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Quebecor reports $654M loss

Monday, March 30, 2009

Press release from the issuing company

Quebecor World Inc.'s results in the fourth quarter and for the year ended December 31, 2008 are based on continuing operations following the sale of its European business in June, 2008. In the fourth quarter, the Company generated consolidated revenues from continuing operations of $1.0 billion compared to $1.2 billion in 2007. Operating income in the fourth quarter of 2008 before impairment of assets, restructuring and other charges (IAROC) and goodwill impairment charge was $50.3 million compared to $24.9 million in the fourth quarter of 2007. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) was $118.3 million in the fourth quarter of 2008 compared to $137.9 million in the fourth quarter of 2007. The lower adjusted EBITDA in 2008 is principally due to decreased volumes, plant closures and particularly in the fourth quarter, to the economic slowdown affecting all sectors. Despite a lower level of activity than planned, the Company's adjusted EBITDA continued to be in line with management's expectations and with the projections prepared for the DIP financing when Quebecor World filed for creditor protection on January 21, 2008. In 2008, the Company aggressively implemented cost reductions to offset lower volumes due to the challenging economic environment. Quebecor World reduced its workforce by 12% during 2008. Major overhead cost reduction programs have also been launched. As a result, in the fourth quarter, selling, general and administrative expenses decreased by 10.8% excluding the favorable impact of foreign exchange and depreciation and amortization, compared to the same period in 2007.

The Company has been operating under creditor protection since its initial filing in the U.S. and Canadian courts. As stated in the twenty-second Monitor's report, the Company had an unrestricted cash balance of $200 million as of February 15, 2009. In addition, Quebecor World continues to have access to the Revolving Loan Facility of up to $400 million. On March 26, 2009, the Company's exclusivity period under Chapter 11 in the U.S. to file a Plan or Plans of Reorganization was extended to April 27, 2009. As to the stay period in Canada, it has been extended again under the CCAA process to May 31, 2009.

"Despite the difficult economic situation, we succeeded in achieving our financial and operational goals in 2008. We reached our financial targets and delivered on all our commitments to our customers," commented Jacques Mallette President and CEO of Quebecor World Inc. "We managed to achieve these objectives while dealing with the added complexity and challenges of operating under court supervised creditor protection in both the United States and Canada. This is a tribute to our employees, our customers, and our suppliers who have demonstrated their confidence in us throughout this period. Our industry, as evidenced by the latest results and comments from our competitors, is facing significant challenges in the current economic environment. However, we believe the actions we implement to streamline and rightsize our cost structure should make us a strong participant in our industry."

In the fourth quarter, the Company continued to focus on renewing major customers, gaining new ones and improving efficiency across all its business groups by reducing costs, improving processes and maximizing the performance of its manufacturing platform.

In the fourth quarter, the Company further demonstrated its commitment to its customer base by the significant investment in new equipment to help its customers achieve their business goals. Quebecor World announced the purchase of three new state-of-the-art short cutoff retail offset presses to further enhance its industry leading U.S. and Canadian retail insert platforms. This investment will provide customers with a new format capability to reduce paper consumption, shorten cycle time and reduce delivery costs. The first of these new presses is scheduled to be operational early in the third quarter of 2009. Also in the fourth quarter 2008, the Company continued to expand its Integrated Multichannel Solutions offering to help retailers achieve maximum return on their marketing investment through integrated solutions that target an ever-changing consumer across multiple channels. Quebecor World publishing and catalog customers are also able to realize greater postal savings with the addition of two new 30-pocket machines in the recently opened Somerset, New Jersey consolidation facility. This additional co-mail capacity gives more customers an opportunity to mitigate the impact of the additional postage costs during these challenging economic times.

Fourth quarter and 2008 year per share information

In the fourth quarter, Quebecor World reported a net loss from continuing operations of $654.0 million or ($3.26) per share compared to $1,802.6 million or ($13.69) per share in the fourth quarter of last year. Fourth quarter results included IAROC net of income taxes of $118.1 million or $0.59 per share, compared to $91.1 million or $0.69 per share in the same period in 2007 as well as a goodwill impairment charge of $324.1 million in 2008 compared to $1,743.4 million net of income taxes in the same period the previous year. For the full year 2008, Quebecor World reported a net loss from continuing operations of $943.9 million or ($5.26) per share, compared to a net loss from continuing operations of $1,837.4 million or ($14.10) per share for the same period in 2007. The full year results incorporate IAROC net of taxes of $165.9 million or $0.91 per share compared to $157.2 million or $1.19 per share in 2007. Excluding IAROC, goodwill impairment charge and reorganization items, adjusted diluted loss per share from continuing operations was ($2.06) in 2008 compared to adjusted diluted earnings per share from continuing operations of $0.31 in 2007. On the same basis, adjusted operating income in 2008 was $121.0 million compared to $169.3 million in 2007. Consolidated revenues were $4.0 billion compared to $4.7 billion in 2007.

Use of Non-GAAP Measures

In the discussion of our 2008 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, adjusted EBITDA and operating income before IAROC 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 our annual report or Form 20-F for the financial year ended December 31, 2008 filed with the United States Securities and Exchange Commission at www.sec.gov and the Canadian securities regulatory authorities at www.sedar.com. A copy of our annual report or Form 20-F for the financial year ended December 31, 2008 is also available on the Company's website at www.quebecorworld.com.




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