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 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 operations for its print customers and other mailers. Donnelley Logistics serves its customers by consolidating and delivering printed products and packages to the U.S. Postal Service closer to the final destination, resulting in reduced postage costs and improved delivery performance. Operating results for Donnelley Logistics are included under the reportable segment “Logistics Services.”

Prior to January 1, 2002, the company disclosed two reportable segments: Commercial Print and Logistics Services. Results previously reported within the Commercial Print segment included the company’s businesses serving the following end markets: Magazines, Catalogs and Retail (including Specialized Publishing Services); Book Publishing Services; Telecommunications; Premedia Technologies; Financial Services; RRD Direct (direct mail); and International, which provides similar products and services outside the U.S. Following the formation of Donnelley Print Solutions, the operating results for Financial Services, RRD Direct and International are included in “Other” for segment reporting purposes. Prior year results have been restated to conform to the new segment presentation.

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

On April 1, 2002, the company reached a settlement agreement with the IRS resolving all disputes over the tax deductibility of interest on loans taken out against its COLI programs. As part of the settlement, the company agreed to the disallowance of 80% of its interest deductions on loans related to its COLI programs from 1990 through 1998. Prior to the settlement, the company’s exposure related to past COLI interest deductions was $272 million, including interest, after-tax. Based upon the 80% settlement, the company’s exposure for all years is approximately $217 million in taxes and interest, after-tax of which $62 million ($55 million after-tax) was paid in prior years. The company paid approximately $130 million of this liability to the IRS in April 2002, with the remainder expected to be paid prior to December 31, 2003. The remaining amount owed is classified in the accompanying condensed consolidated balance sheet as current income taxes payable.

As part of the settlement with the IRS, the company also surrendered approximately 17,000, or 61%, of its outstanding COLI policies to the insurance carriers in April 2002. The IRS agreed to an 80% reduction of the taxable portion of the gain related to the surrender of the COLI policies. The tax at 40% on the remaining 20% gain upon surrender of the policies resulted in additional amounts owed to the IRS of $18 million. In April 2002, the company received $12 million in net cash surrender value related to the policies surrendered.

As a result of the company’s settlement agreement with the IRS, the company reduced its tax reserves related to COLI to equal the settlement amounts. Accordingly, in the first quarter of 2002, the company recorded a one-time tax benefit of $30 million to reflect the reduction in tax reserves. In addition, the company recorded a nonrecurring pretax charge of $5 million in the first quarter of 2002 related to the surrender of the above COLI policies, which is classified in other income (expense), net,

The company entered into a swap agreement with an effective date of May 15, 2002 for a notional amount of $200 million that matures on November 15, 2002. This agreement swaps a floating rate of six month LIBOR for a fixed rate of 2.2675% per annum. The net effect of this agreement is to achieve a fixed rate of 3.13% per annum for the period from May 15, 2002 to November 15, 2002. This swap agreement does not qualify for hedge accounting (as defined by SFAS No. 133) and, accordingly, the change in the fair value of this agreement of $0.6 million and $0.4 million for the quarter and six months ended June 30, 2002 was recorded as a loss and is included in interest expense. The fair value was a liability of $0.2 million at June 30, 2002 and is included in “Other accrued liabilities.”

In July 2002, the company entered into two additional interest rate swap agreements with an effective date of November 15, 2002 for notional amounts of $100 million each, maturing on May 15, 2003. The first agreement swaps a floating rate of six month LIBOR for a fixed rate of 2.0%. The second agreement swaps a floating rate of six month LIBOR for a fixed rate of 1.965%. The net effect of these agreements is to achieve a fixed rate of 2.846% per annum from November 15, 2002 through May 15, 2003. These agreements do not qualify for hedge accounting under SFAS No. 133.

During the first quarter of 2002, the company recognized a pretax restructuring and impairment charge of $27 million, and reduced earnings from operations in the company’s business segments as follows: Donnelley Print Solutions—$23 million; Corporate—$1 million; and Other—$3 million. This charge included $5 million in expensed as incurred charges for defined exit activities that related to 2001 announced plans (the 2001 plans). The first quarter 2002 restructuring plan (the first quarter plan) consisted of workforce reductions and consolidations at several of the company’s facilities. The first quarter pretax charge consisted of the following:

During the second quarter of 2002, the company recognized a pretax restructuring and impairment charge of $16 million, and reduced earnings from operations in the company’s business segments as follows: Donnelley Print Solutions—$14 million; and Other—$2 million. This charge included $6 million in expensed as incurred charges for defined exit activities that related to 2001 plans. The second quarter 2002 restructuring plan (the second quarter plan) consisted of workforce reductions and consolidations at several of the company’s facilities. The second quarter pretax charge consisted of the following:

The following summarizes the restructuring activities from January 1, 2002 to June 30, 2002:

In connection with the 2001 plans, the company has ceased print production at its St. Petersburg and South Daytona, Florida, Houston, Texas, Des Moines, Iowa and Old Saybrook, Connecticut facilities, and all customer work has been transferred to other company facilities. Additional charges related to the 2001 plans are expected to be minimal, and will primarily relate to relocation costs for

In connection with the plans announced in 2002, the company has ceased print production at its Berea, Ohio facility, and customer work has been transferred to other company facilities. The Berea, Ohio facility is currently being held for disposal. Additional charges related to the 2002 plans are expected to be approximately $4 million, which are anticipated to be recognized during the remainder of the year, and relate primarily to employee and equipment relocation. Of a total of 941 planned employee terminations related to the 2002 plans, 909 have been completed. The remaining terminations are expected to be completed by December 31, 2002.

As a result of restructuring actions, the company will reduce its workforce by 4,113 employees or approximately 12.5% of its workforce. As of June 30, 2002, under the restructuring plans, a total of 3,632 terminations have been completed.

The net book value of assets to be disposed of under the plans as of June 30, 2002 was $30 million. Annual depreciation on these assets was approximately $3 million.

In the first quarter of 2001, the company recorded a non-cash pretax impairment charge of $2 million in other income (expense) to writedown the carrying values of two Internet-related technology

Under SFAS No. 142, the company is required to perform transitional impairment tests for its goodwill. During the second quarter of 2002, the company completed the first step of the transitional goodwill impairment test, as required by SFAS No. 142. This test required the company to compare the carrying value of its reporting units to the fair value of these units. If the reporting unit’s fair value is below its carrying value, a potential goodwill impairment exists and the company is required to complete the second step of the transitional impairment test to quantify the amount of the potential goodwill impairment charge. Based on the results of the first step of the transitional impairment test, no impairment losses were identified. Accordingly, the company is not required to complete the second step of the transitional impairment test. The annual test of goodwill and intangible assets for impairment will be performed during the fourth quarter of 2002.

In accordance with SFAS No. 142, effective January 1, 2002, the company discontinued its amortization of goodwill. The impact of discontinuing amortization of goodwill on net income and basic and diluted earnings per share for the three and six months ended June 30, 2002 and 2001 is as follows:

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 138-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 U.S. 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:

We are also a leader in providing short-run publishers, catalogers and associations with comprehensive communications solutions. We serve customers with highly targeted audiences and typical production runs from 15,000 to 200,000 copies. We offer full-service and cost-effective solutions for business-to-business and consumer magazine and catalog publishers, as well as journal, association and academic publishers.

In February 2000, Donnelley Logistics extended its services by adding package delivery (package logistics) to its established business of delivering printed material (print logistics). By leveraging the USPS infrastructure to make the final delivery to households and businesses, the company provides more economical logistics services. Through “zone skipping,” greater postal discounts are obtained, providing more timely, reliable delivery for customers.

In addition to delivering packages and printed material, Donnelley Logistics also provides package return services 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.

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, we produced 40% of the top 25 initial public offerings in 2001, as well as three of the top five insurance demutualizations since 2000, including the largest in 2001. 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. These include services which help our customers leverage the power of the Internet in communicating with their audiences. 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.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The U.S. Securities and Exchange Commission has defined a company’s most critical accounting policies as the ones that are most important to the portrayal of the company’s financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified the critical accounting policies and judgments addressed below. We also have other key accounting policies, which involve the use of estimates, judgments and assumptions. For additional information on accounting policies, refer to the “Summary of Significant Accounting Policies” footnote on page F-6 in the 2001 Annual Report on Form 10-K. Although we believe that our estimates and assumptions are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different assumptions or conditions.

The company recognizes revenue when title and risk of loss pass to the customer. At the time of sale, management records appropriate provisions for any uncollectible amounts based upon available information and historical sales and collectibility history.

The company is subject to lawsuits, investigations and other claims related to environmental, employment and other matters. Periodically, we review the status of each significant matter and assess our potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be estimated, we accrue a liability for the estimated loss. Because of uncertainties related to these matters, accruals are based on the best information available at the time. As additional information becomes available, we reassess the potential liability related to pending claims and may revise our estimates. See Note 4 to the condensed consolidated financial statements for a description of certain legal proceedings.

The company is required to assess potential impairments to its long-lived assets if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impaired asset is written down to its estimated fair value based upon the most recent information available. Estimated fair market value is generally measured by discounting estimated future cash flows developed by management. Long-lived assets that are to be disposed of are recorded at the lower of the carrying value or the fair market value less the estimated cost to sell. The company’s long-lived assets primarily include property, plant and equipment, investments, goodwill and other intangible assets (primarily the costs of acquiring print contracts and volume guarantees that are amortized over the periods in which benefits will be realized).

The company sponsors retirement plans in various forms covering substantially all employees who meet eligibility requirements. The measurement of the expense and the liability related to the plans is based on the company’s assumptions related to future events, including the discount rate, expected return on plan assets, rate of future compensation increases and health care cost trend rates. In addition, the company’s actuarial consultants use subjective factors such as withdrawal and mortality rates to estimate these factors. The actuarial assumptions used by the company and the company’s

The company makes judgments regarding collectibility of outstanding receivables and provides appropriate allowances when collection becomes doubtful. Provisions are made based upon a review of specific customers. Provisions are applied at differing rates taking into consideration the age of the receivable, the creditworthiness and liquidity of the customer, historical collection experience and current economic trends.

Significant judgment is required in determining the effective tax rate used by the company. In the ordinary course of business, there are transactions and calculations where the ultimate tax outcome is uncertain. Additionally, the company’s tax returns are subject to audit by various domestic and foreign tax authorities. As part of these audits, the company’s tax positions can be questioned. Although we believe that our estimates are reasonable, no assurance can be given that the final tax outcome will not be different than that which is reflected in our historical income tax provision and accruals.

Management estimates certain expenses in an effort to record those expenses in the period incurred. The company records accruals for workers compensation based on reported claims, as well as historical claims experience for claims incurred, but not yet reported. These estimates are based on historical loss development factors.

Other than non-cancelable operating lease commitments, the company does not have off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities.” The consolidated financial statements include the accounts of the company and its majority-owned subsidiaries. Minority interests in the income or loss of consolidated subsidiaries are included in other income (expense) in the consolidated income statement. Intercompany items and transactions are eliminated in consolidation.

The following is a discussion of the results of operations for the second quarter and first half of 2002 compared with the second quarter and first half of 2001, and a discussion of the changes in financial condition during the first half of 2002.

The following items affect comparability of the condensed consolidated statements of income and segment operating results:

The following table summarizes items affecting comparability:

Consolidated net sales decreased $143 million, or 11.1%, to $1,149 million compared with $1,292 million in the second quarter of 2001, driven by the decline in net sales of our Donnelley Print Solutions

For our print-related businesses, 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. The value of 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 and postage. By measuring value-added revenue, we eliminate the effects of material prices and transportation costs, as well as mix issues related to customer-furnished versus Donnelley-furnished paper, that are largely beyond our control.

Consolidated value-added revenue decreased $64$66 million, or 8.5%8.9%, to $684$682 million compared with $748 million in the second quarter of 2001, driven by the decline in value-added revenue of our Donnelley Print Solutions segment of 8.6%. This decline of 8.6% was less than the decline in Donnelley Print Solutions’ net sales of 11.1%, primarily due to higher customer-furnished paper during 2002 and improved material yield from productivity initiatives. Value-added revenue of our Logistics Services segment increased 15.7%8.4% between years, despite lower net sales, due to a 39.6%26.8% increase in value-added revenue for package logistics driven by favorable postage and per unit transportation costs, partially offset by a 7.3% decrease within our print logistics business. In addition, 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 2002, we recognized a reduction in cost of materials of $10 million from by-product revenues, compared with $9 million a year ago.

Gross profit as a percentage of net sales was 17.1%16.9% in the second quarter of 2002 compared with 17.2% in the second quarter of 2001. Our second quarter 2002 gross profit margin was impacted negatively by a $9 million provision for litigation related to the closing of our Chicago catalog operations in 1993 (see Note 4 to the condensed consolidated financial statements), partially offset by higher gross profit margins within our Donnelley Print Solutions and Logistics Services segments between years. Our Logistics Services segment, which generally has lower gross profit margins than our Donnelley Print Solutions segment, also represented a higher proportion of net sales in the second quarter of 2002 (15.4% versus 14.4% in 2001).

Selling and administrative expenses decreased $7$8 million, or 5.0%5.4%, to $137 million compared with $144$145 million in the second quarter of 2001. This decrease was driven by reductions in volume-based

Net interest expense decreased 7.4% to $17 million in the second quarter of 2002, primarily due to lower effective interest rates on our outstanding debt. Other income, net, in the second quarter of 2002 was $13 million compared with $3 million in the second quarter of 2001. Second quarter 2002 other income, net, included a $6 million gain on the collection of a previously reserved note receivable and a $3 million gain on the disposition of an equity-based investment. Second quarter 2002 results also benefited between years from higher foreign currency transaction gains of $2 million, partially offset by $1 million of lower miscellaneous income.

Including unusual items, earnings before income taxes in the second quarter of 2002 were $39$37 million compared with $10 million in 2001. Net income was $25$24 million, up $19$18 million from $6 million in 2001. Diluted earnings per share of $0.22$0.21 increased $0.17$0.16 from $0.05 in 2001.

The following comparisons exclude the impact of the unusual items previously discussed: Earnings before income taxes of $55$53 million in the second quarter of 2002 decreased 12.2%14.8% from $62 million in the second quarter of 2001. The effective tax rate for the second quarter of 2002 was 37.0% compared with 38.5% in 2001. The 2002 effective rate is lower than 2001 due to the company’s settlement with the IRS surrounding the company’s COLI program (see Note 7 to the condensed consolidated financial statements). Diluted earnings per share of $0.30$0.29 decreased $0.02,$0.03, or 6.3%9.4%, from $0.32 in 2001.

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

As discussed more fully in Note 6 to the condensed consolidated financial statements, we have two reportable segments: Donnelley Print Solutions and Logistics Services.

Net sales for our Donnelley Print Solutions segment decreased $90 million in the second quarter of 2002, or 11.1%, from a year ago. Second quarter net sales for Magazines, Catalogs and Retail decreased 15.0% between years, which primarily reflected volume decreases across all major markets, along with price deterioration. The continued economic slowdown during 2002 has resulted in lower volumes and more customer bankruptcies within our Catalogs and Retail markets, and lower advertising pages for both trade and consumer magazines. The net sales decline in Premedia Technologies is driven by these same factors. Depressed volumes in these markets are driving increased competition and pricing pressures. We have also experienced year over year market share declines based on actions we took in late 2000 and early 2001 to eliminate less profitable work and hold price levels, when economic activity levels were still relatively robust. Book Publishing Services’ second quarter net sales decreased 0.7% between years due to volume shortfalls within the religious and professional markets, partially offset by volume increases within the education and consumer markets. Second quarter 2002 net sales for Telecommunications were down 11.2% between years, primarily due to lower volumes and a shift to more customer-furnished paper.

Second quarter net sales of our Logistics Services segment decreased $10 million, or 5.1%, from a year ago. Second quarter net sales of our print logistics business were down 10.1% between years driven by lower volumes from a continued slow economy. Second quarter net sales of our package logistics business were up 3.0% between years. Unit volumes for package logistics were up 27.3% between years, which was partially offset by a mix change towards lighter weight, lower priced packages.

Financial Services’ second quarter net sales decreased $29 million, or 16.7%, from a year ago, driven by volume decreases in both the U.S. and international capital markets. We derived 8.8% and 13.5% of our capital markets net sales from international in the second quarter of 2002 and 2001, respectively. For the second quarter of 2002, U.S. capital markets and international capital markets net sales were down 13.2% and 46.7%, respectively. Within Financial Services, second quarter net sales from customized communications solutions decreased 15.5% between years. Second quarter net sales for RRD Direct were down 7.9% between years, primarily due to more customer-furnished paper. Second quarter net sales for International were down 12.6% between years, due to declines in Latin America, partially offset by increases in Poland and China.

Second quarter value-added revenue of our Donnelley Print Solutions segment decreased $43 million, or 8.6%, from a year ago, primarily due to the volume declines and price deterioration noted above. Value-added revenue for Magazines, Catalogs and Retail declined 14.8% between years, consistent with the decline in net sales. Value-added revenue increased 2.2% for Book Publishing Services, driven by improved material yield. Value-added revenue for Telecommunications decreased 1.2% between years, which was less than the percentage decline in net sales, due to higher customer-furnished paper during 2002 and improved material yield.

Second quarter value-added revenue for the Logistics Services segment increased $6$3 million, or 15.7%8.4%, from a year ago despite a 5.1% drop in net sales. Value-added revenue for our package logistics business increased 39.6%26.8% between years, driven by lower per unit transportation costs and increased postage discounts due to deeper penetration of the postal system (closer to the final destination). Value-addedValue- added revenue for our print logistics business was down 7.3% between years, due to the volume shortfalls noted above, despite improvements in per unit transportation costs. Per unit transportation cost reductions across the Logistics Services segment between years reflect productivity initiatives, including improved vendor management and implementation of enhanced optimization software.

Declines in value-added revenue for Financial Services and International between years were attributable to the declines in net sales noted above.

Excluding restructuring and impairment charges, second quarter earnings from operations for the Donnelley Print Solutions segment increased $2 million, or 2.8%, between years. While net sales

Excluding restructuring and impairment charges, second quarter 2002 earnings from operations for the Logistics Services segment were $4$2 million, compared with a loss from operations of $3 million a year ago. This improved performance was driven by higher value-added revenues from our package logistics business, reduced per unit transportation costs across the segment, and lower goodwill amortization of $2 million.

Excluding restructuring and impairment charges, earnings from operations of $3 million within the “Other” business segment during the second quarter of 2001 included additional expenses of $7 million to grow complementary businesses. Earnings from operations within Financial Services decreased during the second quarter between years, driven by the slowdown in capital markets. RRD Direct’s

The loss from operations for the Corporate segment, excluding restructuring and impairment charges, was $10 million in the second quarter of 2002 compared with earnings of $18 million in the second quarter of 2001. The decrease between years was driven by an additional provision for litigation (see Note 4 to the condensed consolidated financial statements) ($9 million); higher management incentive compensation ($7 million); lower benefit plan earnings ($2 million); higher workers’ compensation expenses ($2 million); and higher unallocated corporate administrative and other expenses ($8 million).