RR Donnelley Reports Q4 Net Loss and Full-Year Results

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.

Summary
Net sales in the quarter were $2.7 billion, down $61.2 million, or 2.2 percent, from the fourth quarter of 2011 due to volume declines, price erosion and a 50 basis point unfavorable impact of lower pass-through paper sales. Gross margin of 22.0 percent in the fourth quarter of 2012 declined from 22.9 percent in the fourth quarter of 2011 as a smaller gain on pension curtailment in 2012 ($28.9 million less than in 2011), pricing pressure and unfavorable pricing on by-products more than offset a favorable product mix and productivity improvements. SG&A expense as a percent of net sales in the fourth quarter of 2012 improved to 10.9 percent from 11.1 percent in the fourth quarter of 2011, primarily due to contingent compensation on a prior acquisition incurred in the fourth quarter of 2011. The operating loss in the fourth quarter of 2012 of $841.8 million, which was impacted by impairment and restructuring charges, the pension curtailment gain and acquisition-related expenses totaling $1.0 billion, compared to an operating loss in the fourth quarter of 2011 of $317.1 million, which included impairment and restructuring charges, a pension curtailment gain, the contingent compensation and acquisition-related expenses totaling $483.9 million.