SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For THE FIRST QUARTER FINANCIAL RESULTS 2001
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QUEBECOR WORLD INC.
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(Translation of Registrant's Name into English)
612 SAINT-JACQUES STREET, MONTREAL, QUEBEC, H3C 4M8
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(Address of Principal Executive Office)
(Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F)
Form 20-F Form 40-F X
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(Indicate by check mark whether the registrant by furnishing the information
contained in this form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
Yes No X
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Press Release
and
Consolidated Financial Statements
of
QUEBECOR WORLD INC.
Filed in this Form 6-K
Documents index
1. Press Release dated April 30, 2001 (#11/01)
2. Supplemental Disclosure for the first quarter ended March 31, 2001
3. Consolidated Financial Statements for the three month period ended March 31,
2001.
[QUEBECOR WORLD LOGO]
APRIL 30, 2001 11/01
FOR IMMEDIATE RELEASE Page 1 of 3
QUEBECOR WORLD REPORTS RECORD FIRST QUARTER 2001 RESULTS
DOUBLE DIGIT GROWTH IN EPS, NET INCOME
AND DIVIDENDS INCREASED 20%
MONTREAL, CANADA -- Quebecor World Inc. is pleased to announce for the quarter
ending March 31, 2001 earnings per share of $0.27 an increase of 13% over the
same period last year. Net income also increased 13% to $42.5 million and the
operating margin increased to 8.7%. All are records for the quarter.
"Every quarter since the merger with World Color we have delivered record
earnings and margins," said Charles G. Cavell, President and CEO of Quebecor
World. "These latest results were achieved despite a significant slowdown in the
U.S. economy and soaring energy costs. It shows that our diversified product
strategy and global footprint place Quebecor World in a unique position to
successfully deal with challenging market conditions."
Synergies from the World Color merger and additional cost containment
initiatives allowed the North American platform to increase operating income by
5% in the first quarter even though revenue was down by 5%. These decisions have
also put Quebecor World in a strong position to take full advantage when the
U.S. economy rebounds. The Company continues to harvest the efficiencies
available to it as the world's largest commercial print media provider.
In Europe, management continues to focus on strengthening the French platform
while expanding pan European sales and marketing activities to take advantage of
the company's unique continental reach. Revenues and operating income improved
compared to the same quarter last year, excluding the unfavourable effect of
currency translation.
Latin American revenues increased 34% and operating income was up 12% over the
previous year's first quarter. The company's strategy of growing internationally
with strong customers in expanding markets moved ahead in the first quarter with
the initial printing of Veja Magazine for Editora Abril in the new Recife
facility. Veja, the world's fourth largest news magazine can now be distributed
in timely fashion throughout North East Brazil thus saving the publisher
significant time and distribution costs. Production of telephone directories for
Listel Listas Telefonicas S.A. will begin in the second quarter.
In March, Quebecor World issued $250 million of Senior Notes to a group of
private U.S. investors to completely repay the bank debt incurred for the World
Color acquisition. Quebecor World is now positioned to resume its role as the
industry's leading consolidator.
"We are looking at opportunities in all our geographies," said Mr. Cavell.
"There are a number of options we are studying but the goal is to grow and
strengthen our business. Substantial growth in Europe, South America and North
America will be realized in the coming years."
FOR IMMEDIATE RELEASE Page 2 of 3
The Company recently made two niche acquisitions. In Brazil, Quebecor World
purchased 75% of Graphica Melhoramentos. The Sao Paulo based company has annual
sales of $16 million printing trade and textbooks, magazines, directories and
catalogs.
In Spain, Quebecor World purchased a controlling interest in Espacio y Punto.
This is a leading pre-media company located in Madrid. This acquisition will
strengthen the relationships that many of Spain's largest magazine and catalogue
publishers have with our Altair printing facility. It gives Quebecor World a
European pre-media platform to develop along the lines of those employed in
North America under Que-Net Media-TM-.
"While there is slowdown in the U.S. economy from which we are not immune, we
will continue focusing management resources to diminish the impact on our
business", said Mr. Cavell. "We are moving ahead with the completion of the
World Color integration and we will continue to look for ways to make our
business stronger".
In April, Quebecor World reported it had repurchased 4,940,000 Subordinate
Voting Shares at an average cost per share of CDN$35.26 under its Normal Course
Issuer Bid instituted April 6, 2000. At the same time the Company renewed its
Normal Course Issuer Bid for a maximum of 8,800,000 Subordinate Voting Shares
representing approximately 10% of the public float as of March 26, 2001.
Purchases will be made between April 6, 2001 and April 5, 2002. Shares
repurchased under the bid will be cancelled.
At Quebecor World's Annual Meeting April 4, James Doughan was elected to the
Board of Directors. Mr. Doughan has an extensive business background having most
recently served as President and Chief Executive Officer of Abitibi Consolidated
from 1997 to 1999, and as President and Chief Executive Officer of Stone
Consolidated from 1993 to 1997.
The Board of Directors declared a dividend of $0.12 per share on Multiple Voting
Shares and Subordinate Voting Shares. The Board also declared a dividend of
CDN$0.3125 per share on Series 2 Preferred Shares and CDN$0.4265 per share on
Series 4 Preferred Shares. The dividends are payable on June 1, 2001 to
shareholders of record at the close of business on May 17, 2001.
QUEBECOR WORLD TO WEBCAST INVESTOR CONFERENCE CALL ON MAY 1ST, 2001
Quebecor World Inc. will broadcast its 2001 First Quarter Earnings conference
call live over the Internet on Tuesday May 1st, 2001, at 8:30 A.M. (EDT). The
company's financial results will be made public in a press release prior to
the conference call.
The conference call, which will last approximately one hour, will be webcast
live and can be accessed on the Quebecor World web site:
HTTP://WWW.QUEBECORWORLD.COM/HTMEN/20_0/20_1INV_8.HTM or at:
HTTP://WWW.IR-LIVE.COM/EN/SHOWS/QUEBECOR_WORLD/EVENTS/2001.05.01/?WEBCAST_ID=171
Prior to the call please ensure that you have the appropriate software. The
Quebecor World web address listed above has instructions and a direct link to
download the necessary software, free of charge.
Anyone unable to attend this conference call may listen to the replay tape by
phoning (416) 695-5800 or (800) 408-3053 passcode 753071, available from May 1st
to May 15th, 2001.
FOR IMMEDIATE RELEASE Page 3 of 3
EXCEPT FOR HISTORICAL INFORMATION CONTAINED HEREIN, THE STATEMENTS IN THIS
RELEASE ARE FORWARD-LOOKING AND MADE PURSUANT TO THE SAFE HARBOR PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. FORWARD-LOOKING
STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES THAT MAY CAUSE
THE COMPANY'S ACTUAL RESULTS IN FUTURE PERIODS TO DIFFER MATERIALLY FROM
FORECASTED RESULTS. THOSE RISKS INCLUDE, AMONG OTHERS, CHANGES IN CUSTOMERS'
DEMAND FOR THE COMPANY'S PRODUCTS, CHANGES IN RAW MATERIAL AND EQUIPMENT
COSTS AND AVAILABILITY, SEASONAL CHANGES IN CUSTOMER ORDERS, PRICING ACTIONS
BY THE COMPANY'S COMPETITORS, AND GENERAL CHANGES IN ECONOMIC CONDITIONS.
Quebecor World Inc. (NYSE, TSE: IQW) is the largest commercial print media
services company in the world. The Company is the leader in most of its major
product categories, which include magazines, inserts and circulars, books,
catalogs, specialty printing and direct mail, directories, digital pre-media,
logistics, mail list technologies and other value added services. The Company
has over 43,000 employees working in more than 160 printing and related
facilities in the United States, Canada, France, the United Kingdom, Spain,
Switzerland, Austria, Sweden, Finland, Brazil, Chile, Argentina, Peru, Colombia,
Mexico and India.
- 30 -
FOR FURTHER INFORMATION, PLEASE CONTACT:
Jeremy Roberts
Director, Corporate Finance and
Investor Relations
Quebecor World Inc.
(514) 877-5118
(800) 567-7070
Tony Ross
Director, Communications
Quebecor World Inc.
(514) 877-5317
(800) 567-7070
QUEBECOR WORLD INC.
FINANCIAL HIGHLIGHTS
Periods ended March 31
(In millions of US dollars, except per share data)
Three months
=================================
2001 2000 Change
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CONSOLIDATED RESULTS
Revenues 1,576.7 1,630.4 (3)%
Operating income before amortization 219.2 231.7 (5)%
Operating income 136.4 138.2 (1)%
Net income 42.5 37.6 13 %
Cash provided from operating activities (153.5) 72.6 (311)%
Free cash flow from operations* (218.6) 42.9 (610)%
Operating margin before amortization 13.9 % 14.2 %
Operating margin 8.7 % 8.5 %
========= ========= ======
SEGMENTED INFORMATION
REVENUES
North America 1,315.6 1,377.7 (5)%
Europe 227.1 227.3 --
Latin America 34.2 25.5 34 %
OPERATING INCOME
North America 125.0 119.6 5 %
Europe 12.8 13.4 (4)%
Latin America 1.9 1.7 12 %
OPERATING MARGINS
North America 9.5 % 8.7 %
Europe 5.6 % 5.9 %
Latin America 5.6 % 6.7 %
========= ========= ======
PER SHARE DATA
Cash earnings** $ 0.38 $ 0.35 9 %
Net income $ 0.27 $ 0.24 13 %
Dividends on equity shares $ 0.10 $ 0.07 43 %
Book value $15.32 $14.33
========= ======== ======
FINANCIAL POSITION
Working capital 189.9 147.5
Total assets 6,438.3 6,687.8
Long-term debt (including convertible notes) 2,333.7 2,795.2
Shareholders' equity 2,560.2 2,329.1
Debt-to-capitalization 48 : 52 54 : 46
========= ======== ======
* Cash provided from operating activities, less capital expenditures net of
proceeds from disposals, and preferred share dividends.
** Earnings per share before goodwill amortization.
[LOGO QUEBECOR]
Quebecor World Inc.
Supplemental Disclosure
For the First Quarter
Ended March 31, 2001
For Public Release on April 30, 2001
http://www.quebecorworld.com/htmen/20_0/pdf/01Q1-Suppl.Disclosure.pdf
QUEBECOR WORLD
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FIRST QUARTER 2001
PAGE
1. HIGHLIGHTS 1
2. RECENT DEVELOPMENTS 4
3. PROGRESS REPORT: INTEGRATION OF OPERATIONS 7
4. MANAGEMENT APPOINTMENTS 9
5. CORPORATE FINANCE 11
6. SEGMENTED RESULTS OF OPERATIONS 13
7. BREAKDOWN OF REVENUES 17
8. EARNINGS MOMENTUM 18
9. MARGIN MOMENTUM 19
10. FINANCIAL CONDITION 20
CERTAIN INFORMATION INCLUDED IN THIS DOCUMENT IS FORWARD-LOOKING AND IS SUBJECT
TO IMPORTANT RISK AND UNCERTAINTIES. THE RESULTS OR EVENTS PREDICTED IN THESE
STATEMENTS MAY DIFFER MATERIALLY FROM ACTUAL RESULTS OR EVENTS. FACTORS WHICH
COULD CAUSE RESULTS OR EVENTS TO DIFFER FROM CURRENT EXPECTATIONS INCLUDE, AMONG
OTHER THINGS: THE IMPACT OF PRICE AND PRODUCT COMPETITION; THE IMPACT OF
TECHNOLOGICAL AND MARKET CHANGE; THE ABILITY OF QUEBECOR WORLD INC. TO INTEGRATE
THE OPERATIONS OF ACQUIRED BUSINESS IN AN EFFECTIVE MANNER; GENERAL INDUSTRY AND
MARKET CONDITIONS AND GROWTH RATES, INCLUDING INTEREST RATE AND CURRENCY
EXCHANGE FLUCTUATIONS; AND THE IMPACT OF CONSOLIDATION IN THE PRINTING INDUSTRY.
ALL DOLLAR AMOUNTS IN US DOLLARS UNLESS OTHERWISE NOTED.
1. HIGHLIGHTS
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First Quarter 2001
RECORD RESULTS: Quebecor World achieved record operating margin, net income and
earnings per share for the first quarter 2001.
REVENUES: For the first quarter ended March 31, 2001, revenues were $1,577
million, down 3% from 2000.
OPERATING INCOME: Operating income was $136.4 million in the first quarter 2001
($138.7 million before non-operating expenses) compared with $138.2 million in
2000 ($136.4 million excluding the contribution from CD-ROM replication and
fulfilment activities sold during the summer 2000).
The operating income margin improved from 8.5% in 2000 to 8.7% in 2001 in spite
of non-operating expenses and lower volumes.
NET INCOME: Reached a record $42.5 million, a 13% increase over $37.6 million
last year.
EARNINGS PER SHARE: For the first quarter ended March 31, 2001, earnings per
share reached $0.27, an improvement of 13% over the $0.24 reported in 2000.
Excluding the impact of weaker foreign currencies and non-operating expenses,
earnings per share were $0.29 for an improvement of 21% over 2000.
-1-
1. HIGHLIGHTS (CONTINUED)
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CONSOLIDATED RESULTS
SELECTED CONSOLIDATED FINANCIAL INFORMATION
FOR THE FIRST QUARTER ENDED MARCH 31
(IN $ MILLIONS EXCEPT MARGINS AND PER SHARE DATA) 2001 Change 2000
---- ------ ----
Revenues(1) $1,576.7 -3% $1,630.4
EBITDA(1) 219.2(2) -5% 231.7
Operating income(1) 136.4(2) -1% 138.2
Net income - cash basis 58.3 +8% 53.8
Net income 42.5 +13% 37.6
Earnings per share $ 0.27 +13% $ 0.24
Earnings per share - cash basis 0.38 +9% 0.35
EBITDA margin 13.9% 14.2%
Operating margin 8.7% 8.5%
(1) CD-ROM REPLICATION BUSINESS HAD REVENUES OF $19.5M, EBITDA OF $2.9M AND EBIT
OF $1.8M FOR Q1 2000.
(2) INCLUDES $2.3M OF NON-OPERATING EXPENSES ($2.0M IN NORTH AMERICA AND $0.3M
IN EUROPE)
-2-
1. HIGHLIGHTS (CONTINUED)
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IMPACT OF DIVESTITURES, CURRENCY TRANSLATION AND OTHER FACTORS
(IN $ MILLIONS, EXCEPT PER SHARE DATA)
EPS IMPACT
FIRST QUARTER (PRE-TAX)
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IMPACT ON REVENUES
Weaker foreign currencies ( 31.4)
Sale of CD-ROM and fulfilment ( 19.5)
TOTAL ($ 50.9)
======== =======
IMPACT ON OPERATING INCOME
Weaker foreign currencies ( 1.8) (0.01)
Sale of CD-ROM and fulfilment ( 1.8) (0.01)
Non-operating expenses ( 2.3) (0.02)
TOTAL ($ 5.9) ($0.04)
======== =======
TOTAL IMPACT ON E.P.S. ($0.04)
======== =======
-3-
2. RECENT DEVELOPMENTS
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SPANISH EXPANSION
Quebecor World Inc. announced in February the acquisition of a controlling
interest in a leading Spanish pre-media company in Madrid, Espacio y Punto. The
investment in Espacio y Punto provides Quebecor World with a European pre-media
platform upon which to build. The Company will model its European pre-media
operations along the lines of those employed in North America under Que-Net
Media-TM-.
Espacio y Punto employs approximately 80 people. Its clients include the leading
Spanish magazine publishers and Spain's top retailers. The company's reputation
for excellence in customer service and its long-standing relationship with
Quebecor World's Spanish printing plants means the acquisition will further
strengthen Quebecor World's position as one of the leading printers in Spain.
-4-
2. RECENT DEVELOPMENTS (CONTINUED)
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BRAZILIAN EXPANSION
Quebecor World announced in March a significant expansion of its network in
Latin America with the acquisition of Grafica Melhoramentos S.A., in Sao Paulo.
The transaction means Quebecor World will soon have two facilities in Latin
America's largest economy. The Company is in the final stage of building another
facility in Recife, Brazil's fourth largest city, where it will produce
directories and magazines.
Quebecor World is acquiring 75% of Grafica Melhoramentos from Companhia
Melhoramentos of Sao Paulo (CMSP), a leading Brazilian publisher and paper
manufacturer. CMSP retains a 25% equity interest in the printer. Both companies
are reinvesting in the printing company to expand its capacity and to enhance
its service capabilities. Concurrently, Quebecor World and CMSP's publishing arm
have signed a printing agreement for eight years with a further five-year
option.
Grafica Melhoramentos has annual sales of Brazilian Real 32 million (US $16
million). Approximately 70% of the production is trade and textbooks, 15%
magazines, 10% directories and catalogs and 5% commercial. Some of the key
customers include Editora Melhoramentos, Barsa-Planeta, Saint Gobain, Reader's
Digest and Saraiva. There are approximately 280 employees at the 8,000 square
metre Sao Paulo facility operating a range of web and sheet fed presses and hard
and soft cover bindery equipment.
-5-
2. RECENT DEVELOPMENTS (CONTINUED)
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CORPORATE FINANCE
PRIVATE PLACEMENT OF US$250 MILLION OF SENIOR NOTES
On March 28, 2001, Quebecor World issued through a wholly owned U.S. subsidiary
$250 million of Senior Notes to a group of private U.S. investors. The Notes
mature on March 28, 2006 and have a 7.2% coupon. This issue follows two earlier
placements in July and September of 2000, in the amounts of $250 million and
$121 million respectively, bringing the total amount raised to date in the U.S.
private market to US$621 million for maturities between 5 and 20 years.
Proceeds from this third series of Notes were used to repay the remaining bank
indebtedness under the 1999 World Color acquisition bank credit facility. This
refinancing has also served to extend the Company's debt maturity profile and
further diversify its sources of capital.
ISSUANCE OF CDN$200 MILLION PREFERRED SHARES
On February 28, 2001 the Company issued in the Canadian equity market 8 million
6.75% Cumulative Redeemable First Preferred Shares, Series 4, at Cdn$25.00 per
share, for aggregate proceeds of Cdn $200 million. The shares were purchased by
a syndicate of underwriters, who exercised their green shoe option to purchase
an additional 2 million shares beyond their commitment of 6 million shares. The
Series 4 Shares represent approximately 2% of the Company's capital structure,
and provide additional equity to reinforce the capital structure for the next
stage of growth.
-6-
3. PROGRESS REPORT
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INTEGRATION OF OPERATIONS
KEY PROJECTS STATUS
YEAR 2000
Corporate services integration Completed.
Sales force integration Completed.
Digital services Completed.
San Jose Completed.
Sherwood Completed.
Houston Completed.
Nashville Completed.
St-Paul Completed.
Vermont Completed.
Dresden Completed.
Pawtucket Completed.
YEAR 2001
Salem Collective bargaining underway.
Omaha To be completed by May 15, 2001.
Erlanger To be completed by May 15, 2001.
Other US cost containment Completed
-7-
3. PROGRESS REPORT (CONTINUED)
- ------------------------------
CASH RESTRUCTURING COSTS AND CAPITAL INVESTMENT
CASH RESTRUCTURING COSTS
As a result of the restructuring plan adopted in 1999, the Company incurred $76
million of cash restructuring costs in 2000 and a further $12 million in the
first quarter of 2001.
CAPITAL INVESTMENT
During the quarter ended March 31, 2001, the Company invested $63.5 million in
capital spending, in line with its stated target of $250 million for the full
year 2001.
-8-
4. MANAGEMENT APPOINTMENTS
- --------------------------
QUEBECOR WORLD - NORTH AMERICA
The Company has combined its U.S. and Canadian operations into Quebecor World
North America led by Marc Reisch. QW North America's head office is in
Greenwich, Connecticut. The combined North American platform will allow for
increased product specialization, improved economies of scale and one-stop
shopping for most of our customers.
Brian Sullivan was appointed President, Commercial and Direct Groups. Past
president of the Commercial Group, with a 22-year career in commercial printing,
Brian brings strong leadership to this rapidly growing segment of the Quebecor
World platform. The combination of these two groups has created a business unit
with yearly revenues of $1 billion.
Hans Nielsen has assumed the new role of President - Quebecor World Retail
Offset Group, reporting to David Boles. Hans is an experienced executive having
spent twenty-six years in the Quebecor organization in Canada. Most recently, he
has been leading the Canadian Retail Group.
Carl Gauvreau was appointed Senior Vice President, Finance - Quebecor World
North America. For the last four years, Carl was Vice President, Corporate
Controller for Quebecor World Inc. Prior to joining the company, he held the
position of Senior Manager at KPMG.
-9-
4. MANAGEMENT APPOINTMENTS (CONTINUED)
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QUEBECOR WORLD (CORPORATE)
Mike Young was appointed Vice President, Corporate Controller, Quebecor World.
During the previous six years, Mike served as Chief Financial Officer of
Quebecor World U.K., and as Senior Vice President of Management Information
Systems for Quebecor World Europe.
Marie Hlavaty was appointed Vice President, General Counsel and Secretary of
Quebecor World. She is the senior legal officer of the Corporation. Prior to the
Merger, Marie was Deputy General Counsel of World Color. Marie joined World
Color in 1994 and prior to that, was an associate with the law firm of Latham &
Watkins.
-10-
5. CORPORATE FINANCE
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MERGER BANK BORROWINGS - ACQUISITION FACILITY
Initial limit $1.25 billion
DEC. 31/99 $925 MILLION
DEC. 31/00 $125 MILLION
MARCH 28/01 ISSUANCE OF SENIOR NOTES $250 MILLION
-11-
5. CORPORATE FINANCE (CONTINUED)
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NORMAL COURSE ISSUER BID
As at April 2, 2001, the Corporation had purchased a total of 4,940,000
Subordinate Voting Shares at an average cost per share of Cdn$35.26 under its
April 6, 2000 Normal Course Issuer Bid program (the "2000 Program"). Share
repurchases under the 2000 Program were funded largely through the sale of
non-core businesses and other assets. The 2000 Program expired on April 5, 2001.
On April 6, 2001 the Company began repurchasing shares under a new normal course
issuer bid program (the "2001 Program"), which will expire on April 5, 2002. The
2001 Program allows for repurchases of up to 8,800,000 Subordinate Voting
Shares, representing approximately 10% of the public float. All other terms of
the 2001 Program are substantially the same as the 2000 Program. Repurchases
under the 2001 Program will be funded effectively from Free Cash Flow from
Operations.
-12-
6. SEGMENTED RESULTS OF OPERATIONS
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NORTH AMERICA
FOR THE FIRST QUARTER ENDED MARCH 31
------------------------------------
(IN $ MILLIONS EXCEPT MARGINS) 2001 Change 2000
-------- ------ ------
Revenues(1) $1,315.6 -5% $1,377.7
EBITDA(1) 193.4 -2% 197.8
Operating income (before non-op. expenses)(1) 127.0 +6% 119.6
Operating income as reported 125.0 +5% 119.6
EBITDA margin 14.7% 14.4%
Operating margin (before non-op. expenses) 9.7% 8.7%
(1) CD-ROM replication business had revenues of $19.5M, EBITDA of $2.9M and EBIT
of $1.8M for Q1 2000.
-13-
6. SEGMENTED RESULTS OF OPERATIONS (CONTINUED)
EUROPE ($US)
FOR THE FIRST QUARTER ENDED MARCH 31
------------------------------------
(IN $ MILLIONS EXCEPT MARGINS) 2001 Change 2000
-------- ------ ------
Revenues $ 227.1 0% $ 227.3
EBITDA 25.3 -5% 26.6
Operating income (before non-op. expenses) 13.1 -2% 13.4
Operating income as reported 12.8 -4% 13.4
EBITDA margin 11.1% 11.7%
Operating margin (before non-op. expenses) 5.8% 5.9%
-14-
6. SEGMENTED RESULTS OF OPERATIONS (CONTINUED)
- ----------------------------------------------
EUROPE (EURO)
FOR THE FIRST QUARTER ENDED MARCH 31
------------------------------------
(IN $ MILLIONS EXCEPT MARGINS) 2001 Change 2000
-------- ------ ------
Revenues 246.0 +7% 230.3
EBITDA 27.8 +3% 26.9
Operating income (before non-op. expenses) 14.3 +5% 13.6
Operating income as reported 14.0 +3% 13.6
EBITDA margin 11.3% 11.7%
Operating margin (before non-op. expenses) 5.8% 5.9%
-15-
6. SEGMENTED RESULTS OF OPERATIONS (CONTINUED)
- ----------------------------------------------
LATIN AMERICA ($US)
FOR THE FIRST QUARTER ENDED MARCH 31
------------------------------------
(IN $ MILLIONS EXCEPT MARGINS) 2001 Change 2000
-------- ------ ------
Revenues $ 34.2 +34% $ 25.5
EBITDA 3.6 +10% 3.3
Operating income as reported 1.9 +12% 1.7
EBITDA margin 10.6% 13.0%
Operating margin 5.6% 6.7%
-16-
7. BREAKDOWN OF REVENUES
- ------------------------
FIRST QUARTER 2001
BREAKDOWN OF REVENUES - CONSOLIDATED
FOR THE FIRST QUARTER ENDED MARCH 31
------------------------------------
(IN $ MILLIONS) 2001 Change 2000
-------- ------ ------
Magazines $ 442.5 -7% $ 478.3
Retail inserts 276.8 +5% 263.5
Catalogs 263.7 +1% 261.9
Specialty printing and direct mail 214.1 -20% 268.7
Books 186.7 -9% 205.9
Directories 92.6 +17% 79.1
Pre-media, logistics and
other value added services 100.3 +37% 73.0
TOTAL $1,576.7 -3% $1,630.4
-17-
8. EARNINGS MOMENTUM
- --------------------
DISCUSSION OF CONSENSUS EARNINGS
EARNINGS PER SHARE(1)
---------------------
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER FULL YEAR
--------------- -------------- ------------- -------------- ---------
EPS % EPS % EPS % EPS % EPS %
------ ----- ------ ---- ------ ---- ------ ---- ------ ----
1998 $0.16 + 7% $0.31 +15% $0.38 +27% $0.44 +10% $1.29 +15%
1999 $0.18 +13% $0.36 +16% $0.43 +13% $0.58 +32% $1.55 +20%
2000 $0.24 +33% $0.41 +14% $0.58 +35% $0.70 +21% $1.93 +25%
2001 $0.27(3) +13% $0.45(2) +10% $0.68(2) +17% $0.82(2) +17% $2.22(2) +15%
(1) BEFORE RESTRUCTURING AND OTHER CHARGES.
(2) QUATERLY ESTIMATE BASED ON CONSENSUS ACCORDING TO FIRST CALL, A THOMSON
COMPANY AS AT APRIL 16, 2001.
(3) NET OF $2.3 MILLION OF NON-OPERATING EXPENSES
-18-
9. MARGIN MOMENTUM
- ------------------
EBIT MARGIN (QUARTERLY)
EBIT MARGINS
- on a Quarterly basis -
QUARTER 1
1998 5.7%
1999 6.2%
2000 8.5%
2001 8.7%
QUARTER 2
1998 8.3%
1999 9.1%
2000 10.8%
QUARTER 3
1998 9.4%
1999 10.1%
2000 12.4%
QUARTER 4
1998 9.5%
1999 11.0%
2000 12.7%
-19-
10. FINANCIAL CONDITION
- -----------------------
SUMMARIZED CONSOLIDATED BALANCE SHEETS
FOR THE FIRST QUARTER ENDED MARCH 31
------------------------------------
(IN $ MILLIONS EXCEPT FINANCIAL RATIOS) 2001 Change 2000
-------- ------ ------
Working capital $ 189.9 +29% $ 147.5
Net fixed assets 2,649.3 -6% 2,833.1
Total assets 6,438.2 -4% 6,687.8
Shareholders' equity 2,560.2 +10% 2,329.1
Long-term debt 2,227.6 -15% 2,628.5
Convertible debentures 106.1 -36% 166.7
Debt:Equity 48:52 54:46
EBITDA Coverage Ratio 4.7 5.3
EBIT Coverage Ratio 3.2 3.3
-20-
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
Three months ended March 31
(in thousands of US dollars, except for earnings per share amounts)
(Unaudited)
2001 2000
---------- ----------
REVENUES $1,576,743 $1,630,439
Operating expenses:
Cost of sales 1,234,663 1,272,881
Selling, general and administrative 122,891 125,903
Depreciation and amortization 82,793 93,409
---------- ----------
1,440,347 1,492,193
---------- ----------
OPERATING INCOME 136,396 138,246
Financial expenses 54,365 61,094
---------- ----------
Income before income taxes 82,031 77,152
Income taxes 22,805 22,882
---------- ----------
Income before minority interest 59,226 54,270
Minority interest 893 442
---------- ----------
NET INCOME BEFORE GOODWILL AMORTIZATION 58,333 53,828
Goodwill amortization, net of taxes 15,877 16,219
---------- ----------
NET INCOME $ 42,456 $ 37,609
Net income available to holders of preferred shares 3,216 2,582
---------- ----------
Net income available to holders of equity shares $ 39,240 $ 35,027
---------- ----------
EARNINGS PER SHARE $ 0.27 $ 0.24
EARNINGS PER SHARE BEFORE GOODWILL AMORTIZATION $ 0.38 $ 0.35
---------- ----------
Average number of equity shares outstanding (in thousands) 145,057 147,700
---------- ----------
RETAINED EARNINGS:
BALANCE, BEGINNING OF PERIOD $ 870,272 $ 650,155
Net income 42,456 37,609
Shares and convertible notes repurchased (17,090) 91
Share issue expenses (note 5(a)) (2,990) -
Dividends:
Equity shares (14,311) (10,339)
Preferred shares (2,456) (2,589)
---------- ----------
BALANCE, END OF PERIOD $ 875,881 $ 674,927
========== ==========
See Notes to Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31
(in thousands of US dollars)
(Unaudited)
2001 2000
---------- ----------
OPERATING ACTIVITIES:
Net income $ 42,456 $ 37,609
Non-cash items in net income:
Depreciation of property, plant and equipment 77,045 86,615
Amortization of goodwill and deferred charges 21,624 23,013
Imputed interest 924 1,448
Amortization of deferred financing costs 1,276 2,888
Deferred income taxes 14,873 12,484
Minority interest 893 442
Other (369) (774)
Changes in non-cash balances related to operations:
Trade receivables (56,461) 80,597
Inventories (5,992) (40)
Trade payables and accrued liabilities (215,215) (156,706)
Other current assets and liabilities (4,285) 1,007
Other non-current assets and liabilities (30,295) (16,004)
---------- ----------
Cash (used) provided from operating activities (153,526) 72,579
FINANCING ACTIVITIES:
Net change in bank indebtedness (1,223) 104
Net proceeds from issuance of equity shares 2,611 1,030
Repurchases of shares for cancellation (40,402) -
Net proceeds from issuance of preferred shares 127,211 -
Issuance of long-term debt 249,323 -
Repayments of long-term debt and convertible notes (126,250) (40,322)
Dividends on equity shares (14,311) (10,339)
Dividends on preferred shares (2,456) (2,589)
---------- ----------
Cash provided (used) from financing activities 194,503 (52,116)
INVESTING ACTIVITIES:
Acquisitions of businesses, net of cash and
cash equivalents (note 2) (37,686) -
Additions to property, plant and equipment (63,500) (42,794)
Net proceeds from disposal of other assets 910 15,682
---------- ----------
Cash used by investing activities (100,276) (27,112)
Effect of exchange rate changes on cash and cash equivalents 8,550 6,374
---------- ----------
Net decrease in cash and cash equivalents (50,749) (275)
Cash and cash equivalents, beginning of period 52,732 3,613
---------- ----------
Cash and cash equivalents, end of period $ 1,983 $ 3,338
========== ==========
Supplemental cash flow information:
Interest paid $ 65,732 $ 65,483
Income taxes paid 21,944 4,309
========== ==========
See Notes to Consolidated Financial Statements
CONSOLIDATED BALANCE SHEETS
(In thousands of US dollars)
MARCH 31, 2001 December 31,2000 March 31, 2000
-------------- ---------------- --------------
(UNAUDITED) (audited) (unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,983 $ 52,732 $ 3,338
Trade receivables, net of allowances for
doubtful accounts of $20,189, $17,823, and
$19,188 respectively 639,876 584,047 651,524
Receivables from related parties 3,931 3,048 1,700
Inventories 466,722 461,340 483,950
Deferred income taxes 58,083 58,083 36,385
Prepaid expenses 34,271 26,024 30,055
---------- ---------- ----------
1,204,866 1,185,274 1,206,952
Property, plant and equipment, net of accumulated
depreciation of $1,300,936, $1,262,281, and
$1,249,468 respectively 2,649,304 2,682,983 2,833,069
Goodwill, net of accumulated amortization
of $158,398, $144,114 and $112,709 respectively 2,432,267 2,459,510 2,500,488
Other assets 151,812 156,893 147,299
---------- ---------- ----------
$6,438,249 $6,484,660 $6,687,808
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank indebtedness $ 1,835 $ 3,129 $ 3,996
Trade payables 442,583 632,550 466,836
Accrued liabilities 475,193 522,907 474,113
Income and other taxes 10,659 6,011 41,607
Current portion of long-term debt and convertible notes 84,689 87,212 72,859
---------- ---------- ----------
1,014,959 1,251,809 1,059,411
Long-term debt 2,142,930 2,015,554 2,555,623
Other liabilities 274,116 290,788 288,879
Deferred income taxes 326,538 326,137 266,082
Convertible notes 106,063 105,936 166,695
Minority interest 13,463 20,556 22,058
Shareholders' equity:
Capital stock (note 5) 1,740,741 1,631,241 1,654,786
Additional paid-in capital 88,737 88,737 88,737
Other paid-in capital 15,849 15,849 17,976
Retained earnings 875,881 870,272 674,927
Translation adjustment (161,028) (132,219) (107,366)
---------- ---------- ----------
2,560,180 2,473,880 2,329,060
---------- ---------- ----------
$6,438,249 $6,484,660 $6,687,808
========== ========== ==========
See Notes to Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three months ended March 31, 2001 and 2000 (Tabular amounts are expressed in
thousands of US dollars) (Unaudited)
1. BASIS OF PRESENTATION
The consolidated financial statements included in this report are unaudited
and reflect normal and recurring adjustments which are, in the opinion of
the Company, considered necessary for a fair presentation. These
consolidated financial statements have been prepared in conformity with
generally accepted accounting principles in Canada and should be read in
connection with the consolidated financial statements and the notes thereto
included in the Company's latest Annual Report. The results of operations
for the interim periods should not be considered indicative of full year
results due to the seasonality of our business.
The consolidated financial statements have been prepared using the same
accounting policies as described in the latest annual report with exception
of the new standard described below. In the first quarter of 2001, the
Company has adopted the new accounting standard issued by the Canadian
Institute of Chartered Accountants on earnings per share. The new section
harmonizes Canadian Standards with the United States Standards for the
calculation of diluted earnings per share. All earnings per share numbers
have been retroactively restated and the changes are not significant.
2. BUSINESS ACQUISITION
The company made several business acquisitions in the first quarter of 2001
which were accounted for using the purchase method. In Spain, the Company
purchased a controlling interest in Espacio y Punto. The company completed
several business acquisitions complementary to its Latin American
operations, including the redemption of minority interests and the
acquisition of 75% of Grafica Melhoramentos in Brazil.
3. RESTRUCTURING AND OTHER CHARGES
As of January 1, 2001, the balance of the restructuring was $18 million,
this related to the termination of employees in Europe in response to
difficult market conditions as well as to changes in the Company's digital
strategy. The Company used $5 million of restructuring reserve during the
period ended March 31, 2001.
4. LONG-TERM DEBT
In March 2001, the Company issued Senior Notes for a principal amount of
$250 million. The Senior Notes mature on March 28, 2006 and bear interest
at a rate of 7.2%. These notes contain certain restrictions that are
generally less restrictive than those on the revolving bank facility.
5. CAPITAL STOCK
(a) Issued and outstanding First Preferred Shares Series 4
In the first quarter of 2001, the Company issued 8 million First
Preferred Shares Series 4 for a cash consideration of Cdn $200 million
($130 million) before share issue expenses of Cdn $5 million ($3
million) recorded as a reduction of retained earnings. The First
Preferred Shares Series 4 are entitled to a fixed cumulative
preferential cash dividends of Cdn $1.6875 per share per annum, payable
quarterly.
5. CAPITAL STOCK (CONT'D)
(b) Share repurchase program
During the period ended March 31, 2001, the Company had repurchased for
cancellation under the normal course issuer bid program initiated in
2000, a total of 1,595,923 Subordinate Voting Shares for a net cash
consideration of Cdn $58 million ($40 million).
On April 2, 2001, the Company announced the renewal of the normal
course issuer bid for a maximum of 8.8 million Subordinate Voting
Shares over the period from April 6, 2001 to April 5, 2002.
6. SEGMENT DISCLOSURE
The Company operates in the printing industry. Its business units are
located in three major segments: North America, Europe and Latin America.
The Company assesses the performance of each segment based on operating
income. These segments are managed separately since they all require
specific market strategies.
Summarization of the segmented information is as follows:
NORTH LATIN INTER-
AMERICA EUROPE AMERICA OTHER SEGMENT TOTAL
------- ------ ------- ----- ------- -----
FIRST QUARTER ENDED MARCH 31,
2001
REVENUES $1,315,635 $227,077 $34,150 $ - $(119) $1,576,743
OPERATING INCOME 125,021 12,827 1,911 (3,363) - 136,396
2000
Revenues 1,377,673 227,344 25,459 - (37) 1,630,439
Operating income 119,604 13,425 1,701 3,516 - 138,246
========== ======== ======= ======= ===== ==========
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
QUEBECOR WORLD INC.
By: /S/Mike Young
--------------------------------------------------
Name: Mike Young
Title: Vice President and Corporate Controller
Date: April 30, 2001