R.R. Donnelley & Sons Company (Nasdaq:RRD)
today reported financial results for the first quarter of 2013.
Highlights:
- First-quarter 2013 net sales of $2.5 billion grew 0.5% from the
first quarter of 2012
- U.S. Print and Related Services segment net sales declined
0.5%
- International segment net sales grew 3.5%
- Organic net sales decline of 1.2% reflects improvement in trend
from the previous five quarters
- First-quarter 2013 GAAP net earnings attributable to common
shareholders of $27.1 million, or $0.15 per diluted share
- First-quarter 2013 non-GAAP net earnings attributable to common
shareholders of $68.1 million, or $0.37 per diluted share
- First-quarter 2013 non-GAAP adjusted EBITDA of $277.1 million,
or 10.9% of net sales
- Company reaffirms revenue, margin and free cash flow guidance
for full-year 2013
"Our first-quarter results allow us to reaffirm our full-year
guidance for revenue, margin and free cash flow," said Thomas J.
Quinlan III, R.R. Donnelley's President and Chief Executive
Officer. "We continue to focus our efforts to drive free cash flow,
and remain committed to our targeted gross leverage range of 2.25x
to 2.75x on a long-term sustainable basis."
Net sales in the quarter were $2.5 billion, up $13.6 million, or
0.5%, from the first quarter of 2012 due to the impact of 2012
acquisitions and volume growth in the International segment. The
first quarter of 2012 included an adjustment to accounts receivable
for prior periods' overaccruals of rebates owed to certain
customers that favorably impacted both sales and operating income
by $19.8 million. After adjusting for the impact of this rebate
adjustment, as well as the impact of acquisitions, changes in
foreign exchange rates and pass-through paper sales, organic sales
declined 1.2% from the first quarter of 2012 due to price erosion
and volume declines in the U.S. Print and Related Services segment.
Operating income in the first quarter of 2013 was $139.8 million,
which was impacted by restructuring and impairment charges and
acquisition-related expenses totaling $23.7 million, compared to
operating income in the first quarter of 2012 of $121.4 million,
which included restructuring and impairment charges and
acquisition-related expenses totaling $50.3 million.
First-quarter 2013 net income attributable to common
shareholders was $27.1 million, or $0.15 per diluted share,
compared to net income of $37.4 million, or $0.21 per diluted
share, in the first quarter of 2012. First-quarter 2013 net income
attributable to common shareholders included $62.5 million in
pre-tax charges for restructuring, impairment (non-cash),
acquisition-related expenses, a loss on currency devaluation in
Venezuela and a loss on debt extinguishment, while in the first
quarter of 2012, net income attributable to common shareholders
included $62.4 million in pre-tax charges for restructuring,
impairment (non-cash), acquisition-related expenses and a loss on
debt extinguishment. Additional details regarding the nature of
these and other items are included in the attached schedules.
Non-GAAP adjusted EBITDA was $277.1 million in the first quarter
of 2013 compared to $296.7 million in the first quarter of 2012.
Non-GAAP adjusted EBITDA margin in the first quarter of 2013 was
10.9%, or 90 basis points lower than in the first quarter of 2012,
as the $19.8 million customer rebate adjustment, price pressure, an
unfavorable product mix and lower pension income more than offset
lower employee-related expenses and productivity improvements.
Non-GAAP net earnings attributable to common shareholders
totaled $68.1 million, or $0.37 per diluted share, in the first
quarter of 2013 compared to $78.8 million, or $0.44 per diluted
share, in the first quarter of 2012. First-quarter non-GAAP net
earnings attributable to common shareholders exclude restructuring
and impairment charges, losses on debt extinguishment, and
acquisition-related expenses in both years as well as the loss on
currency devaluation in Venezuela in 2013. A reconciliation of net
earnings attributable to common shareholders to non-GAAP adjusted
EBITDA and non-GAAP net earnings attributable to common
shareholders is presented in the attached schedules.
Outlook
The Company provides the following guidance for the full-year
2013:
| |
| |
Current
guidance |
Previous
guidance |
| Revenue |
$10.1 to $10.3 billion |
$10.1 to $10.3 billion |
| Non-GAAP adjusted EBITDA margin |
11.2% to 11.4% |
11.2% to 11.4% |
| Depreciation and amortization |
$450 to $460 million |
$455 to $465 million |
| Interest expense |
$250 to $255 million |
$245 to $250 million |
| Non-GAAP effective tax rate |
33% to 35% |
33% to 35% |
| Diluted share count |
183 to 185 million |
183 to 185 million |
| Capital expenditures |
$200 to $225 million |
$200 to $225 million |
| Free cash flow |
$400 to $500 million |
$400 to $500 million |
Conference Call
RR Donnelley will host a conference call and simultaneous
webcast to discuss its first-quarter results today, Thursday, April
25, 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
must register in advance at
http://www.meetme.net/rrd. After registering, participants will
receive dial-in numbers, a passcode, and a personal identification
number (PIN) that is used to uniquely identify their presence and
automatically join them into the audio conference. 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 9850121#.
About RR Donnelley
RR Donnelley (Nasdaq:RRD) is a global provider of integrated
communications. The Company works collaboratively with more
than 60,000 customers worldwide to develop custom communications
solutions that reduce costs, drive top-line growth, 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
services to 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 non-GAAP Information
This news release contains certain non-GAAP measures. The
Company believes that these 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
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.
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 sales forces, 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; the Company's ability to access debt and the
capital markets and the reliability of the participants to the
Company's 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 |
| Condensed Consolidated Balance
Sheets |
| As of March 31, 2013 and
December 31, 2012 |
| (UNAUDITED) |
| (in millions, except per share
data) |
| |
|
|
| |
March 31,
2013 |
December 31,
2012 |
| Assets |
|
|
| |
|
|
| Cash and cash
equivalents |
$ 302.9 |
$ 430.7 |
| Receivables, less allowances
for doubtful accounts |
1,851.8 |
1,878.8 |
| Inventories |
504.4 |
510.2 |
| Prepaid expenses and other
current assets |
155.3 |
157.7 |
| Total Current Assets |
2,814.4 |
2,977.4 |
| Property, plant and equipment -
net |
1,544.9 |
1,616.6 |
| Goodwill |
1,431.9 |
1,436.4 |
| Other intangible assets -
net |
366.4 |
382.9 |
| Deferred income
taxes |
447.9 |
445.1 |
| Other noncurrent
assets |
401.3 |
404.3 |
| Total
Assets |
$ 7,006.8 |
$ 7,262.7 |
| |
|
|
| Liabilities |
|
|
| |
|
|
| Accounts payable |
$ 1,030.9 |
$ 1,210.3 |
| Accrued liabilities |
698.4 |
825.2 |
| Short-term and current portion
of long-term debt |
21.6 |
18.4 |
| Total Current
Liabilities |
1,750.9 |
2,053.9 |
| Long-term debt |
3,512.2 |
3,420.2 |
| Pension liabilities |
1,126.0 |
1,150.5 |
| Other postretirement benefits
plan liabilities |
240.4 |
241.7 |
| Other noncurrent
liabilities |
326.9 |
327.7 |
| Total
Liabilities |
6,956.4 |
7,194.0 |
| Equity |
|
|
| |
|
|
| Common stock, $1.25 par
value |
303.7 |
303.7 |
| Authorized shares:
500.0 |
|
|
| Issued shares: 243.0 in 2013
and 2012 |
|
|
| Additional paid-in
capital |
2,796.4 |
2,839.4 |
| Accumulated deficit |
(515.9) |
(496.1) |
| Accumulated other comprehensive
loss |
(1,022.9) |
(1,029.2) |
| Treasury stock, at cost, 61.6
shares in 2013 (2012 - 62.6 shares) |
(1,524.2) |
(1,565.0) |
| Total RR Donnelley
shareholders' equity |
37.1 |
52.8 |
| Noncontrolling
interests |
13.3 |
15.9 |
| Total
Equity |
50.4 |
68.7 |
| Total Liabilities and
Equity |
$ 7,006.8 |
$ 7,262.7 |
| |
| |
| |
| R. R. Donnelley &
Sons Company |
| Condensed Consolidated
Statements of Operations |
| For the Three Months Ended
March 31, 2013 and 2012 |
| (UNAUDITED) |
| (in millions, except per share
data) |
| |
|
|
|
|
|
|
|
| |
For the
Three Months Ended March 31, |
|
|
|
| |
2 0 1 3
GAAP |
ADJUSTMENTS TO
NON-GAAP |
2 0 1 3
NON-GAAP |
2 0 1 2
GAAP |
ADJUSTMENTS TO
NON-GAAP |
2 0 1 2
NON-GAAP |
|
| Products net sales |
$ 2,129.7 |
$ -- |
$ 2,129.7 |
$ 2,196.5 |
$ -- |
$ 2,196.5 |
|
| Services net sales |
408.8 |
-- |
408.8 |
328.4 |
-- |
328.4 |
|
| Total net
sales |
2,538.5 |
-- |
2,538.5 |
2,524.9 |
-- |
2,524.9 |
|
| |
|
|
|
|
|
|
|
| Products cost of sales (1) |
1,668.3 |
-- |
1,668.3 |
1,702.9 |
-- |
1,702.9 |
|
| Services cost of sales (1) |
311.9 |
-- |
311.9 |
242.1 |
-- |
242.1 |
|
| Total cost of sales (1) |
1,980.2 |
-- |
1,980.2 |
1,945.0 |
-- |
1,945.0 |
|
| |
|
|
|
|
|
|
|
| Products gross profit (1) |
461.4 |
-- |
461.4 |
493.6 |
-- |
493.6 |
|
| Services gross profit (1) |
96.9 |
-- |
96.9 |
86.3 |
-- |
86.3 |
|
| Total gross profit
(1) |
558.3 |
-- |
558.3 |
579.9 |
-- |
579.9 |
|
| |
|
|
|
|
|
|
|
| Selling, general and administrative expenses
(SG&A) (1) |
282.2 |
(1.0) |
281.2 |
283.5 |
(0.3) |
283.2 |
|
| Restructuring and impairment charges -
net |
22.7 |
(22.7) |
-- |
50.0 |
(50.0) |
-- |
|
| Depreciation and
amortization |
113.6 |
-- |
113.6 |
125.0 |
-- |
125.0 |
|
| Income from
operations |
139.8 |
23.7 |
163.5 |
121.4 |
50.3 |
171.7 |
|
| |
|
|
|
|
|
|
|
| Interest expense - net |
62.8 |
-- |
62.8 |
60.7 |
-- |
60.7 |
|
| Investment and other expense (income) -
net |
3.5 |
(3.2) |
0.3 |
(1.2) |
-- |
(1.2) |
|
| Loss on debt extinguishment |
35.6 |
(35.6) |
-- |
12.1 |
(12.1) |
-- |
|
| |
|
|
|
|
|
|
|
| Earnings before income
taxes |
37.9 |
62.5 |
100.4 |
49.8 |
62.4 |
112.2 |
|
| |
|
|
|
|
|
|
|
| Income tax expense |
12.6 |
20.5 |
33.1 |
11.9 |
21.0 |
32.9 |
|
| |
|
|
|
|
|
|
|
| Net
earnings |
25.3 |
42.0 |
67.3 |
37.9 |
41.4 |
79.3 |
|
| |
|
|
|
|
|
|
|
| Less: Income (loss) attributable to
noncontrolling interests |
(1.8) |
1.0 |
(0.8) |
0.5 |
-- |
0.5 |
|
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| Net earnings attributable to RR
Donnelley common shareholders |
$ 27.1 |
$ 41.0 |
$ 68.1 |
$ 37.4 |
$ 41.4 |
$ 78.8 |
|
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| Net earnings per share attributable
to RR Donnelley common shareholders: |
|
|
|
|
|
|
|
| Basic net earnings per share |
$ 0.15 |
|
$ 0.38 |
$ 0.21 |
|
$ 0.44 |
|
| Diluted net earnings per share |
$ 0.15 |
|
$ 0.37 |
$ 0.21 |
|
$ 0.44 |
|
| Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
| Basic |
181.2 |
|
181.2 |
179.4 |
|
179.4 |
|
| Diluted |
182.9 |
|
182.9 |
180.4 |
|
180.4 |
|
| |
|
|
|
|
|
|
|
| Additional
information: |
|
|
|
|
|
|
|
| Gross margin (1) |
22.0% |
|
22.0% |
23.0% |
|
23.0% |
|
| SG&A as a % of total net sales
(1) |
11.1% |
|
11.1% |
11.2% |
|
11.2% |
|
| Operating margin |
5.5% |
|
6.4% |
4.8% |
|
6.8% |
|
| Effective tax rate |
33.2% |
|
33.0% |
23.9% |
|
29.3% |
|
| |
|
|
|
|
|
|
|
| (1) Exclusive of depreciation and
amortization |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| 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 |
| For the Three Months Ended
March 31, 2013 and 2012 |
| (UNAUDITED) |
| (in millions, except per share
data) |
| |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| |
For the Three Months
Ended March 31, 2013 |
For the Three Months
Ended March 31, 2012 |
| |
SG&A |
Income from operations |
Operating margin |
Net earnings attributable to common
shareholders |
Net earnings attributable to common
shareholders per diluted share |
SG&A |
Income from operations |
Operating margin |
Net earnings attributable to common
shareholders |
Net earnings attributable to common
shareholders per diluted share |
| GAAP basis measures |
$ 282.2 |
$ 139.8 |
5.5% |
$ 27.1 |
$ 0.15 |
$ 283.5 |
$ 121.4 |
4.8% |
$ 37.4 |
$ 0.21 |
| |
|
|
|
|
|
|
|
|
|
|
| Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| Restructuring charges - net
(1) |
-- |
18.6 |
0.7% |
12.0 |
0.06 |
-- |
40.7 |
1.6% |
27.0 |
0.15 |
| Impairment charges - net
(2) |
-- |
4.1 |
0.2% |
2.7 |
0.01 |
-- |
9.3 |
0.4% |
6.2 |
0.03 |
| Acquisition-related expenses
(3) |
(1.0) |
1.0 |
0.0% |
1.0 |
0.01 |
(0.3) |
0.3 |
0.0% |
0.3 |
0.00 |
| Loss on debt extinguishment
(4) |
-- |
-- |
-- |
23.1 |
0.13 |
-- |
-- |
-- |
7.9 |
0.05 |
| Venezuela devaluation (5) |
-- |
-- |
-- |
2.2 |
0.01 |
-- |
-- |
-- |
-- |
-- |
| Total Non-GAAP adjustments |
(1.0) |
23.7 |
0.9% |
41.0 |
0.22 |
(0.3) |
50.3 |
2.0% |
41.4 |
0.23 |
| Non-GAAP measures |
$ 281.2 |
$ 163.5 |
6.4% |
$ 68.1 |
$ 0.37 |
$ 283.2 |
$ 171.7 |
6.8% |
$ 78.8 |
$ 0.44 |
| |
|
|
|
|
|
|
|
|
|
|
| (1) Restructuring charges -
net (pre-tax): Operating results for the three months ended March
31, 2013 and 2012 were affected by the following restructuring
charges: |
|
| |
|
|
|
|
|
|
|
|
|
|
| |
2013 |
2012 |
|
|
|
|
|
|
|
|
| Employee termination costs
(a) |
$ 8.8 |
$ 36.8 |
|
|
|
|
|
|
|
|
| Other charges (b) |
9.8 |
3.9 |
|
|
|
|
|
|
|
|
| Total restructuring
charges - net |
$ 18.6 |
$ 40.7 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| (a) For the three
months ended March 31, 2013, employee termination costs resulted
from facility closures and the reorganization of certain
operations. Facility closures included two manufacturing facilities
in the U.S. Print and Related Services segment during the three
months ended March 31, 2013. For the three months ended March 31,
2012, employee terminations resulted from the reorganization of
sales and administrative functions across all segments, as well as
facility closures and the reorganization of certain operations.
During the three months ended March 31, 2012, facility closures
included two manufacturing facilities within the U.S. Print and
Related Services segment and one manufacturing facility within the
International segment. |
|
| |
|
|
|
|
|
|
|
|
|
|
| (b) Includes lease
termination and other facility costs, including charges related to
multi-employer pension plan withdrawal obligations. |
|
| |
|
|
|
|
|
|
|
|
|
|
| (2) Impairment charges -
net: Operating results for the three months ended March 31, 2013
and 2012 were affected by other long-lived asset impairment
charges. |
|
| |
|
|
|
|
|
|
|
|
|
|
| (3) Acquisition-related
expenses: Legal, accounting and other expenses associated with
acquisitions completed or contemplated. |
|
| |
|
|
|
|
|
|
|
|
|
|
| (4) Loss on debt
extinguishment: Pre-tax loss of $35.6 million ($23.1 million
after-tax) was recognized for the three months ended March 31, 2013
related to the repurchase of $173.5 million of 6.125% senior notes
due January 15, 2017, $130.2 million of 8.60% senior notes due
August 15, 2016 and $50.0 million of 7.25% senior notes due May 15,
2018. During the three months ended March 31, 2012, a pre-tax loss
of $12.1 million ($7.9 million after-tax) was recognized related to
the repurchase of $341.8 million of 4.95% senior notes due April 1,
2014 and $100.0 million of 5.50% senior notes due May 15,
2015. |
|
| |
|
|
|
|
|
|
|
|
|
|
| (5) Venezuela devaluation:
Currency devaluation in Venezuela resulted in a pre-tax loss of
$3.2 million ($3.2 million after-tax), of which $1.0 million was
included in loss attributable to noncontrolling interests. |
|
|
| |
| |
| |
| R. R. Donnelley &
Sons Company |
| Segment GAAP to Non-GAAP
Operating Income and Margin Reconciliation |
| For the Three Months Ended
March 31, 2013 and 2012 |
| (UNAUDITED) |
| (in millions) |
| |
|
|
|
|
| |
U.S. Print and Related
Services |
International |
Corporate |
Consolidated |
| |
|
|
|
|
| For the Three Months Ended March 31,
2013 |
|
|
|
|
| Net sales |
$ 1,872.5 |
$ 666.0 |
$ -- |
$ 2,538.5 |
| Operating expenses |
1,727.5 |
633.9 |
37.3 |
2,398.7 |
| Income (loss) from operations |
145.0 |
32.1 |
(37.3) |
139.8 |
| Operating margin % |
7.7% |
4.8% |
nm |
5.5% |
| |
|
|
|
|
| Non-GAAP Adjustments |
|
|
|
|
| Restructuring charges - net |
15.6 |
2.2 |
0.8 |
18.6 |
| Impairment charges - net |
3.9 |
(0.2) |
0.4 |
4.1 |
| Acquisition-related expenses |
-- |
-- |
1.0 |
1.0 |
| Total Non-GAAP
adjustments |
19.5 |
2.0 |
2.2 |
23.7 |
| |
|
|
|
|
| Non-GAAP income (loss) from
operations |
$ 164.5 |
$ 34.1 |
$ (35.1) |
$ 163.5 |
| Non-GAAP operating margin % |
8.8% |
5.1% |
nm |
6.4% |
| |
|
|
|
|
| Depreciation and amortization |
75.0 |
26.4 |
12.2 |
113.6 |
| Capital expenditures |
21.2 |
11.3 |
5.4 |
37.9 |
| |
|
|
|
|
| For the Three Months Ended March 31,
2012 |
|
|
|
|
| Net sales |
$ 1,881.4 |
$ 643.5 |
$ -- |
$ 2,524.9 |
| Operating expenses |
1,742.2 |
612.9 |
48.4 |
2,403.5 |
| Income (loss) from operations |
139.2 |
30.6 |
(48.4) |
121.4 |
| Operating margin % |
7.4% |
4.8% |
nm |
4.8% |
| |
|
|
|
|
| Non-GAAP Adjustments |
|
|
|
|
| Restructuring charges - net |
31.7 |
4.4 |
4.6 |
40.7 |
| Impairment charges - net |
8.0 |
1.0 |
0.3 |
9.3 |
| Acquisition-related expenses |
-- |
-- |
0.3 |
0.3 |
| Total Non-GAAP
adjustments |
39.7 |
5.4 |
5.2 |
50.3 |
| |
|
|
|
|
| Non-GAAP income (loss) from
operations |
$ 178.9 |
$ 36.0 |
$ (43.2) |
$ 171.7 |
| Non-GAAP operating margin % |
9.5% |
5.6% |
nm |
6.8% |
| |
|
|
|
|
| Depreciation and amortization |
87.6 |
27.5 |
9.9 |
125.0 |
| Capital expenditures |
27.1 |
11.1 |
7.1 |
45.3 |
| |
| |
| R. R. Donnelley &
Sons Company |
| Condensed Consolidated
Statements of Cash Flows |
| For the Three Months Ended
March 31, 2013 and 2012 |
| (UNAUDITED) |
| (in millions) |
| |
|
|
| |
|
| |
2013 |
2012 |
| |
|
|
| |
|
|
| Net earnings |
$ 25.3 |
$ 37.9 |
| Adjustment to reconcile net
earnings to net cash used in operating activities |
155.4 |
167.4 |
| Changes in operating assets and
liabilities |
(268.0) |
(240.7) |
| Pension and other
postretirement benefits plan contributions |
(8.5) |
(16.6) |
| Net cash used in operating
activities |
$ (95.8) |
$ (52.0) |
| |
|
|
| Capital expenditures |
(37.9) |
(45.3) |
| All other cash used in
investing activities |
4.8 |
(1.0) |
| Net cash used in investing
activities |
$ (33.1) |
$ (46.3) |
| |
|
|
| Net cash provided by financing
activities |
$ 3.7 |
$ 52.0 |
| |
|
|
| Effect of exchange rate on cash and cash
equivalents |
(2.6) |
11.6 |
| |
|
|
| Net decrease in cash and cash
equivalents |
$ (127.8) |
$ (34.7) |
| |
|
|
| Cash and cash equivalents at beginning of
year |
430.7 |
449.7 |
| |
|
|
| Cash and cash equivalents at
end of period |
$ 302.9 |
$ 415.0 |
| |
|
|
| |
|
|
| Additional
Information: |
|
|
| Net cash used in operating
activities |
$ (95.8) |
$ (52.0) |
| Less: capital expenditures |
37.9 |
45.3 |
| Free cash flow, or net cash used in operating
activities less capital expenditures |
$ (133.7) |
$ (97.3) |
| |
| |
| |
| R.R. Donnelley &
Sons Company |
| Reconciliation of Reported to
Pro Forma Net Sales |
| For the Three Months Ended
March 31, 2013 and 2012 |
| (UNAUDITED) |
| (in millions) |
| |
|
|
|
| |
Reported net sales |
Adjustment for net sales of acquired
businesses |
Pro forma net sales |
| For the Three Months Ended March 31,
2013 |
|
|
|
| U.S. Print and Related Services |
$ 1,872.5 |
$ -- |
$ 1,872.5 |
| International |
666.0 |
-- |
666.0 |
| Consolidated |
$ 2,538.5 |
$ -- |
$ 2,538.5 |
| |
|
|
|
| For the Three Months Ended March 31,
2012 |
|
|
|
| U.S. Print and Related Services |
$ 1,881.4 |
$ 66.8 |
$ 1,948.2 |
| International |
643.5 |
-- |
643.5 |
| Consolidated |
$ 2,524.9 |
$ 66.8 |
$ 2,591.7 |
| |
|
|
|
| Net sales change |
|
|
|
| U.S. Print and Related Services |
(0.5%) |
|
(3.9%) |
| International |
3.5% |
|
3.5% |
| Consolidated |
0.5% |
|
(2.1%) |
| |
|
|
|
| Supplementary non-GAAP
information: |
|
|
|
| |
|
|
|
| Year-over-year impact of changes in
foreign exchange (FX) rates |
|
|
|
| U.S. Print and Related
Services |
|
|
--% |
| International |
|
|
(0.4%) |
| Consolidated |
|
|
(0.1%) |
| |
|
|
|
| Approximate year-over-year impact of
changes in pass-through paper sales |
|
|
|
| U.S. Print and Related Services |
|
|
(0.6%) |
| International |
|
|
1.7% |
| Consolidated |
|
|
--% |
| |
|
|
|
| Year-over-year impact of the prior
year rebate adjustment (1) |
|
|
|
| U.S. Print and Related Services |
|
|
(1.0%) |
| Consolidated |
|
|
(0.8%) |
| |
|
|
|
| Net organic sales change
(2) |
|
|
|
| U.S. Print and Related Services |
|
|
(2.3%) |
| International |
|
|
2.2% |
| Consolidated |
|
|
(1.2%) |
| |
|
|
|
| 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 three months ended
March 31, 2013 and 2012 to pro forma net sales as if the 2012
acquisitions took place as of January 1, 2012 for the purposes of
this schedule. |
|
|
|
| |
|
|
|
| There were no acquisitions during
the three months ended March 31, 2013. |
|
|
|
| |
|
|
|
| For the three months ended
March 31, 2012, the adjustment for net sales of acquired businesses
reflects the net sales of EDGAR Online (acquired August 14, 2012),
Express Postal Options International (acquired September 6, 2012),
Meisel Photographic Corporation (acquired December 17, 2012) and
Presort Solutions (acquired December 28, 2012). |
|
|
|
| |
|
|
|
| (1) The three months ended March
31, 2012 included an adjustment for overaccruals of rebates owed to
certain customers in prior periods that favorably impacted net
sales by $19.8 million |
|
|
|
| |
|
|
|
| (2) Adjusted for net sales of
acquired businesses, the impact of changes in FX rates and
pass-through paper sales and the prior year rebate adjustment to
correct an over-accrual of rebates due to certain customers |
|
|
|
| |
|
|
|
| |
| |
| R.R. Donnelley &
Sons Company |
| Reconciliation of GAAP Net
Earnings (Loss) to Non-GAAP Adjusted EBITDA |
| For the Three and Twelve Months
Ended March 31, 2013 and 2012 |
| (UNAUDITED) |
| (in millions) |
| |
|
|
|
|
|
| |
For the Twelve Months Ended |
For the Three Months
Ended |
| |
March 31, 2013 |
March 31, 2013 |
December 31, 2012 |
September 30, 2012 |
June 30, 2012 |
| |
|
|
|
|
|
| GAAP net earnings
(loss) |
$ (666.2) |
$ 25.3 |
$ (851.7) |
$ 71.2 |
$ 89.0 |
| |
|
|
|
|
|
| Adjustments |
|
|
|
|
|
| Income tax expense (benefit) |
14.3 |
12.6 |
(57.0) |
52.2 |
6.5 |
| Interest expense - net |
253.9 |
62.8 |
63.8 |
63.7 |
63.6 |
| Investment and other expense (income) -
net |
7.0 |
3.5 |
(0.9) |
(0.4) |
4.8 |
| Loss on debt extinguishment (1) |
39.6 |
35.6 |
4.0 |
-- |
-- |
| Depreciation and amortization |
470.2 |
113.6 |
116.7 |
119.0 |
120.9 |
| Restructuring and impairment charges - net
(2) |
1,091.2 |
22.7 |
1,020.6 |
13.9 |
34.0 |
| Acquisition-related expenses (3) |
3.2 |
1.0 |
0.4 |
1.3 |
0.5 |
| Gain on pension curtailment (4) |
(3.7) |
-- |
(3.7) |
-- |
-- |
| Total Non-GAAP adjustments |
1,875.7 |
251.8 |
1,143.9 |
249.7 |
230.3 |
| |
|
|
|
|
|
| Non-GAAP adjusted
EBITDA |
$ 1,209.5 |
$ 277.1 |
$ 292.2 |
$ 320.9 |
$ 319.3 |
| |
|
|
|
|
|
| Net sales |
$ 10,235.5 |
$ 2,538.5 |
$ 2,659.6 |
$ 2,508.8 |
$ 2,528.6 |
| Non-GAAP adjusted EBITDA margin % |
11.8% |
10.9% |
11.0% |
12.8% |
12.6% |
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
For the Twelve Months Ended |
For the Three Months
Ended |
| |
March 31, 2012 |
March 31, 2012 |
December 31, 2011 |
September 30, 2011 |
June 30, 2011 |
| |
|
|
|
|
|
| GAAP net earnings
(loss) |
$ (117.5) |
$ 37.9 |
$ (326.6) |
$ 158.7 |
$ 12.5 |
| |
|
|
|
|
|
| Adjustments |
|
|
|
|
|
| Income tax expense (benefit) |
(121.4) |
11.9 |
(52.2) |
(64.8) |
(16.3) |
| Interest expense - net |
246.1 |
60.7 |
61.2 |
62.9 |
61.3 |
| Investment and other expense (income) -
net |
(12.0) |
(1.2) |
0.5 |
(1.3) |
(10.0) |
| Loss on debt extinguishment (1) |
82.0 |
12.1 |
-- |
1.3 |
68.6 |
| Depreciation and amortization |
534.7 |
125.0 |
129.9 |
139.1 |
140.7 |
| Restructuring and impairment charges - net
(2) |
667.0 |
50.0 |
507.1 |
34.2 |
75.7 |
| Acquisition-related expenses (3) |
2.1 |
0.3 |
0.2 |
0.7 |
0.9 |
| Gain on pension curtailment (4) |
(38.7) |
-- |
(38.7) |
-- |
-- |
| Acquisition contingent compensation (5) |
15.3 |
-- |
15.3 |
-- |
-- |
| Total Non-GAAP adjustments |
1,375.1 |
258.8 |
623.3 |
172.1 |
320.9 |
| |
|
|
|
|
|
| Non-GAAP adjusted
EBITDA |
$ 1,257.6 |
$ 296.7 |
$ 296.7 |
$ 330.8 |
$ 333.4 |
| |
|
|
|
|
|
| Net sales |
$ 10,552.4 |
$ 2,524.9 |
$ 2,720.8 |
$ 2,683.3 |
$ 2,623.4 |
| Non-GAAP adjusted EBITDA margin % |
11.9% |
11.8% |
10.9% |
12.3% |
12.7% |
| |
|
|
|
|
|
| |
|
|
|
|
|
| (1) Loss on debt extinguishment:
Pre-tax losses were recognized related to the repurchases of senior
notes prior to maturity, as well as the termination of the previous
$1.75 billion unsecured revolving credit agreement. |
| |
|
|
|
|
|
| (2) Restructuring and impairment
charges - net: Pre-tax charges for employee termination costs,
lease termination and other costs and impairment of other
long-lived assets. The three months ended December 31, 2012 and
2011 also included pre-tax charges for the impairment of goodwill
and other intangible assets. |
| |
|
|
|
|
|
| (3) Acquisition-related expenses:
Legal, accounting and other expenses associated with acquisitions
completed or contemplated. |
| |
|
|
|
|
|
| (4) Gain on pension curtailment:
For 2012, a pre-tax gain on pension curtailment was recognized
related to the remeasurement of the U.K. pension plan's assets and
obligations that was required with the announced freeze on further
benefit accruals as of December 31, 2012. For 2011, a pre-tax gain
on pension curtailment was recognized related to the remeasurement
of the U.S. pension plans' assets and obligations that was required
with the announced freeze of further benefit accruals under all of
the U.S. pension plans as of December 31, 2011. |
| |
|
|
|
|
|
| (5) Acquisition contingent
compensation: For 2011, pre-tax expense of $15.3 million was
incurred related to contingent compensation earned by prior owners,
based on achieving certain volume milestones for the business
following its acquisition by the Company. |
| |
| |
| |
| R.R. Donnelley
& Sons Company |
| Debt and Liquidity
Summary |
| As of March 31, 2013 and
2012 and December 31, 2012 |
| (UNAUDITED) |
| (in millions) |
| |
|
|
|
|
| |
|
March 31, 2013 |
December 31, 2012 |
March 31, 2012 |
| Total Liquidity (1) |
Credit Agreement |
Credit Agreement |
Previous Credit
Agreement |
| Cash (2) |
$ 302.9 |
$ 430.7 |
$ 415.0 |
| Committed credit agreement
(3) |
1,066.3 |
1,150.0 |
1,518.7 |
| |
1,369.2 |
1,580.7 |
1,933.7 |
| Usage |
|
|
|
| Borrowings under credit agreement
(3) |
-- |
-- |
327.0 |
| Impact on availability related to
outstanding letters of credit |
-- |
38.9 |
-- |
| |
|
|
|
| Net Available Liquidity |
$ 1,369.2 |
$ 1,541.8 |
$ 1,606.7 |
| |
|
|
|
| |
|
|
|
| |
|
|
|
| Short-term and current
portion of long-term debt |
$ 21.6 |
$ 18.4 |
$ 346.8 |
| Long-term debt |
3,512.2 |
3,420.2 |
3,408.5 |
| Total debt |
$ 3,533.8 |
$ 3,438.6 |
$ 3,755.3 |
| |
|
|
|
| Non-GAAP adjusted EBITDA
for the twelve months ended March 31, 2013 and 2012 and for the
year ended December 31, 2012 |
$ 1,209.5 |
$ 1,229.1 |
$1,257.6 |
| |
|
|
|
| Non-GAAP
Gross Leverage (defined as total debt divided by non-GAAP adjusted
EBITDA) |
2.9x |
2.8x |
3.0x |
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| (1) Liquidity does
not include credit facilities of non-U.S. subsidiaries, which are
uncommitted facilities. |
| |
|
|
|
|
| (2) Approximately
80% of cash as of March 31, 2013, 85% of cash as of December 31,
2012 and 89% of cash as of March 31, 2012 was located outside the
U.S. In 2013, the Company's foreign subsidiaries are expected
to make intercompany payments to the U.S. of approximately $40
million from foreign cash balances as of March 31, 2013. These
payments, and additional payments expected to be made in future
years, will be made in satisfaction of intercompany obligations.
The Company expects to use the cash received in the U.S. to reduce
debt, either through repayment of short-term borrowings or
repurchase of senior notes or debentures. Cash held by foreign
subsidiaries may be subject to U.S. or local country income or
withholding taxes if repatriated to the U.S. In addition,
repatriation of some foreign cash balances is further restricted by
local laws. |
|
|
|
|
| |
|
|
|
|
| (3) The Company has
a $1.15 billion senior secured revolving credit agreement (the
"Credit Agreement") which expires October 15, 2017. The Credit
Agreement replaced the Company's previous $1.75 billion unsecured
and committed revolving credit agreement (the "Previous Credit
Agreement") which was due to expire on December 17, 2013. The
Credit Agreement is subject to a number of covenants, including a
minimum Interest Coverage Ratio and a maximum Leverage Ratio, both
as defined and calculated in the Credit Agreement. As of March 31,
2013, the Company had $71.5 million in outstanding letters of
credit, of which $38.9 million were issued under the Credit
Agreement. There were no borrowings under the Credit Agreement as
of March 31, 2013. Based on the Company's results of operations for
the twelve months ended March 31, 2013 and existing debt, the
Company would have had the ability to utilize $1.1 billion of the
$1.15 billion Credit Agreement and not have been in violation of
the terms of the agreement. See the table below for a
reconciliation of the stated amount to the current availability as
of March 31, 2013, December 31, 2012 and March 31, 2012. |
|
|
|
|
| |
|
|
|
|
| |
March 31, 2013 |
December 31, 2012 |
March 31, 2012 |
|
| |
Credit Agreement |
Credit Agreement |
Previous Credit Agreement |
|
| Stated amount of the credit
agreement |
$ 1,150.0 |
$ 1,150.0 |
$ 1,750.0 |
|
| Less: availability reduction from
covenants |
83.7 |
-- |
231.3 |
|
| Total amount available |
1,066.3 |
1,150.0 |
1,518.7 |
|
| |
|
|
|
|
| Less: borrowings under the credit
agreement |
-- |
-- |
327.0 |
|
| Impact on availability related to
outstanding letters of credit |
-- |
38.9 |
-- |
|
| Availability |
$ 1,066.3 |
$ 1,111.1 |
$ 1,191.7 |
|
CONTACT: Media:
Doug Fitzgerald
EVP, Communications
630.322.6830
doug.fitzgerald@rrd.com
Investors:
Dave Gardella
SVP, Investor Relations
312.326.8155
david.a.gardella@rrd.com
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