RR Donnelley Reports Fourth-Quarter and Full-Year 2013 Results and Issues 2014 Full-Year Guidance

CHICAGO, Feb. 25, 2014 (GLOBE NEWSWIRE) -- R.R. Donnelley & Sons Company (Nasdaq:RRD) today reported financial results for the fourth quarter of 2013:

Highlights:

  • Company achieved or exceeded its previous guidance on revenue, non-GAAP adjusted EBITDA margin and cash flow as follows:

Full-year 2013 Guidance Full-year 2013 Actual
Net Sales $10.35 to $10.45 billion $10.48 billion
Non-GAAP Adjusted EBITDA margin 11.0% to 11.2% 11.0%
Free Cash Flow(1) $400 to $500 million $478.2 million
(1) Defined as Operating Cash Flow less Capital Expenditures: 2013 Actual Operating Cash Flow of $694.8 million and Capital Expenditures of $216.6 million

  • Fourth-quarter net sales of $2.8 billion grew 3.6% from the fourth quarter of 2012; organic sales grew 2.3% in the quarter
  • Fourth-quarter GAAP net earnings attributable to common shareholders of $104.0 million, or $0.56 per diluted share, compared to a net loss attributable to common shareholders in the fourth quarter of 2012 of $849.0 million, or $4.70 per diluted share
  • Fourth-quarter non-GAAP net earnings attributable to common shareholders of $89.8 million, or $0.49 per diluted share, compared to non-GAAP net earnings attributable to common shareholders in the fourth quarter of 2012 of $78.1 million, or $0.43 per diluted share
  • Non-GAAP adjusted EBITDA in the quarter of $293.6 million, or 10.7% of net sales, compared to $292.2 million, or 11.0% of net sales, in the fourth quarter of 2012
  • Company realigns into four new operating segments
  • Company to celebrate 150-year anniversary in October 2014

"We are pleased with the fourth-quarter organic revenue growth of 2.3%, driven by strong revenue performance across many of our offerings. For the year, we realized reported revenue growth of 2.5% and organic growth of 0.6%, our best organic revenue growth performance since 2010, and continued to deliver strong free cash flow, at the upper end of our guidance for the year," said Thomas J. Quinlan III, R.R. Donnelley's President and Chief Executive Officer. "The continuing development of our market segment solutions, combined with our recent acquisition of Consolidated Graphics, will allow us to build upon the positive trend realized in 2013. We continue to target gross leverage on a long-term sustainable basis to be in the range of 2.25x to 2.75x."

Net Sales

Net sales in the quarter were $2.8 billion, up $95.7 million, or 3.6%, from the fourth quarter of 2012. After adjusting for the impact of acquisitions, changes in foreign exchange rates and pass-through paper sales, organic sales grew by 2.3% from the fourth quarter of 2012, driven by volume growth in many offerings and an increase in pass-through postage revenue.

GAAP Earnings

Fourth-quarter 2013 net earnings attributable to common shareholders were $104.0 million, or $0.56 per diluted share, compared to a net loss attributable to common shareholders of $849.0 million in the fourth quarter of 2012. Fourth-quarter net earnings attributable to common shareholders included pre-tax charges and expenses, detailed on the attached schedules, of $74.5 million and $1.0 billion in 2013 and 2012, respectively, as well as income tax adjustments in both years, all of which were 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 Earnings

Fourth-quarter 2013 non-GAAP adjusted EBITDA was $293.6 million or 10.7% of net sales, compared to non-GAAP adjusted EBITDA of $292.2 million, or 11.0% of net sales, in the fourth quarter of 2012. Unfavorable changes in foreign exchange rates contributed nearly 20 basis points of the quarter-over-quarter margin decline, while higher pass-through postage revenue accounted for an additional 20 basis points of the decline. Higher volume and a favorable product mix offset price pressure, higher benefits-related expenses and wage and other cost inflation.

Non-GAAP net earnings attributable to common shareholders totaled $89.8 million, or $0.49 per diluted share, in the fourth quarter of 2013 compared to $78.1 million, or $0.43 per diluted share, in the fourth quarter of 2012. Fourth-quarter non-GAAP net earnings attributable to common shareholders exclude pre-tax charges and expenses of $74.5 million and $1.0 billion in 2013 and 2012, respectively, as well as income tax adjustments in both years. 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.

2014 Guidance

The Company provides the following full-year guidance for 2014, which includes eleven months of performance from the acquisition of Consolidated Graphics that closed on January 31, 2014:

2014 Guidance 2013 Actual
Net sales $11.5 to $11.7 billion $10.5 billion
Non-GAAP adjusted EBITDA margin 10.5% to 11.0% 11.0%
Depreciation and amortization $500 to $510 million $435.8 million
Interest expense $275 to $285 million $261.4 million
Non-GAAP effective tax rate 33% to 35% 30.5%
Diluted share count Approximately 199 million 183.5 million
Capital expenditures $225 to $250 million $216.6 million
Free cash flow(1) $400 to $500 million $478.2 million
(1) Defined as operating cash flow less capital expenditures

New Operating Segments

During the fourth quarter of 2013, the Company changed its reportable segments to reflect changes in the management reporting structure of the organization. The revised reporting structure includes four operating segments: Publishing and Retail Services, Variable Print, Strategic Services, and International, as well as unallocated Corporate expenses.

The schedules that follow provide quarterly segment-level financial data for 2011, 2012 and 2013. Listed below are the reporting units that comprise each segment:

Publishing and Retail Services Variable Print Strategic Services International
Magazines, Catalogs, and Retail Inserts Commercial and Digital Print Logistics Asia
Books Direct Mail Financial Latin America
Directories Labels Digital and Creative Solutions Business Process Outsourcing
Statement Printing Sourcing Europe
Forms Global Turnkey Solutions
Office Products Canada

Conference Call

RR Donnelley will host a conference call and simultaneous webcast to discuss its fourth-quarter results tomorrow, Wednesday, February 26, at 9:00 a.m. Eastern Time (8:00 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#.

Investor Meeting

In addition to the conference call, an investor meeting and live webcast will be held tomorrow, Wednesday, February 26, from 12:00 p.m. to 3:30 p.m. Eastern Time, with check-in beginning at 11:00 a.m Eastern Time. A management presentation, including a discussion of the Company's strategy and financial outlook, will be followed by a question and answer session. The live webcast will be accessible on RR Donnelley's web site: www.rrdonnelley.com. A copy of the presentation will be available on the Company's web site in advance of the webcast.

About RR Donnelley

RR 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 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 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 "2014 Guidance" in the table included under the "2014 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, among others, the ability to implement plans for the integration of acquisitions, including the Consolidated Graphics acquisition, including with respect to sales forces, cost containment, asset rationalization and other key strategies and the ability to recognize the anticipated synergies and benefits of such acquisitions, and such other 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 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 December 31, 2013 and December 31, 2012
(UNAUDITED)
(in millions, except per share data)
December 31, 2013 December 31, 2012
Assets
Cash and cash equivalents $ 1,028.4 $ 430.7
Receivables, less allowances for doubtful accounts 1,832.3 1,878.8
Inventories 501.2 510.2
Prepaid expenses and other current assets 199.7 157.7
Total Current Assets 3,561.6 2,977.4
Property, plant and equipment - net 1,430.1 1,616.6
Goodwill 1,436.3 1,436.4
Other intangible assets - net 315.9 382.9
Deferred income taxes 118.8 445.1
Other noncurrent assets 375.5 404.3
Total Assets $ 7,238.2 $ 7,262.7
Liabilities
Accounts payable $ 1,143.0 $ 1,210.3
Accrued liabilities 814.8 825.2
Short-term and current portion of long-term debt 270.9 18.4
Total Current Liabilities 2,228.7 2,053.9
Long-term debt 3,587.0 3,420.2
Pension liabilities 245.2 1,150.5
Other postretirement benefits plan liabilities 174.1 241.7
Other noncurrent liabilities 349.5 327.7
Total Liabilities 6,584.5 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 2,802.4 2,839.4
Accumulated deficit (473.4) (496.1)
Accumulated other comprehensive loss (488.1) (1,029.2)
Treasury stock, at cost, 61.2 shares in 2013 (2012 - 62.6 shares) (1,512.8) (1,565.0)
Total RR Donnelley shareholders' equity 631.8 52.8
Noncontrolling interests 21.9 15.9
Total Equity 653.7 68.7
Total Liabilities and Equity $ 7,238.2 $ 7,262.7
R. R. Donnelley & Sons Company
Condensed Consolidated Statements of Operations
For the Three and Twelve Months Ended December 31, 2013 and 2012
(UNAUDITED)
(in millions, except per share data)
For the Three Months Ended December 31, For the Twelve Months Ended December 31,
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
Total net sales $ 2,755.3 $ -- $ 2,755.3 $ 2,659.6 $ -- $ 2,659.6 $ 10,480.3 $ -- $ 10,480.3 $ 10,221.9 $ -- $ 10,221.9
Total cost of sales (1) 2,151.7 -- 2,151.7 2,074.3 2.9 2,077.2 8,149.8 -- 8,149.8 7,889.0 2.9 7,891.9
Total gross profit (1) 603.6 -- 603.6 585.3 (2.9) 582.4 2,330.5 -- 2,330.5 2,332.9 (2.9) 2,330.0
Selling, general and administrative expenses (SG&A) (1) 313.7 (3.7) 310.0 289.8 0.4 290.2 1,181.5 (5.9) 1,175.6 1,102.6 (1.7) 1,100.9
Restructuring, impairment and other charges - net 52.9 (52.9) -- 1,020.6 (1,020.6) -- 133.5 (133.5) -- 1,118.5 (1,118.5) --
Depreciation and amortization 104.9 -- 104.9 116.7 -- 116.7 435.8 -- 435.8 481.6 -- 481.6
Income (loss) from operations 132.1 56.6 188.7 (841.8) 1,017.3 175.5 579.7 139.4 719.1 (369.8) 1,117.3 747.5
Interest expense - net 67.5 -- 67.5 63.8 -- 63.8 261.4 -- 261.4 251.8 -- 251.8
Investment and other expense (income) - net 18.2 (17.9) 0.3 (0.9) -- (0.9) 27.4 (26.6) 0.8 2.3 (4.1) (1.8)
Loss on debt extinguishment -- -- -- 4.0 (4.0) -- 81.9 (81.9) -- 16.1 (16.1) --
Earnings (loss) before income taxes 46.4 74.5 120.9 (908.7) 1,021.3 112.6 209.0 247.9 456.9 (640.0) 1,137.5 497.5
Income tax expense (benefit) (62.0) 88.7 26.7 (57.0) 94.2 37.2 (9.2) 148.4 139.2 13.6 147.8 161.4
Net earnings (loss) 108.4 (14.2) 94.2 (851.7) 927.1 75.4 218.2 99.5 317.7 (653.6) 989.7 336.1
Less: Income (loss) attributable to noncontrolling interests 4.4 -- 4.4 (2.7) -- (2.7) 7.0 1.0 8.0 (2.2) -- (2.2)
Net earnings (loss) attributable to RR Donnelley common shareholders $ 104.0 $ (14.2) $ 89.8 $ (849.0) $ 927.1 $ 78.1 $ 211.2 $ 98.5 $ 309.7 $ (651.4) $ 989.7 $ 338.3
Net earnings (loss) per share attributable to RR Donnelley common shareholders:
Basic net earnings (loss) per share $ 0.57 $ 0.49 $ (4.70) $ 0.43 $ 1.16 $ 1.70 $ (3.61) $ 1.88
Diluted net earnings (loss) per share $ 0.56 $ 0.49 $ (4.70) $ 0.43 $ 1.15 $ 1.69 $ (3.61) $ 1.86
Weighted average common shares outstanding:
Basic 182.3 182.3 180.8 180.8 181.9 181.9 180.4 180.4
Diluted 184.2 184.2 180.8 1.8 182.6 183.5 183.5 180.4 1.8 182.2
Additional information:
Gross margin (1) 21.9% 21.9% 22.0% 21.9% 22.2% 22.2% 22.8% 22.8%
SG&A as a % of total net sales (1) 11.4% 11.3% 10.9% 10.9% 11.3% 11.2% 10.8% 10.8%
Operating margin 4.8% 6.8% nm 6.6% 5.5% 6.9% nm 7.3%
Effective tax rate nm 22.1% 6.3% 33.0% nm 30.5% nm 32.4%
(1) Exclusive of depreciation and amortization
nm Not meaningful
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 December 31, 2013 and 2012
(UNAUDITED)
(in millions, except per share data)
For the Three Months Ended December 31, 2013 For the Three Months Ended December 31, 2012
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 (loss) from operations Operating margin Net earnings (loss) attributable to common shareholders Net earnings (loss) attributable to common shareholders per diluted share
GAAP basis measures $ 313.7 $ 132.1 4.8% $ 104.0 $ 0.56 $ 585.3 $ 289.8 $ (841.8) (31.7%) $ (849.0) $ (4.70)
Non-GAAP adjustments:
Restructuring charges - net (1) -- 14.0 0.5% 11.5 0.06 -- -- 13.2 0.5% 7.3 0.04
Impairment charges - net (2) -- 5.2 0.2% 3.4 0.02 -- -- 1,007.4 37.9% 909.4 5.04
Other charges (3) -- 33.7 1.2% 21.8 0.12 -- -- -- -- -- --
Acquisition-related expenses (4) (3.7) 3.7 0.1% 3.0 0.02 -- (0.4) 0.4 0.0% 0.2 0.00
Gain on pension curtailment (5) -- -- -- -- -- (2.9) 0.8 (3.7) (0.1%) (2.8) (0.02)
Loss on disposal of business (6) -- -- -- 12.3 0.07 -- -- -- -- -- --
Loss on debt extinguishment (7) -- -- -- -- -- -- -- -- -- 2.7 0.01
Income tax adjustments (8) -- -- -- (66.2) (0.36) -- -- -- -- 10.3 0.06
Total Non-GAAP adjustments (3.7) 56.6 2.0% (14.2) (0.07) (2.9) 0.4 1,017.3 38.3% 927.1 5.13
Non-GAAP measures $ 310.0 $ 188.7 6.8% $ 89.8 $ 0.49 $ 582.4 $ 290.2 $ 175.5 6.6% $ 78.1 $ 0.43
(1) Restructuring charges - net: Operating results for the three months ended December 31, 2013 and 2012 were affected by the following pre-tax restructuring charges:
2013 2012
Employee termination costs (a) $ 6.4 $ 8.5
Other restructuring charges (b) 7.6 4.7
Total restructuring charges - net $ 14.0 $ 13.2
(a) For the three months ended December 31, 2013 and 2012, employee termination costs resulted from the reorganization of certain operations.
(b) Includes lease termination and other facility costs, including charges related to multi-employer pension plan withdrawal obligations as a result of facility closures.
(2) Impairment charges - net: Operating results for the three months ended December 31, 2013 and 2012 were affected by the following impairment charges:
2013 2012
Total intangible asset impairment charges (a) $ 3.3 $ 158.0
Total goodwill impairment charges (b) -- 848.4
Total goodwill and intangible asset impairment charges 3.3 1,006.4
Other long-lived asset impairment charges 1.9 1.0
Total impairment charges - net $ 5.2 $ 1,007.4
(a) Non-cash charges related to the impairment of acquired customer relationships of $3.3 million in the financial reporting unit for the three months ended December 31, 2013. During the three months ended December 31, 2012, non-cash charges of $158.0 million were recognized for the impairment of acquired customer relationship intangible assets consisting of $150.1 million, $5.7 million, $1.4 million and $0.8 million within the Publishing and Retail Services, International, Variable Print and Strategic Services segments, respectively.
(b) Non-cash charges related to the impairment of goodwill for the three months ended December 31, 2012, consisting of $669.9 million, $129.9 million, $44.9 million and $3.7 million within the Publishing and Retail Services, Strategic Services, International and Variable Print segments, respectively.
(3) Other charges: Recognition of estimated charges related to the Company's decision to partially withdraw from certain multi-employer pension plans.
(4) Acquisition-related expenses: Legal, accounting and other expenses associated with completed or contemplated acquisitions.
(5) Gain on pension curtailment: Pre-tax gain of $3.7 million ($2.8 million after-tax) was recognized for the three months ended December 31, 2012, related to the remeasurement of the U.K. pension plan's assets and obligations required with the announced freeze on further benefit accruals.
(6) Loss on disposal of business: Recognition of a pre-tax loss on the disposal of the R.R. Donnelley SAS ("MRM France") direct mail business in the International segment of $17.9 million ($12.3 million after-tax) for the three months ended December 31, 2013.
(7) Loss on debt extinguishment: Recognition of a pre-tax loss of $4.0 million ($2.7 million after-tax) for the three months ended December 31, 2012 related to the termination of the Company's previous $1.75 billion revolving credit facility (the "Previous Credit Agreement").
(8) Income tax adjustments: Recognition of a $58.5 million benefit related to the decline in value and reorganization of certain entities within the Publishing and Retail Services segment, a $7.2 million benefit for previously unrecognized tax benefits related to the expected resolution of certain federal tax matters as well as tax adjustments as a result of changes to previous tax estimates for items recorded in previous quarters including a benefit of $1.2 million for the Venezuela currency devaluation and expense of $0.7 million for the loss on debt extinguishment for the three months ended December 31, 2013. For the three months ended December 31, 2012, income tax adjustments included the recognition of a $22.4 million benefit related to the decline in value and reorganization of certain entities within the International segment, partially offset by a valuation allowance provision of $32.7 million on certain deferred tax assets in Latin America.
R.R. Donnelley & Sons Company
Reconciliation of GAAP to Non-GAAP Measures
For the Twelve Months Ended December 31, 2013 and 2012
(UNAUDITED)
(in millions, except per share data)
For the Twelve Months Ended December 31, 2013 For the Twelve Months Ended December 31, 2012
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 (loss) from operations Operating margin Net earnings (loss) attributable to common shareholders Net earnings (loss) attributable to common shareholders per diluted share
GAAP basis measures $ 1,181.5 $ 579.7 5.5% $ 211.2 $ 1.15 $ 2,332.9 $ 1,102.6 $ (369.8) (3.6%) $ (651.4) $ (3.61)
Non-GAAP adjustments:
Restructuring charges - net (1) -- 74.2 0.7% 50.0 0.28 -- -- 91.9 0.9% 59.7 0.33
Impairment charges - net (2) -- 20.9 0.2% 13.5 0.07 -- -- 1,026.6 10.0% 922.2 5.11
Other charges (3) -- 38.4 0.4% 24.7 0.13 -- -- -- -- -- --
Acquisition-related expenses (4) (5.9) 5.9 0.1% 5.2 0.03 -- (2.5) 2.5 0.0% 2.2 0.01
Gain on pension curtailment (5) -- -- -- -- -- (2.9) 0.8 (3.7) 0.0% (2.8) (0.02)
Loss on disposal of business (6) -- -- -- 12.3 0.07 -- -- -- -- -- --
Loss on investments (7) -- -- -- 3.6 0.02 -- -- -- -- 2.6 0.01
Venezuela devaluation (8) -- -- -- 1.0 0.01 -- -- -- -- -- --
Loss on debt extinguishment (9) -- -- -- 53.9 0.29 -- -- -- -- 10.6 0.06
Income tax adjustments (10) -- -- -- (65.7) (0.36) -- -- -- -- (4.8) (0.03)
Total Non-GAAP adjustments (5.9) 139.4 1.4% 98.5 0.54 (2.9) (1.7) 1,117.3 10.9% 989.7 5.47
Non-GAAP measures $ 1,175.6 $ 719.1 6.9% $ 309.7 $ 1.69 $ 2,330.0 $ 1,100.9 $ 747.5 7.3% $ 338.3 $ 1.86
(1) Restructuring charges - net: Operating results for the year ended December 31, 2013 and 2012 were affected by the following pre-tax restructuring charges:
2013 2012
Employee termination costs (a) $ 40.4 $ 66.6
Other restructuring charges (b) 33.8 25.3
Total restructuring charges - net $ 74.2 $ 91.9
(a) For the year ended December 31, 2013, employee termination costs resulted from the closing of two manufacturing facilities within the Publishing and Retail Services segment and one manufacturing facility within the Variable Print segment and the reorganization of certain operations. For the year ended December 31, 2012, employee termination costs resulted from the reorganization of sales and administrative functions across all segments, the closing of three manufacturing facilities within the Variable Print segment, two manufacturing facilities within the Publishing and Retail 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 related to facility closures.
(2) Impairment charges - net: Operating results for the year ended December 31, 2013 and 2012 were affected by the following impairment charges:
2013 2012
Total intangible asset impairment charges (a) $ 3.3 $ 158.0
Total goodwill impairment charges (b) -- 848.4
Total goodwill and intangible asset impairment charges 3.3 1,006.4
Other long-lived asset impairment charges 17.6 20.2
Total impairment charges - net $ 20.9 $ 1,026.6
(a) Non-cash charges related to the impairment of acquired customer relationships of $3.3 million in the financial reporting unit for the year ended December 31, 2013. During the year ended December 31, 2012, non-cash charges of $158.0 million were recognized for the impairment of acquired customer relationship intangible assets consisting of $150.1 million, $5.7 million, $1.4 million and $0.8 million within the Publishing and Retail Services, International, Variable Print and Strategic Services segments, respectively.
(b) Non-cash charges related to the impairment of goodwill for the year ended December 31, 2012, consisting of $669.9 million, $129.9 million, $44.9 million and $3.7 million within the Publishing and Retail Services, Strategic Services, International and Variable Print segments, respectively.
(3) Other charges: Recognition of estimated charges related to the Company's decision to partially withdraw from certain multi-employer pension plans.
(4) Acquisition-related expenses: Legal, accounting and other expenses associated with completed or contemplated acquisitions.
(5) Gain on pension curtailment: Pre-tax gain of $3.7 million ($2.8 million after-tax) was recognized for the year ended December 31, 2012, related to the remeasurement of the U.K. pension plan's assets and obligations required with the announced freeze on further benefit accruals.
(6) Loss on disposal of business: Recognition of a pre-tax loss on the disposal of the MRM France direct mail business in the International segment of $17.9 million ($12.3 million after-tax) for the year ended December 31, 2013.
(7) 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 year ended December 31, 2013 and 2012, respectively.
(8) Venezuela devaluation: Currency devaluation in Venezuela resulted in a pre-tax loss of $3.2 million ($2.0 million after-tax), of which $1.0 million was included in income attributable to noncontrolling interests.
(9) Loss on debt extinguishment: Pre-tax loss of $81.9 million ($53.9 million after-tax) was recognized for the year ended December 31, 2013 related to the repurchase of $273.5 million of the 6.125% senior notes due January 15, 2017, $250.0 million of the 7.25% senior notes due May 15, 2018, $130.2 million of the 8.60% senior notes due August 15, 2016 and $100.0 million of the 5.50% senior notes due May 15, 2015. During the year ended December 31, 2012, a pre-tax loss of $16.1 million ($10.6 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 as well as the termination of the Previous Credit Agreement.
(10) Income tax adjustments: Recognition of a $58.5 million benefit related to the decline in value and reorganization of certain entities within the Publishing and Retail Services segment and a $7.2 million benefit for previously unrecognized tax benefits related to the expected resolution of certain federal tax matters for the year ended December 31, 2013. For the year ended December 31, 2012, income tax adjustments included the recognition of $26.1 million of previously unrecognized tax benefits due to the resolution of certain U.S. federal uncertain tax positions and a $22.4 million benefit related to the decline in value and reorganization of certain entities within the International segment, partially offset by a valuation allowance provision of $32.7 million on certain deferred tax assets in Latin America and a provision of $11.0 million related to certain foreign earnings no longer considered to be permanently reinvested.
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 December 31, 2013, 2012 and 2011
(UNAUDITED)
(in millions)
Publishing and
Retail Services
Variable
Print
Strategic
Services
International Corporate Consolidated
For the Three Months Ended December 31, 2013
Net sales $ 746.1 $ 674.4 $ 618.6 $ 716.2 $ -- $ 2,755.3
Income (loss) from operations 15.8 55.2 50.7 47.8 (37.4) 132.1
Operating margin % 2.1% 8.2% 8.2% 6.7% nm 4.8%
Non-GAAP Adjustments
Restructuring charges - net 3.2 2.9 0.6 6.4 0.9 14.0
Impairment charges - net 1.6 (0.1) 3.6 0.1 -- 5.2
Other charges 30.3 -- 3.4 -- -- 33.7
Acquisition-related expenses -- -- -- 0.2 3.5 3.7
Total Non-GAAP adjustments 35.1 2.8 7.6 6.7 4.4 56.6
Non-GAAP income (loss) from operations $ 50.9 $ 58.0 $ 58.3 $ 54.5 $ (33.0) $ 188.7
Non-GAAP operating margin % 6.8% 8.6% 9.4% 7.6% nm 6.8%
Depreciation and amortization 39.4 24.2 14.2 25.8 1.3 104.9
Non-GAAP Adjusted EBITDA $ 90.3 $ 82.2 $ 72.5 $ 80.3 $ (31.7) $ 293.6
Non-GAAP Adjusted EBITDA margin % 12.1% 12.2% 11.7% 11.2% nm 10.7%
Capital expenditures $ 18.7 $ 22.6 $ 11.4 $ 20.8 $ 3.5 $ 77.0
For the Three Months Ended December 31, 2012
Net sales $ 754.7 $ 686.5 $ 516.8 $ 701.6 $ -- $ 2,659.6
Income (loss) from operations (770.9) 54.6 (92.9) (3.3) (29.3) (841.8)
Operating margin % nm 8.0% nm nm nm nm
Non-GAAP Adjustments
Restructuring charges - net 1.5 1.0 1.0 3.1 6.6 13.2
Impairment charges - net 821.9 5.3 130.8 49.9 (0.5) 1,007.4
Acquisition-related expenses -- -- -- -- 0.4 0.4
Gain on pension curtailment -- -- (1.0) (2.7) -- (3.7)
Total Non-GAAP adjustments 823.4 6.3 130.8 50.3 6.5 1,017.3
Non-GAAP income (loss) from operations $ 52.5 $ 60.9 $ 37.9 $ 47.0 $ (22.8) $ 175.5
Non-GAAP operating margin % 7.0% 8.9% 7.3% 6.7% nm 6.6%
Depreciation and amortization 47.9 25.3 14.2 26.7 2.6 116.7
Non-GAAP Adjusted EBITDA $ 100.4 $ 86.2 $ 52.1 $ 73.7 $ (20.2) $ 292.2
Non-GAAP Adjusted EBITDA margin % 13.3% 12.6% 10.1% 10.5% nm 11.0%
Capital expenditures $ 13.0 $ 17.6 $ 1.5 $ 12.4 $ 1.5 $ 46.0
For the Three Months Ended December 31, 2011
Net sales $ 827.6 $ 721.8 $ 483.2 $ 688.2 $ -- $ 2,720.8
Income (loss) from operations 66.5 (307.8) 20.1 (83.1) (12.8) (317.1)
Operating margin % 8.0% nm 4.2% nm nm nm
Non-GAAP Adjustments
Restructuring charges - net (0.1) 3.3 9.1 5.9 0.4 18.6
Impairment charges - net 1.1 357.7 9.8 118.9 1.0 488.5
Acquisition-related expenses -- -- -- -- 0.2 0.2
Gain on pension curtailment -- -- -- -- (38.7) (38.7)
Acquisition contingent compensation -- -- -- -- 15.3 15.3
Total Non-GAAP adjustments 1.0 361.0 18.9 124.8 (21.8) 483.9
Non-GAAP income (loss) from operations $ 67.5 $ 53.2 $ 39.0 $ 41.7 $ (34.6) $ 166.8
Non-GAAP operating margin % 8.2% 7.4% 8.1% 6.1% nm 6.1%
Depreciation and amortization 58.4 32.6 11.4 27.3 0.2 129.9
Non-GAAP Adjusted EBITDA $ 125.9 $ 85.8 $ 50.4 $ 69.0 $ (34.4) $ 296.7
Non-GAAP Adjusted EBITDA margin % 15.2% 11.9% 10.4% 10.0% nm 10.9%
Capital expenditures $ 17.2 $ 9.5 $ 11.0 $ 17.8 $ 1.6 $ 57.1
R. R. Donnelley & Sons Company
Segment GAAP to Non-GAAP Operating Income and Non-GAAP Adjusted EBITDA and Margin Reconciliation
For the Twelve Months Ended December 31, 2013, 2012 and 2011
(UNAUDITED)
(in millions)
Publishing and
Retail Services
Variable
Print
Strategic
Services
International Corporate Consolidated
For the Twelve Months Ended December 31, 2013
Net sales $ 2,774.8 $ 2,592.8 $ 2,453.0 $ 2,659.7 $ -- $ 10,480.3
Income (loss) from operations 109.6 197.9 232.8 147.3 (107.9) 579.7
Operating margin % 3.9% 7.6% 9.5% 5.5% nm 5.5%
Non-GAAP Adjustments
Restructuring charges - net 31.1 14.7 4.8 17.9 5.7 74.2
Impairment charges - net 12.3 0.9 6.3 1.0 0.4 20.9
Other charges 30.3 -- 8.1 -- -- 38.4
Acquisition-related expenses -- -- -- 0.2 5.7 5.9
Total Non-GAAP adjustments 73.7 15.6 19.2 19.1 11.8 139.4
Non-GAAP income (loss) from operations $ 183.3 $ 213.5 $ 252.0 $ 166.4 $ (96.1) $ 719.1
Non-GAAP operating margin % 6.6% 8.2% 10.3% 6.3% nm 6.9%
Depreciation and amortization 166.0 103.4 58.4 102.5 5.5 435.8
Non-GAAP Adjusted EBITDA $ 349.3 $ 316.9 $ 310.4 $ 268.9 $ (90.6) $ 1,154.9
Non-GAAP Adjusted EBITDA margin % 12.6% 12.2% 12.7% 10.1% nm 11.0%
Capital expenditures $ 57.7 $ 63.4 $ 34.9 $ 50.8 $ 9.8 $ 216.6
For the Twelve Months Ended December 31, 2012
Net sales $ 2,919.5 $ 2,637.2 $ 2,065.4 $ 2,599.8 $ -- $ 10,221.9
Income (loss) from operations (659.4) 202.1 59.0 91.6 (63.1) (369.8)
Operating margin % nm 7.7% 2.9% 3.5% nm nm
Non-GAAP Adjustments
Restructuring charges - net 18.5 19.8 13.7 15.0 24.9 91.9
Impairment charges - net 827.7 9.8 132.9 50.7 5.5 1,026.6
Acquisition-related expenses -- -- -- -- 2.5 2.5
Gain on pension curtailment -- -- (1.0) (2.7) -- (3.7)
Total Non-GAAP adjustments 846.2 29.6 145.6 63.0 32.9 1,117.3
Non-GAAP income (loss) from operations $ 186.8 $ 231.7 $ 204.6 $ 154.6 $ (30.2) $ 747.5
Non-GAAP operating margin % 6.4% 8.8% 9.9% 5.9% nm 7.3%
Depreciation and amortization 213.5 103.8 52.3 105.8 6.2 481.6
Non-GAAP Adjusted EBITDA $ 400.3 $ 335.5 $ 256.9 $ 260.4 $ (24.0) $ 1,229.1
Non-GAAP Adjusted EBITDA margin % 13.7% 12.7% 12.4% 10.0% nm 12.0%
Capital expenditures $ 57.8 $ 42.7 $ 39.9 $ 43.9 $ 21.6 $ 205.9
For the Twelve Months Ended December 31, 2011
Net sales $ 3,175.1 $ 2,764.0 $ 2,058.8 $ 2,613.1 $ -- $ 10,611.0
Income (loss) from operations 227.6 (204.7) 180.6 23.6 (161.9) 65.2
Operating margin % 7.2% nm 8.8% 0.9% nm 0.6%
Non-GAAP Adjustments
Restructuring charges - net 34.1 21.9 47.3 23.4 9.6 136.3
Impairment charges - net 18.7 365.8 24.6 119.7 2.7 531.5
Acquisition-related expenses -- -- -- -- 2.2 2.2
Gain on pension curtailment -- -- -- -- (38.7) (38.7)
Acquisition contingent compensation -- -- -- -- 15.3 15.3
Total Non-GAAP adjustments 52.8 387.7 71.9 143.1 (8.9) 646.6
Non-GAAP income (loss) from operations $ 280.4 $ 183.0 $ 252.5 $ 166.7 $ (170.8) $ 711.8
Non-GAAP operating margin % 8.8% 6.6% 12.3% 6.4% nm 6.7%
Depreciation and amortization 240.2 135.7 48.2 116.2 9.6 549.9
Non-GAAP Adjusted EBITDA $ 520.6 $ 318.7 $ 300.7 $ 282.9 $ (161.2) $ 1,261.7
Non-GAAP Adjusted EBITDA margin % 16.4% 11.5% 14.6% 10.8% nm 11.9%
Capital expenditures $ 51.7 $ 54.2 $ 34.6 $ 91.1 $ 19.3 $ 250.9
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, 2013, 2012 and 2011
(UNAUDITED)
(in millions)
Publishing and
Retail Services
Variable
Print
Strategic
Services
International Corporate Consolidated
For the Three Months Ended September 30, 2013
Net sales $ 715.0 $ 643.8 $ 581.7 $ 674.4 $ -- $ 2,614.9
Income (loss) from operations 34.3 46.8 43.0 42.3 (31.8) 134.6
Operating margin % 4.8% 7.3% 7.4% 6.3% nm 5.1%
Non-GAAP Adjustments
Restructuring charges - net 16.6 2.8 1.3 4.6 0.2 25.5
Impairment charges - net 6.2 0.6 0.9 0.2 -- 7.9
Other charges -- -- 4.7 -- -- 4.7
Acquisition-related expenses -- -- -- -- 1.1 1.1
Total Non-GAAP adjustments 22.8 3.4 6.9 4.8 1.3 39.2
Non-GAAP income (loss) from operations $ 57.1 $ 50.2 $ 49.9 $ 47.1 $ (30.5) $ 173.8
Non-GAAP operating margin % 8.0% 7.8% 8.6% 7.0% nm 6.6%
Depreciation and amortization 40.9 24.9 14.5 24.8 1.2 106.3
Non-GAAP Adjusted EBITDA $ 98.0 $ 75.1 $ 64.4 $ 71.9 $ (29.3) $ 280.1
Non-GAAP Adjusted EBITDA margin % 13.7% 11.7% 11.1% 10.7% nm 10.7%
Capital expenditures $ 14.8 $ 16.0 $ 10.3 $ 11.8 $ 2.4 $ 55.3
For the Three Months Ended September 30, 2012
Net sales $ 753.7 $ 640.2 $ 480.2 $ 634.7 $ -- $ 2,508.8
Income (loss) from operations 59.4 48.8 35.8 29.3 13.4 186.7
Operating margin % 7.9% 7.6% 7.5% 4.6% nm 7.4%
Non-GAAP Adjustments
Restructuring charges - net 2.7 2.2 1.3 4.3 1.8 12.3
Impairment charges - net 1.4 (0.2) 0.4 -- -- 1.6
Acquisition-related expenses -- -- -- -- 1.3 1.3
Total Non-GAAP adjustments 4.1 2.0 1.7 4.3 3.1 15.2
Non-GAAP income (loss) from operations $ 63.5 $ 50.8 $ 37.5 $ 33.6 $ 16.5 $ 201.9
Non-GAAP operating margin % 8.4% 7.9% 7.8% 5.3% nm 8.0%
Depreciation and amortization 53.1 25.3 13.1 25.8 1.7 119.0
Non-GAAP Adjusted EBITDA $ 116.6 $ 76.1 $ 50.6 $ 59.4 $ 18.2 $ 320.9
Non-GAAP Adjusted EBITDA margin % 15.5% 11.9% 10.5% 9.4% nm 12.8%
Capital expenditures $ 10.7 $ 15.5 $ 11.6 $ 12.9 $ 15.5 $ 66.2
For the Three Months Ended September 30, 2011
Net sales $ 821.4 $ 698.0 $ 488.5 $ 675.4 $ -- $ 2,683.3
Income (loss) from operations 65.9 37.5 44.3 37.6 (28.5) 156.8
Operating margin % 8.0% 5.4% 9.1% 5.6% nm 5.8%
Non-GAAP Adjustments
Restructuring charges - net 9.7 (0.6) 8.5 3.1 2.9 23.6
Impairment charges - net 8.1 3.0 (1.3) -- 0.8 10.6
Acquisition-related expenses -- -- -- -- 0.7 0.7
Total Non-GAAP adjustments 17.8 2.4 7.2 3.1 4.4 34.9
Non-GAAP income (loss) from operations $ 83.7 $ 39.9 $ 51.5 $ 40.7 $ (24.1) $ 191.7
Non-GAAP operating margin % 10.2% 5.7% 10.5% 6.0% nm 7.1%
Depreciation and amortization 59.4 34.0 11.6 29.6 4.5 139.1
Non-GAAP Adjusted EBITDA $ 143.1 $ 73.9 $ 63.1 $ 70.3 $ (19.6) $ 330.8
Non-GAAP Adjusted EBITDA margin % 17.4% 10.6% 12.9% 10.4% nm 12.3%
Capital expenditures $ 12.2 $ 14.3 $ 11.8 $ 26.2 $ 1.1 $ 65.6
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 June 30, 2013, 2012 and 2011
(UNAUDITED)
(in millions)
Publishing and
Retail Services
Variable
Print
Strategic
Services
International Corporate Consolidated
For the Three Months Ended June 30, 2013
Net sales $ 649.3 $ 626.2 $ 660.7 $ 635.4 $ -- $ 2,571.6
Income (loss) from operations 37.7 38.5 81.1 29.3 (13.4) 173.2
Operating margin % 5.8% 6.1% 12.3% 4.6% nm 6.7%
Non-GAAP Adjustments
Restructuring charges - net 1.2 6.6 2.2 4.7 1.4 16.1
Impairment charges - net 1.3 0.1 1.4 0.9 -- 3.7
Acquisition-related expenses -- -- -- -- 0.1 0.1
Total Non-GAAP adjustments 2.5 6.7 3.6 5.6 1.5 19.9
Non-GAAP income (loss) from operations $ 40.2 $ 45.2 $ 84.7 $ 34.9 $ (11.9) $ 193.1
Non-GAAP operating margin % 6.2% 7.2% 12.8% 5.5% nm 7.5%
Depreciation and amortization 42.3 26.4 14.9 26.0 1.4 111.0
Non-GAAP Adjusted EBITDA $ 82.5 $ 71.6 $ 99.6 $ 60.9 $ (10.5) $ 304.1
Non-GAAP Adjusted EBITDA margin % 12.7% 11.4% 15.1% 9.6% nm 11.8%
Capital expenditures $ 11.7 $ 13.9 $ 12.6 $ 7.2 $ 1.0 $ 46.4
For the Three Months Ended June 30, 2012
Net sales $ 695.4 $ 628.8 $ 559.4 $ 645.0 $ -- $ 2,528.6
Income (loss) from operations 36.1 31.0 78.8 34.8 (16.8) 163.9
Operating margin % 5.2% 4.9% 14.1% 5.4% nm 6.5%
Non-GAAP Adjustments
Restructuring charges - net 1.4 9.1 6.4 3.3 5.5 25.7
Impairment charges - net (1.2) 2.4 1.3 -- 5.8 8.3
Acquisition-related expenses -- -- -- -- 0.5 0.5
Total Non-GAAP adjustments 0.2 11.5 7.7 3.3 11.8 34.5
Non-GAAP income (loss) from operations $ 36.3 $ 42.5 $ 86.5 $ 38.1 $ (5.0) $ 198.4
Non-GAAP operating margin % 5.2% 6.8% 15.5% 5.9% nm 7.8%
Depreciation and amortization 55.4 25.4 12.5 26.4 1.2 120.9
Non-GAAP Adjusted EBITDA $ 91.7 $ 67.9 $ 99.0 $ 64.5 $ (3.8) $ 319.3
Non-GAAP Adjusted EBITDA margin % 13.2% 10.8% 17.7% 10.0% nm 12.6%
Capital expenditures $ 19.0 $ 5.2 $ 13.6 $ 7.3 $ 3.3 $ 48.4
For the Three Months Ended June 30, 2011
Net sales $ 749.6 $ 653.7 $ 577.0 $ 643.1 $ -- $ 2,623.4
Income (loss) from operations 41.9 14.2 76.8 31.9 (48.7) 116.1
Operating margin % 5.6% 2.2% 13.3% 5.0% nm 4.4%
Non-GAAP Adjustments
Restructuring charges - net 17.2 15.9 9.9 7.0 1.4 51.4
Impairment charges - net 6.6 4.8 12.5 0.2 0.2 24.3
Acquisition-related expenses -- -- -- -- 0.9 0.9
Total Non-GAAP adjustments 23.8 20.7 22.4 7.2 2.5 76.6
Non-GAAP income (loss) from operations $ 65.7 $ 34.9 $ 99.2 $ 39.1 $ (46.2) $ 192.7
Non-GAAP operating margin % 8.8% 5.3% 17.2% 6.1% nm 7.3%
Depreciation and amortization 60.8 34.5 12.5 30.1 2.8 140.7
Non-GAAP Adjusted EBITDA $ 126.5 $ 69.4 $ 111.7 $ 69.2 $ (43.4) $ 333.4
Non-GAAP Adjusted EBITDA margin % 16.9% 10.6% 19.4% 10.8% nm 12.7%
Capital expenditures $ 12.6 $ 21.0 $ 10.7 $ 21.2 $ 15.6 $ 81.1
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 March 31, 2013, 2012 and 2011
(UNAUDITED)
(in millions)
Publishing and
Retail Services
Variable
Print
Strategic
Services
International Corporate Consolidated
For the Three Months Ended March 31, 2013
Net sales $ 664.4 $ 648.4 $ 592.0 $ 633.7 $ -- $ 2,538.5
Income (loss) from operations 21.8 57.4 58.0 27.9 (25.3) 139.8
Operating margin % 3.3% 8.9% 9.8% 4.4% nm 5.5%
Non-GAAP Adjustments
Restructuring charges - net 10.1 2.4 0.7 2.2 3.2 18.6
Impairment charges - net 3.2 0.3 0.4 (0.2) 0.4 4.1
Acquisition-related expenses -- -- -- -- 1.0 1.0
Total Non-GAAP adjustments 13.3 2.7 1.1 2.0 4.6 23.7
Non-GAAP income (loss) from operations $ 35.1 $ 60.1 $ 59.1 $ 29.9 $ (20.7) $ 163.5
Non-GAAP operating margin % 5.3% 9.3% 10.0% 4.7% nm 6.4%
Depreciation and amortization 43.4 27.9 14.8 25.9 1.6 113.6
Non-GAAP Adjusted EBITDA $ 78.5 $ 88.0 $ 73.9 $ 55.8 $ (19.1) $ 277.1
Non-GAAP Adjusted EBITDA margin % 11.8% 13.6% 12.5% 8.8% nm 10.9%
Capital expenditures $ 12.5 $ 10.9 $ 0.6 $ 11.0 $ 2.9 $ 37.9
For the Three Months Ended March 31, 2012
Net sales $ 715.7 $ 681.7 $ 509.0 $ 618.5 $ -- $ 2,524.9
Income (loss) from operations 16.0 67.7 37.3 30.8 (30.4) 121.4
Operating margin % 2.2% 9.9% 7.3% 5.0% nm 4.8%
Non-GAAP Adjustments
Restructuring charges - net 12.9 7.5 5.0 4.3 11.0 40.7
Impairment charges - net 5.6 2.3 0.4 0.8 0.2 9.3
Acquisition-related expenses -- -- -- -- 0.3 0.3
Total Non-GAAP adjustments 18.5 9.8 5.4 5.1 11.5 50.3
Non-GAAP income (loss) from operations $ 34.5 $ 77.5 $ 42.7 $ 35.9 $ (18.9) $ 171.7
Non-GAAP operating margin % 4.8% 11.4% 8.4% 5.8% nm 6.8%
Depreciation and amortization 57.1 27.8 12.5 26.9 0.7 125.0
Non-GAAP Adjusted EBITDA $ 91.6 $ 105.3 $ 55.2 $ 62.8 $ (18.2) $ 296.7
Non-GAAP Adjusted EBITDA margin % 12.8% 15.4% 10.8% 10.2% nm 11.8%
Capital expenditures $ 15.1 $ 4.4 $ 13.2 $ 11.3 $ 1.3 $ 45.3
For the Three Months Ended March 31, 2011
Net sales $ 776.5 $ 690.5 $ 510.1 $ 606.4 $ -- $ 2,583.5
Income (loss) from operations 53.3 51.4 39.4 37.2 (71.9) 109.4
Operating margin % 6.9% 7.4% 7.7% 6.1% nm 4.2%
Non-GAAP Adjustments
Restructuring charges - net 7.3 3.3 19.8 7.4 4.9 42.7
Impairment charges - net 2.9 0.3 3.6 0.6 0.7 8.1
Acquisition-related expenses -- -- -- -- 0.4 0.4
Total Non-GAAP adjustments 10.2 3.6 23.4 8.0 6.0 51.2
Non-GAAP income (loss) from operations $ 63.5 $ 55.0 $ 62.8 $ 45.2 $ (65.9) $ 160.6
Non-GAAP operating margin % 8.2% 8.0% 12.3% 7.5% nm 6.2%
Depreciation and amortization 61.6 34.6 12.7 29.2 2.1 140.2
Non-GAAP Adjusted EBITDA $ 125.1 $ 89.6 $ 75.5 $ 74.4 $ (63.8) $ 300.8
Non-GAAP Adjusted EBITDA margin % 16.1% 13.0% 14.8% 12.3% nm 11.6%
Capital expenditures $ 9.7 $ 9.4 $ 1.1 $ 25.9 $ 1.0 $ 47.1
R. R. Donnelley & Sons Company
Condensed Consolidated Statements of Cash Flows
For the Twelve Months Ended December 31, 2013 and 2012
(UNAUDITED)
(in millions)
2013 2012
Net earnings (loss) $ 218.2 $ (653.6)
Adjustment to reconcile net earnings (loss) to net cash provided by operating activities 518.9 1,475.1
Changes in operating assets and liabilities (12.7) 19.1
Pension and other postretirement benefits plan contributions (29.6) (148.7)
Net cash provided by operating activities $ 694.8 $ 691.9
Capital expenditures (216.6) (205.9)
All other cash provided by (used in) investing activities 4.2 (78.9)
Net cash used in investing activities $ (212.4) $ (284.8)
Net cash provided by (used in) financing activities $ 122.8 $ (438.0)
Effect of exchange rate on cash and cash equivalents (7.5) 11.9
Net increase (decrease) in cash and cash equivalents $ 597.7 $ (19.0)
Cash and cash equivalents at beginning of period 430.7 449.7
Cash and cash equivalents at end of period $ 1,028.4 $ 430.7
Additional Information:
2013 2012
For the Twelve Months Ended December 31:
Net cash provided by operating activities $ 694.8 $ 691.9
Less: capital expenditures 216.6 205.9
Free cash flow $ 478.2 $ 486.0
For the Nine Months Ended September 30:
Net cash provided by operating activities $ 307.1 $ 169.4
Less: capital expenditures 139.6 159.9
Free cash flow $ 167.5 $ 9.5
For the Three Months Ended December 31:
Net cash provided by operating activities $ 387.7 $ 522.5
Less: capital expenditures 77.0 46.0
Free cash flow $ 310.7 $ 476.5
R.R. Donnelley & Sons Company
Reconciliation of Reported to Pro Forma Net Sales
For the Three Months Ended December 31, 2013 and 2012
(UNAUDITED)
(in millions)
Reported net sales Adjustments (1) Pro forma net sales
For the Three Months Ended December 31, 2013
Publishing and Retail Services $ 746.1 $ -- $ 746.1
Variable Print 674.4 -- 674.4
Strategic Services 618.6 -- 618.6
International 716.2 -- 716.2
Consolidated $ 2,755.3 $ -- $ 2,755.3
For the Three Months Ended December 31, 2012
Publishing and Retail Services $ 754.7 $ -- $ 754.7
Variable Print 686.5 4.4 690.9
Strategic Services 516.8 41.3 558.1
International 701.6 -- 701.6
Consolidated $ 2,659.6 $ 45.7 $ 2,705.3
Net sales change
Publishing and Retail Services (1.1%) (1.1%)
Variable Print (1.8%) (2.4%)
Strategic Services 19.7% 10.8%
International 2.1% 2.1%
Consolidated 3.6% 1.8%
Supplementary non-GAAP information:
Year-over-year impact of changes in foreign exchange (FX) rates
Strategic Services (0.2%)
International (0.8%)
Consolidated (0.2%)
Approximate year-over-year impact of changes in pass-through paper sales
Publishing and Retail Services (1.1%)
International 0.5%
Consolidated (0.3%)
Net organic sales change (2)
Publishing and Retail Services 0.0%
Variable Print (2.4%)
Strategic Services 11.0%
International 2.4%
Consolidated 2.3%
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 December 31, 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 December 31, 2013.
For the three months ended December 31, 2012, the adjustment for net sales of acquired businesses reflects the net sales of Meisel Photographic Corporation (acquired December 17, 2012) and Presort Solutions (acquired December 28, 2012).
(1) Adjusted for net sales of acquired businesses: Variable Print included net sales of Meisel Photographic Corporation and Strategic Services included net sales of Presort Solutions
(2) Adjusted for net sales of acquired 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 Twelve Months Ended December 31, 2013 and 2012
(UNAUDITED)
(in millions)
Reported net sales Adjustments (1) Pro forma net sales
For the Twelve Months Ended December 31, 2013
Publishing and Retail Services $ 2,774.8 $ -- $ 2,774.8
Variable Print 2,592.8 -- 2,592.8
Strategic Services 2,453.0 -- 2,453.0
International 2,659.7 -- 2,659.7
Consolidated $ 10,480.3 $ -- $ 10,480.3
For the Twelve Months Ended December 31, 2012
Publishing and Retail Services $ 2,919.5 $ -- $ 2,919.5
Variable Print 2,637.2 24.9 2,662.1
Strategic Services 2,065.4 214.3 2,279.7
International 2,599.8 -- 2,599.8
Consolidated $ 10,221.9 $ 239.2 $ 10,461.1
Net sales change
Publishing and Retail Services (5.0%) (5.0%)
Variable Print (1.7%) (2.6%)
Strategic Services 18.8% 7.6%
International 2.3% 2.3%
Consolidated 2.5% 0.2%
Supplementary non-GAAP information:
Year-over-year impact of changes in foreign exchange (FX) rates
Strategic Services (0.1%)
International (0.5%)
Consolidated (0.2%)
Approximate year-over-year impact of changes in pass-through paper sales
Publishing and Retail Services (1.6%)
International 1.4%
Consolidated 0.0%
Year-over-year impact of the 2012 rebate adjustment (2)
Variable Print (0.9%)
Consolidated (0.2%)
Net organic sales change (3)
Publishing and Retail Services (3.4%)
Variable Print (1.7%)
Strategic Services 7.7%
International 1.4%
Consolidated 0.6%
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 twelve months ended December 31, 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 twelve months ended December 31, 2013.
For the twelve months ended December 31, 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: Variable Print included net sales of Meisel Photographic Corporation and Strategic Services included net sales of EDGAR Online, Express Postal Options International and Presort Solutions
(2) The twelve months ended December 31, 2012 included adjustments for over-accruals of rebates owed to certain customers in prior periods that favorably impacted net sales by $22.7 million
(3) Adjusted for net sales of acquired businesses, the impact of changes in FX rates and pass-through paper sales and the 2012 rebate adjustments to correct an over-accrual of rebates owed to certain customers
R.R. Donnelley & Sons Company
Reconciliation of Reported to Pro Forma Net Sales
For the Three Months Ended September 30, 2013 and 2012
(UNAUDITED)
(in millions)
Reported net sales Adjustments (1) Pro forma net sales
For the Three Months Ended September 30, 2013
Publishing and Retail Services $ 715.0 $ -- $ 715.0
Variable Print 643.8 -- 643.8
Strategic Services 581.7 -- 581.7
International 674.4 -- 674.4
Consolidated $ 2,614.9 $ -- $ 2,614.9
For the Three Months Ended September 30, 2012
Publishing and Retail Services $ 753.7 $ -- $ 753.7
Variable Print 640.2 8.3 648.5
Strategic Services 480.2 51.0 531.2
International 634.7 -- 634.7
Consolidated $ 2,508.8 $ 59.3 $ 2,568.1
Net sales change
Publishing and Retail Services (5.1%) (5.1%)
Variable Print 0.6% (0.7%)
Strategic Services 21.1% 9.5%
International 6.3% 6.3%
Consolidated 4.2% 1.8%
Supplementary non-GAAP information:
Year-over-year impact of changes in foreign exchange (FX) rates
Strategic Services (0.2%)
International (0.9%)
Consolidated (0.3%)
Approximate year-over-year impact of changes in pass-through paper sales
Publishing and Retail Services (1.4%)
International 1.6%
Consolidated 0.0%
Year-over-year impact of the 2012 rebate adjustment (2)
Variable Print (0.4%)
Consolidated (0.1%)
Net organic sales change (3)
Publishing and Retail Services (3.7%)
Variable Print (0.3%)
Strategic Services 9.7%
International 5.6%
Consolidated 2.2%
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, 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 September 30, 2013.
For the three months ended September 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: Variable Print included net sales of Meisel Photographic Corporation and Strategic Services included net sales of EDGAR Online, Express Postal Options International and Presort Solutions
(2) The three months ended September 30, 2012 included an adjustment for over-accruals of rebates owed to certain customers in prior periods that favorably impacted net sales by $2.9 million
(3) Adjusted for net sales of acquired businesses, the impact of changes in FX rates and pass-through paper sales and the 2012 rebate adjustment to correct an over-accrual of rebates owed to certain customers
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 Adjustments (1) Pro forma net sales
For the Three Months Ended June 30, 2013
Publishing and Retail Services $ 649.3 $ -- $ 649.3
Variable Print 626.2 -- 626.2
Strategic Services 660.7 -- 660.7
International 635.4 -- 635.4
Consolidated $ 2,571.6 $ -- $ 2,571.6
For the Three Months Ended June 30, 2012
Publishing and Retail Services $ 695.4 $ -- $ 695.4
Variable Print 628.8 6.6 635.4
Strategic Services 559.4 60.8 620.2
International 645.0 -- 645.0
Consolidated $ 2,528.6 $ 67.4 $ 2,596.0
Net sales change
Publishing and Retail Services (6.6%) (6.6%)
Variable Print (0.4%) (1.4%)
Strategic Services 18.1% 6.5%
International (1.5%) (1.5%)
Consolidated 1.7% (0.9%)
Supplementary non-GAAP information:
Year-over-year impact of changes in foreign exchange (FX) rates
Strategic Services (0.1%)
International (0.1%)
Consolidated 0.0%
Approximate year-over-year impact of changes in pass-through paper sales
Publishing and Retail Services (2.2%)
International 2.0%
Consolidated (0.1%)
Net organic sales change (2)
Publishing and Retail Services (4.4%)
Variable Print (1.4%)
Strategic Services 6.6%
International (3.4%)
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: Variable Print included net sales of Meisel Photographic Corporation and Strategic Services included net sales of EDGAR Online, Express Postal Options International and Presort Solutions
(2) Adjusted for net sales of acquired 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 Three Months Ended March 31, 2013 and 2012
(UNAUDITED)
(in millions)
Reported net sales Adjustments (1) Pro forma net sales
For the Three Months Ended March 31, 2013
Publishing and Retail Services $ 664.4 $ -- $ 664.4
Variable Print 648.4 -- 648.4
Strategic Services 592.0 -- 592.0
International 633.7 -- 633.7
Consolidated $ 2,538.5 $ -- $ 2,538.5
For the Three Months Ended March 31, 2012
Publishing and Retail Services $ 715.7 $ -- $ 715.7
Variable Print 681.7 5.7 687.4
Strategic Services 509.0 61.1 570.1
International 618.5 -- 618.5
Consolidated $ 2,524.9 $ 66.8 $ 2,591.7
Net sales change
Publishing and Retail Services (7.2%) (7.2%)
Variable Print (4.9%) (5.7%)
Strategic Services 16.3% 3.8%
International 2.5% 2.5%
Consolidated 0.5% (2.1%)
Supplementary non-GAAP information:
Year-over-year impact of changes in foreign exchange (FX) rates
Strategic Services (0.2%)
International (0.3%)
Consolidated (0.1%)
Approximate year-over-year impact of changes in pass-through paper sales
Publishing and Retail Services (1.7%)
International 1.8%
Consolidated 0.0%
Year-over-year impact of the 2012 rebate adjustment (2)
Variable Print (2.9%)
Consolidated (0.8%)
Net organic sales change (3)
Publishing and Retail Services (5.5%)
Variable Print (2.8%)
Strategic Services 4.0%
International 1.0%
Consolidated (1.2%)
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 March 31, 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 March 31, 2013.
For the three months ended March 31, 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: Variable Print included net sales of Meisel Photographic Corporation and Strategic Services included net sales of EDGAR Online, Express Postal Options International and Presort Solutions
(2) The three months ended March 31, 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
(3) Adjusted for net sales of acquired businesses, the impact of changes in FX rates and pass-through paper sales and the 2012 rebate adjustment to correct an over-accrual of rebates owed to certain customers
R.R. Donnelley & Sons Company
Reconciliation of Reported to Pro Forma Net Sales
For the Three Months Ended December 31, 2012 and 2011
(UNAUDITED)
(in millions)
Reported net sales Adjustments (1) Pro forma net sales
For the Three Months Ended December 31, 2012
Publishing and Retail Services $ 754.7 $ -- $ 754.7
Variable Print 686.5 4.4 690.9
Strategic Services 516.8 41.3 558.1
International 701.6 -- 701.6
Consolidated $ 2,659.6 $ 45.7 $ 2,705.3
For the Three Months Ended December 31, 2011
Publishing and Retail Services $ 827.6 $ -- $ 827.6
Variable Print 721.8 6.8 728.6
Strategic Services 483.2 47.4 530.6
International 688.2 -- 688.2
Consolidated $ 2,720.8 $ 54.2 $ 2,775.0
Net sales change
Publishing and Retail Services (8.8%) (8.8%)
Variable Print (4.9%) (5.2%)
Strategic Services 7.0% 5.2%
International 1.9% 1.9%
Consolidated (2.2%) (2.5%)
Supplementary non-GAAP information:
Year-over-year impact of changes in foreign exchange (FX) rates
Strategic Services 0.0%
International 0.3%
Consolidated 0.1%
Approximate year-over-year impact of changes in pass-through paper sales
Publishing and Retail Services (2.8%)
International 1.2%
Consolidated (0.5%)
Net organic sales change (2)
Publishing and Retail Services (6.0%)
Variable Print (5.2%)
Strategic Services 5.2%
International 0.4%
Consolidated (2.1%)
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 December 31, 2012 and 2011 to pro forma net sales as if the 2012 and 2011 acquisitions took place as of January 1, 2011, for the purposes of this schedule.
For the three months ended December 31, 2012, the adjustment for net sales of acquired businesses reflects the net sales of Meisel Photographic Corporation (acquired December 17, 2012) and Presort Solutions (acquired December 28, 2012).
For the three months ended December 31, 2011, the adjustment for net sales of acquired businesses reflects the net sales of StratusGroup, Inc. (acquired November 21, 2011), 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: Variable Print included net sales of StratusGroup, Inc. and Meisel Photographic Corporation and Strategic Services included net sales of EDGAR Online, Express Postal Options International and Presort Solutions
(2) Adjusted for net sales of acquired 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 Twelve Months Ended December 31, 2012 and 2011
(UNAUDITED)
(in millions)
Reported net sales Adjustments (1) Pro forma net sales
For the Twelve Months Ended December 31, 2012
Publishing and Retail Services $ 2,919.5 $ -- $ 2,919.5
Variable Print 2,637.2 24.9 2,662.1
Strategic Services 2,065.4 214.3 2,279.7
International 2,599.8 -- 2,599.8
Consolidated $ 10,221.9 $ 239.2 $ 10,461.1
For the Twelve Months Ended December 31, 2011
Publishing and Retail Services $ 3,175.1 $ -- $ 3,175.1
Variable Print 2,764.0 40.9 2,804.9
Strategic Services 2,058.8 185.2 2,244.0
International 2,613.1 -- 2,613.1
Consolidated $ 10,611.0 $ 226.1 $ 10,837.1
Net sales change
Publishing and Retail Services (8.1%) (8.1%)
Variable Print (4.6%) (5.1%)
Strategic Services 0.3% 1.6%
International (0.5%) (0.5%)
Consolidated (3.7%) (3.5%)
Supplementary non-GAAP information:
Year-over-year impact of changes in foreign exchange (FX) rates
Strategic Services (0.1%)
International (3.5%)
Consolidated (0.9%)
Approximate year-over-year impact of changes in pass-through paper sales
Publishing and Retail Services (2.6%)
International 1.2%
Consolidated (0.4%)
Year-over-year impact of the 2012 rebate adjustment (2)
Variable Print 0.8%
Consolidated 0.2%
Net organic sales change (3)
Publishing and Retail Services (5.5%)
Variable Print (5.9%)
Strategic Services 1.7%
International 1.8%
Consolidated (2.4%)
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 twelve months ended December 31, 2012 and 2011 to pro forma net sales as if the 2012 and 2011 acquisitions took place as of January 1, 2011, for the purposes of this schedule.
For the twelve months ended December 31, 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).
For the twelve months ended December 31, 2011, the adjustment for net sales of acquired businesses reflects the net sales of Journalism Online (acquired March 24, 2011), Helium, Inc. (acquired June 21, 2011), Sequence Personal LLC (acquired August 15, 2011), LibreDigital, Inc. (acquired August 16, 2011), Genesis Packaging & Design, Inc. (acquired September 6, 2011), StratusGroup, Inc. (acquired November 21, 2011), 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: Variable Print included net sales of Genesis Packaging & Design, Inc., StratusGroup, Inc. and Meisel Photographic Corporation and Strategic Services included net sales of Journalism Online, Helium, Inc., Sequence Personal LLC, LibreDigital, Inc., EDGAR Online, Express Postal Options International and Presort Solutions
(2) The twelve months ended December 31, 2012 included adjustments for over-accruals of rebates owed to certain customers in prior periods that favorably impacted net sales by $22.7 million
(3) Adjusted for net sales of acquired businesses, the impact of changes in FX rates and pass-through paper sales and the 2012 rebate adjustments to correct an over-accrual of rebates owed to certain customers
R.R. Donnelley & Sons Company
Reconciliation of Reported to Pro Forma Net Sales
For the Three Months Ended September 30, 2012 and 2011
(UNAUDITED)
(in millions)
Reported net sales Adjustments (1) Pro forma net sales
For the Three Months Ended September 30, 2012
Publishing and Retail Services $ 753.7 $ -- $ 753.7
Variable Print 640.2 -- 640.2
Strategic Services 480.2 12.7 492.9
International 634.7 -- 634.7
Consolidated $ 2,508.8 $ 12.7 $ 2,521.5
For the Three Months Ended September 30, 2011
Publishing and Retail Services $ 821.4 $ -- $ 821.4
Variable Print 698.0 7.8 705.8
Strategic Services 488.5 16.6 505.1
International 675.4 -- 675.4
Consolidated $ 2,683.3 $ 24.4 $ 2,707.7
Net sales change
Publishing and Retail Services (8.2%) (8.2%)
Variable Print (8.3%) (9.3%)
Strategic Services (1.7%) (2.4%)
International (6.0%) (6.0%)
Consolidated (6.5%) (6.9%)
Supplementary non-GAAP information:
Year-over-year impact of changes in foreign exchange (FX) rates
Strategic Services (0.1%)
International (4.6%)
Consolidated (1.2%)
Approximate year-over-year impact of changes in pass-through paper sales
Publishing and Retail Services (2.2%)
International 0.9%
Consolidated (0.5%)
Year-over-year impact of the 2012 rebate adjustment (2)
Variable Print 0.4%
Consolidated 0.1%
Net organic sales change (3)
Publishing and Retail Services (6.0%)
Variable Print (9.7%)
Strategic Services (2.3%)
International (2.3%)
Consolidated (5.3%)
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, 2012 and 2011 to pro forma net sales as if the 2012 and 2011 acquisitions took place as of January 1, 2011, for the purposes of this schedule.
For the three months ended September 30, 2012, the adjustment for net sales of acquired businesses reflects the net sales of EDGAR Online (acquired August 14, 2012) and Express Postal Options International (acquired September 6, 2012).
For the three months ended September 30, 2011, the adjustment for net sales of acquired businesses reflects the net sales of Sequence Personal LLC (acquired August 15, 2011), LibreDigital, Inc. (acquired August 16, 2011), Genesis Packaging & Design, Inc. (acquired September 6, 2011), StratusGroup, Inc. (acquired November 21, 2011), EDGAR Online (acquired August 14, 2012) and Express Postal Options International (acquired September 6, 2012).
(1) Adjusted for net sales of acquired businesses: Variable Print included net sales of Genesis Packaging & Design, Inc. and StratusGroup, Inc. and Strategic Services included net sales of Sequence Personal LLC, LibreDigital, Inc., EDGAR Online and Express Postal Options International
(2) The three months ended September 30, 2012 included an adjustment for over-accruals of rebates owed to certain customers in prior periods that favorably impacted net sales by $2.9 million
(3) Adjusted for net sales of acquired businesses, the impact of changes in FX rates and pass-through paper sales and the 2012 rebate adjustment to correct an over-accrual of rebates owed to certain customers
R.R. Donnelley & Sons Company
Reconciliation of Reported to Pro Forma Net Sales
For the Three Months Ended June 30, 2012 and 2011
(UNAUDITED)
(in millions)
Reported net sales Adjustments (1) Pro forma net sales
For the Three Months Ended June 30, 2012
Publishing and Retail Services $ 695.4 $ -- $ 695.4
Variable Print 628.8 -- 628.8
Strategic Services 559.4 -- 559.4
International 645.0 -- 645.0
Consolidated $ 2,528.6 $ -- $ 2,528.6
For the Three Months Ended June 30, 2011
Publishing and Retail Services $ 749.6 $ -- $ 749.6
Variable Print 653.7 8.7 662.4
Strategic Services 577.0 3.1 580.1
International 643.1 -- 643.1
Consolidated $ 2,623.4 $ 11.8 $ 2,635.2
Net sales change
Publishing and Retail Services (7.2%) (7.2%)
Variable Print (3.8%) (5.1%)
Strategic Services (3.1%) (3.6%)
International 0.3% 0.3%
Consolidated (3.6%) (4.0%)
Supplementary non-GAAP information:
Year-over-year impact of changes in foreign exchange (FX) rates
Strategic Services (0.3%)
International (6.5%)
Consolidated (1.6%)
Approximate year-over-year impact of changes in pass-through paper sales
Publishing and Retail Services (2.9%)
International 1.2%
Consolidated (0.5%)
Net organic sales change (2)
Publishing and Retail Services (4.3%)
Variable Print (5.1%)
Strategic Services (3.3%)
International 5.6%
Consolidated (1.9%)
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, 2012 and 2011 to pro forma net sales as if the 2011 acquisitions took place as of January 1, 2011 for the purposes of this schedule.
There were no acquisitions during the three months ended June 30, 2012.
For the three months ended June 30, 2011, the adjustment for net sales of acquired businesses reflects the net sales of Helium, Inc. (acquired June 21, 2011), Sequence Personal LLC (acquired August 15, 2011), LibreDigital, Inc. (acquired August 16, 2011), Genesis Packaging & Design, Inc. (acquired September 6, 2011) and StratusGroup, Inc. (acquired November 21, 2011).
(1) Adjusted for net sales of acquired businesses: Variable Print included net sales of Genesis Packaging & Design, Inc. and StratusGroup, Inc. and Strategic Services included net sales of Helium, Inc., Sequence Personal LLC and LibreDigital, Inc.
(2) Adjusted for net sales of acquired 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 Three Months Ended March 31, 2012 and 2011
(UNAUDITED)
(in millions)
Reported net sales Adjustments (1) Pro forma net sales
For the Three Months Ended March 31, 2012
Publishing and Retail Services $ 715.7 $ -- $ 715.7
Variable Print 681.7 -- 681.7
Strategic Services 509.0 -- 509.0
International 618.5 -- 618.5
Consolidated $ 2,524.9 $ -- $ 2,524.9
For the Three Months Ended March 31, 2011
Publishing and Retail Services $ 776.5 $ -- $ 776.5
Variable Print 690.5 8.1 698.6
Strategic Services 510.1 3.2 513.3
International 606.4 -- 606.4
Consolidated $ 2,583.5 $ 11.3 $ 2,594.8
Net sales change
Publishing and Retail Services (7.8%) (7.8%)
Variable Print (1.3%) (2.4%)
Strategic Services (0.2%) (0.8%)
International 2.0% 2.0%
Consolidated (2.3%) (2.7%)
Supplementary non-GAAP information:
Year-over-year impact of changes in foreign exchange (FX) rates
Strategic Services 0.0%
International (3.2%)
Consolidated (0.8%)
Approximate year-over-year impact of changes in pass-through paper sales
Publishing and Retail Services (2.2%)
International 1.3%
Consolidated (0.4%)
Year-over-year impact of the 2012 rebate adjustment (2)
Variable Print 2.9%
Consolidated 0.8%
Net organic sales change (3)
Publishing and Retail Services (5.6%)
Variable Print (5.3%)
Strategic Services (0.8%)
International 3.9%
Consolidated (2.3%)
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 March 31, 2012 and 2011 to pro forma net sales as if the 2011 acquisitions took place as of January 1, 2011 for the purposes of this schedule.
There were no acquisitions during the three months ended March 31, 2012.
For the three months ended March 31, 2011, the adjustment for net sales of acquired businesses reflects the net sales of Journalism Online (acquired March 24, 2011), Helium, Inc. (acquired June 21, 2011), Sequence Personal LLC (acquired August 15, 2011), LibreDigital, Inc. (acquired August 16, 2011), Genesis Packaging & Design, Inc. (acquired September 6, 2011) and StratusGroup, Inc. (acquired November 21, 2011).
(1) Adjusted for net sales of acquired businesses: Variable Print included net sales of Genesis Packaging & Design, Inc. and StratusGroup, Inc. and Strategic Services included net sales of Journalism Online, Helium, Inc., Sequence Personal LLC and LibreDigital, Inc.
(2) The three months ended March 31, 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
(3) Adjusted for net sales of acquired businesses, the impact of changes in FX rates and pass-through paper sales and the 2012 rebate adjustment to correct an over-accrual of rebates owed to certain customers
R.R. Donnelley & Sons Company
Reconciliation of Reported to Pro Forma Net Sales
For the Three Months Ended December 31, 2011 and 2010
(UNAUDITED)
(in millions)
Reported net sales Adjustments (1) Pro forma net sales
For the Three Months Ended December 31, 2011
Publishing and Retail Services $ 827.6 $ -- $ 827.6
Variable Print 721.8 3.2 725.0
Strategic Services 483.2 -- 483.2
International 688.2 -- 688.2
Consolidated $ 2,720.8 $ 3.2 $ 2,724.0
For the Three Months Ended December 31, 2010
Publishing and Retail Services $ 903.6 $ -- $ 903.6
Variable Print 709.9 26.4 736.3
Strategic Services 447.8 89.2 537.0
International 645.8 5.2 651.0
Consolidated $ 2,707.1 $ 120.8 $ 2,827.9
Net sales change
Publishing and Retail Services (8.4%) (8.4%)
Variable Print 1.7% (1.5%)
Strategic Services 7.9% (10.0%)
International 6.6% 5.7%
Consolidated 0.5% (3.7%)
Supplementary non-GAAP information:
Year-over-year impact of changes in foreign exchange (FX) rates
Strategic Services 0.0%
International (3.2%)
Consolidated (0.7%)
Approximate year-over-year impact of changes in pass-through paper sales
Publishing and Retail Services (1.5%)
International 3.1%
Consolidated 0.2%
Net organic sales change (2)
Publishing and Retail Services (6.9%)
Variable Print (1.5%)
Strategic Services (10.0%)
International 5.8%
Consolidated (3.2%)
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 December 31, 2011 and 2010 to pro forma net sales as if the 2011 and 2010 acquisitions took place as of January 1, 2010, for the purposes of this schedule.
For the three months ended December 31, 2011, the adjustment for net sales of acquired businesses reflects the net sales of StratusGroup, Inc. (acquired November 21, 2011).
For the three months ended December 31, 2010, the adjustment for net sales of acquired businesses reflects the net sales of Bowne & Co., Inc. (acquired November 24, 2010), Nimblefish Technologies (acquired December 14, 2010), 8touches (acquired December 31, 2010), Journalism Online (acquired March 24, 2011), Helium, Inc. (acquired June 21, 2011), Sequence Personal LLC (acquired August 15, 2011), LibreDigital, Inc. (acquired August 16, 2011), Genesis Packaging & Design, Inc. (acquired September 6, 2011) and StratusGroup, Inc. (acquired November 21, 2011).
(1) Adjusted for net sales of acquired businesses: Variable Print included net sales of Bowne & Co., Inc., Genesis Packaging & Design, Inc. and StratusGroup, Inc.; Strategic Services included net sales of Bowne & Co., Inc., Nimblefish Technologies, 8touches, Journalism Online, Helium, Inc., Sequence Personal LLC and LibreDigital, Inc. and International included net sales of Bowne & Co., Inc.
(2) Adjusted for net sales of acquired 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 Twelve Months Ended December 31, 2011 and 2010
(UNAUDITED)
(in millions)
Reported net sales Adjustments (1) Pro forma net sales
For the Twelve Months Ended December 31, 2011
Publishing and Retail Services $ 3,175.1 $ -- $ 3,175.1
Variable Print 2,764.0 28.2 2,792.2
Strategic Services 2,058.8 7.3 2,066.1
International 2,613.1 -- 2,613.1
Consolidated $ 10,611.0 $ 35.5 $ 10,646.5
For the Twelve Months Ended December 31, 2010
Publishing and Retail Services $ 3,369.5 $ -- $ 3,369.5
Variable Print 2,723.8 140.5 2,864.3
Strategic Services 1,529.9 521.3 2,051.2
International 2,395.7 30.8 2,426.5
Consolidated $ 10,018.9 $ 692.6 $ 10,711.5
Net sales change
Publishing and Retail Services (5.8%) (5.8%)
Variable Print 1.5% (2.5%)
Strategic Services 34.6% 0.7%
International 9.1% 7.7%
Consolidated 5.9% (0.6%)
Supplementary non-GAAP information:
Year-over-year impact of changes in foreign exchange (FX) rates
Strategic Services 0.2%
International 2.6%
Consolidated 0.6%
Approximate year-over-year impact of changes in pass-through paper sales
Publishing and Retail Services 0.3%
International 1.7%
Consolidated 0.5%
Net organic sales change (2)
Publishing and Retail Services (6.1%)
Variable Print (2.5%)
Strategic Services 0.5%
International 3.4%
Consolidated (1.7%)
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 twelve months ended December 31, 2011 and 2010 to pro forma net sales as if the 2011 and 2010 acquisitions took place as of January 1, 2010, for the purposes of this schedule.
For the twelve months ended December 31, 2011, the adjustment for net sales of acquired businesses reflects the net sales of Journalism Online (acquired March 24, 2011), Helium, Inc. (acquired June 21, 2011), Sequence Personal LLC (acquired August 15, 2011), LibreDigital, Inc. (acquired August 16, 2011), Genesis Packaging & Design, Inc. (acquired September 6, 2011) and StratusGroup, Inc. (acquired November 21, 2011).
For the twelve months ended December 31, 2010, the adjustment for net sales of acquired businesses reflects the net sales of Bowne & Co., Inc. (acquired November 24, 2010), Nimblefish Technologies (acquired December 14, 2010), 8touches (acquired December 31, 2010), Journalism Online (acquired March 24, 2011), Helium, Inc. (acquired June 21, 2011), Sequence Personal LLC (acquired August 15, 2011), LibreDigital, Inc. (acquired August 16, 2011), Genesis Packaging & Design, Inc. (acquired September 6, 2011) and StratusGroup, Inc. (acquired November 21, 2011).
(1) Adjusted for net sales of acquired businesses: Variable Print included net sales of Bowne & Co., Inc., Genesis Packaging & Design, Inc. and StratusGroup, Inc.; Strategic Services included net sales of Bowne & Co., Inc., Nimblefish Technologies, 8touches, Journalism Online, Helium, Inc., Sequence Personal LLC and LibreDigital, Inc. and International included net sales of Bowne & Co., Inc.
(2) 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 Three Months Ended September 30, 2011 and 2010
(UNAUDITED)
(in millions)
Reported net sales Adjustments (1) Pro forma net sales
For the Three Months Ended September 30, 2011
Publishing and Retail Services $ 821.4 $ -- $ 821.4
Variable Print 698.0 2.3 700.3
Strategic Services 488.5 0.9 489.4
International 675.4 -- 675.4
Consolidated $ 2,683.3 $ 3.2 $ 2,686.5
For the Three Months Ended September 30, 2010
Publishing and Retail Services $ 866.3 $ -- $ 866.3
Variable Print 658.9 28.1 687.0
Strategic Services 356.4 122.4 478.8
International 606.5 7.2 613.7
Consolidated $ 2,488.1 $ 157.7 $ 2,645.8
Net sales change
Publishing and Retail Services (5.2%) (5.2%)
Variable Print 5.9% 1.9%
Strategic Services 37.1% 2.2%
International 11.4% 10.1%
Consolidated 7.8% 1.5%
Supplementary non-GAAP information:
Year-over-year impact of changes in foreign exchange (FX) rates
Strategic Services 0.2%
International 4.2%
Consolidated 1.0%
Approximate year-over-year impact of changes in pass-through paper sales
Publishing and Retail Services 1.4%
International 2.0%
Consolidated 0.9%
Net organic sales change (2)
Publishing and Retail Services (6.6%)
Variable Print 1.9%
Strategic Services 2.0%
International 3.9%
Consolidated (0.4%)
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, 2011 and 2010 to pro forma net sales as if the 2011 and 2010 acquisitions took place as of January 1, 2010, for the purposes of this schedule.
For the three months ended September 30, 2011, the adjustment for net sales of acquired businesses reflects the net sales of Sequence Personal LLC (acquired August 15, 2011), LibreDigital, Inc. (acquired August 16, 2011) and Genesis Packaging & Design, Inc. (acquired September 6, 2011).
For the three months ended September 30, 2010, the adjustment for net sales of acquired businesses reflects the net sales of Bowne & Co., Inc. (acquired November 24, 2010), Nimblefish Technologies (acquired December 14, 2010), 8touches (acquired December 31, 2010), Journalism Online (acquired March 24, 2011), Helium, Inc. (acquired June 21, 2011), Sequence Personal LLC (acquired August 15, 2011), LibreDigital, Inc. (acquired August 16, 2011) and Genesis Packaging & Design, Inc. (acquired September 6, 2011).
(1) Adjusted for net sales of acquired businesses: Variable Print included net sales of Bowne & Co., Inc. and Genesis Packaging & Design, Inc.; Strategic Services included net sales of Bowne & Co., Inc., Nimblefish Technologies, 8touches, Journalism Online, Helium, Inc., Sequence Personal LLC and LibreDigital, Inc. and International included net sales of Bowne & Co., Inc.
(2) 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 Three Months Ended June 30, 2011 and 2010
(UNAUDITED)
(in millions)
Reported net sales Adjustments (1) Pro forma net sales
For the Three Months Ended June 30, 2011
Publishing and Retail Services $ 749.6 $ -- $ 749.6
Variable Print 653.7 -- 653.7
Strategic Services 577.0 0.8 577.8
International 643.1 -- 643.1
Consolidated $ 2,623.4 $ 0.8 $ 2,624.2
For the Three Months Ended June 30, 2010
Publishing and Retail Services $ 809.6 $ -- $ 809.6
Variable Print 636.8 34.8 671.6
Strategic Services 384.1 163.1 547.2
International 578.1 9.9 588.0
Consolidated $ 2,408.6 $ 207.8 $ 2,616.4
Net sales change
Publishing and Retail Services (7.4%) (7.4%)
Variable Print 2.7% (2.7%)
Strategic Services 50.2% 5.6%
International 11.2% 9.4%
Consolidated 8.9% 0.3%
Supplementary non-GAAP information:
Year-over-year impact of changes in foreign exchange (FX) rates
Strategic Services 0.5%
International 7.3%
Consolidated 1.8%
Approximate year-over-year impact of changes in pass-through paper sales
Publishing and Retail Services 1.4%
International 1.8%
Consolidated 0.8%
Net organic sales change (2)
Publishing and Retail Services (8.8%)
Variable Print (2.7%)
Strategic Services 5.1%
International 0.3%
Consolidated (2.3%)
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, 2011 and 2010 to pro forma net sales as if the 2011 and 2010 acquisitions took place as of January 1, 2010, for the purposes of this schedule.
For the three months ended June 30, 2011, the adjustment for net sales of acquired businesses reflects the net sales of Journalism Online (acquired March 24, 2011) and Helium, Inc. (acquired June 21, 2011).
For the three months ended June 30, 2010, the adjustment for net sales of acquired businesses reflects the net sales of Bowne & Co., Inc. (acquired November 24, 2010), Nimblefish Technologies (acquired December 14, 2010), 8touches (acquired December 31, 2010), Journalism Online (acquired March 24, 2011) and Helium, Inc. (acquired June 21, 2011).
(1) Adjusted for net sales of acquired businesses: Variable Print included net sales of Bowne & Co., Inc.; Strategic Services included net sales of Bowne & Co., Inc., Nimblefish Technologies, 8touches, Journalism Online and Helium, Inc. and International included net sales of Bowne & Co., Inc.
(2) Adjusted for net sales of acquired 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 Three Months Ended March 31, 2011 and 2010
(UNAUDITED)
(in millions)
Reported net sales Adjustments (1) Pro forma net sales
For the Three Months Ended March 31, 2011
Publishing and Retail Services $ 776.5 $ -- $ 776.5
Variable Print 690.5 -- 690.5
Strategic Services 510.1 0.1 510.2
International 606.4 -- 606.4
Consolidated $ 2,583.5 $ 0.1 $ 2,583.6
For the Three Months Ended March 31, 2010
Publishing and Retail Services $ 790.0 $ -- $ 790.0
Variable Print 718.2 29.9 748.1
Strategic Services 341.6 140.0 481.6
International 565.3 8.5 573.8
Consolidated $ 2,415.1 $ 178.4 $ 2,593.5
Net sales change
Publishing and Retail Services (1.7%) (1.7%)
Variable Print (3.9%) (7.7%)
Strategic Services 49.3% 5.9%
International 7.3% 5.7%
Consolidated 7.0% (0.4%)
Supplementary non-GAAP information:
Year-over-year impact of changes in foreign exchange (FX) rates
Strategic Services 0.2%
International 2.5%
Consolidated 0.6%
Approximate year-over-year impact of changes in pass-through paper sales
Publishing and Retail Services 0.1%
International (0.1%)
Consolidated 0.0%
Net organic sales change (2)
Publishing and Retail Services (1.8%)
Variable Print (7.7%)
Strategic Services 5.7%
International 3.3%
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 three months ended March 31, 2011 and 2010 to pro forma net sales as if the 2011 and 2010 acquisitions took place as of January 1, 2010, for the purposes of this schedule.
For the three months ended March 31, 2011, the adjustment for net sales of acquired businesses reflects the net sales of Journalism Online (acquired March 24, 2011).
For the three months ended March 31, 2010, the adjustment for net sales of acquired businesses reflects the net sales of Bowne & Co., Inc. (acquired November 24, 2010), Nimblefish Technologies (acquired December 14, 2010), 8touches (acquired December 31, 2010) and Journalism Online (acquired March 24, 2011).
(1) Adjusted for net sales of acquired businesses: Variable Print included net sales of Bowne & Co., Inc.; Strategic Services included net sales of Bowne & Co., Inc., Nimblefish Technologies, 8touches and Journalism Online and International included net sales of Bowne & Co., Inc.
(2) 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 GAAP Net Earnings (Loss) to Non-GAAP Adjusted EBITDA
For the Three and Twelve Months Ended December 31, 2013 and 2012
(UNAUDITED)
(in millions)
For the Twelve
Months Ended For the Three Months Ended
December 31,
2013
December 31,
2013
September 30,
2013
June 30,
2013
March 31,
2013
GAAP net earnings attributable to RR Donnelley common shareholders $ 211.2 $ 104.0 $ 14.7 $ 65.4 $ 27.1
Adjustments
Income (loss) attributable to noncontrolling interests 7.0 4.4 3.3 1.1 (1.8)
Income tax expense (benefit) (9.2) (62.0) 5.0 35.2 12.6
Interest expense - net 261.4 67.5 65.6 65.5 62.8
Investment and other expense (income) - net 27.4 18.2 (0.3) 6.0 3.5
Loss on debt extinguishment (1) 81.9 -- 46.3 -- 35.6
Depreciation and amortization 435.8 104.9 106.3 111.0 113.6
Restructuring, impairment and other charges - net (2) 133.5 52.9 38.1 19.8 22.7
Acquisition-related expenses (3) 5.9 3.7 1.1 0.1 1.0
Total Non-GAAP adjustments 943.7 189.6 265.4 238.7 250.0
Non-GAAP adjusted EBITDA $ 1,154.9 $ 293.6 $ 280.1 $ 304.1 $ 277.1
Net sales $ 10,480.3 $ 2,755.3 $ 2,614.9 $ 2,571.6 $ 2,538.5
Non-GAAP adjusted EBITDA margin % 11.0% 10.7% 10.7% 11.8% 10.9%
For the Twelve
Months Ended For the Three Months Ended
December 31,
2012
December 31,
2012
September 30,
2012
June 30,
2012
March 31,
2012
GAAP net earnings (loss) attributable to RR Donnelley common shareholders $ (651.4) $ (849.0) $ 71.4 $ 88.8 $ 37.4
Adjustments
Income (loss) attributable to noncontrolling interests (2.2) (2.7) (0.2) 0.2 0.5
Income tax expense (benefit) 13.6 (57.0) 52.2 6.5 11.9
Interest expense - net 251.8 63.8 63.7 63.6 60.7
Investment and other expense (income) - net 2.3 (0.9) (0.4) 4.8 (1.2)
Loss on debt extinguishment (1) 16.1 4.0 -- -- 12.1
Depreciation and amortization 481.6 116.7 119.0 120.9 125.0
Restructuring, impairment and other charges - net (2) 1,118.5 1,020.6 13.9 34.0 50.0
Acquisition-related expenses (3) 2.5 0.4 1.3 0.5 0.3
Gain on pension curtailment (4) (3.7) (3.7) -- -- --
Total Non-GAAP adjustments 1,880.5 1,141.2 249.5 230.5 259.3
Non-GAAP adjusted EBITDA $ 1,229.1 $ 292.2 $ 320.9 $ 319.3 $ 296.7
Net sales $ 10,221.9 $ 2,659.6 $ 2,508.8 $ 2,528.6 $ 2,524.9
Non-GAAP adjusted EBITDA margin % 12.0% 11.0% 12.8% 12.6% 11.8%
(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 Credit Agreement.
(2) Restructuring, impairment and other charges - net: Pre-tax charges for employee termination costs, lease termination and other costs, including charges related to multi-employer pension plan withdrawal obligations as a result of facility closures, and impairment of other long-lived assets. The three months ended December 31, 2013 and September 31, 2013 included pre-tax charges for the recognition of estimated charges related to the Company's decision to partially withdraw from certain multi-employer pension plans. The three months ended December 31, 2013 and 2012 included pre-tax charges for the impairment of other intangible assets. The three months ended December 31, 2012 included pre-tax charges for the impairment of goodwill.
(3) Acquisition-related expenses: Legal, accounting and other expenses associated with completed or contemplated acquisitions.
(4) Gain on pension curtailment: 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.
R.R. Donnelley & Sons Company
Reconciliation of GAAP Net Earnings (Loss) to Non-GAAP Adjusted EBITDA
For the Three and Twelve Months Ended December 31, 2011
(UNAUDITED)
(in millions)
For the Twelve
Months Ended For the Three Months Ended
December 31,
2011
December 31,
2011
September 30,
2011
June 30,
2011
March 31,
2011
GAAP net earnings (loss) attributable to RR Donnelley common shareholders $ (122.6) $ (326.7) $ 158.0 $ 12.2 $ 33.9
Adjustments
Income attributable to noncontrolling interests 1.5 0.1 0.7 0.3 0.4
Income tax expense (benefit) (116.3) (52.2) (64.8) (16.3) 17.0
Interest expense - net 243.3 61.2 62.9 61.3 57.9
Investment and other expense (income) - net (10.6) 0.5 (1.3) (10.0) 0.2
Loss on debt extinguishment (1) 69.9 -- 1.3 68.6 --
Depreciation and amortization 549.9 129.9 139.1 140.7 140.2
Restructuring, impairment and other charges - net (2) 667.8 507.1 34.2 75.7 50.8
Acquisition-related expenses (3) 2.2 0.2 0.7 0.9 0.4
Gain on pension curtailment (4) (38.7) (38.7) -- -- --
Acquisition contingent compensation (5) 15.3 15.3 -- -- --
Total Non-GAAP adjustments 1,384.3 623.4 172.8 321.2 266.9
Non-GAAP adjusted EBITDA $ 1,261.7 $ 296.7 $ 330.8 $ 333.4 $ 300.8
Net sales $ 10,611.0 $ 2,720.8 $ 2,683.3 $ 2,623.4 $ 2,583.5
Non-GAAP adjusted EBITDA margin % 11.9% 10.9% 12.3% 12.7% 11.6%
(1) Loss on debt extinguishment: Pre-tax losses were recognized related to the repurchases of senior notes prior to maturity.
(2) Restructuring, impairment and other charges - net: Pre-tax charges for employee termination costs, lease termination and other costs, including charges related to multi-employer pension plan withdrawal obligations as a result of facility closures, and impairment of other long-lived assets. The three months ended December 31, 2011 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: A pre-tax gain was recognized related to the remeasurement of the plans' assets and obligations that was required with the announced freeze on further benefit accruals under all of the Company's U.S. pension plans.
(5) Acquisition contingent compensation: 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 December 31, 2013 and 2012
(UNAUDITED)
(in millions)
Total Liquidity (1) December 31, 2013 December 31, 2012
Cash (2) $ 1,028.4 $ 430.7
Committed credit agreement (3) 387.5 1,150.0
1,415.9 1,580.7
Usage
Borrowings under credit agreement (3) -- --
Impact on availability related to outstanding letters of credit -- 38.9
Net Available Liquidity $ 1,415.9 $ 1,541.8
Short-term and current portion of long-term debt $ 270.9 $ 18.4
Long-term debt 3,587.0 3,420.2
Total debt $ 3,857.9 $ 3,438.6
Non-GAAP adjusted EBITDA for the twelve months ended December 31, 2013 and 2012 $ 1,154.9 $ 1,229.1
Non-GAAP Gross Leverage (defined as total debt divided by non-GAAP adjusted EBITDA) 3.3x 2.8x
(1) Liquidity does not include uncommitted credit facilities, located primarily outside of the U.S.
(2) Approximately 39% and 85% of cash as of December 31, 2013 and 2012, respectively, was located outside of the U.S. The increase in U.S. cash and cash equivalents reflected proceeds from the issuance of senior notes in anticipation of the acquisition of Consolidated Graphics. During 2014, the Company's foreign subsidiaries are expected to make intercompany payments to the U.S. of approximately $40 million from foreign cash balances available at December 31, 2013. These payments, and additional payments up to approximately $210 million expected to be made in 2014 and 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 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 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 December 31, 2013. Based on the Company's results of operations for the twelve months ended December 31, 2013 and existing debt, the Company would have had the ability to utilize $0.4 billion of the $1.15 billion Credit Agreement and not have been in violation of the terms of the agreement. The current availability as of December 31, 2013 under the Credit Agreement reflected the increase in long-term debt as a result of the issuance of $350.0 million of 6.50% senior notes due November 15, 2023 in anticipation of the acquisition of Consolidated Graphics. The availability under the Credit Agreement is expected to increase beginning in the first quarter of 2014 due to an expected increase in the Company's pro forma earnings from the acquisition of Consolidated Graphics.
December 31, 2013 December 31, 2012
Stated amount of the credit agreement $ 1,150.0 $ 1,150.0
Less: availability reduction from covenants 762.5 --
Total amount available 387.5 1,150.0
Less: borrowings under the credit agreement -- --
Impact on availability related to outstanding letters of credit -- 38.9
Availability under the credit agreement $ 387.5 $ 1,111.1

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.comSource:RR Donnelley