MONTREAL, CANADA--(May 15, 2008) - On January 21, 2008, Quebecor World Inc. filed for creditor protection in the United States and Canada due to the inability of the Company to raise new capital in the difficult financial market and to complete the sale of its European operations. The filing was necessary to ensure the long-term sustainable profitability of the Company within a process that ensures fair and equitable treatment for all stakeholders.
Since the initial filing, the Company received the final order for its $1 billion DIP (debtor-in-possession) financing from the U.S. and Canadian courts. The Company also received an extended stay of proceedings under CCAA in Canada to July 25, 2008. The stay of proceeding under the Chapter 11 process is through to July of 2009. As stated in the Monitor's report of May 6, 2008, the Company had an unrestricted cash balance of $123 million at April 27, 2008 and, as a result of the granting of the Final DIP Order on April 1, 2008, has access to the $400 million Revolving Loan Facility.
Quebecor World has made substantial progress on the advancement of the Chapter 11 and CCAA processes with assistance of the restructuring committee of the Board, its advisors, the Chief Restructuring Officer and input from the Monitor. The Company is developing a business plan which will reflect the Company's expectation of future operating performance both during and after the CCAA and Chapter 11 processes and expects to discuss those shortly with its stakeholders committee's.
Quebecor World announces that for first quarter 2008 it generated revenues of $1.3 billion compared to $1.4 billion in 2007. Operating loss before impairment of assets, restructuring, and other charges (IAROC) and business disposals in the first quarter was $2.8 million compared to operating income of $22.2 million in the first quarter of 2007. On the same basis, adjusted EBITDA was $73.4 million in first quarter 2008 compared to $103.0 million in the first quarter 2007. First quarter results included impairment of assets, restructuring and other charges (IAROC) net of income taxes of $38.0 million compared to $23.1 million in the first quarter last year. In the first quarter of 2008, the Company incurred a non-cash loss of $32 million related to its former UK facility as well as reorganization charges of $14.2 million. The lower adjusted EBITDA in 2008 is attributed to reduced volume, customer losses realized last year in the U.S. book and catalog segments, lower prices related to excess capacity, a weaker world-wide economy and the impact of the creditor protection process.
"We continue to implement the final phases of our three-year retooling and restructuring plan which is being completed in 2008," said Jacques Mallette, President and CEO Quebecor World. "Our refinancing efforts at the end of 2007 and our filing for creditor protection in the U.S. and Canada created uncertainty with selected customers. This resulted in spot volume reductions which contributed to our reduced profitability. However, the overwhelming majority of our customers have been very supportive and we continue to work toward the objective of exiting creditor protection as soon as possible as a strong player in our industry. Our adjusted EBITDA results in the first quarter are also slightly ahead of projections for our DIP financing."
In the last three months Quebecor World has renewed business with major publishers and retailers including, McGraw Hill, Simon and Schuster, Bauer, Wenner Media, Rona, Carrefour Group and many others. The Company is serving all its global customers with superior products and services. This includes enhanced before and after print value-added services as exemplified by Quebecor World's Integrated Multi-Channel Solutions offering to increase the efficiency of customers advertising campaigns. In the coming weeks and months, Quebecor World intends to further expand this and other programs to create additional customer value.
First quarter per share information and restructuring charges
In the first quarter Quebecor World reported a net loss of $190.0 million or ($1.29) per share compared to a net loss of $38.1 million or ($0.34) per share in the first quarter of last year. First quarter results included impairment of assets, restructuring and other charges (IAROC) net of income taxes of $38.0 million or $0.26 per share, compared to $23.1 million or $0.17 per share in the same period in 2007. Excluding IAROC, the adjusted net loss was $152 million or ($1.03) per share in the first quarter 2008 compared to adjusted net loss of $15 million or ($0.17) per share for the first quarter last year.
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 (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 5, "Reconciliation of non-GAAP Measures" of our first quarter 2008 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 first quarter 2008 management's discussion and analysis is also available on the Company's website at www.quebecorworld.com.
WhatTheyThink is the global printing industry's leading independent media organization with both print and digital offerings, including WhatTheyThink.com, PrintingNews.com and WhatTheyThink magazine versioned with a Printing News and Wide-Format & Signage edition. Our mission is to provide cogent news and analysis about trends, technologies, operations, and events in all the markets that comprise today’s printing and sign industries including commercial, in-plant, mailing, finishing, sign, display, textile, industrial, finishing, labels, packaging, marketing technology, software and workflow.