Quad/Graphics Reports Fourth Quarter and Full-Year 2012 Results

  Quad/Graphics Reports Fourth Quarter and Full-Year 2012 Results

Company Exceeds 2012 Recurring Free Cash Flow Guidance, Provides 2013 Outlook

Business Wire

SUSSEX, Wis. -- March 4, 2013

Fourth-Quarter and Full-Year Highlights:

  *Generated $1.1billion in net sales during the fourth quarter and
    $4.1billion in net sales for full-year 2012.
  *Achieved $174million in fourth-quarter Adjusted EBITDA and $566million
    in full-year Adjusted EBITDA.
  *Reported fourth quarter Adjusted EBITDA margin of 15.3% and full-year
    Adjusted EBITDA margin of 13.8%.
  *Generated $375million in full-year Recurring Free Cash Flow, surpassing
    upwardly revised guidance of $340million, partially benefitted by
    $15million in lower capital expenditures that moved from 2012 into 2013.
  *Repaid $120million in debt in 2012, maintaining the Company's yearend
    leverage of 2.39x within the targeted range of 2.0x to 2.5x.
  *Increased 2013 quarterly cash dividend by 20% to $0.30 per share.
  *On January 16, 2013, completed its acquisition of Vertis Holdings, Inc.
    (“Vertis”) and began implementing integration plans to achieve
    efficiencies and cost-savings.

Quad/Graphics, Inc. (NYSE: QUAD) (“Quad/Graphics” or the “Company”) today
reported fourth quarter and full-year 2012 results that were in line with
management's originally announced annual guidance with the exception of
Recurring Free Cash Flow, which surpassed the Company's upwardly revised
guidance. For full financial results, please see the accompanying information.

“Our fourth quarter and full-year 2012 results were as we expected, and we
were especially pleased with our continued strong Recurring Free Cash Flow
generation,” said Joel Quadracci, Quad/Graphics Chairman, President & CEO.
“Our ability to generate significant Recurring Free Cash Flow and maintain a
strong balance sheet while simultaneously paying down debt has allowed us to
remain flexible with how we deploy capital. We were able to return cash to our
shareholders through a special $2 yearend dividend and also increase the 2013
quarterly cash dividend by 20% to $0.30 per share. Additionally, we were able
to take advantage of the opportunity to acquire Vertis, which strengthens and
expands our offering, allows us to better serve our clients while achieving
additional efficiencies, and creates value for our shareholders.”

Net sales for the fourth quarter 2012 were $1.1billion versus $1.2billion
for the same period in 2011. Fourth quarter 2012 Adjusted EBITDA was
$174million compared to $187million for the same period in 2011, and
Adjusted EBITDA margin was 15.3% compared to 15.4% for the same period in
2011. The quarterly results reflect expected volume declines, pricing
pressures on print and byproduct sales, and challenges in the book product
line. Partially offsetting these impacts in the quarter were lower selling,
general and administrative costs, and incremental synergy savings.

For the full-year 2012, net sales were $4.1billion versus net sales of
$4.3billion for the previous year. Full-year 2012 Adjusted EBITDA was
$566million compared to $618million for the previous year, and Adjusted
EBITDA margin was 13.8% compared to 14.3% for the previous year. Recurring
Free Cash Flow was $375million compared to $340million for the previous
year, continuing the Company's track record of solid cash-flow generation.

“We continue to generate significant Recurring Free Cash Flow to support our
disciplined capital deployment strategy, which we adjust based on current
circumstances and what we think is best for shareholder value creation,” said
John Fowler, Executive Vice President & Chief Financial Officer. “We also
continue to manage our debt to maintain a strong balance sheet, providing us
with the ability to adjust to changing economic conditions. We repaid
$120million in debt in 2012. After payment of the regular dividend and
special $2 yearend dividend, our yearend leverage ratio of 2.39x remains
within our targeted range of 2.0x to 2.5x. On January 16, 2013, Quad/Graphics
completed our acquisition of substantially all of the assets of Vertis, and we
already have started integration activities to achieve cost savings and
improve the overall efficiency and productivity of our platform, all while
maintaining focus on serving clients well. It's worth noting that the
acquisition of Vertis, after normalization of working capital, will not impact
our leverage ratio.”

As it relates to 2013 guidance, Quadracci said: “We anticipate our 2013
revenue, which will now include Vertis, to be approximately $4.8billion to
$5.0 billion. In addition, we expect 2013 Adjusted EBITDA to be $580million
to $610million, and 2013 Recurring Free Cash Flow to be in excess of
$360million. As we move forward, we will continue working on initiatives to
improve productivity and implement sustainable cost reductions to be the
low-cost producer. We will also focus on maintaining a strong and flexible
balance sheet to adjust to changing industry conditions while also investing
in our business, pursuing profitable investment opportunities, and returning
capital and creating long-term value for our shareholders.”

Quad/Graphics' next quarterly dividend of $0.30 per share will be payable on
March 29, 2013, to shareholders of record as of March 18, 2013.

Quarterly Conference Call

Quad/Graphics (NYSE: QUAD) will hold a conference call at 10 a.m. ET / 9 a.m.
CT on March 5 to discuss fourth quarter and full-year 2012 results. To access
the conference call, it is recommended that you listen via computer at:
http://us.meeting-stream.com/quadgraphics_030513.

If for any reason you are unable to stream, you can listen to the audio via
the telephone by calling:

  *Toll-Free: (877) 217 - 9946 (US/Canada)
  *Toll: (702) 696 - 4824 (International)
  *Conference ID: 76755678

The replay will be available for 30 days following the conference call. To
access the replay via phone, please call (855) 859-2056 or (404) 537-3406 and
enter the Conference ID number 76755678. To access the replay via the
internet, please use the following link:
http://us.meeting-stream.com/quadgraphics_030513. Registration is required for
replay.

Forward-Looking Statements

This press release contains certain “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements regarding, among other things,
our current expectations about the Company’s future results, financial
condition, goals, strategies, revenue, earnings, free cash flow, margins,
prospects and/or outlook and are indicated by words or phrases such as
“anticipate,” “estimate,” “expect,” “project,” “believe,” and similar words or
phrases. These forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause actual results to be
materially different from those expressed in or implied by such
forward-looking statements. Forward-looking statements are based largely on
the Company's expectations and judgments and are subject to a number of risks
and uncertainties, many of which are unforeseeable and beyond our control.

The factors that could cause actual results to materially differ include,
among others: the impact of significant overcapacity in the highly competitive
commercial printing industry, which creates downward pricing pressure and
fluctuating demand for printing services; the inability of the Company to
reduce costs and improve operating efficiency rapidly enough to meet market
conditions; the impact of electronic media and similar technological changes
including digital substitution by consumers; the impact of changing future
economic conditions; the failure to renew long-term contracts with clients on
favorable terms or at all; the failure of clients to perform under long-term
contracts due to financial or other reasons or due to client consolidation;
the failure to successfully identify, manage, complete and integrate
acquisitions and investments, including the integration of the operations of
Vertis Holdings, Inc.; the impact of changes in postal rates, service levels
or regulations; the impact of fluctuations in costs and the availability of
raw materials; the impact of increased business complexity as a result of the
Company’s entry into additional markets; the impact of regulatory matters and
legislative developments or changes in laws, including changes in privacy and
environmental laws; the ability of the Company to make the significant capital
expenditures needed to remain technologically and economically competitive;
the impact on Quad/Graphics class A common shareholders of a limited active
market for Quad/Graphics common stock and the inability to independently elect
directors or control decisions due to the class B common stock voting rights;
and the other risk factors identified in the Company's most recent Annual
Report on Form 10-K, as such may be amended or supplemented by subsequent
Quarterly Reports on Form 10-Q or other reports filed with theSecurities and
Exchange Commission.

Except as required by the federal securities laws, the Company undertakes no
obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.

About Quad/Graphics

Quad/Graphics (NYSE: QUAD), a leading global printer and media channel
integrator, is redefining print in today's multichannel media world by helping
marketers and publishers capitalize on print's ability to complement and
connect with other media channels. With consultative ideas, worldwide
capabilities, leading-edge technology and single-source simplicity,
Quad/Graphics has the resources and knowledge to help its clients maximize the
revenue they derive from their marketing spend through channel integration,
and minimize their total cost of production and distribution through a fully
integrated national distribution network. The Company provides a diverse range
of print solutions, media solutions and logistics services from multiple
locations throughout North America, Latin America and Europe.


QUAD/GRAPHICS,INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended December 31, 2012 and 2011
(in millions, except per share data)
(UNAUDITED)
                                            
                                               Three Months Ended December 31,
                                               2012              2011
Net sales                                      $  1,130.5          $ 1,215.6
                                                                   
Cost of sales                                  871.7               921.4
Selling, general and administrative            87.2                108.5
expenses
Depreciation and amortization                  86.0                88.7
Restructuring, impairment and                  30.5               31.9      
transaction-related charges
Total operating expenses                       1,075.4             1,150.5
                                                                   
Operating income from continuing               $  55.1             $ 65.1
operations
                                                                   
Interest expense                               20.2               23.5      
                                                                   
Earnings from continuing operations before
income taxes and equity in earnings of         34.9                41.6
unconsolidated entities
                                                                   
Income tax expense                             14.5               34.1      
                                                                   
Earnings from continuing operations before
equity in earnings of unconsolidated           20.4                7.5
entities
                                                                   
Equity in earnings of unconsolidated           1.6                1.4       
entities
                                                                   
Net earnings from continuing operations        $  22.0             $ 8.9
                                                                   
Loss from discontinued operations, net of      —                   (15.7     )
tax (1)
Loss on disposal of discontinued               (1.3        )       —         
operations, net of tax
                                                                   
Net earnings (loss)                            $  20.7             $ (6.8    )
                                                                   
Net (earnings) loss attributable to            0.3                (0.1      )
noncontrolling interests
                                                                   
Net earnings (loss) attributable to            $  21.0            $ (6.9    )
Quad/Graphics common shareholders
                                                                   
Earnings (loss) per share attributable to
Quad/Graphics common shareholders:
Basic:
Continuing operations                          $  0.43             $ 0.19
Discontinued operations                        (0.03       )       (0.34     )
Earnings (loss) per share attributable to      $  0.40            $ (0.15   )
Quad/Graphics common shareholders
                                                                   
Diluted:
Continuing operations                          $  0.42             $ 0.19
Discontinued operations                        (0.03       )       (0.34     )
Earnings (loss) per share attributable to      $  0.39            $ (0.15   )
Quad/Graphics common shareholders
                                                                   
Weighted average number of common shares
outstanding:
Basic                                          46.8               46.8      
Diluted                                        47.3               46.8      

______________________________

(1) Includes the results of the Canadian operations prior to the March1, 2012
sale. Net earnings from continuing operations and its components exclude the
Canadian operations.



QUAD/GRAPHICS,INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2012 and 2011
(in millions, except per share data)
(UNAUDITED)
                                                
                                                   Year Ended December 31,
                                                   2012          2011
Net sales                                          $ 4,094.0       $ 4,324.6
                                                                   
Cost of sales                                      3,183.5         3,302.1
Selling, general and administrative expenses       347.1           407.0
Depreciation and amortization                      338.6           344.6
Restructuring, impairment and                      118.3          114.0     
transaction-related charges
Total operating expenses                           3,987.5         4,167.7
                                                                   
Operating income from continuing operations        $ 106.5         $ 156.9
                                                                   
Interest expense                                   84.0            108.0
Loss on debt extinguishment                        —              34.0      
                                                                   
Earnings from continuing operations before
income taxes and equity in earnings of             22.5            14.9
unconsolidated entities
                                                                   
Income tax expense (benefit)                       (31.5     )     26.0      
                                                                   
Earnings (loss) from continuing operations
before equity in earnings of unconsolidated        54.0            (11.1     )
entities
                                                                   
Equity in earnings of unconsolidated entities      2.3            3.1       
                                                                   
Net earnings (loss) from continuing operations     $ 56.3          $ (8.0    )
                                                                   
Loss from discontinued operations, net of tax      (3.2      )     (38.6     )
(1)
Gain on disposal of discontinued operations,       34.0           —         
net of tax
                                                                   
Net earnings (loss)                                $ 87.1          $ (46.6   )
                                                                   
Net (earnings) loss attributable to                0.3            (0.3      )
noncontrolling interests
                                                                   
Net earnings (loss) attributable to                $ 87.4         $ (46.9   )
Quad/Graphics common shareholders
                                                                   
Earnings (loss) per share attributable to
Quad/Graphics common shareholders
Basic:
Continuing operations                              $ 1.14          $ (0.18   )
Discontinued operations                            0.66           (0.82     )
Earnings (loss) per share attributable to          $ 1.80         $ (1.00   )
Quad/Graphics common shareholders
                                                                   
Diluted:
Continuing operations                              $ 1.13          $ (0.18   )
Discontinued operations                            0.65           (0.82     )
Earnings (loss) per share attributable to          $ 1.78         $ (1.00   )
Quad/Graphics common shareholders
                                                                   
Weighted average number of common shares
outstanding:
Basic                                              46.8           47.1      
Diluted                                            47.2           47.1      

______________________________

(1) Includes the results of the Canadian operations prior to the March1, 2012
sale. Net earnings (loss) from continuing operations and its components
exclude the Canadian operations.



QUAD/GRAPHICS,INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended December 31, 2012 and 2011
(in millions, except per share data)
(UNAUDITED)
                                                                 
                        Three Months Ended December 31,               Three Months Ended December 31,
                        2012                                          2011
                                       Discontinued   Continuing                     Discontinued   Continuing
                        Consolidated  Operations    Operations      Consolidated  Operations    Operations
                                       (1)                                           (1)
                                                                                                    
Net sales               $  1,130.5     $  —           $ 1,130.5       $  1,310.0     $  94.4        $ 1,215.6
                                                                                                    
Cost of sales           871.7          —              871.7           999.9          78.5           921.4
Selling, general
and administrative      87.2           —              87.2            114.6          6.1            108.5
expenses
Depreciation and        86.0           —              86.0            89.4           0.7            88.7
amortization
Restructuring,
impairment and          30.5          —             30.5           52.6          20.7          31.9      
transaction-related
charges
Total operating         1,075.4        —              1,075.4         1,256.5        106.0          1,150.5
expenses
                                                                                                    
Operating income        $  55.1        $  —           $ 55.1          $  53.5        $  (11.6  )    $ 65.1
(loss)
                                                                                                    
Interest expense        20.2          —             20.2           23.3          (0.2      )    23.5      
(income)
                                                                                                    
Earnings (loss)
before income taxes
and equity in           34.9           —              34.9            30.2           (11.4     )    41.6
earnings of
unconsolidated
entities
                                                                                                    
Income tax expense      14.5          —             14.5           38.4          4.3           34.1      
                                                                                                    
Earnings (loss)
before equity in
earnings of             20.4           —              20.4            (8.2       )   (15.7     )    7.5
unconsolidated
entities
                                                                                                    
Equity in earnings
of unconsolidated       1.6            —              1.6             1.4            —              1.4
entities
Loss on disposal of
discontinued            (1.3       )   (1.3      )    —              —             —             —         
operations, net of
tax
                                                                                                    
Net earnings (loss)     $  20.7        $  (1.3   )    $ 22.0          $  (6.8    )   $  (15.7  )    $ 8.9
                                                                                                    
Net (earnings) loss
attributable to         0.3           —             0.3            (0.1       )   —             (0.1      )
noncontrolling
interests
                                                                                                    
Net earnings (loss)
attributable to         $  21.0       $  (1.3   )    $ 22.3         $  (6.9    )   $  (15.7  )    $ 8.8     
Quad/Graphics
common shareholders
                                                                                                    
Earnings (loss) per
share attributable
to Quad/Graphics
common
shareholders:
Basic                   $  0.40       $  (0.03  )    $ 0.43         $  (0.15   )   $  (0.34  )    $ 0.19    
Diluted                 $  0.39       $  (0.03  )    $ 0.42         $  (0.15   )   $  (0.34  )    $ 0.19    
                                                                                                    
Weighted average
number of common
shares outstanding:
Basic                   46.8          46.8          46.8           46.8          46.8          46.8      
Diluted                 47.3          47.3          47.3           46.8          46.8          46.8      

______________________________

(1) The Canadian operations sold on March1, 2012 are presented as
discontinued operations. This schedule is presented to provide the full income
statement for consolidated, discontinued and continuing results of operations.



QUAD/GRAPHICS,INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2012 and 2011
(in millions, except per share data)
(UNAUDITED)
                                                                 
                        Year Ended December 31,                       Year Ended December 31,
                        2012                                          2011
                                       Discontinued   Continuing                     Discontinued   Continuing
                        Consolidated  Operations    Operations      Consolidated  Operations    Operations
                                       (1)                                           (1)
                                                                                                    
Net sales               $  4,126.2     $   32.2       $ 4,094.0       $  4,668.5     $  343.9       $ 4,324.6
                                                                                                    
Cost of sales           3,214.3        30.8           3,183.5         3,592.0        289.9          3,302.1
Selling, general
and administrative      350.0          2.9            347.1           441.5          34.5           407.0
expenses
Depreciation and        338.6          —              338.6           353.0          8.4            344.6
amortization
Restructuring,
impairment and          120.0         1.7           118.3          159.1         45.1          114.0     
transaction-related
charges
Total operating         4,022.9        35.4           3,987.5         4,545.6        377.9          4,167.7
expenses
                                                                                                    
Operating income        $  103.3       $   (3.2  )    $ 106.5         $  122.9       $  (34.0  )    $ 156.9
(loss)
                                                                                                    
Interest expense        84.0           —              84.0            108.2          0.2            108.0
Loss on debt            —             —             —              34.0          —             34.0      
extinguishment
                                                                                                    
Earnings (loss)
before income taxes
and equity in           19.3           (3.2      )    22.5            (19.3      )   (34.2     )    14.9
earnings of
unconsolidated
entities
                                                                                                    
Income tax expense      (31.5      )   —             (31.5     )     30.4          4.4           26.0      
(benefit)
                                                                                                    
Earnings (loss)
before equity in
earnings of             50.8           (3.2      )    54.0            (49.7      )   (38.6     )    (11.1     )
unconsolidated
entities
                                                                                                    
Equity in earnings
of unconsolidated       2.3            —              2.3             3.1            —              3.1
entities
Gain on disposal of
discontinued            34.0          34.0          —              —             —             —         
operations, net of
tax
                                                                                                    
Net earnings (loss)     $  87.1        $   30.8       $ 56.3          $  (46.6   )   $  (38.6  )    $ (8.0    )
                                                                                                    
Net (earnings) loss
attributable to         0.3           —             0.3            (0.3       )   —             (0.3      )
noncontrolling
interests
                                                                                                    
Net earnings (loss)
attributable to         $  87.4       $   30.8      $ 56.6         $  (46.9   )   $  (38.6  )    $ (8.3    )
Quad/Graphics
common shareholders
                                                                                                    
Earnings (loss) per
share attributable
to Quad/Graphics
common shareholders
Basic                   $  1.80       $   0.66      $ 1.14         $  (1.00   )   $  (0.82  )    $ (0.18   )
Diluted                 $  1.78       $   0.65      $ 1.13         $  (1.00   )   $  (0.82  )    $ (0.18   )
                                                                                                    
Weighted average
number of common
shares outstanding:
Basic                   46.8          46.8          46.8           47.1          47.1          47.1      
Diluted                 47.2          47.2          47.2           47.1          47.1          47.1      

______________________________

(1) The Canadian operations sold on March1, 2012 are presented as
discontinued operations. This schedule is presented to provide the full income
statement for consolidated, discontinued and continuing results of operations.



QUAD/GRAPHICS,INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
As of December 31, 2012 and 2011
(in millions)
(UNAUDITED)
                                                        
                                       December 31, 2012     December 31, 2011
ASSETS
Cash and cash equivalents              $   16.9              $   25.6
Receivables, less allowances for       585.1                 656.1
doubtful accounts
Inventories                            242.9                 249.5
Prepaid expenses and other current     74.6                  142.3
assets
Deferred income taxes                  55.7                  86.7
Short-term restricted cash             14.8                  8.5
Current assets of discontinued         —                    72.6          
operations (1)
Total current assets                   990.0                1,241.3       
                                                             
Property, plant and equipment—net      1,926.4               2,123.3
Goodwill                               768.6                 787.1
Other intangible assets—net            229.9                 295.6
Long-term restricted cash              45.7                  67.4
Equity method investments in           72.0                  69.4
unconsolidated entities
Other long-term assets                 66.3                  46.2
Long-term assets of discontinued       —                    104.9         
operations (1)
Total assets                           $   4,098.9          $   4,735.2   
                                                             
LIABILITIES AND SHAREHOLDERS'
EQUITY
Accounts payable                       $   285.8             $   301.9
Amounts owing in satisfaction of       9.3                   19.5
bankruptcy claims
Accrued liabilities                    334.0                 393.9
Purchase price payable on business     —                     62.4
exchange transaction
Short-term debt and current            113.3                 82.1
portion of long-term debt
Current portion of capital lease       10.4                  20.7
obligations
Current liabilities of                 —                    48.4          
discontinued operations (1)
Total current liabilities              752.8                928.9         
                                                             
Long-term debt                         1,211.7               1,342.8
Unsecured notes to be issued           23.8                  38.7
Capital lease obligations              15.3                  24.9
Deferred income taxes                  363.9                 471.9
Other long-term liabilities            495.7                 521.5
Long-term liabilities of               —                    99.6          
discontinued operations (1)
Total liabilities                      2,863.2               3,428.3
                                                             
Redeemable equity                      —                     3.5
                                                             
Quad/Graphics common stock and
other equity
Preferred stock                        —                     —
Common stock                           1.4                   1.4
Additional paid-in capital             985.6                 984.2
Treasury stock, at cost                (279.3        )       (295.4        )
Retained earnings                      588.1                 650.2
Accumulated other comprehensive        (60.4         )       (37.7         )
loss
Quad/Graphics common stock and         1,235.4               1,302.7
other equity
                                                             
Noncontrolling interests               0.3                  0.7           
                                                             
Total common stock and other
equity and noncontrolling              1,235.7              1,303.4       
interests
                                                             
Total liabilities and                  $   4,098.9          $   4,735.2   
shareholders' equity

______________________________

(1) December 31, 2011 balance sheet includes the assets and liabilities of the
Canadian operations sold on March1, 2012.



QUAD/GRAPHICS,INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2012 and 2011
(in millions)
(UNAUDITED)
                                                    
                                                       Year Ended December 31,
                                                       2012        2011
OPERATING ACTIVITIES
Net earnings (loss)                                    $  87.1       $ (46.6 )
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Depreciation and amortization                          338.6         353.0
Impairment and other non-cash integration charges      23.0          27.7
Loss on debt extinguishment                            —             34.0
Deferred income taxes                                  (13.6   )     36.5
Gain on disposal of discontinued operations, net       (34.0   )     —
of tax
Other non-cash adjustments to net earnings (loss)      2.8           27.2
Changes in operating assets and liabilities—net of     (49.7   )     (60.7   )
acquisitions
                                                                     
Net Cash Provided by Operating Activities              354.2        371.1   
                                                                     
INVESTING ACTIVITIES
Purchases of property, plant and equipment             (103.5  )     (168.3  )
Investment in ManipalTech                              (18.1   )     —
Proceeds from the sale of property, plant and          23.5          16.0
equipment
Transfers from restricted cash                         15.4          24.6
Deposit paid related to Vertis acquisition             (25.9   )     —
Deposit refunded (paid) related to business            50.0          (50.8   )
exchange transaction
Purchase price payments on business exchange           (4.9    )     —
transaction
Acquisition of businesses—net of cash acquired         (6.6    )     (5.8    )
                                                                     
Net Cash Used in Investing Activities                  (70.1   )     (184.3  )
                                                                     
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt               —             649.0
Payments of long-term debt                             (74.6   )     (759.7  )
Payments of capital lease obligations                  (21.0   )     (15.6   )
Borrowings on revolving credit facilities              270.3         896.4
Payments on revolving credit facilities                (295.7  )     (879.6  )
Payment of debt issuance costs                         (2.1    )     (11.5   )
Bankruptcy claim payments on unsecured notes to be     (14.9   )     (13.8   )
issued
Proceeds from issuance of common stock                 0.1           1.6
Purchase of treasury stock                             —             (8.2    )
Tax benefit on exercise of stock options               —             0.9
Tax benefit on dividends paid on outstanding stock     4.1           —
options
Payment of cash dividends                              (151.8  )     (28.2   )
Payment of tax distributions                           —            (4.8    )
                                                                     
Net Cash Used in Financing Activities                  (285.6  )     (173.5  )
                                                                     
Effect of exchange rates on cash and cash              (7.2    )     (8.2    )
equivalents
                                                                     
Net (Decrease) Increase in Cash and Cash               (8.7    )     5.1     
Equivalents
                                                                     
Cash and Cash Equivalents at Beginning of Year         25.6         20.5    
                                                                     
Cash and Cash Equivalents at End of Year               $  16.9      $ 25.6  
                                                                             

The condensed consolidated statements of cash flows include the cash flows of
the Canadian operations prior to the March1, 2012 sale.



QUAD/GRAPHICS,INC.
SEGMENT FINANCIAL INFORMATION
For the Three Months and Years Ended December 31, 2012 and 2011
(in millions)
(UNAUDITED)
                                                  
                                                           Restructuring,

                                         Operating         Impairment and
                         Net Sales
                                         Income/(Loss)     Transaction-Related

                                                           Charges
Three months
ended December
31, 2012
United States
Print and                $ 1,003.2       $   77.3          $       19.4
Related Services
International            127.3          (4.3       )      3.6
Total operating          1,130.5         73.0              23.0
segments
Corporate                —              (17.9      )      7.5
Total                    $ 1,130.5      $   55.1         $       30.5
                                                           
Three months
ended December
31, 2011
United States
Print and                $ 1,072.9       $   91.4          $       17.3
Related Services
International            142.7          (3.8       )      2.3
Total operating          1,215.6         87.6              19.6
segments
Corporate                —              (22.5      )      12.3
Total                    $ 1,215.6      $   65.1         $       31.9
                                                           
Year ended
December 31,
2012
United States
Print and                $ 3,597.9       $   216.5         $       48.5
Related Services
International            496.1          (24.8      )      26.3
Total operating          4,094.0         191.7             74.8
segments
Corporate                —              (85.2      )      43.5
Total                    $ 4,094.0      $   106.5        $       118.3
                                                           
Year ended
December 31,
2011
United States
Print and                $ 3,826.1       $   271.6         $       55.3
Related Services
International            498.5          (19.4      )      7.3
Total operating          4,324.6         252.2             62.6
segments
Corporate                —              (95.3      )      51.4
Total                    $ 4,324.6      $   156.9        $       114.0
                                                                   

Results from the Canadian operations sold on March1, 2012 are excluded from
the segment financial information presented above.

Restructuring, impairment and transaction-related charges are included in
Operating Income/(Loss) above.



QUAD/GRAPHICS,INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin
For the Three Months Ended December 31, 2012 and 2011
(in millions)
(UNAUDITED)
                                          
                                               Three Months Ended December 31,
                                               2012             2011
Net earnings (loss) attributable to            $  21.0            $  (6.9   )
Quad/Graphics common shareholders
                                                                  
Interest expense                               20.2               23.5
Income tax expense                             14.5               34.1
Depreciation and amortization                  86.0              88.7      
                                                                  
EBITDA (Non-GAAP)                              $  141.7           $  139.4
EBITDA Margin (Non-GAAP)                       12.5      %        11.5      %
                                                                  
Restructuring, impairment and                  30.5               31.9
transaction-related charges (1)
Loss from discontinued operations, net         —                  15.7
of tax
Loss on disposal of discontinued               1.3               —         
operations, net of tax
                                                                  
Adjusted EBITDA from continuing                $  173.5          $  187.0  
operations (Non-GAAP)
Adjusted EBITDA Margin from continuing         15.3      %        15.4      %
operations (Non-GAAP)
                                                                  
Adjusted EBITDA from discontinued              $  —              $  9.8    
operations (Non-GAAP) (2)
Adjusted EBITDA Margin from                    —         %        10.4      %
discontinued operations (Non-GAAP) (2)
                                                                  
Adjusted EBITDA – consolidated                 $  173.5          $  196.8  
(Non-GAAP)
Adjusted EBITDA Margin – consolidated          15.3      %        15.0      %
(Non-GAAP)

______________________________

(1) Operating results from continuing operations for the three months ended
December31, 2012 and 2011 were affected by the following restructuring,
impairment and transaction-related charges:

                                            
                                               Three Months Ended December 31,
                                               2012              2011
Employee termination charges (a)               $   5.2             $  10.3
Impairment charges (b)                         8.5                 9.8
Transaction-related charges (c)                1.3                 1.0
Integration costs (d)                          8.0                 18.9
Gain on collection of note receivable (e)      —                   (8.5     )
Other restructuring charges, net (f)           7.5                0.4      
Restructuring, impairment and
transaction-related charges from               $   30.5           $  31.9  
continuing operations

______________________________

(a) Employee termination charges were related to workforce reductions through
facility consolidations and involuntary separation programs.

(b) Impairment charges were for certain buildings and equipment no longer
being utilized in production as a result of facility consolidations.

(c) Transaction-related charges consisted of professional service fees related
to business acquisition and divestiture activities.

(d) Integration costs were primarily related to preparing existing facilities
to meet new production requirements resulting from work transferring from
closed plants, as well as other costs related to the integration of the
acquired companies.

(e) Gain on the collection of a note receivable for the three months ended
December31, 2011 was related to the June 2008 sale of Worldcolor's European
operations. This non-recurring gain was excluded from the calculation of
Adjusted EBITDA.

(f) Other restructuring charges, net, were primarily from costs to maintain
and exit closed facilities, as well as lease exit charges. Other restructuring
charges, net, in the three months ended December31, 2011, are presented net
of a $7.0million pension curtailment gain. This non-recurring gain was
excluded from the calculation of Adjusted EBITDA.

(2) Includes the Adjusted EBITDA and Adjusted EBITDA Margin for the Canadian
operations sold on March1, 2012, calculated in a consistent manner with the
calculation above for Adjusted EBITDA and Adjusted EBITDA Margin from
continuing operations.

In addition to financial measures prepared in accordance with generally
accepted accounting principles (GAAP), this earnings announcement also
contains non-GAAP financial measures, specifically EBITDA, EBITDA Margin,
Adjusted EBITDA, Adjusted EBITDA Margin, Recurring Free Cash Flow and Adjusted
Diluted Earnings Per Share. They are presented to provide additional
information regarding Quad/Graphics' performance and because they are
important measures by which Quad/Graphics assesses the profitability and
liquidity of its business. These measures should not be considered
alternatives to net earnings (loss) as a measure of operating performance or
to cash flows provided by operating activities as a measure of liquidity.



QUAD/GRAPHICS,INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin
For the Years Ended December 31, 2012 and 2011
(in millions)
(UNAUDITED)
                                                   
                                                      Year Ended December 31,
                                                      2012         2011
Net earnings (loss) attributable to Quad/Graphics     $ 87.4         $ (46.9 )
common shareholders
                                                                     
Interest expense                                      84.0           108.0
Income tax expense (benefit)                          (31.5   )      26.0
Depreciation and amortization                         338.6         344.6   
                                                                     
EBITDA (Non-GAAP)                                     $ 478.5        $ 431.7
EBITDA Margin (Non-GAAP)                              11.7    %      10.0    %
                                                                     
Restructuring, impairment and transaction-related     118.3          114.0
charges (1)
Loss on debt extinguishment                           —              34.0
Loss from discontinued operations, net of tax         3.2            38.6
Gain on disposal of discontinued operations, net      (34.0   )      —       
of tax
                                                                     
Adjusted EBITDA from continuing operations            $ 566.0       $ 618.3 
(Non-GAAP)
Adjusted EBITDA Margin from continuing operations     13.8    %      14.3    %
(Non-GAAP)
                                                                     
Adjusted EBITDA from discontinued operations          $ (1.5  )      $ 19.5  
(Non-GAAP) (2)
Adjusted EBITDA Margin from discontinued              (4.7    )%     5.7     %
operations (Non-GAAP) (2)
                                                                     
Adjusted EBITDA – consolidated (Non-GAAP)             $ 564.5       $ 637.8 
Adjusted EBITDA Margin – consolidated (Non-GAAP)      13.7    %      13.7    %

______________________________

(1) Operating results from continuing operations for the years ended
December31, 2012 and 2011 were affected by the following restructuring,
impairment and transaction-related charges:

                                                    
                                                       Year Ended December 31,
                                                       2012        2011
Employee termination charges (a)                       $ 27.2        $ 29.5
Impairment charges (b)                                 23.0          13.8
Transaction-related charges (c)                        4.1           2.9
Integration costs (d)                                  44.6          61.3
Gain on collection of note receivable (e)              (2.4    )     (15.6   )
Other restructuring charges, net (f)                   21.8         22.1    
Restructuring, impairment and transaction-related      $ 118.3      $ 114.0 
charges from continuing operations

__________________________________

(a) Employee termination charges were related to workforce reductions through
facility consolidations and involuntary separation programs.

(b) Impairment charges were for certain buildings and equipment no longer
being utilized in production as a result of facility consolidations.

(c) Transaction-related charges consisted of professional service fees related
to business acquisition and divestiture activities.

(d) Integration costs were primarily related to preparing existing facilities
to meet new production requirements resulting from work transferring from
closed plants, as well as other costs related to the integration of the
acquired companies.

(e) Gain on the collection of a note receivable for the year ended
December31, 2012, was related to a settlement of a disputed pre-acquisition
Worldcolor note receivable. Gain on the collection of a note receivable for
the year ended December31, 2011, was related to the June 2008 sale of
Worldcolor's European operations. These non-recurring gains were excluded from
the calculation of Adjusted EBITDA.

(f) Other restructuring charges, net, were primarily from costs to maintain
and exit closed facilities, as well as lease exit charges. Other restructuring
charges, net, are presented net of pension and postretirement curtailment
gains of $12.8million and $7.0million for the years ended December31, 2012
and 2011, respectively. These non-recurring gains were excluded from the
calculation of Adjusted EBITDA.

(2) Includes the Adjusted EBITDA and Adjusted EBITDA Margin for the Canadian
operations sold on March1, 2012, calculated in a consistent manner with the
calculation above for Adjusted EBITDA and Adjusted EBITDA Margin from
continuing operations.

In addition to financial measures prepared in accordance with generally
accepted accounting principles (GAAP), this earnings announcement also
contains non-GAAP financial measures, specifically EBITDA, EBITDA Margin,
Adjusted EBITDA, Adjusted EBITDA Margin, Recurring Free Cash Flow and Adjusted
Diluted Earnings Per Share. They are presented to provide additional
information regarding Quad/Graphics' performance and because they are
important measures by which Quad/Graphics assesses the profitability and
liquidity of its business. These measures should not be considered
alternatives to net earnings (loss) as a measure of operating performance or
to cash flows provided by operating activities as a measure of liquidity.



QUAD/GRAPHICS,INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
RECURRING FREE CASH FLOW
For the Years Ended December 31, 2012 and 2011
(in millions)
(UNAUDITED)
                                                  
                                                       Year Ended December 31,
                                                       2012        2011
Net cash provided by operating activities              $ 354.2       $ 371.1
                                                                     
Add back non-recurring payments:
Restructuring payments, net (1)                        113.4         125.2
Worldcolor bankruptcy payments                         10.4         12.4    
                                                                     
Recurring cash flows provided by operating             478.0         508.7
activities
                                                                     
Less: purchases of property, plant and                 (103.5  )     (168.3  )
equipment
                                                                     
Recurring Free Cash Flow                               $ 374.5      $ 340.4 

______________________________

(1) Restructuring payments are shown net of cash receipts related to
non-recurring restructuring transactions. For the year ended December31,
2012, restructuring payments were $128.1million (consisting of $127.2million
in payments for continuing operations and $0.9million for Canadian
discontinued operations) and were reduced for a $14.7million non-recurring
collection of a disputed pre-acquisition Worldcolor note receivable. For the
year ended December31, 2011 restructuring payments are shown net of a
$15.6million gain on the collection of a note receivable for the June 2008
sale of Worldcolor's European operations.

Recurring Free Cash Flow includes the amounts from the Canadian operations
prior to the March1, 2012 sale.

In addition to financial measures prepared in accordance with generally
accepted accounting principles (GAAP), this earnings announcement also
contains non-GAAP financial measures, specifically EBITDA, EBITDA Margin,
Adjusted EBITDA, Adjusted EBITDA Margin, Recurring Free Cash Flow and Adjusted
Diluted Earnings Per Share. They are presented to provide additional
information regarding Quad/Graphics' performance and because they are
important measures by which Quad/Graphics assesses the profitability and
liquidity of its business. These measures should not be considered
alternatives to net earnings (loss) as a measure of operating performance or
to cash flows provided by operating activities as a measure of liquidity.



QUAD/GRAPHICS,INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
Adjusted Diluted Earnings Per Share
For the Three Months Ended December 31, 2012 and 2011
(in millions, except per share data)
(UNAUDITED)
                                            
                                               Three Months Ended December 31,
                                               2012              2011
Earnings from continuing operations before
income taxes and equity in earnings of         $   34.9            $  41.6
unconsolidated entities
                                                                   
Restructuring, impairment and                  30.5               31.9     
transaction-related charges
                                               65.4                73.5
                                                                   
Income tax expense at 40% normalized tax       26.2               29.4     
rate
                                               39.2                44.1
                                                                   
Equity in earnings of unconsolidated           1.6                 1.4
entities
Net (earnings) loss attributable to            0.3                (0.1     )
noncontrolling interests
                                                                   
Adjusted net earnings from continuing          $   41.1           $  45.4  
operations (Non-GAAP)
                                                                   
Basic weighted average number of common        46.8                46.8
shares outstanding
Plus: effect of dilutive equity incentive      0.5                0.2      
instruments (Non-GAAP in 2011)
Diluted weighted average number of common      47.3               47.0     
shares outstanding (Non-GAAP in 2011)
                                                                   
Adjusted Diluted Earnings Per Share From       $   0.87           $  0.97  
Continuing Operations (Non-GAAP) (1)
                                                                   
                                                                   
Diluted Earnings Per Share From Continuing     $   0.42            $  0.19
Operations (GAAP)
Restructuring, impairment and                  0.64                0.68
transaction-related charges per share
Income tax expense from condensed
consolidated statement of operations per       0.31                0.73
share
Income tax expense at 40% normalized tax       (0.55      )        (0.63    )
rate per share
Allocation to participating securities per     0.05               —        
share (2)
Adjusted Diluted Earnings Per Share From       $   0.87           $  0.97  
Continuing Operations (Non-GAAP)

______________________________

(1) Adjusted Diluted Earnings Per Share excludes: (i)the results of the
Canadian discontinued operations, (ii)the loss on disposal of the Canadian
discontinued operations, (iii)restructuring, impairment and transaction
related charges and (iv)discrete income tax items.

(2) Represents the impact of dividends distributed to non-vested stock option
holders in accordance with the two-class method of calculating GAAP earnings
per share.

In addition to financial measures prepared in accordance with generally
accepted accounting principles (GAAP), this earnings announcement also
contains non-GAAP financial measures, specifically EBITDA, EBITDA Margin,
Adjusted EBITDA, Adjusted EBITDA Margin, Recurring Free Cash Flow and Adjusted
Diluted Earnings Per Share. They are presented to provide additional
information regarding Quad/Graphics' performance and because they are
important measures by which Quad/Graphics assesses the profitability and
liquidity of its business. These measures should not be considered
alternatives to net earnings (loss) as a measure of operating performance or
to cash flows provided by operating activities as a measure of liquidity.

                                                    
                                                       
QUAD/GRAPHICS,INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
Adjusted Diluted Earnings Per Share
For the Years Ended December 31, 2012 and 2011
(in millions, except per share data)
(UNAUDITED)
                                                       
                                                       Year Ended December 31,
                                                       2012        2011
Earnings from continuing operations before income
taxes and equity in earnings of unconsolidated         $  22.5       $ 14.9
entities
                                                                     
Restructuring, impairment and transaction-related      118.3         114.0
charges
Loss on debt extinguishment                            —            34.0    
                                                       140.8         162.9
                                                                     
Income tax expense at 40% normalized tax rate          56.3         65.2    
                                                       84.5          97.7
                                                                     
Equity in earnings of unconsolidated entities          2.3           3.1
Net (earnings) loss attributable to noncontrolling     0.3          (0.3    )
interests
                                                                     
Adjusted net earnings from continuing operations       $  87.1      $ 100.5 
(Non-GAAP)
                                                                     
Basic weighted average number of common shares         46.8          47.1
outstanding
Plus: effect of dilutive equity incentive              0.4          0.5     
instruments (Non-GAAP in 2011)
Diluted weighted average number of common shares       47.2         47.6    
outstanding (Non-GAAP in 2011)
                                                                     
Adjusted Diluted Earnings Per Share From               $  1.85      $ 2.11  
Continuing Operations (Non-GAAP) (1)
                                                                     
                                                                     
Diluted Earnings (Loss) Per Share From Continuing      $  1.13       $ (0.18 )
Operations (GAAP)
Restructuring, impairment and transaction-related      2.51          2.39
charges per share
Loss on debt extinguishment per share                  —             0.71
Income tax expense (benefit) from condensed            (0.67   )     0.55
consolidated statement of operations per share
Income tax expense at 40% normalized tax rate per      (1.19   )     (1.37   )
share
Allocation to participating securities per share       0.07          —
(2)
GAAP to Non-GAAP diluted impact per share              —            0.01    
Adjusted Diluted Earnings Per Share From               $  1.85      $ 2.11  
Continuing Operations (Non-GAAP)

______________________________

(1) Adjusted Diluted Earnings Per Share excludes: (i)the results of the
Canadian discontinued operations, (ii) the gain on disposal of the Canadian
discontinued operations, (iii) restructuring, impairment and transaction
related charges, (iv) the loss on debt extinguishment and (v) discrete income
tax items.

(2) Represents the impact of dividends distributed to non-vested stock option
holders in accordance with the two-class method of calculating GAAP earnings
per share.

In addition to financial measures prepared in accordance with generally
accepted accounting principles (GAAP), this earnings announcement also
contains non-GAAP financial measures, specifically EBITDA, EBITDA Margin,
Adjusted EBITDA, Adjusted EBITDA Margin, Recurring Free Cash Flow and Adjusted
Diluted Earnings Per Share. They are presented to provide additional
information regarding Quad/Graphics' performance and because they are
important measures by which Quad/Graphics assesses the profitability and
liquidity of its business. These measures should not be considered
alternatives to net earnings (loss) as a measure of operating performance or
to cash flows provided by operating activities as a measure of liquidity.

Contact:

Investor Relations Contact:
Kelly Vanderboom
Vice President and Treasurer, Quad/Graphics
414-566-2464
Kelly.Vanderboom@qg.com
or
Media Contact:
Claire Ho
Director of Corporate Communications, Quad/Graphics
414-566-2955
Claire.Ho@qg.com