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T
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Wisconsin
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39-1152983
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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N61 W23044 Harry's Way, Sussex, Wisconsin 53089-3995
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(414) 566-6000
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(Address of principal executive offices) (Zip Code)
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(Registrant's telephone number, including area code)
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Title of Class
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Name of Each Exchange on Which Registered
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Class A Common Stock, par value $0.025 per share
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The New York Stock Exchange, LLC
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Emerging growth company
o
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Class
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Outstanding as of February 16, 2018
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Class A Common Stock
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38,866,987
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Class B Common Stock
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13,841,703
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Class C Common Stock
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—
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Page No.
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•
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The impact of decreasing demand for printed materials and significant overcapacity in the highly competitive commercial printing industry creates downward pricing pressures and potential under-utilization of assets;
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•
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The impact of electronic media and similar technological changes, including digital substitution by consumers;
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•
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The inability of the Company to reduce costs and improve operating efficiency rapidly enough to meet market conditions;
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•
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The impact of changing future economic conditions;
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•
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The failure of clients to perform under contracts or to renew contracts with clients on favorable terms or at all;
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•
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The impact of increased business complexity as a result of the Company's transformation to a marketing solutions provider;
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The impact of regulatory matters and legislative developments or changes in laws, including changes in cyber-security, privacy and environmental laws;
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The impact of fluctuations in costs (including labor and labor-related costs, energy costs, freight rates and raw materials) and the impact of fluctuations in the availability of raw materials;
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The failure to attract and retain qualified production personnel;
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The impact of changes in postal rates, service levels or regulations;
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The fragility and decline in overall distribution channels, including newspaper distribution channels;
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The failure to successfully identify, manage, complete and integrate acquisitions and investments;
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The impact of risks associated with the operations outside of the United States, including costs incurred or reputational damage suffered due to improper conduct of its employees, contractors or agents;
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Significant capital expenditures may be needed to maintain the Company's platform and processes and to remain technologically and economically competitive;
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The impact of the various restrictive covenants in the Company's debt facilities on the Company's ability to operate its business;
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•
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The impact on the holders of Quad/Graphics' class A common stock of a limited active market for such shares and the inability to independently elect directors or control decisions due to the voting power of the class B common stock; and
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The impact of an other than temporary decline in operating results and enterprise value that could lead to non-cash impairment charges due to the impairment of property, plant and equipment and other intangible assets.
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Item 1.
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Business
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•
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The Company will continue to leverage its strong print foundation and expand its integrated marketing platform to help marketers and content creators create, integrate, deploy and measure content more efficiently and effectively.
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•
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To fuel Quad 3.0, the Company is supported by an engaged workforce with the latest in manufacturing technology to drive continued productivity improvements. The Company believes this will strengthen its core manufacturing platform to be the strongest and most sustainable platform in the industry, with the goal of remaining the industry's high-quality, low-cost producer.
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•
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Ongoing innovation and investment to integrate offline and online media,
in support of the Company's Quad 3.0 value proposition of helping clients create, integrate, deploy and measure content more efficiently and market more effectively. This includes process investments to help clients optimize workflows through audit and discovery services; streamlined content creation to help reduce overall production and distribution costs and improve speed-to-market; and platform investments in variable printing and data management to bridge the traditional analog and digital marketing worlds to help clients precisely segment, execute and measure more personal, one-on-one relevant brand experiences via multichannel campaigns that engage consumers at the right place and time to generate greater market penetration and lift in response.
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•
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Organic growth,
in which the Company leverages knowledge from existing client relationships in key growth vertical industries to develop complementary products and services that help brand owners market more efficiently and effectively across media channels. Quad/Graphics is also focused on ensuring it has the right talent in the best positions to have strategic marketing conversations with its clients that facilitate understanding their needs, developing tailored solutions and growing market share.
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•
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Disciplined acquisitions,
that take many different forms. For example, the Company intends to continue to transform its existing product lines while expanding into higher growth product and service categories that help bolster the Company's ability to create value for its clients, as well as pursue value-driven industry consolidating acquisitions and/or acquisitions that help accelerate the Company's transformation in Quad 3.0.
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•
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The Company has invested in its technology-enabled direct mail platform to provide innovative front-end toolsets and data workflows; industry-best back-end logistics and postal optimization; and a diverse production platform that is highly leveraged on personalization technologies serving the needs of today's leading marketers. Personalization and targeting create the opportunity to reach the right recipients with a relevant message at the right time which, in turn, helps its clients increase consumer response rates, maximize their return on print spending and reduce overall costs. Built over many years, Quad/Graphics' data-driven, one-to-one direct marketing platform includes in-house capabilities to analyze mailing list data, demographic data, consumer transaction data and other consumer-specific data to help its clients create targeted and personalized printed materials.
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•
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The Company also continues to transform its book platform through the rapid implementation of digital press technology and integrated systems, and the creation of
On-Q™
, a proprietary demand-driven ordering system that helps clients better manage ordering and inventory. Quad/Graphics is helping book publishers with increased customization and versioning capabilities; faster time-to-market; reduced waste, inventories and obsolescence; and lower fixed costs.
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•
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Recent investments in digital press technology for QuadPackaging, the Company's high-end folding carton packaging business, has enabled it to enter markets in which it previously was not as competitive, such as private label packaging. With its digital press platform, QuadPackaging is able to cost-competitively accommodate shorter runs with quicker turns.
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•
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Offering employees a competitive compensation and benefits package;
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Providing employees with a safe work environment with robust safety training and accountability programs;
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Offering continuous learning and career advancement opportunities, such as through registered mechanical and electrical apprenticeship programs, youth apprenticeship programs, the Company's own Accelerated Career Training program for production employees, digital media training, affinity groups and leadership development training;
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•
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Promoting employee health and wellness through a variety of personal improvement programs and facilities, including the Company's own QuadMed primary care clinics;
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Acting on employee feedback garnered through regular surveys and open forums at department and company-wide meetings;
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Offering an employee referral program and investing in technology and improved processes to facilitate an easy hiring and on-boarding process; and
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Fostering pride through employee recognition programs, employee and family events, community outreach activities and support, a history of environmental commitments, such as effective management of resources and reducing waste, and adhering to a published code of ethics.
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Name
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Age
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Position
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J. Joel Quadracci
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49
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Chairman, President and Chief Executive Officer
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Eric N. Ashworth
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52
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Executive Vice President of Product Solutions and Market Strategy, and President of BlueSoHo
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Renee B. Badura
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54
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Executive Vice President of Sales
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David A. Blais
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55
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Executive Vice President of Global Procurement and Platform Strategy
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Thomas J. Frankowski
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57
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Executive Vice President and Chief Operating Officer
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David J. Honan
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49
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Executive Vice President and Chief Financial Officer
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Jennifer J. Kent
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46
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Executive Vice President of Administration and General Counsel
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Kelly A. Vanderboom
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43
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Executive Vice President, President of Logistics and Treasurer
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Steven D. Jaeger
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53
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Vice President and Chief Information Officer
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Anne M. Bauer
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53
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Executive Director and Chief Accounting Officer
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Item 1A.
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Risk Factors
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•
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The Health Insurance Portability and Accountability and the Health Information Technology for Economic and Clinical Health Acts, which, in general and among other things, establish comprehensive federal standards with respect to privacy, security and transmission of individually identifiable health information and impose requirements for the use of standardized electronic transactions with respect to transmission of such information;
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the laws and regulations administered and enforced by the Food and Drug Administration, including the Federal Food Drug and Cosmetics Act, Controlled Substances Act and other federal statutes and regulations;
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the federal Anti-Kickback Statute, which generally prohibits, among other things, soliciting, receiving or providing remuneration to induce the referral of an individual for an item or service or the purchasing or ordering of an item or service for which payment may be made under federal healthcare programs;
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the federal false claims laws, which generally prohibit, among other things, knowingly presenting or causing to be presented claims for payment from third-party payors that are false or fraudulent;
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state law equivalents of each of these federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payor, including commercial insurers, and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not be preempted by applicable federal laws, thus complicating compliance efforts; and
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state prohibitions on the Corporate Practice of Medicine (many of these state laws differ from one another in significant ways and are not preempted by federal law).
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that a majority of the Company's Board of Directors consist of independent directors, as defined under the rules of the NYSE;
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that the Company have a corporate governance and nominating committee that is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities; and
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that the Company have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities.
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Property, plant and equipment of
$1,377.6 million
; and
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Other intangible assets, primarily representing the value of customer relationships acquired, of
$43.4 million
.
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Locations
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Square Feet
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Property Type
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Segment
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Lomira, Wisconsin, United States
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2,174,000
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Owned
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United States Print and Related Services
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Martinsburg, West Virginia, United States
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2,123,000
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Owned
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United States Print and Related Services
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Sussex, Wisconsin, United States
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1,970,000
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Owned
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United States Print and Related Services
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Hartford, Wisconsin, United States
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1,682,000
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Owned
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United States Print and Related Services
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Oklahoma City, Oklahoma, United States
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1,128,000
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Owned
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United States Print and Related Services
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Versailles, Kentucky, United States
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1,065,000
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Owned
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United States Print and Related Services
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Saratoga Springs, New York, United States
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1,034,000
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Owned
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United States Print and Related Services
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West Allis, Wisconsin, United States
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913,000
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Owned
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United States Print and Related Services
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The Rock, Georgia, United States
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797,000
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Owned
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United States Print and Related Services
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Wyszkow, Poland
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709,000
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Owned
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International
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Franklin, Kentucky, United States
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617,000
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Owned
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United States Print and Related Services
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Effingham, Illinois, United States
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564,000
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Owned
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United States Print and Related Services
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Merced, California, United States
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539,000
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Owned
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United States Print and Related Services
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Taunton, Massachusetts, United States
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513,000
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Owned/Leased
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United States Print and Related Services
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Pewaukee, Wisconsin, United States
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504,000
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Owned/Leased
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United States Print and Related Services
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Class A Closing Stock Prices
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||||||||||||||||||
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Dividends Paid
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2017
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2016
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2017
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2016
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High
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Low
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High
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Low
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First Quarter
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$
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0.30
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$
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0.30
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$
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27.66
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$
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22.10
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$
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13.61
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$
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7.85
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Second Quarter
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0.30
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0.30
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27.98
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21.91
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23.29
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11.93
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||||||
Third Quarter
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0.30
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0.30
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23.27
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18.35
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29.18
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23.07
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||||||
Fourth Quarter
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0.30
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0.30
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23.98
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20.92
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28.13
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23.26
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Issuer Purchases of Equity Securities
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||||||||||
Period
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Total Number of Shares Purchased
(1)
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Average Price Paid Per Share
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Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(1)
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Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
(2)
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||||
October 1, 2017 to October 31, 2017
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—
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—
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—
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79,158,311
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November 1, 2017 to November 30, 2017
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—
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—
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—
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79,158,311
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December 1, 2017 to December 31, 2017
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2,418
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(3)
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—
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—
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79,158,311
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Total
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2,418
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—
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(1)
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Represents shares of the Company's class A stock.
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(2)
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On
September 6, 2011
, the Company's Board of Directors authorized a share repurchase program of up to
$100.0 million
of the Company's outstanding class A stock. Under the authorization, share repurchases may be made at the Company's discretion, from time to time, in the open market and/or in privately negotiated transactions as permitted by federal securities laws and other legal requirements. The timing, manner, price and amount of any repurchase will depend on economic and market conditions, share price, trading volume, applicable legal requirements and other factors. The program may be suspended or discontinued at any time. During the year ended December 31, 2017, the Company repurchased
200,605
shares of its class A common stock at a weighted average price of
$18.89
per share for a total purchase price of
$3.8 million
. During the year ended
December 31, 2016
, the Company repurchased
984,190
shares of its class A stock at a weighted average price of
$8.96
per share for a total purchase price of
$8.8 million
. As of
December 31, 2017
, there were
$79.2 million
of authorized repurchases remaining under the program.
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(3)
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Represents
2,418
shares of class A stock transferred from an employee to the Company to satisfy tax withholding requirements in connection with the vesting of restricted stock under the Quad/Graphics, Inc. 2010 Omnibus Incentive Plan ("
Omnibus Plan
") during December 2017.
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Base Period
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12/31/2012
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12/31/2013
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12/31/2014
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12/31/2015
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12/31/2016
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12/31/2017
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||||||||||||
Quad/Graphics, Inc.
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$
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100.00
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$
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139.78
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$
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124.46
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$
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54.90
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$
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168.04
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$
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149.01
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S&P MidCap 400 Index
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100.00
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133.50
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146.54
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143.35
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173.08
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201.20
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||||||
Peer Group
(1)
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100.00
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170.76
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173.77
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161.97
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156.90
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168.25
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(1)
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The following companies were included in the Peer Group:
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(a)
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Adjusted for reverse split and spin offs of LSC Communications, Inc. and Donnelley Financial Solutions, Inc.
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(b)
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Included from June 23, 2015, when Gannett Co., Inc. spun off from its parent company
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(c)
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Included from October 1, 2016, when LSC Communications, Inc. spun off from R.R. Donnelley & Sons Co.
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Item 6.
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Selected Financial Data
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SELECTED FINANCIAL DATA
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|||||||||||||||||||
(In millions, except per share data)
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|||||||||||||||||||
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2017
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2016
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2015
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2014
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2013
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Consolidated Statements of Operations Data:
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Net sales
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$
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4,131.4
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$
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4,329.5
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$
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4,597.1
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$
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4,777.6
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$
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4,712.7
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Operating income (loss)
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164.9
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122.4
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(830.0
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)
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141.3
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142.2
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|||||
Net earnings (loss)
(1) (2)
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$
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107.2
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$
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44.9
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$
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(641.9
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)
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$
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18.6
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$
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32.5
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Earnings (loss) per diluted share
(2)
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$
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2.07
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$
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0.90
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$
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(13.40
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)
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$
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0.38
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$
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0.65
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||||||||||
Consolidated Balance Sheets Data:
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||||||||||
Total assets
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$
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2,452.4
|
|
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$
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2,570.1
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|
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$
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2,847.5
|
|
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$
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4,008.8
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|
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$
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4,103.6
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Long-term debt and capital lease obligations (excluding current portion)
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917.2
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|
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1,038.7
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1,249.6
|
|
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1,309.4
|
|
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1,258.2
|
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|||||
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||||||||||
Other Financial Data:
|
|
|
|
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||||||||||
Dividends per share of common stock
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$
|
1.20
|
|
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$
|
1.20
|
|
|
$
|
1.20
|
|
|
$
|
1.20
|
|
|
$
|
1.20
|
|
(1)
|
Includes restructuring, impairment and transaction-related charges of
$61.2 million
,
$80.6 million
,
$164.9 million
,
$67.3 million
and
$95.3 million
for the years ended
December 31, 2017
,
2016
,
2015
,
2014
and
2013
, respectively. Includes goodwill impairment charges of $808.3 million ($542.4 million, net of tax) for the year ended December 31, 2015. Excludes net loss attributable to non-controlling interests of
$0.3 million
and
$1.6 million
for the years ended
December 31, 2014
and
2013
, respectively.
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(2)
|
Includes a $28.8 million net income tax benefit recorded during the year ended December 31, 2017, as a result of the 2017 Tax Cuts and Jobs Act. See Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," and
Note 14
, "
Income Taxes
," to the Company's consolidated financial statements in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K for further discussion.
|
Item 7.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Overview.
This section includes a general description of the Company's business and segments, an overview of key performance metrics the Company's management measures and utilizes to evaluate business performance, and an overview of trends affecting the Company, including management's actions related to the trends.
|
•
|
Results of Operations.
This section contains an analysis of the Company's results of operations by comparing the results for (1) the year ended
December 31, 2017
, to the year ended
December 31, 2016
; and (2) the year ended
December 31, 2016
, to the year ended
December 31, 2015
. The comparability of the Company's results of operations between periods was impacted by acquisitions, including the 2015 acquisitions of
Marin's International, S.A.
("
Marin's
"),
Copac Global Packaging, Inc.
("
Copac
") and
Specialty Finishing, Inc.
("
Specialty
"). The results of operations of all acquisitions are included in the Company's consolidated results prospectively from their respective acquisition dates. Forward-looking statements providing a general description of recent and projected industry and Company developments that are important to understanding the Company's results of operations are included in this section. This section also provides a discussion of EBITDA and EBITDA margin, financial measures that the Company uses to assess the performance of its business that are not prepared in accordance with
accounting principles generally accepted in the United States of America
("
GAAP
").
|
•
|
Liquidity and Capital Resources.
This section provides an analysis of the Company's capitalization, cash flows, a statement about off-balance sheet arrangements and a discussion and table of outstanding debt and commitments. Forward-looking statements important to understanding the Company's financial condition are included in this section. This section also provides a discussion of Free Cash Flow and Debt Leverage Ratio, non-GAAP financial measures that the Company uses to assess liquidity and capital allocation and deployment.
|
•
|
Critical Accounting Policies and Estimates.
This section contains a discussion of the accounting policies that the Company's management believes are important to the Company's financial condition and results of operations, as well as allowances and reserves that require significant judgment and estimates on the part of the Company's management. In addition, all of the Company's significant accounting policies, including critical accounting policies, are summarized in
Note 1
, "
Basis of Presentation and Summary of Significant Accounting Policies
," to the consolidated financial statements in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K.
|
•
|
New Accounting Pronouncements.
|
•
|
Direct Marketing Platform:
The Company continued to strengthen its Direct Marketing platform through the addition of state-of-the-art digital press technology capable of producing 100% variable content in full color cost-effectively on a mass scale. With this technology, the Company can help its clients increase consumer engagement and response, and improve return on marketing investment. In 2017, the Company installed a Hewlett-Packard T490 digital press in its Midwest Digital Print Supercenter in Pewaukee, Wisconsin, to complement its existing Hewlett-Packard T410 press in Pewaukee. Quad/Graphics also invested in additional high-resolution inkjet print modules for offset presses in its Pewaukee and Effingham, Illinois, facilities. These modules are integrated into existing offset presses to give marketers the opportunity to create high-quality variable images in-line with static four-color print at high speeds.
|
•
|
Commercial and Specialty Platform:
The Company also invested in state-of-the-art digital and offset press technology to enhance its Commercial and Specialty Platform, which increasingly serves national clients in a variety of industries, including restaurants. These investments include a Fuji J press for its Woburn, Massachusetts facility, and a Heidelberg Speedmaster XL 106 eight-color perfecting sheetfed press, in its Burlington, Wisconsin, facility. Both presses are ideal for short-run and print-on-demand work, including promotional items.
|
•
|
QuadPackaging Platform:
In 2017, the Company more than doubled high-end packaging production capacity by moving its Dominican Republic operations into a newer, larger facility in Santo Domingo, close to where products are manufactured to improve timeliness and cost-efficiency. The facility features several new and/or upgraded pieces of equipment including a new Heidelberg Speedmaster XL 106 press, a rebuilt Heidelberg Speedmaster XL 105 press, two new Bobst Visioncut LE Diecutters, and a Marquip roll sheeting machine for cutting its own sheets of paper. QuadPackaging's Spartanburg, South Carolina, facility also installed a new Heidelberg Speedmaster XL 106 press and a new digital Fuji J press for short runs and/or variable printing in the folded carton market.
|
•
|
In-Store Marketing Platform:
Quad/Graphics' Europe, located in Poland, invested in a Heidelberg VLF (Very Large Format) sheetfed press for its In-Store Marketing group. The press is used to produce various types of packaging and floor displays with complex shapes and structures, serving the food, cosmetics, chemical, motor, textile and other industries. In the United States, Quad/Graphics' Tempt in-store
|
•
|
Book Platform:
The Company invested in a 64-page manroland LITHOMAN web offset press for its Versailles, Kentucky, plant. The high-speed press produces optimal quality with reduced production cycle times and waste, and complements the facility's short-run digital press capabilities. It also lowers the break-even point between traditional offset and digital printing so the Company can cost-effectively produce run lengths ranging from one copy to millions of copies. The Company also upgraded three of Versailles plant's five Hewlett-Packard digital presses to increase their top speeds from 600 feet-per-minute to 1,000 feet-per-minute, essentially adding the capacity of two additional presses. Further, it added a case-in machine for digital print finishing and continues to invest in its proprietary information technology solutions, including On-QTM a demand-driven ordering system that helps clients better manage ordering and inventory.
|
•
|
Magazine, Catalog and Retail Platform:
The Company continues to enhance productivity and offset labor shortages by using automation, including automated guided vehicles (driverless forktrucks) for moving work-in-process and finished goods and automated palletizers to stack product at the end of a finishing line at high speeds. In 2017, capital investments included 10 additional automated guided vehicles, for a total of 40 in its Sussex, Wisconsin mega plant, and 20 automated palletizers for a total of more than 100 company-wide.
|
•
|
Direct Mail Platform
: The Company announced that it will transform its Westampton, New Jersey, direct marketing production plant into an East Coast Digital Print Supercenter specializing in personalized, high-response direct marketing solutions. The expansion adds new technology that will enhance both the efficiency and effectiveness of direct marketers' efforts to reach individual consumers with superior-quality, cost effective, hyperpersonalized direct mail pieces on a mass scale. The Company's East Coast Digital Print Supercenter will include two new Hewlett-Packard Indigo 12000 digital presses. In addition, the Supercenter also will operate several other digital presses as well as offset presses with upgraded inkjet technology, and install two new high-speed letter inserters to enhance lettershop operations. The East Coast Digital Supercenter compliments Quad Graphics' existing Midwest Digital Print Supercenter in Pewaukee, Wisconsin, which recently added a Hewlett-Packard Indigo 12000 digital press; and Quad/Graphics Effingham, Illinois direct mail production facility, which recently expanded its personalization capabilities with the installation of a new Hewlett-Packard C800 four-color variable inkjet print module system.
|
•
|
Commercial and Specialty Platform
: The Company announced it will add state-of-the-art digital printing capabilities in its Dallas, Texas plant with two new digital presses. A new Fuji J Press is a digital print press offering the quality, reliability and consistency of offset printing in addition to full variable one-to-one data management. The Fuji J Press is complemented by a Kodak NexPress for short-run, quick-turn workflows. Finishing equipment will also be installed including a Horizon StitchLiner 5500 saddle stitching system and two fully automated Horizon perfect binders as well as a folder, a flatcutter and a shrinkwrapper. Lastly, the Dallas plant will have expanded kitpacking and fulfillment solutions to simplify
|
•
|
Book Platform
: Quad/Graphics has invested in multiple high-speed color digital web presses as part of a strategy to transform the Company's book platform to the widest, most productive digital web presses available in the marketplace today. The Company is committed to helping book publishers produce and deliver books on demand, bringing zero inventory and just-in-time delivery closer to reality. The Company will continue to invest in its book platform to match its clients' changing needs and redefine the book supply chain through increased customization and versioning capabilities, faster time to market, reduced waste, inventories and obsolescence and lower fixed costs.
|
•
|
The Company completed the acquisition of Specialty on
August 25, 2015
, for a net purchase price of
$61 million
, excluding acquired cash. Specialty is a full-service paperboard folding carton manufacturer and logistics provider located in Omaha, Nebraska.
|
•
|
The Company completed the acquisition of Copac on
April 14, 2015
, for a net purchase price of
$59 million
, excluding acquired cash. Copac is a leading international provider of innovative packaging and supply chain solutions, including turnkey packaging design, production and fulfillment services across a range of end markets, headquartered in Spartanburg, South Carolina. Copac manufactures products such as folding cartons, labels, inserts, tags and specialty envelopes, and has production facilities in Spartanburg and Santo Domingo, Dominican Republic, as well as strategically sourcing packaging product manufacturing over multiple end markets in Central America and Asia, giving it a global footprint.
|
•
|
The Company completed the acquisition of Marin's on
February 3, 2015
, for a net purchase price of
$21 million
, excluding acquired cash. Marin's is a worldwide leader in the point-of-sale display industry and specializes in the research and design of display solutions, headquartered in Paris, France. Marin's products are produced by a global network of licensees, including Quad/Graphics, as well as one wide-format digital print, kitting and fulfillment facility in Paris. Marin's uses its own European-based sales force and the global licensees to sell its patented product portfolio.
|
|
Operating Income
|
|
Operating Margin
|
|
Net Earnings
|
|
Diluted Earnings Per Share
|
|||||||
For the year ended December 31, 2016
|
$
|
122.4
|
|
|
2.8
|
%
|
|
$
|
44.9
|
|
|
$
|
0.90
|
|
2017 restructuring, impairment and transaction-related charges
(1)
|
(61.2
|
)
|
|
(1.5
|
)%
|
|
(36.7
|
)
|
|
(0.71
|
)
|
|||
2016 restructuring, impairment and transaction-related charges
(2)
|
80.6
|
|
|
1.9
|
%
|
|
48.4
|
|
|
0.97
|
|
|||
Interest expense
(3)
|
N/A
|
|
|
N/A
|
|
|
3.7
|
|
|
0.07
|
|
|||
2017 loss on debt extinguishment
(4)
|
N/A
|
|
|
N/A
|
|
|
(1.6
|
)
|
|
(0.03
|
)
|
|||
2016 gain on debt extinguishment
(5)
|
N/A
|
|
|
N/A
|
|
|
(8.5
|
)
|
|
(0.17
|
)
|
|||
Income taxes
(6)
|
N/A
|
|
|
N/A
|
|
|
41.8
|
|
|
0.81
|
|
|||
Investments in unconsolidated entities, net of tax
(7)
|
N/A
|
|
|
N/A
|
|
|
1.4
|
|
|
0.03
|
|
|||
Operating income
(8)
|
23.1
|
|
|
0.8
|
%
|
|
13.8
|
|
|
0.20
|
|
|||
For the year ended December 31, 2017
|
$
|
164.9
|
|
|
4.0
|
%
|
|
$
|
107.2
|
|
|
$
|
2.07
|
|
(1)
|
Restructuring, impairment and transaction-related charges of
$61.2 million
($36.7 million, net of tax) incurred during the year ended
December 31, 2017
, included the following:
|
a.
|
$26.9 million
of employee termination charges related to workforce reductions through facility consolidations and voluntary and involuntary separation programs;
|
b.
|
$12.0 million
of impairment charges, including
$6.7 million
of impairment charges for machinery and equipment no longer being utilized in production as a result of facility consolidations, including Waseca, Minnesota; Columbus, Ohio; and Taunton, Massachusetts, as well as other capacity reduction restructuring activities; and
$5.3 million
of impairment charges for land and building related to the Waseca, Minnesota and Taunton, Massachusetts plant closures;
|
c.
|
$3.1 million
of transaction-related charges, consisting of professional service fees for business acquisition and divestiture activities;
|
d.
|
$19.2 million
of various other restructuring charges, including costs to maintain and exit closed facilities, as well as lease exit charges, net of $7.1 million in gains from the sale of the Atglen, Pennsylvania; Dickson, Tennessee; East Greenville, Pennsylvania; Lenexa, Kansas; and Marengo, Iowa plants, and a $1.2 million gain from the Company's Argentina Subsidiaries' settlements with vendors through bankruptcy proceedings. Other restructuring charges also included a $6.7 million loss on the sale of a business and an $0.8 million non-cash pension settlement charge related to lump-sum pension payments.
|
(2)
|
Restructuring, impairment and transaction-related charges of
$80.6 million
($48.4 million, net of tax) incurred during the year ended
December 31, 2016
, included the following:
|
a.
|
$12.9 million of employee termination charges related to workforce reductions through facility consolidations and involuntary separation programs;
|
b.
|
$26.8 million of impairment charges, including $14.7 million of impairment charges for machinery and equipment no longer being utilized in production as a result of facility consolidations, including Atglen, Pennsylvania; Augusta, Georgia; East Greenville, Pennsylvania; Monroe, New Jersey; Woodstock, Illinois; and Queretaro, Mexico, as well as other capacity reduction restructuring activities; and $12.1 million of impairment charges for land and building related to the Atglen, Pennsylvania plant closure;
|
c.
|
$2.2 million of transaction-related charges, consisting of professional service fees for business acquisition and divestiture activities;
|
d.
|
$0.1 million of acquisition-related integration costs; and
|
e.
|
$38.6 million of various other restructuring charges, including costs to maintain and exit closed facilities, as well as lease exit charges. Other restructuring charges also included an $11.2 million adjustment to its MEPPs withdrawal liability and a $7.0 million non-cash pension settlement charge related to lump-sum pension payments.
|
(3)
|
Interest expense
decreased
$6.1 million
(
$3.7 million
, net of tax) during the year ended
December 31, 2017
, to
$71.1 million
. This change was due to lower average debt levels in the year ended
December 31, 2017
, as compared to the year ended
December 31, 2016
.
|
(4)
|
A $2.6 million loss on debt extinguishment ($1.6 million, net of tax) was recognized during the year ended December 31, 2017, from the refinancing of the Senior Secured Credit Facility, completed on February 10, 2017.
|
(5)
|
A $14.1 million gain on debt extinguishment ($8.5 million, net of tax) was recognized during the year ended December 31, 2016, primarily from the repurchase of $56.5 million aggregate principal amount of
Senior Unsecured Notes
.
|
(6)
|
The
$41.8 million
decrease in income taxes as calculated in the following table is primarily due to a $28.8 million tax benefit related to the reduced federal rate applied to net domestic deferred tax liabilities in accordance with the Tax Cuts and Jobs Act and a $21.0 million tax benefit from the release of valuation allowances primarily related to foreign credits, partially offset by a $7.1 million decreased tax benefit of domestic deductions. See
Note 14
, "
Income Taxes
," to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for further information on income taxes.
|
|
Year Ended December 31,
|
|
|
||||||||
|
2017
|
|
2016
|
|
$ Change
|
||||||
Earnings before income taxes and equity in loss of unconsolidated entities
|
$
|
91.2
|
|
|
$
|
59.3
|
|
|
$
|
31.9
|
|
40% normalized tax rate
|
40.0
|
%
|
|
40.0
|
%
|
|
40.0
|
%
|
|||
Income tax expense at 40% normalized tax rate
|
36.5
|
|
|
23.7
|
|
|
12.8
|
|
|||
|
|
|
|
|
|
||||||
Less: Income tax (benefit) expense from the consolidated statements of operations
|
(16.0
|
)
|
|
13.0
|
|
|
(29.0
|
)
|
|||
|
|
|
|
|
|
||||||
Impact of income taxes
|
$
|
52.5
|
|
|
$
|
10.7
|
|
|
$
|
41.8
|
|
(7)
|
The decrease in net loss attributable to investments in unconsolidated entities, net of tax, of
$1.4 million
during the year ended
December 31, 2017
, was related to a decrease in losses at the Company's Brazilian joint venture investment in Plural Industria Gráfica Ltda ("
Plural
").
|
(8)
|
Operating income, excluding restructuring, impairment and transaction-related charges, increased
$23.1 million
(
$13.8 million
, net of tax) primarily due to the following: (1) a
$44.6 million
decrease in depreciation and amortization expense; (2) a $19.4 million vacation reserve reduction from an employee vacation policy change; (3) $6.8 million in lower legal expenses; (4) a $5.0 million gain from a property insurance claim; and (5) savings from cost reduction initiatives, including employee-related costs. These impacts were partially offset by lower print volume and pricing due to ongoing industry pressures and a $10.4 million benefit in 2016 that did not repeat in 2017 related to the collection of a previously written-off vendor receivable.
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||||||||
|
2017
|
|
2016
|
|
|
|
|
|||||||||||||
|
(dollars in millions)
|
|
|
|||||||||||||||||
|
Amount
|
|
% of Net
Sales
|
|
Amount
|
|
% of Net
Sales
|
|
$ Change
|
|
%
Change
|
|||||||||
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Products
|
$
|
3,529.0
|
|
|
85.4
|
%
|
|
$
|
3,717.1
|
|
|
85.9
|
%
|
|
$
|
(188.1
|
)
|
|
(5.1
|
)%
|
Services
|
602.4
|
|
|
14.6
|
%
|
|
612.4
|
|
|
14.1
|
%
|
|
(10.0
|
)
|
|
(1.6
|
)%
|
|||
Total net sales
|
4,131.4
|
|
|
100.0
|
%
|
|
4,329.5
|
|
|
100.0
|
%
|
|
(198.1
|
)
|
|
(4.6
|
)%
|
|||
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Products
|
2,827.3
|
|
|
68.4
|
%
|
|
2,971.0
|
|
|
68.6
|
%
|
|
(143.7
|
)
|
|
(4.8
|
)%
|
|||
Services
|
432.1
|
|
|
10.5
|
%
|
|
423.8
|
|
|
9.8
|
%
|
|
8.3
|
|
|
2.0
|
%
|
|||
Total cost of sales
|
3,259.4
|
|
|
78.9
|
%
|
|
3,394.8
|
|
|
78.4
|
%
|
|
(135.4
|
)
|
|
(4.0
|
)%
|
|||
Selling, general & administrative expenses
|
413.4
|
|
|
10.0
|
%
|
|
454.6
|
|
|
10.5
|
%
|
|
(41.2
|
)
|
|
(9.1
|
)%
|
|||
Depreciation and amortization
|
232.5
|
|
|
5.6
|
%
|
|
277.1
|
|
|
6.4
|
%
|
|
(44.6
|
)
|
|
(16.1
|
)%
|
|||
Restructuring, impairment and transaction-related charges
|
61.2
|
|
|
1.5
|
%
|
|
80.6
|
|
|
1.9
|
%
|
|
(19.4
|
)
|
|
(24.1
|
)%
|
|||
Total operating expenses
|
3,966.5
|
|
|
96.0
|
%
|
|
4,207.1
|
|
|
97.2
|
%
|
|
(240.6
|
)
|
|
(5.7
|
)%
|
|||
Operating income
|
$
|
164.9
|
|
|
4.0
|
%
|
|
$
|
122.4
|
|
|
2.8
|
%
|
|
$
|
42.5
|
|
|
34.7
|
%
|
|
Year Ended December 31,
|
||||||||||||
|
2017
|
|
2016
|
||||||||||
|
Amount
|
|
% of Net Sales
|
|
Amount
|
|
% of Net Sales
|
||||||
|
(dollars in millions)
|
||||||||||||
EBITDA and EBITDA margin
|
$
|
394.8
|
|
|
9.6
|
%
|
|
$
|
412.2
|
|
|
9.5
|
%
|
|
Year Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(dollars in millions)
|
||||||
Net earnings
(1)
|
$
|
107.2
|
|
|
$
|
44.9
|
|
Interest expense
|
71.1
|
|
|
77.2
|
|
||
Income tax (benefit) expense
|
(16.0
|
)
|
|
13.0
|
|
||
Depreciation and amortization
|
232.5
|
|
|
277.1
|
|
||
EBITDA
|
$
|
394.8
|
|
|
$
|
412.2
|
|
(1)
|
Net earnings included the following:
|
a.
|
Restructuring, impairment and transaction-related charges of
$61.2 million
and
$80.6 million
for the years ended
December 31, 2017
and
2016
, respectively;
|
b.
|
Loss on debt extinguishment of $2.6 million for the year ended December 31, 2017;
|
c.
|
Gain on debt extinguishment of $14.1 million for the year ended December 31, 2016; and
|
d.
|
Equity in loss of unconsolidated entities of
$1.4 million
for the year ended
December 31, 2016
.
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
|
|
|
|||||||
|
(dollars in millions)
|
|
|
|||||||||||
|
Amount
|
|
Amount
|
|
$ Change
|
|
% Change
|
|||||||
Net sales:
|
|
|
|
|
|
|
|
|||||||
Products
|
$
|
3,156.9
|
|
|
$
|
3,335.1
|
|
|
$
|
(178.2
|
)
|
|
(5.3
|
)%
|
Services
|
583.2
|
|
|
591.9
|
|
|
(8.7
|
)
|
|
(1.5
|
)%
|
|||
Operating income (including restructuring, impairment and transaction-related charges)
|
194.3
|
|
|
186.1
|
|
|
8.2
|
|
|
4.4
|
%
|
|||
Operating margin
|
5.2
|
%
|
|
4.7
|
%
|
|
N/A
|
|
|
N/A
|
|
|||
Restructuring, impairment and transaction-related charges
|
$
|
53.6
|
|
|
$
|
59.3
|
|
|
$
|
(5.7
|
)
|
|
(9.6
|
)%
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
|
|
|
|||||||
|
(dollars in millions)
|
|
|
|||||||||||
|
Amount
|
|
Amount
|
|
$ Change
|
|
% Change
|
|||||||
Net sales:
|
|
|
|
|
|
|
|
|||||||
Products
|
$
|
372.1
|
|
|
$
|
382.0
|
|
|
$
|
(9.9
|
)
|
|
(2.6
|
)%
|
Services
|
19.2
|
|
|
20.5
|
|
|
(1.3
|
)
|
|
(6.3
|
)%
|
|||
Operating income (including restructuring, impairment and transaction-related charges)
|
19.6
|
|
|
13.5
|
|
|
6.1
|
|
|
45.2
|
%
|
|||
Operating margin
|
5.0
|
%
|
|
3.4
|
%
|
|
N/A
|
|
|
N/A
|
|
|||
Restructuring, impairment and transaction-related charges (income)
|
$
|
3.3
|
|
|
$
|
(1.1
|
)
|
|
$
|
4.4
|
|
|
nm
|
|
Equity in loss of unconsolidated entities
|
—
|
|
|
1.4
|
|
|
(1.4
|
)
|
|
(100.0
|
)%
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
|
|
|
|||||||
|
(dollars in millions)
|
|
|
|||||||||||
|
Amount
|
|
Amount
|
|
$ Change
|
|
% Change
|
|||||||
Operating expenses (including restructuring, impairment and transaction-related charges)
|
$
|
49.0
|
|
|
$
|
77.2
|
|
|
$
|
(28.2
|
)
|
|
(36.5
|
)%
|
Restructuring, impairment and transaction-related charges
|
4.3
|
|
|
22.4
|
|
|
(18.1
|
)
|
|
(80.8
|
)%
|
|
Operating Income(Loss)
|
|
Operating Margin
|
|
Net Earnings (Loss)
|
|
Diluted Earnings (Loss) Per Share
|
|||||||
For the year ended December 31, 2015
|
$
|
(830.0
|
)
|
|
(18.1
|
)%
|
|
$
|
(641.9
|
)
|
|
$
|
(13.40
|
)
|
2016 restructuring, impairment and transaction-related charges
(1)
|
(80.6
|
)
|
|
(1.9
|
)%
|
|
(48.4
|
)
|
|
(0.97
|
)
|
|||
2015 restructuring, impairment and transaction-related charges
(2)
|
164.9
|
|
|
3.6
|
%
|
|
108.0
|
|
|
2.25
|
|
|||
2015 goodwill impairment
(3)
|
808.3
|
|
|
17.6
|
%
|
|
542.4
|
|
|
11.32
|
|
|||
Interest expense
(4)
|
N/A
|
|
|
N/A
|
|
|
6.7
|
|
|
0.13
|
|
|||
2016 gain on debt extinguishment
(5)
|
N/A
|
|
|
N/A
|
|
|
8.5
|
|
|
0.17
|
|
|||
Income taxes
(6)
|
N/A
|
|
|
N/A
|
|
|
28.8
|
|
|
0.58
|
|
|||
Investments in unconsolidated entities, net of tax
(7)
|
N/A
|
|
|
N/A
|
|
|
4.9
|
|
|
0.10
|
|
|||
Operating income
(8)
|
59.8
|
|
|
1.6
|
%
|
|
35.9
|
|
|
0.72
|
|
|||
For the year ended December 31, 2016
|
$
|
122.4
|
|
|
2.8
|
%
|
|
$
|
44.9
|
|
|
$
|
0.90
|
|
(1)
|
Restructuring, impairment and transaction-related charges of $80.6 million ($48.4 million, net of tax) incurred during the year ended December 31, 2016, included the following:
|
a.
|
$12.9 million of employee termination charges related to workforce reductions through facility consolidations and involuntary separation programs;
|
b.
|
$26.8 million of impairment charges, including $14.7 million of impairment charges for machinery and equipment no longer being utilized in production as a result of facility consolidations, including Atglen, Pennsylvania; Augusta, Georgia; East Greenville, Pennsylvania; Monroe, New Jersey; Woodstock, Illinois; and Queretaro, Mexico, as well as other capacity reduction restructuring activities; and $12.1 million of impairment charges for land and building related to the Atglen, Pennsylvania plant closure;
|
c.
|
$2.2 million of transaction-related charges, consisting of professional service fees for business acquisition and divestiture activities;
|
d.
|
$0.1 million of acquisition-related integration costs; and
|
e.
|
$38.6 million of various other restructuring charges, including costs to maintain and exit closed facilities, as well as lease exit charges. Other restructuring charges also included an $11.2 million adjustment to its MEPPs withdrawal liability and a $7.0 million non-cash pension settlement charge related to lump-sum pension payments.
|
(2)
|
Restructuring, impairment and transaction-related charges of $164.9 million incurred during the year ended December 31, 2015, included the following:
|
a.
|
$42.1 million of employee termination charges related to workforce reductions through facility consolidations and involuntary separation programs;
|
b.
|
$95.3 million of impairment charges, including the following: (1) $54.7 million of impairment charges for machinery and equipment no longer being utilized in production as a result of facility consolidations including Atlanta, Georgia; Augusta, Georgia; Dickson, Tennessee; East Greenville, Pennsylvania; Loveland, Colorado; and Queretaro, Mexico, as well as other capacity reduction restructuring initiatives; (2) $18.6 million of investment-related impairment charges, primarily related to $16.7 million of impairment charges to reduce the book value of the Company's equity method investment in Quad/Graphics Chile S.A. ("Chile") to fair value (see Note 8, "Equity Method Investments in Unconsolidated Entities," to the consolidated financial statements in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K, for additional details related to the impairment of the Company's equity method investment in Chile); (3) $12.7 million of land and building impairment charges primarily related to the Augusta, Georgia and East Greenville, Pennsylvania plant closures; (4) $7.1 million of customer relationship intangible asset impairments; and (5) $2.2 million of impairment charges recorded for property, plant and equipment and other intangible assets as a result of the restructuring proceedings in Argentina for the Company's Argentina Subsidiaries;
|
c.
|
$(6.7) million of transaction-related charges (income), including a $10.0 million non-recurring gain as a result of Courier Corporation's ("Courier") termination of the agreement pursuant to which Quad/Graphics was to acquire Courier, partially offset by $3.3 million of professional service fees, including fees for the terminated acquisition of Courier and the acquisitions of Marin's, Copac and Specialty;
|
d.
|
$5.1 million of acquisition-related integration costs primarily related to preparing existing facilities to meet new production requirements resulting from work transferring from closed plants, as well as other costs related to the integration of the acquired companies; and
|
e.
|
$29.1 million of various other restructuring charges, including a $6.0 million non-cash and nondeductible expense to recognize accumulated foreign exchange losses on the sale of the Chile equity method investment and lease exit charges related to closed facilities, as well as other costs to maintain and exit closed facilities.
|
(3)
|
Pre-tax non-cash goodwill impairment charges of $808.3 million ($542.4 million, net of tax) were recorded during the year ended December 31, 2015, of which $778.3 million related to the United States Print and Related Services segment and $30.0 million related to the International segment.
|
(4)
|
Interest expense decreased $11.2 million ($6.7 million, net of tax) during the year ended December 31, 2016, to $77.2 million. This change was due to lower average debt levels in the year ended December 31, 2016, as compared to the year ended December 31, 2015.
|
(5)
|
A non-recurring $14.1 million gain on debt extinguishment ($8.5 million, net of tax) was recognized during the year ended December 31, 2016, primarily from the repurchase of $56.5 million aggregate principal amount of Senior Unsecured Notes.
|
(6)
|
The $28.8 million benefit of income taxes as calculated in the following table is primarily due to the following: (1) $13.3 million of increased taxable income in foreign jurisdictions where the Company was able to use operating loss carryforwards; (2) $8.0 million increased domestic deductions and (3) $4.7 million from increased state deferred tax assets. See Note 14, "Income Taxes," to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for further information on income taxes.
|
|
Year Ended December 31,
|
|
|
||||||||
|
2016
|
|
2015
|
|
$ Change
|
||||||
Earnings (loss) before income taxes and equity in loss of unconsolidated entities
|
$
|
59.3
|
|
|
$
|
(918.4
|
)
|
|
$
|
977.7
|
|
Goodwill impairment charges
|
—
|
|
|
808.3
|
|
|
(808.3
|
)
|
|||
Nondeductible equity method investment impairment
|
—
|
|
|
16.7
|
|
|
(16.7
|
)
|
|||
Nondeductible foreign exchange losses on the sale of investment
|
—
|
|
|
6.0
|
|
|
(6.0
|
)
|
|||
Income (loss) subject to income taxes
|
59.3
|
|
|
(87.4
|
)
|
|
146.7
|
|
|||
40% normalized tax rate
|
40.0
|
%
|
|
40.0
|
%
|
|
40.0
|
%
|
|||
Income tax expense (benefit) at 40% normalized tax rate
|
23.7
|
|
|
(35.0
|
)
|
|
58.7
|
|
|||
|
|
|
|
|
|
||||||
Plus: tax benefit related to goodwill impairment charges (Note 14)
|
—
|
|
|
(265.9
|
)
|
|
265.9
|
|
|||
|
23.7
|
|
|
(300.9
|
)
|
|
324.6
|
|
|||
|
|
|
|
|
|
||||||
Less: Income tax expense (benefit) from the consolidated statements of operations
|
13.0
|
|
|
(282.8
|
)
|
|
295.8
|
|
|||
Impact of income taxes
|
$
|
10.7
|
|
|
$
|
(18.1
|
)
|
|
$
|
28.8
|
|
(7)
|
The decrease in net loss attributable to investments in unconsolidated entities, net of tax, of $4.9 million during the year ended December 31, 2016, was primarily related to a $4.1 million decrease in losses from unconsolidated entities at the Company's investment in Plural, the Company's Brazilian joint venture, and a $0.8 million decrease in losses at the Company's investment in Chile that was sold on July 31, 2015.
|
(8)
|
Operating income (loss), excluding restructuring, impairment and transaction-related charges and goodwill impairment charges, increased $59.8 million ($35.9 million, net of tax) primarily due to the following: (1) lower costs primarily associated with production cost reduction initiatives; (2) a $48.2 million decrease in depreciation and amortization expense; (3) the 2016 collection of a $10.4 million vendor receivable that was written-off in the fourth quarter of 2015 due to collectability concerns; and (4) the additional earnings on sales generated from acquisitions. These impacts were partially offset by the following: (1) lower print volume and pricing in product lines owned more than a year; (2) a $6.3 million increase in selling, general and administrative expenses primarily due to increased incentive compensation and legal expenses; and (3) a $4.0 million vacation expense reduction in 2015 due to a vacation policy change that did not repeat in 2016.
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||||||||
|
2016
|
|
2015
|
|
|
|
|
|||||||||||||
|
(dollars in millions)
|
|
|
|||||||||||||||||
|
Amount
|
|
% of Net
Sales
|
|
Amount
|
|
% of Net
Sales
|
|
$ Change
|
|
%
Change
|
|||||||||
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Products
|
$
|
3,717.1
|
|
|
85.9
|
%
|
|
$
|
3,949.7
|
|
|
85.9
|
%
|
|
$
|
(232.6
|
)
|
|
(5.9
|
)%
|
Services
|
612.4
|
|
|
14.1
|
%
|
|
647.4
|
|
|
14.1
|
%
|
|
(35.0
|
)
|
|
(5.4
|
)%
|
|||
Total net sales
|
4,329.5
|
|
|
100.0
|
%
|
|
4,597.1
|
|
|
100.0
|
%
|
|
(267.6
|
)
|
|
(5.8
|
)%
|
|||
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Products
|
2,971.0
|
|
|
68.6
|
%
|
|
3,213.5
|
|
|
69.9
|
%
|
|
(242.5
|
)
|
|
(7.5
|
)%
|
|||
Services
|
423.8
|
|
|
9.8
|
%
|
|
466.8
|
|
|
10.2
|
%
|
|
(43.0
|
)
|
|
(9.2
|
)%
|
|||
Total cost of sales
|
3,394.8
|
|
|
78.4
|
%
|
|
3,680.3
|
|
|
80.1
|
%
|
|
(285.5
|
)
|
|
(7.8
|
)%
|
|||
Selling, general & administrative expenses
|
454.6
|
|
|
10.5
|
%
|
|
448.3
|
|
|
9.7
|
%
|
|
6.3
|
|
|
1.4
|
%
|
|||
Depreciation and amortization
|
277.1
|
|
|
6.4
|
%
|
|
325.3
|
|
|
7.1
|
%
|
|
(48.2
|
)
|
|
(14.8
|
)%
|
|||
Restructuring, impairment and transaction-related charges
|
80.6
|
|
|
1.9
|
%
|
|
164.9
|
|
|
3.6
|
%
|
|
(84.3
|
)
|
|
(51.1
|
)%
|
|||
Goodwill impairment
|
—
|
|
|
—
|
%
|
|
808.3
|
|
|
17.6
|
%
|
|
(808.3
|
)
|
|
nm
|
|
|||
Total operating expenses
|
4,207.1
|
|
|
97.2
|
%
|
|
5,427.1
|
|
|
118.1
|
%
|
|
(1,220.0
|
)
|
|
(22.5
|
)%
|
|||
Operating income (loss)
|
$
|
122.4
|
|
|
2.8
|
%
|
|
$
|
(830.0
|
)
|
|
(18.1
|
)%
|
|
$
|
952.4
|
|
|
nm
|
|
|
Year Ended December 31,
|
||||||||||||
|
2016
|
|
2015
|
||||||||||
|
Amount
|
|
% of Net Sales
|
|
Amount
|
|
% of Net Sales
|
||||||
|
(dollars in millions)
|
||||||||||||
EBITDA and EBITDA margin
|
$
|
412.2
|
|
|
9.5
|
%
|
|
$
|
(511.0
|
)
|
|
(11.1
|
)%
|
|
Year Ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(dollars in millions)
|
||||||
Net earnings (loss)
(1)
|
$
|
44.9
|
|
|
$
|
(641.9
|
)
|
Interest expense
|
77.2
|
|
|
88.4
|
|
||
Income tax expense (benefit)
|
13.0
|
|
|
(282.8
|
)
|
||
Depreciation and amortization
|
277.1
|
|
|
325.3
|
|
||
EBITDA
|
$
|
412.2
|
|
|
$
|
(511.0
|
)
|
(1)
|
Net earnings (loss) included the following:
|
a.
|
Restructuring, impairment and transaction-related charges of
$80.6 million
and
$164.9 million
for the years ended
December 31, 2016
and
2015
, respectively;
|
b.
|
A non-cash goodwill impairment charge of $808.3 million for the year ended December 31, 2015;
|
c.
|
Gain on debt extinguishment of $14.1 million for the year ended December 31, 2016; and
|
d.
|
Equity in loss of unconsolidated entities of
$1.4 million
and
$6.3 million
for the years ended
December 31, 2016
and
2015
, respectively.
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
|
|
|
|||||||
|
(dollars in millions)
|
|
|
|||||||||||
|
Amount
|
|
Amount
|
|
$ Change
|
|
% Change
|
|||||||
Net sales:
|
|
|
|
|
|
|
|
|||||||
Products
|
$
|
3,335.1
|
|
|
$
|
3,580.1
|
|
|
$
|
(245.0
|
)
|
|
(6.8
|
)%
|
Services
|
591.9
|
|
|
628.5
|
|
|
(36.6
|
)
|
|
(5.8
|
)%
|
|||
Operating income (loss) (including restructuring, impairment and transaction-related charges and goodwill impairment)
|
186.1
|
|
|
(706.1
|
)
|
|
892.2
|
|
|
nm
|
|
|||
Operating margin
|
4.7
|
%
|
|
(16.8
|
)%
|
|
N/A
|
|
|
N/A
|
|
|||
Restructuring, impairment and transaction-related charges
|
$
|
59.3
|
|
|
$
|
101.4
|
|
|
$
|
(42.1
|
)
|
|
(41.5
|
)%
|
Goodwill impairment
|
—
|
|
|
778.3
|
|
|
(778.3
|
)
|
|
nm
|
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
|
|
|
|||||||
|
(dollars in millions)
|
|
|
|||||||||||
|
Amount
|
|
Amount
|
|
$ Change
|
|
% Change
|
|||||||
Net sales:
|
|
|
|
|
|
|
|
|||||||
Products
|
$
|
382.0
|
|
|
$
|
369.6
|
|
|
$
|
12.4
|
|
|
3.4
|
%
|
Services
|
20.5
|
|
|
18.9
|
|
|
1.6
|
|
|
8.5
|
%
|
|||
Operating income (loss) (including restructuring, impairment and transaction-related charges and goodwill impairment)
|
13.5
|
|
|
(63.4
|
)
|
|
76.9
|
|
|
nm
|
|
|||
Operating margin
|
3.4
|
%
|
|
(16.3
|
)%
|
|
N/A
|
|
|
N/A
|
|
|||
Restructuring, impairment and transaction-related charges (income)
|
$
|
(1.1
|
)
|
|
$
|
38.8
|
|
|
$
|
(39.9
|
)
|
|
(102.8
|
)%
|
Goodwill impairment
|
—
|
|
|
30.0
|
|
|
(30.0
|
)
|
|
nm
|
|
|||
Equity in loss of unconsolidated entities
|
1.4
|
|
|
6.3
|
|
|
(4.9
|
)
|
|
(77.8
|
)%
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
|
|
|
|||||||
|
(dollars in millions)
|
|
|
|||||||||||
|
Amount
|
|
Amount
|
|
$ Change
|
|
% Change
|
|||||||
Operating expenses (including restructuring, impairment and transaction-related charges)
|
$
|
77.2
|
|
|
$
|
60.5
|
|
|
$
|
16.7
|
|
|
27.6
|
%
|
Restructuring, impairment and transaction-related charges
|
22.4
|
|
|
24.7
|
|
|
(2.3
|
)
|
|
(9.3
|
)%
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(dollars in millions)
|
||||||||||
Net cash provided by operating activities
|
$
|
344.0
|
|
|
$
|
352.5
|
|
|
$
|
348.1
|
|
Less: purchases of property, plant and equipment
|
(85.9
|
)
|
|
(106.1
|
)
|
|
(133.0
|
)
|
|||
Free Cash Flow
|
$
|
258.1
|
|
|
$
|
246.4
|
|
|
$
|
215.1
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||
|
(dollars in millions)
|
||||||
Total debt and capital lease obligations on the consolidated balance sheets
|
$
|
964.8
|
|
|
$
|
1,130.8
|
|
|
|
|
|
||||
Divided by: EBITDA as adjusted for purposes of calculating the Debt Leverage Ratio
|
$
|
458.6
|
|
|
$
|
480.1
|
|
|
|
|
|
||||
Debt Leverage Ratio
(1)
|
2.10
|
x
|
|
2.36
|
x
|
(1)
|
The Company had $64 million in cash at December 31, 2017, $54 million higher than the Company's typical year-end cash balance of approximately $10 million. The Debt Leverage Ratio would have been 1.99x if the $54 million of excess cash was used to further pay down debt at December 31, 2017.
|
|
Year Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(dollars in millions)
|
||||||
Net earnings
|
$
|
107.2
|
|
|
$
|
44.9
|
|
Interest expense
|
71.1
|
|
|
77.2
|
|
||
Income tax (benefit) expense
|
(16.0
|
)
|
|
13.0
|
|
||
Depreciation and amortization
|
232.5
|
|
|
277.1
|
|
||
EBITDA
|
$
|
394.8
|
|
|
$
|
412.2
|
|
Restructuring, impairment and transaction-related charges
|
61.2
|
|
|
80.6
|
|
||
Loss (gain) on debt extinguishment
|
2.6
|
|
|
(14.1
|
)
|
||
Equity in loss of unconsolidated entities
|
—
|
|
|
1.4
|
|
||
EBITDA as adjusted for purposes of calculating the Debt Leverage Ratio
|
$
|
458.6
|
|
|
$
|
480.1
|
|
•
|
Senior Secured Credit Facility:
|
◦
|
$725.0 million
revolving credit facility (
no
outstanding balance as of
December 31, 2017
);
|
◦
|
$375.0 million
Term Loan A (
$281.3 million
outstanding as of
December 31, 2017
); and
|
◦
|
$300.0 million
Term Loan B (
$279.1 million
outstanding as of
December 31, 2017
);
|
•
|
Senior Unsecured Notes (
$243.5 million
outstanding as of
December 31, 2017
); and
|
•
|
Master Note and Security Agreement (
$123.6 million
outstanding as of
December 31, 2017
).
|
•
|
Total Leverage Ratio.
On a rolling twelve-month basis, the total leverage ratio, defined as total consolidated debt to consolidated EBITDA, shall not exceed
3.75
to 1.00 (for the twelve months ended
December 31, 2017
, the Company's total leverage ratio was
2.06
to 1.00).
|
•
|
Senior Secured Leverage Ratio.
On a rolling twelve-month basis, the senior secured leverage ratio, defined as senior secured debt to consolidated EBITDA, shall not exceed
3.50
to 1.00 (for the twelve months ended
December 31, 2017
, the Company's senior secured leverage ratio was
1.55
to 1.00).
|
•
|
Minimum Interest Coverage Ratio.
On a rolling twelve-month basis, the minimum interest coverage ratio, defined as consolidated EBITDA to consolidated cash interest expense, shall not be less than
3.50
to 1.00 (for the twelve months ended
December 31, 2017
, the Company's minimum interest coverage ratio was
7.03
to 1.00).
|
•
|
If the Company's total leverage ratio is greater than
3.00
to 1.00 (as defined in the Senior Secured Credit Facility), the Company is prohibited from making greater than
$120.0 million
of annual dividend payments, capital stock repurchases and certain other payments. If the total leverage ratio is less than
3.00
to 1.00, there are no such restrictions.
|
•
|
If the Company's senior secured leverage ratio is greater than
3.00
to 1.00 or the Company's total leverage ratio is greater than
3.50
to 1.00 (these ratios as defined in the Senior Secured Credit Facility), the Company is prohibited from voluntarily prepaying any of the Senior Unsecured Notes and from voluntarily prepaying any other unsecured or subordinated indebtedness, with certain exceptions (including any mandatory prepayments on the Senior Unsecured Notes or any other unsecured or subordinated debt). If
|
(1)
|
Achieved an actual return on plan assets of
14.3%
during the year ended
December 31, 2017
, which exceeded the expected return on plan assets assumption of
6.5%
.
|
(2)
|
Made payments totaling
$24.0 million
to the MEPPs.
|
(3)
|
Facilitated lump-sum pension payments to terminated vested participants. During 2017, the Company settled
$23.3 million
of pension liabilities for
$21.4 million
of pension payouts. Payments to eligible participants who elected to receive a lump-sum pension payment were funded from existing pension plan assets and constituted a settlement of the Company's pension liabilities with respect to these participants.
|
|
Payments Due by Period
|
||||||||||||||||||||||||||
|
Total
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
||||||||||||||
Debt obligations
(1)
|
$
|
1,145.8
|
|
|
$
|
93.1
|
|
|
$
|
80.9
|
|
|
$
|
114.2
|
|
|
$
|
571.6
|
|
|
$
|
259.9
|
|
|
$
|
26.1
|
|
Operating lease obligations
|
154.0
|
|
|
43.1
|
|
|
34.5
|
|
|
26.2
|
|
|
14.8
|
|
|
10.4
|
|
|
25.0
|
|
|||||||
Pension benefits
(2)
|
68.2
|
|
|
8.5
|
|
|
17.5
|
|
|
13.0
|
|
|
13.5
|
|
|
15.7
|
|
|
—
|
|
|||||||
Capital lease obligations
(3)
|
21.2
|
|
|
6.5
|
|
|
5.0
|
|
|
4.1
|
|
|
3.6
|
|
|
1.6
|
|
|
0.4
|
|
|||||||
Purchase obligations
(4)
|
32.5
|
|
|
32.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total
(5)(6)
|
$
|
1,421.7
|
|
|
$
|
183.7
|
|
|
$
|
137.9
|
|
|
$
|
157.5
|
|
|
$
|
603.5
|
|
|
$
|
287.6
|
|
|
$
|
51.5
|
|
(1)
|
During 2017, the Company paid in advance the full amount of required amortization payments on its Term Loan A, totaling $72.7 million for the years ended December 31, 2018 and 2019, and through the first quarter ended March 31, 2020. The Company also paid in advance the full amount of required amortization payments on its Term Loan B, totaling $9.0 million for the years ended December 31, 2018, 2019 and 2020. Debt obligations include
$188.6 million
for anticipated future interest payments, and exclude
$10.3 million
and
$1.4 million
for future amortization of debt issuance costs and original issue discount, respectively. With respect to the variable interest rate portions of the debt, the interest amounts were calculated by applying the
December 31, 2017
weighted average interest rate to determine the value of future interest payments. For the Master Note and Security Agreement, the weighted average interest rate of the notes was applied to the average principal balance outstanding for each time period. Amounts included in "Thereafter" include principal payments and estimated interest expense through
April 2031
.
|
(2)
|
For the pension benefits, contributions and benefit payments to be funded from Company assets included in the table have been actuarially estimated over a five year period. While benefit payments under these benefit plans are expected to continue beyond
2022
, the Company believes that an estimate beyond this period is unreasonable. The contractual obligations table above does not include a
$28.2 million
estimated withdrawal liability for the United States World Color Press MEPPs due to the uncertainty with the amount and timing of GCIU potential withdrawal liability payments. During 2018, the Company is scheduled to make minimum payments of
$8.8 million
for the MEPPs, pending no settlement or conclusion to the litigation with the GCIU trustees. See
Note 16
, "
Employee Retirement Plans
," to the consolidated financial statements in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K for further discussion of the MEPPs withdrawal.
|
(3)
|
Capital lease obligations include
$1.9 million
for anticipated future interest payments.
|
(4)
|
Purchase obligations consist primarily of
$22.3 million
in firm commitments to purchase press and finishing equipment, as well as
$10.2 million
of other purchase obligations.
|
(5)
|
The contractual obligations table above does not include reserves for uncertain tax positions recorded in accordance with the accounting guidance on uncertainties in income taxes. The Company has taken tax positions for which the ultimate amount and the year(s) any necessary payments will be made that pertain to those tax positions is uncertain. The reserve for uncertain tax positions prior to interest and penalties was
$21.6 million
as of
December 31, 2017
, of which
$14.6 million
was included in other long-term liabilities,
$6.2 million
was included in deferred income taxes and
$0.8 million
was included in accrued liabilities in the consolidated balance sheets. The Company has also recorded reserves for interest and penalties related to uncertain tax positions of
$3.3 million
and
$0.5 million
, respectively, as of
December 31, 2017
.
|
(6)
|
The contractual obligations table above does not include the share repurchase program as no repurchases are required under the program. See the "Share Repurchase Program" section above for further discussion, including the maximum potential cash payments under the program.
|
|
1.0%
Increase
|
|
1.0%
Decrease
|
||||
|
(in millions)
|
||||||
Projected benefit obligation
|
$
|
(47.8
|
)
|
|
$
|
57.1
|
|
|
0.25%
Increase
|
|
0.25%
Decrease
|
||||
|
(in millions)
|
||||||
Pension income
|
$
|
1.1
|
|
|
$
|
(1.1
|
)
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
UNAUDITED INTERIM FINANCIAL INFORMATION
|
|||||||||||||||||||
(In millions, except per share data)
|
|||||||||||||||||||
|
Year Ended December 31,
|
||||||||||||||||||
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
|
Full Year
|
||||||||||
2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
998.6
|
|
|
$
|
963.2
|
|
|
$
|
1,005.4
|
|
|
$
|
1,164.2
|
|
|
$
|
4,131.4
|
|
Operating income
(1)
|
53.6
|
|
|
32.7
|
|
|
49.4
|
|
|
29.2
|
|
|
164.9
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net earnings
|
25.4
|
|
|
6.7
|
|
|
19.8
|
|
|
55.3
|
|
|
107.2
|
|
|||||
Earnings per share
|
0.49
|
|
|
0.13
|
|
|
0.38
|
|
|
1.06
|
|
|
2.07
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Closing stock price high
|
27.66
|
|
|
27.98
|
|
|
23.27
|
|
|
23.98
|
|
|
27.98
|
|
|||||
Closing stock price low
|
22.10
|
|
|
21.91
|
|
|
18.35
|
|
|
20.92
|
|
|
18.35
|
|
|||||
Closing stock price at quarter-end
|
25.24
|
|
|
22.92
|
|
|
22.61
|
|
|
22.60
|
|
|
22.60
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
2016
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
1,042.5
|
|
|
$
|
1,032.3
|
|
|
$
|
1,056.4
|
|
|
$
|
1,198.3
|
|
|
$
|
4,329.5
|
|
Operating income
|
13.0
|
|
|
13.3
|
|
|
33.8
|
|
|
62.3
|
|
|
122.4
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net earnings (loss)
|
3.8
|
|
|
(7.7
|
)
|
|
11.3
|
|
|
37.5
|
|
|
44.9
|
|
|||||
Earnings (loss) per share
|
0.08
|
|
|
(0.16
|
)
|
|
0.22
|
|
|
0.73
|
|
|
0.90
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Closing stock price high
|
13.61
|
|
|
23.29
|
|
|
29.18
|
|
|
28.13
|
|
|
29.18
|
|
|||||
Closing stock price low
|
7.85
|
|
|
11.93
|
|
|
23.07
|
|
|
23.26
|
|
|
7.85
|
|
|||||
Closing stock price at quarter-end
|
12.94
|
|
|
23.29
|
|
|
26.72
|
|
|
26.88
|
|
|
26.88
|
|
(1)
|
Operating income increased $40.6 million during the three months ended March 31,
2017
, as compared to the three months ended March 31,
2016
, primarily due to the following: (1) a $19.7 million decrease in restructuring, impairment and transaction-related charges; (2) a $19.4 million decrease in depreciation and amortization expense; (3) a $15.4 million vacation reserve reduction from an employee vacation policy change; and (4) $6.3 million in lower legal expenses. These impacts were partially offset by lower print volume and pricing due to ongoing industry pressures and a $10.4 million benefit in 2016 that did not repeat in 2017 related to the collection of a previously written-off vendor receivable.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net sales
|
|
|
|
|
|
||||||
Products
|
$
|
3,529.0
|
|
|
$
|
3,717.1
|
|
|
$
|
3,949.7
|
|
Services
|
602.4
|
|
|
612.4
|
|
|
647.4
|
|
|||
Total net sales
|
4,131.4
|
|
|
4,329.5
|
|
|
4,597.1
|
|
|||
Cost of sales
|
|
|
|
|
|
||||||
Products
|
2,827.3
|
|
|
2,971.0
|
|
|
3,213.5
|
|
|||
Services
|
432.1
|
|
|
423.8
|
|
|
466.8
|
|
|||
Total cost of sales
|
3,259.4
|
|
|
3,394.8
|
|
|
3,680.3
|
|
|||
Operating expenses
|
|
|
|
|
|
||||||
Selling, general and administrative expenses
|
413.4
|
|
|
454.6
|
|
|
448.3
|
|
|||
Depreciation and amortization
|
232.5
|
|
|
277.1
|
|
|
325.3
|
|
|||
Restructuring, impairment and transaction-related charges
|
61.2
|
|
|
80.6
|
|
|
164.9
|
|
|||
Goodwill impairment
|
—
|
|
|
—
|
|
|
808.3
|
|
|||
Total operating expenses
|
3,966.5
|
|
|
4,207.1
|
|
|
5,427.1
|
|
|||
Operating income (loss)
|
$
|
164.9
|
|
|
$
|
122.4
|
|
|
$
|
(830.0
|
)
|
Interest expense
|
71.1
|
|
|
77.2
|
|
|
88.4
|
|
|||
Loss (gain) on debt extinguishment
|
2.6
|
|
|
(14.1
|
)
|
|
—
|
|
|||
Earnings (loss) before income taxes and equity in loss of unconsolidated entities
|
91.2
|
|
|
59.3
|
|
|
(918.4
|
)
|
|||
Income tax (benefit) expense
|
(16.0
|
)
|
|
13.0
|
|
|
(282.8
|
)
|
|||
Earnings (loss) before equity in loss of unconsolidated entities
|
107.2
|
|
|
46.3
|
|
|
(635.6
|
)
|
|||
Equity in loss of unconsolidated entities
|
—
|
|
|
1.4
|
|
|
6.3
|
|
|||
Net earnings (loss)
|
$
|
107.2
|
|
|
$
|
44.9
|
|
|
$
|
(641.9
|
)
|
|
|
|
|
|
|
||||||
Earnings (loss) per share
|
|
|
|
|
|
||||||
Basic
|
$
|
2.16
|
|
|
$
|
0.94
|
|
|
$
|
(13.40
|
)
|
Diluted
|
$
|
2.07
|
|
|
$
|
0.90
|
|
|
$
|
(13.40
|
)
|
|
|
|
|
|
|
||||||
Weighted average number of common shares outstanding
|
|
|
|
|
|
||||||
Basic
|
49.6
|
|
|
47.9
|
|
|
47.9
|
|
|||
Diluted
|
51.8
|
|
|
49.8
|
|
|
47.9
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net earnings (loss)
|
$
|
107.2
|
|
|
$
|
44.9
|
|
|
$
|
(641.9
|
)
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss)
|
|
|
|
|
|
||||||
Translation adjustments
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
14.8
|
|
|
(15.5
|
)
|
|
(63.4
|
)
|
|||
Translation of long-term loans to foreign subsidiaries
|
(2.0
|
)
|
|
11.6
|
|
|
17.5
|
|
|||
Revaluation loss on the sale of a business
|
2.1
|
|
|
—
|
|
|
—
|
|
|||
Revaluation loss on the sale of an equity method investment
|
—
|
|
|
—
|
|
|
7.7
|
|
|||
Total translation adjustments
|
14.9
|
|
|
(3.9
|
)
|
|
(38.2
|
)
|
|||
|
|
|
|
|
|
||||||
Interest rate swap adjustments
|
2.1
|
|
|
—
|
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
Pension benefit plan adjustments
|
|
|
|
|
|
||||||
Net gain (loss) arising during period
|
18.7
|
|
|
(0.8
|
)
|
|
3.7
|
|
|||
Settlement charge on pension benefit plans included in net earnings (loss)
|
0.8
|
|
|
7.0
|
|
|
—
|
|
|||
Total pension benefit plan adjustments
|
19.5
|
|
|
6.2
|
|
|
3.7
|
|
|||
|
|
|
|
|
|
||||||
Other comprehensive income (loss), before tax
|
36.5
|
|
|
2.3
|
|
|
(34.5
|
)
|
|||
|
|
|
|
|
|
||||||
Income tax impact related to items of other comprehensive income (loss)
|
(8.3
|
)
|
|
(2.4
|
)
|
|
(1.4
|
)
|
|||
|
|
|
|
|
|
||||||
Other comprehensive income (loss), net of tax
|
28.2
|
|
|
(0.1
|
)
|
|
(35.9
|
)
|
|||
|
|
|
|
|
|
||||||
Total comprehensive income (loss)
|
$
|
135.4
|
|
|
$
|
44.8
|
|
|
$
|
(677.8
|
)
|
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
ASSETS
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
64.3
|
|
|
$
|
9.0
|
|
Receivables, less allowances for doubtful accounts of $28.9 at December 31, 2017, and $53.5 at December 31, 2016
|
|
552.5
|
|
|
563.6
|
|
||
Inventories
|
|
246.5
|
|
|
265.4
|
|
||
Prepaid expenses and other current assets
|
|
45.1
|
|
|
54.4
|
|
||
Restricted cash
|
|
0.1
|
|
|
10.2
|
|
||
Total current assets
|
|
908.5
|
|
|
902.6
|
|
||
|
|
|
|
|
||||
Property, plant and equipment—net
|
|
1,377.6
|
|
|
1,519.9
|
|
||
Intangible assets—net
|
|
43.4
|
|
|
59.7
|
|
||
Equity method investment in unconsolidated entity
|
|
3.6
|
|
|
3.6
|
|
||
Other long-term assets
|
|
119.3
|
|
|
84.3
|
|
||
Total assets
|
|
$
|
2,452.4
|
|
|
$
|
2,570.1
|
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
||||
Accounts payable
|
|
$
|
381.6
|
|
|
$
|
323.5
|
|
Accrued liabilities
|
|
316.7
|
|
|
359.0
|
|
||
Short-term debt and current portion of long-term debt
|
|
42.0
|
|
|
84.7
|
|
||
Current portion of capital lease obligations
|
|
5.6
|
|
|
7.4
|
|
||
Total current liabilities
|
|
745.9
|
|
|
774.6
|
|
||
|
|
|
|
|
||||
Long-term debt
|
|
903.5
|
|
|
1,019.8
|
|
||
Capital lease obligations
|
|
13.7
|
|
|
18.9
|
|
||
Deferred income taxes
|
|
41.9
|
|
|
35.3
|
|
||
Other long-term liabilities
|
|
225.0
|
|
|
280.0
|
|
||
Total liabilities
|
|
1,930.0
|
|
|
2,128.6
|
|
||
|
|
|
|
|
||||
Commitments and contingencies (Note 10)
|
|
|
|
|
|
|
||
|
|
|
|
|
||||
Shareholders' equity (Note 19)
|
|
|
|
|
||||
Preferred stock, $0.01 par value; Authorized: 0.5 million shares; Issued: None
|
|
—
|
|
|
—
|
|
||
Common stock, Class A, $0.025 par value; Authorized: 80.0 million shares; Issued: 40.0 million shares at December 31, 2017 and 2016
|
|
1.0
|
|
|
1.0
|
|
||
Common stock, Class B, $0.025 par value; Authorized: 80.0 million shares; Issued: 13.8 million shares at December 31, 2017, and 15.0 million shares at December 31, 2016
|
|
0.4
|
|
|
0.4
|
|
||
Common stock, Class C, $0.025 par value; Authorized: 20.0 million shares; Issued: 0.5 million shares at December 31, 2017 and 2016
|
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
|
861.1
|
|
|
912.4
|
|
||
Treasury stock, at cost, 2.3 million shares at December 31, 2017, and 4.1 million shares at December 31, 2016
|
|
(52.8
|
)
|
|
(113.3
|
)
|
||
Accumulated deficit
|
|
(162.9
|
)
|
|
(206.4
|
)
|
||
Accumulated other comprehensive loss
|
|
(124.4
|
)
|
|
(152.6
|
)
|
||
Total shareholders' equity
|
|
522.4
|
|
|
441.5
|
|
||
Total liabilities and shareholders' equity
|
|
$
|
2,452.4
|
|
|
$
|
2,570.1
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
OPERATING ACTIVITIES
|
|
|
|
|
|
||||||
Net earnings (loss)
|
$
|
107.2
|
|
|
$
|
44.9
|
|
|
$
|
(641.9
|
)
|
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
232.5
|
|
|
277.1
|
|
|
325.3
|
|
|||
Impairment charges
|
12.0
|
|
|
26.8
|
|
|
95.3
|
|
|||
Goodwill impairment
|
—
|
|
|
—
|
|
|
808.3
|
|
|||
Amortization of debt issuance costs and original issue discount
|
3.5
|
|
|
4.2
|
|
|
4.4
|
|
|||
Loss (gain) on debt extinguishment
|
2.6
|
|
|
(14.1
|
)
|
|
—
|
|
|||
Stock-based compensation
|
16.4
|
|
|
15.2
|
|
|
7.2
|
|
|||
Gain on the sale or disposal of property, plant and equipment
|
(6.9
|
)
|
|
(9.0
|
)
|
|
(4.1
|
)
|
|||
Loss on the sale of a business
|
7.7
|
|
|
—
|
|
|
—
|
|
|||
Gain from a property insurance claim
|
(5.0
|
)
|
|
—
|
|
|
—
|
|
|||
Foreign exchange losses on sale of investment
|
—
|
|
|
—
|
|
|
6.0
|
|
|||
Settlement loss on pension benefit plans
|
0.8
|
|
|
7.0
|
|
|
—
|
|
|||
Deferred income taxes
|
(22.5
|
)
|
|
(26.6
|
)
|
|
(292.5
|
)
|
|||
Equity in loss of unconsolidated entities
|
—
|
|
|
1.4
|
|
|
6.3
|
|
|||
Changes in operating assets and liabilities—net of acquisitions:
|
|
|
|
|
|
||||||
Receivables
|
8.7
|
|
|
84.8
|
|
|
109.6
|
|
|||
Inventories
|
13.1
|
|
|
12.7
|
|
|
24.6
|
|
|||
Prepaid expenses and other current assets
|
3.8
|
|
|
(18.0
|
)
|
|
4.0
|
|
|||
Accounts payable and accrued liabilities
|
9.9
|
|
|
(16.1
|
)
|
|
(60.5
|
)
|
|||
Other
|
(39.8
|
)
|
|
(37.8
|
)
|
|
(43.9
|
)
|
|||
Net cash provided by operating activities
|
344.0
|
|
|
352.5
|
|
|
348.1
|
|
|||
|
|
|
|
|
|
||||||
INVESTING ACTIVITIES
|
|
|
|
|
|
||||||
Purchases of property, plant and equipment
|
(85.9
|
)
|
|
(106.1
|
)
|
|
(133.0
|
)
|
|||
Cost investment in unconsolidated entities
|
—
|
|
|
(9.9
|
)
|
|
(1.2
|
)
|
|||
Proceeds from the sale of property, plant and equipment
|
23.9
|
|
|
25.9
|
|
|
29.2
|
|
|||
Proceeds from the sale of a business
|
14.1
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from property insurance claims
|
8.0
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from the sale of investments
|
—
|
|
|
1.3
|
|
|
14.0
|
|
|||
Transfers from restricted cash
|
9.9
|
|
|
4.4
|
|
|
17.7
|
|
|||
Loan to an unconsolidated entity
|
(7.3
|
)
|
|
—
|
|
|
—
|
|
|||
Acquisition of businesses—net of cash acquired (Note 2)
|
—
|
|
|
—
|
|
|
(143.4
|
)
|
|||
Net cash used in investing activities
|
(37.3
|
)
|
|
(84.4
|
)
|
|
(216.7
|
)
|
|||
|
|
|
|
|
|
||||||
FINANCING ACTIVITIES
|
|
|
|
|
|
||||||
Proceeds from issuance of long-term debt
|
375.0
|
|
|
19.7
|
|
|
—
|
|
|||
Payments of long-term debt
|
(522.9
|
)
|
|
(192.0
|
)
|
|
(90.9
|
)
|
|||
Payments of capital lease obligations
|
(7.6
|
)
|
|
(9.5
|
)
|
|
(5.0
|
)
|
|||
Borrowings on revolving credit facilities
|
718.5
|
|
|
871.9
|
|
|
1,462.5
|
|
|||
Payments on revolving credit facilities
|
(736.0
|
)
|
|
(918.0
|
)
|
|
(1,435.5
|
)
|
|||
Payments of debt issuance costs and financing fees
|
(4.7
|
)
|
|
(0.1
|
)
|
|
—
|
|
|||
Purchases of treasury stock
|
(3.8
|
)
|
|
(8.8
|
)
|
|
—
|
|
|||
Proceeds from stock options exercised
|
2.6
|
|
|
30.3
|
|
|
2.2
|
|
|||
Equity awards redeemed to pay employees' tax obligations
|
(6.0
|
)
|
|
(1.4
|
)
|
|
(1.6
|
)
|
|||
Payment of cash dividends
|
(62.5
|
)
|
|
(61.1
|
)
|
|
(62.3
|
)
|
|||
Other financing activities
|
(4.3
|
)
|
|
(0.3
|
)
|
|
2.7
|
|
|||
Net cash used in financing activities
|
(251.7
|
)
|
|
(269.3
|
)
|
|
(127.9
|
)
|
|||
Effect of exchange rates on cash and cash equivalents
|
0.3
|
|
|
(0.6
|
)
|
|
(2.3
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
55.3
|
|
|
(1.8
|
)
|
|
1.2
|
|
|||
Cash and cash equivalents at beginning of year
|
9.0
|
|
|
10.8
|
|
|
9.6
|
|
|||
Cash and cash equivalents at end of year
|
$
|
64.3
|
|
|
$
|
9.0
|
|
|
$
|
10.8
|
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Treasury Stock
|
|
Retained
Earnings
(Accumulated
Deficit)
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Shareholders'
Equity
|
||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
Shares
|
|
Amount
|
|
|
|
||||||||||||||||||
Balance at January 1, 2015
|
|
55.5
|
|
|
$
|
1.4
|
|
|
$
|
971.3
|
|
|
(6.6
|
)
|
|
$
|
(218.8
|
)
|
|
$
|
515.2
|
|
|
$
|
(116.6
|
)
|
|
$
|
1,152.5
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(641.9
|
)
|
|
—
|
|
|
(641.9
|
)
|
||||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38.2
|
)
|
|
(38.2
|
)
|
||||||
Pension benefit plan liability adjustments, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.3
|
|
|
2.3
|
|
||||||
Cash dividends declared ($1.20 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(61.4
|
)
|
|
—
|
|
|
(61.4
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
7.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7.2
|
|
||||||
Stock options exercised
|
|
—
|
|
|
—
|
|
|
(3.0
|
)
|
|
0.2
|
|
|
5.2
|
|
|
—
|
|
|
—
|
|
|
2.2
|
|
||||||
Issuance of restricted stock and deferred stock units
|
|
—
|
|
|
—
|
|
|
(21.2
|
)
|
|
0.6
|
|
|
21.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Tax benefit on equity award activity
|
|
—
|
|
|
—
|
|
|
2.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.8
|
|
||||||
Equity awards vested
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Equity awards redeemed to pay employees' tax obligations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
(1.6
|
)
|
|
—
|
|
|
—
|
|
|
(1.6
|
)
|
||||||
Balance at December 31, 2015
|
|
55.5
|
|
|
$
|
1.4
|
|
|
$
|
956.7
|
|
|
(5.9
|
)
|
|
$
|
(193.6
|
)
|
|
$
|
(188.1
|
)
|
|
$
|
(152.5
|
)
|
|
$
|
423.9
|
|
Net earnings
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44.9
|
|
|
—
|
|
|
44.9
|
|
||||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.9
|
)
|
|
(3.9
|
)
|
||||||
Pension benefit plan liability adjustments, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.8
|
|
|
3.8
|
|
||||||
Cash dividends declared ($1.20 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(63.2
|
)
|
|
—
|
|
|
(63.2
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
15.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15.2
|
|
||||||
Purchases of treasury stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.1
|
)
|
|
(8.8
|
)
|
|
—
|
|
|
—
|
|
|
(8.8
|
)
|
||||||
Stock options exercised
|
|
—
|
|
|
—
|
|
|
(13.3
|
)
|
|
1.6
|
|
|
43.6
|
|
|
—
|
|
|
—
|
|
|
30.3
|
|
||||||
Issuance of restricted stock and deferred stock units
|
|
—
|
|
|
—
|
|
|
(45.6
|
)
|
|
1.4
|
|
|
45.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Issuance of shares for settlement of MEPPs liability
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
||||||
Equity awards vested
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|
—
|
|
|
0.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Equity awards redeemed to pay employees' tax obligations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
(1.4
|
)
|
|
—
|
|
|
—
|
|
|
(1.4
|
)
|
||||||
Balance at December 31, 2016
|
|
55.5
|
|
|
$
|
1.4
|
|
|
$
|
912.4
|
|
|
(4.1
|
)
|
|
$
|
(113.3
|
)
|
|
$
|
(206.4
|
)
|
|
$
|
(152.6
|
)
|
|
$
|
441.5
|
|
Net earnings
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
107.2
|
|
|
—
|
|
|
107.2
|
|
||||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14.9
|
|
|
14.9
|
|
||||||
Pension benefit plan liability adjustments, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12.0
|
|
|
12.0
|
|
||||||
Interest rate swap adjustments, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
|
1.3
|
|
||||||
Cash dividends declared ($1.20 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(63.7
|
)
|
|
—
|
|
|
(63.7
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
16.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16.4
|
|
||||||
Purchases of treasury stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
(3.8
|
)
|
|
—
|
|
|
—
|
|
|
(3.8
|
)
|
||||||
Stock options exercised
|
|
—
|
|
|
—
|
|
|
(1.7
|
)
|
|
0.2
|
|
|
4.3
|
|
|
—
|
|
|
—
|
|
|
2.6
|
|
||||||
Issuance of restricted stock and deferred stock units
|
|
—
|
|
|
—
|
|
|
(19.8
|
)
|
|
0.7
|
|
|
19.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Cancellation of class B treasury shares (Note 19)
|
|
(1.2
|
)
|
|
—
|
|
|
(41.9
|
)
|
|
1.2
|
|
|
41.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Equity awards vested
|
|
—
|
|
|
—
|
|
|
(4.3
|
)
|
|
0.2
|
|
|
4.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Equity awards redeemed to pay employees' tax obligations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|
(6.0
|
)
|
|
—
|
|
|
—
|
|
|
(6.0
|
)
|
||||||
Balance at December 31, 2017
|
|
54.3
|
|
|
$
|
1.4
|
|
|
$
|
861.1
|
|
|
(2.3
|
)
|
|
$
|
(52.8
|
)
|
|
$
|
(162.9
|
)
|
|
$
|
(124.4
|
)
|
|
$
|
522.4
|
|
Asset Category
|
|
Range of Useful Lives
|
Buildings
|
|
10 to 40 Years
|
Machinery and equipment
|
|
3 to 15 Years
|
Other
|
|
3 to 10 Years
|
|
2017
|
|
2016
|
|
2015
|
||||||
Interest paid, net of amounts capitalized
|
$
|
57.8
|
|
|
$
|
65.9
|
|
|
$
|
76.5
|
|
Income taxes paid
|
6.5
|
|
|
34.0
|
|
|
1.5
|
|
|||
Non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Capital lease additions (see Note 13)
|
0.5
|
|
|
21.0
|
|
|
5.9
|
|
|||
Leased equipment purchased through term loan
|
—
|
|
|
—
|
|
|
3.7
|
|
|||
Acquisitions of businesses (see Note 2):
|
|
|
|
|
|
||||||
Fair value of assets acquired, net of cash
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
137.0
|
|
Liabilities assumed
|
—
|
|
|
—
|
|
|
(28.6
|
)
|
|||
Goodwill
|
—
|
|
|
—
|
|
|
33.8
|
|
|||
Deferred payment for 2013 Proteus and Transpak acquisition
|
—
|
|
|
—
|
|
|
0.6
|
|
|||
Deferred payment for 2014 UniGraphic acquisition
|
—
|
|
|
—
|
|
|
0.6
|
|
|||
Acquisition of businesses—net of cash acquired
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
143.4
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Employee termination charges
|
$
|
26.9
|
|
|
$
|
12.9
|
|
|
$
|
42.1
|
|
Impairment charges
|
12.0
|
|
|
26.8
|
|
|
95.3
|
|
|||
Transaction-related charges (income)
|
3.1
|
|
|
2.2
|
|
|
(6.7
|
)
|
|||
Integration costs
|
—
|
|
|
0.1
|
|
|
5.1
|
|
|||
Other restructuring charges
|
19.2
|
|
|
38.6
|
|
|
29.1
|
|
|||
Total
|
$
|
61.2
|
|
|
$
|
80.6
|
|
|
$
|
164.9
|
|
•
|
Employee termination charges of
$26.9 million
were recorded by the Company as a result of workforce reductions through facility consolidations and voluntary and involuntary separation programs.
|
•
|
Other restructuring charges of
$19.2 million
were recorded by the Company, which consisted of the following: (1)
$14.2 million
of vacant facility carrying costs, (2) a
$6.7 million
loss on the sale of a business; (3)
$3.9 million
of lease exit charges, including the lease termination of the Huntington Beach, California and Manassas, Virginia plants; (4)
$1.9 million
of equipment and infrastructure removal costs from closed plants; and (5) an
$0.8 million
non-cash pension settlement charge related to lump-sum pension payments during the year ended
December 31, 2017
, (see
Note 16
, "
Employee Retirement Plans
," for additional details). Other restructuring charges were presented net of
$7.1 million
in gains from the sale of the Atglen, Pennsylvania; Dickson, Tennessee; Lenexa, Kansas; East Greenville, Pennsylvania and Marengo, Iowa facilities; and a
$1.2 million
gain from settlements with vendors through bankruptcy proceedings for the Company's
Argentina Subsidiaries
.
|
•
|
Employee termination charges of
$12.9 million
were recorded by the Company as a result of workforce reductions through facility consolidations and involuntary separation programs.
|
•
|
Integration costs of
$0.1 million
were recorded by the Company primarily related to preparing existing facilities to meet new production requirements resulting from work transferring from closed plants, as well as other costs related to the integration of acquired companies.
|
•
|
Other restructuring charges of
$38.6 million
were recorded by the Company, which consisted of the following: (1)
$13.6 million
of vacant facility carrying costs; (2) an
$11.2 million
adjustment to its
MEPPs
withdrawal liability; (3) a
$7.0 million
non-cash pension settlement charge related to lump-sum pension payments during the year ended
December 31, 2017
, (see
Note 16
, "
Employee Retirement Plans
," for additional details); (4)
$4.9 million
of equipment and infrastructure removal costs from closed plants; and (5)
$4.5 million
of lease exit charges, including the lease termination of the Pittsburg, California facility. Other restructuring charges were presented net of the following: (1) a
$1.3 million
gain from settlements with vendors due to the Company's Argentina Subsidiaries emerging from bankruptcy during the fourth quarter of 2016 and (2) a
$1.3 million
gain on the sale of the Pilar, Argentina building.
|
•
|
Employee termination charges of
$42.1 million
were recorded by the Company as a result of workforce reductions through facility consolidations and involuntary separation programs.
|
•
|
Integration costs of
$5.1 million
were recorded by the Company primarily related to preparing existing facilities to meet new production requirements resulting from work transferring from closed plants, as well as other costs related to the integration of acquired companies.
|
•
|
Other restructuring charges of
$29.1 million
were recorded by the Company, which consisted of the following: (1)
$11.7 million
of vacant facility carrying costs; (2)
$2.8 million
of equipment and infrastructure removal costs from closed plants; and (3)
$8.6 million
of lease exit charges primarily related to the closure of the Atlanta, Georgia and Loveland, Colorado facilities. The Company also recorded a
$6.0 million
non-cash expense to recognize accumulated foreign exchange losses on the sale of the Chile equity method investment (see
Note 8
, "
Equity Method Investments in Unconsolidated Entities
," for additional details).
|
|
Employee
Termination
Charges
|
|
Impairment
Charges
|
|
Transaction-Related
Charges (Income)
|
|
Integration
Costs
|
|
Other
Restructuring
Charges
|
|
Total
|
||||||||||||
Balance at January 1, 2016
|
$
|
24.4
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
1.4
|
|
|
$
|
13.0
|
|
|
$
|
38.9
|
|
Expense
|
12.9
|
|
|
26.8
|
|
|
2.2
|
|
|
0.1
|
|
|
38.6
|
|
|
80.6
|
|
||||||
Cash payments
|
(29.5
|
)
|
|
—
|
|
|
(2.2
|
)
|
|
(0.3
|
)
|
|
(23.6
|
)
|
|
(55.6
|
)
|
||||||
Non-cash adjustments/reclassifications
|
(0.2
|
)
|
|
(26.8
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
(17.6
|
)
|
|
(44.7
|
)
|
||||||
Balance at December 31, 2016
|
$
|
7.6
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
1.1
|
|
|
$
|
10.4
|
|
|
$
|
19.2
|
|
Expense
|
26.9
|
|
|
12.0
|
|
|
3.1
|
|
|
—
|
|
|
19.2
|
|
|
61.2
|
|
||||||
Cash payments
|
(19.0
|
)
|
|
—
|
|
|
(2.8
|
)
|
|
(0.1
|
)
|
|
(14.5
|
)
|
|
(36.4
|
)
|
||||||
Non-cash adjustments/reclassifications
|
2.1
|
|
|
(12.0
|
)
|
|
—
|
|
|
(0.8
|
)
|
|
(3.8
|
)
|
|
(14.5
|
)
|
||||||
Balance at December 31, 2017
|
$
|
17.6
|
|
|
$
|
—
|
|
|
$
|
0.4
|
|
|
$
|
0.2
|
|
|
$
|
11.3
|
|
|
$
|
29.5
|
|
|
United States Print and Related Services
|
|
International
|
|
Total
|
||||||
Goodwill
|
$
|
778.3
|
|
|
$
|
30.0
|
|
|
$
|
808.3
|
|
Accumulated goodwill impairment loss
|
(778.3
|
)
|
|
(30.0
|
)
|
|
(808.3
|
)
|
|||
Balance at December 31, 2017 and December 31, 2016
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
United States Print and Related
Services
|
|
International
|
|
Total
|
||||||
Balance at January 1, 2015
|
$
|
751.3
|
|
|
$
|
24.2
|
|
|
$
|
775.5
|
|
Marin's acquisition (see Note 2)
|
—
|
|
|
6.8
|
|
|
6.8
|
|
|||
Copac acquisition (see Note 2)
|
23.5
|
|
|
—
|
|
|
23.5
|
|
|||
Specialty acquisition (see Note 2)
|
3.5
|
|
|
—
|
|
|
3.5
|
|
|||
Impairment
|
(778.3
|
)
|
|
(30.0
|
)
|
|
(808.3
|
)
|
|||
Translation adjustment
|
—
|
|
|
(1.0
|
)
|
|
(1.0
|
)
|
|||
Balance at December 31, 2015
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Amortization Expense
|
||
2018
|
$
|
18.2
|
|
2019
|
13.2
|
|
|
2020
|
7.9
|
|
|
2021
|
2.9
|
|
|
2022
|
1.2
|
|
|
Total
|
$
|
43.4
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Balance at beginning of year
|
$
|
53.5
|
|
|
$
|
50.1
|
|
|
$
|
57.8
|
|
Provisions
|
2.6
|
|
|
8.0
|
|
|
4.2
|
|
|||
Write-offs
(1)
|
(26.3
|
)
|
|
(4.0
|
)
|
|
(12.0
|
)
|
|||
Translation and other
|
(0.9
|
)
|
|
(0.6
|
)
|
|
0.1
|
|
|||
Balance at end of year
|
$
|
28.9
|
|
|
$
|
53.5
|
|
|
$
|
50.1
|
|
(1)
|
Write-offs for the year ended December 31, 2017, primarily consisted of fully reserved receivables.
|
|
2017
|
|
2016
|
||||
Raw materials and manufacturing supplies
|
$
|
128.7
|
|
|
$
|
142.4
|
|
Work in process
|
43.6
|
|
|
45.3
|
|
||
Finished goods
|
74.2
|
|
|
77.7
|
|
||
Total
|
$
|
246.5
|
|
|
$
|
265.4
|
|
|
2017
|
|
2016
|
||||
Land
|
$
|
122.5
|
|
|
$
|
126.2
|
|
Buildings
|
924.5
|
|
|
935.4
|
|
||
Machinery and equipment
|
3,617.1
|
|
|
3,574.4
|
|
||
Other
(1)
|
197.5
|
|
|
191.5
|
|
||
Construction in progress
|
33.0
|
|
|
59.5
|
|
||
Property, plant and equipment—gross
|
$
|
4,894.6
|
|
|
$
|
4,887.0
|
|
Less: accumulated depreciation
|
(3,517.0
|
)
|
|
(3,367.1
|
)
|
||
Property, plant and equipment—net
|
$
|
1,377.6
|
|
|
$
|
1,519.9
|
|
(1)
|
Other consists of computer equipment, vehicles, furniture and fixtures, leasehold improvements and communication related equipment.
|
|
2017
|
|
2016
|
||||
Current assets
|
$
|
23.8
|
|
|
$
|
29.1
|
|
Long-term assets
|
14.6
|
|
|
18.3
|
|
||
Total assets
|
$
|
38.4
|
|
|
$
|
47.4
|
|
|
|
|
|
||||
Current liabilities
|
$
|
17.4
|
|
|
$
|
26.1
|
|
Long-term liabilities
|
5.2
|
|
|
6.3
|
|
||
Total liabilities
|
$
|
22.6
|
|
|
$
|
32.4
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net sales
|
$
|
72.7
|
|
|
$
|
71.3
|
|
|
$
|
110.7
|
|
Operating (income) loss
|
(1.7
|
)
|
|
(1.4
|
)
|
|
10.6
|
|
|||
Net (earnings) loss
|
(0.1
|
)
|
|
2.9
|
|
|
12.8
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
|
Accrued Liabilities
|
|
Other
Long-Term Liabilities
|
|
Total
|
|
Accrued Liabilities
|
|
Other
Long-Term Liabilities
|
|
Total
|
||||||||||||
Employee-related liabilities
(1)
|
$
|
152.1
|
|
|
$
|
67.4
|
|
|
$
|
219.5
|
|
|
$
|
194.3
|
|
|
$
|
61.7
|
|
|
$
|
256.0
|
|
Single employer pension plan obligations
|
1.7
|
|
|
82.4
|
|
|
84.1
|
|
|
1.8
|
|
|
112.4
|
|
|
114.2
|
|
||||||
Multiemployer pension plans – withdrawal liability
|
8.8
|
|
|
19.4
|
|
|
28.2
|
|
|
10.6
|
|
|
33.4
|
|
|
44.0
|
|
||||||
Tax-related liabilities
|
29.0
|
|
|
18.2
|
|
|
47.2
|
|
|
24.6
|
|
|
22.9
|
|
|
47.5
|
|
||||||
Restructuring liabilities
|
24.6
|
|
|
4.2
|
|
|
28.8
|
|
|
13.5
|
|
|
4.8
|
|
|
18.3
|
|
||||||
Interest and rent liabilities
|
6.7
|
|
|
1.9
|
|
|
8.6
|
|
|
7.6
|
|
|
3.3
|
|
|
10.9
|
|
||||||
Other
|
93.8
|
|
|
31.5
|
|
|
125.3
|
|
|
106.6
|
|
|
41.5
|
|
|
148.1
|
|
||||||
Total
|
$
|
316.7
|
|
|
$
|
225.0
|
|
|
$
|
541.7
|
|
|
$
|
359.0
|
|
|
$
|
280.0
|
|
|
$
|
639.0
|
|
(1)
|
Employee-related liabilities consist primarily of payroll, bonus, vacation, health and workers' compensation.
|
|
Restricted Cash
|
||
Balance at January 1, 2016
|
$
|
13.5
|
|
Class 3 Claim payments
|
(0.3
|
)
|
|
Restricted cash refunded to Quad/Graphics
|
(4.0
|
)
|
|
Restricted cash for Class 4 Claim payments
|
1.1
|
|
|
Non-bankruptcy related restricted cash receipts
|
(0.1
|
)
|
|
Balance at December 31, 2016
|
$
|
10.2
|
|
Class 3 Claim payments
|
(4.2
|
)
|
|
Restricted cash refunded to Quad/Graphics
|
(3.0
|
)
|
|
Restricted cash for Class 4 Claim payments
|
(1.0
|
)
|
|
Non-bankruptcy related restricted cash receipts
|
(1.9
|
)
|
|
Balance at December 31, 2017
|
$
|
0.1
|
|
|
Weighted Average Interest Rate
|
|
2017
|
|
2016
|
|||||
Master note and security agreement
|
7.43
|
%
|
|
$
|
123.6
|
|
|
$
|
152.6
|
|
Term loan A—$375.0 million due January 2021
|
3.01
|
%
|
|
281.3
|
|
|
376.9
|
|
||
Term loan B—$300.0 million due April 2021
|
4.39
|
%
|
|
279.1
|
|
|
290.6
|
|
||
Revolving credit facility—$725.0 million due January 2021
|
3.04
|
%
|
|
—
|
|
|
19.0
|
|
||
Senior unsecured notes—$300.0 million due May 2022
|
7.00
|
%
|
|
243.5
|
|
|
243.5
|
|
||
International Term Loan - $21.3 million
|
1.72
|
%
|
|
14.9
|
|
|
16.8
|
|
||
International revolving credit facility - $17.2 million
|
2.41
|
%
|
|
9.8
|
|
|
5.3
|
|
||
Equipment term loans
|
2.53
|
%
|
|
2.4
|
|
|
9.5
|
|
||
Other
|
17.68
|
%
|
|
1.2
|
|
|
1.6
|
|
||
Debt issuance costs
|
|
|
(10.3
|
)
|
|
(11.3
|
)
|
|||
Total debt
|
|
|
$
|
945.5
|
|
|
$
|
1,104.5
|
|
|
Less: short-term debt and current portion of long-term debt
|
|
|
(42.0
|
)
|
|
(84.7
|
)
|
|||
Long-term debt
|
|
|
$
|
903.5
|
|
|
$
|
1,019.8
|
|
|
Capitalized Debt
Issuance Costs
|
||
Balance at January 1, 2016
|
$
|
16.1
|
|
Write off of debt issuance costs from Master Note and Security Agreement redemption
|
(0.2
|
)
|
|
Write off of debt issuance costs from Senior Unsecured Notes repurchase
|
(0.8
|
)
|
|
Amortization of debt issuance costs
|
(3.8
|
)
|
|
Balance at December 31, 2016
|
$
|
11.3
|
|
Debt issuance costs from February 10, 2017 debt financing amendment
|
3.2
|
|
|
Write off of debt issuance costs from April 28, 2014 debt financing agreement
|
(1.1
|
)
|
|
Amortization of debt issuance costs
|
(3.1
|
)
|
|
Balance at December 31, 2017
|
$
|
10.3
|
|
|
Original Issue Discount
|
||
Balance at January 1, 2016
|
$
|
2.2
|
|
Amortization of original issue discount
|
(0.4
|
)
|
|
Balance at December 31, 2016
|
$
|
1.8
|
|
Amortization of original issue discount
|
(0.4
|
)
|
|
Balance at December 31, 2017
|
$
|
1.4
|
|
|
Loss on Debt Extinguishment
|
||
Debt issuance costs from April 28, 2014 debt financing arrangement
|
$
|
1.1
|
|
Debt issuance costs from February 10, 2017 debt financing arrangement
|
1.5
|
|
|
Total
|
$
|
2.6
|
|
|
Master Note and Security Agreement
|
|
Senior Unsecured Notes
|
|
Total
|
||||||
Principal amount repurchased
|
$
|
60.1
|
|
|
$
|
56.5
|
|
|
$
|
116.6
|
|
|
|
|
|
|
|
||||||
Repurchase price
|
61.2
|
|
|
42.5
|
|
|
103.7
|
|
|||
Less: accrued interest paid
|
(1.2
|
)
|
|
(1.1
|
)
|
|
(2.3
|
)
|
|||
Net repurchase price
|
60.0
|
|
|
41.4
|
|
|
101.4
|
|
|||
|
|
|
|
|
|
||||||
Debt financing fees expensed
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|||
Debt issuance costs expensed
|
(0.2
|
)
|
|
(0.8
|
)
|
|
(1.0
|
)
|
|||
Gain (loss) on debt extinguishment
|
$
|
(0.2
|
)
|
|
$
|
14.3
|
|
|
$
|
14.1
|
|
•
|
Total Leverage Ratio.
On a rolling twelve-month basis, the total leverage ratio, defined as total consolidated debt to consolidated EBITDA, shall not exceed
3.75
to 1.00 (for the twelve months ended
December 31, 2017
, the Company's total leverage ratio was
2.06
to 1.00).
|
•
|
Senior Secured Leverage Ratio.
On a rolling twelve-month basis, the senior secured leverage ratio, defined as senior secured debt to consolidated EBITDA, shall not exceed
3.50
to 1.00 (for the twelve months ended
December 31, 2017
, the Company's senior secured leverage ratio was
1.55
to 1.00).
|
•
|
Minimum Interest Coverage Ratio.
On a rolling twelve-month basis, the minimum interest coverage ratio, defined as consolidated EBITDA to consolidated cash interest expense, shall not be less than
3.50
to 1.00 (for the twelve months ended
December 31, 2017
, the Company's minimum interest coverage ratio was
7.03
to 1.00).
|
•
|
If the Company's total leverage ratio is greater than
3.00
to 1.00 (as defined in the
Senior Secured Credit Facility
), the Company is prohibited from making greater than
$120.0 million
of annual dividend payments, capital stock repurchases and certain other payments. If the total leverage ratio is less than
3.00
to 1.00, there are no such restrictions.
|
•
|
If the Company's senior secured leverage ratio is greater than
3.00
to 1.00 or the Company's total leverage ratio is greater than
3.50
to 1.00 (these ratios as defined in the
Senior Secured Credit Facility
), the Company is prohibited from voluntarily prepaying any of the
Senior Unsecured Notes
and from voluntarily prepaying any other unsecured or subordinated indebtedness, with certain exceptions (including any mandatory prepayments on the
Senior Unsecured Notes
or any other unsecured or subordinated debt). If the senior secured leverage ratio is less than
3.00
to 1.00 and the total leverage ratio is less than
3.50
to 1.00, there are no such restrictions.
|
|
Principal Payments
|
||
2018
|
$
|
42.4
|
|
2019
|
30.6
|
|
|
2020
|
65.8
|
|
|
2021
|
546.7
|
|
|
2022
|
249.8
|
|
|
2023 – 2027
|
17.8
|
|
|
2028 – 2031
|
4.1
|
|
|
Total
|
$
|
957.2
|
|
|
2017
|
|
2016
|
||||
Leased equipment—gross
|
$
|
38.0
|
|
|
$
|
37.6
|
|
Less: accumulated depreciation
|
(19.3
|
)
|
|
(12.5
|
)
|
||
Leased equipment—net
|
$
|
18.7
|
|
|
$
|
25.1
|
|
|
Future Maturities of Capitalized Leases
|
||
2018
|
$
|
6.5
|
|
2019
|
5.0
|
|
|
2020
|
4.1
|
|
|
2021
|
3.6
|
|
|
2022
|
1.6
|
|
|
2023 and thereafter
|
0.4
|
|
|
Total minimum payments
|
$
|
21.2
|
|
Less: amounts representing interest
|
(1.9
|
)
|
|
Present value of minimum payments
|
$
|
19.3
|
|
Less: current portion
|
(5.6
|
)
|
|
Long-term capital lease obligations
|
$
|
13.7
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
United States
|
$
|
65.6
|
|
|
$
|
48.4
|
|
|
$
|
(855.1
|
)
|
Foreign
|
25.6
|
|
|
10.9
|
|
|
(63.3
|
)
|
|||
Total
|
$
|
91.2
|
|
|
$
|
59.3
|
|
|
$
|
(918.4
|
)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Federal:
|
|
|
|
|
|
||||||
Current
|
$
|
1.4
|
|
|
$
|
32.0
|
|
|
$
|
5.6
|
|
Deferred
|
(5.5
|
)
|
|
(20.0
|
)
|
|
(281.4
|
)
|
|||
State:
|
|
|
|
|
|
||||||
Current
|
2.7
|
|
|
3.9
|
|
|
0.5
|
|
|||
Deferred
|
(0.5
|
)
|
|
(5.3
|
)
|
|
(13.9
|
)
|
|||
Foreign:
|
|
|
|
|
|
||||||
Current
|
2.4
|
|
|
3.7
|
|
|
3.6
|
|
|||
Deferred
|
(16.5
|
)
|
|
(1.3
|
)
|
|
2.8
|
|
|||
Total income tax (benefit) expense
|
$
|
(16.0
|
)
|
|
$
|
13.0
|
|
|
$
|
(282.8
|
)
|
|
2017
|
|
2016
|
|
2015
|
|||
Federal statutory rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Federal rate change
|
(31.6
|
)
|
|
—
|
|
|
—
|
|
Adjustment to valuation allowances
|
(22.0
|
)
|
|
1.7
|
|
|
(1.0
|
)
|
Foreign rate differential
|
(3.2
|
)
|
|
(8.4
|
)
|
|
0.2
|
|
Adjustment of uncertain tax positions
|
(2.9
|
)
|
|
1.6
|
|
|
(0.1
|
)
|
Adjustment of deferred tax liabilities
|
(1.9
|
)
|
|
3.7
|
|
|
(0.1
|
)
|
Domestic production activity deduction
|
(1.0
|
)
|
|
(5.6
|
)
|
|
—
|
|
Impact from foreign branches
|
7.8
|
|
|
6.1
|
|
|
(0.3
|
)
|
State taxes, net of federal benefit
|
2.2
|
|
|
(3.5
|
)
|
|
—
|
|
Loss on foreign investment
|
—
|
|
|
(7.9
|
)
|
|
—
|
|
Investment in United States subsidiaries
|
—
|
|
|
—
|
|
|
26.3
|
|
Nondeductible goodwill impairment
|
—
|
|
|
—
|
|
|
(28.3
|
)
|
Other
|
0.1
|
|
|
(0.8
|
)
|
|
(0.9
|
)
|
Effective income tax rate
|
(17.5
|
)%
|
|
21.9
|
%
|
|
30.8
|
%
|
|
2017
|
|
2016
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss and other tax carryforwards
|
$
|
129.6
|
|
|
$
|
150.9
|
|
Interest limitation
|
43.7
|
|
|
84.6
|
|
||
Pension and workers compensation benefits
|
42.7
|
|
|
82.9
|
|
||
Accrued compensation
|
20.2
|
|
|
39.0
|
|
||
Accrued liabilities
|
19.3
|
|
|
21.4
|
|
||
Goodwill and intangible assets
|
7.5
|
|
|
11.6
|
|
||
Allowance for doubtful accounts
|
7.3
|
|
|
18.0
|
|
||
Other
|
9.4
|
|
|
17.9
|
|
||
Total deferred tax assets
|
279.7
|
|
|
426.3
|
|
||
Valuation allowance
|
(126.9
|
)
|
|
(155.9
|
)
|
||
|
|
|
|
||||
Net deferred tax assets
|
$
|
152.8
|
|
|
$
|
270.4
|
|
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
||||
Property, plant and equipment
|
$
|
(165.0
|
)
|
|
$
|
(293.0
|
)
|
Other
|
(8.5
|
)
|
|
(12.7
|
)
|
||
Total deferred tax liabilities
|
(173.5
|
)
|
|
(305.7
|
)
|
||
|
|
|
|
||||
Net deferred tax liabilities
|
$
|
(20.7
|
)
|
|
$
|
(35.3
|
)
|
•
|
Net operating loss carryforwards of
$108.8 million
and
$481.6 million
for foreign and state, respectively. Of the foreign net operating loss carryforwards,
$38.4 million
are available without expiration, while the remainder expire through
2037
. The state net operating loss carryforwards expire in varying amounts through
2037
.
|
•
|
Capital loss carryforwards of
$20.8 million
and
$10.7 million
for federal and state, respectively. Of the federal capital loss carryforwards,
$6.2 million
expires in
2019
,
$1.1 million
expires in
2021
and
$13.5 million
expires in
2022
; and of the state capital loss carryforwards,
$3.9 million
expires in
2019
,
$0.5 million
expires in
2021
and
$6.3 million
expires in
2022
.
|
•
|
Various credit carryforwards of
$32.3 million
and
$47.0 million
for foreign and state, respectively. The foreign credit carryforward expires in
2026
. The state credit carryforwards include
$31.9 million
that are available without expiration, while the remainder expire through
2032
|
|
2017
|
|
2016
|
|
2015
|
||||||
Balance at beginning of period
|
$
|
29.6
|
|
|
$
|
29.8
|
|
|
$
|
31.1
|
|
Additions for tax positions of the current year
|
2.3
|
|
|
0.3
|
|
|
0.7
|
|
|||
Additions for tax positions of prior years
|
1.3
|
|
|
1.0
|
|
|
1.4
|
|
|||
Reductions for tax positions of prior years
|
(11.3
|
)
|
|
(0.7
|
)
|
|
(0.9
|
)
|
|||
Lapses of applicable statutes of limitations
|
(0.3
|
)
|
|
(0.8
|
)
|
|
(1.6
|
)
|
|||
Settlements during the period
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
|||
Foreign exchange and other
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|||
Balance at end of period
|
$
|
21.6
|
|
|
$
|
29.6
|
|
|
$
|
29.8
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Interest (income) expense
|
$
|
(2.5
|
)
|
|
$
|
1.0
|
|
|
$
|
—
|
|
Penalties recognized
|
0.1
|
|
|
—
|
|
|
(0.1
|
)
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||
|
Accrued interest
|
|
Accrued penalties
|
|
Accrued interest
|
|
Accrued penalties
|
||||||||
Other current liabilities
|
$
|
0.1
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other long-term liabilities
|
3.2
|
|
|
0.3
|
|
|
5.9
|
|
|
0.4
|
|
||||
Total liabilities
|
$
|
3.3
|
|
|
$
|
0.5
|
|
|
$
|
5.9
|
|
|
$
|
0.4
|
|
•
|
Reduction of US federal corporate rate
: The Tax Act reduces the corporate tax rate to
21
percent, effective January 1, 2018. The Company has recorded a provisional decrease of
$23.7 million
to its deferred income taxes, with a corresponding net adjustment to deferred income tax expense and a
$5.1 million
decrease to uncertain tax positions with a corresponding net adjustment to current income tax expense for the year ended December 31, 2017. While the Company was able to make a reasonable estimate of the impact of the reduction in corporate rate, it may be affected by other analyses related to the Tax Act which are not yet able to be completed, as indicated below.
|
•
|
Deemed Repatriation Transition Tax
: The Deemed Repatriation Transition Tax ("Transition Tax") is a tax on previously untaxed accumulated and current earnings and profits ("E&P") of certain foreign subsidiaries. To determine the amount of the Transition Tax, the Company must determine, in addition to other factors, the amount of post-1986 E&P of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. The Company is able to make a reasonable estimate that the Transition Tax will be
zero
based on an estimated aggregate post-1986 foreign earnings and profits deficit of the relevant subsidiaries. While the Company was able to make a reasonable estimate of the Transition Tax, the Company is continuing to gather additional information to more precisely compute the amount of aggregate foreign earnings and profits and related amount of Transition Tax, if any.
|
•
|
Cost recovery
: While the Company has not yet completed all of the computations necessary or completed an inventory of 2017 expenditures that qualify for immediate expensing, the Company has recorded a provisional benefit for this temporary difference based on the current intent to fully expense all qualifying expenditures.
|
•
|
Global intangible low taxed income
: The Tax Act creates a new requirement that certain income (i.e. GILTI) earned by controlled foreign corporations ("CFCs") must be included currently in the gross income of the CFCs' U.S. shareholder. GILTI is the excess of the Shareholder's "net CFC tested income" over the net deemed tangible income return.
|
•
|
Valuation allowances
: The Company must assess whether valuation allowances assessments are affected by various aspects of the Tax Act (e.g. GILTI inclusions). Since, as discussed herein, the Company has recorded no amounts related to certain portions of the Tax Act, any corresponding determination of the need for or change in valuation allowance has not been completed, and no changes to valuation allowances as a result of the Tax Act have been recorded.
|
Level 1:
|
Quoted prices in active markets for identical assets or liabilities.
|
Level 2:
|
Quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.
|
Level 3:
|
Unobservable inputs for the asset or liability. There were no Level 3 recurring measurements of assets or liabilities as of
December 31, 2017
.
|
|
Pension Benefits
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Interest cost
|
$
|
(17.3
|
)
|
|
$
|
(18.1
|
)
|
|
$
|
(26.9
|
)
|
Expected return on plan assets
|
27.7
|
|
|
30.2
|
|
|
34.9
|
|
|||
Net periodic benefit income
|
10.4
|
|
|
12.1
|
|
|
8.0
|
|
|||
Settlement charge
|
(0.8
|
)
|
|
(7.0
|
)
|
|
—
|
|
|||
Total income
|
$
|
9.6
|
|
|
$
|
5.1
|
|
|
$
|
8.0
|
|
|
Pension Benefits
|
||||||
|
2017
|
|
2016
|
||||
Changes in benefit obligation
|
|
|
|
||||
Projected benefit obligation, beginning of year
|
$
|
(560.6
|
)
|
|
$
|
(645.9
|
)
|
Interest cost
|
(17.3
|
)
|
|
(18.1
|
)
|
||
Actuarial loss
|
(17.2
|
)
|
|
(22.3
|
)
|
||
Benefits paid
|
54.3
|
|
|
107.9
|
|
||
Liability benefit from lump-sum settlement
|
1.9
|
|
|
17.8
|
|
||
Projected benefit obligation, end of year
|
$
|
(538.9
|
)
|
|
$
|
(560.6
|
)
|
|
|
|
|
||||
Changes in plan assets
|
|
|
|
||||
Fair value of plan assets, beginning of year
|
$
|
446.4
|
|
|
$
|
508.1
|
|
Actual return on plan assets
|
61.7
|
|
|
33.8
|
|
||
Employer contributions
|
1.0
|
|
|
12.4
|
|
||
Benefits paid
|
(54.3
|
)
|
|
(107.9
|
)
|
||
Fair value of plan assets, end of year
|
$
|
454.8
|
|
|
$
|
446.4
|
|
|
|
|
|
||||
Funded status
|
$
|
(84.1
|
)
|
|
$
|
(114.2
|
)
|
|
Pension Benefits
|
||||||
|
2017
|
|
2016
|
||||
Current liabilities
|
$
|
(1.7
|
)
|
|
$
|
(1.8
|
)
|
Noncurrent liabilities
|
(82.4
|
)
|
|
(112.4
|
)
|
||
Total amount recognized
|
$
|
(84.1
|
)
|
|
$
|
(114.2
|
)
|
|
Pension Benefits
|
||
|
Actuarial Gain / (Loss), net
|
||
Balance at January 1, 2016
|
$
|
(40.9
|
)
|
Amount arising during the period
|
(0.8
|
)
|
|
Impact of pension plan settlement charge included in net earnings (loss)
|
7.0
|
|
|
Balance at December 31, 2016
|
$
|
(34.7
|
)
|
Amount arising during the period
|
18.7
|
|
|
Impact of pension plan settlement charge included in net earnings (loss)
|
0.8
|
|
|
Balance at December 31, 2017
|
$
|
(15.2
|
)
|
|
Pension Benefits
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Discount rate
|
3.91
|
%
|
|
3.32
|
%
|
|
3.90
|
%
|
Expected long-term return on plan assets
|
6.50
|
%
|
|
6.50
|
%
|
|
6.50
|
%
|
|
Pension Benefits
|
||||
|
2017
|
|
2016
|
||
Discount rate (end of year rate)
|
3.52
|
%
|
|
3.91
|
%
|
|
Pension Benefits
|
||
2018
|
$
|
41.9
|
|
2019
|
39.9
|
|
|
2020
|
39.1
|
|
|
2021
|
38.0
|
|
|
2022
|
37.4
|
|
|
2023 – 2027
|
169.3
|
|
|
Thereafter
|
173.3
|
|
|
Total
|
$
|
538.9
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||||||
Asset Category
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||||||
Cash and cash equivalents
|
|
$
|
2.6
|
|
|
$
|
2.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.9
|
|
|
$
|
0.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Debt securities
|
|
118.4
|
|
|
—
|
|
|
118.4
|
|
|
—
|
|
|
91.4
|
|
|
—
|
|
|
91.4
|
|
|
—
|
|
||||||||
Equity securities
|
|
40.0
|
|
|
—
|
|
|
40.0
|
|
|
—
|
|
|
75.1
|
|
|
22.0
|
|
|
53.1
|
|
|
—
|
|
||||||||
|
|
161.0
|
|
|
$
|
2.6
|
|
|
$
|
158.4
|
|
|
$
|
—
|
|
|
167.4
|
|
|
$
|
22.9
|
|
|
$
|
144.5
|
|
|
$
|
—
|
|
||
Investments measured at net asset value ("NAV")
(1)
|
|
293.8
|
|
|
|
|
|
|
|
|
279.0
|
|
|
|
|
|
|
|
||||||||||||||
|
|
$
|
454.8
|
|
|
|
|
|
|
|
|
$
|
446.4
|
|
|
|
|
|
|
|
(1)
|
These investments consist of privately placed funds that are valued based on NAV. NAV of the funds is based on the fair value of each fund's underlying investments. In accordance with ASC Subtopic 820-10, certain investments that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.
|
|
Fair Value
|
|
Redemption Frequency (If Currently Eligible)
|
|
Redemption Notice Period
|
||||||
|
2017
|
|
2016
|
|
|||||||
JP Morgan Chase Bank Strategic Property Fund
|
$
|
23.3
|
|
|
$
|
26.4
|
|
|
Quarterly
|
|
45 days
|
Pyramis Long Corporate A or Better
|
73.9
|
|
|
53.2
|
|
|
Daily
|
|
15 days
|
||
Pyramis Long Duration
|
73.5
|
|
|
52.6
|
|
|
Daily
|
|
15 days
|
||
Russell 3000 Index NL
|
123.1
|
|
|
—
|
|
|
Daily
|
|
1 day
|
||
Russell 1000 Index NL
|
—
|
|
|
146.8
|
|
|
Daily
|
|
1 day
|
||
Total value of investments measured at NAV
|
$
|
293.8
|
|
|
$
|
279.0
|
|
|
|
|
|
•
|
Assets contributed to the MEPPs by one company may be used to provide benefits to employees of other participating companies.
|
•
|
If a participating company stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating companies.
|
•
|
If the Company stops participating in some or all of its MEPPs, and continues in business, the Company would be required to pay an amount, referred to as a withdrawal liability, based on the unfunded status of the plan.
|
|
2017
|
|
2016
|
|
2015
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net earnings (loss)
|
$
|
107.2
|
|
|
$
|
44.9
|
|
|
$
|
(641.9
|
)
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
||||||
Basic weighted average number of common shares outstanding for all classes of common shares
|
49.6
|
|
|
47.9
|
|
|
47.9
|
|
|||
Plus: effect of dilutive equity incentive instruments
|
2.2
|
|
|
1.9
|
|
|
—
|
|
|||
Diluted weighted average number of common shares outstanding for all classes of common shares
|
51.8
|
|
|
49.8
|
|
|
47.9
|
|
|||
|
|
|
|
|
|
||||||
Earnings (loss) per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
2.16
|
|
|
$
|
0.94
|
|
|
$
|
(13.40
|
)
|
Diluted
|
$
|
2.07
|
|
|
$
|
0.90
|
|
|
$
|
(13.40
|
)
|
|
|
|
|
|
|
||||||
Cash dividends paid per common share for all classes of common shares
|
$
|
1.20
|
|
|
$
|
1.20
|
|
|
$
|
1.20
|
|
|
Shares
Under
Option
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term
(years)
|
|
Aggregate
Intrinsic
Value
(millions)
|
|||||
Outstanding and exercisable at December 31, 2016
|
1,702,866
|
|
|
$
|
23.00
|
|
|
3.3
|
|
$
|
12.3
|
|
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|
||
Exercised
|
(156,049
|
)
|
|
16.11
|
|
|
|
|
|
|
||
Canceled/forfeited/expired
|
(14,784
|
)
|
|
33.22
|
|
|
|
|
|
|
||
Outstanding and exercisable at December 31, 2017
|
1,532,033
|
|
|
$
|
23.60
|
|
|
2.3
|
|
$
|
6.8
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Total intrinsic value of stock options exercised
|
$
|
1.7
|
|
|
$
|
12.4
|
|
|
$
|
1.3
|
|
Proceeds from stock options exercised
|
2.6
|
|
|
30.3
|
|
|
2.2
|
|
|||
Total grant date fair value of stock options vested
|
—
|
|
|
0.3
|
|
|
1.8
|
|
|
Restricted Stock
|
|
Restricted Stock Units
|
||||||||||||||
|
Shares
|
|
Weighted-
Average
Grant Date
Fair Value
Per Share
|
|
Weighted-
Average
Remaining
Contractual
Term (Years)
|
|
Units
|
|
Weighted-
Average
Grant Date
Fair Value
Per Share
|
|
Weighted-
Average
Remaining
Contractual
Term (Years)
|
||||||
Nonvested at December 31, 2016
|
2,485,389
|
|
|
$
|
15.89
|
|
|
1.5
|
|
235,886
|
|
|
$
|
11.04
|
|
|
1.8
|
Granted
|
665,517
|
|
|
26.85
|
|
|
|
|
71,438
|
|
|
26.88
|
|
|
|
||
Vested
|
(619,646
|
)
|
|
23.36
|
|
|
|
|
(192,382
|
)
|
|
13.55
|
|
|
|
||
Forfeited
|
(61,102
|
)
|
|
16.57
|
|
|
|
|
—
|
|
|
—
|
|
|
|
||
Nonvested at December 31, 2017
|
2,470,158
|
|
|
$
|
16.95
|
|
|
1.2
|
|
114,942
|
|
|
$
|
16.68
|
|
|
1.3
|
|
Deferred Stock Units
|
|||||
|
Units
|
|
Weighted Average Grant Date Fair Value Per Share
|
|||
Outstanding at December 31, 2016
|
249,739
|
|
|
$
|
16.98
|
|
Granted
|
34,656
|
|
|
26.88
|
|
|
Dividend equivalents granted
|
11,412
|
|
|
22.36
|
|
|
Settled
|
(99,894
|
)
|
|
18.65
|
|
|
Outstanding at December 31, 2017
|
195,913
|
|
|
$
|
18.18
|
|
|
|
|
Issued Common Stock
|
||||||||
|
Authorized Shares
|
|
Outstanding
|
|
Treasury
|
|
Total Issued Shares
|
||||
Class A stock ($0.025 par value)
|
80.0
|
|
|
|
|
|
|
|
|||
December 31, 2017
|
|
|
38.2
|
|
|
1.8
|
|
|
40.0
|
|
|
December 31, 2016
|
|
|
37.2
|
|
|
2.8
|
|
|
40.0
|
|
|
December 31, 2015
|
|
|
35.4
|
|
|
4.6
|
|
|
40.0
|
|
|
|
|
|
|
|
|
|
|
||||
Class B stock ($0.025 par value)
|
80.0
|
|
|
|
|
|
|
|
|||
December 31, 2017
|
|
|
13.8
|
|
|
—
|
|
|
13.8
|
|
|
December 31, 2016
|
|
|
14.2
|
|
|
0.8
|
|
|
15.0
|
|
|
December 31, 2015
|
|
|
14.2
|
|
|
0.8
|
|
|
15.0
|
|
|
|
|
|
|
|
|
|
|
||||
Class C stock ($0.025 par value)
|
20.0
|
|
|
|
|
|
|
|
|||
December 31, 2017
|
|
|
—
|
|
|
0.5
|
|
|
0.5
|
|
|
December 31, 2016
|
|
|
—
|
|
|
0.5
|
|
|
0.5
|
|
|
December 31, 2015
|
|
|
—
|
|
|
0.5
|
|
|
0.5
|
|
|
Declaration Date
|
|
Record Date
|
|
Payment Date
|
|
Dividend Amount per Share
|
||
2017
|
|
|
|
|
|
|
|
||
Q4 Dividend
|
October 31, 2017
|
|
November 20, 2017
|
|
December 1, 2017
|
|
$
|
0.30
|
|
Q3 Dividend
|
August 1, 2017
|
|
August 21, 2017
|
|
September 1, 2017
|
|
0.30
|
|
|
Q2 Dividend
|
May 1, 2017
|
|
May 22, 2017
|
|
June 2, 2017
|
|
0.30
|
|
|
Q1 Dividend
|
February 17, 2017
|
|
February 27, 2017
|
|
March 10, 2017
|
|
0.30
|
|
|
2016
|
|
|
|
|
|
|
|
||
Q4 Dividend
|
October 31, 2016
|
|
November 28, 2016
|
|
December 9, 2016
|
|
$
|
0.30
|
|
Q3 Dividend
|
August 1, 2016
|
|
August 29, 2016
|
|
September 9, 2016
|
|
0.30
|
|
|
Q2 Dividend
|
May 3, 2016
|
|
June 6, 2016
|
|
June 17, 2016
|
|
0.30
|
|
|
Q1 Dividend
|
February 19, 2016
|
|
March 7, 2016
|
|
March 18, 2016
|
|
0.30
|
|
|
2015
|
|
|
|
|
|
|
|
||
Q4 Dividend
|
November 3, 2015
|
|
December 7, 2015
|
|
December 18, 2015
|
|
$
|
0.30
|
|
Q3 Dividend
|
August 4, 2015
|
|
September 7, 2015
|
|
September 18, 2015
|
|
0.30
|
|
|
Q2 Dividend
|
May 5, 2015
|
|
June 8, 2015
|
|
June 19, 2015
|
|
0.30
|
|
|
Q1 Dividend
|
February 23, 2015
|
|
March 9, 2015
|
|
March 20, 2015
|
|
0.30
|
|
|
Translation Adjustments
|
|
Interest Rate Swap Adjustments
|
|
Pension Benefit Plan Adjustments
|
|
Total
|
||||||||
Balance at January 1, 2016
|
$
|
(126.9
|
)
|
|
$
|
—
|
|
|
$
|
(25.6
|
)
|
|
$
|
(152.5
|
)
|
Other comprehensive loss before reclassifications
|
(3.9
|
)
|
|
—
|
|
|
(0.5
|
)
|
|
(4.4
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss to net earnings (loss)
|
—
|
|
|
—
|
|
|
4.3
|
|
|
4.3
|
|
||||
Net other comprehensive income (loss)
|
(3.9
|
)
|
|
—
|
|
|
3.8
|
|
|
(0.1
|
)
|
||||
Balance at December 31, 2016
|
$
|
(130.8
|
)
|
|
$
|
—
|
|
|
$
|
(21.8
|
)
|
|
$
|
(152.6
|
)
|
Other comprehensive income before reclassifications
|
12.8
|
|
|
1.3
|
|
|
11.5
|
|
|
25.6
|
|
||||
Amounts reclassified from accumulated other comprehensive loss to net earnings (loss)
|
2.1
|
|
|
—
|
|
|
0.5
|
|
|
2.6
|
|
||||
Net other comprehensive income
|
14.9
|
|
|
1.3
|
|
|
12.0
|
|
|
28.2
|
|
||||
Balance at December 31, 2017
|
$
|
(115.9
|
)
|
|
$
|
1.3
|
|
|
$
|
(9.8
|
)
|
|
$
|
(124.4
|
)
|
Details about Accumulated Other
Comprehensive Loss Components
|
Year Ended December 31,
|
|
Consolidated Statements of Operations Presentation
|
||||||||||
2017
|
|
2016
|
|
2015
|
|
||||||||
Revaluation loss on the sale of a business
|
$
|
2.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Restructuring, impairment and transaction-related charges
|
Revaluation loss on the sale of an equity method investment
|
—
|
|
|
—
|
|
|
7.7
|
|
|
Restructuring, impairment and transaction-related charges
|
|||
|
|
|
|
|
|
|
|
||||||
Settlement charge on pension benefit plans
|
0.8
|
|
|
7.0
|
|
|
—
|
|
|
Restructuring, impairment and transaction-related charges
|
|||
Impact of income taxes
|
(0.3
|
)
|
|
(2.7
|
)
|
|
—
|
|
|
Income tax (benefit) expense
|
|||
Settlement charge on pension benefit plans, net of tax
|
0.5
|
|
|
4.3
|
|
|
—
|
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
Total reclassifications for the period
|
2.9
|
|
|
7.0
|
|
|
7.7
|
|
|
|
|||
Impact of income taxes
|
(0.3
|
)
|
|
(2.7
|
)
|
|
—
|
|
|
|
|||
Total reclassifications for the period, net of tax
|
$
|
2.6
|
|
|
$
|
4.3
|
|
|
$
|
7.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring, Impairment and Transaction-Related Charges
|
|
|
||||||||||||||
|
Net Sales
|
|
Operating Income(Loss)
|
|
Depreciation and Amortization
|
|
Capital Expenditures
|
|
|
Goodwill Impairment
|
|||||||||||||||||
|
Products
|
|
Services
|
|
|
|
|
|
|||||||||||||||||||
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
United States Print and Related Services
|
$
|
3,156.9
|
|
|
$
|
583.2
|
|
|
$
|
194.3
|
|
|
$
|
210.8
|
|
|
$
|
73.3
|
|
|
$
|
53.6
|
|
|
$
|
—
|
|
International
|
372.1
|
|
|
19.2
|
|
|
19.6
|
|
|
21.0
|
|
|
12.6
|
|
|
3.3
|
|
|
—
|
|
|||||||
Total operating segments
|
3,529.0
|
|
|
602.4
|
|
|
213.9
|
|
|
231.8
|
|
|
85.9
|
|
|
56.9
|
|
|
—
|
|
|||||||
Corporate
|
—
|
|
|
—
|
|
|
(49.0
|
)
|
|
0.7
|
|
|
—
|
|
|
4.3
|
|
|
—
|
|
|||||||
Total
|
$
|
3,529.0
|
|
|
$
|
602.4
|
|
|
$
|
164.9
|
|
|
$
|
232.5
|
|
|
$
|
85.9
|
|
|
$
|
61.2
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Year ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
United States Print and Related Services
|
$
|
3,335.1
|
|
|
$
|
591.9
|
|
|
$
|
186.1
|
|
|
$
|
252.4
|
|
|
$
|
88.1
|
|
|
$
|
59.3
|
|
|
$
|
—
|
|
International
|
382.0
|
|
|
20.5
|
|
|
13.5
|
|
|
24.1
|
|
|
18.0
|
|
|
(1.1
|
)
|
|
—
|
|
|||||||
Total operating segments
|
3,717.1
|
|
|
612.4
|
|
|
199.6
|
|
|
276.5
|
|
|
106.1
|
|
|
58.2
|
|
|
—
|
|
|||||||
Corporate
|
—
|
|
|
—
|
|
|
(77.2
|
)
|
|
0.6
|
|
|
—
|
|
|
22.4
|
|
|
—
|
|
|||||||
Total
|
$
|
3,717.1
|
|
|
$
|
612.4
|
|
|
$
|
122.4
|
|
|
$
|
277.1
|
|
|
$
|
106.1
|
|
|
$
|
80.6
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Year ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
United States Print and Related Services
|
$
|
3,580.1
|
|
|
$
|
628.5
|
|
|
$
|
(706.1
|
)
|
|
$
|
297.5
|
|
|
$
|
121.5
|
|
|
$
|
101.4
|
|
|
$
|
778.3
|
|
International
|
369.6
|
|
|
18.9
|
|
|
(63.4
|
)
|
|
26.1
|
|
|
11.5
|
|
|
38.8
|
|
|
30.0
|
|
|||||||
Total operating segments
|
3,949.7
|
|
|
647.4
|
|
|
(769.5
|
)
|
|
323.6
|
|
|
133.0
|
|
|
140.2
|
|
|
808.3
|
|
|||||||
Corporate
|
—
|
|
|
—
|
|
|
(60.5
|
)
|
|
1.7
|
|
|
—
|
|
|
24.7
|
|
|
—
|
|
|||||||
Total
|
$
|
3,949.7
|
|
|
$
|
647.4
|
|
|
$
|
(830.0
|
)
|
|
$
|
325.3
|
|
|
$
|
133.0
|
|
|
$
|
164.9
|
|
|
$
|
808.3
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Operating income (loss)
|
$
|
164.9
|
|
|
$
|
122.4
|
|
|
$
|
(830.0
|
)
|
Less: interest expense
|
71.1
|
|
|
77.2
|
|
|
88.4
|
|
|||
Less: loss (gain) on debt extinguishment
|
2.6
|
|
|
(14.1
|
)
|
|
—
|
|
|||
Earnings (loss) before income taxes and equity in loss of unconsolidated entities
|
$
|
91.2
|
|
|
$
|
59.3
|
|
|
$
|
(918.4
|
)
|
|
2017
|
|
2016
|
|
2015
|
||||||
United States Print and Related Services
|
$
|
2,060.9
|
|
|
$
|
2,241.3
|
|
|
$
|
2,498.1
|
|
International
|
329.5
|
|
|
312.7
|
|
|
327.2
|
|
|||
Total operating segments
|
2,390.4
|
|
|
2,554.0
|
|
|
2,825.3
|
|
|||
Corporate
|
62.0
|
|
|
16.1
|
|
|
22.2
|
|
|||
Total
|
$
|
2,452.4
|
|
|
$
|
2,570.1
|
|
|
$
|
2,847.5
|
|
|
United States
|
|
Europe
|
|
Latin America
|
|
Other
|
|
Combined
|
||||||||||
2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
|
|
|
|
|
|
|
|
|
||||||||||
Products
|
$
|
3,121.2
|
|
|
$
|
167.6
|
|
|
$
|
209.3
|
|
|
$
|
30.9
|
|
|
$
|
3,529.0
|
|
Services
|
583.2
|
|
|
19.2
|
|
|
—
|
|
|
—
|
|
|
602.4
|
|
|||||
Property, plant and equipment—net
|
1,215.1
|
|
|
85.5
|
|
|
68.3
|
|
|
8.7
|
|
|
1,377.6
|
|
|||||
Intangible assets—net
|
32.3
|
|
|
11.1
|
|
|
—
|
|
|
—
|
|
|
43.4
|
|
|||||
Other long-term assets
|
92.0
|
|
|
16.2
|
|
|
10.7
|
|
|
0.4
|
|
|
119.3
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
2016
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
|
|
|
|
|
|
|
|
|
||||||||||
Products
|
$
|
3,299.1
|
|
|
$
|
169.8
|
|
|
$
|
217.4
|
|
|
$
|
30.8
|
|
|
$
|
3,717.1
|
|
Services
|
591.9
|
|
|
20.5
|
|
|
—
|
|
|
—
|
|
|
612.4
|
|
|||||
Property, plant and equipment—net
|
1,362.8
|
|
|
79.7
|
|
|
67.7
|
|
|
9.7
|
|
|
1,519.9
|
|
|||||
Intangible assets—net
|
47.6
|
|
|
12.1
|
|
|
—
|
|
|
—
|
|
|
59.7
|
|
|||||
Other long-term assets
|
71.6
|
|
|
0.3
|
|
|
12.2
|
|
|
0.2
|
|
|
84.3
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
2015
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
|
|
|
|
|
|
|
|
|
||||||||||
Products
|
$
|
3,545.8
|
|
|
$
|
162.9
|
|
|
$
|
215.1
|
|
|
$
|
25.9
|
|
|
$
|
3,949.7
|
|
Services
|
628.5
|
|
|
18.9
|
|
|
—
|
|
|
—
|
|
|
647.4
|
|
|||||
Property, plant and equipment—net
|
1,512.2
|
|
|
86.1
|
|
|
73.1
|
|
|
4.4
|
|
|
1,675.8
|
|
|||||
Intangible assets—net
|
93.0
|
|
|
16.6
|
|
|
0.9
|
|
|
—
|
|
|
110.5
|
|
|||||
Other long-term assets
|
54.4
|
|
|
0.3
|
|
|
10.6
|
|
|
0.2
|
|
|
65.5
|
|
Products and Services
|
|
2017
|
|
2016
|
|
2015
|
||||||
Catalog, publications, retail inserts, books and directories
|
|
$
|
2,824.7
|
|
|
$
|
3,014.3
|
|
|
$
|
3,285.8
|
|
Direct mail and other printed products
|
|
646.8
|
|
|
646.2
|
|
|
604.0
|
|
|||
Other
|
|
57.5
|
|
|
56.6
|
|
|
59.9
|
|
|||
Total products
|
|
$
|
3,529.0
|
|
|
$
|
3,717.1
|
|
|
$
|
3,949.7
|
|
|
|
|
|
|
|
|
||||||
Logistics services
|
|
$
|
418.1
|
|
|
$
|
427.3
|
|
|
$
|
453.7
|
|
Imaging and other services
|
|
184.3
|
|
|
185.1
|
|
|
193.7
|
|
|||
Total services
|
|
602.4
|
|
|
612.4
|
|
|
647.4
|
|
|||
Total net sales
|
|
$
|
4,131.4
|
|
|
$
|
4,329.5
|
|
|
$
|
4,597.1
|
|
•
|
the designation of any of the
Guarantor Subsidiaries
as an unrestricted subsidiary;
|
•
|
the release or discharge of any guarantee or indebtedness that resulted in the creation of the guarantee of the
Senior Unsecured Notes
by any of the
Guarantor Subsidiaries
; or
|
•
|
the sale or disposition, including the sale of substantially all the assets, of any of the
Guarantor Subsidiaries
.
|
|
Quad/Graphics,
Inc. |
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||
Net sales
|
$
|
1,759.7
|
|
|
$
|
2,342.5
|
|
|
$
|
424.2
|
|
|
$
|
(395.0
|
)
|
|
$
|
4,131.4
|
|
Cost of sales
|
1,292.2
|
|
|
2,018.9
|
|
|
336.1
|
|
|
(387.8
|
)
|
|
3,259.4
|
|
|||||
Selling, general and administrative expenses
|
264.7
|
|
|
116.6
|
|
|
39.3
|
|
|
(7.2
|
)
|
|
413.4
|
|
|||||
Depreciation and amortization
|
107.0
|
|
|
103.4
|
|
|
22.1
|
|
|
—
|
|
|
232.5
|
|
|||||
Restructuring, impairment and transaction-related charges
|
44.3
|
|
|
13.8
|
|
|
3.1
|
|
|
—
|
|
|
61.2
|
|
|||||
Total operating expenses
|
1,708.2
|
|
|
2,252.7
|
|
|
400.6
|
|
|
(395.0
|
)
|
|
3,966.5
|
|
|||||
Operating income (loss)
|
$
|
51.5
|
|
|
$
|
89.8
|
|
|
$
|
23.6
|
|
|
$
|
—
|
|
|
$
|
164.9
|
|
Interest expense (income)
|
70.4
|
|
|
(3.1
|
)
|
|
3.8
|
|
|
—
|
|
|
71.1
|
|
|||||
Loss (gain) on debt extinguishment
|
2.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.6
|
|
|||||
Earnings (loss) before income taxes and equity in (earnings) loss of consolidated and unconsolidated entities
|
(21.5
|
)
|
|
92.9
|
|
|
19.8
|
|
|
—
|
|
|
91.2
|
|
|||||
Income tax expense (benefit)
|
(32.6
|
)
|
|
30.7
|
|
|
(14.1
|
)
|
|
—
|
|
|
(16.0
|
)
|
|||||
Earnings (loss) before equity in (earnings) loss of consolidated and unconsolidated entities
|
11.1
|
|
|
62.2
|
|
|
33.9
|
|
|
—
|
|
|
107.2
|
|
|||||
Equity in (earnings) loss of consolidated entities
|
(96.1
|
)
|
|
(2.9
|
)
|
|
—
|
|
|
99.0
|
|
|
—
|
|
|||||
Equity in (earnings) loss of unconsolidated entities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net earnings (loss)
|
$
|
107.2
|
|
|
$
|
65.1
|
|
|
$
|
33.9
|
|
|
$
|
(99.0
|
)
|
|
$
|
107.2
|
|
|
Quad/Graphics,
Inc. |
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||
Net earnings (loss)
|
$
|
107.2
|
|
|
$
|
65.1
|
|
|
$
|
33.9
|
|
|
$
|
(99.0
|
)
|
|
$
|
107.2
|
|
Other comprehensive income (loss), net of tax
|
28.2
|
|
|
13.0
|
|
|
12.0
|
|
|
(25.0
|
)
|
|
28.2
|
|
|||||
Total comprehensive income (loss)
|
$
|
135.4
|
|
|
$
|
78.1
|
|
|
$
|
45.9
|
|
|
$
|
(124.0
|
)
|
|
$
|
135.4
|
|
|
Quad/Graphics,
Inc. |
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||
Net sales
|
$
|
1,863.6
|
|
|
$
|
2,429.0
|
|
|
$
|
454.6
|
|
|
$
|
(417.7
|
)
|
|
$
|
4,329.5
|
|
Cost of sales
|
1,381.1
|
|
|
2,067.3
|
|
|
364.1
|
|
|
(417.7
|
)
|
|
3,394.8
|
|
|||||
Selling, general and administrative expenses
|
257.8
|
|
|
152.5
|
|
|
44.3
|
|
|
—
|
|
|
454.6
|
|
|||||
Depreciation and amortization
|
146.8
|
|
|
100.1
|
|
|
30.2
|
|
|
—
|
|
|
277.1
|
|
|||||
Restructuring, impairment and transaction-related charges
|
56.8
|
|
|
25.2
|
|
|
(1.4
|
)
|
|
—
|
|
|
80.6
|
|
|||||
Total operating expenses
|
1,842.5
|
|
|
2,345.1
|
|
|
437.2
|
|
|
(417.7
|
)
|
|
4,207.1
|
|
|||||
Operating income (loss)
|
$
|
21.1
|
|
|
$
|
83.9
|
|
|
$
|
17.4
|
|
|
$
|
—
|
|
|
$
|
122.4
|
|
Interest expense (income)
|
76.0
|
|
|
(4.1
|
)
|
|
5.3
|
|
|
—
|
|
|
77.2
|
|
|||||
Loss (gain) on debt extinguishment
|
(14.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14.1
|
)
|
|||||
Earnings (loss) before income taxes and equity in (earnings) loss of consolidated and unconsolidated entities
|
(40.8
|
)
|
|
88.0
|
|
|
12.1
|
|
|
—
|
|
|
59.3
|
|
|||||
Income tax expense (benefit)
|
15.2
|
|
|
(4.8
|
)
|
|
2.6
|
|
|
—
|
|
|
13.0
|
|
|||||
Earnings (loss) before equity in (earnings) loss of consolidated and unconsolidated entities
|
(56.0
|
)
|
|
92.8
|
|
|
9.5
|
|
|
—
|
|
|
46.3
|
|
|||||
Equity in (earnings) loss of consolidated entities
|
(100.9
|
)
|
|
(6.0
|
)
|
|
—
|
|
|
106.9
|
|
|
—
|
|
|||||
Equity in (earnings) loss of unconsolidated entities
|
—
|
|
|
—
|
|
|
1.4
|
|
|
—
|
|
|
1.4
|
|
|||||
Net earnings (loss)
|
$
|
44.9
|
|
|
$
|
98.8
|
|
|
$
|
8.1
|
|
|
$
|
(106.9
|
)
|
|
$
|
44.9
|
|
|
Quad/Graphics,
Inc. |
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||
Net earnings (loss)
|
$
|
44.9
|
|
|
$
|
98.8
|
|
|
$
|
8.1
|
|
|
$
|
(106.9
|
)
|
|
$
|
44.9
|
|
Other comprehensive income (loss), net of tax
|
(0.1
|
)
|
|
1.7
|
|
|
(4.7
|
)
|
|
3.0
|
|
|
(0.1
|
)
|
|||||
Total comprehensive income (loss)
|
$
|
44.8
|
|
|
$
|
100.5
|
|
|
$
|
3.4
|
|
|
$
|
(103.9
|
)
|
|
$
|
44.8
|
|
|
Quad/Graphics,
Inc. |
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||
Net sales
|
$
|
1,881.5
|
|
|
$
|
2,743.9
|
|
|
$
|
404.8
|
|
|
$
|
(433.1
|
)
|
|
$
|
4,597.1
|
|
Cost of sales
|
1,423.0
|
|
|
2,359.6
|
|
|
330.8
|
|
|
(433.1
|
)
|
|
3,680.3
|
|
|||||
Selling, general and administrative expenses
|
258.7
|
|
|
152.4
|
|
|
37.2
|
|
|
—
|
|
|
448.3
|
|
|||||
Depreciation and amortization
|
179.3
|
|
|
119.5
|
|
|
26.5
|
|
|
—
|
|
|
325.3
|
|
|||||
Restructuring, impairment and transaction-related charges
|
56.6
|
|
|
70.1
|
|
|
38.2
|
|
|
—
|
|
|
164.9
|
|
|||||
Goodwill impairment
|
—
|
|
|
778.3
|
|
|
30.0
|
|
|
—
|
|
|
808.3
|
|
|||||
Total operating expenses
|
1,917.6
|
|
|
3,479.9
|
|
|
462.7
|
|
|
(433.1
|
)
|
|
5,427.1
|
|
|||||
Operating income (loss)
|
$
|
(36.1
|
)
|
|
$
|
(736.0
|
)
|
|
$
|
(57.9
|
)
|
|
$
|
—
|
|
|
$
|
(830.0
|
)
|
Interest expense (income)
|
85.7
|
|
|
(2.3
|
)
|
|
5.0
|
|
|
—
|
|
|
88.4
|
|
|||||
Earnings (loss) before income taxes and equity in (earnings) loss of consolidated and unconsolidated entities
|
(121.8
|
)
|
|
(733.7
|
)
|
|
(62.9
|
)
|
|
—
|
|
|
(918.4
|
)
|
|||||
Income tax expense (benefit)
|
(39.6
|
)
|
|
(249.2
|
)
|
|
6.0
|
|
|
—
|
|
|
(282.8
|
)
|
|||||
Earnings (loss) before equity in (earnings) loss of consolidated and unconsolidated entities
|
(82.2
|
)
|
|
(484.5
|
)
|
|
(68.9
|
)
|
|
—
|
|
|
(635.6
|
)
|
|||||
Equity in (earnings) loss of consolidated entities
|
559.7
|
|
|
2.7
|
|
|
—
|
|
|
(562.4
|
)
|
|
—
|
|
|||||
Equity in (earnings) loss of unconsolidated entities
|
—
|
|
|
—
|
|
|
6.3
|
|
|
—
|
|
|
6.3
|
|
|||||
Net earnings (loss)
|
$
|
(641.9
|
)
|
|
$
|
(487.2
|
)
|
|
$
|
(75.2
|
)
|
|
$
|
562.4
|
|
|
$
|
(641.9
|
)
|
|
Quad/Graphics,
Inc. |
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||
Net earnings (loss)
|
$
|
(641.9
|
)
|
|
$
|
(487.2
|
)
|
|
$
|
(75.2
|
)
|
|
$
|
562.4
|
|
|
$
|
(641.9
|
)
|
Other comprehensive income (loss), net of tax
|
(53.7
|
)
|
|
(1.8
|
)
|
|
(51.3
|
)
|
|
70.9
|
|
|
(35.9
|
)
|
|||||
Total comprehensive income (loss)
|
$
|
(695.6
|
)
|
|
$
|
(489.0
|
)
|
|
$
|
(126.5
|
)
|
|
$
|
633.3
|
|
|
$
|
(677.8
|
)
|
|
Quad/Graphics,
Inc. |
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash from (used in) operating activities
|
$
|
974.5
|
|
|
$
|
(647.3
|
)
|
|
$
|
16.8
|
|
|
$
|
—
|
|
|
$
|
344.0
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property, plant and equipment
|
(27.5
|
)
|
|
(43.9
|
)
|
|
(14.5
|
)
|
|
—
|
|
|
(85.9
|
)
|
|||||
Divestiture related investing activities
|
8.4
|
|
|
5.7
|
|
|
—
|
|
|
—
|
|
|
14.1
|
|
|||||
Intercompany investing activities
|
(18.1
|
)
|
|
632.7
|
|
|
(0.3
|
)
|
|
(614.3
|
)
|
|
—
|
|
|||||
Other investing activities
|
0.9
|
|
|
29.7
|
|
|
3.9
|
|
|
—
|
|
|
34.5
|
|
|||||
Net cash from (used in) investing activities
|
(36.3
|
)
|
|
624.2
|
|
|
(10.9
|
)
|
|
(614.3
|
)
|
|
(37.3
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from issuance of long-term debt
|
375.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
375.0
|
|
|||||
Payments of long-term debt and capital lease obligations
|
(523.3
|
)
|
|
(2.9
|
)
|
|
(4.3
|
)
|
|
—
|
|
|
(530.5
|
)
|
|||||
Borrowings on revolving credit facilities
|
706.7
|
|
|
—
|
|
|
11.8
|
|
|
—
|
|
|
718.5
|
|
|||||
Payments on revolving credit facilities
|
(725.7
|
)
|
|
—
|
|
|
(10.3
|
)
|
|
—
|
|
|
(736.0
|
)
|
|||||
Purchases of treasury stock
|
(3.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.8
|
)
|
|||||
Payment of cash dividends
|
(62.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(62.5
|
)
|
|||||
Intercompany financing activities
|
(645.1
|
)
|
|
30.2
|
|
|
0.6
|
|
|
614.3
|
|
|
—
|
|
|||||
Other financing activities
|
(8.1
|
)
|
|
(4.3
|
)
|
|
—
|
|
|
—
|
|
|
(12.4
|
)
|
|||||
Net cash from (used in) financing activities
|
(886.8
|
)
|
|
23.0
|
|
|
(2.2
|
)
|
|
614.3
|
|
|
(251.7
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Effect of exchange rates on cash and cash equivalents
|
—
|
|
|
0.1
|
|
|
0.2
|
|
|
—
|
|
|
0.3
|
|
|||||
Net increase (decrease) in cash and cash equivalents
|
51.4
|
|
|
—
|
|
|
3.9
|
|
|
—
|
|
|
55.3
|
|
|||||
Cash and cash equivalents at beginning of year
|
0.3
|
|
|
1.9
|
|
|
6.8
|
|
|
—
|
|
|
9.0
|
|
|||||
Cash and cash equivalents at end of year
|
$
|
51.7
|
|
|
$
|
1.9
|
|
|
$
|
10.7
|
|
|
$
|
—
|
|
|
$
|
64.3
|
|
|
Quad/Graphics,
Inc. |
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash from (used in) operating activities
|
$
|
676.2
|
|
|
$
|
(341.9
|
)
|
|
$
|
18.2
|
|
|
$
|
—
|
|
|
$
|
352.5
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property, plant and equipment
|
(35.9
|
)
|
|
(46.8
|
)
|
|
(23.4
|
)
|
|
—
|
|
|
(106.1
|
)
|
|||||
Acquisition related investing activities—net of cash acquired
|
(0.9
|
)
|
|
0.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Intercompany investing activities
|
(62.4
|
)
|
|
368.1
|
|
|
3.8
|
|
|
(309.5
|
)
|
|
—
|
|
|||||
Other investing activities
|
(4.5
|
)
|
|
22.4
|
|
|
3.8
|
|
|
—
|
|
|
21.7
|
|
|||||
Net cash from (used in) investing activities
|
(103.7
|
)
|
|
344.6
|
|
|
(15.8
|
)
|
|
(309.5
|
)
|
|
(84.4
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from issuance of long-term debt
|
—
|
|
|
—
|
|
|
19.7
|
|
|
—
|
|
|
19.7
|
|
|||||
Payments of long-term debt and capital lease obligations
|
(195.7
|
)
|
|
(3.5
|
)
|
|
(2.3
|
)
|
|
—
|
|
|
(201.5
|
)
|
|||||
Borrowings on revolving credit facilities
|
806.1
|
|
|
—
|
|
|
65.8
|
|
|
—
|
|
|
871.9
|
|
|||||
Payments on revolving credit facilities
|
(857.9
|
)
|
|
—
|
|
|
(60.1
|
)
|
|
—
|
|
|
(918.0
|
)
|
|||||
Purchases of treasury stock
|
(8.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8.8
|
)
|
|||||
Payment of cash dividends
|
(61.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(61.1
|
)
|
|||||
Intercompany financing activities
|
(285.9
|
)
|
|
0.2
|
|
|
(23.8
|
)
|
|
309.5
|
|
|
—
|
|
|||||
Other financing activities
|
28.8
|
|
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
|
28.5
|
|
|||||
Net cash from (used in) financing activities
|
(574.5
|
)
|
|
(3.6
|
)
|
|
(0.7
|
)
|
|
309.5
|
|
|
(269.3
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Effect of exchange rates on cash and cash equivalents
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|
—
|
|
|
(0.6
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
(2.0
|
)
|
|
(0.9
|
)
|
|
1.1
|
|
|
—
|
|
|
(1.8
|
)
|
|||||
Cash and cash equivalents at beginning of year
|
2.3
|
|
|
2.8
|
|
|
5.7
|
|
|
—
|
|
|
10.8
|
|
|||||
Cash and cash equivalents at end of year
|
$
|
0.3
|
|
|
$
|
1.9
|
|
|
$
|
6.8
|
|
|
$
|
—
|
|
|
$
|
9.0
|
|
|
Quad/Graphics,
Inc. |
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total
|
||||||||||
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash from (used in) operating activities
|
$
|
229.9
|
|
|
$
|
92.7
|
|
|
$
|
25.5
|
|
|
$
|
—
|
|
|
$
|
348.1
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property, plant and equipment
|
(54.7
|
)
|
|
(64.9
|
)
|
|
(13.4
|
)
|
|
—
|
|
|
(133.0
|
)
|
|||||
Acquisition related investing activities—net of cash acquired
|
(0.6
|
)
|
|
(116.0
|
)
|
|
(26.8
|
)
|
|
—
|
|
|
(143.4
|
)
|
|||||
Intercompany investing activities
|
(123.1
|
)
|
|
(108.0
|
)
|
|
(0.5
|
)
|
|
231.6
|
|
|
—
|
|
|||||
Other investing activities
|
13.9
|
|
|
34.0
|
|
|
11.8
|
|
|
—
|
|
|
59.7
|
|
|||||
Net cash from (used in) investing activities
|
(164.5
|
)
|
|
(254.9
|
)
|
|
(28.9
|
)
|
|
231.6
|
|
|
(216.7
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Payments of long-term debt and capital lease obligations
|
(92.5
|
)
|
|
(3.4
|
)
|
|
—
|
|
|
—
|
|
|
(95.9
|
)
|
|||||
Borrowings on revolving credit facilities
|
1,413.7
|
|
|
—
|
|
|
48.8
|
|
|
—
|
|
|
1,462.5
|
|
|||||
Payments on revolving credit facilities
|
(1,386.8
|
)
|
|
—
|
|
|
(48.7
|
)
|
|
—
|
|
|
(1,435.5
|
)
|
|||||
Payment of cash dividends
|
(62.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(62.3
|
)
|
|||||
Intercompany financing activities
|
59.5
|
|
|
162.8
|
|
|
9.3
|
|
|
(231.6
|
)
|
|
—
|
|
|||||
Other financing activities
|
3.4
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
3.3
|
|
|||||
Net cash from (used in) financing activities
|
(65.0
|
)
|
|
159.3
|
|
|
9.4
|
|
|
(231.6
|
)
|
|
(127.9
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Effect of exchange rates on cash and cash equivalents
|
—
|
|
|
0.1
|
|
|
(2.4
|
)
|
|
—
|
|
|
(2.3
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
0.4
|
|
|
(2.8
|
)
|
|
3.6
|
|
|
—
|
|
|
1.2
|
|
|||||
Cash and cash equivalents at beginning of year
|
1.9
|
|
|
5.6
|
|
|
2.1
|
|
|
—
|
|
|
9.6
|
|
|||||
Cash and cash equivalents at end of year
|
$
|
2.3
|
|
|
$
|
2.8
|
|
|
$
|
5.7
|
|
|
$
|
—
|
|
|
$
|
10.8
|
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Plan Category
|
|
Number of securities to be issued upon the exercise of outstanding options, warrants and rights
|
|
Weighted average exercise price of outstanding options, warrants and rights
(2)
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column)
|
||||
Equity compensation plans approved by security holders
(1)
|
|
4,313,046
|
|
|
$
|
23.60
|
|
|
2,139,257
|
|
Equity compensation plans not approved by security holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
4,313,046
|
|
|
$
|
23.60
|
|
|
2,139,257
|
|
(1)
|
Consists of the Company's 2010 Omnibus Incentive Plan. Awards under the Omnibus Plan may consist of incentive awards, stock options, stock appreciation rights, performance shares, performance share units, shares of class A stock, restricted stock, restricted stock units, deferred stock units or other stock-based awards as determined by the Company's Board of Directors.
|
(2)
|
The weighted average exercise price of outstanding options, warrants and rights only includes stock options.
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accountant Fees and Services
|
Item 15.
|
Exhibit Index and Financial Statement Schedules
|
1.
|
Consolidated financial statements—The consolidated financial statements listed in the accompanying index to consolidated financial statements are filed as part of this Annual Report on Form 10-K.
|
2.
|
Financial statement schedule—All financial statement schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedules, or because the information required is included in the consolidated financial statements and notes thereto.
|
3.
|
Exhibits—The exhibits listed in the accompanying "Exhibit Index" are filed as part of this Annual Report on Form 10-K.
|
|
|
Page in this Form 10-K
|
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
Exhibit Number
|
|
Exhibit Description
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Exhibit Number
|
|
Exhibit Description
|
|
||
|
|
|
|
||
|
|
|
|
|
Certain other instruments, which would otherwise be required to be listed above, have not been so listed as such instruments do not authorize long-term debt securities in an amount that exceeds 10% of the total assets of Quad/Graphics, Inc. and its subsidiaries on a consolidated basis. Quad/Graphics, Inc. agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon request.
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Exhibit Number
|
|
Exhibit Description
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Exhibit Number
|
|
Exhibit Description
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Exhibit Number
|
|
Exhibit Description
|
(99)
|
|
Proxy Statement for the 2018 Annual Meeting of Shareholders. [To be filed with the Securities and Exchange Commission under Regulation 14A within 120 days after December 31, 2017; except to the extent specifically incorporated by reference, the Proxy Statement for the 2018 Annual Meeting of Shareholders shall not be deemed to be filed with the Securities and Exchange Commission as part of this Annual Report on Form 10‑K.]
|
|
|
|
(101)
|
|
Financial statements from the Annual Report on Form 10-K of Quad/Graphics, Inc. for the year ended December 31, 2017 formatted in eXtensible Business Reporting Language (XBRL): (i) the Consolidated Statements of Operations, (ii) the Consolidated Statements of Comprehensive Income (Loss), (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Shareholders' Equity, (vi) the Notes to Consolidated Financial Statements, and (vii) document and entity information.
|
++
|
A management contract or compensatory plan or arrangement.
|
Item 16.
|
Form 10-K Summary
|
|
|
|
QUAD/GRAPHICS, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ J. Joel Quadracci
|
|
|
|
|
J. Joel Quadracci
|
|
|
|
|
Chairman, President and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ J. Joel Quadracci
|
|
Chairman, President and Chief Executive Officer
|
|
February 21, 2018
|
J. Joel Quadracci
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ David J. Honan
|
|
Executive Vice President and Chief Financial Officer
|
|
February 21, 2018
|
David J. Honan
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/ Anne M. Bauer
|
|
Executive Director and Chief Accounting Officer
|
|
February 21, 2018
|
Anne M. Bauer
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Mark A. Angelson
|
|
Director
|
|
February 21, 2018
|
Mark A. Angelson
|
|
|
|
|
|
|
|
|
|
/s/ Douglas P. Buth
|
|
Director
|
|
February 21, 2018
|
Douglas P. Buth
|
|
|
|
|
|
|
|
|
|
/s/ Kathryn Quadracci Flores
|
|
Director
|
|
February 21, 2018
|
Kathryn Quadracci Flores
|
|
|
|
|
|
|
|
|
|
/s/ John C. Fowler
|
|
Director
|
|
February 21, 2018
|
John C. Fowler
|
|
|
|
|
|
|
|
|
|
/s/ Stephen M. Fuller
|
|
Director
|
|
February 21, 2018
|
Stephen M. Fuller
|
|
|
|
|
|
|
|
|
|
/s/ Christopher B. Harned
|
|
Director
|
|
February 21, 2018
|
Christopher B. Harned
|
|
|
|
|
|
|
|
|
|
/s/ Jay O. Rothman
|
|
Director
|
|
February 21, 2018
|
Jay O. Rothman
|
|
|
|
|
|
|
|
|
|
/s/ John S. Shiely
|
|
Director
|
|
February 21, 2018
|
John S. Shiely
|
|
|
|
|
Name
|
|
Domicile
|
Chemical Research/Technology, LLC
|
|
Wisconsin
|
Child Day Care and Learning Services, LLC
|
|
Wisconsin
|
Duplainville Transport, Inc.
|
|
Wisconsin
|
Quad Packaging, Inc.
|
|
Wisconsin
|
Quad/Air, LLC
|
|
Wisconsin
|
Quad/Argentina II, LLC
|
|
Wisconsin
|
Quad/Graphics Canada, LLC
|
|
Wisconsin
|
Quad/Graphics Commercial & Specialty LLC
|
|
Wisconsin
|
Quad/Graphics Marketing, LLC
|
|
Wisconsin
|
Quad/Greenfield, LLC
|
|
Wisconsin
|
Quad Logistics Holdings, LLC
|
|
Wisconsin
|
Quad/Med LLC
|
|
Wisconsin
|
QuadMed Medical Clinics of Wisconsin, S.C.*
|
|
Wisconsin
|
Quad/Med Quality Group, Inc.**
|
|
Wisconsin
|
Quad/Tech, Inc.
|
|
Wisconsin
|
Transpak Corporation
|
|
Wisconsin
|
Anselmo L. Morvillo S.A.
|
|
Argentina
|
Quebecor World Buenos Aires S.A.
|
|
Argentina
|
QuadMed Medical Clinics of Arkansas, Ltd.*
|
|
Arkansas
|
QGLA Participacoes S/C Ltda.
|
|
Brazil
|
Quad/Brasil Grafica Ltda.
|
|
Brazil
|
Quad/Graphics Empreendimentos Ltda.
|
|
Brazil
|
Quad/Graphics (BVI) Holdings Ltd.
|
|
British Virgin Islands
|
Quad/Graphics (BVI) Ltd.
|
|
British Virgin Islands
|
Quad/Graphics Investments Ltd.
|
|
British Virgin Islands
|
QuadMed Medical Clinics of California, Inc.*
|
|
California
|
Quad/Graphics Vancouver Corp.
|
|
Canada
|
Quad/Graphics Chile Holding Limitada
|
|
Chile
|
CG Packaging Company, Limited
|
|
China
|
QuadTech (Shanghai) Trading Company Limited
|
|
China
|
Quad/Graphics Colombia S.A.S.
|
|
Colombia
|
Copac Global Packaging, Inc.
|
|
Delaware
|
New Diversified Mailing Services LLC
|
|
Delaware
|
New Electronic Printing Systems, LLC
|
|
Delaware
|
Openfirst LLC
|
|
Delaware
|
QG Printing II LLC
|
|
Delaware
|
Quad/Argentina, Inc.
|
|
Delaware
|
Quad/Brazil, Inc.
|
|
Delaware
|
Quad/Graphics Printing LLC
|
|
Delaware
|
Quad Logistic Services, LLC
|
|
Delaware
|
World Color Capital II, LLC
|
|
Delaware
|
Name
|
|
Domicile
|
Marin's France SAS
|
|
France
|
Marin's International SAS
|
|
France
|
QuadTech France S.a.r.l.
|
|
France
|
Marin's Deutschland GmbH
|
|
Germany
|
QuadTech Germany GmbH
|
|
Germany
|
Quad/Graphics Germany GmbH
|
|
Germany
|
Quad/Graphics Guatemala S.A.
|
|
Guatemala
|
Global Packaging Ltd
|
|
Hong Kong
|
QuadTech Holdings Limited
|
|
Hong Kong
|
QuadMed Professional Services of Kansas, P.A.*
|
|
Kansas
|
Quad/Graphics Luxembourg 1 S.a.r.L.
|
|
Luxembourg
|
Quad/Graphics Luxembourg 2 S.a.r.L.
|
|
Luxembourg
|
Quad/Graphics Mauritius Ltd.
|
|
Mauritius
|
Proyeccion Industrial S.A. de C.V.
|
|
Mexico
|
Quad/Graphics Mexico D.F., S.A. de C.V.
|
|
Mexico
|
Quad/Graphics Mexico Holding S.A. de C.V.
|
|
Mexico
|
Quad/Graphics Queretaro S.A. de C.V.
|
|
Mexico
|
Reproducciones Fotomecanicas S.A. de C.V.
|
|
Mexico
|
QuadMed Clinics of Michigan, P.C.*
|
|
Michigan
|
QuadMed Medical Clinics of Minnesota, P.C.*
|
|
Minnesota
|
Q/G Holland B.V.
|
|
Netherlands
|
Healthy Medical Innovations, PLLC*
|
|
New York
|
QuadMed Medical Clinics of Oregon, P.C.*
|
|
Oregon
|
Quad/Med Medical Clinics of Pennsylvania, P.C.*
|
|
Pennsylvania
|
QG Editores S.A.C.
|
|
Peru
|
Quad/Graphics Peru S.A.
|
|
Peru
|
CRT Sp. z o.o
|
|
Poland
|
Quad/Graphics Europe Sp. z o.o
|
|
Poland
|
OOO QuadWinkowski
|
|
Russia
|
Copac, Inc.
|
|
South Carolina
|
QuadWinkowski AB
|
|
Sweden
|
QuadMed Medical Clinics of Texas, P.A.*
|
|
Texas
|
CG Packaging Co., Ltd.
|
|
Thailand
|
QW Ukraine LLC
|
|
Ukraine
|
Marin's UK Limited
|
|
United Kingdom
|
CG Packaging Company, Ltd.**
|
|
Vietnam
|
CG Global Solutions Company, Ltd.**
|
|
Vietnam
|
1.
|
I have reviewed this Annual Report on Form 10-K of Quad/Graphics, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
February 21, 2018
|
|
|
|
|
|
|
/s/ J. Joel Quadracci
|
|
|
J. Joel Quadracci
|
|
|
Chairman, President and Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of Quad/Graphics, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
February 21, 2018
|
|
|
|
|
|
|
/s/ David J. Honan
|
|
|
David J. Honan
|
|
|
Executive Vice President and Chief Financial Officer
|
|
/s/ J. Joel Quadracci
|
|
J. Joel Quadracci
|
|
Chairman, President and Chief Executive Officer
|
|
|
|
|
|
/s/ David J. Honan
|
|
David J. Honan
|
|
Executive Vice President and Chief Financial Officer
|