Quebecor World USA Inc – ‘10-K405’ for 12/30/00

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Annual Report — [x] Reg. S-K Item 405   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K405     Annual Report -- [x] Reg. S-K Item 405                51    275K 
 2: EX-21       Subsidiaries of the Registrant                         1      6K 
 3: EX-23.1     Consent of Experts or Counsel                          1      5K 

10-K405   —   Annual Report — [x] Reg. S-K Item 405
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UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K 

                                                                [Download Table]
                                                            
/X/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
        SECURITIES EXCHANGE ACT OF 1934                     

FOR THE FISCAL YEAR ENDED DECEMBER 30, 2000 

COMMISSION FILE NUMBER 1-11802

QUEBECOR WORLD (USA) INC. 

(Formerly known as World Color Press, Inc.) 

                                                                [Download Table]
                                                                     
            DELAWARE                          37-1167902             
(State or other jurisdiction of  (IRS Employer Identification Number)
 incorporation or organization)                                      

                                                                [Download Table]
                                                                         
     THE MILL, 340 PEMBERWICK ROAD                               06831   
         GREENWICH, CONNECTICUT                                (Zip Code)
(Address of principal executive offices)                                 

203-532-4200
(Registrant's telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: None
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: 

   TITLE OF EACH CLASS
6% Convertible Senior Subordinated Notes due 2007 
8 3/8% Senior Subordinated Notes due 2008 
7 3/4% Senior Subordinated Notes due 2009 

INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF   
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE        
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH 
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES /X/  NO / /                       

  INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS   
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. /X/                                                                  

THE ONLY CLASS OF VOTING SECURITIES OF QUEBECOR WORLD (USA) INC. IS ITS 
COMMON STOCK, PAR VALUE $1.00 PER SHARE (THE "COMMON STOCK"). ON MARCH 15, 2001,
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF THE    
REGISTRANT WAS $0.                                                              
------------------------

    AS OF MARCH 15, 2001, TEN SHARES OF COMMON STOCK WERE OUTSTANDING.
------------------------

DOCUMENTS INCORPORATED BY REFERENCE 

   CERTAIN EXHIBITS AS LISTED ON THE EXHIBIT INDEX AND FILED WITH REGISTRANT'S
REGISTRATION STATEMENT ON FORM S-4 (NO. 333-74087) UNDER THE SECURITIES ACT OF  
1933, AS AMENDED, ARE INCORPORATED BY REFERENCE INTO PART IV OF THIS FORM 10-K. 

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INDEX 

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                                                                                PAGE      
                                                                          ----------------
                                                                                          
PART I                                                                                    

Item 1.      Business....................................................                2
Item 2.      Properties..................................................                7
Item 3.      Legal Proceedings...........................................                8
Item 4.      Submission of Matters to a Vote of Security Holders.........                8

PART II                                                                                   

Item 5.      Market for Registrant's Common Equity and Related                            
              Stockholder Matters........................................                9
Item 6.      Selected Financial Data.....................................                9
Item 7.      Management's Discussion and Analysis of Financial Condition                  
              and Results of Operations..................................               11
Item 7A.     Quantitative and Qualitative Disclosures about Market                        
              Risk.......................................................               16
Item 8.      Financial Statements and Supplementary Data.................               16
Item 9.      Changes in and Disagreements with Accountants on Accounting                  
              and Financial Disclosure...................................               16

PART III                                                                                  

Item 10.     Directors and Executive Officers of the Registrant..........               17
Item 11.     Executive Compensation......................................               18
Item 12.     Security Ownership of Certain Beneficial Owners and                          
              Management.................................................               23
Item 13.     Certain Relationships and Related Transactions..............               23

PART IV                                                                                   
Item 14.     Exhibits, Financial Statement Schedule and Reports on Form                   
              8-K........................................................               25

SIGNATURES...............................................................               27

Financial Statements                                                                      
             Index to Financial Statements and Financial Statement                        
              Schedule...................................................               28
             Independent Auditors' Report................................              F-1
             Balance Sheets as of December 30, 2000 and December 31,                      
              1999.......................................................              F-2
             Statements of Operations for the Years Ended December 30,                    
              2000, December 31, 1999 and December 27, 1998..............              F-3
             Statements of Stockholder's Equity for the Years Ended                       
              December 30, 2000, December 31, 1999 and December 27,                       
              1998.......................................................              F-4
             Statements of Cash Flows for the Years ended December 30,                    
              2000, December 31, 1999 and December 27, 1998..............              F-5
             Notes to Financial Statements...............................        F-6--F-21

Financial Statement Schedule                                                              
             Schedule II--Valuation and Qualifying Accounts..............              S-1

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PART I

ITEM 1. BUSINESS.                                                               

GENERAL                                                                         

Quebecor World (USA) Inc. (the "Company"), formerly known as World Color
Press, Inc. ("World Color"), is a wholly owned subsidiary of Quebecor Printing  
(USA) Holdings Inc. and an indirect wholly owned subsidiary of Quebecor         
World Inc. ("QWI"). The capital structure of the Company is 3,000 authorized    
shares of common stock, par value $1.00 per share. As of March 15, 2001 there   
were 10 shares outstanding.                                                     

  DUE TO CERTAIN COVENANTS IN ITS REGISTERED DEBT SECURITIES, THE COMPANY IS
REQUIRED TO CONTINUE TO MAKE REPORTS UNDER SECTION 13 AND 15 (D) OF THE         
SECURITIES EXCHANGE ACT OF 1934 (THE "EXCHANGE ACT"). THIS ANNUAL REPORT SPEAKS 
TO THE OPERATIONS OF THE FORMER WORLD COLOR PRESS, INC. AND SUBSIDIARIES AND    
EXCLUDES THE OTHER OPERATIONS OF QWI WITH WHICH IT IS NOW AFFILIATED.           

QUEBECOR WORLD INC.                                                     

GENERAL                                                                 

QWI, a diversified global commercial printing company, is the largest   
commercial printer in Canada and Europe and one of the largest in the United    
States and South America. Its 2000 revenues reached $6.5 billion, including     
approximately $2.7 billion contributed by the Company. QWI offers its customers 
state-of-the-art web offset, gravure and sheet fed printing capabilities, plus  
related value-added printing services in product categories including magazines,
retail inserts and circulars, books, catalogs, directories, specialty printing  
pre-media, logistics and other value-added services. QWI is a market leader in  
most of its product categories. QWI believes that the diversity of its customer 
base, geographic coverage and product segments reduces its reliance on any      
single product line or market. QWI's strategy for growth focuses on increasing  
its geographic coverage and expanding its product segments and services across  
its network of facilities. QWI services these markets and offers its products   
through a network of 160 printing and related services facilities capable of    
servicing virtually all major markets in the United States, Canada, France,     
Austria, United Kingdom, Spain, Sweden, Switzerland, Finland, Mexico, India,    
Brazil, Chile, Argentina, Peru and Colombia. QWI employs over 43,000 people.    

QUEBECOR WORLD (USA) INC.                                               

GENERAL                                                                 

 We are an industry leader in the management and distribution of print and
digital information. Founded in 1903, we currently operate 52 facilities as well
as warehouse space and a network of sales offices nationwide. Through selective 
acquisitions and internal expansion, we have strategically positioned ourselves 
as a full-service provider of high technology solutions for our customers'      
imaging, print and distribution needs. We operate in one business               
segment--printing services, which is comprised of six separate sectors including
commercial (which includes direct mail), magazines, catalogs, retail, books and 
directories. See consolidated financial statements on pages F-1 through F-21    
hereof.                                                                         

 Substantially all sales are made to customers through our employees based
upon customer specification. A significant amount of our sales are made pursuant
to term contracts with our customers, with the remainder being made on an       
order-by-order basis. As a result, we have a significant backlog of orders. No  
customer accounted for more than 5% of our net sales in 2000. In our opinion,   
the loss, at substantially the same time, of all of the business provided by any
one of our largest customers could have an adverse effect upon us.              

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MARKET SECTORS                                                          

COMMERCIAL/DIRECT MAIL                                                  

   We are a premier printer of virtually all of the different kinds of printed
materials used by businesses to promote their goods and services to businesses, 
investors and consumers. We print high quality specialty products such as annual
reports and automobile and travel brochures. We are also a leading printer of   
product brochures, bill stuffers, informational marketing materials and other   
advertising supplements. We also print freestanding inserts and retail inserts  
for established national and regional retailers and are the second largest      
offset printer of retail advertising inserts in the United States. We are an    
industry leader in three highly specialized areas: (1) complex personalized     
direct response materials; (2) unique and intricate consumer-involvement        
promotional materials such as scratch-off game pieces; and (3) airline guides   
and hotel directories. With a broad range of specialized equipment and focused  
attention to customer service, we provide commercial customers with format      
flexibility, high-speed production and the ability to print high quality        
commercial products from start to finish at one full-service source.            

   We print direct mail materials such as booklets, inserts, bill stuffers and
other advertisements. In addition, we provide direct marketers with direct      
imaging, personalization and other lettershop services. We believe that we are  
the only direct mail printer capable of providing complex personalization for   
both short and long-run projects.                                               

MAGAZINES                                                               

  We are a leading printer of consumer and specialty magazines in the United
States. The publication customer base includes some of the largest and most     
established consumer and specialty magazine publishers in a diverse range of    
market categories. The popularity of these magazines makes them less susceptible
to cyclical downturns in advertising spending, which we believe provides us with
a significant advantage over our competitors whose customers may be more        
susceptible to these downturns. A majority of our magazine printing is performed
under contracts with remaining terms of between one and nine years, the largest 
of which are with customers with whom the Company has had relationships for, on 
average, more than 20 years. We have extended a majority of these contracts     
beyond the initial expiration dates and intend to continue this practice when   
economically practicable.                                                       

CATALOGS                                                                

We are a leading printer for the U.S. catalog market. We currently print
many of the most well known catalog titles. In addition, our                    
business-to-business catalog printing work spans a broad range of industries    
including the computer, home and office furniture, office products and          
industrial safety products industries.                                          

RETAIL                                                                  

    Our coast-to-coast network of offset and gravure presses make us a leader in
printing national insert programs. Our customers include major national         
retailers.                                                                      

BOOKS                                                                   

We print mass-market rack size books as well as hardcover books for the 
consumer, education and reference markets. We service many of the largest U.S.  
publishers.                                                                     

DIRECTORIES                                                             

   We print four-color white-page and yellow-page directories for Pacific Bell
and certain other independent directory publishers.                             

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CURRENT SERVICES                                                        

DIGITAL AND PRE-MEDIA SERVICES                                          

Through our Que-Net Media-TM- division we are a leader in the transition
from conventional pre-media services to an all-digital workflow, providing a    
complete spectrum of film and digital preparation services, from traditional    
paste-up and color separations to state-of-the-art, all-digital pre-media       
services, as well as digital imaging and digital archiving. Our specialized     
digital and pre-media facilities, which are strategically located close to and, 
in certain cases, onsite at customer's facilities, provide our customers high   
quality, 24-hour preparatory services linked directly to our various printing   
facilities. In addition, our computer systems enable us to exchange images and  
textual material electronically, directly between our facilities and our        
customers' business locations. The integrated pre-media operations provide us   
with competitive advantages over traditional pre-media shops that are not able  
to provide the same level of integrated services. Our pre-media group also      
provides multi-media services such as the transformation of customers' existing 
printed and digital material into interactive media such as user-friendly       
information kiosk systems, Internet web sites, corporate Intranets, CD-ROMs and 
computer laptop sales presentations. Our pre-media services group has provided a
natural opportunity for cross-selling efforts by offering integrated pre-media  
and multi-media services to print customers who may have historically used      
third-party suppliers for their pre-media and multi-media needs.                

PRESS AND BINDING SERVICES                                              

We believe that we provide our customers with access to state-of-the-art
technology in all phases of the printing and binding process, including, among  
others, wide-web presses, computerized quality information systems,             
computer-to-plate and digital processing systems, high speed binding and        
personalization capabilities and robotic material handling. Wide-web press      
technology, which only a small number of well-capitalized printers are able to  
justify, generates a significant cost savings on longer press runs. Computerized
quality information systems provide us and our customers with instant analysis  
of the quality of the printing, thereby enabling us to improve our performance  
and plan preventive maintenance of our equipment more effectively.              
Computer-to-plate and digital processing technologies eliminate the use of film,
which significantly reduces costs and production time and enables customers to  
extend their production deadlines. Our personalization capabilities allow       
customers to include different content, whether advertising or editorial or     
both, within different copies of their product depending upon the geographic,   
demographic and subscriber specifications of their readers. We operate web and  
sheet fed offset, rotogravure and flexographic presses. We believe that the     
variety and capabilities of our presses and other production equipment allows us
to meet the broad range of our customers' printing needs and be the full service
provider demanded by the market. This capacity provides us with a competitive   
advantage over smaller printers who are unable to meet this demand.             

DISTRIBUTION AND LOGISTICS                                              

   We believe that our sophisticated mailing and distribution capabilities are
among the best in the industry. We maintain a network of strategic regional     
locations as well as a central facility in the Chicago, Illinois area from which
we provide customers important access to our nationwide services. Nearly all of 
our printing facilities dedicated to servicing our magazine, catalog and direct 
mail customers are strategically located in the mid-region of the country. We   
believe that the size of these printing plants and their central location and   
close proximity to each other provide us with a significant advantage in        
distribution capabilities, enabling us to distribute a greater volume of product
than our competitors to a wider target market at a lower cost. We also operate  
facilities on the west and east coasts which serve more regionalized needs. We  
use computerized cost studies to examine the benefits of pooled and palletized  
mailing for our customers to develop an efficient and cost effective            

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distribution plan designed to enable the customer's product to reach consumers  
at narrowly specified delivery times. Our mail capabilities extend from         
state-of-the-art mail list processing technology through entry point            
optimization, load planning, consolidation, carrier management, mail tracking   
and customer reporting.                                                         

COMPETITION                                                             

 Although we are one of the largest diversified commercial printers in the
United States, the industry is highly competitive in most product categories and
geographic regions. Competition is largely based on price, quality, range of    
services offered, distribution capabilities, customer service, availability of  
printing time on appropriate equipment and state-of-the-art technology. We      
compete for commercial business not only with large national printers, but also 
with smaller regional printers. In certain circumstances, due primarily to      
factors such as freight rates and customer preference for local services,       
printers with better access to certain regions of the country may have a        
competitive advantage in such a region.                                         

The printing industry is experiencing excess capacity. Further, the     
industries that we serve have been subject to consolidation efforts, leading to 
a smaller number of potential customers who exercise increased pricing leverage 
over the industry. Primarily as a result of this excess capacity and customer   
consolidation, there has been, and we believe will continue to be, downward     
pricing pressure and increased competition in the printing industry.            

We continue to evaluate solutions to address the challenges and         
opportunities presented to us by the increased use of e-commerce and reliance on
communication through electronic media, including the Internet, both with our   
customers and suppliers. We are participating with our customers in the use of  
electronic mediums throughout their business spectrums, from the delegation of  
their print requirements through the production and distribution of their       
product. We have continued to move to an all digital environment in our         
pre-media service offerings to allow our customers to produce, manage and       
redeploy their media assets by electronic means. We are also using electronic   
transaction technology that enables us to use electronic tools in aggregating   
and transacting our supply side purchases.                                      

Sales volume during 2000 in general was positively affected by increased
advertising and promotion. However, beginning in the fourth quarter of 2000 and 
continuing through to the present, as a result of the economic downturn in the  
United States we have experienced a softening in sales volume in certain        
sectors.                                                                        

Beginning in late 2000 certain fuel and natural gas prices have risen   
significantly. We have controls in place to minimize the impact on our business,
however, we expect increases in fuel and natural gas costs to have a negative   
effect on our gross margin in 2001.                                             

SEASONALITY                                                             

    The operations of our business are seasonal with approximately two-thirds of
historical operating income recognized in the second half of the fiscal year,   
primarily due to the higher number of magazine pages, new product launches and  
back-to-school and holiday catalog promotions.                                  

RAW MATERIALS                                                           

The primary raw materials required in a printing operation are ink and  
paper. We supply all of the ink and a substantial amount of the paper used in   
the printing process. Our net sales include sales to certain customers of paper 
that we purchase. We provide warehouse space for both ourselves and customer    
supplied paper. The price of paper is volatile over time and may cause          
significant swings in net sales and cost of sales. We generally are able to pass
on increases in the cost of paper to our customers, while declines in paper     
costs result in lower prices to our customers. In 1998, paper prices declined   
from previous years and availability was plentiful for most grades of paper.    
Early in 1999, paper prices in general continued to decline moderately. In the  
fourth quarter of 1999 and through the                                          

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first three quarters of 2000, paper prices increased almost quarterly (depending
on the grade). Starting in the fourth quarter of 2000, there was a slowdown in  
general economic conditions and a general moderation of paper demand. We expect 
this trend to continue and for paper prices to level off or decline in 2001. We 
believe we have adequate allocations with our paper suppliers to meet our       
customers' needs. Our contracts with our customers generally provide for price  
adjustments to reflect price changes for other materials, wages and outside     
services.                                                                       

Our materials management program capitalizes on our purchasing power in 
order to minimize materials costs while optimizing inventory management. We are 
not dependent upon any one source for our paper or ink. We believe that an      
adequate supply of ink is available. Given the volume of our purchases, we are  
generally able to obtain quality paper, ink and other materials at competitive  
prices. In addition, our strong commercial relationships with a relatively small
number of suppliers allow us to negotiate favorable price discounts and achieve 
more assured sourcing of high quality paper that meets our specifications.      

ENVIRONMENTAL COMPLIANCE                                                

  We are subject to regulation under various and changing federal, state and
local laws relating to the environment and to employee safety and health. These 
environmental regulations relate to the generation, storage, transportation,    
disposal and emission into the environment of various substances. Permits are   
required for operation of our business (particularly air emission permits), and 
these permits are subject to renewal, modification and, in certain              
circumstances, revocation. We believe that we are in substantial compliance with
such laws and permitting requirements. We are also subject to regulation under  
various and changing federal, state and local laws which allow regulatory       
authorities to compel (or to seek reimbursement for) clean-up of environmental  
contamination at our own sites and at facilities where our waste is or has been 
disposed.                                                                       

  We have procedural controls and personnel dedicated to compliance with all
applicable environmental laws. We estimate that capital expenditures in 2001    
required to comply with federal, state and local provisions for environmental   
controls, as well as expenditures for our share of costs for environmental      
clean-up, if any, will not be material and will not have a material adverse     
effect on us. We expect to incur ongoing capital and operating costs to maintain
compliance with applicable environmental laws, which costs we do not expect to  
be, in the aggregate, material.                                                 

RESEARCH AND DEVELOPMENT                                                

 Suppliers of equipment and materials used by companies such as us perform
most of the research and development related to the printing industry.          
Accordingly, our expenses and capital investments for research and development  
are not material. We do, however, dedicate significant resources to improving   
our operating efficiencies and the services we provide to our customers. In an  
effort to realize increased efficiencies in our printing processes, we have made
significant investments in state-of-the-art equipment, including new press and  
binding technology, digital photography, computer-to-plate and digital          
processing technology and real-time product quality monitoring systems.         

EMPLOYEES                                                               

  As of February 1, 2001, we had over 16,000 employees, approximately 17% of
whom were represented by unions under several different labor contracts, which  
expire at various times from April 2001 through August 2005, certain of which   
are currently under negotiation. A petition for a representation election has   
been filed at one of our facilities and in early April 2001 a group of          
approximately 275 employees will vote on the issue of union representation. We  
believe we have satisfactory employee and labor relations.                      

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ITEM 2. PROPERTIES.                                                     

    Our corporate office is currently located in leased facilities in Greenwich,
Connecticut. Production facilities are located throughout the United States, as 
set forth below. We believe our facilities provide adequate productive capacity 
for our needs. Summary information regarding our facilities as of March 15, 2001
is set forth as follows:                                                        

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                                                                            APPROXIMATE  
USE AND LOCATION                                             OWNED/LEASED  SQUARE FOOTAGE
----------------                                             ------------  --------------
                                                                                         
CORPORATE HEADQUARTERS:                                                                  

Greenwich, Connecticut......................................    Leased          55,000   

PRINTING PLANTS:                                                                         

Atlanta, Georgia............................................     Owned         129,000   

Augusta, Georgia............................................     Owned         650,000   

Brookfield, Wisconsin.......................................     Owned         309,000   

Caroll, Iowa................................................     Owned          58,000   

Corinth, Mississippi........................................     Owned         630,000   

Covington, Tennessee........................................     Owned         562,000   

Dresden, Tennessee..........................................     Owned         678,000   

Dyersburg, Tennessee........................................     Owned         869,000   

Elk Grove Village, Illinois.................................     Owned         175,000   

Elk Grove Village, Illinois.................................    Leased          93,000   

Effingham, Illinois.........................................     Owned         570,000   

Enfield, Connecticut........................................     Owned          75,000   

Erlanger, Kentucky..........................................    Leased          94,000   

Jonesboro, Arkansas.........................................     Owned         400,000   

Lebanon, Ohio...............................................     Owned         270,000   

Los Angeles, California.....................................    Leased         283,000   

Merced, California..........................................     Owned         460,000   

Metairie, Louisiana.........................................     Owned         106,000   

North Haven, Connecticut....................................     Owned         440,000   

Oakwood, Georgia............................................     Owned         251,000   

Oberlin, Ohio...............................................     Owned         110,000   

Oklahoma City, Oklahoma.....................................     Owned         220,000   

Omaha, Nebraska.............................................     Owned          52,000   

Ontario, California.........................................    Leased          39,000   

Orlando, Florida............................................    Leased         191,000   

Pawtucket, Rhode Island.....................................    Leased         300,000   

Phoenix, Arizona............................................    Leased         111,000   

Red Bank, Ohio..............................................     Owned         180,000   

Salem, Illinois.............................................     Owned         688,000   

South Windsor, Connecticut..................................     Owned          42,000   

Stillwater, Oklahoma........................................     Owned         335,000   

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                                                                            APPROXIMATE  
USE AND LOCATION                                             OWNED/LEASED  SQUARE FOOTAGE
----------------                                             ------------  --------------
                                                                                         
Taunton, Massachusetts......................................     Owned         355,000   

Versailles, Kentucky........................................     Owned       1,058,000   

Waukee, Iowa................................................     Owned         119,000   

Westwood, Massachusetts.....................................    Leased         102,000   

Wilmington, Massachusetts...................................    Leased         195,000   

Winchester, Virginia........................................     Owned          96,000   

DIGITAL SERVICES/PRE-MEDIA:                                                              

Arlington Heights, Illinois.................................    Leased          18,000   

Charlotte, North Carolina...................................    Leased          21,000   

Lanham, Maryland............................................    Leased          18,000   

Lexington, Kentucky.........................................    Leased          27,000   

Los Angeles, California.....................................    Leased          22,000   

New York, New York..........................................    Leased           6,000   

Orlando, Florida............................................    Leased          18,000   

St. Charles, Missouri.......................................    Leased          21,000   

Warren, Michigan............................................    Leased          12,000   

DISTRIBUTION:                                                                            

Altamont, Illinois..........................................    Leased          27,000   

Bensenville, Illinois (Distribution/Bindery)................     Owned         307,000   

Flora, Illinois.............................................     Owned         120,000   

Lexington, Kentucky.........................................    Leased         241,000   

Trenton, Tennessee..........................................    Leased          96,000   

Versailles, Kentucky........................................    Leased          26,000   

In addition, we maintain an extensive network of sales offices located  
throughout the United States, as well as warehouse space. We believe that none  
of our leases are material to our operations and that such leases were entered  
into on market terms.                                                           

ITEM 3. LEGAL PROCEEDINGS.                                              

 We do not believe that there are any pending legal proceedings, which, if
adversely determined, would have a material adverse effect on our financial     
condition or results of operations, taken as a whole.                           

    There were no material pending legal proceedings that were terminated in the
fourth quarter of the fiscal year ended December 30, 2000.                      

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.            

   No matters were submitted for stockholder vote during the fourth quarter of
2000.                                                                           

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PART II 

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. 

MARKET PRICE RANGE OF COMMON STOCK                                              

  On July 12, 1999, World Color entered into an Agreement and Plan of Merger
(the "Merger Agreement") with QWI and its indirect wholly owned subsidiary,     
Printing Acquisition Inc. ("Acquisition Inc."). On July 16, 1999, QWI, through  
Acquisition Inc., commenced a tender offer (the "Offer") to acquire up to       
23,500,000 shares of World Color common stock at a price of $35.69 per share. On
August 20, 1999, QWI acquired, through Acquisition Inc., 19,179,495, or         
approximately 50.4%, of World Color's outstanding shares of common stock (the   
"Change in Control"). On October 8, 1999, World Color and Acquisition Inc.      
completed a merger (the "Merger") of World Color with and into Acquisition Inc. 
with World Color as the surviving corporation, following receipt of approval    
from the Company's stockholders.                                                

   October 8, 1999, the day of the Merger, was the final day of public trading
for the common stock of World Color. Following the Merger, there is no          
established public trading market for our Common Stock, par value $1.00 per     
share. There was one holder of such Common Stock as of March 1, 2001, which was 
an affiliate of the Company.                                                    

Until the effective time of the Merger on October 8, 1999, World Color's
common stock was listed on the New York Stock Exchange under the symbol: WRC. In
connection with the Merger, the remaining outstanding shares of the common stock
of World Color were converted into 1.2685 subordinate voting shares of QWI and  
$8.18 in cash per share. The following table sets forth the range of the high   
and low sales prices of the common stock of World Color as quoted on the New    
York Stock Exchange for 1999. We did not pay dividends in 1999 or 2000.         

                                                        [Enlarge/Download Table]

1999                                                            HIGH        LOW       CLOSE  
----                                                         ----------  ---------  ---------
                                                                                             
First Quarter............................................... 30 7/16     21 15/16   23 3/16  
Second Quarter.............................................. 27 5/8      20         26 7/8   
Third Quarter............................................... 37 3/16     27 1/16    35 1/2   
Fourth Quarter.............................................. 38 3/8      35 1/2     38       

DIVIDEND POLICY                                                                 

    We do not expect to declare or pay cash dividends on the Common Stock at any
time in the foreseeable future. The decision whether to apply legally available 
funds to the payment of dividends on the Common Stock will be made by our Board 
of Directors from time to time in the exercise of its prudent business judgment,
taking into account, among other things, our results of operations and financial
condition and any then existing or proposed commitments for our use of available
funds. We are restricted by the terms of certain of our outstanding debt and    
financing agreements from paying cash dividends on our Common Stock.            

ITEM 6.  SELECTED FINANCIAL DATA.                                               

The following selected financial data for the five fiscal years ended   
December 30, 2000 have been derived from the Company's audited consolidated     
financial statements. The data presented below                                  

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should be read in conjunction with, and is qualified in its entirety by         
reference to, the Company's consolidated financial statements and the notes     
thereto appearing elsewhere in this report.                                     

                                                        [Enlarge/Download Table]

                                                                     FISCAL YEAR (1)                        
                                              --------------------------------------------------------------
                                               2000 (2)     1999 (3)       1998         1997         1996   
                                               --------    ----------   ----------   ----------   ----------
                                                                  (DOLLARS IN THOUSANDS)                    
                                                                                                            
OPERATING DATA:                                                                                             
  Net sales.................................. $2,653,421   $2,552,895   $2,356,885   $1,981,225   $1,641,412
  Cost of sales..............................  2,342,802    2,223,424    1,927,790    1,613,938    1,349,130
                                              ----------   ----------   ----------   ----------   ----------
  Gross profit...............................    310,619      329,471      429,095      367,287      292,282
  Selling, general and administrative                                                                       
    expenses.................................    245,426      406,730      214,862      188,688      153,071
  Restructuring and other special charges                                                                   
    (4)......................................         --       74,807           --           --           --
                                              ----------   ----------   ----------   ----------   ----------
  Operating income (loss)....................     65,193     (152,066)     214,233      178,599      139,211
  Interest expense and securitization fees...    111,478      103,866       88,589       80,039       58,417
  Income tax provision (benefit).............     (4,887)     (56,406)      52,054       41,341       33,533
  Extraordinary items, net of tax (5)........         --      (11,992)          --           --           --
  Cumulative effect of change in accounting                                                                 
    principle, net of tax (6)................         --      (10,513)          --           --           --
                                              ----------   ----------   ----------   ----------   ----------
  Net income (loss).......................... $  (41,398)  $ (222,031)  $   73,590   $   57,219   $   47,261
                                              ==========   ==========   ==========   ==========   ==========

OTHER OPERATING DATA:                                                                                       
  Depreciation and amortization.............. $  144,607   $  155,766   $  140,725   $  131,710   $  104,493
  Capital expenditures (7)...................    112,764      140,005       95,533       93,145       70,639

BALANCE SHEET DATA (AT PERIOD END):                                                                         
  Working capital............................ $  100,364   $  291,068   $  239,428   $  168,752   $  227,068
  Property, plant and equipment, net.........    728,653      877,998      885,999      857,195      818,157
  Total assets...............................  2,117,470    2,376,121    2,433,886    1,933,571    1,822,432
  Long-term debt (including current                                                                         
    maturities)..............................  1,001,479    1,291,196    1,255,920      819,113      897,867
  Stockholder's equity.......................    507,927      549,325      668,647      599,769      414,932

--------------------------                                                      

(1) In 2000, the Company's fiscal year was the 52-week period ending on the last
 Saturday in December. In 1999, the Company changed its fiscal year end to
    December 31, 1999 from the last Sunday in December. The change resulted in a
    369-day period rather than a 52-week period. This change was not material to
the Company's results of operations. The fiscal years prior to 1999 each
represent the 52-week period ending on the last Sunday in December.     

(2) In 2000, the Company recognized Merger related charges of $174,374. See     
Note 4 to the consolidated financial statements for further details.    

(3) In 1999, the Company recognized Merger related charges of $313,845. See     
Note 4 to the consolidated financial statements for further details.    

(4) In 1999, the Company recognized restructuring and other special charges of  
 $74,807 to eliminate redundant and less efficient capacity resulting from
  its ongoing acquisition strategy. See Note 8 to the consolidated financial
statements for further details.                                         

(5) In 1999, the Company recognized extraordinary charges of $11,992, net of    
    tax, for the early extinguishment of certain debt instruments. See Note 9 to
the consolidated financial statements for further details.              

(6) The Company adopted Statement of Position 98-5, "Reporting on the Costs of  
Start-Up Activities," in the first quarter of 1999 which resulted in a  
charge of $10,513, net of tax. See Note 2 to the consolidated financial 
statements for further details.                                         

(7) 1998 capital expenditures are net of proceeds of approximately $88,500 from 
the sale and leaseback of certain equipment.                            

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 
OF OPERATIONS.                                                              

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)                           

GENERAL                                                                         

We are a diversified commercial printer serving customers in the        
commercial/direct mail, magazine, catalog, book, retail and directory markets.  
We operate in one business segment--the management and distribution of print and
digital information. Our revenues are derived primarily from the sale of        
services and materials to our customers, including digital and pre-media        
services, press and binding services and distribution and logistics services.   

On July 12, 1999, we entered into an Agreement and Plan of Merger with  
Quebecor Printing Inc. (subsequently renamed Quebecor World Inc., "QWI") and its
indirect wholly owned subsidiary, Printing Acquisition Inc.                     
("Acquisition Inc."), which provided for the acquisition of World Color (the    
"Merger"). On July 16, 1999, QWI, through Acquisition Inc., commenced a tender  
offer to acquire up to 23,500,000 shares of our common stock at a price of      
$35.69 per share. On August 20, 1999, QWI acquired, through Acquisition Inc.,   
19,179,495, or approximately 50.4%, of our outstanding shares.                  

 On October 8, 1999, World Color and Acquisition Inc. completed the Merger
following receipt of approval from our stockholders. As a result, World Color   
became an indirect wholly owned subsidiary of QWI and at that time was renamed  
Quebecor World (USA) Inc. The remaining outstanding shares of our common stock  
(other than shares purchased by QWI in the tender offer) were converted into the
right to receive 1.2685 subordinate voting shares of QWI and $8.18 in cash per  
share. In addition, each 6% Convertible Senior Subordinated Note due 2007,      
outstanding at the Merger, became convertible into the number of QWI subordinate
voting shares and cash that would have been received had the convertible note   
been converted immediately prior to October 8, 1999. Our new capital structure  
consists of 3,000 authorized shares of common stock, par value $1.00 per share. 
At December 30, 2000, 10 common shares were outstanding.                        

   In 1999, we incurred $169,301 of non-recurring costs related to the Merger.
These costs included: the cancellation and settlement by Acquisition Inc. of all
vested and unvested options, bonuses, severance, legal and attorney fees, and   
other fees specifically related to the Merger. In addition, our outstanding     
restricted stock became fully vested in connection with the Merger. The costs   
related to the Merger are included in selling, general and administrative       
expenses in our 1999 consolidated statement of operations. The majority of these
costs were paid during 1999.                                                    

    In connection with the Merger, we have developed an integration strategy for
the combined entities that requires the redeployment and/or disposal of assets  
and the shutdown or relocation of certain of our plant locations and sales      
offices. This revised strategic initiative resulted in charges to our 1999 cost 
of sales and selling, general and administrative expenses of $134,668 and       
$9,876, respectively. These charges were primarily composed of $40,011 for the  
writedown of fixed assets to reflect fair market value, $32,303 for severance   
and related costs to shut down certain plant locations and sales offices,       
$19,672 for the disposal and other related costs of inventories and $34,100 to  
reflect other operational changes in the business as a result of the Merger.    
During 2000, we incurred $28,637 of severance and related costs to shut down    
certain plant locations as a result of the continuing execution of the          
integration strategy.                                                           

In 2000, we paid approximately $22,500 related to these charges. We     
anticipate the remaining payments for these charges to be approximately $26,500.

   We also incurred non-cash charges of $124,008 and $21,729 in 2000 to adjust
the carrying value of fixed assets and other assets and liabilities,            
respectively, in order to reflect the operational changes in the business       
resulting from the continued implementation of the Merger integration strategy. 

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    We anticipate incurring additional charges of approximately $31,000 over the
next year primarily related to equipment relocation costs as contemplated in the
Merger integration strategy.                                                    

   Our net sales include sales to certain customers of paper we purchased. The
price of paper, our primary raw material, is volatile over time and may cause   
significant swings in net sales and cost of sales. We generally are able to pass
on increases in the cost of paper to our customers, while declines in paper     
costs result in lower prices to our customers. In 1998, paper prices declined   
from previous years and availability was plentiful for most grades of paper.    
Early in 1999, paper prices in general continued to decline moderately. In the  
fourth quarter of 1999, and through the first three quarters of 2000, paper     
prices increased almost quarterly (depending on the grade). Starting in the     
fourth quarter of 2000, there was a slowdown in general economic conditions and 
a general moderation of paper demand. We expect this trend to continue and for  
paper prices to level off or decline in 2001. Our contracts with our customers  
generally provide for price adjustments to reflect price changes for other      
materials, wages and outside services.                                          

Beginning in late 2000 certain fuel and natural gas prices have risen   
significantly. We have controls in place to minimize the impact on our business,
however, we expect increases in fuel and natural gas costs to have a negative   
effect on our gross margin in 2001.                                             

ACQUISITIONS                                                                    

 In fiscal year 1999, we acquired five businesses serving customers in the
commercial, retail, publication and directory markets for an aggregate purchase 
price of approximately $203,000, including assumed indebtedness. In 1998, we    
acquired four businesses serving customers in the commercial, direct mail and   
book markets for an aggregate purchase price of approximately $200,000.         

RESULTS OF OPERATIONS                                                           

   In 2000, our fiscal year was the 52-week period ending on the last Saturday
in December. In 1999, we changed our fiscal year end from the last Sunday in    
December to December 31, 1999 to conform to QWI's fiscal year end. This change  
resulted in a 369-day period rather than the 52-week period under the previous  
policy. The change in fiscal year did not have a material effect on our results 
of operations. Our fiscal year in 1998 was the 52-week period ending on the last
Sunday in December.                                                             

YEAR ENDED DECEMBER 30, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999           

  Net sales increased $100,526 or 3.9% to $2,653,421 in 2000 from $2,552,895
in 1999. The increase was due to the inclusion of sales from the 1999           
acquisitions for the entire 2000 period and improved sales in our base business.

   Gross profit decreased $18,852 or 5.7% to $310,619 in 2000 from $329,471 in
1999 due primarily to additional Merger related charges as discussed above. In  
addition, we incurred one-time customer realignment charges of $21,787 in 2000. 
These charges reflect the impact of the operational integration strategies      
resulting from the Merger on continuing and completed contracts. Excluding the  
effect of the Merger and other one-time charges, the gross profit margin        
increased to 19.0% from 18.2% due primarily to benefits derived from the        
implementation of the Merger integration strategy.                              

   Selling, general and administrative expenses decreased 49.0% or $236,111 to
$245,426 in 2000 from $481,537 in 1999. In 1999 selling, general and            
administrative expenses included restructuring and other special charges of     
$74,807 and expenses related to the Merger of $179,177. Excluding these charges,
selling, general and administrative expenses increased $17,873 or 7.9% in 2000. 
The increase was due to $4,901 of charges for corporate administrative services 
from QWI and the effect of acquisitions in 1999 for the entire 2000 period,     
including the related additional amortization expense for goodwill, partially   

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offset by benefits derived from the implementation of the Merger integration    
strategy and cost saving initiatives.                                           

Interest expense and securitization fees increased $7,612 or 7.3% to    
$111,478 in 2000 from $103,866 in 1999 due to a higher average cost of funds.   

    The effective tax rate, primarily composed of the combined federal and state
statutory rates, was approximately 10.6% for 2000 and approximately 22.0% for   
1999. The tax rates were impacted by costs related to the Merger, some of which 
were nondeductible, as well as restructuring and other special charges in 1999. 

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 27, 1998           

  Net sales increased $196,010 or 8.3% to $2,552,895 in 1999 from $2,356,885
in 1998. The increase was due to the inclusion of both a full year of results   
from the acquisitions in 1998 and results from the acquisitions in 1999, higher 
paper volume and improved sales in our base business.                           

    Gross profit decreased $99,624 or 23.2% to $329,471 in 1999 from $429,095 in
1998, due primarily to the fourth quarter charges related to the Merger as      
described above, partially offset by the inclusion of the 1998 and 1999         
acquisitions and improved operating efficiencies in our base business. Excluding
the effect of the Merger related costs, gross profit margin remained flat at    
18.2% in 1999 and 1998, respectively, due to the increased sales resulting from 
higher paper volume, offset by synergies resulting from the integration of the  
acquired businesses.                                                            

   Selling, general and administrative expenses, including expenses related to
the Merger of $179,177 and restructuring and other special charges of $74,807,  
increased $266,675 to $481,537 in 1999 from $214,862 in 1998. Excluding the     
non-recurring Merger and restructuring charges, the 1999 increase of $12,691 or 
5.9% to $227,553 was due primarily to the acquisitions in 1999 and 1998,        
including the related additional amortization expense for goodwill, partially   
offset by benefits derived from cost saving initiatives.                        

   In 1999, we recorded restructuring and other special charges of $74,807, or
$44,297 net of tax, to eliminate redundant and less efficient capacity resulting
from our ongoing acquisition strategy. The restructuring and other special      
charges included the costs to exit and consolidate certain facilities and sales 
offices, write down impaired assets and eliminate certain administrative        
positions. These charges, consisting primarily of $26,615 for the writedown of  
equipment and $44,566 to reserve for certain lease costs, resulted from changes 
in our strategic growth objectives and were primarily determined based on       
independent appraisals. As of year end 1999, we have closed the affected        
facilities and sales offices and terminated the related employees. Fixed assets 
have been adjusted to reflect their appropriate values. We do not expect to     
incur additional expenses related to this restructuring initiative.             

Interest expense and securitization fees increased $15,277 or 17.2% to  
$103,866 in 1999 from $88,589 in 1998. The increase was due to higher average   
borrowings incurred to fund acquisitions, capital expenditures and working      
capital requirements, offset by a lower average cost of funds.                  

    The effective tax rate, primarily composed of the combined federal and state
statutory rates, was approximately 22.0% for 1999 and 41.4% for 1998. Full year 
1999's rate was impacted by costs related to the Merger, some of which were     
nondeductible, as well as restructuring and other special charges.              

LIQUIDITY AND CAPITAL RESOURCES                                                 

    In 1999, certain wholly owned subsidiaries of QWI provided us with $511,500,
which was borrowed on our behalf from subsidiaries' external long-term credit   
facilities. We used these funds to pay certain Merger expenses and repay        
$491,600 in outstanding debt incurred under our 1996 credit agreement. Our      
resulting indebtedness has an interest rate of LIBOR plus 2% per annum, adjusted
quarterly. In                                                                   

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2000, the interest rate ranged from 8.07% to 8.75%. The outstanding balance on  
these notes at December 30, 2000 was $220,000. Payment is not required prior to 
December 31, 2001.                                                              

  Throughout 2000, certain wholly owned subsidiaries of QWI provided us with
amounts borrowed under notes payable on demand. These borrowings bear interest  
at rates based on prime plus 1% per annum. At December 30, 2000, the outstanding
balance on these notes was $2,041. Certain wholly owned subsidiaries of QWI also
provided us with amounts borrowed under longer term promissory notes. These     
borrowings bear interest at rates based on LIBOR plus 1.55% per annum, adjusted 
quarterly, which was approximately 8.35% in 2000. These notes mature between    
October 2007 and December 2009. The outstanding balance at December 30, 2000 was
$72,744.                                                                        

   During 2000, we utilized amounts borrowed from subsidiaries of QWI to repay
$42,425 of 8.375% Senior Subordinated Notes due 2008 and $24,650 of 6.0%        
Convertible Notes due 2007. The net gains on extinguishment were not material to
our consolidated financial statements.                                          

 On August 20, 1999, we entered into a credit agreement with a third party
lender with a maximum commitment of $100,000. Interest is payable at a variable 
floating rate based on LIBOR or prime rate. We did not owe any amounts under    
this credit agreement at December 30, 2000.                                     

As part of the Merger expenses discussed above, in 1999 we recognized a 
non-cash charge of $67,474 for the cancellation and settlement by               
Acquisition Inc. of all vested and unvested options. Of this amount, $40,868 was
paid directly by Acquisition Inc. to the option holders on our behalf and       
$26,606 was paid in stock of QWI upon consummation of the Merger. In addition,  
we received $51,299 from Acquisition Inc. to pay certain other Merger expenses. 
These amounts will not be repaid and are, therefore, included in stockholder's  
equity in the consolidated balance sheets.                                      

    On June 30, 1997, we entered into an agreement to sell, on a revolving basis
for a period of up to five years, certain of our accounts receivable to a       
wholly-owned subsidiary, which entered into an agreement to transfer, on a      
revolving basis, an undivided percentage ownership interest in a designated pool
of accounts receivable to a maximum of $204,000. Subsequent to the Merger, this 
asset securitization program was cancelled. We then entered into a new agreement
which was aligned with QWI's existing program and has substantially the same    
terms and conditions as our previous agreement. This new agreement provides that
we sell our accounts receivable with QWI under a combined securitization        
program. On November 24, 2000, the asset securitization program limit was       
increased from $408,000 to $510,000. Based on our portion of the accounts       
receivable sold under the program, our accounts receivable were reduced by      
$280,000 and $200,000 at December 30, 2000 and December 31, 1999, respectively. 

Fees arising from the securitization transaction of $14,465, $11,456 and
$11,888 are included in interest expense and securitization fees in the         
consolidated statements of operations for the years ended December 30, 2000,    
December 31, 1999 and December 27, 1998, respectively. These fees vary based on 
commercial paper rates plus a margin. We maintain an allowance for doubtful     
accounts based on the expected collectibility of all accounts receivable,       
including receivables sold.                                                     

Working capital was $100,364 at December 30, 2000 and $291,068 at       
December 31, 1999, decreasing $190,704 or 65.5% primarily due to the sale of    
accounts receivable discussed above, an improvement of the collection of        
accounts receivable and additional accrued expenses generated from Merger       
related costs. Cash flow from operations was primarily used to fund working     
capital requirements and capital expenditures and to repay long-term debt.      

Capital expenditures totaled $112,764 and $140,005 in 2000 and 1999,    
respectively. These capital expenditures reflect the purchase of additional     
press and bindery equipment which increased our capacity and are part of our    
ongoing program to maintain modern, efficient plants and continually increase   
productivity.                                                                   

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At December 30, 2000, we had no net operating loss carryforwards from   
business acquisitions. We had federal tax credits of $4,162 expiring primarily  
from 2001 to 2002 and state tax credits of $11,886 expiring from 2001 to 2013.  
In addition, we had alternative minimum tax carryover credits of $36,698 which  
do not expire and may be applied against regular tax in the future, in the event
that the regular tax expense exceeds the alternative minimum tax.               

Concentrations of credit risk with respect to accounts receivable are   
limited due to our diverse operations and large customer base. As of            
December 30, 2000, we had no significant concentrations of credit risk.         

In the normal course of business, we are exposed to changes in interest 
rates. However, we manage this exposure by having a balanced variety of debt    
maturities as well as a combination of fixed and variable rate obligations. As  
of December 30, 2000 we were not party to any swap agreements. We do not hold or
issue any derivative financial instruments for trading purposes.                

We believe that our liquidity, capital resources and cash flows from    
operations are sufficient to fund planned capital expenditures, working capital 
requirements and interest and principal payments for the foreseeable future.    

RECENT ACCOUNTING PRONOUNCEMENTS                                                

    In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position ("SOP") 98-5, "Reporting on the Costs of Start-Up         
Activities," which requires costs of start-up activities and organization costs 
to be expensed as incurred. We adopted this SOP in the first quarter of fiscal  
year 1999, which resulted in a charge of $10,513, net of taxes of $7,305, for   
the non-recurring write-off of deferred start-up costs. The adoption of this SOP
did not have a material effect on our operating income on a continuing basis.   

  In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative     
Instruments and Hedging Activities." In June 2000, the Financial Accounting     
Standards Board issued SFAS No. 138, which amended certain provisions of        
SFAS 133 to clarify four areas causing difficulties in implementation. We will  
adopt SFAS 133 and the corresponding amendments under SFAS 138 in the first     
quarter of 2001. The adoption of SFAS 133, as amended by SFAS 138, will not have
a material effect on our consolidated financial statements.                     

In December 1999, the Securities and Exchange Commission issued Staff   
Accounting Bulletin ("SAB") 101, "Revenue Recognition in Financial Statements," 
which provides additional guidance in applying generally accepted accounting    
principles to revenue recognition in the financial statements. SAB 101 did not  
have a material effect on our consolidated financial statements.                

In September 2000, the Financial Accounting Standards Board issued SFAS 
No. 140, "Accounting for Transfers and Servicing of Financial Assets and        
Extinguishments of Liabilities." This statement revises the standards for       
accounting for securitization and other transfers of financial assets and       
collateral and requires certain disclosures, but it carries over most of the    
provisions of SFAS No. 125 without reconsideration. This statement is effective 
for transfers and servicing of financial assets and extinguishments of          
liabilities occurring after March 31, 2001. We are currently assessing the      
impact of this standard on our consolidated financial statements but we do not  
expect it to have a material effect.                                            

SEASONALITY                                                                     

    The operations of our business are seasonal with approximately two-thirds of
historical operating income recognized in the second half of the fiscal year,   
primarily due to the higher number of magazine pages, new product launches and  
back-to-school and holiday catalog promotions.                                  

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FORWARD-LOOKING STATEMENTS                                                      

  Except for historical information contained herein, the statements in this
document are forward-looking and made pursuant to the safe harbor provisions of 
the Private Securities Litigation Reform Act of 1995. Forward-looking statements
involve known and unknown risks and uncertainties, which may cause our actual   
results in future periods to differ materially from forecasted results. Those   
risks include, among others, changes in customers' demand for our products,     
changes in raw material and equipment costs and availability, seasonal changes  
in customer orders, pricing actions by our competitors and general changes in   
economic condition.                                                             

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.            

For quantitative and qualitative disclosures about market risk, see the 
notes to the consolidated financial statements (Note 9) referenced in Item 8 of 
this report, and the information presented under the caption "Management's      
Discussion and Analysis of Financial Condition and Results of Operations:       
Liquidity and Capital Resources" on pages 13-15 referenced in Item 7 of this    
report.                                                                         

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.                            

 The consolidated financial statements of the Company on pages F-1 through
F-21 hereof and the related schedule thereto set forth on page S-1 hereof are   
incorporated hereto by reference. The supplementary quarterly data set forth in 
Note 18 on page F-21 hereof is incorporated hereto by reference.                

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND         
FINANCIAL DISCLOSURE.                                           

None.                                                                   

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.                    

EXECUTIVE OFFICERS                                                              

The table below sets forth certain information regarding the current    
executive officers and Directors of the Company as of March 1, 2001.            

                                                        [Enlarge/Download Table]

NAME                                         AGE                          POSITION                    
----                                       --------                       --------                    
                                                                                                      
Marc L. Reisch............................    45     Chairman of the Board of Directors, President and
                                                     Chief Executive Officer                          

Denis Aubin...............................    41     Vice President, Treasurer                        

Kenneth Bacon.............................    50     Vice President, Taxes                            

Paul B. Carousso..........................    31     Vice President, Controller                       

Marcello A. De Giorgis....................    70     Director                                         

Carl Gauvreau.............................    37     Senior Vice President, Finance                   

Kevin P. Hayden...........................    37     Vice President, Operations Planning              

Marie D. Hlavaty..........................    37     Director and Executive Vice President, General   
                                                     Counsel/ Government Affairs and Secretary        

Richard T. Lane...........................    44     Executive Vice President, Strategic Development  

Heidi J. Nolte............................    43     Senior Vice President, Chief Information Officer 

Christian M. Paupe........................    42     Director and Executive Vice President            

 MARC L. REISCH has been the Chairman of the Board of Directors, President
and Chief Executive Officer of the Company since October 1999. Prior to that,   
Mr. Reisch had served as President of World Color since November 1998. Prior to 
holding that position, Mr. Reisch held the position of Vice Chairman, Group     
President since January 1998. Mr. Reisch held the position of Group President,  
Sales and Chief Operating Officer from August 1996 until January 1998 and the   
position of Executive Vice President, Chief Operating and Financial Officer from
June 1996 until August 1996. Mr. Reisch held the position of Executive Vice     
President, Chief Operating and Financial Officer and Treasurer from July 1995   
until June 1996. Prior to holding that position, Mr. Reisch was Executive Vice  
President, Chief Financial Officer and Treasurer since October 1993. Mr. Reisch 
has been a director of the Company since March 1996.                            

    DENIS AUBIN has held the position of Vice President, Treasurer since joining
QWI in July 2000. Prior to joining QWI, Mr. Aubin was Vice President and        
Treasurer of Cambior Inc. from February 1997 to July 2000, and prior thereto    
held several positions in Corporate Finance at Credit Lyonnais and Chase        
Manhattan Bank since 1983. Mr. Aubin is a Canadian citizen.                     

 KENNETH BACON has been Vice President, Taxes since January 1998. Prior to
holding that position, Mr. Bacon held the position of Tax Director for the      
Company, since joining World Color in June 1996. Prior to joining the Company,  
Mr. Bacon was a Senior Tax Manager at Coopers & Lybrand LLP.                    

 PAUL B. CAROUSSO has been Vice President, Controller since December 1998.
Prior to holding that position, Mr. Carousso was Vice President, Assistant      
Controller from July 1998. Mr. Carousso held the position of Assistant          
Controller of World Color from July 1996 until July 1998 and the position of    
Manager, Financial Reporting from October 1994 until July 1996. Prior to joining
World Color, Mr. Carousso was an auditor with Ernst & Young LLP.                

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MARCELLO A. DE GIORGIS has been a director of the Company since         
October 1999. Mr. De Giorgis is currently the sole proprietor of Berkshire      
International Business Consulting.                                              

CARL GAUVREAU has been Senior Vice President, Finance since March 2001. 
Prior thereto he was Vice President and Corporate Controller of QWI since       
September 1999. From July 1997 to September 1999, he was Corporate Controller of
QWI. From September 1995 to July 1997, he was Assistant to the Corporate        
Controller of QWI. From September 1991 to September 1995, he was a Senior       
Manager at KPMG. Mr. Gauvreau is a Canadian citizen.                            

   KEVIN P. HAYDEN has been Vice President, Operations Planning of the Company
since February 1998. Prior thereto, Mr. Hayden was Director, Operations of the  
Company's Northeast Graphics Inc. subsidiary from November 1997. Prior to       
holding that position, Mr. Hayden served as Director, Planning since joining the
Company in July 1994.                                                           

MARIE D. HLAVATY has been Executive Vice President, General             
Counsel/Government Affairs and Secretary of the Company since September 2000.   
Prior to holding that position, Ms. Hlavaty was Vice President, General Counsel 
and Secretary of the Company since November 1999 and Vice President, Deputy     
General Counsel and Assistant Secretary of World Color from March 1998.         
Ms. Hlavaty held the position of Vice President, Assistant General Counsel of   
World Color from October 1996 to March 1998 and the position of Assistant       
General Counsel from August 1995 to October 1996. Prior thereto, Ms. Hlavaty was
Associate Counsel since joining the Company in February 1994. Ms. Hlavaty has   
been a director of the Company since November 2000.                             

    RICHARD T. LANE has held the position of Executive Vice President, Strategic
Development since January 1998. Prior to such time, Mr. Lane held the position  
of Vice President, Sales, since joining World Color in May 1997. Prior to       
joining World Color, Mr. Lane was Vice President, Sales for R.R. Donnelley.     

   HEIDI J. NOLTE has been Senior Vice President, Chief Information Officer of
the Company since July 1997. Prior to holding that position, Ms. Nolte was Vice 
President, Chief Information Officer since joining the Company in               
September 1994. Prior to joining World Color, Ms. Nolte was Senior Director, MIS
at U.S. Surgical where she had been employed since 1979.                        

CHRISTIAN M. PAUPE has been an officer and director of the Company since
August 1999. In April 1999, Mr. Paupe was appointed as Executive Vice President,
Chief Administrative Officer and Chief Financial Officer of QWI. Mr. Paupe has  
also served as Executive Vice President and Chief Financial Officer of QWI since
January 1999. Prior thereto, Mr. Paupe held the position of Senior Executive    
Vice President and Director of Levesque Beaubien Geoffrion Inc. (investment     
dealer) from 1997 until January 1999. Prior thereto, Mr. Paupe was a Senior Vice
President of Southam Inc. (newspaper publisher) from 1995 to 1997. From 1993 to 
1995, Mr. Paupe was Vice President, Corporate Finance of Bell Canada            
International Inc. (cable and telecommunications). Mr. Paupe is a Swiss and     
Canadian citizen.                                                               

DIRECTOR'S FEES                                                                 

    Each director who is not an employee of the Company receives an annual board
retainer of $7,500 as well as $1,000 attendance fee per meeting. Directors who  
are also employees of the Company receive no remuneration for serving as        
directors.                                                                      

ITEM 11. EXECUTIVE COMPENSATION.                                                

    The following table sets forth the cash compensation awarded in fiscal years
1998, 1999 and 2000, paid to (i) all individuals serving as a Chief Executive   
Officer during the last completed fiscal year, (ii) our four most highly paid   
executive officers other than Chief Executive Officer who were serving as       
executive officers at the end of the last completed fiscal year, and (iii) one  
additional individual who                                                       

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would have been covered under (ii) but for the fact that he was not serving as  
an executive officer at the end of the last fiscal year.                        

                                                        [Enlarge/Download Table]

                                                 ANNUAL COMPENSATION              LONG TERM COMPENSATION                      
                                           --------------------------------     --------------------------                    
                                                                                 RESTRICTED     NUMBER OF                     
                                                                                    STOCK        OPTIONS         ALL OTHER    
NAME AND PRINCIPAL POSITION                  YEAR      SALARY     BONUS(2)      AWARDS(3)(4)     GRANTED        COMPENSATION  
---------------------------                --------   --------   ----------     -------------   ----------    ----------------
                                                                                                                              
Marc L. Reisch ..........................    2000     $600,000   $  321,500(6)   $       --       150,000(7)    $2,941,497(5) 
  Chairman of the Board of Directors,        1999      568,270    1,341,000(6)      635,625       675,000(7)     3,655,749(5) 
  President and Chief Executive Officer      1998      463,462      500,000       1,361,563       125,000                 --  

Kevin P. Hayden .........................    2000     $181,000   $   25,000(6)   $       --            --       $  150,000(5) 
  Vice President, Operations and Planning    1999      150,000      125,000(6)      105,938         6,000          100,000(5) 
                                             1998      143,269       48,750              --         6,000                 --  

Marie D. Hlavaty ........................    2000     $249,376   $       --(6)   $       --            --       $         --  
  Executive Vice President, General          1999      239,145      230,000(6)      105,938        10,000        1,029,937(5) 
  Counsel/Government Affairs and             1998      159,769       63,000              --        10,000                 --  
  Secretary                                                                                                                   

Richard T. Lane .........................    2000     $285,095   $   83,000(6)           --            --       $  240,000(5) 
  Executive Vice President, Strategic        1999      250,000      417,000(6)           --        10,000          160,000(5) 
  Development                                1998      248,538       84,375              --        10,000                 --  

Heidi J. Nolte ..........................    2000     $245,096   $   37,000(6)           --            --       $  198,000(5) 
  Senior Vice President,                     1999      220,079      173,000(6)           --        10,000          132,000(5) 
  Chief Information Officer                  1998      200,000       93,000              --        10,000                 --  

Michel P. Salbaing(1) ...................    2000     $282,710   $   43,462              --            --       $    120,563  
  Senior Vice President, Chief Financial     1999      111,137           --              --            --                     
  Officer                                    1998           --           --              --            --                     

------------------------------                                                  

(1) Mr. Salbaing commenced employment as of August 1999. Accordingly,           
  compensation shown reflects amounts paid after that date. Mr. Salbaing was
employed by the Company until November 2000.                            

(2) Amounts shown represent cash bonuses paid in the calendar year indicated. In
 previous filings, 1998 and 1999 bonuses had been presented for Mr. Reisch
and Ms. Nolte as EARNED, rather than as paid. Accordingly 1998 and 1999 
amounts have been restated for this presentation.                       

(3) On April 6, 1999, the Company granted Mr. Reisch 30,000 shares of Restricted
Stock. In addition, Ms. Hlavaty and Mr. Hayden were both granted 5,000  
 shares of Restricted Stock. The fair market value of World Color's common
stock on such date was $21.19 per share. Under the Company's Restricted 
 Stock Plan, shares vested over a five-year period. Pursuant to the Merger
 Agreement, the Board of Directors of World Color (or, if appropriate, the
  committee administering the Restricted Stock Plan) adopted resolutions and
took such actions as required to provide that any restrictions imposed  
    pursuant to the Restricted Stock Plan on any shares of common stock of World
  Color (such shares, "Restricted Stock") would (subject to the consummation
   of the Offer) lapse and each share of Restricted Stock would be entitled to
 receive $35.69 per share. All such shares were subsequently tendered into
the Offer.                                                              

(4) On May 28, 1998, the Company granted Mr. Reisch 25,000 shares of Restricted 
   Stock. The fair market value of the Company's common stock on such date was
  $30.063 per share. On November 16, 1998, the Company granted Mr. Reisch an
  additional 20,000 shares of Restricted Stock. The fair market value of the
Company's common stock on such date was $30.50 per share. Under the     
    Company's 1998 Restricted Stock Plan, shares vested over a five-year period.
    Pursuant to the Merger Agreement, the Board of Directors of World Color (or,
if appropriate, the committee administering the Restricted Stock Plan)  
 adopted resolutions and took such actions as required to provide that any
    restrictions imposed pursuant to the Restricted Stock Plan on any Restricted
    Stock, would (subject to the consummation of the Offer) lapse and each share
 of Restricted Stock would be entitled to receive $35.69 per share. Any of
such shares outstanding at the time of the Offer were tendered into the 
Offer.                                                                  

(5) Messrs. Reisch, Hayden, Lane and Ms. Hlavaty and Ms. Nolte received certain 
   amounts provided for under their respective Change in Control/Retention and
Severance Agreements in connection with the Change in Control.          

(6) In connection with the terms of the Merger, two-thirds of bonuses earned in 
 1999 by Mr. Reisch, Mr. Hayden, Mr. Lane and Ms. Nolte were paid in 1999.
  The remaining one-third was paid in 2000. In connection with the Change in
 Control, the entire amount of the bonus earned by Ms. Hlavaty in 1999 was
paid in 1999.                                                           

(7) Since the Merger, no options in the Company's Common Stock have been granted
by the Company. Options are, however, granted by QWI. In May 2000,      
Mr. Reisch was granted 150,000 options by QWI to purchase Subordinated  
Voting Shares of QWI. In 1999 Mr. Reisch was granted 125,000 options to 
 purchase shares of the Company prior to the Merger and 550,000 options to
purchase Subordinated Voting Shares of QWI after the Merger. The 125,000
options granted to Mr. Reisch prior                                     

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   to the Merger were cancelled in exchange for cash payment and shares of QWI
in accordance with the Merger Agreement described in Footnote 8 below.  

(8) Pursuant to the Merger Agreement, the Board of Directors of World Color (or,
   if appropriate, the committee administering the Stock Option Plans) adopted
such resolutions or took such other actions as required to effect the   
 following: adjust the terms of all outstanding employee or director stock
   options to purchase common shares and any related stock appreciation rights
  ("Company Stock Options") granted under any stock option or stock purchase
   plan, program or arrangement of World Color (the "Stock Plans"), to provide
   that, subject to certain exceptions, at the consummation of the Offer, each
 Company Stock Option outstanding immediately prior to the consummation of
    the Offer be cancelled in exchange for (A) a cash payment from the surviving
corporation to be made promptly following the consummation of the Offer 
(subject to any applicable withholding taxes) equal in value to (1) the 
product of (x) the total number of shares of World Color common stock   
 subject to such Company Stock Option (the "Option Shares"), multiplied by
  (y) $22.00, multiplied by (z) the excess of $35.69 over the exercise price
   per share of World Color common stock subject to such Company Stock Option,
   divided by (2) $35.69, and (B) a number of shares of QWI common stock to be
   issued promptly following the effective time of the Merger equal to (1) the
product of (x) the number of Option Shares, multiplied by (y) 0.6311,   
   multiplied by (z) the excess of $35.69 over the exercise price per share of
 World Color common stock subject to such Company Stock Option, divided by
    (2) $35.69. The calculation of the amounts described in (A) and (B) may also
be expressed with the following formulas:                               

                                                                [Download Table]
                                                                   
(A) = (Option Shares) x (22.00) x  ($35.69 - Exercise Price/$35.69)

(B) = (Option Shares) x (.6311) x  ($35.69 - Exercise Price/$35.69)

  The Stock Plans and any other plan, program or arrangement providing for
     the issuance or grant of any other interest in respect of the capital stock
     of World Color or any subsidiary terminated as of the effective time of the
Merger.                                                               

OPTION GRANTS IN 2000 
INDIVIDUAL GRANTS 

                                                        [Enlarge/Download Table]

                                               PERCENT OF TOTAL    EXERCISE PRICE              GRANT DATE
                                  OPTIONS      OPTIONS GRANTED       PER SHARE     EXPIRATION   PRESENT  
              NAME                GRANTED    TO EMPLOYEES IN 2000     ($/SH.)         DATE     VALUE (3) 
--------------------------------  --------   --------------------  --------------  ----------  ----------
                                                                                                         
Marc L. Reisch..................  150,000(1)        36.36%(2)          $22.525       5/18/10   $1,341,768
                                  -------           ------             -------       -------   ----------
Kevin P. Hayden.................       --               --                  --            --           --
Marie D. Hlavaty................       --               --                  --            --           --
Richard T. Lane.................       --               --                  --            --           --
Heidi J. Nolte..................       --               --                  --            --           --
Michel P. Salbaing..............       --               --                  --            --           --

------------------------                                                        

(1) Special options in Subordinate Voting Shares of QWI were granted to         
Mr. Reisch on May 18, 2000. These options will be fully vested after a  
   period of three years following the grant, on the condition that Mr. Reisch
remains employed by QWI until May 18, 2003.                             

(2) Percentage reflects percentage of options granted to employees of QWI and   
its subsidiaries, taken as a whole.                                     

(3) The fair market value as of the date of grant, May 18, 2000, has been       
calculated using the Black-Scholes method using assumptions about stock 
   price volatility, dividend yield and future interest rates. The assumptions
used in calculating the grant date values are set forth in the following
table:                                                                  

                                                                [Download Table]

 GRANT DATE    VOLATILITY FACTOR   DIVIDEND YIELD   RISK-FREE INTEREST RATE
------------   -----------------   --------------   -----------------------
                                                                           
May 18, 2000         .230               1.8%                  6.76%        

The assumed expected life of the options was ten years. The fair market 
value as of the grant date set forth in the table is only a theoretical value   
and may not accurately determine fair market value. The actual value, if any,   
that will be realized by each individual will depend on the market price of the 
Subordinated Voting Shares on the date of exercise/settlement.                  

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COMPENSATION UNDER RETIREMENT PLANS                                             

PENSION PLAN BENEFITS                                                           

 The retirement plan of the Company in which the named executive officers,
among others, participated during 2000 was named the World Color Press Cash     
Balance Plan (the "Cash Balance Plan"), and provided for the determination of a 
participant's accrued benefit on a cash balance formula. Although the Cash      
Balance Plan was a defined benefit pension plan, each participant was credited  
with a hypothetical individual account in order to better describe his or her   
benefit. A participant's cash balance account was credited each month with an   
amount equal to 4% (on an annualized basis) of the participant's annual base    
wages plus monthly interest at an annual rate equal to the interest on one-year 
U.S. Treasury securities. A participant in the Cash Balance Plan becomes fully  
vested in his/her accrued benefit after the completion of five years of service.

The Cash Balance Plan and the retirement plan of Quebecor Printing Inc. 
("QPI") were merged on December 31, 2000 to create the Quebecor World Pension   
Plan (the "Pension Plan"). The named executive officers, among others, will     
participate in this Pension Plan. It provides for the determination of a        
participant's lump sum accrued benefit based on an accumulation of pension      
credits multiplied by final average pay. Accumulated pension credits are based  
on years of service (3% under 5 years of service, 4% from 5-10 years of service,
5% from 10-15 years of service, 6% from 15-20 years of service and 8% over      
20 years of service). A participant in the Pension Plan becomes fully vested in 
his/her accrued benefit after the completion of five years of service.          

    Benefits under the Cash Balance Plan and the new Pension Plan are limited to
the extent required by provisions of the Internal Revenue Code of 1986, as      
amended (the "Code"), and the Employee Retirement Income Security Act of 1974,  
as amended. If payment of actual retirement benefits to certain individuals     
(including the named executive officers) is limited by such provisions, an      
amount equal to any reduction in retirement benefits will be paid as a          
supplemental benefit under an unfunded restoration plan or a Supplemental       
Executive Retirement Plan, as amended. The following table sets forth the       
estimated combined annual retirement benefits under the Cash Balance Plan and   
the Supplemental Executive Retirement Plan as of December 30, 2000 (exclusive of
Social Security payments) payable on a straight single life annuity basis to    
each of Messrs. Reisch, Hayden and Lane and Ms. Hlavaty and Ms. Nolte assuming  
continued service until age 65 and current compensation levels remain unchanged.

PENSION TABLE 

                                                                [Download Table]

                                                              ESTIMATED ANNUAL
                                                              BENEFITS PAYABLE
NAME                                                          UPON RETIREMENT 
----                                                          ----------------
                                                                              
Marc L. Reisch..............................................      $580,117    
Kevin P. Hayden.............................................        47,739    
Marie D. Hlavaty............................................       113,486    
Richard T. Lane.............................................        71,839    
Heidi J. Nolte..............................................        76,204    

Mr. Salbaing did not participate in the Cash Balance Plan or the        
Supplemental Executive Retirement Plan.                                         

AGREEMENTS WITH NAMED EXECUTIVE OFFICERS                                        

   The terms of employment for Mr. Reisch as the President and Chief Executive
Officer of Quebecor World North America contemplate that he will be paid an     
annual salary of $675,000 to be reviewed annually; he will participate in the   
Quebecor World Inc. short-term incentive plan and newly                         

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established long-term incentive plan; he will be entitled to receive stock      
option grants under the Quebecor World Inc. Executive Stock Option Plan; and he 
will receive all benefits to which other senior executives of Quebecor          
World Inc. are entitled to receive. Mr. Reisch's compensation is determined by  
the Compensation Committee of QWI. Mr. Reisch has received certain retention    
bonuses and non-competition payments and is also entitled to receive severance  
benefits in case of termination of employment pursuant to his employment        
arrangement with QWI and that certain Retention and Severance Agreement entered 
into between Mr. Reisch and the Company in August 1999 (the "Retention and      
Severance Agreement"). Under this agreement, Mr. Reisch received a full gross-up
for all excise taxes and related costs in connection with any payments deemed   
"excess parachute payments."                                                    

   The Retention and Severance Agreement and condition of the special one-time
option grants by Quebecor World Inc. to Mr. Reisch include                      
non-competition/non-solicitation covenants restricting Mr. Reisch's ability to  
own, manage, operate, join, control or participate in the ownership, management,
operation or control of any "competing business," with certain exceptions, or to
solicit customers or employees. Such restrictions are to be effective during    
Mr. Reisch's employment and for a period of up to 18 months after termination of
his employment.                                                                 

   Pursuant to their respective Retention and Severance Agreements executed in
connection with the Change in Control, each of Ms. Nolte and Ms. Hlavaty and    
each of Messrs. Carousso, Hayden and Lane received certain retention bonuses and
non-competition payments and accordingly, are subject to                        
non-competition/non-solicitation covenants, which provide that for one year from
the earlier of August 20, 2000 or the date of termination of employment, the    
respective employee shall not directly or indirectly, own, manage, operate,     
join, control or participate in the ownership, management, operation or control 
of any "competing business," with certain exceptions, or solicit customers or   
employees. Mr. Carousso and Ms. Hlavaty are still eligible to receive certain   
severance benefits under these agreements in the event of their termination     
without cause or by the individual for good reason (as each term is defined in  
the respective agreements) on or prior to August 20, 2001. Under these          
agreements, the named employees received a full gross-up for all excise taxes   
and related costs in connection with any payments deemed "excess parachute      
payments."                                                                      

CASH LONG-TERM INCENTIVE PLAN                                                   

  In December 2000, QWI introduced, to be effective as of January 1, 2001, a
long-term incentive plan for the benefit of its key North American, European and
Latin American senior executives. This plan was designated as the Cash Long-Term
Incentive Plan (the "CLTI Plan").                                               

Payouts under the CLTI Plan are based on QWI's performance, which       
performance will be evaluated against predetermined objectives at the end of    
three-year incentive cycles. Therefore, should QWI achieve its predetermined    
objectives for any given three-year incentive cycle, the participants in the    
CLTI Plan will be awarded a cash payout equal to a predetermined percentage of  
his/her base salary.                                                            

 Every year, the Compensation Committee of QWI will determine which senior
executives will be eligible to participate in the CLTI Plan. It will also       
determine the conditions of such participation for each eligible executive as   
well as QWI's objectives for the relevant three-year incentive cycle.           

The main objectives of the CLTI Plan are to promote the achievement of  
three-year financial targets and to retain and reward selected senior           
executives.                                                                     

    For the first three-year incentive cycle starting January 1, 2001 and ending
December 31, 2003, certain named executive officers have been selected by the   
Compensation Committee of QWI to participate in the CLTI Plan. Accordingly, they
will receive cash payouts on December 31, 2003 if QWI achieves its predetermined
objectives for the three years ending December 31, 2003.                        

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.        

The following table sets forth information regarding the beneficial     
ownership of the Common Stock of Quebecor World (USA) Inc. as of March 1, 2001, 
including beneficial ownership by (i) each stockholder of the Company who owns  
more than 5% of the outstanding shares of Quebecor World (USA) Inc. Common      
Stock, (ii) each director of the Company, (iii) the Chief Executive Officer of  
the Company, (iv) the Company's four highest paid executive officers (exclusive 
of the Chief Executive Officer) and (v) all directors and executive officers of 
the Company as a group. Except as otherwise noted, the persons named in the     
table below have sole voting and investment power with respect to all shares of 
Quebecor World (USA) Inc. Common Stock shown as beneficially owned by them.     

                                                        [Enlarge/Download Table]

                                                              NUMBER OF    PERCENTAGE OF
                                                              SHARES OF     OUTSTANDING 
                                                             COMMON STOCK  SHARES OF THE
NAME                                                           OWNED(1)    COMMON STOCK 
----                                                         ------------  -------------
                                                                                        
Quebecor Printing (USA) Holdings Inc. (2)...................      10            100%    
Marcello A. De Giorgis......................................       0              0%    
Christian M. Paupe..........................................       0              0%    
Marc L. Reisch..............................................       0              0%    
Kevin P. Hayden.............................................       0              0%    
Marie D. Hlavaty............................................       0              0%    
Richard T. Lane.............................................       0              0%    
Heidi J. Nolte..............................................       0              0%    
All directors and executive officers as a group.............       0              0%    

------------------------                                                        

(1) For purposes of this table, "beneficial ownership" includes any shares that 
a person has the right to acquire within 60 days of March 1, 2001. For  
    purposes of computing the percentage of outstanding shares of Quebecor World
   (USA) Inc. Common Stock held by each person or group of persons named above
   on a given date, any security which this person(s) has the right to acquire
   within 60 days after March 1, 2001 is deemed to be outstanding for purposes
  of computing the percentage ownership of this person, but is not deemed to
 be outstanding in computing the percentage ownership of any other person.

(2) Quebecor World Inc. indirectly owns all of the issued and outstanding shares
of its subsidiary, Quebecor Printing (USA) Holdings Inc. The address for
Quebecor Printing (USA) Holdings Inc. is 300 Delaware Ave., Suite 900,  
Wilmington, DE 19801.                                                   

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.                        

In 1999, certain wholly owned subsidiaries of QWI provided us with      
$511.5 million, which was borrowed on our behalf from subsidiaries' external    
long-term credit facilities. The borrowings bear interest at rates based on     
LIBOR plus 2% per annum, adjusted quarterly. Interest on the borrowings ranged  
from 8.07% to 8.75% in 2000. In 2000, we incurred $34.7 million of interest     
expense. The outstanding balance on these notes at December 30, 2000 was        
$220.0 million. Payment is not required prior to December 31, 2001.             

  Throughout 2000, certain wholly owned subsidiaries of QWI provided us with
amounts borrowed under notes payable on demand. These borrowings bear interest  
at rates based on prime plus 1% per annum. At December 30, 2000, the outstanding
balance on these notes was $2.0 million. Certain wholly owned subsidiaries of   
QWI also provided us with amounts borrowed under longer term promissory notes.  
These borrowings bear interest at rates based on LIBOR plus 1.55% per annum,    
adjusted quarterly, which was approximately 8.35% in 2000. These notes mature   
between October 2007 and December 2009. The outstanding balance at December 30, 
2000 was $72.7 million. Interest expense incurred on the demand and promissory  
notes for 2000 was $4.4 million.                                                

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We had net amounts payable to a wholly owned subsidiary of QWI of       
$7.2 million and $5.1 million at December 30, 2000 and December 31, 1999,       
respectively, for the purchase of raw materials. We had transactions in the     
normal course of business with QWI and affiliated companies that resulted in a  
net payable of $57.3 million.                                                   

    During 2000, we sold fixed assets for approximately $14.5 million to certain
subsidiaries of QWI. No gain or loss was recognized on these transactions.      

We incurred fees of $4.9 million in 2000 for corporate administrative   
services provided by QWI.                                                       

As part of our expenses incurred in 1999 related to the Merger, we      
recognized a non-cash charge of $67.5 million for the cancellation and          
settlement by Acquisition Inc. of all vested and unvested options. Of this      
amount, $40.9 million was paid directly by Acquisition Inc. to the option       
holders on our behalf and $26.6 million was paid in stock of QWI upon           
consummation of the Merger. In addition, Acquisition Inc. contributed           
$51.3 million to us to pay certain other Merger expenses. These amounts will not
be repaid and are, therefore, included in stockholder's equity in the           
consolidated balance sheet at December 30, 2000.                                

   In 1999, we sold land for $4.0 million to a wholly owned subsidiary of QWI.
We subsequently entered into a lease agreement for the land with this subsidiary
for a lease term through 2004.                                                  

 We believe that any past or present transactions with our affiliates have
been at prices and on terms no less favorable to us than transactions with      
independent third parties. We may enter into transactions with our affiliates in
the future. However, we intend to enter into such transactions only at prices   
and on terms no less favorable to us than transactions with independent third   
parties. In addition, our debt instruments generally prohibit us from entering  
into any such affiliate transaction on other than arm's length terms.           

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PART IV 

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K.        

(a)  The following documents are filed as a part of this report:        

 (i)  Consolidated Financial Statements--See accompanying Index to
            Consolidated Financial Statements and Financial Statement Schedule
on page 28                                            

(ii) Financial Statement Schedule:                              

          Schedule II, Valuation and Qualifying Accounts, as set forth on page
S-1 of this report.                                                     
          All other schedules have been omitted because they are inapplicable or
  are not required or the information is included elsewhere in the financial
statements or notes thereto.                                            

(iii) Exhibits:                                                 

                                                                [Download Table]

EXHIBIT                                                                            
NUMBER                                         DESCRIPTION                         
---------------------                          -----------                         
                                                                                   
          3.1          Certificate of Merger of Printing Acquisition Inc. into     
                       World Color Press, Inc. incorporated by reference to        
                       Exhibit 3.1 to World Color's Annual Report on Form 10-K for 
                       the fiscal year ended December 31, 1999.                    
          3.2          By-Laws of Quebecor World (USA) Inc. incorporated by        
                       reference to Exhibit 3.2 to World Color's Annual Report on  
                       Form 10-K for the fiscal year ended December 31, 1999.      
          4.1          Indenture (the "Convert Indenture") between World Color     
                       Press, Inc. and State Street Bank and Trust Company, as     
                       trustee, relating to World Color's 6% Convertible Senior    
                       Subordinated Notes due 2007 (the "Converts"), incorporated  
                       by reference to Exhibit 4.1 to World Color's Quarterly      
                       Report on Form 10-Q for the quarterly period ended          
                       September 28, 1997.                                         
          4.2          Specimen of Converts (included in the Convert Indenture,    
                       incorporated by reference as Exhibit 4.1).                  
          4.3          First Supplemental Indenture to the Convert Indenture, dated
                       as of August 10, 1999 incorporated by reference to          
                       Exhibit 4.3 to World Color's Annual Report on Form 10-K for 
                       the fiscal year ended December 31, 1999.                    
          4.4          Second Supplemental Indenture to the Convert Indenture,     
                       dated as of October 8, 1999 incorporated by reference to    
                       Exhibit 4.4 to World Color's Annual Report on Form 10-K for 
                       the fiscal year ended December 31, 1999.                    
          4.5          Third Supplemental Indenture to the Convert Indenture, dated
                       as of November 23, 1999 incorporated by reference to        
                       Exhibit 4.5 to World Color's Annual Report on Form10-K for  
                       the fiscal year ended December 31, 1999.                    
          4.6          Indenture between World Color Press, Inc. and The Bank of   
                       New York, as trustee, relating to World Color's 8 3/8%      
                       Senior Subordinated Notes due 2008, incorporated by         
                       reference to Exhibit 4.1 to World Color's Registration      
                       Statement on Form S-4 (No. 333-74087) under the Securities  
                       Act of 1933, as amended (the "World Color Debt S-4").       
          4.7          Specimen of World Color's 8 3/8% Senior Subordinated Notes  
                       due 2008 (included in the Indenture incorporated by         
                       reference as Exhibit 4.6 hereto).                           
          4.8          Indenture between World Color Press, Inc. and The Bank of   
                       New York, as trustee, relating to World Color's 7 3/4%      
                       Senior Subordinated Notes due 2009, incorporated by         
                       reference to Exhibit 4.3 to the World Color Debt S-4.       
          4.9          Specimen of World Color's 7 3/4% Senior Subordinated Notes  
                       due 2009 (included in the Indenture incorporated by         
                       reference as Exhibit 4.8 hereto).                           
         10.1          Receivables Purchase Agreement dated as of September 24,    
                       1999 among Sellers Parties thereto and Quebecor World       
                       Finance Inc. incorporated by reference to Exhibit 10.1 to   
                       World Color's Annual Report on Form 10-K for the fiscal year
                       ended December 31, 1999.                                    

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                                                                [Download Table]

EXHIBIT                                                                            
NUMBER                                         DESCRIPTION                         
---------------------                          -----------                         
                                                                                   
         10.2          Letter Amendment dated December 22, 1999 to Receivables     
                       Purchase Agreement among Quebecor World (USA) Inc., Quebecor
                       World Finance Inc., and the Sellers party to the Receivables
                       Purchase Agreement dated September 24, 1999 incorporated by 
                       reference to Exhibit 10.2 to World Color's Annual Report on 
                       Form 10-K for the fiscal year ended December 31, 1999.      
         10.3          Amended and Restated Receivables Sale Agreement dated as of 
                       December 22, 1999 among Quebecor World Finance Inc., as     
                       Seller, Quebecor Printing (USA) Holdings Inc., as the       
                       Initial Collection Agent, ABN AMRO Bank N.V., as the Agent  
                       and a Purchaser Agent, Amsterdam Funding Corporation, as a  
                       Conduit Purchaser, the other conduit purchasers from time to
                       time party thereto, the other purchase agents from time to  
                       time party thereto and related bank purchasers from time to 
                       time party thereto incorporated by reference to             
                       Exhibit 10.3 to World Color's Annual Report on Form 10-K for
                       the fiscal year ended December 31, 1999.                    
         10.4          Acknowledgement of Termination of Purchased Interest and    
                       Direction for Payment for Reduction in Purchased Interest   
                       dated December 22, 1999 between World Color Finance Inc.    
                       and ABN AMRO Bank N.V. incorporated by reference to         
                       Exhibit 10.4 to World Color's Annual Report on Form 10-K for
                       the fiscal year ended December 31, 1999.                    
         10.5          Retention and Severance Agreement, dated as of August 16,   
                       1999, between World Color Press, Inc. and Marc L. Reisch,   
                       incorporated by reference to Exhibit 10.2 to the World Color
                       Quarterly Report on Form 10-Q for the quarterly period ended
                       September 26, 1999.                                         
         10.6          Form of Retention and Severance Agreement, dated as of      
                       August 16, 1999, by and between World Color Press, Inc. and 
                       each of Paul B. Carousso and Marie D. Hlavaty, incorporated 
                       by reference to Exhibit 10.8 to the Quebecor World          
                       (USA) Inc. Annual Report on Form 10-K for the year ended    
                       December 31, 1999.                                          
         10.7          Form of Retention and Severance Agreement, dated as of      
                       August 16, 1999, by and between World Color Press, Inc. and 
                       each of Heidi J. Nolte, Richard T. Lane and Kevin P. Hayden,
                       incorporated by reference to Exhibit 10.9 to the Quebecor   
                       World (USA) Inc. Annual Report on Form 10-K for the year    
                       ended December 31, 1999.                                    
         10.9          Third Amendment to the World Color Press, Inc. Supplemental 
                       Executive Retirement Plan, incorporated by reference to     
                       Exhibit 10.18 to World Color's Annual Report on Form 10-K   
                       for the fiscal year ended December 25, 1994.                
        10.10          Agreement Plan of Merger dated as of July 12, 1999 by and   
                       among Quebecor Printing Inc., Printing Acquisition Inc. and 
                       World Color Press, Inc., incorporated by reference to       
                       Exhibit 1 to the Form 14D-9.                                
        10.11          Promissory Note dated December 1, 1999, made by and among   
                       Quebecor World (USA) Inc., Quebecor Printing (USA)          
                       Holdings Inc. and Bank of America, N.A. incorporated by     
                       reference to Exhibit 10.13 to World Color's Annual Report on
                       Form 10-K for the fiscal year ended December 31, 1999.      
        10.12          Promissory Note dated August 20, 1999 made by and between   
                       World Color Press, Inc. and Quebecor Printing (USA)         
                       Holdings Inc. incorporated by reference to Exhibit 10.14 to 
                       World Color's Annual Report on Form 10-K for the fiscal year
                       ended December 31, 1999.                                    
        10.13          Promissory Note dated August 20, 1999 made by and between   
                       World Color Press, Inc. and Quebecor Printing Delaware LLC  
                       incorporated by reference to Exhibit 10.15 to World Color's 
                       Annual Report on Form 10-K for the fiscal year ended        
                       December 31, 1999.                                          
         21.0          Subsidiaries of registrant.                                 
         23.1          Independent Auditors' Consent.                              

(b) Reports on Form 8-K                                                 

NONE                                                            

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.                       

                                                                [Download Table]
                                                                     
                      QUEBECOR WORLD (USA) INC.                      
                      (Registrant)                                   

Date: March 28, 2001  By:  /s/ CARL GAUVREAU                         
                           ------------------------------------------
                           Carl Gauvreau                             
                           Senior Vice President, Finance            

 Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the          
registrant in the capacities indicated on March 28, 2001.                       

                                                                [Download Table]

                SIGNATURES                               TITLES              
                ----------                               ------              
                                                                             
            /s/ MARC L. REISCH               Chairman of the Board of        
-------------------------------------------    Directors, President and      
              Marc L. Reisch                   Chief Executive Officer       

             /s/ CARL GAUVREAU               Senior Vice President, Finance  
-------------------------------------------    (Principal Financial          
               Carl Gauvreau                   Officer)                      

           /s/ PAUL B. CAROUSSO              Vice President, Controller      
-------------------------------------------    (Principal Accounting         
             Paul B. Carousso                  Officer)                      

           /s/ MARIE D. HLAVATY              Executive Vice President,       
-------------------------------------------    General Counsel/Government    
             Marie D. Hlavaty                  Affairs and Secretary,        
                                               Director                      

                                             Director                        
-------------------------------------------                                  
          Marcello A. De Giorgis                                             

          /s/ CHRISTIAN M. PAUPE             Director                        
-------------------------------------------                                  
            Christian M. Paupe                                               

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INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

                                                                [Download Table]

                                                                    PAGE      
                                                                    ----      
                                                                              
FINANCIAL STATEMENTS                                                          

    Independent Auditors' Report............................               F-1

    Balance Sheets as of December 30, 2000 and December 31,                   
      1999..................................................               F-2

    Statements of Operations for the Years Ended December                     
      30, 2000,                                                               
      December 31, 1999 and December 27, 1998...............               F-3

    Statements of Stockholder's Equity for the Years ended                    
      December 30, 2000,                                                      
      December 31, 1999 and December 27, 1998...............               F-4

    Statements of Cash Flows for the Years ended December                     
      30, 2000,                                                               
      December 31, 1999 and December 27, 1998...............               F-5

    Notes to Financial Statements...........................         F-6--F-21

FINANCIAL STATEMENT SCHEDULE                                                  

    Schedule II--Valuation and Qualifying Accounts..........               S-1

All other schedules for which provision is made in the applicable       
regulations of the Securities and Exchange Commission are omitted because they  
are not required under the related instructions or are not applicable or the    
required information is shown in the financial statements or notes thereto.     

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INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of                                   
Quebecor World (USA) Inc.:                                                  

We have audited the accompanying consolidated balance sheets of Quebecor
World (USA) Inc. and subsidiaries as of December 30, 2000 and December 31, 1999,
and related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years then ended. Our audits also included the      
financial statement schedule listed in the Index at Item 14. These consolidated 
financial statements and financial statement schedule are the responsibility of 
the Company's management. Our responsibility is to express an opinion on the    
financial statements and financial statement schedule based on our audits.      

We conducted our audits in accordance with auditing standards generally 
accepted in the United States of America. Those standards require that we plan  
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a 
test basis, evidence supporting the amounts and disclosures in the financial    
statements. An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall     
financial statement presentation. We believe that our audits provide a          
reasonable basis for our opinion.                                               

 In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Quebecor World (USA) Inc. and  
subsidiaries at December 30, 2000 and December 31, 1999, and the results of     
their operations and their cash flows for each of the years then ended in       
conformity with accounting principles generally accepted in the United States of
America. Also, in our opinion, such financial statement schedule, 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.                                                                        

As discussed in Note 2 to the consolidated financial statements, in 1999
Quebecor World (USA) Inc. changed its method of accounting for deferred start-up
costs to conform with Statement of Position 98-5.                               

DELOITTE & TOUCHE LLP                                                           

New York, New York                                                              
January 22, 2001                                                                

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QUEBECOR WORLD (USA) INC. 

CONSOLIDATED BALANCE SHEETS 

DECEMBER 30, 2000 AND DECEMBER 31, 1999 
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 

                                                        [Enlarge/Download Table]

                                                                 2000         1999    
                                                              ----------   ---------- 
                                                                                      
ASSETS                                                                                
Current assets:                                                                       
  Cash and cash equivalents.................................  $  118,004   $   47,383 
  Accounts receivable--net of allowances for doubtful                                 
    accounts of $12,653 and $13,844, respectively...........     150,602      270,399 
  Inventories...............................................     208,642      230,716 
  Deferred income taxes.....................................      52,082       47,990 
  Other.....................................................      21,313       40,226 
                                                              ----------   ---------- 
    Total current assets....................................     550,643      636,714 

Property, plant and equipment--net..........................     728,653      877,998 
Goodwill--net...............................................     767,882      793,011 
Other.......................................................      70,292       68,398 
                                                              ----------   ---------- 
TOTAL ASSETS................................................  $2,117,470   $2,376,121 
                                                              ==========   ========== 

LIABILITIES AND STOCKHOLDER'S EQUITY                                                  
Current liabilities:                                                                  
  Accounts payable..........................................  $  212,158   $  194,212 
  Accrued expenses..........................................     163,427      137,964 
  Payables to related parties--net..........................      66,047        7,380 
  Current maturities of long-term debt......................       8,647        6,090 
                                                              ----------   ---------- 
    Total current liabilities...............................     450,279      345,646 

Long-term debt..............................................     992,832    1,285,106 
Deferred income taxes.......................................      28,840       62,687 
Other long-term liabilities.................................     137,592      133,357 
                                                              ----------   ---------- 
    Total liabilities.......................................   1,609,543    1,826,796 
                                                              ----------   ---------- 
Stockholder's equity:                                                                 
  Common stock, $1.00 par value--authorized, 3,000 shares in                          
    2000 and 1999; shares outstanding, 10 in 2000 and                                 
    1999....................................................          --           -- 
  Additional paid-in capital................................     701,893      701,893 
  Capital contribution from Printing Acquisition Inc........     118,773      118,773 
  Accumulated deficit.......................................    (312,739)    (271,341)
                                                              ----------   ---------- 
    Total stockholder's equity..............................     507,927      549,325 
                                                              ----------   ---------- 
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY..................  $2,117,470   $2,376,121 
                                                              ==========   ========== 

See notes to consolidated financial statements. 

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QUEBECOR WORLD (USA) INC. 

CONSOLIDATED STATEMENTS OF OPERATIONS 

YEARS ENDED DECEMBER 30, 2000, DECEMBER 31, 1999 AND DECEMBER 27, 1998
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                             2000         1999         1998   
                                                          ----------   ----------   ----------
                                                                                              
Net sales................................................ $2,653,421   $2,552,895   $2,356,885

Cost of sales............................................  2,342,802    2,223,424    1,927,790
                                                          ----------   ----------   ----------

Gross profit.............................................    310,619      329,471      429,095

Selling, general and administrative expenses.............    245,426      406,730      214,862

Restructuring and other special charges..................         --       74,807           --
                                                          ----------   ----------   ----------

Operating income (loss)..................................     65,193     (152,066)     214,233

Interest expense and securitization fees.................    111,478      103,866       88,589
                                                          ----------   ----------   ----------

Income (loss) before income taxes, extraordinary items                                        
  and cumulative effect of change in accounting                                               
  principle..............................................    (46,285)    (255,932)     125,644

Income tax provision (benefit)...........................     (4,887)     (56,406)      52,054
                                                          ----------   ----------   ----------

Income (loss) before extraordinary items and cumulative                                       
  effect of change in accounting principle...............    (41,398)    (199,526)      73,590

Extraordinary items, net of tax..........................         --      (11,992)          --

Cumulative effect of change in accounting principle, net                                      
  of tax.................................................         --      (10,513)          --
                                                          ----------   ----------   ----------

Net income (loss)........................................ $  (41,398)  $ (222,031)  $   73,590
                                                          ==========   ==========   ==========

See notes to consolidated financial statements. 

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QUEBECOR WORLD (USA) INC. 

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY 

YEARS ENDED DECEMBER 30, 2000, DECEMBER 31, 1999 AND DECEMBER 27, 1998
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                                                 UNAMORTIZED 
                                               ADDITIONAL                                         RESTRICTED 
                                      COMMON    PAID-IN      CAPITAL     ACCUMULATED  TREASURY      STOCK    
                                      STOCK     CAPITAL    CONTRIBUTION    DEFICIT     STOCK     COMPENSATION
                                     --------  ----------  ------------  -----------  --------   ------------
                                                                                                             
BALANCE DECEMBER 28, 1997...........  $ 384     $711,292     $     --     $(111,907)  $     --     $    --   
                                      -----     --------     --------     ---------   --------     -------   
Net income..........................     --           --           --        73,590         --          --   
Common stock issued.................      1        6,544           --       (10,993)    14,371          --   
Common stock repurchased............     --           --           --            --    (14,984)         --   
Restricted stock issued.............      1        4,077           --            --         --      (4,078)  
Amortization of restricted stock....     --           --           --            --         --         349   
                                      -----     --------     --------     ---------   --------     -------   

BALANCE DECEMBER 27, 1998...........    386      721,913           --       (49,310)      (613)     (3,729)  
                                      -----     --------     --------     ---------   --------     -------   
Net loss............................     --           --           --      (222,031)        --          --   
Common stock issued.................      5        6,469           --            --         --          --   
Common stock repurchased............     --           --           --            --    (30,558)         --   
Restricted stock issued.............      2        4,289           --            --         --      (4,291)  
Amortization of restricted stock....     --           --           --            --         --       8,020   
Capital contribution from Printing                                                                           
  Acquisition Inc...................     --           --      118,773            --         --          --   
Merger with Printing Acquisition                                                                             
  Inc...............................   (393)     (30,778)          --            --     31,171          --   
                                      -----     --------     --------     ---------   --------     -------   

BALANCE DECEMBER 31, 1999...........     --      701,893      118,773      (271,341)        --          --   
                                      -----     --------     --------     ---------   --------     -------   
Net loss............................     --           --           --       (41,398)        --          --   
                                      -----     --------     --------     ---------   --------     -------   

BALANCE DECEMBER 30, 2000...........  $  --     $701,893     $118,773     $(312,739)  $     --     $    --   
                                      =====     ========     ========     =========   ========     =======   

See notes to consolidated financial statements. 

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QUEBECOR WORLD (USA) INC. 

CONSOLIDATED STATEMENTS OF CASH FLOWS 

YEARS ENDED DECEMBER 30, 2000, DECEMBER 31, 1999 AND DECEMBER 27, 1998
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                             2000         1999         1998    
                                                           ---------   -----------   --------- 
                                                                                               
OPERATING ACTIVITIES:                                                                          
  Net income (loss)....................................... $ (41,398)  $  (222,031)  $  73,590 
  Adjustments to reconcile net income (loss) to net cash                                       
    provided by (used in) operating activities:                                                
    Depreciation and amortization.........................   144,607       155,766     140,725 
    Settlement of stock options...........................        --        67,474          -- 
    Amortization of restricted stock......................        --         8,020         349 
    Restructuring and other special charges...............        --        74,807          -- 
    Writedown and write off of fixed assets...............   124,008        40,011          -- 
    Extraordinary items, net of tax.......................        --        11,992          -- 
    Cumulative effect of change in accounting principle,                                       
      net of tax..........................................        --        10,513          -- 
    Deferred income tax (benefit) provision...............   (37,939)      (48,036)     17,897 
    Changes in operating assets and liabilities:                                               
      Proceeds from sale of accounts receivable...........    80,000            --          -- 
      Other changes in accounts receivable--net...........    39,797       (14,096)    (16,031)
      Inventories.........................................    22,074        54,920     (58,029)
      Accounts payable, accrued expenses and net payables                                      
        to related parties................................   102,076       (43,148)    (26,700)
      Other assets and liabilities--net...................    14,279        21,974    (119,916)
                                                           ---------   -----------   --------- 
        Net cash provided by operating activities.........   447,504       118,166      11,885 
                                                           ---------   -----------   --------- 
INVESTING ACTIVITIES:                                                                          
  Additions to property, plant and equipment..............  (112,764)     (140,005)   (184,004)
  Proceeds from sale and leaseback of equipment...........        --            --      88,471 
  Proceeds from sale of property, plant and equipment.....    25,598        14,751       9,533 
  Acquisitions of businesses, net of cash acquired........        --      (120,693)   (190,095)
                                                           ---------   -----------   --------- 
        Net cash used in investing activities.............   (87,166)     (245,947)   (276,095)
                                                           ---------   -----------   --------- 
FINANCING ACTIVITIES:                                                                          
  Proceeds from borrowings................................    74,948       992,900     451,553 
  Payments on long-term debt..............................  (364,665)   (1,038,043)    (20,026)
  Capital contribution from Printing Acquisition Inc......        --        51,299          -- 
  Premium paid on debt extinguishment.....................        --        (6,840)         -- 
  Proceeds from issuance of common stock..................        --         6,474       6,545 
  Repurchases of common stock--net........................        --       (30,558)    (11,606)
                                                           ---------   -----------   --------- 
        Net cash (used in) provided by financing                                               
          activities......................................  (289,717)      (24,768)    426,466 
                                                           ---------   -----------   --------- 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS..........    70,621      (152,549)    162,256 
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR..............    47,383       199,932      37,676 
                                                           ---------   -----------   --------- 
CASH AND CASH EQUIVALENTS, END OF YEAR.................... $ 118,004   $    47,383   $ 199,932 
                                                           =========   ===========   ========= 

See notes to consolidated financial statements. 

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QUEBECOR WORLD (USA) INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 30, 2000, DECEMBER 31, 1999 AND DECEMBER 27, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 

1. ORGANIZATION                                                                 

   Quebecor World (USA) Inc., formerly known as World Color Press, Inc. (along
with its subsidiaries the "Company" or "World"), specializes in the production  
and distribution of data for customers in the commercial, magazine, catalog,    
direct mail, book and directory markets.                                        

  On July 12, 1999, the Company entered into an Agreement and Plan of Merger
with Quebecor Printing Inc. (subsequently renamed Quebecor World Inc., "QWI")   
and its indirect wholly owned subsidiary, Printing Acquisition Inc.             
("Acquisition Inc."), which provided for the acquisition of the Company (the    
"Merger"). On July 16, 1999, QWI, through Acquisition Inc., commenced a tender  
offer to acquire up to 23,500,000 shares of the Company's common stock at a     
price of $35.69 per share. On August 20, 1999, QWI acquired, through            
Acquisition Inc., 19,179,495, or approximately 50.4%, of the Company's          
outstanding shares.                                                             

 On October 8, 1999, the Company and Acquisition Inc. completed the Merger
following receipt of approval from the Company's stockholders. As a result, the 
Company became an indirect wholly owned subsidiary of QWI and at that time was  
renamed Quebecor World (USA) Inc. The remaining outstanding shares of World's   
common stock (other than shares purchased by QWI in the tender offer) were      
converted into the right to receive 1.2685 subordinate voting shares of QWI and 
$8.18 in cash per share. In addition, each 6% Convertible Senior Subordinated   
Note due 2007, outstanding at the Merger, became convertible into the number of 
QWI subordinate voting shares and cash that would have been received had the    
convertible note been converted immediately prior to October 8, 1999.           

   In connection with the Merger, all of the Company's then outstanding common
stock, treasury stock and additional paid-in capital was recapitalized into 10  
common shares, par value $1.00 per share. All shares are held by a wholly owned 
subsidiary of QWI. Under the Company's new capital structure, 3,000 common      
shares, par value $1.00, were authorized. No preferred shares were authorized.  

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                   

  PRINCIPLES OF CONSOLIDATION--The consolidated financial statements include
the accounts of Quebecor World (USA) Inc. and its subsidiaries. Intercompany    
transactions have been eliminated.                                              

CASH AND CASH EQUIVALENTS--Cash equivalents consist of highly liquid    
instruments with original maturities of three months or less.                   

    ACCOUNTING PERIOD--In 2000, the Company's fiscal year was the 52-week period
ending on the last Saturday in December. In 1999, the Company changed its fiscal
year end from the last Sunday in December to December 31, 1999 to conform to    
QWI's fiscal year end. This change resulted in a 369-day period rather than the 
52-week period under the previous policy. The change in fiscal year did not have
a material effect on the Company's results of operations. The Company's fiscal  
year in 1998 was the 52-week period ending on the last Sunday in December.      

CONSOLIDATED STATEMENTS OF CASH FLOWS--During 2000, 1999 and 1998, the  
Company borrowed and repaid $4,387,546, $1,860,706 and $599,100, respectively,  
pursuant to the terms of credit agreements. See also Note 9. Such amounts have  
been reflected as net in the consolidated statements of cash flows because of   
the short-term nature of the borrowings.                                        

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QUEBECOR WORLD (USA) INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 30, 2000, DECEMBER 31, 1999 AND DECEMBER 27, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                       
  Cash paid for interest by the Company during the years 2000, 1999 and 1998
was $111,157, $101,141 and $82,392, respectively, net of capitalized interest of
$1,337, $1,919 and $2,374, respectively. Cash paid for taxes during the years   
2000, 1999 and 1998 was $8,630, $19,162 and $35,145, respectively.              

  REVENUE RECOGNITION--Substantially all of the Company's sales are produced
to customer specifications. In accordance with trade practice, revenue is       
recognized by the Company on the basis of production and service activity at the
pro rata billing value of work completed pursuant to customer agreement.        

 INVENTORIES--The Company's raw materials of paper and ink and the related
raw material component of work-in-process are valued at the lower of cost, as   
determined using the first-in, first-out method, or market. The remainder of the
work-in-process is valued at the pro rata billing value of work completed.      

 DEPRECIATION AND AMORTIZATION--Property, plant and equipment is stated at
cost. Depreciation is recorded principally on the straight-line method over the 
estimated useful lives of the assets. Leasehold improvements are amortized on   
the straight-line method over the lesser of the useful life of the improvement  
or the lease term. Estimated useful lives used in computing depreciation and    
amortization expense are 3 to 15 years for machinery and equipment and 15 to    
40 years for buildings and leasehold improvements.                              

GOODWILL--Goodwill is amortized using the straight-line method primarily
over 35 years. Amortization of goodwill for the years 2000, 1999 and 1998 was   
$25,129, $24,093 and $20,008, respectively, and is included in selling, general 
and administrative expenses. Accumulated amortization of goodwill was $120,458  
and $95,329 as of year end 2000 and 1999, respectively.                         

    USE OF ESTIMATES--The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America        
requires management to make estimates and assumptions that affect the reported  
amounts of assets and liabilities and disclosure of contingent assets and       
liabilities at the date of the financial statements and the reported amounts of 
revenues and expenses during the reporting period. Actual results could differ  
from those estimates.                                                           

 INTEREST RATE SWAP AGREEMENTS--The Company enters into interest rate swap
agreements from time to time to reduce exposures to market risks resulting from 
fluctuations in interest rates. The Company does not hold or issue any          
derivative financial instruments for trading purposes. The Company did not have 
any interest rate swap agreements outstanding at December 30, 2000.             

ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS--In April 1998, the American  
Institute of Certified Public Accountants ("AICPA") issued Statement of Position
("SOP") 98-5, "Reporting on the Costs of Start-Up Activities," which requires   
costs of start-up activities and organization costs to be expensed as incurred. 
The Company adopted this SOP in the first quarter of fiscal year 1999, which    
resulted in a charge of $10,513, net of taxes of $7,305, as the cumulative      
effect of a change in accounting principle for the non-recurring write-off of   
deferred start-up costs. The adoption of this SOP did not have a material effect
on operating income on a continuing basis.                                      

RECENT ACCOUNTING PRONOUNCEMENTS--In June 1998, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards ("SFAS")     
No. 133, "Accounting for Derivative                                             

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QUEBECOR WORLD (USA) INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 30, 2000, DECEMBER 31, 1999 AND DECEMBER 27, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                       
Instruments and Hedging Activities." This statement requires companies to       
recognize all derivatives as either assets or liabilities and measure those     
instruments at fair value. Gains or losses resulting from changes in the values 
of those derivatives would be accounted for depending on the use of the         
derivative and whether it qualifies for hedge accounting. In June 2000, the     
Financial Accounting Standards Board issued SFAS No. 138, which amended certain 
provisions of SFAS 133 to clarify four areas causing difficulties in            
implementation. The Company will adopt SFAS 133 and the corresponding amendments
under SFAS 138 in the first quarter of 2001. The adoption of SFAS 133, as       
amended by SFAS 138, will not have a material effect on the Company's           
consolidated financial statements.                                              

In December 1999, the Securities and Exchange Commission issued Staff   
Accounting Bulletin ("SAB") 101, "Revenue Recognition in Financial Statements," 
which provides additional guidance in applying generally accepted accounting    
principles to revenue recognition in the financial statements. SAB 101 did not  
have a material effect on the Company's consolidated financial statements.      

In September 2000, the Financial Accounting Standards Board issued SFAS 
No. 140, "Accounting for Transfers and Servicing of Financial Assets and        
Extinguishments of Liabilities." This statement revises the standards for       
accounting for securitization and other transfers of financial assets and       
collateral and requires certain disclosures, but it carries over most of the    
provisions of SFAS No. 125 without reconsideration. This statement is effective 
for transfers and servicing of financial assets and extinguishments of          
liabilities occurring after March 31, 2001. The Company is currently assessing  
the impact of this standard on the consolidated financial statements but does   
not expect it to have a material effect.                                        

3. BUSINESS ACQUISITIONS                                                        

   In fiscal year 1999, the Company acquired five businesses serving customers
in the commercial, retail and directory markets for an aggregate purchase price 
of approximately $203,000, including assumed indebtedness. In 1998, the Company 
acquired four businesses serving customers in the commercial, direct mail and   
book markets for an aggregate purchase price of approximately $200,000.         

These acquisitions were accounted for as purchases and the consolidated 
financial statements include the results of their operations from the respective
acquisition dates. These acquisitions have not had a material effect on the     
Company's results of operations.                                                

4. MERGER RELATED COSTS                                                         

    In connection with the Merger, the Company developed an integration strategy
for the combined entities that requires the redeployment and/or disposal of     
assets and the shutdown or relocation of certain of the Company's plant         
locations and sales offices. This revised strategic initiative resulted in 1999 
charges of $144,544. These charges were primarily composed of $40,011 for the   
writedown of fixed assets to reflect fair market value, $32,303 for severance   
and related costs to shut down certain plant locations and sales offices,       
$19,672 for the disposal and other related costs of inventories and $34,100 to  
reflect other operational changes in the business as a result of the Merger.    
During 2000, the Company incurred $28,637 of severance and related costs to shut
down certain plant locations as a result of the continuing execution of the     
integration strategy.                                                           

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QUEBECOR WORLD (USA) INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 30, 2000, DECEMBER 31, 1999 AND DECEMBER 27, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 

4. MERGER RELATED COSTS (CONTINUED)                                             
During 2000, the Company paid approximately $22,500 related to these    
charges. The Company anticipates remaining payments for these charges to be     
approximately $26,500.                                                          

  The Company also incurred non-cash charges of $124,008 and $21,729 in 2000
to adjust the carrying value of fixed assets and other assets and liabilities,  
respectively, in order to reflect the operational changes in the business       
resulting from the continued implementation of the Merger integration strategy. 

The Company anticipates incurring additional charges of approximately   
$31,000 over the next year primarily related to equipment relocation costs as   
contemplated in the Merger integration strategy.                                

    The Company incurred $169,301 of non-recurring Merger related costs in 1999.
These costs included: the cancellation and settlement by Acquisition Inc. of all
vested and unvested options, bonuses, severance, legal and attorney fees, and   
other fees specifically related to the Merger. In addition, the Company's       
outstanding restricted stock became fully vested in connection with the Merger. 
The Merger related expenses are included in selling, general and administrative 
expenses in the Company's 1999 consolidated statement of operations. The        
majority of these expenses were paid in 1999.                                   

5. INVENTORIES                                                                  

Inventories are summarized as follows:                                  

                                                                [Download Table]

                                                            2000       1999  
                                                          --------   --------
                                                                             
Work-in-process.........................................  $127,654   $135,543
Raw materials...........................................    80,988     95,173
                                                          --------   --------
Total...................................................  $208,642   $230,716
                                                          ========   ========

6. PROPERTY, PLANT AND EQUIPMENT                                                

Property, plant and equipment is as follows:                            

                                                                [Download Table]

                                                          2000         1999   
                                                       ----------   ----------
                                                                              
Land.................................................  $   28,241   $   17,922
Buildings and leasehold improvements.................     250,049      310,227
Machinery and equipment..............................   1,347,582    1,379,859
                                                       ----------   ----------
                                                        1,625,872    1,708,008
Accumulated depreciation and amortization............     897,219      830,010
                                                       ----------   ----------
Total................................................  $  728,653   $  877,998
                                                       ==========   ==========

   Depreciation expense related to property, plant and equipment was $119,011,
$131,206 and $120,250 for the years 2000, 1999 and 1998, respectively.          

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QUEBECOR WORLD (USA) INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 30, 2000, DECEMBER 31, 1999 AND DECEMBER 27, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 

7.  ACCRUED EXPENSES                                                            

Accrued expenses are as follows:                                        

                                                                [Download Table]

                                                            2000       1999  
                                                          --------   --------
                                                                             
Compensation............................................  $ 50,481   $ 42,155
Employee health and welfare benefits....................    12,755     11,093
Deferred revenue........................................    12,240     12,918
Interest................................................    14,800     16,080
Other...................................................    73,151     55,718
                                                          --------   --------
Total...................................................  $163,427   $137,964
                                                          ========   ========

8. RESTRUCTURING AND OTHER SPECIAL CHARGES                                      

In 1999, the Company recorded restructuring and other special charges of
$74,807, or $44,297 net of tax, to eliminate redundant and less efficient       
capacity resulting from its ongoing acquisition strategy. The restructuring and 
other special charges included the costs to exit and consolidate certain        
facilities and sales offices, write down impaired assets and eliminate certain  
administrative positions. These charges, consisting primarily of $26,615 for the
writedown of equipment and $44,566 to reserve for certain lease costs, resulted 
from changes in the Company's strategic growth objectives and were primarily    
determined based on independent appraisals.                                     

The Company has closed the affected facilities and sales offices and    
terminated related employees. Fixed assets have been adjusted to reflect their  
appropriate values. Cash payments related to these charges in 2000 were not     
material. The remaining costs, primarily lease payments, will extend through    
2008. The Company does not expect to incur additional expenses related to this  
restructuring initiative.                                                       

9. LONG-TERM DEBT                                                               

Long-term debt is summarized as follows:                                

                                                                [Download Table]

                                                          2000         1999   
                                                       ----------   ----------
                                                                              
7.75% Senior Subordinated Notes......................  $  300,000   $  300,000
8.375% Senior Subordinated Notes.....................     257,575      300,000
Convertible Senior Subordinated Notes................     119,529      144,179
Notes borrowed on the Company's behalf...............     294,785      511,500
Notes payable, average of 9.12% due 2004--2005.......      22,151       26,160
Other debt, average of 7.11% due 2001--2007..........       7,439        9,357
                                                       ----------   ----------
Total................................................   1,001,479    1,291,196
Less current maturities..............................       8,647        6,090
                                                       ----------   ----------
Non current portion..................................  $  992,832   $1,285,106
                                                       ==========   ==========

 7.75% SENIOR SUBORDINATED NOTES--On February 22, 1999, the Company issued
Senior Subordinated Notes in the aggregate principal amount of $300,000,        
receiving net proceeds of approximately $294,000. Interest on the notes is      
payable semi-annually at the annual rate of 7.75%. The notes do not have        

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QUEBECOR WORLD (USA) INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 30, 2000, DECEMBER 31, 1999 AND DECEMBER 27, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 

9. LONG-TERM DEBT (CONTINUED)                                                   
required principal payments prior to maturity on February 15, 2009. The net     
proceeds from the notes issuance were utilized to repay certain indebtedness    
under the Credit Agreement, as defined below.                                   

The fair value of the notes was approximately $285,000 and $287,000 at  
December 30, 2000 and December 31, 1999, respectively, based on quoted market   
prices.                                                                         

  8.375% SENIOR SUBORDINATED NOTES--On November 20, 1998, the Company issued
Senior Subordinated Notes in the aggregate principal amount of $300,000,        
receiving net proceeds of approximately $291,700. Interest on the Senior        
Subordinated Notes is payable semi-annually at the annual rate of 8.375%. The   
notes do not have required principal payments prior to maturity on November 15, 
2008. The Company utilized the net proceeds from the issuance of these notes to 
repay revolving loan commitments incurred under the Credit Agreement and to     
redeem all of its outstanding 9.125% Senior Subordinated Notes. During 2000,    
amounts borrowed from certain subsidiaries of QWI were utilized to repay $42,425
of the 8.375% Senior Subordinated Notes. The net gains on extinguishment of the 
notes were not material to the Company's consolidated financial statements.     

The fair value of the notes was approximately $254,000 and $299,000 at  
December 30, 2000 and December 31, 1999, respectively, based on quoted market   
prices.                                                                         

CONVERTIBLE SENIOR SUBORDINATED NOTES--On October 8, 1997, the Company  
issued $151,800 aggregate principal amount of Convertible Senior Subordinated   
Notes (the "Convertible Notes"), receiving net proceeds of approximately        
$147,900. Interest on the Convertible Notes is payable semi-annually at the     
annual rate of 6.00%. The Convertible Notes have no required principal payments 
prior to maturity on October 1, 2007. The Convertible Notes are convertible at  
the option of the holder at any time and at the option of the Company, at       
specified prices. As discussed in Note 1, on October 8, 1999, each 6%           
Convertible Note due 2007 became convertible into the number of QWI subordinate 
voting shares and cash that would have been received had the Convertible Note   
been converted immediately prior to October 8, 1999.                            

    During 2000, amounts borrowed from certain subsidiaries of QWI were utilized
to repay $24,650 of the Convertible Notes. The net gains on extinguishment of   
the notes were not material to the Company's consolidated financial statements. 
The Company does not intend to exercise its option to redeem the Convertible    
Notes in 2001, therefore the Convertible Notes are classified as long-term in   
the consolidated balance sheet.                                                 

The fair value of the Convertible Notes was approximately $125,000 and  
$146,000 at December 30, 2000 and December 31, 1999, respectively, based on     
quoted market prices.                                                           

    9.125% SENIOR SUBORDINATED NOTES--On May 10, 1993, the Company issued Senior
Subordinated Notes in the aggregate principal amount of $150,000. Interest on   
the Senior Subordinated Notes was payable semi-annually at the annual rate of   
9.125%. The notes did not have required principal payments prior to maturity on 
March 15, 2003.                                                                 

   On December 28, 1998, the Company used proceeds from its November 1998 debt
issuance to redeem all of its outstanding 9.125% Senior Subordinated Notes due  
2003 in an aggregate principal amount of $150,000. The notes were redeemed for  
approximately $160,800, including the redemption premium of $6,840 and accrued  
interest. This early extinguishment of debt generated an extraordinary          

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QUEBECOR WORLD (USA) INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 30, 2000, DECEMBER 31, 1999 AND DECEMBER 27, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 

9. LONG-TERM DEBT (CONTINUED)                                                   
charge of $5,946, net of taxes of $4,132, for the redemption premium and        
write-off of deferred financing costs.                                          

    BORROWINGS UNDER CREDIT AGREEMENTS--On February 22, 1999 concurrent with the
7.75% Senior Subordinated Notes issuance, the Second Amended and Restated Credit
Agreement dated as of June 6, 1996, as amended (the "Credit Agreement"), was    
amended resulting in, among other modifications, a $95,000 permanent reduction  
in borrowings and commitments under the Credit Agreement. As a result, aggregate
total commitments decreased from $920,000 to $825,000. The amendment and related
permanent reduction in total borrowings and commitments resulted in a           
substantial modification of the terms under the Credit Agreement. Accordingly,  
the Company recognized an extraordinary charge for the early extinguishment of  
debt of $6,046, net of taxes of $4,201, for the write-off of deferred financing 
costs. Subsequent to the Merger, the Company repaid all of its outstanding debt 
incurred under the Credit Agreement.                                            

    On August 20, 1999, the Company entered into a credit agreement with a third
party lender with a maximum total commitment of $100,000. Interest is payable at
a variable floating rate based on LIBOR or prime rate. At December 30, 2000, the
Company did not owe any amounts under this agreement.                           

NOTES BORROWED ON THE COMPANY'S BEHALF--In 1999, certain wholly owned   
subsidiaries of QWI provided the Company with $511,500, which was borrowed on   
the Company's behalf from subsidiaries' external long-term credit facilities.   
The Company used these funds to pay certain Merger expenses and repay $491,600  
in outstanding debt incurred under the Credit Agreement. The borrowings bear    
interest at rates based on LIBOR plus 2% per annum, adjusted quarterly. Interest
on the borrowings ranged from 8.07% to 8.75% in 2000. The outstanding balance on
these notes at December 30, 2000 was $220,000. Payment is not required prior to 
December 31, 2001. In 2000, the Company incurred $34,703 of interest expense, of
which $1,042 was included in net payables to related parties in the consolidated
balance sheet at December 30, 2000.                                             

Throughout 2000, certain wholly owned subsidiaries of QWI provided the  
Company with amounts borrowed under notes payable on demand. These borrowings   
bear interest at rates based on prime plus 1% per annum. At December 30, 2000,  
the outstanding balance on these notes was $2,041. Certain wholly owned         
subsidiaries of QWI also provided the Company with amounts borrowed under longer
term promissory notes. These borrowings bear interest at rates based on LIBOR   
plus 1.55% per annum, adjusted quarterly, which was approximately 8.35% in 2000.
These notes mature between October 2007 and December 2009. The outstanding      
balance at December 30, 2000 was $72,744. Interest expense incurred on the      
demand and promissory notes for 2000 was $4,444, of which $485 was included in  
net payables from related parties in the consolidated balance sheet at          
December 30, 2000.                                                              

The fair value of the above debt and the Company's remaining debt       
approximated its carrying value, based upon the Company's current incremental   
borrowing rates for similar types of borrowing arrangements.                    

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QUEBECOR WORLD (USA) INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 30, 2000, DECEMBER 31, 1999 AND DECEMBER 27, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 

9. LONG-TERM DEBT (CONTINUED)                                                   
Aggregate annual maturities of long-term debt subsequent to December 30,
2000 are as follows:                                                            

                                                                [Download Table]

YEAR                                                            AMOUNT  
----                                                          ----------
                                                                        
2001........................................................  $    8,647
2002........................................................     227,125
2003........................................................       7,055
2004........................................................       6,376
2005........................................................       1,800
2006 and thereafter.........................................     750,476
                                                              ----------
Total.......................................................  $1,001,479
                                                              ==========

10. ASSET SECURITIZATION                                                        

On June 30, 1997, the Company entered into an agreement to sell, on a   
revolving basis for a period of up to five years, certain of its accounts       
receivable to a wholly-owned subsidiary, which entered into an agreement to     
transfer, on a revolving basis, an undivided percentage ownership interest in a 
designated pool of accounts receivable to a maximum of $204,000. Subsequent to  
the Merger, this asset securitization program was cancelled. The Company then   
entered into a new agreement which was aligned with QWI's existing program and  
has substantially the same terms and conditions as World's previous agreement.  
This new agreement provides that both World and QWI sell their accounts         
receivable under a combined securitization program.                             

  On November 24, 2000, the asset securitization program limit was increased
from $408,000 to $510,000. Based on its portion of the accounts receivable sold 
under the program, the Company's accounts receivable were reduced by $280,000   
and $200,000 at December 30, 2000 and December 31, 1999, respectively.          

Fees arising from the securitization transaction of $14,465, $11,456 and
$11,888 are included in interest expense and securitization fees in the         
consolidated statements of operations for the years ended December 30, 2000,    
December 31, 1999 and December 27, 1998, respectively. These fees vary based on 
commercial paper rates plus a margin. The Company maintains an allowance for    
doubtful accounts based on the expected collectibility of all accounts          
receivable, including receivables sold.                                         

11. LEASES                                                                      

    OPERATING LEASES--The Company leases certain equipment, warehouse facilities
and office space under noncancellable operating leases which expire over the    
next 10 years. Most of these operating leases provide the Company with the      
option, after the initial lease term, either to purchase the equipment or renew 
its lease based upon the fair value of the property at the option date.         

    In 2000, the Company entered into an agreement to lease real property from a
wholly owned subsidiary of QWI. The lease, which expires in December 2004, has  
been classified as an operating lease. The lease payments of $360 per year have 
been included in the minimum rental payments table.                             

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QUEBECOR WORLD (USA) INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 30, 2000, DECEMBER 31, 1999 AND DECEMBER 27, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 

11. LEASES (CONTINUED)                                                          
   In 1998, the Company entered into interest rate swap agreements to exchange
floating rate for fixed interest payments. The agreements effectively converted 
a notional principal amount of $75,000 variable rate, quarterly operating lease 
payments into fixed. As allowable under the agreements, the respective          
counterparties cancelled the agreements in September 1999. These agreements did 
not have a material impact on the consolidated financial statements for the     
periods presented.                                                              

SALE AND LEASEBACK OF EQUIPMENT--In 1998, the Company entered into      
agreements for the sale and leaseback of certain printing equipment for which it
received approximately $88,500 of proceeds. The lease, which expires in         
July 2010, has been classified as an operating lease. The proceeds were utilized
to repay revolving loan commitments incurred under the Credit Agreement.        

Future minimum rental payments required under noncancellable leases at  
December 30, 2000 were as follows:                                              

                                                                [Download Table]

YEAR                                                                  
----                                                                  
                                                                      
2001........................................................  $ 49,000
2002........................................................    45,306
2003........................................................    39,292
2004........................................................    30,193
2005........................................................    27,652
2006 and thereafter.........................................    87,002
                                                              --------
Total minimum lease payments................................  $278,445
                                                              ========

    Rental expense for operating leases was $56,904, $57,154 and $49,697 for the
years 2000, 1999 and 1998, respectively.                                        

12. INCOME TAXES                                                                

The provision (benefit) for income taxes is summarized as follows:      

                                                                [Download Table]

                                                    2000       1999       1998  
                                                  --------   --------   --------
                                                                                
Current:                                                                        
  Federal.......................................  $25,366    $  6,318   $27,429 
  State.........................................    7,657         950     6,728 
                                                  -------    --------   ------- 
                                                   33,023       7,268    34,157 
                                                  -------    --------   ------- 
Deferred:                                                                       
  Federal.......................................  (37,254)    (60,776)   17,450 
  State.........................................     (656)     (2,898)      447 
                                                  -------    --------   ------- 
                                                  (37,910)    (63,674)   17,897 
                                                  -------    --------   ------- 
Total...........................................  $(4,887)   $(56,406)  $52,054 
                                                  =======    ========   ======= 

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QUEBECOR WORLD (USA) INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 30, 2000, DECEMBER 31, 1999 AND DECEMBER 27, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 

12. INCOME TAXES (CONTINUED)                                                    
  The tax effects of significant items comprising the Company's net deferred
tax asset (liability) as of December 30, 2000 and December 31, 1999 are as      
follows:                                                                        

                                                                [Download Table]

                                                               2000        1999    
                                                             ---------   --------- 
                                                                                   
Deferred tax assets:                                                               
  Operating loss carryforwards.............................. $   2,246   $   4,125 
  Tax credit carryforwards..................................    52,746      37,687 
  Employee health and welfare benefits......................     7,807       9,748 
  Postretirement benefits other than pensions...............    21,379      19,948 
  Pension benefits accrual..................................     7,046       6,853 
  Vacation accrual..........................................     7,997       6,654 
  Restructuring and Merger accrual..........................    34,032      24,076 
  Other differences.........................................    11,579      21,029 
                                                             ---------   --------- 
      Gross deferred tax assets.............................   144,832     130,120 
                                                             ---------   --------- 
Deferred tax liabilities:                                                          
  Differences between book and tax bases of property........  (100,898)   (126,336)
  Other differences.........................................   (17,685)    (15,474)
                                                             ---------   --------- 
      Gross deferred tax liabilities........................  (118,583)   (141,810)
                                                             ---------   --------- 
Deferred tax asset valuation allowance......................    (3,007)     (3,007)
                                                             ---------   --------- 
Net deferred tax asset (liability)..........................    23,242     (14,697)
Less current deferred tax asset.............................    52,082      47,990 
                                                             ---------   --------- 
Noncurrent deferred tax liability........................... $ (28,840)  $ (62,687)
                                                             =========   ========= 

    The 2000 and 1999 amounts above include a valuation allowance of $3,007, for
both years, relating to the limitations on certain state net operating loss and 
credit carryforwards.                                                           

The following table reconciles the difference between the U.S. federal  
statutory tax rates and the rates used by the Company in the determination of   
net income:                                                                     

                                                        [Enlarge/Download Table]

                                                               2000       1999       1998  
                                                             --------   --------   --------
                                                                                           
Income tax provision (benefit), at 35%...................... $(16,199)  $(89,576)  $43,975 
State and local income taxes, net of federal income tax                                    
  benefit...................................................    4,551     (1,266)    4,664 
Release of deferred tax asset valuation allowance...........       --         --    (1,745)
Costs related to acquisition................................       --     29,077        -- 
Other, primarily goodwill amortization......................    6,761      5,359     5,160 
                                                             --------   --------   ------- 
Total....................................................... $ (4,887)  $(56,406)  $52,054 
                                                             ========   ========   ======= 

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QUEBECOR WORLD (USA) INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 30, 2000, DECEMBER 31, 1999 AND DECEMBER 27, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 

12. INCOME TAXES (CONTINUED)                                                    

  The Company had federal tax credits of $4,162 expiring primarily from 2001
to 2002 and state tax credits of $11,886 expiring from 2001 to 2013. In         
addition, the Company had alternative minimum tax carryover credits of $36,698  
which do not expire and may be applied against regular tax in the future, in the
event that the regular tax expense exceeds the alternative minimum tax.         

13. EMPLOYEE BENEFIT PLANS                                                      

    PENSION PLANS--The Company has defined benefit pension plans in effect which
cover certain employees who meet minimum eligibility requirements. The Company  
contributes annually amounts sufficient to satisfy the government's minimum     
standards.                                                                      

Net periodic pension cost is determined based upon years of service and 
compensation levels, using the projected unit credit method. Prior year service 
costs and unrecognized gains and losses are amortized over the estimated future 
service periods of active employees in the respective plan.                     

Effective January 1, 2001, the pension plan covering most non-union     
employees of the Company was replaced. The new plan is a pension equity plan    
that provides annual lump sum credits ranging from 3% to 8% of final five-year  
average earnings. The effect of this change on the pension benefit obligation is
an increase of approximately $1,000. The effect of this change will be          
recognized beginning in fiscal year 2001.                                       

  POSTRETIREMENT PLANS--The Company provides postretirement medical benefits
to eligible employees. The Company's postretirement health care plans are       
unfunded.                                                                       

  The following table provides a reconciliation of the changes in the plans'
benefit obligations and fair value of plan assets for the fiscal years ended    
December 30, 2000 and December 31, 1999 and a statement of the funded status as 
of December 30, 2000 and December 31, 1999:                                     

                                                        [Enlarge/Download Table]

                                                       PENSION BENEFITS     POSTRETIREMENT BENEFITS
                                                      -------------------   -----------------------
                                                        2000       1999        2000         1999   
                                                      --------   --------   ----------   ----------
                                                                                                   
CHANGE IN BENEFIT OBLIGATION                                                                       
  Benefit obligation at beginning of year............ $186,150   $205,845    $ 35,263     $ 43,075 
  Service cost.......................................    4,805      4,865         269          382 
  Interest cost......................................   14,849     14,677       2,852        2,582 
  Plan participants' contributions...................       --         --         482          583 
  Curtailment gain...................................       --         --          --       (7,387)
  Settlement loss....................................      242      2,301          --           -- 
  Actuarial (gain) or loss...........................    7,475    (18,699)      2,562       (1,013)
  Benefits paid......................................  (17,522)   (20,306)     (3,586)      (2,959)
  Settlements paid...................................     (378)    (2,533)         --           -- 
                                                      --------   --------    --------     -------- 
  Benefit obligation at end of year.................. $195,621   $186,150    $ 37,842     $ 35,263 
                                                      ========   ========    ========     ======== 

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QUEBECOR WORLD (USA) INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 30, 2000, DECEMBER 31, 1999 AND DECEMBER 27, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 

13. EMPLOYEE BENEFIT PLANS (CONTINUED)                                          

                                                        [Enlarge/Download Table]

                                                       PENSION BENEFITS     POSTRETIREMENT BENEFITS
                                                      -------------------   -----------------------
                                                        2000       1999        2000         1999   
                                                      --------   --------   ----------   ----------
                                                                                                   
CHANGE IN PLAN ASSETS                                                                              
  Fair value of plan assets at beginning of year..... $190,458   $180,665    $     --     $     -- 
  Actual return on plan assets.......................   (9,403)    27,204          --           -- 
  Employer contributions.............................    5,809      5,428       3,104        2,376 
  Plan participants' contributions...................       --         --         482          583 
  Settlements paid...................................     (378)    (2,533)         --           -- 
  Benefits paid......................................  (17,522)   (20,306)     (3,586)      (2,959)
                                                      --------   --------    --------     -------- 
  Fair value of plan assets at end of year........... $168,964   $190,458    $     --     $     -- 
                                                      ========   ========    ========     ======== 
RECONCILIATION OF FUNDED STATUS                                                                    
  Funded status...................................... $(26,657)  $  4,308    $(37,842)    $(35,263)
  Unrecognized actuarial (gain) loss.................   26,502     (8,553)       (547)      (3,194)
  Unrecognized net transition obligation.............      116         45          --           -- 
  Unrecognized prior service cost....................   (9,915)   (10,929)     (1,424)      (1,731)
                                                      --------   --------    --------     -------- 
  Net amount recognized.............................. $ (9,954)  $(15,129)   $(39,813)    $(40,188)
                                                      ========   ========    ========     ======== 

    The unrecognized net transition asset is amortized over the average expected
future service periods of employees. Plan assets consist principally of common  
stocks and U.S. government and corporate obligations.                           

The following table provides the amounts recognized in the consolidated 
balance sheets as of December 30, 2000 and December 31, 1999:                   

                                                        [Enlarge/Download Table]

                                                     PENSION BENEFITS     POSTRETIREMENT BENEFITS
                                                    -------------------   -----------------------
                                                      2000       1999        2000         1999   
                                                    --------   --------   ----------   ----------
                                                                                                 
Accrued benefit liability.......................... $(22,386)  $(18,362)   $(39,813)    $(40,188)
Prepaid benefit cost...............................    7,985      2,925          --           -- 
Intangible asset...................................    4,447        308          --           -- 
                                                    --------   --------    --------     -------- 
Net amount recognized.............................. $ (9,954)  $(15,129)   $(39,813)    $(40,188)
                                                    ========   ========    ========     ======== 

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QUEBECOR WORLD (USA) INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 30, 2000, DECEMBER 31, 1999 AND DECEMBER 27, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 

13. EMPLOYEE BENEFIT PLANS (CONTINUED)                                          
    The following table provides the components of net periodic benefit cost for
the fiscal years ended December 30, 2000 and December 31, 1999:                 

                                                        [Enlarge/Download Table]

                                                     PENSION BENEFITS     POSTRETIREMENT BENEFITS
                                                    -------------------   -----------------------
                                                      2000       1999        2000         1999   
                                                    --------   --------   ----------   ----------
                                                                                                 
Service cost....................................... $  4,805   $  4,865    $    269     $    382 
Interest cost......................................   14,849     14,677       2,852        2,582 
Expected return on plan assets.....................  (17,925)   (17,428)         --           -- 
Amortization of prior service cost.................   (1,013)    (1,013)       (307)      (1,595)
Amortization of transitional asset.................      (72)      (226)         --           -- 
Curtailment gain...................................       --         --          --       (2,667)
Recognized actuarial gain (loss)...................      (10)       474         (85)          -- 
                                                    --------   --------    --------     -------- 
Net periodic cost.................................. $    634   $  1,349    $  2,729     $ (1,298)
                                                    ========   ========    ========     ======== 

 The weighted average assumptions used in the measurement of the Company's
benefit obligation are as follows:                                              

                                                        [Enlarge/Download Table]

                                                       PENSION BENEFITS     POSTRETIREMENT BENEFITS
                                                      -------------------   -----------------------
                                                        2000       1999        2000         1999   
                                                      --------   --------   ----------   ----------
                                                                                                   
Discount rate........................................     7.75%      8.00%       7.75%        8.00%
Expected return on plan assets.......................    10.25%     10.25%         --           -- 
Rate of compensation increase........................     3.50%      3.50%         --           -- 

  At December 30, 2000, the Company had one pension plan with plan assets of
$1,382 in excess of the accumulated benefit obligation. All other pension plans 
had accumulated benefit obligations which exceeded plan assets. At December 31, 
1999, accumulated benefit obligations exceeded plan assets for all pension      
plans. The market value of plan assets was used to calculate the expected return
on plan assets.                                                                 

 The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 5% at the end of 1999 and 2000, and is    
expected to remain constant at that rate for future periods. A one percentage   
point increase in the assumed health care cost trend rate would increase the    
accumulated postretirement benefit obligation as of December 30, 2000 by $2,526 
and the annual postretirement benefit expense by $194. A one percentage point   
decrease in the assumed health care cost trend rate would decrease the          
accumulated postretirement benefit obligation as of December 30, 2000 by $2,284 
and the annual postretirement benefit expense by approximately $175.            

  Certain union employees of the Company participate in multiemployer plans.
Amounts charged to benefit expense relating to the multiemployer plans for 2000,
1999 and 1998 totaled $4,004, $3,850 and $3,685, respectively. In addition, the 
Company has various deferred savings and profit sharing plans for certain       
employees who meet eligibility requirements. Amounts charged to benefit expense 
related to these plans for 2000, 1999 and 1998 totaled $3,728, $3,891 and       
$2,993, respectively.                                                           

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QUEBECOR WORLD (USA) INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 30, 2000, DECEMBER 31, 1999 AND DECEMBER 27, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 

14. STOCK-BASED COMPENSATION PLANS                                              

   STOCK OPTION PLANS--Prior to the Merger, the Company had stock option plans
that permitted the Stock Option Committee to grant up to an aggregate of        
7,750,000 options to purchase shares of the Company's common stock to certain   
key employees of the Company. Options granted under the plans generally vested  
ratably over a five-year period. Vested options were exercised up to ten years  
from the date of grant. As a result of the Merger, the Company's stock option   
plan was terminated and no subsequent options were granted. Information related 
to the Company's stock option plans is presented below.                         

                                                        [Enlarge/Download Table]

                                                            NUMBER OF OPTIONS    OPTION PRICE  
                                                            -----------------  ----------------
                                                                                               
Outstanding at December 28, 1997...........................     3,308,940      $ 5.49 to $26.75
  Granted..................................................       937,500      $29.13 to $32.56
  Exercised................................................      (617,044)     $ 5.49 to $26.75
  Rescinded/Canceled.......................................      (166,500)     $15.00 to $32.56
                                                               ----------                      
Outstanding at December 27, 1998...........................     3,462,896      $ 5.49 to $30.75
                                                               ----------                      
  Granted..................................................     1,771,500      $23.31 to $24.33
  Exercised................................................      (478,058)     $ 5.49 to $26.75
  Rescinded/Canceled.......................................       (16,400)     $26.75 to $29.13
  Settled at Merger........................................    (4,739,938)     $ 5.49 to $30.75
                                                               ----------                      
Outstanding at December 31, 1999...........................            --                      
                                                               ==========                      

                                                        [Enlarge/Download Table]

                                                                              RESERVED FOR  
                                                             EXERCISABLE     FUTURE GRANTS  
                                                            --------------  ----------------
                                                                                            
December 27, 1998..........................................    1,600,600           2,009,800
December 31, 1999 and thereafter...........................           --                  --

As discussed in Note 4, the Company canceled and settled all vested and 
unvested options at the time of the Merger. During 1999 the Company recognized  
$67,474 of compensation expense related to the cancellation and settlement of   
the outstanding stock options.                                                  

As permitted by SFAS No. 123, "Accounting for Stock-Based Compensation,"
prior to 1999, the Company had not recorded compensation expense for stock      
options granted to employees. Therefore, the Company has determined the pro     
forma net income for fiscal year 1998, had compensation expense been recorded   
for options granted under the applicable fair value method described in the     
statement. For options granted during 1998, the fair value at the date of grant 
was estimated using the Black-Scholes option pricing model. Under the           
Black-Scholes model, a volatility factor of .281 was used for 1998. The         
following weighted average assumptions were used in calculating the fair value  
of the options granted in 1998: risk-free interest rates of 5.13%; an assumed   
dividend yield of zero; and an expected life of the options of ten years.       

  For purposes of the pro forma disclosures, the estimated fair value of the
options granted is amortized to compensation expense over the options' vesting  
period. For the year ended December 27, 1998, the Company's pro forma net income
was $71,319 and the weighted average fair value of options granted during the   
year was $15.00.                                                                

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QUEBECOR WORLD (USA) INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 30, 2000, DECEMBER 31, 1999 AND DECEMBER 27, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 

14. STOCK-BASED COMPENSATION PLANS (CONTINUED)                                  
 RESTRICTED STOCK--Restricted shares of the Company's stock were issued in
1999 and 1998 to certain key employees under a restricted stock plan. The stock 
vested ratably over five years and was contingent upon employment. The market   
value of the stock at the time of grant was recorded as unamortized restricted  
stock compensation in stockholders' equity and was amortized to expense over the
five year vesting period. In 1999 and 1998, the Company issued 202,500 and      
135,000 restricted shares of common stock at a weighted average price of $21.19 
and $30.21 per share, respectively. All of the Company's restricted stock became
fully vested at the time of the Merger. Unamortized restricted stock            
compensation at the time of the Merger of $7,306 was recognized in selling,     
general and administrative expenses as part of the Merger related expenses in   
1999.                                                                           

15. TREASURY STOCK                                                              

 In August 1998, the Board of Directors authorized the repurchase of up to
1,800,000 shares of the Company's common stock. The repurchase of shares        
commenced in August 1998 in the open market at prevailing market prices or in   
negotiated transactions, depending on market conditions. The shares were        
repurchased to satisfy commitments under certain employee benefit plans. When   
treasury shares were reissued, the Company used the weighted average cost method
and the excess of repurchase cost over reissuance price was treated as a        
reduction of retained earnings. In 1999, the Company repurchased 1,263,652      
shares of common stock at a weighted average cost of $24.18 per share. Since the
inception of the plan in 1998, the Company had repurchased 1,750,153 shares at a
weighted average cost of $26.02 and reissued 466,255 shares. The Company        
terminated the share purchase plan in 1999 and the treasury stock was retired as
a result of the Merger.                                                         

16. RELATED PARTY TRANSACTIONS                                                  

  The Company had net amounts payable to a wholly owned subsidiary of QWI of
$7,207 and $5,075 at December 30, 2000 and December 31, 1999, respectively, for 
the purchase of raw materials which were included in net payables to related    
parties in the consolidated balance sheets.                                     

  The Company had transactions in the normal course of business with QWI and
affiliated companies that resulted in a net payable of $57,313 which was        
included in net payables to related parties in the consolidated balance sheet at
December 30, 2000.                                                              

During 2000, the Company sold fixed assets for approximately $14,500 to 
certain wholly owned subsidiaries of QWI. The proceeds were included in the sale
of property, plant and equipment in the statement of cash flows at December 30, 
2000. No gain or loss was recognized on these transactions.                     

The Company incurred fees of $4,901 in 2000 for corporate administrative
services provided by QWI.                                                       

As part of the Merger expenses discussed in Note 4, in 1999 the Company 
recognized a non-cash charge of $67,474 for the cancellation and settlement by  
Acquisition Inc. of all vested and unvested options. Of this amount, $40,868 was
paid directly by Acquisition Inc. to the option holders on behalf of the Company
and $26,606 was paid in stock of QWI upon consummation of the Merger. In        
addition, Acquisition Inc. contributed $51,299 to the Company to pay certain    
other Merger expenses. These                                                    

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QUEBECOR WORLD (USA) INC. 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 30, 2000, DECEMBER 31, 1999 AND DECEMBER 27, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 

16. RELATED PARTY TRANSACTIONS (CONTINUED)                                      
amounts will not be repaid and are, therefore, included in stockholder's equity 
in the Company's consolidated balance sheets.                                   

 In 1999, the Company sold land for $4,000 to a wholly owned subsidiary of
QWI. The Company subsequently entered into a lease agreement for the land with  
this subsidiary for a lease term through 2004.                                  

In 1999, the Company paid $17,997 for consulting services related to the
Merger provided by Kohlberg Kravis Roberts & Co. L.P. These fees are included in
the Merger related expenses discussed in Note 4.                                

    The Company has incurred expenses of $750 in each of the fiscal years ending
1999 and 1998 for management services provided by affiliated companies prior to 
the Merger.                                                                     

17. COMMITMENTS AND CONTINGENT LIABILITIES                                      

   The Company is subject to legal proceedings and other claims arising in the
ordinary course of operations. The Company does not believe that there are any  
pending legal proceedings, which, if adversely determined, could have a material
adverse effect on the financial condition or results of operations of the       
Company.                                                                        

18. UNAUDITED QUARTERLY FINANCIAL INFORMATION                                   

                                                        [Enlarge/Download Table]

                                                                 INCOME (LOSS) BEFORE                     
                                                                EXTRAORDINARY ITEMS AND                   
                                                     GROSS       CUMULATIVE EFFECT OF                     
QUARTER ENDED                        NET SALES   PROFIT/(LOSS)   CHANGE IN ACCOUNTING    NET INCOME (LOSS)
-------------                        ----------  -------------  -----------------------  -----------------
                                                                                                          
April 1, 2000....................... $  661,879     $112,380           $  10,243             $  10,243    
July 1, 2000........................    620,355      111,532              14,632                14,632    
September 30, 2000..................    693,108      (57,650)           (101,360)             (101,360)   
December 30, 2000...................    678,079      144,357              35,087                35,087    
                                     ----------     --------           ---------             ---------    
                                     $2,653,421     $310,619           $ (41,398)            $ (41,398)   
                                     ==========     ========           =========             =========    
March 28, 1999...................... $  605,843     $ 98,036           $  10,379             $ (12,126)   
June 27, 1999.......................    566,545       99,772             (26,218)              (26,218)   
September 26, 1999..................    686,840      139,677            (109,399)             (109,399)   
December 31, 1999...................    693,667       (8,014)            (74,288)              (74,288)   
                                     ----------     --------           ---------             ---------    
                                     $2,552,895     $329,471           $(199,526)(1)         $(222,031)   
                                     ==========     ========           =========             =========    

------------------------                                                        

(1) As discussed in Note 9, in the first quarter of 1999, the Company recognized
    extraordinary charges of $11,992, net of taxes, for the early extinguishment
of certain debt instruments.                                            

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SCHEDULE II 
QUEBECOR WORLD (USA) INC. 
VALUATION AND QUALIFYING ACCOUNTS 
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                    ADDITIONS                    OTHER                
                                          BALANCE   CHARGED TO                  CHARGES-    BALANCE AT
                                         BEGINNING  COSTS AND   DEDUCTIONS-   ADD (DEDUCT)     END    
CLASSIFICATION                            OF YEAR    EXPENSES    DESCRIBE       DESCRIBE     OF YEAR  
--------------                           ---------  ----------  -----------   ------------  ----------
                                                                                                      
YEAR ENDED DECEMBER 30, 2000                                                                          
Allowance for uncollectible accounts                                                                  
  receivable............................  $13,844     $2,900       $4,091(1)     $   --       $12,653 
YEAR ENDED DECEMBER 31, 1999                                                                          
Allowance for uncollectible accounts                                                                  
  receivable............................  $10,638     $5,269       $3,367(1)     $1,304(2)    $13,844 
YEAR ENDED DECEMBER 27, 1998                                                                          
Allowance for uncollectible accounts                                                                  
  receivable............................  $ 9,287     $2,428       $2,545(1)     $1,468(2)    $10,638 

------------------------                                                        

(1) Write-offs of receivables, net of recoveries.                               

(2) Balance of acquired companies at acquisition date.                          

S-1 

Dates Referenced Herein   and   Documents Incorporated by Reference

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