8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 5, 2004

R. R. DONNELLEY & SONS COMPANY

(Exact name of Registrant as Specified in Its Charter)

Delaware	1-4694	36-1004130
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
77 West Wacker Drive, Chicago, Illinois		60601
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (312) 326-8000

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Item 7.    Financial Statements and Exhibits.

(c) Exhibits.
99.1	Press Release issued by R.R. Donnelley & Sons Company on August 4, 2004 reporting second quarter, 2004 results.
99.2	Unaudited, pro forma and non-GAAP financial information posted on the R.R. Donnelley & Sons Company website on August 4, 2004.

Item 12.    Results of Operations and Financial Condition.

On August 4, 2004, R.R. Donnelley & Sons Company issued a press release reporting the Company’s results for the second quarter ended June 30, 2004 and posted unaudited, pro forma and non-GAAP financial information on the Company’s website.

The information shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise incorporated by reference into any filing pursuant to the Securities Act of 1933, as amended, or the Exchange Act except as otherwise expressly stated in such a filing.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

R. R. DONNELLEY & SONS COMPANY

Date: August 5, 2004

/S/    SUZANNE S. BETTMAN        

By:                                                                                                           

      Suzanne S. Bettman

Senior Vice President, General Counsel & Assistant Secretary

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EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release issued by R.R. Donnelley & Sons Company on August 4, 2004 reporting second quarter, 2004 results.
99.2	Unaudited, pro forma and non-GAAP financial information posted on the R.R. Donnelley & Sons Company website on August 4, 2004.

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EX-99.1

Exhibit 99.1

RR DONNELLEY NEWS RELEASE        

RR DONNELLEYREPORTS SECOND QUARTER 2004 RESULTS

Second Quarter 2004 Highlights

• GAAP net loss of $12.5 million or $0.06 per share

• Non-GAAP net earnings of $68.6 million or $0.31 per diluted share

• Full-year, non-GAAP guidance increased to $1.55 per diluted share

Chicago – August 4, 2004 – R.R. Donnelley & Sons Company (NYSE:RRD) today reported second quarter 2004 net sales of $2.0 billion and a net loss of $12.5 million or $0.06 per share, compared with net earnings for the second quarter of 2003 of $19.3 million or $0.17 per diluted share. The second quarter 2004 results include restructuring, impairment and integration charges of $133.6 million, comprised of a non-cash impairment charge of $89.1 million ($53.6 million net of tax) related to the pending disposition of our package logistics business and $44.5 million of restructuring ($41.8 million), impairment ($0.1 million) and integration ($2.6 million) charges primarily related to the ongoing integration efforts following our February 27, 2004 acquisition of Moore Wallace. The second quarter of 2003 included restructuring and impairment charges of $5.3 million.

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.

Non-GAAP net earnings for the second quarter of 2004 totaled $68.6 million, or $0.31 per diluted share. Non-GAAP net earnings for this period excluded restructuring, impairment and integration charges. The company used an effective tax rate of 38.3% in calculating non-GAAP net earnings. A reconciliation of GAAP net earnings to non-GAAP net earnings for these adjustments is presented in the attached tables.

“I am pleased with our progress in the second quarter, particularly with the integration of our acquisition of Moore Wallace, acquisition-related and other cost savings achievements, the near 7% top-line growth in the Publishing and Retail Services segment and the recent CIGNA cross-platform win,” said Mark A. Angelson, RR Donnelley’s Chief Executive Officer. “We are benefiting from a strengthening economy, but we are also demonstrating that our platform can be leveraged to deliver superior products and services while offering cost savings to our clients.”

“Our recent announcement of our agreement to sell the package logistics business is an important step for us. The sale will allow us to exit a non-core business that has required considerable management time in the past, and the continued ownership of which would be inconsistent with our strategic and financial goals. At the same time, we retain control over the distribution of our printed material.”

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RR Donnelley Reports Second Quarter 2004 Results

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Angelson added, “While much work lies ahead, this quarter’s results continue to demonstrate the commitment and performance of RR Donnelley’s employees and the vast potential of the new RR Donnelley platform.”

Business Review

RR Donnelley’s acquisition of Moore Wallace was completed on February 27, 2004. The reported financials for the company, therefore, do not include the results of Moore Wallace in 2003 and approximately the first two months of 2004. Following are the results for the company and each reportable segment.

Summary

Net sales in the quarter were $2.0 billion, up 78% from the same quarter in 2003, primarily as a result of the acquisition of Moore Wallace. Gross margin improved to 25.3% from 22.3% in last year’s second quarter, primarily due to the benefits achieved from restructuring and cost reduction actions. Selling, general and administrative expenses, as a percentage of net sales, increased from 11.5% in the second quarter of 2003 to 13.3% in the second quarter of 2004, primarily as a result of increased employee incentive costs and increased postretirement, insurance and litigation provisions. Increased restructuring, impairment and integration charges in the second quarter of 2004 relative to the second quarter of 2003 negatively impacted operating margin. Operating margin for the quarter was 0.3%, compared to 4.3% for last year’s second quarter.

Excluding restructuring, impairment and integration charges in the second quarter of both years, non-GAAP operating margin for the second quarter of 2004 was 6.9% compared to 4.7% for the second quarter last year, primarily as a result of increased volume in our Publishing and Retail Services segment and the benefits of cost reduction actions. Reconciliations of operating income and margin to non-GAAP operating income and margin are presented in the attached tables.

Segments

During the second quarter, the company realigned its segments and now reports its results, for all periods presented, in five reportable segments, 1) Publishing and Retail Services, 2) Integrated Print Communications and Global Solutions, 3) Forms and Labels, 4) Logistics and 5) Corporate.

The Publishing and Retail Services segment includes 1) magazine, catalog and retail, 2) directories and 3) premedia. Net sales for the Publishing and Retail Services segment increased 6.7% to $550.8 million due to volume increases across all businesses in the segment. Operating margin declined by approximately 150 basis points to 7.0% in the second quarter of 2004 from the second quarter of 2003, primarily due to an increase in restructuring and impairment charges, which were $15.3 million in the second quarter of 2004 and $1.8 million in the second quarter of 2003.

Excluding restructuring and impairment charges, increased volume and lower selling and administrative costs resulted in operating margin expansion to 9.8% in the second quarter of 2004 from 8.9% in the second quarter of 2003.

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RR Donnelley Reports Second Quarter 2004 Results

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The Integrated Print Communications and Global Solutions segment includes 1) financial print, 2) book, 3) direct mail, 4) business communications services, 5) short-run commercial print, 6) Europe and 7) Asia. Net sales for the Integrated Print Communications and Global Solutions segment more than doubled to $765.5 million from the second quarter of 2003, primarily as a result of the acquisition of Moore Wallace ($364.0 million) as well as increased sales in financial print and international markets. Operating margin, which was negatively impacted by restructuring and integration charges of $10.8 million in the second quarter of 2004 and restructuring and impairment charges of $2.5 million in the second quarter of 2003, increased approximately 160 basis points to 12.3% in the second quarter of 2004. Excluding restructuring, impairment and integration charges, operating margin increased to 13.7% in the second quarter of 2004 from 11.3% in the second quarter of 2003, primarily as a result of increased sales volume and the benefits from restructuring and cost reductions in the financial print business.

The Forms and Labels segment includes 1) forms, 2) labels, 3) Peak and 4) Latin America. Net sales for the Forms and Labels segment increased to $478.7 million in the second quarter of 2004 from $32.6 million in the second quarter of 2003, primarily as a result of the acquisition of Moore Wallace. The forms and labels business continued to be negatively impacted by electronic substitution for multi-part paper forms. Operating margin, which was negatively impacted by restructuring and integration charges of $5.2 million in the second quarter of 2004 and $1.0 million in the second quarter of 2003, increased to 7.4% from a loss in the prior year’s second quarter. Excluding restructuring and integration charges, operating margin increased to 8.4% in the second quarter of 2004 from a loss in the second quarter of 2003, primarily as a result of the acquisition of Moore Wallace and improved performance in Latin America.

The Logistics segment includes 1) print logistics and 2) package logistics. Net sales for the Logistics segment increased 8.8% to $233.8 million due to the acquisition of Moore Wallace, which more than offset volume declines in the package logistics business, resulting primarily from the shutdown of Momentum Logistics, Inc.’s business-to-business activities. During the second quarter of 2004, Logistics had an operating loss of $82.0 million. This reflected restructuring and impairment charges totaling $91.5 million, of which $89.1 million ($53.6 million net of tax) was a non-cash impairment charge related to the pending disposition of our package logistics business. Excluding restructuring and impairment charges, operating margin increased to 4.1% in the second quarter of 2004 from 0.5% in the second quarter of 2003, primarily as a result of benefits from cost reduction actions and improved efficiency.

Corporate operating expenses increased by $47.1 million from the second quarter of 2003 to $78.9 million in the second quarter of 2004. The increase is primarily attributable to the acquisition of Moore Wallace, restructuring and integration charges of $10.8 million, increased employee incentive costs and increased insurance and litigation provisions.

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RR Donnelley Reports Second Quarter 2004 Results

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Six-Month Results

For the first six months of 2004, the company reported net sales of $3.5 billion and a net loss of $71.3 million or $0.39 per share, compared with net earnings of $25.1 million or $0.22 per diluted share for the first six months of 2003. The first six month’s results of 2004 include restructuring, impairment and integration charges of $251.9 million, comprised of a non-cash impairment charge of $89.1 million ($53.6 million net of tax) related to the pending disposition of our package logistics business and $162.8 million in restructuring ($64.1 million), impairment ($27.9 million) and integration ($70.8 million) charges primarily related to the ongoing integration efforts following our February 27, 2004 acquisition of Moore Wallace. During the first six months of 2004, the company recognized a gain on the sale of an investment of $15.3 million (pre-tax) and a $6.6 million net charge for the cumulative effect of a change in an accounting principle (adoption of FIN 46 further discussed on attached reconciling schedules). Results for the first half of 2003 included restructuring and impairment charges of $7.9 million.

Non-GAAP net earnings for the first six months of 2004 totaled $86.2 million, or $0.46 per diluted share. Non-GAAP net earnings for this period excluded restructuring, impairment and integration charges, gain on the disposal of an investment and the cumulative effect of a change in an accounting principle. The company used an effective tax rate of 38.3% in calculating non-GAAP net earnings. A reconciliation of GAAP net earnings to non-GAAP net earnings for these adjustments is presented in the attached tables.

Integration Detail

Continuing the integration of our acquisition of Moore Wallace, the company recorded pre-tax restructuring charges of $41.8 million in the second quarter of 2004. Through the first six months of 2004, the company recorded $64.1 million of restructuring charges, substantially all of which will require cash payments.

Restructuring charges were applied as follows:

		2nd Quarter		First Half
$ in Millions		2004		2004
Severance	$	41.4	$	63.0
Facility		0.4		1.1
Total	$	41.8	$	64.1

Payments associated with these severance actions will be substantially completed by June 2005. Through the first six months of 2004, the company has eliminated approximately 2,175 positions.

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RR Donnelley Reports Fourth Quarter 2003 Results

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Outlook — 2004 Non-GAAP EPS Increased

For the full year 2004, RR Donnelley is targeting non-GAAP earnings per diluted share of $1.55, an increase of $0.05 per diluted share from previous guidance. Guidance for the quarter ended September 30, 2004 will be provided later in the quarter.

Non-GAAP net earnings exclude certain items that are unrelated to the ongoing operations of the business. These items include charges that are not currently determinable. For that reason, the company is unable to provide GAAP earnings estimates at this time.

Historical Pro forma / Non-GAAP Information Posted to Company Website

The company has received several requests from shareholders and analysts for pro forma comparative financial data reflecting the company’s new segments. We have been specifically asked to provide “non-GAAP” comparative data for the new segments that combine the company’s and Moore Wallace’s results of operations, and eliminate significant non-comparable items such as restructuring, impairment and integration charges as well as the cost of sales impact resulting from inventory step-ups and backlog valuations recorded in purchase accounting.

The company has posted to its website, www.rrdonnelley.com, tables and explanations presenting unaudited, pro forma and non-GAAP net sales and operating income of the new segments for the four quarters of 2003 and the first quarter of 2004. To the extent possible, the data has been reconciled to the reported results of the company and Moore Wallace for all periods presented. Please refer to the qualifying language on the website.

Conference Call

RR Donnelley will host a conference call to discuss its second quarter results on Thursday, August 5, 2004, 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 www.rrdonnelley.com (“Investor Relations”). For those unable to participate on the live call, a replay will be archived on the company’s website for 30 days after the call.

About RR Donnelley

RR Donnelley (NYSE:RRD) is the world’s premier full-service global print provider and the largest printing company in North America, serving customers in the publishing, healthcare, advertising, retail, technology, financial services, and many other industries. Founded 140 years ago, the company provides solutions in commercial printing, forms and labels, direct mail, financial printing, print fulfillment, business communication outsourcing, logistics, online services, digital photography, and content and database management. 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 website at www.rrdonnelley.com.

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RR Donnelley Reports Second Quarter 2004 Results

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Contact Information

Media:	Investors:
Doug Fitzgerald	Dan Leib
Sr. Vice President, Marketing & Communications	Vice President, Investor Relations
312-326-7740	312-326-7710
doug.fitzgerald@rrd.com	dan.leib@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 press 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.

Many of the factors that could cause material differences in the expected results of RR Donnelley relate to the integration of Moore Wallace Incorporated, which was acquired by RR Donnelley on February 27, 2004. These factors include, without limitation, the following: the development and execution of comprehensive plans for asset rationalization, the ability to eliminate duplicative overhead without excessive cost or adversely affecting the business, the potential loss of customers and employees as a result of the transaction, the ability to achieve procurement savings by leveraging total spending across the organization, the success of the organization in leveraging its comprehensive product offering to the combined customer base as well as the ability of the organization to complete the integration of the combined companies without losing focus on the business. In addition, the ability of the combined company to achieve the expected net sales, accretion and synergy savings will also be affected by the effects of competition (in particular the response to the transaction in the marketplace), the effects of pricing of paper and other raw materials and fuel price fluctuations and shortages of supply, the rate of migration from paper-based forms to digital formats, the impact of currency fluctuations in the countries in which RR Donnelley operates, general economic and other factors beyond the combined company’s control, and other risks and uncertainties described in RR Donnelley’s periodic filings with Securities and Exchange Commission (SEC). Readers are strongly encouraged to read the full cautionary statements described in RR Donnelley’s filings with the SEC.

RR Donnelley disclaims any obligation to update or revise any forward-looking statements.

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R. R. Donnelley and Sons Company

Consolidated Balance Sheets

At June 30, 2004 and December 31, 2003

IN MILLIONS, EXCEPT PER SHARE DATA

	At June 30, 2004 (Unaudited)			At December 31, 2003
Assets
Current Assets
Cash and cash equivalents	$	275.4		$	60.8
Receivables, less allowance for doubtful accounts of		1,249.7			738.5
$41.4 in 2004 ($26.8 in 2003)
Inventories		460.8			154.3
Prepaid expenses and other current assets		45.7			79.8
Deferred income taxes		227.2			–
Total Current Assets		2,258.8			1,033.4
Property, plant and equipment—net		1,899.5			1,297.4
Prepaid pension cost		465.8			314.4
Goodwill		2,631.6			317.5
Other intangible assets—net		693.9			6.9
Other assets		325.1			253.3
Total Assets	$	8,274.7		$	3,222.9
Liabilities
Current Liabilities
Accounts payable	$	501.4		$	304.0
Accrued liabilities		819.8			427.4
Short-term debt		39.2			175.9
Income taxes		12.5			6.8
Deferred income taxes		–			3.4
Total Current Liabilities		1,372.9			917.5
Long-term debt		1,748.5			752.5
Postretirement benefits		336.0			12.0
Deferred income taxes		528.1			234.0
Other liabilities		554.2			323.7
Total Liabilities		4,539.7			2,239.7
Shareholders’ Equity
Preferred stock, $1.00 par value		–			–
Authorized shares: 2.0; Issued shares: None
Common stock, $1.25 par value
Authorized shares: 500.0
Issued shares: 243.0 in 2004 (140.9 in 2003)		303.7			176.1
Additional paid in capital		2,842.1			132.4
Retained earnings		1,414.4			1,641.7
Accumulated other comprehensive loss		(125.1	)		(123.7	)
Unearned compensation		(39.3	)		(2.9	)
Reacquired common stock, at cost, 25.7 shares in 2004 (27.2 in 2003)		(660.8	)		(840.4	)
Total Shareholders’ Equity		3,735.0			983.2
Total Liabilities and Shareholders’ Equity	$	8,274.7		$	3,222.9

RR Donnelley Reports Second Quarter 2004 Results

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R.R. Donnelley and Sons Company

Consolidated Statements of Operations

Three and Six Months Ended June 30, 2004 and 2003

(In millions, except per share data)

(UNAUDITED)

	Three months ended June 30,																		Six months ended June 30,
	2 0 0 4 GAAP			ADJUST- MENTS TO NON-GAAP (1)			2 0 0 4 NON-GAAP			2 0 0 3 GAAP			ADJUST- MENTS TO NON-GAAP (1)			2 0 0 3 NON-GAAP			2 0 0 4 GAAP			ADJUST- MENTS TO NON-GAAP (1)			2 0 0 4 NON-GAAP			2 0 0 3 GAAP			ADJUST- MENTS TO NON-GAAP (1)			2 0 0 3 NON-GAAP
Net sales	$	2,028.8			—		$	2,028.8		$	1,142.5			—		$	1,142.5		$	3,475.0			—		$	3,475.0		$	2,216.3			—		$	2,216.3
Cost of sales		1,515.9			(0.3	)		1,515.6			887.3						887.3			2,689.6			(67.7	)		2,621.9			1,728.3						1,728.3
Selling, general and administrative expense		269.2			(2.3	)		266.9			131.7						131.7			478.1			(3.1	)		475.0			267.1						267.1
Restructuring and impairments—net		131.0			(131.0	)		—			5.3			(5.3	)		—			181.1			(181.1	)		—			7.9			(7.9	)		—
Depreciation and amortization		105.9						105.9			69.3						69.3			186.8						186.8			137.7						137.7
Total operating expenses		2,022.0			(133.6	)		1,888.4			1,093.6			(5.3	)		1,088.3			3,535.6			(251.9	)		3,283.7			2,141.0			(7.9	)		2,133.1
Income (loss) from operations		6.8			133.6			140.4			48.9			5.3			54.2			(60.6	)		251.9			191.3			75.3			7.9			83.2
Interest expense—net		23.7			—			23.7			12.2			—			12.2			40.7			—			40.7			24.6			—			24.6
Investment and other income (expense)		(4.4	)		—			(4.4	)		(5.4	)		—			(5.4	)		6.2			(15.3	)		(9.1	)		(9.9	)		—			(9.9	)
Earnings (loss) before income taxes, minority interest and cumulative effect of change in accounting principle		(21.3	)		133.6			112.3			31.3			5.3			36.6			(95.1	)		236.6			141.5			40.8			7.9			48.7
Income tax expense (benefit)		(9.5	)		52.5			43.0			11.8			2.0			13.8			(31.5	)		85.7			54.2			15.4			3.0			18.4
Minority interest		0.7			—			0.7			0.2			—			0.2			1.1			—			1.1			0.3			—			0.3
Net earnings (loss) before cumulative effect of change in accounting principle		(12.5	)		81.1			68.6			19.3			3.3			22.6			(64.7	)		150.9			86.2			25.1			4.9			30.0
Cumulative effect of change in principle—net of tax		—			—			—			—			—			—			(6.6	)		6.6			—			—			—			—
Net earnings (loss)	$	(12.5	)	$	81.1		$	68.6		$	19.3		$	3.3		$	22.6		$	(71.3	)	$	157.5		$	86.2		$	25.1		$	4.9		$	30.0
Earnings per share:
Basic
Net earnings (loss) before cumulative effect of change in accounting principle	$	(0.06	)				$	0.31		$	0.17					$	0.20		$	(0.35	)				$	0.47		$	0.22					$	0.27
Cumulative effect of change in principle—net of tax		—						—			—						—			(0.04	)					—			—						—
Net earnings (loss)	$	(0.06	)				$	0.31		$	0.17					$	0.20		$	(0.39	)				$	0.47		$	0.22					$	0.27
Diluted
Net earnings (loss) before cumulative effect of change in accounting principle	$	(0.06	)				$	0.31		$	0.17					$	0.20		$	(0.35	)				$	0.46		$	0.22					$	0.26
Cumulative effect of change in principle—net of tax		—						—			—						—			(0.04	)					—			—						—
Net earnings (loss)	$	(0.06	)				$	0.31		$	0.17					$	0.20		$	(0.39	)				$	0.46		$	0.22					$	0.26
Weighted average common shares outstanding
Basic		218.0						218.0			113.1						113.1			184.6						184.6			113.1						113.1
Diluted		218.0						219.8			114.2						114.2			184.6						186.5			113.8						113.8

NOTE:

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 managements’ 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.

(1) Please see the following schedules "Reconciliation of GAAP Net Earnings (loss) to Non-GAAP Net Earnings (loss)" for descriptions of the adjustments, one schedule for the three months ended June 30, 2004 and June, 30 2003 and a second schedule for the six months ended June 30, 2004 and June 30, 2003.

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RR Donnelley Reports Second Quarter 2004 Results

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Reconciliation of GAAP Net Earnings (Loss) to Non-GAAP Net Earnings (Loss)

In millions

(Unaudited)

	Three Months Ended June 30, 2004			Three Months Ended June 30, 2003
NON-GAAP ADJUSTMENTS TO NET EARNINGS (LOSS):
Integration charges (1)	$	2.6		$	—
Restructuring and impairment charges (2)		131.0			5.3
Total non-GAAP adjustments to income from operations		133.6			5.3
Total non-GAAP adjustments to earnings before taxes		133.6			5.3
Income tax adjustment (3)		(52.5	)		(2.0	)
TOTAL NON-GAAP ADJUSTMENTS TO NET EARNINGS (LOSS)	$	81.1		$	3.3

(1) Amount represents integration charges of $2.6 million.

(2) Amount for the three months ended June 30, 2004, includes $41.8 million for restructuring charges and $89.2 million for asset impairment charges. Amount for the three months ended June 30, 2003, includes $4.8 million for restructuring charges and $0.5 million for asset impairment charges.

(3) Amount represents the tax effect of the reconciling items and an adjustment for the three months ended June 30, 2004, to reflect the company’s pro forma effective tax rate of 38.3%.

RR Donnelley Reports Second Quarter 2004 Results

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Reconciliation of GAAP Net Earnings (Loss) to Non-GAAP Net Earnings (Loss)

In millions

(Unaudited)

	Six Months Ended June 30, 2004			Six Months Ended June 30, 2003
NON-GAAP ADJUSTMENTS TO NET EARNINGS (LOSS):
Integration charges (1)	$	70.8		$	—
Restructuring and impairment charges (2)		181.1			7.9
Total non-GAAP adjustments to income from operations		251.9			7.9
Gain on disposition of investment (3)		(15.3	)		—
Total non-GAAP adjustments to investment and other income		(15.3	)		—
Total non-GAAP adjustments to earnings before taxes		236.6			7.9
Income tax adjustment (4)		(85.7	)		(3.0	)
Cumulative effect of change in accounting principle (5)		6.6			—
TOTAL NON-GAAP ADJUSTMENTS TO NET EARNINGS (LOSS)	$	157.5		$	4.9

(1) Amount includes adjustments to cost of sales for fair market value of acquired inventory and backlog ($66.9 million) and other integration charges ($3.9 million).

(2) Amount for the six months ended June 30, 2004, includes $64.1 million for restructuring charges and $117.0 million for asset impairment charges. Amounts for the six months ended June 30, 2003, includes $7.4 million for restructuring charges and $0.5 million for asset impairment charges.

(3) Amount represents the gain on the sale of an investment held in Latin America during the three months ended March 31, 2004.

(4) Amount represents the tax effect of the reconciling items and an adjustment for the six months ended June 30, 2004, to reflect the company’s pro forma effective tax rate of 38.3%.

(5) During the three months ended March 31, 2004, the company recorded a cumulative effect of a change in accounting principle reflecting the adoption of the Financial Accounting Standards Board Interpretation No. 46 “Consolidation of Variable Interest Entities.” The change reflects the difference between the carrying amount of the company’s investments in certain partnerships related to affordable housing and the underlying carrying values of the partnerships upon consolidating these entities into the company’s financial statements.

RR Donnelley Reports Second Quarter 2004 Results

Page 11 of 12

R.R. Donnelley and Sons Company

Segment GAAP to Non-GAAP Operating Income and Margin Reconciliation

For the three and six months ended June 30, 2004 and 2003

$ in millions

(UNAUDITED)

	Publishing and Retail Services			Integrated Print Communications and Global Solutions			Forms and Labels			Logistics			Corporate			Consolidated
Three Months Ended June 30, 2004
Net sales	$	550.8		$	765.5		$	478.7		$	233.8			–		$	2,028.8
Operating expense		512.2			671.6			443.5			315.8			78.9			2,022.0
Operating income (loss)		38.6			93.9			35.2			(82.0	)		(78.9	)		6.8
Operating margin %		7.0	%		12.3	%		7.4	%		-35.1	%		nm			0.3	%
Non-GAAP Adjustments
Restructuring charges		15.2			10.7			4.5			2.4			9.0			41.8
Impairment charges		0.1			–			–			89.1			–			89.2
Integration charges		–			0.1			0.7			–			1.8			2.6
Total Non-GAAP Adjustments		15.3			10.8			5.2			91.5			10.8			133.6
Operating income (loss) before restructuring, impairment and integration charges	$	53.9		$	104.7		$	40.4		$	9.5		$	(68.1	)	$	140.4
Operating Margin before restructuring, impairment and integration charges %		9.8	%		13.7	%		8.4	%		4.1	%		nm			6.9	%
Six Months Ended June 30, 2004
Net sales	$	1,086.1		$	1,247.1		$	679.9		$	461.9			–		$	3,475.0
Operating expense		1,011.7			1,127.0			681.8			562.4			152.7			3,535.6
Operating income (loss)		74.4			120.1			(1.9	)		(100.5	)		(152.7	)		(60.6	)
Operating margin %		6.9	%		9.6	%		-0.3	%		-21.8	%		nm			-1.7	%
Non-GAAP Adjustments
Restructuring charges		20.0			12.3			7.5			6.7			17.6			64.1
Impairment charges		13.5			0.9			–			102.6			–			117.0
Integration charges		–			17.7			50.7			–			2.4			70.8
Total Non-GAAP Adjustments		33.5			30.9			58.2			109.3			20.0			251.9
Operating income (loss) before restructuring, impairment and integration charges	$	107.9		$	151.0		$	56.3		$	8.8		$	(132.7	)	$	191.3
Operating Margin before restructuring, impairment and integration charges %		9.9	%		12.1	%		8.3	%		1.9	%		nm			5.5	%
Three Months Ended June 30, 2003
Net sales	$	516.4		$	378.7		$	32.6		$	214.8			–		$	1,142.5
Operating expense		472.3			338.3			37.5			213.7			31.8			1,093.6
Operating income (loss)		44.1			40.4			(4.9	)		1.1			(31.8	)		48.9
Operating margin %		8.5	%		10.7	%		-15.0	%		0.5	%		nm			4.3	%
Non-GAAP Adjustments
Restructuring charges		1.8			2.0			1.0			–			–			4.8
Impairment charges		–			0.5			–			–			–			0.5
Integration charges		–			–			–			–			–			–
Total Non-GAAP Adjustments		1.8			2.5			1.0			–			–			5.3
Operating income (loss) before restructuring, impairment and integration charges	$	45.9		$	42.9		$	(3.9	)	$	1.1		$	(31.8	)	$	54.2
Operating Margin before restructuring, impairment and integration charges %		8.9	%		11.3	%		-12.0	%		0.5	%		nm			4.7	%
Six Months Ended June 30, 2003
Net sales	$	1,031.8		$	699.3		$	60.6		$	424.6			–		$	2,216.3
Operating expense		940.4			639.6			71.4			418.8			70.8			2,141.0
Operating income (loss)		91.4			59.7			(10.8	)		5.8			(70.8	)		75.3
Operating margin %		8.9	%		8.5	%		-17.8	%		1.4	%		nm			3.4	%
Non-GAAP Adjustments
Restructuring charges		2.0			3.2			1.1			–			1.1			7.4
Impairment charges		–			0.5			–			–			–			0.5
Integration charges		–			–			–			–			–			–
Total Non-GAAP Adjustments		2.0			3.7			1.1			–			1.1			7.9
Operating income (loss) before restructuring, impairment and integration charges	$	93.4		$	63.4		$	(9.7	)	$	5.8		$	(69.7	)	$	83.2
Operating Margin before restructuring, impairment and integration charges %		9.1	%		9.1	%		-16.0	%		1.4	%		nm			3.8	%

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.

RR Donnelley Reports Second Quarter 2004 Results

Page 12 of 12

R.R. Donnelley & Sons Company

Condensed Consolidated Statements of Cash Flows

For the six months ended June 30, 2004 and 2003

In millions

(Unaudited)

	June 30, 2004			June 30, 2003
OPERATING ACTIVITIES
Net earnings (loss) before cumulative effect of change in accounting	$	(71.3	)	$	25.1
Adjustments to reconcile net earnings (loss) before cumulative effect of accounting change to cash provided by operating activities		377.0			143.1
Changes in operating assets and liabilities		22.9			(13.7	)
Net cash provided by operating activities		328.6			154.5
INVESTING ACTIVITIES
Net cash provided by (used in) investing activities		25.9			(112.4	)
FINANCING ACTIVITIES
Net cash used in financing activities		(139.4	)		(53.3	)
Effect of exchange rates on cash and cash equivalents		(0.5	)		.4
Net increase (decrease) in cash and cash equivalents		214.6			(10.8	)
Cash and cash equivalents at beginning of period		60.8			60.5
Cash and cash equivalents at end of period	$	275.4		$	49.7

EX-99.2

Exhibit 99.2

Before accessing the financial schedules, please acknowledge at the end of this text document that you have read and understand the method of preparation and rationale behind the presentation of the following unaudited, pro forma and non-GAAP information.

Introduction

On February 27, 2004 (the “Acquisition Date”), R.R. Donnelley (the “Company”) acquired all of the outstanding shares of Moore Wallace (the “Acquisition”). The Company’s financial statements for the first quarter of 2004 reported results for seven operating segments, representing the historical segment structure of R.R. Donnelley and Moore Wallace. The reported segment results for the first quarter of 2004 reflect the results for Moore Wallace from the Acquisition Date.

In its quarterly report on Form 10-Q for the first quarter of 2004, the Company indicated that it was in the process of analyzing its business units and operating processes and that it anticipated a change in its operating segments as a result of this analysis.

During the second quarter of 2004, management completed its analysis, and has changed its operating segments. The segments have been identified based on factors including the nature of products and services, certain quantitative thresholds, the availability of discreet financial information, and the way management regularly assesses information for decision-making purposes. The new operating segments are:

Publishing and Retail Services. The Publishing and Retail Services Segment consists of the following businesses:

• Magazine, catalog and retail: Provides print services to consumer magazine and catalog publishers as well as retailers.

• Directories: Serves the global directory printing needs of telecommunications providers.

• Premedia: Offers conventional and digital photography, creative, color matching, page production and content management services to the advertising, catalog, corporate, magazine, retail and telecommunications markets.

Integrated Print Communications and Global Solutions. The Integrated Print Communications and Global Solutions Segment consists of short-run and variable print operations in the following lines of business:

• Book: Provides print services to the consumer, religious, educational and specialty book markets.

• Direct Mail: Offers services with respect to direct marketing programs including content creation, database management, printing, personalization, finishing and distribution in

North America and Europe.

• Financial Print: Provides information management, content assembly and print services to corporations and their investment banks and law firms as those corporations access the global capital markets, as well as customized communications solutions for investment management, banking, insurance and managed care companies.

• Business Communications Services: Offers customized, variably-imaged business communications, including account statements, customer invoices, insurance policies, enrollment kits, transaction confirmations and database services, primarily to the financial services, telecommunications, insurance and healthcare industries.

• Short-Run Commercial Print: Provides print and print-related services to a diversified customer base. Examples of materials produced include annual reports, marketing brochures, catalog and marketing inserts, pharmaceutical inserts and other marketing, retail point-of-sale and promotional materials and technical publications.

• Europe: Provides print and print-related services to the telecommunications and consumer magazine and catalog markets.

• Asia: Provides print and print-related services to the consumer, religious, educational and specialty book, telecommunications and consumer magazine markets.

Forms and Labels. The Forms and Labels Segment designs and manufactures paper-based business forms and labels and provides print-related services and print-on-demand, from facilities located in North America and Latin America. The Latin American business also prints magazines, catalogs and directories. The segment’s Peak business provides integration of automatic identification and data collections systems and equipment.

Logistics. The Logistics Segment consolidates and delivers printed products and packages for its customers through the U.S. Postal Service using methods to reduce postage costs and improve delivery performance. The Logistics Segment also provides for the expedited distribution of time-sensitive and secure material, as well as warehousing, fulfillment and distribution services for its customers.

Corporate. The Corporate Segment includes the cost of the corporate management and administrative staff, as well as certain centralized functions.

The Company has received several requests from shareholders and analysts for pro forma comparative financial data reflecting the Company’s new segments. We have been specifically asked to provide “non-GAAP” comparative data for the new segments that combines the Company’s and Moore Wallace’s results of operations for all quarters presented, and eliminates significant non-comparable items such as restructuring, impairment and integration charges, and the cost of sales impacts resulting from inventory step-ups and backlog valuations recorded in purchase accounting.

The following tables present non-GAAP pro forma net sales and operating income of the new segments for the four quarters of 2003 and the first quarter of 2004. To the extent possible, the data has been reconciled to the reported results of the Company and Moore Wallace for all periods presented.

Moore Wallace’s reported financial statements were prepared in accordance with Canadian GAAP, which differs in certain respects from U.S. GAAP. In the attached tables, Moore Wallace’s results of operations have been adjusted to conform to U.S. GAAP.

The numbers in these schedules will not agree to the pro forma financial data shown in Note 2 of the unaudited Notes to the Company’s financial statements included in its quarterly report on Form 10-Q for the first and second quarters of 2004. The data in Note 2 has been prepared in accordance with GAAP, which does not permit pro forma adjustments for non-comparable restructuring, impairment and inventory step-up adjustments. In addition, the 2003 operating income on the attached schedules has not been adjusted to reflect the additional depreciation and amortization that will be recorded by the Company in 2004 as a result of the fair valuing of the Moore Wallace assets in connection with the Acquisition.

The Company believes that certain non-GAAP measures, when presented in conjunction with comparable GAAP measures, are useful because the 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.

The unaudited non-GAAP pro forma financial information is not intended to represent or be indicative of the Company’s consolidated results of operations or financial condition that would have been reported had the Company and Moore Wallace been combined for the periods presented, and should not be taken as indicative of the Company’s future consolidated results of operations or financial condition.

The attached tables are unaudited.

Page 1 of 10

RRD

Segment Reconciliation

Pro Forma Non-GAAP Net Sales

1st Quarter 2003

UNAUDITED

(In Millions)

Historical Segments     GAAP Results			New Segments
	2003—3 Months			2003 3 Months RRD + 1 Month MWI
RR Donnelley				RRD (3)		Acquisitions		Total (2)
Donnelley Print Solutions	$	667.0	Publishing and Retail Services	$	515.4	$	–	$	515.4
Logistics Services		209.8	Integrated Print Communications		431.8		4.8		436.6
Financial Services		90.2	Forms and Labels		194.2		–		194.2
Other		106.8	Logistics		217.1		–		217.1
Total	$	1,073.8	Total	$	1,358.5	$	4.8	$	1,363.3
Moore Wallace (1), (3)
Forms and Labels	$	509.8
Outsourcing		97.4
Commercial		267.1
Total	$	874.3
Total Historical	$	1,948.1

(1) Includes reported results of Moore Corporation Limited of $511.1 million plus the results for January through March 2003 for Wallace Computer Services, Inc. of $363.2 million.

(2) For comparability with the first quarter of 2004, includes 3 months of historical RR Donnelley results plus 1 month of Moore Wallace results.

(3) Reflects reclassification of historical results to conform to current segment presentation.

Page 2 of 10

RRD

Segment Reconciliation

Pro Forma Non-GAAP Net Sales

2nd Quarter 2003

UNAUDITED

(In Millions)

Historical Segments GAAP Results			New Segments
	2003			2003
RR Donnelley				RRD (2)		Acquisitions		Total (1)
Donnelley Print Solutions	$	684.6	Publishing and Retail Services	$	516.4	$	–	$	516.4
Logistics Services		214.8	Integrated Print Communications		713.7		42.1		755.8
Financial Services		125.2	Forms and Labels		503.9		–		503.9
Other		117.9	Logistics		236.3		–		236.3
Total	$	1,142.5	Total	$	1,970.3	$	42.1	$	2,012.4
Moore Wallace (1), (2)
Forms and Labels	$	492.8
Outsourcing		76.3
Commercial		258.7
Total	$	827.8
Total Historical	$	1,970.3

(1) Includes reported results of Moore Wallace of $650.1 million plus the results for Wallace Computer Services, Inc. for the period April 1, 2003 through May 14, 2003 of $177.7 million.

(2) Reflects reclassification of historical results to conform to current segment presentation.

Page 3 of 10

RRD

Segment Reconciliation

Pro Forma Non-GAAP Net Sales

3rd Quarter 2003

UNAUDITED

(In Millions)

Historical Segments GAAP Results			New Segments
	2003			2003
RR Donnelley				RRD (1)		Acquisitions		Total
Donnelley Print Solutions	$	753.2	Publishing and Retail Services	$	569.6	$	–	$	569.6
Logistics Services		218.3	Integrated Print Communications		712.4		30.5		742.9
Financial Services		99.9	Forms and Labels		500.0		–		500.0
Other		122.4	Logistics		240.7		–		240.7
Total	$	1,193.8	Total	$	2,022.7	$	30.5	$	2,053.2
Moore Wallace (1)
Forms and Labels	$	490.0
Outsourcing		80.7
Commercial		258.2
Total	$	828.9
Total Historical	$	2,022.7

(1) Reflects reclassification of historical results to conform to current segment presentation.

Page 4 of 10

RRD

Segment Reconciliation

Pro Forma Non-GAAP Net Sales

4th Quarter 2003

UNAUDITED

(In Millions)

Historical Segments     GAAP Results			New Segments
	2003			2003
RR Donnelley				RRD (1)		Acquisitions		Total
Donnelley Print Solutions	$	851.7	Publishing and Retail Services	$	698.8	$	–	$	698.8
Logistics Services		270.3	Integrated Print Communications		718.8		26.1		744.9
Financial Services		110.9	Forms and Labels		546.4		–		546.4
Other		144.2	Logistics		295.8		–		295.8
Total	$	1,377.1	Total	$	2,259.8	$	26.1	$	2,285.9
Moore Wallace (1)
Forms and Labels	$	532.1
Outsourcing		87.7
Commercial		262.9
Total	$	882.7
Total Historical	$	2,259.8

(1) Reflects reclassification of historical results to conform to current segment presentation.

Page 5 of 10

RRD

Segment Reconciliation

Pro Forma Non-GAAP Net Sales

1st Quarter 2004

UNAUDITED

(In Millions)

Historical Segments GAAP Results			New Segments
	2004			2004 3 Months RRD + 1 Month MWI
RRD				Total (1), (2)
Donnelley Print Solutions	$	676.8	Publishing and Retail Services	$	535.3
Logistics Services		218.7	Integrated Print Communications		481.6
Financial Services		113.2	Forms and Labels		201.2
Other		126.6	Logistics		228.1
Total	$	1,135.3	Total	$	1,446.2
Moore Wallace (1)
Forms and Labels	$	168.2
Outsourcing		47.2
Commercial		95.5
Total	$	310.9
Total Historical	$	1,446.2

(1) Includes the post combination results of MWI since February 27, 2004.

(2) Reflects reclassification of historical results to conform to current segment presentation.

Page 6 of 10

RRD

Segment Reconciliation

Pro Forma non-GAAP Operating Income

1st Quarter 2003

UNAUDITED

(In Millions)

Historical Segments     GAAP Results				New Segments
	2003—3 Months				2003 Income (Loss) from Operations— 3 Months RRD + 1 Month MWI
RR Donnelley	Earnings (Loss) from Operations				RRD GAAP (3)			Restructuring Charges		Acquisition & Other		Total (2)
Donnelley Print Solutions	$	45.7		Publishing and Retail Services	$	47.3		$	0.6	$	–	$	47.9
Logistics Services		3.5		Integrated Print Communications		29.3			0.8		1.8		31.9
Financial Services		(6.4	)	Forms and Labels		17.8			–		0.1		17.9
Other		(9.0	)	Logistics		6.2			–		–		6.2
Corporate		(6.9	)	Corporate		(56.8	)		1.2		2.5		(53.1	)
Total	$	26.9		Total	$	43.8		$	2.6	$	4.4	$	50.8
Moore Wallace (1), (4)	Income (Loss) from Operations
	MWI
Forms and Labels	$	67.5
Outsourcing		26.2
Commercial		23.2
Corporate		(51.4	)
Total	$	65.5
Total Historical	$	92.4

(1) Includes reported results of Moore Corporation Limited of $35.9 million plus the results for January through March 2003 for Wallace Computer Services, Inc. of $29.6 million.

(2) For comparability with the first quarter of 2004, includes 3 months of historical RR Donnelley results plus 1 month of Moore Wallace results.

(3) The difference between the Total Historical combined earnings of $92.4 million and the RRD New Segment Income (Loss) from Operations of $43.8 million for the period presented is due to the difference in the number of MWI months reported under the new segment structure above and certain items that are included in Income (Loss) from Operations but were not included in the historical RRD Earnings (Loss) from Operations. These items totaled approximately $.6 million of expense related to the classification of miscellaneous income and expense, and gains and losses on foreign exchange and fixed asset dispositions.

(4) Reflects reclassification of historical results to conform to current segment presentation.

Page 7 of 10

RRD

Segment Reconciliation

Pro Forma non-GAAP Operating Income

2nd Quarter 2003

UNAUDITED

(In Millions)

Historical Segments GAAP Results				New Segments
	2003				2003 Income (Loss) from Operations
RR Donnelley	Earnings (Loss) from Operations				RRD GAAP (2)			Restructuring & Impairment		Combination Fair Market Value Adjustment		Acquisition & Other			Total
Donnelley Print Solutions	$	49.4		Publishing and Retail Services	$	44.1		$	1.8	$	–	$	–		$	45.9
Logistics Services		(0.1	)	Integrated Print Communications		62.1			0.9		11.4		6.0			80.4
Financial Services		9.4		Forms and Labels		15.8			4.2		27.2		–			47.2
Other		(9.8	)	Logistics		5.7			–		–		(0.1	)		5.6
Corporate		(1.4	)	Corporate		(63.0	)		2.2		–		7.0			(53.9	)
Total	$	47.5		Total	$	64.6		$	9.1	$	38.6	$	12.9		$	125.2
Moore Wallace (1), (3)	Income (Loss) from Operations
	MWI
Forms and Labels	$	25.2
Outsourcing		12.7
Commercial		9.0
Corporate		(31.3	)
Total	$	15.6
Total Historical	$	63.1

(1) Includes reported results of Moore Wallace of $8.5 million plus the results for Wallace Computer Services, Inc. for the period April 1, 2003 through May 14, 2003 of $7.1 million.

(2) The difference between the Total Historical combined earnings of $63.1 million and the RRD New Segment Income (Loss) from Operations of $64.6 million for the period presented is due to certain items that are included in Income (Loss) from Operations but were not included in the historical RRD Earnings (Loss) from Operations. These items totaled approximately $1.5 million of income related to the classification of miscellaneous income and expense, and gains and losses on foreign exchange and fixed asset dispositions.

(3) Reflects reclassification of historical results to conform to current segment presentation.

Page 8 of 10

RRD

Segment Reconciliation

Pro Forma non-GAAP Operating Income

3rd Quarter 2003

UNAUDITED

(In Millions)

Historical Segments GAAP Results				New Segments
	2003				2003 Income (Loss) from Operations
RR Donnelley	Earnings (Loss) from Operations				RRD GAAP (1)			Restructuring & Impairment		Acquisition & Other		Total
Donnelley Print Solutions	$	99.2		Publishing and Retail Services	$	89.6		$	0.5	$	–	$	90.1
				Integrated Print
Logistics Services		(3.5	)	Communications		75.7			2.2		8.3		86.2
Financial Services		(0.3	)	Forms and Labels		43.8			6.4		5.4		55.6
Other		(8.8	)	Logistics		3.3			0.1		–		3.4
Corporate		3.0		Corporate		(71.1	)		4.3		9.3		(57.5	)
Total	$	89.6		Total	$	141.3		$	13.5	$	23.0	$	177.8
Moore Wallace (2)	Income (Loss) from Operations
Forms and Labels	$	54.9
Outsourcing		14.8
Commercial		23.2
Corporate		(41.9	)
Total	$	51.0
Total Historical	$	140.6

(1) The difference between the Total Historical combined earnings of $140.6 million and the RRD New Segment Income (Loss) from Operations of $141.3 million for the period presented is due to certain items that are included in Income (Loss) from Operations but were not included in the historical RRD Earnings (Loss) from Operations. These items totaled approximately $0.7 million of income related to the classification of miscellaneous income and expense, and gains and losses on foreign exchange and fixed asset dispositions.

(2) Reflects reclassification of historical results to conform to current segment presentation.

Page 9 of 10

RRD

Segment Reconciliation

Pro Forma non-GAAP Operating Income

4th Quarter 2003

UNAUDITED

(In Millions)

Historical Segments     GAAP Results				New Segments
	2003				2003 Income (Loss) from Operations
RR Donnelley	Earnings (Loss) from Operations				RRD GAAP (1)			Restructuring & Impairment			Acquisition & Other			Total
Donnelley Print Solutions	$	113.2		Publishing and Retail Services	$	116.6		$	0.3		$	–		$	116.9
Logistics Services		(10.9	)	Integrated Print Communications		75.8			(1.3	)		3.2			77.7
Financial Services		1.6		Forms and Labels		57.9			3.7			6.5			68.1
Other		(10.9	)	Logistics		(2.3	)		3.8			(0.1	)		1.4
Corporate		13.7		Corporate		(56.1	)		(1.7	)		12.5			(45.3	)
Total	$	106.7		Total	$	191.9		$	4.8		$	22.1		$	218.8
Moore Wallace (2)	Income (Loss) from Operations
Forms and Labels	$	70.7
Outsourcing		18.5
Commercial		33.7
Corporate		(38.4	)
Total	$	84.5
Total Historical	$	191.2

(1) The difference between the Total Historical combined earnings of $191.2 million and the RRD New Segment Income (Loss) from Operations of $191.9 million for the period presented is due to certain items that are included in Income (Loss) from Operations but were not included in the historical RRD Earnings (Loss) from Operations. These items totaled approximately $0.7 million of income related to the classification of miscellaneous income and expense, and gains and losses on foreign exchange and fixed asset dispositions.

(2) Reflects reclassification of historical results to conform to current segment presentation.

Page 10 of 10

RRD

Segment Reconciliation

Pro Forma non-GAAP Operating Income

1st Quarter 2004

UNAUDITED

(In Millions)

Historical Segments     GAAP Results				New Segments
	2004				2004 Income (Loss) from Operations – 3 Months RRD + 1 Month MWI
RRD	Income (Loss) from Operations				RRD GAAP			Restructuring & Impairment		Combination Fair Market Value Adjustment		Acquisition & Other		Total (1)
Donnelley Print Solutions	$	50.9		Publishing and Retail Services	$	35.8		$	18.3	$	–	$	–	$	54.1
Logistics Services		(23.2	)	Integrated Print Communications		26.3			2.5		17.5		–		46.3
Financial Services		9.5		Forms and Labels		(37.1	)		2.9		49.4		0.7		15.9
Other		(6.3	)	Logistics		(18.5	)		17.8		–		–		(0.7	)
Corporate		(73.4	)	Corporate		(74.0	)		8.6		–		0.6		(64.8	)
Total	$	(42.5	)	Total	$	(67.5	)	$	50.1	$	66.9	$	1.3	$	50.8
Moore Wallace (1)
Forms and Labels		(28.9	)
Outsourcing		7.3
Commercial		(3.4	)
Total	$	(25.0	)
Total Historical	$	(67.5	)

(1) Includes the post combination results of MWI since February 27, 2004.