RR Donnelley Reports Big Revenue Decline, Small Profit

Summary
Net sales in the quarter were $2.4 billion, down 19.4% from the second quarter of 2008 including a 3.0% negative impact from changes in foreign exchange rates. The remaining decrease was caused by volume declines and continued price pressures across most products and services due to the global economic slowdown. Gross margin decreased to 25.4% in the second quarter of 2009 from 26.7% in the second quarter of 2008 due to price and volume declines and lower by-products recovery, offset in part by the benefits of our continued productivity efforts and lower variable compensation expense. SG&A expense as a percentage of net sales in the second quarter of 2009 increased to 11.6% from 11.1% in the second quarter of 2008 as the impact of the net sales decline and higher acquisition-related expenses more than offset the benefit of productivity efforts. Operating margin, which was negatively impacted by charges for restructuring and impairment of $48.2 million in the second quarter of 2009 and $16.2 million in the second quarter of 2008, as well as acquisition-related expenses of $1.4 million in the second quarter of 2009, decreased to 5.7% in the second quarter of 2009 from 9.5% in the second quarter of 2008.