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Quebecor World Responds to Moody's Rating Reduction

Monday, August 29, 2005

Press release from the issuing company

MONTREAL--Aug. 26, 2005-- In light of today's surprising decision by Moody's to reduce the rating of Quebecor World Inc., the Company reaffirms that its credit ratios have in fact been improving despite unfavourable market conditions. The Company generated strong free cash flow of $183 million in 2003 and $319 million in 2004 As of year-end 2003 and 2004 - Debt/EBITDA ratio improved from 3.0 to 2.3 - Debt/Capitalization improved from 44.3% to 42.7% - EBITDA coverage of interest expense improved from 3.8 to 6.4 The Company notes that Moody's adjusted definition of debt includes unfunded pension liabilities, preferred shares, as well as capitalized operating leases and securitization. Moody's decision to downgrade Quebecor World's rating reflects this interpretation of the Company's balance sheet, as well as its repurchase of shares under a normal course program. Quebecor World's financial policy takes into account the interests of all its key stakeholders, including creditors, shareholders, customers and employees. Quebecor World's credit ratios should continue to improve in the upcoming years. To illustrate this, Quebecor World's free cash flow for the first six months of 2005 increased $55 million compared to the same period in 2004. Free cash flow for first half of 2005 was $36.9 million compared to ($18.2) million for the first half of 2004. As of June 30 2005 and 2004 - Debt/EBITDA ratio improved from 2.7 to 2.4 - Debt/Capitalization improved from 45.2% to 43.1% - EBITDA coverage of interest expense improved from 4.8 to 6.5 These ratios should continue to improve taking into account our important investment plan recently announced which will make the Company one of the best-equipped manufacturers in the industry, to better service our customers and improve our competitive position.

 

 

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