Quad/Graphics Inc (QUAD) 2005 Q4 法說會逐字稿

Welcome to the Quebecor World conference call. I would like to introduce your Chairperson, the Executive Vice President of Corporate Affairs of Quebecor Media Inc., Mr. Luc Lavoie.

Thank you very much. Good afternoon and welcome to the Quebecor World, Quebecor Inc. and Quebecor Media conference call for the fourth-quarter of 2005. My name is Luc Lavoie and I am the Executive Vice President, Corporate Affairs, Quebecor, Inc. and the moderator for today's call.

This call is being webcast and forward-looking statements are subject to Safe Harbor provisions. Again, this quarter because we released the results of Quebecor World and Quebecor, Inc. on the same day, we are holding a combined conference call. The process will be the following. We will begin with the presentation of the results of Quebecor World followed by a question-and-answer session with analysts. This should last approximately 45 to 50 minutes. This will be followed by a presentation of the results of Quebecor Media and Quebecor, Inc. and a question-and-answer session.

Joining me today from our offices in Montreal for the first part of this call are Pierre Karl Peladeau, President and Chief Executive Officer of Quebecor World and Quebecor, Inc.; Jacques Mallette, Executive Vice President and Chief Financial Officer of Quebecor World and Quebecor, Inc.; and Philippe Cloutier, Quebecor World's Director of Investor Relations. Pierre Karl will now provide some introductory remarks and give us an overview of our market segments. Pierre Karl?

Thank you, Luc. Good afternoon everyone and thank you for joining us. First I'd like to make a few comments on our overall strategy and what we're doing in the short, medium and long term to improve our performance. When we announced our three years retooling plan in July '04, we were under no illusion that this would be a quick fix. These problems in our organization and our industry were large and widespread. Internally we had not invested sufficiently in new technology for our North American and European magazine and catalog platform and we have been lax with respect to our fixed cost.

Externally we have lost three large customers in the U.S. and Europe, Conde Nast, Harris Publishing and Associate Newspaper Limited. This volume has gradually left our platform over the last 18 months. Also last year TV Guide another large account changed format and drastically reduced its volume which affected us in the fourth quarter. We are replacing the volume but it's taking place over time.

As well we are renewing existing customer in a more aggressive pricing environment. Our initial cost containment and cost reduction measures delivered a quick impact especially in the second half of 2004. And they serve as a wake-up call for our organization as a whole. These initiatives are ongoing throughout the old organization. We are looking at additional rationalization opportunities and related efficiencies. We are finding savings through smarter procurement, modern IT solutions and more effective use of our manufacturing platform.

Because of the dramatic spike in energy pricing, we have established a group to examine how we can reduce our costs and our consumption. But sustained and significant improvement will only be fully realized when our new equipment is operational.

The first new presses in our three-year plan start being installed in the third and mainly in the fourth quarter last year and will continue throughout '06 and '07. In the fourth quarter we experienced some temporary inefficiency to these startups but we are learning from them. The reality here is there are no shortcuts and there is a learning curve with each piece of equipment. By the end of this year, we expect to have installed 15 new wide web offset presses in North America and several presses in Europe.

We have assigned a special startup team to take care of the startups. They will help in two ways. First, a small group will be better able to analyze and learn from each successive startup. Second, plant manager won't be distracted from the regular duties. Another part of our action plan was to replace lost volume and to renew existing customers. We have come a long way as evidenced by our recent contract renewals with Time, Scholastic, [Art Card], Prime Media, McRoy, Best Buy, Walgreen's and new work from Yellow Book USA, Brookstone, Bass Pro, School Specialty to name a view. Some of this additional volume will come our way in '06 especially in Q4 but the bulk of it will only hit our platform in '07.

Prices in our industry have continued to be under negative pressure. But we intend to maintain a disciplined approach to sales. And we will focus on business where we have distinct competitive advantages. As for Europe, we recently announced an investment plan that will address many of the challenges that we're facing on this continent. We are installing now two new 4.3 meter gravure presses in our most efficient European gravure facility in Belgium. This plant is well-run and strategically located to serve many European markets.

We are investing in 64-page offset presses in Austria and Spain, two other markets where we have been having success. We have just concluded negotiation with our employees in the UK that is allowing our cost structure to return to market. In France, our negotiation with local unions are progressing slowly. As we had said any future investment is dependent on the outcome of these negotiations. There's still a lot of work to be done but we are cautiously optimistic that the harsh reality of our current situation in Europe is helping to focus everyone on finding common ground.

I will now comment on our weak performance in the fourth quarter compared to last year. It is attributable to several factors. The absence of an extra weekend we enjoy in 2004 which is equivalent to a 7% revenue loss for North America. By comparison the reporting period for the fourth quarter in '04 started earlier than in '05 and include extra days in September that comprise our busiest period of the year.

Higher energy costs. As you know energy prices peaked in the fourth quarter due in part to the damages sustained from the hurricanes. Fortunately prices are coming down in Q1. Start-up costs and inefficiencies associated with the new presses also affected our results in Q4. This was expected and we're pleased to report that four of five presses are now operating at or close to the expected level.

A major fire at one of our retail plants in a U.S. reduced capacity and forced us to shift work at the last minute at the busiest time of the year. This created inefficiencies and additional freight costs. In addition, we were negatively impacted in the fourth quarter and for the full year by reduced prices, some lost volume and operating difficulties in France and in the UK. Consequently in the fourth-quarter, Quebecor World earned $0.21 per share before goodwill and restructuring compared to $0.59 per share in the fourth quarter of last year.

Year-to-date earning per share on the same basis is $0.98 compared to $1.45. Revenue in the quarter was $1.6 billion. Year-to-date consolidated revenue was 6.2 compared to $6.3 billion last year. Operating income before restructuring was $87 million compared to 161 in the fourth quarter 2004. Year-to-date, operating income was $358 million compared to $471 million in 2004.

Before I turn this over to Jacques for a more detailed discussion on our financial results I will give you a brief rundown of our operation beginning with North America.

In the magazine and direct-mail, magazine volume decreased 9% for the fourth quarter and 5% for the year. This is primarily due to the gradual loss of volume from one customer and lower pages count with several large publishers. We have been very active on the sales front securing additional volume. In addition to timing, we also renewed multiyear agreement with Prime Media, Prime Media Business, Scholastic, Disney, ESPN and Wiener Media.

In the third and fourth quarter, we installed two new 48-pages presses in our Merced California and Dallas Texas facilities. This year additional new presses will be installed in five facilities. We will also be starting to upgrade the bindery and several of our magazine plans that will provide additional customer service and improved productivity. On the direct business, volume decreased 6% in the quarter and 1% to year-to-date. This is essentially because of the 53rd week in 2004. For the quarter if you exclude the impact of the extra week in utility prices, EBIT was roughly flat versus prior year.

In retail, volume was flat for the quarter and increased 5% for the year. This additional volume and increased paper sales helped offset lower pricing. Renewals in the fourth quarter include Best Buy, (indiscernible World, Walgreen's and Party City. As I mentioned earlier, our retail platform was handicapped by a major fire in one of our facilities in the quarter. Ordinarily this would have been no problem. But because it occurred at the peak time of the year we were forced to shift work around creating inefficiencies and additional freight costs.

In catalogs, volume decrease 6% for the quarter and 1% for the year. However, so far after a month in '06, industry indicators including sales, ad spending and catalog mails are all positives.

In the fourth quarter, we earned new business with Bass Pro Shops, California State Automobile Association and School Specialty which will start in the second quarter of '06. In addition, we renewed contracts with ABC Distribution, Adirondack Direct and Over Direct, Learning Tree and [Peta] Corporation. Catalogers having to cope with a 5.4% postal increase in the U.S. but our co-mail and [co-stitch] program are attracting customers and are helping to mitigate the increase.

In the fourth quarter we installed a new 64-presses in our Jonesboro Arkansas catalog facility which is now beginning to performing as expected. And the book in the directory volume shortfalls in price reductions negatively impact in the fourth quarter. In the book room volume was down 6% in the quarter and 3% for the year. Increasing competition from Asia and lower print runs are the primary factors as publishers attempt to reduce costs by lowering inventories. We expect this trend to continue in '06 which is why we are continuing to develop our Latin American platform as an alternative to Asia.

In directory volume was down 16% in the quarter due to the format change and run length of TV Guide and the unfavorable comparison with the extra week in '04. Although it's imprinted in one of our directory facility, as you know TV Guide is a magazine. If you exclude this customer and the impact of the extra week, our directory volume in the fourth quarter was essentially flat compared to last year.

In the quarter we add new 64-press to our book facility in Versailles, Kentucky and Taunton Massachusetts. Large volume gains in directory business would only begin in Q4 '06 and in '07.

In Canada volume decreased 7% in the fourth quarter and 1% for the full year primarily due to the comparison with the extra week in 2004. Volume was lower in the magazine segment but increased in retail and catalog. Pricing continued to be very competitive in all product groups but operating income and margins improved in the quarter and year-to-date due to cost control and additional operational efficiencies. In 2006, our Canadian platform will benefit less from favorable foreign exchange forward contracts as many expire at the end of 2005.

In Europe, we continued to struggle in the quarter and the full year due to France and the UK. We're hopeful that a new lower cost structure in our UK facility will permit us to rebuild the business with new equipment. Revenue and volume were down in Europe for the quarter and year-to-date. Some of the revenue decrease is related to the fact that we sold certain business as part of our restructuring plan. As I said earlier, we have recently concluded successful negotiation with our employees in Corbeil to bring this facility in line with market. Our plan has been to rearrange this facility to the UK magazine market and we recently won a significant contract with a large UK publisher to print their largest circulation magazine called EAT.

In Latin America, volume and revenues were up in the quarter and year-to-date. Volume increased 3% for the quarter and 5% for the year reflecting an increased directory volume in the fourth quarter and improved economy in Argentina; prices in the region generally remain stable year-to-date. Operating income and margin increase in '05 compared to '04 due to higher volume and improved efficiencies. Book revenue in Latin America increased 35% in the quarter and 44% year-to-date.

I will be back with some closing remarks but first Jacques Mallette will give you a more detailed review of our financial results.

Thank you, Pierre Karl. My remarks will also be limited results from our continuing operations. As Pierre Karl mentioned, fourth-quarter revenues were $1.7 billion and $6.3 billion year-to-date. This is a decrease of 9% and 1% respectively. The operating margin before restructuring and goodwill impairment for the quarter was 5.3% compared to 8.9% in the fourth quarter of last year. For the full year it was 5.7% compared to 7.4%. For the fourth quarter of '05, our operating income before restructuring was $74 million lower than a year before.

An analysis of the major items behind the variances allow us to come up with the following breakdown. The extra week in '04 accounted for a $12 million impact. France and the UK are responsible for 16 million; 9 million are related to higher energy prices. Those three factors account by themselves for approximately 50% of the variance. The remainder can be principally explained by the new press startup inefficiencies, the ripple effect on logistics of the fire in one of our retail facilities, and overall difficult market conditions.

The fourth-quarter results include impairment of assets and restructuring charges of $11.9 million or $0.08 per share compared to $48.5 million or $0.32 per share in the fourth quarter of '04. The non-cash component of $5.2 million is primarily related to the impairment of assets in Europe. The cash items of $6.7 million involve workforce reductions across the Company and the continuation of prior initiatives mainly in the UK and Sweden.

The 2005 restructuring initiatives will result in the reduction of 1100 positions with 950 already completed. The Company expects 80 new positions will be created in selected facilities. In the fourth quarter as part of its annual goodwill tests, the Company recognized a non-cash charge of $243 million before tax or $232.1 million after tax or $1.77 per share for goodwill impairment. The impairment is primarily related to the Company's operating businesses in France and in the United Kingdom. The non-cash charge will not impact Quebecor World's liquidity position in the Company is in compliance with all of its debt covenants.

Extraneous expenses including the impact of currency were lower by $10 million in the quarter and $42 million for the year. SG&A as a percentage of sales was 6.3%. The reported tax rate before restructuring and goodwill impairment was 36.2% compared to 30.6% in '04. Year-to-date the tax rate is 29.2%. Increasing the tax rate before restructuring and goodwill impairment is largely explained by valuation allowances on losses registered in certain countries.

In the fourth quarter, net income before restructuring and goodwill impairment was $38 million compared to $90 million in the same quarter of last year. On the same basis earnings per share was $0.21 compared to $0.59 in the fourth quarter last year. For the year, earnings per share was $0.98 compared to $1.45 last year.

In North America, revenues in the fourth quarter were $1.3 billion and down 5% compared to the fourth quarter in '04. Operating income for the quarter before restructuring was $89 million compared to $137 million and for the year it was $354 million compared to $421 million in 2004. The operating margin in the fourth quarter before restructuring was 6.8% compared to 9.9% last year. For the full year it was 7.2% compared to 8.7%.

In Europe, revenues were $277 million for the quarter compared to $377 million last year. In '05, revenues were $1.2 billion compared to $1.3 billion last year. Before restructuring and goodwill impairment, operating income in Europe was negative for the quarter and for the full year.

In Latin America, revenues in the fourth quarter increased 15% to $65 million. For the full year, revenues were up 26% to $242 million. Operating income and margins before restructuring increased to $3.7 million or 5.7% in the fourth quarter and $13 million or 5.4% year-to-date.

In the fourth quarter we closed the sale of our discontinued operations. These assets which were deemed to be noncore included approximately one dozen commercial printing facilities in the U.S. and Canada as well as our 51% interest in Quebecor (indiscernible) Canada. The proceeds have been used to cover a portion of our CapEx program in the fourth quarter. For 2006 including the impact of our European retooling program, we expect CapEx to be at the high end of our previous estimate of approximately $400 million.

With regard to our financing activities and liquidity position, in December, we have renewed and successfully extended our $1 billion credit facility until January 2009. During this process we welcome two new banks into our core group of syndicate bank partners.

As at year end we had over $780 million of available funds. More than enough for our planned cash needs for a year. In January, we also entered into in an agreement for EUR$136 million or for EUR136 million equipment financing that will be drawn over the next 24 months. This facility will be used to partially finance our North American retooling plan at very favorable rates compared to other financial instruments.

We also have [qualified] our U.S. and Canadian securitization programs to permit more flexibility in our reporting requirements and adapt the programs to our current credit rating levels. We also have the intention to obtain approximately $300 million of financing in the high yield market before the end of the second quarter. Proceeds from this financing would be used to repay our $250 million March maturing 7.2% senior notes. It is also our intention to redeem our $200 million Canadian Series 4 preferred shares before the end of the second quarter. These preferred shares shall be redeemed prior to any conversion into subordinated voting shares of the Company.

Today the Board of Directors declared a dividend of $0.10 per share on multiple and subordinate voting shares as well as our regular dividends on preferred shares. As we stated in an earlier press release, the reduced dividend will lower dividend payments by $21 million per year.

We will be happy to answer your questions in a few moments. But first I will turn the call back over to Pierre Karl for his closing comments.

Thanks, Jacques. As we have outlined, we are in the middle of a three-year retooling program that will need to improve margins that was led to improve margins. Again I should say there is no lack of quick fix in this business. We expect to continue to experience a continuing challenging pricing environment in 2006 and much of the new volume we have under contract will come over to our platform in the second half of this year and in 2007.

Our investment plan is the largest single order in the history of the printing industry. This year will see the bulk of our new equipment installed and we will work diligently to minimize any temporary inefficiencies that may result. At the same time, we will keep looking at how we can adjust to the marketplace, improve the press start up and find additional cost reduction across the platform including further restructuring to improve our efficiencies.

We will now take your questions.

First question, please. Operator?

(OPERATOR INSTRUCTIONS) Adam Shine with National Bank Financial.

Thanks a lot. Pierre Karl, as you pursue this restructuring effort in both North America and Europe and obviously much of it is focused on the retooling and modernization of the equipment, is there any view toward exiting some markets? Let alone pruning some of the niches you are exposed to? Can you talk a little bit about that or are you pretty much satisfied with the platform as it exists?

The line was not very good unfortunately but I think I have your question I think that it was related to Europe. I think I said in our last quarter I think that we need to differentiate the different countries that we're operating -- the problems were concentrated in France and in UK. UK mainly due to the loss of Associated Newspaper that I mentioned just quit entirely the facility starting Q3 and Q4.

We're actually at this stage pretty enthusiastic or optimistic about our capacity to rebuild the business. Don't forget that Associated Newspaper was roughly 65% of the volume that we were running when the plant was fully operational. So through Q3 and Q4 we went through significant headcount reduction which obviously impacted negatively our results. The last by the end of '05 and during January as I mentioned, we renegotiated significant headcount reduction, lower manning and better, more favorable compensation many ways from overtime and other issues that are related to running the facility.

We consider that now we have the appropriate environment and the decent measures to go forward with the investment. We are looking at this at the moment and we should make an announcement in the near future.

I will try to finish up for France. France I should say is a different situation. We've been trying to improve our efficiency by reducing headcount and try to take out the inefficient equipment. The legislation there is much more complicated. Lastly, you need to go through this process and unfortunately in the meantime we've been seeing some labor interruption that was unfavorable to our results.

We believe that we should continue to make sure that at the end of this process we will be in a position to have decent operating platform and it's our responsibility to make sure that we will go through the end of this process.

Jess (indiscernible) from UBS.

It's [Chris McGinnis] on behalf of Jeff. Just a question. I was hoping to get a little more concrete details of how you can improve margins in your North American operations post the completion of the investment plans. Or are these investments just going to sort of allow you to maintain margin? So if you can give us any detail or quantitatively or qualitatively as to how you will be able to improve margins, that would be great. Thanks.

It's all about our retooling program. And as I mentioned, we are in the middle of it. We are replacing what we have right now at capacity and install brand-new equipment that is larger and faster on top of which is highly automated and we are building them in pairs in our facility where we consider that we have the best efficiency. This process is now taking place and from the pricing that we don't have any control, but we certainly have control of our productivity. And through a manufacturing process, there is no other way to be able to improve your contribution and your margin other than having the proper equipment to do so.

So we are just in the middle of it and it will as I mentioned to you, no quick fix there. There is no forward cuts. This needs to be installed. This needs to run and then we will retire the less efficiency equipment. In the middle of the process we have hurdles that we will go through mainly because since not the equipment in install and therefore we're forced to run for a contractual reason to run the work on inefficient equipment that will be idle once the process is over.

Next question please.

Carl Bayard.

Thank you. I just saw that Donnelly put out a press release saying that they've now secured 100% of Verizon directories for North America. I was wondering, did you guys have a big piece of that business?

SBC is part of a larger conglomerate. We used to print Pack Bell in our Merced facility. I was not aware of this announcement. But I can tell you that this contract runs to December '07 and we intend to run it through the end of the contract.

So would you say this is likely to have a material impact on your business post December '07?

The situation as you probably know because we made the previous announcement about this is we will have much more volume taking place in '06 and '07 mainly coming from the Yellow Book business, Yellow Book USA. The equipment which we're running Pack Bell on is a combination of very efficient equipment and I guess middle of the road equipment. We will continue to use this equipment because there would be significant volume to handle coming from the Yellow Book USA that comes partly from and significantly I guess from Donnelly directory platform actually being printed.

The Harris Publishing business you mentioned, when did you guys lose that business?

At the beginning of '05.

So it is fully cycled through now?

Yes.

Thank you very much.

Randal Rudniski with Credit Suisse.

Thanks. First of all I wanted to ask for the North American platform if you exclude the contribution from foreign exchange, the extra week and fluctuations and paper revenues, what was the underlying revenue growth in North America, excluding those items? Because it looks like it was actually a pretty kind of a mid single digit number.

Of course if you look at the week we lost on average you're talking 7, 8% impact for the quarter. If you are to deduct that from our figures, you can see that basically our business has been more or less flat in the fourth quarter in North America.

You indicated in the MD&A that excluding some of these items, volumes were up in North America. Slightly, okay. And then secondly, I wanted to just talk a little bit about the European retooling and will the program be capacity neutral in terms of your overall print capacity over the duration of the program on both the offset and gravure portions? And can you also touch on the impact of the two gravure installations in Belgium, the impact of that on France where the bulk of your gravure capacity is? Thank you.

The machines that we are installing in (indiscernible) are 4 meter 32 machines. These are the latest equipment manufactured by KBA. Some of those machines have been installed in German facility in (indiscernible) and Nuremberg. We intend to run it and as I mentioned earlier with the most efficient plant. As I mentioned also it's central to Europe, can cover France and Germany and UK, Netherlands and Scandinavia. It's well-positioned. Regarding if it's going to be capacity neutral, we will see about the outcome of our negotiations that are taking place right now in France.

And on the outside portion of that program will that be capacity neutral as well?

We are taking some of the equipment that was running in Corby. We had two 96-pagers there which comprised of 16 units, eight had been installed in one of our most efficient equipment plant -- I mean in France -- and eight others would be installed, one in Barcelona, one in Madrid, to keep pace with additional requirements from a sales side. As I mentioned earlier, Spain is doing well and we expect it will continue to do well.

Austria would idle some of the older equipment, but we we're going to have a little bit more offset capacity because what we're idling is a 32-page M300, and it will be replaced by a LITHOMAN IV 64-page. What we are now looking at in UK would be capacity neutral.

And then if I may, just one last question. In previous MD&As for the quarterly results there was an indication was given in terms of the labor cost savings and I think it was 50 million or 52 million at the end of Q3 for the year. Can you give us the number for the full year of 2005?

I'm sorry I missed a piece of the question about the 52 -- what was the 52 that you were referring to?

Labor cost reductions in North America. I believe that was the number given in the Q3 MD&A I'm just asking if you have a number for the full year?

No. This is not an information that we disclose.

Terrific, thank you.

There are two more questions and then we will move to the second part of this conference call, the Quebecor, Inc. part questions.

Martin Toner from Genuity Capital Markets.

Thanks. I've got three questions. First one is can you quantify the impact on EBITDA in the quarter of the inefficiencies associated with press installations that was mentioned in the release?

Regarding the startup, what we should say is that we -- to the exception of two situation, we can say that startups of the new equipment was not so bad. I mean it was in fact -- the thing is that when you put the new machine in the facility then it's changing the environment dramatically which on top of which as you know because we mentioned Mount Morris fire was an event that basically scrambled the entire network and we have been asking the capacity that was installed to produce more to be able to meet our requirements at a very busy time of the year.

One of the machines that didn't start well was in the December period in Versailles and the other one in Taunton but what we are seeing right now is an improved situation and we believe that we will be able to get that situation solved, resolved in the very near future. I don't know if we want to number the aspect of it because it is not only related to the startup equipment where it's also in relation with the entire platform scramble that was taking place because of the fire.

It's hard to quantify but we can say between 5 and $10 million without being too precise. Then again, it's not that it wasn't expected when you start presses, you do have some efficiencies. On most of the equipment we've been following the ramp up curve of productivity fairly well.

Thanks. Second question in Q4 '04 you mentioned a $5 million positive impact from the extra week in Q4. This time you say there's a $12 million negative impact. Can you explain the difference? What is causing these two numbers to be different?

The question is for the full year versus the quarter?

Well, the extra week in the quarter more so more to the quarter, a $5 million impact positive last year; $12 million negative this year.

Again if you in 2004, our Q4 started on September 26. In 2005, our Q4 started on October 2. So the extra days picked up in 2004 occurred right during our peak period. If you look at -- so if you compare '03 and '04 and '04 and '05, there is a difference between the two.

Okay. And then the final question is can you tell me how many presses you currently operate?

Currently operate in our entire platform?

Yes.

I don't have the accurate number.

Ballpark is good.

About 400.

Okay, thank you.

Andrew Mitchell with Scotia Capital.

Thank you. Just a couple of big picture questions, Pierre Karl, can you just delve into your distinct competitive advantages a little bit for us? They were referred to a couple times I think in your release and I just wondered if you can enunciate what you think they are today? And then after the retooling is done, what you think they will be and how sustainable they are?

In other words as you look to the retooling you are seeing your competitors do, do you think you've got sustainable competitive advantages coming out of this retooling program from '07 forward for a couple of years? Or do you think in deteriorates rapidly as they catch up?

It depends, you know -- the segment that we're looking at because we got a different set of competition. First retail. Retail first of all, what we have as a competitive advantage is our capacity to be neutral process, or process neutral. As you know we have significant gravure facility and our plants are located geographically, well distributed in the U.S. from Fernley on the West Coast to Dallas to Upton, Pennsylvania, Memphis, that brings a pretty -- and Mount Morris Illinois -- a pretty strong coverage for the retailers. On top of which we have the offset capability from Riverside California to Nashville to Taunton, Massachusetts.

So being process neutral, we have the capacity to offer different length of inserts from short to long and also high-capacity versioning which is some of the trend that we're saying more and more taking place in the retail industry. On top of which we also have our Canadian platform that is also helpful for any additional capacity that we can run from our gravure facility, Islington, Toronto to the different offset facility from Edmonton to Montreal and Concorde, Ontario.

So this is something unique and as you know, our retail if it was not to the exception of Mount Morris fire which was had sort of a domino effect on our network, is pretty compelling and is uncomparable to any of our competition. Our competition in offset only operates in offset facilities in multiple plants. Yes, they are diversified but they are probably too small each of them.

On the gravure side we're basically the main player there. It is true that some of our competition from Quad and Donnelley operate some of the retail gravure program. But it's not as big as we do.

On the magazine side, it is a little bit about the same. I think that our Merced -- and I should say our catalog and magazine because if you talking offset, we have many well distributed plants throughout the entire United States. Merced will be a plant that we will build. It's one of the few large California plants and as you know California is growing and therefore we consider with the [timing] contract that we signed is one location that we would like to grow. On top of which we believe that we will be able to service much better the catalog market.

Freight is getting more and more expensive and therefore if you are able to offer more machine at the same time reducing the production cycle for a cataloger point of view is very important because it makes the production cycle shorter and the books in the mail and in the different address or homes much faster. We also have a very large gravure module on the catalog side from our Augusta facility, our Corinth and we would like to grow some of our other gravure facilities like Mount Morris to become even more involved on the gravure side of the business.

On the book side, we have -- we're servicing all the major markets from trade to educational. We do soft cover, hardcover, we do mass-market out of our Buffalo facility. I think what we need to do because this is probably the poor infant of our investment on top of the magazine and catalog offset and this is something that we will focus strongly in the near future. We need you have better equipment to produce mass-market books. Actually we're producing it in Buffalo with very old equipment and on a process that doesn't even exist anymore.

We bought Timson presses that will be able to replace significant amount of machine by much fewer. Those machines will be installed in the near future.

We're also in the middle of retooling our book trade facility, Fairfield and Martinsburg where we have roughly about 15 machines which at the end of the process will be replaced by four -- little man 4 which are zero make readies in fact we start one in Taunton facility recently and it delivered a significant amount of output. So this we believe is also something that we consider a competitive advantage on top of which we are now and we think that we made significant success by introducing what we call our Latin America or Spanish customer service cell located in our New York City.

So basically today a publisher is in a position to move some of the work in Latin America in a much lower cost base which is geographically closer than in China but it's handled by professional people that is able to deal in the same language, the same -- not only be language but also the type of words that you are using in the industry. And I think this is one of the reasons we've been same Latin America growing and we look forward to improve all this. This is basically what this plan is all about.

On the directory side, we are installing some brand-new equipment in our Islington facility where they will print newspaper during the night and will print directories during the day. This is brand-new equipment manufactured by KBA, highly automated that will reduce our labor costs significantly. That will be coupled also with the pretty decent network from our facility located in Laughlin, Colorado. We have an Iowa facility, [Beaumont] here in Québec and Hazelton, Pennsylvania.

So the network of our directory give us a lot of flexibility providing a better service to our customers. This is basically the main driver in North America. Our diversity, our capacity to be process neutral and our capacity to service many customers in many segments.

Thank you very much, Pierre Karl. Ladies and gentlemen, we will now be moving on to the second part of this joint Quebecor World, Quebecor, Inc. conference call.

My name is Luc Lavoie, Executive Vice President Corporate Affairs and I would like to welcome you to the Quebecor conference call for the fourth quarter of 2005. Joining me are Pierre Karl Peladeau, President and Chief Executive Officer of Quebecor, Inc.; Jacques Mallette, Executive Vice President and Chief Financial Officer of Quebecor; Pierre Francoeur President and CEO of Quebecor Media and President and CEO of Sun Media Corp.; Robert Depatie, President and CEO of Videotron; and Mark D'Souza, Vice President and Treasurer of Quebecor, Inc.; and Vice President (technical difficulty) this conference call on tape until March 17 by dialing 1-877-293-8133. I repeat 1-877-293-8133 or 1-403-266-2079 and access code #305789. I repeat the access code #305789. This information is also available on our website, www.Quebecor.com.

I now turn the floor over to Pierre Karl.

Thanks again, Luc. Good afternoon to those of you who are just joining our conference call. I would like to use this portion by saying that we're very proud of Quebecor Media performance for the year 2005; the deployment of new services, supportive strong review growth and increasing profitability. In the course of the year, Quebecor Media also announced major investments for its newspapers segments and strategic acquisition and various business segments in order to sustain future growth.

As for Quebecor World, it continues through a transition transitional period that is necessary to achieve its goal. It also set forth several crucial initiatives for instance the implementation of its retooling strategy that will improve efficiency, customer service and print productivity. Finally early in 2006, we announced the completion of a strategic review of its European operation which will result in a goodwill impairment charge of $243 million U.S. to be recorded in 2005 and a capital investment of approximately $250 million U.S. including $87 million for a project that has been initiated in 2005.

I will now ask Jacques to review our financial performance.

Thank you, Pierre Karl. On a consolidated basis, Quebecor, Inc. reported a net income of $70 million for the full year 2005 or $1.08 per basic share compared to a net income of $112 million or $1.74 per basic share in 2004. Lower operating income at our printing operations and some unusual expenses were partly offset by lower depreciation, financial and income tax expenses as well as unusual income of $126 million related to the remeasurement of our exchangeable debentures.

As previously mentioned, some unusual expenses negatively impacted net income in 2005 namely a $287 million goodwill impairment charge at Quebecor World resulting from the strategic review of its European operations; a restructuring charge of $114 million recorded at Quebecor World as a result of its initiatives to improve productivity; and a $60 million loss on the retirement in July 2005 of $140 million of principal of high yielding debt at Quebecor Media.

Revenues were down 3.8% in 2005 to $10.2 billion primarily as a result of continuing pricing and volume pressures at our printing operations as well as the unfavorable impact of currency translation which more than offset growing revenues at our media operations. EBITDA was down 10.9% at $1.5 billion. For the fourth quarter of 2005, the company reported a net income of $15 million or $0.23 per basic share compared to a net income of $59 million or $0.92 per share in 2004. Essentially lower operating income and the goodwill impairment charge at Quebecor World more than offset all year-over-year gains realized on the various expense items.

In the quarter, consolidated revenues were down 7.5% at $2.7 billion and EBITDA was down 18.7% at $409 million. As Pierre Karl mentioned in the introduction of this call, Quebecor Media's performance continued to show great momentum in 2005. It reported a net income of $96 million in 2005 compared to a net income of $88 million in '04 despite the unusual $60 million loss on the retirement of debt. Higher operating income and lower financial expenses explained the favorable trend.

Revenues were up 9.8% in '05 growing from $2.5 billion to $2.7 billion. All segments exhibited revenue growth with our cable operations reaching $1 billion in revenues for the first time of its history. Our Internet portals and business telecom segments also performed well with solid growth of 45 and 30% respectively.

EBITDA increased to $734 million in '05 from $697 million in '04. New product launches negatively impacting operating results of our broadcasting and newspaper operations partly offset the solid operating performance of our other segments especially at our cable business telecom and Internet portals operations that posted growth of 12%, 38% and 133% respectively.

For the last quarter of this year, Quebecor Media recorded net income of $58 million growing 19% over last year. Higher revenues, increasing from $696 million to $756 million contributed to EBITDA improving from $204 million to $213 million. Lower financial expenses also led to higher net income.

Finally I'd like to point out that on January 17, 2006, Quebecor Media completed a refinancing of high yielding debt at the holding company level by issuing a combination of high yield notes, institutional loans and bank debt. This refinancing will increase financial flexibility by extending the maturities, eliminating swap prepayment requirements as well as contribute to annual interest savings of approximately $80 million when including the impact of the partial retirement of debt that took place in July '05. Quebecor Media will report an after-tax loss on debt repayment of $206 million in connection with the impairments of the old notes.

I thank you for your attention, and I will now let Pierre Francoeur review Quebecor Media's operations.

Thank you, Jacques, and good afternoon everyone. Before reviewing Sun Media's business operations, I would like to draw your attention to recent highlights. First, on January 16, 2006, in order to remain the fastest Internet product in its markets, Videotron announced that it was to link a download speed of its allied high-speed Internet product from 300 to 600 kilobytes per second. The extreme product upload speed was also increased from 6.5 to 10 megabytes a second.

For the fall season, TVA's viewership ratings reached a BBN market share of 31%, which was higher than the market share of its two main competitors combined. Also in the fall season, TVA aired 19 of the 20 most watched TV programs. Last week TVA launched [Prezure], a French language specialty channel that airs all popular series and movies, including series from TVA's archive. Finally, on December 13, 2005, we announced the closing of the acquisition of Sogides, a major Québec book publishing and distribution group.

Let's now review the financial performance of our newspapers segment. Revenue decreased 1.8% in the fourth quarter to $242.8 million from $247.2 million last year, mainly due to an additional week of operations last year as a result of the timing of our fiscal year-end. After normalizing for the extra week, revenues would have increased 4.2% in the quarter. Our EBITDA declined 4% in the fourth quarter from $72.2 million last year to $69.3 million. The 53rd week in 2004 and the losses from our new start-up in Vancouver made up virtually all of the shortfall.

The operating margin in the quarter was 28.5% compared to 29.2% in 2004. Advertising revenues were relatively flat in the quarter, despite an extra week last year, as our community newspapers continue to show strong city top-line growth, and revenues in our (indiscernible) more than doubled. We also continued to experience strong sales in our Alberta urban dailies, due to the vibrant economy created by the oil industry.

Finally, we continue to increase market share in our urban daily newspaper markets for both (indiscernible) advertising and classified advertising, resulting in a 3.5% growth in our advertising [lineage] at our urban dailies, compared to the last quarter of the previous year. Circulation revenues declined 9% in the quarter, mainly due to the additional week in 2004 and (indiscernible) circulation strategies in our group to maintain circulation levels market share. These strategies included promotional home-delivered base pricing, incentive programs in Montreal and Toronto, a cover price reduction in Ottawa. Despite the declines in circulation revenues, we are very pleased by the resiliency of our circulation volumes in response to the launch of (indiscernible) in our markets. Other revenues increased 3%, mainly from growth and distribution of advertising fliers and inserts.

I would like to highlight some of Sun Media's initiatives during this quarter. First we made significant investments in our newspapers in Montreal and Toronto to strengthen the paid circulation numbers. These investments include the addition of a high-profile columnist, a redesign of the newspaper, and the introduction of promotional programs such as bingo.

Number two, in Toronto we started seven-day home delivery in the eastern part of the city, and to date we delivered 13,000 newspapers to Durham and York regions, and intend to roll out home delivery to Peel region and the city of Toronto by the end of the year.

Three, our newest free daily newspaper, Vancouver 24 Hours, continues to show encouraging growth in revenues, circulation, readership and acceptance. Revenues have grown almost 90% since last quarter, and the operating results have exceeded our expectation in the first year of operation. Pickup rates are currently at 90%. For the full year 2005, revenues increased 3.1% to 915.6 million from the 888.1 million generated last year. EBITDA decreased 2.5% from 227.8 million to 222.2 million. The EBITDA margin was 24.3% compared to 25.7% in 2004, the best among our Canadian newspaper publishing peers.

Quickly, following up on the performance of our 24 free commuter dailies, I want to point out that they continue to have a significant impact in their respective markets. Full-year revenues for all three publications have increased 151% from last year. Readership continues to strengthen, as 98% of our papers continue to be picked up in Toronto and Montreal, despite the circulation increases in the quarter. We believe that the formula is right for these products, and we will continue to see significant growth in future quarters.

We continue to realize overwhelming successes in our redesigned websites. To date, the websites for all six of our English urban dailies and all three of our free dailies are alive and active on the Web. During the fourth quarter, based on media metrics and online measuring standard, the average number of unit visitors to our urban website has grown by 30% over the last quarter to 1.2 million on a weekly basis. As a result, our urban online revenues have grown 33% over last year on a year-to-date basis.

The performance of our community papers is obviously an important contributor to our operating results. For instance, our newly launched small free dailies in Chatham and Sarnia, Ontario have virtually broken even after less than three months in the marketplace. We think that we have the right formula for all our community markets, and we will investigate other opportunities and markets that could support a free daily newspaper.

In summary, even with significant investments in our two largest operations and Montreal and Toronto, and investment in free daily newspapers, Sun Media continues to be the market leader in operating margins and to provide stable cash flow to its stakeholders.

I will now turn the floor to Robert Depatie for the review of the cable operations.

Thank you, Pierre, and good afternoon everyone. We are pleased to report another excellent quarter in Q4 2005. I know that we have reported our subscriber numbers a few weeks ago, but I would like to review them very quickly. We added 50,000 digital TV and 50,000 high-speed Internet customers in Q4 2005, virtually doubling the 25,000 and 26,000 respectively recorded in Q4 2004. For the full year 2005, we posted growth of 141,000 and 135,000 customers to our digital television and high-speed Internet services respectively. This compared to net additions of 93,000 and 96,000 digital television and high-speed data services in 2004.

During Q4 we also recorded net gains of 34,000 basic cable customers, more than tripling the 11,000 added in the same quarter of 2004. For the full year 2005, we realized net gains of 54,000 customers compared to 28,000 for the preceding year. On a reported last 12-month basis, we have once again maintained the highest percentage growth in basic cable, digital TV, and high-speed data customers among the other large cable companies in Canada. And we are entering 2006 with strong momentum.

Our residential telephony service continues to get tremendous market acceptance. We added 67,000 customers during the quarter to bring the total to 163,000 at the end of the year. As of December 31, 2005, our service was available to 64% of our homes passed. As part of our gradual [line] strategy, we started rolling out the service on the North Shore of Montreal in Q4 2005, which we completed in the month of January. As of today, our service is available to 68% of our homes passed. We intend to continue to roll out the service to be serving 95% of our footprint by the end of this year.

Operating revenues amounted to $278 million in Q4, an increase of $47 million or 20.3% compared to Q4 2004. Operating revenues for the full year reached the $1 billion mark, an increase of $130 million or 15% increase. The increase came primarily from the growth of our customer base, various price increases, and the launch of our residential telephony service. Our total cable ARPU net of programming credits jumped 14.9% from $47.93 during Q4 2004 to $55.09 in Q4 2005. This improvement reflects price increases and the growth of our bundled customers.

We recorded EBITDA of $100 million during Q4, compared to $88 million during the same quarter of 2004, representing a 13.9% increase. This improvement resulted from an increase in customer base and price increases, but was partially offset by higher operating expenses mainly incurred to support the launch of our telephony service. For the full year 2005, we recorded EBITDA of $382 million compared to $341 million in 2004, a 12% increase. Please note that excluding the impact of the set-top box subsidies which we expense in EBITDA rather than defer and amortize, EBITDA would have amounted to $419 million in 2005, for a margin of 41.8%.

Cash flow from operations before working capital changes amounted to $322 million for the year 2005, representing a $25 million improvement over the year 2004. Additions to fixed assets amounted to $192 million in 2005 compared to $123 million in 2004. This increase is mainly due to $67 million invested in the launch of our telephony service. We are expecting CapEx to increase to the 275 to $300 million range this year, as our modernization projects in Québec City and center of Québec are underway and the rollout of our telephony service will continue to require significant fixed and variable expenditures. We will also make investments in our information systems, improve customer service, and operating efficiency. We will incur some modest CapEx in connection with the launch of our wireless MVNO service.

We clearly achieved strong growth of our basic cable customer base in 2005, thanks to our bundled strategy in connection with the launch of our telephony service. But we also believe that the antipiracy measures taken by Bell ExpressVu in July 2005 positively impacted our growth. It is troubling to notice that during the two quarters that followed the adoption by Bell ExpressVu, the increased security measures we have been requesting for so many years, Bell ExpressVu and we have recorded our best quarterly customer growth performance since 2002. This seems to confirm that prior to those corrective actions, the Canadian television industry including broadcasting, distribution and production, was deprived from significant financial resources.

I thank you for your attention and will now let Pierre Karl conclude.

Thank you, Robert. First of all, let me congratulate you and all your team (indiscernible), all the employees and partners that we have the chance to work with. I'd like to extend my congratulation also to all our employees at Quebecor Media and to our Quebecor World employees that through a rough environment are keeping the lead to succeed successfully in the different businesses that we're operating.

So I will conclude by saying in 2005, Quebecor Media continued to build on the solid momentum established some years ago. Our business model based on integrating together different components of our media and telecom assets have brought significant upside to each component. We will pursue this strategy in the upcoming years to make our assets stronger together than working standalone.

The internal products and bundled offers, strengthened by the launch of our residential telephony service, are getting strong support in the marketplace, which translate into revenue and income growth. Despite investment in the launch of three free commuter dailies, Sun Media remains the leading Canadian newspaper publisher in terms of operating margins.

Finally, except where the TVA is going through a necessary investment period in its broadcasting and magazine operation, all other segments of Quebecor Media are exhibiting growth in their financial results. Obviously, as you can imagine, we are very disappointed by our result in Quebecor World. As we explained earlier, the challenging environment is forcing the Company to move forward with the previously announced large investment program which started at the end of 2005. We are confident that the capital expenditure program in North America and Europe, as well as the restructuring efforts, will bring the Company to the level of competitiveness required to benefit from the condition the print media marketplace is currently setting up.

I thank you for your attention. We are up now ready to answer questions.

Questions, please.

(OPERATOR INSTRUCTIONS) Vince Valentini from TD Newcrest.

Thanks very much. Robert, you caught me off guard a bit with your CapEx guidance, up approximately 100 million from what you spent in '05. Can you just remind me your capitalization versus expensing policy? My understanding is when you are selling new digital customers and telephony customers, you are expensing the equipment costs related to that. So that shouldn't be a big factor in your CapEx, but maybe I'm wrong.

Then secondly, you rolled out 64% of your territory with telephony in '05. You're only doing less than half of that in '06, so I'm finding it hard to see where the incremental fixed CapEx would come from. Québec City, we know what that amount is. It's not that dramatic, and I assume it's spread partially over '05 and '06. Can you give us a little more color on what causes CapEx to go up that much?

First of all, the set-top box for your information are not -- they charge for the [DA], but all the modems and the MTAs are charged to CapEx, as we provide the product base on a location free. So that is number one. So based on our plan, we see a substantial amount of CapEx next year based on our history coming from telephony, number one.

Number two, Quebec, we've done probably only a fifth of Québec City; it was around $29 million. So the majority which is 20 will be this year, plus we added center of Québec which is another $20 million approximately, which was not part of it. So it's based on -- and probably $10 million coming from our [Quatro], which is the mobile project. All the rest are success driven. So we feel that this $300 million is based on our plan and based on our growth.

Okay, a follow-up for Pierre Karl. You mentioned many times about the retooling program at Quebecor World. You seem very confident that is going to lead to improved results in the future. The way the share price trades, it certainly doesn't seem to indicate that people have much confidence that is going to happen, it seems to be trading off of the current earnings and the stock price, as I'm sure you've noticed, is depressed versus historical levels. So given your confidence in the future and the disconnect that seems to be there with the share price right now, is there a reason why Quebecor, Inc. or even yourself personally wouldn't step in and be buying Quebecor World shares here at these levels below $13?

That is a pretty big question, Vince. We certainly are not going to comment on this. This as it relates to (technical difficulty) Quebecor, and I can tell you that there's no matter of that kind of discussions are taking place right now at the Board level.

Okay, thanks.

Next question.

Chris Li with Merrill Lynch.

Thank you. I'm wondering if you can update us on when you plan to offer the wireless resell at cable?

Well, we apologize. You've just broken down. We didn't hear your question.

Sorry. Just wondering if you can give us an update on your wireless resale launch at cable?

Well, the only thing I can provide to you because of confidential reason and competitive reason is that were on plan. We're still planning to launch in the first half of this year, which we're going to take a bundle strategy approach.

And a follow-up with that is if the economics are right, attractive, in terms of acquiring some wireless spectrum, let's say, in the region of Québec, would you ever consider doing that in that future?

Well, we will consider everything, but it's not part of our plan currently.

And just one final question on cable as well. In light of the Bell's plans to increase some of his residential rates in second quarter of this year, can you maybe talk to a little bit about your plans for possible (indiscernible)?

I'm sorry, I don't know what's wrong with the line, but it keeps cutting. Can you repeat? I don't know what --.

Sure. Can you hear me now?

Yes.

I was just wondering if you can tell us a little bit about your thoughts about possible cable TV rate increases in light of what Bell is planning to do with their rates?

Well, again, we just can't mention everything that's that part of our policy. But let's put it this way, we'll never leave money on the table. If competition -- and we're the leader on top of that. So we have no intention to leave money on the table.

Thank you.

Greg MacDonald with National Bank Financial.

The question is on Videotron, and I'm wondering with the telephony product that's doing very well closing in within the next couple of quarters, probably at the 200,000 subscriber mark, I'm wondering there was made reference earlier to significant expenditures in telephony, and that's both on the CapEx and the OpEx side. I have a pretty good idea of what I expect on the CapEx side. But on OpEx, I'm wondering if we've come to the point where we've seen the worst impact on the cable margin and shouldn't we be looking at possible stability there and even potential growth in later 2006, as it looks like this product starting to ramp what I would assume is at pretty close to breakeven levels. Am I wrong in making that assumption?

No, you are not wrong. For every dollar that we spend, we generate a dollar of OpEx. But you're right, our margins should improve in terms of telephony. We have incurred all the OpEx costs. A big chunk of it as you know, launching telephony to 60% of your footprint, requires some resources which we did. So your comment about improving the margin is absolutely right.

Thanks. Just as a quick follow-on to that, you made mention of the CapEx impact or modest CapEx impact for your MVNO or your wireless launch. Could you give us some sense of what kind of OpEx impact that might allow us to see on the numbers going forward?

Well, OpEx is based on growth, right, and currently it's part of our plan. We have put a plan together, obviously, to come up with strategic action and resources needed. I just can't provide this information to the detail. But obviously, we believe this would not have a tremendous impact on our bottom line on the first year. So I don't know if I answered your question.

I can appreciate you don't want to get into detail. Is it safe to say then this is largely going to be a variable OpEx impact as opposed to some sort of lump impact that we might see within the next couple quarters as you launch?

Well, (indiscernible), there's a cost of starting up, as you know, mainly call centers; basically it because the network, we don't own it. So the cost will come from call centers. So it could be a bit of fix, but then variable, you're absolutely right. The balance is based on acquisition cost coming from CapEx on a variable basis. The $10 million is purely systems. The other one is based on the acquisition cost. So you are right. So OpEx will be not a significant in terms of starting cost versus telephony, IP.

That is very helpful, thank you.

Last question, please.

Tim Casey with Nesbitt Burns.

A couple questions here. First on cable, and then I want to go over to Sun. On cable, Robert, of the 300 million just on an order of magnitude basis, can you put some goalposts around what is left to spend in Québec City, what is to finish the rollout of the digital voice product, or if you can talk a little bit about how much of that is for digital circuit switch versus soft switch? And then any other buckets that are big? If you could just us, I'm with Vince, I'm just trying to figure out how we got to 300 million.

A follow-up on that, given the massive success you've had on signing up new customers, you said you don't want to leave any money on the table. I mean the person running Bell is clearly a disciplined price guy. We know that from Mr. Copes' history. He sent some very strong signals in Ontario that he's willing to play disciplined price. Can't one argue that there is money there to be had, that you can gently take up prices here and still have a pretty attractive unit growth?

Yes. Well, I'll start with the first question. First, I can't provide all the information because it's based on growth. Most of our CapEx, a big chunk of it, will come from a variable standpoint, i.e. IP telephony. So I just can't provide you the number that will give our forecast for the year. The second one, CapEx from Québec is around $20 million left. Region or center of Québec is around $20 million as well. The balance is just unusual maintenance cost and variable CapEx. But there's no special outside of what I said to you, which is the $10 million coming from our MVNO project and other CapEx costs coming from variable, i.e. IP telephony and mobile telephony.

Okay.

In terms of pricing, well, for your information we did put a price increase on our new basic line from $15.95 to $16.95. You've got to keep in mind that it's based on bundling. If you go on a regular one, if you're a customer that takes only our line, you'll pay $23.95. So it's exactly the price of our competition. We have increased our option as well by $1, and we have increased by more than $2 our long distance packages. So we have taken price increases. But our pricing strategy is fundamentally based on bundled triple play. Outside of that, our prices are not that aggressive.

Finally, as I said previously, we are not going to leave money on the table. So we are working on what we're going to do in the following months in terms of price increases.

Thank you very much. Second question on Sun Media is for Pierre. You mentioned you're rolling out home delivery. One would assume that's going to have a negative impact on margins. Is there any way you can -- first, do you agree with that; and second, is there any way you can quantify the OpEx investment required to roll out home delivery?

For sure, you know, it costs more to create the system, home delivery system, than just to sell copies via boxes or via dealers. But we are doing it gradually, so region by region. So yes, we will have a certain impact on the margin, but it's not very significant. And we have already begun that process in Q4 2005. So I don't see a huge impact on the OpEx.

Pierre, just to confirm, this is a Toronto only initiative?

Yes, that's true, because that is the only urban newspaper that doesn't have a home delivery system. All the rest of the Sun papers and the Montreal papers, we have home delivery implemented for many years.

Thank you.

Thank you very much, and that's the end of our call. See you next quarter.

Thank you very much, all.

Ladies and gentlemen, thank you for participating in the Quebecor conference call. On behalf of myself and the rest of our teleconference team, thank you for choosing Telus.