Quebecor World Posts $2.2 Billion loss for 07
Thursday, May 08, 2008
Press release from the issuing companyMontréal, Canada (May 01, 2008) – Quebecor World Inc. announces that for full year 2007 it generated revenues of $5.7 billion compared to $6.1 billion in 2006 and a net loss of $2.2 billion or ($16.85) per share compared to a net income of $28.3 million or a net loss of $ 0.04 per share the previous year taking into account dividends on preferred shares. Full-year results included a goodwill impairment charges, and impairment of assets, restructuring and other charges (IAROC) net of income taxes of $2.1 billion or ($16.26) per share, compared to $87.3 million or ($0.67) per share in 2006. The cash component of this charge was $42.7 million in 2007 compared to $76.4 million in 2006. Excluding these charges, the adjusted net loss was $54.9 million or ($0.58) per share in 2007 compared to adjusted net income of $117.9 million or diluted earnings per share of $0.64 for the same period in 2006. Operating income before IAROC and goodwill impairment charge in 2007 was $90.1 million compared to $241.5 million in 2006. On the same basis, EBITDA was $461.9 million in 2007 compared to $579.9 million in 2006. The reduction of EBITDA in 2007 is principally explained by $80 million in largely non-cash, additional specific charges, compared to the prior year.
Quebecor World's full-year 2007 revenues reflect a reduction in volume in its North American operations, in particular as the result of several plant closures as the Company moved to complete its three-year restructuring and retooling program. In addition to goodwill, IAROC and specific charges, the decrease in profitability reflects volume reduction, pricing pressure, underperforming European assets and higher financial expenses not fully compensated by cost reductions and efficiency gains.
On January 21, 2008, Quebecor World filed for creditor protection in the United States and Canada due to the inability of the Company to raise new capital in the current market environment and to complete the sale of its European operations. The filing was necessary to ensure the long-term viability of the Company within a process that ensures fair and equitable treatment for all stakeholders.
"We have made important and substantial efforts to stabilize our business and to reach out to all our stakeholders in this process," said Jacques Mallette, President and CEO, Quebecor World. "I am pleased with what we have accomplished so far, and it demonstrates the support of our customers, our suppliers and our employees to our business going forward. We continue to renew and earn new business with important customers across our global platform including, most recently, McGraw Hill, Wenner Media and RONA."
Since the initial filing, the Company received the final order for its $1 billion DIP (debtor-in-possession) financing from the US court. As stated in the Monitor's report of April 1, 2008, the Company had unrestricted cash balances of $160 million and access to revolving credit facility of up to $400 million. The Company believes that this financing and its ability to generate significant cash flow from operations will allow it to emerge from creditor protection as a strong company in its industry. The Company continues to serve all its global customers with superior products and enhanced value-added services as illustrated by the recent launch of its integrated multi-channel solutions offering designed to increase the efficiency of its customers advertising campaigns.
To assist in its efforts to emerge from creditor protection as quickly as possible, the Company has appointed Mr. Randy Benson, Chief Restructuring Officer of the Company. Mr. Benson has extensive experience in working with other companies going through a financial restructuring process. He reports to the Restructuring Committee of the Board of Directors.
"The restructuring process is proceeding as planned. To date we have passed several important milestones and we are actively developing our five-year business plan which we expect to be completed in the second quarter. The appropriate creditors and ad hoc committees have been established in the U.S. and Canada and we are pursuing an active and ongoing dialogue," added Mr. Mallette. "To date we have had more than 60 uncontested motions approved in the U.S. process which is a strong indication of everyone's focus and determination to make this process a success by exiting creditor protection as soon as possible."
Fourth Quarter Results
For the fourth quarter of 2007, the Company generated revenues of $1.5 billion compared to $1.6 billion in 2006, and a net loss of $1.8 billion or ($13.87) per share compared to net income from continuing operations of $11.6 million or $0.03 per share in the same period last year. Fourth quarter results included impairment of assets, restructuring and other charges (IAROC) and a goodwill impairment charge, net of income taxes, of $1.8 billion or ($13.81) per share compared to $33.0 million or ($0.25) per share in 2006. The cash component of this charge was $5.1 million in 2007 compared to $21.1 million in 2006. Excluding these charges, the adjusted net loss was $1.9 million or ($0.06) per share for the fourth quarter of 2007 compared to adjusted net income of $44.6 million or diluted earnings per share of $0.28 for the same period in 2006. Operating income before IAROC and goodwill impairment for the fourth quarter of 2007 was $1.8 million compared to $74.2 million for the same period in 2006. On the same basis, EBITDA was $130.3 million for the fourth quarter of 2007 compared to $170.2 million for the same period in 2006. In the fourth quarter 2007, the Company incurred $45 million in additional specific charges compared to the fourth quarter of 2006. These charges were largely non-cash. Excluding these additional charges, EBITDA in the fourth quarter 2007 was slightly higher than during the same period in 2006.
Use of Non-GAAP Measures
In the discussion of our 2007 results, we use certain financial measures that are not calculated in accordance with Canadian generally accepted accounting principles (GAAP) or United States GAAP to assess our financial performance, including EBITDA (earnings before interest, tax, depreciation and amortization), Adjusted EBITDA and operating income before IAROC (impairment of assets, restructuring and other charges) and goodwill impairment. We use such non-GAAP financial measures because we believe that they are meaningful measures of our performance. Our method of calculating these non-GAAP financial measures may differ from the methods used by other companies and, as a result, the non-GAAP financial measures presented in this press release may not be comparable to other similarly titled measures disclosed by other companies. We provide a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures in Figure 6, "Reconciliation of non-GAAP Measures" of our 2007 annual management's discussion and analysis filed with the Canadian securities regulatory authorities at www.Sedar.com and with the United States Securities and Exchange Commission at www.sec.gov. A copy of our 2007 annual management's discussion and analysis is also available on the Company's website at www.quebecorworld.com.
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