CHICAGO, May 1 -- R.R. Donnelley & Sons Company today announced first quarter 2002 revenues of $1.1 billion, down 16 percent from the year ago period. Diluted earnings per share, excluding one-time items, were 8 cents, a decrease of 65 percent from 23 cents a year ago. Net income, excluding one-time items, was $9 million, down 66 percent from $28 million a year ago.
The company's reported results were affected by several one-time items. Including one-time items, the company reported earnings per diluted share of 20 cents compared with 12 cents for the year-earlier period. Including one- time items, net income was $23 million, compared with $15 million in 2001.
First quarter 2002 one-time items included restructuring and impairment charges of $27 million ($17 million after-tax, or 14 cents per diluted share), and a $30 million reversal of excess tax reserves ($30 million benefit after- tax, or 26 cents per diluted share), related to the company's settlement with the IRS on deductibility of interest payments for corporate-owned life insurance.
Results were impacted by lower activity levels across most of the company's markets, most significantly in magazines, catalogs and retail. The company announced several cost reduction efforts during 2001 that are offsetting much of the market weakness. Those efforts will reduce the company's annualized cost structure by $160 million by the end of the fourth quarter of 2002 versus levels at the end of 2000.
"Even though our markets are still in recession, we are continuing to strengthen our competitive position," stated William L. Davis, chairman, president and chief executive officer of R.R. Donnelley. "This bodes well for R.R. Donnelley when activity levels improve."
The company also affirmed its previously 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, excluding restructuring and impairment charges and other one-time items. Capital spending is expected to range between $250 million and $300 million, also unchanged from previous guidance.
The company changed its segment reporting in the first quarter to reflect the creation of R.R. Donnelley Print Solutions and better align with how the company manages its businesses. Quarterly results for 2001 have been restated to conform to the new presentation and are included in this release.
On a pro forma basis, first quarter 2001 diluted earnings per share would have been 3 cents higher than as reported, or 15 cents, had the company applied the new changes in goodwill accounting for 2002 in the prior year.
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