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 every Interactive Data File required to be submitted 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 such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “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 ~~October 28, 2019, 70.9~~April 27, 2020, 71.3 million shares of common stock were outstanding.

	September 30,			December 31,			March 31,			December 31,
	2019			2018			2020			2019
ASSETS
Cash and cash equivalents	$	144.7		$	370.6		$	450.7		$	190.8
Receivables, less allowances for doubtful accounts of $23.5 in 2019 (2018 - $25.9)		1,248.9			1,298.3
Receivables, less allowances for credit losses of $23.8 in 2020 (2019 - $20.5)								1,063.2			1,161.6
Inventories (Note 3)		338.7			329.7			300.7			301.8
Prepaid expenses and other current assets		111.7			101.1			105.1			98.6
Total current assets		1,844.0			2,099.7			1,919.7			1,752.8
Property, plant and equipment-net (Note 4)		513.6			531.3			475.8			500.0
Goodwill (Note 5)		554.9			553.4			432.5			457.8
Other intangible assets-net (Note 5)		105.6			113.3			93.3			99.7
Deferred income taxes		57.4			66.9			62.1			57.8
Operating lease assets (Note 13)		197.1			—
Operating lease assets								211.0			205.5
Other noncurrent assets		267.9			276.2			243.1			256.5
Total assets	$	3,540.5		$	3,640.8		$	3,437.5		$	3,330.1
LIABILITIES
Accounts payable	$	803.2		$	987.3		$	690.5		$	852.2
Accrued liabilities and other		348.8			347.4			302.2			334.2
Short-term operating lease liabilities (Note 13)		67.8			—
Short-term operating lease liabilities								65.8			68.7
Short-term and current portion of long-term debt (Note 14)		100.6			216.2			208.1			71.2
Total current liabilities		1,320.4			1,550.9			1,266.6			1,326.3
Long-term debt (Note 14)		1,928.5			1,875.3			1,960.3			1,747.2
Pension liabilities		87.9			97.9			106.5			113.6
Other postretirement benefits plan liabilities		66.2			67.8			58.5			61.7
Long-term income tax liability		76.2			91.1			75.8			75.8
Long-term operating lease liabilities (Note 13)		133.1			—
Long-term operating lease liabilities								150.0			141.0
Other noncurrent liabilities		205.1			203.2			236.4			234.8
Total liabilities		3,817.4			3,886.2			3,854.1			3,700.4
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 2019 and 2018		0.9			0.9
Issued: 89.0 shares in 2020 and 2019								0.9			0.9
Additional paid-in-capital		3,357.3			3,404.0			3,267.1			3,348.0
Accumulated deficit		(2,244.7	)		(2,225.7	)		(2,352.2	)		(2,336.8	)
Accumulated other comprehensive loss		(173.9	)		(153.8	)		(207.2	)		(176.2	)
Treasury stock, at cost, 18.2 shares in 2019 (2018 - 18.6 shares)		(1,230.4	)		(1,285.5	)
Treasury stock, at cost, 17.7 shares in 2020 (2019 - 18.1 shares)								(1,137.8	)		(1,219.6	)
Total RRD stockholders' equity		(290.8	)		(260.1	)		(429.2	)		(383.7	)
Noncontrolling interests		13.9			14.7			12.6			13.4
Total equity		(276.9	)		(245.4	)		(416.6	)		(370.3	)
Total liabilities and equity	$	3,540.5		$	3,640.8		$	3,437.5		$	3,330.1

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2019			2018			2019			2018			2020			2019
Products net sales	$	1,328.8		$	1,329.8		$	3,774.4		$	3,881.6		$	1,145.5		$	1,230.9
Services net sales		290.6			319.7			875.6			1,155.2			264.0			291.0
Total net sales		1,619.4			1,649.5			4,650.0			5,036.8			1,409.5			1,521.9

Products cost of sales (exclusive of depreciation and amortization)		1,073.5			1,076.8			3,076.4			3,167.7			922.8			1,008.8
Services cost of sales (exclusive of depreciation and amortization)		235.0			257.3			706.2			968.4			212.9			234.8
Total cost of sales		1,308.5			1,334.1			3,782.6			4,136.1			1,135.7			1,243.6

Products gross profit		255.3			253.0			698.0			713.9			222.7			222.1
Services gross profit		55.6			62.4			169.4			186.8			51.1			56.2
Total gross profit		310.9			315.4			867.4			900.7			273.8			278.3
Selling, general and administrative expenses (exclusive of depreciation and amortization)		190.5			203.8			589.1			626.4			179.1			199.6
Restructuring and other (income) expense-net (Note 6)		(2.3	)		11.0			30.8			22.8
Restructuring, impairment and other expense-net (Note 6)														31.9			17.1
Depreciation and amortization		43.5			44.2			126.2			137.5			40.8			42.7
Other operating expense (income)		5.4			(4.5	)		3.3			(4.6	)		13.2			(4.4	)
Income from operations		73.8			60.9			118.0			118.6			8.8			23.3
Interest expense-net		37.4			42.0			115.6			125.7			33.9			40.1
Investment and other income-net		(4.6	)		(5.5	)		(11.3	)		(14.7	)		(3.8	)		(4.5	)
Loss on debt extinguishment		0.8			—			0.8			0.1
Income before income taxes		40.2			24.4			12.9			7.5
Income tax expense (benefit)		27.3			(10.4	)		15.9			(5.4	)
Net income (loss)		12.9			34.8			(3.0	)		12.9
Gain on debt extinguishment														(0.2	)		—
Loss before income taxes														(21.1	)		(12.3	)
Income tax benefit														(8.2	)		(3.8	)
Net loss														(12.9	)		(8.5	)
Less: income attributable to noncontrolling interests		0.3			0.5			0.2			1.2			0.1			0.3
Net income (loss) attributable to RRD common stockholders	$	12.6		$	34.3		$	(3.2	)	$	11.7
Net loss attributable to RRD common stockholders													$	(13.0	)	$	(8.8	)

Net income (loss) per share attributable to RRD common stockholders (Note 10):
Basic net income (loss) per share	$	0.18		$	0.49		$	(0.04	)	$	0.17
Diluted net income (loss) per share	$	0.18		$	0.49		$	(0.04	)	$	0.17
Net loss per share attributable to RRD common stockholders (Note 10):
Basic net loss per share													$	(0.18	)	$	(0.12	)
Diluted net loss per share													$	(0.18	)	$	(0.12	)

Weighted average number of common shares outstanding:
Basic		71.4			70.6			71.2			70.5			71.6			70.8
Diluted		71.4			70.7			71.2			70.8			71.6			70.8

Three Months Ended

Nine Months Ended

September 30,

September 30,

2019

2018

2019

2018

Net income (loss)

$
12.9

$
34.8

$
(3.0
)

$
12.9

Other comprehensive loss, net of tax (Note 11):

Translation adjustments

(19.9
)

(8.4
)

(21.9
)

(31.1
)
Adjustments for net periodic pension and postretirement benefits plan cost

(0.2
)

1.6

(0.6
)

5.9

Other

0.6

—

2.1

—

Other comprehensive loss

(19.5
)

(6.8
)

(20.4
)

(25.2
)
Comprehensive (loss) income

(6.6
)

28.0

(23.4
)

(12.3
)
Less: comprehensive (loss) income attributable to noncontrolling interests

(0.1
)

0.1

(0.1
)

0.7

Comprehensive (loss) income attributable to RRD common stockholders

$
(6.5
)

$
27.9

$
(23.3
)

$
(13.0
)

	Three Months Ended
	March 31,
	2020			2019
Net loss	$	(12.9	)	$	(8.5	)

Other comprehensive (loss) income, net of tax (Note 11):
Translation adjustments		(20.0	)		1.2
Adjustments for net periodic pension and postretirement benefits plan cost		0.8			(0.2	)
Changes in fair value of derivatives		(12.0	)		—
Other		—			0.6
Other comprehensive (loss) income		(31.2	)		1.6
Comprehensive loss		(44.1	)		(6.9	)
Less: comprehensive income attributable to non-controlling interests		(0.1	)		0.5
Comprehensive loss attributable to RRD common stockholders	$	(44.0	)	$	(7.4	)

	Nine Months Ended						Three Months Ended
	September 30,						March 31,
	2019			2018			2020			2019
OPERATING ACTIVITIES
Net (loss) income	$	(3.0	)	$	12.9
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Net loss							$	(12.9	)	$	(8.5	)
Adjustments to reconcile net loss to net cash used in operating activities:
Impairment charges and other-net								20.6			0.1
Depreciation and amortization		126.2			137.5			40.8			42.7
Provision for doubtful accounts receivable		6.9			10.6
Provision for credit losses								4.4			3.9
Share-based compensation		9.3			6.4			1.4			3.4
Deferred income taxes		9.8			7.3			(1.8	)		1.8
Net pension and other postretirement benefits plan income		(12.1	)		(15.9	)		(3.4	)		(4.0	)
Loss on disposition of business and other assets								6.6			(4.7	)
Gain on debt extinguishments								(0.2	)		—
Other		(3.1	)		(5.9	)		1.3			5.7
Changes in operating assets and liabilities:
Accounts receivable-net		17.7			(5.7	)		62.7			88.6
Inventories		(21.1	)		(16.6	)		(4.1	)		1.4
Prepaid expenses and other current assets		(11.4	)		(5.9	)		(4.9	)		(6.9	)
Accounts payable		(172.3	)		(150.7	)		(143.3	)		(213.3	)
Current income taxes		(41.1	)		(26.7	)		(13.5	)		(30.9	)
Accrued liabilities and other		11.5			2.3			(29.3	)		(7.3	)
Pension and other postretirement benefits plan contributions		(5.1	)		(13.5	)		(4.0	)		(2.0	)
Net cash used in operating activities		(87.8	)		(63.9	)		(79.6	)		(130.0	)
INVESTING ACTIVITIES
Capital expenditures		(107.4	)		(72.7	)		(17.7	)		(37.4	)
Acquisition of business		(3.0	)		—
Disposition of businesses								12.9			(0.7	)
Proceeds from sales of investments and other assets		32.8			49.9			2.9			0.3
Disposition of businesses		10.4			50.5
Payments related to company-owned life insurance		(1.3	)		(1.8	)
Net cash (used in) provided by investing activities		(68.5	)		25.9
Proceeds related to company-owned life insurance								1.6			(0.3	)
Net cash used in investing activities								(0.3	)		(38.1	)
FINANCING ACTIVITIES
Proceeds from other short-term debt		—			56.5
Payments on other short-term debt		(8.0	)		(12.2	)		—			(6.5	)
Payments of current maturities and long-term debt		(221.6	)		(0.2	)		(58.7	)		(173.7	)
Proceeds from credit facility borrowings		1,061.8			975.1			578.0			512.0
Payments on credit facility borrowings		(897.8	)		(949.1	)		(170.0	)		(253.0	)
Dividends paid		(6.4	)		(21.8	)		(2.1	)		(2.1	)
Payments of withholding taxes on share-based compensation		(0.9	)		(0.7	)		(0.6	)		(0.9	)
Other financing activities		(1.0	)		(0.9	)		(0.7	)		(1.0	)
Net cash (used in) provided by financing activities		(73.9	)		46.7
Net cash provided by financing activities								345.9			74.8
Effect of exchange rate on cash, cash equivalents and restricted cash		(6.3	)		(14.0	)		(6.0	)		2.5
Net decrease in cash, cash equivalents and restricted cash		(236.5	)		(5.3	)
Net increase (decrease) in cash, cash equivalents and restricted cash								260.0			(90.8	)
Cash, cash equivalents and restricted cash at beginning of year		403.6			301.5			223.8			403.6
Cash, cash equivalents and restricted cash at end of period	$	167.1		$	296.2		$	483.8		$	312.8

The accompanying unaudited condensed consolidated interim financial statements include the accounts of R.R. Donnelley & Sons Company and its subsidiaries (“RRD,” the “Company,” “we,” “us,” and “our”) 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 our latest Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 filed with the SEC on February ~~27, 2019.~~26, 2020. Operating results for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, ~~2019.~~2020. 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.

The following table provides a reconciliation of cash, cash equivalents and restricted cash at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statement of Cash Flows.

	September 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Cash and cash equivalents	$	144.7	$	370.6	$	450.7	$	190.8
Restricted cash - current^(a)		22.3		32.9		33.0		32.9
Restricted cash - noncurrent^(b)		0.1		0.1		0.1		0.1
Total cash, cash equivalents and restricted cash	$	167.1	$	403.6	$	483.8	$	223.8

Cash payments for income taxes were ~~$54.5~~$8.5 million and ~~$28.4~~$26.4 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. Cash refunds for income taxes were ~~$7.7~~$2.4 million and ~~$14.0~~$0.7 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively. Income taxes receivable of ~~$25.5~~$15.4 million and ~~$11.7~~$12.0 million as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively, are included within Prepaid expenses and other current assets.

~~On January 1, 2018, we adopted ASC Topic 606, “Revenue from Contracts with Customers” using~~We recognize an allowance for credit losses for financial assets carried at amortized cost to present the ~~modified retrospective method applied~~net amount expected to ~~those contracts which were not completed~~be collected as of ~~January 1, 2018. All revenue~~the balance sheet date. Such allowance is based on credit losses expected to arise over the life of the asset’s contractual term, which includes consideration of prepayments. Assets are written off when we determine that such financial assets are deemed uncollectible and are recognized as a deduction from the allowance for credit losses. Expected recoveries of amounts previously written off, not to exceed the aggregate of the amount previously written off, are included in determining the ~~Condensed Statements~~necessary reserve at the balance sheet date. We pool financial assets based on similar risk characteristics to estimate expected credit losses. We estimate expected credit losses on financial assets individually when those assets do not share similar risk characteristics. We closely monitor our accounts receivable including timely account reconciliations, detailed reviews of ~~Operations is considered to be revenue from contracts with clients.~~past due accounts, updated credit limits, and monthly analysis of the adequacy of our reserve for credit losses.

We recorded a net increase to opening retained earnings of $12.9 million as of January 1, 2018 due to the cumulative impact of adopting Topic 606, with the impact primarily related to the timing of revenue recognition for certain inventory that had been billed but not yet shipped.

We utilize a loss rate approach to determine lifetime expected credit losses for our financial assets. This method is used for calculating an estimate of losses based primarily on our historical loss experience. In determining loss rates, we evaluate information related to historical losses, adjusted for current conditions and further adjusted for the period of time that we can reasonably forecast. We have concluded that we can reasonably support a forecast period for the contractual life of our financial assets. Qualitative and quantitative adjustments related to current conditions and the reasonable and supportable forecast period consider the following: the customer or vendor’s creditworthiness, changes in our policy and procedures to establish customer credit limits, changes in the payment terms of receivables, existence and effect of any concentration of credit and changes in the level of such concentrations, and the effects of other external forces such as the current and forecasted direction of the economic and business environment. We have considered the current and expected economic and market conditions as a result of COVID-19 in determining credit loss expense for the period ended March 31, 2020.

The allowance for credit losses as of December 31, 2019 and March 31, 2020, was as follows:

	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
	2019		2018		2019		2018		2020		2019
Products	Products								Products
Commercial print	$	442.9	$	496.4	$	1,278.8	$	1,421.3	$	363.4	$	422.4
Direct marketing		193.5		142.7		479.0		424.1		182.8		148.5
Packaging		182.1		179.7		484.2		474.0
Statements		134.0		133.5		417.1		436.4		126.9		149.5
Labels		124.0		118.8		364.1		355.5		121.6		120.5
Packaging										115.1		139.5
Digital print and fulfillment		122.5		113.5		347.2		332.6		113.6		109.6
Supply chain management		69.8		81.5		222.4		242.2		69.7		78.5
Forms		60.0		63.7		181.6		195.5		52.4		62.4
Total products net sales	$	1,328.8	$	1,329.8	$	3,774.4	$	3,881.6	$	1,145.5	$	1,230.9
Services	Services								Services
Logistics	$	204.6	$	229.1	$	614.3	$	880.3	$	195.2	$	201.7
Business process outsourcing		58.6		60.5		181.0		183.1		41.4		61.8
Digital and creative solutions		27.4		30.1		80.3		91.8		27.4		27.5
Total services net sales	$	290.6	$	319.7	$	875.6	$	1,155.2	$	264.0	$	291.0
Total net sales	$	1,619.4	$	1,649.5	$	4,650.0	$	5,036.8	$	1,409.5	$	1,521.9

Our products revenue is primarily recognized at a point in time. We generally recognize revenue for products 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, w~~e 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 providing~~ ~~audience segmentation, creative development, program testing, print production, postal optimization and performance analytics for large-scale personalized direct mail programs~~.

We generate revenue by providing packaging solutions, ranging from rigid boxes to in-box print materials, for clients in consumer electronics, life sciences, cosmetics and consumer packaged goods industries.

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 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~~ ~~in-store marketing materials, including signage and point-of-purchase materials, as well as custom marketing kits that require multiple types of marketing collateral. Under the trade name Motif~~^TM~~, we also create custom 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 and 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 service which could be either recurring or project-based.

~~We generate revenue by providing specialized transportation and distribution services~~ ~~using our third party logistics solutions~~. These services are comprised of freight services, including truckload, less-than-truckload, intermodal and international freight forwarding; international mail and parcel distribution; and courier services, including same day and next day delivery. As discussed in Note 16, ~~Dispositions, we sold our Print Logistics business on July 2, 2018. Print Logistics services included the distribution of retail and newsstand printed materials.~~

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~~ ~~for delivery across multiple marketing communications channels including print and digital advertising, direct marketing and mail, packaging, sales collateral, in-store marketing and social media~~.

Certain clients may receive volume-based rebates or early payment discounts, which are accounted for as variable consideration. We estimate these amounts based on the expected amount to be earned by our clients and reduce revenue accordingly. We do not expect significant changes to estimates of variable consideration. Given the nature of our products and the history of returns, product returns are not significant.

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

Contract liabilities primarily relate to client advances received prior to completion of performance obligations. Reductions in contract liabilities are a result of our completion of performance obligations.

Revenue recognized during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 from amounts included in contract liabilities at the beginning of the period was approximately ~~$14.0~~$13.6 million. During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, we reclassified ~~$2.7~~$2.0 million of contract assets to receivables as a result of the completion of the performance obligation and the right to the consideration becoming unconditional.

The components of inventories, net of excess and obsolescence reserves for raw materials and finished goods, at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 were as follows:

	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Raw materials and manufacturing supplies	$	145.8		$	153.1		$	140.5		$	139.4
Work in process		83.1			75.1			57.1			64.6
Finished goods		129.2			120.1			121.9			116.4
LIFO reserve		(19.4	)		(18.6	)		(18.8	)		(18.6	)
Total inventories	$	338.7		$	329.7		$	300.7		$	301.8

The components of property, plant and equipment at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 were as follows:

	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Land	$	47.8		$	51.0		$	47.2		$	47.8
Buildings		380.7			389.5			375.3			379.9
Machinery and equipment		1,778.4			1,797.1			1,683.1			1,704.7
		2,206.9			2,237.6			2,105.6			2,132.4
Less: Accumulated depreciation		(1,693.3	)		(1,706.3	)		(1,629.8	)		(1,632.4	)
Total property, plant and equipment-net	$	513.6		$	531.3		$	475.8		$	500.0

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 depreciation expense was ~~$30.2~~$28.2 million and ~~$85.4 million, respectively. During the three and nine months ended September 30, 2018 depreciation expense was $30.9 million and $96.5~~$28.3 million, respectively.

During the fourth quarter of 2017, we entered into an agreement to sell a printing facility in Shenzhen, China and transfer the related land use rights. As of ~~September 30, 2019,~~March 31, 2020, we have received non-refundable deposits in accordance with the terms of the agreement of approximately ~~$68.3~~$98.2 million which is recorded in Other noncurrent liabilities on the Consolidated Balance Sheets. As of ~~September 30, 2019,~~March 31, 2020, the carrying cost of the building and land use rights is recorded in Other noncurrent assets and is not material. Additional deposits will be paid to us in accordance with the agreement. Gross proceeds from the sale, including non-refundable deposits, are expected to be approximately $250.0 million, subject to changes in the exchange rate,and we expect the transaction to close in 2022 after closing conditions are satisfied and government approvals are obtained.

The carrying amount of goodwill at March 31, 2020 and December 31, 2019 were as follows:

During the three months ended March 31, 2020, we recorded a non-cash charge of $20.6 million to recognize the impairment of goodwill in the logistics reporting unit. See Note 6, Restructuring, Impairment and Other, for further discussion regarding goodwill impairment charges.

The components of other intangible assets at March 31, 2020 and December 31, 2019 were as follows:

	March 31, 2020							December 31, 2019
	Gross							Gross
	Carrying		Accumulated			Net Book		Carrying		Accumulated			Net Book
	Amount		Amortization			Value		Amount		Amortization			Value

Client relationships	$	430.5	$	(352.4	)	$	78.1	$	433.9	$	(350.0	)	$	83.9
Patents		2.0		(2.0	)		—		2.0		(2.0	)		—
Trademarks, licenses and agreements		24.4		(24.3	)		0.1		24.6		(24.5	)		0.1
Trade names		31.7		(16.6	)		15.1		31.8		(16.1	)		15.7
Total other intangible assets	$	488.6	$	(395.3	)	$	93.3	$	492.3	$	(392.6	)	$	99.7

Amortization expense for other intangible assets was $5.3 million and $6.4 million for the three months ended March 31, 2020 and 2019, respectively.

~~The carrying amount of goodwill at September 30,~~For the three months ended March 31, 2020 and 2019, we recorded the following net restructuring, impairment and ~~December 31, 2018 were as follows:~~ other expenses (income):

Business Services

Marketing Solutions

Total

Net book value as of December 31, 2018

Goodwill

$
2,604.3

$
519.5

$
3,123.8

Accumulated impairment losses

(2,316.3
)

(254.1
)

(2,570.4
)
Total

288.0

265.4

553.4

Acquisition

4.1

—

4.1

Foreign exchange

(2.6
)

—

(2.6
)

Net book value as of September 30, 2019

Goodwill

2,598.2

519.5

3,117.7

Accumulated impairment losses

(2,308.7
)

(254.1
)

(2,562.8
)
Total

$
289.5

$
265.4

$
554.9

	Three Months Ended
	March 31, 2020
	Employee		Other Restructuring		Multi-Employer Pension Plan		Impairment and
	Terminations		Charges		Charges		Other		Total
Business Services	$	5.8	$	1.1	$	0.6	$	18.9	$	26.4
Marketing Solutions		0.4		—		0.1		—		0.5
Corporate		1.9		3.1		—		—		5.0
Total	$	8.1	$	4.2	$	0.7	$	18.9	$	31.9

~~The components of other intangible assets at September 30, 2019 and December 31, 2018 were as follows:~~

September 30, 2019

December 31, 2018

Gross

Gross

Carrying

Accumulated

Net Book

Carrying

Accumulated

Net Book

Amount

Amortization

Value

Amount

Amortization

Value

Client relationships

$
518.3

$
(429.1
)

$
89.2

$
520.3

$
(425.5
)

$
94.8

Patents

2.0

(2.0
)

—

2.0

(2.0
)

—

Trademarks, licenses and agreements

24.6

(24.4
)

0.2

25.7

(25.2
)

0.5

Trade names

31.8

(15.6
)

16.2

34.6

(16.6
)

18.0

Total other intangible assets

$
576.7

$
(471.1
)

$
105.6

$
582.6

$
(469.3
)

$
113.3

	Three Months Ended
	March 31, 2019
	Employee		Other Restructuring		Multi-Employer Pension Plan
	Terminations		Charges		Charges		Other		Total
Business Services	$	7.8	$	4.7	$	0.6	$	0.1	$	13.2
Marketing Solutions		0.1		—		0.1		—		0.2
Corporate		0.2		3.5		—		—		3.7
Total	$	8.1	$	8.2	$	0.7	$	0.1	$	17.1

Amortization expense for other intangible assets was $5.9 million and $18.1 million for the three and nine months ended September 30, 2019, respectively, and was $6.8 million and $20.7 million for the three and nine months ended September 30, 2018, respectively.

For the three months ended ~~September 30, 2019 and 2018, we recorded the following net restructuring and other (income) expenses:~~

~~For the nine months ended September 30, 2019 and 2018, we recorded the following net restructuring and other expenses (income):~~

~~For the three and nine months ended September 30, 2019,~~March 31, 2020, we recorded net restructuring charges of ~~$0.6~~$8.1 million ~~and $19.5 million, respectively,~~ for employee termination costs. These charges primarily relate to the ~~relocation~~closure of ~~a printing facility in Shenzhen, China,~~the Chilean operations and other announced facility closures in the Business Services segment and the reorganization of selling, general and administrative functions across each segment. ~~Other~~We also incurred $4.2 million of other restructuring charges and $0.7 million of ~~$1.0 million and $13.7 million for~~multi-employer pension plan (“MEPP”) withdrawal obligation charges during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020.

For the three months ended March 31, 2020, we recorded a non-cash charge of $20.6 million to recognize the impairment of goodwill in the logistics reporting unit within the Business Services segment. The goodwill impairment charge resulted from reductions in the estimated fair value for this reporting unit based on lower expectations for future revenue, profitability and cash flows as compared to the expectations of the 2019 ~~are primarily comprised~~annual goodwill impairment test. Although the Logistics reporting unit reported increases in both net sales and income from operations in the first quarter of ~~increased reserves for employee termination litigation, environmental matters~~2020, the lower future expectations were driven by expected reduced demand in the near term due to the COVID-19 pandemic. The goodwill impairment charge was determined using Level 3 inputs, including discounted cash flow analysis and ~~lease terminations. Additionally,~~comparable marketplace fair value data. The discounted cash flow analysis assumes a modest recovery in the logistics reporting unit in the third and fourth quarters of 2020. If the severity and duration of the impacts of the pandemic exceed our current expectations, additional impairment charges could be recorded. In addition, we recorded net gains of ~~$4.7 million and $4.6~~$1.7 million on the sale of restructured facilities for the three ~~and nine~~ months ended ~~September 30, 2019, respectively.~~March 31, 2020.

For the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, we recorded net restructuring charges of ~~$2.8~~$8.1 million ~~and $11.2 million, respectively,~~ for employee termination costs. These charges primarily related to the planned relocation of a printing facility in Shenzhen, China, other facility closures in the Business Services segment and the reorganization of selling, general and administrative functions across each ~~segment and three facility closures in the Business Services~~ segment. We also incurred ~~charges for lease termination and~~ other restructuring charges of ~~$6.4~~$8.2 million and ~~$11.5 million and multi-employer pension plan (“MEPP”)~~MEPP withdrawal ~~obligations~~obligation charges of $0.7 ~~million and $2.2~~ million for the three ~~and nine~~ months ended September 30, 2018, respectively. Additionally, we recorded a $5.4 million net gain on the sale of previously impaired assets in the Business Services segment for the nine months ended September 30, 2018. These assets were impaired in 2015.March 31, 2019. We also recorded impairment charges related to facility closures of ~~$3.3~~$0.1 million for the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019.

Restructuring and MEPP reserves as of December 31, ~~2018~~2019 and ~~September 30, 2019,~~March 31, 2020, and changes during the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, were as follows:

			Restructuring		Foreign										Restructuring		Foreign
	December 31,		and Other		Exchange and			Cash			September 30,		December 31,		and Other		Exchange and			Cash			March 31,
	2018		Charges		Other			Paid			2019		2019		Charges		Other			Paid			2020
Employee terminations	$	4.8	$	19.5	$	(1.2	)	$	(18.4	)	$	4.7	$	3.4	$	8.1	$	—		$	(6.2	)	$	5.3
MEPP withdrawal obligations		44.2		2.2		(0.1	)		(4.8	)		41.5		40.6		0.7		—			(1.7	)		39.6
Other		6.2		13.7		—			(9.6	)		10.3		8.6		4.2		(0.7	)		(3.9	)		8.2
Total	$	55.2	$	35.4	$	(1.3	)	$	(32.8	)	$	56.5	$	52.6	$	13.0	$	(0.7	)	$	(11.8	)	$	53.1

The current portion of restructuring reserves of ~~$17.8~~$16.4 million at ~~September 30, 2019~~March 31, 2020 was included in Accrued liabilities and other, while the long-term portion of ~~$38.7~~$36.7 million, ~~primarily~~ related to MEPP withdrawal obligations, employee terminations in litigation ~~environmental matters~~ and ~~lease liabilities related to restructured facilities,~~other, was included in Other noncurrent liabilities at ~~September 30, 2019.~~March 31, 2020. The liabilities for the withdrawal obligations associated with our previous decision to withdraw from all MEPPs included in Accrued liabilities and other and Other noncurrent liabilities are ~~$6.6~~$6.5 million and ~~$34.9~~$33.1 million, respectively, as of ~~September 30, 2019~~March 31, 2020.

We anticipate that payments associated with the employee terminations reflected in the above table will be ~~substantially~~fully completed by ~~September 2020,~~March 2021, excluding employee terminations in litigation within the Business Services segment.

Payments on all of our MEPP withdrawal obligations are scheduled to be substantially completed by 2034. Changes based on uncertainties in these estimated withdrawal obligations could affect the ultimate charges related to MEPP withdrawals.

The restructuring liabilities classified as “other” primarily consisted of reserves for employee termination litigation and environmental ~~matters and lease liabilities related to restructured facilities.~~matters. Any potential recoveries or additional charges could affect amounts reported in our consolidated financial statements.

Components of net pension and other postretirement benefits plan (“OPEB”) income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ were as follows:

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2019			2018			2019			2018			2020			2019
Pension expense (income):
Pension income:
Service cost	$	0.2		$	0.1		$	0.7		$	0.5		$	0.3		$	0.2
Interest cost		8.2			7.7			24.9			23.4			6.9			8.4
Expected return on plan assets		(11.5	)		(12.4	)		(34.7	)		(37.6	)		(10.2	)		(11.6	)
Amortization, net		1.6			2.0			4.6			5.9			2.5			1.5
Settlements		—			0.2			—			1.5
Net pension income	$	(1.5	)	$	(2.4	)	$	(4.5	)	$	(6.3	)	$	(0.5	)	$	(1.5	)

OPEB expense (income):
Service cost	$	—		$	(0.3	)	$	—		$	0.5
OPEB income:
Interest cost		2.7			2.5			7.7			7.7			1.8			2.6
Expected return on plan assets		(3.3	)		(3.5	)		(9.9	)		(10.5	)		(3.2	)		(3.3	)
Amortization, net		(1.9	)		(0.8	)		(5.4	)		(2.2	)		(1.5	)		(1.8	)
Other		—			(5.1	)		—			(5.1	)
Net OPEB income	$	(2.5	)	$	(7.2	)	$	(7.6	)	$	(9.6	)	$	(2.9	)	$	(2.5	)

During the three months ended March 31, 2020 and 2019, we contributed $4.0 million and $2.0 million, respectively, to our retirement plans.

~~During the nine months ended September 30, 2019 and 2018, we contributed $5.1 million and $13.5 million, respectively, to our retirement plans.~~

Other OPEB income during the three and nine months ended September 30, 2018 reflects the change in one of our OPEB liabilities due to a revision to participant demographic data utilized in the actuarial valuations.

Share-based compensation expense was ~~$2.6~~$1.4 million and ~~$9.3~~$3.4 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019, ~~respectively, and was $2.2 million and $6.4 million for the three and nine months ended September 30, 2018,~~ respectively.

In March ~~2019,~~2020, we awarded our annual share-based compensation grants, which consisted of ~~0.6~~0.8 million restricted stock units with a grant date fair value of ~~$4.77~~$1.61 per unit and ~~0.6~~0.8 million performance share units also with a grant date fair value of ~~$4.77~~$1.61 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, in March ~~2019~~2020 we granted ~~1.3~~1.5 million cash-settled restricted stock units (“phantom restricted stock units”) and ~~0.4~~1.5 million cash-settled performance stock units (“phantom performance stock units”). Our share price on the date of grant was ~~$5.03.~~$1.88. The phantom restricted stock units vest and are payable in three equal installments over a period of three years after the grant date. The phantom performance stock units are subject to a 34 month cliff vesting period. Phantom stock units are not shares of our common stock and therefore the recipients of these awards do not receive ownership interest in the Company or stockholder 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 and other 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.

14Our equity as of December 31, 2019 and March 31, 2020, and changes during the three months ended March 31, 2020, were as follows:

	Common		Additional Paid-in-			Treasury			Accumulated			Accumulated Other Comprehensive			Total RRD's Stockholders'			Noncontrolling			Total
	Stock		Capital			Stock			Deficit			Loss			Equity			Interests			Equity
Balance at December 31, 2019	$	0.9	$	3,348.0		$	(1,219.6	)	$	(2,336.8	)	$	(176.2	)	$	(383.7	)	$	13.4		$	(370.3	)
Net (loss) income										(13.0	)					(13.0	)		0.1			(12.9	)
Other comprehensive loss													(31.0	)		(31.0	)		(0.2	)		(31.2	)
Share-based compensation				1.4												1.4						1.4
Issuance of share-based awards, net of withholdings and other				(82.3	)		81.8									(0.5	)					(0.5	)
Cash dividends paid										(2.1	)					(2.1	)					(2.1	)
Cumulative impact of adopting ASU 2016-03										(0.3	)					(0.3	)					(0.3	)
Distributions to noncontrolling interests																—			(0.7	)		(0.7	)
Balance at March 31, 2020	$	0.9	$	3,267.1		$	(1,137.8	)	$	(2,352.2	)	$	(207.2	)	$	(429.2	)	$	12.6		$	(416.6	)

Our equity as of December 31, 2018 and ~~September 30,~~March 31, 2019, and changes during ~~the~~ three ~~and nine~~ months ended ~~September 30,~~March 31, 2019, were as follows:

Common

Additional
Paid-in-

Treasury

Accumulated

Accumulated
Other
Comprehensive

Total RRD's
Stockholders'

Noncontrolling

Total

Stock

Capital

Stock

Deficit

Loss

Equity

Interests

Equity

Balance at December 31, 2018
$
0.9

$
3,404.0

$
(1,285.5
)

$
(2,225.7
)

$
(153.8
)

$
(260.1
)

$
14.7

$
(245.4
)
Net (loss) income

(8.8
)

(8.8
)

0.3

(8.5
)
Other comprehensive income

1.4

1.4

0.2

1.6

Share-based compensation

3.4

3.4

3.4

Issuance of share-based awards, net of withholdings and other

(54.7
)

53.8

(0.9
)

(0.9
)
Cash dividends paid

(2.1
)

(2.1
)

(2.1
)
Cumulative impact of adopting ASU 2016-02, net of tax

2.6

2.6

2.6

Distributions to noncontrolling interests

—

(0.7
)

(0.7
)
Balance at March 31, 2019
$
0.9

$
3,352.7

$
(1,231.7
)

$
(2,234.0
)

$
(152.4
)

$
(264.5
)

$
14.5

$
(250.0
)
Net loss

(7.0
)

(7.0
)

(0.4
)

(7.4
)
Other comprehensive loss

(2.4
)

(2.4
)

(0.1
)

(2.5
)
Share-based compensation

3.3

3.3

3.3

Issuance of share-based awards, net of withholdings and other

(0.5
)

0.5

—

—

Cash dividends paid

(2.2
)

(2.2
)

(2.2
)
Spinoff adjustments

(12.0
)

(12.0
)

(12.0
)
Balance at June 30, 2019
$
0.9

$
3,355.5

$
(1,231.2
)

$
(2,255.2
)

$
(154.8
)

$
(284.8
)

$
14.0

$
(270.8
)
Net income

12.6

12.6

0.3

12.9

Other comprehensive loss

(19.1
)

(19.1
)

(0.4
)

(19.5
)
Share-based compensation

2.6

2.6

2.6

Issuance of share-based awards, net of withholdings and other

(0.8
)

0.8

—

—

Cash dividends paid

(2.1
)

(2.1
)

(2.1
)
Distributions to noncontrolling interests

—

—

Balance at September 30, 2019
$
0.9

$
3,357.3

$
(1,230.4
)

$
(2,244.7
)

$
(173.9
)

$
(290.8
)

$
13.9

$
(276.9
)

On October 1, 2016, we completed the separation of LSC Communications, Inc. and Donnelley Financial Solutions, Inc. (“Spin Companies”) into two separate publicly-traded companies. The distribution of the Spin Companies was recorded as a reduction in Stockholder's Equity during the fourth quarter of 2016. During the second quarter of 2019, we identified an error in the accounting for the distribution of the Spin Companies. As a result, the error, which was determined by management to be immaterial to the previously issued Consolidated Financial Statements, has been corrected herein by increasing Accumulated Deficit by $12.0 million.

On August 28, 2019, our Board of Directors approved a Stockholder Rights Agreement (the “Rights Agreement”). Under the terms of the Rights Agreement, each share of our common stock is accompanied by one right; each right entitles the stockholder to purchase from the Company one one-thousandth of a newly issued share of Series A Junior Participating Preferred Stock at an exercise price of $12, subject to adjustment.

~~Subject to certain exceptions, the rights become exercisable 10 business days following a public announcement that a person (the “Acquiring Person”) has acquired beneficial ownership of 10%~~ ~~(or 20% in certain circumstances )~~ or more of the outstanding shares of common stock of the Company (the “Stock Acquisition Date”). The rights will expire on August 28, 2020, unless redeemed, exchanged or terminated earlier by the Company. At any time until 10 business days following the Stock Acquisition Date, the Company may redeem the rights for $0.001 per right.

In the event a person becomes an Acquiring Person, each holder of a right, other than the Acquiring Person, will have the right to receive common stock (or, in certain circumstances, cash, property or other securities of the Company) having a value equal to two times the exercise price of the right.

In the event that we are acquired in a merger or other business combination as defined in the Rights Agreement, or 50% or more of our assets or earnings power is sold, each right entitles the holders to purchase common stock of the acquiring company having a value equal to two times the exercise price of the right.

At any time after a person becomes an Acquiring Person and prior to the acquisition by any person or group of 50% or more of the outstanding common stock, the Board of Directors may exchange the rights (other than rights owned by such person or group which have become void), in whole or in part, at an exchange ratio of one share of common stock, or one one-thousandth of a share of Series A Preferred Stock (or of a share of a class or series of the Company’s preferred stock having equivalent rights, preferences and privileges), per right, subject to adjustment.

~~Our equity as of December 31, 2017 and September 30, 2018, and changes during three and nine months ended September 30, 2018, were as follows:~~

	Common		Additional Paid-in-			Treasury			Accumulated			Accumulated Other Comprehensive			Total RRD's Stockholders'			Noncontrolling			Total			Common		Additional Paid-in-			Treasury			Accumulated			Accumulated Other Comprehensive			Total RRD's Stockholders'			Noncontrolling			Total
	Stock		Capital			Stock			Deficit			Loss			Equity			Interests			Equity			Stock		Capital			Stock			Deficit			Loss			Equity			Interests			Equity
Balance at December 31, 2017	$	0.9	$	3,444.0		$	(1,333.1	)	$	(2,225.7	)	$	(103.7	)	$	(217.6	)	$	14.7		$	(202.9	)
Balance at December 31, 2018																								$	0.9	$	3,404.0		$	(1,285.5	)	$	(2,225.7	)	$	(153.8	)	$	(260.1	)	$	14.7		$	(245.4	)
Net (loss) income										(9.6	)					(9.6	)		0.3			(9.3	)										(8.8	)					(8.8	)		0.3			(8.5	)
Other comprehensive income													21.0			21.0			0.5			21.5														1.4			1.4			0.2			1.6
Share-based compensation				1.2												1.2						1.2					3.4												3.4						3.4
Issuance of share-based awards, net of withholdings and other				(32.7	)		31.9			(0.1	)					(0.9	)					(0.9	)				(54.7	)		53.8									(0.9	)					(0.9	)
Cash dividends paid										(9.8	)					(9.8	)					(9.8	)										(2.1	)					(2.1	)					(2.1	)
Cumulative impact of adopting ASU 2014-09, net of tax										12.9						12.9						12.9
Cumulative impact of adopting ASU 2016-02, net of tax																																	2.6						2.6						2.6
Distributions to noncontrolling interests																—			(1.0	)		(1.0	)																—			(0.7	)		(0.7	)
Balance at March 31, 2018	$	0.9	$	3,412.5		$	(1,301.2	)	$	(2,232.3	)	$	(82.7	)	$	(202.8	)	$	14.5		$	(188.3	)
Net (loss) income										(13.0	)					(13.0	)		0.4			(12.6	)
Other comprehensive loss													(39.3	)		(39.3	)		(0.6	)		(39.9	)
Share-based compensation				3.0												3.0						3.0
Issuance of share-based awards, net of withholdings and other				(4.5	)		4.5			0.1						0.1						0.1
Cash dividends paid										(9.8	)					(9.8	)					(9.8	)
Balance at June 30, 2018	$	0.9	$	3,411.0		$	(1,296.7	)	$	(2,255.0	)	$	(122.0	)	$	(261.8	)	$	14.3		$	(247.5	)
Net income										34.3						34.3			0.5			34.8
Other comprehensive loss													(6.4	)		(6.4	)		(0.4	)		(6.8	)
Share-based compensation				2.2												2.2						2.2
Issuance of share-based awards, net of withholdings and other				(0.9	)		0.9									—						—
Cumulative impact of adopting ASU 2018-02, net of tax										22.1			(22.1	)		—						—
Cash dividends paid										(2.2	)					(2.2	)					(2.2	)
Balance at September 30, 2018	$	0.9	$	3,412.3		$	(1,295.8	)	$	(2,200.8	)	$	(150.5	)	$	(233.9	)	$	14.4		$	(219.5	)
Balance at March 31, 2019																								$	0.9	$	3,352.7		$	(1,231.7	)	$	(2,234.0	)	$	(152.4	)	$	(264.5	)	$	14.5		$	(250.0	)

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 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 our stock price during the applicable period. In periods when we are in a net loss, share-based awards are excluded from the calculation of earnings per share as their inclusion would have an anti-dilutive effect.

During the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ no shares of common stock were purchased by us; 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 months ended March 31, 2020 and 2019 were as follows:

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 nine months ended September 30, 2019 and 2018 were as follows:

Three Months Ended

Nine Months Ended

September 30,

September 30,

2019

2018

2019

2018

Net income (loss) per share attributable to RRD common stockholders:

Basic

$
0.18

$
0.49

$
(0.04
)

$
0.17

Diluted

$
0.18

$
0.49

$
(0.04
)

$
0.17

Numerator:

Net income (loss) attributable to RRD common stockholders

$
12.6

$
34.3

$
(3.2
)

$
11.7

Denominator:

Basic weighted average number of common shares outstanding

71.4

70.6

71.2

70.5

Dilutive options and awards

—

0.1

—

0.3

Diluted weighted average number of common shares outstanding

71.4

70.7

71.2

70.8

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

Stock options

0.4

0.7

0.5

0.9

Restricted stock units

1.3

0.5

1.0

0.6

Total

1.7

1.2

1.5

1.5

Dividends declared per common share

$
0.03

$
0.03

$
0.09

$
0.31

The components of other comprehensive ~~loss~~(loss) income and income tax (benefit) expense allocated to each component for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 were as follows:

Accumulated other comprehensive (loss) income by component as of December 31, 2019 and ~~2018~~March 31, 2020, and changes during the three months ended March 31, 2020, were as follows:

Three Months Ended

Nine Months Ended

September 30, 2019

September 30, 2019

Before

Net of

Before

Net of

Tax

Income

Tax

Tax

Income

Tax

Amount

Tax

Amount

Amount

Tax

Amount

Translation adjustments
$
(19.9
)

$
—

$
(19.9
)

$
(21.9
)

$
—

$
(21.9
)
Adjustments for net periodic pension and OPEB cost

(0.3
)

(0.1
)

(0.2
)

(0.8
)

(0.2
)

(0.6
)
Other

—

(0.6
)

0.6

—

(2.1
)

2.1

Other comprehensive loss
$
(20.2
)

$
(0.7
)

$
(19.5
)

$
(22.7
)

$
(2.3
)

$
(20.4
)

	Changes in the Fair Value of Derivatives			Pension and OPEB Cost			Translation Adjustments			Total
Balance at December 31, 2019	$	1.0		$	(185.7	)	$	8.5		$	(176.2	)
Other comprehensive loss before reclassifications		(11.8	)		—			(19.8	)		(31.6	)
Amounts reclassified from accumulated other comprehensive loss		(0.2	)		0.8			—			0.6
Net change in accumulated other comprehensive (loss) income		(12.0	)		0.8			(19.8	)		(31.0	)
Balance at March 31, 2020	$	(11.0	)	$	(184.9	)	$	(11.3	)	$	(207.2	)

Accumulated other comprehensive (loss) income by component as of December 31, 2018 and March 31, 2019, and changes during the three months ended March 31, 2019, were as follows:

~~Accumulated other comprehensive (loss) income by component as of December 31, 2018 and September 30, 2019, and changes during the nine months ended September 30, 2019, were as follows:~~

~~Accumulated other comprehensive (loss) income by component as of December 31, 2017 and September 30, 2018, and changes during the nine months ended September 30, 2018, were as follows:~~

Reclassifications from accumulated other comprehensive loss for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,						Classification in the Condensed	Three Months Ended March 31,						Classification in the Condensed
	2019			2018			2019			2018			Consolidated Statements of Operations	2020			2019			Consolidated Statements of Operations
Translation Adjustments:
Net realized gain, before tax	$	—		$	—		$	(4.5	)	$	—		Other operating expense (income)	$	—		$	(4.5	)	Other operating expense (income)
Reclassification, net of tax	$	—		$	—		$	(4.5	)	$	—			$	—		$	(4.5	)

Amortization of pension and OPEB cost:
Net actuarial loss	$	1.1		$	2.0		$	3.3		$	5.9		Investment and other income-net	$	1.6		$	1.5		Investment and other income-net
Net prior service credit		(1.4	)		(0.8	)		(4.1	)		(2.2	)	Investment and other income-net		(0.6	)		(1.8	)	Investment and other income-net
Settlements		—			0.2			—			1.5		Investment and other income-net
Reclassifications before tax		(0.3	)		1.4			(0.8	)		5.2				1.0			(0.3	)
Income tax benefit		(0.1	)		0.4			(0.2	)		1.1
Income tax expense (benefit)															0.2			(0.1	)
Reclassification, net of tax															0.8			(0.2	)

Derivatives:
Net realized gain														$	(0.2	)	$	—		Interest expense-net
Reclassification, net of tax		(0.2	)		1.0		$	(0.6	)	$	4.1				(0.2	)		—
Total reclassifications, net of tax	$	(0.2	)	$	1.0		$	(5.1	)	$	4.1			$	0.6		$	(4.7	)

Business Services provides customized solutions at scale to help clients inform, service and transact with their customers. The segment’s primary product and service offerings include commercial print, logistics, statement printing, labels, packaging, supply chain management, forms and business process outsourcing. This segment also includes all of our 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 marketing, in-store marketing, digital print, kitting, fulfillment, digital and creative solutions and 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 last-in-first-out inventory provisions. In addition, certain costs and earnings of employee benefit plans, such as pension and OPEB expense (income) and share-based compensation, are included in Corporate and not allocated to the operating segments. Corporate also manages our cash pooling structures, which enables participating international locations to draw on our international cash resources to meet local liquidity needs.

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

Three Months Ended

September 30, 2019

Assets of

Income (Loss)

Depreciation

Operations

Total

Intersegment

Net

from

and

Capital

As of

Sales

Sales

Sales

Operations

Amortization

Expenditures

September 30, 2019

Business Services

$
1,303.0

$
(27.0
)

$
1,276.0

$
80.6

$
26.2

$
17.6

$
2,533.2

Marketing Solutions

352.0

(8.6
)

343.4

24.4

14.7

8.0

766.7

Total operating segments

1,655.0

(35.6
)

1,619.4

105.0

40.9

25.6

3,299.9

Corporate

—

—

—

(31.2
)

2.6

5.4

240.6

Total operations

$
1,655.0

$
(35.6
)

$
1,619.4

$
73.8

$
43.5

$
31.0

$
3,540.5

Three Months Ended

September 30, 2018

Assets of

Income (Loss)

Depreciation

Operations

Total

Intersegment

Net

from

and

Capital

As of

Sales

Sales

Sales

Operations

Amortization

Expenditures

December 31, 2018

Business Services

$
1,385.7

$
(22.5
)

$
1,363.2

$
74.8

$
31.5

$
14.6

$
2,764.5

Marketing Solutions

295.6

(9.3
)

286.3

11.8

11.7

2.7

674.6

Total operating segments

1,681.3

(31.8
)

1,649.5

86.6

43.2

17.3

3,439.1

Corporate

—

—

—

(25.7
)

1.0

7.4

201.7

Total operations

$
1,681.3

$
(31.8
)

$
1,649.5

$
60.9

$
44.2

$
24.7

$
3,640.8

															Three Months Ended
	Nine Months Ended														March 31, 2020
	September 30, 2019																												Assets of
								Income (Loss)			Depreciation											Income (Loss)			Depreciation				Operations
	Total		Intersegment			Net		from			and		Capital		Total		Intersegment			Net		from			and		Capital		As of
	Sales		Sales			Sales		Operations			Amortization		Expenditures		Sales		Sales			Sales		Operations			Amortization		Expenditures		March 31, 2020
Business Services	$	3,812.7	$	(69.2	)	$	3,743.5	$	150.8		$	82.1	$	60.4	$	1,102.2	$	(16.5	)	$	1,085.7	$	19.6		$	26.0	$	10.7	$	2,153.0
Marketing Solutions		930.9		(24.4	)		906.5		38.9			38.2		31.6		330.4		(6.6	)		323.8		24.9			14.2		1.6		699.6
Total operating segments		4,743.6		(93.6	)		4,650.0		189.7			120.3		92.0		1,432.6		(23.1	)		1,409.5		44.5			40.2		12.3		2,852.6
Corporate		—		—			—		(71.7	)		5.9		15.4		—		—			—		(35.7	)		0.6		5.4		584.9
Total operations	$	4,743.6	$	(93.6	)	$	4,650.0	$	118.0		$	126.2	$	107.4	$	1,432.6	$	(23.1	)	$	1,409.5	$	8.8		$	40.8	$	17.7	$	3,437.5

															Three Months Ended
	Nine Months Ended														March 31, 2019
	September 30, 2018																												Assets of
								Income (Loss)			Depreciation											Income (Loss)			Depreciation				Operations
	Total		Intersegment			Net		from			and		Capital		Total		Intersegment			Net		from			and		Capital		As of
	Sales		Sales			Sales		Operations			Amortization		Expenditures		Sales		Sales			Sales		Operations			Amortization		Expenditures		December 31, 2019
Business Services	$	4,265.4	$	(77.1	)	$	4,188.3	$	152.9		$	98.7	$	51.6	$	1,255.9	$	(19.6	)	$	1,236.3	$	28.6		$	29.3	$	23.5	$	2,329.7
Marketing Solutions		876.2		(27.7	)		848.5		32.7			35.3		8.1		291.9		(6.3	)		285.6		8.5			12.1		9.2		748.1
Total operating segments		5,141.6		(104.8	)		5,036.8		185.6			134.0		59.7		1,547.8		(25.9	)		1,521.9		37.1			41.4		32.7		3,077.8
Corporate		—		—			—		(67.0	)		3.5		13.0		—		—			—		(13.8	)		1.3		4.7		252.3
Total operations	$	5,141.6	$	(104.8	)	$	5,036.8	$	118.6		$	137.5	$	72.7	$	1,547.8	$	(25.9	)	$	1,521.9	$	23.3		$	42.7	$	37.4	$	3,330.1

Net restructuring, impairment and other expenses (income) ~~expenses~~ by segment are described in Note 6, Restructuring, Impairment and Other.

We are subject to laws and regulations relating to the protection of the environment. We provide 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. We have been designated as a potentially responsible party or have received claims in ~~two~~three active federal and state Superfund and other multiparty remediation sites. In addition to these sites, we may also have the obligation to remediate six other previously and currently owned facilities. At the Superfund sites, the Comprehensive Environmental Response, Compensation and Liability Act provides that our liability could be joint and several, meaning that we could be required to pay an amount in excess of our proportionate share of the remediation costs.

Our 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 our estimated liability. We believe that our recorded ~~reserves,~~accruals, recorded in Accrued liabilities and other and Other noncurrent liabilities, are adequate to cover our 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 we may undertake in the future. However, in our opinion, compliance with the present environmental protection laws, before taking into account estimated recoveries from third parties, will not have a material effect on our consolidated results of operations, financial position or cash flows.

In April 2019, we received a subpoena from the SEC related to previous business dealings with the Brazilian Ministry of Education. The SEC and Department of Justice (“DOJ”) are investigating the matter, and we are cooperating as they conduct their investigations. In addition, the Brazil authorities are also investigating the matter.

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

In April 2019, we received a subpoena from the SEC related to previous business dealings with the Brazilian Ministry of Education. The SEC and Department of Justice (“DOJ”) are investigating the matter, and we are cooperating as they conduct their investigations. ~~In addition, the DOJ has informed us that the Brazil authorities are also investigating the matter.~~

We determine if an arrangement is a lease at inception. Operating leases are recorded in Operating lease assets, Short-term operating lease liabilities and Long-term operating lease liabilities on the Condensed Consolidated Balance Sheets. Operating lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, we use our incremental borrowing rate based on the information available at the lease commencement date. Operating lease assets ~~also include any~~reflects lease payments ~~made~~ and are reduced by any lease incentives received. Our lease terms may include options to extend or not terminate the lease when we are reasonably certain that we will exercise any such options. Leases with an ~~initial~~expected term of 12 months or less are not recorded on the balance sheet. Lease expense is recognized on a straight-line basis over the expected lease term.

Our most significant leases are real estate leases for plants, warehouses, storage facilities, offices and other facilities. For real estate leases, we elected the practical expedient permitted under Topic 842 to combine lease and non-lease components. As a result, non-lease components, such as common area maintenance charges, are accounted for as a single lease element. Our remaining operating leases are primarily comprised of leases of machinery and technology equipment. Finance leases are not material.

Certain of our operating lease agreements include variable payments that are passed-through by the landlord, such as insurance, taxes and common area maintenance, payments based on the usage of the asset and rental payments adjusted periodically for inflation. Pass-through charges, payments due to change in usage of the asset and payments due to changes in inflation are included within variable rent expense.

Our lease agreements do not contain material residual value guarantees, restrictions or covenants.

~~The components~~Subsequent to the spinoff of LSC Communications, Inc. (“LSC”) and Donnelley Financial Solutions (“Donnelley Financial”) on October 1, 2016, we may be contingently liable for obligations under various operating leases for office, warehouse and manufacturing locations of LSC and Donnelley Financial. In the event that LSC or Donnelley Financial, or any successor lessee, fail to make lease ~~expense~~payments or fail to pay other obligations under these lease agreements, we may be required to satisfy those obligations to the lessor. Under various agreements executed at the time of the spinoff, LSC and Donnelley Financial agreed to fully indemnify us in the event that we would be required to make a payment on their behalf; however, there can be no assurance that the indemnities from LSC and Donnelley Financial will be sufficient to satisfy the full amount of any such contingent obligations. Our exposure to these potential contingent liabilities will decrease over time as LSC and Donnelley Financial pay monthly lease obligations and as the leases expire. As of March 31, 2020 and December 31, 2019, these potential contingent obligations were approximately $72.0 million and $78.8 million, respectively for LSC, and $4.8 million and $5.5 million, respectively for Donnelley Financial. On April 13, 2020, LSC announced that it, along with most of its U.S. subsidiaries, voluntarily filed for business reorganization under Chapter 11 of the ~~three~~U.S. Bankruptcy Code. At the time of this filing, no plan of reorganization has been filed and ~~nine months ended September 30, 2019 were as follows:~~

~~Supplemental cash flow information~~we cannot assess the potential impact of any such plan on our contingent liabilities related to ~~leases for~~ the ~~nine months ended September 30, 2019~~ ~~was as follows:~~

~~(in millions, except per share data, unless otherwise indicated)~~spin-off of LSC.

~~As of September 30, 2019, the future lease payments under operating leases were as follows:~~

Rent expense for facilities in use and equipment was $26.3 million and $83.7 million for the three and nine months ended September 30, 2018, respectively. Sublease rental income for the nine months ended September 30, 2018 was not significant.

~~As of December 31, 2018, future minimum rental commitments under operating leases were as follows:~~

Debt at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 consisted of the following:

September 30, 2019

December 31, 2018

Borrowings under the ABL Credit Agreement
$
223.0

$
59.0

11.25% senior notes due February 1, 2019 ^(a)

—

172.2

7.625% senior notes due June 15, 2020

65.8

65.8

7.875% senior notes due March 15, 2021

167.1

190.4

8.875% debentures due April 15, 2021

60.2

81.0

7.00% senior notes due February 15, 2022

140.0

140.0

6.50% senior notes due November 15, 2023

290.6

290.6

Term Loan Credit Agreement due January 15, 2024 ^(b)

541.4

544.7

6.00% senior notes due April 1, 2024

298.2

298.3

6.625% debentures due April 15, 2029

158.0

157.9

8.820% debentures due April 15, 2031

69.0

69.0

Other ^(c)

29.4

38.9

Unamortized debt issuance costs

(13.6
)

(16.3
)
Total debt

2,029.1

2,091.5

Less: current portion

100.6

216.2

Long-term debt
$
1,928.5

$
1,875.3

	March 31, 2020			December 31, 2019
Borrowings under the ABL Credit Facility	$	450.0		$	42.0
7.625% notes due June 15, 2020		64.5			65.8
7.875% notes due March 15, 2021		138.1			167.1
8.875% debentures due April 15, 2021		59.5			60.2
7.000% notes due February 15, 2022		133.4			140.0
6.500% notes due November 15, 2023		275.2			290.6
Term Loan due January 15, 2024 ^(a)		539.2			540.3
6.000% notes due April 1, 2024		251.8			298.3
6.625% debentures due April 15, 2029		149.8			157.9
8.500% notes due April 15, 2029		49.7			—
8.820% debentures due April 15, 2031		69.0			69.0
Unamortized debt issuance costs		(11.8	)		(12.8	)
Total debt		2,168.4			1,818.4
Less: current portion		208.1			71.2
Long-term debt	$	1,960.3		$	1,747.2

The fair values of the ~~senior~~ notes and debentures, which were determined using the market approach based upon quoted prices or interest rates available to us for ~~borrowings~~debt obligations with similar terms and maturities, were determined to be Level 2 under the fair value hierarchy. The fair value of our total debt was ~~higher than its book value by approximately $10.1 million and~~ less than its book value by approximately ~~$14.4~~$35.9 million at ~~September 30, 2019~~March 31, 2020 and greater than its book value by approximately $29.3 million at December 31, ~~2018, respectively.~~2019.

~~During~~In March 2020, we entered into privately negotiated agreements with the ~~three months~~largest holder of our outstanding notes (the “Seller”) to effect a series of refinancing transactions that address a significant portion of the Company’s 2023 and 2024 debt maturities. The agreements included the repurchase of $6.6 million of the 7.00% notes due 2022 and $20.0 million of the 6.00% notes due 2024. We funded these repurchases with a draw from our ABL Credit Facility. We recorded a gain of $0.2 million on these repurchases.

The agreements also included an exchange of $277.0 million aggregate principal amount of notes owned by the Seller, consisting of $54.0 million of the 6.50% notes due 2023 (the “2023 Notes”), $177.4 million of the 6.00% notes due in 2024 (the “2024 Notes”), and $45.6 million of the 6.625% debentures due 2029 (the “2029 Debentures”) for $297.0 million aggregate principal amount of newly issued unsecured 8.50% notes due 2029 (the “New 2029 Notes”). Other than the interest rate, the terms of the New 2029 Notes are substantially similar to the terms of the 2029 Debentures. As of March 31, 2020, only a portion of this exchange was completed including $15.4 million of the 2023 Notes, $26.5 million of the 2024 Notes, and $8.1 million of the 2029 Debentures, which were exchanged for $53.6 million aggregate principal of New 2029 Notes. We treated the transaction as a debt modification, which resulted in a discount on the New 2029 Notes of $3.9 million, inclusive of $0.3 million of fees paid to the Seller in the first quarter of 2020. The remaining $227 million of the exchange was executed in a series of transactions that were completed on April 8, 2020.

In addition to the aforementioned transactions, during the quarter ended ~~September 30, 2019,~~March 31, 2020, we also repurchased from other parties on the open market ~~$23.4~~$1.3 million ~~and $20.7~~of 7.625% notes due 2020, $29.1 million ~~in aggregate principal amount~~ of the 7.875% ~~senior~~ notes due 2021, and $0.8 million of the 8.875% debentures due 2021 ~~respectively~~.using availability under our ABL Credit Facility. We recorded a ~~loss~~gain on debt extinguishment of ~~$0.8~~$0.3 million, offset by approximately $0.3 million in unamortized debt issuance costs in the ~~third~~first quarter of ~~2019~~2020 on the repurchase of ~~the bonds.~~

~~On February 1, 2019, we retired the $172.2 million 11.25% senior notes using availability under our asset-based revolving credit facility (the “ABL Credit Agreement”).~~

On October 15, 2018, we entered into a $550.0 million senior secured Term Loan B credit facility pursuant to a credit agreement (the “Term Loan Credit Agreement”). Proceeds from the Term Loan Credit Agreement, net of a $5.5 million discount, were used to repurchase certain senior notes, pay transaction fees and repay a portion of borrowings under the ABL Credit Agreement.

Our obligations under the Term Loan Credit Agreement are guaranteed by our material domestic subsidiaries (the “Guarantors”) and are secured by a security interest in substantially all assets of ours and the Guarantors, including certain material real property, subject to certain exceptions and exclusions. The ABL Priority Collateral (as defined below) secures our obligations and the obligations of the Guarantors under the Term Loan Credit Agreement and related guarantees on a second-priority basis, and all other collateral other than the ABL Priority Collateral secures our obligations and the obligations of the Guarantors under the Term Loan Credit Agreement and related guarantees on a first-priority basis, in each case, subject to permitted liens.these notes.

On October 15, 2018, we entered into a $550.0 million senior secured term loan B (the “Term Loan”) pursuant to a credit agreement (the “Term Loan Credit Agreement”). The Term Loan is scheduled to mature on January 15, 2024, at which time the remaining outstanding balance under the Term Loan will be due and payable. Principal payments of $1.4 million are due quarterly. The Term Loan bears interest based on the London Interbank Offered Rate (LIBOR) plus a margin of 5% or a base rate plus a margin of 4%.

We entered into an $800.0 million senior secured asset-based revolving credit facility (the “ABL Credit Facility”) on September 29, 2017, pursuant to a credit agreement (the “ABL Credit Agreement”), which replaced our prior $800.0 million senior secured revolving credit facility dated September 30, 2016. The ABL Credit Facility is scheduled to mature on September 29, 2022, at which time all outstanding amounts under the ABL Credit Facility will be due and payable.

The amount available to be borrowed under the ABL Credit Facility is equal to the lesser of (a) $800.0 million and (b) a borrowing base formula based on the amount of accounts receivable, inventory, machinery, equipment and, if we were to so elect in the future subject to the satisfaction of certain conditions, fee-owned real estate of ours and our material domestic subsidiaries, subject to certain eligibility criteria and advance rates (collectively, the “Borrowing Base”). The aggregate amount of real estate, machinery and equipment that can be included in the Borrowing Base formula cannot exceed $200.0 million.

Borrowings under the ABL Credit Facility bear interest at a rate dependent on the average quarterly availability and is calculated according to a base rate (except in certain circumstances, based on the prime rate) or a Eurocurrency rate (except in certain circumstances, based on 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 total commitments. This fee accrues at a rate of either 0.25% or 0.375% depending upon the average usage of the facility. Borrowings under the ABL Credit Facility may be used for working capital and general corporate purposes.

During the first quarter of 2020, we increased our borrowings under the ABL Credit Facility to $450 million as a proactive measure in response to the COVID-19 pandemic. Based on our Borrowing Base as of March 31, 2020 and outstanding borrowings, we had approximately $192.9 million borrowing capacity available under the ABL Credit Facility. The weighted average interest rate on borrowings under our ABL Credit Facility was 2.7% and 3.9% during the three months ended March 31, 2020 and 2019, respectively.

The ABL Credit Agreement and Term Loan Credit Agreement ~~contains~~contain customary affirmative and negative covenants including negative covenants restricting, among other things, our ability to incur debt, make investments, make certain restricted payments (including payments on certain other debt and external dividends), incur liens securing other debt, consummate certain fundamental transactions, enter into transactions with affiliates and consummate asset sales. The ABL Credit Agreement contains a covenant which requires us to maintain a minimum fixed charge coverage ratio of 1.0 to 1.0 if availability under the ABL Credit Facility declines below certain levels. The Term Loan Credit Agreement requires that the net cash proceeds of significant asset sales be used to prepay ~~borrowings under~~ the Term Loan ~~Credit Agreement, except in certain circumstances, including~~to the ~~reinvestment of~~extent that the net cash proceeds are not used for reinvestment in assets useful to our business, certain acquisitions and investments, repayment of certain borrowings under our ABL Credit ~~Agreement~~Facility or the funding of debt repayments, redemptions or tenders of certain existing notes maturing prior to the maturity of the Term Loan, in each case, subject to certain restrictions and limitations set forth in the Term Loan Credit Agreement.

~~The Term Loan Credit Agreement is scheduled to mature on January 15, 2024, at which time all amounts outstanding under~~Interest paid was $23.5 million for the Term Loan Credit Agreement will be due and payable. Principal payments of $1.4 million are due quarterly. Borrowings will bear interest at a Eurocurrency rate plus a margin of 5% or a base rate plus a margin of 4%.

~~On October 15, 2018, we repurchased $172.6 million and $257.4 million in aggregate principal amount of the~~ ~~7.625% senior notes due~~three months ended March 31, 2020 and ~~7.875% senior notes due 2021, respectively, pursuant to a tender offer. We recorded a loss on debt extinguishment of $32.3~~$38.6 million infor the ~~fourth quarter of 2018 on~~three months ended March 31, 2019.

Interest income was $0.5 million for the ~~repurchase of~~three months ended March 31, 2020 and $0.8 million for the ~~bonds, representing tender premiums paid of $29.0 million, write-off of unamortized debt issuance costs of $1.5 million and fees and expenses of $1.8 million.~~

On September 29, 2017, we entered into the ABL Credit Agreement which amended and restated our prior $800.0 million senior secured revolving credit facility dated September 30, 2016. The ABL Credit Agreement provides for a senior secured asset-based revolving credit facility of up to $800.0 million. The amount available to be borrowed under the ABL Credit Agreement is equal to the lesser of (a) $800.0 million and (b) a borrowing base formula based on the amount of accounts receivable, inventory, machinery, equipment and, if we were to so elect in the future subject to the satisfaction of certain conditions, fee-owned real estate of ours and the Guarantors, subject to certain eligibility criteria and advance rates (collectively, the “Borrowing Base”). The aggregate amount of real estate, machinery and equipment that can be included in the Borrowing Base cannot exceed $200.0 million.

On October 15, 2018, we entered into Amendment No. 1 to the ABL Credit Agreement, which amended the ABL Credit Agreement to, among other things, permit (i) the incurrence of the debt pursuant to the Term Loan Credit Agreement and (ii) the incurrence of a lien on the ABL Priority Collateral to secure our obligations under the Term Loan Credit Agreement and related guarantees on a second-priority basis.

Our obligations under the ABL Credit Agreement are guaranteed by the Guarantors and are secured by a security interest in substantially all assets of ours and the Guarantors, including, only to the extent included in the Borrowing Base, real property, in each case subject to certain exceptions and exclusions. The assets of ours and the Guarantors consisting of accounts receivable, inventory, deposit accounts, securities accounts, 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 our first-tier foreign subsidiaries (collectively, the “ABL Priority Collateral”), secure our obligations and the obligations of the Guarantors under the ABL Credit Agreement and the related guarantees on a first-priority basis, and all other collateral other than the ABL Priority Collateral secures our obligations and the obligations of the Guarantors under the ABL Credit Agreement on a second-priority basis, in each case, subject to permitted liens.

The ABL Credit Agreement contains customary restrictive covenants, including a covenant which requires us to maintain a minimum fixed charge coverage ratio under certain circumstances. In addition, our ability to undertake certain actions, including, among other things, prepay certain junior debt, incur additional indebtedness and make certain restricted payments (including external dividends) depends on satisfaction of certain conditions, including, among other things, meeting minimum borrowing availability thresholds under the ABL Credit Agreement.

Borrowings under the ABL Credit Agreement bear interest at a rate dependent on the average quarterly availability under the ABL Credit Agreement and is calculated according to a base rate (except in certain circumstances, based on the prime rate) or a Eurocurrency rate (except in certain circumstances, based on 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 ABL Credit Agreement. The fee accrues at a rate of either 0.25% or 0.375% depending upon the average usage of the facility.three months ended March 31, 2019.

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

~~Based on our borrowing base as of September 30, 2019 and existing borrowings, we had approximately $438.6 million borrowing capacity available under the ABL Credit Agreement.~~

~~The weighted average interest rate on borrowings under our current facility was 3.7% and 3.4% during the nine months ended September 30, 2019 and 2018, respectively.~~

Interest paid, net of interest capitalized, was $27.0 million and $112.5 million for the three and nine months ended September 30, 2019, respectively, and $38.2 million and $120.0 million for the three and nine months ended September 30, 2018, respectively.

Interest income was $0.6 million and $2.3 million for the three and nine months ended September 30, 2019, respectively, and $0.8 million and $2.0 million for the three and nine months ended September 30, 2018, respectively.

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 the Condensed Consolidated Statements of Operations, or in other comprehensive income (loss), net of applicable income taxes, depending on the purpose for which the derivative is held. At the inception of a hedge transaction, we formally document the hedge relationship and the risk management objective for undertaking the hedge. In addition, we assess 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 in the Condensed Consolidated Statements of Operations.

We are exposed to the impact of foreign currency fluctuations based on our global operations. ~~The exposure to foreign~~Foreign currency ~~movements within many countries is limited because~~fluctuations affect the ~~operating~~U.S. dollar value of revenues earned and expenses ~~of our various subsidiaries and business units~~incurred in foreign currencies. We are ~~substantially in the local~~also exposed to currency ~~of the country in which they operate. To~~risk to the extent ~~borrowings, sales, purchases, revenues, expenses~~we own assets or incur liabilities, or enter into other transactions that are not in the ~~local~~functional currency of the subsidiary ~~or operating unit,~~in which we ~~are exposed~~operate. We employ different practices to manage these risks, including where appropriate the use of derivative instruments, such as foreign currency ~~risk. Periodically, we use foreign exchange spot and forward contracts to hedge exposures resulting from foreign exchange fluctuations.~~forwards. To the extent the gains and losses associated with the fair values of foreign currency ~~exchange contracts~~derivatives are recognized in the ~~Condensed~~ Consolidated Statements of Operations, they are generally offset by gains and losses on underlying payables ~~receivables~~ and ~~net investments in foreign subsidiaries.~~receivables. We do not use derivative financial instruments for trading or speculative purposes. The aggregate notional value of the forward contracts at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 was ~~$144.4~~$158.9 million and ~~$170.8~~$179.9 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.

In 2019 and 2020, we entered into interest rate swap agreements to manage interest rate risk exposure, effectively changing the interest rate on $400.0 million of our floating-rate Term Loan based on LIBOR to a fixed-rate. The interest rate swaps, with a notional value of $400.0 million, were designated as cash flow hedges against the variability of cash flows associated with our Term Loan scheduled to mature on January 15, 2024, which are attributable to changes in the benchmark interest rate.

The ~~total~~fair values of interest rate swaps were determined to be Level 2 under the fair value hierarchy and were developed using the market standard methodology of netting the discounted future variable cash payments and the discounted expected fixed cash receipts. Credit valuation adjustments, which consider the impact of any credit enhancements to the contracts, are incorporated in the fair values to account for potential nonperformance risk. We evaluate the credit value adjustments of the interest rate swap agreements, which take into account the possibility of counterparty and our own default, on at least a quarterly basis.

Our foreign currency contracts ~~which were~~and interest rate swaps are subject to master netting agreements that allow us to settle positive and negative positions with the ~~only derivatives not designated as hedges, included~~respective counterparties. Under these master netting agreements, net settlement generally permits us or the counterparty to determine the net amount payable for contracts due on the same date and in ~~Prepaid expenses and other current assets at September 30, 2019~~the same currency for similar types of derivative transactions. The master netting agreements generally also provide for net settlement of all outstanding contracts with a counterparty in the case of an event of default or a termination event.

We manage credit risk for our derivative positions on a counterparty-by-counterparty basis, considering the net portfolio exposure with each counterparty, consistent with our risk management strategy for such transactions. Our agreements with each of our counterparties contain a provision where we could be declared in default on our derivative obligations if we either default or, in certain cases, are capable of being declared in default of any of our indebtedness greater than specified thresholds. These agreements also contain a provision where we could be declared in default subsequent to a merger or restructuring type event if the creditworthiness of the resulting entity is materially weakened.

As of March 31, 2020 and December 31, ~~2018, was $0.2 million~~2019, the fair values of our derivative financial instruments and ~~$0.9 million, respectively. In addition, there was $3.0 million~~their classifications on the Condensed Consolidated Balance Sheets were as follows:

The pre-tax losses (gains) recognized on derivative financial instruments in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2020 and ~~$0.3 million~~March 31, 2019 were as follows:

The pre-tax losses recognized on derivative financial instruments in the Condensed Consolidated Statements of ~~these derivatives included in Accrued liabilities~~Comprehensive Loss for the three months ended March 31, 2020 and ~~other at September 30,~~March 31, 2019 ~~and December 31, 2018, respectively.~~were as follows:

On ~~August 1, 2019,~~March 2, 2020, we ~~completed an acquisition~~sold our Logistics Courier business within the Business Services segment for net proceeds of $9.7 million, subject to a ~~purchase price~~working capital adjustment. The disposition of ~~$14.6~~this business resulted in a loss of $8.3 million ~~consisting~~during the three months ended March 31, 2020, which was recorded in Other operating expense (income) in the Condensed Consolidated Statements of ~~$3.0 million in cash paid at closing, a $3.0 million note payable due January 1, 2020 and $8.6 million in contingent consideration based on~~Operations.

On October 25, 2019, we completed the ~~future performance~~sale of substantially all of the ~~acquired business.~~Global Document Solutions (“GDS”) business for approximately $47.3 million, subject to a working capital adjustment. GDS primarily provides statements and print management services in Europe. The ~~cost~~disposition resulted in a loss of $0.9 million during 2019, which was recorded in Other operating expense (income) in the ~~acquisition is primarily allocated to intangible assets related to client relationships based on the fair value at the acquisition date.~~Consolidated Statements of Operations.

On May 8, 2019, we sold ~~our~~the R&D business within the Business Services segment for net proceeds of $~~11.7~~11.6 ~~million, which was received during the nine months ended September 30, 2019.~~million. The disposition ~~of this business~~ resulted in a ~~net~~ gain of ~~$6.2~~$6.1 million during ~~the nine months ended September 30,~~ 2019, which was recorded in Other operating expense (income) in the ~~Condensed~~ Consolidated Statements of Operations.

On March 31, 2019, our subsidiary, RR Donnelley Editora e Grafica Ltda. (“RRD Brazil”), filed for bankruptcy liquidation in bankruptcy court in Brazil. The bankruptcy petition was approved by the court shortly thereafter and a bankruptcy trustee was appointed. As a result of the bankruptcy liquidation, we recorded a gain of $4.0 million in Other operating expense (income) ~~for the nine months ended September 30,~~during 2019, primarily reflecting the reclassification of cumulative currency translation adjustments into earnings and ongoing expenses associated with the bankruptcy proceedings. Subsequent to March 31, 2019, the operating results of RRD Brazil are no longer included in our consolidated results of ~~operations. RRD Brazil had net sales of $8.8 million~~operations except for legal fees associated with the ~~three months ended March 31, 2019~~and $12.4 million and $43.2 million for the three and nine months ended September 30, 2018, respectively. RRD Brazil had a loss before income taxes of $4.1 million for the three months ended March 31, 2019~~and $4.1 million and $15.6 million for the three and nine months ended September 30, 2018, respectively~~.bankruptcy proceedings. The operations of RRD Brazil ~~were~~had been included in the Business Services segment.

On ~~July 2, 2018,~~August 1, 2019, we completed the sale of our Print Logistics business for $60.0 million cash, of which we received $43.9 million after transaction costs, working capital adjustments and $4.9 million of cash which was included in the disposition. Net proceeds from the sale were used to reduce borrowings outstanding on our ABL Credit Agreement. The disposition resulted in a pre-tax gain of $3.6 million in the third quarter of 2018, which was recorded in ~~Other operating expense (income) in the Condensed~~ Consolidated Statements of Operations. Income taxes paid as a result of the sale were insignificant due to the utilization of capital loss carryforwards to offset the taxable gain. Prior to the sale, operating results for the Print Logistics business were reported as servicesan acquisition within the Business Services ~~segment.~~segment for a purchase price of $14.6 million consisting of $3.0 million in cash paid at closing, a $3.0 million note paid in January 2020 and $8.6 million in contingent consideration based on the future performance of the acquired business. The cost of the acquisition is primarily allocated to intangible assets related to client relationships based on the fair value at the acquisition date.

On ~~October 25, 2019, we completed the sale of substantially all of our Global Document Solutions (“GDS”) business for approximately $42.3 million, subject to a~~ working capital adjustment. GDS primarily provides statements and print management services in Europe and reported net sales of $185.1 million and $207.2 million during the nine months ended September 30, 2019 and 2018, respectively, and $272.8 million during the year ended December 31, 2018. As of September 30, 2019, net assets sold, excluding currency translation adjustments, were approximately $21.0 million.

In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 a result of the Tax Cuts and Jobs Act of 2017 (the “Tax Act”). The standard also requires entities to disclose whether or not they elected to reclassify the tax effects related to the Tax Act from accumulated other comprehensive income. The standard allows the option of applying either a retrospective adoption, meaning the standard is applied to all periods in which the effect of the Tax Act is recognized, or applying the amendments in the period of adoption, meaning an adjustment is made to stockholders’ equity as of the beginning of the reporting period. ASU 2018-02 was effective in the first quarter of 2019; however, early adoption was permitted for interim and annual periods, including the reporting period in which the Tax Act was enacted. As of July 1, 2018, we adopted the provisions of ASU 2018-02, which resulted in a decrease to Accumulated deficit and increase to Accumulated other comprehensive loss of $22.0 million.

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 a deemed return on tangible assets of foreign corporations. The guidance indicates that either accounting for deferred taxes related to GILTI inclusions or treating any taxes on GILTI inclusions as period costs are both acceptable methods subject to an accounting policy election. During the fourth quarter of 2018, we elected to treat the tax effect of GILTI as a current period expense when incurred.

~~In February~~June 2016, the FASB issued ASU No. ~~2016-02 “Leases~~2016-13 “Financial Instruments—Credit Losses (Topic ~~842)”~~326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which ~~requires lessees~~changes the impairment model for most financial assets and certain other instruments. Under the new guidance, entities are required to ~~record most leases~~measure expected credit losses for financial instruments, including trade receivables, based on ~~the balance sheet. Topic 842 was~~historical experience, current conditions and reasonable forecasts. ASU 2016-13 is effective for ~~annual reporting~~public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, ~~2018, including interim periods within those reporting periods, with early adoption permitted.~~2019. We established a cross-functional implementation team to analyze the effect of Topic 326. The ~~new standard requires a lessee~~analysis included identifying pools of receivables, developing and assessing estimation methodologies, policy elections, and evaluating our business processes and internal controls to recognize a right-of use (“ROU”) asset and lease liability on the balance sheet for all leases with a term longer than 12 months and requires additional disclosures. For lessors, Topic 842 also modifies the classification criteria andmeet the accounting, ~~for sales-type~~reporting and ~~direct financing leases. Topic 842 was subsequently amended by ASU No. 2018-01 “Land Easement Practical Expedient for Transition to Topic 842”; ASU No. 2018-10~~ ~~“Codification Improvements to Topic~~ ~~842, Leases”; ASU No. 2018-11 “Leases (Topic 842): Targeted Improvements” (“ASU 2018-11”); ASU No. 2018-20 “Narrow-Scope Improvements for Lessors”;~~ ~~and~~ ASU No. 2019-01 “Leases (Topic 842): Codification Improvements”. ASU 2018-11 provides clarity on separating components of a lease contract and includes an option to not restate comparative periods in transition and elect to use the effective date of Topic 842 as the date of initial application.

~~We adopted the guidance as of~~disclosure requirements. On January 1, ~~2019~~2020, we adopted and applied Topic 326 using the ~~effective date as the date of initial application. Results for the three and nine months ended September 30, 2019 are presented under Topic 842. Information prior~~modified retrospective method. The cumulative adjustment to ~~the effective date continues to be presented in accordance with the previous lease guidance, “Leases (Topic 840)”.~~

We elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification of those leases in place as of December 31, 2018.

~~See Note 13,~~ ~~Commitments and Contingencies, for further discussion.~~retained earnings was $0.3 million.

In ~~August 2018,~~March 2020, the FASB issued ASU 2020-04, Reference Rate Reform, which provides companies with optional guidance, including expedients and exceptions for applying generally accepted accounting principles to contracts and other transactions affected by reference rate reform, such as the London Interbank Offered Rate (LIBOR). This new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. We are currently evaluating the impact of ASU 2020-04 on the consolidated financial statements.

In December 2019, the FASB issued ASU No. ~~2018-15 “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s~~2019-12 “Simplifying the Accounting for ~~Implementation Costs Incurred~~Income Taxes (Topic 740)” (“ASU 2019-12”), which simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in Accounting Standards Codification (“ASC”) 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a ~~Cloud Computing Arrangement That Is a Service Contract” (“~~step-up in the tax basis of goodwill. ASU 2018-15”). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-152019-12 will be effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, ~~2019,~~2020, however early adoption is permitted. We are currently evaluating the impact of ASU ~~2018-15~~2019-12 on the consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-14 “Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans” (“ASU 2018-14”), which removes certain disclosures that are no longer cost beneficial and also includes additional disclosures to improve the overall usefulness of the disclosure requirements to financial statement users. ASU 2018-14 will be effective for public entities for fiscal years beginning after December 15, 2020, however early adoption is permitted. We are currently evaluating the impact of ASU 2018-14 on the consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which changes the impairment model for most financial assets and certain other instruments. Under the new guidance, entities will be required to measure expected credit losses for financial instruments, including trade receivables, based on historical experience, current conditions and reasonable forecasts. ASU 2016-13 will be effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. We are currently evaluating the impact ASU 2016-13 will have on the consolidated financial statements.

Item 2. Management’s 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 clients. We assist clients in developing and executing multichannel communication strategies that engage audiences, reduce costs, drive revenues and enhance compliance. Our innovative content management offering, production platform, logistics services, supply chain management, outsourcing capabilities and customized consultative expertise assists our clients in the delivery of integrated messages across multiple media to highly targeted audiences at optimal times 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.

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

We separately report our net sales, related costs of sales and gross profit for our product and service offerings. Our product offerings primarily consist of commercial print, statements, direct marketing, packaging, labels, digital print and fulfillment, supply chain management and forms. Our service offerings primarily consist of logistics, business process outsourcing and digital and creative solutions.

The COVID-19 pandemic has created significant business challenges for companies around the world, including many of our clients across the broad number of industries we serve. We have therefore initiated a series of actions to protect our employees, meet client commitments, and preserve financial flexibility in response to the COVID-19 crisis.

We have activated our business continuity plans and are leveraging our strong supply chain partnerships to continue to meet the ongoing needs of our 50,000 global clients. To date, with the exception of a few small facilities in the Caribbean and Mexico, all of our printing and distribution operations have been classified as essential and therefore remain open.

Protecting the health and safety of our employees is our highest priority, and we are continually evolving our policies and procedures to adhere to the latest best practices being provided by the Centers for Disease Control (“CDC”) and World Health Organization (“WHO”). To date we have taken several actions to protect our workforce, including the development of a cross-functional Task Force fully committed to the development of safety measures, policies and communications; the suspension of all international and domestic business travel; and the implementation of flexible working policies, including telecommuting and staggered shifts, while allowing for voluntary leaves of absence. Currently, approximately 10,000 employees, including those providing essential services are working from home. We are also enforcing social distancing policies within our manufacturing facilities, and we are providing training for adherence to personal hygiene best practices in line with CDC and WHO guidelines. In response to the CDC recommendation that all individuals in the U.S. wear face masks, we are supplying our essential employees with a combination of disposable and cloth masks, as well as face shields, to ensure their safety and protection. With personal protective equipment in short supply around the world, our teams have exercised ingenuity and leadership to develop protective equipment within our own operations using our own equipment.

The extent the outbreak will ultimately impact our business, results of operations, financial position and cash flows will depend on future developments which are highly uncertain and cannot be fully predicted or estimated at this time. However, amidst the global uncertainty posed by COVID-19, we are positioning the company to weather an economic downturn and protect the short and long-term interests of our stakeholders. These decisions are difficult but critical to preserving the short-term financial flexibility of the Company as COVID-19 presents increasing challenges across the industries we serve. We are freeing up capital to ensure we are prepared for the range of scenarios we may experience as a result of the virus. As a result, we implemented several business actions, including the implementation of an employee furlough program with RRD paid medical benefits. We have temporarily closed those production facilities most heavily impacted by client volume decreases, shifting that production to other facilities to lower costs while continuing to meet client requirements. We suspended all 2020 employee merit increases. We accelerated cost reduction initiatives, and will continue to assess opportunities for further reduction, and have delayed capital projects and reduced consulting and other discretionary spend. We suspended our quarterly dividend effective April 6, 2020.

During the first quarter of 2020, we increased our borrowings to $450 million as a proactive measure and entered into a series of debt transactions to preserve our financial flexibility.

Net sales decreased by ~~$30.1~~$112.4 million, or ~~1.8%~~7.4%, for the three months ended ~~September 30, 2019~~March 31, 2020 compared to the same period in ~~2018.~~2019. Net sales decreased ~~$13.4~~$87.7 million due to ~~recent~~ business dispositions, primarily the ~~bankruptcy liquidation of RRD Brazil,~~Global Document Solutions (“GDS”) business and ~~$10.5~~our Logistics Courier business, and $6.6 million due to changes in foreign exchange rates. Net sales also decreased $43.4 million due to ~~lower volume~~the impact of COVID-19 in our China business within the Business Services segment, partially offset by higher volume ~~within~~in direct marketing primarily attributable to the ~~Marketing Solutions segment.~~2020 Census contract.

We continue to assess opportunities to reduce our cost structure and enhance productivity throughout the business. During the three months ended ~~September 30, 2019,~~March 31, 2020, we realized cost savings from previous restructuring activities including the reorganization of administrative and support functions across all segments, as well as the Chile facility closure and other facility consolidations.

Net cash used in operating activities for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 was ~~$87.8~~$79.6 million as compared to ~~$63.9~~$130.0 million for the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019. The ~~change~~significant improvement is primarily due to lower tax and interest payments and working capital improvements versus the prior year.

While we have a diversified client base with limited concentration, we do have clients that operate in ~~net~~industries hard-hit by the effects of COVID-19, including airlines, hotel chains, cruise lines, and restaurants. In late March, we began to see the cancellation of some programmatic projects from these clients as they worked to mitigate the impact of the virus on their business. At the same time, we also saw important opportunities to stand by our clients and help them navigate the new conditions and realities.

The Company continues to aggressively accelerate both permanent and temporary cost reduction actions to lessen the impact from lower sales volume as a result of the COVID-19 pandemic. In addition, the Company is also receiving pandemic-related orders in many parts of its business, including special notification letters, government mailings, product packaging, labels, signage, mail-in ballots, test kit assembly, emergency kits, digital creative and COVID-19 specific consumer research and analytics. These orders further mitigate the impact from COVID-19. The extent the outbreak will ultimately impact our business, results of operations, financial position and cash ~~flow from operating activities related primarily~~flows will depend on future developments which are highly uncertain and cannot be fully predicted or estimated at this time. In the nearer term, the Company expects second quarter sales to ~~higher tax payments.~~be $300 to $375 million lower than the prior year which includes an approximate $94 million reduction due to recent business dispositions.

~~We perform our goodwill impairment tests annually as~~In late March and early April, the Company opportunistically repurchased $51 million of ~~October 31, or more frequently if an event occurs or circumstances change that would more likely than not~~Senior Notes and Debentures due in 2020 and 2021 to reduce the fair value of a reporting unit below its carrying value. As part of our interim review for indicators of impairment, we analyzed potential changes in value of individual reporting units with goodwill based on each reporting unit’s operating results for the nine months ended September 30, 2019 comparedfuture interest and principal payments. The 2020 and 2021 maturities have now been reduced to ~~expected results. In addition, we considered how other key assumptions, including discount rates~~$65 million 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.~~

We considered trends in these factors when performing our assessment of whether an interim impairment review was required for any reporting unit. Based on this interim assessment, we concluded that as of September 30, 2019, 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 our 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, 2019, our next annual measurement date. $178 million, respectively.

In ~~particular, we had one reporting unit in~~March of 2020, the ~~Business Services segment experience~~Company increased its borrowings under the revolving credit facility as a ~~decline in sales during the nine months ended September 30, 2019. Continued negative trends could impact the estimated fair value of this reporting unit and could result in a future impairment charge.~~proactive measure to preserve financial flexibility. As of March 31, the ~~October 31, 2018 annual goodwill impairment test, the fair value of this reporting unit exceeded its book value by approximately 29%. As of September 30, 2019, $151.8~~Company had $644 million of ~~goodwill was allocated to this reporting unit.~~total liquidity consisting of $451 million of cash on hand and $193 million of availability under the revolving credit facility.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED ~~SEPTEMBER 30, 2019~~MARCH 31, 2020 AS COMPARED TO THE THREE MONTHS ENDED ~~SEPTEMBER 30, 2018~~MARCH 31, 2019

The following table shows the results of operations for the three months ended ~~September 30, 2019~~March 31, 2020 and ~~2018:~~2019:

	Three Months Ended												Three Months Ended
	September 30,												March 31,
	2019			2018			$ Change			% Change			2020		2019			$ Change			% Change
	(in millions, except percentages)												(in millions, except percentages)
Products net sales	$	1,328.8		$	1,329.8		$	(1.0	)		(0.1	%)	$	1,145.5	$	1,230.9		$	(85.4	)		(6.9	%)
Services net sales		290.6			319.7			(29.1	)		(9.1	%)		264.0		291.0			(27.0	)		(9.3	%)
Total net sales		1,619.4			1,649.5			(30.1	)		(1.8	%)		1,409.5		1,521.9			(112.4	)		(7.4	%)
Products cost of sales (exclusive of depreciation and amortization)		1,073.5			1,076.8			(3.3	)		(0.3	%)		922.8		1,008.8			(86.0	)		(8.5	%)
Services cost of sales (exclusive of depreciation and amortization)		235.0			257.3			(22.3	)		(8.7	%)		212.9		234.8			(21.9	)		(9.3	%)
Total cost of sales		1,308.5			1,334.1			(25.6	)		(1.9	%)		1,135.7		1,243.6			(107.9	)		(8.7	%)
Products gross profit		255.3			253.0			2.3			0.9	%		222.7		222.1			0.6			0.3	%
Services gross profit		55.6			62.4			(6.8	)		(10.9	%)		51.1		56.2			(5.1	)		(9.1	%)
Total gross profit		310.9			315.4			(4.5	)		(1.4	%)		273.8		278.3			(4.5	)		(1.6	%)
Selling, general and administrative expenses (exclusive of depreciation and amortization)		190.5			203.8			(13.3	)		(6.5	%)		179.1		199.6			(20.5	)		(10.3	%)
Restructuring and other (income) expense-net		(2.3	)		11.0			(13.3	)	nm
Restructuring, impairment and other expense-net														31.9		17.1			14.8			86.5	%
Depreciation and amortization		43.5			44.2			(0.7	)		(1.6	%)		40.8		42.7			(1.9	)		(4.4	%)
Other operating expense (income)		5.4			(4.5	)		9.9		nm				13.2		(4.4	)		17.6		nm
Income from operations	$	73.8		$	60.9		$	12.9			21.2	%	$	8.8	$	23.3		$	(14.5	)		(62.2	%)

Net sales of products for the three months ended ~~September 30, 2019~~March 31, 2020 decreased ~~$1.0~~$85.4 million, or ~~0.1%~~6.9%, to ~~$1,328.8~~$1,145.5 million versus the same period in ~~2018.~~2019. The ~~third~~first quarter of ~~2019~~2020 included a ~~$13.4~~$55.3 million decrease due to ~~recent~~ business dispositions and a ~~$9.4~~$6.5 million decrease due to changes in foreign exchange rates. Net sales of products also decreased due to the impact of COVID-19 in our China business of approximately $43.4 million, lower volume in remaining commercial print due to ongoing secular pressure and continued planned reduction in low margin sales, partially offset by higher volume in direct marketing primarily attributable to the 2020 Census contract.

Net sales from services for the three months ended ~~September 30, 2019~~March 31, 2020 decreased ~~$29.1~~$27.0 million, or ~~9.1%~~9.3%, to ~~$290.6~~$264.0 million versus the same period in ~~2018. Net sales from services decreased~~2019. The first quarter of 2020 included a $32.4 million decrease due ~~primarily~~ to ~~lower volume in our logistics business.~~business dispositions.

Products cost of sales for the three months ended ~~September 30, 2019~~March 31, 2020 decreased ~~$3.3~~$86.0 million, or ~~0.3%~~8.5%, to ~~$1,073.5~~$922.8 million versus the same period in ~~2018.~~2019. Products cost of sales decreased primarily due to ~~changes in foreign exchange rates,~~business dispositions, cost control initiatives across both segments and lower volume in commercial print and packaging, partially offset by cost inflation and higher volume in direct marketing primarily attributable to the 2020 Census contract. As a percentage of net sales, products cost of sales decreased ~~0.2~~1.4 percentage points for the three months ended ~~September 30, 2019~~March 31, 2020 versus the same period in ~~2018.~~2019.

Services cost of sales decreased ~~$22.3~~$21.9 million, or ~~8.7%~~9.3%, for the three months ended ~~September 30, 2019~~March 31, 2020 versus the same period in ~~2018,~~2019, primarily due to ~~lower volume in our logistics~~the disposition of the GDS business and cost control initiatives, partially offset by cost inflation. As a percentage of net sales, services cost of sales ~~increased 0.4 percentage points~~remained essentially unchanged for the three months ended ~~September 30, 2019 versus the same period in 2018.~~March 31, 2020.

Products gross profit increased ~~$2.3~~$0.6 million to ~~$255.3~~$222.7 million for the three months ended ~~September 30, 2019~~March 31, 2020 versus the same period in ~~2018,~~2019, primarily due to favorable product mix ~~changes in foreign exchange rates~~ and cost control initiatives, partially offset by ~~price pressures and~~ cost inflation. Products gross margin increased from ~~19.0%~~18.0% in ~~2018~~2019 to ~~19.2%~~19.4% in ~~2019.~~2020.

Services gross profit decreased ~~$6.8~~$5.1 million to ~~$55.6~~$51.1 million for the three months ended ~~September 30, 2019~~March 31, 2020 versus the same period in ~~2018,~~2019, primarily due to ~~lower volume~~the reduction in ~~our logistics business and cost inflation.~~sales. Services gross margin ~~decreased~~increased slightly from ~~19.5%~~19.3% in ~~2018~~2019 to ~~19.1%~~19.4% in ~~2019.~~2020.

Selling, general and administrative expenses decreased ~~$13.3~~$20.5 million to ~~$190.5~~$179.1 million for the three months ended ~~September 30, 2019~~March 31, 2020 versus the same period in ~~2018~~2019 reflecting cost control initiatives and ~~recent~~ business dispositions. As a percentage of net sales, selling, general and administrative expenses decreased from ~~12.4%~~13.1% to ~~11.8%~~12.7% for the three months ended ~~September 30, 2019~~March 31, 2020 versus the same period in ~~2018.~~2019.

For the three months ended ~~September 30, 2019, we recorded~~March 31, 2020, net restructuring, impairment and other ~~income~~charges of ~~$2.3~~$31.9 million ~~versus net restructuring and other expense~~primarily included a non-cash charge of ~~$11.0~~$20.6 million to recognize the impairment of goodwill in the ~~same period in 2018. Net restructuring and other income included $0.6~~logistics reporting unit within the Business Services segment, $8.1 million for employee termination costs and $4.2 million for other restructuring charges of $1.0 million for the three months ended September 30, 2019. Additionally, we recorded a $4.7 million net gain on the sale of restructured facilities for three months ended September 30, 2019.charges. See Note 6, Restructuring, Impairment and Other, within the Notes to the Condensed Consolidated Financial Statements for further discussion.

Depreciation and amortization decreased ~~$0.7~~$1.9 million to ~~$43.5~~$40.8 million for the three months ended ~~September 30, 2019~~March 31, 2020 compared to the same period in ~~2018.~~2019. Depreciation and amortization included ~~$5.9~~$5.3 million and ~~$6.8~~$6.4 million of amortization of other intangible assets related to client relationships, trade names, trademarks, licenses and agreements for the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively.

Other operating expense (income) for the three months ended ~~September 30, 2019~~March 31, 2020 was ~~$5.4~~$13.2 million compared to ~~other operating income of $4.5~~$(4.4) million in the same period in ~~2018. The expense in 2019 primarily related to~~2019. During the ~~ongoing SEC and DOJ investigations and the ongoing bankruptcy liquidation of RRD Brazil. The prior year amount related to~~three-month period ended March 31, 2020 we recorded a ~~pre-tax gain~~$8.3 million loss on the sale of our ~~Print~~ Logistics ~~business in July 2018.~~Courier business. The prior year period included a $4.0 million gain on the Brazil bankruptcy liquidation.

Income from operations for the three months ended ~~September 30, 2019~~March 31, 2020 was ~~$73.8~~$8.8 million, ~~an increase~~a decrease of ~~$12.9~~$14.5 million, or ~~21.2%~~62.2%, compared to the three months ended ~~September 30, 2018.~~March 31, 2019.

	Three Months Ended												Three Months Ended
	September 30,												March 31,
	2019			2018			$ Change			% Change			2020			2019			$ Change			% Change
	(in millions, except percentages)												(in millions, except percentages)
Interest expense-net	$	37.4		$	42.0		$	(4.6	)		(11.0	%)	$	33.9		$	40.1		$	(6.2	)		(15.5	%)
Investment and other income-net		(4.6	)		(5.5	)		(0.9	)		16.4	%		(3.8	)		(4.5	)		0.7			(15.6	%)
Loss on debt extinguishment		0.8			—			0.8		nm
Gain on debt extinguishment														(0.2	)		—			(0.2	)	nm

Net interest expense decreased by ~~$4.6~~$6.2 million for the three months ended ~~September 30, 2019~~March 31, 2020 versus the same period in ~~2018,~~2019, primarily due to lower average interest rates and lower average debt outstanding during the three months ended ~~September 30, 2019.~~March 31, 2020.

Investment and other income, net for the three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ was ~~$4.6~~$3.8 million and ~~$5.5~~$4.5 million, respectively, and principally comprised of net OPEB and pension income.

~~Loss~~Gain on debt extinguishment for the three months ended ~~September 30, 2019~~March 31, 2020 was ~~$0.8 million which related to the repurchase of senior notes and debentures.~~$0.2 million. See Note 14, Debt, within the Notes to the Condensed Consolidated Financial Statements for further discussion.

The effective income tax rate was a benefit of 38.9% and 30.9% for the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~was an expense of 67.9%~~ ~~and was higher than the Federal statutory rate primarily due to limitations on the interest expense deduction as a result of the Tax Act. The~~ ~~effective~~ ~~income tax rate for~~respectively.

During the three months ended ~~September 30, 2018 was~~March 31, 2020, the Company reflected a benefit ~~of 42.6% which included~~ ~~adjustments to~~from the ~~provisional amounts related to the Tax~~recently enacted CARES Act ~~the release of a valuation allowance utilized due to the gain on the sale of our Print Logistics business~~whereby additional interest expense is now deductible for 2019 (approximately $6.9 million) and ~~the inability to recognize a tax benefit on certain losses~~.2020.

Income attributable to noncontrolling interests was ~~$0.3~~$0.1 million and ~~$0.5~~$0.3 million for the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ respectively.

Net ~~income~~loss attributable to RRD common stockholders was ~~$12.6 million and $34.3~~$13.0 million for the three months ended ~~September 30, 2019 and 2018, respectively.~~March 31, 2020 compared to $8.8 million for the three months ended March 31, 2019.

	Three Months Ended						Three Months Ended
	September 30,						March 31,
	2019			2018			2020			2019
	(in millions, except percentages)						(in millions, except percentages)
Net sales	$	1,276.0		$	1,363.2		$	1,085.7		$	1,236.3
Income from operations		80.6			74.8			19.6			28.6
Operating margin		6.3	%		5.5	%		1.8	%		2.3	%
Restructuring and other (income) expense-net		(5.1	)		7.1
Other operating income		—			(4.5	)
Restructuring, impairment and other expense-net								26.4			13.2
Other operating expense (income)								0.9			(0.1	)

Net sales for the Business Services segment for the three months ended ~~September 30, 2019~~March 31, 2020 were ~~$1,276.0~~$1,085.7 million, a decrease of ~~$87.2~~$150.6 million, or ~~6.4%~~12.2%, compared to ~~2018.~~2019. Net sales decreased ~~$13.4~~$87.7 million due to business dispositions, primarily ~~our Brazil~~the GDS and Logistics Courier business, and ~~$10.5~~$6.6 million due to changes in foreign exchange rates. ~~The remaining decrease in net~~Net sales ~~was primarily~~also decreased due to the impact of COVID-19 in our China business of approximately $43.4 million, lower volume in remaining commercial print due to ongoing secular pressure ~~and~~as well as continued planned reduction in low margin sales ~~lower volume in our logistics business~~ and modest price pressures across the segment. The following table summarizes net sales by products and services in the Business Services segment:

	Three Months Ended										Three Months Ended
	September 30,										March 31,
Products and Services	2019		2018		$ Change			% Change			2020		2019		$ Change			% Change
	(in millions, except percentages)										(in millions, except percentages)
Commercial print	$	442.9	$	496.4	$	(53.5	)		(10.8	%)	$	363.4	$	422.4	$	(59.0	)		(14.0	%)
Logistics		204.6		229.1		(24.5	)		(10.7	%)		195.2		201.7		(6.5	)		(3.2	%)
Packaging		182.1		179.7		2.4			1.3	%
Statements		134.0		133.5		0.5			0.4	%		126.9		149.5		(22.6	)		(15.1	%)
Labels		124.0		118.8		5.2			4.4	%		121.6		120.5		1.1			0.9	%
Packaging												115.1		139.5		(24.4	)		(17.5	%)
Supply chain management		69.8		81.5		(11.7	)		(14.4	%)		69.7		78.5		(8.8	)		(11.2	%)
Forms		60.0		63.7		(3.7	)		(5.8	%)		52.4		62.4		(10.0	)		(16.0	%)
Business process outsourcing		58.6		60.5		(1.9	)		(3.1	%)		41.4		61.8		(20.4	)		(33.0	%)
Total Business Services	$	1,276.0	$	1,363.2	$	(87.2	)		(6.4	%)	$	1,085.7	$	1,236.3	$	(150.6	)		(12.2	%)

Business Services segment income from operations ~~increased $5.8~~decreased $9.0 million to ~~$80.6~~$19.6 million for the three months ended ~~September 30, 2019,~~March 31, 2020, primarily due to ~~lower~~higher restructuring ~~expense mostly attributable to net gains on the sale of restructured facilities, lower depreciation~~ and ~~amortization~~impairment expense, ~~and cost control initiatives, including the closure of our operation in Brazil, partially offset by~~ lower volume, price pressures and cost ~~inflation.~~inflation, partially offset by cost control initiatives.

	Three Months Ended						Three Months Ended
	September 30,						March 31,
	2019			2018			2020			2019
	(in millions, except percentages)						(in millions, except percentages)
Net sales	$	343.4		$	286.3		$	323.8		$	285.6
Income from operations		24.4			11.8			24.9			8.5
Operating margin		7.1	%		4.1	%		7.7	%		3.0	%
Restructuring and other-net		0.1			0.2
Restructuring and other expense-net								0.5			0.2

Net sales for the Marketing Solutions segment for the three months ended ~~September 30, 2019~~March 31, 2020 were ~~$343.4~~$323.8 million, an increase of ~~$57.1~~$38.2 million, or ~~19.9%~~13.4%, compared to ~~2018.~~2019. Net sales increased primarily due to higher volume in direct marketing attributable to the 2020 Census contract. The following table summarizes net sales by products and services in the Marketing Solutions segment:

Marketing Solutions segment income from operations increased ~~$12.6~~$16.4 million to ~~$24.4~~$24.9 million for the three months ended ~~September 30, 2019,~~March 31, 2020, primarily due to higher volume in direct marketing attributable to the 2020 Census contract.

Corporate operating expenses during the three months ended ~~September 30, 2019~~March 31, 2020 were ~~$31.2~~$35.7 million, an increase of ~~$5.5~~$21.9 million compared to the same period in ~~2018.~~2019. The increase was primarily driven by higher other operating expense which related to a loss from disposition of our Logistics Courier business and the ongoing SEC and DOJ ~~investigations and the ongoing bankruptcy liquidation of RRD Brazil.~~investigations. The following table summarizes unallocated operating expenses and certain items impacting comparability within the activities presented as Corporate:

~~RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AS COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2018~~

~~The following table shows the results of operations for the nine months ended September 30, 2019 and 2018:~~

Nine Months Ended

September 30,

2019

2018

$ Change

% Change

(in millions, except percentages)

Products net sales
$
3,774.4

$
3,881.6

$
(107.2
)

(2.8
%)
Services net sales

875.6

1,155.2

(279.6
)

(24.2
%)
Total net sales

4,650.0

5,036.8

(386.8
)

(7.7
%)
Products cost of sales (exclusive of depreciation and amortization)

3,076.4

3,167.7

(91.3
)

(2.9
%)
Services cost of sales (exclusive of depreciation and amortization)

706.2

968.4

(262.2
)

(27.1
%)
Total cost of sales

3,782.6

4,136.1

(353.5
)

(8.5
%)
Products gross profit

698.0

713.9

(15.9
)

(2.2
%)
Services gross profit

169.4

186.8

(17.4
)

(9.3
%)
Total gross profit

867.4

900.7

(33.3
)

(3.7
%)
Selling, general and administrative expenses (exclusive of depreciation and amortization)

589.1

626.4

(37.3
)

(6.0
%)
Restructuring and other-net

30.8

22.8

8.0

35.1
%
Depreciation and amortization

126.2

137.5

(11.3
)

(8.2
%)
Other operating expense (income)

3.3

(4.6
)

7.9

nm

Income from operations
$
118.0

$
118.6

$
(0.6
)

(0.5
%)

Net sales of products for the nine months ended September 30, 2019 decreased $107.2 million, or 2.8%, to $3,774.4 million versus the same period in 2018. The nine months ended September 30, 2019 included a $45.0 million decrease due to changes in foreign exchange rates and a $26.7 million decrease due to the bankruptcy liquidation of RRD Brazil. Net sales of products also decreased due to lower volume in commercial print due to ongoing secular pressure and continued planned reduction in low margin sales, as well as price pressure, partially offset by higher volume in direct marketing primarily attributable to the 2020 Census contract.

Net sales from services for the nine months ended September 30, 2019 decreased $279.6 million, or 24.2%, to $875.6 million versus the same period in 2018. Net sales from services decreased $205.0 million due to business dispositions, primarily our Print Logistics business. Net sales from services also decreased due to lower volume in the remaining logistics business.

~~Products cost of sales for the nine months ended September 30, 2019 decreased $91.3 million, or 2.9%, to $3,076.4 million versus the same period in 2018 primarily due to the reduction in net sales.~~

Services cost of sales decreased $262.2 million, or 27.1%, for the nine months ended September 30, 2019 versus the same period in 2018, primarily due to the disposition of our Print Logistics business and cost control initiatives. As a percentage of net sales, services cost of sales decreased 3.1 percentage points for the nine months ended September 30, 2019 versus the same period in 2018.

Products gross profit decreased $15.9 million to $698.0 million for the nine months ended September 30, 2019 versus the same period in 2018, primarily due to lower volume, unfavorable product mix, cost inflation and price pressures, partially offset by changes in foreign exchange rates and cost control initiatives. Products gross margin increased from 18.4% to 18.5% for the nine months ended September 30, 2019 versus the same period in 2018.

Services gross profit decreased $17.4 million to $169.4 million for the nine months ended September 30, 2019 versus the same period in 2018, primarily due to lower volume in our logistics business. Services gross margin increased from 16.2% in 2018 to 19.3% in 2019.

Selling, general and administrative expenses decreased $37.3 million to $589.1 million for the nine months ended September 30, 2019 versus the same period in 2018 reflecting cost control initiatives and the recent dispositions. As a percentage of net sales, selling, general and administrative expenses increased from 12.4% to 12.7% for the nine months ended September 30, 2019 versus the same period in 2018.

For the nine months ended September 30, 2019, net restructuring and other expense of $30.8 million increased $8.0 million versus the same period in 2018. These expenses included $19.5 million for employee termination costs, primarily related to the relocation of a printing facility in Shenzhen, China and $13.7 million for other restructuring charges for the nine months ended September 30, 2019. Additionally, we recorded a $4.6 million net gain on the sale of restructured facilities for the nine months ended September 30, 2019. See Note 6, ~~Restructuring and Other, within the Notes to the Condensed Consolidated Financial Statements for further discussion.~~

Depreciation and amortization decreased $11.3 million to $126.2 million for the nine months ended September 30, 2019 compared to the same period in 2018 primarily due to lower capital spending in recent years compared to historical levels. Depreciation and amortization included $18.1 million and $20.7 million of amortization of other intangible assets related to client relationships, trade names, trademarks, licenses and agreements for the nine months ended September 30, 2019 and 2018, respectively.

Other operating expense for the nine months ended September 30, 2019 was $3.3 million compared to other operating income of $4.6 million for the same period in 2018. The expense in 2019 was primarily related to the ongoing SEC and DOJ investigations, an increase in reserves for an unfavorable state sales tax matter and expenses related to the ongoing bankruptcy liquidation of RRD Brazil, partially offset by the gains from the recent dispositions~~. The prior year amount primarily included a $4.5 million pre-tax gain on the sale of our Print Logistics business in July 2018.~~

~~Income from operations for the nine months ended September 30, 2019 was $118.0 million, a decrease of $0.6 million, or 0.5%, compared to the nine months ended September 30, 2018.~~

Net interest expense decreased by $10.1 million for the nine months ended September 30, 2019 versus the same period in 2018, primarily due to lower average borrowings and interest rates during nine months ended September 30, 2019.

~~Investment and other income, net for the nine months ended September 30, 2019 and 2018 was $11.3 million and $14.7 million, respectively, and principally comprised of net pension and OPEB income.~~

~~Loss on debt extinguishment for the nine months ended September 30, 2019 was $0.8 million which related to the repurchase of senior notes and debentures. See Note 14,~~ ~~Debt, within the Notes to the Condensed Consolidated Financial Statements for further discussion.~~

~~The effective income tax rate for the nine months ended September 30, 2019 was an expense of 123.3%~~ ~~and was higher than the Federal statutory rate primarily due to the inability to recognize a tax benefit on certain losses and limitations on the interest expense deduction as a result of the Tax Act. The~~ ~~effective~~ ~~income tax rate for the nine months ended September 30, 2018 was a benefit of 72.0% which included~~ adjustments to the provisional amounts related to the Tax Act, the release of a valuation allowance utilized due to the gain on the sale of our Print Logistics business and the inability to recognize a tax benefit on certain losses.

~~Income attributable to noncontrolling interests was $0.2 million and $1.2 million for the nine months ended September 30, 2019 and 2018, respectively.~~

~~Net (loss) income attributable to RRD common stockholders was a loss of $3.2 million and income of $11.7 million for the nine months ended September 30, 2019 and 2018, respectively.~~

Net sales for the Business Services segment for the nine months ended September 30, 2019 were $3,743.5 million, a decrease of $444.8 million, or 10.6%, compared to the nine months ended September 30, 2018. Net sales decreased $231.7 million due to business dispositions, primarily our Print Logistics business, and $49.3 million due to changes in foreign exchange rates. The remaining decrease in net sales was primarily due to lower volume in commercial print due to ongoing secular pressure and continued planned reduction in low margin sales, lower volume in the remaining logistics business and price pressures across the segment. The following table summarizes net sales by products and services in the Business Services segment:

Business Services segment income from operations decreased $2.1 million for the nine months ended September 30, 2019, primarily due to higher restructuring expense, lower volume, price pressures and cost inflation, partially offset by changes in foreign exchange rates, lower depreciation and amortization expense and cost control initiatives.

Net sales for the Marketing Solutions segment for the nine months ended September 30, 2019 were $906.5 million, an increase of $58.0 million compared to the nine months ended September 30, 2018. Net sales increased primarily due to higher volume in direct marketing attributable to the 2020 Census contract. The following table summarizes net sales by products and services in the Marketing Solutions segment:

Marketing Solutions segment income from operations increased $6.2 million to $38.9 million for the nine months ended September 30, 2019, primarily due to higher volume in direct marketing attributable to the 2020 Census contract.

~~Corporate operating expenses during the nine months ended September 30, 2019 were $71.7 million, an increase of $4.7 million compared to the same period in 2018.~~ ~~The following table summarizes unallocated operating expenses and certain items impacting comparability within the activities presented as Corporate:~~

	Nine Months Ended				Three Months Ended
	September 30,				March 31,
	2019		2018		2020		2019
	(in millions)				(in millions)
Operating expenses	$	71.7	$	67.0	$	35.7	$	13.8
Restructuring and other-net		8.1		7.5
Other operating expense		3.5		—
Restructuring and other expense-net						5.0		3.7
Other operating expense (income)						12.3		(4.3	)
Acquisition-related expenses		0.5		—		0.2		0.3

We believe that we have sufficient liquidity to support our ongoing operations and to invest in future growth to create value for our stockholders. Our operating cash flows, existing cash balances and available capacity under our asset-based senior secured revolving credit facility (the “ABL Credit ~~Agreement”~~Facility”) are our 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 and payment of interest and principal on our long-term debt ~~obligations, acquisitions and distributions to stockholders that require approval by the Board of Directors.~~obligations.

The following describes our cash flows for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 and ~~2018.~~2019.

Operating cash inflows are largely attributable to sales of our 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 for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 was ~~$23.9~~$50.4 million ~~higher~~lower than in the same period in ~~2018,~~2019, primarily due to ~~higher~~lower tax ~~payments.~~and interest payments and working capital improvements versus the prior year.

Included in net cash used in operating activities were the following operating cash outflows:

	Nine Months Ended							Three Months Ended
	September 30,							March 31,
	2019		2018		$ Change			2020		2019		$ Change
	(in millions)							(in millions)
Income tax payments, net of tax refunds	$	46.8	$	14.4	$	32.4		$	6.1	$	25.7	$	(19.6	)
Interest payments, net of interest income		110.2		118.0		(7.8	)
Interest payments									23.5		38.6		(15.1	)
Performance-based compensation payments		43.7		35.6		8.1			27.5		29.8		(2.3	)
Restructuring and MEPP payments		32.8		28.0		4.8			11.8		7.5		4.3
Pension and other postretirement benefits plan contributions		5.1		13.5		(8.4	)		4.0		2.0		2.0

Significant cash (outflows) inflows included in investing and financing activities for each period were as follows:

	Nine Months Ended									Three Months Ended
	September 30,									March 31,
	2019			2018			$ Change			2020			2019			$ Change
	(in millions)									(in millions)
Capital expenditures	$	(107.4	)	$	(72.7	)	$	(34.7	)	$	(17.7	)	$	(37.4	)	$	19.7
Acquisition of business		(3.0	)		—			(3.0	)
Proceeds from sale of investments and other assets		32.8			49.9			(17.1	)		2.9			0.3			2.6
Disposition of businesses		10.4			50.5			(40.1	)		12.9			(0.7	)		13.6
Proceeds from other short-term debt		—			56.5			(56.5	)
Payments of current maturities and long-term debt		(221.6	)		(0.2	)		(221.4	)		(58.7	)		(173.7	)		115.0
Net borrowings under credit facilities		164.0			26.0			138.0			408.0			259.0			149.0
Dividends paid		(6.4	)		(21.8	)		15.4			(2.1	)		(2.1	)		—

~~Capital expenditures for the nine months ended September 30, 2019 were $34.7 million higher than the same period in 2018, primarily due to~~ ~~investments associated with building a new facility following the expected sale and relocation of a printing facility in Shenzhen, China and additional investments related to the 2020 Census contract.~~

Proceeds from disposition of businesses in 2020 reflect the sale of ~~investments~~the Logistics Courier business and ~~other assets for the~~ ~~nine months ended September 30, 2019 primarily included $23.7 million cash~~a working capital adjustment received ~~as a deposit for the expected sale of a printing facility in Shenzhen, China and cash proceeds~~ from the sale of ~~two restructured facilities~~GDS in the fourth quarter of ~~$8.1 million.~~2019.

Payments of current maturities and long-term debt in 2020 primarily reflect repurchases of outstanding debt with maturities from 2020 to 2024. In the first three months of 2019, we repaid $172.2 million of outstanding notes at maturity using availability under our ABL Credit Facility. Net borrowing under our ABL Credit Facility increased as compared to the same quarter in 2019. The additional borrowings are part of an effort to retain financial flexibility in light of the COVID-19 outbreak. See Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations, Executive Overview, Response to COVID-19 section and Note 14 - Debt ~~Proceeds from sale of investments and other assets~~to the Condensed Consolidated Financial Statements for the nine months ended September 30, 2018 included $32.1 million cash received as a deposit for the expected sale of a printing facility in Shenzhen, China and cash proceeds from the sale of investments and other assets of $17.8 million.further discussion.

Cash and cash equivalents of ~~$144.7~~$450.7 million as of ~~September 30, 2019~~March 31, 2020 included ~~$21.6~~$289.2 million in the U.S. and ~~$123.1~~$161.5 million at international locations.As a result of the Tax Act, we have opportunities to repatriate foreign cash, primarily generated from current year earnings, in a tax efficient manner. The previously taxed earnings from the transition tax and annual GILTI inclusion, as well as certain foreign earnings that receive a one hundred percent dividends received deduction may be repatriated with minimal additional tax consequences. As such, we are no longer permanently reinvested on certain foreign earnings yet remain permanently reinvested on all other foreign earnings and other outside basis differences. We record foreign withholding tax liabilitiesrelated to the certain foreign earnings for repatriation. We have recognized deferred tax liabilities of ~~$6.6~~$5.3 million as of ~~September 30, 2019~~March 31, 2020, related to local taxes on certain foreign earnings ~~that~~which are not considered to be permanently reinvested. Certain other cash balances of foreign subsidiaries, 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. We regularly evaluate whether foreign earnings are expected to be permanently reinvested. This evaluation requires judgment about our future operating and liquidity needs. Changes in economic and business conditions, foreign or U.S. tax laws, or our financial situation could result in changes to these judgments and the need to record additional tax liabilities.

Included in Cash and cash equivalents at ~~September 30, 2019~~March 31, 2020 were ~~$12.2~~$39.2 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.

During the three months ended September 30, 2019, we repurchased on the open market $23.4 million and $20.7 million in aggregate principal amount of the 7.875% senior notes due 2021 and 8.875% debentures due 2021, respectively. We recorded a loss on debt extinguishment of $0.8 million in the third quarter ~~of 2019 on the repurchase of the bonds.~~

~~On February 1, 2019, we retired the $172.2 million 11.25% senior notes using availability under our ABL Credit Agreement.~~

~~On October 15, 2018,~~ we entered into ~~a $550.0 million senior secured Term Loan B credit facility pursuant~~several debt repurchase transactions aimed to a credit agreement (the “Term Loan Credit Agreement”). Proceeds from the Term Loan Credit Agreement, net of a $5.5 million discount, were used to repurchase certain senior notes, pay transaction feesimprove liquidity and ~~repay a portion of borrowings under the ABL Credit Agreement.~~financial flexibility. See Note 14, Debt

The Term Loan Credit Agreement contains customary affirmative and negative covenants including negative covenants restricting, among other things, our ability to incur debt, make investments, make certain restricted payments (including payments on certain other debt and external dividends), incur liens securing other debt, consummate certain fundamental transactions, enter into transactions with affiliates and consummate asset sales. The Term Loan Credit Agreement requires that the net cash proceeds of significant asset sales be used to prepay borrowings under the Term Loan Credit Agreement, except in certain circumstances, including the reinvestment of net cash proceeds in assets useful to our business, repayment of borrowings under our ABL Credit Agreement or the funding of debt tenders, in each case, subject to certain restrictions and limitations set forth in the Term Loan Credit Agreement.

The Term Loan Credit Agreement is scheduled to mature on January 15, 2024, at which time all amounts outstanding under the Term Loan Credit Agreement will be due and payable. Principal payments of $1.4 million are due quarterly. Borrowings will bear interest at a Eurocurrency rate plus a margin of 5% or a base rate plus a margin of 4%.

~~On October 15, 2018, we repurchased $172.6 million and $257.4 million in aggregate principal amount of the~~ ~~7.625% senior notes due 2020 and 7.875% senior notes due 2021, respectively, pursuant to a tender offer~~. We recorded a loss on debt extinguishment of $32.3 million in the fourth quarter of 2018 on the repurchase of the bonds, representing tender premiums paid of $29.0 million, write-off of unamortized debt issuance costs of $1.5 million and fees and expenses of $1.8 million.

Borrowings under the ABL Credit Agreement bear interest at a rate dependent on the average quarterly availability under the ABL Credit Agreement and are calculated according to a base rate (except in certain circumstances, based on the prime rate) or a Eurocurrency rate (except in certain circumstances, based on 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 ABL Credit Agreement. The fee accrues at a rate of either 0.25% or 0.375% depending upon the average usage of the facility.

There were $223.0 million of borrowings under the ABL Credit Agreement as of September 30, 2019. Based on our borrowing base as of September 30, 2019 and existing borrowings, we had approximately $438.6 million borrowing capacity available under the ABL Credit Agreement.

The current availability under the ABL Credit ~~Agreement~~Facility as of ~~September 30, 2019~~March 31, 2020 is shown in the table below:

	September 30, 2019		March 31, 2020
Availability	(in millions)		(in millions)
ABL Credit Agreement	$	800.0
ABL Credit Facility			$	800.0
Availability reduction due to available borrowing base		99.3		118.0
	$	700.7	$	682.0
Usage
Borrowings under the ABL Credit Agreement	$	223.0
Borrowings under the ABL Credit Facility			$	450.0
Outstanding letters of credit		39.1		39.1
	$	262.1	$	489.1

Current availability at September 30, 2019	$	438.6
Current availability at March 31, 2020			$	192.9
Cash and cash equivalents		144.7		450.7
Total available liquidity ^(a)	$	583.3	$	643.6

During the nine months ended September 30, 2019, we transferred approximately $256 million of cash held in international jurisdictions to the U.S. which was used to reduce debt outstanding. Based on current regulations and process requirements, we expect to transfer additional cash held in international jurisdictions to the U.S. in the fourth quarter of 2019.

~~As of September 30, 2019, we were in compliance with the debt covenants under the ABL Credit Agreement~~ ~~and expect to remain in compliance based on our estimates of operating and financial results for 2019 and the foreseeable future. As of~~ ~~September 30, 2019, we met all the conditions required to borrow under the~~ ~~ABL~~ ~~Credit Agreement and we expect to continue to meet the borrowing conditions.~~

The failure of a financial institution supporting the ABL Credit ~~Agreement~~Facility would reduce the size of our committed facility unless a replacement institution was added. Currently, the ABL Credit ~~Agreement~~Facility is supported by eight U.S. financial institutions.

~~As of September 30, 2019, we had $144.4 million in other uncommitted~~On March 18th, 2020, Moody's Investor Service Inc. (“Moody’s) affirmed our credit facilities, primarily outside the U.S. (the “Other Facilities”). There were $107.6 million in outstanding letters of credit, bank guarantees and bank acceptance drafts of which $39.1 million were issued, and reduced availability, under the ABL Credit Agreement. Total borrowings under the ABL Credit Agreement and the Other Facilities (the “Combined Facilities”) were $252.4 million as of September 30, 2019.

ratings but changed our outlook from stable to negative. Our credit ratings from Moody’s ~~Investors Service, Inc. (“Moody’s”)~~ and S&P Global Ratings (“S&P”) as of ~~September 30, 2019~~March 31, 2020 are shown in the table ~~below:~~below.

During the three months ended March 31, 2020, we sold the Logistics Courier business for net proceeds of $9.7 million, subject to a working capital adjustment.

During the fourth quarter of 2017, we entered into an agreement to sell a printing facility in Shenzhen, China and transfer the related land use rights. As of ~~September 30, 2019,~~March 31, 2020, we have received non-refundable deposits in accordance with the terms of the agreement of approximately ~~$68.3~~$98.2 million which is recorded in Other noncurrent liabilities on the Condensed Consolidated Balance Sheets. Additional deposits will be paid to us in accordance with the agreement. Gross proceeds from the sale, including non-refundable deposits, are expected to be approximately $250.0 million, subject to changes in the exchange rate,and we expect the transaction to close in ~~2021~~2022 after closing conditions are satisfied and government approvals are obtained. As of ~~September 30, 2019,~~March 31, 2020, the carrying cost of the building and land use rights is recorded in Other noncurrent assets and is not material.

During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, we paid cash dividends of ~~$6.4~~$2.1 million. On ~~October 24, 2019,~~April 6, 2020, the Board of Directors of the Company ~~declared~~made a ~~quarterly cash dividend~~decision to suspend all dividends payments as part of ~~$0.03 per common share, payable on December~~the Company’s response to the COVID-19 outbreak. See Item 2 ~~2019~~. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Executive Overview, Response to ~~stockholders of record on November 15, 2019.~~COVID-19 Section for further discussion.

We are exposed to interest rate risk on our variable debt and price risk on our fixed-rate debt. ~~At September 30, 2019, our variable-interest borrowings were $798.3 million. Approximately 61.0%~~Including the effect of the floating-to-fixed interest rate swaps (see Note 15, Derivatives, to the Consolidated Financial Statements), approximately 73.0% of our outstanding debt was comprised of fixed-rate debt as of ~~September 30, 2019.~~March 31, 2020.

We assess 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 ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 by approximately ~~$28.2~~$28.3 million and ~~$35.4~~$25.8 million, respectively.

We are exposed to the impact of foreign currency fluctuations based on our global operations. ~~The exposure to foreign~~Foreign currency ~~movements within many countries is limited because~~fluctuations affect the ~~operating~~U.S. dollar value of revenues earned and expenses ~~of our various subsidiaries and business units~~incurred in foreign currencies. We are ~~substantially in the local~~also exposed to currency ~~of the country in which they operate. To~~risk to the extent ~~that borrowings, sales, purchases, revenues, expenses~~we own assets or incur liabilities, or enter into other transactions that are not in the ~~local~~functional currency of the subsidiary in which we ~~are exposed~~operate. We employ different practices to manage these risks, including where appropriate the use of derivative instruments, such as foreign currency ~~risk and may enter into foreign exchange contracts to hedge the currency risk.~~forwards. As of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, the aggregate notional amount of outstanding foreign currency contracts was approximately ~~$144.4~~$158.9 million and ~~$170.8~~$179.9 million, respectively (see Note 15, Derivatives, to the Condensed Consolidated Financial Statements). Net unrealized ~~(losses) gains~~losses from these foreign currency contracts were ~~losses of $2.8~~$1.5 million at ~~September 30, 2019~~March 31, 2020 and net unrealized gains ~~of $0.6~~were $0.8 million at December 31, ~~2018.~~2019. We do not use derivative financial instruments for trading or speculative purposes.

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

Recently issued accounting standards and their estimated effect on our consolidated financial statements are described in Note ~~18,~~17, New Accounting Pronouncements, to the Condensed Consolidated Financial Statements.

This Quarterly Report on Form 10-Q 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 and are based on our beliefs and assumptions. Generally, forward-looking statements include information concerning possible or assumed future actions, events, or results of operations of ours. 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. We claim the protection of the safe harbor for 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 us.

The following important factors, in addition to those discussed elsewhere in this Quarterly Report on Form 10-Q and under the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018,~~2019, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements:

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

Consequently, readers of this Quarterly Report on Form 10-Q should consider these forward-looking statements only as our current plans, estimates and beliefs. We do not undertake and specifically 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. We undertake 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.

See Item 2 of Part I under “Management of Market Risk.” ~~There~~Other than COVID-19 discussed in Part 2 – Risk Factors, Section 1A, there have been no significant changes to our market risk since December 31, ~~2018.~~2019. For a discussion of exposure to market risk, refer to Part II, Item 7A – Quantitative and Qualitative Disclosures about Market Risk, set forth in our ~~2018~~2019 Form 10-K.

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 ~~September 30, 2019,~~March 31, 2020, 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 ~~September 30, 2019~~March 31, 2020 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.

There were no changes in our 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 ~~September 30, 2019~~March 31, 2020 that had materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

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

There is no material change in the information reported under "Part 1 -Items 1A Risk Factors" contained in our annual Report on Form 10-K for the fiscal year ended December 31, 2019 with the exception of the following:

In December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan, Hubei Province, China. While initially the outbreak was largely concentrated in China and caused significant disruptions to its economy, during and subsequent to the first quarter of 2020, COVID-19 continued to spread across the globe at an increasing rate including a significant outbreak in the U.S. The outbreak in the U.S and most other countries forced governments to close non-essential businesses and substantially restrict the lives of most people. Measures taken by various governmental authorities, including the U.S government, to limit the spread of this virus has created tremendous business challenges for us and for other companies around the world, including many of our clients and suppliers. We have taken a number of proactive measures to manage through the impact of the growing pandemic. The extent to which the coronavirus impacts our operations and the operations of our suppliers and our customers will depend on future developments, which are highly uncertain at this time, including the duration of the outbreak, the degree and ultimate success of government intervention in stabilizing economies around the world, and other actions to contain the coronavirus or treat its impact, among others. The continued spread of COVID-19 and ongoing governmental efforts to contain the pandemic has significantly impacted the global economy, resulting in decreased demand for some of our products and services. While the Company continues to implement measures to mitigate the effects of COVID-19, this decreased demand has adversely affected our business, operating results, financial condition and cash flows and we expect such adverse impacts to continue for the foreseeable future. Depending on the severity and duration of the global economic decline, revenue declines from decreased client demand could materially adversely affect our business, operating results, financial condition and cash flows. Additionally, declining operating results and cash flows may also cause impairments of tangible and intangible assets and an increase in allowance for doubtful accounts as a result of our inability to collect customer accounts receivable balances.

Subsequent to the spinoff of LSC Communications, Inc. (“LSC”) and Donnelley Financial Solutions, Inc. (“Donnelley Financial”), we may be contingently liable for obligations under various operating leases for office, warehouse and manufacturing locations of LSC and Donnelley Financial. In the event that LSC or Donnelley Financial, or any successor lessee, fail to make lease payments or fail to pay other obligations under these lease agreements, we may be required to satisfy those obligations to the lessor. Under various agreements executed at the time of the spinoff, LSC and Donnelley Financial agreed to fully indemnify us in the event that we would be required to make a payment on their behalf; however, there can be no assurance that the indemnities from LSC and Donnelley Financial will be sufficient to satisfy the full amount of any such contingent obligations. Our exposure to these potential contingent liabilities will decrease over time as LSC and Donnelley Financial pay monthly lease obligations and as the leases expire. As of March 31, 2020, these potential contingent obligations were approximately $72.0 million and $4.8 million for LSC and Donnelley Financial, respectively. On April 13, 2020, LSC announced that it, along with most of its U.S. subsidiaries, voluntarily filed for business reorganization under Chapter 11 of the U.S. Bankruptcy Code. At the time of this filing, no plan of reorganization has been filed and we cannot assess the potential impact of any such plan on our contingent liabilities related to the spin-off of LSC. If we are required to make payments in connection with these contingent liabilities, it may adversely affect our results of operations, financial condition or cash flows.

ISSUER PURCHASES OF EQUITY SECURITIES	ISSUER PURCHASES OF EQUITY SECURITIES								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			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
July 1, 2019 - July 31, 2019			3,906	$	2.06	—	$	—
August 1, 2019 - August 31, 2019		—		—		—	$	—
September 1, 2019 - September 30, 2019			—		—	—	$	—
January 1, 2020 - January 31, 2020											—	$	—	—	$	—
February 1, 2020 - February 29, 2020										—		—		—	$	—
March 1, 2020 - March 31, 2020											295,407		1.90	—	$	—
Total			3,906	$	2.06	—					295,407	$	1.90	—

~~Each of our~~The ABL Credit Agreement and Term Loan Credit Agreement ~~limit~~contain customary affirmative and negative covenants including negative covenants restricting, among other things, our ability to incur debt, make investments, make certain restricted payments ~~including dividends~~(including payments on certain other debt and ~~share repurchases, subject to specified exceptions.~~external dividends), incur liens securing other debt, consummate certain fundamental transactions, enter into transactions with affiliates and consummate asset sales.

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.

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)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	RRD	New York Stock Exchange
Preferred Stock Purchase Rights		New York Stock Exchange

Large Accelerated filer	☐	Accelerated filer	☒

Non-Accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

		Page
	PART I

Item 1.	Condensed Consolidated Balance Sheets as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019	3
	Condensed Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	4
	Condensed Consolidated Statements of Comprehensive ~~(Loss) Income~~Loss for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	5
	Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2824
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4233
Item 4.	Controls and Procedures	4234

	PART II

Item 1.	Legal Proceedings	4335
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4336
Item 4.	Mine Safety Disclosures	4336
Item 6.	Exhibits	4437

Signatures		4538

	Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash outflows	$	64.8
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	26.6

	Beginning Balance December 31, 2019		Additional Allowance Recognized Due to Adoption of Topic ASC326		Credit Loss Expense for the period		Write offs During the Period			Ending Balance March 31, 2020
Trade receivables	$	20.5		0.2		4.3		(1.2	)	$	23.8
Notes receivables		0.1		—		—		—			0.1
Rebates from vendors		—		0.1		0.1		—			0.2

	Contract Assets		Contract Liabilities
	Short-Term		Short-Term		Long-Term
Balance at December 31, 2018	$	2.7	$	16.5	$	0.6
Balance at September 30, 2019		3.1		24.9		0.5

	Three Months Ended
	March 31, 2020
	Before						Net of
	Tax			Income			Tax
	Amount			Tax			Amount
Translation adjustments	$	(20.0	)	$	—		$	(20.0	)
Adjustments for net periodic pension and OPEB cost		1.0			0.2			0.8
Change in fair value of derivatives		(15.7	)		(3.7	)		(12.0	)
Other comprehensive loss	$	(34.7	)	$	(3.5	)	$	(31.2	)

	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Operating lease cost	$	26.2		$	73.4
Variable lease cost		9.9			28.6
Short-term lease cost		0.1			2.4
Sublease income		(0.3	)		(0.9	)
Total lease cost	$	35.9		$	103.5

Year Ended December 31	Operating Leases
2019 (excluding the nine months ended September 30, 2019)	$	21.6
2020		69.0
2021		52.4
2022		34.1
2023		23.8
2024 and thereafter		32.9
Total lease payments		233.8
Less: Amount representing interest		32.9
Present value of lease obligation	$	200.9

Weighted average remaining lease term	4.1 years
Weighted average discount rate		6.6	%

	Classification on Consolidated Balance Sheets	March 31, 2020		December 31, 2019
Derivative assets
Foreign currency contracts:
Not designated as hedging instruments	Prepaid expenses and other current assets	$	0.7	$	0.9
Interest rate swap agreements:
Designated as cash flow hedges	Other noncurrent assets		—		1.0

Derivative liabilities
Foreign currency contracts:
Not designated as hedging instruments	Accrued liabilities and other	$	2.2	$	0.1
Interest rate swap agreements:
Designated as cash flow hedges	Accrued liabilities and other		4.0		—
Designated as cash flow hedges	Other noncurrent liabilities		10.7		—

		Three months ended
	Classification of Loss (Gain) Recognized in the Consolidated Statements of Operations	March 31, 2020			March 31, 2019
Derivatives not designated as hedges
Foreign currency contracts	Selling, general and administrative expenses	$	1.2		$	(3.7	)
Derivatives designated as cash flow hedges
Interest rate swap agreements	Interest expense, net		(0.2	)		—

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


3.1*		~~Restatement of Certificate of Incorporation of R.R. Donnelley & Sons Company~~

~~4.1~~		Rights Agreement, dated as of August 28, 2019, between R.R. Donnelley & Sons Company and Computershare Trust Company, N.A., as rights agent (incorporated by reference to Exhibit 4.1 to the Company’s Current Report 8-K/A filed August 29, 2019).

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		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

R.R. DONNELLEY & SONS COMPANY

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