R.R. Donnelley & Sons Company reported second-quarter 2012 net earnings attributable to common shareholders of $88.8 million, or $0.49 per diluted share, on net sales of $2.5 billion compared to net earnings of $12.2 million, or $0.06 per diluted share, on net sales of $2.6 billion in the second quarter of 2011. Second-quarter 2012 net earnings attributable to common shareholders included pre-tax charges for restructuring ($25.7 million) and impairment ($8.3 million, non-cash), a pre-tax loss on an investment of $4.1 million (non-cash), and acquisition-related expenses ($0.5 million), offset by the recognition of previously unrecognized tax benefits ($26.1 million, non-cash). Second-quarter 2011 net earnings attributable to common shareholders included pre-tax charges for restructuring ($51.4 million) and impairment ($24.3 million, non-cash), a loss on debt extinguishment ($68.6 million), and acquisition-related expenses ($0.9 million), partially offset by a pre-tax gain on an investment of $9.8 million (non-cash).

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 $88.5 million, or $0.49 per diluted share, in the second quarter of 2012 compared to $105.6 million, or $0.53 per diluted share, in the second quarter of 2011. Second-quarter non-GAAP net earnings attributable to common shareholders exclude restructuring and impairment charges and acquisition-related expenses and gains and losses on investments for both years as well as the recognition of previously unrecognized tax benefits in 2012 and the loss on debt extinguishment in 2011. For non-GAAP comparison purposes, the effective tax rate increased to 33.9% in the second quarter of 2012 from 19.5% in the second quarter of 2011, primarily due to the release of reserves related to the resolution of certain state audits and the release of valuation allowances on certain deferred tax assets in the second quarter of 2011. A reconciliation of GAAP net earnings attributable to common shareholders to non-GAAP net earnings attributable to common shareholders is presented in the attached schedules.

"While economic headwinds continue to challenge our top line, the diversity of our product and service offering to a wide range of vertical markets, coupled with our disciplined cost management, enables us to reaffirm our non-GAAP earnings per diluted share guidance in the range of $1.84 to $1.92," said Thomas J. Quinlan III, RR Donnelley's President and Chief Executive Officer. "In addition, we remain on track to deliver full-year operating cash flow less capital expenditures of approximately $500 million, and expect to end the year within our targeted gross leverage range of 2.5x to 3.0x."

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.