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R.R. DONNELLEY REPORTS SECOND-QUARTER EARNINGS PER SHARE OF 34 CENTS; QUARTERLY DIVIDEND INCREASED 8 PERCENT TO 14 CENTS PER SHARE

 CHICAGO, July 22 /PRNewswire/ -- R.R. Donnelley and Sons Company (NYSE: DNY), the world's largest commercial printer, reported second- quarter net sales of $994.0 million and net income of $52.8 million, compared with 1992 second-quarter sales of $1,006.9 million and net income of $53.7 million. The essentially flat sales for the second quarter resulted from less sales to Sears Roebuck & Co. and a stronger U.S. dollar. Sears' decision to discontinue its catalog operations affected R.R. Donnelley's results primarily in the second quarter of 1993. The strong U.S. dollar is adversely affecting the translation of sales of R.R. Donnelley's foreign operations, particularly those in the United Kingdom. Nevertheless, earnings per share of 34 cents for the second quarter equaled those of the second quarter, 1992.
 The R.R. Donnelley board of directors declared a quarterly cash dividend of 14 cents per share, up approximately 8 percent from the prior quarterly rate of 13 cents, payable Sept. 1, 1993, to shareholders of record Aug. 11, 1993.
 For the 1993 first half, sales increased to $1.95 billion from $1.94 billion for the same year-ago period. Excluding the effects of one-time accounting changes and a restructuring charge previously recorded in the first quarter, earnings for the first half would have been $91.4 million, equivalent to 59 cents per share. Including the accounting changes and restructuring charge, the company reported a net loss for the first half of $38.8 million, or 25 cents per share, compared to net income of $89.2 million or 57 cents per share in 1992.
 Margins (gross profit, earnings from operations and net income) improved, when compared to the first half of 1992, exclusive of the required accounting changes and restructuring charge. The improved earnings rates reflected a more favorable mix of sales, a continuing strong focus on reducing costs, lower startup expenses and a lower effective income tax rate.
 Commenting on the operating results, John R. Walter, R.R. Donnelley chairman and chief executive officer, said: "We performed well in the first half, improving our sales mix, reducing costs and improving margins. Our financial position is strong and our cash flows are large and growing. We are seeing strong or improving demand in all of our businesses. We expect the strong demand and volume growth to be more evident in the second-half sales results."
 In the quarter, catalog and newspaper insert production levels reflected a continuing uncertain retail environment and the discontinued Sears business. Directory printing services reflected continuing soft Yellow Pages advertising, offset in part by increased demand for four- color directories and additional volume for Telmex.
 Financial printing services improved, reflecting strong capital market demand for equity and debt. Computer documentation services continued to experience strong demand, particularly in Europe and Asia. This business increased when compared to the second quarter, 1992, which reflected unusually strong operating levels because of highly successful software introductions by two customers.
 Magazine activity increased in the quarter (despite flat magazine advertising pages industrywide) because of expanded services for existing and new customers, including publishers of trade and association magazines. Continued growth in this area will reflect business already in place and the completion, in mid-July, of the previously announced acquisition of the Special Interest Magazine Group of Ringier America, Inc. When combined with Combined Communication Services, acquired in late 1992, R.R. Donnelley now has a leading position in serving this growing area of the magazine business.
 Services provided to book publishers also continued to experience strong demand, across virtually all product categories. Reflecting current and future customers' needs, R.R. Donnelley announced, in late June, a 250,000-square-foot addition to its book manufacturing division in Harrisonburg, Va. This $40 million phased expansion is scheduled to start up in the second quarter of 1994, giving the company needed capacity to serve the growing needs of publishers of best-sellers.
 During the first half, capital investments totaled $178 million. Full-year capital investment is now estimated at $450 million, up from $300 million previously estimated, reflecting continued investment to expand and upgrade operations, including new equipment to meet the growing needs of present and new customers; expansion of manufacturing facilities; joint venture investments; and acquisitions.
 R.R. DONNELLEY AND SONS COMPANY
 Condensed Consolidated Income Statement ($000s omitted)
 3 Months Ended 6 Months Ended
 1993 1992 1993 1992
 Net Sales $993,964 $1,006,856 $1,954,305 $1,945,028
 Gross Profit 195,351 190,158 370,186 352,802
 Earnings from
 Operations 89,920 92,616 70,901(A) 158,191
 Earnings Before
 Income Taxes
 and Cumulative
 Effect of
 Accounting
 Changes 78,180 82,605 45,427(A) 137,242
 Net Income from
 Operations before
 Cumulative Effect
 of Accounting
 Changes 52,771 53,693 30,663(A) 89,207
 Cumulative Effect of
 Change in Accounting
 for --Post-Retirement
 benefits other than
 pensions (net of income
 tax benefit of
 $80.1 million) -- -- (127,700) --
 --Income Taxes -- -- 58,200 --
 Net Income
 (Loss) $ 52,771 $ 53,693 $ (38,837) $ 89,207
 Earnings Per Share(B)
 Operations (after
 restructuring
 charge) before
 cumulative effect
 of accounting
 changes $ .34 $ .34 $ .20(A) $ .57
 Cumulative effect of
 accounting changes
 --Post-retirement
 benefits other
 than pensions
 (net of income
 tax benefit) -- -- (.82) --
 --Income tax
 accounting -- -- .37 --
 Net Income (Loss)
 Per Share $ .34 $ .34 $(.25) $ .57
 Average Shares
 of Common Stock
 Outstanding for
 the Periods 154,701,000 155,475,000 154,805,000 155,443,000
 Shares of
 Common Stock
 Outstanding at
 June 30 154,696,000 155,486,000 154,696,000 155,486,000
 (A) Includes $90 million ($60.8 million net-of-tax, equivalent to $.39 per share) restructuring charge related primarily to the shutdown of the company's Chicago manufacturing facility following a customer's decision to discontinue its catalog operations.
 (B) Based on average number of shares of common stock outstanding during each period, reflecting the two-for-one stock split distributed to shareholders effective Sept. 1, 1992.
 -0- 7/22/93
 /CONTACT: Ronald G. Eidell, senior vice president and treasurer of R.R. Donnelley, 312-326-8375/
 (DNY)


CO: R.R. Donnelley and Sons Company ST: Illinois IN: SU: ERN DIV

MG -- NY044 -- 4492 07/22/93 11:33 EDT
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Date:Jul 22, 1993
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