RR Donnelley Announces Common Stock Repurchase Program, Earnings Guidance and Plan to Divest its Peak Business
December 16 2004 - 7:00AM
PR Newswire (US)
RR Donnelley Announces Common Stock Repurchase Program, Earnings
Guidance and Plan to Divest its Peak Business CHICAGO, Dec. 16
/PRNewswire-FirstCall/ -- R.R. Donnelley & Sons Company
(NYSE:RRD) announced today that its board of directors authorized
the repurchase, at any time prior to December 31, 2006, of up to
$300 million of the company's common stock. The company also
announced that it expects its non-GAAP earnings per diluted share
from continuing operations to be $0.57 for the fourth quarter of
2004, $1.61 for the full year of 2004 and $1.95 for the full year
of 2005 (assuming the completion of approximately $200 million of
the $300 million share repurchase for the entire year of 2005). RR
Donnelley plans to divest its Peak business and, accordingly, will
report this business as a discontinued operation effective with the
fourth quarter of 2004. Non-GAAP earnings per diluted share from
continuing operations exclude certain items that management
believes are unrelated to the ongoing operations of the business.
In the fourth quarter of 2004, the full year of 2004 and the full
year of 2005, these items may include results of discontinued
operations, restructuring, impairment and integration charges as
well as certain tax adjustments that are not currently
determinable, but may be significant. For that reason, the company
is unable to provide GAAP (Generally Accepted Accounting
Principles) earnings estimates at this time. The company believes
that non-GAAP earnings per diluted share is 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. This measure should be considered in addition to, not a
substitute for, or superior to, measures of financial performance
prepared in accordance with GAAP. "We are announcing several
positive developments today," said Mark A. Angelson, RR Donnelley's
Chief Executive Officer. "The repurchase program reflects our
confidence in the future profitability of RR Donnelley and delivers
on our promise to invest our shareholders' capital wisely and avoid
shareholder dilution when practicable. We believe that our
significant cash flow and strong balance sheet will be sufficient
to fund this program, pay our dividend and very comfortably service
our debt, while allowing us to invest in and grow our business. We
expect to enter into an accelerated share repurchase arrangement in
the approximate amount of $200 million later this month." Angelson
added, "We continuously evaluate our businesses for strategic fit.
We have concluded that, although Peak is a valuable business, it is
not central to our strategy. We will therefore seek alternative
methods of optimizing the value of this unit." Share Repurchase
Program The company is authorized to repurchase up to $300 million
of the company's common stock through a variety of methods,
including open market purchases, block transactions, accelerated
share repurchase arrangements, or private transactions. Such
purchases may be made from time to time and may be discontinued at
any time. The company expects to enter into an accelerated share
repurchase arrangement in the approximate amount of $200 million
later this month. Expected Non-GAAP Fully Diluted Earnings Per
Share The company expects its non-GAAP earnings per diluted share
from continuing operations to be $0.57 for the fourth quarter of
2004, $1.61 for the full year of 2004 and $1.95 for the full year
of 2005 (assuming the completion of approximately $200 million of
the $300 million share repurchase for the entire year of 2005). The
company expects its approximate weighted average fully diluted
share count to be 224 million for the fourth quarter of 2004, 204
million for the full year of 2004 and 220 million for the full year
of 2005. Planned Divestiture The company plans to divest its Peak
business. As such, the company will report the results of
operations and financial position (including conforming previously
reported 2004 results) of the Peak business as a discontinued
operation beginning with the fourth quarter of 2004. Peak provides
integration, maintenance and consulting services related to
automatic identification and data collection systems and hardware.
Results for the nine months ended September 30, 2004 include net
sales of $135.2 million and an operating loss of $5.8 million
(includes $0.9 million in restructuring and impairment charges)
from the Peak business. About RR Donnelley RR Donnelley (NYSE:RRD)
designs, manages and produces words and images, and brings them to
life on paper and in digital form for customers in the publishing,
healthcare, advertising, retail, technology, financial services,
and many other industries. Founded 140 years ago, the company
provides solutions in commercial printing, forms and labels, direct
mail, financial printing, print fulfillment, business communication
outsourcing, logistics, online services, digital photography, and
content and database management. The largest companies in the world
and others rely on RR Donnelley's scale, scope and insight through
a comprehensive range of online tools, variable printing services,
and market-specific solutions. As the largest printer in North
America with strong positions across the globe, RR Donnelley is
changing the role of print in every marketplace it serves. For more
information, 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. Many of the
factors that could cause material differences in the expected
results of RR Donnelley relate to the integration of Moore Wallace
Incorporated, which was acquired by RR Donnelley on February 27,
2004. These factors include, without limitation, the following: the
development and execution of comprehensive plans for asset
rationalization, the ability to eliminate duplicative overhead
without excessive cost or adversely affecting the business, the
potential loss of customers and employees as a result of the
transaction, the ability to achieve procurement savings by
leveraging total spending across the organization, the success of
the organization in leveraging its comprehensive product offering
to the combined customer base as well as the ability of the
organization to complete the integration of the combined companies
without losing focus on the business. In addition, the ability of
the combined company to achieve the expected net sales, accretion,
cash flow and synergy savings will also be affected by the effects
of competition (in particular the response to the transaction in
the marketplace), the effects of pricing of paper and other raw
materials and fuel price fluctuations and shortages of supply, the
rate of migration from paper- based forms to digital formats, the
impact of currency fluctuations in the countries in which RR
Donnelley operates, general economic and other factors beyond the
combined company's control, 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. RR Donnelley disclaims any obligation to
update or revise any forward-looking statements. DATASOURCE: R.R.
Donnelley & Sons Company CONTACT: Dan Leib, Vice President,
Investor Relations, of R.R. Donnelley & Sons Company,
+1-312-326-7710, or e-mail, Web site: http://www.rrdonnelley.com/
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