1. Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements include the accounts of R.R. Donnelley & Sons Company and its subsidiaries (the “Company” or “RRD”) and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed consolidated interim financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods and should be read in conjunction with the consolidated financial statements and the related notes thereto included in the Company’s latest Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on February 28, 2017. Operating results for the nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2017. All significant intercompany transactions have been eliminated in consolidation. These unaudited condensed consolidated interim financial statements include estimates and assumptions of management that affect the amounts reported in the condensed consolidated financial statements. Actual results could differ from these estimates.

Spinoff Transactions

On October 1, 2016, the Company completed the separation of its financial communications and data services business (“Donnelley Financial Solutions, Inc.” or “Donnelley Financial”) and the publishing and retail-centric print services and office products business (“LSC Communications, Inc.” or “LSC”) into two separate publicly-traded companies (the "Separation"). The Company completed the tax-free distribution of 80.75% of the outstanding common stock of each Donnelley Financial and LSC to the Company’s stockholders of record on September 23, 2016 who received one share of each Donnelley Financial and LSC for every eight shares of RRD common stock owned as of the record date (the “Distribution”). The Company retained 19.25% of the outstanding common stock of each Donnelley Financial and LSC. The historical financial results of Donnelley Financial and LSC prior to the Separation, are presented as discontinued operations on the Condensed Consolidated Statements of Operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. Sales from RRD to Donnelley Financial and LSC previously eliminated in consolidation have been recast and are now shown as external sales within the financial results of continuing operations. These net sales were $72.5 million and $150.4 million for the three and nine months ended September 30, 2016, respectively. Unless indicated otherwise, the information in the Notes to Condensed Consolidated Financial Statements relates to the Company's continuing operations. Prior periods have been recast to reflect the Company's current segment reporting structure. See Note 2, Discontinued Operations, for more information on the Separation.

Reverse Stock Split

Immediately following the Distribution on October 1, 2016, the Company affected a one-for-three reverse stock split for RRD common stock (the “Reverse Stock Split”). The Reverse Stock Split was approved by the Company’s Board of Directors on September 14, 2016 and previously approved by the Company’s stockholders at the annual meeting on May 19, 2016. As a result of the Reverse Stock Split, the number of issued and outstanding and treasury shares of the Company’s common stock was reduced proportionally based on the Reverse Stock Split ratio of one share for every three shares of common stock held before the Reverse Stock Split.

Revision of Net Sales and Cost of Sales

During the third quarter of 2017, the Company identified an error in the accounting for certain contracts with an inventory buy-back option within the Asia reporting unit, which is in the International segment. As a result, the error, which was determined by management to be immaterial to the previously issued financial statements, has been corrected herein from the amounts previously reported. There was no impact to net earnings (loss) or net earnings (loss) per share, or the Consolidated Statements of Comprehensive Income or Stockholders’ Equity. The following table presents the impact of the revision on net sales and cost of sales:

	As Reported		Adjustments		As Revised
Three months ended March 31, 2016
Products net sales	$	1,242.7	$	13.1	$	1,229.6
Total net sales		1,645.6		13.1		1,632.5
Products cost of sales		971.9		13.1		958.8
Total cost of sales		1,313.1		13.1		1,300.0
Three months ended June 30, 2016
Products net sales	$	1,231.7	$	16.6	$	1,215.1
Total net sales		1,632.6		16.6		1,616.0
Products cost of sales		985.2		16.6		968.6
Total cost of sales		1,316.2		16.6		1,299.6
Three months ended September 30, 2016
Products net sales	$	1,343.4	$	15.6	$	1,327.8
Total net sales		1,741.2		15.6		1,725.6
Products cost of sales		1,046.3		15.6		1,030.7
Total cost of sales		1,377.0		15.6		1,361.4
Three months ended December 31, 2016
Products net sales	$	1,470.3	$	17.4	$	1,452.9
Total net sales		1,876.3		17.4		1,858.9
Products cost of sales		1,161.0		17.4		1,143.6
Total cost of sales		1,512.6		17.4		1,495.2
Three months ended March 31, 2017
Products net sales	$	1,288.9	$	17.4	$	1,271.5
Total net sales		1,676.3		17.4		1,658.9
Products cost of sales		1,024.3		17.4		1,006.9
Total cost of sales		1,348.5		17.4		1,331.1
Three months ended June 30, 2017
Products net sales	$	1,263.4	$	26.0	$	1,237.4
Total net sales		1,646.0		26.0		1,620.0
Products cost of sales		1,020.7		26.0		994.7
Total cost of sales		1,342.9		26.0		1,316.9

The following table presents the impact of the related balance sheet revision on the December 31, 2016 Condensed Consolidated Balance Sheet:

	As Reported		Adjustments			As Revised
Receivables, less allowance for doubtful accounts	$	1,354.4	$	(23.1	)	$	1,331.3
Inventories		379.6		7.2			386.8
Accounts payable		1,001.2		(15.9	)		985.3

The September 30, 2016 Consolidated Statement of Cash Flows has also been revised to reflect the impact of the above balance sheet revision.