Exhibit 99.2
Pro Forma Financial Information
The accompanying Pro Forma Consolidated Income Statements for the nine
months ended September 30, 1997 and 1996 and the years ended December 31, 1996,
1995 and 1994, and the Pro Forma Consolidated Balance Sheet as of September 30,
1997 are based on historical financial statements, adjusted to give effect to
the intended disposal of Corporate Software & Technology and Modus Media
International as though it had occurred at the beginning of the period
presented. The pro forma financial information should be read in conjunction
with the historical financial statements and related notes thereto. The pro
forma financial information is not necessarily indicative of the results that
would have been attained had the disposal occurred in the earlier period.
R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
PRO FORMA INCOME STATEMENT
(Thousands of dollars, except share data)
Nine months ended September 30, 1997
---------------------------------------------
Discontinued
Consolidated Operations Pro Forma
------------ ------------- ------------
current Presentation
------------ ------------
Net sales $4,537,584 $(1,089,544) $3,448,040
Cost of sales 3,754,436 (968,865) 2,785,571
---------- ----------- ----------
Gross profit 783,148 (120,679) 662,469
Selling and administrative expenses 528,151 (151,944) 376,207
---------- ----------- ----------
Earnings from operations 254,997 31,265 286,262
Other income (expense):
Interest expense (67,262) - (67,262)
Other income (expense), net 28,039 (9,352) 18,687
---------- ----------- ----------
Earnings before income taxes 215,774 21,913 237,687
Provision for income taxes 76,600 (254) 76,346
---------- ----------- ----------
Income from continuing operations 139,174 (22,167) 161,341
Income from discontinued operations,
net of income taxes - (22,167) (22,167)
---------- ----------- ----------
Net income $ 139,174 $ - $ 139,174
========== =========== ==========
Per common share:
Continuing operations $ 0.95 $ 15 $ 1.10
Discontinued operations - (.15) (.15)
---------- ----------- ----------
Net income $ 0.95 $ - $ 0.95
========== =========== ==========
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R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
PRO FORMA INCOME STATEMENT
(Thousands of dollars, except share data)
Nine months ended September 30, 1996
-------------------------------------------
Discontinued
Consolidated Operations Pro Forma
-------------------------------------------
Net sales $4,697,316 $(1,068,839) $3,628,477
Cost of sales 3,883,249 (953,996) 2,929,253
---------- ----------- ----------
Gross profit 814,067 (114,843) 699,224
Selling and administrative expenses 520,692 (131,593) 389,099
Restructuring charges 560,632 (118,924) 441,708
---------- ----------- ----------
Loss from operations (267,257) 135,674 (131,583)
Other income (expense):
Interest expense (71,614) - (71,614)
Gain on stock offerings of subsidiaries 44,158 - 44,158
Other income (expense), net 30,757 (18,180) 12,577
---------- ----------- ----------
Loss before income taxes (263,956) 117,494 (146,462)
Provision for income taxes (9,182) 35,492 26,310
---------- ----------- ----------
Loss from continuing operations (254,774) 82,002 (172,772)
Loss from discontinued operations,
net of income taxes - (82,002) (82,002)
---------- ----------- ----------
Net loss $ (254,774) $ - $ (254,774)
========== =========== ==========
Per common share:
Continuing operations $ (1.66) $ 0.53 $ (1.13)
Discontinued operations - (0.53) (0.53)
---------- ----------- ----------
Net loss $ (1.66) $ - $ (1.66)
========== =========== ==========
2
R. R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
PRO FORMA INCOME STATEMENT
(Thousands of dollars, except share data)
Year ended December 31, 1996
--------------------------------------------
Discontinued
Consolidated Operations Pro Forma
------------ ------------ ----------
Net sales $6,559,554 $(1,526,369) $5,033,185
Cost of sales 5,436,555 (1,374,297) 4,062,258
---------- ----------- ----------
Gross profit 1,122,999 (152,072) 970,927
Selling and administrative expenses 698,343 (180,076) 518,267
Restructuring charges 560,632 (118,924) 441,708
---------- ----------- ----------
(Loss) earnings from operations (135,976) 146,928 10,952
Other income (expense):
Interest expense (95,482) - (95,482)
Gain on stock offerings of subsidiaries 80,041 - 80,041
Other income (expense), net 40,940 (24,139) 16,801
---------- ----------- ----------
(Loss) earnings before income taxes (110,477) 122,789 12,312
Provision for income taxes 47,146 36,634 83,780
---------- ----------- ----------
Loss from continuing operations (157,623) 86,155 (71,468)
Loss from discontinued operations,
net of income taxes - (86,155) (86,155)
---------- ----------- ----------
Net loss $ (157,623) $ - $ (157,623)
========== =========== ==========
Per common share
Continuing operations $ (1.04) $ 0.57 $ (0.47)
Discontinued operations - (0.57) (0.57)
---------- ----------- ----------
Net loss $ (1.04) $ - $ (1.04)
========== =========== ==========
3
R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
PRO FORMA INCOME STATEMENT
(Thousands of dollars, except share data)
Year ended December 31, 1995
--------------------------------------------
Discontinued
Consolidated Operations Pro Forma
------------ ------------ -----------
Net Sales $6,413,213 $(1,363,616) $5,049,597
Cost of sales 5,203,821 (1,166,296) 4,037,525
---------- ----------- ----------
Gross profit 1,209,392 (197,320) 1,012,072
Selling and administrative expenses 649,983 (152,581) 497,402
---------- ----------- ----------
Earnings from operations 559,409 (44,739) 514,670
Other income (expense):
Interest expense (109,759) - (109,759)
Other income (expense), net (10,118) 4,247 (5,871)
---------- ----------- ----------
Earnings before income taxes 439,532 (40,492) 399,040
Provision for income taxes 140,739 (17,651) 123,088
---------- ----------- ----------
Income from continuing operations 298,793 (22,841) 275,952
Income from discontinued operations,
net of income taxes - 22,841 22,841
---------- ----------- ----------
Net income $ 298,793 $ - $ 298,793
========== =========== ==========
Per common share:
Continuing operations $ 1.95 $ (.15) $ 1.80
Discontinued operations - .15 0.15
---------- ----------- ----------
Net income $ 1.95 $ - $ 1.95
========== =========== ==========
4
R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
PRO FORMA INCOME STATEMENT
(Thousands of dollars, except share data)
Year ended December 31, 1994
-------------------------------------------
Discontinued
Consolidated Operations Pro Forma
------------ ------------ ----------
Net sales $4,839,085 $(626,025) $4,213,060
Cost of sales 3,888,793 (517,221) 3,371,572
---------- --------- ----------
Gross profit 950,292 (108,804) 841,488
Selling and administrative expenses 490,861 (76,898) 413,963
---------- --------- ----------
Earnings from operations 459,431 (31,906) 427,525
Other income (expense):
Interest expense (53,493) - (53,493)
Other income (expense), net (10,934) (220) (11,154)
---------- --------- ----------
Earnings before income taxes 395,004 (32,126) 362,878
Provision for income taxes 126,401 (12,850) 113,551
---------- --------- ----------
Income from continuing operations 268,603 (19,276) 249,327
Income from discontinued operations,
net of income taxes - 19,276 19,276
---------- --------- ----------
Net income $ 268,603 $ - $ 268,603
========== ========= ==========
Per common share:
Continuing operations $ 1.75 $ (.13) $ 1.62
Discontinued operations - .13 .13
---------- --------- ----------
Net income $ 1.75 $ - $ 1.75
========== ========= ==========
5
R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
(Thousands of dollars)
As of September 30, 1997
-------------------------------------------
Discontinued Loss on
Consolidated Operations Subtotal Disposal(a) Pro-forma
------------ ------------ ----------- ------------ -----------
ASSETS
Cash and equivalents $ 66,462 $ (18,839) $ 47,623 $ $ 47,623
Receivables, net 1,145,852 (320,416) 825,436 825,436
Inventories, net 299,571 (59,562) 240,009 240,009
Prepaid expenses 117,653 (21,207) 96,446 96,446
----------- --------- ----------- --------- -----------
Total current assets 1,629,538 (420,024) 1,209,514 1,209,514
Property, plant and equipment at cost 4,452,690 (232,482) 4,220,208 4,220,208
Accumulated depreciation (2,485,486) 129,582 (2,355,904) (2,355,904)
----------- --------- ----------- --------- -----------
Net property, plant, and equipment 1,967,204 (102,900) 1,864,304 1,864,304
Goodwill and other intangibles, net 498,361 (93,296) 405,065 405,065
Other noncurrent assets 662,526 (48,666) 613,860 613,860
Net assets of discontinued operations - 341,811 341,811 (100,000) 241,811
----------- --------- ----------- --------- -----------
Total assets $ 4,757,629 $(323,075) $ 4,434,554 $(100,000) $ 4,334,554
=========== ========= =========== ========= ===========
LIABILITIES
Accounts payable $ 459,551 $(165,816) $ 293,735 $ 293,735
Accrued compensation 187,644 (22,897) 164,747 164,747
Current and deferred income taxes 81,884 (4,123) 77,761 77,761
Other accrued liabilities 342,729 (88,193) 254,536 254,536
Short-term debt 33,296 - 33,296 33,296
----------- --------- ----------- --------- -----------
Total current liabilities 1,105,104 (281,029) 824,075 824,075
Deferred income taxes 251,908 7,470 259,378 (40,000) 219,378
Long-term debt 1,330,919 - 1,330,919 1,330,919
Other noncurrent liabilities 411,013 (49,516) 361,497 361,497
Shareholders' equity:
Common stock 320,962 - 320,962 320,962
Retained earnings 1,523,941 - 1,523,941 (60,000) 1,463,941
Unearned compensation (10,780) - (10,780) (10,780)
Reacquired common stock (175,438) - (175,438) (175,438)
----------- --------- ----------- --------- -----------
Total shareholders' equity 1,658,685 - 1,658,685 (60,000) 1,598,685
----------- --------- ----------- --------- -----------
Total liabilities and shareholders' equity $ 4,757,629 $(323,075) $ 4,434,554 $(100,000) $ 4,334,554
=========== ========= =========== ========= ===========
(a) Adjustments reflect the fourth quarter charge to adjust the carrying value
of the discontinued operations.
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