QUAD TO ACQUIRE WORLDCOLOR

Quad/Graphics, the largest privately held printer in the U.S., recently announced plans to acquire Worldcolor, the second largest provider of print, digital and related services in the Americas. For Quad’s customers, this expansion translates into a more complete range of products and services, a broader geographic reach, stronger revenue-generating solutions, and an enhanced ability to capitalize on print’s strengths in a multi-channel world. “By combining the strengths of both companies, we will

Poland U.S. & Canada

WORLDCOLOR

Corporate Headquarters Montreal, Canada

QUAD/GRAPHICS

Corporate Headquarters Sussex, WI

Latin America enhance our leadership position in the printing industry,” said Joel Quadracci, Quad/Graphics Chairman, President & CEO. “With our strong commitment to innovation and customer satisfaction, combined with the greater operational efficiencies we are targeting, we will be better able to achieve our strategic objectives and continue to generate industry-leading margins and profitable growth, all while creating opportunities for our customers, shareholders and employees.” The acquisition is scheduled for completion this summer. In the meantime, it’s business as usual at Quad/Graphics: providing solutions that create competitive advantages for its customers.

Corporate Headquarters

Corporate Headquarters Worldcolor

Printing Plants

COMBINED FACILITY LOCATIONS

Paper Outlook

Plan for a budget increase in the second half of 2010

The year began with predictions of a modest growth in demand for paper, with price increases to follow suit. One publication, RISI Paper Trader, predicted demand for coated paper will grow 2 to 5 percent overall in 2010. And while printers will be looking to replace the inventory they used during the most recent economic downturn, magazine advertising pages continue to decline. It leaves many publishers up in the air about budgeting for the last six months of 2010.

“For special interest publishers, budgeting for paper in the first half of 2010 has remained flat, and should remain flat through June,” said Aaron Eslinger, paper buyer, Quad/Paper Services. “In the second half of the year, based on overall demand, we’re recommending that our customers increase budgets by $6 per hundredweight.”

But Aaron added that several key factors still could influence how paper prices trend in the second half of the year including:

EXPIRED CREDIT’S EFFECT

“The black liquor energy tax credit that paper mills used to continue operating below cost expired at the end of last year. That leaves them with two choices to operate at a sustainable level: raise prices to cover operating costs, or shut down, which takes capacity out of the marketplace. Either result makes the case for some level of price increase.”

IMPORT IMPACT

“The weakness of the dollar, pending legislation against Asian pulp and paper flooding the U.S. markets, and the oversupply of European producers all will have an influence on paper prices in 2010. To warrant long-term increased pricing levels, North American mills need to find a balance between increasing domestic demand and diminishing the impact of imports.”

WHEN DEMAND RETURNS

“Paper pricing is traditionally very cyclical – and stronger in the second half. If we start seeing demand pick up early, we’re more likely to see the price of paper go up sooner than anticipated. If demand lags, then producers will have to make tough decisions on the level of price increase. Of course, how much demand goes up also is a factor.”

Quad/Graphics Printing Plants Worldcolor

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