Moore Wallace Announces Results: $40M Earnings on $882M Sales
Press release from the issuing company
MISSISSAUGA, Ontario & NEW YORK--Feb. 5, 2004-- Moore Wallace Incorporated today reported financial results for its fourth quarter and fiscal year ended December 31, 2003.
Fourth quarter sales totaled $882.7 million, with GAAP (Canadian Generally Accepted Accounting Principles) net earnings of $40.1 million, or $0.25 per diluted share for the fourth quarter. (All dollar amounts discussed in this press release are in U.S. currency.)
The Company believes that certain non-GAAP measures, when presented in conjunction with comparable GAAP measures, are useful because that information, which excludes acquisition-related charges, restructuring and restructuring-related charges, and gains on asset disposals, is an appropriate measure for evaluating the Company's operating performance. In addition, the Company used an effective pro forma income tax rate of 32% in calculating its non-GAAP earnings. Internally, the Company uses this non-GAAP information as an important indicator of business performance, and management's effectiveness is evaluated with specific reference to these indicators. A reconciliation of GAAP net earnings to non-GAAP net earnings for these adjustments is presented in the tables below. These measures should be considered in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
On May 15, 2003, the Company merged with Wallace Computer Services, Inc., a leading provider of comprehensive print management solutions. The differences in the operating results of the Company in 2003 versus 2002 are primarily due to this merger.
Non-GAAP net earnings for the fourth quarter totaled $54.7 million, or $0.34 per diluted share.
Non-GAAP net earnings exclude acquisition, restructuring and restructuring-related charges of $14.6 million, inclusive of the pro forma effective tax adjustment.
GAAP income from operations for the fourth quarter was $84.5 million, or 9.6% of sales. These results were unfavorably affected by acquisition-related items and restructuring actions taken as a result of the merger. Non-GAAP income from operations was $95.4 million, or 10.8% of sales.
Fiscal Year Results
Full year 2003 sales totaled $2.87 billion, with GAAP net earnings of $114.2 million, or $0.81 per diluted share for the full year.
Non-GAAP net earnings for the 2003 fiscal year were $143.8 million, or $1.01 per diluted share.
Non-GAAP net earnings exclude acquisition, restructuring and restructuring-related charges, and gains on asset disposals of $29.6 million, inclusive of the pro forma effective tax adjustment.
GAAP income from operations was $179.9 million, or 6.3% of sales. These results were unfavorably affected by acquisition-related items and restructuring actions taken as a result of the merger. Non-GAAP income from operations was $257.4 million, or 9.0% of sales.
Mark A. Angelson, Moore Wallace's Chief Executive Officer, said, "We are pleased with the strength of our year-end performance, exceeding our targets for earnings and cash flow and stabilizing sales. We delivered consistently strong financial and operating results, notwithstanding economic pressures and the disruption from the integration. Our performance demonstrates yet again the strength of our business strategy and the ability of our management team."
On November 8, 2003, Moore Wallace and RR Donnelley entered into a definitive agreement to combine the two companies. The transaction is expected to close at the end of February 2004.
Mr. Angelson said, "The Moore-Wallace integration is virtually complete and the integration planning process with RR Donnelley is under way. We look forward to our combination with RR Donnelley and the opportunities it will provide for our new organization, our customers, our employees and our investors."
In addition to labels and traditional business forms, the Company's Forms & Labels business includes supplies and print fulfillment. The segment continued to face macro-economic factors and disruption from shifting work, personnel and presses. Although customer retention was strong, demand remained soft in the forms business, particularly for continuous multi-part forms, which has been impacted by electronic media and technological substitution and pricing pressure.
The Company's Commercial Print business includes commercial print, direct mail and warehouse inventory management products. In the fourth quarter, commercial print benefited from increased activity from key customers in the financial services and pharmaceutical sectors and from successful cross-selling efforts. The direct mail business also benefited from cross-selling efforts, as well as the newly enhanced ability to operate more efficiently across a wider geographic platform.
The Outsourcing business is comprised of the Company's customized, high-volume, variably imaged statement mailings and electronic statements and associated database services. Growth in sales and profitability continues to be driven by increased activity from both new and current customers, particularly in the telecommunications and the financial services sectors.
On December 31, 2003, the Company completed the acquisition of Payment Processing Solutions, Inc. ("PPS"), a leading processor of printed customer statements, principally serving the mortgage lender industry. The addition of PPS to the Outsourcing business advanced the Company's previously announced strategy to make relatively small acquisitions in higher growth, higher margin businesses that expand both its product platform and its customer base.
The Company continued to enhance its balance sheet by generating strong cash flow during the quarter, lowering leverage ratios and reducing its net debt position to $814.8 million from $872.6 million at the end of September. (Total debt was $906.7 million on December 31, 2003 and $923.3 million on September 30, 2003.) (1)
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