Approximately 87% of the subsidiary’s total 2000
operating income was generated from North
American operations (72% United States and 15%
Canada). The remaining revenues and operating
income were contributed primarily by European
operations and acquisitions in Austria, Spain and
Argentina in 1999. However, results from Europe were
unfavourably impacted by the weakness of the euro.
Included in the Printing segment’s revenue num-
bers is the value of the paper, the subsidiary pur-
chases for many of its print customers. The subsidiary’s
primary raw material is paper, the pricing of which
can fluctuate and these fluctuations can cause
major variations in revenues and cost of sales.
Generally, Quebecor World passes on these fluctu-
ations to its customers.

Newspapers
Sun Media Corporation, which is 70%-owned by
Quebecor Media, is the only national chain of
tabloids and local newspapers in Canada. For the
52-week period in 2000, revenues from the
Newspaper segment increased by $23,0 million or
2.8% to $850.1 million from $827.1 million, com-
pared with the 53-week period in 1999. Advertising
revenues from urban dailies have risen 7.6% due
namely, to a 3.8% increase in advertising lineage.

Quebecor Inc.

Distribution revenues remained stable in spite of a
decrease in average circulation of 1.7%. Community
newspaper revenues have risen by nearly 4% as a
result of an increase in the advertising revenues of
existing newspapers.

The very substantial increase in the Newspaper
segment's revenues in 1999 as compared with the
previous year is largely due to the acquisition of Sun
Media Corporation, which took place on January 7,
1999. On a pro-forma basis, that is assuming the acqui-
sition of Sun Media Corporation had been completed
on January 1, 1998, advertising revenues from
urban dailies would have risen 5.5% due to a 4.8%
increase in advertising lineage, and their distribu-
tion revenues would have increased by 2.9% in spite
of a decrease in average circulation of 0.4%.
Community newspaper revenues would have risen
12.1% as a result of the acquisition of certain news-
papers in 1999 and an increase in the advertising
revenues of existing newspapers.

The operating income before amortization
was 24.2% in 2000, compared with 22.8% in 1999.
This improvement is due in large part to the urban
dailies, but also to Community newspaper, and results
from the growth in revenues, the restructuring ini-
tiatives undertaken following the acquisition of Sun
Media Corporation and stringent operating cost-
control measures, in spite of the increase in
newsprint prices in 2000.

Leisure and Entertainment
This segment includes essentially the Company's
book publishing operations that are carried on
through several publishing houses, its book distri-
bution operations carried on by Québec-Livres, a
division of Quebecor Communications, its maga-
zine publishing operations carried on by Publicor,
another division of Quebecor Communications, and
the distribution of records and retail sales of
books, magazines and records by Groupe
Archambault (1997) Inc., a subsidiary of Quebecor

Communications. This segment experienced
continued growth during the year with the
acquisition of a 50% interest in Les Éditions Libre
Expresion Ltée, in which Quebecor Communications
already held the other 50%, the acquisition of 100%
of the interest in Occasions d’Affaires, Camelot-Info
inc. and Paragraph Books Inc., as well as the pur-
chase of Le SuperClub Vidéotron, a company
specializing in the rental and sale of videocassettes.
In 2000, revenues increased by $16.2 million,
or 7.7%, over 1999 to $225.4 million. This growth
is due primarily to acquisitions made during the
year and to the opening and/or conversion of
Archambault stores. However, this increase was
adversely impacted by a decrease in revenues
from
sub-distribution operations. Groupe
Archambault’s increase in revenues of 11.6% in 1999
was due to numerous successes under exclusive
distribution agreements and the opening and/or
conversion of retail stores. During 1999, magazine
publishing revenues fell as a result of the sale of
the interest in Publistar and the consolidation of
the women's magazine business. Operating income
before amortization and financial expenses
increased to $13.0 million in 2000, compared with
$8.9 million in 1999. This improvement is due to
the growth in revenues, increased gross margins and
tighter cost-control initiatives.

Broadcasting
TQS’s revenues rose 23.3% in 2000 over 1999. This
growth is due mainly to the increase in advertising
revenues resulting from a larger audience and higher
advertising rates. In 1999, revenues rose 6.1%. These
increases are attributable to improved market shares
since the fall of 1998 following the repositioning
of the network. The increases in revenues are derived
from strong local and national sales and also from
commercial development.

TQS’s operating loss before amortization, finan-
cial expenses and income taxes decreased by $4.4

Quebecor Inc.

million in 2000 over 1999, to $3.4 million. TQS’s
management intends to maintain its momentum.

Web Integration/Technology
In 1999, Quebecor Communications acquired 58.23%
of Nurun's shares in a series of transactions that led
to the business combination of Intellia Inc., which
was a subsidiary of Quebecor Communications at the
time, and Nurun, formerly Informission Group Inc.
The Web Integration/Technology segment's rev-
enues for the year ended December 31, 2000 include
the results of all of the business units for the entire
year, while its 1999 revenues included Nurun's
results only from the date of acquisition of this
company on November 1, 1999, and Intellia's results
for the 12-month period ended December 31, 1999.
Prior to 1999, Quebecor Communications recorded
only a 50% share of Intellia's results, as this com-
pany was held by a limited partnership in which
Quebecor Communications shared ownership
with Quebecor World on a 50-50 basis. Quebecor
Communications purchased Quebecor World's
interest in this limited partnership in early 1999.
The Web Integration/Technology segment
achieved a substantial growth in revenues during
the year and recorded revenues of $127.5 million
in 2000, compared with $21.5 million in 1999. This
increase reflects the consolidation of Nurun's
operations for a period of 12-months in 2000, com-
pared with two months in 1999. It is also due to
11 business acquisitions made during 2000.
Integrating these businesses proved to be a major
challenge in 2000.

Nurun entered into strategic agreements with
its partners, including Quebecor World, in order to
solidly establish itself in the electronic commerce
market in 2000. During the summer, thanks to a
strategic partnership entered into with Quebecor
World, Nurun was able to establish the interna-
tional structure it requires to promote its business.
Under the terms of this partnership, Quebecor World

subscribed for $20.0 million of Nurun's shares.

Through its internal growth, numerous
business acquisitions and the negotiation of strategic
agreements with its partners, Nurun was able to
develop a world-wide network of 19 offices and
to establish itself as provider for several distinguished
corporate clients such as Evian, L'Oréal, Essilor, MTV
Italia, Biotherm, Danone, IBM, GM and Amway.
These multinational clients are looking for a
company with an international network that can
provide them with services of consistent quality
wherever these services are required for their
business development purposes.

Operating income before amortization, financial
expenses, reserve for restructuring of operations and
other special charges was $0.1 million, compared
with $1.3 million in 1999 and a loss of $1.1 million
in 1998. This is partly due to the fierce competition
in the Web integration market, the significant
expenses incurred for developing an international
infrastructure and the losses related to low-margin
business activities. The segment's overall results were
also impacted by non-monetary compensation
charges of $40.2 million relative to escrowed
shares to be remitted to the selling shareholders of
certain acquired companies.

During the fourth quarter, Nurun undertook a
strategic repositioning in order to improve its profit
margins and EBITDA. It was decided to refocus the
subsidiary's operations on Web technology integration
and to exit non-strategic activities such as hosting
services and integrated solutions for information tech-
nology supply chains. As several divisions and offices
will be closed as a result of these decisions, a special
charge was recorded to reflect these strategic deci-
sions. In addition, a write-down of goodwill amounting
to $53.9 million was recorded in the consolidated
statement of income. This write-down, which was
determined following an analysis of the expected future
cash flows, is based on management's best estimates
and assumptions and a steady growth in revenues.

Quebecor Inc.

As a result of these important decisions,
Nurun's management believes that the subsidiary
will be in a better position to take on the challenges
that await it over the medium and long term.

Internet/Portals
The Internet/Portals segment includes operations of
the CANOE portals and specialty Web sites, through
Quebecor New Media subsidiary, and the operations
of La Toile du Québec and InfiniT portals and spe-
cialty Web sites, through the Netgraphe subsidiary.
CANOE was launched by Sun Media Corporation
in 1996. When Quebecor purchased Sun Media
Corporation in early 1999, the latter had a 60%
interest in CANOE and the remaining 40% interest
was held by a subsidiary of BCE Inc. In June 1999,
Quebecor New Media acquired Sun Media
Corporation’s interest in CANOE and Autonet.ca Inc.,
and in July 1999, it acquired the interest held by
BCE Inc.’s subsidiary in CANOE. In September 1999,
Quebecor New Media launched Canoë, the first French-
language continuous news and information site, as
well as the archambault.ca transactional site and in
November 1999, it launched the cultural cyberguide
icimontreal.com. In 2000, other urban sites were added
to the network, including iciquebec.com, and under
the banner FYI (For Your Information), fyiottawa.com,
fyitoronto.com, fyilondon.com, fyiwinnipeg.com,
fyiedmonton.com et fyicalgary.com. Furthermore, in
2000, CANOE portals were launched in France with
canoe.fr and in Spain with micanoa.com.

Netgraphe was acquired on October 23, 2000
through the acquisition of Groupe Vidéotron. The results
of Netgraphe’s operations are included in the results
of the segment from the date of acquisition.

Revenues for the segment were $11.6 million
in 2000 compared with $3.6 million in 1999.
Although this represents an increase in revenues
in excess of 222%, the cost of building, operating
and promoting these sites exceeded by far the
revenues they generated in 2000 and conse-

quently, the operating loss before amortization,
financial expenses and other special charges rose
to $21.6 million. At mid-year, management reviewed
its operations and undertook an operating cost reduc-
tion program. Accordingly, CANOE reduced its work
force and operating costs and wrote-off assets that
will no longer be used in the future operations.

In order to improve its competitive position
and to maximize operating synergies, Quebecor
Media, through Quebecor Communications, made
an offer to the shareholders of Netgraphe to merge
the operations of the Internet/Portals segment of
Quebecor New Media with Netgraphe. This offer
has been approved by an independent committee
and by the Board of Directors of Netgraphe and
will be submitted to the shareholders for their
approval. The objectives of this reorganization is
to materialize as soon as possible the synergies
of all the entities of the segment, for the benefit
of all shareholders. Management believes that the
merger of the operations of both entities will help
the Company take advantage of this segment’s
untapped potential and enable Quebecor Media’s
Internet operations to attain its profitability
objectives.

Financial expenses
Financial expenses have increased significantly in
2000 due to the higher level of the average debt
during the year. Debt increased mainly due to the
business acquisitions completed by Quebecor
World during prior years, principally the acqui-
sition of WCP in 1999, and the acquisition of
Groupe Vidéotron completed by Quebecor Media
on October 23, 2000. This later acquisition was
partially financed by the issuance of additional
debt totalling $3 billion. The increase in finan-
cial expenses in 1999 over 1998 results from the
acquisitions completed by Quebecor World and the
acquisition of Sun Media Corporation in 1999.

Quebecor Inc.

LIQUIDITY AND CAPITAL RESOURCES
Operating Activities
The increase in cash provided by continued oper-
ations over the last two years is basically the result
of corresponding increases in operating income before
non-recurring items and amortization less current
income taxes. For the years ended December 31,
2000 and 1999, Quebecor World and Sun Media
Corporation recorded substantial increases in cash
flow from continued operations. Indeed, cash flows
related to continued operations increased by
$341.7 million to $1,447.6 million in 2000. In 1999,
cash flows related to continued operations increased
by $458.5 million over 1998. The analysis of oper-
ating results provides the appropriate explanation
in this regard. Through its securitization of receiv-
able program implemented in 1999, Quebecor World
was able to reduce its working capital and recover
a considerable amount of cash flow.

Financing Activities
The highlight of financing activities in 2000 was
the financing of major acquisitions, the main one
being Groupe Vidéotron. In order to help finance
the Company's interest in this acquisition, Quebecor
obtained a loan of $900 million that matures on
October 22, 2001 and is secured by certain assets
of the Company. Its Quebecor Media subsidiary took
out a bank credit facility of $2,090 million com-
posed of four tranches. The first two tranches, of
$1,325 million and $90 million respectively, mature
on October 22, 2001. The third tranche of $585 mil-
lion matures on January 23, 2002, or the date this
credit facility is replaced by a new bank credit facil-
ity granted to the Vidéotron subsidiary, whichever
is earlier. The final tranche of $90 million has no
predetermined maturity date. This bank credit facil-
ity is secured by all of Quebecor Media's assets. In
April 2000, Quebecor World extended its US$1.0 bil-
lion bank credit facility for an additional year.
As well, during the year, Quebecor World issued

subordinated notes totalling US$371 million. The
proceeds of these issues were used mainly to
reduce the bank credit facilities used for the acqui-
sition of WCP.

In 1999, Quebecor World obtained financing
of US$1.25 billion and refinanced its existing
US$1 billion bank credit facilities in order to com-
plete the acquisition of WCP. In addition, financ-
ing of $700 million was secured in order to
purchase Sun Media Corporation. This latter credit
facility is secured by all of the assets and issued
and outstanding shares of Sun Media Corporation
and its subsidiaries. Moreover, Quebecor obtained a
bank credit facility of $525 million in early 1999 in
order to support this acquisition. This bank credit facil-
ity was repaid and cancelled during 2000. Quebecor
secured a new bank credit facility of $225 million
in October 1999 in order to complete the reverse
takeover of Nurun, among other things. This facil-
ity was increased to $300 million in February 2000.
Dividends paid by Quebecor World in 2000
totalled US$0.33 per share, compared with US$0.28
per share in 1999 and US$0.24 per share in 1998.
Donohue increased its dividend to $0.44 per share
in 1999, compared with $0.427 per share in 1998.
A major portion of those dividends was paid to the
non-controlling shareholders of the two subsidiaries.
Dividends paid by Quebecor on its Class A and
Class B shares were $0.51 per share in 2000, com-
pared with $0.48 per share in 1999 and $0.44 per
share in 1998.

Investing Activities
The Company's major investment in 2000, which was
made through its Quebecor Media subsidiary, was
the acquisition of Groupe Vidéotron, which was pur-
chased for a cash consideration of $5,267.7 million,
net of the acquired companies' cash. The other
business acquisitions totalled $183.7 million. Capital
expenditures totalled $405.0 million in 2000,
compared with $333.7 million in 1999. The 2000

Quebecor Inc.

capital expenditure level reflects the acquisitions made
by Quebecor World and relates to investments in tech-
nology that are to be used in providing premedia
services and printing and binding services. These
investments are part of an ongoing program to
increase the subsidiary's sales volume by increasing
its production capacity and its ability to meet cus-
tomer demands. The program's focus is to modernize
and enhance printing plant efficiency and to
increase productivity.

In 1999, Quebecor World made a major busi-
ness acquisition, namely that of WCP, mentioned
previously, as well as several strategic acquisitions
in Spain, Austria and Argentina. During the year
ended December 31, 1998, Quebecor World acquired
a number of ancillary businesses, including
Tryckinvest i Norden AB ("TINA"), northern Europe's
largest printer.

During the year ended December 31, 1999,
Quebecor World completed its three-year equipment
modernization program in the United States, par-
ticularly the modernization of its rotogravure
printing facilities.

Very little capital investment is required for the

Company's other business segments.

Financial Position
Following the acquisition of all of Groupe
Vidéotron's shares, the Company's debt increased,
thereby impacting certain financial ratios. This
situation was taken into account in the credit agree-
ments that were negotiated within the framework
of this acquisition. Management is currently
implementing the measures that were previously
anticipated in order to restore the financial posi-
tion to a level that is in line with its objectives.
Given the significant interests of non-controlling
shareholders in the subsidiaries, the Company's
management considers the best indicator of its
debt level to be a debt-to-capitalization ratio,
where capitalization includes shareholders' equity,

non-controlling shareholders' interest in subsidiaries
and debentures convertible into shares of subsidiaries.
As at December 31, 2000, this debt-to-capitalization
ratio stood at 47:53, compared with 52:48 as at
December 31, 1999. While the debt level as at
December 31, 2000 increased over 1999, it was
maintained at an acceptable level due to a major
investment made by a non-controlling shareholder.
As well, in 1999, the Company's consolidated debt
included Donohue's debt, which was no longer
included in consolidation as at December 31, 2000.
As at December 31, 2000, consolidated debt,
including the current portion, totalled $6.7 billion.
An amount of $3.1 billion of this debt relates to
Quebecor World. When Quebecor World acquired
WCP in August 1999, Quebecor's debt was $4.4 bil-
lion and its debt-to-capitalization ratio was 62:38.
Quebecor World generated EBITDA of $1.6 billion
in 2000, for a debt to EBITDA ratio of 1.9:1. Sun
Media Corporation's debt represents $595.2 million
of Quebecor's total debt. When Sun Media
Corporation was purchased in early 1999, the
Company's debt level was approximately $1 bil-
lion and its debt-to-capitalization ratio was 77:23.
Shortly after this acquisition, Sun Media Corporation
sold four newspapers for $339 million. Since the
acquisition, Sun Media Corporation has posted solid
results. These two factors contributed to reducing
Sun Media Corporation's debt by $400 million. As
at December 31, 2000, this company's debt-to-
capitalization ratio was 60:40 and its debt to
EBITDA ratio was 2.9:1. The remainder of Quebecor's
consolidated debt consists mainly of new debt
incurred for the acquisition of Groupe Vidéotron.
Quebecor's bank credit facility of $900 million
matures on October 22, 2001. On February 23, 2001,
Quebecor completed the initial phase of its financial
plan that involved, as a first step, selling 2.5 million
shares of Quebecor World for a cash consideration
of $85 million and, as a second step, issuing
$425 million of exchangeable debentures maturing

Quebecor Inc.

in 25 years which may be exchanged for subordi-
nate voting shares of Quebecor World. Following these
investments and presuming that the debentures will
be exchanged for the 12.5 million shares of Quebecor
World, Quebecor will continue to hold 41,211,277 mul-
tiple voting shares of Quebecor World, which
represents 78.2% of voting shares and 28.2% of share-
holders' equity. The debentures issued by Quebecor
are exchangeable, at the holder's option, at an exchange
rate of 29.41 shares per $1,000 of capital, or at the
option of the issuer, who may choose to deliver the
equivalent cash amount based on the quoted market
price of the shares at the date of the exchange or a
combination of both shares and cash. The deben-
tures are callable at all times. Should the debentures
be exchanged or called during the first 10 years of
their term, a premium shall be payable by the
initiating party. This amount of $510 million was used
to repay part of the non-revolving bank credit facil-
ity. Given that Quebecor Media has acquired Groupe
TVA, and in anticipation of a favourable decision
from the CRTC regarding the transfer of the televi-
sion broadcasting licences, Quebecor has decided to
sell its interest in TQS. Several potential purchasers
have already shown an interest in TQS. If TQS has
not been sold by the time the CRTC renders its deci-
sion, then it will be put under the control of a trustee
in compliance with decisions by the Federal
Competition Bureau and the CRTC, until such time
as a transaction has been concluded.

the

transfer of control of

Quebecor Media’s bank credit facility of $1,936.9
million matures on October 22, 2001 and should be
repaid through the sale of assets, and through an
undertaking by Vidéotron, once the CRTC has
approved
the
company to Quebecor Media, to reimburse an
amount of $585 million. Vidéotron's total debt would
therefore increase to $1.5 billion. Of this amount,
$150 million will be repaid over a 5-year period and
the balance will be repayable over 8 and 9 years.
The first payment under this agreement will be made

in March 2003. Vidéotron's credit agreement also
provides for two debt redemptions for amounts of
CDN$100 million and US$94 million respectively.
A redemption proposal was filed in order to redeem
the U.S. dollar debt in March 2001. Vidéotron's cash
flow will be used to repay this $1.5-billion debt.
As mentioned previously, certain assets obtained
upon acquisition of Groupe Vidéotron are intended
to be sold, as set out in the initial financing plan.
Vidéotron Télécom and Protectron have been targeted
as assets that are not part of Quebecor Media's
strategy and, accordingly, they are meant to be sold.
Other non-strategic assets should also be sold and
appropriate action will be taken by management
to reduce Quebecor Media's debt level.

Quebecor's management, along with the
management of its subsidiaries, are of the opinion that,
once the new debt incurred to finance the acquisi-
tion of Groupe Vidéotron has been repaid in accor-
dance with the financing plans established at the time
of the acquisition, the future cash flows generated
by operations should be adequate to cover these
companies' capital expenditures and debt-repayment
programs, as well as their dividend payments.

RISKS AND UNCERTAINTIES
In the normal course of business, Quebecor and its
subsidiaries are exposed to changes in interest
rates. However, each subsidiary manages this expo-
sure by having a balanced variety of debt maturi-
ties as well as a combination of fixed and variable
rate obligations. In addition, they have entered into
interest rate swap agreements and cross-currency
interest rate swap agreements to manage both their
interest rate and foreign exchange exposure. As at
December 31, 2000, Quebecor Media, except for its
subsidiary Sun Media Corporation, did not hold any
instrument to reduce its exposure to interest rate
fluctuations. Quebecor Media’s intent is to enter into
interest rate swaps during the coming months to
manage its interest rate exposure.

Quebecor Inc.

January 1, 2000. Essentially, these new Canadian
guidelines are in line with the United States
FAS 106 and 109 covering the same subjects. In the
first quarter of 2000, the Company adopted these new
accounting standards and applied the recommendations
retroactively, restating comparative periods. The cumu-
lative effect of these changes is discussed in the
Summary of Significant Accounting Policies in the
notes to the consolidated financial statements under
the heading “Accounting changes.”

FORWARD-LOOKING STATEMENTS
The statements in this document are forward-
looking and made pursuant to the safe harbor
provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements
involve known and unknown risks and uncertain-
ties, which may cause Quebecor’s actual results in
future periods to differ materially from forecasted
results. Those risks include, among others, changes
in customer demand for the Company’s products,
changes in raw material and equipment costs and
availability, seasonal changes in customer orders,
pricing actions by competitors and general changes
in economic conditions.

Quebecor World has also entered into foreign
exchange forward contracts and cross-currency
interest rate swaps to hedge the settlement of raw
materials and equipment purchases, to set the
exchange rate for cross-border sales, and to man-
age our foreign exchange exposure on certain lia-
bilities. While the counterparty to these agreements
exposes the subsidiary to credit loss in the event
of non-performance, the subsidiary believes that
the possibility of incurring such loss is remote due
to the creditworthiness of the parties it deals with.
The Company does not hold nor issue any deriva-
tive financial instruments for trading purposes. A
description of the financial instruments used by the
Company as at December 31, 2000 is included in
note 18 to the consolidated financial statements.
Concentrations of credit risk with respect to trade
receivables are limited due to the Company’s
diverse operations and large customer base. As of
December 31, 2000, the Company had no signifi-
cant concentrations of credit risk. Quebecor believes
that the product and geographic diversity of its
customer base is instrumental in reducing its credit
risk, as well as the impact of a potential change in
its local market or product-line demand.

ACCOUNTING POLICIES
Significant differences between generally accepted
accounting principles in Canada and in the United
States are presented in note 21 to the consolidated
financial statements.

In 1999, the Company adopted the new disclo-
sure guidelines in Canada concerning the statement
of cash flows and the presentation of goodwill amor-
tization after income taxes, as recommended by the
Canadian Institute of Chartered Accountants.

In 1999 and 1997, the Accounting Standards
Board of the Canadian Institute of Chartered
Accountants adopted new requirements related to
the accounting for employee future benefits and
income taxes, with mandatory adoption as of

Quebecor Inc.

Selected Financial Data

Years ended December 31, 2000, 1999, 1998, 1997 and 1996
(in millions of Canadian dollar, except per share data)

Operations
Revenues
Operating income before amortization, financial expenses,

gains on dilution and reserves for restructuring of
operations and other special charges

Contribution to net income
Continued operations
Goodwill amortization
Non-recurring items
Discontinued operation

Net income

2000

1999

1998

1997

1996

(Restated)

$ 10,914.8

8,440.3

6,173.5

5,303.5

4,656.0

1,790.1

1,309.3

852.3

720.0

666.2

203.1
(66.8)
702.0
246.1
1,084.4

181.9
(41.1)
296.0
40.5
477.3

146.5
(18.4)
—
44.2
172.3

124.3
(9.5)
—
28.9
143.7

112.4
(8.0)
(5.0)
47.8
147.2

Cash provided by continued operations

1,447.6

1,105.9

647.4

504.2

530.3

Per share data
Contribution to net income
Continued operations
Goodwill amortization
Non-recurring items
Discontinued operation

Net income

Dividends
Shareholders' equity
Average number of shares outstanding (in millions)

Financial position
Working capital
Long-term debt
Shareholders' equity
Capitalization (1)
Total assets

3.14
(1.03)
10.86
3.81
16.78

0.51
43.21
64.6

2.80
(0.63)
4.57
0.63
7.37

0.48
26.57
64.8

$ (1,785.8)

4,333.5
2,792.2
7,553.5
17,603.3

556.3
5,860.4
1,716.0
5,623.5
15,246.9

2.24
(0.28)
—
0.68
2.64

0.44
21.99
65.3

612.9
3,003.5
1,423.7
4,121.5
9,889.6

1.88
(0.14)
—
0.44
2.18

0.40
18.58
65.9

510.4
2,022.6
1,223.7
3,544.4
7,932.1

1.70
(0.12)
(0.08)
0.73
2.23

0.40
16.44
65.9

454.0
1,956.8
1,090,5
2,937.9
7,003.5

(1) Included in the capitalization are the shareholders' equity, non-controlling interest and convertible debentures

42 Quebecor Inc.

Selected Quarterly Financial Data

Years ended December 31, 2000 and 1999
(Unaudited, in millions of Canadian dollars except per share data)

Operations
Revenues
Operating income before amortization, financial expenses, gains on dilution
and reserves for restructuring of operations and other special charges

March

June

September

2000
December

2,641.7

2,601.2

2,716.2

2,955.7

372.9

436.7

471.2

509.3

Contribution to net income
Continued operations
Goodwill amortization
Non-recurring items
Discontinued operation

Net income

Per share data
Contribution to net income
Continued operations
Goodwill amortization
Non-recurring items
Discontinued operation

Net income

29.7
(16.3)
—
9.5
22.9

0.46
(0.25)
—
0.15
0.36

58.6
(18.5)
—
236.6
276.7

0.91
(0.29)
—
3.66
4.28

72.5
(18.3)
—
—
54.2

1.12
(0.28)
—
—
0.84

March
(Restated)

June
(Restated)

September
(Restated)

42.3
(13.7)
702.0
—
730.6

0.65
(0.21)
10.86
—
11.30

1999
December
(Restated)

Operations
Revenues
Operating income before amortization, financial expenses, gains on dilution
and reserves for restructuring of operations and other special charges

1,607.3

1,667.1

2,118.0

3,047.9

201.1

270.8

334.4

503.0

Contribution to net income
Continued operations
Goodwill amortization
Non-recurring items
Discontinued operation

Net income

Per share data
Contribution to net income
Continued operations
Goodwill amortization
Non-recurring items
Discontinued operation

Net income

21.5
(8.2)
—
9.5
22.8

0.33
(0.13)
—
0.15
0.35

49.5
(8.5)
218.5
6.4
265.9

0.76
(0.12)
3.37
0.09
4.10

46.2
(10.7)
—
9.0
44.5

0.72
(0.17)
—
0.14
0.69

64.7
(13.7)
77.5
15.6
144.1

0.99
(0.21)
1.20
0.25
2.23

Quebecor Inc.

Management’s Responsibility for Financial Statements

The accompanying consolidated financial statements of Quebecor Inc. and its subsidiaries are the responsibility of management and are approved by the Board of
Directors of Quebecor Inc.

These financial statements have been prepared by management in conformity with Canadian generally accepted accounting principles and include amounts that
are based on best estimates and judgments.

Management of the Company and that of its subsidiaries, in furtherance of the integrity and objectivity of the data in the financial statements, have developed
and maintain systems of internal accounting controls and support programs of internal audit. Management believes that these systems of internal accounting
controls provide reasonable assurances that financial records are reliable and form a proper basis for the preparation of the financial statements and that assets
are properly accounted for and safeguarded.

The Board of Directors carries out its responsibility for the financial statements principally through its Audit Committee, consisting solely of outside directors. The
Audit Committee reviews the Company’s annual consolidated financial statements and formulates the appropriate recommendations to the Board of Directors.
The auditors appointed by the shareholders have full access to the Audit Committee, with and without management being present.

These financial statements have been examined by the auditors appointed by the shareholders, KPMG LLP, chartered accountants, and their report is presented
hereafter.

Claude Hélie

Claude Hélie
Executive Vice President and Chief Financial Officer

Montréal, Canada
January 30, 2001

Auditors’ Report to the Shareholders of Quebecor Inc.

We have audited the consolidated balance sheets of Quebecor Inc. and its subsidiaries as at December 31, 2000 and 1999 and the consolidated statements of
income, retained earnings and cash flows for the years ended December 31, 2000, 1999 and 1998. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by manage-
ment, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2000 and
1999 and the results of its operations and its cash flows for the years ended December 31, 2000, 1999 and 1998 in accordance with Canadian generally accepted
accounting principles.

Canadian generally accepted accounting principles vary in certain significant respects from accounting principles generally accepted in the United States.
Application of accounting principles generally accepted in the United States would have affected the financial position of the Company as at December 31, 2000
and 1999 and the results of its operations for the years ended December 31, 2000, 1999 and 1998 to the extent summarized in note 21 to the consolidated
financial statements.

KPMG LLP

Chartered Accountants

Montréal, Canada
January 30, 2001

44 Quebecor Inc.

Consolidated Statements of Income

Years ended December 31, 2000, 1999 and 1998
(in millions of Canadian dollars, except earnings per share data)

Revenues

Operating expenses:
Cost of goods sold
Selling and administrative

Operating income before undernoted items

Amortization
Financial expenses (note 1)
Reserve for restructuring of operations and other special charges (note 2)
Gains on dilution from issuance of capital stock by subsidiaries

Income before income taxes

Income taxes (note 3)

Equity income from non-consolidated subsidiaries (note 4)
Dividends on preferred shares of subsidiaries
Non-controlling interest

Income before amortization and write-down of goodwill

Amortization of goodwill, net of non-controlling interest
Write-down of goodwill, net of non-controlling interest (note 2)

Income from continued operations

Income from the discontinued operation (note 5)

Net income

Earnings per share:

Before amortization and write-down of goodwill and the discontinued

operation

From continued operations
Net income

Average number of shares outstanding (in millions)

See accompanying notes to consolidated financial statements.

2000

1999
(Restated)

1998
(Restated)

$ 10,914.8

8,440.3

6,173.5

8,208.8
915.9
9,124.7

1,790.1

(555.0)
(439.3)
(106.0)
816.1

1,505.9

227.9
1,278.0

0.3
(15.0)
(297.1)

966.2

(66.8)
(61.1)

838.3

246.1

$ 1,084.4

14.95
12.97
16.78

64.6

6,449.4
681.6
7,131.0

1,309.3

(462.7)
(259.0)
(273.5)
376.6

690.7

91.3
599.4

—
(15.1)
(101.9)

482.4

(41.1)
(4.5)

436.8

40.5

477.3

7.46
6.74
7.37

64.8

4,743.0
578.2
5,321.2

852.3

(343.7)
(96.0)
—
—

412.6

123.7
288.9

—
(15.3)
(127.1)

146.5

(18.4)
—

128.1

44.2

172.3

2.24
1.96
2.64

65.3

Quebecor Inc.

Consolidated Statements of Retained Earnings

Years ended December 31, 2000, 1999 and 1998
(in millions of Canadian dollars)

Balance at beginning of year

Net income

Premium paid on redemption of shares

Dividends

Balance at end of year

Consolidated Statements of Cash Flows

Years ended December 31, 2000, 1999 and 1998
(in millions of Canadian dollars)

Cash flows related to continued operations:

Income from continued operations
Adjustments for:

Amortization of property, plant and equipment
Amortization and write-down of goodwill and deferred charges
Gain on disposal of assets
Gains on dilution from issuance of capital stock by subsidiaries
Reserve for restructuring of operations and other special charges
Future income taxes
Equity income from non-consolidated subsidiaries
Non-controlling interest
Other

Change in non-cash balances related to operations

(net of the effect of business acquisitions and dispositions)

Cash flows provided by continued operations

Cash flows related to financing activities:

Net (decrease) increase in bank indebtedness
Issuance of long-term debt
Repayment of long-term debt and convertible debentures
Increase in non-controlling interest
Net proceeds from issuance of capital stock
Redemption of capital stock for cancellation
Dividends
Dividends paid to non-controlling shareholders
Other

Cash flows provided by financing activities

See accompanying notes to consolidated financial statements.

46 Quebecor Inc.

2000

1999
(Restated)

1998
(Restated)

1,376.9

937.3

821.7

1,084.4
2,461.3

(0.4)

(33.0)

477.3
1,414.6

(6.6)

(31.1)

172.3
994.0

(28.0)

(28.7)

2,427.9

1,376.9

937.3

2000

1999
(Restated)

1998
(Restated)

838.3

436.8

128.1

524.1
298.3
(29.5)
(816.1)
84.4
141.0
(0.3)
157.6
27.3
1,225.1

222.5
1,447.6

(349.5)
3,459.5
(1,661.7)
2,759.1
1.0
(0.5)
(33.0)
(46.0)
(1.1)
4,127.8

437.0
145.0
(11.5)
(376.6)
172.2
(12.2)
—
28.2
13.1
832.0

273.9
1,105.9

(1,940.0)
2,760.0
(98.1)
497.8
0.9
(8.5)
(31.1)
(30.6)
(0.4)
1,150.0

343.7
41.7
—
—
—
42.1
—
103.8
(11.6)
647.8

(0.4)
647.4

71.3
425.7
(193.2)
2.7
0.5
(37.8)
(28.7)
(24.2)
(8.3)
208.0

Consolidated Statements of Cash Flows (continued)

Years ended December 31, 2000, 1999 and 1998
(in millions of Canadian dollars)

Cash flows related to investing activities:

Business acquisitions, net of cash and cash equivalents acquired (note 6)
Proceeds from disposal of businesses (note 6)
Increase in investments
Additions to property, plant and equipment
Proceeds from disposal of assets
Other

Cash flows used by investing activities

Net (decrease) increase in cash and cash equivalents
Effect of the discontinued operation on cash and cash equivalents
Effect of exchange rate changes on cash and cash equivalents

denominated in foreign currencies

Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Additional information on the consolidated statements of cash flows:

Changes in non-cash balances related to operations (net of the effect of

business acquisitions and dispositions):
Accounts receivable
Inventories
Accounts payable and accrued liabilities
Other short-term and long-term items

Cash interest payments
Cash payments for income taxes

See accompanying notes to consolidated financial statements.

2000

1999
(Restated)

1998
(Restated)

$ (5,451.4)
82.9
(34.6)
(405.0)
61.6
4.1
(5,742.4)

(167.0)
296.0

(57.2)
52.8
124.6

201.9
25.3
21.7
(26.4)
222.5

447.8
107.1

(1,983.7)
33.3
—
(333.7)
39.0
1.4
(2,243.7)

12.2
(49.9)

(21.5)
112.0
52.8

296.4
38.7
(98.7)
37.5
273.9

239.5
107.0

(404.8)
55.8
—
(467.1)
3.0
(40.4)
(853.5)

1.9
72.0

(0.2)
38.3
112.0

33.5
53.2
(30.1)
(57.0)
(0.4)

111.1
81.9

Quebecor Inc.

Consolidated Balance Sheets

December 31, 2000 and 1999
(in millions of Canadian dollars)

ASSETS

Current assets:

Cash and cash equivalents
Temporary investments
Accounts receivable (note 7)
Amounts receivable from non-consolidated subsidiaries
Inventories (note 8)
Investments in subsidiaries held for resale (note 9)
Prepaid expenses
Future income taxes (note 3)

Portfolio investments (market value of $720.6 million)
Property, plant and equipment (note 10)
Investments in non-consolidated subsidiaries (note 4)
Goodwill, net of accumulated amortization of $315.8 and $183.3 million, respectively
Future income taxes (note 3)
Other assets

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Bank indebtedness
Accounts payable and accrued liabilities
Income and other taxes
Current portion of long-term debt and convertible debentures (notes 11 and 13)

Long-term debt (note 11)
Other liabilities (note 12)
Convertible debentures (note 13)
Future income taxes (note 3)
Non-controlling interest (note 14)

Shareholders’ equity:

Capital stock (note 15)
Retained earnings
Translation adjustment (note 16)

Commitments and contingencies (note 17)

See accompanying notes to consolidated financial statements.

On behalf of the Board of directors,

Jean Neveu

Jean Neveu, Director

48 Quebecor Inc.

Pierre Laurin

Pierre Laurin, Director

2000

1999
(Restated)

124.6
176.2
1,093.0
24.5
796.8
394.6
55.7
87.1
2,752.5

398.4
4,378.6
4,875.2
4,802.5
92.0
304.1

52.8
—
1,589.2
—
1,174.5
—
82.2
84.0
2,982.7

—
7,134.1
—
4,784.7
—
345.4

$ 17,603.3

$ 15,246.9

20.0
2,037.6
9.0
2,471.7
4,538.3

4,333.5
482.8
158.9
695.2
4,602.4

348.5
2,427.9
15.8
2,792.2

21.8
2,154.1
45.9
204.6
2,426.4

5,860.4
510.8
259.4
825.8
3,648.1

347.6
1,376.9
(8.5)
1,716.0

$ 17,603.3

$ 15,246.9

Segmented Information

Years ended December 31, 2000, 1999 and 1998
(in millions of Canadian dollars)

The Company operates in the following industry segments: Printing, Newspapers, Leisure and Entertainment, Web Integration/Technology, Broadcasting and
Internet/Portals. The Printing segment includes the printing of magazines, inserts, flyers, catalogues, books, specialty printing, directories and newspapers. This seg-
ment operates in the United States, Canada, Europe, South America, Mexico and India. The Newspapers segment includes the publishing and distribution of daily
and weekly newspapers, principally in Canada but also in the State of Florida in the United States. The Leisure and Entertainment segment which has operations
solely in Canada combines magazine and book publishing, retail sales and rental of videos, DVD and games, and book and music distribution. The Web
Integration/Technology segment includes a business offering e-commerce solutions through a combination of strategy, technology integration, IP solutions and
creativity on the Internet which is active in Canada, United States, South America and Europe. The Broadcasting segment operates a general-interest French-lan-
guage television network in Canada. The Internet/Portals segment operates Internet sites in Canada and in Europe including French-language and English-language
portals, a Spanish-Language portal and specialized sites.

These segments are managed separately since they all require specific market strategies. The Company assesses the performance of each segment based on
operating income before amortization, financial expenses, gains on dilution and reserve for restructuring of operations and other special charges.

Segment income includes income from sales to third-parties and inter-segment sales. These sales are accounted for at prices similar to those prevailing on the
open market.

INDUSTRY SEGMENTS

Revenues
Printing
Newspapers
Leisure and Entertainment
Web Integration/Technology
Broadcasting
Internet/Portals
Inter-segment:

Printing
Other

Operating income before amortization, financial expenses, gains on dilution
and reserve for restructuring of operations and other special charges

Printing
Newspapers
Leisure and Entertainment
Web Integration/Technology
Broadcasting
Internet/Portals

General corporate income (expenses)

2000

9,683.1
850.1
225.4
127.5
59.9
11.6

(28.2)
(14.6)
$ 10,914.8

2000

1,588.7
205.3
13.0
0.1
(3.4)
(21.6)
1,782.1
8.0
1,790.1

1999
(Restated)

1998
(Restated)

7,361.5
827.1
209.2
21.5
48.6
3.6

(25.7)
(5.5)
8,440.3

1999
(Restated)

1,127.4
187.4
8.9
1.3
(7.8)
(10.4)
1,306.8
2.5
1,309.3

5,643.7
295.1
211.8
6.9
45.8
—

(22.2)
(7.6)
6,173.5

1998
(Restated)

801.5
56.8
10.2
(1.1)
(7.4)
—
860.0
(7.7)
852.3

Quebecor Inc.

2000

512.4
25.7
4.9
4.1
2.9
4.4
0.6
555.0

2000

359.6
19.8
6.0
9.0
3.8
6.4
0.4
405.0

2000

9,719.2
1,164.4
150.0
219.5
87.8
254.7
4,875.2
—
1,132.5
$ 17,603.3

1999
(Restated)

1998
(Restated)

329.9
6.5
4.5
0.3
2.0
—
0.5
343.7

1998
(Restated)

455.7
4.9
4.8
0.3
1.4
—
—
467.1

427.7
26.3
3.7
1.1
2.5
1.3
0.1
462.7

1999
(Restated)

289.4
13.9
6.2
3.2
9.0
1.9
10.1
333.7

1999
(Restated)

9,920.0
1,222.2
117.3
106.7
88.6
59.5
—
3,682.0
50.6
$ 15,246.9

Segmented Information (continued)

Years ended December 31, 2000, 1999 and 1998
(in millions of Canadian dollars)

INDUSTRY SEGMENTS (continued)

Amortization
Printing
Newspapers
Leisure and Entertainment
Web Integration/Technology
Broadcasting
Internet/Portals
Head Office

Additions to property, plant and equipment

Printing
Newspapers
Leisure and Entertainment
Web Integration/Technology
Broadcasting
Internet/Portals
Head Office

Assets

Printing
Newspapers
Leisure and Entertainment
Web Integration/Technology
Broadcasting
Internet/Portals
Investments in non-consolidated subsidiaries (note 4)
Forest Products (note 5)
Head Office

50 Quebecor Inc.

Segmented Information (continued)

Years ended December 31, 2000, 1999 and 1998
(in millions of Canadian dollars)

GEOGRAPHIC SEGMENTS

Revenues generated by:
Canadian operations

Revenues from Canada
Revenues from the United States
Revenues from Europe and other

United States operations
European operations
Other

Operating income before amortization, financial expenses, gains on dilution and reserve

for restructuring of operations and other special charges

Canada
United States
Europe
Other

General corporate income (expenses)

Assets

Canada
United States
Europe
Other
Head Office

2000

1999
(Restated)

1998
(Restated)

1,433.0
251.5
40.6
1,725.1
3,198.2
1,129.1
121.1
6,173.5

1998
(Restated)

256.3
399.2
169.8
34.7
860.0
(7.7)
852.3

2,687.4
18.0
5.0
2,710.4
6,676.5
1,361.2
166.7
$ 10,914.8

2000

421.7
1,127.6
169.6
63.2
1,782.1
8.0
1,790.1

2000

7,455.1
7,106.7
1,562.6
346.4
1,132.5
$ 17,603.3

2,302.3
199.5
1.5
2,503.3
4,388.6
1,406.6
141.8
8,440.3

1999
(Restated)

389.8
696.8
180.1
40.1
1,306.8
2.5
1,309.3

1999
(Restated)

6,578.8
6,408.2
1,317.4
891.9
50.6
$ 15,246.9

Quebecor Inc.

Notes to Consolidated Financial Statements

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

Quebecor Inc. is incorporated under the laws of Québec.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements are prepared in conformity with Canadian generally accepted accounting principles. The material differences between
generally accepted accounting principles in Canada and in the United States are described in note 21.

Accounting changes

Effective January 1, 2000, the Canadian Institute of Chartered Accountants (“CICA”) changed the accounting standards relating to the accounting for income taxes
and the accounting for employee future benefits, including pension and non-pension postretirement benefits.

(a) Income taxes

In December 1997, the Accounting Standards Board issued Section 3465 of the CICA Handbook, Income Taxes. Under the asset and liability method of Section
3465, future income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial
statements carrying amounts of existing assets and liabilities and their respective tax bases. Future income tax assets and liabilities are measured using enacted
or substantively enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Future income tax assets
and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Future income tax assets are recognized and if
realization is not considered “more likely than not” a valuation allowance is provided.

The Company has adopted the new recommendations of the CICA in 2000 and has applied the provisions of Section 3465 retroactively. The cumulative effect of
this accounting change for income taxes is reported as a restatement which increased the opening balance of retained earnings for the year ended December 31,
1998 by $3.5 million.

Accordingly, the financial statements for the years ended December 31, 1999 and 1998 have been restated to comply with the provisions of Section 3465. In
addition to restating the future income tax accounts, an allocation between short- and long-term portions is now presented in the consolidated balance sheets.

(b) Employee future benefits

In March 1999, the Accounting Standards Board issued Section 3461 of the CICA Handbook, Employee Future Benefits. Under the Section 3461, the Company
is required to accrue, during employees’ active service period, the estimated cost of pension, retiree benefit payments other than pensions, and workers’ com-
pensation. The Company previously expensed the cost of postretirement benefits other than pension, which are principally health care, as claims were incurred
by the employees and paid by the Company. In addition, the Company will now use the corridor method to amortize actuarial gains or losses (such as changes
in actuarial assumptions and experience gains or losses). Under the corridor method, amortization is recorded only if the accumulated net actuarial gains or
losses exceed 10% of the greater of accrued pension benefit obligation and the value of the plan assets. Previously, actuarial gains and losses were amortized
on a straight-line basis over the average remaining service life of the employees.

The Company has elected to recognize this change in accounting on the immediate recognition basis retroactively. The cumulative effect of this accounting
change for pension and postretirement benefits other than pension is reported as a restatement which decreased the opening balance of retained earnings for
the year ended December 31, 1998 by $10.2 million.

Accordingly, the financial statements for the years ended December 31, 1999 and 1998 were restated to comply with the provisions of Section 3461.

52 Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting changes (continued)

The following summarizes the impact of applying Sections 3465 and 3461 on income before income taxes, net income, earnings per share, and retained
earnings for the years ended December 31, 1999 and 1998 and retained earnings as at December 31, 1997. The presentation of property, plant and equipment,
goodwill, future income taxes, other liabilities and non-controlling interest are also affected by these changes.

As previously reported
Effect of Section 3465
Effect of Section 3461

As restated

As previously reported
Effect of Section 3465
Effect of Section 3461

As restated

As previously reported
Effect of Section 3465
Effect of Section 3461

As restated

Income before
income taxes

Net
income

481.0
(2.1)
(1.6)

Net
income

172.7
1.2
(1.6)

693.0
—
(2.3)

690.7

477.3

414.9
—
(2.3)

412.6

172.3

Earnings
per share

7.43
(0.03)
(0.03)

Retained
earnings
1999
1,387.7
2.6
(13.4)

7.37

1,376.9

Earnings
per share

2.64
0.02
(0.02)

Retained
earnings
1998
944.4
4.7
(11.8)

2.64

937.3

Retained
earnings
1997
828.4
3.5
(10.2)

821.7

Consolidation and long-term investments

The consolidated financial statements include the accounts of Quebecor Inc. and all its subsidiaries (the “Company”). The investments in non-consolidated
subsidiaries, Vidéotron Ltée and Groupe TVA inc., which operate cable television and broadcasting regulated businesses, respectively, and which are under the con-
trol of trustees until the Canadian Radio-television and Telecommunications Commission (“CRTC”) approves the transfer of their control of those businesses to the
Company, are accounted for by the equity method. The investments in subsidiaries held for resale are accounted for by the cost method.

Investments in joint ventures are accounted for using the proportionate consolidation method. Joint ventures represent a negligible portion of the Company’s
operations. Investments in companies subject to significant influence are accounted for by the equity method. Investments in other affiliated companies are
accounted for by the cost method.

Foreign currency translation

Net assets of self-sustaining foreign operations are translated using the current rate method. Adjustments arising from this translation are deferred and recorded
as a separate item under shareholders’ equity and are included in income only when a reduction in the investment in these foreign operations is realized.

Other foreign currency transactions entered into by the Company are translated using the temporal method. Translation gains and losses are included in income
except for unrealized gains and losses arising from the translation of long-term monetary assets and liabilities which are deferred and amortized on the straight-
line basis over the remaining life of the related items.

Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, related amounts of revenues and expenses and disclosure of contingent assets and liabilities. Significant areas
requiring the use of management estimates relate to the determination of pension and other employee benefits, reserves for environmental matters and for the
restructuring of operations, the useful life of assets for amortization and evaluation of net recoverable amount, the determination of fair value of assets acquired
and liabilities assumed in business combinations, provisions for income taxes and the determination of the fair value of financial instruments. Consequently, actu-
al results could differ from those estimates.

Derivative financial instruments

The Company uses various derivative financial instruments to reduce its exposure to fluctuations in interest rates and foreign currency exchange rates. The Company
does not hold or issue any derivative financial instruments for speculative trading purposes. These instruments are accounted for on an accrual basis. Realized and
unrealized gains and losses on these financial instruments are deferred and recognized in income in the same period and in the same financial statement category
as the income or expense arising from the corresponding hedged positions.

Cash and cash equivalents

Cash and cash equivalents include highly liquid investments purchased three months or less from maturity and are stated at cost, which approximates market value.

Temporary investments

Temporary investments are recorded at the lower of cost and market value.

Inventories

Inventories are valued at the lower of cost or market value. Cost is determined using the first-in, first-out method. Market value is net realizable value for all inven-
tories, except for raw materials and supplies for which market value is replacement cost.

Investments in subsidiaries held for resale

Investments in subsidiaries acquired through the business acquisition of Le Groupe Vidéotron Ltée, which it is management intent to dispose of, are recorded at
their net realizable value, representing the future expected discounted cash flows up to the estimated date of disposal. If the market value of these investments
becomes lower than their carrying value, the latter would be reduced accordingly.

Property, plant and equipment

Property, plant and equipment are stated at cost, net of government grants and investment tax credits which are accounted for when qualified expenditures are
incurred. Cost includes financial expenses directly related to property, plant and equipment until they are ready for productive use.

Amortization is provided on the straight-line basis over the following estimated useful lives:

Assets
Buildings and leasehold improvements
Machinery and equipment

Estimated useful lives
20 years to 40 years
3 years to 20 years

54 Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Goodwill

Goodwill represents the excess of the purchase price over the fair value of net assets of acquired businesses. Goodwill is amortized using the straight-line method
over 10 to 40 years. Management reviews periodically the value and amortization period of goodwill. When circumstances or events indicate a possible decline in
the net recoverable amount for goodwill, an evaluation, on an undiscounted basis, of the future expected cash flows related to the plants or products which gave
rise to the goodwill is undertaken. As the case may be, the carrying amount of goodwill is then reduced.

Stock option plan

Holders of options under the stock option plan (the “Plan”) of Quebecor Inc. have the following choices when they want to exercise their options:

(a)

(b)

acquire Treasury shares at the corresponding option exercise price;
or
receive a cash payment from Quebecor Inc. equivalent to the difference between the market value of the underlying shares and the exercise price of the option.

The Company considers it probable that, in most cases, choice (b) will be privileged and, consequently, that the benefit attached to vested options under the Plan
should be accounted for as an expense, as for the other items of the compensation program. Thus, a liability is recorded. Subsequent adjustments to this liability,
originating from fluctuations in underlying share price and increases or decreases in the number of vested options, are recorded on a quarterly basis and included
in operating expenses.

Earnings per share

Earnings per share have been calculated using the weighted average number of shares outstanding during the year. The method of revenue attributable to funds
that would have been obtained from the exercise of warrants, options or their equivalents was used to determine their potential dilution effect.

1. FINANCIAL EXPENSES

Interest on long-term debt and convertible debentures
Interest on bank indebtedness
Securitization fees
Investment income
Other

Interest capitalized to the cost of property, plant and equipment and investments

2000

415.5
6.2
49.2
(20.0)
1.7
452.6

(13.3)
439.3

1999
(Restated)

1998
(Restated)

247.8
20.6
5.2
(0.5)
(5.0)
268.1

(9.1)
259.0

100.5
10.4
3.8
(0.1)
(1.7)
112.9

(16.9)
96.0

Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

2. RESERVE FOR RESTRUCTURING OF OPERATIONS AND OTHER SPECIAL CHARGES

This item includes the following:

(a) Printing segment

During the year ended December 31, 2000, Quebecor World Inc. pursued the activities underlying the restructuring plan which was originally established
in the fourth quarter of 1999. In addition, it implemented other restructuring initiatives in 2000. These decisions were taken in response to difficult market
conditions in Europe and implementation of the digital strategy resulting in termination of employees for a cost of US$18.0 million (CDN$26.6 million)
and write-down of assets for US$10.0 million (CDN$15.0 million). In 2000, Quebecor World Inc. utilized US$41.9 million (CDN$62.2 million) of restruc-
turing and other charges reserves which consisted of severance payments of US$28.8 million (CDN$42.7 million) for employees terminated during the year,
US$8.2 million (CDN$12.2 million) for facility closings and US$4.9 million (CDN$7.3 million) for other charges.

During 2000, management determined that some of the restructuring reserve originally established in the fourth quarter of 1999 would not be utilized
because of a change in management’s decision. The change in the reserve requirements stemmed primarily from a significant increase in the requirement
for manufacturing capacity to meet expected sales growth and newly contracted business which resulted in the retention of employees targeted for
termination of employment, and utilization of equipment originally targeted for shutdown or significantly reduced usage of capacity. As a result, a few
plants targeted for shutdown were kept open and equipment continued to be used.

Accordingly, the restructuring reserve reversal was included under the line item restructuring and other charges in the determination of income from
operations for the year ended December 31, 2000.

Committed to improving profitability and improving efficiencies and as a result of identifying opportunities to streamline operations and maximize the
integration of World Color Press (“WCP”) acquired in 1999 into its own operations, the subsidiary’s management committed itself to a restructuring plan
and recorded US$180.0 million (CDN$267.6 million) of restructuring and other charges in the fourth quarter of 1999. The actions undertaken included a
worldwide realignment of manufacturing capacity, the consolidation of administrative offices, and a streamlining of the overhead structure to reduce
operating expenses. The restructuring charge excluded any integration costs relating to WCP which were accrued as a liability assumed in the purchase
equation.

Restructuring charges consisted of US$99.8 million (CDN$148.3 million) related primarily to property, plant and equipment impaired as a result of the
decision to close several facilities; US$63.3 million (CDN$94.1 million) in work-force reduction costs which resulted principally from the closed facilities
and the consolidation of administrative offices and sales-force and other charges of US$16.9 million (CDN$25.2 million).

The fair value of assets determined to be written off was the result of independent appraisals and use of management estimates. The work-force reduction
costs primarily included severance, benefits and other personnel-related costs related to involuntary reduction of jobs worldwide related to plant closures,
duplicate position elimination, streamlining administrative management and implementation of a sales-force reduction program. Other charges included
US$8.0 million (CDN$11.9 million) for write-down of other assets and US$8.9 million (CDN$13.3 million) for other charges.

56 Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

2. RESERVE FOR RESTRUCTURING OF OPERATIONS AND OTHER SPECIAL CHARGES (continued)

(a) Printing segment (continued)

The following table sets forth the subsidiary’s 1999 restructuring reserve and activity against the reserve in 2000:

Original balance
Utilized in 1999

Cash
Non-cash

Translation adjustment
Balance as at December 31, 1999
Additional reserve
Utilized in 2000

Cash
Non-cash

Reversal
Cash
Non-cash

Write-down
of assets
148.3

Restructuring
charges
94.1

Other
charges
25.2

—
(17.0)
(3.9)
127.4
15.0

—
(121.6)

—
(24.3)
3.5
—

(13.3)
—
(2.6)
78.2
26.6

(61.6)
—

(18.3)
–
1.5
26.4

(1.3)
(12.4)
(0.5)
11.0
—

(0.6)
(7.1)

(2.0)
(1.1)
(0.2)
—

Total
267.6

(14.6)
(29.4)
(7.0)
216.6
41.6

(62.2)
(128.7)

(20.3)
(25.4)
4.8
26.4

Translation adjustment
Balance as at December 31, 2000

The subsidiary foresees the restructuring plan to be substantially completed by June 2001.

(b) Web Integration/Technology segment, Internet/Portals segment and Head Office

During 2000, the Web Integration/Technology segment recorded non-monetary compensation charges of $40.2 million relative to escrowed shares to be
remitted to selling shareholders of acquired companies. The escrowed shares are subject to a minimal period of employment from selling shareholders. Also,
management decided to close certain business units and recorded a reserve of $1.6 million in relation thereto.

Management of the Internet/Portals segment had to record a restructuring charge of $8.2 million following the decision to reduce its work-force and due
to write-down of equipment and other assets that will no longer be used in future operations.

A write-down of temporary investments and other assets of $58.6 million was recorded due to a decline in fair value as at December 31, 2000. Also, other
special charges of $1.5 million were recorded to reflect management’s decision to cease utilization of certain assets under operating leases by the
Broadcasting segment.

In 1999, the Leisure and Entertainment segment, Internet/Portals segment and Head Office recorded write-offs and write-downs of assets, principally
equipment, which suffered a permanent decline in their net recoverable amount, which totaled $5.9 million.

During 2000, management determined that a portion of the goodwill related to different business units of the Web Integration/Technology segment had
to be written down for an amount of $53.9 million before the non-controlling interest of $23.5 million. The write-down was recorded following the deci-
sion to close business units and the realignment of their strategies. Also, a write-down of $54.0 million before non-controlling interest of $23.3 million
of the goodwill related to the Internet/Portals segment was recorded to take into consideration revised expectations for this segment. These write-downs
were determined following an analysis of the undiscounted expected future cash flows.

In 1999, the Leisure and Entertainment segment recorded a write-down of goodwill which suffered a permanent decline in its net recoverable amount of
$4.5 million.

Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

INCOME TAXES

Total income tax expense was allocated as follows:

Income taxes
Goodwill amortization
Discontinued operation
Goodwill, for initial recognition of acquired tax benefits that

previously were included in the valuation allowance

Income tax expense (recovery) attributable to income consists of:

Current
Future

2000

227.9
(5.5)
121.9

—
344.3

2000

86.9
141.0
227.9

1999
(Restated)

1998
(Restated)

91.3
(1.1)
74.2

(0.5)
163.9

1999
(Restated)

103.5
(12.2)
91.3

123.7
—
142.3

(1.0)
265.0

1998
(Restated)

81.6
42.1
123.7

The following table reconciles the difference between the international statutory tax rate, which corresponds to the weighted average of the Canadian and
foreign statutory tax rates of the Company, and the effective tax rate used by the Company in the determination of net income:

International statutory rates
Increase (reduction) resulting from:

Effect of non-deductible charges and/or resulting from tax rate reduction
Change in valuation allowance
Other

Effective tax rate before the following item
Effect of the non-taxable gains on dilution
Effective tax rate

2000

1999
(Restated)

1998
(Restated)

26.1 %

31.9 %

33.5 %

3.3
2.1
1.5
33.0
(17.9)
15.1 %

—
(2.0)
(0.8)
29.1
(15.9)
13.2 %

—
(1.7)
(1.8)
30.0
—
30.0 %

58 Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

INCOME TAXES (continued)

The tax effects of significant items comprising the Company’s net future tax liability are as follows:

Future tax assets:

Operating loss carryforwards
Tax credit carryforwards
Reserve for restructuring of operations
Pension and postretirement benefits
Workers’ compensation
Goodwill
Other

Valuation allowance

Future tax liability:

Differences between book and tax bases of property, plant and equipment
Differences between book and tax bases of investments
Future tax liability related to the discontinued operation
Other

Net future tax liability

Less net future tax assets:

Current
Long-term

Net long-term future tax liability

2000

135.0
70.4
84.9
102.0
53.3
34.9
105.2
585.7
(72.3)
513.4

(720.6)
(116.0)
—
(192.9)
(1,029.5)

1999
(Restated)

135.1
69.9
148.7
97.5
24.9
37.9
115.4
629.4
(57.3)
572.1

(716.5)
—
(423.7)
(173.7)
(1,313.9)

(516.1)

(741.8)

87.1
92.0
(695.2)

84.0
—
(825.8)

The 2000 and 1999 amounts above include a valuation allowance of $72.3 million and $57.3 million respectively, relating to loss carryforwards and other tax
benefits available.

The valuation allowance for future tax assets as at January 1, 1999 was $61.7 million. The net change in the total valuation allowance for the year ended
December 31, 2000 is the result, among other things, of $16.1 million allocated to income from operations. In 1999, the valuation allowance decreased by
$4.4 million which resulted, among other things, from an increase of $4.5 million related to the acquisition of World Color Press, Inc. and a decrease of
$6.3 million allocated to income from operations.

Subsequent recognized tax benefits relating to the valuation allowance for future tax assets as at December 31, 2000 will be allocated as follows:

Income tax benefit that would be reported in the consolidated statement of income
Goodwill

39.9
32.4
72.3

As at December 31, 2000, the Company had net operating loss carryforwards for income tax purposes available to reduce future taxable income of $245.3 million,
expiring from 2002 to 2019, and $131.8 million which can be carried forward indefinitely. The Company also had tax credits of $70.4 million which do not expire.

The Company has not recognized a future tax liability for the undistributed earnings of its subsidiaries in the current and prior years because the Company
currently does not expect those unremitted earnings to reverse and become taxable to the Company in the foreseeable future. A future tax liability will be
recognized when the Company expects that it will recover those undistributed earnings in a taxable manner, such as through receipt of dividends or sale of
the investments.

Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

INVESTMENTS IN NON-CONSOLIDATED SUBSIDIARIES

Quebecor Media Inc., a subsidiary of Quebecor Inc., owns 100% of the shares of Vidéotron Ltée and an equity interest of approximately 36% (99.9% of the
voting rights) of Groupe TVA inc. The ultimate control over those cable television and broadcasting businesses is subject to the approval of the CRTC. Until this
approval is obtained, these businesses remain under the control of trustees.

The financial position of these non-consolidated subsidiaries as at December 31, 2000 and the results of their operations for the period of 70 days then ended,
taking into account the revaluation of assets and liabilities as part of the purchase price allocation, are as follows:

Condensed Consolidated and Combined Statements of Operations
For the period of 70 days ended December 31, 2000

Revenues

Operating expenses
Amortization
Financial expenses

Income before income taxes

Income taxes (credit)

Non-controlling interest

Income before amortization of goodwill

Amortization of goodwill, net of non-controlling interest

211.1

151.2
24.7
14.1

21.1

(7.5)
28.6
4.0

24.6

24.3

Net income and equity income from non-consolidated subsidiaries

0.3

Income taxes include an adjustment to reflect the reduction of federal income tax rates that should be enacted during the years when the temporary
differences will reverse.

Condensed Consolidated and Combined Balance Sheet
December 31, 2000

ASSETS
Current assets
Other assets
Goodwill

LIABILITIES
Current liabilities
Long-term debt
Future income taxes
Non-controlling interest

Investments in non-consolidated subsidiaries

60 Quebecor Inc.

363.7
1,471.6
4,945.0
6,780.3

331.6
1,104.1
237.8
231.6
1,905.1
4,875.2

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

5. DISCONTINUED OPERATION

Donohue Inc. (“Donohue”) operates an integrated forest products business which has mills in Canada and the United States. On April 18, 2000, Quebecor Inc.
held a 19.5% equity interest and a 63.1% voting interest in Donohue. Consequently, the financial statements of Donohue were consolidated with those of
Quebecor Inc. Donohue was the only interest Quebecor Inc. had in the Forest Products segment.

On that date, pursuant to an agreement between Abitibi-Consolidated Inc. (“Abitibi-Consolidated”), Donohue and Quebecor Inc., Abitibi-Consolidated pur-
chased all the outstanding shares of Donohue and paid in cash and in shares of Abitibi-Consolidated. Quebecor Inc. received $12.00 cash and 1.8462 shares of
Abitibi-Consolidated for each share tendered. The transaction was recorded as a reverse take-over of Abitibi-Consolidated by Donohue, as the latter’s share-
holders received a sufficient number of Abitibi-Consolidated shares to enable them to acquire control of this company. Quebecor Inc. holds an interest of
approximately 11% in Abitibi-Consolidated, in terms of both the number of shares and the voting rights held. Since Quebecor Inc. does not control nor
exercise a significant influence over Abitibi-Consolidated, this interest is accounted for as a portfolio investment. Consequently, the Forest Products segment
was considered a discontinued operation as of the first quarter of 2000. Donohue’s operating results are then presented separately since the first quarter of
2000, and until April 18, 2000, the disposal date, and comparative figures for 1999 and 1998 were accordingly restated. The gain on disposal amounts to
$235.0 million, net of income taxes of $94.2 million.

The following tables provide additional financial information related to the discontinued operation as at December 31, 1999 and for the years ended December 31,
2000, 1999 and 1998 (as restated following the change in accounting policies adopted retroactively in 2000).

Condensed Consolidated Statements of Operations

Revenues

Income before income taxes
Income taxes
Non-controlling interest
Contribution of the discontinued operation
Gain on disposal
Net income from the discontinued operation

Condensed Consolidated Balance Sheet

Current assets
Fixed assets
Goodwill
Other assets
Current liabilities
Long-term debt
Other long-term liabilities
Future income taxes
Non-controlling interest

2000

760.2

89.5
(27.7)
(50.7)
11.1
235.0
246.1

1999
(Restated)

2,394.9

295.3
(74.2)
(180.6)
40.5
—
40.5

1998
(Restated)

2,251.7

385.3
(142.3)
(198.8)
44.2
—
44.2

1999
(Restated)

805.3
2,667.6
154.4
54.7
(430.2)
(1,247.7)
(44.2)
(437.9)
(1,249.5)

Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

6. BUSINESS ACQUISITIONS AND DISPOSITIONS

During the year ended December 31, 2000, the Company acquired the following businesses, which have been accounted for by the purchase method and income
is included since the date of acquisition:

Geographic
segments

Acquired
interest

Date of
acquisition

CONSOLIDATED SUBSIDIARIES
Leisure and Entertainment segment
Les Éditions Libre Expression Ltée (1)
Occasions D’Affaires
Camelot-info inc.
Paragraph Book inc.
DM Diffusion Multimédia Inc.
Le SuperClub Vidéotron Ltée

Web Integration/Technology segment

Entrevision Inc.
Société Cythère S.A.
Digit Interactive Inc.
Beltron Technologies Inc.
Flow Systems Corporation
Andrew Duncan & Associates Limited
Imagix Multimedia Inc.
Quam s.r.l.
CCS Electronics (UK) Limited
MSM Interactive, S.A.
Yelo Limited

Canada
Canada
Canada
Canada
Canada
Canada

Canada
Europe and United Sates
Canada
Canada
United States
Europe
Canada
Europe
Europe
Others
Europe

Internet/Portals segment

9031-9146 Québec inc. (Réseau Contact/Match Contact)
I-Money corp.
Via Site
Netgraphe Inc.

Canada
Canada
Canada
Canada

50 %
100 %
100 %
100 %
51 %
100 %

100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
50 %
100 %

100 %
100 %
100 %
40 %

January 2000
February and March 2000
June 2000
September 2000
September 2000
October 2000

January 2000
February 2000
February 2000
March 2000
April 2000
June 2000
June 2000
July 2000
August 2000
August 2000
October 2000

February 2000
April 2000
April 2000
October and December 2000

NON-CONSOLIDATED SUBSIDIARIES
Cable television segment

Vidéotron ltée

Broadcasting segment

Groupe TVA inc.

(1) Previously a joint venture held at 50%.

Canada

100 %

October 2000

Canada

36 %

October 2000

On October 23, 2000, Quebecor Media Inc. completed the acquisition of Le Groupe Vidéotron ltée. This company operates in the cable television segment
(Vidéotron ltée), the broadcasting segment (Groupe TVA inc.) and the Internet/Portals segment (Netgraphe Inc.). Le Groupe Vidéotron ltée also owns investments
in subsidiaries that are now held for resale by Quebecor Media Inc.

During 2000, Quebecor World Inc. paid an amount of US$1.0 million (CDN$1.5 million) adjusting the purchase price of prior years’ business acquisitions in the
United States and in Peru. This amount was accounted for as an increase of goodwill. In addition, Quebecor World Inc. acquired the remaining non-controlling
interest in Inter-Routage in France for an amount of US$4.3 million (CDN$6.4 million).

Moreover, during the year ended December 31, 2000, the Company increased its interest in several of its subsidiaries in the Leisure and Entertainment segment,
Internet/Portals segment, Web Integration/Technology segment and in the Broadcasting segment.

62 Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

6. BUSINESS ACQUISITIONS AND DISPOSITIONS (continued)

Business acquisitions are summarized as follows:

1999

1998

(Restated)

Assets acquired
Cash and cash equivalents
Temporary investments
Non-cash current operating assets
Investments in subsidiaries held for resale
Property, plant and equipment
Investments in non-consolidated subsidiaries
Goodwill
Future income taxes
Non-controlling interest
Other

Liabilities assumed
Bank indebtedness
Non-cash current operating liabilities
Amounts payable to non-consolidated subsidiaries
Long-term debt
Convertible debentures
Future income taxes
Non-controlling interest
Other

Le Groupe
Vidéotron ltée

7.0
222.1
19.1
389.0
64.9
5,007.8
183.4
—
—
1.7

(344.8)
(133.6)
(91.0)
(8.2)
—
(0.7)
(42.0)
—

Net assets acquired at fair value

5,274.7

Consideration
Cash
Notes payable
Increase in the interest of non-controlling

shareholders

B Shares
Balance of purchase price payable

5,274.7
—

—
—
—
5,274.7

2000

Total

10.8
222.1
51.1
389.0
66.7
5,007.8
327.0
22.7
37.7
85.6

(346.6)
(164.6)
(91.0)
(9.3)
—
(0.7)
(140.7)
(0.1)

Other

3.8
—
32.0
—
1.8
—
143.6
22.7
37.7
83.9

(1.8)
(31.0)
—
(1.1)
—
—
(98.7)
(0.1)

147.8
—
971.4
—
1,567.6
—
3,711.2
58.5
15.0
109.2

(13.1)
(932.9)
—
(2,112.9)
(202.5)
—
(67.5)
(123.3)

192.8

5,467.5

3,128.5

187.5
—

—
—
5.3
192.8

5,462.2
—

—
—
5.3
5,467.5

2,131.5
90.5

906.5
—
—
3,128.5

25.4
—
86.4
—
114.4
—
371.6
—
13.8
9.1

(2.6)
(49.1)
—
(117.3)
—
(1.9)
(11.3)
(3.8)

434.7

430.2
—

—
4.5
—
434.7

Given the magnitude of the acquisition of Le Groupe Vidéotron ltée and due to the fact that Quebecor Media Inc. does not control the regulated subsidiaries,
the purchase price allocation has not been finalized as at December 31, 2000. Accordingly, the fair value of assets acquired and liabilities assumed could differ
from the amount presented in the financial statements. The significant elements where the fair values could be modified include fixed assets and intangible
assets of non-consolidated subsidiaries and investments in subsidiaries held for resale.

In 1999, Quebecor World Inc. acquired World Color Press, Inc. (“WCP”) for a purchase price of US$1.5 billion (CDN$2.2 billion). During 2000, Quebecor World
Inc. completed the purchase price allocation and adjusted the assets and liabilities acquired of WCP by US$78.6 million (CDN$116.7 million). The adjustment
related to the fair value of assets impaired resulted in an additional write-off of US$52.1 million (CDN$77.3 million). Other costs included US$21.4 million
(CDN$31.8 million) for plant shutdowns, US$7.3 million (CDN$10.8 million) related to workers’ compensation, which was based on underestimated claims,
US$21.2 million (CDN$31.4 million) for contract termination and write-down of related assets and US$23.3 million (CDN$34.6 million) for other reserves
recorded at acquisition. The tax impact on these adjustments was US$46.6 million (CDN$69.2 million).

Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

6. BUSINESS ACQUISITIONS AND DISPOSITIONS (continued)

In August 2000, Quebecor World Inc. sold the operating assets of its North American CD-Rom replication business for a total consideration of US$68.0 million
(CDN$101.2 million). The sale price was comprised of US$47.0 million (CDN$69.9 million) in cash and US$21.0 million (CDN$31.2 million) in special warrants
and promissory notes convertible into Q-Media shares. Quebecor World Inc. realized a gain amounting to US$13.4 million (CDN$19.9 million) which was
recorded as a reduction of selling and administrative expenses.

In 2000, the Company sold other businesses in the Printing segment. In 1999 and 1998, the Company sold businesses in the Printing, Newspapers and Leisure
and Entertainment segments.

7. ACCOUNTS RECEIVABLE

Trade
Other

2000

1,060.9
32.1
1,093.0

1999

1,383.7
205.5
1,589.2

During 2000, Quebecor World Inc. sold a portion of its Canadian trade receivables on a revolving basis under the terms of a Canadian securitization agreement
dated March 1998 (the “Canadian Program”). The Canadian Program limit is $125.0 million. As at December 31, 2000, the amount outstanding under the
Canadian program is $108.0 million ($100.0 million as at December 31, 1999).

In addition, Quebecor World Inc. also sold a portion of its US trade receivables on a revolving basis under the terms of a US securitization agreement dated
December 1999 (the “US Program”). The program limit was increased from US$408.0 million (CDN$611.8 million) to US$510.0 million (CDN$764.7 million) on
November 24, 2000. As at December 31, 2000, the amount outstanding under the US Program is US$500.0 million (CDN$749.8 million) (US$400.0 million
(CDN$577.3 million) as at December 31, 1999).

Quebecor World Inc. entered into these agreements where groups of trade receivables are sold under terms that transfer significant risks and rewards of
ownership to third parties; the transaction is recognized as a sale and the trade receivables are accordingly removed from the consolidated balance sheet.

Securitization fees vary based on commercial paper rates in Canada and the United States and, generally, provide a lower effective funding cost than
available under the bank facilities of Quebecor World Inc.

2000

379.0
338.9
78.9
796.8

1999

620.7
349.5
204.3
1,174.5

INVENTORIES

Raw materials and supplies
Work in process
Finished goods

INVESTMENTS IN SUBSIDIARIES HELD FOR RESALE

Quebecor Media Inc. owns investments held for resale in the following subsidiaries:

– Vidéotron Télécom Ltée; and
– Protectron Inc.

These investments were acquired in the acquisition of Le Groupe Vidéotron Ltée (note 6).

64 Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

10. PROPERTY, PLANT AND EQUIPMENT

Land
Buildings and leasehold improvements
Machinery and equipment
Projects under development

Cost

161.0
1,266.7
4,767.9
214.8
6,410.4

Cost
(Restated)
158.7
5,727.9
4,757.8
124.6
10,769.0

Accumulated
amortization

—
190.3
1,841.5
—
2,031.8

Accumulated
amortization
(Restated)
—
2,030.6
1,604.3
—
3,634.9

2000
Net
amount

161.0
1,076.4
2,926.4
214.8
4,378.6

1999
Net
amount
(Restated)
158.7
3,697.3
3,153.5
124.6
7,134.1

As at December 31, 2000, the cost of property, plant and equipment and the corresponding accumulated amortization balance included amounts of $404.1
million ($455.1 million as at December 31, 1999) and $195.7 million ($199.7 million as at December 31, 1999), respectively, for assets held under capital leases.

11. LONG-TERM DEBT

Quebecor Inc.

Revolving bank credit facility (i)
Non-revolving bank credit facility (ii)
Other debt

Quebecor World Inc. and its subsidiaries (iii)

Revolving bank credit facility (iv)
Commercial paper (v)
Acquisition bank credit facility (vi)
Senior subordinated notes (vii)
Senior subordinated notes (vii)
Senior debentures (viii)
Senior debentures (ix)
Senior notes (x)
Senior notes (xi)
Other debt and obligations under capital leases (xii)

Quebecor Media Inc.

Revolving bank credit facility (xiii)
Non-revolving bank credit facility (xiv)

Sub-total long-term debt, balance to carry forward

Effective interest
rate as at
December 31, 2000

Years of
maturity

8.30 to 9.00 %
8.34 %
5.25 to 7.42 %

2002
2001
2001 – 2014

7.29 to 7.42 % 2004 – 2006
2004
5.75 to 6.71 %
2002
7.56 to 7.70 %
2008
8.38 %
2009
7.75 %
2007
7.25 %
2027
6.50 %
8.42 and 8.52 %
2010 – 2012
2015 – 2020
8.54 and 8.69 %
2001 – 2010
0 to 10.54 %

8.17 to 8.31 %
8.28 to 8.31 %

2002
2001 – 2002

2000

122.0
900.0
8.9
1,030.9

561.7
322.5
187.4
388.1
435.6
224.9
224.9
374.9
181.4
179.7
3,081.1

74.0
1,936.9
2,010.9
6,122.9

1999

164.0
—
8.7
172.7

516.7
331.0
1,335.1
435.3
417.6
216.5
216.5
—
—
370.7
3,839.4

—
—
—
4,012.1

Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

11. LONG-TERM DEBT (continued)

Sub-total long-term debt, balance brought forward

Sun Media Corporation and its subsidiaries (iii)

Revolving bank credit facility (xv)
Senior subordinated notes (xvi)

Other subsidiaries of Quebecor Media Inc.(iii)

Miscellaneous debt

Donohue Inc. and its subsidiaries (iii)

Bank credit facility (xvii)
Senior notes (xviii (a) and (b))
Senior notes (xviii (b))
Other debt (xix)

Total long–term debt

Less current portion

Quebecor Inc.
Quebecor World Inc. and its subsidiaries
Quebecor Media Inc.
Other subsidiaries of Quebecor Media Inc.
Donohue Inc. and its subsidiaries

Effective interest
rate as at
December 31, 2000

Years of
maturity

2000

1999

6,122.9

4,012.1

7.13 %
9.50 %

2001 – 2005
2007

376.3
218.9
595.2

481.8
228.4
710.2

0 to 13.80 %

2001 – 2005

15.2

4.8

—
—
—
—

—
—
—
—
—

6,733.3

900.0
58.7
1,426.9
14.2
—
2,399.8
4,333.5

750.4
206.6
274.2
106.7
1,337.9

6,065.0

—
111.5
—
3.0
90.1
204.6
5,860.4

(i)

As at December 31, 2000, these borrowings were drawn on a bank credit facility of $300.0 million. The bank credit facility is a one–year revolving facility
that can be extended on a yearly basis. In the event it would not be extended, the outstanding borrowed amounts would convert into a one–year term
loan. The credit agreement governing this bank credit facility contains certain covenants, including the obligation to maintain investments in publicly
traded companies having a market value of at least 200% of the borrowed amounts. The borrowed amounts bear interest at floating rates based on
Bankers’ Acceptances rates or bank prime rate. The bank credit facility is secured by certain shares owned in certain subsidiaries of the Company and by
the shares of Abitibi–Consolidated Inc.

(ii)

The non–revolving bank credit facility of $900.0 million will mature on October 22, 2001. The borrowed amounts bear interest at floating rates based on
Bankers’ Acceptances rates or bank prime rate. The credit agreement governing this bank credit facility contains certain covenants, including the obliga-
tion to maintain investments in publicly traded companies having a market value of at least 200% of the borrowed amounts. The bank credit facility is
secured by certain shares owned in certain subsidiaries of the Company and by the shares of Abitibi–Consolidated Inc.

(iii) Debt of these subsidiaries are non–recourse to the parent company, Quebecor Inc.

(iv)

In April 2000, Quebecor World Inc. refinanced its existing revolving bank credit facility of US$1.0 billion (CDN$1.5 billion) by a new revolving bank cre-
dit facility composed of three tranches. The first tranche of US$250.0 million (CDN$374.9 million) matures in 2004 and provides liquidity back–up to the
commercial paper program of US$250.0 million (CDN$374.9 million) of Quebecor World Inc. The second tranche of US$250.0 million (CDN$374.9 million)
matures in 2005, while the third tranche of US$500.0 million (CDN$749.8 million) matures in 2006. The credit agreement governing these bank credit
facilities contains certain covenants among which is the obligation to maintain certain financial ratios. The revolving bank credit facility bears interest at
floating rates based on LIBOR or Bankers’ Acceptances rates. As at December 31, 2000, the drawings under this facility were all denominated in US
dollars.

66 Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

11. LONG-TERM DEBT (continued)

(v) As at December 31, 2000, $307.3 million ($331.0 million as at December 31, 1999) and US$10.1 million (CDN$15.2 million) (none in 1999) of notes are
outstanding under the commercial paper program and are classified as long-term since Quebecor World Inc. has the ability and the intent to maintain
such debt on a long-term basis and has a credit facility available until 2004 (see above) to replace such debt, if necessary.

(vi)

In 1999, Quebecor World Inc. had negotiated and obtained two additional credit facilities for a total initial limit of US$1.25 billion (CDN$1.9 billion) to
finance the acquisition of WCP. Those facilities consisted of a revolving credit facility of US$450.0 million (CDN$674.8 million) (US$450.0 million
(CDN$649.5 million) as at December 31, 1999) maturing in August 2002, available for general corporate purposes, and a term loan of US$800.0 million
(CDN$1.2 billion). At Quebecor World Inc.’s request, US$150.0 million (CDN$216.0 million) of the term loan was cancelled in December 1999. The
balance of US$650.0 million (CDN$965.2 million) was reimbursed and cancelled during 2000. These credit facilities bear interest at variable rates based
on LIBOR. As at December 31, 2000, the credit agreements contain certain restrictions, including the obligation to maintain certain financial ratios.

(vii) The Senior Subordinated Notes (the “Notes”) were issued by WCP in two series before it was acquired by Quebecor World Inc. The aggregate
principal amount of the first series is US$300.0 million (CDN$444.9 million) and the Notes are redeemable at the option of Quebecor World Inc. at a
decreasing premium between November 2003 and November 2006 and at par value thereafter. The aggregate principal amount of the second series is
US$300.0 million (CDN$444.9 million) and the Notes are redeemable at the option of Quebecor World Inc. at a decreasing premium between February 2004
and February 2007 and at par value thereafter. The Notes were revalued in order to reflect their fair value at the time WCP was acquired by Quebecor
World Inc. During 2000, Quebecor World Inc. repurchased on the open market US$42.4 million (CDN$63.0 million) at par. The aggregate principal amount
of the notes as at December 31, 2000 is US$257.6 million (CDN$386.3 million). The Notes contain certain restrictions on WCP, including limitations on
its ability to incur additional indebtedness.

(viii) These debentures are repayable in US dollars.

(ix) These debentures are redeemable at the option of the holder at their par value on August 1, 2004, and are repayable in US dollars.

(x)

(xi)

In July 2000, Quebecor World Inc. issued Senior Notes for a principal amount of US$250.0 million (CDN$369.5 million) comprised of two tranches. The
first tranche of US$175.0 million (CDN$262.4 million) matures on July 15, 2010, while the second tranche of US$75.0 million (CDN$112.5 million)
matures on July 15, 2012. These notes contain certain restrictions which are generally less restrictive than those of the revolving bank credit facility.

In September 2000, Quebecor World Inc. issued Senior Notes for a principal amount of US$121.0 million (CDN$179.8 million). The first tranche of
US$91.0 million (CDN$136.5 million) matures on September 15, 2015 and the second tranche of US$30.0 million (CDN$44.9 million) matures on
September 15, 2020. These notes contain certain restrictions which are generally less restrictive than those of the revolving bank credit facility.

(xii) Obligations under capital leases and other debt are partially secured by assets. In addition, a portion of $95.9 million ($266.0 million in 1999) is repayable
in euros, a portion of $10.4 million ($13.0 million in 1999) is repayable in Swedish krona and the balance of $73.4 million ($91.7 million in 1999) is
repayable in US dollars.

(xiii) This bank credit facility of $90.0 million is a one-year revolving facility that can be extended on a yearly basis. In the event it would not be extended, the
outstanding borrowed amounts would convert into a one-year term loan. The borrowed amounts bear interest at floating rates based on Bankers’
Acceptances rates or bank prime rate. The bank credit facility is secured by all the assets of Quebecor Media Inc.

(xiv) The non-revolving bank credit facility of $2.0 billion is composed of three tranches. The first and second tranche of $1.325 billion and $90.0 million,
respectively, mature on October 22, 2001. The third tranche of $585.0 million matures at the earliest of January 23, 2002 or the date when this tranche
will be replaced by a new bank facility to be granted to Vidéotron Ltée. The bank credit facility is secured by all the assets of Quebecor Media Inc.

(xv) The Senior bank credit facility is comprised of two tranches. The first tranche is a term loan maturing in 2005. The second tranche is a
revolving credit facility of $75.0 million ($100.0 million as at December 31, 1999) of which $1.1 million was used as at December 31, 2000 (none as at
December 31, 1999). The credit agreement governing this bank facility contains certain covenants, including the obligation to maintain certain financial
ratios, and certain restrictions, including a restriction on dividend payments by Sun Media Corporation. The facility bears interest at floating rates based
on Bankers’ Acceptances rates or bank prime rate and is collateralized by liens on all assets as well as shares of Sun Media Corporation and its subsidiaries.

Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

11. LONG-TERM DEBT (continued)

(xvi)

The Senior Subordinated Notes were issued in two series by Sun Media Corporation in 1997. Their outstanding principal amount as at December 31, 2000 was
US$97.5 million (CDN$146.2 million) and US$53.5 million (CDN$80.2 million), (US$97.5 million (CDN$140.7 million) and US$58.5 million (CDN$84.4 million)
as at December 31, 1999). The Notes were recorded at their fair market value of $230.6 million when Sun Media Corporation was acquired in 1999.

(xvii) The bank credit facility of US$855.0 million (CDN$1,234 million) consisted of four tranches as at December 31, 1999. The first tranche was a revolving
credit of US$200.0 million (CDN$289.0 million), or the equivalent in Canadian dollars, maturing in 2003. The second and third tranche consisted of term
credits of US$230.0 million (CDN$332.0 million) and US$300.0 million (CDN$433.0 million) payable in quarterly installments maturing in 2003 and 2005,
respectively. The fourth tranche, a revolving credit of US$125.0 million (CDN$180.0 million) up to 2000, became thereafter a term credit payable in quar-
terly installments maturing in 2005. During 1999, Donohue Inc. obtained a new revolving credit facility of $100.0 million, or the equivalent in US dollars,
maturing in 2000 and remained unused at the end of 1999. These credits bare interest at floating rates based on Bankers’ Acceptances rates, bank prime
rate or LIBOR. The credit agreement contained usual covenants such as the obligation to maintain certain financial ratios.

(xviii) a) The Senior Notes issued by a subsidiary of Donohue Inc. were redeemable at the subsidiary’s option on or after May 15, 2000, in whole or in part, at

a premium until 2003 and at par thereafter, plus accrued interest.

b) Repayable in US dollars.

(xix) Other debt includes a portion of $103.5 million repayable in US dollars.

Principal repayments on long-term debt in each of the next five years are as follows:

2001
2002
2003
2004
2005

12. OTHER LIABILITIES

Pension liability
Postretirement benefits
Reserve for unfavourable leases acquired
Reserve for environmental matters
Workers’ compensation accrual
Other

13. CONVERTIBLE DEBENTURES

Convertible Senior Subordinated Notes of a subsidiary, 6.0% (a)
Convertible debentures of a subsidiary (b)

Less current portion

Maturity
2007
2001

68 Quebecor Inc.

2,399.8
224.8
94.5
97.2
429.8

1999
(Restated)

133.0
156.6
83.1
27.1
24.8
86.2
510.8

1999
185.9
73.5
259.4
—
259.4

2000

138.9
119.7
79.2
26.6
41.3
77.1
482.8

2000
158.9
71.9
230.8
71.9
158.9

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

13. CONVERTIBLE DEBENTURES (continued)

(a)

(b)

The Convertible Senior Subordinated Notes mature on October 1, 2007. The notes were issued by World Color Press, Inc. (“WCP”) and revalued in order
to reflect their fair value at the time WCP was acquired by Quebecor World Inc. Since the acquisition of WCP by Quebecor World Inc., each US$1,000
tranche is convertible into 30.5884 Subordinate Voting Shares of Quebecor World Inc. and US$197.25 (CDN$284.69) in cash. The portion of the notes
related to the option to convert into Subordinate Voting Shares of Quebecor World Inc. was valued at the date of acquisition and classified as non-
controlling interest. The notes are convertible at the option of the holder at any time, and redeemable at the option of Quebecor World Inc. at a decreasing
premium from October 2000 to final maturity. Certain conditions apply to a redemption between October 2000 and October 2002. During 1999,
pursuant to the terms of the convertible notes, Quebecor World Inc. made a par tender offer for 100 % of the face value of US$151.8 million (CDN$219.1
million) under this offer, US$7.6 million (CDN$11.0 million) of outstanding notes were repurchased. Quebecor World Inc. subsequently repurchased notes
on the open market in 2000 having a principal amount of US$24.7 million (CDN$36.7 million). The aggregate principal amount of the notes, as at
December 31, 2000, is US$119.5 million (CDN$179.2 million) (US$144.2 million (CDN$208.1 million) as at December 31, 1999). If all outstanding notes
were converted into Subordinate Voting Shares of Quebecor World Inc., Quebecor World Inc. would have to issue 3,656,201 Subordinate Voting Shares
and Quebecor Inc.’s interest would decrease from 38.46% to 37.53%.

A French subsidiary of Quebecor World Inc. issued convertible debentures into shares of this subsidiary. The total amount of convertible debentures out-
standing as at December 31, 2000 is FF344.0 million (CDN$73.1 million) (FF344.0 million (CDN$76.0 million) as at December 31, 1999). Quebecor World
Inc. has the right to redeem these debentures. In addition, a portion of FF172.0 million (CDN$38.0 million) cannot be converted without prior approval
of Quebecor World Inc. The interest of Quebecor World Inc. in this subsidiary would decrease from 100% to 78.5% if the debentures were converted and
Quebecor World Inc. did not exercise its redemption rights. The convertible debentures bear interest at rates varying between 1.0% and 5.0% and mature
on December 31, 2001. A portion of these debentures has been discounted for accounting purposes at an imputed rate of 4.5% in order to establish its
fair value within the context of a business combination.

14. NON-CONTROLLING INTEREST

Non-controlling interest includes the interest of the non-controlling shareholders in the shares of subsidiaries of Quebecor Inc. As at December 31, 2000, the
most significant non-controlling interests in the participating shares of subsidiaries were as follows:

Subsidiary
Quebecor World Inc.
Quebecor Media Inc.

Sun Media Corporation (i)
Nurun Inc. (i)
Netgraphe Inc.(i)

Segment
Printing
Newspapers, Leisure and Entertainment, Web Integration/Technology,

Broadcasting and Internet/Portals

Newspapers
Web Integration/Technology
Internet/Portals

Non-controlling
interest

62 %

45 %
30 %
43 %
60 %

Sun Media Corporation, Nurun Inc. and Netgraphe Inc. are subsidiaries of Quebecor Media Inc.

15. CAPITAL STOCK

(a) Authorized capital stock

An unlimited number of Class A Multiple Voting Shares with voting rights of ten votes per share (herein referred to as “A shares”), convertible at any time
into Class B Subordinate Voting Shares on a one-for-one share basis.

An unlimited number of Class B Subordinate Voting Shares (herein referred to as “B shares”), convertible into A shares on a one-for-one share basis only
if a takeover bid regarding A shares is made to holders of A shares without being made concurrently and under the same terms to holders of B shares.

Holders of B shares are entitled to elect 25% of the Board of Directors of Quebecor Inc. Holders of A shares may elect the other members of the Board
of Directors.

Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

15. CAPITAL STOCK

(b) Issued capital stock

Number

A Shares
Amount

Number

B Shares
Amount

Balance as at December 31, 1999

24,673,569

11.0

39,911,853

336.6

Shares issued for cash upon the exercise of stock options
Shares redeemed
A shares converted into B shares

2,700
—
(623,586)

—
—
(0.3)

50,000
(12,000)
623,586

1.0
(0.1)
0.3

Balance as at December 31, 2000

24,052,683

10.7

40,573,439

337.8

Under a stock option plan established by Quebecor Inc., 1,702,612 B Shares have been set aside for officers, senior employees and other key employees of
the Company. The exercise price of each option is equal to the weighted average transaction price of B Shares on the Toronto Stock Exchange in the five
days preceeding the grant. Each option may be exercised during a period not exceeding ten years from the date it was granted. Options usually vest as
follows: 1/3 after one year, 2/3 after two years and 100% three years after the original grant. The Board of Directors may, at its discretion, affix different
vesting periods at the moment of each grant.

The following table provides details regarding changes to outstanding options for the years ended December 31, 2000 and 1999:

Balance at beginning of year
Granted
Exercised
Cancelled against cash payment
Cancelled
Balance at end of year

Vested options at end of year

2000
Weighted
average
exercise price

33.20
33.72
20.19
29.45
39.17
33.38

32.31

Options

1,115,317
526,000
(50,000)
(22,823)
(125,645)
1,442,849

375 515

1999
Weighted
average
exercise price

18.22
34.58
12.31
22.33
—
33.20

23.94

Options

222,834
1,002,817
(75,000)
(35,334)
—
1,115,317

144,849

The following table provides summary information regarding outstanding options as at December 31, 2000:

Range of
exercise price
15 to 20
$
20 to 25
25 to 30
30 to 35
35 to 40
40 to 45
15 to 45

Weighted average
years to maturity
3.6 years
—
10.0 years
8.9 years
8.7 years
9.4 years
8.8 years

Outstanding options
Weighted average
exercise price
17.85
$
—
26.01
32.52
36.97
42.19
33.38

Number
42,500
—
25,000
1,004,349
300,000
71,000
1,442,849

Vested options
Weighted average
exercise price
17.85
$
—
—
32.95
36.97
—
32.31

Number
42,500
—
—
233,015
100,000
—
375,515

70 Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

15. CAPITAL STOCK (continued)

For the year ended December 31, 2000, a charge reversal of $1.8 million (a charge reversal of $0.8 million and a charge of $2.3 million for the years ended
December 31, 1999 and 1998, respectively) relative to the plan was included under “Selling and administrative expenses” in the consolidated statements
of income.

16. TRANSLATION ADJUSTMENT

Balance at beginning of year

Effect of exchange rate variation on translation of net assets of self-sustaining foreign operations

Portion included in income as a result of reductions in net investments

in self-sustaining foreign operations

Balance at end of year

17. COMMITMENTS AND CONTINGENCIES

(a) Leases

2000

1999
(Restated)

(8.5)

131.5

23.9

0.4
15.8

(121.2)

(18.8)
(8.5)

The Company rents premises and equipment under operating leases which expire at various dates up to 2014 and whose minimum lease payments totaled
$1.035 billion. Minimum payments under these leases for each of the next five years are as follows:

2001
2002
2003
2004
2005

197.8
146.0
120.8
97.1
91.5

Operating lease rentals amounted to $189.7 million, $122.8 million and $94.8 million for the years ended December 31, 2000, 1999 and 1998, respectively.

(b) Fixed assets

As at December 31, 2000, Quebecor World Inc. had commitments to purchase fixed assets valued at approximately US$22.0 million (CDN$33.0 million).

The Company is subject to various laws, regulations and government policies, principally in North America and Europe, relating to health and safety, to the
generation, storage, transportation, disposal and environment emissions of various substances, and to the protection of the environment in general.
The Company believes it is in compliance with such laws, regulations and government policies, in all material respects. Furthermore, the Company does not
anticipate that the compliance with such environmental statutes will have a material adverse effect upon its competitive or consolidated financial position.

(d) Other

As part of the acquisition of Groupe TVA inc., Quebecor Media Inc. is committed to spend $27.0 million in the Canadian broadcasting industry and $3.0
million in the Canadian communication industry to promote the broadcasting content and development of communications.

Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

18. FINANCIAL INSTRUMENTS

The Company has operations and exports its products in several countries and is therefore exposed to risks relating to foreign exchange fluctuations. It is also
subject to risks relating to interest rate fluctuations. In order to reduce these risks, Quebecor Inc. and its subsidiaries make a portion of their borrowings in
foreign currencies and use derivative financial instruments. None of these instruments is held or issued for speculative purposes.

(a) Description of derivative financial instruments

(i) Management of foreign exchange risk

Forward foreign exchange contracts and foreign currency options:

Quebecor World Inc. and its subsidiaries
CDN$ / US

Less than 1 year
Between 1 and 3 years

US$ / Euro

Less than 1 year
Between 1 and 3 years

US$ / SEK

Less than 1 year

Euro / GBP

Less than 1 year
Between 1 and 3 years

Other

Less than 1 year
Between 1 and 3 years

Donohue Inc. and its subsidiaries
CDN$ / US

Less than 1 year
Between 1 and 3 years

CDN$ / GBP

Less than 1 year

Average
rate

2000
Notional
amount(1)

Average
rate

1999
Notional
amount(1)

0.6898
0.7008

183.8
241.8

0.6557
0.7117

156.1
112.9

1.0633
0.9033

21.0
3.2

0.9737
0.9026

9.6400

24.4

8.3286

0.6074
0.6222

—
—

—

61.2
3.4

40.5
0.6

—
—

—

0.6608
—

—
—

1.4925
1.4730

169.2
22.2

26.5

42.2
—

20.0
—

354.2
169.2

2.4227

18.8

(1) Exchange rates as at December 31, 2000 and 1999 were used to translate amounts in foreign currencies.

72 Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

18. FINANCIAL INSTRUMENTS (continued)

(a) Description of derivative financial instruments (continued)

(i) Management of foreign exchange risk (continued)

Cross-currency interest rate swap:

Quebecor World Inc. and its subsidiaries
US$ / Euro

Less than 1 year
Between 1 and 3 years

US$ / SEK

Less than 1 year
Between 1 and 3 years

Average
rate

2000
Notional
amount(1)

Average
rate

1999
Notional
amount(1)

1.0551
1.1355

132.9
38.3

0.3715
0.9578

8.1650
9.8450

27.5
22.8

8.1650
8.1650

38.4
15.1

26.5
26.5

(1) Exchange rates as at December 31, 2000 and 1999 were used to translate amounts in foreign currencies.

(ii) Management of interest rate risk

Quebecor World Inc. has entered into interest rate swaps to manage its interest rate exposure. Quebecor World Inc. is committed to exchange, at specific
intervals, the difference between the fixed and floating interest rate calculated by reference to the notional amounts. Quebecor World Inc. pays the
fixed rate and receives the floating rate on a notional amount of US$19.7 million (CDN$29.6 million) in euro currencies matching the payment terms of
a capital lease maturing in April 2003.

Sun Media Corporation has entered into a number of interest rate swap and cap agreements maturing in May 2002 in order to reduce its exposure to
changes in interest rates on its senior bank credit facility. The interest rate swap agreements have the effect of converting the interest on $100.0 million
of the senior bank credit facility from a floating rate plus the applicable margin (the “Margin”) to a weighted average fixed interest rate of 5.39% plus
the Margin. The interest rate cap agreements have the effect of limiting the interest on $100.0 million of the senior bank credit facility to a maximum of
5.31% plus the Margin.

Sun Media Corporation has also entered into a number of foreign exchange, fixed and variable interest rate swap agreements for 100% of its Senior
Subordinated Notes in order to reduce its exposure to changes in the exchange rate of the US dollar as compared to the Canadian dollar. The effect of
these agreements is to convert the obligation of Sun Media Corporation to service US dollar-denominated debt of $151.0 million into Canadian dollar-
denominated debt of $205.7 million at an average exchange rate of CDN$1.3622 to US$1.00.

In addition, these interest rate swap agreements have the effect of converting the interest rate on US$118.5 million of Senior Subordinated Notes from a
fixed rate of 9.5% to a weighted average fixed interest rate on CDN$161.4 million of 9.51%. These agreements also convert the interest rate on
US$32.5 million of Senior Subordinated Notes from a fixed rate of 9.5% per annum to a floating interest rate on CDN$44.3 million equal to the Bankers’
Acceptance rates plus 2.94% per annum.

Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

18. FINANCIAL INSTRUMENTS (continued)

(b) Fair value of financial instruments

The carrying amount of cash and cash equivalents, temporary investments, accounts receivable, amounts receivable from non-consolidated subsidiaries,
bank indebtedness, and accounts payable and accrued liabilities approximates their fair value as these items will be realized or paid within one year.

Financial instruments having a fair value different from their carrying amount as at December 31, 2000 and 1999 are:

Quebecor World Inc. and its subsidiaries
Long-term debt (including current portion)
Convertible debentures (including current portion)
Interest rate swap agreements
Forward foreign exchange contracts
Cross-currency interest rate swap agreements
Equity forwards

Sun Media Corporation and its subsidiaries
Long-term debt (including current portion)
Interest rate swap agreements
Interest rate cap agreements

Donohue Inc. and its subsidiaries
Long-term debt (including current portion)
Forward foreign exchange contracts and foreign currency options

Carrying
value

$ (3,081.1)
(230.8)
—
—
—
—

(595.2)
—
0.7

—
—

2000
Fair
value

$ (3,083.6)
(238.5)
(0.1)
(16.1)
1.9
1.9

(572.5)
0.1
0.3

Carrying
value

(3,839.4)
(259.4)
—
—
—
—

(710.2)
—
1.2

1999
Fair
value

(3,800.0)
(257.7)
(1.1)
12.6
2.3
—

(696.9)
1.4
1.6

—
—

(1,337.9)
—

(1,366.3)
11.0

The fair values of the financial liabilities are estimated based on discounted cash flows using year-end market yields of similar instruments having the
same maturity. The fair values of the derivative financial instruments are estimated using year-end market rates, and reflect the amount that the Company
would receive or pay if the instruments were closed out at those dates.

The Company is exposed to credit losses resulting from defaults by counterparties when using financial instruments.

When the Company enters into foreign exchange contracts and fixed interest rate agreements, the counterparties are international and Canadian banks
having a minimum credit rating of A- by Standard & Poor’s or of A3 by Moody’s. The Company does not foresee any failure by the counterparties in
meeting their obligations.

The Company, in the normal course of business, continuously monitors the financial condition of its customers and reviews the credit history of each new
customer. As at December 31, 2000, no customer balance represents a significant portion of the Company’s consolidated trade receivables. The Company
establishes an allowance for doubtful accounts that corresponds to the specific credit risk of its customers, historical trends and other information on the
state of the economy.

The Company believes that the product and geographic diversity of its customer base is instrumental in reducing its credit risk, as well as the impact on
the Company of fluctuations in local market or product-line demand. The Company has long-term contracts with most of its largest customers. The
Company does not believe that it is exposed to an unusual level of customer credit risk.

74 Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

19. RELATED PARTY TRANSACTIONS

During the year, the Company purchased raw materials from Donohue Inc. The purchases amounted to $29.5 million ($89.3 million and $44.1 million for the
years ended December 31, 1999 and 1998) in 2000 up to the date that the control over Donohue Inc. ceased. These transactions were concluded at prices and
conditions similar to those prevailing on the open market.

20. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

The Company maintains defined benefit pension plans for its employees. The Company’s policy is to maintain its contribution at a level sufficient to cover
benefits. Actuarial valuations of the Company’s various pension plans were performed during the last three years.

The Company provides postretirement benefits to eligible employees. The costs of these benefits, which are principally health care, are accounted for during
employees’ active service period.

The following tables provide a reconciliation of the changes in the plans’ benefit obligations and fair value of plan assets for the years ended December 31,
2000 and 1999 and a statement of the funded status as at these dates:

Change in benefit obligations:

Benefit obligations at beginning of year
Service costs
Interest costs
Plant participants’ contributions
Plan amendments
(Disposition) acquisition
Curtailment loss (gain)
Settlement loss
Actuarial loss (gain)
Change in assumptions
Benefits and settlements paid
Foreign currency changes
Other
Benefit obligations at end of year

Change in plan assets:

Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Plan participants’ contributions
Curtailment loss (gain)
Settlement loss
(Disposition) acquisition
Benefits and settlements paid
Foreign currency changes
Fair value of plan assets at end of year

2000

1,602.5
36.5
79.3
7.9
0.7
(607.0)
0.4
0.3
38.5
12.8
(82.0)
28.7
—
1,118.6

2000

1,612.8
79.8
31.7
7.9
8.1
—
(653.0)
(82.0)
26.9
1,032.2

Pension
benefits
1999

1,298.0
54.6
101.4
8.0
—
283.6
(2.8)
—
(40.3)
—
(73.9)
(37.1)
11.0
1,602.5

Pension
benefits
1999

1,237.5
153.9
44.0
15.9
—
(3.3)
266.6
(73.9)
(27.9)
1,612.8

Postretirement
benefits
1999

115.0
3.6
9.0
0.5
—
51.5
—
—
(4.2)
—
(9.1)
(3.8)
—
162.5

Postretirement
benefits
1999

—
—
8.6
0.5
—
—
—
(9.1)
—
—

2000

162.5
2.5
8.9
0.7
(7.2)
(44.0)
(1.0)
—
5.5
1.2
(15.8)
3.6
—
116.9

2000

–
–
15.1
0.7
—
—
—
(15.8)
—
—

Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

20. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS (continued)

Reconciliation of funded status:

Excess of benefit obligations over fair value of plan assets at end of year
Unrecognized actuarial (gain) loss
Unrecognized net transition asset
Unrecognized prior service cost
Valuation allowance
Foreign currency changes
Net amount recognized

Amount recognized in the consolidated balance sheets is as follows:

Accrued benefit liability
Prepaid benefit costs
Net amount recognized

2000

(86.4)
(24.1)
(6.2)
3.9
(7.7)
(0.1)
(120.6)

2000

(170.9)
50.3
(120.6)

Pension
benefits
1999

10.3
(64.0)
(6.6)
2.9
(11.3)
1.5
(67.2)

Pension
benefits
1999

(147.8)
80.6
(67.2)

Postretirement
benefits
1999

(162.5)
(4.6)
—
—
—
0.1
(167.0)

Postretirement
benefits
1999

(167.0)
—
(167.0)

2000

(116.9)
1.8
—
(7.1)
—
—
(122.2)

2000

(122.2)
—
(122.2)

The unrecognized net transition obligation is being amortized over the expected future service periods of employees.

Components of the net benefit costs are as follows:

Service costs
Interest costs
Expected return on plan assets
Amortization of prior service costs
Amortization of transitional

obligation

Curtailment loss (gain)
Valuation allowance
Amortization of actuarial (gain) loss
Net benefit costs

2000

36.5
79.3
(92.8)
0.3

(0.7)
—
(3.5)
(2.8)
16.3

1999

34.6
59.4
(63.4)
0.1

(0.4)
2.5
6.7
0.6
40.1

Pension
benefits
1998

31.7
45.8
(49.1)
0.2

(0.6)
—
0.5
0.1
28.6

2000

1999

Postretirement
benefits
1998

2.5
8.9
—
—

—
(0.7)
—
—
10.7

2.6
5.9
—
—

—
—
—
0.2
8.7

1.5
4.0
—
—

—
—
—
(0.1)
5.4

The weighted average assumptions used in the measurement of the Company’s benefit obligations are as follows:

2000

1999

Discount rate
Expected return on plan assets
Rate of compensation increase

7.7 %
9.7
3.7

7.9 %
9.2
4.4

Pension
benefits
1998

6.7 %
8.5
3.7

2000

1999

Postretirement
benefits
1998

7.7 %
—
—

7.9 %
—
—

6.7 %
—
—

76 Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

20. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS (continued)

The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligations was 8.8% at the end of 2000 and 7.2% at
the end of 1999 and is expected to decrease gradually to 5.0% in 2009 and remaining at that level thereafter. A one-percentage point change the assumed
health care cost trend would have the following effects:

Sensitivity analysis

Effect on service and interest costs
Effect on benefit obligations

Postretirement
benefits
1%
decrease
(0.6)
(6.1)

1%
increase
0.7
6.9

21. MATERIAL DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (“GAAP”) IN CANADA AND THE UNITED STATES

The Company’s consolidated financial statements are prepared in accordance with GAAP in Canada, which differ in some respects from those applicable in the
United States. The following tables set forth the impact of material differences between GAAP in Canada and GAAP in the United States on the Company’s
consolidated financial statements.

(a) Consolidated Statements of Income

2000

1999
(Restated)

1998
(Restated)

Net income, as reported in the consolidated statements of income per GAAP in Canada
Adjustments:

1,084.4

477.3

172.3

Foreign currency translation (i)
Business process reengineering (ii)
Reserve for restructuring (iii)
Derivative financial instruments (iv)
Net income from non-consolidated subsidiaries (v)
Income taxes (vi)

Net income as adjusted per GAAP in the United States (in Canadian dollars)

Earnings per share, as reported in the consolidated statements

of income per GAAP in Canada

Effect of adjustments, net of applicable income taxes
Earnings per share as adjusted per GAAP in the United States (in Canadian dollars)

—
—
(0.8)
—
(8.8)
0.5
1,075.3

16.78
(0.14)
16.64

8.9
0.7
(1.0)
6.4
—
—
492.3

7.37
0.23
7.60

(9.0)
0.7
–
(1.2)
—
—
162.8

2.64
(0.14)
2.50

Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

21. MATERIAL DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

(“GAAP”) IN CANADA AND THE UNITED STATES (continued)

(b) Consolidated Balance Sheets

Current assets
Portfolio investments (vii)
Investments in non-consolidated subsidiaries
Other assets
Current liabilities
Long-term debt
Future income taxes
Non-controlling interest
Retained earnings
Other comprehensive income

Canada

2,752.5
398.4
4,875.2
396.1
4,538.3
4,333.5
695.2
4,602.4
2,427.9
—

2000
United States

2,752.5
720.6
4,859.2
396.1
4,545.7
4,333.5
762.1
4,593.1
2,417.8
251.3

Canada
(Restated)

1999
United States
(Restated)

2,982.7
—
—
345.4
2,426.4
5,860.4
825.8
3,648.1
1,376.9
—

2,993.6
—
—
344.3
2,428.6
5,895.2
813.2
3,634.5
1,375.9
—

(i) Under GAAP in Canada, unrealized exchange losses arising from the translation of long-term debt denominated in foreign currencies are deferred and
amortized over the remaining life of the related debt. Under GAAP in the United States, these losses would have been included in income and,
consequently, no amount would have been deferred in the consolidated balance sheets under the item “Other assets”.

Under GAAP in Canada, as of the moment they are identified as a hedge for long-term monetary liabilities, exchange gains or losses on a foreign currency
future revenue stream are offset against the corresponding losses or gains on the hedged items. Under GAAP in the United States, a foreign currency future
revenue stream cannot constitute a hedge of long-term monetary liabilities.

(ii) Under GAAP in Canada, certain costs incurred in connection with consulting contracts or internal projects that combine business process reengineering
and information technology transformation were recorded in the balance sheets under the items “Other assets” or “Property, plant and equipment”, and
are amortized over periods varying between three to five years. Under GAAP in the United States, these costs must be included in income as incurred.

(iii) Under GAAP in the United States, a portion of the reserve for restructuring of operations included in “Accounts payable and accrued liabilities” would not
meet the criteria for recognition of a liability. In addition, a portion of the reserve for restructuring of operations related to the acquisition of Sun Media
Corporation in 1999, which was added to goodwill as allowed under GAAP in Canada, would have been expensed in the year under GAAP in the United
States.

(iv) Under GAAP in Canada, outstanding foreign currency forward and option contracts at year-end are off-balance sheet items. Under GAAP in the United
States, unrealized exchange gains or losses on foreign currency forward and option contracts must be accounted for in the income statement when they
do not constitute a hedge for a firm commitment.

(v) The financial statements of non-consolidated subsidiaries prepared in accordance with GAAP in Canada differ in some respects from those that would
have been prepared under GAAP in the United States. The material difference relates to income taxes where, under GAAP in Canada, substantially enacted tax
rates are used, while under GAAP in the United States, enacted tax rates have to be used.

(vi) Under GAAP in Canada, substantially enacted tax rates are used, while under GAAP in the United States, enacted tax rates have to be used.

(vii) Under GAAP in Canada, temporary investments are recorded at the lower of cost or market value while portfolio investments are carried at cost, unless
an other than temporary decline needs to be recognized. Under GAAP in the United States, trading and available-for-sale securities that have readily deter-
minable fair values shall be measured at fair value. Any fluctuation of securities bought and held for the purpose of selling them shall be included in
earnings, while fluctuations of other investments shall be recognized as a separate component of other comprehensive income.

78 Quebecor Inc.

Notes to Consolidated Financial Statements (continued)

Years ended December 31, 2000, 1999 and 1998
(Tabular amounts are expressed in millions of Canadian dollars, unless stated otherwise)

21. MATERIAL DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

(“GAAP”) IN CANADA AND THE UNITED STATES (continued)

The application of GAAP in the United Sates requires the disclosure of comprehensive income in a separate financial statement, which includes the net
income as well as revenues, charges, gains and losses recorded directly to equity.

Net income, as adjusted per GAAP in the United States
Difference between fair value and carrying value of portfolio investments
Translation adjustment(1)
Comprehensive income per GAAP in the United States

(1) Change for the year

22. ASSETS OF A SUBSIDIARY HELD FOR RESALE

2000

1999
(Restated)

1998
(Restated)

1,075.3
251.3
24.3
1,350.9

492.3
—
(139.4)
352.9

162.8
—
88.8
251.6

The acquisition of Le Groupe Vidéotron Ltée will enable the Company to acquire control over Groupe TVA inc. At the end of the quarter ended September
30, 2000, following consultations with authorities, management of the Company decided to sell TQS Inc. TQS Inc., owned at approximately 86%, is the only
asset of the broadcasting segment as at December 31, 2000. The sale of TQS Inc. would be subject to approval by the CRTC of the transfer of the broad-
casting license of TVA, owned by Groupe TVA inc.

23. COMPARATIVE FIGURES

Certain 1999 and 1998 figures have been reclassified to conform with the presentation adopted for the year ended December 31, 2000.

Quebecor Inc.

Dividends and Stock Market Price

The Company declares and pays dividends quarterly. Each Class A Multiple Voting Share (the “Class A Share”) and each Class B Subordinate Voting Share (the “Class
B Share”) are entitled to receive the dividends as determined by the Board of Directors, in an identical amount, at the same date and in the same form, as if such
shares constituted shares of a single class.

For the year ended December 31, 2000, the dividend declared and paid by the Company on Class A Shares and Class B Shares totalled $0.51 per share, while for
the year ended December 31, 1999, it totalled $0.48 per share.

The Class A Shares and the Class B Shares are listed on the Toronto Stock Exchange.

The following table sets forth the price range for the Class A Shares and Class B Shares on the Toronto Stock Exchange for the periods indicated:

CLASS A SHARE
Low

High

CLASS B SHARE
Low

High

$ 36.75
43.25
45.25
61.50

$ 23.00
34.60
38.00
36.25

$ 36.50
43.25
45.00
62.00

$ 23.25
34.60
37.00
36.25

CLASS A SHARE
Low

High

CLASS B SHARE
Low

High

$ 39.50
39.50
36.00
34.55

$ 34.30
35.25
31.50
31.25

$ 39.00
39.00
36.50
34.25

34.00
34.85
31.00
31.00

Quarter ended
2000
December 31
September 30
June 30
March 31

Quarter ended
1999
December 31
September 30
June 30
March 31

80 Quebecor Inc.

QUEBECOR INC.
Officers

Jean Neveu
Chairman of the Board

Érik Péladeau
Vice Chairman of the Board

Pierre Karl Péladeau
President and Chief Executive Officer

Monique Leroux
Senior Executive Vice President and
Chief Operating Officer

Claude Hélie
Executive Vice President and
Chief Financial Officer

Luc Lavoie
Executive Vice President,
Corporate Affairs

Marc Girard
Vice President and Treasurer

Jocelyn Pépin
Vice President, Control

Louis Saint-Arnaud
Vice President,
Legal Affairs and Secretary

Claudine Tremblay
Assistant Secretary

List of Directors and Officers

QUEBECOR INC.
Board of Directors

Alain Bouchard (3)
Chairman, President and Chief Executive Officer,
Alimentation Couche-Tard Inc.

Charles G. Cavell (1)
President and Chief Executive Officer,
Quebecor World Inc.

Michel Desbiens
Corporate Director

Pierre Laurin (2)
Executive in Residence,
École des hautes études commerciales

Claire Léger (2)
Chairman of the Board,
Groupe St-Hubert Inc.

Pierre Legrand, Q.C.. (2) (3)
Senior Partner, Ogilvy Renault

Raymond Lemay (1)
Corporate Director

The Right Honourable
Brian Mulroney, P.C., C.C., LL.D
Senior Partner, Ogilvy Renault and
Chairman of the Board,
Sun Media Corporation

Jean Neveu (1)
Chairman of the Board,
Quebecor Inc. and Quebecor World Inc.

Érik Péladeau (1)
Vice Chairman, Quebecor Inc.

Pierre Karl Péladeau (1)
President and Chief Executive Officer,
Quebecor Inc.,
President and Chief Executive Officer,
Quebecor Media Inc. and Chairman of the Board,
Nurun Inc.

Charles-Albert Poissant (1) (3)
Corporate Director

(1) member of the Executive Committee
(2) member of the Audit Committee
(3) member of the Compensation Committee