<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 JANUARY, FEBRUARY AND MARCH 2000
---------------------------------------------------------
QUEBECOR WORLD INC. (FORMERLY KNOWN AS QUEBECOR PRINTING INC.)
--------------------------------------------------------------------------------
(Translation of Registrant's Name into English)
612 Saint-Jacques Street, Montreal, Quebec, Canada 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
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PAGE 1 OF 15
<PAGE>
FIRST QUARTERLY REPORT
OF
QUEBECOR WORLD INC.
FILED IN THIS FORM 6-K
Material sent to shareholders by Fiducie Desjardins
Quarterly Report (ending March 31, 2000)
PAGE 2 OF 15
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Report to Shareholders
First Quarter 2000
[GRAPHIC]
The Evolution of
Print Media
[LOGO]
Page 3 of 15
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QUEBECOR WORLD INC.
FINANCIAL HIGHLIGHTS
Periods ended March 31
(In millions of US dollars, except per share data)
<TABLE>
<CAPTION>
Three months
================================================================================================
2000 1999 Change
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONSOLIDATED RESULTS
Revenues 1,630.4 910.5 79%
Operating income before amortization 231.7 113.8 103%
Operating income 138.2 56.5 145%
Net income 37.6 23.2 62%
Cash provided from operating activities 72.6 69.0 5%
Free cash flow from operations* 42.9 38.1 13%
Operating margin before amortization 14.2% 12.5%
Operating margin 8.5% 6.2%
================================================================================================
SEGMENTED INFORMATION
REVENUES
United States 1,132.1 466.3 143%
Canada 247.5 220.5 12%
Europe 227.3 203.1 12%
Latin America 25.5 21.6 18%
OPERATING INCOME
United States 99.5 24.0 315%
Canada 20.1 16.5 21%
Europe 13.4 11.5 16%
Latin America 1.7 2.9 (41%)
OPERATING MARGINS
United States 8.8% 5.1%
Canada 8.1% 7.5%
Europe 5.9% 5.7%
Latin America 6.7% 13.4%
================================================================================================
FINANCIAL POSITION
Working capital 147.5 300.5
Total assets 6,687.8 3,815.2
Long-term debt 2,799.2 1,224.4
Shareholders' equity 2,329.1 1,556.0
Debt-to-equity ratio 54 : 46 44 : 56
================================================================================================
PER SHARE DATA
Cash earnings** $ 0.35 $ 0.21 67%
Net income $ 0.24 $ 0.18 33%
Dividends $ 0.07 $ 0.07
Book value $ 14.33 $ 11.59
================================================================================================
</TABLE>
* Cash provided from operating activities, less capital expenditures net of
proceeds from disposals, and preferred share dividends.
**Net income before goodwill amortization, less net income available to holders
of preferred shares.
Page 4 of 15
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MESSAGE TO SHAREHOLDERS
Quebecor World Inc. posted record results in the first quarter of 2000.
Consolidated revenues increased more than 75% to reach $1.6 billion, compared
with $911 million in 1999. Net income amounted to $37.6 million for the quarter
ended March 31, 2000, rising from $23.2 million for the same period in 1999.
Earnings per share for the quarter increased 33% to $0.24 from $0.18 in 1999.
Free cash flow from operations reached $43 million and was used to pay down the
increased debt arising from the World Color transaction. As the Company realizes
synergies and focuses free cash flow on debt reduction, management expects to
return to a debt-to-equity level of one-to-one as early as the end of fiscal
2000.
OPERATIONS OVERVIEW
GROWING DEMAND FROM NEW MEDIA
With over one billion unique pages on five million sites*, the growth of the
World Wide Web as a new medium of communication has increased the demand for
both print products and digital content services. As a result, Quebecor World
has been experiencing unprecedented organic growth, and has realigned its
business to focus on the growing demand for pre-media services.
PRINT PRODUCTS - Internet and New Media companies are increasingly turning to
print products to create brand awareness and attract website traffic. As a
result, advertising lineage has grown significantly. In addition, there has been
tremendous growth in the number of books and magazines dedicated to
Internet-related topics. During the first quarter, due in large part to this
trend, volume in Book services and Retail inserts increased by 13% and 7%
respectively over the previous year. In fact, there was significant organic
growth in most of the Company's core print media businesses in the United
States.
DIGITAL CONTENT SERVICES - The growth in the Internet has also affected demand
for pre-media services by creating requirements to repurpose existing graphic
data and to create new, original data for Web publishing. In April, Quebecor
World formed a wholly-owned subsidiary, Que-Net Media, to focus on these
pre-media activities. Christopher H. Rudge, President of Quebecor World's
Canadian operations, was appointed President of the new company. Under his
leadership, Que-Net Media will expand upon Quebecor World's existing network of
pre-media centers to establish a global network of digital content centers
focused on the growing market for pre-media services for both print and Web
applications.
INTEGRATION OF WORLD COLOR
During the first quarter, Quebecor World made significant progress in its
integration of World Color operations. The synergies between the two
manufacturing platforms are significantly better than expected and the Company
has doubled its original target of $50 million in annual cost savings and
synergies to $100 million by the end of 2001.
To optimize the combined operations, Quebecor World is restructuring its
manufacturing platform in the United States. By consolidating U.S. operations
into larger and more specialized plants, the Company will reduce administrative
costs, increase economies of scale and improve efficiency and distribution. As
part of this strategy, six facilities are being closed and three mega-facilities
created.
- A mega-facility is being created in Effingham, Illinois to provide a
comprehensive offering of Direct Response products and services. In addition to
a multi-million dollar investment for state-of-the-art in-line and off-line
finishing and imaging equipment, this facility will be strengthened with
equipment and personnel from other Quebecor World plants. Work on this project
began in February and is expected to be completed in the third quarter of 2000.
- Quebecor World's Buffalo, New York plant is being expanded to create a
dual-purpose "mega-facility" specialized in Books and Retail. This expansion,
which will double the plant's current gravure printing capacity, will allow the
Company to fully capitalize on the strength of this location for efficient
distribution. An investment of approximately $15 million is being made,
comprising: the cost of redeploying assets from the Dresden, Tennessee and
Brattleboro, Vermont plants, which will be shut down; environmental upgrades;
and the hiring and training of new and existing employees. Implementation of
this project began in March and is scheduled for completion by December 31,
2000.
- Quebecor World's facility in Oklahoma City, Oklahoma is being expanded to
create a "mega-facility" specialized in retail inserts. Equipment for this
expansion is being transferred from the Company's Houston, Texas plant, which
has been shut down.
INDUSTRY EXCHANGE
In April, Quebecor World announced plans to expand its global procurement
activities, which has allowed the Company to aggregate demand for strategic
items such as ink and paper across its 160-plus plants worldwide. The Company
intends to build a company-wide e-procurement platform that will allow it to
further capture economies and transaction efficiencies in all procurement
areas. Recognizing the potential to realize additional gains through the use of
e-commerce tools, the Company is increasing its focus in this area and is also
investigating the concept of an industry marketplace. Building on its own
experience, it is initiating discussions with leading participants and key
suppliers in the North American and European print media industry. An industry
exchange would facilitate the establishment of standards across the supply
chain, improving procurement processes, reducing inventory levels and lowering
transaction costs.
CONTRACT EXTENSIONS
In February, Quebecor World announced a ten-year contract extension with Sears
Canada for the printing of its catalogs. Under the agreement, which is valued
at over Cdn$1 billion, Quebecor World will print more than 60 million catalogs a
year. Most of the work will be carried out at the Company's PE&E facility
located in Toronto, Ontario. This contract extension follows the Cdn$45 million
expansion of Quebecor World's Canadian rotogravure capacity to meet increased
demand for catalogs and retail inserts.
* NEC Research Institute and Inktomi study, January 18, 2000.
Page 5 of 15
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In March, Quebecor World signed a $500 million, multi-year contract extension
with Pacific Bell Directory, a major long-term customer of the former World
Color. Under the terms of the contract, Quebecor World will produce Yellow Pages
directories for Pacific Bell customers located in 120 cities in California and
Nevada. The directories will be printed at the Company's Merced, California
plant, where Quebecor World is investing in state-of-the-art pre-media equipment
and a new four-color directory press. The Company is now strongly positioned to
further grow its market presence in the directory market segment.
ANNUAL GENERAL MEETING
During Quebecor World's Annual General Meeting on April 25, 2000, management
reviewed the past year and discussed its strategy for the future. An on-site
demonstration showcased Que-Net Media and the Company's pre-media capabilities.
"1999 was an historic year for us," stated Charles G. Cavell. "Our merger with
World Color has turned us into the largest print media services company in the
world. More importantly, we are successfully leveraging our size and
restructuring our manufacturing platform in the United States to take full
advantage of the synergies."
"One of the biggest misconceptions today is the idea that new media hurts old
media. Well, all I can say is if the Web is a threat, I'd like to be threatened
like that every day for the balance of my career. The wonderful truth is: new
media is creating new demand for traditional print."
"With the development of the World Wide Web, we're riding a wave of expanding
demand for print and digital content. Que-Net Media will put Quebecor World on
the crest of that wave."
NORMAL COURSE ISSUER BID
On April 4, the Board of Directors authorized a normal course issuer bid for a
maximum of 8 million Subordinate Voting Shares, representing 9.5% of the public
float as at March 27, 2000. The Company has concluded that the purchase of
Subordinate Voting Shares under the issuer bid represents an attractive
investment. Purchases will be made on the open market through the facilities of
the Toronto and New York Stock Exchanges during the period from April 6, 2000 to
April 5, 2001. Shares purchased under the bid will be cancelled.
The normal course issuer bid will be funded with cash proceeds from the sale of
non-core assets as well as those made redundant as a result of restructuring. In
March, Quebecor World announced the divestiture of the North American operations
of Print Northwest, consisting of two software manufacturing and fulfillment
facilities located in Fife, Washington and Westborough, Massachusetts. Quebecor
World will receive a total consideration of $63 million, consisting of $58
million in cash and $5 million in shares of Q-Media, the purchasing company.
The proceeds of this sale, which is subject to regulatory approval, will be used
to repurchase shares.
NAME AND STOCK SYMBOL CHANGE
At the Company's Annual General Meeting, shareholders approved a change of the
Company's name from Quebecor Printing Inc. to Quebecor World Inc. The ticker
symbol for Quebecor World's shares listed on the New York Stock Exchange and the
Toronto Stock Exchange was changed from "PRW" and "IQI" respectively to "IQW" on
both exchanges, effective April 28, 2000.
DIVIDEND
The Board of Directors declared a dividend of $0.08 per share on Multiple Voting
Shares and Subordinate Voting Shares, which represents an increase of 14% over
the previous dividend declaration. The Board of Directors also declared a
dividend of Cdn$0.3125 per share on Series 2 Preferred Shares. The two
dividends are payable on June 1, 2000 to shareholders of record at the close of
business on May 17, 2000.
EUROPEAN MANAGEMENT TEAM
In April, Quebecor World announced several key appointments with respect to its
European operations. John Bertuccini, formerly President, East Group and Acting
President, Quebecor World France, was appointed President, Quebecor World
Europe. He will continue to assume the position of President, Quebecor World
France on an interim basis. Andrew Parker, previously Director of Manufacturing
& Customer Services, was appointed Managing Director, Corby Operations.
Broadening his focus, John Dickin assumed the position of Vice President,
Strategy for Quebecor World Europe, in addition to his role as General Manager,
U.K. Serge Reynaud, formerly Vice President, Quebecor World Human Resources, was
appointed Chief Administrative Officer, Quebecor World Europe.
OUTLOOK
Quebecor World posted record results in the first quarter of 2000, with strong
margin improvements. These results are the product of expanded sales coverage
and improved efficiency from retooling, combined with significant organic growth
in most of Quebecor World's core print media lines of business. Management is
confident that this trend will continue for the balance of the year. The focus
will continue to be on the integration of the Company's newly reorganized U.S.
manufacturing operations, as well as on the utilization of technology as a means
of improving efficiency and ensuring that we provide leading-edge service to
clients. The Company's e-procurement platform and Que-Net Media are two
examples of initiatives under way to take advantage of the new economy.
/s/ Jean Neveu /s/ Charles G. Cavell
JEAN NEVEU, CHARLES G. CAVELL,
Chairman of the Board President and Chief Executive Officer
Montreal, Canada, May 2000
Page 6 of 15
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MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RECENT DEVELOPMENTS
Quebecor World is the largest commercial printer in the world. We are a market
leader in most of our product categories, which include magazines, retail
inserts, catalogs, books, specialty printing and direct mail, directories,
pre-media and other value-added services. We have facilities in the United
States, Canada, France, the United Kingdom, Spain, Sweden, Finland, Austria,
Germany, India, Chile, Argentina, Peru, Colombia and Mexico.
The Company's strategy to focus on its core business was pursued in 2000 with
the sale of the North American operations of Print Northwest to Vancouver-based
Q-Media for a total consideration of $63 million, comprising of $58 million in
cash and $5 million in Q-Media shares. The transaction is expected to close on
or about May 31, 2000.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999
Consolidated revenues increased $720 million or 79% to $1.6 billion in 2000 from
$911 million in 1999. The increase was due primarily to the inclusion of World
Color Press (World Color) results acquired in August 1999.
Cost of sales increased $551 million or 76% to $1.3 billion in 2000 from $722
million in 1999. Gross profit margins improved to 21.9% in 2000 from 20.8% in
1999 due to efficiencies from retooling certain plants in the United States and
net cost savings and synergies resulting from the integration of the acquired
businesses.
Selling, general and administrative expenses increased 68% or $51 million to
$126 million in 2000 from $75 million in 1999. The increase was due primarily to
the acquisition of World Color. Selling, general and administrative expenses as
a percentage of revenues decreased slightly from 1999 to 2000 due to benefits
derived from cost savings initiatives such as the consolidation of general and
administrative activities in the United States.
EBITA increased $118 million to $232 million in 2000 from $114 million in 1999.
The improvement in the EBITA margin from 12.5% in 1999 to 14.2% in 2000 was
primarily due to contributions from acquisitions as well as organic growth in
the United States, mainly in the Retail and Book segments, amplified by
increased efficiencies in retooled plants. Canadian operations also benefited
from organic growth in the quarter.
Net income for the three months ended March 31, 2000 was $38 million and
earnings per share was $0.24 compared to $23 million and $0.18 respectively for
the corresponding period in 1999. On a cash basis, before goodwill amortization,
earnings per share rose 67% from $0.21 to $0.35.
Amortization of fixed assets and deferred charges increased 63% to $93 million
in 2000 from $57 million in 1999. The increase was primarily due to
depreciation from business acquisitions and capital spending in prior years.
Financial expenses increased $43 million to $61 million in 2000 from $18 million
in 1999. The increase was a result of the debt incurred and assumed in
acquisitions as well as an increase in interest rates as compared to the
corresponding period of the preceding year.
The effective tax rate is 29.7% for 2000 and 28.4% for 1999. This increase is
primarily due to the acquisition of World Color taxable income impacted by the
higher U.S. tax rate offset by lower tax on financing instruments.
Goodwill amortization increased $12 million to $16 million in 2000 from $4
million in 1999. This increase results from additional goodwill of $1.9 billion
incurred principally from the World Color acquisition, which is being amortized
over 40 years.
LIQUIDITY AND CAPITAL RESOURCES
We continued to generate a high level of cash from operating activities in
2000, reaching $73 million compared to $69 million in 1999. Working capital was
$148 million at March 31, 2000 compared to $40 million at December 31, 1999 and
$301 million at March 31, 1999. The decrease of $153 million or 51%, when
compared to March 1999, was primarily due to the U.S. asset securitization
program, which began in September 1999, and additional accrued expenses
generated from the purchase of World Color and short-term restructuring charges.
The increase from December is explained by the timing of payments related to
interest and raw materials as well as disbursements for restructuring activities
and equipment received in December and paid in the first quarter.
During the first quarter of 2000, the Company announced a Normal Course Issuer
Bid for the period from April 6, 2000 to April 5, 2001 for a maximum of 8
million Subordinate Voting Shares, representing 9.5% of the public float as at
March 27, 2000. Shares purchased under the bid will be cancelled. The issuer bid
will be funded with cash proceeds from the sale of non-core assets such as the
Company's CD-ROM replication business, MDC shares sold in the first quarter of
2000, and other assets made redundant as a result of the restructuring.
Capital expenditures, net of proceeds from disposals, totaled $27 million and
$28 million in 2000 and 1999, respectively. These capital expenditures reflected
the purchase of additional pre-media, press and bindery equipment which are part
of an ongoing program to grow our business, respond to customers' needs,
maintain modern,
Page 7 of 15
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efficient plants, and continually increase productivity. Under this program, the
Company will invest approximately $250 million in 2000, of which approximately
$80 million will be used to redeploy equipment from closed facilities to
facilities that can use the equipment to increase productivity and provide cost
efficiencies.
We believe that our liquidity, capital resources and cash flow from operations
are sufficient to fund planned capital expenditures, working capital
requirements, and interest and principal payments for the foreseeable future.
FINANCIAL POSITION
At March 31, 2000 and 1999, our total debt was $2,799 million and $1,224
million, respectively. Our debt-to-equity ratio decreased to 54:46 from 55:45 at
December 31, 1999 while it stood at 44:56 at March 31, 1999. The increase in our
debt, compared to prior year, was primarily due to the $923 million of debt
incurred for business acquisitions and the $1,258 million of debt assumed in the
acquisition of World Color. In the first quarter of 2000, free cash flow from
operations, net of capital expenditures and preferred share dividends, reached
$43 million and was largely used to pay down outstanding debt. In 1999, we
generated $38 million of free cash flow from operations. Our securitization
program amounted to $486 million as of March 31, 2000 compared to $54 million
as of March 31, 1999 and $492 million as of December 31, 1999.
RISKS AND UNCERTAINTIES
In the normal course of business, we are exposed to changes in interest rates.
However, we manage this exposure by having a balanced variety of debt maturities
as well as a combination of fixed and variable rate obligations. In addition, we
have entered into interest rate swap agreements and cross-currency interest rate
swap agreements to manage both our interest rate and foreign exchange exposure.
These agreements did not have a material impact on the financial statements for
the periods presented. 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 counterparties 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 counterparties. We do not hold or
issue any derivative financial instruments for trading purposes.
Concentration of credit risk with respect to trade receivables is limited due
to our diverse operations and large customer base. As of March 31, 2000, we had
no significant concentration of credit risk.
ACCOUNTING POLICIES
In 1998 and 1999, the Accounting Standards Board of the Canadian Institute of
Chartered Accountants published new requirements related to the accounting for
employee future benefits and future income taxes with the possibility of
adoption in the year 2000. In the first quarter of this year, the Company
adopted these new accounting guidelines and applied the recommendations
retroactively, restating comparative periods. The cumulative effect of these
changes is discussed in Note 1 to the Quarterly Financial Statements.
SEASONALITY
The operations of our business are seasonal, with approximately two-thirds of
operating income historically 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 and holiday catalog promotions.
FORWARD-LOOKING STATEMENTS
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 customers' 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.
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CONSOLIDATED STATEMENTS OF INCOME
Periods ended March 31
(In thousands of US dollars, except for earnings per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three months
====================================================================================================
2000 1999
----------------------------------------------------------------------------------------------------
(Restated)
(Note 1)
<S> <C> <C>
REVENUES $1,630,439 $ 910,515
Operating expenses:
Cost of sales 1,272,881 721,574
Selling, general and administrative 125,903 75,093
Amortization of fixed assets and deferred charges 93,409 57,324
----------------------------------------------------------------------------------------------------
1,492,193 853,991
----------------------------------------------------------------------------------------------------
OPERATING INCOME 138,246 56,524
Financial expenses 61,094 17,784
----------------------------------------------------------------------------------------------------
Income before income taxes 77,152 38,740
Income taxes:
Current 10,398 6,173
Future 12,484 4,829
-------------------------------------------------------------------------------------------------
22,882 11,002
----------------------------------------------------------------------------------------------------
Income before non-controlling interest 54,270 27,738
Non-controlling interest 442 422
----------------------------------------------------------------------------------------------------
NET INCOME BEFORE GOODWILL AMORTIZATION 53,828 27,316
Goodwill amortization 16,219 4,131
----------------------------------------------------------------------------------------------------
NET INCOME $ 37,609 $ 23,185
Net income available to holders of preferred shares 2,582 2,477
----------------------------------------------------------------------------------------------------
Net income available to holders of equity shares $ 35,027 $ 20,708
====================================================================================================
EARNINGS PER SHARE $ 0.24 $ 0.18
EARNINGS PER SHARE BEFORE GOODWILL AMORTIZATION $ 0.35 $ 0.21
====================================================================================================
Average number of equity shares outstanding (in thousands) 147,700 115,856
====================================================================================================
</TABLE>
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CONSOLIDATED STATEMENTS OF CASH FLOWS
Periods ended March 31
(in thousands of US dollars)
(unaudited)
<TABLE>
<CAPTION>
Three months
======================================================================================================
2000 1999
------------------------------------------------------------------------------------------------------
(Restated)
(Note 1)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 37,609 $ 23,185
Non-cash items in net income:
Amortization of fixed assets 86,615 54,801
Amortization of goodwill and deferred charges 23,013 6,654
Amortization of deferred financing costs 2,888 211
Future income taxes 12,484 4,829
Other 1,116 157
Changes in non-cash balances related to operations:
Trade receivables 80,597 48,488
Inventories (40) 3,128
Trade payables and accrued liabilities (156,706) (65,602)
Other current assets and liabilities 1,007 (8,430)
Other non-current assets and liabilities (16,004) 1,612
------------------------------------------------------------------------------------------------------
Cash provided from operating activities 72,579 69,033
FINANCING ACTIVITIES
Net change in bank indebtedness 104 1,733
Net proceeds from issuance of capital stock 1,030 2,034
Repayments of long-term debt (40,322) (37,946)
Dividends on equity shares (10,339) (8,107)
Dividends on preferred shares (2,589) (2,515)
------------------------------------------------------------------------------------------------------
Cash used by financing activities (52,116) (44,801)
INVESTING ACTIVITIES
Business acquisitions, net of cash and cash equivalents - (2,389)
Sale of business - 33
Additions to fixed assets (42,794) (36,182)
Net proceeds from disposal of assets 15,682 7,731
------------------------------------------------------------------------------------------------------
Cash used by investing activities (27,112) (30,807)
Effect of exchange rate changes on cash and cash equivalents 6,374 6,659
------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (275) 84
Cash and cash equivalents, beginning of period 3,613 309
------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 3,338 $ 393
======================================================================================================
</TABLE>
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CONSOLIDATED BALANCE SHEETS
(In thousands of US dollars)
<TABLE>
<CAPTION>
MARCH 31 December 31 March 31
(UNAUDITED) (Audited) (Unaudited)
===========================================================================================================
2000 1999 1999
-----------------------------------------------------------------------------------------------------------
(Restated) (Restated)
(Note 1) (Note 1)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,338 $ 3,613 $ 393
Trade receivables 653,224 743,305 634,079
Inventories 483,950 486,228 227,958
Future income taxes 36,385 36,385 35,385
Prepaid expenses 30,055 27,831 29,919
---------------------------------------------------------------------------------------------------------
1,206,952 1,297,362 927,734
Fixed assets, net of accumulated
amortization of $1,249,459, $1,180,316
and $1,046,878 respectively 2,833,069 2,895,307 2,168,367
Goodwill 2,500,488 2,526,707 629,301
Other assets 147,299 153,752 89,771
-----------------------------------------------------------------------------------------------------------
$ 6,687,808 $ 6,873,128 $ 3,815,173
===========================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank indebtedness $ 3,996 $ 5,646 $ 17,733
Trade payables and accrued liabilities 940,949 1,103,171 531,725
Income and other taxes 41,607 38,751 38,588
Current portion of long-term debt 72,859 77,260 39,190
---------------------------------------------------------------------------------------------------------
1,059,411 1,224,828 627,236
Long-term debt 2,555,623 2,582,911 1,113,249
Other liabilities 288,879 290,203 159,870
Future income taxes 266,082 255,000 286,688
Convertible debentures 166,695 179,752 54,215
Non-controlling interest 22,058 22,002 17,874
Shareholders' equity:
Capital stock 1,654,786 1,653,846 900,171
Contributed surplus 88,737 88,737 88,737
Other paid-in capital 17,976 20,831 -
Retained earnings 674,927 650,155 641,150
Translation adjustment (107,366) (95,137) (74,017)
---------------------------------------------------------------------------------------------------------
2,329,060 2,318,432 1,556,041
-----------------------------------------------------------------------------------------------------------
$ 6,687,808 $ 6,873,128 $ 3,815,173
===========================================================================================================
</TABLE>
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NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US dollars, except per share data)
(Unaudited)
1. ACCOUNTING CHANGE:
Effective January 1, 2000, the Canadian Institute of Chartered Accountants
("CICA") changed the accounting standards relating to the acccounting for
income taxes and the accounting for future employee benefits, including
pension and non-pension post-retirement benefits.
a) INCOME TAXES
In December 1997, the Accounting Standards Board issued Section 3465
of the CICA Handbook, "Income Taxes." Under the asset and liability
method of Section 3465, future income tax assets and liabilities are
recognized for the estimated future tax consequences attributable to
differences between the financial statements carrying amounts of
existing assets and liabilities and their respective tax bases. Future
income tax assets and liabilities are measured using enacted tax rates
in effect for the year in which those temporary differences are
expected to be recovered or settled. The effect on future income tax
assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. Future income
tax assets are recognized and if realization is not considered "more
likely than not," a valuation allowance is provided.
The Company has adopted in 2000 the new recommendations of the CICA
and has applied the provisions of Section 3465 retroactively to
January 1989 when the Company was created. The cumulative effect of
this change in accounting for income taxes is reported as a
restatement to increase the opening balance of retained earnings as of
January 1, 2000 by $7,119 (an increase of $8,690 as of January 1,
1999).
Accordingly, the financial statements for the three months ended March
31, 1999 have been restated to comply with the provisions of Section
3465. In addition to restating the future income tax accounts, an
allocation between short- and long-term portions is now presented in
the consolidated balance sheets.
b) EMPLOYEE FUTURE BENEFITS
In March 1999, the Accounting Standards Board issued Section 3461 of
the CICA Handbook, "Employee Future Benefits." Under Section 3461,
the Company is required to accrue, during employees' active service
period, the estimated cost of pension, retiree benefit payment other
than pensions and workers' compensation. The Company previously
expensed the cost of post-retirement benefits other than pension,
which are principally health care, as claims were incurred by the
employees and paid by the Company. In addition, the Company will now
use the corridor method to amortize actuarial gains or losses (such as
changes in actuarial assumptions and experience gains or losses).
Under the corridor method, amortization is recorded only if the
accumulated net actuarial gains or losses exceed 10% of the greater of
accrued pension benefit obligation and the value of the plan assets.
Previously, actuarial gains and losses were amortized on a
straight-line basis over the average remaining service life of the
employees.
The Company has elected to recognize this change in accounting on the
immediate recognition basis retroactively to January 1, 1992. The
cumulative effect of this change in accounting for pension and other
post-retirement benefits is reported as a restatement to decrease of
the opening balance of retained earnings as of January 1, 2000 by
$10,715 (a decrease of $9,694 as of January 1, 1999).
c) SUMMARY EFFECT
The following summarizes the impact of applying Sections 3465 and 3461
on net income, retained earnings, and earnings per share for the three
months ended March 31, 1999. The presentation of fixed assets,
goodwill, future income taxes and other liabilities are also affected
by these changes.
<TABLE>
<CAPTION>
==============================================================================================
RETAINED EARNINGS
NET INCOME EARNINGS PER SHARE
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
As previously reported $ 24,223 $ 643,192 $0.19
Effect of Section 3465 (630) 8,060 (0.01)
Effect of Section 3461, net of taxes (408) (10,102) -
----------------------------------------------------------------------------------------------
As restated $ 23,185 $ 641,150 $0.18
==============================================================================================
</TABLE>
Page 12 of 15
10
<PAGE>
Breakdown of Revenues
First Quarter 2000
[CHART]
<TABLE>
<CAPTION>
BY PRODUCT
<S> <C>
Magazines 30%
Retail inserts 16%
Catalogs 16%
Specialty Printing and Direct Mail 16%
Books 13%
Directories 5%
Pre-media and other value-added services 4%
</TABLE>
[CHART]
<TABLE>
<CAPTION>
BY GEOGRAPHIC SEGMENT
<S> <C>
United States 69%
Canada 15%
Europe 14%
Latin America 2%
</TABLE>
[CHART]
<TABLE>
<CAPTION>
Operating Margins
First Quarter
<S> <C>
1997 5.7%
1998 5.7%
1999 6.2%
2000 8.5%
</TABLE>
[CHART]
<TABLE>
<CAPTION>
Earnings Per Share
First Quarter
<S> <C>
1997 $ 0.15
1998 $ 0.16
1999 $ 0.18
2000 $ 0.24
</TABLE>
[CHART]
<TABLE>
<CAPTION>
Cash Earnings Per Share
First Quarter
<S> <C>
1997 $ 0.17
1998 $ 0.19
1999 $ 0.21
2000 $ 0.35
</TABLE>
Page 13 of 15
11
<PAGE>
QUE-NET MEDIA
Quebecor World's new subsidiary, Que-Net Media, brings together the full range
of the Company's digital and pre-media assets. By focusing on the growing area
of pre-media services for both print and digital content, we will offer a more
comprehensive range of solutions to our customers.
At Quebecor World's Annual Shareholders Meeting, held April 25, 2000, Que-Net
Media demonstrated the many features and benefits of a totally digital
workflow: flexibility, speed, choice, connectivity and convergence.
Through Que-Net Media, Quebecor World's current network of digital and
conventional photography studios will be expanded. A series of new, high
technology Customer Solutions Centers will be established in Toronto, Chicago,
New York and Los Angeles.
[GRAPHIC]
DIGITAL IMAGE CAPTURE
High-quality digital cameras are used by expert photographers to create images
for customer promotions.
[GRAPHIC]
DIGITAL IMAGE PROCESSING
Skilled operators color correct and manipulate images to suit customer
communication goals.
[GRAPHIC]
CONTENT MANAGEMENT
This includes the cataloging and management of customers' digital assets to
facilitate their repurposing to any number of distribution channels.
[LOGO]
QUEBECOR WORLD HEAD OFFICE
612 St. Jacques Street, Montreal, Quebec, Canada H3C 4M8
Tel.: (514) 954-0101 (800) 567-7070 Fax: (514) 954-9624
www.quebecorworld.com
Page 14 of 15
<PAGE>
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: JUNE 5, 2000
PAGE 15 OF 15
