In a SEC 8-K filing on Friday, RR Donnelley stated it has agreed to end its contractual relationship with a significant customer:
On September 24, 2009, R. R. Donnelley & Sons Company (the "Company") entered into a termination agreement (the "Termination Agreement") with a significant customer pursuant to which the parties agreed to end their contractual relationship allowing the Company to exit from certain unprofitable operations.
Pursuant to the Termination Agreement, the Company will incur certain costs associated with exit or disposal activities. The estimated pre-tax charges associated with the Termination Agreement total approximately $123 million to $130 million. These charges include cash charges relating to a termination payment of approximately $122 million to the customer and severance costs and other charges of approximately $1.0 million to $8.0 million. The termination payment will be paid to the customer as follows: (1) $22 million will be paid in the third quarter of 2009; (2) approximately $42 million to $45 million will be paid into escrow for the benefit of the customer in the fourth quarter of 2009 and paid to the customer in the first quarter of 2011; and (3) the remaining payment will be made in the first quarter of 2010. Interest on the amount paid into escrow shall accrue to the Company.
RR Donnelley has not disclosed the name of the customer or provided any additional details.
R.R. Donnelley has struggled as demand for magazines, catalogs and books has weakened. Its second-quarter profit dropped 83%.