Quebecor: Full-Year Free Cash Flow Increases 11% to $320 Million
Press release from the issuing company
MONTREAL--Feb. 3, 2003--Quebecor World Inc. is pleased to announce 2002 year-end and fourth quarter results. For the full year 2002, revenues were $6.2 billion compared to $6.3 billion in 2001. Net income amounted to $279.3 million or $1.76 per diluted share compared to $22.4 million or $0.00 per diluted share for the years ended December 31, 2002 and 2001 respectively. For the full year 2002, restructuring and other special charges amounted to $24.1 million compared to $226.3 million after tax, in the prior year. Free cash flow increased to $320 million in 2002 from $287 million in 2001, an 11% increase.
Revenues for the fourth quarter 2002 increased 5% to $1.7 billion. Operating income increased 7% to $160 million and earnings per share increased 11% on a comparable basis (note: 1) to $0.61 per diluted share.
Operating margin in the fourth quarter, before restructuring and other charges, increased to 9.5% compared to 9.3% for the same period last year. We recorded strong performance in our North American Magazine/Catalog and Directory Groups that helped offset significantly weaker results in our North American Commercial/Direct Group and in our French operations. On a full year comparable basis operating margin was 9.0% compared to 9.8% in 2001.
"During the first half of 2002 we realized lower revenues and earnings, as expected. We experienced improvement in the last six months and reduced financial expenses, allowing us to grow EPS on a comparable basis in the third and fourth quarters," said Mr. Charles G. Cavell, President and CEO Quebecor World. "This was achieved despite price pressures as a result of the difficult economic climate and excess capacity in the industry. We expect these conditions to continue into 2003 thereby requiring a continued focus on cost containment as we move forward."
During 2002 Quebecor World was successful in gaining new business and renewing long-term contracts with existing customers especially in our largest market, North America. Recently we announced contract wins with such important retailers and publishers as USA WEEKEND, Simon & Schuster, Albertsons, Rogers Publishing, and with Avon, Reader's Digest, Telefonica and Abril in Latin America.
"These wins clearly demonstrate that our leading technological platform and one-stop global shopping approach is of tremendous value in the market place," added Mr. Cavell. "We are determined to continue to be the low cost provider in our industry. This mix of a high-technology, low cost platform, coupled with strong customer service is what has made us the world leader and we will ensure this continues to be the case in all our geographies."
During the fourth quarter the Company recognized restructuring and other special charges of $19.6 million, pre-tax. The major components of this restructuring charge include the cost of workforce reductions in North America, Europe and Latin America, the write-off of an investment in Q-Media, a CD ROM replication business, and idle or impaired assets, for a total of $60 million. This is partially offset by the reversal of unused reserves in the 2001 restructuring initiatives amounting to $40 million.
Quebecor World's European operations, in countries outside of France, grew revenues and operating income in 2002 in spite of difficult print market conditions. Overall in Europe, revenues increased in the quarter and on a year-to-date basis but operating margins dropped because of our underperforming French operations. The Company is committed to correcting this situation, as we indicated in the third quarter, by significantly reducing costs in an effort to improve our French results.
In Latin America our business continued its strong growth. Despite a weaker fourth quarter, 2002 revenues increased 13% to $183 million. On a comparable basis, operating margins in 2002 improved to 7.8% from 6.5% in 2001.
During the year Quebecor World significantly improved its financial condition. For the year ending December 31, 2002, the net repayment of long-term debt amounted to $380 million. For the year, financial expenses were reduced by $39 million or 18% compared to 2001, due to reduced bank borrowings and lower rates of interest on long-term debt and securitization. At the end of 2002 Quebecor World's debt-to-capitalization stood at 40:60 compared to 46:54 at the end of 2001. This is also down from the high of 62:38 at the time of the World Color merger in 1999.
The Board of Directors declared a dividend of $0.13 per share on Multiple Voting Shares and Subordinate Voting Shares. The Board also declared a dividend of CDN$0.3845 per share on Series 3 Preferred Shares, CDN$0.4219 per share on Series 4 Preferred Shares and CDN$0.43125 on Series 5 Preferred Shares. The dividends are payable on March 3, 2003 to shareholders of record at the close of business February 14, 2003.
Quebecor World Inc. also announced today that it has filed its quarterly report for the quarter ended December 31, 2002 with the Securities and Exchange Commission. The report contains certifications from Charles G. Cavell, President and Chief Executive Officer and Christian M. Paupe, Executive Vice President, Chief Administrative Officer and Chief Financial Officer, that the periodic report fully complies with the Securities Exchange Act of 1934 and that the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the company. These certifications are in accordance with the requirements of the Sarbanes-Oxley Act.
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