Donnelley Financial Solutions, Inc. (Form: 10-Q, Received: 05/04/2017 16:31:15)

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Accelerated filer

Non-Accelerated filer

☒ (Do not check if a smaller reporting company)

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2017

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

Commission File Number 1-37728

Donnelley Financial Solutions, Inc.

(Exact name of registrant as specified in its charter)

Delaware		36-4829638
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

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

(844) 866-4337

(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 ☒ 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 ☒ No ☐

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

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

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

Yes ☐ No ☒

As of April 28, 2017, 32.8 million shares of common stock were outstanding.

DONNELLEY FINANCIAL SOLUTIONS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2017

TABLE OF CONTENTS

Part I
FINANCIAL INFORMATION		Page
Item 1:	Condensed Consolidated and Combined Financial Statements (unaudited)	3

	Condensed Consolidated and Combined Statements of Operations for the three months ended March 31, 2017 and 2016	3

	Condensed Consolidated and Combined Statements of Comprehensive Income for the three months ended March 31, 2017 and 2016	4

	Condensed Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016	5

	Condensed Consolidated and Combined Statements of Cash Flows for the three months ended March 31, 2017 and 2016	6

	Notes to Condensed Consolidated and Combined Financial Statements	7

Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3:	Quantitative and Qualitative Disclosure About Market Risk	41

Item 4:	Controls and Procedures	42

Part II
OTHER INFORMATION		Page
Item 1:	Legal Proceedings	43

Item 1A:	Risk Factors	43

Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	43

Item 4:	Mine Safety Disclosures	43

Item 6:	Exhibits	44

Signatures		48

Donnelley Financi al Solutions, Inc. and Subsidiaries (“Donnelley Financial”)

Condensed Consolidated and Combined Statements of Operations

For the Three Months Ended March 31, 2017 and 2016

(in millions, except per share data)

(UNAUDITED)

	Three Months Ended
	March 31,
	2017		2016

Services net sales	$	154.0	$	139.8
Products net sales		113.3		100.3
Total net sales		267.3		240.1
Services cost of sales (exclusive of depreciation and amortization)		77.7		71.9
Services cost of sales with R.R. Donnelley affiliates (exclusive of depreciation and amortization)		9.9		11.2
Products cost of sales (exclusive of depreciation and amortization)		63.0		55.0
Products cost of sales with R.R. Donnelley affiliates (exclusive of depreciation and amortization)		18.8		20.4
Total cost of sales		169.4		158.5
Selling, general and administrative expenses (exclusive of depreciation and amortization)		56.7		49.0
Restructuring, impairment and other charges-net		3.8		0.6
Depreciation and amortization		10.2		9.5
Income from operations		27.2		22.5
Interest expense-net		11.1		0.3
Earnings before income taxes		16.1		22.2
Income tax expense		6.8		8.8
Net earnings	$	9.3	$	13.4

Net earnings per share (Note 8):
Basic net earnings per share		0.29		0.41
Diluted net earnings per share		0.28		0.41
Weighted average number of common shares outstanding
Basic		32.6	32.4
Diluted		32.8	32.4

See Notes to Unaudited Condensed Consolidated and Combined Financial Statements

Donnelley Financial Solutions, Inc. and Subsidiaries (“Donnelley Financial”)

Condensed Consolidated and Combined Statements of Comprehensive Income

For the Three Months Ended March 31, 2017 and 2016

(in millions)

(UNAUDITED)

	Three Months Ended
	March 31,
	2017		2016
Net earnings	$	9.3	$	13.4

Other comprehensive income (loss), net of tax:
Translation adjustments		0.1		3.0
Adjustment for net periodic pension and other postretirement benefits plan cost		0.4		(0.2	)
Other comprehensive income, net of tax		0.5		2.8
Comprehensive income	$	9.8	$	16.2

See Notes to Unaudited Condensed Consolidated and Combined Financial Statements

Donnelley Financial Solutions, Inc. and Subsidiaries (“Donnelley Financial”)

Condensed Consolidated Balance Sheets

As of March 31, 2017 and December 31, 2016

(in millions, except per share data)

(UNAUDITED)

	March 31,			December 31,
	2017			2016
ASSETS
Cash and cash equivalents	$	12.3		$	36.2
Receivables, less allowances for doubtful accounts of $7.5 in 2017 (2016 - $6.4)		233.3			156.2
Receivables from R.R. Donnelley		84.2			96.0
Inventories		27.5			24.1
Prepaid expenses and other current assets		17.3			17.1
Total current assets		374.6			329.6
Property, plant and equipment-net		36.0			35.5
Goodwill		446.5			446.4
Other intangible assets-net		50.9			54.3
Software-net		39.3			41.6
Deferred income taxes		39.1			37.0
Other noncurrent assets		38.2			34.5
Total assets	$	1,024.6		$	978.9
LIABILITIES
Accounts payable	$	101.3		$	85.3
Accrued liabilities		99.8			100.7
Total current liabilities		201.1			186.0
Long-term debt (Note 11)		607.5			587.0
Deferred compensation liabilities		23.1			24.4
Pension and other postretirement benefits plan liabilities		55.0			56.4
Other noncurrent liabilities		13.4			14.0
Total liabilities		900.1			867.8
Commitments and Contingencies (Note 12)
EQUITY
Preferred stock, $0.01 par value
Authorized: 1.0 shares; Issued: None		—			—
Common stock, $0.01 par value
Authorized: 65.0 shares;
Issued: 32.8 shares in 2017 (2016 - 32.6 shares)		0.3			0.3
Additional paid-in-capital		183.5			179.9
Retained earnings (deficit)		8.5			(0.8	)
Accumulated other comprehensive loss		(67.8	)		(68.3	)
Total equity		124.5			111.1
Total liabilities and equity	$	1,024.6		$	978.9

See Notes to Unaudited Condensed Consolidated and Combined Financial Statements

Donnelley Financial Solutions, Inc. and Subsidiaries (“Donnelley Financial”)

Condensed Consolidated and Combined Statements of Cash Flows

For the Three Months Ended March 31, 2017 and 2016

(in millions)

(UNAUDITED)

	Three Months Ended
	March 31,
	2017			2016
OPERATING ACTIVITIES
Net earnings	$	9.3		$	13.4
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation and amortization		10.2			9.5
Provision for doubtful accounts receivable		1.8			0.2
Share-based compensation		1.1			0.3
Deferred income taxes		(2.2	)		(0.3	)
Net pension and other postretirement benefits plan income		(0.8	)		(0.2	)
Other		0.4			—
Changes in operating assets and liabilities - net of acquisitions:
Accounts receivable - net		(66.7	)		(52.8	)
Inventories		(3.4	)		(2.9	)
Prepaid expenses and other current assets		(4.4	)		(0.5	)
Accounts payable		15.0			4.5
Income taxes payable and receivable		7.7			(0.3	)
Accrued liabilities and other		(6.1	)		(13.5	)
Pension and other postretirement benefits plan contributions		(0.1	)		(1.1	)
Net cash used in operating activities		(38.2	)		(43.7	)
INVESTING ACTIVITIES
Capital expenditures		(4.3	)		(8.5	)
Purchase of investment		(3.4	)		—
Other investing activities		0.2			2.4
Net cash used in investing activities		(7.5	)		(6.1	)
FINANCING ACTIVITIES
Revolving facility borrowings		57.0			—
Payments on revolving facility borrowings		(37.0	)		—
Debt issuance costs		(1.5	)		—
Net transfers related to the Separation	3.1				—
Net change in short-term debt		—			6.9
Net transfers from Parent and affiliates		—			39.7
Other financing activities		—			0.2
Net cash provided by financing activities		21.6			46.8
Effect of exchange rate on cash and cash equivalents		0.2			2.9
Net decrease in cash and cash equivalents		(23.9	)		(0.1	)
Cash and cash equivalents at beginning of year		36.2			15.1
Cash and cash equivalents at end of period	$	12.3		$	15.0

See Notes to Unaudited Condensed Consolidated and Combined Financial Statements

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated and Combined Financial Statements

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

Note 1. Overview and Basis of Presentation

Description of Business

Donnelley Financial Solutions, Inc. (the “Company” or “Donnelley Financial” ) is a financial communications services company that supports global capital markets compliance and transaction needs for its corporate clients and their advisors (such as law firms and investment bankers) and global investment markets compliance and analytics needs for mutual fund companies, variable annuity providers and broker/dealers. With proprietary technology such as data storage and workflow collaboration tools, deep subject matter expertise and a global footprint, Donnelley Financial produces, manages, stores, distributes and translates documents and electronic communications in order to deliver timely financial communications to investors and documents in a manner that complies with regulatory commissions.

Donnelley Financial’s Registration Statement on Form 10, as amended, was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on September 20, 2016. On October 1, 2016, Donnelley Financial became an independent publicly traded company through the distribution by R.R. Donnelley & Sons Company (“RRD”) of approximately 26.2 million shares, or 80.75%, of Donnelley Financial common stock to RRD shareholders (the “Separation”). Holders of RRD common stock received one share of Donnelley Financial common stock for every eight shares of RRD common stock held on September 23, 2016. RRD retained approximately 6.2 million shares of Donnelley Financial common stock, or a 19.25% interest (as of the Separation date) in Donnelley Financial, as part of the Separation. Donnelley Financial’s common stock began regular-way trading under the ticker symbol “DFIN” on the New York Stock Exchange on October 3, 2016. On October 1, 2016, RRD also completed the previously announced separation of LSC Communications, Inc. (“LSC”), its publishing and retail-centric print services and office products business. On March 28, 2017, RRD completed the sale of 6.2 million shares of LSC common stock (RRD’s remaining ownership stake in LSC) in an underwritten public offering.

On March 24, 2017, pursuant to the Stockholder and Registration Rights Agreement, dated as of September 30, 2016, by and between the Company and RRD, the Company filed a Registration Statement on Form S-1 to register the offering and sale of shares of the Company’s common stock retained by RRD.

The Company and LSC entered into a Separation and Distribution Agreement with RRD to effect the distribution of the Company’s and LSC’s common stock to R.R. Donnelley’s common stockholders. This agreement governs the Company’s relationship with RRD and LSC with respect to pre-Separation matters and provides for the allocation of employee benefit, litigation and other liabilities and obligations attributable to periods prior to the Separation. The Separation and Distribution Agreement also includes an agreement that the Company, RRD and LSC will provide each other with appropriate indemnities with respect to liabilities arising out of the businesses being distributed and retained by RRD in the Separation. The Separation and Distribution Agreement also addresses employee compensation and benefit matters.

In connection with the Separation, the Company entered into transition services agreements separately with RRD and LSC, under which, in exchange for the fees specified in the arrangements, RRD and LSC agree to provide certain services to the Company and the Company agrees to provide certain services to RRD, respectively, for up to 24 months following the Separation. These services include, but are not limited to, information technology, accounts receivable, accounts payable, payroll and other financial and administrative services and functions. These agreements facilitate the separation by allowing the Company to operate independently prior to establishing stand-alone back office systems across its organization.

The Company entered into a number of commercial and other arrangements with RRD and its subsidiaries. These include, among other things, arrangements for the provision of services, including global outsourcing and logistics services, printing and binding, digital printing, composition, premedia and access to technology. The Company also entered into a number of commercial and other arrangements with LSC and its subsidiaries, pursuant to which LSC will print and bind products for the Company. The terms of the arrangements with RRD and LSC do not exceed 24 months. Subsequent to the Separation, RRD and LSC are clients of the Company and expect to utilize financial communication software and services that the Company provides to all of its clients.

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated and Combined Financial Statements

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

Basis of Presentation

The accompanying unaudited condensed consolidated and combined financial statements reflect the consolidated financial position and consolidated results of operations of the Company as an independent, publicly traded company for the periods after the Separation and the combined financial position and combined results of operations for the periods prior to the Separation. Prior to the Separation, the combined financial statements were prepared on a stand-alone basis and were derived from RRD’s consolidated financial statements and accounting records.

The unaudited condensed consolidated and combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The financial data presented herein should be read in conjunction with the audited consolidated and combined financial statements and accompanying notes included in the Company’s latest Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on February 28, 2017. In the opinion of management, the financial data presented includes all adjustments necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented. Results of interim periods should not be considered indicative of the results for the full year. These unaudited condensed consolidated and combined interim financial statements include estimates and assumptions of management that affect the amounts reported in the unaudited condensed consolidated and combined financial statements. Actual results could differ from these estimates.

For periods prior to the Separation, the unaudited condensed consolidated and combined financial statements include the allocation of certain assets and liabilities that have historically been held at the RRD corporate level but which are specifically identifiable or attributable to the Company. Cash and cash equivalents held by RRD were not allocated to Donnelley Financial unless they were held in a legal entity that was transferred to Donnelley Financial. All intercompany transactions and accounts within Donnelley Financial have been eliminated. All intracompany transactions between RRD and Donnelley Financial are considered to be effectively settled in the unaudited condensed consolidated and combined financial statements at the time the transaction is recorded. The total net effect of the settlement of these intracompany transactions is reflected in the unaudited condensed consolidated and combined statements of cash flows as a financing activity and in the unaudited condensed consolidated and combined balance sheets as net parent company investment. Net parent company investment is primarily impacted by contributions from RRD which are the result of treasury activities and net funding provided by or distributed to RRD.

Prior to the Separation, the unaudited condensed consolidated and combined financial statements include certain expenses of RRD which were allocated to Donnelley Financial for certain functions, including general corporate expenses related to information technology, finance, legal, human resources, internal audit, treasury, tax, investor relations and executive oversight. These expenses were allocated to the Company on the basis of direct usage, when available, with the remainder allocated on the pro rata basis of revenue, employee headcount, or other measures. We consider the expense methodology and results to be reasonable for all periods presented. However these allocations may not be indicative of the actual expenses that would have been incurred as an independent public company or the costs that may be incurred in the future.

For periods prior to the Separation, the income tax amounts in the unaudited condensed consolidated and combined financial statements were calculated based on a separate income tax return methodology and presented as if the Company’s operations were separate taxpayers in the respective jurisdictions.

RRD maintained various benefit and share-based compensation plans at a corporate level. Donnelley Financial employees participated in those programs and a portion of the cost of those plans is included in Donnelley Financial’s condensed consolidated and combined financial statements for periods prior to the Separation. On October 1, 2016, Donnelley Financial recorded net pension plan liabilities of $68.3 million (consisting of a total benefit plan liability of $317.0 million, net of plan assets having fair market value of $248.7 million), as a result of the transfer of certain pension plan liabilities and assets from RRD to the Company upon the legal split of those plans. The Company also recorded a net other postretirement benefit liability of $1.5 million, as a result of the transfer of an other postretirement benefit plan from RRD to the Company. Refer to Note 5, Retirement Plans , for further details regarding the Company’s pension and other postretirement benefit plans. Refer to Note 6, Share Based Compensation , for further details regarding the Company’s share-based compensation plans.

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated and Combined Financial Statements

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

Donnelley Financial generates a portion of net revenue from sales to RRD’s subsidiaries. Included in the unaudited condensed consolidated and combined financial statements are net revenues from sales to RRD and affiliates of $ 4.0 million and $1.4 million for the three months ended March 31, 2017 and 2016, respectively. Donnelley Financial utilizes RRD for freight and logistics, production of certain printed products and outsourced business services functions. Included in the un audited condensed consolidated and combined financial statements are cost of sales to RRD and affiliates of $28.7 million and $31.6 million for the three months ended March 31, 2017 and 2016, respectively. Intercompany receivables and payables with RRD ar e reflected within net parent company investment in the accompanying unaudited condensed consolidated and combined financial statements for periods prior to the Separation. See Note 13, Related Parties, for a further description of related party transactio ns.

Note 2. Inventories

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

	March 31, 2017		December 31, 2016
Raw materials and manufacturing supplies	$	9.7	$	7.6
Work in process		11.3		10.8
Finished goods		6.5		5.7
Total	$	27.5	$	24.1

Note 3. Property, Plant and Equipment

The components of the Company’s property, plant and equipment at March 31, 2017 and December 31, 2016 were as follows:

	March 31, 2017			December 31, 2016
Land	$	10.0		$	10.0
Buildings		44.5			44.4
Machinery and equipment		109.0			109.2
		163.5			163.6
Less: Accumulated depreciation		(127.5	)		(128.1	)
Total	$	36.0		$	35.5

During the three months ended March 31, 2017 and 2016, depreciation expense was $1.3 million and $1.9 million, respectively.

Note 4. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill by segment for the three months ended March 31, 2017 were as follows:

	U.S.		International		Total
Net book value as of December 31, 2016	$	429.2	$	17.2	$	446.4
Foreign exchange and other adjustments		—		0.1		0.1
Net book value as of March 31, 2017	$	429.2	$	17.3	$	446.5

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated and Combined Financial Statements

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

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

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

Customer relationships	$	139.2	$	(89.1	)	$	50.1	$	138.8	$	(85.3	)	$	53.5
Trade names		6.3		(5.5	)		0.8		6.3		(5.5	)		0.8
Trademarks, licenses and agreements		3.2		(3.2	)		—		3.2		(3.2	)		—
Total other intangible assets	$	148.7	$	(97.8	)	$	50.9	$	148.3	$	(94.0	)	$	54.3

Amortization expense for other intangible assets was $3.6 million for both the three months ended March 31, 2017 and 2016.

The following table outlines the estimated annual amortization expense related to other intangible assets as of March 31, 2017:

For the year ending December 31,	Amount
2017	$	13.9
2018		13.7
2019		13.7
2020		12.4
2021		0.5
2022 and thereafter		0.3
Total	$	54.5

Note 5. Retirement Plans

Donnelley Financial’s Participation in RRD’s Pension and Postretirement Benefit Plans

RRD provided pension and other postretirement healthcare benefits to certain current and former employees of Donnelley Financial. Prior to the Separation, RRD was responsible for the net benefit plan obligations associated with these plans, and as such, these liabilities are not reflected in Donnelley Financial’s unaudited condensed consolidated and combined balance sheets.

Donnelley Financial’s unaudited condensed consolidated and combined statements of operations include expense allocations for these benefits. These allocations were funded through intercompany transactions with RRD which are reflected within net parent company investment in Donnelley Financial. Total RRD pension and postretirement benefit plan net income allocated to Donnelley Financial, related to pension cost and postretirement benefits, was $1.4 million in the three months ended March 31, 2016. Included in these amounts is an allocation for other postretirement benefit plans for $0.3 million in the three months ended March 31, 2016. These allocations are reflected in the Company’s cost of sales and selling, general and administrative expenses.

Donnelley Financial’s Pension and Postretirement Benefit Plans

On October 1, 2016, Donnelley Financial recorded net pension plan liabilities of $68.3 million (consisting of a total benefit plan liability of $317.0 million, net of plan assets having fair market value of $248.7 million), as a result of the transfer of certain pension plan liabilities and assets from RRD to the Company upon the legal split of those plans. The pension plan asset allocation from RRD is expected to be finalized during the second quarter of 2017. The final asset allocation will result in an adjustment to the fair value of plan assets transferred to the Company from RRD. The Company also recorded a net other postretirement benefit liability of $1.5 million, as a result of the transfer of an other postretirement benefit plan from RRD to the Company.

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated and Combined Financial Statements

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

The components of the estimated net pension plan income for Donnelley Financial’s pension plans for the three months ended March 31, 2017 and 2016 were as follows:

	Three Months Ended
	March 31,
	2017			2016
Pension expense (income)
Interest cost	$	2.7		$	—
Expected return on assets		(4.0	)		—
Amortization, net		0.5			(0.2	)
Net pension income	$	(0.8	)	$	(0.2	)

Note 6. Share Based Compensation

Share-based compensation expense

For all share-based awards granted to employees and directors following the Separation, including stock options, restricted stock units (“RSUs”), performance based restricted stock and performance share units (“PSUs”), the Company recognizes compensation expense based on estimated grant date fair values. The Company estimates the fair value of share-based awards based on assumptions as of the grant date. The Company recognizes compensation costs for RSUs expected to vest, on a straight-line basis over the requisite service period of the award, which is generally the vesting term of three years. Compensation expense for performance based restricted stock awards granted in 2016, which vest on a graded basis, is recognized utilizing a graded vesting schedule. Compensation expense for performance based restricted stock awards and PSUs granted in 2017, which cliff vest, is recognized on a straight-line basis over the performance period of the award. Compensation expense for stock options is recognized on a straight-line basis over the requisite service period of the award, which is generally the vesting term of four years. The Company estimates the number of awards expected to vest based, in part, on historical forfeiture rates and also based on management’s expectations of employee turnover within the specific employee groups receiving each type of award. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods, if actual forfeitures differ from those estimates.

The stock options, RSUs, performance based restricted stock and PSUs granted during the three months ended March 31, 2017 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, upon a change in control of the Company, the performance based restricted stock and PSU awards will be measured at target performance and will remain subject to time based vesting until the end of the performance period; provided that the award will vest in full if, within three months prior to or two years after the date of the change in control of the Company, the grantee’s employment is terminated without cause by the Company or for good reason by the grantee.

In periods prior to the Separation, share-based compensation expense includes expense attributable to the Company based on the award terms previously granted to the Company’s employees and an allocation of compensation expense for RRD’s corporate and shared functional employees. As those share-based compensation plans are RRD’s plans, the amounts have been recognized through net parent company investment on the combined balance sheets.

Total compensation expense was $1.1 million and $0.3 million for the three months ended March 31, 2017 and 2016, respectively.

During the three months ended March 31, 2017, the Company adopted Accounting Standards Update 2016-09 “Compensation–Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09)”, which identifies areas of simplification for several aspects of accounting for share-based payment transactions. The adoption of ASU 2016-09 represents a change in accounting principle. The Company has adopted all applicable aspects of this guidance on a prospective basis.

ASU 2016-09 requires all excess tax benefits and tax deficiencies to be recognized as discrete items within income tax expense or benefit in the income statement in the reporting period in which they occur. As a result of this change, excess tax benefits and tax deficiencies are now excluded from the calculation of assumed proceeds when using the treasury stock method in calculating diluted earnings per share. ASU 2016-09 also requires excess tax benefits to be presented as an operating activity on the statement of cash flows rather than as a financing activity.

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated and Combined Financial Statements

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

ASU 2016-09 allows an employer with a statutory income tax withholding obligation to withhold shares with a fair value up to the amount of tax owed using the maximum statutory tax rate in t he employee’s applicable jurisdiction(s). ASU 2016-09 requires companies to apply this guidance to outstanding liability awards at the date of adoption using a modified retrospective transition method, with a cumulative-effect adjustment to retained earnin gs. The Company does not have any outstanding share-based awards classified as liabilities. As such, no adjustment is required. ASU 2016-09 requires cash paid by an employer to taxing authorities when directly withholding shares for tax withholding purpose s to be classified as a financing activity on the statement of cash flows. The change in classification is to be applied retrospectively. However, an adjustment to prior periods is not required because the Company did not have such tax withholding obligat ions during the prior periods.

ASU 2016-09 requires a company to make an accounting policy election to account for forfeitures of share-based payments by either estimating the number of awards expected to vest or recognizing forfeitures when they occur. In accordance with ASU 2016-09, the Company has made an accounting policy election to estimate forfeitures and recognize compensation expense based on the number of awards expected to vest.

Stock Options

The Company granted 169,800 options, with a grant date fair market value of $7.77, during the three months ended March 31, 2017. There were no options granted during the three months ended March 31, 2016. The fair market value of each stock option award was estimated using the Black-Scholes-Merton option pricing model and the Company used the following methods to determine its underlying assumptions:

•

Expected volatility was estimated based on a weighted-average of historical volatilities for certain of the Company’s competitors

•

The risk-free interest rate was based on the U.S Treasury yield curve in effect on the date of grant

•

The expected term of options granted was based on the simplified method of using the mid-point between the vesting term and the original contractual term

•

The expected dividend yield was based on the Company’s current dividend rate

The assumptions used to determine the fair market value of the stock options granted during the three months ended March 31, 2017 were as follows:

	2017
Expected volatility		30.73	%
Risk-free interest rate		2.18	%
Expected life (years)	6.25
Expected dividend yield		0.00	%

Stock option awards outstanding as of December 31, 2016 and March 31, 2017, and changes during the three months ended March 31, 2017, were as follows:

					Weighted
					Average
			Weighted		Remaining		Aggregate
	Shares Under		Average		Contractual		Intrinsic
	Option		Exercise		Term		Value
	(thousands)		Price		(years)		(millions)
Outstanding at December 31, 2016		299	$	21.48		3.5	$	1.4
Granted		170		22.35		9.9
Outstanding at March 31, 2017		469		21.80		5.6		0.9
Vested and expected to vest at March 31, 2017		458		21.78		5.5		0.9
Exercisable at March 31, 2017		119	$	11.95		1.9		0.9

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated and Combined Financial Statements

(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, 2017 and December 31, 2016, 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, 2017 and December 31, 2016. 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, 2017 and 2016 was de minimis. Excess tax benefits on stock option exercises, shown as operat ing cash inflows in the unaudited condensed consolidated and combined cash flows were de minimus for the three months ended March 31, 2017. There were no excess tax benefits on stock option exercises for the three months ended March 31, 2016.

Compensation expense related to stock options for the three months ended March 31, 2017 and March 31, 2016 was de minimis. As of March 31, 2017, $1.3 million of total unrecognized compensation expense related to stock options is expected to be recognized over a weighted average period of 3.9 years.

Restricted Stock Units

Nonvested restricted stock unit awards as of December 31, 2016 and March 31, 2017, and changes during the three months ended March 31, 2017, were as follows:

				Weighted
	Shares			Average Grant
	(Thousands)			Date Fair Value
Nonvested at December 31, 2016		436		$	25.28
Granted		220			22.35
Vested		(86	)
Nonvested at March 31, 2017		570		$	23.52

Compensation expense related to RSUs was $0.6 million and $0.3 million for the three months ended March 31, 2017 and 2016, respectively. As of March 31, 2017, there was $7.8 million of unrecognized share-based compensation expense related to 0.6 million restricted stock unit awards, with a weighted-average grant date fair value of $23.52, 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.

Restricted Stock

Nonvested restricted stock unit awards as of December 31, 2016 and March 31, 2017, and changes during the three months ended March 31, 2017, were as follows:

			Weighted
	Shares		Average Grant
	(Thousands)		Date Fair Value
Nonvested at December 31, 2016		156	$	24.75
Granted		129		22.35
Nonvested at March 31, 2017		285	$	23.66

During the three months ended March 31, 2017, the Company granted 129,400 shares of restricted stock to certain executives, payable upon the achievement of certain performance metrics. The fair value of these awards was determined based on the Company’s stock price on the grant date. The performance period for the restricted stock awarded is January 1, 2017 through December 31, 2019. The total potential payout for awards granted during the three months ended March 31, 2017 range from zero to 129,400 shares, should certain performance targets be achieved. Compensation expense for the restricted stock awards granted in 2017 and 2016 is currently being recognized based on 100% attainment of the targeted performance metrics for each award. Compensation expense for restricted stock awards was $0.5 million for the three months ended March 31, 2017. As of March 31, 2017, there was $5.0 million of unrecognized compensation expense related to restricted stock awards, which is expected to be recognized over a weighted average period of 2.7 years.

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated and Combined Financial Statements

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

Performance Share Units

During the three months ended March 31, 2017, 31,900 performance share units were granted to certain executive officers and senior management, payable upon the achievement of certain established performance targets. The performance period for the shares awarded is January 1, 2017 through December 31, 2019. 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 payout for awards granted during the three months ended March 31, 2017 range from zero to 47,850 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.

Compensation expense for the PSUs granted in 2017 is currently being recognized based on 100% attainment of the targeted performance metrics or 31,900 shares. Compensation expense related to PSUs for the three months ended March 31, 2017 was de minimus. As of March 31, 2017, there was $0.7 million of unrecognized compensation expense related to PSUs, which is expected to be recognized over a weighted average period of 2.9 years.

Note 7. Equity

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



	Total
	Equity
Balance at December 31, 2016	$	111.1
Net earnings		9.3
Other comprehensive income		0.5
Separation-related adjustments		3.1
Share-based compensation		1.1
Issuance of share-based awards, net of withholdings and other		(0.6	)
Balance at March 31, 2017	$	124.5

Separation-related adjustments primarily relate to the settlement of balances due to or from RRD for activity prior to the Separation.

The Company’s equity as of December 31, 2015 and March 31, 2016, and changes during the three months ended March 31, 2016, were as follows:

			Accumulated
	Net Parent		Other
	Company		Comprehensive			Total
	Investment		Loss			Equity
Balance at December 31, 2015	$	639.5	$	(16.0	)	$	623.5
Net earnings		13.4		—			13.4
Transfers to parent company, net		43.9		—			43.9
Other comprehensive income		—		2.8			2.8
Balance at March 31, 2016	$	696.8	$	(13.2	)	$	683.6

Note 8. Earnings per Share

Basic earnings per share is calculated by dividing net earnings by the weighted average number of common shares outstanding for the period. In computing diluted earnings per share, basic earnings per share is adjusted for the assumed issuance of all potentially dilutive share-based awards, including restricted stock units and restricted stock.

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated and Combined Financial Statements

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

On October 1, 2016, RRD distributed approximately 26.2 million shares of Donnelley Financial common stock to RRD shareholders in connection with the spin-off of Donnelley Financial, with RRD retaining approximately 6.2 million shares of Donnelley Financial common stock. Holders of RRD common stock received on e share of Donnelley Financial for every eight shares of RRD common stock held on September 23, 2016. Basic and diluted earnings per common share and the average number of common shares outstanding were retrospectively restated for the number of Donnelley Financial shares outstanding immediately following this transaction. For periods prior to the Separation, basic and diluted earnings per share were calculated using the number of shares distributed and retained by RRD, totaling 32.4 million. The same numbe r of shares was used to calculate basic and diluted earnings per share since there were no Donnelley Financial equity awards outstanding prior to the spin-off.

As discussed in Note 6, Share-based Compensation , the Company adopted ASU 2016-09 during the three months ended March 31, 2017. As a result of the change in the recognition of excess tax benefits and tax deficiencies, excess tax benefits and tax deficiencies are now excluded from the calculation of assumed proceeds when using the treasury stock method in calculating diluted earnings per share.

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

	Three Months Ended
	March 31,
	2017		2016
Net earnings per share:
Basic	$	0.29	$	0.41
Diluted	$	0.28	$	0.41
Numerator:
Net earnings	$	9.3	$	13.4
Denominator:
Weighted average number of common shares outstanding		32.6		32.4
Dilutive awards		0.2		—
Diluted weighted average number of common shares outstanding		32.8		32.4
Weighted average number of anti-dilutive share-based awards:
Restricted stock units		0.1		—
Stock options		0.1		—
Total		0.2		—

Note 9. Comprehensive Income

The components of other comprehensive income and income tax expense allocated to each component for the three months ended March 31, 2017 and 2016 were as follows:

	Three Months Ended
	March 31, 2017
	Before Tax		Income Tax		Net of Tax
	Amount		Expense		Amount
Translation adjustments	$	0.1	$	—	$	0.1
Adjustment for net periodic pension plan and other postretirement benefits plan cost		0.5		0.1		0.4
Other comprehensive income	$	0.6	$	0.1	$	0.5

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated and Combined Financial Statements

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

	Three Months Ended
	March 31, 2016
	Before Tax			Income Tax		Net of Tax
	Amount			Expense		Amount
Translation adjustments	$	3.0		$	—	$	3.0
Adjustment for net periodic pension plan and other postretirement benefits plan cost		(0.2	)		—		(0.2	)
Other comprehensive income	$	2.8		$	—	$	2.8

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

	Pension and Other Postretirement Benefits Plan Cost			Translation Adjustments			Total
Balance at December 31, 2016	$	(52.2	)	$	(16.1	)	$	(68.3	)
Other comprehensive income before reclassifications		—			0.1			0.1
Amounts reclassified from accumulated other comprehensive loss		0.4			—			0.4
Net change in accumulated other comprehensive loss		0.4			0.1			0.5
Balance at March 31, 2017	$	(51.8	)	$	(16.0	)	$	(67.8	)

Accumulated other comprehensive loss by component as of December 31, 2015 and March 31, 2016 were as follows:

	Pension and Other Postretirement Benefits Plan Cost			Translation Adjustments			Total
Balance at December 31, 2015	$	—		$	(16.0	)	$	(16.0	)
Other comprehensive income before reclassifications		—			3.0			3.0
Amounts reclassified from accumulated other comprehensive loss		(0.2	)		—			(0.2	)
Net change in accumulated other comprehensive loss		(0.2	)		3.0			2.8
Balance at March 31, 2016	$	(0.2	)	$	(13.0	)	$	(13.2	)

Reclassifications from accumulated other comprehensive loss for the three months ended March 31, 2017 and 2016 were as follows:

	Three Months Ended					Classification in the Condensed
	March 31,					Consolidated and Combined
	2017		2016			Statements of Operations
Amortization of pension and other postretirement benefits plan cost:
Net actuarial income (loss)	$	0.5	$	(0.2	)	_(a)
Reclassifications before tax		0.5		(0.2	)
Income tax expense		0.1		—
Reclassifications, net of tax	$	0.4	$	(0.2	)

(a)

These accumulated other comprehensive loss components are included in the calculation of net periodic pension and other postretirement benefits plan (income) expense, a component of which was allocated to Donnelley Financial in periods prior to the Separation, and recognized in cost of sales and selling, general and administrative expenses in the unaudited condensed consolidated and combined statements of operations (see Note 5, Retirement Plans ).

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated and Combined Financial Statements

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

Note 10. Segment Information

The Company’s segments are summarized below:

United States

The U.S. segment serves capital market and investment market clients in the U.S. by delivering products and services to help create, manage, and deliver, accurate and timely financial communications to investors and regulators. The Company also provides virtual data rooms to facilitate the deal management requirements of capital markets and mergers and acquisitions transactions, and provides data and analytics services that help professionals uncover intelligence from disclosures contained within public filings made with the SEC. The U.S. segment also includes language solutions capabilities, through which the Company can translate documents and create content in up to 140 different languages for its clients, and commercial print.

International

The International segment includes the Company’s operations in Asia, Europe, Canada and Latin America. The international business is primarily focused on working with international capital markets clients on capital markets offerings and regulatory compliance related activities into or within the United States. In addition, the international segment provides language translation services and shareholder communication services to investment market clients.

Corporate

Corporate consists of unallocated selling, general and administrative activities and associated expenses including, in part, executive, legal, finance, communications and certain facility costs. In addition, certain costs and earnings of employee benefit plans, such as pension and other postretirement benefit plan expense (income) and allocated costs for share-based compensation, are included in Corporate and not allocated to the operating segments.

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 consolidated and combined 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, 2017
U.S.	$	232.9	$	(2.5	)	$	230.4	$	37.0		$	740.2	$	8.8	$	3.9
International		37.3		(0.4	)		36.9		0.2			94.6		1.4		0.4
Total operating segments		270.2		(2.9	)		267.3		37.2			834.8		10.2		4.3
Corporate		—		—			—		(10.0	)		189.8		—		—
Total operations	$	270.2	$	(2.9	)	$	267.3	$	27.2		$	1,024.6	$	10.2	$	4.3


								Income (Loss)					Depreciation
	Total		Intersegment			Net		from			Assets of		and		Capital
	Sales		Sales			Sales		Operations			Operations		Amortization		Expenditures
Three Months Ended March 31, 2016
U.S.	$	209.6	$	(1.5	)	$	208.1	$	22.0		$	713.0	$	8.3	$	5.6
International		32.7		(0.7	)		32.0		3.0			92.7		1.1		0.3
Total operating segments		242.3		(2.2	)		240.1		25.0			805.7		9.4		5.9
Corporate		—		—			—		(2.5	)		69.9		0.1		2.6
Total operations	$	242.3	$	(2.2	)	$	240.1	$	22.5		$	875.6	$	9.5	$	8.5

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated and Combined Financial Statements

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

Note 11. Debt

On September 30, 2016, in connection with the Separation, the Company entered into a Credit Agreement (the “Credit Agreement”) by and among the Company, the lenders party thereto from time to time and JPMorgan Chase Bank, N.A., as administrative agent. The Credit Agreement provides for (i) a new senior secured term loan B facility in an aggregate principal amount of $350.0 million (the “Term Loan Credit Facility”) and (ii) a new first lien senior secured revolving credit facility in an aggregate principal amount of $300.0 million (the “Revolving Facility,” and, together with the Term Loan Credit Facility, the “Credit Facilities”). The Credit Agreement contains a number of covenants, including a minimum Interest Coverage Ratio and a maximum Leverage Ratio, as defined in 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 $15.0 million in the aggregate. As of March 31, 2017, there were $20.0 million of outstanding borrowings under the Revolving Facility.

Borrowings under the Term Loan Credit Facility were used to provide $340.2 million of cash to RRD, pursuant to the Separation Agreement, as of September 30, 2016. The remainder of the net proceeds was used for general corporate purposes.

On September 30, 2016, also in connection with the Separation, the Company issued $300.0 million of 8.25% senior unsecured notes due October 15, 2024 (the “Notes”). Interest on the Notes is payable semi-annually on April 15 and October 15, commencing on April 15, 2017. The issuance of the Notes was part of a debt exchange that resulted in the settlement of certain of RRD's bonds. The Notes were issued pursuant to an indenture where certain wholly-owned domestic subsidiaries of the Company guarantee the Notes (the “Guarantors”). The Notes are jointly and severally guaranteed, on an unsecured basis, by the Guarantors, which are comprised of each of the Company’s existing and future direct and indirect wholly-owned U.S. subsidiaries that guarantee the Company’s obligations under the Credit Facilities. The Notes are not guaranteed by the Company’s foreign subsidiaries or unrestricted subsidiaries. The Notes and the related guarantees will be the Company and the Guarantors’, respective, senior unsecured obligations and will rank equally in right of payment to all present and future senior debt, including the obligations under the Company’s Credit Facilities, senior in right of payment to all present and future subordinated debt, and effectively subordinated in right of payment to any of the Company and the Guarantors’ secured debt, to the extent of the value of the assets securing such debt. The indenture governing the Notes contains certain covenants applicable to the Company and its restricted subsidiaries, including limitations on: (1) liens; (2) indebtedness; (3) mergers, consolidations and acquisitions; (4) sales, transfers and other dispositions of assets; (5) loans and other investments; (6) dividends and other distributions, stock repurchases and redemptions and other restricted payments; (7) restrictions affecting subsidiaries; (8) transactions with affiliates; and (9) designations of unrestricted subsidiaries. Each of these covenants is subject to important exceptions and qualifications.

In connection with the offering of the Notes, the Company entered into a registration rights agreement, dated as of September 30, 2016 (the “Registration Rights Agreement”), pursuant to which the Company agreed to file a registration statement with the SEC with respect to an offer to exchange the Notes for registered notes. In certain circumstances, the Company may be required to file a shelf registration statement with the SEC registering the resale of the Notes by the holders thereof, in lieu of an exchange offer to such holders. On March 10, 2017, the Company filed a Registration Statement on Form S-4 (as amended, the “Exchange Offer Registration Statement”) to offer to exchange the Notes for registered notes which have terms identical in all material respects to the Notes except that the registered notes are not subject to transfer restrictions or registration rights. The Exchange Offer Registration Statement was declared effective by the SEC on March 22, 2017. An exchange offer for the Notes was launched on March 22, 2017 and settled on April 25, 2017, resulting in the exchange of $299.9 million aggregate principal amount of outstanding Notes for registered notes.

The Company’s debt as of March 31, 2017 and December 31, 2016 consisted of the following:

	March 31,			December 31,
	2017			2016
Term Loan Credit Facility	$	298.4		$	298.3
8.25% senior notes due October 15, 2024		300.0			300.0
Borrowings under the Revolving Facility		20.0			—
Unamortized debt issuance costs		(10.9	)		(11.3	)
Total debt		607.5			587.0
Less: current portion		—			—
Long-term debt	$	607.5		$	587.0

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated and Combined Financial Statements

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

The fair value of the senior notes, which was 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 $5.5 million and $7.1 million at March 31, 2017 and December 31, 2016, respectively.

The weighted average interest rate on borrowings under the Revolving Facility was 4.2% at March 31, 2017.

Note 12. Commitments and Contingencies

Litigation

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 may be party to certain litigation arising in the ordinary course of business. Management believes that the final resolution of these preference items and litigation will not have a material effect on the Company’s combined results of operations, financial position or cash flows.

Note 13. Related Parties

Transition Services Agreements

Commercial Arrangements

The Company entered into a number of commercial and other arrangements with RRD and its subsidiaries. These include, among other things, arrangements for the provision of services, including global outsourcing and logistics services, printing and binding, digital printing, composition and access to technology. The Company also entered into a number of commercial and other arrangements with LSC and its subsidiaries, pursuant to which LSC will print and bind products for the Company. The terms of the arrangements with RRD and LSC do not exceed 24 months. Subsequent to the Separation, RRD and LSC are clients of the Company and expect to utilize financial communication software and services that the Company provides to all of its clients.

Stockholder and Registration Rights Agreement

The Company and RRD entered into a Stockholder and Registration Rights Agreement with respect to the Company’s common stock retained by RRD pursuant to which the Company agrees that, upon the request of RRD, the Company will use its reasonable best efforts to effect the registration under applicable federal and state securities laws of the shares of the Company’s common stock retained by RRD after the Separation. In addition, RRD granted the Company a proxy to vote the shares of the Company’s common stock that RRD retained immediately after the Separation in proportion to the votes cast by the Company’s other stockholders. This proxy, however, will be automatically revoked as to a particular share upon any sale or transfer of such share from RRD to a person other than RRD, and neither the voting agreement nor the proxy will limit or prohibit any such sale or transfer.

On March 24, 2017, pursuant to the Stockholder and Registration Rights Agreement, the Company filed a Registration Statement on Form S-1 to register the offering and sale of the Company’s common stock retained by RRD.

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated and Combined Financial Statements

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

Sublease Agreement

In connection with the Separation, the Company assumed an operating lease through 2024 for the Company’s headquarters. There is a related non-cancelable sublease rental to RRD for the same period. The Company remains secondarily liable under this lease in the event that the sub-lessee defaults under the sublease terms. The Company does not believe that material payments will be required as a result of the secondary liability provisions of the primary lease agreement.

Related Party Receivables/Payables

Pursuant to t he Separation and Distribution A greement, the Company received a cash payment of $68.0 million from RRD on April 3, 2017. The proceeds were used to reduce outstanding debt under the Term Loan Credit Facility. The Company has other amounts due to or from RRD and LSC in the normal course of business. The following is a summary of the amounts in the unaudited condensed consolidated and combined balance sheet due to or from RRD and LSC as of the three months ended March 31, 2017 and December 31, 2016:

	March 31, 2017		December 31, 2016
Receivable from RRD	$	84.2	$	96.0
Receivable from LSC		0.8		0.8
Due from related parties		85.0		96.8

Payable to RRD	$	23.4	$	27.1
Payable to LSC		4.4		2.5
Due to related parties		27.8		29.6

Allocations from RRD

Prior to the Separation RRD provided Donnelley Financial with certain services, which include, but are not limited to information technology, finance, legal, human resources, internal audit, treasury, tax, investor relations and executive oversight. The financial information in these consolidated and combined financial statements does not necessarily include all the expenses that would have been incurred had Donnelley Financial been a separate, standalone entity for all periods presented. Prior to the Separation RRD charged Donnelley Financial for these services based on direct usage when possible. When specific identification was not practicable, the pro rata basis of revenue or employee headcount, or some other measure was used. These allocations were reflected as follows in the unaudited condensed consolidated and combined financial statements:

	Three Months Ended
	March 31, 2016
Costs of goods sold allocation	$	10.3
Selling, general and administrative allocation		39.3
Depreciation and amortization		4.8
Total allocations from RRD	$	54.4

The Company considers the expense methodology and results to be reasonable for all periods presented. However, these allocations may not be indicative of the actual expenses that the Company would have incurred as an independent public company or the costs it may incur in the future.

Related Party Revenues

Donnelley Financial generates a portion of net revenue from sales to RRD’s subsidiaries. Net revenues from sales to RRD and affiliates of $4.0 million and $1.4 million for the three months ended March 31, 2017 and 2016, respectively, were included in the unaudited condensed consolidated and combined statement of operations.

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated and Combined Financial Statements

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

Related Party Purchases

Donnelley Financial utilizes RRD for freight and logistics and services as well as certain production of printed products. Cost of sales of $18.8 million and $20.4 million for the three months ended March 31, 2017 and 2016, respectively, were included in the unaudited condensed consolidated and combined statements of operations for these purchases.

Donnelley Financial also utilizes RRD’s business process outsourcing business for certain composition, XBRL and other functions. Cost of sales of $9.9 million and $11.2 million for the three months ended March 31, 2017 and 2016, respectively, were included in the unaudited condensed consolidated and combined statements of operations for these purchases.

For periods prior to the Separation, intercompany payables with RRD and affiliates for these purchases are reflected within net parent company investment in the unaudited condensed consolidated and combined financial statements.

Share-Based Compensation Prior to Separation

Prior to the Separation, certain Donnelley Financial employees participated in RRD’s share-based compensation plans, the costs of which have been allocated to Donnelley Financial and recorded in selling, general and administrative expenses in the unaudited condensed consolidated and combined statements of operations. Share-based compensation costs allocated to the Company were $0.3 million for the three months ended March 31, 2016.

Retirement Plans Prior to Separation

Prior to the Separation, Donnelley Financial employees participated in pension and other postretirement plans sponsored by RRD. These costs are reflected in the Company’s cost of sales and selling, general and administrative expenses in the unaudited condensed consolidated and combined statements of operations. These costs were funded through intercompany transactions with RRD which are reflected within the net parent company investment.

Centralized Cash Management Prior to Separation

RRD uses a centralized approach to cash management and financing of operations. Prior to the Separation, the majority of the Company’s foreign subsidiaries were party to RRD’s international cash pooling arrangements to maximize the availability of cash for general operating and investing purposes. As part of RRD’s centralized cash management process, cash balances were swept regularly from the Company’s accounts. Cash transfers to and from RRD’s cash concentration accounts and the resulting balances at the end of each reporting period are reflected in net parent company investment in the consolidated and combined balance sheets.

Debt

RRD’s third party debt and related interest expense have not been allocated to the Company for any of the periods presented as the Company was not the legal obligor of the debt and the borrowings were not directly related to the Company’s business.

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated and Combined Financial Statements

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

Note 14. New Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2017-07 “Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (“ASU 2017-07”), which requires an employer to report the service cost component of net periodic benefit cost in the same line item(s) as other employee compensation costs arising from services rendered during the period. The other components of net periodic benefit cost will be presented in the income statement separately from the line item(s) that includes the service cost and outside of any subtotal of operating income. ASU 2017-07 must be applied retrospectively and is effective in the first quarter of 2018. Early adoption is permitted; however the Company plans to adopt the standard in the first quarter of 2018. Refer to Note 5, Retirement Plans , for disclosure of pension income for the three months ended March 31, 2017 and 2016 which would be reclassified to other income upon adoption of the standard.

In January 2017, the FASB issued Accounting Standards Update No. 2017-04 “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”), which simplifies the accounting for goodwill impairment. ASU 2017-04 requires entities to record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (Step 1 under the current impairment test). The standard eliminates Step 2 from the current goodwill impairment test, which included determining the implied fair value of goodwill and comparing it with the carrying amount of that goodwill. ASU 2017-04 must be applied prospectively and is effective in the first quarter of 2020. Early adoption is permitted. The Company early adopted the standard in the first quarter of 2017.

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

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. In August 2015, the FASB issued Accounting Standards Update No. 2015-14 “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date” (“ASU 2015-14”), which defers the effective date of ASU 2014-09 to January 1, 2018. Early adoption of ASU 2014-09 is permitted in the first quarter of 2017. However, the Company plans to adopt the standard in the first quarter of 2018. The standard allows the option of either a full retrospective adoption, meaning the standard is applied to all periods presented, or a modified retrospective adoption, meaning the standard is applied only to the most current period. The Company is evaluating the impact of the provisions of ASU 2014-09 and currently anticipates applying the modified retrospective approach when adopting the standard.

The following standards were effective for and adopted by the Company in 2017. 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. 2016-17 “Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control”

•

Accounting Standards Update No. 2016-09 “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”

•

Accounting Standards Update No. 2016-07 Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting”

•

Accounting Standards Update No. 2016-06 “Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments”

•

Accounting Standards Update No. 2016-05 “Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships”

•

Accounting Standards Update No. 2015-11 “Inventory (Topic 330): Simplifying the Measurement of Inventory”

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated and Combined Financial Statements

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

Note 15. Guarantor Financial Information

As described in Note 11, Debt , on September 30, 2016, the Company issued the Notes. The Guarantors of the Notes, Donnelley Financial, LLC and DFS International Holding, Inc., entered into an agreement pursuant to which each agreed to guarantee the Company’s obligations under the Notes. All guarantees are full and unconditional and joint and several. The Guarantors are 100% directly owned subsidiaries of the Company.

The guarantee of the Notes by a subsidiary guarantor will be automatically released under certain situations, including upon the sale or disposition of such subsidiary guarantor to a person that is not Donnelley Financial or a subsidiary guarantor of the notes, the liquidation or dissolution of such subsidiary guarantor, and if such subsidiary guarantor is released from its guarantee obligations under the Company’s Credit Facilities.

The following tables set forth condensed consolidating statements of income for the three months ended March 31, 2017 and 2016, condensed consolidating statements of financial position as of March 31, 2017 and December 31, 2016, and condensed consolidating statements of cash flows for the three months ended March 31, 2017 and 2016. The principal consolidating adjustments are to eliminate the investment in subsidiaries and intercompany balances and transactions. For purposes of the tables below, the Company is referred to as “Parent” and the Guarantors are referred to as “Guarantor Subsidiaries.”

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated and Combined Financial Statements

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

Condensed Consolidating Statements of Operations

For the Three Months Ended March 31, 2017

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries		Eliminations			Consolidated

Services net sales	$	—		$	128.6		$	27.0	$	(1.6	)	$	154.0
Products net sales		—			104.3			10.3		(1.3	)		113.3
Total net sales		—			232.9			37.3		(2.9	)		267.3
Services cost of sales (exclusive of depreciation and amortization)		—			61.3			17.9		(1.5	)		77.7
Services cost of sales with R.R. Donnelley affiliates (exclusive of depreciation and amortization)		—			9.4			0.5		—			9.9
Products cost of sales (exclusive of depreciation and amortization)		—			57.0			7.4		(1.4	)		63.0
Products cost of sales with R.R. Donnelley affiliates (exclusive of depreciation and amortization)		—			18.7			0.1		—			18.8
Total cost of sales		—			146.4			25.9		(2.9	)		169.4
Selling, general and administrative expenses (exclusive of depreciation and amortization)		—			47.6			9.1		—			56.7
Restructuring, impairment and other charges-net		—			3.1			0.7		—			3.8
Depreciation and amortization		—			8.8			1.4		—			10.2
Income from operations		—			27.0			0.2		—			27.2
Interest expense (income)-net		11.3			(0.2	)		—		—			11.1
Earnings (loss) before income taxes and equity in net income of subsidiaries		(11.3	)		27.2			0.2		—			16.1
Income tax (benefit) expense		(4.7	)		11.4			0.1		—			6.8
Earnings (loss) before equity in net income of subsidiaries		(6.6	)		15.8			0.1		—			9.3
Equity in net income of subsidiaries		15.9			0.1			—		(16.0	)		—
Net earnings (loss)	$	9.3		$	15.9		$	0.1	$	(16.0	)	$	9.3
Comprehensive income (loss)	$	9.8		$	16.4		$	0.2	$	(16.6	)	$	9.8

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated and Combined Financial Statements

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

Condensed Consolidating Statements of Operations

For the Three Months Ended March 31, 2016

	Parent		Guarantor Subsidiaries		Non-guarantor Subsidiaries		Eliminations			Consolidated

Services net sales	$	—	$	117.2	$	23.9	$	(1.3	)	$	139.8
Products net sales		—		92.4		8.8		(0.9	)		100.3
Total net sales		—		209.6		32.7		(2.2	)		240.1
Services cost of sales (exclusive of depreciation and amortization)		—		58.2		14.9		(1.2	)		71.9
Services cost of sales with R.R. Donnelley affiliates (exclusive of depreciation and amortization)		—		10.6		0.6		—			11.2
Products cost of sales (exclusive of depreciation and amortization)		—		49.8		6.2		(1.0	)		55.0
Products cost of sales with R.R. Donnelley affiliates (exclusive of depreciation and amortization)		—		20.4		—		—			20.4
Total cost of sales		—		139.0		21.7		(2.2	)		158.5
Selling, general and administrative expenses (exclusive of depreciation and amortization)		—		42.1		6.9		—			49.0
Restructuring, impairment and other charges-net		—		0.6		—		—			0.6
Depreciation and amortization		—		8.4		1.1		—			9.5
Income from operations		—		19.5		3.0		—			22.5
Interest expense-net		—		0.3		—		—			0.3
Earnings before income taxes and equity in net income of subsidiaries		—		19.2		3.0		—			22.2
Income tax expense		—		7.6		1.2		—			8.8
Earnings before equity in net income of subsidiaries		—		11.6		1.8		—			13.4
Equity in net income of subsidiaries		13.4		1.8		—		(15.2	)		—
Net earnings (loss)	$	13.4	$	13.4	$	1.8	$	(15.2	)	$	13.4
Comprehensive income (loss)	$	16.2	$	16.2	$	4.8	$	(21.0	)	$	16.2

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated and Combined Financial Statements

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

Condensed Consolidating Balance Sheet

As of March 31, 2017

	Parent		Guarantor Subsidiaries		Non-guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	—	$	19.2	$	10.3	$	(17.2	)	$	12.3
Receivables, less allowances		—		193.1		40.2		—			233.3
Receivables from R.R. Donnelley		68.0		14.9		1.3		—			84.2
Intercompany receivables		—		34.1		—		(34.1	)		—
Intercompany short-term note receivable		—		—		21.0		(21.0	)		—
Inventories		—		25.5		2.0		—			27.5
Prepaid expenses and other current assets		4.5		14.4		5.1		(6.7	)		17.3
Total current assets		72.5		301.2		79.9		(79.0	)		374.6
Property, plant and equipment-net		—		32.8		3.2		—			36.0
Goodwill		—		429.2		17.3		—			446.5
Other intangible assets-net		—		41.1		9.8		—			50.9
Software-net		—		38.8		0.5		—			39.3
Deferred income taxes		—		35.4		3.7		—			39.1
Other noncurrent assets		4.2		30.9		3.1		—			38.2
Investments in consolidated subsidiaries		711.3		66.0		—		(777.3	)		—
Total assets	$	788.0	$	975.4	$	117.5	$	(856.3	)	$	1,024.6
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	17.2	$	91.2	$	12.0	$	(19.1	)	$	101.3
Intercompany payable		10.0		—		22.2		(32.2	)		—
Intercompany short-term note payable		21.0		—		—		(21.0	)		—
Accrued liabilities		7.8		85.0		13.7		(6.7	)		99.8
Total current liabilities		56.0		176.2		47.9		(79.0	)		201.1
Long-term debt		607.5		—		—		—			607.5
Deferred compensation liabilities		—		23.1		—		—			23.1
Pension and other postretirement benefits plan liabilities		—		53.9		1.1		—			55.0
Other noncurrent liabilities		—		10.9		2.5		—			13.4
Total liabilities		663.5		264.1		51.5		(79.0	)		900.1
Total equity		124.5		711.3		66.0		(777.3	)		124.5
Total liabilities and equity	$	788.0	$	975.4	$	117.5	$	(856.3	)	$	1,024.6

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated and Combined Financial Statements

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

Condensed Consolidating Balance Sheet

As of December 31, 2016

	Parent		Guarantor Subsidiaries		Non-guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	—	$	21.8	$	16.8	$	(2.4	)	$	36.2
Receivables, less allowances		—		119.9		36.3		—			156.2
Receivables from R.R. Donnelley		68.0		28.0		—		—			96.0
Intercompany receivables		—		63.0		—		(63.0	)		—
Intercompany short-term note receivable		—		—		15.3		(15.3	)		—
Inventories		—		22.7		1.4		—			24.1
Prepaid expenses and other current assets		4.3		8.1		4.7		—			17.1
Total current assets		72.3		263.5		74.5		(80.7	)		329.6
Property, plant and equipment-net		—		32.4		3.1		—			35.5
Goodwill		—		429.2		17.2		—			446.4
Other intangible assets-net		—		44.0		10.3		—			54.3
Software-net		—		41.0		0.6		—			41.6
Deferred income taxes		—		34.2		2.8		—			37.0
Other noncurrent assets		4.4		27.7		2.4		—			34.5
Investments in consolidated subsidiaries		692.2		65.1		—		(757.3	)		—
Total assets	$	768.9	$	937.1	$	110.9	$	(838.0	)	$	978.9
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	3.4	$	72.8	$	11.5	$	(2.4	)	$	85.3
Intercompany payable		43.9		—		18.6		(62.5	)		—
Intercompany short-term note payable		15.3		—		—		(15.3	)		—
Accrued liabilities		8.2		81.4		11.6		(0.5	)		100.7
Total current liabilities		70.8		154.2		41.7		(80.7	)		186.0
Long-term debt		587.0		—		—		—			587.0
Deferred compensation liabilities		—		24.4		—		—			24.4
Pension and other postretirement benefits plan liabilities		—		55.3		1.1		—			56.4
Other noncurrent liabilities		—		11.0		3.0		—			14.0
Total liabilities		657.8		244.9		45.8		(80.7	)		867.8
Total equity		111.1		692.2		65.1		(757.3	)		111.1
Total liabilities and equity	$	768.9	$	937.1	$	110.9	$	(838.0	)	$	978.9

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated and Combined Financial Statements

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

Condensed Consolidating Statements of Cash Flows

For the Three Months Ended March 31, 2017

	Parent			Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations			Consolidated
OPERATING ACTIVITIES
Net cash (used in) provided by operating activities	$	(27.3	)	$	4.5		$	(0.6	)	$	(14.8	)	$	(38.2	)
INVESTING ACTIVITIES
Capital expenditures		—			(3.9	)		(0.4	)		—			(4.3	)
Purchase of investment		—			(3.4	)		—			—			(3.4	)
Other investing activities		—			0.2			—			—			0.2
Net cash used in investing activities		—			(7.1	)		(0.4	)		—			(7.5	)
FINANCING ACTIVITIES
Revolving facility borrowings		57.0			—			—			—			57.0
Payments on revolving facility borrowings		(37.0	)		—			—			—			(37.0	)
Debt issuance costs		(1.5	)		—			—			—			(1.5	)
Intercompany note payable (receivable)		5.7			—			(5.7	)		—			—
Net transfers related to the Separation		3.1			—			—			—			3.1
Net cash provided by (used in) financing activities		27.3			—			(5.7	)		—			21.6
Effect of exchange rate on cash and cash equivalents		—			—			0.2			—			0.2
Net decrease in cash and cash equivalents		—			(2.6	)		(6.5	)		(14.8	)		(23.9	)
Cash and cash equivalents at beginning of year		—			21.8			16.8			(2.4	)		36.2
Cash and cash equivalents at end of period	$	—		$	19.2		$	10.3		$	(17.2	)	$	12.3

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated and Combined Financial Statements

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

Condensed Consolidating Statements of Cash Flows

For the Three Months Ended March 31, 2016

	Parent		Guarantor Subsidiaries			Non-guarantor Subsidiaries			Eliminations		Consolidated
OPERATING ACTIVITIES
Net cash used in operating activities	$	—	$	(41.0	)	$	(2.7	)	$	—	$	(43.7	)
INVESTING ACTIVITIES
Capital expenditures		—		(8.2	)		(0.3	)		—		(8.5	)
Other investing activities		—		2.0			0.4			—		2.4
Net cash (used in) provided by investing activities		—		(6.2	)		0.1			—		(6.1	)
FINANCING ACTIVITIES
Net change in short-term debt		—		—			6.9			—		6.9
Other financing activities		—		0.2			—			—		0.2
Net transfers from Parent and affiliates		—		47.1			(7.4	)		—		39.7
Net cash provided by (used in) financing activities		—		47.3			(0.5	)		—		46.8
Effect of exchange rate on cash and cash equivalents		—		—			2.9			—		2.9
Net increase (decrease) in cash and cash equivalents		—		0.1			(0.2	)		—		(0.1	)
Cash and cash equivalents at beginning of year		—		0.1			15.0			—		15.1
Cash and cash equivalents at end of period	$	—	$	0.2		$	14.8		$	—	$	15.0

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

Company Overview

Donnelley Financial Solutions, Inc. (“Donnelley Financial,” or the “Company”) is a financial communications services company that supports global capital markets compliance and transaction needs for its corporate clients and their advisors (such as law firms and investment bankers) and global investment management compliance and analytics needs for mutual fund companies, variable annuity providers and broker/dealers. The Company provides content management, multi-channel content distribution, data management and analytics services, collaborative workflow and business reporting tools, and translations and other language services in support of its clients’ communications requirements. The Company operates in two business segments:

•

United States . The U.S. segment is comprised of three reporting units: capital markets, investment markets, and language solutions and other. The Company services capital market and investment market clients in the U.S by delivering products and services to help create, manage and deliver financial communications to investors and regulators. The Company provides capital market and investment market clients with communication tools and services to allow them to comply with their ongoing regulatory filings. In addition, the U.S. segment provides clients with communications services to create, manage and deliver registration statements, prospectuses, proxies and other communications to regulators and investors. The U.S. segment also includes language solutions and commercial printing capabilities.

•

International . The International segment includes operations in Asia, Europe, Canada and Latin America. The international business is primarily focused on working with international capital markets clients on capital markets offerings and regulatory compliance related activities within the United States. In addition, the International segment provides services to international investment market clients to allow them to comply with applicable U.S. Securities and Exchange Commission (“SEC”) regulations, as well as language solutions to international clients.

The Company reports certain unallocated selling, general and administrative activities and associated expenses within “Corporate”, including, in part, executive, legal, finance, marketing and certain facility costs. In addition, certain costs and earnings of employee benefit plans, such as pension income and share-based compensation, are included in Corporate and are not allocated to the reportable segments. Prior to the Separation (as defined below), many of these costs were based on allocations from R.R. Donnelley & Sons Company (“RRD”); however, beginning October 1, 2016, the Company incurs such costs directly.

For the Company’s financial results and the presentation of certain other financial information by segment, see Note 10, Segment Information , to the Unaudited Condensed Consolidated and Combined Financial Statements.

Products and Services

The Company separately reports its net sales and related cost of sales for its products and services offerings. The Company’s services offerings consist of all non-print offerings, including document composition, compliance related EDGAR filing services, transaction solutions, data and analytics, content storage services and language solutions. The Company’s product offerings primarily consist of conventional and digital printed products and related shipping costs.

Spin-off Transaction

On October 1, 2016, Donnelley Financial became an independent publicly traded company through the distribution by RRD of approximately 26.2 million shares, or 80.75%, of Donnelley Financial common stock to RRD shareholders (the “Separation”). Holders of RRD common stock received one share of Donnelley Financial common stock for every eight shares of RRD common stock held on September 23, 2016. RRD retained approximately 6.2 million shares of Donnelley Financial common stock, or a 19.25% interest (as of the Separation date) in Donnelley Financial, as part of the Separation.

Donnelley Financial’s common stock began regular-way trading under the ticker symbol “DFIN” on the New York Stock Exchange on October 3, 2016. On October 1, 2016, RRD also completed the previously announced separation of LSC Communications, Inc. (“LSC”), its publishing and retail-centric print services and office products business. On March 28, 2017, RRD completed the sale of 6.2 million shares of LSC common stock (RRD’s remaining ownership stake in LSC) in an underwritten public offering.

Executive Overview

First Quarter Overview

Net sales increased by $27.2 million, or 11.3%, for the first quarter of 2017 compared to the same period in the prior year. There was a $1.3 million, or 0.5%, decrease due to changes in foreign exchange rates. Net sales increased due to higher volumes in capital markets transactions, mutual funds print, virtual data room services and mutual fund content management services.

Non-GAAP Measures

The Company believes that certain Non-GAAP measures, such as Non-GAAP adjusted EBITDA, provide useful information about the Company’s operating results and enhance the overall ability to assess the Company’s financial performance. The Company uses these measures, together with other measures of performance under GAAP, to compare the relative performance of operations in planning, budgeting and reviewing the performance of its business. Non-GAAP adjusted EBITDA allows investors to make a more meaningful comparison between the Company’s core business operating results over different periods of time. The Company believes that Non-GAAP adjusted EBITDA, when viewed with the Company’s results under GAAP and the accompanying reconciliations, provides useful information about the Company’s business without regard to potential distortions. By eliminating potential differences in results of operations between periods caused by factors such as depreciation and amortization methods, historic cost and age of assets, financing and capital structures, taxation positions or regimes, restructuring, impairment and other charges and gain or loss on certain equity investments and asset sales, the Company believes that Non-GAAP adjusted EBITDA can provide a useful additional basis for comparing the current performance of the underlying operations being evaluated.

Non-GAAP adjusted EBITDA is not presented in accordance with GAAP and has important limitations as an analytical tool. These measures should not be considered as a substitute for analysis of the Company’s results as reported under GAAP. In addition, these measures are defined differently by different companies in our industry and, accordingly, such measures may not be comparable to similarly-titled measures of other companies.

In addition to the factors listed above, the following items are excluded from Non-GAAP adjusted EBITDA:

•

Share-based compensation expense . Although share-based compensation is a key incentive offered to certain of the Company’s employees, business performance is evaluated excluding share-based compensation expenses. Depending upon the size, timing and the terms of grants, non-cash compensation expense may vary but will recur in future periods. Prior periods have been revised to reflect this adjustment.

•

Spin-off related transaction expenses. The Company has incurred expenses related to the Separation to operate as a standalone publicly traded company. These expenses include third-party consulting fees, employee retention payments, legal fees and other costs related to the Separation. Management does not believe that these expenses are reflective of ongoing operating results. This adjustment does not include expenses incurred prior to the Separation.

A reconciliation of GAAP net earnings to Non-GAAP adjusted EBITDA for the three months ended March 31, 2017 and 2016 for these adjustments is presented in the following table:

	Three Months Ended March 31,
	2017		2016
	(in millions)
Net earnings	$	9.3	$	13.4
Restructuring, impairment and other charges—net		3.8		0.6
Share-based compensation expense		1.1		0.3
Spin-off related transaction expenses		2.7		-
Depreciation and amortization		10.2		9.5
Interest expense—net		11.1		0.3
Income tax expense		6.8		8.8
Non-GAAP adjusted EBITDA	$	45.0	$	32.9

2017 Restructuring, impairment and other charges—net . The three months ended March 31, 2017 included $3.3 million for employee termination costs, $0.4 million of lease termination and other restructuring costs and $0.1 million for other charges associated with the Company’s decision to withdraw in 2013 from certain multi-employer pension plans serving facilities that continued to operate.

2016 Restructuring, impairment and other charges—net . The three months ended March 31, 2016 included $0.5 million of lease termination and other restructuring costs and $0.1 million for other charges associated with the Company’s decision to withdraw in 2013 from certain multi-employer pension plans serving facilities that continued to operate.

Share-based compensation expense. Included pre-tax charges of $1.1 million and $0.3 million for the three months ended March 31, 2017 and 2016, respectively.

Spin-off related transaction expenses. Included pre-tax charges of $2.7 million related to third-party consulting fees, legal fees and other costs related to the Separation for the three months ended March 31, 2017.

OUTLOOK

Competition

Technological and regulatory changes, including the electronic distribution of documents and data hosting of media content, continue to impact the market for our products and services. One of the Company’s competitive strengths is that it offers a wide array of communications products, compliance services and technologies, a global platform, exceptional sales and service and regulatory domain expertise, which provide differentiated solutions for its clients.

The financial communications services industry, in general, is highly competitive and barriers to entry have decreased as a result of technology innovation. Despite some consolidation in recent years, the industry remains highly fragmented in the United States and even more so internationally with many in-country alternative providers. The Company expects competition to increase from existing competitors, as well as new and emerging market entrants. In addition, as the Company expands its product and service offerings, it may face competition from new and existing competitors. The Company competes primarily on product quality and functionality, service levels, subject matter regulatory expertise, security and compliance characteristics, price and reputation.

The impact of digital technologies has been felt in many print products, most acutely in the Company’s mutual fund, variable annuity and public company compliance business offerings. Historically, the Company has been a high-touch, service oriented business. Technology changes have provided alternatives to the Company’s clients that allow them to manage more of the financial disclosure process themselves through collaborative document management solutions. For years, the Company has invested in its own applications, ActiveDisclosure, FundSuiteArc and Venue to serve clients and increase retention and has invested to expand capabilities and address new market sectors. The future impact of technology on the 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 its existing business to offer clients innovative services and solutions, including acquisitions of EDGAR Online and MultiCorpora and investments in Soxhub, Mediant, Peloton and eBrevia that further solidify the Company’s position as a technology service leader in the industry.

The Company’s competitors for SEC filing services for capital markets clients include full service financial communications providers, technology point solution providers focused on financial communications and general technology providers. The Company’s competitors for SEC filing services for investment markets clients include full service traditional providers, small niche technology providers and local and regional print providers that bid against the Company for printing, mailing and fulfillment services. Language solutions competes with global and local language service providers and language/globalization software vendors.

Market Volatility/Cyclicality

The Company is subject to market volatility in the United States and world economy, as the success of the transactional offering is largely dependent on the global market for IPOs, secondary offerings, mergers and acquisitions, public and private debt offerings, leveraged buyouts, spinouts and other transactions. The International segment is particularly susceptible to capital market volatility as most of the International business is capital markets transaction focused. The Company mitigates some of that risk by offering services in higher demand during a down market, like document management tools for the bankruptcy/restructuring process, and also moving upstream from the filing process with products like Venue, the Company’s data room solution. The Company also attempts to balance this volatility through supporting the quarterly/annual public company reporting process through its EDGAR filing services and ActiveDisclosure product, its investment markets regulatory and shareholder communications offering and continues to expand into adjacent growth businesses like language solutions and data and analytics, which have recurring revenues and are not as susceptible to market volatility and cycles. This quarterly/annual public company reporting process work also subjects the Company to filing seasonality shortly after the end of each fiscal quarter, with peak periods during the course of the year that have operational implications. Such operational implications include the need to increase staff during peak periods through a combined strategy of hiring additional full-time and temporary personnel, increasing the premium time of existing staff, and outsourcing production for a number of services. Additionally, clients and their financial advisors have begun to increasingly rely on web-based services which allow clients to autonomously file and distribute compliance documents with regulatory agencies, such as the SEC. While the Company believes that its ActiveDisclosure and FundSuiteArc solutions are competitive in this space, competitors are continuing to develop technologies that aim to improve clients’ ability to autonomously produce and file documents to meet their regulatory obligations. The Company continues to remain focused on driving recurring revenue in order to mitigate market volatility.

Raw Materials

The primary raw materials used in the Company’s printed products are paper and ink. The paper and ink supply is sourced from a small set of select suppliers in order to ensure consistent quality that meets the Company’s performance expectations and provides for continuity of supply. The Company believes that the risk of incurring material losses as a result of a shortage in raw materials is unlikely and that the losses, if any, would not have a materially negative impact on the Company’s business.

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. 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.

Financial Review

In the financial review that follows, the Company discusses its unaudited condensed consolidated and combined results of operations, cash flows and certain other information. In periods prior to the Separation, the combined financial statements were prepared on a stand-alone basis and were derived from RRD’s consolidated financial statements and accounting records. There are limitations inherent in the preparation of all carve out financial statements due to the fact that the Company’s business was previously part of a larger organization. This discussion should be read in conjunction with the Company’s unaudited condensed consolidated and combined financial statements and the related notes.

Results of Operations for the Three Month s Ended March 31, 2017 as Compared to the Three Months Ended March 31, 2016

The following table shows the results of operations for the three months ended March 31, 2017 and 2016:

	2017		2016		$ Change			% Change
	(in millions, except percentages)
Services net sales	$	154.0	$	139.8	$	14.2			10.2	%
Products net sales		113.3		100.3		13.0			13.0	%
Net sales		267.3		240.1		27.2			11.3	%
Services cost of sales (exclusive of depreciation and amortization)		77.7		71.9		5.8			8.1	%
Services cost of sales with RRD affiliates (exclusive of depreciation and amortization)		9.9		11.2		(1.3	)		(11.6	%)
Products cost of sales (exclusive of depreciation and amortization)		63.0		55.0		8.0			14.5	%
Products cost of sales with RRD affiliates (exclusive of depreciation and amortization)		18.8		20.4		(1.6	)		(7.8	%)
Cost of sales		169.4		158.5		10.9			6.9	%
Selling, general and administrative expenses (exclusive of depreciation and amortization)		56.7		49.0		7.7			15.7	%
Restructuring, impairment and other charges-net		3.8		0.6		3.2			533.3	%
Depreciation and amortization		10.2		9.5		0.7			7.4	%
Income from operations	$	27.2	$	22.5	$	4.7			20.9	%

Combined

Net sales of services for the three months ended March 31, 2017 increased $14.2 million, or 10.2%, to $154.0 million, versus the three months ended March 31, 2016, including a $1.1 million, or 0.8%, decrease due to changes in foreign exchange rates. Net sales of services increased due to higher volumes in capital markets transactions, virtual data room services, mutual fund content management services and translations services, partially offset by lower capital markets compliance and healthcare volumes.

Net sales of products for the three months ended March 31, 2017 increased $13.0 million, or 13.0 %, to $113.3 million versus the three months ended March 31, 2016, including a $0.2 million, or 0.2%, decrease due to changes in foreign exchange rates. Net sales of products increased due to higher mutual fund print and capital markets transactions volumes, partially offset by lower healthcare and capital markets compliance volumes and mutual fund price pressures.

Services cost of sales increased $4.5 million, or 5.4%, for the three months ended March 31, 2017, versus the three months ended March 31, 2016. Services cost of sales increased due to higher volumes in capital markets transactions and mutual fund content management services, an increase in the allocation of information technology expenses from selling, general and administrative expenses to cost of sales and an increase in incentive compensation expense, partially offset by cost control initiatives. As a percentage of net sales, services cost of sales decreased 2.5% due to favorable mix and cost control initiatives.

Products cost of sales increased $6.4 million, or 8.5%, for the three months ended March 31, 2017, versus the three months ended March 31, 2016. Products cost of sales increased due to higher volumes in mutual fund print and capital markets transactions, partially offset by cost control initiatives. As a percentage of net sales, products cost of sales decreased 3.0% primarily due to favorable mix and cost control initiatives.

Selling, general and administrative expenses increased $7.7 million, or 15.7%, to $56.7 million, for the three months ended March 31, 2017, as compared to the three months ended March 31, 2016, primarily due to an increase in expenses incurred to operate as an independent public company, including selling expenses, employee compensation costs and spin-off related transaction expenses, partially offset by an increase in the allocation of information technology expenses from selling, general and administrative expenses to cost of sales. As a percentage of net sales, selling, general, and administrative expenses increased from 20.4% for the three months ended March 31, 2016 to 21.2% for the three months ended March 31, 2017 due to increased costs of operating as an independent public company.

For the three months ended March 31, 2017, the Company recorded net restructuring, impairment and other charges of $3.8 million, as compared to $0.6 million for the three months ended March 31, 2016. In 2017, these charges included $3.3 million of employee termination costs for 87 employees, $0.4 million of lease termination and other restructuring costs and $0.1 million for other charges associated with the Compa ny’s decision to withdraw in 2013 from certain multi-employer pension plans serving facilities that continued to operate. In 2016, the Company incurred lease termination and other restructuring charges of $0.5 million and other charges of $0.1 million.

Depreciation and amortization increased $0.7 million, or 7.4%, to $10.2 million for the three months ended March 31, 2017 compared to the three months ended March 31, 2016. Depreciation and amortization included $3.6 million of amortization of other intangible assets related to customer relationships, trade names and non-compete agreements for both the three months ended March 31, 2017 and 2016.

Income from operations for the three months ended March 31, 2017 increased $4.7 million, or 20.9%, to $27.2 million versus the three months ended March 31, 2016, due to higher volumes in capital markets transactions, mutual funds print and content management services and virtual data room services and cost control initiatives, partially offset by an increase in expenses incurred to operate as an independent public company, including selling expenses, employee compensation costs and spin-off related transaction expenses.

	2017		2016		$ Change		% Change
	(in millions, except percentages)
Interest expense-net	$	11.1	$	0.3	$	10.8		3600.0	%

Net interest expense increased $10.8 million for the three months ended March 31, 2017 versus the same period in 2016, due to the issuance of debt in connection with the Separation.

	2017			2016			$ Change			% Change
	(in millions, except percentages)
Earnings before income taxes	$	16.1		$	22.2		$	(6.1	)		(27.5	%)
Income tax expense		6.8			8.8			(2.0	)		(22.7	%)
Effective income tax rate		42.2	%		39.6	%

The effective income tax rate was 42.2% for the three months ended March 31, 2017 compared to 39.6% for the three months ended March 31, 2016. The March 31, 2017 effective income tax rate was impacted by an unfavorable change in the mix of income within foreign jurisdictions and an increase in certain U.S. non-deductible expenses.

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.

U.S.

	Three Months Ended March 31,
	2017			2016
	(in millions, except percentages)
Net sales	$	230.4		$	208.1
Income from operations		37.0			22.0
Operating margin		16.1	%		10.6	%
Restructuring, impairment and other charges-net		2.5			0.6

	Net Sales for the Three Months
	Ended March 31,
Reporting unit	2017		2016		$ Change		% Change
	(in millions, except percentages)
Capital Markets	$	119.1	$	106.8	$	12.3		11.5	%
Investment Markets		100.1		91.1		9.0		9.9	%
Language Solutions and other		11.2		10.2		1.0		9.8	%
Total U.S.	$	230.4	$	208.1	$	22.3		10.7	%

Net sales for the U.S. segment for the three months ended March 31, 2017 were $230.4 million, an increase of $22.3 million, or 10.7%, compared to the three months ended March 31, 2016 . Net sales increased due to higher volumes in capital markets transactions, mutual fund print and content management services and virtual data room services, partially offset by a decrease in capital markets compliance and healthcare volumes. An analysis of net sales by reporting unit follows:

•

Capital Markets: Sales increased due to higher transactions and virtual data room services volumes, partially offset by lower compliance volumes.

•

Investment Markets: Sales increased due to higher mutual fund print and content management services volumes, partially offset by lower healthcare volumes and price pressures.

•

Language Solutions and other: Sales increased due to higher volumes in translations services and commercial print.

U.S. segment income from operations increased $15.0 million, or 68.2%, for the three months ended March 31, 2017 as compared to the three months ended March 31, 2016, due to higher volumes in capital markets transactions, mutual fund print and content management services and virtual data room services, partially offset by an increase in selling expenses and incentive compensation expense.

Operating margins increased from 10.6% for the three months ended March 31, 2016 to 16.1% for the three months ended March 31, 2017 due to favorable mix and cost control initiatives, partially offset by an increase in selling expenses and incentive compensation expense.

International

	Three Months Ended March 31,
	2017			2016
	(in millions, except percentages)
Net sales	$	36.9		$	32.0
Income from operations		0.2			3.0
Operating margin		0.5	%		9.4	%
Restructuring, impairment and other charges-net		0.7			—

Net sales for the International segment for the three months ended March 31, 2017 were $36.9 million, an increase of $4.9 million, or 15.3%, compared to the three months ended March 31, 2016 including a $1.3 million, or 4.1%, decrease due to changes in foreign exchange rates. Net sales increased due to higher volumes in capital markets transactions, mutual funds, virtual data room services and translations services.

International segment income from operations decreased $2.8 million compared to the three months ended March 31, 2016, due to an increase in allocated expenses, including information technology expenses, partially offset by higher volumes in capital markets transactions, mutual funds, virtual data room services and translations services.

Operating margins decreased from 9.4% for the three months ended March 31, 2016 to 0.5% for the three months ended March 31, 2017 due to an increase in allocated expenses, including information technology expenses.

Corporate

The following table summarizes unallocated operating expenses and certain items impacting comparability within the activities presented as Corporate:

	Three Months Ended March 31,
	2017		2016
	(in millions)
Operating expenses	$	10.0	$	2.5
Spin-off related transaction expenses		2.7		—
Share-based compensation expense		1.1		0.3
Restructuring, impairment and other charges-net		0.6		—

Corporate operating expenses for the three months ended March 31, 2017 increased $7.5 million versus the same period in 2016 due to higher employee compensation costs incurred to operate as an independent public company, spin-off related transaction expenses and an increase in bad debt and share-based compensation expense.

Liquidity and Capital Resources

Prior to the Separation, RRD provided financing, cash management and other treasury services to Donnelley Financial. The Company’s cash balances were swept by RRD and the Company received funding from RRD for operating and investing needs. Cash transferred to and from RRD was recorded as intercompany payables and receivables which are reflected in the net parent company investment in the consolidated and combined financial statements. Subsequent to the Separation, the Company no longer participates in cash management and funding arrangements with RRD.

The Company believes it has sufficient liquidity to support its ongoing operations and to invest in future growth to create value for its shareholders. Cash on hand, operating cash flows and the Company’s $300.0 million senior secured revolving credit facility (the “Revolving Facility”) are the primary sources of liquidity and are expected to be used for, among other things, payment of interest and principal on the Company’s debt obligations, capital expenditures necessary to support productivity improvement and growth, acquisitions and completion of restructuring programs.

The following describes the Company’s cash flows for the three months ended March 31, 2017 and 2016.

Cash Flows Used For Operating Activities

Operating cash inflows are largely attributable to sales of the Company’s services and products. Operating cash outflows are largely attributable to recurring expenditures for labor, rent, raw materials and other operating activities. For periods prior to the Separation, allocations of operating expenses from RRD are also reflected as operating cash inflows or outflows, including those for pension costs and current income taxes payable.

Net cash used in operating activities was $38.2 million for the three months ended March 31, 2017 compared to $43.7 million of for the three months ended March 31, 2016. The decrease in net cash used in operating activities reflected the timing of payments for suppliers and employee-related liabilities, partially offset by the timing of customer payments and higher payments related to interest.

Cash Flows Used For Investing Activities

Net cash used in investing activities was $7.5 million for the three months ended March 31, 2017 compared to $6.1 million for the three months ended March 31, 2016. Capital expenditures were $4.3 million during the three months ended March 31, 2017, a decrease of $4.2 million as compared to the three months ended March 31, 2016. The Company expects that capital expenditures for 2017 will be approximately $30.0 million to $35.0 million, compared to $26.2 million in 2016. For the three months ended March 31, 2017, cash used in investing activities included $3.4 million for the purchase of an investment.

Cash Flows Provided By Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2017 was $21.6 million compared to $46.8 million for the three months ended March 31, 2016. The decrease in net cash provided by financing activities reflected a $39.7 million decrease in net transfers from RRD and its affiliates in connection with the Separation, offset by $20.0 million of net proceeds from borrowings under the Revolving Facility.

Contractual Cash Obligations and Other Commitments and Contingencies

In connection with the Separation, the Company entered into transition services agreements with RRD, covering certain support and back office services that the Company has historically received from RRD. Under the terms of the agreements, RRD will provide various services, including information technology, accounts receivable, accounts payable, payroll and other financial and administrative services and functions. The Company also entered into a transition services agreement with LSC, pursuant to which LSC will provide certain services to the Company. The services under the transition services agreements generally extend for up to 24 months following the Separation.

The Compa ny entered into a number of commercial and other arrangements with RRD and its subsidiaries. These include, among other things, arrangements for the provision of services, including global outsourcing and logistics services, printing and binding, digital p rinting, composition and access to technology. The Company also entered into a number of commercial and other arrangements with LSC and its subsidiaries, pursuant to which LSC will print and bind products for the Company. The terms of the arrangements with RRD and LSC do not exceed 24 months.

See discussion in Liquidity related to the Company's debt obligations.

Liquidity

Cash and cash equivalents of $12.3 million at March 31, 2017 included $2.0 million in the U.S. and $10.3 million at international locations. The Company has not recognized deferred tax liabilities related to taxes on foreign earnings as foreign earnings are considered to be permanently reinvested. Certain 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.

The Company’s debt maturity schedule as of March 31, 2017 is shown in the table below:

	Debt Maturity Schedule
	Total		2017		2018		2019		2020		2021		Thereafter
Borrowings under the Term Loan Credit Facility ^(a)	$	300.0	$	—	$	—	$	6.9	$	17.5	$	17.5	$	258.1
Notes ^(b)		300.0		—		—		—		—		—		300.0
Borrowings under the Revolving Facility		20.0		—		—		—		—		20.0		—
Total	$	620.0	$	—	$	—	$	6.9	$	17.5	$	37.5	$	558.1

(a)	Excludes unamortized debt issuance costs of $4.6 million and a discount of $1.6 million which do not represent contractual commitments with a fixed amount or maturity date.

(b)	Excludes unamortized debt issuance costs of $6.3 million which do not represent contractual commitments with a fixed amount or maturity date.

The Credit Agreement contains a number of covenants, including, but not limited to, a minimum Interest Coverage Ratio and the Consolidated Leverage Ratio, as defined in 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 $15 million in aggregate, though additional dividends may be allowed subject to certain conditions. Each of these covenants is subject to important exceptions and qualifications.

The indenture governing the Notes contains certain covenants applicable to the Company and its restricted subsidiaries, including limitations on: (1) liens; (2) indebtedness; (3) mergers, consolidations and acquisitions; (4) sales, transfers and other dispositions of assets; (5) loans and other investments; (6) dividends and other distributions, stock repurchases and redemptions and other restricted payments; (7) restrictions affecting subsidiaries; (8) transactions with affiliates; and (9) designations of unrestricted subsidiaries. Each of these covenants is subject to important exceptions and qualifications.

As of March 31, 2017, there was $20.0 million of outstanding borrowings under the Revolving Facility. Based on the Company’s results of operations for the twelve months ended March 31, 2017 and existing debt, the Company would have had the ability to utilize $170.3 million of the $300.0 million Revolving Facility and not have been in violation of the terms of the agreement. The current availability under the Revolving Facility and net available liquidity as of March 31, 2017 is shown in the table below:

	March 31, 2017
Availability	(in millions)
Revolving Facility	$	300.0
Availability reduction from covenants		107.5
	$	192.5
Usage
Borrowings under the Revolving Facility		20.0
Impact on availability related to outstanding letters of credit		2.2
	$	22.2

Current availability at March 31, 2017	$	170.3
Cash		12.3
Net Available Liquidity	$	182.6

The Company was in compliance with its debt covenants as of March 31, 2017, and expects to remain in compliance based on management’s estimates of operating and financial results for 2017 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, 2017, 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 Revolving Facility would reduce the size of the Company’s committed facility unless a replacement institution was added. As of March 31, 2017, the Revolving Facility is supported by seventeen U.S. and international financial institutions.

As of March 31, 2017, the Company had $2.6 million in outstanding letters of credit and bank guarantees, of which $2.2 million reduced the availability under the Revolving Facility.

The Company’s liquidity may be affected by its credit ratings. The Company’s S&P and Moody’s credit ratings as of March 31, 2017 are shown in the table below:

	S&P	Moody's
Ratings
Long-term corporate credit rating	BB-	B1
Senior unsecured debt	BB-	B3
Credit Agreement	BB-	B1
Outlook	Stable	Stable

Debt Issuances

On September 30, 2016, the Company entered into the Credit Agreement, which provided for the Term Loan Credit Facility and the Revolving Facility. The Term Loan Facility will mature on September 30, 2023 and the Revolving Credit Facility will mature on September 30, 2021.

On September 30, 2016, the Company issued $300 million of 8.250% Senior Notes (the “Notes”) due October 15, 2024. Interest on the Notes is due semi-annually on April 15 and October 15, commencing on April 15, 2017.

The Notes were issued pursuant to an indenture where certain wholly-owned domestic subsidiaries of the Company guarantee the Notes (the “Guarantors”). In connection with the offering of the Notes, the Company entered into a registration rights agreement, dated as of September 30, 2016 (the “Registration Rights Agreement”), pursuant to which the Company agreed to file a registration statement with the SEC with respect to an offer to exchange the Notes for registered notes. On March 10, 2017, the Company fil ed a Registration Statement on Form S-4 (as amended, the “Exchange Offer Registration Statement”) to offer to exchange the Notes for registered notes which have terms identical in all material respects to the Notes except that the registered notes are not subject to transfer restrictions or registration rights. The Exchange Offer Registration Statement was declared effective by the SEC on March 22, 2017. An exchange offer for the Notes was launched on March 22, 2017 and settled on April 25, 2017, resulting in the exchange of $299.9 million aggregate principal amount of outstanding Notes for registered notes.

Risk Management

The Company is exposed to interest rate risk on its variable debt. At March 31, 2017, the Company’s exposure to rate fluctuations on variable-interest borrowings was $300.0 million.

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. A hypothetical 10% change in yield would change the fair values of fixed-rate debt at March 31, 2017 by approximately $13.1 million, or 4.4%.

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 spot and forward contracts to hedge the currency risk. 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 12, Commitments and Contingencies , to the Unaudited Condensed Consolidated and Combined Financial Statements.

New Accounting Pronouncements and Pending Accounting Standards

Recently issued accounting standards and their estimated effect on the Company’s combined financial statements are described in Note 14, New Accounting Pronouncements , to the Unaudited Condensed Consolidated and Combined Financial Statements.

CAUTIONARY STATEMENT

The Company has made forward-looking statements in this Quarterly Report on Form 10-Q within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 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 words such as “anticipates,” “estimates,” “expects,” “projects,” “forecasts,” “intends,” “plans,” “continues,” “believes,” “may,” “will,” “goals” and variations of such words and similar expressions are intended to identify our 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, that could cause our actual results to differ materially from those indicated in any such forward-looking statements. These factors include, but are not limited to:

•

the volatility of the global economy and financial markets, and its impact on transactional volume;

•

failure to offer high quality customer support and services;

•

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

•

the growth of new te chnologies with which we may be able to adequately compete;

•

our inability to maintain client referrals;

•

vulnerability to adverse events as a result of becoming a stand-alone company following the Separation from RRD, including the inability to obtain as favorable of terms from third-party vendors;

•

the competitive market for our products and industry fragmentation affecting our prices;

•

the ability to gain client acceptance of our new products and technologies;

•

delay in market acceptance of our products and services due to undetected errors or failures found in our products and services;

•

failure to maintain the confidentiality, integrity and availability of our systems, software and solutions;

•

failure to properly use and protect client and employee information and data;

•

the effect of a material breach of security or other performance issues of any of our or our vendors’ systems;

•

factors that affect client demand, including changes in economic conditions, national or international regulations and clients’ budgetary constraints;

•

our ability to access debt and the capital markets due to adverse credit market conditions;

•

the effect of increasing costs of providing healthcare and other benefits to our employees

•

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

•

failure to protect our proprietary technology;

•

failure to successfully integrate acquired businesses into our business;

•

availability to maintain our brands and reputation;

•

the retention of existing, and continued attraction of, key employees, including management;

•

the effects of operating in international markets, including fluctuations in currency exchange rates;

•

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

•

lack of market for our common stock;

•

lack of history as an operating company and costs associated with being an independent company;

•

failure to achieve certain intended benefits of the Separation; and

•

failure of RRD or LSC to satisfy their respective obligations under transition services agreements or other agreements entered into in connection with the Separation.

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 the 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

Refer to Item 2 of Part I under “Risk Management.” There have been no significant changes to the Company’s market risk since December 31, 2016. For a discussion of exposure to market risk, refer to Part II, Item 7A – Quantitative and Qualitative Disclosures about Market Risk, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the SEC on February 28, 2017.

Item 4. Controls and Procedures

(a)	Disclosure controls and procedures.

Management, together with the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934) as of March 31, 2017. Based on that evaluation the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2017.

(b)	Changes in internal control over financial reporting.

Under the rules and regulations of the Securities and Exchange Commission, Donnelley Financial is not required to comply with the requirements of Section 404 of the Sarbanes Oxley Act of 2002 until its Annual Report on Form 10-K for the year ending December 31, 2017. In its Annual Report on Form 10-K for the year ending December 31, 2017, management and the Company’s independent registered public accounting firm will be required to provide an assessment as to the effectiveness of the Company’s 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, 2017 that had materially affected, or were reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHE R INFORMATION

Item 1. Legal Proceedings

For a discussion of certain litigation involving the Company, see Note 12, Commitments and Contingencies , to the Condensed Combined Financial Statements.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the SEC on February 28, 2017.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

I tem 6. E xhibits

2.1		Separation and Distribution Agreement, dated as of September 14, 2016, by and among R. R. Donnelley & Sons Company, LSC Communications, Inc. and Donnelley Financial Solutions, Inc. (the “Separation Agreement”) (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)

2.2		Transition Services Agreement, dated as of September 14, 2016, between Donnelley Financial Solutions, Inc. and R. R. Donnelley & Sons Company (incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)

2.3		Transition Services Agreement, dated as of September 14, 2016, between LSC Communications, Inc. and Donnelley Financial Solutions, Inc. (incorporated by reference to Exhibit 2.3 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)

2.4		Tax Disaffiliation Agreement, dated as of September 14, 2016, between Donnelley Financial Solutions, Inc. and R. R. Donnelley & Sons Company (incorporated by reference to Exhibit 2.4 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)

2.5		Patent Assignment and License Agreement, dated as of September 27, 2016, between Donnelley Financial, LLC and R. R. Donnelley & Sons Company (incorporated by reference to Exhibit 2.5 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)

2.6		Trademark Assignment and License Agreement, dated as of September 27, 2016, between Donnelley Financial, LLC and R. R. Donnelley & Sons Company (incorporated by reference to Exhibit 2.6 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)

2.7		Data Assignment and License Agreement, dated as of September 27, 2016, between Donnelley Financial, LLC and R. R. Donnelley & Sons Company (incorporated by reference to Exhibit 2.7 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)

2.8		Software, Copyright and Trade Secret Assignment and License Agreement, dated as of September 27, 2016, between Donnelley Financial, LLC and R. R. Donnelley & Sons Company (incorporated by reference to Exhibit 2.8 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)

3.1		Amended and Restated Certificate of Incorporation of Donnelley Financial Solutions, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)

3.2		Amended and Restated By-laws of Donnelley Financial Solutions, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)

4.1		Stockholder and Registration Rights Agreement, dated as of September 14, 2016, between Donnelley Financial Solutions, Inc. and R. R. Donnelley & Sons Company (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)

4.2		Indenture, dated as of September 30, 2016, among Donnelley Financial Solutions, Inc., the subsidiary guarantors party thereto and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)

4.3		Registration Rights Agreement, dated as of September 30, 2016, by and among Donnelley Financial Solutions, Inc., the subsidiary guarantors party thereto and J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc. and MUFG Securities Americas Inc., as Representatives (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)

10.1		Credit Agreement, dated as of September 30, 2016, among Donnelley Financial Solutions, Inc., as Borrower, the lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)*

10.2		2016 Donnelley Financial Solutions, Inc. Performance Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)*

10.3		Donnelley Financial Solutions, Inc. Non-Employee Director Compensation Plan (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)*

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

10.5		Donnelley Financial Solutions, Inc. Nonqualified Deferred Compensation Plan, dated as of September 22, 2016 (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)*

10.6		Donnelley Financial Unfunded Supplemental Pension Plan effective October 1, 2016 (incorporated by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K dated December 31, 2016, filed on February 28, 2017)*

10.7		Assignment of Employment Agreement and Acceptance of Assignment, dated as of September 29, 2016, between Donnelley Financial Solutions, Inc., R. R. Donnelley & Sons Company and Daniel N. Leib (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)*

10.8		Amendment to Employment Agreement between the Company and Daniel N. Leib dated October 26, 2016 (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K dated October 26, 2016, filed on October 27, 2016)*

10.9		Assignment of Employment Agreement and Acceptance of Assignment, dated as of September 29, 2016, between Donnelley Financial Solutions, Inc., R. R. Donnelley & Sons Company and Thomas F. Juhase (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)*

10.10		Assignment of Employment Agreement and Acceptance of Assignment, dated as of September 29, 2016, between Donnelley Financial Solutions, Inc., R. R. Donnelley & Sons Company and David A. Gardella (incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)*

10.11		Assignment of Severance Agreement and Acceptance of Assignment, dated as of September 29, 2016, between Donnelley Financial Solutions, Inc., R. R. Donnelley & Sons Company and Jennifer B. Reiners (incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K dated September 30, 2016, filed on October 3, 2016)*

10.12		Written Description of the 2016 Annual Incentive Plan of the Company with respect to the period from October 1, 2016 to December 31, 2016 (incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K dated December 31, 2016, filed on February 28, 2017)*

10.13		2017 Annual Incentive Plan (incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K dated December 31, 2016, filed on February 28, 2017)*

10.14		Amended and Restated Annual Incentive Plan of R.R. Donnelley & Sons Company (incorporated by reference to Exhibit 10.32 to the R.R. Donnelley & Sons Company Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed on May 7, 2015)*

10.15		Form of Founders Award (Restricted Stock) Agreement (incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K dated December 31, 2016, filed on February 28, 2017)*

10.16		Form of Performance Restricted Stock Award Agreement (filed herewith)*

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

10.18		Form of Restricted Stock Unit Award Agreement (filed herewith)*

10.19		Form of Stock Option Award Agreement (filed herewith)*

10.20		Form of Performance Share Unit Award Agreement (for 2014) converted from R. R. Donnelley & Sons Company to the Company pursuant to the Separation Agreement (incorporated by reference to Exhibit 10.23 to the R.R. Donnelley & Sons Company 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 (for 2015) converted from R. R. Donnelley & Sons Company to the Company pursuant to the Separation Agreement (incorporated by reference to Exhibit 10.19 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed on May 7, 2015)*

10.22		Form of Restricted Stock Unit Award Agreement for certain executive officers, as amended (for 2014) converted from R. R. Donnelley & Sons Company to the Company pursuant to the Separation Agreement (incorporated by reference to Exhibit 10.17 to the R.R. Donnelley & Sons Company Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed on February 25, 2009)*

10.23		Form of Restricted Stock Unit Award Agreement for certain executive officers (for 2015 and 2016) converted from R. R. Donnelley & Sons Company to the Company pursuant to the Separation Agreement (incorporated by reference to Exhibit 10.12 to the R.R. Donnelley & Sons Company Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed on May 7, 2015)*

10.24		Form of Cash Award Agreement (for 2014) converted from R. R. Donnelley & Sons Company to the Company pursuant to the Separation Agreement (incorporated by reference to Exhibit 10.21 to the Company’s Annual Report on Form 10-K dated December 31, 2016, filed on February 28, 2017)*

10.25		Form of Cash Award Agreement (for 2015) converted from R. R. Donnelley & Sons Company to the Company pursuant to the Separation Agreement (incorporated by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K dated December 31, 2016, filed on February 28, 2017)*

10.26		Form of Cash Award Agreement (for 2016) converted from R. R. Donnelley & Sons Company to the Company pursuant to the Separation Agreement (incorporated by reference to Exhibit 10.23 to the Company’s Annual Report on Form 10-K dated December 31, 2016, filed on February 28, 2017)*

10.27		Form of Amendment to Cash Retention Awards (for 2014) converted from R.R. Donnelley & Sons Company to the Company pursuant to the Separation Agreement (incorporated by reference to Exhibit 10.1 to the R.R. Donnelley & Sons Company Current Report on Form 8-K dated March 2, 2016, filed on March 2, 2016)*

10.28		Agreement regarding title and retention bonus for Thomas Juhase dated March 21, 2016 converted from R.R. Donnelley & Sons Company to the Company pursuant to the Separation Agreement (incorporated by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-K dated December 31, 2016, filed on February 28, 2017)*

10.29		Form of Director Restricted Stock Unit Award (incorporated by reference to Exhibit 10.26 to the Company’s Annual Report on Form 10-K dated December 31, 2016, filed on February 28, 2017)*

10.30		Form of Restricted Stock Unit Award Agreement for directors converted from R.R. Donnelley & Sons Company to the Company pursuant to the Separation Agreement (incorporated by reference to Exhibit 10.21 to the R.R. Donnelley & Sons Company Annual Report on Form 10-K for the fiscal year ended December 31, 2004, filed on March 14, 2005)*

10.31		Form of Restricted Stock Unit Award Agreement for directors converted from R.R. Donnelley & Sons Company to the Company pursuant to the Separation Agreement (incorporated by reference to Exhibit 10.25 to the R.R. Donnelley & Sons Company Annual Report on Form 10-K for the fiscal year ended December 31, 2007, filed on February 27, 2008)*

10.32		Form of Restricted Stock Unit Award Agreement for directors converted from R.R. Donnelley & Sons Company to the Company pursuant to the Separation Agreement (incorporated by reference to Exhibit 10.23 to the R.R. Donnelley & Sons Company Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed on February 25, 2009)*

10.33		Form of Amendment to Director Restricted Stock Unit Awards converted from R.R. Donnelley & Sons Company to the Company pursuant to the Separation Agreement (incorporated by reference to Exhibit 10.22 to the R.R. Donnelley & Sons Company Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed on February 25, 2009)*

10.34		Form of Amendment to Director Restricted Stock Unit Awards dated May 21, 2009 converted from R.R. Donnelley & Sons Company to the Company pursuant to the Separation Agreement (incorporated by reference to Exhibit 10.23 to the R.R. Donnelley & Sons Company Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, filed on August 5, 2009)*

10.35		Form of Director Indemnification Agreement (incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q dated September 30, 2016, filed on November 9, 2016)

14.1		Code of Ethics for the Chief Executive Officer and Senior Financial Officers (incorporated by reference to Exhibit 14.1 to the Company’s Annual Report on Form 10-K dated December 31, 2016, filed on February 28, 2017)

21.1		Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 to the Company’s Annual Report on Form 10-K dated December 31, 2016, filed on February 28, 2017)

31.1		Certification by Daniel N. Leib, 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 David A. Gardella, 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 Daniel N. Leib, 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 David A. Gardella, 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.

SIGNAT URES

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.

DONNELLEY FINANCIAL SOLUTIONS, INC.

By:		/s/ DAVID A. GARDELLA
		David A. Gardella
		Executive Vice President and Chief Financial Officer

Date: May 4, 2017

Exhibit 10.16

DONNELLEY FINANCIAL SOLUTIONS, INC.
PERFORMANCE RESTRICTED STOCK AWARD

(2016 PIP)

This Restricted Stock Award (“Award”) is granted as of XXXX (the “Grant Date”) by Donnelley Financial Solutions, Inc., a Delaware corporation (the “Company”), to XXXXXX (“Grantee”).

1. Grant of Award . This Award is granted as an incentive for Grantee to remain an employee of the Company and share in the future success of the Company. The Company hereby grants to Grantee [ XXXXX] ¹ restricted shares (the “Shares”) (with [YYYYY] number of shares considered to represent target achievement of the Performance Condition (as defined below)), 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 2016 Performance Incentive Plan (the “2016 PIP”) and reflects the right to receive [XXXXX] Shares of the Company subject to the maximum achievement of Performance Conditions set forth in this Award. Capitalized terms not defined herein shall have the meanings specified in the 2016 PIP. Grantee shall indicate acceptance of this Award by signing and returning a copy hereof. The Shares will be held for you by Computershare, the Company’s transfer agent, until the Performance Vesting Date (as defined below).

2. Vesting .

(a) The number of Shares subject to the Award that are earned and eligible for vesting shall be determined as set forth below in Section 4(a), according to the attainment of the performance condition or conditions as established by the Committee and set forth on Exhibit A hereto (each, a “Performance Condition”) for the applicable performance period (the “Performance Period”) as established by the Committee and set forth on Exhibit A. The Committee shall determine and certify the attainment of each Performance Condition after the applicable Performance Period.

(b) This Award is intended to constitute “performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) and is intended to comply the requirements thereof to the extent Grantee is a “covered person” within the meaning of Section 162(m).

(c) Notwithstanding anything provided in the 2016 PIP or any other agreement with Grantee to the contrary, on the date of a Change in Control, the Committee shall measure the attainment of each Performance Condition as of the end of the Company’s last fiscal quarter ending immediately prior to the fiscal quarter in which the Change in Control takes place and determine the number of Shares payable as of the date of such Change in Control. Such Shares shall continue to remain subject to time-based vesting until the end of the Performance Period; provided , however , that if on or within three months prior to or two years after the date of such Change in Control, Grantee’s employment is

¹	Note : Since these are restricted stock awards, note that this represents the maximum award (150%) that could be earned under the scale, which will then be cut back based upon actual performance.

terminated by the Company or any successor entity thereto without Cause, or Gran tee resigns his or her employment with Good Reason, all of the unvested Shares deemed payable pursuant to this paragraph 2(c) shall immediately vest and become payable as of the date of such termination of employment. Unless otherwise defined in Grantee’s employment agreement or other arrangement with the Company, “Cause” and “Good Reason” shall have the meanings ascribed to them below.

“Cause” means (i) Grantee’s willful and continued failure to perform substantially his or her duties with the Company (other than any such failure resulting from Grantee’s incapacity due to physical or mental illness or any such failure subsequent to Grantee’s being delivered a notice of termination without Cause) after a written demand for substantial performance is delivered to Grantee by the Group President, the Chief Executive Officer, or the Board that identifies the manner in which Grantee has not performed his or her duties, (ii) Grantee’s willful engaging in conduct which is demonstrably and materially injurious (monetarily or otherwise) to the business, reputation, character or community standing of the Company, (iii) conviction of or the pleading of nolo contendere with regard to a felony or any crime involving fraud, dishonesty or moral turpitude, or (iv) a refusal or failure to attempt in good faith to follow the written direction of the Group President, the Chief Executive Officer, or the Board (provided that such written direction is consistent with Grantee’s duty and station) promptly upon receipt of such written direction. For the purposes of this definition, no act or failure to act by Grantee shall be considered “willful” unless done or omitted to be done by Grantee in bad faith and without reasonable belief that Grantee’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of the Company’s principal outside counsel shall be conclusively presumed to be done, or omitted to be done, by Grantee in good faith and in the best interests of the Company. Notwithstanding the foregoing, the Company shall provide Grantee with a reasonable amount of time, after a notice and demand for substantial performance is delivered to Grantee, to cure any such failure to perform, and if such failure is so cured within a reasonable time thereafter (which shall be no less than thirty (30) days), such failure shall not be deemed to have occurred.

“Good Reason” means, without Grantee’s express written consent, the occurrence of any of the following events: (i) a change in Grantee’s duties or responsibilities (including reporting responsibilities) that taken as a whole represents a material and adverse diminution of Grantee’s duties, responsibilities or status with the Company (other than a temporary change that results from or relates to Grantee’s incapacitation due to physical or mental illness), (ii) a reduction by the Company in Grantee’s rate of annual base salary or annual target bonus opportunity (including any material and adverse change in the formula for such annual bonus target) as the same may be increased from time to time, (iii) any requirement of the Company that Grantee’s office be more than seventy-five (75) miles from Grantee’s then-primary work location, or (iv) any material breach by the Company of any employment agreement between Grantee and the Company. Notwithstanding the foregoing, a Good Reason event shall not be deemed to have occurred if the Company cures such action, failure or breach within thirty (30) days after receipt of notice thereof given by Grantee. Grantee’s right to terminate employment for

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Good Reason shall not be affected by Grantee’s incapacities due to mental or physical illness and Grantee’s continued employmen t shall not constitute consent to, or a waiver of rights with respect to, any event or condition constituting Good Reason; provided, however, that Grantee must provide notice of termination of employment within ninety (90) days following Grantee’s knowledg e of an event constituting Good Reason or such event shall not constitute Good Reason under this Agreement.

3. Treatment Upon Separation from Service .

(a) 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), a pro rata portion of any unvested Performance Units shall vest and become payable, based the attainment of each Performance Condition as of the end of the Company’s last fiscal quarter ending immediately prior to the fiscal quarter in which the date of death or determination of Disability took place .

(b) [Subject to paragraph 2(c) above and the terms and conditions of any employment agreement between Grantee and the Company, if Grantee’s employment terminates for reason other than for death or Disability, the unvested Shares shall be forfeited.][For CEO only: Subject to paragraph 2(c) above and the terms and conditions of any employment agreement between Grantee and the Company, if Grantee’s employment terminates for reason other than for death or Disability, the Shares shall continue to 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, 2019).]

4. Period of Restriction . The number of Shares under the Award that vest shall be based upon the achievement of the Performance Condition for the applicable Performance Period set forth on Exhibit A (such Shares shall be referred to as the “Earned Shares”). Subject to Grantee’s continued employment with the Company through the end of the Performance Period, the performance-based vesting restrictions set forth in this Award with respect to the Earned Shares shall lapse upon certification by the Committee that the Performance Condition for the applicable Performance Period set forth on Exhibit A has been satisfied (the “Performance Vesting Date”). Upon the Performance Vesting Date, all restrictions applicable to the Earned Shares shall lapse. Unless the vesting of the Shares is accelerated under the circumstances set forth above, if the Performance Condition is not satisfied, then no Shares shall be Earned Shares, and all Shares shall be forfeited. Any Shares subject to the Award that do not become Earned Shares pursuant to this Section 4(a) shall be cancelled and surrendered to the Company without payment of any consideration to Grantee immediately upon the determination of the number of Earned Shares pursuant to Exhibit A (the “Cancelled Shares”).

5. Rights as a Shareholder . Grantee shall have all rights of a shareholder (including, without limitation, dividends and voting rights) with respect to the Shares, for record dates occurring on or after the Grant Date and prior to the date any such Shares are forfeited in accordance with this Award, except that any dividends or distributions shall,

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until such time as the applicable restrictions have lapsed, be deposited with the Company or any holder appointed, ( together with a stock power endorsed in blank or other appropriate instrument of transfer for dividends or di stributions paid in Shares or other securities with respect to the Shares ) , or credited to Grantee’s book-entry account, as applicable, and shall be subject to the same restrictions (including, without limitation, the need to satisfy the Performance Condit ion) as such Shares and otherwise considered to be such Shares for all purposes hereunder. Grantee shall not have the rights of a shareholder with respect to any Cancelled Shares, and shall not be entitled to receive any dividends or distributions paid wi th respect to such Cancelled Shares.

6. Withholding Taxes .

(a) All payments or distributions of Earned Shares or with respect thereto shall be net of any amounts required to be withheld pursuant to applicable federal, national, state and local tax withholding requirements (the “Required Tax Payments”). The Company may require Grantee to remit to it an amount sufficient to satisfy such Required Tax Payments prior to delivery of any certificates for such Earned Shares or with respect thereto. In lieu thereof, the Company shall have the right to withhold the number of Earned Shares equal to the amount of such taxes or may withhold such amount from any other amounts (provided such amounts do not constitute deferred compensation within the meaning of Section 409A of the Code) that are due or to become due from such corporation to Grantee as the Company shall determine.

(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 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, (3) directing the Company to withhold a number of Shares subject to this Award having a fair market value, determined as of the Tax Date, equal to the Required Tax Payments or (4) 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.

7. Non-Solicitation .

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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 t hat 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 cust omer's business. Grantee recognizes that during a period following Separation 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 Co mpany during Grantee’s employment.

(b) 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.

(c) Grantee shall not, while employed by the Company and for a period of two years following 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.

(d) Grantee acknowledges that the non-solicitation restrictions set forth in this Section 7 apply whether or not the Shares subject to this Award actually vest.

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8. Miscellaneous .

(a) The Company shall pay all original issue or transfer taxes with respect to the issuance or delivery of the Earned Shares 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 binding upon and inure to the benefit of any successor or successors to the Company.

(e) Neither this Award nor the Shares nor any rights hereunder or thereunder may be transferred or assigned by Grantee prior to vesting 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.

(f) The Committee, as from time to time constituted, shall have the right to determine any questions which arise in connection with this Award or the Shares. This Award and the Shares are subject to the provisions of the 2016 PIP and shall be interpreted in accordance therewith.

(g) 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

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or distribution of the Common Stock by Gra ntee is contrary to the representations and agreements referred to above.

(h) 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.

-7-

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

Donnelley Financial Solutions, Inc.

By:

Name: Diane Bielawski

Title: Chief Human Resources Officer

All of the terms of this Award are accepted as of this ___ day of ______, 2017.

______________________________

Grantee:

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EXHIBIT A

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Exhibit 10.17

DONNELLEY FINANCIAL SOLUTIONS, INC.
PERFORMANCE UNIT AWARD (2016 PIP)

This Performance Unit Award (“Award”) is granted as of XXXX (the “Grant Date”), by Donnelley Financial Solutions, Inc. (the “Company”) to XXXXXXXXX (“Grantee”).

1. Grant of Award . This Award 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”) (which number shall represent target achievement of the Performance Condition (as defined below)), subject to the restrictions and on the terms and conditions set forth herein. This Award is made pursuant to the provisions of the Donnelley Financial Solutions 2016 Performance Incentive Plan (“2016 PIP”). Capitalized terms not defined herein shall have the meanings specified in the 2016 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 $0.01 per share, of the Company (the “Common Stock”) payable in respect of the Performance Units will be determined according to the attainment of the performance condition or conditions as established by the Committee and set forth on Exhibit A hereto (each, a “Performance Condition”) for the applicable performance period (the “Performance Period”) as established by the Committee and set forth on Exhibit A. The Committee shall determine and certify the attainment of each Performance Condition after the applicable Performance Period.

(b) Distribution with respect to this Award shall be made to Grantee as soon as practicable following the determination of the achievement of the Performance Condition as 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(c) above.

NY12533:173045.4

4. Treatment upon Separation or Termination .

(b) Subject to Section 5 below and the terms and conditions of any employment agreement between Grantee and the Company , if Grantee’s employment terminates for any reason other as set forth above, any unvested Performance Units shall be forfeited.

5. Treatment upon Change in Control . Notwithstanding anything provided in the 2016 PIP or any other agreement with Grantee to the contrary, upon the date of a Change in Control, the Committee shall measure the attainment of each Performance Condition as of the end of the Company’s fiscal quarter ending immediately prior to the fiscal quarter in which the Change in Control took place and determine the number of Performance Units payable as of the date of such Change in Control. Such Performance Units will continue to remain subject to time-based vesting until the end of the Performance Period; provided , however , that if on or within three months prior to or two years after the date of such Change in Control, Grantee’s employment is terminated by the Company or any successor entity thereto without Cause (as defined below), or Grantee resigns his or her employment with Good Reason (as defined below), all of the Performance Units earned pursuant to this paragraph 5 shall immediately vest and become payable as of the date of such termination of employment. Unless otherwise defined in Grantee’s employment agreement or other arrangement with the Company, “Cause” and “Good Reason” shall have the meanings ascribed to them below.

done or omitted to be done by Grantee in bad f aith and without reasonable belief that Grantee’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of the Compan y’s principal outside counsel shall be conclusively presumed to be done, or omitted to be done, by Grantee in good faith and in the best interests of the Company. Notwithstanding the foregoing, the Company shall provide Grantee with a reasonable amount of time, after a notice and demand for substantial performance is delivered to Grantee, to cure any such failure to perform, and if such failure is so cured within a reasonable time (which shall be no less than thirty (30) days) thereafter, such failure shal l not be deemed to have occurred.

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) de livery 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 co nnection 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. N o 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 refe rence 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.

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

(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 a re 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.

DONNELLEY FINANCIAL SOLUTIONS, INC.

By:

Name:

Diane Bielawski

Title:

Chief Human Resources Officer

All of the terms of this Agreement are accepted as of this ____ day of _________, 20XX.

___________________________

Grantee:

Exhibit 10.18

DONNELLEY FINANCIAL SOLUTIONS, INC.
STOCK UNIT AWARD

(2016 PIP)

This Stock Unit Award (“Award”) is granted as of XXXXX (the “Grant Date”) by Donnelley Financial Solutions, Inc., a Delaware corporation (the “Company”), to XXXXXX (“Grantee”).

1. Grant of Award . This Award is granted as an incentive for 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 2016 Performance Incentive Plan (the “2016 PIP”). Capitalized terms not defined herein shall have the meanings specified in the 2016 PIP. Grantee shall indicate acceptance of this Award by signing and returning a copy hereof.

2. Vesting .

(a) Except to the extent otherwise provided in paragraph 2(b) or 3 below, the Stock Units shall vest as follows:

One-third of the Stock Units on each of the first, second and third anniversaries of the Grant Date.

(b) Notwithstanding anything provided in the 2016 PIP or any other agreement with Grantee to the contrary, if on or within three months prior to or two years after the date of a Change in Control, Grantee’s employment is terminated by the Company or any successor entity thereto without Cause, or Grantee resigns his or her employment with Good Reason, the Stock Units shall become fully vested. Unless otherwise defined in Grantee’s employment agreement or other arrangement with the Company, “Cause” and “Good Reason” shall have the meanings ascribed to them below.

or omitted to be done by Grantee in bad faith and without reasonable belief that Grantee’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of t he Company’s principal outside counsel shall be conclusively presumed to be done, or omitted to be done, by Grantee in good faith and in the best interests of the Company. Notwithstanding the foregoing, the Company shall provide Grantee with a reasonable amount of time, after a notice and demand for substantial performance is delivered to Grantee, to cure any such failure to perform, and if such failure is so cured within a reasonable time (which shall be no less than thirty (30) days) thereafter, such fai lure shall not be deemed to have occurred.

“Good Reason” means, without Grantee’s express written consent, the occurrence of any of the following events: (i) a reduction by more than 10% by the Company in Grantee’s rate of annual base salary or annual target bonus opportunity (including any material and adverse change in the formula for such annual bonus target) as the same may be increased from time to time, (ii) any requirement of the Company that Grantee’s office be more than seventy-five (75) miles from Grantee’s then-primary work location, or (iii) any material breach by the Company of any employment agreement between Grantee and the Company. Notwithstanding the foregoing, a Good Reason event shall not be deemed to have occurred if the Company cures such action, failure or breach within thirty (30) days after receipt of notice thereof given by Grantee. Grantee’s right to terminate employment for Good Reason shall not be affected by Grantee’s incapacities due to mental or physical illness and Grantee’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any event or condition constituting Good Reason; provided, however, that Grantee must provide notice of termination of employment within ninety (90) days following Grantee’s knowledge of an event constituting Good Reason or such event shall not constitute Good Reason under this Agreement.

3. Treatment Upon Separation from Service.

(a) 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.

(b) Subject to paragraph 2(b) above and the terms and conditions of any employment agreement between Grantee and the Company, if Grantee has a Separation from Service other than for death or Disability, the Stock Units, if unvested, shall be forfeited.

4. 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 date. Each Stock Unit shall be cancelled upon the issuance of a share of Common Stock with respect thereto.

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

6. 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.

7. Withholding Taxes .

(a) As a condition precedent to the issuance to Grantee of any shares of Common Stock pursuant to this Award, 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 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, (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 (4) 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.

8. Non-Solicitation .

(a) 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 r equired to rebuild that customer relationship to retain the customer's business. Grantee recognizes that during a period following Separation from Service, the Company is entitled to protection from Grantee’s use of the information and customer and employ ee relationships with which Grantee has been entrusted by the Company during Grantee’s employment.

(d) Grantee acknowledges that the non-solicitation restrictions set forth in this Section 8 apply whether or not the Stock Units subject to this Award actually vest.

9. Miscellaneous .

reasonable efforts to comply with all laws and regulations which, in the opinion of coun sel for the Company, shall be applicable thereto.

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

(e) 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.

(f) The Compensation Committee of the Board of Directors of the Company (the “Committee”), as from time to time constituted, shall have the right to determine any questions which arise in connection with this Award or the Stock Units. This Award and the Stock Units are subject to the provisions of the 2016 PIP 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 Grantee’s employment agreement, employment letter or

other similar agreement, the terms and conditions of such agreement shall control.

(i) 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 Award 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.

Donnelley Financial Solutions, Inc.

By:

Name: Diane Bielawski

Title: Chief Human Resources Officer

All of the terms of this Award are accepted as of this ___ day of ______, 20XX.

______________________________

Grantee:

Exhibit 10.19

DONNELLEY FINANCIAL SOLUTIONS, INC.

STOCK OPTION AGREEMENT

(2016 PIP)

DONNELLEY FINANCIAL SOLUTIONS, INC., a Delaware corporation (herein called the "Company"), acting pursuant to the provisions of its 2016 Performance Incentive Plan (herein called the "Plan"), hereby grants to XXXXXX (herein called "Optionee"), as of XXXXX (herein called the "Grant Date"), an option (herein called the "Option") to purchase from the Company XXXXX shares of common stock of the Company, par value $.01 per share (herein called "Common Stock"), at a price of $XXXXX per share, which is 100% of the fair market value of a share of Common Stock on the Grant Date, to be exercisable during the term set forth herein, but only upon the following terms and conditions:

1.	The Option may be exercised by Optionee, in whole or in part, from time to time, during the Option Term (as defined below) only in accordance with the following conditions and limitations:

(a)

Except as provided in Sections 5 and 7 hereof, Optionee must, at any time the Option becomes exercisable and at any time the Option is exercised, have been continuously in the employment of the Company since the date hereof, unless otherwise determined by the Compensation Committee of the Board of Directors administering the Plan (the “Committee”). Leave of absence for periods and purposes conforming to the personnel policies of the Company and approved by the Committee shall not be deemed terminations of employment or interruptions of continuous service.

(b)

(i) Subject to Sections 5 and 7 hereof and subsection (ii) below, at any time on and after the dates indicated in column (1), Optionee may purchase such whole number of shares of Common Stock which, when added to all shares theretofore purchased under the Option, does not exceed the total number of shares subject to the Option multiplied by the percentage indicated in column (2) opposite such respective date, as follows:


(1)		(2)
Date		Percentage of Total

(ii) Notwithstanding the foregoing subsection (i), anything provided in the 2016 PIP or any other agreement with Grantee to the contrary, if on or within three months prior to or two years after the date of a Change in Control (as defined in the Plan), Optionee’s employment is terminated by the Company or any successor entity thereto without Cause, or Optionee resigns his or her employment with Good Reason while any portion of the Option is outstanding and unexercisable, then from and after the date of such Change in Control, the Option shall be exercisable with respect to all of the shares of Common Stock subject to the Option, but only during the Option Term (as defined below).

(iii) The Option awarded hereby shall expire on the first business day preceding the tenth anniversary of the Grant Date (the period beginning on the Grant Date and ending on such tenth anniversary date being the “Option Term”). Unless otherwise

defined in Optionee’s employment agreement or other arrangement with the Company, “Cause” and “Good Reason” shall have the meanin gs ascribed to them below.

“Cause” means (i) Optionee’s willful and continued failure to perform substantially his or her duties with the Company (other than any such failure resulting from Optionee’s incapacity due to physical or mental illness or any such failure subsequent to Optionee’s being delivered a notice of termination without Cause) after a written demand for substantial performance is delivered to Optionee by the the Chief Executive Officer, the Chief Operating Officer or the Board that identifies the manner in which Optionee has not performed his or her duties, (ii) Optionee’s willful engaging in conduct which is demonstrably and materially injurious (monetarily or otherwise) to the business, reputation, character or community standing of the Company, (iii) conviction of or the pleading of nolo contendere with regard to a felony or any crime involving fraud, dishonesty or moral turpitude, or (iv) a refusal or failure to attempt in good faith to follow the written direction of the the Chief Executive Officer, the Chief Operating Officer or the Board (provided that such written direction is consistent with Optionee’s duty and station) promptly upon receipt of such written direction. For the purposes of this definition, no act or failure to act by Optionee shall be considered “willful” unless done or omitted to be done by Optionee in bad faith and without reasonable belief that Optionee’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of the Company’s principal outside counsel shall be conclusively presumed to be done, or omitted to be done, by Optionee in good faith and in the best interests of the Company. Notwithstanding the foregoing, the Company shall provide Optionee with a reasonable amount of time, after a notice and demand for substantial performance is delivered to Optionee, to cure any such failure to perform, and if such failure is so cured within a reasonable time thereafter (which shall be no less than thirty (30) days), such failure shall not be deemed to have occurred.

“Good Reason” means, without Optionee’s express written consent, the occurrence of any of the following events: (i) a reduction by more than 10% by the Company in Optionee’s rate of annual base salary or annual target bonus opportunity (including any material and adverse change in the formula for such annual bonus target) as the same may be increased from time to time, (ii) any requirement of the Company that Optionee’s office be more than seventy-five (75) miles from Optionee’s then-primary work location, or (iii) any material breach by the Company of any employment agreement between Optionee and the Company. Notwithstanding the foregoing, a Good Reason event shall not be deemed to have occurred if the Company cures such action, failure or breach within thirty (30) days after receipt of notice thereof given by Optionee. Optionee’s right to terminate employment for Good Reason shall not be affected by Optionee’s incapacities due to mental or physical illness and Optionee’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any event or condition constituting Good Reason; provided, however, that Optionee must provide notice of termination of employment within ninety (90) days following Optionee’s knowledge of an event

constituting Good Reason or such event shall not constitute Good Reason under this Agreement.

(c)

No fractional shares may be purchased at any time.

Subject to the limitations herein set forth, the Option may be exercised by delivery of notice to the Company, in such form as the Company determines, specifying the number of shares of Common Stock to be purchased and accompanied by payment in full of the option price (or arrangement made for such payment to the Company's satisfaction) for the number of shares so purchased. No shares of Common Stock may be purchased under the Option unless Optionee (or in the event of Optionee's death, Optionee's executor, administrator or personal representative or Optionee's beneficiary designated pursuant to the Beneficiary Designation Form on file with the Company (herein called a "Beneficiary")) shall pay to the Company such amount as the Company is advised it is required under applicable federal, state, local or other tax laws to withhold and pay over to governmental taxing authorities by reason of the purchase of shares of Common Stock pursuant to the Option.

The option price and any federal, state, local and other taxes required to be withheld in connection with such exercise may be paid (i) in cash, (ii) by delivering previously owned whole shares of Common Stock (which Optionee has held for at least six months prior to the delivery of such shares or which Optionee purchased on the open market and for which Optionee has good title, free and clear of all liens and encumbrances) having a fair market value, determined on the date of exercise, equal to the option price and such amount of tax, (iii) with respect to taxes only, by authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered having a fair market value equal to such amount of tax, (iv) in a combination of (i) - (iii), (v) in cash by a broker-dealer acceptable to the Company to whom Optionee has submitted an irrevocable notice of exercise or (vi) to the extent previously expressly authorized by the Committee, via a cashless exercise arrangement with the Company; provided that the Committee shall have the sole discretion to disapprove of an election pursuant to clause (vi). Payment of the option price and such tax, or any part thereof, in previously owned shares of Common Stock shall not be effective unless Optionee delivers one or more stock certificates (or otherwise delivers shares of Common Stock or evidence of ownership to the satisfaction of the Company) representing shares having a fair market value on the date of exercise equal to or in excess of the option price and such tax, or applicable portion thereof, accompanied by such endorsements, signature guarantees or other documents or assurances as may reasonably be required by the Company. For purposes of this Agreement, the fair market value of the 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.

Upon exercise of the Option in whole or in part pursuant to Section 2 hereof, the Company shall deliver or cause to be delivered a certificate (or other evidence of ownership) representing the number of shares specified against payment therefore and shall pay all original issue or transfer taxes and all other fees and expenses incident to such delivery.

4.	Optionee shall be entitled to the privileges of ownership with respect to shares subject to the Option only with respect to shares purchased upon exercise of all or part of the Option and as to which Optionee becomes a stockholder of record.

(a) If Optionee ceases to be employed by the Company by reason of death or Disability (as defined in the Company’s long-term disability policy as in effect at the time of the Optionee’s disability), then from and after the date of death or such Disability the Option shall be exercisable by Optionee, the executor, administrator, personal representative or Beneficiary of Optionee during the 1-year period commencing on the date of Optionee's death or Disability, but only during the Option Term, with respect to all of the shares of Common Stock subject to the Option.

(b) Subject to paragraph 1(b)(ii) above and the terms and conditions of any employment agreement between Optionee and the Company , if Optionee ceases to be employed by the Company for any reason other than death or Disability, then from and after the effective date of such cessation of employment the Option shall be exercisable by Optionee during the 90-day period commencing on the effective date of such cessation of employment, but only during the Option Term, to the extent it is exercisable on the effective date of such cessation of employment. The portion of the Option that is not exercisable pursuant to the preceding sentence shall be cancelled as of the effective date of Optionee’s cessation of employment.

The Option may not be transferred by Optionee other than by will, the laws of descent and distribution or pursuant to the beneficiary designation procedures approved by the Company or as otherwise set forth in an amendment to this Agreement. The Option is exercisable only by Optionee or Optionee's guardian, personal representative or similar person or by a permitted transferee. Except as permitted by the foregoing, the Option may not be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of the Option, the Option and all rights hereunder shall immediately become null and void.

In the event of the death of Optionee (a) during the one-year period commencing on the effective date of Optionee's cessation of employment by reason of Disability, or (b) during the 90-day period commencing on the effective date of Optionee's cessation of employment for reason other than retirement under Section 5(b) or (c), or Disability, the Option may be exercised by the executor, administrator, personal representative or Beneficiary of Optionee during the Option Term remaining, and only to the extent Optionee was entitled to exercise the Option on the date of Optionee's death.

In the event of any stock split, stock dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar change in capitalization or event, or any distribution to holders of Common Stock other than a regular cash dividend, the number and class of securities subject to the Option and the purchase price per security shall be appropriately adjusted by the Committee without an increase in the aggregate purchase price, other than an increase resulting from rounding. If any adjustment would result in a fractional security being subject to the Option, the Company shall pay Optionee, in connection with the first exercise of the Option, in whole or

in part, occurring after such adjustment, an amount in cash determined by multip lying (i) the fraction of such security (rounded to the nearest hundredth) by (ii) the excess, if any, of (A) the fair market value of the Common Stock on the exercise date over (B) the exercise price of the Option; provided, however, that if the fair mark et value of such fractional security immediately after such adjustment is less than the fair market value of one share of Common Stock immediately prior to such adjustment, such fractional security shall be disregarded and no payment shall be made. The de cision of the Committee regarding the amount and timing of any adjustment pursuant to this Section 9 shall be final, binding and conclusive.

For purposes of this Agreement, employment by the Company shall be deemed to include employment by a corporation which is a direct or indirect majority-owned subsidiary of the Company, employment by any other entity designated by the Board of Directors of the Company or the Committee in which the Company has a direct or indirect equity interest and employment by any corporation which succeeds to the obligations of the Company hereunder.

10.

(a) Optionee shall not, while employed by the Company and for a period of one year from the date of termination of Optionee’s employment with the Company for any reason, including termination by the Company with or without cause, directly or indirectly, either on Optionee’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 Optionee was employed by the Company to any customer or prospective customer of the Company (i) with whom Optionee had direct contact during the last two years of Optionee’s employment with the Company or about whom Optionee learned confidential information as a result of his or her employment with the Company and (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 .

(b) Optionee shall not while employed by the Company and for a period of two years from the date of termination of Optionee’s employment with the Company for any reason, including termination 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 termination to terminate their employment with the Company or to accept employment with any entity, including but not limited to a competitor, supplier or customer of the Company, nor shall Optionee 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.

11.	The Option is subject to the condition that if the listing, registration or qualification of the shares subject to the Option on any securities exchange or under any state or federal law, or if the assent or approval of any regulatory body shall be necessary as a condition of, or in

connection with, the granting of the Option or the delivery or purchase of shares thereunder, the Option may not be exercised in whole or in part unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained. The Company agrees to use its best efforts to obtain any such requisite listing, registration, qualification, consent or approval.

12.	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 Option. This Agreement and the Option are subject to the provisions of the Plan and shall be interpreted in accordance therewith.

13.

This Agreement shall not be construed as an employment contract and does not give Optionee any right to continued employment by the Company or any affiliate of the Company, and the fact that the termination of Optionee's employment occurs during the Option Term shall in no way be construed as giving Optionee the right to continue in the Company's or any such affiliate's employ.

14.	The Option is intended to be a non-qualified stock option and shall not be treated as an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended.

15.	This Agreement shall be binding upon and shall inure to the benefit of any successor or successors of the Company and any person or persons who shall, upon the death of Optionee, acquire any rights in the Option.

16.

Any notice, including a notice of exercise of the Option, required to be given hereunder to the Company shall be addressed to the Company at its headquarters in Chicago, Illinois, attention of the Corporate Secretary, and any notice required to be given hereunder to Optionee shall be addressed to Optionee at Optionee's residence address as shown in the Company's records, subject to the right of either party hereafter to designate in writing to the other some other address. Any such notice shall be (i) delivered by personal delivery, facsimile, United States mail or by express courier service and (ii) deemed to be received upon personal delivery, upon confirmation of receipt of facsimile transmission or upon receipt if by United States mail or express courier service; provided, however, that if any notice is not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company.

17.

The Option, this Agreement, and all determinations made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.

IN WITNESS WHEREOF, DONNELLEY FINANCIAL SOLUTIONS, INC. has caused this instrument to be executed as of the day and year first above written.

DONNELLEY FINANCIAL SOLUTIONS, INC.

By:

Name: Diane Bielawski

Title: Chief Human Resources Officer

All of the terms of this Agreement are accepted as of this ___ day of _____.

___________________________

Optionee:

Exhibit 31.1

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 Donnelley Financial Solutions, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) 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)	not applicable;

	(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 4, 2017

/s/ D ANIEL N. L EIB

Daniel N. Leib

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, David A. Gardella, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Donnelley Financial Solutions, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) 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)	not applicable;

	(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 4, 2017

/s/ DAVID A. GARDELLA

David A. Gardella

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 Donnelley Financial Solutions, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel N. Lieb, 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 4, 2017

/s/ D ANIEL N. L EIB

Daniel N. Leib

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 Donnelley Financial Solutions, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David A. Gardella, 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 4, 2017

/s/ DAVID A. GARDELLA

David A. Gardella

Executive Vice President and Chief Financial Officer