R.R. Donnelley Reports 1st-Quarter 2001 Earnings. Income Lower
Press release from the issuing company
CHICAGO, April 25, 2001 -- R.R. Donnelley & Sons Company (NYSE: DNY) reported net income for the first quarter of 2001 of $14.5 million, or 12 cents per diluted share. The results include restructuring charges of $22 million, or 11 cents per share, to cover the cost of closing operations in several of the company's business units, including printing facilities in South Daytona and St. Petersburg, Fla., and Houston. The charges also include costs associated with closing the company's existing directory-printing operations in York, England, and transitioning production to a new state-of-the-art four-color printing plant in Flaxby.
Before restructuring charges, net income was $27.9 million, or 23 cents per share, compared with $46.7 million, or 38 cents per diluted share, a year ago. Revenues for the quarter were $1.3 billion, down 3 percent from the year-earlier period.
Contributing to the first-quarter earnings decline was continued softness in capital markets activity, which affected demand for printing in the company's R.R. Donnelley Financial unit. In addition, demand for magazines, catalogs and trade books slipped as advertising spending declined, consumer orders slowed and book publishers cut reprint orders as they work off excess inventory from a slow holiday selling season.
Among the actions the company has taken to counteract the volume shortfalls are adjusting capacity to current activity levels through closing of facilities, workforce reductions and reduced workweeks; and cutting discretionary spending.
Despite the softer economy, R.R. Donnelley continued to take steps toward achieving its vision of transforming the company to lead the revolution in communications effectiveness. Building on its investments in continuous improvement over the past several years, the company recently announced it is investing $300 million over the next 24 months to upgrade some plants and replace less-efficient equipment with fewer, though faster and more flexible printing presses and finishing equipment to improve speed and efficiency. This investment will not increase overall capacity, but will focus on cost, quality and service.
The company also is adding other capabilities to help customers get their content into the hands of the right audiences, with more precise timing, less waste, lower total delivered costs and greater results that provide R.R. Donnelley the opportunity to compete on value, not cost.
"I can report with confidence that, even in the current economic environment, we are satisfied with the progress we've made in repositioning R.R. Donnelley," said William L. Davis, chairman, president and chief executive officer. "We have the resources and strong cash flow to manage and execute through this environment and strengthen our competitive position, while continuing to develop and deliver the broadest range of integrated communications solutions for our customers."
Since February 1, the company has bought back 2.2 million shares at an aggregate cost of approximately $61 million in shares under a program authorizing the purchase of up to $300 million in shares before Jan. 31, 2002. The company expects to complete the purchase before year-end.
The company maintains its expectations for 2001 earnings per share to range between $1.95 and $2.10 before one-time items and restructuring charges, assuming market demand in the second half will return to 2000 levels.
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