DONNELLEY R R & SONS CO, 10-K, 1994-03-28

DONNELLEY R R & SONS CO
10-K, 1994-03-28
COMMERCIAL PRINTING

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1993

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
COMMISSION FILE NUMBER 1-4694

R. R. DONNELLEY & SONS COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 36-1004130
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

77 WEST WACKER DRIVE,
CHICAGO, ILLINOIS 60601
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)

REGISTRANT'S TELEPHONE NUMBER--(312) 326-8000

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON
----------------------------- WHICH REGISTERED
COMMON (PAR VALUE $1.25) --------------------------------------------
PREFERRED STOCK PURCHASE RIGHTS NEW YORK, CHICAGO AND PACIFIC STOCK
EXCHANGES

NEW YORK, CHICAGO AND PACIFIC STOCK
EXCHANGES
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.
YES X NO

INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO
THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATE-
MENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT
TO THIS FORM 10-K. [X]

AS OF MARCH 1, 1994, 154,221,434 SHARES OF COMMON STOCK WERE OUTSTANDING, AND
THE AGGREGATE MARKET VALUE OF THE SHARES OF COMMON STOCK (BASED ON THE CLOSING
PRICE OF THESE SHARES ON THE NEW YORK STOCK EXCHANGE--COMPOSITE TRANSACTIONS ON
MARCH 1, 1994) HELD BY NONAFFILIATES WAS APPROXIMATELY $4,490,393,042.

DOCUMENTS INCORPORATED BY REFERENCE

PORTIONS OF THE REGISTRANT'S DEFINITIVE PROXY STATEMENT DATED FEBRUARY
17, 1994 ARE INCORPORATED BY REFERENCE INTO PART III OF THIS FORM 10-K.

- --------------------------------------------------------------------------------
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<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
FORM 10-K
ITEM NO. NAME OF ITEM PAGE
--------- ------------ ----
<C> <S> <C> <C> <C>
Part I
Item 1. Business.......................................... 3
Item 2. Properties........................................ 4
Item 3. Legal Proceedings................................. 7
Item 4. Submission of Matters to a Vote of Security
Holders.......................................... 7
Executive Officers of R. R. Donnelley & Sons
Company.......................................... 7
Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.............................. 9
Item 6. Selected Financial Data........................... 10
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............. 10
Item 8. Financial Statements and Supplementary Data....... 12
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.............. 13
Part III
Item 10. Directors and Executive Officers of the
Registrant....................................... 13
Item 11. Executive Compensation............................ 13
Item 12. Security Ownership of Certain Beneficial Owners
and Management................................... 13
Item 13. Certain Relationships and Related Transactions.... 13
Part IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K.............................. 13
Signatures................................................... 14
Index to Financial Statements and Financial Statement Sched-
ules........................................................ F-1
Index to Exhibits............................................ E-1
</TABLE>

2
<PAGE>

PART I

ITEM 1. BUSINESS

R. R. Donnelley & Sons Company (the company), incorporated in the state of
Delaware in 1956 as the successor to a business founded in 1864, is a major
participant in the information industry, providing a broad range of services in
print and digital media. The company believes it is the largest supplier of
commercial print and print-related services in the United States. It is a major
supplier in the United Kingdom and also provides services in Mexico, other
locations in Europe and in Asia. Services provided to customers include
presswork and binding, including on-demand customized publications;
conventional and digital pre-press operations, including desktop publishing and
filmless color imaging, necessary to create a printed image; software
replication, translation and localization; list, list enhancement, database
management and mail production services (provided primarily through Metromail);
design and related creative services (provided through Mobium); cartographic
services; electronic communication networks for simultaneous worldwide product
releases; digital services to publishers; and, through R. R. Donnelley Logistic
Services, the planning for and fulfillment of truck, rail, mail and air
distribution for products of the company and its customers, as well as third
parties. The company's pre-press, presswork and binding operations have
accounted for over 90% of the company's revenues for each of the last five
years. In 1990, the company acquired the Meredith/Burda companies, thereby
enhancing the company's service capabilities by adding four printing plants.

The company provides these services to more than 4,000 customers, including
publishers of consumer and trade magazines, books and telephone and other
directories; direct mail (catalog) and in-store merchandisers; software
publishers and computer hardware manufacturers; and financial institutions and
other firms requiring substantial amounts of printing and other related
information services. Due to the range of services it provides, the company
believes it is uniquely positioned to meet the information and communication
needs of its customers.

The relative contribution of each of the company's major product areas to its
total sales for the five-year period ended December 31, 1993, is presented in
the table below. In 1993, international printing operations represented less
than 9% of consolidated results and assets.

<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
REVENUE BY PRODUCT TYPE
Catalogs, Inserts and Specialty Products............... 32% 35% 39% 37% 33%
Magazines.............................................. 18 17 17 18 20
Directories............................................ 14 16 16 17 18
Books.................................................. 13 11 11 11 13
Computer Documentation Services........................ 12 10 8 7 6
Financial.............................................. 6 5 4 4 4
Other.................................................. 5 6 5 6 6
</TABLE>

Most of the company's sales are made pursuant to term contracts with
customers, with the remainder being made on a single-order basis. For some
customers, the company prints and provides related services for several
different publications under different contracts. The company's contracts with
its larger customers normally run for a period of years (usually three to five
years but longer in the case of contracts requiring significant capital
investment) or for an indefinite period subject to termination on specified
notice by either party. Such sales contracts generally provide for timely price
adjustments to reflect price changes for materials, wages and utilities. No
single customer has a relationship with the company that accounted for 3% or
more of the company's sales in 1993. The company's dependence for sales from
its ten largest customers has declined in the past eleven years to
approximately 22% of sales in 1993, down from 35% of sales in 1983.

3
<PAGE>

The various phases of the information industry in which the company is
involved are highly competitive. While the company has contracts with its
customers as indicated above, there are numerous competing companies and
renewal of such contracts is dependent, in part, on the ability of the company
to continue to differentiate itself from the competition. Differentiation
results, in part, from the company's broad range of value-added services, which
include Selectronic(R) imaging and gathering; list maintenance, database
management and targeted mail programs; expansive mailing and distribution
services; in-plant reception from customer desktop publishing systems;
fulfillment and returned books inventory management; replication of magnetic
media products; electronic data management and distribution; and design.
Although the company believes it is the largest commercial printer in the
United States, it estimates that its revenues represent approximately 7% of the
total sales in the industry. Although the company's plants are well located for
the national or regional distribution of its products, competitors in some
areas of the United States have a competitive advantage in some instances due
to such factors as freight rates, wage scales and customer preference for local
services. In addition to location, other important competitive factors are
price and quality as well as the range of available services.

An excess of supply versus demand exists for most grades of paper. The list
price of paper remains stable, although discounting is prevalent for certain
grades of paper. Existing paper supply contracts (at prevailing market prices)
will cover the company's requirements through 1994, and management believes
that extensions and renewals of these purchase contracts will provide adequate
paper supplies in the future. Ink and ink materials are currently available in
sufficient amounts, and the company believes that it will have adequate
supplies in the future.

The company estimates that its capital expenditures in 1994 and 1995 to
comply with federal, state and local provisions for environmental controls, as
well as expenditures, if any, for the company's share of costs to clean
hazardous waste sites that have received waste from the company, will not be
material and will not have a material effect upon its earnings or its
competitive position.

The company employed an average of approximately 32,100 persons in 1993
(34,000 persons at December 31, 1993), of whom more than 11,000 had been with
the company for more than 10 years and over 2,700 for 25 years or longer.

ITEM 2. PROPERTIES

R. R. Donnelley & Sons Company's corporate office is located in leased
facilities in Chicago, Illinois. Production facilities leased by the company
are listed in the chart beginning on page 6. Printing and other plants that are
owned and operated by the company (or through wholly owned subsidiaries) are
listed below and continuing on the next page.

4
<PAGE>

<TABLE>
<CAPTION>
DATE OF
DATE OF ACQUISITION LATEST SQUARE PRINCIPAL PRODUCTS
OWNED LOCATION(S) OR OPERATIONS BEGAN ADDITION FEET OR SERVICES
----------------- ------------------- -------- --------- --------------------
<S> <C> <C> <C> <C>
Warsaw, IN 1959 1987 881,000 Catalogs, Inserts
Old Saybrook, CT 1959 1986 292,000 Magazines, Catalogs
Lancaster, PA 1959 1987 1,437,000 Directories,
Catalogs, Inserts,
Magazines,
Financial
Mattoon, IL 1968 1989 668,000 Magazines, Catalogs,
Inserts
Dwight, IL 1968 1987 434,000 Directories,
Catalogs, Inserts,
Magazines
Glasgow, KY 1970 1987 461,000 Magazines, Catalogs,
Inserts
Gallatin, TN 1975 1987 528,000 Catalogs, Inserts,
Magazines
York, England 1978 1985 291,000 Directories,
Magazines, Catalogs
Los Angeles, CA 1978 1986 252,000 Magazines, Catalogs,
Inserts, Financial
Harrisonburg, VA 1980 1993 613,000 Books
Spartanburg, SC 1980 1989 545,000 Catalogs, Inserts,
Magazines
Gateshead, England 1983 1989 189,000 Directories
Danville, KY 1985 1992 361,000 Magazines, Catalogs,
Inserts
Portland, OR 1986 1989 247,000 Directories,
Computer
Documentation
Services
Greeley, CO 1986 -- 165,000 Directories
Reno, NV 1987 -- 393,000 Catalogs, Inserts
Pittsburgh, PA 1987 -- 70,000 Financial
Lincoln, NE 1987 1988 233,000 Mail Production,
Data Center
Rutland, VT 1987 1987 113,000 Mail Production
Mt. Pleasant, IA 1987 -- 211,000 Mail Production
Seward, NE 1987 -- 161,000 Mail Production
Thorp Arch, En- 1989 -- 146,000 Computer
gland Documentation
Services
South Daytona, FL 1990 1993 237,000 Magazines, Catalogs,
Inserts
Des Moines, IA 1990 -- 627,000 Magazines, Catalogs,
Inserts
Lynchburg, VA 1990 -- 412,000 Catalogs, Inserts
Newton, NC 1990 -- 455,000 Catalogs, Inserts,
Magazines
Casa Grande, AZ 1990 -- 316,000 Catalogs, Inserts
Reynosa, Mexico 1990 -- 260,000 Books
Singapore 1990 1993 160,000 Computer
Documentation
Services
Houston, TX 1991 -- 41,000 Financial
San Juan del Rio, 1992 1993 80,000
Mexico Catalogs
Provo, UT 1992 -- 126,000 Computer
Documentation
Services
Mendota, IL 1992 -- 110,000 Magazines
Seymour, IN 1992 -- 45,000 Specialty Products
Allentown, PA 1993 -- 23,000 Books
Bloomsburg, PA 1993 -- 105,000 Books
Pontiac, IL 1993 -- 240,000 Magazines
Scranton, PA 1993 -- 399,000 Books
Senatobia, MS 1993 -- 140,000 Magazines
Newbern, TN 1993 -- 33,000 Books
</TABLE>

5
<PAGE>

<TABLE>
<CAPTION>
LEASED LOCATIONS SQUARE FEET
---------------- -----------
R. R. DONNELLEY & SONS COMPANY
------------------------------
<S> <C>
Columbus, OH................................................ 15,000
Crawfordsville, IN.......................................... 48,000
Elgin, IL................................................... 65,000
Fremont, CA................................................. 183,000
Glasgow, KY................................................. 25,000
Hudson, MA.................................................. 141,000
Lancaster, PA............................................... 41,000
Los Angeles, CA............................................. 45,000
New York, NY................................................ 92,000
Newark, CA.................................................. 52,000
Orem, UT.................................................... 33,000
Raleigh, NC................................................. 58,000
Wheeling, IL................................................ 65,000
Willowbrook, IL............................................. 55,000
R. R. DONNELLEY NEDERLAND, B.V.
-------------------------------
Apeldoorn, The Netherlands.................................. 60,000
Amsterdam, The Netherlands.................................. 15,000
R. R. DONNELLEY NORWEST INC.
----------------------------
Beaverton, OR............................................... 50,000
Seattle, WA................................................. 89,000
Tigard, OR.................................................. 140,000
Preston, WA................................................. 70,000
LABORATORIO LITO COLOR, S.A. DE C.V.
------------------------------------
Mexico City, Mexico......................................... 15,000
R. R. DONNELLEY PRINTING COMPANY
--------------------------------
Lynchburg, VA............................................... 22,000
METROMAIL CORPORATION
---------------------
Lincoln, NE................................................. 28,000
Lombard, IL................................................. 100,000
St. Louis, MO............................................... 13,000
R. R. DONNELLEY (U.K.) LIMITED
------------------------------
London, England............................................. 20,000
Cumbernauld, Scotland....................................... 53,000
MOBIUM CORPORATION FOR DESIGN AND COMMUNICATION
-----------------------------------------------
Chicago, IL................................................. 10,000
IRISH PRINTERS HOLDINGS
-----------------------
Dublin, Ireland............................................. 104,000
Kildare, Ireland............................................ 63,000
DONNELLEY CARIBBEAN GRAPHICS, INC.
----------------------------------
Bridgetown, Barbados........................................ 29,000
</TABLE>

The company has historically followed the practice of adding capacity to meet
customer requirements, and has retained a substantial portion of its earnings
for reinvestment in plant and equipment for this purpose. Management believes
that growth in 1994 will be financed in large part by internally-generated
funds. The amount of capital expenditures in future years will depend upon the
requirements of the company's existing and future customers.

6
<PAGE>

ITEM 3. LEGAL PROCEEDINGS

On July 13, 1990, the Federal Trade Commission ("FTC") filed a complaint in
the U.S. District Court for the District of Columbia ("District Court") seeking
a preliminary injunction enjoining the company from consummating its
acquisition of the Meredith/Burda companies. The complaint alleged that
consummation of the acquisition might substantially lessen competition in
certain alleged rotogravure printing markets. The District Court denied the
motion of the FTC for an injunction as well as a further motion for injunction
pending appeal. The acquisition was closed on September 4, 1990.

On October 11, 1990, the FTC Staff initiated its administrative action
challenging the acquisition of the Meredith/Burda companies. The complaint
alleged the same issues as did the complaint before the District Court. Trial
before an administrative law judge ("ALJ") of the FTC concluded in June, 1993.
On December 30, 1993, the FTC's ALJ issued his initial decision upholding the
position of the FTC Staff. The ALJ found that the acquisition by the company of
the Meredith/Burda companies created a "dominant firm" and significantly
increased concentration in a "high-volume publication rotogravure market," thus
increasing the likelihood of anti-competitive conduct and actual or tacit
collusion among the firms participating in that market. The ALJ ordered the
divestiture of the Meredith/Burda companies and prohibited the acquisition by
the company of any other firms participating in the U.S. "rotogravure market"
without FTC approval for a period of ten years.

The company has filed its appeal of the ALJ's decision, asking the FTC
Commissioners to dismiss the FTC complaint. The appeal has the effect of
staying the ALJ's order. If the appeal by the company is not granted, the
company intends to file a further appeal to a U.S. Court of Appeals.

The company continues to believe that the acquisition of the Meredith/Burda
companies was legally proper and will ultimately be upheld.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the quarter
ended December 31, 1993.

EXECUTIVE OFFICERS OF R. R. DONNELLEY & SONS COMPANY

<TABLE>
<CAPTION>
NAME, AGE AND OFFICER BUSINESS EXPERIENCE DURING
POSITIONS WITH THE COMPANY SINCE PAST FIVE YEARS(1)
- -------------------------- ------- --------------------------
<S> <C> <C>
J. R. Walter 1985 Management responsibilities as Chairman of the
47, Director, Board and Chief Executive Officer. Prior manage-
Chairman of the Board ment responsibilities as Chief Executive Officer
and Chief Executive Offi- and President.
cer(2)
J. R. Donnelley 1983 Management responsibilities as Vice Chairman of
58, Director, Vice Chairman the Board. Prior management responsibility for
of the Board Corporate Development.
R. J. Cowan 1988 Management responsibilities for Information
41, Executive Vice Services, Technology, Database Technology Serv-
President, and Director, ices, Information Systems and Metromail. Prior
Information Resources management responsibilities for Book, Financial
Sector(2) Services, Global Software Services, Information
Services and Technology; prior sales
and manufacturing responsibility for Global
Software Services.
</TABLE>

7
<PAGE>

<TABLE>
<CAPTION>
NAME, AGE AND OFFICER BUSINESS EXPERIENCE DURING
POSITIONS WITH THE COMPANY SINCE PAST FIVE YEARS(1)
- -------------------------- ------- --------------------------
<S> <C> <C>
F. R. Jarc 1987 Management responsibilities for treasury,
51, Executive Vice controller, corporate development, internal au-
President and dit and taxes.
Chief Financial Officer(2)
W. E. Tyler 1989 Management responsibilities for Financial Serv-
41, Sector President, ices, Global Software Services, Book Publishing
Networked Services Sec- Services and Europe. Prior sales and manufactur-
tor(2) ing responsibility for Global Software Services;
prior management responsibility for Technology.
J. P. Ward 1991 Management responsibilities for Telecommunica-
39, Sector President, tions, Merchandise Media and Magazine Publishing
Commercial Print Sector(2) Services. Prior sales and manufacturing respon-
sibility for Merchandise Media; prior sales and
manufacturing responsibility for Financial Serv-
ices.
J. D. Butler 1991 Sales and manufacturing responsibility for Book
56, President, Publishing Services. Prior sales and marketing
Book Publishing Services responsibilities in Book Publishing Services.
E. P. Duffy 1990 Sales and manufacturing responsibility for Tele-
52, President, communications. Prior sales and manufacturing
Telecommunications(1) responsibility for Merchandise Media; prior ex-
perience as Senior Vice President, Marketing, of
the Meredith/Burda companies which were acquired
by the company in 1990.
B. L. Faber 1989 Sales and manufacturing responsibility for In-
46, President, formation Services. Prior management responsi-
Information Services(2) bility for Corporate Development.
E. E. Lane 1991 Sales responsibility for Magazine Publishing
42, President, Services and sales and manufacturing responsi-
Magazine Publishing Serv- bility for Europe. Prior sales and manufacturing
ices responsibility for Magazine Publishing Services.
T. M. Leahy 1994 Sales and manufacturing responsibility for
38, President, Global Software Services. Prior manufacturing
Global Software Services responsibility for Global Software Services;
prior sales experience in Global Software Serv-
ices.
R. S. MacQueen 1993 Sales and manufacturing responsibility for Fi-
41, President, nancial Services. Prior responsibilities in Fi-
Financial Services nancial Services.
J. D. McQuaid 1991 Management responsibilities as Chairman of the
56, Chairman of the Board, Board, President and Chief Executive Officer of
President and Chief Execu- Metromail Corporation, a wholly owned subsidi-
tive Officer, Metromail ary.
Corporation
R. J. Weir 1990 Management responsibility for Technology, Data-
38, President, Technology base Technology Services and Information Sys-
tems. Prior responsibilities in Technology.
</TABLE>

8
<PAGE>

<TABLE>
<CAPTION>
NAME, AGE AND OFFICER BUSINESS EXPERIENCE DURING
POSITIONS WITH THE COMPANY SINCE PAST FIVE YEARS(1)
- -------------------------- ------- --------------------------
<S> <C> <C>
S. J. Baumgartner 1993 Management responsibilities for Human Resources,
42, Senior Vice Compensation and Benefits. Prior experience as a
President, Human Resources, co-owner and member of board of directors of FRC
Compensation and Management Inc., and as a Senior Vice President,
Benefits(1)(2) Human Resources and Public Affairs at Rhone-
Poulenc Rorer/Rorer Group, Inc.
J. S. Oberhill 1988 Management responsibilities for Purchasing,
52, Senior Vice President, Donnelley Logistic Services and certain manufac-
Corporate Manufacturing turing operations. Prior management responsibil-
Services(2) ities for Europe and Chairman of the Board of R.
R. Donnelley Limited; prior sales and manufac-
turing responsibility for Telecommunications;
prior sales and manufacturing responsibility for
Magazine.
F. J. Uvena 1975 Management responsibilities for legal services,
60, Senior Vice President, corporate relations, environmental functions and
Law and Corporate Staffs corporate real estate. Prior responsibility as
General Counsel.
</TABLE>

(1) Each officer named has carried on his principal occupation and employment
in R. R. Donnelley & Sons Company for more than five years with the exception
of S. J. Baumgartner and E. P. Duffy as noted in the above table.

(2) Member of the company's management committee.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The common stock is listed and traded on the New York Stock Exchange, Chicago
Stock Exchange and Pacific Stock Exchange and is accorded unlisted trading
privileges on the Boston and Cincinnati Stock Exchanges.

As of March 1, 1994 there were approximately 10,400 stockholders of record.
Information about the quarterly prices of the common stock, as reported on the
New York Stock Exchange-Composite Transactions, and dividends paid during the
two years ended December 31, 1993, is contained in the chart below:

<TABLE>
<CAPTION>
COMMON STOCK PRICES
--------------------------------
DIVIDENDS
PAID 1993 1992
------------- --------------- ----------------
1993 1992 HIGH LOW HIGH LOW
------ ------ ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
First Quarter.................... $0.130 $0.125 $32 3/4 $27 1/8 $26 1/8 $23 7/8
Second Quarter................... 0.130 0.125 31 3/4 26 1/8 29 23 3/4
Third Quarter.................... 0.140 0.130 31 3/8 27 3/4 30 1/2 27 1/16
Fourth Quarter................... 0.140 0.130 31 1/8 27 3/8 33 3/4 28 7/8
Full Year........................ 0.540 0.510 32 3/4 26 1/8 33 3/4 23 3/4
</TABLE>

1992 reflects the 2 for 1 stock split effective September 1, 1992.

9
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

SELECTED FINANCIAL DATA
(NOT COVERED BY AUDITORS' REPORT)
(THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------------------------------------
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............... $4,387,761 $4,193,072 $3,914,828 $3,497,943 $3,122,331
Earnings from opera-
tions*................. 325,607 405,501 363,128 361,836 332,701
Net income from opera-
tions before cumulative
effect of accounting
changes................ 178,920 234,659 204,919 225,846 221,857
Net income**............ 109,420 234,659 204,919 225,846 221,857
PER COMMON SHARE***
Net income from opera-
tions before cumulative
effect of accounting
changes................ 1.16 1.51 1.32 1.45 1.43
Net income**............ 0.71 1.51 1.32 1.45 1.43
Dividends............... 0.54 0.51 0.50 0.48 0.44
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------------
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets............. $3,654,026 $3,410,247 $3,206,826 $3,147,486 $2,311,981
Noncurrent liabilities... 1,124,594 949,537 940,544 1,064,333 454,189
</TABLE>
- --------
* 1993 earnings from operations includes the one-time adjustment for a
restructuring charge ($90 million).
** 1993 net income and net income per share include one-time adjustments for
the restructuring charge ($60.8 million or $0.39 per share); the net
cumulative effect of accounting changes ($69.5 million or $0.45 per share);
and the deferred income tax charge related to the federal income tax rate
increase ($6.2 million or $0.04 per share).
*** Reflects the 2 for 1 stock split effective September 1, 1992.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS

COMPARISON OF 1993 WITH 1992

Net sales grew at a rate of 4.6% (first half growth was 0.5%; second half
growth was 8.2%). The year-to-year growth was due to an increased volume of
services provided to customers, including volume added through the company's
global expansion into new areas. Strong demand for global software services,
financial printing services and services for book publishers and volume
increases associated with recent acquisitions in new product areas, including
specialty products and special interest magazines, were partially offset by the
negative effects of a stronger dollar (lower translation of foreign revenues,
particularly those of the company's U.K. operations) and lower catalog volume
primarily associated with the decision by Sears, Roebuck & Co., a customer, to
discontinue its catalog operations.

Gross profit grew at a greater rate than net sales, 6.3%, reflecting better
coverage of fixed costs through higher volume, a more favorable mix of sales
and a favorable LIFO inventory credit. Earnings from operations included a $90
million restructuring charge recorded during the first quarter (an after-tax
charge of $0.39 per share) related primarily to the closing of the company's
Chicago manufacturing facility following the decision by Sears to discontinue
its catalog operations. Excluding this charge, earnings from operations would
have been $415.6 million, a 2.5% increase over the prior year, reflecting the
gross profit improvement

10
<PAGE>

partially offset by higher selling and administrative expenses (10.1% increase)
resulting primarily from the additional costs associated with newly acquired
and start-up operations and the expansion of the company's global sales
presence.

The $4.6 million increase in total other expense-net resulted from higher
interest expense (higher outstanding debt balances due to recent acquisitions,
investments in joint ventures and additional VEBA funding for employee
benefits) and increased expenses associated with life insurance programs, which
were partially offset by improved earnings on investments.

The 1993 provision for income taxes included the one-time effect of the new,
higher federal statutory income tax rate on deferred taxes, which reduced net
income $6.2 million (equivalent to $0.04 per share); excluding this one-time
charge, the 1993 effective tax rate of 33.1% would have been lower than the
1992 rate of 35.0%, reflecting the benefits associated with life insurance
programs and credits associated with affordable housing investments, partially
offset by the impact of the higher federal statutory income tax rate on current
year earnings ($2.8 million). Net income from operations before cumulative
effects of accounting changes reflected the restructuring charge and increased
selling and administrative expenses partially offset by the favorable factors
discussed above with respect to gross profit. Excluding the restructuring
charge and deferred income tax charge, net income from operations before
cumulative effects of accounting changes would have been $245.9 million
(equivalent to $1.59 per common share).

During the first quarter of 1993, the company adopted two new accounting
standards for postretirement benefits and income taxes. The one-time charge for
postretirement benefits, net of associated tax benefits of $80.1 million, was
$127.7 million (equivalent to $0.82 per share). Ongoing annual expense
increases resulting from this new accounting requirement have been mitigated
through an investment program to partially prefund the related postretirement
liabilities. Nevertheless, in 1993, the new accounting standard for
postretirement benefits resulted in additional expenses which reduced operating
income by $0.05 per share. The new accounting standard for income taxes
resulted in a one-time credit of $58.2 million (equivalent to $0.37 per share).
As discussed above, the new income tax standard also required the company to
increase its 1993 income tax provision by $6.2 million. This new standard will
not have an ongoing material effect as long as statutory income tax rates
remain at current levels.

COMPARISON OF 1992 WITH 1991

The growth in net sales (7.1% higher than 1991) is represented by an
increased volume of services provided to customers, including volume added
through the company's global expansion into new markets. A large portion of
this increase was due to the introduction of new products by documentation
services customers and the strong demand for financial printing services
resulting from favorable capital market conditions in 1992.

Gross profit grew at a greater rate than net sales, 12.5%, reflecting several
factors: higher volume, a more favorable mix of sales, improved productivity
and cost control, lower start-up costs and a LIFO inventory credit. Higher
depreciation expense, increased reserve provisions and expenses related to the
companywide stock purchase plan and incentive compensation plans partially
offset the favorable factors. Selling and administrative expenses increased
13.4% over 1991 as a result of higher volume-related commission expenses, a
higher provision for doubtful accounts receivable, the increased costs of
expanding the company's global sales presence and expenses related to the
companywide stock purchase plan and incentive compensation plans. Earnings from
operations also grew at a rate greater than net sales, 11.7%, reflecting the
gross profit improvement partially offset by the higher selling and
administrative expenses.

The $1.5 million increase in total other expense-net resulted from lower
interest expense (lower interest rates and outstanding debt balances) which was
more than offset by start-up expenses associated with recent international and
domestic joint venture investments. The effective tax rate of 35.0% in 1992 was
lower than the 36.0% in 1991 reflecting the benefits associated with a life
insurance program. Net income for the full year increased 14.5%, as a
consequence of the net favorable factors discussed above.

11
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

The Consolidated Balance Sheet presents the company's financial position at
the end of each of the last two years. The statement lists the company's assets
and liabilities, and the equity of its shareholders. Major changes in the
company's financial position are summarized in the Consolidated Statement of
Cash Flows which appears on page F-4. The Cash Flows Statement summarizes the
changes in the Company's cash and equivalents balance for each of the last
three years and helps to show the relationship between operations (presented in
the Consolidated Statement of Income) and liquidity and financial resources
(presented in the Consolidated Balance Sheet).

With the growth in cash flow and the credit facilities and shelf registration
discussed below, management believes the company has the financial flexibility
to fund current operations and growth. In 1993, net income from operations
before cumulative effect of accounting changes plus depreciation and
amortization represented $453.7 million of the net cash provided by operating
activities. Excluding the restructuring charge and the charge related to the
impact of higher income tax rates on deferred income tax balances, net income
from operations before cumulative effect of accounting changes plus
depreciation and amortization would have been $520.7 million, compared to
$492.8 million in 1992. Cash flow from operations was used primarily to fund
capital investments and pay dividends.

The company's working capital continued to be adequate for the operation and
expansion of the business. Working capital--particularly cash, accounts
receivable and inventories--is closely controlled and continually monitored.
Emphasis continues on overall balance sheet management. Working capital
increased by $14.6 million from December 31, 1992, due to working capital
balances of newly acquired businesses, the additional funding of the Voluntary
Employee's Beneficiary Associations, increase in inventory resulting from the
reduced LIFO reserve, as well as increased inventory quantities to support
revenue growth and the reclassification of short-term debt (which reflects
management's estimate of near-term repayments). Other noncurrent liabilities
and deferred income tax balances at December 31, 1993 reflect the impacts of
the adoption of new accounting standards for postretirement benefits and income
taxes. A valuation allowance has not been provided on deferred tax asset
balances due to the company's projection of future taxable income (supported by
existing long-term customer contracts that are expected to provide future
revenues and earnings) in excess of such tax assets.

In 1993, capital expenditures totaled $307 million ($228 million in 1992) and
an additional $178 million ($84 million in 1992) was invested in various
acquisitions and joint ventures. This capital investment reflects the company's
continued program to expand and upgrade operations, including new equipment and
operations to meet the growing needs of present and new customers. The
expenditures were financed by internally generated funds and the issuance of
debt. Management currently estimates capital investment in 1994 will be
approximately $375 million, and, once again, capital investment will be
substantially financed through operating cash flows. Other expenditures in 1994
are expected to be in line with the growth in sales, earnings and cash flows.

At December 31, 1993, the company had revolving credit facilities totaling
$550 million with a number of banks (see the Notes to Consolidated Financial
Statements). These credit facilities provide support for the issuance of
commercial paper and other credit needs. Under an effective shelf registration,
in January, 1993, the company issued $110 million of 7.0% (7.2% effective rate
after consideration of placement costs and discounts) notes due January, 2003.
As of December 31, 1993, the company had effective shelf registration
statements permitting it to issue, from time to time, up to $500 million in
additional debt securities.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial information required by Item 8 is contained in Item 14 of Part
IV and listed on page F-1.

12
<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information concerning the directors and officers of the company is contained
on pages 2-5 and 8 of the company's definitive Proxy Statement dated February
17, 1994 and is incorporated herein by reference. See also the list of the
company's executive officers and related information under "Executive Officers
of R. R. Donnelley & Sons Company" at the end of Part I of this Report.

ITEM 11. EXECUTIVE COMPENSATION

Information concerning executive compensation for the year ended December 31,
1993, and, with respect to certain of such information, prior years, is
contained on pages 8-14 of the company's definitive Proxy Statement dated
February 17, 1994 and is incorporated herein by reference (excluding the
information on page 14 under the caption, "Compensation Committee Report on
Executive Compensation").

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information concerning the beneficial ownership of the company's common stock
is contained on pages 5-8 of the company's definitive Proxy Statement dated
February 17, 1994 and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information concerning certain relationships and related transactions for the
year ended December 31, 1993, is contained on pages 5 and 14 of the company's
definitive Proxy Statement dated February 17, 1994 and is incorporated herein
by reference (excluding the information on page 14 under the caption,
"Compensation Committee Report on Executive Compensation").

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)1. Financial Statements
The financial statements listed in the accompanying index (page F-1) to
the financial statements are filed as part of this annual report.
2. Financial Statement Schedules
The financial statement schedules listed in the accompanying index
(page F-1) to the financial statements are filed as part of this annual
report.
3. Exhibits
The exhibits listed on the accompanying index to exhibits (pages E-1
through E-2) are filed as part of this annual report.
(b)Reports on Form 8-K
None
(c)Exhibits
The exhibits listed on the accompanying index (Pages E-1 through E-2)
are filed as part of this annual report.
(d)Financial Statements omitted--
Separate financial statements of the parent company have been omitted
since it is primarily an operating company and the minority interest
and indebtedness to persons other than the parent of the subsidiaries
included in the consolidated financial statements are less than 5% of
total consolidated assets.
Certain schedules have been omitted because the required information is
included in the consolidated financial statements or notes thereto or
because they are not applicable or not required.

13
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) 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, ON THE 28TH DAY OF
MARCH, 1994.

R. R. DONNELLEY & SONS COMPANY

William L. White
By __________________________________
William L. White,
Vice President, Controller

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES INDICATED, ON THE 28TH DAY OF MARCH, 1994.

SIGNATURE AND TITLE SIGNATURE AND TITLE

John R. Walter Robert A. Hanson
- ------------------------------------- -------------------------------------
John R. Walter Robert A. Hanson
Chairman of the Board, Director
Chief Executive Officer and Director

(Principal Executive Officer) Thomas S. Johnson
-------------------------------------

Frank R. Jarc Thomas S. Johnson
- ------------------------------------- Director
Frank R. Jarc

Executive Vice President and Richard M. Morrow
Chief Financial Officer -------------------------------------
(Principal Financial Officer) Richard M. Morrow
Director

William L. White
- ------------------------------------- John M. Richman
William L. White -------------------------------------
Vice President, Controller John M. Richman
(Principal Accounting Officer) Director

Martha Layne Collins William D. Sanders
- ------------------------------------- -------------------------------------
Martha Layne Collins William D. Sanders
Director Director

James R. Donnelley Jerre L. Stead
- ------------------------------------- -------------------------------------
James R. Donnelley Jerre L. Stead
Director Director

Charles C. Haffner III Bide L. Thomas
- ------------------------------------- -------------------------------------
Charles C. Haffner III Bide L. Thomas
Director Director

H. Blair White
-------------------------------------
H. Blair White
Director
<PAGE>

ITEM 14(A). INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
PAGE(S)
-------
<S> <C>
Consolidated Statement of Income for each of the three years ended De-
cember 31, 1993....................................................... F-2
Consolidated Balance Sheet at December 31, 1993 and 1992............... F-3
Consolidated Statement of Cash Flows for each of the three years ended
December 31, 1993..................................................... F-4
Consolidated Statement of Shareholders' Equity for each of the three
years ended December 31, 1993......................................... F-5
Notes to Consolidated Financial Statements............................. F-6
Report of Independent Public Accountants on Financial Statements....... F-16
Interim Financial Information.......................................... F-17
Report of Independent Public Accountants on Financial Statement Sched-
ules.................................................................. F-18
Financial Statement Schedules
V--Property, Plant and Equipment..................................... F-19
VI--Accumulated Depreciation and Amortization of Property, Plant and
Equipment........................................................... F-20
VIII--Valuation and Qualifying Accounts.............................. F-20
IX--Short-Term Borrowings............................................ F-21
X--Supplementary Income Statement Information........................ F-21
</TABLE>

F-1
<PAGE>

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
----------------------------------
1993 1992 1991
---------- ---------- ----------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Net sales.................................. $4,387,761 $4,193,072 $3,914,828
Cost of sales.............................. 3,518,168 3,375,214 3,187,925
---------- ---------- ----------
Gross profit............................... 869,593 817,858 726,903
Selling and administrative expenses........ 453,986 412,357 363,775
Restructuring charge....................... 90,000 -- --
---------- ---------- ----------
Earnings from operations................... 325,607 405,501 363,128
---------- ---------- ----------
Interest expense........................... (45,436) (38,659) (46,660)
Other income (expense)--net................ (3,609) (5,828) 3,718
---------- ---------- ----------
Total other expense--net................... (49,045) (44,487) (42,942)
---------- ---------- ----------
Earnings before income taxes and cumulative
effect of accounting changes.............. 276,562 361,014 320,186
Income taxes............................... 97,642 126,355 115,267
---------- ---------- ----------
Net income from operations before cumula-
tive effect of accounting changes......... 178,920 234,659 204,919
Cumulative effect of change in accounting
for:
Postretirement benefits other than pen-
sions (net of $80.1 million in tax bene-
fits)................................... (127,700) -- --
Income taxes............................. 58,200 -- --
---------- ---------- ----------
Net Income................................. $ 109,420 $ 234,659 $ 204,919
========== ========== ==========
Income (charge) per common share:
Operations before cumulative effect of ac-
counting changes.......................... $ 1.16 $ 1.51 $ 1.32
Cumulative effect of change in accounting
for:
Postretirement benefits other than pen-
sions (net of in tax benefits).......... (0.82) -- --
Income taxes............................. 0.37 -- --
---------- ---------- ----------
Net Income per Share of Common Stock....... $ 0.71 $ 1.51 $ 1.32
========== ========== ==========
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

F-2
<PAGE>

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

Assets

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1993 1992
---------- ----------
(THOUSANDS OF
DOLLARS)
<S> <C> <C>
Cash and equivalents................................... $ 10,716 $ 12,348
Receivables, less allowances for doubtful accounts of
$14,795 in 1993 and $17,745 in 1992................... 825,207 791,869
Inventories, principally at LIFO cost.................. 243,714 197,961
Prepaid expenses....................................... 30,277 19,419
---------- ----------
Total Current Assets............................... 1,109,914 1,021,597
---------- ----------
Net property, plant and equipment, at cost, less accu-
mulated depreciation of $1,686,779 in 1993 and
$1,490,683 in 1992.................................... 1,674,476 1,532,248
---------- ----------
Goodwill, net of accumulated amortization of $67,735 in
1993 and $53,448 in 1992.............................. 493,672 448,486
Other.................................................. 375,964 407,916
---------- ----------
Total Other Assets................................. 869,636 856,402
---------- ----------
Total Assets....................................... $3,654,026 $3,410,247
========== ==========

Liabilities

Accounts payable....................................... $ 333,862 $ 254,608
Accrued compensation................................... 78,284 79,764
Short-term debt........................................ 37,428 45,001
Current and deferred income taxes...................... 40,698 35,925
Other accrued liabilities.............................. 195,169 196,435
---------- ----------
Total Current Liabilities.......................... 685,441 611,733
---------- ----------
Long-term debt......................................... 673,422 522,563
Deferred income taxes.................................. 272,959 400,796
Other noncurrent liabilities........................... 178,213 26,178
---------- ----------
Total Noncurrent Liabilities....................... 1,124,594 949,537
---------- ----------
Shareholders' equity
Common stock at stated value ($1.25 par value)
Authorized shares: 500,000,000; Issued: 158,608,800
in 1993 and 1992.................................... 330,612 330,612
Retained earnings, including ($13,140) in 1993 and
($10,019) in 1992 of cumulative translation
adjustments......................................... 1,629,673 1,602,401
Reacquired common stock, at cost..................... (116,294) (84,036)
---------- ----------
Total Shareholders' Equity......................... 1,843,991 1,848,977
---------- ----------
Total Liabilities and Shareholders' Equity......... $3,654,026 $3,410,247
========== ==========
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

F-3
<PAGE>

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31
-------------------------------
1993 1992 1991
--------- --------- ---------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Cash flows provided by (used in) operating
activities:
Net income from operations before cumulative
effect of accounting changes................ $ 178,920 $ 234,659 $ 204,919
Depreciation and amortization................ 274,804 258,169 241,166
Net change in assets and liabilities......... (4,342) (41,530) (30,797)
Other........................................ 3,241 743 3,490
--------- --------- ---------
Net Cash Provided By Operating Activities.... 452,623 452,041 418,778
--------- --------- ---------
Cash flows from (used for) investing activi-
ties:
Capital expenditures......................... (306,512) (228,002) (286,880)
Other capital investments including acquisi-
tions....................................... (177,743) (83,771) (20,891)
Proceeds from sale/leaseback transaction..... -- -- 8,526
--------- --------- ---------
Net Cash Used For Investing Activities....... (484,255) (311,773) (299,245)
--------- --------- ---------
Cash flows from (used for) financing activi-
ties:
Net increase (decrease) in borrowings........ 143,286 (56,275) (84,930)
Disposition of reacquired common stock....... 19,693 13,068 18,532
Acquisition of common stock.................. (47,513) (28,298) (12,365)
Cash dividends on common stock............... (83,465) (79,242) (77,683)
--------- --------- ---------
Net Cash From (Used For) Financing Activi-
ties........................................ 32,001 (150,747) (156,446)
--------- --------- ---------
Net effect of foreign currency transactions.. (2,001) (1,313) 1,107
--------- --------- ---------
Net Decrease in Cash and Equivalents......... (1,632) (11,792) (35,806)
--------- --------- ---------
Cash and Equivalents at Beginning of Year.... 12,348 24,140 59,946
--------- --------- ---------
Cash and Equivalents at End of Year.......... $ 10,716 $ 12,348 $ 24,140
========= ========= =========
The changes in assets and liabilities, net of
balances assumed through acquisitions, were
as follows:
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Decrease (Increase) in Assets:
Receivables--net........................... $ 5,835 $ (87,970) $ (3,453)
Inventories--net........................... (32,156) (32,568) (1,184)
Prepaid expenses........................... (8,463) 80,133 (12,426)
Other assets............................... 31,609 (125,065) (23,234)
Increase (Decrease) in Liabilities:
Accounts payable........................... 41,988 37,079 9,667
Accrued compensation....................... (3,146) 22,108 6,265
Current and deferred income taxes.......... 4,773 (3,859) 1,069
Deferred income taxes...................... 9,725 18,821 1,195
Other accrued liabilities.................. (1,110) 53,748 (3,231)
Other noncurrent liabilities............... (53,397) (3,957) (5,465)
--------- --------- ---------
Net Change in Assets and Liabilities..... $ (4,342) $ (41,530) $ (30,797)
========= ========= =========
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

F-4
<PAGE>

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
REACQUIRED COMMON
COMMON STOCK STOCK
-------------------- --------------------- RETAINED
SHARES AMOUNT SHARES AMOUNT EARNINGS TOTAL
----------- -------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1990...... 79,304,400 $231,481 (1,839,562) $ (71,737) $1,435,872 $1,595,616
Net income.............. 204,919 204,919
Treasury stock pur-
chases................. (272,135) (12,365) (12,365)
Cash dividends.......... (77,683) (77,683)
Cost of common shares
issued under stock pro-
grams.................. 482,148 17,587 945 18,532
Translation adjustments. 1,367 1,367
----------- -------- ---------- --------- ---------- ----------
Balance at
December 31, 1991...... 79,304,400 231,481 (1,629,549) (66,515) 1,565,420 1,730,386
Net income.............. 234,659 234,659
Par value of common
shares issued for stock
split effective Septem-
ber 1, 1992............ 79,304,400 99,131 (1,629,549) (99,131) --
Treasury stock pur-
chases................. (967,370) (28,298) (28,298)
Cash dividends.......... (79,242) (79,242)
Cost of common shares
issued under stock pro-
grams.................. 646,486 10,777 2,291 13,068
Translation adjustments. (21,596) (21,596)
----------- -------- ---------- --------- ---------- ----------
Balance at
December 31, 1992...... 158,608,800 330,612 (3,579,982) (84,036) 1,602,401 1,848,977
Net income before cumu-
lative effects of ac-
counting changes....... 178,920 178,920
Cumulative effect of
change in accounting
for:
Other postretirement
benefits, net of tax
benefits............. (127,700) (127,700)
Income taxes.......... 58,200 58,200
Treasury stock pur-
chases................. (1,601,296) (47,513) (47,513)
Cash dividends.......... (83,465) (83,465)
Cost of common shares
issued under stock pro-
grams.................. 730,511 15,255 4,438 19,693
Translation adjustments. (3,121) (3,121)
----------- -------- ---------- --------- ---------- ----------
Balance at
December 31, 1993...... 158,608,800 $330,612 (4,450,767) $(116,294) $1,629,673 $1,843,991
=========== ======== ========== ========= ========== ==========
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

F-5
<PAGE>

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation--

The consolidated financial statements include the accounts of the company and
its subsidiaries. Intercompany items and transactions are eliminated in
consolidation.

Nature of Operations--

The operations of the company are in the information industry. The company
produces a wide variety of print and print-related services for specific
customers, virtually always under contract. Some contracts provide for progress
payments from customers as certain phases of the work are completed; however,
revenue is not recognized until the production process has been completed in
accordance with the terms of the contracts. Some customers furnish paper for
their work, while in other cases the company purchases and sells the paper.
International operations represent less than 9% of consolidated results and of
consolidated assets.

Cash and Equivalents--

The company considers all highly liquid debt instruments purchased with
original maturities of three months or less to be cash equivalents.

Inventories--

Inventories include material, labor and factory overhead and are
substantially carried at Last-In, First-Out (LIFO) cost. This method reflects
the effect of inventory replacement costs in earnings; accordingly, charges to
cost of sales reflect recent costs of material, labor and factory overhead.

Foreign Currency Translation--

Gains and losses arising from the translation of the company's international
subsidiaries' financial statements are reflected in Retained Earnings.

Net Income Per Share of Common Stock--

Net income per share is computed on the basis of average shares outstanding
during each year. No material dilution would result if effect were given to the
exercise of outstanding stock options and the vesting of stock units.

Benefit Plans--

The company's Retirement Benefit Plan (the Plan) is a non-contributory
defined benefit plan covering substantially all employees. Normal retirement
age is 65 but provision is made for earlier retirement. As required, the
company uses the projected unit credit actuarial cost method to determine
pension cost for financial reporting purposes. In conjunction with this method,
the company amortizes deferred gains and losses (using the corridor method),
prior service costs and the transition credit (the excess of Plan assets plus
balance sheet accruals over the projected obligation, as of January 1, 1987)
over 19 years, representing the average remaining service life of its active
employee population. For tax and funding purposes, the attained age normal
actuarial cost method is used. Compared to the projected unit credit method,
the attained age normal method attributes a greater proportion of the total
retirement obligation to an employee's early years of service.

F-6
<PAGE>

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Capitalization, Depreciation and Amortization--

Property, plant and equipment are stated at cost. Depreciation is computed
principally on the straight-line method. Maintenance and repair costs are
charged to expense as incurred. Major overhauls are capitalized as reductions
to accumulated depreciation. When properties are retired or disposed, the costs
and related depreciation reserves are eliminated and the resulting profit or
loss is recognized in income. Goodwill and other intangible assets are
amortized principally over periods ranging from 10 to 40 years.

Income Taxes--

Deferred income taxes relate principally to the use of accelerated
depreciation methods for tax reporting purposes, the investment in safe harbor
leases, pension costs, net postretirement medical and death benefit costs and
contributions to fund the Voluntary Employees' Beneficiary Associations
(VEBAs).

RESTRUCTURING CHARGE

On January 25, 1993, Sears Roebuck and Co., a customer, announced its
decision to discontinue catalog operations during 1993. In response to Sears'
announcement, the company incurred a one-time charge of $60.8 million (net of
the associated tax benefit) in the first quarter of 1993. The charge primarily
covered the costs associated with closing the company's manufacturing facility
in Chicago, Illinois, where the company printed the Sears catalogs. The loss of
this work will have no ongoing material effect on operating results.

INVENTORIES

The components of the company's inventories as of December 31, 1993 and 1992,
were as follows:

<TABLE>
<CAPTION>
1993 1992
-------- --------
(THOUSANDS OF
DOLLARS)
<S> <C> <C>
Raw materials......................................... $142,739 $141,294
Work in process....................................... 154,477 158,178
Operating supplies.................................... 32,192 25,350
Progress billings..................................... (40,299) (53,479)
LIFO reserve.......................................... (45,395) (73,382)
-------- --------
Total............................................. $243,714 $197,961
======== ========
</TABLE>

VOLUNTARY EMPLOYEES' BENEFICIARY ASSOCIATIONS

The company maintains two Voluntary Employees' Beneficiary Associations to
fund employee welfare benefits and postretirement medical and death benefits.
The balances of the VEBAs (net of associated liabilities) in the accompanying
Consolidated Balance Sheet are classified as either current or noncurrent
depending on the ultimate expected payment date of the underlying liabilities.
As of December 31, 1993, a net current asset of $9.8 million was included in
Prepaid Assets representing the current position of the company's employee
welfare benefit plans funded by one of the VEBAs ($33.2 million included in
Other Accrued Liabilities at December 31, 1992). The VEBA established to
partially fund the company's liability for postretirement medical and death
benefits ($135 million at December 31, 1993) is included in other noncurrent
liabilities as an offset to the related liability. (The initial VEBA fund of
$104 million was recorded as a Noncurrent Asset at December 31, 1992). For
additional information, refer to the notes on "Other Retirement Benefits."

F-7
<PAGE>

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
PROPERTY, PLANT AND EQUIPMENT

The following table summarizes the components of Property, Plant and
Equipment (at cost):

<TABLE>
<CAPTION>
1993 1992
---------- ----------
(THOUSANDS OF
DOLLARS)
<S> <C> <C>
Land................................................ $ 39,033 $ 34,807
Buildings........................................... 551,103 493,113
Machinery and equipment............................. 2,771,119 2,495,011
---------- ----------
Total........................................... $3,361,255 $3,022,931
========== ==========
</TABLE>

COMMITMENTS AND CONTINGENCIES

Authorized expenditures on incomplete projects for the purchase of property,
plant and equipment, as of December 31, 1993, totaled $418.8 million. Of this
total, $143.9 million has been paid and an additional $120.7 million has been
committed for payment upon completion of the contracts. The company has a
variety of commitments with suppliers for the purchase of paper, ink and other
materials for delivery in future years at prevailing market prices.

The company has operating lease commitments approximating $390.2 million
extending through various periods to 2066. The lease commitment is $60.8
million for 1994, and ranges from $26.8 million to $47.4 million in each of the
years 1995-1998 and totals $186.1 million for future periods.

The company does not believe an accounts receivable credit risk exists due to
the diversity of industry classification, distribution channels and geographic
location of its customers. In addition, the company is a party to certain
litigation (other than the FTC matter described below) arising in the ordinary
course of business which, in the opinion of management, will not have a
material adverse effect on the operations of the company. The company also has
future annual commitments to invest in various affordable housing limited
partnerships which provide annual tax benefits and credits in amounts greater
than the annual investments.

The company has appealed a recent decision in the Federal Trade Commission
(FTC) challenge to the company's 1990 acquisition of the Meredith/Burda
companies. An FTC administrative law judge found the acquisition has or may
substantially lessen competition in an alleged "high-volume publication gravure
printing" market and ordered the divestiture of the Meredith/Burda companies.
The company's appeal has the effect of staying the divestiture order. The
ruling is contrary to an earlier ruling by a Federal District Court which
allowed the acquisition to be consummated. Company management continues to
believe this acquisition was legally proper.

RETIREMENT BENEFIT PLAN

Net pension credits included in operating results for the Retirement Benefit
Plan (the Plan) were:

<TABLE>
<CAPTION>
1993 1992 1991
--------- -------- ---------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Service cost................................... $ 25,097 $ 20,455 $ 14,940
Interest cost on the projected benefit obliga-
tion.......................................... 47,295 43,252 41,117
Actual return on Plan assets................... (106,595) (85,115) (174,208)
Amortization of excess Plan net assets at adop-
tion of SFAS No. 87 and deferrals--net........ 20,306 5,127 98,846
--------- -------- ---------
Total...................................... $ (13,897) $(16,281) $ (19,305)
========= ======== =========
</TABLE>

F-8
<PAGE>

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
For financial reporting purposes the actuarial computations that derived the
above amounts assumed a discount rate on projected benefit obligations of 7.5%
(7.8% at December 31, 1992 and December 31, 1991), an expected long-term rate
of return on Plan assets of 9.5% and annual salary increases of 5%.

Plan assets include primarily government and corporate debt securities and
marketable equity securities, and, to a lesser extent, commingled funds, real
estate and a group annuity contract purchased from a life insurance company.
The funded status and prepaid pension cost (included in Other Assets on the
accompanying Consolidated Balance Sheet) are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1993 1993
------------ ----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Fair value of Plan assets.............................. $962,153 $890,297
-------- --------
Actuarial present value of benefit obligations:
Vested............................................... 590,214 535,640
Non-vested........................................... 10,488 8,325
-------- --------
Total accumulated benefit obligations.................. 600,702 543,965
Additional amounts related to projected wage increases. 95,155 79,746
-------- --------
Projected benefit obligations for services rendered to
date.................................................. 695,857 623,711
-------- --------
Excess of Plan assets over projected benefit obliga-
tions................................................. 266,296 266,586
Unrecognized net deferrals............................. 6,385 2,047
Unrecognized net excess Plan assets to be amortized
through the year 2005................................. (118,197) (128,046)
-------- --------
Prepaid pension costs.............................. $154,484 $140,587
======== ========
</TABLE>

In the event of Plan termination, the Plan provides that no funds can revert
to the company and any excess assets over Plan liabilities must be used to fund
retirement benefits.

OTHER RETIREMENT BENEFITS

In addition to pension benefits, the company provides certain health care and
life insurance benefits for retired employees. Substantially all of the
company's domestic, full-time employees become eligible for those benefits upon
reaching age 55 while working for the company and having ten years continuous
service at retirement. Beginning in 1992, the company began a program to
partially fund the liabilities associated with these plans through a tax-exempt
trust. The trust is invested in various assets, primarily life insurance
covering some of the company's employees.

Effective January 1, 1993, the company adopted Statement of Financial
Accounting Standards No. 106 (SFAS 106), "Employers' Accounting for
Postretirement Benefits Other Than Pensions." SFAS 106 requires companies to
charge to expense the expected costs of postretirement health care and life
insurance (and similar benefits) during the years that the employees render
service. Previously, such costs were expensed as actual claims were paid (cash
basis). The company elected to immediately recognize the transition obligation
for future benefits to be paid related to past employee services, resulting in
a noncash charge of $207.8 million before deferred income tax benefits ($127.7
million after-tax or $0.82 per share) that represents the cumulative effect of
the change in accounting for the years prior to 1993.

F-9
<PAGE>

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The net accrual-basis expense for postretirement benefits during 1993
included the following components:

<TABLE>
<CAPTION>
1993
----------
(THOUSANDS
OF
DOLLARS)
<S> <C>
Service cost................................................... $11,580
Interest cost on the projected benefit obligations............. 17,486
Actual return on assets........................................ (5,545)
Deferrals--net................................................. (3,832)
-------
Total...................................................... $19,689
=======
</TABLE>

The above table does not include a $23 million charge for postretirement
medical benefits associated with the closing of the company's Chicago
manufacturing facility; such amount was included in the restructuring charge
(see separate note above). The expense for postretirement medical and death
benefits for 1992 and 1991 (recognized on a cash basis) was $12.4 million and
$9.8 million, respectively.

The liability (included in Other Noncurrent Liabilities on the accompanying
Consolidated Balance Sheet at December 31, 1993) for postretirement benefits,
net of the partial funding, is as follows:

<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1993 1993
------------ ----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Actuarial present value of benefit obligations:
Retirees.......................................... $ 152,334 $ 137,733
Fully eligible active plan participants........... 4,413 6,711
Other active plan participants.................... 87,077 63,376
--------- ---------
Total accumulated benefit obligations............... 243,824 207,820
Fair value of Plan assets........................... (134,731) (104,186)
Unrecognized net deferrals.......................... (805) --
--------- ---------
Excess of accumulated benefit obligation over
plan assets.................................... $ 108,288 $ 103,634
========= =========
</TABLE>

For financial reporting purposes the 1993 actuarial computations assumed a
discount rate of 7.5% to determine the accumulated postretirement benefit
obligation, an expected long-term rate of return on plan assets of 9.0% and a
health care cost trend rate of 8.4% initially, declining gradually to 5.4% in
2053, to measure the accumulated postretirement benefit obligation.

Effective January 1, 1993, certain features of the plan were amended. For
future retirees, the company introduced retiree cost-sharing and implemented
programs intended to stem rising costs. Also, the company has adopted a
provision which limits its future obligation to absorb health care cost
inflation. The features of the new plan provisions have been reflected in the
assumed health care cost trend rate disclosed above. However, a one-percentage-
point increase in the assumed health care cost trend rate would increase the
1993 postretirement benefit expense (service cost and interest cost) by $1.6
million and the accumulated postretirement benefit obligations as of December
31, 1993 by $10.4 million.

INCOME TAXES

Effective January 1, 1993, the company adopted Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes." SFAS
109 requires, among other things, the application of current statutory income
tax rates to deferred income tax balances. In the first quarter of 1993, the
company recognized the cumulative effect, through January 1, 1993, of the
accounting change, reflecting the difference between current statutory tax
rates and the generally higher rates that were used to establish the deferred
income tax balances, resulting in noncash income of $58.2 million (equivalent
to $0.37 per share).

F-10
<PAGE>

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Cash payments for income taxes were $75.2 million, $105.9 million and $106.2
million in 1993, 1992 and 1991, respectively. The components of income tax
expense for the years ending December 31, 1993, 1992 and 1991, were as follows:

<TABLE>
<CAPTION>
1993 1992 1991
------- -------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Federal
Current...................................... $72,049 $108,494 $ 93,186
Deferred*.................................... 7,339 (5,966) 1,269
State.......................................... 18,254 23,827 20,812
------- -------- --------
Total...................................... $97,642 $126,355 $115,267
======= ======== ========
</TABLE>
- --------
*The 1993 deferred income tax expense includes $6.2 million for the one-time
adjustment of previously recorded deferred taxes due to the increase in the
U.S. statutory rate.

The significant deferred tax assets and liabilities at December 31, 1993 and
January 1, 1993, were as follows:

<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1993 1993
------------ ----------
(MILLIONS OF DOLLARS)
<S> <C> <C>
Deferred tax liabilities:
Accelerated depreciation........................ $176 $165
Investments in safe harbor leases............... 46 56
Pensions........................................ 57 51
Other........................................... 72 76
---- ----
Total Deferred Tax Liabilities................ 351 348
---- ----
Less deferred tax assets:
Postretirement benefits......................... 43 40
Purchase accounting............................. 30 27
Other........................................... 19 31
---- ----
Total Deferred Tax Assets..................... 92 98
---- ----
Net deferred tax liabilities................ $259 $250
==== ====
</TABLE>

The following table reconciles the difference between the U.S. statutory tax
rates and the rates used by the company in the determination of net income:

<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Federal statutory rate....................................... 35.0% 34.0% 34.0%
State and local income taxes, net of U.S. federal income tax
benefit..................................................... 4.3 4.4 4.3
Differences resulting from purchase accounting............... 2.0 1.1 1.3
Benefits resulting from life insurance program............... (5.5) (3.2) (2.1)
Affordable housing investment credits........................ (2.5) -- --
Other........................................................ (0.2) (1.3) (1.5)
---- ---- ----
Subtotal..................................................... 33.1 35.0 36.0
Adjustment of deferred taxes for the increase in the U.S.
federal
statutory income tax rate................................... 2.2 -- --
---- ---- ----
Total.................................................... 35.3% 35.0% 36.0%
==== ==== ====
</TABLE>

F-11
<PAGE>

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DEBT FINANCING AND INTEREST EXPENSE

The company's debt at December 31, consisted of the following:

<TABLE>
<CAPTION>
1993 1992
-------- --------
(THOUSANDS OF
DOLLARS)
<S> <C> <C>
9.125% Debentures due December 1, 2000....................... $199,502 $199,430
7.0% Notes due January 1, 2003............................... 109,647 --
8.875% Debentures due April 15, 2021......................... 149,638 149,625
Commercial paper............................................. 218,664 175,978
Other........................................................ 33,399 42,531
-------- --------
Total.................................................... $710,850 $567,564
======== ========
</TABLE>

Based upon the interest rates currently available to the company for
borrowings with similar terms and maturities, the fair value of the company's
debt is approximately $788 million. The company's debentures are not actively
traded and contain no call provisions. The company's other financial
instruments are either carried at fair value or do not materially differ from
fair value.

At December 31, 1993, the company had available credit facilities of $550
with a group of domestic and foreign banks. The credit arrangements provide
support for the issuance of commercial paper and other credit needs. Borrowings
under the facilities (none during the past three years) bear interest at
various rates not exceeding the banks' prime rates. The company pays annual
fees ranging from 0.1% to 0.15% on the total unused credit facilities.

At December 31, 1993, the company had $233.0 million of commercial paper and
short-term debt outstanding, of which $37.4 million represents management's
current estimate of 1994 net repayment. The remaining $195.6 million is
classified as long term since the company has the ability and intent to
maintain such debt on a long term basis. The weighted average interest rate on
all commercial paper debt outstanding during 1993 was 3.2% (3.3% at December
31, 1993).

The following table summarizes interest expenses included in the Consolidated
Statement of Income:

<TABLE>
<CAPTION>
1993 1992 1991
------- ------- -------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Interest incurred........... $51,922 $43,882 $55,889
Amount capitalized as prop-
erty, plant and equipment.. (6,486) (5,223) (9,229)
------- ------- -------
Total................... $45,436 $38,659 $46,660
======= ======= =======
</TABLE>

Interest paid, net of capitalized interest, was $42.9 million, $38.4 million,
$51.8 million in 1993, 1992 and 1991, respectively. As of December 31, 1993,
the company had effective shelf registrations permitting it to issue, from time
to time, up to $500 million of debt securities. The proceeds of any debt
securities issued would be used for general corporate purposes.

F-12
<PAGE>

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

STOCK AND INCENTIVE PROGRAMS FOR MANAGEMENT EMPLOYEES

Stock Unit Awards and Restricted Stock Awards--At December 31, 1993 and 1992,
the company had outstanding 80,000 and 171,000 stock units, respectively, which
had been granted to officers and selected managers prior to 1990. Certain of
these units are payable upon or subsequent to termination of employment and
others are payable upon vesting, normally five years after the date of grant.
Payment of these awards will be made in shares of common stock equal to the
number of units awarded, in cash equal to the market value at the date of
distribution, or a combination thereof, at the company's option. The expense
for these grants was recognized in the year granted. When an award of stock
units is paid, the recipient will receive an additional amount in cash equal to
dividends paid on an equivalent number of shares of common stock during the
vesting period, plus interest. The values of the dividends and interest
accounts, were $232 thousand and $409 thousand at December 31, 1993 and 1992,
respectively.

At December 31, 1993 and 1992, the company had outstanding 275,000 and
223,000, respectively, restricted shares granted to certain officers. These
shares are registered in the names of the recipients, but are subject to
conditions of forfeiture and restrictions on sale or transfer for five years
from the grant date. Dividends on the restricted shares are paid currently to
the recipients and, accordingly, the restricted shares are treated as
outstanding shares. The expense of the grant is recognized evenly over the
vesting period.

The value of the stock units and restricted stock awards was $11.0 million
and $12.9 million based upon the closing price of the company's stock price at
each year end ($31.13 and $32.75 at December 31, 1993 and 1992, respectively).
Charges to expense for both stock plans were $1.1 million, $1.2 million, and
$0.9 million in 1993, 1992 and 1991, respectively.

Stock Purchase Plan--

The company has a stock purchase plan for selected managers and key staff
employees. Under the plan, the company is required to contribute an amount
equal to 70% of participants' contributions, of which 50% is applied to the
purchase of stock and 20% is paid in cash. The number of shares required for
the plan for the year 1993 will depend upon the extent to which eligible
participants subscribe during the subscription period in the first quarter of
1994 and the price of the stock on March 16, 1994. Amounts charged to expense
for this plan were $6.2 million in 1993 and $5.8 million in 1992. No amounts
were charged to expense for the 1991 plan year since participation was not
allowed according to the plan terms because the company's earnings did not meet
the required performance goal under the plan.

Incentive Compensation Plans--

The company has incentive compensation plans covering selected officers.
Amounts charged to expense for supplementary compensation, which is determined
from participants' base salaries and factors relating to various performance
measures, were $2.6 million in 1993, $2.7 million in 1992 and $0.7 million in
1991.

Stock Options--

The company has granted stock options annually from 1983 to 1993. Exercise
prices are 100% of the market price of common stock on the date of grant. The
options vest over four or five years and may be exercised, once vested, up to
ten years from the date of grant. Under the 1991 Stock Incentive Plan, a
maximum of 2.9 million shares were available for future grants of stock options
and restricted stock awards as of December 31, 1993. Information relating to
stock options for the years ended December 31 is shown on the following table.

F-13
<PAGE>

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>
1993 1992
-------------------------- --------------------------
NUMBER PER SHARE OPTION NUMBER PER SHARE OPTION
OF SHARES ON DATE OF GRANT OF SHARES ON DATE OF GRANT
--------- ---------------- --------- ----------------
<S> <C> <C> <C> <C>
Stock options granted.... 1,399,200 $28.94 to $30.19 1,261,800 $25.31 to $31.38
Stock options canceled or
expired................. 17,040 $19.63 to $31.38 50,460 $17.72 to $23.94
Stock options exercised.. 248,201 $11.00 to $23.94 548,348 $11.30 to $23.94
At end of year
Stock options outstand-
ing................... 7,685,105 $11.44 to $31.38 6,551,146 $11.00 to $31.38
Stock options exercis-
able.................. 3,850,079 $11.44 to $31.38 2,936,312 $11.00 to $23.94
========= ================ ========= ================
</TABLE>

Other Information--

Under the stock programs, authorized unissued shares or treasury shares may
be used. If authorized unissued shares are used, not more than 11.3 million
shares may be issued in the aggregate. The company intends to reacquire shares
of its common stock to meet the stock requirements of these programs in the
future.

EMPLOYEE STOCK OWNERSHIP PLAN

Contributions to the company's Employee Stock Ownership Plan were
discontinued in response to the change in tax law that eliminated the
previously available tax credit. Under this plan, 1.2 million shares are held
in trust as of December 31, 1993, for formerly eligible employees. There are no
charges to operations for this plan, except for certain administrative
expenses.

STOCK SPLIT

On July 23, 1992, the Board of Directors declared a 2-for-1 common stock
split. The split was completed on September 1, 1992, by the distribution of one
share of common stock, par value $1.25 per share, for each share held by
stockholders of record on August 7, 1992. Information relating to stock
options, stock units rights, reacquired common stock, the Shareholders Rights
Plan, and the net income and dividends per share included in the Consolidated
Financial Statements and related footnotes reflect the stock split.

PREFERRED STOCK

The company has two million shares of $1.00 par value preferred stock
authorized for issuance. The Board of Directors may divide the preferred stock
into one or more series and fix the redemption, dividend, voting, conversion,
sinking fund, liquidation and other rights. The company has no present plans to
issue any preferred stock. One million of the shares are reserved for issuance
under the Shareholder Rights Plan discussed below.

SHAREHOLDER RIGHTS PLAN

The company maintains a Shareholder Rights Plan (the Plan) designed to deter
coercive or unfair takeover tactics, to prevent a person or group from gaining
control of the company without offering fair value to all shareholders and to
deter other abusive takeover tactics which are not in the best interest of
shareholders.

Under the terms of the Plan, each share of common stock is accompanied by
one-quarter of a right; each full right entitles the shareholder to purchase
from the company, one one-hundredth of a newly issued share of Series A Junior
Preferred Stock at an exercise price of $225.

F-14
<PAGE>

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)

The rights become exercisable ten days after a public announcement that an
acquiring person (as defined in the Plan) has acquired 20% or more of the
outstanding common stock of the company (the Stock Acquisition Date) or ten
days after the commencement of a tender offer of which would result in a person
owning 30% or more of such shares. The company can redeem the rights for $.05
per right at any time until twenty days following the Stock Acquisition Date
(the 20-day period can be shortened or lengthened by the company). The rights
will expire on August 8, 1996 unless redeemed earlier by the company.

If, subsequent to the rights becoming exercisable, the company is acquired in
a merger or other business combination at any time when there is a 20% or more
holder, the rights will then entitle a holder to buy shares of the acquiring
company with a market value equal to twice the exercise price of each right.
Alternatively, if a 20% holder acquires the company by means of a merger in
which the company and its stock survives, or if any person acquires 30% or more
of the company's common stock, each right not owned by a 20% or more
shareholder, would become exercisable for common stock of the company (or, in
certain circumstances, other consideration) having a market value equal to
twice the exercise price of the right.

ACQUISITIONS

The company made several acquisitions, joint venture and equity investments
in 1993, 1992 and 1991, none of which, either individually or in the aggregate,
were material to the company's financial statements. The acquisitions were
accounted for using the purchase method; accordingly, the assets and
liabilities of the acquired entities have been recorded at their estimated fair
values at their respective dates of acquisition.

F-15
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders of
R.R. Donnelley & Sons Company:

We have audited the accompanying consolidated balance sheets of R. R.
Donnelley & Sons Company (a Delaware corporation) and Subsidiaries as of
December 31, 1993 and 1992, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three years ended December
31, 1993. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion the financial statements referred to above present fairly, in
all material respects, the financial position of R. R. Donnelley & Sons Company
and Subsidiaries as of December 31, 1993 and 1992, and the results of its
operations and its cash flows for each of the three years ended December 31,
1993, in conformity with generally accepted accounting principles.

As explained in the Notes to Consolidated Financial Statements, effective
January 1, 1993, the company changed its method of accounting for
postretirement benefits other than pensions and its method of accounting for
income taxes.

Arthur Andersen & Co.
Chicago, Illinois
January 27, 1994

F-16
<PAGE>

UNAUDITED INTERIM FINANCIAL INFORMATION

THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31
-----------------------------------------------------
FIRST SECOND THIRD FOURTH FULL
QUARTER QUARTER QUARTER QUARTER YEAR
-------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1993
Net sales............... $960,341 $ 993,964 $1,123,848 $1,309,608 $4,387,761
Gross profit............ 174,835 195,351 232,022 267,385 869,593
Net income (loss) from
operations before cumu-
lative effect of ac-
counting changes....... (22,108) 52,771 69,451 78,806 178,920
Cumulative effect of ac-
counting changes....... (69,500) -- -- -- (69,500)
Net income (loss)....... (91,608) 52,771 69,451 78,806 109,420
Per common share
Net income (loss) from
operations before cu-
mulative effect of
accounting changes... (0.14) 0.34 0.45 0.51 1.16
Cumulative effect of
accounting changes... (0.45) -- -- -- (0.45)
Net income (loss)..... (0.59) 0.34 0.45 0.51 0.71
1992
Net sales............... $938,172 $1,006,856 $1,038,781 $1,209,263 $4,193,072
Gross profit............ 162,644 190,158 219,128 245,928 817,858
Net income.............. 35,514 53,693 72,360 73,092 234,659
Net income per common
share.................. 0.23 0.34 0.47 0.47 1.51
</TABLE>

F-17
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON

FINANCIAL STATEMENT SCHEDULES

To the Stockholders of
R.R. Donnelley & Sons Company:

We have audited, in accordance with generally accepted auditing standards,
the financial statements included in the Company's Annual Report to
Shareholders included in this Form 10-K, and have issued our report thereon
dated January 27, 1994. Our audit was made for the purpose of forming an
opinion on those statements taken as a whole. The schedules listed in the index
to the financial statements and financial statement schedules are the
responsibility of the Company's management and are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not part
of the basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.

Arthur Andersen & Co.

Chicago, Illinois,
January 27, 1994

F-18
<PAGE>

SCHEDULE V

PROPERTY, PLANT AND EQUIPMENT

Depreciation of plant and equipment is computed principally on the straight-
line basis primarily at the following rates: buildings, 3%-5% and machinery and
equipment, 6 2/3%-33 1/3%.

<TABLE>
<CAPTION>
BALANCE AT ACQUI- RETIRE- TRANSLATION BALANCE
BEGINNING SITIONS ADDITIONS MENTS OR AND OTHER AT END
OF YEAR AT COST AT COST SALES ADJUSTMENTS OF YEAR
---------- ------- --------- -------- ----------- ----------
(IN THOUSANDS OF DOLLARS)
1993--
<S> <C> <C> <C> <C> <C> <C>
Land................... $ 34,807 $ 3,251 $ 1,104 $ (97) $ (32) $ 39,033
Buildings.............. 493,113 28,600 34,465 (4,887) (188) 551,103
Machinery & equipment.. 2,495,011 59,564 286,652 (66,884) (3,224) 2,771,119
---------- ------- -------- -------- -------- ----------
$3,022,931 $91,415 $322,221 $(71,868) $ (3,444) $3,361,255
========== ======= ======== ======== ======== ==========
1992--
Land................... $ 53,678 $ 1,756 $ 322 $(20,836) $ (113) $ 34,807
Buildings.............. 474,566 7,633 26,325 (12,786) (2,625) 493,113
Machinery & equipment.. 2,317,897 35,871 199,420 (49,268) (8,909) 2,495,011
---------- ------- -------- -------- -------- ----------
$2,846,141 $45,260 $226,067 $(82,890) $(11,647) $3,022,931
========== ======= ======== ======== ======== ==========
1991--
Land................... $ 53,283 $ -- $ 1,122 $ (1,583) $ 856 $ 53,678
Buildings.............. 465,021 -- 20,260 (11,824) 1,186 474,643
Machinery & equipment.. 2,117,824 -- 257,081 (55,772) (1,313) 2,317,820
---------- ------- -------- -------- -------- ----------
$2,636,128 $ -- $278,463 $(69,179) $ 729 $2,846,141
========== ======= ======== ======== ======== ==========
</TABLE>

F-19
<PAGE>

SCHEDULE VI

ACCUMULATED DEPRECIATION AND
AMORTIZATION OF PROPERTY, PLANT
AND EQUIPMENT
<TABLE>
<CAPTION>
BALANCE AT TRANSLATION BALANCE AT
BEGINNING RETIREMENTS AND OTHER END OF
OF YEAR ADDITIONS OR SALES ADJUSTMENTS YEAR
---------- --------- ----------- ----------- ----------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
1993--
Buildings.............. $ 178,495 $ 21,673 $ (482) $ (114) $ 199,572
Machinery & equipment.. 1,312,188 230,853 (48,205) (7,629) 1,487,207
---------- -------- -------- ------- ----------
$1,490,683 $252,526 $(48,687) $(7,743) $1,686,779
========== ======== ======== ======= ==========
1992--
Buildings.............. $ 163,091 $ 20,158 $ (6,078) $ 1,324 $ 178,495
Machinery & equipment.. 1,139,021 215,188 (49,195) 7,174 1,312,188
---------- -------- -------- ------- ----------
$1,302,112 $235,346 $(55,273) $ 8,498 $1,490,683
========== ======== ======== ======= ==========
1991--
Buildings.............. $ 145,659 $ 19,721 $ (2,152) $ (137) $ 163,091
Machinery & equipment.. 1,008,289 189,036 (56,866) (1,438) 1,139,021
---------- -------- -------- ------- ----------
$1,153,948 $208,757 $(59,018) $(1,575) $1,302,112
========== ======== ======== ======= ==========
</TABLE>

SCHEDULE VIII

VALUATION AND QUALIFYING ACCOUNTS

Transactions affecting the allowances for doubtful accounts during the years
ended December 31, 1993, 1992 and 1991 were as follows:

<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Allowance for trade receivable losses:
Balance, beginning of year................ $ 17,745 $ 23,928 $ 29,514
Balance, acquired companies at acquisi-
tion..................................... 312 1,066 --
Provisions charged to income.............. 22,658 12,931 8,995
-------- -------- --------
40,715 37,925 38,509
Uncollectible accounts written off, net of
recoveries............................... (25,920) (20,180) (14,581)
-------- -------- --------
Balance, end of year...................... $ 14,795 $ 17,745 $ 23,928
======== ======== ========
</TABLE>

F-20
<PAGE>

SCHEDULE IX

SHORT-TERM BORROWINGS

<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Commercial Paper*:
As of December 31......................... $ 23,120 $ 29,620 $75,137
-------- -------- --------
Weighted average interest rate at December
31................................... 3.3% 3.6% 5.0%
Maximum balance during the year........... 32,500 79,882 75,137
Average amount outstanding over the pe-
riods
the indebtedness was outstanding......... 29,150 75,305 47,409
Weighted average interest rate during the
period................................... 3.2% 3.9% 5.7%
Other, as of December 31.................... 14,308 15,381 21,160
-------- -------- --------
Total short-term debt as of December 31... $ 37,428 $ 45,001 $96,297
======== ======== ========
</TABLE>
- --------
*At December 31, 1993 the Company had $218.7 million of commercial paper
($176.0 million and $215.7 million at December 31, 1992 and December 31,
1991, respectively) of which the $23.1 million represents management's
current estimate of 1994 repayments. The remaining $195.6 million, at
December 31, 1993, is classified as long term since the Company has the
ability and intent to maintain such debt on a long term basis.

SCHEDULE X

SUPPLEMENTARY INCOME STATEMENT INFORMATION

Amounts charged to expense for the years ended December 31, 1993, 1992 and
1991 were as follows:

<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- -------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Maintenance and repairs......................... $102,990 $100,850 $92,345
</TABLE>

F-21
<PAGE>

INDEX TO EXHIBITS*

<TABLE>
<CAPTION>
DESCRIPTION EXHIBIT NO.
----------- -----------
<S> <C>
Certificate of Incorporation(10)............................... 3(i)(a)
Certificate of Stock Designation filed as Exhibit A to the
Rights Agreement dated July 24, 1986 between R. R. Donnelley
& Sons Company and Morgan Shareholder Services Trust Compa-
ny(2).........................................................
3(i)(b)
By-Laws........................................................ 3(ii)(a)
Amendments to By-Laws adopted January 27, 1994................. 3(ii)(b)
Form of Rights Agreement, dated as of July 24, 1986 between R.
R. Donnelley & Sons Company and Morgan Shareholder Services
Trust Company(2)..............................................
4(a)
First Amendment to Rights Agreement, dated as of March 24,
1988 between R. R. Donnelley & Sons Company and Morgan Share-
holder Services Trust Company(4)..............................
4(b)

Instruments Defining the Rights of Security Holders(1)......... 4(c)

Indenture dated as of November 1, 1990 between the Company and
Citibank, N.A. as Trustee(8)..................................
4(d)

Directors' Retirement Benefit Plan, as amended(6)**............ 10(a)

Directors' Deferred Compensation Agreement**................... 10(b)

Donnelley Shares Stock Option Plan............................. 10(c)

1993 Stock Ownership Plan for Non-Employee Directors(9)**...... 10(d)

Senior Management Annual Incentive Plan, as amended(8)**....... 10(e)

Form of Severance Agreement for Senior Officers, as amended**.. 10(f)

1993 Stock Purchase Plan for Selected Managers and Key Staff 10(g)
Employees(9)**.................................................

1981 Stock Incentive Plan(5)**................................. 10(h)

1986 Stock Incentive Plan(5)**................................. 10(i)

1991 Stock Incentive Plan, as amended(11)**.................... 10(j)

Unfunded Supplemental Benefit Plan(8)**........................ 10(k)

Amendment to Unfunded Supplemental Benefit Plan adopted on 10(l)
April 25, 1991(7)**...........................................

Agreement with John R. Walter for 1988 award of stock 10(m)
units(3)**....................................................

Agreement with C. K. Doty (11)**............................... 10(n)
Statement of Computation of Ratio of Earnings to Fixed 12
Charges.......................................................
Subsidiaries of R. R. Donnelley & Sons Company................. 21
Consent of Independent Public Accountants dated March 28, 23
1994..........................................................
</TABLE>
- --------
*Filed with the Securities and Exchange Commission. Each such exhibit
may be obtained by a shareholder of the Company upon payment of $5.00
per exhibit.
**Management contract or compensatory plan or arrangement.

(1) Instruments, other than that described in 4(d), defining the rights
of holders of long-term debt not registered under the Securities
Exchange Act of 1934 of the registrant and of all subsidiaries for
which consolidated or unconsolidated financial statements are required
to be filed are being omitted pursuant to paragraph (4)(iii)(A) of Item
601 of Regulation S-K. Registrant agrees to furnish a copy of any such
instrument to the Commission upon request.

E-1
<PAGE>

(2) Filed as Exhibit with Form SE filed on July 31, 1986, and
incorporated herein by reference.

(3) Filed as Exhibit with Form SE filed on March 24, 1988, and
incorporated herein by reference.

(4) Filed as Exhibit with Form SE filed on May 10, 1988, and
incorporated herein by reference.

(5) Filed as Exhibit with Form SE filed on March 23, 1990, and
incorporated herein by reference.

(6) Filed as Exhibit with Form SE filed on March 25, 1991, and
incorporated herein by reference.

(7) Filed as Exhibit with Form SE filed on May 9, 1991 and incorporated
herein by reference.

(8) Filed as Exhibit with Form SE filed on March 26, 1992 and
incorporated herein by reference.
(9) Filed as Exhibit with Form SE filed on March 30, 1993 and
incorporated herein by reference.
(10) Filed on May 14, 1993 as Exhibit to Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 1993.
(11) Filed on November 12, 1993 as Exhibit to Quarterly Report on Form
10-Q for the quarterly period ended September 30, 1993.

E-2

<PAGE>
EXHIBIT 3(ii)(a)

As Amended through January 27, 1994

BY-LAWS OF
R. R. DONNELLEY & SONS COMPANY

ARTICLE I
---------

SECTION 1.1. PRINCIPAL OFFICE. The principal office in the State of
Delaware shall be in the City of Wilmington, County of New Castle, State of
Delaware, and the name of the resident agent in charge thereof is The
Corporation Trust Company.

SECTION 1.2. OTHER OFFICES. The corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the corporation may
require.

ARTICLE II
----------

Meetings of Stockholders
------------------------

SECTION 2.1. ANNUAL MEETING. The annual meeting of the stockholders shall
be held on the fourth Thursday in March of each year for the purpose of electing
Directors of the class for which the term expires on that date and for the
transaction of such other business as may properly be brought before the
meeting. Such meeting shall be held at ten o'clock in the morning or such other
time during normal business hours as may be fixed by the Board of Directors and
stated in the notice of the meeting. If the day fixed for the annual meeting
shall be a legal holiday, the Board of Directors may, subject to the provisions
of Article X hereof, designate another day on which such meeting shall be held.
If the election of Directors shall not be held on the date designated for any
annual meeting, or any adjournment thereof, the Board of Directors shall cause
the election to be held at a special meeting of the stockholders as soon
thereafter as conveniently may be.

Except as otherwise provided by statute or the certificate of incorporation,
the only business which properly shall be conducted at any annual meeting of the
stockholders shall (i) have been specified in the written notice of the meeting
(or any supplement thereto) given as provided in Section 2.4, (ii) be brought
before the meeting by or at the direction of the Board of Directors or the
officer of the corporation presiding at the meeting or (iii) have been specified
in a written notice (a "Stockholder Meeting Notice") given to the corporation,
in accordance with all of the following requirements, by or on behalf of any
stockholder who is entitled to vote at such meeting. Each Stockholder Meeting
Notice must be delivered

<PAGE>

personally to, or be mailed to and received by, the Secretary of the corporation
at the principal executive offices of the corporation in the City of Chicago,
State of Illinois, not less than 60 days nor more than 90 days prior to the
annual meeting; provided, however, that in the event that less than 75 days'
notice or prior public disclosure of the date of the annual meeting is given or
made to stockholders, notice by the stockholder to be timely must be received
not later than the close of business on the tenth day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure was made, whichever first occurs. Each Stockholder Meeting Notice
shall set forth: (i) a description of each item of business proposed to be
brought before the meeting and the reasons for conducting such business at the
annual meeting; (ii) the name and record address of the stockholder proposing to
bring such item of business before the meeting and the reasons for conducting
such business at the annual meeting; (iii) the class and number of shares of
stock held of record, owned beneficially and represented by proxy by such
stockholder as of the record date for the meeting (if such date shall then have
been made publicly available) and as of the date of such Stockholder Meeting
Notice and (iv) all other information which would be required to be included in
a proxy statement filed with the Securities and Exchange Commission if, with
respect to any such item of business, such stockholder were a participant in a
solicitation subject to Section 14 of the Securities Exchange Act of 1934. No
business shall be brought before any annual meeting of stockholders of the
corporation otherwise than as provided in this Section; provided, however, that
nothing contained in this Section shall be deemed to preclude discussion by any
stockholder of any business properly brought before the annual meeting. The
officer of the corporation presiding at the annual meeting of stockholders
shall, if the facts so warrant, determine that business was not properly brought
before the meeting in accordance with the provisions of this Section and, if he
should so determine, he should so declare to the meeting and any such business
so determined to be not properly brought before the meeting shall not be
transacted. (Amended 3/24/88)

SECTION 2.2. SPECIAL MEETINGS. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the Chief Executive Officer,
President, or the Chairman of the Board, and shall be called by the Secretary
pursuant to a resolution duly adopted by the affirmative vote of a majority of
the whole Board of Directors. Such call shall state the purposes of the
proposed meeting. Business transacted at any special meeting shall be limited
to the general objectives stated in the call. (Amended 12/15/88)

SECTION 2.3. PLACE OF MEETING. All meetings of stockholders for the
election of Directors shall be held in the City of Chicago, County of Cook,
State of Illinois and the Board of Directors is authorized to fix the place
within the City of Chicago for the holding of such meeting. Meetings of
stockholders for any

2
<PAGE>

other purpose may be held at such place, within or without the State of
Delaware, and time as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof. (Amended 1/9/57)

SECTION 2.4. NOTICE OF MEETINGS. Written or printed notice stating the
place, day and hour of the meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten nor more than fifty days before the date of the meeting, either
personally or by mail, by or at the direction of the Board of Directors, the
Chief Executive Officer, the Chairman of the Board or the President, to each
stockholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail in a
sealed envelope addressed to the stockholder at his address as it appears on the
records of the corporation, with postage thereon prepaid. (Amended 12/15/88)

SECTION 2.5. CLOSING TRANSFER BOOKS OR FIXING RECORD DATE. The Board of
Directors may close the stock transfer books of the corporation for a period not
exceeding fifty (50) days preceding the date of any meeting of stockholders, or
the date for payment of any dividend, or the date for the allotment of rights or
the date when any change, or conversion or exchange of capital stock shall go
into effect or for a period of not exceeding fifty (50) days in connection with
obtaining the consent of stockholders for any purpose. In lieu of closing the
stock transfer books as aforesaid, the Board of Directors may fix in advance a
date, not exceeding fifty (50) days preceding the date of any meeting of the
stockholders, or the date for payment of any dividend, or the date for the
allotment of rights, or the date when any change, or conversion or exchange of
capital stock shall go into effect, or a date in connection with obtaining such
consent, as a record date for the determination of the stockholders entitled to
notice of, and to vote at, any such meeting and any adjournment thereof, or
entitled to receive payment of any such dividend, or to any such allotment of
rights, or to exercise the rights in respect of any such change, conversion or
exchange of capital stock, or to give such consent and in such case such
stockholders and only such stockholders as shall be stockholders of record on
the date so fixed shall be entitled to such notice of and to vote at, such
meeting and any adjournment thereof, or to receive payments of such dividend, or
to receive such allotment of rights, or to exercise such rights, or to give such
consent, as the case may be notwithstanding any transfer of any stock on the
books of the corporation after any such record date fixed as aforesaid.

SECTION 2.6. VOTING LIST. At least ten days before every election of
Directors, a complete list of the stockholders entitled to vote at such
election, arranged in alphabetical order with the residence of and the number of
voting shares held by each, shall be prepared by the Secretary. Such list shall
be open at the place where said election is to be held for ten days, to the
examination of any stockholders, and shall be produced and kept at the time and
place of election

3
<PAGE>

during the whole time thereof, and subject to the inspection of any stockholder
who may be present.

SECTION 2.7. QUORUM. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at any meeting of stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of stockholders, the stockholders entitled to vote
thereat, present in person or represented by proxy, shall have power to adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified.

SECTION 2.8. PROXIES. At all meetings of stockholders a stockholder may
vote by proxy executed in writing by the stockholder or by his duly authorized
attorney-in-fact. Such proxy shall be filed with the Secretary of the
corporation before or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise provided in the
proxy.

SECTION 2.9. VOTING. When a quorum is present at any meeting of
stockholders, the affirmative vote of the holders of a majority of the shares
present in person or represented by proxy at the meeting and entitled to vote on
the subject matter shall decide any question brought before such meeting, unless
the question is one upon which, by express provision of the statutes, the
certificate of incorporation or these by-laws, a different vote is required, in
which case such express provision shall govern and control the decision of such
question. Every stockholder having the right to vote shall be entitled to vote
in person, or by proxy appointed by an instrument in writing subscribed by such
stockholder and bearing a date not more than eleven months prior to voting,
unless such instrument provides for a longer period. Every such stockholder
shall have one vote for each share of stock having voting power registered in
his name on the books of the corporation. Except where the transfer books of
the corporation shall have been closed or a date shall have been fixed as a
record date for the determination of its stockholders entitled to vote, no share
of stock shall be voted on at any election for Directors which has been
transferred on the books of the corporation within twenty days next preceding
such election of Directors. (Amended 1/28/93)

SECTION 2.10. VOTING OF STOCK OF CERTAIN HOLDERS. Shares standing in the
name of another corporation, domestic or foreign, may be voted by such officer,
agent or proxy as the by-laws of such corporation may prescribe or, in the
absence of such provision, as the Board of Directors of such corporation may

4
<PAGE>

determine. Shares standing in the name of a deceased person may be voted by
executor or administrator of such deceased person, either in person or by proxy.
Shares standing in the name of a guardian, conservator or trustee may be voted
by such fiduciary, either in person or by proxy, but no such fiduciary shall be
entitled to vote shares held in such fiduciary capacity without a transfer of
such shares into the name of such fiduciary. Shares standing in the name of a
receiver may be voted by such receiver. A stockholder whose shares are pledged
shall be entitled to vote such shares, unless in the transfer by the pledger or
on the books of the corporation, he has expressly empowered the pledgee to vote
thereon, in which case only the pledgee, or his proxy, may represent the stock
and vote thereon.

SECTION 2.11. TREASURY STOCK. The corporation shall not vote shares of its
own stock directly or indirectly; and such shares shall not be counted in
determining the total number of outstanding shares.

SECTION 2.12. ELECTION OF DIRECTORS. When a quorum is present at any
meeting of stockholders, directors shall be elected by a plurality of the votes
of the shares present in person or represented by proxy at such meeting of
stockholders and entitled to vote on the election of directors. (New Section
10/22/92)

ARTICLE III
-----------

Directors
---------

SECTION 3.1. GENERAL POWERS. The property and business of the corporation
shall be managed by its Board of Directors which may exercise all such powers of
the corporation and do all such lawful acts and things as are not by statute or
by the certificate of incorporation or by these by-laws directed or required to
be exercised or done by the stockholders. (Amended 9/28/90)

Without limiting the generality of the foregoing, it shall be the
responsibility of the Board of Directors to establish broad objectives and the
general course of the business, determine basic policies, appraise the adequacy
of overall results, and generally represent and further the interests of the
Company's stockholders and insure the most effective use of the Company's
assets.

Several examples of the responsibilities of the Board are as follows:

1. Establish broad Company objectives and basic policies and maintain
overall control of the business.

5
<PAGE>

2. Make necessary revisions of the by-laws (in accordance with Article X).

3. Determine dividend action (in accordance with Article VIII).

4. Authorize necessary action with respect to issuance of new securities and
listing securities for trading on exchanges.

5. Fix time and place and take other necessary action with respect to
stockholders meetings (in accordance with Article II).

6. Approve issuance of stock certificates to replace those lost or destroyed
(in accordance with Section 7.2).

7. Fill Vacancies in the Board of Directors (in accordance with Section
3.8).

8. Elect the officers of the corporation (in accordance with Section 4.2.)
and appraise their performance.

9. Determine the basic organization structure of the business.

10. Authorize any necessary action with respect to loans and pledging of
assets (in accordance with Section 6.2.).

11. Designate officers authorized to buy or sell corporate investment
securities.

12. Designate persons authorized to execute contracts and other documents
requiring signatures of officers or specific individuals (in accordance
with Section 6.1).

13. Select, or designate those authorized to select, depositaries for
corporate funds and investment securities and designate check signatories
and persons authorized to have access to safe deposit boxes (in
accordance with Sections 6.3 and 6.4).

14. Approve proposals to convey corporate-owned land or buildings or
designate those authorized to take such action.

15. Designate the person or persons authorized to appoint proxies to vote
stock in subsidiary and other concerns in which the corporation has a
significant interest and the person or persons authorized to determine

6
<PAGE>

who shall serve as Directors in representing the parent corporation in
such concerns.

16. Designate stock transfer agents, registrars, and paying agents with
respect to corporate securities and other special purpose agents.

17. Procure special professional services required by and for the Board.

18. Provide for issuance of an annual report to stockholders and such
other reports and notices as the Board deems advisable.

19. Employ, upon recommendation of the Audit Committee (in accordance with
Section 3.13), public accountants to audit the corporation's financial
statements.

20. Review and approve new employee benefit plans and major revisions of
employee stock incentive plans.

21. Review and approve the actions of the Executive Committee as reported in
the minutes of their meetings.

22. Approve the annual operating budget.

23. Review and approve the annual capital budget.

24. Direct the manner of handling matters outside the ordinary course of
business of the corporation.

SECTION 3.2. NUMBER, ELECTION AND TERM. Effective immediately, the number
of Directors which shall constitute the whole Board shall be twelve (12) of whom
four (4) shall be Directors of the First Class, four (4) shall be Directors of
the Second Class and four (4) shall be Directors of the Third Class. The term
of office of each class shall be three years, with the term of one class
expiring in each year, and the successors to the class of Directors whose terms
shall expire shall be elected at each annual election or adjournment thereof.
Each Director shall hold office until his successor shall be elected and shall
qualify or until his earlier resignation or removal. Directors need not be
residents of Delaware or stockholders. (Amended 1/27/94)

SECTION 3.3. MEETINGS. The Board of Directors may hold meetings, both
regular and special, either within or without the State of Delaware. Regular
meetings of the Board of Directors may be held without notice at such time and
such place as may from time to time be determined by the Board. Special
meetings of the Board of Directors may be called by or at the request of the
Chief

7
<PAGE>

Executive Officer, the Chairman of the Board, a Vice Chairman, President, or any
two directors. (Amended 12/15/88)

SECTION 3.4. NOTICE. Notice of any special meeting of the Board of
Directors stating the place, date and hour of the special meeting shall be given
in writing to each director, either personally, or by mail, telex, telegram or
cable, addressed to the director's residence or usual place of business, not
less than two days before the date of such meeting, or by such other means,
whether or not in writing, and within such lesser period, as circumstances
require in the reasonable judgment of the person calling the meetings. If
mailed, such notice shall be deemed to be given at the time when it is deposited
in the United States mail with first class postage prepaid. Notice by telegram
or cable shall be deemed given when the notice is delivered to the telegraph or
cable company; notice by telex shall be deemed given when the notice is
transmitted by telex. Any director may waive notice of any meeting. The
attendance of a director at any meeting shall constitute a waiver of notice at
such meeting, except where the director attends the meeting for the express
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any special meeting of the Board of Directors need be specified
in the notice or waiver of notice of such meeting, unless otherwise provided by
statute, the Certificate of Incorporation or these By-Laws. (Amended 6/24/76)

SECTION 3.5. QUORUM. A majority of the Board of Directors shall constitute
a quorum for the transaction of business at any meeting of the Board of
Directors, provided, that if less than a majority of the Directors are present
at said meeting, a majority of the Directors present may adjourn the meeting
from time to time without further notice. (Renumbered 6/24/76)

SECTION 3.6. MANNER OF ACTING. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors. (Renumbered 6/24/76)

SECTION 3.7. USE OF COMMUNICATIONS EQUIPMENT. Members of the Board of
Directors, or any committee thereof, may participate in a meeting of the Board
of Directors or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
section shall constitute presence in person at such meeting. (New Section
6/24/76)

SECTION 3.8. VACANCIES AND ADDITIONAL DIRECTORS. Any director may resign at
any time upon written notice to the corporation. If any vacancy occurs in the
Board of Directors caused by death, resignation, retirement, disqualification or

8
<PAGE>

removal from office of any Director, or otherwise, or if any new directorship is
created by any increase in the authorized number of Directors, a majority of the
Directors then in office, though less than a quorum may choose a successor or
fill the newly created directorship; and a Director so chosen shall hold office
until the next annual election at which Directors of the class to which he was
chosen are elected and until his successor shall be duly elected and shall
qualify or until his earlier resignation or removal. (Amended 3/26/70)

SECTION 3.9. COMPENSATION. Directors who are not full-time employees of the
Company shall receive a stated salary and may receive options to purchase shares
of the Company's stock as provided under the Company's stock plans, for their
services, and, in addition thereto, shall receive a fixed fee and expenses, if
any, for attendance at each regular or special meeting of the Board of Directors
from time to time. Directors who are full-time employees of the Company shall
not receive any compensation for their services as such; provided that nothing
herein contained shall be construed to preclude any Director from serving the
corporation in any other capacity and receiving compensation thereof. (Amended
3/28/91)

SECTION 3.10. EXECUTIVE COMMITTEE. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate three, four or five
Directors to constitute an Executive Committee. The Chairman of the Executive
Committee shall be the Chief Executive Officer. The Executive Committee shall
have and exercise all of the authority of the Board of Directors in the
management of the corporation, except that such Committee shall not have the
power to take specific actions which have been delegated to other committees of
the Board and shall not be empowered to take action with respect to: declaring
dividends; issuing bonds, debentures, or the borrowing of moneys except within
limits expressly approved by the Board of Directors; amending by-laws; filling
vacancies and newly created directorships in the Board of Directors; removing
Directors of the corporation; mergers or consolidations; the sale, lease or
exchange of all or sub-stantially all of the assets of the corporation;
dissolution; or any other action requiring the approval of stockholders. The
designation of such Committee and the delegation thereto of authority shall not
operate to relieve the Board of Directors or any member thereof of any
responsibility imposed upon it or him by law. (Amended 9/28/90)

SECTION 3.11. FINANCE COMMITTEE. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate three, four or five
Directors, a majority of whom shall not be employees of the Company, to
constitute a Finance Committee, which Committee is charged with reviewing the
overall financial policies of the Company and making recommendations to the
Board regarding the Company's financial condition and requirements for and
disposition of funds, including: capital structure, raising long-term capital,

9
<PAGE>

dividend policy, and material changes in the Company's financial position with
respect to cash, investments, debt and accounts receivable. The Committee shall
review the performance and management of the Company's Retirement Benefit Plan
including the investment policy, the performance of the Investment Trustee on a
regular periodic basis, the reasonableness of the actuarial assumptions in
relation to investment performance, the funding status of the Plan and shall
make recommendations with respect to the selection of one or more investment
trustees or other investment agencies, and undertake such other studies and make
such other recommendations to the Board as it may deem desirable with respect to
the Investment Trust of the Retirement Benefit Plan. (Amended and Renamed
9/28/90)

SECTION 3.12. COMPENSATION COMMITTEE. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate three, four or five
Directors who are not employees of the Company, to constitute a Compensation
Committee. The Compensation Committee shall determine the annual salary, bonus
and other benefits of selected senior officers and key management employees of
the Company and review, as appropriate, performance standards under compensation
programs for key employees. The Compensation Committee shall also recommend to
the Board candidates for election as corporate officers.

The Compensation Committee shall recommend new employee benefit plans and
changes to stock incentive plans to the Board, approve amendments to the non-
stock employee benefit plans of the Company and oversee the administration of
all of the Company's employee benefit plans. The Compensation Committee may
delegate to one or more officers of the Company the power to approve any
amendment of any non-stock employee benefit plan of the Company or the Donnelley
Tax Credit Stock Ownership Plan which in the reasonable opinion of such officer
will not materially affect the costs to the Company of, or benefits under, such
plans. (Amended 7/22/93)

SECTION 3.13. AUDIT COMMITTEE. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate three, four or five
Directors who are not employees of the Company to constitute an Audit Committee,
which Committee shall review on behalf of the stockholders of the Company: the
qualifications and services of the independent public accountants employed by
the Company from time to time to audit the books of the Company, the scope of
their audits, the adequacy of their audit reports, and recommendations made by
them. The Committee may also make such reviews of internal financial audits and
controls as the Committee considers desirable.

The Audit Committee will recommend to the Board the selection of the
independent public accountants.

10
<PAGE>

The Audit Committee shall review the Company's financial disclosure
documents, management perquisites, significant developments in accounting
principles and significant proposed changes in financial statements. The Audit
Committee shall also review and monitor the Company's codes of conduct to guard
against significant conflicts of interest and dishonest, unethical or illegal
activities. The Audit Committee shall review periodically the performance of
the Company's accounting and financial personnel, and shall review material
litigation and regulatory proceedings and other issues relating to potentially
significant corporate liability. (Amended 9/28/90)

SECTION 3.14. NOMINATING COMMITTEE. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate three, four or five
Directors to constitute a Nominating Committee, which Committee shall recommend
to the Board nominees for election to the Board of Directors in connection with
any meeting of stockholders at which directors are to be elected and persons for
appointment to fill any Board vacancy which the Board of Directors is authorized
under the By-Laws to fill. The Committee may also recommend to the Board
policies or guidelines concerning criteria for Board membership, the structure
and composition of Board Committees, the size and composition of the Board and
the selection, tenure and retirement of Directors and matters related thereto.
(Amended 9/28/90)

SECTION 3.15. OTHER COMMITTEES. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate two or more Directors to
constitute committees other than the Executive Committee, Finance Committee,
Compensation Committee, Audit Committee and Nominating Committee, which
committees shall have and exercise such authority as may be provided for in the
resolution creating such committee. (Amended 9/28/90)

SECTION 3.16. HONORARY DIRECTORS. The Board of Directors may select from
time to time, and for such periods of time as it may deem appropriate, one or
more past Chairmen of the Board, Presidents or Chief Executive Officers elected
a Director prior to September 28, 1990, to serve as Honorary Directors.
Honorary Directors shall be entitled to receive notice of and to attend all
meetings of the Board of Directors, to receive copies of all reports or other
communications made to the Board of Directors, to give counsel and advice on any
subject, to receive such fees and expense reimbursements as may be provided from
time to time by the Board of Directors. The Board of Directors, Chief Executive
Officer, Chairman of the Board or President may invite an Honorary Director to
attend meetings of any committee of the Board of Directors or to undertake
temporary assignments, but this shall not preclude any other arrangements,
consulting or otherwise, between the corporation and an Honorary Director. The
presence or absence of an Honorary Director shall not be counted for purposes or
determining the existence of a quorum. Honorary Directors shall not have the
right to vote on

11
<PAGE>

any matters voted on by the Board of Directors or any of the rights, duties,
privileges, or responsibilities of Directors of the corporation. (Amended
9/28/90)

SECTION 3.17. NOMINATION OF DIRECTORS. Except as otherwise fixed pursuant
to the certificate of incorporation relating to the rights of the holders of any
one or more classes or series of Preferred Stock issued by the corporation,
acting separately by class or series, to elect, under specified circumstances,
directors at a meeting of stockholders, nominations for the election of
directors may be made by the Board of Directors or a committee appointed by the
Board of Directors pursuant to Section 3.14 or by any stockholder entitled to
vote in the election of directors generally. However, any stockholder entitled
to vote in the

election of directors generally may nominate one or more persons for election as
directors at a meeting at which directors are to be elected only if written
notice of such stockholder's intent to make such nomination or nominations has
been delivered personally to, or been mailed to and received by, the Secretary
of the corporation at the principal executive offices of the corporation in the
City of Chicago, State of Illinois, not less than 60 days nor more than 90 days
prior to the meeting; provided, however, that, in the event that less than 75
days' notice or prior public disclosure of the date of the meeting is given or
made to stockholders, notice by the stockholder to be timely must be so received
not later than the close of business on the tenth day following the day on which
such notice of the date of the meeting was mailed or such public disclosure was
made, whichever first occurs. Each such notice shall set forth: (i) the name
and record address of the stockholder who intends to make the nomination; (ii)
the name, age, principal occupation or employment, business address and
residence address of the person or persons to be nominated; (iii) the class and
number of shares of stock held of record, owned beneficially and represented by
proxy by such stockholder and by the person or persons to be nominated as of the
record date for the meeting (if such date shall then have been made publicly
available) and of the date of such notice; (iv) a representation that the
stockholder intends to appear in person or by proxy at the meeting to nominate
the person or persons specified in the notice; (v) a description of all
arrangements or understandings between such stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by such stockholder; (vi) such other
information regarding each nominee proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to the Securities
Exchange Act of 1934 and the proxy rules of the Securities and Exchange
Commission; and (vii) the consent of each nominee to serve as a director of the
corporation if so elected. The corporation may require any proposed nominee to
furnish such other information as may reasonably be required by the corporation
to determine the eligibility of such proposed nominee to serve as a director of
the corporation. The officer of the corporation presiding at the annual meeting
of stockholders shall, if the facts so warrant, determine that a nomination was
not made in accordance with the provisions of this Section, and

12
<PAGE>

if he should so determine, he should so declare to the meeting and the defective
nomination shall be disregarded. No person shall be eligible for election as a
director of the corporation unless nominated in accordance with the procedures
set forth herein. (Added 3/24/88)

ARTICLE IV
----------

Officers of the Corporation
---------------------------

SECTION 4.1. OFFICERS AND NUMBER. The officers of the corporation shall be
a Chief Executive Officer, a Chairman of the Board, one or more Vice Chairmen, a
President, one or more Executive Vice Presidents, one or more Sector Presidents,
one or more Business Unit Presidents, one or more Senior Vice Presidents, one or
more Vice Presidents, a Secretary, a Treasurer, a Controller, a General Counsel,
one or more Assistant Secretaries, one or more Assistant General Counsels, one
or more Assistant Treasurers and one or more Assistant Controllers. Any two or
more offices may be held by the same person except the offices of President and
Secretary. The Chief Executive Officer shall be either the Chairman, a Vice
Chairman or the President, as designated by the Board of Directors. The Board
of Directors may elect one or more Vice Chairmen of the Board and one or more
Executive Vice Presidents. The Board of Directors may elect an Honorary
Director to the office of Honorary Chairman of the Board. (Amended 1/27/94)

SECTION 4.2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected annually by the Board of Directors at the first meeting of the
Board of Directors held after each annual meeting of the stockholders. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as conveniently may be. Vacancies may be filled or new
offices created and filled at any meeting of the Board of Directors. Each
officer shall hold office until his successor shall have been duly elected and
shall have qualified or until his death or until he shall resign or shall have
been removed in the manner hereinafter provided. (Adopted 10/21/60)

SECTION 4.3. REMOVAL. Any officer elected by the Board of Directors may be
removed by the Board of Directors whenever in its judgment the best interests of
the corporation would be served thereby. (Amended 12/15/88)

SECTION 4.4. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term. (Adopted 10/21/60)

13
<PAGE>

SECTION 4.5. SALARIES. No officer shall be prevented from receiving a
salary for his services as an officer by reason of the fact that he is also a
Director of the corporation.

SECTION 4.6. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall
have overall supervision of, and responsibility for, the business, and shall
direct the affairs and policies of the corporation. (Adopted 12/15/88)

SECTION 4.7. CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside
at all meetings of the stockholders and Board of Directors. The Chairman of the
Board shall perform such other duties and responsibilities as may be assigned to
him by the Board of Directors. (Amended 9/28/90)

SECTION 4.8. VICE CHAIRMEN OF THE BOARD. The Vice Chairmen of the Board
shall, in the absence of the Chairman of the Board (in the order prescribed by
the Board), preside at all meetings of the stockholders and Board of Directors,
and shall perform such other duties as may be assigned to them by the Board of
Directors. (Amended 12/15/88)

SECTION 4.9. HONORARY CHAIRMAN OF THE BOARD. The Honorary Chairman of the
Board shall consult with the Chief Executive Officer and other officers of the
corporation, as he or they shall determine, with respect to the general policies
and affairs of the corporation, and shall have such authority and perform such
duties as from time to time may be prescribed by the Board of Directors or as
may be granted by the Chief Executive Officer. (Renumbered 9/28/90)

SECTION 4.10. PRESIDENT. Subject to the supervision and direction of the
Chief Executive Officer, the President shall have responsibility for such of the
operations and other functions of the corporation as may be assigned to him.
The President shall perform such other duties and responsibilities as may be
assigned to him by the Chief Executive Officer. In the absence of the Chairman
of the Board and Vice Chairmen of the Board, the President shall preside at
meetings of the stockholders and Board of Directors. (Renumbered and Amended
9/28/90)

SECTION 4.11. VICE PRESIDENTS. Each Vice President shall have such
corporate powers, if any, as may be assigned to him from time to time by the
Board of Directors, Chief Executive Officer, Chairman of the Board or the
President. (Renumbered 9/28/90)

SECTION 4.12. SENIOR VICE PRESIDENTS. Each Senior Vice President shall have
such corporate powers, if any, as may be assigned to him by the Board of
Directors, Chief Executive Officer, Chairman of the Board or the President.
(Renumbered 9/28/90)

14
<PAGE>

SECTION 4.13. SECTOR PRESIDENTS. The Board of Directors may from time to
time designate as Sector President one or more of the individuals who occupies
the position of senior officer heading a Sector consisting of one or more
business units and to whom one or more of the Business Unit Presidents reports.
(Amended 1/27/94)

SECTION 4.14. BUSINESS UNIT PRESIDENTS. The Board of Directors may from
time to time designate as Business Unit President one or more of the individuals
who occupies the position of senior officer heading a business unit consisting
of one or more divisions and one or more sales units and who reports to one or
more of the Sector Presidents or other senior officers of the corporation.
(Added 1/27/94)

SECTION 4.15. EXECUTIVE VICE PRESIDENTS. The Board of Directors may
designate as an Executive Vice President the officer to whom one or more other
senior officers of this corporation reports. (Amended and Renumbered 1/27/94)

SECTION 4.16. ORDER OF SUCCESSION. Such of the directors of the corporation
as shall be designated by resolution of the Board of Directors, and in the order
of such designation, shall in the absence of the Chairman of the Board perform
the duties of the Chairman of the Board and shall have all of the powers and
shall be subject to any restrictions imposed upon the Chairman.

Such of the officers of the corporation as may be designated by resolution of
the Board of Directors, and in the order of such designation, shall in the
absence of the Chief Executive Officer, perform the duties of the Chief
Executive Officer and when so acting shall have all the powers of and be subject
to any restrictions imposed upon the Chief Executive Officer.

Such of the officers of the corporation as may be designated by resolution of
the Board of Directors, and in the order of such designation, shall in the
absence of the President perform the duties of the President and when so acting
shall have all the powers of and be subject to any restrictions imposed upon the
President. (Renumbered 1/27/94)

SECTION 4.17. SECRETARY. The Secretary shall keep the minutes of all
meetings of the stockholders and Board of Directors of the corporation, shall
have charge of the corporate records and the corporate seal, and shall have the
power to attach the seal to all instruments which shall require sealing after
the same shall have been signed as authorized by the Board of Directors.
(Renumbered 1/27/94)

SECTION 4.18. TREASURER. The Treasurer shall be responsible for the
receipt, custody and disbursement of all funds of the corporation in the form of
both cash and securities. He may delegate the details of his office to someone
in his stead,

15
<PAGE>

but this shall nowise relieve him of the responsibilities and liability of his
office. The Treasurer shall have the power to attach the seal to all
instruments which shall require sealing after the same shall have been signed as
authorized by the Board of Directors. (Renumbered 1/27/94)

SECTION 4.19. CONTROLLER. The Controller reports to the Chief Executive
Officer directly or through such other management executives as the Chief
Executive Officer may direct. The Controller, however, may directly submit any
matter to the Board of Directors for their consideration. The Controller shall
maintain adequate records of all assets, liabilities, and transactions of the
corporation, and in conjunction with other officers and department heads, shall
initiate and enforce measures and procedures whereby the business of the
corporation shall be conducted with the maximum of safety, efficiency and
economy. He shall attend that part of the meetings of the Board of Directors
which is concerned with the review of the financial and operating reports of the
business, except when, in the discretion of the Board, he shall be asked not to
attend. (Renumbered 1/27/94)

SECTION 4.20. GENERAL COUNSEL. The General Counsel shall be the chief legal
officer of the corporation and have legal responsibility for all aspects of the
business. The General Counsel shall have the power to attach the seal to all
instruments which shall require sealing after the same shall have been signed as
authorized by the Board of Directors. (Renumbered 1/27/94)

SECTION 4.21. ASSISTANT TREASURERS. The Assistant Treasurers shall in the
absence of the Treasurer perform all functions and duties of the Treasurer and
in addition shall perform such functions and duties as the Treasurer may
delegate, but this shall in nowise relieve the Treasurer of the responsibilities
and liability of his office. (Renumbered 1/27/94)

SECTION 4.22. ASSISTANT SECRETARIES. The Assistant Secretaries shall in the
absence of the Secretary perform all functions and duties of the Secretary and
in addition shall assume such functions and duties as the Secretary may
delegate, but this shall in nowise relieve the Secretary of the responsibilities
and liability of his office. (Renumbered 1/27/94)

SECTION 4.23. ASSISTANT GENERAL COUNSELS. The Assistant General Counsels
shall in the absence of the General Counsel perform all functions and duties of
the General Counsel and in addition shall assume such functions and duties as
the General Counsel may delegate, but this shall in nowise relieve the General
Counsel of the responsibilities and liabilities of his office. (Renumbered
1/27/94)

SECTION 4.24. ASSISTANT CONTROLLERS. The Assistant Controllers shall in the
absence of the Controller perform all functions and duties of the Controller and
in

16
<PAGE>

addition shall assume such functions and duties as the Controller may delegate,
but this shall in nowise relieve the Controller of the responsibilities and
liabilities of such office. (Renumbered 1/27/94)

ARTICLE V
---------

Appointed Officers
------------------

The Chief Executive Officer may appoint officials assigned to a particular
Sector or other business unit as such officers of such Sector or business unit
and having such titles as he shall deem appropriate. Any such officer appointed
by the Chief Executive Officer may be removed by the Chief Executive Officer
whenever in his judgment the best interests of the corporation would be served
thereby. The term of office, compensation, powers and duties and other terms of
employment of appointed officers shall be such as the Chief Executive Officer
may from time to time deem proper, and the authority of such officers shall be
limited to acts pertaining to the business of such Sector or business unit.
(Amended 1/27/94)

ARTICLE VI
----------

Contracts, Loans, Checks and Deposits
-------------------------------------

SECTION 6.1. CONTRACTS. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances.

SECTION 6.2. LOANS. No loans shall be contracted on behalf of the
corporation and no evidence of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors (or a resolution of a
committee of Directors pursuant to authority conferred upon that committee).
Such authority may be general or confined to specific instances.

SECTION 6.3. CHECKS, ETC. All checks, demands, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation shall be signed by such officer or officers or such
agent or agents of the corporation, and in such manner, as may be designated by
the Board of Directors or by one or more officers of the corporation named by
the Board of Directors for such purpose.

17
<PAGE>

SECTION 6.4. DEPOSITS. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies and other depositaries as the Board of Directors may
select.

(Entire Article Renumbered 6/28/84)

ARTICLE VII
-----------

Certificates of Stock and Their Transfer
----------------------------------------

SECTION 7.1. CERTIFICATES OF STOCK. Certificates of stock of the
corporation shall be in such form as may be determined by the Board of
Directors, shall be numbered and shall be entered in the books of the
corporation as they are issued. They shall exhibit the holder's name and number
of shares and shall be signed by the Chief Executive Officer, Chairman of the
Board or President or a Vice President and by the Secretary or Assistant
Secretary or the Treasurer or an Assistant Treasurer. If any stock certificate
is signed manually (a) by a transfer agent other than the corporation or its
employee or (b) by a registrar other than the corporation or its employee, any
other signature on the certificate may be a facsimile.

In case any officer, transfer agent, or registrar who has signed or whose
facsimile has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, such
certificate may nevertheless be issued by the corporation with the same effect
as if he were such officer, transfer agent, or registrar at the date of issue.
All certificates properly surrendered to the corporation for transfer shall be
cancelled and no new certificates shall be issued to evidence transferred shares
until the former certificate for at least a like number of shares shall have
been surrendered and cancelled and the corporation reimbursed for any applicable
taxes on the transfer, except that in the case of a lost, destroyed or mutilated
certificate, a new one may be issued therefor upon such terms, and with such
indemnification (if any) to the corporation, as the Board of Directors may
prescribe specifically or in general terms or by delegation to a transfer agent
for the corporation. Certificates shall not be issued representing fractional
shares of stock. (Amended 12/15/88)

SECTION 7.2. LOST CERTIFICATES. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost or
destroyed upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost or destroyed. When authorizing such issue
of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost or destroyed

18
<PAGE>

certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost or destroyed.

SECTION 7.3. TRANSFERS. Upon surrender to the corporation or the transfer
agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books. Transfers of shares shall be made only on the books
of the corporation by the registered holder thereof or by his attorney thereunto
authorized by power of attorney and filed with the Secretary or transfer agent
of the corporation.

SECTION 7.4. REGISTERED STOCKHOLDERS. The corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder in fact
thereof and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.

(Entire Article Renumbered 6/28/84)

ARTICLE VIII
------------

Dividends
---------

SECTION 8.1. DECLARATION. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation.

SECTION 8.2. RESERVE. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the Directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
such other purposes as the Directors shall think conducive to the interest of
the corporation, and the Directors may modify or abolish any such reserve in the
manner in which it was created.

(Entire Article Renumbered 6/28/84)

19
<PAGE>

ARTICLE IX
----------

Miscellaneous
-------------

SECTION 9.1. FISCAL YEAR. Unless otherwise fixed by the resolution of the
Board of Directors, the fiscal year of the corporation shall be the calendar
year.

SECTION 9.2. SEAL. The corporate seal shall have inscribed thereon the name
of the corporation and the words "Corporate Seal, Delaware." The seal may be
used by causing it or a facsimile thereof to be impressed or affixed or
otherwise reproduced.

SECTION 9.3. BOOKS. The books of the corporation may be kept (subject to
any provision contained in the statutes) outside the State of Delaware at the
offices of the corporation at Chicago, Illinois, or at such other place or
places as may be designated from time to time by the Board of Directors.

(Entire Article Renumbered 6/28/84)

ARTICLE X
---------

Amendment
---------

These by-laws may be altered or repealed at any regular meeting of the Board
of Directors or at any special meeting of the Board of Directors if notice of
such alteration or repeal be contained in the notice of such special meeting,
provided that no amendment of these by-laws shall conflict with the provisions
of the Certificate of Incorporation, whether relating to the number of Directors
which shall constitute the whole Board or the number of Directors of any class
or otherwise. (Renumbered 6/28/84)

<PAGE>

EXHIBIT 3(ii)(b)

R. R. DONNELLEY & SONS COMPANY
AMENDMENTS TO BYLAWS

Section 3.2, 4.1, and 4.13 were amended, a new section 4.14 was added, sections
4.14 through 4.23 were renumbered and Section 4.15 was amended.

RESOLVED, That the By-Laws be and hereby are amended to delete the first
sentence of Section 3.2 thereof and to substitute the following therefor:

Effective immediately, the number of Directors which shall constitute the whole
Board shall be twelve (12) of whom four (4) shall be Directors of the First
Class, four (4) shall be Directors of the Second Class and four (4) shall be
Directors of the Third Class.

NOW, THEREFORE, BE IT RESOLVED That the By-Laws of the corporation be and hereby
are amended, effective immediately, as follows:

FURTHER RESOLVED, That the first sentence of ARTICLE IV, Section 4.1 is deleted
and the following is substituted therefor:

"The officers of the corporation shall be a Chief Executive Officer, a
Chairman of the Board, one or more Vice Chairmen, a President, one or
more Executive Vice Presidents, one or more Sector Presidents, one or
more Business Unit Presidents, one or more Senior Vice Presidents, one or
more Vice Presidents, a Secretary, a Treasurer, a Controller, a General
Counsel, one or more Assistant Secretaries, one or more Assistant General
Counsels, one or more Assistant Treasurers and one or more Assistant
Controllers."

FURTHER RESOLVED, That Section 4.13 is deleted and the following is
substituted therefor:

"Section 4.13. Sector Presidents. The Board of Directors may from time
------------- ------------------
to time designate as Sector President one or more of the individuals who
occupies the position of senior officer heading a Sector consisting of
one or more business units and to whom one or more of the Business Unit
Presidents reports."

FURTHER RESOLVED, That the following be added as a new Section 4.14 and that
each of the existing Sections 4.14 through 4.23 be renumbered as Sections 4.15
through 4.24, respectively, to follow in consecutive order the new Section
4:14:

"Section 4.14. Business Unit Presidents. The Board of Directors may from
------------- -------------------------
time to time designate as Business Unit
<PAGE>

President one or more of the individuals who occupies the position of
senior officer heading a business unit consisting of one or more
divisions and one or more sales units and who reports to one or more of
the Sector Presidents or other senior officers of the corporation."

FURTHER RESOLVED, That the new Section 4.15 (Section 4.14, prior to the
effectiveness of these resolutions) is deleted and the following is
substituted therefor:

"Section 4.15. Executive Vice Presidents. The Board of Directors may
------------- --------------------------
designate as an Executive Vice President the officer to whom one or more
other senior officers of this corporation reports."

FURTHER RESOLVED, That the word "Group" be deleted in each of the three places
that it appears in ARTICLE V and that the word "Sector" be substituted
therefor.

<PAGE>

EXHIBIT 10(b)

R.R. DONNELLEY & SONS COMPANY
NON-EMPLOYEE DIRECTOR DEFERRED COMPENSATION AGREEMENT
-----------------------------------------------------

This AGREEMENT made this _____ day of _______________, 19_____, by and between
R.R. DONNELLEY & SONS COMPANY, a Delaware corporation (hereinafter called the
"Company"), and _________________________, (hereinafter called "Director").

W I T N E S S E T H
-------------------

WHEREAS, the Director is a member of the board of directors of the
Company, or has been nominated for election as a member of the board of
directors of the Company;

WHEREAS, the Director is not also an employee of the Company; and

WHEREAS, the Company and the Director desire to enter into this
Agreement with respect to compensation earned by the Director from the Company
for the period commencing with the first to occur of (i) the calendar year
beginning immediately after the date hereof and (ii) the Director's election,
and continuing so long as the Director shall continue to serve as a director of
the Company or until terminated by the board of directors of the Company in
accordance with Section 4;

NOW, THEREFORE, in consideration of the Director's service as a member of
the board of directors of the Company, it is agreed:
<PAGE>

1. As compensation for such services, the Company agrees to pay to the
Director during the period specified in Section 2(b) the aggregate amount
credited on the books of the Company to the account provided for in
Section 2(a).

2. (a) The Company shall set up on its books an account in the name of
the Director to which shall be credited:

(i) An amount equal to the fixed retainer or compensation to be paid
for services as a director as from time to time determined by the
board of directors, to be credited monthly for each month or part
thereof during which the Director serves as a director of the
Company subsequent to the effective date of this Agreement;

(ii) An amount equal to the fixed fee for attendance at each meeting
and any additional fee payable for service on any committee of
the board of directors of the Company, as from time to time
determined by the board of directors, in respect of services
performed subsequent to the effective date of this Agreement;

(iii) An amount equivalent to interest on the balance (including
interest theretofore credited) from time to time credited to such
account, to be credited quarterly at a rate equal to the then
current yield obtainable on United States government bonds having
a maturity date of approximately five years.

-2-
<PAGE>

The amounts properly to be credited to such account shall in the event
of dispute be determined by the board of directors, and such
determination shall be binding and conclusive.

(b) Commencing with the first day of the calendar month next following (i)
termination of the Director's service as a director of the Company or
(ii) the Director attaining age 65, whichever later occurs, the
Company shall pay to the Director the amount then credited to his or
her reserve account, together with interest to be thereafter credited
to said account as above provided, in equal (as nearly as possible)
annual installments, the number of which shall be the lesser of ten
and the number of years during which the Director served as a director
of the Company after the date of this Agreement.

(c) Upon the death of the Director prior to complete distribution to the
Director of the amount credited to the Director's account, any
undistributed amount shall be paid, as soon as practicable after the
Director's death, in a lump sum to such beneficiaries and in such
proportions among them as the Director shall have designated in the
latest instrument in writing filed by the Director with the Company,
provided, however, that the Director may specify that such
undistributed amount (together with interest to be thereafter credited
to such account as above provided) shall be paid to the

-3-
<PAGE>

Director's spouse in equal (as nearly as possible) annual
installments, commencing as soon as practicable after the Director's
death, the aggregate number of which (including installments, if any,
paid to the Director before the Director's death) shall be the lesser
of ten and the number of years during which the Director served as a
director after the date of this Agreement. If there shall be no
beneficiary designated or in existence at the Director's death, any
undistributed amount shall be paid to the executor or administrator of
the Director's estate. If payments are being made in installments to
the Director's spouse, then upon the spouse's death, any amount then
undistributed shall be paid as soon as practicable after such spouse's
death, in one lump sum to the executor or administrator of the
spouse's estate.

3. The Director may have all or a portion of the amounts which would otherwise
be credited with respect to the services referred to in subparagraphs (i)
and (ii) of paragraph 2(a) for any calendar year during the term of this
Agreement paid to him or her in cash by filing with the Company on or
before the December 31 immediately preceding such calendar year a written
direction to such effect. Any such written election shall be effective
only for the year for which it is made and once made, may not be revoked.

4. The board of directors of the Company may, by action taken before any
annual meeting of the stockholders of the

-4-
<PAGE>

Company, terminate the continued effectiveness of Section 2 of this
Agreement, so that no further amounts (other than interest as provided in
Section 2(a)(iii)) are credited to the account of the Director from and
after such annual meeting date. The Director may, by filing with the
COmpany a written direction to such effect, terminate the continued
effectiveness of Section 2 of this Agreement so that no further amounts
(other than interest as provided in Section 2(a)(iii)) are credited to the
account of the Director from and after the calendar year beginning after
the filing of such direction. No termination pursuant to this Section
shall adversely affect the rights of the Director, the Director's personal
representative or designated beneficiary, to receive the amounts
theretofore credited to the Director's account, with interest thereon as
provided in this Agreement.

5. The Director shall have no power to commute, encumber, sell or otherwise
dispose of the rights provided herein and such rights shall be
nonassignable and nontransferable.

6. The Company shall not be obligated to set aside any assets to satisfy its
obligations hereunder. Neither the Director nor any spouse or other
beneficiary shall have any claim against any specific assets of the
Company, but shall have only the rights of a general creditor of the
Company.

7. This Agreement shall be construed and interpreted in accordance with the
laws (other than those pertaining to conflicts of law) of the State of
Illinois, and shall be

-5-
<PAGE>

binding upon and inure to the benefit of the Director, the Company and the
heirs, executors, administrators, assigns and successors of each.

IN WITNESS WHEREOF, the parties have signed this Agreement on the day and year
first above written.

R.R. DONNELLEY & SONS COMPANY

By_________________________ By___________________________
Director Title

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<PAGE>

EXHIBIT 10(c)

Approved by Board of
Directors on January 27, 1994

DONNELLEY SHARES STOCK OPTION PLAN

1. Plan. The purpose of this Donnelley Shares Stock Option Plan (the "Plan") is
to provide incentives to employees through rewards based upon the ownership and
performance of the common stock of R. R. Donnelley & Sons Company (the
"Company"). The Committee hereinafter designated shall grant options to
purchase shares of common stock, par value $1.25 per share, of the Company (the
"Common Stock") to eligible employees on the terms and subject to the conditions
stated in the Plan.

2. Eligibility. All employees (other than officers) of the Company and all of
its direct or indirect wholly-owned subsidiaries (the "Employers") who have
completed at least two (2) years of continuous service with any one or more of
the Employers shall be eligible, upon selection by the Committee, to receive
options under the Plan; provided, however, that an otherwise eligible employee
whose terms and conditions of employment are covered by a collective bargaining
agreement shall be eligible to receive options under the Plan only if expressly
provided for in a collective bargaining agreement or supplemental letter of
understanding signed by such employee's Employer and the recognized
representative of the collective bargaining unit in which the employee is a
member. An employee granted an option pursuant to the Plan shall be referred to
herein from time to time as an "Optionee".

3. Limitation on Shares Available. Subject to adjustment as provided in Section
5 of the Plan, the maximum number of shares of Common Stock available for all
grants made under the Plan shall be 6,000,000. Shares of Common Stock subject
to grants made hereunder which, by reason of the expiration, cancellation,
forfeiture or other termination of such grants prior to purchase, are not
purchased shall again be available for future grants.

Shares of Common Stock to be delivered may be authorized and unissued
shares of stock, treasury stock or a combination thereof. The Company reserves
the right to purchase shares of Common Stock for the Plan in the open market.

4. Administration of the Plan. The Plan shall be administered by a committee
(the "Committee") designated by the Board of Directors of the Company (the
"Board"). Except as otherwise set forth in the Plan, the Committee shall,
subject to the terms of the Plan, select groups of eligible employees for
participation in the Plan and, with respect to such groups of eligible
employees, shall determine the number of shares of Common Stock subject to each
option granted hereunder, the terms and conditions of exercise of such option
and all other terms and conditions of such option. The Committee shall, subject
to the terms of the Plan, have the authority to interpret the Plan, establish
rules and regulations for the administration of the Plan and impose, incidental
to the grant of an option, conditions with respect to the grant. All such rules,
regulations and interpretations adopted by the
<PAGE>

Committee shall be conclusive and binding on all parties. The Committee may
delegate its authority to interpret all or part of the Plan to designated
officers of the Company.

5. Adjustments for Changes in Capitalization. The Committee shall make
appropriate adjustments to the number of shares available under the Plan, the
option exercise price and the number of shares subject to any option granted
hereunder in order to give effect to any stock split, stock dividend, merger,
consolidation, reorganization, spin-off, liquidation or other similar change in
capitalization or event that occurs after the effective date of the Plan, such
adjustments to be made in the case of outstanding options without a change in
the aggregate purchase price. If any adjustment would result in a fractional
security being available under the Plan or subject to a grant under the Plan,
such fractional security shall be disregarded.

6. Effective Date and Term of Plan. The Plan shall become effective on January
27, 1994 (the "Effective Date"). The Plan shall terminate five (5) years after
the Effective Date unless terminated prior thereto by action of the Board. No
further grants shall be made under the Plan after termination, but termination
shall not affect the rights of any Optionee under any grants made prior to
termination.

7. Amendments. The Plan may be amended or terminated by the Board in any
respect and at any time, provided that such action shall not adversely affect
any rights or obligations with respect to any outstanding grants under the Plan.

8. Grants. (a) Options to purchase 100 shares of Common Stock shall be granted
on March 24, 1994 to eligible employees employed on such date who had completed
at least two (2) years of continuous service with any one or more of the
Employers as of December 31, 1993; provided, however, that employees who, as of
March 24, 1994, are members of a collective bargaining unit shall be deemed
eligible employees for purposes of this paragraph 8(a) only if a collective
bargaining agreement or supplemental letter of understanding providing for the
receipt of such options by such employees was fully executed by such employee's
Employer and the recognized representative of the collective bargaining unit
prior to March 1, 1994; and provided further, that eligible employees who are
not employed in the United States of America as of March 24, 1994 shall not
receive such options. All options granted on March 24, 1994 shall become
exercisable in full on December 31, 1996.

(b) Additional options may be granted, in the sole and absolute
discretion of the Committee, to groups of eligible employees at any time.

(c) The option price per share of Common Stock purchasable upon the
exercise of any option granted pursuant to the Plan shall be the fair market
value of a share of Common Stock on the date of grant of such option. For
purposes of the Plan, the fair market value shall be determined by reference to
the average of the high and low transaction prices in trading of the Common
Stock as reported in the New York Stock Exchange-Composite Transactions on the
date of grant.

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<PAGE>

(d) All options granted hereunder shall be evidenced by a certificate
substantially in the form of Exhibit A hereto. Each certificate shall be dated
and signed by an officer of the Company as of the date of the grant.

9. Terms of Options. (a) No option shall be exercisable earlier than one (1)
year, nor more than ten (10) years, after the date of grant. Each option
granted hereunder shall become exercisable in full on the third anniversary of
the date of the grant, unless otherwise determined by the Committee and except
as otherwise set forth in Section 8(a). Notwithstanding the foregoing, if an
Optionee is no longer employed by at least one of the Employers for any reason
(including due to death or long-term disability but excluding due to termination
of employment upon retirement at normal retirement age or early retirement at or
after age 55 with the consent of the Company), each option held by such Optionee
which is not exercisable on the date of termination of employment shall
terminate automatically on such date. Options held by an Optionee who retires
at normal retirement age or who takes early retirement at or after age 55 with
the consent of the Company, regardless of whether or not such options are
exercisable at the date of retirement, shall not terminate as a result of such
retirement but shall continue to remain outstanding and subject to the terms and
conditions of the Plan; provided, however, that in the event that such an
Optionee dies, each option held by such Optionee which is not exercisable on the
date of death of such Optionee shall terminate automatically upon the death of
such Optionee. Additionally, after an option held by an Optionee has become
exercisable, if such Optionee is no longer employed by at least one of the
Employers for any reason (other than retirement at normal retirement age or
early retirement at or after age 55 with the consent of the Company or for any
of the reasons specified in Section 9(c)) and/or such Optionee dies, then such
Optionee (or in the case of death, such Optionee's executor, administrator,
personal representative, beneficiary or similar person) may exercise such
exercisable option until ninety (90) days from the date of such termination of
employment and/or the date of death, as the case may be, or until the expiration
of the term of such option, whichever is earlier.

(b) No option hereunder shall be transferable other than by will or
the laws of descent and distribution. Each option shall be exercisable during
the Optionee's lifetime only by the Optionee or the Optionee's guardian, legal
representative or similar person, provided that evidence of such person's
identity and rights with respect to such exercise are acceptable to the
Committee. Except as permitted by the first sentence of Section 9(b) of the
Plan, no option hereunder shall be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation of law
or otherwise) or be subject to execution, attachment or similar process. Any
such attempt to so sell, transfer, assign, pledge, hypothecate, encumber or
otherwise dispose of any option hereunder shall be null and void and no person
shall be entitled to any rights hereunder by virtue of any attempted execution,
attachment or similar process. In the event of the death of an Optionee, any
unexercised portion of an option that, but for the death of the Optionee, would
have been exercisable on the date of such Optionee's death by such Optionee may
be exercised by the executor, administrator, personal representative,
beneficiary or similar person of such deceased Optionee within ninety (90) days
of the death of such Optionee, but not after the expiration of the term of the
option; provided that evidence of such person's identity and rights with respect
to such exercise are acceptable to the Committee.

-3-
<PAGE>

(c) Notwithstanding anything contained herein to the contrary, in the
event the Committee shall determine that an Optionee's employment was terminated
by the Optionee's Employer on account of (i) an unauthorized disclosure of
confidential information or trade secrets of any Employer, (ii) unlawful trading
in the securities of the Company or any customers of any of the Employers, or
(iii) fraud, theft or embezzlement with respect to any of the Employers or any
breach of the Optionee's duties to the Optionee's Employer or any of the other
Employers, then such Optionee shall forfeit all rights to the unexercised
portion of any option held by the Optionee under the Plan, and all such options
shall automatically terminate.

(d) Options must be exercised in full. No partial exercise is
permitted. No shares of Common Stock may be purchased under any option granted
under the Plan unless prior to or simultaneously with the purchase, the Optionee
shall have delivered by such means as have been identified by the Committee
notice to the Company, accompanied by payment therefor in full of the option
price, any brokerage fees associated with the exercise of the options (the
"Brokerage Fees"), and any local, state, federal or other taxes required to be
withheld and paid over to governmental taxing authorities by the Company due to
such exercise ("Taxes") (or arrangement made for such payment to the
satisfaction of the Company). Upon exercise, the option price, the Brokerage
Fees and the Taxes may be paid according to procedures established by the
Committee as follows: (i) in cash or (ii) by electing to sell, through an agent
or broker designated by the Company, whole shares of Common Stock issuable upon
exercise of the option having a fair market value determined on the date of
exercise as close as is practicable to the sum of (A) the option price for
shares of Common Stock subject to such exercise, (B) the Brokerage Fees
associated with such exercise and (C) the Taxes associated with such exercise,
provided that the number of whole shares sold shall be sufficient to pay in full
the option price, the Brokerage Fees and the Taxes. No option may be exercised
by an Optionee through any agent or broker other than an agent or broker
designated by the Company. Notwithstanding the foregoing, in the event that an
Optionee has notified the Company through the Company's electronic system that
such Optionee is exercising an option and is paying cash for the option price
and the Taxes and such cash is not received within 30 calendar days following
such notice, then the Company may automatically order the sale, through the
designated agent or broker, of whole shares of Common Stock to pay in full the
option price, the Brokerage Fees and the Taxes and deliver any whole shares of
Common Stock not so applied to the Optionee, plus any cash owed in lieu of
fractional shares. The Committee shall have sole discretion to disapprove of an
election pursuant to clause (ii). No shares of Common Stock shall be delivered
to the Optionee until the full option price, the Brokerage Fees and the Taxes
have been paid. Optionees shall be required to receive all shares acquired under
an option in the form of stock certificates; cash shall not be paid to an
Optionee in lieu of the delivery of stock certificates upon the exercise of any
option, except to the extent necessary to compensate for fractional shares.

(e) Optionees shall be entitled to the privilege of ownership with
respect to shares of Common Stock subject to options granted hereunder only as
to shares of Common Stock purchased and delivered to an Optionee upon exercise
of an option.

-4-
<PAGE>

10. Miscellaneous.
-------------

(a) Effect of Leaves of Absence. Leaves of absence for periods and
purposes conforming to the personnel policies of the Company and approved by the
Employer shall not be deemed terminations of employment or interruptions of
continuous service.

(b) Restrictions on Shares. Notwithstanding any provision of the Plan to
the contrary, unless a registration statement under the Securities Act of 1933,
as amended (the "Securities Act"), is in effect as to the shares purchasable
under any option granted under the Plan, no shares of Common Stock may be
purchased under such option. In addition, notwithstanding any provision of this
Plan to the contrary, any option granted under the Plan is subject to the
condition that if at any time the Company determines that the listing,
registration or qualification of the shares of Common Stock subject to such
option upon any securities exchange or under any law, the consent or approval of
any regulatory body, or the taking of any other action is necessary or desirable
as a condition of, or in connection with, the delivery of the shares thereunder,
such shares shall not be delivered unless such listing, registration,
qualification, consent, approval or other action shall have been effected or
obtained, free of any conditions not acceptable to the Company.

(c) No Right to Employment. Neither the Plan nor the grant of options
hereunder shall be construed as giving any employee any right to be retained in
the employ of any Employer.

(d) Governing Law. The Plan shall be governed by and interpreted in
accordance with the laws of the State of Delaware.

(e) Nature of Option. The options granted under the Plan shall not be
treated as incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended.

11. Acceleration of Options Upon a Change in Control. If while any option
remains unexercised and outstanding under the Plan:

(a) any "person", as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
modified and used in Section 13(d) and 14(d) thereof (but not including (i)
the Company or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of
its subsidiaries, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a corporation owned,
directly or indirectly, by the stockholders of the Company in substantially
the same proportions as their ownership of stock of the Company)
(hereinafter a "Person") is or becomes the beneficial owner, as defined in
Rule 13d-3 of the Exchange Act, directly or indirectly, of securities of
the Company (not including in the securities beneficially owned by such
Person any securities acquired directly from the Company or its affiliates)
representing 50% or more of the combined voting power of the Company's then
outstanding securities; or

-5-
<PAGE>

(b) during any period of two (2) consecutive years, individuals who at
the beginning of such period constitute the Board and any new director
(other than a director designated by a Person who has entered into any
agreement with the Company to effect a transaction described in clause (a),
(c) or (d) of this Section) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to constitute
a majority thereof; or

(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, at least 50% of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in
which no Person acquires more than 50% of the combined voting power of the
Company's then outstanding securities; or

(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all the Company's assets;

(any of such events being hereinafter referred to as a "Change in Control"),
then from and after the date on which public announcement of the acquisition of
such percentage shall have been made, or the date on which the change in
composition of the Board set forth above shall have occurred, or the date of any
such stockholder approval of a merger, consolidation, plan of complete
liquidation or an agreement for the sale of the Company's assets as described
above occurs (the applicable date being hereinafter referred to as the
"Acceleration Date"), all such outstanding and unexercised options, whether or
not then exercisable, shall be fully and immediately exercisable.

-6-

<PAGE>

A severance agreement in this form has been executed by and
between the Company and each of its executive officers.

EXHIBIT 10(f)

AGREEMENT
---------

THIS AGREEMENT dated as of ___________________, is made by and
between R.R. Donnelley & Sons Company, a Delaware corporation ("Donnelley";
Donnelley and its Subsidiaries being hereafter referred to as the
"Company"), and ___________________ (the "Executive").

WHEREAS the Company considers it essential to the best interests
of its stockholders to foster the continuous employment of key management
personnel; and

WHEREAS the Board of Directors of Donnelley (the "Board")
recognizes that, as is the case with many publicly held corporations, the
possibility of a Change in Control (as defined in the last Section hereof)
exists and that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its stockholders;
and

WHEREAS the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the Company's management, including the Executive, to their
assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change in Control;
<PAGE>

NOW THEREFORE, in consideration of the promises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Defined Terms. The definition of capitalized terms used in this
-------------
Agreement is provided in the last Section hereof.

2. Term of Agreement. This Agreement shall commence on the date
-----------------
hereof and shall continue in effect through December 31, 199X; provided,
however, that commencing on January 1, 199X and each January 1 there-after,
the term of this Agreement shall automatically be extended for one
additional year unless, not later than September 30 of the preceding year,
the Company or the Executive shall have given notice not to extend this
Agreement or a Change in Control shall have occurred prior to such January
1; provided, however, if a Change in Control shall have occurred during the
term of this Agreement, this Agreement shall continue in effect for a period
of not less than twenty-four (24) months beyond the month in which such
Change in Control occurred.

3. Company's Covenants Summarized. In order to induce the
------------------------------
Executive to remain in the employ of the Company and in consideration of the
Executive's covenants set forth in Section 4 hereof, the Company agrees,
under the conditions described herein, to pay the Executive the Severance
Payments and the other payments and benefits

2
<PAGE>

described herein in the event the Executive's employment with the Company is
terminated following a Change in Control and during the term of this
Agreement. No amount or benefit shall be payable under this Agreement unless
there shall have been (or, under the terms hereof, there shall be deemed to
have been) a termination of the Executive's employment with the Company
following a Change in Control. This Agreement shall not be construed as
creating an express or implied contract of employment and, except as
otherwise agreed in writing between the Executive and the Company, the
Executive shall not have any right to be retained in the employ of the
Company.

4. The Executive's Covenants. The Executive agrees that, subject
to the terms and conditions of this Agreement, in the event of a Potential
Change in Control during the term of this Agreement, the Executive will
remain in the employ of the Company until the earliest of (i) a date which
is six (6) months from the date of such Potential Change of Control, (ii)
the date of a Change in Control, (iii) the date of termination by the
Executive of the Executive's employment for Good Reason (determined by
treating the Potential Change in Control as a Change in Control in applying
the definition of Good Reason), by reason of death, Disability or
Retirement, or (iv) the termination by the Company of the Executive's
employment for any reason.

3
<PAGE>

5. Compensation Other Than Severance Payments.
-------------------------------------------

5.01 Following a Change in Control and during the term of this Agreement,
during any period that the Executive fails to perform the Executive's full-
time duties with the Company as a result of incapacity due to physical or
mental illness, the Company shall pay the Executive's full salary to the
Executive at the rate in effect at the commencement of any such period,
together with all compensation and benefits payable to the Executive under
the terms of any compensation or benefit plan, program or arrangement
maintained by the Company during such period, until the Executive's
employment is terminated by the Company for Disability.

5.02 If the Executive's employment shall be terminated for any
reason following a Change in Control and during the term of this Agreement,
the Company shall pay the Executive's full salary to the Executive through

the Date of Termination at the rate in effect at the time the Notice of
Termination is given, together with all compensation and benefits payable to
the Executive through the Date of Termination under the terms of any
compensation or benefit plan, program or arrangement maintained by the
Company during such period.

5.03 If the Executive's employment shall be terminated for any
reason following a Change in Control and during the term of this Agreement,
the Company shall

4
<PAGE>

pay the Executive's normal post-termination compensation and benefits to the
Executive as such payments become due; provided that, in no event shall any
severance pay which might be payable to the Executive pursuant to the
Company's Standard Practice Manual or Special Severance Plan be paid if the
Executive is entitled to the Severance Payments as a result of such
termination. Such post-termination compensation and benefits shall be
determined under, and paid in accordance with, the Company's retirement,
insurance and other compensation or benefit plans, programs and
arrangements.

6. Severance Payments.
------------------
6.01 The Company shall pay the Executive the payments described in
this Section 6.01 (the "Severance Payments") upon the termination of the
Executive's employment following a Change in Control and during the term of
this Agreement, in addition to the payments and benefits described in
Section 5 hereof, unless such termination is (i) by the Company for Cause,
(ii) by reason of death or Disability or (iii) by the Executive without Good
Reason. The Executive's employment shall be deemed to have been terminated
following a Change in Control by the Company without Cause or by the
Executive with Good Reason if the Executive's employment is terminated prior
to a Change in Control without Cause at the direction of a Person who has
entered into an

5
<PAGE>

agreement with the Company the consummation of which will constitute a
Change in Control or if the Executive terminates his employment with Good
Reason prior to a Change in Control (determined by treating a Potential
Change in Control as a Change in Control in applying the definition of Good
Reason) if the circumstance or event which constitutes Good Reason occurs at
the direction of such Person.

(A) Provided that the Executive has been in the employ of
the Company for at least one year, in lieu of any further salary
payments to the Executive for periods subsequent to the Date of
Termination and in lieu of any severance benefit otherwise payable to
the Executive, the Company shall pay to the Executive a lump sum
severance payment, in cash, equal to an amount determined as follows:
(i) in the event the Executive has been in the employ of the Company,
as of the Date of Termination, for a period equal to or greater than
one year but less than two years, one (1) or, if less, the number of
years, including fractional parts thereof, from the Date of Termination
until the Executive reaches Normal Retirement Age, times the
Executive's Planned Compensation; (ii) in the event the Executive has
been in the employ of the Company, as of the Date of Termination, for a
period

6
<PAGE>

equal to or greater than two years but less than three years, two (2),
or, if less, the number of years, including fractional parts thereof,
until the Executive reaches Normal Retirement Age, times the
Executive's Planned Compensation; or (iii) in the event the Executive
has been in the employ of the Company, as of the Date of Termination,
for a period equal to or greater than three years, three (3), or, if
less, the number of years, including fractional parts thereof, until
the Executive reaches Normal Retirement Age, times the Executive's
Planned Compensation;

(B) Notwithstanding any provision of any Bonus Plan, the
Company shall pay to the Executive a lump sum amount, in cash, equal to
the sum of (i) any incentive compensation which has been allocated or
awarded to the Executive for a completed year or other measuring period
preceding the Date of Termination under any such Bonus Plan but has not
yet been paid (pursuant to Section 5.02 hereof or otherwise), and (ii)
the aggregate value of all contingent incentive compensation awards to
the Executive for all uncompleted periods under any such Bonus Plan,
assuming (a) any and all target levels of achievement for the period
with respect to which such awards have been made have been met and

7
<PAGE>

(b) any period of continued employment specified in such awards upon
which such awards are contingent have been completed;

(C) Notwithstanding any provision of the Stock Plans, the
Company shall pay to the Executive, in lieu of any stock bonus awards
granted to the Executive under the Stock Plans, a lump sum payment, in
cash, equal to the sum of (i) the amount determined by multiplying the
number of outstanding stock units granted at any time to the Executive
under the Stock Plan, whether or not vested, by the higher of the
Exchange Price and the Transaction Price and (ii) the amount of any
dividends and interest credited to the Executive's cash account in
connection with the grant of such units;

(D) In lieu of Company Shares issuable upon exercise of
outstanding Options (which Options shall be canceled upon the making of
the payment referred to below), the Company shall pay the Executive a
lump sum amount, in cash, equal to the product of (i) the excess of (x)
in the case of ISOs granted after the date hereof, the Exchange Price,
or in the case of all other Options, the higher of the Exchange Price
and the Transaction Price, over (y) the per share exercise price of
each such Option held by the Executive (whether or not then fully

8
<PAGE>

exercisable), times (ii) the number of Company Shares covered by each
such Option;

(E) In addition to the retirement benefits to which the
Executive is entitled under the Pension Plan or any successor plans
thereto, the Company shall pay the Executive a lump sum amount, in
cash, equal to the actuarial equivalent of the excess of (i) the
retirement pension (determined as a straight life annuity commencing at
Normal Retirement Age) which the Executive would have accrued under the
terms of the Pension Plan (without regard to any amendment to the
Pension Plan made subsequent to a Change in Control and on or prior to
the Date of Termination, which amendment adversely affects in any
manner the computation of retirement benefits thereunder), determined
as if the Executive were fully vested thereunder and had accumulated
(after the Date of Termination) thirty-six (36) (or, if less, a number
equal to the number of months, including fractional parts thereof, from
the Date of Termination until the Executive reaches Normal Retirement
Age) additional months of service credit thereunder at the Executive's
highest annual rate of compensation during the twelve (12) months
immediately preceding the Date of Termination, and (ii) the retirement
pension (determined as a

9
<PAGE>

straight life annuity commencing at Normal Retirement Age) which the
Executive had then accrued pursuant to the provisions of the Pension
Plan. For purposes of this Section 6.01(E), "actuarial equivalent"
shall be determined using the same assumptions utilized under the
Pension Plan immediately prior to the Date of Termination.

F. For a twenty-four (24) month period after the Date of
Termination, the Company shall arrange to provide the Executive with
life, disability, accident and health insurance benefits substantially
similar to those which the Executive is receiving immediately prior to
the Notice of Termination (without giving effect to any reduction in
such benefits subsequent to a Change in Control which reduction
constitutes Good Reason); provided, however, that, in the event the
date upon which the Executive attains Normal Retirement Age occurs
during such twenty-four month period, the Executive shall thereafter
receive such life, disability, accident and health insurance benefits
as would be provided to him as a retiree. Benefits otherwise receivable
by the Executive pursuant to this Section 6.01(F) shall be reduced to
the extent comparable benefits are actually received by or made
available to the Executive without cost during the

10
<PAGE>

twenty-four (24) month period following the Executive's termination of
employment (and any such benefits actually received by the Executive
shall be reported to the Company by the Executive).

6.02 (A) Whether or not the Executive becomes entitled to the
Severance Payments, if any of the Total Payments will be subject to the
Excise Tax, the Company shall pay to the Executive an additional amount
(the "Gross-Up Payment") such that the net amount retained by the
Executive, after deduction of any Excise Tax on the Total Payments and
any federal, state and local income tax and Excise Tax upon the payment
provided for by this Section 6.02, shall be equal to the excess of the
Total Payments over the payment provided for by this Section 6.02.

(B) For purposes of determining whether any of the Total
Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) any payments or benefits received or to be received by
the Executive in connection with a Change in Control or the Executive's
termination of employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company,
any Person whose actions result in a Change in Control or any Person
affiliated with the Company or such Person) (the

11
<PAGE>

"Total Payments") shall be treated as "parachute payments" (within the
meaning of section 280G(b)(2) of the Code) unless, in the opinion of
tax counsel selected by the Company's independent auditors and
reasonably acceptable to the Executive, such payments or benefits (in
whole or in part) do not constitute parachute payments, including by
reason of section 280G(b)(4)(A) of the Code, and all "excess parachute
payments" (within the meaning of section 280G(b)(1) of the Code) shall
be treated as subject to the Excise Tax unless, in the opinion of such
tax counsel, such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered
(within the meaning of section 280G(b)(4)(B) of the Code), or are
otherwise not subject to the Excise Tax, and (ii) the value of any
noncash benefits or any deferred payment or benefit shall be determined
by the Company's independent auditors in accordance with the principles
of sections 280G(d)(3) and (4) of the Code. For purposes of determining
the amount of the Gross-Up Payment, the Executive shall be deemed to
pay federal income taxes at the highest marginal rate of federal income
taxation in the calendar year in which the Gross-Up Payment is to be
made and state and local income taxes at the highest

12
<PAGE>

marginal rate of taxation in the state and locality of the Executive's
residence on the Date of Termination, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such
state and local taxes.

(C) In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at
the time of termination of the Executive's employment, the Executive
shall repay to the Company, at the time that the amount of sucreduction
in Excise Tax is finally determined, the portion of the Gross-Up
Payment attributable to such reduction (plus that portion of the Gross-
Up Payment attributable to the Excise Tax and federal, state and local
income tax imposed on the Gross-Up Payment being repaid by the
Executive to the extent that such repayment results in a reduction in
Excise Tax and/or a federal, state or local income tax deduction) plus
interest on the amount of such repayment at the rate provided in
section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the
time of the termination of the Executive's employment (including
increases in the Excise Tax resulting from any payment the existence or
amount of which

13
<PAGE>

could not be determined at the time of the Gross-Up Payment), the
Company shall make an additional Gross-Up Payment in respect of such
excess (plus any interest, penalties or additions payable by the
Executive with respect to such excess) at the time that the amount of
such excess is finally determined. The Executive and the Company shall
each reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the existence or
amount of liability for Excise Tax with respect to the Total Payments.

6.03 The payments provided for in Section 6.01 (other than Section
6.01(F)) and 6.02 hereof shall be made not later than the fifth (5th) day
following the Date of Termination; provided, however, that, if the amounts
of such payments cannot be finally determined on or before such day, the
Company shall pay to the Executive on such day an estimate, as determined in
good faith by the Company, of the minimum amount of such payments to which
the Executive is clearly entitled and shall pay the remainder of such
payments (together with interest at the rate provided in section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined
but in no event later than the thirtieth (30th) day after the Date of
Termination. In the event that the amount of

14
<PAGE>

the estimated payments exceeds the amount subsequently determined to have
been due, such excess shall constitute a loan by the Company to the
Executive, payable on the fifth (5th) business day after demand by the
Company (together with interest at the rate provided in section
1274(b)(2)(B) of the Code). At the time that payments are made under this
Section, the Company shall provide the Executive with a written statement
setting forth the manner in which such payments were calculated and the
basis for such calculations including, without limitation, any opinions or
other advice the Company has received from outside counsel, auditors or
consultants (and any such opinions or advice which are in writing shall be
attached to the statement).

6.04 The Company also shall pay to the Executive all legal fees
and expenses incurred by the Executive as a result of a termination which
entitles the Executive to the Severance Payments (including all such fees
and expenses, if any, incurred in disputing any such termination or in
seeking in good faith to obtain or enforce any benefit or right provided by
this Agreement or in connection with any tax audit or proceeding to the
extent attributable to the application of section 4999 of the Code to any
payment or benefit provided hereunder). Such payments shall be made within
five (5) business days after delivery of the Executive's written requests
for

15
<PAGE>

payment accompanied with such evidence of fees and expenses incurred as the
Company reasonably may require.

7. Termination Procedures and Compensation During Dispute.
------------------------------------------------------

7.01 Notice of Termination. After a Change in Control and during
the term of this Agreement, any purported termination of the Executive's
employment (other than by reason of death) shall be communicated by written
Notice of Termination from one party hereto to the other party hereto in
accordance with Section 10 hereof. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
Further, a Notice of Termination for Cause is required to include a copy of
a resolution duly adopted by the affirmative vote of not less than three-
quarters (3/4) of the entire membership of the Board at a meeting of the
Board which was called and held for the purpose of considering such
termination (after reasonable notice to the Executive and an opportunity for
the Executive, together with the Executive's counsel, to be heard before the
Board) finding that, in the good faith opinion of the Board, the Executive
was guilty of

16
<PAGE>

conduct set forth in clause (i) or (ii) of the definition of Cause herein,
and specifying the particulars thereof in detail.

7.02 Date of Termination. "Date of Termination," with respect to
any purported termination of the Executive's employment after a Change in
Control and during the term of this Agreement, shall mean (i) if the
Executive's employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that the Executive shall not have
returned to the full-time performance of the Executive's duties during such
thirty (30) day period), and (ii) if the Executive's employment is
terminated for any other reason, the date specified in the Notice of
Termination (which, in the case of a termination by the Company, shall not
be less than thirty (30) days (except in the case of a termination for
Cause) and, in the case of a termination by the Executive, shall not be less
than fifteen (15) days nor more than sixty (60) days, respectively, from the
date such Notice of Termination is given).

7.03 Dispute Concerning Termination. If within fifteen (15) days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this Section 7.03), the party
receiving such Notice of Termination notifies the

17
<PAGE>

other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally resolved,
either by mutual written agreement of the parties or by a final judgment,
order or decree (which is not appealable or with respect to which the time
for appeal therefrom has expired and no appeal has been perfected) of a
court of competent jurisdiction; provided, however, that the Date of
Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution
of such dispute with reasonable diligence.

7.04 Compensation During Dispute. If a purported termination
occurs following a Change in Control and during the term of this Agreement,
and such termination is disputed in accordance with Section 7.03 hereof, the
Company shall continue to pay the Executive the full compensation in effect
when the notice giving rise to the dispute was given (including, but not
limited to, salary) and continue the Executive as a participant in all
compensation, benefit and insurance plans in which the Executive was
participating when the notice giving rise to the dispute was given, until
the dispute is finally resolved in accordance with Section 7.03 hereof.
Amounts paid under this Section 7.04 are in addition to all other amounts
due under this Agreement (other than

18
<PAGE>

those due under Section 5.02 hereof) and shall not be offset against or
reduce any other amounts due under this Agreement.

8. No Mitigation. The Company agrees that, if the Executive's
employment by the Company is terminated during the term of this Agreement,
the Executive is not required to seek other employment or to attempt in any
way to reduce any amounts payable to the Executive by the Company pursuant
to Section 6 or Section 7.04 hereof. Further, the amount of any payment or
benefit provided for in Section 6 (other than Section 6.01(F)) or Section
7.04 hereof shall not be reduced by any compensation earned by the Executive
as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by the Executive to the
Company, or otherwise.

9. Successors; Binding Agreement.

9.01 In addition to any obligations imposed by law upon any
successor to Donnelley, Donnelley will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of Donnelley to expressly assume
and agree to perform this Agreement in the same manner and to the same
extent that Donnelley would be required to perform it if no such succession
had taken place. Failure of Donnelley to obtain such

19
<PAGE>

assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Executive to
compensation in the same amount and on the same terms as the Executive would
be entitled to hereunder if the Executive were to terminate the Executive's
employment for Good Reason after a Change in Control, except that, for
purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination.

9.02 This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
the Executive shall die while any amount would still be payable to the
Executive hereunder (other than amounts which, by their terms, terminate
upon the death of the Executive) if the Executive had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the executors, personal representatives
or administrators of the Executive's estate.

10. Notices. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed

20
<PAGE>

by United States registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth below, or to such other
address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be
effective only upon actual receipt:

To the Company:

R.R. Donnelley & Sons Company
77 West Wacker Drive
Chicago, IL 60601
Attention: General Counsel

To the Executive:

---------------------------
---------------------------
---------------------------

11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed
to in writing and signed by the Executive and such officer as may be
specifically designated by the Board. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly
set forth in this

21
<PAGE>

Agreement. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Illinois. All
references to sections of the Exchange Act or the Code shall be deemed also
to refer to any successor provisions to such sections. Any payments provided
for hereunder shall be paid net of any applicable withholding required under
federal, state or local law and any additional withholding to which the
Executive has agreed. The obligations of the Company and the Executive under
Sections 6 and 7 hereof shall survive the expiration of the term of this
Agreement.

12. Validity. The invalidity or unenforceability or any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force and
effect.

13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.

14. Settlement of Disputes; Arbitration. All claims by the
Executive for benefits under this Agreement shall be directed to and
determined by the Board and shall be in writing. Any denial by the Board of
a claim for benefits under this Agreement shall be delivered to

22
<PAGE>

the Executive in writing and shall set forth the specific reasons for the
denial and the specific provisions of this Agreement relied upon. The Board
shall afford a reasonable opportunity to the Executive for a review of the
decision denying a claim and shall further allow the Executive to appeal to
the Board a decision of the Board within sixty (60) days after notification
by the Board that the Executive's claim has been denied. Any further dispute
or controversy arising under or in connection with this Agreement shall be
settled exclusively by arbitration in Chicago, Illinois, in accordance with
the rules of the American Arbitration Association then in effect. Judgment
may be entered on the arbitrator's award in any court having jurisdiction;
provided, however, that the Executive shall be entitled to seek specific
performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under
or in connection with this Agreement.

15. Definitions. For purposes of this Agreement, the following
terms shall have the meanings indicated below:

(A) "Base Amount" shall have the meaning defined in section
280G(b)(3) of the Code.

(B) "Beneficial Owner" shall have the meaning defined in Rule
13d-3 under the Exchange Act.

23
<PAGE>

Directors of Donnelley.

(D) "Bonus Plan" shall mean the Senior Management Annual
Incentive Plan or other supplementary compensation plan or bonus plan
or arrangement, or any similar successor plan or arrangement,
applicable to the Executive, other than the 1991 Stock Incentive Plan.

(E) "Cause" for termination by the Company of the Executive's
employment, after any Change in Control, shall mean (i) the willful and
continued failure by the Executive to substantially perform the
Executive's duties with the Company (other than any such failure
resulting from the Executive's incapacity due to physical or mental
illness or any such actual or anticipated failure after the issuance of
a Notice of Termination for Good Reason by the Executive pursuant to
Section 7.01 hereof) after a written demand for substantial performance
is delivered to the Executive by the Board, which demand specifically
identifies the manner in which the Board believes that the Executive
has not substantially performed the Executive's duties, or (ii) the
willful engaging by the Executive in conduct which is demonstrably and
materially injurious to the Company, monetarily or otherwise. For
purposes of clauses (i) and (ii) of

24
<PAGE>

this definition, no act, or failure to act, on the Executive's part
shall be deemed "willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that the
Executive's act, or failure to act, was in the best interest of the
Company.

(F) A "Change in Control" shall be deemed to have occurred if
the conditions set forth in any one of the following paragraphs shall
have been satisfied:

(I) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of Donnelley (not including
in the securities beneficially owned by such Person any securities
acquired directly from Donnelley or its affiliates) representing
50% or more of the combined voting power of Donnelley's then
outstanding securities; or

(II) during any period of two (2) consecutive years (not
including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the
Board and any new director (other than a director designated by a
Person who has entered into an agreement with Donnelley to effect
a transaction described in

25
<PAGE>

clause (I), (III) or (IV) of this paragraph) whose election by the
Board or nomination for election by Donnelley's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of
the period or whose election or nomination for election was
previously so approved (a "Continuing Director"), cease for any
reason to constitute a majority thereof; or

(III) the stockholders of Donnelley approve a merger or
consolidation of Donnelley with any other corporation, other than
(i) a merger or consolidation which would result in the voting
securities of Donnelley outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity),
in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company, at least 50% of the combined voting power of the voting
securities of Donnelley or such surviving entity outstanding
immediately after such merger or consolidation, or (ii) a merger
or

26
<PAGE>

consolidation effected to implement a recapitalization of
Donnelley (or similar transaction) in which no Person acquires
more than 50% of the combined voting power of the Company's then
outstanding securities; or

(IV) the stockholders of Donnelley approve a plan of
complete liquidation of Donnelley or an agreement for the sale or
disposition by Donnelley of all or substantially all Donnelley's
assets.

The foregoing to the contrary notwithstanding, a Change in
Control shall not be deemed to have occurred with respect to the Executive if
(i) the event first giving rise to the Potential Change in Control involves a
publicly announced transaction or publicly announced proposed transaction
which at the time of the announcement has not been previously approved by the
Board and (ii) the Executive is "part of a purchasing group" proposing the
transaction. A Change in Control shall also not be deemed to have occurred
with respect to the Executive if the Executive is part of a purchasing group
which consummates the Change in Control transaction. The Executive shall be
deemed "part of a purchasing group" for purposes of the two preceding
sentences if the Executive is an equity participant or has agreed to become
an equity participant in the

27
<PAGE>

purchasing company or group (except for (i) passive ownership of less than
5% of the stock of the purchasing company or (ii) ownership of equity
participation in the purchasing company or group which is otherwise not
deemed to be significant, as determined prior to the Change in Control by a
majority of the nonemployee Continuing Directors).

(G) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.

(H) "Company" shall mean Donnelley and its Subsidiaries.

(I) "Company Shares" shall mean shares of common stock of
Donnelley or any equity securities into which such shares have been
converted.

(J) "Date of Termination" shall have the meaning stated in
Section 7.02 hereof.

(K) "Disability" shall be deemed the reason for the
termination by the Company of the Executive's employment, if, as a
result of the Executive's incapacity due to physical or mental illness,
the Executive shall have been absent from the full-time performance of
the Executive's duties with the Company for a period of six (6)
consecutive months, the Company shall have given the Executive a Notice
of Termination for Disability, and, within thirty (30) days after such
Notice of Termination is

28
<PAGE>

given, the Executive shall not have returned to the full-time
performance of the Executive's duties.

(L) "Donnelley" shall mean R.R. Donnelley & Sons Company and
any successor to its business or assets which assumes and agrees to
perform this Agreement by operation of law, or otherwise (except in
determining, under Section 15(F) hereof, whether or not any Change in
Control of Donnelley has occurred in connection with such succession).

(M) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.

(N) "Exchange Price" shall mean the higher of the closing
price of Company Shares reported on the New York Stock Exchange--
Composite Tape on or nearest the Date of Termination (or, if not listed
on such exchange, on the nationally recognized exchange or quotation
system on which trading volume in Company Shares is highest).

(O) "Excise Tax" shall mean any excise tax imposed under
section 4999 of the Code.

(P) "Executive" shall mean the individual named in the first
paragraph of this Agreement.

(Q) "Good Reason" for termination by the Executive of the
Executive's employment shall mean the occurrence (without the
Executive's express

29
<PAGE>

written consent) of any one of the following acts by the Company, or
failures by the Company to act, unless, in the case of any act or
failure to act described in paragraph (I), (V), (VI), (VII), or (VIII)
below, such act or failure to act is corrected prior to the Date of
Termination specified in the Notice of Termination given in respect
thereof:
(I) the assignment to the Executive of any duties
inconsistent with the Executive's status as a senior officer of
the Company or a substantial adverse alteration in the nature or
status of the Executive's responsibilities from those in effect
immediately prior to the Change in Control;
(II) a reduction by the Company in the Executive's
annual base salary as in effect on the date hereof or as the same
may be increased from time to time;
(III) the Company's requiring that the Executive's
principal place of business be at an office located more than 25
miles from the site of the Executive's principal place of business
immediately prior to the Change in Control except for required
travel on the Company's business to an extent substantially

30
<PAGE>

consistent with the Executive's present business travel
obligations ;

(IV) the failure by the Company, without the Executive's
consent, to pay to the Executive any portion of the Executive's
current compensation, or to pay to the Executive any portion of an
installment of deferred compensation under any deferred
compensation program of the Company, within seven (7) days of the
date such compensation is due;

(V) the failure by the Company to continue in effect any
compensation plan in which the Executive participates immediately
prior to the Change in Control which is material to the
Executive's total compensation, including but not limited to the
Company's Senior Officers Supplementary Compensation Plan and the
Stock Plans, or any substitute plans adopted prior to the Change
in Control, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect
to such plan, or the failure by the Company to continue the
Executive's participation therein (or in such substitute or
alternative plan) on a basis not

31
<PAGE>

materially less favorable, both in terms of the amount of benefits
provided and the level of the Executive's participation relative
to other participants, as existed at the time of the Change in
Control;
(VI) the failure by the Company to continue to provide
the Executive with benefits substantially similar to those enjoyed
by the Executive under any of the Company's pension, life
insurance, medical, health and accident, or disability plans in
which the Executive was participating at the time of the Change in
Control, the taking of any action by the Company which would
directly or indirectly materially reduce any of such benefits or
deprive the Executive of any material fringe benefit enjoyed by
the Executive at the time of the Change in Control, or the failure
by the Company to provide the Executive with the number of paid
vacation days to which the Executive is entitled on the basis of
years of service with the Company in accordance with the Company's
normal vacation policy in effect at the time of the Change in
Control; or

(VII) any purported termination of the Executive's
employment which is not

32
<PAGE>

effected pursuant to a Notice of Termination satisfying the
requirements of Section 9.01 hereof; for purposes of this
Agreement, no such purported termination shall be effective.

The Executive's right to terminate the Executive's employment
for Good Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any act or failure
to act constituting Good Reason hereunder.

(R) "Gross-Up Payment" shall have the meaning given in
Section 6.02 hereof.

(S) "ISOs" shall mean options qualifying as incentive stock
options under section 422A of the Code.

(T) "Normal Retirement Age" shall mean the earliest age at
which the Executive may commence Retirement and become entitled to
an unreduced pension under the Pension Plan.

(U) "Notice of Termination" shall have the meaning stated in
Section 7.01 hereof.

(V) "Options" shall mean options for Company Shares granted
to the Executive under any Stock Plan, other than ISOs granted on
or before the date of this Agreement and ISOs which have not

33
<PAGE>

become exercisable on the Date of Termination.

(W) "Pension Plan" shall mean the Company's Retirement
Benefit Plan.

(X) "Person" shall have the meaning given in Section 3(a)(9)
of the Exchange Act, as modified and used in Sections 13(d) and
14(d) thereof; provided, however, that a Person shall not include
(i) Donnelley or any of its Subsidiaries, (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of the
Company, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a corporation
owned, directly or indirectly, by the stockholders of Donnelley in
substantially the same proportions as their ownership of stock of
Donnelley.

(Y) "Planned Compensation" shall mean the annual "planned
compensation" approved by the Executive Committee of the Board to
be paid to the Executive (or, if the Executive's "planned compen-
sation" is not presented for approval at the Executive Committee
level, then as otherwise established by Donnelley or one of its
Subsidiaries) with respect to the year in which the Date of
Termination occurs, or with respect to either of the previous two
(2) calendar years, whichever is

34
<PAGE>

highest, such "planned compensation" being a gross amount
comprised of base salary plus any bonus payable to the Executive
under any Bonus Plan for the calendar year in question, assuming
any and all target levels of achievement for the period with
respect to which such bonus was paid have been met .

(Z) a "Potential Change in Control" shall be deemed to have
occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:

(I) Donnelley enters into an agreement, the consummation
of which would result in the occurrence of a Change in
Control;

(II) Donnelley or any Person publicly announces an
intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control;

(III) any Person who is or becomes the Beneficial Owner,
directly or indirectly, of securities of Donnelley
representing at least 9-1/2% or more of the combined voting
power of Donnelley's then outstanding securities increases
such Person's beneficial ownership of such securities by 5%
or more over the percentage so owned by such Person on the

35
<PAGE>

date hereof; or

(IV) the Board adopts a resolution to the effect that,
for purposes of this Agreement, a Potential Change in Control
has occurred.

(AA) "Retirement" shall be deemed the reason for the
termination by the Company or the Executive of the Executive's
employment if such employment is terminated in accordance with the
Company's retirement policy, not including early retirement, generally
applicable to its salaried employees, as in effect immediately prior to
the Change in Control, or in accordance with any retirement arrangement
established with the Executive's consent with respect to the Executive.

(BB) "Severance Payments" shall mean those payments
described in Section 6.01 hereof.

(CC) "Stock Plans" shall mean the Company's 1981 Stock
Incentive Plan, 1986 Stock Incentive Plan, 1991 Stock Incentive Plan
and any other stock compensation plan applicable to the Executive, or
any similar successor plan or arrangement.

(DD) "Subsidiary" shall mean any corporation,
partnership or other entity, at least a majority of the outstanding
voting shares or

36
<PAGE>

controlling interest of which is at the time directly or indirectly
owned or controlled (either alone or through Subsidiaries or together
with Subsidiaries) by Donnelley or another Subsidiary.

(EE) "Total Payments" shall mean those payments
described in Section 6.02 hereof .

(FF) "Transaction Price" shall mean the highest per
share price for Company Shares actually paid in connection with any
Change in Control.

R.R. DONNELLEY & SONS COMPANY

By ______________________________
Authorized Officer

------------------------------

<PAGE>

EXHIBIT 12

R. R. DONNELLEY & SONS COMPANY

STATEMENT OF COMPUTATION OF
RATIO OF EARNINGS TO FIXED CHARGES
(DOLLAR AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
DECEMBER 31, 1993
-------------------
<S> <C>
Earnings
Earnings before income taxes*............................ $276,562
Interest expense......................................... 45,436
One-third of the Company's operating lease (see note be-
low).................................................... 18,433
Amortization of capitalized interest..................... 5,888
--------
Earnings available for fixed charges..................... 346,319
========
Fixed Charges
Interest expense......................................... 45,436
Capitalized interest..................................... 6,486
--------
Interest incurred........................................ 51,922
One-third of the Company's operating lease (see note be-
low).................................................... 18,433
--------
Earnings available for fixed charges..................... $ 70,355
========
Ratio of Earnings to Fixed Charges....................... 4.9
========
</TABLE>

- --------
Note: Management estimates one-third of current year operating lease payments
to be the interest factor of such rentals.
* Earnings before income taxes includes the one-time adjustment for a
restructuring charge ($90 million). Exclusive of the one-time charge, the
ratio of earnings to fixed charges would have been 6.2.

<PAGE>

EXHIBIT 21

SUBSIDIARIES OF R. R. DONNELLEY & SONS COMPANY
(As of March 24, 1994)
<TABLE>
<CAPTION>
Subsidiaries of Place of
R. R. Donnelley & Sons Company Incorporation
------------------------------ -------------
<S> <C>
77 Capital Corporation Delaware
Air Operations Company Delaware
Allentown S.H. Leasing Company Delaware
American Inline Graphics, Inc. New Jersey
Aviation Transportation, Inc. Delaware
C & E Transport, Inc. Delaware
CWH Supply Company Delaware
Caslon Incorporated Delaware
Chemical Equipment S.H. Leasing Company Delaware
DPA Printing Company, SP. Zo. Poland
Donnelley Caribbean Graphics, Inc. Delaware
Donnelley Comco, Inc. Delaware
Donnelley Documentation Services (Ireland),
Limited Delaware
Donnelley Documentation Services Dublin Republic of
Ireland
Donnelley Fulfillment Services Company Indiana
Donnelley Holdings, Limited Delaware
Donnelley International, Inc. Delaware
Donnelley Language Solutions Republic of
Ireland
Donnelley Satellite Services, Limited Delaware
Donnelley Satellite Graphics, Limited Delaware
Donnelley Turnkey Services Kildare Republic of
Ireland
European-American Ink Sales Corp. Iowa
FFH Corporation Delaware
HCI Holdings Delaware
Haddon Craftsmen, Inc. Delaware
Impresora Donneco Internacional, S.A. de C.V. Mexico
Information Investment Partners L.P. Delaware
Ink International, B.V. Dutch
</TABLE>
<PAGE>

EXHIBIT 21

<TABLE>
<CAPTION>
Subsidiaries of Place of
R. R. Donnelley & Sons Company Incorporation
------------------------------ -------------
<S> <C>
Intervisual Communications, Inc. Delaware
Irish Printers (Holdings) Republic of
Ireland
Kittyhawk S.H. Leasing Company Delaware
Laboratorio Lito Color S.A. de C.V. Mexico
M/B Companies, Inc. Iowa
Metromail Corporation Delaware
Mailing List Research of Canada, Limited Canada
Mobium Corporation for Design &
Communication Delaware
Pan Associates L.P. Delaware
R. R. Donnelley Far East, Limited Delaware
R. R. Donnelley International, Inc. Delaware
R. R. Donnelley Japan K. K. Japan
R. R. Donnelley Limited United Kingdom
R. R. Donnelley Mendota, Inc. Delaware
R. R. Donnelley Nederland B.V. The Netherlands
R. R. Donnelley Norwest Inc. Oregon
R. R. Donnelley Printing Company Delaware
R. R. Donnelley Printing Company L.P. Delaware
R. R. Donnelley Receivables, Inc. Nevada
R. R. Donnelley U.K. Marketing Services
Limited Republic of
Ireland
R. R. Donnelley (Canada) Limited Ontario
R. R. Donnelley (Europe) Limited Delaware
R. R. Donnelley (Ireland) Limited Delaware
R. R. Donnelley (Singapore) Pte Ltd Singapore
R. R. Donnelley (U.K.) Limited United Kingdom
Reynosa Holding Company Delaware
Siegwerk Sales & Services L.P. Delaware
Wyoming Avenue Holdings, Inc. Delaware
Winfield Avenue Holdings, Inc. Delaware
</TABLE>

<PAGE>

EXHIBIT 23

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation by
reference of our reports dated January 27, 1994, included in this Annual Report
of R. R. Donnelley & Sons Company on Form 10-K for the year ended December 31,
1993, into the Company's previously filed Registration Statements on Form S-8
(File Nos. 2-66154, 2-79574, 33-19803, 33-43632, 33-49431 and 33-52805), Form
S-3 (33-34660) and previously filed post-effective amendments thereto.

Arthur Andersen & Co.

Chicago, Illinois,
March 28, 1994