DFS Annual Report

Notes to the Consolidated and Combined Financial Statements (in millions, except per share data, unless otherwise indicated)-(Continued) Note 22. Guarantor Financial Information As described in Note 13, Debt, on September 30, 2016, the Company issued $300.0 million of 8.25% senior unsecured notes due October 15, 2024. Donnelley Financial, LLC and DFS International Holding, Inc. (together the “Guarantor Subsidiaries”) entered into an agreement pursuant to which each agreed to guarantee the obligations of Donnelley Financial Solutions, Inc. (the “Parent”) under the Notes. All guarantees are full and unconditional and joint and several. The Guarantor Subsidiaries are 100% directly owned subsidiaries of the Parent. The guarantee of the notes by a subsidiary guarantor will be automatically released under certain situations, including upon the sale or disposition of such subsidiary guarantor to a person that is not Donnelley Financial or a subsidiary guarantor of the notes, the liquidation or dissolution of such subsidiary guarantor, and if such subsidiary guarantor is released from its guarantee obligations under the Company’s Credit Facilities. The following tables set forth condensed consolidating statements of income for the years ended December 31, 2016, 2015, and 2014, condensed consolidating statements of financial position as of December 31, 2016 and December 31, 2015, and condensed consolidating statements of cash flows for the years ended December 31, 2016, 2015, and 2014. The principal consolidating adjustments are to eliminate the investment in subsidiaries and intercompany balances and transactions. Condensed Consolidating Statements of Operations Year Ended December 31, 2016 Parent Guarantor Subsidiaries Non-guarantor Subsidiaries Eliminations Consolidated Services net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $502.2 $104.1 $ (7.7) $598.6 Products net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 350.4 38.8 (4.3) 384.9 Total net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 852.6 142.9 (12.0) 983.5 Services cost of sales (exclusive of depreciation and amortization) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 236.0 68.2 (7.1) 297.1 Services cost of sales with RR Donnelley affiliates (exclusive of depreciation and amortization) . . . . . . . . . . — 35.6 2.2 — 37.8 Products cost of sales (exclusive of depreciation and amortization) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 207.0 24.1 (4.9) 226.2 Products cost of sales with RR Donnelley affiliates (exclusive of depreciation and amortization) . . . . . . . . . . — 57.3 0.6 — 57.9 Total cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 535.9 95.1 (12.0) 619.0 Selling, general and administrative expenses (exclusive of depreciation and amortization) . . . . . . . . . . . . . . . . . . . . . . . . . — 176.8 33.0 — 209.8 Restructuring, impairment and other charges-net . . . . . . . . . . . . — 4.8 0.6 — 5.4 Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . — 38.6 4.7 — 43.3 Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 96.5 9.5 — 106.0 Interest expense-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.7 — — — 11.7 Earnings (loss) before income taxes and equity in net income of subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11.7) 96.5 9.5 — 94.3 Income tax (benefit) expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4.3) 38.5 1.0 — 35.2 Earnings (loss) before equity in net income of subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7.4) 58.0 8.5 — 59.1 Equity in net income of subsidiaries . . . . . . . . . . . . . . . . . . . . . . 66.5 8.5 — (75.0) — Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 59.1 $ 66.5 $ 8.5 $(75.0) $ 59.1 Comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . $ 66.1 $ 73.5 $ 8.6 $(82.1) $ 66.1 F-37