Separate Financial Information of Subsidiary Guarantors of Indebtedness

On April 28, 2014, Quad completed an offering of the Senior Unsecured Notes (see Note 11, “Debt,” for further details on the Senior Unsecured Notes). Each of the Company’s Guarantor Subsidiaries fully and unconditionally guarantee or, in the case of future subsidiaries, will guarantee, on a joint and several basis, the Senior Unsecured Notes. All of the current Guarantor Subsidiaries are 100% owned by the Company. Guarantor Subsidiaries will be automatically released from these guarantees upon the occurrence of certain events, including the following:


•	the designation of any of the Guarantor Subsidiaries as an unrestricted subsidiary;


•	the release or discharge of any guarantee or indebtedness that resulted in the creation of the guarantee of the Senior Unsecured Notes by any of the Guarantor Subsidiaries; or


•	the sale or disposition, including the sale of substantially all the assets, of any of the Guarantor Subsidiaries.

The following condensed consolidating financial information reflects the summarized financial information of Quad, the Company’s Guarantor Subsidiaries on a combined basis and the Company’s non-guarantor subsidiaries on a combined basis.

Condensed Consolidating Statement of Operations

For the Year Ended December 31, 2018



	Quad/Graphics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Net sales	$	1,748.7		$	2,457.6		$	463.9		$	(476.5	)	$	4,193.7
Cost of sales	1,378.2			2,156.2			361.2			(466.3		)	3,429.3
Selling, general and administrative expenses	232.3			101.9			48.1			(10.2		)	372.1
Depreciation and amortization	99.5			104.7			26.5			—			230.7
Restructuring, impairment and transaction-related charges	9.1			72.3			22.2			—			103.6
Total operating expenses	1,719.1			2,435.1			458.0			(476.5		)	4,135.7
Operating income (loss)	29.6			22.5			5.9			—			58.0
Interest expense (income)	64.9			3.1			5.3			—			73.3
Net pension income	—			(12.4		)	—			—			(12.4		)
Loss (gain) on debt extinguishment	—			—			—			—			—
Earnings (loss) before income taxes and equity in (earnings) loss of consolidated and unconsolidated entities	(35.3		)	31.8			0.6			—			(2.9		)
Income tax expense (benefit)	13.9			(18.7		)	(5.0		)	—			(9.8		)
Earnings (loss) before equity in (earnings) loss of consolidated and unconsolidated entities	(49.2		)	50.5			5.6			—			6.9
Equity in (earnings) loss of consolidated entities	(57.7		)	(5.7		)	—			63.4			—
Equity in (earnings) loss of unconsolidated entity	—			—			(1.0		)	—			(1.0		)
Net earnings (loss)	8.5			56.2			6.6			(63.4		)	7.9
Less: net earnings (loss) attributable to noncontrolling interests	—			—			(0.6		)	—			(0.6		)
Net earnings (loss) attributable to Quad common shareholders	$	8.5		$	56.2		$	7.2		$	(63.4	)	$	8.5

Condensed Consolidating Statement of Comprehensive Income (Loss)

For the Year Ended December 31, 2018



	Quad/Graphics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Net earnings (loss)	$	8.5		$	56.2		$	6.6		$	(63.4	)	$	7.9
Other comprehensive income (loss), net of tax	(24.9		)	(17.8		)	(12.7		)	30.5			(24.9		)
Total comprehensive income (loss)	(16.4		)	38.4			(6.1		)	(32.9		)	(17.0		)
Less: comprehensive income (loss) attributable to noncontrolling interests	—			—			(0.6		)	—			(0.6		)
Comprehensive income (loss) attributable to Quad common shareholders	$	(16.4	)	$	38.4		$	(5.5	)	$	(32.9	)	$	(16.4	)

Condensed Consolidating Statement of Operations

For the Year Ended December 31, 2017



	Quad/Graphics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Net sales	$	1,759.7		$	2,342.5		$	424.2		$	(395.0	)	$	4,131.4
Cost of sales	1,292.2			2,018.9			336.1			(387.8		)	3,259.4
Selling, general and administrative expenses	264.7			127.0			39.3			(7.2		)	423.8
Depreciation and amortization	107.0			103.4			22.1			—			232.5
Restructuring, impairment and transaction-related charges	44.3			13.0			3.1			—			60.4
Total operating expenses	1,708.2			2,262.3			400.6			(395.0		)	3,976.1
Operating income (loss)	51.5			80.2			23.6			—			155.3
Interest expense (income)	70.4			(3.1		)	3.8			—			71.1
Net pension income	—			(9.6		)	—			—			(9.6		)
Loss (gain) on debt extinguishment	2.6			—			—			—			2.6
Earnings (loss) before income taxes and equity in (earnings) loss of consolidated and unconsolidated entities	(21.5		)	92.9			19.8			—			91.2
Income tax expense (benefit)	(32.6		)	30.7			(14.1		)	—			(16.0		)
Earnings (loss) before equity in (earnings) loss of consolidated and unconsolidated entities	11.1			62.2			33.9			—			107.2
Equity in (earnings) loss of consolidated entities	(96.1		)	(2.9		)	—			99.0			—
Equity in (earnings) loss of unconsolidated entity	—			—			—			—			—
Net earnings (loss)	107.2			65.1			33.9			(99.0		)	107.2
Less: net earnings (loss) attributable to noncontrolling interests	—			—			—			—			—
Net earnings (loss) attributable to Quad common shareholders	$	107.2		$	65.1		$	33.9		$	(99.0	)	$	107.2

Condensed Consolidating Statement of Comprehensive Income (Loss)

For the Year Ended December 31, 2017



	Quad/Graphics, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Total
Net earnings (loss)	$	107.2	$	65.1	$	33.9	$	(99.0	)	$	107.2
Other comprehensive income (loss), net of tax	28.2		13.0		12.0		(25.0		)	28.2
Total comprehensive income (loss)	135.4		78.1		45.9		(124.0		)	135.4
Less: comprehensive income (loss) attributable to noncontrolling interests	—		—		—		—			—
Comprehensive income (loss) attributable to Quad common shareholders	$	135.4	$	78.1	$	45.9	$	(124.0	)	$	135.4

Condensed Consolidating Statement of Operations

For the Year Ended December 31, 2016



	Quad/Graphics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Net sales	$	1,863.6		$	2,429.0		$	454.6		$	(417.7	)	$	4,329.5
Cost of sales	1,381.1			2,067.3			364.1			(417.7		)	3,394.8
Selling, general and administrative expenses	257.8			164.6			44.3			—			466.7
Depreciation and amortization	146.8			100.1			30.2			—			277.1
Restructuring, impairment and transaction-related charges	56.8			18.2			(1.4		)	—			73.6
Goodwill impairment	—			—			—			—			—
Total operating expenses	1,842.5			2,350.2			437.2			(417.7		)	4,212.2
Operating income (loss)	21.1			78.8			17.4			—			117.3
Interest expense (income)	76.0			(4.1		)	5.3			—			77.2
Net pension income	—			(5.1		)	—			—			(5.1		)
Loss (gain) on debt extinguishment	(14.1		)	—			—			—			(14.1		)
Earnings (loss) before income taxes and equity in (earnings) loss of consolidated and unconsolidated entities	(40.8		)	88.0			12.1			—			59.3
Income tax expense (benefit)	15.2			(4.8		)	2.6			—			13.0
Earnings (loss) before equity in (earnings) loss of consolidated and unconsolidated entities	(56.0		)	92.8			9.5			—			46.3
Equity in (earnings) loss of consolidated entities	(100.9		)	(6.0		)	—			106.9			—
Equity in (earnings) loss of unconsolidated entity	—			—			1.4			—			1.4
Net earnings (loss)	44.9			98.8			8.1			(106.9		)	44.9
Less: net earnings (loss) attributable to noncontrolling interests	—			—			—			—			—
Net earnings (loss) attributable to Quad common shareholders	$	44.9		$	98.8		$	8.1		$	(106.9	)	$	44.9

Condensed Consolidating Statement of Comprehensive Income (Loss)

For the Year Ended December 31, 2016



	Quad/Graphics, Inc.			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Total
Net earnings (loss)	$	44.9		$	98.8	$	8.1		$	(106.9	)	$	44.9
Other comprehensive income (loss), net of tax	(0.1		)	1.7		(4.7		)	3.0			(0.1		)
Total comprehensive income (loss)	44.8			100.5		3.4			(103.9		)	44.8
Less: comprehensive income (loss) attributable to noncontrolling interests	—			—		—			—			—
Comprehensive income (loss) attributable to Quad common shareholders	$	44.8		$	100.5	$	3.4		$	(103.9	)	$	44.8

Condensed Consolidating Balance Sheet

As of December 31, 2018



	Quad/Graphics, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Total
ASSETS
Cash and cash equivalents	$	60.3	$	2.9	$	6.3	$	—		$	69.5
Receivables, less allowances for doubtful accounts	378.0		63.3		87.4		—			528.7
Intercompany receivables	—		153.9		28.8		(182.7		)	—
Inventories	108.6		121.0		71.0		—			300.6
Other current assets	34.3		4.3		9.2		—			47.8
Total current assets	581.2		345.4		202.7		(182.7		)	946.6

Property, plant and equipment—net	647.7		451.6		158.1		—			1,257.4
Investment in consolidated entities	757.0		16.7		—		(773.7		)	—
Goodwill and intangible assets—net	1.7		111.3		54.2		—			167.2
Intercompany loan receivable	109.7		—		—		(109.7		)	—
Other long-term assets	42.5		10.4		45.0		—			97.9
Total assets	$	2,139.8	$	935.4	$	460.0	$	(1,066.1	)	$	2,469.1

LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable	$	265.5	$	137.8	$	107.7	$	—		$	511.0
Intercompany accounts payable	182.7		—		—		(182.7		)	—
Short-term debt and current portion of long-term debt and capital lease obligations	29.7		0.7		17.6		—			48.0
Other current liabilities	182.6		64.7		45.0		—			292.3
Total current liabilities	660.5		203.2		170.3		(182.7		)	851.3

Long-term debt and capital lease obligations	878.8		1.0		13.1		—			892.9
Intercompany loan payable	—		42.0		67.7		(109.7		)	—
Other long-term liabilities	140.3		115.4		9.0		—			264.7
Total liabilities	1,679.6		361.6		260.1		(292.4		)	2,008.9

Total shareholders' equity and noncontrolling interests	460.2		573.8		199.9		(773.7		)	460.2
Total liabilities and shareholders' equity	$	2,139.8	$	935.4	$	460.0	$	(1,066.1	)	$	2,469.1

Condensed Consolidating Balance Sheet

As of December 31, 2017



	Quad/Graphics, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Total
ASSETS
Cash and cash equivalents	$	51.7	$	2.0	$	10.7	$	—		$	64.4
Receivables, less allowances for doubtful accounts	427.9		40.6		84.0		—			552.5
Intercompany receivables	—		85.3		—		(85.3		)	—
Inventories	97.0		108.6		40.9		—			246.5
Other current assets	35.2		2.6		7.3		—			45.1
Total current assets	611.8		239.1		142.9		(85.3		)	908.5

Property, plant and equipment—net	706.5		508.6		162.5		—			1,377.6
Investment in consolidated entities	578.3		12.1		—		(590.4		)	—
Goodwill and intangible assets—net	6.9		25.5		11.0		—			43.4
Intercompany loan receivable	106.3		—		1.7		(108.0		)	—
Other long-term assets	60.5		13.5		48.9		—			122.9
Total assets	$	2,070.3	$	798.8	$	367.0	$	(783.7	)	$	2,452.4

LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable	$	201.6	$	115.9	$	64.1	$	—		$	381.6
Intercompany accounts payable	75.1		—		10.2		(85.3		)	—
Short-term debt and current portion of long-term debt and capital lease obligations	31.9		1.0		14.7		—			47.6
Other current liabilities	213.9		74.9		27.9		—			316.7
Total current liabilities	522.5		191.8		116.9		(85.3		)	745.9

Long-term debt and capital lease obligations	904.3		1.4		11.5		—			917.2
Intercompany loan payable	—		40.9		67.1		(108.0		)	—
Other long-term liabilities	121.1		133.4		12.4		—			266.9
Total liabilities	1,547.9		367.5		207.9		(193.3		)	1,930.0

Total shareholders' equity and noncontrolling interests	522.4		431.3		159.1		(590.4		)	522.4
Total liabilities and shareholders' equity	$	2,070.3	$	798.8	$	367.0	$	(783.7	)	$	2,452.4

Condensed Consolidating Statement of Cash Flows

For the Year Ended December 31, 2018



	Quad/Graphics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
OPERATING ACTIVITIES
Net cash from (used in) operating activities	$	145.1		$	65.6		$	49.9		$	—		$	260.6

INVESTING ACTIVITIES
Purchases of property, plant and equipment	(23.7		)	(45.3		)	(27.3		)	—			(96.3		)
Acquisition related investing activities—net of cash acquired	—			(76.4		)	5.0			—			(71.4		)
Intercompany investing activities	(151.0		)	(81.2		)	(0.6		)	232.8			—
Other investing activities	29.4			13.3			4.5			—			47.2
Net cash from (used in) investing activities	(145.3		)	(189.6		)	(18.4		)	232.8			(120.5		)

FINANCING ACTIVITIES
Proceeds from issuance of long-term debt	—			—			7.8			—			7.8
Payments of long-term debt and capital lease obligations	(31.7		)	(2.1		)	(5.7		)	—			(39.5		)
Borrowings on revolving credit facilities	2,536.3			—			27.4			—			2,563.7
Payments on revolving credit facilities	(2,536.3		)	—			(24.8		)	—			(2,561.1		)
Purchases of treasury stock	(36.7		)	—			—			—			(36.7		)
Payment of cash dividends	(62.9		)	—			—			—			(62.9		)
Intercompany financing activities	144.9			127.0			(39.1		)	(232.8		)	—
Other financing activities	(4.8		)	—			—			—			(4.8		)
Net cash from (used in) financing activities	8.8			124.9			(34.4		)	(232.8		)	(133.5		)

Effect of exchange rates on cash and cash equivalents	—			—			(1.5		)	—			(1.5		)
Net increase (decrease) in cash and cash equivalents	8.6			0.9			(4.4		)	—			5.1
Cash and cash equivalents at beginning of year	51.7			2.0			10.7			—			64.4
Cash and cash equivalents at end of year	$	60.3		$	2.9		$	6.3		$	—		$	69.5

Condensed Consolidating Statement of Cash Flows

For the Year Ended December 31, 2017



	Quad/Graphics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
OPERATING ACTIVITIES
Net cash from (used in) operating activities	$	974.5		$	(647.3	)	$	16.8		$	—		$	344.0

INVESTING ACTIVITIES
Purchases of property, plant and equipment	(27.5		)	(43.9		)	(14.5		)	—			(85.9		)
Divestiture related investing activities	8.4			5.7			—			—			14.1
Acquisition related investing activities—net of cash acquired	—			—			—			—			—
Intercompany investing activities	(18.1		)	632.7			(0.3		)	(614.3		)	—
Other investing activities	0.9			21.6			2.1			—			24.6
Net cash from (used in) investing activities	(36.3		)	616.1			(12.7		)	(614.3		)	(47.2		)

FINANCING ACTIVITIES
Proceeds from issuance of long-term debt	375.0			—			—			—			375.0
Payments of long-term debt and capital lease obligations	(523.3		)	(2.9		)	(4.3		)	—			(530.5		)
Borrowings on revolving credit facilities	706.7			—			11.8			—			718.5
Payments on revolving credit facilities	(725.7		)	—			(10.3		)	—			(736.0		)
Purchases of treasury stock	(3.8		)	—			—			—			(3.8		)
Payment of cash dividends	(62.5		)	—			—			—			(62.5		)
Intercompany financing activities	(645.1		)	30.2			0.6			614.3			—
Other financing activities	(8.1		)	(4.3		)	—			—			(12.4		)
Net cash from (used in) financing activities	(886.8		)	23.0			(2.2		)	614.3			(251.7		)

Effect of exchange rates on cash and cash equivalents	—			—			0.1			—			0.1
Net increase (decrease) in cash and cash equivalents	51.4			(8.2		)	2.0			—			45.2
Cash and cash equivalents at beginning of year	0.3			10.2			8.7			—			19.2
Cash and cash equivalents at end of year	$	51.7		$	2.0		$	10.7		$	—		$	64.4

Condensed Consolidating Statement of Cash Flows

For the Year Ended December 31, 2016



	Quad/Graphics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
OPERATING ACTIVITIES
Net cash from (used in) operating activities	$	676.2		$	(340.8	)	$	18.2		$	—		$	353.6

INVESTING ACTIVITIES
Purchases of property, plant and equipment	(35.9		)	(46.8		)	(23.4		)	—			(106.1		)
Acquisition related investing activities—net of cash acquired	(0.9		)	0.9			—			—			—
Intercompany investing activities	(62.4		)	368.1			3.8			(309.5		)	—
Other investing activities	(4.5		)	18.1			3.7			—			17.3
Net cash from (used in) investing activities	(103.7		)	340.3			(15.9		)	(309.5		)	(88.8		)

FINANCING ACTIVITIES
Proceeds from issuance of long-term debt	—			—			19.7			—			19.7
Payments of long-term debt and capital lease obligations	(195.7		)	(3.5		)	(2.3		)	—			(201.5		)
Borrowings on revolving credit facilities	806.1			—			65.8			—			871.9
Payments on revolving credit facilities	(857.9		)	—			(60.1		)	—			(918.0		)
Purchases of treasury stock	(8.8		)	—			—			—			(8.8		)
Payment of cash dividends	(61.1		)	—			—			—			(61.1		)
Intercompany financing activities	(285.9		)	0.2			(23.8		)	309.5			—
Other financing activities	28.8			(0.3		)	—			—			28.5
Net cash from (used in) financing activities	(574.5		)	(3.6		)	(0.7		)	309.5			(269.3		)

Effect of exchange rates on cash and cash equivalents	—			—			(0.6		)	—			(0.6		)
Net increase (decrease) in cash and cash equivalents	(2.0		)	(4.1		)	1.0			—			(5.1		)
Cash and cash equivalents at beginning of year	2.3			14.3			7.7			—			24.3
Cash and cash equivalents at end of year	$	0.3		$	10.2		$	8.7		$	—		$	19.2