What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-21 compared with 2024-02-22 · 409 added, 277 removed, 1163 unchanged (37% of the section changed)

4 unchanged sentences

We have audited the accompanying consolidated balance sheets of Quad/Graphics, Inc.

(the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, shareholders’ equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with U.S.

22 unchanged sentences

Auditing management’s estimate of the IBNR was especially challenging due to the various assumptions and the complexity of the actuarial analysis.

How We Addressed the Matter in Our Audit We tested certain of the Company’s controls over the measurement of accrued liabilities for workers’ compensation claims process, which included, among others, management’s review and approval of the actuarial analysis and related year-end update, management’s validation of data inputs as well as their review and approval of assumptions used in the analysis.

To test the measurement of accrued liabilities for workers’ compensation claims, we performed audit procedures that included, among other others, assessing methodologies and testing the significant assumptions discussed above, as well as testing the completeness and accuracy of the underlying data used by the Company in its analysis.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the measurement of accrued liabilities for workers’ compensation claims process, which included, among others, management’s review and approval of the actuarial analysis and related year-end update, management’s validation of data inputs as well as their review and approval of assumptions used in the analysis.

To test the measurement of accrued liabilities for workers’ compensation claims, we performed audit procedures that included, among others, assessing methodologies and testing the significant assumptions discussed above, as well as testing the completeness and accuracy of the underlying data used by the Company in its analysis.

We also involved our actuarial professionals with specialized skills and knowledge, who assisted in:

10 unchanged sentences

(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for each of the two years in the period ended December 31, 2023, and the related notes and our report dated February 21, 2024 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, shareholders’ equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes and our report dated February 20, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

31 unchanged sentences

Depreciation and amortization 102.5 128.8

Restructuring, impairment and transaction-related charges 77.5 44.8

Restructuring, impairment and transaction-related charges, net 101.5 77.5

Total operating expenses 2,653.0 2,932.0

2 unchanged sentences

Net pension income ( 0.8 ) ( 1.7 )

Earnings (loss) before income taxes ( 42.6 ) 17.7

Loss before income taxes ( 44.5 ) ( 42.6 )

Income tax expense 6.4 12.8

Net earnings (loss) $ ( 55.4 ) $ 9.3

Earnings (loss) per share

Net loss $ ( 50.9 ) $ ( 55.4 )

Loss per share

Basic and Diluted $ ( 1.07 ) $ ( 1.14 )

Weighted average number of common shares outstanding

Basic 48.4 50.7

Diluted 48.4 52.5

Basic and Diluted 47.6 48.4

See accompanying Notes to Consolidated Financial Statements.

QUAD/GRAPHICS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in millions)

Year Ended December 31,

Net earnings (loss) $ ( 55.4 ) $ 9.3

Other comprehensive income

Net loss $ ( 50.9 ) $ ( 55.4 )

Other comprehensive income (loss)

Translation adjustments

1 unchanged sentence

Translation of long-term loans to foreign subsidiaries 2.8 ( 1.9 )

Revaluation loss from the dissolution of an equity method investment entity — 29.4

Total translation adjustments ( 15.5 ) 13.1

Reclassification of foreign currency translation adjustments — 27.3

Interest rate derivative adjustments 0.1 2.5

Net loss arising from pension benefit plans during period ( 5.4 ) ( 30.7 )

Other comprehensive income, before tax 10.2 27.1

Income tax impact related to items of other comprehensive income 0.5 5.8

Other comprehensive income, net of tax 10.7 32.9

Total comprehensive income (loss) $ ( 44.7 ) $ 42.2

Net gain (loss) arising from pension benefit plans during period 2.3 ( 5.4 )

Other comprehensive income (loss), before tax ( 13.1 ) 10.2

Income tax impact related to items of other comprehensive income (loss) ( 0.5 ) 0.5

Other comprehensive income (loss), net of tax ( 13.6 ) 10.7

Total comprehensive loss $ ( 64.5 ) $ ( 44.7 )

See accompanying Notes to Consolidated Financial Statements.

33 unchanged sentences

105.0 million shares;

42.5 million shares at December 31, 2023, and 42.6 million shares at December 31, 2022

42.5 million shares at December 31, 2024 and 2023

Common stock, Class B, $ 0.025 par value;

80.0 million shares;

13.6 million shares at December 31, 2023 and 2022

13.3 million shares at December 31, 2024, and 13.6 million shares at December 31, 2023

Common stock, Class C, $ 0.025 par value;

14 unchanged sentences

OPERATING ACTIVITIES

Net earnings (loss) $ ( 55.4 ) $ 9.3

Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:

Net loss $ ( 50.9 ) $ ( 55.4 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 102.5 128.8

2 unchanged sentences

Stock-based compensation 7.3 5.6

Gain on the sale or disposal of property, plant and equipment, net ( 10.9 ) ( 2.3 )

Loss on the sale of a business — 23.1

Gain on the sale of an investment ( 4.1 ) —

Gains on the sale or disposal of property, plant and equipment, net ( 22.5 ) ( 10.9 )

Deferred income taxes ( 2.0 ) ( 3.7 )

10 unchanged sentences

Proceeds from the sale of property, plant and equipment 49.1 31.7

Proceeds from the sale of an investment 22.2 —

Loan to an unconsolidated entity — ( 0.6 )

Acquisitions of businesses ( 1.5 ) ( 2.6 )

Acquisition of a business — ( 1.5 )

Other investing activities ( 1.2 ) ( 4.5 )

Net cash used in investing activities ( 46.4 ) ( 60.5 )

Net cash provided by (used in) investing activities 12.7 ( 46.4 )

FINANCING ACTIVITIES

4 unchanged sentences

Proceeds from issuance of long-term debt 53.1 0.6

Payments of debt issuance costs and financing fees ( 4.4 ) —

Purchases of treasury stock — ( 12.6 )

18 unchanged sentences

Balance at January 1, 2023 56.6 $ 1.4 $ 841.8 ( 3.9 ) $ ( 23.5 ) $ ( 518.5 ) $ ( 128.3 ) $ 172.9

Net earnings — — — — — 9.3 — 9.3

Net loss — — — — — ( 55.4 ) — ( 55.4 )

Foreign currency translation adjustments — — — — — — 13.1 13.1

Reclassification of foreign currency translation adjustments — — — — — — 27.3 27.3

Pension benefit plan liability adjustments, net of $ 1.0 million tax benefit

— — — — — — ( 4.4 ) ( 4.4 )

Interest rate swap adjustments, net of tax — — — — — — 2.6 2.6

Interest rate derivatives adjustments, net of tax — — — — — — 2.0 2.0

Stock-based compensation — — 5.6 — — — — 5.6

7 unchanged sentences

— — — — — — 1.8 1.8

Interest rate swap adjustments, net of tax — — — — — — 2.0 2.0

Interest rate derivatives adjustments, net of tax — — — — — — 0.1 0.1

Cash dividends declared ($ 0.20 per share)

— — — — — ( 10.3 ) — ( 10.3 )

Stock-based compensation — — 7.3 — — — — 7.3

Purchases of treasury stock — — — ( 2.9 ) ( 12.6 ) — — ( 12.6 )

Conversion of class B shares ( 0.3 ) — ( 1.3 ) 0.3 1.3 — — —

Issuance of share-based awards, net of other activity — — ( 5.9 ) 1.4 5.9 — — —

6 unchanged sentences

Basis of Presentation and Summary of Significant Accounting Policies

Nature of Operations —Quad is a global marketing experience (MX) company that helps brands make direct consumer connections, from household to in-store to online.

The Company is focused on providing a better marketing experience for its clients, so they can focus on delivering the best customer experience to theirs.

Quad does this with a suite of marketing solutions that is flexible, scalable and connected.

Supported by state-of-the-art technology and data-driven intelligence, these solutions are designed to streamline the complexities of marketing and remove friction from wherever it occurs in the marketing journey.

Quad tailors its solutions to its clients’ objectives, driving cost efficiencies, improving speed to market, strengthening marketing effectiveness, and delivering value on their investments.

Nature of Operations —Quad is a marketing experience (MX) company that simplifies the complexities of marketing, removing friction from wherever it occurs along the marketing journey.

Its results-driven approach enables stronger marketing operations that lead to real, repeatable success for clients.

The Company does this through its MX Solutions Suite, which is flexible, scalable and connected.

Quad tailors its solutions to each client’s objectives, driving cost efficiencies, improving speed to market, strengthening marketing effectiveness and delivering value on investments.

The Company supports a diverse base of clients, including industry-leading blue-chip companies that serve both businesses and consumers across multiple industry verticals, with a particular focus on commerce, including retail, consumer packaged goods and direct-to-consumer;

2 unchanged sentences

The results of operations and accounts of businesses acquired are included in the consolidated financial statements from the dates of acquisition.

Investments in entities where the Company has both the ability to exert significant influence but not control and an ownership interest of 50 % or less but more than 20 % are accounted for using the equity method of accounting.

Investments in entities where the Company does not exert significant influence or control and has an ownership interest of less than 20 % are accounted for using the cost method of accounting.

3 unchanged sentences

Translation adjustments resulting from fluctuations in exchange rates are recorded as a separate component of accumulated other comprehensive income (loss) on the consolidated statements of shareholders’ equity, while transaction gains and losses are recorded in selling, general and administrative expenses on the consolidated statements of operations.

Foreign exchange transactions resulted in gains of $ 4.4 million during the year ended December 31, 2023 and losses of $ 2.1 million during the year ended December 31, 2022.

Foreign exchange transactions resulted in losses of $ 6.4 million during the year ended December 31, 2024 and gains of $ 4.4 million during the year ended December 31, 2023.

Use of Estimates —The preparation of consolidated financial statements requires the use of management’s estimates and assumptions that affect the reported assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods.

7 unchanged sentences

however, the Company accrues for the estimated amount of customer allowances at the time of sale based on historical experience and known trends.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

Revenue from services is recognized as services are performed.

1 unchanged sentence

Revenues related to the Company’s logistics operations, which includes the delivery of printed material, are recognized upon completion of services.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

Certain revenues earned by the Company require judgment to determine if revenue should be recorded gross as a principal or net of related costs as an agent.

16 unchanged sentences

Cash and Cash Equivalents and Restricted Cash —The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

Receivables —Receivables are stated net of allowances for credit losses.

3 unchanged sentences

Inventories —Inventories include material, labor, and plant overhead and are stated at the lower of cost or net realizable value.

At December 31, 2023 and 2022, all inventories were valued using the first-in, first-out method.

At December 31, 2024 and 2023, raw material inventories were generally valued using the specific identification method, and work-in-progress and finished good inventories were valued under the first-in, first-out method.

See Note 6, “Inventories,” for the components of the Company’s inventories.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

Leases —Leases are accounted for under the right-of-use model, which requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than twelve months.

72 unchanged sentences

Stock-Based Compensation —The Company recognizes stock-based compensation expense over the vesting period for all stock-based awards made to employees and directors based on the fair value of the instrument at the time of grant.

Equity awards accounted for as liabilities are recorded at fair value on the initial issuance date and are remeasured to fair value at each reporting period, with the change in fair value being recorded in selling, general and administrative expense in the consolidated statements of operations.

See Note 16, “Equity Incentive Programs,” for further discussion.

10 unchanged sentences

Non-cash operating lease additions 11.2 18.9

Acquisitions of businesses:

Acquisition of a business:

Fair value of assets acquired 1.1 0.2

42 unchanged sentences

The Company recognizes its Print revenues upon transfer of title and the passage of risk of loss, which is point-in-time upon shipment to the customer, and when there is a reasonable assurance as to collectability.

Revenues related to the Company’s logistics operations, which includes the delivery of printed material, are included in the Print performance obligation and are also recognized at point-in-time as services are completed.

Revenues related to the Company’s imaging operations, which include digital content management, photography, color services and page production, are recognized in accordance with the terms of the contract, typically upon completion of the performed service and acceptance by the customer.

27 unchanged sentences

In accordance with ASC 606 — Revenue from Contracts with Customers (“ASC 606”), the Company defers certain contract acquisition costs paid to the client at contract inception.

The Company also capitalizes certain sales incentives of the sales compensation packages for costs that are directly attributed to being awarded a client contract or renewal and would not have been incurred had the contract not been obtained.

When applicable, the Company also capitalizes certain sales incentives of the sales compensation packages for costs that are directly attributed to being awarded a client contract or renewal and would not have been incurred had the contract not been obtained.

Costs to obtain contracts with a duration of less than one year are expensed as incurred.

6 unchanged sentences

Balance at December 31, 2024 $ 1.0

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

Practical Expedients

5 unchanged sentences

The Company had no volume commitments in contracts that extend beyond one year as of December 31, 2024.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

• The Company expenses costs to obtain contracts as incurred when the contract duration is less than one year.

2 unchanged sentences

• The Company excludes from its transaction price any amounts collected from customers for sales taxes.

Restructuring, Impairment and Transaction-Related Charges

The Company recorded restructuring, impairment and transaction-related charges for the years ended December 31, 2023 and 2022, as follows:

Restructuring, Impairment and Transaction-Related Charges, Net

The Company recorded restructuring, impairment and transaction-related charges, net for the years ended December 31, 2024 and 2023, as follows:

Employee termination charges $ 30.5 $ 35.1

Impairment charges 74.9 25.2

Transaction-related charges 4.2 2.0

Transaction-related charges (income) ( 0.6 ) 4.2

Integration costs 0.4 1.0

Other restructuring charges 12.0 32.6

Other restructuring charges (income) ( 3.7 ) 12.0

Total $ 101.5 $ 77.5

The costs related to these activities have been recorded on the consolidated statements of operations as restructuring, impairment and transaction-related charges.

See Note 19, “Segment Information,” for restructuring, impairment and transaction-related charges by segment.

The costs related to these activities have been recorded on the consolidated statements of operations as restructuring, impairment and transaction-related charges, net.

See Note 19, “Segment Information,” for restructuring, impairment and transaction-related charges, net by segment.

Restructuring Charges

6 unchanged sentences

(In millions, except share and per share data and unless otherwise indicated)

• Other restructuring charges are presented net of the gains or losses on the sale of facilities and businesses.

During the year ended December 31, 2023, the Company recognized a gain from the sale of the facility located in Merced, California.

The components of other restructuring charges consisted of the following during the years ended December 31, 2023 and 2022:

• Other restructuring charges (income) are presented net of the gain on the sale of the Saratoga Springs, New York facility during the year ended December 31, 2024 and net of the gain on the sale of the Merced, California facility during the year ended December 31, 2023.

The components of other restructuring charges (income) consisted of the following during the years ended December 31, 2024 and 2023:

Year Ended December 31,

1 unchanged sentence

Equipment and infrastructure removal costs 1.6 0.9

Gain on the sale of a facility ( 9.2 ) —

Loss on the sale of Argentina print business — 23.1

Gains on the sale of facilities ( 20.5 ) ( 9.2 )

Other restructuring activities 1.0 3.7

Other restructuring charges $ 12.0 $ 32.6

Other restructuring charges (income) $ ( 3.7 ) $ 12.0

The restructuring charges recorded were based on plans that have been committed to by management and were, in part, based upon management’s best estimates of future events.

2 unchanged sentences

Impairment Charges

The Company recognized impairment charges of $ 25.2 million during the year ended December 31, 2023, which consisted of $ 17.5 million for machinery and equipment no longer being utilized in production as a result of facility consolidations, as well as other capacity reduction activities, $ 4.1 million for software licensing and related implementation costs from a terminated project and $ 3.6 million for right-of-use assets.

The Company recognized impairment charges of $ 2.2 million during the year ended December 31, 2022, primarily for machinery and equipment no longer being utilized in production as a result of facility consolidations, as well as other capacity reduction.

The fair values of the impaired assets were determined by the Company to be Level 3 under the fair value hierarchy (see Note 13, “Financial Instruments and Fair Value Measurements,” for the definition of Level 3 inputs) and were estimated based on broker quotes, internal expertise related to current marketplace conditions and estimated future discounted cash flows.

The Company recognized impairment charges of $ 74.9 million during the year ended December 31, 2024, which consisted of $ 57.6 million to reduce the carrying value of the European operations to its estimated fair value, including $ 41.6 million for foreign currency translation adjustments and $ 16.0 million for property, plant and equipment, $ 14.2 million for machinery and equipment no longer being utilized in production as a result of facility consolidations, as well as other capacity reduction activities, and $ 3.1 million for operating lease right-of-use assets.

For more information on the European operations assets classified as held for sale, refer to Note 22, “Assets Held for Sale.”

These assets were adjusted to their estimated fair values at the time of impairment.

If estimated fair values subsequently decline, the carrying values of the assets are adjusted accordingly.

Transaction-Related Charges

The Company incurs transaction-related charges primarily consisting of professional service fees related to business acquisition and divestiture activities.

Transaction-related charges of $ 4.2 million and $ 2.0 million were recorded during the years ended December 31, 2023 and 2022, respectively.

Transaction-Related Charges (Income)

The Company incurs transaction-related charges primarily consisting of professional service fees related to business acquisition and divestiture activities, as well as adjustments to estimated acquisition consideration.

Transaction-related income of $ 0.6 million and transaction-related charges of $ 4.2 million were recorded during the years ended December 31, 2024 and 2023, respectively.

QUAD/GRAPHICS, INC.

18 unchanged sentences

The Company’s restructuring reserves at December 31, 2024, included a short-term and a long-term component.

The short-term portion included $ 21.4 million in other current liabilities (see Note 8, “Other Current and Long-Term Liabilities”) and $ 2.7 million in accounts payable in the consolidated balance sheets as the Company expects these reserves to be settled within the next twelve months.

The short-term portion included $ 53.9 million in other current liabilities (see Note 8, “Other Current and Long-Term Liabilities” and Note 22, “Assets Held for Sale”) and $ 1.5 million in accounts payable in the consolidated balance sheets as the Company expects these reserves to be settled within the next twelve months.

The long-term portion of $ 6.7 million was included in other long-term liabilities (see Note 8, “Other Current and Long-Term Liabilities”) in the consolidated balance sheets.

17 unchanged sentences

Goodwill, net of accumulated goodwill impairment loss $ 100.3 $ — $ 100.3 $ 103.0 $ — $ 103.0

Activity impacting goodwill for the year ended December 31, 2023, was as follows:

Activity impacting goodwill for the years ended December 31, 2024 and 2023, was as follows:

United States Print and Related

1 unchanged sentence

Balance at January 1, 2023 $ 86.4 $ — $ 86.4

Acquisition of a business 16.6 — 16.6

DART acquisition 16.6 — 16.6

Balance at December 31, 2023 $ 103.0 $ — $ 103.0

DART acquisition adjustments ( 2.7 ) — ( 2.7 )

Balance at December 31, 2024 $ 100.3 $ — $ 100.3

In December 2023, the Company completed the acquisition of DART Innovation, an in-store digital media solutions provider.

The acquisition expands and integrates into the Company’s suite of products and services, enabling brands and marketers to more effectively reach consumers.

As of December 31, 2023, the preliminary purchase price includes $ 16.6 million of goodwill.

There was no activity impacting goodwill for the year ended December 31, 2022.

The acquisition expanded and integrated into the Company’s suite of products and services, enabling brands and marketers to more effectively reach consumers.

As of December 31, 2023, the preliminary purchase price included $ 16.6 million of goodwill.

During 2024, the final valuation of the net assets acquired in the acquisition was finalized and a $ 2.7 million reduction to goodwill was recorded.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

Other Intangible Assets

11 unchanged sentences

Total finite-lived intangible assets $ 622.5 $ ( 615.3 ) $ 7.2 $ 646.2 $ ( 624.4 ) $ 21.8

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

Other intangible assets are evaluated for potential impairment whenever events or circumstances indicate that the carrying value may not be recoverable.

3 unchanged sentences

Amortization Expense

2028 and Thereafter 0.3

Prior to granting credit, the Company evaluates each client in an underwriting process, taking into consideration the prospective client’s financial condition, past payment experience, credit bureau information and other financial and qualitative factors that may affect the client’s ability to pay.

6 unchanged sentences

Accounts that are deemed uncollectible are written off when all reasonable collection efforts have been exhausted.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

The Company has recorded credit loss expense of $ 1.6 million and $ 2.8 million during the years ended December 31, 2024 and 2023, respectively, which is included in selling, general and administrative expenses in the consolidated statements of operations.

3 unchanged sentences

Write-offs ( 4.2 ) ( 3.5 )

Assets held for sale reclassification (1)

Translation and other ( 0.2 ) —

Balance at December 31, $ 21.5 $ 25.7

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

______________________________

(1) For more information on the assets classified as held for sale, refer to Note 22, “Assets Held for Sale.”

The components of inventories at December 31, 2024 and 2023, were as follows:

14 unchanged sentences

(1) Other consists of computer equipment and software, vehicles, furniture and fixtures, leasehold improvements and communication related equipment.

The Company recorded impairment charges of $ 17.5 million and $ 2.2 million during the years ended December 31, 2023 and 2022, respectively, to reduce the carrying amounts of certain property, plant and equipment no longer utilized in production, or due to other capacity reduction, to fair value (see Note 3, “Restructuring, Impairment and Transaction-Related Charges,” for further discussion on impairment charges).

The Company recognized depreciation expense of $ 100.9 million and $ 110.4 million for the years ended December 31, 2023 and 2022, respectively.

QUAD/GRAPHICS, INC.

1 unchanged sentence

(In millions, except share and per share data and unless otherwise indicated)

The Company recorded impairment charges of $ 30.2 million and $ 17.5 million during the years ended December 31, 2024 and 2023, respectively, to reduce the carrying amounts of certain property, plant and equipment no longer utilized in production, or due to other capacity reduction, to fair value, including $ 16.0 million related to the expected sale of the European operations to reduce the carrying value to its estimated fair value during the year ended December 31, 2024 (see Note 3, “Restructuring, Impairment and Transaction-Related Charges, Net,” and Note 22, “Assets Held for Sale,” for further discussion on impairment charges).

The Company recognized depreciation expense of $ 85.0 million and $ 100.9 million for the years ended December 31, 2024 and 2023, respectively.

Other Current and Long-Term Liabilities

12 unchanged sentences

Interest and rent liabilities 0.6 — 0.6 0.7 — 0.7

Interest rate swap liabilities — 0.7 0.7 — — —

Liabilities held for sale (2)

27.7 4.8 32.5 — — —

Other 33.3 24.2 57.5 38.1 28.1 66.2

2 unchanged sentences

(1) Employee-related liabilities consist primarily of payroll, bonus, vacation, health and workers’ compensation.

(2) For more information on the liabilities classified as held for sale, refer to Note 22, “Assets Held for Sale.”

Commitments and Contingencies

2 unchanged sentences

The liabilities, if any, which ultimately result from such lawsuits are not expected by management to have a material impact on the consolidated financial statements of the Company.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

Environmental Reserves

5 unchanged sentences

Furthermore, the Company does not anticipate that maintaining compliance with such environmental statutes will have a material impact upon the Company’s consolidated financial position.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

The weighted average interest rate for the year ended December 31, 2024 and the components of long-term debt at December 31, 2024 and 2023, were as follows:

Weighted Average Interest Rate 2024 2023

Master note and security agreement 8.09 % $ 2.5 $ 4.4

Term loan A 7.78 % $ 360.8 $ 511.1

Revolving credit facility 7.79 % — —

Press Financing Arrangements 8.72 % 23.6 —

Master note and security agreement 8.17 % — 2.5

International term loans 18.13 % 0.4 1.8

4 unchanged sentences

Long-term debt $ 349.1 $ 362.5

______________________________

(1) Excludes a $ 3.7 million international revolving credit facility that was classified as held for sale and included in other current liabilities on the Company’s consolidated balance sheet as of December 31, 2024.

For more information on the European operations liabilities classified as held for sale, refer to Note 22, “Assets Held for Sale.”

Description of Debt Obligations

Master Note and Security Agreement

On September 1, 1995, and as last amended on November 24, 2014, the Company entered into its Master Note and Security Agreement.

As of December 31, 2023, the borrowings outstanding under the Master Note and Security Agreement were $ 2.5 million.

The senior notes under the Master Note and Security Agreement had a weighted average interest rate of 8.09 % at December 31, 2023, which is fixed to maturity, with interest payable semiannually.

Principal payments commenced September 1997 and extend through 2026 in various tranches.

The notes are collateralized by certain United States press equipment under the terms of the Master Note and Security Agreement.

Senior Secured Credit Facility

On April 28, 2014, the Company entered into its Senior Secured Credit Facility, which included a revolving credit facility, Term Loan A and Term Loan B (Term Loan B was retired in July 2019).

The Company completed the fifth amendment to the Senior Secured Credit Facility on November 2, 2021.

The Senior Secured Credit Facility was amended to (a) reduce the aggregate amount of the existing revolving credit facility from $ 500.0 million to $ 432.5 million, and extend the maturity of a portion of the revolving credit facility such that $ 90.0 million under the revolving credit facility is due on the existing maturity date of January 31, 2024 (the “Existing Maturity Date”) and $ 342.5 million under the revolving credit facility is due on November 2, 2026 (the “Extended Maturity Date”);

(b) extend the maturity of a portion of the existing term loan facility such that $ 91.5 million (of which a principal payment of $ 87.7 million was due upon maturity on January 31, 2024) of such term loan facility is due on the Existing Maturity Date and $ 483.9 million is due on the Extended Maturity Date;

(c) make certain adjustments to pricing, including an increase of 0.50 % to the interest rate margin applicable to the loans maturing on the Extended Maturity Date;

(d) modify certain financial and operational covenants;

and (e) modify the interest rate provisions relating to the phase-out of LIBOR as a reference rate.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

The Company completed the sixth amendment to the Senior Secured Credit Facility on March 25, 2022, which expanded the number of currencies available for letters of credit.

The Company completed the seventh amendment to the Senior Secured Credit Facility on January 24, 2023, which transitioned the Company’s reference rate from LIBOR to SOFR effective February 1, 2023.

1 unchanged sentence

The transition from LIBOR to SOFR did not have a material impact on the condensed consolidated financial statements.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

The Company completed the eighth amendment to the Senior Secured Credit Facility on January 4, 2024, which added an additional $ 25.0 million principal value to the Term Loan A (under the Extended Maturity Date).

1 unchanged sentence

Additionally, due to a portion of the revolving credit facility maturing on January 31, 2024, the total capacity under the revolving credit facility was reduced to $ 342.5 million as of this date.

The Company completed the ninth amendment to its Senior Secured Credit Facility (the “Ninth Amendment”) on October 18, 2024.

The Senior Secured Credit Facility was amended to:

(a) reduce the aggregate amount of the existing revolving credit facility from $ 342.5 million to $ 324.6 million, and extend the maturity of a portion of the revolving credit facility such that $ 17.7 million under the revolving credit facility will be due on the existing maturity date of November 2, 2026 (the “Existing Maturity Date”) and $ 306.9 million under the revolving credit facility will be due on October 18, 2029 (the “Extended Maturity Date”);

(b) extend the maturity of a portion of the existing Term Loan A such that $ 8.7 million of such term loan facility will be due on the Existing Maturity Date and $ 193.2 million will be due on the Extended Maturity Date;

(c) make certain adjustments to pricing, including an increase of 0.50 % to the interest rate margin applicable to the loans maturing on the Extended Maturity Date;

and (d) modify certain financial and operational covenants, including the Senior Secured Leverage Ratio (net indebtedness to consolidated EBITDA) shall not exceed 3.00 to 1.00 for any fiscal quarter ending on or after September 30, 2024, as well as the Total Leverage Ratio (consolidated total indebtedness to consolidated EBITDA) shall not exceed 3.50 to 1.00 for any fiscal quarter ending on or after September 30, 2024.

Borrowings under the revolving credit facility and Term Loan A made under the Senior Secured Credit Facility bear interest at 3.00 % in excess of reserve adjusted SOFR, or 2.00 % in excess of an alternate base rate with a SOFR floor of 0.75 % for the extended tranche and bear interest at 2.50 % in excess of reserve adjusted SOFR, or 1.50 % in excess of an alternate base rate with a SOFR floor of 0.75 % for the non-extending tranche.

At December 31, 2024, the Company had no outstanding borrowings on the revolving credit facility, and had $ 25.7 million of issued letters of credit, leaving up to $ 298.9 million available for future borrowings.

The amount available for future borrowings is reduced to $ 353.8 million under the Company’s most restrictive debt covenants.

This is the most restrictive liquidity measure currently applicable under the credit agreement.

The Senior Secured Credit Facility is secured by substantially all of the unencumbered assets of the Company.

The Senior Secured Credit Facility also requires the Company to provide additional collateral to the lend ers in certain limited circumstances.

Senior Unsecured Notes

The Company issued $ 300.0 million aggregate principal amount of its Senior Unsecured Notes due May 1, 2022, on April 28, 2014.

During the first quarter of 2022, the Company repurchased $ 2.4 million of its outstanding Senior Unsecured Notes in the open market.

All repurchased Senior Unsecured Notes were canceled.

The Company used cash flows from operating activities and borrowings under its revolving credit facility to fund the repurchases.

These repurchases were completed primarily to reduce interest expense.

On May 2, 2022, the Company used liquidity available under its revolving credit facility and available cash on hand to fund the repayment on maturity of all $ 209.1 million aggregate principal amount, outstanding at the time, of its Senior Unsecured Notes.

International Debt Obligations

The Company had one fixed rate, Euro denominated, international term loan for purposes of financing certain capital expenditures and general business needs.

The international term loan in the amount of $ 12.8 million was entered into on December 21, 2018, at a 1.96 % interest rate, with a term of five years , and matured on December 31, 2023.

In addition, as of December 31, 2023, there is $ 1.8 million outstanding on a term loan in Colombia.

Press Financing Arrangements

During the first quarter of 2024 , the Company entered into two press financing arrangements.

The first arrangement of $ 11.3 million bears interest at a fixed rate of 8.31 %, maturing in 2028.

The second arrangement of $ 12.3 million bears interest at a current weighted average variable rate of 9.10 %, maturing in 2031.

Payments are made monthly on both arrangements.

Master Note and Security Agreement

On September 1, 1995, and as last amended on November 24, 2014, the Company entered into its Master Note and Security Agreement.

On November 25, 2024, the Company used liquidity available under its revolving credit facility and available cash on hand to fund the repayment of the total outstanding aggregate principal balance of $ 1.5 million, thus terminating the Master Note and Security Agreement.

The notes were collateralized by certain United States press equipment under the terms of the Master Note and Security Agreement.

QUAD/GRAPHICS, INC.

1 unchanged sentence

(In millions, except share and per share data and unless otherwise indicated)

The Company has two multicurrency international revolving credit facilities that are used for financing working capital and general business needs.

The Company had $ 3.7 million of borrowings outstanding at a weighted average interest rate of 6.28 % on the international revolving credit facilities as of December 31, 2023, leaving $ 12.4 million available for future borrowing.

The terms of the international revolving credit facilities includes certain financial covenants, a guarantee of the international revolving credit facilities by the Company and a security agreement that includes collateralizing substantially all of the Quad Europe Sp.

The first multicurrency international revolving credit facility expires on October 29, 2024, and bears interest at the aggregate of the Warsaw Interbank Offered Rate (“WIBOR”) plus 1.40 % for any Polish Zloty denominated borrowings, the aggregate of Euro Interbank Offered Rate (“EURIBOR”) plus 1.45 % for any Euro denominated borrowings or the aggregate of British pound sterling LIBOR plus 1.45 % for any British pound sterling denominate borrowings.

The second multicurrency international revolving credit facility expires on January 14, 2025, and bears interest at the aggregate of WIBOR plus 1.00 % for any Polish Zloty denominated borrowings or the aggregate of EURIBOR plus 1.00 % for any Euro denominated borrowings.

International Debt Obligations

The Company had one fixed rate, Euro denominated, international term loan for purposes of financing certain capital expenditures and general business needs.

The international term loan in the amount of $ 12.8 million was entered into on December 21, 2018, at a 1.96 % interest rate, with a term of five years , and matured on December 31, 2023.

In addition, as of December 31, 2024 , there is $ 0.4 million outstanding on a term loan in Peru.

The Company has one multicurrency international revolving credit facility that is used for financing working capital and general business needs for the Company’s European operations.

The Company had $ 3.7 million of borrowings outstanding at a weighted average interest rate of 6.36 % on the international revolving credit facility as of December 31, 2024, leaving $ 10.8 million available for future borrowing.

The multicurrency international revolving credit facility is classified as held for sale and included in other current liabilities on the Company’s consolidated balance sheet as of December 31, 2024.

For more information on the European operations liabilities classified as held for sale, refer to Note 22, “Assets Held for Sale.” The terms of the international revolving credit facility include certain financial covenants, a guarantee of the international revolving credit facility by the Company and a security agreement that includes collateralizing substantially all of the Quad Europe Sp.

The multicurrency international revolving credit facility will expire on February 28, 2025, and bears interest at the aggregate of WIBOR plus 1.40 % for any Polish Zloty denominated borrowings or the aggregate of EURIBOR plus 1.45 % for any Euro denominated borrowings.

The Company held a second multicurrency international revolving credit facility until its expiration on October 31, 2024.

Fair Value of Debt

10 unchanged sentences

Balance at December 31, 2023 4.9

Debt issuance costs from October 18, 2024 debt financing arrangement 4.4

Amortization expense ( 1.6 )

Balance at December 31, 2024 $ 7.7

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

Covenants and Compliance

2 unchanged sentences

• Total Leverage Ratio.

On a rolling twelve-month basis, the Total Leverage Ratio, defined as consolidated total indebtedness to consolidated EBITDA, shall not exce ed 3.75 to 1.00 (for the twelve months ended December 31, 2023, the Company’s Total Leverage Ratio was 2.18 to 1.00).

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

• Liquidity, defined as unrestricted cash and permitted investments of the Company and its subsidiaries (subject to certain conditions) plus the aggregate amount of the unused revolving credit facility commitments, shall not be less than $ 181.6 million at any time during the period commencing December 15, 2023 and ending when all obligations owed under the Senio r Secured Credit Facility to lenders that are not extending lenders are paid in full.

On a rolling twelve-month basis, the Total Leverage Ratio, defined as consolidated total indebtedness to consolidated EBITDA, shall not exce ed 3.50 to 1.00 (for the twelve months ended December 31, 2024, the Company’s Total Leverage Ratio wa s 1.68 to 1.00).

• If there is any amount outstanding on the Revolving Credit Facility or Term Loan A, or if any lender has any revolving credit exposure or Term Loan A credit exposure, the Company is required to maintain the following:

◦ Se nior Secured Leverage Ratio.

On a rolling four-quarter basis, the Senior Secured Leverage Ratio, defined as the ratio of consolidated senior secured net indebtedness to consolidated EBITDA, shall not exceed (a) 3.50 to 1.00 for any fiscal quarter ending prior to December 31, 2023, and (b) 3.25 to 1.00 for any fiscal quarter ending on or after December 31, 2023 (other than, in the case of this clause (b), any fiscal quarter ending September 30 of any year, each of which shall be subject to a maximum Senior Secured Leverage Ratio not to exceed 3.50 to 1.00) (for the twelve months ended December 31, 2023, the Company’s Senior Secured Leverage Ratio was 1.99 to 1.00).

On a rolling four-quarter basis, the Senior Secured Leverage Ratio, defined as the ratio of consolidated senior secured net indebtedness to consolidated EBITDA, shall not exceed 3.00 to 1.00 for any fiscal quarter ending on or after September 30, 2024 (for the twelve months ended December 31, 2024, the Company’s Senior Secured Leverage Ratio was 1.57 to 1.00).

◦ Interest Coverage Ratio.

5 unchanged sentences

As the Company’s Total Leverage Ratio as of December 31, 2024, was 1.68 to 1.00, the limitations described above are not applicable at this time.

• If the Company’s Senior Secured Leverage Ratio is greater than 3.00 to 1.00 or the Company’s Total Net Leverage Ratio which, on a rolling twelve-month basis, is defined as consolidated net indebtedness to consolidated EBITDA, is greater than 3.50 to 1.00, the Company is prohibited from voluntarily prepaying any unsecured or subordinated indebtedness, with certain exceptions (including any mandatory prepayments on the Senior Unsecured Notes or any other unsecured or subordinated debt).

If the Senior Secured Leverage Ratio is less than 3.00 to 1.00 and the Total Net Leverage Ratio is less than 3.50 to 1.00, there are no such restrictions.

The limitations described above are currently not applicable, as the Company’s Senior Secured Leverage Ratio was 1.99 to 1.00 and Total Net Leverage Ratio was 1.99 to 1.00, as of December 31, 2023 .

The limitations described above are currently not applicable, as the Company’s Senior Secured Leverage Ratio wa s 1.57 to 1.00 and Total Net Leverage Ratio wa s 1.57 to 1.00, as of December 31, 2024 .

QUAD/GRAPHICS, INC.

2 unchanged sentences

Estimated Principal Payments

The approximate annual principal amounts due on long-term debt, ex cluding $ 4.9 million for future amortization of debt issuance costs, at December 31, 2023, were as follows:

The approximate annual principal amounts due on long-term debt, ex cludi ng $ 7.7 million for future amortization of debt issuance costs, at December 31, 2024, were as follows:

Principal Payments (1)

Total $ 384.8

______________________________

(1) Excludes $ 3.7 million of principal payments due on the international revolving credit facility that was classified as held for sale as of December 31, 2024.

For more information on the European operations liabilities classified as held for sale, refer to Note 22, “Assets Held for Sale.”

The Company determines if an arrangement is or contains a lease at contract inception.

9 unchanged sentences

The Company’s leases do not contain variable lease payments.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

ROU assets are initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received.

2 unchanged sentences

Amortization of the ROU asset is recognized and presented separately from interest expense on the lease liability.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

The Company’s ROU assets for both operating and finance leases are reviewed for impairment losses on a quarterly basis in line with ASC 360-10 — Property, Plant, and Equipment — Overall.

The Company recorded impairment charges of $ 3.6 million for the year ended December 31, 2023 to reduce the carrying value of certain ROU assets.

There was no ROU impairment recorded for the year ended December 31, 2022.

The Company recorded impairment charges of $ 3.1 million and $ 3.6 million for the year ended December 31, 2024 and December 31, 2023, respectively, to reduce the carrying value of certain ROU assets.

The Company also monitors its leases for events or changes in circumstances that require a reassessment of the lease.

14 unchanged sentences

Real estate leases are accounted for separately while all other leases, primarily equipment leases, with separate lease and non-lease components are accounted for as a single lease component.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

Leases Financial Information

2 unchanged sentences

In general, the Company has determined these options were not reasonably certain to be exercised, and therefore are not included in the determination of the lease term.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

The following summarizes certain lease information for the years ended December 31, 2024 and 2023:

1 unchanged sentence

December 31, 2024 December 31, 2023

Lease cost (1)

Finance lease cost:

16 unchanged sentences

Weighted-average discount rate — operating leases 6.1 % 5.8 %

______________________________

(1) Includes information related to leases classified as held for sale as of December 31, 2024.

For more information on the assets and liabilities classified as held for sale, refer to Note 22, “Assets Held for Sale.”

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

The components of finance lease assets at December 31, 2024 and 2023, were as follows:

2 unchanged sentences

Leased equipment—net (1)

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

______________________________

(1) Leased equipment - net totaling $ 5.4 million are classified as held for sale and are included in other long-term assets within the Company’s consolidated balance sheet as of December 31, 2024.

Refer to Note 22, “Assets Held for Sale,” for further information on the assets classified as held for sale.

These balances are excluded from the table above.

Future maturities of lease liabilities at December 31, 2024, were as follows:

4 unchanged sentences

2028 13.0 0.3

2028 12.5 0.4

2030 and thereafter 7.7 —

4 unchanged sentences

Long-term lease liability $ 61.4 $ 1.3

Income taxes have been based on the following components of earnings (loss) before income taxes for the years ended December 31, 2023 and 2022:

______________________________

(1) Current portion of finance lease obligations totaling $ 1.3 million and current portion of operating lease obligations totaling $ 0.8 million are classified as held for sale and are included in other current liabilities within the Company’s consolidated balance sheet as of December 31, 2024.

Finance lease obligations totaling $ 3.0 million and operating lease obligations totaling $ 0.8 million are classified as held for sale and are included in other long-term liabilities within the Company’s consolidated balance sheet as of December 31, 2024.

Refer to Note 22, “Assets Held for Sale,” for further information on the lease liabilities classified as held for sale.

These balances are excluded from the table above.

Income taxes have been based on the following components of loss before income taxes for the years ended December 31, 2024 and 2023:

United States $ ( 8.6 ) $ ( 65.8 )

1 unchanged sentence

Total $ ( 44.5 ) $ ( 42.6 )

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

The components of income tax expense for the years ended December 31, 2024, and 2023, were as follows:

6 unchanged sentences

Total income tax expense $ 6.4 $ 12.8

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

The following table outlines the reconciliation of differences between the Federal statutory tax rate and the Company’s income tax expense for the years ended December 31, 2024 and 2023:

Federal statutory rate $ ( 9.3 ) $ ( 8.9 )

Adjustment of uncertain tax positions and audit assessments 10.4 ( 0.3 )

Adjustment to valuation allowances 14.5 4.7

Impairment on European operations 8.7 —

Adjustment of uncertain tax positions and audit assessments ( 5.9 ) 10.4

Adjustment of deferred tax liabilities ( 4.8 ) 0.3

Executive compensation limitation 2.7 2.3

Foreign rate differential 2.0 —

Other permanent tax differences 1.2 1.4

Credits ( 1.2 ) ( 1.5 )

Impact from foreign branches ( 1.1 ) 0.6

Adjustment of deferred tax liabilities 0.3 1.5

Credits ( 0.9 ) ( 1.2 )

State taxes, net of federal benefit 0.9 0.3

Loss on the sale of Argentina print business — ( 5.1 )

Foreign rate differential 0.3 2.0

Other 0.1 0.9

1 unchanged sentence

The $ 14.5 million adjustment to valuation allowance in 2024 primarily relates to adjusting reserves related to deferred tax assets for interest limitation, credits and other deferred tax assets that are not expected to be realized in the future for federal income tax purposes.

The $ 3.1 million adjustment to valuation allowance in 2022 primarily relates to increasing reserves related to deferred tax assets for credits and interest limitation that are not expected to be realized in the future for federal income tax purposes.

The $ 4.7 million adjustment to valuation allowance in 2023 primarily relates to adjusting reserves related to deferred tax assets for interest limitation, credits and other deferred tax assets that are not expected to be realized in the future for federal income tax purposes.

The $ 0.9 million effective rate reconciling item for State taxes, net of federal benefit, in 2024 includes a $ 3.1 million adjustment for partial release of valuation allowance reserves.

18 unchanged sentences

Net deferred tax assets (1)

$ 66.9 $ 86.6

Deferred tax liabilities:

3 unchanged sentences

Net deferred tax assets $ 3.9 $ 7.3

______________________________

(1) Deferred tax assets totaling $ 3.8 million are classified as held for sale and are included in other long-term assets within the Company’s consolidated balance sheet as of December 31, 2024.

Refer to Note 22, “Assets Held for Sale,” for further information on the assets classified as held for sale.

These balances are excluded from the table above.

The Company has recorded deferred income tax liabilities of $ 3.2 million and $ 5.1 million as of December 31, 2024 and 2023, respectively, which were included in deferred income taxes in the consolidated balance sheets.

4 unchanged sentences

Of the state net operating loss carryforwards, $ 70.0 million is available without expiration, while the remainders expire through 2044.

• Various credit carryforwards of $ 7.8 million, $ 29.5 million and $ 32.5 million for federal, foreign and state, respectively.

The federal carryforward expires through 2043, the foreign credit carryforward expires in 2026, and the state credit carryforwards include $ 25.5 million that is available without expiration, while the remainder expires through 2037.

QUAD/GRAPHICS, INC.

1 unchanged sentence

(In millions, except share and per share data and unless otherwise indicated)

• Various credit carryforwards of $ 4.4 million and $ 32.2 million for federal and state, respectively.

The federal carryforward expires through 2044 and the state credit carryforwards include $ 25.5 million that is available without expiration, while the remainder expires through 2038.

A foreign credit carryforward of $ 30.0 million was classified as held for sale and is included in other long-term assets within the Company’s consolidated balance sheet as of December 31, 2024.

Refer to Note 22, “Assets Held for Sale,” for further information on the assets classified as held for sale.

As of December 31, 2024, the Company has recorded a valuation allowance of $ 97.9 million on its consolidated balance sheet primarily related to the tax-affected amounts of the above carryforwards.

The valuation allowance includes $ 26.9 million, $ 7.8 million and $ 63.2 million of federal, foreign and state deferred tax assets, respectively, that are not expected to be realized.

The foreign valuation allowance excludes $ 32.9 million which was classified as held for sale and is included in other long-term assets within the Company’s consolidated balance sheet as of December 31, 2024.

Refer to Note 22, “Assets Held for Sale,” for further information on the assets classified as held for sale.

Uncertain Tax Positions

4 unchanged sentences

Lapses of applicable statutes of limitations ( 6.7 ) ( 0.2 )

Cumulative translation adjustment ( 1.3 ) —

Balance at December 31, $ 8.9 $ 16.7

As of December 31, 2024, $ 4.4 million of unrecognized tax benefits would impact the Company’s effective tax rate, if recognized.

It is reasonably possible that $ 6.7 million of the total amount of unrecognized tax benefits will decrease within the next twelve months due to resolution of income tax audits or statute expirations.

The Company classified interest expense (income) and any related penalties (refunds) related to income tax uncertainties as a component of income tax expense.

The following table summarizes the Company’s interest income related to tax uncertainties and refunds recognized during the years ended December 31, 2023 and 2022:

Interest expense (income) $ 3.3 $ ( 0.1 )

Penalties (refunds) 1.6 —

It is reasonably possible that $ 1.8 million of the total amount of unrecognized tax benefits will decrease within the next twelve months due to resolution of income tax audits or statute expirations, of which $ 0.2 million would impact the Company’s effective tax rate.

The Company classified interest expense and any related penalties related to income tax uncertainties as a component of income tax expense.

The following table summarizes the Company’s interest expense related to tax uncertainties and penalties recognized during the years ended December 31, 2024 and 2023:

Interest expense $ 0.2 $ 3.3

Penalties 0.4 1.6

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

Accrued interest and penalties related to income tax uncertainties are reported as components of other current liabilities and other long-term liabilities in the consolidated balance sheets.

The following table summarizes the Company’s liabilities for accrued interest and penalties related to income tax uncertainties at December 31, 2023 and 2022:

The following table summarizes the Company’s liabilities for accrued interest and penalties, after the impact of translation adjustments, related to income tax uncertainties at December 31, 2024 and 2023:

December 31, 2024 December 31, 2023

6 unchanged sentences

Tax years 2011 and 2016 through 2024 remain open and subject to examination or litigation in the Company’s major foreign jurisdictions.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

The Company’s practice and intention is to reinvest certain earnings of its non-U.S.

3 unchanged sentences

Reform of International Taxation

The Organization for Economic Co-operation and Development’s reform of international taxation known as Pillar Two Global Anti-Base Erosion Rules is effective for the Company starting in 2024.

The Company is closely monitoring developments and evaluating the impacts that the new Pillar 2 minimum tax may have on its tax rate, including eligibility to qualify for safe harbor rules that would eliminate or reduce the Pillar 2 minimum tax.

Based upon preliminary calculations for calendar year 2024, the Company anticipates it will meet the safe harbor rules in most jurisdictions, and any remaining tax under Pillar 2 should be immaterial.

The Organization for Economic Co-operation and Development’s reform of international taxation known as Pillar Two Global Anti-Base Erosion Rules is effective for the Company in 2024.

The Company continues to monitor ongoing developments concerning this tax reform within applicable jurisdictions.

As of December 31, 2024, the Company qualifies for safe harbor provisions in jurisdictions with adopted Pillar 2 legislation, and did not record a tax impact within its consolidated financial statements.

Financial Instruments and Fair Value Measurements

10 unchanged sentences

Interest Rate Swap

The Company currently holds one interest rate swap contract.

The Company currently holds one active interest rate swap contract.

The purpose of entering into the contract was to reduce the variability of cash flows from interest payments related to a portion of Quad’s variable-rate debt.

The interest rate swap was previously designated as cash flow hedges as it effectively converted the notional value of the Company’s variable rate debt based on one-month LIBOR to a fixed rate, including a spread on underlying debt, and a monthly reset in the variable interest rate.

However, the Company amended its Senior Secured Credit Facility during the second quarter of 2020, which added a 0.75 % LIBOR floor to the Company’s variable rate debt, changing the critical terms of the hedged instrument.

Due to this change in critical terms, the Company elected to de-designate the swap as a cash flow hedge, resulting in future changes in fair value being recognized in interest expense.

The balance of the accumulated other comprehensive loss attributable to the interest rate swap as of June 30, 2020 was then amortized to interest expense on a straight-line basis over the remaining lives of the swap contracts.

The Company expects to reclassi fy $ 0.7 million of this balance to interest expense over the next twelve months.

Due to the Company’s transition from LIBOR to SOFR during the first quarter of 2023, the interest rate swap’s fixed swap rate was amended to be based on one-month term SOFR.

March 19, 2019

Active Interest Rate Swap

The active interest rate swap is designated as a cash flow hedge as it effectively converts the notional value of the Company’s variable rate debt based on one-month term SOFR to a fixed rate, including a spread on underlying debt, and a monthly reset in the variable interest rate.

The key terms of the active interest rate swap are as follows:

April 23, 2024

Interest Rate Swap

Effective date March 29, 2019

Effective date April 30, 2024

Termination date March 31, 2027

2 unchanged sentences

The Company classifies interest rate swaps as Level 2 because the inputs into the valuation model are observable or can be derived or corroborated utilizing observable market data at commonly quoted intervals.

The fair value of the interest rate swaps classified as Level 2 as of December 31, 2023 and 2022, were as follows:

The fair value of the active interest rate swap classified as Level 2 as of December 31, 2024 and 2023, was as follows:

Balance Sheet Location December 31, 2024 December 31, 2023

Interest rate swap assets Prepaid expenses and other current assets $ 0.9 $ 3.8

Prior to the Company’s de-designation of the interest rate swap as a cash flow hedge, the interest rate swap was considered highly effective, with no a mount of ineffectiveness recorded into earnings.

Interest rate swap liabilities Other long-term liabilities ( 0.7 ) —

The active interest rate swap was highly effective as of December 31, 2024.

No a mount of ineffectiveness has been recorded into earnings related to the active interest rate swap.

The cash flows associated with the active interest rate swap have been recognized as an adjustment to interest expense in the consolidated statements of operations, and the changes in the fair value of the active interest rate swap has been included in other comprehensive income (loss) in the consolidated statements of comprehensive loss:

Year Ended December 31,

Cash Flow Impacts

Net interest received $ ( 0.1 ) $ —

Loss recognized in other comprehensive income (loss) $ 0.7 $ —

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

Terminated Interest Rate Swap

The Company held a $ 130.0 million interest rate swap, effective on March 29, 2019, that terminated on March 28, 2024.

The terminated interest rate swap was previously designated as cash flow hedges as it effectively converted the notional value of the Company’s variable rate debt based on one-month LIBOR to a fixed rate, including a spread on underlying debt, and a monthly reset in the variable interest rate.

Due to this change in critical terms, the Company had elected to de-designate the swap as a cash flow hedge, resulting in future changes in fair value being recognized in interest expense.

Due to the Company’s transition from LIBOR to SOFR during the first quarter of 2023, the interest rate swap’s fixed swap rate was amended to be based on one-month term SOFR.

The fair value of the terminated interest rate swap classified as Level 2 as of December 31, 2024 and 2023, was as follows:

Balance Sheet Location December 31, 2024 December 31, 2023

Interest rate swap asset Prepaid expenses and other current assets $ — $ 0.9

Prior to the Company’s de-designation of the terminated interest rate swap as a cash flow hedge, the interest rate swap was considered highly effective, with no a mount of ineffectiveness recorded into earnings.

The change in the fair value of the interest rate swap is recorded as an adjustment to interest expense in the consolidated statements of operations.

The cash flows associated with the interest rate swap have been recognized as an adjustment to interest expense in the consolidated statements of operations:

The cash flows associated with the terminated interest rate swap have been recognized as an adjustment to interest expense in the consolidated statements of operations:

Year Ended December 31,

Cash Flow Impacts

Net interest paid (received) $ ( 3.4 ) $ 1.7

Net interest received $ ( 1.0 ) $ ( 3.4 )

Impacts with Swaps as Nonhedging Instruments

(Income) loss recognized in interest expense excluded from hedge effectiveness assessments $ 2.9 $ ( 9.0 )

Loss recognized in interest expense excluded from hedge effectiveness assessments $ 0.9 $ 2.9

Amounts reclassified out of accumulated other comprehensive loss to interest expense 0.6 2.7

21 unchanged sentences

Balance Sheet Location December 31, 2024 December 31, 2023

Interest rate collar assets Prepaid expenses and other current assets $ 0.1 $ —

Interest rate collar liabilities Other long-term liabilities — ( 0.2 )

1 unchanged sentence

No amount of ineffectiveness has been recorded into earnings related to these cash flow hedges.

The cash flows associated with the interest rate collars have been recognized as an adjustment to interest expense in the condensed consolidated statements of operations, and t he changes in the fair value of the interest rate collars have been included in other comprehensive income (loss) in the condensed consolidated statements of comprehensive income (loss):

The cash flows associated with the interest rate collars have been recognized as an adjustment to interest expense in the consolidated statements of operations, and t he changes in the fair value of the interest rate collars have been included in other comprehensive income (loss) in the consolidated statements of comprehensive loss:

Year Ended December 31,

6 unchanged sentences

As of December 31, 2024, there were no open foreign currency exchange contracts designated as cash flow hedges.

Natural Gas Forward Contracts

The Company periodically enters into natural gas forward purchase contracts to hedge against increases in commodity costs.

The Company’s commodity contracts qualified for the exception related to normal purchases and sales during the years ended December 31, 2023 and 2022, as the Company takes delivery in the normal course of business.

QUAD/GRAPHICS, INC.

1 unchanged sentence

(In millions, except share and per share data and unless otherwise indicated)

Natural Gas Forward Contracts

The Company periodically enters into natural gas forward purchase contracts to hedge against increases in commodity costs.

The Company’s commodity contracts qualified for the exception related to normal purchases and sales during the years ended December 31, 2024 and 2023, as the Company takes delivery in the normal course of business.

The Company measures fair value on its debt instruments using interest rates available to the Company for borrowings with similar terms and maturities and is categorized as Level 2.

2 unchanged sentences

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company is required to record certain assets and liabilities at fair value on a nonrecurring basis, generally as a result of acquisitions or the remeasurement of assets that may result in impairment charges, which are categorized as Level 3.

See Note 3, “Restructuring, Impairment and Transaction-Related Charges”;

See Note 3, “Restructuring, Impairment and Transaction-Related Charges, Net”;

Note 4, “Goodwill and Other Intangible Assets”;

Note 7, “Property, Plant and Equipment”;

and Note 11, “Leases” for further discussion on fair value remeasurements.

See Note 3, “Restructuring, Impairment and Transaction-Related Charges” for impairment charges recorded as a result of the remeasurement of certain long-lived assets.

Note 11, “Leases”;

and Note 22, “Assets Held for Sale,” for further discussion on fair value remeasurements.

See Note 3, “Restructuring, Impairment and Transaction-Related Charges, Net” and Note 22, “Assets Held for Sale,” for impairment charges recorded as a result of the remeasurement of certain long-lived assets.

The Company records the fair value of its forward contracts and pension plan assets on a recurring basis.

13 unchanged sentences

The Company funds at least the minimum amount required for all qualified plans using actuarial cost methods and assumptions acceptable under government regulations.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

The components of net pension income for the years ended December 31, 2024 and 2023, were as follows:

4 unchanged sentences

Net pension income $ 0.8 $ 1.7

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

The Company made $ 0.7 million in benefit payments to its non-qualified defined benefit pension plans and made no contributions to its qualified defined benefit pension plans during the year ended December 31, 2023.

The Company made $ 1.7 million in contributions to its qualified defined benefit pension plans and $ 0.4 million in benefit payments to its non-qualified defined benefit pension plans during the year ended December 31, 2024.

The underfunded pension obligations are calculated using generally accepted actuarial methods and are measured annually as of December 31.

9 unchanged sentences

Fair value of plan assets, beginning of year 303.3 313.0

Actual gain (loss) on plan assets 26.2 ( 94.5 )

Actual gain on plan assets 5.6 26.2

Employer contributions 2.1 0.7

2 unchanged sentences

Underfunded status $ ( 34.1 ) $ ( 39.4 )

The underfunded defined benefit plan obligations increased by $ 3.1 million during the year ended December 31, 2023.

This increase in the underfunded status was primarily due to an overall decrease of $ 9.7 million in pension plan assets from $ 36.6 million in benefits paid, offset by an actual gain on pension plan assets of $ 26.2 million or 10.67 % during the year ended December 31, 2023, which was above the expected return on plan assets assumption of 6.75 %, and employer contributions of $ 0.7 million.

This decrease in plan assets was partially offset by a decrease in overall pension obligations of $ 6.6 million from $ 36.6 million in benefits paid, offset by a $ 17.6 million increase in interest cost due to a 35 basis point decrease in the pension discount rate from 5.46 % at December 31, 2022, to 5.11 % at December 31, 2023 and $ 12.4 million from an actuarial loss.

The underfunded defined benefit plan obligations decreased by $ 5.3 million during the year ended December 31, 2024.

This decrease in the underfunded status was primarily due to a decrease in overall pension obligations of $ 30.1 million from $ 32.5 million in benefits paid and $ 14.0 million from an actuarial gain, offset by a $ 16.4 million increase in interest cost due to a 44 basis point increase in the pension discount rate from 5.11 % at December 31, 2023, to 5.55 % at December 31, 2024.

This decrease in pension obligations was partially offset by an overall decrease of $ 24.8 million in pension plan assets from $ 32.5 million in benefits paid, offset by an actual gain on pension plan assets of $ 5.6 million, or 2.99 %, during the year ended December 31, 2024, which was below the expected long-term return on plan assets assumption of 6.30 %, and employer contributions of $ 2.1 million.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

Amounts recognized on the consolidated balance sheets as of December 31, 2024 and 2023, were as follows:

3 unchanged sentences

Total amount recognized $ ( 34.1 ) $ ( 39.4 )

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

The following table provides a reconciliation of the Company’s accumulated other comprehensive loss prior to any deferred tax effects at December 31, 2024 and 2023:

2 unchanged sentences

Amount arising during the period ( 6.0 )

Amortization included in net loss 0.6

Balance at December 31, 2023 ( 53.0 )

5 unchanged sentences

Payments to eligible participants who elected to receive a lump-sum pension payment were funded from existing pension plan assets and constituted a settlement of the Company’s pension liabilities with respect to these participants.

Actuarial gains and losses in excess of 10% of the greater of the projected benefit obligation or the market-related value of plan assets are recognized as a component of net periodic benefit costs over the average remaining service period of a plan’s active employees.

Unrecognized prior service costs or credits are also recognized as a component of net periodic benefit cost over the average remaining service period of a plan’s active employees.

There were no special lump sum pension options offered in 2024.

Unrecognized prior service costs or credits are also recognized as a component of net periodic benefit cost over the average remaining life expectancy of all participants.

The weighted average assumptions used to determine net periodic benefit costs for the years ended December 31, 2024 and 2023, were as follows:

2 unchanged sentences

Expected long-term return on plan assets 6.30 % 6.75 %

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

The weighted average assumptions used to determine pension benefit obligations at December 31, 2024 and 2023, were as follows:

3 unchanged sentences

Estimated Company Contributions and Benefit Payments

In 2024, the Company expects to make cash contributions of $ 4.2 million to its qualified defined benefit pension plans and expects to make estimated benefit payments of $ 1.7 million to its non-qualified defined benefit pension plans.

In 2025, the Company does not expect to make any cash contributions to its qualified defined benefit pension plans and expects to make estimated benefit payments of $ 1.7 million to its non-qualified defined benefit pension plans.

The actual pension contributions may differ based on the funding calculations, and the Company may choose to make additional discretionary contributions.

The estimated benefit payments may differ based on actual experience.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

Estimated Future Benefit Payments by the Plans to or on Behalf of Plan Participants

14 unchanged sentences

Derivatives are strictly used for hedging purposes and not speculative purposes.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

The current target allocations for plan assets on a weighted average basis are 25 % equity securities and 75 % debt securities, including cash and cash equivalents.

5 unchanged sentences

The expected long-term rate of return on plan assets is then calculated by weighting each asset class.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

The fair values of the Company’s pension plan assets at December 31, 2024 and 2023, by asset category were as follows:

23 unchanged sentences

Level 2 assets are valued using quoted prices in markets that are not active, broker dealer quotations, and other methods by which all significant input was observable at the measurement date.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

The valuation methodologies described above may generate a fair value calculation that may not be indicative of net realizable value or future fair values.

2 unchanged sentences

The Company believes that NAV is representative of fair value at the reporting date, as there are no significant restrictions on redemption on these investments or other reasons to indicate that the investment would be redeemed at an amount different than NAV.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

The fair value measurements in common/collective trusts, calculated using a NAV and their redemption restrictions, for the years ended December 31, 2024 and 2023, are as follows:

19 unchanged sentences

• If a participating company stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating companies.

• If the Company stops participating in some or all of its MEPPs, and continues in business, the Company would be required to pay an amount, referred to as a withdrawal liability, based on the unfunded status of the plan.

QUAD/GRAPHICS, INC.

1 unchanged sentence

(In millions, except share and per share data and unless otherwise indicated)

The Company has withdrawn from all significant MEPPs and replaced these union sponsored “promise to pay in the future” defined benefit plans with a Company sponsored “pay as you go” defined contribution plan.

1 unchanged sentence

As a result of the decision to withdraw, the Company accrued the estimated withdrawal liability based on information provided by each plan’s trustee.

The GCIU Plan is a defined benefit plan that provides retirement benefits, total and permanent disability benefits, and pre-retirement death benefits for the participating union employees of the Company.

The GCIU Plan is a defined benefit plan that provides retirement benefits, total and permanent disability benefits, and pre-retirement death benefits for the former participating union employees of the Company.

The funded status of the GCIU Plan is classified as critical and declining based on the GCIU Plan’s 2022 certification to the United States Department of Labor, as the plan is projected to become insolvent within 20 years.

2 unchanged sentences

In 2019, the Company and the GCIU reached a settlement agreement for all claims, with scheduled payments until April 2032.

The GCC Plan is a defined benefit plan that provides retirement benefits, disability benefits, and early retirement benefits for the participating union employees of the Company.

The funded status of the GCC Plan is classified as critical based on the GCC Plan’s 2023 certification to the Internal Revenue Service.

While the GCC Plan has no projected insolvency for the next 20 years, it will be deemed in critical status through April 30, 2051, regardless of its funded status as a result of having received special financial assistance from the Pension Benefit Guaranty Corporation.

In 2016, the Company and the GCC reached a settlement agreement for all claims, with scheduled payments until February 2024.

The Company made payments totaling $ 6.2 million for the years ended December 31, 2023 and 2022.

The GCC Plan is a defined benefit plan that provides retirement benefits, disability benefits, and early retirement benefits for the former participating union employees of the Company.

The funded status of the GCC Plan is classified as critical based on the GCC Plan’s 2024 certification to the Internal Revenue Service, and has operated under a Rehabilitation Plan for fifteen years.

At the time of the certification, the GCC Plan had sufficient assets to meet its monthly obligations.

The Company made its final payment to the GCC in February 2024.

The Company made payments totaling $ 4.3 million and $ 6.2 million for the years ended December 31, 2024 and 2023, respectively.

The Company has reserved $ 21.5 million as the total MEPPs withdrawal liability as of December 31, 2024, of which $ 19.2 million was recorded in other long-term liabilities and $ 2.3 million was recorded in other current liabilities in the consolidated balance sheets.

Earnings (Loss) Per Share

Loss Per Share

Basic earnings (loss) per share is computed as net earnings (loss) divided by the basic weighted average common shares outstanding.

2 unchanged sentences

Equity incentive instruments for which the total employee proceeds from exercise exceed the average fair value of the same equity incentive instrument over the period have an anti-dilutive effect on earnings per share during periods with net earnings, and accordingly, the Company excludes them from the calculation.

Due to the net loss incurred during the year ended December 31, 2023, the assumed exercise of all equity incentive instruments was anti-dilutive and therefore, not included in the diluted loss per share calculation.

Anti-dilutive equity instruments excluded from the computation of diluted net earnings per shares were 0.2 million class A common shares for the year ended December 31, 2022.

Due to the net loss incurred during the years ended December 31, 2024 and 2023, the assumed exercise of all equity incentive instruments were anti-dilutive and therefore, not included in the diluted loss per share calculation.

QUAD/GRAPHICS, INC.

2 unchanged sentences

Reconciliations of the numerator and the denominator of the basic and diluted per share computations for the Company’s common stock for the years ended December 31, 2024 and 2023, are summarized as follows:

Net earnings (loss) $ ( 55.4 ) $ 9.3

Net loss $ ( 50.9 ) $ ( 55.4 )

Basic weighted average number of common shares outstanding for all classes of common stock 47.6 48.4

1 unchanged sentence

Diluted weighted average number of common shares outstanding for all classes of common shares 47.6 48.4

Earnings (loss) per share:

Loss per share:

Basic and Diluted $ ( 1.07 ) $ ( 1.14 )

Cash dividends paid per common share for all classes of common shares $ 0.20 $ —

Equity Incentive Programs

24 unchanged sentences

RS and RSU equity awards expense $ 6.2 $ 4.3

RSU liability awards expense — 0.2

DSU awards expense 1.1 1.3

23 unchanged sentences

Nonvested at December 31, 2024 4,264,407 $ 4.45 1.1 147,953 $ 4.46 1.1

In general, RS and RSU awards will vest on the third anniversary of the grant date, provided the holder of the share is continuously employed by the Company until the vesting date.

Compensation expense recognized for RS and RSUs classified as equity was $ 4.3 million and $ 5.1 million for the years ended December 31, 2023 and 2022, respectively.

QUAD/GRAPHICS, INC.

1 unchanged sentence

(In millions, except share and per share data and unless otherwise indicated)

In general, RS and RSU awards will vest on the third anniversary of the grant date, provided the holder of the share is continuously employed by the Company until the vesting date.

Compensation expense recognized for RS and RSUs classified as equity was $ 6.2 million and $ 4.3 million for the years ended December 31, 2024 and 2023, respectively.

Deferred Stock Units

5 unchanged sentences

Granted 225,000 5.01

Dividend equivalents granted 35,976 5.96

Settled ( 89,156 ) 6.69

17 unchanged sentences

December 31, 2023 20.0 — 0.5 0.5

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

In accordance with the Articles of Incorporation, each class A common share has one vote per share and each class B and class C common share has ten votes per share on all matters voted upon by the Company’s shareholders.

2 unchanged sentences

The Company has no present plans to issue any preferred stock.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

On July 30, 2018, the Company’s Board of Directors authorized a share repurchase program of up to $ 100.0 million of the Company’s outstanding class A common stock.

2 unchanged sentences

The program may be suspended or discontinued at any time.

The following repurchases occurred during the years ended December 31, 2023 and 2022:

There were no share repurchases during the year ended December 31, 2024.

The following repurchases occurred during the year ended December 31, 2023:

Shares of Class A common stock 2,852,501

1 unchanged sentence

Total repurchases during the period (in millions) $ 12.6

$ 12.6 $ 10.0

______________________________

(1) Excluding commissions, total repurchases were $ 12.6 million and $ 9.9 million during the years ended December 31, 2023 and 2022.

As of December 31, 2024, there were $ 77.5 million of authorized repurchases remaining under the program.

In March 2024, 294,875 shares of class B common stock were converted to class A common stock, and the class B common shares were canceled and returned to the status of authorized but unissued shares.

In accordance with the Articles of Incorporation, dividends are paid equally for all three classes of common shares.

1 unchanged sentence

On February 15, 2024, the Board of Directors reinstated the Company’s quarterly dividends.

The dividend activity related to the then outstanding shares for the year ended December 31, 2024 is as follows:

Declaration Date Record Date Payment Date Dividend Amount per Share

Q4 Dividend October 21, 2024 November 18, 2024 December 6, 2024 $ 0.05

Q3 Dividend July 22, 2024 August 19, 2024 September 6, 2024 $ 0.05

Q2 Dividend April 22, 2024 May 22, 2024 June 7, 2024 $ 0.05

Q1 Dividend February 16, 2024 February 27, 2024 March 12, 2024 $ 0.05

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

Accumulated Other Comprehensive Loss

3 unchanged sentences

Other comprehensive income (loss) before reclassifications 13.1 ( 0.2 ) ( 4.4 ) 8.5

Amounts reclassified from accumulated other comprehensive loss to net earnings 27.3 2.6 — 29.9

Amounts reclassified from accumulated other comprehensive loss to net loss — 2.2 — 2.2

Net other comprehensive income (loss) 13.1 2.0 ( 4.4 ) 10.7

4 unchanged sentences

Balance at December 31, 2024 $ ( 91.0 ) $ ( 2.0 ) $ ( 38.2 ) $ ( 131.2 )

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

The details about the reclassifications from accumulated other comprehensive loss to net earnings (loss) for the years ended December 31, 2023 and 2022, were as follows:

The details about the reclassifications from accumulated other comprehensive loss to net loss for the years ended December 31, 2024 and 2023, were as follows:

Details about Accumulated Other

3 unchanged sentences

Amortization of amounts accumulated for interest rate swaps de-designated as cash flow hedges, net of tax 0.6 2.2

Reclassification of foreign currency translation adjustments — 27.3 Restructuring, impairment and transaction-related charges

Impact of income taxes — — Income tax expense

Reclassification of foreign currency translation adjustments, net of tax — 27.3

Total reclassifications for the period, net of tax $ 0.6 $ 2.2

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

Segment Information

Quad is a global MX company that helps brands make direct consumer connections, from household to in-store to online.

The Company’s mission is to provide a better marketing experience for its clients, so they can focus on delivering the best customer experience to theirs.

The Company’s operating and reportable segments are aligned with how the chief operating decision maker of the Company currently manages the business.

The Company adopted Accounting Standards Update 2023-07 “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures” during the year ended December 31, 2024.

The Company’s operating and reportable segments are aligned with how the chief operating decision maker (the “CODM”) of the Company (the Chairman, President and Chief Executive Officer) currently manages the business.

On a monthly basis, the CODM receives discrete financial information, including operating income (loss), for the United States Print and Related Services and International segments, as well as for the Corporate non-operating segment.

This information is used to make resource allocation decisions for the entire Company.

Intercompany transactions, including sales between the Company’s operating and reportable segments, have been eliminated in consolidation.

The Company’s operating and reportable segments, including their product and service offerings, and a “Corporate” category are as follows:

2 unchanged sentences

United States Print and Related Services

The United States Print and Related Services segment is predominantly comprised of the Company’s United States printing operations and is managed as one integrated platform.

This includes print execution and logistics for retail inserts, catalogs, long-run publications, special interest publications, journals, direct mail, directories, in-store marketing and promotion, packaging, newspapers, custom print products, as well as other commercial and specialty printed products, along with global paper procurement, and marketing and other complementary services, such as data intelligence and analytics, technology solutions, media planning, placement and optimization, creative strategy and content creation, as well as execution in non-print channels (e.g., digital and broadcast).

This segment also includes the manufacture of ink.

The United States Print and Related Services segment is predominantly comprised of the Company’s United States printing operations, managed as one integrated platform, and marketing and other complementary services.

The printing operations include print execution and logistics for retail inserts, catalogs, long-run publications, special interest publications, journals, direct mail, directories, in-store marketing and promotion, packaging, newspapers, custom print products, as well as other commercial and specialty printed products, along with global paper procurement and the manufacture of ink.

Marketing and other complementary services include data intelligence and analytics, technology solutions, media planning, placement and optimization, creative strategy and content creation, as well as execution in non-print channels (e.g., digital and broadcast).

This segment also includes medical services.

International

1 unchanged sentence

This segment provides printed products and marketing and other complementary services consistent with the United States Print and Related Services segment.

Corporate consists of unallocated general and administrative activities and associated expenses including, in part, executive, legal and finance, as well as certain expenses and income from frozen employee retirement plans, such as pension benefit plans.

QUAD/GRAPHICS, INC.

1 unchanged sentence

(In millions, except share and per share data and unless otherwise indicated)

The following is a summary of segment information for the years ended December 31, 2023 and 2022:

Operating Income (Loss) Restructuring, Impairment and Transaction-Related Charges

Net Sales Depreciation and Amortization Capital Expenditures

Products Services

The following tables provide segment information for the years ended December 31, 2024 and 2023:

United States Print and Related Services International Corporate Total

Year Ended December 31, 2024

United States Print and Related Services $ 1,949.7 $ 604.6 $ 56.6 $ 113.7 $ 57.6 $ 66.3

International 384.4 19.0 18.3 14.8 13.2 9.6

Total operating segments 2,334.1 623.6 74.9 128.5 70.8 75.9

Corporate — — ( 49.2 ) 0.3 — 1.6

Total $ 2,334.1 $ 623.6 $ 25.7 $ 128.8 $ 70.8 $ 77.5

Products $ 1,775.0 $ 324.2 $ — $ 2,099.2

Services 554.5 18.5 — 573.0

Total net sales 2,329.5 342.7 — 2,672.2

Cost of sales $ 1,820.3 $ 271.9 $ — $ 2,092.2

Selling, general and administrative expenses 263.1 42.8 50.9 356.8

Depreciation and amortization 90.5 11.8 0.2 102.5

Restructuring, impairment and transaction-related charges, net 42.8 61.9 ( 3.2 ) 101.5

Operating income (loss) $ 112.8 $ ( 45.7 ) $ ( 47.9 ) $ 19.2

Capital expenditures by segment $ 46.8 $ 10.4 $ — $ 57.2

Total assets by segment $ 1,052.8 $ 214.9 $ 31.3 $ 1,299.0

______________________________

(1) The significant expense categories and amounts align with the segment-level information regularly provided to the CODM.

United States Print and Related Services International Corporate Total

Year Ended December 31, 2023

United States Print and Related Services $ 2,126.6 $ 668.1 $ 108.3 $ 124.7 $ 46.4 $ 12.1

International 401.7 20.6 ( 4.5 ) 16.1 13.9 30.7

Total operating segments 2,528.3 688.7 103.8 140.8 60.3 42.8

Corporate — — ( 50.3 ) 0.5 — 2.0

Total $ 2,528.3 $ 688.7 $ 53.5 $ 141.3 $ 60.3 $ 44.8

Restructuring, impairment and transaction-related charges for the years ended December 31, 2023 and 2022, are further described in Note 3, “Restructuring, Impairment and Transaction-Related Charges,” and are included in the operating income (loss) results by segment above.

A reconciliation of operating income to earnings (loss) before income taxes as reported in the consolidated statements of operations for the years ended December 31, 2023 and 2022, was as follows:

Operating income $ 25.7 $ 53.5

interest expense 70.0 48.4

net pension income ( 1.7 ) ( 12.6 )

Earnings (loss) before income taxes $ ( 42.6 ) $ 17.7

Total assets by segment at December 31, 2023 and 2022, are shown in the following table:

United States Print and Related Services $ 1,191.2 $ 1,390.2

International 271.1 289.5

Total operating segments 1,462.3 1,679.7

Corporate 47.4 22.1

Total $ 1,509.7 $ 1,701.8

Products $ 1,949.7 $ 384.4 $ — $ 2,334.1

Services 604.6 19.0 — 623.6

Total net sales 2,554.3 403.4 — 2,957.7

Cost of sales $ 2,067.6 $ 313.6 $ — $ 2,381.2

Selling, general and administrative expenses 250.1 47.1 47.3 344.5

Depreciation and amortization 113.7 14.8 0.3 128.8

Restructuring, impairment and transaction-related charges, net 66.3 9.6 1.6 77.5

Operating income (loss) $ 56.6 $ 18.3 $ ( 49.2 ) $ 25.7

Capital expenditures by segment $ 57.6 $ 13.2 $ — $ 70.8

Total assets by segment $ 1,191.2 $ 271.1 $ 47.4 $ 1,509.7

______________________________

(1) The significant expense categories and amounts align with the segment-level information regularly provided to the CODM.

QUAD/GRAPHICS, INC.

1 unchanged sentence

(In millions, except share and per share data and unless otherwise indicated)

Restructuring, impairment and transaction-related charges, net for the years ended December 31, 2024 and 2023, are further described in Note 3, “Restructuring, Impairment and Transaction-Related Charges, Net.”

A reconciliation of operating income to loss before income taxes as reported in the consolidated statements of operations for the years ended December 31, 2024 and 2023, was as follows:

Operating income $ 19.2 $ 25.7

interest expense 64.5 70.0

net pension income ( 0.8 ) ( 1.7 )

Loss before income taxes $ ( 44.5 ) $ ( 42.6 )

Geographic Area Information

5 unchanged sentences

Property, plant and equipment—net (1)

445.4 — 46.8 7.5 499.7

Operating lease right-of-use assets—net (2)

71.9 — 1.3 5.7 78.9

Other intangible assets—net 7.2 — — — 7.2

Other long-term assets (3)

42.5 28.4 7.1 0.6 78.6

Products $ 1,902.3 $ 160.2 $ 263.6 $ 8.0 $ 2,334.1

4 unchanged sentences

Other long-term assets 66.1 7.2 6.2 0.5 80.0

______________________________

(1) Property, plant and equipment - net held within the Europe geographic region totaling $ 22.1 million are classified as held for sale and are included in other long-term assets within the Company’s consolidated balance sheet as of December 31, 2024.

Refer to Note 22, “Assets Held for Sale,” for further information on the European operations classified as held for sale.

(2) Operating lease right-of-use assets - net held within the Europe geographic region totaling $ 1.6 million are classified as held for sale and are included in other long-term assets within the Company’s consolidated balance sheet as of December 31, 2024.

Refer to Note 22, “Assets Held for Sale,” for further information on the European operations classified as held for sale.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

(3) Other long-term assets held within the Europe geographic region include $ 22.1 million of property, plant and equipment, $ 1.6 million of operating lease right-of-use assets and $ 3.9 million of other long-term assets classified as held for sale as of December 31, 2024.

Refer to Note 22, “Assets Held for Sale,” for further information on the European operations classified as held for sale.

Strategic Investments

Sale of Manipal Technologies Limited Strategic Partnership

On March 28, 2012, the Company entered into a strategic partnership with India-based Manipal Technologies Limited (“ManipalTech”) whereby Quad paid $ 18.1 million for a minority equity ownership interest in ManipalTech.

The Company’s investment in ManipalTech was accounted for as a cost method investment until its sale.

On April 16, 2024, Quad sold its ownership interest back to the majority owners of ManipalTech for total proceeds of $ 22.2 million and a realized gain of $ 4.1 million.

Assets Held for Sale

Effective during the third quarter of 2024, the Company, having the authority to approve the action, committed to a plan to sell its European operations as part of an ongoing strategic focus to optimize its business portfolio for growth as an MX company.

Accordingly, as of September 30, 2024, the Company has classified its European operations as held for sale, as required by ASC 360-10 – “Long Lived Assets”, and has continued this classification as of December 31, 2024.

The Company’s European operations primarily consist of all employees and facilities for Quad/Graphics Europe print and ink manufacturing headquartered in Wyszkow, Poland;

the Peppermint agency in Warsaw, Poland;

and Quad Point of Sale (including Marin’s International SAS), which has locations throughout Europe.

The Company’s European operations has historically been included within the International segment and reporting unit.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

The following table summarizes the components of the European operations classified as held for sale on the consolidated balance sheet as of December 31, 2024:

Receivables—net 19.6

Inventories 9.0

Prepaid expenses and other current assets 1.0

Included in prepaids and other current assets $ 31.3

Property, plant and equipment—net $ 22.1

Operating lease right-of-use assets—net 1.6

Other long-term assets 3.9

Included in other long-term assets $ 27.6

Accounts payable $ 14.2

Other current liabilities 7.7

Short-term debt and current portion of long-term debt 3.7

Current portion of finance lease obligations 1.3

Current portion of operating lease obligations 0.8

Included in other current liabilities $ 27.7

Finance lease obligations $ 3.0

Operating lease obligations 0.8

Other long-term liabilities 1.0

Included in other long-term liabilities $ 4.8

Restructuring reserve (included in other current liabilities) $ 41.6

Cumulative translation adjustments (loss) (included in accumulated other comprehensive loss) $ ( 41.6 )

For the year ended December 31, 2024, the European operations recognized net sales of $ 152.9 million and had an operating loss, including a non-cash impairment charges of $ 57.6 million, to reduce the carrying value of the European operations to its estimated fair value, including $ 41.6 million of non-cash impairment of foreign currency translation adjustments and $ 16.0 million of non-cash impairment of tangible property, plant and equipment.

The fair value of the assets held for sale were determined by the Company to be Level 2 under the fair value hierarchy (see Note 10, “Financial Instruments and Fair Value Measurements,” for the definition of Level 2 inputs) and were estimated based on revised expected net proceeds.

On October 22, 2024, the Company announced it entered into a definitive agreement with Germany-based entrepreneurial private capital investment manager Capmont GmbH to sell the European operations.

The expected net proceeds are approximately $ 26.4 million.

The sale is expected to close in early 2025, pending customary closing conditions.

QUAD/GRAPHICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In millions, except share and per share data and unless otherwise indicated)

New Accounting Pronouncements

In December 2023, the FASB issued Accounting Standards Update 2023-09 “Income Taxes (Topic 470):

Improvements to Income Tax Disclosures” (“ASU 2023-09”), which establishes new income tax disclosures to consistently categorize and provide greater disaggregation of information in the rate reconciliation, including dollar value and percentage impacts of each component of the reconciliation, as well as further disaggregates income taxes paid.

This guidance is effective for fiscal years beginning after December 15, 2024.

The Company is evaluating the impact of the adoption of ASU 2023-09 on the consolidated financial statements.

In November 2024, the FASB issued Accounting Standards Update 2024-03 “Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures:

Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which is intended to improve disclosures about a public business entity's expenses, primarily through additional disaggregation of income statement expenses.

The ASU’s amendments are effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027.

The Company is evaluating the impact of the adoption of ASU 2024-03 on the consolidated financial statements.

Subsequent Events

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What changed 10-K

Item 8. Financial Statements and Supplementary Data