Highlights: -- First-Quarter GAAP net earnings from continuing
operations of $114.2 million or $0.52 per diluted share --
First-Quarter Non-GAAP net earnings from continuing operations of
$124.4 million or $0.57 per diluted share -- Reaffirms full-year,
2006 Non-GAAP net earnings per diluted share from continuing
operations guidance of $2.45 to $2.50 CHICAGO, May 2
/PRNewswire-FirstCall/ -- R.R. Donnelley & Sons Company
(NYSE:RRD) today reported first-quarter 2006 net earnings from
continuing operations of $114.2 million or $0.52 per diluted share
on net sales of $2.3 billion compared to net earnings from
continuing operations of $109.2 million or $0.50 per diluted share
on net sales of $1.9 billion in the first quarter of 2005. The
first-quarter 2006 net earnings from continuing operations included
charges for restructuring ($16.2 million) and impairment ($0.4
million) totaling $16.6 million, substantially all associated with
the reorganization of certain operations and the exiting of certain
business activities. Net earnings from continuing operations in the
first quarter of 2005 included charges for restructuring ($10.9
million), impairment ($1.3 million) and integration ($2.5 million)
totaling $14.7 million, primarily related to the integration of the
2004 acquisition of Moore Wallace. The company's effective tax rate
decreased to 35.5% in the first quarter of 2006 from 37.9% in the
first quarter of 2005, primarily reflecting the benefit from a
larger proportion of taxable income being generated in lower tax
jurisdictions. The company recorded a net loss from discontinued
operations of $2.3 million in both the first quarter of 2006 and
the first quarter of 2005. Including discontinued operations, net
earnings were $111.9 million or $0.51 per diluted share in the
first quarter of 2006 compared to net earnings of $106.9 million or
$0.49 per diluted share in the first quarter of 2005. 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 from continuing
operations totaled $124.4 million or $0.57 per diluted share in the
first quarter of 2006 compared to $117.6 million or $0.54 per
diluted share in the first quarter of 2005. Non-GAAP net earnings
from continuing operations exclude restructuring, impairment and
integration charges in the first quarters of both 2006 and 2005. A
reconciliation of GAAP net earnings to non-GAAP net earnings for
these adjustments is presented in the attached tables. "Strong
sales growth across our platform, led by our Integrated Print
Communications and Publishing and Retail Services segments, and
continued cost discipline, generated our strong results during the
first quarter," said Mark A. Angelson, RR Donnelley's Chief
Executive Officer. "Previously announced client contract wins and
renewals continue to impact our results and we are pleased that our
momentum continued during the quarter." Angelson added, "In
addition to the top-line growth in our existing operations, we
supplemented our platform through the acquisition of OfficeTiger,
which was completed last week, further to build on the business
process outsourcing strengths added by last year's acquisition of
the Astron Group. Our strength in business process outsourcing, in
conjunction with our premedia and logistics capabilities, provides
us with an unparalleled service offering that is increasingly
important to our customers." Business Review (Continuing
Operations) Following are the results for the company and each
reportable segment. Summary Net sales in the quarter were $2.3
billion, up 17.7% from the first quarter of 2005. The increase was
primarily due to acquisitions, namely the Astron Group, Asia
Printers Group, Poligrafia, Spencer Press, the Charlestown, Indiana
print operations of Adplex-Rhodes and Critical Mail Continuity
Services, and new customer wins and increased volume with existing
customers in the Integrated Print Communications and Publishing and
Retail Services segments, offset in part by continued pricing
pressure. The gross margin rate decreased to 26.7% in the first
quarter of 2006 from 29.0% in the first quarter of 2005, reflecting
a difference in the allocation of certain expenses between cost of
sales and selling, general and administrative (SG&A) expense,
and pricing pressure, higher energy prices, a shift in business mix
and higher year-over-year paper prices, offset in part by benefits
from cost reduction actions and procurement savings. SG&A
expense as a percentage of net sales decreased to 11.6% in the
first quarter of 2006 from 13.1% in the first quarter of 2005,
reflecting in part a difference in the allocation of certain
expenses between cost of sales and SG&A expense. SG&A
expense in the first quarter of 2005 benefited from a $7.8 million
expense reversal related to a value-added tax refund and collection
of a bankruptcy receivable that was previously written off.
Operating margin decreased to 9.3% in the first quarter of 2006
from 10.2% in the first quarter a year earlier. Excluding
restructuring, impairment and integration charges of $16.6 million
in the first quarter of 2006 and $14.7 million in the first quarter
of 2005, the non-GAAP operating margin for the first quarter of
2006 was 10.1% compared to 11.0% for the first quarter of 2005,
primarily related to the $7.8 million favorable expense reversal in
the first quarter of 2005 related to a value-added tax refund and
collection of a bankruptcy receivable that was previously written
off, pricing pressure, a shift in business mix, higher energy
prices and higher paper prices. Reconciliations of GAAP operating
income and margin to non-GAAP operating income and margin are
presented in the attached tables. Segments The company reports its
results in four reportable segments: 1) Publishing and Retail
Services, 2) Integrated Print Communications, 3) Forms and Labels
and 4) Corporate. The Publishing and Retail Services segment
includes: our 1) magazine, catalog and retail, 2) directories, 3)
book, 4) Europe, 5) Asia, 6) logistics and 7) premedia businesses.
Net sales for the Publishing and Retail Services segment increased
13.4% to $1.1 billion from the first quarter of 2005 primarily due
to sales increases from all businesses within the segment and the
acquisitions of the Asia Printers Group, Spencer Press, the
Charlestown, Indiana print operations of Adplex-Rhodes and
Poligrafia. The segment's operating margin, which was negatively
impacted by restructuring and integration charges of $6.6 million
and $1.8 million in the first quarters of 2006 and 2005,
respectively, was 13.5% in the first quarter of 2006 compared to
15.5% in the first quarter of 2005. Operating margin benefited, in
the first quarter of 2005, from the $7.8 million favorable expense
reversal related to a value-added tax refund and collection of a
bankruptcy receivable that was previously written off. Excluding
restructuring and integration charges, the segment's non-GAAP
operating margin for the first quarter of 2006 was 14.1% compared
to 15.7% in the first quarter of 2005, primarily related to the
$7.8 million favorable expense reversal in the first quarter of
2005 related to a value-added tax refund and collection of a
bankruptcy receivable that was previously written off and higher
energy prices. While higher paper prices decreased operating margin
percentages slightly, they had no material impact on operating
income, as price increases largely were passed directly through to
customers. Productivity improvements more than offset pricing
pressure. The Integrated Print Communications segment includes: our
1) direct mail and business communications services, 2) financial
print, 3) short-run commercial print, and 4) the Astron Group
businesses. Net sales for the Integrated Print Communications
segment increased 36.7% to $727.3 million from the first quarter of
2005, primarily due to the acquisition of the Astron Group as well
as sales growth in our financial print, short-run commercial print
and direct mail and business communication services businesses. The
segment's operating margin, which was negatively impacted by
restructuring, impairment and integration charges of $3.0 million
and $4.5 million in the first quarters of 2006 and 2005,
respectively, decreased to 10.5% in the first quarter of 2006 from
12.1% in the first quarter of 2005. Excluding restructuring,
impairment and integration charges, the segment's non-GAAP
operating margin decreased to 10.9% in the first quarter of 2006
from 13.0% in the first quarter of 2005. This decrease was due to
mix shift to lower margin businesses and incremental non-cash
depreciation and purchase accounting- related amortization expenses
associated with the acquisition of the Astron Group. The Forms and
Labels segment includes: our 1) forms, 2) labels, 3) office
products, 4) Latin America and 5) Canada businesses. Net sales for
the segment increased 3.3% to $425.9 million in the first quarter
of 2006 from the first quarter of 2005, primarily due to favorable
foreign exchange rates and increased volume in our Latin America
and Canada businesses. The segment's operating margin, which was
negatively impacted by restructuring, impairment and integration
charges of $1.0 million and $4.2 million in the first quarters of
2006 and 2005, respectively, increased to 7.9% in the first quarter
of 2006 from 7.8% in the first quarter of 2005. Excluding
restructuring, impairment and integration charges, non-GAAP
operating margin decreased to 8.1% in the first quarter of 2006
from 8.8% in the first quarter of 2005, primarily due to continued
pricing pressure, offset in part by increased sales volume and the
benefits of our productivity efforts. Corporate operating expenses
decreased to $48.4 million in the first quarter of 2006 from $52.0
million in the first quarter of 2005. Excluding restructuring and
integration charges of $6.0 million and $4.2 million in the first
quarters of 2006 and 2005, respectively, corporate operating
expenses decreased $5.4 million to $42.4 million from the first
quarter of the prior year primarily due to lower employee-related
costs, offset in part by additional investment in information
technology. Outlook -- 2006 Full-Year Non-GAAP EPS from Continuing
Operations Reaffirmed For the full year of 2006, RR Donnelley is
projecting non-GAAP net earnings per diluted share from continuing
operations to be in the range of $2.45 to $2.50. This guidance
includes the expected dilutive impact from both the acquisition of
OfficeTiger and the adoption of SFAS 123 (R) - Share-Based Payment,
but assumes no shares repurchased under the authorization available
to the company. The non-GAAP effective tax rate for 2006 is
expected to be approximately 35.5%. GAAP net earnings per diluted
share from continuing operations, in 2006, may include
restructuring, impairment and integration charges, the resolution
of certain tax items and other items that are not currently
determinable, but may be significant. For that reason, the company
is unable to provide GAAP net earnings estimates at this time.
Conference Call RR Donnelley will host a conference call to discuss
its first quarter results on Tuesday, May 2, 2006, at 10:00 am
Eastern Time (9:00 am Central Time). The company will provide a
live webcast of the earnings conference call, which can be accessed
via the Internet at http://www.rrdonnelley.com/ ("Investors").
Individuals wishing to participate can join the conference call by
dialing (706) 634-1139. A webcast replay will be archived on the
Company's web site for 30 days after the call. In addition, a
telephonic replay of the call will be available for seven days at
(706) 645-9291, passcode 8087444. About RR Donnelley RR Donnelley
(NYSE:RRD) is the world's premier full-service provider of print
and related services, including business process outsourcing.
Founded more than 140 years ago, the company provides solutions in
commercial printing, direct mail, financial printing, print
fulfillment, forms and labels, logistics, call centers,
transactional print-and-mail, print management, online services,
digital photography, color services, and content and database
management to customers in the publishing, healthcare, advertising,
retail, technology, financial services and many other industries.
The largest companies in the world and others rely on RR
Donnelley's scale, scope and insight through a comprehensive range
of online tools, variable printing services and market-specific
solutions. For more information, visit the company's web site at
http://www.rrd.com/ . Use of Forward-Looking Statements This news
release contains "forward-looking statements" as defined in the
U.S. Private Securities Litigation Reform Act of 1995. Readers are
cautioned not to place undue reliance on these forward-looking
statements and any such forward-looking statements are qualified in
their entirety by reference to the following cautionary statements.
All forward-looking statements speak only as of the date of this
news release and are based on current expectations and involve a
number of assumptions, risks and uncertainties that could cause the
actual results to differ materially from such forward-looking
statements. The company does not undertake to and specifically
declines any obligation to publicly release the results of any
revisions to these forward-looking statements that may be made to
reflect future events or circumstances after the date of such
statement or to reflect the occurrence of anticipated or
unanticipated events. The factors that could cause material
differences in the expected results of RR Donnelley include,
without limitation, the following: the successful execution and
integration of acquisitions and the performance of the Company's
businesses following acquisitions; the ability to implement
comprehensive plans for the execution of cross-selling, cost
containment, asset rationalization and other key strategies;
competitive pressures in all markets in which the company operates;
factors that affect customer demand, including changes in postal
rates and postal regulations, changes in the capital markets,
changes in advertising markets, the rate of migration from paper-
based forms to digital format, customers' budgetary constraints and
customers' changes in short-range and long-range plans; and other
risks and uncertainties described in RR Donnelley's periodic
filings with the Securities and Exchange Commission (SEC). Readers
are strongly encouraged to read the full cautionary statements
contained in RR Donnelley's filings with the SEC. RR Donnelley
disclaims any obligation to update or revise any forward-looking
statements. R. R. Donnelley and Sons Company Consolidated Balance
Sheets As of March 31, 2006 and December 31, 2005 (UNAUDITED) (In
millions, except per share data) At March 31, 2006 At December 31,
2005 Assets Current Assets Cash and cash equivalents $320.7 $366.7
Receivables, less allowance for doubtful accounts 1,505.4 1,529.1
Inventories 506.5 481.4 Prepaid expenses and other current assets
87.4 67.5 Deferred income taxes 167.0 177.0 Total Current Assets
2,587.0 2,621.7 Property, plant and equipment - net 2,138.8 2,138.6
Goodwill 2,753.1 2,750.7 Other intangible assets - net 1,093.5
1,094.3 Prepaid pension cost 514.3 514.1 Other noncurrent assets
295.7 254.3 Assets of discontinued operations - - Total Assets
$9,382.4 $9,373.7 Liabilities Current Liabilities Accounts payable
665.7 718.1 Accrued liabilities 829.6 826.9 Short-term debt 269.8
269.1 Total Current Liabilities 1,765.1 1,814.1 Long-term debt
2,351.5 2,365.4 Postretirement benefits 332.5 330.6 Deferred income
taxes 589.3 596.8 Other noncurrent liabilities 559.0 541.2
Liabilities from discontinued operations 4.1 1.4 Total Liabilities
$5,601.5 $5,649.5 Shareholders' Equity Preferred stock, $1.00 par
value - - Authorized shares: 2.0; Issued: None Common stock, $1.25
par value Authorized shares: 500.0 Issued shares: 243.0 in 2006 and
2005 303.7 303.7 Additional paid-in-capital 2,856.5 2,888.2
Retained earnings 1,495.1 1,439.4 Accumulated other comprehensive
loss (95.4) (90.2) Unearned compensation (11.4) (44.9) Treasury
stock, at cost, 25.5 shares in 2006 (2005 -25.5 shares) (767.6)
(772.0) Total Shareholders' Equity $3,780.9 $3,724.2 Total
Liabilities and Shareholders' Equity $9,382.4 $9,373.7 R. R.
Donnelley & Sons Company Consolidated Statements of Operations
Three Months Ended March 31, 2006 and 2005 (In millions, except per
share data) (UNAUDITED) Three months ending March 31, ADJUSTMENTS
ADJUSTMENTS 2006 TO NON- 2006 2005 TO NON- 2005 GAAP GAAP NON-GAAP
GAAP GAAP NON-GAAP Net sales $2,266.9 - $2,266.9 $1,926.5 -
$1,926.5 Cost of sales (exclusive of depreciation and amortization
shown below) 1,661.5 - 1,661.5 1,367.0 (0.1) 1,366.9 Selling,
general and administrative expense (exclusive of depreciation and
amortization shown below) 262.1 - 262.1 251.5 (2.4) 249.1
Restructuring and impairment charges - net 16.6 (16.6) - 12.2
(12.2) - Depreciation and amortization 114.8 - 114.8 98.7 - 98.7
Total operating expenses 2,055.0 (16.6) 2,038.4 1,729.4 (14.7)
1,714.7 Income from continuing operations 211.9 16.6 228.5 197.1
14.7 211.8 Interest expense - net 34.8 - 34.8 21.1 - 21.1
Investment and other income (expense) - net (0.8) - (0.8) (0.6) -
(0.6) Earnings from continuing operations before income taxes and
minority interest 176.3 16.6 192.9 175.4 14.7 190.1 Income taxes
62.6 6.4 69.0 66.5 6.3 72.8 Minority interest (0.5) - (0.5) (0.3) -
(0.3) Net earnings from continuing operations 114.2 10.2 124.4
109.2 8.4 117.6 Income (loss) from discontinued operations - net of
tax (2.3) 2.3 - (2.3) 2.3 - Net earnings $111.9 $12.5 $124.4 $106.9
$10.7 $117.6 Earnings per share: Basic Net earnings from continuing
operations $0.53 $0.57 $0.51 $0.55 Loss from discontinued
operations, net of tax (0.01) - (0.01) - Net earnings $0.52 $0.57
$0.50 $0.55 Diluted Net earnings from continuing operations $0.52
$0.57 $0.50 $0.54 Loss from discontinued operations, net of tax
(0.01) - (0.01) - Net earnings $0.51 $0.57 $0.49 $0.54 Weighted
average common shares outstanding: Basic 216.5 216.5 215.3 215.3
Diluted 217.8 217.8 217.0 217.0 The company believes that certain
non-GAAP measures, when presented in conjunction with comparable
GAAP 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 this indicator. These
measures should be considered in addition to, not a substitute for,
or superior to, measures of financial performance prepared in
accordance with GAAP. R.R. Donnelley & Sons Company
Reconciliation of GAAP to Non-GAAP Measures IN MILLIONS, EXCEPT PER
SHARE AMOUNTS (UNAUDITED) Three months ended March 31, 2006 Net
Income earnings from per continuing Operating Net diluted
operations margin earnings share GAAP basis measures $211.9 9.4%
$111.9 $0.51 Non-GAAP adjustments: Restructuring and impairment
charges, net (1) 16.6 0.7% 10.2 0.05 Integration charges (2) - - -
- Income tax adjustments - - Net loss from discontinued operations
(3) 2.3 0.01 Total non-GAAP adjustments 16.6 0.7% 12.5 0.06
Non-GAAP measures $228.5 10.1% $124.4 $0.57 Three months ended
March 31, 2005 Net Income earnings from Net per continuing
Operating earnings diluted operations margin (loss) share GAAP
basis measures $197.1 10.2% $106.9 $0.49 Non-GAAP adjustments:
Restructuring and impairment charges, net (1) 12.2 0.6% 7.5 0.03
Integration charges (2) 2.5 0.2% 1.5 0.01 Income tax adjustments
(0.6) - Net loss from discontinued operations (3) 2.3 0.01 Total
non-GAAP adjustments 14.7 0.8% 10.7 0.05 Non-GAAP measures $211.8
11.0% $117.6 $0.54 (1) Restructuring and impairment: Operating
results for the three months ended March 31, 2006 and 2005 were
affected by the following restructuring and impairment charges: -
2006 included $13.5 million for employee termination costs
substantially all of which were associated with restructuring
actions resulting from the reorganization of certain operations and
the exiting of certain business activities; $2.7 million of other
restructuring costs, primarily lease termination costs; and $0.4
million for impairment of other long-lived assets. - 2005 included
$3.2 million for employee termination costs primarily related to
the elimination of duplicative administrative functions resulting
from the Moore Wallace acquisition and other actions to restructure
operations; $7.7 million of other restructuring costs, primarily
related to lease termination costs and relocation costs associated
with the Moore Wallace acquisition and the exiting of a U.K.
financial print facility, and $1.3 million of impairment of
long-lived assets primarily related to the abandonment of assets in
the Forms and Labels segment. (2) Integration charges: Operating
income included post-acquisition integration charges of $2.5
million in the three months ended March 31, 2005 related to the
Moore Wallace acquisition. (3) Net loss from discontinued
operations: Net loss from discontinued operations in 2006 primarily
reflects costs resulting from a subtenant bankruptcy related to a
facility previously occupied by the Company's package logistics
business. In 2005, the net loss from discontinued operations
primarily includes the results of the Peak Technologies business.
R. R. Donnelley & Sons Company Segment GAAP to Non-GAAP
Operating Income and Margin Reconciliation For the three months
ended March 31, 2006 and 2005 $ IN MILLIONS (UNAUDITED) Integrated
Publishing Print Forms and Retail Communic- and Services ations
Labels Corporate Consolidated Three Months Ended March 31, 2006 *
Net sales $1,113.7 $727.3 $425.9 $- $2,266.9 Operating expense
963.1 651.1 392.4 48.4 2,055.0 Operating income (loss) 150.6 76.2
33.5 (48.4) 211.9 Operating margin % 13.5% 10.5% 7.9% nm 9.3%
Non-GAAP adjustments Restructuring charges 6.6 2.6 1.0 6.0 16.2
Impairment charges - 0.4 - - 0.4 Integration charges - - - - -
Total non-GAAP adjustments 6.6 3.0 1.0 6.0 16.6 Operating income
(loss) excluding restructuring, impairment and integration charges
$157.2 $79.2 $34.5 $(42.4) $228.5 Operating margin excluding
restructuring, impairment and integration charges % 14.1% 10.9%
8.1% nm 10.1% Depreciation and amortization 59.0 33.3 14.6 7.9
114.8 Capital expenditures 65.6 17.8 4.2 3.3 90.9 Three Months
Ended March 31, 2005 * Net sales $982.3 $532.0 $412.2 $- $1,926.5
Operating expense 829.8 467.5 380.1 52.0 1,729.4 Operating income
(loss) 152.5 64.5 32.1 (52.0) 197.1 Operating margin % 15.5% 12.1%
7.8% nm 10.2% Non-GAAP adjustments Restructuring charges 1.3 4.3
2.6 2.7 10.9 Impairment charges - 0.1 1.2 - 1.3 Integration charges
0.5 0.1 0.4 1.5 2.5 Total non-GAAP Adjustments 1.8 4.5 4.2 4.2 14.7
Operating income (loss) excluding restructuring, impairment and
integration charges $154.3 $69.0 $36.3 $(47.8) $211.8 Operating
margin excluding restructuring, impairment and integration charges
% 15.7% 13.0% 8.8% nm 11.0% Depreciation and amortization 51.6 23.5
16.1 7.5 98.7 Capital expenditures 78.2 5.8 5.1 4.7 93.8 * During
the first quarter of 2006, management changed the Company's
reportable segments to better reflect the current organizational
structure. As a result, the Company's print fulfillment business is
reported in the Publishing and Retail Services segment (previously
reported in the Forms & Labels segment) and the Company's
Canadian outsourcing business (previously reported in the
Integrated Print Communications segment) and Canadian logistics
business (previously reported in the Publishing and Retail Services
segment) are reported in the Forms and Labels segment. All prior
periods have been reclassified to this current reporting structure.
The Company believes that certain non-GAAP measures, when presented
in conjunction with comparable GAAP 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
this indicator. These measures should be considered in addition to,
not a substitute for, or superior to, measures of financial
performance prepared in accordance with GAAP. R. R. Donnelley &
Sons Company Condensed Consolidated Statements of Cash Flows For
the three months ended March 31, 2006 and 2005 IN MILLIONS
(UNAUDITED) 2006 2005 Operating Activities Net earnings $111.9
$106.9 Net (income) loss from discontinued operations 2.3 2.3
Adjustment to reconcile net earnings (loss) to cash provided by
operating activities 150.4 141.4 Changes in operating assets and
liabilities (155.0) (93.4) Net cash provided by operating
activities of continuing operations 109.6 157.2 Net cash (used for)
provided by operating activities of discontinued operations (0.6)
(3.3) Net cash provided by operating activities 109.0 153.9 Net
cash used for investing activities of continuing operations (90.1)
(84.8) Net cash used for investing activities (90.1) (84.8) Net
cash used for financing activities of continuing operations (65.8)
(332.1) Net cash used for financing activities (65.8) (332.1)
Effect of exchange rates on cash and cash equivalents 0.9 (7.0) Net
decrease in cash and cash equivalents (46.0) (270.0) Cash and cash
equivalents at beginning of period 366.7 641.8 Cash and cash
equivalents at end of period $320.7 $371.8 R.R. Donnelley &
Sons Company Revenue Reconciliation Reported to Pro Forma For the
three months ended March 31, 2006 and 2005 $ IN MILLIONS
(UNAUDITED) Adjustment for net sales of Reported net acquired Pro
forma net sales businesses sales Three Months Ended March 31, 2006
Publishing and Retail Services $1,113.7 $- $1,113.7 Integrated
Print Communications 727.3 - $727.3 Forms and Labels 425.9 - $425.9
Corporate - $- Consolidated $2,266.9 $- $2,266.9 Three Months Ended
March 31, 2005 Publishing and Retail Services $982.3 $57.2 $1,039.5
Integrated Print Communications 532.0 144.1 $676.1 Forms and Labels
412.2 $412.2 Corporate $- Consolidated $1,926.5 $201.3 $2,127.8 Net
sales change Publishing and Retail Services 13.4% 7.1% Integrated
Print Communications 36.7% 7.6% Forms and Labels 3.3% 3.3%
Corporate Consolidated 17.7% 6.5% The reported results of the
company include the results of acquired businesses from the
acquisition date forward. The company has provided this schedule to
reconcile reported net sales for the three months ended March 31,
2006 and 2005 to pro forma net sales as if the acquisitions took
place at the beginning of the respective periods. Because no
businesses were acquired in the quarter ended March 31, 2006, no
adjustment to reported net sales is included. For the quarter ended
March 31, 2005, the adjustment for net sales of acquired businesses
reflects the net sales of the Astron Group (acquired June 20,
2005), Asia Printers Group (acquired July 7, 2005), the
Charlestown, Indiana print facility acquired from Adplex-Rhodes
(acquired August 18, 2005), Poligrafia (acquired September 5, 2005)
and Spencer Press (acquired November 9, 2005) for the three months
ended March 31, 2005 as if the respective acquisitions had occurred
on January 1, 2005. DATASOURCE: R.R. Donnelley & Sons Company
CONTACT: Web site: http://www.rrdonnelley.com/ http://www.rrd.com/
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