R.R. Donnelley & Sons Company (Nasdaq:RRD) today reported
financial results for the second quarter of 2013.
Second-quarter 2013 highlights:
- Net sales of $2.6 billion grew 1.7% from the second quarter of
2012
- GAAP net earnings attributable to common shareholders of $65.4
million, or $0.36 per diluted share
- Non-GAAP net earnings attributable to common shareholders of
$82.5 million, or $0.45 per diluted share
- Non-GAAP adjusted EBITDA of $304.1 million, or 11.8% of net
sales
- Free cash flow of $107.3 million exceeds the second quarter of
2012 by $93.8 million
- Company reaffirms revenue, margin and free cash flow guidance
for full-year 2013
"We are pleased with our results, as the revenue trend continued
to improve during the second quarter. The year-over-year change in
organic revenue is the best we've experienced in the last seven
quarters, and represents a 40 basis-point improvement from the
first-quarter change," said Thomas J. Quinlan III, R.R. Donnelley's
President and Chief Executive Officer. "In addition, we continued
to invest in the business, at the same time improving free cash
flow by over $90 million from the same quarter last year. We remain
on track to deliver our full-year guidance, including free cash
flow in the range of $400 million to $500 million, that will allow
us to migrate toward our targeted gross leverage range of 2.25x to
2.75x on a long-term sustainable basis."
Net sales in the quarter were $2.6 billion, up $43.0 million, or
1.7%, from the second quarter of 2012 due to the impact of 2012
acquisitions and volume growth in the U.S. Print and Related
Services segment. After adjusting for the impact of acquisitions,
changes in foreign exchange rates and pass-through paper sales,
organic sales declined 0.8% from the second quarter of 2012 due to
price erosion in both segments and volume declines in the
International segment, partially offset by volume growth in the
U.S. Print and Related Services segment. Operating income in the
second quarter of 2013 was $173.2 million, which was impacted by
restructuring and impairment charges and acquisition-related
expenses totaling $19.9 million, compared to operating income in
the second quarter of 2012 of $163.9 million, which included
restructuring and impairment charges and acquisition-related
expenses totaling $34.5 million.
Second-quarter 2013 net earnings attributable to common
shareholders was $65.4 million, or $0.36 per diluted share,
compared to net earnings of $88.8 million, or $0.49 per diluted
share, in the second quarter of 2012. Second-quarter 2013 net
earnings attributable to common shareholders included $25.4 million
in pre-tax charges for restructuring, impairment (non-cash) and
acquisition-related expenses and losses on investments, while in
the second quarter of 2012, net earnings attributable to common
shareholders included $38.6 million in pre-tax charges for
restructuring, impairment (non-cash), acquisition-related expenses
and a loss on an investment, which were offset by the recognition
of previously unrecognized tax benefits ($26.1 million, non-cash).
Additional details regarding the nature of these and other items
are included in the attached schedules.
Non-GAAP adjusted EBITDA was $304.1 million in the second
quarter of 2013 compared to $319.3 million in the second quarter of
2012. Non-GAAP adjusted EBITDA margin in the second quarter of 2013
was 11.8%, or 80 basis points lower than in the second quarter of
2012, as price pressure, wage and other inflation, lower pension
income and pass-through postage revenue from the Presort Solutions
business acquired in 2012 more than offset lower benefits-related
expenses, higher volume, and a favorable product mix.
Non-GAAP net earnings attributable to common shareholders
totaled $82.5 million, or $0.45 per diluted share, in the second
quarter of 2013 compared to $88.5 million, or $0.49 per diluted
share, in the second quarter of 2012. Second-quarter non-GAAP net
earnings attributable to common shareholders exclude restructuring
and impairment charges, acquisition-related expenses and losses on
investments in both years as well as the recognition of previously
unrecognized tax benefits in the second quarter of 2012. A
reconciliation of net earnings attributable to common shareholders
to non-GAAP adjusted EBITDA and non-GAAP net earnings attributable
to common shareholders is presented in the attached schedules.
Outlook
The Company provides the following guidance for the full-year
2013, unchanged from the previous guidance provided on April 25,
2013:
| |
Guidance |
| Revenue |
$10.1 to $10.3 billion |
| Non-GAAP adjusted EBITDA margin |
11.2% to 11.4% |
| Depreciation and amortization |
$450 to $460 million |
| Interest expense |
$250 to $255 million |
| Non-GAAP effective tax rate |
33% to 35% |
| Diluted share count |
183 to 185 million |
| Capital expenditures |
$200 to $225 million |
| Free cash flow |
$400 to $500 million |
Conference Call
RR Donnelley will host a conference call and simultaneous
webcast to discuss its second-quarter results tomorrow, Tuesday,
July 30, 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 9850121#.
About RR Donnelley
RR Donnelley (Nasdaq:RRD) is a global provider of integrated
communications. The Company works collaboratively with more
than 60,000 customers worldwide to develop custom communications
solutions that reduce costs, drive top-line growth, enhance ROI and
increase compliance. Drawing on a range of proprietary and
commercially available digital and conventional technologies
deployed across four continents, the Company employs a suite of
leading Internet-based capabilities and other resources to provide
premedia, printing, logistics and business process outsourcing
services to clients in virtually every private and public
sector.
For more information, and for RR Donnelley's Corporate Social
Responsibility Report, visit the company's web site at
http://www.rrdonnelley.com.
Use of non-GAAP Information
This 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 Statements
This news release contains "forward-looking statements" as
defined in the U.S. Private Securities Litigation Reform Act of
1995. Readers are cautioned not to place undue reliance on
these forward-looking statements and any such forward-looking
statements are qualified in their entirety by reference to the
following cautionary statements. All forward-looking
statements speak only as of the date of this news release and are
based on current expectations and involve a number of assumptions,
risks and uncertainties that could cause the actual results to
differ materially from such forward-looking statements. The
Company 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. The factors that could cause material differences in
the expected results of RR Donnelley include, without limitation,
the following: the successful execution and integration of
acquisitions and the performance of the Company's businesses
following acquisitions; the ability to implement comprehensive
plans for the integration of sales forces, cost containment, asset
rationalization and other key strategies; competitive pressures in
all markets in which the Company operates; the volatility and
disruption of the capital and credit markets, and adverse changes
in the global economy; the Company's ability to access debt and the
capital markets and the reliability of the participants to the
Company's lending and insurance agreements; factors that affect
customer demand, including changes in postal rates and postal
regulations, changes in the capital markets, changes in advertising
markets, the rate of migration from paper-based forms to digital
format, customers' budgetary constraints and customers' changes in
short-range and long-range plans; customers' financial strength;
shortages or changes in availability, or increases in costs of, key
materials (such as ink, paper and fuel); and other risks and
uncertainties described in RR Donnelley's periodic filings with the
Securities and Exchange Commission (SEC). Readers are strongly
encouraged to read the full cautionary statements contained in RR
Donnelley's filings with the SEC.
| R. R. Donnelley &
Sons Company |
| Condensed Consolidated Balance
Sheets |
| As of June 30, 2013 and
December 31, 2012 |
| (UNAUDITED) |
| (in millions, except per share
data) |
| |
June 30,
2013 |
December 31,
2012 |
|
Assets |
|
|
| |
|
|
| Cash and cash
equivalents |
$ 354.4 |
$ 430.7 |
| Receivables, less allowances
for doubtful accounts |
1,804.7 |
1,878.8 |
| Inventories |
493.3 |
510.2 |
| Prepaid expenses and other
current assets |
155.0 |
157.7 |
| Total Current Assets |
2,807.4 |
2,977.4 |
| Property, plant and equipment -
net |
1,487.6 |
1,616.6 |
| Goodwill |
1,432.7 |
1,436.4 |
| Other intangible assets -
net |
349.6 |
382.9 |
| Deferred income
taxes |
448.2 |
445.1 |
| Other
noncurrent assets |
376.1 |
404.3 |
| Total
Assets |
$ 6,901.6 |
$ 7,262.7 |
| |
|
|
|
Liabilities |
|
|
| |
|
|
| Accounts payable |
$ 961.1 |
$ 1,210.3 |
| Accrued liabilities |
695.4 |
825.2 |
| Short-term and current portion
of long-term debt |
277.6 |
18.4 |
| Total Current
Liabilities |
1,934.1 |
2,053.9 |
| Long-term debt |
3,237.7 |
3,420.2 |
| Pension liabilities |
1,104.3 |
1,150.5 |
| Other postretirement benefits
plan liabilities |
240.3 |
241.7 |
| Other
noncurrent liabilities |
330.1 |
327.7 |
| Total
Liabilities |
6,846.5 |
7,194.0 |
| |
|
|
|
Equity |
|
|
| |
|
|
| Common stock, $1.25 par
value |
303.7 |
303.7 |
| Authorized shares:
500.0 |
|
|
| Issued shares: 243.0 in 2013
and 2012 |
|
|
| Additional paid-in
capital |
2,795.0 |
2,839.4 |
| Accumulated deficit |
(497.6) |
(496.1) |
| Accumulated other comprehensive
loss |
(1,044.0) |
(1,029.2) |
| Treasury stock, at cost, 61.3
shares in 2013 (2012 - 62.6 shares) |
(1,516.2) |
(1,565.0) |
| Total RR Donnelley
shareholders' equity |
40.9 |
52.8 |
| Noncontrolling
interests |
14.2 |
15.9 |
| Total
Equity |
55.1 |
68.7 |
| Total Liabilities and
Equity |
$ 6,901.6 |
$ 7,262.7 |
| |
| R. R. Donnelley &
Sons Company |
| Condensed Consolidated
Statements of Operations |
| For the Three and Six Months
Ended June 30, 2013 and 2012 |
| (UNAUDITED) |
| (in millions, except per share
data) |
| |
| |
For the Three
Months Ended June 30, |
For the Six
Months Ended June 30, |
| |
2 0 1 3 GAAP |
ADJUSTMENTS TO
NON-GAAP |
2 0 1 3
NON-GAAP |
2 0 1 2
GAAP |
ADJUSTMENTS TO
NON-GAAP |
2 0 1 2
NON-GAAP |
2 0 1 3
GAAP |
ADJUSTMENTS TO
NON-GAAP |
2 0 1 3
NON-GAAP |
2 0 1 2
GAAP |
ADJUSTMENTS TO
NON-GAAP |
2 0 1 2
NON-GAAP |
| Products net sales |
$ 2,135.0 |
$ -- |
$ 2,135.0 |
$ 2,189.7 |
$ -- |
$ 2,189.7 |
$ 4,264.7 |
$ -- |
$ 4,264.7 |
$ 4,386.2 |
$ -- |
$ 4,386.2 |
| Services net sales |
436.6 |
-- |
436.6 |
338.9 |
-- |
338.9 |
845.4 |
-- |
845.4 |
667.3 |
-- |
667.3 |
| Total net
sales |
2,571.6 |
-- |
2,571.6 |
2,528.6 |
-- |
2,528.6 |
5,110.1 |
-- |
5,110.1 |
5,053.5 |
-- |
5,053.5 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Products cost of sales (1) |
1,641.7 |
-- |
1,641.7 |
1,689.6 |
-- |
1,689.6 |
3,310.0 |
-- |
3,310.0 |
3,392.5 |
-- |
3,392.5 |
| Services cost of sales (1) |
331.7 |
-- |
331.7 |
244.3 |
-- |
244.3 |
643.6 |
-- |
643.6 |
486.4 |
-- |
486.4 |
| Total cost of sales (1) |
1,973.4 |
-- |
1,973.4 |
1,933.9 |
-- |
1,933.9 |
3,953.6 |
-- |
3,953.6 |
3,878.9 |
-- |
3,878.9 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Products gross profit (1) |
493.3 |
-- |
493.3 |
500.1 |
-- |
500.1 |
954.7 |
-- |
954.7 |
993.7 |
-- |
993.7 |
| Services gross profit (1) |
104.9 |
-- |
104.9 |
94.6 |
-- |
94.6 |
201.8 |
-- |
201.8 |
180.9 |
-- |
180.9 |
| Total gross profit
(1) |
598.2 |
-- |
598.2 |
594.7 |
-- |
594.7 |
1,156.5 |
-- |
1,156.5 |
1,174.6 |
-- |
1,174.6 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Selling, general and administrative expenses
(SG&A) (1) |
294.2 |
(0.1) |
294.1 |
275.9 |
(0.5) |
275.4 |
576.4 |
(1.1) |
575.3 |
559.4 |
(0.8) |
558.6 |
| Restructuring and impairment charges -
net |
19.8 |
(19.8) |
-- |
34.0 |
(34.0) |
-- |
42.5 |
(42.5) |
-- |
84.0 |
(84.0) |
-- |
| Depreciation and
amortization |
111.0 |
-- |
111.0 |
120.9 |
-- |
120.9 |
224.6 |
-- |
224.6 |
245.9 |
-- |
245.9 |
| Income from
operations |
173.2 |
19.9 |
193.1 |
163.9 |
34.5 |
198.4 |
313.0 |
43.6 |
356.6 |
285.3 |
84.8 |
370.1 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense - net |
65.5 |
-- |
65.5 |
63.6 |
-- |
63.6 |
128.3 |
-- |
128.3 |
124.3 |
-- |
124.3 |
| Investment and other expense (income) -
net |
6.0 |
(5.5) |
0.5 |
4.8 |
(4.1) |
0.7 |
9.5 |
(8.7) |
0.8 |
3.6 |
(4.1) |
(0.5) |
| Loss on debt extinguishment |
-- |
-- |
-- |
-- |
-- |
-- |
35.6 |
(35.6) |
-- |
12.1 |
(12.1) |
-- |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings before income
taxes |
101.7 |
25.4 |
127.1 |
95.5 |
38.6 |
134.1 |
139.6 |
87.9 |
227.5 |
145.3 |
101.0 |
246.3 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Income tax expense |
35.2 |
8.3 |
43.5 |
6.5 |
38.9 |
45.4 |
47.8 |
28.8 |
76.6 |
18.4 |
59.9 |
78.3 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net
earnings |
66.5 |
17.1 |
83.6 |
89.0 |
(0.3) |
88.7 |
91.8 |
59.1 |
150.9 |
126.9 |
41.1 |
168.0 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Less: Income (loss) attributable to
noncontrolling interests |
1.1 |
-- |
1.1 |
0.2 |
-- |
0.2 |
(0.7) |
1.0 |
0.3 |
0.7 |
-- |
0.7 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net earnings attributable to RR
Donnelley common shareholders |
$ 65.4 |
$ 17.1 |
$ 82.5 |
$ 88.8 |
$ (0.3) |
$ 88.5 |
$ 92.5 |
$ 58.1 |
$ 150.6 |
$ 126.2 |
$ 41.1 |
$ 167.3 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net earnings per share attributable
to RR Donnelley common shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
| Basic net earnings per share |
$ 0.36 |
|
$ 0.45 |
$ 0.49 |
|
$ 0.49 |
$ 0.51 |
|
$ 0.83 |
$ 0.70 |
|
$ 0.93 |
| Diluted net earnings per share |
$ 0.36 |
|
$ 0.45 |
$ 0.49 |
|
$ 0.49 |
$ 0.51 |
|
$ 0.82 |
$ 0.69 |
|
$ 0.92 |
| Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
| Basic |
182.0 |
|
182.0 |
180.7 |
|
180.7 |
181.6 |
|
181.6 |
180.1 |
|
180.1 |
| Diluted |
183.2 |
|
183.2 |
181.8 |
|
181.8 |
183.1 |
|
183.1 |
181.9 |
|
181.9 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Additional
information: |
|
|
|
|
|
|
|
|
|
|
|
|
| Gross margin (1) |
23.3% |
|
23.3% |
23.5% |
|
23.5% |
22.6% |
|
22.6% |
23.2% |
|
23.2% |
| SG&A as a % of total net sales
(1) |
11.4% |
|
11.4% |
10.9% |
|
10.9% |
11.3% |
|
11.3% |
11.1% |
|
11.1% |
| Operating margin |
6.7% |
|
7.5% |
6.5% |
|
7.8% |
6.1% |
|
7.0% |
5.6% |
|
7.3% |
| Effective tax rate |
34.6% |
|
34.2% |
6.8% |
|
33.9% |
34.2% |
|
33.7% |
12.7% |
|
31.8% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| (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
June 30, 2013 and 2012 |
| (UNAUDITED) |
| (in millions, except per share
data) |
| |
| |
For the Three Months
Ended June 30, 2013 |
For the Three Months
Ended June 30, 2012 |
| |
SG&A |
Income from operations |
Operating margin |
Net earnings attributable to common
shareholders |
Net earnings attributable to common
shareholders per diluted share |
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 |
$ 294.2 |
$ 173.2 |
6.7% |
$ 65.4 |
$ 0.36 |
$ 275.9 |
$ 163.9 |
6.5% |
$ 88.8 |
$ 0.49 |
| |
|
|
|
|
|
|
|
|
|
|
| Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| Restructuring charges - net
(1) |
-- |
16.1 |
0.6% |
10.9 |
0.06 |
-- |
25.7 |
1.0% |
17.2 |
0.10 |
| Impairment charges - net
(2) |
-- |
3.7 |
0.2% |
2.5 |
0.01 |
-- |
8.3 |
0.3% |
5.5 |
0.03 |
| Acquisition-related expenses
(3) |
(0.1) |
0.1 |
0.0% |
0.1 |
0.00 |
(0.5) |
0.5 |
0.0% |
0.5 |
0.00 |
| Loss on investments (4) |
-- |
-- |
-- |
3.6 |
0.02 |
-- |
-- |
-- |
2.6 |
0.01 |
| Income tax adjustments (5) |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
(26.1) |
(0.14) |
| Total Non-GAAP adjustments |
(0.1) |
19.9 |
0.8% |
17.1 |
0.09 |
(0.5) |
34.5 |
1.3% |
(0.3) |
0.00 |
| Non-GAAP measures |
$ 294.1 |
$ 193.1 |
7.5% |
$ 82.5 |
$ 0.45 |
$ 275.4 |
$ 198.4 |
7.8% |
$ 88.5 |
$ 0.49 |
| |
|
|
|
|
|
|
|
|
|
|
| (1) Restructuring
charges - net (pre-tax): Operating results for the three months
ended June 30, 2013 and 2012 were affected by the following
restructuring charges: |
| |
|
|
|
|
|
|
|
|
|
|
| |
2013 |
2012 |
|
|
|
|
|
|
|
|
| Employee termination costs
(a) |
$ 7.3 |
$ 13.8 |
|
|
|
|
|
|
|
|
| Other charges (b) |
8.8 |
11.9 |
|
|
|
|
|
|
|
|
| Total restructuring
charges - net |
$ 16.1 |
$ 25.7 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| (a) For the three
months ended June 30, 2013, employee termination costs resulted
from the reorganization of certain operations. For the three months
ended June 30, 2012, employee terminations resulted from the
reorganization of sales and administrative functions across all
segments, two facility closures within the U.S. Print and Related
Services segment and the reorganization of certain operations. |
| (b) Includes lease
termination and other facility costs, including charges related to
multi-employer pension plan withdrawal obligations. |
| |
|
|
|
|
|
|
|
|
|
|
| (2) Impairment
charges - net: Operating results for the three months ended June
30, 2013 and 2012 were affected by other long-lived asset
impairment charges. |
| |
|
|
|
|
|
|
|
|
|
|
| (3)
Acquisition-related expenses: Legal, accounting and other expenses
associated with completed or contemplated acquisitions. |
| |
|
|
|
|
|
|
|
|
|
|
| (4) Loss on
investments: Pre-tax impairment losses on equity investments of
$5.5 million ($3.6 million after-tax) and $4.1 million ($2.6
million after-tax) for the three months ended June 30, 2013 and
2012, respectively. |
| |
|
|
|
|
|
|
|
|
|
|
| (5) Income tax
adjustments: Recognition of previously unrecognized income tax
benefits due to the resolution of certain U.S. federal uncertain
tax positions for the three months ended June 30, 2012. |
| |
| R.R. Donnelley &
Sons Company |
| Reconciliation of GAAP to
Non-GAAP Measures |
| For the Six Months Ended June
30, 2013 and 2012 |
| (UNAUDITED) |
| (in millions, except per share
data) |
| |
| |
For the Six Months Ended
June 30, 2013 |
For the Six Months Ended
June 30, 2012 |
| |
SG&A |
Income from operations |
Operating margin |
Net earnings attributable to common
shareholders |
Net earnings attributable to common
shareholders per diluted share |
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 |
$ 576.4 |
$ 313.0 |
6.1% |
$ 92.5 |
$ 0.51 |
$ 559.4 |
$ 285.3 |
5.6% |
$ 126.2 |
$ 0.69 |
| |
|
|
|
|
|
|
|
|
|
|
| Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
| Restructuring charges - net
(1) |
-- |
34.7 |
0.7% |
22.9 |
0.12 |
-- |
66.4 |
1.3% |
44.2 |
0.25 |
| Impairment charges - net
(2) |
-- |
7.8 |
0.1% |
5.2 |
0.03 |
-- |
17.6 |
0.4% |
11.7 |
0.06 |
| Acquisition-related expenses
(3) |
(1.1) |
1.1 |
0.1% |
1.1 |
0.00 |
(0.8) |
0.8 |
0.0% |
0.8 |
0.01 |
| Loss on investments (4) |
-- |
-- |
-- |
3.6 |
0.02 |
-- |
-- |
-- |
2.6 |
0.01 |
| Venezuela devaluation (5) |
-- |
-- |
-- |
2.2 |
0.01 |
-- |
-- |
-- |
-- |
-- |
| Loss on debt extinguishment
(6) |
-- |
-- |
-- |
23.1 |
0.13 |
-- |
-- |
-- |
7.9 |
0.04 |
| Income tax adjustments (7) |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
-- |
(26.1) |
(0.14) |
| Total Non-GAAP adjustments |
(1.1) |
43.6 |
0.9% |
58.1 |
0.31 |
(0.8) |
84.8 |
1.7% |
41.1 |
0.23 |
| Non-GAAP measures |
$ 575.3 |
$ 356.6 |
7.0% |
$ 150.6 |
$ 0.82 |
$ 558.6 |
$ 370.1 |
7.3% |
$ 167.3 |
$ 0.92 |
| |
|
|
|
|
|
|
|
|
|
|
| (1) Restructuring
charges - net (pre-tax): Operating results for the six months ended
June 30, 2013 and 2012 were affected by the following restructuring
charges: |
| |
|
|
|
|
|
|
|
|
|
|
| |
2013 |
2012 |
|
|
|
|
|
|
|
|
| Employee termination costs
(a) |
$ 16.1 |
$ 50.6 |
|
|
|
|
|
|
|
|
| Other charges (b) |
18.6 |
15.8 |
|
|
|
|
|
|
|
|
| Total restructuring
charges - net |
$ 34.7 |
$ 66.4 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| (a) For the six
months ended June 30, 2013, employee termination costs resulted
from the closing of two manufacturing facilities within the U.S.
Print and Related Services segment and the reorganization of
certain operations. For the six months ended June 30, 2012,
employee termination costs resulted from the reorganization of
sales and administrative functions across all segments, the closing
of four manufacturing facilities within the U.S. Print and Related
Services segment and one manufacturing facility within the
International segment and the reorganization of certain
operations. |
| (b) Includes lease
termination and other facility costs, including charges related to
multi-employer pension plan withdrawal obligations. |
| |
|
|
|
|
|
|
|
|
|
|
| (2) Impairment
charges - net: Operating results for the six months ended June 30,
2013 and 2012 were affected by other long-lived asset impairment
charges. |
| |
|
|
|
|
|
|
|
|
|
|
| (3)
Acquisition-related expenses: Legal, accounting and other expenses
associated with completed or contemplated acquisitions. |
| |
|
|
|
|
|
|
|
|
|
|
| (4) Loss on
investments: Pre-tax impairment losses on equity investments of
$5.5 million ($3.6 million after-tax) and $4.1 million ($2.6
million after-tax) for the six months ended June 30, 2013 and 2012,
respectively. |
| |
|
|
|
|
|
|
|
|
|
|
| (5) Venezuela
devaluation: Currency devaluation in Venezuela resulted in a
pre-tax loss of $3.2 million ($3.2 million after-tax), of which
$1.0 million was included in loss attributable to noncontrolling
interests. |
| |
|
|
|
|
|
|
|
|
|
|
| (6) Loss on debt
extinguishment: Pre-tax loss of $35.6 million ($23.1 million
after-tax) was recognized for the six months ended June 30, 2013
related to the repurchase of $173.5 million of 6.125% senior notes
due January 15, 2017, $130.2 million of 8.60% senior notes due
August 15, 2016 and $50.0 million of 7.25% senior notes due May 15,
2018. During the six months ended June 30, 2012, a pre-tax loss of
$12.1 million ($7.9 million after-tax) was recognized related to
the repurchase of $341.8 million of 4.95% senior notes due April 1,
2014 and $100.0 million of 5.50% senior notes due May 15,
2015. |
| |
|
|
|
|
|
|
|
|
|
|
| (7) Income tax
adjustments: Recognition of previously unrecognized tax benefits
due to the resolution of certain U.S. federal uncertain tax
positions for the six months ended June 30, 2012. |
| |
| R. R. Donnelley &
Sons Company |
| Segment GAAP to Non-GAAP
Operating Income and Margin Reconciliation |
| For the Three Months Ended June
30, 2013 and 2012 |
| (UNAUDITED) |
| (in millions) |
| |
|
|
|
|
| |
|
|
|
|
| |
U.S. Print and Related
Services |
International |
Corporate |
Consolidated |
| |
|
|
|
|
| For the Three Months
Ended June 30, 2013 |
|
|
|
|
| Net sales |
$ 1,890.8 |
$ 680.8 |
$ -- |
$ 2,571.6 |
| Operating expenses |
1,709.2 |
642.4 |
46.8 |
2,398.4 |
| Income (loss) from operations |
181.6 |
38.4 |
(46.8) |
173.2 |
| Operating margin % |
9.6% |
5.6% |
nm |
6.7% |
| |
|
|
|
|
| Non-GAAP Adjustments |
|
|
|
|
| Restructuring charges - net |
10.4 |
4.9 |
0.8 |
16.1 |
| Impairment charges - net |
2.8 |
0.9 |
-- |
3.7 |
| Acquisition-related expenses |
-- |
-- |
0.1 |
0.1 |
| Total Non-GAAP
adjustments |
13.2 |
5.8 |
0.9 |
19.9 |
| |
|
|
|
|
| Non-GAAP income (loss) from
operations |
$ 194.8 |
$ 44.2 |
$ (45.9) |
$ 193.1 |
| Non-GAAP operating margin % |
10.3% |
6.5% |
nm |
7.5% |
| |
|
|
|
|
| Depreciation and amortization |
$ 71.6 |
$ 26.5 |
$ 12.9 |
$ 111.0 |
| Capital expenditures |
26.1 |
7.3 |
13.0 |
46.4 |
| |
|
|
|
|
| For the Three Months
Ended June 30, 2012 |
|
|
|
|
| Net sales |
$ 1,846.0 |
$ 682.6 |
$ -- |
$ 2,528.6 |
| Operating expenses |
1,680.3 |
640.6 |
43.8 |
2,364.7 |
| Income (loss) from operations |
165.7 |
42.0 |
(43.8) |
163.9 |
| Operating margin % |
9.0% |
6.2% |
nm |
6.5% |
| |
|
|
|
|
| Non-GAAP Adjustments |
|
|
|
|
| Restructuring charges - net |
19.1 |
3.5 |
3.1 |
25.7 |
| Impairment charges - net |
7.0 |
-- |
1.3 |
8.3 |
| Acquisition-related expenses |
-- |
-- |
0.5 |
0.5 |
| Total Non-GAAP
adjustments |
26.1 |
3.5 |
4.9 |
34.5 |
| |
|
|
|
|
| Non-GAAP income (loss) from
operations |
$ 191.8 |
$ 45.5 |
$ (38.9) |
$ 198.4 |
| Non-GAAP operating margin % |
10.4% |
6.7% |
nm |
7.8% |
| |
|
|
|
|
| Depreciation and amortization |
$ 83.3 |
$ 27.1 |
$ 10.5 |
$ 120.9 |
| Capital expenditures |
27.3 |
6.9 |
14.2 |
48.4 |
| |
| R. R. Donnelley &
Sons Company |
| Segment GAAP to Non-GAAP
Operating Income and Margin Reconciliation |
| For the Six Months Ended June
30, 2013 and 2012 |
| (UNAUDITED) |
| (in millions) |
| |
|
|
|
|
| |
|
|
|
|
| |
U.S. Print and Related
Services |
International |
Corporate |
Consolidated |
| |
|
|
|
|
| For the Six Months
Ended June 30, 2013 |
|
|
|
|
| Net sales |
$ 3,763.3 |
$ 1,346.8 |
$ -- |
$ 5,110.1 |
| Operating expense |
3,436.7 |
1,276.3 |
84.1 |
4,797.1 |
| Income (loss) from operations |
326.6 |
70.5 |
(84.1) |
313.0 |
| Operating margin % |
8.7% |
5.2% |
nm |
6.1% |
| |
|
|
|
|
| Non-GAAP Adjustments |
|
|
|
|
| Restructuring charges - net |
26.0 |
7.1 |
1.6 |
34.7 |
| Impairment charges - net |
6.7 |
0.7 |
0.4 |
7.8 |
| Acquisition-related expenses |
-- |
-- |
1.1 |
1.1 |
| Total Non-GAAP
adjustments |
32.7 |
7.8 |
3.1 |
43.6 |
| |
|
|
|
|
| Non-GAAP income (loss) from
operations |
$ 359.3 |
$ 78.3 |
$ (81.0) |
$ 356.6 |
| Non-GAAP operating margin % |
9.6% |
5.8% |
nm |
7.0% |
| |
|
|
|
|
| Depreciation and amortization |
$ 146.6 |
$ 52.9 |
$ 25.1 |
$ 224.6 |
| Capital expenditures |
47.3 |
18.6 |
18.4 |
84.3 |
| |
|
|
|
|
| For the Six Months
Ended June 30, 2012 |
|
|
|
|
| Net sales |
$ 3,727.4 |
$ 1,326.1 |
$ -- |
$ 5,053.5 |
| Operating expense |
3,422.5 |
1,253.5 |
92.2 |
4,768.2 |
| Income (loss) from operations |
304.9 |
72.6 |
(92.2) |
285.3 |
| Operating margin % |
8.2% |
5.5% |
nm |
5.6% |
| |
|
|
|
|
| Non-GAAP Adjustments |
|
|
|
|
| Restructuring charges - net |
50.8 |
7.9 |
7.7 |
66.4 |
| Impairment charges - net |
15.0 |
1.0 |
1.6 |
17.6 |
| Acquisition-related expenses |
-- |
-- |
0.8 |
0.8 |
| Total Non-GAAP
adjustments |
65.8 |
8.9 |
10.1 |
84.8 |
| |
|
|
|
|
| Non-GAAP income (loss) from
operations |
$ 370.7 |
$ 81.5 |
$ (82.1) |
$ 370.1 |
| Non-GAAP operating margin % |
9.9% |
6.1% |
nm |
7.3% |
| |
|
|
|
|
| Depreciation and amortization |
$ 170.9 |
$ 54.6 |
$ 20.4 |
$ 245.9 |
| Capital expenditures |
54.4 |
18.0 |
21.3 |
93.7 |
| R. R. Donnelley &
Sons Company |
| Condensed Consolidated
Statements of Cash Flows |
| For the Six Months Ended June
30, 2013 and 2012 |
| (UNAUDITED) |
| (in millions) |
| |
|
|
| |
|
|
| |
|
|
| |
2013 |
2012 |
| |
|
|
| |
|
|
| Net earnings |
$ 91.8 |
$ 126.9 |
| Adjustment to reconcile net
earnings to net cash provided by operating activities |
288.1 |
279.6 |
| Changes in operating assets and
liabilities |
(307.3) |
(340.0) |
| Pension and
other postretirement benefits plan contributions |
(14.7) |
(56.6) |
| Net cash provided by operating
activities |
$ 57.9 |
$ 9.9 |
| |
|
|
| Capital expenditures |
(84.3) |
(93.7) |
| All other cash
provided by investing activities |
5.7 |
3.8 |
| Net cash used in investing
activities |
$ (78.6) |
$ (89.9) |
| |
|
|
| Net cash provided by (used in)
financing activities |
$ (44.9) |
$ 1.6 |
| |
|
|
| Effect of exchange rate on cash and cash
equivalents |
(10.7) |
(2.3) |
| |
|
|
| Net decrease in cash and cash
equivalents |
$ (76.3) |
$ (80.7) |
| |
|
|
| Cash and cash equivalents at beginning of
year |
430.7 |
449.7 |
| |
|
|
| Cash and cash equivalents at
end of period |
$ 354.4 |
$ 369.0 |
| |
|
|
| |
|
|
| Additional
Information: |
|
|
| |
2013 |
2012 |
| For the Six Months Ended June 30: |
|
|
| Net cash provided by operating
activities |
$ 57.9 |
$ 9.9 |
| Less: capital expenditures |
84.3 |
93.7 |
| Free cash flow, or net cash provided by
operating activities less capital expenditures |
$ (26.4) |
$ (83.8) |
| |
|
|
| For the Three Months Ended March
31: |
|
|
| Net cash used in operating
activities |
$ (95.8) |
$ (52.0) |
| Less: capital expenditures |
37.9 |
45.3 |
| Free cash flow, or net cash used in operating
activities less capital expenditures |
$ (133.7) |
$ (97.3) |
| |
|
|
| For the Three Months Ended June
30: |
|
|
| Net cash provided by operating
activities |
$ 153.7 |
$ 61.9 |
| Less: capital expenditures |
46.4 |
48.4 |
| Free cash flow, or net cash provided by
operating activities less capital expenditures |
$ 107.3 |
$ 13.5 |
| |
| R.R. Donnelley &
Sons Company |
| Reconciliation of Reported to
Pro Forma Net Sales |
| For the Three Months Ended June
30, 2013 and 2012 |
| (UNAUDITED) |
| (in millions) |
| |
|
|
|
| |
|
|
|
| |
Reported net sales |
Adjustment for net sales of
acquired businesses |
Pro forma net sales |
| For the Three Months
Ended June 30, 2013 |
|
|
|
| U.S. Print and Related Services |
$ 1,890.8 |
$ -- |
$ 1,890.8 |
| International |
680.8 |
-- |
680.8 |
| Consolidated |
$ 2,571.6 |
$ -- |
$ 2,571.6 |
| |
|
|
|
| For the Three Months
Ended June 30, 2012 |
|
|
|
| U.S. Print and Related Services |
$ 1,846.0 |
$ 67.4 |
$ 1,913.4 |
| International |
682.6 |
-- |
682.6 |
| Consolidated |
$ 2,528.6 |
$ 67.4 |
$ 2,596.0 |
|
|
|
|
|
| Net sales
change |
|
|
|
| U.S. Print and Related Services |
2.4% |
|
(1.2%) |
| International |
(0.3%) |
|
(0.3%) |
| Consolidated |
1.7% |
|
(0.9%) |
| |
|
|
|
| Supplementary non-GAAP
information: |
|
|
|
| |
|
|
|
| Year-over-year impact
of changes in foreign exchange (FX) rates |
|
|
|
| U.S. Print and Related Services |
|
|
---% |
| International |
|
|
(0.1%) |
| Consolidated |
|
|
---% |
| |
|
|
|
| Approximate
year-over-year impact of changes in pass-through paper
sales |
|
|
|
| U.S. Print and Related Services |
|
|
(0.8%) |
| International |
|
|
1.8% |
| Consolidated |
|
|
(0.1%) |
|
|
|
|
|
| Net organic sales change
(1) |
|
|
|
| U.S. Print and Related Services |
|
|
(0.4%) |
| International |
|
|
(2.0%) |
| Consolidated |
|
|
(0.8%) |
| |
| 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
June 30, 2013 and 2012 to pro forma net sales as if the 2012
acquisitions took place as of January 1, 2012 for the purposes of
this schedule. |
| |
| There were no acquisitions during
the three months ended June 30, 2013. |
| |
| For the three months ended
June 30, 2012, the adjustment for net sales of acquired businesses
reflects the net sales of EDGAR Online (acquired August 14, 2012),
Express Postal Options International (acquired September 6, 2012),
Meisel Photographic Corporation (acquired December 17, 2012) and
Presort Solutions (acquired December 28, 2012). |
| |
| (1) Adjusted for net sales of
acquired businesses and 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 Six Months Ended June
30, 2013 and 2012 |
| (UNAUDITED) |
| (in millions) |
| |
|
|
|
| |
|
|
|
| |
Reported net sales |
Adjustment for net sales of acquired
businesses |
Pro forma net sales |
| For the Six Months
Ended June 30, 2013 |
|
|
|
| U.S. Print and Related Services |
$ 3,763.3 |
$ -- |
$ 3,763.3 |
| International |
1,346.8 |
-- |
1,346.8 |
| Consolidated |
$ 5,110.1 |
$ -- |
$ 5,110.1 |
| |
|
|
|
| For the Six Months
Ended June 30, 2012 |
|
|
|
| U.S. Print and Related Services |
$ 3,727.4 |
$ 134.2 |
$ 3,861.6 |
| International |
1,326.1 |
-- |
1,326.1 |
| Consolidated |
$ 5,053.5 |
$ 134.2 |
$ 5,187.7 |
|
|
|
|
|
| Net sales change |
|
|
|
| U.S. Print and Related Services |
1.0% |
|
(2.5%) |
| International |
1.6% |
|
1.6% |
| Consolidated |
1.1% |
|
(1.5%) |
| |
|
|
|
| Supplementary non-GAAP
information: |
|
|
|
| |
|
|
|
| Year-over-year impact
of changes in foreign exchange (FX) rates |
|
|
|
| U.S. Print and Related Services |
|
|
---% |
| International |
|
|
(0.3%) |
| Consolidated |
|
|
(0.1%) |
| |
|
|
|
| Approximate
year-over-year impact of changes in pass-through paper
sales |
|
|
|
| U.S. Print and Related Services |
|
|
(0.7%) |
| International |
|
|
1.8% |
| Consolidated |
|
|
---% |
| |
|
|
|
| Year-over-year impact
of the prior year rebate adjustment (1) |
|
|
|
| U.S. Print and Related Services |
|
|
(0.5%) |
| Consolidated |
|
|
(0.4%) |
|
|
|
|
|
| Net organic sales change
(2) |
|
|
|
| U.S. Print and Related Services |
|
|
(1.3%) |
| International |
|
|
0.1% |
| Consolidated |
|
|
(1.0%) |
| |
| 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 six months ended
June 30, 2013 and 2012 to pro forma net sales as if the 2012
acquisitions took place as of January 1, 2012 for the purposes of
this schedule. |
| |
|
|
|
| There were no acquisitions during the six
months ended June 30, 2013. |
|
|
|
| |
|
|
|
| For
the six months ended June 30, 2012, the adjustment for net sales of
acquired businesses reflects the net sales of EDGAR Online
(acquired August 14, 2012), Express Postal Options International
(acquired September 6, 2012), Meisel Photographic Corporation
(acquired December 17, 2012) and Presort Solutions (acquired
December 28, 2012). |
|
|
|
| |
|
|
|
| (1) The six months ended June 30,
2012 included an adjustment for over-accruals of rebates owed to
certain customers in prior periods that favorably impacted net
sales by $19.8 million |
| |
|
|
|
| (2) Adjusted for net sales of
acquired businesses, the impact of changes in FX rates and
pass-through paper sales and the prior year rebate adjustment to
correct an over-accrual of rebates owed to certain
customers |
| |
| R.R. Donnelley &
Sons Company |
| Reconciliation of GAAP Net
Earnings (Loss) to Non-GAAP Adjusted EBITDA |
| For the Three and Twelve Months
Ended June 30, 2013 and 2012 |
| (UNAUDITED) |
| (in millions) |
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
For the Twelve Months Ended |
For the Three Months
Ended |
| |
June 30, 2013 |
June 30, 2013 |
March 31, 2013 |
December 31, 2012 |
September 30, 2012 |
| |
|
|
|
|
|
| GAAP net earnings
(loss) |
$ (688.7) |
$ 66.5 |
$ 25.3 |
$ (851.7) |
$ 71.2 |
| |
|
|
|
|
|
|
Adjustments |
|
|
|
|
|
| Income tax expense (benefit) |
43.0 |
35.2 |
12.6 |
(57.0) |
52.2 |
| Interest expense - net |
255.8 |
65.5 |
62.8 |
63.8 |
63.7 |
| Investment and other expense (income) -
net |
8.2 |
6.0 |
3.5 |
(0.9) |
(0.4) |
| Loss on debt extinguishment (1) |
39.6 |
-- |
35.6 |
4.0 |
-- |
| Depreciation and amortization |
460.3 |
111.0 |
113.6 |
116.7 |
119.0 |
| Restructuring and impairment charges - net
(2) |
1,077.0 |
19.8 |
22.7 |
1,020.6 |
13.9 |
| Acquisition-related expenses (3) |
2.8 |
0.1 |
1.0 |
0.4 |
1.3 |
| Gain on pension curtailment (4) |
(3.7) |
-- |
-- |
(3.7) |
-- |
| Total Non-GAAP adjustments |
1,883.0 |
237.6 |
251.8 |
1,143.9 |
249.7 |
| |
|
|
|
|
|
| Non-GAAP adjusted
EBITDA |
$ 1,194.3 |
$ 304.1 |
$ 277.1 |
$ 292.2 |
$ 320.9 |
| |
|
|
|
|
|
| Net sales |
$ 10,278.5 |
$ 2,571.6 |
$ 2,538.5 |
$ 2,659.6 |
$ 2,508.8 |
| Non-GAAP adjusted EBITDA margin % |
11.6% |
11.8% |
10.9% |
11.0% |
12.8% |
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
For the Twelve Months Ended |
For the Three Months
Ended |
| |
June 30, 2012 |
June 30, 2012 |
March 31, 2012 |
December 31, 2011 |
September 30, 2011 |
| |
|
|
|
|
|
| GAAP net earnings
(loss) |
$ (41.0) |
$ 89.0 |
$ 37.9 |
$ (326.6) |
$ 158.7 |
| |
|
|
|
|
|
|
Adjustments |
|
|
|
|
|
| Income tax expense (benefit) |
(98.6) |
6.5 |
11.9 |
(52.2) |
(64.8) |
| Interest expense - net |
248.4 |
63.6 |
60.7 |
61.2 |
62.9 |
| Investment and other expense (income) -
net |
2.8 |
4.8 |
(1.2) |
0.5 |
(1.3) |
| Loss on debt extinguishment (1) |
13.4 |
-- |
12.1 |
-- |
1.3 |
| Depreciation and amortization |
514.9 |
120.9 |
125.0 |
129.9 |
139.1 |
| Restructuring and impairment charges - net
(2) |
625.3 |
34.0 |
50.0 |
507.1 |
34.2 |
| Acquisition-related expenses (3) |
1.7 |
0.5 |
0.3 |
0.2 |
0.7 |
| Gain on pension curtailment (4) |
(38.7) |
-- |
-- |
(38.7) |
-- |
| Acquisition contingent compensation (5) |
15.3 |
-- |
-- |
15.3 |
-- |
| Total Non-GAAP adjustments |
1,284.5 |
230.3 |
258.8 |
623.3 |
172.1 |
| |
|
|
|
|
|
| Non-GAAP adjusted
EBITDA |
$ 1,243.5 |
$ 319.3 |
$ 296.7 |
$ 296.7 |
$ 330.8 |
| |
|
|
|
|
|
| Net sales |
$ 10,457.6 |
$ 2,528.6 |
$ 2,524.9 |
$ 2,720.8 |
$ 2,683.3 |
| Non-GAAP adjusted EBITDA margin % |
11.9% |
12.6% |
11.8% |
10.9% |
12.3% |
| |
|
|
|
|
|
| (1) 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
$1.75 billion unsecured revolving credit agreement. |
| |
|
|
|
|
|
| (2) Restructuring and impairment
charges - net: Pre-tax charges for employee termination costs,
lease termination and other costs and impairment of other
long-lived assets. The three months ended December 31, 2012 and
2011 also included pre-tax charges for the impairment of goodwill
and other intangible assets. |
| |
|
|
|
|
|
| (3) Acquisition-related expenses:
Legal, accounting and other expenses associated with completed or
contemplated acquisitions. |
| |
|
|
|
|
|
| (4) Gain on pension curtailment:
For 2012, a pre-tax gain on pension curtailment was recognized
related to the remeasurement of the U.K. pension plan's assets and
obligations that was required with the announced freeze on further
benefit accruals as of December 31, 2012. For 2011, a pre-tax gain
on pension curtailment was recognized related to the remeasurement
of the U.S. pension plans' assets and obligations that was required
with the announced freeze on further benefit accruals under all of
the U.S. pension plans as of December 31, 2011. |
| |
|
|
|
|
|
| (5) Acquisition contingent
compensation: For 2011, pre-tax expense of $15.3 million was
incurred related to contingent compensation earned by prior owners,
based on achieving certain volume milestones for the business
following its acquisition by the Company. |
| |
| R.R. Donnelley &
Sons Company |
| Debt and Liquidity
Summary |
| As of June 30, 2013, December
31, 2012 and June 30, 2012 |
| (UNAUDITED) |
| (in millions) |
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
June 30, 2013 |
December 31, 2012 |
June 30, 2012 |
| Total Liquidity (1) |
Credit Agreement |
Credit Agreement |
Previous Credit
Agreement |
| Cash (2) |
$ 354.4 |
$ 430.7 |
$ 369.0 |
| Committed credit agreement (3) |
987.7 |
1,150.0 |
1,326.8 |
| |
1,342.1 |
1,580.7 |
1,695.8 |
| Usage |
|
|
|
| Borrowings under credit agreement (3) |
-- |
-- |
325.0 |
| Impact on availability related to outstanding
letters of credit |
-- |
38.9 |
-- |
| |
|
|
|
| Net Available Liquidity |
$ 1,342.1 |
$ 1,541.8 |
$ 1,370.8 |
| |
|
|
|
| |
|
|
|
|
|
|
|
|
| Short-term and current portion of long-term
debt |
$ 277.6 |
$ 18.4 |
$ 343.0 |
| Long-term debt |
3,237.7 |
3,420.2 |
3,418.4 |
| Total debt |
$ 3,515.3 |
$ 3,438.6 |
$ 3,761.4 |
| |
|
|
|
| Non-GAAP adjusted EBITDA for the twelve
months ended June 30, 2013, December 31, 2012 and June 30,
2012 |
$ 1,194.3 |
$ 1,229.1 |
$ 1,243.5 |
| |
|
|
|
| Non-GAAP Gross Leverage
(defined as total debt divided by non-GAAP adjusted
EBITDA) |
2.9x |
2.8x |
3.0x |
| |
|
|
|
| (1) Liquidity does not include
credit facilities of non-U.S. subsidiaries, which are uncommitted
facilities. |
| |
|
|
|
| (2) Approximately 70% of cash as
of June 30, 2013, 85% of cash as of December 31, 2012 and 91% of
cash as of June 30, 2012 was located outside of the
U.S. During the second half of 2013, the Company's foreign
subsidiaries are expected to make intercompany payments to the U.S.
of approximately $40 million from foreign cash balances as of June
30, 2013. These payments, and additional payments up to
approximately $340 million expected to be made in future years,
will be made in satisfaction of intercompany obligations. Cash held
by foreign subsidiaries may be subject to U.S. or local country
income or withholding 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 $1.15
billion senior secured revolving credit agreement (the "Credit
Agreement") which expires October 15, 2017. The Credit Agreement
replaced the Company's previous $1.75 billion unsecured and
committed revolving credit agreement (the "Previous Credit
Agreement") which was due to expire on December 17, 2013. The
Credit Agreement is subject to a number of covenants, including a
minimum Interest Coverage Ratio and a maximum Leverage Ratio, both
as defined and calculated in the Credit Agreement. There were no
borrowings under the Credit Agreement as of June 30, 2013. Based on
the Company's results of operations for the twelve months ended
June 30, 2013 and existing debt, the Company would have had the
ability to utilize $1.0 billion of the $1.15 billion Credit
Agreement and not have been in violation of the terms of the
agreement. See the table below for a reconciliation of the stated
amount to the current availability as of June 30, 2013, December
31, 2012 and June 30, 2012. |
| |
| |
June 30, 2013 |
December 31, 2012 |
June 30, 2012 |
| |
Credit Agreement |
Credit Agreement |
Previous Credit Agreement |
| Stated amount of the credit agreement |
$ 1,150.0 |
$ 1,150.0 |
$ 1,750.0 |
| Less: availability reduction from
covenants |
162.3 |
-- |
423.2 |
| Total amount available |
987.7 |
1,150.0 |
1,326.8 |
| |
|
|
|
| Less: borrowings under the credit
agreement |
-- |
-- |
325.0 |
| Impact on availability related to outstanding
letters of credit |
-- |
38.9 |
-- |
| Availability |
$ 987.7 |
$ 1,111.1 |
$ 1,001.8 |
CONTACT: Media:
Phyllis Burgee
Director, Communications
630.322.6093
phyllis.burgee@rrd.com
Investors:
Dave Gardella
SVP, Investor Relations
312.326.8155
david.a.gardella@rrd.com
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