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RR Donnelley Reports Big Decline in Net Earnings for Third Quarter

November 4, 2009
CHICAGO—Nov 04, 2009—R.R. Donnelley & Sons Co. (NASDAQ: RRD) today reported third-quarter net earnings from continuing operations attributable to common shareholders of $13.1 million or $0.06 per diluted share on net sales of $2.5 billion compared to net earnings from continuing operations attributable to common shareholders of $168.2 million or $0.80 per diluted share on net sales of $2.9 billion in the third quarter of 2008.

The third-quarter net earnings from continuing operations attributable to common shareholders included pre-tax charges for restructuring ($129.7 million) and impairment ($2.0 million) totaling $131.7 million and acquisition expenses of $0.1 million in 2009 and for restructuring ($22.9 million) and impairment ($0.5 million) totaling $23.4 million in 2008.

Substantially all of the restructuring and impairment charges in the third quarter of 2009 were associated with the previously reported termination of a significant long-term customer contract in the business process outsourcing reporting unit within the International segment. In the third quarter of 2008, substantially all of the restructuring and impairment charges were related to the reorganization of certain operations and the exiting of certain business activities.

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 $111.9 million or $0.54 per diluted share in the third quarter of 2009 compared to $183.2 million or $0.87 per diluted share in the third quarter of 2008. Third-quarter non-GAAP net earnings attributable to common shareholders exclude restructuring and impairment charges for both years, as well as losses related to debt extinguishment and acquisition-related expenses in 2009. For non-GAAP comparison purposes, the effective tax rate decreased to 31.3% in the third quarter of 2009 from 32.3% in the third quarter of 2008, primarily due to a change in the mix of earnings across tax jurisdictions. 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.

"Although demand in most of the end-markets we serve remains challenged by economic conditions, we saw continued stabilization and achieved modest sequential revenue growth over the second quarter, in line with our expectations," said Thomas J. Quinlan III, RR Donnelley's President and Chief Executive Officer. "We expect a sequential revenue growth rate in the low single digits in the fourth quarter."
 

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