UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

OR

Commission file number 1-4694

R. R. DONNELLEY & SONS COMPANY

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code—(312) 326-8000

Securities registered pursuant to Section 12(b) of the Act:

Indicated by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  þ☑    No  ¨☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨☐    No  þ☑

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 such filing requirements for the past 90 days.    Yes  þ☑    No  ¨☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ☑    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 statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    þ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act:

If an emerging growth company, indicate by check mark if the registrant has elected to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨☐    No  þ☑

The aggregate market value of the shares of registrant’s common stock (basedheld by non-affiliates based on the closingsale price of these shares on the NASDAQ Stock Exchange—Composite Transactions)common stock on June 30, 2014, the last business day of the registrant’s most recently completed second fiscal quarter, held by nonaffiliates2017 was $3,364,349,044.$866,581,829.

As of February 20, 2015, 199,811,82122, 2018, 70,083,915 shares of common stock were outstanding.

Documents Incorporated By Reference

Portions of the registrant’s proxy statement related to its annual meeting of stockholders scheduled to be held on May 21, 201517, 2018 are incorporated by reference into Part III of this Form 10-K.

TABLE OF CONTENTS

PARTPART I

Company Overview

R.R. Donnelley & Sons Company (“RR Donnelley,RRD,” the “Company,” “we,” “us,” and “our”), a Delaware corporation, helps organizations communicate more effectively by working to create, manage, produce, distribute and process content on behalf of our customers. The Company assists customersclients. We assist clients in developing and executing multichannel communication strategies that engage audiences, reduce costs, drive revenues and increase compliance. R.R. Donnelley’sOur innovative technologies enhance digitalcontent management offering, production platform, logistics services, supply chain management, outsourcing capabilities and print communications to delivercustomized consultative expertise assists our clients in the delivery of integrated messages across multiple media to highly targeted audiences at optimal times for clientsto their customers in virtually every private and public sector. StrategicallyWe have strategically located operations that provide local service and responsiveness while leveraging the economic, geographic and technological advantages of a global organization.

Competitive Strategy

Our long-standing client relationships and comprehensive portfolio of capabilities allow us to focus on the following key strategies:

Segment Descriptions

The Company’sOur reportable segments and, where applicable, operating segments, their solutions and product and service offerings are summarized below:

Publishing and Retail Services

The Publishing and Retail Services segment’s primary product offerings include magazines, catalogs, retail inserts, books, directories and packaging. The Publishing and Retail Services segment accounted for 22.7% of the Company’s consolidated net sales in 2014.below.

Variable Print

The Variable Print segment includes the Company’sour U.S. short-run and transactional printing operations. This segment’s primary product offerings includeoperations and includes the following reporting units: commercial and digital print, direct mail, office products, labels, statement printing forms and packaging. Theforms. In 2017, the Variable Print segment accounted for 32.5%44.9% of our consolidated net sales.

Commercial and Digital Print

We provide various commercial printing and print-related services. These services consist of traditional print services, including electronic prepress, digital and offset printing, finishing, storage and delivery of high-quality printed documents which are custom manufactured to our clients’ design specifications. Our Print Fulfillment and Distribution solution allows us to combine Just-In-Time and Digital Print-On-Demand product with off-the-shelf inventory through a national platform of networked facilities in quantities and timeframes desired by the end user. Additionally, our product offerings include packaging, structural engineering and prototyping services, as well as in-store marketing, including in-store signage and point-of-purchase displays. We partner with our clients to help them re-imagine their in-store experience by providing creative and design services in order to present innovative, new ideas for complete store design or individual merchandising materials. Commercial and digital print accounted for 51.7% of the Company’s consolidatedVariable Print segment’s net sales for the fiscal year ended December 31, 2017.

Direct Mail

We are an industry leader in 2014.creating and implementing fully integrated direct mail communications programs. We provide solutions ranging from guidance in overall copyrighting, design and print production to postal optimization strategies. We have a diverse and comprehensive mail production platform with significant digital production capabilities. Our proprietary ProteusJet^SM imaging systems, customized software and marketing strategies enable our clients to communicate to an audience of any size. We believe we are well positioned to meet our direct mail clients’ specific needs by offering cadenced, multiple touch mailings and multi-media communications such as websites, email and mobile contact. Through advanced data analytics, we assist our clients in targeting their customers to deliver the right message at the right time and through the right channel to their intended audience. Direct mail accounted for 17.5% of the Variable Print segment’s net sales for the fiscal year ended December 31, 2017.

Labels

We produce custom labels for clients across multiple industries including warehouse and distribution, retail, pharmaceutical, manufacturing and consumer packaging. Our manufacturing capabilities provide a diverse product offering, including distribution and shipping labels, healthcare and durable goods labels, promotional labels and consumer product goods packaging labels. Our network of production facilities enables the optimal combination of regional or national distribution for us. Labels accounted for 12.9% of the Variable Print segment’s net sales for the fiscal year ended December 31, 2017.

Statement Printing

We enable enhanced relationships between our clients and their customers by creating and managing critical business communications across multiple channels. These essential business communications include customer billing, financial statements, healthcare communications and insurance documents. We support these communications according to customer preferences allowing clients to benefit from our offerings via hosted managed services or with a fully outsourced solution. The breadth of our capabilities includes design and composition, variable imaging, email, archival, digital mail interaction, and payment services, as well as our innovative RRDigital solution set. Our platform, scale and breadth of offering combined with our technology and innovation provide our clients with low cost solutions that assist them in servicing their customers. Statement printing accounted for 12.4% of the Variable Print segment’s net sales for the fiscal year ended December 31, 2017.

Forms

We produce a variety of forms including invoices, order and business forms that support both the private and public sectors. The primary industries we serve are financial, government, retail, healthcare and business services. Forms accounted for 5.5% of the Variable Print segment’s net sales for the fiscal year ended December 31, 2017.

Strategic Services

The Strategic Services segment accounted for 25.4% of our consolidated net sales in 2017 and includes the Company’sfollowing reporting units: logistics, services, financial print products and related services, print management offeringssourcing and digital and creative solutions. The

Logistics

Our logistics services consist of a portfolio of specialized transportation and distribution services targeting a number of unique industry verticals. Our worldwide business is a leading third party logistics provider that utilizes a leveraged platform and a nationwide sales network to offer clients a full suite of freight services, including truckload, less-than-truckload, intermodal and international freight forwarding. We are a leading international mail and parcel distributor with an extensive 200 country network of postal and foreign distribution partners that we manage to meet the unique requirements of international mailers. Domestically, we are a leading provider of print logistics services in the U.S., with the scale, technology and expertise in USPS® rules and regulations to maximize distribution savings for our mail clients. We are also a leading distributor of retail and newsstand print materials, utilizing a nationwide network of consolidation facilities to provide unique distribution solutions for a number of clients. We offer our print and mail clients access to proprietary technology that is designed to determine the most efficient and cost-effective method of shipping depending on their needs. Our integrated distribution management business, last mile, is an extensive nationwide courier network that offers customized same day and next day delivery solutions with optimized route planning and web-based tracking. We continue to leverage our unique courier capabilities to build a position in the growing last-mile delivery sector. Logistics accounted for 69.8% of the Strategic Services segmentsegment’s net sales for the fiscal year ended December 31, 2017.

Sourcing

We utilize ISO certified platforms to provide print management solutions including consulting and systems solutions to allow our clients to more efficiently and cost-effectively manage their print needs. We allow our clients to use our proprietary CustomBuy software for increased visibility, control and rationalization of expenditures, and consult our clients on supplier management, vendor consolidation and offshore production, as well as advising on paper management solutions and other cost optimization opportunities. We guide and support our clients with the development and fulfillment of promotional product strategies that meet their desired objectives within budgetary constraints. Sourcing accounted for 22.5%21.7% of the Company’s consolidatedStrategic Services segment’s net sales for the year ended December 31, 2017.

Digital and Creative Solutions

We utilize teams of photographers, videographers, web designers, writers, editors, designers and various digital experience experts who assist brands in 2014.creating, augmenting and managing content designed to speak directly to their targeted audiences. With our breadth of capabilities, we provide cost effective solutions to bring the creative concepts of our clients and their agencies to life. We assist our clients in facilitating a common creative approach to all of their communications needs, including print and digital advertising, direct marketing and direct mail design, packaging design, marketing and sales collateral and in-store marketing. We also advise on corporate communications and interactive experiences and services. Digital and creative solutions accounted for 8.5% of the Strategic Services segment’s net sales for the year ended December 31, 2017.

International

The International segment includes the Company’sour non-U.S. printing operations in Asia, Europe,Canada, Latin America and Canada. This segment’s primary productEurope, as well as our Global Turnkey Solutions and service offerings include magazines, catalogs, retail inserts, books, directories, direct mail, packaging, forms, labels, manuals, statement printing, commercial and digital print, logistics services and digital and creative solutions. Additionally, this segment includes the Company’s business process outsourcing reporting units. This segment accounted for 29.7% of our consolidated net sales in 2017.

Asia

We are a strategically integrated network of eleven locations, which provides in-box materials, packaging, labels, and export and domestic book production to our major international clients. Asia accounted for 40.3% of the International segment’s net sales for the year ended December 31, 2017.

Global Turnkey Solutions operations. Business process outsourcing provides transactional print

We provide complex supply chain management and outsourcing services, statement printing, direct mail and print management offerings through its operations in Europe, Asia and North America. Global Turnkey Solutions provides outsourcing capabilities, including product configuration, packaging, customized kitting and order fulfillment for technology, medical device and other companies around the world through itsour operations in Europe, North America, and Asia. The International segmentGlobal Turnkey Solutions accounted for 22.3%23.0% of the Company’s consolidatedInternational segment’s net sales for the fiscal year ended December 31, 2017.

Business Process Outsourcing

We provide transactional print and outsourcing services including inbound and outbound document processing, creative services, research and analytics, financial management and other services for legal providers, insurance, telecommunications, utilities, retail and financial services companies. Business process outsourcing accounted for 18.7% of the International segment’s net sales for the fiscal year ended December 31, 2017.

Canada

We provide commercial printing, statement printing, labels, forms, in-store marketing, sourcing and print fulfillment to major companies in 2014.the financial, insurance, transportation, retail, education and restaurant verticals across ten integrated locations. Canada accounted for 9.5% of the International segment’s net sales for the fiscal year ended December 31, 2017.

Latin America

We have operations in Brazil, Chile, Central America and the Caribbean. We provide highly secure educational testing materials, inserts, books, statements, forms, labels and fulfillment to local and regional clients. Latin America accounted for 8.5% of the International segment’s net sales for the fiscal year ended December 31, 2017.

Corporate

Corporate consists of unallocated selling, general and administrative activities and associated expenses including, in part, executive, legal, finance, communications, certain facility costs and LIFOlast-in-first-out inventory provisions. In addition, certain costs and earnings of employee benefit plans, such as pension and other postretirement benefits plan expense (income) and share-based compensation, are included in Corporate and not allocated to the operating segments. Corporate also manages the Company’s cash pooling structures, which enables participating international locations to draw on the Company’s overseasour international cash resources to meet local liquidity needs.

Financial and other information related to these segments is included in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and in Note 19,16, Segment Information, to the Consolidated Financial Statements. Additional information related to the Company’s International operations is included inStatements and within Note 20,17, Geographic Area and Products and Services Information, to the Consolidated Financial Statements.

Business Acquisitions and DispositionsSpinoff Transactions

On February 5, 2015,October 1, 2016, we completed the Company announced that it had enteredseparation of our financial communications and data services business (“Donnelley Financial Solutions, Inc.” or “Donnelley Financial”) and our publishing and retail-centric print services and office products business (“LSC Communications, Inc.” or “LSC”) into a definitive agreement to acquire Courier Corporation (“Courier”two separate publicly-traded companies (the “Separation”) for a total transaction value. We completed the tax free distribution of approximately $261.026.2 million in cash and RR Donnelley shares, plus the assumption of Courier’s net debt and payout of outstanding equity awards.  Courier is a leader in digital printing, publishing and content management in the United States, specializing in educational, religious and trade books.  The completionor 80.75%, of the transaction is subjectoutstanding common stock of each of Donnelley Financial and LSC, to customary closing conditions, including regulatory approval and approvalRRD stockholders (the “Distribution”). The Distribution was made to RRD stockholders of Courier’s shareholders.

2014 Acquisitions

On March 25, 2014, the Company acquired substantially allrecord as of the North American operationsclose of Esselte Corporation (“Esselte”), a developerbusiness on September 23, 2016, who received one share of Donnelley Financial common stock and manufacturerone share of nationally branded and private label office and stationery products. The purchase price included $82.3 million in cash and 1.0 millionLSC common stock for every eight shares of RR DonnelleyRRD common stock or a total transaction value of $100.6 million based on the Company’s closing share price on March 24, 2014. Esselte’s operations are included in the Variable Print segment.

On March 10, 2014, the Company acquired the assets of MultiCorpora R&D Inc. and MultiCorpora International Inc. (together “MultiCorpora”) for $6.0 million. MultiCorpora is an international provider of translation technology solutions. MultiCorpora’s operations are included in the Strategic Services segment.

On January 31, 2014, the Company acquired Consolidated Graphics, Inc. (“Consolidated Graphics”), a provider of digital and commercial printing, fulfillment services, print management and proprietary Internet-based technology solutions, with operations in North America, Europe and Asia. The purchase price for Consolidated Graphics was $359.9 million in cash and 16.0 million shares of RR Donnelley common stock, or a total transaction value of $660.6 million based on the Company’s closing share price on January 30, 2014, plus the assumption of Consolidated Graphics’ debt of $118.4 million. Immediately following the acquisition, the Company repaid substantially allheld as of the debt assumed. Consolidated Graphics’ operations are included in the Variable Print segment, with the exception of operations in the Czech Republic and Japan which are included in the International segment.

2014 Dispositions

On August 15, 2014, the Company sold the assets and liabilities of Journalism Online, LLC (“Journalism Online”), a provider of online subscription management services, for net proceeds of $10.7 million, of which $9.5 million was received as of December 31, 2014, resulting in a gain of $11.2 million. The operations of the Journalism Online business were included in the Strategic Services segment.

On August 11, 2014, the Company’s subsidiary, RR Donnelley Argentina S.A. (“RRDA”), filed for bankruptcy liquidation in bankruptcy court in Argentina.  The bankruptcy petition was approved by the court shortly thereafter and a bankruptcy trustee was appointed.record date. As a result of the bankruptcy liquidation,Distribution, Donnelley Financial and LSC are now independent public companies trading under the Company recorded a loss of $16.4 million forsymbols “DFIN” and “LKSD”, respectively, on the year ended December 31, 2014. Effective as ofNew York Stock Exchange. Immediately following the court’s approval, the operating results of RRDA are no longer included in the Company’s consolidated results of operations. The operations of RRDA were included in the International segment.

On February 7, 2014, the Company sold the assetsDistribution and liabilities of Office Tiger Global Real Estate Service Inc. (“GRES”), its commercial and residential real estate advisory services, for net proceeds of $1.8 million and a loss of $0.8 million. The operations of the GRES business were included in the International segment.

2013 Disposition

During the fourth quarter of 2013, the Company sold the assets and liabilities of R.R. Donnelley SAS (“MRM France”), its direct mail business located in Cosne sur Loire, France, for a loss of $17.9 million, which included cash incentive payments due to the purchaser of $18.8 million, of which $16.4 million was paid as of December 31, 2014 with2016, we held approximately 6.2 million shares of Donnelley Financial common stock and approximately 6.2 million shares of LSC common stock.

In March 2017, we sold the remaining balanceapproximately 6.2 million shares of LSC common stock retained by us and used the proceeds to be paid by January 2016. The operationsrepay a portion of the MRM France businessoutstanding borrowings under the Company’s then-existing credit facility. In June 2017 and August 2017, we exchanged our approximately 6.2 million shares of Donnelley Financial common stock for certain outstanding senior indebtedness of the Company, which obligations were includedsubsequently cancelled and discharged upon delivery to the Company. As of December 31, 2017, we no longer held any shares of the common stock of either Donnelley Financial or LSC.

The financial results of Donnelley Financial and LSC for periods prior to the Distribution are presented as discontinued operations on the Consolidated Statements of Operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. Additionally, sales from RRD to Donnelley Financial and LSC previously eliminated in consolidation have been recast and are now shown as external sales of RRD within the International segment.financial results of continuing operations. See Note 2, Discontinued Operations, to the Consolidated Financial Statements for additional information.

2012 AcquisitionsBusiness Acquisition and Dispositions

On December 28, 2012, the CompanyAugust 4, 2016, we acquired Presort Solutions (“Presort”),Precision Dialogue, a provider of email marketing, direct mail presortingmarketing and other services to businesses in various industries. Presort’swith operations are included in the Strategic Services segment.United States.

On December 17, 2012,January 11, 2016, we sold two entities within the Company acquired Meisel Photographic Corporation (“Meisel”)business process outsourcing reporting unit.

On April 29, 2015, we sold our 50.1% interest in our Venezuelan operating entity.

For further information on the above acquisition and dispositions, see Note 3, Acquisitions and Dispositions, a provider of custom designed visual graphics products to the retailConsolidated Financial Statements.

Competitive Environment

Our clients operate in an evolving and ever-changing market. Meisel’s operationsWhile the market is large and fragmented, there are includedtremendous changes occurring in how organizations need to create, manage, deliver and measure their communications. Some of the Variable Print segment.

On September 6, 2012, the Company acquired Express Postal Options International (“XPO”), a provider of international outbound mailing serviceskey factors facing our clients include regulatory changes, sensitivity to pharmaceutical, e-commerce, financial services, information technology, catalog, direct maileconomic conditions, raw material pricing volatility and other businesses. XPO’s operations are included in the Strategic Services segment.

On August 14, 2012, the Company acquired EDGAR Online, a leading provider of disclosure management services, financial data and enterprise risk analytics software and solutions. EDGAR Online’s operations are included in the Strategic Services segment.

Competition and Strategy

TechnologicalUSPS actions. In addition, technological changes, including the electronic distribution of documents and data, online distribution and hosting of media content, and advances in digital printing, print-on-demand and Internetinternet technologies, continue to impact the market for the Company’ssome of our products and services.services, such as statement printing and forms.

We work with our clients to create, manage, deliver and optimize their multichannel communications strategies by providing innovative solutions to meet increasing customer demands in light of the large and evolving marketplace. One of the Company’sour competitive strengths is that it offerswe offer a wide array of communications products and services, including print and content management, which provide differentiated solutions for its customers. The Company worksour clients. We are also able to manage the storage and distribution of products for our clients by offering warehousing and inventory management solutions that allow clients to store printed materials and to efficiently ship them using our platform. Our logistics operations offer our clients access to our proprietary technology that is designed to determine the most efficient and cost-effective method of shipping depending on our clients’ needs. We believe our breadth of offerings provides us with its customers to create, manage, deliver and optimize their multi-channel communications strategies. The Company hasa distinct competitive advantage. We have and will continue to develop and expand itsour creative and design, content management, digital and print production, supply chain management and distribution services to address its customersour clients’ evolving needs while supporting the strategic objective of becoming a leading global provider of integrated communication products and services.

The print and related services industry, in general, continues to have excess capacity and remains highly competitive. Despite consolidation in recent years, the industry remains highlycompetitive and fragmented. Across the Company’s

We believe that, across our range of products and services, competition is based primarily on price in addition to quality and the ability to service the special needs of customers. Management expects that prices for the Company’s products and services will continue to beclients at a focal point for customers in coming years.competitive price. Therefore, the Company believes it needswe believe we need to continue to lower its cost structure and continue to differentiate itsour product and service offerings.offerings and aggressively manage our cost structure to remain competitive.

The impact of digital technologies has been feltWe also operate in many print products. Electronic communicationa highly competitive and transaction technology has eliminatedfragmented market for commercial freight transportation and third-party logistics services. Primary competitors to our services include other national non-asset based third-party logistics companies, as well as regional or reduced the role of many traditional printed productsniche freight brokerages, asset-based carriers offering brokerage and/or logistics services, wholesale intermodal transportation service providers and has continued to drive electronic substitution in directory and statement printing, in part driven by environmental concerns and cost pressures at key customers.rail carriers. In addition, e-book substitution is having a continuing impact on consumer print book volume, though adoption rates are stabilizing, and a limited impact on educational and specialty books. Digital technologies have also impacted printed magazines, as advertiser spending has movedwe may from printtime to electronic media. The future impact of technology on the Company’s business is difficult to predict and could result in additional expenditures to restructure impacted operationstime compete against carriers’ internal sales forces or develop new technologies. In addition, the Company has made targeted acquisitions and investments in the Company’s existing business to offer customers innovative services and solutions that further secure the Company’s position as a technology leader in the industry.

The acquisitions of Consolidated Graphics, Esselte and MultiCorpora support the Company’s strategic objective of generating profitable growth and improved cash flow and liquidity through targeted acquisitions. These acquisitions have enhanced the Company’s existing capabilities and ability to serve its customers and have provided cost savings through the combination of best practices, complementary products and manufacturing and distribution capabilities.

The Company has implemented a number of strategic initiatives to reduce its overall cost structure and improve efficiency, including the restructuring, reorganization and integration of operations and streamlining of administrative and support activities. Future cost reduction initiatives could include the reorganization of operations and the consolidation of facilities. Implementing such initiatives might result in future restructuring or impairment charges, which may be substantial. Management also reviews the Company’s operations and management structure on a regular basis to balance appropriate risks and opportunities to maximize efficiencies and to support the Company’s long-term strategic goals.shippers’ internal transportation departments.

Seasonality

Advertising and consumer spending trends affect demand in several of the end-markets served by the Company. Historically, demand for printing of magazines, catalogs, retail inserts and books is higherwe serve. As such, we have some seasonality in the second half of the year driven by increased advertising pages within magazines,in our business, despite the breadth of our product and holiday volume in catalogs, retail inserts and books. Partially offsetting this pattern, demand for financial print and related services is typically stronger in the first half of the year due to annual compliance requirements. As a result of the acquisition of Consolidated Graphics, which provides significant campaign-related printed products, quarterly and annual results may also be impacted by U.S. election cycles. These typical seasonal patterns can be impacted by overall trends in the U.S. and world economy. The seasonal pattern in 2014 was in line with historical patterns.service offerings.

Raw Materials

The primary raw materials the Company useswe use in itsour print businesses are paper and ink. The Company negotiatesWe negotiate with leading suppliers to maximize itsour purchasing efficiencies and uses a wide varietyefficiencies. Some of the paper grades, formats, ink formulations and colors. In addition, a substantial amount of paper used by the Companywe use is supplied directly by customers.clients. Variations in the cost and supply of certain paper grades and ink formulations used in the manufacturing process may affect the Company’s consolidated financial results. Paper prices fluctuated during 2014,2017 and volatility in the future is expected. Generally, customersclients directly absorb the impact of changing prices on customer-suppliedclient-supplied paper. With respect to paper purchased by the Company, the Company haswe purchase, we have historically passed most changes in price through to its customers. Contractualour clients. We believe contractual arrangements and industry practice shouldwill support the Company’sour continued ability to pass on any future paper price increases, but there is no assurance that market conditions will continue to enable the Companyus to successfully do so. Management believesWe believe that the paper supply is consolidating, and there may be shortfalls in the future in supplies necessary to meet the demands of the entire marketplace. Higher paper prices and tight paper supplies may have an impact on customers’clients’ demand for printed products. The Company hasWe have undertaken various strategic initiatives to mitigate any foreseeable supply disruptions with respect to the Company’sour ink requirements. The Company also resells waste paper and other print-related by-products and may be impacted by changes in prices for these by-products.

The Company continuesWe continue to monitor the impact of changes in the price of crude oil and other energy costs, which impact the Company’sour ink suppliers, logistics operations and manufacturing costs. Crude oil, and energy prices and market cost of transportation continue to be volatile. The Company believes itsWe believe our logistics operations will continue to be able to pass a substantial portion of any increases in fuel prices directly to its customersour clients in order to offset the impact of related cost increases. Decreases in fuel prices are also passed on to customersclients which negatively impacts sales. The Companyimpact sales and income from operations. However, our logistics operations is restricted in its ability to pass on increased cost of transportation costs to some clients in the short term. Therefore, increases in the market cost of transportation will negatively impact income from operations. We generally cannot pass on to customersclients the impact of higher energy prices on itsour manufacturing costs. However, the Company enters into fixed price contracts for a portion of its natural gas purchases to mitigate the impact of changes in energy prices. The CompanyWe cannot predict sudden changes in energy prices and the impact that possible future changes in energy prices might have upon either future operating costs or customerclient demand andor the related impact either will have on the Company’sour consolidated annual results of operations, financial position or cash flows.

Distribution

The Company’sOur products are distributed to end-users through the U.S. orand foreign postal services, through retail channels, electronically or by direct shipment to customerclient facilities. Through itsour logistics operations, the Company manageswe manage the distribution of most customerclient products printed by the Companywe print in the U.S. and Canada to maximize efficiency and reduce costs for customers.clients.

Postal costs are a significant component of many customers’ cost structures and postal rate changes can influence the number of pieces that the Company’s customers are willing to print and mail. On January 27, 2013, the United States Postal Service (“USPS”) increased postage rates across all classes of mail by approximately 2.6%, on average. Under the 2006 Postal Accountability and Enhancement Act, it had been anticipated that postage would increase annually by an amount equal to or slightly less than the Consumer Price Index (the “CPI”). However, on December 24, 2013, the Postal Regulatory Commission (the “PRC”) approved the USPS Board of Governors’ request under the Exigency Provision in the applicable law for price increases of 4.3%. The exigent rate increase was implemented in addition to a 1.7% rate increase, equal to the CPI, for total price increases of 6.0%, on average, across all significant mail categories, effective January 26, 2014. According to the PRC’s ruling, which is currently being appealed, the USPS must develop a plan to phase out the exigent rate increase once it has produced the revenue justified by the request. As of December 31, 2014, the USPS has not presented a plan for the required phase out. On January 15, 2015, the USPS filed for a CPI rate increase of 2.0%, which if approved by the PRC, will be effective April 26, 2015. As a leading provider of print logistics and among the largest mailers of standardmarketing mail in the U.S., the Company workswe work closely with its customersour clients and the USPS to offer innovative products and mail preparation services to minimize postage costs. While the Company doeswe do not directly absorb the impact of higher postal rates on its customers’our clients’ mailings, demand for products distributed through the U.S. or foreign postal services has been negatively impacted by changesincreases in postal rates.rates, as postal costs are a significant component of many clients’ cost structures.

On January 22, 2017, the USPS implemented a CPI based postage increase of approximately 1.0%, as allowed under postal law, entitled the 2006 Postal Accountability and Enhancement Act (“PAEA”).

In addition, there is a pending bi-partisan legislative proposal (still in Committee) agreed to on March 16, 2017 that seeks to stabilize the financial condition of the USPS, which among other things calls for levying a 2.15% increase on market-dominant mail products. Nevertheless, the Postal Regulatory Commission (“PRC”) on November 6, 2017 adjusted and approved a USPS filing for a CPI based average price increases of 1.9% to 2.0% depending on the class of mail, which became effective January 21, 2018.

 Additionally, as required by PAEA, the PRC initiated a comprehensive review of PAEA on December 20, 2016, to determine if the current system for regulating rates and classes for market-dominant products is still achieving the original objectives of the law. On December 1, 2017, the PRC issued its findings and concluded that the current system was not meeting all of PAEA’s original objectives. To remedy this situation, the PRC has proposed recommendations, which among other things, allows the Postal Service flexibility of “CPI + 2%” on market-dominant mail products for a 5 year period of time. The PRC has asked for industry stakeholder input, comments and alternative suggestions to these recommendations which are due by March 1, 2018. This will be followed by a reply comment period ending March 30, 2018. The impact to the Company of the USPS’s restructuring plans, many of which require legislative action,these actions cannot currently be estimated.

Mail delivery services through the USPS accounted for approximately 44%29% of the Company’srevenue within our logistics revenuesreporting unit during the fiscal year ended December 31, 2017.

Clients

We have more than 50,000 clients worldwide, including 99% of the Fortune 100, 96% of the Fortune 500 and 89% of the Fortune 1000. Our services enable some of the world’s largest companies to create, manage and deliver comprehensive and cost-effective multi-channel communications around the world. In connection with the Separation, we entered into a number of agreements with LSC and Donnelley Financial with respect to our ongoing commercial relationships. For the year ended December 31, 2014.

During the year ended December 31, 2014, the Company experienced an increase2017, LSC and Donnelley Financial accounted for 10.1% of total net sales in its costs of transportation, largely as a result of an industry-wide shortage of drivers resulting from regulations restricting the number of hours drivers can work and the severe winter weather in the first quarter. The Company’s ability to pass on these increased costs to its customers varies based on contractual arrangements. Industry practice should support the Company’s ability to pass on these cost increases when contractually allowed, but there is no assurance that market conditions will continue to enable the Company to successfully do so.

Customers

our Strategic Services segment. For each of the years ended December 31, 2014, 20132017, 2016 and 2012,2015, no customersingle client accounted for 10% or more of the Company’s consolidated net sales.

Technology, Research and Development

The Company hasWe invest in technology and research and development as a key strategy for our business. We believe that investing in new technologies allows us to remain on the forefront of content management and data analytics, while also allowing us to support our clients’ growing utilization of digital and print technologies. In addition, these technologies help expand our capabilities to provide additional services to clients as customers’ needs evolve. We have a research facility in Grand Island, New York, that supports the development and implementation of new technologies to meet customerclient needs and improve operating efficiencies. The Company’sWe believe that proprietary technology is required where it will provide a competitive advantage or where the desired technology is not readily available in the marketplace, and as such, our proprietary technology portfolio contains an array of applications and technological capabilities which are developed to perform different functions, including digital ink jet printing. Our cost for research and development activities is not material to the Company’sour consolidated annual results of operations, financial position or cash flows. In addition, while we consider our patent portfolio to be valuable, the Company does not believe that our business is dependent upon any single patent or group of patents. We actively monitor the registrations of our trademark and patent portfolio to ensure that our intellectual property is appropriately protected and maintained.

Cybersecurity

Our cybersecurity program is designed to meet the needs and expectations of our clients who entrust us with highly sensitive information. Furthermore, our healthcare and insurance printing businesses are subject to industry-specific data regulations, including the Health Care Insurance Portability and Accountability Act of 1996, which could subject us and our clients to liability should sensitive customer or patient information be publicly disclosed. Our infrastructure and technology, expansive and highly trained global workforce and comprehensive security and compliance program make us qualified to safely process, store and protect customer information to ensure compliance with relevant regulations.

Our infrastructure and technology security capabilities are bolstered by our relationship with a leading data center services provider. Furthermore, our networks are monitored by intrusion detection services around the clock, and our systems and applications are routinely tested for vulnerabilities and are operated under a strict patch management program.

We employ a highly skilled IT workforce to implement our cybersecurity programs and to handle specific security responsibilities. As a result of annual mandatory security awareness training, our IT workforce is qualified to address security and compliance-related issues as they arise. Additionally, all of our IT employees are carefully screened, undergo a thorough background check and are bound by a nondisclosure agreement that details such employee’s security and legal responsibilities with regard to information handling.

The Company believes our security and compliance team diminishes the risk of system compromise and data exposure by rapidly and effectively addressing security incidents as they arise.

Environmental Compliance

It is the Company’sour policy to conduct itsour global operations in accordance with all applicable laws, regulations and other requirements. It is not possible to quantify with certainty the potential impact of actionspotential failures regarding environmental matters, particularly remediation and other compliance efforts that the Company may undertake in the future. However, in themanagement’s opinion, of management, compliance with the present environmental protection laws, before taking into account estimated recoveries from third parties, will not have a material adverse effect on the Company’sCompany’s consolidated annual results of operations, financial position or cash flows.

Employees

As of December 31, 2014,2017, the Company had approximately 68,00042,700 employees.

As of December 31, 2017, 438 of our U.S. employees were covered by collective bargaining agreements at twelve of our U.S. facilities, representing 2.5% of our U.S. workforce. We have collective bargaining agreements with unionized employees in China, Canada, Mexico, Brazil, Chile and Europe. We have not experienced a work stoppage during the past five years. Management believes that our relationships with our employees and collective bargaining groups are good.

Available Information

The Company maintainsWe maintain an Internet website at www.rrdonnelley.com where the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports are available without charge, as soon as reasonably practicable following the time they are filed with, or furnished to, the Securities and Exchange Commission (“SEC”). Copies of the materials filed by the Company with the SEC are available at the Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Information regarding the operation of the Public Reference Room is available by calling the SEC at 1-800-SEC-0330. Reports, proxy and information statements and other information that is filed electronically with the SEC are available on the SEC’s website atwww.sec.gov.

The Principles of Corporate Governance of the Company’sour Board of Directors, the chartersCharters of the Audit, Human Resources and Corporate Responsibility & Governance Committees of the Board of Directors and the Company’sour Principles of Ethical Business Conduct are also available on the Investor Relations portion of www.rrdonnelley.com, and will be provided, free of charge, to any shareholderstockholder who requests a copy. References to the Company’sour website address do not constitute incorporation by reference of the information contained on the website, and the information contained on the website is not part of this document.

Special Note Regarding Forward-Looking Statements

The Company has made forward-looking statements in thisThis Annual Report on Form 10-K thatand any documents incorporated by reference contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties. These statementsuncertainties and are based on the beliefs and assumptions of the Company. Generally, forward-looking statements include information concerning possible or assumed future actions, events, or results of operations of the Company.

These statements may include, or be preceded or followed by, the words “may,” “will,” “should,” “might,” “could,” “would,” “potential,” “possible,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “hope” or similar expressions. The Company claims the protection of the Safe Harborsafe harbor for Forward-Looking Statementsforward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all forward-looking statements.

Forward-looking statements are not guarantees of performance. The factors identified below are believed to be significant factors, but not necessarily all of the significant factors, that could cause actual results to differ materially from those expressed in any forward-looking statement. Unpredictable or unknown factors could also have material effects on the Company.

The following important factors, in addition to those discussed elsewhere in this Annual Report on Form 10-K, could affect the future results of the Company and could cause those results or other outcomes to differ materially from those expressed or implied in its forward-looking statements:

Because forward-looking statements are subject to assumptions and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Undue reliance should not be placed on such statements, which speak only as of the date of this document or the date of any document that may be incorporated by reference into this document.

Consequently, readers of this Annual Report on Form 10-K should consider these forward-looking statements only as the Company’s current plans, estimates and beliefs. The Company does not undertake and specifically declinesdisclaims any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. The Company undertakes no obligation to update or revise any forward-looking statements in this Annual Report on Form 10-K to reflect any new events or any change in conditions or circumstances.

ITEM 1A.   RISK FACTORS

The Company’sOur consolidated results of operations, financial position and cash flows can be adversely affected by various risks. These risks include the principal factors listed below and the other matters set forth in this Annual Report on Form 10-K. You should carefully consider all of these risks.

Risks Relatingrelated to the Businesses of the Companyour business

Global market and economic conditions, as well as the effects of these conditions on customers’our clients’ businesses, couldmay adversely affect the Company.

GlobalIn general, demand for our products and services is highly correlated with general economic conditions affect customers’ businesses and the markets they serve. Demand for advertising tends to correlate with changes in the level of economic activity in the markets customers serve.conditions. Because a significant part of the Company’sour business relies on its customers’our clients’ advertising spending, which is driven in part by economic conditions and customer spending, a prolonged downturn in the global economy and an uncertain economic outlook couldmay further reduce the demand for printing and related services that the Company provideswe provide to these customers.clients. Delays or reductions in clients’ spending could have an adverse effect on demand for our products and services which may adversely affect our results of operations, financial position and cash flows. Economic weakness and constrained advertising spending may result in decreased revenue, operating margin, earnings and growth rates and difficulty in managing inventory levels and collecting accounts receivable. The Company may experience reduced demand for its products and services due to economic conditions and other macroeconomic factors affecting consumers’ and businesses’ spending behavior. In addition, customerclient difficulties couldmay result in increases in bad debt write-offs and allowances for doubtful accounts receivable. In particular, the Company’s exposure to certain industries currently experiencing financial difficulties and certain financially troubled customers could have an adverse effect on the Company’s results of operations. The Company may experience operating margin declines in certain businesses, reflecting the effect of items such as competitive price pressures, inventory write-downs, cost increases for wages and materials, and increases in pension and other postretirement benefits plan funding requirements. Economic downturns may also result in restructuring actions and associated expenses and impairment of long-lived assets, including goodwill and other intangibles. Uncertainty about future economic conditions makes it difficult for the Companyus to forecast operating results and to make decisions about future investments. Delays or reductions

Changes in customers’ spending wouldcustomer preferences have reduced, and may continue to reduce, demand for our products and services in certain markets. In addition, failure to manage changes in our relationships with our significant clients will have an adverse effect on our results of operations.

Many of the end markets in which our clients compete are experiencing changes due to technological progress and changes in customer preferences. In order to grow and remain competitive, we will need to continue to adapt to future changes in technology, enhance our existing offerings and introduce new offerings to address the changing demands of clients. If we are unable to continue to utilize new and existing technologies to adapt to new distribution methods and address changing customer preferences, our business may be adversely affected.

Technological developments and changing demands of clients may require additional investment in new equipment and technologies. We must monitor changes in our clients’ markets and develop new solutions to meet clients’ needs. The development of such solutions may be costly and there is no assurance that these solutions will be accepted by clients. If we are unable to adapt to technological changes on a timely basis or at an acceptable cost, clients’ demand for the Company’sour products and services may be adversely affected.

In addition, electronic delivery of documents and data, including the online distribution and hosting of media content, offer alternatives to traditional delivery of printed documents. Customers continue to accept electronic substitution in statement printing and forms while online and digital advertising is impacting clients’ printed advertising spend. The extent to which customers will continue to accept electronic delivery is uncertain and it is difficult to predict future acceptance of these alternatives. Electronic delivery has adversely affected our products, such as forms and statement printing. To the extent that customers, clients and regulators continue to accept these alternatives, demand for our products and services may be further adversely affected.

During 2017, our five largest clients accounted for 11.1% of our net sales in the aggregate. In addition, we continue to provide products and services, including logistics, pre-media, production and sales services, to LSC and Donnelley Financial and their respective customers. There can be no assurance that our clients, including LSC and Donnelley Financial, will continue to purchase our products in the same mix or quantities or on the same terms as in the past. The loss of or disruptions related to significant clients may result in a reduction in sales or change in the mix of products we sell to significant clients. This may adversely affect our results of operations, financial condition and cash flows.

Additionally, disputes with significant suppliers, including those related to pricing or performance, may adversely affect our ability to supply products to our clients and also our results of operations, financial condition and cash flows.

Our business is dependent upon brand reputation and the quality of our client support and services offerings. If we fail to offer effective client support and services, our brand reputation would be harmed and clients may not use our solutions, which will have an adverse effect on our results of operations.

A high level of client support and service is critical for the successful marketing and sale of our solutions and the maintenance and enhancement of our brand reputation. If we are unable to provide a level of client support and service to meet or exceed the expectations of our clients, we may experience a loss of clients and market share and a decline in our brand reputation which may result in reduced client demand for our solutions. Furthermore, our brand reputation may be impacted by a wide range of factors, some of which are out of our control, including actions of our competitors and third party providers and positive or negative publicity, any or all of which could adversely affect our operations.

Our operations are subject to political and regulatory risks in the countries in which we operate.

Our operations may be material,substantially affected by both domestic and consequently impactinternational political or regulatory risk including general political conditions in the Company’s consolidatedcountries in which we operate; unexpected legal, regulatory or tax changes; governmental actions which have the effect of restriction on our business or opportunities or make it more expensive for us to operate in those jurisdictions; and changes in tax laws that would reduce net income due to withholding requirements or the imposition of tariffs or other restrictions.

In addition, potential political uncertainty in our developed markets, or the perception of such uncertainty, has had and may continue to have an adverse effect on global economic conditions and the stability of global financial markets. This may reduce global market liquidity and restrict the ability of key market participants to operate in certain financial markets. Any of these factors may adversely affect our results of operations, financial position and cash flow.flows. Our success will depend, in part, on our ability to effectively anticipate and manage these and other risks associated with our domestic and international operations.

We are subject to taxation related risks in multiple jurisdictions.

We are a U.S.-based global company subject to tax in multiple U.S. and foreign tax jurisdictions. Significant judgment is required in determining our global provision for income taxes, deferred tax assets and liabilities and in evaluating our tax positions on a worldwide basis. While we believe our tax positions are consistent with the tax laws in the jurisdictions in which we conduct our business, it is possible that these positions may be overturned by jurisdictional tax authorities, which may have a significant impact on our global provision for income taxes.

Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. The Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law on December 22, 2017 and represents the most significant change to U.S. tax law since 1986. As a result of the Tax Act, we are subject to a one-time transition tax on foreign earnings and have recorded a provisional estimate for this item, as well as other items, in our 2017 results of operations. We continue to analyze the impact of the Tax Act on our Company. In the future, we may be subject to additional taxes as required under the Tax Act, including current tax on foreign earnings and possibly significant limitations on deductions for certain items, such as interest on debt. In addition, we may be required to make material adjustments to provisional items recorded. All of these factors may adversely affect our results of operations, financial position and cash flows.

Many countries are actively considering changes to existing tax laws that, if enacted, could increase our tax obligations in countries where we do business. If U.S. or other foreign tax authorities change applicable tax laws, our overall taxes could increase, which may adversely affect our business, results of operations, financial position and cash flows.

Adverse credit market conditions, may limit the Company’s ability to obtain future financing.

Uncertainty and volatility in global financial markets may cause financial markets institutions to fail or may cause lenders to hoard capital and reduce lending. The failure of a financial institution that supports the Company’s existing credit agreement would reduce the size of its committed facility unless a replacement institution were added.

The Company’sour operating performance and our creditworthiness may limit itsour ability to obtain future financing and the cost of any such capital may be higher than in past periods.

We have a substantial amount of outstanding debt at December 31, 2017 which could adversely affect our business, results of operations, financial condition and cash flows. Uncertainty and volatility in global financial markets may cause financial institutions to fail, lenders to reduce lending or investors to reinvest in assets that are considered less risky. The Company’sfailure of a financial institution that supports our existing credit agreement would reduce the size of its committed facility unless a replacement institution was added. Any future capital markets transactions will be dependent on our financial performance as well as market conditions, which may result in receiving financing on terms less favorable to us than our existing financings. In addition, our access to future financing and our ability to refinance existing debt will depend on a variety of factors such as our financial performance, the general availability of credit, itsour credit ratings and credit capacity at the time it pursueswe pursue such financing. The Company’s

Our current Corporatecorporate credit ratings are below investment grade and, as a result, the Company’sour borrowing costs may further increase orand our ability to borrow may be limited. The Company’s obligations under its current $1.5 billion senior securedIn September 2017, we amended and restated our revolving credit facility (the “Credit Agreement”) which expires September 9, 2019, are guaranteed by material and certain other domestic subsidiaries and are secured by a pledge of the equity interests of certain subsidiaries, including most of its domestic subsidiaries, and a security interest in substantially all of the domestic current assets and mortgages of certain domestic real property of the Company.. The Credit Agreement provides for a senior secured asset-based revolving credit facility, which is scheduled to mature on September 29, 2022, of up to $800.0 million, subject to a number of covenants, including a minimum Interest Coverage Ratio and aborrowing base. The maximum Leverage Ratio, that, in part, restrictavailability under the Company’s ability to incur additional indebtedness, create liens, engage in mergers and consolidations, make restricted payments, dispose of certain assets and may also limit the use of proceeds. The Credit Agreement generally allows annual dividend paymentsincreases and decreases with changes in the amount of up to $225.0 million in aggregate, though additional dividends may be allowedaccounts receivable, inventory, machinery, equipment and fee-owned real estate of the Company and the Guarantors (collectively, the “Borrowing Base”), subject to certain conditions. eligibility criteria and advance rates.

If adequate capital is not available to the Companyus and itsour internal sources of liquidity prove to be insufficient, or if future financings require more restrictive covenants, such combination of events could adversely affect the Company’sour ability to (i) acquire new businesses or enter new markets, (ii) service or refinance itsour existing debt, (iii) pay dividends on common stock, (iv) make necessary capital investments, and (v) make other expenditures necessary for the ongoing conduct of our business.

Our Credit Agreement limits our borrowing capacity to the value of certain of our assets. In addition, our Credit Agreement is secured by certain assets of the Company and its domestic subsidiaries, and lenders may exercise remedies against the collateral in the event of our default.

Our borrowing capacity under our Credit Agreement is equal to the lesser of (i) $800.0 million and (ii) the Borrowing Base. In the event of any material decrease in the amount of or appraised value of the assets in the Borrowing Base, our borrowing capacity would similarly decrease, which could adversely affect our business and liquidity.

Certain restrictions on operations become applicable if our availability falls below certain thresholds. These restrictions could impose significant operating and financial limitations and restrictions on us, including restrictions on our ability to enter into particular transactions and to engage in other actions that we may believe are advisable or necessary for our business.

In the event of a default under our Credit Agreement, the lenders’ commitment to extend further credit under our Credit Agreement could be terminated, our outstanding obligations could become immediately due and payable, outstanding letters of credit may be required to be cash collateralized and remedies may be exercised against the collateral. If we are unable to borrow under our Credit Agreement, we may not have the necessary cash resources for our operations and, if any event of default occurs, there is no assurance that we would have the cash resources available to repay such accelerated obligations, refinance such indebtedness on commercially reasonable terms, or at all, or cash collateralize our letters of credit, which would have a material adverse effect on our business, financial condition, results of operations and liquidity.

We may not be able to reduce or extinguish our material indebtedness, and as a result we may have increased financial leverage, which may adversely affect our business.

We may not be able to reduce or extinguish our material indebtedness. We have substantial indebtedness and if we are unable to reduce this indebtedness, we will continue to have increased financial leverage. Our interest and principal payments are significant. In addition, our ability to make payments on, repay or refinance, such debt, will depend largely upon our future operating performance.

The indentures governing theour outstanding notes and debentures the Company issues do not contain restrictive covenants and the Companywe may incur substantially more debt or take other actions, including engaging in mergers and acquisitions, paying dividends and making other distributions to holders of equity securities, and disposing of certain assets, which may adversely affect the Company’sour ability to satisfy itsour obligations under the notes and debentures issued under itsour indentures.

Although the Credit Agreement is subject to a number of negative and financial covenants, including a minimum interestfixed charge coverage ratio and a maximum leverage ratio, and covenants that restrict the Company’sour ability to incur additional indebtedness, engage in mergers and acquisitions, pay dividends and make other distributions to the holders of the Company’sour equity securities, and dispose of certain assets, the indentures governing the Company’sour outstanding notes and debentures do not contain financial or operating covenants or restrictions on the incurrence of indebtedness, the payment of dividends or making other distributions, or the disposition of certain assets. In addition, the limited covenants applicable to the notes and debentures do not require the Companyus to achieve or maintain any minimum financial results relating to itsour financial position or results of operations.

In carrying out the Company’sour strategy focused on maximizing long-term shareholderstockholder value, the Companywe may enter into transactions which may increase itsour financial leverage. The Company’sOur ability to recapitalize, incur additional debt and take a number of other actions that are not limited by the terms of the indentures governing itsour notes and debentures couldmay have the effect of diminishing the Company’sour ability to make payments on those notes and debentures when due, and require the Companyus to dedicate a substantial portion of itsour cash flow from operations to payments on itsour indebtedness, which would reduce the availability of cash flow to fund the Company’sour operations, working capital and capital expenditures.

FluctuationsWe may be adversely affected by a decline in the availability of raw materials or by fluctuations in the costs of paper, ink, energy and other raw materials.

We are dependent on the availability of paper, ink and other raw materials may adversely impact the Company.

Purchasesto support our operations. As such, purchases of paper, ink, energy and other raw materials represent a large portion of the Company’sour costs. Increases in the costs of these inputs may increase the Company’sour costs and the Companywe may not be able to pass these costs on to customersclients through higher prices. In addition, the Company may not be able to resell waste paper and other print-related by-products or may be adversely impacted by decreases in the prices for these by-products. Increases in the cost of materials may adversely impact customers’affect clients’ demand for the Company’sour printing and related services.

The Company may be adversely affected by a decline in the availability of raw materials.

The Company is dependent on the availability of paper, ink and other raw materials to support its operations. Unforeseen Other unforeseen developments in these markets couldmay result in a decrease in the supply of paper, ink or other raw materials which may adversely affect our results of operations and could cause a decline in the Company’s revenues.financial condition.

The financial condition of the Company’s customers may deteriorate.

Many of the Company’s customers participate in highly competitive markets, and their financial condition may deteriorate as a result. A decline in the financial condition of the Company’s customers would hinder the Company’s ability to collect amounts owed by customers. In addition, such a decline would result in lower demand for the Company’s products and services. A lack of liquidity in the capital markets or a sustained period of unfavorable economic conditions will increase the Company’s exposure to credit risks and result in increases in bad debt write-offs and allowances for doubtful accounts receivable.

The CompanyWe may be unable to improve itsour operating efficiency rapidly enough to meet market conditions.

Because the markets in which the Company competeswe operate are highly competitive, the Companywe must continue to improve itsour operating efficiency in order to maintain or improve itsour profitability. There is no assurance that the Companywe will be able to do so in the future. In addition, the need to reduce ongoing operating costs may result in significant up-front costs to reduce workforce, close or consolidate facilities, or upgrade equipment and technology.

A decline in expected profitability of the Company or individual reporting units of the Company may result in the impairment of assets, including goodwill, other long-lived assets and deferred tax assets.

In prior years we have recorded significant goodwill and other long-lived asset impairments and continue to hold goodwill, other long-lived assets and deferred tax assets on our balance sheet. A decline in expected profitability may call into question the recoverability of our related goodwill, other long-lived tangible and intangible assets or deferred tax assets and require the write down or write off of these assets or, in the case of deferred tax assets, recognition of a valuation allowance through a charge to income. Such events have had and may continue to have an adverse effect on our results of operations, financial position and cash flows.

Our services depend on the reliability of computer systems we and our vendors maintain. If our systems fail or are unreliable, our operations may be adversely affected.

We depend on our information technology and data processing systems to operate our business, and a significant malfunction or disruption in the operation of our systems may disrupt our business and adversely affect our ability to operate and compete in the markets we serve. These systems include systems that we own and operate, as well as those systems of our vendors. Such systems are susceptible to malfunctions and interruptions due to equipment damage and power outages and a range of other hardware, software and network problems. We also periodically upgrade and install new systems, which if installed or programmed incorrectly, may cause significant disruptions. If a disruption occurs, we may incur losses and costs for interruption of our operations, which may adversely affect our results of operations, financial condition and cash flows.

We may suffer a data breach of sensitive information. If our efforts to protect the security of such information are unsuccessful, any such failures may result in significant costs to investigate and remediate the data-breach, private litigation expense and costly government enforcement actions and penalties, and may have an adverse effect on our operations and reputation.

Maintaining the confidentiality, integrity and availability of our systems, software and solutions is an issue of critical importance for us and for our clients and users who rely on us to protect the confidentiality of certain information they provide us. Many of our clients’ industries are highly regulated and have established standards and requirements for safeguarding the confidentiality, integrity and availability of information relating to their businesses and customers. Confidential and sensitive information stored in our systems are susceptible to cybercrime, or threats of intentional disruption, which are increasing in terms of sophistication and frequency. Disclosure of the information maintained on our systems due to human error, breach of our systems through hacking or cybercrime, a leak of confidential information due to employee misconduct or other such events may damage our reputation, subject us to regulatory enforcement action and cause significant reputational harm for our clients, all of which may adversely affect our results of operations, financial condition and cash flows.

The Companyhighly competitive market for our products and industry consolidation may continue to create adverse price pressures.

The markets for the majority of our product categories are highly fragmented and we have a large number of competitors. Management believes that excess capacity in our markets has caused downward price pressure and that this trend is likely to continue. In addition, consolidation in the markets in which we compete may increase competitive price pressures due to competitors lowering prices.

We believe that selectively pursuing acquisitions is an important strategy for our Company. If our competitors are able to successfully combine with one another or otherwise consolidate, the competitive landscape would be significantly altered. Such consolidation would create stronger competitors with greater financial resources and broader manufacturing and distribution capabilities than our own, and, if we are not successful with our own efforts to consolidate or adapt effectively to increased competition, the resulting increase in competitive pressures may adversely affect our results of operations, financial position and cash flows.

We have in the past acquired, and intend in the future to acquire, other businesses, and we may be unable to successfully integrate the operations of acquiredthese businesses and may not achieve the cost savings and increased revenuesnet sales anticipated as a result of these acquisitions.

Achieving the anticipated benefits of acquisitions will depend in part upon the Company’sour ability to integrate these businesses in an efficient and effective manner. The integration of companies that have previously operated independently may result in significant challenges, and the Companywe may be unable to accomplish the integration smoothly or successfully. In particular, the coordination of geographically dispersed organizations with differences in corporate cultures and management philosophies may increase the difficulties of integration. The integration of acquired businesses may also require the dedication of significant management resources, which may temporarily distract management’s attention from theour day-to-day operations of the Company.operations. In addition, the process of integrating operations may cause an interruption of, or loss of momentum in, the activities of one or more of the Company’sour businesses and the loss of our key personnel from the Company or the acquired businesses. Further, employee uncertainty and lack of focus during the integration process may disrupt our operations or the businessesoperations of the Company or the acquired businesses. The Company’sOur strategy is, in part, predicated on the Company’sour ability to realize cost savings and to increase revenuesnet sales through the acquisition of businesses that add to the breadth and depth of the Company’sour products and services. Achieving these cost savings and revenuenet sales increases is dependent upon a number of factors, many of which are beyond the Company’sour control. In particular, the Companywe may not be able to realize the benefits of more comprehensive product and service offerings, anticipated integration of sales forces, asset rationalization and systems integration.

The Company may be unable to hire and retain talented employees, including management.

The Company’s success depends, in part, on its general ability to attract, develop, motivate and retain highly skilled employees. The loss of a significant number of the Company’s employees or the inability to attract, hire, develop, train and retain additional skilled personnel could have a serious negative effect on the Company. Various locations may encounter competition with other manufacturers for skilled labor. Many of these competitors may be able to offer significantly greater compensation and benefits or more attractive lifestyle choices than the Company offers. In addition, many members of the Company’s management have significant industry experience that is valuable to the Company’s competitors. The Company enters into non-solicitation and, as appropriate, non-competition agreements with its executive officers, prohibiting them contractually from soliciting the Company’s customers and employees and from leaving and joining a competitor within a specified period. If one or more members of the Company’s senior management team leave and cannot be replaced with a suitable candidate quickly, the Company could experience difficulty in managing its business properly, which could harm business prospects and the Company’s consolidated results of operations.

The trend of increasing costs to provide health care and other benefits to the Company’sour employees and retirees may continue.

The Company providesWe provide health care and other benefits to both employees and retirees. For many years, costsCosts for health care have increased more rapidly than general inflation in the U.S. economy. If this trend in health care costs continues, the Company’sour cost to provide such benefits couldmay increase, adversely impacting the Company’saffecting our profitability. Changes to health care regulations in the U.S. may also increase the Company’sour cost of providing such benefits.

Changes in market conditions or lower returns on assets may increase required pension and other postretirement benefits plan contributions in future periods.

The funded status of the Company’sour pension and other postretirement benefits plans is dependent upon many factors, including returns on invested assets and the level of certain market interest rates. As experienced in prior years, declines in the market value of the securities held by the plans coupled with historically low interest rates have substantially reduced, and in the future could further reduce, the funded status of the plans. These reductions have increased the level of expected required pension and other postretirement benefits plan contributions in future years. Market conditions may lead to changes in the discount rates used to value the year-end benefit obligations of the plans, which couldmay partially mitigate or worsen the effects of lower asset returns. If adverse market conditions were to continue for an extended period of time, the Company’sour costs and required cash contributions associated with pension and other postretirement benefits plans may substantially increase in future periods.

There are risksWe may be more vulnerable to adverse events and trends associated with operations outside the United States.U.S.

The Company hasWe have significant operations outside the United States. RevenuesU.S. Conducting business outside the U.S. subjects us to a number of additional risks and challenges, including:

These factors, individually or in combination, may impair our ability to effectively deliver our products and services, result in unexpected expenses, or cause an unexpected decline in the demand for our products in certain countries or regions. Specifically with respect to our operations in geographic regions outside the United States accounted for approximately 23% of the Company’s consolidated net sales for the year ended December 31, 2014. As a result, the Company isChina, our financial performance may be subject to the following risks, inherentamong others, regulation of foreign investment and business activities by the Chinese government, including recent scrutiny of foreign companies, may limit our ability to expand our business in conductingChina; uncertainties with respect to the legal system in China may limit the legal protections available to us in China; government restrictions on the remittance of currency out of China and the ability of any subsidiary we may establish in China to pay dividends and make other distributions to us; and potential unfavorable tax consequences as a result of our operations in China. Our failure to manage the risks and challenges associated with our international business outside the United States, including the impactand operations may adversely affect our results of economicoperations, financial position and political instability of those countries in which the Company operates. The volatile economic environment has increased the risk of disruption and losses resulting from hyper-inflation, currency devaluation and tax or regulatory changes in certain countries in which the Company has operations.cash flows.

The Company isWe are exposed to significant risks related to potential adverse changes in currency exchange rates.

The Company isWe are exposed to market risks resulting from changes in the currency exchange rates of the currencies in the countries in which it doeswe do business. Although operating in local currencies may limit the impact of currency rate fluctuations on the operating results of the Company’sour non-U.S. subsidiaries, fluctuations in such rates may affect the translation of these results into the Company’sour consolidated financial statements. To the extent borrowings, sales, purchases, revenues and expenses or other transactions are not in the applicable local currency, the Companywe may enter into foreign currency spot and forward contracts to hedge the currency risk. ManagementWe cannot be sure, however, that the Company’sour efforts at hedging will be successful, and such efforts could,may, in certain circumstances, lead to losses.

A decline in expected profitability of the Company or individual reporting units of the Company could result in the impairment of assets, including goodwill, other long-lived assets and deferred tax assets.

The Company holds material amounts of goodwill, other long-lived assets and deferred tax assets on its balance sheet. A decline in expected profitability, particularly if there is a decline in the global economy, could call into question the recoverability of the Company’s related goodwill, other long-lived tangible and intangible assets or deferred tax assets and require the write down or write off these assets or, in the case of deferred tax assets, recognition of a valuation allowance through a charge to income. Such an occurrence has had and could continue to have a material adverse effect on the Company’s consolidatedadversely affect our results of operations, financial position and cash flows.

Risks RelatedCatastrophic events may damage or destroy our factories, distribution centers or other facilities, which may disrupt our business.

Natural disasters, conflicts, wars, terrorist attacks, fires or other catastrophic events may cause damage or disruption to our factories, distribution centers or other facilities, which may adversely affect our ability to manage logistics, cause delays in the Printing and Related Services Industry

The highly competitive market for the Company’sdelivery of products and industry consolidationservices to our clients, and create inefficiencies in our supply chain. An event of this nature may continuealso prevent us from maintaining ongoing operations and performing critical business functions. While we maintain backup systems and operate out of multiple facilities to createreduce the potentially adverse price pressures.

The markets for the majorityeffect of the Company’s product categories are highly fragmented and the Company hasthese types of events, a large number of competitors. Management believescatastrophic event that excess capacityresults in the Company’s markets has caused downward price pressure and that this trend is likelydestruction of any of our major factories, distribution centers or other facilities would affect our ability to continue. In addition, consolidation in the markets inconduct normal business operations, which the Company competes may increase competitive price pressures due to competitors lowering prices as a result of synergies achieved.

The substitution of electronic delivery for printed materials may continue to adversely affect the Company’s businesses.

Electronic deliveryour results of documentsoperations, financial position and data, including the online distribution and hosting of media content, offer alternatives to traditional delivery of printed documents. Consumers continue to accept electronic substitution in directory and statement printing and are replacing traditional reading of print materials with online, hosted media content or e-reading devices. The extent to which consumers will continue to accept electronic delivery is uncertain and it is difficult to predict future rates of acceptance of these alternatives. Electronic delivery has negatively impacted the Company’s products, such as directories, books, forms and statement printing. Digital technologies have also impacted printed magazines, as advertising spending has moved from print to electronic media. To the extent that consumers, customers and regulators continue to accept these alternatives, the Company’s products will be adversely affected.cash flows.

Changes in the rules and regulations to which the Company iswe are subject may increase our costs, which may adversely affect the Company’s costs.Company.

The Company isWe are subject to numerous rules and regulations, including, but not limited to, product safety, environmental and health and welfare benefit regulations. These rules and regulations may be changed by local, state or federal governments in countries in which the Company operates.we operate. Changes in these regulations may result in a significant increase in the Company’sour costs to comply. Compliance with changes in rules and regulations couldmay require increases to the Company’sour workforce, increased cost for compensation and benefits, or investments in new or upgraded equipment. In addition, growing concerns about climate change, including the impact of global warming, may result in new regulations with respect to greenhouse gas emissions (including carbon dioxide) and/or “cap and trade” legislation. Compliance with new rules and regulations or changes in existing rules and regulations couldmay result in additional costs, to the Company.

Declines in general economic conditions or political unrestwhich may adversely impact the Company’s business.

In general, demand for the Company’s productsaffect our results of operations, financial condition and services are highly correlated with general economic conditions. Declines in economic conditions in the U.S., or in other countries in which the Company operates, may adversely impact the Company’s consolidated financial results. Because such declines in demand are difficult to predict, the Company or the industry may have increased excess capacity as a result. An increase in excess capacity may result in declines in prices for the Company’s products and services. The overall business climate may also be impacted by wars or acts of terrorism. Such acts may have sudden and unpredictable adverse impacts on demand for the Company’s products and services.

Changes in the rules and regulations to which customers are subject may impact demand for the Company’s products and services.cash flows.

Many of the Company’s customersour clients are subject to rules and regulations requiring certain printed or electronic communications, governing the form of such communications and protecting the privacy of consumers.customers. For instance, our healthcare and insurance printing businesses are subject to such regulations. Changes in these regulations may impact customers’clients’ business practices and couldmay reduce demand for the Company’s printedour products and related services. Changes in such regulations couldmay eliminate the need for certain types of printed communications altogether or such changes may impact the quantity or format of printedsuch communications.

Changes in postal rates, regulations and delivery structure may adversely impactaffect demand for the Company’sour products and services.

Postal costs are a significant component of many of the Company’s customers’our clients’ cost structuresstructure and postal rate changes can influence the number of pieces and types of mailings that the Company’s customersour clients mail. On December 24, 2013, the PRC approvedApril 10, 2016, the USPS Boardremoved the exigent surcharge, which was approved in December 2013, resulting in a 4.3% decrease in postage rates for all significant mail categories. As allowed under postal law, entitled the 2006 Postal Accountability and Enhancement Act (“PAEA”), the USPS implemented a CPI based postage increase on January 22, 2017 of Governors’ requestapproximately 1.0%. In addition, there is a pending bi-partisan legislative proposal (still in Committee) agreed to on March 16, 2017 that seeks to stabilize the financial condition of the USPS, which among other things calls for an exigentlevying a 2.15% increase on market-dominant mail products. Nevertheless, the Postal Regulatory Commission (“PRC”) on November 6, 2017 adjusted and approved a USPS filing for a CPI based average price increase of 4.3%. This exigent rate increase was implemented in addition to a 1.7% rate increase, equal to the CPI,1.927% for total price increases of 6.0%First-Class Mail, 1.936% for Marketing Mail (aka Standard Mail), on average, across all mail categories,1.924% for Periodicals Mail, 1.960% for Package Services Mail and 1.987% for Special Services which became effective January 26, 2014. On January 15, 2015, the USPS filed for a CPI rate increase of 2.0%, which if approved by the PRC, will be effective April 26, 2015. 21, 2018.

In addition, the USPS has incurred significant financial losses in recent years and may, as a result, implement significant changes to the breadth or frequency of its mail delivery. The USPS is continuing to pursue its previously announced plans to restructure its mail delivery network, including the closure of many post office facilities and a possible suspension of Saturday service. The impact to the Company of the USPS’s restructuring plans, many of which require legislative action, cannot currently be estimated. If implemented, such changes couldwould impact customers’our clients’ ability or willingness to communicate by mail. Declines in print volumes mailed would have an adverse effect on the Company’s business.our results of operations, financial condition and cash flows.

A failure to adapt to technological changes to address the changing demands of customers may adversely impact the Company’s business.

Many of the end markets in which customers of the Company compete are experiencing changes due to technological progressIncreased transportation costs and changes in consumer preferences.  In orderthe relationships with independent shipping companies may have an adverse effect on our business.

We rely upon third party carriers for timely delivery of our product shipments. As a result, we are subject to growcarrier disruptions and remain competitive, the Company will needincreased costs due to continuefactors that are beyond our control, including employee strikes, inclement weather and increased fuel costs. Any failure to adaptdeliver products to future changesour clients in technology, enhance the Company's existing offeringsa timely and introduce new offeringsaccurate manner may damage our reputation and brand and may cause us to address the changing demandslose clients. If our relationship with any of customers.  If the Companythese third party carriers is terminated or impaired, or if any of these third parties are unable to continueship products for us, we would be required to exploit newuse alternative, and existing technologies to distinguish its products and services from thosepossibly more expensive, carriers for the shipment of its competitors or adapt to new distribution methods, the Company’s businessproducts. We may be adversely affected.

Technological developments and changing demands of customers may require additional investment in new equipment and technologies. The Company must monitor changes in its customers’ markets and develop new solutions to meet customers’ needs. The development of such solutions may be costly and there is no assurance that these solutions will be accepted by customers. If the Company is unable to adapt to technological changesengage alternative carriers on a timely basis or on terms favorable to us, if at all, which may have an acceptable cost, customers’ demandadverse effect on our results of operations, financial condition and cash flows.

Furthermore, shipping costs represent a significant operational expense for us. Changes in shipping terms, or the Company’sinability of these third party shippers to perform effectively (whether as a result of mechanical failure, casualty loss, labor stoppage, or any other reason), may have an adverse effect on our results of operations, financial condition and cash flows. Additionally, deterioration of the financial condition of these third-party carriers may have an adverse effect on our shipping costs. Any future increases in shipping rates may have an adverse effect on our results of operations, financial condition and cash flows, particularly if we are unable to pass on these higher costs to our clients.

Undetected errors or failures found in our products and services may result in loss of or delay in market acceptance of our products and services that may seriously harm our business.

Our products and services may contain undetected errors or scalability limitations at any point, but particularly when first introduced or as new versions are released. We frequently release new versions of our products and different aspects of our platform are in various stages of development. Despite testing by us and by current and potential clients, errors may not be found in new products and services until after commencement of commercial availability or use, resulting in a loss of or a delay in market acceptance, damage to our reputation, client dissatisfaction and reductions in net sales and margins, any of which may have an adverse effect on our results of operations, financial condition and cash flows.

We may be unable to hire and retain talented employees, including management.

Our success depends, in part, on our general ability to attract, develop, motivate and retain highly skilled employees. The loss of a significant number of our employees or the inability to attract, hire, develop, train and retain skilled personnel may have an adverse effect on the Company. Various locations may encounter competition with other manufacturers for skilled labor. Many of these competitors may be able to offer significantly greater compensation and benefits or more attractive lifestyle choices than we offer. In addition, many members of our management team have significant industry experience that is valuable to our competitors. We enter into non-solicitation and, as appropriate, non-competition agreements with certain of our executive officers, prohibiting them contractually from soliciting our clients and employees and from leaving and joining a competitor within a specified period. Our inability to hire and retain talented employees or the loss of senior members of our senior management team may result in challenges or temporary difficulty in managing our business, which may adversely affected.affect our results of operations, financial condition or cash flows.

The spinoff transactions could result in significant tax liability.

We obtained an opinion from our outside legal counsel substantially to the effect that, among other things, the distributions in connection with the spinoff transactions qualify as tax-free distributions under the U.S. Internal Revenue Code of 1986, as amended (the “Code”). The opinion will not be binding on the IRS or the courts. Additionally, we have received a private letter ruling from the IRS concluding that certain limited aspects of the distributions will not prevent the distributions from satisfying certain requirements for tax-free treatment under the Code. The opinion and the private letter ruling rely on customary factual representations and assumptions, which if incorrect or inaccurate may jeopardize the ability to rely on such opinion and letter ruling.

If either or both of the distributions do not qualify for tax-free treatment for U.S. federal income tax purposes, then, in general, we would be subject to tax as if we had sold the common stock of such spun-off entity in a taxable sale for its fair value. In that case, we expect that RRD stockholders would be subject to tax as if they had received a distribution equal to the fair value of the spun-off entity’s common stock that was distributed to them, which generally would be treated first as a taxable dividend to the extent of our earnings and profits, then as a non-taxable return of capital to the extent of each holder’s tax basis in its Company common stock, and thereafter as capital gain with respect to any remaining value. We expect that the amount of any such taxes to RRD stockholders and us would be substantial if this were to occur.

ITEM 1B.   UNRESOLVED STAFF COMMENTS

The Company hasWe have no unresolved written comments from the SEC staff regarding itsour periodic or current reports under the Securities Exchange Act of 1934.

The Company’sCompany’s corporate office is located in leased office space in Chicago, Illinois. As of December 31, 2014,2017, the Company leased or owned 355237 U.S. facilities, some of which had multiple buildings and warehouses, and these U.S. facilities encompassed approximately 41.417.8 million square feet. The Company leased or owned 14991 international facilities, some of which had multiple buildings and warehouses, encompassing approximately 10.86.7 million square feet primarily in Asia, Europe, Canada and Latin America, Europe and Asia.America. Of the Company’sCompany’s U.S. and international facilities, approximately 30.59.4 million square feet of space was owned, while the remaining 21.715.1 million square feet of space was leased.

From time to time, the Company’s clients and others file voluntary petitions for reorganization under United States bankruptcy laws. In such cases, certain pre-petition payments received by the Company from these parties could be considered preference items and subject to return. In addition, the Company is party to certain litigation arising in the ordinary course of business. Management believes that the final resolution of these preference items and litigation will not have a material effect on the Company’s consolidated results of operations, financial position or cash flows.

For a discussion of certain litigation involving the Company, see Note 10,8, Commitments and Contingencies, to the Consolidated Financial Statements.

Not applicable.

EXECUTIVEEXECUTIVE OFFICERS OF R.R. DONNELLEY & SONS COMPANY (As of February 1, 2018)

PARTPART II

RR Donnelley’sEffective August 22, 2016, RRD’s common stock is listed and traded on the NASDAQNew York Stock Market.Exchange (NYSE). Prior to that date, the Company’s stock was listed and traded on the Nasdaq Stock Market (“NASDAQ”).

As of February 20, 2015,23, 2018, there were 7,1384,123 stockholders of record of the Company’s common stock. Quarterly closing prices of the Company’s common stock, as reported on the NYSE and the NASDAQ, and dividends paid per share during the years ended December 31, 20142017 and 2013,2016, are contained in the chart below:

The Credit Agreement generally allows annual dividend payments of up to $225.0$60.0 million in aggregate, though additional dividends may be allowed subject to certain conditions. For more detail refer to the Credit Agreement and its amendments filed as exhibits to this Annual Report on Form 10-K.

ISSUER PURCHASES OF EQUITY SECURITIES

There were no repurchases of equity securities during the three months ended December 31, 2014.2017.

EQUITY COMPENSATION PLANS

For information regarding equity compensation plans, see Item 12 of Part III of this Annual Report on Form 10-K.

PEER PERFORMANCE TABLE

The graph below compares five-year returns of the Company’s common stock with those of the S&P 500 IndexSmallCap 600 and a selected peer group of companies.the S&P 1500 Industrials Index. The comparison assumes all dividends have been reinvested, and an initial investment of $100 on December 31, 2009.2012 and that all dividends have been reinvested. The returnsCompany's performance through September 30, 2016 has been adjusted for the spinoffs of each companyLSC and Donnelley Financial which occurred on October 1, 2016 and are reflected in the peer group have been weighted to reflect their market capitalizations.

Becausetable below as a dividend. Additionally, the Company’s services and customers are so diverse, the Company does not believe that any single published industry index is appropriate for comparing stockholder return. Therefore, the peer group used in the performance graph combines two industry groups identified by Value Line Publishing, Inc., the publishing group (including printing companies) and the newspaper group. The Company itself has been excluded, and its contributions toadjusted for the indices cited have been subtracted out. Changes in1-for-3 reverse stock split for the peer group from year to year result from companies being added to or deleted from the Value Line publishing group or newspaper group.

Comparison of Five-Year Cumulative Total Return Among RR Donnelley, S&P 500 Index and Peer Group*Company's stock which also occurred on October 1, 2016.

Below are the specific companies included in the peer group.

__________________

SELECTED FINANCIAL DATA

(in millions, except per share data)

Reflects results of acquired businesses from the relevant acquisition dates.

The following discussion of RR Donnelley’sRRD’s financial condition and results of operations should be read together with the consolidated financial statementsConsolidated Financial Statements and notesNotes to those statements included in Item 15 of Part IV of this Annual Report on Form 10-K.

On October 1, 2016, the Company completed the spinoff transactions of LSC and Donnelley Financial into two independent public companies as described in more detail in Item 1, Business –Spinoff Transactions, of Part I of this Annual Report on Form 10-K. The financial results of Donnelley Financial and LSC for periods prior to the Distribution have been reflected within the disclosures of this Management’s Discussion and Analysis of Financial Condition and Results of Operations as discontinued operations. Additionally, sales from RRD to Donnelley Financial and LSC previously eliminated in consolidation have been recast and are now shown as external sales of RRD within the financial results from continuing operations. See Note 2, Discontinued Operations, to the Consolidated Financial Statements for additional information.

Business

For a description of the Company’s business, segments and product and service offerings, see Item 1, Business, of Part I of this Annual Report on Form 10-K.

The Company separately reports its net sales, related costs of sales and gross profit for its product and service offerings. The Company’s product offerings primarily consist of magazines, catalogs, retail inserts, commercial and digital print, books, financial print, statement printing, direct mail, packaging, labels, office products, packaging, forms, manuals and other related products procured through the Company’sour print management offering and directories. The Company’soffering. Our service offerings primarily consist of logistics, EDGAR-related and eXtensible Business Reporting Language (“XBRL”) financial services, certain business outsourcing services and digital and creative solutions.

Executive OverviewRevision of Net Sales and Cost of Sales

2014 OVERVIEW

Net sales increasedDuring the third quarter of 2017, the Company identified an error in the accounting for certain contracts with an inventory buy-back option within the Asia reporting unit, which is in the International segment. As a result, the error which had no impact on reported gross margins or income from operations and which was determined by 10.7% in 2014 comparedmanagement to 2013, including a $47.8 million, or 0.4%, decrease due to changes in foreign exchange rates. The net sales increase was primarily duebe immaterial to the acquisitionspreviously issued financial statements, has been corrected herein from the amounts previously reported. See Note 1, Basis of Consolidated GraphicsPresentation and Esselte. On a pro forma basis, the Company’s net sales decreased by approximately 0.5% (see Note 2, Acquisitions and DispositionsSummary of Significant Accounting Policies, to the Consolidated Financial Statements). The netStatements for additional information regarding the revision.

Executive Overview

2017 OVERVIEW

Net sales decrease on a pro forma basis was primarily due to price pressures, volume declines in the Publishing and Retail Services segment, the impact of dispositions in the International segment and decreases in pass-through paper sales in the Publishing and Retail Services segment, partially offset by increased volume in the Strategic Services and International segments.

The Company made significant progress in the integration of Consolidated Graphics and Esselte during$106.6 million, or 1.6%, for the year ended December 31, 2014. Restructuring actions2017 versus 2016. The increase in net sales was driven by higher volume in the Asia and sourcing reporting units, partially offset by lower volume in the Variable Print segment and certain other reporting units within the International segment, lower postage pass-through sales in the logistics reporting unit as well as price pressures across all segments.

The Company continues to eliminate duplicate facilitiesstrategically assess opportunities to reduce its cost structure and personnel have been implementedenhance productivity throughout the affected operations. Along withbusiness. During the Company’s continuing focus on productivity improvement, these actions are expected to result in significant cost savings. In addition,year ended December 31, 2017, the Company has benefitedrealized cost savings from an enhanced ability to serve local print marketsprevious restructuring activities, including the reorganization of administrative and broader product and service offeringssupport functions across all segments, as a result of these acquisitions.well as facility consolidations.

Net cash provided by operating activities for the year ended December 31, 20142017 was $722.7$217.9 million as compared to $694.8$127.2 million for the year ended December 31, 2013.2016. The increase in net cash provided byflow from operating activities reflected timing of supplier payments and cash collections, partially offsetwas primarily driven by an increaseimprovements in pension and other postretirement benefits plan contributions and higherworking capital in 2017 versus 2016, lower interest expense, lower spinoff-related transaction payments in 2014 related to 2013 incentive compensation.

In June 2014 the Company communicated to certain former employees the option to receive a lump-sum pension payment or annuity computed in accordance with statutory requirements, with payments beginning in the fourth quarter of 2014. A portion of the eligible participants elected to receive a lump-sum pension payment or annuity2017 versus 2016 and as a result the Company’s pension assets and obligations were remeasured as of the payout dates. As of the remeasurement dates, the reductions in the reported pension obligations for these participants were $404.0 million, compared to payout amounts of approximately $317.7 million. Payout amounts were funded from pension plan assets. The Company recorded  non-cash settlement charges of $95.7 million included in selling, general and administrative expenses in the fourth quarter of 2014 in connection with the settlementlower tax payments. These charges resulted from the recognition in earnings of a portion of the losses recorded in accumulated other comprehensive loss based on the proportion of the obligation settled.

20142017 Financial Performance – Continuing Operations

The changes in the Company’s income (loss) from operations, operating margin, net earningsloss attributable to RR DonnelleyRRD common shareholdersstockholders and net earningsloss attributable to RR DonnelleyRRD common shareholdersstockholders per diluted share for the year ended December 31, 2014,2017, from the year ended December 31, 2013,2016, were due to the following:

20142017 restructuring, impairment and other charges-net: included pre-tax charges - net: included $35.5 million for other estimated charges related to the decision to withdraw from certain multi-employer pension plans serving facilities that are currently operating; $30.3of $23.5 million for employee termination costs; $20.8 million of lease termination and other restructuring costs, including charges related to multi-employer pension plan withdrawal obligations as a result of facility closures; $18.1$21.3 million for the impairment of goodwill in the magazines, catalogsdigital and retail insertscreative solutions reporting unit; $14.0 million for impairment of other long-lived assets, primarily for buildings and machinery and equipment associated with facility closures; $13.6 million for the impairment of acquired customer relationship intangible assets; and $1.4 million for the impairment of acquired tradenames.

2013 restructuring, impairment and other charges—net: included pre-tax charges of $40.4 million for employee termination costs primarily related to the closing of two manufacturing facilitiesunit within the Publishing and RetailStrategic Services segment and one manufacturing facility within the Variable Print segment and the reorganization of certain operations; $38.4million for other estimated charges related to the decision to partially withdraw from certain multi-employer pension plans; $33.8segment; $4.8 million of lease termination and other restructuring costs, of which $14.7costs; $2.3 million related tofor multi-employer pension plan withdrawal charges primarily attributableobligations unrelated to manufacturing facility closures; $17.6$0.2 million forrelated to the impairment of intangible assets in the commercial and digital print reporting unit within the Variable Print segment; and $0.9 million impairment charges of other long-lived assets primarilyrelated to facility closures. See Note 4, Restructuring, Impairment and Other Charges, to the Consolidated Financial Statements for buildingsfurther discussion.

2016 restructuring, impairment and machinery and equipment associated with facility closures andother charges-net: included pre-tax charges of $3.3$527.8 million for the impairment of othergoodwill in the commercial and digital print and statement printing reporting units within the Variable Print segment; $29.7 million related to the impairment of intangible assets in the financialcommercial and digital print reporting unit within the Strategic Services segment.Variable Print segment; $21.9 million for employee termination costs; $3.5 million of lease termination and other restructuring costs; $2.3 million of other charges; and $0.9 million net gain on the sale of previously impaired other long-lived assets. See Note 4, Restructuring, Impairment and Other Charges, to the Consolidated Financial Statements for further discussion.

Spinoff-related transaction expenses: included pre-tax charges of $3.3 million ($2.1 million after-tax) related to consulting and other expenses for the year ended December 31, 2017 associated with the Separation and Distribution. For the year ended December 31, 2016, these pre-tax charges were of $8.0 million ($4.9 million after-tax).

Other postretirement benefit plan obligation (OPEB) curtailment gain: included a pre-tax gain of $19.5 million ($12.0 million after-tax) as a result of curtailments of the Company’s OPEB plans during the year ended December 31, 2016.

Pension settlement charges: included pre-tax charges of $1.6 million ($1.4 million after-tax) for the year ended December 31, 2017 related to lump-sum pension settlement payments. For the year ended December 31, 2016, these pre-tax charges were $21.1 million ($12.9 million after-tax).

Acquisition-related expenses: included pre-tax charges of $8.6$2.7 million ($6.91.8 million after-tax) related to legal, accounting and other expenses for the year ended December 31, 20142016 associated with completed or contemplated acquisitions. For the year ended December 31, 2013, these pre-tax charges were $5.9 million ($5.2 million after-tax).

Pension settlement charges: included pre-tax charges of $95.7 million ($58.4 million after-tax) for the year ended December 31, 2014, related to lump-sum pension settlement payments.

Purchase accounting inventory adjustments: included pre-tax charges of $14.3 million ($9.1 million after-tax) for the year ended December 31, 2014 as a result of inventory purchase accounting adjustments for Consolidated Graphics and Esselte.

Net gain on disposal of businesses: included a pre-tax gain on the sale of Journalism Online of $11.2$11.9 million ($6.9 million after-tax) offset by a pre-tax loss on the sale of GRES of $0.8 million ($0.512.1 million after-tax) for the year ended December 31, 2014. The year ended December 31, 2013 2016, related to the disposal of entities in the International segment.

Loss on debt extinguishments: included a pre-tax net loss on the disposal of the MRM France direct mail business$20.1 million ($12.6 million after-tax), recorded in the InternationalCorporate segment, of $17.9 million ($12.3 million after-tax).

Loss on bankruptcy of subsidiary: included a pre-tax loss of $16.4 million ($14.2 million after-tax) for the year ended December 31, 2014 as a result of the bankruptcy liquidation of RRDA, a subsidiary of RR Donnelley.

Gain on bargain purchase: acquisition of Esselte resulted in a pre-tax gain of $9.5 million ($9.5 million after-tax) for the year ended December 31, 2014.

Venezuela currency remeasurement: currency remeasurement in Venezuela resulted in a pre-tax loss, net of foreign exchange gains, of $18.4 million ($13.8 million after-tax), of which $5.6 million was included in loss attributable to noncontrolling interests for the year ended December 31, 2014. For the year ended December 31, 2013, the currency devaluation in Venezuela resulted in a pre-tax loss of $3.2 million ($2.0 million after-tax), of which $1.0 million was included in income attributable to noncontrolling interests.

Net gain on investments: pre-tax gain of $3.0 million ($1.9 million after-tax) resulting from the sale of the Company’s shares of a previously impaired equity investment offset by a pre-tax loss of $1.3 million ($0.8 million after-tax) from the impairment of an equity investment for the year ended December 31, 2014 and impairment losses on equity investments of $5.5 million ($3.6 million after-tax) for the year ended December 31, 2013.

Loss on debt extinguishment: included a pre-tax loss of $77.1 million ($49.8 million after-tax) for the year ended December 31, 2014, related to the premiums paid in connection with the tender offers, unamortized debt issuance costs and other expenses due to the debt-for-equity exchange of senior notes, the repurchase of $211.1 milliondebentures and senior notes and the amendment and restatement of the 8.25% senior notes due March 15, 2019, $100.0 million of the 7.25% senior notes due May 15, 2018 and $50.0 million of the 7.625% senior notes due June 15, 2020. Forcredit agreement during the year ended December 31, 2013,2017. See Note 11, Debt, to the Consolidated Financial Statements for further discussion.

Net gain on investments: included a pre-tax non-cash net realized gain of $94.0 million ($95.7 million after-tax) resulting from the debt-for-equity exchange of the Company’s retained shares of Donnelley Financial for certain outstanding senior notes and a pre-tax gain of $1.3 million ($0.8 million after-tax) resulting from the sale of certain of the Company’s affordable housing investments, partially offset by a pre-tax loss of $81.9$51.6 million ($53.951.6 million after-tax) was recognized related toresulting from the premiums paid, unamortized debt issuance costs and other expenses due to the repurchase of $273.5 millionsale of the 6.125% senior notes due January 15, 2017, $250.0 million of the 7.25% senior notes due May 15, 2018, $130.2 million of the 8.60% senior notes due August 15, 2016 and $100.0 million of the 5.50% senior notes due May 15, 2015.

Income tax adjustments: forCompany’s retained shares in LSC during the year ended December 31, 2014, income tax adjustments include a tax benefit related to the decline in value of an entity within the Strategic Services segment, of $15.2 million. For the2017. The year ended December 31, 2013, income2016 included a pre-tax loss of $1.4 million ($1.4 million after-tax) resulting from the impairment of an equity investment and a pre-tax gain of $0.1 million ($0.1 million after-tax) resulting from the sale of one of the Company’s affordable housing investments.

Income tax adjustments adjustment: included the recognition of a $58.5$3.0 million and $0.4 million deferred income tax benefit during the years ended December 31, 2017 and 2016, respectively.

Tax expense related to the decline in value and reorganizationenactment of certain entities within the Publishing and Retail Services segment andTax Act: reflects the impact associated with the enactment of the Tax Act which included a $7.2provisional estimate for the one-time transition tax on foreign earnings of $103.5 million, benefit for previously unrecognized tax benefits relatedas well as a provisional adjustment to the expected resolution of certain federalnet deferred tax mattersassets for the year ended December 31, 2013.

Operations: reflected price pressures primarily in the International, Publishing and Retail Services and Variable Print segments, wage and other inflation in the International segment, an increase in depreciation and amortization expense and volume declines in the Publishing and Retail Services and Variable Print segments, partially offset by increases due to the acquisitionsreduced corporate income tax rate of Consolidated Graphics and Esselte, cost control initiatives, lower healthcare costs and increased volume in the Strategic Services segment. See further details in the review of operating results by segment that follows below.$6.8 million.

OUTLOOK

Vision and Strategy

RR Donnelley’s vision is to improve on its existing position as a global provider of integrated communications by providing its customers with the highest quality products and services. The Company offers a wide array of communications products and services, including print, which provide differentiated solutions for its customers. The CompanyRRD works with its customersclients to create, manage, deliver and optimize their multi-channelmultichannel communications strategies. The Company has and will continue to develop and expand its creative and design, content management, digital and print production, supply chain management and distribution services to address its customers’clients’ evolving needs while supporting the strategic objective of becoming a leading global provider of integrated communication services.needs.

The Company’s long-term strategyglobal platform provides differentiated solutions for its clients through its broad range of complementary communications services, strong logistics capabilities, and innovative leadership in both conventional print and digital technologies. This platform has enabled RRD to develop strong client relationships, and the Company is focused on maximizing long-term shareholder value by building onexpanding these relationships to a broader range of its core strategic advantages, which are summarized below, along with more specific areas of focus.

As the largest player in the highly-fragmented market for print and related services, the Company enjoys scale advantages in procurement, production, and distribution. Management believes productivity improvement and cost reduction are critical to the Company’s continued competitiveness, and theofferings. The flexibility of its platformour platforms enhances the value the Company delivers to its customers.clients and the Company intends to expand its capabilities in order to make it easier for clients to manage their full range of communication needs.

Management believes productivity improvement and cost reductions are critical to the Company’s competitiveness. The Company continues to implement strategic initiatives across all platforms to reduce its overall cost structure and enhance productivity, including restructuring, consolidation, reorganization and integration of operations and streamlining of administrative and support activities.

The Company’s global platform provides differentiated solutions for its customers through its broad range of complementary print-related services, strong logistics capabilities, and its innovative leadership in both conventional and digital technologies. The Company is focusing its information technology efforts on projects that facilitate integration and make it easier for customers to manage their full range of communication needs. The Company is also working to broaden customer relationships by more fully integrating its sales efforts.

The Company seeks to deploy its capital using a balanced approach in order to ensure financial flexibility and provide returns to shareholders.stockholders. Priorities for capital deployment, over time, include capital expenditures, targeted acquisitions, principal and interest payments on debt obligations and distributions to shareholders, targeted acquisitions and capital expenditures.stockholders. The Company believes that a strong financial condition is important to customersclients focused on establishing or growing long-term relationships with a stable provider of integrated communications.relationships. The Company also expects to make targeted acquisitions that extend its capabilities, drive cost savings and reduce future capital spending needs. The Company’s acquisitions of Consolidated Graphics and Esselte have and are expected to continue to enhance existing capabilities and improve the ability to serve customers.

The CompanyManagement uses several key indicators to gauge progress toward achieving these objectives. These indicators include organic sales growth, operating margins, cash flow from operations and capital expenditures. The Company targets long-term net sales growth, at or above industry levels, while managing operating margins by achieving productivity improvements that offset the impact of price declines and cost inflation. Cash flows from operations are expectedtargeted to be stable over time, however, cash flows from operationsbut in any given year can be significantly impacted by the timing of non-recurring or infrequent receipts and expenditures, the level of required pension and other postretirement benefits plan contributions, the timing of tax payments and the impact of working capital management efforts.changes.

The Company faces many challenges and risks as a result of competing in highly competitive global markets. Refer to Item 1A, Risk Factors, of Part I of this Annual Report on Form 10-K for further discussion.

20152018 Outlook

In 2015,2018, the Company expects net sales to range from a slight decrease to a slight increase over 2014as compared to 2017 primarily driven by the acquisitions of Consolidated Graphics, Esselte and MultiCorpora, as well as organic growth across most product and service offerings in the Strategic Services, International and Variable Print segments that are expected to more thansegment, partially offset by the anticipated continuing volume declines in the Variable Print segment and price pressures in most parts of the Publishing and Retail Services segment. The sales growth in the International segment will be partially offset by the negative impact of fluctuations in foreign exchange rates.business. The highly competitive market conditions and unused industry capacity will continue to put price pressure on both transactional work and contract renewals across all segments. The Company’s outlook assumes that the U.S. economy and Europeanthe economies of the foreign countries in which we operate will grow modestly in 2015, with a decline in growth expected in developing countries and China.remain stable. The Company will continue to leverage its customerclient relationships in order to provide a larger share of its customers’their communications needs. In addition, the Company expects to continue cost control and productivity initiatives, including selected facility consolidations.

The Company initiated several restructuring actions in 2014during the years ended December 31, 2017, 2016 and 20132015 to further reduce the Company’s overall cost structure. These restructuring actions included the closures of nine manufacturing facilities during 2014 as well as the reorganization and consolidation of certain operations. These and future cost reduction actions are expected to have a positive impact on operating earnings in 20152018 and in future years. In addition, the Company expects to identify other cost reduction opportunities and possibly take further actions in 2015,2018, which may result in significant additional restructuring charges. These restructuring actions will be funded by cash generated from operations and cash on hand or, if necessary, by utilizing the Company’s credit facilities.

PublishingWe expect lower interest expense on lower average borrowings in 2018 and Retail Serviceswe expect the effective tax rate to be higher than the statutory rate primarily due to anticipated limitations on the Company’s domestic interest expense deduction as a result of the Tax Act.

Cash flows from operations in 2018 are expected to range from a slight decrease to a slight increase versus 2017 as lower interest expense and expected targeted working capital improvements will be offset by higher payments for income taxes. The Company expects capital expenditures to be between $100 million to $115 million.

Financial Review

In the financial review that follows, the Company discusses its consolidated results of operations, financial position, cash flows and certain other information. This discussion should be read in conjunction with the Company’s Consolidated Financial Statements and related notes that begin on page F-1.

RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2017 AS COMPARED TO THE YEAR ENDED DECEMBER 31, 2016

The following table shows the results of operations for continuing operations for the years ended December 31, 2017 and 2016, which reflects the results of an acquired business from the relevant acquisition date: