<PAGE>
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 1999
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QUEBECOR PRINTING 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
----- -----
(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 9
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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 30, 1999)
PAGE 2 OF 9
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QUEBECOR PRINTING INC.
Report to Shareholders
Second Quarter 1999
Canada H3C 4M8
Tel.: (514) 954-0101
1 (800) 567-7070
Fax: (514) 954-9624
www.quebecorprinting.com
Quebecor Printing Inc.
Report to Shareholders
Third Quarter 1998
[LOGO]
PAGE 3 OF 9
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FINANCIAL HIGHLIGHTS
Periods ended June, 30
(In millions of US dollars, except per share data)
<TABLE>
<CAPTION>
Three months Six months
- -------------------------------------------------------------------------------------------------------------
1999 1998 Change 1999 1998 Change
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Segmented Information
- ---------------------
REVENUES
United States 460.4 481.2 (4.3)% 928.7 982.3 (5.5)%
Canada 243.6 237.2 2.7 % 464.1 460.5 0.8 %
Europe 219.3 152.6 43.7 % 422.3 295.8 42.8 %
South America 20.8 17.6 18.4 % 40.5 30.7 31.7 %
OPERATING INCOME
United States 38.0 34.7 9.5 % 60.4 59.2 2.1 %
Canada 27.1 23.0 17.8 % 43.4 37.0 17.3 %
Europe 14.3 11.1 28.4 % 24.4 17.8 36.8 %
South America 0.9 1.5 (38.6)% 3.3 2.4 40.1 %
OPERATING MARGIN
United States 8.3 % 7.2 6.5 % 6.0 %
Canada 11.1 % 9.7 % 9.3 % 8.0 %
Europe 6.5 % 7.3 % 5.8 % 6.0 %
South America 4.5 % 8.6 % 8.2 % 7.7 %
Consolidated Results
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Revenues 944.3 890.2 6.1 % 1 854.8 1 772.1 4.7 %
Operating income
before depreciation
& amortization 145.3 128.9 12.8 % 259.4 232.1 11.8 %
Operating income 81.9 71.5 14.7 % 134.9 118.9 13.5 %
Net Income 45.9 38.9 17.8 % 70.1 59.6 17.6 %
Net Income
available for holders
of equity shares 43.3 36.4 19.2 % 65.1 54.4 19.6 %
Income as % of revenues
- -----------------------
Operating income
before depreciation
& amortization 15.4 % 14.5 % 14.0 % 13.1 %
Operating income 8.7 % 8.0 % 7.3 % 6.7 %
Per Share Data ($US)
- --------------------
Cash flow from
operations $0.99 $0.88 $1.75 $1.57
Net Income $0.37 $0.31 $0.5 $0.47
Per Share Data ($Cdn) *
- ---------------------
Cash flow from
operations $1.46 $1.28 $2.60 $2.26
Net Income $0.55 $0.46 $0.83 $0.68
Revenues
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by product segment
- ------------------
Magazines 29.4 % 29.3 % 30.6 % 29.0 %
Inserts and circulars 22.6 % 19.0 % 20.8 % 19.4 %
Catalogs 13.7 % 15.8 % 14.5 % 15.9 %
Books 14.2 % 13.4 % 13.9 % 13.9 %
Specialty printing
and direct mail 9.3 % 10.2 % 9.6 % 10.4 %
Directories 5.3 % 5.3 % 4.9 % 4.9 %
Related Services
and CD-ROM 4.6 % 4.5 % 4.8 % 4.5 %
Bonds, Banknotes
and Others 0.9 % 2.5 % 0.9 % 2.0 %
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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.
MESSAGE TO SHAREHOLDERS
Quebecor Printing's results in the second quarter continue to demonstrate the
validity of the Company's strategy and its commitment to deliver increased value
to shareholders. For the second quarter ended June 30, 1999, net income
available for holders of equity shares rose to $43 million, an increase from $36
million for the same period in 1998. Earnings per share increased 19% to $0.37
from $0.31 in 1998. Revenues increased 6% to $944 million, compared with $890
million in 1998.
For the six months ended June 30, 1999, net income available for holders of
equity shares rose to $65 million from $54 million last year. Earnings per share
increased 19% to $0.56 from $0.47 in 1998. Revenues for the period were $1.9
billion, up 5% from $1.8 billion last year. Free cash flow from operations net
of capital expenditures and preferred share dividends for the six-month period
ended June 30, 1999, was $173 million compared to a deficit of $10 million last
year.
The Company's performance for the quarter was marked by an increase in the
consolidated operating margin to 8.7% from 8.0% for the same period in 1998.
This increase was due, in part, to improved operating margins in the United
States as newly retooled plants showed efficiency and productivity gains.
Operating margins were also up in the Company's Canadian operations despite the
loss of operating income resulting from the divestiture of the Company's check
business.
In Europe, although lower volume and pricing pressures were felt in France,
recently acquired Quebecor Printing Norden and Cayfo performed according to
plan. In South America, the operating environment remains difficult, with a
reduction in export volume to Brazil. This was offset, however, by strict cost
control measures combined with the strong performance of the Company's Peruvian
operation.
OPERATIONS OVERVIEW
In May, Quebecor Printing announced a CDN $45 million expansion of its
Toronto-based PE&E printing facility, the only commercial printing facility in
Canada using rotogravure, a uniquely efficient process for printing long-run
work. The expansion will consist of the construction of a building extension and
the installation of two 91-inch wide-web rotogravure presses. This expansion is
in response to retailers' requirements for increased page count for their
catalogs and retail inserts. The increased capacity will allow Quebecor Printing
to expand its North American customer base and assume the print work of major
Canadian and American retailers.
In June, Quebecor Printing announced a contract extension with British newspaper
publisher Associated Newspapers Ltd. (ANL)
PAGE 4 OF 9
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for the printing of four of its most popular magazine newspaper supplements:
WEEKEND, YOU, NIGHT AND DAY and ES MAGAZINE. The value of the contract extension
is in excess of $325 million (L200 million), excluding paper sales, and
runs for a period of seven years. It is believed to be the largest magazine
printing contract in Europe. Under the terms of the contract, Quebecor Printing
will print over eight million magazines a week from its British plant in Corby,
Northamptonshire and from its rotogravure facility in Lille, France.
Subsequent to the quarter's end, the Company announced a merger agreement to
acquire all of the shares of World Color Press, Inc., one of the United States'
leading commercial printers, in a transaction valued at approximately $2.7
billion. The acquisition, the largest in the history of the printing industry,
will make the newly merged company, to be named Quebecor World Inc., the largest
independent commercial printer in the world, serving customers in magazines,
catalogs, books, retail inserts and circulars, specialty/direct mail printing
and directories.
World Color offers significant potential for synergies due to the high degree of
similarity with Quebecor Printing's product mix and management philosophy.
Management believes that the merger of the two companies will result in excess
of $50 million in annual synergies. Sales force integration and the elimination
of duplicate functions will be implemented as soon as possible as well as the
integration with Quebecor Printing's Switzerland-based worldwide procurement
center. Printing facilities will be integrated in accordance with client needs
and commitments and will be linked to Quebecor Printing's North American
fiber-optic network to facilitate work transfer and improve customer service and
asset utilization.
In June, the Company announced an agreement in principle with German banknote
printer Giesecke & Devrient GmbH for the divestiture of Quebecor Printing's BA
Banknote Ottawa division. The divestiture is in keeping with Quebecor Printing's
objective to focus on its core businesses and follows the recent divestitures of
its check and credit card operations. BA Banknote's sales make up less than 1%
of the Company's consolidated annual revenues.
In June, Quebecor Printing closed its public offering of 6.5 million
Subordinate Voting Shares for net proceeds of $155 million, which were applied
to the reduction of bank indebtedness. At June 30, 1999, the Company's debt:
equity ratio was 37:63. This strong financial condition combined with
significant free cash flow from operations position Quebecor Printing very well
for the completion of the World Color acquisition.
YEAR 2000 TRANSITION
To ensure continuous operations, Quebecor Printing has been working for
years, together with its business partners and strategic suppliers, to
eliminate the risk of problems on January 1, 2000 at the turn of the
millennium. Contingency plans have been pre-pared to maintain essential
operations in all eventualities. Y2K-related activities have proceeded
according to plan; costs have been within forecasts and have been covered out
of operating budgets. We are confident that, with the exception of some very
minor work to be done, this fall, the mission critical systems will be year
2000 compliant.
DIVIDEND
The Board of Directors declared a dividend of $0.07 per share on Multiple Voting
Shares and Subordinate Voting Shares. The Board of Directors also declared a
dividend of CDN $0.3125 per share on Series 2 Preferred Shares. Theses dividends
are payable on September 1, 1999 to shareholders of record at the close of
business on August 9, 1999.
OUTLOOK
Looking ahead to the remainder of 1999, Quebecor Printing is well positioned to
meet or exceed its financial targets for the current year.
The Company intends to temporarily suspend its market growth strategy through
business acquisitions while it focuses on the synergy opportunities afforded by
the integration of the acquisition of World Color. Once completed, the merger
will strengthen the Company's position as an industry leader by bringing
together two very focused growth companies. With this transaction, the Company
is confident it will reach new highs in shareholder value.
JEAN NEVEU (SIGNED) CHARLES G. CAVELL (SIGNED)
JEAN NEVEU CHARLES G. CAVELL
Chairman of the Board President and
Chief Executive Officer
Montreal, Canada, August 1999
PAGE 5 OF 9
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CONSOLIDATED BALANCE SHEETS
(In Thousands of US Dollars)
<TABLE>
<CAPTION>
June 30 December 31 June 30
(unaudited) (audited) (unaudited)
- --------------------------------------------------------------------------------------------------------------------------
1999 1998 1998
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash $ 1,676 $ 309 $ 1,819
Trade receivables 621,217 695,867 569,947
Inventories 222,928 233,019 244,780
Prepaid expenses 31,290 25,035 26,149
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877,111 954,230 842,695
Fixed assets 3,275,600 3,224,609 3,058,230
less accumulated depreciation 1,108,180 1,013,645 927,122
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2,167,420 2,210,964 2,131,108
Goodwill 624,640 595,724 379,156
Other assets 97,380 81,198 70,442
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$ 3,766,551 $ 3,842,116 $ 3,423,401
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank indebtedness $ 4,331 $ 15,607 $ 19,948
Trade payables and accrued liabilities 546,125 601,244 507,972
Income and other taxes 54,001 42,207 32,017
Current portion of long-term debt and convertible debentures 37,461 51,066 40,347
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641,918 710,124 600,284
Long-term debt 949,775 1,140,941 953,177
Other liabilities 129,971 127,859 119,408
Deferred income taxes 234,325 223,085 206,750
Convertible debentures 52,583 58,193 57,414
Non-controlling interest 21,378 17,410 16,869
Shareholders' equity:
Capital stock 1,061,448 898,138 897,000
Contributed surplus 88,737 88,737 88,737
Retained earnings 674,023 629,596 548,463
Translation adjustment (87,607) (51,967) (64,701)
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1,736,601 1,564,504 1,469,499
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$ 3,766,551 $ 3,842,116 $ 3,423,401
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</TABLE>
PAGE 6 OF 9
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CONSOLIDATED STATEMENTS OF INCOME
Periods ended June, 30
(In thousands of US dollars, except for earnings per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three months Six months
- ----------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES $ 944,323 $ 890,171 $ 1,854,838 $ 1,772,050
Operating expenses:
Operating costs 798,985 761,316 1,595,458 1,539,956
Depreciation and amortization 63,410 57,382 124,459 113,153
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862,395 818,698 1,719,917 1,653,109
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OPERATING INCOME 81,928 71,473 134,921 118,941
Financial expenses 15,889 15,264 33,673 30,412
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66,039 56,209 101,248 88,529
Income taxes 19,810 16,800 30,374 27,886
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46,229 39,409 70,874 60,643
Non-controlling interest 339 461 761 1,006
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NET INCOME 45,890 38,948 70,113 59,637
Net income available for holders
of preferred shares 2,544 2,595 5,021 5,221
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NET INCOME AVAILABLE FOR HOLDERS
OF EQUITY SHARES $ 43,346 $ 36,353 $ 65,092 $ 54,416
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EARNINGS PER SHARE $ 0.37 $ 0.31 $ 0.56 $ 0.47
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Average number of equity shares
outstanding (in thousands) 117,589 115,685 116,723 115,649
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</TABLE>
PAGE 7 OF 9
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CONSOLIDATED STATEMENTS OF CASH FLOWS
Periods ended June 30
(in thousands of US dollars)
(Unaudited)
<TABLE>
<CAPTION>
Six months
- ----------------------------------------------------------------------------------------------------------------------
1999 1998
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows provided by (used in):
OPERATIONS:
Net income $ 70,113 $ 59,637
Non-cash items in income:
Depreciation and amortization 124,459 113,153
Deferred income taxes 12,339 11,803
Non-controlling interest 761 1,006
Other 1,170 1,757
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208,842 187,356
Changes in non-cash operating working capital 34,200 (6,756)
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243,042 180,600
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FINANCING:
Net proceeds from issuance of capital stock 158,946 999
Net increase (decrease) of long-term debt (247,211) 36,558
Increase (decrease) in bank indebtedness (11,276) 964
Dividends on equity shares (16,233) (13,882)
Dividends paid to preferred shareholders (5,089) (5,806)
Dividends paid to non-controlling shareholders (19) (1,395)
Translation adjusment 6,240 (550)
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(114,642) 16,888
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INVESTMENTS:
Business acquisitions, net of cash position (59,920) (14,974)
Additions to fixed assets (72,939) (185,687)
Proceeds from disposal of assets 8,278 874
Increase in other assets (10,105) (5,223)
Other 7,763 8,995
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(126,923) (196,015)
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Effect of exchange rate changes on cash (110) (34)
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INCREASE IN CASH 1,367 1,439
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Cash at beginning 309 380
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CASH AT END $ 1,676 $ 1,819
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</TABLE>
PAGE 8 OF 9
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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) CLAUDINE TREMBLAY
-------------------------------------
Name: Claudine Tremblay
Title: Assistant Secretary
Date: AUGUST 30, 1999
PAGE 9 OF 9
