U.S. Securities and Exchange Commission
Washington, D.C. 20549

FORM 40-F





[  ]  Registration statement pursuant to Section 12 of the Securities Exchange Act of 1934

or

[]  Annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2003		Commission file number 1-14118

QUEBECOR WORLD INC.

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant's name into English (if applicable))

CANADA

(Province or other jurisdiction of incorporation or organization)

2572

(Primary Standard Industrial Classification Code Number (if applicable))

N/A

(I.R.S. Employer Identification Number (if applicable))

612 Saint-Jacques Street, Montreal, Quebec, Canada, H3C 4M8

Tel: (514) 954-0101

(Address and telephone number of Registrant's principal executive offices)

QUEBECOR WORLD (USA) INC.

291 State Street, North Haven, CT 06473

Telephone: (203) 288-2468

(Name, address (including zip code) and telephone number (including area code) of agent for service in the United States)





Securities registered or to be registered pursuant to Section 12(b) of the Act.



|Subordinate voting shares |  | New York Stock Exchange                  
|------------------------- |  | -----------------------------------------
|______________________    |  | _________________________                
|Title of each class       |  | Name of each exchange on which registered

Securities Registered or to be registered pursuant to Section 12(g) of the Act

N/A

(Title of Class)



Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

Guarantees of Debt Securities issued by Quebecor World Capital Corporation, an indirect subsidiary of Registrant

(Title of Class)

For annual reports, indicate by check mark the information filed with this Form:

[]  Annual Information form     []  Audited financial statements

Indicate the number of outstanding shares of each of the issuer's classes of capital/or common stock as of the close of the period covered by the annual report.

84,964,837 Subordinate Voting shares Outstanding

46,987,120 Multiple Voting Shares Outstanding

12,000,000 First Preferred Shares Series  Outstanding

8,000,000 First Preferred Shares Series 4 Outstanding

7,000,000 First Preferred Shares Series 5 Outstanding



Indicate by check mark whether the Registrant by filling the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934 (the "Exchange Act").  If "Yes" is marked, indicate the filing number assigned to the Registrant in connection with such Rule.

Yes                				82-                No   





Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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                    No











Material included in this Form 40-F:

1. The Annual Information Form of the Registrant dated May 12, 2004
2. Management's Discussion and Analysis of Financial Condition and results of Operation and Audited Consolidated Financial Statements of the Registrant, including the Notes thereto, as at December 31, 2003 and 2002 and for the years ended December 31, 2003, 2002 and 2001.









*************

DISCLOSURE CONTROLS AND PROCEDURES; INTERNAL CONTROL OVER FINANCIAL REPORTING



Disclosure controls and procedures are defined by the Securities and Exchange Commission (the "Commission") as those controls and other procedures that are designed to ensure that information required to be disclosed in our filings and submissions under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Commission.  Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this annual report on Form 40-F and have determined that such disclosure controls and procedures are effective.



There was no change in our internal control over financial reporting that occurred during the period covered by this annual report on Form 40-F that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



AUDIT COMMITTEE

Quebecor World Inc. (the "Registrant") has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act.  The members of the Registrant's audit committee are Robert Coallier (Chairman), Reginald K. Brack, Robert Normand and Alain Rhéaume.

AUDIT COMMITTEE FINANCIAL EXPERT

The Board of Directors of the Registrant has reviewed the definition of "audit committee financial expert" under paragraph 8(b) of General Instruction B to Form 40-F and determined that the Registrant has at least one audit committee financial expert.  The names of the audit committee financial experts of the Registrant are Messrs. Robert Coallier, Robert Normand and Alain Rhéaume.  The Commission has indicated that the designation of Messrs. Coallier, Normand and Rhéaume as the audit committee financial experts of the Registrant do not (i) make any of Messrs. Coallier, Normand and Rhéaume an "expert" for any purpose, including without limitation for purposes of Section 11 of the Securities Act of 1933, as amended, as a result of this designation; (ii) impose any duties, obligations or liability on Messrs. Coallier, Normand and Rhéaume that are greater than those imposed on them as members of the audit committee and the Board of Directors in the absence of such designation; or (iii) affect the duties, obligations or liability of any other member of the audit committee or the Board of Directors.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Fees payable to the Registrant's independent auditor, KPMG LLP, for the years ended December 31, 2003, and December 31, 2002, totalled $5,760,000 CAD and $7,872,000 CAD, respectively, as detailed in the following table:



|Fees                  | Financial Year Ended
December 31, 2003 | Financial Year Ended
December 31, 2002
|--------------------- | -------------------------------------- | --------------------------------------
|                      |                                        |                                       
|Audit Fees(1)         | $3,459,000                             | $3,329,000                            
|                      |                                        |                                       
|Audit-Related Fees(2) | $774,000                               | $730,000                              
|                      |                                        |                                       
|Tax Fees(3)           | $1,441,000                             | $3,631,000                            
|                      |                                        |                                       
|All other Fees(4)     | $86,000                                | $182,000                              
|                      |                                        |                                       
|Total Fees:           | $5,760,000                             | $7,872,000                            



|(1) | Refers to all fees incurred in respect of audit services, being the professional services rendered by the Registrant's external auditor for the audit and review of the Registrant's financial statements as well as services normally provided by the external auditor in connection with statutory and regulatory filings and engagements.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Includes audit or attest services not required by statute or regulation, employee benefit plan audits, due diligence services, and accounting consultations on proposed transactions.                                                                                                                                                       
|(3) | Incurred in respect of tax compliance, tax planning and tax advice.                                                                                                                                                                                                                                                                         
|(4) | Refers to all fees not included in audit fees, audit-related fees or tax fees.                                                                                                                                                                                                                                                              

Pre-approval policies and procedures

The Registrant's audit committee is responsible for overseeing the work of the independent auditors and has considered whether the provision of services other than audit services is compatible with maintaining the auditors' independence.  The audit committee is determining which non-audit services the external auditor are prohibited from providing and, exceptionally, approving and overseeing the disclosure of permitted non-audit services to be performed by the external auditor.

For the year ended December 31, 2003, none of the services described above were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

OFF-BALANCE SHEET ARRANGEMENTS

The Registrant and its subsidiaries have certain arrangements and commitments that have financial implications. These arrangements are described in Notes 2a), 8 and 18 to our audited consolidated financial statements for the year ended December 31, 2003 included hereto.



TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

Contractual Cash Obligations ($ millions)

|                                     |  | 2004 |     | 2005 |   | 2006 |  | 2007 |     | 2008 |   | 2009 and thereafter
|------------------------------------ |  | ---- | --- | ---- | - | ---- |  | ---- | --- | ---- | - | -------------------
|Long-term debt and convertible
notes |  | $    | 8   |      | $ |     |  | $    | 530 |      | $ | 261                
|Capital leases                       |  |      | 16  |      |   | 11   |  |      | 8   |      |   | 4                  
|Operating leases                     |  |      | 101 |      |   | 84   |  |      | 68  |      |   | 52                 
|                                     |  |      |     |      |   |      |  |      |     |      |   |                    
|Total contractual cash obligations   |  | $    | 125 |      | $ | 95   |  | $    | 606 |      | $ | 317                
|                                     |  |      |     |      |   |      |  |      |     |      |   |                    

For further details on our long-term debt and convertible notes, Capital leases and Operating leases, see Notes 12, 14 and 19 of our audited consolidated financial statements for the year ended December 31, 2003 included hereto.

CODE OF ETHICS

The Registrant has adopted a Code of Business Conduct, which is a code of ethics (as defined in paragraph 9(b) of General Instruction B of Form 40-F) that applies to all of the Registrant's employees, directors and officers, including the Registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.   The text of the Code of Business Conduct of the Registrant is available on the Registrant's web site at www.quebecorworldinc.com in Investors Center under Corporate Governance.



UNDERTAKING

Quebecor World Inc. undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.



SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant certified that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereto duly authorized.





Registrant:











/s/ Raynald Lecavalier

Raynald Lecavalier

Vice President, Corporate General Counsel and 
Secretary





























QUEBECOR WORLD INC.































ANNUAL INFORMATION FORM



For the Year Ended

December 31, 2003





May  12, 2004

QUEBECOR WORLD INC.

TABLE OF CONTENTS

|DEFINITIONS .............................................................................................................................                                           | 3   
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                                                                                    |     
|ITEM 1 - INCORPORATION ...........................................................................................................                                                  | 3   
|                                                                                                                                                                                    | 1.1 
|                                                                                                                                                                                    | 1.2 
|                                                                                                                                                                                    | 1.3 
|                                                                                                                                                                                    |     
|ITEM 2 - GENERAL DEVELOPMENT OF THE BUSINESS .......................................................................                                                                | 4   
|                                                                                                                                                                                    |     
|ITEM 3 - NARRATIVE DESCRIPTION OF THE BUSINESS .....................................................................                                                                | 6   
|                                                                                                                                                                                    | 3.1 
|                                                                                                                                                                                    | 3.2 
|                                                                                                                                                                                    | 3.3 
|                                                                                                                                                                                    | 3.4 
|                                                                                                                                                                                    | 3.5 
|                                                                                                                                                                                    | 3.6 
|                                                                                                                                                                                    | 3.7 
|                                                                                                                                                                                    | 3.8 
|                                                                                                                                                                                    | 3.9 
|                                                                                                                                                                                    | 3.10
|                                                                                                                                                                                    | 3.11
|                                                                                                                                                                                    | 3.12
|                                                                                                                                                                                    | 3.13
|                                                                                                                                                                                    |     
|ITEM 4 - SELECTED CONSOLIDATED FINANCIAL INFORMATION .........................................................                                                                      | 16  
|                                                                                                                                                                                    | 4.1 
|                                                                                                                                                                                    | 4.2 
|                                                                                                                                                                                    | 4.3 
|                                                                                                                                                                                    |     
|ITEM 5 - MARKET FOR THE NEGOTIATION OF SECURITIES ................................................................                                                                  | 18  
|                                                                                                                                                                                    |     
|ITEM 6 - DIRECTORS AND OFFICERS .............................................................................................                                                       | 18  
|                                                                                                                                                                                    | 6.1 
|                                                                                                                                                                                    | 6.2 
|                                                                                                                                                                                    |     
|ITEM 7 - ADDITIONAL INFORMATION ............................................................................................                                                        | 24  
|                                                                                                                                                                                    |     
|ITEM 8 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
             CONDITION AND RESULTS OF OPERATIONS ....................................................................... | 25  
|                                                                                                                                                                                    |     
|ITEM 9 - FORWARD-LOOKING STATEMENTS ....................................................................................                                                            | 25  
|                                                                                                                                                                                    |     



2

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In this Annual Information Form, unless the context otherwise requires, "Corporation" refers to Quebecor World Inc., its partnerships, subsidiaries and divisions and their respective predecessors and, for the relevant periods, refers to Quebecor Inc.'s divisions and subsidiaries involved in the commercial printing business, and "Parent" refers to Quebecor Inc., its subsidiaries and divisions and their respective predecessors other than the Corporation, its subsidiaries and divisions and their respective predecessors. References to "dollars," "US$" and "$" are in United States dollars. Unless otherwise indicated, the information contained herein is given as at December 31, 2003.

ITEM 1 -  INCORPORATION

1.1     Incorporation of Quebecor World Inc.

The Corporation was incorporated on February 23, 1989 pursuant to the Canada Business Corporations Act under the name "Quebecor Printing Inc.". On January 1, 1990, the Corporation (as it was then known), Quebecor Printing Group Inc., Quebecor Printing (Canada) Inc., 166599 Canada Inc., Ronalds Printing Atlantic Limited and 148461 Canada Inc. amalgamated under the name "Quebecor Printing Inc." pursuant to the Canada Business Corporations Act. This corporate reorganization was undertaken in order to consolidate the assets of the printing sector of Quebecor Inc., which, prior to such reorganization, consisted of a number of divisions and subsidiaries.  The Corporation's articles were amended: (a) on December 7, 1990, in order to subdivide each outstanding share into five shares; (b) on December 14, 1990, in order to create Series 1 Preferred Shares; (c) on February 24, 1992, in order to delete private company restrictions; (d) on April 10, 1992, in order to (i) create three new classes of shares, namely Subordinate Voting Shares, Multiple Voting Shares and First Preferred Shares, issuable in series, (ii) reclassify and change the 39,965,005 outstanding common shares into 39,965,005 Multiple Voting Shares, (iii) reclassify and change the 5,360 outstanding Series 1 Preferred Shares into 5,360 Series 1 First Preferred Shares, and (iv) cancel the unissued preferred and common shares; (e) on April 25, 1994 in order to split the Subordinate Voting Shares and the Multiple Voting Shares so that each shareholder would receive three shares for each two shares held; (f) on April 25, 1996, in order to permit the appointment of one or more directors during the course of the year; (g) on November 5, 1997, in order to create Series 2 and 3 First Preferred Shares; (h) on April 25, 2000, in order to change the name of the Corporation to "Quebecor World Inc."; (i) on February 21, 2001, in order to create Series 4 First Preferred Shares; and (j) on August 10, 2001, in order to create Series 5 First Preferred Shares.

The head office of the Corporation is located at 612 Saint-Jacques Street, Montreal, Quebec, Canada, H3C 4M8, the telephone number of the Corporation at its head office is (514) 954-0101, the fax number is (514) 954-9624 and its web site is www.quebecorworld.com.

The following organizational chart shows the Corporation's principal subsidiaries as at March 31, 2004, their jurisdiction of incorporation or continuation and the percentage of voting rights held or controlled, directly or indirectly, by the Corporation.  The Corporation does not own or control, directly or indirectly, any non-voting securities of such subsidiaries. Subsidiaries whose total assets and revenues represented (a) individually, less than 10% of the consolidated assets and revenues of the Corporation as at December 31, 2003, and (b) in the aggregate, less than 20% of the consolidated assets and revenues of the Corporation as at December 31, 2003, have not been included.



3

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CHART



















The equity shares of the Corporation carrying the right to vote are the Multiple Voting Shares and the Subordinate Voting Shares. The Subordinate Voting Shares, each of which carries the right to one vote, are restricted shares (within the meaning of Canadian regulations respecting securities) in that they do not carry equal voting rights to the Multiple Voting Shares, each of which carries the right to ten votes. The articles of the Corporation do not contain any rights or provisions applicable to holders of Subordinate Voting Shares of the Corporation where a take-over bid is made for the Multiple Voting Shares. However, the Corporation's significant shareholder, Quebecor Inc., has provided undertakings in favour of the holders of Subordinate Voting Shares in certain circumstances where a take-over bid is made for the Multiple Voting Shares. Please refer to the Corporation's Management Proxy Circular dated March 31, 2004 for more details in respect of the foregoing at pages 3-4 under "Section 1 - VOTING AND PROXIES - Undertakings in Favour of Holders of Subordinate Voting Shares", which text is incorporated by reference into this Annual Information Form.

ITEM 2 -  GENERAL DEVELOPMENT OF THE BUSINESS

Quebecor World Inc., a diversified global commercial printing Corporation, is one of the largest commercial print media services company in the world. Its 2003 revenues reached $6.4 billion. The Corporation offers its customers state-of-the-art web offset, gravure and sheetfed printing capabilities in product categories including magazines, retail inserts, catalogs, specialty printing and direct mail, directories, as well as books, pre-media, logistics and other value-added services. The Corporation is a market leader in most of its product categories. The Corporation believes that the diversity of its customer base, geographic coverage and product segments enhance the overall stability and potential growth of its earnings and cash flow. The Corporation's strategy for growth focuses on increasing its geographic coverage through selective business acquisitions and internal growth.

The Corporation services its various markets and offers its products through a network of more than 160 plants and related facilities capable of economically servicing virtually all major markets in the United States, Canada, France, the United Kingdom, Spain, Switzerland, Sweden, Finland, Austria, Belgium, Brazil, Chile, Argentina, Peru, Colombia, Mexico and India.



4

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Growth Strategy

In an industry characterized by a high degree of fragmentation and consolidation opportunities, the Corporation has grown historically primarily through acquisitions.

Since its inception in 1988, the Corporation has made more than 65acquisitions valued at more than $5.5 billion, 15of which had an acquisition price in excess of $50 million.  The following table sets forth the Corporation's most significant acquisitions since 1988.

|Year | Acquisition                                                             | Country            | Consideration (millions)*
|---- | ----------------------------------------------------------------------- | ------------------ | -------------------------
|1988 | BCE PubliTech Inc.                                                      | Canada             | $191.0                   
|1990 | Graphics Holding Enterprises Inc.                                       | U.S.A.             | $532.1                   
|1994 | Arcata Corporation (Book Group)                                         | U.S.A.             | $180.9                   
|1995 | Financière Jean Didier                                                  | France             | $336.7                   
|1997 | AmerSig Graphics Inc.                                                   | U.S.A.             | $116.0                   
|1997 | Franklin Division of Brown Printing Company                             | U.S.A.             | $125.0                   
|1998 | TINA                                                                    | Sweden and Finland | $271.8                   
|1999 | World Color Press                                                       | U.S.A.             | $2,723.7                 
|2001 | Retail Printing Corporation                                             | U.S.A.             | $127.7                   
|2002 | European Graphic Group S.A., a subsidiary of Hachette Filipacchi Medias | France and Belgium | $70.7                    

*

In 1999, a subsidiary of the Corporation merged with Greenwich, Connecticut-based World Color Press, Inc., the second-largest commercial printer in the United States which operated 58 facilities in the United States and had approximately 16,000 employees.

In order to focus on the integration of operations, from both North American and international perspectives, and on the maximization of free cash flow, the Corporation made no significant business acquisitions since the acquisition of World Color Press, Inc. in August 1999 through the close of 2000. The Corporation resumed its external growth strategy in 2001. The Corporation expanded its U.S. retail platform in July 2001 by acquiring Retail Printing Corporation, a web offset retail printer with locations in Nashville, Tennessee and Taunton, Massachusetts.

In September 2001, the Corporation signed an agreement pending regulatory approval to purchase the European printing business of Hachette Filipacchi Medias (European Graphic Group, or E2G). The acquired assets include printing and bindery facilities in France, as well as Hachette's 50% ownership stake in the rotogravure printing plant of Helio Charleroi in Belgium. Hachette Filipacchi Medias is one of the world's top publishers with 210 magazine titles in 34 countries. All necessary regulatory approvals were obtained and this transaction closed in March 2002 for an aggregate purchase price of $70.7 million. The transaction amount includes a purchase price balance for the 50% stake of the Charleroi Group controlled by the Belgian businessman, Albert Frère. As part of the transaction, Hachette has entered into a long-term agreement with the Corporation for it to print many of Hachette's magazines in Europe, the value of which is estimated to be $400 million (excluding paper) over the term of the contracts.



5

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ITEM 3 -  NARRATIVE DESCRIPTION OF THE BUSINESS

The Corporation has rotogravure, web offset and sheetfed printing capacity for a wide variety of printed materials, such as magazines, retail inserts, catalogs, specialty printing and direct mail, books, directories, pre-media, logistics and other value-added services.  Printing services, including design, production and distribution, are offered from more than 160 plants and related facilities located throughout the United States, Canada, France, the United Kingdom, Spain, Switzerland, Sweden, Finland, Austria, Belgium, Brazil, Chile, Argentina, Peru, Colombia, Mexico and India.

Description of Segments

The Corporation operates in the printing industry. Its business units are located in three main geographic segments as follows:

|                          |                        | Years Ended
      December 31, |        
|------------------------- | ---------------------- | ------------------------------ | -------
|
|
|
|Revenues:                 |                        |                                |        
|                          | North America          |                                | 5,062.9
|                          | Europe                 |                                | 1,151.4
|                          | Latin America          |                                | 177.3  
|                          | Intersegment and Other |                                | (0.1   
|                          |                        |                                |        
|                          |                        | Total                          |        
|                          |                        |                                |        
|Operating income (loss):* |                        |                                |        
|                          | North America          |                                | 311.1  
|                          | Europe                 |                                | 30.3   
|                          | Latin America          |                                | (3.7   
|                          | Other                  |                                | (7.3   
|                          |                        |                                |        
|                          |                        | Total                          |        
|                          |                        |                                |        

* Before impairment of assets, restructuring and other
charges

Commercial printing is a very fragmented, capital-intensive manufacturing industry. The North American, European and Latin American printing industries are highly competitive in most product categories and geographic regions. The Corporation believes that the ten largest competitors in the North American and European commercial printing markets have in aggregate less than 25% of the total share of each of their respective markets. In North America alone, there are more than 32,000 commercial printers.

Commercial printers tend to compete within each product category based on price, quality and the ability to service customers' specialized needs. Small competitors are generally limited to servicing customers for a specific product category within a regional market. Larger and more diversified commercial printers with greater geographic coverage have the ability to serve national and global customers across multiple product segments.

Management believes that both the North American and European printing markets are consolidating and that acquisition targets will continue to be available as larger commercial printers displace medium-size printers and regional competitors. Industry trends in Latin America, which are mirroring historical developments in North America, should also provide acquisition opportunities. Over the past decade, North American and European publishers have outsourced their printing operations. This trend began in the mid-1990s in Europe as demonstrated initially by the decision of Associated Newspapers in 1995 to outsource its printing to the Corporation and, more recently, by the Corporation's acquisition of the European printing assets of Hachette Filipacchi Media in France and Belgium. The Corporation's ongoing partnership with the Brazilian publisher Editora Abril, S.A., which commenced in



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2000, is a reflection of a similar trend taking root in Latin America. This segregation of publishing and printing activity should provide independent printers greater acquisition opportunities and enable them to seek printing business with previously captive customers. Management believes that the Corporation is well positioned to continue to take advantage of the consolidation of the North American, European and Latin American commercial printing markets.

The Corporation is one of the few commercial printers that has the ability to serve customers on a regional, national and global basis. As a result, the Corporation has been able to build a substantial business within each of the American, Canadian and European segments and to pursue its expansion in Latin America.

In the United States, the Corporation is one of the largest commercial printers with more than 89 plants and related facilities and approximately 23,000 employees operating in 31 states. The Corporation is a leader in the printing of books, magazines, retail inserts, catalogs, specialty printing, and direct mail.

The Corporation is the largest commercial printer in Canada, with 31 facilities in sixprovinces and approximately 5,600 employees. It offers a diversified mix of printed products and related value-added services to the domestic market and internationally, including substantial exports to the United States.

In Europe, the Corporation operates in France, Belgium, Switzerland, the United Kingdom, Spain, Sweden, Austria and Finland, with 31 facilities and approximately 5,900 employees serving customers in 8 European countries. It is the largest independent commercial printer in Europe.

The Corporation also operates in Latin America with eight facilities and approximately 2,500 employees, as well as in India, where it has one facility and 60 employees.

Description of Products

The Corporation's revenues by product are as follows:



|                                                          |  | For the year ended
      December 31, 2003
|--------------------------------------------------------- |  | ------------------------------------------
|
|
|Magazines                                                 |  | 171.3                                     
|Retail Inserts                                            |  | 302.3                                     
|Catalogs                                                  |  | 118.6                                     
|Books                                                     |  | 43.4                                      
|Specialty Printing and Direct Mail                        |  | 123.2                                     
|Directories                                               |  | 65.0                                      
|Pre-Media, Logistics and other Value-Added
      Services |  | 88.6                                      
|Inter-segment                                             |  | (4.6                                      
|                                                          |  |                                           
|Total                                                     |  | 907.8                                     
|                                                          |  |                                           



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|                                                          |  | For the year ended
      December 31, 2003
|--------------------------------------------------------- |  | ------------------------------------------
|
|
|Magazines                                                 |  | 153.1                                     
|Retail Inserts                                            |  | 273.0                                     
|Catalogs                                                  |  | 146.3                                     
|Books                                                     |  | 43.4                                      
|Specialty Printing and Direct Mail                        |  | 108.4                                     
|Directories                                               |  | 58.7                                      
|Pre-Media, Logistics and other Value-Added
      Services |  | 85.4                                      
|Inter-segment                                             |  | (1.3                                      
|                                                          |  |                                           
|Total                                                     |  | 867.0                                     
|                                                          |  |                                           



Magazines and Catalogs

The Corporation is the world's leading printer of consumer magazines.  It prints more than 1,000 magazine titles.  The Corporation prints 43 percent of the top 100 magazine titles in the United States.  It operates a global print platform with operations in the United States, Canada, Europe and Latin America.

Management believes that the Corporation is the industry leader in producing weekend newspaper magazines. These are four-color magazines inserted in major-market weekend newspapers. In the United States the Corporation prints two syndicated weekend magazines as well as locally edited and distributed weekend newspaper magazines. In the United Kingdom, the Corporation is also an important supplier of weekend supplements. The Corporation also prints comic books for leading companies.

The Corporation has invested in pre-media (computer-to-plate) and post-press technology to enhance its ability to service this market. For the production of medium to long-run magazines, the Corporation is at an advantage because its plants have selective-binding and ink-jet-imaging capabilities and can utilize the Corporation's mail analysis system.

The Corporation is the largest printer of catalogs in the world.  It prints several hundred different catalogs on an annual basis for many of North America's direct mail retailers.The Corporation offers special catalog services such as list services, to help customers compile effective lists for distribution, selective-binding capacity to allow customers to vary catalog content to meet their customers' demographic and purchase patterns, and ink-jet addressing and messaging to personalize messages for each recipient. This technology partially offsets postage-cost increases by eliminating pages of products that do not fit a buyer's demographic or purchasing profile.  The Corporation's global network also allows the Corporation to offer its customers one-stop shopping for all of their catalog needs in North America, Europe and Latin America.

Retail

The Corporation's major retail inserts customers include large retailers. In North America, the Corporation's 13 rotogravure process printing plants offer both the coast-to-coast manufacturing network and the long-run efficiencies required to serve the larger retail customers. The Corporation has five rotogravure process printing plants in France, one in Belgium and two in Nordic countries. In Canada, the Corporation prints inserts and circulars using web offset and rotogravure processes in accordance with customer requirements.  The Corporation also offers digital engraving and related pre-press processes, which both enhances quality and shortens time-to-market.



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Commercial and Direct

Products in these categories include annual reports, corporate prospectuses, promotional literature, calendars, posters, direct-mail products, highly personalized catalog wraps and promotions for the auto industry and other custom items.  The Corporation's web and sheetfed printing presses of a smaller size permit the Corporation to offer custom colors, coatings, finishes and specialized binding required to produce a wide variety of print products. The Corporation provides numerous print-related services to customers, including typesetting, pre-press, circulation fulfillment, list management, mailing and distribution, in particular through desktop-publishing and electronic pre-media technology.

Quebecor Merrill Canada Inc., a subsidiary of the Corporation, offers services of manufacturing operations to serve the market for financial documents, prospectuses, annual reports and related printing.

The Corporation's Direct division is a leader in the application of versioning, ink jet addressing, print-on-demand technology and computer-to-plate techniques which are critical to the customized production and compressed cycle times that customers demand today.

Book

The Corporation is a North American industry leader in book manufacturing. The Book Group is an industry leader in the application of new technologies for book production including electronic pre-media, information networking, digital printing, computer-to-plate and electronic data interchange. With plants in the United States, Spain, and Latin America, the Corporation serves internationally more than 1,000 publisher customers.

In keeping with its full-service approach, the Corporation also provides on-demand digital printing services for small quantities of books, brochures, technical documents and similar products to be produced quickly and at a relatively low cost.

Directory

The Corporation specializes in telephone directories and is the largest directory printer in Canada and among the largest directory printers in North America and Latin America. The presence of the Corporation's directory group in the North American market dates back to the late nineteenth century with the printing of Bell Canada's first directories. The Corporation prints telephone and other directories for a large number of companies.  In 1994, the Corporation began production of directories for the Indian domestic market at its directory facility near New Delhi, India and in 2002, it started printing directories in Spain.

Pre-Media, Logistics and Other Value-Added Services

The Corporation is a leader in the transition from conventional pre-press to an all-digital workflow, providing a complete spectrum of film, and digital preparation services, from traditional past-up and colour separation to state-of-the-art, all-digital pre-media, as well as digital emerging and digital archiving.  Such pre-media services include the colour electronic pre-media system, which takes art work from idea to final product, and desktop publishing, giving the customer greater control over the finished product. These pre-media services are especially helpful to smaller customers, who may not have the capital to employ such equipment or who may have to rely on third-party vendors, which may result in coordination and delay problems.  Our specialized digital and pre-media facilities, which are strategically located close to and, in certain cases, onsite at, customers' facilities, provide our customers high quality, twenty-four hour preparatory services linked directly to the Corporation's various printing facilities.  In addition, its computer systems enable the Corporation to electronically exchange both images and textual material directly between the Corporation and the customers' business locations. The integrated pre-media operations provide the Corporation with competitive advantages over traditional pre-press shops that are



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not able to provide the same level of integrated services. Quebecor World Premedia Service brings together the full range of digital technologies and pre-media assets within the Corporation that allows it to focus on providing a more comprehensive range of solutions to the customer base of the Corporation.

Other value-added services, including mail list, shipping and distribution expertise, ink-jet personalizing and customer-targeted binding, are rapidly becoming requirements of numerous customers.

The establishment of Quebecor World Logistics Inc., a subsidiary of the Corporation, has made the Corporation one of the largest and most technologically advanced print transport companies, as well as one of the largest customers by volume of the U.S. Postal Service. Quebecor World Logistics Inc. provides complete logistics services including customized door-to-door planning, management, transportation, delivery and tracking solutions, thereby providing customers with cost-effective, efficient and trackable distribution services.

3.2     MANUFACTURING

Description of Processes and Equipment

The Corporation uses principally two types of printing processes, rotogravure and offset, which are the most commonly used commercial printing processes. Both processes have undergone substantial technological advances over the past decade, resulting in significant improvements in speed and print quality. The Corporation estimates that in 2003 approximately 75 percent of its revenues by volume were printed using offset and the remainder using the rotogravure process.

Rotogravure

With 101 rotogravure presses, the Corporation is one of the largest world-wide printers using the rotogravure process. The process uses a copper-coated printing cylinder which is mechanically engraved using high-precision, computer-controlled and diamond-cutting heads. Although the engraving of the printing cylinder is relatively expensive, the printing cylinder itself is extremely durable and cost effective per long run. The rotogravure process has an excellent reputation for the quality of its four-color reproductions on various grades of paper and the very high speed at which it is capable of running.

The rotogravure process is well suited to long-run printing of advertising inserts and circulars, Sunday newspaper magazines and other high-circulation magazines and catalogs. The Corporation believes that its coast-to-coast network of rotogravure facilities in the United States offers both the capacity and locations required by large merchandisers and publishers. The acquisition in March 2002 of the European printing assets of Hachette Filipacchi Medias provides an advantageous position in the rotogravure market in Europe. The Corporation's advanced ability in rotogravure digital pre-media also ensures more efficient and accurate production of the same insert simultaneously in multiple locations, thereby offering the customer the efficiency and cost savings of manufacturing and distribution closer to its end-use markets in reduced time frames.

Offset

In the offset process, an inked impression from a thin metal plate is first made on a rubber cylinder, after which it is offset to paper. There are several types of offset printing processes: sheetfed and web, heatset and coldset. Sheetfed presses print on sheets of paper, whereas web presses print on rolls of paper. Short-run printing is generally best served by sheetfed offset, whereas web offset is generally the best process for longer runs.

Heatset web offset involves a press which uses an oven to instantly set or dry the oil-based inks. This permits high speed and better quality and is best suited for printing on glossier papers (coated paper). Heatset web offset is used to print retail inserts, magazines, catalogs and books. The Corporation owns 443 heatset web offset presses.



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Coldset web offset involves a press that does not use an oven to dry the ink, instead using oil-based inks that are absorbed into the paper and dried by oxidation. Coldset web offset is used mainly to print newspapers, books, directories, and some retail inserts. The Corporation owns 55 coldset web offset presses.

The Corporation owns 182 sheetfed offset presses, which print books, promotional material, covers and direct-mail products.

3.3     SALES AND MARKETING

The sales and marketing activities of the Corporation are highly integrated and reflect an increasingly global approach to meeting customers' needs that is complemented by product-specific sales efforts. Sales representatives are located in plants or in regional offices throughout North America, Europe, and Latin America, generally close to their customers and prospects. Each sales representative has the ability to sell into any plant in the Corporation's global network. This enables the customer to coordinate simultaneous printing throughout the Corporation's network through one sales representative. Certain of the larger customers centralize the purchase of printing services and, in this regard, the Corporation's ability to provide broad geographical services is clearly an advantage over smaller regional competitors.

Since 1995, the Corporation has proceeded to complete ISO 9000 series certification at various plants where it operates and it is continuing to ensure that more and more plants will be ISO 9000 series certified. The ISO 9000 series of international standards certify that a company meets quality control requirements in its production processes.

As of the date of this Annual Information Form, twelve of the Corporation's plants have or are about to receive the ISO-14001 certification, an internationally recognized environmental management system, the goal of which is the continuous improvement in environmental management.

The Corporation believes that its size and network of locations throughout North America, Europe and Latin America is an advantage over smaller competitors in terms of shipping and distribution. Because of its volume, the Corporation is able to set up pool-shipping systems, which enable customers to ship their products at significant discounts. The discount is achieved through agreements with the postal services, which provides the mailer/customer with a discount if the mailer/customer pays the freight costs to transport the mail closer to the postal services delivery office. The Corporation uses its custom-built mail analysis system, which automatically combines different customers into truck-load shipments and analyzes the cost-savings benefit to the customer. The mail analysis system then generates the necessary forms, bills of lading and freight invoices for the customer.

Ink-jet personalizing is increasingly being used by many publishers and catalogers. Ink-jet addressing eliminates the additional process of printing paper labels and improves mailing efficiency. Catalogers use ink-jet personalizing in a number of ways. Ink-jet addressing allows both the cover and the order form to be labelled and to show customer-coding information. Furthermore, as catalogers continue to look for methods to increase the level of personalization, the ink-jet process is being used more frequently to add personal messages, specific inserts to frequent buyers, or unique coding information for order entry. Another advantage to ink-jet printing and selective binding is the Corporation's ability to merge lists of names for the same customer or to co-mail different customers to achieve increased postal pre-sort discounts.



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3.4     COMPETITIVE STRENGTHS

Management believes it has certain competitive strengths which enable it to provide enhanced customer service while maintaining a low-cost position in the industry. Such advantages include broad geographic coverage, a single source of printing services, technological capabilities, economies of scale and a large manufacturing base.

Broad Geographic Coverage. Certain of the Corporation's largest customers utilize simultaneous printing in several of the Corporation's locations. The Corporation is one of the few commercial printers that can service these customers in virtually all of their markets, allowing them to coordinate their requirements. In addition, multi-plant simultaneous printing makes delivery more efficient and lowers distribution costs for national products.

Single Sourcing. By providing its customers a wide variety of printing, pre-press, post-press and distribution services, the Corporation is able to become a more integral element in its customers' publishing process while simultaneously expanding its sources of revenues. As large customers have centralized their purchasing of printing services, the Corporation's ability to provide a single source for comprehensive printing services and broad geographical coverage is a competitive advantage, since customers are not required to contract with numerous smaller specialized and regional competitors.

Technological Capabilities. The Corporation is committed to the effective use of state-of-the-art technology, including the development of new printing technologies, upgrade of existing printing assets and further development of integrated services. The Corporation's technological capabilities have enabled it to lower its cost position and to better serve its customers by improving quality, flexibility, speed and cost of production. Keeping pace with the technological developments in the industry requires substantial capital expenditures. Thus, in 2003, the Corporation spent $243.1 million on capital expenditures, including for faster and more efficient presses and pre-press and post-press technologies. In 2004, capital expenditures will be made in order to maintain the Corporation's existing assets and to invest in new projects for expansion in selected markets. The breadth of the Corporation's business enables it to spread technological investments over numerous facilities and product segments and its size enables it to lower its relative cost position by spreading fixed capital investment over a greater base of revenues.

Economies of Scale. The Corporation enjoys significant economies of scale which, in the opinion of management, provide the Corporation with a cost advantage. The Corporation also purchases a significant amount of printing equipment. Management believes that such purchasing power enables the Corporation to purchase both raw materials, primarily paper and ink, and equipment, on enhanced terms. This purchasing power also ensures availability of raw materials in tight markets. In 1998, the Corporation opened a global procurement office in Fribourg, Switzerland. Global procurement allows the Corporation to achieve economies of scale for materials and equipment.

By consolidating platforms into fewer but larger and more specialized plants, the Corporation reduces administrative costs and achieves better economies of scale.  In addition, increased plant specialization allows for greater efficiency and improved distribution reduces the final cost to customers and improves speed of delivery.

The growth of new media provides the Corporation with further opportunities to exploit its economies of scale.  Increasingly, clients seek to repurpose information so that it can be used in both printed and electronic forms.  The Corporation has implemented digital workflows and has provided tools such as its Digital Asset Management System and Automated Publishing System to facilitate the re-use of information in a more cost effective manner than its competitors.

Large Manufacturing Base. The Corporation's diversity and breadth of plant and press capability, product mix and large customer base facilitate greater capacity utilization. Most presses can produce a variety of printed products, and the Corporation frequently allocates orders among its facilities to optimize their equipment utilization. In addition, the Corporation's large manufacturing base combined with its technological capabilities frequently enable the Corporation to improve customer service and operating margins by transferring technology and maximizing the printing capabilities of its facilities.



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Management believes that further consolidation of the fragmented printing industry will occur due to the advantages of size, the high cost of capital equipment and technology and the demand of many large customers for broad, technologically advanced, continent-wide and international printing services. The Corporation's competitive and financial strengths and its substantial experience in integrating acquired businesses provide it with the ability to take advantage of this industry dynamic. Having established a critical size and the geographic and product diversity required to compete, the Corporation is focused on continuing the expansion of its customer base, markets and scope of services in North America, Europe and Latin America.

3.5     CAPACITY UTILIZATION

The Corporation's diversity in plant and press capability, product mix and large customer base facilitate greater capacity utilization. Most presses can produce a variety of printed products and the Corporation will frequently allocate orders among its facilities to optimize their utilization. Because the Corporation serves a wide variety of markets, it is able to redeploy equipment, thereby maximizing its utility and extending its useful life. Diversity in plant and press capability enables the Corporation, through central scheduling of the Corporation's presses, to assign a particular order to the machine best suited for it.

3.6     TECHNOLOGY

The Corporation cooperates with large suppliers in the area of research and development of new printing technologies, materials and processes. The Corporation's capital-improvement programs include adding, replacing and/or upgrading existing equipment.

The Corporation has continued to invest in faster, more efficient and higher quality presses. Pre-media has continued to witness dramatic enhancements in the digital electronic area, with new computer software and hardware installed to help customers create their pages more quickly and more efficiently. The Corporation has been an industry leader in bringing new imaging services on-line that streamline the process of preparing pages for print. The Corporation was one of the first printers to install desktop publishing, direct-to-film and computer-to-plate systems for offset printing, which eliminates entirely the costly and time-consuming film step in print production. It has furthermore established one of the industry's most sophisticated data communications networks, capable of transmitting a customer's publication files quickly and efficiently from the customer's location to multiple plant locations.

Management believes that only printers capable of investing and integrating new technology will continue to expand. The Corporation continues to upgrade its U.S. rotogravure network to produce magazines, catalogs, inserts and flyers, and Sunday Magazines. The Corporation became the first commercial printer to install the latest generation of short cut-off tabloid offset presses. These presses print more pages at faster speeds and use less paper than conventional tabloid presses. The Corporation has also invested in new and emerging digital and web-based technologies to improve services, cut costs and expand its range of products.

The Corporation operates a North American-wide telecommunications network, which enhances the Corporation's ability to move digital files between its facilities and customers quickly, share work among plants, and expand distribution and printing operations.

3.7     PURCHASING AND RAW MATERIALS

The principal raw materials used in the Corporation's products are paper and ink. In 2003, the Corporation spent approximately $2.3 billion on raw materials.The Corporation exercises its purchasing power to obtain pricing, terms, quality, quality control and service in line with its status as one of the largest industry customers.



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The Corporation negotiates with a limited number of suppliers to maximize its purchasing power, but does not rely on any one supplier. Purchasing activity at both the local plant and corporate level is coordinated in order to increase and benefit from economies of scale. Inventory-control operations are also integrated into the purchasing functions of the Corporation, which has resulted in improvements in inventory turns. Plant inventories are also managed and tracked on a regional basis, increasing the utilization of existing inventories.  In addition, most of the Corporation's long-term contracts with its customers include price-adjustment clauses based on the cost of materials in order to minimize the effects of fluctuation in the price of paper and ink.

The Corporation takes pride in offering world-wide procurement service to its customers. The procurement office, located in Fribourg, Switzerland, gives the Corporation a major competitive advantage. By consolidating the activities formerly carried out at four regional offices, the Corporation has been able to reduce administrative costs, standardize procurement and provide customers with assured supply at attractive prices.

3.8     COMPETITIVE ENVIRONMENT

The commercial printing business in North America and Europe is highly competitive in most product categories and geographic segments. Industry analysts consider most of the industry's markets to be currently oversupplied, and competition is significant. 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.

3.9     RISKS ASSOCIATED WITH CHANGES IN INTEREST RATES, FOREIGN EXCHANGE RATES AND          COMMODITY PRICES

In the normal course of business, the Corporation is exposed to changes in interest rates, foreign exchange rates and commodity prices.

The Corporation manages the interest rate exposure by having a balanced schedule of debt maturities as well as a combination of fixed and floating rate obligations.  In addition, the Corporation enters into interest rate swap agreements to manage this exposure.

The Corporation also enters into foreign exchange forward contracts and cross-currency swaps to hedge the settlement of raw materials and equipment purchases, to set the exchange rate for cross-border sales and to manage its foreign exchange exposure on net investments and foreign denominated assets.

The Corporation also enters into natural gas swap contracts to manage the exposure on this commodity.

While the counterparties to these agreements expose the Corporation to credit loss in the event of non-performance, the Corporation believes that the possibility of incurring such a loss is remote due to the creditworthiness of the counterparties. The Corporation does not hold or issue any derivative financial instruments for speculative or trading purposes.

Concentrations of credit risk with respect to trade receivables are limited due to the Corporation's diverse operations and large customer base. As at March 31, 2004, the Corporation had no significant concentrations of credit risk.

Additional information is presented in section entitled "Risk Management" the Management's discussion and analysis of Financial Conditions and Results of Operations at page 29 of the Corporation's 2003 Annual Report.



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3.10     CUSTOMERS

The Corporation believes that the product and geographical diversity of its customer base serve to reduce the impact on the Corporation of dramatic fluctuations in local markets or product-line demand. Many of the Corporation's large customers are under contract. These contracts include price adjustment clauses based on the cost of paper, ink and labor.

3.11     SEASONALITY OF THE CORPORATION'S BUSINESS

The operations of the Corporation's 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, retail and holiday catalog promotions.

3.12     HUMAN RESOURCES

As of March 31, 2004, the Corporation employed approximately 37,000 people, 10,500 of whom were covered by71 separate collective agreements. Of these, 15 collective agreements covering 2,200  employees are or will expire in 2004. These agreements are limited to single plants and groups of employees within these plants.

The Corporation believes that its relations with its employees are generally good.

3.13     ENVIRONMENTAL REGULATIONS

The Corporation is subject to various laws, regulations and government policies in North America, Europe and Latin America relating to the generation, storage, transportation, disposal and environmental emission of various substances, and to environmental protection in general. The Corporation believes that it is in compliance with such laws, regulations and government policies in all material respects. Furthermore, the Corporation does not anticipate that compliance with such environmental statutes will have a material adverse effect upon the Corporation's competitive or consolidated financial position.

Energy and pollution control also continue to be the heart of Corporation's commitment to the environment. In addition to the expanded installation of regenerative thermal oxidizers for the lithographic offset printing process, the Corporation is now in the middle of upgrading and optimizing the solvent recovery systems used to recover the solvent from the gravure printing process by means of activated carbon. The recovered solvent is then reused in the printing process. The upgrade and optimization program includes an exhaustive assessment of the solvent recovery systems and implementation of improvement measures that will allow the Corporation to have more reliable and efficient systems with additional operating flexibility and standardization across the plants. Furthermore, it will ensure lower energy consumption and strong compliance with regulatory air emission requirements. Since 2002 and until the end of 2004, nearly US$10M will have been invested in this program.

ITEM 4 -  SELECTED CONSOLIDATED FINANCIAL INFORMATION

4.1     ANNUAL

Set forth below are selected consolidated financial data which have been derived from the Corporation's consolidated financial statements for the three most recent financial years ended December 31.



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The data below should be read in conjunction with the consolidated financial statements and related notes thereto as well as the items included hereafter.  Please see "Management's Discussion and Analysis of Financial Condition and Results of Operations" at item 8 of this Annual Information Form.

(in millions of US dollars, except per share data &
other statistics)

|                                                                                |                      | 2003 |         | 2002  |   | 2001    |     
|------------------------------------------------------------------------------- | -------------------- | ---- | ------- | ----- | - | ------- | ----
|Consolidated Results                                                            |                      |      |         |       |   |         |     
|Revenues                                                                        |                      | $    | 6,391.5 |       | $ | 6,271.7 |     
|Operating income before depreciation and
      amortization and before IAROC    |                      |      | 689.8   |       |   | 898.4   |     
|Operating income before IAROC                                                   |                      |      | 330.4   |       |   | 562.8   |     
|IAROC                                                                           |                      |      | 98.3    |       |   | 19.6    |     
|Operating income (loss)                                                         |                      |      | 232.1   |       |   | 543.2   |     
|Net income (loss)*                                                              |                      |      | (31.4   | )     |   | 279.3   |     
|Cash provided by operating activities                                           |                      |      | 461.3   |       |   | 513.4   |     
|Free cash flow from operations**                                                |                      |      | 183.3   |       |   | 319.8   |     
|Operating margin before depreciation and
      amortization and before IAROC*** |                      |      | 10.8%   |       |   | 14.3%   |     
|Operating margin before IAROC***                                                |                      |      | 5.2%    |       |   | 9.0%    |     
|Operating margin***                                                             |                      |      | 3.6%    |       |   | 8.7%    |     
|                                                                                |                      |      |         |       |   |         |     
|Financial Position                                                              |                      |      |         |       |   |         |     
|Working capital                                                                 |                      | $    | (193.0  | )     | $ | (213.8  | )   
|Property, plant and equipment                                                   |                      |      | 2,581.0 |       |   | 2,610.6 |     
|Total assets                                                                    |                      |      | 6,213.8 |       |   | 6,207.4 |     
|Long-term debt (including convertible
      notes)                              |                      |      | 2,009.0 |       |   | 1,822.1 |     
|First Preferred Shares                                                          |                      |      | 456.6   |       |   | 456.6   |     
|Equity Multiple and Subordinate Voting
      Shares                             |                      |      | 1,236.5 |       |   | 1,357.3 |     
|Debt-to-capitalization                                                          |                      |      | 44:56   |       |   | 40:60   |     
|                                                                                |                      |      |         |       |   |         |     
|Per Share Data                                                                  |                      |      |         |       |   |         |     
|Earnings (losses)*                                                              |                      |      |         |       |   |         |     
|                                                                                | Diluted              |      | $       | (0.50 | ) | $       | 1.76
|                                                                                | Diluted before IAROC |      | $       | 0.03  |   | $       | 1.92
|Dividends on equity shares                                                      |                      | $    | 0.52    |       | $ | 0.49    |     
|Book value                                                                      |                      | $    | 15.51   |       | $ | 15.92   |     
|Market price  TSX close in
      CDN$                                          |                      | $    | 26.75   |       | $ | 35.00   |     
|Market price  NYSE close                                                       |                      | $    | 20.59   |       | $ | 22.32   |     
|                                                                                |                      |      |         |       |   |         |     

IAROC: Impairment of assets, restructuring and other charges





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4.2     QUARTERLY

The table below presents selected financial information for the last eight quarters ending with the most recent fiscal year of the Corporation.

(In millions of US dollars, except per share amounts)

|                                                                             |                      | 2003 |        
|---------------------------------------------------------------------------- | -------------------- | ---- | -------
|
|Consolidated Results                                                         |                      |      |        
|Revenues                                                                     |                      | $    | 1,539.6
|Operating income before depreciation and
      amortization and before IAROC |                      |      | 165.2  
|Operating income before IAROC                                                |                      |      | 77.8   
|IAROC                                                                        |                      |      |       
|Operating income (loss)                                                      |                      |      | 77.8   
|Net income (loss)                                                            |                      |      | 24.5   
|                                                                             |                      |      |        
|Per Share Data                                                               |                      |      |        
|Earnings (losses)                                                            |                      |      |        
|                                                                             | Diluted              |      | $      
|                                                                             | Diluted before IAROC |      | $      
|                                                                             |                      |      |        

(In millions of US dollars, except per share amounts)

|                                                                             |                      | 2002
|---------------------------------------------------------------------------- | -------------------- | ----
|
|Consolidated Results                                                         |                      |     
|Revenues                                                                     |                      | $   
|Operating income before depreciation and
      amortization and before IAROC |                      |     
|Operating income before IAROC                                                |                      |     
|IAROC                                                                        |                      |     
|Operating income                                                             |                      |     
|Net income                                                                   |                      |     
|                                                                             |                      |     
|Per Share Data                                                               |                      |     
|Earnings                                                                     |                      |     
|                                                                             | Diluted              |     
|                                                                             | Diluted before IAROC |     
|                                                                             |                      |     

IAROC: Impairment of assets, restructuring and other
charges



4.3     DIVIDENDS

On May 5, 2004, the Corporation declared a dividend of $0.13 per share on the Multiple Voting Shares and the Subordinate Voting Shares, a dividend of CA$0.3845 per share on the Series 3 Preferred Shares, a dividend of CA$0.4219 per share on the Series 4 Preferred Shares, and a dividend of CA$0.43125 per share on the Series 5 Preferred Shares, which dividends are payable on June 1, 2004 to the shareholders of record at the close of business on May 14, 2004.



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The Corporation has declared and paid semi-annual dividends since October 23, 1992 and quarterly dividends since 1998. The following table presents the annual dividends declared and paid by the Corporation on all of its shares since 1998:

|                    | Multiple Voting Shares and Subordinate Voting Shares | Series 2 Preferred Shares | Series 3 Preferred Shares | Series 4 Preferred Shares | Series 5 Preferred Shares
|------------------- | ---------------------------------------------------- | ------------------------- | ------------------------- | ------------------------- | -------------------------
|1998                | $0.24                                                | CA$1.3151                 | N/A                       | N/A                       | N/A                      
|1999                | $0.28                                                | CA$1.2500                 | N/A                       | N/A                       | N/A                      
|2000                | $0.33                                                | CA$1.2500                 | N/A                       | N/A                       | N/A                      
|2001                | $0.46                                                | CA$1.2500                 | N/A                       | CA$1.2703                 | CA$0.5069                
|2002                | $0.49                                                | CA$1.2500                 | N/A                       | CA$1.6875                 | CA$1.7250                
|2003                | $0.52                                                | N/A                       | CA$1.5380                 | CA$1.6875                 | CA$1.7250                
|As of March 1, 2004 | $0.13                                                | N/A                       | CA$0.3845                 | CA$0.4219                 | CA$0.43125               
|As of June 1, 2004  | $0.13                                                | N/A                       | CA$0.3845                 | CA$0.4219                 | CA$0.43125               



ITEM 5 -  MARKET FOR THE NEGOTIATION OF SECURITIES

The Corporation's Subordinate Voting Shares are listed and posted for trading on The Toronto Stock Exchange and the New York Stock Exchange under the symbol "IQW". The Corporation's Series 3 Cumulative Redeemable First Preferred Shares, Series 4 Cumulative Redeemable First Preferred Shares and Series 5 Cumulative Redeemable First Preferred Shares are listed and posted for trading on The Toronto Stock Exchange.

ITEM 6 -  DIRECTORS AND OFFICERS

The following tables set forth the name, municipality of residence and position held within the Corporation of its directors and executive officers, the principal occupation and the term of office of each director, as well as the number of voting shares beneficially held or over which control or direction is exercised by each director of the Corporation. As of May 6, 2004, the directors and executive officers of the Corporation, as a group, beneficially owned, directly or indirectly, or exercised control or direction over, 33,028 Subordinate Voting Shares and 46,911,277 Multiple Voting Shares of the Corporation, representing 0.04% and 99.84%, respectively, of the outstanding shares of each such class. The shares so owned or controlled by the directors and executive officers of the Corporation represented 84.50% of all voting rights attached to all the outstanding common shares of the Corporation. The following information is given as of May 6, 2004, except as otherwise noted.

The principal occupations over the past five years of the Corporation's directors and executive officers are given below, except in certain cases when a director or an executive officer has held more than one position in the same firm or an affiliated firm, in which case only the date of appointment to the most recent position is indicated.





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6.1     Directors

|Name                                                                      | Principal Occupation                                                                                                                                                                                                                       | Director
since | Subordinate Voting Shares Owned or Controlled Directly
or Indirectly(1) | Units held under 
the DSU Plan(2)
|------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------- | ----------------------------------------------------------------------- | ---------------------------------
|A. Charles Baillie(C), (D)Toronto, Ontario                                | Retired Chairman of the Board and Chief Executive Officer of TD Bank Financial Group (Financial services conglomerate)                                                                                                                     | 2003           | 1,000(3)                                                                | 2,610                            
|Reginald K. Brack (A), (B), (E)Greenwich, Connecticut                     | Former Chairman and Chief Executive Officer, Time Inc. (Magazines and books publisher)                                                                                                                                                     | 2000           | 2,000                                                                   | 5,805                            
|Derek H. Burney, O.C. (B), (D), (E)Toronto, Ontario                       | President and Chief Executive Officer of CAE Inc. (Flight and navigation simulation and controls equipment company)                                                                                                                        | 2003           |                                                                        | 2,925                            
|Robert Coallier (A), (B), (E)Sao Paulo, Brazil                            | President and Chief Executive Officer, Cervejarias Kaiser (Brewing company)                                                                                                                                                                | 1991           |                                                                        | 9,857                            
|James Doughan (C)Scottsdale, Arizona                                      | Corporate Director, Consultant                                                                                                                                                                                                             | 2001           |                                                                        | 6,145                            
|The Honourable Richard C. Holbrooke (C)New York, New York                 | Vice-Chairman of the Board of Perseus, llc (Merchant bank and private equity fund management company)                                                                                                                                      | 2003           |                                                                        | 2,133                            
|Eileen A. Mercier (C)Toronto, Ontario                                     | Corporate Director                                                                                                                                                                                                                         | 1999           | 2,300                                                                   | 2,764                            
|The Right Honourable
Brian Mulroney, P.C., C.C., LL.D.(B)Montreal, Quebec | Chairman of the Board of the Corporation and Senior Partner, Ogilvy Renault (Barristers and Solicitors)                                                                                                                                    | 1997           | 4,900(4)                                                                | 30,608(5)                        
|Jean NeveuLongueuil, Quebec                                               | Chairman of the Board of Quebecor Inc. (communications holding company) and Chairman of the Board of Groupe TVA Inc. (Television broadcasting company)                                                                                     | 1989           | 3,626(6)                                                                | 3,394(7)                         
|Robert Normand (A), (D)Rosemère, Quebec                                   | Corporate Director                                                                                                                                                                                                                         | 1999           | 1,000                                                                   | 10,055                           
|Érik PéladeauRosemère, Quebec                                             | Vice Chairman of the Board of the Corporation, Chairman of the Board of  Quebecor Media Inc. (communications company) and Vice Chairman of the Board of Quebecor Inc. (communications holding company)                                     | 1989           | (8)(9)                                                                 | 1,693(10)                        
|Pierre Karl Péladeau (B)Montreal, Quebec                                  | President and Chief Executive Officer of the Corporation, President and Chief Executive Officer of Quebecor Inc. (communications holding company), and Chairman of the Board of Nurun Inc. (information technology management consultants) | 1989           | (9)(11)                                                                | 6,635                            
|Alain Rhéaume (A), (D), (E)Montreal, Quebec                               | President and Chief Operating Officer, Microcell Solutions Inc. (Personal communications services company)(11)                                                                                                                             | 1997           |                                                                        | 8,815                            



|(A)    Member of the Audit Committee.(B)    Member of the Executive Committee.(C)    Member of the Pension Committee. | (D)    Member of the Human Resources and Compensation Committee.(E)     Member of the Nominating and Corporate Governance Committee. | 
|--------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------ | 

|(1) | This information has been provided to the Corporation by the above directors. This information excludes shares of subsidiaries of the Corporation that may be owned by a director in order to qualify as a director of such subsidiaries under applicable law.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



19

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|(2)  | The amounts in this column are as of March 31, 2004. In 2000, the Corporation implemented a Directors Deferred Stock Unit Plan for the benefit of its directors, which plan was amended in February 2003.                                                                                                                                                                                                                                                                             
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3)  | Shares held by 1260154 Ontario Inc., a company controlled by Mr. Baillie.                                                                                                                                                                                                                                                                                                                                                                                                             
|(4)  | Mr. Mulroney also owns 1,000 Class A Multiple Voting Shares of Quebecor Inc.                                                                                                                                                                                                                                                                                                                                                                                                          
|(5)  | Includes units attributed to The Right Honourable Brian Mulroney in his capacity as Chairman of the Board of Directors of the Corporation.                                                                                                                                                                                                                                                                                                                                            
|(6)  | Mr. Neveu also owns 65,614 Class B Subordinate Voting Shares of Quebecor Inc.                                                                                                                                                                                                                                                                                                                                                                                                         
|(7)  | No compensation paid for services rendered as director from March 2003 to March 2004, when Mr. Neveu acted as President and Chief Executive Officer of the Corporation.                                                                                                                                                                                                                                                                                                               
|(8)  | Mr. Érik Péladeau directly and indirectly exercises control over 5,340 Class B Subordinate Voting Shares of Quebecor Inc.                                                                                                                                                                                                                                                                                                                                                             
|(9)  | Les Placements Péladeau Inc., a corporation controlled by a trust constituted for the benefit of Messrs. Érik Péladeau and Pierre Karl Péladeau, has voting control over Quebecor Inc., the Corporation's parent company, with 17,465,264 Class A Multiple Voting Shares and 19,800 Class B Subordinate Voting Shares of Quebecor Inc.  The aforementioned trust also exercises control over Gestion Péladeau Inc., which holds 43,700 Class A Multiple Voting Shares of Quebecor Inc.
|(10) | No compensation paid for services rendered as director from October 2001 to March 2004, when Mr. Péladeau acted as Senior Executive Vice president of the Corporation.                                                                                                                                                                                                                                                                                                                
|(11) | Mr. Pierre Karl Péladeau owns 3,200 Class A Multiple Voting Shares of Quebecor Inc.                                                                                                                                                                                                                                                                                                                                                                                                   





Each director serves until the next annual meeting of shareholders or until a successor is elected or appointed.

A. Charles Baillie was the Chairman of the Board of TD Bank Financial Group until April 4, 2003. From February 1998 until December 2002, Mr. Baillie served as Chairman of the Board and Chief Executive Officer of TD Bank Financial Group. He has been a director of the Corporation since 2003.

Reginald K. Brack was the Chairman and CEO of Time Inc., the world's largest magazine publisher. He served as Chairman until June 1997. He has been a director of the Corporation since 2000.

Derek H. Burney, O.C. has been the President and Chief Executive Officer of CAE Inc. since October 1999. From January 1993 until October 1999, he was Chairman of the Board and Chief Executive Officer of Bell Canada International. He has been a director of the Corporation since 2003.

Robert Coallier is President and Chief Executive Officer of Cervejarias Kaiser (a brewing company in Brazil and a subsidiary of Molson Inc.). From May 2000 until July 2002, Mr. Coallier was Executive Vice President and Chief Financial Officer of Molson Inc. (a brewing company). Prior to May 2000, he occupied the position of Vice President and Chief Financial Officer of C-MAC Industries Inc. (parent company of a multinational industrial group in the field of state-of-the-art microelectronics) since July 1996.  He has been a director of the Corporation since 1991.

James Doughan has been a corporate director since July 2000.  He acted as a consultant to Gaylord Container from August 1999 to July 2000.  He was President and Chief Executive Officer of Abitibi-Consolidated Inc. (a pulp and paper company) from 1997 to 1999.  He has been a director of the Corporation since 2001.

The Honourable Richard C. Holbrooke is Vice-Chairman of the Board of Perseus, llc (a merchant bank and private equity fund management company). From August 1999 until January 2001, he served as Ambassador of the United States to the United Nations and as a member of President Clinton's cabinet. From February 1996 until August 1999, he was Vice-Chairman of the Board of Credit Suisse First Boston (USA), Inc. (an investment bank and financial services firm). He has been a director of the Corporation since 2003.

Eileen A. Mercier was Vice Chair of the Board, Workplace Safety and Insurance Board (Ontario) (a workers' compensation system) from July 1996 to November 2003. She has been a director of the Corporation since 1999.



20

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The Right Honourable Brian Mulroney, P.C., C.C., LL.D.,has been Chairman of the Board of the Corporation since April 2002.  He served as Chairman of the Board of Sun Media Corporation (a newspaper publishing company) from January 2000 to June 2001 and he has been a Senior Partner of Ogilvy Renault (a law firm) since July 1993. He has been a director of the Corporation since 1997.

Jean Neveu was President and Chief Executive Officer of the Corporation from March 18, 2003 to March 12, 2004.  From December 1997 until April 2002, he served as Chairman of the Board of the Corporation.  He served as Chairman of the Board and Chief Executive Officer of the Corporation from February 1989 until December 1997. He was President and Chief Executive Officer of the Parent from December 1997 until April 1999, and, since that date, he has served as Chairman of the Board of the Parent. He has also served as Chairman of the Board of Groupe TVA Inc. (a television broadcasting company) since November 2001. He has been a director ofthe Corporation since 1989.

Robert Normand has been a corporate director of a number of private and public corporations since 1997.  He has been a director of the Corporation since 1999.

Érik Péladeau has been Vice Chairman of the Board of the Corporation since October 2001 and Senior Executive Vice President of the Corporation from October 2001 until March 12, 2004. He has been Vice Chairman of the Board of the Parent since April 1999. He has been Chairman of the Board of Quebecor Media Inc. (a communications company) since March 12, 2004 and served as its Vice-Chairman from February 2001 to March 2004. He is also Chairman of the Board of Joncas Postexperts Inc. (a postal and mailing specialist company) since May 1999. He was Chairman of the Board of Quebecor Communications Inc. (a communications company) from December 1997 until December, 2003 and was Vice Chairman of the Board of Sun Media Corporation (a newspaper publishing company) from February 1999 to July 2001. He has been a director of the Corporation since 1989.

Pierre Karl Péladeau was named President and Chief Executive Officer of the Corporation on March 12, 2004. He has been President and Chief Executive Officer of the Parent since April 1999 and he served as President and Chief Executive Officer of Quebecor Media Inc. from February 2001 until March 2004. He served as Vice Chairman of the Board of the Corporation from April 1999 until September 2001. He has also been Chairman of the Board of Nurun Inc. (information technology company) since January 2000. He was Vice Chairman of the Board of Sun Media Corporation from February 1999 to July 2001. He was Vice Chairman of the Board of the Parent from December 1997 to April 1999.  From April 1998 until April 1999, he was Executive Vice President and Chief Operating Officer of the Corporation. He has been a director of the Corporation since 1989.

Alain Rhéaumehas been President and Chief Operating Officer of Microcell Solutions Inc. (personal communications services company) since May 2003. He was President and Chief Executive Officer of Microcell PCS from February 2001until April 2003. From May 1996 until February 2001, he was Executive Vice President, Chief Financial Officer and Treasurer of Microcell Telecommunications Inc. He has been a director of the Corporation since 1997.











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6.2     Executive Officers Who Are Not Directors

|Name and municipality of residence   |  | Function within the Corporation                                 
|------------------------------------ |  | ----------------------------------------------------------------
|Claude Hélie
Longueuil, Quebec       |  | Executive Vice President and Chief Financial Officer            
|David Boles
Hingham, Massachussets   |  | Chief Operating Officer, Quebecor World North America           
|John Dickin
York, England            |  | Chief Operating Officer, Europe                                 
|Guy Trahan
Buenos Aires, Argentina   |  | President, Quebecor World Latin America                         
|Yvan Lesniak
Marne la Vallée, France |  | Managing Director of Operations, Quebecor World France          
|David Blair
Toronto, Ontario         |  | Senior Vice President, Manufacturing, Environment and Technology
|Carl Gauvreau
Longueuil, Quebec      |  | Senior Vice President and Chief Accounting Officer              
|Louise Desjardins
Rosemère, Quebec   |  | Vice President, Taxation                                        
|Raynald Lecavalier
Longueuil, Quebec |  | Vice President, Corporate General Counsel and Secretary         
|Sylvain Levert
Candiac, Quebec       |  | Vice President, Procurement                                     
|Roger Martel
Repentigny, Quebec      |  | Vice President, Internal Audit                                  
|Jeremy Roberts
St-Lazare, Quebec     |  | Vice President, Investor Relations and Treasury                 
|Hugues Simard
Montreal, Quebec       |  | Vice President, Development and Planning                        
|Julie Tremblay
Montreal, Quebec      |  | Vice President, Human Resources                                 
|Diane Dubé
La Prairie, Quebec        |  | Corporate Controller                                            
|Nicolas Lavoie
Candiac, Quebec       |  | Assistant Treasurer, Corporate Finance                          
|Tony Ross
Montreal, Quebec           |  | Director, Communications                                        
|Caroline McNicoll
Longueuil, Quebec  |  | Legal Counsel and Assistant Secretary                           



Claude Hélie has been Executive Vice President and Chief Financial Officer of the Corporation since February 2003. From April 2000 until his appointment as Executive Vice President and Chief Financial Officer of the Corporation, Mr. Hélie served as Executive Vice President and Chief Financial Officer of the Parent. From July 1994 to April 2000, Mr. Hélie was Vice-President and Chief Financial Officer of Donohue Inc. (a pulp and paper company).



22

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David Boles has been Chief Operating Officer, Quebecor World North America since March 2003.  From September 2002 until March 2003, he was Co-Chief Operating Officer, Quebecor World North America.  Prior to September 2002, he served as President of the North America Retail Insert and Sunday Magazine Group of the Corporation.

Guy Trahan has been President of Quebecor World Latin America since July 1997.

John Dickin has been Chief Operating Officer, Europe since April 2002.  From October 2001 until April 2002, he was Executive Vice President, Quebecor World Europe. From 1996 until October 2001, he was Managing Director, Quebecor World, Corby.

Yvan Lesniak has been Managing Director of Operations of Quebecor World France S.A. since June 2003.  From 2000 until June 2003, he was Executive Vice President of Quebecor World France.  From 1998 until 2000, he was Vice President, Sales for Quebecor World France.

David Blair has been Senior Vice President, Manufacturing, Environment and Technology since April 2002. From June 2001 to April 2002, he was Vice President, Manufacturing, Technologies and Environment of the Corporation. From January 1999 to June 2001, he was Vice President, Manufacturing of the Corporation. From January 1997 to December 1998, he was Vice President, Technical Services of the Corporation.

Carl Gauvreau has been Senior Vice President and Chief Accounting Officer since November 2002. From April 2002 until November 2002, he was Senior Vice President - Advisor to the Office of the Chairman of the Board of the Corporation.  From March 2001 to April 2002, he was Senior Vice President, Finance - North America of the Corporation.  From September 1999 to March 2001, he was Vice-President and Corporate Controller.  He was Corporate Controller from July 1997 to September 1999.

Louise Desjardinswas named Vice President, Taxation of the Corporation as of May 3, 2004.   From February 2000 until April 2004, she served as Director, Taxation of Abitibi-Consolidated Inc. and from August 1995 until March 2000, as Director, Taxation of St-Lawrence Cement.

Raynald Lecavalier has been Vice President, Corporate General Counsel and Secretary of the Corporation since September 2002. From January 2002 until September 2002, he was Assistant Vice President, Legal and Environmental Affairs and Assistant Secretary of the Corporation. From July 1996 to January 2002, he was Director of Legal Affairs and Assistant Secretary of the Corporation.

Sylvain Levert has been Vice President, Procurement of the Corporation since November 2003.  He was Vice President, Corporate Services and Logistics (Switzerland) from October 1998 to November 2003. He was Director, Business Development of the Corporation from July 1997 to October 1998.

Roger Martel was named Vice President, Internal Audit of the Corporation on February 16, 2004.  He is responsible for Internal Audit of both Quebecor Inc. and Quebecor Media Inc.  From February 2001 to February 2004, he was Principal Director, Internal Audit of Quebecor Media Inc.  Prior to that, he was a Internal Auditor of Le Groupe Vidéotron Ltée.

Jeremy Roberts has been Vice President, Investor Relations and Treasury since May 2003. From September 2000 until May 2003, he was Director, Corporate Finance and Investor Relations. He was Assistant Treasurer of the Corporation from November 1997 until September 2000.

Hugues Simard was named Vice President, Development and Planning of the Corporation in September 2003. From February 2003 until September 2003, he was Vice President, Corporate Development of Quebecor Media Inc. From July 2000 until February 2003, Mr. Simard was President and Chief Executive Officer of Canoe Inc. and Netgraphe Inc., a publicly-listed corporation controlled by Quebecor Media. He was Vice President, Corporate Development of Quebecor New Media from July 1999 to July 2000 and Director, Business Development of the Corporation from July 1998 to July 1999. Prior to that, Mr. Simard worked in Investment Banking.



23

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Julie Tremblay has been Vice President, Human Resources since April 2003. From August 1998 to April 2003, she was Vice President, Human Resources of the Parent.

Diane Dubé has been Corporate Controller since June 2003. From February 2001 to June 2003, she was Assistant Vice President, Corporate Controller.  From February 1998 to February 2001, she was Director Financial Accounting and Systems.  From May 1991 to February 1998, she held several positions in the Accounting Department of the Corporation.

Nicolas Lavoie has been Assistant Treasurer, Corporate Finance of the Corporation since March 2001. From May 1998 to March 2001, he was Chief Financial Analyst, Treasury Department of the Corporation.  From May 1995 to May 1998, he was a Financial Analyst of the Société Générale de Financement du Québec.

Tony Ross has been Director, Communications since August 2000.  From 1997 to August 2000, he was Executive Producer at Canadian Broadcasting Corporation (a television broadcasting company).

Caroline McNicoll has been Legal Counsel since November 2003 and was named Assistant Secretary of the Corporation on January 27, 2004.  From August 2001 to November 2003, she was Legal Counsel at Bombardier Transportation, Total Transit Systems Division. From August 2000 to August 2001, she completed a master's degree in International business law at the University of Ottawa. From October 1997 to August 2000, she practiced law at a private law firm.

ITEM 7 -  ADDITIONAL INFORMATION

The Corporation will provide the following documents to any person or corporation, upon request to the Corporate Secretary, Quebecor World Inc., 612 Saint-Jacques St., Montreal, Quebec, Canada, H3C 4M8:

(a)

when the securities of the Corporation are in the course of distribution pursuant to a short form prospectus or a preliminary short form prospectus has been filed in respect of a distribution of its securities, (i) one copy of the Annual Information Form of the Corporation, together with one copy of any document, or the pertinent pages of any document, incorporated by reference in the Annual Information Form, (ii) one copy of the consolidated financial statements of the Corporation for its most recently completed financial year together with the accompanying report of the auditors and one copy of any interim financial statements for its most recently completed financial year, (iii) one copy of the management proxy circular of the Corporation in respect of its most recent annual meeting of shareholders that involved the election of directors or one copy of any annual filing prepared in lieu of that information circular, as appropriate, and (iv) one copy of any other documents that are incorporated by reference into the preliminary short form prospectus or the short form prospectus and that are not required to be provided under (i) to (iii) above; or

(b)

at any other time, one copy of any other documents referred to in (a) (i) to (iii) above, provided the Corporation may require the payment of a reasonable charge if the request is made by a person or Corporation who is not a securityholder of the Corporation.

Additional information, including information on the compensation of directors and executive officers, loans to executives, the principal holders of securities of the Corporation, as well as the stock option plans and interest of insiders in material transactions, as the case may be, are presented in the Corporation's management proxy circular pertaining to the annual meeting of the shareholders held on May 5, 2004. Additional financial information, in particular, the audited consolidated financial statements, are included in the Annual Report to the shareholders of the Corporation for the year ended December 31, 2003.



24

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ITEM 8 -  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management's Discussion and Analysis of the Financial Condition and Results of Operations for the year ended December 31, 2003 is presented at pages 22 to 35 of the Corporation's 2003 Annual Report (Financial Review), which analysis is incorporated by reference herein. As a supplement to the discussion and analysis, please refer to the Consolidated Financial Statements for the years ended December 31, 2003 and 2002 and to the notes to the consolidated financial statements at pages 36 to 70 of the Corporation's 2003 Annual Report (Financial Review), such consolidated financial statements and such notes being incorporated by reference herein.

ITEM 9 -  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 customer 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 conditions.













25

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---



MANAGEMENT'S DISCUSSION AND
ANALYSISOF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Quebecor
World Inc. is one of the largest commercial print media services company in
the world. Quebecor World is the market leader in most of its product categories
and geographies. This market-leading position has been built through a
combination of integrating acquisitions, investment in key strategic
technologies and a commitment to build long-term partnerships with the world's
leading print media customers.

Quebecor World
has facilities in the United States, Canada, France, the
United Kingdom, Spain, Switzerland, Sweden, Finland, Austria, Belgium,
Brazil, Chile, Argentina, Peru, Colombia, Mexico and India.

Certain measures
used in this discussion and analysis do not have any standardized meaning under
Canadian Generally Accepted Accounting Principles (GAAP). When used, these
measures are defined in such terms to allow the reconciliation to the closest
GAAP measure. Numerical reconciliations are provided in figures 9 and 10. It is
not likely that these measures could be compared to similar measures presented
by other companies.

The Company's
2003 results were deeply affected by a very difficult economic environment in
the print media industry. Weak advertising spending and global overcapacity in
the industry resulted in a significant price erosion. This environment
negatively impacted results in all the Company's markets.

To face these
challenges, management's approach has been to secure and increase new and
existing volume and to adopt an uncompromising focus on costs.

The Company
competed aggressively and this is reflected in the volume increase in most
markets as a result of contract extensions and new gains at market prices.

To mitigate the
pricing decline, the Company continued to focus on cost reduction and cost
containment. Early in 2003 and throughout the year, new management performed a
detailed review of the Company's operations. Through this review, management
identified additional restructuring initiatives to address the competitive
environment. This involved a general workforce reduction across the platform,
the closure of four smaller facilities in North America and the decommissioning
of underperforming assets. In addition, progress was made in terms of
streamlining the workforce and cutting overhead expenses, achieved through
consolidation of corporate functions and relocation of certain sales offices
into plants. To further reduce costs, the Company took advantage of lower
interest rates to refinance debt with the proceeds of a new $600 million
issuance of long-term debt.

Ultimately, all
of these cost reduction measures will lower the cost base and allow the Company
to harvest the benefits when markets recover.

Revenue by Product($ millions)For the year ended December 31

LOGO

Figure 1

FOURTH QUARTER IN REVIEW

In the fourth
quarter of 2003, the Company continued to face challenges in difficult markets
and overcapacity in the print industry. The Company's consolidated revenues
increased from $1,701 million in 2002 to $1,742 million in 2003, an
increase of 2%, essentially explained by the favourable impact of currency
translation of $95 million. Excluding this impact, revenues for the fourth
quarter followed the same trend as in the third quarter, decreasing 3% compared
to the same period last year (5% decrease in the third quarter of 2003). Despite
this decrease, volume was up in virtually all of the Company's business groups.
Lower prices were the main factor for the decrease in revenues.

The Company
assesses performance based on operating income before impairment of assets,
restructuring and other charges. The following operating analyses are before
impairment of assets, restructuring and other charges.

During the
fourth quarter of 2003, the Company incurred specific charges that reduced
operating income totalling $22.7 million of which $13.9 million was
related to North America, $3.4 million to Europe and the balance to Latin
America and other provisions. Most of the charge, or $18.2 million, was
included in selling, general and administrative expenses. Of the
$13.9 million related to North America, there was $6.3 million for
lease provisions and a $5.0 million provision for doubtful accounts.

In the fourth
quarter of 2003, operating income, before impairment of assets, restructuring
and other charges, fell by 44% to $90 million, from $160 million in
2002. Operating margin, on the same basis, declined to 5.2% from 9.4% in 2002.
Depreciation and amortization were $86 million in the fourth quarter of
2003, compared to $81 million in 2002.

Selling, general
and administrative expenses were $152 million compared with
$125 million in 2002, an increase of $27 million. Excluding the
specific charges of $18.2 million, of which $8.2 million was for bad
debts and $6.3 million was for lease provisions, and the impact of currency
translation of $8.9 million, selling, general and administrative expenses
were flat with the fourth quarter of last year. The savings from the workforce
reduction and other cost containment measures were offset by the increasing
employee benefit expenses, such as medical, pension and accounting for
stock-based compensation. However, as explained in section "Year 2003 in
Review", on a full year basis, selling, general and administrative expenses were
down by $32 million when compared to 2002.

26

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Impact of Foreign Currency and
Business Acquisition($ millions)

|                 |                         | Periods ended December 31,
      2003 |     
|---------------- | ----------------------- | ------------------------------------- | ----
|
|Revenues         |                         |                                       |     
|                 | Foreign currency impact |                                       | $   
|                 | Business acquisition    |                                       |     
|                 |                         |                                       |     
|Total            |                         | $                                     | 95.2
|                 |                         |                                       |     
|Operating income |                         |                                       |     
|                 | Foreign currency impact |                                       | $   
|                 | Business acquisition    |                                       |     
|                 |                         |                                       |     
|Total            |                         | $                                     | 2.7 
|                 |                         |                                       |     

Figure 2

During the
fourth quarter, the Company continued its restructuring initiatives and recorded
a net restructuring charge of $21.5 million, which reflected further
work-force reduction and additional impairment of assets. These measures are
described in section "Impairment of Assets and Restructuring Initiatives".

Financial
expenses were $84 million in the fourth quarter of 2003, compared to
$43 million in 2002. The 2003 results included a $30 million charge on
extinguishment of long-term debt related to the redemption of the 8.375% senior
notes and the repurchase of 89.6% of the 7.75% senior notes. The effect of this
transaction is expected to lower interest expense by approximately
$12 million per year. This quarter's financial expenses also included
an exchange loss of $5 million from the currency translation adjustment
account due to the reduction of a net investment in Latin America. Excluding
these two events, financial expenses increased by $6 million from last
year. The higher expenses were mainly due to a higher level of debt in the
fourth quarter of 2003 combined with the net impact of the currency mix of the
debt portfolio and losses on foreign exchange related to the weaker
U.S. dollar.

Income taxes
were $37 million in the fourth quarter of 2003 compared with
$26 million in 2002. The increase in income taxes was due to two items,
namely an adjustment of the average tax rate applied on cumulative temporary
differences within different states in the United States for
$28 million and an additional charge of $18 million reflecting a
revised expectation of tax asset recovery and liabilities from prior years. When
excluding these items, the income tax would be a recovery, since earnings before
taxes were generated in jurisdictions with lower tax rates whereas income taxes
on restructuring and other charges were recovered in jurisdictions with higher
tax rates.

For the fourth
quarter ended December 31, 2003, the Company reported a diluted loss per
share of $0.48 compared to a diluted earnings per share of $0.44 in 2002. These
results incorporated impairment of assets, restructuring and other charges of
$21.5 million ($15.7 million net of taxes) or $0.12 per share compared
with $19.6 million ($24.1 million net of taxes) or $0.17 per share in
2002. Excluding the effect of impairment of assets, restructuring and other
charges, the fourth quarter of 2003 resulted in loss per share of $0.36 compared
with earnings per share of $0.61 in the same period of 2002. The specific
charges of $22.7 million ($13.7 million net of taxes) also negatively
impacted earnings per share by $0.10. The refinancing of the long-term debt
which generated a charge on extinguishment of long-term debt of $30 million
($18 million net of taxes) and a $5 million loss from the currency
translation adjustment further lowered earnings per share by $0.18.

The combined
effect of the items affecting the tax expense described above was $0.35 on
earnings per share ($46 million reduction of net income) for the fourth
quarter.

YEAR 2003 IN REVIEW

In 2003, the
difficult economic environment and the global overcapacity in the print media
industry resulted in increased competition and severe pressure on prices. In
reaction to this environment, the Company's approach was to secure and increase
new and existing volume and to contain and reduce costs. These measures were
implemented across the platform, on the operational side as well as in the
administrative functions.

Revenue
increased from $6,272 million in 2002 to $6,392 million in 2003, an
increase of 2%, explained by the favourable impact of currency translation and
the aquisition of the printing assets of Hachette Filipacchi Medias (see figure
2). The reduction in revenues when excluding these factors, was a reflection of
the pricing pressure in all business segments, despite the overall volume
increase.

On a full year
basis, the Company incurred specific charges that reduced operating income
totalling $78.8 million of which $58.4 million related to North
America, and included a $15.0 million adjustment caused by the rapid growth
and systems issues in the North American Logistics business, a
$16.0 million provision for doubtful accounts and $9.3 million for
lease provisions. In Latin America and Europe, specific charges amounted to
$8.0 million and $6.1 million, respectively. From the total specific
charges, a portion of $37.9 million increased selling, general and
administrative expenses.

Operating
income, before impairment of assets, restructuring and other charges, fell by
41% to $330 million in 2003, from $563 million in 2002. Operating
margin, on the same basis, declined to 5.2% in 2003 from 9.0% in 2002. Reduced
capacity utilization and pricing pressures were largely responsible for the
lower operating margin. Operating margin was also negatively affected by
increases in pension, utilities and medical expenses (see figure 3)

Depreciation and
amortization were $336 million in 2003, compared to $316 million in
2002. This increase was primarily due to new capital expenditures including the
purchase of presses that were previously under operating leases.

Impact of Selected Expenses on
Operating Income and EPS

|                     |           | Year ended December 31,
      2003
|-------------------- | --------- | ----------------------------------
|
|
|Selected expenses(1) |           |                                   
|                     | Pension   |                                   
|                     | Utilities |                                   
|                     | Medical   |                                   
|                     |           |                                   
|Total                |           | $                                 
|                     |           |                                   

---

Figure 3

27

---

Selling, general
and administrative expenses were $536 million compared with
$507 million in 2002, an increase of $29 million. Excluding specific
charges totalling $37.9 million, as well as the impact of currency
translation of $23 million, selling, general and administrative expenses
improved by $32 million or 6%. This resulted from the work-force reduction
and other cost containment measures despite increases in employee benefit
expenses, such as medical, pension and accounting for stock-based compensation.

In 2003,
impairment of assets, restructuring and other charges of $98.3 million were
recorded following management's detailed review of the Company's operations and
administrative functions.

Financial
expenses were $221 million in 2003, compared to $170 million in 2002.
The 2003 results included a $30 million charge on extinguishment of
long-term debt related to the redemption of the 8.375% senior notes and the
repurchase of 89.6% of the 7.75% senior notes in the fourth quarter of 2003.
This year's financial expenses also included an exchange loss of $5 million
from the currency translation adjustment account for the reduction of a net
investment in Latin America. Excluding these two events, financial expenses
increased by $16 million from last year. Despite the higher level of debt
at year-end, the average volume for the year was similar to the previous year.
The higher expenses were mainly due to the net impact of the currency mix of the
debt portfolio, the higher fixed component of the debt denominated in
U.S. dollars and losses on foreign exchange due to the weaker
U.S. dollar.

Income tax
expenses were $39 million in 2003 compared with $91 million in 2002.
The income taxes in 2003 include the following two items; an adjustment of the
average tax rate applied on cumulative temporary differences within different
states in the United States for $28 million; and an additional charge
of $25 million reflecting a revised expectation of tax asset recovery and
liabilities from prior years. When excluding these items, the income tax would
be a recovery, since earnings before taxes were generated in jurisdictions with
lower tax rates, whereas income tax on restructuring and other charges were
recovered in jurisdictions with higher tax rates.

For the year
ended December 31, 2003, the Company reported a diluted loss per share of
$0.50 compared to a diluted earnings per share of $1.76 in 2002. These results
incorporated impairment of assets, restructuring and other charges of
$98.3 million ($71.3 million net of taxes) or $0.53 per share compared
with $19.6 million ($24.1 million net of taxes) or $0.16 per share in
2002. Excluding the effect of impairment of assets, restructuring and other
charges, 2003 resulted in diluted earnings per share of $0.03 compared with
$1.92 in 2002. The specific charges of $78.8 million ($56.9 million
net of taxes) also negatively impacted earnings per share by $0.42. The
refinancing of the long-term debt, which generated a charge on extinguishment of
long-term debt of $30 million ($18 million net of taxes) and a
$5 million loss from the currency translation adjustment further lowered
earnings per share by $0.17. The impact of the special tax items as described
above also reduced earnings per share by $0.39 ($53 million reduction of
net income).

YEAR 2002 IN REVIEW

Year 2002 was
also impacted by a difficult economic environment with declines in volumes and
pressures on prices. However, restructuring activities and cost reduction
initiatives mitigated the negative impact on the Company's results and resulted
in increased operating margins for most of the North American and European
(other than France) groups.

Revenue
decreased from $6,443 million in 2001 to $6,272 million in 2002, a
decrease of 3%, despite the impact of business acquisitions of
$184 million. Operating income, before restructuring and other special
charges, fell by 9% to $563 million in 2002, from $618 million in
2001. Operating margin, on the same basis, declined to 9.0% in 2002 from 9.6% in
2001. Reduced capacity utilization and pricing pressures were largely
responsible for the lower margin.

Depreciation and
amortization were $316 million in 2002, compared to $317 million in
2001. This slight decrease was primarily due to the closure of facilities and
the disposal of equipment following the 2001 restructuring initiatives.

Selling, general
and administrative expenses were $507 million compared with
$489 million in 2001. The increase of $18 million was primarily due to
business acquisitions and reduction in suppliers' cash discounts related to the
cash management strategy. However, this strategy allowed us to reduce our
financial expenses.

In 2002,
restructuring and other charges of $20 million were recorded due to
difficult market conditions in France, further integration of administrative
functions in North America and the write-down of impaired or idle assets.

Segmented Results of Operations($ millions)Selected
Performance Indicators

|                                                                                    |  | North America |         | Europe |   | Latin America |   | Inter-Segment and
      Others |         | Total |  
|----------------------------------------------------------------------------------- |  | ------------- | ------- | ------ | - | ------------- | - | ------------------------------ | ------- | ----- | -
|
|Year ended December 31                                                              |  |               |         |        |   |               |   |                                |         |       |  
|Revenues                                                                            |  | $             | 5,062.9 |        | $ | 5,087.6       |   | $                              | 1,151.4 |       | $
|Operating income (loss) before depreciation
      and amortization and before IAROC |  |               | 595.4   |        |   | 797.0         |   |                                | 93.5    |       |  
|Operating income (loss) before
IAROC                                                |  |               | 311.1   |        |   | 527.3         |   |                                | 30.3    |       |  
|IAROC                                                                               |  |               | 78.5    |        |   | (9.0)         |   |                                | 6.8     |       |  
|Operating income (loss)                                                             |  |               | 232.6   |        |   | 536.3         |   |                                | 23.5    |       |  
|Operating margin before depreciation and
      amortization and before IAROC        |  |               | 11.8    | %      |   | 15.7          | % |                                | 8.1     | %     |  
|Operating margin before IAROC                                                       |  |               | 6.1     | %      |   | 10.4          | % |                                | 2.6     | %     |  
|Operating margin                                                                    |  |               | 4.6     | %      |   | 10.5          | % |                                | 2.0     | %     |  

Figure 4

28

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Revenue by Business Group($ millions)For the year ended December 31

LOGO

Figure 5

Financial
expenses were $170 million in 2002, compared to $209 million in 2001.
The significant decrease was due to lower levels of debt, together with reduced
interest rates on long-term debt and on securitization programs.

Income taxes
were $91 million in 2002 compared with $52 million in 2001. Before
restructuring and other special charges, income taxes were $86 million or
22.0% compared to $96 million or 23.4% in 2001. The decrease in income
taxes is due to lower profitability and an increase in profits generated in
countries with a lower overall tax rate.

SEGMENT REVIEW

The following is
a review of activity by business group and the operating analysis is before
impairment of assets, restructuring and other charges.

North America

North American
revenues for the fourth quarter of 2003 were $1,355 million, down 1% from
$1,366 million in 2002. On a full year basis, revenues slightly decreased
to $5,063 million in 2003, from $5,088 million in 2002. Excluding the
effect of currency translation, revenues decreased by 4% in the fourth quarter
and 2% for the year. The following is a review of the North American activities
by business group.

Magazine & Catalog

Magazine &
Catalog revenues for the fourth quarter of 2003 were $385 million, down 4%
from $402 million in 2002. On a full year basis, revenues fell by 3% to
$1,473 million in 2003, from $1,518 million in 2002. The decrease was
a direct result of price erosion and lower volume due to weaknesses in the
Magazine business. However, in the fourth quarter, volume was stable. Magazine
advertising pages, as measured by the Publishers Information Bureau were down 1%
from last year. On the other hand, the Catalog business has been experiencing
year-over-year growth from renewals and new contracts.

The
Magazine & Catalog Group is the Company's largest business platform and
contributed in securing market share by extending current contracts and
attracting new customers, such as: Viacom, Dennis Publishing, Bauer, Viking,
Office Depot, Avon, Williams-Sonoma and Ethan Allen.

In an effort to
contain costs, headcount was reduced by 401 employees or approximatively 4% when
compared to December 2002.

Retail

Retail revenues
for the fourth quarter of 2003 were $276 million, down 1% from
$279 million in 2002. On a full year basis, revenues increased by 3% to
$993 million in 2003, from $962 million in 2002. In the fourth
quarter, volume was up 4% (3% for the year) but was offset by a significant
price erosion hurting revenues and operating margins.

The Company's
North American Retail network, built through strategic investments in both
gravure and offset technologies, provides customers with a unique coast-to-coast
platform allowing for large-run national campaigns or shorter-run
multi-versioned ones. Competition is fierce but the Group reported significant
wins with customers such as: Staples, Office Depot, Home Depot and JC Penny, an
indication of increased market share.

Year-over-year
headcount was reduced by 131 employees or approximatively 3% when compared to
2002. This improvement was reflected in selling, general and administrative
costs.

Book & Directory

Book &
Directory revenues for the fourth quarter of 2003 were $183 million, down
11% from $206 million in 2002. On a full year basis, revenues fell by 8% to
$750 million in 2003, from $817 million in 2002. The drop in revenues
was directly related to negative price pressures in both businesses. The Book
group was hit hard by the price competition in a soft market combined with
overcapacity in the United States and strong competition from Asia. Volume
was down by 1% in the fourth quarter. The demand was weak for high-value added
products such as bibles, fine-edition books, encyclopedias, and industrial
catalogs. Educational publishers focused on cash management in this difficult
market, reducing inventories which resulted in smaller orders and fewer new
titles.

In Directories,
while competition for market share for the major telecom business remained
fierce, volume was higher in 2003 as the Company's orders from emerging
independent publishers increased. However, this caused a negative price impact
on the overall product mix.

As part of the
cost reduction efforts, Book & Directory were combined to maximize
efficiencies due to the similarities of their operations.

The Group's
focus continued to be on cost containment. Headcount was reduced by 510
employees or approximatively 9% when compared to 2002. In addition, detailed
action plans were implemented in every plant to reduce waste and improve
operational efficiency. Also, a capital investment to improve the efficiency of
equipment and complete the expansion for school books was made at the Dubuque
facility.

Commercial & Direct

Commercial &
Direct revenues for the fourth quarter of 2003 were $165 million, up 10%
from $150 million in 2002. On a full year basis, revenues increased by 2%
to $605 million in 2003, from $593 million in 2002. Volume increased
close to 4% during the fourth quarter, following the same trend for the full
year. Headcount was reduced by 197 employees which represented approximatively a
6% year-over-year decrease with a significant impact on administrative expenses.

29

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Canada

Canadian
revenues for the fourth quarter of 2003 were $259 million, up 11% from
$235 million in 2002. On a full year basis, revenues increased by 5% to
$910 million in 2003 from $870 million in 2002. Excluding the effect
of currency translation, revenues decreased by 7% in both the fourth quarter and
for the year. Similar to the US market, pricing was very competitive. In Eastern
Canada, despite eroding prices and excluding currency translation, revenues for
the year were up 3% from 2002, explained by an increase in volume. This trend
was reversed in the fourth quarter with a decrease of more than 3%.

During the year,
the Group reported contract renewals including, Rogers Publications, Sears
Retail, Shoppers Drug Mart, Verizon, and Canada Wide Magazines.

Other Revenues

Other sources of
revenues in North America included Que-Net MediaTM (pre-media services) and
Logistics. The Que-Net MediaTM Group's revenues for the fourth quarter of 2003
were $18 million, down 8% from $19 million in 2002. On a full year
basis, revenues fell by 10% to $75 million in 2003, from $84 million
in 2002, despite a significant volume increase (8% for 2003 and 13% in the
fourth quarter). This business offers services to the Company's main print media
businesses and has suffered from the decline in volume and price pressures
experienced elsewhere in the platform. The economic environment also impacted
customers who continued to focus on cutting costs, many of whom are turning
towards self-service and in-house production.

Logistics
revenues for the fourth quarter of 2003 were $69 million, up 17% from
$59 million in 2002. On a full year basis, revenues increased to
$245 million in 2003, from $187 million in 2002, a 31% increase.

Europe

European
revenues for the fourth quarter of 2003 were $340 million, up 18% from
$288 million in 2002. On a full year basis, revenues increased by 15% to
$1,151 million in 2003, from $1,003 million in 2002. The increase in
revenues in the last quarter and for the year was largely due to the positive
impact of currency translation. The purchase of the printing assets of Hachette
Filipacchi was also a factor in the annual increase in revenues for 2003.
Excluding these factors, revenues were flat for the last quarter and down
$49 million for the year 2003.

The European
market is still suffering from overcapacity and pressures on price. Operations
excluding France performed well, particularly in the facilities in the
United Kingdom, Austria and Belgium, where results were higher or
comparable to last year. Volume was up 7% for the year (11% in the fourth
quarter). Despite this, the book export business in Spain experienced volume
declines due to the strengthening of the Euro. Sweden and Finland were also
severely hit by a price erosion.

French revenues
for the fourth quarter of 2003 were $155 million, up 19% from
$131 million in 2002. Operating income in the fourth quarter of 2003 was
$7 million, up from $1 million in 2002. On a full year basis, revenues
were $529 million, an increase of 18% from $447 million in 2002.
Operating loss for the year 2003 was $3 million, as compared to a loss of
$2 million in 2002.

The French
operations, excluding the effect of the currency translation, reported a
negative operating margin and a revenue decline of 1%. However, the trend was
reversed in the fourth quarter with flat revenues and positive margins. Its
operations were especially hard hit by negative price pressures due to the
over-capacity in the industry.

Overall,
headcount in Europe was reduced by 269 employees which represented
approximatively a 5% decrease, with a particular focus on France where general
administrative expense reductions were effected.

Latin America

Latin America's
revenues for the fourth quarter of 2003 were $48 million, stable compared
to 2002. On a full year basis, revenues decreased by 3% to $177 million in
2003, from $184 million in 2002. Overcapacity coupled with economic
pressure within the region and currency devaluation all had a negative impact on
prices. As a result, management's plan of action was to secure volume at market
prices and focus on reducing headcount in addition to significant overhead cost
reductions. Volume was up in all countries except for the Recife facility in
Brazil. Overall volume was up 13% (10% in the fourth quarter) and headcounts
reduced by 548 employees or approximatively an 18% reduction.

PENSION AND OTHER POSTRETIREMENT BENEFITS

As at
December 2003, the pension and other post-retirement benefit costs were
$67 million compared with $55 million in 2002 and the funded status
decreased by $93 million over last year. Calculations of pension and other
postretirement benefit costs and obligations are based on various assumptions
(see figure 6). Management is continuously assessing those assumptions for its
funding exposure. In 2002 and 2001, difficult capital market conditions affected
pension asset returns. The year 2003 returns were marked by a slight recovery.
However, Generally Accepted Accounting Principles recommend an accounting
treatment to reduce the volatility of the pension plan expense in order to
reflect the long-term nature of these obligations and any actuarial gains or
losses resulting from a turbulent capital market environment are amortized over
a period of 15 years.

The Company is
monitoring the funding of the pension plans very closely and made contributions
above the minimum legal requirements. A total of $68 million of cash
contributions were made to the pension plans in 2003 compared to
$40 million in 2002.

Weighted average assumptions
used in themeasurement of the Company's pension benefits

|                               |  | 2003 |   | 2002 |   |  | 
|------------------------------ |  | ---- | - | ---- | - |  | 
|Discount rate                  |  | 6.0  | % | 6.7  | % |  | 
|Expected return on plan assets |  | 8.2  | % | 8.2  | % |  | 
|Rate of compensation increase  |  | 3.5  | % | 3.4  | % |  | 

Figure 6

30

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Total Debt and Accounts
Receivable Securitization($ millions)

|                                                        |  | December 31, 2003 |         | December 31, 2002
|------------------------------------------------------- |  | ----------------- | ------- | -----------------
|Bank indebtedness                                       |  | $                 | 1.3     |                  
|Current portion of long-term debt                       |  |                   | 23.9    |                  
|Long-term debt                                          |  |                   | 1,874.4 |                  
|Convertible notes                                       |  |                   | 110.7   |                  
|                                                        |  |                   |         |                  
|Total debt                                              |  | $                 | 2,010.3 |                  
|Accounts receivable
    securitization                  |  |                   | 766.6   |                  
|                                                        |  |                   |         |                  
|Total debt and accounts receivable
      securitization |  | $                 | 2,776.9 |                  
|                                                        |  |                   |         |                  

Figure 7

STOCK OPTION PLANS

During the year,
the Company issued a total of 916,911 options. Shares reserved for issuance
total 7.6 million as at December 31, 2003, of which 3.7 million
were outstanding.

In 2003, the
Company changed its method of accounting for stock-based compensation and
decided to adopt the fair value based method of accounting for all of its
stock-based compensation. The Company adopted these changes using the
prospective application transitional alternative. Accordingly, the fair value
based method was applied to awards granted, modified or settled on or after
January 1, 2003. The compensation cost charged against income for those
plans was $2 million for the year 2003.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

The Company
measures its liquidity performance using the calculation of free cash flow as
described in figure 9. Free cash flow reflects liquidity available for business
acquisitions, dividends on equity shares and repayments of long-term debt. In
2003, free cash flow from operations was $183 million, compared to
$320 million in 2002. The decrease in free cash flow was due to lower
earnings and higher capital expenditures in 2003.

OPERATING ACTIVITIES

Cash flow from
operating activities was $461 million in 2003, compared with
$513 million in 2002. This reduction was mainly attributable to the lower
earnings in 2003. The deficiency in working capital was $193 million in
2003, compared to $214 million in 2002. The variance was due to lower trade
payables partly offset by a higher level of securitization in 2003. Favourable
currency impact on Canadian and European programs and the amendment to the
U.S. program allowed for greater drawings under these securitization
programs. The Company has also renegotiated certain terms and conditions of the
U.S. and European programs to substitute the previous credit rating termination
event with a termination event which mirrors the financial covenants in the bank
facility.

FINANCING ACTIVITIES

In
June 2003, the Company repurchased for cancellation a total of 10,000,000
Subordinate Voting Shares pursuant to its Substantial Issuer Bid dated
April 24, 2003 for a net cash consideration, including redemption fees, of
Cdn $241 million ($174 million). The Substantial Issuer Bid expired at
midnight (Montreal time) on the evening of June 2,2003. The excess of the
price paid over the book value of the shares repurchased was charged to retained
earnings.

In
November 2003, the Company issued senior notes for a principal amount of
$600 million, comprised of two tranches. The first tranche of
$200 million matures on November 15, 2008 and the second tranche of
$400 million matures on November 15, 2013. The notes were issued at a
discount for a total net proceeds of $597 million. The proceeds from the
sale of these notes were used to repay outstanding indebtedness.

In
November 2003, following a tender offer to purchase all of the
$300 million principal amount of the 7.75% senior notes due
February 15, 2009, the Company repurchased 89.6% of the notes at a premium
for a cash consideration of $283 million.

In
December 2003, the Company exercised its option and redeemed all of the
$258 million principal amount of the 8.375% senior notes at a premium for a
total cash consideration of $268 million.

The Company also
restructured its $1 billion bank facility in November 2003 in three
tranches, the first tranche of $250 million matures in 2004, while the
second tranche of $250 million and the third tranche of $500 million
mature in 2006. All three tranches can be extended on a yearly basis. The
financial covenants remain unchanged and the facility can be used for general
corporate purposes. All of these new agreements were part of the Company's 2003
financial plan and will contribute to substantial annual savings.

Dividends paid
to shareholders of Multiple Voting Shares and Subordinate Voting Shares totaled
$0.52 per share, compared to $0.49 per share in 2002 and $0.46 per share in
2001, an increase of 6% over 2002 and 13% from 2001.

No dividends
were paid on the First Preferred Shares, Series 2 in 2003 as all First
Preferred Shares, Series 2 were converted into First Preferred Shares,
Series 3 in December 2002. The Company paid dividends of Cdn $1.54 per
share on the First Preferred Shares, Series 3 in 2003. Dividends of
Cdn $1.25 per share were paid in 2002 and in 2001 on First Preferred
Shares, Series 2. The Company paid dividends of Cdn $1.69 per share on the
First Preferred Shares, Series 4 in 2003 (Cdn $1.69 per share in 2002 and
Cdn $1.27 in 2001), and Cdn $1.73 per share on the First Preferred Shares,
Series 5, in 2003 (Cdn $1.73 per share in 2002 and Cdn $0.51 in 2001).

Contractual Cash Obligations($ millions)

|                                     |  | 2004 |     | 2005 |   | 2006 |  | 2007 |     | 2008 |   | 2009 and thereafter
|------------------------------------ |  | ---- | --- | ---- | - | ---- |  | ---- | --- | ---- | - | -------------------
|Long-term debt and convertible
notes |  | $    | 8   |      | $ |     |  | $    | 530 |      | $ | 261                
|Capital leases                       |  |      | 16  |      |   | 11   |  |      | 8   |      |   | 4                  
|Operating leases                     |  |      | 101 |      |   | 84   |  |      | 68  |      |   | 52                 
|                                     |  |      |     |      |   |      |  |      |     |      |   |                    
|Total contractual cash obligations   |  | $    | 125 |      | $ | 95   |  | $    | 606 |      | $ | 317                
|                                     |  |      |     |      |   |      |  |      |     |      |   |                    

Figure 8

31

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INVESTING ACTIVITIES

In 2003, capital
expenditures were targeted to improve the Company's cost structure and for
customer-driven projects. The Company invested $243 million on capital
expenditure projects, compared to $185 million in 2002. Key expenditures
included the following items:





During 2003, the
Company acquired some minority interests in Spain and North America.

FINANCIAL POSITION

For the year
ended December 31, 2003, the debt-to-capitalization ratio was 44:56,
compared to 40:60 in 2002. As at December 31, 2003, total debt plus
accounts receivable securitization was $2,777 million, $305 million
higher than last year (see figure 7).

In
February 2004, the Company expects to finalize the redemption of the
remaining nominal amount of $31 million of the 7.75% senior notes.

The holders of
the 6.50% senior debentures have the option to tender the $150 million
aggregate principal amount for redemption in August 2004. Their decision
will depend on prevailing market conditions at such time.

The Company
believes that the liquidity, capital resources and cash flows from operations
are sufficient to fund planned capital expenditures, working capital
requirements, pension contributions, interest and principal payment obligations
for the foreseeable future. The total mandatory principal payments on long-term
debt, convertible notes and capital leases are $24 million in 2004 and
$11 million in 2005. Minimum pension contributions are estimated at
$75 million for 2004.

IMPAIRMENT OF ASSETS AND RESTRUCTURING INITIATIVES

In early 2003,
as a result of changes in management, a detailed review of the Company's
operations and administrative functions has been undertaken to further reduce
the cost base and improve efficiencies. This resulted in additional impairment
of assets and restructuring initiatives.

In 2003, the
Company recorded an impairment of assets, restructuring and other charges of
$98.3 million. Non-cash items amounted to $60.4 million and cash items
to $37.9 million. The non-cash portion included an impairment of assets of
$54.4 million and other charges of $2.8 million for the 2003
initiatives and $3.2 million related to previous years' initiatives.

Impairment of Assets

During 2003, the
Company recorded an impairment of assets of $54.4 million for write-downs
of certain under-performing assets resulting from the over capacity in the
industry and the decision not to redeploy the assets. An amount of
$47.4 million has been recorded in the second quarter and $7.0 million
in the fourth quarter.

Restructuring and Other Charges

During the
fourth quarter of 2003, the Company continued its restructuring initiatives and
recorded net restructuring charges of $21.5 million. The charges included
$15.8 million, consisting of new initiatives of $16.1 million, net of
a reversal of $0.3 million related to second quarter and third quarter
initiatives, $7.0 million for impairment of assets and a reversal of
$1.3 million related to 2001-2002 initiatives. The cash charge of
$16.1 million was related to a workforce reduction of 878 employee
positions, of which $12.8 million was for North America, $1.9 million
for Europe and $1.4 million for Latin America. Under these initiatives, 393
employee positions have been eliminated and 485 will be eliminated in the first
quarter of 2004.

In the third
quarter of 2003, the Company initiated new restructuring initiatives. A net cash
reversal of $0.3 million was recorded. This was composed of two items: a
reversal of $2.2 million of which $1.9 million was for Europe and
$0.3 million was for Latin America, and a charge of $1.9 million for
work-force reduction, of which $1.4 million was for North America and
$0.5 million for Latin America. Under these initiatives, 260 employee
positions were eliminated. The reversal of the provision of $2.2 million
was recorded after the Company completed most of its June initiatives and
re-evaluated the remaining costs.

In the second
quarter of 2003, the Company initiated restructuring initiatives and other
charges following the continued volume declines in certain business segments. A
cash charge of $23.4 million was taken consisting of $17.6 million in
workforce reduction and $5.8 million of additional closure costs of four
smaller facilities. The amount of $17.6 million in workforce reduction
included $5.8 million for Europe and $10.0 million for North America.
Related to this, an asset write-down of $2.8 million was also recorded.
Under these initiatives,1,134 employee positions were eliminated.

In summary, as
of December 31, 2003, 1,769 employee positions were eliminated under the
2003 restructuring initiatives and 503 will be completed in 2004. The workforce
reductions affected all fixed cost areas of the Company, both at plant and
corporate levels.

32

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In 2003, the
review and the execution of the 2002 and 2001 initiatives resulted in a net
reversal of $1.0 million comprised of a cash over-spending of
$12.9 million and a $13.9 million reversal of prior year restructuring
and other charges. The cash overspending is related to costs of closed
facilities not yet disposed of, and office leases not yet subleased and other
completed initiatives. Under these initiatives, 3,961 employee positions were
eliminated as at December 31, 2003 and 23 will be eliminated in 2004, of
which 18 terminations in Europe are to be completed when all the legal
procedures and requirements are met.

In addition,
during the second quarter of 2003, the Company also recorded an asset write-down
of $3.2 million in relation with 2001 and 2002 initiatives.

In 2002,
following the persistant difficult situation in France and the identification of
other cost reduction opportunities in North America, the Company took additonal
restructuring charges which also included asset and investment write-downs and
overspending on its 2001 restructuring initiatives, net of the reversal of
unused reserves from 2001.

Restructuring
and other charges, as at December 31, 2002, were $19.6 million. This
included $13.3 million required to complete the 2001 restructuring
initiatives, mostly related to employee termination costs. In addition, it also
included a reversal of $40.1 million, mainly related to the Company's
decision not to close a plant. This reversal consisted of $18.4 million of
asset impairments and $21.7 million for related restructuring. The new
initiatives in 2002 were comprised of the following three basic components:



In 2001, due to
the economic fallout that was exacerbated following September 11th events,
the Company announced that it would restructure its business with the aim of
removing the least efficient equipment, without materially affecting the overall
capacity of its platform. The restructuring and other charges required to
achieve this goal totaled $273 million. The restructuring plan involved the
closure of facilities, together with the rationalization of numerous other
plants. The restructuring and other charges included the following three basic
components:



RISK MANAGEMENT

In the normal
course of business, the Company is exposed to changes in interest rates, foreign
exchange rates and commodity prices.

The Company
manages interest rate exposure by having a balanced schedule of debt maturities
as well as a combination of fixed and floating rate obligations. In addition,
the Company has entered into interest rate swap agreements to manage this
exposure. Contracts outstanding at year-end have a notional value of
$33 million. These contracts expire in March 2006.

The Company has
also entered into foreign-exchange forward contracts and cross-currency swaps to
set the exchange rate for cross-border sales and to manage the foreign exchange
exposure on net investments and foreign denominated assets. Foreign-exchange
forward contracts and cross-currency swap contracts outstanding at year-end have
a notional value of $673 million and $212 million respectively, and
expire between January 2004 and December 2007.

The Company has
also entered into natural gas swap contracts to manage the exposure on this
commodity. Contracts outstanding at year-end cover a notional quantity of
271,000 gigajoules in Canada and 2,237,000 MMBTU in the U.S. These
contracts expire between January and December 2004.

While the
counterparties of these agreements expose the Company to credit loss in the
event of non-performance, the Company believes that the possibility of incurring
such a loss is remote due to the creditworthiness of the counterparties. The
Company does not hold or issue any derivative financial instruments for
speculative or trading purposes.

Concentrations
of credit risk with respect to trade receivables are limited due to the diverse
operations and large customer base.

As of
December 31, 2003, the Company has no significant concentrations of credit
risk and believes that the product and geographic diversity of its customer base
is instrumental in reducing credit risk, as well as having a positive impact on
local markets or product-line demand. The Company has long-term contracts with
most of its largest customers. These contracts generally include
price-adjustment clauses based on the cost of paper, ink and labor. The Company
does not believe that it is exposed to an unusual level of customer credit risk.

The primary raw
materials used in the manufacturing process are paper and ink. The Company uses
its purchasing power as one of the major buyers in the printing industry to
obtain among the best prices, terms, quality control and service. To maximize
its purchasing power, the Company negotiates with a limited number of suppliers.

In 2003, the
Company had 71 collective bargaining agreements in North America. Of this total,
7 agreements expired in 2003 and 6 are still under negotiation. In addition, 15
collective bargaining agreements, covering 2,248 employees, will expire in 2004.
The Company has approximately 10,509 unionized employees in North America.
Moreover, 87 of the plants and related facilities in North America are
non-unionized.

SEASONALITY

The operations
of the Company's business are seasonal, with approximately two-thirds of
operating income historically 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, retail and holiday catalog promotions.

ENVIRONMENTAL MATTERS

During 2003, the
Company continued to strengthen its approach to environmental management.
Twelve facilities have now received or are in the implementation phase of
getting ISO-14001 certification, an internationally recognized environmental
management system standard.

33

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Reconciliation of non GAAP
measures($ millions)

|                          |                                                                                                                   | Year ended
      December 31 |        
|------------------------- | ----------------------------------------------------------------------------------------------------------------- | ---------------------------- | -------
|
|Operating Income          |                                                                                                                   |                              |        
|                          | Operating income                                                                                                  |                              | $      
|                          | Impairment of assets, restructuring and other
      charges ("IAROC")                                             |                              |        
|                          |                                                                                                                   |                              |        
|                          | Operating income before IAROC                                                                                     |                              | $      
|                          |                                                                                                                   |                              |        
|                          | Operating income                                                                                                  |                              | $      
|                          | Depreciation of property, plant and
      equipment                                                               |                              |        
|                          | Amortization of deferred
      charges(1)                                                                         |                              |        
|                          |                                                                                                                   |                              |        
|                          | Operating income before depreciation and
      amortization                                                       |                              | $      
|                          | IAROC                                                                                                             |                              |        
|                          |                                                                                                                   |                              |        
|                          | Operating income before depreciation and
      amortization and IAROC                                             |                              | $      
|                          |                                                                                                                   |                              |        
|Earnings (loss) per share |                                                                                                                   |                              |        
|                          | Net income (loss) available to holders of
      equity shares                                                     |                              | $      
|                          | IAROC (net of income taxes of
      $27.0 million in 2003,$(4.5) million in 2002 and
      $43.8 million in 2001) |                              |        
|                          |                                                                                                                   |                              |        
|                          | Net income available to holders of equity
      shares before IAROC                                               |                              | $      
|                          | Diluted average number of equity shares
      outstanding (in millions)                                           |                              |        
|                          | Earnings (loss) per share                                                                                         |                              |        
|                          |                                                                                                                   | Diluted                      |        
|                          |                                                                                                                   | Diluted, before IAROC        |        
|                          |                                                                                                                   |                              |        
|Free Cash Flow            |                                                                                                                   |                              |        
|                          | Cash provided by operating activities                                                                             |                              | $      
|                          | Dividends on preferred shares                                                                                     |                              |        
|                          | Additions to property, plant and
      equipment                                                                  |                              |        
|                          | Net proceeds from disposal of other
      assets                                                                  |                              |        
|                          |                                                                                                                   |                              |        
|                          | Free cash flow from operations                                                                                    |                              | $      
|                          |                                                                                                                   |                              |        
|Debt-to-capitalization    |                                                                                                                   |                              |        
|                          | Bank indebtedness                                                                                                 |                              | $      
|                          | Current portion of long-term debt and
      convertible notes                                                     |                              |        
|                          | Long-term debt                                                                                                    |                              |        
|                          | Convertible notes                                                                                                 |                              |        
|                          |                                                                                                                   |                              |        
|                          | Total debt                                                                                                        |                              | $      
|                          | Minority interest                                                                                                 |                              |        
|                          | Shareholders' equity                                                                                              |                              |        
|                          |                                                                                                                   |                              |        
|                          | Capitalization                                                                                                    |                              | $      
|                          |                                                                                                                   |                              |        
|                          | Debt-to-capitalization                                                                                            |                              |        
|                          |                                                                                                                   |                              |        
|Book value per share      |                                                                                                                   |                              |        
|                          | Shareholders' equity                                                                                              |                              | $      
|                          | Preferred shares                                                                                                  |                              |        
|                          |                                                                                                                   |                              |        
|                          |                                                                                                                   | $                            | 2,046.8
|                          | Ending number of equity shares (in
      millions)                                                                |                              |        
|                          |                                                                                                                   |                              |        
|                          | Book value per share                                                                                              |                              | $      
|                          |                                                                                                                   |                              |        

Figure 9

---

34

---

Reconciliation of non GAAP
measures($ millions)

|                          |                                                                                       | Three Months ended
      December 31 |  
|------------------------- | ------------------------------------------------------------------------------------- | ------------------------------------ | -
|
|Operating Income          |                                                                                       |                                      |  
|                          | Operating income                                                                      |                                      | $
|                          | Impairment of assets, restructuring and other
      charges ("IAROC")                 |                                      |  
|                          |                                                                                       |                                      |  
|                          | Operating income before IAROC                                                         |                                      | $
|                          |                                                                                       |                                      |  
|                          | Operating income                                                                      |                                      | $
|                          | Depreciation of property, plant and
      equipment                                   |                                      |  
|                          | Amortization of deferred charges                                                      |                                      |  
|                          |                                                                                       |                                      |  
|                          | Operating income before depreciation and
      amortization                           |                                      | $
|                          | IAROC                                                                                 |                                      |  
|                          |                                                                                       |                                      |  
|                          | Operating income before depreciation and
      amortization and IAROC                 |                                      | $
|                          |                                                                                       |                                      |  
|Earnings (loss) per share |                                                                                       |                                      |  
|                          | Net income (loss) available to holders of
      equity shares                         |                                      | $
|                          | IAROC (net of income taxes of $5.8 million
      in 2003, and $(4.5) million in 2002) |                                      |  
|                          |                                                                                       |                                      |  
|                          | Net income (loss) available to holders of
      equity shares before IAROC            |                                      | $
|                          | Diluted average number of equity shares
      outstanding (in millions)               |                                      |  
|                          | Earnings (loss) per share                                                             |                                      |  
|                          |                                                                                       | Diluted                              |  
|                          |                                                                                       | Diluted, before IAROC                |  
|                          |                                                                                       |                                      |  
|Free Cash Flow            |                                                                                       |                                      |  
|                          | Cash provided by operating activities                                                 |                                      | $
|                          | Dividends on preferred shares                                                         |                                      |  
|                          | Additions to property, plant and
      equipment                                      |                                      |  
|                          | Net proceeds from disposal of other
      assets                                      |                                      |  
|                          |                                                                                       |                                      |  
|                          | Free cash flow from operations                                                        |                                      | $
|                          |                                                                                       |                                      |  

Figure 10

35

---

|Selected Quarterly Financial
      Data(In millions of dollars, except per share
      data) |                     
|-------------------------------------------------------------------------------------------- | --------------------
|
|
|Consolidated Results                                                                         |                     
|Revenues                                                                                     |                     
|Operating income before depreciation and
      amortization and before IAROC                 |                     
|Operating income before IAROC                                                                |                     
|IAROC                                                                                        |                     
|Operating income (loss)                                                                      |                     
|Net income (loss)*                                                                           |                     
|Cash provided (used) by operating
      activities                                           |                     
|Free cash flow (outflow) from
      operations**                                             |                     
|Operating margin before depreciation and
      amortization and before IAROC***              |                     
|Operating margin before IAROC***                                                             |                     
|Operating margin***                                                                          |                     
|                                                                                             |                     
|Segmented Information                                                                        |                     
|Revenues                                                                                     |                     
|                                                                                             | North America       
|                                                                                             | Europe              
|                                                                                             | Latin America       
|Operating income (loss) before
      IAROC                                                   |                     
|                                                                                             | North America       
|                                                                                             | Europe              
|                                                                                             | Latin America       
|Operating margins before
    IAROC***                                                        |                     
|                                                                                             | North America       
|                                                                                             | Europe              
|                                                                                             | Latin America       
|                                                                                             |                     
|Per Share Data                                                                               |                     
|Earnings (losses)*                                                                           |                     
|                                                                                             | Diluted             
|                                                                                             | Diluted before IAROC
|Dividends on equity shares                                                                   |                     

Figure 11

---

IAROC: Impairment of assets, restructuring and other charges

| |  | 36 |  |  |  | 37 |  | 
| |  | -- |  |  |  | -- |  | 

---

Revenue by Product($ millions)For
the fourth quarter ended December 31

LOGO

Figure 12

Revenue by Business Group($ millions)For the fourth quarter ended December 31

LOGO

Figure 13

Segmented Results of Operations($ millions)Selected Performance
Indicators

|                                                                                    |  | NorthAmerica |         | Europe |   | LatinAmerica |   | Inter-Segmentand
      Others |       | Total |  
|----------------------------------------------------------------------------------- |  | ------------ | ------- | ------ | - | ------------ | - | ----------------------------- | ----- | ----- | -
|
|Three Months ended
      December 31                                                |  |              |         |        |   |              |   |                               |       |       |  
|Revenues                                                                            |  | $            | 1,354.9 |        | $ | 1,366.4      |   | $                             | 340.3 |       | $
|Operating income (loss) before depreciation
      and amortization and before IAROC |  |              | 145.7   |        |   | 208.1        |   |                               | 36.4  |       |  
|Operating income (loss) before
IAROC                                                |  |              | 72.7    |        |   | 138.2        |   |                               | 19.6  |       |  
|IAROC                                                                               |  |              | 18.0    |        |   | (9.0         | ) |                               | 1.3   |       |  
|Operating income (loss)                                                             |  |              | 54.7    |        |   | 147.2        |   |                               | 18.3  |       |  
|Operating margin before depreciation and
      amortization and before IAROC        |  |              | 10.8    | %      |   | 15.2         | % |                               | 10.7  | %     |  
|Operating margin before IAROC                                                       |  |              | 5.4     | %      |   | 10.1         | % |                               | 5.8   | %     |  
|Operating margin                                                                    |  |              | 4.0     | %      |   | 10.8         | % |                               | 5.4   | %     |  

Figure 14

38

---

Energy and
pollution control also continue to be the heart of the Company's commitment to
the environment. In addition to the expanded installation of regenerative
thermal oxidizers for the lithographic offset printing process, the Company is
now in the middle of upgrading and optimizing the solvent recovery systems used
to recover the solvent from the gravure printing process by means of activated
carbon. The recovered solvent is then reused in the printing process. The
upgrade and optimization program includes an exhaustive assessment of the
solvent recovery systems and implementation of improvement measures that will
allow the Company to have more reliable and efficient systems with additional
operating flexibility and standardization across the plants. Furthermore, it
will ensure lower energy consumption and strong compliance with regulatory air
emission requirements. Since 2002 and until the end of 2004, nearly
$10 million will have been invested in this program.

RECENT ACCOUNTING PRONOUNCEMENTS AND CHANGES IN ACCOUNTING
POLICIES

Significant
differences between Generally Accepted Accounting Principles (GAAP) in Canada
and the United States are presented in Note 22 to the
Consolidated Financial Statements. The Company generates more than 65% of its
revenues from the United States. In an effort to expand its investor base
in the United States, the Company has made efforts to follow new disclosure
guidelines and to harmonize disclosure based on accounting pronouncements in
both Canada and the United States.

In
December 2002, the CICA's Accounting Standards Board ("AcSB") revised
Handbook Section 3475, Disposal of Long-Lived Assets and Discontinued
Operations. The revised Section 3475 is applicable to disposal activities
initiated by an enterprise's commitment to plan on or after May 1, 2003.
Under this Section, new standards are established for the recognition,
measurement, presentation and disclosure of the disposal of long-lived assets.
New standards are also established for the presentation and disclosure of
discontinued operations. It applies to the disposal of non-monetary long-lived
assets, including property, plant and equipment, intangible assets with finite
useful lives and long-term prepaid assets. It requires an asset or group that
will be disposed of other than by sale to continue to be classified as "held and
used" until the disposal transaction occurs. Long-lived assets that meet the
criteria to be considered as held for sale, cease to be amortized. The Section
also provides specific guidance on balance sheet and income statement
presentation for a disposal group that is a component of an entity. The effect
of adopting the new recommendations did not have a significant impact on the
consolidated balance sheet and consolidated statement of income and retained
earnings and cash flows as at December 31, 2003 and for the period then
ended.

Effective
January 1, 2003, the Company changed its method of accounting for
stock-based compensation and decided to adopt the fair value based method of
accounting for all its stock-based compensation. The Company adopted these
changes using the prospective application transitional alternative. Accordingly,
the fair value based method is applied to awards granted, modified or settled on
or after January 1, 2003. Prior to the adoption of the fair value based
method, the Company, as permitted by Section 3870, had chosen to continue
its existing policy of recording no compensation cost on the grant of stock
options to employees. The effect of adopting the new recommendation is reflected
in note 2 (d) of the consolidated financial statements. In
February 2003, the Canadian Institute of Chartered Accountants ("CICA")
issued Accounting Guideline 14, Disclosure of Guarantees (AcG-14), which
clarifies disclosure requirements for certain guarantees. The Company adopted
the new recommendations effective January 1, 2003. The impact of that
change is presented in note 2 (a) of the consolidated financial
statements.

In
March 2003, the Emerging Issues Committee released Abstracts EIC-134,
Accounting for Severance and Termination Benefits ("EIC-134"), and EIC-135,
Accounting for Costs Associated with Exit and Disposal Activities (Including
Costs Incurred in a Restructuring) ("EIC-135"). EIC-134 provides interpretive
guidance to the accounting requirements for the various types of severance and
termination benefits covered in CICA Handbook Section 3461, Employee Future
Benefits. EIC-135 provides interpretive guidance for the timing of the
recognition of a liability for costs associated with an exit or disposal
activity. The new guidance requires that the liability be recognized for those
costs only when the liability is incurred, that is, when it meets the definition
of a liability in CICA Handbook Section 1000, Financial Statement Concepts.
These new EICs also establish fair value as the objective for initial
measurement of liabilities related to exit or disposal activities. Together,
these two EICs are intended to harmonize Canadian GAAP with US
SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activities ("FAS 146"). The Company adopted the new recommendations
effective April 1,2003. The Company adopted the new recommendations for its
2003 initiatives.

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 the Company's actual
results in future periods to differ materially from forecasted results. Those
risks include, among others, changes in customer demand for products, changes in
raw material and equipment costs and availability, seasonal changes in customer
orders, pricing actions by competitors and general changes in economic
conditions.

On behalf of Management,

/s/ Claude HélieExecutive Vice President andChief
Financial Officer

/s/ Carl GauvreauSenior Vice President andChief
Accounting Officer

Montreal, CanadaJanuary 30, 2004

39

---

Management's
Responsibility for Financial Statements

The accompanying consolidated financial statements of Quebecor
World Inc. and its subsidiaries are the responsibility of management and
are approved by the Board of Directors of Quebecor World Inc.

These financial statements have been prepared by management in
conformity with Canadian generally accepted accounting principles and include
amounts that are based on best estimates and judgments.

Management of the Company and of its subsidiaries, in
furtherance of the integrity and objectivity of data in the financial
statements, have developed and maintain systems of internal accounting controls
and support a program of internal audit. Management believes that the systems of
internal accounting controls provide reasonable assurance that financial records
are reliable and form a proper basis for the preparation of the financial
statements and that assets are properly accounted for and safeguarded.

The Board of Directors carries out its responsibility for the
financial statements principally through its Audit Committee, consisting solely
of outside directors. The Audit Committee reviews the Company's annual
consolidated financial statements and formulates the appropriate recommendations
to the Board of Directors. The auditors appointed by the shareholders have full
access to the Audit Committee, with and without management being present.

These financial statements have been examined by the auditors
appointed by the shareholders, KPMGLLP, chartered accountants, and their report is presented hereafter.

|/s/ The Right HonourableBrian
      MulroneyChairman of the Board |  | /s/ Claude HélieExecutive Vice President andChief Financial
    Officer |  | /s/ Carl GauvreauSenior Vice President andChief Accounting
  Officer
|----------------------------------------------------------------- |  | ----------------------------------------------------------------------- |  | --------------------------------------------------------------------

Montreal, CanadaJanuary 30, 2004

Auditors' Report to the Shareholders

We have audited the consolidated balance sheets of Quebecor
World Inc. and its subsidiaries as at December 31, 2003 and 2002 and
the consolidated statements of income, shareholders' equity and cash flows for
the years ended December 31, 2003, 2002 and 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with Canadian generally
accepted auditing standards. Those standards require that we plan and perform an
audit to obtain reasonable assurance 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.

In our opinion, these consolidated financial statements present
fairly, in all material respects, the financial position of the Company as at
December 31, 2003 and 2002 and the results of its operations and its cash
flows for the years ended December 31, 2003, 2002 and 2001 in accordance
with Canadian generally accepted accounting principles.

/s/ KPMGLLPChartered AccountantsMontreal, CanadaJanuary 30, 2004

40

---



CONSOLIDATED STATEMENTS OF
INCOME Years ended December 31(in millions of US dollars,
except per share amounts)

|                                                              |                                                             | Notes |   | 2003 |         | 2002    |   | 2001   
|------------------------------------------------------------- | ----------------------------------------------------------- | ----- | - | ---- | ------- | ------- | - | -------
|Revenues                                                      |                                                             |       |   | $    | 6,391.5 |         | $ | 6,271.7
|Operating expenses:                                           |                                                             |       |   |      |         |         |   |        
|                                                              | Cost of sales                                               |       |   |      |         | 5,188.8 |   |        
|                                                              | Selling, general and administrative                         |       |   |      |         | 536.4   |   |        
|                                                              | Depreciation and amortization                               |       |   |      |         | 335.9   |   |        
|                                                              | Impairment of assets, restructuring and other
      charges |       | 3 |      |         | 98.3    |   |        
|                                                              |                                                             |       |   |      |         |         |   |        
|                                                              |                                                             |       |   |      | 6,159.4 |         |   | 5,728.5
|                                                              |                                                             |       |   |      |         |         |   |        
|Operating income                                              |                                                             |       |   |      | 232.1   |         |   | 543.2  
|Financial expenses                                            |                                                             | 4     |   |      | 221.3   |         |   | 170.2  
|                                                              |                                                             |       |   |      |         |         |   |        
|Income before income taxes                                    |                                                             |       |   |      | 10.8    |         |   | 373.0  
|Income taxes                                                  |                                                             | 5     |   |      | 39.1    |         |   | 90.9   
|                                                              |                                                             |       |   |      |         |         |   |        
|Income (loss) before minority
interest                        |                                                             |       |   |      | (28.3   | )       |   | 282.1  
|Minority interest                                             |                                                             |       |   |      | 3.1     |         |   | 2.8    
|                                                              |                                                             |       |   |      |         |         |   |        
|Net income (loss) before goodwill
      amortization          |                                                             |       |   |      | (31.4   | )       |   | 279.3  
|Goodwill amortization, net of income
      taxes              |                                                             |       |   |      |        |         |   |       
|                                                              |                                                             |       |   |      |         |         |   |        
|Net income (loss)                                             |                                                             |       |   | $    | (31.4   | )       | $ | 279.3  
|Net income available to holders of
      preferred shares     |                                                             |       |   |      | 36.5    |         |   | 28.9   
|                                                              |                                                             |       |   |      |         |         |   |        
|Net income (loss) available to holders of
      equity shares |                                                             |       |   | $    | (67.9   | )       | $ | 250.4  
|                                                              |                                                             |       |   |      |         |         |   |        
|Earnings (loss) per share:                                    |                                                             | 6     |   |      |         |         |   |        
|                                                              | Basic                                                       |       |   |      | $       | (0.50   | ) | $      
|                                                              | Diluted                                                     |       |   |      | $       | (0.50   | ) | $      
|                                                              |                                                             |       |   |      |         |         |   |        
|Earnings (loss) per share before
      goodwill amortization: |                                                             |       |   |      |         |         |   |        
|                                                              | Basic                                                       |       |   |      | $       | (0.50   | ) | $      
|                                                              | Diluted                                                     |       |   |      | $       | (0.50   | ) | $      
|                                                              |                                                             |       |   |      |         |         |   |        
|Weighted average number of equity shares
      outstanding:   |                                                             | 6     |   |      |         |         |   |        
|(in millions)                                                 |                                                             |       |   |      |         |         |   |        
|                                                              | Basic                                                       |       |   |      |         | 136.0   |   |        
|                                                              | Diluted                                                     |       |   |      |         | 136.0   |   |        
|                                                              |                                                             |       |   |      |         |         |   |        

See Notes to Consolidated Financial Statements.

41

---

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Years ended December 31(in millions of
US dollars, except per share amounts and thousands of shares)

|                                                                                        |                                                                  |       |  | Equity Multiple Voting
      Shares |   | Equity Subordinate Voting
      Shares |       | First Preferred Shares
      Series 2, 3, 4 and 5 |         |   |   |         |   |        |         |   |       |        |  
|--------------------------------------------------------------------------------------- | ---------------------------------------------------------------- | ----- |  | ----------------------------------- | - | -------------------------------------- | ----- | ------------------------------------------------- | ------- | - | - | ------- | - | ------ | ------- | - | ----- | ------ | -
|
|Balance, December 31, 2000                                                              |                                                                  |       |  | 57,386                              |   | $                                      | 118.6 |                                                   | 88,753  |   | $ | 1,300.1 |   | 12,000 |         | $ | 212.5 |        | $
|Net income                                                                              |                                                                  |       |  |                                    |   |                                        |      |                                                   |        |   |   |        |   |       |         |   |      |        |  
|Translation adjustment                                                                  |                                                                  | 17    |  |                                    |   |                                        |      |                                                   |        |   |   |        |   |       |         |   |      |        |  
|Conversion of Equity Multiple Voting Shares
      into Equity Subordinate Voting Shares |                                                                  |       |  | (2,650                              | ) |                                        | (5.9  | )                                                 | 2,650   |   |   | 5.9     |   |       |         |   |      |        |  
|Shares repurchased                                                                      |                                                                  | 15    |  |                                    |   |                                        |      |                                                   | (6,732  | ) |   | (96.7   | ) |       |         |   |      |        |  
|Shares issued from stock plans                                                          |                                                                  | 16    |  |                                    |   |                                        |      |                                                   | 777     |   |   | 14.7    |   |       |         |   |      |        |  
|Issuance of First Preferred Shares
      Series 4                                       |                                                                  | 15    |  |                                    |   |                                        |      |                                                   |        |   |   |        |   | 8,000  |         |   | 130.2 |        |  
|Issuance of First Preferred Shares
      Series 5                                       |                                                                  | 15    |  |                                    |   |                                        |      |                                                   |        |   |   |        |   | 7,000  |         |   | 113.9 |        |  
|Share issue expenses (net of income taxes of
      $2.3)                                |                                                                  | 15    |  |                                    |   |                                        |      |                                                   |        |   |   |        |   |       |         |   |      |        |  
|Dividends on equity shares($0.46 per
      share)                                       |                                                                  |       |  |                                    |   |                                        |      |                                                   |        |   |   |        |   |       |         |   |      |        |  
|Dividends on preferred shares($0.68 (Cdn
      $1.06) per share)                        |                                                                  |       |  |                                    |   |                                        |      |                                                   |        |   |   |        |   |       |         |   |      |        |  
|                                                                                        |                                                                  |       |  |                                     |   |                                        |       |                                                   |         |   |   |         |   |        |         |   |       |        |  
|Balance, December 31, 2001                                                              |                                                                  |       |  | 54,736                              |   | $                                      | 112.7 |                                                   | 85,448  |   | $ | 1,224.0 |   | 27,000 |         | $ | 456.6 |        | $
|Net income                                                                              |                                                                  |       |  |                                    |   |                                        |      |                                                   |        |   |   |        |   |       |         |   |      |        |  
|Translation adjustment                                                                  |                                                                  | 17    |  |                                    |   |                                        |      |                                                   |        |   |   |        |   |       |         |   |      |        |  
|Conversion of Equity Multiple Voting Shares
      into Equity Subordinate Voting Shares |                                                                  |       |  | (7,749                              | ) |                                        | (19.2 | )                                                 | 7,749   |   |   | 19.2    |   |       |         |   |      |        |  
|Conversion of First Preferred Shares:                                                   |                                                                  | 15    |  |                                     |   |                                        |       |                                                   |         |   |   |         |   |        |         |   |       |        |  
|                                                                                        | Series 2                                                         |       |  |                                     |  |                                        |       |                                                  |         |  |   |         |  |        | (12,000 | ) |       | (212.5 | )
|                                                                                        | Series 3                                                         |       |  |                                     |  |                                        |       |                                                  |         |  |   |         |  |        | 12,000  |   |       | 212.5  |  
|Shares repurchased                                                                      |                                                                  | 15    |  |                                    |   |                                        |      |                                                   | (148    | ) |   | (2.1    | ) |       |         |   |      |        |  
|Shares issued from stock plans                                                          |                                                                  | 16    |  |                                    |   |                                        |      |                                                   | 1,109   |   |   | 22.7    |   |       |         |   |      |        |  
|Related party transactions                                                              |                                                                  | 20    |  |                                    |   |                                        |      |                                                   |        |   |   |        |   |       |         |   |      |        |  
|Dividends on equity shares($0.49 per
      share)                                       |                                                                  |       |  |                                    |   |                                        |      |                                                   |        |   |   |        |   |       |         |   |      |        |  
|Dividends on preferred shares($0.96(Cdn
      $1.50) per share)                         |                                                                  |       |  |                                    |   |                                        |      |                                                   |        |   |   |        |   |       |         |   |      |        |  
|                                                                                        |                                                                  |       |  |                                     |   |                                        |       |                                                   |         |   |   |         |   |        |         |   |       |        |  
|Balance, December 31, 2002                                                              |                                                                  |       |  | 46,987                              |   | $                                      | 93.5  |                                                   | 94,158  |   | $ | 1,263.8 |   | 27,000 |         | $ | 456.6 |        | $
|Net loss                                                                                |                                                                  |       |  |                                    |   |                                        |      |                                                   |        |   |   |        |   |       |         |   |      |        |  
|Reduction of a net investment in a foreign
      operation                              |                                                                  | 4     |  |                                    |   |                                        |      |                                                   |        |   |   |        |   |       |         |   |      |        |  
|Translation adjustment                                                                  |                                                                  | 17    |  |                                    |   |                                        |      |                                                   |        |   |   |        |   |       |         |   |      |        |  
|Shares repurchased                                                                      |                                                                  | 15    |  |                                    |   |                                        |      |                                                   | (10,000 | ) |   | (134.3  | ) |       |         |   |      |        |  
|Shares issued from stock plans                                                          |                                                                  | 16    |  |                                    |   |                                        |      |                                                   | 806     |   |   | 13.5    |   |       |         |   |      |        |  
|Related party transactions                                                              |                                                                  | 20    |  |                                    |   |                                        |      |                                                   |        |   |   |        |   |       |         |   |      |        |  
|Stock-based compensation                                                                |                                                                  | 2 (d) |  |                                    |   |                                        |      |                                                   |        |   |   |        |   |       |         |   |      |        |  
|Dividends on equity shares($0.52 per
      share)                                       |                                                                  |       |  |                                    |   |                                        |      |                                                   |        |   |   |        |   |       |         |   |      |        |  
|                                                                                        | Dividends on preferred shares($1.17 (Cdn
      $1.63) per share) |       |  |                                     |  |                                        |       |                                                  |         |  |   |         |  |        |        |   |       |       |  
|                                                                                        |                                                                  |       |  |                                     |   |                                        |       |                                                   |         |   |   |         |   |        |         |   |       |        |  
|Balance, December 31,
2003                                                              |                                                                  |       |  | 46,987                              |   | $                                      | 93.5  |                                                   | 84,964  |   | $ | 1,143.0 |   | 27,000 |         | $ | 456.6 |        | $
|                                                                                        |                                                                  |       |  |                                     |   |                                        |       |                                                   |         |   |   |         |   |        |         |   |       |        |  

See Notes to Consolidated Financial Statements.

| |  | 42 |  |  |  | 43 |  | 
| |  | -- |  |  |  | -- |  | 

---



CONSOLIDATED STATEMENTS OF CASH
FLOWS Years ended December 31(in millions of US dollars)

|                                                                   |                                                                                      | Notes                                                                             |         | 2003 |       | 2002   |        | 2001  |       
|------------------------------------------------------------------ | ------------------------------------------------------------------------------------ | --------------------------------------------------------------------------------- | ------- | ---- | ----- | ------ | ------ | ----- | ------
|Operating activities:                                              |                                                                                      |                                                                                   |         |      |       |        |        |       |       
|                                                                   | Net income (loss)                                                                    |                                                                                   |         |      | $     | (31.4  | )      | $     | 279.3 
|                                                                   | Non-cash items in net income
    (loss):                                             |                                                                                   |         |      |       |        |        |       |       
|                                                                   |                                                                                      | Depreciation of property, plant and
      equipment                               |         |      |       |        | 333.2  |       |       
|                                                                   |                                                                                      | Future income taxes                                                               |         | 5    |       |        | 15.1   |       |       
|                                                                   |                                                                                      | Amortization of goodwill and deferred
      charges                               |         |      |       |        | 26.2   |       |       
|                                                                   |                                                                                      | Impairment of assets and non-cash portion of
      restructuringand other charges |         | 3    |       |        | 60.4   |       |       
|                                                                   |                                                                                      | Gain on sale of investments                                                       |         |      |       |        |       |       |       
|                                                                   |                                                                                      | Loss on extinguishment of long
      term-debt                                    |         | 4    |       |        | 30.2   |       |       
|                                                                   |                                                                                      | Other                                                                             |         |      |       |        | 16.0   |       |       
|                                                                   | Changes in non-cash balances related to
      operations:                            |                                                                                   |         |      |       |        |        |       |       
|                                                                   |                                                                                      | Trade receivables                                                                 |         |      |       |        | 157.0  |       |       
|                                                                   |                                                                                      | Inventories                                                                       |         |      |       |        | 30.8   |       |       
|                                                                   |                                                                                      | Trade payables and accrued
    liabilities                                        |         |      |       |        | (121.4 | )     |       
|                                                                   |                                                                                      | Other current assets and
liabilities                                              |         |      |       |        | (56.3  | )     |       
|                                                                   |                                                                                      | Other non-current assets and
      liabilities                                    |         |      |       |        | 1.5    |       |       
|                                                                   |                                                                                      |                                                                                   |         |      |       |        |        |       |       
|                                                                   | Cash provided by operating activities                                                |                                                                                   |         |      |       | 461.3  |        |       | 513.4 
|Financing activities:                                              |                                                                                      |                                                                                   |         |      |       |        |        |       |       
|                                                                   | Net change in bank indebtedness                                                      |                                                                                   |         |      |       | 1.0    |        |       | 0.2   
|                                                                   | Net proceeds from issuance of equity
      shares                                    |                                                                                   | 15 & 16 |      |       | 13.5   |        |       | 22.7  
|                                                                   | Repurchases of shares for
cancellation                                               |                                                                                   | 15      |      |       | (173.6 | )      |       | (3.5  
|                                                                   | Net proceeds from issuance of preferred
      shares                                 |                                                                                   | 15      |      |       |       |        |       |      
|                                                                   | Issuance of long-term debt                                                           |                                                                                   | 12      |      |       | 592.0  |        |       |      
|                                                                   | Repayments of long-term debt                                                         |                                                                                   |         |      |       | (582.4 | )      |       | (96.9 
|                                                                   | Net (repayments) borrowings under revolving
      bank facility and commercial paper |                                                                                   |         |      |       | 108.9  |        |       | (283.6
|                                                                   | Dividends on equity shares                                                           |                                                                                   |         |      |       | (71.1  | )      |       | (69.0 
|                                                                   | Dividends on preferred shares                                                        |                                                                                   |         |      |       | (37.7  | )      |       | (36.2 
|                                                                   | Dividends to minority shareholders                                                   |                                                                                   |         |      |       | (0.4   | )      |       | (2.0  
|                                                                   | Other                                                                                |                                                                                   |         |      |       | 5.7    |        |       |      
|                                                                   |                                                                                      |                                                                                   |         |      |       |        |        |       |       
|                                                                   | Cash used in financing activities                                                    |                                                                                   |         |      |       | (144.1 | )      |       | (468.3
|Investing activities:                                              |                                                                                      |                                                                                   |         |      |       |        |        |       |       
|                                                                   | Business acquisitions, net of cash and cash
      equivalents                        |                                                                                   | 7       |      |       | (7.5   | )      |       | (0.3  
|                                                                   | Additions to property, plant and
      equipment                                     |                                                                                   |         |      |       | (243.1 | )      |       | (184.5
|                                                                   | Net proceeds from disposal of assets                                                 |                                                                                   |         |      |       | 2.8    |        |       | 27.1  
|                                                                   | Other                                                                                |                                                                                   |         |      |       | (0.8   | )      |       | 19.6  
|                                                                   |                                                                                      |                                                                                   |         |      |       |        |        |       |       
|                                                                   | Cash used in investing activities                                                    |                                                                                   |         |      |       | (248.6 | )      |       | (138.1
|Effect of exchange rate changes on cash and
      cash equivalents |                                                                                      |                                                                                   |         |      | (56.2 | )      |        | 10.2  |       
|                                                                   |                                                                                      |                                                                                   |         |      |       |        |        |       |       
|Net increase (decrease) in cash and cash
      equivalents         |                                                                                      |                                                                                   |         |      | 12.4  |        |        | (82.8 | )     
|Cash and cash equivalents, beginning of
      year                 |                                                                                      |                                                                                   |         |      | 2.7   |        |        | 85.5  |       
|                                                                   |                                                                                      |                                                                                   |         |      |       |        |        |       |       
|Cash and cash equivalents, end of
year                             |                                                                                      |                                                                                   |         | $    | 15.1  |        | $      | 2.7   |       
|                                                                   |                                                                                      |                                                                                   |         |      |       |        |        |       |       

See Notes to Consolidated Financial Statements.

44

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CONSOLIDATED BALANCE SHEETS
December 31(in millions of US dollars)

|                                                 |                                                               | Notes |         | 2003 |         | 2002    |  
|------------------------------------------------ | ------------------------------------------------------------- | ----- | ------- | ---- | ------- | ------- | -
|Assets                                           |                                                               |       |         |      |         |         |  
|Current assets:                                  |                                                               |       |         |      |         |         |  
|                                                 | Cash and cash equivalents                                     |       |         |      | $       | 15.1    |  
|                                                 | Trade receivables                                             |       | 8       |      |         | 346.9   |  
|                                                 | Receivables from related parties                              |       | 20      |      |         | 16.5    |  
|                                                 | Inventories                                                   |       | 9       |      |         | 400.1   |  
|                                                 | Income taxes receivable                                       |       |         |      |         | 6.2     |  
|                                                 | Future income taxes                                           |       | 5       |      |         | 105.8   |  
|                                                 | Prepaid expenses                                              |       |         |      |         | 17.4    |  
|                                                 |                                                               |       |         |      |         |         |  
|Total current assets                             |                                                               |       |         |      | 908.0   |         |  
|Property, plant and equipment,
net               |                                                               | 10    |         |      | 2,581.0 |         |  
|Goodwill                                         |                                                               | 11    |         |      | 2,591.0 |         |  
|Other assets                                     |                                                               |       |         |      | 133.8   |         |  
|                                                 |                                                               |       |         |      |         |         |  
|Total assets                                     |                                                               |       |         | $    | 6,213.8 |         | $
|                                                 |                                                               |       |         |      |         |         |  
|Liabilities and Shareholders'
      Equity       |                                                               |       |         |      |         |         |  
|Current liabilities:                             |                                                               |       |         |      |         |         |  
|                                                 | Bank indebtedness                                             |       |         |      | $       | 1.3     |  
|                                                 | Trade payables                                                |       |         |      |         | 455.7   |  
|                                                 | Accrued liabilities                                           |       |         |      |         | 552.5   |  
|                                                 | Payables to related parties                                   |       |         |      |         | 0.1     |  
|                                                 | Income and other taxes payable                                |       |         |      |         | 61.3    |  
|                                                 | Future income taxes                                           |       | 5       |      |         | 6.2     |  
|                                                 | Current portion of long-term debt and
      convertible notes |       | 12 & 14 |      |         | 23.9    |  
|                                                 |                                                               |       |         |      |         |         |  
|Total current liabilities                        |                                                               |       |         |      | 1,101.0 |         |  
|Long-term debt                                   |                                                               | 12    |         |      | 1,874.4 |         |  
|Other liabilities                                |                                                               | 13    |         |      | 194.5   |         |  
|Future income taxes                              |                                                               | 5     |         |      | 405.1   |         |  
|Convertible notes                                |                                                               | 14    |         |      | 110.7   |         |  
|Minority interest                                |                                                               |       |         |      | 24.7    |         |  
|Shareholders' equity:                            |                                                               |       |         |      |         |         |  
|                                                 | Capital stock                                                 |       | 15      |      |         | 1,693.1 |  
|                                                 | Additional paid-in capital                                    |       |         |      |         | 105.9   |  
|                                                 | Retained earnings                                             |       |         |      |         | 723.6   |  
|                                                 | Translation adjustment                                        |       | 17      |      |         | (19.2   | )
|                                                 |                                                               |       |         |      |         |         |  
|                                                 |                                                               |       |         |      | 2,503.4 |         |  
|                                                 |                                                               |       |         |      |         |         |  
|Total liabilities and shareholders'
      equity |                                                               |       |         | $    | 6,213.8 |         | $
|                                                 |                                                               |       |         |      |         |         |  

See Notes to Consolidated Financial
Statements.

On behalf of the Board:

|/s/ The Right Honourable Brian
      Mulroney, Director |  | /s/ Jean Neveu,
      Director
|------------------------------------------------------- |  | ------------------------------

45

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS Years ended December 31, 2003, 2002 and 2001(Tabular
amounts are expressed in millions of US dollars, except for earnings per share
and option amounts)

1.    SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

(a) Principles of consolidation

The consolidated financial statements include the accounts of
Quebecor World Inc. and all its subsidiaries (the "Company") and are
prepared in conformity with Canadian generally accepted accounting principles.

(b) Use of estimates

The preparation of financial statements in conformity with
Canadian generally accepted accounting principles 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. Financial results as determined by actual events
could differ from those estimates.

Examples of significant estimates include: the key economic
assumptions used in determining the allowance for doubtful accounts, the
provision for obsolescence and some of the amounts accrued for restructuring and
other charges; the composition of future income tax assets; the useful life of
capital assets; certain actuarial and economic assumptions used in determining
pension costs, accrued pension benefit obligations and pension plan assets; and
the assumptions used in property, plant and equipment and goodwill impairment
tests.

(c) Foreign currency translation

The Company's functional currency is the Canadian dollar and
uses the US currency as its reporting currency for the presentation of its
consolidated financial statements.

Financial statements of self-sustaining foreign operations are
translated using the rate in effect at the balance sheet date for asset and
liability items and the average exchange rates during the year for revenues and
expenses. Adjustments arising from this translation are deferred and recorded in
translation adjustment and are included in income only when a reduction in the
investment in these foreign operations is realized.

Other foreign currency transactions are translated using the
temporal method. Translation gains and losses are included in financial
expenses.

(d) Revenue recognition

The Company provides a wide variety of print and print-related
services and products to its customers, which usually require that the specifics
be agreed upon prior to process. Sales are recognized by the Company either when
the production process is completed or services are performed, or on the basis
of production and service activity at the pro rata billing value of work
completed.

(e) Cash and cash equivalents

Cash and cash equivalents consist of highly liquid investments
purchased three months or less from maturity and are stated at cost, which
approximates market value.

(f) Trade receivables

Any gains or losses on the sale of trade receivables are
calculated by comparing the carrying amount of the trade receivables sold to the
total of the cash proceeds on sale and the fair value of the retained interest
in such receivables on the date of transfer. Fair values are determined on a
discounted cash flow basis. Costs including losses on sales of trade receivables
are recognized in income in the period incurred and included in financial
expenses.

(g) Inventories

Raw materials and supplies are valued at the lower of cost, as
determined, using the first in, first out method, or market being replacement
cost. The work in process is valued at the pro rata billing value of the
work completed.

(h) Property, plant and equipment

Property, plant and equipment are stated at cost. Cost
represents acquisition or construction costs including preparation, installation
and testing charges and interest incurred with respect to property, plant and
equipment until they are ready for commercial production. Repair and maintenance
are expensed as incurred.

46

---

Depreciation is provided using the straight-line basis over the
estimated useful lives as follows:

|Assets                               |  | Estimateduseful lives
|------------------------------------ |  | ---------------------
|Buildings and leasehold
improvements |  | 15 to 40 years       
|Machinery and equipment              |  | 3 to
  18 years      

(i) Goodwill and intangible assets

Goodwill represents the excess of the purchase price over the
fair value of net assets of acquired businesses. Goodwill is not amortized and
is tested for impairment annually, or more frequently if events or changes in
circumstances indicate that the asset might be impaired. When the carrying
amount of a reporting unit's goodwill exceeds the implied fair value of the
goodwill, an impairment loss is recognized in an amount equal to the excess and
is presented as a separate line item in the income statement before
extraordinary items and discontinued operations.

Intangible assets which have indefinite lives, are not
amortized, and are tested for impairment annually, or more frequently if events
or changes in circumstances indicate that the asset might be impaired. The
impairment test compares the carrying amount of the intangible asset with its
fair value, and an impairment loss is recognized in income for the excess, if
any. Intangible assets with definite useful lives are amortized over their
useful life.

(j) Income taxes

The Company follows the asset and liability method of accounting
for income taxes. Under the asset and liability method, future income tax assets
and liabilities are recognized for the estimated future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Future income
tax assets and liabilities are measured using enacted or substantively enacted
tax rates in effect for the year in which those temporary differences are
expected to be recovered or settled. The effect on future income tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment, or substantively enactment, date. Future income tax
assets are recognized and if realization is not considered more likely than not,
a valuation allowance is provided.

(k) Derivative financial and commodity instruments

The Company uses various derivative financial instruments to
manage its exposure to fluctuations in foreign currency exchange rates, interest
rates and commodity pricing. The Company does not hold or use any derivative
instruments for speculative trading purposes.

The Company enters into foreign exchange forward contracts to
hedge anticipated foreign denominated sales and related receivables, raw
material and equipment purchases. Foreign exchange translation gains and losses
are recognized as an adjustment of the revenues, of the cost of goods sold and
of the fixed assets, respectively when the transaction is recorded. The portion
of the forward premium or discount on the contract relating to the period prior
to consummation of the transaction is also recognized as an adjustment of the
revenues, of the cost of goods sold and of the fixed assets, respectively when
the transaction is recorded.

The Company enters into foreign exchange forward contracts to
hedge its net investments in foreign subsidiaries. Foreign exchange translation
gains and losses are recorded under translation adjustment. Any realized or
unrealized gain or loss on such derivative instruments is also recognized in
translation adjustment.

The Company enters into foreign exchange forward contracts and
cross currency swaps to hedge foreign denominated asset exposures. Foreign
exchange translation gains and losses are recorded in income. Changes in the
spot rates on the derivative instruments are recorded in income. The forward
premium or discount on forward exchange contracts and the interest component of
the cross currency swap are amortized as an adjustment of interest expense over
the term of the contract.

47

---

The Company enters into interest rate swaps in order to manage
the impact of fluctuating interest rates on its short-term and long-term debt.
These swap agreements require the periodic exchange of payments without the
exchange of the notional principal amount on which the payments are based. The
Company designates its interest rate hedge agreements as hedges of the interest
cost of the underlying debt. Interest expense on the debt is adjusted to include
amounts payable or receivable under the interest rate swaps.

The Company uses Treasury Lock Agreements in order to manage the
impact of fluctuating interest rates on forecasted issuance of long-term debts.
The Company designates its Treasury Lock Agreements as hedges of the future
interest payments resulting from the issuance of long-term debts. The single
payment from the derivative instrument at its maturity date is deferred and
amortized over the term of the long-term debt.

The Company also entered into commodity swaps to manage a
portion of its natural gas exposure. The Company is committed to exchange, on a
monthly basis, the difference between a fixed price and a floating natural gas
price index. The Company designated its commodity hedge agreements as a hedge of
the natural gas cost. Natural gas cost is adjusted to include amounts payable or
receivable under the commodity hedge agreements.

Realized and unrealized gains or losses associated with
derivative instruments, which have been terminated or cease to be effective
prior to maturity, are deferred on the balance sheet and recognized in income in
the period in which the underlying hedged transaction is recognized. In the
event a designated hedged item is sold, extinguished or matures prior to the
termination of the related derivative instrument, any realized or unrealized
gain or loss on such derivative instrument is recognized in income.

(l) Employee future benefits

i) Pensions



ii) Other
postretirement benefits

The Company accrues the cost of postretirement benefits other
than pensions. These benefits, which are funded by the Company as they become
due, include life insurance programs and medical benefits. The Company amortizes
the cumulative unrecognized net actuarial gains and losses in excess of 10% of
the projected benefit obligation over the expected average remaining service
life of the employee group covered by the plans.

(m) Environmental expenditures

Environmental expenditures that relate to current operations are
expensed or capitalized as appropriate. Expenditures that relate to an existing
condition caused by past operations and which are not expected to contribute to
current or future operations are expensed. Liabilities are recorded when
environmental assessments and/or remedial efforts are likely, and when the
costs, based on a specific plan of action in terms of the technology to be used
and the extent of the corrective action required, can be reasonably estimated.

(n) Reclassifications

Certain reclassifications have been made to prior years' amounts
to conform with the basis of presentation adopted in the current year.

48

---

2.    ACCOUNTING CHANGES

The Company has made certain changes in accounting policies to
conform to new accounting standards.

(a) Guarantees

In February 2003, the Canadian Institute of Chartered
Accountants ("CICA") issued Accounting Guideline 14, Disclosure of Guarantees
(AcG-14), which clarifies disclosure requirements for certain guarantees. The
Company adopted the new recommendations effective January 1, 2003.

In the normal course of business, the Company enters into
numerous agreements that may contain features that meet the AcG-14 definition of
a guarantee. AcG-14 defines a guarantee to be a contract (including an
indemnity) that contingently requires the Company to make payments to a third
party based on (i) changes in an underlying that is related to an asset, a
liability or an equity of the guaranteed party, or (ii) failure of another
party to perform under an obligating agreement.

Significant guarantees the Company has provided to third parties
include the following:

Operating leases

The Company has guaranteed a portion of the residual values of
certain of its assets under operating leases with expiry dates between 2004 and
2007, for the benefit of the lessor. If the fair value of the assets, at the end
of their respective lease term, is less than the residual value guaranteed, then
the Company must, under certain conditions, compensate the lessor for a portion
of the shortfall. The maximum exposure in respect of these guarantees is
$112.2 million. As at December 31, 2003, the Company has recorded a
liability of $5.2 million associated with these guarantees.

Sub-lease agreements

The Company has, for some of its assets under operating leases,
entered into sub-lease agreements with expiry dates between 2004 and 2008. If
the sub-lessee defaults under the agreement, the Company must, under certain
conditions, compensate the lessor for the default. The maximum exposure in
respect of these guarantees is $4.1 million. As at December 31, 2003,
the Company has not recorded a liability associated with these guarantees, since
it is not probable that the sub-lessee will default under the agreement.
Recourse against the sub-lessee is also available, up to the total amount due.

Business and real estate disposals

In the sale of all or a part of a business or real estate, in
addition to possible indemnification relating to failure to perform covenants
and breach of representations and warranties, the Company may agree to indemnify
against claims from its past conduct of the business. Typically, the term and
amount of such indemnification will be limited by the agreement. The nature of
these indemnification agreements prevents the Company from estimating the
maximum potential liability that could be required to pay to guaranteed parties.
The Company has not accrued any amount in the Consolidated balance sheet in
respect to this item.

Debt agreements

Under the terms of certain debt agreements, the Company has
guaranteed the obligation of its US subsidiaries. In that context, the Company
would have to indemnify the other parties against changes in regulation relative
to withholding taxes, which would occur only if the Company must perform the
payments on behalf of its US subsidiaries. These indemnifications extend for the
term of the related financings and do not provide any limit on the maximum
potential liabilities. The nature of the indemnification agreements prevent the
Company from estimating the maximum potential liability it could be required to
pay. Within the current structure of the transactions, the Company is however
not exposed to such liabilities. As such, the Company has not accrued any amount
in the consolidated balance sheet in respect to this item.

(b) Disposal of long-lived assets and discontinued operations

In December 2002, the CICA's Accounting Standards Board
("AcSB") revised Handbook Section 3475, Disposal of Long-Lived Assets and
Discontinued Operations. The revised section 3475 is applicable to disposal
activities initiated by an enterprise's commitment to a plan on or after
May 1, 2003.

Under this section, new standards are established for the
recognition, measurement, presentation and disclosure of the disposal of
long-lived assets. New standards are also established for the presentation and
disclosure of discontinued operations. It applies to the disposal of
non-monetary long-lived assets, including property, plant and equipment,
intangible assets with definite useful lives and long-term prepaid assets. It
requires an asset or group that will be disposed of other than by sale to
continue to be classified as "held and used" until the disposal transaction
occurs. Long-lived assets that meet the criterias to be considered as held for
sale cease to be amortized. The Section also provides specific guidance on
balance sheet and income statement presentation for a disposal group that is a
component of an entity. The effect of adopting the new recommendations did not
have a significant impact on the consolidated balance sheet and consolidated
statement of income and retained earnings and cash flows as at December 31,
2003 and for the period then ended.

(c) Termination benefits and cost associated with exit and
disposal activities

In March 2003, the Emerging Issues Committee released
Abstracts EIC-134, Accounting for Severance and Termination Benefits
("EIC-134"), and EIC-135, Accounting for Costs Associated with Exit and Disposal
Activities (Including Costs Incurred in a Restructuring) ("EIC-135"). EIC-134
provides interpretive guidance to the accounting requirements for the various
types of severance and termination benefits covered in CICA Handbook
Section 3461, Employee Future Benefits. EIC-135 provides interpretive
guidance for the timing of the recognition of a liability for costs associated
with an exit or disposal activity. The new guidance requires that the liability
be recognized for those costs only when the liability is incurred, that is, when
it meets the definition of a liability in CICA Handbook Section 1000,
Financial Statement Concepts. These new EICs also establish fair value as the
objective for initial measurement of liabilities related to exit or disposal of
activities. Together, these two EICs and revised section 3475 are intended
to harmonize Canadian GAAP with US SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal of Activities ("FAS 146"). The Company
adopted the new recommendations effective April 1, 2003.

49

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(d) Stock-based compensation

Effective January 1, 2003, the Company changed its method
of accounting for stock-based compensation and decided to adopt the fair value
based method of accounting for all its stock-based compensation. The Company
adopted these changes using the prospective application transitional
alternative. Accordingly, the fair value based method is applied to awards
granted, modified or settled on or after January 1, 2003. Prior to the
adoption of the fair value based method, the Company, as permitted by
Section 3870, had chosen to continue its existing policy of recording no
compensation cost on the grant of stock options to employees.

The compensation cost charged against income for those plans was
$1.9 million for the year ended December 31, 2003. The counterpart has
been recorded as additional paid-in capital.

The compensation cost was calculated using the Black-Scholes
option pricing model with the following assumptions:

|Weighted-average grant date fair value of
      options |                         | $5.74
|------------------------------------------------------- | ----------------------- | -----
|Assumptions:                                            |                         |      
|                                                        | Risk-free interest rate |      
|                                                        | Dividend yield          |      
|                                                        | Expected volatility     |      
|                                                        | Expected life           |      

When employees exercise their stock options, the capital stock
is credited by the sum of the consideration paid by employees together with the
related portion previously credited to additional paid-in capital when
compensation costs were charged against income. The prospective method omits the
effects of awards granted, modified or settled before January 1, 2003.

As in prior year, for the employee share plans, the Company's
contribution on the employee's behalf is recognized as a compensation expense.
Any consideration paid by employees on purchase of stock is recorded as an
increase to capital stock.

3.    IMPAIRMENT OF ASSETS, RESTRUCTURING
AND OTHER CHARGES

In 2003, the Company recorded an impairment of assets,
restructuring and other charges of $98.3 million. Non-cash items amounted
to $60.4 million and cash items to $37.9 million. The non-cash portion
included an impairment of assets of $54.4 million and other charges of
$2.8 million for the 2003 initiatives and $3.2 million related to
previous years' initiatives.

Impairment of assets

During 2003, the Company reviewed the status of assets that had
become permanently idle following the prior years' restructuring initiatives and
difficult economic conditions. The Company determined that these assets would
not be redeployed as it had originally contemplated under an economic recovery
scenario or would not generate sufficient cash flow, and as such, recorded an
impairment of assets of $54.4 million, of which $47.4 million in the
second quarter and $7.0 million in the fourth quarter.

Restructuring initiatives

During the fourth quarter of 2003, the Company continued its
restructuring initiatives and recorded net restructuring charges of
$21.5 million. The charges include $15.8 million, consisting of new
initiatives of $16.1 million net of a reversal of $0.3 million related
to second quarter and third quarter initiatives, $7.0 million for
impairment of assets and a reversal of $1.3 million related to 2001-2002
initiatives. The cash charge of $16.1 million is related to a reduction in
workforce of 878 employee positions, of which $12.8 million was for North
America, $1.9 million for Europe and $1.4 million for Latin America.
Under these initiatives, 393 employee positions have been eliminated and 485
will be eliminated in the first quarter of 2004.

In the third quarter of 2003, the Company initiated new
restructuring initiatives. A net cash reversal of $0.3 million was
recorded. This was composed of two items: a reversal of $2.2 million of
which $1.9 million was for Europe and $0.3 million was for Latin
America and a charge of $1.9 million for workforce reduction, of which
$1.4 million was for North America and $0.5 million for Latin America.
Under these initiatives 260 employee positions are being eliminated. The
reversal of provision of $2.2 million was recorded after the Company
completed most of its June initiatives and re-evaluated the remaining costs.

In the second quarter of 2003, the Company initiated
restructuring initiatives and other charges following the continued volume
declines in certain business segments. A cash charge of $23.4 million was
taken consisting of $17.6 million in workforce reduction and
$5.8 million of additional closure costs of four smaller facilities. The
amount of $17.6 million in workforce reduction included $5.8 million
for Europe and $10.0 million for North America. Related to this, an asset
write-down of $2.8 million was also recorded. Under these initiatives,
1,134 employee positions are being eliminated.

In summary, as of December 31, 2003, 1,769 employee
positions have been eliminated under the 2003 restructuring initiatives and 503
will be completed in 2004. The workforce reductions affected both plants and
corporate levels.

50

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2002 and 2001 restructuring initiatives

In 2003, the review and the execution of the 2002 and 2001
initiatives resulted in a net reversal of $1.0 million comprised of a cash
overspending of $12.9 million and a $13.9 million reversal of prior
year restructuring and other charges. The cash overspending is related to costs
of closed facilities not yet disposed of, and office leases not yet subleased
and other completed initiatives. Under these initiatives, 3,961 employee
positions were eliminated as at December 31, 2003 and 23 will be eliminated
in 2004, of which 18 terminations in Europe to be completed when all legal
procedures and requirements are met.

In addition, during the second quarter of 2003, the Company also
recorded an asset write-down of $3.2 million in relation with 2001 and 2002
initiatives.

In 2002, the Company reported restructuring and other charges of
$19.6 million. The charges are detailed as follows and discussed below:

 2002 initiatives amounted to $46.4 million, while overspending
on 2001 initiatives stood at $13.3 million for total costs of
$59.7 million.

 The reversal of unused reserves for restructuring from 2001
amounted to $40.1 million and was applied against the 2002 charges.

In 2001, the Company recorded restructuring and other charges of
$270.0 million, net of a $3.2 million reversal from the 2000
initiatives.

2002 restructuring initiatives

In 2002, the Company initiated new restructuring initiatives in
France due to difficult market conditions, severe price competition and a
decrease in sales volume. In addition, reduction in force programs were
initiated in North America and mostly completed in 2003. This initiative to
reduce headcount was the result of volume declines in certain business segments
and overlapping activities across the platform.

The charges of $46.4 million consisted of
$6.5 million, relating to impaired property, plant and equipment,
$30.0 million in workforce reduction costs and other restructuring charges,
and $9.9 million mostly for the write-down of the investment in Q-Media
Services Corporation, which went into receivership at the end of 2002. The
$30 million in workforce reduction costs and other restructuring charges
included $18.6 million for France and $8.6 million for
North America.

2001 restructuring initiatives

As at December 31, 2002, the restructuring initiatives
announced in 2001 were substantially completed. Nearly 3,000 employees'
positions were eliminated, 10 facilities closed and more than
30 pieces of equipment were successfully relocated.

The continuation of a contract with a customer, previously
expected to be terminated, provided sufficient work to utilize equipment
originally targeted for shutdown. As a result, the Company decided to stop one
plant shutdown which mainly explained the balance of the 2001 restructuring
reserve reversed in 2002 of $40.1 million which consisted of
$18.4 million of asset impairments and $21.7 million for related
charges. In addition, the execution of the 2001 initiatives resulted in an
overspending of $13.3 million recorded in the 2002 restructuring and other
charges.

In 2001, in response to difficult market conditions, the Company
had committed itself to restructuring initiatives aimed at eliminating
non-competitive assets and consolidating its platform into fewer facilities.
These initiatives focused the Company's efforts on reducing operating expenses
and maximizing capacity utilization in larger and more specialized facilities.

Therefore, the Company recorded restructuring and other charges
of $273.2 million. The restructuring plan consisted of $114.0 million
relating primarily to impaired property, plant and equipment as a result of
planned facility closures, together with other associated closure costs,
$115.5 million in workforce reduction costs resulting from planned closures
and other headcount reductions and other restructuring charges, and
$43.7 million of other related restructuring and exit costs.

The other special charges of $43.7 million included an
additional charge of $13.1 million relating to an increase in costs
associated with implementing the 1999 restructuring plan, to the costs of
exiting unfavourable contracts, and the write-down of investments to their
expected realizable value.

Continuity of the reserve for restructuring and other charges

As at January 1, 2003, the balance of the restructuring
reserve was $51.2 million. This amount related mostly to the workforce
reduction across the platform. The Company utilized $46.3 million of the
current and prior year's restructuring and other charges reserves during the
twelve-month period ended December 31, 2003.

The following table sets forth the Company's 2003 restructuring
reserve and activities against the reserves carried forward from 2002:

|(in millions of US
      dollars)         |  | Restructuring
charges |       | Other charges |   | Total |  
|----------------------------------------- |  | --------------------- | ----- | ------------- | - | ----- | -
|Balance as at December 31,
2002           |  | $                     | 50.0  |               | $ | 1.2   |  
|Overspending of 2001-2002
    initiatives |  |                       | 11.1  |               |   | 1.8   |  
|Reversal of previous years'
reserves      |  |                       | (13.9 | )             |   |      |  
|New initiatives in 2003                   |  |                       | 37.2  |               |   | 1.7   |  
|                                          |  |                       |       |               |   |       |  
|                                          |  |                       | 34.4  |               |   | 3.5   |  
|Reserve utilized in 2003                  |  |                       | (42.8 | )             |   | (3.5  | )
|Foreign currency changes                  |  |                       | 3.0   |               |   |      |  
|                                          |  |                       |       |               |   |       |  
|Balance as at December 31,
      2003     |  | $                     | 44.6  |               | $ | 1.2   |  
|                                          |  |                       |       |               |   |       |  

Breakdown of the 2003 restructuring and other charges by quarter

|(in millions of US
      dollars) |  | Overspending
      2001 - 2002 Initiatives |      | Reversal Previous years'
      reserves |   | New Initiatives in
      2003 |   | Total |     
|--------------------------------- |  | ------------------------------------------ | ---- | --------------------------------------- | - | ----------------------------- | - | ----- | ----
|Second Quarter                    |  | $                                          | 9.6  |                                         | $ | (4.6                          | ) | $     | 23.4
|Third Quarter                     |  |                                            | 1.1  |                                         |   | (5.8                          | ) |       | (0.3
|Fourth Quarter                    |  |                                            | 2.2  |                                         |   | (3.5                          | ) |       | 15.8
|                                  |  |                                            |      |                                         |   |                               |   |       |     
|                                  |  | $                                          | 12.9 |                                         | $ | (13.9                         | ) | $     | 38.9
|                                  |  |                                            |      |                                         |   |                               |   |       |     

The utilization of the reserve is estimated to be as follows:

|(in millions of US
      dollars) |  | Workforce reduction
      costs |      | Leases, closed facilities
      carrying costs and other |   | Total
|--------------------------------- |  | ------------------------------- | ---- | -------------------------------------------------------- | - | -----
|2004                              |  | $                               | 22.0 |                                                          | $ | 10.6 
|2005                              |  |                                 |     |                                                          |   | 5.3  
|2006                              |  |                                 |     |                                                          |   | 3.3  
|2007                              |  |                                 |     |                                                          |   | 2.3  
|2008                              |  |                                 |     |                                                          |   | 1.4  
|2009 and thereafter               |  |                                 |     |                                                          |   | 0.9  
|                                  |  |                                 |      |                                                          |   |      
|                                  |  | $                               | 22.0 |                                                          | $ | 23.8 
|                                  |  |                                 |      |                                                          |   |      

51

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4.    FINANCIAL EXPENSES

|                                                                              |  | 2003 |       | 2002 |   | 2001  |  
|----------------------------------------------------------------------------- |  | ---- | ----- | ---- | - | ----- | -
|Interest on long-term debt and convertible
      notes                        |  | $    | 151.8 |      | $ | 146.1 |  
|Interest on short-term debt                                                   |  |      | 9.0   |      |   | 5.6   |  
|Securitization fees of trade
      receivables                                |  |      | 14.5  |      |   | 15.6  |  
|Amortization of deferred financing
      costs                                |  |      | 3.6   |      |   | 3.5   |  
|Exchange losses (gains)                                                       |  |      | 9.2   |      |   | 3.4   |  
|Exchange loss from reduction of a net
      investment in a foreign operation |  |      | 5.3   |      |   |      |  
|Loss on extinguishment of long-term
      debt                                |  |      | 30.2  |      |   |      |  
|                                                                              |  |      |       |      |   |       |  
|                                                                              |  |      | 223.6 |      |   | 174.2 |  
|Interest capitalized to the cost of
      equipment                           |  |      | (2.3  | )    |   | (4.0  | )
|                                                                              |  |      |       |      |   |       |  
|                                                                              |  | $    | 221.3 |      | $ | 170.2 |  
|                                                                              |  |      |       |      |   |       |  
|Cash interest payments                                                        |  | $    | 175.2 |      | $ | 165.1 |  
|                                                                              |  |      |       |      |   |       |  

In 2003, the Company has repurchased 89.6% of the
$300 million aggregate principal amount of the 7.75% senior notes pursuant
to a tender offer. The Company has also exercised its option to redeem all
$257.6 million aggregate principal amount of the 8.375% senior notes. These
extinguishments of long-term debt resulted in a loss of $30.2 million
consisting of premium paid, write-off of discounts and deferred costs related to
those transactions.

5.     INCOME TAXES

The domestic and foreign components of income before income
taxes are as follows:

|         |  | 2003 |       | 2002 |   | 2001 
|-------- |  | ---- | ----- | ---- | - | -----
|Domestic |  | $    | (11.8 | )    | $ | 5.1  
|Foreign  |  |      | 22.6  |      |   | 367.9
|         |  |      |       |      |   |      
|         |  | $    | 10.8  |      | $ | 373.0
|         |  |      |       |      |   |      

Total income tax expense was allocated as follows:

|                      |                               | 2003 |      | 2002 |   | 2001 |    
|--------------------- | ----------------------------- | ---- | ---- | ---- | - | ---- | ---
|Income taxes          |                               | $    | 39.1 |      | $ | 90.9 |    
|Goodwill amortization |                               |      |     |      |   |     |    
|Shareholders' equity: |                               |      |      |      |   |      |    
|                      | Share issue expenses          |      |      |     |   |      |   
|                      | Dividends on preferred shares |      |      | 5.3  |   |      | 3.0
|                      |                               |      |      |      |   |      |    
|                      |                               | $    | 44.4 |      | $ | 93.9 |    
|                      |                               |      |      |      |   |      |    

Income tax expense (recovery) attributable to income consists
of:

|         |          | 2003 |      | 2002  |   | 2001 |      
|-------- | -------- | ---- | ---- | ----- | - | ---- | -----
|Current: |          |      |      |       |   |      |      
|         | Domestic |      | $    | 8.2   |   | $    | 3.1  
|         | Foreign  |      |      | 15.8  |   |      | 31.1 
|         |          |      |      |       |   |      |      
|         |          |      | 24.0 |       |   | 34.2 |      
|Future:  |          |      |      |       |   |      |      
|         | Domestic |      |      | (12.6 | ) |      | (17.2
|         | Foreign  |      |      | 27.7  |   |      | 73.9 
|         |          |      |      |       |   |      |      
|         |          |      | 15.1 |       |   | 56.7 |      
|         |          |      |      |       |   |      |      
|         |          | $    | 39.1 |       | $ | 90.9 |      
|         |          |      |      |       |   |      |      

52

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The following table reconciles the difference between the
domestic statutory tax rate and the effective tax rate used by the Company in
the determination of net income:

|                                         |                                                                       | 2003 |        | 2002  |   | 2001  |     
|---------------------------------------- | --------------------------------------------------------------------- | ---- | ------ | ----- | - | ----- | ----
|Domestic statutory tax rate              |                                                                       |      | 35.1   | %     |   | 37.2  | %   
|Effect of foreign tax rate
differences   |                                                                       |      | (389.1 | )     |   | (14.0 | )   
|                                         |                                                                       |      |        |       |   |       |     
|International rates                      |                                                                       |      | (354.0 | )     |   | 23.2  |     
|Increase (reduction) resulting
    from: |                                                                       |      |        |       |   |       |     
|                                         | Change in valuation allowance                                         |      |        | 455.9 |   |       | 1.8 
|                                         | Permanent differences                                                 |      |        | (30.1 | ) |       | (4.7
|                                         | Change in average tax rates on cumulative
      temporary differences |      |        | 258.8 |   |       |    
|                                         | Large corporation and American state
      taxes                      |      |        | 34.6  |   |       | 1.5 
|                                         | Other                                                                 |      |        | (3.8  | ) |       | 2.6 
|                                         |                                                                       |      |        |       |   |       |     
|Effective tax rate                       |                                                                       |      | 361.4  | %     |   | 24.4  | %   
|                                         |                                                                       |      |        |       |   |       |     
|Income taxes paid (received)             |                                                                       | $    | 22.2   |       | $ | (3.6  | )   
|                                         |                                                                       |      |        |       |   |       |     

The tax effects of significant items comprising the Company's
net future tax liability are as follows:

|                             |                                                                 | 2003 |        | 2002   |  
|---------------------------- | --------------------------------------------------------------- | ---- | ------ | ------ | -
|Future tax assets:           |                                                                 |      |        |        |  
|                             | Operating loss carryforwards                                    |      | $      | 271.6  |  
|                             | Tax credit carryforwards                                        |      |        | 25.4   |  
|                             | Trade receivables                                               |      |        | 18.7   |  
|                             | Acquisition and restructuring
    reserves                      |      |        | 29.7   |  
|                             | Pension, postretirement and workers
      compensation benefits |      |        | 47.9   |  
|                             | Accrued compensation                                            |      |        | 23.3   |  
|                             | Other                                                           |      |        | 99.3   |  
|                             |                                                                 |      |        |        |  
|Gross future tax assets      |                                                                 |      | 515.9  |        |  
|                             |                                                                 |      |        |        |  
|Future tax liabilities:      |                                                                 |      |        |        |  
|                             | Property, plant and equipment                                   |      |        | (457.2 | )
|                             | Inventories                                                     |      |        | (44.3  | )
|                             | Capital leases                                                  |      |        | (37.7  | )
|                             | Goodwill and other assets                                       |      |        | (36.7  | )
|                             | Other                                                           |      |        | (121.5 | )
|                             |                                                                 |      |        |        |  
|Gross future tax liabilities |                                                                 |      | (697.4 | )      |  
|                             |                                                                 |      |        |        |  
|Valuation allowance          |                                                                 |      | (124.0 | )      |  
|                             |                                                                 |      |        |        |  
|Net future tax liability     |                                                                 |      | (305.5 | )      |  
|Less current portion of:     |                                                                 |      |        |        |  
|                             | Future tax assets                                               |      |        | 105.8  |  
|                             | Future tax liabilities                                          |      |        | (6.2   | )
|                             |                                                                 |      |        |        |  
|Future tax liability         |                                                                 | $    | (405.1 | )      | $
|                             |                                                                 |      |        |        |  

The 2003 and 2002 amounts above include a valuation allowance of
$124.0 million and $55.9 million respectively, relating to loss
carryforwards and other tax benefits available. The valuation allowance for
future tax assets as of January 1, 2002 was $47.3 million. The net
change in the total valuation allowance for the years ended December 31,
2003 and 2002 were explained by $49.4 million and $6.8 million
respectively, allocated to income from operations.

53

---

Subsequent recognition of the tax benefits relating to the
valuation allowance for future tax assets as of December 31, 2003 will be
allocated as follows:

|Income tax benefit will be reported: |                                             |   |      
|------------------------------------ | ------------------------------------------- | - | -----
|                                     | In the consolidated statement of
    income |   | $    
|                                     | As a reduction of goodwill                  |   |      
|                                     |                                             |  
|                                     |                                             | $ | 124.0
|                                     |                                             |  

At December 31, 2003, the Company had net operating loss
carryforwards for income tax purposes available to reduce future taxable income
of $115.4 million, expiring from 2004 to 2018, and $381.5 million
which can be carried forward indefinitely. The Company also has state net
operating losses and tax credits of $189.9 million in the
United States, which expire from 2005 to 2023 and federal alternative
minimum tax credits of $14.6 million in the United States which can be
carried forward indefinitely.

The Company has not recognized a future tax liability for the
undistributed earnings of its subsidiaries in the current and prior years
because the Company does not expect those unremitted earnings to reverse and
become taxable to the Company in the foreseeable future. A future income taxes
will be recognized when the Company expects that it will recover those
undistributed earnings in a taxable manner, such as through receipt of dividends
or sale of the investments. Such liability is not reasonably determinable at the
present time.

6.    EARNINGS (LOSS) PER SHARE

Basic earnings per share are calculated by dividing net income
available to holders of equity shares by the weighted average number of equity
shares outstanding during the year. Net income available to holders of equity
shares is computed by subtracting dividends on the preferred shares from net
income. Diluted earnings per share are calculated by using the weighted average
number of equity shares outstanding adjusted to include potentially the dilutive
effect of convertible notes and stock options.

The following table sets forth the computation of basic and
diluted earnings per share:

|                                                                                              |         | 2003 |       | 2002  |   | 2001 
|--------------------------------------------------------------------------------------------- | ------- | ---- | ----- | ----- | - | -----
|Net income (loss) available to holders of
      equity shares                                 |         | $    | (67.9 | )     | $ | 250.4
|Income impact on assumed conversion of
      convertible notes,net of applicable income taxes |         |      |      |       |   | 4.8  
|                                                                                              |         |      |       |       |   |      
|Net income (loss) adjusted for dilution
      effect                                          |         | $    | (67.9 | )     | $ | 255.2
|                                                                                              |         |      |       |       |   |      
|(In millions)                                                                                 |         |      |       |       |   |      
|Weighted average number of equity shares
      outstanding                                    |         |      | 136.0 |       |   | 140.7
|Effect of dilutive convertible notes and
      stock options                                  |         |      |      |       |   | 4.7  
|                                                                                              |         |      |       |       |   |      
|Weighted average number of diluted equity
      shares outstanding                            |         |      | 136.0 |       |   | 145.4
|                                                                                              |         |      |       |       |   |      
|Earnings (loss) per share:                                                                    |         |      |       |       |   |      
|                                                                                              | Basic   |      | $     | (0.50 | ) | $    
|                                                                                              | Diluted |      | $     | (0.50 | ) | $    
|                                                                                              |         |      |       |       |   |      

In 2003, diluted net loss available to holders of equity shares
does not include the effects of the convertible notes and stock options as the
effect of their inclusion was anti-dilutive. In 2001, diluted net income
available to holders of equity shares does not include the effects of the
convertible notes as the effect of their inclusion was anti-dilutive.

7.    BUSINESS ACQUISITIONS AND DISPOSALS

Acquisitions

During the years ended December 31, 2003, 2002 and 2001,
the Company acquired the following businesses, which have been accounted for by
the purchase method, and earnings are included in the consolidated statements of
income since the date of acquisition.

2003

In March 2003, the Company acquired minority interests in
its Spanish operations for a cash consideration of $3.1 million, of which
$2.2 million has been recorded in goodwill.

54

---

In May 2003, the Company also acquired minority interests
in its North American operations for a cash consideration of $4.4 million,
of which $3.0 million has been recorded in goodwill.

2002

In March 2002, the Company purchased all of the issued and
outstanding shares of European Graphic Group S.A. ("E2G"), a subsidiary of
Hachette Filipacchi Medias in France, for a cash consideration of
$3.3 million. The purchase price will be adjusted by contingent
considerations of a maximum of 6.1 million Euro ($7.6 million), based
on achieving a specific performance level, and will be payable in 2004 and 2007.
The contingent considerations, if any, will be recorded as an increase of the
fixed assets. E2G owns printing and bindery facilities in France and Belgium and
a 50% ownership of Bayard Hachette Routage in France. No goodwill resulted from
this acquisition. The allocation purchase price process was completed as at
March 31, 2003 and the effect of these adjustments did not have a
significant impact on the consolidated financial statements.

During the year, the Company also acquired minority interests in
North America and Europe for a cash consideration of $4.5 million for which
$1.3 million was recorded in goodwill.

2001

In February 2001, the Company acquired a 70% controlling
interest in Espacio Y Punto, in Spain, for a cash consideration of
$8.2 million.

In March 2001, the Company acquired a 75% controlling
interest in Grafica Melhoramentos, in Brazil, for a cash consideration of
$3.3 million.

In March 2001, the Company also acquired minority interests
in its Latin American operations for a cash consideration of $15.0 million,
a convertible subordinated debenture of $6.0 million and a promissory note
of $2.0 million.

In July 2001, the Company acquired all of the issued and
outstanding shares of Retail Printing Corporation, in Massachusetts,
United States, to expand its North American retail network for a cash
consideration of $97.6 million.

In August 2001, the Company purchased the manufacturing
assets of Grupo Serla, in Mexico, for a cash consideration of
$13.0 million.

During the year, the Company also completed other business
acquisitions complementary to its operations for a cash consideration of
$1.8 million.

Goodwill recognized in those transactions amounted to
$98.7 million and was assigned to the North America, Europe and Latin
America segments in the amounts of $85.7 million, $8.4 million and
$4.6 million, respectively.

Net assets acquired at fair value:

|                     |                                                                          | 2003 |     | 2002 |   | 2001
|-------------------- | ------------------------------------------------------------------------ | ---- | --- | ---- | - | ----
|Assets acquired:     |                                                                          |      |     |      |   |     
|                     | Cash and cash equivalents                                                |      | $   |     |   | $   
|                     | Non-cash operating working capital                                       |      |     |     |   |     
|                     | Property, plant and equipment                                            |      |     |     |   |     
|                     | Goodwill                                                                 |      |     | 5.2  |   |     
|                     | Other assets                                                             |      |     |     |   |     
|                     | Minority interest                                                        |      |     | 2.3  |   |     
|Liabilities assumed: |                                                                          |      |     |      |   |     
|                     | Bank indebtedness                                                        |      |     |     |   |     
|                     | Long-term debt                                                           |      |     |     |   |     
|                     | Other liabilities                                                        |      |     |     |   |     
|                     | Future income taxes                                                      |      |     |     |   |     
|                     | Minority interest                                                        |      |     |     |   |     
|                     |                                                                          |      |     |      |   |     
|Net assets acquired  |                                                                          | $    | 7.5 |      | $ | 7.8 
|                     |                                                                          |      |     |      |   |     
|Consideration:       |                                                                          |      |     |      |   |     
|                     | Cash                                                                     |      | $   | 7.5  |   | $   
|                     | Issuance of convertible subordinated
      debenture and promissory note |      |     |     |   |     
|                     |                                                                          |      |     |      |   |     
|                     |                                                                          | $    | 7.5 |      | $ | 7.8 
|                     |                                                                          |      |     |      |   |     

55

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8. TRADE
RECEIVABLES

Asset securitization

In March 2003, the Company renewed its 1998 agreement to
sell, with limited recourse, a portion of its Canadian trade receivables on a
revolving basis (the "Canadian Program"). The Canadian Program limit has been
increased to Cdn $135.0 million from Cdn $125.0 million. As at
December 31, 2003, the amount outstanding under the Canadian Program was
Cdn $132.0 million ($101.0 million) (Cdn $125.0 million
($79.7 million) as at December 31, 2002).

In 2003, the Company sold, with limited recourse, a portion of
its US trade receivables on a revolving basis under the terms of a US
securitization agreement dated December 1999 (the "US Program"). The US
Program limit is $510.0 million. As at December 31, 2003, the amount
outstanding under the US Program was $488.0 million
($435.0 million as at December 31, 2002).

In 2003, the Company also sold, with limited recourse, a portion
of its French and Spanish trade receivables on a revolving basis under the terms
of a European securitization agreement dated June 2001 (the "European
Program"). The European Program limit is 153.0 million Euro
($190.7 million). As at December 31, 2003, the amount outstanding
under the European Program was 142.5 million Euro ($177.6 million)
(129.5 million Euro ($135.0 million) as at December 31, 2002).

The Company has retained the responsibility for servicing,
administering and collecting trade receivables sold. No servicing asset or
liability has been recorded, since the fees the Company receives for servicing
the receivables approximate the related costs.

At December 31, 2003, an aggregate of $902.2 million
($747.2 million as at December 31, 2002) of accounts receivable have
been sold under the three programs, of which $135.6 million
($97.5 million as at December 31, 2002) were kept by the Company as a
retained interest, resulting in a net aggregate consideration of
$766.6 million ($649.7 million as at December 31, 2002) on the
sale. The retained interest is recorded in the Company's accounts receivable,
and its fair market value approximates its cost, given the short nature of the
collection period of the accounts receivable sold. The rights of the Company to
the retained interest are subordinated to the rights of the investors under the
programs. There is no recourse under the programs to the Company's other assets
for failure of debtors to pay when due, other than the retained interest of the
Company.

Securitization fees vary based on commercial paper rates in
Canada, the United States and Europe and, generally, provide a lower
effective funding cost than available under the Company's bank facilities.

Proceeds from revolving sales between the securitization trusts
and the Company in 2003 totaled $4.7 billion ($4.5 billion in 2002).

9. INVENTORIES

|                           |  | 2003 |       | 2002
|-------------------------- |  | ---- | ----- | ----
|Raw materials and supplies |  | $    | 241.1 |     
|Work in process            |  |      | 159.0 |     
|                           |  |      |       |     
|                           |  | $    | 400.1 |     
|                           |  |      |       |     

56

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10. PROPERTY, PLANT AND EQUIPMENT

|                  |                                      | Cost |         | Accumulateddepreciation |   | Net bookvalue
|----------------- | ------------------------------------ | ---- | ------- | ----------------------- | - | -------------
|December 31, 2003 |                                      |      |         |                         |   |              
|                  | Land                                 |      | $       | 88.5                    |   | $            
|                  | Buildings and leasehold
improvements |      |         | 834.8                   |   |              
|                  | Machinery and equipment              |      |         | 3,766.8                 |   |              
|                  | Projects under development           |      |         | 35.9                    |   |              
|                  |                                      |      |         |                         |   |              
|                  |                                      | $    | 4,726.0 |                         | $ | 2,145.0      
|                  |                                      |      |         |                         |   |              
|December 31, 2002 |                                      |      |         |                         |   |              
|                  | Land                                 |      | $       | 83.4                    |   | $            
|                  | Buildings and leasehold
improvements |      |         | 783.7                   |   |              
|                  | Machinery and equipment              |      |         | 3,433.6                 |   |              
|                  | Projects under development           |      |         | 87.9                    |   |              
|                  |                                      |      |         |                         |   |              
|                  |                                      | $    | 4,388.6 |                         | $ | 1,778.0      
|                  |                                      |      |         |                         |   |              

As at December 31, 2003, the cost of property, plant and
equipment and the corresponding accumulated depreciation balance included
amounts of $386.6 million ($355.0 million as at December 31,
2002) and $233.3 million ($189.3 million as at December 31, 2002)
respectively, for the assets held under capital leases. Depreciation expenses of
property, plant and equipment held under capital leases amounted to
$17.6 million in 2003 ($19.4 million in 2002 and $17.5 million in
2001).

11. GOODWILL

The changes in the carrying amount of goodwill for the year
ended December 31, 2003 are as follows:

|                                      |  | NorthAmerica |         | Europe |   | LatinAmerica |  | Total
|------------------------------------- |  | ------------ | ------- | ------ | - | ------------ |  | -----
|Balance as at December 31,
2002       |  | $            | 2,182.3 |        | $ | 324.8        |  | $    
|Goodwill acquired                     |  |              | 3.0     |        |   | 2.2          |  |      
|Foreign currency changes              |  |              | 6.9     |        |   | 64.1         |  |      
|                                      |  |              |         |        |   |              |  |      
|Balance as at December 31,
      2003 |  | $            | 2,192.2 |        | $ | 391.1        |  | $    
|                                      |  |              |         |        |   |              |  |      

12. LONG-TERM DEBT

|                                         |  | Maturity   |  | 2003 |         | 2002
|---------------------------------------- |  | ---------- |  | ---- | ------- | ----
|Revolving bank facility $1.0 B (a)       |  | 2004-2006  |  | $    | 279.3   |     
|Senior notes 4.875% and 6.125%
      (b) |  | 2008, 2013 |  |      | 596.8   |     
|Senior notes 8.42% and 8.52%
      (c)   |  | 2010, 2012 |  |      | 250.0   |     
|Senior notes 7.20% (d)                   |  | 2006       |  |      | 250.0   |     
|Senior debentures 7.25% (e)              |  | 2007       |  |      | 150.0   |     
|Senior debentures 6.50% (f)              |  | 2027       |  |      | 150.0   |     
|Senior notes 8.54% and 8.69%
      (g)   |  | 2015, 2020 |  |      | 121.0   |     
|Senior notes 7.75% (h)                   |  | 2009       |  |      | 30.7    |     
|Senior notes 8.375% (i)                  |  | 2008       |  |      |        |     
|Commercial paper (j)                     |  | 2004-2006  |  |      | 0.3     |     
|Other debts and capital leases (k)       |  | 2004-2016  |  |      | 64.2    |     
|                                         |  |            |  |      |         |     
|                                         |  |            |  |      | 1,892.3 |     
|Less current portion                     |  |            |  |      | 17.9    |     
|                                         |  |            |  |      |         |     
|                                         |  |            |  | $    | 1,874.4 |     
|                                         |  |            |  |      |         |     

57

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(a)    In April 2003, the Company
extended for an additional year its existing revolving bank facility.
Subsequently, in November 2003, the Company restructured the facility. The
new facility is comprised of three tranches. The first tranche of
$250.0 million matures in 2004, while the second tranche of
$250.0 million and the third tranche of $500.0 million mature in 2006.
All three tranches can be extended on a yearly basis. The facility contains
certain restrictions, including the obligation to maintain certain financial
ratios. The facility can be used for general corporate purposes and as liquidity
back-up for the Company's commercial paper program. The Company paid fees for
the unused portion of $1.0 million in 2003 ($1.0 million in 2002).

The revolving bank facility bears interest at variable rates
based on LIBOR or Bankers' Acceptances rates. At December 31, 2003, the
drawings under this facility are denominated in Canadian and US dollars and bear
interest at 3.53% and 1.92% respectively.

(b)    In November 2003, the Company
issued senior notes for a principal amount of $600.0 million comprised of
two tranches. The first tranche of $200.0 million matures on
November 15, 2008 and was issued at a discount, for a net proceed of
$199.8 million. The second tranche of $400.0 million matures on
November 15, 2013 and was issued at a discount, for a net proceed of
$397.0 million. Issuance costs of $4.8 million have been paid on that
transaction.

(c)    In July 2000, the Company issued
senior notes for a principal amount of $250.0 million comprised of two
tranches. The first tranche of $175.0 million matures on July 15,
2010, while the second tranche of $75.0 million matures on July 15,
2012. These notes contain certain restrictions which are generally less
restrictive than those of the revolving bank facility.

(d)    In March 2001, the Company
issued senior notes for a principal amount of $250.0 million maturing in
March 2006. A portion of $33.0 million of the notes bears a floating
interest rate, but has been swapped to fixed at the same rate as the coupon on
the fixed rate portion (see Note 18 (c)). These notes contain certain
restrictions which are generally less restrictive than those of the revolving
bank facility.

(e)    The senior debentures mature on
January 15, 2007.

(f)    The senior debentures mature on
August 1, 2027 and are redeemable at the option of the holder at their par
value on August 1, 2004.

(g)    In September 2000, the Company
issued senior notes for a principal amount of $121.0 million comprised of
two tranches. The first tranche of $91.0 million matures on
September 15, 2015 and the second tranche of $30.0 million matures on
September 15, 2020. These notes contain certain restrictions which are
generally less restrictive than those of the revolving bank facility.

(h)    In November 2003, following a
tender offer at a premium for 100% of the face value of $300.0 million, the
Company repurchased 89.6% of the notes or $268.7 million. The aggregate
principal amount of the notes, as at December 31, 2003, is
$31.3 million ($300.0 million as at December 31, 2002). The
remaining senior notes mature on February 15, 2009 and are redeemable at
the option of the Company at a decreasing premium between February 2004 and
February 2007, and thereafter at par value until their final maturity. The
notes were issued by World Color Press ("WCP") and revalued in order to reflect
their fair value at the time WCP was acquired based on the Company's borrowing
rate for similar financial instruments. In August 2001, the Company
obtained the consent from the noteholders to generally conform the restrictions
on the notes with the Company's other senior public debentures. At the same
time, the notes which were senior subordinated notes became senior notes.

(i)    In December 2003, the Company
exercised its option to redeem all of these senior notes at a premium. The notes
were issued by WCP for an original aggregate principal of $300.0 million.
They were subsequently revalued in order to reflect their fair value at the time
WCP was acquired, based on the Company's borrowing rate for similar financial
instruments. During 2000, the Company repurchased in the open market
$42.4 million face value thereof. The aggregate principal amount of the
notes, as at December 31, 2002 was $257.6 million.

(j)    At December 31, 2003, Cdn
$0.4 million ($0.3 million) (Cdn $156.4 million
($99.6 million) as at December 31, 2002) of notes in Canadian dollars
were outstanding under the Commercial paper program bearing interest at 3.00%.
No notes in dollars ($2.3 million as at December 31, 2002) were
outstanding at December 31, 2003. The program limit is $350.0 million.
At December 31, 2003, the Commercial paper program was classified as
long-term, since the Company has the ability and the intent to maintain such
debt on a long-term basis and has long-term bank facilities available (see
(a) above) to replace such debt, if necessary.

(k)    Other debts and capital leases are
partially secured by assets. An amount of $29.6 million ($37.6 million
as at December 31, 2002) is denominated in Euro, no debts or capital leases
is denominated in British pounds ($18.9 million as at December 31,
2002), an amount of $4.2 million ($4.9 million as at December 31,
2002) in Swedish krona and an amount of $1.9 million ($1.0 million as
at December 31, 2002) in Canadian dollars. At December 31, 2003, these
debts and capital leases bear interest at rates ranging from 0.00% to 10.21%.

The Company was in compliance with all significant debt
covenants at December 31, 2003.

58

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Principal repayments on long-term debt are as follows:

|2004                |  | $ | 17.9 
|------------------- |  | - | -----
|2005                |  |   | 11.2 
|2006                |  |   | 538.4
|2007                |  |   | 153.9
|2008                |  |   | 204.7
|2009 and thereafter |  |   | 966.2

13. OTHER LIABILITIES

|                                               |  | 2003 |       | 2002
|---------------------------------------------- |  | ---- | ----- | ----
|Postretirement benefits                        |  | $    | 66.5  |     
|Pension liability                              |  |      | 42.5  |     
|Workers' compensation accrual                  |  |      | 18.1  |     
|Reserve for environmental matters              |  |      | 16.2  |     
|Reserve for unfavourable leases
      acquired |  |      | 5.4   |     
|Other                                          |  |      | 45.8  |     
|                                               |  |      |       |     
|                                               |  | $    | 194.5 |     
|                                               |  |      |       |     

14. CONVERTIBLE NOTES

|                                                      |  | Maturity |  | 2003 |       | 2002
|----------------------------------------------------- |  | -------- |  | ---- | ----- | ----
|Convertible senior subordinated
      notes 6.00% (a) |  | 2007     |  | $    | 110.7 |     
|Convertible subordinated debentures 7.00%
      (b)   |  | 2004     |  |      | 6.0   |     
|                                                      |  |          |  |      |       |     
|                                                      |  |          |  |      | 116.7 |     
|Less current portion                                  |  |          |  |      | 6.0   |     
|                                                      |  |          |  |      |       |     
|                                                      |  |          |  | $    | 110.7 |     
|                                                      |  |          |  |      |       |     

(a)    The convertible senior subordinated
notes mature on October 1, 2007. The notes were issued by WCP and revalued
in order to reflect their fair value at the time WCP was acquired based on the
Company's borrowing rate for similar financial instruments. The equity component
of the notes, which corresponds to the option of the holder to convert the notes
into equity shares of the Company, was valued at the date of acquisition and
classified as additionnal paid-in capital. Since the acquisition of WCP by the
Company, each $1,000 tranche is convertible into 30.5884 Subordinate Voting
Shares of the Company which corresponds to a price of $26.24 per share and
$197.25 in cash. The notes are convertible at the option of the holder at any
time, and redeemable at the option of the Company at a decreasing premium from
October 2002 to the final maturity. Pursuant to the terms of the
convertible notes, the Company repurchased $7.6 million of the notes in
1999 following a tender offer at par for 100% of the face value of
$151.8 million. The Company subsequently repurchased notes in the open
market in 2000 for the principal amount of $24.7 million thereof. The
aggregate principal amount of the notes, as at December 31, 2003, was
$119.5 million ($119.5 million as at December 31, 2002). The
number of equity shares to be issued upon conversion of the convertible notes
would be 3,656,201.

(b)    In March 2001, a subsidiary of
the Company issued convertible subordinated debentures maturing in
May 2004. These debentures are convertible in subordinate voting shares of
the Company at a conversion price of $25.00 per share. The debentures are not
redeemable prior to maturity. The number of equity shares to be issued upon
conversion of the debentures would be 240,000.

59

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15. CAPITAL STOCK

(a) Authorized capital stock

| |  | Equity shares:                                                                                                                                                                                             
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Multiple Voting Shares, authorized in an
      unlimited number, without par value, carrying ten votes per share,
      convertible at any time into Subordinate Voting Shares on a one-to-one
      basis.
| |  | Subordinate Voting Shares, authorized in
      an unlimited number, without par value, carrying one vote per
    share.                                                                                    

Preferred shares, authorized in an unlimited number, without par
value, issuable in series; the number of preferred shares in each series and the
related characteristics, rights and privileges are to be determined by the Board
of Directors prior to each issue.

The Series 2 Cumulative Redeemable First Preferred Shares
were entitled to a fixed cumulative preferential cash dividend of Cdn $1.25 per
share per annum, payable quarterly from March 1, 1998 to November 30,
2002, if declared. Since then, the annual dividend represents a floating
adjustable cumulative preferential cash dividend based on prime rate and payable
on a monthly basis, if declared. These preferred shares are redeemable in whole
but not in part, at the Company's option, since December 1, 2002, at Cdn
$25.50 per share. On December 1, 2002, and at every 5th anniversary
thereafter, these preferred shares may be converted into Series 3
Cumulative Redeemable First Preferred Shares under certain conditions.

The Series 3 Cumulative Redeemable First Preferred Shares
are entitled to a fixed cumulative preferential cash dividend of Cdn $1.5380 per
share per annum, payable quaterly from December 1, 2002 to
November 30, 2007. Thereafter, a new fixed cumulative preferential cash
dividend will be set by the Company for another five-year period. On
December 1, 2007, and at every 5th anniversary thereafter, these preferred
shares may be converted into Series 2 Cumulative Redeemable First Preferred
Shares under certain conditions.

The Series 4 Cumulative Redeemable First Preferred Shares
are entitled to a fixed cumulative preferential cash dividend of Cdn $1.6875 per
share per annum, payable quarterly, if declared. On and after March 15,
2006, these preferred shares are redeemable at the option of the Company at Cdn
$25.00, or with regulatory approval, the preferred shares may be converted into
equity shares by the Company. On and after June 15, 2006, these preferred
shares may be converted at the option of the holder into equity shares, subject
to the right of the Company prior to the conversion date to redeem for cash or
find substitute purchasers for such preferred shares.

The Series 5 Cumulative Redeemable First Preferred Shares
are entitled to a fixed cumulative preferential cash dividend of Cdn $1.725 per
share per annum, payable quarterly, if declared. On and after December 1,
2007, these preferred shares are redeemable at the option of the Company at Cdn
$25.00, or with regulatory approval, the preferred shares may be converted into
equity shares by the Company. On and after March 1, 2008, these preferred
shares may be converted at the option of the holder into equity shares, subject
to the right of the Company prior to the conversion date to redeem for cash or
find substitute purchasers for such preferred shares.

Each series of Preferred Shares ranks on a parity with every
other series of Preferred Shares.

(b) Issued and outstanding Redeemable First Preferred Shares

In December 2002, the holders of the Series 2
Cumulative Redeemable First Preferred Shares elected to convert more than
11,000,000 preferred shares into Series 3 Cumulative Redeemable First
Preferred Shares. Consequently, in accordance with the Articles of the Company
for these preferred shares, all remaining Series 2 Cumulative Redeemable
First Preferred Shares were automatically converted into Series 3
Cumulative Redeemable First Preferred Shares.

In February 2001, the Company issued 8,000,000
Series 4 Cumulative Redeemable First Preferred Shares for a cash
consideration of Cdn $200.0 million ($130.2 million) before share
issue expenses of Cdn $4.8 million ($3.1 million) recorded as a
reduction of retained earnings.

In August 2001, the Company issued 7,000,000 Series 5
Cumulative Redeemable First Preferred Shares for a cash consideration of Cdn
$175.0 million ($113.9 million) before share issue expenses of Cdn
$5.7 million ($3.7 million) recorded as a reduction of retained
earnings.

60

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(c) Share repurchase

In June 2003, the Company repurchased for cancellation a
total of 10,000,000 Subordinate Voting Shares pursuant to its Substantial Issuer
Bid dated April 24, 2003 for a net cash consideration, including redemption
fees, of Cdn $241.1 million ($173.6 million). The Substantial Issuer
Bid expired at midnight (Montreal time) on the evening of June 2, 2003. The
excess of the price paid over the book value of the shares repurchased,
amounting to $39.3 million, was charged to retained earnings.

In 2001, the Company initiated a normal course issuer bid for a
maximum of 8,800,000 Subordinate Voting Shares over the period from
April 6, 2001 to April 5, 2002. During 2002, under this normal course
issuer bid program, the Company repurchased for cancellation 148,500 Subordinate
Voting Shares for a net cash consideration of Cdn $5.2 million
($3.5 million). As at December 31, 2001, the Company repurchased for
cancellation 3,543,700 Subordinate Voting Shares for a net cash consideration of
Cdn $143.8 million ($98.2 million).

In 2000, the Company initiated a normal course issuer bid for a
maximum of 8,000,000 Subordinate Voting Shares over the period from
April 6, 2000 to April 5, 2001. During 2001, under this normal course
issuer bid program, the Company had repurchased for cancellation 3,188,492
Subordinate Voting Shares for a net cash consideration of Cdn
$114.9 million ($79.2 million). As at December 31, 2000, the
Company had repurchased for cancellation 1,751,508 Subordinate Voting Shares for
a net cash consideration of Cdn $59.2 million ($41.6 million).

16. STOCK-BASED COMPENSATION PLANS

(a) Employee share plans

The Employee Stock Purchase Plan gives eligible employees in the
United States the opportunity to acquire shares of the Company's capital
stock for up to 4% of their gross salaries and to have the Company contribute,
on the employees' behalf, a further amount equal to 17.5% of the total amount
invested by the employee. The number of shares that may be issued and sold under
the plan is limited to 2,000,000 Subordinate Voting Shares, subject to
adjustments in the event of stock dividends, stock splits and similar events. At
December 31, 2003, 6,559 employees (6,199 as at December 31, 2002 and
6,372 as at December 2001) were participating in the plan. The total number
of plan shares issued on behalf of employees, including the Company's
contribution, was 600,310 in 2003, (468,267 in 2002 and 270,843 in 2001) which
represents compensation expenses amounting to $1.9 million in 2003
($1.6 million in 2002 and $1.0 million in 2001).

The Employee Share Investment Plan gives eligible employees in
Canada the opportunity to subscribe for up to 4% of their gross salaries to
purchase shares of the Company's capital stock and to have the Company invest,
on the employee's behalf, a further 20% of the amount invested by the employee.
The number of shares that may be issued and sold under this plan is limited to
3,000,000 Subordinate Voting Shares, subject to adjustments in the event of
stock dividends, stock splits and similar events. At December 31, 2003,
2,281 employees (2,249 at December 31, 2002 and 2,072 at
December 2001) were participating in the plan. The total number of shares
issued on behalf of employees, including the Company's contribution, was 179,189
in 2003, (117,162 in 2002 and 120,494 in 2001), which represents compensation
expenses amounting to $0.6 million in 2003 ($0.4 million in 2002 and
$0.4 million in 2001).

(b) Stock option plans

Under stock option plans, a total of 7,575,159 Subordinate
Voting Shares have been reserved for plan participants. As of December 31,
2003, the number of Subordinate Voting Shares related to the stock options
outstanding was 3,699,061. The subscription price was usually equal to the share
market price at the date the options were granted. The options vest over either
four or five years. The options may be exercised during a period not exceeding
ten years from the date they have been granted.

The number of stock options outstanding fluctuated as follows:

|                                 |  | 2003      |   | 2002 |       | 2001
|-------------------------------- |  | --------- | - | ---- | ----- | ----
|
|Balance, beginning of year       |  | 3,525,376 |   | $    | 20.42 |     
|Issued                           |  | 916,911   |   |      | 22.54 |     
|Exercised                        |  | (27,346   | ) |      | 13.93 |     
|Cancelled                        |  | (715,880  | ) |      | 23.01 |     
|                                 |  |           |   |      |       |     
|Balance, end of year             |  | 3,699,061 |   | $    | 22.52 |     
|                                 |  |           |   |      |       |     
|Options exercisable, end of year |  | 1,939,486 |   | $    | 22.21 |     
|                                 |  |           |   |      |       |     

61

---

The following table summarizes information about stock options
outstanding and exercisable at December 31, 2003:

|          |  | Options outstanding |  | Options exercisable
|--------- |  | ------------------- |  | -------------------
|
|$11 - $15 |  | 72,671              |  | 0.71               
|$15 - $18 |  | 362,080             |  | 5.87               
|$18 - $21 |  | 564,636             |  | 4.27               
|$21 - $24 |  | 1,468,180           |  | 7.13               
|$24 - $29 |  | 1,231,494           |  | 6.34               
|          |  |                     |  |                    
|          |  | 3,699,061           |  | 6.27               
|          |  |                     |  |                    

Prior to January 1, 2003, the Company used the settlement
based method for its stock-based compensation plans. Had compensation cost been
determined using the fair value based method at the date of grant for awards
granted in 2002 under all plans, the Company's pro forma net income (loss),
earnings (loss) per share and diluted earnings (loss) per share would have been
as presented in the table below.

|                                         |         | 2003 |       | 2002 
|---------------------------------------- | ------- | ---- | ----- | -----
|Pro forma net income (loss)              |         | $    | (31.8 | )    
|Pro forma earnings (loss) per
    share: |         |      |       |      
|                                         | Basic   |      | $     | (0.50
|                                         | Diluted |      | $     | (0.50
|                                         |         |      |       |      

The pro forma disclosure omits the effect of awards granted
before January 1, 2002. These pro forma amounts include a compensation
cost calculated using the Black-Scholes option pricing model with the following
assumptions.

|Weighted-average grant date fair value of
      options |                         | $4.86
|------------------------------------------------------- | ----------------------- | -----
|Assumptions:                                            |                         |      
|                                                        | Risk-free interest rate |      
|                                                        | Dividend yield          |      
|                                                        | Expected volatility     |      
|                                                        | Expected life           |      

(c) Deferred Stock Unit Plan

The deferred stock unit plan ("DSU plan") is for the benefit of
the Company's directors. Under the DSU plan, a portion of each director's
compensation package is received in the form of units. The value of a unit is
based on the weighted average trading price of the Subordinate Voting Shares.
Subject to certain limitations, the units will be redeemed by the Company when
the director ceases to be a DSU participant. For the purpose of redeeming units,
the value of a unit shall correspond to the fair market value of a Subordinate
Voting Share on the date of redemption.

As of December 31, 2003, the number of units outstanding
under this plan was 83,972 (31,260 in 2002), which represents compensation
expenses amounting to $0.9 million in 2003 ($0.7 million in 2002).

17. TRANSLATION ADJUSTMENT

The change in the translation adjustment included in
shareholders' equity is the result of the fluctuation of the exchange rates on
translation of net assets of self-sustaining foreign operations, exchange gains
or losses on intercompany account balances that form part of the net investments
and foreign exchange gains or losses related to derivative financial instruments
used to hedge the net investments.

62

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18.
FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK

(a) Fair value of financial instruments

The carrying values of cash and cash equivalents, trade
receivables, receivables from related parties, bank indebtedness, trade payables
and accrued liabilities approximate their fair values because of the short-term
nature of these items.

The following table summarizes the book value and fair value at
December 31, 2003 and 2002 of those financial instruments having a fair
value different from their book value as at December 31. The fair values of
the financial liabilities are estimated based on discounted cash flows using
year-end market yields of similar instruments having the same maturity. The fair
values of the derivative financial instruments are estimated using year-end
market rates, and reflect the amount that the Company would receive or pay if
the instruments were closed out at these dates.

|                                                     |                                    | 2003 |   | 2002     |  
|---------------------------------------------------- | ---------------------------------- | ---- | - | -------- | -
|
|Financial liabilities                                |                                    |      |   |          |  
|                                                     | Long-term debt(1)                  |      | $ | (1,892.3 | )
|                                                     | Convertible notes(1)               |      |   | (116.7   | )
|Derivative financial instruments (Gain
      (loss)) |                                    |      |   |          |  
|                                                     | Interest rate swap agreements      |      |   |         |  
|                                                     | Foreign exchange forward contracts |      |   | 42.6     |  
|                                                     | Cross currency interest rate swaps |      |   | (47.2    | )
|                                                     | Commodity swaps                    |      |   |         |  

---

(b) Foreign exchange risk management

The Company enters into foreign exchange forward contracts and
cross-currency swaps to set the exchange rate for foreign denominated sales and
related receivables and to manage its foreign exchange exposure on net
investments and foreign denominated assets. The amounts of outstanding contracts
at year-end, presented by currency, are included in the tables below:

|           |                       | 2003 |       | 2002 
|---------- | --------------------- | ---- | ----- | -----
|
|$/ Cdn $   |                       |      |       |      
|           | Less than 1 year      |      | $     | 129.1
|           | Between 1 and 3 years |      |       | 261.7
|           | Between 3 and 5 years |      |       | 133.9
|Euro / $   |                       |      |       |      
|           | Less than 1 year      |      |       | 94.0 
|SEK / $    |                       |      |       |      
|           | Less than 1 year      |      |       | 15.7 
|GBP / Euro |                       |      |       |      
|           | Less than 1 year      |      |       | 19.4 
|           | Between 1 and 3 years |      |       | 1.4  
|Other      |                       |      |       |      
|           | Less than 1 year      |      |       | 17.7 
|           | Between 1 and 3 years |      |       | 0.5  
|           |                       |      |       |      
|           |                       | $    | 673.4 |      
|           |                       |      |       |      

---

63

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|         |                       | 2003 |       | 2002
|-------- | --------------------- | ---- | ----- | ----
|
|Euro / $ |                       |      |       |     
|         | Less than 1 year      |      | $     | 98.3
|         | Between 1 and 3 years |      |       | 91.9
|SEK / $  |                       |      |       |     
|         | Less than 1 year      |      |       | 21.5
|         | Between 1 and 2 years |      |       |    
|         |                       |      |       |     
|         |                       | $    | 211.7 |     
|         |                       |      |       |     

---

(c) Interest rate risk management

The Company has entered into interest rate swaps to manage its
interest rate exposure. The Company is committed to exchange, at specific
intervals, the difference between the fixed and floating interest rate
calculated by reference to the notional amounts.

The amounts of outstanding contracts at December 31, 2003
are included in the table below:

|Maturity   |  | Notional amount |      | Pay/Receive |                                      | Fixed Rate |       | Floating Rate
|---------- |  | --------------- | ---- | ----------- | ------------------------------------ | ---------- | ----- | -------------
|March 2006 |  | $               | 33.0 |             | Company pays fixed/receives
floating |            | 7.20% |              

The amounts of outstanding contracts at December 31, 2002
are included in the table below:

|Maturity         |  | Notional amount |       | Pay/Receive |                                      | Fixed Rate |              | Floating Rate
|---------------- |  | --------------- | ----- | ----------- | ------------------------------------ | ---------- | ------------ | -------------
|Less than 1 year |  | $               | 550.0 |             | Company pays fixed/receives
floating |            | 1.67 - 5.30% |              
|March 2006       |  | $               | 33.0  |             | Company pays fixed/receives
floating |            | 7.20%        |              

(d) Commodity risk

The Company has entered into commodity swap agreements to manage
a portion of its North American natural gas exposure. The Company is committed
to exchange, on a monthly basis, the difference between a fixed price and a
floating natural gas price index calculated by reference to the notional
amounts.

The amounts of outstanding contracts at year-end are included in
the table below:

|                    |                  | 2003 |     | 2002
|------------------- | ---------------- | ---- | --- | ----
|
|Canada / Gigajoules |                  |      |     |     
|                    | Less than 1 year |      | 0.3 |     
|US / MMBTU          |                  |      |     |     
|                    | Less than 1 year |      | 2.2 |     

---

64

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(e) Credit risk

The Company is exposed to credit losses resulting from defaults
by counterparties when using financial instruments.

When the Company enters into derivative financial instruments,
the counterparties are international and Canadian banks having a minimum credit
rating of A- by Standard & Poor's or of A3 by Moody's and are subject
to concentration limits. The Company does not foresee any failure by the
counterparties in meeting their obligations.

The Company, in the normal course of business, continuously
monitors the financial condition of its customers and reviews the credit history
of each new customer. At December 31, 2003, no customer balance represents
a significant portion of the Company's consolidated trade receivables. The
Company establishes an allowance for doubtful accounts that corresponds to the
specific credit risk of its customers, historical trends and other information
on the state of the economy.

The Company believes that the product and geographic diversity
of its customer base is instrumental in reducing its credit risk, as well as the
impact on the Company of fluctuations in local market or product-line demand.
The Company has long-term contracts with most of its largest customers. These
contracts usually include price adjustment clauses based on the cost of paper,
ink and labor. The Company does not believe that it is exposed to an unusual
level of customer credit risk.

19. COMMITMENTS AND CONTINGENCIES

(a) Leases

The Company rents premises and machinery and equipment under
operating leases which expire at various dates up to 2016 and for which minimum
lease payments total $448.6 million.

Annual minimum payments under these leases are as follows:

|2004                |  | $ | 100.8
|------------------- |  | - | -----
|2005                |  |   | 84.1 
|2006                |  |   | 68.1 
|2007                |  |   | 51.8 
|2008                |  |   | 36.2 
|2009 and thereafter |  |   | 107.6

Rental expenses for operating leases were $89.1 million,
$91.4 million and $83.0 million for the years 2003, 2002 and 2001.

(b) Machinery and equipment

As at December 31, 2003, the Company had commitments to
purchase equipment for a total value of approximately $11 million.

(c) Environment

The Company is subject to various laws, regulations and
government policies principally in North America and Europe, relating to health
and safety, to the generation, storage, transportation, disposal and
environmental emissions of various substances, and to environment protection in
general. The Company believes it is in compliance with such laws, regulations
and government policies, in all material respects. Furthermore, the Company does
not anticipate that maintaining compliance with such environmental statutes will
have a material adverse effect upon the Company's competitive or consolidated
financial position.

(d) Business acquisitions

The Company signed a binding agreement to purchase, in
September 2004, the remaining 50% of Helio Charleroi in Belgium, a
subsidiary of European Graphic Group, SA. The transaction should amount to
24.9 million Euro ($31.0 million), adjusted by a contingent
consideration based on achieving a specific performance level over the period
ending September 2004.

65

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20. RELATED PARTY TRANSACTIONS

The Company entered into the following transactions, at prices
and conditions prevailing on the market, with related parties (the parent
company and its other subsidiaries) and were accounted for using the amount of
cash consideration:

|                                              |  | 2003 |      | 2002 |   | 2001
|--------------------------------------------- |  | ---- | ---- | ---- | - | ----
|Revenues                                      |  | $    | 42.5 |      | $ | 38.0
|Purchases                                     |  |      | 2.2  |      |   | 1.0 
|Management fees billed by
      Quebecor Inc. |  |      | 3.9  |      |   | 3.5 

During the year, the Company transferred the benefit of a
deduction for Part VI.I tax to subsidiaries of its parent company for a
consideration of Cdn $11.4 million ($8.7 million), (Cdn
$9.9 million ($6.4 million) in 2002) recorded in receivables from
related parties. This reduced the Company's available future income tax assets
by Cdn $10.8 million ($8.3 million), (Cdn $11.5 million
($7.4 million) in 2002), and increased the additional paid-in capital by
Cdn $0.6 million ($0.4 million) (decrease of Cdn $1.6 million
($1.0 million) in 2002). The transaction was recorded at the carrying
amount.

21. PENSION AND OTHER POSTRETIREMENT BENEFITS

The Company maintains defined benefit and contribution pension
plans for its employees. The Company's policy is to maintain its contribution at
a level sufficient to cover benefits. Actuarial valuations of the Company's
various pension plans were performed during the last three years.

The Company provides postretirement benefits to eligible
employees. The costs of these benefits, which are principally health care, are
accounted for during employees' active service period.

The following table is based on a September 30th
measurement date. The table provides a reconciliation of the changes in the
plan's benefit obligations and fair value of plan assets for the fiscal years
ended December 31, 2003 and December 31, 2002 and a statement of the
funded status as at December 31, 2003 and December 31, 2002:

|                               |                                                    | PensionBenefits |   | PostretirementBenefits |  
|------------------------------ | -------------------------------------------------- | --------------- | - | ---------------------- | -
|
|Changes in benefit obligations |                                                    |                 |   |                        |  
|                               | Benefit obligation, beginning of
    year          |                 | $ | 809.5                  |  
|                               | Service cost                                       |                 |   | 35.4                   |  
|                               | Interest cost                                      |                 |   | 54.5                   |  
|                               | Plan participants' contributions                   |                 |   | 5.0                    |  
|                               | Plan amendments                                    |                 |   | 2.4                    |  
|                               | Curtailment gain                                   |                 |   | (0.4                   | )
|                               | Acquisitions                                       |                 |   |                       |  
|                               | Actuarial loss                                     |                 |   | 85.0                   |  
|                               | Benefits paid                                      |                 |   | (59.4                  | )
|                               | Foreign currency changes                           |                 |   | 39.0                   |  
|                               |                                                    |                 |   |                        |  
|                               | Benefit obligation, end of year                    |                 | $ | 971.0                  |  
|                               |                                                    |                 |   |                        |  
|Changes in plan assets         |                                                    |                 |   |                        |  
|                               | Fair value of plan assets, beginning of
      year |                 | $ | 404.1                  |  
|                               | Actual return on plan assets                       |                 |   | 64.9                   |  
|                               | Employer contributions                             |                 |   | 41.2                   |  
|                               | Plan participants' contributions                   |                 |   | 5.0                    |  
|                               | Transfer / Adjustment                              |                 |   | 1.4                    |  
|                               | Benefits paid                                      |                 |   | (59.4                  | )
|                               | Foreign currency changes                           |                 |   | 23.6                   |  
|                               |                                                    |                 |   |                        |  
|                               | Fair value of plan assets, end of
    year         |                 | $ | 480.8                  |  
|                               |                                                    |                 |   |                        |  

66

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|                                |                                                   | PensionBenefits |   | PostretirementBenefits |  
|------------------------------- | ------------------------------------------------- | --------------- | - | ---------------------- | -
|
|Reconciliation of funded
status |                                                   |                 |   |                        |  
|                                | Funded status                                     |                 | $ | (490.2                 | )
|                                | Unrecognized net transition asset                 |                 |   | (5.1                   | )
|                                | Unrecognized prior service cost
      (benefit)   |                 |   | 19.9                   |  
|                                | Unrecognized actuarial loss                       |                 |   | 401.9                  |  
|                                | Adjustment for fourth quarter
      contributions |                 |   | 47.0                   |  
|                                |                                                   |                 |   |                        |  
|                                | Net amount recognized                             |                 | $ | (26.5                  | )
|                                |                                                   |                 |   |                        |  

Included in the above benefit obligation and fair value of plan
assets at year-end are the following amounts in respect of plans that are not
fully funded:

|                                 |  | PensionBenefits |        | PostretirementBenefits |  
|-------------------------------- |  | --------------- | ------ | ---------------------- | -
|
|Benefit obligation               |  | $               | (971.0 | )                      | $
|Fair value of plan assets        |  |                 | 480.8  |                        |  
|                                 |  |                 |        |                        |  
|Funded status  plan
    deficit |  | $               | (490.2 | )                      | $
|                                 |  |                 |        |                        |  

The following table provides the amounts recognized in the
consolidated balance sheets:

|                                    |  | PensionBenefits |       | PostretirementBenefits |  
|----------------------------------- |  | --------------- | ----- | ---------------------- | -
|
|Accrued benefit
      liability (1) |  | $               | (63.0 | )                      | $
|Prepaid benefit
      costs (2)     |  |                 | 36.5  |                        |  
|                                    |  |                 |       |                        |  
|Net amount recognized               |  | $               | (26.5 | )                      | $
|                                    |  |                 |       |                        |  

---

67

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The following table provides the components of net periodic
benefit cost:

|                            |                                                    | PensionBenefits |      | PostretirementBenefits |  
|--------------------------- | -------------------------------------------------- | --------------- | ---- | ---------------------- | -
|
|Defined benefit plans       |                                                    |                 |      |                        |  
|                            | Service cost                                       |                 | $    | 35.4                   |  
|                            | Interest cost                                      |                 |      | 54.5                   |  
|                            | Expected return on plan assets                     |                 |      | (50.1                  | )
|                            | Amortization of transitional assets                |                 |      | (0.7                   | )
|                            | Amortization of prior service cost
      (benefit) |                 |      |                       |  
|                            | Amortization of actuarial loss
    (gain)          |                 |      | 5.4                    |  
|                            | Curtailment loss (gain)                            |                 |      | 2.1                    |  
|                            | Valuation allowance                                |                 |      |                       |  
|                            |                                                    |                 |      |                        |  
|                            | Net periodic cost                                  |                 |      | 46.6                   |  
|Defined contribution plans  |                                                    |                 | 11.8 |                        |  
|                            |                                                    |                 |      |                        |  
|Total periodic benefit cost |                                                    | $               | 58.4 |                        | $
|                            |                                                    |                 |      |                        |  

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

|                               |  | PensionBenefits |  | PostretirementBenefits
|------------------------------ |  | --------------- |  | ----------------------
|
|Discount rate                  |  | 6.0%            |  | 6.7%                  
|Expected return on plan assets |  | 8.2%            |  | 8.2%                  
|Rate of compensation increase  |  | 3.5%            |  | 3.4%                  

The assumed health care cost trend rate used in measuring the
accumulated postretirement benefit obligation was 10.2% at the end of 2003 (8.7%
at the end of 2002) and is expected to decrease gradually to 5% in 2009 and
remain at that level thereafter. A one percentage point change in assumed health
care cost trend would have the following effects:

|                                     |  | Postretirement
      benefits |    
|------------------------------------ |  | ----------------------------- | ---
|
|
|Effect on service and interest
costs |  | $                             | 0.6
|Effect on benefit obligation         |  |                               | 7.3

68

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22. SIGNIFICANT DIFFERENCES BETWEEN GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES IN CANADA AND THE UNITED STATES

The Company's consolidated financial statements have been
prepared in accordance with Canadian generally accepted accounting principles
("GAAP"), which differ in some respects from those applicable in the
United States. The following are the significant differences in accounting
principles as they pertain to the consolidated financial statements.

(a) Reconciliation of net income (loss) and earnings (loss)
per share and presentation of financial statements

The application of GAAP in the United States would have the
following effects on net income as reported:

|                                                                                                     |                                                      | 2003 |       | 2002  |   | 2001  |      
|---------------------------------------------------------------------------------------------------- | ---------------------------------------------------- | ---- | ----- | ----- | - | ----- | -----
|Net income (loss), as reported in the
      consolidated statements of income per GAAP in
    Canada |                                                      | $    | (31.4 | )     | $ | 279.3 |      
|Adjustments before income taxes:                                                                     |                                                      |      |       |       |   |       |      
|                                                                                                     | Stock-based compensation
    (a) (i)                 |      |       | (1.9  | ) |       | 2.1  
|                                                                                                     | Convertible senior subordinated
      notes (a) (ii) |      |       | 2.4   |   |       | 2.3  
|                                                                                                     | Hedge accounting (a) (iv)                            |      |       | 23.6  |   |       |     
|                                                                                                     |                                                      |      |       |       |   |       |      
|                                                                                                     |                                                      |      | 24.1  |       |   | 4.4   |      
|Income taxes (a) (i) (iv)
(v)                                                                        |                                                      |      | (7.9  | )     |   | (0.6  | )    
|Asset retirement obligations, net of income
      taxes of $0.8 (a) (v)                              |                                                      |      | (1.2  | )     |   |      |      
|                                                                                                     |                                                      |      |       |       |   |       |      
|Net adjustments                                                                                      |                                                      |      | 15.0  |       |   | 3.8   |      
|                                                                                                     |                                                      |      |       |       |   |       |      
|Net income (loss), as adjusted per GAAP in
      the United States                                   |                                                      | $    | (16.4 | )     | $ | 283.1 |      
|Net income available to holders of preferred
      shares                                            |                                                      |      | 36.5  |       |   | 28.9  |      
|                                                                                                     |                                                      |      |       |       |   |       |      
|Net income (loss) per GAAP in the
      United States available to holders of equity shares          |                                                      |      | (52.9 | )     |   | 254.2 |      
|Income impact on assumed conversion of
      convertible notes, net of applicable income taxes       |                                                      |      |      |       |   | 3.8   |      
|                                                                                                     |                                                      |      |       |       |   |       |      
|Net income (loss) per GAAP in the
      United States adjusted for dilution effect                   |                                                      | $    | (52.9 | )     | $ | 258.0 |      
|                                                                                                     |                                                      |      |       |       |   |       |      
|Weighted average number of equity shares
      outstanding (in millions):                            |                                                      |      |       |       |   |       |      
|                                                                                                     | Basic                                                |      |       | 136.0 |   |       | 140.7
|                                                                                                     | Diluted                                              |      |       | 136.0 |   |       | 145.4
|                                                                                                     |                                                      |      |       |       |   |       |      
|Earnings (loss) per share as adjusted per GAAP
      in the United States:                           |                                                      |      |       |       |   |       |      
|                                                                                                     | Basic                                                |      | $     | (0.39 | ) | $     | 1.81 
|                                                                                                     | Diluted                                              |      | $     | (0.39 | ) | $     | 1.77 
|                                                                                                     |                                                      |      |       |       |   |       |      

69

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(i) Stock-based compensation

Under GAAP in the United States, prior to fiscal 2003, in
accordance with the provisions of Statement of Financial Accounting Standards
("SFAS") No. 123, "Accounting for stock-based compensation", the Company
applied Accounting Principles Board Opinion No. 25, "Accounting for stock
issued to employees" (APB 25) and related interpretations in accounting for
its employee share plans and stock option plans. Effective January 1, 2003,
the Company changed its method of accounting for stock-based compensation and
decided to use the fair value based method of accounting for all its stock-based
compensation plans. In accordance with the provisions of SFAS No.148,
"Accounting for Stock-Based Compensation  Transition and Disclosure,
an amendment of SFAS No.123", the Company adopted these changes using the
prospective method. This adoption of SFAS no.123 and No.148 harmonizes
accounting standards with CICA Handbook Section 3870.

Employee stock purchase plan in the United States:

Under the provisions of APB 25, applied by the Company
prior to fiscal 2003, an Employee Share Plan was accounted for as
non-compensatory. Under GAAP in Canada, the Company's contributions were
accounted for as compensation expenses.

Stock option plans:

The Company awarded in 1999 a special performance grant to
certain executives. Under the provisions of APB 25, which the Company
applied prior to fiscal 2003, those grants were accounted for as a variable
plan. Compensation costs of this grant are still recognized over the vesting
period. There were no similar requirements under GAAP in Canada.

(ii) Convertible senior subordinated notes

Under GAAP in Canada, the equity component of the convertible
notes is recorded under shareholders' equity as additional paid-in capital. The
difference between the carrying amount of the debt component and its face value
is amortized as imputed interest to income over the life of the convertible
senior subordinated note. Regarding the repurchase of convertible notes, the
Company is required to allocate the consideration paid on extinguishment to the
liability and equity components of the convertible notes based on their fair
values at the date of the transaction. The amount of gain (loss) relating to the
liability element is recorded to income and the difference between the carrying
amount and the amount considered to be settled relating to the conversion option
element is treated as an equity transaction. Under GAAP in the
United States, the allocation to equity is not permitted, no imputed
interest is needed in relation to the equity component and the gain (loss) on
repurchase is recorded through income in the period of extinguishment.

(iii) Presentation of goodwill amortization

Under GAAP in Canada, prior to fiscal 2002, goodwill
amortization was presented, net of related income taxes, and was excluded from
the calculation of operating income. Under GAAP in the United States,
goodwill amortization was included in the computation of operating income and
was presented as an operating expense. For the year 2002 and onward, the Company
adopted the new CICA accounting standard related to goodwill and other
intangible assets (see notes 1(i) and 11). Under the new accounting
standard, goodwill is not amortized. This new CICA accounting standard
harmonizes with SFAS No. 142 "Goodwill and Other Intangible Assets"
("SFAS 142") effective January 1, 2002.

(iv) Accounting for derivative instruments and hedging
activities

Effective since January 1, 2001, the Company adopted
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities", as amended (SFAS 133).
SFAS 133 establishes accounting and reporting standards for derivative
instruments and hedging activities and requires that all derivatives be recorded
as either assets or liabilities in the balance sheet at fair value. In order to
apply hedge accounting under SFAS 133, hedging relationships must be
formally documented and highly effective at offsetting changes in hedged items.

The Company did not apply the hedge accounting under
SFAS No.133 for some foreign exchange forward contracts and cross currency
swaps that hedge anticipated foreign denominated sales and the related
receivables, and foreign denominated asset exposures, under GAAP in the United
States during 2003. However, the Company considers those derivative instruments
to be effective foreign currency risk management tools and economic hedges of
the changes attributable to the foreign currencies in which the forecasted
transactions and assets are denominated. Under GAAP in Canada, hedge accounting
was applied to all such transactions.

70

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(v) Asset retirement obligations

Effective January 1, 2003, the Company adopted Statement of
Financial Accounting Standards No. 143, "Accounting for Asset Retirement
Obligations", (SFAS 143), which addresses financial accounting for legal
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. SFAS 143 requires the recognition of the
fair value of a liability for an asset retirement obligation in the period in
which it is incurred. When a liability is initially recorded, the cost is
capitalized by increasing the carrying amount of the related long-lived asset.
Over time, the liability is increased each period to reflect an interest element
considered in its initial measurement at fair value, and the capitalized cost is
amortized over the useful life of the related asset. Under GAAP in Canada, such
accounting for asset retirement obligations is not required.

(b) Effect on consolidated balance sheets

The application of GAAP in the United States would have the
following effects on the consolidated balance sheets, as reported:

|                                            |                                                                               | 2003 |   | 2002    |  
|------------------------------------------- | ----------------------------------------------------------------------------- | ---- | - | ------- | -
|
|Assets                                      |                                                                               |      |   |         |  
|                                            | Future income taxes (a) (iv)
      (b) (i)                                    |      | $ | 105.8   |  
|                                            | Prepaid expenses (a) (iv)
      (b) (i)                                       |      |   | 17.4    |  
|                                            | Property, plant and equipment, net
      (a) (v)                              |      |   | 2,581.0 |  
|                                            | Other assets (a) (iv) (b) (i)
      (ii)                                      |      |   | 133.8   |  
|Liabilities and Sharesholders'
      Equity |                                                                               |      |   |         |  
|                                            | Accrued liabilities (a) (iv)
      (b) (i)                                    |      |   | 552.5   |  
|                                            | Other liabilities (a) (iv) (v)
      (b) (i) (ii)                             |      |   | 194.5   |  
|                                            | Future income taxes (a) (i)
      (iv) (v) (b) (i) (ii)                       |      |   | 405.1   |  
|                                            | Convertible Notes (a) (ii)                                                    |      |   | 110.7   |  
|                                            | Capital stock (b) (iii)                                                       |      |   | 1,693.1 |  
|                                            | Additional paid-in capital (a) (i)
      (ii)                                 |      |   | 105.9   |  
|                                            | Retained earnings (a) (i) (ii)(iv)(v)
      (b) (i) (iii)                     |      |   | 723.6   |  
|                                            | Translation adjustment (c)                                                    |      |   | (19.2   | )
|                                            | Accumulated other comprehensive income (loss)
      (a) (iv) (b) (i) (ii) (c) |      |   |        |  

(i) Accounting for derivative instruments and hedging
activities

Effective since January 1, 2001, the Company adopted
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities", as amended (SFAS 133). The
Company recorded the cumulative effect of change in other comprehensive income
(loss) upon the adoption of SFAS 133 in 2001.

The Company utilizes interest rate and commodity SWAP to enhance
its ability to manage risk relating to cash flow exposure. On the earlier of the
date into which the derivative contract is entered or the date of transaction,
the Company designates the derivative as a hedge. Changes in the derivative fair
values of contracts that are designated effective and qualify as cash flow
hedges are deferred and recorded as a component of accumulated other
comprehensive income (loss) until the underlying transaction is recorded in
earnings. When the hedged item affects earnings, gains or losses are
reclassified from accumulated other comprehensive income (loss) to the
consolidated statement of income on the same line as the underlying transaction.
The ineffective portion of a hedging derivative's change in fair value is
recognized immediately in earnings.

Under GAAP in Canada, these derivative financial instruments are
accounted for on an accrual basis. Realized and unrealized gains and losses are
deferred and recognized in income in the same period and in the same financial
statement category as the income or expense arising from the corresponding
hedged positions.

71

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(c) Comprehensive income (loss)



|                                                                                                                      |  | 2003 |       | 2002 |   | 2001   |  
|--------------------------------------------------------------------------------------------------------------------- |  | ---- | ----- | ---- | - | ------ | -
|Net income (loss), as adjusted per GAAP in
      the United States                                                    |  | $    | (15.2 | )    | $ | 283.1  |  
|Cumulative effect of changes in
      accounting principles, net ofincome taxes ($3.3 in 2001)
      (b) (i)          |  |      |      |      |   |       |  
|Gain (loss) on hedging activities, net of
      income taxes of $(5.5)($(3.2) in 2002 and $6.3 in 2001)
      (b) (i) |  |      | 39.2  |      |   | (22.2  | )
|Additional minimum liability, net of income
      taxes of $37.3($53.8 in 2002 and $27.4 in 2001)
(b) (ii)            |  |      | (32.1 | )    |   | (109.2 | )
|Currency translation adjustment                                                                                       |  |      | 96.4  |      |   | 30.9   |  
|                                                                                                                      |  |      |       |      |   |        |  
|Other comprehensive income (loss)                                                                                     |  |      | 103.5 |      |   | (100.5 | )
|Comprehensive income (loss) as per GAAP
      in the United States                                                    |  | $    | 88.3  |      | $ | 182.6  |  
|                                                                                                                      |  |      |       |      |   |        |  

23. SEGMENT DISCLOSURES

The Company
operates in the printing industry. Its business groups are located in three main
segments: North America, Europe and Latin America. These segments are managed
separately, since they all require specific market strategies. The Company
assesses the performance of each segment based on operating income before
impairment of assets, restructuring and other charges.

72

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Accounting
policies relating to each segment are identical to those used for the purposes
of the consolidated financial statements. Intersegment sales are made at fair
market values, which approximate those prevailing on the markets serviced.
Management of financial expenses and income tax expense is centralized and,
consequently, these expenses are not allocated among these segments.

|                                                            |      | North
      America(1) |   | Europe  |   | LatinAmerica |         | Other |   | Inter-segment |   | Total
|----------------------------------------------------------- | ---- | ---------------------- | - | ------- | - | ------------ | ------- | ----- | - | ------------- | - | -----
|Revenues                                                    |      |                        |   |         |   |              |         |       |   |               |   |      
|                                                            | 2003 |                        | $ | 5,062.9 |   | $            | 1,151.4 |       | $ | 177.3         |   | $    
|                                                            | 2002 |                        |   | 5,087.6 |   |              | 1,002.5 |       |   | 183.5         |   |      
|                                                            | 2001 |                        |   | 5,370.7 |   |              | 910.7   |       |   | 161.8         |   |      
|Depreciation and
    amortization                           |      |                        |   |         |   |              |         |       |   |               |   |      
|                                                            | 2003 |                        |   | 261.5   |   |              | 62.7    |       |   | 10.2          |   |      
|                                                            | 2002 |                        |   | 250.7   |   |              | 57.3    |       |   | 7.0           |   |      
|                                                            | 2001 |                        |   | 258.9   |   |              | 49.6    |       |   | 7.4           |   |      
|Impairment of assets, restructuring and
      other charges |      |                        |   |         |   |              |         |       |   |               |   |      
|                                                            | 2003 |                        |   | 78.5    |   |              | 6.8     |       |   | 11.8          |   |      
|                                                            | 2002 |                        |   | (9.0    | ) |              | 22.1    |       |   | 1.0           |   |      
|                                                            | 2001 |                        |   | 194.4   |   |              | 22.6    |       |   | 14.6          |   |      
|Operating income (loss)                                     |      |                        |   |         |   |              |         |       |   |               |   |      
|                                                            | 2003 |                        |   | 232.6   |   |              | 23.5    |       |   | (15.5         | ) |      
|                                                            | 2002 |                        |   | 536.3   |   |              | 16.8    |       |   | 13.2          |   |      
|                                                            | 2001 |                        |   | 370.1   |   |              | 30.5    |       |   | (4.2          | ) |      
|Goodwill amortization, net of income
      taxes            |      |                        |   |         |   |              |         |       |   |               |   |      
|                                                            | 2003 |                        |   |        |   |              |        |       |   |              |   |      
|                                                            | 2002 |                        |   |        |   |              |        |       |   |              |   |      
|                                                            | 2001 |                        |   | 55.5    |   |              | 5.4     |       |   | 0.5           |   |      
|Additions to property, plant and
      equipment            |      |                        |   |         |   |              |         |       |   |               |   |      
|                                                            | 2003 |                        |   | 187.9   |   |              | 45.6    |       |   | 8.9           |   |      
|                                                            | 2002 |                        |   | 139.9   |   |              | 29.5    |       |   | 14.1          |   |      
|                                                            | 2001 |                        |   | 180.6   |   |              | 43.3    |       |   | 40.8          |   |      
|Property, plant and
    equipment                           |      |                        |   |         |   |              |         |       |   |               |   |      
|                                                            | 2003 |                        |   | 1,952.8 |   |              | 535.2   |       |   | 90.5          |   |      
|                                                            | 2002 |                        |   | 2,024.1 |   |              | 489.8   |       |   | 94.4          |   |      
|Goodwill                                                    |      |                        |   |         |   |              |         |       |   |               |   |      
|                                                            | 2003 |                        |   | 2,192.2 |   |              | 391.1   |       |   | 7.7           |   |      
|                                                            | 2002 |                        |   | 2,182.3 |   |              | 324.8   |       |   | 7.2           |   |      
|Total assets                                                |      |                        |   |         |   |              |         |       |   |               |   |      
|                                                            | 2003 |                        |   | 4,828.3 |   |              | 1,149.5 |       |   | 207.1         |   |      
|                                                            | 2002 |                        |   | 4,954.6 |   |              | 1,003.1 |       |   | 215.4         |   |      
|                                                            |      |                        |   |         |   |              |         |       |   |               |   |      

---

73

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The Company
carries out international commercial printing operations, and offers to its
customers a broad range of printed products and related communication services,
such as magazines, retail inserts, catalogs, specialty printing and direct mail,
books, directories, pre-media, logistics, and other value-added services.

Revenues per
product are as follows:

|                                                          |  | 2003 |         | 2002 |       | 2001 |  
|--------------------------------------------------------- |  | ---- | ------- | ---- | ----- | ---- | -
|Magazine                                                  |  | $    | 1,694.4 |      | 26.5  | %    | $
|Retail inserts                                            |  |      | 1,519.8 |      | 23.8  |      |  
|Catalogs                                                  |  |      | 1,031.8 |      | 16.1  |      |  
|Books                                                     |  |      | 698.1   |      | 10.9  |      |  
|Specialty printing and direct mail                        |  |      | 619.0   |      | 9.7   |      |  
|Directories                                               |  |      | 356.6   |      | 5.6   |      |  
|Pre-media, logistics and other value-added
      services |  |      | 471.8   |      | 7.4   |      |  
|                                                          |  |      |         |      |       |      |  
|                                                          |  | $    | 6,391.5 |      | 100.0 | %    | $
|                                                          |  |      |         |      |       |      |  

74

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FIVE YEAR FINANCIAL SUMMARYYears ended December 31(In millions of
US dollars, except per share data & other statistics)

|                                                                               |                      | 2003 |         | 2002  |   | 2001    |      | 2000 |         | 1999 |  
|------------------------------------------------------------------------------ | -------------------- | ---- | ------- | ----- | - | ------- | ---- | ---- | ------- | ---- | -
|Consolidated Results                                                           |                      |      |         |       |   |         |      |      |         |      |  
|Revenues                                                                       |                      | $    | 6,391.5 |       | $ | 6,271.7 |      | $    | 6,442.7 |      | $
|Operating income before depreciation and
      amortization and before IAROC   |                      |      | 689.8   |       |   | 898.4   |      |      | 955.6   |      |  
|Operating income before IAROC                                                  |                      |      | 330.4   |       |   | 562.8   |      |      | 617.8   |      |  
|IAROC                                                                          |                      |      | 98.3    |       |   | 19.6    |      |      | 270.0   |      |  
|Operating income                                                               |                      |      | 232.1   |       |   | 543.2   |      |      | 347.8   |      |  
|Net income (loss)*                                                             |                      |      | (31.4   | )     |   | 279.3   |      |      | 22.4    |      |  
|Cash provided by operating activities                                          |                      |      | 461.3   |       |   | 513.4   |      |      | 576.5   |      |  
|Free cash flow from operations**                                               |                      |      | 183.3   |       |   | 319.8   |      |      | 287.2   |      |  
|Operating margin before depreciation and
      amortizationand before IAROC*** |                      |      | 10.8    | %     |   | 14.3    | %    |      | 14.8    | %    |  
|Operating margin before IAROC***                                               |                      |      | 5.2     | %     |   | 9.0     | %    |      | 9.6     | %    |  
|Operating margin***                                                            |                      |      | 3.6     | %     |   | 8.7     | %    |      | 5.4     | %    |  
|                                                                               |                      |      |         |       |   |         |      |      |         |      |  
|Financial Position                                                             |                      |      |         |       |   |         |      |      |         |      |  
|Working capital                                                                |                      | $    | (193.0  | )     | $ | (213.8  | )    | $    | (194.5  | )    | $
|Property, plant and equipment                                                  |                      |      | 2,581.0 |       |   | 2,610.6 |      |      | 2,634.0 |      |  
|Total assets                                                                   |                      |      | 6,213.8 |       |   | 6,207.4 |      |      | 6,186.5 |      |  
|Long-term debt (including convertible
      notes)                             |                      |      | 2,009.0 |       |   | 1,822.1 |      |      | 2,132.2 |      |  
|First Preferred Shares                                                         |                      |      | 456.6   |       |   | 456.6   |      |      | 456.6   |      |  
|Equity Multiple and Subordinate Voting
      Shares                            |                      |      | 1,236.5 |       |   | 1,357.3 |      |      | 1,336.7 |      |  
|Debt-to-capitalization                                                         |                      |      | 44:56   |       |   | 40:60   |      |      | 46:54   |      |  
|                                                                               |                      |      |         |       |   |         |      |      |         |      |  
|Per Share Data                                                                 |                      |      |         |       |   |         |      |      |         |      |  
|Earnings (loss)*                                                               |                      |      |         |       |   |         |      |      |         |      |  
|                                                                               | Diluted              |      | $       | (0.50 | ) | $       | 1.76 |      | $       |     |  
|                                                                               | Diluted before IAROC |      | $       | 0.03  |   | $       | 1.92 |      | $       | 1.58 |  
|Dividends on equity shares                                                     |                      | $    | 0.52    |       | $ | 0.49    |      | $    | 0.46    |      | $
|Book value                                                                     |                      | $    | 15.51   |       | $ | 15.92   |      | $    | 14.39   |      | $
|Market price  TSE close in
      CDN$                                         |                      | $    | 26.75   |       | $ | 35.00   |      | $    | 35.88   |      | $
|Market price  NYSE close                                                      |                      | $    | 20.59   |       | $ | 22.32   |      | $    | 22.56   |      | $
|                                                                               |                      |      |         |       |   |         |      |      |         |      |  
|Other statistics                                                               |                      |      |         |       |   |         |      |      |         |      |  
|Capital expenditures                                                           |                      | $    | 243.1   |       | $ | 184.5   |      | $    | 278.3   |      | $
|Return on capital employed                                                     |                      |      | 12.8    | %     |   | 17.3    | %    |      | 17.9    | %    |  
|                                                                               |                      |      |         |       |   |         |      |      |         |      |  

---

IAROC: Impairment of assets, restructuring and other charges

75

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LIST OF EXHIBITS





The following documents are attached to this annual report on Form 40-F:

|23.1 | Consent of KPMG LLP                                                                                                                                    
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1 | Certification of Pierre Karl Péladeau, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                              
|31.2 | Certification of Claude Hélie, Executive Vice President, Finance and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|32.1 | Certification of Pierre Karl Péladeau, Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                              
|32.2 | Certification of Claude Hélie, Executive Vice President, Finance and Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002





EXHIBIT 23.1





EXHIBIT 31.1

CERTIFICATIONS





I, Pierre Karl Péladeau, President and Chief Executive Officer of Quebecor World Inc., certify that:



1. I have reviewed this annual report on Form 40-F of Quebecor World Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly represent in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
4. The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the issuer and have:
5. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
6. [omitted pursuant to the guidance of Release No. 33-8283 (June 5, 2003)]
7. evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report ; and
8. disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting; and
9. The issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer's auditors and the audit committee of the issuer's board of directors (or persons performing the equivalent functions):
10. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and
11. any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting.





Date:  May 19, 2004





/s/ Pierre Karl Péladeau
Pierre Karl Péladeau
President and Chief Executive Officer





EXHIBIT 31.2

CERTIFICATIONS





I, Claude Hélie, Executive Vice President and Chief Financial Officer of Quebecor World Inc., certify that:



1. I have reviewed this annual report on Form 40-F of Quebecor World Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly represent in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
4. The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the issuer and have:



1. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
2. [omitted pursuant to the guidance of Release 33-8283 (June 5, 2003)]
3. evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report; and
4. disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting; and



1. The issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer's auditors and the audit committee of the issuer's board of directors (or persons performing the equivalent functions):
2. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and
3. any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting.





Date:  May 19, 2004





/s/ Claude Hélie
Claude Hélie
Executive Vice President and 
Chief Financial Officer





EXHIBIT 32.1



CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002





In connection with the Annual Report of Quebecor World Inc. (the "Company") on Form 40-F for the year ended December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Pierre Karl Péladeau, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley of 2002, that:



1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

















/s/ Pierre Karl Péladeau
Pierre Karl Péladeau
President and Chief Executive Officer



Dated:  May 19, 2004







EXHIBIT 32.2



CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002





In connection with the Annual Report of Quebecor World Inc. (the "Company") on Form 40-F for the year ended December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Claude Hélie, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley of 2002, that:



1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

















/s/ Claude Hélie
Claude Hélie
Executive Vice President and 
Chief Financial Officer



Dated:  May 19, 2004