R.R. Donnelley & Sons Company (RRD)

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R.R. Donnelley & Sons (RRD)

Q4 2010 Earnings Call

February 22, 2011 10:00 am ET


Miles McHugh - Chief Financial Officer and Executive Vice President

Thomas Quinlan - Chief Executive Officer, President and Director

Dave Gardella -


Daniel Leben - Robert W. Baird & Co. Incorporated

Charles Strauzer - CJS Securities, Inc.

Craig Huber -

Edward Atorino - The Benchmark Company, LLC



Welcome to the RR Donnelley Fourth Quarter 2010 Results Conference Call. My name is John, and I'll be your operator for today's call. [Operator Instructions] I'll now turn the call over to Dave Gardella. You may begin, Dave.

Dave Gardella

Thank you, John. Good morning, everyone, and thank you for joining us for RR Donnelley's Fourth Quarter 2010 Results Conference Call. Earlier this morning, we released our earnings report, a copy of which can be found in the Investors section of our website at rrdonnelley.com.

During this call, we'll refer to forward-looking statements that are subject to uncertainty. For a complete discussion, please refer to the cautionary statement included in our earnings release and further detailed in our annual report on Form 10 K and other filings with the SEC.

Further, we will discuss non GAAP and pro forma financial information. We believe the presentation of non GAAP and pro forma results provides you with useful supplementary information concerning the company's ongoing operations and is an appropriate way for you to evaluate the company's performance. They are, however, provided for informational purposes only. Please refer to the press release and related footnotes for GAAP information and a reconciliation of GAAP to non GAAP information. We also posted to our website, in the Investors section, a description as well as reconciliation of non GAAP measures to which we will refer on this call.

We are joined this morning by Tom Quinlan, Miles McHugh, and Drew Coxhead. I'll now turn the call over to Tom.

Thomas Quinlan

Thank you, Dave, and good morning, everyone. 2010 was a year that validated the decisions we made in 2009. As you remember, 2009 was a year during which economies worldwide were in chaos and businesses and consumers were accelerating changes in how they communicated and preferred to be communicated to. We looked to the strategy that we, as a management team, embraced in 2004 and did not waver from it, even when no one would have blamed us if we had. As a result of how we managed the business in 2009, 2010 became a year that we are very proud of.

The strategic framework that we continue to pursue is built around four elements that we implement as One RR Donnelley. These are: one, continuous improvement. This involves efforts to drive out costs and enhance productivity, not just in response to economic conditions but every working day. Remember, we operate in a very competitive environment that requires us to manage pennies, nickels and dimes for a relentless focus on continuous improvement in order for us to be successful for our stakeholders.

Two, creating integrated solutions for our customers that draw on multiple product and service offerings. We have built and continued to expand upon an ability to move customers' projects and programs seamlessly across the breadth of our supply chain, all under one physical or virtual RR Donnelley roof. We believe that we already are the best at physical content distribution. Our goal now is also to be the best at digital logistics, in management and distribution of information into a variety of media. And we feel we are already well down the road of being one of the best at digital logistics.

Three, maximizing the value of our geography product and service diversity. No customer relationship is static. But when a customer changes its communication mix or pursues growth in a different part of the country or the world, RR Donnelley is there.

And four, developing innovations. Our comprehensive new product and service development efforts serve a single goal: to continue to distinguish RR Donnelley's offering from commodities and place them into a value-added position that uniquely help customers to achieve their goals.

Our nearly 58,000 employees, which almost matches the number of customers we have, continue to embrace and execute this One RR Donnelley strategy during 2010, which enabled us to achieve three important outcomes. First, we emerged from the economic downturn with positive momentum and the financial strength and flexibility to respond to the best opportunities and adapt to a fast changing business environment.

Second, we widened our lead over our competition in terms of what we can do for our customers. Our ability to deliver superb value to our customers across the breadth of the supply chain is a complex offering that we believe would take years and billions of dollars for any competitor to duplicate.

And third, we continue to add to our portfolio resources, making RR Donnelley's offering even more comprehensive and attractive to our customers. Let me address each of these outcomes individually.

The value of continuing to execute our strategy in the face of a challenging economic environment and a shifting communications environment is reflected by our fourth quarter and full year results. Please note, as you look at our results in our 10 K, which we'll file later today, that our income statement reporting has been expanded as a result of an important trigger. Our revenues from services have passed the 10% of total revenue threshold. We expect that business services will continue to provide an important source of opportunities for revenue growth.

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