RR Donnelley Reports Higher Earnings on Slight Sales Decline

Net sales for the International segment of $643.5 million increased slightly from the first quarter of 2011. Volume growth in business process outsourcing, Asia and Latin America and higher pass-through paper sales in Europe were mostly offset by a $19.7 million (307 basis points) unfavorable impact of changes in foreign exchange rates, volume declines in Europe and the impact of continued pricing pressure across the segment. The segment's operating income of $30.6 million in the first quarter of 2012, which was negatively impacted by charges for restructuring and impairment of $5.4 million, decreased $13.5 million from operating income of $44.1 million in the first quarter of 2011, which included charges for restructuring and impairment of $9.2 million. The segment's non-GAAP operating margin declined to 5.6 percent in the first quarter of 2012 from 8.3 percent in the first quarter of 2011 as pricing pressure, wage and other inflationary increases in certain countries and an unfavorable product mix were only partially offset by lower depreciation and amortization and lower variable compensation expense.