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R.R. Donnelley Reports 4Q Earnings: Revenue Down 12%

Press release from the issuing company

CHICAGO, Jan. 30 - R.R. Donnelley & Sons Company today announced fourth quarter 2001 revenues of $1.4 billion, down 12 percent from the year ago period. Fourth-quarter diluted earnings per share, excluding one-time items, were 46 cents, a decrease of 21 percent from 58 cents a year ago. Fourth-quarter net income, excluding one-time items, was $53 million, down 26 percent from $72 million a year ago. For the full year, revenues were $5.3 billion, down 8 percent from a year ago, and diluted earnings per share, excluding one-time items, were $1.47, down 30 percent from $2.11 in the prior year. Full year net income, excluding one-time items, was $174 million, down 33 percent from $259 million a year ago. The company's reported results were affected by several one-time items. Including one-time items, the company reported a net loss per diluted share for the fourth quarter of 33 cents compared with net income per diluted share of 58 cents for the year-earlier period. For the full year, including one-time items, diluted earnings per share were 21 cents compared with $2.17 for 2000. Including one-time items, net income was $25 million, compared with $267 million in 2000. Fourth quarter 2001 one-time items included restructuring and impairment charges of $102 million ($79 million after-tax, or 69 cents per diluted share); a $19 million ($19 million after-tax, or 16 cents per diluted share) write-down of two Internet-related investments; and a gain on the sale of the company's remaining stake in Stream International of $7 million ($7 million after-tax, or six cents per diluted share). The fourth-quarter charges of $102 million included non-cash impairment write-downs of $81 million for goodwill and other non-current assets. The reduced value of these assets resulted from a combination of operating performance and economic conditions. The depressed economic environment impacted the company's financial performance in the fourth quarter and full year 2001. Most affected were R.R. Donnelley Financial, which relies heavily on capital markets activity, and print businesses serving the magazine, catalog and advertising insert markets. In response, the company has taken aggressive actions to permanently reduce its overall cost structure. The benefits from these actions will increase throughout 2002. "We advanced our transformation efforts and maintained a strong financial position in 2001, despite a severe downturn in the economy,'' stated William L. Davis, chairman, president and chief executive officer of R.R. Donnelley. "In 2001 we recorded significant customer wins, achieved milestones in aligning our structure and culture with our strategies, and turned around our logistics business. When the recovery starts, we'll be ready.'' Under programs in place during the year, the company reacquired 8.8 million of its shares. To date, the company has spent $229 million of its current $300 million repurchase program, which expires on Jan. 31, 2002. The company indicated it will not extend the current program, stressing the need to preserve financial flexibility during these challenging times. The company also issued guidance for 2002. Anticipating continued weak conditions across its key markets, the company expects earnings per share to range between $1.50 and $1.65. This guidance incorporates the new accounting rules on goodwill amortization, which, if effective in 2001, would have added 11 cents per diluted share to the company's full-year financial results. Capital spending is expected to range between $250 million and $300 million.