Exhibit 99.1
R. R. Donnelley and Sons Company
Segment GAAP to Non-GAAP Operating Income (Loss) and Margin Reconciliation
Quarterly results by segment for the twelve months ended December 31, 2004
$ IN MILLIONS
(UNAUDITED)
During the first quarter of 2005, the Company changed its reportable segments to reflect the new structure of the organization and the manner in which the chief operating decision maker regularly assesses information for decision-making purposes, including the allocation of resources. As a result, the Company’s book, European and Asian operations have been reported in the Publishing and Retail Services segment (previously reported in the Integrated Print Communications segment). This document presents the quarterly information of 2004 in the new segments. |
Publishing and Retail Services | Integrated Print Communications | Forms and Labels | Corporate | Consolidated | ||||||||||||||||
Three Months Ended March 31, 2004 | ||||||||||||||||||||
Net sales | $ | 845.3 | $ | 265.5 | $ | 177.9 | $ | — | $ | 1,288.7 | ||||||||||
Operating expense | 788.1 | 261.9 | 216.7 | 70.6 | 1,337.3 | |||||||||||||||
Operating income (loss) | 57.2 | 3.6 | (38.8 | ) | (70.6 | ) | (48.6 | ) | ||||||||||||
Operating margin % | 6.8 | % | 1.4 | % | (21.8 | )% | nm | (3.8 | )% | |||||||||||
Non-GAAP Adjustments | ||||||||||||||||||||
Restructuring charges | 6.7 | 1.6 | 3.0 | 8.6 | 19.9 | |||||||||||||||
Impairment charges | 13.4 | 0.9 | — | — | 14.3 | |||||||||||||||
Integration charges | — | 17.5 | 50.1 | 0.6 | 68.2 | |||||||||||||||
Total Non-GAAP Adjustments | 20.1 | 20.0 | 53.1 | 9.2 | 102.4 | |||||||||||||||
Operating income (loss) before restructuring, impairment and integration charges | $ | 77.3 | $ | 23.6 | $ | 14.3 | $ | (61.4 | ) | $ | 53.8 | |||||||||
Operating margin before restructuring, impairment and integration charges % | 9.1 | % | 8.9 | % | 8.0 | % | nm | 4.2 | % | |||||||||||
Depreciation and amortization | 53.1 | 12.5 | 7.2 | 6.4 | 79.2 | |||||||||||||||
Capital Expenditures | 20.9 | 4.4 | 1.0 | 0.5 | 26.8 | |||||||||||||||
Three Months Ended June 30, 2004 | ||||||||||||||||||||
Net sales | $ | 908.2 | $ | 517.3 | $ | 417.4 | $ | — | $ | 1,842.9 | ||||||||||
Operating expense | 828.1 | 460.5 | 387.7 | 69.1 | 1,745.4 | |||||||||||||||
Operating income (loss) | 80.1 | 56.8 | 29.7 | (69.1 | ) | 97.5 | ||||||||||||||
Operating margin % | 8.8 | % | 11.0 | % | 7.1 | % | nm | 5.3 | % | |||||||||||
Non-GAAP Adjustments | ||||||||||||||||||||
Restructuring charges | 21.2 | 6.5 | 3.5 | 9.0 | 40.2 | |||||||||||||||
Impairment charges | 1.0 | (0.9 | ) | — | — | 0.1 | ||||||||||||||
Integration charges | — | 0.1 | 0.7 | 1.8 | 2.6 | |||||||||||||||
Total Non-GAAP Adjustments | 22.2 | 5.7 | 4.2 | 10.8 | 42.9 | |||||||||||||||
Operating income (loss) before restructuring, impairment and integration charges | $ | 102.3 | $ | 62.5 | $ | 33.9 | $ | (58.3 | ) | $ | 140.4 | |||||||||
Operating margin before restructuring, impairment and integration charges % | 11.3 | % | 12.1 | % | 8.1 | % | nm | 7.6 | % | |||||||||||
Depreciation and amortization | 53.8 | 24.1 | 15.1 | 11.1 | 104.1 | |||||||||||||||
Capital Expenditures | 41.2 | 13.7 | 2.4 | 5.4 | 62.7 | |||||||||||||||
Three Months Ended September 30, 2004 | ||||||||||||||||||||
Net sales | $ | 993.6 | $ | 500.7 | $ | 418.7 | $ | — | $ | 1,913.0 | ||||||||||
Operating expense | 838.0 | 446.9 | 384.0 | 53.8 | 1,722.7 | |||||||||||||||
Operating income (loss) | 155.6 | 53.8 | 34.7 | (53.8 | ) | 190.3 | ||||||||||||||
Operating margin % | 15.7 | % | 10.7 | % | 8.3 | % | nm | 9.9 | % | |||||||||||
Non-GAAP Adjustments | ||||||||||||||||||||
Restructuring charges | 1.7 | 2.8 | 8.7 | 1.6 | 14.8 | |||||||||||||||
Impairment charges | 0.9 | 0.7 | 0.8 | — | 2.4 | |||||||||||||||
Integration charges | — | 1.4 | 0.6 | 2.4 | 4.4 | |||||||||||||||
Total Non-GAAP Adjustments | 2.6 | 4.9 | 10.1 | 4.0 | 21.6 | |||||||||||||||
Operating income (loss) before restructuring, impairment and integration charges | $ | 158.2 | $ | 58.7 | $ | 44.8 | $ | (49.8 | ) | $ | 211.9 | |||||||||
Operating margin before restructuring, impairment and integration charges % | 15.9 | % | 11.7 | % | 10.7 | % | nm | 11.1 | % | |||||||||||
Depreciation and amortization | 53.4 | 24.1 | 15.7 | 7.5 | 100.7 | |||||||||||||||
Capital Expenditures | 32.2 | 11.1 | 3.7 | 7.0 | 54.0 | |||||||||||||||
Three Months Ended December 31, 2004 | ||||||||||||||||||||
Net sales | $ | 1,143.3 | $ | 528.6 | $ | 439.9 | $ | — | $ | 2,111.8 | ||||||||||
Operating expense | 972.6 | 468.7 | 417.6 | 32.9 | 1,891.8 | |||||||||||||||
Operating income (loss) | 170.7 | 59.9 | 22.3 | (32.9 | ) | 220.0 | ||||||||||||||
Operating margin % | 14.9 | % | 11.3 | % | 5.1 | % | nm | 10.4 | % | |||||||||||
Non-GAAP Adjustments | ||||||||||||||||||||
Restructuring charges | 0.6 | 3.6 | 5.4 | 0.5 | 10.1 | |||||||||||||||
Impairment charges | 0.8 | 1.2 | 3.6 | — | 5.6 | |||||||||||||||
Integration charges | 0.4 | 2.1 | 1.1 | 2.0 | 5.6 | |||||||||||||||
Total Non-GAAP Adjustments | 1.8 | 6.9 | 10.1 | 2.5 | 21.3 | |||||||||||||||
Operating income (loss) before restructuring, impairment and integration charges | $ | 172.5 | $ | 66.8 | $ | 32.4 | $ | (30.4 | ) | $ | 241.3 | |||||||||
Operating margin before restructuring, impairment and integration charges % | 15.1 | % | 12.6 | % | 7.4 | % | nm | 11.4 | % | |||||||||||
Depreciation and amortization | 52.8 | 23.5 | 16.7 | 8.5 | 101.5 | |||||||||||||||
Capital Expenditures | 100.2 | 9.3 | 7.3 | 4.9 | 121.7 | |||||||||||||||
Twelve Months Ended December 31, 2004 | ||||||||||||||||||||
Net sales | $ | 3,890.4 | $ | 1,812.1 | $ | 1,453.9 | $ | — | $ | 7,156.4 | ||||||||||
Operating expense | 3,426.8 | 1,638.0 | 1,406.0 | 226.4 | 6,697.2 | |||||||||||||||
Operating income (loss) | 463.6 | 174.1 | 47.9 | (226.4 | ) | 459.2 | ||||||||||||||
Operating margin % | 11.9 | % | 9.6 | % | 3.3 | % | nm | 6.4 | % | |||||||||||
Non-GAAP Adjustments | ||||||||||||||||||||
Restructuring charges | 30.2 | 14.5 | 20.6 | 19.7 | 85.0 | |||||||||||||||
Impairment charges | 16.1 | 1.9 | 4.4 | — | 22.4 | |||||||||||||||
Integration charges | 0.4 | 21.1 | 52.5 | 6.8 | 80.8 | |||||||||||||||
Total Non-GAAP Adjustments | 46.7 | 37.5 | 77.5 | 26.5 | 188.2 | |||||||||||||||
Operating income (loss) before restructuring, impairment and integration charges | $ | 510.3 | $ | 211.6 | $ | 125.4 | $ | (199.9 | ) | $ | 647.4 | |||||||||
Operating margin before restructuring, impairment and integration charges % | 13.1 | % | 11.7 | % | 8.6 | % | nm | 9.0 | % | |||||||||||
Depreciation and amortization | 213.1 | 84.2 | 54.7 | 33.5 | 385.5 | |||||||||||||||
Capital Expenditures | 194.5 | 38.5 | 14.4 | 17.8 | 265.2 |
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. |