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Quad/Graphics Reports Second Quarter And Year-To-Date June 2012 Results

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

(b) Impairment charges incurred in the three months ended June 30, 2012 were for certain buildings and equipment no longer being utilized in production as a result of facility consolidations, primarily related to the Company's Stillwater, Oklahoma and Pila, Poland facilities.

(c) Transaction-related charges incurred in the three months ended June 30, 2012 consisted of professional service fees related to business acquisition and divestiture activities.

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

(e) Other restructuring charges were primarily from costs to maintain and exit closed facilities, as well as lease exit charges.

(2) Includes the Adjusted EBITDA and Adjusted EBITDA Margin for the Canadian operations sold on March 1, 2012, calculated in a consistent manner with the calculation above for Adjusted EBITDA and Adjusted EBITDA Margin from continuing operations.

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

 
QUAD/GRAPHICS, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin

For the Six Months Ended June 30, 2012 and 2011

(in millions)

(UNAUDITED)

 
Six Months Ended June 30,
2012   2011
Net earnings (loss) attributable to Quad/Graphics common shareholders $ 26.6 $ (17.6 )
 
Interest expense 42.1 59.1
Income tax benefit (44.1 ) (10.9 )
Depreciation and amortization 169.3   170.8  
 
EBITDA (Non-GAAP) $ 193.9 $ 201.4
EBITDA Margin (Non-GAAP) 10.1 % 10.1 %
 
Restructuring, impairment and transaction-related charges (1) 75.9 50.3
Loss from discontinued operations, net of tax 3.2 6.1
Gain on disposal of discontinued operations, net of tax (35.3 )  
 
Adjusted EBITDA from continuing operations (Non-GAAP) $ 237.7   $ 257.8  
Adjusted EBITDA Margin from continuing operations (Non-GAAP) 12.4 % 12.9 %
 
Adjusted EBITDA from discontinued operations (Non-GAAP) (2) $ (1.5 ) $ 9.6  
Adjusted EBITDA Margin from discontinued operations (Non-GAAP) (2) (4.7 )% 5.5 %
 
Adjusted EBITDA - consolidated (Non-GAAP) $ 236.2   $ 267.4  
Adjusted EBITDA Margin - consolidated (Non-GAAP) 12.1 % 12.3 %

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