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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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<C> <S>
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
</TABLE>
FOR THE QUARTERLY PERIOD ENDED APRIL 1, 2000 COMMISSION FILE NUMBER 1-11802
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QUEBECOR WORLD (USA) INC.
(Formerly known as World Color Press, Inc.)
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 37-1167902
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
THE MILL, 340 PEMBERWICK ROAD 06831
Greenwich, Connecticut (Zip Code)
(Address of principal executive offices)
</TABLE>
203-532-4200
(Registrant's telephone number, including area code)
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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 / /
At May 5, 2000, ten shares of the registrant's common stock, $1.00 par
value, were outstanding.
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QUEBECOR WORLD (USA) INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED APRIL 1, 2000
INDEX
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PAGE
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PART I. FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets as of April 1, 2000
and December 31, 1999................................... 3
Condensed Consolidated Statements of Operations for the
Three Months Ended April 1, 2000 and March 28, 1999..... 4
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended April 1, 2000 and March 28, 1999..... 5
Notes to Condensed Consolidated Financial Statements...... 6-8
Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 9-10
PART II. OTHER INFORMATION.................................. 11
</TABLE>
2
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PART I. FINANCIAL INFORMATION
QUEBECOR WORLD (USA) INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
APRIL 1, 2000 AND DECEMBER 31, 1999
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
APRIL 1, DECEMBER 31,
2000 1999
----------- ------------
(UNAUDITED) (NOTE)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 15,571 $ 47,383
Accounts receivable--net.................................. 233,229 270,399
Inventories............................................... 230,241 230,716
Deferred income taxes..................................... 45,890 47,990
Other..................................................... 41,640 40,226
---------- ----------
Total current assets.................................. 566,571 636,714
Property, plant and equipment, at cost.................... 1,718,118 1,708,008
Accumulated depreciation and amortization................. (862,008) (830,010)
---------- ----------
Property, plant and equipment--net...................... 856,110 877,998
Goodwill--net............................................. 788,800 793,011
Other..................................................... 76,484 68,398
---------- ----------
TOTAL ASSETS................................................ $2,287,965 $2,376,121
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses..................... $ 316,432 $ 332,176
Payables to related parties............................... 14,931 7,380
Current maturities of long-term debt...................... 29,173 6,090
---------- ----------
Total current liabilities............................. 360,536 345,646
Long-term debt............................................ 1,182,719 1,285,106
Deferred income taxes..................................... 63,587 62,687
Other long-term liabilities............................... 121,555 133,357
---------- ----------
Total liabilities..................................... 1,728,397 1,826,796
---------- ----------
STOCKHOLDERS' EQUITY:
Common stock, $1.00 par value--3,000 shares authorized;
10 shares outstanding................................... -- --
Additional paid-in capital................................ 701,893 701,893
Capital contribution from Printing Acquisition Inc. ...... 118,773 118,773
Accumulated deficit....................................... (261,098) (271,341)
---------- ----------
Total stockholders' equity............................ 559,568 549,325
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................. $2,287,965 $2,376,121
========== ==========
</TABLE>
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Note: Derived from audited consolidated financial statements.
See notes to condensed consolidated financial statements.
3
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QUEBECOR WORLD (USA) INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED APRIL 1, 2000 AND MARCH 28, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
-------------------
2000 1999
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<S> <C> <C>
Net sales................................................... $661,879 $605,843
Cost of sales............................................... 549,499 507,807
-------- --------
Gross profit................................................ 112,380 98,036
Selling, general and administrative expenses................ 66,914 56,535
-------- --------
Operating income............................................ 45,466 41,501
Interest expense and securitization fees.................... 28,099 23,909
-------- --------
Income before income taxes, extraordinary items and
cumulative effect of change in accounting principle....... 17,367 17,592
Income tax provision........................................ 7,124 7,213
-------- --------
Income before extraordinary items and cumulative
effect of change in accounting principle.................. 10,243 10,379
Extraordinary items, net of tax............................. -- (11,992)
Cumulative effect of change in accounting principle, net of
tax....................................................... -- (10,513)
-------- --------
Net income (loss)........................................... $ 10,243 $(12,126)
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
4
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QUEBECOR WORLD (USA) INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED APRIL 1, 2000 AND MARCH 28, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
--------------------
2000 1999
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<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)......................................... $ 10,243 $ (12,126)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization........................... 39,912 38,276
Extraordinary items, net of tax......................... -- 11,992
Cumulative effect of change in accounting principle, net
of tax................................................ -- 10,513
Deferred income tax provision........................... 3,000 2,463
Changes in operating assets and liabilities:
Accounts receivable--net.............................. 37,170 48,942
Inventories........................................... 475 3,138
Accounts payable, accrued expenses and payables to
related parties..................................... (8,193) 32,520
Other assets and liabilities--net..................... (20,306) (20,584)
-------- ---------
Net cash provided by operating activities........... 62,301 115,134
-------- ---------
INVESTING ACTIVITIES:
Additions to property, plant and equipment--net......... (14,809) (24,993)
Acquisitions of businesses, net of cash acquired........ -- (73,512)
-------- ---------
Net cash used in investing activities............... (14,809) (98,505)
-------- ---------
FINANCING ACTIVITIES:
Net payments on debt.................................... (79,304) (114,564)
Premium paid on debt extinguishment..................... -- (6,840)
Proceeds from issuance of common stock.................. -- 1,209
Repurchases of common stock............................. -- (15,121)
-------- ---------
Net cash used in financing activities............... (79,304) (135,316)
-------- ---------
DECREASE IN CASH AND CASH EQUIVALENTS....................... (31,812) (118,687)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.............. 47,383 199,932
-------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................... $ 15,571 $ 81,245
======== =========
</TABLE>
See notes to condensed consolidated financial statements.
5
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QUEBECOR WORLD (USA) INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
1. BASIS OF PRESENTATION
The accompanying condensed consolidated interim financial statements have
been prepared by Quebecor World (USA) Inc., formerly known as World Color
Press, Inc., (along with its subsidiaries, the "Company" or "World")
pursuant to the rules and regulations of the Securities and Exchange
Commission and reflect normal and recurring adjustments, which are, in the
opinion of the Company, considered necessary for a fair presentation. As
permitted by these regulations, these statements do not include all
information required by generally accepted accounting principles to be
included in an annual set of financial statements, however, the Company
believes that the disclosures made are adequate to make the information
presented not misleading. These condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and
the notes thereto included in the Company's latest Annual Report on
Form 10-K.
2. ACQUISITION BY QUEBECOR WORLD INC.
On July 12, 1999, the Company entered into an Agreement and Plan of Merger
with Quebecor Printing Inc. (subsequently renamed Quebecor World Inc. "QWI")
and its indirect wholly owned subsidiary, Printing Acquisition Inc.
("Acquisition Inc."), which provided for the acquisition of the Company (the
"Merger"). On July 16, 1999, QWI, through Acquisition Inc., commenced a
tender offer to acquire up to 23,500,000 shares of the Company's common
stock at a price of $35.69 per share. On August 20, 1999, QWI acquired,
through Acquisition Inc., 19,179,495, or approximately 50.4%, of the
Company's outstanding shares.
On October 8, 1999, the Company and Acquisition Inc. completed the Merger
following receipt of approval from the Company's stockholders. As a result,
the Company became an indirect wholly owned subsidiary of QWI and at that
time was renamed Quebecor World (USA) Inc. The remaining outstanding shares
of World's common stock (other than shares purchased by QWI in the tender
offer) were converted into the right to receive 1.2685 subordinate voting
shares of QWI and $8.18 in cash per share. In addition, each 6% Convertible
Senior Subordinated Note due 2007 outstanding at the Merger became
convertible into the number of QWI subordinate voting shares and cash that
would have been received had the convertible note been converted immediately
prior to October 8, 1999. The Company's new capital structure consists of
3,000 authorized shares of common stock, par value $1.00 per share. At
April 1, 2000, 10 common shares were outstanding.
3. INVENTORIES
Inventories are summarized as follows:
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<CAPTION>
APRIL 1, DECEMBER 31,
2000 1999
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<S> <C> <C>
Work-in-process..................................... $142,714 $135,543
Raw materials....................................... 87,527 95,173
-------- --------
Total......................................... $230,241 $230,716
======== ========
</TABLE>
6
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QUEBECOR WORLD (USA) INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
4. MERGER RELATED COSTS
In connection with the Merger, the Company developed an integration strategy
for the combined entities that requires the redeployment and/or disposal of
assets and the shutdown or relocation of certain of the Company's plant
locations and sales offices. This revised strategic initiative resulted in
fourth quarter 1999 charges of $144,544. In the first quarter of 2000, the
Company paid approximately $4,800 related to these charges.
As a result of the Merger integration plan, the Company anticipates
incurring additional charges of approximately $26,000 in the remainder of
2000.
5. RESTRUCTURING AND OTHER SPECIAL CHARGES
In 1999, prior to the Merger, the Company recorded restructuring and other
special charges of $74,807 to eliminate redundant and less efficient
capacity resulting from its ongoing acquisition strategy. The restructuring
and other special charges included the costs to exit and consolidate certain
facilities and sales offices, write down impaired assets and eliminate
certain administrative positions. Cash payments related to this charge in
the first quarter of 2000 were not material.
6. RELATED PARTY TRANSACTIONS
At the time of the Merger, certain wholly owned subsidiaries of QWI provided
the Company with $511,500, which was borrowed on the Company's behalf from
the subsidiaries' external long-term credit facilities. The borrowings bear
interest at rates based on LIBOR plus 2% per annum, adjusted quarterly.
Interest on the borrowings ranged from 8.07% to 8.10% in the first quarter
of 2000. The outstanding balance on these notes at April 1, 2000 was
$420,000 due to the repayment of $91,500 during the first quarter of 2000.
Payment on the remaining balance is not required prior to April 2, 2001. In
the first quarter of 2000, the Company incurred $9,177 of interest expense,
of which $1,991 was included in payables to related parties in the
consolidated balance sheet at April 1, 2000.
In March 2000, certain wholly owned subsidiaries of QWI provided the Company
with $16,726, which was borrowed on the Company's behalf from the
subsidiaries' external credit facilities. The borrowings bear interest at
rates based on prime plus 1% per annum. Interest on the borrowings ranged
from 9.75% to 10% in the first quarter of 2000. Amounts outstanding are
payable on demand, and are therefore included in current maturities of
long-term debt in the consolidated balance sheet at April 1, 2000.
In 1999, the Company sold land for $4,000 to a wholly owned subsidiary of
QWI. The Company subsequently entered into a lease agreement for the land
with this subsidiary for a lease term through 2004.
At April 1, 2000, the Company had amounts payable to a wholly owned
subsidiary of QWI of approximately $9,054 for the purchase of raw materials.
This payable is included in payables to related parties in the consolidated
balance sheet at April 1, 2000.
The Company had transactions in the normal course of business with QWI and
affiliated companies that resulted in a net payable of $1,174 which is
included in payables to related parties in the consolidated balance sheet at
April 1, 2000.
7
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QUEBECOR WORLD (USA) INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
6. RELATED PARTY TRANSACTIONS (CONTINUED)
The Company incurred fees of $1,275 in the first quarter of 2000 for
corporate administrative services provided by QWI.
7. DEBT ISSUANCE AND EXTINGUISHMENT
On December 28, 1998, the Company redeemed all of its outstanding 9.125%
Senior Subordinated Notes due 2003 in an aggregate principal amount of
$150,000. The notes were redeemed for approximately $160,800, including the
redemption premium of $6,840 and accrued interest. In the first quarter of
1999, the early extinguishment of debt generated an extraordinary charge of
$5,946, net of taxes of $4,132, for the redemption premium and write-off of
deferred financing costs.
In 1999, the Company repaid certain indebtedness under the Second Amended
and Restated Credit Agreement dated June 6, 1996, as amended (the "Credit
Agreement") and amended the Credit Agreement resulting in, among other
modifications, a $95,000 permanent reduction in borrowings and commitments.
This amendment and related permanent reduction in total borrowings and
commitments resulted in a substantial modification of the terms under the
Credit Agreement. Accordingly, in the first quarter of 1999 the Company
recognized an extraordinary charge for the early extinguishment of debt of
$6,046, net of taxes of $4,201, for the write-off of deferred financing
costs. Subsequent to the Merger, the Company repaid all of its outstanding
debt incurred under the Credit Agreement, effectively canceling all
available commitments.
On August 20, 1999, the Company entered into a credit agreement with a third
party lender with a maximum commitment of $100,000. Interest is payable at a
variable floating rate based on LIBOR or prime rate. At April 1, 2000,
$6,243 was outstanding under the credit agreement at an interest rate of 9%.
Amounts outstanding under the credit agreement are payable on demand, and
are therefore included in current maturities of long-term debt in the
consolidated balance sheet at April 1, 2000.
8. CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
In April 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") 98-5, "Reporting on the Costs
of Start-Up Activities," which requires costs of start-up activities and
organization costs to be expensed as incurred. The Company adopted this SOP
in the first quarter of fiscal year 1999, which resulted in a charge of
$10,513, net of taxes of $7,305, as the cumulative effect of a change in
accounting principle for the non-recurring write-off of deferred start-up
costs. The adoption of this SOP did not have a material effect on operating
income on a continuing basis.
8
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QUEBECOR WORLD (USA) INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
GENERAL
On July 12, 1999, we entered into an Agreement and Plan of Merger with
Quebecor Printing Inc. (subsequently renamed Quebecor World Inc. "QWI") and its
indirect wholly owned subsidiary, Printing Acquisition Inc.
("Acquisition Inc."), which provided for the acquisition of World Color (the
"Merger"). On July 16, 1999, QWI, through Acquisition Inc., commenced a tender
offer to acquire up to 23,500,000 shares of our common stock at a price of
$35.69 per share. On August 20, 1999, QWI acquired, through Acquisition Inc.,
19,179,495, or approximately 50.4%, of our outstanding shares.
On October 8, 1999, World Color and Acquisition Inc. completed the Merger
following receipt of approval from our stockholders. As a result, World Color
became an indirect wholly owned subsidiary of QWI and at that time was renamed
Quebecor World (USA) Inc. The remaining outstanding shares of our common stock
(other than shares purchased by QWI in the tender offer) were converted into the
right to receive 1.2685 subordinate voting shares of QWI and $8.18 in cash per
share. In addition, each 6% Convertible Senior Subordinated Note due 2007
outstanding at the Merger became convertible into the number of QWI subordinate
voting shares and cash that would have been received had the convertible note
been converted immediately prior to October 8, 1999. Our new capital structure
consists of 3,000 authorized shares of common stock, par value $1.00 per share.
At April 1, 2000, 10 common shares were outstanding.
In connection with the Merger, we have developed an integration strategy for
the combined entities that requires the redeployment and/or disposal of assets
and the shutdown or relocation of certain of our plant locations and sales
offices. This revised strategic outlook resulted in fourth quarter 1999 charges
of $144,544. We paid $4,800 in 2000 related to these charges.
As a result of the Merger integration plan, we anticipate incurring
additional charges of approximately $26,000 in the remainder of 2000.
RESULTS OF OPERATIONS
THREE MONTHS ENDED APRIL 1, 2000 COMPARED TO THREE MONTHS ENDED MARCH 28, 1999
Net sales increased $56,036 or 9.2% to $661,879 in 2000 from $605,843 in
1999. The increase was due to the inclusion of a full quarter of sales from the
acquisitions in 1999, increased paper prices and improved sales in our base
business.
Gross profit increased $14,344 or 14.6% to $112,380 in 2000 from $98,036 in
1999. The gross profit margin increased to 17.0% in 2000 from 16.2% in 1999 due
to the effect of the Merger integration strategy and certain cost reduction
initiatives and synergies resulting from the integration of the acquired
businesses, partially offset by increased sales resulting from higher paper
prices.
Selling, general and administrative expenses increased $10,379 or 18.4% to
$66,914 in 2000 from $56,535 in 1999. The increase was due to $1,275 of charges
for corporate administrative services from QWI and the full quarter effect of
acquisitions in 1999, including the related additional amortization expense for
goodwill, partially offset by benefits derived from the Merger integration
strategy and cost saving initiatives.
Interest expense and securitization fees increased $4,190 or 17.5% to
$28,099 in 2000 from $23,909 in 1999. The increase was due to higher average
cost of funds.
9
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QUEBECOR WORLD (USA) INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The effective tax rate, primarily composed of the combined federal and state
statutory rates, was 41% for 2000 and 1999.
LIQUIDITY AND CAPITAL RESOURCES
We have historically met our liquidity and capital investment needs with
internally generated funds and external borrowings. Income before extraordinary
items and cumulative effect of change in accounting principle, plus depreciation
and amortization and deferred income taxes was $53,155 and $51,118 for the three
months ended April 1, 2000 and March 28, 1999, respectively. Our outstanding
indebtedness less cash decreased $47,492 from December 31, 1999 to April 1,
2000. At April 1, 2000, our debt including current maturities was composed of
approximately 35% of amounts borrowed by certain wholly owned subsidiaries of
QWI on our behalf. Working capital was $206,035 at April 1, 2000 and $230,838 at
March 28, 1999.
Capital expenditures totaled $14,809 and $24,993 in the first quarter of
2000 and 1999, respectively. These capital expenditures reflect the purchase of
additional press and bindery equipment and are part of our ongoing program to
maintain modern, efficient plants and continually increase productivity.
Concentrations of credit risk with respect to accounts receivable are
limited due to our diverse operations and large customer base. As of April 1,
2000, we had no significant concentrations of credit risk.
We believe that our liquidity, capital resources and cash flows from
operations are sufficient to fund planned capital expenditures, working capital
requirements and interest and principal payments for the foreseeable future.
YEAR 2000
We did not experience any material adverse impact with regard to software or
hardware failure or malfunction as a result of the year 2000 transition. The
costs incurred to date related to the year 2000 efforts have not been material,
nor are they expected to be material for the remainder of 2000. We will continue
to monitor our systems going forward.
SEASONALITY
Results of operations for this interim period are not necessarily indicative
of results for the full year. Our operations are seasonal. Historically,
approximately two-thirds of our operating income has been generated 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 condition.
10
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QUEBECOR WORLD (USA) INC.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibits required in accordance with Item 601 of Regulation S-K are
incorporated by reference herein as filed with registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999, dated March 30, 2000.
In addition, the Company has filed herewith the following exhibits:
<TABLE>
<S> <C> <C>
10.1 Grid Note dated March 6, 2000 made by and between Quebecor
World (USA) Inc. and Quebecor Printing Delaware LLC.
10.2 Grid Note dated March 13, 2000 made by and between Quebecor
World (USA) Inc. and Quebecor Printing S.A.
27.0 Financial Data Schedule for the period ended April 1, 2000
(filed in electronic form only).
</TABLE>
(b) Reports on Form 8-K
None
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.
<TABLE>
<S> <C> <C>
QUEBECOR WORLD (USA) INC.
Date: May 12, 2000 By: /s/ MICHEL P. SALBAING
-----------------------------------------
Michel P. Salbaing
SENIOR VICE PRESIDENT, CHIEF FINANCIAL
OFFICER
</TABLE>
11
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EXHIBIT 10.1
GRID NOTE
BY
QUEBECOR WORLD (USA) INC.
MARCH 6, 2000
GREENWICH, CONNECTICUT
FOR VALUE RECEIVED, the undersigned, Quebecor World (USA) Inc. ("World") hereby
promises to pay to the order of Quebecor Printing Delaware LLC ("QPDLLC"),
or to the order of any successor thereto, at the principal office of QPDLLC, at
Wilmington, Delaware or at such other place as shall be designated by the holder
hereof from time to time, the unpaid principal amount of all advances made by
QPDLLC, to World from time to time. World promises to pay interest on, March 6,
2000 and thereafter monthly, the unpaid principal amount of each such advance at
the maturity thereof at the Prime + 1 % (which rate shall not exceed the maximum
rate permitted by applicable law) at such office for the period commencing on
the date such advance is made until such advance shall be paid in full, with
interest on any interest (to the extent permitted by law) not paid when due at
the same rate until paid. All such payments of principal and interest shall be
made in lawful money of the United States of America and in immediately
available funds.
All advances made by QPDLLC, the maturities thereof and all repayments of
principal thereof shall be recorded by QPDLLC, and appropriate notations of
evidence the foregoing information with respect to each such advance shall be
endorsed by QPDLLC, on the schedule attached hereto, or on a continuation of
such schedule attached to and made a part hereof; provided that the failure of
QPDLLC, to make such recordation or endorsement shall not affect the obligations
of World, hereunder.
The occurrence of any of the following shall constitute an Event of Default
hereunder:
1. Commencement of any proceeding under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganisation, or relief of debtors, by or against World. If such
proceedings is not stayed or dismissed within 90 days from the date on
which it is filed; or
2. The appointment of a trustee, receiver, custodian, liquidator or the
like under any law relating to bankruptcy, insolvency, reorganisation,
winding-up, or composition or adjustment of debts of, or a general
assignment for the benefit of creditors of World.
Upon the occurrence of any Event of Default specified above, the entire unpaid
principal amount of all advances evidenced hereby, plus accrued interest, shall
automatically become immediately due and payable.
The undersigned promises to pay all costs and expenses, including reasonable
attorneys fees and disbursements incurred in the collection and enforcement of
this Note or any appeal of a judgement rendered thereon. The undersigned hereby
waives diligence, presentment, protest, demand and notice of every kind and, to
the full extend permitted by applicable law, the right to plead any statute of
limitations as a defense to any demands hereunder.
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF WILMINGTON, DELAWARE.
IN WITNESS WHEREOF WORLD has caused this Note to be executed and delivered by
its duly authorised director, as of the day and year and at the place first
above written.
QUEBECOR WORLD (USA) INC.
By:
---------------------------------
By:
---------------------------------
<PAGE>
EXHIBIT 10.2
GRID NOTE
QUEBECOR WORLD (USA) INC.
Greenwich, Connecticut
March 13, 2000
FOR VALUE RECEIVED, the undersigned, Quebecor World (USA) Inc. (the
"Borrower"), a Delaware corporation, hereby promises to pay to the order of
Quebecor Printing S.A., a societe anonyme organized under the laws of
Switzerland (the "Lender"), or to the order of any successor thereto, the unpaid
principal amount of all advances made by the Lender to the Borrower from time to
time. The Borrower promises to pay interest on the unpaid principal amount of
each such advance at the maturity thereof or on a monthly basis at a rate per
annum equal to the Prime Rate plus 1% (which rate shall not exceed the maximum
rate permitted by applicable law) at such office for the period commencing on
the date such advance is made until such advance shall be paid in full, with
interest on any interest (to the extent permitted by law) not paid when due at
the same rate until paid.
"Prime Rate" shall mean any right or interest publicly announced by
Morgan Guaranty Trust Company of New York, New York from time to time as its
Prime Rate.
All payments of principal and interest hereunder shall be made in
lawful money of the United States of America and in immediately available funds
and shall be payable to the Lender at its address in Fribourg, Switzerland or at
such other address as shall be designated by the holder hereof from time to
time.
All advances made by the Lender, the maturities thereof and all
repayments of principal thereof shall be recorded by the Borrower and
appropriate notations of evidence the foregoing information with respect to each
such advance shall be endorsed by the Borrower on the schedule attached hereto,
or on a continuation of such schedule attached to and made a part hereof;
provided that the failure of the Borrower to make such recordation or
endorsement shall not affect the obligations of the Borrower hereunder.
Borrower agrees that the principal amount advanced hereunder shall not
exceed $60,000,000 outstanding in the aggregate at any time, and that any
advances exceeding such amount shall be immediately repaid, together with any
unpaid interest.
The occurrence of any of the following shall constitute an Event of
Default hereunder:
<PAGE>
1. Commencement of any proceeding under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, or relief of debtors, by or against
the Borrower, if such proceedings is not stayed or dismissed
within 90 days from the date on which it is filed; or
2. The appointment of a trustee, receiver, custodian, liquidator or
the like under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts
of, or a general assignment for the benefit of creditors of the
Borrower.
Upon the occurrence of any Event of Default specified above, the entire
unpaid principal amount of all advances evidenced hereby, plus accrued interest,
shall automatically become immediately due and payable.
The Borrower promises to pay all costs and expenses, including
reasonable attorneys fees and disbursements incurred in the collection and
enforcement of this Note or any appeal of a judgement rendered thereon. The
Borrower hereby waives diligence, presentment, protest, demand and notice of
every kind and, to the full extent permitted by applicable law, the right to
plead any statute of limitations as a defense to any demands hereunder.
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed
and delivered by its duly authorized director, as of the day and year and at the
place first above written.
QUEBECOR WORLD (USA) INC.
By:
---------------------------------
By:
---------------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AS OF APRIL 01, 2000 AND THE CONDENSED
CONSOLDIATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED APRIL 01, 2000
OF QUEBECOR WORLD (USA) INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-2000
<PERIOD-END> APR-01-2000
<CASH> 15,571
<SECURITIES> 0
<RECEIVABLES> 233,229
<ALLOWANCES> 0
<INVENTORY> 230,241
<CURRENT-ASSETS> 566,571
<PP&E> 1,718,118
<DEPRECIATION> 862,008
<TOTAL-ASSETS> 2,287,965
<CURRENT-LIABILITIES> 360,536
<BONDS> 1,182,719
0
0
<COMMON> 0
<OTHER-SE> 559,568
<TOTAL-LIABILITY-AND-EQUITY> 2,287,965
<SALES> 661,879
<TOTAL-REVENUES> 661,879
<CGS> 549,499
<TOTAL-COSTS> 549,499
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,099
<INCOME-PRETAX> 17,367
<INCOME-TAX> 7,124
<INCOME-CONTINUING> 10,243
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,243
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
