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Donnelley to Close Daytona Plant, But Will Plow $300 Million to Upgrade Operations

Press release from the issuing company

CHICAGO, March 26, 2001 -- R.R. Donnelley & Sons Company [NYSE: DNY] is taking steps in its traditional long-run printing business serving magazine, catalog and retail customers to create the most cost-effective, integrated and flexible printing "platform of the future" for its customers. As part of this process, the company will invest $300 million over the next two years to improve the efficiency of its long-run printing network and close its South Daytona, Fla., plant, which prints magazines, catalogs and advertising inserts, by the end of the second quarter. The company also informed union representatives that it is considering closing its Des Moines, Iowa, printing plant. Over the next 24 months, the company plans to invest up to $300 million to improve the efficiency of the long-run printing and binding operations serving its magazine, catalog and retail customers. The company will make investments to upgrade plants with fewer, yet wider and faster, presses to offer customers more flexibility and improved distribution efficiencies with virtually no change to the company's capacity. "This underscores our commitment to traditional print customers, which not only will ensure our long-term position as an industry leader but also will enable us to expand our value chain through a broader platform of services," said William L. Davis, chairman, president and chief executive officer of R.R. Donnelley. "While these actions are independent of economic conditions, the current environment gives us an opportunity to strengthen our competitive position while minimizing operational risks to our goal of revolutionizing communications effectiveness." As part of this investment program, R.R. Donnelley will retire several older presses and replace them with 10 new presses and related binding equipment to improve speed, to provide operating flexibility and to reduce waste. The company also will continue to invest in productivity improvement initiatives, including extending Six Sigma training to all company supervisors and strategic suppliers. The capital investment will maintain basically the same capacity. However, the company's continuous improvement programs are providing substantial additional capacity across its network of printing plants. "We are committed to providing our catalog, magazine and retail print customers with exceptional customer service and quality, along with the broadest range of solutions from content management through distribution," said Michael B. Allen, executive vice president. "These actions extend the ways we provide our customers with greater speed, flexibility of scale, consistently high performance levels, and purchasing and distribution efficiencies." As part of this process, R.R. Donnelley will close its South Daytona, Fla., plant, which prints short-run magazines and catalogs, as well as newspaper advertising inserts. Production will transfer to other plants in R.R. Donnelley's nationally integrated network. "After careful review of our business and market trends, we determined that our South Daytona plant lacks the scale necessary to support the current and future needs of our customers," Allen added. "By consolidating our production and equipment in more geographically strategic plants, and replacing less efficient assets, we'll be in a better position to partner with our customers to refine their targeting, eliminate waste, leverage our logistics business, reduce total delivered cost, and build their businesses and brands." The South Daytona, Fla., plant, which employs 198 people, will close by the end of the second quarter of 2001. The plant opened in 1991. "Taking actions that affect the lives of our employees is an extremely difficult decision," said Allen. "We are committed to assisting them during the transition." R.R. Donnelley will help employees find other jobs, whether inside or outside the company. The company also will offer separation pay, extended medical benefits and skills training to eligible employees. Related to the actions to improve the print platform efficiency, the company today informed union representatives that it is considering closing its Des Moines, Iowa, facility. The plant, which employs approximately 800 people, was acquired by R.R. Donnelley in 1990. It produces a variety of magazines under long-term contracts, as well as catalogs and newspaper advertising inserts. A final decision around the Des Moines facility will be made in late April.

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