Montréal, Canada – In the first quarter of 2009, Quebecor World Inc. generated consolidated revenues from continuing operations of $752.1 million compared to $1.0 billion in the first quarter of 2008. Operating loss in the first quarter of 2009 before impairment of assets, restructuring and other charges (IAROC) was $14.9 million compared to an operating income of $9.2 million in the first quarter of 2008. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) was $35.6 million in the first quarter of 2009 compared to $74.2 million in the first quarter of 2008. The lower adjusted EBITDA in 2009 is principally due to the economic slowdown in North America, affecting all segments. Quebecor World's results in the first quarter of 2009 are based on continuing operations following the sale of its European business in June 2008.
The Company's adjusted EBITDA continues to be in line with management's expectations. Quebecor World continues to aggressively implement cost reductions. The Company recently put in place new cost reduction initiatives that will realize approximately $100 million in annualized cost savings. These measures which are detailed in the first quarter MD&A include changes to working conditions, reduced wages and benefits across the North American platform. The Company also expects to implement additional cost reduction initiatives by year-end. In the first quarter, selling, general and administrative expenses decreased by 28.3% compared to the same period last year. Despite reduced adjusted EBITDA, the Company generated $75.0 million of free cash flow in the first quarter compared to $63.9 million in the first quarter of 2008.
"Like other companies in our industry and elsewhere, we are experiencing reduced volumes largely due to the North American recession. We are taking responsible measures to reduce costs including reducing wages and benefits across the board," said Jacques Mallette President and CEO Quebecor World Inc. "While difficult, these concessions are being shared by all our employees across North America both union and non-union. It is this spirit of shared commitment to the future success of our Company that will benefit all our stakeholders going forward. We believe that these efforts will enable us to exit creditor protection with a pro forma ratio in the range of 2x Debt/EBITDA, which should give us one of the strongest balance sheets in the industry in the current environment."
The Company also recently engaged the services of Credit Suisse Securities (USA) LLC, GE Capital Markets, Inc.and Wachovia Capital Markets LLC as the lead arrangers for the Exit Financing. Based on the proposed new capital structure contemplated in the Amended Plan of Reorganization, the Company estimates that the exit financing facility, which is expected to be finalized by mid-July, will be in the range of $625 million to $700 million.
Quebecor World continues to leverage the size and scope of its North America and Latin American platform and its full service product offering to renew and sign new business with the leading retailers and publishers in the Americas. The Company has recently announced new and extended agreements with Boardroom, CVS Caremark, Rodale, Forbes and Newsweek' s Arthur Frommer's Budget Travel.
"These and other agreements are the result of our focus on working closely with our customers to evaluate how we can best help them reach their business goals," commented Mr. Mallette. "Our approach, as evidenced by our Integrated Multichannel Solutions offering, is based on much more than competitive market pricing. We are a responsive and innovative organization developing partnerships with customers enabling them to leverage an integrated multi-channel or multi-product solution to maximize their return on investment."
On May 12, 2009, the Corporation received an unsolicited, non-binding and conditional indication of interest from R.R. Donnelley & Sons Company ("RRD") to acquire all or substantially all of the assets of Quebecor World in exchange for cash in an amount equal to the cash amount contemplated for distribution under the Plan, which is approximately $700 million, distribution of the cash on Quebecor World's balance sheet which is estimated to be $257 million as at June 30, 2009 and 30 million shares of RRD common stock. As announced on May 13, 2009, the Company's Board of Directors, together with its financial and legal advisors, is reviewing the terms and conditions of the proposed transaction and will be discussing it with its major stakeholders. Quebecor World is proceeding as scheduled with its reorganization activities under the Insolvency Proceedings.
Quebecor World also announces today that it was granted orders from the Quebec Superior Court extending the expiration of the stay period under the insolvency proceedings pursuant to the Companies' Creditors Arrangement Act (the CCCAA) and authorizing the convening of, and the filing and mailing to creditors of an information circular relating to the Canadian creditors' meeting on June 18, 2009 under the CCAA as well as setting out certain procedural rules and matters with respect to such meeting.
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