Separate Financial Information of Subsidiary Guarantors of Indebtedness

On April 28, 2014, Quad/Graphics completed an offering of the Senior Unsecured Notes (see Note 12, "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/Graphics, the Company's Guarantor Subsidiaries on a combined basis and the Company's non-guarantor subsidiaries on a combined basis. During the year ended December 31, 2015, a non-guarantor subsidiary of the Company became a Guarantor subsidiary. Accordingly, the supplemental financial information for all periods presented below has been recast to reflect subsidiaries per the Senior Unsecured Notes agreement that were Guarantor Subsidiaries as of December 31, 2015.

Condensed Consolidating Statement of Operations

For the Year Ended December 31, 2015



	Quad/Graphics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Net sales	$	1,918.0		$	2,755.0		$	437.8		$	(433.1	)	$	4,677.7

Cost of sales	1,459.5			2,378.6			355.9			(433.1		)	3,760.9
Selling, general and administrative expenses	258.7			148.4			41.2			—			448.3
Depreciation and amortization	179.3			114.8			31.2			—			325.3
Restructuring, impairment and transaction-related charges	56.6			70.1			38.2			—			164.9
Goodwill impairment	—			754.7			53.6			—			808.3
Total operating expenses	1,954.1			3,466.6			520.1			(433.1		)	5,507.7
Operating income (loss)	$	(36.1	)	$	(711.6	)	$	(82.3	)	$	—		$	(830.0	)
Interest expense (income)	85.7			(2.3		)	5.0			—			88.4
Earnings (loss) before income taxes and equity in earnings (loss) of consolidated and unconsolidated entities	(121.8		)	(709.3		)	(87.3		)	—			(918.4		)
Income tax expense (benefit)	(39.6		)	(249.1		)	5.9			—			(282.8		)
Earnings (loss) before equity in earnings (loss) of consolidated and unconsolidated entities	(82.2		)	(460.2		)	(93.2		)	—			(635.6		)
Equity in earnings (loss) of consolidated entities	(559.7		)	(24.7		)	—			584.4			—
Equity in earnings (loss) of unconsolidated entities	—			—			(6.3		)	—			(6.3		)
Net earnings (loss)	$	(641.9	)	$	(484.9	)	$	(99.5	)	$	584.4		$	(641.9	)
Net (earnings) loss attributable to noncontrolling interests	—			—			—			—			—
Net earnings (loss) attributable to Quad/Graphics common shareholders	$	(641.9	)	$	(484.9	)	$	(99.5	)	$	584.4		$	(641.9	)

Condensed Consolidating Statement of Comprehensive Income (Loss)

For the Year Ended December 31, 2015



	Quad/Graphics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Total
Net earnings (loss)	$	(641.9	)	$	(484.9	)	$	(99.5	)	$	584.4	$	(641.9	)
Other comprehensive income (loss), net of tax	(35.9		)	(1.8		)	(33.6		)	35.4		(35.9		)
Total comprehensive income (loss)	(677.8		)	(486.7		)	(133.1		)	619.8		(677.8		)
Less: comprehensive (income) loss attributable to noncontrolling interest	—			—			—			—		—
Comprehensive income (loss) attributable to Quad/Graphics common shareholders	$	(677.8	)	$	(486.7	)	$	(133.1	)	$	619.8	$	(677.8	)

Condensed Consolidating Statement of Operations

For the Year Ended December 31, 2014



	Quad/Graphics, Inc.		Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Net sales	$	1,952.8	$	2,886.7		$	456.6		$	(433.7	)	$	4,862.4

Cost of sales	1,505.3		2,426.2			394.1			(433.7		)	3,891.9
Selling, general and administrative expenses	191.2		207.8			26.5			—			425.5
Depreciation and amortization	129.1		178.1			29.2			—			336.4
Restructuring, impairment and transaction-related charges	9.5		47.6			10.2			—			67.3
Total operating expenses	1,835.1		2,859.7			460.0			(433.7		)	4,721.1
Operating income (loss)	$	117.7	$	27.0		$	(3.4	)	$	—		$	141.3
Interest expense (income)	85.8		(0.8		)	7.9			—			92.9
Loss on debt extinguishment	7.2		—			—			—			7.2
Earnings (loss) before income taxes and equity in earnings (loss) of consolidated and unconsolidated entities	24.7		27.8			(11.3		)	—			41.2
Income tax expense (benefit)	20.6		(9.8		)	9.4			—			20.2
Earnings (loss) before equity in earnings (loss) of consolidated and unconsolidated entities	4.1		37.6			(20.7		)	—			21.0
Equity in earnings (loss) of consolidated entities	14.5		(2.4		)	—			(12.1		)	—
Equity in earnings (loss) of unconsolidated entities	—		—			(2.7		)	—			(2.7		)
Net earnings (loss)	$	18.6	$	35.2		$	(23.4	)	$	(12.1	)	$	18.3
Net (earnings) loss attributable to noncontrolling interests	—		—			0.3			—			0.3
Net earnings (loss) attributable to Quad/Graphics common shareholders	$	18.6	$	35.2		$	(23.1	)	$	(12.1	)	$	18.6

Condensed Consolidating Statement of Comprehensive Income (Loss)

For the Year Ended December 31, 2014



	Quad/Graphics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Net earnings (loss)	$	18.6		$	35.2		$	(23.4	)	$	(12.1	)	$	18.3
Other comprehensive income (loss), net of tax	(111.0		)	(91.5		)	(47.5		)	139.0			(111.0		)
Total comprehensive income (loss)	(92.4		)	(56.3		)	(70.9		)	126.9			(92.7		)
Less: comprehensive (income) loss attributable to noncontrolling interest	—			—			0.3			—			0.3
Comprehensive income (loss) attributable to Quad/Graphics common shareholders	$	(92.4	)	$	(56.3	)	$	(70.6	)	$	126.9		$	(92.4	)

Condensed Consolidating Statement of Operations

For the Year Ended December 31, 2013



	Quad/Graphics, Inc.		Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
Net sales	$	1,923.8	$	2,813.7		$	457.6		$	(399.2	)	$	4,795.9

Cost of sales	1,467.8		2,342.3			391.0			(399.2		)	3,801.9
Selling, general and administrative expenses	176.2		205.5			34.3			—			416.0
Depreciation and amortization	136.5		175.1			28.9			—			340.5
Restructuring, impairment and transaction-related charges	12.0		67.4			15.9			—			95.3
Total operating expenses	1,792.5		2,790.3			470.1			(399.2		)	4,653.7
Operating income (loss)	$	131.3	$	23.4		$	(12.5	)	$	—		$	142.2
Interest expense (income)	79.2		(0.4		)	6.7			—			85.5
Earnings (loss) before income taxes and equity in earnings (loss) of consolidated and unconsolidated entities	52.1		23.8			(19.2		)	—			56.7
Income tax expense (benefit)	35.8		(14.0		)	1.5			—			23.3
Earnings (loss) before equity in earnings (loss) of consolidated and unconsolidated entities	16.3		37.8			(20.7		)	—			33.4
Equity in earnings (loss) of consolidated entities	16.2		(9.3		)	—			(6.9		)	—
Equity in earnings (loss) of unconsolidated entities	—		—			(2.5		)	—			(2.5		)
Net earnings (loss)	$	32.5	$	28.5		$	(23.2	)	$	(6.9	)	$	30.9
Net (earnings) loss attributable to noncontrolling interests	—		—			1.6			—			1.6
Net earnings (loss) attributable to Quad/Graphics common shareholders	$	32.5	$	28.5		$	(21.6	)	$	(6.9	)	$	32.5

Condensed Consolidating Statement of Comprehensive Income (Loss)

For the Year Ended December 31, 2013



	Quad/Graphics, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Total
Net earnings (loss)	$	32.5	$	28.5	$	(23.2	)	$	(6.9	)	$	30.9
Other comprehensive income (loss), net of tax	54.8		79.3		(21.2		)	(58.1		)	54.8
Total comprehensive income (loss)	87.3		107.8		(44.4		)	(65.0		)	85.7
Less: comprehensive (income) loss attributable to noncontrolling interest	—		—		1.6			—			1.6
Comprehensive income (loss) attributable to Quad/Graphics common shareholders	$	87.3	$	107.8	$	(42.8	)	$	(65.0	)	$	87.3

Condensed Consolidating Balance Sheet

As of December 31, 2015



	Quad/Graphics, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Total
ASSETS
Cash and cash equivalents	$	2.3	$	2.8	$	5.7	$	—		$	10.8
Receivables, less allowances for doubtful accounts	507.5		53.3		87.9		—			648.7
Intercompany receivables	—		1,007.7		—		(1,007.7		)	—
Inventories	95.8		138.5		45.8		—			280.1
Other current assets	24.7		20.0		7.0		—			51.7
Total current assets	630.3		1,222.3		146.4		(1,007.7		)	991.3

Property, plant and equipment—net	849.6		652.8		173.4		—			1,675.8
Investment in consolidated entities	1,676.6		57.8		—		(1,734.4		)	—
Goodwill and intangible assets—net	46.9		27.1		36.5		—			110.5
Intercompany loan receivable	125.8		—		—		(125.8		)	—
Other long-term assets	27.8		8.5		33.6		—			69.9

Total assets	$	3,357.0	$	1,968.5	$	389.9	$	(2,867.9	)	$	2,847.5

LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable	$	203.7	$	85.4	$	69.7	$	—		$	358.8
Intercompany accounts payable	997.4		—		10.3		(1,007.7		)	—
Current portion of long-term debt and capital lease obligations	95.6		3.5		0.6		—			99.7
Other current liabilities	223.4		94.3		31.2		—			348.9
Total current liabilities	1,520.1		183.2		111.8		(1,007.7		)	807.4

Long-term debt and capital lease obligations	1,242.5		5.3		1.8		—			1,249.6
Intercompany loan payable	—		38.8		87.0		(125.8		)	—
Other long-term liabilities	170.5		175.9		20.2		—			366.6
Total liabilities	2,933.1		403.2		220.8		(1,133.5		)	2,423.6

Total shareholders' equity	423.9		1,565.3		169.1		(1,734.4		)	423.9

Total liabilities and shareholders' equity	$	3,357.0	$	1,968.5	$	389.9	$	(2,867.9	)	$	2,847.5

Condensed Consolidating Balance Sheet

As of December 31, 2014



	Quad/Graphics, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Total
ASSETS
Cash and cash equivalents	$	1.9	$	5.6	$	2.1	$	—		$	9.6
Receivables, less allowances for doubtful accounts	577.5		65.6		123.1		—			766.2
Intercompany receivables	—		847.9		—		(847.9		)	—
Inventories	111.9		133.4		42.5		—			287.8
Other current assets	26.1		35.2		9.0		—			70.3
Total current assets	717.4		1,087.7		176.7		(847.9		)	1,133.9

Property, plant and equipment—net	959.5		701.9		194.1		—			1,855.5
Investment in consolidated entities	1,939.9		40.3		—		(1,980.2		)	—
Goodwill and intangible assets—net	0.6		892.2		31.8		—			924.6
Intercompany loan receivable	418.5		—		—		(418.5		)	—
Other long-term assets	28.1		6.1		60.6		—			94.8

Total assets	$	4,064.0	$	2,728.2	$	463.2	$	(3,246.6	)	$	4,008.8

LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable	$	251.1	$	82.8	$	73.0	$	—		$	406.9
Intercompany accounts payable	830.2		—		17.7		(847.9		)	—
Current portion of long-term debt and capital lease obligations	90.7		3.7		1.8		—			96.2
Other current liabilities	205.1		116.5		37.9		—			359.5
Total current liabilities	1,377.1		203.0		130.4		(847.9		)	862.6

Long-term debt and capital lease obligations	1,298.4		9.4		1.6		—			1,309.4
Intercompany loan payable	—		335.9		82.6		(418.5		)	—
Other long-term liabilities	236.0		442.1		6.2		—			684.3
Total liabilities	2,911.5		990.4		220.8		(1,266.4		)	2,856.3

Total shareholders' equity	1,152.5		1,737.8		242.4		(1,980.2		)	1,152.5

Total liabilities and shareholders' equity	$	4,064.0	$	2,728.2	$	463.2	$	(3,246.6	)	$	4,008.8

Condensed Consolidating Statement of Cash Flows

For the Year Ended December 31, 2015



	Quad/Graphics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
OPERATING ACTIVITIES
Net cash from operating activities	$	229.9		$	90.7		$	27.5		$	—		$	348.1

INVESTING ACTIVITIES
Purchases of property, plant and equipment	(54.7		)	(63.9		)	(14.4		)	—			(133.0		)
Acquisition related investing activities—net of cash acquired	(0.6		)	(63.4		)	(79.4		)	—			(143.4		)
Intercompany investing activities	(123.1		)	(159.6		)	(0.5		)	283.2			—
Other investing activities	13.9			34.0			11.8			—			59.7
Net cash from investing activities	(164.5		)	(252.9		)	(82.5		)	283.2			(216.7		)

FINANCING ACTIVITIES
Payments of long-term debt and capital lease obligations	(92.5		)	(3.4		)	—			—			(95.9		)
Borrowings on revolving credit facilities	1,413.7			—			48.8			—			1,462.5
Payments on revolving credit facilities	(1,386.8		)	—			(48.7		)	—			(1,435.5		)
Payment of dividends	(62.3		)	—			—			—			(62.3		)
Intercompany financing activities	59.5			162.8			60.9			(283.2		)	—
Other financing activities	3.4			(0.1		)	—			—			3.3
Net cash from financing activities	(65.0		)	159.3			61.0			(283.2		)	(127.9		)

Effect of exchange rates on cash and cash equivalents	—			0.1			(2.4		)	—			(2.3		)
Net increase (decrease) in cash and cash equivalents	0.4			(2.8		)	3.6			—			1.2
Cash and cash equivalents at beginning of year	1.9			5.6			2.1			—			9.6
Cash and cash equivalents at end of year	$	2.3		$	2.8		$	5.7		$	—		$	10.8

Condensed Consolidating Statement of Cash Flows

For the Year Ended December 31, 2014



	Quad/Graphics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
OPERATING ACTIVITIES
Net cash from operating activities	$	100.8		$	194.0		$	(1.6	)	$	—		$	293.2

INVESTING ACTIVITIES
Purchases of property, plant and equipment	(48.7		)	(68.2		)	(22.3		)	—			(139.2		)
Acquisition related investing activities—net of cash acquired	(7.0		)	(105.5		)	—			—			(112.5		)
Intercompany investing activities	(189.0		)	(157.6		)	(0.1		)	346.7			—
Other investing activities	(0.4		)	26.9			1.0			—			27.5
Net cash from investing activities	(245.1		)	(304.4		)	(21.4		)	346.7			(224.2		)

FINANCING ACTIVITIES
Proceeds from issuance of long-term debt	1,047.0			—			—			—			1,047.0
Payments of long-term debt and capital lease obligations	(802.1		)	(7.6		)	(58.1		)	—			(867.8		)
Borrowings on revolving credit facilities	1,285.2			—			124.7			—			1,409.9
Payments on revolving credit facilities	(1,451.1		)	—			(126.5		)	—			(1,577.6		)
Payment of dividends	(61.2		)	—			—			—			(61.2		)
Intercompany financing activities	137.6			128.2			80.9			(346.7		)	—
Other financing activities	(14.0		)	(8.0		)	—			—			(22.0		)
Net cash from financing activities	141.4			112.6			21.0			(346.7		)	(71.7		)

Effect of exchange rates on cash and cash equivalents	—			(0.1		)	(0.7		)	—			(0.8		)
Net increase (decrease) in cash and cash equivalents	(2.9		)	2.1			(2.7		)	—			(3.5		)
Cash and cash equivalents at beginning of year	4.8			3.5			4.8			—			13.1
Cash and cash equivalents at end of year	$	1.9		$	5.6		$	2.1		$	—		$	9.6

Condensed Consolidating Statement of Cash Flows

For the Year Ended December 31, 2013



	Quad/Graphics, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
OPERATING ACTIVITIES
Net cash from operating activities	$	106.6		$	301.2		$	33.3		$	—		$	441.1

INVESTING ACTIVITIES
Purchases of property, plant and equipment	(55.4		)	(81.0		)	(13.1		)	—			(149.5		)
Acquisition related investing activities—net of cash acquired	(41.6		)	(250.3		)	—			—			(291.9		)
Intercompany investing activities	(287.2		)	(212.9		)	—			500.1			—
Other investing activities	6.2			4.6			—			—			10.8
Net cash from investing activities	(378.0		)	(539.6		)	(13.1		)	500.1			(430.6		)

FINANCING ACTIVITIES
Payments of long-term debt and capital lease obligations	(95.3		)	(8.9		)	(8.3		)	—			(112.5		)
Borrowings on revolving credit facilities	1,504.9			—			123.9			—			1,628.8
Payments on revolving credit facilities	(1,345.1		)	—			(129.9		)	—			(1,475.0		)
Payment of dividends	(56.4		)	—			—			—			(56.4		)
Intercompany financing activities	255.6			252.8			(8.3		)	(500.1		)	—
Other financing activities	9.4			(4.5		)	—			—			4.9
Net cash from financing activities	273.1			239.4			(22.6		)	(500.1		)	(10.2		)

Effect of exchange rates on cash and cash equivalents	—			—			(4.1		)	—			(4.1		)
Net increase (decrease) in cash and cash equivalents	1.7			1.0			(6.5		)	—			(3.8		)
Cash and cash equivalents at beginning of year	3.1			2.5			11.3			—			16.9
Cash and cash equivalents at end of year	$	4.8		$	3.5		$	4.8		$	—		$	13.1