RR Donnelley Records Drop in Earnings on Higher Sales

Excluding restructuring and impairment charges and acquisition expenses, non-GAAP operating margin declined to 7.3 percent in the second quarter of 2011 from 7.9 percent in the second quarter of 2010. Changes in foreign exchange rates, primarily due to export sales from certain international operations, and higher pass-through paper sales unfavorably impacted non-GAAP operating margin by approximately 29 basis points. The remainder of the margin decline was primarily due to lower volume, continued pricing pressure and higher unallocated Corporate costs for pension and other benefits-related expenses, which more than offset the impact of productivity initiatives and lower variable compensation expense.