RR Donnelley Posts Earnings Increase, Net Sales Decline

CHICAGO—August 1, 2012—R.R. Donnelley & Sons reported second-quarter 2012 net earnings attributable to common shareholders of $88.8 million on net sales of $2.5 billion (down 3.6 percent), compared to net earnings of $12.2 million on net sales of $2.6 billion in the second quarter of 2011.

Operating earnings in the quarter totaled $163.9 million, and were impacted by restructuring and impairment charges and acquisition-related expenses totaling $34.5 million in the second quarter of 2012, compared to operating earnings in the second quarter of 2011 of $116.1 million, which included restructuring and impairment charges and acquisition-related expenses totaling $76.6 million.

Non-GAAP net earnings attributable to common shareholders totaled $88.5 million in the second quarter of 2012, vs. $105.6 million in the second quarter of 2011.

Excluding restructuring and impairment charges and acquisition-related expenses, non-GAAP operating income increased from $192.7 million to $198.4 million in the second quarter of 2012 and non-GAAP operating margin improved to 7.8 percent in the second quarter of 2012 from 7.3 percent in the second quarter of 2011. Lower pension expense, productivity improvements and lower depreciation and amortization more than offset an unfavorable product mix, lower volume, continued pricing pressure and unfavorable pricing on by-products.

The company reports its results in two reportable segments: 1) U.S. Print and Related Services and 2) International.

Segments

Net sales for the U.S. Print and Related Services segment decreased 3.9 percent from the second quarter of 2011 to $1.8 billion in the second quarter of 2012. Pro forma for acquisitions, net sales in the segment decreased 4.5 percent, as volume declines across most product offerings, lower pass-through paper sales of $21.6 million or 112 basis points, and continued pricing pressure across the segment more than offset volume increases in office products and logistics.

The segment’s operating income of $165.7 million in the second quarter of 2012, which was negatively impacted by charges for restructuring and impairment of $26.1 million, increased $32.9 million from operating income of $132.8 million in the second quarter of 2011, which included charges for restructuring and impairment of $65.1 million.

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