R.R. Donnelley & Sons Company (NASDAQ:RRD)
today reported financial results for the third quarter of 2015:
Highlights:
- Third-quarter net sales of $2.8 billion declined 4.4% from the
third quarter of 2014; organic net sales declined 3.1% from the
third quarter of 2014
- Third-quarter GAAP net earnings attributable to common
shareholders of $14.3 million, or $0.07 per diluted share, compared
to GAAP net earnings attributable to common shareholders in the
third quarter of 2014 of $62.2 million, or $0.31 per diluted
share
- Third-quarter non-GAAP net earnings attributable to common
shareholders of $76.0 million, or $0.36 per diluted share, compared
to non-GAAP net earnings attributable to common shareholders in the
third quarter of 2014 of $78.9 million, or $0.39 per diluted
share
- Third-quarter non-GAAP adjusted EBITDA margin of 10.8%,
compared to non-GAAP adjusted EBITDA margin of 10.6% in the third
quarter of 2014
- Previously announced plan to create three independent publicly
traded companies remains on schedule; expect transactions to be
effective October 2016
“We are pleased with our performance during the quarter, given
the challenging demand environment. Our continuing focus on
matching costs to demand resulted in a non-GAAP adjusted EBITDA
margin of 10.8% in the quarter, a 20 basis point improvement from
the same quarter last year,” said Thomas J. Quinlan III, RR
Donnelley’s President and Chief Executive Officer. “Our
updated guidance assumes the fourth-quarter demand environment will
be similar to what we’ve experienced throughout the year, and the
improvement in margin guidance is reflective of our continuing to
manage the business to create value for all of our
stakeholders. In addition, we continue to expect free cash
flow in the range of $400 million to $500 million, unchanged from
our previous guidance.”
Net SalesNet sales in the quarter were $2.8
billion, down $129.8 million, or 4.4%, from the third quarter of
2014. After adjusting for the impact of acquisitions and
dispositions, as well as changes in foreign exchange rates and
pass-through paper, organic sales decreased 3.1% from the third
quarter of 2014, as modest increases in the Strategic Services and
International segments only partially offset declines in the
Publishing and Retail Services and Variable Print segments.
GAAP EarningsThird-quarter 2015 net earnings
attributable to common shareholders was $14.3 million, or $0.07 per
diluted share, compared to net earnings attributable to common
shareholders of $62.2 million, or $0.31 per diluted share, in the
third quarter of 2014. The third-quarter net earnings
attributable to common shareholders included pre-tax charges of
$69.4 million and $22.6 million in 2015 and 2014, respectively, all
of which are excluded from the presentation of non-GAAP net
earnings attributable to common shareholders. Additional
details regarding the amount and nature of these and other items
are included in the attached schedules.
Non-GAAP EarningsNon-GAAP adjusted EBITDA in
the third quarter of 2015 was $305.2 million, compared to $313.2
million in the third quarter of 2014. Non-GAAP adjusted
EBITDA margin in the third quarter of 2015 was 10.8%, or 20 basis
points higher than in the third quarter of 2014, as productivity
improvements more than offset volume declines and price
pressure.
Non-GAAP net earnings attributable to common shareholders
totaled $76.0 million, or $0.36 per diluted share, in the third
quarter of 2015 compared to $78.9 million, or $0.39 per diluted
share, in the third quarter of 2014. Reconciliations of net
earnings attributable to common shareholders to non-GAAP adjusted
EBITDA and non-GAAP net earnings attributable to common
shareholders are presented in the attached schedules.
2015 GuidanceThe Company provides the following
updated full-year guidance for 2015:
|
Current Guidance |
|
Previous Guidance |
Net sales |
$11.2 to $11.4 billion |
|
$11.4 to $11.6 billion |
Non-GAAP adjusted EBITDA margin |
10.6% to 10.8% |
|
10.5% to 10.7% |
Depreciation and amortization |
$460 to $470 million |
|
$460 to $470 million |
Interest expense |
$270 to $275 million |
|
$270 to $275 million |
Non-GAAP effective tax rate |
33% to 34% |
|
33% to 34% |
Diluted share count |
Approximately 207 million |
|
Approximately 207 million |
Capital expenditures |
$225 to $250 million |
|
$225 to $250 million |
Free cash flow(1) |
$400 to $500 million |
|
$400 to $500 million |
(1) Defined as operating cash flow less capital
expenditures
Conference CallRR Donnelley will host a
conference call and simultaneous webcast to discuss its
third-quarter results today, Thursday, November 5, at 10:00 a.m.
Eastern Time (9:00 a.m. Central Time). The live webcast will
be accessible on RR Donnelley’s web site:
www.rrdonnelley.com. Individuals wishing to participate
must register in advance at
http://www.meetme.net/rrd. After registering, participants
will receive dial-in numbers, a passcode, and a personal
identification number (PIN) that is used to uniquely identify their
presence and automatically join them into the audio
conference. A webcast replay will be archived on the
Company’s web site for 30 days after the call. In addition, a
telephonic replay of the call will be available for seven days at
630.652.3042, passcode 8086973#.
About RR DonnelleyRR Donnelley (Nasdaq:RRD)
helps organizations communicate more effectively by working to
create, manage, produce, distribute and process content on behalf
of our customers. The Company assists customers in developing and
executing multichannel communication strategies that engage
audiences, reduce costs, drive revenues and increase compliance. RR
Donnelley’s innovative technologies enhance digital and print
communications to deliver integrated messages across multiple media
to highly targeted audiences at optimal times for clients in
virtually every private and public sector. Strategically located
operations provide local service and responsiveness while
leveraging the economic, geographic and technological advantages of
a global organization.
For more information, and for RR Donnelley's Global Social
Responsibility Report, visit the Company's web site
at http://www.rrdonnelley.com.
Use of non-GAAP InformationThis news release
contains certain non-GAAP measures. The Company believes that
these non-GAAP measures, when presented in conjunction with
comparable GAAP measures, are useful because that information is an
appropriate measure for evaluating the Company’s operating
performance. Internally, the Company uses this non-GAAP
information as an indicator of business performance, and evaluates
management’s effectiveness with specific reference to these
indicators. These measures should be considered in addition
to, not a substitute for, or superior to, measures of financial
performance prepared in accordance with GAAP.
Use of Forward-Looking StatementsThis news
release includes certain "forward-looking statements" within the
meaning of, and subject to the safe harbor created by, Section 21E
of the Securities Exchange Act of 1934, as amended, with respect to
the business, strategy and plans of RR Donnelley and its
expectations relating to future financial condition and
performance. These statements include all of the items under the
column labeled “Current Guidance” in the table included under the
“2015 Guidance” section. Statements that are not historical facts,
including statements about RR Donnelley management’s beliefs and
expectations, are forward-looking statements. Words such as
"believes," "anticipates," "estimates," "expects," "intends,"
"aims," "potential," "will," "would," "could," "considered,"
"likely," "estimate" and variations of these words and similar
future or conditional expressions are intended to identify
forward-looking statements but are not the exclusive means of
identifying such statements. While RR Donnelley believes these
expectations, assumptions, estimates and projections are
reasonable, such forward-looking statements are only predictions
and involve known and unknown risks and uncertainties, many of
which are beyond RR Donnelley's control. By their nature,
forward-looking statements involve risk and uncertainty because
they relate to events and depend upon future circumstances that may
or may not occur. Actual results may differ materially from RR
Donnelley's current expectations depending upon a number of factors
affecting the business and risks associated with the performance of
the business. These factors include such risks and uncertainties
detailed in RRD's periodic public filings with the SEC, including
but not limited to those discussed under "Risk Factors" in RRD's
Form 10-K for the fiscal year ended December 31, 2014, those
discussed under “Cautionary Statement” and “Other Information” in
RRD’s quarterly Form 10-Q filings, and other filings with the SEC
and in other investor communications of RRD from time to time. RR
Donnelley does not undertake to and specifically declines any
obligation to publicly release the results of any revisions to
these forward-looking statements that may be made to reflect future
events or circumstances after the date of such statement or to
reflect the occurrence of anticipated or unanticipated events.
|
|
R. R. Donnelley &
Sons Company |
|
Condensed Consolidated Balance Sheets |
|
As of September 30, 2015 and December 31, 2014 |
|
(UNAUDITED) |
|
(in millions, except per share data) |
|
|
|
|
|
|
|
|
September 30,
2015 |
December 31,
2014 |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
|
|
$ |
257.3 |
|
$ |
527.9 |
|
|
|
|
Receivables, less allowances for doubtful accounts |
|
|
|
|
2,059.0 |
|
|
2,033.8 |
|
|
|
|
Inventories |
|
|
|
|
|
639.9 |
|
|
586.2 |
|
|
|
|
Prepaid
expenses and other current assets |
|
|
|
|
228.3 |
|
|
225.4 |
|
|
|
Total
Current Assets |
|
|
|
|
|
3,184.5 |
|
|
3,373.3 |
|
|
|
|
Property,
plant and equipment - net |
|
|
|
|
1,504.0 |
|
|
1,515.5 |
|
|
|
|
Goodwill |
|
|
|
|
|
1,737.8 |
|
|
1,706.6 |
|
|
|
|
Other
intangible assets - net |
|
|
|
|
465.7 |
|
|
423.7 |
|
|
|
|
Deferred
income taxes |
|
|
|
|
179.5 |
|
|
234.1 |
|
|
|
|
Other
noncurrent assets |
|
|
|
|
399.1 |
|
|
386.1 |
|
|
Total
Assets |
|
|
|
|
|
$ |
7,470.6 |
|
$ |
7,639.3 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable |
|
|
|
|
$ |
1,196.4 |
|
$ |
1,296.6 |
|
|
|
|
Accrued
liabilities |
|
|
|
|
|
793.7 |
|
|
867.3 |
|
|
|
|
Short-term
and current portion of long-term debt |
|
|
|
|
460.2 |
|
|
203.4 |
|
|
|
Total
Current Liabilities |
|
|
|
|
|
2,450.3 |
|
|
2,367.3 |
|
|
|
|
Long-term
debt |
|
|
|
|
|
3,216.1 |
|
|
3,429.1 |
|
|
|
|
Pension
liabilities |
|
|
|
|
|
558.1 |
|
|
616.1 |
|
|
|
|
Other
postretirement benefits plan liabilities |
|
|
|
|
201.6 |
|
|
210.8 |
|
|
|
|
Other
noncurrent liabilities |
|
|
|
|
381.8 |
|
|
395.6 |
|
|
Total
Liabilities |
|
|
|
|
|
6,807.9 |
|
|
7,018.9 |
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock, $1.25 par value |
|
|
|
|
333.7 |
|
|
323.7 |
|
|
|
|
Authorized shares: 500.0 |
|
|
|
|
|
|
|
|
Issued shares: 267.0 in 2015 (2014 - 259.0 shares) |
|
|
|
|
|
|
|
Additional
paid-in capital |
|
|
|
|
3,161.0 |
|
|
3,041.5 |
|
|
|
|
Accumulated
deficit |
|
|
|
|
|
(637.4 |
) |
|
(559.1 |
) |
|
|
|
Accumulated
other comprehensive loss |
|
|
|
|
(804.6 |
) |
|
(773.6 |
) |
|
|
|
Treasury
stock, at cost, 58.3 shares in 2015 (2014 - 59.2 shares) |
|
|
(1,403.8 |
) |
|
(1,438.7 |
) |
|
|
Total RR
Donnelley shareholders' equity |
|
|
|
|
648.9 |
|
|
593.8 |
|
|
|
Noncontrolling interests |
|
|
|
|
|
13.8 |
|
|
26.6 |
|
|
Total
Equity |
|
|
|
|
|
662.7 |
|
|
620.4 |
|
|
Total Liabilities and
Equity |
|
|
|
|
$ |
7,470.6 |
|
$ |
7,639.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. R. Donnelley &
Sons Company |
|
Condensed Consolidated Statements of
Operations |
|
For the Three and Nine Months Ended September
30, 2015 and 2014 |
|
(UNAUDITED) |
|
(in millions, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended September
30, |
|
For the Nine Months Ended September
30, |
|
|
2 0 1 5
GAAP |
ADJUSTMENTS
TO NON-GAAP |
2 0 1 5
NON-GAAP |
|
2 0 1 4
GAAP |
ADJUSTMENTS
TO NON-GAAP |
2 0 1 4
NON-GAAP |
|
2 0 1 5
GAAP |
ADJUSTMENTS
TO NON-GAAP |
2 0 1 5
NON-GAAP |
|
2 0 1 4
GAAP |
ADJUSTMENTS
TO NON-GAAP |
2 0 1 4
NON-GAAP |
|
Net sales |
$ |
2,828.0 |
|
$ |
- |
|
$ |
2,828.0 |
|
|
$ |
2,957.8 |
|
$ |
- |
|
$ |
2,957.8 |
|
|
$ |
8,322.2 |
|
$ |
|
- |
|
|
$ |
8,322.2 |
|
|
$ |
8,534.1 |
|
$ |
- |
|
$ |
8,534.1 |
|
|
Cost of sales
(1) |
|
2,208.1 |
|
|
(6.7 |
) |
|
2,201.4 |
|
|
|
2,310.2 |
|
|
- |
|
|
2,310.2 |
|
|
|
6,506.8 |
|
|
|
(9.9 |
) |
|
|
6,496.9 |
|
|
|
6,651.1 |
|
|
(14.3 |
) |
|
6,636.8 |
|
|
Gross profit (1) |
|
619.9 |
|
|
6.7 |
|
|
626.6 |
|
|
|
647.6 |
|
|
- |
|
|
647.6 |
|
|
|
1,815.4 |
|
|
|
9.9 |
|
|
|
1,825.3 |
|
|
|
1,883.0 |
|
|
14.3 |
|
|
1,897.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses (SG&A) (1) |
|
328.4 |
|
|
(7.0 |
) |
|
321.4 |
|
|
|
334.4 |
|
|
- |
|
|
334.4 |
|
|
|
972.4 |
|
|
|
(20.8 |
) |
|
|
951.6 |
|
|
|
990.2 |
|
|
(8.2 |
) |
|
982.0 |
|
|
Restructuring,
impairment and other charges - net |
|
52.9 |
|
|
(52.9 |
) |
|
- |
|
|
|
19.9 |
|
|
(19.9 |
) |
|
- |
|
|
|
104.9 |
|
|
|
(104.9 |
) |
|
|
- |
|
|
|
87.9 |
|
|
(87.9 |
) |
|
- |
|
|
Depreciation and
amortization |
|
115.3 |
|
|
- |
|
|
115.3 |
|
|
|
119.6 |
|
|
- |
|
|
119.6 |
|
|
|
341.5 |
|
|
|
- |
|
|
|
341.5 |
|
|
|
357.0 |
|
|
- |
|
|
357.0 |
|
|
Income from
operations |
|
123.3 |
|
|
66.6 |
|
|
189.9 |
|
|
|
173.7 |
|
|
19.9 |
|
|
193.6 |
|
|
|
396.6 |
|
|
|
135.6 |
|
|
|
532.2 |
|
|
|
447.9 |
|
|
110.4 |
|
|
558.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense -
net |
|
69.0 |
|
|
- |
|
|
69.0 |
|
|
|
71.2 |
|
|
- |
|
|
71.2 |
|
|
|
207.2 |
|
|
|
- |
|
|
|
207.2 |
|
|
|
213.0 |
|
|
- |
|
|
213.0 |
|
|
Investment and other
expense (income) - net |
|
3.0 |
|
|
(2.8 |
) |
|
0.2 |
|
|
|
2.0 |
|
|
(2.7 |
) |
|
(0.7 |
) |
|
|
43.2 |
|
|
|
(44.9 |
) |
|
|
(1.7 |
) |
|
|
8.9 |
|
|
(11.5 |
) |
|
(2.6 |
) |
|
Loss on debt
extinguishment |
|
- |
|
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
77.1 |
|
|
(77.1 |
) |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income
taxes |
|
51.3 |
|
|
69.4 |
|
|
120.7 |
|
|
|
100.5 |
|
|
22.6 |
|
|
123.1 |
|
|
|
146.2 |
|
|
|
180.5 |
|
|
|
326.7 |
|
|
|
148.9 |
|
|
199.0 |
|
|
347.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense |
|
39.7 |
|
|
5.0 |
|
|
44.7 |
|
|
|
35.7 |
|
|
6.3 |
|
|
42.0 |
|
|
|
79.1 |
|
|
|
35.9 |
|
|
|
115.0 |
|
|
|
51.7 |
|
|
67.9 |
|
|
119.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
11.6 |
|
|
64.4 |
|
|
76.0 |
|
|
|
64.8 |
|
|
16.3 |
|
|
81.1 |
|
|
|
67.1 |
|
|
|
144.6 |
|
|
|
211.7 |
|
|
|
97.2 |
|
|
131.1 |
|
|
228.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: (Loss) income
attributable to noncontrolling interests |
|
(2.7 |
) |
|
2.7 |
|
|
- |
|
|
|
2.6 |
|
|
(0.4 |
) |
|
2.2 |
|
|
|
(13.0 |
) |
|
|
13.2 |
|
|
|
0.2 |
|
|
|
(0.7 |
) |
|
6.0 |
|
|
5.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to RR Donnelley common
shareholders |
$ |
14.3 |
|
$ |
61.7 |
|
$ |
76.0 |
|
|
$ |
62.2 |
|
$ |
16.7 |
|
$ |
78.9 |
|
|
$ |
80.1 |
|
$ |
|
131.4 |
|
|
$ |
211.5 |
|
|
$ |
97.9 |
|
$ |
125.1 |
|
$ |
223.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share attributable to RR Donnelley common
shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
net earnings per share |
$ |
0.07 |
|
|
$ |
0.36 |
|
|
$ |
0.31 |
|
|
$ |
0.39 |
|
|
$ |
0.39 |
|
|
$ |
1.04 |
|
|
$ |
0.49 |
|
|
$ |
1.13 |
|
|
Diluted
net earnings per share |
$ |
0.07 |
|
|
$ |
0.36 |
|
|
$ |
0.31 |
|
|
$ |
0.39 |
|
|
$ |
0.39 |
|
|
$ |
1.03 |
|
|
$ |
0.49 |
|
|
$ |
1.12 |
|
|
Weighted
average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
209.2 |
|
|
|
209.2 |
|
|
|
200.3 |
|
|
|
200.3 |
|
|
|
204.3 |
|
|
|
204.3 |
|
|
|
197.9 |
|
|
|
197.9 |
|
|
Diluted |
|
210.3 |
|
|
|
210.3 |
|
|
|
201.6 |
|
|
|
201.6 |
|
|
|
205.5 |
|
|
|
205.5 |
|
|
|
199.4 |
|
|
|
199.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
(1) |
|
21.9 |
% |
|
|
22.2 |
% |
|
|
21.9 |
% |
|
|
21.9 |
% |
|
|
21.8 |
% |
|
|
21.9 |
% |
|
|
22.1 |
% |
|
|
22.2 |
% |
|
SG&A as a % of net
sales (1) |
|
11.6 |
% |
|
|
11.4 |
% |
|
|
11.3 |
% |
|
|
11.3 |
% |
|
|
11.7 |
% |
|
|
11.4 |
% |
|
|
11.6 |
% |
|
|
11.5 |
% |
|
Operating
margin |
|
4.4 |
% |
|
|
6.7 |
% |
|
|
5.9 |
% |
|
|
6.5 |
% |
|
|
4.8 |
% |
|
|
6.4 |
% |
|
|
5.2 |
% |
|
|
6.5 |
% |
|
Effective tax
rate |
|
77.4 |
% |
|
|
37.0 |
% |
|
|
35.5 |
% |
|
|
34.1 |
% |
|
|
54.1 |
% |
|
|
35.2 |
% |
|
|
34.7 |
% |
|
|
34.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Exclusive of depreciation and amortization |
|
|
|
The Company believes that certain non-GAAP measures,
when presented in conjunction with comparable GAAP measures, are
useful because that information is an appropriate measure for
evaluating the Company’s operating performance. Internally,
the Company uses this non-GAAP information as an indicator of
business performance, and evaluates management’s effectiveness with
specific reference to this indicator. These measures should be
considered in addition to, not a substitute for, or superior to,
measures of financial performance prepared in accordance with
GAAP |
|
|
|
|
|
R.R. Donnelley & Sons
Company |
|
Reconciliation of GAAP to Non-GAAP Measures |
|
For the Three Months Ended September 30, 2015 and
2014 |
|
(UNAUDITED) |
|
(in millions, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended September 30, 2015 |
|
For the Three Months Ended September 30, 2014 |
|
|
|
Gross Profit |
SG&A |
Income from
operations |
Operating
margin |
Net earnings
attributable to common shareholders |
Net earnings
attributable to common shareholders per diluted share |
|
Income from
operations |
Operating
margin |
Net earnings
attributable to common shareholders |
Net earnings
attributable to common shareholders per diluted share |
|
GAAP basis
measures |
$ |
619.9 |
|
$ |
328.4 |
|
$ |
123.3 |
|
|
4.4 |
% |
$ |
14.3 |
|
$ |
0.07 |
|
|
$ |
173.7 |
|
|
5.9 |
% |
$ |
62.2 |
|
$ |
0.31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges -
net (1) |
|
- |
|
|
- |
|
|
23.4 |
|
|
0.9 |
% |
|
16.8 |
|
|
0.09 |
|
|
|
9.9 |
|
|
0.3 |
% |
|
4.9 |
|
|
0.02 |
|
|
|
Impairment charges -
net (2) |
|
- |
|
|
- |
|
|
28.2 |
|
|
1.0 |
% |
|
21.1 |
|
|
0.10 |
|
|
|
0.3 |
|
|
0.0 |
% |
|
0.1 |
|
|
0.01 |
|
|
|
Other charges (3) |
|
- |
|
|
- |
|
|
1.3 |
|
|
0.0 |
% |
|
3.1 |
|
|
0.01 |
|
|
|
9.7 |
|
|
0.3 |
% |
|
4.8 |
|
|
0.02 |
|
|
|
Spinoff-related
transaction expenses (4) |
|
- |
|
|
(6.7 |
) |
|
6.7 |
|
|
0.2 |
% |
|
4.4 |
|
|
0.02 |
|
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
Acquisition-related
expenses (5) |
|
- |
|
|
(0.3 |
) |
|
0.3 |
|
|
0.0 |
% |
|
0.2 |
|
|
0.00 |
|
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
Purchase accounting
inventory adjustment (6) |
|
6.7 |
|
|
- |
|
|
6.7 |
|
|
0.2 |
% |
|
4.3 |
|
|
0.02 |
|
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
Income tax adjustment
(7) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
9.0 |
|
|
0.04 |
|
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
Net loss (gain) on
investments (8) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
2.8 |
|
|
0.01 |
|
|
|
- |
|
|
- |
|
|
(1.9 |
) |
|
(0.01 |
) |
|
|
Loss on bankruptcy of
subsidiary (9) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
|
14.2 |
|
|
0.07 |
|
|
|
Net gain on disposals
of businesses (10) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
|
(6.8 |
) |
|
(0.03 |
) |
|
|
Gain-net on bargain
purchase (11) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
|
1.0 |
|
|
0.00 |
|
|
|
Venezuela currency
remeasurement (12) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
|
0.4 |
|
|
0.00 |
|
|
|
Total
Non-GAAP adjustments |
|
6.7 |
|
|
(7.0 |
) |
|
66.6 |
|
|
2.3 |
% |
|
61.7 |
|
|
0.29 |
|
|
|
19.9 |
|
|
0.6 |
% |
|
16.7 |
|
|
0.08 |
|
|
Non-GAAP
measures |
$ |
626.6 |
|
$ |
321.4 |
|
$ |
189.9 |
|
|
6.7 |
% |
$ |
76.0 |
|
$ |
0.36 |
|
|
$ |
193.6 |
|
|
6.5 |
% |
$ |
78.9 |
|
$ |
0.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Restructuring charges - net: Operating results for
the three months ended September 30, 2015 and 2014 were affected by
the following pre-tax restructuring charges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
Employee termination
costs (a) |
|
|
$ |
18.8 |
|
$ |
4.8 |
|
|
|
|
|
|
|
|
|
|
Other restructuring
charges (b) |
|
|
|
4.6 |
|
|
5.1 |
|
|
|
|
|
|
|
|
|
|
Total
restructuring charges - net |
|
|
$ |
23.4 |
|
$ |
9.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) For the three months ended September 30, 2015, employee
termination costs primarily resulted from the announcement of a
facility closure in the International segment. For the three
months ended September 30, 2014, employee termination costs
resulted from the integration of Consolidated Graphics, Inc.
("Consolidated Graphics"), including the closure of one
Consolidated Graphics facility and the reorganization of certain
operations. |
|
|
|
|
|
(b) Includes lease termination and other facility costs. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Impairment charges - net: Operating results for
the three months ended September 30, 2015 and 2014 were affected by
the following impairment charges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
Goodwill impairment
charges (a) |
|
|
$ |
18.0 |
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Intangible
asset impairment charges (b) |
|
|
2.3 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
Total
goodwill and intangible asset impairment charges |
|
|
20.3 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
Other
long-lived asset impairment charges |
|
|
7.9 |
|
|
0.3 |
|
|
|
|
|
|
|
|
|
|
Total
impairment charges - net |
|
|
$ |
28.2 |
|
$ |
0.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Non-cash charges during the three months ended September
30, 2015 of $13.7 million and $4.3 million to recognize the
impairment of goodwill in the Europe and Latin America reporting
units, respectively, both of which are within the International
segment. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Impairment charges during the three months ended September
30, 2015, substantially all of which related to the impairment of
acquired customer relationship intangible assets and trade names in
the Latin America reporting unit within the International
segment. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Other charges: Recognition of charges related to
the Company's multi-employer pension plan withdrawal obligations
unrelated to facility closures. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4) Spinoff-related transaction expenses: Included
pre-tax charges of $6.7 million ($4.4 million after-tax) related to
consulting, tax advice, legal and other expenses for the three
months ended September 30, 2015 associated with the proposed
spinoff transactions. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5) Acquisition-related expenses: Legal, accounting
and other expenses associated with completed or contemplated
acquisitions. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6) Purchase accounting inventory adjustment: Included
pre-tax charges of $6.7 million ($4.3 million after-tax) as a
result of an inventory purchase accounting adjustment for Courier
Corporation ("Courier") for the three months ended September 30,
2015. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7) Income tax adjustment: Included tax expense of
$9.0 million due to the receipt of an unfavorable court decision
relating to payment of prior year taxes in the International
segment for the three months ended September 30, 2015. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8) Net loss (gain) on investments: Included a pre-tax
loss of $2.8 million ($2.8 million after-tax) for the three months
ended September 30, 2015 resulting from the impairment of an
investment. For the three months ended September 30, 2014, included
a pre-tax gain of $3.0 million ($1.9 million after-tax) resulting
from the sale of the Company’s shares of a previously impaired
equity investment. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9) Loss on bankruptcy of subsidiary: Included a
pre-tax loss of $16.4 million ($14.2 million after-tax) for the
three months ended September 30, 2014 as a result of the bankruptcy
liquidation of RR Donnelley Argentina S.A. ("RRDA"), a subsidiary
of RR Donnelley. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10) Net gain on disposals of businesses: Included a
pre-tax gain of $11.1 million ($6.8 million after-tax) on the sale
of Journalism Online, LLC ("JOL") and Office Tiger Global Real
Estate Service Inc. ("GRES") for the three months ended September
30, 2014. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11) Gain-net on bargain purchase: Acquisition of
Esselte Corporation ("Esselte") resulted in a pre-tax reduction of
$1.0 million ($1.0 million after-tax) in the previously recorded
gain for the three months ended September 30, 2014 as a result of
finalizing the purchase price allocation. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12) Venezuela currency remeasurement: Currency
remeasurement in Venezuela resulted in a net pre-tax gain of $0.6
million ($0.0 million after-tax) for the three months ended
September 30, 2014, of which $0.4 million was included in loss
attributable to noncontrolling interests. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R.R. Donnelley & Sons
Company |
|
Reconciliation of GAAP to Non-GAAP Measures |
|
For the Nine Months Ended September 30, 2015 and
2014 |
|
(UNAUDITED) |
|
(in millions, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended September 30, 2015 |
|
For the Nine Months Ended September 30, 2014 |
|
|
|
Gross profit |
SG&A |
Income from
operations |
Operating
margin |
Net earnings
attributable to common shareholders |
Net earnings
attributable to common shareholders per diluted share |
|
Gross profit |
SG&A |
Income from
operations |
Operating
margin |
Net earnings
attributable to common shareholders |
Net earnings
attributable to common shareholders per diluted share |
|
GAAP basis
measures |
$ |
1,815.4 |
|
$ |
972.4 |
|
$ |
396.6 |
|
|
4.8 |
% |
$ |
80.1 |
|
$ |
0.39 |
|
|
$ |
1,883.0 |
|
$ |
990.2 |
|
$ |
447.9 |
|
|
5.2 |
% |
$ |
97.9 |
|
$ |
0.49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges -
net (1) |
|
- |
|
|
- |
|
|
52.8 |
|
|
0.7 |
% |
|
30.5 |
|
|
0.16 |
|
|
|
- |
|
|
- |
|
|
43.8 |
|
|
0.5 |
% |
|
27.5 |
|
|
0.14 |
|
|
|
Impairment charges -
net (2) |
|
- |
|
|
- |
|
|
29.0 |
|
|
0.3 |
% |
|
21.5 |
|
|
0.10 |
|
|
|
- |
|
|
- |
|
|
10.1 |
|
|
0.1 |
% |
|
6.6 |
|
|
0.03 |
|
|
|
Other charges (3) |
|
- |
|
|
- |
|
|
23.1 |
|
|
0.3 |
% |
|
13.3 |
|
|
0.06 |
|
|
|
- |
|
|
- |
|
|
34.0 |
|
|
0.4 |
% |
|
21.0 |
|
|
0.11 |
|
|
|
Spinoff-related
transaction expenses (4) |
|
- |
|
|
(6.7 |
) |
|
6.7 |
|
|
0.1 |
% |
|
4.4 |
|
|
0.02 |
|
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
Acquisition-related
expenses (5) |
|
- |
|
|
(14.1 |
) |
|
14.1 |
|
|
0.1 |
% |
|
13.4 |
|
|
0.07 |
|
|
|
- |
|
|
(8.2 |
) |
|
8.2 |
|
|
0.1 |
% |
|
6.7 |
|
|
0.03 |
|
|
|
Purchase accounting
inventory adjustments (6) |
|
9.9 |
|
|
- |
|
|
9.9 |
|
|
0.1 |
% |
|
6.4 |
|
|
0.03 |
|
|
|
14.3 |
|
|
- |
|
|
14.3 |
|
|
0.2 |
% |
|
9.1 |
|
|
0.05 |
|
|
|
Venezuela currency
remeasurement (7) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
17.0 |
|
|
0.08 |
|
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
8.0 |
|
|
0.04 |
|
|
|
Net loss (gain) on
disposals of businesses (8) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
15.7 |
|
|
0.08 |
|
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(6.4 |
) |
|
(0.03 |
) |
|
|
Net loss (gain) on
investments (9) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
0.2 |
|
|
0.00 |
|
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(1.9 |
) |
|
(0.01 |
) |
|
|
Income tax adjustment
(10) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
9.0 |
|
|
0.04 |
|
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
Loss on debt
extinguishment (11) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
49.8 |
|
|
0.25 |
|
|
|
Loss on bankruptcy of
subsidiary (12) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
14.2 |
|
|
0.07 |
|
|
|
Gain on bargain
purchase (13) |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(9.5 |
) |
|
(0.05 |
) |
|
|
Total
Non-GAAP adjustments |
|
9.9 |
|
|
(20.8 |
) |
|
135.6 |
|
|
1.6 |
% |
|
131.4 |
|
|
0.64 |
|
|
|
14.3 |
|
|
(8.2 |
) |
|
110.4 |
|
|
1.3 |
% |
|
125.1 |
|
|
0.63 |
|
|
Non-GAAP
measures |
$ |
1,825.3 |
|
$ |
951.6 |
|
$ |
532.2 |
|
|
6.4 |
% |
$ |
211.5 |
|
$ |
1.03 |
|
|
$ |
1,897.3 |
|
$ |
982.0 |
|
$ |
558.3 |
|
|
6.5 |
% |
$ |
223.0 |
|
$ |
1.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Restructuring charges - net: Operating results for
the nine months ended September 30, 2015 and 2014 were affected by
the following pre-tax restructuring charges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
Employee termination
costs (a) |
|
|
$ |
39.8 |
|
$ |
27.8 |
|
|
|
|
|
|
|
|
|
|
|
|
Other restructuring
charges (b) |
|
|
|
13.0 |
|
|
16.0 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
restructuring charges - net |
|
|
$ |
52.8 |
|
$ |
43.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) For the nine months ended September 30, 2015, employee
termination costs resulted from the announcement of one facility
closure and the closure of another facility, both in the
International segment, one facility closure in the Variable Print
segment and the reorganization of certain operations. For the nine
months ended September 30, 2014, employee termination costs
resulted from the integration of Consolidated Graphics, including
the closure of seven facilities and one additional facility closure
within the Variable Print segment, one facility closure in the
Publishing and Retail Services segment and the reorganization of
certain operations. |
|
|
(b) Includes lease termination and other facility costs. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Impairment charges - net: Operating results for
the nine months ended September 30, 2015 and 2014 were affected by
the following impairment charges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill impairment
charges (a) |
|
|
$ |
18.0 |
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
Intangible asset
impairment charges (b) |
|
|
|
2.3 |
|
|
1.0 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
goodwill and intangible asset impairment charges |
|
|
20.3 |
|
|
1.0 |
|
|
|
|
|
|
|
|
|
|
|
|
Other long-lived asset
impairment charges |
|
|
|
8.7 |
|
|
9.1 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
impairment charges - net |
|
|
$ |
29.0 |
|
$ |
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Non-cash charges during the nine months ended September
30, 2015 of $13.7 million and $4.3 million to recognize the
impairment of goodwill in the Europe and Latin America reporting
units, respectively, both of which are within the International
segment. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Impairment charges during the nine months ended September
30, 2015, substantially all of which related to the impairment of
acquired customer relationship intangible assets and trade names in
the Latin America reporting unit within the International
segment. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Other charges: Included recognition of integration
charges for certain Courier employees upon the termination of
Courier's executive severance plan for the nine months ended
September 30, 2015 and the Company's multi-employer pension plan
withdrawal obligations unrelated to facility closures for the nine
months ended September 30, 2015 and 2014. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4) Spinoff-related transaction expenses: Included
pre-tax charges of $6.7 million ($4.4 million after-tax) related to
consulting, tax advice, legal and other expenses for the nine
months ended September 30, 2015 associated with the proposed
spinoff transactions. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5) Acquisition-related expenses: Legal, accounting
and other expenses associated with completed or contemplated
acquisitions. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6) Purchase accounting inventory adjustments:
Included pre-tax charges of $9.9 million ($6.4 million after-tax)
for the nine months ended September 30, 2015 as a result of
inventory purchase accounting adjustments for Courier. For the nine
months ended September 30, 2014, these pre-tax charges included
$14.3 million ($9.1 million after-tax) as a result of inventory
purchase accounting adjustments for Consolidated Graphics and
Esselte. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7) Venezuela currency remeasurement: Currency
remeasurement in Venezuela and the related impact of the
devaluation resulted in a pre-tax loss of $30.3 million ($27.5
million after-tax) for the nine months ended September 30, 2015, of
which $10.5 million was included in loss attributable to
noncontrolling interests. For the nine months ended September
30, 2014, currency remeasurement in Venezuela resulted in a pre-tax
loss, net of foreign exchange gains, of $18.0 million ($14.0
million after-tax), of which $6.0 million was included in loss
attributable to noncontrolling interests. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8) Net loss (gain) on disposals of businesses:
Included a pre-tax loss of $15.7 million ($15.7 million after-tax)
for the nine months ended September 30, 2015, primarily related to
the disposal of the Venezuelan operating entity in the
International segment. For the nine months ended September 30,
2014, these pre-tax charges included a gain on the sale of
Journalism Online of $11.2 million ($6.9 million after-tax) offset
by a loss on the disposal of GRES in the International segment of
$0.8 million ($0.5 million after-tax). |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9) Net loss (gain) on investments: Included a pre-tax
gain of $3.9 million ($2.6 million after-tax) resulting from the
sale of one of the Company’s affordable housing investments and a
pre-tax loss of $2.8 million ($2.8 million after-tax) resulting
from the impairment of an investment during the nine months ended
September 30, 2015. For the nine months ended September 30, 2014,
these pre-tax charges included a gain of $3.0 million ($1.9 million
after-tax) resulting from the sale of the Company’s shares of a
previously impaired equity investment. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10) Income tax adjustment: Included tax expense of
$9.0 million due to the receipt of an unfavorable court decision
relating to payment of prior year taxes in the International
segment for the nine months ended September 30, 2015. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11) Loss on debt extinguishment: Included a pre-tax
loss of $77.1 million ($49.8 million after-tax) for the nine months
ended September 30, 2014, related to the premiums paid, unamortized
debt issuance costs and other expenses due to the repurchase of
$211.1 million of the 8.25% senior notes due March 15, 2019, $100.0
million of the 7.25% senior notes due May 15, 2018 and $50.0
million of the 7.625% senior notes due June 15, 2020. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12) Loss on bankruptcy of subsidiary: Included a
pre-tax loss of $16.4 million ($14.2 million after-tax) for the
nine months ended September 30, 2014 as a result of the bankruptcy
liquidation of RRDA, a subsidiary of RR Donnelley. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13) Gain on bargain purchase: Acquisition of Esselte
resulted in a pre-tax gain of $9.5 million ($9.5 million after-tax)
for the nine months ended September 30, 2014. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. R. Donnelley &
Sons Company |
|
|
|
|
Segment GAAP to Non-GAAP Operating Income and
Non-GAAP Adjusted EBITDA and Margin Reconciliation |
|
|
|
|
For the Three Months Ended September 30, 2015
and 2014 |
|
|
|
|
(UNAUDITED) |
|
|
|
|
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Publishing and Retail Services |
Variable Print |
Strategic Services |
International |
Corporate |
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
the Three Months Ended September 30,
2015 |
|
|
|
|
|
|
|
|
|
Net sales |
$ |
684.9 |
|
$ |
935.9 |
|
$ |
635.6 |
|
$ |
571.6 |
|
$ |
- |
|
$ |
2,828.0 |
|
|
|
|
|
Income (loss) from
operations |
|
33.4 |
|
|
58.0 |
|
|
51.5 |
|
|
(8.4 |
) |
|
(11.2 |
) |
|
123.3 |
|
|
|
|
|
Operating margin
% |
|
4.9 |
% |
|
6.2 |
% |
|
8.1 |
% |
|
nm |
|
|
nm |
|
|
4.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjustments |
|
|
|
|
|
|
|
|
|
|
Restructuring charges -
net |
|
3.1 |
|
|
2.6 |
|
|
2.4 |
|
|
13.9 |
|
|
1.4 |
|
|
23.4 |
|
|
|
|
|
Impairment charges -
net |
|
2.0 |
|
|
(0.1 |
) |
|
0.9 |
|
|
25.4 |
|
|
- |
|
|
28.2 |
|
|
|
|
|
Other
charges |
|
0.7 |
|
|
0.4 |
|
|
0.2 |
|
|
- |
|
|
- |
|
|
1.3 |
|
|
|
|
|
Acquisition-related
expenses |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
0.3 |
|
|
0.3 |
|
|
|
|
|
Spinoff-related
transaction expenses |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
6.7 |
|
|
6.7 |
|
|
|
|
|
Purchase accounting
inventory adjustment |
|
5.6 |
|
|
- |
|
|
1.1 |
|
|
- |
|
|
- |
|
|
6.7 |
|
|
|
|
|
Total Non-GAAP
adjustments |
|
11.4 |
|
|
2.9 |
|
|
4.6 |
|
|
39.3 |
|
|
8.4 |
|
|
66.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP income (loss)
from operations |
$ |
44.8 |
|
$ |
60.9 |
|
$ |
56.1 |
|
$ |
30.9 |
|
$ |
(2.8 |
) |
$ |
189.9 |
|
|
|
|
|
Non-GAAP operating
margin % |
|
6.5 |
% |
|
6.5 |
% |
|
8.8 |
% |
|
5.4 |
% |
|
nm |
|
|
6.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
40.1 |
|
|
38.0 |
|
|
15.8 |
|
|
20.5 |
|
|
0.9 |
|
|
115.3 |
|
|
|
|
|
Non-GAAP Adjusted
EBITDA |
$ |
84.9 |
|
$ |
98.9 |
|
$ |
71.9 |
|
$ |
51.4 |
|
$ |
(1.9 |
) |
$ |
305.2 |
|
|
|
|
|
Non-GAAP Adjusted
EBITDA margin % |
|
12.4 |
% |
|
10.6 |
% |
|
11.3 |
% |
|
9.0 |
% |
|
nm |
|
|
10.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures |
$ |
5.9 |
|
$ |
18.7 |
|
$ |
4.8 |
|
$ |
16.7 |
|
$ |
5.6 |
|
$ |
51.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
the Three Months Ended September 30,
2014 |
|
|
|
|
|
|
|
|
|
Net sales |
$ |
681.0 |
|
$ |
988.1 |
|
$ |
630.7 |
|
$ |
658.0 |
|
$ |
- |
|
$ |
2,957.8 |
|
|
|
|
|
Income (loss) from
operations |
|
34.1 |
|
|
68.8 |
|
|
56.5 |
|
|
24.7 |
|
|
(10.4 |
) |
|
173.7 |
|
|
|
|
|
Operating margin
% |
|
5.0 |
% |
|
7.0 |
% |
|
9.0 |
% |
|
3.8 |
% |
|
nm |
|
|
5.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjustments |
|
|
|
|
|
|
|
|
|
|
Restructuring charges -
net |
|
1.6 |
|
|
4.4 |
|
|
1.1 |
|
|
2.1 |
|
|
0.7 |
|
|
9.9 |
|
|
|
|
|
Impairment charges -
net |
|
(1.2 |
) |
|
1.7 |
|
|
- |
|
|
(0.2 |
) |
|
- |
|
|
0.3 |
|
|
|
|
|
Other
charges |
|
7.4 |
|
|
2.2 |
|
|
0.1 |
|
|
- |
|
|
- |
|
|
9.7 |
|
|
|
|
|
Total Non-GAAP
adjustments |
|
7.8 |
|
|
8.3 |
|
|
1.2 |
|
|
1.9 |
|
|
0.7 |
|
|
19.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP income (loss)
from operations |
$ |
41.9 |
|
$ |
77.1 |
|
$ |
57.7 |
|
$ |
26.6 |
|
$ |
(9.7 |
) |
$ |
193.6 |
|
|
|
|
|
Non-GAAP operating
margin % |
|
6.2 |
% |
|
7.8 |
% |
|
9.1 |
% |
|
4.0 |
% |
|
nm |
|
|
6.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
35.8 |
|
|
40.8 |
|
|
16.1 |
|
|
25.2 |
|
|
1.7 |
|
|
119.6 |
|
|
|
|
|
Non-GAAP Adjusted
EBITDA |
$ |
77.7 |
|
$ |
117.9 |
|
$ |
73.8 |
|
$ |
51.8 |
|
$ |
(8.0 |
) |
$ |
313.2 |
|
|
|
|
|
Non-GAAP Adjusted
EBITDA margin % |
|
11.4 |
% |
|
11.9 |
% |
|
11.7 |
% |
|
7.9 |
% |
|
nm |
|
|
10.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures |
$ |
9.8 |
|
$ |
15.2 |
|
$ |
10.5 |
|
$ |
19.9 |
|
$ |
2.8 |
|
$ |
58.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
nm Not meaningful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. R. Donnelley &
Sons Company |
|
|
Segment GAAP to Non-GAAP Operating Income and
Non-GAAP Adjusted EBITDA and Margin Reconciliation |
|
|
For the Nine Months Ended September 30, 2015 and
2014 |
|
|
(UNAUDITED) |
|
|
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Publishing and Retail Services |
Variable Print |
Strategic Services |
International |
Corporate |
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
For
the Nine Months Ended September 30,
2015 |
|
|
|
|
|
|
|
Net sales |
$ |
1,840.4 |
|
$ |
2,796.0 |
|
$ |
2,000.5 |
|
$ |
1,685.3 |
|
$ |
- |
|
$ |
8,322.2 |
|
|
|
Income (loss) from
operations |
|
47.8 |
|
|
183.6 |
|
|
189.3 |
|
|
25.9 |
|
|
(50.0 |
) |
|
396.6 |
|
|
|
Operating margin
% |
|
2.6 |
% |
|
6.6 |
% |
|
9.5 |
% |
|
1.5 |
% |
|
nm |
|
|
4.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjustments |
|
|
|
|
|
|
|
|
Restructuring charges -
net |
|
7.8 |
|
|
9.0 |
|
|
7.3 |
|
|
24.8 |
|
|
3.9 |
|
|
52.8 |
|
|
|
Impairment charges -
net |
|
1.5 |
|
|
1.6 |
|
|
0.9 |
|
|
25.0 |
|
|
- |
|
|
29.0 |
|
|
|
Other
charges |
|
18.5 |
|
|
1.3 |
|
|
3.3 |
|
|
- |
|
|
- |
|
|
23.1 |
|
|
|
Acquisition-related
expenses |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
14.1 |
|
|
14.1 |
|
|
|
Spinoff-related
transaction expenses |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
6.7 |
|
|
6.7 |
|
|
|
Purchase accounting
inventory adjustments |
|
8.5 |
|
|
- |
|
|
1.4 |
|
|
- |
|
|
- |
|
|
9.9 |
|
|
|
Total Non-GAAP
adjustments |
|
36.3 |
|
|
11.9 |
|
|
12.9 |
|
|
49.8 |
|
|
24.7 |
|
|
135.6 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP income (loss)
from operations |
$ |
84.1 |
|
$ |
195.5 |
|
$ |
202.2 |
|
$ |
75.7 |
|
$ |
(25.3 |
) |
$ |
532.2 |
|
|
|
Non-GAAP operating
margin % |
|
4.6 |
% |
|
7.0 |
% |
|
10.1 |
% |
|
4.5 |
% |
|
nm |
|
|
6.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
109.1 |
|
|
115.5 |
|
|
50.4 |
|
|
63.7 |
|
|
2.8 |
|
|
341.5 |
|
|
|
Non-GAAP Adjusted
EBITDA |
$ |
193.2 |
|
$ |
311.0 |
|
$ |
252.6 |
|
$ |
139.4 |
|
$ |
(22.5 |
) |
$ |
873.7 |
|
|
|
Non-GAAP Adjusted
EBITDA margin % |
|
10.5 |
% |
|
11.1 |
% |
|
12.6 |
% |
|
8.3 |
% |
|
nm |
|
|
10.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures |
$ |
27.9 |
|
$ |
43.1 |
|
$ |
33.0 |
|
$ |
36.7 |
|
$ |
12.1 |
|
$ |
152.8 |
|
|
|
|
|
|
|
|
|
|
|
|
For
the Nine Months Ended September 30,
2014 |
|
|
|
|
|
|
|
Net sales |
$ |
1,949.6 |
|
$ |
2,737.6 |
|
$ |
1,937.9 |
|
$ |
1,909.0 |
|
$ |
- |
|
$ |
8,534.1 |
|
|
|
Income (loss) from
operations |
|
71.8 |
|
|
158.2 |
|
|
193.0 |
|
|
79.6 |
|
|
(54.7 |
) |
|
447.9 |
|
|
|
Operating margin
% |
|
3.7 |
% |
|
5.8 |
% |
|
10.0 |
% |
|
4.2 |
% |
|
nm |
|
|
5.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjustments |
|
|
|
|
|
|
|
|
Restructuring charges -
net |
|
5.8 |
|
|
21.9 |
|
|
5.0 |
|
|
6.7 |
|
|
4.4 |
|
|
43.8 |
|
|
|
Impairment charges -
net |
|
2.4 |
|
|
6.9 |
|
|
- |
|
|
0.8 |
|
|
- |
|
|
10.1 |
|
|
|
Other
charges |
|
23.7 |
|
|
6.3 |
|
|
4.0 |
|
|
- |
|
|
- |
|
|
34.0 |
|
|
|
Acquisition-related
expenses |
|
- |
|
|
0.1 |
|
|
- |
|
|
0.4 |
|
|
7.7 |
|
|
8.2 |
|
|
|
Purchase accounting
inventory adjustments |
|
- |
|
|
14.3 |
|
|
- |
|
|
- |
|
|
- |
|
|
14.3 |
|
|
|
Total Non-GAAP
adjustments |
|
31.9 |
|
|
49.5 |
|
|
9.0 |
|
|
7.9 |
|
|
12.1 |
|
|
110.4 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP income (loss)
from operations |
$ |
103.7 |
|
$ |
207.7 |
|
$ |
202.0 |
|
$ |
87.5 |
|
$ |
(42.6 |
) |
$ |
558.3 |
|
|
|
Non-GAAP operating
margin % |
|
5.3 |
% |
|
7.6 |
% |
|
10.4 |
% |
|
4.6 |
% |
|
nm |
|
|
6.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
110.7 |
|
|
117.4 |
|
|
48.5 |
|
|
75.0 |
|
|
5.4 |
|
|
357.0 |
|
|
|
Non-GAAP Adjusted
EBITDA |
$ |
214.4 |
|
$ |
325.1 |
|
$ |
250.5 |
|
$ |
162.5 |
|
$ |
(37.2 |
) |
$ |
915.3 |
|
|
|
Non-GAAP Adjusted
EBITDA margin % |
|
11.0 |
% |
|
11.9 |
% |
|
12.9 |
% |
|
8.5 |
% |
|
nm |
|
|
10.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures |
$ |
32.0 |
|
$ |
44.3 |
|
$ |
28.4 |
|
$ |
50.3 |
|
$ |
9.5 |
|
$ |
164.5 |
|
|
|
|
|
|
|
|
|
|
|
|
nm
Not meaningful |
|
|
|
|
|
|
|
|
|
|
|
|
R. R. Donnelley & Sons
Company |
|
Condensed Consolidated Statements of Cash Flows |
|
For the Nine Months Ended September 30, 2015 and
2014 |
|
(UNAUDITED) |
|
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
|
|
|
$ |
67.1 |
|
$ |
97.2 |
|
|
|
Adjustment
to reconcile net earnings to net cash provided by operating
activities |
|
394.4 |
|
|
457.8 |
|
|
|
Changes in
operating assets and liabilities |
|
|
|
|
(237.5 |
) |
|
(267.3 |
) |
|
|
Pension and
other postretirement benefits plan contributions |
|
(19.8 |
) |
|
(33.8 |
) |
|
Net cash provided by operating
activities |
|
|
|
$ |
204.2 |
|
$ |
253.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures |
|
|
|
|
|
(152.8 |
) |
|
(164.5 |
) |
|
|
All other
cash used in investing activities |
|
|
|
|
|
(108.2 |
) |
|
(376.3 |
) |
|
Net cash used in investing
activities |
|
|
|
|
$ |
(261.0 |
) |
$ |
(540.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing
activities |
|
|
|
|
$ |
(188.8 |
) |
$ |
(446.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
Effect of
exchange rate on cash and cash equivalents |
|
|
|
|
(25.0 |
) |
|
(25.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash
equivalents |
|
|
|
$ |
(270.6 |
) |
$ |
(759.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents at beginning of period |
|
|
|
|
|
527.9 |
|
|
1,028.4 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of
period |
|
|
|
$ |
257.3 |
|
$ |
269.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
Information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
2014 |
|
|
For the
Nine Months Ended September 30: |
|
|
|
|
|
|
|
Net cash
provided by operating activities |
|
|
|
|
$ |
204.2 |
|
$ |
253.9 |
|
|
Less:
capital expenditures |
|
|
|
|
|
|
152.8 |
|
|
164.5 |
|
|
Free cash
flow |
|
|
|
|
|
$ |
51.4 |
|
$ |
89.4 |
|
|
|
|
|
|
|
|
|
|
|
|
For the Six
Months Ended June 30: |
|
|
|
|
|
|
|
Net cash
provided by operating activities |
|
|
|
|
$ |
61.0 |
|
$ |
69.7 |
|
|
Less:
capital expenditures |
|
|
|
|
|
|
101.1 |
|
|
106.3 |
|
|
Free cash
flow |
|
|
|
|
|
$ |
(40.1 |
) |
$ |
(36.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
For the
Three Months Ended September 30: |
|
|
|
|
|
|
|
Net cash
provided by operating activities |
|
|
|
|
$ |
143.2 |
|
$ |
184.2 |
|
|
Less:
capital expenditures |
|
|
|
|
|
|
51.7 |
|
|
58.2 |
|
|
Free cash
flow |
|
|
|
|
|
$ |
91.5 |
|
$ |
126.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
R.R. Donnelley &
Sons Company |
Reconciliation of Reported to Pro Forma Net
Sales |
For the Three Months Ended September 30, 2015
and 2014 |
(UNAUDITED) |
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Reported net sales |
Adjustments (1) |
Pro forma net sales |
For the Three
Months Ended September 30,
2015 |
|
|
|
|
Publishing and Retail
Services |
|
$ |
684.9 |
|
|
- |
|
$ |
684.9 |
|
Variable
Print |
|
|
935.9 |
|
|
- |
|
|
935.9 |
|
Strategic
Services |
|
|
635.6 |
|
|
- |
|
|
635.6 |
|
International |
|
|
571.6 |
|
|
- |
|
|
571.6 |
|
Consolidated |
|
$ |
2,828.0 |
|
$ |
- |
|
$ |
2,828.0 |
|
|
|
|
|
|
For the Three
Months Ended September 30,
2014 |
|
|
|
|
Publishing and Retail
Services |
|
$ |
681.0 |
|
$ |
74.6 |
|
$ |
755.6 |
|
Variable
Print |
|
|
988.1 |
|
|
- |
|
|
988.1 |
|
Strategic
Services |
|
|
630.7 |
|
|
8.2 |
|
|
638.9 |
|
International |
|
|
658.0 |
|
|
- |
|
|
658.0 |
|
Consolidated |
|
$ |
2,957.8 |
|
$ |
82.8 |
|
$ |
3,040.6 |
|
|
|
|
|
|
Net sales change |
|
|
|
|
Publishing and Retail Services |
|
|
0.6 |
% |
|
|
(9.4 |
%) |
Variable Print |
|
|
(5.3 |
%) |
|
|
(5.3 |
%) |
Strategic Services |
|
|
0.8 |
% |
|
|
(0.5 |
%) |
International |
|
|
(13.1 |
%) |
|
|
(13.1 |
%) |
Consolidated |
|
|
(4.4 |
%) |
|
|
(7.0 |
%) |
|
|
|
|
|
Supplementary
non-GAAP information: |
|
|
|
|
|
|
|
|
|
Year-over-year
impact of changes in foreign exchange (FX)
rates |
|
|
|
|
Publishing and Retail
Services |
|
|
|
--- |
% |
Variable
Print |
|
|
|
|
(0.5 |
%) |
Strategic
Services |
|
|
|
|
(0.5 |
%) |
International |
|
|
|
|
(8.9 |
%) |
Consolidated |
|
|
|
|
(2.2 |
%) |
|
|
|
|
|
Approximate year-over-year impact of changes in
pass-through paper sales |
|
|
|
Publishing and Retail
Services |
|
|
|
|
(3.0 |
%) |
Variable
Print |
|
|
|
|
0.1 |
% |
Strategic
Services |
|
|
|
--- |
% |
International |
|
|
|
--- |
% |
Consolidated |
|
|
|
|
(0.7 |
%) |
|
|
|
|
|
Year-over-year
impact of dispositions (2) |
|
|
|
|
Publishing and Retail
Services |
|
|
|
--- |
% |
Variable
Print |
|
|
|
--- |
% |
Strategic
Services |
|
|
|
|
(0.1 |
%) |
International |
|
|
|
|
(4.3 |
%) |
Consolidated |
|
|
|
|
(1.0 |
%) |
|
|
|
|
|
|
|
|
|
|
Net organic sales change
(3) |
|
|
|
|
Publishing and Retail Services |
|
|
|
|
(6.4 |
%) |
Variable Print |
|
|
|
|
(4.9 |
%) |
Strategic Services |
|
|
|
|
0.1 |
% |
International |
|
|
|
|
0.1 |
% |
Consolidated |
|
|
|
|
(3.1 |
%) |
|
|
|
|
|
|
The reported results of the Company include the
results of acquired businesses from the acquisition date forward.
The Company has provided this schedule to reconcile reported net
sales for the three months ended September 30, 2015 and 2014 to pro
forma net sales as if the Courier acquisition took place as of
January 1, 2014 for the purposes of this schedule. |
|
There were no acquisitions during the three months
ended September 30, 2015. |
|
For the three months ended September 30, 2014, the
adjustment for net sales of acquired businesses reflects the net
sales of Courier (acquired June 8, 2015). |
|
|
|
|
|
|
|
(1) Adjusted
for net sales of acquired business: Courier |
(2) Adjusted
for net sales of disposed businesses: JOL, RRDA, and the Venezuelan
operating entity |
(3) Adjusted
for net sales of acquired and disposed businesses, the impact of
changes in FX rates and pass-through paper sales |
|
|
|
|
|
R.R. Donnelley &
Sons Company |
Reconciliation of Reported to Pro Forma Net
Sales |
For the Nine Months Ended September 30, 2015 and
2014 |
(UNAUDITED) |
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Reported net
sales |
Adjustments
(1) |
Pro forma net
sales |
For the Nine
Months Ended September 30,
2015 |
|
|
|
|
Publishing and Retail
Services |
|
$ |
1,840.4 |
|
$ |
103.1 |
|
$ |
1,943.5 |
|
Variable
Print |
|
|
2,796.0 |
|
|
- |
|
|
2,796.0 |
|
Strategic
Services |
|
|
2,000.5 |
|
|
14.7 |
|
|
2,015.2 |
|
International |
|
|
1,685.3 |
|
|
5.5 |
|
|
1,690.8 |
|
Consolidated |
|
$ |
8,322.2 |
|
$ |
123.3 |
|
$ |
8,445.5 |
|
|
|
|
|
|
For the Nine
Months Ended September 30,
2014 |
|
|
|
|
Publishing and Retail
Services |
|
$ |
1,949.6 |
|
$ |
186.2 |
|
$ |
2,135.8 |
|
Variable
Print |
|
|
2,737.6 |
|
|
149.4 |
|
|
2,887.0 |
|
Strategic
Services |
|
|
1,937.9 |
|
|
25.9 |
|
|
1,963.8 |
|
International |
|
|
1,909.0 |
|
|
2.3 |
|
|
1,911.3 |
|
Consolidated |
|
$ |
8,534.1 |
|
$ |
363.8 |
|
$ |
8,897.9 |
|
|
|
|
|
|
Net sales change |
|
|
|
|
Publishing and Retail Services |
|
|
(5.6 |
%) |
|
|
(9.0 |
%) |
Variable Print |
|
|
2.1 |
% |
|
|
(3.2 |
%) |
Strategic Services |
|
|
3.2 |
% |
|
|
2.6 |
% |
International |
|
|
(11.7 |
%) |
|
|
(11.5 |
%) |
Consolidated |
|
|
(2.5 |
%) |
|
|
(5.1 |
%) |
|
|
|
|
|
Supplementary
non-GAAP information: |
|
|
|
|
|
|
|
|
|
Year-over-year
impact of changes in foreign exchange (FX)
rates |
|
|
|
|
Publishing and Retail
Services |
|
|
|
--- |
% |
Variable
Print |
|
|
|
|
(0.3 |
%) |
Strategic
Services |
|
|
|
|
(0.6 |
%) |
International |
|
|
|
|
(8.4 |
%) |
Consolidated |
|
|
|
|
(2.1 |
%) |
|
|
|
|
|
Approximate year-over-year impact of changes in
pass-through paper sales |
|
|
|
Publishing and Retail
Services |
|
|
|
|
(2.8 |
%) |
Variable
Print |
|
|
|
|
0.1 |
% |
Strategic
Services |
|
|
|
--- |
% |
International |
|
|
|
|
0.1 |
% |
Consolidated |
|
|
|
|
(0.6 |
%) |
|
|
|
|
|
Year-over-year
impact of dispositions (2) |
|
|
|
|
Publishing and Retail
Services |
|
|
|
--- |
% |
Variable
Print |
|
|
|
--- |
% |
Strategic
Services |
|
|
|
|
(0.2 |
%) |
International |
|
|
|
|
(3.6 |
%) |
Consolidated |
|
|
|
|
(0.8 |
%) |
|
|
|
|
|
|
|
|
|
|
Net organic sales change
(3) |
|
|
|
|
Publishing and Retail Services |
|
|
|
|
(6.2 |
%) |
Variable Print |
|
|
|
|
(3.0 |
%) |
Strategic Services |
|
|
|
|
3.4 |
% |
International |
|
|
|
|
0.4 |
% |
Consolidated |
|
|
|
|
(1.6 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The reported results of the Company include the
results of acquired businesses from the acquisition date forward.
The Company has provided this schedule to reconcile reported net
sales for the nine months ended September 30, 2015 and 2014 to pro
forma net sales as if the 2015 and 2014 acquisitions took place as
of January 1, 2014 for the purposes of this schedule. |
|
For the nine months ended September 30, 2015, the
adjustment for net sales of acquired businesses reflects the net
sales of Courier (acquired June 8, 2015). |
|
For the nine months ended September 30, 2014, the
adjustment for net sales of acquired businesses reflects the net
sales of Courier (acquired June 8, 2015), Consolidated Graphics
(acquired January 31, 2014), MultiCorpora (acquired March 10,
2014), and Esselte (acquired March 25, 2014). |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Adjusted
for net sales of acquired businesses: Courier, Consolidated
Graphics, MultiCorpora and Esselte |
(2) Adjusted
for net sales of disposed businesses: JOL, RRDA, GRES and the
Venezuelan operating entity |
(3) Adjusted
for net sales of acquired and disposed businesses, the impact of
changes in FX rates and pass-through paper sales |
|
|
|
|
|
|
R.R. Donnelley &
Sons Company |
|
Reconciliation of GAAP Net Earnings (Loss) to
Non-GAAP Adjusted EBITDA |
|
For the Three and Twelve Months Ended September
30, 2015 and 2014 |
|
(UNAUDITED) |
|
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Twelve Months Ended |
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
|
|
September 30, 2015 |
|
September 30, 2015 |
June 30, 2015 |
March 31, 2015 |
December 31, 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net
earnings attributable to RR Donnelley common
shareholders |
|
$ |
99.6 |
|
|
$ |
14.3 |
|
$ |
43.5 |
|
$ |
22.3 |
|
$ |
19.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments |
|
|
|
|
|
|
|
|
|
Income (loss)
attributable to noncontrolling interests |
|
|
(8.9 |
) |
|
|
(2.7 |
) |
|
0.1 |
|
|
(10.4 |
) |
|
4.1 |
|
|
|
Income tax expense
(benefit) |
|
|
53.7 |
|
|
|
39.7 |
|
|
33.0 |
|
|
6.4 |
|
|
(25.4 |
) |
|
|
Interest expense -
net |
|
|
276.3 |
|
|
|
69.0 |
|
|
69.2 |
|
|
69.0 |
|
|
69.1 |
|
|
|
Investment and other
expense - net |
|
|
43.9 |
|
|
|
3.0 |
|
|
11.9 |
|
|
28.3 |
|
|
0.7 |
|
|
|
Depreciation and
amortization |
|
|
458.5 |
|
|
|
115.3 |
|
|
112.8 |
|
|
113.4 |
|
|
117.0 |
|
|
|
Restructuring,
impairment and other charges - net (1) |
|
|
150.7 |
|
|
|
52.9 |
|
|
32.2 |
|
|
19.8 |
|
|
45.8 |
|
|
|
Acquisition-related
expenses (2) |
|
|
14.5 |
|
|
|
0.3 |
|
|
3.3 |
|
|
10.5 |
|
|
0.4 |
|
|
|
Spinoff-related
transaction expenses (3) |
|
|
6.7 |
|
|
|
6.7 |
|
|
- |
|
|
- |
|
|
- |
|
|
|
Pension settlement
charges (4) |
|
|
95.7 |
|
|
|
- |
|
|
- |
|
|
- |
|
|
95.7 |
|
|
|
Purchase accounting
inventory adjustments (5) |
|
|
9.9 |
|
|
|
6.7 |
|
|
3.2 |
|
|
- |
|
|
- |
|
|
|
Total Non-GAAP
adjustments |
|
|
1,101.0 |
|
|
|
290.9 |
|
|
265.7 |
|
|
237.0 |
|
|
307.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
adjusted EBITDA |
|
$ |
1,200.6 |
|
|
$ |
305.2 |
|
$ |
309.2 |
|
$ |
259.3 |
|
$ |
326.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
11,391.5 |
|
|
$ |
2,828.0 |
|
$ |
2,748.1 |
|
$ |
2,746.1 |
|
$ |
3,069.3 |
|
|
|
Non-GAAP adjusted
EBITDA margin % |
|
|
10.5 |
% |
|
|
10.8 |
% |
|
11.3 |
% |
|
9.4 |
% |
|
10.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Twelve Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
|
|
September 30, 2014 |
|
September 30, 2014 |
June 30, 2014 |
March 31, 2014 |
December 31, 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net
earnings (loss) attributable to RR Donnelley common
shareholders |
|
$ |
201.9 |
|
|
$ |
62.2 |
|
$ |
64.7 |
|
$ |
(29.0 |
) |
$ |
104.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments |
|
|
|
|
|
|
|
|
|
Income (loss)
attributable to noncontrolling interests |
|
|
3.7 |
|
|
|
2.6 |
|
|
0.9 |
|
|
(4.2 |
) |
|
4.4 |
|
|
|
Income tax expense
(benefit) |
|
|
(10.3 |
) |
|
|
35.7 |
|
|
39.5 |
|
|
(23.5 |
) |
|
(62.0 |
) |
|
|
Interest expense -
net |
|
|
280.5 |
|
|
|
71.2 |
|
|
70.8 |
|
|
71.0 |
|
|
67.5 |
|
|
|
Investment and other
expense - net |
|
|
27.1 |
|
|
|
2.0 |
|
|
2.3 |
|
|
4.6 |
|
|
18.2 |
|
|
|
Loss on debt
extinguishment (6) |
|
|
77.1 |
|
|
|
- |
|
|
- |
|
|
77.1 |
|
|
- |
|
|
|
Depreciation and
amortization |
|
|
461.9 |
|
|
|
119.6 |
|
|
121.9 |
|
|
115.5 |
|
|
104.9 |
|
|
|
Restructuring,
impairment and other charges - net (1) |
|
|
140.8 |
|
|
|
19.9 |
|
|
22.8 |
|
|
45.2 |
|
|
52.9 |
|
|
|
Acquisition-related
expenses (2) |
|
|
11.9 |
|
|
|
- |
|
|
0.5 |
|
|
7.7 |
|
|
3.7 |
|
|
|
Purchase accounting
inventory adjustments (5) |
|
|
14.3 |
|
|
|
- |
|
|
2.2 |
|
|
12.1 |
|
|
- |
|
|
|
Total Non-GAAP
adjustments |
|
|
1,007.0 |
|
|
|
251.0 |
|
|
260.9 |
|
|
305.5 |
|
|
189.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
adjusted EBITDA |
|
$ |
1,208.9 |
|
|
$ |
313.2 |
|
$ |
325.6 |
|
$ |
276.5 |
|
$ |
293.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
11,289.4 |
|
|
$ |
2,957.8 |
|
$ |
2,902.5 |
|
$ |
2,673.8 |
|
$ |
2,755.3 |
|
|
|
Non-GAAP adjusted
EBITDA margin % |
|
|
10.7 |
% |
|
|
10.6 |
% |
|
11.2 |
% |
|
10.3 |
% |
|
10.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Restructuring, impairment and other charges - net:
Pre-tax charges for employee termination costs, lease termination
and other costs, including integration charges for certain Courier
employees upon the termination of Courier's executive severance
plan, immediately prior to the acquisition, multi-employer pension
plan withdrawal obligations as a result of facility closures, and
impairment of goodwill, intangible assets and other long-lived
assets. |
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Acquisition-related expenses: Legal, accounting
and other expenses associated with completed or contemplated
acquisitions. |
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Spinoff-related transaction expenses: Consulting,
tax advice, legal and other expenses associated with the proposed
spinoff transactions. |
|
|
|
|
|
|
|
|
|
|
|
|
|
(4) Pension settlement charges: Pre-tax charges
recognized for pension lump-sum settlement payments. |
|
|
|
|
|
|
|
|
|
|
|
|
|
(5) Purchase accounting inventory adjustments:
Recognition of charges as a result of inventory purchase accounting
adjustments. |
|
|
|
|
|
|
|
|
|
|
|
|
|
(6) Loss on debt extinguishment: Pre-tax losses were
recognized related to the repurchases of senior notes prior to
maturity, as well as the termination of the previous Credit
Agreement (as defined below). |
|
|
|
|
|
|
|
|
|
|
|
|
|
R.R. Donnelley &
Sons Company |
|
Debt and Liquidity Summary |
|
As of September 30, 2015 and 2014 and December
31, 2014 |
|
(UNAUDITED) |
|
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Liquidity (1) |
|
|
September 30, 2015 |
|
December 31, 2014 |
|
September 30, 2014 |
|
Cash
(2) |
|
|
$ |
257.3 |
|
|
$ |
527.9 |
|
|
$ |
269.2 |
|
|
Amount
available under the Credit Agreement (3) |
|
|
|
1,179.6 |
|
|
|
1,262.7 |
|
|
|
1,321.8 |
|
|
|
|
|
|
|
1,436.9 |
|
|
|
1,790.6 |
|
|
|
1,591.0 |
|
|
Usage |
|
|
|
|
|
|
|
|
Borrowings
under credit agreement (3) |
|
|
|
225.0 |
|
|
|
- |
|
|
|
130.0 |
|
|
Impact on
availability related to outstanding letters of credit |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Net
Available Liquidity |
|
|
$ |
1,211.9 |
|
|
$ |
1,790.6 |
|
|
$ |
1,461.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term and current portion of long-term
debt |
|
|
$ |
460.2 |
|
|
$ |
203.4 |
|
|
$ |
333.5 |
|
|
Long-term debt |
|
|
|
3,216.1 |
|
|
|
3,429.1 |
|
|
|
3,427.3 |
|
|
Total debt |
|
|
$ |
3,676.3 |
|
|
$ |
3,632.5 |
|
|
$ |
3,760.8 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted EBITDA for the twelve months ended
September 30, 2015 and 2014 and the year ended December 31,
2014 |
|
$ |
1,200.6 |
|
|
$ |
1,242.2 |
|
|
$ |
1,208.9 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Gross Leverage (defined as total debt
divided by non-GAAP adjusted
EBITDA) |
|
3.1x |
|
|
2.9x |
|
|
3.1x |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Liquidity does not include uncommitted credit
facilities, located primarily outside of the U.S. |
|
|
|
|
|
|
|
(2) Approximately 87% of cash as of September 30,
2015, 88% of cash as of December 31, 2014 and 85% of cash as of
September 30, 2014 was located outside of the U.S. During 2015, the
Company's foreign subsidiaries are expected to make approximately
$260.0 million in payments in 2015 and future years in satisfaction
of intercompany obligations. Certain other cash balances of
foreign subsidiaries may be subject to U.S. or local country taxes
if repatriated to the U.S. In addition, repatriation of some
foreign cash balances is further restricted by local laws. |
|
|
|
|
|
|
|
(3) The Company has a $1.5 billion senior secured
revolving credit agreement (the “Credit Agreement”) which expires
September 9, 2019. The Credit Agreement is subject to a number of
covenants, including a minimum Interest Coverage Ratio and a
maximum Leverage Ratio, as defined and calculated in the Credit
Agreement. There were $225.0 million in borrowings under the Credit
Agreement as of September 30, 2015. Based on the Company’s results
of operations for the twelve months ended September 30, 2015 and
existing debt, the Company would have had the ability to utilize
approximately $1.0 billion of the $1.5 billion Credit Agreement and
not have been in violation of the terms of the agreement. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2015 |
|
December 31, 2014 |
|
September 30, 2014 |
|
|
|
|
Stated amount of the
Credit Agreement |
$ |
1,500.0 |
|
|
$ |
1,500.0 |
|
|
$ |
1,500.0 |
|
|
|
|
|
Less: availability
reduction from covenants |
|
320.4 |
|
|
|
237.3 |
|
|
|
178.2 |
|
|
|
|
|
Total amount
available |
|
1,179.6 |
|
|
|
1,262.7 |
|
|
|
1,321.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: borrowings under
the Credit Agreement |
|
225.0 |
|
|
|
- |
|
|
|
130.0 |
|
|
|
|
|
Impact on availability
related to outstanding letters of credit |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Availability under the
Credit Agreement |
$ |
954.6 |
|
|
$ |
1,262.7 |
|
|
$ |
1,191.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contact Information
Investors:
Dave Gardella
SVP, Investor Relations
312.326.8155
david.a.gardella@rrd.com
Donnelley (R.R.) & Sons Co. (NYSE:RRD.WI)
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