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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 months of APRIL, MAY AND JUNE 1998
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QUEBECOR PRINTING INC.
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(Translation of Registrant's Name into English)
612 Saint-Jacques Street, Montreal, Quebec, Canada 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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PAGE 1 OF 15
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SECOND QUARTERLY REPORT
OF
QUEBECOR PRINTING INC.
FILED IN THIS FORM 6-K
----------------------
Material sent to shareholders by Fiducie Desjardins
Quarterly Report (ending June 1998)
PAGE 2 OF 15
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QUEBECOR PRINTING INC.
Report to Shareholders
Second Quarter 1998
THE POWER TO SERVE
PAGE 3 OF 15
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FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Periods ended June, 30
(In millions of US dollars, except per share data)
3 Months 6 Months
--------------------------- ----------------------------
1998 1997 Change 1998 1997 Change
<S> <C> <C> <C> <C>
SEGMENTED INFORMATION
REVENUES
United States 511.2 488.2 4.7 % 1,040.4 943.3 10.3 %
Canada 205.4 188.3 9.1 % 398.3 372.4 6.9 %
Europe 153.6 157.6 (2.5)% 297.7 303.0 (1.8)%
International 20.0 2.5 35.7 4.7
OPERATING INCOME
United States 42.0 35.2 19.3 % 70.6 60.1 17.6 %
Canada 17.9 16.9 5.7 % 28.7 30.6 (6.5)%
Europe 9.4 11.8 (20.5)% 15.9 15.1 5.5 %
International 2.2 0.4 3.7 0.9
OPERATING MARGIN
United States 8.2% 7.2% 6.8 % 6.4%
Canada 8.7% 9.0% 7.2 % 8.2%
Europe 6.1% 7.5% 5.3 % 5.0%
International 10.8% 14.6% 10.5 % 19.0%
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CONSOLIDATED RESULTS
Revenues 890.2 836.6 6.4 % 1,772.1 1,623.4 9.2 %
Operating income
before depreciation
& amortization 129.3 117.4 10.1% 232.6 210.5 10.5 %
Operating income 71.5 64.3 11.1% 118.9 106.7 11.5 %
Net Income 38.9 31.0 25.6% 59.6 48.1 24.1 %
Net Income
attributable to Equity
Shareholders 36.4 31.0 17.2% 54.4 48.1 13.2 %
INCOME AS % OF REVENUES
Operating income
before depreciation
& amortization 14.5% 14.0% 13.1% 13.0%
Operating income 8.0% 7.7% 6.7% 6.6%
PER SHARE DATA ($US)
Cash flow from
operations $0.88 $0.80 $1.57 $1.44
Net Income $0.31 $0.27 $0.47 $0.42
PER SHARE DATA ($CDN) *
Cash flow from
operations $1.28 $1.12 $2.26 $1.99
Net Income $0.46 $0.37 $0.68 $0.57
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</TABLE>
*For reference only -- subject to the fluctuations of the exchange rate.
NOTE: All dollar amounts in this report are in US dollars, unless stated
otherwise.
PAGE 4 OF 15
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Message to Shareholders
Quebecor Printing's second quarter results reflect the strong performance of
recent acquisitions and the productivity improvements arising from the
Company's retooling program in the US. Second quarter 1998 earnings
attributable to equity shareholders rose to $36 million, an increase from $31
million for the same period in 1997. After preferred share dividends, earnings
per share increased 15% to $ 0.31 from $ 0.27 in 1997. Revenues increased by 6%
to $890 million, compared to $837 million in 1997. For the six months ended June
30, 1998, net income attributable to equity shareholders rose to $54 million
from $48 million last year. After preferred share dividends, earnings per share
increased 12% to $0.47 from $0.42 in 1997. Revenues for the period were $1.8
billion, up 9% from $1.6 billion last year. Cash flow from operations totaled
$187 million, business acquisitions were $15 million and capital expenditures
totaled $178 million. The Company's debt:equity ratio was 42:58.
OPERATIONS OVERVIEW During the quarter, the Company began to reap the
planned benefits of its US retooling strategy. US operations reported a 19%
increase in operating income for the second quarter, due in part to completed
modernization projects and to the strong performance of acquisitions.
Excellent overall results, however, were partially offset by the performance
of operations in France as well as by those facilities still undergoing
retooling. Revenues were also down slightly in the US Book Group. In early
July, the Company announced a recommended offer to acquire all of the shares
of Tryckinvest i Norden AB (TINA), Scandinavia's largest printer, for the
approximate sum of $221 million plus the
PAGE 5 OF 15
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assumption of $51 million in debt. The acquisition will expand the Company's
presence in Europe by 30% and strengthen Quebecor Printing's position as one of
Europe's leading commercial printers. The TINA purchase will also allow
Quebecor Printing to extend its rotogravure network throughout Scandinavia and
provide access to a market position through exports into Russia and the Baltic
States. The Company's commitment to strategic acquisitions and the resulting
benefits of being a geographically diverse company are having an impact in the
areas of tax management and global procurement. Reflecting its position as a
global consolidator, Quebecor Printing achieved a reduction in the Company's
annual tax rate to 31.5% from 34.3%. In June, the Company signed a contract
extension with Jean Coutu Group, a major Canadian pharmaceutical retailer.
Valued at Cdn $50 million, the five-year contract renewal reflects the
longstanding nature of Quebecor Printing's relationships with many of its
customers. The Company also signed a three and a half year printing and related
communication services contract valued at Cdn $32 million with Rona, one of
Canada's largest distributors and retailers of hardware and building materials.
Quebecor Printing will print advertising inserts for Rona's Quebec and Ontario
divisions. Through its Quebecor Multimedia partnership, it will also develop
Rona's internet web site. The range of services included in this contract
demonstrates the Company's ability to provide one-stop tailored solutions to
meet customer needs. In April, Guy Turgeon was appointed Vice President and
Chief Financial Officer of Quebecor Printing. Mr. Turgeon replaced Michel
Salbaing who is now President of Quebecor Printing Europe.
PAGE 6 OF 15
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DIVIDEND On July 23, 1998, the Board of Directors declared a dividend of US
$0.06 per share on the Multiple Voting Shares and Subordinate Voting Shares.
This dividend is payable on September 1, 1998 to shareholders of record at the
close of business on August 10, 1998. The Board of Directors also declared a
dividend of CDN $0.3125 per share on Series 2 Preferred Shares. This dividend
is payable on September 1, 1998 to shareholders of record at the close of
business on August 10, 1998.
OUTLOOK With its US retooling strategy beginning to produce positive results
and the pending acquisition of Scandinavia's largest printer strengthening
the Company's position in Europe, Quebecor Printing expects favourable
revenue and profit growth during the third and fourth quarters of 1998.
/s/ Jean Neveu /s/ Charles G. Cavell
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JEAN NEVEU CHARLES G. CAVELL
Chairman of the Board President and
Chief Executive Officer
Montreal, Canada, August 1998
PAGE 7 OF 15
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CONSOLIDATED STATEMENTS OF INCOME
Periods ended June 30
(In thousands of US dollars, except for earnings per share amounts)
(Unaudited)
REVENUES
Operating expenses:
Operating costs
Depreciation and amortization
OPERATING INCOME
Financial expenses
Income taxes
Non-controlling interest
NET INCOME
Dividends on preferred shares
NET INCOME ATTRIBUTABLE TO EQUITY SHAREHOLDERS
EARNINGS PER SHARE
Average number of equity shares outstanding (in thousands)
[PIE CHART]
PAGE 8 OF 15
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<TABLE>
<CAPTION>
Three months Six months
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1998 1997 1998 1997
<S> <C> <C> <C>
$890,171 $836,553 $1,772,050 $1,623,410
760,825 719,114 1,539,440 1,412,863
57,873 53,109 113,669 103,872
-------- -------- ---------- ----------
818,698 772,223 1,653,109 1,516,735
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71,473 64,330 118,941 106,675
15,264 16,047 30,412 32,135
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56,209 48,283 88,529 74,540
16,800 16,739 27,886 25,981
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39,409 31,544 60,643 48,559
461 526 1,006 491
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38,948 31,018 59,637 48,068
2,595 - 5,221 -
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$ 36,353 $ 31,018 $ 54,416 $ 48,068
-------- -------- ---------- ----------
-------- -------- ---------- ----------
$ 0.31 $ 0.27 $ 0.47 $ 0.42
-------- -------- ---------- ----------
-------- -------- ---------- ----------
115,685 115,574 115,649 115,558
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</TABLE>
<TABLE>
<CAPTION>
REVENUES BY PRODUCT SEGMENT (6 MONTHS) 1998 1997
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<S> <C> <C>
1. Magazines 29.0% 29.0%
2. Inserts and circulars 19.4 18.8
3. Catalogs 15.9 14.0
4. Books 13.9 15.7
5. Specialty Printing 10.4 10.7
6. Directories 4.9 4.9
7. Related Services and CD-ROM 4.5 4.8
8. Checks, Bonds and Banknotes 2.0 2.1
</TABLE>
PAGE 9 OF 15
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CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
Periods ended June 30
(In thousands of US dollars)
(Unaudited)
Cash provided by (used for):
OPERATIONS:
Net income
Items not involving cash:
Depreciation and amortization
Deferred income taxes
Non-controlling interest
Other
Changes in non-cash operating working capital
FINANCING:
Net proceeds from issuance of capital stock
Net increase of long-term debt
Dividends
Dividends paid to preferred shareholders
Dividends paid to non-controlling shareholders
Translation adjustment
INVESTMENTS:
Business acquisitions, net of cash position
Additions to fixed assets
Increase in other assets
Other
INCREASE (DECREASE) IN CASH POSITION
Cash position at beginning
CASH POSITION AT END
REPRESENTED BY:
Cash
Bank indebtedness
PAGE 10 OF 15
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<TABLE>
<CAPTION>
Six months Six months
1998 1997
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<S> <C>
$ 59,637 $ 48,068
113,669 103,872
11,803 10,475
1,006 491
1,241 4,072
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187,356 166,978
(6,756) (26,789)
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180,600 140,189
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999 476
36,558 164,308
(13,882) (12,713)
(5,806) -
(1,395) (854)
(584) (5,409)
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15,890 145,808
(14,974) (153,510)
(177,855) (141,468)
(13,055) (4,180)
9,869 7,364
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(196,015) (291,794)
475 (5,797)
(18,604) 806
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$ (18,129) $ (4,991)
--------- ---------
--------- ---------
$ 1,819 $ 1,218
(19,948) (6,209)
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$ (18,129) $ (4,991)
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</TABLE>
PAGE 11 OF 15
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CONSOLIDATED BALANCE SHEETS
(In thousands of US dollars)
ASSETS
Current assets :
Cash
Trade receivables
Inventories
Prepaid expenses
Fixed assets
less accumulated depreciation
Goodwill
Other assets
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities :
Bank indebtedness
Trade payables and accrued liabilities
Income and other taxes
Current portion of long-term debt and
convertible debentures
Long-term debt
Other liabilities
Deferred income taxes
Convertible debentures
Non-controlling interest
Shareholders' equity :
Capital stock
Contributed surplus
Retained earnings
Translation adjustment
PAGE 12 OF 15
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<TABLE>
<CAPTION>
June 30 December 31 June 30
(unaudited) (audited) (unaudited)
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1998 1997 1997
<S> <C> <C>
$ 1,819 $ 380 $ 1,218
569,947 683,840 530,839
244,780 253,228 214,089
26,149 20,907 27,551
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842,695 958,355 773,697
3,035,442 2,887,510 2,637,653
927,122 843,131 753,188
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2,108,320 2,044,379 1,884,465
379,156 383,801 335,685
93,230 89,003 83,560
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$3,423,401 $3,475,538 $3,077,407
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---------- ---------- ----------
$ 19,948 $ 18,984 $ 6,209
507,972 635,050 490,055
32,017 32,993 24,734
40,347 52,019 37,821
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600,284 739,046 558,819
953,177 913,269 952,185
119,408 114,065 122,801
206,750 195,005 188,260
57,414 60,021 75,549
16,869 17,792 14,519
897,000 896,001 683,499
88,737 88,737 88,737
548,463 508,514 442,004
(64,701) (56,912) (48,966)
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1,469,499 1,436,340 1,165,274
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$3,423,401 $3,475,538 $3,077,407
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</TABLE>
PAGE 13 OF 15
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HEAD OFFICE
Quebecor Printing Inc.
612 Saint-Jacques Street
Montreal, Quebec
Canada H3C 4M8
Tel.: (514) 954-0101
1 (800) 567-7070
Fax:(514) 954-9624
QUEBECOR
PRINTING INC.
PAGE 14 OF 15
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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 PRINTING INC.
By: (s) PHILIPPE MONTEL
------------------------------------------------
Name: Philippe Montel
Title: Vice President, Legal Affairs and Secretary
Date: August 25, 1998
PAGE 15 OF 15
