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R.R. Donnelley & Sons Company Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 2, 2012 04:00PM
R.R. Donnelley & Sons Company (RRD) filed Quarterly Report for the period ended 2012-03-31. Donnelley (rr) has a market cap of $2.25 billion; its shares were traded at around $11.81 with a P/E ratio of 6.9 and P/S ratio of 0.2. The dividend yield of Donnelley (rr) stocks is 8.3%.
Highlight of Business Operations:Net sales of products for the three months ended March 31, 2012 decreased $69.9 million, or 3.1%, to $2,196.5 million versus the same period in the prior year, including an $18.4 million, or 0.8%, decrease due to changes in foreign exchange rates. Net sales of products decreased due to a decline in sales of products in the U.S. Print and Related Services segment resulting from lower overall volume, decreased pass-through paper sales, ongoing price pressure, continued economic uncertainty and the increasing impact of electronic substitution on certain products. These decreases were partially offset by the rebate adjustment to net sales to correct for an over-accrual of rebates due to certain office products customers, higher pass-through sales in print management and increased volume from new and existing customers in business process outsourcing and organic growth in Asia.
Net sales from services for the three months ended March 31, 2012 increased $11.3 million, or 3.6%, to $328.4 million versus the same period in the prior year. Net sales from services increased due to higher logistics volume driven primarily by growth in freight brokerage services, partially offset by the decline in capital markets transactions activity and changes in foreign exchange rates of $1.3 million, or 0.4%.
Services cost of sales increased $12.7 million to $242.1 million for the three months ended March 31, 2012 versus the same period in the prior year primarily due to higher logistics volume and higher fuel surcharges. Services cost of sales as a percentage of services net sales increased from 72.3% to 73.7%, reflecting unfavorable mix and higher fuel surcharges.
For the three months ended March 31, 2012, the Company recorded net restructuring and impairment charges of $50.0 million compared to $50.8 million in the same period of 2011. In 2012, these charges included $36.8 million for employee termination costs for 1,365 employees, of whom 872 were terminated as of March 31, 2012. These terminations included the reorganization of sales and administrative functions across all segments, as well as facility closures and the reorganization of certain operations. Additionally, the Company incurred lease termination and other restructuring charges of $3.9 million for the three months ended March 31, 2012. For the three months ended March 31, 2012, the Company also recorded $9.3 million of impairment charges primarily related to machinery and equipment associated with the facility closings.
Net sales for the International segment for the three months ended March 31, 2012 were $643.5 million, an increase of $1.1 million, or 0.2%, compared to the same period in 2011. The net sales increase is due to higher pass-through sales in print management and increased existing customer volume in business process outsourcing, increased volume in Asia and higher pass-through paper sales in Europe, largely offset by changes in foreign exchange rates of $19.7 million, or 3.1%, a decline in capital markets transactions activity in Europe and Asia, decreased technology and telecommunications volume in Europe and continued price pressures. An analysis of net sales by reporting unit follows:
Stocks Discussed: RRD,