Quad/Graphics Reports Third Quarter and Year-to-Date September 2013 Results

  Quad/Graphics Reports Third Quarter and Year-to-Date September 2013 Results

Company Reaffirms 2013 Recurring Free Cash Flow in Excess of $360million

Third Quarter Highlights:

  *Generated Net Sales of $1.2billion.
  *Achieved Adjusted EBITDA of $154million.
  *Reaffirms 2013 guidance for Recurring Free Cash Flow in excess of
    $360million.
  *Narrows 2013 guidance for Net Sales to approximately $4.8billion, and
    Adjusted EBITDA to approximately $580million.
  *Approves quarterly dividend of $0.30 per share.

Business Wire

SUSSEX, Wis. -- November 5, 2013

Quad/Graphics, Inc. (NYSE: QUAD) (“Quad/Graphics” or the “Company”) today
reported results for its third quarter ending September30, 2013. The reported
results include Vertis Holdings, Inc. (“Vertis”) from the day of acquisition
on January 16, 2013. Prior year financial results do not include the
acquisition of Vertis. For full financial results, including reconciliations
of non-GAAP financial measures, please see the accompanying information.

“We are pleased to reaffirm annual guidance for Recurring Free Cash Flow,
which is the foundation of our strong balance sheet and supports our
disciplined capital deployment strategy,” said Joel Quadracci, Quad/Graphics
Chairman, President & CEO. “Third-quarter volumes across our U.S. platform
were as expected, but our results were adversely impacted by ongoing industry
pressures, economic and political challenges in Latin America and a
slower-than-expected turnaround in the underlying Vertis business. That said,
the integration is going well and we remain confident in our process to drive
future cost-savings, and improve the efficiency and productivity of our
platform. Overall, we remain pleased with our strategic decision to acquire
Vertis as we believe it will provide long-term value for our clients and
shareholders.”

Net Sales for the third quarter 2013 increased to $1.2billion versus
$1.0billion for the same period in 2012 primarily due to the Vertis
acquisition. Third quarter 2013 Adjusted EBITDA was $154million as compared
to $155million for the same period in 2012, and Adjusted EBITDA margin was
12.8% as compared to 14.9% for the same period in 2012. These results
primarily reflect Vertis’ historically lower margin profile compared to
Quad/Graphics’ core business as well as ongoing volume and pricing pressures.

For the first nine months of 2013, Net Sales were $3.4billion versus
$3.0billion for the same period in 2012. Year-to-date Adjusted EBITDA was
$379million versus $393million in 2012, and Adjusted EBITDA margin was 11.0%
as compared to 13.2% for the same period in 2012. Recurring Free Cash Flow was
$178million for the first nine months of 2013 compared to $220million for
the same period in 2012 due to increased capital expenditures and lower net
cash earnings during 2013.

“Our strong Recurring Free Cash Flow will allow us to continue to pay down
debt and pension liabilities, invest in our business and pursue opportunities
that will drive future value,” said John Fowler, Quad/Graphics Executive Vice
President and Chief Financial Officer. “Further, given that we are now through
the third quarter, we feel comfortable narrowing the guidance for Net Sales
and Adjusted EBITDA. We currently forecast full-year 2013 Net Sales to be
approximately $4.8billion, narrowed from a prior guidance range of
$4.8billion to $5.0billion, and full-year 2013 Adjusted EBITDA to be
approximately $580million, narrowed from a prior guidance range of
$580million to $610million.”

Fowler continued, “Our quarter-end leverage ratio of 2.69x reflects the impact
of the Vertis acquisition and our peak season for working capital. However, we
expect to achieve a leverage ratio of approximately 2.5x by yearend. We
continue to believe that operating in the 2.0x to 2.5x leverage range is the
appropriate target, but at times, like this quarter, we may go above that
range given economic changes, working capital seasonality, timing of
investments and growth opportunities. As always, we are committed to our
priorities to maintain a strong and flexible balance sheet; invest in our
business; pursue profitable investment opportunities; and create long-term
value for our shareholders and clients.”

Quad/Graphics’ quarterly dividend of $0.30 per share will be payable on
December 20, 2013, to shareholders of record as of December 9, 2013.

Quarterly Conference Call

Quad/Graphics (NYSE: QUAD) will hold a conference call at 10 a.m. ET / 9 a.m.
CT on Wednesday, November 6, to discuss third quarter 2013 results. To access
the conference call, it is recommended that you listen via computer at:
http://us.meeting-stream.com/quadgraphics_110613.

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: 35656803

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 35656803. To access the replay via the
internet, please use the following link:
http://us.meeting-stream.com/quadgraphics_110613. 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 September 30, 2013 and 2012
(in millions, except per share data)
(UNAUDITED)
                                              
                                              Three Months Ended September 30,
                                              2013             2012
Net sales                                     $  1,206.0        $  1,039.7
                                                                
Cost of sales                                 950.2             798.1
Selling, general and administrative           101.6             87.3
expenses
Depreciation and amortization                 82.0              83.3
Restructuring, impairment and                 27.8             11.9        
transaction-related charges
Total operating expenses                      1,161.6           980.6
                                                                
Operating income                              $  44.4           $  59.1
                                                                
Interest expense                              20.9             21.7        
                                                                
Earnings before income taxes and equity in    23.5              37.4
earnings (loss) of unconsolidated entities
                                                                
Income tax expense (benefit)                  10.4             (1.9        )
                                                                
Earnings before equity in earnings (loss)     13.1              39.3
of unconsolidated entities
                                                                
Equity in earnings (loss) of unconsolidated   (0.5        )     0.4         
entities
                                                                
Net earnings                                  $  12.6           $  39.7
                                                                
Net loss attributable to noncontrolling       0.4              0.1         
interests
                                                                
Net earnings attributable to Quad/Graphics    $  13.0          $  39.8     
common shareholders
                                                                
Earnings per share attributable to
Quad/Graphics common shareholders:
Basic                                         $  0.27          $  0.85     
Diluted                                       $  0.26          $  0.84     
                                                                
Weighted average number of common shares
outstanding:
Basic                                         47.0             46.8        
Diluted                                       48.1             47.2        


QUAD/GRAPHICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30, 2013 and 2012
(in millions, except per share data)
(UNAUDITED)
                                             
                                               Nine Months Ended September 30,
                                               2013             2012
Net sales                                      $  3,446.3        $  2,963.5
                                                                 
Cost of sales                                  2,753.8           2,311.8
Selling, general and administrative expenses   312.6             259.9
Depreciation and amortization                  258.7             252.6
Restructuring, impairment and                  82.9             87.8        
transaction-related charges
Total operating expenses                       3,408.0           2,912.1
                                                                 
Operating income from continuing operations    $  38.3           $  51.4
                                                                 
Interest expense                               64.1             63.8        
                                                                 
Loss from continuing operations before
income taxes and equity in earnings (loss)     (25.8       )     (12.4       )
of unconsolidated entities
                                                                 
Income tax expense (benefit)                   1.3              (46.0       )
                                                                 
Earnings (loss) from continuing operations
before equity in earnings (loss) of            (27.1       )     33.6
unconsolidated entities
                                                                 
Equity in earnings (loss) of unconsolidated    (2.0        )     0.7         
entities
                                                                 
Net earnings (loss) from continuing            $  (29.1    )     $  34.3
operations
                                                                 
Loss from discontinued operations, net of      —                 (3.2        )
tax (1)
Gain on disposal of discontinued operations,   —                35.3        
net of tax
                                                                 
Net earnings (loss)                            $  (29.1    )     $  66.4
                                                                 
Net loss attributable to noncontrolling        0.9              —           
interests
                                                                 
Net earnings (loss) attributable to            $  (28.2    )     $  66.4     
Quad/Graphics common shareholders
                                                                 
Earnings (loss) per share attributable to
Quad/Graphics common shareholders:
Basic:
Continuing operations                          $  (0.62    )     $  0.73
Discontinued operations                        —                0.69        
Earnings (loss) per share attributable to      $  (0.62    )     $  1.42     
Quad/Graphics common shareholders
Diluted:
Continuing operations                          $  (0.62    )     $  0.73
Discontinued operations                        —                0.68        
Earnings (loss) per share attributable to      $  (0.62    )     $  1.41     
Quad/Graphics common shareholders
                                                                 
Weighted average number of common shares
outstanding:
Basic                                          46.9             46.8        
Diluted                                        46.9             47.1        

______________________________

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

                                                               
QUAD/GRAPHICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 2013 and December 31, 2012
(in millions)
(UNAUDITED)
                                                                  
                                                  September 30,   December 31,
                                                  2013            2012
ASSETS
Cash and cash equivalents                         $  20.3         $  16.9
Receivables, less allowances for doubtful         700.2           585.1
accounts
Inventories                                       311.5           242.9
Prepaid expenses and other current assets         52.9            74.6
Deferred income taxes                             67.2            55.7
Short-term restricted cash                        6.1            14.8       
Total current assets                              1,158.2        990.0      
                                                                  
Property, plant and equipment—net                 1,946.5         1,926.4
Goodwill                                          765.3           768.6
Other intangible assets—net                       202.3           229.9
Long-term restricted cash                         49.9            45.7
Equity method investments in unconsolidated       61.6            72.0
entities
Other long-term assets                            64.8           66.3       
Total assets                                      $  4,248.6     $  4,098.9 
                                                                  
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable                                  $  370.1        $  285.8
Amounts owing in satisfaction of bankruptcy       2.5             9.3
claims
Accrued liabilities                               349.8           334.0
Short-term debt and current portion of            133.7           113.3
long-term debt
Current portion of capital lease obligations      7.5            10.4       
Total current liabilities                         863.6          752.8      
                                                                  
Long-term debt                                    1,388.7         1,211.7
Unsecured notes to be issued                      18.1            23.8
Capital lease obligations                         8.1             15.3
Deferred income taxes                             373.8           363.9
Other long-term liabilities                       435.3          495.7      
Total liabilities                                 3,087.6         2,863.2
                                                                  
Quad/Graphics common stock and other equity
Preferred stock                                   —               —
Common stock                                      1.4             1.4
Additional paid-in capital                        977.2           985.6
Treasury stock, at cost                           (250.4      )   (279.3     )
Retained earnings                                 513.6           588.1
Accumulated other comprehensive loss              (80.3       )   (60.4      )
                                                                  
Quad/Graphics common stock and other equity       1,161.5         1,235.4
                                                                  
Noncontrolling interests                          (0.5        )   0.3        
                                                                  
Total common stock and other equity and           1,161.0        1,235.7    
noncontrolling interests
                                                                  
Total liabilities and shareholders' equity        $  4,248.6     $  4,098.9 


QUAD/GRAPHICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2013 and 2012
(in millions)
(UNAUDITED)
                                             
                                               Nine Months Ended September 30,
                                               2013               2012
OPERATING ACTIVITIES
Net earnings (loss)                            $   (29.1   )       $  66.4
Adjustments to reconcile net earnings (loss)
to net cash provided by operating
activities:
Depreciation and amortization                  258.7               252.6
Impairment charges                             18.5                14.5
Deferred income taxes                          (1.2        )       (21.1    )
Gain on disposal of discontinued operations,   —                   (35.3    )
net of tax
Stock-based compensation charges               13.5                10.2
Other non-cash adjustments to net earnings     5.2                 (8.7     )
(loss)
Dividends from unconsolidated entities         5.0                 0.5
Changes in operating assets and                (51.2       )       (46.9    )
liabilities—net of acquisitions
                                                                   
Net Cash Provided by Operating Activities      219.4              232.2    
                                                                   
INVESTING ACTIVITIES
Purchases of property, plant and equipment     (117.6      )       (85.3    )
Cost investment in unconsolidated entities     (2.5        )       (18.1    )
Proceeds from the sale of property, plant      6.4                 13.5
and equipment
Transfers from restricted cash                 4.5                 13.7
Deposit refunded related to business           —                   50.0
exchange transaction
Purchase price payments on business exchange   —                   (4.2     )
transaction
Acquisition of Vertis—net of cash acquired     (235.4      )       —
Acquisition of other businesses—net of cash    (1.5        )       (6.6     )
acquired
                                                                   
Net Cash Used in Investing Activities          (346.1      )       (37.0    )
                                                                   
FINANCING ACTIVITIES
Payments of long-term debt                     (73.4       )       (49.1    )
Payments of capital lease obligations          (7.9        )       (18.0    )
Borrowings on revolving credit facilities      1,225.9             95.0
Payments on revolving credit facilities        (971.8      )       (175.6   )
Bankruptcy claim payments on unsecured notes   (4.5        )       (13.3    )
to be issued
Proceeds from issuance of common stock         6.5                 0.1
Tax benefit on stock option activity           0.5                 —
Payment of cash dividends                      (42.0       )       (35.1    )
                                                                   
Net Cash Provided by (Used in) Financing       133.3              (196.0   )
Activities
                                                                   
Effect of exchange rates on cash and cash      (3.2        )       (6.2     )
equivalents
                                                                   
Net Increase (Decrease) in Cash and Cash       3.4                (7.0     )
Equivalents
                                                                   
Cash and Cash Equivalents at Beginning of      16.9               25.6     
Period
                                                                   
Cash and Cash Equivalents at End of Period     $   20.3           $  18.6  

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 and Nine Months Ended September 30, 2013 and 2012
(in millions)
(UNAUDITED)
                                                           
                                                           Restructuring,
                                                           Impairment and
                                           Operating       Transaction-Related
                             Net Sales     Income/(Loss)   Charges
Three months ended
September 30, 2013
United States Print and      $ 1,099.6     $   60.5        $      19.3
Related Services
International                106.4        —              0.6            
Total operating segments     1,206.0       60.5            19.9
Corporate                    —            (16.1      )    7.9            
Total                        $ 1,206.0    $   44.4       $      27.8    
                                                           
Three months ended
September 30, 2012
United States Print and      $ 922.8       $   84.7        $      (3.3    )
Related Services
International                116.9        (4.4       )    4.6            
Total operating segments     1,039.7       80.3            1.3
Corporate                    —            (21.2      )    10.6           
Total                        $ 1,039.7    $   59.1       $      11.9    
                                                           
Nine months ended
September 30, 2013
United States Print and      $ 3,114.7     $   108.5       $      49.8
Related Services
International                331.6        (7.2       )    5.6            
Total operating segments     3,446.3       101.3           55.4
Corporate                    —            (63.0      )    27.5           
Total                        $ 3,446.3    $   38.3       $      82.9    
                                                           
Nine months ended
September 30, 2012
United States Print and      $ 2,594.7     $   139.2       $      29.1
Related Services
International                368.8        (20.5      )    22.7           
Total operating segments     2,963.5       118.7           51.8
Corporate                    —            (67.3      )    36.0           
Total                        $ 2,963.5    $   51.4       $      87.8    

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 September 30, 2013 and 2012
(in millions)
(UNAUDITED)
                                              
                                              Three Months Ended September 30,
                                              2013               2012
Net earnings attributable to Quad/Graphics    $   13.0            $  39.8
common shareholders
                                                                  
Interest expense                              20.9                21.7
Income tax expense (benefit)                  10.4                (1.9      )
Depreciation and amortization                 82.0               83.3      
                                                                  
EBITDA (Non-GAAP)                             $   126.3           $  142.9
EBITDA Margin (Non-GAAP)                      10.5        %       13.7      %
                                                                  
Restructuring, impairment and                 27.8               11.9      
transaction-related charges (1)
                                                                  
Adjusted EBITDA (Non-GAAP)                    $   154.1          $  154.8  
Adjusted EBITDA Margin (Non-GAAP)             12.8        %       14.9      %

______________________________

      Operating results for the three months ended September 30, 2013 and 2012
(1)  were affected by the following restructuring, impairment and
      transaction-related charges:

                                            
                                              Three Months Ended September 30,
                                              2013              2012
Employee termination charges (a)              $   4.9            $   1.4
Impairment charges (b)                        8.8                0.4
Transaction-related charges (c)               0.3                0.5
Integration costs (d)                         6.2                13.5
Other restructuring charges, net (e)          7.6               (3.9       )
Restructuring, impairment and                 $   27.8          $   11.9   
transaction-related charges

______________________________

(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.
      Integration costs were primarily related to preparing existing
(d)   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.
      Other restructuring charges, net, were primarily from costs to maintain
      and exit closed facilities, as well as lease exit charges. Other
(e)   restructuring charges, net, in the three months ended September 30,
      2012, are presented net of a $12.8 million curtailment gain resulting
      from an amendment to the postretirement medical benefit plan.

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 Nine Months Ended September 30, 2013 and 2012
(in millions)
(UNAUDITED)
                                               
                                               Nine Months Ended September 30,
                                               2013              2012
Net earnings (loss) attributable to            $   (28.2   )      $  66.4
Quad/Graphics common shareholders
                                                                  
Interest expense                               64.1               63.8
Income tax expense (benefit)                   1.3                (46.0     )
Depreciation and amortization                  258.7             252.6     
                                                                  
EBITDA (Non-GAAP)                              $   295.9          $  336.8
EBITDA Margin (Non-GAAP)                       8.6         %      11.4      %
                                                                  
Restructuring, impairment and                  82.9               87.8
transaction-related charges (1)
Loss from discontinued operations, net of      —                  3.2
tax
Gain on disposal of discontinued operations,   —                 (35.3     )
net of tax
                                                                  
Adjusted EBITDA from continuing operations     $   378.8         $  392.5  
(Non-GAAP)
Adjusted EBITDA Margin from continuing         11.0        %      13.2      %
operations (Non-GAAP)

______________________________

      Operating results from continuing operations for the nine months ended
(1)  September 30, 2013 and 2012 were affected by the following
      restructuring, impairment and transaction-related charges:

                                             
                                               Nine Months Ended September 30,
                                               2013              2012
Employee termination charges (a)               $   12.6           $   22.0
Impairment charges (b)                         18.5               14.5
Transaction-related charges (c)                3.5                2.8
Integration costs (d)                          21.3               36.6
Gain on collection of note receivable (e)      —                  (2.4      )
Other restructuring charges, net (f)           27.0              14.3      
Restructuring, impairment and
transaction-related charges from continuing    $   82.9          $   87.8  
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.
      Integration costs were primarily related to preparing existing
(d)   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.
      Gain on the collection of a note receivable for the nine months ended
(e)   September 30, 2012 was related to a settlement of a disputed
      pre-acquisition Worldcolor note receivable. This non-recurring gain was
      excluded from the calculation of Adjusted EBITDA.
      Other restructuring charges, net, were primarily from costs to maintain
      and exit closed facilities, as well as lease exit charges. Other
(f)   restructuring charges, net, in the nine months ended September 30, 2012,
      are presented net of a $12.8 million curtailment gain resulting from an
      amendment to the postretirement medical benefit plan.

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 Nine Months Ended September 30, 2013 and 2012
(in millions)
(UNAUDITED)
                                               
                                               Nine Months Ended September 30,
                                               2013              2012
Net cash provided by operating activities      $   219.4          $  232.2
                                                                  
Add back non-recurring payments:
Restructuring payments, net (1)                67.9               64.3
Worldcolor bankruptcy payments                 7.9               9.3       
                                                                  
Recurring cash flows provided by operating     295.2              305.8
activities
                                                                  
Less: purchases of property, plant and         (117.6      )      (85.3     )
equipment
                                                                  
Recurring Free Cash Flow                       $   177.6         $  220.5  

______________________________

      Restructuring payments are shown net of cash receipts related to
      non-recurring restructuring transactions. For the nine months ended
      September 30, 2013, restructuring payments were $67.9 million. For the
(1)  nine months ended September 30, 2012, restructuring payments were $79.0
      million (consisting of $78.1 million in payments for continuing
      operations and $0.9 million for Canadian discontinued operations) and
      were reduced for a $14.7 million non-recurring collection of a disputed
      pre-acquisition Worldcolor note receivable.

Recurring Free Cash Flow includes the cash flows of 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 September 30, 2013 and 2012
(in millions, except per share data)
(UNAUDITED)
                                            
                                              Three Months Ended September 30,
                                              2013              2012
Earnings before income taxes and equity in    $   23.5           $   37.4
earnings (loss) of unconsolidated entities
                                                                 
Restructuring, impairment and                 27.8              11.9       
transaction-related charges
                                              51.3               49.3
                                                                 
Income tax expense at 40% normalized tax      20.5              19.7       
rate
                                              30.8               29.6
                                                                 
Equity in earnings (loss) of unconsolidated   (0.5       )       0.4
entities
Net loss attributable to noncontrolling       0.4               0.1        
interests
                                                                 
Adjusted net earnings (Non-GAAP)              $   30.7          $   30.1   
                                                                 
Basic weighted average number of common       47.0               46.8
shares outstanding
Plus: effect of dilutive equity incentive     1.1               0.4        
instruments (Non-GAAP)
Diluted weighted average number of common     48.1              47.2       
shares outstanding (Non-GAAP)
                                                                 
Adjusted Diluted Earnings Per Share           $   0.64          $   0.64   
(Non-GAAP) (1)
                                                                 
                                                                 
Diluted Earnings Per Share (GAAP)             $   0.26           $   0.84
Restructuring, impairment and                 0.58               0.25
transaction-related charges per share
Income tax expense (benefit) from condensed
consolidated statement of operations per      0.22               (0.04      )
share
Income tax expense at 40% normalized tax      (0.43      )       (0.42      )
rate per share
Allocation to participating securities per    0.01               —
share (2)
GAAP to Non-GAAP diluted impact per share     —                 0.01       
Adjusted Diluted Earnings Per Share           $   0.64          $   0.64   
(Non-GAAP) (1)

______________________________

      Adjusted Diluted Earnings Per Share excludes: (i) restructuring,
(1)  impairment and transaction-related charges and (ii) discrete income tax
      items.

      Represents the impact of dividends distributed to non-vested stock
(2)   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 Nine Months Ended September 30, 2013 and 2012
(in millions, except per share data)
(UNAUDITED)
                                             
                                               Nine Months Ended September 30,
                                               2013              2012
Loss from continuing operations before
income taxes and equity in earnings (loss)     $   (25.8   )      $  (12.4  )
of unconsolidated entities
                                                                  
Restructuring, impairment and                  82.9              87.8      
transaction-related charges
                                               57.1               75.4
                                                                  
Income tax expense at 40% normalized tax       22.8              30.2      
rate
                                               34.3               45.2
                                                                  
Equity in earnings (loss) of unconsolidated    (2.0        )      0.7
entities
Net loss attributable to noncontrolling        0.9               —         
interests
                                                                  
Adjusted net earnings from continuing          $   33.2          $  45.9   
operations (Non-GAAP)
                                                                  
Basic weighted average number of common        46.9               46.8
shares outstanding
Plus: effect of dilutive equity incentive      0.9               0.3       
instruments (Non-GAAP)
Diluted weighted average number of common      47.8              47.1      
shares outstanding (Non-GAAP)
                                                                  
Adjusted Diluted Earnings Per Share From       $   0.69          $  0.97   
Continuing Operations (Non-GAAP) (1)
                                                                  
                                                                  
Diluted Earnings (Loss) Per Share From         $   (0.62   )      $  0.73
Continuing Operations (GAAP)
Restructuring, impairment and                  1.73               1.86
transaction-related charges per share
Income tax expense (benefit) from condensed
consolidated statement of operations per       0.03               (0.98     )
share
Income tax expense at 40% normalized tax       (0.48       )      (0.64     )
rate per share
Allocation to participating securities per     0.02               —
share (2)
GAAP to Non-GAAP diluted impact per share      0.01              —         
Adjusted Diluted Earnings Per Share From       $   0.69          $  0.97   
Continuing Operations (Non-GAAP) (1)

______________________________

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

      Represents the impact of dividends distributed to non-vested stock
(2)   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 & 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
 
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