RR Donnelley Reports Higher Earnings on Slight Sales Decline

Segments

Net sales for the U.S. Print and Related Services segment decreased 3.1 percent from the first quarter of 2011 to $1.9 billion in the first quarter of 2012. Pro forma for acquisitions, net sales in the segment decreased 3.6 percent, as volume declines in books and directories, variable print and financial print, lower pass-through paper sales and continued pricing pressure across the segment more than offset the customer rebate adjustment and volume increases in logistics. The segment's operating income of $139.2 million in the first quarter of 2012, which was negatively impacted by charges for restructuring and impairment of $39.7 million, decreased $2.7 million from operating income of $141.9 million in the first quarter of 2011, which included charges for restructuring and impairment of $38.2 million. The segment's non-GAAP operating margin of 9.5 percent in the first quarter of 2012 improved 20 basis points from the first quarter of 2011, as productivity improvements, the customer rebate adjustment, lower depreciation and amortization, and lower variable compensation expense more than offset volume declines, an unfavorable product mix, pricing pressure and a lower recovery on by-products.