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R.R. Donnelley & Sons Company
- Commercial Printers -
Category Directory
(312)
326-8000
77
West Wacker Drive
Chicago, IL 60601
www.rrdonnelley.com
Sales
$4.8
billion
Business Description
RR Donnelley prepares, produces and delivers integrated communications
services that efficiently and effectively produce, manage and deliver our
customers’ content, regardless of the communications medium. While our print
capabilities remain the foundation of the company, our recent focus on
expanding our range of offerings with value-added services allows us to
create additional value for our customers.
We provide solutions designed to enhance the effectiveness of our customers’
communications. Our services include:
· Content creation—to provide creative design services to maximize the
impact of communications and improve response rates. In addition to our
in-house capabilities, alliances with best-in-class providers complement our
service offerings.
· Digital content management—to help our customers leverage their content to
reach end-users through multiple marketing channels. Through our Premedia
Technologies Services (Premedia), we digitally capture content, convert it
to the appropriate format and channel it to multiple communications media
including print and the Internet.
· Production—to drive results for our customers cost-effectively through
print or the Internet. Our manufacturing operations around the world offer a
full range of capabilities and are networked to quickly produce large
printing jobs with identical specifications. We also are able to version
printed content to reach targeted audiences.
· Distribution—to deliver our customers’ words and images efficiently and
reliably through print or the Internet. RR Donnelley Logistics (Logistics)
delivers printed products and packages to the U.S. Postal Service (USPS),
saving our customers significant time and money. We also offer a full range
of services to deliver value, maximize content effectiveness, enhance our
clients’ businesses and build their customer relationships via the Internet.
Our 139-year history as a printing industry leader positions us well for the
future. We expect print advertising to remain among the most cost-effective
ways for our customers to deliver their messages and generate revenue as
they use words and images to inform, educate, entertain and sell to their
audiences.
We believe that print will remain integral to successful marketing given its
unique capabilities, such as portability and high-quality graphics that
cannot be duplicated by other communications methods. We also believe that
the nature of print will continue to evolve. The ability of print to be
targeted, timely, flexible and integrated with other communications media
will become even more critical.
End Market Descriptions
We operate primarily in the commercial print portion of the printing
industry, with related service offerings designed to offer customers
complete solutions for communicating their messages to targeted audiences.
While our manufacturing plants, financial service centers and sales offices
are located throughout the U.S. and selected international markets, the
supporting technologies and knowledge base are common. Our locations have a
range of production capabilities to serve our customers and end markets. We
manufacture products with the operational goal of optimizing the efficiency
of the common manufacturing and distribution platforms. As a result, most
plants produce work for customers in two or three of our end markets.
The following describes the end markets we serve:
Magazines, Catalogs and Retail RR Donnelley is a leader in the North
American magazine, catalog and retail markets. These markets are
characterized by demand for large, cost-effective print runs with
opportunity for differentiation among competitors through services such as
Premedia and Logistics. Our U.S. customers include the majority of the top
10 magazine titles and a majority of the largest consumer catalog companies
and retailers. Contracts typically span from three to five years.
We are also a leader in providing short-run publishers, catalogers and
associations with comprehensive communications solutions. We serve customers
with highly targeted audiences and typical production runs of 15,000 to
200,000 copies. We offer full-service and cost-effective solutions for
business-to-business and consumer magazine and catalog publishers, as well
as journal, association and academic publishers.
Telecommunications RR Donnelley is a worldwide leader in the telephone
directory market. We serve the global directory needs of telecommunications
providers, including three of the four U.S. Regional Bell Operating
Companies (SBC, Verizon and Qwest), independent directory publishers such as
Yellow Book, Feist, RH Donnelley and White Directories, and leading
international directory publishers such as Yell and Shanghai Telephone.
Directory contracts typically span five to 12 years, with our current major
contracts expiring between 2006 and 2015.
Book RR Donnelley, the leader in the North American book market, serves the
consumer, religious, educational and specialty book segments. We are a key
services provider for the majority of the top 10 U.S. book publishers and we
typically print more than 50% of The New York Times’ adult best-seller
titles. We also print approximately one-third of all textbooks used in U.S.
classrooms.
Premedia RR Donnelley’s Premedia business partners with customers to
effectively create, manage, prepare and distribute customer content. We
offer services in both conventional and digital photography, creative and
color services, page production, ad management, facilities management and
content management. Integrating these core competencies enables us to help
customers efficiently, consistently and successfully deliver their messages
across multiple channels, including print and the Internet. We leverage our
experience in content production and workflow optimization to link
customers’ creative processes with today’s technologies. Facilities located
in key markets provide close customer contact with nationwide scale-up
capabilities. Premedia’s services are used by leading-edge companies in the
advertising, catalog, corporate, magazine, retail and telecommunications
markets.
Financial RR Donnelley’s financial business, a leader in the U.S. and
international financial services markets, supports the communications needs
of corporations, and their investment banks and law firms, as those
corporations access the global capital markets. We also are a leading
provider of customized communications solutions for investment management,
banking, insurance, and managed care companies.
Our capital markets business is a global leader integral to the capital
raising and regulatory process worldwide. Our global service network,
manufacturing platform and distribution system give us unique advantages in
servicing the capital raising industry, particularly for large financial
transactions, including initial public offerings, mergers and acquisitions.
We serve our corporate, legal and investment banking clients’ needs for
responsiveness and reliability by providing EDGAR expertise, project and
content management, virtual deal management and web-based solutions, and
process insight. During 2003, our self-filing NET.filer solution was
expanded to all Section 16 documents and client education programs were
added to help our clients meet the accelerated and expanded filing
requirements mandated by the U.S. Securities and Exchange Commission (SEC).
Our customized communications solutions business is a leader in the U.S.
investment fund companies market, for which we manage and produce compliance
and marketing communications more efficiently and effectively. We provide an
integrated suite of content and information management, production and
delivery solutions designed to help our clients meet U.S. disclosure
requirements and to generate longer-lasting relationships with their
customers. In 2003, we introduced Document Directorsm, our exclusive
web-based technology platform that enables content to be shared across
multiple communications, supporting enhanced workflow and process
efficiency.
Direct Mail Direct Mail offers expertise in a wide range of direct marketing
print and related services, to guide customers smoothly and cost-effectively
through direct-marketing projects. Our full-service solutions include
content creation, database management, premedia, printing, personalization,
finishing and distribution. We produce highly personalized and sophisticated
direct mail pieces that generate results for our customers.
International We have extended our core competencies for high-quality print
and related services into non-U.S. geographic markets. These markets tend to
be emerging, with favorable demographic trends such as rising education
levels and increasing disposable income. Our operations in Latin America,
Poland and China, where we produce magazines, books, telephone directories
and technology manuals, are reported as “International.” Financial’s
international revenue is included in “Financial.” Directory revenues from
England are included in “Telecommunications.”
Logistics RR Donnelley is one of the largest users of the USPS, handling
over 20 billion print and mail pieces and over 180 million packages each
year. Distribution costs are a significant component of our customers’ cost
structures, and our ability to deliver mail and packages more predictably
and cost-effectively than competitors is a key differentiator. By leveraging
our national network as well as the USPS infrastructure to make the final
delivery to households and businesses, we provide more economical logistics
services to both markets. Through “zone skipping,” greater postal discounts
are obtained, and we provide more economical, reliable and easy-to-use
delivery services for our customers.
In addition to delivering packages and printed material, Logistics also
provides expedited distribution of time-sensitive and secure material
(expedited services). Together, these services help merchandisers and other
businesses manage their supply chains more effectively and at a lower cost.
Commercial printing remains a competitive industry. Consolidation among our
customers and in the printing industry, as well as over-capacity in the
industry as a whole, has put pressure on prices and increased competition
among printers. We compete by leveraging our position and size, generating
continued productivity improvements and enhancing the value we deliver to
our customers by offering them products and services that improve their
effectiveness and reduce their total delivered cost. While we have contracts
with many of our print customers as discussed below, there are many
competing companies and renewal of these contracts is dependent, in part, on
our ability to continue to differentiate ourself from the competition. While
our manufacturing and distribution facilities are well located for the
global, national or regional distribution of our products, competitors in
some areas of the U.S. may have a competitive advantage in some instances
due to such factors as freight rates, wage scales and customer preference
for local services. In addition to location, other important competitive
factors are price and quality, as well as the range of available services.
Demand in several of the end markets served by Print and Logistics is
affected by advertising and consumer spending trends. Historically, our
businesses which serve the Magazines, Catalogs and Retail and Book end
markets generate higher revenues in the second half of the year, driven by
increased advertising pages within magazines, and holiday catalog, retail
and book volumes. These same factors drive higher revenues in the second
half of the year for both our print and package logistics businesses.
Approximately 60% of our total company sales are under term contracts with
customers, with the remainder on a single-order basis. For some customers,
we print and provide related services for different publications under
different contracts. Contracts with our larger customers normally run for a
period of years (usually three to five years, but longer in the case of
contracts requiring significant capital investment) or for an indefinite
period subject to termination on specified notice by either party. These
sales contracts generally provide for price adjustments to reflect price
changes for materials, wages and utilities. No single customer had a
relationship with the company that accounted for 10% or more of our sales in
2003.
The primary raw materials we use in our print businesses are paper and ink.
In 2003, we spent approximately $1.3 billion on raw materials. We are a
large purchaser of paper and our focus is to improve materials performance
and total cost management for our customers, which we believe is a
competitive advantage. We negotiate with leading suppliers to maximize our
purchasing efficiencies, but we do not rely on any one supplier. We have
existing paper supply contracts (at prevailing market prices) to cover
substantially all of our requirements through 2004 and management believes
extensions and renewals of these purchase contracts will provide adequate
paper supplies in the future. Ink and related materials are currently
available in sufficient amounts, and we believe that we will have adequate
supplies in the future. We also coordinate purchasing activity at the local
facility and corporate levels to increase economies of scale.
Our Logistics segment is a large purchaser of transportation services. While
there are currently sufficient sources of these services, the cost of such
services has been affected by fuel prices as well as by changes in
government regulations. We continually work to leverage the volume we give
third-party transportation companies in order to minimize transportation
costs.
Our overriding objectives in the environmental, health and safety areas are
to create sustainable compliance and an injury-free workplace. We believe
that estimated capital expenditures for environmental controls to comply
with federal, state and local provisions, as well as expenditures, if any,
for our share of costs to clean hazardous waste sites that have received our
waste, will not have a material effect on our results of operations or our
competitive position.
As of December 31, 2003, we had approximately 30,000 employees.
Approximately 7,400 employees in our U.S. workforce have been our employees
for 10 to 24 years, and more than 3,100 have been our employees for 25 years
or longer. As of December 31, 2003, we employed approximately 24,000 people
in the U.S., approximately 360, or 2%, of whom were covered by collective
bargaining agreements. In addition, we employed approximately 6,000 people
in our international operations, approximately 1,800, or 30%, of whom were
covered by collective bargaining agreements.
On November 8, 2003, we entered into a combination agreement with Moore
Wallace Incorporated (Moore Wallace), a leading provider of print management
and outsourced communications. Based on the terms of the agreement, a
direct, wholly-owned subsidiary of RR Donnelley will acquire each of the
outstanding common shares of Moore Wallace for 0.63 of a share of common
stock of RR Donnelley. We expect that, upon closing of the transaction, we
will issue approximately 100 million shares of RR Donnelley common stock, as
well as undertake the obligation for the indebtedness of Moore Wallace which
was approximately $900 million as of December 31, 2003. The transaction was
approved by the Boards of Directors of both RR Donnelley and Moore Wallace,
but remains subject to certain closing conditions that include, among
others, the receipt of required approval from both companies’ shareholders
and Ontario Superior Court of Justice approval of a plan of arrangement.
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Consolidated Graphics
Quebecor
R.R. Donnelley & Sons
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