Fitch Downgrades RR Donnelley’s Rating; Outlook Remains Negative

Based on current expectations, Fitch believes that the company has the financial flexibility to reduce debt levels; however, Fitch is concerned that an acceleration in secular driven revenues declines may impair that ability.

Fitch believes that the company’s financial and management strategies are appropriate and prudent for the current ratings. Management has publicly stated its intentions to reduce absolute levels of debt. Fitch calculates unadjusted gross leverage (without adding back restructuring charges) at 3.2 times (x). Debt reduction will need to be a primary use of free cash flow (FCF) going forward in order to maintain current ratings. There is no tolerance in the ratings for material share buy backs and/or increases in the current dividend level.