<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 2000
-------------------------------------------------------
Commission file number 1 - 8014
--------------------------------------------------------
MOORE CORPORATION LIMITED
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
ONTARIO, CANADA 98-0154502
- --------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1 First Canadian Place, Toronto, Ontario, Canada M5X 1G5
- ------------------------------------------------------ --------------
(Address of principal executive offices) (Zip Code)
416 - 364-2600
- --------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No___.
The number of common shares without par value outstanding as of April 17, 2000
was 88,456,940.
1
<PAGE>
PART I - FINANCIAL INFORMATION
Note: Unless otherwise indicated by the designation "Canadian" or "Cdn.", all
dollar amounts in this Form are expressed in United States currency.
ITEM 1. FINANCIAL STATEMENTS
The consolidated financial statements of Moore Corporation Limited for the
three months ended March 31, 2000 and 1999 appear in the Interim Report to
Shareholders for the three months ended March 31, 2000 and are incorporated
herein by reference.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's discussion and analysis of financial condition and results of
operations appears in the Interim Report to Shareholders for the three
months ended March 31, 2000 and is incorporated herein by reference.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Corporation knows of no material legal proceedings to which Moore is
party or to which Moore's property is subject.
ITEM 2. CHANGES IN SECURITIES
There have been no changes in the registered securities of the Corporation.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The Corporation is not in default with respect to any senior securities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There have been no matters submitted to a vote of security holders.
ITEM 5. OTHER INFORMATION
The Corporation has no other information to report.
2
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT # DESCRIPTION LOCATION
--------- ----------- --------
<S> <C> <C>
2 Plan of acquisition, reorganization,
arrangement, liquidation and succession Not applicable
4 Instruments defining the rights of
security holders, including indentures Not applicable
10 Material contracts Not applicable
11 Statement re: computation of per share
earnings Page 5
15 Letter re: unaudited interim financial
information Not applicable
18 Letter re: change in accounting principles Not applicable
19 Report furnished to security holders
22 Published report regarding matters
submitted to vote of security holders Not applicable
23 Consents of experts and counsel Not applicable
24 Power of attorney Not applicable
27 Financial data schedule Not applicable
99 Additional exhibits Not applicable
</TABLE>
(b) Reports of Form 8-K:
Press release announcing preliminary update on first quarter results
was filed on March 20, 2000.
3
<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.
MOORE CORPORATION LIMITED
-------------------------
(Registrant)
APRIL 27, 2000 s/b M.S. ROUSSEAU
- -------------- ----------------------------------------
(Date) M.S. Rousseau, Senior Vice President
and Chief Financial Officer
APRIL 27, 2000 s/b J.M. WILSON
- -------------- ---------------------------------------
(Date) J.M. Wilson, Vice President and Secretary
4
<PAGE>
EXHIBIT 11
MOORE CORPORATION LIMITED
CALCULATION OF EARNINGS PER SHARE
UNDER UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
<TABLE>
<CAPTION>
Three months ended
March 31
------------------------------------
2000 1999
---------------- ----------------
<S> <C> <C>
Net earnings (loss) as determined
under United States generally
accepted accounting principles (1) $ (6,098,000) $ 5,879,000
================ ================
Weighted average number of
shares outstanding
- Basic 88,456,940 88,456,940
- Diluted 88,966,373 88,901,508
Earnings (loss) per share
- Basic $ (0.07) $ 0.07
================ ================
- Diluted $ (0.07) $ 0.07
================ ================
</TABLE>
(1) Refer to Note 2 to the Consolidated Financial Statements included in
the Interim Report to the Shareholders.
5
<PAGE>
MOORE
CORPORATION LIMITED
Interim Report
TO SHAREHOLDERS
FOR THE THREE MONTHS
ENDED MARCH 31, 2000
www.moore.com
MOORE-Registered Trademark-
<PAGE>
CORPORATE
VISION
Moore Corporation Limited will be a high-growth, technology-based leader
in the management and communication of customer information, thereby creating
value for customers, employees and shareholders.
MESSAGE FROM
THE CEO
While the first quarter results were unsatisfactory, I have confidence in
the strategic direction we are taking. The loss is attributable to the
performance of the Corporation's Forms and Labels division, due in part to
customers purchasing product in December 1999 in anticipation of Y2K problems.
We are addressing the financial situation by improving our processes and
expanding our product and service offerings. I am pleased with the financial
performance of the remaining Moore divisions.
A key component of our growth strategy is becoming a leader in delivering
digital information services. In the first quarter we announced alliances with
Noosh Inc. and Impress to provide Internet-based e-commerce solutions for our
customers to order, track and fulfill commercial printing. This is consistent
with our December announcement of an alliance with Commerce One to automate
e-procurement for our customers.
FINANCIAL
HIGHLIGHTS
FOR THE THREE MONTHS
ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
Sales $ 577 $ 609
Income (loss) (9) 14
from operations
Net earnings (loss) (9) 10
Per common share
Net earnings $ (0.10) $ 0.11
Dividends $ 0.05 $ 0.05
Average shares 88,457 88,457
outstanding (thousands)
</TABLE>
EXPRESSED IN UNITED STATES CURRENCY AND, EXCEPT PER SHARE AMOUNTS, IN MILLIONS
OF DOLLARS.
2
<PAGE>
LETTER TO
SHAREHOLDERS
OPERATING RESULTS DISCUSSION
Highlights of the consolidated results reported for the first quarter of
2000 and 1999 are shown in the accompanying consolidated statement of earnings
on pages 8 and 9 of this interim report.
In order to provide a more meaningful comparison of the first quarter 2000
(Q1-2000) results to first quarter 1999 (Q1-1999) results, the Corporation has
identified transactions that affect the two quarters in a disproportionate
manner. These are divestitures, Year 2000 costs and other one-time transactions.
These items have been removed from the operating results of the affected quarter
as follows:
- - The Q1-1999 operating results of the Data Management Services business unit
sold in December 1999 with sales of $19.2 million and operating income of
$0.5 million.
- - The Q1-1999 Year 2000 costs of $5.3 million.
- - The Q1-2000 restructuring expenses of $1.5 million incurred as a result of
the change in accounting policy explained in notes 1 and 4 on pages 13 and 18
of this interim report.
All further discussions will be based on the Corporation's operating
results net of the above mentioned items.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
Presented net of above
noted items
- ---------------------------------------------------------------------
FOR THE THREE MONTHS ENDED MARCH 31 2000 1999
<S> <C> <C>
Sales:
Moore North America $ 360.3 $ 388.2
CCS United States 131.5 121.7
Latin America 43.9 38.0
Europe 41.2 41.8
- ---------------------------------------------------------------------
$ 576.9 $ 589.7
- ---------------------------------------------------------------------
Income (loss) from operations:
Moore North America $ (21.0) $ 3.8
CCS United States 11.8 14.8
Latin America 1.5 (0.7)
Europe 0.2 0.7
General corporate (0.2) (0.3)
- ---------------------------------------------------------------------
(7.7) 18.3
- ---------------------------------------------------------------------
NET EARNINGS (LOSS) $ (7.9) $ 12.4
- ---------------------------------------------------------------------
NET EARNINGS (LOSS)
PER COMMON SHARE $ (0.09) $ 0.14
- ---------------------------------------------------------------------
</TABLE>
EXPRESSED IN UNITED STATES CURRENCY AND, EXCEPT PER SHARE AMOUNTS, IN MILLIONS
OF DOLLARS.
Sales in Q1-2000 of $576.9 million decreased by 2.2% over Q1-1999 sales of
$589.7 million.
- - Forms sales in Q1-2000 of $384.9 million decreased by $25.1 million or 6.1%
compared to $410.0 million in Q1-1999. Included in the Forms sales are Labels
and Label Systems of $114.9 million in Q1-2000 compared to $113.5 million in
Q1-1999.
- - CCS sales in Q1-2000 of $192.0 million increased by 6.8% from $179.7 million
in Q1-1999.
Loss from operations in Q1-2000 was $7.7 million compared to income from
operations in Q1-1999 of $18.3 million.
- - Forms operating loss in Q1-2000 of $20.8 million increased from an operating
loss of $0.3 million in Q1-1999.
- - CCS operating income in Q1-2000 of $13.1 million decreased by $5.5 million
from $18.6 million in Q1-1999.
Net loss in Q1-2000 was $7.9 million or $0.09 loss per share compared
to net earnings of $12.4 million or $0.14 per share in Q1-1999.
3
<PAGE>
Cash outflow from operations for the Q1-2000 period was $30.4 million
compared to $7.0 million for the Q1-1999 period. Cash resources decreased
from $25.1 million at December 31, 1999 to bank indebtedness of $0.5 million
at March 31, 2000. The cash was used to fund operating losses, capital
expenditures of $19.3 million and is partially offset by the $24.0 million of
cash proceeds received from the sale of the Lake Forest facility.
The Corporation is currently conducting an internal review of its
Enterprise Resource Planning (ERP) system with the objective of maximizing
benefit realization in the most timely manner possible. The Corporation
continues to expect transaction and other costs to be reduced in line with our
original expectations once the ERP system is fully implemented. As part of this
review process, the Corporation has decided to postpone deployment of a
component of its ERP for its US-based manufacturing facilities because, at
present, incremental costs are not offset by sufficient tangible benefits.
As the ERP review is completed over the next six months, decisions may be
made to change other deployment plans or processes, which could result in a
material reduction to the carrying value of the ERP asset. The Corporation's
objective is to realize significant benefits at the lowest possible annual
incremental operating cost structure. As previously disclosed, we expect that
these benefits will start to be realized in 2001.
MOORE NORTH AMERICA
North American sales in Q1-2000 have decreased by $27.9 million compared
to Q1-1999. The decrease is attributable to the higher than expected revenue
shift resulting from customers building up forms inventories in December 1999 in
anticipation of potential Year 2000 problems, the Corporation's strategy to exit
low margin accounts and delays in implementing certain major contracts.
Operating loss in Q1-2000 was $21.0 million compared to operating income
of $3.8 million in Q1-1999. The revenue shortfall, coupled with the incremental
costs associated with maintaining redundant Information Technology (IT) systems
as the Corporation implements the enterprise-wide information system and the
investment necessary to launch the Forms businesses' digital and Internet
strategies have resulted in the Q1-2000 operating losses.
CCS UNITED STATES
CCS US sales in Q1-2000 of $131.5 million have increased by $9.8 million
compared to Q1-1999 sales of $121.7 million. This is credited to increased
volumes in Response Marketing Services (RMS) and Phoenix Group (Phoenix)
businesses. The legislative changes contained in the "Deceptive Mail Prevention
and Enforcement Act" has continued to affect the sweepstakes industry; however,
RMS has actively pursued new opportunities to replace these lost volumes and is
starting to show positive operating results. These increases are partially
offset by the exiting of several unprofitable accounts in the loyalty card
market segment reducing Q1-2000 sales by $2.8 million in the Business
Communication Services business.
Operating income has decreased by $3.0 million compared
to Q1-1999. Operating income has been affected by the ramp up costs associated
with new product line ventures that have yet to generate positive operating
results, incremental costs associated with maintaining redundant IT systems as
the ERP system is implemented and strategic investments to reposition certain
product and service offerings.
LATIN AMERICA
Segment sales and operating income have improved by $5.9 million and $2.2
million, respectively, compared to Q1-1999. The improvements were a direct
result of higher volumes in Mexico and Brazil and the implementation of more
reliable and efficient label presses. Future efforts will be directed towards
building on the
4
<PAGE>
achieved sales improvement and continuing the implementation of cost control
measures.
EUROPE
Sales in Europe have decreased by $0.6 million from Q1-1999 amounts of
$41.8 million. The decrease is primarily a result of unfavorable foreign
exchange fluctuations, a decision by a major customer to postpone certain
programs and partially offset by increased volumes in the Colleagues business
unit.
Operating income in Q1-2000 decreased by $0.5 million when compared to
Q1-1999. Europe is continuing to exit low profit generating accounts and is
implementing specific cost containment measures, as well as completing
manufacturing rationalization activities in France.
ECONOMIC VALUE ADDED(R) (EVA)
As a result of the financial results in the first quarter, Moore did not
meet its EVA improvement target for the first quarter of 2000.
ESTIMATED OUTLOOK
The Corporation believes that overall continued weakness in the
paper-based forms industry in the second quarter will continue to be compounded
by the costs associated with Moore North America's initiatives to improve sales
processes, expand product and service offerings and deploy digital and Internet
strategies. Consequently, the Corporation expects that its revenue, operating
loss and loss per share in the second quarter will be consistent with the first
quarter.
In response to the first quarter and expected second quarter results, a
$30 million cost reduction program to reduce administrative costs has been
launched. Management expects these strategic and cost reduction initiatives will
begin to contribute to results in the second half of the year. The majority of
the remaining Moore divisions performed at expected levels and are expected to
continue to meet targets. Based on these expectations for a stronger second
half, management believes that normalized revenue will increase by up to 5% in
2000 and that normalized operating income (utilizing a 1999 base of $91 million)
will be at approximately the same level as last year.
MANAGEMENT CHANGES
On January 11, 2000 John V. Laurie joined Moore as Vice President and
Treasurer.
On March 21, 2000 Gary W. Ampulski, formerly President of Moore's Business
Communication Services unit, was promoted to President, Moore North America and
Bruce D'Angelo, was named President, Moore's Business Communication Services
unit.
On May 1, 2000, Thomas T. McKiernan, after 39 years of service with Moore,
is retiring as Executive Vice President. We thank him for his many contributions
to Moore.
DIVIDEND
On April 27, 2000 the Board of Directors declared a quarterly dividend
of 5(cent) per common share payable in United States funds on July 5, 2000 to
shareholders of record on June 2, 2000.
/s/ Tom Kierans /s/ Ed Tyler
- ---------------------- ----------------------
THOMAS E. KIERANS W. ED TYLER
Chairman of the Board President and Chief
Executive Officer
April 27, 2000
5
<PAGE>
CONSOLIDATED BALANCE SHEET
EXPRESSED IN UNITED STATES CURRENCY
IN THOUSANDS OF DOLLARS
<TABLE>
<CAPTION>
March 31 December 31
2000 1999
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and short-term securities $ 44,833 $ 38,179
Accounts receivable 427,704 477,083
Inventories:
Raw material 44,611 42,653
Work in process 15,497 15,918
Finished goods 124,194 120,095
Prepaid expenses 32,080 23,930
Deferred income taxes 38,247 33,002
----------- -----------
Total current assets 727,166 750,860
----------- -----------
Property, plant and equipment:
Cost 1,177,468 1,199,822
Less: Accumulated depreciation 740,470 741,014
----------- -----------
436,998 458,808
----------- -----------
Goodwill 157,680 156,867
Deferred income taxes and other assets 570,066 263,758
----------- -----------
Total assets $1,891,910 $1,630,293
----------- -----------
LIABILITIES
Current liabilities:
Bank loans $ 45,331 $ 13,086
Accounts payable and accruals 436,986 533,010
Deferred income taxes 524 -
Short-term debt 64,067 40,140
Dividends payable 4,423 4,423
Income taxes 14,424 31,805
----------- -----------
Total current liabilities 565,755 622,464
Long-term debt 205,233 201,686
Deferred income taxes and liabilities 411,380 118,888
Minority interests 15,288 14,581
----------- -----------
Total liabilities 1,197,656 957,619
----------- -----------
SHAREHOLDERS' EQUITY
Common shares 310,881 310,881
Unrealized foreign currency translation adjustments (119,106) (118,256)
Retained earnings 502,479 480,049
----------- -----------
694,254 672,674
----------- -----------
Total liabilities and shareholders' equity $1,891,910 $1,630,293
----------- -----------
</TABLE>
6 & 7
<PAGE>
CONSOLIDATED STATEMENT OF EARNINGS
EXPRESSED IN UNITED STATES CURRENCY AND,
EXCEPT EARNINGS PER SHARE, IN THOUSANDS OF DOLLARS
<TABLE>
<CAPTION>
Three months ended
March 31
2000 1999
--------- ----------
<S> <C> <C>
Sales $ 576,864 $ 608,928
--------- ----------
Cost of sales 404,082 413,445
Selling, general and administrative expenses 147,650 148,812
--------- ----------
Provision for restructuring costs 1,532 -
Capital asset amortization 27,378 27,327
--------- ----------
Research and development expense 5,436 5,796
--------- ----------
586,078 595,380
--------- ----------
Income (loss) from operations (9,214) 13,548
Investment and other income 8 2,377
--------- ----------
Interest expense 5,775 4,835
--------- ----------
(14,981) 11,090
--------- ----------
Income taxes (6,445) 1,268
Minority interests 349 143
--------- ----------
Net earnings (loss) $ (8,885) $ 9,679
--------- ----------
Earnings (loss) per share $ (0.10) $ 0.11
--------- ----------
</TABLE>
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
EXPRESSED IN UNITED STATES CURRENCY
IN THOUSANDS OF DOLLARS
<TABLE>
<CAPTION>
Three months ended Year ended
March 31 December 31
2000 1999
----------- ----------
<S> <C> <C>
Balance, beginning $ 480,049 $ 405,142
Change in accounting policy:
----------- ----------
Income taxes (note 1) 2,443 -
Employee future benefits (note 1) 33,295 -
----------- ----------
Balance, beginning restated 515,787 405,142
Net earnings (loss) (8,885) 92,599
Dividends 20(cent)per share 4,423 17,692
----------- ----------
Balance, ending $ 502,479 $ 480,049
----------- ----------
</TABLE>
8 & 9
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
EXPRESSED IN UNITED STATES CURRENCY
IN THOUSANDS OF DOLLARS
<TABLE>
<CAPTION>
Three months ended March 31
2000 1999
---------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings (loss) $ (8,885) $ 9,679
Items not affecting cash resources 34,371 29,836
Increase in working capital other
than cash resources (55,853) (46,522)
---------- ---------
Total $ (30,367) $ (7,007)
---------- ---------
INVESTING ACTIVITIES
Expenditure for property, plant and equipment $ (19,335) $ (14,215)
Sale of property, plant and equipment 24,377 2,203
Acquisition of businesses (1,267) (4,828)
Software expenditures (12,395) (14,874)
Other (4,129) (7,749)
---------- ---------
Total $ (12,749) $ (39,463)
---------- ---------
FINANCING ACTIVITIES
Dividends $ (4,423) $ (4,423)
Addition to debt 40,401 200,091
Reduction in debt (16,333) (202,210)
Other (2,270) -
---------- ---------
Total $ 17,375 $ (6,542)
---------- ---------
---------- ---------
Decrease in cash resources before
unrealized exchange adjustments $ (25,741) $ (53,012)
Unrealized exchange adjustments 150 53
---------- ---------
Decrease in cash resources (25,591) (52,959)
Cash resources at beginning of year(1) 25,093 130,971
---------- ---------
Cash resources at end of period(1) $ (498) $ 78,012
---------- ---------
(1) Cash resources are defined as cash and short-term securities less bank
loans.
OTHER CASH FLOW DISCLOSURES
Interest paid $ 5,979 $ 4,441
Income taxes paid $ 1,200 $ 5,741
---------- ---------
</TABLE>
10 & 11
<PAGE>
NOTES
EXPRESSED IN UNITED STATES CURRENCY AND, EXCEPT PER SHARE AMOUNTS, IN THOUSANDS
OF DOLLARS
1. CHANGES IN ACCOUNTING POLICIES
CICA SECTION 3465 ACCOUNTING FOR INCOME TAXES
Effective January 1, 2000, the Corporation changed its method of
accounting for income taxes from the tax allocation basis (deferral
method), which related income taxes to the accounting income for the year,
to the liability method of tax allocation as required by the Canadian
Institute of Chartered Accountants' Section 3465. The liability method
records future tax assets and liabilities which reflect the net tax
effects of temporary differences between carrying amounts for financial
reporting purposes and the amounts used for tax purposes.
The cumulative effect of this change, as of January 1, 2000,
excluding the effect of the change in accounting policy for Employee
Future Benefits noted on page 13 of this interim report, resulted in the
following:
- an increase in current assets of $7,704,
- an increase in long term assets of $62,138,
- an increase in current liabilities of $672,
- an increase in long term liabilities by $66,727 and
- an increase in opening retained earnings of $2,443.
As permitted under the new standard, prior year financial
statements were not restated; however, the effect was applied
retroactively as an adjustment to opening retained earnings.
No provision has been made for taxes on undistributed earnings of
subsidiaries not currently available for paying dividends as such earnings
have been reinvested in the business.
The new Canadian standard, as described above, has eliminated all
current differences with United States GAAP, SFAS No. 109.
12
<PAGE>
CICA SECTION 3461 EMPLOYEE FUTURE BENEFITS
Effective January 1, 2000, the Corporation changed its method of
accounting for post retirement benefits other than pensions. Under past
Canadian standards, the Corporation recognized the cost of these benefits
as an expense when paid. The new standard requires that the expected costs
of the employees' post retirement benefits be expensed during the years
that the employees render services to the Corporation. In addition, the
new standard changes the accounting for recognition of involuntary
termination benefits. For accrual purposes, the new standard requires that
benefit arrangements are communicated to employees in sufficient detail to
enable them to determine the type and amount of benefits they will receive
when their employment is terminated. Past Canadian standards did not
require this condition and included in the Corporation's 1998
restructuring charge were special termination benefits not yet
communicated to employees.
The cumulative effect of this change, as of January 1, 2000,
resulted in the following:
- an increase of assets by $231,946,
- an increase in liabilities by $198,651 and
- an increase in opening retained earnings by $33,295.
As permitted under the new standard, prior year financial
statements were not restated; however, the effect was applied
retroactively as an adjustment to opening retained earnings.
The transitional rules for implementing this new Canadian
standard have resulted in a United States GAAP reporting difference. In
implementing the new Canadian standard, the retained earnings effect
included the cumulative effect of the unamortized past service costs,
actuarial gains and losses and other transition amounts. Under United
States GAAP these amounts will continue to be amortized into income over
the expected average remaining service life of the employee group.
13
<PAGE>
2. UNITED STATES GAAP
<TABLE>
<CAPTION>
Three months ended
March 31
2000 1999
---------- ---------
<S> <C> <C>
Net earnings (loss) as reported $ (8,885) $ 9,679
Decreased pension expense 1,691 891
Decreased post retirement benefits 3,719 746
Reengineering costs (800) (495)
Reduced (increased) termination liabilities - (8,980)
Reduced income taxes (1) (1,823) 4,038
---------- ---------
Net earnings (loss) as determined under U.S. GAAP $ (6,098) $ 5,879
---------- ---------
Earnings (loss) per share:
Basic earnings (loss) per share $ (0.07) $ 0.07
Diluted earnings (loss) per share $ (0.07) $ 0.07
Average shares outstanding (in thousands) 88,457 88,457
---------- ---------
Comprehensive income:
Net earnings (loss) as determined under U.S. GAAP $ (6,098) $ 5,879
Other comprehensive income (loss):
Foreign currency translation adjustment (850) (12,470)
Unrealized gains on available-for-sale securities 5,763 -
---------- ---------
Total comprehensive loss $ (1,185) $ (6,591)
---------- ---------
(1) SFAS No. 109 income tax adjustments $ - $ 942
---------- ---------
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 2000 December 31, 1999
Balance sheet items: AS REPORTED U.S.GAAP As reported U.S.GAAP
<S> <C> <C> <C> <C>
----------- --------- ----------- ---------
Net pension liability (asset) $(256,570) $ (29,697) $ (22,323) $ (30,140)
Other assets - computer software (146,925) (98,838) (139,032) (91,745)
Post retirement benefit cost liability 233,869 422,709 - 426,511
Deferred income taxes asset - long term (48,203) (210,640) (33,002) (260,635)
Deferred income taxes liability - long term 106,493 75,760 24,439 91,736
Accounts payable and accruals 436,986 430,986 533,010 459,045
Unrealized foreign currency translation adjustments (119,106) (83,922) (118,256) (83,072)
Retained earnings 502,479 202,664 480,049 213,185
----------- --------- ----------- ---------
</TABLE>
14 & 15
<PAGE>
NOTES (CONT'D)
3. SEGMENTED INFORMATION
<TABLE>
<CAPTION>
For the three months Moore CCS Latin
ended March 31 North America United States America Europe Consolidated
- ----------------------- ------------- ------------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
2000
Total revenue $ 364,129 $131,749 $43,850 $ 41,238 $ 580,966
Intersegment revenue (3,820) (282) - - (4,102)
------------- ------------- -------- -------- ------------
Sales to customers outside the enterprise $ 360,309 $131,467 $43,850 $ 41,238 $ 576,864
------------- ------------- -------- -------- ------------
Segment operating profit (loss) $ (22,187) $ 11,553 $ 1,430 $ 193 $ (9,011)
------------- ------------- -------- --------
General corporate expenses (203)
------------
Loss from operations $ (9,214)
------------
Segment assets $1,258,692 $165,874 $95,381 $130,068 $1,650,015
------------- ------------- -------- --------
Corporate assets including investments 241,895
------------
Total assets $1,891,910
------------
Provisions for restructuring costs $ 1,222 $ 218 $ 48 $ 44 $ 1,532
------------- ------------- -------- -------- ------------
Capital asset amortization $ 16,414 $ 7,252 $ 1,621 $ 2,091 $ 27,378
------------- ------------- -------- -------- ------------
Capital expenditures $ 9,855 $ 5,300 $ 1,342 $ 2,838 $ 19,335
------------- ------------- -------- -------- ------------
1999
Total revenue $ 394,811 $141,033 $37,954 $ 41,786 $ 615,584
Intersegment revenue (6,569) (87) - - (6,656)
------------- ------------- -------- -------- ------------
Sales to customers outside the enterprise $ 388,242 $140,946 $ 37,954 $ 41,786 $ 608,928
------------- ------------- -------- -------- ------------
Segment operating profit (loss) $ (1,491) $ 15,349 $ (731) $ 673 $ 13,800
------------- ------------- -------- --------
General corporate expenses (252)
------------
Income from operations $ 13,548
------------
Segment assets $ 790,170 $290,458 $95,848 $139,998 $1,316,474
------------- ------------- -------- --------
Corporate assets including investments 351,268
------------
Total assets $1,667,742
------------
Capital asset amortization $ 14,709 $ 8,717 $ 1,503 $ 2,398 $ 27,327
------------- ------------- -------- -------- ------------
Capital expenditures $ 6,449 $ 4,422 $ 1,433 $ 1,911 $ 14,215
------------- ------------- -------- -------- ------------
</TABLE>
16 & 17
<PAGE>
4. PROVISION FOR RESTRUCTURING COSTS
In 1998, the Corporation incurred a pre-tax charge of $615
million, $531 million after tax, related to a restructuring plan directed
at reducing costs and restoring profitability to the Forms business, and
increasing profitability of the Customer Communication Services
businesses. The key restructuring actions include the integration of North
American operations, the disposal of non-strategic assets, and exiting of
certain unprofitable products.
In the fourth quarter of 1999, the Corporation reversed $68
million of charges, $48 million after tax, under the 1998 restructuring
plan. The reversal was primarily the result of: the favourable settlement
of liabilities for obligations and future payments related to the
disposition of the European and Australasia Forms businesses; negotiated
costs to exit customer contracts and lease agreements under several
actions were lower than originally planned; the decision to sell rather
than restructure the Moore Data Management Services business; and the
decision to not fully implement certain restructuring actions under the
plan, including the sale of certain North American businesses.
As a result of CICA Section 3461 - Employee Future Benefits (note
1 on page 13 of this interim report), $68 million of termination
liabilities, $46 million after tax, accrued under the 1998 restructuring
program were reversed into retained earnings. In the current period, $1.5
million of these termination liabilities were communicated to employees
and were charged to current earnings.
Included in the balance sheet at March 31, 2000 are accounts
payable and accruals of $60.8 million and deferred income taxes and
liabilities of $23.4 million related to the restructuring program. The
carrying value of remaining assets held for disposal as at March 31, 2000
is $9.4 million. Included in the Corporation's results of operations for
the three months ended March 31 are sales of $10.5 million (1999 - $10.1
million) and income from operations of $0.6 million (1999 - $0.2 million
loss) from businesses to be exited under the restructuring program.
Approximately 4,026 employees have left the Corporation as a
result of restructuring actions implemented to date, representing 2,600
due to divestitures and 1,426 from other restructuring activities.
5. CAPITALIZED SOFTWARE
The Corporation's capitalized software costs, on a consolidated
basis, as at March 31, 2000 is $147 million. The Corporation is currently
conducting an internal review of its Enterprise Resource Planning (ERP)
system with the objective of maximizing benefit realization in the most
timely manner possible. As part or this review process, the Corporation
has decided to postpone deployment of a component of its ERP for its
US-based manufacturing facilities. As the ERP review is completed over the
next six months, decisions may be made to change other deployment plans or
processes, which could result in a material reduction to the carrying
value of the ERP asset that cannot be readily determined at this time.
6. COMPARATIVE CONSOLIDATED FINANCIAL STATEMENTS
Comparative figures have been restated where appropriate to
conform to the current presentation.
18
<PAGE>
CORPORATE INFORMATION
SHAREHOLDER ACCOUNT INQUIRIES
Montreal Trust Company of Canada operates a telephone inquiry
line that can be reached by dialing toll-free 1-800-663-9097 or (416)
981-9633. Correspondence should be addressed to: Moore Corporation
Limited, c/o Montreal Trust Company of Canada, 8th Floor, 150 Front Street
West, Toronto, Ontario M2J 2N1. Shareholders can also e-mail Montreal
Trust at faq@montreal trust.com or visit their web page at www.montreal
trust.com.
DIVIDENDS
Shareholders are reminded of the flexibility available on payment
of the Corporation's dividends. While the Corporation's dividends are
declared payable in United States funds, registered shareholders have the
option of receiving dividends in equivalent Canadian funds, or
participating in the Dividend Reinvestment and Share Purchase Plan. The
Dividend Reinvestment Option allows shareholders to reinvest dividends
automatically in additional shares of the Corporation. The Share Purchase
Option provides shareholders a means to purchase shares by making cash
payments. Further information regarding these options is available from
Montreal Trust Company of Canada, or the Corporation.
INVESTOR RELATIONS
Institutional and individual investors seeking financial
information about the Corporation are invited to contact John Laurie, Vice
President and Treasurer at the Corporate Office.
MANAGEMENT'S STATEMENT
The financial information included in this report is unaudited,
but in the opinion of management it reflects all adjustments that are
necessary for a fair presentation of the financial position, results of
operations and changes in cash flows for the interim periods.
FORWARD LOOKING STATEMENT
This interim report contains statements relating to future results of
the Corporation (including certain anticipated, planned, forecasted, expected,
targeted, believed and estimated results and the Corporation's outlook
concerning future results) that are "forward-looking statements" as defined in
the U.S. Private Securities Litigation Reform Act of 1995. Readers are cautioned
not to place undue reliance on these forward-looking statements and any such
forward-looking statements are qualified in their entirety by reference to the
following cautionary statements. All forward-looking statements speak only as of
the date hereof and are based on current expectations and involve a number of
assumptions, risks and uncertainties that could cause the actual results to
differ materially from such forward-looking statements. Factors that could cause
such material differences include, without limitation, the following: the
successful completion of the restructuring program announced in 1998 within the
time frame anticipated to execute the respective restructuring actions and
achieving the associated benefits, the successful implementation of the cost
reduction program that commenced in the final quarter of 2000, the successful
implementation of the ERP system within anticipated time frames and achieving
associated benefits, the effects of paper price fluctuations on the
Corporation's Forms operations, successful execution of key strategies
(including the digital and Internet strategies), the rate of migration from
paper-based forms to digital formats, maintenance of growth rates in Customer
Communication Services businesses, the impact of currency fluctuations in the
countries in which the Corporation operates, general economic and other factors
beyond the Corporation's control, and other assumptions, risks and uncertainties
described from time to time in the Corporation's periodic filings with
Securities Regulators.
19
<PAGE>
[MOORE LOGO]
Moore Corporation Limited
1 First Canadian Place
P.O. Box 78
Toronto, Ontario
M5X 1G5
Internet: http://www.moore.com
Tel: (416) 364-2600
Fax: (416) 364-1667
[LOGO]
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waste, with environmentally friendly vegetable inks.
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