Last week, printer R. R. Donnelley & Sons Co. agreed to end a contract with “a significant customer”, according to a Securities and Exchange Commission filing. The filing did not identify the customer.
According to the filing, the agreement to end the relationship allowed the company “to exit from certain unprofitable operations”. Donnelley will take between $123 million and $130 million in charges as part of the termination agreement.
These charges include $22 million to be paid to the customer during the third quarter; between $42 million and $45 million to be put into an escrow fund during the fourth quarter, which will be available to the customer during first quarter 2011; with the balance, (less between $1 million and $8 million in severance and other costs), to be paid to the customer during the first quarter of 2010.
During its most recent quarter, which ended June 30, the company reported net sales of $2.36 billion during the second quarter of 2009, down from $2.92 billion in second-quarter 2008. The printer’s net income fell from $148.8 million a year ago to $26.2 million.
