Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2017shares | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | VIDEOTRON LTEE |
Entity Central Index Key | 890,746 |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2017 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | Yes |
Entity Current Reporting Status | No |
Entity Filer Category | Non-accelerated Filer |
Entity Common Stock, Shares Outstanding | 172,516,829 |
Document Fiscal Year Focus | 2,017 |
Document Fiscal Period Focus | FY |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - CAD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues | |||
Cable television | $ 1,009,584 | $ 1,024,283 | $ 1,053,797 |
Internet | 1,030,861 | 978,723 | 920,746 |
Mobile telephony | 609,772 | 510,420 | 403,668 |
Cable telephony | 397,787 | 424,795 | 458,028 |
Over-the-top video | 39,720 | 31,443 | 23,596 |
Business | 124,608 | 111,181 | 69,134 |
Equipment sales | 56,542 | 53,577 | 57,627 |
Other | 9,968 | 9,917 | 11,383 |
Revenues | 3,278,842 | 3,144,339 | 2,997,979 |
Employee costs | 386,353 | 376,757 | 356,503 |
Purchase of goods and services | 1,359,850 | 1,320,568 | 1,259,179 |
Depreciation and amortization | 654,614 | 596,065 | 625,366 |
Financial expenses | 149,243 | 161,452 | 167,429 |
Loss on valuation and translation of financial instruments | 3,098 | 2,126 | 518 |
Restructuring of operations, litigation and other items | 5,888 | 15,880 | (129,737) |
Gain on sale of spectrum licences | (330,871) | ||
Loss on debt refinancing | 5,201 | 7,346 | 12,153 |
Income before income taxes | 1,045,466 | 664,145 | 706,568 |
Income taxes (recovery) | |||
Current | (3,248) | 153,976 | 54,412 |
Deferred | 134,479 | (37,066) | 66,253 |
Income taxes (recovery) | 131,231 | 116,910 | 120,665 |
Net income | 914,235 | 547,235 | 585,903 |
Net income attributable to | |||
Shareholder | 914,183 | 547,202 | 585,851 |
Non-controlling interests | $ 52 | $ 33 | $ 52 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - CAD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Net income | $ 914,235 | $ 547,235 | $ 585,903 |
Cash flows hedges: | |||
Gain (loss) on valuation of derivative financial instruments | 35,235 | (18,301) | 2,054 |
Deferred income taxes | 11,977 | 7,545 | (22,096) |
Defined benefit plans: | |||
Re-measurement (loss) gain | (7,012) | 5,025 | (9,614) |
Deferred income taxes | 1,879 | (1,332) | 2,590 |
Reclassification to income: | |||
Gain related to cash flows hedges | (3,914) | ||
Deferred income taxes | 1,125 | ||
Other comprehensive income (loss) | 42,079 | (7,063) | (29,855) |
Comprehensive income | 956,314 | 540,172 | 556,048 |
Comprehensive income attributable to | |||
Shareholder | 956,262 | 540,139 | 555,996 |
Non-controlling interests | $ 52 | $ 33 | $ 52 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - CAD ($) $ in Thousands | Capital stock | Retained earnings | Accumulated other comprehensive loss | Equity attributable to non-controlling interests | Total |
Equity at beginning of period at Dec. 31, 2014 | $ 3,401 | $ 836,684 | $ (46,989) | $ 811 | $ 793,907 |
Net income | 585,851 | 52 | 585,903 | ||
Other comprehensive income (loss) | (29,855) | (29,855) | |||
Issuance of capital stock | 170,000 | 170,000 | |||
Reduction of paid-up capital | (41,000) | (41,000) | |||
Dividends | (665,000) | (155) | (665,155) | ||
Equity at end of period at Dec. 31, 2015 | 132,401 | 757,535 | (76,844) | 708 | 813,800 |
Net income | 547,202 | 33 | 547,235 | ||
Other comprehensive income (loss) | (7,063) | (7,063) | |||
Dividends | (282,000) | (232) | (282,232) | ||
Equity at end of period at Dec. 31, 2016 | 132,401 | 1,022,737 | (83,907) | 509 | 1,071,740 |
Net income | 914,183 | 52 | 914,235 | ||
Other comprehensive income (loss) | 42,079 | 42,079 | |||
Dividends | (295,000) | (295,000) | |||
Equity at end of period at Dec. 31, 2017 | $ 132,401 | $ 1,641,920 | $ (41,828) | $ 561 | $ 1,733,054 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - CAD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows related to operating activities | |||
Income from operations | $ 914,235 | $ 547,235 | $ 585,903 |
Adjustments for: | |||
Depreciation of fixed assets | 569,152 | 517,673 | 545,612 |
Amortization of intangible assets | 85,462 | 78,392 | 79,754 |
Loss on valuation and translation of financial instruments | 3,098 | 2,126 | 518 |
Gain on sale of spectrum licences | (330,871) | ||
Amortization of financing costs and long-term debt discount | 4,333 | 3,904 | 4,008 |
Deferred income taxes | 134,479 | (37,066) | 66,253 |
Loss on debt refinancing | 5,201 | 7,346 | 12,153 |
Other | 7,671 | 6,892 | 6,262 |
Cash flows before non-cash balances | 1,392,760 | 1,126,502 | 1,300,463 |
Net change in non-cash balances related to operating activities | (121,040) | 117,591 | (92,499) |
Cash flows provided by operating activities | 1,271,720 | 1,244,093 | 1,207,964 |
Cash flows related to investing activities | |||
Additions to fixed assets | (574,339) | (666,698) | (630,076) |
Additions to intangible assets | (132,254) | (125,482) | (312,062) |
Proceeds from disposals of assets | 619,863 | 3,376 | 4,375 |
Business acquisitions | (5,553) | (118,946) | (35,167) |
Business disposals | 7,848 | ||
Redemption (acquisition) of preferred shares of an affiliated corporation | 2,090,000 | (1,010,000) | |
Cash flows (used in) provided by investing activities | (92,283) | 1,182,250 | (1,975,082) |
Cash flows related to financing activities | |||
Net change in bank indebtedness | (10,118) | (1,580) | 11,698 |
Net change under revolving credit facility, net of financing fees | (209,323) | (37,984) | 244,631 |
Issuance of long-term debt, net of financing fees | 794,580 | 370,130 | |
Repayment of long-term debt | (321,028) | (10,714) | (637,083) |
Settlement of hedging contracts | 18,346 | (4,646) | (37,131) |
Issuance of capital stock | 170,000 | ||
Reduction of paid-up capital | (41,000) | ||
Dividends | (295,000) | (282,000) | (665,000) |
Issuance of a loan to the parent corporation | (342,000) | ||
(Repayment) issuance of a loan from the parent corporation | (2,090,000) | 1,010,000 | |
Other | (7) | (232) | (155) |
Cash flows (used in) provided by financing activities | (364,550) | (2,427,156) | 426,090 |
Net change in cash and cash equivalents | 814,887 | (813) | (341,028) |
Cash and cash equivalents at the beginning of the year | 961 | 1,774 | 342,802 |
Cash and cash equivalents at the end of the year | 815,848 | 961 | 1,774 |
Changes in non-cash balances related to operating activities | |||
Accounts receivable | (8,730) | (52,968) | (13,515) |
Amounts receivable from and payable to affiliated corporations | (16,224) | 13,296 | 12,017 |
Inventories | (3,526) | 28,933 | (35,139) |
Prepaid expenses | (8,227) | (6,927) | (7,709) |
Accounts payable, accrued charges and provisions | (25,650) | 31,549 | 31,751 |
Income taxes | (58,862) | 54,942 | (85,072) |
Stock-based compensation | 1,698 | 1,465 | 57 |
Deferred revenues | (2,861) | 38,390 | (1,505) |
Defined benefit plans | (2,588) | 3,653 | 571 |
Other | 3,930 | 5,258 | 6,045 |
Net change in non-cash balances related to operating activities | (121,040) | 117,591 | (92,499) |
Non-cash investing activities | |||
Net change in additions to fixed assets and intangible assets financed with accounts payable | 22,729 | (1,828) | (11,751) |
Interest and taxes reflected as operating activities | |||
Cash interest payments | 152,885 | 154,540 | 150,094 |
Cash income tax payments (net of refunds) | $ 56,624 | $ 99,544 | $ 139,502 |
CONSOLIDATED STATEMENTS OF CAS6
CONSOLIDATED STATEMENTS OF CASH FLOW - Cash information - CAD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Cash and cash equivalents consist of | |||
Cash | $ 814,150 | $ 161 | $ 175 |
Cash equivalents | 1,698 | 800 | 1,599 |
Total cash and cash equivalents | $ 815,848 | $ 961 | $ 1,774 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - CAD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 815,848 | $ 961 |
Accounts receivable | 337,768 | 329,037 |
Income taxes | 27,158 | |
Amounts receivable from affiliated corporations | 7,021 | 2,657 |
Inventories | 89,590 | 86,064 |
Prepaid expenses | 46,163 | 38,242 |
Total current assets | 1,323,548 | 456,961 |
Non-current assets | ||
Fixed assets | 3,257,388 | 3,261,883 |
Intangible assets | 907,972 | 1,123,257 |
Goodwill | 535,932 | 535,932 |
Derivative financial instruments | 293,157 | 417,788 |
Subordinated loan to parent corporation | 342,000 | |
Other assets | 13,406 | 16,864 |
Total non-current assets | 5,349,855 | 5,355,724 |
Total assets | 6,673,403 | 5,812,685 |
Current liabilities | ||
Bank indebtedness | 10,118 | |
Accounts payable and accrued charges | 491,910 | 456,437 |
Amounts payable to affiliated corporations | 54,675 | 66,534 |
Provisions | 17,508 | 60,321 |
Deferred revenue | 312,772 | 309,910 |
Income taxes | 33,370 | |
Current portion of long-term debt | 5,357 | 10,714 |
Total current liabilities | 882,222 | 947,404 |
Non-current liabilities | ||
Long-term debt | 3,264,973 | 3,152,394 |
Deferred income taxes | 646,158 | 525,535 |
Derivative financial instruments | 34,129 | |
Other liabilities | 112,867 | 115,612 |
Total non-current liabilities | 4,058,127 | 3,793,541 |
Total liabilities | 4,940,349 | 4,740,945 |
Equity | ||
Capital stock | 132,401 | 132,401 |
Retained earnings | 1,641,920 | 1,022,737 |
Accumulated other comprehensive loss | (41,828) | (83,907) |
Equity attributable to shareholder | 1,732,493 | 1,071,231 |
Non-controlling interests | 561 | 509 |
Total equity | 1,733,054 | 1,071,740 |
Commitments and contingencies | ||
Guarantees | ||
Subsequent events | ||
Total liabilities and equity | $ 6,673,403 | $ 5,812,685 |
OTHER EXPLANATORY INFORMATION
OTHER EXPLANATORY INFORMATION | 12 Months Ended |
Dec. 31, 2017 | |
OTHER EXPLANATORY INFORMATION | |
OTHER EXPLANATORY INFORMATION | Videotron Ltd. (the “Corporation”) is incorporated under the laws of Québec and is a wholly owned subsidiary of Quebecor Media Inc. (the parent corporation) and is a subsidiary of Quebecor Inc. (the ultimate parent corporation). The Corporation’s head office and registered office is located at 612, rue Saint-Jacques, Montréal (Québec), Canada. The percentages of voting rights and equity in its major subsidiaries are as follows: % equity and voting Videotron Infrastructures Inc. % Videotron US Inc. % Fibrenoire Inc. % 4 Degrees Colocation Inc. % SETTE Inc. % The Corporation offers television distribution, Internet access, business solutions (including data centers), cable and mobile telephony and over-the-top video services in Canada and is engaged in the rental of movies and televisual products through its video-on-demand services. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of presentation The consolidated financial statements have been prepared in accordance with IFRS as issued by the International Accounting Standards Board. These consolidated financial statements have been prepared on a historical cost basis, except for certain financial instruments (note 1(i)), the liability related to stock-based compensation (note 1(r)), and the net defined benefit liability (note 1(s)), and they are presented in Canadian dollars (“CAN dollars”), which is the currency of the primary economic environment in which the Corporation operates (“functional currency”). (b) Consolidation The consolidated financial statements include the accounts of the Corporation and its subsidiaries. Intercompany transactions and balances are eliminated on consolidation. A subsidiary is an entity controlled by the Corporation. Control is achieved when the Corporation is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Non-controlling interests in the net assets and results of consolidated subsidiaries are identified separately from the parent corporation’s ownership interest in them. Non-controlling interests in the equity of a subsidiary consist of the amount of non-controlling interests calculated at the date of the original business combination and their share of changes in equity since that date. Changes in non-controlling interests in a subsidiary that do not result in a loss of control by the Corporation are accounted for as equity transactions. (c) Business combinations A business combination is accounted for by the acquisition method. The cost of an acquisition is measured at the fair value of the consideration given in exchange for control of the business acquired at the acquisition date. This consideration can be comprised of cash, assets transferred, financial instruments issued, or future contingent payments. The identifiable assets and liabilities of the business acquired are recognized at their fair value at the acquisition date. Results of operations of a business acquired are included in the Corporation’s consolidated financial statements from the date of the business acquisition. Business acquisition and integration costs are expensed as incurred and included as other items in the consolidated statements of income. Non-controlling interests in an entity acquired are presented in the consolidated balance sheets within equity, separately from the equity attributable to the shareholder and are initially measured at fair value. (d) Foreign currency translation Foreign currency transactions are translated to the functional currency by applying the exchange rate prevailing at the date of the transactions. Translation gains and losses on assets and liabilities denominated in a foreign currency are included in financial expenses, or in gain or loss on valuation and translation of financial instruments. (e) Revenue recognition The Corporation recognizes operating revenues when the following criteria are met: · the amount of revenue can be measured reliably; · the receipt of economic benefits associated with the transaction is probable; · the costs incurred or to be incurred in respect of the transaction can be measured reliably; · the stage of completion can be measured reliably where services have been rendered; and · significant risks and rewards of ownership, including effective control, have been transferred to the buyer where goods have been sold. The portion of revenue that is unearned is recorded under “Deferred revenue” when customers are invoiced. The Corporation provides services under arrangements with multiple deliverables, for which there are two separate accounting units: one for subscriber services (cable television, Internet access, cable or mobile telephony and over-the-top video services, including connection costs and rental of equipment); the other for equipment sales to subscribers. Components of multiple deliverable arrangements are separately accounted for, provided the delivered elements have stand-alone value to the customer and the fair value of any undelivered elements can be objectively and reliably determined. Arrangement consideration is allocated among the separate accounting units based on their relative fair values. The Corporation recognizes revenues for each of its main activities as follows: · Operating revenues from subscriber services such as cable television, Internet access, cable and mobile telephony and over-the-top video services are recognized when services are provided. Promotional offers and rebates are accounted for as a reduction in the service revenue to which they relate; · Revenues from equipment sales to subscribers and their costs are recognized in income when the equipment is delivered. Promotional offers related to equipment, with the exclusion of mobile devices, are accounted for as a reduction in related equipment sales on delivery, while promotional offers related to the sale of mobile devices are accounted for as a reduction in related equipment sales on activation; · Operating revenues related to service contracts are recognized in income over the life of the specific contracts on a straight-line basis over the period in which the services are provided; · Cable connection revenues are deferred and recognized as revenues over the estimated average period that subscribers are expected to remain connected to the network. The incremental and direct costs related to cable connection costs, in an amount not exceeding the revenue, are deferred and recognized as an operating expense over the same period. The excess of those costs over the related revenues is recognized immediately in income. (f) Impairment of assets For the purposes of assessing impairment, assets are grouped in cash-generating units (“CGUs”), which represent the lowest levels for which there are separately identifiable cash inflows generated by those assets. The Corporation reviews at each balance sheet date whether events or circumstances have occurred to indicate that the carrying amounts of its long-lived assets with finite useful lives may be less than their recoverable amounts. Goodwill, intangible assets having an indefinite useful life, and intangible assets not yet available for use are tested for impairment each financial year, as well as whenever there is an indication that the carrying amount of the asset, or the CGU to which an asset has been allocated, exceeds its recoverable amount. The recoverable amount is the higher of the fair value less costs of disposal and the value in use of the asset or the CGU. Fair value less costs of disposal represents the amount an entity could obtain at the valuation date from the asset’s disposal in an arm’s length transaction between knowledgeable, willing parties, after deducting the costs of disposal. The value in use represents the present value of the future cash flows expected to be derived from the asset or the CGU. An impairment loss is recognized in the amount by which the carrying amount of an asset or a CGU exceeds its recoverable amount. When the recoverable amount of a CGU to which goodwill has been allocated is lower than the CGU’s carrying amount, the related goodwill is first impaired. Any excess amount of impairment is recognized and attributed to assets in the CGU, prorated to the carrying amount of each asset in the CGU. An impairment loss recognized in prior periods for long-lived assets with finite useful lives and intangible assets having an indefinite useful life, other than goodwill, can be reversed through the consolidated statement of income to the extent that the resulting carrying value does not exceed the carrying value that would have been the result if no impairment loss had previously been recognized. (g) Income taxes Current income taxes are recognized with respect to amounts expected to be paid or recovered under the tax rates and laws that have been enacted or substantively enacted at the balance sheet date. Deferred income taxes are accounted for using the liability method. Under this method, deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities in the consolidated financial statements and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted or substantively enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred income tax assets and liabilities is recognized in income in the period that includes the substantive enactment date. A deferred tax asset is recognized initially when it is probable that future taxable income will be sufficient to use the related tax benefits and may be subsequently reduced, if necessary, to an amount that is more likely than not to be realized. A deferred tax expense or benefit is recognized in other comprehensive income or otherwise directly in equity to the extent that it relates to items that are recognized in other comprehensive income or directly in equity in the same or a different period. In the course of the Corporation’s operations, there are a number of uncertain tax positions due to the complexity of certain transactions and due to the fact that related tax interpretations and legislation are continually changing. When a tax position is uncertain, the Corporation recognizes an income tax benefit or reduces an income tax liability only when it is probable that the tax benefit will be realized in the future or that the income tax liability is no longer probable. (h) Leases Assets under leasing agreements are classified at the inception of the lease as (i) finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership of the asset to the lessee, or as (ii) operating leases for all other leases. Operating lease rentals are recognized in the consolidated statement of income on a straight-line basis over the period of the lease. Any lessee incentives are deferred and then recognized evenly over the lease term. (i) Financial instruments Classification, recognition and measurement Financial instruments are classified as held-for-trading, available-for-sale, loans and receivables, or as other financial liabilities, and measurement in subsequent periods depends on their classification. The Corporation has classified its financial instruments (except derivative financial instruments) as follows: Held-for-trading Loans and receivables Other liabilities Cash and cash equivalents Bank indebtedness Accounts receivable Amounts receivable from affiliated corporations Investments Accounts payable and accrued charges Amounts payable to affiliated corporations Long-term debt Subordinated loan from parent corporation Other long-term financial liabilities included in “Other Liabilities” Financial instruments held-for-trading are measured at fair value with changes recognized in income as a gain or loss on valuation and translation of financial instruments. Financial assets classified as loans and receivables and financial liabilities classified as Other liabilities are initially measured at fair value and subsequently measured at amortized cost, using the effective interest rate method of amortization. Derivative financial instruments and hedge accounting The Corporation uses various derivative financial instruments to manage its exposure to fluctuations in foreign currency exchange rates and interest rates. The Corporation does not hold or use any derivative financial instruments for speculative purposes. Under hedge accounting, the Corporation documents all hedging relationships between hedging items and hedged items, as well as its strategy for using hedges and its risk-management objective. It also designates its derivative financial instruments as either fair value hedges or cash flow hedges when they qualify for hedge accounting. The Corporation assesses the effectiveness of derivative financial instruments when the hedge is put in place and on an ongoing basis. The Corporation generally enters into the following types of derivative financial instruments: · The Corporation uses foreign exchange forward contracts to hedge foreign currency rate exposure on anticipated equipment or inventory purchases in a foreign currency. The Corporation also uses offsetting foreign exchange forward contracts in combination with cross-currency interest rate swaps to hedge foreign currency rate exposure on interest and principal payments on foreign currency denominated debt. These foreign exchange forward contracts are designated as cash flow hedges. · The Corporation uses cross-currency interest rate swaps to hedge (i) foreign currency rate exposure on interest and principal payments on foreign currency denominated debt and/or (ii) fair value exposure on certain debt resulting from changes in interest rates. The cross-currency interest rate swaps that set all future interest and principal payments on U.S.-dollar-denominated debt in fixed CAN dollars, in addition to converting an interest rate from a floating rate to a floating rate or from a fixed rate to a fixed rate, are designated as cash flow hedges. The cross-currency interest rate swaps are designated as fair value hedges when they set all future interest and principal payments on U.S.-dollar-denominated debt in fixed CAN dollars, in addition to converting the interest rate from a fixed rate to a floating rate. Under hedge accounting, the Corporation applies the following accounting policies: · For derivative financial instruments designated as fair value hedges, changes in the fair value of the hedging derivative recorded in income are substantially offset by changes in the fair value of the hedged item to the extent that the hedging relationship is effective. When a fair value hedge is discontinued, the carrying value of the hedged item is no longer adjusted and the cumulative fair value adjustments to the carrying value of the hedged item are amortized to income over the remaining term of the original hedging relationship. · For derivative financial instruments designated as cash flow hedges, the effective portion of a hedge is reported in other comprehensive income until it is recognized in income during the same period in which the hedged item affects income, while the ineffective portion is immediately recognized in income. When a cash flow hedge is discontinued, the amounts previously recognized in accumulated other comprehensive income are reclassified to income when the variability in the cash flows of the hedged item affects income. Any change in the fair value of derivative financial instruments recorded in income is included in gain or loss on valuation and translation of financial instruments. Interest expense on hedged long-term debt is reported at the hedged interest and foreign currency rates. Derivative financial instruments that do not qualify for hedge accounting, including derivatives that are embedded in financial or non-financial contracts that are not closely related to the host contracts, such as early settlement options on long-term debt, are reported on a fair value basis in the consolidated balance sheets. Any change in the fair value of these derivative financial instruments is recorded in the consolidated statements of income as a gain or loss on valuation and translation of financial instruments. Early settlement options are accounted for separately from the debt when the corresponding option exercise price is not approximately equal to the amortized cost of the debt. (j) Financing fees Financing fees related to long-term debt are capitalized in reduction of long-term debt and amortized using the effective interest rate method. (k) Tax credits and government assistance The Corporation receives tax credits mainly related to its research and development activities. Government financial assistance is accounted for as revenue or as a reduction in related costs, whether capitalized and amortized or expensed, in the year the costs are incurred and when management has reasonable assurance that the conditions of the government programs are met. (l) Cash and cash equivalents Cash and cash equivalents include highly liquid investments purchased three months or less from maturity and are recorded at fair value. These highly liquid investments consisted mainly of Bankers’ acceptances and term deposits. (m) Trade receivables Trade receivables are stated at their nominal value, less an allowance for doubtful accounts. The Corporation establishes an allowance for doubtful accounts based on the specific credit risk of its customers and historical trends. Individual accounts receivables are written off when management deems them not collectible. (n) Inventories Inventories are valued at the lower of cost, determined by the weighted-average cost method, and net realizable value. Net realizable value represents the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. When the circumstances that previously caused inventories to be written down below cost no longer exist, the amount of the write-down is reversed. (o) Fixed assets Fixed assets are stated at cost. Cost represents the acquisition costs, net of government grants and investment tax credits, or construction costs, including preparation, installation and testing costs. In the case of projects to construct cable and mobile networks, the cost includes equipment, direct labour and related overhead costs. Projects under development may also be comprised of advance payments made to suppliers for equipment under construction. Borrowing costs are also included in the cost of fixed assets during the development phase. Expenditures such as maintenance and repairs are expensed as incurred. Depreciation is calculated on a straight-line basis over the following estimated useful lives: Assets Estimated useful life Buildings and their components 12 to 40 years Furniture and equipment 3 to 7 years Receiving, distribution and telecommunication networks 3 to 20 years Customer equipment 3 to 5 years Depreciation methods, residual values, and the useful lives of significant fixed assets are reviewed at least once a year. Any change is accounted for prospectively as a change in accounting estimate. Leasehold improvements are depreciated over the shorter of the term of the lease and their estimated useful life. The Corporation does not record any decommissioning obligations in connection with its cable distribution networks. The Corporation expects to renew all of its agreements with utility companies to access their support structures in the future, making the retirement date so far into the future that the present value of the restoration costs is insignificant for those assets. A decommissioning obligation is however recorded for the rental of sites related to the mobile network. The Corporation is engaged in an agreement to operate a shared LTE network in the Province of Québec and in the Ottawa region. (p) Goodwill and intangible assets Goodwill Goodwill initially arising from a business acquisition is measured and recognized as the excess of the fair value of the consideration paid over the fair value of the recognized identifiable assets acquired and liabilities assumed. When the Corporation acquires less than 100% of the equity interests in the business acquired at the acquisition date, goodwill attributable to the non-controlling interests is also recognized at fair value. Goodwill is allocated as at the date of a business acquisition to a CGU for purposes of impairment testing (note 1(f)). The allocation is made to the CGU or group of CGUs expected to benefit from the synergies of the business acquisition. Intangible assets Spectrum licences are recorded at cost. Spectrum licences have an indefinite useful life and are not amortized based on the following facts: (i) the Corporation intends to renew the spectrum licences and believes that they are likely to be renewed by Innovation, Science and Economic Development Canada, (ii) the Corporation has the financial and operational ability to renew these spectrum licences, (iii) currently, the competitive, legal and regulatory landscape does not limit the useful lives of the spectrum licences, and (iv) the Corporation foresees no limit to the period during which these licences can be expected to generate cash flows in the future. Software is recorded at cost. In particular, internally generated intangible assets such as software and Web site development are mainly comprised of internal costs in connection with the development of those assets to be used internally or to provide services to customers. These costs are capitalized when the development stage of the software application begins and costs incurred prior to that stage are recognized as expenses. Customer relationships and trademarks acquired through a business acquisition are recorded at fair value at the date of acquisition. Trademarks have an indefinite useful life and are not amortized. Borrowing costs directly attributable to the acquisition, development or production of an intangible asset are also included as part of the cost of that asset during the development phase. Intangible assets with finite useful lives are amortized over their useful lives using the straight-line method over the following periods: Assets Estimated useful life Software, licences and other intangible assets 3 to 7 years Customer relationships and other 5 to 8 years Amortization methods, residual values, and the useful lives of significant intangible assets are reviewed at least once a year. Any change is accounted for prospectively as a change in accounting estimate. (q) Provisions Provisions are recognized when (i) the Corporation has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation, and when (ii) the amount of the obligation can be reliably estimated. Restructuring costs, comprised primarily of termination benefits, are recognized when a detailed plan for the restructuring exists and a valid expectation has been raised in those affected, that the plan will be carried out. Provisions are reviewed at each balance sheet date and changes in estimates are reflected in the consolidated statement of income in the reporting period in which changes occur. (r) Stock-based compensation Stock-based awards to employees that call for settlement in cash, as deferred share units (“DSUs”) and performance share units (“PSUs”), or that call for settlement in cash at the option of the employee, as stock options awards, are accounted for at fair value and classified as a liability. The compensation cost is recognized in expenses over the vesting period. Changes in the fair value of stock-based awards between the grant date and the measurement date result in a change in the liability and compensation cost. The fair value of DSUs and PSUs is based on the underlying share price at the date of valuation. The fair value of stock option awards is determined by applying an option pricing model, taking into account the terms and conditions of the grant. Key assumptions are described in note 23. (s) Pension plans and postretirement benefits The Corporation offers defined contribution pension plans and defined benefit pension plans to some of its employees. (i) Defined contribution pension plans Under its defined contribution pension plans, the Corporation pays fixed contributions to participating employees’ pension plans and has no legal or constructive obligation to pay any further amounts. Obligations for contributions to defined contribution pension plans are recognized as employee benefits in the consolidated statements of income when the contributions become due. (ii) Defined benefit pension plans and postretirement plans Defined benefit pension plan costs are determined using actuarial methods and are accounted for using the projected unit credit method, which incorporates management’s best estimates of future salary levels, other cost escalations, retirement ages of employees, and other actuarial factors. Defined benefit pension costs recognized in the consolidated statements of income as employee costs, mainly include the following: · service costs provided in exchange for employee services rendered during the period; · prior service costs recognized at the earlier of (a) when the employee benefit plan is amended or (b) when restructuring costs are recognized; · curtailment or settlement gain or loss. Interest on net defined benefit liability or asset recognized in the consolidated statements of income, as financial expenses, is determined by multiplying the net defined benefit liability or asset by the discount rate used to determine the defined benefit obligation. Re-measurements of the net defined benefit liability or asset are recognized immediately in other comprehensive loss and in accumulated other comprehensive loss. Re-measurements are comprised of the following: · actuarial gains and losses arising from changes in financial and demographic actuarial assumptions used to determine the defined benefit obligation or from experience adjustments on liabilities; · the difference between actual return on plan assets and interest income on plan assets anticipated as part of the interest on net defined benefit liability or asset calculation; · changes in the net benefit asset limit or in the minimum funding liability. Recognition of a net benefit asset is limited under certain circumstances to the amount recoverable, which is primarily based on the present value of future contributions to the plan, to the extent that the Corporation can unilaterally reduce those future contributions. In addition, an adjustment to the net benefit asset or the net benefit liability can be recorded to reflect a minimum funding liability in a certain number of the Corporation’s pension plans. The Corporation also offers discounts on telecommunication services and health and life insurance plans to some of its retired employees. The cost of postretirement benefits is determined using an accounting methodology similar to that for defined benefit pension plans. The benefits related to these plans are funded by the Corporation as they become due. (t) Use of estimates and judgments The preparation of consolidated financial statements in accordance with IFRS requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities, related amounts of revenues and expenses, and disclosure of contingent assets and liabilities. Although these estimates are based on management’s best judgment and information available at the time of the assessment date, actual results could differ from those estimates. The following significant areas represent management’s most difficult, subjective or complex estimates: (i) Recoverable amount of an asset or a CGU When an impairment test is performed on an asset or a CGU, management estimates the recoverable amount of the asset or CGU based on its fair value less costs of disposal or its value in use. These estimates are based on valuation models requiring the use of a number of assumptions such as forecasts of future cash flows, pre-tax discount rate (WACC) and perpetual growth rate. These assumptions have a significant impact on the results of impairment tests and on the impairment charge, as the case may be, recorded in the consolidated statements of income. A description of key assumptions used in the goodwill impairment tests and a sensitivity analysis of recoverable amounts are presented in note 16. (ii) Fair value of derivative financial instruments, including embedded derivatives Derivative financial instruments must be accounted for at their fair value, which is estimated using valuation models based on a number of assumptions such as future cash flows, period-end swap rates, foreign exchange rates, and credit default premium. Also, the fair value of embedded derivatives related to early settlement options on debt is determined with option pricing models using market inputs, including volatility, discount factors and the underlying instrument’s adjusted implicit interest rate and credit premium. The assumptions used in the valuation models have a significant impact on the gain or loss on valuation and translation of financial instruments recorded in the consolidated statements of income, the gain or loss on valuation of financial instruments recorded in the consolidated statements of comprehensive income, and the carrying value of derivative financial instruments in the consolidated balance sheets. A description of valuation models used and sensitivity analysis on key assumptions are presented in note 27. (iii) Costs and obligations related to pension and postretirement benefit plans Estimates of costs and obligations related to pension and postretirement benefit obligations are based on a number of assumptions, such as the discount rate, the rate of increase in compensation, the retirement age of employees, health care costs, and other actuarial factors. Certain of these assumptions may have a significant impact on employee costs and financial expenses recorded in the consolidated statements of income, the re-measurement gain or loss on defined benefit plans recorded in the consolidated statements of comprehensive income, and on the carrying value of other assets or other liabilities in the consolidated balance sheets. Key assumptions and a sensitivity analysis on the discount rate are presented in note 29. (iv) Provisions The recognition of provisions requires management to estimate expenditures required to settle a present obligation or to transfer it to a third party at the date of assessment. More specifically, an assessment of the probable outcomes of legal proceedings or other contingencies is also required. A description of the main provisions, including management expectations on the potential effect on the consolidated financial statements of the possible outcomes of legal disputes, is presented in note 19. The following areas represent management’s most significant judgments, apart from those involving estimates: (i) Useful life periods for the depreciation and amortization of assets with finite useful lives For each class of assets with finite useful lives, management has to determine over which period the Corporation will consume the assets’ future economic benefits. The determination of a useful life period involves judgment and has an impact on the depreciation and amortization charge recorded in the consolidated statements of income. (ii) Indefinite useful life of spectrum licences Management has concluded that spectrum licences have an indefinite useful life. This conclusion was based on an analysis of factors, such as the Corporation’s financial ability to renew the spectrum licences, the competitive, legal and regulatory landscape, and the future expectation regarding the use of the spectrum licences. Therefore, the determination that spectrum licences have an indefinite useful life involves judgment, which could have an impact on the amortization charge recorded in the consolidated statements of income if management changed its conclusion in the future. (iii) CGU’s determination for the purpose of impairment tests The determination of CGUs requires judgment when determining the lowest level for which there are separately identifiable cash inflows generated by the group of assets. In identifying assets to group in CGUs, the Corporation considers, among other factors, offering bundled services, sharing telecommunication network infrastructure, similarity on exposure to market risk, and materiality. The determination of CGUs could affect the results of impairment tests and, as the case may be, the impairment charge recorded in the consolidated statements of income. (iv) Determination if early settlement options are not closely related to their debt contract Early settlement options are not considered closely related to their debt contract when the corresponding option exercise price is not approximately equal to the amortized cost of the debt. Judgment is therefore required to determine if an option exercise price is not approximately eq |
EMPLOYEE COSTS AND PURCHASE OF
EMPLOYEE COSTS AND PURCHASE OF GOODS AND SERVICES | 12 Months Ended |
Dec. 31, 2017 | |
EMPLOYEE COSTS AND PURCHASE OF GOODS AND SERVICES | |
EMPLOYEE COSTS AND PURCHASE OF GOODS AND SERVICES | 2. EMPLOYEE COSTS AND PURCHASE OF GOODS AND SERVICES The main components are as follows: 2017 2016 2015 Employee costs $ $ $ Less employee costs capitalized to fixed assets and to intangible assets ) ) ) Purchase of goods and services Royalties and rights Cost of retail products Subcontracting costs Marketing and distribution expenses Other $ $ $ |
FINANCIAL EXPENSES
FINANCIAL EXPENSES | 12 Months Ended |
Dec. 31, 2017 | |
FINANCIAL EXPENSES | |
FINANCIAL EXPENSES | 3. FINANCIAL EXPENSES 2017 2016 2015 Third parties : Interest on long-term debt $ $ $ Amortization of financing costs and long-term debt discount (Gain) Loss on foreign currency translation on short-term monetary items ) Other ) Affiliated corporations: Interest expense Dividend income ) ) ) Interest income ) — — ) ) ) Interest on net defined benefit liability $ $ $ |
LOSS ON VALUATION AND TRANSLATI
LOSS ON VALUATION AND TRANSLATION OF FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2017 | |
LOSS ON VALUATION AND TRANSLATION OF FINANCIAL INSTRUMENTS | |
LOSS ON VALUATION AND TRANSLATION OF FINANCIAL INSTRUMENTS | 4. LOSS ON VALUATION AND TRANSLATION OF FINANCIAL INSTRUMENTS 2017 2016 2015 Loss (gain) on the ineffective portion of fair value hedges $ $ $ ) Loss (gain) on embedded derivatives related to long-term debt ) Loss (gain) on reversal of embedded derivatives on debt redemption — ) Loss on the ineffective portion of cash flow hedges — — $ $ $ |
RESTRUCTURING OF OPERATIONS, LI
RESTRUCTURING OF OPERATIONS, LITIGATION AND OTHER ITEMS | 12 Months Ended |
Dec. 31, 2017 | |
RESTRUCTURING OF OPERATIONS, LITIGATION AND OTHER ITEMS | |
RESTRUCTURING OF OPERATIONS, LITIGATION AND OTHER ITEMS | 5. RESTRUCTURING OF OPERATIONS, LITIGATION AND OTHER ITEMS In 2017, a net charge of $5.9 million was recorded relating to various cost reduction initiatives across the organization, the migration of subscribers from analog to digital services and developments in certain legal disputes (a net charge of $15.9 million and a net reversal of the charge of $129.7 million for the years ended respectively on December 31, 2016 and 2015). In 2015, the net gain of $129.7 million included a gain of $138.4 million resulting from the Court of Appeal of Quebec ruling in favour of the Corporation which ordered Bell ExpressVu Limited Partnership (“Bell ExpressVu”), a subsidiary of Bell Canada, to pay to the Corporation $135.3 million, including interest, for negligence in failing to implement an appropriate security system to prevent piracy of the signals broadcast by its satellite television service between 1999 and 2005, thereby harming its competitors and broadcasters. |
GAIN ON SALE OF SPECTRUM LICENC
GAIN ON SALE OF SPECTRUM LICENCES | 12 Months Ended |
Dec. 31, 2017 | |
GAIN ON SALE OF SPECTRUM LICENCES | |
GAIN ON SALE OF SPECTRUM LICENCES | 6. GAIN ON SALE OF SPECTRUM LICENCES On June 20, 2017, the Corporation sold its AWS spectrum licence in the greater Toronto region to Rogers Communications Canada Inc. for a cash consideration of $184.2 million, pursuant to the transfer option held since 2013. The sale resulted in a gain on disposal of $87.8 million. On July 24, 2017, the Corporation sold its seven 2500 MHz and 700 MHz wireless spectrum licences outside Québec to Shaw Communications Inc. for a cash consideration of $430.0 million. The sale resulted in a gain on disposal of $243.1 million. |
LOSS ON DEBT REFINANCING
LOSS ON DEBT REFINANCING | 12 Months Ended |
Dec. 31, 2017 | |
LOSS ON DEBT REFINANCING | |
LOSS ON DEBT REFINANCING | 7. LOSS ON DEBT REFINANCING 2017 On March 31, 2017, the Corporation issued a notice for the redemption of all its issued and outstanding 6.875% Senior Notes due July 15, 2021 in aggregate principal amount of $125.0 million. On May 1, 2017, the Senior Notes were redeemed for a cash consideration of $129.3 million. This transaction resulted in a loss of $5.2 million in 2017. 2016 On December 2, 2016, the Corporation issued a notice for the redemption of an aggregate principal amount of $175.0 million of its issued and outstanding 6.875% Senior Notes due July 15, 2021. On January 5, 2017, the Senior Notes were redeemed for a cash consideration of $181.0 million. This transaction resulted in a loss of $7.3 million in 2016. 2015 · On April 10, 2015, the Corporation redeemed all of its issued and outstanding 6.375% Senior Notes due December 15, 2015, in aggregate principal amount of US$175.0 million and the related hedging contracts were unwound for a total cash consideration of $204.5 million. · On July 16, 2015, the Corporation redeemed all of its issued and outstanding 9.125% Senior Notes due April 15, 2018, in aggregate principal amount of US$75.0 million and the related hedging contracts were unwound for a total cash consideration of $75.9 million. · On July 16, 2015, the Corporation redeemed all of its issued and outstanding 7.125% Senior Notes due January 15, 2020, in aggregate principal amount of $300.0 million for a total cash consideration of $310.7 million. These transactions resulted in a total loss of $12.2 million in 2015, net of a gain of $3.9 million previously reported in other comprehensive income. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
INCOME TAXES | |
INCOME TAXES | 8. INCOME TAXES The following table reconciles income taxes at the Corporation’s domestic statutory tax rate of 26.8% in 2017 (26.9% in 2016 and 2015), and income taxes in the consolidated statements of income: 2017 2016 2015 Income taxes at domestic statutory tax rate $ $ $ (Reduction) increase resulting from: Effect of non-deductible charges and non-taxable income ) ) Change in benefit arising from the recognition of current and prior year tax losses ) ) Change in deferred tax balances due to a change in substantively enacted tax rates — ) — Effect of tax consolidation transactions with the parent corporation and affiliated corporations ) ) ) Other 1 ) Income taxes $ $ $ 1 Includes in 2015 a decrease of $16.1 million in income tax liability resulting from developments in tax audit matters, jurisprudence and tax legislation. The significant items comprising the Corporation’s net deferred income tax liability and their impact on the deferred income tax expense are as follows: Consolidated Consolidated 2017 2016 2017 2016 2015 Accounts payable, accrued charges and provisions $ $ $ ) $ $ Defined benefit plans Fixed assets ) ) ) ) ) Goodwill and intangible assets ) ) ) ) ) Long-term debt and derivative financial instruments ) ) ) ) Benefits from a general partnership — ) ) Other ) ) ) $ ) $ ) $ ) $ $ ) Changes in the net deferred income tax liability are as follows: 2017 2016 Balance at beginning of year $ ) $ ) Recognized in income ) Recognized in other comprehensive income Business acquisition (note 10) — ) Balance at end of year $ ) $ ) There are no income tax consequences attached to the payment of dividends or distributions in 2017, 2016 or 2015 by the Corporation to its shareholder. |
BUSINESS DISPOSAL
BUSINESS DISPOSAL | 12 Months Ended |
Dec. 31, 2017 | |
BUSINESS DISPOSAL | |
BUSINESS DISPOSAL | 9. BUSINESS DISPOSAL In 2015, the Corporation received an amount of $7.8 million from its parent corporation in connection with the 2013 sale of Web sites Jobboom and Réseau Contact . |
BUSINESS ACQUISITIONS
BUSINESS ACQUISITIONS | 12 Months Ended |
Dec. 31, 2017 | |
BUSINESS ACQUISITIONS | |
BUSINESS ACQUISITIONS | 10. BUSINESS ACQUISITIONS 2016 On January 7, 2016, the Corporation acquired Fibrenoire Inc., a company that provides businesses with fibre-optic connectivity services, for a purchase price of $125.0 million. At closing, the Corporation paid an amount of $119.1 million, net of cash acquired of $1.8 million. A post-closing adjustment of $0.2 million was received in the second quarter of 2016. The purchase price balance was paid in February 2017 for an amount of $5.6 million plus interests of $0.3 million. 2015 On March 11, 2015, the Corporation acquired 4Degrees Colocation Inc. (“4Degrees Colocation”) and its data center, the largest in Québec City, for a purchase price of $35.5 million in cash. A post-closing adjustment of $0.2 million was received in the second quarter of 2015. The acquisition enables the Corporation to meet its business customers’ growing technological and hosting needs. The purchase price allocation between the fair value of identifiable assets and liabilities related to business acquisitions in 2016 and 2015 is summarized as follows: 2016 2015 Assets acquired Non-cash current assets $ $ Property, plant and equipment Intangible assets Goodwill Other assets — Liabilities assumed Non-cash current liabilities ) ) Deferred income taxes ) ) Other long-term liabilities ) — ) ) Net assets acquired at fair value $ $ Consideration Cash, net of cash acquired $ $ Balance payable — $ $ The goodwill that was recorded is not deductible for tax purposes. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2017 | |
INVENTORIES | |
INVENTORIES | 11. INVENTORIES 2017 2016 Customer equipment $ $ Network materials $ $ Cost of inventories included in purchase of goods and services amounted to $278.0 million in 2017 ($258.7 million in 2016 and $205.7 million in 2015). Write-downs of inventories totalling $4.8 million were recognized in purchase of goods and services in 2017 ($3.0 million in 2016 and $1.5 million in 2015). |
INVESTMENTS AND SUBORDINATED LO
INVESTMENTS AND SUBORDINATED LOAN FROM PARENT CORPORATION | 12 Months Ended |
Dec. 31, 2017 | |
INVESTMENTS AND SUBORDINATED LOAN FROM PARENT CORPORATION | |
INVESTMENTS AND SUBORDINATED LOAN FROM PARENT CORPORATION | 12. INVESTMENTS AND SUBORDINATED LOAN FROM PARENT CORPORATION On February 5, 2015, the Corporation contracted a subordinated loan of $1.01 billion from Quebecor Media Inc., bearing interest at a rate of 10.75%, payable every six months on June 20 and December 20, and maturing on February 5, 2045. On the same day, the Corporation invested the total proceeds of $1.01 billion into 1,010,000 preferred shares, Series B, of 9101-0835 Québec Inc. These shares carry the right to receive an annual dividend of 10.85%, payable semi-annually. On February 12, 2016, 9101-0835 Québec Inc., a subsidiary of Quebecor Media Inc., redeemed 430,000 preferred shares, Series B, for a total cash consideration of $430.0 million, and settled cumulative unpaid dividends of $6.9 million. On the same day, the Corporation used the total proceeds of $430.0 million to repay part of its subordinated loan contracted from Quebecor Media Inc. On March 1, 2016, the Corporation contracted a subordinated loan of $625.0 million from Quebecor Media Inc., bearing interest at a rate of 11.5%, payable every six months on June 20 and December 20, and maturing on March 1 st , 2046. On the same day, the Corporation invested the total proceeds of $625.0 million into 625,000 preferred shares, Series D, of 9101-0835 Québec Inc., a subsidiary of Quebecor Media Inc. These shares carry the right to receive an annual dividend of 11.6%, payable semi-annually. On November 1, 2016, 9101-0835 Québec Inc., a subsidiary of Quebecor Media Inc., redeemed 1,660,000 preferred shares, Series B and 625,000 preferred shares, Series D for a total cash consideration of $2.29 billion, and settled cumulative unpaid dividends of $92.7 million. On the same day, the Corporation used the total proceeds of $2.29 billion to repay its subordinated loans contracted from Quebecor Media Inc. On May 3, 2017, the Corporation contracted a subordinated loan of $3.6 billion from Quebecor Media Inc., bearing interest at a rate of 10.5%, payable every six months on June 20 and December 20 and maturing on May 3, 2047. On the same day, the Corporation invested the total proceeds of $3.6 billion into 3,600,000 preferred shares, Series C, of 9346-9963 Québec Inc., a subsidiary of Quebecor Media Inc. These shares carry the right to receive an annual dividend of 10.6%, payable semi-annually. On November 6, 2017, 9346-9963 Québec Inc., a subsidiary of Quebecor Media Inc., redeemed 3,600,000 preferred shares, Series C for a total cash consideration of $3.6 billion, and settled cumulative unpaid dividends of $145.3 million. On the same day, the Corporation used the total proceeds of $3.6 billion to repay its subordinated loans contracted from Quebecor Media Inc. The above transactions were carried out for tax consolidation purposes of Quebecor Media Inc. and its subsidiaries. |
SUBORDINATED LOAN TO PARENT COR
SUBORDINATED LOAN TO PARENT CORPORATION | 12 Months Ended |
Dec. 31, 2017 | |
SUBORDINATED LOAN TO PARENT CORPORATION | |
SUBORDINATED LOAN TO PARENT CORPORATION | 13. SUBORDINATED LOAN TO PARENT CORPORATION On April 12, 2017, the Corporation issued to Quebecor Media Inc. a $342.0 million subordinated loan, bearing interest at 5.5%, payable every six months on April 12 and October 12, and maturing on April 12, 2019. The loan was reimbursed by Quebecor Media Inc. on January 16, 2018 (note 30). |
FIXED ASSETS
FIXED ASSETS | 12 Months Ended |
Dec. 31, 2017 | |
FIXED ASSETS | |
FIXED ASSETS | 14. FIXED ASSETS For the years ended December 31, 2017 and 2016, changes in the net carrying amount of fixed assets are as follows: Land and Furniture Receiving and Customer Projects Total Cost : Balance as of December 31, 2015 $ $ $ $ $ $ Additions Business acquisition (note 10) — — Net change in additions financed with accounts payable — ) ) Retirement, disposals and other ) ) ) ) — ) Reclassification — — ) — Balance as of December 31, 2016 Additions Net change in additions financed with accounts payable — ) ) ) Retirement, disposals and other — ) ) ) — ) Reclassification — — ) — Balance as of December 31, 2017 $ $ $ $ $ $ Land and Furniture and Receiving and 1 Customer Projects Total Accumulated depreciation : Balance as of December 31, 2015 $ ) $ ) $ ) $ ) $ — $ ) Depreciation ) ) ) ) — ) Retirement and disposals — Balance as of December 31, 2016 ) ) ) ) — ) Depreciation ) ) ) ) — ) Retirement and disposals — — Balance as of December 31, 2017 $ ) $ ) $ ) $ ) $ — $ ) Net carrying amount : As of December 31, 2016 As of December 31, 2017 $ $ $ $ $ $ 1 In 2017, the calculation of the depreciation of a component of the Corporation’s telecommunications networks was changed in order to depreciate this component over its useful life of 5 years, from a period of 15 years previously. As a result, depreciation in 2017 was increased by $21.2 million. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2017 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | 15. INTANGIBLE ASSETS For the years ended December 31, 2017 and 2016, changes in the net carrying amount of intangible assets are as follows: Spectrum Software, Projects under Total Cost : Balance as of December 31, 2015 $ $ $ $ Additions — Business acquisition (note 10) — — Net change in additions financed with accounts payable — ) ) ) Retirements and other — ) — ) Reclassification — ) — Balance as of December 31, 2016 Additions — Net change in additions financed with accounts payable — Retirements and disposal ) ) — ) Reclassification and other items — ) — Balance as of December 31, 2017 $ $ $ $ Spectrum Software, Projects Total Accumulated amortization : Balance as of December 31, 2015 $ ) $ ) $ — $ ) Amortization — ) — ) Retirements — — Balance as of December 31, 2016 ) ) — ) Amortization — ) — ) Retirements — — Balance as of December 31, 2017 $ ) $ ) $ — $ ) Net carrying amount : As of December 31, 2016 As of December 31, 2017 $ $ $ $ The cost of internally generated intangible assets, mainly composed of software, was $514.7 million as of December 31, 2017 ($453.0 million as of December 31, 2016). For the year ended December 31, 2017, the Corporation recorded additions of internally generated intangible assets of $64.1 million ($57.2 million in 2016 and $25.7 million in 2015). The accumulated amortization of internally generated intangible assets, mainly composed of software, was $284.1 million as of December 31, 2017 ($249.8 million as of December 31, 2016). For the year ended December 31, 2017, the Corporation recorded $36.5 million of amortization ($35.4 million in 2016 and $33.6 million in 2015) for its internally generated intangible assets. The net carrying value of internally generated intangible assets was $230.6 million as of December 31, 2017 ($203.2 million as of December 31, 2016). The net carrying amount of intangible assets as of December 31, 2017 and 2016 is allocated to the Telecommunications CGU. |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2017 | |
GOODWILL | |
GOODWILL | 16. GOODWILL For the years ended December 31, 2017 and 2016, changes in the net carrying amount of goodwill are as follows: Cost : Balance as of December 31, 2015 $ Business acquisition (note 10) Balance as of December 31, 2017 and 2016 Accumulated amortization : Balance as of December 31, 2017 and 2016 $ ) Net carrying amount : As of December 31, 2017 and 2016 $ The net carrying amount of goodwill as of December 31, 2017 and 2016 is allocated to the Telecommunications CGU. Recoverable amount The recoverable amount of the Telecommunications CGU was determined based on the higher of value in use or fair value less costs of disposal with respect to the impairment tests performed. The Corporation uses the discounted cash flow method to estimate the recoverable amount, consisting of future cash flows derived primarily from the most recent budget and three-year strategic plan approved by the Corporation’s management and presented to the Board of Directors. These forecasts considered the CGU’s past operating performance and market share as well as economic trends, along with specific and market industry trends and corporate strategies. In particular, specific assumptions are used for each type of revenue generated by the CGU or for each nature of expenses as well as for future capital expenditures. Such assumptions will consider, among many other factors, subscribers, competitive landscape, evolution of products and services offerings, wireless penetration growth, technology evolution, bargaining agreements, Canadian GDP rates and operating cost structures. A perpetual growth rate is used for cash flows beyond the three-year strategic plan period. The discount rate used by the Corporation is a pre-tax rate derived from the weighted average cost of capital pertaining to the CGU, which reflects the current market assessment of (i) the time value of money, and (ii) the risk specific to the assets for which the future cash flow estimates have not been risk-adjusted. The perpetual growth rate was determined with regard to the specific markets in which the CGU participates. The following key assumptions were used to determine recoverable amounts in the most recent impairment tests performed: 2017 2016 CGU groups Pre-tax discount Perpetual Pre-tax discount Perpetual Telecommunications % % % % Sensitivity of the recoverable amount No reasonable changes in the discount rate or in the perpetual growth rate used in the most recent test performed would have caused the recoverable amount of the Telecommunication CGU to equal its carrying value. |
OTHER ASSETS
OTHER ASSETS | 12 Months Ended |
Dec. 31, 2017 | |
OTHER ASSETS | |
OTHER ASSETS | 17. OTHER ASSETS 2017 2016 Deferred connection costs $ $ Other $ $ |
ACCOUNTS PAYABLE AND ACCRUED CH
ACCOUNTS PAYABLE AND ACCRUED CHARGES | 12 Months Ended |
Dec. 31, 2017 | |
ACCOUNTS PAYABLE AND ACCRUED CHARGES | |
ACCOUNTS PAYABLE AND ACCRUED CHARGES | 18. ACCOUNTS PAYABLE AND ACCRUED CHARGES 2017 2016 Trade and accruals $ $ Salaries and employee benefits Interest payable Stock-based compensation $ $ |
PROVISIONS AND CONTINGENCIES
PROVISIONS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
PROVISIONS AND CONTINGENCIES | |
PROVISIONS AND CONTINGENCIES | 19. PROVISIONS AND CONTINGENCIES Balance as of December 31, 2016 $ Recognized in income ) Payments ) Other Balance as of December 31, 2017 $ Current portion $ Non-current portion 1 1 The non-current portion of provisions and contingencies is included in other liabilities (note 21) The recognition of provisions, in terms of both timing and amounts, requires the exercise of judgment based on relevant circumstances and events that can be subject to change over time. Provisions are primarily comprised of the following: Contingencies and legal disputes There are a number of legal proceedings against the Corporation and its subsidiaries that are pending. In the opinion of the management of the Corporation and its subsidiaries, the outcome of those proceedings is not expected to have a material adverse effect on the Corporation’s results or on its financial position. Management of the Corporation, after taking legal advice, has established provisions for specific claims or actions considering the facts of each case. The Corporation cannot determine when and if any payment will be made related to those provisions. Other Other provisions are principally related to decommissioning obligations. |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2017 | |
LONG-TERM DEBT | |
LONG-TERM DEBT | 20. LONG-TERM DEBT Effective interest rate as of 2017 2016 Bank credit facilities (i) % Senior Notes (ii) (note 7) Total long-term debt Change in fair value related to hedged interest rate risk Adjustments related to embedded derivatives — ) Financing fees, net of amortization ) ) ) ) Less current portion ) ) $ $ (i) The bank credit facilities provide for a $965.0 million secured revolving credit facility that matures in July 2021 and a $75.0 million secured export financing facility providing for a term loan that matures in June 2018. The revolving credit facility bears interest at Bankers’ acceptance rate, U.S. London Interbank Offered Rate (“LIBOR”), Canadian prime rate or U.S. prime rate, plus a margin, depending on the Corporation’s leverage ratio. Advances under the export financing facility bear interest at Bankers’ acceptance rate plus a margin. The bank credit facilities are secured by a first ranking hypothec on the universality of all tangible and intangible assets, current and future, of the Corporation and most of its wholly owned subsidiaries. As of December 31, 2017, the bank credit facilities were secured by assets with a carrying value of $6,665.7 million ($5,804.3 million in 2016). The bank credit facilities contain covenants such as maintaining certain financial ratios, limitations on the Corporation’s ability to incur additional indebtedness, pay dividends, or make other distributions. As of December 31, 2017, no amount had been drawn on the secured revolving credit facility ($209.4 million in 2016) and $5.4 million was outstanding on the export financing facility ($16.1 million in 2016). (ii) The Senior Notes are unsecured and contain certain restrictions on the Corporation, including limitations on its ability to incur additional indebtedness, pay dividends or make other distributions. Some Notes are redeemable at the option of the issuer, in whole or in part, at a price based on a make-whole formula during the first five years of the term of the Notes and at a decreasing premium thereafter, while the remaining Notes are redeemable at a price based on a make-whole formula at any time prior to their maturity. The Notes are guaranteed by specific subsidiaries of the Corporation. The following table summarizes terms of the outstanding Senior Notes as of December 31, 2017: Principal amount Annual nominal Effective interest rate Maturity date Interest payable US$ % % July 15, 2022 January and July 15 US$ % % June 15, 2024 June and December 15 $ % % June 15, 2025 April and October 15 $ 1 % % January 15, 2026 March and September 15 US$ 2 % % April 15, 2027 April and October 15 1 The Notes were issued in September 2015 for net proceeds of $370.1 million, net of financing fees of $4.9 million. 2 The Notes were issued in April 2017 for net proceeds of $794.5 million, net of financing fees of $9.9 million. On December 31, 2017, the Corporation and its subsidiaries were in compliance with all debt covenants. Principal repayments of long-term debt over the coming years are as follows: 2018 $ 2019 — 2020 — 2021 — 2022 2023 and thereafter |
OTHER LIABILITIES
OTHER LIABILITIES | 12 Months Ended |
Dec. 31, 2017 | |
OTHER LIABILITIES | |
OTHER LIABILITIES | 21. OTHER LIABILITIES Note 2017 2016 Defined benefit plans $ $ Asset retirement obligation Deferred revenue Balance payable on a business acquisition — Stock-based compensation 1 Other $ $ 1 The current $4.1 million portion of stock-based compensation is included in accounts payable and accrued charges ($2.3 million in 2016) (note 18). |
CAPITAL STOCK
CAPITAL STOCK | 12 Months Ended |
Dec. 31, 2017 | |
CAPITAL STOCK | |
CAPITAL STOCK | 22. CAPITAL STOCK (a) Authorized capital stock An unlimited number of Common Shares, without par value, voting and participating An unlimited number of Preferred Shares, Series B, Series C, Series D, Series E, Series F, and Series H, without par value, ranking prior to the Common Shares with regards to payment of dividends and repayment of capital, non-voting, non-participating, a fixed monthly non-cumulative dividend of 1%, retractable and redeemable. An unlimited number of Preferred Shares, Series G, ranking prior to all other shares with regards to payment of dividends and repayment of capital, non-voting, non-participating carrying the rights and restrictions attached to the class as well as a fixed annual cumulative preferred dividend of 11.25%, retractable and redeemable. (b) Issued and outstanding capital stock Common Shares Number Amount Balance as of December 31, 2017 and 2016 $ On June 23, 2015, the Corporation issued 170,000,000 common shares to its parent corporation for a total cash consideration of $170.0 million. On July 20, 2015 and July 30, 2015, the Corporation reduced its paid-up capital for a cash consideration of $21.0 million and $20.0 million, respectively. |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS | 12 Months Ended |
Dec. 31, 2017 | |
STOCK-BASED COMPENSATION PLANS | |
STOCK-BASED COMPENSATION PLANS | 23. STOCK-BASED COMPENSATION PLANS (a) Ultimate parent corporation stock option plan On November 15, 2017, a stock split on Quebecor’s outstanding Class A and Class B Shares was performed on a two-for-one basis. Accordingly, all references to Quebecor share-based compensation information in these consolidated financial statements have been retrospectively restated to reflect the impact of the stock split. Under a stock option plan established by the ultimate parent corporation, 26,000,000 Class B Shares of the ultimate parent corporation have been set aside for directors, officers, senior employees, and other key employees of the ultimate parent corporation and its subsidiaries. The exercise price of each option is equal to the weighted average trading price of the ultimate parent corporation’s Class B Shares on the Toronto Stock Exchange over the last five trading days immediately preceding the granting of the option. Each option may be exercised during a period not exceeding 10 years from the date granted. Options usually vest as follows: 1/3 after one year, 2/3 after two years, and 100% three years after the original grant. Holders of options under the stock option plan have the choice, when they exercise their options, of acquiring the Class B Shares at the corresponding option exercise price, or receiving a cash payment equivalent to the difference between the market value of the underlying shares and the exercise price of the option. The Board of Directors of the ultimate parent corporation may, at its discretion, affix different vesting periods at the time of each grant. The following table gives details on changes to outstanding options for the years ended December 31, 2017 and 2016: 2017 2016 Options Weighted Options Weighted average Balance at beginning and end of year $ $ Vested options at end of year $ $ As of December 31, 2017, exercise prices of all outstanding and vested options are at $12.75 and the number of years to maturity of all outstanding options is 6.22 years. (b) Parent corporation stock option plan Under a stock option plan established by the parent corporation, 6,180,140 options have been set aside for officers, senior employees, directors and other key employees of the Corporation. Each option may be exercised within a maximum period of 10 years following the date of grant at an exercise price not lower than, as the case may be, the fair market value of the Common Shares of the parent corporation at the date of grant, as determined by its Board of Directors (if the Common Shares of the parent corporation are not listed on a stock exchange at the time of the grant), or the five-day weighted average market price ending on the day preceding the date of grant of the Common Shares of the parent corporation on the stock exchange(s) where such shares are listed at the time of grant. As long as the Common Shares of the parent corporation are not listed on a recognized stock exchange, optionees may exercise their vested options during one of the following periods: from March 1 to March 30, from June 1 to June 29, from September 1 to September 29, and from December 1 to December 30. Holders of options under the plan have the choice at the time of exercising their options of receiving an amount in cash (equal to the difference between either the five-day weighted average market price ending on the day preceding the date of exercise of the Common Shares of the parent corporation on the stock exchange(s) where such shares are listed at the time of exercise or the fair market value of the Common Shares, as determined by the parent corporation’s Board of Directors, and the exercise price of their vested options) or, subject to certain stated conditions, exercise their options to purchase Common Shares of the parent corporation at the exercise price. Except under specific circumstances, and unless the Human Resources and Corporate Governance Committee decides otherwise, options vest over a five-year period in accordance with one of the following vesting schedules as determined by the Human Resources and Corporate Governance Committee at the time of grant: (i) equally over five years with the first 20% vesting on the first anniversary of the date of the grant; (ii) equally over four years with the first 25% vesting on the second anniversary of the date of grant; and (iii) equally over three years with the first 33 1/3% vesting on the third anniversary of the date of grant. The following table gives details on changes to outstanding options granted as of December 31, 2017 and 2016: 2017 2016 Options Weighted Options Weighted Balance at beginning of year $ $ Exercised ) ) Cancelled ) ) Balance at end of year $ $ Vested options at end of year $ $ During the year ended December 31, 2017, 80,378 of the Corporation’s stock options were exercised for a cash consideration of $2.0 million (94,506 stock options for $1.6 million in 2016). As of December 31, 2017, exercise prices of all outstanding and vested options are from $57.35 to $70.56 and the number of years to maturity of all outstanding options is 6.47 years. (c) Deferred share unit (“DSU”) and performance share unit (“PSU”) plans On July 13, 2016, the ultimate parent corporation established a DSU plan and a PSU plan for its employees and those of its subsidiaries. Both plans are based on Quebecor Class B Subordinate Shares (“Quebecor Class B Shares”). The DSUs vest over six years and will be redeemed for cash only upon the participant’s retirement or termination of employment, as the case may be. The PSUs vest over three years and will be redeemed for cash at the end of this period subject to the achievement of financial targets. DSUs and PSUs entitle the holders to receive additional units when dividends are paid on Quebecor Class B Shares. No treasury shares will be issued for the purposes of these plans. As of December 31, 2017, 96,963 DSUs and 118,529 PSUs were outstanding under these plans. (d) Assumptions in estimating the fair value of stock-based awards The fair value of stock-based awards under the stock option plans of the ultimate parent corporation and parent corporation was estimated using the Black-Scholes option pricing model. The following weighted-average assumptions were used to estimate the fair value of all outstanding stock options under the stock option plans as of December 31, 2017 and 2016: December 31, 2017 Ultimate parent Parent Risk-free interest rate % % Distribution yield % % Expected volatility % % Expected remaining life 2.7 years 2.4 years December 31, 2016 Ultimate parent Parent Risk-free interest rate % % Distribution yield % % Expected volatility % % Expected remaining life 3.7 years 3.2 years Except for the parent corporation, the expected volatility is based on the historical volatility of the underlying share price for a period equivalent to the expected remaining life of the options. Since the Common Shares of the parent corporation are not publicly traded on a stock exchange, expected volatility is derived from the implied volatility of the ultimate parent corporation’s stock. The expected remaining life of options granted represents the period of time that options granted are expected to be outstanding. The risk-free rate over the expected remaining life of the option is based on the Government of Canada yield curve in effect at the time of the valuation. Distribution yield is based on the current average yield. (e) Liability of vested options As of December 31, 2017, the liability for all vested options was $1.9 million as calculated using the intrinsic value ($0.6 million as of December 31, 2016). (f) Consolidated compensation charge For the year ended December 31, 2017, a consolidated charge related to all stock-based compensation plans was recorded in the amount of $3.7 million (charge of $3.0 million in 2016 and $1.3 million 2015). |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 12 Months Ended |
Dec. 31, 2017 | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | 24. ACCUMULATED OTHER COMPREHENSIVE LOSS Cash flow hedges Defined Total Balance as of December 31, 2014 $ ) $ ) $ ) Other comprehensive loss ) ) ) Balance as of December 31, 2015 ) ) ) Other comprehensive (loss) income ) ) Balance as of December 31, 2016 ) ) ) Other comprehensive income (loss) ) Balance as of December 31, 2017 $ ) $ ) $ ) No significant amount is expected to be reclassified in income over the next 12 months in connection with derivatives designated as cash flow hedges. The balance is expected to reverse over a 9¼ year period. |
COMMITMENTS
COMMITMENTS | 12 Months Ended |
Dec. 31, 2017 | |
COMMITMENTS | |
COMMITMENTS | 25. COMMITMENTS The Corporation rents premises and equipment under operating leases and has entered into long-term commitments to purchase services and capital equipment that call for total future payments of $741.9 million, including an amount of $41.6 million for future rent payments to the ultimate parent corporation. The operating leases have various terms, escalation clauses, purchase options and renewal rights. The minimum payments for the coming years are as follows: Leases Other 2018 $ $ 2019 to 2022 2023 and thereafter The Corporation and its subsidiaries’ operating lease expenses amounted to $54.9 million in 2017 ($54.2 million in 2016 and $52.1 million in 2015). |
GUARANTEES
GUARANTEES | 12 Months Ended |
Dec. 31, 2017 | |
GUARANTEES | |
GUARANTEES | 26. GUARANTEES In the normal course of business, the Corporation enters into numerous agreements containing guarantees, including the following: Operating leases The Corporation has guaranteed a portion of the residual value of certain assets under operating leases for the benefit of the lessor. Should the Corporation terminate these leases prior to term (or at the end of the lease terms) and should the fair value of the assets be less than the guaranteed residual value, then the Corporation must, under certain conditions, compensate the lessor for a portion of the shortfall. As of December 31, 2017, the maximum exposure with respect to the guarantees was $13.1 million and no liability has been recorded in the consolidated balance sheet. Business and asset disposals In the sale of all or part of a business or an asset, in addition to possible indemnification relating to failure to perform covenants and breach of representations or warranties, the Corporation may agree to indemnify against claims related to the past conduct of the business. Typically, the term and amount of such indemnification will be limited by the agreement. The nature of these indemnification agreements prevents the Corporation from estimating the maximum potential liability it could be required to pay to guaranteed parties. The Corporation has not accrued any amount in respect of these items in the consolidated balance sheet. Outsourcing companies and suppliers In the normal course of its operations, the Corporation enters into contractual agreements with outsourcing companies and suppliers. In some cases, the Corporation agrees to provide indemnifications in the event of legal procedures initiated against them. In other cases, the Corporation provides indemnification to counterparties for damages resulting from the outsourcing companies and suppliers. The nature of the indemnification agreements prevents the Corporation from estimating the maximum potential liability it could be required to pay. No amount has been accrued in the consolidated balance sheet with respect to these indemnifications. |
FINANCIAL INSTRUMENTS AND FINAN
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT | 12 Months Ended |
Dec. 31, 2017 | |
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT | |
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT | 27. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT The Corporation’s financial risk management policies have been established in order to identify and analyze the risks faced by the Corporation, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk-management policies are reviewed regularly to reflect changes in market conditions and in the Corporation’s activities. The Corporation uses a number of financial instruments, mainly cash and cash equivalents, accounts receivable, bank indebtedness, accounts payable and accrued charges, long-term debt, and derivative financial instruments. As a result of their use of financial instruments, the Corporation and its subsidiaries are exposed to credit risk, liquidity risk and market risks relating to foreign exchange fluctuations and interest rate fluctuations. In order to manage its foreign exchange and interest rate risks, the Corporation uses derivative financial instruments (i) to set in CAN dollars future payments on debts denominated in U.S. dollars (interest and principal) and certain purchases of inventories and other capital expenditures denominated in a foreign currency, (ii) to achieve a targeted balance of fixed and floating rate debts, and (iii) to lock-in the value of certain derivative financial instruments through offsetting transactions. The Corporation does not intend to settle its derivative financial instruments prior to their maturity as none of these instruments is held or issued for speculative purposes. (a) Description of derivative financial instruments (i) Foreign exchange forward contracts Maturity CAN dollar Notional Notional Less than 1 year $ US$ (ii) Cross-currency interest rate swaps Hedging instrument Hedged item Period covered Notional Annual interest CAN dollar 5.000% Senior Notes due 2022 2014 to 2022 US$ % 5.000% Senior Notes due 2022 2012 to 2022 US$ % 5.375% Senior Notes due 2024 2014 to 2024 US$ Bankers’ acceptance % 5.375% Senior Notes due 2024 2017 to 2024 US$ % 5.125% Senior Notes due 2027 2017 to 2027 US$ % Certain cross-currency interest rate swaps entered into by the Corporation include an option that allows each party to unwind the transaction on a specific date at the then settlement amount. (b) Fair value of financial instruments In accordance with IFRS 13, Fair value measurement , the Corporation considers the following fair value hierarchy which reflects the significance of the inputs used in measuring its financial instruments: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and Level 3: inputs that are not based on observable market data (unobservable inputs). The fair value of long-term debt is estimated based on quoted market prices when available or on valuation models using Level 1 and Level 2 inputs. When the Corporation uses valuation models, the fair value is estimated using discounted cash flows using year-end market yields or the market value of similar instruments with the same maturity. The fair value of cash equivalents and bank indebtedness classified as held-for-trading and accounted for at their fair value on the consolidated balance sheets, is determined using Level 2 inputs. The fair value of derivative financial instruments recognized in the consolidated balance sheets is estimated as per the Corporation’s valuation models. These models project future cash flows and discount the future amounts to a present value using the contractual terms of the derivative instrument and factors observable in external market data, such as period-end swap rates and foreign exchange rates (Level 2 inputs). An adjustment is also included to reflect non-performance risk impacted by the financial and economic environment prevailing at the date of the valuation in the recognized measure of the fair value of the derivative instruments by applying a credit default premium estimated using a combination of observable and unobservable inputs in the market (Level 3 inputs) to the net exposure of the counterparty or the Corporation. Derivative financial instruments are classified as Level 2. The fair value of early settlement options recognized as embedded derivatives is determined by option pricing models using Level 2 market inputs, including volatility, discount factors and the underlying instrument’s adjusted implicit interest rate and credit premium. The carrying value and fair value of long term debt and derivative financial instruments as of December 31, 2017 and 2016 are as follows: 2017 2016 Asset (liability) Carrying value Fair value Carrying value Fair value Long-term debt 1, 2 $ ) $ ) $ ) $ ) Derivative financial instruments 3 Early settlement options — — Foreign exchange forward contracts 4 ) ) Cross-currency interest rate swaps 4 1 The carrying value of long-term debt excludes adjustments to record changes in the fair value of long-term debt related to hedged interest rate risk, embedded derivatives and financing fees. 2 The fair value of long-term debt excludes the fair value of early settlement options, which is presented separately in the table. 3 The fair value of derivative financial instruments designated as hedges is a net asset position of $259.0 million as of December 31, 2017 ($417.8 million as of December 31, 2016). 4 The value of foreign exchange forward contracts entered into to lock-in the value of existing hedging positions is netted from the value of the offset financial instruments. (c) Credit risk management Credit risk is the risk of financial loss to the Corporation if a customer or counterparty to a financial asset fails to meet its contractual obligations. In the normal course of business, the Corporation continuously monitors the financial condition of its customers and reviews the credit history of each new customer. As of December 31, 2016, no customer balance represented a significant portion of the Corporation’s consolidated accounts receivable. The Corporation establishes an allowance for doubtful accounts based on the specific credit risk of its customers and historical trends. The allowance for doubtful accounts amounted to $14.0 million as of December 31, 2017 ($19.4 million as of December 31, 2016). As of December 31, 2017, 4.9% of accounts receivable were 90 days past their billing date (7.7% as of December 31, 2016), of which 67.3% had an allowance for doubtful accounts (58.9% as of December 31, 2016). The following table shows changes to the allowance for doubtful accounts for the years ended December 31, 2017 and 2016: 2017 2016 Balance at beginning of the year $ $ Charged to income Utilization ) ) Balance at the end of the year $ $ The Corporation believes that its product lines and the diversity of its customer base are instrumental in reducing its credit risk, as well as the impact of fluctuations in product-line demand. The Corporation does not believe that it is exposed to an unusual level of customer credit risk. As a result of its use of derivative financial instruments, the Corporation is exposed to the risk of non-performance by a third party. When the Corporation enters into derivative contracts, the counterparties (either foreign or Canadian) must have credit ratings at least in accordance with the Corporation’s risk-management policy and are subject to concentration limits. These credit ratings and concentration limits are monitored on an ongoing basis but at least quarterly. (d) Liquidity risk management Liquidity risk is the risk that the Corporation will not be able to meet its financial obligations as they fall due or the risk that those financial obligations will have to be met at excessive cost. The Corporation manages this exposure through staggered debt maturities. The weighted average term of the Corporation’s consolidated debt was approximately 7.0 years as of December 31, 2017 (6.8 years as of December 31, 2016). The Corporation’s management believes that cash flows and available sources of financing should be sufficient to cover committed cash requirements for capital investments, working capital, interest payments, income tax payments, debt repayments, pension plan contributions, and dividends (or distributions) in the future. The Corporation has access to cash flows generated by its subsidiaries through dividends and cash advances paid by its wholly owned subsidiaries. As of December 31, 2017, material contractual obligations related to financial instruments included capital repayment and interest on long-term debt and obligations related to derivative instruments, less estimated future receipts on derivative instruments. These obligations and their maturities are as follows: Total Less than 1-3 years 3-5 years 5 years Accounts payable and accrued charges $ $ $ — $ — $ — Amounts payable to affiliated corporations — — — Long-term debt 1 — Interest payments 2 Derivative instruments 3 ) — — ) ) Total $ $ $ $ $ 1 The carrying value of long-term debt excludes adjustments to record changes in the fair value of long-term debt related to hedged interest rate risk, embedded derivatives and financing fees. 2 Estimate of interest payable on long-term debt, based on interest rates, hedging of interest rates and hedging of foreign exchange rates as of December 31, 2017. 3 Estimated future receipts, net of future disbursements, on derivative financial instruments related to foreign exchange hedging. (e) Market risk Market risk is the risk that changes in market prices due to foreign exchange rates and/or interest rates will affect the value of the Corporation’s financial instruments. The objective of market risk management is to mitigate and control exposures within acceptable parameters while optimizing the return on risk. Foreign currency risk Most of the Corporation’s consolidated revenues and expenses, other than interest expense on U.S.-dollar-denominated debt, purchases of set-top boxes, handsets and cable modems and certain capital expenditures, are received or denominated in CAN dollars. A large portion of the interest, principal and premium, if any, payable on its debt is payable in U.S. dollars. The Corporation has entered into transactions to hedge the foreign currency risk exposure on its U.S.-dollar-denominated debt obligations outstanding as of December 31, 2017 and to hedge its exposure on certain purchases of set-top boxes, handsets, cable modems and capital. Accordingly, the Corporation’s sensitivity to variations in foreign exchange rates is economically limited. The estimated sensitivity on income and on other comprehensive income, before income tax, of a variance of $0.10 in the year-end exchange rate of a CAN dollar per one U.S. dollar used to calculate the fair value of financial instruments as of December 31, 2017 is as follows: Increase (decrease) Income Other Increase of $0.10 Gain on valuation and translation of financial instruments and derivative financial instruments $ $ Decrease of $0.10 Gain on valuation and translation of financial instruments and derivative financial instruments ) ) A variance of $0.10 in the 2017 average exchange rate of CAN dollar per one U.S. dollar would have resulted in a variance of $3.2 million on unhedged purchase of goods and services in 2017 and $5.7 million on unhedged acquisitions of tangible and intangible assets in 2017. Interest rate risk The Corporation’s bank credit facilities bear interest at floating rates based on the following reference rates: (i) Bankers’ acceptance rate, (ii) LIBOR, (iii) Canadian prime rate and (iv) U.S. prime rate. The Senior Notes issued by the Corporation bear interest at fixed rates. The Corporation has entered into cross-currency interest rate swap agreements in order to manage cash flow risk exposure. As of December 31, 2017, after taking into account the hedging instruments, long-term debt was comprised of 94.1% fixed rate debt (85.5% in 2016) and 5.9% floating rate debt (14.5% in 2016). The estimated sensitivity on interest payments of a 100 basis-point variance in the year-end Canadian Bankers’ acceptance rate as of December 31, 2017 was $1.8 million. The estimated sensitivity on income and on other comprehensive income, before income tax, of a 100 basis-point variance in the discount rate used to calculate the fair value of financial instruments as of December 31, 2017, as per the Corporation’s valuation models, was as follows: Increase (decrease) Income Other Increase of 100 basis points $ ) $ ) Decrease of 100 basis points (f) Capital management The Corporation’s primary objective in managing capital is to maintain an optimal capital base in order to support the capital requirements of its various businesses, including growth opportunities. In managing its capital structure, the Corporation takes into account the asset characteristics of its subsidiaries and planned requirements for funds. Management of the capital structure involves the issuance and repayment of debt, the use of cash flows generated by operations, and the level of distributions to the parent corporation. The Corporation has not significantly changed its strategy regarding the management of its capital structure since the last financial year. The Corporation’s capital structure is composed of equity, bank indebtedness, long-term debt and derivative financial instruments and cash and cash equivalents. The capital structure as of December 31, 2017 and 2016 is as follows: 2017 2016 Bank indebtedness $ — $ Long-term debt Derivative financial instruments ) ) Cash and cash equivalents ) ) Net liabilities Equity $ $ The Corporation is not subject to any externally imposed capital requirements other than certain restrictions under the terms of its borrowing agreements, which relate, among other things, to permitted investments, inter-corporation transactions, the declaration and payment of dividends or other distributions. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2017 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 28. RELATED PARTY TRANSACTIONS Compensation of key management personnel Key management personnel comprises members of the Board of Directors and key senior managers of the Corporation and its main subsidiaries. Their compensation is as follows: 2017 2016 2015 Salaries and short-term benefits $ $ $ Post-employment benefits Share-based compensation Other long-term benefits $ $ $ Operating transactions During the years ended December 31, 2017, 2016 and 2015, the Corporation and its subsidiaries made purchases and incurred rent charges with the parent corporation and affiliated corporations, which are included in purchase of goods and services. The Corporation and its subsidiaries also made sales to the parent corporation and affiliated corporations. These transactions were accounted for at the consideration agreed between parties: 2017 2016 2015 Ultimate parent and parent corporation : Revenues $ $ $ Purchase of goods and services Operating expenses recovered ) ) ) Corporations under common control : Revenues Purchase of goods and services Operating expenses recovered ) ) ) Accounts receivable from affiliated corporations: 2017 2016 Ultimate parent and parent corporation : Accounts receivable $ $ Interest receivable — Corporations under common control: Accounts receivable $ $ Accounts payable to affiliated corporations: 2017 2016 Ultimate parent and parent corporation : Accounts payable $ $ Corporations under common control: Accounts payable $ $ Management arrangements The Corporation pays annual management fees to the parent corporation for services rendered to the Corporation, including internal audit, legal and corporate, financial planning and treasury, tax, real estate, human resources, risk management, public relations and other services. Management fees amounted to $53.0 million in 2017 ($53.0 million in 2016 and $48.0 million in 2015). The agreement provides for an annual management fee to be agreed upon for the year 2018. In addition, the parent corporation is entitled to the reimbursement of out-of-pocket expenses incurred in connection with the services provided under the agreement. |
PENSION PLANS AND POSTRETIREMEN
PENSION PLANS AND POSTRETIREMENT BENEFITS | 12 Months Ended |
Dec. 31, 2017 | |
PENSION PLANS AND POSTRETIREMENT BENEFITS | |
PENSION PLANS AND POSTRETIREMENT BENEFITS | 29. PENSION PLANS AND POSTRETIREMENT BENEFITS The Corporation maintains various defined benefit and defined contribution plans. The Corporation also provides postretirement benefits to eligible retired employees, principally health care and cable services. The Corporation’s pension plans are registered with a provincial or federal regulatory authority. The Corporation’s funding policy for its funded pension plans is to maintain its contribution at a level sufficient to cover benefits and to meet requirements of the applicable regulations and plan provisions that govern the funding of the plans. These provisions establish, among others, the future payment of amortization payments when the funding ratio of the pension plans is insufficient as defined by the relevant provincial and federal laws. Payments are determined by an actuarial report performed by an independent company at least every three years or annually, according to the applicable laws and in accordance with plan provisions. By their design, the defined benefit plans expose the Corporation to the typical risks faced by defined benefit plans, such as investment performance, changes to the discount rates used to value the obligation, longevity of plan participants, and future inflation. The administration of the plans is assured by pension committees composed of members of the plans, independent members of the Corporation’s management and independent members or by the Corporation in accordance with the provisions of each plan. Under the Corporation’s rules of governance, the approval and oversight of the defined benefit plan policies are performed at different levels through the pension committees, the Corporation’s management, or the Audit Committee. The risk management of pension plans is also performed under the leadership of these committees at various levels. The custody of securities and management of security transactions are assigned to trustees within a mandate given by the pension committee or the Corporation, as the case may be. Policies include those on investment objectives, risk mitigation strategies and the mandate to hire investment fund managers and monitor their work and performance. The defined benefit pension plans are monitored on an ongoing basis to assess the benefit, funding and investment policies, financial status, and the Corporation’s funding requirement. The following tables show a reconciliation of the changes in the plans’ benefit obligations and the fair value of plan assets for the years ended December 31, 2017 and 2016: Pension benefits Postretirement benefits 2017 2016 2017 2016 Change in benefit obligations Benefit obligations at the beginning of the year $ $ $ $ Service costs Interest costs Plan participants’ contributions — — Actuarial (gain) loss arising from: Demographic assumptions ) — — — Financial assumptions Participant experience ) — Benefits and settlements paid ) ) ) ) Other — — Benefit obligations at the end of the year $ $ $ $ Pension benefits Postretirement benefits 2017 2016 2017 2016 Change in plan assets Fair value of plan assets at the beginning of the year $ $ $ — $ — Actual return on plan assets — — Employer contributions Plan participants’ contributions — — Benefits and settlements paid ) ) ) ) Administrative fees — — Fair value of plan assets at the end of the year $ $ $ — $ — As of December 31, 2017, the weighted average duration of defined benefit obligations was 22.9 years (23.4 years in 2016). The Corporation expects future benefit payments of $17.2 million in 2018. The investment strategy for plan assets takes into account a number of factors, including the time horizon of the pension plans’ obligations and the investment risk. For each of the plans, an allocation range by asset class is developed whereby a mix of equities and fixed-income investments is used to optimize the risk-return profile of plan assets and to mitigate asset-liability mismatch. Plan assets are comprised of: 2017 2016 Equity securities: Canadian % % Foreign Debt securities Other % % The fair value of plan assets is principally based on quoted prices in an active market. Where funded plans have a net defined benefit asset, the Corporation determines if potential reductions in future contributions are permitted by applicable regulations. When a defined benefit asset is created, it cannot exceed the future economic benefit that the Corporation can expect to obtain from the asset. The future economic benefit represents the value of reductions in future contributions and expenses payable to the pension fund. It does not reflect gains that could be generated in the future that would allow reductions in contributions by the Corporation. When there is a minimum funding requirement, this could also limit the amount recognized in the balance sheet. A minimum funding requirement represents the present value of amortization payments based on the most recent actuarial financing reports filed. The reconciliation of funded status to the net amount recognized in the consolidated balance sheets is as follows: Pension benefits Postretirement benefits 2017 2016 2017 2016 Benefit obligations $ ) $ ) $ ) $ ) Fair value of plan assets — — Plan deficit and net amount recognized 1 $ ) $ ) $ ) $ ) 1 The net amount recognized for 2017 and 2016 is included in Other liabilities (note 21). Components of re-measurements are as follows: Pension benefits Postretirement benefits 2017 2016 2015 2017 2016 2015 Actuarial (loss) gain on benefit obligations $ ) $ ) $ ) $ $ ) $ ) Actual return on plan assets, less interest income anticipated in the interest on the net defined benefit liability calculation — — — Re-measurements (loss) gain recorded in other comprehensive income $ ) $ $ ) $ $ ) $ ) Components of the net benefit costs are as follows: Pension benefits Postretirement benefits 2017 2016 2015 2017 2016 2015 Employee costs: Service costs $ $ $ $ $ $ Administrative fees and other — — — Interest on net defined benefit liability Net benefit costs $ $ $ $ $ $ The expense related to defined contribution pension plans amounted to $13.9 million in 2017 ($13.2 million in 2016 and $12.1 million in 2015). The expected employer contributions to the Corporation’s defined benefit pension plans and post-retirement benefit plans will be $25.0 million in 2018 based on the most recent financial actuarial reports filed (contributions of $27.0 million were paid in 2017). Assumptions The Corporation determines its assumption for the discount rate to be used for purposes of computing annual service and interest costs based on an index of high-quality corporate bond-yield and matched-funding yield curve analysis as of the measurement date. The actuarial assumptions used in measuring the Corporation’s benefit obligations as of December 31, 2017, 2016 and 2015 and current periodic benefit costs are as follows: Pension benefits Postretirement benefits 2017 2016 2015 2017 2016 2015 Benefit obligations Rates as of year-end: Discount rate % % % % % % Rate of compensation increase Current periodic costs Rates as of preceding year-end: Discount rate % % % % % % Rate of compensation increase The assumed average retirement age of participants used was of 62 years in 2017, 2016 and 2015. The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligations was 6.5% at the end of 2017. These costs, as per the estimate, are expected to decrease gradually over the next 10 years to 4.5% and to remain at that level thereafter. Sensitivity analysis An increase of 10 basis points in the discount rate would have decreased the pension benefits obligation by $10.2 million and the postretirement benefits obligation by $0.7 million as of December 31, 2017. There are limitations to this sensitivity analysis since it only considers the impacts of an increase of 10 basis points in the discount rate assumption without changing any other assumptions. No sensitivity analysis was performed on other assumptions as a similar change to those assumptions would not have a significant impact on the consolidated financial statements. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 30. SUBSEQUENT EVENTS On January 3, 2018, Quebecor Media Inc. transferred all of its shares in the Corporation to a newly fully owned subsidiary, 9370-5762 Québec Inc. in exchange for a convertible promissory note for a value of $3,908.6 million that is convertible into 3,908,569,822 common shares of 9370-5762 Québec Inc. The following day, the Corporation was merged with 9370-5762 Québec Inc. The new merged Corporation will continue to operate under the name of Videotron Ltd. Since this transaction resulted in no substantive changes in the parent corporation reporting group, the transaction was accounted for using the continuity of interest method. Under this method, all figures of the Corporation will then reflect the carrying values of the two merged entities as reported in the consolidated financial statements of Quebecor Media Inc. and comparative figures will be presented as if the two merged entities had always been combined. On January 8, 2018, the convertible promissory note was converted into 3,908,569,822 common shares of the Corporation. On January 16, 2018, the Corporation reduced its paid-up capital for a cash consideration of $342.0 million. On the same day, Quebecor Media Inc. reimbursed the subordinated loan of $342.0 million from the Corporation. On February 27, 2018, the Corporation contracted a subordinated loan of $2.39 billion from Quebecor Media Inc., bearing interest at a rate of 9.5%, payable every six months on June 20 and December 20, and maturing on February 27, 2048. On the same day, the Corporation invested the total proceeds of $2.39 billion into 2,390,000 preferred shares, Series C, of 9346-9963 Québec Inc. These shares carry the right to receive an annual dividend of 9.6%, payable semi-annually. |
SUMMARY OF SIGNIFICANT ACCOUN39
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of presentation | (a) Basis of presentation The consolidated financial statements have been prepared in accordance with IFRS as issued by the International Accounting Standards Board. These consolidated financial statements have been prepared on a historical cost basis, except for certain financial instruments (note 1(i)), the liability related to stock-based compensation (note 1(r)), and the net defined benefit liability (note 1(s)), and they are presented in Canadian dollars (“CAN dollars”), which is the currency of the primary economic environment in which the Corporation operates (“functional currency”). |
Consolidation | (b) Consolidation The consolidated financial statements include the accounts of the Corporation and its subsidiaries. Intercompany transactions and balances are eliminated on consolidation. A subsidiary is an entity controlled by the Corporation. Control is achieved when the Corporation is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Non-controlling interests in the net assets and results of consolidated subsidiaries are identified separately from the parent corporation’s ownership interest in them. Non-controlling interests in the equity of a subsidiary consist of the amount of non-controlling interests calculated at the date of the original business combination and their share of changes in equity since that date. Changes in non-controlling interests in a subsidiary that do not result in a loss of control by the Corporation are accounted for as equity transactions. |
Business combinations | (c) Business combinations A business combination is accounted for by the acquisition method. The cost of an acquisition is measured at the fair value of the consideration given in exchange for control of the business acquired at the acquisition date. This consideration can be comprised of cash, assets transferred, financial instruments issued, or future contingent payments. The identifiable assets and liabilities of the business acquired are recognized at their fair value at the acquisition date. Results of operations of a business acquired are included in the Corporation’s consolidated financial statements from the date of the business acquisition. Business acquisition and integration costs are expensed as incurred and included as other items in the consolidated statements of income. Non-controlling interests in an entity acquired are presented in the consolidated balance sheets within equity, separately from the equity attributable to the shareholder and are initially measured at fair value. |
Foreign currency translation | (d) Foreign currency translation Foreign currency transactions are translated to the functional currency by applying the exchange rate prevailing at the date of the transactions. Translation gains and losses on assets and liabilities denominated in a foreign currency are included in financial expenses, or in gain or loss on valuation and translation of financial instruments. |
Revenue recognition | (e) Revenue recognition The Corporation recognizes operating revenues when the following criteria are met: · the amount of revenue can be measured reliably; · the receipt of economic benefits associated with the transaction is probable; · the costs incurred or to be incurred in respect of the transaction can be measured reliably; · the stage of completion can be measured reliably where services have been rendered; and · significant risks and rewards of ownership, including effective control, have been transferred to the buyer where goods have been sold. The portion of revenue that is unearned is recorded under “Deferred revenue” when customers are invoiced. The Corporation provides services under arrangements with multiple deliverables, for which there are two separate accounting units: one for subscriber services (cable television, Internet access, cable or mobile telephony and over-the-top video services, including connection costs and rental of equipment); the other for equipment sales to subscribers. Components of multiple deliverable arrangements are separately accounted for, provided the delivered elements have stand-alone value to the customer and the fair value of any undelivered elements can be objectively and reliably determined. Arrangement consideration is allocated among the separate accounting units based on their relative fair values. The Corporation recognizes revenues for each of its main activities as follows: · Operating revenues from subscriber services such as cable television, Internet access, cable and mobile telephony and over-the-top video services are recognized when services are provided. Promotional offers and rebates are accounted for as a reduction in the service revenue to which they relate; · Revenues from equipment sales to subscribers and their costs are recognized in income when the equipment is delivered. Promotional offers related to equipment, with the exclusion of mobile devices, are accounted for as a reduction in related equipment sales on delivery, while promotional offers related to the sale of mobile devices are accounted for as a reduction in related equipment sales on activation; · Operating revenues related to service contracts are recognized in income over the life of the specific contracts on a straight-line basis over the period in which the services are provided; · Cable connection revenues are deferred and recognized as revenues over the estimated average period that subscribers are expected to remain connected to the network. The incremental and direct costs related to cable connection costs, in an amount not exceeding the revenue, are deferred and recognized as an operating expense over the same period. The excess of those costs over the related revenues is recognized immediately in income. |
Impairment of assets | (f) Impairment of assets For the purposes of assessing impairment, assets are grouped in cash-generating units (“CGUs”), which represent the lowest levels for which there are separately identifiable cash inflows generated by those assets. The Corporation reviews at each balance sheet date whether events or circumstances have occurred to indicate that the carrying amounts of its long-lived assets with finite useful lives may be less than their recoverable amounts. Goodwill, intangible assets having an indefinite useful life, and intangible assets not yet available for use are tested for impairment each financial year, as well as whenever there is an indication that the carrying amount of the asset, or the CGU to which an asset has been allocated, exceeds its recoverable amount. The recoverable amount is the higher of the fair value less costs of disposal and the value in use of the asset or the CGU. Fair value less costs of disposal represents the amount an entity could obtain at the valuation date from the asset’s disposal in an arm’s length transaction between knowledgeable, willing parties, after deducting the costs of disposal. The value in use represents the present value of the future cash flows expected to be derived from the asset or the CGU. An impairment loss is recognized in the amount by which the carrying amount of an asset or a CGU exceeds its recoverable amount. When the recoverable amount of a CGU to which goodwill has been allocated is lower than the CGU’s carrying amount, the related goodwill is first impaired. Any excess amount of impairment is recognized and attributed to assets in the CGU, prorated to the carrying amount of each asset in the CGU. An impairment loss recognized in prior periods for long-lived assets with finite useful lives and intangible assets having an indefinite useful life, other than goodwill, can be reversed through the consolidated statement of income to the extent that the resulting carrying value does not exceed the carrying value that would have been the result if no impairment loss had previously been recognized. |
Income taxes | (g) Income taxes Current income taxes are recognized with respect to amounts expected to be paid or recovered under the tax rates and laws that have been enacted or substantively enacted at the balance sheet date. Deferred income taxes are accounted for using the liability method. Under this method, deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities in the consolidated financial statements and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted or substantively enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred income tax assets and liabilities is recognized in income in the period that includes the substantive enactment date. A deferred tax asset is recognized initially when it is probable that future taxable income will be sufficient to use the related tax benefits and may be subsequently reduced, if necessary, to an amount that is more likely than not to be realized. A deferred tax expense or benefit is recognized in other comprehensive income or otherwise directly in equity to the extent that it relates to items that are recognized in other comprehensive income or directly in equity in the same or a different period. In the course of the Corporation’s operations, there are a number of uncertain tax positions due to the complexity of certain transactions and due to the fact that related tax interpretations and legislation are continually changing. When a tax position is uncertain, the Corporation recognizes an income tax benefit or reduces an income tax liability only when it is probable that the tax benefit will be realized in the future or that the income tax liability is no longer probable. |
Leases | (h) Leases Assets under leasing agreements are classified at the inception of the lease as (i) finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership of the asset to the lessee, or as (ii) operating leases for all other leases. Operating lease rentals are recognized in the consolidated statement of income on a straight-line basis over the period of the lease. Any lessee incentives are deferred and then recognized evenly over the lease term. |
Financial instruments | (i) Financial instruments Classification, recognition and measurement Financial instruments are classified as held-for-trading, available-for-sale, loans and receivables, or as other financial liabilities, and measurement in subsequent periods depends on their classification. The Corporation has classified its financial instruments (except derivative financial instruments) as follows: Held-for-trading Loans and receivables Other liabilities Cash and cash equivalents Bank indebtedness Accounts receivable Amounts receivable from affiliated corporations Investments Accounts payable and accrued charges Amounts payable to affiliated corporations Long-term debt Subordinated loan from parent corporation Other long-term financial liabilities included in “Other Liabilities” Financial instruments held-for-trading are measured at fair value with changes recognized in income as a gain or loss on valuation and translation of financial instruments. Financial assets classified as loans and receivables and financial liabilities classified as Other liabilities are initially measured at fair value and subsequently measured at amortized cost, using the effective interest rate method of amortization. Derivative financial instruments and hedge accounting The Corporation uses various derivative financial instruments to manage its exposure to fluctuations in foreign currency exchange rates and interest rates. The Corporation does not hold or use any derivative financial instruments for speculative purposes. Under hedge accounting, the Corporation documents all hedging relationships between hedging items and hedged items, as well as its strategy for using hedges and its risk-management objective. It also designates its derivative financial instruments as either fair value hedges or cash flow hedges when they qualify for hedge accounting. The Corporation assesses the effectiveness of derivative financial instruments when the hedge is put in place and on an ongoing basis. The Corporation generally enters into the following types of derivative financial instruments: · The Corporation uses foreign exchange forward contracts to hedge foreign currency rate exposure on anticipated equipment or inventory purchases in a foreign currency. The Corporation also uses offsetting foreign exchange forward contracts in combination with cross-currency interest rate swaps to hedge foreign currency rate exposure on interest and principal payments on foreign currency denominated debt. These foreign exchange forward contracts are designated as cash flow hedges. · The Corporation uses cross-currency interest rate swaps to hedge (i) foreign currency rate exposure on interest and principal payments on foreign currency denominated debt and/or (ii) fair value exposure on certain debt resulting from changes in interest rates. The cross-currency interest rate swaps that set all future interest and principal payments on U.S.-dollar-denominated debt in fixed CAN dollars, in addition to converting an interest rate from a floating rate to a floating rate or from a fixed rate to a fixed rate, are designated as cash flow hedges. The cross-currency interest rate swaps are designated as fair value hedges when they set all future interest and principal payments on U.S.-dollar-denominated debt in fixed CAN dollars, in addition to converting the interest rate from a fixed rate to a floating rate. Under hedge accounting, the Corporation applies the following accounting policies: · For derivative financial instruments designated as fair value hedges, changes in the fair value of the hedging derivative recorded in income are substantially offset by changes in the fair value of the hedged item to the extent that the hedging relationship is effective. When a fair value hedge is discontinued, the carrying value of the hedged item is no longer adjusted and the cumulative fair value adjustments to the carrying value of the hedged item are amortized to income over the remaining term of the original hedging relationship. · For derivative financial instruments designated as cash flow hedges, the effective portion of a hedge is reported in other comprehensive income until it is recognized in income during the same period in which the hedged item affects income, while the ineffective portion is immediately recognized in income. When a cash flow hedge is discontinued, the amounts previously recognized in accumulated other comprehensive income are reclassified to income when the variability in the cash flows of the hedged item affects income. Any change in the fair value of derivative financial instruments recorded in income is included in gain or loss on valuation and translation of financial instruments. Interest expense on hedged long-term debt is reported at the hedged interest and foreign currency rates. Derivative financial instruments that do not qualify for hedge accounting, including derivatives that are embedded in financial or non-financial contracts that are not closely related to the host contracts, such as early settlement options on long-term debt, are reported on a fair value basis in the consolidated balance sheets. Any change in the fair value of these derivative financial instruments is recorded in the consolidated statements of income as a gain or loss on valuation and translation of financial instruments. Early settlement options are accounted for separately from the debt when the corresponding option exercise price is not approximately equal to the amortized cost of the debt. |
Financing fees | (j) Financing fees Financing fees related to long-term debt are capitalized in reduction of long-term debt and amortized using the effective interest rate method. |
Tax credits and government assistance | (k) Tax credits and government assistance The Corporation receives tax credits mainly related to its research and development activities. Government financial assistance is accounted for as revenue or as a reduction in related costs, whether capitalized and amortized or expensed, in the year the costs are incurred and when management has reasonable assurance that the conditions of the government programs are met. |
Cash and cash equivalents | (l) Cash and cash equivalents Cash and cash equivalents include highly liquid investments purchased three months or less from maturity and are recorded at fair value. These highly liquid investments consisted mainly of Bankers’ acceptances and term deposits. |
Trade receivables | (m) Trade receivables Trade receivables are stated at their nominal value, less an allowance for doubtful accounts. The Corporation establishes an allowance for doubtful accounts based on the specific credit risk of its customers and historical trends. Individual accounts receivables are written off when management deems them not collectible. |
Inventories | (n) Inventories Inventories are valued at the lower of cost, determined by the weighted-average cost method, and net realizable value. Net realizable value represents the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. When the circumstances that previously caused inventories to be written down below cost no longer exist, the amount of the write-down is reversed. |
Fixed assets | (o) Fixed assets Fixed assets are stated at cost. Cost represents the acquisition costs, net of government grants and investment tax credits, or construction costs, including preparation, installation and testing costs. In the case of projects to construct cable and mobile networks, the cost includes equipment, direct labour and related overhead costs. Projects under development may also be comprised of advance payments made to suppliers for equipment under construction. Borrowing costs are also included in the cost of fixed assets during the development phase. Expenditures such as maintenance and repairs are expensed as incurred. Depreciation is calculated on a straight-line basis over the following estimated useful lives: Assets Estimated useful life Buildings and their components 12 to 40 years Furniture and equipment 3 to 7 years Receiving, distribution and telecommunication networks 3 to 20 years Customer equipment 3 to 5 years Depreciation methods, residual values, and the useful lives of significant fixed assets are reviewed at least once a year. Any change is accounted for prospectively as a change in accounting estimate. Leasehold improvements are depreciated over the shorter of the term of the lease and their estimated useful life. The Corporation does not record any decommissioning obligations in connection with its cable distribution networks. The Corporation expects to renew all of its agreements with utility companies to access their support structures in the future, making the retirement date so far into the future that the present value of the restoration costs is insignificant for those assets. A decommissioning obligation is however recorded for the rental of sites related to the mobile network. The Corporation is engaged in an agreement to operate a shared LTE network in the Province of Québec and in the Ottawa region. |
Goodwill and intangible assets | (p) Goodwill and intangible assets Goodwill Goodwill initially arising from a business acquisition is measured and recognized as the excess of the fair value of the consideration paid over the fair value of the recognized identifiable assets acquired and liabilities assumed. When the Corporation acquires less than 100% of the equity interests in the business acquired at the acquisition date, goodwill attributable to the non-controlling interests is also recognized at fair value. Goodwill is allocated as at the date of a business acquisition to a CGU for purposes of impairment testing (note 1(f)). The allocation is made to the CGU or group of CGUs expected to benefit from the synergies of the business acquisition. Intangible assets Spectrum licences are recorded at cost. Spectrum licences have an indefinite useful life and are not amortized based on the following facts: (i) the Corporation intends to renew the spectrum licences and believes that they are likely to be renewed by Innovation, Science and Economic Development Canada, (ii) the Corporation has the financial and operational ability to renew these spectrum licences, (iii) currently, the competitive, legal and regulatory landscape does not limit the useful lives of the spectrum licences, and (iv) the Corporation foresees no limit to the period during which these licences can be expected to generate cash flows in the future. Software is recorded at cost. In particular, internally generated intangible assets such as software and Web site development are mainly comprised of internal costs in connection with the development of those assets to be used internally or to provide services to customers. These costs are capitalized when the development stage of the software application begins and costs incurred prior to that stage are recognized as expenses. Customer relationships and trademarks acquired through a business acquisition are recorded at fair value at the date of acquisition. Trademarks have an indefinite useful life and are not amortized. Borrowing costs directly attributable to the acquisition, development or production of an intangible asset are also included as part of the cost of that asset during the development phase. Intangible assets with finite useful lives are amortized over their useful lives using the straight-line method over the following periods: Assets Estimated useful life Software, licences and other intangible assets 3 to 7 years Customer relationships and other 5 to 8 years Amortization methods, residual values, and the useful lives of significant intangible assets are reviewed at least once a year. Any change is accounted for prospectively as a change in accounting estimate. |
Provisions | (q) Provisions Provisions are recognized when (i) the Corporation has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation, and when (ii) the amount of the obligation can be reliably estimated. Restructuring costs, comprised primarily of termination benefits, are recognized when a detailed plan for the restructuring exists and a valid expectation has been raised in those affected, that the plan will be carried out. Provisions are reviewed at each balance sheet date and changes in estimates are reflected in the consolidated statement of income in the reporting period in which changes occur. |
Stock-based compensation | (r) Stock-based compensation Stock-based awards to employees that call for settlement in cash, as deferred share units (“DSUs”) and performance share units (“PSUs”), or that call for settlement in cash at the option of the employee, as stock options awards, are accounted for at fair value and classified as a liability. The compensation cost is recognized in expenses over the vesting period. Changes in the fair value of stock-based awards between the grant date and the measurement date result in a change in the liability and compensation cost. The fair value of DSUs and PSUs is based on the underlying share price at the date of valuation. The fair value of stock option awards is determined by applying an option pricing model, taking into account the terms and conditions of the grant. Key assumptions are described in note 23. |
Pension plans and postretirement benefits | (s) Pension plans and postretirement benefits The Corporation offers defined contribution pension plans and defined benefit pension plans to some of its employees. (i) Defined contribution pension plans Under its defined contribution pension plans, the Corporation pays fixed contributions to participating employees’ pension plans and has no legal or constructive obligation to pay any further amounts. Obligations for contributions to defined contribution pension plans are recognized as employee benefits in the consolidated statements of income when the contributions become due. (ii) Defined benefit pension plans and postretirement plans Defined benefit pension plan costs are determined using actuarial methods and are accounted for using the projected unit credit method, which incorporates management’s best estimates of future salary levels, other cost escalations, retirement ages of employees, and other actuarial factors. Defined benefit pension costs recognized in the consolidated statements of income as employee costs, mainly include the following: · service costs provided in exchange for employee services rendered during the period; · prior service costs recognized at the earlier of (a) when the employee benefit plan is amended or (b) when restructuring costs are recognized; · curtailment or settlement gain or loss. Interest on net defined benefit liability or asset recognized in the consolidated statements of income, as financial expenses, is determined by multiplying the net defined benefit liability or asset by the discount rate used to determine the defined benefit obligation. Re-measurements of the net defined benefit liability or asset are recognized immediately in other comprehensive loss and in accumulated other comprehensive loss. Re-measurements are comprised of the following: · actuarial gains and losses arising from changes in financial and demographic actuarial assumptions used to determine the defined benefit obligation or from experience adjustments on liabilities; · the difference between actual return on plan assets and interest income on plan assets anticipated as part of the interest on net defined benefit liability or asset calculation; · changes in the net benefit asset limit or in the minimum funding liability. Recognition of a net benefit asset is limited under certain circumstances to the amount recoverable, which is primarily based on the present value of future contributions to the plan, to the extent that the Corporation can unilaterally reduce those future contributions. In addition, an adjustment to the net benefit asset or the net benefit liability can be recorded to reflect a minimum funding liability in a certain number of the Corporation’s pension plans. The Corporation also offers discounts on telecommunication services and health and life insurance plans to some of its retired employees. The cost of postretirement benefits is determined using an accounting methodology similar to that for defined benefit pension plans. The benefits related to these plans are funded by the Corporation as they become due. |
Use of estimates and judgments | (t) Use of estimates and judgments The preparation of consolidated financial statements in accordance with IFRS requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities, related amounts of revenues and expenses, and disclosure of contingent assets and liabilities. Although these estimates are based on management’s best judgment and information available at the time of the assessment date, actual results could differ from those estimates. The following significant areas represent management’s most difficult, subjective or complex estimates: (i) Recoverable amount of an asset or a CGU When an impairment test is performed on an asset or a CGU, management estimates the recoverable amount of the asset or CGU based on its fair value less costs of disposal or its value in use. These estimates are based on valuation models requiring the use of a number of assumptions such as forecasts of future cash flows, pre-tax discount rate (WACC) and perpetual growth rate. These assumptions have a significant impact on the results of impairment tests and on the impairment charge, as the case may be, recorded in the consolidated statements of income. A description of key assumptions used in the goodwill impairment tests and a sensitivity analysis of recoverable amounts are presented in note 16. (ii) Fair value of derivative financial instruments, including embedded derivatives Derivative financial instruments must be accounted for at their fair value, which is estimated using valuation models based on a number of assumptions such as future cash flows, period-end swap rates, foreign exchange rates, and credit default premium. Also, the fair value of embedded derivatives related to early settlement options on debt is determined with option pricing models using market inputs, including volatility, discount factors and the underlying instrument’s adjusted implicit interest rate and credit premium. The assumptions used in the valuation models have a significant impact on the gain or loss on valuation and translation of financial instruments recorded in the consolidated statements of income, the gain or loss on valuation of financial instruments recorded in the consolidated statements of comprehensive income, and the carrying value of derivative financial instruments in the consolidated balance sheets. A description of valuation models used and sensitivity analysis on key assumptions are presented in note 27. (iii) Costs and obligations related to pension and postretirement benefit plans Estimates of costs and obligations related to pension and postretirement benefit obligations are based on a number of assumptions, such as the discount rate, the rate of increase in compensation, the retirement age of employees, health care costs, and other actuarial factors. Certain of these assumptions may have a significant impact on employee costs and financial expenses recorded in the consolidated statements of income, the re-measurement gain or loss on defined benefit plans recorded in the consolidated statements of comprehensive income, and on the carrying value of other assets or other liabilities in the consolidated balance sheets. Key assumptions and a sensitivity analysis on the discount rate are presented in note 29. (iv) Provisions The recognition of provisions requires management to estimate expenditures required to settle a present obligation or to transfer it to a third party at the date of assessment. More specifically, an assessment of the probable outcomes of legal proceedings or other contingencies is also required. A description of the main provisions, including management expectations on the potential effect on the consolidated financial statements of the possible outcomes of legal disputes, is presented in note 19. The following areas represent management’s most significant judgments, apart from those involving estimates: (i) Useful life periods for the depreciation and amortization of assets with finite useful lives For each class of assets with finite useful lives, management has to determine over which period the Corporation will consume the assets’ future economic benefits. The determination of a useful life period involves judgment and has an impact on the depreciation and amortization charge recorded in the consolidated statements of income. (ii) Indefinite useful life of spectrum licences Management has concluded that spectrum licences have an indefinite useful life. This conclusion was based on an analysis of factors, such as the Corporation’s financial ability to renew the spectrum licences, the competitive, legal and regulatory landscape, and the future expectation regarding the use of the spectrum licences. Therefore, the determination that spectrum licences have an indefinite useful life involves judgment, which could have an impact on the amortization charge recorded in the consolidated statements of income if management changed its conclusion in the future. (iii) CGU’s determination for the purpose of impairment tests The determination of CGUs requires judgment when determining the lowest level for which there are separately identifiable cash inflows generated by the group of assets. In identifying assets to group in CGUs, the Corporation considers, among other factors, offering bundled services, sharing telecommunication network infrastructure, similarity on exposure to market risk, and materiality. The determination of CGUs could affect the results of impairment tests and, as the case may be, the impairment charge recorded in the consolidated statements of income. (iv) Determination if early settlement options are not closely related to their debt contract Early settlement options are not considered closely related to their debt contract when the corresponding option exercise price is not approximately equal to the amortized cost of the debt. Judgment is therefore required to determine if an option exercise price is not approximately equal to the amortized cost of the debt. This determination may have a significant impact on the amount of gains or losses on valuation and translation of financial instruments recorded in the consolidated statements of income. (v) Interpretation of laws and regulations Interpretation of laws and regulation, including tax regulations, requires judgment from management that could have an impact on the recognition of provisions for legal litigation and income taxes in the consolidated financial statements. |
Recent accounting pronouncements | (u) Recent accounting pronouncements (i) IFRS 9 — Financial Instruments is required to be applied retrospectively for annual periods beginning on or after January 1, 2018. IFRS 9 simplifies the measurement and classification of financial assets by reducing the number of measurement categories in IAS 39, Financial Instruments: Recognition and Measurement. The new standard also provides for a fair value option in the designation of a non-derivative financial liability and its related classification and measurement, as well as for a new hedge accounting model more closely aligned with risk-management activities undertaken by entities. The Corporation does not expect its consolidated financial statements to be materially impacted by the adoption of IFRS 9. (ii) IFRS 15 — Revenue from Contracts with Customers is required to be applied retrospectively for annual periods beginning on or after January 1, 2018. On January 1, 2018, the Corporation will adopt on a fully retrospective basis the new rules under IFRS 15 which specify how and when an entity should recognize revenue as well as requiring such entities to provide users of financial statements with more informative disclosures. The standard provides a single, principles-based, five-step model to be applied to all contracts with customers. The adoption of IFRS 15 will have significant impacts on the consolidated financial statements with regards to the timing of the recognition of its revenues, the classification of its revenues, as well as the capitalization of costs, such as costs to obtain a contract and connection costs. Under IFRS 15, the total consideration from a contract with multiple deliverables will be allocated to all performance obligations in the contract based on the stand-alone selling price of each obligation, without being limited to a non-contingent amount. The Corporation provides mobile devices and services under contracts with multiple deliverables and for a fixed period of time. Under IFRS 15, promotional offers related to the sale of mobile devices previously accounted for as a reduction in related equipment sales on activation, now need to be considered in the relative total consideration to be allocated to all performance obligations. Among other impacts, the adoption of IFRS 15 will result in an increase in the revenue from the device sale and in a decrease in the mobile service revenue recognized over the contract term. The timing of the recognition of these revenues will therefore change under IFRS 15. However, the total revenue recognized over a contract term relating to all performance obligations within the contract will remain the same as under the previous rules. The portion of revenues that is earned without having been invoiced will be presented as contract assets in the consolidated balance sheets. All other types of revenues have not been impacted by the adoption of IFRS 15. In addition, under IFRS 15, certain costs, mainly sales commissions, to obtain a contract will be capitalized and amortized as operating expenses over the contract term or over the period of time the customer is expected to remain a customer of the Corporation. Currently, such costs are expensed as incurred. Also, the capitalization of connection costs will no longer be limited to the related connection revenues as it is under the current rules. These capitalized costs will be included in “Other Assets” as contract costs in the consolidated balance sheet. The retroactive adoption of IFRS 15 will have the following impacts on the 2017 and 2016 consolidated financial figures: Consolidated statements of income and comprehensive income Increase (decrease) 2017 2016 Revenues $ $ Purchase of goods and services ) ) Deferred income tax expense Net income and comprehensive income attributable to shareholder $ $ Consolidated balance sheets Increase (decrease) December 31, December 31, Contract assets $ $ Other assets Deferred income tax liability Retained earnings (iii) IFRS 16 — Leases is required to be applied retrospectively for annual periods beginning on or after January 1, 2019, with early adoption permitted, provided that the IFRS 15 is applied at the same time as IFRS 16. IFRS 16 sets out new principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract. The standard provides lessees with a single accounting model for all leases, with certain exemptions. In particular, lessees will be required to report most leases on their balance sheets by recognizing right-of-use assets and related financial liabilities. Under IFRS 16, most lease charges will be expensed as an asset amortization charge, along with a financial charge on the asset related financial liabilities. Since operating lease charges are currently recognized as operating expenses as they are incurred, the adoption of IFRS 16 will change the timing of the recognition of these lease charges over the term of each lease. It will also affect the classification of expenses in the statement of income. The Corporation expects that the adoption of IFRS 16 will have significant impacts on its consolidated financial statements since it is engaged in various long-term leases relating to premises and equipment. However, the adoption impacts on the consolidated financial statements have not yet been measured. |
OTHER EXPLANATORY INFORMATION (
OTHER EXPLANATORY INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
OTHER EXPLANATORY INFORMATION | |
Schedule of major subsidiaries | % equity and voting Videotron Infrastructures Inc. % Videotron US Inc. % Fibrenoire Inc. % 4 Degrees Colocation Inc. % SETTE Inc. % |
SUMMARY OF SIGNIFICANT ACCOUN41
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of fixed assets useful lives | Assets Estimated useful life Buildings and their components 12 to 40 years Furniture and equipment 3 to 7 years Receiving, distribution and telecommunication networks 3 to 20 years Customer equipment 3 to 5 years |
Schedule of useful lives of intangible assets using the straight-line method | Assets Estimated useful life Software, licences and other intangible assets 3 to 7 years Customer relationships and other 5 to 8 years |
Summary of retroactive adoption of IFRS 15 | Consolidated statements of income and comprehensive income Increase (decrease) 2017 2016 Revenues $ $ Purchase of goods and services ) ) Deferred income tax expense Net income and comprehensive income attributable to shareholder $ $ Consolidated balance sheets Increase (decrease) December 31, December 31, Contract assets $ $ Other assets Deferred income tax liability Retained earnings |
EMPLOYEE COSTS AND PURCHASE O42
EMPLOYEE COSTS AND PURCHASE OF GOODS AND SERVICES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
EMPLOYEE COSTS AND PURCHASE OF GOODS AND SERVICES | |
Schedule of employee costs and purchase of goods and services | 2017 2016 2015 Employee costs $ $ $ Less employee costs capitalized to fixed assets and to intangible assets ) ) ) Purchase of goods and services Royalties and rights Cost of retail products Subcontracting costs Marketing and distribution expenses Other $ $ $ |
FINANCIAL EXPENSES (Tables)
FINANCIAL EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
FINANCIAL EXPENSES | |
Schedule of financial expenses | 2017 2016 2015 Third parties : Interest on long-term debt $ $ $ Amortization of financing costs and long-term debt discount (Gain) Loss on foreign currency translation on short-term monetary items ) Other ) Affiliated corporations: Interest expense Dividend income ) ) ) Interest income ) — — ) ) ) Interest on net defined benefit liability $ $ $ |
LOSS ON VALUATION AND TRANSLA44
LOSS ON VALUATION AND TRANSLATION OF FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
LOSS ON VALUATION AND TRANSLATION OF FINANCIAL INSTRUMENTS | |
Schedule of loss on valuation and translation of financial instruments | 2017 2016 2015 Loss (gain) on the ineffective portion of fair value hedges $ $ $ ) Loss (gain) on embedded derivatives related to long-term debt ) Loss (gain) on reversal of embedded derivatives on debt redemption — ) Loss on the ineffective portion of cash flow hedges — — $ $ $ |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
INCOME TAXES | |
Schedule of reconciliation of income taxes at Corporation's domestic statutory tax rate | 2017 2016 2015 Income taxes at domestic statutory tax rate $ $ $ (Reduction) increase resulting from: Effect of non-deductible charges and non-taxable income ) ) Change in benefit arising from the recognition of current and prior year tax losses ) ) Change in deferred tax balances due to a change in substantively enacted tax rates — ) — Effect of tax consolidation transactions with the parent corporation and affiliated corporations ) ) ) Other 1 ) Income taxes $ $ $ 1 Includes in 2015 a decrease of $16.1 million in income tax liability resulting from developments in tax audit matters, jurisprudence and tax legislation. |
Schedule of net deferred income tax liability and their impact on deferred income tax expense | Consolidated Consolidated 2017 2016 2017 2016 2015 Accounts payable, accrued charges and provisions $ $ $ ) $ $ Defined benefit plans Fixed assets ) ) ) ) ) Goodwill and intangible assets ) ) ) ) ) Long-term debt and derivative financial instruments ) ) ) ) Benefits from a general partnership — ) ) Other ) ) ) $ ) $ ) $ ) $ $ ) |
Summary of changes in net deferred income tax liability | 2017 2016 Balance at beginning of year $ ) $ ) Recognized in income ) Recognized in other comprehensive income Business acquisition (note 10) — ) Balance at end of year $ ) $ ) |
BUSINESS ACQUISITIONS (Tables)
BUSINESS ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
BUSINESS ACQUISITIONS | |
Schedule of purchase price allocation between the fair value of identifiable assets and liabilities | 2016 2015 Assets acquired Non-cash current assets $ $ Property, plant and equipment Intangible assets Goodwill Other assets — Liabilities assumed Non-cash current liabilities ) ) Deferred income taxes ) ) Other long-term liabilities ) — ) ) Net assets acquired at fair value $ $ Consideration Cash, net of cash acquired $ $ Balance payable — $ $ |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
INVENTORIES | |
Schedule of inventories | 2017 2016 Customer equipment $ $ Network materials $ $ |
FIXED ASSETS (Tables)
FIXED ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
FIXED ASSETS | |
Schedule of changes in the net carrying amount of fixed assets | Land and Furniture Receiving and Customer Projects Total Cost : Balance as of December 31, 2015 $ $ $ $ $ $ Additions Business acquisition (note 10) — — Net change in additions financed with accounts payable — ) ) Retirement, disposals and other ) ) ) ) — ) Reclassification — — ) — Balance as of December 31, 2016 Additions Net change in additions financed with accounts payable — ) ) ) Retirement, disposals and other — ) ) ) — ) Reclassification — — ) — Balance as of December 31, 2017 $ $ $ $ $ $ Land and Furniture and Receiving and 1 Customer Projects Total Accumulated depreciation : Balance as of December 31, 2015 $ ) $ ) $ ) $ ) $ — $ ) Depreciation ) ) ) ) — ) Retirement and disposals — Balance as of December 31, 2016 ) ) ) ) — ) Depreciation ) ) ) ) — ) Retirement and disposals — — Balance as of December 31, 2017 $ ) $ ) $ ) $ ) $ — $ ) Net carrying amount : As of December 31, 2016 As of December 31, 2017 $ $ $ $ $ $ 1 In 2017, the calculation of the depreciation of a component of the Corporation’s telecommunications networks was changed in order to depreciate this component over its useful life of 5 years, from a period of 15 years previously. As a result, depreciation in 2017 was increased by $21.2 million. |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
INTANGIBLE ASSETS | |
Schedule of changes in the net carrying amount of intangible assets | Spectrum Software, Projects under Total Cost : Balance as of December 31, 2015 $ $ $ $ Additions — Business acquisition (note 10) — — Net change in additions financed with accounts payable — ) ) ) Retirements and other — ) — ) Reclassification — ) — Balance as of December 31, 2016 Additions — Net change in additions financed with accounts payable — Retirements and disposal ) ) — ) Reclassification and other items — ) — Balance as of December 31, 2017 $ $ $ $ Spectrum Software, Projects Total Accumulated amortization : Balance as of December 31, 2015 $ ) $ ) $ — $ ) Amortization — ) — ) Retirements — — Balance as of December 31, 2016 ) ) — ) Amortization — ) — ) Retirements — — Balance as of December 31, 2017 $ ) $ ) $ — $ ) Net carrying amount : As of December 31, 2016 As of December 31, 2017 $ $ $ $ |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
GOODWILL | |
Schedule of changes in the net carrying amount of goodwill | Cost : Balance as of December 31, 2015 $ Business acquisition (note 10) Balance as of December 31, 2017 and 2016 Accumulated amortization : Balance as of December 31, 2017 and 2016 $ ) Net carrying amount : As of December 31, 2017 and 2016 $ |
Schedule of determination of recoverable amounts in the impairment tests performed in significant CGU groups | 2017 2016 CGU groups Pre-tax discount Perpetual Pre-tax discount Perpetual Telecommunications % % % % |
OTHER ASSETS (Tables)
OTHER ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
OTHER ASSETS | |
Schedule of other assets | 2017 2016 Deferred connection costs $ $ Other $ $ |
ACCOUNTS PAYABLE AND ACCRUED 52
ACCOUNTS PAYABLE AND ACCRUED CHARGES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
ACCOUNTS PAYABLE AND ACCRUED CHARGES | |
Schedule of accounts payable and accrued charges | 2017 2016 Trade and accruals $ $ Salaries and employee benefits Interest payable Stock-based compensation $ $ |
PROVISIONS AND CONTINGENCIES (T
PROVISIONS AND CONTINGENCIES (Table) | 12 Months Ended |
Dec. 31, 2017 | |
PROVISIONS AND CONTINGENCIES | |
Summary of provisions and contingencies | Balance as of December 31, 2016 $ Recognized in income ) Payments ) Other Balance as of December 31, 2017 $ Current portion $ Non-current portion 1 1 The non-current portion of provisions and contingencies is included in other liabilities (note 21) |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
LONG-TERM DEBT | |
Schedule of long-term debt | Effective interest rate as of 2017 2016 Bank credit facilities (i) % Senior Notes (ii) (note 7) Total long-term debt Change in fair value related to hedged interest rate risk Adjustments related to embedded derivatives — ) Financing fees, net of amortization ) ) ) ) Less current portion ) ) $ $ (i) The bank credit facilities provide for a $965.0 million secured revolving credit facility that matures in July 2021 and a $75.0 million secured export financing facility providing for a term loan that matures in June 2018. The revolving credit facility bears interest at Bankers’ acceptance rate, U.S. London Interbank Offered Rate (“LIBOR”), Canadian prime rate or U.S. prime rate, plus a margin, depending on the Corporation’s leverage ratio. Advances under the export financing facility bear interest at Bankers’ acceptance rate plus a margin. The bank credit facilities are secured by a first ranking hypothec on the universality of all tangible and intangible assets, current and future, of the Corporation and most of its wholly owned subsidiaries. As of December 31, 2017, the bank credit facilities were secured by assets with a carrying value of $6,665.7 million ($5,804.3 million in 2016). The bank credit facilities contain covenants such as maintaining certain financial ratios, limitations on the Corporation’s ability to incur additional indebtedness, pay dividends, or make other distributions. As of December 31, 2017, no amount had been drawn on the secured revolving credit facility ($209.4 million in 2016) and $5.4 million was outstanding on the export financing facility ($16.1 million in 2016). (ii) The Senior Notes are unsecured and contain certain restrictions on the Corporation, including limitations on its ability to incur additional indebtedness, pay dividends or make other distributions. Some Notes are redeemable at the option of the issuer, in whole or in part, at a price based on a make-whole formula during the first five years of the term of the Notes and at a decreasing premium thereafter, while the remaining Notes are redeemable at a price based on a make-whole formula at any time prior to their maturity. The Notes are guaranteed by specific subsidiaries of the Corporation. The following table summarizes terms of the outstanding Senior Notes as of December 31, 2017: Principal amount Annual nominal Effective interest rate Maturity date Interest payable US$ % % July 15, 2022 January and July 15 US$ % % June 15, 2024 June and December 15 $ % % June 15, 2025 April and October 15 $ 1 % % January 15, 2026 March and September 15 US$ 2 % % April 15, 2027 April and October 15 1 The Notes were issued in September 2015 for net proceeds of $370.1 million, net of financing fees of $4.9 million. 2 The Notes were issued in April 2017 for net proceeds of $794.5 million, net of financing fees of $9.9 million. |
Schedule of principal repayments of long-term debt | 2018 $ 2019 — 2020 — 2021 — 2022 2023 and thereafter |
OTHER LIABILITIES (Tables)
OTHER LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
OTHER LIABILITIES | |
Schedule of other liabilities | Note 2017 2016 Defined benefit plans $ $ Asset retirement obligation Deferred revenue Balance payable on a business acquisition — Stock-based compensation 1 Other $ $ 1 The current $4.1 million portion of stock-based compensation is included in accounts payable and accrued charges ($2.3 million in 2016) (note 18). |
CAPITAL STOCK (Tables)
CAPITAL STOCK (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
CAPITAL STOCK | |
Summary of issued and outstanding capital stock | Common Shares Number Amount Balance as of December 31, 2017 and 2016 $ |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
STOCK-BASED COMPENSATION PLANS | |
Schedule of weighted-average assumptions used to estimate the fair value of outstanding stock options | December 31, 2017 Ultimate parent Parent Risk-free interest rate % % Distribution yield % % Expected volatility % % Expected remaining life 2.7 years 2.4 years December 31, 2016 Ultimate parent Parent Risk-free interest rate % % Distribution yield % % Expected volatility % % Expected remaining life 3.7 years 3.2 years |
Ultimate parent corporation stock option plan | |
STOCK-BASED COMPENSATION PLANS | |
Schedule of information on changes to outstanding options | 2017 2016 Options Weighted Options Weighted average Balance at beginning and end of year $ $ Vested options at end of year $ $ |
Parent corporation stock option plan | |
STOCK-BASED COMPENSATION PLANS | |
Schedule of information on changes to outstanding options | 2017 2016 Options Weighted Options Weighted Balance at beginning of year $ $ Exercised ) ) Cancelled ) ) Balance at end of year $ $ Vested options at end of year $ $ |
ACCUMULATED OTHER COMPREHENSI58
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | |
Schedule of accumulated other comprehensive loss | Cash flow hedges Defined Total Balance as of December 31, 2014 $ ) $ ) $ ) Other comprehensive loss ) ) ) Balance as of December 31, 2015 ) ) ) Other comprehensive (loss) income ) ) Balance as of December 31, 2016 ) ) ) Other comprehensive income (loss) ) Balance as of December 31, 2017 $ ) $ ) $ ) |
COMMITMENTS (Tables)
COMMITMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
COMMITMENTS | |
Schedule of minimum payments | Leases Other 2018 $ $ 2019 to 2022 2023 and thereafter |
FINANCIAL INSTRUMENTS AND FIN60
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of detailed information about financial instruments | |
Schedule of derivative financial instruments | (i) Foreign exchange forward contracts Maturity CAN dollar Notional Notional Less than 1 year $ US$ (ii) Cross-currency interest rate swaps Hedging instrument Hedged item Period covered Notional Annual interest CAN dollar 5.000% Senior Notes due 2022 2014 to 2022 US$ % 5.000% Senior Notes due 2022 2012 to 2022 US$ % 5.375% Senior Notes due 2024 2014 to 2024 US$ Bankers’ acceptance % 5.375% Senior Notes due 2024 2017 to 2024 US$ % 5.125% Senior Notes due 2027 2017 to 2027 US$ % |
Schedule of carrying value and fair value of long-term debt and derivative financial instruments | 2017 2016 Asset (liability) Carrying value Fair value Carrying value Fair value Long-term debt 1 , 2 $ ) $ ) $ ) $ ) Derivative financial instruments 3 Early settlement options — — Foreign exchange forward contracts 4 ) ) Cross-currency interest rate swaps 4 1 The carrying value of long-term debt excludes adjustments to record changes in the fair value of long-term debt related to hedged interest rate risk, embedded derivatives and financing fees. 2 The fair value of long-term debt excludes the fair value of early settlement options, which is presented separately in the table. 3 The fair value of derivative financial instruments designated as hedges is a net asset position of $259.0 million as of December 31, 2017 ($417.8 million as of December 31, 2016). 4 The value of foreign exchange forward contracts entered into to lock-in the value of existing hedging positions is netted from the value of the offset financial instruments. |
Schedule of allowance for doubtful accounts | 2017 2016 Balance at beginning of the year $ $ Charged to income Utilization ) ) Balance at the end of the year $ $ |
Schedule of maturities of financial instruments included capital repayment and interest on long-term debt and obligations related to derivative instruments, less estimated future | Total Less than 1-3 years 3-5 years 5 years Accounts payable and accrued charges $ $ $ — $ — $ — Amounts payable to affiliated corporations — — — Long-term debt 1 — Interest payments 2 Derivative instruments 3 ) — — ) ) Total $ $ $ $ $ 1 The carrying value of long-term debt excludes adjustments to record changes in the fair value of long-term debt related to hedged interest rate risk, embedded derivatives and financing fees. 2 Estimate of interest payable on long-term debt, based on interest rates, hedging of interest rates and hedging of foreign exchange rates as of December 31, 2017. 3 Estimated future receipts, net of future disbursements, on derivative financial instruments related to foreign exchange hedging. |
Schedule of capital structure | 2017 2016 Bank indebtedness $ — $ Long-term debt Derivative financial instruments ) ) Cash and cash equivalents ) ) Net liabilities Equity $ $ |
Foreign currency risk | |
Disclosure of detailed information about financial instruments | |
Schedule of estimated sensitivity on income and on other comprehensive income, before income tax | The estimated sensitivity on income and on other comprehensive income, before income tax as of December 31, 2017 is as follows: Increase (decrease) Income Other Increase of $0.10 Gain on valuation and translation of financial instruments and derivative financial instruments $ $ Decrease of $0.10 Gain on valuation and translation of financial instruments and derivative financial instruments ) ) |
Interest rate risk | |
Disclosure of detailed information about financial instruments | |
Schedule of estimated sensitivity on income and on other comprehensive income, before income tax | The estimated sensitivity on income and on other comprehensive income, before income tax as of December 31, 2017, as per the Corporation’s valuation models, was as follows: Increase (decrease) Income Other Increase of 100 basis points $ ) $ ) Decrease of 100 basis points |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
RELATED PARTY TRANSACTIONS | |
Schedule of key management personnel compensation | 2017 2016 2015 Salaries and short-term benefits $ $ $ Post-employment benefits Share-based compensation Other long-term benefits $ $ $ |
Schedule of transactions between related parties | 2017 2016 2015 Ultimate parent and parent corporation : Revenues $ $ $ Purchase of goods and services Operating expenses recovered ) ) ) Corporations under common control : Revenues Purchase of goods and services Operating expenses recovered ) ) ) Accounts receivable from affiliated corporations: 2017 2016 Ultimate parent and parent corporation : Accounts receivable $ $ Interest receivable — Corporations under common control: Accounts receivable $ $ Accounts payable to affiliated corporations: 2017 2016 Ultimate parent and parent corporation : Accounts payable $ $ Corporations under common control: Accounts payable $ $ |
PENSION PLANS AND POSTRETIREM62
PENSION PLANS AND POSTRETIREMENT BENEFITS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
PENSION PLANS AND POSTRETIREMENT BENEFITS | |
Schedule of reconciliation of the changes in the plans' benefit obligations and the fair value of plan assets | Pension benefits Postretirement benefits 2017 2016 2017 2016 Change in benefit obligations Benefit obligations at the beginning of the year $ $ $ $ Service costs Interest costs Plan participants’ contributions — — Actuarial (gain) loss arising from: Demographic assumptions ) — — — Financial assumptions Participant experience ) — Benefits and settlements paid ) ) ) ) Other — — Benefit obligations at the end of the year $ $ $ $ Pension benefits Postretirement benefits 2017 2016 2017 2016 Change in plan assets Fair value of plan assets at the beginning of the year $ $ $ — $ — Actual return on plan assets — — Employer contributions Plan participants’ contributions — — Benefits and settlements paid ) ) ) ) Administrative fees — — Fair value of plan assets at the end of the year $ $ $ — $ — |
Schedule of fair value of plan assets | 2017 2016 Equity securities: Canadian % % Foreign Debt securities Other % % |
Schedule of reconciliation of funded status to the net amount | Pension benefits Postretirement benefits 2017 2016 2017 2016 Benefit obligations $ ) $ ) $ ) $ ) Fair value of plan assets — — Plan deficit and net amount recognized 1 $ ) $ ) $ ) $ ) 1 The net amount recognized for 2017 and 2016 is included in Other liabilities (note 21). |
Schedule of components of re-measurements | Pension benefits Postretirement benefits 2017 2016 2015 2017 2016 2015 Actuarial (loss) gain on benefit obligations $ ) $ ) $ ) $ $ ) $ ) Actual return on plan assets, less interest income anticipated in the interest on the net defined benefit liability calculation — — — Re-measurements (loss) gain recorded in other comprehensive income $ ) $ $ ) $ $ ) $ ) |
Schedule of components of net benefit costs | Pension benefits Postretirement benefits 2017 2016 2015 2017 2016 2015 Employee costs: Service costs $ $ $ $ $ $ Administrative fees and other — — — Interest on net defined benefit liability Net benefit costs $ $ $ $ $ $ |
Schedule of actuarial assumptions used in measuring the Corporation's benefit obligations | Pension benefits Postretirement benefits 2017 2016 2015 2017 2016 2015 Benefit obligations Rates as of year-end: Discount rate % % % % % % Rate of compensation increase Current periodic costs Rates as of preceding year-end: Discount rate % % % % % % Rate of compensation increase |
OTHER EXPLANATORY INFORMATION63
OTHER EXPLANATORY INFORMATION (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Videotron Infrastructures Inc | |
Percentages of voting rights and equity in its major subsidiaries | |
% equity and voting | 100.00% |
Videotron US Inc | |
Percentages of voting rights and equity in its major subsidiaries | |
% equity and voting | 100.00% |
Fibrenoire Inc | |
Percentages of voting rights and equity in its major subsidiaries | |
% equity and voting | 100.00% |
4 Degrees Colocation Inc | |
Percentages of voting rights and equity in its major subsidiaries | |
% equity and voting | 100.00% |
SETTE Inc | |
Percentages of voting rights and equity in its major subsidiaries | |
% equity and voting | 84.53% |
SUMMARY OF SIGNIFICANT ACCOUN64
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Estimated useful life of fixed assets (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Buildings and their components | Minimum | |
FIXED ASSETS | |
Estimated useful life of fixed assets | 12 years |
Buildings and their components | Maximum | |
FIXED ASSETS | |
Estimated useful life of fixed assets | 40 years |
Furniture and equipment | Minimum | |
FIXED ASSETS | |
Estimated useful life of fixed assets | 3 years |
Furniture and equipment | Maximum | |
FIXED ASSETS | |
Estimated useful life of fixed assets | 7 years |
Receiving, distribution and telecommunication networks | Minimum | |
FIXED ASSETS | |
Estimated useful life of fixed assets | 3 years |
Receiving, distribution and telecommunication networks | Maximum | |
FIXED ASSETS | |
Estimated useful life of fixed assets | 20 years |
Customer equipment | Minimum | |
FIXED ASSETS | |
Estimated useful life of fixed assets | 3 years |
Customer equipment | Maximum | |
FIXED ASSETS | |
Estimated useful life of fixed assets | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN65
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Estimated useful life of intangible assets (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Minimum | Software, licences and other intangible assets | |
INTANGIBLE ASSETS | |
Estimated useful life of intangible assets | 3 years |
Minimum | Customer relationships and other | |
INTANGIBLE ASSETS | |
Estimated useful life of intangible assets | 5 years |
Maximum | Software, licences and other intangible assets | |
INTANGIBLE ASSETS | |
Estimated useful life of intangible assets | 7 years |
Maximum | Customer relationships and other | |
INTANGIBLE ASSETS | |
Estimated useful life of intangible assets | 8 years |
SUMMARY OF SIGNIFICANT ACCOUN66
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Retroactive adoption of IFRS 15 - Consolidated statements of income and comprehensive income (Details) - CAD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues | $ 3,278,842 | $ 3,144,339 | $ 2,997,979 |
Purchase of goods and services | 1,359,850 | 1,320,568 | 1,259,179 |
Deferred income tax expense | 134,479 | (37,066) | 66,253 |
Net income attributable to shareholder | 914,183 | 547,202 | 585,851 |
Comprehensive income attributable to shareholder | 956,262 | 540,139 | $ 555,996 |
Increase (decrease) due to application of IFRS 15 | |||
Revenues | 22,487 | 52,540 | |
Purchase of goods and services | (12,405) | (13,193) | |
Deferred income tax expense | 9,246 | 17,419 | |
Net income attributable to shareholder | 25,646 | 48,314 | |
Comprehensive income attributable to shareholder | $ 25,646 | $ 48,314 |
SUMMARY OF SIGNIFICANT ACCOUN67
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Retroactive adoption of IFRS 15 - Consolidated balance sheets (Details) - CAD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Other assets | $ 13,406 | $ 16,864 |
Deferred income tax liability | 646,158 | 525,535 |
Retained earnings | 1,641,920 | 1,022,737 |
Increase (decrease) due to application of IFRS 15 | ||
Contract assets | 183,611 | 155,790 |
Other assets | 92,528 | 85,457 |
Deferred income tax liability | 73,176 | 63,930 |
Retained earnings | $ 202,963 | $ 177,317 |
EMPLOYEE COSTS AND PURCHASE O68
EMPLOYEE COSTS AND PURCHASE OF GOODS AND SERVICES (Details) - CAD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
EMPLOYEE COSTS AND PURCHASE OF GOODS AND SERVICES | |||
Employee costs | $ 572,178 | $ 557,468 | $ 527,549 |
Less employee costs capitalized to fixed assets and to intangible assets | (185,825) | (180,711) | (171,046) |
Total employee costs | 386,353 | 376,757 | 356,503 |
Purchase of goods and services | |||
Royalties and rights | 421,685 | 427,951 | 435,740 |
Cost of retail products | 331,344 | 303,130 | 243,224 |
Subcontracting costs | 117,999 | 111,174 | 117,973 |
Marketing and distribution expenses | 62,187 | 64,731 | 63,062 |
Other | 426,635 | 413,582 | 399,180 |
Purchase of goods and services | 1,359,850 | 1,320,568 | 1,259,179 |
Total employee costs and purchase of goods and services | $ 1,746,203 | $ 1,697,325 | $ 1,615,682 |
FINANCIAL EXPENSES (Details)
FINANCIAL EXPENSES (Details) - CAD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Third parties: | |||
Interest on long-term debt | $ 160,128 | $ 154,781 | $ 155,036 |
Amortization of financing costs and long-term debt discount | 4,333 | 3,904 | 4,008 |
(Gain) Loss on foreign currency translation on short-term monetary items | (1,692) | 345 | 6,593 |
Other | (1,184) | 989 | 1,948 |
Total third parties | 161,585 | 160,019 | 167,585 |
Affiliated corporations: | |||
Interest expense | 193,660 | 202,556 | 213,189 |
Dividend income | (195,505) | (204,536) | (216,257) |
Interest income | (13,941) | ||
Total affiliated corporations | (15,786) | (1,980) | (3,068) |
Interest on net defined benefit liability | 3,444 | 3,413 | 2,912 |
Total financial expenses | $ 149,243 | $ 161,452 | $ 167,429 |
LOSS ON VALUATION AND TRANSLA70
LOSS ON VALUATION AND TRANSLATION OF FINANCIAL INSTRUMENTS (Details) - CAD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
LOSS ON VALUATION AND TRANSLATION OF FINANCIAL INSTRUMENTS | |||
Loss (gain) on embedded derivatives related to long-term debt | $ 174 | $ (106) | $ 3,583 |
Loss (gain) on reversal of embedded derivatives on debt redemption | 244 | (336) | |
Loss on valuation and translation of financial instruments | 3,098 | 2,126 | 518 |
Fair value hedges | |||
LOSS ON VALUATION AND TRANSLATION OF FINANCIAL INSTRUMENTS | |||
Loss (gain) on the ineffective portion of hedges | $ 2,924 | $ 1,988 | (3,466) |
Cash flow hedges | |||
LOSS ON VALUATION AND TRANSLATION OF FINANCIAL INSTRUMENTS | |||
Loss (gain) on the ineffective portion of hedges | $ 737 |
RESTRUCTURING OF OPERATIONS, 71
RESTRUCTURING OF OPERATIONS, LITIGATION AND OTHER ITEMS (Details) - CAD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
RESTRUCTURING OF OPERATIONS, LITIGATION AND OTHER ITEMS | |||
Restructuring of operations, litigation and other items | $ (5,888) | $ (15,880) | $ 129,737 |
Gain on litigation | 138,400 | ||
Settlement award | $ 135,300 |
GAIN ON SALE OF SPECTRUM LICE72
GAIN ON SALE OF SPECTRUM LICENCES (Details) $ in Thousands | Jul. 24, 2017CAD ($)Asset | Jun. 20, 2017CAD ($) | Dec. 31, 2017CAD ($) |
GAIN ON SALE OF SPECTRUM LICENCES | |||
Gain on disposal | $ 330,871 | ||
AWS spectrum licence | |||
GAIN ON SALE OF SPECTRUM LICENCES | |||
Cash consideration | $ 184,200 | ||
Gain on disposal | $ 87,800 | ||
2500 MHz and 700 MHz wireless spectrum licences | |||
GAIN ON SALE OF SPECTRUM LICENCES | |||
Number of intangible assets sold | Asset | 7 | ||
Cash consideration | $ 430,000 | ||
Gain on disposal | $ 243,100 |
LOSS ON DEBT REFINANCING (Detai
LOSS ON DEBT REFINANCING (Details) $ in Thousands, $ in Millions | May 01, 2017CAD ($) | Jan. 05, 2017CAD ($) | Jul. 16, 2015CAD ($) | Apr. 10, 2015CAD ($) | Dec. 31, 2017CAD ($) | Dec. 31, 2016CAD ($) | Dec. 31, 2015CAD ($) | Mar. 31, 2017CAD ($) | Dec. 02, 2016CAD ($) | Jul. 16, 2015USD ($) | Jul. 16, 2015CAD ($) | Apr. 10, 2015USD ($) |
Long-term debt | ||||||||||||
Redeemed for cash consideration | $ 321,028 | $ 10,714 | $ 637,083 | |||||||||
Loss on debt refinancing | $ 5,201 | $ 7,346 | 12,153 | |||||||||
Gain from hedging contracts | $ 3,914 | |||||||||||
6.875% Senior Notes | ||||||||||||
Long-term debt | ||||||||||||
Principal amount | $ 125,000 | $ 175,000 | ||||||||||
Annual nominal interest rate (in percentage) | 6.875% | 6.875% | ||||||||||
Redeemed for cash consideration | $ 129,300 | $ 181,000 | ||||||||||
6.375% Senior Notes | ||||||||||||
Long-term debt | ||||||||||||
Principal amount | $ 175 | |||||||||||
Annual nominal interest rate (in percentage) | 6.375% | |||||||||||
Redeemed for cash consideration | $ 204,500 | |||||||||||
9.125% Senior Notes | ||||||||||||
Long-term debt | ||||||||||||
Principal amount | $ 75 | |||||||||||
Annual nominal interest rate (in percentage) | 9.125% | 9.125% | ||||||||||
Redeemed for cash consideration | $ 75,900 | |||||||||||
7.125% Senior Notes | ||||||||||||
Long-term debt | ||||||||||||
Principal amount | $ 300,000 | |||||||||||
Annual nominal interest rate (in percentage) | 7.125% | 7.125% | ||||||||||
Redeemed for cash consideration | $ 310,700 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of income tax expense (Details) - CAD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
INCOME TAXES | |||
Domestic statutory tax rate (in percent) | 26.80% | 26.90% | 26.90% |
Income taxes at domestic statutory tax rate | $ 280,185 | $ 178,655 | $ 190,067 |
(Reduction) increase resulting from: | |||
Effect of non-deductible charges and non-taxable income | (50,269) | (19) | 3,060 |
Change in benefit arising from the recognition of current and prior year tax losses | (2,671) | (491) | 2,179 |
Change in deferred tax balances due to a change in substantively enacted tax rates | (6,376) | ||
Effect of tax consolidation transactions with the parent corporation and affiliated corporations | (96,732) | (55,020) | (58,173) |
Other | 718 | 161 | (16,468) |
Income taxes (recovery) | $ 131,231 | $ 116,910 | 120,665 |
Decrease in income tax liability resulting from developments in tax audit matters | $ 16,100 |
INCOME TAXES - Components of de
INCOME TAXES - Components of deferred income tax (Details) - CAD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Deferred income taxes | |||
Deferred tax liability, net | $ (646,158) | $ (525,535) | $ (561,318) |
Deferred tax expense (income) | 134,479 | (37,066) | 66,253 |
Accounts payable, accrued charges and provisions | |||
Deferred income taxes | |||
Deferred tax liability, net | 10,470 | 11,655 | |
Deferred tax expense (income) | 1,185 | (1,365) | (5,342) |
Defined benefit plans | |||
Deferred income taxes | |||
Deferred tax liability, net | 19,497 | 17,398 | |
Deferred tax expense (income) | (220) | (1,548) | (1,085) |
Fixed assets | |||
Deferred income taxes | |||
Deferred tax liability, net | (483,882) | (399,022) | |
Deferred tax expense (income) | 84,860 | 10,049 | 2,758 |
Goodwill and intangible assets | |||
Deferred income taxes | |||
Deferred tax liability, net | (179,876) | (126,900) | |
Deferred tax expense (income) | 52,976 | 23,440 | 47,477 |
Long-term debt and derivative financial instruments | |||
Deferred income taxes | |||
Deferred tax liability, net | (8,772) | (25,489) | |
Deferred tax expense (income) | (4,740) | 424 | 13,908 |
Benefits from a general partnership | |||
Deferred income taxes | |||
Deferred tax liability, net | (574) | ||
Deferred tax expense (income) | (574) | (67,044) | 11,108 |
Other | |||
Deferred income taxes | |||
Deferred tax liability, net | (3,595) | (2,603) | |
Deferred tax expense (income) | $ 992 | $ (1,022) | $ (2,571) |
INCOME TAXES - Changes in defer
INCOME TAXES - Changes in deferred income tax liability (Details) - CAD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Changes in the net deferred income tax liability | ||
Balance at beginning of year | $ (525,535) | $ (561,318) |
Recognized in income | (134,479) | 37,066 |
Recognized in other comprehensive income | 13,856 | 6,213 |
Business acquisition | (7,496) | |
Balance at end of year | $ (646,158) | $ (525,535) |
INCOME TAXES - Additional infor
INCOME TAXES - Additional information (Details) - CAD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
INCOME TAXES | |||
Income tax consequences attached to the payment of dividends or distributions | $ 0 | $ 0 | $ 0 |
BUSINESS DISPOSAL (Details)
BUSINESS DISPOSAL (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2015CAD ($) | |
BUSINESS DISPOSAL | |
Amount received from sale of Web sites Jobboom and Reseau Contact | $ 7,848 |
BUSINESS ACQUISITIONS - 2016 an
BUSINESS ACQUISITIONS - 2016 and 2015 Acquisitions (Details) - CAD ($) $ in Thousands | Jan. 07, 2016 | Feb. 28, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Mar. 11, 2015 |
BUSINESS ACQUISITIONS | ||||||
Business acquisitions | $ 5,553 | $ 118,946 | $ 35,167 | |||
Fibrenoire Inc | ||||||
BUSINESS ACQUISITIONS | ||||||
Purchase price | $ 125,000 | |||||
Cash paid | 119,100 | |||||
Cash acquired | 1,800 | |||||
Post-closing adjustment | $ 200 | |||||
Business acquisitions | $ 5,600 | |||||
Interest paid on balance payable | $ 300 | |||||
4Degrees Colocation | ||||||
BUSINESS ACQUISITIONS | ||||||
Purchase price | $ 35,500 | |||||
Post-closing adjustment | $ 200 |
BUSINESS ACQUISITIONS - Purchas
BUSINESS ACQUISITIONS - Purchase price allocation (Details) - CAD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Assets acquired | |||
Goodwill | $ 535,932 | $ 535,932 | |
Consideration | |||
Balance payable | 5,553 | ||
Business acquisitions | |||
Assets acquired | |||
Non-cash current assets | 5,387 | $ 130 | |
Property, plant and equipment | 32,679 | 11,181 | |
Intangible assets | 15,574 | 5,074 | |
Goodwill | 87,068 | 19,612 | |
Other assets | 42 | ||
Total assets acquired | 140,750 | 35,997 | |
Liabilities assumed | |||
Non-cash current liabilities | (3,112) | (463) | |
Deferred income taxes | (7,496) | (367) | |
Other long-term liabilities | (5,643) | ||
Total liabilities Assumed | (16,251) | (830) | |
Net assets acquired at fair value | 124,499 | 35,167 | |
Consideration | |||
Cash, net of cash acquired | 118,946 | 35,167 | |
Balance payable | 5,553 | ||
Total consideration transferred, acquisition-date fair value | $ 124,499 | $ 35,167 |
INVENTORIES (Details)
INVENTORIES (Details) - CAD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
INVENTORIES | |||
Customer equipment | $ 73,124 | $ 66,402 | |
Network materials | 16,466 | 19,662 | |
Total current inventories | 89,590 | 86,064 | |
Cost of inventories included in purchase of goods and services | 278,000 | 258,700 | $ 205,700 |
Write-downs of inventories | $ 4,800 | $ 3,000 | $ 1,500 |
INVESTMENTS AND SUBORDINATED 82
INVESTMENTS AND SUBORDINATED LOAN FROM PARENT CORPORATION (Details) - CAD ($) $ in Millions | Nov. 06, 2017 | May 03, 2017 | Nov. 01, 2016 | Mar. 01, 2016 | Feb. 12, 2016 | Feb. 05, 2015 |
9101-0835 Quebec Inc | ||||||
INVESTMENTS AND SUBORDINATED LOAN FROM PARENT CORPORATION | ||||||
Number of preferred shares redeemed | 3,600,000 | |||||
9101-0835 Quebec Inc | Series B and D Preferred shares | ||||||
INVESTMENTS AND SUBORDINATED LOAN FROM PARENT CORPORATION | ||||||
Payments for redemption of preferred stock in cash | $ 2,290 | |||||
Settlement of cumulative unpaid dividends in cash | $ 92.7 | |||||
9101-0835 Quebec Inc | Series B Preferred shares | ||||||
INVESTMENTS AND SUBORDINATED LOAN FROM PARENT CORPORATION | ||||||
Number of preferred shares redeemed | 1,660,000 | 430,000 | ||||
Payments for redemption of preferred stock in cash | $ 430 | |||||
Settlement of cumulative unpaid dividends in cash | 6.9 | |||||
Investment in redeemable preferred shares | $ 1,010 | |||||
Redeemable preferred shares acquired (in shares) | 1,010,000 | |||||
Preferred stock annual dividend rate (in percentage) | 10.85% | |||||
9101-0835 Quebec Inc | Series D Preferred shares | ||||||
INVESTMENTS AND SUBORDINATED LOAN FROM PARENT CORPORATION | ||||||
Number of preferred shares redeemed | 625,000 | |||||
Investment in redeemable preferred shares | $ 625 | |||||
Redeemable preferred shares acquired (in shares) | 625,000 | |||||
Preferred stock annual dividend rate (in percentage) | 11.60% | |||||
9346-9963 Quebec Inc | Series C preference shares | ||||||
INVESTMENTS AND SUBORDINATED LOAN FROM PARENT CORPORATION | ||||||
Payments for redemption of preferred stock in cash | $ 3,600 | |||||
Settlement of cumulative unpaid dividends in cash | 145.3 | |||||
Repayment of subordinated loan | $ 3,600 | |||||
Investment in redeemable preferred shares | $ 3,600 | |||||
Redeemable preferred shares acquired (in shares) | 3,600,000 | |||||
Preferred stock annual dividend rate (in percentage) | 10.60% | |||||
Quebecor Media Inc. | ||||||
INVESTMENTS AND SUBORDINATED LOAN FROM PARENT CORPORATION | ||||||
Repayment of subordinated loan | $ 2,290 | $ 430 | ||||
Subordinated loan granted during the period | $ 3,600 | $ 625 | $ 1,010 | |||
Interest rate on subordinated loan (in percentage) | 10.50% | 11.50% | 10.75% | |||
Repayment term intervals of subordinated loan (in months) | 6 months | 6 months | 6 months |
SUBORDINATED LOAN TO PARENT C83
SUBORDINATED LOAN TO PARENT CORPORATION (Details) - Quebecor Media Inc. $ in Millions | Apr. 12, 2017CAD ($) |
SUBORDINATED LOAN TO PARENT CORPORATION | |
Subordinated loan granted | $ 342 |
Interest on subordinated loan granted (as percent) | 5.50% |
Subordinated loan repayment term interval | 6 months |
FIXED ASSETS (Details)
FIXED ASSETS (Details) - CAD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
FIXED ASSETS | ||
Balance at the beginning of period | $ 3,261,883 | |
Balance at the end of period | 3,257,388 | $ 3,261,883 |
Cost | ||
FIXED ASSETS | ||
Balance at the beginning of period | 7,344,567 | 6,938,189 |
Additions | 574,339 | 666,698 |
Business acquisition | 32,679 | |
Net change in additions financed with accounts payable | (3,649) | 6,068 |
Retirement, disposals and other | (167,829) | (299,067) |
Balance at the end of period | 7,747,428 | 7,344,567 |
Accumulated depreciation | ||
FIXED ASSETS | ||
Balance at the beginning of period | (4,082,684) | (3,857,502) |
Depreciation | (569,152) | (517,673) |
Retirement, disposals and other | 161,796 | 292,491 |
Balance at the end of period | (4,490,040) | (4,082,684) |
Land and buildings | ||
FIXED ASSETS | ||
Balance at the beginning of period | 201,126 | |
Balance at the end of period | 208,304 | 201,126 |
Land and buildings | Cost | ||
FIXED ASSETS | ||
Balance at the beginning of period | 267,906 | 214,248 |
Additions | 17,885 | 53,922 |
Business acquisition | 462 | |
Retirement, disposals and other | (726) | |
Balance at the end of period | 285,791 | 267,906 |
Land and buildings | Accumulated depreciation | ||
FIXED ASSETS | ||
Balance at the beginning of period | (66,780) | (60,092) |
Depreciation | (10,707) | (7,174) |
Retirement, disposals and other | 486 | |
Balance at the end of period | (77,487) | (66,780) |
Furniture and equipment | ||
FIXED ASSETS | ||
Balance at the beginning of period | 215,625 | |
Balance at the end of period | 200,045 | 215,625 |
Furniture and equipment | Cost | ||
FIXED ASSETS | ||
Balance at the beginning of period | 609,452 | 570,266 |
Additions | 33,597 | 42,197 |
Business acquisition | 266 | |
Net change in additions financed with accounts payable | 73 | 10 |
Retirement, disposals and other | (27,255) | (10,986) |
Reclassification | 15,848 | 7,699 |
Balance at the end of period | 631,715 | 609,452 |
Furniture and equipment | Accumulated depreciation | ||
FIXED ASSETS | ||
Balance at the beginning of period | (393,827) | (336,323) |
Depreciation | (63,429) | (66,952) |
Retirement, disposals and other | 25,586 | 9,448 |
Balance at the end of period | (431,670) | (393,827) |
Receiving and distribution networks | ||
FIXED ASSETS | ||
Balance at the beginning of period | 2,521,029 | |
Balance at the end of period | 2,587,416 | 2,521,029 |
Receiving and distribution networks | Cost | ||
FIXED ASSETS | ||
Balance at the beginning of period | 5,611,274 | 5,414,901 |
Additions | 365,544 | 340,983 |
Business acquisition | 31,951 | |
Net change in additions financed with accounts payable | (3,544) | 10,183 |
Retirement, disposals and other | (97,900) | (253,295) |
Reclassification | 88,660 | 66,551 |
Balance at the end of period | 5,964,034 | 5,611,274 |
Receiving and distribution networks | Accumulated depreciation | ||
FIXED ASSETS | ||
Balance at the beginning of period | (3,090,245) | (3,015,913) |
Depreciation | (384,000) | (327,133) |
Retirement, disposals and other | 97,627 | 252,801 |
Balance at the end of period | (3,376,618) | (3,090,245) |
Customer equipment | ||
FIXED ASSETS | ||
Balance at the beginning of period | 243,854 | |
Balance at the end of period | 224,049 | 243,854 |
Customer equipment | Cost | ||
FIXED ASSETS | ||
Balance at the beginning of period | 775,686 | 694,360 |
Additions | 96,394 | 117,177 |
Net change in additions financed with accounts payable | (1,092) | (1,791) |
Retirement, disposals and other | (42,674) | (34,060) |
Balance at the end of period | 828,314 | 775,686 |
Customer equipment | Accumulated depreciation | ||
FIXED ASSETS | ||
Balance at the beginning of period | (531,832) | (445,174) |
Depreciation | (111,016) | (116,414) |
Retirement, disposals and other | 38,583 | 29,756 |
Balance at the end of period | (604,265) | (531,832) |
Projects under development | ||
FIXED ASSETS | ||
Balance at the beginning of period | 80,249 | |
Balance at the end of period | 37,574 | 80,249 |
Projects under development | Cost | ||
FIXED ASSETS | ||
Balance at the beginning of period | 80,249 | 44,414 |
Additions | 60,919 | 112,419 |
Net change in additions financed with accounts payable | 914 | (2,334) |
Reclassification | (104,508) | (74,250) |
Balance at the end of period | 37,574 | $ 80,249 |
Telecommunications network | ||
FIXED ASSETS | ||
Depreciation | $ (21,200) | |
Estimated useful life of fixed assets | 5 years | 15 years |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - CAD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Changes in the net carrying amount of intangible assets | |||
Balance at the beginning of the period | $ 1,123,257 | ||
Balance at the end of the period | 907,972 | $ 1,123,257 | |
Internally Generated | |||
Changes in the net carrying amount of intangible assets | |||
Balance at the beginning of the period | 203,200 | ||
Balance at the end of the period | 230,600 | 203,200 | |
Cost | |||
Changes in the net carrying amount of intangible assets | |||
Balance at the beginning of the period | 1,789,505 | 1,659,318 | |
Additions | 132,254 | 125,482 | |
Business acquisition | 15,574 | ||
Net change in additions financed with accounts payable | 26,378 | (7,896) | |
Retirements and disposal | (290,900) | (2,973) | |
Balance at the end of the period | 1,657,237 | 1,789,505 | $ 1,659,318 |
Cost | Internally Generated | |||
Changes in the net carrying amount of intangible assets | |||
Balance at the beginning of the period | 453,000 | ||
Additions | 64,100 | 57,200 | 25,700 |
Balance at the end of the period | 514,700 | 453,000 | |
Accumulated depreciation | |||
Changes in the net carrying amount of intangible assets | |||
Balance at the beginning of the period | (666,248) | (587,920) | |
Amortization | (85,462) | (78,392) | |
Retirements and disposal | 2,445 | 64 | |
Balance at the end of the period | (749,265) | (666,248) | (587,920) |
Accumulated depreciation | Internally Generated | |||
Changes in the net carrying amount of intangible assets | |||
Balance at the beginning of the period | (249,800) | ||
Amortization | 36,500 | 35,400 | 33,600 |
Balance at the end of the period | (284,100) | (249,800) | |
Spectrum licences | |||
Changes in the net carrying amount of intangible assets | |||
Balance at the beginning of the period | 759,246 | ||
Balance at the end of the period | 475,872 | 759,246 | |
Spectrum licences | Cost | |||
Changes in the net carrying amount of intangible assets | |||
Balance at the beginning of the period | 1,006,910 | 1,006,910 | |
Retirements and disposal | (283,374) | ||
Balance at the end of the period | 723,536 | 1,006,910 | 1,006,910 |
Spectrum licences | Accumulated depreciation | |||
Changes in the net carrying amount of intangible assets | |||
Balance at the beginning of the period | (247,664) | (247,664) | |
Balance at the end of the period | (247,664) | (247,664) | (247,664) |
Software, licenses and other intangible assets | |||
Changes in the net carrying amount of intangible assets | |||
Balance at the beginning of the period | 346,036 | ||
Balance at the end of the period | 372,811 | 346,036 | |
Software, licenses and other intangible assets | Cost | |||
Changes in the net carrying amount of intangible assets | |||
Balance at the beginning of the period | 764,620 | 631,507 | |
Additions | 72,479 | 99,663 | |
Business acquisition | 15,574 | ||
Net change in additions financed with accounts payable | 14,064 | (5,828) | |
Retirements and disposal | (7,526) | (2,973) | |
Reclassification and other items | 30,775 | 26,677 | |
Balance at the end of the period | 874,412 | 764,620 | 631,507 |
Software, licenses and other intangible assets | Accumulated depreciation | |||
Changes in the net carrying amount of intangible assets | |||
Balance at the beginning of the period | (418,584) | (340,256) | |
Amortization | (85,462) | (78,392) | |
Retirements and disposal | 2,445 | 64 | |
Balance at the end of the period | (501,601) | (418,584) | (340,256) |
Projects under development | |||
Changes in the net carrying amount of intangible assets | |||
Balance at the beginning of the period | 17,975 | ||
Balance at the end of the period | 59,289 | 17,975 | |
Projects under development | Cost | |||
Changes in the net carrying amount of intangible assets | |||
Balance at the beginning of the period | 17,975 | 20,901 | |
Additions | 59,775 | 25,819 | |
Net change in additions financed with accounts payable | 12,314 | (2,068) | |
Reclassification and other items | (30,775) | (26,677) | |
Balance at the end of the period | $ 59,289 | $ 17,975 | $ 20,901 |
GOODWILL - Changes in the net c
GOODWILL - Changes in the net carrying amount of goodwill - Cost roll forward (Details) - CAD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill | ||
Goodwill at beginning of period | $ 535,932 | |
Goodwill at end of period | 535,932 | $ 535,932 |
Cost | ||
Goodwill | ||
Goodwill at beginning of period | 569,243 | 482,175 |
Business acquisition | 0 | 87,068 |
Goodwill at end of period | $ 569,243 | $ 569,243 |
GOODWILL - Changes in the net87
GOODWILL - Changes in the net carrying amount of goodwill - Net carrying amount (Details) - CAD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Goodwill | |||
Goodwill | $ 535,932 | $ 535,932 | |
Cost | |||
Goodwill | |||
Goodwill | 569,243 | 569,243 | $ 482,175 |
Accumulated amortization | |||
Goodwill | |||
Goodwill | $ (33,311) | $ (33,311) |
GOODWILL - Determination of rec
GOODWILL - Determination of recoverable amounts in the impairment tests performed in significant CGU groups (Details) - Telecommunications | Dec. 31, 2017 | Dec. 31, 2016 |
Goodwill | ||
Percentage of pre-tax discount rate (WACC) | 8.50% | 8.50% |
Perpetual growth rate | 2.50% | 2.50% |
OTHER ASSETS (Details)
OTHER ASSETS (Details) - CAD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
OTHER ASSETS | ||
Deferred connection costs | $ 10,437 | $ 13,555 |
Other | 2,969 | 3,309 |
Other assets | $ 13,406 | $ 16,864 |
ACCOUNTS PAYABLE AND ACCRUED 90
ACCOUNTS PAYABLE AND ACCRUED CHARGES (Details) - CAD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
ACCOUNTS PAYABLE AND ACCRUED CHARGES | ||
Trade and accruals | $ 356,825 | $ 332,281 |
Salaries and employee benefits | 87,122 | 85,090 |
Interest payable | 43,901 | 36,728 |
Stock-based compensation | 4,062 | 2,338 |
Total accounts payable and accrued charges | $ 491,910 | $ 456,437 |
PROVISIONS AND CONTINGENCIES -
PROVISIONS AND CONTINGENCIES - Roll forward (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2017CAD ($) | |
Reconciliation of changes in provisions | |
Balance at the beginning of the period | $ 76,549 |
Recognized in income | (15,489) |
Payments | (26,682) |
Other | 183 |
Balance at the end of the period | $ 34,561 |
PROVISIONS AND CONTINGENCIES 92
PROVISIONS AND CONTINGENCIES - Current and non-current (Details) - CAD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Total provisions | ||
Total other provisions | $ 34,561 | $ 76,549 |
Current portion | 17,508 | 60,321 |
Non-current portion | $ 17,053 | $ 16,228 |
LONG-TERM DEBT - Breakdown of l
LONG-TERM DEBT - Breakdown of long-term debt (Details) - CAD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Long-term debt | ||
Total long-term debt | $ 3,294,557 | $ 3,180,301 |
Change in fair value related to hedged interest rate risk | 5,789 | 8,377 |
Adjustments related to embedded derivatives | (174) | |
Financing fees, net of amortization | (30,016) | (25,396) |
Total adjustments for long-term debt | (24,227) | (17,193) |
Total long-term debt, current and non current | 3,270,330 | 3,163,108 |
Less current portion | (5,357) | (10,714) |
Total Long-term debt, non current portion | $ 3,264,973 | 3,152,394 |
Bank credit facilities | ||
Long-term debt | ||
Effective interest rate (as a percent) | 2.95% | |
Total long-term debt | $ 5,357 | 225,521 |
Senior Notes | ||
Long-term debt | ||
Total long-term debt | $ 3,289,200 | $ 2,954,780 |
LONG-TERM DEBT - Bank credit fa
LONG-TERM DEBT - Bank credit facilities (Details) - CAD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Long-term debt | ||
Long-term debt | $ 3,294,557 | $ 3,180,301 |
Assets carrying value | 6,673,403 | 5,812,685 |
Secured revolving credit facility | Videotron | ||
Long-term debt | ||
Drawn credit facility | 0 | 209,400 |
Export financing facility | Videotron | ||
Long-term debt | ||
Drawn credit facility | 5,400 | 16,100 |
Secured revolving credit facility matures in July 2021 | Videotron | ||
Long-term debt | ||
Maximum borrowing capacity | 965,000 | |
Bank credit facilities | ||
Long-term debt | ||
Long-term debt | 5,357 | 225,521 |
Bank credit facilities | Videotron | ||
Long-term debt | ||
Assets carrying value | 6,665,700 | $ 5,804,300 |
Secured export financing facility matures in June 2018 | Videotron | ||
Long-term debt | ||
Maximum borrowing capacity | $ 75,000 |
LONG-TERM DEBT - Senior Notes (
LONG-TERM DEBT - Senior Notes (Details) $ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | |||||
Apr. 30, 2017CAD ($) | Sep. 30, 2015CAD ($) | Dec. 31, 2017CAD ($) | Dec. 31, 2016CAD ($) | Dec. 31, 2015CAD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2017CAD ($) | |
Long-term debt | |||||||
Senior notes redeemable period by issuer | 5 years | ||||||
Net proceeds from issuance of senior notes | $ 794,580 | $ 370,130 | |||||
Financing fees | $ 149,243 | $ 161,452 | $ 167,429 | ||||
Senior Note 5.000% July 2022 | Videotron | |||||||
Long-term debt | |||||||
Principal amount | $ 800,000 | ||||||
Annual nominal interest rate (in percentage) | 5.00% | 5.00% | |||||
Effective interest rate (after discount or premium at issuance) (as a percent) | 5.00% | ||||||
Senior Note 5.375% June 2024 | Videotron | |||||||
Long-term debt | |||||||
Principal amount | $ 600,000 | ||||||
Annual nominal interest rate (in percentage) | 5.375% | 5.375% | |||||
Effective interest rate (after discount or premium at issuance) (as a percent) | 5.375% | ||||||
Senior Note 5.625% June 2025 | Videotron | |||||||
Long-term debt | |||||||
Principal amount | $ 400,000 | ||||||
Annual nominal interest rate (in percentage) | 5.625% | 5.625% | |||||
Effective interest rate (after discount or premium at issuance) (as a percent) | 5.625% | ||||||
Senior Note 5.750% January 2026 | Videotron | |||||||
Long-term debt | |||||||
Principal amount | $ 375,000 | ||||||
Annual nominal interest rate (in percentage) | 5.75% | 5.75% | |||||
Effective interest rate (after discount or premium at issuance) (as a percent) | 5.75% | ||||||
5.125% Senior Notes due 2027 | Videotron | |||||||
Long-term debt | |||||||
Principal amount | $ 600,000 | ||||||
Annual nominal interest rate (in percentage) | 5.125% | 5.125% | |||||
Effective interest rate (after discount or premium at issuance) (as a percent) | 5.125% | ||||||
Senior Note September 2015 | |||||||
Long-term debt | |||||||
Net proceeds from issuance of senior notes | $ 370,100 | ||||||
Financing fees | $ 4,900 | ||||||
Senior Note April 2017 | |||||||
Long-term debt | |||||||
Net proceeds from issuance of senior notes | $ 794,500 | ||||||
Financing fees | $ 9,900 |
LONG-TERM DEBT - Principal repa
LONG-TERM DEBT - Principal repayments of long-term debt (Details) $ in Thousands | Dec. 31, 2017CAD ($) |
2018 (Less than one year) | |
Principal repayments of long-term debt | |
Principal repayments | $ 5,357 |
2,022 | |
Principal repayments of long-term debt | |
Principal repayments | 1,005,680 |
2023 and thereafter (5 years or more) | |
Principal repayments of long-term debt | |
Principal repayments | $ 2,283,520 |
OTHER LIABILITIES (Details)
OTHER LIABILITIES (Details) - CAD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
OTHER LIABILITIES | ||
Defined benefit plans | $ 78,891 | $ 71,024 |
Asset retirement obligation | 17,053 | 16,228 |
Deferred revenue | 14,236 | 19,960 |
Balance payable on a business acquisition | 5,553 | |
Stock-based compensation | 1,151 | 1,823 |
Other | 1,536 | 1,024 |
Total other liabilities | 112,867 | 115,612 |
Current portion of stock-based compensation | $ 4,062 | $ 2,338 |
CAPITAL STOCK - Authorized capi
CAPITAL STOCK - Authorized capital stock (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Preferred B Shares | |
Authorized capital stock | |
Non-cumulative dividend | 1.00% |
Preferred C Shares | |
Authorized capital stock | |
Non-cumulative dividend | 1.00% |
Preferred D Shares | |
Authorized capital stock | |
Non-cumulative dividend | 1.00% |
Preferred E Shares | |
Authorized capital stock | |
Non-cumulative dividend | 1.00% |
Preferred F Shares | |
Authorized capital stock | |
Non-cumulative dividend | 1.00% |
Preferred H Shares | |
Authorized capital stock | |
Non-cumulative dividend | 1.00% |
Preferred G Shares | |
Authorized capital stock | |
Cumulative preferred dividend | 11.25% |
CAPITAL STOCK - Issued and outs
CAPITAL STOCK - Issued and outstanding capital stock (Details) - CAD ($) $ in Thousands | Jul. 30, 2015 | Jul. 20, 2015 | Jun. 23, 2015 | Dec. 31, 2015 | Dec. 31, 2017 | Dec. 31, 2016 |
Issued and outstanding capital stock | ||||||
Balance | $ 132,401 | $ 132,401 | ||||
Issuance of capital stock | $ 170,000 | |||||
Reduction of paid-up capital | 41,000 | |||||
Capital stock | ||||||
Issued and outstanding capital stock | ||||||
Balance | $ 132,401 | $ 132,401 | ||||
Balance (in shares) | 172,516,829 | 172,516,829 | ||||
Reduction of paid-up capital | $ 41,000 | |||||
Ordinary shares | Capital stock | ||||||
Issued and outstanding capital stock | ||||||
Reduction of paid-up capital | $ 20,000 | $ 21,000 | ||||
Ordinary shares | Ultimate parent and parent corporation | Capital stock | ||||||
Issued and outstanding capital stock | ||||||
Number of shares issued | 170,000,000 | |||||
Issuance of capital stock | $ 170,000 |
STOCK-BASED COMPENSATION PLA100
STOCK-BASED COMPENSATION PLANS - Ultimate parent corporation stock option plan (Details) - Ultimate parent corporation stock option plan | Nov. 15, 2017 | Dec. 31, 2017shares |
STOCK-BASED COMPENSATION PLANS | ||
Stock split ratio | 2 | |
Exercisable period | 10 years | |
Class B | ||
STOCK-BASED COMPENSATION PLANS | ||
Number of shares authorized to issue under stock-based compensation plans | 26,000,000 | |
One year | ||
STOCK-BASED COMPENSATION PLANS | ||
Percentage of stock options vested | 33.33% | |
Vesting period of share based awards (in years) | 1 year | |
Two years | ||
STOCK-BASED COMPENSATION PLANS | ||
Percentage of stock options vested | 66.67% | |
Vesting period of share based awards (in years) | 2 years | |
Three years | ||
STOCK-BASED COMPENSATION PLANS | ||
Percentage of stock options vested | 100.00% | |
Vesting period of share based awards (in years) | 3 years |
STOCK-BASED COMPENSATION PLA101
STOCK-BASED COMPENSATION PLANS - Ultimate parent corporation outstanding options (Details) - Ultimate parent corporation stock option plan | Dec. 31, 2017CAD ($)Option | Dec. 31, 2016CAD ($)Option |
STOCK-BASED COMPENSATION PLANS | ||
Number of shares outstanding | Option | 100,000 | 100,000 |
Weighted average exercise price of outstanding options | $ | $ 12.75 | $ 12.75 |
Number of vested options | Option | 66,666 | 33,333 |
Weighted average exercise price of vested options | $ | $ 12.75 | $ 12.75 |
STOCK-BASED COMPENSATION PLA102
STOCK-BASED COMPENSATION PLANS - Ultimate parent corporation exercise price range of options (Details) - Ultimate parent corporation stock option plan | Dec. 31, 2017CAD ($)Y |
Range of exercise price | |
Exercise price of outstanding options | $ | $ 12.75 |
Weighted average years to maturity | Y | 6.22 |
STOCK-BASED COMPENSATION PLA103
STOCK-BASED COMPENSATION PLANS - Parent corporation stock option plan (Details) - Parent corporation stock option plan | 12 Months Ended |
Dec. 31, 2017shares | |
STOCK-BASED COMPENSATION PLANS | |
Number of shares authorized to issue under stock-based compensation plans | 6,180,140 |
Stock option plan - first anniversary | |
STOCK-BASED COMPENSATION PLANS | |
Vesting period of share based awards (in years) | 5 years |
Annual vesting percent of share based awards | 20.00% |
Stock option plan - second anniversary | |
STOCK-BASED COMPENSATION PLANS | |
Vesting period of share based awards (in years) | 4 years |
Annual vesting percent of share based awards | 25.00% |
Stock option plan - third anniversary | |
STOCK-BASED COMPENSATION PLANS | |
Vesting period of share based awards (in years) | 3 years |
Annual vesting percent of share based awards | 33.33% |
Maximum | |
STOCK-BASED COMPENSATION PLANS | |
Term of an option | 10 years |
STOCK-BASED COMPENSATION PLA104
STOCK-BASED COMPENSATION PLANS - Parent corporation outstanding options (Details) - Parent corporation stock option plan | 12 Months Ended | |
Dec. 31, 2017CAD ($)Option | Dec. 31, 2016CAD ($)Option | |
STOCK-BASED COMPENSATION PLANS | ||
Balance at beginning of year | Option | 286,105 | 386,611 |
Exercised | Option | (80,378) | (94,506) |
Cancelled | Option | (47,500) | (6,000) |
Balance at end of year | Option | 158,227 | 286,105 |
Vested options at end of year | Option | 39,900 | 29,550 |
Balance at beginning of year (in dollars per share) | $ 63.98 | $ 62.34 |
Exercised (in dollars per share) | 60.89 | 56.84 |
Cancelled (in dollars per share) | 65.54 | 70.56 |
Balance at end of year (in dollars per share) | 65.08 | 63.98 |
Vested options at end of year (in dollars per share) | 63.06 | 59.94 |
Cash consideration on stock options exercised | $ 2,000,000 | $ 1,600,000 |
STOCK-BASED COMPENSATION PLA105
STOCK-BASED COMPENSATION PLANS - Parent corporation exercise price range of options (Details) - Parent corporation stock option plan | Dec. 31, 2017CAD ($)Y |
Range of exercise price | |
Weighted average years to maturity | Y | 6.47 |
Minimum | |
Range of exercise price | |
Exercise price of outstanding share options | $ 57.35 |
Maximum | |
Range of exercise price | |
Exercise price of outstanding share options | $ 70.56 |
STOCK-BASED COMPENSATION PLA106
STOCK-BASED COMPENSATION PLANS - Deferred share unit and performance share unit plans (Details) | 12 Months Ended |
Dec. 31, 2017EquityInstrumentsshares | |
STOCK-BASED COMPENSATION PLANS | |
Number of treasury shares issued | shares | 0 |
Deferred share unit plan | |
STOCK-BASED COMPENSATION PLANS | |
Vesting life of share based awards | 6 years |
Outstanding units under plan | 96,963 |
Performance Share Unit (PSU) | |
STOCK-BASED COMPENSATION PLANS | |
Vesting life of share based awards | 3 years |
Outstanding units under plan | 118,529 |
STOCK-BASED COMPENSATION PLA107
STOCK-BASED COMPENSATION PLANS - Assumptions in estimating the fair value of awards (Details) - Y | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Ultimate parent corporation stock option plan | ||
STOCK-BASED COMPENSATION PLANS | ||
Risk-free interest rate | 1.89% | 1.21% |
Distribution yield | 0.46% | 0.48% |
Expected volatility (as a percent) | 18.76% | 19.26% |
Expected remaining life | 2.7 | 3.7 |
Parent corporation stock option plan | ||
STOCK-BASED COMPENSATION PLANS | ||
Risk-free interest rate | 1.83% | 1.13% |
Distribution yield | 1.12% | 1.33% |
Expected volatility (as a percent) | 16.94% | 19.01% |
Expected remaining life | 2.4 | 3.2 |
STOCK-BASED COMPENSATION PLA108
STOCK-BASED COMPENSATION PLANS - Liability and expense (Details) - CAD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
STOCK-BASED COMPENSATION PLANS | |||
Liability for all vested options under intrinsic value | $ 1.9 | $ 0.6 | |
Consolidated charge related to stock-based compensation | $ 3.7 | $ 3 | $ 1.3 |
ACCUMULATED OTHER COMPREHENS109
ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - CAD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | |||
Equity at beginning of period | $ 1,071,740 | $ 813,800 | $ 793,907 |
Other comprehensive income (loss) | 42,079 | (7,063) | (29,855) |
Equity at end of period | 1,733,054 | 1,071,740 | 813,800 |
Accumulated other comprehensive loss | |||
ACCUMULATED OTHER COMPREHENSIVE LOSS | |||
Equity at beginning of period | (83,907) | (76,844) | (46,989) |
Other comprehensive income (loss) | 42,079 | (7,063) | (29,855) |
Equity at end of period | (41,828) | (83,907) | (76,844) |
Cash flow hedges | |||
ACCUMULATED OTHER COMPREHENSIVE LOSS | |||
Equity at beginning of period | (51,192) | (40,436) | (17,605) |
Other comprehensive income (loss) | 47,212 | (10,756) | (22,831) |
Equity at end of period | $ (3,980) | (51,192) | (40,436) |
Expected reversal period | 9 years 3 months | ||
Defined benefit plans | |||
ACCUMULATED OTHER COMPREHENSIVE LOSS | |||
Equity at beginning of period | $ (32,715) | (36,408) | (29,384) |
Other comprehensive income (loss) | (5,133) | 3,693 | (7,024) |
Equity at end of period | $ (37,848) | $ (32,715) | $ (36,408) |
COMMITMENTS (Details)
COMMITMENTS (Details) - CAD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
COMMITMENTS | |||
Minimum payments | $ 741,900 | ||
Operating lease expenses | 54,900 | $ 54,200 | $ 52,100 |
Ultimate parent and parent corporation | |||
COMMITMENTS | |||
Minimum payments | 41,600 | ||
Leases | 2018 (Less than one year) | |||
COMMITMENTS | |||
Minimum payments | 42,212 | ||
Leases | 2019 to 2022 | |||
COMMITMENTS | |||
Minimum payments | 74,087 | ||
Leases | 2023 and thereafter (5 years or more) | |||
COMMITMENTS | |||
Minimum payments | 35,232 | ||
Other commitments | 2018 (Less than one year) | |||
COMMITMENTS | |||
Minimum payments | 94,796 | ||
Other commitments | 2019 to 2022 | |||
COMMITMENTS | |||
Minimum payments | 262,470 | ||
Other commitments | 2023 and thereafter (5 years or more) | |||
COMMITMENTS | |||
Minimum payments | $ 233,141 |
GUARANTEES (Details)
GUARANTEES (Details) - CAD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
GUARANTEES | ||
Maximum exposure with respect to operating lease guarantees | $ 13.1 | |
Guarantees |
FINANCIAL INSTRUMENTS AND FI112
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Description of derivative financial instruments (Details) - 12 months ended Dec. 31, 2017 $ in Thousands, $ in Millions | CAD ($)$ / $ | USD ($) |
Foreign exchange forward contracts | ||
Financial instruments and financial risk management | ||
Average exchange rate | $ / $ | 1.2936 | |
Notional amount sold | $ 151.4 | |
Principal amount | $ 117,000 | |
5.000% Senior Notes due 2022 | Cross-currency interest rate swaps | ||
Financial instruments and financial risk management | ||
Average exchange rate | $ / $ | 0.9983 | |
Principal amount | $ 543,125 | |
Annual nominal interest rate (in percentage) | 5.00% | |
Annual interest rate on notional amount (as a percent) | 6.01% | |
5.000% Senior Notes due 2022 | Cross-currency interest rate swaps | ||
Financial instruments and financial risk management | ||
Average exchange rate | $ / $ | 1.0016 | |
Principal amount | $ 256,875 | |
Annual nominal interest rate (in percentage) | 5.00% | |
Annual interest rate on notional amount (as a percent) | 5.81% | |
5.375% Senior Notes due 2024 | Cross-currency interest rate swaps | ||
Financial instruments and financial risk management | ||
Average exchange rate | $ / $ | 1.1034 | |
Principal amount | $ 158,605 | |
Annual nominal interest rate (in percentage) | 5.375% | |
Annual interest rate on notional amount, interest rate basis | Bankers' acceptance 3 months | |
Annual interest rate on notional amount, adjustment to interest rate basis (as a percent) | 2.67% | |
5.375% Senior Notes due 2024 | Cross-currency interest rate swaps | ||
Financial instruments and financial risk management | ||
Average exchange rate | $ / $ | 1.1039 | |
Principal amount | $ 441,395 | |
Annual nominal interest rate (in percentage) | 5.375% | |
Annual interest rate on notional amount (as a percent) | 5.62% | |
5.125% Senior Notes due 2027 | Cross-currency interest rate swaps | ||
Financial instruments and financial risk management | ||
Average exchange rate | $ / $ | 1.3407 | |
Principal amount | $ 600,000 | |
Annual nominal interest rate (in percentage) | 5.125% | |
Annual interest rate on notional amount (as a percent) | 4.82% |
FINANCIAL INSTRUMENTS AND FI113
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Carrying value and fair value of financial assets (Details) - CAD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Carrying value | Early settlement options | ||
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT | ||
Asset | $ 417 | |
Carrying value | Foreign exchange forward contracts | ||
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT | ||
Asset | 2,467 | |
Carrying value | Cross-currency interest rate swaps | ||
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT | ||
Asset | $ 263,530 | 415,321 |
Fair value | Early settlement options | ||
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT | ||
Asset | 417 | |
Fair value | Foreign exchange forward contracts | ||
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT | ||
Asset | 2,467 | |
Fair value | Cross-currency interest rate swaps | ||
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT | ||
Asset | $ 263,530 | $ 415,321 |
FINANCIAL INSTRUMENTS AND FI114
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Carrying value and fair value of financial liabilities (Details) - CAD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Carrying value | Long-term debt | ||
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT | ||
Liability | $ (3,294,557) | $ (3,180,301) |
Carrying value | Foreign exchange forward contracts | ||
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT | ||
Liability | (4,502) | |
Fair value | Long-term debt | ||
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT | ||
Liability | (3,492,100) | $ (3,266,417) |
Fair value | Foreign exchange forward contracts | ||
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT | ||
Liability | $ (4,502) |
FINANCIAL INSTRUMENTS AND FI115
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Fair value of derivative financial instruments designated as hedges (Details) - CAD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT | ||
Fair value of derivative financial instruments designated as hedges | $ 259,028 | $ 417,788 |
FINANCIAL INSTRUMENTS AND FI116
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Credit risk management (Details) - CAD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Changes to the allowance for doubtful accounts | ||
Balance at beginning of year | $ 19,351 | $ 16,569 |
Charged to income | 19,977 | 33,811 |
Utilization | (25,374) | (31,029) |
Balance at end of year | $ 13,954 | $ 19,351 |
Credit risk management | 90 days past due | ||
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT | ||
Trade receivables past due (as a percent) | 4.90% | 7.70% |
Trade receivables past due which had an established allowance for doubtful accounts (as a percent) | 67.30% | 58.90% |
FINANCIAL INSTRUMENTS AND FI117
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Liquidity risk management (Details) - CAD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Liquidity risk management | ||
Accounts payable and accrued charges | $ 491,910 | |
Amounts payable to affiliated corporations | 54,675 | |
Long-term debt | 3,294,557 | |
Interest payments | 1,149,339 | |
Derivative instruments | (248,015) | |
Total | 4,742,466 | |
2018 (Less than one year) | ||
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Liquidity risk management | ||
Accounts payable and accrued charges | 491,910 | |
Amounts payable to affiliated corporations | 54,675 | |
Long-term debt | 5,357 | |
Interest payments | 123,783 | |
Total | 675,725 | |
1-3 years | ||
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Liquidity risk management | ||
Interest payments | 335,210 | |
Total | 335,210 | |
3-5 years | ||
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Liquidity risk management | ||
Long-term debt | 1,005,680 | |
Interest payments | 331,954 | |
Derivative instruments | (206,179) | |
Total | 1,131,455 | |
2023 and thereafter (5 years or more) | ||
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Liquidity risk management | ||
Long-term debt | 2,283,520 | |
Interest payments | 358,392 | |
Derivative instruments | (41,836) | |
Total | $ 2,600,076 | |
Liquidity risk management | ||
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Liquidity risk management | ||
Weighted average term of the Corporation's consolidated debt | 7 years | 6 years 9 months 18 days |
FINANCIAL INSTRUMENTS AND FI118
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Market risk (Details) - CAD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Increase of $0.10 | ||
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT | ||
Income | $ 1,587 | |
Other comprehensive income | 28,684 | |
Decrease of $0.10 | ||
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT | ||
Income | (1,587) | |
Other comprehensive income | (28,684) | |
Variance of $0.10 in the foreign currency exchange rate | ||
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT | ||
Unhedged purchase of goods and services | 3,200 | |
Unhedged acquisitions of tangible and intangible assets | $ 5,700 | |
Interest rate risk | ||
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT | ||
Long-term debt, fixed-rate debt (in percent) | 94.10% | 85.50% |
Long-term debt, floating-rate debt (in percent) | 5.90% | 14.50% |
Estimated sensitivity on interest payments | $ 1,800 | |
Increase of 100 basis points | ||
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT | ||
Income | (1,558) | |
Other comprehensive income | (8,948) | |
Decrease of 100 basis points | ||
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT | ||
Income | 1,558 | |
Other comprehensive income | $ 8,948 |
FINANCIAL INSTRUMENTS AND FI119
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT - Capital management (Details) - CAD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT | ||||
Bank indebtedness | $ 10,118 | |||
Long-term debt | $ 3,270,330 | 3,163,108 | ||
Derivative financial instruments | (259,028) | (417,788) | ||
Cash and cash equivalents | (815,848) | (961) | $ (1,774) | $ (342,802) |
Net liabilities | 2,195,454 | 2,754,477 | ||
Equity | $ 1,733,054 | $ 1,071,740 | $ 813,800 | $ 793,907 |
RELATED PARTY TRANSACTIONS - Co
RELATED PARTY TRANSACTIONS - Compensation of key management personnel (Details) - CAD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
RELATED PARTY TRANSACTIONS | |||
Salaries and short-term benefits | $ 4,445 | $ 4,410 | $ 5,100 |
Post-employment benefits | 312 | 208 | 225 |
Share-based compensation | 3,091 | 2,024 | 1,226 |
Other long-term benefits | 1,061 | 1,534 | 1,688 |
Total compensation | $ 8,909 | $ 8,176 | $ 8,239 |
RELATED PARTY TRANSACTIONS - Op
RELATED PARTY TRANSACTIONS - Operating transactions (Details) - CAD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Ultimate parent and parent corporation | |||
RELATED PARTY TRANSACTIONS | |||
Revenues | $ 525 | $ 455 | $ 696 |
Purchase of goods and services | 8,698 | 8,037 | 8,584 |
Operating expenses recovered | (344) | (752) | (597) |
Corporations under common control | |||
RELATED PARTY TRANSACTIONS | |||
Revenues | 5,481 | 5,906 | 8,059 |
Purchase of goods and services | 103,519 | 104,244 | 103,435 |
Operating expenses recovered | $ (2,308) | $ (1,275) | $ (1,395) |
RELATED PARTY TRANSACTIONS - Ac
RELATED PARTY TRANSACTIONS - Accounts receivable from affiliated corporations (Details) - CAD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
RELATED PARTY TRANSACTIONS | ||
Total receivables | $ 7,021 | $ 2,657 |
Ultimate parent and parent corporation | ||
RELATED PARTY TRANSACTIONS | ||
Accounts receivable | 533 | 224 |
Interest receivable | 4,174 | |
Corporations under common control | ||
RELATED PARTY TRANSACTIONS | ||
Accounts receivable | $ 2,314 | $ 2,433 |
RELATED PARTY TRANSACTIONS -123
RELATED PARTY TRANSACTIONS - Accounts payable to affiliated corporations (Details) - CAD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
RELATED PARTY TRANSACTIONS | ||
Total payables | $ 54,675 | $ 66,534 |
Ultimate parent and parent corporation | ||
RELATED PARTY TRANSACTIONS | ||
Accounts payable | 36,028 | 51,561 |
Corporations under common control | ||
RELATED PARTY TRANSACTIONS | ||
Accounts payable | $ 18,647 | $ 14,973 |
RELATED PARTY TRANSACTIONS - Ma
RELATED PARTY TRANSACTIONS - Management arrangements (Details) - CAD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
RELATED PARTY TRANSACTIONS | |||
Management fees | $ 53 | $ 53 | $ 48 |
PENSION PLANS AND POSTRETIRE125
PENSION PLANS AND POSTRETIREMENT BENEFITS - Changes in the plans benefit obligations (Details) - Present value of defined benefit - CAD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Pension benefits | ||
Disclosure of net defined benefit liability (asset) | ||
Benefit obligations at the beginning of the year | $ 394,246 | $ 355,410 |
Service costs | 22,594 | 22,902 |
Interest costs | 15,455 | 14,476 |
Plan participants' contributions | 6,728 | 6,946 |
Actuarial (gain) loss arising from: | ||
Demographic assumptions | (8,502) | |
Financial assumptions | 37,943 | 8,681 |
Participant experience | 4,875 | 1,533 |
Benefits and settlements paid | (16,695) | (16,125) |
Other | 235 | 423 |
Benefit obligations at the end of the year | 456,879 | 394,246 |
Postretirement benefits | ||
Disclosure of net defined benefit liability (asset) | ||
Benefit obligations at the beginning of the year | 38,010 | 34,690 |
Service costs | 1,579 | 1,474 |
Interest costs | 1,535 | 1,438 |
Actuarial (gain) loss arising from: | ||
Financial assumptions | 2,903 | 859 |
Participant experience | (13,443) | |
Benefits and settlements paid | (467) | (451) |
Benefit obligations at the end of the year | $ 30,117 | $ 38,010 |
PENSION PLANS AND POSTRETIRE126
PENSION PLANS AND POSTRETIREMENT BENEFITS - Changes in the fair value of plan assets (Details) - Plan assets - CAD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Disclosure of net defined benefit liability (asset) | ||
Employer contributions | $ 27,000 | |
Pension benefits | ||
Disclosure of net defined benefit liability (asset) | ||
Fair value of plan assets at the beginning of the year | 361,232 | $ 321,117 |
Actual return on plan assets | 29,789 | 28,189 |
Employer contributions | 26,817 | 20,682 |
Plan participants' contributions | 6,728 | 6,946 |
Benefits and settlements paid | (16,695) | (16,125) |
Administrative fees | 234 | 423 |
Fair value of plan assets at the end of the year | 408,105 | 361,232 |
Postretirement benefits | ||
Disclosure of net defined benefit liability (asset) | ||
Fair value of plan assets at the beginning of the year | 0 | 0 |
Employer contributions | 467 | 451 |
Benefits and settlements paid | (467) | (451) |
Fair value of plan assets at the end of the year | $ 0 | $ 0 |
PENSION PLANS AND POSTRETIRE127
PENSION PLANS AND POSTRETIREMENT BENEFITS - Components of plan assets and reconciliation of funded status (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017CAD ($)Y | Dec. 31, 2016CAD ($)Y | |
Disclosure of net defined benefit liability (asset) | ||
Weighted average duration of defined benefit obligations | Y | 22.9 | 23.4 |
Expected future benefit payments | $ 17,200 | |
Plan assets | ||
Plan assets | ||
Debt securities (as a percent) | 36.50% | 37.50% |
Other (as a percent) | 0.10% | 0.10% |
Total plan assets (in percent) | 100.00% | 100.00% |
Plan assets | Canadian | ||
Plan assets | ||
Equity securities (as a percent) | 26.50% | 25.60% |
Plan assets | Foreign | ||
Plan assets | ||
Equity securities (as a percent) | 36.90% | 36.80% |
Pension benefits | ||
Reconciliation of funded status to net amount recognized | ||
Benefit obligations | $ (456,879) | $ (394,246) |
Fair value of plan assets | 408,105 | 361,232 |
Plan deficit and net amount recognized | (48,774) | (33,014) |
Postretirement benefits | ||
Reconciliation of funded status to net amount recognized | ||
Benefit obligations | (30,117) | (38,010) |
Plan deficit and net amount recognized | $ (30,117) | $ (38,010) |
PENSION PLANS AND POSTRETIRE128
PENSION PLANS AND POSTRETIREMENT BENEFITS - Components of re-measurements (Details) - CAD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Pension benefits | |||
Disclosure of net defined benefit liability (asset) | |||
Actuarial (loss) gain on benefit obligations | $ (34,316) | $ (10,214) | $ (13,612) |
Actual return on plan assets, less interest income anticipated in the interest on the net defined benefit liability calculation | 16,764 | 16,098 | 4,790 |
Re-measurements (loss) gain recorded in other comprehensive income | (17,552) | 5,884 | (8,822) |
Postretirement benefits | |||
Disclosure of net defined benefit liability (asset) | |||
Actuarial (loss) gain on benefit obligations | 10,540 | (859) | (792) |
Re-measurements (loss) gain recorded in other comprehensive income | $ 10,540 | $ (859) | $ (792) |
PENSION PLANS AND POSTRETIRE129
PENSION PLANS AND POSTRETIREMENT BENEFITS - Components of the net benefit costs (Details) - CAD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Pension benefits | |||
Employee costs: | |||
Service costs | $ 22,594 | $ 22,902 | $ 21,875 |
Administrative fees and other | 521 | 409 | 384 |
Interest on net defined benefit liability | 1,909 | 1,975 | 1,569 |
Net benefit costs | 25,024 | 25,286 | 23,828 |
Postretirement benefits | |||
Employee costs: | |||
Service costs | 1,579 | 1,474 | 1,373 |
Interest on net defined benefit liability | 1,535 | 1,438 | 1,344 |
Net benefit costs | $ 3,114 | $ 2,912 | $ 2,717 |
PENSION PLANS AND POSTRETIRE130
PENSION PLANS AND POSTRETIREMENT BENEFITS - Defined contribution pension plans (Details) - CAD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
PENSION PLANS AND POSTRETIREMENT BENEFITS | |||
Defined contribution expense | $ 13.9 | $ 13.2 | $ 12.1 |
PENSION PLANS AND POSTRETIRE131
PENSION PLANS AND POSTRETIREMENT BENEFITS - Assumptions and sensitivity analysis (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017CAD ($)Y | Dec. 31, 2016CAD ($)Y | Dec. 31, 2015Y | |
Pension and postretirement benefits | |||
Expected employer contributions in the next fiscal year | $ 25,000 | ||
Benefit obligations | |||
Percentage increase of discount rate (as a percent) | 0.10% | ||
Pension benefits | |||
Benefit obligations | |||
Decrease of retirement benefit obligation due to increase of actuarial assumption | $ 10,200 | ||
Postretirement benefits | |||
Benefit obligations | |||
Decrease of retirement benefit obligation due to increase of actuarial assumption | $ 700 | ||
Actuarial assumption discount rate | |||
Current periodic costs | |||
Assumed average retirement age | Y | 62 | 62 | 62 |
Assumed health care cost trend rate (as a percent) | 6.50% | ||
Assumed health care cost trend rate after eight years (as a percent) | 4.50% | ||
Actuarial assumption discount rate | Pension benefits | |||
Benefit obligations | |||
Discount rate, current year (as a percent) | 3.50% | 3.90% | 4.00% |
Rate of compensation increase, current year (as a percent) | 3.25% | 3.25% | 3.25% |
Current periodic costs | |||
Discount rate, preceding year (as a percent) | 3.90% | 4.00% | 4.10% |
Rate of compensation increase, preceding year (as a percent) | 3.25% | 3.25% | 3.25% |
Actuarial assumption discount rate | Postretirement benefits | |||
Benefit obligations | |||
Discount rate, current year (as a percent) | 3.50% | 3.90% | 4.00% |
Rate of compensation increase, current year (as a percent) | 3.00% | 3.00% | 3.00% |
Current periodic costs | |||
Discount rate, preceding year (as a percent) | 3.90% | 4.00% | 4.10% |
Rate of compensation increase, preceding year (as a percent) | 3.00% | 3.00% | 3.00% |
Plan assets | |||
Pension and postretirement benefits | |||
Employer contributions | $ 27,000 | ||
Plan assets | Pension benefits | |||
Pension and postretirement benefits | |||
Employer contributions | 26,817 | $ 20,682 | |
Plan assets | Postretirement benefits | |||
Pension and postretirement benefits | |||
Employer contributions | $ 467 | $ 451 |
SUBSEQUENT EVENTS - Continuity
SUBSEQUENT EVENTS - Continuity of interest (Details) - 9370-5762 Quebec Inc - Quebecor Media Inc. - Transfer of shares - CAD ($) $ in Millions | Jan. 08, 2018 | Jan. 03, 2018 |
SUBSEQUENT EVENTS | ||
Convertible promissory note | $ 3,908.6 | |
Number of ordinary shares convertible | 3,908,569,822 |
SUBSEQUENT EVENTS - Subordinate
SUBSEQUENT EVENTS - Subordinated loan to parent corporation (Details) - Reduction of paid-up capital $ in Millions | Jan. 16, 2018CAD ($) |
SUBSEQUENT EVENTS | |
Paid-up capital reduction cash consideration | $ 342 |
Quebecor Media Inc. | |
SUBSEQUENT EVENTS | |
Repayment of subordinated loan granted | $ 342 |
SUBSEQUENT EVENTS - Investments
SUBSEQUENT EVENTS - Investments and subordinated loan from parent corporation (Details) - CAD ($) $ in Millions | Feb. 27, 2018 | May 03, 2017 | Mar. 01, 2016 | Feb. 05, 2015 |
9346-9963 Quebec Inc | Series C preference shares | ||||
SUBSEQUENT EVENTS | ||||
Investment in redeemable preferred shares | $ 3,600 | |||
Redeemable preferred shares acquired (in shares) | 3,600,000 | |||
Preferred stock annual dividend rate (in percentage) | 10.60% | |||
Subordinated loan | 9346-9963 Quebec Inc | Series C preference shares | ||||
SUBSEQUENT EVENTS | ||||
Investment in redeemable preferred shares | $ 2,390 | |||
Redeemable preferred shares acquired (in shares) | 2,390,000 | |||
Preferred stock annual dividend rate (in percentage) | 9.60% | |||
Quebecor Media Inc. | ||||
SUBSEQUENT EVENTS | ||||
Subordinated loan granted during the period | $ 3,600 | $ 625 | $ 1,010 | |
Interest rate on subordinated loan (in percentage) | 10.50% | 11.50% | 10.75% | |
Repayment term intervals of subordinated loan (in months) | 6 months | 6 months | 6 months | |
Quebecor Media Inc. | Subordinated loan | ||||
SUBSEQUENT EVENTS | ||||
Subordinated loan granted during the period | $ 2,390 | |||
Interest rate on subordinated loan (in percentage) | 9.50% | |||
Repayment term intervals of subordinated loan (in months) | 6 months |