RR Donnelley Reports Fourth-Quarter and Full-Year 2010 Results

R.R. Donnelley & Sons Company today reported fourth-quarter net earnings attributable to common shareholders of $27.0 million, or $0.13 per diluted share, on net sales of $2.7 billion compared to a net loss attributable to common shareholders of $79.5 million, or $0.39 per diluted share, on net sales of $2.6 billion in the fourth quarter of 2009. The fourth-quarter net earnings (loss) attributable to common shareholders included pre-tax charges for restructuring ($21.5 million) and impairment ($61.5 million, non-cash) and acquisition-related costs ($5.6 million) totaling $88.6 million in 2010 compared to charges for restructuring ($17.5 million) and impairment ($131.1 million, non-cash) and acquisition-related costs ($0.1 million) totaling $148.7 million in 2009. Additional details regarding the nature of these charges are included in the attached schedules.

The Company believes that certain non-GAAP measures, when presented in conjunction with comparable GAAP (Generally Accepted Accounting Principles) measures, are useful because that information is an appropriate measure for evaluating the Company’s operating performance. Internally, the Company uses this non-GAAP information as an indicator of business performance, and evaluates management’s effectiveness with specific reference to these indicators. These measures should be considered in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

Non-GAAP net earnings attributable to common shareholders totaled $107.2 million, or $0.51 per diluted share, in the fourth quarter of 2010 compared to $95.4 million, or $0.46 per diluted share, in the fourth quarter of 2009. Fourth-quarter non-GAAP net earnings attributable to common shareholders exclude restructuring and impairment charges, acquisition expenses and the write-down of affordable housing investments for both years, as well as income tax expense related to the reorganization of entities within the International segment in 2009. For non-GAAP comparison purposes, the effective tax rate decreased to 10.0% in the fourth quarter of 2010 from 21.1% in the fourth quarter of 2009, primarily as a result of the release of valuation allowances on deferred tax assets. A reconciliation of GAAP net earnings attributable to common shareholders to non-GAAP net earnings attributable to common shareholders is presented in the attached tables.

“We are pleased with our fourth-quarter results and the momentum that we built throughout the year,” said Thomas J. Quinlan III, RR Donnelley’s President and Chief Executive Officer. “During 2010, we saw a significant increase in the number of customers purchasing multiple products and services from us, taking advantage of the breadth and scale that our unique platform offers. As we begin 2011, we continue to focus on achieving top-line growth through our One RR Donnelley global print management strategy, and expect the positive trends achieved in 2010 to continue throughout 2011.”

Business Review
The Company reports its results in two reportable segments: 1) U.S. Print and Related Services and 2) International. The Company reports as Corporate its unallocated expenses associated with general and administrative activities.