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R.R. Donnelley Reports Q2 Results: Sales Down 11% to $1.1 Billion

Press release from the issuing company

CHICAGO, July 24 -- R.R. Donnelley & Sons Company today announced second quarter 2002 revenues of $1.1 billion, down 11 percent from the year ago period. Diluted earnings per share, excluding one-time items, were 30 cents, a decrease of 6 percent from 32 cents a year ago. Net income, excluding one-time items, was $34 million, down 10 percent from $38 million a year ago. Including one-time items, the company reported earnings per diluted share of 22 cents compared with 5 cents for the year-earlier period. Including one- time items, net income was $25 million, compared with $6 million in 2001. Second quarter 2002 one-time items included restructuring and impairment charges of $16 million ($10 million after-tax, or 8 cents per diluted share). Results were impacted by lower activity levels across most of the company's markets, most significantly in magazines, catalogs and retail. Offsetting much of the volume decline was an aggressive focus on cost reduction. During 2001 and 2002, the company announced several cost reduction efforts intended to reduce the company's annualized cost structure by $160 million by the end of the fourth quarter of 2002 versus levels at the end of 2000. Additional actions being taken are now expected to raise that total to $175 million on an annualized basis. "We are pleased with our progress on two major fronts - reducing costs and investing in our future," said William L. Davis, R.R. Donnelley's chairman, president and chief executive officer. "This dual effort puts tremendous pressure on our employees, and they have responded remarkably, rising to the challenge during these difficult times." The company also affirmed its previously issued guidance for 2002. Anticipating continued weak conditions across its key commercial markets, and a tempered outlook for the domestic capital markets, the company expects earnings per share to range between $1.50 and $1.65, excluding restructuring and impairment charges and other one-time items. Capital spending is expected to range between $250 million and $300 million, also unchanged from previous guidance.