CHICAGO, July 25 - R.R. Donnelley & Sons Company reported second-quarter earnings of 32 cents per diluted share compared with 46 cents a year ago. Net income was $38.3 million compared with $56.3 million a year ago. These results exclude pretax restructuring and impairment charges of $52.3 million ($32.2 million after-tax or 27 cents per diluted share) to cover costs associated with the announced closings of the company's Des Moines, Iowa, and Old Saybrook, Conn., plants, and administrative workforce reductions.
After restructuring and impairment charges, net income for the quarter was $6.1 million, or 5 cents per diluted share. Revenues for the quarter were $1.3 billion, down 7 percent from the year-earlier period.
The economy continued to put pressure on volumes across the company's businesses, with the most significant decreases occurring in commercial print operations that produce magazines, catalogs and advertising inserts, and R.R. Donnelley Financial, which was affected by weak capital markets activity. Actions the company has taken to counteract the volume shortfalls include adjusting capacity to current activity levels by consolidating work in fewer plants, closing facilities, idling equipment, and reducing the number of workers and work hours.
Despite the soft economy, R.R. Donnelley continues to invest in transforming its strategy, structure and culture to become an integrated communications solutions provider. These efforts include streamlining and upgrading its network of printing plants through a previously announced $300 million investment, approximately 1/3 of which is restructuring charges or other related costs.
"We remain firmly committed to transforming this company, and we are making substantial progress,'' stated William L. Davis, chairman, president and chief executive officer. "This flexible and integrated network will give us the capabilities to stay ahead of our customers' changing communications needs.''
In addition, R.R. Donnelley's ongoing efforts in continuous improvement and supply-chain management aim to improve customer satisfaction by reducing defects and cycle times. At the same time, the company is well into a major two-year effort to standardize, automate and integrate its business processes.
"These combined initiatives will produce significant cost-savings, enable us to perform better in environments like today's and -- more importantly -- lay the groundwork for how we will serve our customers in the future,'' said Davis.
Second-quarter results were in line with management's expectations, and the company reaffirmed its expectations for 2001 earnings per share to range between $1.60 and $1.75 before one-time items and restructuring and impairment charges. Management also indicated that the company expects to spend between $300 million and $350 million on capital expenditures this year, $95 million of which has been spent through June.
Since the current program began, the company has reacquired approximately 4.5 million shares, at an aggregate cost of approximately $125 million, under a $300 million repurchase program that expires on January 31, 2002. Management intends to complete the program by year's end.
R.R. Donnelley will hold its quarterly investor conference call to review its second-quarter 2001 results at 10 a.m., central time, on Wednesday, July 25, 2001. For a link to the call, log on to www.rrdonnelley.com/invest/events/ . Check in approximately 10 minutes in advance of the start time to set up to receive the webcast. The call also will be archived on the site for 30 days.
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