By Ann Levine February 10, 2004 – Quebecor World Inc. (NYSE: IQW) today announced a net loss of $54 million or $0.48 per share for the fourth quarter of 2003. The net loss is after impairment of assets, restructuring and other charges relating to finance and tax. This compares to a net income of $71 million or $0.44 per diluted share for the same period last year. Operating income was $90 million compared to $160 million for the fourth quarter of 2002. For the full year 2003, Quebecor World reported a net loss of $31 million or $0.50 per share after special charges. In 2002, the company reported a net income of $279 million or $1.76 per diluted share. Consolidated revenues increased to $6.39 billion from $6.2 billion in 2002. Topics of this summary: Overall Performance Global Performance Restructuring Q & A Overall Performance Quebecor World reported few signs of a quick upturn in economic conditions. Even though the company has seen an increase in volumes, pricing pressures have contributed to the company's overall performance during the last year. Quebecor is taking steps to increase performance including, cost containment, the closure of the Paris office, consolidation and transfer of services, and instituting a 6% reduction in the global workforce. Additionally, the company is instituting a broad-based wage freeze in 2004 affecting non-union employees along with suspending contributions to the U.S. employee's 401(k) plan. The fourth quarter also brought a refinancing of long-term debt and is expected to lower interest expense by $12 million. Global Performance The European market continues to suffer from over capacity and a weak pricing environment. Most facilities showed strong volumes but lower prices. The UK, Belgium and Austria all performed well throughout the year. French operations recorded positive results in the fourth quarter with negative margins for the year; the result of cost cutting and an aggressive approach to sales. Overall, European operations had revenues of $340 in the fourth quarter, an 18% increase due mostly to currency. Latin America operations recorded stable revenues of $48 million for the fourth quarter. Revenues for the year were $177 million in 2003 as compared to $184 million in 2003, a 3% decrease. Operations here were affected by currency devaluations. Steps are also being taking in Latin America to reduce costs and reduce the workforce. In North America, revenues decreased by 1% in the fourth quarter to $1.35 billion compared to $1.37 billion for the same period last year. In the magazine and catalog sector, volumes were down as publishers reduced page counts and circulation. New wins include magazines for teens, gossip/tabloid and men's issues. Increased volumes were realized with the company's focus on growing current customers in the catalog sector. Commercial/Direct saw some improvement during the fourth quarter, although price declines remain a major factor. Direct mail houses are seeing some rebound. The national “Do Not Call” list should lead to increased business. The Book/Directory sector is also fighting price declines, however the company gained 30 new customers during the quarter. Book industry unit sales declined due to publisher print orders. On the operational side, the North America sector is focused on reducing costs and sharpening its focus through improving throughput, investing in technology, improving customer partnerships, better management of existing assets, and reducing waste. Restructuring Although the company did not anticipate additional restructuring during the last earnings call, during Quebecor's annual planning cycle during the fourth quarter it became evident that additional employee reductions were necessary in all regions. The restructuring during the second quarter went only partway in achieving cost savings objectives. In the fourth quarter 878 additional employee positions were eliminated bringing the total reduction in force to 1769 in 2003. Another 503 positions will be eliminated by the end of the first quarter of 2004. These reductions are expected to result in more $90 million in annualized cost savings. The cost reductions are not apparent in results as the company faced increases in utilities, pension and medical expenses in 2003, in the range of $35 million. Q & A The $90 million expected in cost savings relates to the elimination of the 2200 employees in 2003-2004. Procurement savings were factored into the 2003 results. The $9 million in savings from suspended contributions to 401(k) programs were not factored into the $90 million figure. Quebecor World expects a 10%-15% increase in costs associated with medical benefits and pension costs. The company continues to explore ways to reduce this cost. Free cash flow in 2003 was $183 million down from $320 million in 2002. Free cash flow should normalize somewhere between these two numbers in 2004. Quebecor World estimates capital expenditures in the $240-250 million range for 2004. During the fourth quarter a couple of senior level executives left Quebecor's North American operations, specifically in the magazine and catalog divisions. Officials stated the situation is well under control even with the contributions the departing employees made over the year. Quebecor stated that the company has ample bench strength amidst the departures and does not anticipate the departures will have any impact with its competitiveness in the industry. Even given the recent price erosions, Quebecor's goal is to grow margins in 2004 and bring margins back to levels known a few years ago. The impact of paper prices and supply depends on the market sector. The company's focus is to supply more paper for various reasons including its size, global reach and the advantages of Quebcor's value chain. Even with the reduction in force taken over the course of the last year, Quebecor's production capacity has grown and impressions have gone up in every sector but one. Even with two years of cost savings initiatives, the company expected 2003 would be a challenging year to offset price erosions. In 2004, expectations are to turn the tide on revenues. As far as the competitive landscape is concerned, Quebecor sees a status quo for the immediate future. Officials have not seen anything that suggests growth in printed product, except for some private printing company closures that may have some impact. Contract renewal percentages in 2004 are expected to be at a much lesser rate than 2003. With regard to Quebecor's overall strategy of restructuring the manufacturing platform and realizing economies of scale, certain of the company's sectors are further along in development than other. Even though certain areas lag, the belief is that continued opportunities exist. Quebecor's tax rate for 2004 is expected to be at 25%.