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R.R. DONNELLEY THIRD-QUARTER SALES INCREASE 8.2 PERCENT; EARNINGS INCREASE 4.5 PERCENT EXCLUDING ONE-TIME EFFECT OF TAX RATE CHANGE

 CHICAGO, Oct. 28 /PRNewswire/ -- R.R. Donnelley and Sons Company (NYSE:DNY), the world's largest commercial printer, reported third- quarter 1993 net sales increased 8.2 percent to $1.12 billion from $1.04 billion in the third quarter of 1992.
 Third-quarter 1993 net income was $69.5 million or 45 cents per share. This included the one-time effect of the new, higher federal income tax rate on deferred income taxes, which reduced third-quarter net income by $6.2 million or 4 cents per share. Excluding this one- time item, net income would have been $75.7 million or 49 cents per share. In the third quarter of 1992, net income was $72.4 million or 47 cents per share.
 Net sales for the first nine months of 1993 increased to $3.08 billion, up 3.2 percent over the comparable 1992 period. Nine-month 1993 net income was $30.6 million or 20 cents per share. This included the previously recorded accounting changes and restructuring charge and the third-quarter deferred income tax change. Nine-month net income, excluding these items, would have been $167.1 million, equivalent to $1.08 per share. Net income for the nine months, 1992, was $161.6 million or $1.04 per share.
 ``Our sales growth in the third quarter reflects the improved demand and volume we had expected to be more evident in our second- half results,'' said John R. Walter, chairman and chief executive officer. ``We are well positioned for continued growth. Our financial position is strong with a large and growing cash flow that provides for continuing investment to grow the business profitably.''
 Operating earnings growth was constrained in the third quarter by higher expenses associated with several major equipment and plant startups, as well as recent acquisitions that are not yet fully integrated into R.R. Donnelley's operations. In August, the company's newest book manufacturing plant began production in Tennessee. Major, new press equipment started up for a new contract to print coupon inserts. The quarter's results also included recently acquired companies that provide services to publishers of trade and association magazines and users of specialty and direct-response products. These investments provide R.R. Donnelley with new, attractive growth opportunities.
 In the third quarter, directory printing services reflected continuing soft yellow pages advertising. Despite the effect of the discontinued Sears catalog business, catalog and newspaper insert production levels improved seasonally in the quarter. Magazine activity increased (despite fewer magazine advertising pages industrywide) because of expanded services for existing and new customers.
 Several areas of the business reflected continued strong demand. Financial printing services benefitted from global capital market demand for equity and debt. Growth in computer documentation services was particularly notable in Europe and Asia. Growth in services provided to book publishers was strong across virtually all product categories. The company expects growth to continue in book services, reflecting additions to capacity (including the new Tennessee book manufacturing plant) and the sales and capacity added by the early October completion of the acquisition of Haddon Craftsmen, a book printer with $50 million of sales in 1992.
 During the first nine months, capital investment totaled $340 million. Full-year capital investment is estimated at $450 million. The company's investments include expanding and upgrading operations, joint venture investments and acquisitions. In addition to investments in the United States, the company continues to invest capital to extend its global service capabilities, including new or expanded operations in Korea, Poland, Singapore and China. R.R. Donnelley now operates in more than 150 locations worldwide. The Donnelley board of directors declared a quarterly cash dividend of 14 cents per share, payable Dec. 1, 1993, to shareholders of record Nov. 11, 1993.
 CONDENSED CONSOLIDATED INCOME STATEMENT ($000s omitted)
 3 Months Ended Sept. 30 9 Months Ended Sept. 30
 1993 1992 1993 1992
 Net Sales $1,123,848 $1,038,781 $3,078,153 $2,983,809
 Gross Profit 232,022 219,128 602,208 571,930
 Earnings from
 Operations 121,866 120,469 192,767(a) 278,660
 Earnings Before
 Income Taxes
 and Cumulative
 Effect of
 Accounting Changes112,662 111,322 158,089(a) 248,564
 Net Income
 from Operations
 before Cumulative
 Effect of
 Accounting
 Changes 69,451(b) 72,360 100,114(a)(b) 161,567
 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 $ 69,451(b) $ 72,360 $ 30,614(a)(b) $161,567
 ======== ======== ========= =======
 Earnings Per Share
 Net Income from
 Operations before
 Cumulative Effect
 of Accounting Changes$ .45(b) $ .47 $ .65(a)(b) $1.04
 Cumulative Effect of
 Accounting Changes
 Post-Retirement
 benefits other
 than pensions
 (net of income
 tax benefit) - - (.82) -
 Income tax accounting - - .37 -
 Net Income Per Share $ .45(b) $ .47 $ .20(a)(b) $1.04
 ===== ===== ====== =====
 Average Shares of
 Common Stock
 Outstanding for
 the Periods 54,474,000 155,499,000 54,684,000 155,461,000
 Shares of
 Common Stock
 Outstanding at
 Sept. 30 154,183,000 155,518,000 154,183,000 155,518,000 (a) Includes $90 million ($60.8 million net-of-tax, equivalent to
 $.39 per share) restructuring charge related primarily
 to the shutdown of the companyUs Chicago manufacturing facility
 following a customerUs decision to discontinue its
 catalog operations.


(b) Includes $6.2 million (equivalent to $.04 per share) of
 additional income tax provision for one-time effect of new,
 higher federal income tax rate on deferred income taxes.
 -0- 10/28/93
 /CONTACT: Ronald G. Eidell, senior vice president and treasurer, R.R. Donnelly, 312-326-8375/
 (DNY)


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

DH -- NY076 -- 7933 10/28/93 12:39 EDT
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Publication:PR Newswire
Date:Oct 28, 1993
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