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 2002 FINANCIAL RESULTS
---------------------------------------------------------------------------
QUEBECOR WORLD INC. (Formerly known as Quebecor Printing Inc.)
(Translation of Registrant's Name into English)
612 Saint-Jacques Street, Montreal, Quebec, H3C 4M8
(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
(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
QUEBECOR WORLD INC.
(Formerly known as Quebecor Printing Inc.)
Filed in this Form 6-K
Documents index
1. First Quarter ended March 31, 2002 Financials, including
Management's Discussion and Analysis of Financial Condition
and Results of Operations
2. Financial Highlights
3. Press Release dated April 25, 2002 (#06/02)
4. Supplemental Disclosure For the First Quarter Ended March 31, 2002,
dated April 25, 2002
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
- --------
Quebecor World is the largest commercial print media services company in the
world. We are the market-leader in most of our product categories and
geographies. This market leading position has been built through a combination
of successfully integrated acquisitions, investment in key strategic
technologies and a commitment to building long-term partnerships with the
world's leading print media customers.
We have facilities in the United States, Canada, France, the United Kingdom,
Spain, Switzerland, Sweden, Finland, Austria, Belgium, Brazil, Chile, Argentina,
Peru, Colombia, Mexico and India.
On January 1, 2002, we adopted the new Handbook Section 3062 of the Canadian
Institute of Chartered Accountants, GOODWILL AND OTHER INTANGIBLE ASSETS.
Under this Section, goodwill is no longer amortized to the earnings
statements and is tested for impairment annually. We conducted the
transitional goodwill impairment test as of the date of adoption and, based
on this test, determined that there is no impairment.
QUARTER IN REVIEW
- -----------------
The print media industry ended a difficult 2001 facing dramatic declines in
magazine advertising pages, when compared to a record year 2000. The first
quarter 2002 has seen continued erosion in our revenue base as advertising
spending has continued to fall. (See Figure 1).
FIGURE 1
Clustered bar
Title: Magazine Advertising Pages - Percentage
Change Monthly vs 2000
X-axis Jan 01 to Mar 02
Y-axis 0%, -5%, -10%, -15%, -20%
Column: Value:
Jan-01 -0.9%
Feb -9.8%
Mar -7.9%
Apr -9.3%
May -16.8%
Jun -18.4%
Jul -17.2%
Aug -12.3%
Sep -9.9%
Oct -16.7%
Nov -17.5%
Dec -19.3%
Jan-02 -18.4%
Feb -22.9%
Mar -14.6%
Source: Publishers Information Bureau (PIB)
Revenue was $1,459 million, $118 million lower than 2001. The Company is taking
advantage of this reduced capacity utilization to execute its restructuring
initiatives and should realize cost reductions earlier than planned. The
benefits of these cost reductions will become increasingly apparent in future
quarters.
Operating margins have continued to decline as overall capacity utilization
decreases. It is not expected to recover substantially until advertising markets
recover. This recovery is expected to occur in the third quarter of the year.
Our North American business has performed in line with expectations, in a
difficult market place. Demand continued to show weakness throughout the
quarter, but proactive cost containment initiatives ensured operating income was
above guidance targets established in the Fall 2001.
Our European business excluding France performed well, in markets showing
significant declines in advertising revenue. Our French business suffered from
an 8% fall in revenue, as German printers aggressively priced surplus capacity,
drawing volumes from the rest of Europe.
Our Latin American business continued to show strong growth, as new contracts
increased revenues as well as operating income. Our facility in Recife, Brazil
continues to suffer from startup problems, but our new Mexican facility
performed strongly in the quarter.
Financial expenses decreased by $9 million to $46 million in 2002, a
16% improvement. This reduction in interest is a result of lower interest rates
on long-term debt and the securitization program as well as management's
commitment to reduce debt and strengthen the Company's balance sheet.
The effective tax rate was 24.0%, compared to 27.8% in 2001. The effective tax
rate, before restructuring and other special charges, was 23.4% for the full
year 2001.
Net income was $46 million, $3.5 million or 8% higher than 2001. Earnings per
share for the first quarter was $0.28, a 4% increase compared to $0.27 last
year.
RESTRUCTURING INITIATIVES
- -------------------------
The restructuring initiatives announced in 2001 have progressed ahead of
schedule.
FIGURE 2
Table
Title: 2001 Restructuring Initiatives - Progress Report
Column Title: Key Projects Status Completion Date
----------------------------------------------------
Rows: Metairie closed 2nd Quarter
Oklahoma City closed 2nd Quarter
Eagle closed 2nd Quarter
Chicago Wessel closed 2nd Quarter
Sayers announced 3rd Quarter
Oakwood announced 3rd Quarter
Orlando Litho closed completed
Arlington Heights closed 2nd Quarter
Hawkins closed 3rd Quarter
Buenos Aires closed 3rd Quarter
Other Projects - up to 3rd Quarter
----------------------------------------------------
More than 2,000 employee positions have been eliminated as a result of
restructuring initiatives implemented to date. As shown in figure 2,
10 facilities have been closed or their closure announced, and more than
20 pieces of equipment have been successfully relocated. The cash costs
incurred as at March 31, 2002 are as follows:
FIGURE 3
Table
Title: Restructuring Initiatives - Cash Costs ($ millions)
Restructuring Other Special Total
Charges Charges
- --------------------------------------------------------------------------------
Balances as at
Dec. 31, 2001 $98.5 $9.0 $107.5
Utilized in the first (15.2) (3.3) (18.5)
Quarter 2002
- --------------------------------------------------------------------------------
Balance as at
March 31, 2002 $83.3 $5.7 $89.0
- --------------------------------------------------------------------------------
The above cash costs do not reflect the progress of the restructuring due to
trailing severance payments, future lease payments and other delayed exit costs.
Management expects that the planned restructuring will be substantially
completed by September 2002.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION
- ---------------------------------------------------
Free Cash Flow for the first quarter showed an outflow of $80 million, a
$139 million improvement compared to the same period for 2001. This
significantly improved cash flow was net of cash used in implementing the
restructuring initiatives announced last year of $18.5 million. This improvement
in a difficult economic environment underlines management's
commitment to reducing debt levels, and strengthening the balance sheet in
preparation for future growth opportunities.
In March 2002, we acquired European Graphic Group S.A. ("E2G"), a subsidiary of
Hachette Filipacchi Medias in Europe. E2G owns printing and bindery facilities
in France and Belgium and a 50% ownership of Bayard Hachette Routage in France.
This investment complements our European Gravure platform, and comes with a $400
million (exclusive of paper) long-term printing contract for Hachette's
magazines in Europe. The purchase price, including assumption of long-term debt
net of cash and cash equivalents, increased our long-term debt by $70.7 million.
FIGURE 4
Table
Title: E2G - Net assets acquired at fair value
Assets acquired
Cash and cash equivalents $ 7.5
Non-cash operating working capital 1.7
Property, plant and equipment 82.1
Liabilities assumed:
Long-term debt 55.5
Other liabilities 5.7
Deferred income taxes 7.4
--------------------------------------------------
Net assets acquired $22.7
- ----------------------------------------------------------------
Consideration:
Cash $ 3.3
Purchase price balance 19.4
--------------------------------------------------
$22.7
- ----------------------------------------------------------------
As at December 31, 2001, we had committed to repurchase, under the Normal Course
Issuer Bid announced on April 6, 2001, a total of 148,500 Subordinate Voting
Shares. The settlement of this commitment took place in January 2002, for a net
cash consideration of Cdn$5.2 million ($3.5 million), at an average cost per
share of Cdn$35.28 ($23.89). A total of 3,692,200 Subordinate Voting Shares, at
an average cost per share of Cdn$40.36 ($27.54), were repurchased under the
program which expired on April 5, 2002.
Debt levels continue to fall, with outstanding debt as at March 31, 2002,
showing a $125 million improvement over the same date of March 2001. The debt to
capitalization ratio also improved to 47:53 compared to 48:52 in 2001.
Following recent announcements by the Securities and Exchange Commission, we
decided to provide details of contractual cash obligations for the remainder of
2002 and future years. As shown in figure 5, average annual cash obligations
over the next three years represent approximately 10% of the 2001 EBITDA before
restructuring and other charges.
FIGURE 5
Table
Title: Contractual Cash Obligations ($ millions)
Remaining of 2007 and
2002 2003 2004 2005 2006 thereafter
Long-term Debt and
convertible notes 1 4 26 0 250 1,798
Capital Leases 43 23 21 12 9 23
Operating Leases 59 73 60 64 46 95
- ------------------------------------------------------------------------------------------------------
Total Contractual 103 100 107 76 305 1,916
Cash Obligations
- ------------------------------------------------------------------------------------------------------
We invested $47 million in capital projects during the first quarter of 2002.
These capital expenditures were focused on implementing the various
restructuring initiatives together with customer driven projects as well as
projects initiated under the Quebecor World Employee Suggestion Team program
designed to reduce costs and improve efficiency.
We believe that our liquidity, capital resources and cash flow from operations
are sufficient to fund planned capital expenditures, working capital
requirements, interest and principal payments for the foreseeable future.
RISKS AND UNCERTAINTIES
- -----------------------
In the normal course of business, we are exposed to changes in interest rates
and foreign exchange rates. However, we manage the interest rate exposure by
having a balanced schedule of debt maturities as well as a combination of fixed
and variable rate obligations. In addition, we have entered into interest rate
swap agreements to manage this exposure.
We have also entered into foreign exchange forward contracts and cross-currency
interest rate swaps to hedge the settlement of raw materials and equipment
purchases, to set the exchange rate for cross-border sales and to manage our
foreign exchange exposure on certain liabilities.
While the counter parties of these agreements expose us to credit loss in the
event of non-performance, we believe that the possibility of incurring such a
loss is remote due to the creditworthiness of the counter parties. We do not
hold or issue any derivative financial instruments for trading purposes.
Concentrations of credit risk with respect to trade receivables are limited due
to our diverse operations and large customer base. As at March 31, 2002, we had
no significant concentrations of credit risk.
ACCOUNTING POLICIES
- -------------------
The Consolidated Financial Statements have been prepared using the same
accounting policies described in the Company's latest Annual Report with the
exception of the following items.
In August 2001, the Canadian Institute of Chartered Accountants ("CICA") issued
Handbook Section 3062, GOODWILL AND OTHER INTANGIBLE ASSETS. Under Section 3062,
goodwill is not amortized and is tested for impairment annually, or more
frequently if events or changes in circumstances indicate that the asset might
be impaired. The impairment test is carried out in two steps as explained in
note 2 of the quarterly consolidated financial statements.
We have adopted Section 3062 effective January 1, 2002. As of the date of
adoption, we had unamortized goodwill of approximately $2.5 billion. In
accordance with the requirements of Section 3062, this change in accounting
policy is not applied retroactively and the amounts presented for prior periods
have not been restated for this change. The Company conducted the first step of
the transitional goodwill impairment test as of the date of adoption and, based
on this test, determined that there is no impairment. The impact of that change
is presented in note 2 of the quarterly consolidated financial statements.
In November 2001, the CICA approved the modification of Section 1650 of the CICA
handbook, FOREIGN CURRENCY TRANSLATION, to eliminate the deferral and
amortization of foreign currency translation gains and losses on long-lived
monetary items. In the first quarter of 2002, we adopted the new recommendations
retroactively. The effect of adopting the new recommendations did not have a
significant impact on the consolidated balance sheet and consolidated statements
of income and retained earnings and cash flows as at March 31, 2002.
Effective January 1, 2002 we adopted the new recommendations of CICA Handbook
Section 3870, STOCK-BASED COMPENSATION AND OTHER STOCK-BASED PAYMENTS. This
Section establishes standards for the recognition, measurement and disclosure of
stock-based compensation and other stock-based payments made in exchange for
goods and services. These new recommendations require that compensation for all
awards made to non-employees and certain awards made to employees, including
stock appreciation rights, direct awards of stock and awards that call for
settlement in cash or other assets, be measured and recorded in the financial
statements at fair value.
As permitted by Section 3870, we have chosen to continue our existing policy
of recording no compensation cost on the grant of stock options to employees.
Any consideration paid by employees on exercise of stock options is credited
to capital stock.
SEASONALITY
- -----------
The operations of our business are seasonal, with approximately two-thirds of
historical operating income recognized in the second half of the fiscal year,
primarily due to the higher number of magazine pages, new product launches and
back-to-school, retail and holiday catalog promotions.
FORWARD LOOKING STATEMENT
- -------------------------
Except for historical information contained herein, the statements in this
document are forward-looking and made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements
involve known and unknown risks and uncertainties, which may cause our actual
results in future periods to differ materially from forecasted results. Those
risks include, among others, changes in customer demand for our products,
changes in raw material and equipment costs and availability, seasonal changes
in customer orders, pricing actions by our competitors and general changes in
economic conditions.
Michael Young,
Senior Vice President,
Financial Operations and Control,
Corporate Controller
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
Periods ended March 31
(In millions of US dollars, except for earnings per share amounts)
(Unaudited)
- ------------------------------------------------------------------------------------------------------------
Notes 2002 2001
- ------------------------------------------------------------------------------------------------------------
REVENUES $ 1,459.2 $ 1,576.7
Operating expenses:
Cost of sales 1,140.1 1,234.6
Selling, general and administrative 129.4 122.9
Depreciation and amortization 82.9 82.8
- ------------------------------------------------------------------------------------------------------------
1,352.4 1,440.3
- ------------------------------------------------------------------------------------------------------------
OPERATING INCOME 106.8 136.4
Financial expenses 45.5 54.3
- ------------------------------------------------------------------------------------------------------------
Income before income taxes 61.3 82.1
Income taxes 14.7 22.8
- ------------------------------------------------------------------------------------------------------------
Income before minority interest 46.6 59.3
Minority interest 0.6 0.9
- ------------------------------------------------------------------------------------------------------------
NET INCOME BEFORE GOODWILL AMORTIZATION 46.0 58.4
Goodwill amortization, net of income taxes 2 (a) - 15.9
- ------------------------------------------------------------------------------------------------------------
NET INCOME $ 46.0 $ 42.5
Net income available to holders of preferred shares 7.1 3.2
- ------------------------------------------------------------------------------------------------------------
Net income available to holders of equity shares $ 38.9 $ 39.3
- ------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE 7
Basic $ 0.28 $ 0.27
Diluted $ 0.28 $ 0.27
- ------------------------------------------------------------------------------------------------------------
Average number of equity shares outstanding (in millions) 7
Basic 140.2 145.1
Diluted 140.8 145.8
- ------------------------------------------------------------------------------------------------------------
RETAINED EARNINGS:
Balance, beginning of period $ 721.8 $ 870.3
Net income 46.0 42.5
Shares repurchased 6 (1.4) (17.1)
Share issue expenses - (3.0)
Dividends:
Equity shares (16.8) (14.3)
Preferred shares (7.1) (2.5)
- ------------------------------------------------------------------------------------------------------------
BALANCE, END OF PERIOD $ 742.5 $ 875.9
============================================================================================================
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Periods ended March 31
(In millions of US dollars)
(Unaudited)
- ---------------------------------------------------------------------------------------------------------------
Notes 2002 2001
- ---------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES:
Net income $ 46.0 $ 42.5
Non-cash items in net income:
Depreciation of property, plant and equipment 77.3 77.1
Deferred income taxes 12.3 14.9
Amortization of goodwill and deferred charges 5.6 21.6
Other 2.1 2.7
Changes in non-cash balances related to operations:
Trade receivables (138.4) (56.5)
Inventories (10.5) (6.0)
Trade payables and accrued liabilities - (215.2)
Other current assets and liabilities (10.5) (4.3)
Other non-current assets and liabilities (10.9) (30.3)
- ---------------------------------------------------------------------------------------------------------------
Cash used by operating activities (27.0) (153.5)
FINANCING ACTIVITIES:
Net change in bank indebtedness - (1.2)
Net proceeds from issuance of equity shares 6.0 2.6
Repurchases of shares for cancellation 6 (3.5) (40.4)
Net proceeds from issuance of preferred shares - 127.2
Net issuance of long-term debt 13.7 123.1
Dividends on equity shares (16.8) (14.3)
Dividends on preferred shares (7.1) (2.5)
- ---------------------------------------------------------------------------------------------------------------
Cash (used) provided from financing activities (7.7) 194.5
INVESTING ACTIVITIES:
Acquisitions of businesses, net of cash and cash equivalents 3 3.9 (37.7)
Additions to property, plant and equipment (46.5) (63.5)
Net proceeds from disposal of other assets 0.5 0.9
----------------------------------------------------------------------------------------------------------
Cash used by investing activities (42.1) (100.3)
Effect of exchange rate changes on cash and cash equivalents (4.8) 8.6
- ---------------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (81.6) (50.7)
Cash and cash equivalents, beginning of period 85.5 52.7
- ---------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 3.9 $ 2.0
===============================================================================================================
Supplemental cash flow information:
Interest paid $ 60.7 $ 65.7
Income taxes paid 11.8 21.9
===============================================================================================================
See Notes to Consolidated Financial Statements.
CONSOLIDATED BALANCE SHEETS
(In millions of US dollars)
MARCH 31 December 31 March 31
(UNAUDITED) (Audited) (Unaudited)
- --------------------------------------------------------------------------------------------------------------------
Notes 2002 2001 2001
- --------------------------------------------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 3.9 $ 85.5 $ 2.0
Trade receivables 509.1 366.6 639.9
Receivables from related parties 0.5 1.9 3.9
Inventories 387.8 377.1 466.7
Deferred income taxes 58.0 58.0 58.1
Prepaid expenses 23.1 24.1 34.3
- --------------------------------------------------------------------------------------------------------------------
Total current assets 982.4 913.2 1,204.9
Property, plant and equipment, net 2,662.8 2,634.0 2,649.3
Goodwill 2 (a), 5 2,462.9 2,470.7 2,432.3
Other assets 130.7 132.0 151.8
- --------------------------------------------------------------------------------------------------------------------
Total assets $ 6,238.8 $ 6,149.9 $ 6,438.3
====================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank indebtedness $ 0.1 $ 0.1 $ 1.8
Trade payables 520.4 462.9 442.6
Accrued liabilities 516.8 561.2 475.2
Income and other taxes payable 22.0 26.5 10.7
Current portion of long-term debt and convertible notes 50.2 57.0 84.7
- --------------------------------------------------------------------------------------------------------------------
Total current liabilities 1,109.5 1,107.7 1,015.0
Long-term debt 2,046.9 1,961.9 2,142.9
Other liabilities 243.5 245.6 274.1
Deferred income taxes 254.7 234.0 326.5
Convertible notes 113.7 113.3 106.1
Minority interest 14.4 14.2 13.5
Shareholders' equity:
Capital stock 6 1,797.2 1,793.3 1,740.7
Additional paid-in capital 104.6 104.6 104.6
Retained earnings 742.5 721.8 875.9
Translation adjustment (188.2) (146.5) (161.0)
- --------------------------------------------------------------------------------------------------------------------
2,456.1 2,473.2 2,560.2
- --------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 6,238.8 $ 6,149.9 $ 6,438.3
====================================================================================================================
See Notes to Consolidated Financial Statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Periods ended March 31, 2002 and 2001
(Tabular amounts are expressed in millions of US dollars, except for
earnings per share amounts)
(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
Canadian generally accepted accounting principles. The same accounting
policies as described in the Company's latest Annual Report have been used,
with the exception of the new accounting changes described in note 2.
However, these Consolidated Financial Statements do not include all
disclosures required under generally accepted accounting principles and
accordingly should be read in conjunction 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.
2. ACCOUNTING CHANGES
The Company has changed certain accounting policies to comply with new
standards.
a) Goodwill and Other Intangible Assets
In August 2001, the Canadian Institute of Chartered Accountants
("CICA") issued Handbook Section 3062, Goodwill and Other Intangible
Assets. Under Section 3062, goodwill is not amortized and is tested for
impairment annually, or more frequently if events or changes in
circumstances indicate that the asset might be impaired. The impairment
test is carried out in two steps. In the first step, the carrying
amount of the reporting unit is compared with its fair value. When the
fair value of a reporting unit exceeds its carrying amount, goodwill of
the reporting unit is considered not to be impaired and the second step
of the impairment test is unnecessary. The second step is carried out
when the carrying amount of a reporting unit exceeds its fair value, in
which case the implied fair value of the reporting unit's goodwill is
compared with its carrying amount to measure the amount of the
impairment loss, if any. When the carrying amount of a reporting unit's
goodwill exceeds the implied fair value of the goodwill, an impairment
loss is recognized in an amount equal to the excess and is presented as
a separate line item in the income statement before extraordinary items
and discontinued operations.
Intangible assets acquired in business combinations and intangible
assets acquired individually or with a group of other assets, which
have indefinite lives, are not amortized, and are tested for impairment
annually, or more frequently if events or changes in circumstances
indicate that the asset might be impaired. The impairment test compares
the carrying amount of the intangible asset with its fair value, and an
impairment loss is recognized in income for the excess, if any.
Intangible assets with definite useful lives are amortized over their
useful life.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. ACCOUNTING CHANGES (CONT'D)
A) GOODWILL AND OTHER INTANGIBLE ASSETS (CONT'D)
The Company has adopted Section 3062 effective January 1, 2002. As of
the date of adoption, the Company had unamortized goodwill of
$2,470.7 million. In accordance with the requirements of Section 3062,
this change in accounting policy is not applied retroactively and the
amounts presented for prior periods have not been restated for this
change. This change in accounting policy resulted in a reduction in
amortization expense related to goodwill of $15.2 million (net of taxes
of $1.3 million) for the three-month period ended March 31, 2002. The
following summarizes the effect of the accounting change if it were
applied retroactively:
----------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 2002 MARCH 31, 2001
----------------------------------------------------------------------------------------------------------
Net income, as reported in the consolidated
statements of income $ 46.0 $ 42.5
Goodwill amortization, net of taxes - 15.9
----------------------------------------------------------------------------------------------------------
Net income, adjusted: $ 46.0 $ 58.4
Earnings per share, adjusted:
Basic $ 0.28 $ 0.38
Diluted $ 0.28 $ 0.38
----------------------------------------------------------------------------------------------------------
The Company conducted the first step of the transitional goodwill
impairment test as of the date of adoption and, based on this test,
determined that there is no impairment.
B) FOREIGN CURRENCY TRANSLATION
In November 2001, the CICA approved the modification of Section 1650 of
the CICA handbook, FOREIGN CURRENCY TRANSLATION, to eliminate the
deferral and amortization of foreign currency translation gains and
losses on long-lived monetary items. In the first quarter of 2002, the
Company adopted the new recommendations retroactively. The effect of
adopting the new recommendations did not have a significant impact on
the consolidated balance sheet and consolidated statements of income
and retained earnings and cash flows as at March 31, 2002.
C) STOCK-BASED COMPENSATION
Effective January 1, 2002 the Company adopted the new recommendations
of CICA Handbook Section 3870, STOCK-BASED COMPENSATION AND OTHER
STOCK-BASED PAYMENTS. This section establishes standards for the
recognition, measurement and disclosure of stock-based compensation and
other stock-based payments made in exchange for goods and services.
These new recommendations require that compensation for all awards made
to non-employees and certain awards made to employees, including stock
appreciation rights, direct awards of stock and awards that call for
settlement in cash or other assets, be measured and recorded in the
financial statements at fair value. This Section also sets out a fair
value based method of accounting for stock options issued to employees
and applies to awards granted on or after January 1, 2002.
The Company, as permitted by Section 3870, has chosen to continue its
existing policy of recording no compensation cost on the grant of stock
options to employees. Any consideration paid by employees on exercise
of stock options is credited to capital stock.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. ACCOUNTING CHANGES (CONT'D)
C) STOCK-BASED COMPENSATION (CONT'D)
The Company has not issued any stock options to participants in the
first quarter of 2002. As a result, compensation cost and net income
for the three-month period ended March 31, 2002 would not have been
different had the Company applied the fair value based method of
accounting for stock options.
3. BUSINESS ACQUISITIONS
In March 2002, the Company purchased all of the issued and outstanding
shares of European Graphic Group S.A. ("E2G"), a subsidiary of Hachette
Filipacchi Medias in France, for a cash consideration of $3.3 million and a
purchase price balance amounting to $19.4 million. The purchase price will
be adjusted by contingent consideration based on achieving a specific
performance level over the next three years. E2G owns printing and bindery
facilities in France and Belgium and a 50% ownership of Bayard Hachette
Routage in France. This acquisition was accounted for using the purchase
method and no goodwill resulted from the acquisition. Earnings are included
in the consolidated statements of income since the date of acquisition. The
allocation purchase price process was not completed as at March 31, 2002
and the amounts assigned to the assets and liabilities may be subsequently
adjusted.
During the quarter, the Company also acquired minority interests in North
America for a cash consideration of $0.3 million.
4. RESTRUCTURING AND OTHER CHARGES
As at January 1, 2002, the balance of the restructuring reserve was
$107.5 million; this related to workforce costs resulting from planned
closures and other headcount reductions in addition to other restructuring
and exit costs. The Company utilized $18.5 million of the restructuring and
other charges reserve during the period ended March 31, 2002.
5. GOODWILL
The changes in the carrying amount of goodwill for the three-month period
ended March 31, 2002 are as follows:
--------------------------------------------------------------------------------------------------------------
NORTH LATIN
AMERICA EUROPE AMERICA TOTAL
--------------------------------------------------------------------------------------------------------------
Balance as at January 1, 2002 $ 2,181.5 $ 270.8 $ 18.4 $ 2,470.7
Goodwill acquired during the period 0.3 - - 0.3
Foreign currency changes - 1.8 (9.9) (8.1)
--------------------------------------------------------------------------------------------------------------
BALANCE AS AT MARCH 31, 2002 $ 2,181.8 $ 272.6 $ 8.5 $ 2,462.9
--------------------------------------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. CAPITAL STOCK
During the period ended March 31, 2002, the Company repurchased for
cancellation under the Normal Course Issuer Bid program initiated in 2001,
a total of 148,500 Subordinate Voting Shares for a net cash consideration
of Cdn$5.2 million ($3.5 million).
7. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share:
Three months
------------------------------------------------------------------------------------------------
2002 2001
------------------------------------------------------------------------------------------------
Net income available to holders of equity shares $ 38.9 $ 39.3
------------------------------------------------------------------------------------------------
(In millions)
Weighted average of equity shares outstanding 140.2 145.1
Effect of dilutive stock options 0.6 0.7
------------------------------------------------------------------------------------------------
Weighted average number of diluted equity shares outstanding 140.8 145.8
------------------------------------------------------------------------------------------------
Basic earnings per share $ 0.28 $ 0.27
Diluted earnings per share $ 0.28 $ 0.27
------------------------------------------------------------------------------------------------
Diluted earnings per share does not include the effects of the convertible
notes as the effect of their inclusion is anti-dilutive.
8. SEGMENT DISCLOSURE
The Company operates in the printing industry. Its business groups are
located in three main 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
---------------------------------------------------------------------------------------------------------------
Three months ended March 31,
2002
REVENUES $ 1,201.0 $ 211.8 $ 46.7 $ - $ (0.3) $ 1,459.2
OPERATING INCOME 107.5 5.3 2.3 (8.3) - 106.8
2001
Revenues $ 1,315.6 $ 227.1 $ 34.2 $ - $ (0.2) $ 1,576.7
Operating income 125.0 12.8 1.9 (3.3) - 136.4
---------------------------------------------------------------------------------------------------------------
Graph: Stacked column with 3-D visual effect
Operating Margins
Title: -----------------
(Three Months)
X axis only: 1999, 2000, 2001, 2002
Column: Value:
1999 6.2%
2000 8.5%
2001 8.7%
2002 7.3%
Graph: Stacked column with 3-D visual effect with stacked line marking values
from 1999 to 2002
Net Income ($ Millions) - Diluted EPS ($)
Title: -----------------------------------------
(Three Months)
Note: The columns specify for Net Income
X axis only: 1999, 2000, 2001, 2002
Column: Value:
1999 $23.2
2000 $37.6
2001 $42.5
2002 $46.0
Note: The line specifies for Diluted EPS
Line with marking value: Value:
1999 $0.18
2000 $0.24
2001 $0.27
2002 $0.28
QUEBECOR WORLD INC.
FINANCIAL HIGHLIGHTS
Periods ended March 31
(In millions of US dollars, except per share amounts)
(Unaudited)
Three months
- ------------------------------------------------------------------------------------------------------------
2002 2001 Change
- ------------------------------------------------------------------------------------------------------------
CONSOLIDATED RESULTS
- --------------------
Revenues $ 1,459.2 $ 1,576.7 (7)%
Operating income before amortization 189.7 219.2 (13)%
Operating income 106.8 136.4 (22)%
Net income* 46.0 42.5 8 %
Cash used by operating activities (27.0) (153.5)
Free cash flow from operations** (80.1) (218.6)
Operating margin before amortization 13.0 % 13.9 %
Operating margin 7.3 % 8.7 %
============================================================================================================
SEGMENTED INFORMATION
- ---------------------
REVENUES
North America $ 1,201.0 $ 1,315.6 (9)%
Europe 211.8 227.1 (7)%
Latin America 46.7 34.2 37 %
OPERATING INCOME
North America $ 107.5 $ 125.0 (14)%
Europe 5.3 12.8 (59)%
Latin America 2.3 1.9 21 %
OPERATING MARGINS
North America 9.0 % 9.5 %
Europe 2.5 % 5.6 %
Latin America 4.9 % 5.6 %
============================================================================================================
FINANCIAL POSITION
- ------------------
Working capital $ (127.1) $ 189.9
Total assets 6,238.8 6,438.3
Long-term debt (including convertible notes) 2,210.8 2,333.7
Shareholders' equity 2,456.1 2,560.2
Debt-to-capitalization 47:53 48:52
============================================================================================================
PER SHARE DATA
- --------------
Earnings*
Basic $ 0.28 $ 0.27 4 %
Diluted $ 0.28 $ 0.27 4 %
Dividends on equity shares $ 0.12 $ 0.10 20 %
Book value $ 14.25 $ 15.32 (7)%
============================================================================================================
* Effective January 1, 2002, net income and earnings per share reflect the
new accounting policy adopted by the Company under which goodwill is no
longer amortized.
** Cash provided from operating activities, less capital expenditures net of
proceeds from disposals, and preferred share dividends.
[QUEBECOR WORLD LOGO]
APRIL 25, 2002 06/02
FOR IMMEDIATE RELEASE Page 1 of 3
QUEBECOR WORLD ANNOUNCES FIRST QUARTER RESULTS
EARNINGS PER SHARE of $0.28
MONTREAL, CANADA -- Quebecor World Inc. today announced first quarter 2002
diluted earnings per share of $0.28. Revenues for the quarter were
$1.46 billion down 7% compared to first quarter 2001 due to the continued
weakness of the global advertising market. However, net income for the
quarter increased by 8% to $46 million compared to $43 million last year.
This year's results incorporate the new accounting rules relating to the
non-amortization of goodwill.
Quebecor World's results from operations are starting to benefit from the
Company's restructuring initiatives announced in October. Some North American
Product Groups, which have largely completed their planned plant closures and
staff reductions, are showing improved margins.
"I am pleased the savings and efficiencies planned for in the restructuring
initiative are being reflected in our results," said Charles G. Cavell,
President and CEO of Quebecor World. "The Company should benefit greatly when
the market demand and advertising spending return to normal levels."
The restructuring initiatives announced in October 2001 are ahead of plan,
with 10 facility closures already announced or completed. Management expects
the restructuring plan will be substantially completed by the end of the
Third Quarter, 2002, positioning Quebecor World to take full advantage of
increasing operating leverage as the economy recovers. The current focus of
management is to execute the 2001-2002 restructuring plan to improve
efficiency and to improve the Company's financial condition through the
reduction of bank borrowings.
In North America while magazine ad pages continue to be down year over year for
the quarter, recent figures for March show an improving trend and we are hopeful
this will lead to an upturn in the third and fourth quarter of 2002. Quebecor
World continues to partner with the leading publishers and retailers in the
industry and in 2001 we completed the largest transactions in the industry. In
addition the Company had contract wins and renewals for such important customers
as Brylane and Victoria's Secret.
After an extensive review of Quebecor World's goodwill it has been determined
there is no impairment and therefore no financial correction required.
FOR IMMEDIATE RELEASE Page 2 of 3
"Quebecor World is a company that has been built through acquisition, more
than 85 during the last ten years. While we are looking at opportunites in
all our geographies it is difficult to fully assess value in this market.
Unlike many other companies, our goodwill has been determined to be fairly
valued. This demonstrates that we buy when the price is right. This will
continue to be our strategy going forward," said Mr. Cavell.
During the quarter Quebecor World completed the acquisition of the European
printing assets of Hachette Filipacchi Medias. These assets consist of printing,
binding and logistics facilities in France and a gravure plant in Belgium. Under
the terms of the agreement Quebecor World has been awarded a long-term agreement
to print many of Hachette publications in France, the right of first refusal on
Hachette publications it doesn't already print and the right of first refusal on
new publications in Europe.
Quebecor World's European revenues declined 7% compared to the same period in
2001 with the majority of the decrease attributed to France. The Company is
implementing a cost reduction program. In Spain, Quebecor World signed its
first European directory contract with Telefonica Espana to provide
approximately one-third of the telephone directories in Spain.
Our Latin American business continues to grow with revenues increasing 37% in
the first quarter. Quebecor World is increasing market share in its leading
directory and book platforms. The Company recently signed a directory
contract with Telefonica, owned by Telefonica de Espagna, to serve customers
in Peru, Argentina and Brazil. QW Latin America now prints 58 billion
directory pages a year for eight Latin American countries. This is
approximately twice as many pages as Quebecor World prints in Canada.
Quebecor World has also signed book contracts with several leading Latin
American publishers including Editorial Estrada and AZ Editora in Argentina,
Zamora Ediciones S.A. in Colombia, Rezza Editores S.A. de C.V. in Mexico and
Editora Melhoramentos in Brazil. The combined value of the contracts is
approximately $100 million over the life of the contracts. All are long-term
contracts of more than three-years, a significant accomplishment for Quebecor
World given that book publishers have historically chosen to award short-term
contracts.
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, CDN$0.4219 per share on
Series 4 Preferred Shares and CDN$0.43125 on Series 5 Preferred Shares. The
dividends are payable on June 1, 2002 to shareholders of record at the close of
business May 16, 2002.
QUEBECOR WORLD TO WEBCAST INVESTOR CONFERENCE CALL ON APRIL 25, 2002
Quebecor World Inc. will broadcast its First Quarter conference call live over
the Internet on Thursday, April 25, at 5:00 PM (EDT).
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/webcasts/Q102
- ------------------------------------------------
FOR IMMEDIATE RELEASE Page 3 of 3
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 1143007, available from April
25th to May 9th, 2002.
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 printer in the
world. It is a market 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. Quebecor World Inc. has
approximately 40,000 employees working in more than 160 printing and related
facilities in the United States, Canada, Brazil, France, the United Kingdom,
Belgium, Spain, Austria, Sweden, Switzerland, Finland, 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 Word Inc.
(514) 877-5317
(800) 567-7070
[Quebecor World Logo]
QUEBECOR WORLD INC.
SUPPLEMENTAL DISCLOSURE
AS FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 25TH, 2002
FOR THE FIRST QUARTER
ENDED MARCH 31ST, 2002
FOR PUBLIC RELEASE ON APRIL 25TH, 2002
http://www.quebecorworld.com/htmen/20_0/Pdf/Q102-Supp_Disclosure.pdf
QUEBECOR WORLD
- -------------------------------------------------------------------------------
FIRST QUARTER ENDED MARCH 31st, 2002 Page
1. Highlights 1
----------------------------------------------------------------------------
2. Recent Developments 4
----------------------------------------------------------------------------
3. 2001 Corporate Restructuring 7
----------------------------------------------------------------------------
4. Management Appointments 8
----------------------------------------------------------------------------
5. Corporate Finance 9
----------------------------------------------------------------------------
6. Segmented Results of Operations 10
----------------------------------------------------------------------------
7. Breakdown of Revenues by Product Group 13
----------------------------------------------------------------------------
8. Financial Condition 14
----------------------------------------------------------------------------
9. Discussion of Consensus Earnings 15
----------------------------------------------------------------------------
10. 2002 Management Objectives 16
-----------------------------------------------------------------------------
EXCEPT FOR HISTORICAL INFORMATION CONTAINED HEREIN, THE STATEMENTS IN THIS
DOCUMENT ARE FORWARD-LOOKING AND MADE PURSUANT TO THE SAFE HARBOR PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. FORWARD-LOOKING STATEMENTS
INVOLVE KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES, WHICH MAY CAUSE OUR ACTUAL
RESULTS IN FUTURE PERIODS TO DIFFER MATERIALLY FROM FORECASTED RESULTS. THOSE
RISKS INCLUDE, AMONG OTHERS, CHANGES IN CUSTOMER DEMAND FOR OUR PRODUCTS,
CHANGES IN RAW MATERIAL AND EQUIPMENT COSTS AND AVAILABILITY, SEASONAL CHANGES
IN CUSTOMER ORDERS, PRICING ACTIONS BY OUR COMPETITORS AND GENERAL CHANGES IN
ECONOMIC CONDITIONS.
1. HIGHLIGHTS
- -------------------------------------------------------------------------------
CONSOLIDATED RESULTS
THREE MONTHS ENDED MARCH 31, 2002
NET INCOME: Net income for the first quarter ended March 31, 2002 increased 8%
to $46 million, versus $43 million last year.
EARNINGS PER SHARE: Diluted earnings per share for the first quarter ended
March 31, 2002 were $0.28 versus $0.27 for the same period last year ($0.38 per
share before goodwill amortization). This is $0.03 or 12% higher than the
consensus of earnings estimates of $0.25.
REVENUES: For the first quarter ended March 31, 2002, revenues were $1,459
million, down 7% from 2001.
OPERATING INCOME: Operating income decreased 22% to $107 million, compared with
$136 million for the corresponding period last year. The operating income margin
for the quarter was 7.3% compared to 8.7% in 2001.
FREE CASH FLOW: For the first quarter ended March 31, 2002, free cash flow was
negative $80 million, an improvement of $139 million compared to the first
quarter of 2001.
ADOPTION OF CICA SECTION 3062: GOODWILL AND OTHER INTANGIBLE ASSETS
Effective January 1, 2002, Quebecor World adopted the accounting standards
prescribed by Section 3062 of the CICA Handbook. Under Section 3062, goodwill is
no longer amortized to the earnings statement and is tested for impairment at
least once per year. The Company conducted the first step of the transitional
goodwill impairment test as of the date of adoption, and based on this test,
determined that there is no impairment.
QUEBECOR WORLD PAGE 1
1. HIGHLIGHTS (CONTINUED)
- -------------------------------------------------------------------------------
CONSOLIDATED RESULTS
- --------------------------------------------------------------------------------------------
(IN $ MILLIONS EXCEPT MARGINS FOR THE THREE MONTHS
AND PER SHARE DATA) ENDED MARCH 31
- --------------------------------------------------------------------------------------------
2002 Change 2001
-----------------------------------------------------
Revenues $ 1,459 -7% $ 1,577
EBITDA 1 190 -13% 219
Operating income 1 107 -22% 136
Net income 1 46 -8% 43
Diluted Earnings per share 1 $ 0.28 4% $ 0.27
EBITDA margin 13.0% 13.9%
Operating margin 7.3% 8.7%
- --------------------------------------------------------------------------------------------
1 Including non-operating expenses of $0.3 million for Q1 2002 and
$2.4 million for Q1 2001
QUEBECOR WORLD PAGE 2
1. HIGHLIGHTS (CONTINUED)
- -------------------------------------------------------------------------------
IMPACTS OF CURRENCY TRANSLATION AND OTHER FACTORS
(IN $ MILLIONS, EXCEPT PER SHARE DATA)
- ------------------------------------------------------------------------------------------
IMPACT ON: Q1 2002
- ------------------------------------------------------------------------------------------
REVENUES Weaker foreign currencies (22)
--------------------------------------------------------
Business Acquisitions 36
--------------------------------------------------------
TOTAL $15
- ------------------------------------------------------------------------------------------
OPERATING INCOME 1 Weaker foreign currencies (0.2)
--------------------------------------------------------
Business Acquisitions 5.9
--------------------------------------------------------
TOTAL $5.7
- ------------------------------------------------------------------------------------------
EARNINGS PER SHARE (PRE-TAX) Weaker foreign currencies 0.00
--------------------------------------------------------
Business Acquisitions 0.04
--------------------------------------------------------
TOTAL $0.04
- ------------------------------------------------------------------------------------------
1 In 2001, non-operating expenses were $2.4 million compared with
$0.3 million in 2002.
QUEBECOR WORLD PAGE 3
2. RECENT DEVELOPMENTS
- -------------------------------------------------------------------------------
QUEBECOR WORLD INC. CONFIRMS CLOSING OF THE ACQUISITION OF HACHETTE FILIPACCHI
PRINTING ASSETS
On March 12, 2002, Quebecor World Inc. closed the acquisition of the Hachette
Filipacchi Medias printing assets in Europe. The total consideration for the
assets was approximately $71 million.
Hachette Filipacchi Medias is one of the world's top publishers and as part of
the transaction it is entering into a long-term agreement with Quebecor World to
print many of its magazines in Europe. The value is estimated to be $400 million
over the term of the contract, excluding paper.
LONG TERM CONTRACT WITH BRYLANE INC.
On February 7, 2002, Quebecor World announced that it had been awarded a
long-term contract by Brylane Inc. for the printing, pre-media, mail list and
logistics services of its Lane Bryant catalog. Lane Bryant's parent company,
Brylane, is the leader in U.S. specialty catalogs mailing over 500 million
catalogs in 2001 in the U.S. alone. Quebecor World will produce the catalog in
its Augusta, GA plant. Pre-media will be handled by its Que-Net Media(TM)
Washington, DC division and both list management and logistics services will be
managed out of Quebecor World's Bensenville, IL facility.
QUEBECOR WORLD PAGE 4
2. RECENT DEVELOPMENTS (CONTINUED)
- -------------------------------------------------------------------------------
NORTH AMERICAN MARKET GAINS
At the Annual General Meeting of Shareholders, the following contract wins
were announced:
CUSTOMER PRODUCTS/SERVICES
-------- -----------------
- Brylane - Catalog, Premedia, MLT, Logistics
- Circuit City - Catalog, Retail
- CompUSA - Catalog, Retail
- Victoria's Secret - Catalog, Premedia, MLT, Logistics
- Sam's Club - Commercial
- Columbia House - Commercial
- Chrysler - Commercial, Magazine
- First USA - Commercial, MLT, Logistics
- Kohl's - Retail
- Simon & Schuster - Book
- Microsoft Press - Book
- Time Inc. - Magazine
- Forbes - Magazine, Premedia
QUEBECOR WORLD PAGE 5
2. RECENT DEVELOPMENTS (CONTINUED)
- -------------------------------------------------------------------------------
ARGENTINA PESOS DEVALUATION
The impact of the Argentinean pesos devaluation was assessed and no significant
impact was reported to the income statement.
NEW REPORTING PRESENTATION BY PRODUCT GROUP
Effective January 1, 2002, Quebecor World introduced a new financial reporting
structure. Previously, revenues were disclosed on a product line basis. In order
to improve consistency with the Company's management structure, revenues are now
broken down by "Product Group".
QUEBECOR WORLD PAGE 6
3. 2001 CORPORATE RESTRUCTURING
- -------------------------------------------------------------------------------
Implementation of the restructuring plan announced on October 9, 2001 is
currently ahead of schedule. Ten facilities have been closed or announced to be
closed, and more than 20 pieces of manufacturing equipment have been redeployed.
Management expects that the planned restructuring will be substantially
completed by September 2002.
Total cash costs incurred for restructuring and other special charges are as
follows:
- ----------------------------------------------
Q4 2001 $24 million
Q1 2002 $19 million
Total cash costs to date $43 million
Total expected cash costs $130 million
- ----------------------------------------------
QUEBECOR WORLD PAGE 7
4. MANAGEMENT APPOINTMENTS
- -------------------------------------------------------------------------------
KEY MANAGEMENT APPOINTMENTS
At its Annual General Meeting of Shareholders on April 3, 2002, Quebecor World
announced that The Right Honourable Brian Mulroney would assume the position of
Chairman of the Board of Quebecor World Inc. coincident with the meeting. Mr.
Mulroney's extensive knowledge and reach in the field of international business
will enrich Quebecor World's strategy to expand its printing platform with
global customers.
Also at the Annual General Meeting, Erik Peladeau was appointed Vice Chairman
and Senior Executive Vice President, Quebecor World Inc. Erik is a member of the
Office of the CEO, and will assist in establishing and implementing Quebecor
World's global strategy.
QUEBECOR WORLD PAGE 8
5. CORPORATE FINANCE
- -------------------------------------------------------------------------------
NORMAL COURSE ISSUER BID
As at March 30, 2002 Quebecor World had purchased a total of 148,500 Subordinate
Voting Shares under its 2001 normal course issuer bid program.
Over the past two years, since it initiated its 2000 normal course issuer bid,
the Company has repurchased a total of 8.6 million shares for a total
consideration of $223 million (Cdn $323 million) under its 2000 and 2001
programs.
- -----------------------------------------------------------------------
NORMAL COURSE SHARE REPURCHASES FIRST QUARTER 2002
- -----------------------------------------------------------------------
Number of Shares Purchased 148,500
Average Price per Share (Cdn $) $35.28
Average Price per Share (US $) $23.89
- -----------------------------------------------------------------------
Total in US $ millions $3.5
- -----------------------------------------------------------------------
QUEBECOR WORLD PAGE 9
6. SEGMENTED RESULTS OF OPERATIONS
- -------------------------------------------------------------------------------
NORTH AMERICA
- --------------------------------------------------------------------------------
FOR THE THREE MONTHS
(IN $ MILLIONS EXCEPT MARGINS) ENDED MARCH 31
- --------------------------------------------------------------------------------
2002 Change 2001
---------------------------------------------
Revenues $1,201 -9% $1,316
EBITDA 1 174 -10% 193
Operating income 1 108 -14% 125
EBITDA margin 14.5% 14.7%
Operating margin 9.0% 9.5%
- --------------------------------------------------------------------------------
1 Including non-operating expenses of $ 0.1 million for Q1 2002 and of
$ 2.0 million for Q1 2001.
QUEBECOR WORLD PAGE 10
6. SEGMENTED RESULTS OF OPERATIONS (CONTINUED)
- -------------------------------------------------------------------------------
EUROPE
- --------------------------------------------------------------------------------
FOR THE THREE MONTHS
(IN $ MILLIONS EXCEPT MARGINS) ENDED MARCH 31
- --------------------------------------------------------------------------------
2002 Change 2001
---------------------------------------------
Revenues $212 -7% $227
EBITDA 1 18 -28% 25
Operating income 1 5 -59% 13
EBITDA margin 8.6% 11.1%
Operating margin 2.5% 5.6%
- --------------------------------------------------------------------------------
1 Including non-operating income of $ 0.1 million for Q1 2002 and
non-operating expenses of $ 0.3 million for Q1 2001.
QUEBECOR WORLD PAGE 11
6. SEGMENTED RESULTS OF OPERATIONS (CONTINUED)
- -------------------------------------------------------------------------------
LATIN AMERICA
- --------------------------------------------------------------------------------
FOR THE THREE MONTHS
(IN $ MILLIONS EXCEPT MARGINS) ENDED MARCH 31
- --------------------------------------------------------------------------------
2002 Change 2001
---------------------------------------------
Revenues $47 +37% $34
EBITDA 1 5.2 +43% 3.6
Operating income 1 2.3 +21% 1.9
EBITDA margin 11.1% 10.6%
Operating margin 4.9% 5.6%
- --------------------------------------------------------------------------------
1 Including non-operating expenses of $ 0.1 million for Q1 2002.
QUEBECOR WORLD PAGE 12
7. BREAKDOWN OF REVENUES BY PRODUCT GROUP
- -------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOR THE THREE MONTHS
(IN $ MILLIONS) ENDED MARCH 31
- --------------------------------------------------------------------------------
2002 Change 2001
---------------------------------------------
North America
Retail $ 256 +14% $ 225
Magazines & Catalogs $ 406 -14% $ 470
Books $ 125 -6% $ 133
Directories $ 109 -9% $ 119
Commercial & Direct $ 188 -21% $ 239
Other Domestic Revenues $ 117 -10% $ 130
--------------------------------------------
North America $1,201 -9% $1,316
Europe 212 -7% 227
Latin America 47 +37% 34
- --------------------------------------------------------------------------------
Quebecor World Inc. $1,459 -7% $1,577
- --------------------------------------------------------------------------------
QUEBECOR WORLD PAGE 13
8. FINANCIAL CONDITION
- -------------------------------------------------------------------------------
SUMMARIZED CONSOLIDATED BALANCE SHEETS
- ------------------------------------------------------------------------------------------------------------
(IN $ MILLIONS EXCEPT FINANCIAL RATIOS) MARCH 31, 2002 CHANGE MARCH 31, 2001
- ------------------------------------------------------------------------------------------------------------
Non-cash working capital 1 $13 (96%) $333
(in % of 12-month trailing revenues) 0.2% 5.1%
Net fixed assets 2,663 +1% 2,649
Total assets 6,239 (3%) 6,438
Shareholders' equity 2,456 (4%) 2,560
Long Term Debt 2,047 (4%) 2,143
Convertible Debentures (including the current portion) 114 (25%) 152
Debt:Equity 47:53 48:52
EBITDA Coverage Ratio 2 4.6 4.7
EBIT Coverage Ratio 2 2.9 3.2
- ------------------------------------------------------------------------------------------------------------
1 Before restructuring liabilities.
2 12-month trailing average before restructuring and other charges.
QUEBECOR WORLD PAGE 14
9. DISCUSSION OF CONSENSUS EARNINGS
- -------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
DILUTED EARNINGS PER SHARE 1
- ----------------------------------------------------------------------------------------------------------------------------
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER FULL YEAR
EPS % EPS % EPS % EPS % EPS %
1999 $ 0.18 +13% $ 0.36 +16% $ 0.43 +13% $ 0.58 +32% $ 1.55 +20%
2000 $ 0.24 +33% $ 0.40 +11% $ 0.58 +35% $ 0.69 +19% $ 1.90 +23%
2001 $ 0.27 +13% $ 0.41 +2% $ 0.46 -21% $ 0.45 -35% $ 1.58 -17%
- ----------------------------------------------------------------------------------------------------------------------------
IQW 2002 GUIDANCE -
FEBRUARY 4, 2002 $ 1.85-2.00
- ----------------------------------------------------------------------------------------------------------------------------
2002 CONSENSUS 2 $ 0.25 -7% $ 0.37 -10% $ 0.63 +37% $ 0.68 +51% $ 1.92 +22%
- ----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
SUMMARY OF EARNINGS ESTIMATES 2002
- -----------------------------------------------------------------------------------------------------------------------
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER FULL YEAR
- -----------------------------------------------------------------------------------------------------------------------
Average 1 $0.25 $0.37 $0.63 $0.68 $1.92
High 1 $0.29 $0.45 $0.74 $0.81 $2.06
Low 1 $0.22 $0.31 $0.53 $0.60 $1.75
Number of Analysts 8 7 7 7 12
- -----------------------------------------------------------------------------------------------------------------------
IQW 2002 Guidance -
February 4, 2002 $0.25-$0.28 $1.85 - $2.00
- -----------------------------------------------------------------------------------------------------------------------
1 Before restructuring & other special charges.
2 Based on management's survey of 12 sell-side analysts as at April 18, 2002.
QUEBECOR WORLD PAGE 15
10. 2002 MANAGEMENT OBJECTIVES
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
ACTUAL 2001 TARGET 2002 **
- -------------------------------------------------------------------------------
EARNINGS PER SHARE * $1.58 $1.85 - $2.00
OPERATING INCOME MARGIN 9.8% 10%
FREE CASH FLOW $287 million $300 million
DEBT-TO-CAPITALIZATION 46% 42%
CAPITAL EXPENDITURES $278 million $200 million
- -------------------------------------------------------------------------------
* Before restructuring & other special charges.
Reflects the adoption of FAS 142 and CICA 3062 effective January 1, 2002.
** Reflects management's February 4, 2002 guidance for the current year.
QUEBECOR WORLD PAGE 16
[QUEBECOR WORLD LOGO]
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/ Michael Young
---------------------------------------
Name: Michael Young
Title: Senior Vice President,
Financial Operations and Control,
Corporate Controller
Date: April 25, 2002