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RR Donnelley Revenues Continue to Decline

Net sales in the quarter were $2.5 billion, down $94.8 million, or 3.6%, from the second quarter of 2011. Pro forma for acquisitions, net sales decreased 4.0%, as a 164 basis point unfavorable impact of changes in foreign exchange rates, volume declines in certain product offerings, price erosion and a 53 basis point unfavorable impact due to lower pass-through paper sales more than offset volume growth in certain product offerings. Gross margin of 23.5% in the second quarter of 2012 declined from 24.5% in the second quarter of 2011 as an unfavorable product mix, volume declines, unfavorable pricing on by-products and pricing pressure more than offset lower pension expense and productivity improvements.

Net sales for the U.S. Print and Related Services segment decreased 3.9% from the second quarter of 2011 to $1.8 billion in the second quarter of 2012. Pro forma for acquisitions, net sales in the segment decreased 4.5%, as volume declines across most product offerings, lower pass-through paper sales of $21.6 million or 112 basis points, and continued pricing pressure across the segment more than offset volume increases in office products and logistics. The segment’s operating income of $165.7 million in the second quarter of 2012, which was negatively impacted by charges for restructuring and impairment of $26.1 million, increased $32.9 million from operating income of $132.8 million in the second quarter of 2011, which included charges for restructuring and impairment of $65.1 million.

Net sales for the International segment of $682.6 million decreased $19.9 million, or 2.8%, from the second quarter of 2011, inclusive of a $43.3 million (616 basis points) unfavorable impact from changes in foreign exchange rates. The balance of the change in net sales was driven by volume growth in business process outsourcing, global turnkey and Asia and higher pass-through paper sales in Asia ($7.5 million or 107 basis points), which were only partially offset by volume declines in Europe, Canada and Latin America and the impact of continued pricing pressure across certain offerings within the segment.

To offset the declining print business the company is moving into digital services, however no information was given how much of the business is digital versus print.

On Aug. 15, 2012 the company announced that it has completed its previously announced purchase of EDGAR Online, a leading provider of disclosure management services, financial data and enterprise risk analytics software and solutions for both corporate and investment professionals.

Source:  Company Earnings Release

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