Highlights:
- Fourth-quarter 2010 GAAP income from operations tripled to
$85.7 million from $28.5 million in the fourth quarter of 2009
- Full-year 2010 GAAP income from operations increased 61.3% to
$555.5 million from $344.3 million in 2009
- Fourth-quarter 2010 GAAP earnings per diluted share increased
to $0.13 from a loss of $0.39 in the fourth quarter of 2009
- Full-year 2010 GAAP earnings per diluted share increased to
$1.06 from a loss of $0.13 in 2009
- Fourth-quarter 2010 non-GAAP earnings per diluted share
increased 10.9% to $0.51 from $0.46 in the fourth quarter of
2009
- Full-year 2010 non-GAAP earnings per diluted share increased
10.0% to $1.76 from $1.60 in 2009
- Fourth-quarter 2010 net sales of $2.7 billion increased 4.8%
compared to the fourth quarter of 2009
- Full-year 2010 net sales of $10.0 billion increased 1.6%
compared to 2009
CHICAGO, Feb. 22, 2011 (GLOBE NEWSWIRE) -- R.R.
Donnelley & Sons Company (Nasdaq:RRD) today reported
fourth-quarter net earnings attributable to common shareholders of
$27.0 million, or $0.13 per diluted share, on net sales of $2.7
billion compared to a net loss attributable to common shareholders
of $79.5 million, or $0.39 per diluted share, on net sales of $2.6
billion in the fourth quarter of 2009. The fourth-quarter net
earnings (loss) attributable to common shareholders included
pre-tax charges for restructuring ($21.5 million) and impairment
($61.5 million, non-cash) and acquisition-related costs ($5.6
million) totaling $88.6 million in 2010 compared to charges for
restructuring ($17.5 million) and impairment ($131.1 million,
non-cash) and acquisition-related costs ($0.1 million) totaling
$148.7 million in 2009. Additional details regarding the
nature of these charges are included in the attached
schedules.
The Company believes that certain non-GAAP measures, when
presented in conjunction with comparable GAAP (Generally Accepted
Accounting Principles) measures, are useful because that
information is an appropriate measure for evaluating the Company's
operating performance. Internally, the Company uses this
non-GAAP information as an indicator of business performance, and
evaluates management's effectiveness with specific reference to
these indicators. These measures should be considered in
addition to, not a substitute for, or superior to, measures of
financial performance prepared in accordance with GAAP.
Non-GAAP net earnings attributable to common shareholders
totaled $107.2 million, or $0.51 per diluted share, in the fourth
quarter of 2010 compared to $95.4 million, or $0.46 per diluted
share, in the fourth quarter of 2009. Fourth-quarter non-GAAP
net earnings attributable to common shareholders exclude
restructuring and impairment charges, acquisition expenses and the
write-down of affordable housing investments for both years, as
well as income tax expense related to the reorganization of
entities within the International segment in 2009. For
non-GAAP comparison purposes, the effective tax rate decreased to
10.0% in the fourth quarter of 2010 from 21.1% in the fourth
quarter of 2009, primarily as a result of the release of valuation
allowances on deferred tax assets. A reconciliation of GAAP
net earnings attributable to common shareholders to non-GAAP net
earnings attributable to common shareholders is presented in the
attached tables.
"We are pleased with our fourth-quarter results and the momentum
that we built throughout the year," said Thomas J. Quinlan III, RR
Donnelley's President and Chief Executive
Officer. "During 2010, we saw a significant increase in
the number of customers purchasing multiple products and services
from us, taking advantage of the breadth and scale that our unique
platform offers. As we begin 2011, we continue to focus on
achieving top-line growth through our One RR Donnelley global print
management strategy, and expect the positive trends achieved in
2010 to continue throughout 2011."
Business Review
The Company reports its results in two reportable
segments: 1) U.S. Print and Related Services and 2)
International. The Company reports as Corporate its
unallocated expenses associated with general and administrative
activities.
Summary
Net sales in the quarter were $2.7 billion, up 4.8% from the
fourth quarter of 2009, including $61.2 million (237 basis points)
related to the acquisition of Bowne and an unfavorable impact of
changes in foreign exchange rates and lower pass-through paper
sales of $22.7 million (88 basis points). Gross margin
decreased to 23.1% in the fourth quarter of 2010 from 23.3% in the
fourth quarter of 2009 due to continued price pressure and higher
pension and other benefits-related expenses, partially offset by a
higher recovery on print-related by-products, increased volume and
lower incentive compensation expense. SG&A expense as a
percentage of net sales in the fourth quarter of 2010 increased to
11.8% from 10.9% in the fourth quarter of 2009 primarily due to the
acquisition of Bowne, higher acquisition-related expenses and a
higher provision for bad debt expense, partially offset by lower
incentive compensation expense. Operating earnings were
negatively impacted by restructuring and impairment charges and
acquisition expenses of $88.6 million in the fourth quarter of 2010
and $148.7 million in the fourth quarter of 2009, resulting in
operating income of $85.7 million in 2010 and $28.5 million in
2009.
Excluding restructuring and impairment charges and acquisition
expenses, our non-GAAP operating margin declined to 6.4% in the
fourth quarter of 2010 from 6.9% in the fourth quarter of 2009, as
higher unallocated Corporate expenses, primarily related to pension
and other benefits-related expenses and a higher provision for bad
debt, more than offset operating margin improvements in both of our
operating segments.
Segments
Net sales for the U.S. Print and Related Services segment in the
quarter increased 5.3% from the fourth quarter of 2009 to $2.0
billion primarily due to volume increases in logistics, financial
print and commercial print as well as $48.1 million (250 basis
points) related to the acquisition of Bowne, partially offset by
price declines across most products and services and lower
pass-through paper sales. The segment's operating income,
which was negatively impacted by charges for restructuring and
impairment of $66.1 million in the fourth quarter of 2010 and
$101.5 million in the fourth quarter of 2009, increased to $127.3
million in the fourth quarter of 2010 from $71.4 million in the
fourth quarter of 2009. Excluding the restructuring and
impairment charges, the segment's non-GAAP operating margin
increased to 9.6% in the fourth quarter of 2010 from 9.0% in the
fourth quarter of 2009, due to lower incentive compensation
expense, increased volume and a higher recovery on print-related
by-products, which more than offset the impact of continued price
erosion.
Net sales for the International segment in the quarter increased
3.5% from the fourth quarter of 2009 to $682.4 million, including
$13.1 million (199 basis points) related to the acquisition of
Bowne and inclusive of an $11.6 million (176 basis points)
unfavorable impact of changes in foreign exchange rates. The
improvement in net sales was a result of increased volume,
primarily in Asia and Latin America, partially offset by continued
price pressure. The segment's operating income, which was
negatively impacted by charges for restructuring and impairment of
$5.0 million in the fourth quarter of 2010 and $44.2 million in the
fourth quarter of 2009, improved to $49.6 million in the fourth
quarter of 2010 from a loss of $3.1 million in the fourth quarter
of 2009. Excluding the restructuring and impairment charges,
the segment's non-GAAP operating margin increased to 8.0% in the
fourth quarter of 2010 from 6.2% in the fourth quarter of 2009 due
to increased volume, partially offset by the impact of continued
price
erosion.
Unallocated Corporate operating expenses increased to $91.2
million in the fourth quarter of 2010 as compared to $39.8 million
in the fourth quarter of 2009. Excluding restructuring charges
of $11.9 million and acquisition expenses of $5.6 million in the
fourth quarter of 2010 and restructuring charges of $2.9 million
and acquisition expenses of $0.1 million in the fourth quarter of
2009, unallocated Corporate operating expenses increased by $36.9
million to $73.7 million in the fourth quarter of 2010. Higher
pension and other benefits-related expenses and a higher provision
for bad debt were the primary factors contributing to the
increase.
Conference Call
RR Donnelley will host a conference call and simultaneous
webcast to discuss its fourth-quarter results today, Tuesday,
February 22, at 10:00 a.m. Eastern Time (9:00 a.m. Central
Time). The live webcast will be accessible on RR Donnelley's
web site: www.rrdonnelley.com. Individuals wishing to
participate can join the conference call by dialing 847.413.9014
and use confirmation number 28951693. A webcast replay will
be archived on the Company's web site for 30 days after the
call. In addition, a telephonic replay of the call will be
available for seven days at 630.652.3042, passcode 5053580#.
About RR Donnelley
RR Donnelley (Nasdaq:RRD) is a global provider of integrated
communications. Founded more than 146 years ago, the Company
works collaboratively with more than 60,000 customers worldwide to
develop custom communications solutions that reduce costs, enhance
ROI and ensure compliance. Drawing on a range of proprietary
and commercially available digital and conventional technologies
deployed across four continents, the Company employs a suite of
leading Internet-based capabilities and other resources to provide
premedia, printing, logistics and business process outsourcing
products and services to leading clients in virtually every private
and public sector.
For more information, and for RR Donnelley's Corporate Social
Responsibility Report, visit the company's web site at
http://www.rrdonnelley.com.
Use of Forward-Looking Statements
This news release contains "forward-looking statements" as
defined in the U.S. Private Securities Litigation Reform Act of
1995. Readers are cautioned not to place undue reliance on
these forward-looking statements and any such forward-looking
statements are qualified in their entirety by reference to the
following cautionary statements. All forward-looking
statements speak only as of the date of this news release and are
based on current expectations and involve a number of assumptions,
risks and uncertainties that could cause the actual results to
differ materially from such forward-looking statements. The
company does not undertake to and specifically declines any
obligation to publicly release the results of any revisions to
these forward-looking statements that may be made to reflect future
events or circumstances after the date of such statement or to
reflect the occurrence of anticipated or unanticipated
events. The factors that could cause material differences in
the expected results of RR Donnelley include, without limitation,
the following: the successful execution and integration of
acquisitions and the performance of the company's businesses
following acquisitions; the ability to implement comprehensive
plans for the integration of the sales force, cost containment,
asset rationalization and other key strategies; competitive
pressures in all markets in which the company operates; the
volatility and disruption of the capital and credit markets, and
adverse changes in the global economy; our ability to access
unsecured debt in the capital markets and the reliability of the
participants to our contractual lending and insurance agreements;
factors that affect customer demand, including changes in postal
rates and postal regulations, changes in the capital markets,
changes in advertising markets, the rate of migration from
paper-based forms to digital format, customers' budgetary
constraints and customers' changes in short-range and long-range
plans; customers financial strength; shortages or changes in
availability, or increases in costs of, key materials (such as ink,
paper and fuel); and other risks and uncertainties described in RR
Donnelley's periodic filings with the Securities and Exchange
Commission (SEC). Readers are strongly encouraged to read the
full cautionary statements contained in RR Donnelley's filings with
the SEC.
| R. R. Donnelley
& Sons Company |
| Consolidated Balance
Sheets |
| As of December 31, 2010 and
December 31, 2009 |
| (UNAUDITED) |
| (In millions, except per share
data) |
| |
|
| |
December 31,
2010 |
December 31,
2009 |
|
Assets |
|
|
| Current Assets |
|
|
| Cash and cash
equivalents |
$ 519.1 |
$ 499.2 |
| Receivables, less
allowance for doubtful accounts |
1,922.9 |
1,675.9 |
| Income taxes
receivable |
49.3 |
63.2 |
| Inventories |
560.6 |
561.8 |
| Prepaid expenses and
other current assets |
115.4 |
160.8 |
| Total Current Assets |
3,167.3 |
2,960.9 |
| Property, plant and
equipment - net |
2,138.7 |
2,271.4 |
| Goodwill |
2,526.8 |
2,333.3 |
| Other intangible assets -
net |
775.0 |
747.4 |
| Other noncurrent
assets |
475.4 |
434.6 |
| Total
Assets |
$ 9,083.2 |
$ 8,747.6 |
| |
|
|
|
Liabilities |
|
|
| Current
Liabilities |
|
|
| Accounts
payable |
$ 939.8 |
$ 886.4 |
| Accrued
liabilities |
902.2 |
813.4 |
| Short-term and current
portion of long-term debt |
131.4 |
339.9 |
| Total Current
Liabilities |
1,973.4 |
2,039.7 |
| Long-term debt |
3,398.6 |
2,982.5 |
| Pension
liability |
533.0 |
509.8 |
| Postretirement benefit
obligations |
287.4 |
324.5 |
| Deferred income
taxes |
174.5 |
205.5 |
| Other noncurrent
liabilities |
470.9 |
524.6 |
| Total
Liabilities |
6,837.8 |
6,586.6 |
|
Equity |
|
|
| |
|
|
| Common stock, $1.25 par
value |
303.7 |
303.7 |
| Authorized shares:
500.0 |
|
|
| Issued shares: 243.0 in
2010 and 2009 |
|
|
| Additional paid-in
capital |
2,907.0 |
2,906.2 |
| Retained
earnings |
670.2 |
662.9 |
| Accumulated other
comprehensive loss |
(490.4) |
(545.0) |
| Treasury stock, at cost,
36.4 shares in 2010 (2009 - 37.3 shares) |
(1,166.2) |
(1,193.8) |
| Total shareholders'
equity |
2,224.3 |
2,134.0 |
| Noncontrolling
interests |
21.1 |
27.0 |
| Total
Equity |
2,245.4 |
2,161.0 |
| Total Liabilities and
Equity |
$ 9,083.2 |
$ 8,747.6 |
| |
| R. R. Donnelley
& Sons Company |
| Condensed Consolidated
Statements of Operations |
| Three and Twelve Months Ended
December 31, 2010 and 2009 |
| (In millions, except per
share data) |
|
(UNAUDITED) |
| |
|
|
| |
Three
Months Ended December 31, |
Twelve
Months Ended December 31, |
| |
2010
GAAP |
ADJUSTMENTS TO NON-
GAAP |
2010
NON-GAAP |
2009
GAAP |
ADJUSTMENTS TO NON-
GAAP |
2009
NON-GAAP |
2010
GAAP |
ADJUSTMENTS TO NON-
GAAP |
2010
NON-GAAP |
2009
GAAP |
ADJUSTMENTS TO NON-
GAAP |
2009
NON-GAAP |
| Net sales |
$ 2,707.1 |
$ -- |
$ 2,707.1 |
$ 2,583.1 |
$ -- |
$ 2,583.1 |
$ 10,018.9 |
$ -- |
$ 10,018.9 |
$ 9,857.4 |
$ -- |
$ 9,857.4 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of sales (exclusive of depreciation and
amortization shown below) |
2,082.9 |
-- |
2,082.9 |
1,982.4 |
-- |
1,982.4 |
7,642.9 |
-- |
7,642.9 |
7,462.9 |
-- |
7,462.9 |
| Selling, general and administrative expenses
(exclusive of depreciation and amortization shown below) |
320.0 |
(5.6) |
314.4 |
281.3 |
(0.1) |
281.2 |
1,123.4 |
(13.5) |
1,109.9 |
1,088.5 |
(1.6) |
1,086.9 |
| Restructuring and impairment
charges |
83.0 |
(83.0) |
-- |
148.6 |
(148.6) |
-- |
157.9 |
(157.9) |
-- |
382.7 |
(382.7) |
-- |
| Depreciation and amortization |
135.5 |
-- |
135.5 |
142.3 |
-- |
142.3 |
539.2 |
-- |
539.2 |
579.0 |
-- |
579.0 |
| Total operating expenses |
2,621.4 |
(88.6) |
2,532.8 |
2,554.6 |
(148.7) |
2,405.9 |
9,463.4 |
(171.4) |
9,292.0 |
9,513.1 |
(384.3) |
9,128.8 |
| Income from
operations |
85.7 |
88.6 |
174.3 |
28.5 |
148.7 |
177.2 |
555.5 |
171.4 |
726.9 |
344.3 |
384.3 |
728.6 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense - net |
56.5 |
-- |
56.5 |
55.9 |
-- |
55.9 |
222.6 |
-- |
222.6 |
234.6 |
-- |
234.6 |
| Investment and other income
(expense) |
(0.8) |
1.1 |
0.3 |
(1.7) |
2.4 |
0.7 |
(9.9) |
10.0 |
0.1 |
(16.6) |
15.4 |
(1.2) |
| |
|
| Earnings (loss) before income
taxes |
28.4 |
89.7 |
118.1 |
(29.1) |
151.1 |
122.0 |
323.0 |
181.4 |
504.4 |
93.1 |
399.7 |
492.8 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Income tax expense |
2.3 |
9.5 |
11.8 |
49.5 |
(23.8) |
25.7 |
105.9 |
30.8 |
136.7 |
114.5 |
39.6 |
154.1 |
| |
|
| Net earnings
(loss) |
26.1 |
80.2 |
106.3 |
(78.6) |
174.9 |
96.3 |
217.1 |
150.6 |
367.7 |
(21.4) |
360.1 |
338.7 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Less: Income (loss) attributable to
noncontrolling interests |
(0.9) |
-- |
(0.9) |
0.9 |
-- |
0.9 |
(4.6) |
3.6 |
(1.0) |
5.9 |
-- |
5.9 |
|
|
|
| Net earnings (loss)
attributable to common shareholders |
$ 27.0 |
$ 80.2 |
$ 107.2 |
$ (79.5) |
$ 174.9 |
$ 95.4 |
$ 221.7 |
$ 147.0 |
$ 368.7 |
$ (27.3) |
$ 360.1 |
$ 332.8 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings (loss) per share
attributable to common shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
| Basic net earnings (loss) per
share |
$ 0.13 |
|
$ 0.52 |
$ (0.39) |
|
$ 0.46 |
$ 1.07 |
|
$ 1.79 |
$ (0.13) |
|
$ 1.62 |
| Diluted net earnings (loss) per
share |
$ 0.13 |
|
$ 0.51 |
$ (0.39) |
|
$ 0.46 |
$ 1.06 |
|
$ 1.76 |
$ (0.13) |
|
$ 1.60 |
| Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
206.7 |
|
206.7 |
205.3 |
|
205.3 |
206.4 |
|
206.4 |
205.2 |
|
205.2 |
| Diluted |
210.2 |
|
210.2 |
205.3 |
3.8 |
209.1 |
209.7 |
|
209.7 |
205.2 |
2.8 |
208.0 |
| |
|
|
| The Company believes that
certain non-GAAP measures, when presented in conjunction with
comparable GAAP measures, are useful because that information is an
appropriate measure for evaluating the Company's operating
performance. Internally, the Company uses this non-GAAP
information as an indicator of business performance, and evaluates
management's effectiveness with specific reference to this
indicator. These measures should be considered in addition to, not
a substitute for, or superior to, measures of financial performance
prepared in accordance with GAAP. |
| |
| R.R. Donnelley &
Sons Company |
| Reconciliation of GAAP
to Non-GAAP Measures |
| IN MILLIONS, EXCEPT PER SHARE
AND MARGIN DATA |
| (UNAUDITED) |
| |
|
|
|
|
|
|
|
|
| |
Three Months Ended
December 31, 2010 |
Three Months Ended
December 31, 2009 |
| |
Income from operations |
Operating margin |
Net earnings attributable to common
shareholders |
Net earnings attributable to common
shareholders per dilutedshare |
Income from continuing
operations |
Operating margin |
Net earnings (loss) attributable to
common shareholders |
Net earnings (loss) attributable to
common shareholders per diluted share |
| GAAP basis measures |
$ 85.7 |
3.2% |
$ 27.0 |
$ 0.13 |
$ 28.5 |
1.1% |
$ (79.5) |
$ (0.39) |
| |
|
|
|
|
|
|
|
|
| Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
| Restructuring and impairment
charges (1) |
83.0 |
3.0% |
75.0 |
0.36 |
148.6 |
5.8% |
157.7 |
0.77 |
| Acquisition-related expenses
(2) |
5.6 |
0.2% |
4.5 |
0.02 |
0.1 |
0.0% |
0.1 |
-- |
| Write-down of affordable
housing investments (3) |
-- |
-- |
0.7 |
-- |
-- |
-- |
1.5 |
0.01 |
| Income tax adjustments (4) |
-- |
-- |
-- |
-- |
-- |
-- |
15.6 |
0.07 |
| Total Non-GAAP adjustments |
88.6 |
3.2% |
80.2 |
0.38 |
148.7 |
5.8% |
174.9 |
0.85 |
| Non-GAAP measures |
$ 174.3 |
6.4% |
$ 107.2 |
$ 0.51 |
$ 177.2 |
6.9% |
$ 95.4 |
$ 0.46 |
| |
|
|
|
|
|
|
|
|
| (1) Restructuring
and impairment charges (pre-tax): Operating results for the
three months ended December 31, 2010 and 2009 were affected by the
following restructuring and impairment charges: |
| |
|
|
|
|
|
|
|
|
| |
2010 |
2009 |
|
|
|
|
|
|
| Employee termination costs
(a) |
$ 17.4 |
$ 8.0 |
|
|
|
|
|
|
| Other charges (b) |
4.1 |
9.5 |
|
|
|
|
|
|
| Total restructuring
expense |
21.5 |
17.5 |
|
|
|
|
|
|
| Forms and labels (c) |
61.0 |
93.8 |
|
|
|
|
|
|
| Canada (c) |
-- |
34.7 |
|
|
|
|
|
|
| Total goodwill
impairment |
61.0 |
128.5 |
|
|
|
|
|
|
| Other long-lived asset
impairment |
0.5 |
2.6 |
|
|
|
|
|
|
| Total impairment
charges |
61.5 |
131.1 |
|
|
|
|
|
|
| Total restructuring and
impairment charges |
$ 83.0 |
$ 148.6 |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| (a) employee
termination costs resulted from the reorganization of certain
operations and the exiting of certain business
activities. |
|
|
|
|
| (b) Includes lease
termination and other facility closure costs. |
|
|
|
|
| (c) non-cash
charges related to the impairment of goodwill. |
|
|
|
|
| |
|
|
|
|
|
|
|
|
| (2) Acquisition-related
expenses: Legal, accounting and other expenses associated with
acquisitions completed or contemplated. |
| |
|
|
|
|
|
|
|
|
| (3) Write-down of affordable
housing investments: Reflected the loss on the write-down of the
Company's affordable housing investments for the three months ended
December 31, 2010 and 2009. |
| |
|
|
|
|
|
|
|
|
| (4) Income tax
adjustments: Net earnings (loss) for the three months ended
December 31, 2009 included $15.6 million of income tax expense due
to the reorganization of certain entities within the International
segment. |
| |
| R.R. Donnelley &
Sons Company |
| Reconciliation of GAAP
to Non-GAAP Measures |
| IN MILLIONS, EXCEPT PER SHARE
AND MARGIN DATA |
| (UNAUDITED) |
| |
|
|
|
|
|
|
|
|
| |
Twelve Months Ended
December 31, 2010 |
Twelve Months Ended
December 31, 2009 |
| |
Income from operations |
Operating margin |
Net earnings attributable to common
shareholders |
Net earnings attributable to common
shareholders per diluted share |
Income from operations |
Operating margin |
Net earnings (loss) attributable to
common shareholders |
Net earnings (loss) attributable to
common shareholders per diluted share |
| GAAP basis measures |
$ 555.5 |
5.5% |
$ 221.7 |
$ 1.06 |
$ 344.3 |
3.5% |
$ (27.3) |
$ (0.13) |
| |
|
|
|
|
|
|
|
|
| Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
| Restructuring and impairment
charges (1) |
157.9 |
1.6% |
130.0 |
0.62 |
382.7 |
3.9% |
334.0 |
1.60 |
| Acquisition-related expenses
(2) |
13.5 |
0.2% |
11.8 |
0.06 |
1.6 |
0.0% |
1.0 |
-- |
| Losses related to debt
extinguishment (3) |
-- |
-- |
-- |
-- |
-- |
-- |
8.0 |
0.04 |
| Write-down of affordable
housing investments (4) |
-- |
-- |
0.7 |
-- |
-- |
-- |
1.5 |
0.01 |
| Venezuela devaluation (5) |
-- |
-- |
4.5 |
0.02 |
-- |
-- |
-- |
-- |
| Income tax adjustments (6) |
-- |
-- |
-- |
-- |
-- |
-- |
15.6 |
0.08 |
| Total Non-GAAP
adjustments |
171.4 |
1.8% |
147.0 |
0.70 |
384.3 |
3.9% |
360.1 |
1.73 |
| Non-GAAP measures |
$ 726.9 |
7.3% |
$ 368.7 |
$ 1.76 |
$ 728.6 |
7.4% |
$ 332.8 |
$ 1.60 |
| |
|
|
|
|
|
|
|
|
| (1) Restructuring
and impairment charges (pre-tax): Operating results for the
twelve months ended December 31, 2010 and 2009 were affected by the
following restructuring and impairment charges: |
| |
|
|
|
|
|
|
|
|
| |
2010 |
2009 |
|
|
|
|
|
|
| Employee termination costs
(a) |
$ 35.9 |
$ 79.4 |
|
|
|
|
|
|
| Other charges (b) |
29.5 |
149.3 |
|
|
|
|
|
|
| Total restructuring
expense |
65.4 |
228.7 |
|
|
|
|
|
|
| Forms and labels (c) |
61.0 |
93.8 |
|
|
|
|
|
|
| Canada (c) |
-- |
34.7 |
|
|
|
|
|
|
| Global Turnkey Solutions
(d) |
26.9 |
-- |
|
|
|
|
|
|
| Total goodwill and
intangible asset impairment |
87.9 |
128.5 |
|
|
|
|
|
|
| Other long-lived asset
impairment |
4.6 |
25.5 |
|
|
|
|
|
|
| Total impairment
charges |
92.5 |
154.0 |
|
|
|
|
|
|
| Total restructuring and
impairment charges |
$ 157.9 |
$ 382.7 |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| (a) employee
termination costs resulted from the reorganization of certain
operations and the exiting of certain business
activities. |
| (b) Includes lease
termination and other facility closure costs. In addition,
2010 includes multi-employer pension plan partial withdrawal
charges primarily attributable to two closed manufacturing
facilities in the U.S. Print and Related Services segment and 2009
includes termination of a significant long-term customer contract
in the business process outsourcing unit within the International
segment. |
| (c) non-cash
charges related to the impairment of goodwill. |
| (d) non-cash
charges related to the impairment of acquired customer relationship
intangible assets. |
| |
|
|
|
|
|
|
|
|
| (2)
Acquisition-related expenses: Legal, accounting and other expenses
associated with acquisitions completed or contemplated. |
| |
|
|
|
|
|
|
|
|
| (3) Losses related
to debt extinguishment: Reflected losses on the repurchase of
$640.6 million of senior notes due May 15, 2010 and January 15,
2012 for the twelve months ended December 31, 2009. |
| |
|
|
|
|
|
|
|
|
| (4) Write-down of
affordable housing investments: Reflected the loss on the
write-down of the Company's affordable housing investments for the
twelve months ended December 31, 2010 and 2009. |
| |
|
|
|
|
|
|
|
|
| (5) Venezuela devaluation:
Currency devaluation in Venezuela resulted in a pre-tax loss of
$8.9 million ($8.1 million after-tax) and an increase in loss
attributable to noncontrolling interests of $3.6 million. |
| |
|
|
|
|
|
|
|
|
| (6) Income tax adjustments:
Net earnings (loss) for the twelve months ended December 31, 2009
included $15.6 million of income tax expense due to the
reorganization of certain entities within the International
segment. |
| |
| R. R. Donnelley
& Sons Company |
| Segment GAAP to Non-GAAP
Operating Income and Margin Reconciliation |
| For the Three Months
Ended December 31, 2010 and 2009 |
| $ IN MILLIONS |
| (UNAUDITED) |
| |
|
|
|
|
| |
U.S. Print and Related
Services |
International |
Corporate |
Consolidated |
| |
|
|
|
|
| Three Months Ended
December 31, 2010 |
|
|
|
|
| Net sales |
$ 2,024.7 |
$ 682.4 |
$ -- |
$ 2,707.1 |
| Operating expense |
1,897.4 |
632.8 |
91.2 |
2,621.4 |
| Operating income (loss) |
127.3 |
49.6 |
(91.2) |
85.7 |
| Operating margin % |
6.3% |
7.3% |
nm |
3.2% |
| |
|
|
|
|
| Non-GAAP Adjustments |
|
|
|
|
| Restructuring charges |
4.9 |
4.7 |
11.9 |
21.5 |
| Impairment charges |
61.2 |
0.3 |
-- |
61.5 |
| Acquisition-related expenses |
-- |
-- |
5.6 |
5.6 |
| Total Non-GAAP
adjustments |
66.1 |
5.0 |
17.5 |
88.6 |
| |
|
|
|
|
| Non-GAAP income (loss) from
operations |
$ 193.4 |
$ 54.6 |
$ (73.7) |
$ 174.3 |
| Non-GAAP operating margin % |
9.6% |
8.0% |
nm |
6.4% |
| |
|
|
|
|
| Depreciation and
amortization |
97.5 |
29.2 |
8.8 |
135.5 |
| Capital expenditures |
29.9 |
39.2 |
15.4 |
84.5 |
| |
|
|
|
|
| Three Months Ended
December 31, 2009 |
|
|
|
|
| Net sales |
$ 1,923.6 |
$ 659.5 |
$ -- |
$ 2,583.1 |
| Operating expense |
1,852.2 |
662.6 |
39.8 |
2,554.6 |
| Operating income (loss) |
71.4 |
(3.1) |
(39.8) |
28.5 |
| Operating margin % |
3.7% |
(0.5)% |
nm |
1.1% |
| |
|
|
|
|
| Non-GAAP Adjustments |
|
|
|
|
| Restructuring charges |
6.0 |
8.6 |
2.9 |
17.5 |
| Impairment charges |
95.5 |
35.6 |
-- |
131.1 |
| Acquisition-related expenses |
-- |
-- |
0.1 |
0.1 |
| Total Non-GAAP
adjustments |
101.5 |
44.2 |
3.0 |
148.7 |
| |
|
|
|
|
| Non-GAAP income (loss) from
operations |
$ 172.9 |
$ 41.1 |
$ (36.8) |
$ 177.2 |
| Non-GAAP operating margin % |
9.0% |
6.2% |
nm |
6.9% |
| |
|
|
|
|
| Depreciation and
amortization |
103.4 |
31.0 |
7.9 |
142.3 |
| Capital expenditures |
18.9 |
23.2 |
20.0 |
62.1 |
| |
| R. R. Donnelley
& Sons Company |
| Segment GAAP to Non-GAAP
Operating Income and Margin Reconciliation |
| For the Twelve Months
Ended December 31, 2010 and 2009 |
| $ IN MILLIONS |
| (UNAUDITED) |
| |
|
|
|
|
| |
U.S. Print and Related
Services |
International |
Corporate |
Consolidated |
| |
|
|
|
|
| Twelve Months Ended
December 31, 2010 |
|
|
|
|
| Net sales |
$ 7,532.2 |
$ 2,486.7 |
$ -- |
$ 10,018.9 |
| Operating expense |
6,893.3 |
2,337.2 |
232.9 |
9,463.4 |
| Operating income (loss) |
638.9 |
149.5 |
(232.9) |
555.5 |
| Operating margin % |
8.5% |
6.0% |
nm |
5.5% |
| |
|
|
|
|
| Non-GAAP Adjustments |
|
|
|
|
| Restructuring charges |
29.9 |
22.4 |
13.1 |
65.4 |
| Impairment charges |
64.1 |
28.2 |
0.2 |
92.5 |
| Acquisition-related expenses |
-- |
-- |
13.5 |
13.5 |
| Total Non-GAAP
adjustments |
94.0 |
50.6 |
26.8 |
171.4 |
| |
|
|
|
|
| Non-GAAP income (loss) from
operations |
$ 732.9 |
$ 200.1 |
$ (206.1) |
$ 726.9 |
| Non-GAAP operating margin % |
9.7% |
8.0% |
nm |
7.3% |
| |
|
|
|
|
| Depreciation and
amortization |
391.8 |
115.2 |
32.2 |
539.2 |
| Capital expenditures |
99.2 |
88.4 |
41.8 |
229.4 |
| |
|
|
|
|
| Twelve Months Ended
December 31, 2009 |
|
|
|
|
| Net sales |
$ 7,437.0 |
$ 2,420.4 |
$ -- |
$ 9,857.4 |
| Operating expense |
6,947.8 |
2,456.4 |
108.9 |
9,513.1 |
| Operating income (loss) |
489.2 |
(36.0) |
(108.9) |
344.3 |
| Operating margin % |
6.6% |
(1.5)% |
nm |
3.5% |
| |
|
|
|
|
| Non-GAAP Adjustments |
|
|
|
|
| Restructuring charges |
55.7 |
164.8 |
8.2 |
228.7 |
| Impairment charges |
108.1 |
45.9 |
-- |
154.0 |
| Acquisition-related expenses |
-- |
-- |
1.6 |
1.6 |
| Total Non-GAAP
adjustments |
163.8 |
210.7 |
9.8 |
384.3 |
| |
|
|
|
|
| Non-GAAP income (loss) from
operations |
$ 653.0 |
$ 174.7 |
$ (99.1) |
$ 728.6 |
| Non-GAAP operating margin % |
8.8% |
7.2% |
nm |
7.4% |
| |
|
|
|
|
| Depreciation and
amortization |
422.2 |
122.6 |
34.2 |
579.0 |
| Capital expenditures |
101.4 |
60.9 |
32.7 |
195.0 |
| |
| R. R. Donnelley &
Sons Company |
| Condensed Consolidated
Statements of Cash Flows |
| For the Twelve Months Ended
December 31, 2010 and 2009 |
| IN MILLIONS |
| (UNAUDITED) |
| |
|
| |
2010 |
2009 |
| Operating
Activities |
|
|
| |
|
|
| Net earnings |
$ 217.1 |
$ (21.4) |
| Adjustment to reconcile
net loss to cash provided by operating activities |
660.5 |
775.3 |
| Changes in
operating assets and liabilities |
(125.1) |
671.9 |
| Net cash provided by
operating activities |
$ 752.5 |
$ 1,425.8 |
| |
|
| Net cash used in
investing activities |
$ (674.5) |
$ (260.9) |
| |
|
| Net cash used in
financing activities |
$ (58.0) |
$ (1,028.0) |
| |
|
|
| Effect of exchange rate on cash and
cash equivalents |
(0.1) |
38.3 |
| |
|
| Net increase in cash and
cash equivalents |
$ 19.9 |
$ 175.2 |
| |
|
|
| Cash and cash equivalents at beginning
of period |
499.2 |
324.0 |
| |
|
| Cash and cash equivalents
at end of period |
$ 519.1 |
$ 499.2 |
| Supplemental non-cash
disclosure: |
|
|
| Use of restricted cash to
pay restructuring costs |
$ 38.3 |
$ -- |
| Use of restricted cash to fund
obligations associated with deferred compensation plans |
1.1 |
0.9 |
| |
| R.R. Donnelley
& Sons Company |
| Revenue Reconciliation
Reported to Pro Forma |
| For the Three Months
Ended December 31, 2010 and 2009 |
| $ IN MILLIONS |
| (UNAUDITED) |
| |
|
|
|
| |
Reported net sales |
Adjustment for net sales of
acquired businesses |
Pro forma net sales |
| Three Months Ended
December 31, 2010 |
|
|
|
| U.S. Print and Related
Services |
$ 2,024.7 |
$ 79.9 |
$ 2,104.6 |
| International |
682.4 |
30.0 |
712.4 |
| Consolidated |
$ 2,707.1 |
$ 109.9 |
$ 2,817.0 |
| |
|
|
|
| Three Months Ended
December 31, 2009 |
|
|
|
| U.S. Print and Related
Services |
$ 1,923.6 |
$ 141.0 |
$ 2,064.6 |
| International |
659.5 |
33.9 |
693.4 |
| Consolidated |
$ 2,583.1 |
$ 174.9 |
$ 2,758.0 |
| |
|
|
|
| Net sales
change |
|
|
|
| U.S. Print and Related
Services |
5.3% |
|
1.9% |
| International |
3.5% |
|
2.7% |
| Consolidated |
4.8% |
|
2.1% |
The reported results of the company include the results of
acquired businesses from the acquisition date forward. The
company has provided this schedule to reconcile reported net sales
for the quarter ended December 31, 2010 and 2009 to pro forma net
sales as if the acquisitions took place at the beginning of the
respective periods.
For the quarter ended December 31, 2010 and 2009, the adjustment
for net sales of acquired businesses reflects the net sales of
Bowne & Co., Inc. (acquired November 24, 2010), Nimblefish
Technologies (acquired December 14, 2010) and 8touches (acquired
December 31, 2010).
| R.R. Donnelley
& Sons Company |
| Revenue Reconciliation
Reported to Pro Forma |
| For the Twelve Months
Ended December 31, 2010 and 2009 |
| $ IN MILLIONS |
| (UNAUDITED) |
| |
|
|
|
| |
Reported net sales |
Adjustment for net sales of
acquired businesses |
Pro forma net sales |
| Twelve Months Ended
December 31, 2010 |
|
|
|
| U.S. Print and Related
Services |
$ 7,532.2 |
$ 507.9 |
$ 8,040.1 |
| International |
2,486.7 |
139.2 |
2,625.9 |
| Consolidated |
$ 10,018.9 |
$ 647.1 |
$ 10,666.0 |
| |
|
|
|
| Twelve Months Ended
December 31, 2009 |
|
|
|
| U.S. Print and Related
Services |
$ 7,437.0 |
$ 587.4 |
$ 8,024.4 |
| International |
2,420.4 |
112.2 |
2,532.6 |
| Consolidated |
$ 9,857.4 |
$ 699.6 |
$ 10,557.0 |
| |
|
|
|
| Net sales
change |
|
|
|
| U.S. Print and Related
Services |
1.3% |
|
0.2% |
| International |
2.7% |
|
3.7% |
| Consolidated |
1.6% |
|
1.0% |
The reported results of the company include the results of
acquired businesses from the acquisition date forward. The
company has provided this schedule to reconcile reported net sales
for the year ended December 31, 2010 and 2009 to pro forma net
sales as if the acquisitions took place at the beginning of the
respective periods.
For the year ended December 31, 2010 and 2009, the adjustment
for net sales of acquired businesses reflects the net sales of
Bowne & Co., Inc. (acquired November 24, 2010), Nimblefish
Technologies (acquired December 14, 2010) and 8touches (acquired
December 31, 2010).
| |
| R.R. Donnelley
& Sons Company |
| Liquidity
Summary |
| As of December 31, 2010
and 2009 |
| $ IN MILLIONS |
| (UNAUDITED) |
| |
|
|
| Total Liquidity (1) |
December 31, 2010 |
December 31, 2009 |
| Cash (2) |
$ 519.1 |
$ 499.2 |
| Committed credit facilities (3,4) |
1,503.0 |
1,401.2 |
| |
2,022.1 |
1,900.4 |
| Usage |
|
|
| Borrowings under credit facilities |
120.0 |
-- |
| |
120.0 |
-- |
| |
|
|
| Net Available Liquidity |
$ 1,902.1 |
$ 1,900.4 |
| |
|
|
| (1) Liquidity does not include
credit facilities of non-U.S. subsidiaries, which are uncommitted
facilities. |
| |
|
|
| (2) Approximately 85% and 83% of
the cash as of December 31, 2010 and 2009, respectively, was
located outside the U.S., most of which could be subject to U.S.
federal income taxes and some of which could be subject to local
country taxes if repatriated to the U.S. |
| |
|
|
| (3) On December 17, 2010, the
Company entered into a $1.75 billion revolving unsecured and
committed credit agreement (the "Credit Agreement") which expires
December 17, 2013. The Credit Agreement replaced the Company's
previous $2.0 billion unsecured and committed revolving credit
facility (the "previous Facility") that was maturing on January 6,
2012. |
| |
|
|
| (4) The December 31, 2010 and
2009 amounts reflect the Credit Agreement and previous Facility,
respectively. Similar to the previous Facility, the Credit
Agreement contains a financial covenant that limits total debt to
four times adjusted EBITDA for the last twelve months as described
therein. Based on the results of operations for the twelve
months ended December 31, 2010 and existing term debt at that date,
the Company could have incurred up to $1,383.0 million of
additional debt under the Credit Agreement or otherwise in
aggregate and not be in violation of this financial covenant. The
$1,383.0 million of maximum additional debt is $247.0 million less
than the amount otherwise available under the $1.75 billion Credit
Agreement. As this total debt covenant is calculated using the
results of operations for the trailing twelve months, it does not
consider the impact of any future operating results that might
be achieved if the $1,383.0 million of additional available debt
were deployed in future operating activities. |
CONTACT: Media:
Doug Fitzgerald
EVP, Communications
630.322.6830
doug.fitzgerald@rrd.com
Investors:
Dave Gardella
VP, Investor Relations
312.326.8155
david.a.gardella@rrd.com
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