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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED COMMISSION FILE NUMBER 1-11802
SEPTEMBER 30, 2000
QUEBECOR WORLD (USA) INC.
(FORMERLY KNOWN AS WORLD COLOR PRESS, INC.)
(Exact name of registrant as specified in its charter)
DELAWARE 37-1167902
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
THE MILL, 340 PEMBERWICK ROAD 06831
GREENWICH, CONNECTICUT (Zip Code)
(Address of principal executive offices)
203-532-4200
(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 [ ]
At November 10, 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 SEPTEMBER 30, 2000
INDEX
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<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets as of September 30, 2000
and December 31, 1999.....................................................................3
Condensed Consolidated Statements of Operations for the Three and Nine Months
Ended September 30, 2000 and September 26, 1999...........................................4
Condensed Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 2000 and September 26, 1999...........................................5
Notes to Condensed Consolidated Financial Statements...........................................6 - 8
Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................................9 - 11
PART II. OTHER INFORMATION................................................................................12
</TABLE>
2
<PAGE>
QUEBECOR WORLD (USA) INC.
PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
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<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
(Unaudited) (Note)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 18,467 $ 47,383
Accounts receivable - net 263,953 270,399
Receivables from related parties - net 22,080 -
Inventories 269,866 230,716
Deferred income taxes 28,374 47,990
Other 25,876 40,226
--------------- -------------
Total current assets 628,616 636,714
Property, plant and equipment, at cost 1,607,479 1,708,008
Accumulated depreciation and amortization (906,417) (830,010)
---------------- -------------
Property, plant and equipment - net 701,062 877,998
Goodwill - net 774,165 793,011
Deferred income taxes 10,772 -
Other 70,434 68,398
--------------- -------------
TOTAL ASSETS $ 2,185,049 $ 2,376,121
=============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 352,031 $ 332,176
Payables to related parties - net - 7,380
Current maturities of long-term debt 6,916 6,090
--------------- -------------
Total current liabilities 358,947 345,646
Long-term debt 1,194,566 1,285,106
Deferred income taxes - 62,687
Other long-term liabilities 158,696 133,357
--------------- -------------
Total liabilities 1,712,209 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 (347,826) (271,341)
--------------- --------------
Total stockholders' equity 472,840 549,325
--------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,185,049 $ 2,376,121
=============== =============
</TABLE>
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 AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 26, 1999
(IN THOUSANDS)
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<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net sales $ 693,108 $ 686,840 $ 1,975,342 $ 1,859,228
Cost of sales 750,758 547,163 1,809,080 1,521,743
----------- ----------- ----------- -----------
Gross profit (loss) (57,650) 139,677 166,262 337,485
Selling, general and
administrative expenses 60,399 228,567 186,838 341,851
Restructuring and other special charges -- 12,397 -- 74,807
----------- ----------- ----------- -----------
Operating loss (118,049) (101,287) (20,576) (79,173)
Interest expense and
securitization fees 29,511 25,521 84,784 74,480
----------- ----------- ----------- -----------
Loss before income taxes,
extraordinary items and
cumulative effect of change
in accounting principle (147,560) (126,808) (105,360) (153,653)
Income tax benefit (46,200) (17,409) (28,875) (28,415)
----------- ----------- ----------- -----------
Loss before extraordinary items
and cumulative effect of change
in accounting principle (101,360) (109,399) (76,485) (125,238)
Extraordinary items, net of tax -- -- -- (11,992)
Cumulative effect of change in
accounting principle, net of tax -- -- -- (10,513)
----------- ----------- ----------- -----------
Net loss $ (101,360) $ (109,399) $ (76,485) $ (147,743)
=========== =========== =========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
4
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QUEBECOR WORLD (USA) INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) NINE MONTHS ENDED
SEPTEMBER 30, 2000 AND SEPTEMBER 26, 1999
(IN THOUSANDS)
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<TABLE>
<CAPTION>
NINE MONTHS
2000 1999
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (76,485) $(147,743)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 110,666 116,435
Settlement of stock options -- 67,474
Amortization of restricted stock options -- 8,020
Restructuring and other special charges -- 74,807
Write down and write off of fixed assets 124,008 --
Extraordinary items, net of tax -- 11,992
Cumulative effect of change in accounting principle, net of tax -- 10,513
Deferred income tax benefit (53,843) (28,415)
Changes in operating assets and liabilities:
Accounts receivable - net 6,446 10,809
Inventories (39,150) (16,122)
Accounts payable and accrued expenses 19,855 (62,886)
Other assets and liabilities - net 9,091 (34,611)
--------- ---------
Net cash provided by operating activities 100,588 10,273
--------- ---------
INVESTING ACTIVITIES:
Additions to property, plant and equipment - net (39,790) (94,251)
Acquisitions of businesses, net of cash acquired -- (120,689)
--------- ---------
Net cash used in investing activities (39,790) (214,940)
--------- ---------
FINANCING ACTIVITIES:
Net (payments) borrowings on debt (89,714) 485
Capital contribution from Printing Acquisition Inc. -- 51,299
Premium paid on debt extinguishment -- (6,840)
Proceeds from issuance of common stock -- 6,476
Repurchases of common stock -- (30,558)
--------- ---------
Net cash (used in) provided by financing activities (89,714) 20,862
--------- ---------
DECREASE IN CASH AND CASH EQUIVALENTS (28,916) (183,805)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 47,383 199,932
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 18,467 $ 16,127
========= =========
</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)
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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 ("Convertible
Notes") 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
September 30, 2000, 10 common shares were outstanding.
3. INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
<S> <C> <C>
Work-in-process $ 177,220 $ 135,543
Raw materials 92,646 95,173
----------- ----------
Total $ 269,866 $ 230,716
=========== ===========
</TABLE>
6
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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. During
the third quarter of 2000 the Company incurred $26,984 of severance and
related costs to shut down certain plant locations as a result of the
continuing execution of the integration strategy.
In the first nine months of 2000, the Company paid approximately $15,000
related to these charges. The Company anticipates remaining payments for
these charges to be approximately $32,000.
During the third quarter of 2000, the Company also incurred non-cash
Merger related charges of $124,008 for the write down and write off of
fixed assets and $21,054 which reflects other operational changes in the
business as a result of the Merger.
The Company anticipates incurring additional charges of approximately
$33,500 over the next year primarily related to equipment relocation as
contemplated in the Merger integration strategy.
5. RESTRUCTURING AND OTHER SPECIAL CHARGES
In 1999, prior to the Merger, the Company recorded restructuring and
other special charges of $62,410 and $12,397 in the second and third
quarters, respectively, 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 these charges in the first nine months 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 8.72%
in the first nine months of 2000. The outstanding balance on these notes
at September 30, 2000 was $420,000. Payment on the remaining balance is
not required prior to October 1, 2001. In the three and nine month
periods ended September 30, 2000, the Company incurred $9,239 and $27,406
of interest expense, respectively, of which $1,919 was included in net
receivables from related parties in the consolidated balance sheet at
September 30, 2000.
Throughout the first nine months of 2000, certain wholly owned
subsidiaries of QWI provided the Company with amounts borrowed under
notes payable on demand. These borrowings bear interest at rates based on
prime plus 1% per annum. At September 30, 2000, the outstanding balance
on these notes was $441. Certain wholly owned subsidiaries of QWI also
provided the Company with amounts borrowed under longer term promissory
notes. These borrowings bear interest at rates based on LIBOR plus 1.55%
per annum, adjusted quarterly, which was approximately 8.35% in the first
nine months of 2000. These notes mature between October 2007 and December
2009. The outstanding balance at September 30, 2000 was $72,744. Interest
expense incurred on the demand and promissory notes for the three and
nine months ending September 30, 2000 was $1,471 and $2,822,
respectively, of which $637 was included in net receivables from related
parties in the consolidated balance sheet at September 30, 2000.
At September 30, 2000, the Company had amounts payable to a wholly owned
subsidiary of QWI of approximately $10,625 for the purchase of raw
materials. This payable was included in net receivables from related
parties in the consolidated balance sheet at September 30, 2000.
7
<PAGE>
The Company had transactions in the normal course of business with QWI
and affiliated companies that resulted in a net receivable of $35,261
which was included in net receivables from related parties in the
consolidated balance sheet at September 30, 2000.
The Company incurred fees of $3,756 in the first nine months of 2000 for
corporate administrative services provided by QWI.
7. DEBT ISSUANCE AND EXTINGUISHMENT
During the first nine months of 2000, amounts borrowed from certain
subsidiaries of QWI were utilized to repay $42,425 of the 8.375% Senior
Subordinated Notes due 2008. In addition, in the first nine months of
2000, the Company redeemed $24,650 of Convertible Notes due 2007. The net
gains on extinguishment of the notes were not material.
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
September 30, 2000, no amounts were outstanding under this credit
agreement.
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
<PAGE>
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 ("Convertible
Notes") 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 July 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 initiative resulted in fourth quarter
1999 charges of $144,544. During the third quarter of 2000 we incurred
$26,984 of severance and related costs to shut down certain plant locations
as a result of the continuing execution of the integration strategy.
In the first nine months of 2000, we paid approximately $15,000 related to
these charges. We anticipate the remaining payments for these charges to be
approximately $32,000.
During the third quarter of 2000, we also incurred non-cash Merger related
charges of $124,008 for the write down and write off of fixed assets and
$21,054 which reflects other operational changes in the business as a result
of the Merger.
We anticipate incurring additional charges of approximately $33,500 over the
next year primarily related to equipment relocation as contemplated in the
Merger integration strategy.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THREE MONTHS ENDED SEPTEMBER
26, 1999
Net sales increased $6,268 or 1.0% to $693,108 in 2000 from $686,840 in 1999.
The increase was due primarily to increased paper prices.
Gross profit (loss) decreased $197,327 or 141.3% to ($57,650) in 2000 from
$139,677 in 1999 due primarily to the additional Merger related charges
described above. In addition, we incurred one-time customer realignment charges
of $21,787 in the third quarter of 2000. These charges reflect the impact of the
operational integration strategies resulting from the Merger on continuing and
completed contracts. Excluding the effect of the Merger and other one-time
charges, the gross profit margin decreased to 19.3% in 2000 from 20.3% in 1999
due primarily to the increase in paper prices.
9
<PAGE>
QUEBECOR WORLD (USA) INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
--------------------------------------------------------------------------------
Selling, general and administrative expenses decreased $180,565 or 74.9% to
$60,399 in 2000 from $240,964 in 1999. In 1999, selling, general and
administrative expenses included restructuring and other special charges of
$12,397 and expenses related to the tender offer of $169,301. Excluding these
charges, selling, general and administrative expenses increased $1,133 or
1.9% in 2000 due primarily to $2,481 of charges for corporate administrative
services from QWI, partially offset by benefits derived from the
implementation of the Merger integration strategy and cost saving initiatives.
Interest expense and securitization fees increased $3,990 or 15.6% to $29,511 in
2000 from $25,521 in 1999. The increase was due to higher average cost of funds.
The effective tax rate, primarily composed of the combined federal and state
statutory rates, was 31.3% for the third quarter of 2000 and 13.7% in 1999.
The change in the tax rate was due primarily to permanent differences in
Merger related expenses.
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED SEPTEMBER 26,
1999
Net sales increased $116,114 or 6.2% to $1,975,342 in 2000 from $1,859,228 in
1999. The increase was due to the inclusion of sales from the 1999 acquisitions
for the entire 2000 period, increased paper prices and improved sales in our
base business.
Gross profit decreased $171,223 or 50.7% to $166,262 in 2000 from $337,485 in
1999 due primarily to additional Merger related charges as discussed above. In
addition, we incurred one-time customer realignment charges of $21,787 in the
third quarter of 2000. These charges reflect the impact of the operational
integration strategies resulting from the Merger on continuing and completed
contracts. Excluding the effect of the Merger and other one-time charges, the
gross profit margin decreased to 18.1% in 2000 from 18.2% in 1999.
Selling, general and administrative expenses decreased $229,820 or 55.2% to
$186,838 in 2000 from $416,658 in 1999. In 1999, selling, general and
administrative expenses included restructuring and other special charges of
$74,807 and expenses related to the tender offer of $169,301. Excluding these
charges, selling, general and administrative expenses increased $14,288 or 8.3%
in 2000. The increase was due to $3,756 of charges for corporate administrative
services from QWI and the effect of acquisitions in 1999 for the entire 2000
period, including the related additional amortization expense for goodwill,
partially offset by benefits derived from the implementation of the Merger
integration strategy and cost saving initiatives.
Interest expense and securitization fees increased $10,304 or 13.8% to $84,784
in 2000 from $74,480 in 1999. The increase was due to a higher average cost of
funds.
The effective tax rate, primarily composed of the combined federal and state
statutory rates, was 27.4% for the first nine months of 2000 and 18.5% in
1999. The change in the tax rate was due primarily to permanent differences
in Merger related expenses.
LIQUIDITY AND CAPITAL RESOURCES
We have historically met our liquidity and capital investment needs with
internally generated funds and external borrowings. Net income before
one-time charges, plus depreciation and amortization and deferred income taxes
was $175,251 and $183,128 for the nine months ended September 30, 2000 and
September 26, 1999, respectively. Our outstanding indebtedness less cash
decreased $60,798 from December 31, 1999 to September 30, 2000. At September 30,
2000 our debt including current maturities was composed of approximately 41% of
amounts borrowed
10
<PAGE>
QUEBECOR WORLD (USA) INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
--------------------------------------------------------------------------------
by certain wholly owned subsidiaries of QWI on our behalf. Working capital was
$269,669 at September 30, 2000 and $306,736 at September 26, 1999.
During the first nine months of 2000, amounts borrowed from certain subsidiaries
of QWI were utilized to repay $42,425 of the 8.375% Senior Subordinated Notes
due 2008. In addition, in the first nine months of 2000, we redeemed $24,650 of
Convertible Notes due 2007. The net gains on extinguishment of the notes were
not material.
Gross capital expenditures totaled $62,641 and $98,906 in the first nine months
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. As a
result of the Merger, we have continued to strategically redeploy assets to
optimize efficiency.
Concentrations of credit risk with respect to accounts receivable are limited
due to our diverse operations and large customer base. As of September 30, 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.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") 133, "Accounting for
Derivative Instruments and Hedging Activities." In June 2000, the FASB issued
SFAS 138, which amended certain provisions of SFAS 133 to clarify four areas
causing difficulties in implementation. We are currently reviewing our
contracts to assess the impact of these statements on our financial
statements. We will adopt SFAS 133 and the corresponding amendments under
SFAS 138 in the first quarter of 2001. We do not expect the adoption of SFAS
133, as amended by SFAS 138, to have a material effect on our consolidated
financial statements.
In December 1999, the SEC issued Staff Accounting Bulletin ("SAB") 101,
"Revenue Recognition in Financial Statements," which provides additional
guidance in applying generally accepted accounting principles to revenue
recognition in the financial statements. We do not anticipate SAB 101 to have a
material effect on our financial statements.
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.
11
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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:
27.0 Financial Data Schedule for the period ended September 30, 2000
(filed in electronic form only).
(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.
QUEBECOR WORLD (USA) INC.
Date: November 13, 2000 By:/s/ PAUL B. CAROUSSO
-------------------------------------
Paul B. Carousso
Vice President, Controller
12
