~~Total Leverage Ratio.~~ ~~On a rolling twelve-month basis,~~If there is any amount outstanding on the ~~total leverage ratio, defined as total consolidated debt~~Revolving Credit Facility or Term Loan A, or if any lender has any revolving credit exposure or Term Loan A credit exposure, the Company is required to ~~consolidated EBITDA, shall not exceed 3.75 to 1.00 (for~~maintain the ~~twelve months ended September 30, 2018, the Company's total leverage ratio was 2.39 to 1.00).~~following:


◦	Senior Secured Leverage Ratio. On a rolling twelve-month basis, the senior secured leverage ratio, defined as senior secured net debt to consolidated EBITDA, shall not exceed 3.50 to 1.00 (for the twelve months ended September 30, 2019, the Company’s senior secured leverage ratio was 2.51 to 1.00).


◦	Interest Coverage Ratio. On a rolling twelve-month basis, the interest coverage ratio, defined as consolidated EBITDA to consolidated cash interest expense, shall not be less than 3.00 to 1.00 (for the twelve months ended September 30, 2019, the Company’s interest coverage ratio was 4.85 to 1.00).

~~Senior Secured Leverage Ratio.~~ On a rolling twelve-month basis, the senior secured leverage ratio, defined as senior secured debt to consolidated EBITDA, shall not exceed 3.50 to 1.00 (for the twelve months ended September 30, 2018, the Company's senior secured leverage ratio was 1.85 to 1.00).

~~Minimum Interest Coverage Ratio.~~ On a rolling twelve-month basis, the minimum interest coverage ratio, defined as consolidated EBITDA to consolidated cash interest expense, shall not be less than 3.50 to 1.00 (for the twelve months ended September 30, 2018, the Company's minimum interest coverage ratio was 6.67 to 1.00).

The indenture underlying the ~~Company's~~Company’s $300.0 million aggregate principal amount of ~~unsecured 7.0% senior notes maturing on May 1, 2022, (the "Senior~~Senior Unsecured ~~Notes")~~Notes contains various covenants, including, but not limited to, covenants that, subject to certain exceptions, limit the ~~Company's~~Company’s and its restricted ~~subsidiaries'~~subsidiaries’ ability to incur and/or guarantee additional debt; pay dividends, repurchase stock or make certain other restricted payments; enter into agreements limiting dividends and certain other restricted payments; prepay, redeem or repurchase subordinated debt; grant liens on assets; enter into sale and leaseback transactions; merge, consolidate, transfer or dispose of substantially all of the ~~Company's~~Company’s consolidated assets; sell, transfer or otherwise dispose of property and assets; and engage in transactions with affiliates.

In addition to those covenants, the Senior Secured Credit Facility also includes certain limitations on acquisitions, indebtedness, liens, dividends and repurchases of capital stock, including the following:

If the ~~Company's~~Company’s total leverage ratio is greater than ~~3.00~~2.75 to 1.00 (as defined in the Senior Secured Credit Facility), the Company is prohibited from making greater than $120.0 million of annual dividend payments, capital stock repurchases and certain other payments. If the total leverage ratio is less than ~~3.00~~2.75 to 1.00, there are no such restrictions. As the Company’s total leverage ratio as of September 30, 2019, was 3.18 to 1.00, the limitations described above are currently applicable.

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QUAD/GRAPHICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019

(In millions, except share and per share data and unless otherwise indicated)

If the ~~Company's~~Company’s senior secured leverage ratio is greater than 3.00 to 1.00 or the ~~Company's~~Company’s total leverage ratio is greater than 3.50 to 1.00 (these ratios as defined in the Senior Secured Credit Facility), the Company is prohibited from voluntarily prepaying any of the Senior Unsecured Notes and from voluntarily prepaying any other unsecured or subordinated indebtedness, with certain exceptions (including any mandatory prepayments on the Senior Unsecured Notes or any other unsecured or subordinated debt). If the senior secured leverage ratio is less than 3.00 to 1.00 and the total leverage ratio is less than 3.50 to 1.00, there are no such restrictions. The limitations described above are currently not applicable, as the Company’s senior secured leverage ratio was 2.51 to 1.00 and total leverage ratio was 3.18 to 1.00, as of September 30, 2019.

Note 11. Leases

The Company determines if an arrangement is or contains a lease at contract inception. The Company recognizes a right-of-use (“ROU”) asset and a lease liability at the lease commencement date.

For operating and finance leases, the lease liability is initially measured at the present value of the unpaid lease payments at the lease commencement date, and is subsequently measured at amortized cost using the effective interest method.

Key estimates and judgments include how the Company determines the discount rate, lease term and lease payments.

ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. Generally, the Company cannot determine the implicit interest rate as it does not have access to the lessor’s estimated residual value or the amount of the lessor’s deferred initial direct costs. Therefore, the Company generally uses its incremental borrowing rate as the discount rate for the lease. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms based on the published United States Treasury rates as well as the Company’s credit rating at implementation or at the lease inception date.

The lease term for all of the Company’s leases includes the noncancelable period of the lease, plus or minus any additional periods covered by an option to extend or terminate the lease that the Company is reasonably certain to exercise.

Lease payments included in the lease liability are comprised of fixed payments as well as any exercise price of a Company option to purchase the underlying asset if the Company is reasonably certain to exercise. The Company’s leases do not contain variable lease payments.

ROU assets are initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. For operating leases, the ROU asset is subsequently amortized by the straight-line lease expense adjusted by the lease liability accretion over the lease term.

For finance leases, the ROU asset is subsequently amortized on a straight-line basis from the lease commencement date to the earlier of the end of its useful life or the end of the lease term. Amortization of the ROU asset is recognized and presented separately from interest expense on the lease liability.

The Company’s ROU assets for both operating and finance leases are reviewed for impairment losses on a quarterly basis in line with ASC 360-10 — Property, Plant, and Equipment — Overall. The Company has not recognized any impairment losses to date from continuing operations.

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QUAD/GRAPHICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, ~~2018~~2019

(In millions, except share and per share data and unless otherwise indicated)

The Company also monitors its leases for events or changes in circumstances that require a reassessment of the lease. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the ROU asset.

Operating leases are included in operating lease right-of-use assets—net, current portion of operating lease obligations, and operating lease obligations in the condensed consolidated balance sheets. Finance leases are included in property and equipment—net, current portion of finance lease obligations, and finance lease obligations in the condensed consolidated balance sheets.

The Company has elected not to recognize ROU assets and lease liabilities for short-term leases that have an original lease term of twelve months or less. Therefore, the Company recognizes the lease payments associated with these short-term leases as an expense over the lease term in the condensed consolidated statement of operations.

Adoption of ASU 2016-02 — Transition Approach

The Company adopted ASU 2016-02 as of January 1, 2019 using the additional optional transition method pursuant to Accounting Standards Update 2018-11 “Leases (Topic 842): Targeted Improvements”, meaning that restatement of prior period consolidated financial statements or presentation of comparative disclosures is not necessary. During adoption, the Company elected the following practical expedients allowed:

The Company elected the practical expedient package and therefore did not reassess for any existing leases:


◦	whether contracts are or contain leases;


◦	the lease classification for any existing leases; and


◦	any initial direct costs.

The Company elected the practical expedient related to land easements, allowing to carry forward the accounting treatment for land easements on existing agreements.

The Company used “hindsight” judgments that impact the lease term.

The Company elected to combine lease and non-lease components into one lease component for select underlying lease asset categories. Real estate leases are accounted for separately while all other leases, primarily equipment, leases with separate lease and non-lease components are accounted for as a single lease component.

Adoption of the new standard resulted in the recording of operating lease right-of-use assets and operating lease obligations of $130.8 million and $132.4 million, respectively, as of January 1, 2019. The transition adjustment included right-of-use assets and operating lease obligations attributable to the Book business of $0.6 million and $0.6 million, respectively. The transition had no impact to the condensed consolidated statement of operations.

Leases Financial Information

The Company enters into various lease agreements for real estate, such as office space and manufacturing facilities, as well as equipment leases, including press, finishing and transportation equipment. Many of these leases provide the Company with options to renew, terminate, or in the case of equipment leases, purchase the related equipment at the termination value, as defined, and at various early buyout dates during the term of the lease. In general, the Company has determined these options were not reasonably certain to be exercised, and therefore are not included in the determination of the lease term.

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QUAD/GRAPHICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019

(In millions, except share and per share data and unless otherwise indicated)

The following summarizes certain lease information for the three and nine months ended September 30, 2019:



	Three Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2019
Lease cost
Finance lease cost:
Amortization of right-of-use assets	$	1.4		$	3.4
Interest on lease liabilities	0.2			0.6
Operating lease cost	11.9			33.3
Short-term lease cost	—			0.3
Sublease income	(0.7		)	(2.0		)
Total lease cost	$	12.8		$	35.6

				Nine Months Ended
				September 30, 2019
Other information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases				$	—
Operating cash flows from operating leases				33.6
Financing cash flows from finance leases				4.5
Right-of-use assets obtained in exchange for new finance lease liabilities				7.8
Right-of-use assets obtained in exchange for new operating lease liabilities				17.9
Weighted-average remaining lease term — finance leases				2.1 years
Weighted-average remaining lease term — operating leases				5.1 years
Weighted-average discount rate — finance leases				6.4		%
Weighted-average discount rate — operating leases				6.7		%

Future maturities of lease liabilities at September 30, 2019 were as follows:



	Future Maturities of Operating Leases			Future Maturities of Finance Leases
Remainder of 2019	$	10.9		$	2.8
2020	38.0			6.9
2021	26.4			2.8
2022	19.7			1.5
2023	15.4			0.2
2024 and thereafter	33.6			—
Total minimum payments	144.0			14.2
Less: present value discount	(22.9		)	(0.9		)
Lease liability	$	121.1		$	13.3

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QUAD/GRAPHICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019

(In millions, except share and per share data and unless otherwise indicated)

The following tables summarize certain lease information from continuing operations for the year ended December 31, 2018, prior to the implementation of the guidance under ASC 842.

The components of finance lease assets at December 31, 2018, were as follows:



	2018
Leased equipment—gross	$	21.7
Less: accumulated depreciation	(12.0		)
Leased equipment—net	$	9.7

The future maturities of finance leases at December 31, 2018, were as follows:



	Future Maturities of Finance Leases
2019	$	4.3
2020	3.3
2021	2.5
2022	1.3
2023	0.2
2024 and thereafter	—
Total minimum payments	11.6
Less: amounts representing interest	(1.3		)
Present value of minimum payments	10.3
Less: current portion	(3.6		)
Long-term finance lease obligations	$	6.7

The Company has various operating lease agreements. Future minimum rental commitments under non-cancelable leases at December 31, 2018, were as follows:



	Future Minimum Rental Commitments
2019	$	37.9
2020	33.3
2021	23.9
2022	17.8
2023	13.7
2024 and thereafter	31.1
Total	$	157.7

Note ~~10.~~12. Income Taxes

The Company records income tax expense (benefit) ~~expense~~ on an interim basis. The estimated ~~annual~~ effective income tax rate is adjusted quarterly, and items discrete to a specific quarter are reflected in income tax expense (benefit) ~~expense~~ for that interim period. ~~For 2018, the estimated annual effective income tax rate incorporates the relevant provisions of the~~ Tax ~~Cuts and Jobs Act of 2017 (the "Tax Act"), including, but not limited~~allocable to continuing operations is calculated without regard to the ~~21% United States federal corporate rate.~~tax effects of income and losses allocable to discontinued operations under the incremental approach.

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QUAD/GRAPHICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019

(In millions, except share and per share data and unless otherwise indicated)

The effective income tax rate for the interim period can differ from the statutory tax rate, as it reflects discrete items, such as changes in the liability for unrecognized tax benefits related to the establishment and settlement of income tax exposures and benefits related to share-based compensation. ~~During~~

The Company currently has various open tax audits in multiple jurisdictions. From time to time, the ~~nine months ended~~Company will receive tax assessments as part of the process. Based on the information available as of September 30, ~~2018,~~2019, the Company has recorded ~~an income tax benefit~~its best estimate of ~~$9.9 million~~the potential settlements of these audits. Actual results could differ from ~~a decrease in~~ the ~~liability for unrecognized tax benefits.~~estimated amounts.

The ~~Company's~~Company’s liability for unrecognized tax benefits as of September 30, ~~2018,~~2019, was ~~$14.2~~$10.5 million. The Company anticipates a ~~$4.3~~$1.7 million decrease to its liability for unrecognized tax benefits within the next twelve months due to the resolution of income tax audits or statute expirations.

The SEC staff issued Staff Accounting Bulletin No. 118 ("SAB 118"), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date of December 22, 2017, for companies to complete the accounting for the enactment of the Tax Act under Accounting Standards Codification 740 ("ASC 740").

The Company was able to reasonably estimate certain effects of the Tax Act as of December 31, 2017, and has not changed the preliminary estimates as of September 30, 2018. During the nine months ended September 30, 2018, the Internal Revenue Service issued new guidance affecting the computation of the tax effects of global intangible low taxed income ("GILTI"). Due to the complexity of the new GILTI tax rules, the Company continues to evaluate this provision of the Tax Act and the application of ASC 740. In accordance with GAAP, the Company is allowed to make an accounting policy choice of either (1) treating taxes due on future United States inclusions beginning January 1, 2018, in taxable income related to GILTI as current-period expense when incurred (the "period cost method") or (2) factoring in such amounts into the Company's measurement of its deferred taxes (the "deferred method") as of December 31, 2017. The Company's selection of an accounting policy with respect to the new GILTI tax rules is dependent on additional analysis and potential future modifications to existing structures, which are not currently known. The Company has not made a policy decision regarding whether to record deferred taxes on GILTI. The Company will continue to analyze the full effects of the Tax Act on the condensed consolidated financial statements.

Note ~~11.~~13. Financial Instruments and Fair Value Measurements

Certain assets and liabilities are required to be recorded at fair value on a recurring basis, while other assets and liabilities are recorded at fair value on a nonrecurring basis, generally as a result of acquisitions or impairment charges. Fair value is determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. GAAP also classifies the inputs used to measure fair value into the following hierarchy:


Level 1:	Quoted prices in active markets for identical assets or liabilities.


Level 2:	Quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.


Level 3:	Unobservable inputs for the asset or liability. There were no Level 3 recurring measurements of assets or liabilities as of September 30, ~~2018.~~2019.

~~Table of Contents~~

~~QUAD/GRAPHICS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018~~

~~(In millions, except share and per share data and unless otherwise indicated)~~

Interest Rate ~~Swap~~Swaps

The Company ~~entered into a $250.0 million~~currently holds two interest rate swap ~~on February 7, 2017. The swap was~~contracts designated as a cash flow ~~hedge~~hedges, as ~~its~~the purpose is to reduce the variability of cash flows from interest payments related to a portion of ~~Quad/Graphics'~~Quad’s variable-rate debt. The ~~swap~~swaps effectively ~~converts $250.0 million~~convert the notional value of the ~~Company's variable-rate~~Company’s variable rate debt based on one-month LIBOR to a fixed rate, ~~of 3.64% (including~~including a ~~1.75%~~ spread on underlying debt, ~~at September 30, 2018). The~~and a monthly reset in the variable interest rate. The key terms of the interest rate ~~resets monthly and the swap is a five year arrangement, maturing on February 28, 2022.~~swaps are as follows:



	March 19, 2019 Interest Rate Swap	February 7, 2017 Interest Rate Swap
Effective date	March 29, 2019	February 28, 2017
Termination date	March 28, 2024	February 28, 2022
Term	5 years	5 years
Notional amount	$130.0	$250.0
Fixed swap rate	2.43%	1.89%

The Company classifies the interest rate ~~swap~~swaps as Level 2 because the inputs into the valuation model are observable or can be derived or corroborated utilizing observable market data at commonly quoted intervals. The fair value of the interest rate ~~swap was~~swaps classified as Level 2 as of September 30, 2019, and December 31, 2018, were as follows:

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QUAD/GRAPHICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019

(In millions, except share and per share data and unless otherwise indicated)



	Balance Sheet Location	September 30, 2019			December 31, 2018
Interest rate swap assets	Prepaid expenses and other current assets	$	—		$	4.3
Interest rate swap liabilities	Other long-term liabilities	$	(8.3	)	$	—

The interest rate swaps were highly effective as of September 30, 2018; therefore, the increase in fair value of $1.0 million and $6.1 million during the three and nine months ended September 30, 2018, respectively; and the increase in fair value of $0.3 million and the decrease in the fair value of $0.4 million during the three and nine months ended September 30, 2017, respectively, are shown as a change in other comprehensive income (loss) in the condensed consolidated statements of comprehensive income. No2019. NaN amount of ineffectiveness has been recorded into earnings related to ~~this~~these cash flow hedge. The fair value of the interest rate swap was an asset of $8.2 million as of September 30, 2018, and an asset of $2.1 million as of December 31, 2017, and was recorded in prepaid expenses and other current assets in the condensed consolidated balance sheets.

~~The company received $0.1 million of interest income associated with the interest rate swap during the three months ended September 30, 2018.~~hedges. The cash flows associated with the interest rate swap had no impact on interest expense during the nine months ended September 30, 2018, due to the net impact of interest paid and received during the period. The net payment of interest under the terms of the interest rate swap totaled an expense of $0.4 million and $1.2 million during the three and nine months ended September 30, 2017, respectively. The paymentsswaps have been recognized as an adjustment to interest expense in the condensed consolidated statements of ~~operations.~~operations, and the changes in the fair value of the interest rate swaps have been included in other comprehensive loss in the condensed consolidated statements of comprehensive income (loss):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net interest paid (received)	$	(0.2	)	$	(0.1	)	$	(1.0	)	$	—
Gain (loss) recognized in other comprehensive income (loss)	(2.0		)	1.0			$	(12.6	)	$	6.1

Foreign Exchange Contracts

The Company has operations in countries that have transactions outside their functional currencies and periodically enters into foreign exchange contracts. These contracts are used to hedge the net exposures of changes in foreign currency exchange rates and are designated as either cash flow hedges or fair value hedges. Gains or losses on net foreign currency hedges are intended to offset losses or gains on the underlying net exposures in an effort to reduce the earnings volatility resulting from fluctuating foreign currency exchange rates. There were no0 open foreign currency exchange contracts as of September 30, ~~2018.~~2019.

Natural Gas Forward Contracts

The Company periodically enters into natural gas forward purchase contracts to hedge against increases in commodity costs. The ~~Company's~~Company’s commodity contracts qualified for the exception related to normal purchases and sales during the three and nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, as the Company takes delivery in the normal course of business.

Debt

The Company measures fair value on its debt instruments using interest rates available to the Company for borrowings with similar terms and maturities and is categorized as Level 2. See Note 9,10, “Debt,” for the fair value of the Company’s debt as of September 30, ~~2018.~~2019.

~~Table of Contents~~

~~QUAD/GRAPHICS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018~~

~~(In millions, except share and per share data and unless otherwise indicated)~~

Nonrecurring Fair Value Measurements

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company is required to record certain assets and liabilities at fair value on a nonrecurring basis, generally as a result of acquisitions or the remeasurement of assets resulting in impairment charges. See Note 3, ~~"Acquisitions~~“Acquisitions and Strategic Investments,"” for further discussion on acquisitions. See Note 4, ~~"Restructuring,~~“Discontinued Operations”; Note 5, “Restructuring, Impairment and Transaction-Related ~~Charges"~~Charges”; Note 6, “Goodwill and Other Intangible Assets”; and Note ~~7, "Property,~~8, “Property, Plant and ~~Equipment"~~Equipment” for further discussion on impairment charges recorded as a result of the remeasurement of certain long-lived assets.

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QUAD/GRAPHICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019

(In millions, except share and per share data and unless otherwise indicated)

Other Estimated Fair Value Measurements

The Company records the fair value of its forward contracts and pension plan assets on a recurring basis. The fair value of cash and cash equivalents, receivables, inventories, accounts payable and accrued liabilities approximate their carrying values as of September 30, ~~2018,~~2019, and December 31, ~~2017.~~2018.

Note ~~12.~~14. Accrued Liabilities and Other Long-Term Liabilities

The components of accrued and other long-term liabilities as of September 30, ~~2018,~~2019, and December 31, ~~2017,~~2018, were as follows:



	September 30, 2019						December 31, 2018
	Accrued Liabilities		Other Long-Term Liabilities		Total		Accrued Liabilities		Other Long-Term Liabilities		Total
Employee-related liabilities ⁽¹⁾	$	116.7	$	57.7	$	174.4	$	122.4	$	62.8	$	185.2
Single employer pension plan obligations	1.7		72.1		73.8		1.7		80.9		82.6
Multiemployer pension plans – withdrawal liability	8.8		37.0		45.8		8.4		42.5		50.9
Tax-related liabilities	29.2		4.1		33.3		29.5		8.1		37.6
Restructuring liabilities	22.5		4.8		27.3		23.1		2.9		26.0
Interest and rent liabilities	9.8		0.3		10.1		6.0		1.4		7.4
Other	88.6		31.2		119.8		94.0		33.2		127.2
Total	$	277.3	$	207.2	$	484.5	$	285.1	$	231.8	$	516.9

September 30, 2018 December 31, 2017
Accrued Liabilities
Other
Long-Term Liabilities
Total Accrued Liabilities
Other
Long-Term Liabilities
Total
Employee-related liabilities ⁽¹⁾
$ 128.3
$ 59.6
$ 187.9
$ 152.1
$ 67.4
$ 219.5
Single employer pension plan obligations 1.7
66.2
67.9
1.7
82.4
84.1
Multiemployer pension plans – withdrawal liability 6.9
13.5
20.4
8.8
19.4
28.2
Tax-related liabilities 24.9
8.2
33.1
29.0
18.2
47.2
Restructuring liabilities 11.3
3.0
14.3
24.6
4.2
28.8
Interest and rent liabilities 11.7
2.3
14.0
6.7
1.9
8.6
Other 97.9
34.6
132.5
93.8
31.5
125.3
Total $ 282.7
$ 187.4
$ 470.1
$ 316.7
$ 225.0
$ 541.7


⁽¹⁾	Employee-related liabilities consist primarily of payroll, bonus, vacation, health and ~~workers'~~workers’ compensation.

Note ~~13.~~15. Employee Retirement Plans

Defined Contribution Plans

The Quad/Graphics, Inc. Employee Stock Ownership Plan ~~("ESOP"~~(“ESOP”) holds profit sharing contributions of Company stock, which are made at the discretion of the ~~Company's~~Company’s Board of Directors. The Company made a non-cash contribution of 1,006,061 shares of Company class A common stock at a stock price of $22.18 per share for a total value of $22.3 million to the ESOP during the nine months ended September 30, 2018. There were no0 profit sharing contributions during the three months ended September 30, 2018, or during the three and nine months ended September 30, ~~2017.~~2019.

~~Table of Contents~~

~~QUAD/GRAPHICS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018~~

~~(In millions, except share and per share data and unless otherwise indicated)~~

Pension Plans

The Company assumed various funded and unfunded frozen pension plans for a portion of its full-time employees in the United States as part of the acquisition of World Color Press Inc. ("(“World Color ~~Press"~~Press”) in 2010. Benefits are generally based upon years of service and compensation. These plans are funded in conformity with the applicable government regulations. The Company funds at least the minimum amount required for all qualified plans using actuarial cost methods and assumptions acceptable under government regulations.

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QUAD/GRAPHICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019

(In millions, except share and per share data and unless otherwise indicated)

The components of net pension income for the three and nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, were as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Interest cost	$	(4.4	)	$	(4.0	)	$	(13.2	)	$	(12.0	)
Expected return on plan assets	5.9			7.1			17.7			21.3
Net pension income	$	1.5		$	3.1		$	4.5		$	9.3

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Interest cost $ (4.0 ) $ (4.3 ) $ (12.0 ) $ (12.9 )
Expected return on plan assets 7.1
6.9
21.3
20.7
Net pension income $ 3.1
$ 2.6
$ 9.3
$ 7.8

The Company made $0.8 million in benefit payments to its non-qualified defined benefit pension plans and made ~~$6.0~~$3.5 million in contributions to its qualified defined benefit pension plans during the nine months ended September 30, ~~2018.~~2019.

Multiemployer Pension Plans ~~("MEPPs"~~(“MEPPs”)

The Company has withdrawn from all significant ~~multiemployer pension plans~~MEPPs and replaced these union sponsored ~~"promise~~“promise to pay in the ~~future"~~future” defined benefit plans with a Company sponsored ~~"pay~~“pay as you ~~go"~~go” defined contribution plan. The ~~two~~2 MEPPs, the Graphic Communications International Union – Employer Retirement Fund ~~("GCIU"~~(“GCIU”) and the Graphic Communications Conference of the International Brotherhood of Teamsters National Pension Fund ~~("GCC"~~(“GCC”), are significantly underfunded, and require the Company to pay a withdrawal liability to fund its pro rata share of the underfunding as of the plan year the full withdrawal was completed. As a result of the decision to withdraw, the Company accrued ~~the estimated~~a withdrawal liability based on information provided by each ~~plan's~~plan’s trustee.

The Company has received a notice of withdrawal and demand for payment letter from the GCIU, which is in excess of the reserve established by the Company for the GCIU withdrawal. The Company is currently in litigation with the GCIU trustees to determine the amount and duration of the withdrawal payments for the GCIU. Arbitration proceedings with the GCIU have been completed, both sides have appealed the arbitrator's ruling, and litigation in Federal court has commenced. During April 2017, a Federal district court overturned the arbitration decision in one of the pending disputes in this matter. The Company has appealed the district court's ruling to the Ninth Circuit.

~~During the fourth quarter of 2016, the Company and the GCC reached a settlement agreement for all claims, with scheduled payments until February 2024.~~

The Company made payments totaling $10.5 million and $20.4 million for the nine months ended September 30, 2018 and 2017, respectively. The payments are required by the Employee Retirement Income Security Act, although such payments to the GCIU do not waive the Company's rights to object to the withdrawal liabilities submitted by the GCIU plan administrator. The Company has reserved ~~$20.4~~$45.8 million ~~as its estimate of~~for the total MEPPs withdrawal liability as of September 30, ~~2018,~~2019, of which ~~$13.5~~$37.0 million was recorded in other long-term liabilities and ~~$6.9~~$8.8 million was recorded in accrued liabilities in the condensed consolidated balance sheets. The ~~withdrawal liability reserved by the~~ Company is ~~within the range of the Company's estimated potential outcomes. This estimate may increase or decrease depending on the final conclusion of the litigation with~~scheduled to make payments to the GCIU ~~trustees.~~and GCC until April 2032 and February 2024, respectively. The Company made payments totaling $7.8 million and $10.5 million for the nine months ended September 30, 2019 and 2018, respectively.

~~Table of Contents~~

~~QUAD/GRAPHICS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018~~

~~(In millions, except share and per share data and unless otherwise indicated)~~

Note ~~14.~~16. Earnings (Loss) Per Share Attributable to ~~Quad/Graphics~~Quad Common Shareholders

Basic earnings (loss) per share attributable to ~~Quad/Graphics~~Quad common shareholders is computed as net earnings (loss) attributable to ~~Quad/Graphics~~Quad common shareholders divided by the basic weighted average common shares outstanding. The calculation of diluted earnings (loss) per share attributable to ~~Quad/Graphics~~Quad common shareholders includes the effect of any dilutive equity incentive instruments. The Company uses the treasury stock method to calculate the effect of outstanding dilutive equity incentive instruments, which requires the Company to compute total proceeds as the sum of the amount the employee must pay upon exercise of the award and the amount of unearned stock-based compensation costs attributable to future services.

Equity incentive instruments for which the total employee proceeds from exercise exceed the average fair value of the same equity incentive instrument over the period have an anti-dilutive effect on earnings per share during periods with net earnings from continuing operations, and accordingly, the Company excludes them from the calculation. Due to the net loss incurred during the three and nine months ended September 30, 2019, the assumed exercise of all equity incentive instruments was anti-dilutive and therefore, not included in the diluted loss per share calculation. Anti-dilutive equity instruments excluded from the computation of diluted net earnings per share were 0.3 million and 0.5 million class A common shares for the three and nine months ended September 30, 2018, ~~respectively, and 0.7 million and 0.8 million class A common shares for the three and nine months ended September 30, 2017,~~ respectively.

Reconciliations of the numerator and the denominator of the basic and diluted per share computations for the Company's common stock, for the three and nine months ended September 30, 2018 and 2017, are summarized as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Numerator
Net earnings attributable to Quad/Graphics common shareholders $ 23.4
$ 19.8
$ 29.3
$ 51.9

Denominator
Basic weighted average number of common shares outstanding for all classes of common shares 49.3
49.5
50.0
49.4
Plus: effect of dilutive equity incentive instruments 1.8
2.0
1.8
2.2
Diluted weighted average number of common shares outstanding for all classes of common shares 51.1
51.5
51.8
51.6

Earnings per share attributable to Quad/Graphics common shareholders
Basic $ 0.47
$ 0.40
$ 0.59
$ 1.05
Diluted $ 0.46
$ 0.38
$ 0.57
$ 1.01

Cash dividends paid per common share for all classes of common shares $ 0.30
$ 0.30
$ 0.90
$ 0.90

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QUAD/GRAPHICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, ~~2018~~2019

(In millions, except share and per share data and unless otherwise indicated)

Reconciliations of the numerator and the denominator of the basic and diluted per share computations for the Company’s common stock, including the impact of discontinued operations, for the three and nine months ended September 30, 2019 and 2018, are summarized as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Numerator
Net earnings (loss) from continuing operations	$	(47.0	)	$	27.5		$	(62.8	)	$	41.1
Less: net earnings (loss) attributable to noncontrolling interests	0.1			(0.9		)	(0.1		)	(0.8		)
Net earnings (loss) from continuing operations attributable to Quad common shareholders	(47.1		)	28.4			(62.7		)	41.9

Loss from discontinued operations, net of tax	(79.4		)	(5.0		)	(101.1		)	(12.6		)

Net earnings (loss) attributable to Quad common shareholders	$	(126.5	)	$	23.4		$	(163.8	)	$	29.3

Denominator
Basic weighted average number of common shares outstanding for all classes of common shares	50.1			49.3			50.0			50.0
Plus: effect of dilutive equity incentive instruments	—			1.8			—			1.8
Diluted weighted average number of common shares outstanding for all classes of common shares	50.1			51.1			50.0			51.8

Earnings (loss) per share attributable to Quad common shareholders
Basic:
Continuing operations	$	(0.94	)	$	0.57		$	(1.26	)	$	0.84
Discontinued operations	(1.58		)	(0.10		)	(2.02		)	(0.25		)
Basic earnings (loss) per share attributable to Quad common shareholders	$	(2.52	)	$	0.47		$	(3.28	)	$	0.59

Diluted:
Continuing operations	$	(0.94	)	$	0.56		$	(1.26	)	$	0.81
Discontinued operations	(1.58		)	(0.10		)	(2.02		)	(0.24		)
Diluted earnings (loss) per share attributable to Quad common shareholders	$	(2.52	)	$	0.46		$	(3.28	)	$	0.57

Cash dividends paid per common share for all classes of common shares	$	0.30		$	0.30		$	0.90		$	0.90

Table of Contents

QUAD/GRAPHICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019

(In millions, except share and per share data and unless otherwise indicated)

Note ~~15.~~17. Equity Incentive Programs

The shareholders of the Company approved the Quad/Graphics, Inc. 2010 Omnibus Incentive Plan ("(“Omnibus ~~Plan"~~Plan”) for two complementary purposes: (1) to attract and retain outstanding individuals to serve as directors, officers and employees; and (2) to increase shareholder value. ~~The Omnibus Plan provides~~In May 2019, an additional 1,800,000 shares were approved for issuance, providing for an aggregate ~~10,871,652~~12,671,652 shares of class A common stock reserved for issuance under the Omnibus Plan. Awards under the Omnibus Plan may consist of incentive awards, stock options, stock appreciation rights, performance shares, performance share units, shares of class A common stock, restricted stock (“RS”), restricted stock units (“RSU”), deferred stock units (“DSU”) or other stock-based awards as determined by the ~~Company's~~Company’s Board of Directors. Each stock option granted has an exercise price of no less than 100% of the fair market value of the class A common stock on the date of grant. AsThere were 1,629,294 shares of ~~September 30, 2018, there were 1,563,344 shares available~~class A common stock reserved for issuance under the Omnibus ~~Plan.~~Plan as of September 30, 2019. Authorized unissued shares or treasury shares may be used for issuance under the ~~Company's~~Company’s equity incentive programs. The Company plans to either use treasury shares of its class A common stock or issue shares of class A common stock to meet the stock requirements of its awards in the future.

The Company recognizes compensation expense based on estimated grant date fair values for all share-based awards issued to employees and non-employee directors, including stock options, performance shares, performance share units, ~~restricted stock, restricted stock units~~RS awards, RSU awards and ~~deferred stock units.~~DSU awards. The Company recognizes these compensation costs for only those awards expected to vest, on a straight-line basis over the requisite three to four year service period of the awards, except deferred stock units, which are fully vested and expensed on the grant date. The Company estimated the number of awards expected to vest based, in part, on historical forfeiture rates and also based on ~~management's~~management’s expectations of employee turnover within the specific employee groups receiving each type of award. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods, if actual forfeitures differ from those estimates.

Equity Incentive Compensation Expense

The total compensation expense recognized related to all equity incentive programs was $3.9 million and $11.6 million for the three and nine months ended September 30, 2019, respectively, and $3.2 million and $12.3 million for the three and nine months ended September 30, 2018, ~~respectively, and $3.3 million and $13.0 million for the three and nine months ended September 30, 2017,~~ respectively, and was recorded primarily in selling, general and administrative expenses in the condensed consolidated statements of operations. Total stock-based compensation expense included expense of $0.4 million and income of $0.2 million recognized for liability awards that are remeasured on a quarterly basis during the three and nine months ended September 30, 2019, respectively. Total future compensation expense related to all equity incentive programs granted as of September 30, ~~2018,~~2019, was estimated to be ~~$19.3~~$19.2 million, which consists entirely of expense for ~~restricted stock ("RS")~~RS and ~~restricted stock unit ("RSU")~~RSU awards. Estimated future compensation expense is ~~$3.3~~$3.5 million for the remainder of ~~2018, $10.0~~2019, $9.7 million for ~~2019,~~2020, $5.3 million for ~~2020~~2021 and $0.7 million for ~~2021.~~2022.

Stock Options

Options vest over four years, with no0 vesting in the first year and one-third vesting upon the second, third and fourth anniversary dates. As defined in the individual grant agreements, acceleration of vesting may occur under a change in control, death, disability or normal retirement of the grantee. Options expire no later than the tenth anniversary of the grant date, 24 months after termination for death, 36 months after termination for normal retirement or disability and 90 days after termination of employment for any other reason. Options are not credited with dividend declarations, except for the November 18, 2011 grants. Stock options are only to be granted to employees.

There were no0 stock options granted, and no0 compensation expense was recognized related to stock options for the three and nine months ended September 30, ~~2018~~2019 and ~~2017.~~2018. There is no0 future compensation expense for stock options as of September 30, ~~2018.~~2019.

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QUAD/GRAPHICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, ~~2018~~2019

(In millions, except share and per share data and unless otherwise indicated)

The following table is a summary of the stock option activity for the nine months ended September 30, ~~2018:~~2019:



	Shares Under Option		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (millions)
Outstanding at December 31, 2018	942,315		$	24.31	1.8	$	—
Granted	—		—
Exercised	—		—
Canceled/forfeited/expired	(147,292	)	18.64
Outstanding and exercisable at September 30, 2019	795,023		$	25.36	1.3	$	—

Shares Under
Option

Weighted Average
Exercise
Price

Weighted Average
Remaining
Contractual Term
(years)

Aggregate
Intrinsic Value
(millions)
Outstanding at December 31, 2017 1,532,033
$ 23.60
2.3 $ 6.8
Granted —
—

Exercised (280,161 ) 14.80

Canceled/forfeited/expired (307,057 ) 29.54

Outstanding and exercisable at September 30, 2018 944,815
$ 24.29
2.0 $ 3.5

The intrinsic value of options outstanding and exercisable at September 30, ~~2018,~~2019, and December 31, ~~2017,~~2018, was based on the fair value of the stock price. All outstanding options are vested as of September 30, ~~2018.~~2019.

There were 0 stock options exercised during the three and nine months ended September 30, 2019. The following table is a summary of the stock option exercise activity for the three and nine months ended September 30, ~~2018 and 2017:~~2018:



	Three Months Ended September 30,		Nine Months Ended September 30,
	2018		2018
Total intrinsic value of stock options exercised	$	0.1	$	3.7
Proceeds from stock options exercised	0.1		4.1

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Total intrinsic value of stock options exercised $ 0.1
$ —
$ 3.7
$ 1.7
Proceeds from stock options exercised 0.1
—
4.1
2.4

Restricted Stock and Restricted Stock Units

Restricted stock and restricted stock unit awards consist of shares or the rights to shares of the ~~Company's~~Company’s class A common stock which are awarded to employees of the Company. The awards are restricted such that they are subject to substantial risk of forfeiture and to restrictions on their sale or other transfer by the employee. RSU awards are typically granted to eligible employees outside of the United States. As defined in the individual grant agreements, acceleration of vesting may occur under a change in control, death, disability or normal retirement of the grantee. Grantees receiving RS ~~grants~~awards are able to exercise full voting rights and receive full credit for dividends during the vesting period. All such dividends will be paid to the RS grantee within 45 days of full vesting. Grantees receiving ~~RSUs~~RSU awards are not entitled to vote, but do earn dividends. Upon vesting, ~~RSUs~~RSU awards will be settled either through cash payment equal to the fair market value of the ~~RSUs~~RSU awards on the vesting date or through issuance of the ~~Company's~~Company’s class A common stock.

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QUAD/GRAPHICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, ~~2018~~2019

(In millions, except share and per share data and unless otherwise indicated)

The following table is a summary of RS and RSU award activity for the nine months ended September 30, ~~2018:~~2019:



	Restricted Stock					Restricted Stock Units
	Shares		Weighted- Average Grant Date Fair Value Per Share		Weighted- Average Remaining Contractual Term (years)	Units		Weighted- Average Grant Date Fair Value Per Share		Weighted- Average Remaining Contractual Term (years)
Nonvested at December 31, 2018	2,335,916		$	17.36	1.0	107,092		$	16.70	0.8
Granted	1,503,344		12.31			186,807		12.33
Vested	(1,118,071	)	9.46			(58,187	)	9.51
Forfeited	(38,758	)	22.53			(5,091	)	26.88
Nonvested at September 30, 2019	2,682,431		$	17.75	1.8	230,621		$	14.75	2.1

Restricted Stock Restricted Stock Units
Shares
Weighted-
Average
Grant Date
Fair Value
Per Share

Weighted-
Average
Remaining
Contractual
Term (years)
Units
Weighted-
Average
Grant Date
Fair Value
Per Share

Weighted-
Average
Remaining
Contractual
Term (years)
Nonvested at December 31, 2017 2,470,158
$ 16.95
1.2 114,942
$ 16.68
1.3
Granted 668,359
22.54
18,586
22.60

Vested (650,320 ) 21.26
(19,510 ) 23.11

Forfeited (145,938 ) 16.60
—
—

Nonvested at September 30, 2018 2,342,259
$ 17.37
1.2 114,018
$ 16.55
1.0

In the first quarter of 2019, the Company issued RSU awards in connection with the acquisition of Periscope that are accounted for as liability awards that will vest on March 1, 2022. The awards were recorded at fair value on the initial issuance date and are remeasured to fair value at each reporting period, with the change in fair value being recorded in selling, general and administrative expense in the condensed consolidated statements of operations. The change in fair value of the awards classified as liabilities resulted in expense of $0.4 million and income of $0.2 million for the three and nine months ended September 30, 2019. As of September 30, 2019, the fair value of the RSU awards classified as liabilities was $1.5 million and was included in other long-term liabilities on the condensed consolidated balance sheets.

In general, RS and RSU awards will vest on the third anniversary of the grant date, provided the holder of the share is continuously employed by the Company until the vesting date. Compensation expense recognized for RS and RSU awards classified as equity was $3.5 million and $10.9 million for the three and nine months ended September 30, 2019, respectively, and $3.2 million and $11.4 million for the three and nine months ended September 30, 2018, ~~respectively, and $3.3 million and $12.1 million for the three and nine months ended September 30, 2017,~~ respectively.

Deferred Stock Units

Deferred stock units ~~("DSU")~~ are awards of rights to shares of the ~~Company's~~Company’s class A common stock and are awarded to non-employee directors of the Company. The following table is a summary of DSU award activity for the nine months ended September 30, ~~2018:~~2019:



	Deferred Stock Units
	Units		Weighted-Average Grant Date Fair Value Per Share
Outstanding at December 31, 2018	236,561		$	19.40
Granted	72,464		12.32
Dividend equivalents granted	26,173		10.19
Settled	(30,676	)	22.53
Outstanding at September 30, 2019	304,522		$	16.61

Table of Contents

QUAD/GRAPHICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019

(In millions, except share and per share data and unless otherwise indicated)

Deferred Stock Units
Units Weighted-Average Grant Date Fair Value Per Share
Outstanding at December 31, 2017 195,913
$ 18.18
Granted 39,360
22.60
Dividend equivalents granted 9,103
22.20
Settled (12,587 ) 10.56
Outstanding at September 30, 2018 231,789
$ 19.50

Each DSU award entitles the grantee to receive ~~one~~1 share of class A common stock upon the earlier of the separation date of the grantee or the second anniversary of the grant date, but could be subject to acceleration for a change in control, death or disability as defined in the individual DSU grant agreement. Grantees of DSU awards may not exercise voting rights, but are credited with dividend equivalents, and those dividend equivalents will be converted into additional DSU awards based on the closing price of the class A common stock. NoCompensation expense recognized for DSU awards was $0.9 million during the nine months ended September 30, 2019 and 2018. There was 0 compensation expense ~~was~~ recognized for DSU awards during the three months ended September 30, ~~2018~~2019 and ~~2017. There was $0.9 million of compensation expense recognized for DSU awards during the nine months ended September 30, 2018 and 2017.~~2018. As DSU awards are fully vested on the grant date, all compensation expense was recognized at the date of grant.

~~Table of Contents~~

~~QUAD/GRAPHICS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018~~

~~(In millions, except share and per share data and unless otherwise indicated)~~

Note ~~16. Shareholders'~~18. Shareholders’ Equity

The Company has ~~three~~3 classes of common stock as follows (share data in millions):

Issued Common Stock
Authorized Shares Outstanding Treasury Total Issued Shares
Class A stock ($0.025 par value) 80.0

September 30, 2018 38.2
2.1
40.3
December 31, 2017 38.2
1.8
40.0

Class B stock ($0.025 par value) 80.0

September 30, 2018 13.5
—
13.5
December 31, 2017 13.8
—
13.8

Class C stock ($0.025 par value) 20.0

September 30, 2018 —
0.5
0.5
December 31, 2017 —
0.5
0.5



		Issued Common Stock
	Authorized Shares	Outstanding	Treasury	Total Issued Shares
Class A stock ($0.025 par value)
September 30, 2019	105.0	39.3	1.0	40.3
December 31, 2018	80.0	38.1	2.2	40.3

Class B stock ($0.025 par value)
September 30, 2019	80.0	13.5	—	13.5
December 31, 2018	80.0	13.5	—	13.5

Class C stock ($0.025 par value)
September 30, 2019	20.0	—	0.5	0.5
December 31, 2018	20.0	—	0.5	0.5

In accordance with the Articles of Incorporation, each class A common share has ~~one~~1 vote per share and each class B and class C common share has ~~ten~~10 votes per share on all matters voted upon by the ~~Company's~~Company’s shareholders. Liquidation rights are the same for all ~~three~~3 classes of common stock.

The Company also has 0.5 million shares of $0.01 par value preferred stock authorized, of which ~~none~~NaN were issued at September 30, ~~2018,~~2019, and December 31, ~~2017.~~2018. The Company has no present plans to issue any preferred stock.

On May 20, 2019, the Company held its annual meeting of shareholders. At the meeting, the shareholders of the Company approved a proposed amendment to the Company’s Amended and Restated Articles of Incorporation to increase the number of authorized shares of class A common stock from 80.0 million to 105.0 million, and a corresponding increase to the number of authorized shares of capital stock from 180.5 million to 205.5 million.

On September 6, 2011, the ~~Company's~~Company’s Board of Directors authorized a share repurchase program of up to $100.0 million of the ~~Company's~~Company’s outstanding class A common stock. On July 30, 2018, the ~~Company's~~Company’s Board of Directors discontinued the remainder of the September 6, 2011 share repurchase program and authorized a new share repurchase program of up to $100.0 million of the ~~Company's~~Company’s outstanding class A common stock. There were 0 shares repurchased during the three and nine months ended September 30, 2019, or during the three months ended September 30, 2018. During the nine months ended September 30, 2018, the Company repurchased 1,871,631 shares of its class A common stock at a weighted average price of $19.59 per share for a total purchase price of $36.7 million. ~~There were no shares repurchased during the three months ended September 30, 2018.~~ As of September 30, ~~2018,~~2019, there were $100.0 million of authorized repurchases remaining under the program.

Table of Contents

QUAD/GRAPHICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019

(In millions, except share and per share data and unless otherwise indicated)

On February 16, 2018, the ~~Company's~~Company’s Board of Directors authorized the issuance of 1,006,061 shares of Company class A common stock from treasury to the ~~Company's~~Company’s ESOP, at a stock price of $22.18 per share for a total value of $22.3 million.

In March 2018, 284,845 shares of class B common stock were converted to class A common stock, and the class B common shares were canceled and returned to the status of authorized but unissued shares.

~~Table of Contents~~

~~QUAD/GRAPHICS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018~~

~~(In millions, except share and per share data and unless otherwise indicated)~~

In accordance with the Articles of Incorporation, dividends are paid equally for all ~~three~~3 classes of common shares. The dividend activity related to the then outstanding shares for the nine months ended September 30, ~~2018~~2019 and ~~2017, was as follows:~~

Declaration Date Record Date Payment Date
Dividend Amount
per Share
2018
Q3 Dividend July 31, 2018 August 20, 2018 September 7, 2018 $ 0.30
Q2 Dividend May 1, 2018 May 21, 2018 June 8, 2018 0.30
Q1 Dividend February 21, 2018 March 19, 2018 March 30, 2018 0.30
2017
Q3 Dividend August 1, 2017 August 21, 2017 September 1, 2017 $ 0.30
Q2 Dividend May 1, 2017 May 22, 2017 June 2, 2017 0.30
Q1 Dividend February 17, 2017 February 27, 2017 March 10, 2017 0.30

~~Activity impacting the Company's shareholders' equity and noncontrolling interests for the nine months ended September 30,~~ 2018, was as follows:



	Declaration Date	Record Date	Payment Date	Dividend Amount per Share
2019
Q3 Dividend	July 30, 2019	August 19, 2019	September 6, 2019	$	0.30
Q2 Dividend	April 30, 2019	May 20, 2019	June 7, 2019	0.30
Q1 Dividend	February 19, 2019	February 25, 2019	March 8, 2019	0.30
2018
Q3 Dividend	July 31, 2018	August 20, 2018	September 7, 2018	$	0.30
Q2 Dividend	May 1, 2018	May 21, 2018	June 8, 2018	0.30
Q1 Dividend	February 21, 2018	March 19, 2018	March 30, 2018	0.30

Quad/Graphics' Shareholders' Equity Noncontrolling Interests Total Shareholders' Equity and Noncontrolling Interests
Balance at December 31, 2017 $ 522.4
$ —
$ 522.4
Net earnings (loss) 29.3
(0.8 ) 28.5
Consolidation of Rise —
18.4
18.4
Accumulated deficit transition adjustment for adoption of Topic 606 (see Note 2) 3.2
—
3.2
Translation adjustments (9.3 ) —
(9.3 )
Interest rate swap adjustments, net of tax 4.6
—
4.6
Cash dividends declared (47.5 ) —
(47.5 )
Stock-based compensation 12.3
—
12.3
Employee stock ownership plan contribution 22.3
—
22.3
Purchases of treasury stock (36.7 ) —
(36.7 )
Stock options exercised 4.1
—
4.1
Equity awards redeemed to pay employees' tax obligations (9.0 ) —
(9.0 )
Balance at September 30, 2018 $ 495.7
$ 17.6
$ 513.3

~~Table of Contents~~

~~QUAD/GRAPHICS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018~~

~~(In millions, except share and per share data and unless otherwise indicated)~~

Note ~~17.~~19. Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss by component, net of tax, for the nine months ended September 30, 2019, were as follows:



	Translation Adjustments			Interest Rate Swap Adjustments			Pension Benefit Plan Adjustments			Total
Balance at January 1, 2019	$	(130.0	)	$	3.3		$	(25.5	)	$	(152.2	)
Other comprehensive loss before reclassifications	(6.4		)	(9.4		)	—			(15.8		)
Amounts reclassified from accumulated other comprehensive loss to net loss	—			—			—			—
Net other comprehensive loss	(6.4		)	(9.4		)	—			(15.8		)
Balance at September 30, 2019	$	(136.4	)	$	(6.1	)	$	(25.5	)	$	(168.0	)

The changes in accumulated other comprehensive loss by component, net of tax, for the nine months ended September 30, 2018, were as follows:



	Translation Adjustments			Interest Rate Swap Adjustments		Pension Benefit Plan Adjustments			Total
Balance at January 1, 2018	$	(117.0	)	$	1.6	$	(11.9	)	$	(127.3	)
Other comprehensive income (loss) before reclassifications	(9.3		)	4.6		—			(4.7		)
Amounts reclassified from accumulated other comprehensive loss to net earnings	—			—		—			—
Net other comprehensive income (loss)	(9.3		)	4.6		—			(4.7		)
Balance at September 30, 2018	$	(126.3	)	$	6.2	$	(11.9	)	$	(132.0	)

Translation Adjustments Interest Rate Swap Adjustments Pension Benefit Plan Adjustments Total
Balance at December 31, 2017 $ (115.9 ) $ 1.3
$ (9.8 ) $ (124.4 )
Other comprehensive income (loss) before reclassifications (9.3 ) 4.6
—
(4.7 )
Amounts reclassified from accumulated other comprehensive loss to net earnings —
—
—
—
Net other comprehensive income (loss) (9.3 ) 4.6
—
(4.7 )
Amounts reclassified from accumulated other comprehensive loss to accumulated deficit ⁽¹⁾
(1.1 ) 0.3
(2.1 ) (2.9 )
Balance at September 30, 2018 $ (126.3 ) $ 6.2
$ (11.9 ) $ (132.0 )


⁽¹⁾	Includes adjustments for the adoption of Accounting Standards Update 2018-02 "Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income".

~~The changes in accumulated other comprehensive loss by component, net of tax, for the nine months ended September 30, 2017, were as follows:~~

Translation Adjustments Interest Rate Swap Adjustments Pension Benefit Plan Adjustments Total
Balance at December 31, 2016 $ (130.8 ) $ —
$ (21.8 ) $ (152.6 )
Other comprehensive income (loss) before reclassifications 14.9
(0.3 ) —
14.6
Amounts reclassified from accumulated other comprehensive loss to net earnings —
—
—
—
Net other comprehensive income (loss) 14.9
(0.3 ) —
14.6
Balance at September 30, 2017 $ (115.9 ) $ (0.3 ) $ (21.8 ) $ (138.0 )

3239

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QUAD/GRAPHICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, ~~2018~~2019

(In millions, except share and per share data and unless otherwise indicated)

Note ~~18.~~20. Segment Information

~~The Company is~~As a ~~leading~~worldwide marketing solutions ~~provider.~~ T~~he Company leverages~~partner dedicated to creating a better way, Quad uses its ~~strong print foundation as part of a much larger, robust~~data-driven, integrated marketing solutions platform ~~that helps marketers and content creators improve the~~to help clients reduce complexity, increase efficiency and ~~effectiveness of their~~enhance marketing spend ~~across offline and online media channels.~~effectiveness. The ~~Company's~~Company’s operating and reportable segments are aligned with how the chief operating decision maker of the Company currently manages the business. The ~~Company's~~Company’s operating and reportable segments, including their product and service offerings, and a ~~"Corporate"~~“Corporate” category are as follows:

•United States Print and Related Services

•International

•Corporate

United States Print and Related Services

The United States Print and Related Services segment is predominantly comprised of the ~~Company's~~Company’s United States printing operations and is managed as one integrated platform. This includes retail inserts, publications, catalogs, special interest publications, journals, direct mail, ~~books,~~ directories, in-store marketing and promotion, packaging, newspapers, custom print products, other commercial and specialty printed products and global paper procurement, together with marketing and other complementary services, including consumer insights, audience targeting, personalization, media planning and placement, process optimization, campaign planning and creation, pre-media production, videography, photography, digital execution, print execution and logistics. This segment also includes the manufacture of ink.

International

The International segment consists of the ~~Company's~~Company’s printing operations in Europe and Latin America, including operations in England, France, Germany, Poland, Argentina, Colombia, Mexico and Peru, as well as investments in printing operations in Brazil and India. This segment provides printed products and marketing and other complementary services consistent with the United States Print and Related Services segment. ~~Unrestricted~~As of September 30, 2019, the Company has no unrestricted subsidiaries as defined in the ~~Company's~~Company’s Senior Unsecured Notes ~~indenture represent less than 2.0% of total consolidated assets as of September 30, 2018, and less than 2.0% of total consolidated net sales for the three and nine months ended September 30, 2018.~~indenture.

Corporate

Corporate consists of unallocated general and administrative activities and associated expenses including, in part, executive, legal and finance, as well as certain expenses and income from frozen employee retirement plans, such as pension benefit plans.

3340

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QUAD/GRAPHICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, ~~2018~~2019

(In millions, except share and per share data and unless otherwise indicated)

The following is a summary of segment information for the three and nine months ended September 30, ~~2018~~2019 and ~~2017:~~2018:



	Net Sales				Operating Income (Loss) from Continuing Operations			Restructuring, Impairment and Transaction- Related Charges
	Products		Services		Operating Income (Loss) from Continuing Operations			Restructuring, Impairment and Transaction- Related Charges
Three months ended September 30, 2019
United States Print and Related Services	$	649.8	$	197.2	$	27.1		$	7.3
International	92.7		3.9		2.6			2.5
Total operating segments	742.5		201.1		29.7			9.8
Corporate	—		—		(59.1		)	46.9
Total	$	742.5	$	201.1	$	(29.4	)	$	56.7

Three months ended September 30, 2018
United States Print and Related Services	$	686.7	$	198.0	$	55.4		$	3.2
International	84.4		4.4		3.8			1.9
Total operating segments	771.1		202.4		59.2			5.1
Corporate	—		—		(12.2		)	0.2
Total	$	771.1	$	202.4	$	47.0		$	5.3

Nine months ended September 30, 2019
United States Print and Related Services	$	1,962.4	$	593.6	$	89.8		$	15.1
International	285.0		12.5		4.9			7.5
Total operating segments	2,247.4		606.1		94.7			22.6
Corporate	—		—		(89.0		)	51.1
Total	$	2,247.4	$	606.1	$	5.7		$	73.7

Nine months ended September 30, 2018
United States Print and Related Services	$	2,009.5	$	566.9	$	119.2		$	31.7
International	270.5		14.0		11.1			4.9
Total operating segments	2,280.0		580.9		130.3			36.6
Corporate	—		—		(45.1		)	4.0
Total	$	2,280.0	$	580.9	$	85.2		$	40.6

Net Sales Operating Income (Loss)
Restructuring, Impairment and Transaction-
Related Charges
Products Services
Three months ended September 30, 2018
United States Print and Related Services $ 742.3
$ 198.0
$ 49.0
$ 3.2
International 84.4
4.4
3.8
1.9
Total operating segments 826.7
202.4
52.8
5.1
Corporate —
—
(12.2 ) 0.2
Total $ 826.7
$ 202.4
$ 40.6
$ 5.3

Three months ended September 30, 2017
United States Print and Related Services $ 762.5
$ 143.8
$ 53.4
$ 7.8
International 94.4
4.7
7.2
(1.0 )
Total operating segments 856.9
148.5
60.6
6.8
Corporate —
—
(13.8 ) 1.2
Total $ 856.9
$ 148.5
$ 46.8
$ 8.0

Nine months ended September 30, 2018
United States Print and Related Services $ 2,160.7
$ 566.9
$ 102.6
$ 31.7
International 270.5
14.0
11.1
4.9
Total operating segments 2,431.2
580.9
113.7
36.6
Corporate —
—
(45.1 ) 4.0
Total $ 2,431.2
$ 580.9
$ 68.6
$ 40.6

Nine months ended September 30, 2017
United States Print and Related Services $ 2,258.7
$ 422.1
$ 156.6
$ 17.7
International 271.9
14.5
15.3
1.8
Total operating segments 2,530.6
436.6
171.9
19.5
Corporate —
—
(44.0 ) 3.0
Total $ 2,530.6
$ 436.6
$ 127.9
$ 22.5

Restructuring, impairment and transaction-related charges for the three and nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, are further described in Note ~~4, "Restructuring,~~5, “Restructuring, Impairment and Transaction-Related Charges,"” and are included in the operating income (loss) from continuing operations results by segment above.

3441

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QUAD/GRAPHICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, ~~2018~~2019

(In millions, except share and per share data and unless otherwise indicated)

A reconciliation of operating income (loss) from continuing operations to earnings (loss) from continuing operations before income taxes and equity in (earnings) loss of unconsolidated entity as reported in the condensed consolidated statements of operations for the three and nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, was as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Operating income (loss) from continuing operations	$	(29.4	)	$	47.0		$	5.7		$	85.2
Less: interest expense	22.0			18.3			69.6			53.9
Less: net pension income	(1.5		)	(3.1		)	(4.5		)	(9.3		)
Less: loss on debt extinguishment	14.6			—			30.5			—
Earnings (loss) from continuing operations before income taxes and equity in (earnings) loss of unconsolidated entity	$	(64.5	)	$	31.8		$	(89.9	)	$	40.6

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Operating income $ 40.6
$ 46.8
$ 68.6
$ 127.9
Less: interest expense 18.3
17.8
54.0
53.6
Less: net pension income (3.1 ) (2.6 ) (9.3 ) (7.8 )
Less: loss on debt extinguishment —
—
—
2.6
Earnings before income taxes and equity in (earnings) loss of unconsolidated entity $ 25.4
$ 31.6
$ 23.9
$ 79.5

Note ~~19.~~21. Separate Financial Information of Subsidiary Guarantors of Indebtedness

On April 28, 2014, ~~Quad/Graphics~~Quad completed an offering of the Senior Unsecured Notes (see Note ~~9, "Debt,"~~10, “Debt,” for further details on the Senior Unsecured Notes). Each of the ~~Company's~~Company’s Guarantor Subsidiaries fully and unconditionally guarantee or, in the case of future subsidiaries, will guarantee, on a joint and several basis, the Senior Unsecured Notes. All of the current Guarantor Subsidiaries are 100% owned by the Company. Guarantor Subsidiaries will be automatically released from these guarantees upon the occurrence of certain events, including the following:

the designation of any of the Guarantor Subsidiaries as an unrestricted subsidiary;

the release or discharge of any guarantee or indebtedness that resulted in the creation of the guarantee of the Senior Unsecured Notes by any of the Guarantor Subsidiaries; or

the sale or disposition, including the sale of substantially all the assets, of any of the Guarantor Subsidiaries.

The following condensed consolidating financial information reflects the summarized financial information of ~~Quad/Graphics,~~Quad, the ~~Company's~~Company’s Guarantor Subsidiaries on a combined basis and the ~~Company's~~Company’s non-guarantor subsidiaries on a combined basis.

3542

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QUAD/GRAPHICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, ~~2018~~2019

(In millions, except share and per share data and unless otherwise indicated)

Condensed Consolidating Statement of Operations

For the Three Months Ended September 30, ~~2018~~2019



	Quad/Graphics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Total
Net sales	$	396.9		$	539.3		$	118.7	$	(111.3	)	$	943.6
Cost of sales	323.7			457.8			91.0		(108.0		)	764.5
Selling, general and administrative expenses	62.6			25.8			14.5		(3.3		)	99.6
Depreciation and amortization	21.6			24.0			6.6		—			52.2
Restructuring, impairment and transaction-related charges	58.0			(3.6		)	2.3		—			56.7
Total operating expenses	465.9			504.0			114.4		(111.3		)	973.0
Operating income (loss) from continuing operations	$	(69.0	)	$	35.3		$	4.3	$	—		$	(29.4	)
Interest expense (income)	20.3			0.5			1.2		—			22.0
Net pension income	—			(1.5		)	—		—			(1.5		)
Loss (gain) on debt extinguishment	14.6			—			—		—			14.6
Earnings (loss) from continuing operations before income taxes and equity in (earnings) loss of consolidated and unconsolidated entities	(103.9		)	36.3			3.1		—			(64.5		)
Income tax expense (benefit)	(30.0		)	11.6			0.8		—			(17.6		)
Earnings (loss) from continuing operations before equity in (earnings) loss of consolidated and unconsolidated entities	(73.9		)	24.7			2.3		—			(46.9		)
Equity in (earnings) loss of consolidated entities	52.6			1.1			—		(53.7		)	—
Equity in (earnings) loss of unconsolidated entity	—			—			0.1		—			0.1
Net earnings (loss) from continuing operations	(126.5		)	23.6			2.2		53.7			(47.0		)
Loss from discontinued operations, net of tax	—			(79.4		)	—		—			(79.4		)
Net earnings (loss)	(126.5		)	(55.8		)	2.2		53.7			(126.4		)
Less: net earnings (loss) attributable to noncontrolling interests	—			—			0.1		—			0.1
Net earnings (loss) attributable to Quad common shareholders	$	(126.5	)	$	(55.8	)	$	2.1	$	53.7		$	(126.5	)

Quad/Graphics,
Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Total
Net sales $ 426.0
$ 626.8
$ 110.3
$ (134.0 ) $ 1,029.1
Cost of sales 326.1
552.6
84.5
(131.5 ) 831.7
Selling, general and administrative expenses 57.8
25.3
11.8
(2.5 ) 92.4
Depreciation and amortization 24.7
26.5
7.9
—
59.1
Restructuring, impairment and transaction-related charges (2.5 ) 5.7
2.1
—
5.3
Total operating expenses 406.1
610.1
106.3
(134.0 ) 988.5
Operating income (loss) $ 19.9
$ 16.7
$ 4.0
$ —
$ 40.6
Interest expense (income) 16.3
0.7
1.3
—
18.3
Net pension income —
(3.1 ) —
—
(3.1 )
Earnings (loss) before income taxes and equity in (earnings) loss of consolidated and unconsolidated entities 3.6
19.1
2.7
—
25.4
Income tax expense (benefit) 1.2
1.4
0.5
—
3.1
Earnings (loss) before equity in (earnings) loss of consolidated and unconsolidated entities 2.4
17.7
2.2
—
22.3
Equity in (earnings) loss of consolidated entities (21.0 ) (1.5 ) —
22.5
—
Equity in (earnings) loss of unconsolidated entity —
—
(0.2 ) —
(0.2 )
Net earnings (loss) $ 23.4
$ 19.2
$ 2.4
$ (22.5 ) $ 22.5
Less: net earnings (loss) attributable to noncontrolling interests —
—
(0.9 ) —
(0.9 )
Net earnings (loss) attributable to Quad/Graphics common shareholders $ 23.4
$ 19.2
$ 3.3
$ (22.5 ) $ 23.4

Condensed Consolidating Statement of Comprehensive Income (Loss)

For the Three Months Ended September 30, ~~2018~~2019



	Quad/Graphics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Total
Net earnings (loss)	$	(126.5	)	$	(55.8	)	$	2.2		$	53.7	$	(126.4	)
Other comprehensive income (loss), net of tax	(9.7		)	(1.6		)	(7.3		)	8.9		(9.7		)
Total comprehensive income (loss)	(136.2		)	(57.4		)	(5.1		)	62.6		(136.1		)
Less: comprehensive earnings (loss) attributable to noncontrolling interests	—			—			0.1			—		0.1
Comprehensive income (loss) attributable to Quad common shareholders	$	(136.2	)	$	(57.4	)	$	(5.2	)	$	62.6	$	(136.2	)

Quad/Graphics,
Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Total
Net earnings (loss) $ 23.4
$ 19.2
$ 2.4
$ (22.5 ) $ 22.5
Other comprehensive income (loss), net of tax 1.4
(1.9 ) (0.4 ) 2.3
1.4
Total comprehensive income (loss) $ 24.8
$ 17.3
$ 2.0
$ (20.2 ) $ 23.9
Less: comprehensive earnings (loss) attributable to noncontrolling interests —
—
(0.9 ) —
(0.9 )
Comprehensive income (loss) attributable to Quad/Graphics common shareholders $ 24.8
$ 17.3
$ 2.9
$ (20.2 ) $ 24.8

3643

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QUAD/GRAPHICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, ~~2018~~2019

(In millions, except share and per share data and unless otherwise indicated)

Condensed Consolidating Statement of Operations

For the Three Months Ended September 30, ~~2017~~2018



	Quad/Graphics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Net sales	$	426.0		$	571.2		$	110.3		$	(134.0	)	$	973.5
Cost of sales	326.1			497.9			84.5			(131.5		)	777.0
Selling, general and administrative expenses	57.8			22.1			11.8			(2.5		)	89.2
Depreciation and amortization	24.7			22.4			7.9			—			55.0
Restructuring, impairment and transaction-related charges	(2.5		)	5.7			2.1			—			5.3
Total operating expenses	406.1			548.1			106.3			(134.0		)	926.5
Operating income (loss) from continuing operations	$	19.9		$	23.1		$	4.0		$	—		$	47.0
Interest expense (income)	16.3			0.7			1.3			—			18.3
Net pension income	—			(3.1		)	—			—			(3.1		)
Earnings (loss) from continuing operations before income taxes and equity in (earnings) loss of consolidated and unconsolidated entities	3.6			25.5			2.7			—			31.8
Income tax expense (benefit)	1.2			2.8			0.5			—			4.5
Earnings (loss) from continuing operations before equity in (earnings) loss of consolidated and unconsolidated entities	2.4			22.7			2.2			—			27.3
Equity in (earnings) loss of consolidated entities	(21.0		)	(1.5		)	—			22.5			—
Equity in (earnings) loss of unconsolidated entity	—			—			(0.2		)	—			(0.2		)
Net earnings (loss) from continuing operations	23.4			24.2			2.4			(22.5		)	27.5
Loss from discontinued operations, net of tax	—			(5.0		)	—			—			(5.0		)
Net earnings (loss)	23.4			19.2			2.4			(22.5		)	22.5
Less: net earnings (loss) attributable to noncontrolling interests	—			—			(0.9		)	—			(0.9		)
Net earnings (loss) attributable to Quad common shareholders	$	23.4		$	19.2		$	3.3		$	(22.5	)	$	23.4

Quad/Graphics,
Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Total
Net sales $ 413.6
$ 585.5
$ 107.8
$ (101.5 ) $ 1,005.4
Cost of sales 297.1
502.3
84.8
(99.4 ) 784.8
Selling, general and administrative expenses 66.6
32.6
10.4
(2.1 ) 107.5
Depreciation and amortization 26.4
26.2
5.7
—
58.3
Restructuring, impairment and transaction-related charges 7.9
1.1
(1.0 ) —
8.0
Total operating expenses 398.0
562.2
99.9
(101.5 ) 958.6
Operating income (loss) $ 15.6
$ 23.3
$ 7.9
$ —
$ 46.8
Interest expense (income) 17.7
(0.7 ) 0.8
—
17.8
Net pension income —
(2.6 ) —
—
(2.6 )
Earnings (loss) before income taxes and equity in (earnings) loss of consolidated and unconsolidated entities (2.1 ) 26.6
7.1
—
31.6
Income tax expense (benefit) 4.5
6.1
1.2
—
11.8
Earnings (loss) before equity in (earnings) loss of consolidated and unconsolidated entities (6.6 ) 20.5
5.9
—
19.8
Equity in (earnings) loss of consolidated entities (26.4 ) (1.0 ) —
27.4
—
Equity in (earnings) loss of unconsolidated entity —
—
—
—
—
Net earnings (loss) $ 19.8
$ 21.5
$ 5.9
$ (27.4 ) $ 19.8
Less: net earnings (loss) attributable to noncontrolling interests —
—
—
—
—
Net earnings (loss) attributable to Quad/Graphics common shareholders $ 19.8
$ 21.5
$ 5.9
$ (27.4 ) $ 19.8

Condensed Consolidating Statement of Comprehensive Income (Loss)

For the Three Months Ended September 30, ~~2017~~2018


	Quad/Graphics, Inc.		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Total		Quad/Graphics, Inc.		Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Net earnings (loss)	$	19.8	$	21.5		$	5.9	$	(27.4	)	$	19.8	$	23.4	$	19.2		$	2.4		$	(22.5	)	$	22.5
Other comprehensive income (loss), net of tax	3.6		(0.3		)	3.4		(3.1		)	3.6		1.4		(1.9		)	(0.4		)	2.3			1.4
Total comprehensive income (loss)	$	23.4	$	21.2		$	9.3	$	(30.5	)	$	23.4	24.8		17.3			2.0			(20.2		)	23.9
Less: comprehensive earnings (loss) attributable to noncontrolling interests	—		—			—		—			—		—		—			(0.9		)	—			(0.9		)
Comprehensive income (loss) attributable to Quad/Graphics common shareholders	$	23.4	$	21.2		$	9.3	$	(30.5	)	$	23.4
Comprehensive income (loss) attributable to Quad common shareholders													$	24.8	$	17.3		$	2.9		$	(20.2	)	$	24.8



Wisconsin		39-1152983
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

~~N61 W23044 Harry's Way, Sussex, Wisconsin 53089-3995~~		~~(414) 566-6000~~
~~(Address of principal executive offices) (Zip Code)~~		~~(Registrant's~~



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.025 per share	QUAD	The New York Stock Exchange



Large accelerated filerx	☒		Accelerated filero	☐
Non-accelerated filer	☐		Smaller reporting company	☐

~~Non-accelerated filer~~ o		~~Smaller reporting company~~ o

~~(Do not check if a smaller reporting company)~~		Emerging growth companyo	☐



Class		Outstanding as of October ~~26, 2018~~
		25, 2019
Class A Common Stock		~~38,115,225~~
		39,239,588
Class B Common Stock		13,556,858

Class C Common Stock		—



			Page No.

PART I	FINANCIAL INFORMATION		3

	ITEM 1.	Condensed Consolidated Financial Statements (Unaudited)	3

		Condensed Consolidated Statements of Operations (Unaudited)	3

		Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	4

		~~Condensed Consolidated Balance Sheets (Unaudited)~~	5

		Condensed Consolidated ~~Statements of Cash Flows~~Balance Sheets (Unaudited)	6

		~~Notes to~~ Condensed Consolidated ~~Financial~~ Statements of Cash Flows (Unaudited)	7

		~~ITEM 2.~~Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)	~~Management's Discussion and Analysis of~~8

		Notes to Condensed Consolidated Financial ~~Condition and Results of Operations~~Statements (Unaudited)	4610

	ITEM 3.2.	~~Quantitative~~Management's Discussion and ~~Qualitative Disclosures About Market Risk~~Analysis of Financial Condition and Results of Operations	7552

	ITEM 4.3.	~~Controls~~Quantitative and ~~Procedures~~Qualitative Disclosures About Market Risk	77

~~PART II~~	~~OTHER INFORMATION~~		7885

	ITEM 1.4.	~~Legal Proceedings~~Controls and Procedures	7887

PART II	OTHER INFORMATION		87

	ITEM ~~1A.~~1.	~~Risk Factors~~Legal Proceedings	7887

	ITEM 2.1A.	~~Unregistered Sales of Equity Securities and Use of Proceeds~~Risk Factors	7887

	ITEM 6.2.	~~Exhibits~~Unregistered Sales of Equity Securities and Use of Proceeds	7987

	~~Signatures~~ITEM 6.	80Exhibits	88

	Signatures		89



x☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



¨☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	September 30, 2018			December 31, 2017			September 30, 2019			December 31, 2018
ASSETS
Cash and cash equivalents	$	6.3		$	64.4		$	18.2		$	69.5
Receivables, less allowances for doubtful accounts of $27.7 million at September 30, 2018, and $28.9 million at December 31, 2017	553.0			552.5
Receivables, less allowances for doubtful accounts of $27.9 million at September 30, 2019, and $27.4 million at December 31, 2018							472.0			497.6
Inventories	354.5			246.5			288.6			279.0
Prepaid expenses and other current assets	57.6			45.1			46.4			45.2
Current assets of discontinued operations							39.8			55.3
Total current assets	971.4			908.5			865.0			946.6

Property, plant and equipment—net	1,284.5			1,377.6			1,079.6			1,149.1
Operating lease right-of-use assets—net							118.1			—
Goodwill	55.5			—			103.0			44.5
Other intangible assets—net	121.7			43.4			149.7			112.6
Equity method investment in unconsolidated entity	3.6			3.6			2.9			4.0
Other long-term assets	97.1			119.3			126.2			89.2
Long-term assets of discontinued operations							23.5			123.1
Total assets	$	2,533.8		$	2,452.4		$	2,468.0		$	2,469.1

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	432.0		$	381.6		$	416.3		$	496.3
Accrued liabilities	282.7			316.7			277.3			285.1
Short-term debt and current portion of long-term debt	42.3			42.0			66.0			42.9
Current portion of capital lease obligations	5.1			5.6
Current portion of finance lease obligations							8.2			3.6
Current portion of operating lease obligations							32.6			—
Current liabilities of discontinued operations							18.5			23.4
Total current liabilities	762.1			745.9			818.9			851.3

Long-term debt	1,015.9			903.5			1,098.9			882.6
Capital lease obligations	11.1			13.7
Finance lease obligations							5.1			6.7
Operating lease obligations							88.5			—
Deferred income taxes	44.0			41.9			5.3			32.1
Other long-term liabilities	187.4			225.0			207.2			231.8
Long-term liabilities of discontinued operations							3.1			4.4
Total liabilities	2,020.5			1,930.0			2,227.0			2,008.9

Commitments and contingencies (Note 8)

Shareholders' equity
Commitments and contingencies (Note 9)
Shareholders’ equity
Preferred stock	—			—			—			—
Common stock, Class A	1.0			1.0			1.0			1.0
Common stock, Class B	0.4			0.4			0.4			0.4
Common stock, Class C	—			—			—			—
Additional paid-in capital	857.9			861.1			843.5			861.3
Treasury stock, at cost	(56.6		)	(52.8		)	(30.4		)	(56.6		)
Accumulated deficit	(175.0		)	(162.9		)	(423.1		)	(211.4		)
Accumulated other comprehensive loss	(132.0		)	(124.4		)	(168.0		)	(152.2		)
Quad/Graphics' shareholders' equity	495.7			522.4
Quad’s shareholders’ equity							223.4			442.5
Noncontrolling interests	17.6			—			17.6			17.7
Total shareholders' equity and noncontrolling interests	513.3			522.4
Total liabilities and shareholders' equity	$	2,533.8		$	2,452.4
Total shareholders’ equity and noncontrolling interests							241.0			460.2
Total liabilities and shareholders’ equity							$	2,468.0		$	2,469.1



	Common Stock			Additional Paid-in Capital			Treasury Stock					Accumulated Deficit			Accumulated Other Comprehensive Loss			Shareholders’ Equity			Noncontrolling Interests
	Shares	Amount		Additional Paid-in Capital			Shares		Amount			Accumulated Deficit			Accumulated Other Comprehensive Loss			Shareholders’ Equity			Noncontrolling Interests
Balance at January 1, 2019	54.3	$	1.4	$	861.3		(2.7	)	$	(56.6	)	$	(211.4	)	$	(152.2	)	$	442.5		$	17.7
Net loss	—	—		—			—		—			(22.5		)	—			(22.5		)	(0.3		)
Foreign currency translation adjustments	—	—		—			—		—			—			(0.3		)	(0.3		)	—
Interest rate swap adjustments, net of tax	—	—		—			—		—			—			(2.8		)	(2.8		)	—
Cash dividends declared ($0.30 per common share)	—	—		—			—		—			(16.0		)	—			(16.0		)	—
Stock-based compensation	—	—		5.0			—		—			—			—			5.0			—
Issuance of share-based awards, net of other activity	—	—		(30.1		)	1.7		33.3			—			—			3.2			—
Awards redeemed to pay employees’ tax obligations	—	—		—			(0.5	)	(6.6		)	—			—			(6.6		)	—
Balance at March 31, 2019	54.3	$	1.4	$	836.2		(1.5	)	$	(29.9	)	$	(249.9	)	$	(155.3	)	$	402.5		$	17.4
Net earnings (loss)	—	—		—			—		—			(14.8		)	—			(14.8		)	0.1
Foreign currency translation adjustments	—	—		—			—		—			—			2.1			2.1			—
Interest rate swap adjustments, net of tax	—	—		—			—		—			—			(5.1		)	(5.1		)	—
Cash dividends declared ($0.30 per common share)	—	—		—			—		—			(16.0		)	—			(16.0		)	—
Stock-based compensation	—	—		3.3			—		—			—			—			3.3			—
Issuance of share-based awards, net of other activity	—	—		0.1			—		(0.1		)	—			—			—			—
Balance at June 30, 2019	54.3	$	1.4	$	839.6		(1.5	)	$	(30.0	)	$	(280.7	)	$	(158.3	)	$	372.0		$	17.5
Net earnings (loss)	—	—		—			—		—			(126.5		)	—			(126.5		)	0.1
Foreign currency translation adjustments	—	—		—			—		—			—			(8.2		)	(8.2		)	—
Interest rate swap adjustments, net of tax	—	—		—			—		—			—			(1.5		)	(1.5		)	—
Cash dividends declared ($0.30 per common share)	—	—		—			—		—			(15.9		)	—			(15.9		)	—
Stock-based compensation	—	—		3.5			—		—			—			—			3.5			—
Issuance of share-based awards, net of other activity	—	—		0.4			—		(0.4		)	—			—			—			—
Balance at September 30, 2019	54.3	$	1.4	$	843.5		(1.5	)	$	(30.4	)	$	(423.1	)	$	(168.0	)	$	223.4		$	17.6



	Three Months Ended September 30, 2017								Nine Months Ended September 30, 2017
	As Previously Reported		Adjusted for ASU 2017-07			As Adjusted			As Previously Reported		Adjusted for ASU 2017-07			As Adjusted
Net sales	$	1,005.4	$	—		$	1,005.4		$	2,967.2	$	—		$	2,967.2
Cost of sales	784.8		—			784.8			2,330.9		—			2,330.9
Operating expenses
Selling, general and administrative expenses	104.9		2.6			107.5			302.6		7.8			310.4
Depreciation and amortization	58.3		—			58.3			175.5		—			175.5
Restructuring, impairment and transaction-related charges	8.0		—			8.0			22.5		—			22.5
Total operating expenses	956.0		2.6			958.6			2,831.5		7.8			2,839.3
Operating income	49.4		(2.6		)	46.8			135.7		(7.8		)	127.9
Interest expense	17.8		—			17.8			53.6		—			53.6
Net pension income	—		(2.6		)	(2.6		)	—		(7.8		)	(7.8		)
Loss on debt extinguishment	—		—			—			2.6		—			2.6
Earnings before income taxes and equity in (earnings) loss of unconsolidated entity	$	31.6	$	—		$	31.6		$	79.5	$	—		$	79.5



	Year Ended December 31, 2017								Year Ended December 31, 2016
	As Previously Reported		Adjusted for ASU 2017-07			As Adjusted			As Previously Reported			Adjusted for ASU 2017-07			As Adjusted
Net sales	$	4,131.4	$	—		$	4,131.4		$	4,329.5		$	—		$	4,329.5
Cost of sales	3,259.4		—			3,259.4			3,394.8			—			3,394.8
Operating expenses
Selling, general and administrative expenses	413.4		10.4			423.8			454.6			12.1			466.7
Depreciation and amortization	232.5		—			232.5			277.1			—			277.1
Restructuring, impairment and transaction-related charges	61.2		(0.8		)	60.4			80.6			(7.0		)	73.6
Total operating expenses	3,966.5		9.6			3,976.1			4,207.1			5.1			4,212.2
Operating income	164.9		(9.6		)	155.3			122.4			(5.1		)	117.3
Interest expense	71.1		—			71.1			77.2			—			77.2
Net pension income	—		(9.6		)	(9.6		)	—			(5.1		)	(5.1		)
Loss (gain) on debt extinguishment	2.6		—			2.6			(14.1		)	—			(14.1		)
Earnings before income taxes and equity in (earnings) loss of unconsolidated entity	$	91.2	$	—		$	91.2		$	59.3		$	—		$	59.3



	United States Print and Related Services		International		Total
Three months ended September 30, 2019
Catalog, publications, retail inserts, and directories	$	468.1	$	73.4	$	541.5
Direct mail and other printed products	178.8		19.3		198.1
Other	2.9		—		2.9
Total products	649.8		92.7		742.5
Logistics services	105.7		3.7		109.4
Imaging, marketing services and other services	91.5		0.2		91.7
Total services	197.2		3.9		201.1
Total net sales	$	847.0	$	96.6	$	943.6

Three months ended September 30, 2018
Catalog, publications, retail inserts, and directories	$	514.0	$	68.3	$	582.3
Direct mail and other printed products	166.7		16.0		182.7
Other	6.0		0.1		6.1
Total products	686.7		84.4		771.1
Logistics services	106.8		4.4		111.2
Imaging, marketing services and other services	91.2		—		91.2
Total services	198.0		4.4		202.4
Total net sales	$	884.7	$	88.8	$	973.5



	December 31, 2017 As Reported			Topic 606 Adjustments		Opening Balance at January 1, 2018
Prepaid expenses and other current assets	$	45.1		$	2.3	$	47.4
Other long-term assets	119.3			2.0		121.3
Deferred income taxes	41.9			1.1		43.0
Accumulated deficit	(162.9		)	3.2		(159.7		)



	Costs to Obtain Contracts
Balance at January 1, 2019	$	14.6
Costs to obtain contracts	3.6
Amortization of costs to obtain contracts	(5.3		)
Balance at September 30, 2019	$	12.9


⁽¹⁾	The Company recognized impairment charges during the three and nine months endedSeptember 30, 2019, to reduce the carrying value of the Book business to its fair value, including $85.0 million of impairment charges for tangible property, plant and equipment and $5.6 million of impairment charges for contract assets.



	September 30, 2019		December 31, 2018
Receivables—net	$	23.0	$	31.1
Inventories	16.7		21.6
Prepaid expenses and other current assets	0.1		2.6
Current assets of discontinued operations	39.8		55.3

Property, plant and equipment—net	23.0		108.3
Operating lease right-of-use assets—net	0.2		—
Goodwill	—		10.1
Other long-term assets	0.3		4.7
Long-term assets of discontinued operations	23.5		123.1

Accounts payable	9.0		14.7
Accrued liabilities	7.7		7.2
Current portion of finance lease obligations	1.5		1.5
Current portion of operating lease obligations	0.3		—
Current liabilities of discontinued operations	18.5		23.4

Finance lease obligations	2.5		3.6
Other long-term liabilities	0.6		0.8
Long-term liabilities of discontinued operations	3.1		4.4


•	Employee termination charges are incurred when the Company reduces its workforce through facility consolidations and separation programs.


•	Integration costs are incurred primarily for the integration of acquired companies (see Note 3, “Acquisitions and Strategic Investments,” for descriptions of the Company’s recent acquisitions).



	Employee Termination Charges			Impairment Charges			Transaction-Related Charges			Integration Costs			Other Restructuring Charges (Income)			Total
Balance at December 31, 2018	$	9.3		$	—		$	1.2		$	0.2		$	17.1		$	27.8
Expense, net	19.9			3.6			51.1			2.1			(3.0		)	73.7
Cash payments, net	(13.5		)	—			(51.2		)	(2.3		)	5.6			(61.4		)
Non-cash adjustments/reclassifications	(1.5		)	(3.6		)	0.6			—			(6.3		)	(10.8		)
Balance at September 30, 2019	$	14.2		$	—		$	1.7		$	—		$	13.4		$	29.3



	United States Print and Related Services		International		Total
Balance at December 31, 2017	$	—	$	—	$	—
Ivie acquisition (see Note 3)	28.3		—		28.3
Rise acquisition (see Note 3)	27.2		—		27.2
Balance at September 30, 2018	$	55.5	$	—	$	55.5



	September 30, 2018									December 31, 2017
	United States Print and Related Services			International			Total			United States Print and Related Services			International			Total
Goodwill	$	833.8		$	30.0		$	863.8		$	778.3		$	30.0		$	808.3
Accumulated goodwill impairment loss	(778.3		)	(30.0		)	(808.3		)	(778.3		)	(30.0		)	(808.3		)
Ending Balance	$	55.5		$	—		$	55.5		$	—		$	—		$	—



	September 30, 2018								December 31, 2017
	Weighted Average Amortization Period (Years)	Gross Carrying Amount		Accumulated Amortization			Net Book Value		Weighted Average Amortization Period (Years)	Gross Carrying Amount		Accumulated Amortization			Net Book Value
Trademarks, patents, licenses and agreements	6	$	59.9	$	(20.0	)	$	39.9	7	$	24.0	$	(13.5	)	$	10.5
Capitalized software	5	17.0		(6.1		)	10.9		5	4.8		(4.3		)	0.5
Customer relationships	6	515.1		(444.2		)	70.9		6	460.8		(428.4		)	32.4
Total		$	592.0	$	(470.3	)	$	121.7		$	489.6	$	(446.2	)	$	43.4



	Amortization Expense
Remainder of 2019	$	10.9
2020	39.2
2021	30.7
2022	28.2
2023	24.6
2024 and thereafter	16.1
Total	$	149.7



	Amortization Expense
Remainder of 2018	$	9.1
2019	32.5
2020	27.1
2021	18.8
2022	16.3
2023 and thereafter	17.9
Total	$	121.7



	September 30, 2018		December 31, 2017
Raw materials and manufacturing supplies	$	197.7	$	128.7
Work in process	64.7		43.6
Finished goods	92.1		74.2
Total	$	354.5	$	246.5


⁽¹⁾	Other consists of computer equipment, vehicles, furniture and fixtures, leasehold improvements and communication-related equipment.



	September 30, 2019			December 31, 2018
Master note and security agreement	$	74.5		$	96.2
Term Loan A	814.7			281.3
Term Loan B	—			279.5
Revolving credit facility	19.4			—
Senior unsecured notes	243.5			243.5
International term loans	17.3			17.8
International revolving credit facilities	3.3			11.8
Other	2.1			2.6
Debt issuance costs	(9.9		)	(7.2		)
Total debt	$	1,164.9		$	925.5
Less: short-term debt and current portion of long-term debt	(66.0		)	(42.9		)
Long-term debt	$	1,098.9		$	882.6



	Capitalized Debt Issuance Costs
Balance at December 31, 2017	$	10.3
Amortization of debt issuance costs	(2.3		)
Balance at September 30, 2018	$	8.0



	Capitalized Debt Issuance Costs
Balance at December 31, 2018	$	7.2
Debt issuance costs from January 31, 2019 debt financing arrangement	6.0
Loss on debt extinguishment from February 10, 2017 debt financing arrangement	(0.7		)
Loss on debt extinguishment from July 26, 2019 delayed draw Term Loan A funding and retirement of Term Loan B	(0.5		)
Amortization of debt issuance costs	(2.1		)
Balance at September 30, 2019	$	9.9



	Original Issue Discount
Balance at December 31, 2018	$	1.0
Original issue discount from January 31, 2019 debt financing arrangement	15.0
Loss on debt extinguishment from February 10, 2017 debt financing arrangement	(1.0		)
Loss on debt extinguishment from July 26, 2019 delayed draw Term Loan A funding and retirement of Term Loan B	(14.1		)
Amortization of original issue discount	(0.9		)
Balance at September 30, 2019	$	—



	Loss on Debt Extinguishment
Debt issuance costs:
Debt issuance costs from February 10, 2017 debt financing arrangement	$	0.7
Debt issuance costs from January 31, 2019 debt financing arrangement	14.2
Debt issuance costs from July 26, 2019 delayed draw Term Loan A funding and retirement of Term Loan B	0.5
Original issue discount:
Original issue discount from February 10, 2017 debt financing arrangement	1.0
Original issue discount from July 26, 2019 delayed draw Term Loan A funding and retirement of Term Loan B	14.1
Total	$	30.5



	Loss on Debt Extinguishment
Debt issuance costs from April 28, 2014 debt financing arrangement	$	1.1
Debt issuance costs from February 10, 2017 debt financing arrangement	1.5
Total	$	2.6


•	Total Leverage Ratio. On a rolling twelve-month basis, the total leverage ratio, defined as total consolidated debt to consolidated EBITDA, shall not exceed 3.75 to 1.00 (for the twelve months ended September 30, 2019, the Company’s total leverage ratio was 3.18 to 1.00).



	Net Sales				Operating Income (Loss)			Restructuring, Impairment and Transaction- Related Charges
	Products		Services		Operating Income (Loss)			Restructuring, Impairment and Transaction- Related Charges
Three months ended September 30, 2018
United States Print and Related Services	$	742.3	$	198.0	$	49.0		$	3.2
International	84.4		4.4		3.8			1.9
Total operating segments	826.7		202.4		52.8			5.1
Corporate	—		—		(12.2		)	0.2
Total	$	826.7	$	202.4	$	40.6		$	5.3

Three months ended September 30, 2017
United States Print and Related Services	$	762.5	$	143.8	$	53.4		$	7.8
International	94.4		4.7		7.2			(1.0		)
Total operating segments	856.9		148.5		60.6			6.8
Corporate	—		—		(13.8		)	1.2
Total	$	856.9	$	148.5	$	46.8		$	8.0

Nine months ended September 30, 2018
United States Print and Related Services	$	2,160.7	$	566.9	$	102.6		$	31.7
International	270.5		14.0		11.1			4.9
Total operating segments	2,431.2		580.9		113.7			36.6
Corporate	—		—		(45.1		)	4.0
Total	$	2,431.2	$	580.9	$	68.6		$	40.6

Nine months ended September 30, 2017
United States Print and Related Services	$	2,258.7	$	422.1	$	156.6		$	17.7
International	271.9		14.5		15.3			1.8
Total operating segments	2,530.6		436.6		171.9			19.5
Corporate	—		—		(44.0		)	3.0
Total	$	2,530.6	$	436.6	$	127.9		$	22.5


ITEM 2.	~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations