Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days.

        The condensed consolidated financial statements included herein reflect, in the opinion of the company, all adjustments (which include only normal, recurring adjustments) necessary to present fairly the financial information for such periods. Certain prior year amounts have been reclassified to maintain comparability with current year classifications.

        In December 1999, the U.S. Environmental Protection Agency, Region 5 (U.S. EPA) issued a Notice of Violation against the company, pursuant to Section 113 of the Clean Air Act (the Act). The notice alleges that the company’s facility in Willard, Ohio, violated the Act and Ohio’s State Implementation Plan in installing and operating certain equipment without appropriate air permits. While the notice does not specify the remedy sought, upon final determination of a violation, the U.S. EPA may issue an administrative order requiring the installation of air pollution control equipment, assess penalties, or commence civil or criminal action against the company. The company responded to U.S. EPA on March 10, 2000. The company believes that the resolution of this matter, even if unfavorable to the company, will not materially impact its financial position or results of operations.

        In addition, the company is a party to certain litigation arising in the ordinary course of business which, in the opinion of management, will not have a material adverse effect on the operations or financial condition of the company.

        R.R. Donnelley Logistics (Donnelley Logistics) represents the company’s logistics and distribution services operation for its print customers and other mailers. Donnelley Logistics serves its customers by consolidating and delivering printed productproducts and packages to the U.S. Postal Service closer to the final destination, resulting in reduced postage costs and improved delivery performance. Following the company’s acquisition of certain net assets of CTC Distribution Services L.L.C. (CTC) in February 2000, the combined operations of Donnelley Logistics and CTC have been included within the reportable segment “Logistics Services.” Refer to Note 9 toof the condensed consolidated financial statements for more details regarding the acquisition of CTC.

        The company has disclosed earnings (loss) from operations as the primary measure of segment earnings (loss). This is the measure of profitability used by the company’s chief operating decision-maker that is most consistent with the presentation of profitability reported within the consolidated financial statements. The accounting policies of the business segments reported are the same as those described in the “Summary of Significant Accounting Policies” footnote on page F-6 in the 2000 Annual Report on Form 10-K.

        In three federal trial court decisions involving different corporate taxpayers, the courts disallowed deductions for loans against those taxpayers’ COLI programs. Appeals from these decisions have been or are expected to be taken.taken and in one, the appellate court upheld the tax court’s ruling. While the company believes its COLI program differs from those involved in the earlier litigation, should the reasoning of these cases be upheld and applied to others, in addition to payments already made, the company could lose up to $155 million in federal and state tax benefits for periods from 1993 through 1998 plus interest of approximately $50$53 million after-tax through March 31,June 30, 2001.

        The company will continue to examine its COLI position with respect to the final resolution of pending cases. The ultimate resolution of the company’s COLI issues may have a material impact on the company’s results of operations and financial condition.

        The restructuring plan approved by management in the first quarter of 2001 the company approved various restructuring actions, primarily consolidations of operations. As a result of the restructuring plans, the company recorded(first quarter plan) resulted in a pretax charge against income from continuing operations of $22 million or $13($13 million after-tax, ($0.11or $0.11 per diluted share).

        During the second quarter of 2001, the company recognized a pretax restructuring charge of $52 million ($32 million after-tax, or $0.27 per diluted share). This charge reduced earnings from operations in the company’s business segments as follows: Commercial Print segment—$47 million; Other—$1 million (related to Red Rover) and Corporate—$4 million. As part of the restructuring plan approved by management in the second quarter (the second quarter plan), the company announced the closing of a magazine-printing plant in Des Moines, Iowa and a catalog-printing plant in Old Saybrook, Connecticut, and plans to exit a leased Financial Services’ sales and service center in Austin, Texas. In addition, the second quarter plan included workforce reductions and consolidations at other facilities, including a company-wide workforce reduction announced in June 2001 of approximately 250 general and administrative positions. The second quarter pretax charge consisted of the following:

        As of June 30, 2001, the company has ceased print production at its St. Petersburg, Florida, South Daytona, Florida and Houston, Texas plants, and all customer work has been transferred to existing company facilities. Of a total approximately 520 positions have been eliminated duringof 490 planned employee terminations related to the first quarter 2001 restructuring plan, all have been completed as of 2001, resulting in severance and severance-related costs of $10 million.June 30, 2001. Both Florida printing facilities are being currently held for sale.

        Exit costs relatingIn connection with the second quarter 2001 restructuring plan, the company has begun to facility closures total $2 million and consist primarily of coststransition certain customers’ work to maintain the buildings at closed facilities until the estimated sale date. Theother company also has incurred restructuring-related costs that have been expensed as incurred. In the first quarter of 2001, such costs were $1 million and consisted primarily of costs to transfer equipment from closed facilitiesfacilities. Planned production will gradually be transferred to other company facilities once necessary expansions in those facilities to accommodate the transfer of work are complete. The company expects to complete the closures of the Des Moines, Iowa, and the Old Saybrook, Connecticut, plants by June 30, 2002. Additional charges related to the second quarter 2001 restructuring plan are expected to be approximately $25 million, half of which are anticipated to be recognized by the end of 2001, and relate primarily to employee and equipment relocation. The workforce reduction of approximately 250 general and administrative personnel was completed by June 30, 2001. Of a total of 1,690 planned employee terminations related to the second quarter 2001 restructuring plan, 460 have been completed as well as employee relocation costs.of June 30, 2001.

        At facilities that are being closed, assets being disposed of were written down to their fair market values, less estimated costs to sell. Fair market value of land, buildings and significant pieces of equipment was based upon external appraisals. Impairment recognized in the first quarter of 2001 relating to buildings and equipment to be disposed of was $6 million.        The net book value of assets to be disposed as of at March 31,June 30, 2001 was $28$53 million.

        R.R. Donnelley & Sons Company (NYSE:DNY) provides comprehensive, integrated communications services that efficiently and effectively produce, manage and deliver our customers’ content, regardless of the communications medium. While our superior print capabilities remain the foundation of the company, our recent focus on expanding our range of offerings with value-added services allows us to create additional value.

        We provide solutions designed to enhance the effectiveness of our customers’ communications. Our services include:

        Our 137-year history as a printing industry leader positions us well for the future. The printing industry is projected to grow along with the communications industry. Print advertising is expected to remain among the most cost-effective ways for our customers to deliver their messages and generate revenue as they use words and images to inform, educate, entertain and sell to their audiences.

        We are confident that print will remain integral to successful marketing given its unique capabilities, such as portability and high-quality graphics that cannot be duplicated by other communications methods. We also believe that the nature of print will evolve. The ability of print to be targeted, timely, flexible and integrated with other communications media will become more critical.

        We operate primarily in the commercial print portion of the printing industry, with related service offerings designed to offer customers complete solutions for communicating their messages to targeted audiences. While our manufacturing plants, financial service centers and sales offices are located throughout the United States and selected international markets, the supporting technologies and knowledge base are common. Our locations have a range of production capabilities to serve our customers and end-markets. We manufacture products with the operational goal of optimizing the efficiency of the common manufacturing and distribution platform. As a result, most plants produce work for customers in two or three of our end-markets.

        The following describes the end-markets we serve:

        Directory contracts typically span five to 10 years, with our current major contracts expiring between 2004 and 2009. Deregulation and substantial investment in the global telecommunications industry provide growth opportunities. In addition, growth opportunities arise as we work with directory publishers to introduce innovations such as targeted printed directories, website development for small businesses, content for online directories and solutions for the technology and government markets, and as we extend our capabilities worldwide.

        Our global service network, manufacturing platform and distribution system give us unique advantages in servicing the capital markets, particularly for large financial deals. For example, the four largest transactions of the 1990s used R.R. Donnelley Financial to communicate their deals. Additionally, we are a leading provider of mutual fund compliance communications. To meet our clients’ needs for accuracy, speed, confidentiality and convenience, we have developed technology for virtual deal management and Internet-enabled inventory management, are experts in EDGAR HTML filings and have integrated database management with content assembly, digital output and multiple-media delivery.

        Our customized communications solutions provide an integrated suite of information management, content assembly and delivery solutions designed to give our clients closer and longer-lasting relationships with their customers. In markets that increasingly see demand for more precise communication with individuals, we believe customized communications solutions are and will continue to be a significant growth opportunity for the company.

        Our February 2000 acquisition of CTC Distribution Services L.L.C. (CTC) extended our services by adding package delivery to our established business of delivering printed material (freight services). By leveraging the USPS infrastructure to make the final delivery to households and businesses, we are able to provide more economical logistics services. Through “zone skipping” we are able to obtain greater postal discounts and provide more timely, reliable delivery for our customers. As we complete the integration of CTC and further develop our processes for zone skipping, we are able to bring together our scale, systems and expertise to create logistics services that are valuable to our customers.

        In addition to delivering packages and printed material, we also provide returns management and expedited distribution of time-sensitive and secure material (expedited services). Together, these services help merchandisers and other businesses manage their supply chains more effectively and at a lower cost.

        For our Commercial Print segment, value-added revenue represents net sales less the cost of materials. For some customers, we purchase paper used in the printing process and pass through this cost (referred to as “pass through material sales”) at a margin that is lower than print and related services; other customers furnish their own paper. Customer-furnished paper is not reflected in our financial results. For our Logistics Services segment, value-added revenue represents net sales less the cost of transportation. By measuring value-added revenue, we eliminate the effects of material prices and transportation costs that are largely beyond our control.

        Consolidated value-added revenue decreased $74 million, or 9.0%, to $748 million compared with $822 million in the second quarter of 2000. Second quarter value-added revenue within the Commercial Print segment decreased 9.9% between years. Value-added revenue is affected by the price of scrap (by-product) paper we sell. Income from the sale of by-products is recorded as a reduction in our cost of materials. During the second quarter of 2001, we recognized a reduction in our cost of materials of $9 million from the sale of by-products, compared with $17 million for the year ago period.

        Second quarter net sales of our Logistics Services segment increased $29 million, or 3.9%18.2%, from a year ago. Second quarter net sales of our package logistics business were up 25.3% between years driven by higher unit volume and price increases. Package logistics unit volume was up 16% for the second quarter between years. Within print logistics, freight services unit volume for the second quarter was down 14% between years, partially offset by price increases and fuel surcharges. Lower expedited services volume as a result of the slowed capital markets was more than offset during the second quarter of 2001 by delivery services provided for banks as well as international mail.

        Second quarter value-added revenue for the Commercial Print segment decreased $78 million, or 9.9% from a year ago, primarily due to $728volume declines in Long-run Magazines, Catalogs and Inserts, as well as Financial Services. Second quarter value-added revenue for the Logistics Services segment increased $6 million, or 19.5%, from a year ago. Package logistics contributed an incremental $3 million in value-added revenue between years, driven by higher prices, higher unit volume and increased penetration of the postal system (delivery closer to the final destination, which reduces postage costs), partially offset by higher transportation costs. Second quarter value-added revenue for print logistics was up $3 million, or 17.2%, based primarily on higher prices for freight services despite increased transportation costs.

        The second quarter loss from operations for the Logistics Services segment was $3 million, compared with $758a loss of $0.5 million a year ago. The second quarter loss from operations from package logistics was $1.5 million unfavorable to the prior year second quarter. The second quarter of 2001 reflected both a higher volume of packages and deeper penetration of the postal system (closer to final destination) for package logistics. Higher initial warehousing and transportation costs associated with this increased level of postal penetration achieved more than offset the volume-related gains. The second quarter loss from print logistics was $1.2 million higher than the year ago period primarily due to consolidation center expansion costs, and increased selling and administrative expenses.

        Consolidated net sales decreased $137 million, or 5.0%, to $2,595 million compared with $2,732 million in the first quarterhalf of 2000. Acquisitions contributed an increase of $19$77 million in net sales for the first half between years, offset by lower organic sales within both the Commercial Print and Logistics Services segments.

        Consolidated value-added revenue decreased $103 million, or 6.6%, to $1,476 million compared with $1,580 million in the first half of 2000. Acquisitions contributed an increase of $23 million in value-added revenue between years. Value-added revenue is affected by the price of scrap (by-product) paper we sell. Income from the sale of by-products is recorded as a reduction in our cost of materials. During the first quarterhalf of 2001, we recognized a reduction in our cost of materials of $13 million from by-product revenues, which represents a decrease of $3$22 million from the first quartersale of 2000.by-products, compared with $33 million for the year ago period.

        Gross profit as a percentage of net sales was 15.3%16.3% in the first quarterhalf of 2001 compared with 17.8%18.6% in the first quarterhalf of 2000.2000, primarily due to lower margins within the Commercial Print segment. Commercial Print’s gross profit margin was affected negatively in the first half of 2001 by lower volumes across most of the segment, primarily within Financial Services and Long-run Magazines, Catalogs and Inserts. Our Logistics Services segment, which has a lower gross marginsprofit margin than our Commercial Print segment, also represented a higher proportion of first half net sales in the first quarter of 2001 (14.3% versus 11.1%11.2% in the first quarter of 2000), primarily as a result of the expansion into package logistics through the acquisition of CTC in February 2000. Commercial Print’s gross margin decreased between years primarily due to lower Financial Services’ volume as a result of depressed capital markets, as well as escalating energy and healthcare costs..

        Selling and administrative expenses decreased $7$17 million, or 4.5%5.7%, to $138 million compared with $144$282 million in the first quarterhalf of 2000.2001, due to cost reduction initiatives. Selling and administrative expenses as a percentage of net sales for the first half was 10.6%10.9% in 2001 compared with 11.0% for the year ago period.

        Excluding restructuring and impairment charges (discussed in Note 11 to the condensed consolidated financial statements), earnings from operations decreased $68 million, or 32.9%, to $139 million in the first quarterhalf of 2001 compared with 10.7%2001. Lower earnings from operations were driven principally by the decline in net sales and lower gross profit margins within the Commercial Print segment. Including restructuring and impairment charges, earnings from operations decreased 68.5% versus the first quarterhalf of 2000. The majority of the decrease was due to reductions in discretionary spending.

        Net interest expense decreased 20.4%22.9% to $18$36 million in the first quarterhalf of 2001 due to lower debt levels, lower interest rates on commercial paper, and as a result of refinancingthe benefit for having refinanced $200 million of matured long-term bonds in December 2000 with commercial paper in December 2000, which carries aat lower interest rate.rates. Other income, net, decreased $2 million between years primarily due to non-recurring gains on the sale of assets in 2000 ($5 million) and lower earnings from unconsolidated investments ($2 million), partially offset by increasedadditional miscellaneous expenses in 2000income ($35 million).

        Excluding restructuring and impairment charges of $22 million(discussed in the first quarter of 2001 (see Note 11 to the condensed consolidated financial statements for additional information)statements), net income of $28$66 million in the first quarterhalf of 2001 decreased 40.3%$37 million, or 35.7%, from $47 million in the first quarterhalf of 2000, while diluted earnings per share decreased 39.5%34.5% to $0.23.$0.55. Including restructuring and impairment charges, first half net income decreased 68.9% while dilutedand earnings per diluted share decreased 68.4%.80.0% and 79.8%, respectively, between years. The effective tax rate for the first quarterhalf in both years was 38.5%.

        The following table shows the trends in net sales and value-added revenue by end market:end-market:

        A summary analysis of expense trends is presented below:

        Cash used inprovided by operating activities totaled $25$225 million in 2001, compared with cash provided by operating activities of $56$298 million in 2000. The decrease in 2001 was primarily due to the 2001 COLI tax payment of $62 million as a higher investment in operating working capital, a payment related toresult of the settlement of a federal income tax audit (see Note 7 tofor the condensed consolidated financial statements) and lower net income. The decrease in cash related to operating working capital was driven by a decrease in accounts payable, primarily due to lower overall activity and timing of payments, including payment of $22 million in COLI tax-related interest, and a decrease in other accrued liabilities, primarily due to a reduction in the share repurchase accrual from year-end, partially offset by lower receivables.years 1990 through 1992.

        Our cash conversion cycle (days’ sales outstanding plus days’ inventory on hand minus days’ payable outstanding) continued to improve to 42 days from 44 days awas consistent year ago.over year at 48 days. The ratio of operating working capital to sales also has continued to improve to 6.2%6.1% in 2001 from 6.7%6.5% in 2000.

        Our principal recurring investing activities are capital expenditures to improve the productivity of operations. In the first quarter,six months of 2001, capital expenditures totaled $33$95 million, a $24$27 million decrease from a year ago. We expect full year capital spending to be between $300 million and $350 million in 2001. Over2001, compared with capital spending of $237 million in 2000. This higher planned level of investment in 2001 is driven by our intent to create a more efficient print platform to serve our magazine, catalog and advertising insert customers. As discussed in the first quarter of 2001, over the next 24 months,two years, we planexpect to invest up to $300 million in this print platform, a third of which relates to improve the efficiencyrestructuring activities, to create fewer, larger and flexibility of the long-run printing and binding operations serving our magazine, catalog and retail customers. We will make investments to upgrade plants with fewer, yet wider and faster, presses and related equipment to offer customers more flexibility and improved distribution efficiencies with virtually no change to the company’s capacity.efficient facilities focused on very specific capabilities.

        In 2000, we made acquisitions and investments to extend our geographic reach and expand our range of capabilities. We have had no acquisitions to date in 2001.

        Acquisitions completed in the first quarter ofduring 2000 included:

        Financing activities include net borrowings, dividend payments and share repurchases. Our net borrowings decreasedincreased by $70$3 million year over year, primarily due to acquisition activity in the first quarter of 2000. See Acquisitions above.year.

        Commercial Paper is our primary source of short-term financing. On March 31,June 30, 2001, we had $385$297 million outstanding in commercial paper borrowing.borrowings. In addition, at March 31,June 30, 2001, we had a $438 million unused revolving credit facility with a number of banks. This facility provides support for issuing commercial paper and other credit needs. Management believes our cash flow and borrowing capability are sufficient to fund operations.

        We purchased 3.11.9 million shares of our stock in the second quarter of 2001 for $53 million in privately negotiated or open-market transactions. For the year to date, we have purchased 5.1 million and 0.9 million shares of our stock in the first quarter of 2001 and 2000, respectively, for $88$141 million and $21 million, respectively, in privately negotiated or open-market transactions.respectively.

        In January 2001, the board of directors authorized a share repurchase program for up to $300 million of the company’s common stock in privately negotiated or open-market transactions. Since February 1, under this program we have purchased approximately 2.24.1 million shares at an aggregate cost of approximately $61 million.$113 million through June 30, 2001. We expect to complete this program by the end of 2001.

        Net cash used to repurchase common stock infor the first quarter,year, defined as cash used for share repurchases net of proceeds from stock options exercised, was $114$155 million and $21$20 million in 2001 and 2000, respectively. See Note 8 to the condensed consolidated financial statements for a summary of shares outstanding.

        We remain a technology leader and hold 180have held 265 patents in print-related technology including 20 patents in the emerging areasince 1953, of digital printing.which 180 have been issued since 1980. We are a leader in technologies such as computer-to-plate, customer connectivity and digital imaging capabilities, as well as Internet-based services. In addition, we are a pioneer in managing digitized images and text, and hold more than 25 issued and pending patents for these emerging technologies. For more than 23 years, we have been first with every significant technological advancement in the printing industry.

        In December 1999, the U.S. Environmental Protection Agency, Region 5 (U.S. EPA) issued a Notice of Violation against us, pursuant to section 113 of the Clean Air Act (the Act). The notice alleges that our facility in Willard, Ohio, violated the Act and Ohio’s State Implementation Plan in installing and operating certain equipment without appropriate air permits. While the notice does not specify the remedy sought, upon final determination of a violation, the U.S. EPA may issue an administrative order requiring the installation of air pollution control equipment, assess penalties, or commence civil or criminal action against us. We responded to U.S. EPA on March 10, 2000. We believe that the resolution of this matter, even if unfavorable to us, will not materially impact our financial position or results of operations.

        In addition, we are a party to certain litigation arising in the ordinary course of business which, in the opinion of management, will not have a material adverse effect on the operations or financial condition of the company.

        We are a large user of paper, supplied to us by our customers or bought by us. The cost and supply of certain paper grades used in the manufacturing process will continue to affect our financial results. However, management currently does not see any disruptive conditions affecting prices and supply of paper in 2001.

        Postal costs are a significant component of our customers’ cost structures. Changes in postal rates went into effect in January 2001 and are expected to increaseincreased again in July 2001. These increases are not expected to negatively affect the company. In fact, postal rate increases enhance the value of Donnelley Logistics to our customers, as we are able to improve the cost efficiency of mail processing and distribution. This ability to deliver mail on a more precise schedule and at a lower relative cost should enhance our position in the marketplace.

        The cost of energy affects our operating costs in the Commercial Print segment and transportation costs in Logistics Services. In Logistics Services, increases in fuel costs can be offset by fuel surcharges passed on to customers, but continuing increases in other energy costs could affect our consolidated financial results.

        In addition, consumer confidence and economic growth are key drivers of demand for our services and a significant changeservices. The slowdown experienced in economic outlook could affect us.the U.S. economy is affecting demand across most of our businesses. We do not expect demand to return to 2000 levels during the second half of 2001. The slowdown experienced in U.S. capital markets in the fourth quarter of 2000 has continued into 2001 and spread to the international capital markets, negatively affecting our Financial Services business. However, growth in demand for customized communications solutions for investment management, banking, insurance, managed care and pharmaceutical companies provides opportunities for our Financial Services business to partially offset the U.S. capital markets slowdown.

        In the longer term, technological changes, including the electronic distribution of information, present both risks and opportunities for the company. Many of our new business initiatives are designed to leverage our distinctive capabilities to participate in the rapid growth in electronic communications. Our goal remains to help our customers succeed by delivering effective and targeted communications in the right format to the right audience at the right time. We believe that with our competitive strengths, including our comprehensive service offerings, technology leadership, depth of management experience, customer relationships and economies of scale, we can develop the most valuable solutions for our customers, which should result in increased shareholder value.

        The company is exposed to market risk from changes in interest rates and foreign exchange rates. However, the company generally maintains more than half of its debt at fixed rates (approximately 62%65% at March 31,June 30, 2001), and therefore its exposure to short-term interest rate fluctuations is immaterial to the consolidated financial statements of the company as a whole. The company’s exposure to adverse changes in foreign exchange rates also is immaterial to the consolidated financial statements of the company as a whole, and the company occasionally uses financial instruments to hedge exposures to foreign exchange rate changes. The company does not use financial instruments for trading purposes and is not a party to any leveraged derivatives. For further disclosure relating to financial instruments see the “Debt Financing and Interest Expense” footnote to the consolidated financial statements included in the company’s 2000 Annual Report on Form 10-K.

        On each of November 25, 1996, and June 30, 1998, class actions were brought against the company alleging racial discrimination and seeking actual, compensatory, consequential and punitive damages in an amount not less than $500 million. On December 18, 1995, a class action was brought against the company alleging age discrimination in connection with the 1993 closing of the company’s Chicago catalog operations, and violation of the Employee Retirement Income Security Act (ERISA). On December 28, 2000, a purported class action was brought against the company alleging failure to calculate pension benefits for former employees of the company’s Chicago catalog operations in accordance with plan documents and ERISA. These actions are described in Part I of this quarterly report on Form 10-Q.

        Certain statements in this filing, including the discussions of management expectations for 2001, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from the future results expressed or implied by those statements. Refer to Part I, Item 1 of the company’s 2000 Annual Report on Form 10-K for a description of such factors.

        (b) No current report on Form 8-K was filed during the firstsecond quarter of 2001.