To the extent any statements in this Annual Report on Form 10-K contain information that is not historical, these statements are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to, among other things, the objectives, goals, strategies, beliefs, intentions, plans, estimates, prospects, projections and outlook of Quad/Graphics, Inc. (the "Company"“Company” or "Quad/Graphics"“Quad”), and can generally be identified by the use of words such as "may," "will," "expect," "intend," "estimate," "anticipate," "plan," "foresee," "believe"“may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “plan,” “foresee,” “believe” or "continue"“continue” or the negatives of these terms, variations on them and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements.

These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the control of the Company. These risks, uncertainties and other factors could cause actual results to differ materially from those expressed or implied by those forward-looking statements. Among risks, uncertainties and other factors that may impact Quad/GraphicsQuad are those described in Part I, Item 1A, "Risk“Risk Factors,"” of this Annual Report on Form 10-K, as such may be amended or supplemented in Part II, Item 1A, "Risk“Risk Factors,"” of the Company'sCompany’s subsequently filed Quarterly Reports on Form 10-Q, and the following:

Quad cautions that the foregoing list of risks, uncertainties and other factors is not exhaustive and you should carefully consider the other factors detailed from time to time in Quad/Graphics'Quad’s filings with the United States Securities and Exchange Commission ("SEC"(“SEC”) and other uncertainties and potential events when reviewing the Company'sCompany’s forward-looking statements.

Because forward-looking statements are subject to assumptions and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. You are cautioned not to place undue reliance on such statements, which speak only as of the date of this Annual Report on Form 10-K. Except to the extent required by the federal securities laws, Quad/GraphicsQuad undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Quad/Graphics isAs a globalworldwide marketing services provider that helps brand owners market their products,solutions partner dedicated to creating a better way, Quad uses its data-driven, integrated marketing solutions platform to help clients reduce complexity, increase efficiency and enhance marketing spend effectiveness. Quad provides its clients with unmatched scale for client on-site services and content more efficientlyexpanded subject expertise in marketing strategy, creative solutions, media deployment and effectively by using its strong print foundation in combination with other media channels.marketing management services. With a consultativeclient-centric approach, worldwide capabilities,that drives its expanded offering, combined with leading-edge technology and single-source simplicity, the Company believes it has the resources and knowledge to help a wide variety of clients in multiple vertical industries, including retail, publishing and healthcare.

Quad/GraphicsQuad was founded in Pewaukee, Wisconsin, as a Wisconsin corporation, in 1971 by the late Harry V. Quadracci. As of February 11, 2019, the Quadracci family, through the Quad Voting Trust, has voting control of approximately 72%, which the Company believes provides it with continued stability and flexibility as Quad works to achieve its long-term strategic vision. As of December 31, 2016,2018, the Company had approximately 22,60020,600 full-time equivalent employees in North America, South America, Europe and Asia, and served a diverse base of approximately 8,600 clients from 1626,100 clients. Quad locations span 15 countries, including 60 manufacturing and distribution facilities located in 17 countries, as well asand more than 60 client-based marketing on-site locations, with additional investments in printing operations in Brazil and India.

The Company is on a transformative journey that it describes in chapters. The Company's first chapterevolutions. Each new evolution expands the Company’s offerings to create enhanced value for its clients. Quad 1.0 covered a period of tremendous organic growth that began with its founding in 1971 and concluded in 2010.1971. During this 40-year period, the Company grew rapidly through greenfield growth, built a premier manufacturing and distribution platform equipped with the latest technology, established its reputation as one of the industry'sprinting industry’s foremost innovators and created a Company culture based on strong values that remains in place today.

The Company's second chapterQuad 2.0 began in 2010 and relates to Quad/Graphics'continues today with Quad’s ongoing role as a disciplined print industry consolidator. Quad/GraphicsQuad saw an opportunity to participate in industry consolidation in response to economic and industry pressures following the Great Recessiongreat recession of 2008 and 2009, which severely impacted print volumes.volumes and accelerated the impact of media disruption. Through a series of consolidating acquisitions that included World Color Press, Inc. (“World Color Press”), Vertis Holdings Inc. and Brown Printing Company, the Company added experienced talent and was able to enhance and expand its product and service offerings, while removing inefficient and underutilized capacity, pulling out costs and transitioning work to more efficient facilities. This period of consolidation created the advanced, highly automated and efficient manufacturing and distribution platform the Company has today.

Now as theThe Company transitions from chapter two to chapter three,believes it is focused on continued Company transformation in two distinct ways:

As the Company continues its transformationAccording to a marketingDecember 2018 Dun & Bradstreet First Research report, the U.S. advertising services provider with a strong print foundation,industry is forecast to grow at an annual compounded rate of 4% between 2018 and 2022, as compared to the printing industry which is in secular decline. This opportunity for growth supports Quad’s 3.0 transformation and a review of both the marketing services and printing industries is set forth below.

In addition to being highly fragmented, competition in the printing industry remains intense, and the Company believes that there are indicators of heightened competitive pressures. The industry has excess manufacturing capacity created by continued declines in industry volumes which, in turn, hashave created accelerated downward pricing pressures. The Company also faces competition due to the increased accessibility and quality of digital alternatives to traditional delivery of printed documents through the online distribution and hosting of media content, and the digital distribution of documents and data. In addition, theThe Company faces competition from print management and marketing consulting firms that look to streamline processes and reduce the overall print spend of the Company'sCompany’s clients. Furthermore, the Company believes the

The commercial print industry has moved toward a demand for shorter print runs, faster product turnaround and increased production efficiency of products with lower page counts and increased complexity. This, combined with increases in postage expenses and the increased use of alternative digital marketing technologies,and communication channels, has led to excess manufacturing capacity in the print industry, and thisindustry. This excess capacity has allowed for certain larger printers, like Quad, with economies of scale, strong balance sheets and access to capital markets, the ability to installinvest in automation and more efficient equipment, take advantage of consolidating acquisition opportunities to remove excess, inefficient and/or underutilized capacity, and reduce overall costs.

Competition in both the marketing services and print industries is affected by real gross domestic product growth, as economic activity and advertising spending are key drivers of consumer demand. In times of economic prosperity, advertisers may increase spending to build brand awareness and to drive sales. Conversely, in times of global economic uncertainty and budget pressures, advertisers may reduce spending.spending or shift their spending to other forms of media. For print specifically, magazine publishers facingthat face diminished advertising pages reduce total page counts; catalog marketers reduce page counts, circulation and frequency of print campaigns; retailers curb investments in store inventory and cut back on retail insert newspaper circulation and advertising; and other advertisers reduce their direct mail volume, particularly in the banking, insurance, credit card, real estate and nonprofit industries. It is possible that these customers instead decide to move advertising spend to digital alternatives.

Marketing services providers face pressure to satisfy major clients'clients’ needs, as the win or loss of a major client account can impact revenue significantly. Another challenge facing marketing service providers relates to public concern and general annoyance with advertising methods. For example, data collection of personal information for marketing purposes is an issue under scrutiny from federal legislation, and marketing service providers can faceare facing future restrictions on certain types of data they collect. In Europe, the European Union already has been enforcing data protection through the General Data Protection Regulations.

The Company faces competition in the advertising and marketing services industry based on access to a skilled workforce, pricing, adapting quickly to new technology, creating unique and effective campaigns and offering superior customer service. Across Quad/Graphics'Quad’s range of printed products, competition is based on total price of printing, materials and distribution; quality; distribution capabilities; customer service; access to a highly skilled workforce; availability to schedule work on appropriate equipment; on-time production and delivery; and state-of-the-art technology to meet a client'sclient’s business objectives, including the ability to adopt new technology quickly.

As consumer media consumption habits change, marketing services providers face increased demand to offer completeend-to-end marketing services, from strategy and creative through execution, across bothall channels, traditional and digital channels.digital. As new marketing and advertising channels emerge, marketing serviceservices providers must offer not onlyexpand their services beyond traditional marketing services,channels, such as for television, newspapers, print publications and radio, but they must also offer services forto digital channels, such as mobile, internet search, internet display and video, to create effective multichannel campaigns for their clients.

Quad/GraphicsQuad believes that traditional business users of print and print-related services are focused on generating and tracking the highest returns on their marketing spend. Quad believes it is well positioned to help clients achieve greater process efficiencies and marketing spend effectiveness through data-driven integrated marketing solutions. The Company believes that its clients receive the greatest return on their marketing and advertising dollarsspend when they effectively utilizestart with a strong marketing strategy that uses print in combination with other media channels, informed by customer data, to target the appropriate customerscreate targeted and combine digital alternatives with customized print products in a targeted,relevant multichannel marketing campaign driven by an overall marketing strategy. Quad/Graphics believes it is well positioned to help its clients navigate through this changing media landscape and create innovative ways to connect online and offline channels.campaigns.

The CompanyQuad is subject to seasonality in its quarterly results as net sales and operating income are higher in the third and fourth quarters of the calendar year as compared to the first and second quarters. The fourth quarter is typically the highest seasonal quarter for cash flows from operating activities and Free Cash Flow due to the reduction of working capital requirements that reach peak levels during the third quarter. Seasonality is driven by increased magazine advertising page counts, retail inserts, catalogs and books primarily due to back-to-school and holiday-related advertising and promotions. The Company expects this seasonality impact to continue in future years.

Quad/GraphicsQuad believes employee pride, combined with a relentless quest to findcreate a better way, creates innovative ideas that drive improved performance and shared success for all.builds the opportunity to invent the future as a preferred marketing solutions partner, helping its clients win every day. To accomplish this vision, Quad/Graphics continues to redefine its role in a multichannel world andQuad remains focused on its consistent mission to achieve the following:strategic priorities as follows:

Quad/Graphics seeks to become an invaluable strategic partner for helping clients successfully navigate today's constantly changing media marketplace. As a strategic partner, Quad/Graphics helps clients plan, create and execute a marketing strategy effectively across multiple channels. The Company reinforces thatencourages all employees, regardless of job title, are partto walk in the shoes of Quad/Graphics' client experience team. As such, all employees are responsible for meeting theclients by putting a priority on listening to clients’ needs of its clients every day, makingand challenges, doing what they can to make it easy to work with Quad/Graphics,Quad, and making the client experience enjoyable at every touchpoint. AIn Quad 3.0, the Company is focused on evolving client print-production conversations to conversations encompassing consultative, enterprise-wide solutions that will create more value for clients. To accomplish this, a key component of Quad/Graphics'Quad’s client-facing strategy is to strengthen relationships at differenthigher levels insidewithin a client'sclient’s organization so the Company can better understand, anticipate and satisfy a client'sthe organization’s needs. In Quad 3.0, Quad seeks to become an invaluable strategic marketing partner for its clients, helping them successfully navigate today’s constantly evolving media landscape through innovative data-driven solutions, produced and deployed across multiple media channels. The Company also believes its proactive thought leadership in the key issues facing its clients, such as integratedincluding data-driven marketing services and postal reform, will foster loyalty to the Quad/GraphicsQuad brand.

This strategy centers on Quad’s ability to grow its business at a time when significant media disruption and print industry headwinds continue. Key components of this strategy are centered on Quad/Graphics' ability to grow through the following:as follows:

Quad/GraphicsQuad uses a disciplined return on capital framework and historically has made significant investments in its print manufacturing platform and data management capabilities that have resulted in what it believes is one of the most integrated, automated, efficient, innovative and modern manufacturing platformsplatform and distribution network in the printing industry. The Company'sCompany’s continued focus to strengthen its core manufacturing platform through investments tothat streamline, automate and improve efficiencies and throughput, while reducing labor costs, promotes sustainable cash flow and continued value creation. Further, aQuad’s disciplined culture of holistic Continuous Improvement and commitment to Lean Enterprise and a disciplined culture of continuous improvementManufacturing methodologies is a high priority throughout the Company and supports its goal of strengthening the production and distribution functions for core product lines to ensureso that Quad can remain the most efficient production and distribution platform and reach its goal to be the industry'sprinting industry’s high-quality, low-cost producer.

Quad/Graphics'Quad’s strategy to engageempower employees throughout their career journey builds on key aspects of itsthe Company’s distinct corporate culture, includingwhich the Company uses to fuel its ongoing Quad 3.0 transformation. These aspects include strong and lasting Company values and an organization-wide entrepreneurial spirit and opportunity-seeking mentality where employeesmentality. Employees are encouraged to take pride and ownership in their work;work, take advantage of continuous learning apprenticeprograms to advance in their careers and job-advancement opportunities;improve leadership skills, share knowledge by mentoring others;others and innovate solutions.solutions to drive performance. With the encouragement to do things differently, to be something greater and to create a better way, the Company believes its employees are more fully engaged in producing better results for clients and the local communities surrounding its facilities, and advancing the Company'sCompany’s strategic goals.goals, while supporting community activities, initiatives and organizations that impact the quality of life near Quad’s facilities. As Quad continues to expand its integrated marketing platform in Quad 3.0, the Company believes this creates possibilities for each employee that are advantageously distinct from other employers.

Quad/GraphicsQuad follows a disciplined approach to maintaining and enhancing financial strength to create shareholder value, which is essential given ongoing media disruption and printing industry challenges. This key strategic goalstrategy is centered on the Company'sCompany’s ability to maximize net earnings, Free Cash Flow and operating margins; maintain consistent financial policies to ensure a strong balance sheet, liquidity level and access to capital; and retain the financial flexibility needed to strategically allocate and deploy capital as circumstances change. The priorities for capital allocation and deployment are adjusted based on prevailing circumstances and what the Company thinks is best for shareholder value creation at any particular point in time. Those priorities currently include the following: (1) deleveraging the Company'sCompany’s balance sheet through debt and pension liability reductions; (2) making compelling investments that drive profitable organic growth and productivity in the Company's current business,Company’s print manufacturing and distribution operations, as well as executing on acquisitions through a disciplined approach that includes continued expansion into higher-growth products andmarketing services that enhance its ability to create client value,help accelerate the Company’s transformation in Quad 3.0, and pursuing value-driven industry consolidation; and (3) returning capital to shareholders through dividends and share repurchases.

Quad/Graphics' primaryQuad’s strategic goalspriorities are powered by three key competitive advantages which we believethat the Company believes distinguishes the Companyitself from its competitors: a commitment to ongoing innovation, a commitment to platform excellence, and a commitment to its people and lasting culture.

At the forefront of innovation for more than 4547 years, Quad/GraphicsQuad believes its commitment to ongoing innovation drives its visionpurpose to create a better way. To accomplish this, Quad takes a disciplined build-partner-acquire approach:

From integrated marketing solutions and technology to productivity improvements and vertically integrated businesses like healthcare, Quad prides itself on strategically investing in 2016, partnered with—and made a minority investment in—Rise Interactive, a digital marketing agency. The partnership brings together a company that is an expert at optimizing spend offline, with a company that is doingdeveloping the same online, using robust analyticsappropriate expertise internally to deliver highly-relevant, consistent messages—at scale—to consumers across print and digital channels. The strategic investment in Rise Interactive will enable both companies to accelerate growth through co-innovation that delivers more value to their collective clients.increase revenue or reduce costs as follows:

The Company also remains committed to ongoing innovation throughout its print manufacturing and distribution processes.processes to better serve its clients and remain the industry’s high-quality, low-cost producer. Over the last five years, Quad/GraphicsQuad has invested an average of 2.8%2.5% of its annual net sales for capital expenditures.expenditures in its core print manufacturing and distribution platform. This investment has resulted in what the Company believes is one of the most advanced and efficient platformsprint manufacturing and distribution platform in the industry and has allowed the Company to reduce the amount invested in recent years without impacting its leading technological excellence. The Company is in the midst of a three-year plan to transform some of its platform from conventional web offset presses to modern digital presses that will give marketers

A commitment to innovation and creating a better way to do business has also helped to expand Quad/GraphicsQuad’s vertically-integrated non-print capabilities, such as data management, imaging, logistics and distribution, ink manufacturing (Chemical Research\Technology), paper procurement, and equipment research and design (QuadTech).design. This approach to business gives the Company a competitive advantage in delivering lower costs for its clients, enhancing customer service levels and allowing substantial control over critical links in the overall print supply chain to help it control the quality, cost and availability of key inputs in the printing process. In addition, QuadMed, LLC (“QuadMed”), the Company'sCompany’s health and wellness subsidiary, was founded in 1990 to create a better way to address the Company'sCompany’s own employees'

Quad continues to invest in equipment and leading-edge technology to ensure its manufacturing platform remains the strongest and most efficientsustainable in the printing industry and that it continues to support a vast range of traditional and digital print solutions, finishing techniques and distribution capabilities to create value for its clients in Quad 3.0. At the same time, the Company has continued to strengthen its platform by removing excess, under-utilized capacity and by consolidating work into chapter three.

The Company has continuously invested in its print manufacturing platform through modernstate-of-the-art equipment and automation whichthat reduces labor costs, maximizes labor productivity and increases throughput. Within the last 5 years, these investments include multiple wide-web offset presses and digital presses; more than 50 automated guided vehicles or computer-controlled robotic forklifts; and more than 40 automated palletizers, which automatically configure bundles of finished magazines and catalogs on pallets at the end of a binding line.

The Company'sCompany’s investment in its manufacturing platform has consistently been based on evaluating the economic useful life of the underlying equipment rather than focusing on the potential mechanical life of the equipment. This discipline is critical in an industry in which technological change can create obsolescence well before the end of the mechanical life of equipment. To achieve its goal to beremain the industry'sindustry’s high-quality, low-cost producer, Quad/GraphicsQuad makes a concerted effort to treat all costs as variable and maintains a stringent focus on achieving productivity improvements and sustainable cost reductions through a variety of holistic Continuous Improvement and Lean Enterprise programs in both manufacturing and administrative areas.

Another key aspect of the Company'sCompany’s modern manufacturing platform is the combination of its footprint of mega plants (facilities greater than one million square feet) that produce a number ofseveral different products under one roof; mega zones where multiple facilities in close geographic proximity are managed as one large facility; and smaller strategically located facilities. The Company has continued to evolve its platform by equipping facilities to be product line agnostic, which enables the Company to maximize equipment utilization. Quad/GraphicsQuad believes that the large plant size of certain of its key printing facilities allows the Company to drive savings in certain product lines (such as publications and catalogs) due to economies of scale and from investments in automation and technology. Quad/Graphics

Quad is also able to leverage the volume of products running through its plants for further client distribution savings by coordinating and consolidating shipments from single mega plants or multiple plants that create a mega zone, and then routing those shipments directly to thousands of local newspapers, United States Postal Service ("USPS"(“USPS”) processing facilities or other distribution facilities. In addition, each major United States metropolitan area is within one day'sday’s drive of at least one of the Company'sCompany’s strategically located facilities, providing its clients the flexibility to print closest to their end consumers.

Quad/GraphicsQuad believes that its distinct corporate culture, which evolved from a core set of values conceived by the late founder Harry V. Quadracci, drives thoughtful decision-making, especially with regard to its disciplined approach to managemanaging operations, createscreating solutions that redefine print in a multichannel media marketplace, and better positionspositioning the Company to prevail in the dynamic and competitive printing industry. The Company fosters an entrepreneurial environment by inspiring and empowering employees to own projects and enact solutions that advance the Company'sCompany’s goals. Employees in the United States also may have a beneficial ownership interest in Quad/GraphicsQuad through Company stock held in an employee stock ownership plan,the Quad/Graphics, Inc. Employee Stock Ownership Plan (“ESOP”), enhancing their sense of ownership. The Company believes that it is this sense of employee engagement and distinct corporate culture that drives its disciplined approach to all aspects of its business.

Quad/GraphicsQuad is led by an experienced management team with a proven track record in the printing industry that is committed to preserving the Company'sCompany’s values-based culture. The senior management team includes individualsentrepreneurially minded leaders with a long tenure at Quad mixed with the Company augmented with seasoned industry talent realized through strategic hiringnew hires or leaders from recent acquisitions, further supplemented by managers and employees committed to advancing print and marketing solutions in coordination with the ever-evolving multichannel media landscape. The Company believes the experience and stability of senior management, paired with next-generation entrepreneurially minded employees,talent, will contribute to its long-term success as it continues on its path forward.forward in Quad 3.0.

Quad/GraphicsQuad also enjoys a competitive advantage in consistent, stable leadership that is focused on making decisions in the best long-term interest of the Company. It is able to do this because of the Quadracci family voting control, which enables the Company to manage its strategy and disciplined financial policy by being able to make decisions today that could benefit the Company years from now and avoid the pitfalls of short-term decision making that could potentially jeopardize the stability and longevity of the Company.

Quad strives to be the leader in a disciplined financialthe printing industry in adopting new technologies and processes to minimize the Company’s impact on the environment. The Company believes it has long been known for its environmental stewardship. Quad’s proactive approach to maximize earningsincorporate holistic practices has also positively impacted operating costs through the reduction of waste, energy use, and Free Cash Flow,emissions, as well as through the implementation of water conservation solutions. The Company has also undertaken steps to reduce greenhouse gas emissions from its manufacturing processes and to maintain a strong balance sheet. Continuous Improvementimprove fuel efficiency and Lean Manufacturing methodologies are among thereduce emissions in its fleet of Company-owned tractor trailers.

tools that Quad/Graphics usesAs the owner, lessee or operator of various real properties and facilities, Quad is subject to improve manufacturing productivity, simplifyvarious federal, state and streamline processeslocal environmental laws and regulations, including those relating to ultimately maximize operating margins. The Company appliesair emissions; waste generation, handling, management and disposal; sanitary and storm water discharge; and remediation of contaminated sites. Historically, compliance with these same methodologies to its selling, generallaws and administrative functions to createregulations has not had a truly Lean Enterprise. The Company has been working diligently to lower its cost structure by consolidating its manufacturing platform into its most efficient facilities, as well as realizing purchasing, mailingmaterial adverse effect on the Company’s results of operations, financial position or cash flows. Compliance with existing or new environmental laws and logistics efficiencies by centralizing and consolidating print manufacturing volumes and eliminating redundancies in its administrative and corporate operations. Quad/Graphics believes that its focused efforts to be the high-quality, low-cost producer generates increased Free Cash Flow and allowsregulations may require the Company to maintain a strong balance sheet through debt and pension liability reductions. The Company's disciplined financial approach also allows it to maintain sufficient liquidity as well as to reduce refinancing risk, with the nearest significant debt maturity not occurring until January 2021, as a result of the Company completing the second amendment to the Senior Secured Credit Facility during February 2017. See Note 25, “Subsequent Events,” to the consolidated financial statements in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K for further detail.

Quad/GraphicsQuad enjoys long-standing relationships with a diverse base of clients, which includes both national and regional corporations in North America, South America, Europe and Asia. The Company'sCompany’s clients include industry-leading blue chip companies that operate in a wide range of industries and serve both businesses and consumers, including retailers, publishers and direct marketers. The Company'sCompany’s relationships with its largest clients average more thanover 20 years in duration.

In 2016, Quad/Graphics2018, Quad served approximately 8,6006,100 clients, and its 10ten largest clients accounted for approximately 15% of consolidated sales, with none representing more than 5% individually. The Company believes that its large and diverse client base, broad geographic coverage and extensive range of printing and print-related capabilities are competitive strengths.

Quad/GraphicsQuad operates research and development facilities that support the development of new equipment, process improvements, raw materials and content management, and distribution technologies to better meet client needs and improve operating efficiencies. The Company continues to innovate within the printing and print-related industry and, as a result, has developed what it believes to be one of the most powerful patent portfolios in the print industry.

Quad/GraphicsQuad currently holds or has rights to commercialize a wide variety of worldwide patents and applications relating to its business. The Company intends to continue to file patent applications that it believes will help ensure the continued strength of the Company and its portfolio. Additionally, the Company markets products, services and capabilities under a number of trademarks and trade names. Quad/GraphicsQuad aggressively defends its intellectual property rights and intends to continue to do so in the future.

The primary raw materials that Quad/GraphicsQuad uses in its print business are paper, ink and energy. At this time, the Company'sCompany’s supply of raw materials is readily available from numerous vendors; however, based on market conditions, that could change in the future. The Company generally buys these raw materials based upon market prices that are established with the vendor as part of the procurement process.

The majorityApproximately half of the paper used by the Company is supplied directly by its clients. For those clients that do not directly supply their own paper, the Company makes use of its purchasing efficiencies to supply paper by negotiating with leading paper vendors, uses a wide variety of paper grades, weights and sizes, and does not rely on any one vendor. In addition, the Company generally includes price adjustment clauses in sales contracts for paper and other critical raw materials in the printing process. Although these clauses generally mitigate paper price risk, higher paper prices and tight paper supplies may have an impact on client demand for printed products. The Company'sCompany’s working capital requirements, including the impact of seasonality, are partially mitigated through the direct purchasing of paper by its clients.

The Company produces the majority of ink used in its print production, allowing it to control the quality, cost and supply of key inputs. Raw materials for the ink manufacturing process are purchased externally from a variety of vendors.

The Company generally cannot pass on to clients the impact of higher electric and natural gas energy prices on its manufacturing costs, and increases in energy prices result in higher manufacturing costs for certain of its operations. The Company mitigates its risk through natural gas hedges when appropriate. In its logistic operations, however, the Company is able to pass a substantial portion of any increase in fuel prices directly to its clients.

As of December 31, 2016, Quad/Graphics2018, Quad had approximately 22,60020,600 full-time equivalent employees in North America, South America, Europe and Asia. Within the United States, there were approximately 18,90016,900 full-time equivalent employees, of which approximately 600400 were covered by a collective bargaining agreement. Outside of the United States, there were approximately 3,700 full-time equivalent employees, of which approximately 1,3001,200 were either governed by an industry-wide agreement, by a collective bargaining agreement or through a works council or similar arrangement. Quad/GraphicsQuad believes that its employee relations are good and that the Company maintains an employee-centric culture.

There were no acquisitionsThe Company completed during the year ended December 31, 2016. acquisition of Ivie on February 21, 2018, for a net purchase price of $92 million, excluding acquired cash. Ivie is headquartered in Flower Mound, Texas and provides a full array of marketing services, including creative and production services, studio services, sourcing, procurement, staff enhancement, media services, public relations, digital, technology solutions and project management for many leading brands throughout the world.

For additional information related to the Company's priorCompany’s acquisition activity, see Note 2, "Acquisitions3, “Acquisitions and Strategic Investments,"” to the consolidated financial statements in Part II, Item 8, "Financial“Financial Statements and Supplementary Data,"” of this Annual Report on Form 10-K.

The following table sets forth the names, ages (as of February 17, 2017)11, 2019) and positions of Quad/Graphics'Quad’s executive officers.

Mr. Quadracci has served as the Chairman, President and Chief Executive Officer of Quad/GraphicsQuad since January 2010. Since March, 2018, Mr. Quadracci also serves on the Board of Directors of Rise Interactive Media & Analytics, LLC. He previously served as President and Chief Executive Officer from July 2006 to January 2010, President from January 2005 to July 2006 and has served as a director of Quad/GraphicsQuad since 2003. Mr. Quadracci joined Quad/GraphicsQuad in 1991 and, prior to becoming President and Chief Executive Officer, served in various capacities, including Sales Manager, Regional Sales Strategy Director, Vice President of Print Sales, Senior Vice President of Sales & Administration, and President and Chief Operating Officer. Mr. Quadracci is the brother of Kathryn Quadracci Flores, a director of the Company, and the brother-in-law of Christopher B. Harned, a director of the Company.

Ms. Badura has served as Executive Vice President of Sales since June 2015. She previously served as Vice President of Omnichannel Sales Strategy from February 2014 to June 2015, as Regional Vice President of Sales-Midwest for Marketing Solutions from January 2012 to February 2014, as Vice President of Sales - East Coast for Magazines and Catalogs from April 2007 to December 2011, as Vice President of Sales - West Coast from January 2004 to March 2007 and in various other capacities since she joined Quad/GraphicsQuad in 1986.

Mr. BlaisFrankowski has served as Executive Vice President of Global Procurement and Platform StrategyChief Operating Officer since March 2014. He previously served as Executive Vice President of Sales and Client Services from January 2012 to March 2014 and as Executive Vice PresidentManufacturing Operations and President of Magazines and CatalogsEurope from July 2010 to January 2012.March 2014. Prior thereto, Mr. BlaisFrankowski was Senior Vice President of Sales & AdministrationManufacturing from May 20052004 to July 2010, Quad/Graphics' Vice President of OperationsQuad Europe, Quad Polish subsidiary, from 19992008 to May 2005July 2010, and he served in various other capacities since he joined Quad/GraphicsQuad in 1984.1979.

Mr. Honan has served as Executive Vice President and Chief Financial Officer since January 2015. He previously served as Vice President and Chief Financial Officer from March 2014 to January 2015, Vice President and Chief Accounting Officer from July 2010 to March 2014, Vice President and Corporate Controller from December 2009 to July 2010 and as the Company'sCompany’s Corporate Controller from when he joined Quad/GraphicsQuad in May 2009 until December 2009. Prior to joining Quad/Graphics,Quad, Mr. Honan served as Vice President, General Manager and Chief Financial Officer of Journal Community Publishing Group, a subsidiary of media conglomerate Journal Communications Inc., for five years. Before joining Journal Community Publishing Group, Mr. Honan worked in executive-level roles in investor relations and corporate development at Newell Rubbermaid, a global marketer of consumer and commercial products. Prior thereto, Mr. Honan worked at the accounting firm Arthur Andersen LLP for 11 years.

Ms. Kent has served as Executive Vice President of Administration and General Counsel since June 2015. She previously served as Vice President and General Counsel from December 2013 to June 2015 and as the Company'sCompany’s Assistant General Counsel from when she joined Quad/GraphicsQuad in August 2010 until December 2013. Prior to joining Quad/Graphics,Quad, Ms. Kent held various positions in the legal department at Harley-Davidson Motor Company from March 2003 to July 2010. Prior thereto, Ms. Kent served as an Assistant United States Attorney for the Eastern District of Wisconsin and practiced law at Foley & Lardner LLP, a Milwaukee-based law firm.

Mr. Vanderboom has served as Executive Vice President since 2018. Since March 2018, Mr. Vanderboom has also served on the Board of Directors of Rise Interactive Media & Analytics, LLC. He has also served as Treasurer and President of Logistics Vice President and Treasurer since March 2014. He previously served as Quad/Graphics'Quad’s Vice President & Treasurer from 2008 to March 2014 and as its Treasurer from 2007 to 2008. Prior to becoming Quad/Graphics'Quad’s Treasurer, Mr. Vanderboom served as Director of Treasury, Risk & Planning from 2006 until 2007, as Controller of Quad/Graphics'Quad’s Distribution and Facilities departments from 2004 until 2006, and in various other capacities since he joined Quad/GraphicsQuad in 1993.

Mr. Jaeger has served as Vice President and Chief Information Officer since November 2015. He previously served as Executive Vice President, President of Direct Marketing and Chief Information Officer from November 2014 to November 2015, as Executive Vice President, President of Direct Marketing and Media Solutions and Chief Information Officer from March 2014 to November 2014, as Corporate Vice President of Information and Technology for Quad/GraphicsQuad since 2013, Vice President of Information Systems and Infrastructure from 2007 to 2012 and as President of Quad/Direct since August 2007. Prior thereto, Mr. Jaeger had been Quad/Graphics'Quad Vice President of Information Systems from 1998 to 2006 and had worked in various other capacities since he joined the Company in 1994. Prior to joining Quad/Graphics,Quad, Mr. Jaeger worked for Andersen Consulting for eight years.

Mr. StaniakMs. Bauer has served as Vice President and Chief Accounting Officer since January 2015. He previously served as Executive Director and Chief Accounting Officer since March 2017. She previously served as Director - Corporate Controller of the Company from May 2016 until March 2014 to January 2015, as Executive Director and Financial Controller from March 2013 to March 2014,2017. She joined the Company in September 2011, serving as Director of Internal Audit from November 2011 to March 2013 and as Director of External Reporting from when he joined Quad/Graphics in October 2009Corporate Accounting until November 2011.May 2016. Prior to joining Quad/Graphics, Mr. Staniak served as Chief Financial Officer for the data consulting firm Sagence,Quad, Ms. Bauer held various accounting positions at Journal Communications, Inc. (initially known as SilverTrain Inc.) since 2002. Prior thereto, Mr. Staniak worked in the audit division of the accounting firm Arthur Andersen LLP since 1995.during her 18 years there, including Vice President and Controller from June 2000 until September 2011.

Executive officers of the Company are elected by and serve at the discretion of the Company's boardCompany’s Board of directors.Directors. Other than described above, there are no family relationships between any directors or executive officers of Quad/Graphics.Quad.

You should carefully consider each of the risks described below, together with all of the other information contained in this Annual Report on Form 10-K, before making an investment decision with respect to Quad/Graphics'Quad’s securities. If any of the following risks develop into actual events, the Company'sCompany’s business, financial condition or results of operations could be materially and adversely affected, and you may lose all or part of your investment.

The printingadvertising and marketing services industries are highly competitive and are expected to remain so. The U.S. advertising and marketing services industry includes about 38,000 establishments (single-location companies and units of multi-location companies), with combined annual revenue of about $95$100 billion. Any failure on the part of the Company to compete effectively in the markets it serves could have a material adverse effect on its results of operations, financial condition or cash flows and could require changes to the way it conducts its business or require it to reassess strategic alternatives involving its operations.

The Company has experienced significant downward pricing pressures for printing services in the past, and pricing for printing services has declined significantly in recent years. Such pricing may continue to decline from current levels. In addition, demand for printing services has decreased in recent years and may continue to decrease. Any increases in the supply of printing services or decreases in demand could cause prices to continue to decline, and prolonged periods of low prices, weak demand and/or excess supply could have a material adverse effect on the Company'sCompany’s business growth, results of operations and liquidity.

The media landscape is experiencing rapid change due to the impact of electronicdigital media and digital content on printed products. Improvements in the accessibility and quality of digital media through the online distribution and hosting of media content, mobile technologies, e-reader technologies, electronicdigital retailing and the digital distribution of documents and data has resulted and may continue to result in increased consumer substitution. Continued consumer acceptance of such digital media, as an alternative to print materials, is uncertain and difficult to predict and may decrease the demand for the Company'sCompany’s printed products, result in reduced pricing for its printing services and additional excess capacity in the printing industry, and adversely affect the results of the Company'sCompany’s operations.

Quad/GraphicsAs competition increases among retail-based customers, they may not be ableenter into business combinations or alliances and establish companies in other market segments to expand their businesses. In addition, new and enhanced technologies, including search, web and infrastructure computing services, digital content, and electronic devices, affect the customers’ reliance on the use of printed materials. The internet facilitates competitive entry and comparison shopping, and the reliance on digital retailing may reduce coststhe Company’s sales and improve its operating efficiency rapidly enough to meet market conditions.profits.

The primary raw materials that Quad/GraphicsQuad uses in its print business are paper, ink and energy. The price of such raw materials has fluctuated over time and has caused fluctuations in the Company'sCompany’s net sales and cost of sales. This volatility may continue and Quad/GraphicsQuad may experience increases in the costs of its raw materials in the future as prices in the overall paper, ink and energy markets are expected to remain beyond its control.

The majorityApproximately half of the paper used by the Company is supplied directly by its clients. For those clients that do not directly supply their own paper, the Company generally includes price adjustment clauses in sales contracts for paper and other critical raw materials in the printing process. Although these clauses generally mitigate paper price risk, higher paper prices and tight paper supplies may have an impact on client demand for printed products. If Quad/GraphicsQuad passes along increases in the cost of paper and the price of the Company'sCompany’s products and services increases as a result, client demand could be adversely affected, and thereby, negatively impact Quad/Graphics'Quad’s financial performance. If the Company is unable to continue to pass along increases in the cost of paper to its clients, future increases in paper costs would adversely affect its margins and profits.

Although historically Quad/GraphicsQuad generally has not experienced significant difficulty in obtaining adequate quantities of paper, continued decline in suppliers, changes as noted above in United States import or trade regulations, under the new administration, or other unforeseen developments in the overall paper markets could result in a decrease in the supply of paper and could adversely affect the Company'sCompany’s revenues or profits.

The Company generally cannot pass alongon to clients the impact of higher electric and natural gas energy prices on its manufacturing costs, and increases in the costenergy prices result in higher manufacturing costs for certain of ink and energy to its clients.operations. If the Company is unable to pass along increases in the cost of ink and energy costs, future increases in these items would adversely affect its margins and profits. Even if Quad/Graphics is able toQuad could pass along increases in theenergy costs, of ink and energy and the price of the Company'sCompany’s products and services increaseswould increase as a result, clientresult. Client demand could be adversely affected, and would thereby negatively impact Quad/Graphics'Quad’s financial performance.

Labor represents a significant component of the cost structure of Quad/Graphics.Quad. Increases in wages, salaries and benefits, such as medical, dental, pension and other post-retirement benefits, may impact the Company'sCompany’s financial performance. Changes in interest rates, investment returns or the regulatory environment may impact the amounts the Company will be required to contribute to the pension plans that it sponsors and may affect the solvency of these pension plans. Quad/GraphicsQuad may be unable to achieve labor productivity targets, to retain employees or labor may not be adequately available in locations in which the Company operates, which could negatively impact the Company'sCompany’s financial performance.

Freight rates and fuel costs also represent a significant component of the Company'sCompany’s cost structure. In general, the Company has been able to pass along increases in the cost of freight and fuel to many of its clients. If the Company is not able to pass along a substantial portion of increases in freight rates or in the price of fuel, future increases in these items would adversely impact the Company'sCompany’s margin and profits. If Quad/GraphicsQuad passes along increases in the cost of freight and fuel and the price of the Company'sCompany’s products and services increases as a result, client demand could be adversely affected, and thereby, negatively impact Quad/Graphics'Quad’s financial performance.

As part of Quad/Graphics'Quad’s growth strategy, the Company may pursue acquisitions of, investment opportunities in, or other significant transactions with, companies that are complementary to the Company'sCompany’s business. In order to pursue this strategy successfully, the Company must identify attractive acquisition or investment opportunities, successfully complete the transaction, some of which may be large and complex, and manage post-closing issues such as integration of the acquired company or employees. Quad/GraphicsQuad may not be able to identify or complete appealing acquisition or investment opportunities given the intense competition for these transactions. Even if the Company identifies and completes suitable corporate transactions, the Company may not be able to successfully address inherent risks in a timely manner, or at all. These inherent risks include, among other things: (1) failure to successfully integrate the purchased operations, technologies, products or services and maintain uniform standard controls, policies and procedures; (2) substantial unanticipated integration costs; (3) loss of key employees including those of the acquired business; (4) diversion of management'smanagement’s attention from other operations; (5) failure to retain the clients of the acquired business; (6) failure to achieve any projected synergies and performance targets; (7) additional debt and/or assumption of known or unknown liabilities; (8) potential dilutive issuances of equity securities; and (9) a write-off of goodwill, client lists, other intangibles and amortization of expenses. If the Company fails to successfully integrate an acquisition, the Company may not realize all or any of the anticipated benefits of the acquisition, and Quad/Graphics'Quad future results of operations could be adversely affected. In addition, the diversion of management'smanagement’s attention from the Company'sCompany’s other operations due to these acquisitions and integration effort could adversely affect its business and have a negative financial impact.

Although the substantial majority of the Company'sCompany’s business activity takes place in the United States, a portion of Quad/GraphicsQuad’s net sales are derived from operations in foreign countries. The Company'sCompany’s products and services are sold primarily throughout North America, South America and Europe. In addition, the Company strategically sources packaging product manufacturing over multiple end markets in Central America and Asia. The Company'sCompany’s printing operations located in Europe and Latin America include operations in England, France, Germany, Poland, Argentina, Colombia, Mexico and Peru, as well as investments in printing operations in Brazil and India. Net sales from the Company'sCompany’s wholly-owned subsidiaries outside of the United States accounted for approximately 9%, 8% and 9% of its consolidated net sales for the years ended December 31, 2016, 20152018, 2017 and 2014, respectively.2016.

As a result, the Company is subject to the risks inherent in conducting business outside of the United States, including, but not limited to: the impact of economic and political instability; fluctuations in currency values, foreign-currency exchange rates, devaluation and conversion restrictions; exchange control regulations and other limits on the Company'sCompany’s ability to import raw materials or finished product; tariffs and other trade barriers; trade restrictions and economic embargoes by the United States or other countries; social unrest, acts of terrorism, force majeure, war or other armed conflicts; inflation and fluctuations in interest rates; language barriers; difficulties in staffing, training, employee retention and managing international operations; logistical and communications challenges; differing local business practices and cultural consideration; restrictions on the ability to repatriate funds; foreign ownership restrictions and the potential for nationalization or expropriation of property or other resources; longer accounts receivable payment cycles; potential adverse tax consequences and being subject to different legal and regulatory regimes that may preclude or make more costly certain initiatives or the implementation of certain elements of its business strategy. Any international expansion or acquisition that the Company undertakes could amplify these risks related to operating outside of the United States.

Quad/GraphicsQuad is exposed to the economic and political conditions in Argentina. The Argentine economy has experienced significant volatility in recent decades, characterized by periods of low or negative growth, high and variable levels of inflation and currency devaluation. As a consequence, the Company'sCompany’s business and operations have been, and could be in the future, affected from time to time to varying degrees by economic and political developments and other material events affecting the Argentine economy. The majority of the Company'sCompany’s employees in Argentina are covered by a collective bargaining agreement. A strike, work stoppage or other form of labor protest in Argentina in the future could disrupt the Company'sCompany’s Argentina operations and result in a material adverse impact to the Company'sCompany’s

The Company could be adversely affected by engaging in business practices that are in violation of United States and foreign anti-corruption laws, including the United States Foreign Corrupt Practices Act. The Company operates in parts of the world with developing economies that have experienced governmental corruption to some degree, and in certain circumstances, strict compliance with anti-corruption laws may conflict with local customs and practices. In certain countries, the Company does substantial business with government entities or instrumentalities, which creates increased risk of a violation of the Foreign Corrupt Practices Act.Act and international laws. There can be no assurance that all of the Company'sCompany’s employees, contractors or agents, including those representing the Company in countries where practices which violate anti-corruption laws may be customary, will not take actions that violate Quad/Graphics'Quad’s policies and procedures. The failure to comply with the laws governing international business practices may result in substantial penalties and fines. For additional information, see Note 10, "Commitments“Commitments and Contingencies — Litigation,"” to the consolidated financial statements in Part II, Item 8, "Financial“Financial Statements and Supplementary Data,"” of this Annual Report on Form 10-K.

The nature of the Company'sCompany’s business includes the receipt and storage of information about the Company'sCompany’s clients, vendors and the end-users of Quad/Graphics'Quad’s products and services. Quad/GraphicsQuad and its clients are subject to various United States and foreign consumer protection, information security, data privacy and "do“do not mail"mail” requirements at the federal, states, provincial and local levels. Quad/GraphicsQuad is subject to many legislative and regulatory laws and regulations around the world concerning data protection and privacy. In addition, the interpretation and application of

The conduct of the Company'sCompany’s businesses is subject to various laws and regulations administered by federal, state and local government agencies in the United States, as well as to foreign laws and regulations administered by government entities and agencies in markets in which the Company operates. These laws and regulations and interpretations thereof may change, sometimes dramatically, as a result of political, economic or social events, such as the election of the new administration. Such regulatory environment changes may include changes in taxation requirements, accounting and disclosure standards, immigration laws and policy, environmental laws, and requirements of United States and foreign occupational health and safety laws. Changes in laws, regulations or governmental policy and the related interpretations may alter the environment in which Quad/GraphicsQuad does business, and therefore, may impact its results or increase its costs or liabilities.

In addition, the Company and its subsidiaries are party to a variety of legal and environmental remediation obligations arising in the normal course of business, as well as environmental remediation and related indemnification proceedings in connection with certain historical activities, former facilities and contractual obligations of acquired businesses. Permits are required for the operation of certain parts of the Company'sCompany’s business, and these permits are subject to renewal, modification and, in some circumstances, revocation. Due to regulatory complexities, uncertainties inherent in litigation and the risk of unidentified contaminants on current and former properties, the potential exists for remediation, liability and indemnification costs to differ materially from the costs the Company has estimated. Quad/GraphicsQuad cannot assure you that the Company'sCompany’s costs in relation to these matters will not exceed its established liabilities or otherwise have an adverse effect on its results of operations.

Various laws and regulations addressing climate change are being considered at the federal and state levels. Proposals under consideration include limitations on the amount of greenhouse gas that can be emitted (so-called "caps"“caps”) together with systems of trading allowed emissions capacities. The impacts of such proposals could have a material adverse impact on the Company'sCompany’s financial condition and results of operations.

AsThe printing industry is experiencing rapid change as new digital technologies are developed that offer clients an array of December 31, 2016, 61%choices for their marketing and publication needs. In order to grow and remain competitive, the Company will need to adapt to future changes, especially with regard to technology, to enhance the Company’s existing offerings and introduce new offerings to address the changing demands of clients. If Quad is unable to meet future challenges from competing technologies on a timely basis or at an acceptable cost, the Company could lose clients to competitors. In general, the development of new communication channels inside and outside the printing and media solutions industry requires the Company to anticipate and respond to the varied and continually changing demands of clients. The Company may not be able to accurately predict technological trends or the success of new services in the market.

The Company’s business is seasonal, with Quad recognizing the majority of its operating income in the third and fourth quarters of the Company's borrowings were subject to variable interest rates. Asfinancial year, primarily as a result of the increased magazine advertising page counts and retail inserts, catalogs and books from back-to-school and holiday-related advertising and promotions. The fourth quarter is typically the highest seasonal quarter for cash flows from operating activities and Free Cash Flow due to the reduction of working capital requirements that reach peak levels during the third quarter. If the Company is exposed to market risks associated with fluctuations in interest rates, anddoes not successfully manage the increased workflow, necessary increases in interest ratespaper and ink inventory, production capacity flows and other business elements during these high seasons of activity, this seasonality could adversely affect the Company.

QuadMed provides employer-sponsored healthcare solutions on a national level to employers of all sizes, including the Company and other private and public-sector companies. These solutions include, but are outsidenot limited to, on-site and near-site healthcare clinics, occupational health services, telemedicine, and health and wellness programs. The healthcare industry is heavily regulated, constantly evolving and subject to significant change and fluctuation. The U.S. federal and state healthcare laws and regulations that impact the QuadMed subsidiary business include, among others:

In addition to the single employer defined benefit plans described above, the Company has previously participated in multiemployer pension plans (“MEPPs”) in the United States, including the Graphic Communications International Union - Employer Retirement Fund (“GCIU”) and the Graphic Communications Conference of the International Brotherhood of Teamsters National Pension Fund (“GCC”). Prior to the acquisition of World Color Press by Quad, World Color Press received notice that certain plans in which it participated were in critical status, as defined in Section 432 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). As a result, the Company could have been subject to increased contribution rates associated with these plans or other MEPPs suffering from declines in their funding levels. Due to the significantly underfunded status of the United States significant revenuesmultiemployer plans and expenses are denominatedthe potential increased contribution rates, the Company withdrew from participation in local currencies. Although operatingthese multiemployer plans and has replaced these pension benefits with a Company-sponsored “pay as you go” defined contribution plan, which is historically the form of retirement benefit provided to the Company’s employees.

As of December 31, 2018, the Company estimates and has recorded in local currencies may limitits financial statements a pre-tax withdrawal liability for all United States multiemployer plans of $50.9 million in the impactaggregate. During the fourth quarter of currency rate fluctuations on2016, the results of operationsCompany and the GCC reached a settlement agreement for all claims, with scheduled payments until February 2024. The Company is currently in litigation with the GCIU trustees to determine the amount and duration of the Company's non-United States subsidiarieswithdrawal payments for the GCIU. Arbitration proceedings with the GCIU have been completed, both sides have appealed the arbitrator’s ruling, and business units, fluctuationslitigation in such rates may affectFederal court has commenced. In April 2017, a Federal district court overturned the translationarbitration decision in one of the pending disputes in this matter. The Company appealed the district court’s ruling to a panel of the Ninth Circuit Court of Appeals, and in December 2018, the panel upheld the district court’s decision. The Company filed a motion for reconsideration with the panel, which was denied. Until litigation with the GCIU trustees is concluded, the exact amount of the withdrawal liability will not be known. As a result of these results into the Company's consolidated financial statements. To the extent revenues and expenses are not in the applicable local currency,unfavorable rulings, the Company may enter into foreign exchange forward contractsrecorded a $32.1 million increase to hedge the currency risk. There can be no assurance, however, thatMEPPs withdrawal liability during the Company's efforts at hedging will be successful. There is always a possibility that attempts to hedge currency risks will lead to greater losses than predicted.year ended December 31, 2018.

The Company'sCompany’s outstanding stock is divided into two classes of common stock: class A common stock ("(“class A stock"stock”) and class B common stock ("(“class B stock"stock”). The class B stock has ten votes per share on all matters and the class A stock is entitled to one vote per share. As of February 17, 2017,11, 2019, the class B stock constitutes approximately 79%78% of Quad/Graphics'Quad’s total voting power. As a result, holders of class B stock are able to exercise a controlling influence over the Company'sCompany’s business, have the power to elect its directors and indirectly control decisions such as whether to issue additional shares, declare and pay dividends or enter into corporate transactions. All of the class B stock is owned by certain members of the Quadracci family or trusts for their benefit, whose interests may differ from the interests of the holders of class A stock.

Approximately 91%As of February 11, 2019, approximately 93% of the outstanding class B stock iswas held of record by the Quad/GraphicsQuad Voting Trust, and that constitutes approximately 72% of the Company'sCompany’s total voting power. The trustees of the Quad/GraphicsQuad Voting Trust have the authority to vote the stock held by the Quad/GraphicsQuad Voting Trust. Accordingly, the trustees of the Quad/GraphicsQuad Voting Trust are able to exercise a controlling influence over the Company'sCompany’s business, have the power to elect its directors and indirectly control decisions such as whether to issue additional shares, declare and pay dividends or enter into corporate transactions.

Since the Quad/GraphicsQuad Voting Trust owns more than 50% of the total voting power of the Company'sCompany’s stock, the Company is considered a controlled company under the corporate governance listing standards of the NYSE. As a controlled company, an exception under the NYSE listing standards exempts the Company from the obligation to comply with certain of the NYSE'sNYSE’s corporate governance requirements, including the requirements:

Accordingly, for so long as Quad/GraphicsQuad is a controlled company, holders of class A stock will not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of the NYSE.

The Company'sCompany’s class A common stock has been traded on the NYSE under the symbol "QUAD"“QUAD” since July 6, 2010. However, there is currently a limited active market for the class A common shares. The Company cannot predict the extent to which investor interest in the Company will lead to the development of an active trading market for its class A common stock on the NYSE or how liquid that market will become. If a more active trading market does not develop, shareholders may have difficulty selling any class A common stock without negatively affecting the stock price, and thereby, losing a significant portion of their investment.

The Company has a material amount of property, plant, equipment, goodwill and other intangible assets on its balance sheet, due in part to acquisitions. As of December 31, 2016,2018, the Company had the following long-lived assets on its consolidated balance sheet included in Part II, Item 8, "Financial“Financial Statements and Supplementary Data,"” of this Annual Report on Form 10-K:

As of December 31, 2016,2018, these assets represented approximately 61%58% of the Company'sCompany’s total assets. The Company assesses impairment of property, plant and equipment and other intangible assets based upon the expected future cash flows of the respective assets. These valuations include management'smanagement’s estimates of sales, profitability, cash flow generation, capital structure, cost of debt, interest rates, capital expenditures and other assumptions. A decline in expected profitability, significant negative industry or economic trends, inability to effectively integrate acquired businesses, unexpected significant changes or planned changes in use of the assets or in entity structure, and divestitures may adversely impact the assumptions used in the valuations. As a result, the recoverability of these assets could be called into question, and the Company could be required to write down or write off these assets. Such an occurrence could have a material adverse effect on the Company'sCompany’s results of operations and financial position.

As of December 31, 2016,2018, the Company had deferred tax assets, net of valuation allowances, of $258.8$158.8 million. The Company expects to utilize the deferred tax assets to reduce consolidated income tax liabilities in future taxable years. However, the Company may not be able to fully utilize the deferred tax assets if its future taxable income and related income tax liability is insufficient to permit their use. In addition, in the future, the Company may be required to record a valuation allowance against the deferred tax assets if the Company believes it is unable to utilize them, which would have an adverse effect on the Company'sCompany’s results of operations and financial position.

As of December 31, 2016, Quad/Graphics2018, Quad had a total of approximately 22,60020,600 full-time equivalent employees, of which approximately 1,9001,600 were covered by an industry wide agreement, a collective bargaining agreement or through a works council or similar arrangement. As of December 31, 2016,2018, the Company had sixfive collective bargaining agreements in the United States and nine agreements outside of the United States that are either industry-wide individual collective bargaining agreements or works councils or similar arrangements.

While the Company believes its employee relations are good and that the Company maintains an employee-centric culture, and there has not been any material disruption in operations resulting from labor disputes, the Company cannot be certain that it will be able to maintain a productive and efficient labor environment. The Company cannot predict the outcome of any future negotiations relating to the renewal of the collective bargaining agreements, nor can there be any assurance that work stoppages, strikes or other forms of labor protests pending the outcome of any future negotiations will not occur. A strike or other forms of labor protest affecting a series of major plants in the future could materially disrupt the Company'sCompany’s operations and result in a material adverse impact on its financial condition, results of operations and cash flows, which could force the Company to reassess its strategic alternatives involving certain of its operations.

The Company has no unresolved staff comments to report pursuant to this item.

Quad/Graphics'Quad’s corporate office is located in Sussex, Wisconsin. The Company owned or leased 162145 facilities located in 1715 countries including manufacturing operations, warehouses and office space totaling approximately 31,510,00027,722,000 square feet, of which approximately 23,280,00020,653,000 is owned space and approximately 8,230,0007,069,000 is leased space as of December 31, 2016.2018. In addition to these owned and leased facilities, the Company has more than 60 client-based marketing on-site locations, as well as investments in printing operations located in Brazil and India.

Within the United States Print and Related Services segment, the Company operated 6352 owned or leased manufacturing facilities, encompassing approximately 23,204,00020,658,000 square feet as of December 31, 2016.2018. Within the International segment, the Company operated eight owned or leased manufacturing facilities, encompassing approximately 1,820,0001,829,000 square feet as of December 31, 2016.2018. The following table lists the Company'sCompany’s operating locations with manufacturing facilities totaling over 500,000 square feet as of December 31, 2016:

Quad/GraphicsQuad is subject to various legal actions, administrative proceedings and claims arising out of the ordinary course of business. Quad/GraphicsQuad believes that such unresolved legal actions, proceedings and claims will not materially adversely affect its results of operations, financial condition or cash flows. For additional information, see Note 10, "Commitments“Commitments and Contingencies — Litigation,"” to the consolidated financial statements in Part II, Item 8, "Financial“Financial Statements and Supplementary Data,"” of this Annual Report on Form 10-K.

Not applicable.

Quad/Graphics'Quad’s authorized capital stock consists of 80.0 million shares of class A stock, 80.0 million shares of class B stock, 20.0 million shares of class C common stock and 0.5 million shares of preferred stock. The Company'sCompany’s outstanding capital stock as of December 31, 2016,2018, consisted of 37.238.1 million shares of class A stock, 14.213.5 million shares of class B stock and no shares of class C common stock or preferred stock. As of February 17, 2017,11, 2019, there were 2,5702,657 record holders of the class A stock and 2322 record holders of the class B stock.

The Company'sCompany’s class A stock is listed on the NYSE under the symbol "QUAD"“QUAD”. The class A stock is entitled to one vote per share. The Company'sCompany’s class B stock is held by certain members of the Quadracci family or trusts for their benefit (and can only be voluntarily transferred to the Company or to a member of the Quadracci "family group"“family group” as defined in the Company'sCompany’s amended and restated articles of incorporation; and any transfer in violation of the Company'sCompany’s amended and restated articles of incorporation results in the automatic conversion of such class B stock into class A stock). The class B stock is entitled to ten votes per share. Each share of class B stock may, at the option of the holder, be converted at any time into one share of class A stock. There is no public trading market for the class B stock. The Company has paid quarterly dividends of $0.30 per share for each class of common stock then outstanding during the years ended December 31, 2018 and 2017.

Pursuant to the Company'sCompany’s amended and restated articles of incorporation, each outstanding class of common stock has equal rights with respect to cash dividends. Pursuant to the Company'sCompany’s debt facilities, the Company is subject to limitations on dividends and repurchases of capital stock. If the Company'sCompany’s total leverage ratio is greater than 3.00 to 1.00 (as defined in the Company'sCompany’s Senior Secured Credit Facility), the Company is prohibited from making greater than $120.0 million of annual dividend payments, capital stock repurchases and certain other payments. If the total leverage ratio is less than 3.00 to 1.00, there are no such restrictions. For the twelve months ended December 31, 2016,2018, the Company'sCompany’s total leverage ratio was 2.342.19 to 1.00.

See Part III, Item 12, "Security“Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters,"” of this Annual Report on Form 10-K for certain information regarding the Company'sCompany’s equity compensation plans.

Information about the Company'sCompany’s repurchases of its class A stock during the yearthree months ended December 31, 2016,2018, were as follows:

The following graph compares cumulative shareholder return on Quad/Graphics'Quad’s class A stock since December 31, 2011,2013, as compared to the Standard & Poor's ("Poor’s (“S&P"&P”) MidCap 400 Index, the S&P 1500 Commercial Printing Index and a selected peer group of companies over the same period. Due to the diversity of its product and service offerings, the Company does not believe that any single published industry index is appropriate for comparing stockholder return. As such, the Company has compiled a peer group to use in the below performance graph, incorporating companies from different industries, including commercial printing, marketing services and publishing.

The selected consolidated statements of operations data for the years ended December 31, 2016, 20152018, 2017 and 2014,2016, and the selected consolidated balance sheets data at December 31, 20162018 and 2015,2017, are derived from the audited consolidated financial statements of the Company included in Item 8, "Financial“Financial Statements and Supplementary Data,"” of this Annual Report on Form 10-K. The selected financial data includes the results of operations of acquired businesses prospectively from their respective acquisition dates. For additional information related to the Company'sCompany’s acquisition activity, see Note 2, "Acquisitions3, “Acquisitions and Strategic Investments,"” to the consolidated financial statements in Part II, Item 8, "Financial“Financial Statements and Supplementary Data,"” of this Annual Report on Form 10-K. The selected consolidated statements of operations data for the years ended December 31, 20132015 and 2012,2014, and the consolidated balance sheets data at December 31, 2014, 20132016, 2015 and 2012,2014, are derived from audited consolidated financial statements not included herein.

The followingFollowing discussion of the financial condition and results of operations of Quad/GraphicsQuad should be read together with the Quad/Graphics'Quad’s audited consolidated financial statements for each of the three years in the period ended December 31, 2016,2018, including the notes thereto, included in Part II, Item 8, "Financial“Financial Statements and Supplementary Data,"” of this Annual Report on Form 10-K. This discussion contains forward-looking statements that reflect the Company'sCompany’s plans, estimates and beliefs. The Company'sCompany’s actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed in "Forward-Looking Statements"“Forward-Looking Statements” and Part I, Item 1A, "Risk“Risk Factors,"” included earlier within this Annual Report on Form 10-K.

Management'sManagement’s discussion and analysis of financial condition and results of operations is provided as a supplement to the Company'sCompany’s consolidated financial statements and accompanying notes to help provide an understanding of the Company'sCompany’s financial condition, the changes in the Company'sCompany’s financial condition and the Company'sCompany’s results of operations. This discussion and analysis is organized as follows:

Quad/Graphics isAs a globalworldwide marketing services provider that helps brand owners market their products, services and content more efficiently and effectively by usingsolutions partner dedicated to creating a better way, Quad uses its strong print foundation in combination with other media channels. With a consultative approach, worldwide capabilities, leading-edge technology and single-source simplicity, the Company believes it has the resources and knowledgedata-driven, integrated marketing solutions platform to help a wide variety of clients in multiple vertical industries, including retail, publishingreduce complexity, increase efficiency and healthcare.enhance marketing spend effectiveness.

Quad/Graphics operates primarily in the commercial print portionFor a full description of the printing industry, with relatedCompany’s business overview, product offerings and service offerings designedQuad 3.0 strategy, refer to offer clients complete solutions for communicating their message to target audiences. Part I, Item 1, “Business,” of this Annual Report on Form 10-K.

The Company'sCompany’s operating and reportable segments are aligned with how the chief operating decision maker of the Company currently manages the business. The Company'sCompany’s operating and reportable segments, including their product and operating segmentsservice offerings, and a “Corporate” category, are summarized below.

The United States Print and Related Services segment is predominantly comprised of the Company'sCompany’s United States printing operations and is managed as one integrated platform. This includes retail inserts, publications, catalogs, special interest publications, journals, direct mail, books, directories, in-store marketing and promotion, packaging, newspapers, custom print products, other commercial and specialty printed products and global paper procurement, together with marketing and other complementary services, including marketing strategy,consumer insights, audience targeting, personalization, media planning and placement, data insights, segmentationprocess optimization, campaign planning and response analytics services, creative services,creation, pre-media production, videography, photography, workflow solutions, digital imaging, facilities management services, digital publishing, interactiveexecution, print solutions including image recognitionexecution and near field communication technology, mailing, distribution, logistics, and data optimization and hygiene services.logistics. This segment also includes the manufacture of ink. The United States Print and Related Services segment accounted for approximately 91% of the Company'sCompany’s consolidated net sales during the year ended December 31, 2016.2018.

The International segment consists of the Company'sCompany’s printing operations in Europe and Latin America, including operations in England, France, Germany, Poland, Argentina, Colombia, Mexico and Peru, as well as investments in printing operations in Brazil and India. This segment provides printed products and marketing and other complementary services consistent with the United States Print and Related Services segment. The International segment accounted for approximately 9% of the Company'sCompany’s consolidated net sales during the year ended December 31, 2016.2018.

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.

The Company'sCompany’s management believes the ability to generate net sales growth, profit increases and positive cash flow, while maintaining the appropriate level of debt, are key indicators of the successful execution of the Company'sCompany’s business strategy and will increase shareholder value. The Company uses period over period net sales growth, EBITDA, EBITDA margin, net cash provided by operating activities, Free Cash Flow and Debt Leverage Ratio as metrics to measure operating performance, financial condition and liquidity. EBITDA, EBITDA margin, Free Cash Flow and Debt Leverage Ratio are non-GAAP financial measures (see the definitions of EBITDA, EBITDA margin and the reconciliation of net earnings (loss) attributable to Quad/Graphics common shareholders to EBITDA in the "Results“Results of Operations"Operations” section below, and see the definitions of Free Cash Flow and Debt Leverage Ratio, the reconciliation of net cash provided by operating activities to Free Cash Flow, and the calculation of Debt Leverage Ratio in the "Liquidity“Liquidity and Capital Resources"Resources” section below).

From aAs consumer media consumption habits change, marketing services perspective,providers face increased demand to offer end-to-end marketing services, from strategy and creative through execution, across all media channel proliferation continues,channels. As new marketing and consumers remain in control of where, whenadvertising channels emerge, marketing services providers must expand their services beyond traditional channels such as for television, newspapers, print publications and how they buyradio, to digital channels such as mobile, internet search, internet display and video, to create effective multichannel campaigns for their products and services.clients. This trend has contributedgreatly influences Quad’s ongoing efforts to marketers'redefine the future of integrated marketing and publishers' needcreate greater value for its clients who are looking for less complexity, greater transparency and accountability from their business partners.

The Company believes that a disciplined approach for capital management and a strong balance sheet are critical to be able to invest in profitable growth opportunities and technological advances, thereby providing the highest return for shareholders. Management balances the use of cash between deleveraging the Company'sCompany’s balance sheet (through reduction in debt and pension obligations), compelling investment opportunities (through capital expenditures, acquisitions and strategic investments) and returns to shareholders (through share repurchases and a quarterly dividend of $0.30 per share).

The Company intendsbelieves it will continue to continue reducing costs, as evidenced bydrive productivity improvements and sustainable cost reduction initiatives into the December 2016 announcementfuture through an engaged workforce and ongoing adoption of four plant closures in the first quarter of 2017.latest manufacturing automation and technology. Through this strategy, the Company believes it can maintain the strongest, most efficient print manufacturing platform to remain a high-quality, low-cost producer.

Integrated distribution with the postal service is an important component of the Company'sCompany’s business. Any material change in the current service levels provided by the postal service could impact the demand that clients have for print services. The USPS continues to experience financial problems. Without increased revenues or action by Congress to reform the USPSUSPS’ cost structure, these losses will continue into the future. As a resultBecause of these financial difficulties, the USPS has come under increased pressure to adjust its postal rates and service levels. Additional price increases may result in customers reducing mail volumes and exploring the use of alternative methods for delivering a larger portion of their products, such as continued diversion to the internet and other alternative media channels to ensure that they stay within their expected postage budgets.

Current federal law limits postal rate increases (outside of an “exigent circumstance”) to the increase in the CPI. This cap works to ensure funding stability and predictability for mailers. However, that same federal statute requires the PRC to conduct a review of the overall rate-making structure for the USPS. The 4.3% temporary exigentresults of that study found that the current rate structure has been partially successful in meeting the USPS’ goals. The current system does result in predictable and stable rate making. However, the PRC also concluded that the current rate structure does not meet USPS’ revenue needs and lacks pricing efficiency. As a result, the PRC proposed a new rate-making structure that would provide the USPS with additional pricing flexibility over the current CPI cap, and which may result in a substantially altered rate structure for mailers. There is a great deal of uncertainty as to the outcome of this review as the PRC issued a Notice of Proposed Rulemaking with comments due on March 1, 2018. An additional round of comments was due on March 30, 2018. Any newly revised rates that would be effective because of new rules issued by the PRC may include a higher rate cap, or potentially the elimination of a rate cap altogether, which will result in no restrictions on the USPS’

On April 10, 2016. While12, 2018, an executive order was issued for a presidential task force to review the USPS appeal to maintain the 4.3% exigent increase was rejected in federal court during the fourth quarterwith a provided time frame of 2016, there could be future120 days. Other initiatives, such as postal reform legislation forand PRC response, have been temporarily delayed, pending the outcome of this review. The recommendations stemming from the presidential task force were published on December 4, 2018, which were wide in scope and will require additional input from a variety of stakeholders, including the United States Congress. The Company expects that with the publication of the report, both postal reform legislation and the PRC’s proposed rate increases. structure changes will be further investigated within the next year.

The Company has invested significantly in its mail preparation and distribution capabilities to mitigate the impact of increases in postage costs, and to help clients successfully navigate the ever-changing postal environment. Through its data analytics, unique software to merge mailstreamsmail streams on a large scale, advanced finishing capabilities and technology, and in-house transportation and logistics operations, the Company manages the mail preparation and distribution of most of its clients'clients’ products to maximize efficiency, to enable on-time and consistent delivery and to partially reduce these costs; however, the net impact of increasing postal costs may create a decrease in client demand for print and mail products.

Another key aspectIn 2018, the Company continued to fuel its Quad 3.0 transformation through a series of the Company's modern manufacturing platform is the combination ofstrategic investments and acquisitions focused on building out its footprint of mega plants (facilities greater than 1.0 million square feet) that produce a number of different products under one roof; mega zones where multiple facilities in close geographic proximity are managed as one large facility; and smaller strategically located facilities. integrated marketing solutions platform:

Throughout 2018, the Company also continued to make strategic investments in its manufacturing platform as part of its ongoing commitment to maintaining the most efficient, automated and dependable manufacturing and distribution platform in the printing industry. These investments, which help fuel Quad’s 3.0 transformation and sustain its high-quality, low-cost producer position, include the following: