Quad/Graphics Reports Fourth Quarter and Full-Year 2013 Results

  Quad/Graphics Reports Fourth Quarter and Full-Year 2013 Results

2013 Results In-Line with Expectations; Company Provides 2014 Outlook

Fourth Quarter and Full-Year Highlights:

  *Generated $1.3billion in net sales during the fourth quarter and
    $4.8billion in net sales for full-year 2013.
  *Achieved $198million in fourth quarter Adjusted EBITDA and $577million
    in full-year Adjusted EBITDA.
  *Generated $380million in full-year Recurring Free Cash Flow.
  *Achieved yearend Debt Leverage Ratio of 2.44x, which is within the
    Company's targeted range of 2.0xto2.5x.
  *Declares quarterly dividend of $0.30 per share.
  *Provides 2014 annual guidance for net sales of $4.6billion to
    $4.8billion and Adjusted EBITDA to be $520million to $550million.

Business Wire

SUSSEX, Wis. -- February 26, 2014

Quad/Graphics, Inc. (NYSE: QUAD) (“Quad/Graphics” or the “Company”), today
reported fourth quarter and full-year 2013 results. Prior year financial
results do not include the acquisition of Vertis, Inc. (“Vertis”), which was
acquired on January 16, 2013. For full financial results, including
reconciliations of non-GAAP financial measures, please see the accompanying
information.

“Our fourth quarter and full-year 2013 results met our expectations, and we
were especially pleased with our continued strong cash flow generation,” said
Joel Quadracci, Quad/Graphics Chairman, President & CEO. “Our ability to
generate significant cash flow and maintain a strong balance sheet while
simultaneously reducing our pension and debt obligations has allowed us to
remain flexible with how we deploy capital. We have invested in our business
to strengthen and expand our offering to clients, returned cash to our
shareholders through quarterly cash dividends, and taken advantage of several
unique acquisition opportunities, including Vertis and the recently announced
UniGraphic transaction.”

Net sales for the fourth quarter 2013 were $1.3billion versus $1.1billion
for the same period in 2012. Fourth quarter 2013 Adjusted EBITDA was
$198million compared to $174million for the same period in 2012. The
increase in net sales and Adjusted EBITDA was due to the Vertis acquisition.
Adjusted EBITDA margin was 14.7% compared to 15.3% for the same period in
2012. The Adjusted EBITDA margin variance primarily reflects ongoing industry
volume and pricing pressures as well as the dilutive impact of Vertis’
historically lower margin profile compared to Quad/Graphics’ core business.

For the full-year 2013, net sales were $4.8billion versus net sales of
$4.1billion for the previous year. Full-year 2013 Adjusted EBITDA was
$577million compared to $566million for the previous year, and Adjusted
EBITDA margin was 12.0% compared to 13.8% for the previous year. Recurring
Free Cash Flow was $380million compared to $375million for the previous
year, continuing the Company’s track record of solid cash flow generation.
Free Cash Flow, including restructuring payments and excluding the favorable
impact of an estimated $90million in Vertis working capital restoration, was
$202million. Going forward, the Company is amending its non-GAAP financial
measures to report Free Cash Flow instead of Recurring Free Cash Flow. Free
Cash Flow is defined as net cash provided by operating activities less
purchases of property, plant and equipment.

“Our ability to generate significant Free Cash Flow supports our disciplined
approach to capital deployment, which we adjust based on current circumstances
and what we think is best for shareholder value creation,” said John Fowler,
incoming Vice Chairman and Executive Vice President. “We also continue to
closely manage our pension and debt liabilities to maintain a strong balance
sheet which, in turn, provides us with the ability to adjust to changing
economic and industry conditions. We reduced our pension, post-retirement and
MEPPs obligations by $191million for full-year 2013, and $360million since
the July 2010 acquisition of Worldcolor. We continued to reduce debt after the
Vertis acquisition, achieving a yearend Debt Leverage Ratio of 2.44x, which is
within our targeted range of 2.0x to 2.5x.”

Outlook

David Honan, incoming Vice President & Chief Financial Officer, concluded: “We
anticipate our 2014 net sales will be in the range of $4.6billion to
$4.8billion. In addition, we expect 2014 Adjusted EBITDA will be between
$520million to $550million, and 2014 Free Cash Flow to be between
$155million and $165million. As we move forward in this challenging industry
environment, we continue to be disciplined in how we manage all aspects of our
business, especially improving productivity and sustainable cost reduction
initiatives to remain a low-cost producer. We will also continue focusing on
maintaining a strong and flexible balance sheet to adjust to changing industry
conditions while also investing in our business, pursuing compelling
acquisition 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 21, 2014, to shareholders of record as of March 12, 2014.

Quarterly Conference Call

Quad/Graphics (NYSE: QUAD) will hold a conference call at 10 a.m. ET / 9 a.m.
CT on Thursday, February 27, to discuss fourth quarter and full-year 2013
results. To access the conference call, it is recommended that you listen via
computer at: https://us.reg.meeting-stream.com/quadgraphics_022714.

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: 34020437

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 34020437. To access the replay via the
internet, please use the following link:
https://us.reg.meeting-stream.com/quadgraphics_022714. 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, revenue, earnings, free cash flow, margins, objectives, goals,
strategies, beliefs, intentions, plans, estimates, prospects, projections and
outlook of the Company and can generally be identified by the use of words or
phrases such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,”
“plan,” “foresee,” “project,” “believe,” “continue” or the negatives of these
terms, variations on them and other similar expressions. 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 changes in postal
rates, service levels or regulations; 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; the impact of increased business complexity as a result of the
Company’s entry into additional markets; the impact of fluctuations in costs
(including labor-related costs, energy costs, freight rates and raw materials)
and the impact of fluctuations in the availability of raw materials; the
impact of regulatory matters and legislative developments or changes in laws,
including changes in privacy and environmental laws; the impact on the holders
of Quad/Graphics class A common stock of a limited active market for such
shares and the inability to independently elect directors or control decisions
due to the voting power of the class B common stock; the impact of risks
associated with the operations outside of the United States; significant
capital expenditures may be needed to maintain the Company’s platform and
processes and to remain technologically and economically competitive; 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 the Securities 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 print 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, 2013 and 2012
(in millions, except per share data)
(UNAUDITED)

                                             Three Months Ended December 31,
                                               2013              2012
Net sales                                      $  1,349.6          $ 1,130.5
                                                                   
Cost of sales                                  1,048.1             871.7
Selling, general and administrative            103.4               87.2
expenses
Depreciation and amortization                  81.8                86.0
Restructuring, impairment and                  12.4               30.5      
transaction-related charges
Total operating expenses                       1,245.7             1,075.4
                                                                   
Operating income from continuing               $  103.9            $ 55.1
operations
                                                                   
Interest expense                               21.4               20.2      
                                                                   
Earnings from continuing operations before
income taxes and equity in earnings (loss)     82.5                34.9
of unconsolidated entities
                                                                   
Income tax expense                             22.0               14.5      
                                                                   
Earnings from continuing operations before
equity in earnings (loss) of                   60.5                20.4
unconsolidated entities
                                                                   
Equity in earnings (loss) of                   (0.5        )       1.6       
unconsolidated entities
                                                                   
Net earnings from continuing operations        $  60.0             $ 22.0
                                                                   
Loss on disposal of discontinued               —                  (1.3      )
operations, net of tax
                                                                   
Net earnings                                   $  60.0             $ 20.7
                                                                   
Net loss attributable to noncontrolling        0.7                0.3       
interests
                                                                   
Net earnings attributable to Quad/Graphics     $  60.7            $ 21.0    
common shareholders
                                                                   
Earnings (loss) per share attributable to
Quad/Graphics common shareholders:
Basic:
Continuing operations                          $  1.27             $ 0.43
Discontinued operations                        —                  (0.03     )
Earnings per share attributable to             $  1.27            $ 0.40    
Quad/Graphics common shareholders
                                                                   
Diluted:
Continuing operations                          $  1.24             $ 0.42
Discontinued operations                        —                  (0.03     )
Earnings per share attributable to             $  1.24            $ 0.39    
Quad/Graphics common shareholders
                                                                   
Weighted average number of common shares
outstanding:
Basic                                          47.3               46.8      
Diluted                                        48.5               47.3      
                                                                             

QUAD/GRAPHICS,INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2013 and 2012
(in millions, except per share data)
(UNAUDITED)

                                                 Year Ended December 31,
                                                   2013          2012
Net sales                                          $ 4,795.9       $ 4,094.0
                                                                   
Cost of sales                                      3,801.9         3,183.5
Selling, general and administrative expenses       416.0           347.1
Depreciation and amortization                      340.5           338.6
Restructuring, impairment and                      95.3           118.3     
transaction-related charges
Total operating expenses                           4,653.7         3,987.5
                                                                   
Operating income from continuing operations        $ 142.2         $ 106.5
                                                                   
Interest expense                                   85.5           84.0      
                                                                   
Earnings from continuing operations before
income taxes and equity in earnings (loss) of      56.7            22.5
unconsolidated entities
                                                                   
Income tax expense (benefit)                       23.3           (31.5     )
                                                                   
Earnings from continuing operations before
equity in earnings (loss) of unconsolidated        33.4            54.0
entities
                                                                   
Equity in earnings (loss) of unconsolidated        (2.5      )     2.3       
entities
                                                                   
Net earnings from continuing operations            $ 30.9          $ 56.3
                                                                   
Loss from discontinued operations, net of tax      —               (3.2      )
(1)
Gain on disposal of discontinued operations,       —              34.0      
net of tax
                                                                   
Net earnings                                       $ 30.9          $ 87.1
                                                                   
Net loss attributable to noncontrolling            1.6            0.3       
interests
                                                                   
Net earnings attributable to Quad/Graphics         $ 32.5         $ 87.4    
common shareholders
                                                                   
Earnings per share attributable to
Quad/Graphics common shareholders
Basic:
Continuing operations                              $ 0.67          $ 1.14
Discontinued operations                            —              0.66      
Earnings per share attributable to                 $ 0.67         $ 1.80    
Quad/Graphics common shareholders
                                                                   
Diluted:
Continuing operations                              $ 0.65          $ 1.13
Discontinued operations                            —              0.65      
Earnings per share attributable to                 $ 0.65         $ 1.78    
Quad/Graphics common shareholders
                                                                   
Weighted average number of common shares
outstanding:
Basic                                              47.0           46.8      
Diluted                                            48.0           47.2      

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


QUAD/GRAPHICS,INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
As of December 31, 2013 and 2012
(in millions)
(UNAUDITED)

                                               December 31,   December 31,
                                                 2013             2012
ASSETS
Cash and cash equivalents                        $  13.1          $  16.9
Receivables, less allowances for doubtful        698.9            585.1
accounts
Inventories                                      272.5            242.9
Prepaid expenses and other current assets        37.2             74.6
Deferred income taxes                            48.1             55.7
Short-term restricted cash                       4.5             14.8       
Total current assets                             1,074.3         990.0      
                                                                  
Property, plant and equipment—net                1,925.5          1,926.4
Goodwill                                         773.1            768.6
Other intangible assets—net                      221.8            229.9
Long-term restricted cash                        51.5             45.7
Equity method investments in unconsolidated      57.1             72.0
entities
Other long-term assets                           62.4            66.3       
Total assets                                     $  4,165.7      $  4,098.9 
                                                                  
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable                                 $  401.0         $  285.8
Amounts owing in satisfaction of bankruptcy      2.5              9.3
claims
Accrued liabilities                              350.7            334.0
Short-term debt and current portion of           127.6            113.3
long-term debt
Current portion of capital lease obligations     7.0             10.4       
Total current liabilities                        888.8           752.8      
                                                                  
Long-term debt                                   1,265.7          1,211.7
Unsecured notes to be issued                     18.0             23.8
Capital lease obligations                        6.5              15.3
Deferred income taxes                            395.2            363.9
Other long-term liabilities                      303.9           495.7      
Total liabilities                                2,878.1          2,863.2
                                                                  
Quad/Graphics common stock and other equity
Preferred stock                                  —                —
Common stock                                     1.4              1.4
Additional paid-in capital                       983.1            985.6
Treasury stock, at cost                          (248.8     )     (279.3     )
Retained earnings                                558.8            588.1
Accumulated other comprehensive loss             (5.6       )     (60.4      )
Quad/Graphics common stock and other equity      1,288.9          1,235.4
                                                                  
Noncontrolling interests                         (1.3       )     0.3        
                                                                  
Total common stock and other equity and          1,287.6         1,235.7    
noncontrolling interests
                                                                  
Total liabilities and shareholders' equity       $  4,165.7      $  4,098.9 
                                                                             

QUAD/GRAPHICS,INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2013 and 2012
(in millions)
(UNAUDITED)

                                                     Year Ended December 31,
                                                       2013         2012
OPERATING ACTIVITIES
Net earnings                                           $   30.9       $ 87.1
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization                          340.5          338.6
Impairment charges                                     21.8           23.0
Deferred income taxes                                  (11.1    )     (13.6  )
Gain on disposal of discontinued operations, net       —              (34.0  )
of tax
Stock-based compensation charges                       18.6           13.4
Other non-cash adjustments to net earnings             3.7            (11.1  )
Dividends from unconsolidated entities                 5.0            0.5
Changes in operating assets and liabilities—net of     31.7          (49.7  )
acquisitions
                                                                      
Net Cash Provided by Operating Activities              441.1         354.2  
                                                                      
INVESTING ACTIVITIES
Purchases of property, plant and equipment             (149.5   )     (103.5 )
Cost investment in unconsolidated entities             (2.5     )     (18.1  )
Proceeds from the sale of property, plant and          8.8            23.5
equipment
Transfers from restricted cash                         4.5            15.4
Deposit paid related to Vertis acquisition             —              (25.9  )
Deposit refunded related to business exchange          —              50.0
transaction
Purchase price payments on business exchange           —              (4.9   )
transaction
Acquisition of businesses—net of cash acquired         (291.9   )     (6.6   )
                                                                      
Net Cash Used in Investing Activities                  (430.6   )     (70.1  )
                                                                      
FINANCING ACTIVITIES
Payments of long-term debt                             (102.7   )     (74.6  )
Payments of capital lease obligations                  (9.8     )     (21.0  )
Borrowings on revolving credit facilities              1,628.8        270.3
Payments on revolving credit facilities                (1,475.0 )     (295.7 )
Payment of debt issuance costs                         —              (2.1   )
Bankruptcy claim payments on unsecured notes to be     (4.5     )     (14.9  )
issued
Proceeds from issuance of common stock                 7.2            0.1
Tax benefit on stock option activity                   2.2            4.1
Payment of cash dividends                              (56.4    )     (151.8 )
                                                                      
Net Cash Used in Financing Activities                  (10.2    )     (285.6 )
                                                                      
Effect of exchange rates on cash and cash              (4.1     )     (7.2   )
equivalents
                                                                      
Net Decrease in Cash and Cash Equivalents              (3.8     )     (8.7   )
                                                                      
Cash and Cash Equivalents at Beginning of Year         16.9          25.6   
                                                                      
Cash and Cash Equivalents at End of Year               $   13.1      $ 16.9 

______________________________
The condensed consolidated statements of cash flows include the cash flows of
the Canadian operations prior to the March 1, 2012 sale.


QUAD/GRAPHICS,INC.
SEGMENT FINANCIAL INFORMATION
For the Three Months and Years Ended December 31, 2013 and 2012
(in millions)
(UNAUDITED)

                                                     Restructuring,
                                                           Impairment and
                                         Operating         Transaction-Related
                         Net Sales       Income/(Loss)     Charges
Three months ended
December 31, 2013
United States Print      $ 1,225.0       $   122.2         $        2.5
and Related Services
International            124.6          (0.5       )      4.0
Total operating          1,349.6         121.7             6.5
segments
Corporate                —              (17.8      )      5.9
Total                    $ 1,349.6      $   103.9        $        12.4
                                                           
Three months ended
December 31, 2012
United States Print      $ 1,003.2       $   77.3          $        19.4
and 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
                                                           
Year ended December
31, 2013
United States Print      $ 4,339.7       $   230.7         $        52.3
and Related Services
International            456.2          (7.7       )      9.6
Total operating          4,795.9         223.0             61.9
segments
Corporate                —              (80.8      )      33.4
Total                    $ 4,795.9      $   142.2        $        95.3
                                                           
Year ended December
31, 2012
United States Print      $ 3,597.9       $   216.5         $        48.5
and 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

______________________________
Results from the Canadian operations sold on March 1, 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, 2013 and 2012
(in millions)
(UNAUDITED)

                                        Three Months Ended December 31,
                                               2013             2012
Net earnings attributable to
Quad/Graphics common                           $  60.7            $  21.0
shareholders
                                                                  
Interest expense                               21.4               20.2
Income tax expense                             22.0               14.5
Depreciation and amortization                  81.8              86.0      
                                                                  
EBITDA (Non-GAAP)                              $  185.9           $  141.7
EBITDA Margin (Non-GAAP)                       13.8      %        12.5      %
                                                                  
Restructuring, impairment and                  12.4               30.5
transaction-related charges (1)
Loss on disposal of discontinued               —                 1.3       
operations, net of tax
                                                                  
Adjusted EBITDA from continuing                $  198.3          $  173.5  
operations (Non-GAAP)
Adjusted EBITDA Margin from                    14.7      %        15.3      %
continuing operations (Non-GAAP)

______________________________
        Operating results from continuing operations for the three months
(1)    ended December 31, 2013 and 2012 were affected by the following
        restructuring, impairment and transaction-related charges:

                                             Three Months Ended December 31,
                                               2013                 2012
Employee termination charges (a)               $   3.1                $  5.2
Impairment charges (b)                         3.3                    8.5
Transaction-related charges (c)                0.5                    1.3
Integration costs (d)                          3.9                    8.0
Other restructuring charges, net (e)           1.6                   7.5
Restructuring, impairment and
transaction-related charges from               $   12.4              $  30.5
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.
        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.
(e)     Other restructuring charges, net, in the three months ended December
        31, 2013, are presented net of a $2.1 million pension plan settlement
        gain. This non-recurring gain was excluded from the calculation of
        Adjusted EBITDA.

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, Free Cash Flow, Recurring Free Cash
Flow, Debt Leverage Ratio 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 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, 2013 and 2012
(in millions)
(UNAUDITED)

                                                     Year Ended December 31,
                                                       2013        2012
Net earnings attributable to Quad/Graphics common      $ 32.5        $ 87.4
shareholders
                                                                     
Interest expense                                       85.5          84.0
Income tax expense (benefit)                           23.3          (31.5   )
Depreciation and amortization                          340.5        338.6   
                                                                     
EBITDA (Non-GAAP)                                      $ 481.8       $ 478.5
EBITDA Margin (Non-GAAP)                               10.0    %     11.7    %
                                                                     
Restructuring, impairment and transaction-related      95.3          118.3
charges (1)
Loss from discontinued operations, net of tax          —             3.2
Gain on disposal of discontinued operations, net       —            (34.0   )
of tax
                                                                     
Adjusted EBITDA from continuing operations             $ 577.1      $ 566.0 
(Non-GAAP)
Adjusted EBITDA Margin from continuing operations      12.0    %     13.8    %
(Non-GAAP)

______________________________
        Operating results from continuing operations for the years ended
(1)    December 31, 2013 and 2012 were affected by the following
        restructuring, impairment and transaction-related charges:

                                                     Year Ended December 31,
                                                       2013        2012
Employee termination charges (a)                       $  15.7       $ 27.2
Impairment charges (b)                                 21.8          23.0
Transaction-related charges (c)                        4.0           4.1
Integration costs (d)                                  25.2          44.6
Gain on collection of note receivable (e)              —             (2.4    )
Other restructuring charges, net (f)                   28.6         21.8    
Restructuring, impairment and transaction-related      $  95.3      $ 118.3 
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.
        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 year ended
(e)     December 31, 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 restructuring charges, net, in the year ended December 31, 2013,
        are presented net of a $2.1 million pension plan settlement gain.
(f)     Other restructuring charges, net, in the year ended December 31, 2012,
        are presented net of a $12.8 million pension curtailment gain from an
        amendment to the postretirement medical benefit plan. These
        non-recurring gains were excluded from the calculation of Adjusted
        EBITDA.

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, Free Cash Flow, Recurring Free Cash
Flow, Debt Leverage Ratio 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 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
FREE CASH FLOW AND RECURRING FREE CASH FLOW
For the Years Ended December 31, 2013 and 2012
(in millions)
(UNAUDITED)

                                                   Year Ended December 31,
                                                     2013        2012
Net cash provided by operating activities            $ 441.1       $ 354.2
                                                                   
Less: purchases of property, plant and equipment     (149.5  )     (103.5  )
                                                                   
Free Cash Flow                                       $ 291.6       $ 250.7
                                                                   
Add back non-recurring payments:
Restructuring payments, net (1)                      79.9          113.4
Worldcolor bankruptcy payments                       8.6          10.4    
                                                                   
Recurring Free Cash Flow                             $ 380.1      $ 374.5 

______________________________
        Restructuring payments are shown net of cash receipts related to
        non-recurring restructuring transactions. For the year ended December
        31, 2013, restructuring payments were $79.9 million. For the year
(1)    ended December 31, 2012, restructuring payments were $128.1 million
        (consisting of $127.2 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.

Free Cash Flow and Recurring Free Cash Flow includes the amounts from the
Canadian operations prior to the March 1, 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, Free Cash Flow, Recurring Free Cash
Flow, Debt Leverage Ratio 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 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
DEBT LEVERAGE RATIO
For the Years Ended December 31, 2013 and 2012
(in millions, except ratio)
(UNAUDITED)

                                                 Year Ended December 31,
                                                   2013          2012
Total debt and capital lease obligations on        $ 1,406.8       $ 1,350.7
the condensed consolidated balance sheets
                                                                   
Adjusted EBITDA from continuing operations         $ 577.1        $ 566.0   
(Non-GAAP)
                                                                   
Debt Leverage Ratio (Non-GAAP) (1)                 2.44      x     2.39      x

______________________________
        Debt Leverage Ratio is calculated by dividing total debt and capital
(1)    lease obligations on the condensed consolidated balance sheets by
        Adjusted EBITDA 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, Free Cash Flow, Recurring Free Cash
Flow, Debt Leverage Ratio 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 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, 2013 and 2012
(in millions, except per share data)
(UNAUDITED)

                                             Three Months Ended December 31,
                                               2013              2012
Earnings from continuing operations before
income taxes and equity in earnings (loss)     $   82.5            $  34.9
of unconsolidated entities
                                                                   
Restructuring, impairment and                  12.4               30.5     
transaction-related charges
                                               94.9                65.4
                                                                   
Income tax expense at 40% normalized tax       38.0               26.2     
rate
                                               56.9                39.2
                                                                   
Equity in earnings (loss) of                   (0.5       )        1.6
unconsolidated entities
Net loss attributable to noncontrolling        0.7                0.3      
interests
                                                                   
Adjusted net earnings from continuing          $   57.1           $  41.1  
operations (Non-GAAP)
                                                                   
Basic weighted average number of common        47.3                46.8
shares outstanding
Plus: effect of dilutive equity incentive      1.2                0.5      
instruments
Diluted weighted average number of common      48.5               47.3     
shares outstanding
                                                                   
Adjusted Diluted Earnings Per Share From       $   1.18           $  0.87  
Continuing Operations (Non-GAAP) (1)
                                                                   
                                                                   
Diluted Earnings Per Share From Continuing     $   1.24            $  0.42
Operations (GAAP)
Restructuring, impairment and                  0.26                0.64
transaction-related charges per share
Income tax expense from condensed
consolidated statement of operations per       0.45                0.31
share
Income tax expense at 40% normalized tax       (0.78      )        (0.55    )
rate per share
Allocation to participating securities per     0.01               0.05     
share (2)
Adjusted Diluted Earnings Per Share From       $   1.18           $  0.87  
Continuing Operations (Non-GAAP) (1)

______________________________
        Adjusted Diluted Earnings Per Share excludes: (i) the loss on disposal
(1)    of the Canadian discontinued operations, (ii) restructuring,
        impairment and transaction related charges and (iii) 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, Free Cash Flow, Recurring Free Cash
Flow, Debt Leverage Ratio 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 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, 2013 and 2012
(in millions, except per share data)
(UNAUDITED)

                                                     Year Ended December 31,
                                                       2013         2012
Earnings from continuing operations before income
taxes and equity in earnings (loss) of                 $  56.7        $ 22.5
unconsolidated entities
                                                                      
Restructuring, impairment and transaction-related      95.3          118.3  
charges
                                                       152.0          140.8
                                                                      
Income tax expense at 40% normalized tax rate          60.8          56.3   
                                                       91.2           84.5
                                                                      
Equity in earnings (loss) of unconsolidated            (2.5     )     2.3
entities
Net loss attributable to noncontrolling interests      1.6           0.3    
                                                                      
Adjusted net earnings from continuing operations       $  90.3       $ 87.1 
(Non-GAAP)
                                                                      
Basic weighted average number of common shares         47.0           46.8
outstanding
Plus: effect of dilutive equity incentive              1.0           0.4    
instruments
Diluted weighted average number of common shares       48.0          47.2   
outstanding
                                                                      
Adjusted Diluted Earnings Per Share From               $  1.88       $ 1.85 
Continuing Operations (Non-GAAP) (1)
                                                                      
                                                                      
Diluted Earnings Per Share From Continuing             $  0.65        $ 1.13
Operations (GAAP)
Restructuring, impairment and transaction-related      1.99           2.51
charges per share
Income tax expense (benefit) from condensed            0.49           (0.67  )
consolidated statement of operations per share
Income tax expense at 40% normalized tax rate per      (1.27    )     (1.19  )
share
Allocation to participating securities per share       0.02          0.07   
(2)
Adjusted Diluted Earnings Per Share From               $  1.88       $ 1.85 
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, Free Cash Flow, Recurring Free Cash
Flow, Debt Leverage Ratio 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 as a measure of
operating performance or to cash flows provided by operating activities as a
measure of liquidity.

Contact:

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