RR Donnelley 2002 Annual Report


4	Financial Highlights
4	Letter to Shareholders
4	Capabilities Overview
6	Every Step of the Way
	4 It Pays to Prepare
	4 Printing–Our Foundation
	4 The Last Mile
4	Financials
4	Board of Directors
4	Leadership
4	Additional Information
4	Our Values

The Last Mile

Distribution is a significant cost for our customers, and our ability to deliver mail and packages more predictably and cost-effectively than competitors is one of the most important ways we provide value to our customers. We offer a wide range of solutions that maximize economy, efficiency and response, and enable customers to focus on their core business.

20 Billion + 150 Million + 6 Million = Growth
We provide delivery solutions for leading catalogers, e-retailers, publishers and financial services firms. In 2002, we directed the distribution of more than 20 billion print and mail pieces, and more than 160 million packages.

We save our customers time and money by delivering materials as deeply as possible into the postal system, bypassing numerous postal handling and processing steps, and qualifying our customers for significant postal discounts. We can then track delivery as the postal service handles the last leg of delivery to the home. The results are lower costs, more reliability and more timely delivery for our customers.

RR Donnelley Recognized as Top Vendor

Largest USPS Commercial Partner, Largest Consolidator of Packages

Our logistics services include:

Print Services: We provide sophisticated distribution and mail management services for major publishers, catalogers and other direct marketers. As the first and now the largest commercial business partner of the USPS, we leverage our volume and expertise to ensure customers' magazines, catalogs, books, direct mail and other printed materials are distributed in the most timely, efficient and cost-effective manner.
Package Services: We are the largest consolidator of small packages to homes in the United States. Through a nationwide network of strategically located distribution centers, we are able to quickly and efficiently manage customer package volumes and enter this merchandise into the postal system for "last-mile" delivery. This process saves our customers up to 25 percent versus other standard ground services. In addition, we provide return management to handle and process returned merchandise.

Postal Reform

New Consolidation Center to Open in 2003
We are enhancing our consolidation and distribution network by opening a 670,000-square-foot facility in York, Pennsylvania. The new center is expected to be operational by mid-2003, and is part of our strategy to continuously improve service and expand capacity.

The facility will consolidate operations in the northeastern United States. Customers will see service improve by up to two days within the region, and by one day for the balance of the country. The new facility will also increase our capacity by approximately 40 million packages per year.