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Press release from Marketwire

TVA Group Reports $7.0 Million Net Income Attributable to Shareholders in Quarter Ended June 30, 2013

Friday, August 02, 2013

TVA Group Reports $7.0 Million Net Income Attributable to Shareholders in Quarter Ended June 30, 2013

09:49 EDT Friday, August 02, 2013

MONTRÉAL, CANADA--(Marketwired - Aug. 2, 2013) - TVA Group Inc. ("the Corporation")(TSX:TVA.B) announces that it recorded net income attributable to shareholders in the amount of $7.0 million, or $0.29 per share, in the second quarter of 2013, compared with $10.2 million, or $0.43 per share, excluding a $12.9 million gain on disposal of investments,(1) in the same quarter of 2012.

Second quarter operating highlights :

  • Television segment generates operating income(2) in the amount of $18,932,000, a $3,013,000 increase mainly due to:
    • positive impact on operating income of the deconsolidation of the results of SUN News since July 1, 2012;

      partially offset by:

    • lower operating income at TVA Network as a direct consequence of a 1.5% decrease in operating revenues; and
    • lower operating results at the specialty services due to higher programming investments at all services.

  • Publishing segment generates operating income in the amount of $2,008,000, a $595,000 decrease mainly due to an unfavourable variance in the charge related to business contributions toward the costs of waste recovery and recycling services provided by Québec municipalities ("EEQ"), whereas a downward adjustment of the liability recorded in the first quarter of 2012 in respect of this charge was recognized in the second quarter of 2012.

"Results for the latest quarter, combined with those for the first quarter of 2013, point towards long-term trends in the global television market," said Pierre Dion, President and Chief Executive Officer of the Corporation. "This reality has prompted us to introduce a cost-reduction plan to enable us to achieve our financial targets for fiscal 2013 while continuing to invest in growth projects. At the same time, our revenue-diversification strategy aimed at increasing subscription revenues continued paying dividends, with 14.5% growth in the second quarter of 2013 compared with the same quarter of 2012".

"Our magazines' newsstand revenues and advertising revenues both declined in comparison with the same quarter of 2012. However, the cost-containment initiatives we have introduced since the beginning of the year have offset these decreases, aligning our cost structure with our current revenue levels. We are very pleased with our acquisition of Les Publications Charron and its weekly La Semaine, which allows us to grow that brand with the support of all of Quebecor Media's existing platforms and to offer it to our advertisers as a complement to our existing selection of magazines in Québec."

(1) In the quarter ended June 30 2012, net income attributable to shareholders was $23.1 million or $0.97 per share.
(2) See definition of operating income (loss) below.

Cash flows provided by operating activities totalled $10.7 million in the second quarter of 2013, compared with $2.0 million in the same quarter of 2012. The $8.7 million increase was essentially due to a favourable net change in non-cash items, resulting in part from positive variances in accounts receivable and in programs, broadcast and distribution rights, and inventories, partially offset by an unfavourable variance in rights payable.

Definition

Operating income (loss)

In its analysis of operating results, the Corporation defines operating income (loss) as net income (loss) before amortization of property, plant and equipment and intangible assets, financial expenses, operational restructuring costs, impairment of assets and other costs, impairment of goodwill, gain on disposal of investments, tax expense, share of loss (income) of associated corporations and joint ventures, and net loss attributable to non-controlling interest. Operating income (loss) as defined above is not a measure of results that is consistent with International Financial Reporting Standards ("IFRS"). Neither is it intended to be regarded as an alternative to other financial performance measures or to the statement of cash flows as a measure of liquidity. This measure is not intended to represent funds available for debt service, dividend payment, reinvestment or other discretionary uses, and should not be considered in isolation or as a substitute for other performance measures prepared in accordance with IFRS. Operating income (loss) is used by the Corporation because management believes it is a meaningful measure of performance.

This measure is used by management and the Board of Directors to evaluate the Corporation's consolidated results and the results of its segments. Measurements such as operating income (loss) are also commonly used by the investment community to analyze and compare the performance of companies in the industries in which the Corporation is active. The Corporation's definition of operating income (loss) may not be identical to similarly titled measures reported by other companies.

Forward-looking Information Disclaimer

The statements in this news release that are not historical facts may be forward-looking statements and are subject to important known and unknown risks, uncertainties and assumptions which could cause the Corporation's actual results for future periods to differ materially from those set forth in the forward-looking statements. Forward-looking statements generally can be identified by the use of the conditional, the use of forward-looking terminology such as "propose," "will," "expect," "may," "anticipate," "intend," "estimate," "plan," "foresee," "believe" or the negative of these terms or variations of them or similar terminology. Certain factors that may cause actual results to differ from current expectations include seasonality, operational risks (including pricing actions by competitors), programming, content and production cost risks, credit risk, government regulation risks, government assistance risks, changes in economic conditions, fragmentation of the media landscape, and labour relation risks. Investors and others are cautioned that the foregoing list of factors that may affect future results is not exhaustive and that undue reliance should not be placed on any forward-looking statements. For more information on the risks, uncertainties and assumptions that could cause the Corporation's actual results to differ from current expectations please refer to the Corporation's public filings available at www.sedar.com and http://groupetva.ca including, in particular, the "Risks and Uncertainties" section of the Corporation's annual Management's Discussion and Analysis for the year ended December 31, 2012.

The forward-looking statements in this news release reflect the Corporation's expectations as of August 2, 2013, and are subject to change after this date. The Corporation expressly disclaims any obligation or intention to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by the applicable securities laws.

TVA Group

TVA Group Inc., a subsidiary of Quebecor Media Inc., is an integrated communications company involved in the creation, production, broadcast and distribution of audiovisual products, and in magazine publishing. TVA Group Inc. is the largest broadcaster of French-language entertainment, information and public affairs programming and publisher of French-language magazines in North America, and one of the largest private-sector producers of French-language content in North America. The Corporation's Class B shares are listed on the Toronto Stock Exchange under the ticker symbol TVA.B.

TVA GROUP INC.
Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
(unaudited)
(in thousands of dollars, except per share amounts)
Three-month periods
ended June 30
Six-month periods
ended June 30
2013 2012 2013 2012
Note (restated,
note 2)
(restated,
note 2)
Revenues 3 $ 111,507 $ 113,509 $ 222,577 $ 228,972
Purchases of goods and services 4 56,822 57,570 131,915 139,317
Employee costs 33,745 37,417 68,827 78,139
Amortization of property, plant and equipment and intangible assets 5,374 5,242 10,462 10,459
Financial expenses 5 1,597 1,896 3,201 3,882
Operational restructuring costs, impairment of assets and other costs 6 2,047 - 2,999 117
Impairment of goodwill 7 - - - 32,200
Gain on disposal of investments 8 - (12,881 ) - (12,881 )
Income (loss) before tax expense and share of income of associated corporations and joint ventures 11,922 24,265 5,173 (22,261 )
Tax expense 3,526 4,356 1,102 1,036
Share of loss (income) of associated corporations and joint ventures 1,415 (942 ) 2,978 (2,042 )
Net income (loss) and comprehensive income (loss) $ 6,981 $ 20,851 $ 1,093 $ (21,255 )
Net income (loss) and comprehensive income (loss) attributable to:
Shareholders $ 6,981 $ 23,088 $ 1,093 $ (16,841 )
Non-controlling interest - (2,237 ) - (4,414 )
Basic and diluted earnings (loss) per share attributable to shareholders 9 c) $ 0.29 $ 0.97 $ 0.05 $ (0.71 )
See accompanying notes to condensed consolidated financial statements.
TVA GROUP INC.
Consolidated Statements of Equity
(unaudited)
(in thousands of dollars)
Equity attributable to shareholders
Capital
stock
(note 9)
Contri-
buted
surplus
Retained
earnings
Accumu-
lated
other
compre-
hensive
loss -
Defined
benefit
plans
Equity
attribu-
table
to non-
controlling
interest
Total
equity
Balance as at December 31, 2011,as previously reported $ 98,647 $ - $ 176,993 $ - $ 5,389 $ 281,029
Changes in accounting policies(note 2) - - 17,408 (18,323 ) - (915 )
Balance as at December 31, 2011,as restated 98,647 - 194,401 (18,323 ) 5,389 280,114
Net loss - - (16,841 ) - (4,414 ) (21,255 )
Contributions related to non-controlling interest (note 11) - - - - 3,528 3,528
Disposal of interest in SUN News (note 11) - 581 - - (4,503 ) (3,922 )
Balance as at June 30, 2012 98,647 581 177,560 (18,323 ) - 258,465
Net income - - 10,377 - - 10,377
Other comprehensive loss - - - (2,297 ) - (2,297 )
Balance as at December 31, 2012 98,647 581 187,937 (20,620 ) - 266,545
Net income - - 1,093 - - 1,093
Balance as at June 30, 2013 $ 98,647 $ 581 $ 189,030 $ (20,620 ) $ - $ 267,638
See accompanying notes to condensed consolidated financial statements.
TVA GROUP INC.
Consolidated Balance Sheets
(unaudited)
(in thousands of dollars)
June 30,
2013
December 31,
2012
Note (restated,
note 2)
Assets
Current assets
Cash $ 7,665 $ 10,619
Accounts receivable 107,857 115,925
Income taxes 3,924 3,152
Programs, broadcast and distribution rights and inventories 6 61,416 67,579
Prepaid expenses 3,876 2,426
184,738 199,701
Non-current assets
Broadcast and distribution rights 6 37,253 33,563
Investments 15,344 17,651
Property, plant and equipment 100,623 98,494
Licences and other intangible assets 110,416 112,056
Goodwill 7 39,781 39,781
Deferred income taxes 1,220 725
304,637 302,270
Total assets $ 489,375 $ 501,971
Liabilities and equity
Current liabilities
Accounts payable and accrued liabilities $ 77,097 $ 89,092
Income taxes 391 816
Broadcast and distribution rights payable 16,991 16,966
Provisions 1,023 862
Deferred revenues 4,120 6,136
99,622 113,872
Non-current liabilities
Long-term debt 74,539 74,438
Other liabilities 37,405 38,499
Deferred income taxes 10,171 8,617
122,115 121,554
Equity
Capital stock 9 98,647 98,647
Contributed surplus 11 581 581
Retained earnings 189,030 187,937
Accumulated other comprehensive loss (20,620 ) (20,620 )
Equity attributable to shareholders 267,638 266,545
Event after the reporting period 13
Total liabilities and equity $ 489,375 $ 501,971
See accompanying notes to condensed consolidated financial statements.

On August 2, 2013, the Board of Directors approved the condensed consolidated financial statements for the three-month and six-month periods ended June 30, 2013 and 2012.

TVA GROUP INC.
Consolidated Statements of Cash Flows
(unaudited)
(in thousands of dollars)
Three-month periods
ended June 30
Six-month periods
ended June 30
2013 2012 2013 2012
Note (restated,
note 2)
(restated,
note 2)
Cash flows related to operating activities
Net income (loss) $ 6,981 $ 20,851 $ 1,093 $ (21,255 )
Non-cash items:
Amortization 5,424 5,349 10,563 10,667
Impairment of assets 6 612 - 999 -
Impairment of goodwill 7 - - - 32,200
Gain on disposal of investments 8 - (12,881 ) - (12,881 )
Share of loss (income) of associated corporations and joint ventures 1,415 (942 ) 2,978 (2,042 )
Deferred income taxes (115 ) 355 909 373
14,317 12,732 16,542 7,062
Net change in non-cash items (3,587 ) (10,776 ) (8,355 ) (2,811 )
Cash flows provided by operating activities 10,730 1,956 8,187 4,251
Cash flows related to investing activities
Additions to property, plant and equipment (4,236 ) (6,828 ) (9,548 ) (12,102 )
Additions to intangible assets (338 ) (737 ) (922 ) (1,303 )
Net change in investments 8,11 (1,470 ) 20,963 (671 ) 20,963
Cash of SUN News at the date of deconsolidation 11 - (430 ) - (430 )
Cash flows (used in) provided by investing activities (6,044 ) 12,968 (11,141 ) 7,128
Cash flows related to financing activities
Net change in bank overdraft - 4,661 - 963
Net change in revolving credit facility (254 ) (22,285 ) - (17,282 )
Financing costs - - - (344 )
Non-controlling interest 11 - 1,764 - 3,528
Cash flows used in financing activities (254 ) (15,860 ) - (13,135 )
Net change in cash 4,432 (936 ) (2,954 ) (1,756 )
Cash at beginning of period 3,233 936 10,619 1,756
Cash at end of period $ 7,665 $ - $ 7,665 $ -
Interest and taxes reflected as operating activities
Interest paid $ 2,115 $ 2,361 $ 2,196 $ 2,747
Income taxes (received) paid (579 ) 1,185 1,389 3,472
See accompanying notes to condensed consolidated financial statements.
TVA GROUP INC.
Notes to Condensed Consolidated Financial Statements
Three-month and six-month periods ended June 30, 2013 and 2012 (unaudited)
(Tabular amounts are expressed in thousands of dollars, except per share and per option amounts)

TVA Group Inc. ("TVA Group" or "the Corporation") is governed by the Québec Business Corporations Act. TVA Group is an integrated communications company with two operating segments: Television and Publishing (note 12). The Corporation is a subsidiary of Quebecor Media Inc. ("Quebecor Media" or "the parent corporation") and the ultimate parent corporation is Quebecor Inc. ("Quebecor"). The Corporation's head office is located at 1600 de Maisonneuve Boulevard East, Montréal, Québec, Canada.

The Corporation's businesses experience significant seasonality due, among other factors, to seasonal advertising patterns and influences on people's viewing, reading and listening habits. Because the Corporation depends on the sale of advertising for a significant portion of its revenues, operating results are also sensitive to prevailing economic conditions, including changes in local, regional and national economic conditions, particularly as they may affect advertising expenditures. Furthermore, the Corporation is investing in the launch of new specialty services in the Television segment. During the period immediately following the launch of a new specialty service, subscription revenues are always relatively modest, while initial operating expenses may prove more substantial. Accordingly, the results of operations for interim periods should not necessarily be considered indicative of full-year results.

1. Basis of presentation

These consolidated financial statements were prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), except that they do not include all disclosures required under IFRS for annual consolidated financial statements. In particular, these consolidated financial statements were prepared in accordance with IAS 34, Interim Financial Reporting, and accordingly, they are condensed consolidated financial statements. They are presented in Canadian dollars, which is the currency of the primary economic environment in which the Corporation and its subsidiaries operate ("functional currency"). These condensed consolidated financial statements should be read in conjunction with the Corporation's 2012 annual consolidated financial statements, which describe the accounting policies used to prepare these financial statements.

Comparative figures for the three-month and six-month periods ended June 30, 2012 have been restated to conform to the presentation adopted for the three-month and six-month periods ended June 30, 2013.

2. Changes in accounting policies

On January 1, 2013, the Corporation adopted retrospectively the following standards. Unless otherwise indicated, the adoption of these new standards did not have a material impact on prior period comparative figures.

  1. IFRS 10 Consolidated Financial Statements replaces SIC 12 Consolidation - Special Purpose Entities and parts of IAS 27 Consolidated and Separate Financial Statements and provides additional guidance regarding the concept of control as the determining factor in whether an entity should be included in the consolidated financial statements of the parent corporation.
  1. IFRS 11 Joint Arrangements replaces IAS 31 Interests in Joint Ventures with guidance that focuses on the rights and obligations of the arrangement, rather than its legal form. It also withdraws the option to proportionately consolidate an entity's interest in joint ventures. The new standard requires that such interests be recognized using the equity method.

The adoption of the standard had the following impacts on prior period comparative figures:

Consolidated statements of income and comprehensive income

Increase (decrease) Three-month period ended June 30, 2012 Six-month period ended
June 30, 2012
Revenues $ (1,870 ) $ (4,219 )
Purchases of goods and services (1,073 ) (2,512 )
Financial expenses 3 7
Loss before tax expense and share of income of associated corporations and joint ventures 800 1,714
Share of loss (income) of associated corporations and joint ventures (800 ) (1,714 )
Net income and comprehensive income $ - $ -
  1. IFRS 12 Disclosure of Interests in Other Entities is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose entities and other off-balance sheet vehicles.

  2. IFRS 13 Fair Value Measurement is a new and comprehensive standard that sets out a framework for measuring at fair value and that provides guidance on required disclosures about fair value measurements.

  3. IAS 1 Presentation of Financial Statements was amended and the principal change resulting from amendments to this standard is the requirement to present separately other comprehensive items that may be reclassified to income and other comprehensive items that will not be reclassified to income.

  1. IAS 19 Employee Benefits (Amended) involves, among other changes, the immediate recognition of the re-measurement component in other comprehensive income, thereby removing the accounting option previously available in IAS 19 to recognize or to defer recognition of changes in defined benefit obligations and in the fair value of plan assets directly in the consolidated statement of income. IAS 19 also introduces a net interest approach that replaces the expected return on assets and interest costs on the defined benefit obligation with a single net interest component determined by multiplying the net defined benefit liability or asset by the discount rate used to determine the defined benefit obligation. In addition, all past service costs are required to be recognized in profit or loss when the employee benefit plan is amended and no longer spread over any future service period. IAS 19 also allows amounts recorded in other comprehensive income to be recognized either immediately in retained earnings or as a separate category within equity. The Corporation has elected to immediately recognize in accumulated other comprehensive income the amounts recorded in other comprehensive income.

The adoption of the amended standard had the following impacts on prior period comparative figures:

Consolidated statements of income and comprehensive income

Increase (decrease) Three-month period ended June 30, 2012 Six-month period ended June 30, 2012
Employee costs $ 342 $ 684
Financial expenses 462 925
Deferred income tax expense (216 ) (433 )
Net income and comprehensive income $ (588 ) $ (1,176 )

Consolidated balance sheets

Increase (decrease) December 31, 2012 December 31, 2011
Other liabilities $ - $ 1,251
Deferred income tax liability - (336 )
Retained earnings 20,620 17,408
Accumulated other comprehensive income (20,620 ) (18,323 )

3. Revenues

The breakdown of revenues between services rendered and product sales is as follows:

Three-month periods
ended June 30
Six-month periods
ended June 30
2013 2012 2013 2012
(restated, note 2) (restated, note 2)
Services rendered $ 86,867 $ 87,665 $ 172,844 $ 176,887
Product sales 24,640 25,844 49,733 52,085
$ 111,507 $ 113,509 $ 222,577 $ 228,972

4. Purchases of goods and services

The main components of purchases of goods and services are as follows:

Three-month periods
ended June 30
Six-month periods
ended June 30
2013 2012 2013 2012
(restated, note 2) (restated, note 2)
Royalties, rights and production costs $ 32,722 $ 32,555 $ 81,710 $ 82,716
Printing and distribution 4,720 4,523 9,318 12,442
Marketing, advertising and promotion 3,308 4,059 8,375 9,372
Buildings costs 2,209 2,445 4,392 5,085
Services rendered by parent corporation 6,037 4,951 11,972 9,215
Other 7,826 9,037 16,148 20,487
$ 56,822 $ 57,570 $ 131,915 $ 139,317

5. Financial expenses

Three-month periods
ended June 30
Six-month periods
ended June 30
2013 2012 2013 2012
(restated, note 2) (restated, note 2)
Interest on long-term debt $ 1,126 $ 1,282 $ 2,248 $ 2,698
Amortization of financing costs 50 107 101 208
Interest on net defined benefit liability 420 462 840 925
Other 1 45 12 51
$ 1,597 $ 1,896 $ 3,201 $ 3,882

6. Operational restructuring costs, impairment of assets and other costs

In the three-month and six-month periods ended June 30, 2013, the Corporation recorded $1,646,000 in operational restructuring costs in connection with the elimination of a number of positions, including $897,000 in the Television segment and $749,000 in the Publishing segment. In the six-month period ended June 30, 2012, the Corporation recorded $117,000 in operational restructuring costs in connection with the elimination of a number of positions in the Publishing segment.

During the first quarter of 2013, the Corporation decided to discontinue theatrical distribution of new Québec films, whereas in the second quarter of 2013, the Corporation announced that its TVA Boutiques division's home shopping and online shopping operations would be discontinued by August 31, 2013. As a result of these repositionings, the Corporation recorded a $612,000 inventory impairment charge and a $303,000 provision for operational restructuring costs for the three-month period ended June 30, 2013 and a $999,000 impairment charge and a $303,000 provision for operational restructuring costs for the six-month period ended June 30, 2013.

During the three-month period ended June 30, 2013, the Corporation also reversed a $514,000 provision for restructuring costs following a favourable judgment in a legal dispute related to a former subsidiary's production activities. During the six-month period ended June 30, 2013, the Corporation recorded a net charge of $51,000 in connection with this dispute.

7. Impairment of goodwill

During the first quarter of 2012, following the adoption of new rates for business contributions toward the costs of waste recovery and recycling services provided by Québec municipalities, the Corporation had to review its business plan for the related activities and perform an impairment test on the Publishing cash-generating unit ("CGU"). The Corporation concluded that the recoverable amount based on value in use was less than the carrying amount of the Publishing CGU and a goodwill impairment charge of $32,200,000 was recorded.

8. Gain on disposal of investments

On May 31, 2012, following Canadian Radio-television and Telecommunications Commission approval, the Corporation completed the sale of its 51% interest in "The Cave" and its 50% interest in "Mystery TV" to its partner in the joint ventures, Shaw Media Global Inc., for a total cash consideration of $20,963,000. A $12,881,000 gain on disposal of investments, before taxes, was recorded. The transaction did not give rise to any tax expense because the Corporation used unrecorded capital losses to eliminate the capital gains tax on disposal of investments.

9. Capital stock

(a) Authorized capital stock

An unlimited number of Class A common shares, participating, voting, without par value.

An unlimited number of Class B shares, participating, non-voting, without par value.

An unlimited number of preferred shares, non-participating, non-voting, with a par value of $10 each, issuable in series.

(b) Issued and outstanding capital stock

June 30,
2013
December 31,
2012
4,320,000 Class A Common Shares $ 72 $ 72
19,450,906 Class B shares 98,575 98,575
$ 98,647 $ 98,647

(c) Earnings (loss) per share attributable to shareholders

The following table sets forth the computation of basic and diluted earnings (loss) per share attributable to shareholders:

Three-month periods
ended June 30
Six-month periods
ended June 30
2013 2012 2013 2012
(restated, note 2) (restated, note 2)
Net income (loss) attributable to shareholders $ 6,981 $ 23,088 $ 1,093 $ (16,841 )
Weighted average number of basic and diluted shares outstanding 23,770,906 23,770,906 23,770,906 23,770,906
Basic and diluted earnings (loss) per share attributable to shareholders (in dollars) $ 0.29 $ 0.97 $ 0.05 $ (0.71 )

The diluted earnings (loss) per share calculation does not take into consideration the potential dilutive effect of stock options of the Corporation since their impact is anti-dilutive.

10. Stock-based compensation and other stock-based payments

Six-month period ended June 30, 2013
Corporation's Class B
stock options
Quebecor Media
stock options
Number Weighted
average
exercise
price
Number Weighted
average
exercise
price
Balance as at December 31, 2012 819,421 $ 16.34 213,416 $ 46.55
Exercised - - (41,884 ) 46.70
Cancelled (128,345 ) 15.29 (32,500 ) 47.68
Options related to executives transferred to Quebecor Media - - (14,625 ) 46.48
Balance as at June 30, 2013 691,076 $ 16.54 124,407 $ 46.21

Of the number of options outstanding as at June 30, 2013, 691,076 Corporation's Class B stock options at an average exercise price of $16.54 and 46,407 Quebecor Media stock options at an average price of $45.76 could be exercised.

During the three-month period ended June 30, 2013, 21,927 Quebecor Media stock options were exercised for a cash consideration of $243,000 (no stock options were exercised in the same period of 2012). During the six-month period ended June 30, 2013, 41,884 Quebecor Media stock options were exercised for a cash consideration of $471,000 (no stock options were exercised in the same period of 2012).

During the three-month and six-month periods ended June 30, 2013, the Corporation recorded compensation expense reversals of $83,000 and $31,000 respectively (compensation expense reversals of $250,000 and $245,000 respectively in the same periods of 2012) in relation to the Corporation's Class B stock options and compensation expense reversals of $41,000 and $70,000 respectively (compensation expense reversal of $50,000 and compensation expense of $546,000 respectively in the same periods of 2012) in relation to Quebecor Media stock options.

11. Related party transactions

Capital contributions to SUN News

During the three-month and six-month periods ended June 30, 2013, the partners in SUN News made a capital contribution of $3,000,000 ($3,600,000 and $7,200,000 respectively during the same periods of 2012), including $1,470,000 from the Corporation ($1,836,000 and $3,672,000 respectively during the same periods of 2012) and $1,530,000 from Sun Media Corporation, a company under common control ($1,764,000 and $3,528,000 respectively during the same periods of 2012).

Disposal of interest in SUN News

On June 30, 2012, the Corporation sold a 2% interest in SUN News to Sun Media Corporation for a cash consideration of $765,000.The Corporation now holds a 49% interest in SUN News and Sun Media Corporation owns 51%. The difference between the amount paid and the book value of the interest yielded a $581,000 gain, which was accounted for in contributed surplus. Following the loss of control, SUN News' results are no longer consolidated as of July 1, 2012, and the investment in SUN News is now accounted for using the equity method.

The following table shows details of the net assets of SUN News, which were reclassified as an investment using the equity method at the date of deconsolidation:

Current assets
Cash $ 430
Accounts receivable and other current assets 2,792
3,222
Non-current assets
Property, plant and equipment 8,873
Intangible assets 650
12,745
Current liabilities
Accounts payable and accrued liabilities 3,555
Net assets 9,190
Sun Media Corporation interest (4,687 )
Investment using equity method $ 4,503

12. Segmented information

The Corporation's operations consist of the following segments:

- The Television segment includes the operations of TVA Network, (including the subsidiaries and divisions TVA Productions Inc., TVA Sales and Marketing Inc., TVA Accès, TVA Nouvelles, TVA Interactif), specialty services, the marketing of digital products associated with the different televisual brands, the home and online shopping services of the TVA Boutiques division, and the distribution of audiovisual products by the TVA Films division.
- The Publishing segment includes the operations of TVA Publications Inc., a content producer that specializes in the publication of French-language magazines in various fields such as the arts, entertainment, television, fashion and decoration; the marketing of digital products associated with the different magazine brands; and the operations of the TVA Studio division, specializing in custom publishing, commercial print production and premedia services.
Three-month periods
ended June 30
Six-month periods
ended June 30
2013 2012 2013 2012
(restated, note 2) (restated, note 2)
Revenues
Television $ 96,470 $ 97,262 $ 193,534 $ 197,733
Publishing 15,806 17,213 30,775 33,119
Intersegment items (769 ) (966 ) (1,732 ) (1,880 )
$ 111,507 $ 113,509 $ 222,577 $ 228,972
Operating income(1)
Television 18,932 15,919 19,595 10,960
Publishing 2,008 2,603 2,240 556
20,940 18,522 21,835 11,516
Amortization of property, plant and equipment and intangible assets 5,374 5,242 10,462 10,459
Financial expenses 1,597 1,896 3,201 3,882
Operational restructuring costs, impairment of assets and other costs 2,047 - 2,999 117
Impairment of goodwill - - - 32,200
Gain on disposal of investments - (12,881 ) - (12,881 )
Income (loss) before tax expense and share of income of associated corporations and joint ventures $ 11,922 $ 24,265 $ 5,173 $ (22,261 )

The above-noted intersegment items represent the elimination of normal course business transactions between the Corporation's business segments regarding revenues.

(1) The Chief Executive Officer uses operating income as a measure of financial performance for assessing the performance of each of the Corporation's segments. Operating income is defined as net income (loss) before amortization of property, plant and equipment and intangible assets, financial expenses, operational restructuring costs, impairment of assets and other costs, impairment of goodwill, gain on disposal of investments, tax expense, share of loss (income) of associated corporations and joint ventures, and net loss attributable to non-controlling interest. Operating income as defined above is not a measure of results that is consistent with IFRS.

13. Event after the reporting period

On July 18, 2013, the Corporation acquired all of the issued and outstanding shares of Les Publications Charron & Cie inc., publisher of La Semaine magazine, and of Charron Éditeur inc., a book publisher, for a total cash consideration of $7,500,000. Les Publications Charron & Cie inc. was acquired as part of TVA Group's strategy to remain the Québec market leader in magazine publishing. The operations of Charron Éditeur inc. will be transferred to Sogides Group, a corporation under common control, for a $300,000 consideration.

FOR FURTHER INFORMATION PLEASE CONTACT:

Contact Information:
Denis Rozon, CPA, CA
Vice President and Chief Financial Officer
(514) 598-2808

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