UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 or 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2007
Commission File Number :
1-14118
(Translation of Registrants Name into English)
612 Saint-Jacques Street, Montreal, Quebec H3C 4M8
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form
20-F or Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule 101 (b)(1):
Note:
Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if
submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Fork 6-K in paper as permitted by
Regulation S-T Rule 101 (b) (7):
Note:
Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if
submitted to furnish a report or other document that the registrant foreign private issuer must
furnish and make public under the laws of the jurisdiction in which the registrant is incorporated,
domiciled or legally organized (the registrants home country), or under the rules of the home
country exchange on which the registrants securities are traded, as long as the report or other
document is not a press release, is not required to be and has not been distributed to the
registrants security holders, and, if discussing a material event, has already been the subject of
a Form 6-K submission or other filing on EDGAR.
Indicate by check mark whether the registrant by furnishing the information contained in this
form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under
the Securities Exchange Act of 1934. Yes
o
No
þ
If Yes is marked, indicate below the file number assigned to the registrant in connection with
Rule 12g3-2(b): 82-
.
QUEBECOR WORLD INC.
Filed in this Form 6-K
Documents index
1. Audited Additional Disclosures related to the Reconciliation to United States GAAP Note for the
Years Ended December 31, 2006, 2005 and 2004 together with the Report of the Registrants Auditors
2. Unaudited Additional Disclosures related to the Reconciliation to United States GAAP Note for
the Nine Month Period Ended September 30, 2007
AUDITORS REPORT ON ADDITIONAL DISCLOSURES RELATED TO
THE RECONCILIATION TO UNITED STATES GAAP
NOTE
To the Board of Directors of Quebecor World Inc.
On March 20, 2007, we reported on the consolidated balance sheets of Quebecor World Inc. (the
Company) as at December 31, 2006 and 2005 and the consolidated statements of income, shareholders
equity and cash flows for each of the years in the three-year period ended December 31, 2006 which
are included in the annual report on Form 40-F. In connection with our audits of the aforementioned
consolidated financial statements, we also have audited the related supplemental information
entitled Additional Disclosures related to the Reconciliation to United States GAAP Note included
in a Form 6-K. This supplemental information is the responsibility of the Companys management. Our
responsibility is to express an opinion on this supplemental information based on our audits.
In our opinion, such supplemental information, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
/s/ KPMG
LLP
Chartered Accountants
Montreal, Canada
March 20, 2007 (except for the Additional Disclosures related to the Reconciliation to United
States GAAP Note which is as November 12, 2007)
1
QUEBECOR
WORLD INC. AND ITS SUBSIDIARIES
Additional
Disclosure Related to the Reconciliation to United States
Generally
Accepted Accounting Principles Note
For The
Years Ended December 31, 2006, 2005 and 2004
(Tabular amounts are expressed in millions of US dollars, except
option amounts)
The Company follows generally accepted accounting principles
(GAAP) in Canada, which differ in some respects from
those applicable in the United States. The Company has prepared
a reconciliation of the significant accounting differences
between Canadian GAAP and U.S. GAAP in accordance with
Item 17 of
Form 20-F,
which is included in Note 25 to the Companys 2006
Annual Report on
Form 40-F.
For purposes of a registration statement on
Form F-10,
the Company is also required to provide additional significant
disclosures required by U.S. GAAP, in accordance with
Item 18 of
Form 20-F.
The additional significant disclosures required by U.S. GAAP and
certain applicable SEC rules are as follows:
Additional
disclosure
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(i)
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Pension
and Other Post Retirement Benefits
|
Under GAAP in the United States, a narrative description of
investment policies and strategies and of the basis used to
determine the overall expected long-term
rate-of-return-on-assets
assumption must be disclosed.
The Company follows a disciplined investment strategy, which
provides diversification of investments by asset class, foreign
currency, sector or company. The Pension Committee of the Board
of Directors has approved investment policies for the different
pension plans that establish long-term asset mix targets based
on several factors, including: historical returns achieved by
worldwide investment markets, the time horizon of the pension
plans obligations and the investment risk. For each of the
plans, an allocation range by asset class is developed whereby a
mix of equities and fixed-income investments is used to provide
an appropriate risk-adjusted long-term return on plan assets.
Third party investment managers are employed to invest assets in
both passively-indexed and actively-managed strategies and
investment returns and risks are monitored on an ongoing basis.
The prospective target asset allocation percentage for both the
pension and other post retirement benefits is approximately 65%
for equity securities and approximately 35% for debt
securities and others.
The expected long-term rate of return on assets assumption is
selected by first identifying the expected range of long-term
rates of return for each major asset class. Expected long-term
rates of return are developed based on long-term historical
averages, current expectations of future returns and level of
inflation rates. The expected long-term rate of return on plan
assets is then calculated by weighting each asset class. To the
extent that individual pension plans have different target asset
mixes, the expected long-term rate of return on assets may
differ across plans.
The Company determines its assumption for the discount rate to
be used for purposes of computing annual service and interest
costs based on an index of high-quality corporate bond yields
and matched-funding yield curve analysis as of the measurement
date.
Also, under GAAP in the United States, information about the
future expected cash flows for pension plans must be disclosed.
2
QUEBECOR
WORLD INC. AND ITS SUBSIDIARIES
Additional
Disclosure Related to the Reconciliation to United States
Generally
Accepted Accounting Principles Note
For The
Years Ended December 31, 2006, 2005 and 2004
(Continued)
Additional
disclosure (Continued)
|
|
(i)
|
Pension
and Other Post Retirement Benefits (Continued)
|
The expected employer contributions to the Companys
defined benefit pension plans and other post-retirement benefits
plans will be $68.2 million in 2007 and the expected
benefit payments over the next years will be as follows:
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|
|
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2007
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|
$
|
96.1
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|
2008
|
|
|
58.2
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|
2009
|
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|
61.1
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|
2010
|
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63.0
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2011
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64.5
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|
2012 2017
|
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374.4
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|
As at December 31, 2006 and 2005, the accumulated benefit
obligation for all defined benefit pension plans was of $1.0
billion and $1.1 billion, respectively; none of our plans are
fully funded.
The incremental effects of adopting the provisions of
SFAS 158 on the Companys consolidated balance sheets
at December 31, 2006 are presented in the following table.
The adoption of SFAS 158 had no effect on the
Companys statement of income for the year ended
December 31, 2006, or for any prior period presented,
and it will not affect the Companys operating results in
future periods. Prior to the Companys adoption of
SFAS 158, it recognized a decrease in the minimum pension
liability of $1.3 million and an increase of
$23.8 million at December 31, 2006 and 2005
respectively. The amounts recognized in the consolidated balance
sheets upon adoption were as follows:
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Prior to adopting
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Effect of adopting
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As Reported at
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SFAS 158
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SFAS 158
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December 31, 2006
|
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|
Intangible asset
|
|
|
13.2
|
|
|
|
(13.2
|
)
|
|
|
|
|
Accrued pension and postretirement liability
|
|
|
(341.9
|
)
|
|
|
(44.2
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)
|
|
|
(386.1
|
)
|
Deferred tax liabilities
|
|
|
80.7
|
|
|
|
15.4
|
|
|
|
96.1
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|
Accumulated other comprehensive income
|
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|
186.6
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|
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42.1
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|
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228.7
|
|
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|
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As at December 31, 2006, accumulated other comprehensive
income (loss) include the following amounts that have not yet
been recognized in net periodic benefit cost related to the
Companys pension plans:
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Defined Benefit
|
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Post-Retirement
|
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Pension Plans
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Benefit Plans
|
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Total
|
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|
Net actuarial loss
|
|
$
|
(312.4
|
)
|
|
$
|
(6.9
|
)
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|
$
|
319.3
|
|
Net prior service (costs) credit
|
|
|
(16.2
|
)
|
|
|
14.1
|
|
|
|
(2.1
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)
|
Net transitional obligation
|
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3.1
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|
|
|
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3.1
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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$
|
(325.5
|
)
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|
$
|
7.2
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|
|
$
|
(318.3
|
)
|
|
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|
|
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The net actuarial loss, net prior service (costs) credit and net
transitional asset included in accumulated other comprehensive
income and expected to be recognized in net period benefit cost
3
QUEBECOR
WORLD INC. AND ITS SUBSIDIARIES
Additional
Disclosure Related to the Reconciliation to United States
Generally
Accepted Accounting Principles Note
For The
Years Ended December 31, 2006, 2005 and 2004
(Continued)
Additional
disclosure (Continued)
|
|
(i)
|
Pension
and Other Post Retirement Benefits (Continued)
|
during the fiscal year ended December 31, 2007 for the
Companys pension and post-retirement plans is
$14.6 million.
|
|
(ii)
|
Allowance
for doubtful accounts
|
Under SEC Requirements, allowance for doubtful accounts must be
disclosed. Accordingly, allowance for doubtful accounts, which
is recorded as a reduction of trade receivables amounted to
$49.8 million and $59.0 million as at
December 31, 2006 and 2005, respectively.
|
|
(iii)
|
Trade
payables and accrued liabilities
|
Under SEC Requirements, items which comprise more than 5% of
total current liabilities must be disclosed separately. Trade
payables of $315.6 million and $335.1 million, accrued
employees salaries of $140.2 million and
$143.9 million and accrued raw material and supplies of
$117.4 million and $105.7 million as at
December 31, 2006 and 2005, respectively, are included in
trade payables and accrued liabilities.
Under GAAP in the United States and GAAP in Canada, advertising
costs are expensed as incurred and amounted to
$2.6 million, $2.3 million and $2.1 million during the
years ended December 31, 2006, 2005 and 2004, respectively.
|
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(v)
|
Derivative
hedging instruments
|
Under SEC requirement, the amount of ineffectiveness related to
fair value and cash flow hedges must be disclosed separately.
The Company did not record any ineffectiveness related to its
fair value hedges. The reconciliation of the beginning and
ending accumulated comprehensive derivative gain (loss) related
to cash flow hedges is as follows:
|
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|
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|
Accumulated comprehensive derivative loss as at
December 31, 2003
|
|
$
|
(1.4
|
)
|
Reclassification to income
|
|
|
(0.6
|
)
|
Effective portion of hedges
|
|
|
22.7
|
|
|
|
|
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|
Accumulation comprehensive derivative gain as at
December 31, 2004
|
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20.7
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|
Reclassification to income
|
|
|
(18.0
|
)
|
Effective portion of hedges
|
|
|
1.5
|
|
|
|
|
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|
Accumulation comprehensive derivative gain as at
December 31, 2005
|
|
|
4.2
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|
Reclassification to income
|
|
|
(3.8
|
)
|
Effective portion of hedges
|
|
|
(10.3
|
)
|
|
|
|
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|
Accumulated comprehensive derivative loss as at
December 31, 2006
|
|
$
|
(9.9
|
)
|
|
|
|
|
|
Over the next 12 months, the Company expects an estimated
$6.2 million (net of income tax of $3.7 million) in
net losses in other comprehensive income as at December 31,
2006 to be reclassified to net income in connection with
derivative related to cash flow hedges, while the balance of
accumulated other comprehensive loss is expected to be reversed
over a
4-year
period.
4
QUEBECOR
WORLD INC. AND ITS SUBSIDIARIES
Additional
Disclosure Related to the Reconciliation to United States
Generally
Accepted Accounting Principles Note
For The
Years Ended December 31, 2006, 2005 and 2004
(Continued)
Additional
disclosure (Continued)
|
|
(vi)
|
Other
comprehensive income
|
Under GAAP in the United States, income tax (expense) or benefit
allocated to each component of other comprehensive income must
be disclosed. The income tax (expense) or benefit is allocated
as follow to components of other comprehensive income:
|
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|
|
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|
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
Pension and post-retirement benefits
|
|
$
|
(6.6
|
)
|
|
$
|
(3.8
|
)
|
|
$
|
(27.4
|
)
|
Unrealized net loss (gain) on derivative financial instruments
related to cash flow hedges
|
|
|
5.7
|
|
|
|
(1.2
|
)
|
|
|
(11.2
|
)
|
Reclassification of realized net loss on derivative financial
instruments to the statement of income
|
|
|
1.6
|
|
|
|
9.0
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
$
|
0.7
|
|
|
$
|
4.0
|
|
|
$
|
(38.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(vii)
|
Accumulated
other comprehensive income
|
The accumulated other comprehensive loss as at December 31 for
the years ended 2006, 2005 and 2004 are as follows:
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|
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|
|
|
|
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|
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2006
|
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|
2005
|
|
|
2004
|
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|
Accumulated other comprehensive income (loss) as per GAAP in
Canada
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative hedging
instruments
(a)
(ii)
|
|
|
(9.9
|
)
|
|
|
4.2
|
|
|
|
20.7
|
|
Pension and postretirement
benefits
(b)
(i)
|
|
|
(228.7
|
)
|
|
|
|
|
|
|
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|
Minimum pension
liability
(b)
(i)
|
|
|
|
|
|
|
(181.3
|
)
|
|
|
(153.7
|
)
|
Foreign currency translation
|
|
|
(47.8
|
)
|
|
|
(23.2
|
)
|
|
|
37.6
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Accumulated other comprehensive loss as per GAAP in the United
States at the end of year
|
|
$
|
(286.4
|
)
|
|
$
|
(200.3
|
)
|
|
$
|
(95.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
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|
In managements judgment, the future income tax assets of
$415.8 million as at December 31, 2006, net of
valuation allowance of $278.4 million will more likely than
not be realized as reductions of future taxable income, the
reversal of taxable temporary differences or by utilizing
available tax planning strategies. The valuation allowance for
future income tax assets relates primarily to loss carryforwards
and other tax benefits arising in foreign tax jurisdictions and
in the judgment of management, these assets are not likely to be
realized.
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(ix)
|
Stock-based
compensation
|
As of December 31, 2006, the total compensation cost
related to non-vested awards not yet recognized is
$13.9 million and the weighted-average period over which
the total compensation cost related to non-vested awards not yet
recognized is expected to be recognized is 2.0 years.
Volatility is based on historical volatility calculated from
grant date to the anticipated exercise date on issues of options
over a period of 221 weeks which is estimated to be the
life of an
5
QUEBECOR
WORLD INC. AND ITS SUBSIDIARIES
Additional
Disclosure Related to the Reconciliation to United States
Generally
Accepted Accounting Principles Note
For The
Years Ended December 31, 2006, 2005 and 2004
(Continued)
Additional
disclosure (Continued)
|
|
(ix)
|
Stock-based
compensation (Continued)
|
option. The risk-free interest rate is based on the yield of 4-
and
5-year
Treasury bonds issued in Canada and 3- and
5-year
treasury bonds issued in the United States. Dividend yield is
based on the average yield.
The number of non-vested options outstanding fluctuated as
follows:
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|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
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|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
average
|
|
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|
|
average
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|
average
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grant-date
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|
grant-date
|
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|
grant-date
|
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Options
|
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|
fair value
|
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|
Options
|
|
|
fair value
|
|
|
Options
|
|
|
fair value
|
|
|
Balance, beginning
of year
|
|
|
3,162,399
|
|
|
$
|
5.17
|
|
|
|
1,629,768
|
|
|
$
|
6.39
|
|
|
|
643,904
|
|
|
$
|
5.74
|
|
Granted
|
|
|
2,314,500
|
|
|
|
2.58
|
|
|
|
1,930,120
|
|
|
|
4.32
|
|
|
|
1,180,700
|
|
|
|
6.66
|
|
Vested
|
|
|
(513,278
|
)
|
|
|
5.67
|
|
|
|
(318,881
|
)
|
|
|
6.36
|
|
|
|
(156,936
|
)
|
|
|
5.73
|
|
Cancelled
|
|
|
(282,480
|
)
|
|
|
4.18
|
|
|
|
(78,608
|
)
|
|
|
4.87
|
|
|
|
(37,900
|
)
|
|
|
6.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of year
|
|
|
4,681,141
|
|
|
$
|
3.89
|
|
|
|
3,162,399
|
|
|
$
|
5.17
|
|
|
|
1,629,768
|
|
|
$
|
6.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior to 2003, the Company used the intrinsic value method for
its stock-based compensation; therefore, 50,000 options
non-vested are not included in the table above. For options
exercisable as at December 31, 2006 the weighted-average
remaining contractual life equals 3.64 years and the
intrinsic value of those options is nil since the exercise price
is lower than the fair value of the stock price of the Company
on that date.
|
|
(x)
|
Restrictions
of dividends payments
|
Substantially, the Companys net assets are subject to
restrictions which limit the payment of dividends.
|
|
(xi)
|
Future
accounting standards
|
In June 2006, the FASB issued interpretation No. 48,
Accounting for Uncertainty in Income Taxes
(FIN 48), an interpretation of FASB Statement
No. 109 (SFAS 109). FIN 48 clarifies
the accounting for uncertainty in income taxes in an
enterprises financial statement in accordance with
SFAS 109, Accounting for Income Taxes, and prescribes a
recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. This
interpretation also provides guidance as to de-recognition,
classification, interest and penalties, accounting in interim
periods, disclosure, and transition. The Company completed the
analysis and there was no impact on the income tax reserves at
January 1, 2007 upon the adoption of FIN 48.
In September 2006, the FASB issued SFAS No. 157, Fair
Value Measurements, to increase consistency and comparability in
fair value measurements and to expand their disclosures. The new
standard includes a definition of fair value as well as a
framework for measuring fair value. The standard is effective
for fiscal periods beginning after November 15, 2007 and
should be applied prospectively, except for certain financial
instruments where it must be applied
6
QUEBECOR
WORLD INC. AND ITS SUBSIDIARIES
Additional
Disclosure Related to the Reconciliation to United States
Generally
Accepted Accounting Principles Note
For The
Years Ended December 31, 2006, 2005 and 2004
(Continued)
Additional
disclosure (Continued)
|
|
(xi)
|
Future
accounting standards (Continued)
|
retrospectively as a cumulative-effect adjustment to the balance
of opening retained earnings in the year of adoption. The
Company is currently evaluating the impact of this standard on
its financial statements.
In February 2007, the FASB issued SFAS No. 159
(FASB 159), The Fair Value Option for Financial
Assets and Financial Liabilities, including an amendment of FASB
Statement No. 115. This statement permits entities to
choose to measure many financial instruments and certain other
items at fair value that are not currently required to be
measured at fair value and establishes presentation and
disclosure requirements designed to facilitate comparisons
between entities that choose different measurement attributes
for similar types of assets and liabilities. SFAS 159 is
effective on January 1, 2008. The Company is currently
evaluating the impact of this standard on its financial
statements.
7
QUEBECOR
WORLD INC. AND ITS SUBSIDIARIES
Reconciliation to United States Generally Accepted Accounting
Principles
For the Nine Months Ended September 30, 2007 and 2006
(Tabular amounts are expressed in millions of US dollars,
except per share and option amounts)
(Unaudited)
The Company follows generally accepted accounting principles
(GAAP) in Canada, which differ in some respects from
those applicable in the United States. The Company has prepared
a reconciliation of the significant accounting differences
between Canadian GAAP and U.S. GAAP in accordance with
Item 18 of
Form 20-F.
|
|
(a)
|
Reconciliation
of net income (loss) and earnings (loss) per share and
presentation of financial statements
|
The application of GAAP in the United States would have the
following effects on net income (loss) as reported:
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
2007
|
|
|
2006
|
|
|
Net income (loss), as reported in the consolidated statements
of income per GAAP in Canada
|
|
$
|
(374.3
|
)
|
|
$
|
16.9
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Convertible senior subordinated
notes
(a)(i)
|
|
|
2.9
|
|
|
|
1.7
|
|
Prepayment
option
(a)(ii)
|
|
|
7.9
|
|
|
|
|
|
Dividends on preferred shares classified as
liability
(b)(iii)
|
|
|
5.7
|
|
|
|
|
|
Premium on early redemption of
debt
(a)(vii)
|
|
|
53.1
|
|
|
|
|
|
Reduction of net income in a foreign
operation
(a)(iii)
|
|
|
|
|
|
|
2.5
|
|
Income
taxes
(a)(vi)
|
|
|
(38.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30.9
|
|
|
|
4.2
|
|
|
|
|
|
|
|
|
|
|
Net income (loss), as adjusted per GAAP in the United
States
|
|
$
|
(343.4
|
)
|
|
$
|
21.1
|
|
Net income allocated to holders of preferred shares
|
|
|
22.4
|
|
|
|
26.4
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per GAAP in the United States available to
holders of equity shares
|
|
$
|
(365.8
|
)
|
|
$
|
(5.3
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average number of equity shares outstanding (in
millions):
|
|
|
|
|
|
|
|
|
Basic
|
|
|
131.9
|
|
|
|
131.3
|
|
Diluted
|
|
|
131.9
|
|
|
|
131.3
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share as adjusted per GAAP in the United
States:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(2.77
|
)
|
|
$
|
(0.04
|
)
|
Diluted
|
|
|
(2.77
|
)
|
|
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
Dividends Per Common share
|
|
$
|
|
|
|
$
|
0.30
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Convertible
senior subordinated notes
|
Under GAAP in Canada, the equity component of the convertible
notes is recorded under shareholders equity as contributed
surplus. The difference between the carrying amount of
8
QUEBECOR
WORLD INC. AND ITS SUBSIDIARIES
Reconciliation to United States Generally Accepted Accounting
Principles (Continued)
For the Nine Months Ended September 30, 2007 and 2006
(Tabular amounts are expressed in millions of US dollars,
except per share and option amounts)
(Unaudited)
|
|
(a)
|
Reconciliation
of net income (loss) and earnings (loss) per share and
presentation of financial statements (Continued)
|
|
|
(i)
|
Convertible
senior subordinated notes (Continued)
|
the debt component and its face value is amortized as imputed
interest to income over the life of the convertible senior
subordinated note. Regarding the repurchase of convertible
notes, the Company is required to allocate the consideration
paid on extinguishment to the liability and equity components of
the convertible notes based on their fair values at the date of
the transaction. The amount of gain (loss) relating to the
liability element is recorded to income and the difference
between the carrying amount and the amount considered to be
settled relating to the conversion option element is treated as
an equity transaction. Under GAAP in the United States, the
allocation to equity is not permitted, no imputed interest is
needed in relation to the equity component and the gain (loss)
on repurchase is recorded through income in the period of
extinguishment. In June 2007, the Company redeemed all of its
outstanding senior notes. As a result the convertible feature
portion which was previously reported as contributed surplus is
reported to retained earnings for GAAP in Canada.
|
|
(ii)
|
Accounting
for derivative instruments and hedging activities
|
Under GAAP in United States, Statement of Financial Accounting
Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities
(SFAS 133) establishes accounting and reporting
standards for derivative instruments and hedging activities and
requires that all derivatives be recorded as either assets or
liabilities in the balance sheet at fair value. In accordance
with SFAS 133, for derivative instruments designated as
fair value hedges by the Company, such as certain interest rate
swaps and forward exchange contracts, changes in the fair values
of these derivative instruments are substantially offset in the
statement of income by changes in the fair values of the hedged
items.
For derivative instruments designated as cash flow hedges by the
Company, such as certain forward exchange contracts and natural
gas swap contracts, the effective portions of these hedges are
reported in other comprehensive income (loss) until it is
recognized in income during the same period in which the hedged
item affects income, while the current ineffective portions of
these hedges are recognized in the statement of income each
period.
Under GAAP in Canada prior to January 1, 2007, derivative
financial instruments were accounted for on an accrual basis.
Realized and unrealized gains and losses were deferred and
recognized in income in the same period and in the same
financial statement category as the income or expense arising
from the corresponding hedged positions. Since January 1,
2007, the standards for hedge accounting under Canadian GAAP
have been harmonized to those prescribed by SFAS 133 and
the differences recognized in prior periods have been eliminated.
Certain embedded derivatives, such as early prepayment options
included in some of the Companys borrowing agreements, do
not meet the criteria to be considered closely related to their
host contracts and are required to be recorded separately at
their fair values with changes recognized to earnings, for GAAP
in Canada. Under GAAP in the United States,
9
QUEBECOR
WORLD INC. AND ITS SUBSIDIARIES
Reconciliation to United States Generally Accepted Accounting
Principles (Continued)
For the Nine Months Ended September 30, 2007 and 2006
(Tabular amounts are expressed in millions of US dollars,
except per share and option amounts)
(Unaudited)
|
|
(a)
|
Reconciliation
of net income (loss) and earnings (loss) per share and
presentation of financial statements (Continued)
|
|
|
(ii)
|
Accounting
for derivative instruments and hedging activities
(Continued)
|
these embedded derivatives are considered to be clearly and
closely related to the underlying debt and changes to their fair
values are not recorded to earnings.
|
|
(iii)
|
Reduction
of a net investment in a foreign operation
|
Under GAAP in Canada, a gain or loss equivalent to a
proportionate amount of the exchange gain or loss accumulated in
the translation adjustment has to be recognized in income when
there has been a reduction of a net investment in a foreign
operation. Under GAAP in the United States, a gain or loss
should only be recognized in income in the case of a substantial
or complete liquidation, a sale or partial sale of a net
investment in a foreign operation.
|
|
(iv)
|
Asset
retirement obligations
|
Effective January 1, 2003, the Company adopted Statement of
Financial Accounting Standards No. 143, Accounting
for Asset Retirement Obligations,
(SFAS 143), which addresses financial
accounting for legal obligations associated with the retirement
of tangible long-lived assets and the associated asset
retirement costs. SFAS 143 requires the recognition of the
fair value of a liability for an asset retirement obligation in
the period in which it is incurred. When a liability is
initially recorded, the cost is capitalized by increasing the
carrying amount of the related long-lived asset. Over time, the
liability is increased at each period to reflect an interest
element considered in its initial measurement at fair value, and
the capitalized cost is amortized over the useful life of the
related asset. Under GAAP in Canada, accounting for asset
retirement obligations was adopted in 2004.
|
|
(v)
|
Stock-based
compensation
|
Effective January 1, 2003, the Company began accounting for
its stock-based compensation expense using the fair value based
method by adopting the requirements of CICA Handbook
Section 3870, Stock-based compensation and other
stock-based payments under GAAP in Canada and the
Statement of Financial Accounting Standards (SFAS)
No. 123, Accounting for Stock-Based
Compensation under GAAP in the United States. As a result,
there is no difference in stock-based compensation accounting
since January 1, 2003, except for the accounting of stock
option granted prior to 2003 or stock-based compensation
accounting rules applied prior to fiscal year 2003. Furthermore,
the adoption by the Company of the new SFAS No. 123
(revised) on January 1, 2006 did not result in any
additional difference between GAAP in Canada and in the United
States.
This adjustment represents the tax impact of United States GAAP
differences.
10
QUEBECOR
WORLD INC. AND ITS SUBSIDIARIES
Reconciliation to United States Generally Accepted Accounting
Principles (Continued)
For the Nine Months Ended September 30, 2007 and 2006
(Tabular amounts are expressed in millions of US dollars,
except per share and option amounts)
(Unaudited)
|
|
(a)
|
Reconciliation
of net income (loss) and earnings (loss) per share and
presentation of financial statements (Continued)
|
|
|
(vii)
|
Premium
on early redemption of debt
|
Under GAAP in Canada, the prepayment premium on the senior notes
was recorded to financial expenses at the notification date of
the early redemption on September 28, 2007, but under GAAP
in the United States, it is recognized on the settlement date.
|
|
(b)
|
Effect on
consolidated balance sheets
|
The application of GAAP in the United States would have the
following effects on the consolidated balance sheets, as
reported:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2007
|
|
|
December 31, 2006
|
|
|
|
Canada
|
|
|
United States
|
|
|
Canada
|
|
|
United States
|
|
|
|
|
|
|
|
|
|
(Revised
(1)
)
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current future income
taxes
(a)(vi) (b)(i)
|
|
$
|
46.6
|
|
|
$
|
49.3
|
|
|
$
|
40.6
|
|
|
$
|
50.7
|
|
Other
assets
(b)(i)(iv)
|
|
|
231.6
|
|
|
|
160.3
|
|
|
|
224.2
|
|
|
|
134.6
|
|
Liabilities and Shareholders Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables and accrued
liabilities
(a)(ii) (b)(i)
|
|
|
991.7
|
|
|
|
1,000.7
|
|
|
|
942.4
|
|
|
|
971.1
|
|
Income and other tax
payable
(b)(v)
|
|
|
25.9
|
|
|
|
1.4
|
|
|
|
39.7
|
|
|
|
39.7
|
|
Current future income
taxes
(a)(vi)
|
|
|
1.1
|
|
|
|
1.1
|
|
|
|
1.1
|
|
|
|
0.4
|
|
Long-term
debt
(a)(ii)(vii) (b)(iv)
|
|
|
2,237.2
|
|
|
|
2,203.5
|
|
|
|
1,984.0
|
|
|
|
1,981.7
|
|
Other
liabilities
(a)(ii) (b)(i)(v)
|
|
|
358.1
|
|
|
|
604.2
|
|
|
|
283.5
|
|
|
|
512.1
|
|
Long-term future income
taxes
(a)(ii)(vi)(vii) (b)(i)(v)
|
|
|
299.8
|
|
|
|
240.5
|
|
|
|
389.1
|
|
|
|
297.8
|
|
Convertible
notes
(a)(i)
|
|
|
|
|
|
|
|
|
|
|
117.7
|
|
|
|
120.5
|
|
Preferred
shares
(b)(iii)
|
|
|
175.9
|
|
|
|
|
|
|
|
150.2
|
|
|
|
|
|
Capital
stock
(b)(ii)(iii)
|
|
|
1,456.7
|
|
|
|
1,542.3
|
|
|
|
1,452.4
|
|
|
|
1,538.0
|
|
Contributed
surplus
(a)(i)(v)
|
|
|
101.5
|
|
|
|
101.3
|
|
|
|
114.1
|
|
|
|
98.1
|
|
Retained
earnings
(a) (b)(ii)(iii)
|
|
|
21.0
|
|
|
|
68.0
|
|
|
|
398.3
|
|
|
|
437.4
|
|
Accumulated other comprehensive income
(loss)
(e)
|
|
|
(165.0
|
)
|
|
|
(327.7
|
)
|
|
|
(82.6
|
)
|
|
|
(286.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See consolidated financial statements as of
September 30, 2007, Notes 2 and 12.
|
|
(i)
|
Pension
and post-retirement plans
|
Under GAAP in the United States, Statement No. 158,
Employers Accounting for Defined Benefit Pension and Other
Postretirement Plans (SFAS 158) was issued in
2006 and
11
QUEBECOR
WORLD INC. AND ITS SUBSIDIARIES
Reconciliation to United States Generally Accepted Accounting
Principles (Continued)
For the Nine Months Ended September 30, 2007 and 2006
(Tabular amounts are expressed in millions of US dollars,
except per share and option amounts)
(Unaudited)
|
|
(b)
|
Effect on
consolidated balance sheets (Continued)
|
|
|
(i)
|
Pension
and post-retirement plans (Continued)
|
requires the recognition in the balance sheet of the over- or
unfunded positions of defined benefit pension and other
post-retirement plans, along with a corresponding non-cash
adjustment, which is recorded in the accumulated other
comprehensive loss.
Under GAAP in Canada, a company is not required to recognize the
over- or unfunded positions.
The following table provides the components of net periodic
benefit cost:
|
|
|
|
|
|
|
|
|
|
|
September 30
|
|
|
|
2007
|
|
|
2006
|
|
|
Current service cost
|
|
$
|
11.6
|
|
|
$
|
26.6
|
|
Interest cost
|
|
|
44.1
|
|
|
|
46.8
|
|
Expected return on assets
|
|
|
(39.5
|
)
|
|
|
(38.1
|
)
|
Amortization
|
|
|
11.2
|
|
|
|
10.9
|
|
Plan amendments
|
|
|
|
|
|
|
2.3
|
|
Curtailment gain
|
|
|
|
|
|
|
(2.0
|
)
|
Settlement
|
|
|
4.7
|
|
|
|
2.5
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
32.1
|
|
|
$
|
49.0
|
|
|
|
|
|
|
|
|
|
|
Under GAAP in the United States, share issue costs are deducted
from the value proceeds of the capital stock issued. Under GAAP
in Canada, share issue costs are included in the Retained
earnings in the year when incurred.
Under Canadian GAAP, the Series 4 and Series 5
Cumulative Redeemable First Preferred Shares are presented as
liability in the balance sheet. Under GAAP in the United States,
these preferred shares are considered to be equity. As a result,
dividends on preferred shares classified as liability which are
reported to income under Canadian GAAP are reported to equity
under GAAP in the United States.
|
|
(iv)
|
Deferred
Financing Fees
|
Under GAAP in the United States, debt issuance costs are
capitalized as an asset and amortized over the term of the debt.
Canadian GAAP does not permit an entity to classify debt
issuance costs as deferred charges but instead requires
capitalized financing fees to be deducted from the amortized
cost of the debt.
12
QUEBECOR
WORLD INC. AND ITS SUBSIDIARIES
Reconciliation to United States Generally Accepted Accounting
Principles (Continued)
For the Nine Months Ended September 30, 2007 and 2006
(Tabular amounts are expressed in millions of US dollars,
except per share and option amounts)
(Unaudited)
|
|
(b)
|
Effect on
consolidated balance sheets (Continued)
|
On January 1, 2007, the Company adopted the provisions of
the Financial Accounting Standards Board (FASB) Interpretation
No. 48, Accounting for Uncertainty in Income Taxesan
interpretation of FASB Statement No. 109
(FIN 48). FIN 48 clarifies the accounting
for uncertainty in income taxes recognized in an
enterprises financial statements in accordance with FASB
Statement No. 109, Accounting for Income Taxes, and
prescribes a recognition threshold and measurement attribute for
the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. This
interpretation also provides guidance as to de-recognition,
classification, interest and penalties, accounting in interim
periods, disclosure and transition.
There was no change in the income tax reserves of the Company at
January 1, 2007, upon the adoption of FIN 48. At
adoption, the Company had approximately $38.7 million of
gross unrecognized income tax benefits (UTBs).
A reconciliation of the change in UTB balance from
January 1, 2007 to September 30, 2007 is as follows:
|
|
|
|
|
|
|
Federal, State and
|
|
|
|
Foreign Tax
|
|
|
Balance at January 1, 2007
|
|
$
|
38.7
|
|
Additions for tax positions related to the current year
|
|
|
6.1
|
|
Additions for tax positions related to prior years
|
|
|
9.3
|
|
Reductions for tax positions related to prior years
|
|
|
(3.2
|
)
|
Settlements with tax authorities
|
|
|
(9.0
|
)
|
Lapse of applicable statutes of limitations
|
|
|
(0.8
|
)
|
Variation in foreign exchange charged to the foreign currency
translation
|
|
|
2.1
|
|
|
|
|
|
|
Balance at September 30, 2007
|
|
$
|
43.2
|
|
|
|
|
|
|
Less: tax attributable to timing items included above
|
|
|
(13.4
|
)
|
|
|
|
|
|
Total UTBs that, if recognized, would impact the effective
income tax rate as of September 30, 2007
|
|
$
|
29.8
|
|
|
|
|
|
|
It is expected that the amount of UTBs will decrease by
approximately $11.7 million in the next twelve months. A
decrease of $2.3 million should result from various amended
state income tax returns filed with regards to tax audit
adjustments of the years 2003 and 2004. Also, the Canadian tax
authorities have completed the examination of the years 2002 and
2003 and notices of reassessment should be issued in the next
twelve months covering mainly various transfer pricing issues
for a total amount of $9.4 million.
The Company recognizes accrued interest and penalties related to
gross unrecognized tax benefits as part of the income tax
expense. The accrued amounts of interest and penalties are as
follow:
13
QUEBECOR
WORLD INC. AND ITS SUBSIDIARIES
Reconciliation to United States Generally Accepted Accounting
Principles (Continued)
For the Nine Months Ended September 30, 2007 and 2006
(Tabular amounts are expressed in millions of US dollars,
except per share and option amounts)
(Unaudited)
|
|
(b)
|
Effect on
consolidated balance sheets (Continued)
|
|
|
(v)
|
Income
taxes (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
|
Penalties
|
|
|
Balance at January 1, 2007
|
|
$
|
3.5
|
|
|
$
|
0.4
|
|
Charge (recovery) to the income statements
|
|
|
0.6
|
|
|
|
(0.1
|
)
|
Variation in foreign exchange charged to the foreign currency
translation
|
|
|
0.2
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2007
|
|
$
|
4.3
|
|
|
$
|
0.4
|
|
|
|
|
|
|
|
|
|
|
The Company and its subsidiaries are routinely examined by
various taxing authorities. With few exceptions, the Company and
its subsidiaries are no longer subject to examinations by tax
authorities for years before 2002.
At September 30, 2007, an amount of $2.5 million is
classified as short-term liability while an amount of
$39.1 million is classified as other long-term liability.
The application of GAAP in the United States would have the
following effects on the consolidated statements of
comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
2007
|
|
|
2006
|
|
|
Comprehensive income (loss) as per Canadian GAAP
|
|
$
|
(451.0
|
)
|
|
$
|
7.8
|
|
Adjustments to net income (loss) as per (a) above
|
|
|
30.9
|
|
|
|
4.2
|
|
Adjustments to other comprehensive income:
|
|
|
|
|
|
|
|
|
Pension and other post-retirement
benefits
(b)(i)
|
|
|
11.0
|
|
|
|
(9.3
|
)
|
Unrealized net loss (gain) on derivative financial instruments
related to cash flow
hedges
(a)(ii)
|
|
|
|
|
|
|
(16.5
|
)
|
Foreign currency
translation
(a)(iii)(b)(iii)
|
|
|
25.8
|
|
|
|
(38.3
|
)
|
Income
taxes
(a)(vi)
|
|
|
(5.3
|
)
|
|
|
8.3
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) as per GAAP in the United States
|
|
$
|
(388.6
|
)
|
|
$
|
(43.8
|
)
|
|
|
|
|
|
|
|
|
|
14
QUEBECOR
WORLD INC. AND ITS SUBSIDIARIES
Reconciliation to United States Generally Accepted Accounting
Principles (Continued)
For the Nine Months Ended September 30, 2007 and 2006
(Tabular amounts are expressed in millions of US dollars,
except per share and option amounts)
(Unaudited)
|
|
(d)
|
Other
comprehensive income
|
Under GAAP in the United States, income tax (expense) or benefit
allocated to each component of other comprehensive income must
be disclosed. The income tax (expense) or benefit is allocated
as follow to components of other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
2007
|
|
|
2006
|
|
|
Unrecognized (loss) gain on foreign currency translation
adjustment
|
|
$
|
(2.2
|
)
|
|
$
|
(1.6
|
)
|
Pension and post-retirement
benefits
(b)(i)
|
|
|
(5.3
|
)
|
|
|
2.3
|
|
Unrealized net loss (gain) on derivative financial instruments
related to cash flow
hedges
(a)(ii)
|
|
|
(6.7
|
)
|
|
|
6.0
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(14.2
|
)
|
|
$
|
6.7
|
|
|
|
|
|
|
|
|
|
|
|
|
(e)
|
Accumulated
other comprehensive income
|
The accumulated other comprehensive (loss) as at
September 30, 2007 and as at December 31, 2006 are as
follows:
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Accumulated other comprehensive income (loss) as per GAAP in
Canada
|
|
$
|
(165.0
|
)
|
|
$
|
(82.6
|
)
|
Adjustments:
|
|
|
|
|
|
|
|
|
Derivative hedging
instruments
(a)(ii)
|
|
|
(0.3
|
)
|
|
|
(9.9
|
)
|
Pension and postretirement
benefits
(b)(i)
|
|
|
(223.0
|
)
|
|
|
(228.7
|
)
|
Foreign currency translation
|
|
|
60.6
|
|
|
|
34.8
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive (loss) as per GAAP in the United
States at the end of period
|
|
$
|
(327.7
|
)
|
|
$
|
(286.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(f)
|
Statement
of cash flow
|
The disclosure of a subtotal of the amount of cash flows
provided by operations before net change in non-cash balances
related to operations in the consolidated statement of cash
flows is permitted under GAAP in Canada while it is not allowed
by GAAP in the United States.
The adjustments to comply with GAAP in the United States, with
respect to the consolidated statements of cash flows for the
nine months ended September 30, 2007 would result in an
increase of $8.0 million in cash provided by operating
activities and in a decrease in cash provided by financing
activities of $8.0 million and there would be no effect on
cash used in investing activities. There would be no effect on
net cash and cash equivalents provided by operating activities,
cash provided by (used in) financing activities and cash used in
investing activities for September 30, 2006.
15
QUEBECOR
WORLD INC. AND ITS SUBSIDIARIES
Reconciliation to United States Generally Accepted Accounting
Principles (Continued)
For the Nine Months Ended September 30, 2007 and 2006
(Tabular amounts are expressed in millions of US dollars,
except per share and option amounts)
(Unaudited)
|
|
(g)
|
Additional
disclosures
|
|
|
(i)
|
Allowance
for doubtful accounts
|
Under GAAP in the United States, allowance for doubtful accounts
must be disclosed. Accordingly, allowance for doubtful accounts,
which is recorded in reduction of accounts receivables amounted
to $43.6 million and $49.8 million as at
September 30, 2007 and December 31, 2006, respectively.
|
|
(ii)
|
Trade
payables and accrued liabilities
|
Under SEC requirements, items which comprise more than 5% of
total current liabilities must be disclosed separately. Trade
payables of $438.1 million and $315.6 million, accrued
employees salaries of $149.6 million and
$140.2 million and accrued raw material and supplies of
$107.8 million and $117.4 million as at
September 30, 2007 and December 31, 2006,
respectively, are included in trade payables and accrued
liabilities.
Under GAAP in the United States inventories must be disclosed
and were as follows:
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Raw materials and supplies
|
|
$
|
243.5
|
|
|
$
|
234.0
|
|
Work in process
|
|
|
147.0
|
|
|
|
122.7
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
390.5
|
|
|
$
|
356.7
|
|
|
|
|
|
|
|
|
|
|
|
|
(iv)
|
Accumulated
Depreciation
|
Under GAAP in the United States accumulated depreciation of
property, plant and equipment must be disclosed and amounted to
$2,980.2 million and $2,754.5 million as at
September 30, 2007 and December 31, 2006, respectively.
Under GAAP in the United States and GAAP in Canada, advertising
costs are expensed as incurred and amounted to $1.8 million
and $2.0 million for the nine months ended
September 30, 2007 and 2006, respectively.
|
|
(vi)
|
Commitment
and contingencies
|
The Company is subject to various laws, regulations and
government policies principally in North America and Europe,
relating to health and safety, to the generation, storage,
transportation, disposal and environmental emissions of various
substances, and to environment protection in general. The
Company believes it is in compliance with such laws, regulations
and government policies, in all material respects. Furthermore,
the Company does not anticipate that maintaining compliance with
such environmental statutes
16
QUEBECOR
WORLD INC. AND ITS SUBSIDIARIES
Reconciliation to United States Generally Accepted Accounting
Principles (Continued)
For the Nine Months Ended September 30, 2007 and 2006
(Tabular amounts are expressed in millions of US dollars,
except per share and option amounts)
(Unaudited)
|
|
(g)
|
Additional
disclosures (Continued)
|
|
|
(vi)
|
Commitment
and contingencies (Continued)
|
will have a material adverse effect upon the Companys
competitive or consolidated financial position.
Significant guarantees the Company has provided to third parties
include the following:
Operating
leases
The Company has guaranteed a portion of the residual values of
certain of its assets under operating leases with expiry dates
between 2007 and 2009, for the benefit of the lessor. If the
fair value of the assets, at the end of their respective lease
term, is less than the residual value guaranteed, then the
Company must, under certain conditions, compensate the lessor
for a portion of the shortfall. The maximum exposure in respect
of these guarantees was $57.6 million at the end of
September 2007. As at September 30, 2007, the Company
recorded a liability of $16.9 million associated with these
guarantees.
Sub-lease
agreements
The Company has, for some of its assets under operating leases,
entered into sub-lease agreements with expiry dates between 2007
and 2008. If the sub-lessee defaults under the agreement, the
Company must, under certain conditions, compensate the lessor
for the defaults. The maximum exposure in respect of these
guarantees is $0.08 million. As at September 30, 2007,
the Company did not record a liability associated with these
guarantees, other than that provided for under unfavourable
leases of $0.07 million, since it is not likely at this
time that the sub-lessee would default under the agreement and
that the Company would thus be required to honour the initial
obligation. Recourse against the sub-lessee was also available,
up to the total amount due.
Business
and real estate disposals
In connection with certain disposals of businesses or real
estate, the Company has provided customary representations and
warranties whose terms range in duration and may not be
explicitly defined. The Company has also retained certain
liabilities for events that have occurred prior to the sale,
relating to tax, environmental, litigation and other matters.
Generally, the Company has indemnified the purchasers in the
event that a third party asserts a claim against the purchaser
that relates to a liability retained by the Company.
These types of indemnification guarantees typically extend for a
number of years. The nature of these indemnification agreements
prevents the Company from estimating the maximum potential
liability that it could be required to pay to guaranteed
parties. These amounts are dependent upon the outcome of future
contingent events, the nature and likelihood of which cannot be
determined at this time.
17
QUEBECOR
WORLD INC. AND ITS SUBSIDIARIES
Reconciliation to United States Generally Accepted Accounting
Principles (Continued)
For the Nine Months Ended September 30, 2007 and 2006
(Tabular amounts are expressed in millions of US dollars,
except per share and option amounts)
(Unaudited)
|
|
(g)
|
Additional
disclosures (Continued)
|
|
|
(vii)
|
Guarantees
(Continued)
|
Business
and real estate disposals (Continued)
Historically, the Company has not made any significant
indemnification payments under such agreements and no amount has
been accrued in the consolidated balance sheet with respect to
these indemnification guarantees as at September 30, 2007.
The Company continues to monitor the conditions that are subject
to guarantees and indemnifications to identify whether it is
probable that a loss has occurred, and would recognize any such
losses under any guarantees or indemnifications when those
losses are probable and estimable.
Debt
agreements
Under the terms of certain debt agreements, the Company has
guaranteed the obligation of some of its U.S. subsidiaries. In
this context, the Company would have to indemnify the other
parties against changes in regulation relative to withholding
taxes, which would occur only if the Company was to make the
payments on behalf of some of its U.S. subsidiaries. These
indemnifications extend for the term of the related financings
and do not provide any limit on the maximum potential
liabilities. The nature of the indemnification agreements
prevents the Company from estimating the maximum potential
liability it could be required to pay. However, the majority of
the obligations to which such guarantees apply contain
make-whole provisions which effectively limit the exposure
associated with such an occurrence. Moreover, within the current
structure of the transactions, the Company is not exposed to
such liabilities. As such, the Company has not accrued any
amount in the consolidated balance sheet with respect to this
item.
Irrevocable
standby letters of credit
The Company and certain of its subsidiaries have granted
irrevocable standby letters of credit, issued by highly rated
financial institutions, to third parties to indemnify them in
the event the Company does not perform its contractual
obligations. As of September 30, 2007, the letters of
credit amounted to $47.2 million. The Company has not
recorded any liability with respect to these letters of credit,
as the Company does not expect to make any payments in excess of
what is recorded in the Companys financial statements. The
letters of credit mature at various dates in 2007 and 2008.
|
|
(ix)
|
Future
accounting standards
|
In September 2006, the FASB issued SFAS No. 157, Fair
Value Measurements, to increase consistency and comparability in
fair value measurements and to expand their disclosures. The new
standard includes a definition of fair value as well as a
framework for measuring fair value. The standard is effective
for fiscal periods beginning after November 15, 2007 and
should be applied prospectively, except for certain financial
instruments where it must be applied retrospectively as a
cumulative-effect adjustment to the balance of opening retained
earnings in the year of adoption. The Company is currently
evaluating the impact of this standard on its financial
statements.
18
QUEBECOR
WORLD INC. AND ITS SUBSIDIARIES
Reconciliation to United States Generally Accepted Accounting
Principles (Continued)
For the Nine Months Ended September 30, 2007 and 2006
(Tabular amounts are expressed in millions of US dollars,
except per share and option amounts)
(Unaudited)
|
|
(g)
|
Additional
disclosures (Continued)
|
|
|
(ix)
|
Future
accounting standards (Continued)
|
In February 2007, the FASB issued SFAS No. 159
(SFAS 159), The Fair Value Option for Financial
Assets and Financial Liabilities, including an amendment of FASB
Statement No. 115. This statement permits entities to
choose to measure many financial instruments and certain other
items at fair value that are not currently required to be
measured at fair value and establishes presentation and
disclosure requirements designed to facilitate comparisons
between entities that choose different measurement attributes
for similar types of assets and liabilities. SFAS 159 is
effective on January 1, 2008. The Company is currently
evaluating the impact of this standard on its financial
statements.
19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
|
|
|
QUEBECOR WORLD INC.
|
|
|
|
|
By:
|
/s/ Marie-É. Chlumecky
|
|
|
|
Name:
|
Marie-É. Chlumecky
|
|
|
|
Title:
|
Assistant Corporate Secretary
|
|
|
|
|
Date: November 13, 2007
|
|
|
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