Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

As of ~~July 28, 2017, 70.0~~April 27, 2018, 70.3 million shares of common stock were outstanding.

	June 30,			December 31,			March 31,			December 31,
	2017			2016			2018			2017
ASSETS
Cash and cash equivalents	$	224.0		$	317.5		$	235.2		$	273.4
Receivables, less allowances for doubtful accounts of $35.7 in 2017 (2016 - $35.9)		1,301.5			1,354.4
Inventories (Note 4)		392.4			379.6
Receivables, less allowances for doubtful accounts of $38.4 in 2018 (2017 - $32.4)								1,345.4			1,417.6
Inventories (Note 3)								339.9			416.8
Prepaid expenses and other current assets		142.3			136.7			115.8			109.1
Investment in LSC and Donnelley Financial (Note 2)		2.3			328.7
Total current assets		2,062.5			2,516.9			2,036.3			2,216.9
Property, plant and equipment-net (Note 5)		633.2			650.3
Goodwill (Note 6)		607.1			602.0
Other intangible assets-net (Note 6)		157.5			171.9
Property, plant and equipment-net (Note 4)								588.7			615.1
Goodwill (Note 5)								590.7			588.5
Other intangible assets-net (Note 5)								136.3			143.3
Deferred income taxes		119.7			108.9			73.3			81.7
Other noncurrent assets		251.8			234.7			255.3			259.0
Total assets	$	3,831.8		$	4,284.7		$	3,680.6		$	3,904.5
LIABILITIES
Accounts payable	$	911.6		$	1,001.2		$	860.8		$	1,094.7
Accrued liabilities		409.7			541.7			349.2			447.5
Short-term and current portion of long-term debt (Note 15)		19.1			8.2
Short-term and current portion of long-term debt (Note 14)								219.1			10.8
Total current liabilities		1,340.4			1,551.1			1,429.1			1,553.0
Long-term debt (Note 15)		2,233.4			2,379.2
Long-term debt (Note 14)								1,969.4			2,098.9
Pension liabilities		105.9			119.4			93.6			102.7
Other postretirement benefits plan liabilities		130.3			134.1			108.8			113.2
Long-term income tax liability								59.4			59.4
Other noncurrent liabilities		183.3			193.1			208.6			180.2
Total liabilities		3,993.3			4,376.9			3,868.9			4,107.4
Commitments and Contingencies (Note 14)
EQUITY (Note 10)
Commitments and Contingencies (Note 13)
EQUITY (Note 9)
RRD stockholders' equity
Preferred stock, $1.00 par value
Authorized: 2.0 shares; Issued: None		—			—			—			—
Common stock, $0.01 par value
Authorized: 165.0 shares;
Issued: 89.0 shares in 2017 and 2016		0.9			0.9
Issued: 89.0 shares in 2018 and 2017								0.9			0.9
Additional paid-in-capital		3,449.0			3,468.5			3,412.5			3,444.0
Accumulated deficit		(2,140.1	)		(2,155.4	)		(2,232.3	)		(2,225.7	)
Accumulated other comprehensive loss		(143.0	)		(55.7	)		(82.7	)		(103.7	)
Treasury stock, at cost, 19.0 shares in 2017 (2016 - 19.1 shares)		(1,341.9	)		(1,364.0	)
Treasury stock, at cost, 18.7 shares in 2018 (2017 - 18.9 shares)								(1,301.2	)		(1,333.1	)
Total RRD stockholders' equity		(175.1	)		(105.7	)		(202.8	)		(217.6	)
Noncontrolling interests		13.6			13.5			14.5			14.7
Total equity		(161.5	)		(92.2	)		(188.3	)		(202.9	)
Total liabilities and equity	$	3,831.8		$	4,284.7		$	3,680.6		$	3,904.5

														Three Months Ended
	Three Months Ended						Six Months Ended							March 31,
	June 30,						June 30,							2018				2017
	2017			2016				2017			2016
Products net sales	$	1,263.4		$	1,231.7			$	2,552.3		$	2,474.4			$	1,286.6			$	1,271.5
Services net sales		382.6			400.9				770.0			803.8				421.2				387.4
Total net sales		1,646.0			1,632.6				3,322.3			3,278.2				1,707.8				1,658.9

Products cost of sales (exclusive of depreciation and amortization)		1,020.7			985.2				2,045.0			1,957.1				1,051.9				1,007.8
Services cost of sales (exclusive of depreciation and amortization)		322.2			331.0				646.4			672.2				361.2				324.3
Total cost of sales		1,342.9			1,316.2				2,691.4			2,629.3				1,413.1				1,332.1

Products gross profit		242.7			246.5				507.3			517.3				234.7				263.7
Services gross profit		60.4			69.9				123.6			131.6				60.0				63.1
Total gross profit		303.1			316.4				630.9			648.9				294.7				326.8
Selling, general and administrative expenses (exclusive of depreciation and amortization)		213.2			233.6				435.9			462.9				214.6				225.8
Restructuring, impairment and other charges-net (Note 7)		3.8			8.2				12.9			13.5
Restructuring and other-net (Note 6)															0.8				9.1
Depreciation and amortization		47.5			49.9				96.1			102.5				47.2				48.6
Other operating income		—			—				—			(12.3	)			(0.1	)			—
Income from operations		38.6			24.7				86.0			82.3				32.2				43.3
Interest expense-net		45.5			51.4				93.8			101.8				41.7				48.3
Investment and other (income) expense -net		(93.1	)		0.7				(44.4	)		0.6
Loss on debt extinguishments		13.6			—				13.6			—
Earnings (loss) before income taxes		72.6			(27.4	)			23.0			(20.1	)
Income tax benefit		(4.1	)		(4.4	)			(3.9	)		(1.0	)
Net earnings (loss) from continuing operations		76.7			(23.0	)			26.9			(19.1	)
Income from discontinued operations, net of tax (Note 2)		—			8.7				—			44.9
Net earnings (loss)		76.7			(14.3	)			26.9			25.8
Investment and other (income) expense-net															(5.6	)			44.6
Loss on debt extinguishment															0.1				—
Loss before income taxes															(4.0	)			(49.6	)
Income tax expense															5.3				0.2
Net loss															(9.3	)			(49.8	)
Less: Income attributable to noncontrolling interests		0.2			0.2				0.5			0.5				0.3				0.3
Net earnings (loss) attributable to RRD common stockholders	$	76.5		$	(14.5	)		$	26.4		$	25.3
Net loss attributable to RRD common stockholders														$	(9.6	)		$	(50.1	)

Basic net earnings (loss) per share attributable to RRD common stockholders (Note 11):
Continuing operations	$	1.09		$	(0.33	)		$	0.38		$	(0.28	)
Discontinued operations	$	—		$	0.12			$	—		$	0.64
Net earnings (loss) attributable to RRD stockholders	$	1.09		$	(0.21	)		$	0.38		$	0.36

Diluted net earnings (loss) per share attributable to RRD common stockholders (Note 11):
Continuing operations	$	1.09		$	(0.33	)		$	0.38		$	(0.28	)
Discontinued operations	$	—		$	0.12			$	—		$	0.64
Net earnings (loss) attributable to RRD	$	1.09		$	(0.21	)		$	0.38		$	0.36
Net loss per share attributable to RRD common stockholders (Note 10):
Basic net loss per share														$	(0.14	)		$	(0.71	)
Diluted net loss per share														$	(0.14	)		$	(0.71	)

Dividends declared per common share	$	0.14		$	0.78			$	0.28		$	1.56			$	0.14			$	0.14

Weighted average number of common shares outstanding:
Basic		70.1			70.0				70.1			69.9				70.3				70.1
Diluted		70.2			70.0				70.3			69.9				70.3				70.1

Six Months Ended

June 30,

2017

2016

OPERATING ACTIVITIES

Net earnings

$
26.9

$
25.8

Adjustments to reconcile net earnings to net cash used in operating activities:

Impairment charges - net

0.3

0.6

Depreciation and amortization

96.1

211.0

Provision for doubtful accounts receivable

1.4

12.5

Share-based compensation

4.3

10.0

Deferred income taxes

(5.3
)

(20.8
)
Changes in uncertain tax positions

0.4

(1.4
)
Gain on investments and other assets - net

(2.4
)

(12.4
)
Realized gain on disposition of available-for-sale securities - net

(40.8
)

—

Loss on debt extinguishments

13.6

—

Net pension and other postretirement benefits plan income

(7.3
)

(38.1
)
Loss on pension settlement

—

96.9

Other

9.3

3.3

Changes in operating assets and liabilities - net of dispositions:

Accounts receivable - net

69.8

14.2

Inventories

(8.0
)

(3.3
)
Prepaid expenses and other current assets

(6.9
)

(10.8
)
Accounts payable

(111.2
)

(274.5
)
Income taxes payable and receivable

(3.4
)

(15.2
)
Accrued liabilities and other

(79.6
)

(84.9
)
Pension and other postretirement benefits plan contributions

(9.0
)

(13.2
)
Net cash used in operating activities

(51.8
)

(100.3
)
INVESTING ACTIVITIES

Capital expenditures

(54.2
)

(101.4
)
Disposition of businesses

—

13.4

Proceeds from sales of investments and other assets

126.7

3.1

Transfers from restricted cash

0.7

14.9

Other investing activities

—

(2.1
)
Net cash provided by (used in) investing activities

73.2

(72.1
)
FINANCING ACTIVITIES

Net change in short-term debt

12.3

0.9

Payments of current maturities and long-term debt

(200.4
)

(2.9
)
Payments on Credit Agreement borrowings

(655.0
)

—

Proceeds from Credit Agreement borrowings

820.0

—

Net proceeds from credit facility borrowings

—

185.0

Dividends paid

(19.6
)

(108.7
)
Net transfer of cash and cash equivalents to LSC and Donnelley Financial

(78.0
)

—

Other financing activities

(1.6
)

1.9

Net cash (used in) provided by financing activities

(122.3
)

76.2

Effect of exchange rate on cash and cash equivalents

7.4

(2.8
)
Net decrease in cash and cash equivalents

(93.5
)

(99.0
)
Cash and cash equivalents at beginning of year

317.5

389.6

Cash and cash equivalents at end of period

$
224.0

$
290.6

SUPPLEMENTAL NON-CASH DISCLOSURE:

Assumption of warehousing equipment related to customer contract

$
—

$
8.8

Debt-for-equity exchange

130.5

—

	Three Months Ended
	March 31,
	2018			2017
OPERATING ACTIVITIES
Net loss	$	(9.3	)	$	(49.8	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		47.2			48.6
Provision for doubtful accounts receivable		8.4			1.7
Share-based compensation		1.2			1.9
Deferred income taxes		3.9			(1.6	)
Changes in uncertain tax positions		—			0.2
Loss on disposition of available-for-sale securities-net		—			51.6
Net pension and other postretirement benefits plan income		(3.8	)		(3.6	)
Other		(0.7	)		4.5
Changes in operating assets and liabilities:
Accounts receivable-net		74.0			94.2
Inventories		15.4			6.2
Prepaid expenses and other current assets		(5.8	)		(3.9	)
Accounts payable		(240.9	)		(125.7	)
Income taxes payable and receivable		(0.8	)		5.2
Accrued liabilities and other		(22.8	)		(29.6	)
Pension and other postretirement benefits plan contributions		(6.3	)		(4.9	)
Net cash used in operating activities		(140.3	)		(5.0	)
INVESTING ACTIVITIES
Capital expenditures		(21.5	)		(26.1	)
Proceeds from sales of investments and other assets		47.7			123.2
Proceeds/(payments) related to company-owned life insurance		1.2			(11.7	)
Proceeds from disposal of business		0.3			—
Net cash provided by investing activities		27.7			85.4
FINANCING ACTIVITIES
Net proceeds from other short-term debt		35.4			4.7
Payments of current maturities and long-term debt		(0.1	)		—
Proceeds from credit facility borrowings		366.0			280.0
Payments on credit facility borrowings		(324.0	)		(425.0	)
Dividends paid		(9.8	)		(9.8	)
Payments of withholding taxes on share-based compensation		(0.7	)		(1.9	)
Other financing activities		(0.7	)		(1.3	)
Net cash provided by (used in) financing activities		66.1			(153.3	)
Effect of exchange rate on cash, cash equivalents and restricted cash		4.4			1.5
Net decrease in cash, cash equivalents and restricted cash		(42.1	)		(71.4	)
Cash, cash equivalents and restricted cash at beginning of year		301.5			335.9
Cash, cash equivalents and restricted cash at end of period	$	259.4		$	264.5

The accompanying unaudited condensed consolidated interim financial statements include the accounts of R.R. Donnelley & Sons Company and its subsidiaries (the “Company” or “RRD”) and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed consolidated interim financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods and should be read in conjunction with the consolidated financial statements and the related notes thereto included in the Company’s latest Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 filed with the SEC on February 28, ~~2017.~~2018. Operating results for the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, ~~2017.~~2018. All significant intercompany transactions have been eliminated in consolidation. These unaudited condensed consolidated interim financial statements include estimates and assumptions of management that affect the amounts reported in the condensed consolidated financial statements. Actual results could differ from these estimates.

On October 1, 2016, ~~the Company~~we completed the separation of ~~its~~our financial communications and data services business (“Donnelley Financial Solutions, Inc.” or “Donnelley Financial”) and ~~the~~our publishing and retail-centric print services and office products business (“LSC Communications, Inc.” or “LSC”) into two separate publicly-traded companies (the ~~"Separation"~~“Separation”). ~~The Company~~We completed the tax-free distribution of approximately 26.2 million shares, or 80.75%, of the outstanding common stock of each of Donnelley Financial and LSC, to ~~the Company’s~~RRD stockholders (the “Distribution”). The Distribution was made to RRD stockholders of record as of the close of business on September 23, 2016, who received one share of ~~each~~ Donnelley Financial common stock and one share of LSC common stock for every eight shares of RRD common stock ~~owned~~held as of the record ~~date (the “Distribution”). The Company~~date. Immediately following the Distribution, we held approximately 6.2 million shares of Donnelley Financial common stock and approximately 6.2 million shares of LSC common stock.

In March 2017, we sold all of the approximately 6.2 million shares of LSC common stock retained ~~19.25%~~by us and used the proceeds to repay a portion of the outstanding ~~common stock~~borrowings under the Company’s then-existing credit facility. In June 2017 and August 2017, we exchanged all of ~~each Donnelley Financial and LSC. The historical financial results~~the approximately 6.2 million shares of Donnelley Financial common stock for certain outstanding senior indebtedness of the Company, which obligations were subsequently cancelled and ~~LSC prior~~discharged upon delivery to the ~~Separation, are presented as discontinued operations on~~Company.

During the third quarter of 2017, the Company identified an error in the accounting for certain contracts with an inventory buy-back option in the Business Services segment. As a result, the error, which was determined by management to be immaterial to the previously issued financial statements, has been corrected herein from the amounts previously reported. There was no impact to net loss, net loss per share, or the Condensed Consolidated Statements of ~~Operations and, as such, have been excluded from both continuing operations and segment results for all periods presented.~~ ~~Sales from RRD~~Comprehensive Income (Loss). The impact of the revision was to ~~Donnelley Financial and LSC~~reduce previously ~~eliminated in consolidation have been recast and are now shown as external sales within the financial results of continuing operations. These~~reported net sales ~~were $36.3~~and cost of sales by $17.4 million, ~~and $77.9 million~~respectively, for the three ~~and six~~ months ended ~~June 30, 2016, respectively.~~ ~~Unless indicated otherwise,~~March 31, 2017.

The following table presents the ~~information in~~impact of the ~~Notes to~~related balance sheet revision on the March 31, 2017 Condensed Consolidated ~~Financial Statements relates to the Company's continuing operations. Prior periods have~~Balance Sheet:

The March 31, 2017 Consolidated Statement of Cash Flows has also been ~~recast~~revised to reflect the ~~Company's current segment reporting structure. See Note 2,~~ ~~Discontinued Operations, for more information on the Separation.~~

Immediately following the Distribution on October 1, 2016, the Company affected a one-for-three reverse stock split for RRD common stock (the “Reverse Stock Split”). The Reverse Stock Split was approved by the Company’s Board of Directors on September 14, 2016 and previously approved by the Company’s stockholders at the annual meeting on May 19, 2016. As a resultimpact of the Reverse Stock Split, the number of issued and outstanding and treasury shares of the Company’s common stock was reduced proportionally based on the Reverse Stock Split ratio of one share for every three shares of common stock held before the Reverse Stock Split. All references in these unaudited condensed consolidated interim financial statements to the number of shares of common stock and per share amounts have been retroactively adjusted to give effect to the Reverse Stock Split.

~~Immediately~~The following table provides a reconciliation of cash, cash equivalents and restricted cash at March 31, 2018 and December 31, 2017 reported within the ~~Distribution,~~Condensed Consolidated Balance Sheets that sum to the ~~Company held approximately 6.2 million shares~~total of ~~Donnelley Financial Solutions common stock and approximately 6.2 million shares of LSC common stock. The Company accounts for these investments as available-for-sale equity securities. In March 2017,~~ the Company sold the 6.2 million shares of LSC common stock it retained upon spinoff for net proceeds of $121.4 million, resulting in a realized loss of $51.6 million, which was recorded within investment and other income (expense)-netsame such amounts shown in the Condensed Consolidated ~~Statements~~Statement of Operations for the six months ended June 30, 2017. In June 2017, the Company completed a non-cash debt-for-equity exchange, in which RRD exchanged 6,143,208 of its retained shares of Donnelley Financial for the extinguishment of $111.6 million in aggregate principal amount of RRD indebtedness. See Note 15, ~~Debt, for additional details of this debt-for-equity transaction. As of June 30, 2017, the fair value of the remaining 99,594 retained shares of Donnelley Financial common stock was $2.3 million.~~Cash Flows.

The ~~significant non-cash items~~effective income tax rate for the three months ended March 31, 2018 was (132.5%), compared to (0.4%) in the same period in 2017, and is primarily driven by the inability to recognize a tax benefit on certain losses and limitations on the Company’s interest expense deduction as a result of the Tax Cuts and Jobs Act of 2017 (the “Tax Act”). Non-deductible interest expense will be carried forward; however it is more likely than not that the benefit of such deferred tax asset will not be fully realized and a valuation allowance was recorded. The effective income tax rate for the three months ended March 31, 2017 reflects the impact of the $51.6 million realized loss on the sale of LSC retained shares. The sale generated a capital ~~expenditures~~loss which will be carried forward; however it is more likely than not that the benefit of ~~discontinued operations~~such deferred tax asset will not be fully realized and a valuation allowance was recorded.

Cash payments for income taxes were $9.2 million and $15.2 million for the three months ended March 31, 2018 and 2017, respectively. Cash refunds for income taxes were $7.1 million and $18.9 million for the three months ended March 31, 2018 and 2017, respectively.

On December 22, 2017, the SEC issued Staff Accounting Bulletin 118 (SAB 118) which provides guidance for companies analyzing their accounting for the income tax effects of the Tax Act. SAB 118 provides that a company may report provisional amounts based on reasonable estimates. The provisional estimates are then subject to adjustment during a measurement period up to one year and should be accounted for as ~~follows:~~

~~In connection~~a prospective change. At December 31, 2017, we were able to make reasonable provisional estimates of the one-time transition tax and impact to deferred taxes; however we continue to analyze our data and refine our estimated amounts accordingly, and continue to interpret any guidance or subsequent clarification of the tax law. As a result, we may make adjustments to the provisional amounts recorded, throughout the year, in accordance with the Separation, the Company entered into transition services agreements with Donnelley Financial and LSC under which the companies will provide one another with certain services to help ensure an orderly transition following the Separation (the “Transition Services Agreement”). The charges for these services are intended to allow the companies, as applicable, to recover the direct and indirect costs incurredguidance outlined in providing such services. The Transition Services Agreement generally provides for a term of services starting at the Separation date and continuing for a period of up to twenty-four months following the Separation.SAB 118. During the ~~three~~first quarter of 2018, we made an adjustment of $2.3 million to increase the provisional amounts recorded at December 31, 2017.

Deferred U.S. income taxes and ~~six months ended June 30, 2017,~~foreign taxes have historically not been provided on the ~~Company~~excess of the investment value for financial reporting over the tax basis of investments in those foreign subsidiaries for which such excess is considered to be permanently reinvested in those operations. We continue to analyze the global working capital and cash requirements and the potential tax liabilities attributable to repatriation, but we have yet to determine whether to change the prior assertion and repatriate earnings. We will record the tax effects of any change in the prior assertion in the period the analysis is complete and reasonable estimates are made.

On January 1, 2018, we adopted ASC Topic 606, “Revenue from Contracts with Customers” using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historical accounting under Topic 605. All revenue recognized ~~$2.2 million and $5.0 million, respectively, as a reduction of costs within selling general and administrative expenses within~~in the Condensed ~~Consolidated~~ Statements of Operations is considered to be revenue from ~~the Transition Services Agreement.~~

~~The Company also entered into various commercial agreements which govern sales transactions between~~We recorded a net increase to opening retained earnings of $12.9 million as of January 1, 2018 due to the ~~companies. Under these commercial agreements,~~cumulative impact of adopting Topic 606, with the ~~Company recognized~~impact primarily related to the ~~following transactions with LSC and Donnelley Financial during the three and six months ended June 30, 2017:~~timing of revenue recognition for certain inventory that has been billed but not yet shipped.

~~Additionally, the Company had the following balances recorded within the Condensed Consolidated Balance Sheets associated with LSC and Donnelley Financial:~~ Disaggregation of Revenue

The Company also recognized $75.2 million of net cash inflow from Donnelley Financial and LSC within operating activities in the Condensed Consolidated Statements of Cash Flows during the six months ended June 30, 2017.

On August 4, 2016, the Company acquired Precision Dialogue Holdings, LLC (“Precision Dialogue”), a provider of email marketing, direct mail marketing and other services with operations in the United States for a purchase price, net of cash acquired, of approximately $59.2 million. The acquisition expandedfollowing table presents the Company’s ~~ability to help its customers measure communications effectiveness~~net sales disaggregated by products and ~~audience engagement.~~ ~~During the three and six months ended June 30, 2017,~~ ~~Precision Dialogue contributed $13.7 million and $27.5 million, respectively, in sales and income before income taxes of $0.6 million and $1.5 million, respectively. Precision Dialogue~~ is ~~included within the operating results of the Variable Print and Strategic Services segments.~~

On January 11, 2016, the Company sold two entities within the business process outsourcing reporting unit for net proceeds of $13.4 million. This resulted in a net gain of $12.3 million during the six months ended June 30, 2016, which was recorded in other operating income in the Condensed Consolidated Statements of Operations. Additionally, during the three months ended September 30, 2016, the Company sold three immaterial entities in the International segment.

~~The components of the Company’s inventories, net of excess and obsolescence reserves for raw materials and finished goods, at June 30, 2017 and December 31, 2016 were as follows:~~services:

Our products revenue is primarily recognized at a point in time. We generally recognize revenue for products sales upon the transfer of control of the products to the client which typically occurs upon transfer of title and risk of ownership, which is generally upon shipment to the client. For certain products sales, we are able to recognize revenue for completed inventory billed but not yet shipped at the client’s direction.

We generate revenue by providing various commercial printing products and offer a full range of branded materials including manuals, publications, brochures, business cards, flyers, post cards, posters and promotional items.

We generate revenue by creating critical business communications, including customer billings, financial statements, healthcare communications and insurance documents. Our capabilities include design and composition, variable imaging, email, archival and digital mail interaction, as well as our innovative RRDigital solution set.

We generate revenue by providing print production, including touch mailings, and postal optimization strategies.

~~5. Property, Plant~~We generate revenue by providing packaging print for clients in consumer electronics, life sciences, cosmetics and ~~Equipment~~consumer packaged goods industries.

We generate revenue by producing custom labels for clients across multiple industries including warehouse and distribution, retail, pharmaceutical, manufacturing and consumer packaging. We offer distribution and shipping labels, healthcare and durable goods labels, promotional labels and consumer product goods packaging labels.

We generate revenue by providing various in-store marketing materials, using our digital and offset printing capabilities, including in-store signage and point-of-purchase displays. We also create photobooks.

We generate revenue by providing workflow design to assembly, configuration, kitting and fulfillment for clients in consumer electronics, telecommunications, life sciences, cosmetics, education and industrial industries.

We generate revenue by producing a variety of forms including invoices, order forms and business forms that support both the private and public sectors for clients in financial, government, retail, healthcare and business services industries.

Our services revenue is recognized both at a point in time as well as over time. Our logistics revenue is primarily recognized over time as the performance obligation is completed. Due to the short transit period of logistics performance obligations, the timing of revenue recognition does not require significant judgment. Our business process outsourcing and digital and creative solutions revenue is recognized over time or at a point in time, depending on the nature of the ~~Company’s property, plant~~service which could be either recurring or project-based.

We generate revenue by providing specialized transportation and ~~equipment at June 30, 2017~~distribution services. These services are comprised of freight services, including truckload, less-than-truckload, intermodal and ~~December 31, 2016 were~~international freight forwarding; international mail and parcel distribution; print logistics services, including distribution of retail and newsstand printed materials; and courier services including same day and next day delivery.

We generate revenue by providing outsourcing services including creative services, research and analytics, financial management and other services for legal providers, insurance, telecommunications, utilities, retail and financial services companies.

We generate revenue by creating and managing content designed to speak directly to customers, including print and digital advertising, direct marketing and direct mail design, packaging design, marketing and sales collateral and in-store marketing.

Certain clients may receive volume-based rebates or early payment discounts, which are accounted for as ~~follows:~~

~~During~~variable consideration. We estimate these amounts based on the ~~three~~expected amount to be earned by our clients and ~~six months ended June 30, 2017, depreciation expense was $34.9 million~~reduce revenue accordingly. We do not expect significant changes to estimates of variable consideration. Given the nature of our products and ~~$70.6 million, respectively. During~~ the ~~three and six months ended June 30, 2016, depreciation expense was $38.9 million and $78.6 million, respectively.~~

~~The changes in the carrying amount~~history of ~~goodwill for the six months ended June 30, 2017 were as follows:~~

~~The components of other intangible assets at June 30, 2017 and December 31, 2016 were as follows:~~

Amortization expense for other intangible assets was $7.0 million and $14.5 million for the three and six months ended June 30, 2017, respectively. Amortization expense for other intangible assets was $8.1 million and $17.7 million for the three and six months ended June 30, 2016, respectively.

The following table provides information about contract assets and ~~Other Charges~~contract liabilities from contracts with clients:

Contract liabilities primarily relate to client advances received prior to completion of performance obligations. Reductions in ~~Results~~contract liabilities are a result of ~~Operations~~the Company’s completion of performance obligations.

~~For~~Revenue recognized during the three months ended ~~June 30, 2017~~March 31, 2018 from amounts included in contract liabilities at the beginning of the period was approximately $21.0 million. During the three months ended March 31, 2018, we reclassified $4.0 million of contract assets to receivables as a result of the completion of the performance obligation and ~~2016,~~ the ~~Company recorded~~right to the ~~following net restructuring, impairment~~consideration becoming unconditional.

As part of the adoption of Topic 606, we have elected practical expedients and exemptions allowable under the guidance.

We account for shipping and handling activities performed after the control of a good has been transferred to the client as a fulfillment cost. We accrue for the costs of shipping and handling activities if revenue is recognized before contractually agreed shipping and handling activities occur.

We apply Topic 606 to a portfolio of contracts (or performance obligations) with similar characteristics as we reasonably expect that the effects on the financial statements of applying this guidance to the portfolio would not differ significantly from applying this guidance to the individual contracts (or performance obligations) within that portfolio.

When the output method for measure of progress is determined appropriate, we recognize revenue in the amount for which we have the right to invoice for revenue that is recognized over time and for which we can demonstrate that the invoiced amount corresponds directly with the value to the client for the performance completed to date.

We generally expense sales commissions and other ~~charges:~~ costs to obtain a contract when incurred, because the amortization period would have been one year or less. These costs are recorded within selling, general and administrative expenses.

We exclude sales taxes and other similar taxes from the measurement of the transaction price. We do not disclose the value of unsatisfied performance obligations, nor do we disclose the timing of revenue recognition for contracts with an original expected length of one year or less.

The components of the Company’s inventories, net of excess and obsolescence reserves for raw materials and finished goods, at March 31, 2018 and December 31, 2017 were as follows:

~~For the six months ended June 30, 2017 and 2016, the Company recorded the following net restructuring, impairment and other charges:~~

~~For the three and six months ended June 30, 2017, the Company recorded net restructuring charges~~The components of ~~$2.4 million and $8.8 million, respectively, for employee termination costs. These charges primarily relate to ceasing~~ the Company’s relationship in a joint venture within the International segment, the reorganization of selling, general and administrative functions primarily within the Corporate, International and Variable Print segments and one facility closure in the Strategic Services segment. The Company also recorded $0.3 million related to a net gain on the sale of previously impaired equipment during the three months ended June 30, 2017. For the six months ended June 30, 2017, the Company recorded net impairment charges of $0.2 million primarily related to the impairment of equipment associated with the facility closure in the Strategic Services segment, partially offset by the aforementioned net gain recorded in the second quarter of 2017. Additionally, the Company incurred lease termination and other restructuring charges of $1.1 million and $2.7 million, respectively, for the three and six months ended June 30, 2017.

For the three and six months ended June 30, 2016, the Company recorded net restructuring charges of $6.1 million and $11.0 million, respectively, for employee termination costs. These charges primarily related to two facility closures in the International segment and the reorganization of certain operations. Additionally, the Company incurred lease termination and other restructuring charges of $0.8 million and $2.3 million, respectively, for the three and six months ended June 30, 2016. The Company incurred $0.7 million of impairment charges related to buildings and machineryproperty, plant and equipment associated with facility closures for the three months ended June 30, 2016. For the six month period ended June 30, 2016, the Company recognized $0.9 million of net gains on the sale of previously impaired assets, partially offset by impairment charges related to buildingsat March 31, 2018 and ~~machinery and equipment associated with facility closures.~~

For the three and six months ended June 30, 2017 and 2016, the Company recorded other charges of $0.6 million and $1.2 million and $0.6 million and $1.1 million, respectively, for multi-employer withdrawal pension plan obligations unrelated to facility closures. The total liabilities for the withdrawal obligations associated with the Company’s decision to withdraw from multi-employer pension plans included in accrued liabilities and other noncurrent liabilities are $4.9 million and $33.4 million, respectively, as of June 30, 2017.

The Company’s multi-employer pension plan withdrawal liabilities could be affected by the financial stability of other employers participating in the plans and any decisions by those employers to withdraw from the plans in the future. While it is not possible to quantify the potential impact of future events or circumstances, reductions in other employers’ participation in multi-employer pension plans, including certain plans from which the Company has previously withdrawn, could have a material impact on the Company’s previously estimated withdrawal liabilities, consolidated results of operations, financial position or cash flows.

~~The restructuring reserve as of~~ December 31, ~~2016 and June 30, 2017, and changes during the six months ended June 30,~~ 2017 were as follows:

~~The current portion~~During the three months ended March 31, 2018 and 2017, depreciation expense was $33.3 million and $35.7 million, respectively.

During the fourth quarter of ~~restructuring reserves~~2017, we entered into an agreement to sell a building and transfer the related land use rights to a third party for a facility in the Business Services segment. During the three months ended December 31, 2017 and March 31, 2018, we received deposits in accordance with the terms of ~~$9.0~~the agreement of approximately $12.5 million ~~at June 30, 2017 was included in accrued liabilities, while the long-term portion of $14.2~~and $32.1 million, ~~primarily related to multi-employer pension plan withdrawal obligations related to facility closures and lease termination costs, was included~~respectively, which are recorded in other noncurrent liabilities ~~at June 30, 2017.~~on the Condensed Consolidated Balance Sheets. The terms of the agreement require the buyer to make additional deposits to us through the close date, which is expected to occur in 2020. As of March 31, 2018, we continue to classify the carrying cost of the building within property, plant and equipment and record depreciation expense. The carrying cost of the land use rights are classified in other noncurrent assets.

The ~~Company anticipates that payments associated with the employee terminations reflected~~changes in the ~~above table will be substantially completed by June 2018.~~carrying amount of goodwill for the three months ended March 31, 2018 were as follows:

The components of other intangible assets at March 31, 2018 and December 31, 2017 were as follows:

Amortization expense for other intangible assets was $7.0 million and $7.5 million for the three months ended March 31, 2018 and 2017, respectively.

For the three months ended March 31, 2018 and 2017, the Company recorded the following net restructuring and other expenses:

For the three months ended March 31, 2018, the Company recorded net restructuring charges of $3.2 million for employee termination costs. These charges primarily relate to the reorganization of selling, general and administrative functions across each segment and an announced facility closure in the Business Services segment. The Company also incurred lease termination and other restructuring charges of $1.6 million for the three months ended March 31, 2018. Additionally, the Company recorded a $4.9 million net gain on the sale of previously impaired assets in the Business Services segment. These assets were impaired in 2015.

For the three months ended March 31, 2017, the Company recorded net restructuring charges of $6.4 million for employee termination costs. These charges primarily related to ceasing the Company’s relationship in a joint venture within the Business Services segment, the reorganization of certain operations and one facility closure in the Marketing Solutions segment. The Company also incurred lease termination and other restructuring charges of $1.6 million for the three months ended March 31, 2017 and recorded impairment charges of $0.5 million related to equipment associated with a facility closure in the Marketing Solutions segment.

For the three months ended March 31, 2018 and 2017, the Company recorded charges of $0.6 million for MEPP withdrawal obligations unrelated to facility closures. The total liabilities for the withdrawal obligations associated with the Company’s decision to withdraw from all multi-employer pension plans included in accrued liabilities and other noncurrent liabilities are $5.1 million and $31.0 million, respectively, as of March 31, 2018.

The restructuring reserve as of December 31, 2017 and March 31, 2018, and changes during the three months ended March 31, 2018, were as follows:

The current portion of restructuring reserves of $9.1 million at March 31, 2018 was included in accrued liabilities, while the long-term portion of $12.2 million, primarily related to multi-employer pension plan withdrawal obligations related to facility closures, employee terminations in litigation within the Business Services segment and lease termination costs, was included in other noncurrent liabilities at March 31, 2018.

The Company anticipates that payments associated with the employee terminations reflected in the above table will be substantially completed by March 2019, excluding employee terminations in litigation within the Business Services segment.

Payments on all of the Company’s multi-employer pension plan withdrawal obligations are scheduled to be substantially completed by ~~2036.~~2034. Changes based on uncertainties in these estimated withdrawal obligations could affect the ultimate charges related to multi-employer pension plan withdrawals.

The restructuring liabilities classified as “lease terminations and other” consisted of lease terminations, other facility closing costs and contract termination costs. Payments on certain of the lease obligations are scheduled to continue until 2020. Market conditions and the Company’s ability to sublease these properties could affect the ultimate charges related to the lease obligations. Any potential recoveries or additional charges could affect amounts reported in the Company’s financial statements.

The components of the estimated net pension and other postretirement benefits plan income for the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and 2017 ~~and 2016~~ were as follows:

~~The Company expects to make cash contributions of approximately $17.0 million to its pension and other postretirement benefit plans in 2017.~~ During the ~~six~~three months ended ~~June 30, 2017,~~March 31, 2018, the Company contributed ~~$9.0~~$6.3 million to its benefit plans.

In the fourth quarter of 2015, the Company communicated to certain former employees the option to receive a lump-sum pension payment or annuity with payments computed in accordance with statutory requirements, beginning in the second quarter of 2016. Payments to eligible participants who elected to receive a lump-sum pension payment or annuity were funded from existing pension plan assets and liabilities were remeasured as of the payout date. The discount rates and actuarial assumptions used to calculate the payouts were determined in accordance with federal regulations. The company recorded total non-cash settlement charges of $96.4 million, of which $20.4 million is included within selling, general and administrative expenses and $76.0 million is included within income from discontinued operations, net of tax in the Condensed Consolidated Statements of Operations for the three months ended June 30, 2016. These charges resulted from the recognition in earnings of a portion of the actuarial losses recorded in accumulated other comprehensive loss based on the proportion of the obligation settled.

Share-based compensation expense from continuing operations totaled $2.4 million and $3.7 million for the three months ended June 30, 2017 and 2016 respectively, and $4.3 million and $5.8 million for the six months ended June 30, 2017 and 2016, respectively.

In March 2017, the Company awarded its annual share-based compensation grants, which consisted of 569,594 restricted stock units with a grant date fair value of $16.30 per unit and 304,425 performance share units with a grant date fair value of $16.30 per unit. The restricted stock units are subject to a three year graded vesting period. The performance share units are subject to a 34

~~month cliff vesting period. Additionally,~~The Company adopted ASU No. 2017-07 “Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost”, with retrospective adoption, during the first quarter of 2018 and records benefit service costs in ~~May~~cost of sales and selling, general and administrative expenses. The other components, which include interest cost, expected return on plan assets, net amortization and settlements, are recorded in Investment and other (income) expense-net within the Condensed Consolidated Statements of Operations. Previously, all pension and postretirement benefits expense (income) was recorded in cost of sales and selling, general and administrative expenses. See Note 16, New Accounting Pronouncements, for further discussion and impact of adoption.

Share-based compensation expense totaled $1.2 million and $1.9 million for the three months ended March 31, 2018 and 2017, respectively.

In March 2018, the Company awarded its ~~non-employee directors 75,745~~annual share-based compensation grants, which consisted of 683,076 restricted stock units with a grant date fair value of ~~$12.08~~$6.10 per unit and 683,076 performance share units also with a grant date fair value of $6.10 per unit. The restricted stock units are subject to a three year graded vesting period and the performance share units are subject to a 34 month cliff vesting period. Dividends are not paid on restricted stock units.

In addition, during the three months ended March 31, 2018, the Company granted 798,105 cash-settled stock units (“phantom stock units”). The Company’s share price on the date of grant was $7.31. The phantom stock units vest and are payable in ~~May 2018.~~three equal installments over a period of three years after the grant date. Phantom stock units are not shares of the Company’s common stock and therefore the recipients of these awards do not receive ownership interest in the Company or shareholder voting rights. Phantom stock unit awards are subject to forfeiture upon termination of employment prior to vesting, subject in some cases to early vesting upon specified events, including death or permanent disability of the grantee, termination of the grantee’s employment under certain circumstances or a change in control of the Company. All phantom stock unit awards are classified as liability awards due to their expected settlement in cash, and are included in accrued liabilities in the Condensed Consolidated Balance Sheets. Compensation expense for these awards is measured based upon the fair value of the awards at the end of each reporting period. Dividends are not paid on phantom stock units.

The Company’s equity as of December 31, ~~2016~~2017 and ~~June 30, 2017,~~March 31, 2018, and changes during the ~~six~~three months ended ~~June 30, 2017,~~March 31, 2018, were as follows:

During the six months ended June 30, 2017, the Company recorded certain spinoff related adjustments within equity primarily resulting from the final pension asset valuation as required by the Separation and Distribution Agreement.

Basic earnings per share is calculated by dividing net earnings attributable to RRD common stockholders by the weighted average number of common shares outstanding for the period. In computing diluted earnings per share, basic earnings per share is adjusted for the assumed issuance of all potentially dilutive share-based awards, including stock options, restricted stock units and performance share units. Performance share units are ~~considered anti-dilutive and~~ excluded if the performance targets upon which the issuance of the shares is contingent have not been achieved and the respective performance period has not been completed as of the end of the current period. Additionally, stock options are considered anti-dilutive when the exercise price exceeds the average market value of the Company’s stock price during the applicable period. In periods when the Company is in a net loss, ~~from continuing operations,~~ share-based awards are excluded from the calculation of earnings per share as their inclusion would have an anti-dilutive effect.

During the ~~six~~three months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016,~~ no shares of common stock were purchased by the Company; however shares were withheld for tax liabilities upon the vesting of equity awards.

The reconciliation of the numerator and denominator of the basic and diluted earnings per share calculation and the anti-dilutive share-based awards for the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and 2017 ~~and 2016~~ were as follows:

Three Months Ended

Six Months Ended

June 30,

June 30,

2017

2016

2017

2016

Basic net earnings (loss) per share attributable to RRD common stockholders:

Continuing operations

$
1.09

$
(0.33
)

$
0.38

$
(0.28
)
Discontinued operations

—

0.12

—

0.64

Net earnings (loss) attributable to RRD stockholders

$
1.09

$
(0.21
)

$
0.38

$
0.36

Diluted net earnings (loss) per share attributable to RRD common stockholders:

Continuing operations

$
1.09

$
(0.33
)

$
0.38

$
(0.28
)
Discontinued operations

—

0.12

—

0.64

Net earnings (loss) attributable to RRD stockholders

$
1.09

$
(0.21
)

$
0.38

$
0.36

Numerator

Net earnings (loss) attributable to RRD common stockholders - continuing operations

$
76.5

$
(23.2
)

$
26.4

$
(19.6
)
Net earnings from discontinued operations, net of income taxes

—

8.7

—

44.9

Net earnings (loss) attributable to RRD common stockholders

$
76.5

$
(14.5
)

$
26.4

$
25.3

Denominator:

Weighted average number of common shares outstanding

70.1

70.0

70.1

69.9

Dilutive options and awards

0.1

—

0.2

—

Diluted weighted average number of common shares outstanding

70.2

70.0

70.3

69.9

Weighted average number of anti-dilutive share-based awards:

Stock options

0.9

0.8

1.1

0.8

Performance share units

0.3

0.2

0.2

0.2

Restricted stock units

1.1

0.2

0.3

0.4

Total

2.3

1.3

1.6

1.4

Dividends declared per common share

$
0.14

$
0.78

$
0.28

$
1.56

	Three Months Ended
	March 31,
	2018			2017
Net loss per share attributable to RRD common stockholders:
Basic	$	(0.14	)	$	(0.71	)
Diluted	$	(0.14	)	$	(0.71	)

Numerator:
Net loss attributable to RRD common stockholders	$	(9.6	)	$	(50.1	)

Denominator:
Weighted average number of common shares outstanding - Basic and Diluted		70.3			70.1

Weighted average number of anti-dilutive share-based awards:
Stock options		1.1			1.3
Restricted stock units		0.9			0.5
Total		2.0			1.8

Dividends declared per common share	$	0.14		$	0.14

The components of other comprehensive income (loss) ~~income~~ and income tax expense (benefit) ~~expense~~ allocated to each component for the three ~~and six~~ months ended ~~June 30, 2017~~March 31, 2018 and ~~2016 were as follows:~~

During the six months ended June 30, 2016, translation adjustments and income tax expense on pension and other postretirement benefits plan cost were adjusted to reflect previously recorded deferred taxes at their historical exchange rates.

~~Accumulated other comprehensive loss by component as of December 31, 2016 and June 30, 2017, and changes during the six months ended June 30,~~ 2017 were as follows:

~~Accumulated other comprehensive loss by component as of December 31, 2015 and June 30, 2016, and changes during the six months ended June 30, 2016, were as follows:~~

Accumulated other comprehensive income (loss) by component as of December 31, 2017 and March 31, 2018, and changes during the three months ended March 31, 2018, were as follows:

Accumulated other comprehensive income (loss) by component as of December 31, 2016 and March 31, 2017, and changes during the three months ended March 31, 2017, were as follows:

Reclassifications from accumulated other comprehensive ~~loss~~income (loss) for the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and 2017 ~~and 2016~~ were as follows:

During the first quarter of 2018, management realigned the Company’s reportable segments to reflect changes in the global operating structure of the Company and the manner in which the chief operating decision maker assesses information for decision-making purposes. All prior year amounts have been reclassified to conform to the Company’s current reporting structure.

The Company’s segments and their product and service offerings are summarized below:

This segment includes the Company’s U.S. short-run and transactional printing operations. This segment’s primary product offerings include commercial and digital print, direct mail, labels, statement printing, forms and packaging.

~~This segment includes the Company’s logistics services, print management offerings~~Business Services provides customized solutions at scale to help clients inform, service and ~~digital and creative solutions.~~

~~This segment includes the Company’s non-U.S. printing operations in Asia, Latin America, Canada and Europe. This~~transact with their customers. The segment’s primary product and service offerings include ~~packaging, books, catalogs, magazines, retail inserts,~~commercial print, logistics, statement printing, ~~commercial~~labels, packaging, supply chain management, forms and business process outsourcing. This segment also includes all of the Company’s operations in Asia, Europe, Canada and Latin America.

Marketing Solutions leverages an integrated portfolio of data analytics, creative services and multichannel execution to deliver comprehensive, end-to-end solutions. The segment’s primary product and service offerings include direct mail, in-store marketing, digital print, ~~forms, labels, logistics services, directories,~~kitting, fulfillment, digital and creative solutions and direct mail. Additionally, this segment includes the Company’s business process outsourcing and Global Turnkey Solutions operations. Business process outsourcing provides transactional print and outsourcing services, statement printing, direct mail and print management offerings through its operations in Europe, Asia and North America. Global Turnkey Solutions provides outsourcing capabilities, including product configuration, customized kitting and order fulfillment for technology, medical device and other companies around the world through its operations in Europe, North America and Asia.list services.

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

The Company has disclosed income (loss) from operations as the primary measure of segment earnings (loss). This is the measure of profitability used by the Company’s chief operating decision-maker and is most consistent with the presentation of profitability reported within the Condensed Consolidated Financial Statements.

Income (Loss)

Depreciation

Total

Intersegment

Net

from

and

Capital

Sales

Sales

Sales

Operations

Amortization

Expenditures

Three Months Ended June 30, 2017

Variable Print

$
739.3

$
(4.3
)

$
735.0

$
31.1

$
28.5

$
9.7

Strategic Services

443.7

(37.7
)

406.0

4.0

4.6

3.0

International

515.2

(10.2
)

505.0

16.3

13.5

11.9

Total operating segments

1,698.2

(52.2
)

1,646.0

51.4

46.6

24.6

Corporate

—

—

—

(12.8
)

0.9

3.5

Total operations

$
1,698.2

$
(52.2
)

$
1,646.0

$
38.6

$
47.5

$
28.1

	Three Months Ended
	March 31, 2018
															Assets of
								Income (Loss)			Depreciation				Operations
	Total		Intersegment			Net		from			and		Capital		As of
	Sales		Sales			Sales		Operations			Amortization		Expenditures		March 31, 2018
Business Services	$	1,445.5	$	(29.4	)	$	1,416.1	$	39.8		$	34.0	$	16.7	$	2,813.3
Marketing Solutions		298.0		(6.3	)		291.7		12.3			11.9		3.0		678.4
Total operating segments		1,743.5		(35.7	)		1,707.8		52.1			45.9		19.7		3,491.7
Corporate		—		—			—		(19.9	)		1.3		1.8		188.9
Total operations	$	1,743.5	$	(35.7	)	$	1,707.8	$	32.2		$	47.2	$	21.5	$	3,680.6

Income (Loss)

Depreciation

Total

Intersegment

Net

from

and

Capital

Sales

Sales

Sales

Operations

Amortization

Expenditures

Three Months Ended June 30, 2016

Variable Print

$
745.6

$
(4.2
)

$
741.4

$
40.1

$
30.1

$
17.0

Strategic Services

437.7

(37.6
)

400.1

8.9

5.1

9.2

International

502.8

(11.7
)

491.1

28.8

14.9

6.9

Total operating segments

1,686.1

(53.5
)

1,632.6

77.8

50.1

33.1

Corporate

—

—

—

(53.1
)

(0.2
)

6.7

Total operations

$
1,686.1

$
(53.5
)

$
1,632.6

$
24.7

$
49.9

$
39.8

	Three Months Ended
	March 31, 2017
															Assets of
								Income (Loss)			Depreciation				Operations
	Total		Intersegment			Net		from			and		Capital		As of
	Sales		Sales			Sales		Operations			Amortization		Expenditures		December 31, 2017
Business Services	$	1,409.8	$	(33.4	)	$	1,376.4	$	58.7		$	35.1	$	14.9	$	2,989.5
Marketing Solutions		290.9		(8.4	)		282.5		4.9			12.2		4.6		717.0
Total operating segments		1,700.7		(41.8	)		1,658.9		63.6			47.3		19.5		3,706.5
Corporate		—		—			—		(20.3	)		1.3		6.6		198.0
Total operations	$	1,700.7	$	(41.8	)	$	1,658.9	$	43.3		$	48.6	$	26.1	$	3,904.5

Restructuring ~~impairment~~ and other ~~charges~~expenses by segment ~~for the three and six months ended June 30, 2017~~ are described in Note 7,6, Restructuring ~~Impairment~~ and Other ~~Charges~~.

The Company is subject to laws and regulations relating to the protection of the environment. The Company provides for expenses associated with environmental remediation obligations when such amounts are probable and can be reasonably estimated. Such accruals are adjusted as new information develops or circumstances change and are generally not discounted. The Company has been designated as a potentially responsible party or has received claims in two active federal and state Superfund and other multiparty remediation sites. In addition to these sites, the Company may also have the obligation to remediate ~~seven~~six other previously and currently owned facilities. At the Superfund sites, the Comprehensive Environmental Response, Compensation and Liability Act provides that the Company’s liability could be joint and several, meaning that the Company could be required to pay an amount in excess of its proportionate share of the remediation costs.

The Company’s understanding of the financial strength of other potentially responsible parties at the multiparty sites and of other liable parties at the previously owned facilities has been considered, where appropriate, in the determination of the Company’s estimated liability. The Company ~~established~~believes that its recorded reserves, recorded in accrued liabilities and other noncurrent liabilities, ~~that it believes~~ are adequate to cover its share of the potential costs of remediation at each of the multiparty sites and the previously and currently owned facilities. It is not possible to quantify with certainty the potential impact of actions regarding environmental matters, particularly remediation and other compliance efforts that the Company may undertake in the future. However, in the opinion of management, compliance with the present environmental protection laws, before taking into account estimated recoveries from third parties, will not have a material effect on the Company’s consolidated results of operations, financial position or cash flows.

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

The Company’s debt at ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 consisted of the following:

The fair values of the senior notes and debentures, which were determined using the market approach based upon interest rates available to the Company for borrowings with similar terms and maturities, were determined to be Level 2 under the fair value hierarchy. The fair value of the Company’s total debt was greater than its book value by approximately ~~$93.1~~$34.6 million and ~~$4.3~~$18.8 million at ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively.

On September 29, 2017, t~~The~~he Company entered into an asset-based revolving credit facility (the “Credit Agreement”) which amended and restated the Company’s prior $800.0 million senior secured revolving credit facility dated September 30, 2016. The Credit Agreement provides for a senior secured asset-based revolving credit facility of up to $800.0 million subject to a borrowing base. The amount available to be borrowed under the Credit Agreement is equal to the lesser of (a) $800.0 million and (b) the aggregate amount of accounts receivable, inventory, machinery and equipment and fee-owned real estate of the Company and certain of its domestic subsidiaries (the ~~“Credit Agreement”~~“Guarantors”) (collectively, the “Borrowing Base”), subject to certain eligibility criteria and advance rates. The aggregate amount of real estate, machinery and equipment that can be included in the Borrowing Base cannot exceed $200.0 million.

The Company’s obligations under the Credit Agreement are guaranteed by the Guarantors and are secured by a security interest in certain assets of the Company and its domestic subsidiaries, including accounts receivable, inventory, deposit accounts, securities accounts, investment property, machinery, equipment and, to the extent related to the foregoing, general intangibles, documents and instruments, as well as 65% of the equity interests of their first-tier foreign subsidiaries.

The Credit Agreement contains ~~a number of~~customary restrictive covenants, including a ~~maximum leverage~~covenant which requires the Company to maintain a minimum fixed charge coverage ratio ~~as defined in and calculated pursuant to the~~ ~~Credit Agreement, that, in part, restrict~~under certain circumstances. In addition, the Company’s ability to undertake certain actions, including, among other things, prepay certain junior debt, incur additional unsecured indebtedness ~~create liens, engage in mergers~~ and ~~consolidations,~~ make certain restricted payments ~~and dispose~~depends on satisfaction of certain ~~assets.~~conditions, including, among other things, meeting minimum availability thresholds under the Credit Agreement. The Credit Agreement generally allows annual dividend payments of up to $60.0 million in aggregate, though additional dividends may be ~~permitted~~allowed subject to certain conditions.

Borrowings under the Credit Agreement bear interest at a rate dependent on the average quarterly availability under the Credit Agreement and is calculated according to a base rate (prime rate) or a Eurocurrency rate (London Inter-bank Offered Rate or “LIBOR”) plus an applicable margin. The applicable margin for base rate loans ranges from 0.25% to 0.50% and the applicable margin for Eurocurrency loans ranges from 1.25% to 1.50%. In addition, a fee is payable quarterly on the unused portion of the amount available to be borrowed under the Credit Agreement. The fee accrues at a rate of either 0.25% or 0.375% depending upon the average usage of the facility.

The Credit Agreement is scheduled to mature on September 29, 2022, at which time all outstanding amounts under the Credit Agreement will be due and payable. Borrowings under the Credit Agreement may be used for working capital and general corporate purposes.

Based on the Company’s borrowing base as of March 31, 2018 and existing borrowings, the Company had approximately $477.3 million borrowing capacity available under the Credit Agreement.

The weighted average interest rate on borrowings under the ~~Credit Agreement was 3.8% during the six months ended June 30, 2017. The weighted average interest rate on the borrowing under the~~Company’s current and prior credit ~~agreement~~facilities was ~~2.3% during the six months ended June 30, 2016.~~

~~On June 7, 2017, the Company repurchased $41.7 million of the 6.625% debentures due April 15, 2029, $59.4 million of the 6.50% senior notes due November 15, 2023~~3.1% and $101.7 million of the 6.00% senior notes due April 1, 2024 using borrowings under the Credit Agreement. The repurchases resulted in a net gain of $0.8 million which was recognized within loss on debt extinguishments ~~in the Condensed Consolidated Statements of Operations~~ for the three and six months ended June 30, 2017 related to the difference between the fair value of the debt repurchased and the principal outstanding, partially offset by the premiums paid, unamortized debt issuance costs and other expenses.

On May 22, 2017, certain third party financial institutions (such financial institutions collectively, the “Third Party Purchasers”), launched cash tender offers for certain of the Company’s outstanding debt securities, including the Company’s 7.625% senior notes due June 15, 2020 and 7.875% senior notes due March 15, 2021. On June 7, 2017, the Third Party Purchasers purchased $111.6 million in aggregate principal amount of the 7.625% senior notes due June 15, 2020 (the “Third Party Purchase Notes”). On June 21, 2017, the Company exchanged 6,143,208 of its retained shares of Donnelley Financial for the Third Party Purchase Notes. The Company cancelled the Third Party Purchase Notes on June 21, 2017. As a result, the Company recognized a $14.4 million loss on debt extinguishment ~~in the Condensed Consolidated Statements of Operations~~ 3.5% during the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and 2017, related to premiums paid, unamortized debt issuance costs and other expenses. In addition, the Company recognized a net realized gain of $92.4 million resulting from the disposition of the retained shares of Donnelley Financial common stock within investment and other (income) expense-net ~~in the Condensed Consolidated Statements of Operations~~ ~~during the three and six months ended~~ ~~June 30, 2017.~~ respectively.

Interest ~~income~~paid, net of interest capitalized, was ~~$0.6~~$38.1 million and ~~$1.5~~$38.3 million ~~for the three and six months ended June 30, 2017, respectively, and $1.0 million and $1.9 million for the three and six months ended June 30, 2016, respectively~~.

~~The Company’s effective income tax rate was (5.6%) and 16.1%~~ for the three months ended ~~June 30,~~March 31, 2018 and 2017, respectively.

Interest income was $0.5 million and ~~2016, respectively and (17.0%) and 5.0% for the six months ended June 30, 2017 and 2016, respectively. The effective income tax rate~~$0.9 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and 2017, reflects the impact of the disposition of the Donnelley Financial and LSC retained shares. The retained shares of Donnelley Financial were disposed in a non-taxable debt-for-equity exchange during the three and six months ended June 30, 2017. See Note 15, respectively~~Debt~~. , for additional details regarding the disposition of the Donnelley Financial retained shares. During the six months ended June 30, 2017, the sale of LSC shares generated a capital loss which will be carried forward, however it is more likely than not that the benefit of such deferred tax asset will not be realized and a valuation allowance was recorded. See Note 2, ~~Discontinued Operations~~, for additional information regarding the sale of the LSC retained shares. The effective income tax rate for the three and six months ended June 30, 2016 reflects the impact of income generated in higher taxing jurisdictions and the inability to recognize a tax benefit on certain losses.

All derivatives are recorded as other current or noncurrent assets or other current or noncurrent liabilities in the Condensed Consolidated Balance Sheets at their respective fair values. Unrealized gains and losses related to derivatives are recorded in other comprehensive income (loss), net of applicable income taxes, or in the Condensed Consolidated Statements of Operations, depending on the purpose for which the derivative is held. For derivatives designated and that qualify as cash flow hedges, the effective portion of the unrealized gain or loss related to the derivatives are generally recorded in other comprehensive income (loss) until the transaction affects earnings. For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative, as well as the offsetting gain or loss on the hedged item attributable to the hedged risk, are recognized in the Condensed Consolidated Statements of Operations. Changes in the fair value of derivatives that do not meet the criteria for designation as a hedge at inception, or fail to meet the criteria thereafter, are recognized currently in the Condensed Consolidated Statements of Operations. At the inception of a hedge transaction, the Company formally documents the hedge relationship and the risk management objective for undertaking the hedge. In addition, the Company assesses both at inception of the hedge and on an ongoing basis, whether the derivative in the hedging transaction has been highly effective in offsetting changes in fair value or cash flows of the hedged item and whether the derivative is expected to continue to be highly effective. The impact of any ineffectiveness is also recognized ~~currently~~ in the Condensed Consolidated Statements of Operations.

The Company is exposed to the impact of foreign currency fluctuations in certain countries in which it operates. The exposure to foreign currency movements is limited in many countries because the operating revenues and expenses of its various subsidiaries and business units are substantially in the local currency of the country in which they operate. To the extent borrowings, sales, purchases, revenues, expenses or other transactions are not in the local currency of the subsidiary or operating unit, the Company is exposed to currency risk. Periodically, the Company uses foreign exchange spot ~~forward~~ and ~~swap~~forward contracts to hedge exposures resulting from foreign exchange fluctuations. Accordingly, the gains and losses associated with the fair values of foreign currency exchange contracts are recognized ~~currently~~ in the Condensed Consolidated Statements of Operations and are generally offset by gains and losses on underlying payables, receivables ~~borrowings~~ and net investments in foreign subsidiaries. The Company does not use derivative financial instruments for trading or speculative purposes. The aggregate notional value of the ~~foreign currency~~forward contracts at ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 was ~~$104.2~~$189.6 million and ~~$172.2~~$215.9 million, respectively. The fair values of foreign currency contracts were determined to be Level 2 under the fair value hierarchy and are valued using market exchange rates.

On March 13, 2012, the Company entered into interest rate swap agreements to manage interest rate risk exposure, effectively changing the interest rate on $400.0 million of its fixed-rate senior notes to a floating-rate based on LIBOR plus a basis point spread. The ~~interest rate swaps, with a notional value of $400.0 million at inception, were designated as~~total fair ~~value hedges against changes in the~~ value of the Company’s ~~$450.0 million 8.25% senior notes due March 15, 2019,~~foreign currency contracts, which were ~~attributable to changes~~the only derivatives not designated as hedges, included in ~~the benchmark interest rate. During 2014, the Company repurchased $211.1~~prepaid expenses and other current assets at March 31, 2018 and December 31, 2017 was $3.9 million and $2.2 million, respectively. In addition, there was $0.1 million of these derivatives included in accrued liabilities at March 31, 2018.

In March 2017, the ~~8.25% senior notes due March 15, 2019,~~Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-07 “Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and ~~related interest rate swaps~~Net Periodic Postretirement Benefit Cost,” which changed the presentation of net periodic pension and postretirement benefit cost (net benefit cost) within the Statement of Operations. Under the previous guidance, net benefit cost was reported as an employee cost within income from operations. The amendment required the bifurcation of net benefit cost, with the service cost component presented with other employee compensation costs in income from operations while the other components are presented separately outside of income from operations. The Company retrospectively adopted this guidance as of January 1, 2018. See Note 7, Employee Benefits, for further discussion. The impact of adoption was a ~~notional amount~~$1.0 million increase in cost of ~~$210.0~~sales, $3.1 million ~~were terminated, resulting~~increase in ~~payments of $4.2~~selling, general and administrative expenses and $4.1 million decrease in investment and other expense-net for ~~the fair value of the interest rate swaps. During~~ the three months ended ~~September 30,~~March 31, 2017 to the amounts previously reported.

In May 2014, the FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers (Topic 606),” which outlined a single comprehensive model for entities to use in accounting for revenue using a five-step process that superseded virtually all existing revenue guidance. ASU 2014-09 also required additional quantitative and qualitative disclosures. During 2016, ~~in connection~~the FASB issued ASU 2016-08 “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” ASU 2016-10 “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,” and ASU 2016-12 “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients,” which clarified the ~~tender~~revenue recognition implementation guidance on principal versus agent considerations, identifying performance obligations, determining whether an entity's promise to grant a license provides a customer with either a right to use or a right to access the entity's intellectual property, assessing the collectability criteria, presentation of sales and similar taxes, noncash consideration and various other items. The standard allowed the ~~Company’s 8.25% senior notes due March 15, 2019,~~option of either a full retrospective adoption, meaning the standard is applied to all periods presented, or a modified retrospective adoption, meaning the standard is applied only to the most current period. The Company ~~terminated~~adopted the ~~remaining $190.0 million notional value~~guidance as of ~~the interest rate swap agreements which resulted in cash received of $2.5 million for the fair value of the interest rate swaps.~~

~~The fair values of interest rate swaps were determined to be Level 2 under the fair value hierarchy and were developed~~January 1, 2018 using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on the expectation of future interest rates derived from observed market interest rate curves. In addition, credit valuation adjustments, which consider the impact of any credit enhancements to the contracts, are incorporated in the fair values to accountmodified retrospective approach. See Note 2, Revenue Recognition, for potential nonperformance risk. On at least a quarterly basis, the Company evaluates the credit value adjustments of the interest rate swap agreements, which take into account the possibility of counterparty and the Company’s own default.

The Company’s foreign currency contracts and interest rate swaps are subject to enforceable master netting agreements that allow the Company to settle positive and negative positions with the respective counterparties. The Company settles foreign currency contracts on a net basis when possible. Foreign currency contracts that can be settled on a net basis are presented net in the Condensed Consolidated Balance Sheets. Interest rate swaps were settled on a gross basis and presented gross in the Condensed Consolidated Balance Sheets.further discussion.

~~The Company manages credit risk for its derivative positions~~In accordance with Topic 606, the impact of adoption as compared to the prior guidance on a counterparty-by-counterparty basis, considering the net portfolio exposure with each counterparty, consistent with its risk management strategy for such transactions. The Company’s agreements with each of its counterparties contain a provision where the Company could be declared in default on its derivative obligations if it either defaults or, in certain cases, is capable of being declared in default of any of its indebtedness greater than specified thresholds. These agreements also contain a provision where the Company could be declared in default subsequent to a merger or restructuring type event if the creditworthiness of the resulting entity is materially weaker.

~~At June 30, 2017 and December 31, 2016, the total fair value of~~ the Company’s foreign currency contracts, which were the only derivatives not designated as hedges along with the accounts in the Condensed Consolidated Balance Sheets in which the fair value amounts were included, were as follows:

~~The pre-tax (gains) losses related to derivatives not designated as hedges recognized in the~~ Condensed Consolidated Statements of Operations was an increase of $5.2 million in total net sales and increase of $1.2 million in total gross profit for the three ~~and six~~ months ended ~~June 30, 2017~~March 31, 2018. Additionally, the impact of adoption as compared to the prior guidance was a decrease of $67.6 million in inventories, decrease of $80.7 million in accrued liabilities and ~~2016 were~~increase of $14.0 million in stockholders' equity at March 31, 2018. No other financial statement line item was materially impacted.

In February 2018, the FASB issued ASU No. 2018-02 “Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which permits the reclassification of tax effects stranded in accumulated other comprehensive income to retained earnings as ~~follows:~~

~~For derivatives designated as fair value hedges,~~a result of the ~~pre-tax (gains) losses~~Tax Act. The standard also requires entities to disclose whether or not they elected to reclassify the tax effects related to the ~~hedged items attributable~~Tax Act as well as their policy for releasing income tax effects from accumulated other comprehensive income. The standard allows the option of applying either a retrospective adoption, meaning the standard is applied to ~~changes~~all periods in which the effect of the Tax Act is recognized, or applying the amendments in the ~~hedged benchmark interest rate and the offsetting (gain) loss on the related interest rate swaps for the three and six months ended June 30, 2017 and 2016 were~~period of adoption, meaning an adjustment is made to stockholders’ equity as ~~follows:~~

The Company also recognized a net reduction to interest expense of $0.4 million and $0.8 million for the three and six months ended June 30, 2016, respectively, related to the Company’s fair value hedges, which included interest accruals on the derivatives and amortization of the ~~basis in~~beginning of the ~~hedged items.~~

Certain assets and liabilities are required to be recorded at fair value on a recurring basis. The following tables summarize the bases used to measure financial assets and liabilities that are carried at fair value on a recurring basis in the Condensed Consolidated Balance Sheets:

As of June 30, 2017, the investment in Donnelley Financial common stock was categorized as a Level 1 security and was valued based on the closing price of Donnelley Financial’s common stock as of that date. As of December 31, 2016, the Company’s investment in LSC and Donnelley Financial common stock were categorized as Level 2 securities as these shares were not registered and were valued based upon the closing stock price on the balance sheet date as they represented an identical equity instrument registered under the Securities Act of 1933, as amended.

~~In March 2017, the Financial Accounting Standards Board (“FASB”) issued~~ Accounting Standards Update (“ASU”) No. 2017-07 “Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which changes the presentation of net periodic pension and postretirement benefit cost (net benefit cost) within the Statement of Operations. Under the current guidance, net benefit cost is reported as an employee cost within operating income. The amendment requires the bifurcation of net benefit cost, with the service cost component to be presented with other employee compensation costs in operating income while the other components will be reported separately outside of income from operations.reporting period. ASU ~~No. 2017-07~~2018-02 will be effective in the first quarter of 2018 and is required to be retrospectively adopted. Had this guidance been adopted as of January 1, 2017, income from operations within the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2017 would have been lower by $4.2 million and $8.3 million, respectively, and other non-operating income would have increased $4.2 million and $8.3 million, respectively.

~~In January 2017, the FASB issued~~ ~~ASU No. 2017-04 “Intangibles—Goodwill and Other (Topic 350):Simplifying the Test for Goodwill Impairment,”~~ ~~which~~ eliminates Step 2 from the current goodwill impairment test, including determining the implied fair value of goodwill and comparing it with the carrying amount of that goodwill. The standard requires entities to record impairment charges based on the excess of a reporting unit’s carrying amount over its fair value. ~~ASU No. 2017-04 will be effective in the first quarter of 2020;~~2019; however early adoption is permitted for interim and annual ~~goodwill impairment tests performed after January 1, 2017~~.periods, including the reporting period in which the Tax Act was enacted. The ~~adoption~~Company is currently evaluating the impact of ASU ~~2017-04 may impact~~2018-02 on the ~~results~~Condensed Consolidated Financial Statements.

In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income ("GILTI") provisions in the Tax Act. The GILTI provisions impose a tax on foreign income in excess of ~~future goodwill impairment tests and therefore could impact the Company’s consolidated financial position and results~~a deemed return on tangible assets of ~~operations.~~foreign corporations. The guidance indicates that either accounting for deferred taxes related to GILTI inclusions or treating any taxes on GILTI inclusions as period cost are both acceptable methods subject to an accounting policy election. The Company has not yet completed its assessment and therefore has not yet elected ~~to early adopt this guidance and will apply this guidance to all impairment analyses performed after January 1, 2017.~~

~~In March 2016, the FASB issued~~ ~~ASU~~ ~~No. 2016-09 “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.”~~ Under the new guidance, when awards vest or are settled, the excess tax benefits and tax deficiencies are recorded as income tax expense or benefit in the income statement instead of within additional paid-in capital. This guidance will be applied prospectively. Furthermore, the guidance requires excess tax benefits to be presented as an operating activity on the statement of cash flows rather than as a financing activity, which can be applied retrospectively or prospectively. Under the new guidance, an election can be made regarding whether to account for forfeitures of share-based payments by recognizing forfeitures of awards as they occur or estimate the number of awards expected to be forfeited, as is currently required. This guidance is to be applied using a modified retrospective transition method, with a cumulative adjustment to retained earnings. T~~he Company has adopted this guidance as of January 1, 2017. The adoption had an immaterial impact on the Company’s Condensed Consolidated financial statements.~~ accounting policy.

In February 2016, the FASB issued ASU No. 2016-02 “Leases (Topic 842)” which requires lessees to ~~put~~record most leases on the balance sheet but recognize expense on the income statement in a manner similar to current accounting. For lessors, ASU 2016-02 also modifies the classification criteria and the accounting for sales-type and direct financing leases. The standard requires a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements and is effective in the first quarter of 2019. Early adoption of ASU 2016-02 is permitted; however the Company plans to adopt the standard in the first quarter of 2019. The Company is currently evaluating the impact of ASU ~~2016-02.~~

~~In May 2014,~~2016-02 on the FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers (Topic 606),” which outlines a single comprehensive model for entities to use in accounting for revenue using a five-step process that supersedes virtually all existing revenue guidance. ASU 2014-09 also requires additional quantitative and qualitative disclosures. ~~During 2016, the FASB issued ASU 2016-08~~ ~~“Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),”~~ ~~ASU 2016-10 “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,”~~ ~~and ASU 2016-12~~ ~~“Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients,”~~ which clarify the revenue recognition implementation guidance on principal versus agent considerations, identifying performance obligations, determining whether an entity's promise to grant a license provides a customer with either a right to use or a right to access the entity's intellectual property, assessing the collectability criteria, presentation of sales and similar taxes, noncash consideration and various other items. The amendments in these ASUs affect the guidance in ASU 2014-09, and the effective date and transition requirements are the same as those for ASU 2014-09 which, as amended by ASU 2015-14 “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” will be effective for the Company on January 1, 2018. The standard allows the option of either a full retrospective adoption, meaning the standard is applied to all periods presented, or a modified retrospective adoption, meaning the standard is applied only to the most current period.

Based upon preliminary results of management’s evaluation, the most impactful aspects of the guidance relate to the timing of recognition for the revenue from customized products over time versus at a point in time, as well as inventory billed but not yet shipped. The Company has amounts of customized products in the Variable Print and International segments which are currently recognized when the products are completed and shipped to the customer. Currently, the Company defers revenue for inventory billed but not yet shipped which under the new revenue standard, the Company may be able to recognize revenue for certain inventory billed but not yet shipped. The actual revenue recognition treatment required under this new standard will be dependent on contract specific terms. The Company is still in the process of evaluating and designing the necessary changes to its business processes, systems and controls to support recognition and disclosure under the new standard. The Company will adopt the standard in the first quarter of 2018 and currently anticipates applying the modified retrospective approach.Condensed Consolidated Financial Statements.

I~~tem~~Item 2. Management’s ~~Discussion~~Discussion and Analysis of Financial Condition and Results of Operations

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

~~On October 1, 2016, we completed~~During the ~~previously announced separation~~first quarter of our financial communications and data services business (“Donnelley Financial Solutions, Inc.” or “Donnelley Financial”) and our publishing and retail-centric print services and office products business (“LSC Communications, Inc.” or “LSC”) into two separate publicly-traded companies (the "Separation"). We completed2018, management realigned the ~~tax free distribution of approximately 26.2 million shares, or 80.75%,~~Company’s reportable segments to reflect changes in the global operating structure of the ~~outstanding common stock of Donnelley Financial~~Company and ~~26.2 million shares, or 80.75%, of~~ the ~~outstanding common stock of LSC, to RRD stockholders (the “Distribution”). The Distribution was made to RRD stockholders of record as of~~manner in which the ~~close of business on September 23, 2016, who received one share of Donnelley Financial common stock and one share of LSC common stock~~chief operating decision maker assesses information for every eight shares of RRD common stock held as of the record date. As a result of the Distribution, Donnelley Financial and LSC are now independent public companies trading under the symbols “DFIN” and “LKSD”, respectively, on the New York Stock Exchange. Immediately following the Distribution, we held 6.2 million shares of Donnelley Financial common stock and 6.2 million shares of LSC common stock. As of June, 30 2017, we no longer held any shares of LSC common stock but continued to hold 99,594 shares of Donnelley Financial common stock.

~~The financial results of Donnelley Financial and LSC for periods~~decision-making purposes. All prior ~~to the Distribution have been reflected within the disclosures of this~~ ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~ ~~as discontinued operations. Additionally, sales from RRD to Donnelley Financial and LSC previously eliminated in consolidation have been recast and are now shown as external sales of RRD within the financial results of continuing operations.~~ ~~See Note 1,~~ ~~Basis of Presentation, and Note 2,~~ ~~Discontinued Operations, to these Condensed Consolidated Financial Statements for additional information.~~

Immediately following the Distribution on October 1, 2016, we affected a one-for-three reverse stock split for RRD common stock (the “Reverse Stock Split”). The Reverse Stock Split was approved by our Board of Directors on September 14, 2016 and previously approved by our stockholders at the annual meeting on May 19, 2016. As a result of the Reverse Stock Split, the number of issued and outstanding and treasury shares of our common stock was reduced proportionally based on the Reverse Stock Split ratio of one share for every three shares of common stock held before the Reverse Stock Split. Refer to Note 1, ~~Basis of Presentation, to the Condensed Consolidated Financial Statements for additional information regarding the Reverse Stock Split.~~ ~~All references in these~~ ~~unaudited condensed consolidated interim financial statements~~ ~~to the number of shares of common stock and per share~~year amounts have been ~~retroactively adjusted~~reclassified to ~~give effect~~conform to the ~~Reverse Stock Split.~~Company’s current reporting structure.

~~Our~~The Company’s segments and their ~~respective~~ product and service offerings are summarized below:

This segment includes our U.S. short-run and transactional printing operations. This segment’s primary product offerings include commercial and digital print, direct mail, labels, statement printing, forms and packaging.

~~This segment includes our logistics services, print management offerings~~Business Services provides customized solutions at scale to help clients inform, service and ~~digital and creative solutions.~~

~~This segment includes our non-U.S. printing operations in Asia, Latin America, Canada and Europe. This~~transact with their customers. The segment’s primary product and service offerings include ~~packaging, books, catalogs, magazines, retail inserts,~~commercial print, logistics, statement printing, ~~commercial~~labels, packaging, supply chain management, forms and business process outsourcing. This segment also includes all of the Company’s operations in Asia, Europe, Canada and Latin America.

Marketing Solutions leverages an integrated portfolio of data analytics, creative services and multichannel execution to deliver comprehensive, end-to-end solutions. The segment’s primary product and service offerings include direct mail, in-store marketing, digital print, ~~forms, labels, logistics services, directories,~~kitting, fulfillment, digital and creative solutions and direct mail. Additionally, this segment includes our business process outsourcing business and Global Turnkey Solutions operations. Business process outsourcing provides transactional print and outsourcing services, statement printing, direct mail and print management offerings through its operations in Europe, Asia and North America. Global Turnkey Solutions provides outsourcing capabilities, including product configuration, customized kitting and order fulfillment for technology, medical device and other companies around the world through its operations in Europe, North America and Asia.list services.

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

WeThe Company separately ~~report our~~reports its net sales, related costs of sales and gross profit for our product and service offerings. Our product offerings primarily consist of commercial ~~and~~print, statements, direct mail, labels, in-store marketing, digital print, ~~statement printing, direct mail,~~ packaging, ~~labels,~~supply chain management, forms ~~magazines, catalogs, retail inserts, books, directories, manuals~~ and other related products procured through our print management offering. Our service offerings primarily consist of logistics, ~~certain~~ business process outsourcing services and digital and creative solutions.

~~On August 4, 2016, the Company acquired Precision Dialogue, a provider of email marketing, direct mail marketing and other services with operations in the United States.~~

~~On January 11, 2016, the Company sold two entities within the business process outsourcing reporting unit.~~

~~For further information on the above acquisitions and dispositions, see Note 3,~~ ~~Acquisitions and Dispositions, to the Condensed Consolidated Financial Statements.~~

Net sales increased by ~~$13.4~~$48.9 million, or ~~0.8%~~2.9%, for the ~~second quarter of 2017~~three months ended March 31, 2018 compared to the same period in ~~the prior year. There was~~2017. The first quarter of 2018 included a ~~$14.4~~$26.2 million ~~or 0.9%, decrease~~increase due to changes in foreign exchange ~~rates. After including~~rates, which accounted for 1.6 percentage points of the ~~impact of changes~~increase in ~~foreign exchange rates, the~~net sales. The remaining increase in net sales was due to ~~increased~~higher volume in both segments and higher fuel surcharges in the ~~International and Strategic~~Business Services ~~segments driven by the Asia and sourcing reporting units,~~segment, partially offset by ~~lower volume~~price pressure in the ~~Variable Print segment, lower postage pass-through sales and price pressures across the segments.~~Business Services segment.

The Company continues to strategically assess opportunities to reduce its cost structure and enhance productivity throughout the business. During the ~~six~~three months ended ~~June 30, 2017,~~March 31, 2018, the Company realized cost savings from previous restructuring activities including the reorganization of administrative and support functions across all segments, as well as facility consolidations.

Net cash used in operating activities for the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 was ~~$51.8~~$140.3 million as compared to ~~$100.3~~$5.0 million for the ~~six~~three months ended ~~June 30, 2016.~~March 31, 2017. The decrease in net cash ~~used in~~flow from operating activities ~~was driven by the~~ ~~timing of supplier~~related primarily to net unfavorable changes in working capital and ~~customer payments and lower interest, spinoff-related transaction and tax payments, partially offset by~~ ~~lower~~higher cash ~~earnings~~taxes.

On May 2, 2018, the Company announced that it had entered into a definitive agreement to sell certain assets and liabilities of its Print Logistics business. The ~~changes~~sale is expected to close in the ~~Company’s income from operations, operating margin, net earnings (loss) attributable~~third quarter of 2018 and is subject to RRD common stockholders and net earnings (loss) attributable to RRD common stockholders per diluted share for the three months ended June 30, 2017, from the three months ended June 30, 2016, were due to the following:customary closing conditions.

~~2017 restructuring, impairment and other charges - net:~~ included pre-tax charges of $2.4 million for employee termination costs; $1.1 million of lease termination and other restructuring costs; $0.6 million for multi-employer pension plan withdrawal obligations unrelated to facility closures; and $0.3 million net gain related to the sale of previously impaired equipment. See Note 7,~~Restructuring, Impairment and Other Charges~~, ~~to the Condensed Consolidated Financial Statements for additional details.~~

~~2016 restructuring, impairment and other charges - net:~~ included pre-tax charges of $6.1 million for employee termination costs; $0.7 million of impairment charges related to buildings and machinery and equipment associated with facility closures; $0.8 million of lease termination and other restructuring costs; and $0.6 million of other charges for multi-employer pension plan withdrawal obligations unrelated to facility closures. See Note 7,~~Restructuring, Impairment and Other Charges~~, ~~to the Condensed Consolidated Financial Statements for additional details.~~

~~Spinoff-related transaction expenses:~~ ~~included pre-tax charges of $1.2 million ($0.8 million after-tax) related to consulting and other expenses for the three months ended June 30, 2017 associated with the Separation and Distribution.~~

~~Pension settlement charges:~~ ~~included pre-tax charges of $20.4 million ($12.0 million after-tax) for the three months ended June 30, 2016, related to lump-sum pension settlement payments.~~

~~Acquisition-related expenses:~~ included pre-tax charges of $1.4 million ($1.0 million after-tax) related to legal, accounting and other expenses for the three months ended June 30, 2016 associated with contemplated or completed acquisitions.

~~Loss on debt extinguishments:~~ included a pre-tax net loss of $13.6 million ($8.5 million after-tax) for the three months ended June 30, 2017 related to the premiums paid in connection with the tenders, unamortized debt issuance costs and other expenses due to the debt-for-equity exchange of senior notes and the repurchase of debentures and senior notes during the three months ended June 30, 2017. See Note 15, ~~Debt,~~ ~~to the Condensed Consolidated Financial Statements for additional details.~~

~~Net gain on investments:~~ included a pre-tax non-cash net realized gain of $92.4 million ($94.4 million after-tax) for the three months ended June 30, 2017, resulting from the debt-for-equity exchange of a portion of the Company’s retained shares of Donnelley Financial for certain outstanding senior notes and an after-tax gain of $0.4 million related to the Company’s affordable housing investments. See Note 15, ~~Debt,~~ to the Condensed Consolidated Financial Statements for additional details of the debt-for-equity exchange. The three months ended June 30, 2016 included a pre-tax gain of $0.1 million ($0.1 million after-tax) resulting from the sale of certain of the Company’s affordable housing investments.

~~Operations:~~ reflected price pressures, lower volume in certain reporting units within the International and Variable Print segments and higher variable incentive compensation, partially offset by lower corporate and other overhead costs related to our

operations prior to the Separation, higher volume in the Asia reporting unit, lower bad debt and depreciation and amortization expense and cost control initiatives. See further details in the review of operating results by segment that follows below.

The changes in the Company’s income from operations, operating margin, net earnings (loss) attributable to RR Donnelley common stockholders and net earnings (loss) attributable to RR Donnelley common stockholders per diluted share for the six months ended June 30, 2017, from the six months ended June 30, 2016, were due to the following:

~~2017 restructuring, impairment and other charges - net:~~ included pre-tax charges of $8.8 million for employee termination costs; $2.7 million of lease termination and other restructuring costs; $1.2 million for multi-employer pension plan withdrawal obligations unrelated to facility closures; and $0.2 million of net impairment charges of long-lived assets. See Note 7,~~Restructuring, Impairment and Other Charges~~, ~~to the Condensed Consolidated Financial Statements for additional details.~~

~~2016 restructuring, impairment and other charges - net:~~ included pre-tax charges of $11.0 million for employee termination costs; $0.9 million for a net gain on the sale of previously impaired other long-lived assets, partially offset by impairment charges related to buildings and machinery and equipment associated with facility closures; $2.3 million of lease termination and other restructuring costs; and $1.1 million of other charges for multi-employer pension plan withdrawal obligations unrelated to facility closures. See Note 7,~~Restructuring, Impairment and Other Charges~~, ~~to the Condensed Consolidated Financial Statements for additional details.~~

~~Spinoff-related transaction expenses:~~ ~~included pre-tax charges of $3.3 million ($2.1 million after-tax) related to consulting and other expenses for the six months ended June 30, 2017 associated with the Separation and Distribution.~~

~~Pension settlement charges:~~ ~~included pre-tax charges of $20.4 million ($12.0 million after-tax) for the six months ended June 30, 2016 related to lump-sum pension settlement payments.~~

~~Acquisition-related expenses:~~ included pre-tax charges of $2.0 million ($1.4 million after-tax) related to legal, accounting and other expenses for the six months ended June 30, 2016 associated with contemplated or completed acquisitions.

~~Gain on disposal of businesses:~~ ~~included a pre-tax gain on the sales of two entities in the International segment of $12.3 million ($12.3 million after-tax) for the six months ended June 30, 2016.~~

~~Loss on debt extinguishments:~~ included a pre-tax net loss of $13.6 million ($8.5 million after-tax) related to the premiums paid in connection with the tenders, unamortized debt issuance costs and other expenses due to the debt-for-equity exchange of senior notes and repurchase of debentures and senior notes during the six months ended June 30, 2017. See Note 15, ~~Debt,~~ ~~to the Condensed Consolidated Financial Statements for additional details.~~

~~Net gain on investments:~~ included a pre-tax non-cash net realized gain of $92.4 million ($94.4 million after-tax) resulting from the debt-for-equity exchange of a portion of the Company’s retained shares of Donnelley Financial for certain outstanding senior notes and a pre-tax gain of $1.3 million ($0.7 million after-tax) resulting from the sale of certain of the Company’s affordable housing investments, partially offset by a pre-tax loss of $51.6 million ($51.6 million after-tax) resulting from the sale of the Company’s retained shares in LSC during the six months ended June 30, 2017. The six months ended June 30, 2016 included pre-tax gain of $0.1 million ($0.1 million after-tax) resulting from the sale of certain of the Company’s affordable housing investments.

~~Operations:~~ reflected price pressures and lower volume in certain reporting units within the International and Variable Print segments, partially offset by lower corporate and other overhead costs related to our operations prior to the Separation, higher volume in the Asia reporting unit, reduced bad debt, legal and depreciation and amortization expenses and cost control initiatives.

Our customers are in an evolving market. While the market is large and fragmented, there are tremendous changes occurring in how organizations need to create, manage, deliver and measure their communications. Key factors facing our customers include regulatory changes, sensitivity to economic conditions, raw material pricing volatility and USPS actions. In addition, technological changes, including the electronic distribution of documents and data, online distribution and hosting of media content, and advances in digital printing, print-on-demand and internet technologies, continue to impact the market for some of our products and services, such as statement printing and forms.

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

~~The print and related services industry, in general, continues to have excess capacity and remains highly competitive and fragmented.~~

We believe that, across our range of products and services, competition is based primarily on quality and the ability to service the special needs of customers at a competitive price. Therefore, we believe we need to continue to differentiate our product and service offerings and aggressively manage our cost structure to remain competitive.

We also operate in a highly competitive and fragmented market for commercial freight transportation and third-party logistics services. Primary competitors to our services include other national non-asset based third-party logistics companies, as well as regional or niche freight brokerages, asset-based carriers offering brokerage and/or logistics services, wholesale intermodal transportation service providers and rail carriers. In addition, we may from time to time compete against carriers’ internal sales forces or shippers’ internal transportation departments.

Advertising and consumer spending trends affect demand in several of the end-markets we serve. As such, we have some seasonality in the second half of the year in our business, despite the breadth of our product and services offerings.

The primary raw materials we use in our print businesses are paper and ink. We negotiate with leading suppliers to maximize our purchasing efficiencies. Some of the paper we use is supplied directly by customers. Variations in the cost and supply of certain paper grades and ink formulations used in the manufacturing process may affect the Company’s consolidated financial results. ~~Paper prices fluctuated during the first six months of 2017 and volatility in the future is expected.~~ Generally, customers directly absorb the impact of changing prices on customer-supplied paper. With respect to paper we purchased, we have historically passed most changes in price through to our customers. We believe contractual arrangements and industry practice will support our continued ability to pass on any future paper price increases, but there is no assurance that market conditions will continue to enable us to successfully do so. We believe that the paper supply is consolidating, and there may be shortfalls in the future in supplies necessary to meet the demands

of the entire marketplace. Higher paper prices and tight paper supplies may have an impact on customers’ demand for printed products. We resell waste paper and other print-related by-products. We also have undertaken various strategic initiatives to mitigate any foreseeable supply disruptions with respect to our ink requirements. We may be impacted by changes in prices for these by-products in the future.

We continue to monitor the impact of changes in the price of crude oil and other energy costs, which impact our ink suppliers, logistics operations and manufacturing costs. Crude oil and energy prices continue to be volatile. We believe our logistics operations will continue to be able to pass a substantial portion of any increases in fuel prices directly to our customers in order to offset the impact of related cost increases. Decreases in fuel prices are also passed on to customers which negatively impact sales and income from operations. We generally cannot pass on to customers the impact of higher energy prices on our manufacturing costs. We cannot predict sudden changes in energy prices and the impact that possible future changes in energy prices might have upon either future operating costs or customer demand and the related impact either will have on our consolidated annual results of operations, financial position or cash flows.

Our products are distributed to end-users through the U.S. or foreign postal services, through retail channels, electronically or by direct shipment to customer facilities. Through our logistics operations, we manage the distribution of most customer products we print in the U.S. and Canada to maximize efficiency and reduce costs for customers.

As a leading provider of print logistics and among the largest mailers of standard mail in the U.S., we work closely with our customers and the USPS to offer innovative products and mail preparation services to minimize postage costs. While we do not directly absorb the impact of higher postal rates on our customers’ mailings, demand for products distributed through the U.S. or foreign postal services has been negatively impacted by increases in postal rates, as postal costs are a significant component of many customers’ cost structures.

Under the 2006 Postal Accountability and Enhancement Act (“PAEA”), it had been anticipated that postage for Market Dominant mail categories would increase annually by an amount equal to or slightly less than the Consumer Price Index (the “CPI”). On April 10, 2016, the USPS removed the exigent surcharge, which was approved in December 2013, resulting in a 4.3% decrease in postage rates for all significant mail categories. The USPS implemented a CPI postage increase on January 22, 2017 of approximately 1.0%. In addition, there is a pending bi-partisan legislative proposal that seeks to stabilize the financial condition of the USPS, which among other things calls for restoring a 2.15% increase (approximately half of the exigent surcharge) on market dominant mail products. The USPS plans for further restructuring of its mail delivery network, including the closure of many post office facilities. However, these plans are still under temporary suspension. Additionally, as required by PAEA, the Postal Regulatory Commission began a comprehensive review of the law on December 20, 2016, its 10 year anniversary, to determine if the current system for regulating rates and classes for market-dominant products is achieving the original objectives of the law. The study is still in process and their recommendations are due by the end of 2017. The impact of these actions cannot currently be estimated. Mail transportation services to the USPS facilities across the country accounted for approximately 32% of the Company’s logistics revenues during the six months ended June 30, 2017.

We perform our goodwill impairment tests annually as of October 31, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. As part of its interim review for indicators of impairment, management analyzed potential changes in value of individual reporting units with goodwill based on each reporting unit’s operating results for the six months ended June 30, 2017 compared to expected results. In addition, management considered how other key assumptions, including discount rates and expected long-term growth rates, used in the last fiscal year’s impairment analysis, could be impacted by changes in market conditions and economic events.

Management considered trends in these factors when performing its assessment of whether an interim impairment review was required for any reporting unit. Based on this interim assessment, management concluded that as of June 30, 2017, no events or changes in circumstances indicated that it was more likely than not that the fair value for any reporting unit had declined below its carrying value. Nevertheless, significant changes in economic and market conditions could result in changes to expectations of future financial results and key valuation assumptions. Such changes could result in revisions of management’s estimates of the fair value of our reporting units and could result in a material impairment of goodwill in a future interim period or as of October 31, 2017, our next annual measurement date.

In particular, the digital and creative solutions reporting unit, which is included within the Strategic Services segment, has experienced declines in sales with existing customers. Continued negative trends could impact the estimated fair value of this reporting unit and could result in a future impairment charge. As of the October 31, 2016 annual goodwill impairment test, the fair value of the digital and creative solutions reporting unit exceeded its book value by approximately 30%. As of June 30, 2017, $21.3 million of goodwill was allocated to the digital and creative solutions reporting unit.

The funded status of our pension and other postretirement benefits plans is dependent upon many factors, including returns on invested assets and the level of certain market interest rates. Market conditions may lead to changes in the discount rates (used to value the year-end benefit obligations of the plans) and the market value of the securities held by the plans, which could significantly increase or decrease the funded status of the plans. We review the actuarial assumptions on an annual basis as of December 31. Based on current estimates, we expect to make cash contributions of approximately $17.0 million to our pension and other postretirement benefits plans for the full year 2017 of which $9.0 million has been contributed during the six months ended June 30, 2017.

As of December 31, 2016 the Company had approximately $70.0 million of U.S. deferred tax assets which at this time, we believe is more likely than not that we will realize these deferred tax assets. However, in the next twelve months we may be required to establish a valuation allowance to reduce the carrying value of certain U.S. deferred tax assets.

In the financial review that follows, ~~we discuss our~~the Company discusses its consolidated results of operations, financial position, cash flows and certain other information. This discussion should be read in conjunction with our Condensed Consolidated Financial Statements and related notes.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED ~~JUNE 30, 2017~~MARCH 31, 2018 AS COMPARED TO THE THREE MONTHS ENDED ~~JUNE 30, 2016~~MARCH 31, 2017

The following table shows the results of ~~continuing~~ operations for the three months ended ~~June 30, 2017~~March 31, 2018 and ~~2016, which reflects the results of acquired businesses from the relevant acquisition dates:~~2017:

											Three Months Ended
	Three Months Ended June 30,										March 31,
	2017		2016		$ Change			% Change			2018			2017		$ Change			% Change
	(in millions, except percentages)										(in millions, except percentages)

Products net sales	$	1,263.4	$	1,231.7	$	31.7			2.6	%	$	1,286.6		$	1,271.5	$	15.1			1.2	%
Services net sales		382.6		400.9		(18.3	)		(4.6	%)		421.2			387.4		33.8			8.7	%
Total net sales		1,646.0		1,632.6		13.4			0.8	%		1,707.8			1,658.9		48.9			2.9	%
Products cost of sales (exclusive of depreciation and amortization)		1,020.7		985.2		35.5			3.6	%		1,051.9			1,007.8		44.1			4.4	%
Services cost of sales (exclusive of depreciation and amortization)		322.2		331.0		(8.8	)		(2.7	%)
Services cost of sales (exclusive of depreciation and amortization)												361.2			324.3		36.9			11.4	%
Total cost of sales		1,342.9		1,316.2		26.7			2.0	%		1,413.1			1,332.1		81.0			6.1	%
Products gross profit		242.7		246.5		(3.8	)		(1.5	%)		234.7			263.7		(29.0	)		(11.0	%)
Services gross profit		60.4		69.9		(9.5	)		(13.6	%)		60.0			63.1		(3.1	)		(4.9	%)
Total gross profit		303.1		316.4		(13.3	)		(4.2	%)		294.7			326.8		(32.1	)		(9.8	%)
Selling, general and administrative expenses (exclusive of depreciation and amortization)		213.2		233.6		(20.4	)		(8.7	%)		214.6			225.8		(11.2	)		(5.0	%)
Restructuring, impairment and other charges-net		3.8		8.2		(4.4	)		(53.7	%)
Restructuring and other-net												0.8			9.1		(8.3	)		(91.2	%)
Depreciation and amortization		47.5		49.9		(2.4	)		(4.8	%)		47.2			48.6		(1.4	)		(2.9	%)
Other operating income												(0.1	)		—		(0.1	)	nm
Income from operations	$	38.6	$	24.7	$	13.9			56.3	%	$	32.2		$	43.3	$	(11.1	)		(25.6	%)

Net sales of products for the three months ended ~~June 30, 2017~~March 31, 2018 increased ~~$31.7~~$15.1 million, or ~~2.6%~~1.2%, to ~~$1,263.4~~$1,286.6 million versus the same period in ~~2016, including~~2017. The first quarter of 2018 included a ~~$10.5~~$23.5 million, or ~~0.9%~~1.8%, ~~decrease~~increase due to changes in foreign exchange rates. ~~Including the impact of changes in foreign exchange rates, net~~Net sales of products also increased due to higher volume ~~within the Asia~~in packaging and ~~sourcing reporting units, partially~~direct mail, which was more than offset by lower volume in ~~the Variable Print segment~~commercial print due to ongoing secular pressure and ~~certain other reporting units within the International segment,~~lower specialty card sales, as well as price ~~pressures.~~pressure.

Net sales from services for the three months ended ~~June 30, 2017 decreased $18.3~~March 31, 2018 increased $33.8 million, or ~~4.6%~~8.7%, to ~~$382.6~~$421.2 million versus the same period in ~~2016,~~2017, including a ~~$3.9~~$2.7 million, or ~~1.0%~~0.7%, ~~decrease~~increase due to changes in foreign exchange rates. Net sales ~~decreased~~from services increased primarily due to ~~lower postage pass-through sales within~~higher volume and increased fuel surcharges in logistics, ~~lower~~as well as higher volume in business process outsourcing, ~~and price pressures, partially offset by higher volume in freight brokerage and courier services as well as increased fuel surcharges.~~

Products cost of sales increased $35.5 million, or 3.6%, for the three months ended June 30, 2017 versus the same period in the prior year, primarily due to higher volume within the Asia and sourcing reporting units as well as cost inflation, partially offset by lower volume in digital and creative solutions and price pressure.

Products cost of sales for the ~~Variable Print segment~~three months ended March 31, 2018 increased $44.1 million, or 4.4%, to $1,051.9 million versus the same period in 2017. Products cost of sales increased primarily due to unfavorable impact due to changes in foreign exchange rates, higher volume in packaging, as well as cost inflation, including higher paper costs in Asia, and ~~certain reporting units within the International segment~~operational inefficiencies due to volume reductions from two clients, partially offset by lower volume in commercial print, along with cost control initiatives across the organization. As a percentage of net sales, products cost of sales increased ~~0.8~~2.5 percentage points for the three months ended ~~June 30, 2017~~March 31, 2018 versus the same period in ~~2016, primarily due to an unfavorable mix in the Variable Print and International segments.~~2017.

Services cost of sales ~~decreased $8.8~~increased $36.9 million, or ~~2.7%~~11.4%, for the three months ended ~~June 30, 2017~~March 31, 2018 versus the same period in ~~the prior year. Services cost of sales decreased~~2017, primarily due to ~~lower postage pass-through sales within~~higher volume in logistics and ~~reduced~~ business process outsourcing, ~~volume,~~as well as higher costs of transportation in logistics, partially offset by ~~higher volume in freight brokerage and courier services in the logistic reporting unit.~~cost control initiatives. As a percentage of net sales, services cost of sales increased ~~1.6~~2.1 percentage points for the three months ended ~~June 30, 2017~~March 31, 2018 versus the same period in ~~2016, primarily due to unfavorable revenue mix in business process outsourcing.~~2017.

Products gross profit decreased ~~$3.8~~$29.0 million to ~~$242.7~~$234.7 million for the three months ended ~~June 30, 2017~~March 31, 2018 versus the same period in ~~2016~~2017, primarily due to price pressures, unfavorable impact due to changes in foreign exchange rates, cost inflation, including higher paper costs in commercial print and an unfavorable mix in ~~Variable Print and certain International reporting units,~~commercial print, partially offset by ~~higher volume in the Asia reporting unit, favorable revenue mix within the statement printing reporting unit and~~ cost control initiatives. Products gross margin decreased from ~~20.0%~~20.7% to ~~19.2%, driven by price pressures and an unfavorable revenue mix within much of the International segment and the Variable Print segment, partially offset by cost control initiatives.~~18.2%.

Services gross profit decreased ~~$9.5~~$3.1 million to ~~$60.4~~$60.0 million for the three months ended ~~June 30, 2017~~March 31, 2018 versus the same period in ~~2016~~2017, primarily due to ~~decreased volume~~higher costs of transportation in ~~the business processing outsourcing reporting unit, an unfavorable revenue mix in the~~ logistics ~~reporting unit~~ and price pressures, partially offset by increased fuel surcharges in ~~the logistics reporting unit.~~logistics. Services gross margin decreased from ~~17.4%~~16.3% to ~~15.8%, reflecting lower volume in business process outsourcing and price pressures.~~14.2%.

Selling, general and administrative expenses decreased ~~$20.4~~$11.2 million to ~~$213.2~~$214.6 million for the three months ended ~~June 30, 2017~~March 31, 2018 versus the same period in ~~2016~~2017 reflecting ~~the prior year pension settlement charge, lower corporate and other overhead costs related to our operations prior to the Separation, lower bad debt expense and~~ cost control initiatives, partially offset by higher ~~variable incentive compensation.~~bad debt expense in 2018, which included an $8.3 million charge due to a client-related bankruptcy, and foreign currency expense. As a percentage of net sales, selling, general and administrative expenses decreased from ~~14.3%~~13.6% to ~~13.0%~~12.6% for the three months ended ~~June 30, 2017~~March 31, 2018 versus the same period in ~~2016,~~2017, due to the impact of the aforementioned expenses.

For the three months ended ~~June 30, 2017,~~March 31, 2018, the Company recorded net restructuring ~~impairment~~ and other ~~charges~~expenses of ~~$3.8~~$0.8 million. These ~~charges~~expenses included ~~$2.4~~$3.2 million for employee termination ~~costs, which were related~~costs. These charges primarily relate to the reorganization of ~~certain operations within~~selling, general and administrative functions across each segment and an announced facility closure in the ~~International and Variable Print segments.~~Business Services segment. The Company also incurred lease termination and other restructuring ~~costs~~charges of ~~$1.1~~$1.6 million ~~and~~for the three months ended March 31, 2018. Additionally, the Company recorded a $4.9 million net gain ~~of $0.3 million primarily related to~~on the sale of previously impaired ~~equipment~~assets in the ~~Variable Print segment during the three months ended June 30, 2017.~~ ~~Additionally, the~~Business Services segment. These assets were impaired in 2015. The Company also recorded ~~$0.6~~$0.6 million of other charges for multi-employer pension plan withdrawal obligations unrelated to facility closures. ~~Refer to~~See Note 7,6, Restructuring ~~Impairment~~ and Other ~~Charges~~, within the Notes to the Condensed Consolidated Financial Statements for ~~additional information.~~

For the three months ended June 30, 2016, the Company recorded net restructuring, impairment and other charges of $8.2 million. The Company recorded $6.1 million of employee termination costs, primarily due to two facility closures in the International segment and the reorganization of certain operations. The Company also recorded lease termination and other restructuring charges of $0.8 million and $0.6 million of other charges related to multi-employer pension plan withdrawal obligations unrelated to facility closures for the three months ended June 30, 2016. Additionally, the Company recorded $0.7 million of impairment charges related to buildings and machinery and equipment associated with facility closures. Refer to Note 7, ~~Restructuring, Impairment and Other Charges, within the Notes to the Condensed Consolidated Financial Statements for additional information.~~further discussion.

Depreciation and amortization decreased ~~$2.4~~$1.4 million to ~~$47.5~~$47.2 million for the three months ended ~~June 30, 2017~~March 31, 2018 compared to the same period in ~~2016~~2017 primarily due to lower capital spending in recent years compared to historical ~~levels and certain International customer relationship intangible assets becoming fully amortized since the prior year.~~levels. Depreciation and amortization included $7.0 million and ~~$8.1~~$7.5 million of amortization of other intangible assets related to ~~customer~~client relationships, trade names, trademarks, licenses and agreements for the three months ended ~~June 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively.

Income from operations for the three months ended ~~June 30, 2017~~March 31, 2018 was ~~$38.6~~$32.2 million, ~~an increase~~a decrease of ~~$13.9~~$11.1 million, or ~~56.3%~~25.6%, compared to the three months ended June 30, 2016. The increase was due to the prior year pension settlement charge, lower corporate and other overhead costs related to our operations prior to the Separation, higher volume in the Asia reporting unit, lower bad debt expense, lower restructuring, impairment and other charges and depreciation and amortization expense and cost control initiatives, partially offset by price pressures and lower volume in certain reporting units within the International and Variable Print segments. March 31, 2017.

Net interest expense decreased by ~~$5.9~~$6.6 million for the three months ended ~~June 30, 2017~~March 31, 2018 versus the same period in ~~2016,~~2017, primarily due to ~~a decrease in~~lower average ~~senior notes outstanding.~~borrowings during three months ended March 31, 2018.

~~Net investment~~Investment and other (income) expense-net for the three months ended ~~June 30,~~March 31, 2018 and 2017 ~~and 2016~~ was income of ~~$93.1~~$5.6 million and expense of ~~$0.7~~$44.6 million, respectively. During the three months ended ~~June 30,~~March 31, 2017, the Company ~~recognized~~sold its retained interest in LSC which resulted in a ~~non-cash~~ net realized ~~gain~~loss of ~~$92.4~~$51.6 million, ~~on the retained shares~~partially offset by income of ~~Donnelley Financial exchanged for certain of the Company’s senior notes outstanding.~~$1.3 million from affordable housing investments. See Note ~~15,~~11, ~~Debt,~~Other Comprehensive Income (Loss) ~~to the Condensed Consolidated Financial Statements~~, for ~~additional details of the debt-for-equity exchange.~~

Loss on debt extinguishments for the three months ended June 30, 2017 was $13.6 million which related to premiums paid in connection with the tenders, unamortized debt issuance costs and other expenses associated with the debt-for-equity exchange of senior notes and the repurchase of debentures and senior notes in June 2017. Refer to Note 15, ~~Debt,~~ ~~to the Condensed Consolidated Financial Statements for additional details.~~further discussion.

The effective income tax rate for the three months ended ~~June 30, 2017~~March 31, 2018 was ~~(5.6%~~(132.5%), compared to ~~16.1%~~(0.4%) in the same period in ~~2016.~~ 2017. The effective income tax rate for 2018 is primarily driven by the ~~period ended June 30, 2017~~ reflects the impact of the non-taxable gain on the disposition of the Donnelley Financial retained shares. The income tax provision for the period ended June 30, 2016 reflects the impact of income generated in higher taxing jurisdictions and the inabilityinability to recognize a tax benefit on certain ~~losses.~~

~~Income attributable to noncontrolling interests was $0.2 million for both~~losses and limitations on the ~~three months ended June 30, 2017 and 2016.~~

The net earnings from continuing operations, excluding the impact from non-controlling interests, attributable to RRD common stockholders for the three months ended June 30, 2017 was $76.5 million, or $1.09 per diluted share, compared to a net loss of $23.2 million, or $0.33 per diluted share, for the three months ended June 30, 2016.

The following tables summarize net sales, income (loss) from operations and certain items impacting comparability within each of the operating segments and Corporate. The descriptions of the reporting units generally reflect the primary products or services provided by each reporting unit. Included in these net sales amounts are sales of other products or services that may be produced within a reporting unit to meet customer needs and improve operating efficiency.

Net sales for the Variable Print segment for the three months ended June 30, 2017 were $735.0 million, a decrease of $6.4 million, or 0.9%, compared to 2016, including a $0.3 million decrease due to changes in foreign exchange rates. Net sales decreased due to lower volume primarily in the direct mail and commercial and digital print reporting units and price pressures. An analysis of net sales by reporting unit follows:

Variable Print segment income from operations decreased $9.0 million for the three months ended June 30, 2017, primarily due to lower volume and unfavorable mix within commercial and digital print and direct mail and price pressures, partially offset by a favorable mix within statement printing and forms. Operating margins decreased from 5.4% for the three months ended June 30, 2016 to 4.2% for the three months ended June 30, 2017 due to unfavorable mix within commercial and digital print and direct mail and price pressures, partially offset by cost control initiatives and favorable mix within statement printing, forms and labels. Lower restructuring, impairment and other charges favorably impacted operating margins by 0.1 percentage points.

Net sales for the Strategic Services segment for the three months ended June 30, 2017 were $406.0 million, an increase of $5.9 million, or 1.5%, compared to 2016. Net sales increased primarily due to higher volume in sourcing, freight brokerage and courier services and increased fuel surcharges in logistics, partially offset by lower postage pass-through sales in logistics and price pressures. An analysis of net sales by reporting unit follows:

Strategic Services segment income from operations decreased $4.9 million for the three months ended June 30, 2017, mainly due to an unfavorable revenue mix in logistics and price pressures within logistics, partially offset by increased fuel surcharges. Operating margins decreased from 2.2% to 1.0%, primarily due to an unfavorable revenue mix within the segment and price pressures, partially offset by increased fuel surcharges in logistics, productivity and cost control initiatives. Lower restructuring, impairment and other charges favorably impacted operating margins by 0.1 percentage points.

Net sales in the International segment for the three months ended June 30, 2017 were $505.0 million, an increase of $13.9 million, or 2.8%, compared to the same period in 2016, inclusive of a $14.1 million, or 2.9%, decrease due to changes in foreign exchange rates. Net sales increased due to higher volume in Asia, partially offset by lower volume in business process outsourcing, Global Turnkey Solutions and Canada and price pressures. An analysis of net sales by reporting unit follows:

International segment income from operations decreased $12.5 million primarily due to lower volume in Global Turnkey Solutions, business process outsourcing and Canada as well as price pressures, partially offset by increased volume in Asia, lower bad debt expense and lower restructuring, impairment and other charges. Operating margins decreased from 5.9% to 3.2%, driven by lower volume in Global Turnkey Solutions, business process outsourcing and Canada as well as price pressures, partially offset by increased packaging volume in Asia, lower bad debt expense and lower restructuring, impairment and other charges. Lower restructuring, impairment and other charges favorably impacted operating margins by 0.3 percentage points.

Corporate operating expenses in the three months ended June 30, 2017 were $12.8 million, a decrease of $40.3 million compared to the same period in 2016. The decrease was primarily driven by the prior year pension settlement charge, lower corporate and other overhead costs related to the pre-Separation combined entity, lower bad debt expense and cost control initiatives, partially offset by lower pension and postretirement plan income and spinoff-related transaction expenses.

~~RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2017 AS COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2016~~

~~The following table shows the results of operations for the six months ended June 30, 2017 and 2016, which reflects the results of acquired businesses from the relevant acquisition dates:~~

Net sales of products for the six months ended June 30, 2017 increased $77.9 million, or 3.1%, to $2,552.3 million versus the same period in 2017, including a $15.2 million, or 0.6%, decrease due to changes in foreign exchange rates. Including the impact of changes in foreign exchange rates, net sales of products increased due to higher volume within the Asia and sourcing reporting units, partially offset by lower volume in the Variable Print segment and certain other reporting units within the International segment, as well as price pressures.

Net sales from services for the six months ended June 30, 2017 decreased $33.8 million to $770.0 million versus the same period in 2016, including an $8.5 million, or 1.1%, decrease due to change in foreign exchange rates. Net sales decreased primarily due to lower postage pass-through sales within logistics, lower volume in business process outsourcing and price pressures, partially offset by higher volume in freight brokerage and courier services as well as increased fuel surcharges.

Products cost of sales increased $87.9 million, or 4.5%, for the six months ended June 30, 2017 versus the same period in the prior year, primarily due to higher volume within the Asia and sourcing reporting units as well as cost inflation, partially offset by lower volume in the Variable Print segment and certain reporting units within the International segment along with cost control initiatives across the organization. As a percentage of net sales, products cost of sales increased 1.0% for the six months ended June 30, 2017 versus the same period in the prior year, primarily due to an unfavorable mix across the segments.

Services cost of sales decreased $25.8 million, or 3.8%, for the six months ended June 30, 2017 versus the same period in the prior year. Services cost of sales decreased primarily due to lower postage pass-through sales within logistics and reduced business process outsourcing volume, partially offset by higher volume in freight brokerage and courier services in the logistics reporting unit. As a percentage of net sales, services cost of sales increased 0.3% for the six months ended June 30, 2017 versus the same period in the prior year driven by unfavorable revenue mix in business process outsourcing and the logistics reporting unit.

Products gross profit decreased $10.0 million to $507.3 million for the six months ended June 30, 2017 versus the same period in 2016 primarily due to price pressures and lower volume in certain International reporting units and the Variable Print segment, partially offset by higher volume in the Asia reporting unit and cost control initiatives. Products gross margin decreased from 20.9% to 19.9%, driven by price pressures and an unfavorable revenue mix within much of the International and Variable Print segments and the sourcing reporting unit, partially offset by cost control initiatives.

Services gross profit decreased $8.0 million to $123.6 million for the six months ended June 30, 2017 versus the same period in 2016 due to lower business process outsourcing volume and price pressures, partially offset by increased fuel surcharges within the logistics reporting unit. Services gross margin decreased from 16.4% to 16.1%, reflecting lower business process outsourcing volume and an unfavorable revenue mix in the logistics reporting unit.

Selling, general and administrative expenses decreased $27.0 million to $435.9 million for the six months ended June 30, 2017 versus the same period in 2016 due to the pension settlement charge in the prior year period, lower corporate and other overhead costs related to our operations prior to the Separation, lower bad debt and legal expenses and cost control initiatives, partially offset by higher variable incentive compensation expense and lower pension and other post-retirement benefits income. As a percentage of net sales, selling, general and administrative expenses decreased from 14.1% to 13.1% for the six months ended June 30, 2017 versus the same period in 2016, due to the impact of the aforementioned expenses.

For the six months ended June 30, 2017, the Company recorded net restructuring, impairment and other charges of $12.9 million. These charges included $8.8 million of employee termination costs, which were related to the ceasing of the Company’s relationship in a joint venture within the International segment, the reorganization of selling, general and administrative functions primarily within the Corporate, International and Variable Print segments and one facility closure in the Strategic Services segment. The Company also incurred lease termination and other restructuring charges of $2.7 million and net impairment charges of $0.2 million for impairment of equipment related due to a facility closure in the Strategic Services segment, partially offset by a net gain recognized on the sale of previously impaired equipment during the six months ended June 30, 2017. Additionally, the Company recorded $1.2 million of other charges for multi-employer pension plan withdrawal obligations unrelated to facility closures. Refer to Note 7, ~~Restructuring, Impairment and Other~~ ~~Charges, within the Notes to the Condensed Consolidated Financial Statements for additional information.~~

For the six months ended June 30, 2016, the Company recorded net restructuring, impairment and other charges of $13.5 million. The Company recorded $11.0 million of employee termination costs, primarily due to two facility closures in the International segment and the reorganization of certain operations. The Company also recorded lease termination and other restructuring charges of $2.3 million and $1.1 million of other charges related to multi-employer pension plan withdrawal obligations unrelated to facility closures for the six months ended June 30, 2016. Additionally, the Company recorded $0.9 million of net gains on the sale of previously impaired assets, partially offset by impairment charges related to buildings and machinery and equipment associated with facility closures. Refer to Note 7, ~~Restructuring, Impairment and Other Charges, within the Notes to the Condensed Consolidated Financial Statements for additional information.~~

Depreciation and amortization decreased $6.4 million to $96.1 million for the six months ended June 30, 2017 compared to the same period in 2016 primarily due to lower capital spending in recent years compared to historical levels and certain International customer relationship intangible assets becoming fully amortized since the prior year quarter. Depreciation and amortization included $14.5 million and $17.7 million of amortization of other intangible assets related to customer relationships, trade names, trademarks, licenses and agreements for the six months ended June 30, 2017 and 2016, respectively.

~~For the six months ended June 30, 2016, other operating income was $12.3 million, which consisted of the gain on the sale of two entities in the International segment.~~

Income from operations for the six months ended June 30, 2017 was $86.0 million, an increase of $3.7 million, or 4.5%, compared to the six months ended June 30, 2016. The increase was due to the prior year pension settlement charge, lower corporate and other overhead costs related our operations prior to the Separation, higher volume in the Asia reporting unit, reduced bad debt, legal and depreciation and amortization expenses, lower restructuring, impairment and other charges and cost control initiatives, partially offset by the prior year $12.3 million gain on the sale of two entities in the International segment, price pressures and lower volume in certain reporting units within the International and Variable Print segments.

~~Net~~Tax Act. Non-deductible interest expense decreased by $8.0 million for the six months ended June 30, 2017 versus the same period in 2016, primarily due to a decrease in average senior notes outstanding, partially offset by higher average borrowings under the Credit Agreement.

Net investment and other (income) expense for the six months ended June 30, 2017 and 2016 was income of $44.4 million and expense of $0.6 million, respectively. For the six months ended June 30, 2017, the Company recorded a non-cash net realized gain of $92.4 million on the retained shares of Donnelley Financial exchanged for certain of the Company’s senior notes outstanding and a gain of $1.3 million resulting from the sale of certain of the Company’s affordable housing investments, partially offset by a net realized loss of $51.6 million resulting from the sale of the Company’s retained shares of LSC.

Loss on debt extinguishments for the six months ended June 30, 2017 was $13.6 million which related to premiums paid in connection with the tenders, unamortized debt issuance costs and other expenses associated with the debt-for-equity exchange of senior notes and the repurchase of debentures and senior notes in June 2017. Refer to Note 15, ~~Debt,~~ ~~to the Condensed Consolidated Financial Statements for additional details.~~

~~The effective income tax rate for the six months ended June 30, 2017 was (17.0%) compared to 5.0% in the same period in 2016.~~ ~~The income tax rate for the period ended six months ended June 30, 2017~~ reflects the impact on the net gain on the disposition of investments. The Donnelley Financial retained shares were disposed in a non-taxable debt-for-equity exchange. The sale of the LSC retained shares generated a capital loss which will be carried ~~forward,~~forward; however it is more likely than not that the benefit of such deferred tax asset will not be fully realized and a valuation allowance was recorded. The effective income tax ~~provision~~rate for the ~~six~~three months ended ~~June 30, 2016~~March 31, 2017 reflects the impact of ~~income~~the $51.6 million realized loss on the sale of LSC retained shares. The sale generated ~~in higher taxing jurisdictions~~a capital loss which will be carried forward; however it is more likely than not that the benefit of such deferred tax asset will not be fully realized and ~~the inability to recognize~~ a ~~tax benefit on certain losses.~~valuation allowance was recorded.

Income attributable to noncontrolling interests was ~~$0.5~~$0.3 million for ~~both~~ the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 and ~~2016.~~ 2017.

Net ~~earnings from continuing operations,~~loss attributable to RRD common stockholders, excluding the impact from non-controlling interests, ~~attributable to RRD common stockholders~~ for the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 was ~~$26.4~~$9.6 million, or ~~$0.38~~$0.14 per diluted share, compared to ~~a loss of $19.6~~$50.1 million, or ~~$0.28~~$0.71 per diluted share, for the ~~six~~three months ended ~~June 30, 2016.~~March 31, 2017.

Net sales for the ~~Variable Print~~Business Services segment for the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 were ~~$1,512.1~~$1,416.1 million, ~~a decrease~~an increase of ~~$9.4~~$39.7 million, or ~~0.6%~~2.9%, compared to ~~2016, including~~2017. The first quarter of 2018 included a ~~$0.1~~$26.2 million ~~decrease~~increase due to changes in foreign exchange rates. ~~Net~~The remaining increase in net sales ~~decreased~~was due to lower volume primarily in direct mail, commercial and digital print and forms and price pressures, partially offset by the incremental sales from the Precision Dialogue acquisition. An analysis of net sales by reporting unit follows:

Business Services segment income from operations decreased ~~$19.0~~$18.9 million for the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018, primarily due to ~~lower volume within commercial and digital print and direct mail,~~an unfavorable impact due to changes in foreign exchange rates, unfavorable mix in sales, price pressures, higher cost of transportation in logistics, cost inflation, including higher paper costs in our products in Asia and higher variable incentive compensation, partially offset by a favorable mix within statement printing, labels and forms. Operating margins decreased from 6.2% for the six months ended June 30, 2016 to 5.0% for the six months ended June 30, 2017operational inefficiencies due to ~~lower~~ volume ~~and unfavorable mix within commercial and digital print and direct mail and price pressures,~~reductions from two clients, partially offset by cost control initiatives and ~~favorable mix within statement printing, labels and forms. Lower restructuring, impairment and other charges favorably impacted operating margins by 0.1 percentage points.~~

Net sales for the ~~Strategic Services~~Marketing Solutions segment for the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 were ~~$830.6~~$291.7 million, an increase of ~~$46.0~~$9.2 million, or ~~5.9%~~3.3%, compared to ~~2016.~~2017. Net sales increased primarily due to higher volume in sourcing, freight brokerage and courier services and increased fuel surcharges in logistics, partially offset by lower postage pass-through sales in logistics. An analysis of net sales by reporting unit follows:

~~Digital~~digital and creative ~~solutions: Sales increased due to incremental revenue from~~solutions and digital print and fulfillment. The following table summarizes net sales by products and services in the ~~acquisition of Precision Dialogue, partially offset by lower prepress and photo volume.~~ Marketing Solutions segment:

	Three Months Ended
	March 31,
Products and Services	2018		2017		$ Change			% Change
	(in millions, except percentages)
Direct mail	$	149.6	$	134.2	$	15.4			11.5	%
Digital print and fulfillment		110.8		112.0		(1.2	)		(1.1	%)
Digital and creative solutions		31.3		36.3		(5.0	)		(13.8	%)
Total Marketing Solutions	$	291.7	$	282.5	$	9.2			3.3	%

~~Strategic Services~~Marketing Solutions segment income from operations ~~decreased $4.2~~increased $7.4 million to $12.3 million for the ~~six~~three months ended June 30, 2017, mainly due to lower volume in print logistics and digital solutions, price pressures, higher restructuring, impairment and other charges and higher variable incentive compensation expense, partially offset by increased fuel surcharges within logistics and productivity and cost control initiatives. Operating margins decreased from 1.5% for the six months ended June 30, 2016 to 0.9% for the six months ended June 30, 2017March 31, 2018, primarily due to unfavorable mix within the segment, price pressures, lower volume in digital solutions, higher variable incentive compensation and higher restructuring, impairment and other charges, partially offset by increased fuel surcharges in logistics and productivity and cost control ~~initiatives. Higher restructuring, impairment~~initiatives and ~~other charges negatively impacted operating margins by 0.2 percentage points.~~

~~International~~

Six Months Ended

June 30,

2017

2016

(in millions, except percentages)

Net sales

$
979.6

$
972.1

Income from operations

33.2

65.8

Operating margin

3.4
%

6.8
%
Restructuring, impairment and other charges-net

6.4

5.1

Gain on sale of businesses

—

(12.3
)

Net Sales for the Six Months Ended

June 30,

Reporting unit

2017

2016

$ Change

% Change

(in millions, except percentages)

Asia

$
401.9

$
325.9

$
76.0

23.3
%
Global Turnkey Solutions

221.0

249.2

(28.2
)

(11.3
%)
Business process outsourcing

188.8

223.7

(34.9
)

(15.6
%)
Canada

103.1

114.2

(11.1
)

(9.7
%)
Latin America

64.8

59.1

5.7

9.6
%
Total International

$
979.6

$
972.1

$
7.5

0.8
%

Net sales in the International segment for the six months ended June 30, 2017 were $979.6 million, an increase of $7.5 million, or 0.8%, compared to the same period in 2016, inclusive of a $23.6 million, or 2.4%, decrease due to changes in foreign exchange rates. After including the impact of changes in foreign exchange rates, net sales increased due to higher volume in ~~Asia,~~direct mail, partially offset by lower volume in ~~business process outsourcing, Global Turnkey Solutions~~digital and ~~Canada, as well as price pressures. An analysis of net sales by reporting unit follows:~~

~~Asia: Sales increased due to higher volume primarily in packaging and books products, partially offset by price pressures.~~

~~Global Turnkey Solutions: Sales decreased primarily due to lower volume in books and packaging, partially offset by favorable price changes.~~

~~Business process outsourcing: Sales decreased due to lower volume, changes in foreign exchanges rates and price pressures.~~

~~Canada: Sales decreased due to lower volume in statement printing, commercial print, forms and labels.~~

~~Latin America: Sales increased primarily due to favorable changes in foreign exchange rates across the region, partially offset by lower volume.~~

International segment income from operations decreased $32.6 million primarily due to the prior year $12.3 million gain recognized on the sale of two entities, lower volume in Global Turnkey Solutions, Canada, business process outsourcing, price pressures, higher restructuring, impairment and other charges and higher variable incentive compensation expense, partially offset by increased volume in Asia and lower bad debt expense. Operating margins decreased from 6.8% for the six months ended June 30, 2016 to 3.4% for the six months ended June 30, 2017, driven by the prior year $12.3 million gain recognized on the sale of two entities, lower volume in Global Turnkey Solutions, Canada and business process outsourcing, price pressures, higher restructuring, impairment and other charges and higher variable incentive compensation expense, partially offset by increased packaging volume in Asia and lower bad debt expense. The prior year gain on the sale of businesses and higher restructuring, impairment and other charges negatively impacted operating margins by 1.3 and 0.1 percentage points, respectively.creative solutions.

Corporate

~~Corporate~~

Six Months Ended

June 30,

2017

2016

(in millions)

Operating expenses

$
29.9

$
89.4

Pension settlement

—

20.4

Spinoff-related transaction expenses

3.3

—

Restructuring, impairment and other charges-net

2.4

4.9

Acquisition-related expenses

—

2.0

Corporate operating expenses induring the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 were ~~$29.9~~$19.9 million, a decrease of ~~$59.5~~$0.4 million compared to the same period in ~~2016.~~2017. The decrease was primarily driven by ~~the prior year pension settlement charge, lower corporate and other overhead costs related to the pre-Separation combined entity, lower legal and bad debt expenses and~~ cost control initiatives, ~~partially~~ offset by higher ~~variable incentive compensation, lower pension~~bad debt expense in 2018 due to a client-related bankruptcy. The following table summarizes unallocated operating expenses and ~~postretirement plan income and spinoff-related transaction expenses.~~certain items impacting comparability within the activities presented as Corporate:

	Three Months Ended
	March 31,
	2018		2017
	(in millions)
Operating expenses	$	19.9	$	20.3
Spinoff-related transaction expenses		—		2.1
Restructuring and other-net		0.9		1.6

LIQUIDITY AND CAPITAL RESOURCES

The Company believes it has sufficient liquidity to support its ongoing operations and to invest in future growth to create value for its stockholders. Operating cash flows and available capacity under the Company’s $800.0 million asset-based senior secured revolving credit facility (the “Credit Agreement”) are the Company’s primary sources of liquidity and are expected to be used for, among other things, capital expenditures necessary to support productivity improvement and growth, completion of restructuring programs, acquisitions, payment of interest and principal on the Company’s long-term debt obligations, and distributions to stockholders that may be approved by the Board of ~~Directors, acquisitions, capital expenditures necessary to support productivity improvement and growth and completion of restructuring programs.~~Directors.

The following describes the Company’s cash flows for the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 and ~~2016. The Company’s cash flows for all periods prior to the October 1, 2016 Distribution include the impact of LSC and Donnelley Financial. Refer to Note 2,~~ ~~Discontinued Operations, to the Condensed Consolidated Financial Statements for information on the significant non-cash items, capital expenditures and depreciation and amortization related to LSC and Donnelley Financial.~~2017.

Cash Flows From Operating Activities

Operating cash inflows are largely attributable to sales of the Company’s products and services. Operating cash outflows are largely attributable to recurring expenditures for raw materials, labor, rent, interest, taxes and other operating activities.

Net cash used in operating activities was ~~$51.8~~$140.3 million for the ~~six~~three months ended ~~June 30, 2017,~~March 31, 2018 compared to ~~$100.3~~$5.0 million during the same period in ~~2016.~~2017. The ~~decrease~~increase in net cash used in operating activities ~~was driven by the~~related primarily to net unfavorable changes in working capital and ~~timing of supplier and customer payments and lower interest, spinoff-related transaction and tax payments, partially offset by~~ ~~lower~~higher cash ~~earnings.~~taxes.

Cash Flows From Investing Activities

Net cash provided by investing activities for the ~~six~~three months ended ~~June 30, 2017~~March 31, 2018 was ~~$73.2~~$27.7 million compared to ~~net cash used~~$85.4 million during the same period in ~~investing activities of $72.1 million for the six months ended June 30, 2016.~~2017. Capital expenditures were ~~$54.2~~$21.5 million during the first ~~six~~three months of ~~2017,~~2018, a decrease of ~~$47.2~~$4.6 million as compared to the same period of ~~2016 driven~~2017. For the three months ended March 31, 2018, cash provided by ~~LSC~~investing activities included $32.1 million cash received as a deposit for the expected sale of a facility and ~~Donnelley Financial capital expenditures in~~cash proceeds from the ~~prior year period~~sale of ~~$31.2~~investments and other assets of $15.6 million. For the ~~six~~three months ended ~~June 30,~~March 31, 2017, cash provided by investing activities included net proceeds of $121.4 million from the sale of the Company’s ~~retained interest~~investment in LSC. ~~For the six months ended June 30, 2016, cash used in investing activities included $13.4 million of proceeds from business dispositions in the International segment.~~

Cash Flows From Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2018 was $66.1 million compared to net cash used in financing activities ~~for the six months ended June 30, 2017 was $122.3 million compared to net cash provided by financing activities~~ of ~~$76.2~~$153.3 million in the same period in ~~2016.~~2017. During the ~~six~~three months ended ~~June 30, 2017,~~March 31, 2018, the Company ~~had $655.0~~increased its borrowings under credit facilities by $42.0 million, ~~and $820.0 million of payments and borrowings, respectively, under the Credit Agreement,~~ compared to ~~$185.0 million of net~~a reduction in borrowings under ~~the prior~~ credit facility during the six months ended June 30, 2016. During the six months ended June 30, 2017, the Company paid approximately $200.4 million to repurchase certain senior notes and debentures outstanding through borrowings under the Credit Agreement. Additionally, dividends paid decreased $89.1 million from $108.7facilities of $145.0 million during the ~~six~~

three months ended ~~June 30, 2016 to $19.6~~March 31, 2017. During the three months ended March 31, 2018, the Company also received $35.4 million in net short-term loan proceeds. Dividends paid were $9.8 million during the ~~six~~three months ended ~~June 30,~~March 31, 2018 and 2017. ~~During the six months ended June 30, 2017, the Company paid the final spinoff cash settlement of $78.0 million to LSC and Donnelley Financial as required by the Separation and Distribution agreement.~~

LIQUIDITY

Cash and cash equivalents of ~~$224.0~~$235.2 million as of ~~June 30, 2017~~March 31, 2018 included ~~$52.8~~$39.9 million in the U.S. and ~~$171.2~~$195.3 million at international locations. ~~The Company’s foreign subsidiaries are expected to make payments of approximately $17.5 million during the remainder of 2017 in satisfaction of intercompany obligations.~~ The Company has recognized deferred tax liabilities of ~~$8.5~~$5.9 million as of ~~June 30, 2017~~March 31, 2018 related to local taxes on certain foreign earnings that are not considered to be permanently reinvested. Certain other cash balances of foreign subsidiaries, ~~may be subject to U.S. or local country taxes~~ if repatriated to the U.S., may be subject to additional tax which would depend on income tax laws and circumstances at the time of distribution. In addition, repatriation of some foreign cash balances is further restricted by local laws. Management regularly evaluates whether foreign earnings are expected to be permanently reinvested. This evaluation requires judgment about the future operating and liquidity needs of the Company and its foreign subsidiaries. Changes in economic and business conditions, foreign or U.S. tax laws, or the Company’s financial situation could result in changes to these judgments and the need to record additional tax ~~liabilities.~~liabilities.

Included in cash and cash equivalents at ~~June 30, 2017~~March 31, 2018 were ~~$6.9~~$13.7 million of short-term investments, which primarily consisted of short-term deposits and money market funds. These investments are held at institutions with sound credit ratings and are expected to be highly liquid.

In March 2017, the Company sold the 6,242,802 common shares it retained upon the spinoff of LSC for net proceeds of $121.4 million. The proceeds of this sale were used to repay a portion of the outstanding borrowings under the ~~Credit Agreement.~~Company’s credit facility. In June 2017, the Company exchanged 6,143,208 of the 6,242,802 common shares of Donnelley Financial retained upon the spinoff for $111.6 million of aggregate principal of certain outstanding senior notes. ~~As of June 30,~~In August 2017, the Company ~~no longer held any~~disposed of its remaining retained shares ~~of LSC common stock but continued~~in Donnelley Financial via a second debt-for-equity exchange, pursuant to ~~hold~~which the Company exchanged 99,594 shares of Donnelley ~~Financial~~Financial’s common ~~stock. The Company is currently in~~stock for $1.9 million of aggregate principal of certain outstanding senior notes. Such debt obligations were cancelled and discharged upon delivery to the ~~process of executing a debt-for-equity exchange for the remaining retained shares of Donnelley Financial.~~

~~The Company’s debt maturities as of June 30, 2017 are shown in the following table:~~

Debt Maturity Schedule

Total

2017

2018

2019

2020

2021

Thereafter

(in millions)

Senior notes and debentures and borrowings
under the Credit Agreement _(a)
$
2,247.7

$
—

$
—

$
172.2

$
238.4

$
881.0

$
956.1

Miscellaneous debt obligations

19.2

19.1

0.1

—

—

—

—

Total
$
2,266.9

$
19.1

$
0.1

$
172.2

$
238.4

$
881.0

$
956.1

~~(a)~~

~~Excludes unamortized debt issuance costs of $12.9 million and a discount of $1.5 million which do not represent contractual commitments with a fixed amount or maturity date.~~

Company.

On ~~June 7,~~September 29, 2017, the Company ~~repurchased $41.7~~entered into the Credit Agreement, an asset-based revolving credit facility which amended and restated the Company’s prior $800.0 million senior secured revolving credit facility dated September 30, 2016. The Credit Agreement provides for a senior secured asset-based revolving credit facility of ~~the 6.625% debentures due April 15, 2029, $59.4~~up to $800.0 million ~~of the 6.50% senior notes due November 15, 2023 and $101.7 million of the 6.00% senior notes due April 1, 2024 using borrowings~~subject to a borrowing base. The amount available to be borrowed under the Credit ~~Agreement.~~Agreement is equal to the lesser of (a) $800.0 million and (b) the aggregate amount of accounts receivable, inventory, machinery and equipment and fee-owned real estate of the Company and certain of its domestic subsidiaries (the “Guarantors”) (collectively, the “Borrowing Base”), subject to certain eligibility criteria and advance rates. The ~~repurchases resulted in a net gain~~aggregate amount of ~~$0.8 million which was recognized within loss on debt extinguishments~~real estate, machinery and equipment that can be included in the Condensed Consolidated Statements of Operations during the three and six months ended June 30, 2017 related to the difference between the fair value of the debt repurchased and the principal outstanding, partially offset by premiums paid, unamortized debt issuance costs and other expenses.

On May 22, 2017, certain third party financial institutions (such financial institutions collectively, the “Third Party Purchasers”), launched cash tender offers for certain of the Company’s outstanding debt securities, including the Company’s 7.625% senior notes due June 15, 2020 and 7.875% senior notes due March 15, 2021. On June 7, 2017, the Third Party Purchasers purchased $111.6 million in aggregate principal amount of the 7.625% senior notes due June 15, 2020 (the “Third Party Purchase Notes”). On June 21, 2017, the Company exchanged 6,143,208 of its retained shares of Donnelley Financial for the Third Party Purchase Notes. The Company cancelled the Third Party Purchase Notes on June 21, 2017. As a result, the Company recognized a ~~$14.4 million~~ loss on debt extinguishment in the Condensed Consolidated Statements of Operations during the three and six months ended June 30, 2017 related to premiums paid, unamortized debt issuance costs and other expenses. In addition, the Company recognized a net realized gain of ~~$92.4 million~~ resulting from the disposition of the retained shares of Donnelley Financial common stock within investment and other (income) expense-net in the Condensed Consolidated Statements of Operations during the three and six months ended June 30, 2017.Borrowing Base cannot exceed $200.0 million.

Borrowings under the Credit Agreement bear interest at a base or LIBOR plus an applicable margin determined at the time of the borrowing. In addition, the Company pays facility commitment fees which fluctuate dependent on the Credit Agreement’s leverage ratio. Borrowings under the Credit Agreement are used for general corporate purposes, including acquisitions and letters of credit. The Company’s obligations under the Credit Agreement are guaranteed by ~~its material and certain other domestic subsidiaries~~the Guarantors and are secured by a ~~pledge~~security interest in certain assets of the Company and its domestic subsidiaries, including accounts receivable, inventory, deposit accounts, securities accounts, investment property, machinery and equipment and, to the extent related to the foregoing, general intangibles, documents and instruments, as well as 65% of the equity interests of its first-tier foreign subsidiaries.

The Credit Agreement contains customary restrictive covenants, including a covenant which requires the Company to maintain a minimum fixed charge coverage ratio under certain ~~subsidiaries,~~circumstances. In addition, the Company’s ability to undertake certain actions, including, ~~most~~among other things, prepay certain junior debt, incur additional unsecured indebtedness and make certain restricted payments depends on satisfaction of ~~its domestic subsidiaries,~~certain conditions, including, among other things, meeting minimum availability thresholds under the Credit Agreement.

Borrowings under the Credit Agreement bear interest at a rate dependent on the average quarterly availability under the Credit Agreement and is calculated according to a ~~security interest in substantially all~~base rate (prime rate) or a Eurocurrency rate (LIBOR) plus an applicable margin. The applicable margin for base rate loans ranges from 0.25% to 0.50% and the applicable margin for Eurocurrency loans ranges from 1.25% to 1.50%. In addition, a fee is payable quarterly on the unused portion of the ~~domestic current assets and mortgages~~amount available to be borrowed under the Credit Agreement. The fee accrues at a rate of ~~certain domestic real property~~either 0.25% or 0.375% depending upon the average usage of the ~~Company.~~facility.

The Credit Agreement is ~~subject~~scheduled to ~~a number of covenants, including but not limited to: limitations~~mature on debt, investments, restricted payments, burdensome agreements, liens, merger or sale of assets, conduct of business, transactions with affiliates and dispositions. The Credit Agreement also requires that the Company maintain a maximum secured leverage ratio of 1.50 to 1.00 and a maximum leverage ratio, as defined and calculated pursuant toSeptember 29, 2022, at which time all outstanding amounts under the Credit Agreement ~~as of~~will be due and payable. Borrowings under the ~~last day of each fiscal quarter of (i) with respect to any fiscal quarter ending on or after December 31, 2016~~Credit Agreement may be used for working capital and prior to September 30, 2017, 5.00 to 1.00; (ii) with respect to any fiscal quarter ending on or after September 30, 2017 and prior to March 31, 2018, 4.75 to 1.00; (iii) with respect to any fiscal quarter ending on or after March 31, 2018 and prior to March 31, 2019, 4.50 to 1.00; (iv) with respect to any fiscal quarter ending on or after March 31, 2019 and prior to March 31, 2020, 4.25 to 1.00; and (v) with respect to any fiscal quarter ending on or after March 31, 2020, 4.00 to 1.00.general corporate purposes.

There were ~~$350.0~~$258.0 million of borrowings under the Credit Agreement as of June 30, 2017. Based on the Company’s results of operations for the trailing twelve months ended June 30, 2017 and existing borrowings, the Company would have had the ability to utilize approximately $329.0 million of the $800.0 million Credit Agreement and not have been in violation of the terms of the agreement.March 31, 2018.

The current availability under the Credit Agreement as of ~~June 30, 2017~~March 31, 2018 is shown in the table below:

June 30, 2017

Availability

(in millions)

Committed Credit Agreement

$
800.0

Availability reduction from covenants

121.0

$
679.0

Usage

Borrowings under the Credit Agreement

350.0

Impact on availability related to outstanding letters of credit

—

350.0

Current availability at June 30, 2017

$
329.0

	March 31, 2018
Availability	(in millions)
Credit Agreement	$	800.0
Availability reduction due to available borrowing base		29.0
	$	771.0
Usage
Borrowings under the Credit Agreement	$	258.0
Outstanding letters of credit		35.7
	$	293.7

Current availability at March 31, 2018	$	477.3
Cash and cash equivalents		235.2
Total available liquidity ^(a)	$	712.5

(a)	Total available liquidity does not include credit facilities of non-U.S. subsidiaries, which are uncommitted facilities.

~~The~~As of March 31, 2018, the Company was in compliance with ~~its~~the debt covenants ~~as of June 30, 2017~~ under the Credit Agreement and expects to remain in compliance based on management’s estimates of operating and financial results for ~~2017~~2018 and the foreseeable future. ~~However, declines in market~~As of March 31, 2018, the Company met all the conditions required to borrow under the Credit Agreement and ~~economic conditions or demand for certain of~~management expects the ~~Company’s products and services could impact~~Company to continue to meet the Company’s ability to remain in compliance with its debt covenants in future periods. In the event we were to fall out of compliance with one or more of our debt covenants in the future, following an applicable cure period, the banks could terminate their commitments unless we could negotiate a covenant waiver or amendment or refinance our facility. If any such activities become necessary, there can be no assurance that we would be successful in obtaining additional financing or modifying our existing debt terms.borrowing conditions.

The failure of a financial institution supporting the Credit Agreement would reduce the size of the Company’s committed facility unless a replacement institution was added. Currently, the Credit Agreement is supported by ~~sixteen~~eight U.S. ~~and international~~ financial institutions.

As of ~~June 30, 2017,~~March 31, 2018, the Company had ~~$146.5~~$184.1 million in other uncommitted credit facilities, primarily outside the U.S. (the “Other Facilities”). There were ~~$111.4~~$74.4 million in outstanding letters of credit, bank guarantees and bank acceptance drafts which reduced availability, ~~and~~ of which ~~$64.1~~$35.7 million were issued under the Credit Agreement. Total borrowings under the Credit Agreement and the Other Facilities (the “Combined Facilities”) were ~~$369.1~~$304.7 million as of ~~June 30, 2017.~~March 31, 2018.

The Company’s liquidity may be affected by its credit ratings. During the first quarter of 2018, Moody’s downgraded the Company’s long-term corporate credit rating from B1 to B2 and downgraded the senior unsecured debt credit rating from B2 to B3. The outlook remained stable. The Company’s Standard & Poor Rating Services (“S&P”) and Moody’s credit ratings as of ~~June 30, 2017~~March 31, 2018 are shown in the table below:

	S&P	Moody's
Long-term corporate credit rating	~~B+,~~B, Stable	~~B1,~~B2, Stable
Senior unsecured debt	B+B	B2
~~Credit Agreement~~	BB	~~Ba1~~B3

Dividends

During the ~~six~~three months ended ~~June 30, 2017,~~March 31, 2018, the Company paid cash dividends of ~~$19.6~~$9.8 million. On ~~July 18, 2017,~~April 5, 2018, the Board of Directors of the Company declared a quarterly cash dividend of $0.14 per common share, payable on ~~September~~June 1, ~~2017~~2018 to ~~RRD~~ stockholders of record on ~~August~~May 15, ~~2017.~~2018.

~~Acquisitions and Dispositions~~

~~During the six months ended June 30, 2016, the Company sold two entities within the business process outsourcing reporting unit, for net proceeds of $13.4 million.~~

MANAGEMENT OF MARKET RISK

The Company is exposed to interest rate risk on its variable debt and price risk on its fixed-rate debt. At ~~June 30, 2017,~~March 31, 2018, the Company’s variable-interest borrowings were ~~$368.9~~$304.7 million. Approximately ~~83.7%~~86.0% of the Company’s outstanding debt was comprised of fixed-rate debt as of ~~June 30, 2017.~~March 31, 2018.

The Company assesses market risk based on changes in interest rates utilizing a sensitivity analysis that measures the potential loss in earnings, fair values and cash flows based on a hypothetical 10% change in interest rates. Using this sensitivity analysis, such changes would not have a material effect on interest income or expense and cash flows and would change the fair values of fixed-rate debt at ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 by approximately ~~$49.4~~$46.0 million and ~~$69.6~~$48.9 million, respectively.

The Company is exposed to the impact of foreign currency fluctuations in certain countries in which it operates. The exposure to foreign currency movements is limited in many countries because the operating revenues and expenses of its various subsidiaries and business units are substantially in the local currency of the country in which they operate. To the extent that borrowings, sales, purchases, revenues, expenses or other transactions are not in the local currency of the subsidiary, the Company is exposed to currency risk and may enter into foreign ~~currency~~exchange spot and forward contracts to hedge the currency risk. As of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the aggregate notional amount of outstanding foreign currency contracts was approximately ~~$104.2~~$189.6 million and ~~$172.2~~$215.9 million, respectively (see Note ~~17,~~15, Derivatives, to the Condensed Consolidated Financial Statements). Net unrealized gains (losses) from these foreign currency contracts were ~~$0.7~~$3.8 million at ~~June 30, 2017~~March 31, 2018 and ~~$0.2~~$2.2 million at December 31, ~~2016.~~2017. The Company does not use derivative financial instruments for trading or speculative purposes.

OTHER INFORMATION

Litigation and Contingent Liabilities

For a discussion of certain litigation involving the Company, see Note ~~14,~~13, Commitments and Contingencies, to the Condensed Consolidated Financial Statements.

New Accounting Pronouncements and Pending Accounting Standards

Recently issued accounting standards and their estimated effect on the Company’s consolidated financial statements are described in Note ~~19,~~16, New Accounting Pronouncements, to the Condensed Consolidated Financial Statements.

CAUTIONARY STATEMENT

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

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

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

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

adverse changes in global economic conditions and the resulting effect on the businesses of our ~~customers;~~clients;

changes in customer preferences or a failure to otherwise manage relationships with our significant clients;

loss of brand reputation and decreases in quality of client support and service offerings;

political and regulatory risks and uncertainty in the countries in which we operate or sell our products and services;

~~loss of brand reputation and decreases in quality of customer support and service offerings;~~

~~changes in consumer preferences or a failure to otherwise manage relationships with our significant customers;~~

adverse credit market conditions and other issues that may affect the Company’s ability to obtain future financing on favorable terms;

the Company’s ability to make payments on, reduce or extinguish any of its material indebtedness;

changes in the availability or costs of key materials (such as ink, paper and fuel), or increases in shipping ~~costs or changes in prices received for the sale of by-products;~~costs;

the ability of the Company to improve operating efficiency rapidly enough to meet market conditions;

~~successful negotiation, execution and integration of acquisitions;~~

~~increased pricing pressure as a result of the competitive environment in which the Company operates;~~

~~increasing health care and benefits costs for employees and retirees;~~

~~changes in the Company’s pension and other postretirement obligations;~~

~~catastrophic events which may damage the Company’s facilities or otherwise disrupt the business;~~

~~adverse trends or events in our operations outside of the United States;~~

~~the effect of inflation, changes in currency exchange rates and changes in interest rates;~~

the effect of changes in laws and regulations, including changes in accounting standards, trade, tax, environmental compliance (including the emission of greenhouse gases and other air pollution controls), health and welfare benefits (including the Patient Protection and Affordable Care Act, as modified by the Health Care and Education Reconciliation Act, and further healthcare reform initiatives), price controls and other regulatory matters and the cost, which could be substantial, of complying with these laws and regulations;

~~changes in the regulations applicable to the Company’s customers, which may adversely impact demand for the Company’s products and services;~~

factors that affect customer demand, including changes in postal rates, postal regulations and service levels, changes in the capital markets, changes in advertising markets, customers’ budgetary constraints and changes in customers’ short-range and long-range plans;

~~failures or errors in the Company’s products and services;~~

the ability by the Company and/or its vendors to implement and maintain information technology and security measures sufficient to protect against breaches and data leakage or the failure to properly use and protect customer, Company and employee information and data;

increased pricing pressure as a result of the competitive environment in which the Company operates;

successful negotiation, execution and integration of acquisitions;

increasing health care and benefits costs for employees and retirees;

changes in the Company’s pension and other postretirement obligations;

adverse trends or events in our operations outside of the United States;

the effect of inflation, changes in currency exchange rates and changes in interest rates;

catastrophic events which may damage the Company’s facilities or otherwise disrupt the business;

the effect of changes in laws and regulations, including changes in accounting standards, trade, tax, environmental compliance, health and welfare benefits, price controls and other regulatory matters and the cost, which could be substantial, of complying with these laws and regulations;

changes in the regulations applicable to the Company’s clients, which may adversely impact demand for the Company’s products and services;

factors that affect client demand, including changes in postal rates, postal regulations and service levels, changes in the capital markets, changes in advertising markets, clients’ budgetary constraints and changes in clients’ short-range and long-range plans;

failures or errors in the Company’s products and services;

changes in technology, including electronic substitution and migration of paper based documents to digital data formats, and the ability of the Company to adapt to these changes;

~~the spinoff transactions achieving the intended results;~~

~~the volatility of the price of the Company’s common stock following completion of the spinoff;~~

~~not realizing the benefits from the retained ownership interests in LSC and Donnelley Financial;~~

•

~~increased costs resulting from a decrease in purchase power as a result of the spinoffs;~~

inability to hire and retain employees;

the spinoffs resulting in significant tax liability; and

other risks and uncertainties detailed from time to time in the Company’s filings with the SEC.

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

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

See Item 2 of Part I under “Management of Market Risk.” There have been no significant changes to the Company’s market risk since December 31, ~~2016.~~2017. For a discussion of exposure to market risk, refer to Part II, Item 7A – Quantitative and Qualitative Disclosures about Market Risk, set ~~for~~forth in the Company’s ~~2016~~2017 Form 10-K.

Item 4. Controls and Procedures

(a)	Disclosure controls and procedures.

As required by Rule 13a-15(b) and Rule 15d-15(e) of the Securities Exchange Act of 1934, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining effective disclosure controls and procedures, as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. As of ~~June 30, 2017,~~March 31, 2018, an evaluation was performed under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures as of ~~June 30, 2017~~March 31, 2018 were effective in ensuring information required to be disclosed in our SEC reports was recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information was accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

(b)	Changes in internal control over financial reporting.

There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) that occurred during the quarter ended ~~June 30, 2017~~March 31, 2018 that had materially affected, or were reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II— OTHER INFORMATION

Item 1. Legal Proceedings

For a discussion of certain litigation involving the Company, see Note ~~14,~~13, Commitments and Contingencies, to the Condensed Consolidated Financial Statements.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

ISSUER PURCHASES OF EQUITY SECURITIES

Period	Total Number of Shares Purchased (a)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
January 1, 2018 - January 31, 2018		—	$	—	—	$	—
February 1, 2018 - February 28, 2018	—		—		—	$	—
March 1, 2018 - March 31, 2018		97,472		7.31	—	$	—
Total		97,472	$	7.31	—

(a)	Shares withheld for tax liabilities upon vesting of equity awards.

~~There were no issuer purchases of equity securities during the three months ended June 30, 2017.~~

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

Item 4: Mine Safety Disclosures

Not applicable

IItem 6. Exhib~~tem 6. Exhibits~~its

10.1*		Form of Stock Unit Award Agreement

10.2*		Form of Performance Unit Award Agreement

10.3*		Form of Cash-Settled Stock Unit Award Agreement

31.1*		Certification by Daniel L. Knotts, President and Chief Executive Officer, required by Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934

31.2*		Certification by Terry D. Peterson, Executive Vice President and Chief Financial Officer, required by Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934

32.1**		Certification by Daniel L. Knotts, President and Chief Executive Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code

32.2**		Certification by Terry D. Peterson, Executive Vice President and Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code
~~101.INS~~
101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

*	Filed herewith

**	Furnished herewith

SSIG~~IGNATURES~~NATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

R.R. DONNELLEY & SONS COMPANY

By:		/s/ TERRY D. PETERSON
		Terry D. Peterson
		Executive Vice President and Chief Financial Officer

~~By:~~		~~/s/ JEFFREY~~ ~~G. GORSKI~~
		~~Jeffrey G. Gorski~~
		~~Senior Vice President and Chief Accounting Officer~~

Date: ~~August~~May 2, ~~2017~~2018

5135

Delaware		36-1004130
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

35 West Wacker Drive, Chicago, Illinois		60601
(Address of principal executive offices)		(Zip code)

	As Reported		Adjustments			As Revised
Receivables, less allowance for doubtful accounts	$	1,268.9	$	(24.8	)	$	1,244.1
Inventories		375.9		6.5			382.4
Accounts payable		884.8		(18.3	)		866.5

	Three Months Ended		Six Months Ended
	June 30, 2017		June 30, 2017
Net sales to LSC and Donnelley Financial	$	86.2	$	169.1
Purchases from LSC and Donnelley Financial		31.9		69.0

	June 30,			December 31,
	2017			2016
Raw materials and manufacturing supplies	$	144.3		$	133.8
Work in process		88.0			84.4
Finished goods		176.7			179.4
LIFO reserve		(16.6	)		(18.0	)
Total	$	392.4		$	379.6

		Page
	PART I
~~FINANCIAL INFORMATION~~

Item 1:	~~Condensed Consolidated Financial Statements (unaudited)~~	3

1.	Condensed Consolidated Balance Sheets as of ~~June 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017	3

	Condensed Consolidated Statements of Operations for the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and 2017 ~~and 2016~~	4

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three ~~and six~~ months ended ~~June 30,~~March 31, 2018 and 2017 ~~and 2016~~	5

	Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June 30,~~March 31, 2018 and 2017 ~~and 2016~~	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2:2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
		23
Item 3:3.	Quantitative and Qualitative Disclosures About Market Risk	48
		32
Item 4:4.	Controls and Procedures	4832

	PART II

~~OTHER INFORMATION~~

Item 1:1.	Legal Proceedings	49
		33
Item 2:2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
		33
Item 4:4.	Mine Safety Disclosures	49
		33
Item 6:6.	Exhibits	5034

Signatures		5135

	June 30,		December 31,
	2017^(b)		2016
Accounts receivable	$	17.5	$	78.1
Accounts payable		12.5		62.6
Accrued liabilities ^(a)		—		78.0

	Variable			Strategic
	Print			Services			International			Total
Net book value as of December 31, 2016
Goodwill	$	1,823.0		$	365.2		$	1,017.9		$	3,206.1
Accumulated impairment losses		(1,550.5	)		(148.7	)		(904.9	)		(2,604.1	)
Total		272.5			216.5			113.0			602.0
Foreign exchange and other adjustments		—			—			5.1			5.1
Net book value as of June 30, 2017
Goodwill		1,823.5			365.2			1,060.0			3,248.7
Accumulated impairment losses		(1,551.0	)		(148.7	)		(941.9	)		(2,641.6	)
Total	$	272.5		$	216.5		$	118.1		$	607.1

	June 30, 2017							December 31, 2016
	Gross							Gross
	Carrying		Accumulated			Net Book		Carrying		Accumulated			Net Book
	Amount		Amortization			Value		Amount		Amortization			Value

Customer relationships	$	527.9	$	(393.6	)	$	134.3	$	517.9	$	(370.7	)	$	147.2
Patents		2.0		(2.0	)		—		2.0		(2.0	)		—
Trademarks, licenses and agreements		26.2		(24.8	)		1.4		26.2		(24.4	)		1.8
Trade names		36.9		(15.1	)		21.8		36.8		(13.9	)		22.9
Total other intangible assets	$	593.0	$	(435.5	)	$	157.5	$	582.9	$	(411.0	)	$	171.9

	Contract Assets		Contract Liabilities
	Short-Term		Short-Term		Long-Term
Balance at January 1, 2018	$	4.0	$	30.3	$	1.4
Balance at March 31, 2018		5.2		23.7		1.2

Three Months Ended	Employee		Other Restructuring			Total Restructuring					Other
June 30, 2017	Terminations		Charges			Charges		Impairment			Charges		Total
Variable Print	$	0.6	$	0.2		$	0.8	$	(0.3	)	$	0.5	$	1.0
Strategic Services		0.1		(0.1	)		—		—			0.1		0.1
International		1.0		0.9			1.9		—			—		1.9
Corporate		0.7		0.1			0.8		—			—		0.8
Total	$	2.4	$	1.1		$	3.5	$	(0.3	)	$	0.6	$	3.8

					Foreign
	December 31,		Restructuring		Exchange and			Cash			June 30,
	2016		Charges		Other			Paid			2017
Employee terminations	$	7.6	$	8.8	$	(0.3	)	$	(7.6	)	$	8.5
Multi-employer pension withdrawal obligations		11.8		0.3		—			(0.7	)		11.4
Lease terminations and other		1.6		2.4		0.9			(1.6	)		3.3
Total	$	21.0	$	11.5	$	0.6		$	(9.9	)	$	23.2

	March 31, 2018			December 31, 2017
Land	$	53.6		$	56.1
Buildings		414.5			417.3
Machinery and equipment		1,899.5			1,885.2
		2,367.6			2,358.6
Less: Accumulated depreciation		(1,778.9	)		(1,743.5	)
Total property, plant and equipment-net	$	588.7		$	615.1

	Three Months Ended March 31, 2018
	Employee		Other Restructuring		Total Restructuring					Multi-Employer Pension Plan
	Terminations		Charges		Charges		Other			Charges		Total
Business Services	$	1.8	$	1.0	$	2.8	$	(4.9	)	$	0.5	$	(1.6	)
Marketing Solutions		1.1		—		1.1		0.3			0.1		1.5
Corporate		0.3		0.6		0.9		—			—		0.9
Total	$	3.2	$	1.6	$	4.8	$	(4.6	)	$	0.6	$	0.8

	Three Months Ended March 31, 2017
	Employee		Other Restructuring		Total Restructuring				Multi-Employer Pension Plan
	Terminations		Charges		Charges		Other		Charges		Total
Business Services	$	3.8	$	1.1	$	4.9	$	—	$	0.5	$	5.4
Marketing Solutions		1.1		0.4		1.5		0.5		0.1		2.1
Corporate		1.5		0.1		1.6		—		—		1.6
Total	$	6.4	$	1.6	$	8.0	$	0.5	$	0.6	$	9.1

	RRD
	Stockholders'			Noncontrolling
	Equity			Interest			Total Equity
Balance at December 31, 2016	$	(105.7	)	$	13.5		$	(92.2	)
Net earnings		26.4			0.5			26.9
Other comprehensive (loss) income		(87.3	)		0.3			(87.0	)
Share-based compensation		4.3			—			4.3
Spinoff adjustments		8.5			—			8.5
Issuance of share-based awards, net of withholdings and other		(1.7	)		—			(1.7	)
Cash dividends paid		(19.6	)		—			(19.6	)
Distributions to noncontrolling interests		—			(0.7	)		(0.7	)
Balance at June 30, 2017	$	(175.1	)	$	13.6		$	(161.5	)

	Three Months Ended								Six Months Ended
	June 30, 2016								June 30, 2016
	Before Tax			Income Tax		Net of Tax			Before Tax			Income Tax		Net of Tax
	Amount			Expense		Amount			Amount			Expense		Amount
Translation adjustments	$	(22.5	)	$	—	$	(22.5	)	$	(4.6	)	$	—	$	(4.6	)
Adjustment for net periodic pension and other postretirement benefits plan cost		10.9			4.2		6.7			16.1			10.0		6.1
Other comprehensive (loss) income	$	(11.6	)	$	4.2	$	(15.8	)	$	11.5		$	10.0	$	1.5

	Changes in the Fair Value of Available-for-Sale Securities			Pension and Other Postretirement Benefits Plan Cost			Translation Adjustments			Total
Balance at December 31, 2016	$	119.3		$	(159.5	)	$	(15.5	)	$	(55.7	)
Other comprehensive (loss) income before reclassifications		(48.5	)		—			28.8			(19.7	)
Amounts reclassified from accumulated other comprehensive loss		(69.0	)		1.4			—			(67.6	)
Net change in accumulated other comprehensive loss		(117.5	)		1.4			28.8			(87.3	)
Balance at June 30, 2017	$	1.8		$	(158.1	)	$	13.3		$	(143.0	)

	Three Months Ended June 30,						Six Months Ended June 30,						Classification in the Condensed Consolidated	Three Months Ended March 31,						Classification in the Condensed Consolidated
	2017			2016			2017			2016			Statements of Operations	2018			2017			Statements of Operations
Amortization of pension and other postretirement benefits plan cost:
Net actuarial loss	$	1.8		$	7.9		$	3.5		$	15.7		Cost of sales; Selling, general and administrative expenses	$	2.0		$	1.7		Investment and other (income) expense-net
Net prior service credit		(0.8	)		(4.0	)		(1.5	)		(8.0	)	Cost of sales; Selling, general and administrative expenses		(0.7	)		(0.7	)	Investment and other (income) expense-net
Settlements		—			96.9			—			96.9		Cost of sales; Selling, general and administrative expenses		0.3			—		Investment and other (income) expense-net
Reclassifications before tax		1.0			100.8			2.0			104.6				1.6			1.0
Income tax expense		0.3			37.4			0.6			43.0
Income tax benefit															0.4			0.3
Reclassification, net of tax	$	0.7		$	63.4		$	1.4		$	61.6			$	1.2		$	0.7

Available-for-sale securities:
Net realized gain on equity securities		(97.6	)		—			(51.0	)		—		Investment and other (income) expense -net
Reclassifications before tax		(97.6	)		—			(51.0	)		—
Loss on equity securities, before tax														$	—		$	46.6		Investment and other (income) expense-net
Income tax benefit		—			—			18.0			—				—			18.0
Reclassification, net of tax	$	(97.6	)	$	—		$	(69.0	)	$	—				—			28.6
Total reclassifications, net of tax	$	(96.9	)	$	63.4		$	(67.6	)	$	61.6			$	1.2		$	29.3

	June 30, 2017		December 31, 2016
Derivatives not designated as hedges
Prepaid expenses and other current assets	$	1.8	$	1.7
Accrued liabilities		1.1		1.5

		Three Months Ended						Six Months Ended
	Classification of (Gain) Loss Recognized in the	June 30,						June 30,
	Condensed Consolidated Statements of Operations	2017			2016			2017		2016
Derivatives not designated as hedges
Foreign currency contracts	Selling, general and administrative expenses	$	(1.0	)	$	(2.6	)	$	0.6	$	2.6

			Basis of Fair Value Measurement
	Balance as of June 30, 2017		Quoted prices in active markets for identical assets (Level 1)		Significant Other Observable Inputs (Level 2)
Assets
Foreign currency contracts	$	1.8	$	—	$	1.8
Available-for-sale securities		2.3		2.3		—
Total assets	$	4.1	$	2.3	$	1.8
Liabilities
Foreign currency contracts		1.1		—		1.1
Total liabilities	$	1.1	$	—	$	1.1

			Basis of Fair Value Measurement
	Balance as of December 31, 2016		Significant Other Observable Inputs (Level 2)
Assets
Foreign currency contracts	$	1.7	$	1.7
Available-for-sale securities	328.7		328.7
Total assets	$	330.4	$	330.4
Liabilities
Foreign currency contracts	1.5		1.5
Total liabilities	$	1.5	$	1.5

	Income from Operations			Operating Margin			Net Earnings (Loss) From Continuing Operations Attributable to RRD Common Stockholders			Net Earnings (Loss) Attributable to RRD Stockholders Per Diluted Share
	(in millions, except margin and per share data)
For the Three Months Ended June 30, 2016	$	24.7			1.5	%	$	(23.2	)	$	(0.33	)
2017 restructuring, impairment and other charges - net		(3.8	)		(0.2	%)		(4.9	)		(0.07	)
2016 restructuring, impairment and other charges - net		8.2			0.5	%		11.1			0.16
Spinoff-related transaction expenses		(1.2	)		(0.1	%)		(0.8	)		(0.01	)
Pension settlement charges		20.4			1.2	%		12.0			0.17
Acquisition-related expenses		1.4			0.1	%		1.0			0.01
Loss on debt extinguishments		—			—			(8.5	)		(0.12	)
Net gain on investments		—			—			94.7			1.35
Operations		(11.1	)		(0.7	%)		(4.9	)		(0.07	)
For the Three Months Ended June 30, 2017	$	38.6			2.3	%	$	76.5		$	1.09

	Net Sales for the Three Months Ended
	June 30,
Reporting unit	2017		2016		$ Change			% Change
	(in millions, except percentages)
Commercial and digital print	$	384.4	$	389.1	$	(4.7	)		(1.2	%)
Direct mail		120.0		121.7		(1.7	)		(1.4	%)
Statement printing		91.0		89.3		1.7			1.9	%
Labels		95.1		96.8		(1.7	)		(1.8	%)
Forms		44.5		44.5		—			—
Total Variable Print	$	735.0	$	741.4	$	(6.4	)		(0.9	%)

	Six Months Ended June 30,
	2017		2016			$ Change			% Change
	(in millions, except percentages)

Products net sales	$	2,552.3	$	2,474.4		$	77.9			3.1	%
Services net sales		770.0		803.8			(33.8	)		(4.2	%)
Total net sales		3,322.3		3,278.2			44.1			1.3	%
Products cost of sales (exclusive of depreciation and amortization)		2,045.0		1,957.1			87.9			4.5	%
Services cost of sales (exclusive of depreciation and amortization)		646.4		672.2			(25.8	)		(3.8	%)
Total cost of sales		2,691.4		2,629.3			62.1			2.4	%
Products gross profit		507.3		517.3			(10.0	)		(1.9	%)
Services gross profit		123.6		131.6			(8.0	)		(6.1	%)
Total gross profit		630.9		648.9			(18.0	)		(2.8	%)
Selling, general and administrative expenses (exclusive of depreciation and amortization)		435.9		462.9			(27.0	)		(5.8	%)
Restructuring, impairment and other charges-net		12.9		13.5			(0.6	)		(4.4	%)
Depreciation and amortization		96.1		102.5			(6.4	)		(6.2	%)
Other operating income		—		(12.3	)		12.3			100.0	%
Income from operations	$	86.0	$	82.3		$	3.7			4.5	%

	Net Sales for the Six Months Ended
	June 30,
Reporting unit	2017		2016		$ Change			% Change
	(in millions, except percentages)
Commercial and digital print	$	782.9	$	786.9	$	(4.0	)		(0.5	%)
Direct mail		252.5		251.3		1.2			0.5	%
Statement printing		195.9		197.7		(1.8	)		(0.9	%)
Labels		192.2		195.1		(2.9	)		(1.5	%)
Forms		88.6		90.5		(1.9	)		(2.1	%)
Total Variable Print	$	1,512.1	$	1,521.5	$	(9.4	)		(0.6	%)

	Debt Maturity Schedule
	Total		2017		2018		2019		2020		2021		Thereafter
	(in millions)
Senior notes and debentures and borrowings under the Credit Agreement _(a)	$	2,247.7	$	—	$	—	$	172.2	$	238.4	$	881.0	$	956.1
Miscellaneous debt obligations		19.2		19.1		0.1	—		—		—		—
Total	$	2,266.9	$	19.1	$	0.1	$	172.2	$	238.4	$	881.0	$	956.1

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