RR Donnelley & Sons Co (Form: 10-Q, Received: 05/07/2015 16:27:41)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2015

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

Commission File Number 1-4694

R.R. DONNELLEY & SONS COMPANY

(Exact name of registrant as specified in its charter)

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

111 South Wacker Drive, Chicago, Illinois		60606
(Address of principal executive offices)		(Zip code)

(312) 326-8000

(Registrant’s telephone number, including area code)

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

Yes x No ¨

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

Yes x No ¨

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

Large Accelerated filer	x	Accelerated filer	¨

Non-Accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	¨

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

Yes ¨ No x

As of May 1, 2015, 200.6 million shares of common stock were outstanding.

R.R. DONNELLEY & SONS COMPANY

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2015

TABLE OF CONTENTS

		Page
	PART I
FINANCIAL INFORMATION

Item 1:	Condensed Consolidated Financial Statements (unaudited)	3

	Condensed Consolidated Balance Sheets as of March 31, 2015 and December 31, 2014	3

	Condensed Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014	4

	Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2015 and 2014	5

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and 2014	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3:	Quantitative and Qualitative Disclosures About Market Risk	44

Item 4:	Controls and Procedures	44

	PART II

OTHER INFORMATION

Item 1:	Legal Proceedings	45

Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	45

Item 4:	Mine Safety Disclosures	45

Item 6:	Exhibits	45

Signatures		49

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except per share data)

(UNAUDITED)

	March 31,			December 31,
	2015			2014
ASSETS
Cash and cash equivalents	$	268.7		$	527.9
Receivables, less allowances for doubtful accounts of $48.0 in 2015 (2014 - $44.3)		1,981.6			2,033.8
Inventories (Note 3)		560.2			586.2
Prepaid expenses and other current assets		233.2			225.4
Total current assets		3,043.7			3,373.3
Property, plant and equipment-net (Note 4)		1,455.5			1,515.5
Goodwill (Note 5)		1,697.9			1,706.6
Other intangible assets-net (Note 5)		402.5			423.7
Deferred income taxes		227.2			234.1
Other noncurrent assets		378.5			386.1
Total assets	$	7,205.3		$	7,639.3
LIABILITIES
Accounts payable	$	1,100.1		$	1,296.6
Accrued liabilities		727.5			867.3
Short-term and current portion of long-term debt (Note 14)		203.3			203.4
Total current liabilities		2,030.9			2,367.3
Long-term debt (Note 14)		3,431.0			3,429.1
Pension liabilities		589.4			616.1
Other postretirement benefits plan liabilities		204.7			210.8
Other noncurrent liabilities		390.7			395.6
Total liabilities		6,646.7			7,018.9
Commitments and Contingencies (Note 13)
EQUITY (Note 9)
RR Donnelley shareholders' equity
Preferred stock, $1.00 par value
Authorized: 2.0 shares; Issued: None		—			—
Common stock, $1.25 par value
Authorized: 500.0 shares;
Issued: 259.0 shares in 2015 and 2014		323.7			323.7
Additional paid-in-capital		3,011.0			3,041.5
Accumulated deficit		(588.8	)		(559.1	)
Accumulated other comprehensive loss		(794.2	)		(773.6	)
Treasury stock, at cost, 58.4 shares in 2015 (2014 - 59.2 shares)		(1,408.8	)		(1,438.7	)
Total RR Donnelley shareholders' equity		542.9			593.8
Noncontrolling interests		15.7			26.6
Total equity		558.6			620.4
Total liabilities and equity	$	7,205.3		$	7,639.3

(See Notes to Condensed Consolidated Financial Statements)

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

(UNAUDITED)

	Three Months Ended
	March 31,
	2015			2014
Products net sales	$	2,260.3		$	2,225.7
Services net sales		485.8			448.1
Total net sales		2,746.1			2,673.8

Products cost of sales (exclusive of depreciation and amortization)		1,780.3			1,745.9
Services cost of sales (exclusive of depreciation and amortization)		386.1			354.7
Total cost of sales		2,166.4			2,100.6

Products gross profit		480.0			479.8
Services gross profit		99.7			93.4
Total gross profit		579.7			573.2
Selling, general and administrative expenses (exclusive of depreciation and amortization)		330.9			316.5
Restructuring, impairment and other charges-net (Note 6)		19.8			45.2
Depreciation and amortization		113.4			115.5
Income from operations		115.6			96.0
Interest expense-net		69.0			71.0
Investment and other expense-net		28.3			4.6
Loss on debt extinguishment		—			77.1
Earnings (loss) before income taxes		18.3			(56.7	)
Income tax expense (benefit)		6.4			(23.5	)
Net earnings (loss)		11.9			(33.2	)
Less: Loss attributable to noncontrolling interests		(10.4	)		(4.2	)
Net earnings (loss) attributable to RR Donnelley common shareholders	$	22.3		$	(29.0	)

Net earnings (loss) per share attributable to RR Donnelley common shareholders (Note 10):
Basic net earnings (loss) per share	$	0.11		$	(0.15	)
Diluted net earnings (loss) per share	$	0.11		$	(0.15	)

Dividends declared per common share	$	0.26		$	0.26

Weighted average number of common shares outstanding:
Basic		200.6			193.1
Diluted		202.1			193.1

(See Notes to Condensed Consolidated Financial Statements)

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

(UNAUDITED)

	Three Months Ended
	March 31,
	2015			2014
Net earnings (loss)	$	11.9		$	(33.2	)

Other comprehensive (loss) income, net of tax (Note 11):
Translation adjustments		(22.6	)		(9.0	)
Adjustment for net periodic pension and postretirement benefits plan cost		2.2			0.9
Other comprehensive loss		(20.4	)		(8.1	)
Comprehensive loss		(8.5	)		(41.3	)
Less: comprehensive loss attributable to noncontrolling interests		(10.2	)		(4.3	)
Comprehensive income (loss) attributable to RR Donnelley common shareholders	$	1.7		$	(37.0	)

(See Notes to Condensed Consolidated Financial Statements)

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(UNAUDITED)

	Three Months Ended
		March 31,
		2015			2014
OPERATING ACTIVITIES
Net earnings (loss)		$	11.9		$	(33.2	)
Adjustments to reconcile net earnings (loss) to net cash used in operating activities:
Impairment charges			0.8			6.6
Depreciation and amortization			113.4			115.5
Provision for doubtful accounts receivable			5.9			2.4
Share-based compensation			3.5			3.8
Deferred income taxes			(8.0	)		(3.2	)
Changes in uncertain tax positions			(1.5	)		(2.9	)
Gain on investments and other assets – net			(0.2	)		(0.8	)
Loss related to Venezuela currency remeasurement-net			29.9			21.8
Loss on debt extinguishment			—			77.1
Net pension and other postretirement benefits plan income			(10.8	)		(11.3	)
Gain on bargain purchase			—			(16.6	)
Other			11.8			6.4
Changes in operating assets and liabilities - net of acquisitions:
Accounts receivable - net			9.8			23.1
Inventories			(1.0	)		6.1
Prepaid expenses and other current assets			(3.4	)		(9.1	)
Accounts payable			(173.7	)		(145.0	)
Income taxes payable and receivable			4.1			(33.1	)
Accrued liabilities and other			(128.5	)		(73.8	)
Pension and other postretirement benefits plan contributions			(8.3	)		(14.2	)
Net cash used in operating activities			(144.3	)		(80.4	)
INVESTING ACTIVITIES
Capital expenditures			(48.5	)		(49.0	)
Acquisitions of businesses, net of cash acquired			(2.0	)		(381.6	)
Disposition of businesses			(0.2	)		1.7
Proceeds from sales of investments and other assets			5.4			1.5
Other investing activities			(0.4	)		—
Net cash used in investing activities			(45.7	)		(427.4	)
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt			—			400.0
Net change in short-term debt			1.7			0.1
Payments of current maturities and long-term debt			(0.3	)		(552.5	)
Net proceeds from credit facility borrowings			—			10.0
Debt issuance costs			—			(6.2	)
Dividends paid			(52.0	)		(47.3	)
Other financing activities			3.0			(0.9	)
Net cash used in financing activities			(47.6	)		(196.8	)
Effect of exchange rate on cash and cash equivalents			(21.6	)		(15.4	)
Net decrease in cash and cash equivalents			(259.2	)		(720.0	)
Cash and cash equivalents at beginning of year			527.9			1,028.4
Cash and cash equivalents at end of period		$	268.7		$	308.4

Supplemental non-cash disclosure:
Issuances of 17.0 million shares of RR Donnelley stock for acquisitions of businesses		$	—		$	319.0

(See Notes to Condensed Consolidated Financial Statements)

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions, except per share data, unless otherwise indicated)

1. Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements include the accounts of R.R. Donnelley & Sons Company and its subsidiaries (the “Company” or “RR Donnelley”) and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed consolidated interim financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods and should be read in conjunction with the consolidated financial statements and the related notes thereto included in the Company’s latest Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on February 25, 2015. Operating results for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2015. All significant intercompany transactions have been eliminated in consolidation. These unaudited condensed consolidated interim financial statements include estimates and assumptions of management that affect the amounts reported in the condensed consolidated financial statements. Actual results could differ from these estimates.

Note 2. Acquisitions and Dispositions

2015 Acquisitions

On February 5, 2015, the Company announced that it had entered into a definitive agreement to acquire Courier Corporation (“Courier”), a leader in digital printing, publishing and content management primarily in the United States, specializing in educational, religious and trade books. Based on the Company’s closing share price on March 31, 2015, the total transaction value is approximately $290.5 million in cash and RR Donnelley shares, plus the assumption of Courier’s net debt. The completion of the transaction is subject to customary closing conditions, including approval of Courier’s shareholders.

For the three months ended March 31, 2015, the Company recorded $10.5 million of acquisition-related expenses associated with acquisitions completed or contemplated, within selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

2014 Acquisitions

On March 25, 2014, the Company acquired substantially all of the North American operations of Esselte Corporation (“Esselte”), a developer and manufacturer of nationally branded and private label office and stationery products. The acquisition, combined with the Company’s existing products, created a more competitive and efficient office products supplier capable of supplying enhanced offerings across the combined customer base. The purchase price for Esselte included $82.3 million in cash and 1.0 million shares of RR Donnelley common stock, or a total transaction value of $100.6 million based on the Company’s closing share price on March 24, 2014. Esselte’s operations are included in the Variable Print segment.

On March 10, 2014, the Company acquired the assets of MultiCorpora R&D Inc. and MultiCorpora International Inc. (together “MultiCorpora”) for approximately $6.0 million. MultiCorpora is an international provider of translation technology solutions. The acquisition of MultiCorpora expanded the capabilities of the Company’s translation services offering which supports clients’ multi-lingual communications. MultiCorpora’s operations are included in the Strategic Services segment.

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

For the three months ended March 31, 2014, the Company recorded $7.7 million of acquisition-related expenses associated with acquisitions completed or contemplated within selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions, except per share data, unless otherwise indicated)

The Esselte, MultiCorpora and Consolidated Graphics acquisitions were recorded by allocating the cost of the acquisitions to the assets acquired, including other intangible assets, based on their estimated fair values at the acquisition date. The excess of the cost of the MultiCorpora and Consolidated Graphics acquisitions over the net amounts assigned to the fair value of the assets acquired was recorded as goodwill. The goodwill associated with these acquisitions is primarily attributable to the synergies expected to arise as a result of the acquisitions.

For Esselte, the fair value of the identifiable net assets acquired of approximately $110.1 million exceeded the purchase price of $100.6 million, resulting in a bargain purchase gain of $9.5 million for the year ended December 31, 2014, which was recorded in net investment and other expense. The gain on the bargain purchase was primarily attributable to the Company’s ability to utilize certain tax operating losses.

The tax deductible goodwill related to the Consolidated Graphics, Esselte and MultiCorpora acquisitions was $73.4 million.

Based on the valuations, the final purchase price allocations for these acquisitions as well as the purchase price allocation for an insignificant acquisition were as follows:

Accounts receivable	$	242.0
Inventories		89.6
Prepaid expenses and other current assets		17.5
Property, plant and equipment		337.0
Other intangible assets		205.0
Other noncurrent assets		11.9
Goodwill		300.1
Accounts payable and accrued liabilities		(221.0	)
Other noncurrent liabilities		(57.5	)
Deferred taxes--net		(96.6	)
Total purchase price-net of cash acquired		828.0
Less: debt assumed		118.4
Less: value of common stock issued		319.0
Less: gain on bargain purchase		9.5
Net cash paid	$	381.1

The fair values of other intangible assets, technology and goodwill associated with the acquisitions of Esselte, MultiCorpora and Consolidated Graphics were determined to be Level 3 under the fair value hierarchy. The following table presents the fair value, valuation techniques and related unobservable inputs for these Level 3 measurements:

	Fair Value		Valuation Technique	Unobservable Input	Range
Customer relationships	$	178.2	Excess earnings	Discount rate Attrition rate	17.0% - 21.0% 5.0% - 9.5%
Trade names		26.5	Relief-from-royalty method	Discount rate Royalty rate (after-tax)	19.0% 0.5% - 1.5%
Technology		1.1	Excess earnings	Discount rate		17.0%

The fair values of property, plant and equipment associated with the Consolidated Graphics, Esselte, and MultiCorpora acquisitions were determined to be Level 3 under the fair value hierarchy. Property, plant and equipment values were estimated using either the cost or market approach, if a secondhand market existed.

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions, except per share data, unless otherwise indicated)

2014 Dispositions

On August 15, 2014, the Company sold the assets and liabilities of Journalism Online, LLC (“Journalism Online”), a provider of online subscription management services, for net proceeds of $10.7 million, of which $9.3 million was received as of March 31, 2015, resulting in a gain of $11.2 million during the year ended December 31, 2014. The gain was included in net investment and other expense in the Consolidated Statement of Operations. The operations of the Journalism Online business were included in the Strategic Services segment.

On August 11, 2014, the Company’s subsidiary, RR Donnelley Argentina S.A. (“RRDA”), filed for bankruptcy liquidation in bankruptcy court in Argentina. The bankruptcy petition was approved by the court shortly thereafter and a bankruptcy trustee was appointed. As a result of the bankruptcy liquidation, the Company recorded a loss of $16.4 million in net investment and other expense for the year ended December 31, 2014. Effective as of the court’s approval, the operating results of RRDA are no longer included in the Company’s consolidated results of operations. RRDA had net sales of $9.6 million and a loss before income taxes of $1.4 million for the three months ended March 31, 2014. The operations of RRDA were included in the International segment.

On February 7, 2014, the Company sold the assets and liabilities of Office Tiger Global Real Estate Service Inc. (“GRES”), its commercial and residential real estate advisory services, for net proceeds of $1.8 million and a loss of $0.8 million, which was recognized in net investment and other expense in the Consolidated Statements of Operations for the year ended December 31, 2014. The operations of the GRES business were included in the International segment.

Pro forma results

The following unaudited pro forma financial information for the three months ended March 31, 2014 presents the combined results of operations of the Company and the 2014 acquisitions described above, as if the acquisitions had occurred as of January 1 of the year prior to acquisition.

The unaudited pro forma financial information is not intended to represent or be indicative of the Company’s consolidated results of operations or financial condition that would have been reported had these acquisitions been completed as of the beginning of the period presented and should not be taken as indicative of the Company’s future consolidated results of operations or financial condition. Pro forma adjustments are tax-effected at the applicable statutory tax rates.

	Three Months Ended March 31, 2014
Net sales	$	2,826.6
Net loss attributable to RR Donnelley common shareholders		(17.7	)
Net loss per share attributable to RR Donnelley common shareholders:
Basic	$	(0.09	)
Diluted	$	(0.09	)

The following table outlines unaudited pro forma financial information for the three months ended March 31, 2014:

	Three Months Ended March 31, 2014
Amortization of purchased intangibles	$	20.5
Restructuring, impairment and other charges		30.1

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions, except per share data, unless otherwise indicated)

Additionally, the pro forma adjustments affecting net loss attributable to RR Donnelley common shareholders for the three months ended March 31, 2014 were as follows:

	Three Months Ended March 31, 2014
Depreciation and amortization of purchased assets, pre-tax	$	(0.2	)
Acquisition-related expenses, pre-tax		18.6
Restructuring and impairment charges, pre-tax		17.1
Inventory fair value adjustment, pre-tax		12.1
Other pro forma adjustments, pre-tax		(10.6	)
Income taxes		(10.2	)

3. Inventories

The components of the Company’s inventories, net of excess and obsolescence reserves for raw materials and finished goods, at March 31, 2015 and December 31, 2014 were as follows:

	March 31,			December 31,
	2015			2014
Raw materials and manufacturing supplies	$	250.0		$	261.7
Work in process		155.4			157.5
Finished goods		249.1			260.6
LIFO reserve		(94.3	)		(93.6	)
Total	$	560.2		$	586.2

4. Property, Plant and Equipment

The components of the Company’s property, plant and equipment at March 31, 2015 and December 31, 2014 were as follows:

	March 31,			December 31,
	2015			2014
Land	$	111.1		$	112.1
Buildings		1,206.7			1,214.8
Machinery and equipment		6,123.8			6,142.8
		7,441.6			7,469.7
Less: Accumulated depreciation		(5,986.1	)		(5,954.2	)
Total	$	1,455.5		$	1,515.5

During the three months ended March 31, 2015 and 2014, depreciation expense was $82.9 million and $87.9 million, respectively.

Assets Held for Sale

Primarily as a result of restructuring actions, certain facilities and equipment are considered held for sale. The net book value of assets held for sale was $3.4 million and $7.2 million at March 31, 2015 and December 31, 2014, respectively. These assets were included in other current assets in the Condensed Consolidated Balance Sheets at March 31, 2015 and December 31, 2014 at the lower of their historical net book value or their estimated fair value, less estimated costs to sell.

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions, except per share data, unless otherwise indicated)

5. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill by segment for the three months ended March 31, 2015 were as follows:

	Publishing & Retail			Print			Strategic			International
	Services			Solutions			Services			Services			Total
Net book value as of December 31, 2014
Goodwill	$	688.0			1,914.1			987.5		$	1,213.9		$	4,803.5
Accumulated impairment losses		(688.0	)		(1,105.2	)		(222.4	)		(1,081.3	)		(3,096.9	)
Total		—			808.9			765.1			132.6			1,706.6
Acquisitions		—			—			1.2			—			1.2
Foreign exchange and other adjustments		—			(1.2	)		(0.4	)		(8.3	)		(9.9	)
Net book value as of March 31, 2015
Goodwill		688.0			1,912.9			986.0			1,151.1			4,738.0
Accumulated impairment losses		(688.0	)		(1,105.2	)		(220.1	)		(1,026.8	)		(3,040.1	)
Total	$	—		$	807.7		$	765.9		$	124.3		$	1,697.9

The components of other intangible assets at March 31, 2015 and December 31, 2014 were as follows:

	March 31, 2015							December 31, 2014
	Gross							Gross
	Carrying		Accumulated			Net Book		Carrying		Accumulated			Net Book
	Amount		Amortization			Value		Amount		Amortization			Value

Customer relationships	$	850.5	$	(503.3	)	$	347.2	$	865.6	$	(498.0	)	$	367.6
Patents		98.3		(98.3	)		—		98.3		(98.3	)		—
Trademarks, licenses and agreements		31.8		(29.9	)		1.9		31.5		(29.7	)		1.8
Trade names		42.9		(16.2	)		26.7		43.1		(15.6	)		27.5
Total amortizable other intangible assets		1,023.5		(647.7	)		375.8		1,038.5		(641.6	)		396.9
Indefinite-lived trade names		26.7		—			26.7		26.8		—			26.8
Total other intangible assets	$	1,050.2	$	(647.7	)	$	402.5	$	1,065.3	$	(641.6	)	$	423.7

Amortization expense for other intangible assets was $19.0 million and $18.3 million for the three months ended March 31, 2015 and 2014, respectively.

The following table outlines the estimated annual amortization expense related to other intangible assets as of March 31, 2015:

For the year ending December 31,	Amount
2015	$	73.6
2016		56.2
2017		50.2
2018		45.0
2019		41.5
2020 and thereafter		128.3
Total	$	394.8

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions, except per share data, unless otherwise indicated)

6. Restructuring, Impairment and Other Charges

Restructuring, Impairment and Other Charges Recognized in Results of Operations

For the three months ended March 31, 2015 and 2014, the Company recorded the following net restructuring, impairment and other charges:

Three Months Ended	Employee		Other Restructuring		Total Restructuring					Other
March 31, 2015	Terminations		Charges		Charges		Impairment			Charges		Total
Publishing and Retail Services	$	2.8	$	1.1	$	3.9	$	(0.4	)	$	0.8	$	4.3
Variable Print		2.0		1.3		3.3		1.3			0.4		5.0
Strategic Services		1.6		0.5		2.1		—			0.1		2.2
International		7.7		0.2		7.9		(0.2	)		—		7.7
Corporate		0.1		0.5		0.6		—			—		0.6
Total	$	14.2	$	3.6	$	17.8	$	0.7		$	1.3	$	19.8

Three Months Ended	Employee		Other Restructuring		Total Restructuring				Other
March 31, 2014	Terminations		Charges		Charges		Impairment		Charges		Total
Publishing and Retail Services	$	0.2	$	2.1	$	2.3	$	2.2		16.3	$	20.8
Variable Print		11.1		0.9		12.0		4.5		4.1		20.6
Strategic Services		1.0		0.5		1.5		—		0.1		1.6
International		1.1		0.5		1.6		—		—		1.6
Corporate		0.5		0.1		0.6		—		—		0.6
Total	$	13.9	$	4.1	$	18.0	$	6.7	$	20.5	$	45.2

Restructuring and Impairment Charges

For the three months ended March 31, 2015, the Company recorded net restructuring charges of $14.2 million for employee termination costs for 894 employees, of whom 735 were terminated as of March 31, 2015. These charges primarily related to one facility closure in the International segment, one facility closure in the Variable Print segment and the reorganization of certain operations. Additionally, the Company incurred lease termination and other restructuring charges of $3.6 million for the three months ended March 31, 2015. For the three months ended March 31, 2015, the Company also recorded $0.7 million of net impairment charges primarily related to buildings and machinery and equipment associated with facility closures.

For the three months ended March 31, 2014, the Company recorded net restructuring charges of $13.9 million for employee termination costs for 278 employees, substantially all of whom were terminated as of March 31, 2015. These charges primarily related to the integration of Consolidated Graphics, including the closure of three Consolidated Graphics facilities as well as one additional facility closure within the Variable Print segment, one facility closure in the Publishing and Retail Services segment and the reorganization of certain operations. Additionally, the Company incurred lease termination and other restructuring charges of $4.1 million for the three months ended March 31, 2014. For the three months ended March 31, 2014, the Company also recorded $6.7 million of impairment charges primarily related to buildings and machinery and equipment associated with facility closings. The fair values of the buildings and machinery and equipment were determined to be Level 3 under the fair value hierarchy and were estimated based on discussions with real estate brokers, review of comparable properties, if available, discussions with machinery and equipment brokers, dealer quotes and internal expertise related to the current marketplace conditions.

Other Charges

For the three months ended March 31, 2015 and 2014, the Company recorded other charges of $1.3 million and $20.5 million, respectively, for multi-employer pension plan withdrawal obligations unrelated to facility closures. The total liabilities for the withdrawal obligations associated with the Company’s decision to withdraw from all multi-employer pension plans included in accrued liabilities and other noncurrent liabilities are $10.9 million and $86.6 million, respectively, as of March 31, 2015.

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions, except per share data, unless otherwise indicated)

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

Restructuring Reserve

The restructuring reserve as of December 31, 2014 and March 31, 2015, and changes during the three months ended March 31, 2015, were as follows:

					Foreign
	December 31,		Restructuring		Exchange and			Cash			March 31,
	2014		Charges		Other			Paid			2015
Employee terminations	$	13.0	$	14.2	$	(0.8	)	$	(11.1	)	$	15.3
Multi-employer pension withdrawal obligations		34.6		0.5		(0.1	)		(1.5	)		33.5
Lease terminations and other		15.1		3.1		—			(5.4	)		12.8
Total	$	62.7	$	17.8	$	(0.9	)	$	(18.0	)	$	61.6

The current portion of restructuring reserves of $23.7 million at March 31, 2015 was included in accrued liabilities, while the long-term portion of $37.9 million, primarily related to multi-employer pension plan withdrawal obligations related to facility closures and lease termination costs, was included in other noncurrent liabilities at March 31, 2015.

The Company anticipates that payments associated with the employee terminations reflected in the above table will be substantially completed by March 2016.

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

The restructuring liabilities classified as “lease terminations and other” consisted of lease terminations, other facility closing costs and contract termination costs. Payments on certain of the lease obligations are scheduled to continue until 2026. Market conditions and the Company’s ability to sublease these properties could affect the ultimate charges related to the lease obligations. Any potential recoveries or additional charges could affect amounts reported in the Company’s financial statements.

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions, except per share data, unless otherwise indicated)

7. Employee Benefits

The components of the estimated net pension and other postretirement benefits plan income for the three months ended March 31, 2015 and 2014 were as follows:

	Three Months Ended
	March 31,
	2015			2014
Pension (income) expense
Service cost	$	0.6		$	0.5
Interest cost		44.8			47.7
Expected return on assets		(61.6	)		(63.1	)
Amortization, net		10.2			7.8
Net pension income	$	(6.0	)	$	(7.1	)
Other postretirement benefits plan (income) expense
Service cost	$	1.2		$	1.1
Interest cost		4.0			4.2
Expected return on plan assets		(3.3	)		(3.1	)
Amortization, net		(6.7	)		(6.4	)
Net other postretirement benefits plan income	$	(4.8	)	$	(4.2	)

8. Share-Based Compensation

The Company recognizes compensation expense based on estimated grant date fair values for all share-based awards issued to employees and directors, including stock options, restricted stock units and performance share units. The total compensation expense related to all share-based compensation plans was $3.5 million and $3.8 million for the three months ended March 31, 2015 and 2014, respectively.

Stock Options

There were no options granted during the three months ended March 31, 2015 and 2014.

Stock option awards as of December 31, 2014 and March 31, 2015, and changes during the three months ended March 31, 2015, were as follows:

						Weighted
						Average
				Weighted		Remaining		Aggregate
				Average		Contractual		Intrinsic
	Shares Under Option			Exercise		Term		Value
	(Thousands)			Price		(Years)		(millions)
Outstanding at December 31, 2014		3,847		$	19.43		4.7	$	12.6
Exercised		(92	)		13.21
Outstanding at March 31, 2015		3,755			19.58		4.4		16.6
Vested and expected to vest at March 31, 2015		3,745			19.60		4.4		16.6
Exercisable at March 31, 2015		1,729		$	10.48		5.2	$	15.1

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions, except per share data, unless otherwise indicated)

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on March 31, 2015 and December 31, 2014, respectively, and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their in-the-money options on March 31, 2015 and December 31, 2014. This amount will change in future periods based on the fair market value of the Company’s stock and the number of options outstanding. Total intrinsic value of options exercised for the three months ended March 31, 2015 and 2014 was $0.5 million and $1.0 million, respectively. Excess tax benefits on stock option exercises, shown as financing cash inflows in the Condensed Consolidated Statements of Cash Flows were $0.1 million and $0.3 million for the three months ended March 31, 2015 and 2014, respectively.

Compensation expense related to stock options for the three months ended March 31, 2015 and 2014 was $0.2 million and $0.3 million, respectively. As of March 31, 2015, $0.5 million of total unrecognized compensation expense related to stock options is expected to be recognized over a weighted average period of 0.9 years.

Restricted Stock Units

Nonvested restricted stock unit awards as of December 31, 2014 and March 31, 2015, and changes during the three months ended March 31, 2015, were as follows:

				Weighted Average
	Shares			Grant Date
	(Thousands)			Fair Value
Nonvested at December 31, 2014		2,045		$	12.54
Granted		575			16.73
Vested		(880	)		12.94
Nonvested at March 31, 2015		1,740		$	13.71

Compensation expense related to restricted stock units for the three months ended March 31, 2015 and 2014 was $2.6 million and $2.9 million, respectively. As of March 31, 2015, there was $19.7 million of unrecognized share-based compensation expense related to approximately 1.7 million of restricted stock unit awards, with a weighted average grant date fair market value of $13.71, that are expected to vest over a weighted average period of 2.5 years. The fair value of these awards was determined based on the Company’s stock price on the grant date reduced by the present value of expected dividends through the vesting period.

Excess tax benefits on restricted stock units that vested, shown as financing cash inflows in the Condensed Consolidated Statements of Cash Flows, were $2.1 million and $2.2 million for the three months ended March 31, 2015 and 2014, respectively.

Performance Share Units

Nonvested performance share unit awards as of December 31, 2014 and March 31, 2015, and changes during the three months ended March 31, 2015, were as follows:

			Weighted Average
	Shares		Grant Date
	(Thousands)		Fair Value
Nonvested at December 31, 2014		804	$	11.87
Granted		418		16.73
Nonvested at March 31, 2015		1,222	$	13.53

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions, except per share data, unless otherwise indicated)

During the three months ended March 31, 2015, 418,000 performance share unit awards were granted to certain executive and senior officers, payable upon the achievement of certain established performance targets. The performance period for the shares awarded is January 1, 2015 through December 31, 2017. Distributions under these awards are payable at the end of the performance period in common stock or cash, at the Company’s discretion. The total potential payouts for awards granted during the three months ended March 31, 2015 range from 209,000 to 627,000 shares, should certain performance targets be achieved. The fair value of these awards was determined based on the Company’s stock price on the grant date reduced by the present value of expected dividends through the vesting period. These awards are subject to forfeiture upon termination of employment prior to vesting, subject in some cases to early vesting upon specified events, including death or permanent disability of the grantee or a change in control of the Company. In addition, certain of these awards provide for continued vesting upon same terms and conditions that would have applied had grantee's employment not terminated upon a termination without cause by the Company or for good reason by the grantee.

Compensation expense for the performance share unit awards granted in 2015 is being recognized based on 100% payout or 418,000 shares. Compensation expense for the performance share unit awards granted in 2014 and 2013 is being recognized based on the maximum estimated payout of 319,000 and 485,000 shares, for each respective period. Compensation expense related to performance share unit awards for the three months ended March 31, 2015 and 2014 was $0.7 million and $0.6 million, respectively. As of March 31, 2015, there was $11.1 million of unrecognized compensation expense related to performance share unit awards, which is expected to be recognized over a weighted average period of 2.3 years.

9. Equity

The Company’s equity as of December 31, 2014 and March 31, 2015, and changes during the three months ended March 31, 2015, were as follows:

	RR Donnelley
	Shareholders'			Noncontrolling
	Equity			Interest			Total Equity
Balance at December 31, 2014	$	593.8		$	26.6			620.4
Net earnings (loss)		22.3			(10.4	)		11.9
Other comprehensive loss		(20.6	)		0.2			(20.4	)
Share-based compensation		3.5			—			3.5
Issuance of share-based awards, net of withholdings and other		(4.1	)		—			(4.1	)
Cash dividends paid		(52.0	)		—			(52.0	)
Distributions to noncontrolling interests		—			(0.7	)		(0.7	)
Balance at March 31, 2015	$	542.9		$	15.7		$	558.6

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions, except per share data, unless otherwise indicated)

The Company’s equity as of December 31, 2013 and March 31, 2014, and changes during the three months ended March 31, 2014, were as follows:

	RR Donnelley
	Shareholders'			Noncontrolling
	Equity			Interest			Total Equity
Balance at December 31, 2013	$	631.8		$	21.9		$	653.7
Net loss		(29.0	)		(4.2	)		(33.2	)
Other comprehensive loss		(8.0	)		(0.1	)		(8.1	)
Share-based compensation		3.8			—			3.8
Issuances of common stock		300.7			—			300.7
Issuances of treasury stock		18.3			—			18.3
Issuance of share-based awards, net of withholdings and other		(4.4	)		—			(4.4	)
Cash dividends paid		(47.3	)		—			(47.3	)
Noncontrolling interests in acquired business		—			2.7			2.7
Distributions to noncontrolling interests		—			(0.7	)		(0.7	)
Balance at March 31, 2014	$	865.9		$	19.6		$	885.5

During the three months ended March 31, 2014, the Company issued stock in conjunction with the Consolidated Graphics and Esselte acquisitions with closing date values of $300.7 million and $18.3 million, respectively.

10. Earnings per Share

Basic earnings (loss) per share is calculated by dividing net earnings (loss) attributable to RR Donnelley common shareholders by the weighted average number of common shares outstanding for the period. In computing diluted earnings (loss) per share, basic earnings (loss) per share is adjusted for the assumed issuance of all potentially dilutive share-based awards, including stock options, restricted stock units and performance share units. Performance share units are considered anti-dilutive and excluded if the performance targets upon which the issuance of the shares is contingent have not been achieved and the respective performance period has not been completed as of the end of the current period. Additionally, stock options are considered anti-dilutive when the exercise price exceeds the average of the Company’s stock price during the applicable period.

During the three months ended March 31, 2015 and 2014, no shares of common stock were purchased by the Company; however, shares were withheld for tax liabilities upon the vesting of equity awards.

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions, except per share data, unless otherwise indicated)

The reconciliation of the numerator and denominator of the basic and diluted earnings (loss) per share calculation and the anti-dilutive share-based awards for the three months ended March 31, 2015 and 2014 were as follows:

	Three Months Ended
	March 31,
	2015		2014
Net earnings (loss) per share attributable to RR Donnelley common shareholders:
Basic	$	0.11	$	(0.15	)
Diluted	$	0.11	$	(0.15	)
Dividends declared per common share	$	0.26	$	0.26
Numerator:
Net earnings (loss) attributable to RR Donnelley common shareholders	$	22.3	$	(29.0	)
Denominator:
Weighted average number of common shares outstanding		200.6		193.1
Dilutive options and awards		1.5		—
Diluted weighted average number of common shares outstanding		202.1		193.1
Weighted average number of anti-dilutive share-based awards:
Stock options		2.0		4.1
Performance share units		0.9		1.0
Restricted stock units		—		2.3
Total		2.9		7.4

11. Comprehensive Income

The components of other comprehensive (loss) income and income tax expense allocated to each component for the three months ended March 31, 2015 and 2014 were as follows:

	Three Months Ended
	March 31, 2015
	Before Tax			Income Tax		Net of Tax
	Amount			Expense		Amount
Translation adjustments	$	(22.6	)	$	—	$	(22.6	)
Adjustment for net periodic pension and other postretirement benefits plan cost		3.5			1.3		2.2
Change in fair value of derivatives		0.1			0.1		—
Other comprehensive (loss) income	$	(19.0	)	$	1.4	$	(20.4	)

	Three Months Ended
	March 31, 2014
	Before Tax			Income Tax		Net of Tax
	Amount			Expense		Amount
Translation adjustments	$	(9.0	)	$	—	$	(9.0	)
Adjustment for net periodic pension and other postretirement benefits plan cost		1.4			0.5		0.9
Change in fair value of derivatives		0.1			0.1		—
Other comprehensive (loss) income	$	(7.5	)	$	0.6	$	(8.1	)

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions, except per share data, unless otherwise indicated)

Accumulated other comprehensive loss by component as of December 31, 2014 and March 31, 2015, and changes during the three months ended March 31, 2015, were as follows:

	Changes in the Fair Value of Derivatives			Pension and Other Postretirement Benefits Plan Cost			Translation Adjustments			Total
Balance at December 31, 2014	$	(0.1	)	$	(762.3	)	$	(11.2	)	$	(773.6	)
Other comprehensive loss before reclassifications		—			—			(22.8	)		(22.8	)
Amounts reclassified from accumulated other comprehensive loss		—			2.2			—			2.2
Net change in accumulated other comprehensive loss		—			2.2			(22.8	)		(20.6	)
Balance at March 31, 2015	$	(0.1	)	$	(760.1	)	$	(34.0	)	$	(794.2	)

Accumulated other comprehensive income (loss) by component as of December 31, 2013 and March 31, 2014, and changes during the three months ended March 31, 2014, were as follows:

	Changes in the Fair Value of Derivatives			Pension and Other Postretirement Benefits Plan Cost			Translation Adjustments			Total
Balance at December 31, 2013	$	(0.2	)	$	(521.4	)	$	33.5		$	(488.1	)
Other comprehensive loss before reclassifications		—			—			(8.9	)		(8.9	)
Amounts reclassified from accumulated other comprehensive loss		—			0.9			—			0.9
Net change in accumulated other comprehensive loss		—			0.9			(8.9	)		(8.0	)
Balance at March 31, 2014	$	(0.2	)	$	(520.5	)	$	24.6		$	(496.1	)

Reclassifications from accumulated other comprehensive loss for the three months ended March 31, 2015 and 2014 were as follows:

	Three Months Ended March 31,						Classification in the Condensed
	2015			2014			Consolidated Statements of Operations
Amortization of pension and other postretirement benefits plan cost:
Net actuarial loss	$	10.2		$	7.8		_(a)
Net prior service credit		(6.7	)		(6.4	)	_(a)
Reclassifications before tax		3.5			1.4
Income tax expense		1.3			0.5
Reclassifications, net of tax	$	2.2		$	0.9

(a)

These accumulated other comprehensive income (loss) components are included in the calculation of net periodic pension and other postretirement benefits plan income recognized in cost of sales and selling, general and administrative expenses in the Condensed Consolidated Statements of Operations (see Note 7, Employee Benefits ).

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions, except per share data, unless otherwise indicated)

12. Segment Information

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

Publishing and Retail Services

The Publishing and Retail Services segment’s primary product offerings include magazines, catalogs, retail inserts, books, directories and packaging.

Variable Print

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

Strategic Services

The Strategic Services segment includes the Company’s logistics services, financial print products and related services, print management offerings and digital and creative solutions.

International

The International segment includes the Company’s non-U.S. printing operations in Asia, Europe, Latin America and Canada. This segment’s primary product and service offerings include magazines, catalogs, retail inserts, books, directories, direct mail, packaging, forms, labels, manuals, statement printing, commercial and digital print, logistics services and digital and creative solutions. Additionally, this segment includes the Company’s business process outsourcing and Global Turnkey Solutions operations. Business process outsourcing provides transactional print and outsourcing services, statement printing, direct mail and print management offerings through its operations in Europe, Asia and North America. Global Turnkey Solutions provides outsourcing capabilities, including product configuration, customized kitting and order fulfillment for technology, medical device and other companies around the world through its operations in Europe, North America and Asia.

Corporate

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

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions, except per share data, unless otherwise indicated)

Information by Segment

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

								Income (Loss)					Depreciation
	Total		Intersegment			Net		from			Assets of		and		Capital
	Sales		Sales			Sales		Operations			Operations		Amortization		Expenditures
Three Months Ended March 31, 2015
Publishing and Retail Services	$	577.8	$	(4.0	)	$	573.8	$	11.8		$	1,153.9	$	34.3	$	12.5
Variable Print		964.2		(15.4	)		948.8		66.2			2,585.7		39.0		9.5
Strategic Services		694.8		(27.5	)		667.3		55.0			1,419.5		17.4		11.9
International		581.2		(25.0	)		556.2		12.1			1,586.8		21.7		12.2
Total operating segments		2,818.0		(71.9	)		2,746.1		145.1			6,745.9		112.4		46.1
Corporate		—		—			—		(29.5	)		459.4		1.0		2.4
Total operations	$	2,818.0	$	(71.9	)	$	2,746.1	$	115.6		$	7,205.3	$	113.4	$	48.5

								Income (Loss)					Depreciation
	Total		Intersegment			Net		from			Assets of		and		Capital
	Sales		Sales			Sales		Operations			Operations		Amortization		Expenditures
Three Months Ended March 31, 2014
Publishing and Retail Services	$	643.5	$	(0.8	)	$	642.7	$	9.9		$	1,303.6	$	37.7	$	11.9
Variable Print		809.0		(16.9	)		792.1		27.7			2,723.6		35.1		10.4
Strategic Services		650.6		(30.9	)		619.7		55.4			1,427.0		16.1		9.9
International		639.4		(20.1	)		619.3		30.2			1,919.5		24.9		12.0
Total operating segments		2,742.5		(68.7	)		2,673.8		123.2			7,373.7		113.8		44.2
Corporate		—		—			—		(27.2	)		220.7		1.7		4.8
Total operations	$	2,742.5	$	(68.7	)	$	2,673.8	$	96.0		$	7,594.4	$	115.5	$	49.0

Restructuring, impairment and other charges by segment for the three months ended March 31, 2015 and 2014 are described in Note 6, Restructuring, Impairment and Other Charges .

13. Commitments and Contingencies

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

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions, except per share data, unless otherwise indicated)

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

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

14. Debt

The Company’s debt at March 31, 2015 and December 31, 2014 consisted of the following:

	March 31,			December 31,
	2015			2014
5.50% senior notes due May 15, 2015	$	200.0		$	200.0
8.60% senior notes due August 15, 2016		219.2			219.1
6.125% senior notes due January 15, 2017		251.1			251.0
7.25% senior notes due May 15, 2018		250.0			250.0
11.25% senior notes due February 1, 2019 _(a)		172.2			172.2
8.25% senior notes due March 15, 2019		238.9			238.9
7.625% senior notes due June 15, 2020		350.0			350.0
7.875% senior notes due March 15, 2021		448.3			448.3
8.875% debentures due April 15, 2021		80.9			80.9
7.00% senior notes due February 15, 2022		400.0			400.0
6.50% senior notes due November 15, 2023		350.0			350.0
6.00% senior notes due April 1, 2024		400.0			400.0
6.625% debentures due April 15, 2029		199.5			199.5
8.820% debentures due April 15, 2031		69.0			69.0
Other _(b)		5.2			3.6
Total debt		3,634.3			3,632.5
Less: current portion		(203.3	)		(203.4	)
Long-term debt	$	3,431.0		$	3,429.1

(a)	As of March 31, 2015 and December 31, 2014, the interest rate on the 11.25% senior notes due February 1, 2019 was 12.75% as a result of downgrades in the ratings of the notes by the rating agencies.

(b)	Includes fair value adjustments to the 8.25% senior notes due March 15, 2019 related to the Company’s fair value hedges, miscellaneous debt obligations and capital leases.

The fair values of the senior notes and debentures, which were determined using the market approach based upon interest rates available to the Company for borrowings with similar terms and maturities, were determined to be Level 2 under the fair value hierarchy. The fair value of the Company’s debt was greater than its book value by approximately $357.1 million and $259.5 million at March 31, 2015 and December 31, 2014, respectively.

Effective September 9, 2014, the aggregate revolving commitments of the Lenders under the Company’s senior secured revolving credit facility (the “Credit Agreement”) were increased from $1.15 billion to $1.5 billion and the expiration date of the Credit Agreement was extended from October 15, 2017 to September 9, 2019.

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions, except per share data, unless otherwise indicated)

The Credit Agreement is subject to a number of covenants, including a minimum Interest Coverage Ratio and a maximum Leverage Ratio, as defined and calculated pursuant to the Credit Agreement, that, in part, restrict the Company’s ability to incur additional indebtedness, create liens, engage in mergers and consolidations, make restricted payments and dispose of certain assets. The Credit Agreement generally allows annual dividend payments of up to $225.0 million in aggregate, though additional dividends may be allowed subject to certain conditions.

The weighted average interest rate on borrowings under the Company’s $1.5 billion Credit Agreement was 2.1% during the three months ended March 31, 2015 and 2014.

On April 1, 2014, cash on hand and borrowings under the Credit Agreement were used to pay the $258.2 million 4.95% senior notes that matured on April 1, 2014.

On March 20, 2014, the Company issued $400.0 million of 6.00% senior notes due April 1, 2024. Interest on the notes is payable semi-annually on April 1 and October 1, and commenced on October 1, 2014. The net proceeds from the offering along with borrowings under the Credit Agreement were used to repurchase $211.0 million of the 8.25% senior notes due March 15, 2019, $100.0 million of the 7.25% senior notes due May 15, 2018, and $50.0 million of the 7.625% senior notes due June 15, 2020. The repurchases resulted in a pre-tax loss on debt extinguishment of $77.1 million for the three months ended March 31, 2014 related to the premiums paid, unamortized debt issuance costs, elimination of the $2.8 million fair value adjustment on the 8.25% senior notes and other expenses.

Interest income was $1.7 million and $2.5 million for the three months ended March 31, 2015 and 2014, respectively.

15. Derivatives

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

The Company is exposed to the impact of foreign currency fluctuations in certain countries in which it operates. The exposure to foreign currency movements is limited in many countries because the operating revenues and expenses of its various subsidiaries and business units are substantially in the local currency of the country in which they operate. To the extent borrowings, sales, purchases, revenues, expenses or other transactions are not in the local currency of the subsidiary or operating unit, the Company is exposed to currency risk. Periodically, the Company uses foreign exchange forward contracts to hedge exposures resulting from foreign exchange fluctuations. Accordingly, the gains and losses associated with the fair values of foreign currency exchange contracts are recognized currently in the Condensed Consolidated Statements of Operations and are generally offset by gains and losses on underlying payables, receivables and net investments in foreign subsidiaries. The Company does not use derivative financial instruments for trading or speculative purposes. The aggregate notional value of the forward contracts at March 31, 2015 and December 31, 2014 was $342.9 million and $377.2 million, respectively. The fair values of foreign exchange forward contracts were determined to be Level 2 under the fair value hierarchy and are valued using market exchange rates.

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions, except per share data, unless otherwise indicated)

On March 13, 2012, the Company entered into interest rate swap agreements to manage interest rate risk exposure, effectively changing the interest rate on $400.0 million of its fixed-rate senior notes to a floating-rate based on LIBOR plus a basis point spread. The interest rate swaps, with a notional value of $400.0 million at inception, were designated as fair value hedges against changes in the value of the Company’s $450.0 million 8.25% senior notes due March 15, 2019, which were attributable to changes in the benchmark interest rate. During the three months ended March 31, 2014, the Company repurchased $211.0 million of the 8.25% senior notes due March 15, 2019, and related interest rate swaps with a notional amount of $210.0 million were terminated, resulting in payments of $4.2 million for the fair value of the interest rate swaps. As a result of the termination, the remaining notional value of the interest rate swap agreements as of March 31, 2015 was $190.0 million. The interest rate swaps were designated as fair value hedges against changes in the value of $239.0 million of the Company’s 8.25% senior notes due March 15, 2019.

On April 9, 2010, the Company entered into interest rate swap agreements to manage interest rate risk exposure, effectively changing the interest rate on $600.0 million of its fixed-rate senior notes to a floating-rate LIBOR plus a basis point spread. The interest rate swaps, with a notional value of $600.0 million at inception, are designated as fair value hedges against changes in the value of the Company’s 4.95% senior notes due April 1, 2014, which are attributable to changes in the benchmark interest rate. During March 2012, the Company repurchased $341.8 million of the 4.95% senior notes due April 1, 2014, and related interest rate swaps with a notional value of $342.0 million were terminated, resulting in proceeds of $11.0 million for the fair value of the interest rate swaps. In conjunction with the 4.95% senior notes’ maturity in April 2014, the remaining interest rate swap agreements matured.

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

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

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

At March 31, 2015 and December 31, 2014, the total fair value of the Company’s foreign exchange forward contracts, which were the only derivatives not designated as hedges, and fair value hedges, along with the accounts in the Condensed Consolidated Balance Sheets in which the fair value amounts were included, were as follows:

	March 31, 2015		December 31, 2014
Derivatives not designated as hedges
Prepaid expenses and other current assets	$	37.2	$	7.0
Accrued liabilities		0.3		0.5
Derivatives designated as fair value hedges
Other noncurrent assets	$	1.0	$	—
Other noncurrent liabilities		—		1.2

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions, except per share data, unless otherwise indicated)

The pre-tax gains related to derivatives not designated as hedges recognized in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014 were as follows:

		Three Months Ended
	Classification of Gain Recognized in the	March 31,
	Condensed Consolidated Statements of Operations	2015			2014
Derivatives not designated as hedges
Foreign exchange forward contracts	Selling, general and administrative expenses	$	(31.7	)	$	(0.4	)

For derivatives designated as fair value hedges, the pre-tax (gains) losses related to the hedged items, attributable to changes in the hedged benchmark interest rate and the offsetting (gain) loss on the related interest rate swaps for the three months ended March 31, 2015 and 2014 were as follows:

		Three Months Ended
	Classification of (Gain) Loss Recognized in the	March 31,
	Condensed Consolidated Statements of Operations	2015			2014
Fair Value Hedges
Interest rate swaps	Investment and other expense-net	$	(2.3	)	$	(0.1	)
Hedged items	Investment and other expense-net	$	2.1			(0.6	)
Total gain recognized as ineffectiveness in the Condensed Consolidated Statements of Operations	Investment and other expense-net	$	(0.2	)	$	(0.7	)

The Company also recognized a net reduction to interest expense of $0.6 million and $2.3 million for the three months ended March 31, 2015 and 2014, respectively, related to the Company’s fair value hedges, which included interest accruals on the derivatives and amortization of the basis in the hedged items.

16. Fair Value Measurement

Certain assets and liabilities are required to be recorded at fair value on a recurring basis. The Company’s assets and liabilities required to be adjusted to fair value on a recurring basis are pension and other postretirement benefits plan assets, foreign exchange forward contracts and interest rate swaps. See Note 15, Derivatives , for further discussion on the fair value of the Company’s foreign exchange forward contracts and interest rate swaps as of March 31, 2015 and December 31, 2014. See Note 14, Debt , for the fair value of the Company’s debt, which is recorded at book value.

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company is required to record certain assets and liabilities at fair value on a nonrecurring basis, generally as a result of acquisitions or the remeasurement of assets resulting in impairment charges. See Note 2, Acquisitions and Dispositions , for further discussion on the fair value of assets and liabilities associated with acquisitions.

The fair value as of the measurement date, net book value as of March 31, 2015 and 2014 and related impairment charges for assets measured at fair value on a nonrecurring basis subsequent to initial recognition during the three months ended March 31, 2015 and 2014 were as follows:

	Three Months Ended March 31, 2015				As of March 31, 2015
	Impairment Charge		Fair Value Measurement (Level 3)		Net Book Value
Long-lived assets held and used	$	0.7	$	3.1	$	2.9
Long-lived assets held for sale or disposal		1.1		0.4		0.4
Total	$	1.8	$	3.5	$	3.3

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions, except per share data, unless otherwise indicated)

	Three Months Ended March 31, 2014				As of March 31, 2014
	Impairment Charge		Fair Value Measurement (Level 3)		Net Book Value
Long-lived assets held and used	$	4.7	$	5.8	$	5.7
Long-lived assets held for sale or disposal		1.9		4.2		3.9
Total	$	6.6	$	10.0	$	9.6

The fair value of long-lived assets held for sale that were remeasured during the three months ended March 31, 2015 and 2014 were reduced by estimated costs to sell of $0.2 million and $0.3 million, respectively.

The Company’s accounting and finance management determines the valuation policies and procedures for Level 3 fair value measurements and is responsible for the development and determination of unobservable inputs.

The fair values of the long-lived assets held and used and long-lived assets held for sale or disposal were determined using Level 3 inputs and were estimated based on discussions with real estate brokers, review of comparable properties, if available, discussions with machinery and equipment brokers, dealer quotes and internal expertise related to the current marketplace conditions. Unobservable inputs obtained from third parties are adjusted as necessary for the condition and attributes of the specific asset.

17. Venezuela Currency Remeasurement

Since January 1, 2010, the three-year cumulative inflation for Venezuela using the blended Consumer Price Index and National Consumer Price Index has exceeded 100%. As a result, Venezuela’s economy is considered highly inflationary and the financial statements of the Company’s Venezuelan subsidiaries are remeasured as if the functional currency were the U.S. Dollar. Prior to March 31, 2014, the financial statements were remeasured based on the official rate determined by the government of Venezuela. On February 8, 2013, the government of Venezuela changed its primary fixed exchange rate from 4.3 Bolivars per U.S. Dollar to 6.3 Bolivars per U.S. Dollar, devaluing the Bolivar by 32%.

During the first quarter of 2014, the Venezuelan government expanded the operation of the Supplementary System for the Administration of Foreign Currency (“SICAD 1”) currency exchange mechanism for use with certain transactions. In addition, the Venezuelan government also began operating the SICAD 2 exchange which the government indicated was available to all entities for all transactions. The Venezuelan government indicated that the official rate of 6.3 Bolivars per U.S. Dollar would be reserved only for settlement of U.S. Dollar denominated purchases of “essential goods and services.” While there was considerable uncertainty as to the nature, amount and timing of transactions that could be settled through SICAD 1 and SICAD 2, beginning March 31, 2014, certain assets of the Company’s Venezuelan subsidiaries were remeasured at the SICAD 2 rate as the Company believed those assets would ultimately be utilized to settle U.S. Dollar denominated liabilities using SICAD 2. Remaining net monetary assets were remeasured at the SICAD 1 rate, as the Company believed SICAD 1 would be applicable for future transactions, and dividend remittances, if any, from the Company’s Venezuelan subsidiaries. As of March 31, 2014, the SICAD 1 and SICAD 2 exchange rates were 10.7 and 49.8 Bolivars per U.S. Dollar, respectively.

In February 2015, the Venezuelan government discontinued the SICAD 2 rate and introduced a new currency exchange rate mechanism (“SIMADI”). While considerable uncertainty still exists as to the nature, amount and timing of transactions that could be settled through the various currency exchange rate mechanisms, as of February 28, 2015, monetary assets and liabilities of the Company’s Venezuelan subsidiaries were remeasured at the SIMADI rate as the Company believes the SIMADI is the exchange rate mechanism most likely to be available to the Company’s Venezuelan subsidiaries to settle U.S. Dollar denominated transactions. As of March 31, 2015 the SIMADI rate was 193.0.

As a result of the remeasurement at the SIMADI rate and the related impact of the devaluation, during the three months ended March 31, 2015, a pre-tax loss of $29.9 million ($26.3 million after-tax) was recognized in net investment and other expense, of which $10.3 million was included in loss attributable to noncontrolling interests.

R.R. DONNELLEY & SONS COMPANY AND SUBSIDIARIES (“RR DONNELLEY”)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in millions, except per share data, unless otherwise indicated)

The exchange rate available through SIMADI will fluctuate, causing additional remeasurements of the Company’s Venezuelan subsidiaries’ local currency-denominated net monetary assets and further impact ongoing results. The operating results of the Venezuelan subsidiaries, one of which is the operating entity and a 50.1% owned joint venture, are not significant to the Company’s consolidated results of operations.

On April 29, 2015, the Company sold its 50.1% interest in the Venezuelan operating entity. The Company estimates that it will recognize a net loss of approximately $15.0 million, in net investment and other expense in the Consolidated Statements of Operations during the second quarter of 2015. The operations of the Venezuela business were included in the International segment.

18. New Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2015-03 “Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”), which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability. ASU 2015-03 requires retrospective application and represents a change in accounting principle. The update becomes effective on January 1, 2016. Based on the balances as of March 31, 2015, the adoption will require the Company to reclassify $45.2 million of unamortized debt issuance costs from "Other noncurrent assets" to "Long-term debt."

In May 2014, the FASB issued Accounting Standards Update No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), which outlines a single comprehensive model for entities to use in accounting for revenue using a five-step process that supersedes virtually all existing revenue guidance. ASU 2014-09 also requires additional quantitative and qualitative disclosures. On April 1, 2015, the FASB proposed a one year deferral of the effective date of ASU 2014-09 to January 1, 2018. Early adoption of the standard will be permitted in the first quarter of 2017. The standard allows the option of either a full retrospective adoption, meaning the standard is applied to all periods presented, or a modified retrospective adoption, meaning the standard is applied only to the most current period. The Company is evaluating the impact of the provisions of ASU 2014-09 and the related deferral and currently anticipates applying the modified retrospective approach when adopting the standard.

The following recently issued standards are not expected to have a material impact on the Company’s Consolidated Financial Statements:

·	Accounting Standards Update No. 2015-05 “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement”

·	Accounting Standards Update No. 2015-04 “Compensation—Retirement Benefits (Topic 715): Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets”

·	Accounting Standards Update No. 2015-02 “Consolidation (Topic 810): Amendments to the Consolidation Analysis”

·	Accounting Standards Update No. 2015-01 “Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items”

·	Accounting Standards Update No. 2014-17 “Business Combinations (Topic 805): Pushdown Accounting”

·	Accounting Standards Update No. 2014-16 “Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity”

·	Accounting Standards Update No. 2014-15 “Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”

·	Accounting Standards Update No. 2014-12 “Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period”

The following standards were effective for and adopted by the Company in the first quarter of 2015. The adoption of these standards did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows:

·	Accounting Standards Update No. 2014-08 “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”

·	Accounting Standards Update No. 2014-01 “Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects”

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

Company Overview

R.R. Donnelley & Sons Company (“RR Donnelley,” the “Company,” “we,” “us,” and “our”), a Delaware corporation, helps organizations communicate more effectively by working to create, manage, produce, distribute and process content on behalf of our customers. The Company assists customers in developing and executing multichannel communication strategies that engage audiences, reduce costs, drive revenues and increase compliance. R.R. Donnelley’s innovative technologies enhance digital and print communications to deliver integrated messages across multiple media to highly targeted audiences at optimal times for clients in virtually every private and public sector. Strategically located operations provide local service and responsiveness while leveraging the economic, geographic and technological advantages of a global organization.

Segment Descriptions

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

Publishing and Retail Services

The Publishing and Retail Services segment’s primary product offerings include magazines, catalogs, retail inserts, books, directories and packaging.

Variable Print

Strategic Services

The Strategic Services segment includes the Company’s logistics services, financial print products and related services, print management offerings and digital and creative solutions.

International

Corporate

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

Products and Services

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

Business Acquisitions and Dispositions

2015 Acquisitions

2014 Acquisitions

On March 25, 2014, the Company acquired substantially all of the North American operations of Esselte Corporation (“Esselte”), a developer and manufacturer of nationally branded and private label office and stationery products. The purchase price included $82.3 million in cash and 1.0 million shares of RR Donnelley common stock, or a total transaction value of $100.6 million based on the Company’s closing share price on March 24, 2014. Esselte’s operations are included in the Variable Print segment.

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

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

2014 Dispositions

On August 15, 2014, the Company sold the assets and liabilities of Journalism Online, LLC (“Journalism Online”), a provider of online subscription management services, for net proceeds of $10.7 million, of which $9.3 million was received as of March 31, 2015, resulting in a gain of $11.2 million during the year ended December 31, 2014. The operations of the Journalism Online business were included in the Strategic Services segment.

On August 11, 2014, the Company’s subsidiary, RR Donnelley Argentina S.A. (“RRDA”), filed for bankruptcy liquidation in bankruptcy court in Argentina. The bankruptcy petition was approved by the court shortly thereafter and a bankruptcy trustee was appointed. As a result of the bankruptcy liquidation, the Company recorded a loss of $16.4 million for the year ended December 31, 2014. Effective as of the court’s approval, the operating results of RRDA are no longer included in the Company’s consolidated results of operations. The operations of RRDA were included in the International segment.

On February 7, 2014, the Company sold the assets and liabilities of Office Tiger Global Real Estate Service Inc. (“GRES”), its commercial and residential real estate advisory services, for net proceeds of $1.8 million and a loss of $0.8 million for the year ended December 31, 2014. The operations of the GRES business were included in the International segment.

Executive Overview

First Quarter Overview

Net sales increased by 2.7% in the first quarter of 2015 compared to the same period in the prior year, including a $57.0 million, or 2.1%, decrease due to foreign exchange rates. The net sales increase was primarily due to the acquisitions of Consolidated Graphics and Esselte. On a proforma basis, the Company’s net sales decreased by approximately 2.8% (see Note 2, Acquisitions and Dispositions , to the Condensed Consolidated Financial Statements). The net sales decrease on a proforma basis was primarily due to the impact of foreign exchange rates, volume declines and decreases in pass-through paper sales in the Publishing and Retail Services segment and price pressures, partially offset by increased volume in the Strategic Services segment.

Net cash used in operating activities for the three months ended March 31, 2015 was $144.3 million as compared to $80.4 million for the three months ended March 31, 2014. The increase in net cash used in operating activities reflected timing of supplier and customer payments, higher payments for incentive compensation and acquisition-related costs, partially offset by lower pension and other postretirement benefit plan contributions.

Financial Performance: Three Months Ended March 31, 2015

The changes in the Company’s income from operations, operating margin, net earnings (loss) attributable to RR Donnelley common shareholders and net earnings (loss) attributable to RR Donnelley common shareholders per diluted share for the three months ended March 31, 2015, from the three months ended March 31, 2014, were due to the following:

	Income from Operations			Operating Margin			Net Earnings (Loss) Attributable to RR Donnelley Common Shareholders			Net Earnings (Loss) Attributable to RR Donnelley Shareholders Per Diluted Share
	(in millions, except margin and per share data)
For the three months ended March 31, 2014	$	96.0			3.6	%	$	(29.0	)	$	(0.15	)
2015 restructuring, impairment and other charges - net		(19.8	)		(0.7	%)		(3.1	)		(0.02	)
2014 restructuring, impairment and other charges - net		45.2			1.6	%		33.5			0.18
Acquisition-related expenses		(2.8	)		(0.1	%)		(4.3	)		(0.02	)
Purchase accounting inventory adjustment		12.1			0.5	%		7.6			0.04
Venezuela currency remeasurement		—			—			(8.2	)		(0.04	)
Loss on debt extinguishment		—			—			49.8			0.26
Gain on bargain purchase		—			—			(16.6	)		(0.09	)
Loss on disposal of business		—			—			0.4			—
Operations		(15.1	)		(0.7	%)		(7.8	)		(0.05	)
For the three months ended March 31, 2015	$	115.6			4.2	%	$	22.3		$	0.11

2015 restructuring, impairment and other charges - net: included pre-tax charges of $14.2 million for employee termination costs; $3.6 million of lease termination and other restructuring costs; $1.3 million for multi-employer pension plan withdrawal obligations; and $0.7 million for net impairment charges of other long-lived assets, primarily for buildings and machinery and equipment associated with facility closures.

2014 restructuring, impairment and other charges - net: included pre-tax charges of $20.5 million related to the decision to withdraw from certain multi-employer pension plans; $13.9 million for employee termination costs; $6.7 million for impairment of other long-lived assets, primarily for buildings and machinery and equipment associated with facility closures; and $4.1 million of lease termination and other restructuring costs.

Acquisition-related expenses: included pre-tax charges of $10.5 million ($10.5 million after-tax) related to legal, accounting and other expenses for the three months ended March 31, 2015 associated with completed or contemplated acquisitions. For the three months ended March 31, 2014, these pre-tax charges were $7.7 million ($6.2 million after-tax) for acquisitions completed or contemplated.

Purchase accounting inventory adjustment: included pre-tax charges of $12.1 million ($7.6 million after-tax) for the three months ended March 31, 2014 as a result of an inventory purchase accounting adjustment.

Venezuela currency remeasurement: currency remeasurement in Venezuela and the related impact of the devaluation resulted in a pre-tax loss of $29.9 million ($26.3 million after-tax) for the three months ended March 31, 2015, of which $10.3 million was included in loss attributable to noncontrolling interests. For the three months ended March 31, 2014, currency remeasurement in Venezuela resulted in a pre-tax loss of $21.8 million ($14.9 million after-tax), of which $7.1 million was included in loss attributable to noncontrolling interests.

Loss on debt extinguishment: included a pre-tax loss of $77.1 million ($49.8 million after-tax) for the three months ended March 31, 2014, related to the premiums paid, unamortized debt issuance costs and other expenses due to the repurchase of $211.0 million of the 8.25% senior notes due March 15, 2019, $100.0 million of the 7.25% senior notes due May 15, 2018 and $50.0 million of the 7.625% senior notes due June 15, 2020.

Gain on bargain purchase: acquisition of Esselte resulted in a pre-tax gain of $16.6 million ($16.6 million after-tax) for the three months ended March 31, 2014.

Loss on disposal of business: included a pre-tax loss on the disposal of GRES in the International segment of $0.8 million ($0.4 million after-tax) for the three months ended March 31, 2014.

Operations: reflected price pressures and wage and other inflation in the International segment, partially offset by an increase in volume due to the acquisitions of Consolidated Graphics and Esselte and cost control initiatives resulting from the reorganization of certain operations and the integration of Consolidated Graphics and Esselte. See further details in the review of operating results by segment that follows below.

OUTLOOK

Competition and Strategy

Technological changes, including the electronic distribution of documents and data, online distribution and hosting of media content, and advances in digital printing, print-on-demand and Internet technologies, continue to impact the market for the Company’s products and services. One of the Company’s competitive strengths is that it offers a wide array of communications products and services, including print, which provide differentiated solutions for its customers. The Company works with its customers to create, manage, deliver and optimize their multi-channel communications strategies. The Company has and will continue to develop and expand its creative and design, content management, digital and print production, supply chain management and distribution services to address its customers’ evolving needs while supporting the strategic objective of becoming a leading global provider of integrated communication services.

The print and related services industry, in general, continues to have excess capacity and remains highly competitive. Despite consolidation in recent years, the industry remains highly fragmented. Across the Company’s range of products and services, competition is based primarily on price in addition to quality and the ability to service the special needs of customers. Management expects that prices for the Company’s products and services will continue to be a focal point for customers in coming years. Therefore, the Company believes it needs to continue to lower its cost structure and continue to differentiate its product and service offerings.

The impact of digital technologies has been felt in many print products. Electronic communication and transaction technology has eliminated or reduced the role of many traditional printed products and has continued to drive electronic substitution in directory and statement printing, in part driven by environmental concerns and cost pressures at key customers. In addition, e-book substitution is having a continuing impact on consumer print book volume, though adoption rates are stabilizing, and a limited impact on educational and specialty books. Digital technologies have also impacted printed magazines, as advertiser spending has moved from print to electronic media. The future impact of technology on the Company’s business is difficult to predict and could result in additional expenditures to restructure impacted operations or develop new technologies. In addition, the Company has made targeted acquisitions and investments in the Company’s existing business to offer customers innovative services and solutions that further secure the Company’s position as a technology leader in the industry.

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

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

Seasonality

Advertising and consumer spending trends affect demand in several of the end-markets served by the Company. Historically, demand for printing of magazines, catalogs, retail inserts and books is higher in the second half of the year driven by increased advertising pages within magazines, and holiday volume in catalogs, retail inserts and books. Partially offsetting this pattern, demand for financial print and related services is typically stronger in the first half of the year due to annual compliance requirements. As a result of the acquisition of Consolidated Graphics, which provides significant campaign-related printed products, quarterly and annual results may also be impacted by U.S. election cycles. These typical seasonal patterns can be impacted by overall trends in the U.S. and world economy. The Company expects the seasonality impact in 2015 and future years to be in line with historical patterns.

Raw Materials

The primary raw materials the Company uses in its print businesses are paper and ink. The Company negotiates with leading suppliers to maximize its purchasing efficiencies and uses a wide variety of paper grades, formats, ink formulations and colors. In addition, a substantial amount of paper used by the Company is supplied directly by customers. Variations in the cost and supply of certain paper grades and ink formulations used in the manufacturing process may affect the Company’s consolidated financial results. Paper prices fluctuated during the first three months of 2015, and volatility in the future is expected. Generally, customers directly absorb the impact of changing prices on customer-supplied paper. With respect to paper purchased by the Company, the Company has historically passed most changes in price through to its customers. Contractual arrangements and industry practice should support the Company’s continued ability to pass on any future paper price increases, but there is no assurance that market conditions will continue to enable the Company to successfully do so. Management believes that the paper supply is consolidating, and there may be shortfalls in the future in supplies necessary to meet the demands of the entire marketplace. Higher paper prices and tight paper supplies may have an impact on customers’ demand for printed products. The Company has undertaken various strategic initiatives to mitigate any foreseeable supply disruptions with respect to the Company’s ink requirements. The Company also resells waste paper and other print-related by-products and may be impacted by changes in prices for these by-products.

The Company continues to monitor the impact of changes in the price of crude oil and other energy costs, which impact the Company’s ink suppliers, logistics operations and manufacturing costs. Crude oil and energy prices continue to be volatile. The Company believes its logistics operations will continue to be able to pass a substantial portion of any increases in fuel prices directly to its customers in order to offset the impact of related cost increases. Decreases in fuel prices are also passed on to customers which negatively impacts sales. The Company generally cannot pass on to customers the impact of higher energy prices on its manufacturing costs. However, the Company enters into fixed price contracts for a portion of its natural gas purchases to mitigate the impact of changes in energy prices. The Company cannot predict sudden changes in energy prices and the impact that possible future changes in energy prices might have upon either future operating costs or customer demand and the related impact either will have on the Company’s consolidated annual results of operations, financial position or cash flows.

Distribution

The Company’s products are distributed to end-users through the U.S. or foreign postal services, through retail channels, electronically or by direct shipment to customer facilities. Through its logistics operations, the Company manages the distribution of most customer products printed by the Company in the U.S. and Canada to maximize efficiency and reduce costs for customers.

Postal costs are a significant component of many customers’ cost structures and postal rate changes can influence the number of pieces that the Company’s customers are willing to print and mail. On January 27, 2013, the United States Postal Service (“USPS”) increased postage rates across all classes of mail by approximately 2.6%, on average. Under the 2006 Postal Accountability and Enhancement Act, it had been anticipated that postage would increase annually by an amount equal to or slightly less than the Consumer Price Index (the “CPI”). However, on December 24, 2013, the Postal Regulatory Commission (the “PRC”) approved the USPS Board of Governors’ request under the Exigency Provision in the applicable law for price increases of 4.3%. The exigent rate increase was implemented in addition to a 1.7% rate increase, equal to the CPI, for total price increases of 6.0%, on average, across all significant mail categories, effective January 26, 2014. According to the PRC’s ruling, which is currently being appealed, the USPS must develop a plan to phase out the exigent rate increase once it has produced the revenue justified by the request. As of March 31, 2015, the USPS has presented a plan for the required phase out which the PRC is evaluating. On January 15, 2015, the USPS filed for a CPI rate increase of 2.0%, which if approved by the PRC, will be effective May 31, 2015. As a leading provider of print logistics and among the largest mailers of standard mail in the U.S., the Company works closely with its customers and the USPS to offer innovative products and services to minimize postage costs. While the Company does not directly absorb the impact of higher postal rates on its customers’ mailings, demand for products distributed through the U.S. or foreign postal services has been negatively impacted by increases in postal rates. The impact to the Company of the USPS’s restructuring plans, many of which require legislative action, cannot currently be estimated. Mail delivery services through the USPS accounted for approximately 44% of the Company’s logistics revenues during the three months ended March 31, 2015.

Goodwill Impairment Assessment

The Company performs its goodwill impairment tests annually as of October 31, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. As part of its interim review for indicators of impairment, management analyzed potential changes in value of individual reporting units with goodwill based on each reporting unit’s operating results for the three months ended March 31, 2015 compared to expected results. In addition, management considered how other key assumptions, including discount rates and expected long-term growth rates, used in the last fiscal year’s impairment analysis, could be impacted by changes in market conditions and economic events.

Management considered trends in these factors when performing its assessment of whether an interim impairment review was required for any reporting unit. Based on this interim assessment, management concluded that as of March 31, 2015, no events or changes in circumstances indicated that it was more likely than not that the fair value for any reporting unit had declined below its carrying value. Nevertheless, significant changes in global economic and market conditions could result in changes to expectations of future financial results and key valuation assumptions. Such changes could result in revisions of management’s estimates of the fair value of the Company’s reporting units and could result in a material impairment of goodwill as of October 31, 2015, the Company’s next annual measurement date.

The digital and creative solutions reporting unit has been impacted by a decline in expected full year net sales as the result of the bankruptcy of two premedia services customers. Further negative developments having a significant impact on the estimated fair value of this reporting unit could result in future goodwill impairment charges. As of the October 31, 2014 annual goodwill impairment test, the digital and creative solutions reporting unit’s estimated fair value exceeded book value by approximately 29.4%. As of March 31, 2015, $25.5 million of goodwill was allocated to the digital and creative solutions reporting unit, which is included within the Strategic Services segment.

Pension and Other Postretirement Benefit Plans

The funded status of the Company’s pension and other postretirement benefits plans is dependent upon many factors, including returns on invested assets and the level of certain market interest rates. Market conditions may lead to changes in the discount rates (used to value the year-end benefit obligations of the plans) and the market value of the securities held by the plans, which could significantly increase or decrease the funded status of the plans. The Company reviews its actuarial assumptions on an annual basis as of December 31. Based on current estimates, the Company expects to make cash contributions of approximately $25.0 million to $30.0 million to its pension and other postretirement benefits plans for the full year 2015, of which $8.3 million has been contributed during the three months ended March 31, 2015.

Financial Review

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

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2015 AS COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2014

The following table shows the results of operations for the three months ended March 31, 2015 and 2014, which reflects the results of acquired businesses from the relevant acquisition dates:

	Three Months Ended March 31,
	2015		2014		$ Change			% Change
	(in millions, except percentages)

Products net sales	$	2,260.3	$	2,225.7	$	34.6			1.6	%
Services net sales		485.8		448.1		37.7			8.4	%
Total net sales		2,746.1		2,673.8		72.3			2.7	%
Products cost of sales (exclusive of depreciation and amortization)		1,780.3		1,745.9		34.4			2.0	%
Services cost of sales (exclusive of depreciation and amortization)		386.1		354.7		31.4			8.9	%
Total cost of sales		2,166.4		2,100.6		65.8			3.1	%
Products gross profit		480.0		479.8		0.2			0.0	%
Services gross profit		99.7		93.4		6.3			6.7	%
Total gross profit		579.7		573.2		6.5			1.1	%
Selling, general and administrative expenses (exclusive of depreciation and amortization)		330.9		316.5		14.4			4.5	%
Restructuring, impairment and other charges-net		19.8		45.2		(25.4	)		(56.2	%)
Depreciation and amortization		113.4		115.5		(2.1	)		(1.8	%)
Income from operations	$	115.6	$	96.0	$	19.6			20.4	%

Consolidated

Net sales of products for the three months ended March 31, 2015 increased $34.6 million, or 1.6%, to $2,260.3 million versus the same period in 2014, including a $50.8 million, or 2.2%, decrease due to changes in foreign exchange rates. Net sales of products increased due to the acquisitions of Consolidated Graphics and Esselte, partially offset by lower volume in the Publishing and Retail Services segment, a $15.7 million, or 0.7% decrease due to a decline in pass-through paper sales and price pressures.

Net sales from services for the three months ended March 31, 2015 increased $37.7 million, or 8.4%, to $485.8 million versus the same period in 2014, including a $6.2 million, or 1.3%, decrease due to changes in foreign exchange rates. The increase in net sales from services was primarily due to higher volume in the Strategic Services segment, primarily driven by the logistics reporting unit.

Products cost of sales increased $34.4 million, or 0.4% as a percentage of net sales of products for the three months ended March 31, 2015 versus the same period in the prior year. Products cost of sales increased primarily due to the acquisitions of Consolidated Graphics and Esselte and wage and other inflation in the International segment, partially offset by the impact from the prior year $12.1 million purchase accounting inventory adjustment and lower incentive compensation expense.

Services cost of sales increased $31.4 million, or 0.3% as a percentage of net sales from services for the three months ended March 31, 2015 versus the same period in the prior year. Services cost of sales increased primarily due to higher volume in the Strategic Services segment driven by the logistics reporting unit.

Products gross profit increased $0.2 million to $480.0 million for the three months ended March 31, 2015 versus the same period in 2014 primarily due to the acquisitions of Consolidated Graphics and Esselte, the impact from the prior year $12.1 million purchase accounting inventory adjustment and lower incentive compensation expense, mostly offset by volume declines in the Publishing and Retail Services segment, price pressures and wage and other inflation in the International segment. Products gross margin decreased from 21.6% to 21.2%, reflecting volume declines in the Publishing and Retail Services segment, price pressures and wage and other inflation in the International segment.

Services gross profit increased $6.3 million to $99.7 million for the three months ended March 31, 2015 versus the same period in 2014 due to higher volume in the Strategic Services segment driven by the financial and logistics reporting units, partially offset by increased transportation costs. Services gross margin decreased from 20.8% to 20.5%, reflecting increased transportation costs.

Selling, general and administrative expenses increased $14.4 million to $330.9 million, and from 11.8% to 12.0% as a percentage of net sales, for the three months ended March 31, 2015 versus the same period in 2014 reflecting a $2.8 million increase in acquisition-related expenses and wage and other inflation in the International segment, partially offset by lower incentive compensation expense.

For the three months ended March 31, 2015, the Company recorded net restructuring, impairment and other charges of $19.8 million compared to $45.2 million in the same period in 2014. In 2015, these charges included $14.2 million of employee termination costs for 894 employees, of whom 735 were terminated as of March 31, 2015. These charges were primarily the result of one facility closure in the International segment, one facility closure in the Variable Print segment and the reorganization of certain operations. Additionally, the Company incurred lease termination and other restructuring charges of $3.6 million for the three months ended March 31, 2015. The Company also recorded $1.3 million of other charges for multi-employer pension plan withdrawal obligations and $0.7 million of net impairment charges primarily related to buildings and machinery and equipment associated with facility closures for the three months ended March 31, 2015.

For the three months ended March 31, 2014, the Company recorded net restructuring, impairment and other charges of $45.2 million. In 2014, these charges included $13.9 million of employee termination costs for 278 employees, substantially all of whom were terminated as of March 31, 2015. These charges were the result of the integration of Consolidated Graphics, including the closure of three Consolidated Graphics facilities as well as one additional facility closure within the Variable Print segment, one facility closure in the Publishing and Retail Services segment and the reorganization of certain operations. Additionally, the Company incurred lease termination and other restructuring charges of $4.1 million for the three months ended March 31, 2014, including charges related to multi-employer pension plan withdrawal obligations as a result of facility closures. The Company also recorded $20.5 million of other charges as a result of its decision to withdraw from certain multi-employer pension plans and $6.7 million of impairment charges primarily related to buildings and machinery and equipment associated with facility closures for the three months ended March 31, 2014.

Depreciation and amortization decreased $2.1 million to $113.4 million for the three months ended March 31, 2015 compared to the same period in 2014 primarily due to the impact of changes in foreign exchange rates, mostly offset by increases due to the acquisitions of Consolidated Graphics and Esselte. Depreciation and amortization included $19.0 million and $18.3 million of amortization of other intangible assets related to customer relationships, trade names, trademarks, licenses and agreements for the three months ended March 31, 2015 and 2014, respectively.

Income from operations for the three months ended March 31, 2015 was $115.6 million, an increase of 20.4% compared to the three months ended March 31, 2014. The increase was due to lower restructuring, impairment and other charges, the acquisitions of Consolidated Graphics and Esselte and the impact of the prior year purchase accounting inventory adjustment, partially offset by price pressures and wage and other inflation in the International segment.

	Three Months Ended March 31,
	2015		2014		$ Change			% Change
	(in millions, except percentages)
Interest expense-net	$	69.0	$	71.0	$	(2.0	)		(2.8	%)
Investment and other expense-net		28.3		4.6		23.7		nm
Loss on debt extinguishment		—		77.1		(77.1	)		(100.0	%)

Net interest expense decreased by $2.0 million for the three months ended March 31, 2015 versus the same period in 2014, primarily due to a decrease in average outstanding debt.

Net investment and other expense for the three months ended March 31, 2015 and 2014 was $28.3 million and $4.6 million, respectively. For the three months ended March 31, 2015, the Company recorded a loss of $29.9 million related to the currency remeasurement in Venezuela and the related impact of the devaluation. For the three months ended March 31, 2014, the Company recorded a loss of $21.8 million related to the remeasurement of the Venezuelan currency, partially offset by a $16.6 million bargain purchase gain related to the Esselte acquisition.

For the three months ended March 31, 2014, loss on debt extinguishment, related to the premiums paid, unamortized debt issuance costs and other expenses, was $77.1 million due to the repurchase of $211.0 million of the 8.25% senior notes due March 15, 2019, $100.0 million of the 7.25% senior notes due May 15, 2018 and $50.0 million of the 7.625% senior notes due June 15, 2020.

	Three Months Ended March 31,
	2015			2014			$ Change		% Change
	(in millions, except percentages)
Earnings (loss) before income taxes	$	18.3		$	(56.7	)	$	75.0		(132.3	%)
Income tax expense (benefit)		6.4			(23.5	)		29.9		(127.2	%)
Effective income tax rate		35.0	%		41.4	%

The effective income tax rate for the three months ended March 31, 2015 was 35.0% compared to 41.4% in the same period in 2014. The income tax benefit for the period ended March 31, 2014 reflects the benefit related to the reorganization of certain entities.

Loss attributable to noncontrolling interests was $10.4 million and $4.2 million for the three months ended March 31, 2015 and 2014, respectively. For the three months ended March 31, 2015 and 2014, the remeasurement of the Venezuelan currency resulted in losses attributable to noncontrolling interests of $10.3 million and $7.1 million, respectively.

Net earnings attributable to RR Donnelley common shareholders for the three months ended March 31, 2015 was $22.3 million, or $0.11 per diluted share, compared to net loss of $29.0 million, or $0.15 per diluted share, for the three months ended March 31, 2014. In addition to the factors described above, the per share results reflect an increase in weighted average diluted shares outstanding of 9.0 million, primarily as a result of the acquisitions of Consolidated Graphics and Esselte.

Information by Segment

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

Publishing and Retail Services

	Three Months Ended
	March 31,
	2015			2014
	(in millions, except percentages)
Net sales	$	573.8		$	642.7
Income from operations		11.8			9.9
Operating margin		2.1	%		1.5	%
Restructuring, impairment and other charges-net		4.3			20.8

	Net Sales for the Three Months Ended
	March 31,
Reporting unit	2015		2014		$ Change			% Change
	(in millions, except percentages)
Magazines, catalogs and retail inserts	$	349.6	$	393.5	$	(43.9	)		(11.2	%)
Books		191.9		209.0		(17.1	)		(8.2	%)
Directories		32.3		40.2		(7.9	)		(19.7	%)
Total Publishing and Retail Services	$	573.8	$	642.7	$	(68.9	)		(10.7	%)

Net sales for the Publishing and Retail Services segment for the three months ended March 31, 2015 were $573.8 million, a decrease of $68.9 million, or 10.7%, compared to 2014. Net sales decreased due to lower volume in magazines, catalogs and retail inserts, books and directories and decreases in pass through paper sales in magazines, catalogs and retail inserts and directories. An analysis of net sales by reporting unit follows:

·	Magazines, catalogs and retail inserts: Sales declined due to reduced volume, decreases in pass-through paper sales and price pressures across the reporting unit.

·	Books: Sales decreased as a result of reduced volume in educational books primarily due to a shift in timing to the second quarter, decreased volume in consumer books and price declines in educational books, partially offset by growth in packaging.

·	Directories: Sales decreased primarily as a result of a decline in pass-through paper sales, lower volume resulting from electronic substitution and price pressures.

Publishing and Retail Services segment income from operations increased by $1.9 million for the three months ended March 31, 2015 due to lower restructuring, impairment and other charges and incentive compensation expense, mostly offset by price pressures and volume declines in magazines, catalogs and retail inserts and reduced volume in books and directories. Operating margins increased from 1.5% for the three months ended March 31, 2014 to 2.1% for the three months ended March 31, 2015. While lower restructuring, impairment and other charges improved operating margins by 2.6 percentage points, the remaining decline in operating margins was due to price pressures and a decline in volume in magazines, catalogs and retail inserts and reduced volume in books and directories.

Variable Print

	Three Months Ended
	March 31,
	2015			2014
	(in millions, except percentages)
Net sales	$	948.8		$	792.1
Income from operations		66.2			27.7
Operating margin		7.0	%		3.5	%
Restructuring, impairment and other charges-net		5.0			20.6
Purchase accounting inventory adjustment		—			12.1

	Net Sales for the Three Months Ended
	March 31,
Reporting unit	2015		2014		$ Change			% Change
	(in millions, except percentages)
Commercial and digital print _(a)	$	412.7	$	346.5	$	66.2			19.1	%
Office products		137.3		54.5		82.8			151.9	%
Direct mail _(a)		126.8		118.0		8.8			7.5	%
Statement printing		112.1		107.7		4.4			4.1	%
Labels		107.5		105.1		2.4			2.3	%
Forms		52.4		60.3		(7.9	)		(13.1	%)
Total Variable Print	$	948.8	$	792.1	$	156.7			19.8	%

(a) Certain prior year amounts were restated to conform to the Company’s current reporting unit structure.

_______________________

Net sales for the Variable Print segment for the three months ended March 31, 2015 were $948.8 million, an increase of $156.7 million, or 19.8%, compared to 2014, including a $2.7 million, or 0.3% decrease due to changes in foreign exchange rates. Net sales increased due to the acquisitions of Consolidated Graphics and Esselte and higher volume in office products, partially offset by lower volume in forms. An analysis of net sales by reporting unit follows:

·	Commercial and digital print: Sales increased primarily as a result of the acquisition of Consolidated Graphics and higher volume in graphics products and in-store marketing materials.

·	Office products: Sales increased as a result of the acquisition of Esselte and higher volume in binder and filing products primarily related to new customers.

·	Direct mail: Sales increased as a result of higher volume and an increase in pass through paper sales, partially offset by price pressures.

·	Statement printing: Sales increased as a result of higher pass-through postage sales and an increase in volume, partially offset by price pressures.

·	Labels: Sales increased as a result of higher volume.

·	Forms: Sales decreased due to lower volume, primarily as a result of electronic substitution.

Variable Print segment income from operations increased $38.5 million for the three months ended March 31, 2015 mainly due to higher volume resulting from the acquisitions of Consolidated Graphics and Esselte, lower restructuring, impairment and other charges and the impact of the prior year purchase accounting inventory adjustment, partially offset by higher depreciation and amortization expense, price pressures in statement printing and lower volume in forms. Operating margins increased from 3.5% for the three months ended March 31, 2014 to 7.0% for the three months ended March 31, 2015, of which 2.0 percentage points were due to lower restructuring, impairment and other charges and 1.5 percentage points were due to the favorable impact of the prior year purchase accounting inventory adjustment. Additionally, changes in operating margins reflected higher volume resulting from the acquisitions of Consolidated Graphics and Esselte and cost control initiatives resulting from the integration of Consolidated Graphics and Esselte, mostly offset by higher depreciation and amortization expense, price pressures in statement printing and lower volume in forms.

Strategic Services

	Three Months Ended
	March 31,
	2015			2014
	(in millions, except percentages)
Net sales	$	667.3		$	619.7
Income from operations		55.0			55.4
Operating margin		8.2	%		8.9	%
Restructuring, impairment and other charges-net		2.2			1.6

	Net Sales for the Three Months Ended
	March 31,
Reporting unit	2015		2014		$ Change			% Change
	(in millions, except percentages)
Logistics	$	320.7	$	283.2	$	37.5			13.2	%
Financial		250.8		246.3		4.5			1.8	%
Sourcing		56.9		45.2		11.7			25.9	%
Digital and creative solutions		38.9		45.0		(6.1	)		(13.6	%)
Total Strategic Services	$	667.3	$	619.7	$	47.6			7.7	%

Net sales for the Strategic Services segment for the three months ended March 31, 2015 were $667.3 million, an increase of $47.6 million, or 7.7%, compared to 2014, including a $3.8 million, or 0.6%, decrease due to changes in foreign exchange rates. Net sales increased primarily due to higher volume in logistics, commercial print sourcing products and capital markets transactions activity, partially offset by a decrease in fuel surcharges and lower volume in digital and creative solutions. An analysis of net sales by reporting unit follows:

·	Logistics: Sales increased primarily due to higher volume in freight brokerage services, pass-through postage sales and international mail services, partially offset by a decrease in fuel surcharges and lower volume in print logistics.

·	Financial: Sales increased due to an increase in capital markets transactions activity, translation services and investment management products volume, partially offset by lower compliance volume.

·	Sourcing: Sales increased primarily due to higher print-management volume for healthcare customers.

·	Digital and creative solutions: Sales decreased due to the bankruptcy of a customer and lower volume in photo, prepress and creative services.

Strategic Services segment income from operations decreased $0.4 million for the three months ended March 31, 2015, mainly due to unfavorable revenue mix across the segment, lower volume in digital and creative solutions and increased costs of transportation, partially offset by higher volume in logistics and capital markets transactions activity. Operating margins decreased from 8.9% to 8.2% as a result of unfavorable revenue mix across the segment, lower volume in digital and creative solutions and increased costs of transportation. These decreases were partially offset by higher volume in logistics and capital markets transaction activity.

International

	Three Months Ended
	March 31,
	2015			2014
	(in millions, except percentages)
Net sales	$	556.2		$	619.3
Income from operations		12.1			30.2
Operating margin		2.2	%		4.9	%
Restructuring, impairment and other charges-net		7.7			1.6
Acquisition-related expenses		—			0.2

	Net Sales for the Three Months Ended
	March 31,
Reporting unit	2015		2014		$ Change			% Change
	(in millions, except percentages)
Asia	$	164.9	$	168.9	$	(4.0	)		(2.4	%)
Business process outsourcing		107.1		116.7		(9.6	)		(8.2	%)
Latin America		74.1		108.7		(34.6	)		(31.8	%)
Global Turnkey Solutions		80.5		75.0		5.5			7.3	%
Europe		74.8		91.4		(16.6	)		(18.2	%)
Canada		54.8		58.6		(3.8	)		(6.5	%)
Total International	$	556.2	$	619.3	$	(63.1	)		(10.2	%)

Net sales in the International segment for the three months ended March 31, 2015 were $556.2 million, a decrease of $63.1 million, or 10.2%, compared to the same period in 2014, including a $50.5 million, or 8.3%, decrease due to changes in foreign exchange rates. The net sales decrease was also due to the 2014 bankruptcy liquidation of RRDA, which had net sales of $9.6 million for the three months ended March 31, 2014, and lower volume and price pressures in Asia, partially offset by higher volume in Global Turnkey Solutions. An analysis of net sales by reporting unit follows:

●	Asia: Sales decreased due to lower volume in book exports and technology manuals and price pressures, partially offset by higher volume in packaging products.

●	Business process outsourcing: Sales decreased due to changes in foreign exchanges rates and the sale of GRES in the first quarter of 2014, partially offset by higher outsourcing volume and an increase in volume due to new customers.

●	Latin America: Sales decreased primarily due to the impact of the Venezuelan currency devaluation, changes in foreign exchange rates across the region and the 2014 bankruptcy liquidation of RRDA.

●	Global Turnkey Solutions: Sales increased due to higher volume primarily related to a new customer, partially offset by changes in foreign exchange rates.

●	Europe: Sales decreased primarily due to changes in foreign exchange rates and price pressures, partially offset by an increase in volume due to the acquisition of Consolidated Graphics and an increase in pass-through paper sales.

●	Canada: Sales decreased due to changes in foreign exchange rates, partially offset by higher labels and statement printing volume.

International segment income from operations decreased $18.1 million primarily due to the impact of the currency devaluation in Venezuela, wage inflation in Latin America, Asia, and business process outsourcing, price pressures in Asia and Europe and changes in foreign exchange rates, partially offset by lower incentive compensation expense. Operating margins decreased from 4.9% for the three months ended March 31, 2014 to 2.2% for the three months ended March 31, 2015, of which 1.0 percentage points were due to higher restructuring, impairment and other charges. The remaining decrease in operating margins reflected wage inflation in Latin America, Asia, and business process outsourcing, price pressures in Asia and Europe and changes in foreign exchange rates.

Corporate

	Three Months Ended
	March 31,
	2015		2014
	(in millions)
Operating expenses	$	29.5	$	27.2
Restructuring, impairment and other charges-net		0.6		0.6
Acquisition-related expenses		10.5		7.5

Corporate operating expenses in the three months ended March 31, 2015 were $29.5 million, an increase of $2.3 million compared to the same period in 2014. The increase was driven by an increase in acquisition-related expenses and healthcare costs, partially offset by lower incentive compensation expense.

LIQUIDITY AND CAPITAL RESOURCES

The Company believes it has sufficient liquidity to support its ongoing operations and to invest in future growth to create value for its shareholders. Operating cash flows and the Company’s $1.5 billion senior secured revolving credit facility (the “Credit Agreement”) are the Company’s primary sources of liquidity and are expected to be used for, among other things, payment of interest and principal on the Company’s long-term debt obligations, distributions to shareholders that may be approved by the Board of Directors, acquisitions, capital expenditures necessary to support productivity improvement and growth and completion of restructuring programs.

The following describes the Company’s cash flows for the three months ended March 31, 2015 and 2014.

Cash Flows From Operating Activities

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

Net cash used in operating activities was $144.3 million for the three months ended March 31, 2015, compared to $80.4 million used for the same period in 2014. The increase in net cash used in operating activities reflected timing of supplier and customer payments, higher payments for incentive compensation and acquisition-related costs, partially offset by lower pension and other postretirement benefit plan contributions.

Cash Flows From Investing Activities

Net cash used in investing activities for the three months ended March 31, 2015 was $45.7 million compared to $427.4 million for the three months ended March 31, 2014. During the three months ended March 31, 2014, net cash used for the acquisitions of Consolidated Graphics, Esselte and MultiCorpora was $381.6 million. Capital expenditures were $48.5 million during the first three months of 2015, a decrease of $0.5 million as compared to the same period of 2014. The Company expects that capital expenditures for 2015 will be approximately $225 million to $250 million, compared to $223.6 million in 2014.

Cash Flows From Financing Activities

Net cash used in financing activities for the three months ended March 31, 2015 was $47.6 million compared to net cash used in financing activities of $196.8 million in the same period in 2014. During the three months ended March 31, 2014, the Company received proceeds of $400.0 million from the issuance of 6.00% senior notes due April 1, 2024, which were used to repurchase $211.0 million of the 8.25% senior notes due March 15, 2019, $100.0 million of the 7.25% senior notes due May 15, 2018, and $50.0 million of the 7.625% senior notes due June 15, 2020. The Company also repaid $118.3 million of debt assumed from the Consolidated Graphics acquisition during the three months ended March 31, 2014.

LIQUIDITY

Cash and cash equivalents of $268.7 million as of March 31, 2015 included $65.1 million in the U.S. and $203.6 million at international locations. The Company’s foreign subsidiaries are expected to make approximately $250.0 million in payments in 2015 and future years in satisfaction of intercompany obligations. The Company has recognized deferred tax liabilities of $2.6 million as of March 31, 2015 related to local taxes on certain foreign earnings that are not considered to be permanently reinvested. Certain other cash balances of foreign subsidiaries may be subject to U.S. or local country taxes if repatriated to the U.S. In addition, repatriation of some foreign cash balances is further restricted by local laws. Management regularly evaluates whether foreign earnings are expected to be permanently reinvested. This evaluation requires judgment about the future operating and liquidity needs of the Company and its foreign subsidiaries. Changes in economic and business conditions, foreign or U.S. tax laws, or the Company’s financial situation could result in changes to these judgments and the need to record additional tax liabilities.

Included in cash and cash equivalents of $268.7 million at March 31, 2015 were $14.7 million of short-term investments, which primarily consist of short-term deposits and money market funds. These investments are held at institutions with sound credit ratings and are expected to be highly liquid.

The Company’s debt maturities as of March 31, 2015 are shown in the following table:

	Debt Maturity Schedule
	Total		2015		2016		2017		2018		2019		Thereafter
	(in milions)
Senior notes and debentures and borrowings under the Credit Agreement _(a)	$	3,632.4	$	200.0	$	219.8	$	251.5	$	250.0	$	411.1	$	2,300.0
Capital lease obligations		1.6		0.8		0.7		0.1	—		—		—
Miscellaneous debt obligations		2.2		2.2	—		—		—		—		—
Total	$	3,636.2	$	203.0	$	220.5	$	251.6	$	250.0	$	411.1	$	2,300.0

(a)	Excludes a discount of $3.3 million and an adjustment for fair value hedges of $1.4 million related to the Company’s 8.25% senior notes due March 15, 2019, which do not represent contractual commitments with a fixed amount or maturity date.

Cash on hand and borrowings under the Credit Agreement will be used to pay the $200 million 5.50% senior notes due May 15, 2015.

Borrowings under the Credit Agreement bear interest at a base or Eurocurrency rate plus an applicable margin determined at the time of the borrowing. In addition, the Company pays facility commitment fees which fluctuate dependent on the Credit Agreement’s credit ratings. The Credit Agreement is used for general corporate purposes, including acquisitions and letters of credit. The Company’s obligations under the Credit Agreement are guaranteed by its material and certain other domestic subsidiaries and are secured by a pledge of the equity interests of certain subsidiaries, including most of its domestic subsidiaries, and a security interest in substantially all of the domestic current assets and mortgages of certain domestic real property of the Company.

There were no borrowings under the Credit Agreement as of March 31, 2015. Based on the Company’s results of operations for the twelve months ended March 31, 2015 and existing debt, the Company would have had the ability to utilize approximately $1.0 billion of the $1.5 billion Credit Agreement and not have been in violation of the terms of the agreement.

The current availability under the Credit Agreement as of March 31, 2015 is shown in the table below:

	March 31, 2015
Availability	(in millions)
Committed Credit Agreement	$	1,500.0
Availability reduction from covenants		508.3
	$	991.7
Usage
Borrowings under the Credit Agreement		—
Impact on availability related to outstanding letters of credit		—
		—

Current availability at March 31, 2015	$	991.7

The Company was in compliance with its debt covenants as of March 31, 2015, and expects to remain in compliance based on management’s estimates of operating and financial results for 2015 and the foreseeable future. However, declines in market and economic conditions or demand for certain of the Company’s products and services could impact the Company’s ability to remain in compliance with its debt covenants in future periods. As of March 31, 2015, the Company met all the conditions required to borrow under the Credit Agreement and management expects the Company to continue to meet the applicable borrowing conditions.

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

As of March 31, 2015, the Company had $92.0 million in outstanding letters of credit and bank guarantees, of which $55.9 million were issued under the Credit Agreement. The letters of credit used under the Credit Agreement did not reduce availability under the Credit Agreement as of March 31, 2015, as the amounts issued were less than the reduction in availability from the Leverage Ratio covenant. As of March 31, 2015, the Company also had $173.9 million in other uncommitted credit facilities, primarily outside the U.S. (the “Other Facilities”). As of March 31, 2015, bank acceptance drafts, letters of credit and guarantees of $44.6 million were issued, and reduced availability, under the Company’s Other Facilities. Total borrowings under the Credit Agreement and the Other Facilities (the “Combined Facilities”) were $2.2 million as of March 31, 2015.

The Company’s Standard & Poor’s Rating Services (“S&P”) and Moody’s Investor Service (“Moody’s”) credit ratings as of March 31, 2015 are shown in the table below:

	S&P	Moody's
Long-term corporate credit rating	BB-, stable outlook	Ba2, negative outlook
Senior unsecured debt	BB-	Ba3
Credit Agreement	BB+	Baa2

Dividends

During the three months ended March 31, 2015, the Company paid cash dividends of $52.0 million. On April 16, 2015, the Board of Directors of the Company declared a quarterly cash dividend of $0.26 per common share payable on June 1, 2015 to RR Donnelley shareholders of record on May 15, 2015.

Acquisitions and Dispositions

During the year ended December 31, 2014, the Company paid $380.8 million of total cash purchase prices, net of cash acquired, substantially all for the acquisitions of Consolidated Graphics, Esselte and MultiCorpora. The Company financed the cash portion of these acquisitions with a combination of cash on hand, including net proceeds from the $350.0 million 6.50% senior note issuance on November 12, 2013, and borrowings under the Credit Agreement.

During the year ended December 31, 2014, the Company sold the assets and liabilities of Journalism Online, a provider of online subscription management services, for net proceeds of $10.7 million, of which $9.3 million was received as of March 31, 2015. The Company also sold the assets and liabilities of GRES, its commercial and residential real estate advisory services, for net proceeds of $1.8 million.

Debt Issuances

MANAGEMENT OF MARKET RISK

The Company is exposed to interest rate risk on its variable debt and price risk on its fixed-rate debt. At March 31, 2015, the Company was exposed to interest rate fluctuations on variable-interest borrowings of $192.2 million, including $190.0 million notional amount of interest rate swap agreements (see Note 15, Derivatives , to the Condensed Consolidated Financial Statements) and $2.2 million in borrowings under the Combined Facilities. Including the effect of the fixed to floating interest rate swaps, approximately 95% of the Company’s outstanding term debt was comprised of fixed-rate debt as of March 31, 2015.

The Company assesses market risk based on changes in interest rates utilizing a sensitivity analysis that measures the potential loss in earnings, fair values and cash flows based on a hypothetical 10% change in interest rates. Using this sensitivity analysis, such changes would not have a material effect on interest income or expense and cash flows and would change the fair values of fixed-rate debt at March 31, 2015 and 2014 by approximately $92.3 million and $106.7 million, respectively.

The Company is exposed to the impact of foreign currency fluctuations in certain countries in which it operates. The exposure to foreign currency movements is limited in many countries because the operating revenues and expenses of its various subsidiaries and business units are substantially in the local currency of the country in which they operate. To the extent that borrowings, sales, purchases, revenues, expenses or other transactions are not in the local currency of the subsidiary, the Company is exposed to currency risk and may enter into foreign exchange forward contracts to hedge the currency risk. As of March 31, 2015 and December 31, 2014, the aggregate notional amount of outstanding foreign exchange forward contracts was approximately $342.9 million and $377.2 million, respectively (see Note 15, Derivatives , to the Condensed Consolidated Financial Statements). Net unrealized gains from these foreign exchange forward contracts were $36.9 million and $6.5 million at March 31, 2015 and December 31, 2014, respectively. The Company does not use derivative financial instruments for trading or speculative purposes.

OTHER INFORMATION

Litigation and Contingent Liabilities

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

New Accounting Pronouncements and Pending Accounting Standards

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

CAUTIONARY STATEMENT

The Company has made forward-looking statements in this Quarterly Report on Form 10-Q that are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of the Company. Generally, forward-looking statements include information concerning possible or assumed future actions, events, or results of operations of the Company.

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

Forward-looking statements are not guarantees of performance. The following important factors, in addition to those discussed elsewhere in this Quarterly Report on Form 10-Q, could affect the future results of the Company and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements:

·	the volatility and disruption of the capital and credit markets, and adverse changes in the global economy;

·	successful execution of acquisitions and negotiation of future acquisitions;

·	the ability of the Company to integrate operations of acquisitions successfully and achieve enhanced earnings or effect cost savings;

·	the ability to implement comprehensive plans for the integration of sales forces, cost containment, asset rationalization, systems integration and other key strategies;

·	the ability to divest non-core businesses;

·	future growth rates in the Company’s core businesses;

·	competitive pressures in all markets in which the Company operates;

·	the Company’s ability to access debt and the capital markets and the ability of its counterparties to perform their contractual obligations under the Company’s lending and insurance agreements;

·	changes in technology, including electronic substitution and migration of paper based documents to digital data formats;

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

·	the ability to gain customer acceptance of the Company’s new products and technologies;

·	the ability to secure and defend intellectual property rights and, when appropriate, license required technology;

·	customer expectations and financial strength;

·	performance issues with key suppliers;

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

·	changes in ratings of the Company or the Company’s debt securities;

·	the ability of the Company to comply with covenants under its Credit Agreement and indentures governing its debt securities;

·	the ability to generate cash flow or obtain financing to fund growth;

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

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

·	contingencies related to actual or alleged environmental contamination;

·	the retention of existing, and continued attraction of additional customers and key employees;

·	the effect of a material breach of security of any of the Company’s or its vendors’ systems;

·	the failure to properly use and protect customer information and data;

·	the failure to properly protect the Company’s and its employees’ information and data;

·	the effect of labor disruptions or shortages;

·	the effect of economic and political conditions on a regional, national or international basis;

·	the effect of economic weakness and constrained advertising;

·	uncertainty about future economic conditions;

·	the possibility of future terrorist activities or the possibility of a future escalation of hostilities in Eastern Europe, the Middle East or elsewhere;

·	the possibility of a regional or global health pandemic outbreak;

·	disruptions to the Company’s operations resulting from possible natural disasters, interruptions in utilities and similar events;

·	adverse outcomes of pending and threatened litigation; and

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

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

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

See Item 2 of Part I under “Management of Market Risk.” There have been no significant changes to the Company’s market risk since December 31, 2014. For a discussion of exposure to market risk, refer to Part II, Item 7A – Quantitative and Qualitative Disclosures about Market Risk, set for in the Company’s 2014 Form 10-K.

Item 4. Controls and Procedures

(a)	Disclosure controls and procedures.

As required by Rule 13a-15(b) and Rule 15d-15(e) of the Securities Exchange Act of 1934, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining effective disclosure controls and procedures, as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. As of March 31, 2015, an evaluation was performed under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures as of March 31, 2015 were effective in ensuring information required to be disclosed in our SEC reports was recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information was accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

(b)	Changes in internal control over financial reporting.

There have not been any changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) that occurred during the quarter ended March 31, 2015 that had materially affected, or were reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II— OTHER INFORMATION

Item 1: Legal Proceedings

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

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

ISSUER PURCHASES OF EQUITY SECURITIES

Period	Total Number of Shares Purchased (a)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
January 1, 2015 - January 31, 2015	—		$	—	—	$	—
February 1, 2015 - February 28, 2015	—		—		—	$	—
March 1, 2015 - March 31, 2015		434,197		19.05	—	$	—
Total		434,197	$	19.05	—

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

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

Item 4: Mine Safety Disclosures

Not applicable

Item 6. Exhibits

2.1		Agreement and Plan of Merger by and among Courier Corporation, R. R. Donnelley & Sons Company, Raven Solutions, Inc. and Raven Ventures LLC, dated as of February 5, 2015 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K dated February 11, 2015)

3.1		Restated Certificate of Incorporation (incorporated by reference to Exhibit A to the Company’s Current Report on Form 8-K dated September 26, 2014, filed on September 26, 2014)
3.2		By-Laws of R.R. Donnelley & Sons Company, as amended as of February 20, 2014 (incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed on February 26, 2014)
4.1		Instruments, other than those defining the rights of holders of long-term debt not registered under the Securities Exchange Act of 1934 of the registrant and of all subsidiaries for which consolidated or unconsolidated financial statements are required to be filed are being omitted pursuant to paragraph (4)(iii)(A) of Item 601 of Regulation S-K. Registrant agrees to furnish a copy of any such instrument to the Commission upon request.
4.2		Indenture dated as of November 1, 1990 between the Company and Citibank, N.A., as Trustee (incorporated by reference to Exhibit 4 filed with the Company’s Form SE filed on March 26, 1992)
4.3		Indenture dated as of March 10, 2004 between the Company and LaSalle National Bank Association, as Trustee (incorporated by reference to Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, filed on May 10, 2004)

4.4

Indenture dated as of May 23, 2005 between the Company and LaSalle Bank National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K dated May 23, 2005, filed on May 25, 2005)

4.5

Indenture dated as of January 3, 2007 between the Company and LaSalle Bank National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-3 filed on January 3, 2007)

4.6

Credit Agreement dated October 15, 2012, among the Company, as the borrower, certain of its subsidiaries, as guarantors, the lenders party thereto, and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K dated October 15, 2012, filed on October 16, 2012)

4.7

Amendment No. 1 to the Credit Agreement and Amendment No. 1 to the Security Agreement dated April 11, 2014, among the Company, as the borrower, certain of its subsidiaries, as guarantors, the lenders party thereto, and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K dated April 11, 2014, filed on April 14, 2014)

4.8

Amendment No. 2 to the Credit Agreement dated September 9, 2014, among the Company, as the borrower, certain of its subsidiaries, as guarantors, the lenders party thereto, and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K dated September 9, 2014, filed on September 15, 2014)

10.1

Policy on Retirement Benefits, Phantom Stock Grants and Stock Options for Directors (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, filed on August 6, 2008)*

10.2

Non-Employee Director Compensation Plan (filed herewith)*

10.3

Directors’ Deferred Compensation Agreement, as amended (incorporated by reference to Exhibit 10(b) to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1998, filed on November 12, 1998)*

10.4

Amended and Restated Non-Qualified Deferred Compensation Plan (filed herewith)*

10.5

2012 Performance Incentive Plan (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, filed on July 30, 2013)*

10.6

2004 Performance Incentive Plan (incorporated by reference to Exhibit 10.9 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, filed on February 25, 2009)*

10.7

Amended and Restated R.R. Donnelley & Sons Company Unfunded Supplemental Benefit Plan (incorporated by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010, filed on November 3, 2010)*

10.8

Amendment to Amended and Restated R.R. Donnelley & Sons Company Unfunded Supplemental Benefit Plan (incorporated by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010, filed on November 3, 2010)*

10.9

Supplemental Executive Retirement Plan for Designated Executives—B (incorporated by reference to Exhibit 10.1 to Moore Wallace Incorporated’s (Commission file number 1-8014) Quarterly Report on Form 10-Q for the quarter ended September 30, 2001, filed on November 14, 2001)*

10.10

Form of Option Agreement for certain executive officers (incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004, filed on March 14, 2005)*

10.11

Form of Restricted Stock Unit Award Agreement for certain executive officers, as amended (incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed on February 25, 2009)*

10.12

Form of Restricted Stock Unit Award Agreement for certain executive officers (filed herewith)*

10.13

Form of Restricted Stock Unit Award Agreement for directors (incorporated by reference to Exhibit 10.21 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004, filed on March 14, 2005)*

10.14

Form of Restricted Stock Unit Award Agreement for directors (incorporated by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007, filed on February 27, 2008)*

10.15

Form of Amendment to Director Restricted Stock Unit Awards dated May 21, 2009 (incorporated by reference to Exhibit 10.23 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, filed on August 5, 2009)*

10.16

Form of Amendment to Director Restricted Stock Unit Awards (incorporated by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed on February 25, 2009)*

10.17

Form of Restricted Stock Unit Award Agreement for directors (incorporated by reference to Exhibit 10.23 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed on February 25, 2009)*

10.18

Form of Director Restricted Stock Unit Awards (incorporated by reference to Exhibit 10.26 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, filed on August 5, 2009)*

10.19

Form of Performance Share Unit Award Agreement (filed herewith)*

10.20

Form of Performance Share Unit Award Agreement (incorporated by reference to Exhibit 10.23 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, filed on May 1, 2014)*

10.21

Form of Performance Share Unit Award Agreement (incorporated by reference to Exhibit 10.20 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, filed on April 25, 2013)*

10.22

Form of Cash Retention Award Agreement (incorporated by reference to Exhibit 10.21 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, filed on April 25, 2013)*

10.23

Form of Cash Bonus Award Agreement for certain executive officers (incorporated by reference to Exhibit 10.30 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, filed on May 2, 2012)*

10.24

Form of Long Term Incentive Cash Award Agreement (incorporated by reference to Exhibit 10.22 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, filed on May 1, 2014)*

10.25

Amended and Restated Employment Agreement dated as of November 30, 2008 between the Company and Thomas J. Quinlan, III (incorporated by reference to Exhibit 10.24 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed on February 25, 2009)*

10.26

Amended and Restated Employment Agreement dated as of November 28, 2008 between the Company and Daniel L. Knotts (incorporated by reference to Exhibit 10.26 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed on February 25, 2009)*

10.27

Amended and Restated Employment Agreement dated as of December 18, 2008 between the Company and Suzanne S. Bettman (incorporated by reference to Exhibit 10.27 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed on February 25, 2009)*

10.29

Amended and Restated Employment Agreement dated as of May 3, 2011 between the Company and Daniel N. Leib (incorporated by reference to Exhibit 10.34 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, filed May 4, 2011)*

10.30

Amended and Restated Employment Agreement dated as of November 21, 2008 between the Company and Andrew B. Coxhead (incorporated by reference to Exhibit 10.30 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, filed April 25, 2013)*

10.31

Form of Amended and Restated Indemnification Agreement for directors (incorporated by reference to Exhibit 10.31 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed on February 26, 2014)*

10.32

Amended and Restated Annual Incentive Plan (filed herewith)*

Code of Ethics (incorporated by reference to Exhibit 14 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003, filed on March 1, 2004)

Subsidiaries of the Company (incorporated by reference to Exhibit 21 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, filed on February 25, 2015)

31.1

Certification by Thomas J. Quinlan, III, President and Chief Executive Officer, required by Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934 (filed herewith)

31.2

Certification by Daniel N. Leib, Executive Vice President and Chief Financial Officer, required by Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934 (filed herewith)

32.1

Certification by Thomas J. Quinlan, III, President and Chief Executive Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code (filed herewith)

32.2

Certification by Daniel N. Leib, Executive Vice President and Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code (filed herewith)

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

*	Management contract or compensatory plan or arrangement.

SIGNATURES

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

R.R. DONNELLEY & SONS COMPANY

By:		/s/ D ANIEL N. L EIB
		Daniel N. Leib
		Executive Vice President and Chief Financial Officer

By:		/s/ A NDREW B. C OXHEAD
		Andrew B. Coxhead
		Senior Vice President and Chief Accounting Officer

Date: May 7, 2015

Exhibit 10.2

RR DONNELLEY
NON-EMPLOYEE DIRECTOR COMPENSATION PLAN

Each Director shall receive (A) an annual retainer fee (a “Retainer”) to be paid in the form of a grant of Restricted Stock Units (“RSUs”) on the date of the Company’s Annual Meeting of Stockholders pursuant to the Company’s Performance Incentive Plan in effect on such date (the “Plan”), and (B) a per board meeting fee (“Meeting Fee’), each as described further below.

Meeting Fee:

1.	Each Director shall be paid $5,000 in cash for each meeting of the Board attended in person or telephonically.

2.	Meeting Fees shall be paid semi-annually following the Board’s October and April meetings of each year.

Retainer:

Each director shall be entitled to a Retainer in the amount equal to the applicable amounts described in the table in paragraph 7 below. If any director joins the Board on a date other than the date of the Company’s Annual Meeting, then (i) a pro-rata portion of the applicable Retainer from the date joined to the next Annual Meeting date shall be granted and (ii) the special deferral election under section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), that applies when an individual first becomes eligible to participate in a plan shall apply in lieu of paragraphs 3 and 4 hereof .

RSUs will be payable in three equal annual installments beginning on the first anniversary of the grant date , unless a D irector makes a deferral election pursuant to paragraph 3 or 4 hereof, but will be payable in full on the earlier of (i) the date the D irector ceases to be a Director of the Company and (ii) a Change in Control (as defined in the Plan).

3.	Directors have the option to defer payment of any installment to the later of (i) the date the Director ceases to be a Director of the Company and (ii) such other deferral period as may be required by section 409A of the Code .

A Director who does not irrevocably make an initial deferral election pursuant to paragraph 3 hereof before the December 31 ^st immediately preceding the date of the Company’s Annual Meeting of Stockholders at which the Retainer will be granted shall have another opportunity to elect to defer such Retainer. Such a subsequent deferral election must become irrevocable no later than the day before the Company’s Annual Meeting of Stockholders at which the Retainer will be granted, and the election will become effective twelve months thereafter. The deferral period elected by a Director pursuant to this paragraph 4 must end no earlier than the sixth anniversary of the date the Retainer was granted.

5.	Dividend equivalents on the awards are deferred (credited with interest quarterly at the same rate as five-year U.S. government bonds) and paid out at the same time the corresponding portion of the award becomes payable.

Effective as of May 21, 2015

6.	The Company shall make payment of the RSUs in Company common stock.

7.	The schedule of Retainer amounts are as follows:

	Base Retainer:
Director	$	230,000

	Additional Retainer:
Chairman of the Board	$	175,000
Chairman of Audit and Human Resources Committees	$	35,000
Chairman of GRT Committee	$	20,000
Audit Committee member other than Chairman	$	20,000

Effective as of May 21, 2015

Exhibit 10.4

R.R. Donnelley & Sons Company

Nonqualified Deferred Compensation Plan

(amended and restated effective January 1, 2011)

R.R. DONNELLEY & SONS COMPANY
NONQUALIFIED DEFERRED COMPENSATION PLAN

TABLE OF CONTENTS

			Page
ARTICLE I PURPOSE			1
ARTICLE II DEFINITIONS			1
ARTICLE III ELIGIBILITY, ENROLLMENT, PARTICIPATION			10
Section	3.1.	Eligibility	10
Section	3.2.	Enrollment and Commencement of Participation	10
Section	3.3.	Termination of Eligibility	12
ARTICLE IV DEFERRALS, COMPANY CONTRIBUTIONS, DEEMED INVESTMENTS, TAXES, ETC.			12
Section	4.1.	Participant Annual Deferral Amounts	12
Section	4.2.	FBU Participant and CSR Participant Deferral Amounts	12
Section	4.3.	Short Plan Year	13
Section	4.4.	Deferral Elections	13
Section	4.5.	Withholding and Crediting of Deferral Amounts, FBU Deferral Amounts and CSR Deferral Amounts, etc.	14
Section	4.6.	Leave of Absence	16
Section	4.7.	Company Contribution Amount	16
Section	4.8.	Vesting	17
Section	4.9.	Deemed Investments	18
Section	4.10.	No Crediting to Accounts After Distribution	20
Section	4.11.	FICA and Other Taxes	21
ARTICLE V RETIREMENT BENEFIT			21
Section	5.1.	Retirement Benefit	21
Section	5.2.	Time and Form of Retirement Benefit Payment	22
ARTICLE VI SEPARATION FROM SERVICE BENEFIT			22
Section	6.1.	Separation from Service Benefit	22
Section	6.2.	Time and Form of Separation from Service Benefit Payment	22
ARTICLE VII CHANGE IN CONTROL BENEFIT			23
Section	7.1.	Change in Control Benefit	23
Section	7.2.	Time and Form of Change in Control Benefit Payment	23

-i-

			Page
ARTICLE VIII SCHEDULED DISTRIBUTIONS; UNFORESEEABLE EMERGENCY PAYMENTS			24
Section	8.1.	Scheduled Distributions	24
Section	8.2.	Other Payments Take Precedence Over Scheduled Distributions	24
Section	8.3.	Unforeseeable Emergency	24
ARTICLE IX CHANGES IN THE FORM OR TIMING OF PAYMENTS			25
Section	9.1.	Election Changes	25
Section	9.2.	Other Changes	25
ARTICLE X DEATH BENEFIT			26
Section	10.1.	Death Benefit	26
Section	10.2.	Payment of Death Benefit	26
ARTICLE XI BENEFICIARY DESIGNATION			26
Section	11.1.	Beneficiary Designation	26
Section	11.2.	Spousal Consent	27
Section	11.3.	Acknowledgment	27
Section	11.4.	No Beneficiary Designation	27
Section	11.5.	Discharge of Obligations	27
ARTICLE XII PLAN AMENDMENT, TERMINATION OR LIQUIDATION			27
Section	12.1.	Amendment	27
Section	12.2.	Termination and Liquidation of Plan	28
Section	12.3.	Effect of Payment	29
ARTICLE XIII ADMINISTRATION			29
Section	13.1.	Benefits Committee	29
Section	13.2.	Administration Upon Change In Control	30
Section	13.3.	Agents	30
Section	13.4.	Binding Effect of Decisions	30
Section	13.5.	Indemnity	30
Section	13.6.	Employer Information	30
ARTICLE XIV COORDINATION WITH OTHER BENEFITS			31

-ii-

			Page
ARTICLE XV CLAIMS AND APPEALS PROCEDURES			31
Section	15.1.	Authority to Submit Claims	31
Section	15.2.	Procedure for Filing a Claim	31
Section	15.3.	Initial Claim Review	31
Section	15.4.	Claim Determination	31
Section	15.5.	Manner and Content of Notification of Adverse Determination of a Claim	32
Section	15.6.	Procedure for Filing an Appeal of an Adverse Determination	32
Section	15.7.	Appeal Procedure	32
Section	15.8.	Timing and Notification of the Determination of an Appeal	33
Section	15.9.	Manner and Content of Notification of Adverse Determination of Appeal	33
Section	15.10.	Delivery and Receipt	33
Section	15.11.	Limitation on Actions	34
Section	15.12.	Failure to Exhaust Administrative Remedies	34
ARTICLE XVI TRUST			34
Section	16.1.	Establishment of the Trust	34
Section	16.2.	Investment of Trust Assets	34
Section	16.3.	Interrelationship of the Plan and the Trust	34
Section	16.4.	Distributions From the Trust	34
ARTICLE XVII MISCELLANEOUS			34
Section	17.1.	Status of Plan	34
Section	17.2.	Unsecured General Creditor	35
Section	17.3.	Employer’s Liability	35
Section	17.4.	Nonassignability	35
Section	17.5.	Withholding for Taxes	35
Section	17.6.	Immunity of Benefits Committee Members	35
Section	17.7.	Not a Contract of Employment	36
Section	17.8.	Furnishing Information	36
Section	17.9.	Terms	36
Section	17.10.	Captions	36
Section	17.11.	Governing Law	36
Section	17.12.	Notice	37
Section	17.13.	Successors	37
Section	17.14.	Spouse’s Interest	37
Section	17.15.	Validity	37
Section	17.16.	Incompetent	37
Section	17.17.	Court Order	37
Section	17.18.	Insurance	38
Section	17.19.	Legal Fees To Enforce Rights After Change in Control	38

-iii-

R.R. DONNELLEY & SONS COMPANY
NONQUALIFIED DEFERRED COMPENSATION PLAN

(amended and restated effective January 1, 2009)

ARTICLE I

PURPOSE

The purpose of the Plan is to provide specified payments to a select group of management or highly compensated Employees who contribute materially to the continued growth, development and success of R.R. Donnelley & Sons Company, a Delaware corporation, and its subsidiaries that participate in the Plan. The Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA.

ARTICLE II

DEFINITIONS

For the purposes of the Plan, unless otherwise clearly apparent from the context, the following phrases or terms shall have the meanings set forth below.

2.1	“Account” shall mean an account established on the Company’s books and records on behalf of a Participant equal to the sum of the Participant’s (i) Deferral Account and (ii) Company Contribution Account.

2.2	“Administrator” shall be the person appointed pursuant to Section 13.2 to administer the Plan upon a Change in Control.

2.3

“Adverse Determination” means a Determination that is a denial, reduction or termination of, or a failure to provide or make payment (in whole or in part) with respect to a Claim, including any such denial, reduction, termination or failure to provide or make payment that is based on a determination of an Employee’s or former Employee’s eligibility to participate in the Plan.

2.4

“Affiliate” shall mean (a) a corporation that is a member of the same controlled group of corporations (within the meaning of section 414(b) of the Code) as an Employer, (b) a trade or business (whether or not incorporated) under common control (within the meaning of section 414(c) of the Code) with an Employer, (c) any organization (whether or not incorporated) that is a member of an affiliated service group (within the meaning of section 414(m) of the Code) that includes (i) an Employer, (ii) a corporation described in clause (a) of this definition or (iii) a trade or business described in clause (b) of this definition, or (d) any other entity that is required to be aggregated with an Employer pursuant to regulations promulgated under section 414(o) of the Code by the U.S. Treasury Department. A corporation, trade or business or entity shall be an Affiliated employer only for such period or periods of time during which such corporation, trade or business or entity is described in the preceding sentence.

2.5	“Annual Bonus” shall mean compensation relating to services performed during a calendar year, regardless of whether such compensation is paid in such calendar year or

-1-

included on an IRS Form W-2 for such calendar year, that is earned by a Participant as an Employee under any Employer’s annual cash bonus plan or annual cash incentive plan, provided that such compensation has been designated by the Benefits Committee to be eligible for deferral under the Plan.

2.6	“Annual Deferral Amount” shall mean that portion of a Participant’s Base Salary and Annual Bonus that the Participant defers for a Plan Year and is withheld from the Participant’s compensation in accordance with Article IV.

2.7	“Appeal” shall mean a request by a Claimant to the Benefits Committee to review an Adverse Determination.

2.8

“Base Salary” shall mean the cash compensation of a Participant, an FBU Participant or a CSR Participant for a calendar year relating to services performed during such calendar year, excluding bonuses, commissions, overtime, fringe benefits, stock options, relocation expenses, incentive payments (other than under an annual cash incentive plan designated by the Benefits Committee to be eligible for deferral under the Plan, as described in Section 2.5), non-monetary awards, and other fees, and automobile and other allowances paid to the Participant, FBU Participant or CSR Participant. Base Salary shall also include compensation voluntarily deferred or contributed by a Participant, an FBU Participant or a CSR Participant pursuant to all qualified and nonqualified plans of his or her Employer and amounts not otherwise included in his or her gross income under sections 125 and 402(e)(3) of the Code pursuant to plans established or maintained by his or her Employer; provided, however , that all such amounts shall be considered Base Salary only to the extent that had there been no such plan, the amount would have been payable in cash to the Participant, FBU Participant or CSR Participant.

2.9	“Beneficial Owner” shall have the meaning defined in Rule 13d-3 under the Securities Exchange Act of 1934.

2.10	“Beneficiary” shall mean one or more persons, trusts, estates or other entities, designated in accordance with Article XI, entitled to receive benefits under the Plan upon the death of a Participant, an FBU Participant or a CSR Participant.

2.11	“Benefits Committee” shall mean the committee described in Section 13.1.

2.12	“Board” shall mean the board of directors of the Company.

2.13	“Change in Control” shall be deemed to have occurred with respect to a Participant, an FBU Participant or a CSR Participant on the date the conditions set forth in any one of the following subparagraphs shall have been satisfied.

(a)

Change in Ownership . Any Person, or more than one Person acting as a group, is or becomes the Beneficial Owner, directly or indirectly, of the Participant’s, FBU Participant’s or CSR Participant’s Employer’s securities representing more than fifty percent (50%) of the total fair market value or total voting power of such Employer’s then outstanding securities.

-2-

(b)

Change in Effective Control . Any Person, or more than one Person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition of the Participant’s, FBU Participant’s or CSR Participant’s Employer’s securities by such Person or Persons) ownership of fifty percent (50%) or more of the total voting power of such Employer’s then outstanding securities.

(c)

Change in Board Composition . A majority of the members of the board of directors of the Participant’s, FBU Participant’s or CSR Participant’s Employer is replaced during any 12-month period by directors whose appointment or election is not endorsed by at least two-thirds (2/3) of the directors before such appointment or election.

(d)

Change in Asset Ownership . Any Person, or more than one Person acting as a group, who is not a Related Person acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition of assets of the Employer of the Participant, FBU Participant or CSR Participant by such Person or Persons) all or substantially all of the assets of such Employer having a total gross fair market value equal to or more than fifty percent (50%) of the total gross fair market value of all of the assets of such Employer immediately before such acquisition or acquisitions. “Related Person” shall mean (i) a stockholder of the Participant’s, FBU Participant’s or CSR Participant’s Employer who receives assets of such Employer in exchange for the stockholder’s stock; (ii) a Person, or more than one Person acting as a group, in which the Employer owns directly or indirectly at least fifty percent (50%) of the total value or voting power; or (iii) an entity at least fifty percent (50%) owned, directly or indirectly, by a Person or Persons described in clause (ii).

A Change in Control shall also occur if any of the four circumstances described in clause (a), (b), (c) or (d) above shall occur with respect to (i) the Company and any other corporation that is a direct or indirect owner of more than fifty percent (50%) of the total fair market value and total voting power of the Employer of the Participant, FBU Participant or CSR Participant or (ii) the corporation(s) that are liable for the payment of the Participant’s vested Account balance, the FBU Participant’s vested FBU Account balance or CSR Participant’s CSR Account balance, as the case may be. The foregoing to the contrary notwithstanding, a Change in Control shall not occur with respect to a Participant, an FBU Participant or a CSR Participant if (i) a Potential Change in Control related to such Change in Control involves a publicly announced transaction or publicly announced proposed transaction which at the time of the announcement has not been previously approved by the Board and (ii) the Participant, FBU Participant or CSR Participant is part of the purchasing group proposing such a transaction. A Change in Control also shall not occur with respect to a Participant, an FBU Participant or a CSR Participant if he or she is part of a purchasing group which consummates the Change in Control transaction. A Participant, an FBU Participant or a CSR Participant shall be a part of the purchasing group for purposes of the two preceding sentences if he or she is an equity participant, or has agreed to become an equity participant, in the purchasing group

-3-

(except for passive ownership of less than five percent (5%) of the equity of the purchasing group).

Notwithstanding the foregoing, the Benefits Committee shall interpret all provisions relating to a Change in Control in a manner that is consistent with applicable tax law.

2.14	“Change in Control Benefit” shall have the meaning set forth in Article VII.

2.15	“Claim” shall mean an initial request to the Benefits Committee for a payment or for a request of a determination of eligibility to participate in the Plan. If the procedure described in Section 15.2 is not followed by a Claimant, then the Claimant’s request shall not be considered.

2.16	“Claimant” shall have the meaning set forth in Section 15.1.

2.17	“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

2.18	“Company” shall mean R.R. Donnelley & Sons Company, a Delaware corporation, and any successor to all or substantially all of the Company’s assets or business.

2.19	“Company Contribution Account” shall mean an account established on the Company’s books and records on behalf of a Participant or an FBU Participant to which amounts are credited in accordance with Section 4.7, as adjusted for earnings and losses and distributions made pursuant to the Plan.

2.20	“Company Contribution Amount” shall mean, for any Plan Year, the amount described in Section 4.7.

2.21

“Crediting Date” shall mean the date that is on or before the forty-fifth (45 ^th ) day occurring immediately after the end of the twelve-month period in which the annual compensation of a Participant or an FBU Participant is payable as set forth in the participant’s employment agreement with an Employer.

2.22	“CSR Account” shall mean an account established on the Company’s books and records on behalf of a CSR Participant equal to the CSR Participant’s CSR Deferral Account.

2.23	“CSR Deferral Account” shall mean an account established on the Company’s books and records on behalf of a CSR Participant, to which account amounts are credited in accordance with Section 4.5(d) or Section 4.5(e), as adjusted for earnings and losses and distributions pursuant to the Plan.

2.24	“CSR Deferral Amount” shall mean the portion of a CSR Participant’s (i) Base Salary or draw payments and (ii) commissions that the CSR Participant defers for a Plan Year and is withheld from the CSR Participant’s compensation in accordance with Article IV.

2.25	“CSR Participant” shall mean a commissioned Sales Representative within the meaning of clause (ii) of Section 2.50 who satisfies the criteria established by the Benefits

-4-

Committee to be eligible to participate in the Plan as a CSR Participant and who has elected to participate in the Plan pursuant to Section 3.2(b).

2.26	“Deferral Account” shall mean an account established on the Company’s books and records on behalf of a Participant, to which account amounts are credited in accordance with Section 4.5(a), as adjusted for earnings and losses and distributions pursuant to the Plan.

2.27	“Determination” means the Claims Administrator’s decision with respect to a Claim or an Appeal.

2.28

“Director” shall mean the Company’s Director of Executive Compensation. In the event of the temporary absence of the Director, whether due to illness, disability or otherwise, or upon the resignation or removal of the Director, the individual who performs substantially similar duties with respect to the Plan (regardless of the individual’s title with the Company) shall be deemed to be the Director.

2.29

“Distribution Date” shall mean the date on which a Participant’s vested Account balance, an FBU Participant’s vested FBU Account balance and FBU Transferred Account balance, if any, or a CSR Participant’s CSR account balance shall become distributable. Subject to Section 9.2, the Distribution Date shall be:

(a)

in the case of a Participant or a CSR Participant whose vested account balance first becomes distributable on or after January 1, 2011, the later of (i) the first day of the Plan Year immediately following the Plan Year in which he or she has a Separation from Service or Retirement, and (ii) the next day after the expiration of the six-month period immedia t ely following the date on which he or she has a Separation from Service or Retirement, if he or she is a Specified Employee on such date;

(b)	in the case of a Participant or a CSR Participant, the first day of the Plan Year immediately following the Plan Year in which he or she has a Separation from Service or Retirement, if he or she is not a Specified Employee on such date;

(c)	in the case of an FBU Participant, the second anniversary of his or her Retirement;

(d)	in the case of an FBU Participant who has a Separation from Service other than by reason of his or her death, the date that is the second anniversary of his or her Separation from Service date;

(e)

notwithstanding Section 2.29(a), (b), (c) or (d), if (i) the Participant, FBU Participant or CSR Participant, as the case may be, has elected a Change in Control Benefit and (ii) a Change in Control occurs before his or her Separation from Service or Retirement, the date on which the Change in Control occurs;

-5-

(f)	notwithstanding Section 2.29(a), (b), (c) or (d), in the case of a Scheduled Distribution, the business day occurring immediately before the date of the Scheduled Distribution; or

(g)

if the Participant, FBU Participant or CSR Participant, as the case may be, dies before the distribution of his or her vested Account balance, vested FBU Account balance and any FBU Transferred Account or CSR Account balance, as applicable, occurs or commences, the date on which the Benefits Committee is provided with evidence satisfactory to the Benefits Committee of his or her death.

2.30

“Election Form” shall mean the form established from time to time by the Benefits Committee that each Participant, FBU Participant and CSR Participant must complete, sign and return to the Benefits Committee in order to make a valid deferral and distribution election under the Plan. Initial investment elections applicable to such elective deferrals shall also be made on the Election Form. Such term shall also refer to any electronic means of making deferral or distribution elections that is approved by the Benefits Committee.

2.31	“Employee” shall mean an individual (i) whose employment relationship with an Employer is, under common law, that of an employee and (ii) who has not experienced a Separation from Service.

2.32	“Employer” shall mean the Company or Moore Wallace North America or any subsidiary of either such Employer that participates in the Plan.

2.33	“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

2.34	“FBU Account” shall mean an account established on the Company’s books and records on behalf of an FBU Participant equal to the sum of the FBU Participant’s (i) FBU Deferral Account, (ii) FBU Bonus Account and (iii) Company Contribution Account.

2.35

“FBU Bonus Account” shall mean an account established on the Company’s books and records on behalf of an FBU Participant, to which account amounts are credited in respect of his or her Signing Credit(s) and Paid Billing Bonus(es) awarded pursuant to employment agreements between the FBU Participant and an Employer, as adjusted for earnings and losses and distributions pursuant to the Plan.

2.36	“FBU Deferral Account” shall mean an account established on the Company’s books and records on behalf of a FBU Participant, to which account amounts are credited in accordance with Section 4.5(b) or Section 4.5(c), as adjusted for earnings and losses and distributions pursuant to the Plan.

2.37	“FBU Deferral Amount” shall mean that portion of an FBU Participant’s (i) Base Salary or draw payments and (ii) commissions that the FBU Participant defers for a Plan Year and is withheld from the FBU Participant’s compensation in accordance with Article IV.

-6-

2.38

“FBU Participant” shall mean either (i) a Sales Representative in the Global Capital Markets Unit of the Company or the Global Investment Markets Business Unit of the Finance Business Unit of the Company or (ii) any other management or highly compensated Employee who satisfies the eligibility criteria established by the Benefits Committee to be eligible to participate in the Plan as an FBU Participant and who has elected to participate in the Plan pursuant to Section 3.2(b).

2.39

“FBU Transferred Account” shall mean an account established on the Company’s books and records on behalf of an FBU Participant that is credited with the balance as of February 28, 2009 of the FBU Participant’s account under the R.R. Donnelley & Sons Company Global Capital Markets and Global Investment Markets Business Units of the Financial Business Unit Sales Representative Deferred Compensation Plan.

2.40

“Measurement Fund” shall mean a common trust fund, mutual fund or other collective investment vehicle selected by the Benefits Committee to serve as a benchmark for determining the rate of return on a Participant’s Account, an FBU Participant’s FBU Account and FBU Transferred Account, if any, or a CSR Participant’s CSR Account, to the extent such account is deemed to be invested in such Measurement Fund in accordance with Section 4.9.

2.41

“Paid Billings Bonus” shall mean the bonus awarded to an FBU Participant in connection with his or her entering into an employment agreement with an Employer, which bonus, pursuant to the FBU Participant’s employment agreement, may be earned over the term of the employment agreement if certain billings targets are achieved. When a portion of the bonus is earned because a billings target has been achieved, such portion is credited to the FBU Participant’s FBU Bonus Account as of the FBU Participant’s Crediting Date or relevant anniversary thereof.

2.42	“Participant” shall mean any Employee who satisfies the eligibility criteria established by the Benefits Committee to be eligible to participate in the Plan as a Participant and who has elected to participate in the Plan pursuant to Section 3.2(a).

2.43

“Person” shall have the meaning given in section 3(a)(9) of the Securities Exchange Act of 1934, as modified and used in sections 13(d) and 14(d) thereof; provided, however , that a Person shall not include (i) the Company or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

2.44	“Plan” shall mean the R.R. Donnelley & Sons Company Nonqualified Deferred Compensation Plan, effective January 1, 2011, which shall be evidenced by this instrument, as it may be amended from time to time.

2.45	“Plan Agreement” shall mean a written agreement in a form approved by the Benefits Committee, as may be amended from time to time, which is entered into by and between

-7-

(i) an Employer and (ii) a Participant, an FBU Participant or a CSR Participant . Each Plan Agreement shall apply to the entire benefit to which such an individual is entitled under the Plan. If more than one Plan Agreement has been entered into by an individual and any Employer, then the Plan Agreement bearing the latest date of acceptance by an Employer shall be the governing instrument and it shall supersede all previous Plan Agreements in their entirety. The terms of any Plan Agreement may be different then the terms of any other Plan Agreement, and any Plan Agreement may provide additional benefits not set forth in the Plan or limit the benefits otherwise provided under the Plan; provided, however , that any such additional benefits or benefit limitations must be agreed to by both parties and be clearly set forth in such Plan Agreement.

2.46	“Plan Year” shall mean a period beginning on January 1 of each calendar year and continuing through December 31 of such calendar year.

2.47	“Potential Change in Control” shall be deemed to have occurred if the conditions set forth in any one of the following paragraphs shall have been satisfied:

(a)	the Employer of a Participant, an FBU Participant or a CSR Participant enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

(b)	the Employer of a Participant, an FBU Participant or a CSR Participant or any other Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control; or

(c)

any Person who is or becomes the Beneficial Owner, directly or indirectly, of securities of the Employer of a Participant, an FBU Participant or a CSR Participant representing 9½ % or more of the combined voting power of such Employer’s then outstanding securities increases such Person’s beneficial ownership of such securities by 5% or more over the percentage so owned by such Person on the date hereof.

2.48

“Quarterly Installment Method” shall be payments of quarterly installments over the number of years selected by a Participant, an FBU Participant or a CSR Participant in accordance with the Plan, calculated as follows: (i) for the first quarterly installment, the Participant’s vested Account balance, the FBU Participant’s vested FBU Account balance and FBU Transferred Account balance, if any, or the CSR Participant’s CSR Account balance, as the case may be, shall be calculated as of the close of business on the business day immediately preceding his or her Distribution Date by multiplying such balance by a fraction, the numerator of which is one and the denominator of which is the number of quarterly installments to be paid; and (ii) for remaining quarterly installments, the Participant’s vested Account balance, the FBU Participant’s vested FBU Account balance and FBU Transferred Account balance, if any, or the CSR Participant’s CSR Account balance, as the case may be, shall be calculated on the last business day of the applicable remaining calendar quarter by multiplying the then balance by a fraction, the numerator of which is one and the denominator of which is the number of remaining quarterly installments to be paid (including the then current payment). Notwithstanding the

-8-

foregoing provisions of this Section 2.48, if at any time after quarterly installments payments have commenced or or after January 1, 2011, the Participant’s vested Account balance, the FBU Participant’s vested FBU Account balance and FBU Transferred Account balance, if any, or the CSR Participant’s CSR Account balance, as the case may be, when added together with his or her interests under all other plans and arrangements of the same type within the meaning of Treasury Regulation § 1.409A-1(c)(2) is not greater than the then applicable dollar limit under section 402(g)(1)(B) of the Code, then the Participant’s Account balance, the FBU Participant’s FBU Account and FBU Transferred Account, if any, or the CSR Participant’s CSR Account, as the case may be, shall be paid in a cash lump sum on the next quarterly installment payment date.

2.49	“Retirement” shall mean an Employee’s separation from service with the Employers, as described in Treasury Regulation § 1.409A-1(h), on or after age 55 with five Years of Service for any reason other than a leave of absence or death.

2.50

“Sales Representative” shall mean any Employee who is a sales representative (i) in the Global Capital Markets Unit or the Global Investments Markets Business Unit of the Company and who is eligible to participate in the Global Capital Markets Sales Compensation Plan or the Global Investments Markets Commission Plan or (ii) eligible to earn commissions under another Company commission plan.

2.51

“Scheduled Distribution” shall mean the first day of the Plan Year designated by a Participant, an FBU Participant or a CSR Participant who elects on an Election Form to receive all or a portion of his or her vested Account balance, vested FBU Account balance and any FBU Transferred Account or CSR Account balance, as applicable, in the form of a Scheduled Distribution. The Plan Year so designated may not be earlier than the first Plan Year beginning after the expiration of three Plan Years after the end of the Plan Year to which the deferral election relates. For example, if a Participant elects a Scheduled Distribution of his or her vested Account balance attributable to the Annual Deferral Amount earned in the Plan Year commencing January 1, 2009, the earliest Plan Year that may be elected by the Participant for the Scheduled Distribution is 2013 and the Scheduled Distribution would become payable on January 1, 2013.

2.52	“Separation from Service” shall mean an Employee’s separation from service with the Employers, as described in Treasury Regulation § 1.409A-1(h) or in Section 4.6, whichever is later, other than a Retirement.

2.53	“Signing Credit” shall mean the dollar amount awarded to an FBU Participant in connection with entering into an employment agreement with an Employer, which amount is credited to his or her FBU Bonus Account within thirty (30) days of the effective date of the employment agreement.

2.54

“Specified Employee” shall mean any individual who is determined to be a “specified employee” within the meaning of section 409A(a)(2)(B)(i) of the Code, in accordance with the terms of the document entitled “Section 409A: Policy of R.R. Donnelley & Sons Company and its Affiliates Regarding Specified Employees”.

-9-

2.55

“Treasurer” shall mean the Treasurer of the Company. In the event of the temporary absence of the Treasurer, whether due to illness, disability or otherwise, or upon the resignation or removal of the Treasurer, the individual who performs substantially similar duties with respect to the Plan (regardless of the individual’s title with the Company) shall be deemed to be the Treasurer for purposes of the Plan.

2.56	“Trust” shall mean one or more trusts established pursuant to the Master Trust Agreement dated as of April 1, 2002 between the Company and the Trustee.

2.57	“Trustee” shall have the same meaning as that term is defined in the Trust, as amended from time to time.

2.58

“Unforeseeable Emergency” shall mean a severe financial hardship to a Participant, an FBU Participant or a CSR Participant resulting from (i) an illness or accident of such an individual or his or her spouse, dependent or Beneficiary, (ii) a loss of such Participant’s, FBU Participant’s or CSR Participant’s property due to casualty (or the need to rebuild a home following damage not otherwise covered by insurance), or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of such Participant, FBU Participant or CSR Participant, all as determined in the sole discretion of the Benefits Committee.

2.59

“Years of Service” shall mean the total number of full years in which a Participant, an FBU Participant or a CSR Participant has been employed by one or more Employers. For purposes of this definition, a year of employment shall be a 365 day period (or 366 day period in the case of a leap year) that, for the first year of employment, commences on the hire date of such Participant, FBU Participant or CSR Participant and that, for any subsequent year, commences on an anniversary of that hire date. The Benefits Committee may make a determination as to whether any partial year of employment of an Employee shall be counted as a Year of Service. If the Benefits Committee does not make a determination, partial years of employment shall be disregarded.

ARTICLE III

ELIGIBILITY, ENROLLMENT, PARTICIPATION

Section 3.1. Eligibility . The Benefits Committee shall establish criteria for participation in the Plan whereby a select group of management or highly compensated Employees (i) will be eligible to participate in the Plan as Participants, and (ii) who are Sales Representatives will be eligible to participate in the Plan either as FBU Participants or as CSR Participants.

Section 3.2. Enrollment and Commencement of Participation .

(a) Participants . An Employee who is eligible to participate in the Plan as a Participant who first elects to participate in the Plan for a Plan Year shall complete, execute and return to the Benefits Committee, no later than the date selected by the Benefits Committee in its sole discretion, an Election Form and a Beneficiary designation form before the first day of such Plan Year. The Employee shall indicate on the Election

-10-

Form the percentages of his or her Base Salary and Annual Bonus, or both, that will be earned by the Employee in such Plan Year that he or she elects to defer the receipt thereof in accordance with his or her election and the terms of the Plan, including Section 4.4(a).

(b) FBU Participants and CSR Participants . A Sales Representative who is eligible to participate in the Plan either as an FBU Participant or a CSR Participant who first elects to participate in the Plan for a Plan Year shall complete, execute and return to the Benefits Committee, no later than the date selected by the Benefits Committee in its sole discretion, an Election Form and a Beneficiary designation form before the first day of such Plan Year. A Sales Representative who is eligible to participate in the Plan as a CSR Participant shall indicate on the Election Form the percentages of his or her (i) Base Salary or draw payments or (ii) commissions, or both, that will be earned by such Sales Representative in such Plan Year. A Sales Representative who is eligible to participate in the Plan as an FBU Participant shall indicate on the Election Form the percentages or dollar amounts of his or her (i) Base Salary or draw payments, (ii) commissions, or both, and (iii) any Paid Billings Bonus that may be earned in such Plan Year that he or she elects to defer the receipt thereof in accordance with his or her election and Plan terms, including Section 4.4(a). An FBU Participant who expects to enter into a new employment agreement with an Employer in such Plan Year shall also elect on the Election Form, the percentage or dollar amount of any Paid Billings Bonus that may be awarded in such employment agreement for the first year of the term of such new employment agreement if the FBU Participant wishes to defer any such Paid Billings Bonus, even though the FBU Participant does not know (i) whether he or she will in fact enter into a new employment agreement, (ii) whether any Paid Billings Bonus will be awarded in the employment agreement, (iii) if a Paid Billings Bonus is awarded, what the amount thereof would be, and (iv) whether the portion of the Paid Billings Bonus awarded in such Plan Year will be earned.

(c) Initial Eligibility . An Employee who first is selected to participate in the Plan after the first day of a Plan Year must complete the requirements described in Section 3.2(a) or Section 3.2(b), as applicable, within 30 days after he or she first becomes eligible to participate in the Plan, or earlier, as may be required by the Benefits Committee, in its sole discretion, in order to participate in the Plan for such Plan Year. Such an Employee shall not be permitted to defer receipt of any portion of his or her compensation that is earned for services performed before the Employee commences participation in the Plan. In addition, the Benefits Committee shall establish from time to time such other enrollment requirements as it determines, in its sole discretion, are necessary or desirable.

(d) Participation . Each Employee who enrolls in the Plan pursuant to Section 3.2 shall commence participation in the Plan on the date that the Benefits Committee determines, in its sole discretion, that the Employee has met all enrollment requirements set forth in the Plan and as required by the Benefits Committee, including returning all required documents to the Benefits Committee within the specified time period. If an Employee fails to meet all requirements contained in this Section 3.2 within the period

-11-

required, then the Employee shall not be eligible to participate in the Plan during the relevant Plan Year.

Section 3.3. Termination of Eligibility . If the Benefits Committee determines that a Participant, an FBU Participant or a CSR Participant no longer qualifies as a member of a select group of management or highly compensated employees (within the meaning of sections 201(2), 301(a)(3) and 401(a)(l) of ERISA), then, to the extent permitted under section 409A of the Code, the Benefits Committee shall (i) terminate any deferral election that such Participant, FBU Participant or CSR Participant has made for the remainder of the Plan Year in which the Benefits Committee makes such determination and (ii) take any further action that the Benefits Committee deems appropriate. In the event that a Participant, an FBU Participant or a CSR Participant becomes ineligible to defer compensation under the Plan, his or her account balance(s) shall continue to be governed by the terms of the Plan until such time as the vested portion of such account balance(s) is paid in accordance with the terms of the Plan.

ARTICLE IV

DEFERRALS, COMPANY CONTRIBUTIONS, DEEMED INVESTMENTS, TAXES, ETC.

Section 4.1. Participant Annual Deferral Amounts . A Participant may elect to defer for a Plan Year the receipt of any whole percentage of his or her (i) Base Salary or (ii) any whole percentage of his or her Annual Bonus, or (iii) both, provided that the percentage of Base Salary that may be deferred cannot exceed 50% of Base Salary and the percentage of Annual Bonus that may be deferred cannot exceed 90% of the Annual Bonus. The minimum Annual Deferral Amount is $2,000, in any combination of whole percentages of Base Salary and Annual Bonus. The Participant’s election shall apply to Base Salary earned in the Plan Year with respect to which the election applies and the Base Salary earned in the immediately succeeding Plan Year to the extent that the last payroll period beginning in the Plan Year to which the Participant’s election applies extends into such succeeding Plan Year.

Section 4.2. FBU Participant and CSR Participant Deferral Amounts . Each FBU Participant and each CSR Participant may elect to defer for a Plan Year (i) any whole percentage of his or her Base Salary or draw payments or (ii) any whole percentage of his or her commissions under the Global Capital Markets Sales Compensation Plan, the Global Investments Markets Commission Plan or other Company commission plan pursuant to which such individual may earn commissions, or (iii) both, provided that the percentage of Base Salary or draw payments cannot exceed 50% of the Base Salary or draw payments and the percentage of commissions that may be deferred cannot exceed (a) 90% of such commissions earned by an FBU Participant and (b) 75% of such commissions earned by a CSR Participant. The minimum FBU Deferral Amount and the minimum CSR Deferral Amount is $2,000, each in any combination of whole percentages of Base Salary or draw payments and commissions otherwise payable in the Plan Year. Notwithstanding the previous provisions of this Section 4.2, FBU Participants also have the right to specify his or her deferrals in dollar amounts or in whole percentages. Each election with respect to Base Salary or draw payments and commissions shall apply to that earned (i) in the Plan Year with respect to which the election applies and (ii) in the immediately succeeding Plan Year to the extent that the last payroll period beginning in the Plan Year to which the election applies extends into such succeeding Plan Year.

-12-

Section 4.3. Short Plan Year . Notwithstanding Section 4.1, except the last sentence thereof, if an Employee becomes a Participant after the first day of a Plan Year, the minimum Annual Deferral Amount shall be an amount equal to $2,000, in any combination of whole percentages of Base Salary and Annual Bonus earned in the Plan Year multiplied by a fraction, the numerator of which is the number of complete months remaining in the Plan Year after the Employee becomes a Participant and the denominator of which is 12 (the “Partial Year Fraction”). Notwithstanding Section 4.2, except the last sentence thereof, if an Employee becomes an FBU Participant or a CSR Participant after the first day of a Plan Year, the minimum FBU Deferral Amount or the minimum CSR Deferral Amount, as applicable, is $2,000, in any combination of whole percentages of Base Salary or draw payments and commissions earned in the Plan Year, multiplied by the Partial Year Fraction. Notwithstanding the previous provisions of this Section 4.3, FBU Participants also have the right to specify his or her deferrals in dollar amounts or in whole percentages.

Section 4.4. Deferral Elections .

(a) First Plan Year . In connection with a Participant’s commencement of participation in the Plan, the Participant shall make an irrevocable election on an Election Form specifying the whole percentages of Base Salary or Annual Bonus, or both, (to the maximum percentages set forth in Section 4.1) for the Plan Year in which participation commences that the Participant wishes to defer that are earned after the date the election is made. In connection with an FBU Participant’s or a CSR Participant’s commencement of participation in the Plan, the participant shall make an irrevocable election on an Election Form specifying the whole percentages of Base Salary or draw payments and commissions (to the maximum percentages set forth in Section 4.2) for the Plan Year in which participation commences that the participant wishes to defer that are earned after the date the election is made. Notwithstanding the previous provisions of this Section 4.4(a), FBU Participants also have the right to specify his or her deferrals in dollar amounts or in whole percentages. Each Participant, FBU Participant and CSR Participant also shall specify on the Election Form the payment form in which his or her vested account balance(s) shall be paid on account of his or her Separation from Service and the form in which the payment shall be made on account of his or her Retirement. For an election to be valid, the Election Form must be completed and signed by the Participant, the FBU Participant or the CSR Participant, as the case may be, timely delivered to the Benefits Committee (in accordance with Section 3.2), and accepted by the Benefits Committee.

(b) Subsequent Plan Years . For each succeeding Plan Year with respect to which an Employee is a Participant, an FBU Participant or a CSR Participant, an irrevocable deferral election for such a Plan Year, and such other elections as the Benefits Committee deems necessary or desirable under the Plan, shall be made by timely delivering a new Election Form to the Benefits Committee, in accordance with its rules and procedures, before the end of the Plan Year preceding the Plan Year with respect to which the election applies with respect to an Employee. If no valid election applies with respect to an Employee for a Plan Year, then no compensation earned by the Employee in such Plan Year amount shall be deferred. An FBU Participant who expects to enter into a new employment agreement with an Employer in a Plan Year shall also elect on the Election

-13-

Form, the percentage or dollar amount of any Paid Billings Bonus that may be awarded in such employment agreement for the first year of the term of such new employment agreement if the FBU Participant wishes to defer any such Paid Billings Bonus, even though the FBU Participant does not know (i) whether he or she will in fact enter into a new employment agreement, (ii) whether any Paid Billings Bonus will be awarded in the employment agreement, (iii) if a Paid Billings Bonus is awarded, what the amount thereof would be, and (iv) whether the portion of the Paid Billings Bonus awarded in such Plan Year will be earned.

Section 4.5. Withholding and Crediting of Deferral Amounts, FBU Deferral Amounts and CSR Deferral Amounts, etc .

(a) Annual Deferral Amounts . For each Plan Year, the Base Salary portion of a Participant’s Annual Deferral Amount shall be withheld from each of the Participant’s regularly scheduled Base Salary payments in substantially equal amounts, as adjusted from time to time for increases and decreases in his or her Base Salary, and a credit to the Participant’s Deferral Account shall be made equal to such amount on the applicable Base Salary payment date. The Annual Bonus portion of the Annual Deferral Amount shall be withheld on the date the Annual Bonus is or otherwise would be paid to the Participant and a credit to the Participant’s Deferral Account shall be made equal to each amount on such date.

(b) FBU Deferral Amounts when an FBU Participant Receives Base Salary; Signing Credit and Paid Billings Bonus . When an FBU Participant’s compensation is payable in the form of Base Salary, the Base Salary portion of his or her FBU Deferral Amount for a Plan Year shall be withheld from the FBU Participant’s Base Salary and credited to his or her FBU Deferral Account in accordance with this Section 4.5(b). Such Base Salary portion shall be withheld in substantially equal installments, adjusted from time to time to correspond to increases and decreases in Base Salary, on each regularly scheduled Base Salary payment date. A credit shall be made to the FBU Participant’s FBU Deferral Account equal to the amount withheld on each scheduled payment date. The commissions portion of an FBU Participant’s FBU Deferral Amount shall be withheld in substantially equal installments on the dates the commissions would otherwise be paid and a credit shall be made to his or her FBU Deferral Account equal to the amount withheld on date of the withholding. A credit shall be automatically made to the FBU Participant’s FBU Bonus Account on the FBU Participant’s Crediting Date or applicable anniversary thereof equal to the portion of the FBU Participant’s Paid Billings Bonus that is earned because a billings target set forth in his or her employment agreement has been achieved. A credit shall be automatically made to an FBU Participant’s FBU Bonus Account equal to his or her Signing Credit on the FBU Participant’s Crediting Date.

(c) FBU Deferral Amounts when an FBU Participant Receives Draw Payments; Signing Credit and Paid Billings Bonus . When an FBU Participant’s compensation is payable in the form of draw payments rather than Base Salary, his or her FBU Deferral Amount for a Plan Year that applies to his or her draw payments shall be withheld from such FBU Participant’s draw payments and credited to his or her FBU Deferral Account in accordance with this Section 4.5(c). The draw portion of an FBU Participant’s FBU

-14-

Deferral Amount for a Plan Year shall be withheld from his or her draw payments in substantially equal installments, adjusted from time to time to correspond to increases and decreases in the FBU Participant’s gross draw payments, on each draw payment date. A credit shall be made to the FBU Participant’s FBU Deferral Account equal to the amount withheld on each draw payment date. The commission portion of an FBU Participant’s FBU Deferral Amount shall be withheld in substantially equal installments on the dates the commissions would otherwise be paid and a credit shall be made to the FBU Participant’s FBU Deferral Account on each date of withholding equal to the amount of commissions withheld on such date. A credit shall be automatically made to the FBU Participant’s FBU Bonus Account on his or her Crediting Date or applicable anniversary thereof equal to the portion of the FBU Participant’s Paid Billings Bonus that is earned because a billings target set forth in his or her employment agreement has been achieved. A credit shall automatically be made to an FBU Participant’s FBU Bonus Account equal to his or her Signing Credit on the FBU Participant’s Crediting Date.

(d) CSR Deferral Amounts when a CSR Participant Receives Base Salary . When a CSR Participant’s compensation is payable in the form of Base Salary, his or her CSR Deferral Amount for a Plan Year that applies to his or her Base Salary shall be withheld from the CSR Participant’s Base Salary and credited to his or her CSR Deferral Account in accordance with this Section 4.5(d). The Base Salary portion of a CSR Participant’s CSR Deferral Amount for a Plan Year shall be withheld in substantially equal installments, adjusted from time to time to correspond to increases and decreases in Base Salary, on each regularly scheduled Base Salary payment date. A credit shall be made to the CSR Participant’s CSR Deferral Account equal to the amount withheld on each scheduled payment date. The commissions portion of a CSR Participant’s CSR Deferral Amount shall be withheld in substantially equal installments on the dates the commissions would otherwise be paid and a credit shall be made to his or her CSR Deferral Account equal to the amount withheld on the date of the withholding.

(e) CSR Deferral Amounts when a CSR Participant Receives Draw Payments . When a CSR Participant’s compensation is payable in the form of draw payments rather than Base Salary, his or her CSR Deferral Amount for a Plan Year that applies to his or her draw payments shall be withheld from such CSR Participant’s draw payments and credits shall be made to his or her CSR Deferral Account in accordance with this Section 4.5(e). The draw portion of a CSR Participant’s CSR Deferral Amount for a Plan Year shall be withheld from his or her draw payments in substantially equal installments, adjusted from time to time to correspond to increases and decreases in the CSR Participant’s gross draw payments on each draw payment date. A credit shall be made to the CSR Participant’s CSR Deferral Account equal to the amount withheld on each draw payment date. The commission portion of a CSR Participant’s CSR Deferral Amount shall be withheld in substantially equal installments on the dates the commissions would otherwise be paid, and a credit shall be made to the CSR Participant’s CSR Deferral Account on each date of the withholding equal to the amount of commissions withheld on such date.

-15-

Section 4.6. Leave of Absence .

(a) Paid Leave . If a Participant, an FBU Participant or a CSR Participant is authorized by his or her Employer to take a paid leave of absence from employment, the Annual Deferral Amount, FBU Deferral Amount or CSR Deferral Amount, as applicable, shall continue to be withheld during such paid leave of absence in accordance with Section 4.5 for a period not to exceed six months or, if longer, the period of such leave of absence as set forth in a written agreement between the Participant, FBU Participant or CSR Participant, as the case may be, and his or her Employer. Upon the expiration of such relevant period, the participant shall be deemed to have a Separation from Service if he or she has not returned to employment before such expiration.

(b) Unpaid Leave . If a Participant, an FBU Participant or a CSR Participant is authorized by his or her Employer to take an unpaid leave of absence from the employment of the Employer for any reason, his or her deferral election shall be cancelled for the remainder of the Plan Year. The Participant, FBU Participant or CSR Participant, as applicable, shall be deemed to have a Separation from Service six months after the beginning of such leave of absence if the duration of the leave is six months or longer, except that if the maximum period of the leave of absence is set forth in a written agreement between the Participant, FBU Participant or CSR Participant, as the case may be, and his or her Employer, the participant shall not have a Separation from Service due to the leave unless he or she does not return to work with an Employer before the expiration of the maximum leave of absence set forth in such agreement.

Section 4.7. Company Contribution Amount .

(a) Employment Agreements . For each Plan Year, the Company shall credit amounts to a Participant’s or an FBU Participant’s Company Contribution Account in accordance with an employment or other agreement entered into between such an individual and his or her Employer. If such an agreement provides that such amounts are subject to a vesting schedule, such amounts credited under the Plan shall be subject to such vesting schedule. Such amounts shall be credited to a participant’s Company Contribution Account on the date or dates prescribed by the applicable agreement. If no Crediting Date is prescribed by an agreement, an amount deferred in a Plan Year shall be credited as of the last day of such Plan Year.

(b) Discretionary . For each Plan Year, the Company, in its sole discretion, may, but is not required to, credit any amount it desires to the Company Contribution Account of any Participant or FBU Participant. The amount so credited may be smaller or larger than the amount credited to the Company Contribution Account of any other Participant or FBU Participant, and the amount credited to any participant’s Company Contribution Account for a Plan Year may be zero, even though one or more other participants are credited with a Company Contribution Amount for that Plan Year. A Company Contribution Amount described in this Section 4 .7(b) , if any, shall be credited as of the last day of the Plan Year. If a Participant or an FBU Participant is not employed by an Employer as of the last day of a Plan Year, then the Company Contribution Amount for that Plan Year for such participant shall be zero. Notwithstanding the previous sentence,

-16-

if a participant’s Retirement occurs within a Plan Year or if he or she dies within a Plan Year, then a pro-rated portion of the Company Contribution Amount for that Plan Year for such participant shall be credited as of the last day of the Plan Year.

Section 4.8. Vesting .

(a) Deferral Account . A Participant shall at all times be 100% vested in his or her Deferral Account.

(b) FBU Deferral Account . An FBU Participant shall at all times be 100% vested in his or her FBU Deferral Account.

(d) FBU Bonus Account . Except as provided in Section 4.8(i), Section 5.1 and Article VII, an FBU Participant shall become vested in a Signing Credit and the portion(s) of Paid Billings Bonus that are credited to his or her FBU Bonus Account on the date that is the fifth anniversary of the FBU Participant’s Crediting Date that applies to the employment agreement between the FBU Participant and the Employer pursuant to which such Signing Credit and Paid Billings Bonus were awarded, provided, however, that if the FBU Participant is not employed by an Employer on the fifth anniversary of such Crediting Date, then all amounts credited to the FBU Participant’s FBU Bonus Account in respect of such credit and bonus shall be forfeited. An FBU Participant who has a Separation from Service other than by reason of his or her disability (as determined under Section 4.8(f)) or death before he or she becomes vested in amounts attributable to any Signing Credit or Paid Billings Bonus shall forfeit such unvested amounts.

(e) Company Contribution Account . Participants shall become vested in the amounts credited to their Company Contribution Accounts as determined by the Company at the time the amount is so credited. Except as provided in Section 4.8(i), Section 5.1 and Article VII, FBU Participants shall become 100% vested in the amount credited to their Company Contribution Accounts for a Plan Year on the first day of the fifth anniversary of the date such amount was so credited.

(f) FBU Transferred Accounts . FBU Transferred Accounts shall vest in accordance with the terms applicable to such accounts as established under the R. R. Donnelley & Sons Company Global Capital Markets and Global Investment Markets Business Units of the Financial Business Unit Sales Representative Deferred Compensation Plan.

(g) Disability . Notwithstanding Section 4.8(d) and (e), a Participant or FBU Participant who becomes permanently disabled, as determined by the Benefits Committee in its sole discretion, shall become fully vested 60 days after the date he or she begins receiving long term disability benefits under the Company’s long term disability program.

(h) Other Accelerated Vesting . In the event of a Change in Control or upon the Retirement or death of a Participant while such participant is employed by an Employer,

-17-

his or her Company Contribution Account shall immediately become 100% vested, except to the extent that the Benefits Committee determines in the case of a Change in Control that the acceleration of vesting would cause the deduction limitations of section 280G of the Code to apply. In the event of a Change in Control or upon an FBU Participant’s Retirement or death while such participant is employed by an Employer, his or her FBU Deferral Account, FBU Bonus Account and Company Contribution Account shall immediately become 100% vested, except to the extent that the Benefits Committee determines in the case of a Change in Control that the acceleration of vesting would cause the deduction limitations of section 280G of the Code to apply. Any participant may request independent verification of the Benefits Committee’s calculations with respect to the application of the deduction limitations of section 280G of the Code. If a participant requests an independent verification, the Benefits Committee must provide him or her within 90 days of such a request an opinion, along with supporting calculations, from a nationally recognized accounting firm (the “Accounting Firm”) selected by the participant, stating that it is the Accounting Firm’s opinion that the vesting of the Company Contribution Account would cause the deduction limitations of section 280G of the Code to apply. The cost of such opinion and calculations shall be paid for by the Company.

(i) Forfeiture for Termination of Employment for Cause or Competition with the Company . Notwithstanding any other provisions of the Plan, all unvested amounts credited to an FBU Participant’s Company Contribution Account and all earnings thereon and all earnings credited to his or her FBU Deferral Account and FBU Bonus Account shall be forfeited (i) if the FBU Participant directly or indirectly becomes employed by or does any work for a competitor of the Company’s financial printing business in the twelve-month period beginning on the first date of the month occurring after the month in which his or her termination of employment with the Company and its affiliates occurs or (ii) the FBU Participant’s employment with the Company or an affiliate is terminated for cause (as determined by the Company in its sole discretion).

Section 4.9. Deemed Investments .

(a) Investment Elections . Each Participant in connection with his or her deferral elections pursuant to Section 4.4 shall elect on the Election Form the percentage, in increments of 1%, of his or her Annual Deferral Amount and Company Contribution Amount that shall be deemed to be invested in one or more Measurement Funds. Each FBU Participant in connection with his or her deferral elections pursuant to Section 4.4 shall elect on the Election Form the percentage, in increments of 1%, of the Base Salary or draw payments and commissions deferred by the FBU Participant, and the Company Contribution Amount credited to his or her Company Contribution Account that shall be deemed to be invested in one or more Measurement Funds. Notwithstanding the foregoing sentence, until an FBU Participant becomes 100% vested in his or her Company Contribution Account, such account shall be credited with earnings periodically throughout the Plan Year based upon the applicable percentage of the annual yield on the first business day of the Plan Year of U.S. Treasury Notes with a maturity of five years, as posted on the Federal Reserve’s website. Prior to the fifth anniversary of the FBU Participant’s Crediting Date that applies to the employment agreement between

-18-

the FBU Participant and the Employer pursuant to which a Signing Credit or a Paid Billings Bonus was awarded, the FBU Participant shall elect, on the form and at the time and manner determined solely by the Committee in its discretion, the whole percentage or dollar amounts of such Signing Bonus and Paid Billings Bonus that shall be deemed to be invested in one or more Measurement Funds. Each CSR Participant in connection with his or her deferral elections pursuant to Section 4.4 shall elect on the Election Form the percentage, in increments of 1%, of the Base Salary or draw payments and commissions deferred by the CSR Participant that shall be deemed invested in one or more Measure Funds. If a Participant, an FBU Participant or a CSR Participant does not elect any Measurement Fund, such amounts credited to his or her account(s) shall automatically be deemed invested in the lowest-risk Measurement Fund (the “default Measurement Fund”), as determined by the Benefits Committee in its sole discretion.

(b) Changing Investments . A Participant, an FBU Participant or a CSR Participant may elect, by use of any medium approved by the Benefits Committee, to change the portion of the balance(s) of his or her account(s) that is deemed to be invested in one or more Measurement Funds by specifying the whole percentage of such amounts or account balances that is to be deemed invested in each Measurement Fund. Any such election shall apply as of the first business day deemed reasonably practicable by the Benefits Committee, in its sole discretion, and shall continue to apply thereafter for each subsequent day in which the participant participates in the Plan, unless changed in accordance with the previous sentence.

(c) Selection of Measurement Funds . The Benefits Committee may, in its sole discretion, discontinue, substitute or add a Measurement Fund at any time. Each discontinuance, substitution or addition of a Measurement Fund shall take effect as of the first day of the first calendar month that begins at least 30 days after the day on which the Benefits Committee gives Participants, FBU Participants and CSR Participants written notice of such discontinuance, substitution or addition.

(d) Crediting or Debiting Method . The performance of each Measurement Fund (either positive or negative) shall be determined by the Director of Global Trust Investments, in its reasonable discretion, based on the performance of the investment vehicles upon which the Measurement Funds are based. In determining the value of each Measurement Fund, the Benefits Committee may establish the value of the Measurement Fund at a lower amount than the investment vehicle upon which such Measurement Fund is based to take into account expenses incurred in the administration of the Plan. Each Participant’s Account, each FBU Participant’s FBU Account and each CSR Participant’s CSR Account shall be credited or debited on each business day to the extent values are available for the investments upon which the Measurement Funds elected (or the default Measurement Fund deemed elected) by him or her are based.

(e) No Actual Investment . Notwithstanding any other provision of the Plan that may be interpreted to the contrary, the Measurement Funds, as well as the rate based upon the U.S. Treasury Notes with a maturity of five years in the case of Company Contribution Accounts of FBU Participants who are not 100% vested in such accounts, are to be used for measurement purposes only and shall not be considered or construed in any manner as

-19-

an actual investment of a Participant’s Account, an FBU Participant’s FBU Account or a CSR Participant’s CSR Account. In the event that the Company or the Trustee decides to invest funds of the Trust in any or all of the investments on which the Measurement Funds are based or in U.S. Treasury Notes with a maturity of five years, no Participant, FBU Participant or CSR Participant shall have any rights in or to such investments. Without limiting the foregoing, each Participant’s Account, each FBU Participant’s FBU Account and each CSR Participant’s CSR Account shall at all times be a bookkeeping entry only and shall not represent any investment made on his or her behalf by the Company or the Trust.

(f) FBU Transferred Accounts . Earnings shall be credited to the balance of each FBU Transferred Account periodically throughout the Plan Year based upon the applicable percentage of the annual yield on the first business day of the Plan Year of United States Treasury Notes with a maturity of five years, as posted on the Federal Reserve’s website. If an FBU Account is distributed to an accountholder as of any day other than January 1 ^st , then the FBU Account shall be credited with an amount representing earnings based upon the number of whole months during the Plan Year prior to the date of distribution. Each FBU Transferred Account shall at all times be a bookkeeping entry only and shall not represent any investment made on behalf of the accountholder.

(g) Unvested Signing Bonuses and Paid Billings Bonuses . Until an FBU Participant’s Signing Credit(s) and earned Paid Billings Bonus(es) become vested pursuant to Section 4.8, an amount representing earnings in respect of such Signing Credit(s) and Paid Billings Bonus(es) shall be credited to his or her FBU Bonus Account periodically throughout the Plan Year based upon the applicable percentage of the annual yield on the first business day of the Plan Year of United States Treasury Notes with a maturity of five years, as posted on the Federal Reserve’s website. If an FBU Bonus Account is distributed to an accountholder as of any day other than January 1 ^st , then the FBU Bonus Account shall be credited with an amount representing earnings based upon the number of whole months during the Plan Year prior to the date of distribution.

(h) Unsecured Creditors . Participants, FBU Participants and CSR Participants shall at all times be unsecured creditors of the Employers.

Section 4.10. No Crediting to Accounts After Distribution . Notwithstanding any provision in the Plan to the contrary, should the complete distribution of a Participant’s vested Account balance, an FBU Participant’s vested FBU Account balance or a CSR Participant’s vested CRS Account balance occur before the date on which any amount would otherwise be credited to such account, such amount, other than a Company Contribution Amount, shall be paid to the former Participant, former FBU Participant or former CSR Participant, as the case may be, on or before the March 15 ^th occurring immediately after the end of the Plan Year in which such amount would have been credited to the account. Any Company Contribution Amount that otherwise would have been credited to a Company Contribution Account of a Participant or FBU Participant and any amount representing earnings that would otherwise have been credited to a Company Contribution Account, a Deferral Account, FBU Deferral Account, an FBU Transferred Account or a CSR Deferral Account after the Distribution Date shall be forfeited.

-20-

Section 4.11. FICA and Other Taxes .

(a) Annual Deferral Amounts, FBU Deferral Amounts and CSR Deferral Amounts . For each Plan Year in which an Annual Deferral Amount is being withheld from a Participant’s current compensation, the Participant’s Employer shall withhold, in a manner determined by the Company, from the Participant’s Base Salary and Annual Bonus that are not being deferred, as applicable, the Participant’s share of FICA and other taxes on such Annual Deferral Amount. For each Plan Year in which an FBU Deferral Amount is being withheld from an FBU Participant’s current compensation, the FBU Participant’s Employer shall withhold, in a manner determined by the Company, from the FBU Participant’s Base Salary or draw payments that are not being deferred the FBU Participant’s share of FICA and other taxes on such FBU Deferral Amount. For each Plan Year in which a CSR Deferral Amount is being withheld from a CSR Participant’s current compensation, the CSR Participant’s Employer shall withhold, in a manner determined by the Company, from the CSR Participant’s Base Salary or draws payments that are not being deferred the CSR Participant’s share of FICA and other taxes on such CSR Deferral Amount. If deemed necessary, the Benefits Committee may reduce any Annual Deferral Amount, FBU Deferral Amount or CSR Deferral Amount in order to comply with this Section 4.11(a).

(b) Company Contribution Account . When a Participant or an FBU Participant becomes vested in a Company Contribution Amount that had been credited to his or her Company Contribution Account for a Plan Year, his or her Employer shall withhold from the portion of his or her current compensation that is not deferred his or her share of FICA and other taxes due on such vested amount. If deemed necessary, the Benefits Committee may reduce the vested portion of such Company Contribution Account in order to satisfy the taxes due as a result of such vesting.

(c) Distributions . Each Participant’s, FBU Participant’s and CSR Participant’s Employer, or the Trustee, shall withhold from any payments under the Plan made to such Participant, FBU Participant or CSR Participant, as the case may be, all federal, state and local income, employment and other taxes required to be withheld by the Employer or the Trustee, in connection with such payments, in amounts and in a manner to be determined in the sole discretion of the Company or the Trustee.

ARTICLE V

RETIREMENT BENEFIT

Section 5.1. Retirement Benefit . Notwithstanding Section 4.8(e), each Participant shall become fully vested in his or her Company Contribution Account balance as of the first day of the Plan Year immediately following the Plan Year in which the date of his or her Retirement occurs. Notwithstanding Section 4.8(d) and (e), each FBU Participant shall become fully vested in his or her FBU Deferral Account, FBU Bonus Account and Company Contribution Account upon his or her Retirement. A Participant’s or an FBU Participant’s Company Contribution Account balance shall be determined as of the close of business on the business day immediately preceding the Distribution Date.

-21-

Section 5.2. Time and Form of Retirement Benefit Payment . Each Participant, FBU Participant and CSR Participant, in connection with his or her commencement of participation in the Plan, shall elect on an Election Form to receive his or her Account balance, FBU Account balance or CSR Account balance, as applicable, and with respect to an FBU Participant, any FBU Transferred Account balance, on account of Retirement in a cash lump sum or pursuant to the Quarterly Installment Method for a maximum period of 15 years. Subject to Section 9.2, payment of a Participant’s Account balance, an FBU Participant’s FBU Account balance or a CSR Participant’s CSR Account balance, and, with respect to an FBU Participant, any FBU Transferred Account balance, on account of such participant’s Retirement shall be made, or shall commence, within 60 days of the Distribution Date according to his or her direction on the most recently filed Election Form, provided that the conditions set forth in Article IX are satisfied, and provided further that if the amount of such Account, FBU Account or CSR Account and, with respect to an FBU Participant any FBU Transferred Account, added together with the interests of the Participant, FBU Participant or CSR Participant, as the case may be, under all other plans and arrangements of the same type within the meaning of Treasury Regulation § 1.409A-1(c)(2), is not greater than the then applicable dollar limit under section 402(g)(1)(B) of the Code, then the Participant’s Account balance, the FBU Participant’s FBU Account or the CSR Participant’s CSR Account, as the case may be, and, with respect to an FBU Participant, any FBU Transferred Account, shall be paid in a cash lump sum on the applicable Distribution Date. If there is no valid election regarding the form of payment on account of Retirement (or the election does not satisfy the conditions set forth in Article IX), then the account balance(s) shall be paid, subject to Section 9.2, in a cash lump sum within 60 days of the applicable Distribution Date.

ARTICLE VI

SEPARATION FROM SERVICE BENEFIT

Section 6.1. Separation from Service Benefit . Each Participant who has a Separation from Service shall be entitled to receive his or her vested Account balance calculated as of the close of business on the business day immediately preceding the Participant’s Distribution Date. Each FBU Participant who has a Separation from Service shall be entitled to receive his or her vested FBU Account balance and FBU Transferred Account balance, if any, on the second anniversary of his or her date of Separation from Service, except that if an FBU Participant performs services for a competitor of the Company before such second anniversary, then the FBU Participant shall be entitled to receive his or her vested FBU Account balance and FBU Transferred Account balance, if any, on the later of (i) the second anniversary of his or her date of Separation from Service and (ii) the date on which he or she attains age 55. Each CSR Participant who has a Separation from Service shall be entitled to receive his or her CSR Account balance, calculated as of the close of business on the business day immediately preceding the CSR Participant’s Distribution Date.

Section 6.2. Time and Form of Separation from Service Benefit Payment . Each Participant, FBU Participant and CSR Participant in connection with his or her commencement of participation in the Plan, shall elect on an Election Form to receive his or her vested Account balance, vested FBU Account balance or CSR Account balance, as the case may be, and, with respect to an FBU Participant, any FBU Transferred Account, on account of his or her

-22-

Separation from Service in a cash lump sum or pursuant to the Quarterly Installment Method for a maximum period of five years. Subject to Section 9.2, payment of a Participant’s vested Account balance, an FBU Participant’s vested FBU Account balance or a CSR Participant’s CSR Account balance, and, with respect to an FBU Participant, any FBU Transferred Account balance, on account of his or her Separation from Service shall be made, or shall commence, within 60 days of the Distribution Date according to his or her direction on the most recently filed Election Form, provided that the conditions set forth in Article IX are satisfied, and provided further that if the amount of such Account, FBU Account or CSR Account and, with respect to an FBU Participant, any FBU Transferred Account, added together with the interests of the Participant, FBU Participant or CSR Participant, as applicable, under all other plans and arrangements of the same type within the meaning of Treasury Regulation § 1.409A-1(c)(2), is not greater than the then applicable dollar limit under section 402(g)(1)(B) of the Code, then the Participant’s Account balance, the FBU Participant’s FBU Account balance or the CSR Participant’s CSR Account balance, as the case may be, and, with respect to an FBU Participant, any FBU Transferred Account, shall be paid in a cash lump sum on the applicable Distribution Date. If there is no valid election regarding the form of payment on account of his or her Separation from Service (or the election does not satisfy the conditions set forth in Article IX), then the vested account balance(s) shall be paid, subject to Section 9.2, in a cash lump sum within 60 days of the applicable Distribution Date.

ARTICLE VII

CHANGE IN CONTROL BENEFIT

Section 7.1. Change in Control Benefit . Each Participant, FBU Participant and CSR Participant, in connection with his or her commencement of participation in the Plan, shall elect on an Election Form whether to (i) receive a Change in Control Benefit or (ii) have his or her account balance(s) remain in the Plan, subject to its terms and conditions, upon the occurrence of a Change in Control. If a Participant, an FBU Participant or a CSR Participant does not timely submit an election with respect to the payment of the Change in Control Benefit, then such Participant’s, FBU Participant’s or CSR Participant’s account balance(s) shall remain in the Plan upon a Change in Control and shall continue to be subject to the terms and conditions of the Plan.

Section 7.2. Time and Form of Change in Control Benefit Payment . The Change in Control Benefit for a Participant or a CSR Participant shall be equal to the Participant’s Account balance or the CSR Participant’s CSR Account balance, as applicable, calculated as of the close of business on the date of the Change in Control, and shall be paid in a cash lump sum within 60 days of the Participant’s or CSR Participant’s Distribution Date. A FBU Participant’s Change in Control Benefit shall be equal to the FBU Participant’s FBU Account balance and FBU Transferred Account balance, if any, calculated at the same time and paid in the same form and within the same time period as the vested Account balance of a Participant with respect to whom a Change in Control occurred.

-23-

ARTICLE VIII

SCHEDULED DISTRIBUTIONS; UNFORESEEABLE EMERGENCY PAYMENTS

Section 8.1. Scheduled Distributions . In connection with each election to defer an Annual Deferral Amount, a Participant may irrevocably elect to receive a Scheduled Distribution from the Plan with respect to all or a portion of such Annual Deferral Amount, adjusted for deemed earnings and losses. In connection with each election to defer an FBU Deferral Amount, an FBU Participant may irrevocably elect to receive a Scheduled Distribution from the Plan with respect to all or a portion of such FBU Deferral Amount, adjusted for deemed earnings and losses. In connection with each election to defer a CSR Deferral Amount, a CSR Participant may irrevocably elect to receive a Scheduled Distribution from the Plan with respect to all or a portion of such CSR Deferral Amount, adjusted for deemed earnings and losses. A Scheduled Distribution shall be paid in cash lump sum, calculated as of the close of business on the Distribution Date, in an amount equal to the portion of the Annual Deferral Amount, FBU Deferral Amount or CSR Deferral Amount that the participant elected to have distributed in a Scheduled Distribution. Subject to the other terms and conditions of the Plan, including Section 9.2, each Scheduled Distribution shall be paid within 60 days of the date of the Distribution Date.

Section 8.2. Other Payments Take Precedence Over Scheduled Distributions . If a Distribution Date occurs that triggers a payment under Article V, VI, VII or X or a payment is to be made pursuant to Section 8.3, then any amount subject to a Scheduled Distribution election shall not be paid in accordance with Section 8.1, to the extent it is payable pursuant to such other applicable Article or Section 8.3. If a payment on account of an Unforeseeable Emergency is to be made pursuant to Section 8.3, then, to the extent necessary to satisfy the Unforeseeable Emergency, any amount subject to a Scheduled Distribution election shall not be paid in accordance with Section 8.1, but shall be paid in accordance with Section 8.3. Notwithstanding the foregoing, the Benefits Committee shall interpret this Section 8.2 in a manner that is consistent with applicable law.

Section 8.3. Unforeseeable Emergency .

(a) In General . A Participant, an FBU Participant or a CSR Participant who experiences an Unforeseeable Emergency may file a request with the Benefits Committee to receive a distribution from his or her vested Account balance, vested FBU Account balance or CSR Account balance, as the case may be, equal to an amount reasonably necessary to satisfy his or her emergency financial need and pay any taxes and penalties reasonably anticipated as a result of the distribution. The Executive Vice President, Chief Human Resource Officer, in his or her sole discretion, shall determine whether the Participant, FBU Participant or CSR Participant, as applicable, has experienced an Unforeseeable Emergency. The Benefits Committee shall not make a distribution on account of an Unforeseeable Emergency to the extent that the Executive Vice President, Chief Human Resource Officer determines that the emergency need may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the assets of the Participant, FBU Participant or CSR Participant, as the case may be (to the extent such liquidation would not cause severe financial hardship), or by cessation of the participant’s deferrals under the Plan. In making his or her determination, the

-24-

Executive Vice President, Chief Human Resource Officer is not required to consider any amounts that are available under a tax-qualified plan (including any amount that may be available by obtaining a loan under such a plan) or under another nonqualified deferred compensation plan. The payment of any amount under this Section 8.3 shall be subject to Section 9.2. If the Executive Vice President, Chief Human Resource Officer, grants a request for a payment on account of an Unforeseeable Emergency, then the deferral election of the requesting participant shall be cancelled for the remainder of the Plan Year or, if longer, for six months.

(b) Coordination with 401(k) Plan . If a Participant, an FBU Participant or a CSR Participant receives a hardship distribution within the meaning of Treasury Regulation § 1.401(k)-1(d)(3) under the RR Donnelley & Sons Company Savings Plan or any other plan with a cash or deferred arrangement within the meaning of section 401(k) of the Code that is maintained by an Employer or an Affiliate, then his or her deferral election under the Plan shall be cancelled, and he or she shall not be permitted to defer any amounts under the Plan for a period of six months after the receipt of the hardship distribution. The Employee shall be again eligible to defer compensation under the Plan upon the expiration of such six-month period if he or she is then eligible to participate.

ARTICLE IX

CHANGES IN THE FORM OR TIMING OF PAYMENTS

Section 9.1. Election Changes . Each Participant, FBU Participant and CSR Participant may change the form or timing of a payment of his or her vested account balance(s) only in accordance with this Section 9.1. Such an individual who wishes to change the time or form of a previously elected payment must submit a new Election Form to the Benefits Committee, in accordance with any rules and procedures established by the Benefits Committee, at least 12 months before the payment would otherwise be made, except that any change in the form of Retirement payment must be made before the individual attains age 50. The first payment pursuant to a new election must be at least five years after the time the payment would otherwise have been made, and the new election shall have no effect until at least 12 months after the date on which such election is made.

Section 9.2. Other Changes .

(a) Section 162(m) . The Company shall delay a payment to a Participant, an FBU Participant or a CSR Participant to the extent the Company reasonably anticipates that if the payment were made as scheduled, the Employer of such individual would not be permitted fully to deduct the payment under section 162(m) of the Code, provided that the payment is made, at the Company’s discretion, either (i) during the first taxable year of the individual in which the Company reasonably anticipates that the payment would be deductible for such year or (ii) during the period beginning with the date of the Separation from Service or Retirement of the individual and ending on the later of (w) the last day of the Employer’s taxable year in which the such Separation from Service or Retirement occurs and (x) the fifteenth day of the third month following such Separation from Service or Retirement. If a payment is delayed to a date on or after such Separation from Service or Retirement, however, and the individual is a Specified Employee on the

-25-

date of his or her Separation from Service or Retirement, then the payment shall be treated as a payment on account of the his or her Separation from Service or Retirement. Thus, in the case of a delayed payment to such an individual, the payment shall be made during the period beginning with the date that is six months after such Separation from Service or Retirement and ending on the later of (y) the last day of the Employer’s taxable year in which occurs the last day of the sixth month period beginning on the date after such Separation from Service or Retirement and (z) the fifteenth day of the third month following the last day of the sixth month beginning on the date after such Separation from Service or Retirement. The Participant’s Account, the FBU Participant’s FBU Account and any FBU Transferred Account, or the CSR Participant’s CSR Account, as applicable, shall continue to be adjusted in accordance with Section 4.9 until it is fully paid.

(b) Payment upon Income Inclusion Under Section 409A . To the extent an amount deferred under the Plan is included in the income of a Participant, an FBU Participant or a CSR Participant as a result of a failure to comply with section 409A of the Code, the Plan shall distribute to the Participant, FBU Participant or CSR Participant, as the case may be, in the year of inclusion an amount equal to the lesser of the amount included in his or her income and the amount of the Participant’s vested Account balance, the FBU Participant’s vested FBU Account balance and any FBU Transferred Account or the CSR Participant’s CSR Account, as applicable.

(c) Payments That Would Violate Applicable Law . If the Company reasonably anticipates that a payment would violate a federal securities law or other applicable law, then the payment shall be delayed until the earliest date the Company reasonably anticipates that the payment can be made without a violation of law.

ARTICLE X

DEATH BENEFIT

Section 10.1. Death Benefit . In the case of a Participant, an FBU Participant or a CSR Participant who dies before his or her vested account balance(s) have been paid in full, his or her Beneficiary shall be entitled to receive the remainder of such vested account balance(s), calculated as of the close of business of the business day immediately preceding the Distribution Date of such Participant, FBU Participant or CSR Participant.

Section 10.2. Payment of Death Benefit . The Death Benefit in respect of a Participant, an FBU Participant or a CSR Participant shall be paid to his or her Beneficiary in a cash lump sum within 60 days of the Distribution Date.

ARTICLE XI

BENEFICIARY DESIGNATION

Section 11.1. Beneficiary Designation . Each Participant, FBU Participant and CSR Participant shall have the right, at any time, to designate his or her Beneficiary (primary, as well as contingent) to receive his or her vested account balance(s) upon such participant’s death. Each participant shall designate his or her Beneficiary by completing and signing the Beneficiary

-26-

designation form and returning it to the Benefits Committee or its designated agent. Each participant shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary designation form and the Benefits Committee’s rules and procedures, as in effect from time to time. If a participant designates more than one person to be his or her primary Beneficiary and one or more of those persons predeceases such participant, then the share of such deceased person(s) shall be allocated pro rata to such surviving persons.

Section 11.2. Spousal Consent . If a Participant, an FBU Participant or a CSR Participant names someone other than his or her spouse as a Beneficiary, then the Benefits Committee may, in its sole discretion, determine that spousal consent is required to be provided in a form designated by the Benefits Committee, executed by such spouse and returned to the Benefits Committee. Upon the acceptance by the Benefits Committee of a new Beneficiary designation form from a participant, all Beneficiary designations previously filed by such participant shall be canceled. The Benefits Committee shall be entitled to rely on the last Beneficiary designation form filed by a participant and accepted by the Benefits Committee prior to his or her death.

Section 11.3. Acknowledgment . No designation or change in designation of a Beneficiary shall be effective until received and acknowledged in writing by the Benefits Committee or its designated agent.

Section 11.4. No Beneficiary Designation . If a Participant, an FBU Participant or a CSR Participant fails to designate a Beneficiary or, if no Beneficiary survives the participant (or if no Beneficiary survives until the complete distribution of the Participant’s vested Account balance, the FBU Participant’s vested FBU Account balance and any FBU Transferred Account balance or the CSR Participant’s CSR Account balance), then the participant’s Beneficiary shall be deemed to be his or her surviving spouse. If the deceased Participant, FBU Participant or CSR Participant has no surviving spouse, then the Participant’s vested Account balance, the FBU Participant’s vested FBU Account balance and any vested FBU Transferred Account balance or the CSR Participant’s CSR Account balance, as the case may be, shall be payable to the executor or personal representative of the deceased participant’s estate.

Section 11.5. Discharge of Obligations . The payment of a deceased Participant’s vested Account balance, a deceased FBU Participant’s FBU Account and any FBU Transferred Account or a deceased CSR Participant’s CSR Account balance to his or her Beneficiary shall fully and completely discharge all Employers and the Benefits Committee from all obligations under the Plan with respect to such Participant, FBU Participant or CSR Participant.

ARTICLE XII

PLAN AMENDMENT, TERMINATION OR LIQUIDATION

Section 12.1. Amendment . The Company shall have the right, at any time, to amend the Plan in whole or in part by the action of its board of directors, its Human Resources Committee or the Benefits Committee; provided, however , that: (i) no amendment shall be effective to decrease the value of a Participant’s Account balance, an FBU Participant’s FBU Account balance and the balance of any FBU Transferred Account or a CSR Participant’s CSR

-27-

Account balance (the value of such balance(s) calculated as if the participant had experienced a Separation from Service as of the effective date of the amendment) and (ii) no amendment to this Section 12.1 or Section 13.2 after a Change in Control shall be effective, and provided further, that the Company’s Executive Vice President, Chief Human Resources Officer shall have the right to amend the Plan, but only to the extent that such amendment: (i) is required or deemed advisable as the result of legislation or regulation; (ii) concerns solely routine ministerial or administrative matters; or (iii) does not concern routine ministerial or administrative matters but does not materially increase any cost to any Employer. No amendment to the Plan shall affect any Participant, FBU Participant, CSR Participant or Beneficiary who has become entitled to the payments under the Plan on or before the earlier of (i) the date of the amendment and (ii) the effective date of the amendment.

Section 12.2. Termination and Liquidation of Plan . The Plan may be terminated and payments hereunder may be accelerated in connection with the termination of the Plan (such payment acceleration referred to herein as a “liquidation” of the Plan) only if the conditions of subsection (a), (b), (c) or (d) of this Section 12.2 are satisfied. U ntil 60 days before the Plan is completely liquidated, or such other time reasonably anticipated by the Benefits Committee to permit an orderly liquidation of the Plan, the Measurement Funds available to Participants, FBU Participants and CSR Participants immediately before the termination of the Plan shall be comparable in number and type to those Measurement Funds available in the Plan Year preceding the Plan Year in which the termination of the Plan becomes effective.

(a) Corporate Dissolution or Bankruptcy Court Approval . The Company may terminate and liquidate the Plan with respect to Participants, FBU Participants and CSR Participants who are Employees of one or more Employers (i) within 12 months of the dissolution of such Employer(s) that is taxed to stockholders under section 331 of the Code or (ii) with the approval of a bankruptcy court pursuant to 11 U.S.C. § 503(b)(1)(A), provided that all payments to each affected Participant, FBU Participant and CSR Participant are included in his or her gross income at the earlier of (x) the taxable year in which the payment is actually or constructively received by him or her and (y) the latest of the following: (1) the calendar year in which the Plan termination and liquidation occurs; (2) the first calendar year in which the amount of the payment is no longer subject to a substantial risk of forfeiture; and (3) the first calendar year in which the payment is administratively practicable.

(b) Change in Control . The Plan may be terminated and liquidated with respect to Participants, FBU Participants and CSR Participants who are Employees of an Employer that experiences a Change in Control at any time within 30 days before and 12 months after such Change in Control by the person who after the Change in Control is primarily liable for the payments under the Plan, provided that all plans, agreements and other arrangements that are of the same type (within the meaning of Treasury Regulation § 1.409A-1(c)(2)) as the Plan are terminated and liquidated with respect to each Participant, FBU Participant and CSR Participant affected by the Change in Control, and provided further that all such Participants, FBU Participants and CSR Participants receive all compensation deferred under the Plan and all plans, agreements and other arrangements of the same type as the Plan within 12 months of the date all necessary actions to terminate and liquidate the Plan and such other plans, agreements and

-28-

arrangements are irrevocably taken by the person primarily responsible for the payments thereunder.

(c) No New Plan for Three Years . The Company may liquidate and terminate the Plan with respect to one or more Employers only if the following five conditions are satisfied: (i) there is not a downturn in the financial health of such Employer(s); (ii) all plans, programs and arrangements of the same type (within the meaning of Treasury Regulation § 1.409A-1(c)(2)) as the Plan in which any Participant, FBU Participant or CSR Participant employed by such Employer(s) participates are also terminated and liquidated; (iii) no payments are made under the Plan within 12 months following the date the Company terminates the Plan with respect to such Employer(s), other than payments that would be made if the Plan had not been terminated with the intent to liquidate the Plan; (iv) all payments are made within 24 months following the date of Plan termination; and (v) such Employer(s) do not establish a new plan of the same type for those Employees of such Employer(s) who had participated in the Plan within the three year period following the date the Company takes all necessary action to terminate and liquidate the Plan with respect to such Employer(s).

(d) Other Permissible Events . The Company may terminate and liquidate the Plan upon any other event or condition that the Internal Revenue Service may provide in a regulation, ruling or notice or other publication in the Internal Revenue Bulletin.

Section 12.3. Effect of Payment . The full payment of a Participant’s vested Account balance, an FBU Participant’s vested FBU Account and any FBU Transferred Account and a CSR Participant’s CSR Account balance shall completely discharge all obligations to such Participant, FBU Participant or CSR Participant and his or her Beneficiary under the Plan, and the Participant’s, FBU Participant’s or CSR Participant’s Plan Agreement shall terminate.

ARTICLE XIII

ADMINISTRATION

Section 13.1. Benefits Committee . Except as otherwise provided in this Article XIII, the Plan shall be administered by the Benefits Committee.

(a) Members . Treasurer and Vice President shall be members of the Benefits Committee. The Benefits Committee may appoint additional members to the Benefits Committee and may replace vacancies pursuant to procedures established in its by-laws.

(b) Benefits Committee Duties and Actions . The Benefits Committee shall have the authority to (i) make, amend, interpret and enforce all appropriate rules and regulations for the administration of the Plan, (ii) decide or resolve any and all questions, including interpretations of the Plan, as may arise in connection with the Plan, and (iii) take any action as may be required or advisable for the proper administration of the Plan. Any individual serving on the Benefits Committee who is a Participant, an FBU Participant or a CSR Participant shall not vote or act on any matter relating solely to himself or herself. When making a determination or calculation, the Benefits Committee shall be entitled to rely on information furnished by a Participant, an FBU Participant, a CSR Participant or

-29-

the Company. Any action taken by the Benefits Committee with respect to any one or more Participants, FBU Participants or CSR Participants shall not be binding on the Benefits Committee as to any action to be taken with respect to any other participant. Each determination required or permitted under the Plan shall be made by the Benefits Committee in its sole and absolute discretion. The members of the Benefits Committee may allocate their responsibilities and may designate any other person or committee, including employees of the Company, to carry out any of their responsibilities with respect to administration of the Plan.

Section 13.2. Administration Upon Change In Control . Upon and after the occurrence of a Change in Control, the Plan shall be administered by an independent third party selected by the Trustee and approved by the individual who, immediately prior to the Change in Control, was the Company’s highest ranking officer (the “Ex-CEO”). Such independent third party (the “Administrator”) shall have the discretionary power to determine all questions arising in connection with the administration of the Plan and the interpretation of the Plan and Trust including, but not limited to benefit entitlement determinations. Upon a Change in Control and for a period of three years thereafter, the Administrator may be terminated (and a replacement appointed) by the Trustee only with the approval of the Ex-CEO. Upon a Change in Control and for a period of three years thereafter, the Company may not terminate the services of the Administrator.

Section 13.3. Agents . In the administration of the Plan, the Benefits Committee or, if applicable, the Administrator, may from time to time employ agents and delegate to them such administrative duties as it sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel who may be counsel to any Employer.

Section 13.4. Binding Effect of Decisions . Any decision or action of the Benefits Committee or, if applicable, the Administrator, with respect to any matter arising out of or in connection with the administration, interpretation and application of the Plan shall be final, binding and conclusive upon all persons having any interest in the Plan and all persons claiming under any Participant, FBU Participant, CSR Participant, former Participant, former FBU Participant, former CSR Participant or Beneficiary.

Section 13.5. Indemnity . The Company shall: (i) pay all reasonable administrative expenses and fees of the Benefits Committee or, if any, the Administrator; and (ii) indemnify and hold harmless the Benefits Committee or, if any, the Administrator (or any agent or delegate of either the Benefits Committee or the Administrator) against any and all claims, losses, damages, costs, expenses and liabilities including, without limitation, attorney’s fees and expenses arising in connection with the performance of its duties hereunder, except with respect to matters resulting from the gross negligence or willful misconduct of the Benefits Committee or, as applicable, the Administrator, or the employees, delegates or agents of either.

Section 13.6. Employer Information . To enable the Benefits Committee or, as the case may be, the Administrator, to perform its functions, the Company and each Employer shall supply full and timely information to the Benefits Committee or the Administrator as requested, on all matters relating to the compensation of the Participants, FBU Participants and CSR Participants, the date and circumstances of the Retirement, disability, death or Separation

-30-

from Service of the Participants, FBU Participants and CSR Participants, and such other pertinent information as the Benefits Committee or Administrator may reasonably require.

ARTICLE XIV

COORDINATION WITH OTHER BENEFITS

The benefits provided to a Participant, an FBU Participant or a CSR Participant or to his or her Beneficiary under the Plan are in addition to any other benefits available to such Participant, FBU Participant, CSR Participant or Beneficiary under any other plan or program for employees of such Participant’s, FBU Participant’s or CSR Participant’s Employer. The Plan shall supplement and shall not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided.

ARTICLE XV

CLAIMS AND APPEALS PROCEDURES

Section 15.1. Authority to Submit Claims . Any Participant, FBU Participant, CSR Participant or Beneficiary who believes that he or she is entitled to a payment under the Plan, including a payment greater than the payment initially determined by the Benefits Committee, may (or his or her duly authorized representative may) file a Claim in writing with the Benefits Committee. The Benefits Committee shall determine whether an individual is duly authorized to act on behalf of a Participant, FBU Participant, CSR Participant or Beneficiary in connection with the Claim and may establish reasonable procedures for making such a determination. Any such Participant, FBU Participant, CSR Participant, Beneficiary or duly authorized representative is referred to in the Plan as a Claimant.

Section 15.2. Procedure for Filing a Claim . In order for a communication from a Claimant to constitute a valid Claim, the communication must be delivered to the Benefits Committee in writing on the form designated by the Benefits Committee or in such other form as may be acceptable to the Benefits Committee.

Section 15.3. Initial Claim Review . The initial Claim review shall be conducted by the Benefits Committee, with or without the presence of the Claimant, as determined by the Benefits Committee in its discretion. The Benefits Committee shall consider the applicable terms and provisions of the Plan, information and evidence that is presented by the Claimant and any other information the Benefits Committee deems relevant. In reviewing the Claim, the Benefits Committee shall also consider determinations made within the immediately preceding 24 months of Claims of similarly situated Claimants.

Section 15.4. Claim Determination .

(a) The Benefits Committee shall make a Determination regarding a Claim and notify the Claimant of such Determination within a reasonable period of time, but in any event (except as described in Section 15.4(b) below) within 90 days after the Benefits Committee receives the Claim.

-31-

(b) The Benefits Committee may extend the period for making a Determination to a maximum of 90 additional days if the Benefits Committee determines that circumstances require an extension of time. The Benefits Committee shall notify the Claimant before the end of the initial 90‑day period of the circumstances requiring the extension of time and the date by which the Benefits Committee expects to render a Determination.

Section 15.5. Manner and Content of Notification of Adverse Determination of a Claim . The Benefits Committee shall provide a Claimant with written or electronic notice of an Adverse Determination. Such notice shall:

(i)	specify the specific reason or reasons for the Adverse Determination;

(ii)	reference the specific provision(s) of the Plan on which the Adverse Determination is based;

(iii)

describe any additional material or information necessary for the Claimant to perfect the Claim and explain of why such material or information is necessary; and

(iv)	describe the Plan’s appeal procedure and the time limits applicable to such procedure, and include a statement describing the Claimant’s right to bring a civil action under section 502(a) of ERISA after an Adverse Determination of an appeal of a Claim.

Section 15.6. Procedure for Filing an Appeal of an Adverse Determination . In order for a communication from a Claimant to constitute a valid appeal, the communication must be submitted by a Claimant in writing on the form designated by the Benefits Committee, or in such other form as may be acceptable to the Benefits Committee, and delivered to the Benefits Committee within 60 days of the Claimant’s receipt of the notice of the Adverse Determination on the Claim . If the Benefits Committee does not receive a valid appeal within 60 days of the delivery to the Claimant of the notice of the Adverse Determination for the related Claim, the Claimant shall be barred from filing an appeal of such Claim and he or she shall be deemed to have failed to exhaust all administrative remedies under the Plan.

Section 15.7. Appeal Procedure . An appeal of an Adverse Determination shall be conducted by the Benefits Committee, with or without the presence of the Claimant, as determined by the Benefits Committee in its discretion. The Benefits Committee shall consider the applicable terms and provisions of the Plan, information and evidence that is presented by the Claimant (including all comments, documents, records and other information submitted by the Claimant without regard to whether such information was submitted or considered in the initial Determination) and any other information the Benefits Committee deems relevant. The Claimant shall be provided, upon request and free of charge, reasonable access to and copies of all relevant documents and shall be allowed to submit any supporting comments, documents, records and other information.

-32-

Section 15.8. Timing and Notification of the Determination of an Appeal .

(a) The Benefits Committee shall make a Determination regarding an appeal and notify the Claimant of its Determination within a reasonable period of time, but in any event (except as described in Section 15.8(b) below) within 60 days after the Benefits Committee receives the appeal.

(b) The Benefits Committee may extend the period for making the Determination of the appeal of denied Claim to a maximum of 60 additional days if the Benefits Committee determines that circumstances require an extension of time. The Benefits Committee shall notify the Claimant before the end of the initial 60‑day period of the circumstances requiring the extension of time and the date by which the Benefits Committee expects to render a decision. If such an extension is due to a failure of the Claimant to submit information necessary to decide the appeal, the period in which the Benefits Committee is required to make a decision shall be tolled by the Benefits Committee from the date on which the Benefits Committee notifies the Claimant until the date the Benefits Committee has received the requested information from the Claimant. If the Claimant fails to respond to the Benefits Committee’s request for additional information within a reasonable time, the Benefits Committee may, in its discretion, render a Determination on the appeal based on the record before the Benefits Committee.

Section 15.9. Manner and Content of Notification of Adverse Determination of Appeal . The Benefits Committee shall provide a Claimant with written or electronic notice of any Adverse Determination of an appeal of a denial of a Claim. Such notice shall:

(i)	specify the reason or reasons for the Adverse Determination;

(ii)	reference the specific provision(s) of the Plan on which the Adverse Determination is based;

(iii)

state that the Claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all relevant documents; and

(iv)	state that the Claimant has a right to bring a civil action under section 502(a) of ERISA.

Section 15.10. Delivery and Receipt . For purposes of the Article XV, any notice, Claim or document may be delivered in person; provided, however , that any notice sent by the Benefits Committee related to a Claim may be sent by facsimile or by electronic mail if there is a verifiable confirmation that such notice was received and the facsimile or electronic mail is followed by a hard copy sent by next business day courier service no later than the next business day. Any Claim or document sent to a Claimant shall be sent to the Claimant’s last known address. Any Claim or document that satisfies the requirements described in this Section 15.10 shall be deemed delivered and received on the earlier of (a) the date of its actual receipt, if receipt is evidenced in writing, (b) 10 days after deposit in the United States Mail, first class postage prepaid and return receipt requested, and (c) the date of confirmation of successful transmission of a facsimile or electronic mail. If the requirements described in this Section 15.10

-33-

are not satisfied, then the notice, Claim or document shall be deemed not delivered or received and not be effective.

Section 15.11. Limitation on Actions . No legal action, including without limitation any lawsuit, may be brought by a Claimant more than two years after the date the Claimant has received an Adverse Determination of his or her appeal of a Claim denial.

Section 15.12. Failure to Exhaust Administrative Remedies . No legal action may be brought by a Claimant who has not timely filed a Claim and an appeal of the denial of such Claim and otherwise exhausted all administrative remedies under the Plan.

ARTICLE XVI

TRUST

Section 16.1. Establishment of the Trust . The Company shall maintain the Trust, and each Employer shall at least annually transfer over to the Trust such assets as the Company determines, in its sole discretion, are necessary to provide for the Employer’s liabilities created with respect to the Annual Deferral Amounts, FBU Deferral Amounts, CSR Deferral Amounts and Company Contribution Amounts for such Employer’s Participants, FBU Participants and CSR Participants, taking into consideration the value of the assets in the Trust attributable to such Employer’s liabilities at the time of the transfer.

Section 16.2. Investment of Trust Assets . The Trustee of the Trust shall be authorized, upon written instructions received from the Benefits Committee or investment manager appointed by the Benefits Committee, to invest and reinvest the assets of the Trust in accordance with the Trust Agreement.

Section 16.3. Interrelationship of the Plan and the Trust . The provisions of the Plan shall govern the rights of each Participant, FBU Participant and CSR Participant to receive distributions pursuant to the Plan. The provisions of the Trust shall govern the rights of the Employers and the creditors of the Employers to the assets transferred to the Trust. Each Employer shall at all times remain liable to carry out its obligations under the Plan and Trust.

Section 16.4. Distributions From the Trust . Each Employer’s obligations under the Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such distribution shall reduce the Employer’s obligations under the Plan.

ARTICLE XVII

MISCELLANEOUS

Section 17.1. Status of Plan . The Plan is intended to be a plan that is not qualified within the meaning of section 401(a) of the Code and that “is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of sections 201(2), 301(a)(3) and 401(a)(l) of ERISA. The Plan is also intended to comply with section 409A of the Code and the regulations promulgated thereunder. The Plan shall be administered

-34-

and interpreted to the extent possible in a manner consistent with the intent expressed in this Section 17.1.

Section 17.2. Unsecured General Creditor . Participants, FBU Participants, CSR Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interests or claims in any property or assets of any Employer. For purposes of the payment of benefits under the Plan, any and all of an Employer’s assets shall be, and remain, the general, unpledged unrestricted assets of the Employer. An Employer’s obligation under the Plan shall be merely that of an unfunded and unsecured promise to pay money in the future, and Participants, FBU Participants, CSR Participants and their Beneficiaries, heirs, successors and assigns shall at all times be unsecured creditors of the Employers.

Section 17.3. Employer’s Liability . An Employer’s liability for the payment of benefits shall be defined only by the Plan and the Plan Agreements. An Employer shall have no obligation to a Participant, an FBU Participant, a CSR Participant or any Beneficiary under the Plan except as expressly provided in the Plan or in a Plan Agreement.

Section 17.4. Nonassignability . No Participant, FBU Participant, a CSR Participant, Beneficiary or any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are expressly declared to be, unassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant, FBU Participant, CSR Participant, Beneficiary or any other person, be transferable by operation of law in the event of his or her bankruptcy or insolvency or be transferable to a spouse as a result of a property settlement or otherwise. Any attempt to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, except as specifically permitted under the Plan, shall be null and void and without legal effect.

Section 17.5. Withholding for Taxes . Notwithstanding anything contained in the Plan to the contrary, the Employers shall withhold from payments to be made under the Plan such amount or amounts as may be required for purposes of complying with the tax withholding provisions of the Code or any applicable State law for purposes of paying any tax attributable to any amounts payable or creditable under the Plan. The Company may reduce a Participant’s Account, an FBU Participant’s FBU Account and any FBU Transferred Account or a CSR Participant’s CSR Account in the amount of employment taxes payable with respect to compensation deferred before the Participant’s, FBU Participant’s or CSR Participant’s Separation from Service.

Section 17.6. Immunity of Benefits Committee Members . The members of the Benefits Committee may rely upon any information, report or opinion supplied to them by any officer of the Company or any legal counsel, independent public accountant or actuary, and shall be fully protected in relying upon any such information, report or opinion. No member of the Benefits Committee shall have any liability to the Company or any Participant, FBU Participant, CSR Participant, former Participant, former FBU Participant, former CSR Participant, any

-35-

Beneficiary, or to any person claiming under or through any Participant, FBU Participant, CSR Participant, former Participant, former FBU Participant, former CSR Participant or any Beneficiary or other person interested or concerned in connection with any decision made by such member of the Benefits Committee pursuant to the Plan which was based upon any such information, report or opinion if such member of the Benefits Committee relied thereon in good faith.

Section 17.7. Not a Contract of Employment . The terms and conditions of the Plan shall not be deemed to constitute a contract of employment between any Employer and a Participant, an FBU Participant or a CSR Participant. Employment of a Participant, an FBU Participant or a CSR Participant is hereby acknowledged to be an “at will” employment relationship that can be terminated at any time for any reason, or no reason, with or without cause, and with or without notice, unless expressly provided otherwise in a written employment agreement. Nothing in the Plan shall be deemed to give a Participant, an FBU Participant or a CSR Participant the right to be retained in the service of any Employer or to interfere with the right of any Employer to discipline or discharge the Participant, FBU Participant or CSR Participant at any time.

Section 17.8. Furnishing Information . A Participant, an FBU Participant or a CSR Participant or his or her Beneficiary will cooperate with the Benefits Committee by furnishing any and all information requested by the Benefits Committee and take such other actions as may be requested in order to facilitate the administration of the Plan and payments hereunder, including but not limited to taking such physical examinations as the Benefits Committee may deem necessary in connection with the purchase of insurance, as described in Section 17.18.

Section 17.9. Terms . Whenever any words are used herein in the masculine, they shall be construed as though they were in the feminine in all cases where they would so apply. Whenever any word is used herein in the singular, it shall be construed as though it was used in the plural, in all cases where it would reasonably so apply; and whenever any word is used herein in the plural, it shall be construed as though it was used in the singular, in all cases where it would so reasonably apply.

Section 17.10. Captions . The captions of the articles, sections and paragraphs of the Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.

Section 17.11. Governing Law . The provisions of the Plan shall be construed and interpreted according to the internal laws of the State of Illinois without regard to its conflicts of laws principles, to the extent not preempted by any applicable federal law.

-36-

Section 17.12. Notice . Any notice or filing required or permitted to be given to the Benefits Committee under the Plan shall be sufficient if in writing and hand-delivered, or sent by registered or certified mail, to the address below:

R. R. Donnelley & Sons Company
Attn: Director of Executive Compensation
111 S. Wacker
Chicago, IL 60606

Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.

Any notice or filing required or permitted to be given to a Participant, FBU Participant or CSR Participant, any former participant or any Beneficiary under the Plan shall be sufficient if in writing and hand-delivered, or sent by mail, to his or her last known address.

Section 17.13. Successors . The provisions of the Plan shall bind and inure to the benefit of the Employers and their successors and assigns and to the Participants, FBU Participants and CSR Participants and their Beneficiaries.

Section 17.14. Spouse’s Interest . The interest in the benefits hereunder of a spouse of a Participant, FBU Participant or CSR Participant who has predeceased such Participant, FBU Participant or CSR Participant shall automatically pass to the Participant, FBU Participant or CSR Participant, as applicable, and shall not be transferable by such spouse in any manner, including but not limited to such spouse’s will, nor shall such interest pass under the laws of intestate succession.

Section 17.15. Validity . In case any provision of the Plan shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but the Plan shall be construed and enforced as if such illegal or invalid provision had never been inserted herein.

Section 17.16. Incompetent . If the Benefits Committee determines in its discretion that a payment under the Plan is to be made to a minor, a person declared incompetent or to a person incapable of handling the disposition of such person’s property, the Benefits Committee may direct that such payment be made to the guardian, legal representative or person having the care and custody of such minor, incompetent or incapable person. The Benefits Committee may require proof of minority, incompetence, incapacity or guardianship, as it may deem appropriate prior to such payment. Any payment made shall be for the account of the Participant, FBU Participant or CSR Participant, as the case may be, or his or her Beneficiary, and shall be a complete discharge of any liability under the Plan for such payment.

Section 17.17. Court Order . The Benefits Committee is authorized to comply with any court order in any action in which the Plan or the Benefits Committee has been named as a party, including any action involving a determination of a Participant’s, FBU Participant’s or CSR Participant’s rights or interests under the Plan. Notwithstanding the foregoing, the Benefits Committee shall interpret this provision in a manner that is consistent with applicable tax law,

-37-

including but not limited to guidance issued after the effective date of the Plan or any amendment or restatement thereof.

Section 17.18. Insurance . The Employers, on their own behalf or on behalf of the Trustee, and, in their sole discretion, may apply for and procure insurance on the life of a Participant, an FBU Participant or a CSR Participant, in such amounts and in such forms as the Trust may choose. The Employers or the Trustee, as the case may be, shall be the sole owner and beneficiary of any such insurance. Such Participant, FBU Participant or CSR Participant shall have no interest whatsoever in any such policy or policies, and at the request of his or her Employer shall submit to medical examinations and supply such information and execute such documents as may be required by the insurance company or companies to whom the Employers have applied for insurance.

Section 17.19. Legal Fees To Enforce Rights After Change in Control . The Company and each Employer are aware that upon the occurrence of a Change in Control, the Board or the board of directors of an Employer (which might then be composed of new members) or a shareholder of the Company or an Employer, or of any successor corporation might then cause or attempt to cause the Company, an Employer or such successor to refuse to comply with its obligations under the Plan and might cause or attempt to cause the Company or an Employer to institute, or may institute, litigation seeking to deny Participants, FBU Participants or CSR Participants the payments intended under the Plan. In these circumstances, the purpose of the Plan could be frustrated. Accordingly, if, following a Change in Control, it should appear to any Participant, FBU Participant or CSR Participant that the Company, his or her Employer or any successor corporation has failed to comply with any of its obligations under the Plan or any Plan Agreement thereunder or, if the Company, such Employer or any other person takes any action to declare the Plan void or unenforceable or institutes any litigation or other legal action designed to deny, diminish or to recover from any Participant, FBU Participant or CSR Participant the payments intended to be provided, then the Company and his or her Employer irrevocably authorize such Participant, FBU Participant or CSR Participant to retain counsel of his or her choice at the expense of the Company and his or her Employer (who shall be jointly and severally liable) to represent such Participant, FBU Participant or CSR Participant in connection with the initiation or defense of any litigation or other legal action, whether by or against the Company, his or her Employer or any director, officer, shareholder or other person affiliated with the Company, his or her Employer or any successor thereto in any jurisdiction.

IN WITNESS WHEREOF, the Company has signed this Plan document as of ______________, 2011.



	R. R. Donnelley & Sons Company



	By:
	Title:

CH1 3925440v.27 11/29/2010 11:02 AM

-38-

Exhibit 10.12

R.R. DONNELLEY & SONS COMPANY
STOCK UNIT AWARD

(2012 PIP)

This Stock Unit Award (“Award”) i s granted as of March 2, 2015 by R.R. Donnelley & Sons Company, a Delaware corporation (the “Company”), to XXXXXX (“Grantee”) .

Grant of Award . This Award is in recognition of your hard work and dedication over the last several years and is granted as an incentive for the Grantee to remain an employee of the Company and share in the future success of the Company. The Company hereby credits to Grantee XXXXX stock units (the “Stock Units”), subject to the restrictions and on the terms and conditions set forth herein. This Award is made pursuant to the provisions of the Company’s 2012 Performance Incentive Plan (the “2012 PIP”). Capitalized terms not defined herein shall have the meanings specified in the 2012 PIP. Grantee shall indicate acceptance of this Award by signing and returning a copy hereof.

Vesting .

Except to the extent otherwise provided in paragraph 2(b) or 3 below, the Stock Units shall vest 100% on March 2, 2018.

Upon the Acceleration Date associated with a Change in Control, the Stock Units shall, in accordance with the terms of the 2012 PIP, become fully vested.

Treatment Upon Separation from Service .

If Grantee has a separation from service (within the meaning of Treasury Regulation § 1.409A-1(h), hereinafter a “Separation from Service”) by reason of death or Disability (as defined in the applicable Company long-term disability policy as in effect at the time of Grantee’s disability) , the Stock Units shall become fully vested of the date of such Separation from Service .

If Grantee has a Separation from Service other than for deathor Disability, the Stock Units, if unvested, shall be forfeited.

Issuance of Common Stock in Satisfaction of Stock Units . As soon as practicable, but not more than 2½ months following the vesting date , the Company shall issue one share of common stock of the Company (“Common Stock”) to Grantee for each Stock Unit that has vested on such dateEach Stock Unit shall be cancelled upon the issuance of a share of Common Stock with respect thereto.

Dividends . No dividends or dividend equivalents will accrue with respect to the Stock Units.

Rights as a Shareholder . Prior to issuance, Grantee shall not have the right to vote, nor have any other rights of ownership in, the shares of Common Stock to be issued in satisfaction of Stock Units upon their vesting .

Withholding Taxes .

As a condition precedent to the issuance to Grantee of any shares of Common Stock pursuant to this Award, the Grantee shall, upon request by the Company, pay to the Company such amount of cash as the Company may be required, under all applicable federal, state, local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the “Required Tax Payments”) with respect to the Award. If Grantee shall fail to advance the Required Tax Payments after request by the Company, the Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company to Grantee.

Grantee may elect to satisfy his obligation to advance the Required Tax Payments by any of the following means: (1) a cash payment to the Company, (2) delivery to the Company of previously owned whole shares of Common Stock for which Grantee has good title, free and clear of all liens and encumbrances, having a fair market value, determined as of the date the obligation to withhold or pay taxes first arises in connection with the Award (the “Tax Date”), equal to the Required Tax Payments, or (3) directing the Company to withhold a number of shares of Common Stock otherwise issuable to Grantee pursuant to this Award having a fair market value, determined as of the Tax Date, equal to the Required Tax Payments or any combination of (1)-(3). Any fraction of a share of Common Stock which would be required to satisfy such an obligation shall be disregarded and the remaining amount due shall be paid in cash by Grantee. No certificate representing a share of Common Stock shall be delivered until the Required Tax Payments have been satisfied in full. For purposes of this Award, the fair market value of a share of Common Stock on a specified date shall be determined by reference to the closing stock price in trading of the Common Stock on such date or, if no such trading in the Common Stock occurred on such date, then on the next preceding date when such trading occurred.

Non-Solicitation .

Grantee hereby acknowledges that the Company’s relationship with the customer or customers Grantee serves, and with other employees, is special and unique, based upon the development and maintenance of good will resulting from the customers' and other employees’ contacts with the Company and its employees, including Grantee. As a result of Grantee’s position and customer contacts, Grantee recognizes that Grantee will gain valuable information about (i) the Company’s relationship with its customers, their buying habits, special needs, and purchasing policies, (ii) the Company’s pricing policies, purchasing policies, profit structures, and margin needs, (iii) the skills, capabilities and other employment-related information relating to Company employees, and (iv) and other matters of which Grantee would not otherwise know and that is not otherwise readily available. Such knowledge is essential to the business of the Company and Grantee recognizes that, if Grantee has a Separation from Service , the Company will be required to rebuild that customer relationship to retain the customer's business. Grantee recognizes that during a period following Se paration from Service , the Company is entitled to protection from Grantee’s use of the information and customer and employee relationships with which Grantee has been entrusted by the Company during Grantee’s employment.

Grantee acknowledges and agrees that any injury to the Company’s customer relationships, or the loss of those relationships, would cause irreparable harm to the Company. Accordingly, Grantee shall not , while employed by the Company and for a period of one year from the date of Grantee’s Separation from Service for any reason, including Separation from Service initiated by the Company with or without cause, directly or indirectly, either on Grantee’s own behalf or on behalf of any other person, firm or entity, solicit or provide services that are the same as or similar to the services the Company provided or offered while Grantee was employed by the Company to any customer or prospective customer of the Company (i) with whom Grantee had direct contact during the last two years of Grantee’s employment with the Company or about whom Grantee learned confidential information as a result of his or her employment with the Company or (ii) with whom any person over whom Grantee had supervisory authority at any time had direct contact during the last two years of Grantee’s employment with the Company or about whom such person learned confidential information as a result of his or her employment with the Company.

Grantee shall not, while employed by the Company and for a period of two years following Separation from Service Grantee’s Separation from Service for any reason, including Separation from Service initiated by the Company with or without cause, either directly or indirectly solicit, induce or encourage any individual who was a Company employee at the time of, or within six months prior to, Grantee’s Separation from Service , to terminate their employment with the Company or accept employment with any entity, including but not limited to a competitor, supplier or customer of the Company, nor shall Grantee cooperate with any others in doing or attempting to do so. As used herein, the term "solicit, induce or encourage" includes, but is not limited to, (i) initiating communications with a Company employee relating to possible employment, (ii) offering bonuses or other compensation to encourage a Company employee to terminate his or her employment with the Company and accept employment with any entity, including but not limited to a competitor, supplier or customer of the Company, or (iii) referring Company employees to personnel or agents employed by any entity, including but not limited to competitors, suppliers or customers of the Company.

Miscellaneous .

The Company shall pay all original issue or transfer taxes with respect to the issuance or delivery of shares of Common Stock pursuant hereto and all other fees and expenses necessarily incurred by the Company in connection therewith, and will use reasonable efforts to comply with all laws and regulations which, in the opinion of counsel for the Company, shall be applicable thereto.

Nothing in this Award shall confer upon Grantee any right to continue in the employ of the Company or any other company that is controlled, directly or indirectly, by the Company or to interfere in any way with the right of the Company to terminate Grantee’s employment at any time.

This Award shall be governed in accordance with the laws of the state of Delaware.

This Award shall be binding upon and inure to the benefit of any successor or successors to the Company.

Neither this Award nor the Stock Units nor any rights hereunder or thereunder may be transferred or assigned by Grantee other than by will or the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company or other procedures approved by the Company. Any other transfer or attempted assignment, pledge or hypothecation, whether or not by operation of law, shall be void.

The Committee, as from time to time constituted, shall have the right to determine any questions which arise in connection with this Agreement or the Stock Units. This Agreement and the Stock Units are subject to the provisions of the 2012 PIP and shall be interpreted in accordance therewith.

If Grantee is a resident of Canada, Grantee further agrees and represents that any acquisitions of Common Stock hereunder are for his own account for investment, and without the present intention of distributing or selling such Common Stock or any of them. Further, the Company and its subsidiaries expressly reserve the right at any time to dismiss Grantee free from any liability, or any claim under this Award, except as provided herein or in any agreement entered into hereunder. Any obligation of the Company under this Award to make any payment at any future date or issue Common Stock merely constitutes the unfunded and unsecured promise of the Company to make such payment or issue such Common Stock; any payment shall be from the Company’s general assets in accordance with this Award and the issuance of any Common Stock shall be subject to the Company’s compliance with all applicable laws including securities law and the laws its jurisdiction of incorporation or continuance, as applicable, and no Grantee shall have any interest in, or lien or prior claim upon, any property of the Company or any subsidiary by reason of that obligation. If Grantee is a resident of Canada, Grantee hereby indemnifies the Company against and agrees to hold it free and harmless from any loss, damage, expense or liability resulting to the Company if any sale or distribution of the Common Stock by Grantee is contrary to the representations and agreements referred to above.

If there is any inconsistency between the terms and conditions of this Award and the terms and conditions of Grantee’s employment agreement, employment letter or other similar agreement, the terms and conditions of such agreement shall control.

This Award is intended to be exempt from section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations promulgated thereunder, as a “short-term deferral.” This Award shall be administered and interpreted to the extent possible in a manner consistent with the intent expressed in this paragraph. If any compensation or benefits provided by this Award may result in the application of section 409A of the Code, the Company shall, in consultation with you, modify this Award as necessary in order to exclude such compensation from the definition of “deferred compensation” within the meaning of such section 409A of the Code or in order to comply with the provisions of section 409A of the Code. By signing this Agreement you acknowledge that if any amount paid or payable to you becomes subject to section 409A of the Code, you are solely responsible for the payment of any taxes and interest due as a result.

IN WITNESS WHEREOF, the Company has caused this Award to be duly executed by its duly authorized officer.

	R.R. Donnelley & Sons Company

	By:
	Name:	Thomas Carroll
	Title:	EVP, Chief Human Resources Officer

All of the terms of this Award are accepted as of this ___ day of ____ __, 2015.

______________________________

Grantee:

Exhibit 10.19

R.R. DONNELLEY & SONS COMPANY
PERFORMANCE UNIT AWARD (2012 PIP)

This Performance Unit Award (“Award”) is granted as of March 2, 2015 (the “Grant Date”), by R. R. Donnelley & Sons Company (the “Company”) to XXXXXXXXX (“Grantee”).

1. Grant of Award . This Award is in recognition of your hard work and dedication over the last several years and is granted as an incentive for the Grantee to remain an employee of the Company and share in the future success of the Company. The Company hereby credits to Grantee XXXXX stock units (the “Performance Units”), subject to the restrictions and on the terms and conditions set forth herein. This Award is made pursuant to the provisions of the R. R. Donnelley & Sons Company 2012 Performance Incentive Plan (“2012 PIP”). Capitalized terms not defined herein shall have the meanings specified in the 2012 PIP. Grantee shall indicate acceptance of this Award by signing and returning a copy hereof.

2. Determination of Achievement; Distribution of Award .

(a) The number of shares of common stock, par value $1.25 per share, of the Company (the “Common Stock”) payable in respect of the Performance Units will be determined based on the attainment of Cumulative Free Cash Flow against the “Cumulative Free Cash Flow Matrix” and as modified by the “PSU Payout Modifier,” each as shown on Attachment A hereto. Promptly following the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (or promptly following such earlier date as of which, pursuant to Section 4 hereof, to be made), the Committee (as defined in the 2012 PIP) shall determine the attainment against the “Cumulative Free Cash Flow Matrix” of the Company’s Cumulative Free Cash Flow and any adjustment to such attainment as required pursuant to the “PSU Payout Modifier.”

(b) Distribution with respect to this Award shall be made to Grantee as soon as practicable following the determination described in (a) above but no later than 60 days thereafter . Distribution of this Award may be made in Common Stock, cash (based upon the fair market value of the Common Stock on the date of distribution) or any combination thereof as determined by the Committee.

3. Dividends; Voting .

(a) No dividends or dividend equivalents will accrue with respect to the Performance Units.

(b) Grantee shall have no rights to vote shares of common stock represented by the Performance Units unless and until distribution with respect to this Award is made in Common Stock pursuant to paragraph 2(b) above.

4. Treatment upon Separation or Termination .

(a) [NB: This provision to remain for certain PSU Agreements: Notwithstanding any other agreement with Grantee to the contrary, if Grantee terminates his employment for Good Reason (as defined in the Grantee’s employment agreement) or the Company terminates the Grantee’s employment without Cause (as defined in the Grantee’s employment agreement) the

Performance Units shall vest and be payable, if at all, on the same terms and conditions that would have applied had Grantee’s employment not terminated (i.e., performance measured on December 31, 2017).]

(b) Notwithstanding any other agreement with Grantee to the contrary, if Grantee’s employment terminates by reason of death or Disability (as defined in the applicable Company long-term disability policy as in effect at the time of Grantee’s disability), fifty percent of any unvested Performance Units shall vest and become payable, assuming the attainment of target performance (100% achievement) or, if greater, based on actual performance through the date of death or determination of Disability.

(c) Except as set forth in Grantee’s employment agreement, if any, with the Company, if Grantee’s employment terminates for any reason other than by death or Disability, any unvested Performance Units shall be forfeited.

5. Treatment upon Change in Control . Notwithstanding anything provided in the 2012 PIP or any other agreement with Grantee to the contrary, upon the Acceleration Date associated with a Change in Control, all of the Performance Units shall vest and become payable at the fifty percent payout level with respect to that number of shares of Common Stock that would be payable or, if greater, based on actual performance through the Change in Control Date.

6. Withholding Taxes

(a) As a condition precedent to the issuance to Grantee of any shares of Common Stock pursuant to this Award, the Grantee shall, upon request by the Company, pay to the Company such amount of cash as the Company may be required, under all applicable federal, state, local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the “Required Tax Payments”) with respect to the Award. If Grantee shall fail to advance the Required Tax Payments after request by the Company, the Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company to Grantee.

(b) Grantee may elect to satisfy his obligation to advance the Required Tax Payments by any of the following means: (1) a cash payment to the Company, (2) delivery to the Company of previously owned whole shares of Stock for which Grantee has good title, free and clear of all liens and encumbrances, having a fair market value, determined as of the date the obligation to withhold or pay taxes first arises in connection with the Award (the “Tax Date”), equal to the Required Tax Payments, or (3) directing the Company to withhold a number of shares of Common Stock otherwise issuable to Grantee pursuant to this Award having a fair market value, determined as of the Tax Date, equal to the Required Tax Payments or any combination of (1)-(3). Any fraction of a share of Common Stock that would be required to satisfy such an obligation shall be disregarded and the remaining amount due shall be paid in cash by Grantee. No certificate representing a share of Common Stock shall be delivered until the Required Tax Payments have been satisfied in full. For purposes of this Award, the fair market value of a share of Common Stock on a specified date shall be determined by reference to the closing stock price in trading of the Common Stock on such date, or, if no such trading in the Common Stock occurred on such date, then on the next preceding date when such trading occurred.

7. Miscellaneous

(a) The Company shall pay all original issue or transfer taxes with respect to the issuance or delivery of shares of Common Stock pursuant hereto and all other fees and expenses necessarily incurred by the Company in connection therewith, and will use reasonable efforts to comply with all laws and regulations which, in the opinion of counsel for the Company, shall be applicable thereto.

(b) Nothing in this Award shall confer upon Grantee any right to continue in the employ of the Company or any other company that is controlled, directly or indirectly, by the Company or to interfere in any way with the right of the Company to terminate Grantee’s employment at any time.

(d) This Award shall be governed in accordance with the laws of the state of Illinois.

(e) This Award shall be binding upon and inure to the benefit of any successor or successors to the Company.

(f) Neither this Award nor the Performance Units nor any rights hereunder or thereunder may be transferred or assigned by Grantee other than by will or the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company or other procedures approved by the Company. Any other transfer or attempted assignment, pledge or hypothecation, whether or not by operation of law, shall be void.

(g) The Committee, as from time to time constituted, shall have the right to determine any questions that arise in connection with this Agreement or the Performance Units. This Agreement and the Performance Units are subject to the provisions of the Plan and shall be interpreted in accordance therewith.

(h) If there is any inconsistency between the terms and conditions of this Award and the terms and conditions of the Employment Agreement, the terms and conditions of the Employment Agreement shall control.

IN WITNESS WHEREOF, the Company has caused this Award to be duly executed by its duly authorized officer.


R. R. DONNELLEY & SONS COMPANY
By:
Name:	Thomas Carroll
Title:	EVP, Chief Human Resources Officer

All of the terms of this Agreement are accepted as of this ____ day of _________, 2015.

___________________________

Grantee:

Attachment A

DEFINITIONS:

“Free Cash Flow” for a fiscal year shall be equal to net cash provided by (used in) operating activities of continuing operations for such year less capital expenditures (as reported in the Financial Statements) for such year. Free Cash Flow shall be adjusted by the Committee, as it shall deem reasonably necessary and appropriate, to avoid any increase or diminution in the opportunity conveyed by the Performance Units that could result from (i) (whether at the time of or subsequent to) any acquisition or disposition of any business or division (whether by merger, stock purchase or sale, sale or purchase of assets, or otherwise) made by the Company or (ii) other significant events that in the Committee’s judgment have caused an increase or diminution in the opportunity conveyed by the Performance units (including, but not limited to, significant changes in financial or capital structure, significant regulatory changes, or significant changes in tax laws).

“Cumulative Free Cash Flow” shall equal the sum of the Free Cash Flow amounts for the years ended December 31, 2015, 2016 and 2017.

“Financial Statements” shall mean the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K filed for the applicable year.

“PSU Payout Modifier” shall mean the amount by which any PSU payout shall be adjusted as set forth.

CUMULATIVE FREE CASH FLOW MATRIX:

The attainment of Cumulative Free Cash Flow shall be compared to the matrix below to determine the payout under the Performance Units, if any.

PSU PAYOUT MODIFIER:

Exhibit 10.32

RR Donnelley

Annual Incentive Plan

(As amended and restated effective January 15, 2015)

OVERVIEW

The RR Donnelley Annual Incentive Plan (the “Annual Incentive Plan” or the “Plan”) is designed to promote the growth and profitability of RR Donnelley and its subsidiaries with incentives to reward and enhance the retention of eligible employees. Awards are made depending on the Company’s financial performance and on how well an eligible employee performs against individual objectives that link to and support RR Donnelley’s strategic and financial priorities.

The Plan is a sub-plan of the R. R. Donnelley & Sons Company 2012 Performance Incentive Plan (the “2012 PIP”) and is subject to all of the performance conditions established pursuant to the 2012 PIP and the limitations set forth therein. With respect to participants who are subject to Section 162(m) of the Internal Revenue Code, as amended (the “Code”), to the extent that any term of the Plan conflicts with the terms of the 2012 PIP, the terms of the 2012 PIP will apply.

The Human Resources Committee of the Board of Directors (the “Committee’) administers the Plan. The Committee has authority to establish rules and regulations for the Plan’s implementation and administration, including the authority to impose limitations and conditions, with respect to competitive employment or otherwise, that are not inconsistent with the Plan’s purposes.

PARTICIPATION

Eligibility is limited to officers selected by the Committee and other key employees designated as eligible by position in the organization.

TARGET AWARD PERCENTAGE AND PLAN FUNDING

Each eligible participant’s target incentive opportunity under the Annual Incentive Plan is a percentage of such participant’s base salary as of December 31 of the Plan Year, or such other amount as determined by the Committee. This is referred to as the “Target Award Percentage” and will be communicated to eligible participants annually. Eligible wages do not include disability benefit payments. The “Plan Year” for any year is the calendar year. The portion of any Target Award Percentage that is dependent upon achievement of personal objectives may vary based on the participant’s level in the Company (the “Personal Objective Percentage”) and will be communicated to eligible participants annually.

Subject to the performance conditions established under the 2012 PIP and the limitations set forth therein, the Company must fund the Plan for a Plan Year for participants to receive an award for that Plan Year. The decision whether or not to fund the Plan for a particular Plan Year,

~ 1 ~

as well as the Plan’s funding level, is made by the Committee in its sole discretion based on financial performance targets set by the Committee, which may not be amended after the end of the Plan Year. Plan funding is based upon the Company’s actual financial performance for the Plan Year against the previously set targets and if the Committee determines that the financial targets have been met, the Plan will be funded.

If the Company funds the Plan awards will be made based upon the Plan’s funding level and the participant’s achievement level of his or her personal objectives, up to 150% of the participant’s Target Award Percentage (or such other percentage as determined by the Committee). The Committee will determine the percentage of the participant’s Target Award Percentage to be paid out based upon the participant’s Personal Objective Percentage, achievement of personal objectives and the Plan’s funding level; such percentages will be communicated to the participant.

Any actual award made under the Annual Incentive Plan can range from 0% to 150% of the Target Award Percentage (or such other percentage as determined by the Committee), depending upon the Plan’s funding level, the participant’s Personal Objective Percentage and achievement of the participant’s personal objectives.

PERSONAL OBJECTIVES

Personal objectives are established for each participant each Plan Year to link and support RR Donnelley’s strategic and financial priorities. A participant’s personal objectives are determined each year in consultation with the participant and his or her manager and are communicated to the participant in writing as part of the objective goal-setting process. The portion of any Target Award Percentage that is dependent upon achievement of personal objectives may vary based on the participant’s level in the Company and will be communicated to eligible participants annually. The Committee’s determination of whether a participant has attained, in whole or in part, the participant’s personal objectives for a Plan Year, shall be final and binding.

AWARD AMOUNT AND PAYMENT

Awards are paid following the Plan Year after the Committee has certified the achievement of performance goals under the 2012 PIP and the Plan funding decisions and personal performance measurements have been made. Except as otherwise provided herein, or by the Committee, at any time prior to the end of such Plan Year, any award to be paid under the Plan shall be paid to recipients within 2 ¹ / ² months after the end of the Plan Year (i.e., by March 15). A participant must be on the payroll of the Company as of the end of the Plan Year (i.e. as of December 31) to receive an award. Special provisions apply to retirees and in the case of a participant’s death or Disability. (Please refer to the Changes in Employment Status section of this document for details.)

The Committee has the discretionary authority prior to the end of the Plan Year to determine to pay any award in installment payments over a specified period of time. The Committee also has discretionary authority to increase or decrease the amount of the award otherwise payable if it determines prior to the end of the Plan Year that an adjustment is appropriate to better reflect the actual performance of the Company and/or the participant; provided, however, that the

~ 2 ~

Committee may not increase the amount of the award payable to a person who is a “covered employee,” as defined in Section 162(m) of the Code, to an amount in excess of the amount earned under the 2012 PIP; provided further, however, the Committee has discretionary authority to decrease the amount of the award otherwise payable at any time for any person designated as an executive officer of the Company for purposes of Section 16 of the Securities Exchange Act of 1934, including after the end of the Plan Year. Additionally, the Committee has discretionary authority to reduce the amount of the award otherwise payable if it determines that any participant engaged in misconduct.

BENEFITS AND TAX TREATMENT

Award payments are subject to applicable deductions, including social security taxes and federal and applicable state and local income tax withholding.

The treatment of award payments as compensation for purposes of other RR Donnelley employee benefits plans is determined by the terms of the applicable plans.

CHANGES IN EMPLOYMENT STATUS

A.	PROMOTIONS, DEMOTIONS, TRANSFERS, CHANGES IN ASSIGNMENT

If a participant is promoted, demoted, transferred to or between business units or from corporate during the year, any award payout normally will be calculated by prorating the payouts for each eligible position based on the time assigned to that position.

NEW HIRE

Employees hired prior to October 1 ^st of the Plan Year shall be eligible to participate in the Annual Incentive Plan in the year of hire if designated. Eligible employees hired after September 30 ^th of the Plan Year shall not be eligible to begin participation in the Plan until the following year, except for those who receive approval for participation from the Company’s Chief Human Resources Officer.

C.	RETIREMENT, DEATH or DISABILITY

A participant’s retirement*, death, or Disability** during a Plan Year or prior to the payment date will not disqualify a participant from eligibility to receive any award that otherwise would be due under the Plan.

*	For purposes of the Plan, “retirement” generally means (i) retirement at age 65, or (ii) retirement at or after age 55 with 5 or more years of continuous service.

**	For purposes of the Plan, “Disability” means disability as defined as in the Company’s long-term disability policy as in effect at the time of the participant’s disability.

~ 3 ~

D.	OTHER TERMINATION

If participant’s employment terminates for reasons other than retirement (as defined above), death, or Disability (as defined above) prior to the end of the Plan Year, no award shall be payable.

ADMINISTRATION

The Committee has full discretionary authority to administer the Plan, including the authority to determine the performance achievement attained under the Plan. The Committee may delegate to members of RR Donnelley’s management the authority to administer the Plan and determine performance under the Plan.

RR Donnelley retains the right to amend or terminate the Plan at any time; provided however that awards for any plan year may not be amended or terminated after the completion of such Plan Year except in cases of misconduct of the participant.

Questions regarding the Plan should be directed to the Corporate Compensation Department.

~ 4 ~

Exhibit 31.1

Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a)

of the Securities Exchange Act of 1934

I, Thomas J. Quinlan, III, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of R.R. Donnelley & Sons Company;

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: May 7, 2015

/s/ T HOMAS J. Q UINLAN , III

Thomas J. Quinlan, III

President and Chief Executive Officer

Exhibit 31.2

Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a)

of the Securities Exchange Act of 1934

I, Daniel N. Leib, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of R.R. Donnelley & Sons Company;

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: May 7, 2015

/s/ D ANIEL N. L EIB

Daniel N. Leib

Executive Vice President and Chief Financial Officer

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

CERTIFICATION PURSUANT TO RULE 13a-14(b) OR RULE 15d-14(b)

AND SECTION 1350 OF CHAPTER 63 OF TITLE 18

OF THE UNITED STATES CODE (18 U.S.C. 1350),

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of R. R. Donnelley & Sons Company (the “Company”) on Form 10-Q for the period ending March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas J. Quinlan, III, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 7, 2015

/s/ T HOMAS J. Q UINLAN , III

Thomas J. Quinlan, III

President and Chief Executive Officer

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

CERTIFICATION PURSUANT TO RULE 13a-14(b) OR RULE 15d-14(b)

AND SECTION 1350 OF CHAPTER 63 OF TITLE 18

OF THE UNITED STATES CODE (18 U.S.C. 1350),

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of R. R. Donnelley & Sons Company (the “Company”) on Form 10-Q for the period ending March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel N. Leib, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 7, 2015

/s/ D ANIEL N. L EIB

Daniel N. Leib

Executive Vice President and Chief Financial Officer