2. Acquisitions

2011 Acquisitions

On June 21, 2011, the Company acquired Helium, Inc. ("Helium"), an online community offering publishers, catalogers and other customers stock and custom content, as well as a comprehensive range of editorial solutions. As the Company previously held a 23.7% equity investment in Helium, the purchase price for the remaining equity of Helium was $57.0 million net of cash acquired of $0.1 million and included an amount due from Helium of $1.1 million. The fair value of the Company's previously held equity investment was $12.8 million, resulting in the recognition of a $10.0 million gain, which is reflected in investment and other income (expense) in the Condensed Consolidated Statements of Operations. The fair value of the previously held equity investment was determined based on the purchase price paid for the remaining equity less an estimated control premium and was determined to be Level 3 under the fair value hierarchy. Other than this gain, the Company's Condensed Consolidated Statements of Operations were not impacted by this acquisition for the three and six months ended June 30, 2011. Helium's operations are included in the U.S. Print and Related Services segment.

On March 24, 2011, the Company acquired Journalism Online, LLC ("Journalism Online"), an online provider of tools that allow consumers to purchase online subscriptions from publishers. The purchase price for Journalism Online was $19.6 million net of cash acquired of $0.4 million. Journalism Online's operations are included in the U.S. Print and Related Services segment.

The operations of these acquired businesses are complementary to the Company's existing products and services. Journalism Online's Press+ offering provides subscription management and online content payment services that increase the breadth of services the Company offers to its existing base of publishing customers. The ability to bundle Helium's content development solutions with the Company's complete offering of content delivery resources addresses customers' needs across the full breadth of the supply chain.

The Journalism Online and Helium acquisitions were recorded by allocating the cost of the acquisitions to the assets acquired, including intangible assets, based on their estimated fair values at the acquisition date. The excess of the cost of the acquisitions and the fair value of the previously-held investments in Helium over the net amounts assigned to the fair value of the assets acquired was recorded as goodwill. The goodwill related to Helium is not tax deductible. Based on the valuations, the final purchase price allocations for these 2011 acquisitions were as follows:


Accounts receivable	$	0.6
Property, plant and equipment and other long-term assets		3.3
Amortizable intangible assets		0.5
Goodwill		78.8
Accounts payable and accrued liabilities		(0.8	)
Deferred taxes-net		7.0

Total purchase price-net of cash acquired		89.4
Less: fair value of Company's previously-held investments in Helium		13.9

Net cash paid	$	75.5

The fair values of property, plant and equipment, amortizable intangible assets and goodwill associated with the acquisitions of Journalism Online and Helium were determined to be Level 3 under the fair value hierarchy.

2010 Acquisitions

On December 31, 2010, the Company acquired the assets of 8touches, an online provider of tools that allow real estate associates, brokers, Multiple Listing Service (MLS) associations and other marketers to create customized communications materials. The purchase price for 8touches was $1.1 million. 8touches' operations are included in the U.S. Print and Related Services segment.

On December 14, 2010, the Company acquired the assets of Nimblefish Technologies ("Nimblefish"), a provider of multi-channel marketing services to leading retail, technology, telecom, hospitality and other customers. The purchase price for Nimblefish was $3.9 million, including debt assumed of $2.0 million. The Company subsequently repaid $1.9 million of the debt assumed in December 2010. Nimblefish's operations are included in the U.S. Print and Related Services segment.

On November 24, 2010, the Company acquired Bowne & Co., Inc. ("Bowne"), a provider of shareholder and marketing communication services, with operations in North America, Latin America, Europe and Asia. The purchase price for Bowne was $465.2 million, including debt assumed of $26.2 million and net of cash acquired of $41.4 million. Immediately following the acquisition, the Company subsequently repaid $25.4 million of the debt assumed. Bowne's operations are included in both the U.S. Print and Related Services and International segments.

The operations of these acquired businesses are complementary to the Company's existing products and services. As a result, the additions of these businesses are expected to improve the Company's ability to serve customers and reduce management, real estate and manufacturing costs.

The Bowne, Nimblefish and 8touches acquisitions were recorded by allocating the cost of the acquisitions to the assets acquired, including intangible assets, based on their estimated fair values at the acquisition date. The excess of the cost of the acquisitions over the net amounts assigned to the fair value of the assets acquired was recorded as goodwill, most of which is not tax deductible. Based on the valuations, the final purchase price allocations for these 2010 acquisitions were as follows:


Accounts receivable	$	129.0
Inventories		32.1
Prepaid expenses and other current assets		18.1
Property, plant and equipment and other long-term assets		127.3
Amortizable intangible assets		159.8
Goodwill		257.9
Accounts payable and accrued liabilities		(159.7	)
Pension benefits and other long-term liabilities		(76.7	)
Deferred taxes—net		(17.6	)

Total purchase price—net of cash acquired		470.2
Less: debt assumed		28.2

Net cash paid	$	442.0

The fair values of property, plant and equipment, goodwill and intangible assets associated with the acquisitions of Bowne, Nimblefish and 8touches were determined to be Level 3 under the fair value hierarchy. Property, plant and equipment values were estimated using dealer quotes and other indicators of current market place conditions. Customer relationships intangible asset values were estimated based on future cash flows and customer attrition rates discounted using an estimated weighted-average cost of capital. The tradename intangible asset value was estimated based on the relief of royalty method.

Pro forma results

The following unaudited pro forma financial information for the three and six months ended June 30, 2011 and 2010 presents the combined results of operations of the Company, Helium, Journalism Online, Bowne, Nimblefish and 8touches as if the acquisitions had occurred at January 1, 2010.

The unaudited 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 these acquisitions been completed as of the beginning of the period presented and should not be taken as indicative of the Company's future consolidated results of operations or financial condition. Pro forma adjustments are tax-effected at the applicable statutory tax rates.


	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Net sales	$	2,624.2	$	2,616.4	$	5,208.6	$	5,210.5
Net earnings attributable to RR Donnelley common shareholders		20.6		80.2		79.7		116.4
Net earnings per share attributable to RR Donnelley common shareholders:
Basic	$	0.10	$	0.39	$	0.39	$	0.57

Diluted	$	0.10	$	0.38	$	0.39	$	0.56

The unaudited pro forma financial information for the three months ended June 30, 2011 and 2010 included $28.8 million and $28.5 million, respectively, for the amortization of purchased intangibles. Amortization of purchased intangibles for the six months ended June 30, 2011 and 2010 was $57.3 million and $57.5 million, respectively. In addition, the unaudited pro forma financial information includes restructuring and impairment charges from operations of $47.8 million and $37.8 million for the three months ended June 30, 2011 and 2010, respectively. Restructuring and impairment charges for the six months ended June 30, 2011 and 2010 were $62.0 million and $89.6 million, respectively. The pro forma adjustments affecting net earnings attributable to RR Donnelley common shareholders for the three and six months ended June 30, 2011 and 2010 were as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Depreciation and amortization of purchased assets, pre-tax	$	(0.2	)	$	(0.1	)	$	1.4		$	(1.5	)
Acquisition expenses, pre-tax		0.7			3.1			0.8			5.9
Restructuring and impairment charges, pre-tax		27.9			(24.9	)		64.5			(57.1	)
Inventory fair value adjustment, pre-tax		—			—			3.6			(5.7	)
Other pro forma adjustments, pre-tax		(8.1	)		(0.6	)		(7.2	)		6.9
Income taxes		(11.2	)		9.7			(27.2	)		25.1