UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2018

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-37728

Donnelley Financial Solutions, Inc.

(Exact name of registrant as specified in its charter)

Delaware	36-4829638
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
35 West Wacker Drive, Chicago, Illinois	60601
(Address of principal executive offices)	(Zip code)

(844) 866-4337

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes   ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-Accelerated Filer	☐  (Do not check if a smaller reporting company)	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ☐    No  ☒

As of April 27, 2018, 33.9 million shares of common stock were outstanding.  

DONNELLEY FINANCIAL SOLUTIONS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2018

TABLE OF CONTENTS

Part I
FINANCIAL INFORMATION		Page
Item 1:	Condensed Consolidated Financial Statements (unaudited)	3
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 and 2017	3
	Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2018 and 2017	4
	Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017	5
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3:	Quantitative and Qualitative Disclosure About Market Risk	45
Item 4:	Controls and Procedures	45

Part II
OTHER INFORMATION		Page
Item 1:	Legal Proceedings	46
Item 1A:	Risk Factors	46
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 4:	Mine Safety Disclosures	46
Item 6:	Exhibits	47
Signatures		51

2

Donnelley Financial Solutions, Inc. and Subsidiaries (“Donnelley Financial”)

Condensed Consolidated Statements of Operations

For the Three Months Ended March 31, 2018 and 2017

(in millions, except per share data)

(UNAUDITED)

	Three Months Ended
	March 31,
	2018			2017
Services net sales	$	159.5		$	154.0
Products net sales		95.7			113.3
Total net sales		255.2			267.3
Services cost of sales (exclusive of depreciation and amortization)		85.9			77.7
Services cost of sales with R.R. Donnelley affiliates (exclusive of depreciation and amortization)*		—			9.9
Products cost of sales (exclusive of depreciation and amortization)		72.7			63.0
Products cost of sales with R.R. Donnelley affiliates (exclusive of depreciation and amortization)*		—			18.8
Total cost of sales		158.6			169.4
Selling, general and administrative expenses (exclusive of depreciation and amortization)		66.1			57.5
Restructuring, impairment and other charges-net		0.7			3.8
Depreciation and amortization		10.4			10.2
Income from operations		19.4			26.4
Interest expense-net		9.0			11.1
Investment and other income-net		(0.8	)		(0.8	)
Earnings before income taxes		11.2			16.1
Income tax expense		3.5			6.8
Net earnings	$	7.7		$	9.3
Net earnings per share (Note 11):
Basic net earnings per share		0.23			0.29
Diluted net earnings per share		0.23			0.28
Weighted average number of common shares outstanding
Basic		33.7		32.6
Diluted		33.9		32.8

*Beginning in the quarter ended June 30, 2017, LSC Communications, Inc. (“LSC”) no longer qualified as a related party, therefore the amounts disclosed related to LSC are only presented for the three months ended March 31, 2017. Beginning in the quarter ended September 30, 2017, R.R. Donnelley & Sons Company ("RRD") no longer qualified as a related party, therefore the amounts disclosed related to RRD are only presented for the three months ended March 31, 2017.

See Notes to Unaudited Condensed Consolidated Financial Statements

3

Donnelley Financial Solutions, Inc. and Subsidiaries (“Donnelley Financial”)

Condensed Consolidated Statements of Comprehensive Income

For the Three Months Ended March 31, 2018 and 2017

(in millions)

(UNAUDITED)

	Three Months Ended
	March 31,
	2018		2017
Net earnings	$	7.7	$	9.3
Other comprehensive income, net of tax:
Translation adjustments		0.7		0.1
Adjustment for net periodic pension and other postretirement benefits plan cost		0.5		0.4
Other comprehensive income, net of tax		1.2		0.5
Comprehensive income	$	8.9	$	9.8

See Notes to Unaudited Condensed Consolidated Financial Statements

4

Donnelley Financial Solutions, Inc. and Subsidiaries (“Donnelley Financial”)

Condensed Consolidated Balance Sheets

As of March 31, 2018 and December 31, 2017

(in millions, except per share data)

(UNAUDITED)

	March 31,			December 31,
	2018			2017
ASSETS
Cash and cash equivalents	$	12.1		$	52.0
Receivables, less allowances for doubtful accounts of $7.7 in 2018 (2017 - $7.3)		239.0			165.2
Inventories		18.5			23.3
Prepaid expenses and other current assets		28.2			29.6
Total current assets		297.8			270.1
Property, plant and equipment-net		33.1			34.7
Goodwill		447.3			447.4
Other intangible assets-net		36.5			39.9
Software-net		41.8			41.1
Deferred income taxes		21.0			22.2
Other noncurrent assets		37.7			38.1
Total assets	$	915.2		$	893.5
LIABILITIES
Accounts payable	$	87.7		$	67.8
Accrued liabilities		91.5			119.2
Total current liabilities		179.2			187.0
Long-term debt (Note 14)		478.8			458.3
Deferred compensation liabilities		21.8			22.8
Pension and other postretirement benefits plan liabilities		51.0			52.5
Other noncurrent liabilities		22.8			23.5
Total liabilities		753.6			744.1
Commitments and Contingencies (Note 15)
EQUITY
Preferred stock, $0.01 par value
Authorized: 1.0 shares; Issued: None		—			—
Common stock, $0.01 par value
Authorized: 65.0 shares;
Issued: 34.0 shares in 2018 (2017 - 33.8 shares)		0.3			0.3
Treasury stock, at cost: 0.1 shares in 2018 (2017 - less than 0.1 shares)		(1.7	)		(0.9	)
Additional paid-in-capital		208.9			205.7
Retained earnings		17.5			8.9
Accumulated other comprehensive loss		(63.4	)		(64.6	)
Total equity		161.6			149.4
Total liabilities and equity	$	915.2		$	893.5

See Notes to Unaudited Condensed Consolidated Financial Statements

5

Donnelley Financial Solutions, Inc. and Subsidiaries (“Donnelley Financial”)

Condensed Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2018 and 2017

(in millions)

(UNAUDITED)

	Three Months Ended
	March 31,
	2018			2017
OPERATING ACTIVITIES
Net earnings	$	7.7		$	9.3
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation and amortization		10.4			10.2
Provision for doubtful accounts receivable		1.0			1.8
Share-based compensation		1.8			1.1
Deferred income taxes		0.6			(2.2	)
Net pension plan income		(0.8	)		(0.8	)
Other		0.5			0.4
Changes in operating assets and liabilities - net of acquisitions:
Accounts receivable - net		(65.4	)		(66.7	)
Inventories		(5.8	)		(3.4	)
Prepaid expenses and other current assets		(0.2	)		(4.4	)
Accounts payable		20.3			15.0
Income taxes payable and receivable		0.6			7.7
Accrued liabilities and other		(23.1	)		(6.1	)
Pension and other postretirement benefits plan contributions		(1.2	)		(0.1	)
Net cash used in operating activities		(53.6	)		(38.2	)
INVESTING ACTIVITIES
Capital expenditures		(6.4	)		(4.3	)
Purchase of investment		—			(3.4	)
Other investing activities		—			0.2
Net cash used in investing activities		(6.4	)		(7.5	)
FINANCING ACTIVITIES
Revolving facility borrowings		88.0			57.0
Payments on revolving facility borrowings		(68.0	)		(37.0	)
Debt issuance costs		—			(1.5	)
Net transfers related to the Separation		—			3.1
Proceeds from issuance of common stock		1.2			—
Treasury stock repurchases		(0.8	)		—
Net cash provided by financing activities		20.4			21.6
Effect of exchange rate on cash and cash equivalents		(0.3	)		0.2
Net decrease in cash and cash equivalents		(39.9	)		(23.9	)
Cash and cash equivalents at beginning of year		52.0			36.2
Cash and cash equivalents at end of period	$	12.1		$	12.3

See Notes to Unaudited Condensed Consolidated Financial Statements

6

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated Financial Statements

(in millions, except per share data, unless otherwise indicated)

Note 1. Overview and Basis of Presentation

Description of Business

Donnelley Financial Solutions, Inc. (the “Company” or “Donnelley Financial” ) is a financial communications services company that supports global capital markets compliance and transaction needs for its corporate clients and their advisors (such as law firms and investment bankers) and global investment markets compliance and analytics needs for mutual fund companies, variable annuity providers and broker/dealers. With proprietary technology such as data storage and workflow collaboration tools, deep subject matter expertise and a global footprint, Donnelley Financial produces, manages, stores, distributes and translates documents and electronic communications in order to deliver timely financial communications to investors and documents in a manner that complies with regulatory commissions.

Donnelley Financial’s Registration Statement on Form 10, as amended, was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on September 20, 2016. On October 1, 2016, Donnelley Financial became an independent publicly traded company through the distribution by R.R. Donnelley & Sons Company (“RRD”) of approximately 26.2 million shares, or 80.75%, of Donnelley Financial common stock to RRD shareholders (the “Separation”). Holders of RRD common stock received one share of Donnelley Financial common stock for every eight shares of RRD common stock held on September 23, 2016. As part of the Separation, RRD retained approximately 6.2 million shares of Donnelley Financial common stock, or a 19.25% interest in Donnelley Financial. Donnelley Financial’s common stock began regular-way trading under the ticker symbol “DFIN” on the New York Stock Exchange on October 3, 2016.  On October 1, 2016, RRD also completed the previously announced separation of LSC Communications, Inc. (“LSC”), its publishing and retail-centric print services and office products business. On March 28, 2017, RRD completed the sale of 6.2 million shares of LSC common stock (RRD’s remaining ownership stake in LSC) in an underwritten public offering. As a result, beginning in the quarter ended June 30, 2017, LSC no longer qualified as a related party of the Company.

On March 24, 2017, pursuant to the Stockholder and Registration Rights Agreement, dated as of September 30, 2016, by and between the Company and RRD, the Company filed a Registration Statement on Form S-1 to register the offering and sale of shares of the Company’s common stock retained by RRD. The Registration Statement on Form S-1, as amended, was declared effective by the SEC on June 13, 2017. On June 21, 2017, RRD completed the sale of approximately 6.1 million shares of the Company’s common stock in an underwritten public offering. Upon the consummation of the offering, RRD retained approximately 0.1 million shares of the Company’s common stock which were subsequently sold by RRD on August 4, 2017. In conjunction with the underwritten public offering, the underwriters exercised their option to purchase approximately 0.9 million of the Company’s shares (the “Option Shares”). The Company received approximately $18.8 million in net proceeds from the sale of the Option Shares, after deducting estimated underwriting discounts and commissions. The proceeds were used to reduce outstanding debt under the Revolving Facility (as defined in Note 14, Debt). Beginning in the quarter ended September 30, 2017, RRD no longer qualified as a related party, therefore amounts disclosed related to RRD are presented only for the three months ended March 31, 2017.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Donnelley Financial Solutions, Inc. (the “Company” or “Donnelley Financial”) and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The financial data presented herein should be read in conjunction with the audited consolidated and combined financial statements and accompanying notes included in the Company’s latest Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on February 28, 2018. In the opinion of management, the financial data presented includes all adjustments necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented. Results of interim periods should not be considered indicative of the results for the full year. These unaudited condensed consolidated interim financial statements include estimates and assumptions of management that affect the amounts reported in the unaudited condensed consolidated financial statements. Actual results could differ from these estimates.

7

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated Financial Statements

(in millions, except per share data, unless otherwise indicated)

Note 2. Revenue

Revenue Recognition

The Company manages highly-customized data and materials, such as Exchange Act, Securities Act and Investment Company Act filings with the SEC on behalf of our customers, manages virtual data rooms and performs XBRL and related services.  Clients are provided with EDGAR filing services, XBRL compliance services and translation, editing, interpreting, proof-reading and multilingual typesetting services, among others. Our software-as-a-service solutions (“SaaS”) include the Venue Virtual Data Room, the FundSuiteArc software platform, ActiveDisclosure and data and analytics, among others.

Substantially all of the Company’s revenue is derived from contracts with an initial expected duration of one year or less. Generally, customer payment is due within ten days upon invoicing.

Revenue is recognized upon transfer of control of promised services or products to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services or products. The Company’s arrangements with customers often include promises to transfer multiple services or products to a customer. Determining whether services and products are considered distinct performance obligations that should be accounted for separately requires significant judgement. Certain customer arrangements have multiple performance obligations as certain promises are both capable of being distinct and are distinct within the context of the contract.  Other customer arrangements have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts, and therefore are not distinct.

Revenue for the Company’s services and products is recognized either over time or at a point in time, as outlined below.

Over time

The Company recognizes revenue for certain services over time.

• The Company’s SaaS solutions, including the Venue Virtual Data Room, the FundSuiteArc software platform, ActiveDisclosure, data and analytics and others, are generally provided on a subscription basis and allow customers access to use the products over the contract period.  As a result, revenue for SaaS solutions are recognized ratably over time as the customer receives the benefit throughout the contract period. The timing of invoicing varies, however the customer may be invoiced before the end of the contract period, resulting in a deferred revenue balance.

• Revenue for warehousing services are recognized ratably over time as the customer receives the benefit throughout the storage period.

Point in time

All remaining revenue arrangements are generally recognized at a point in time and are primarily invoiced upon completion of all services or upon shipment to the customer.

• Certain of these arrangements include multiple performance obligations and revenue is recognized upon completion of each performance obligation, such as when a document is filed with a regulatory agency and upon completion of printing the related document. For arrangements with multiple performance obligations, the transaction price is allocated to the separate performance obligations. The Company provides customer specific solutions and as such, observable standalone selling price is rarely available. Standalone selling price is more frequently determined using an estimate of the standalone selling price of each distinct service or product, taking into consideration historical selling price by customer for each distinct service or product.  These estimates may vary from the final amounts invoiced to the customer and are adjusted upon completion of all performance obligations. Customers may be invoiced subsequent to the recognition of revenue for completed performance obligations, resulting in contract asset balances.

• Revenue for arrangements which include assisting customers in completing regulatory filings for transactions, such as mergers and acquisitions or other public capital market transactions, is recognized upon completion of all promises, including the services performed and printing of the related document, if applicable.

8

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated Financial Statements

(in millions, except per share data, unless otherwise indicated)

• Revenue for arrangements without a regulatory filing generally have a single performance obligation, as the services and products provided are not distinct within the context of the contract, and are recognized upon completion of the services performed or upon completion of printing of the related product.

• Warehousing, fulfillment services and shipping and handling are each separate performance obligations.  As a result, when the Company provides warehousing and future fulfillment services, revenue for the composition services performed and printing of the product is recognized upon completion of the performance obligation(s), as control of the inventory has transferred to the customer and the inventory is being stored at the customer’s request.

Because substantially all of the Company’s products are customized, product returns are not significant; however, the Company accrues for the estimated amount of customer credits at the time of sale.

The Company records deferred revenue when amounts are invoiced but the revenue recognition criteria are not yet met. Such revenue is recognized when all criteria are subsequently met.

Certain revenues earned by the Company require significant judgment to determine if revenue should be recorded gross, as a principal, or net of related costs, as an agent. Billings for shipping and handling costs as well as certain postage costs, and out-of-pocket expenses are recorded gross.  Revenue is not recognized for customer-supplied postage. The Company’s printing operations process paper that may be supplied directly by customers or may be purchased by the Company from third parties and sold to customers.  Revenue is not recognized for customer-supplied paper, however revenues for Company-supplied paper are recognized on a gross basis. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to authorities.

Adoption of ASU 2014-09

In May 2014, the FASB issued Accounting Standards Update No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), which outlines a single comprehensive model for entities to use in accounting for revenue using a five-step process that supersedes virtually all existing revenue guidance. ASU 2014-09 also requires additional quantitative and qualitative disclosures. On January 1, 2018, the Company adopted the standard and all related amendments, using the modified retrospective approach applied to contracts that were not completed as of January 1, 2018. The Company recognized the cumulative effect of applying the standard as an opening transition adjustment to retained earnings. The comparative periods have not been restated and continue to be reported under the accounting standards in effect for those periods (“Previous Revenue Standard”).

As a result of the adoption of ASU 2014-09, revenue recognition has been accelerated for certain arrangements with multiple performance obligations as revenue is now recognized upon the completion of each performance obligation rather than upon completion of all services and shipment of the related document, if applicable. Revenue has also been accelerated for certain inventory which has been invoiced but not yet shipped at the customer’s request. Additionally, certain revenues related to virtual data room services have been deferred to be recognized over the term of the contract.

As substantially all of the Company’s revenue is derived from contracts with an initial expected duration of one year or less, the Company has applied the practical expedient for performance obligations related to contracts with an initial duration of less than one year and is therefore not required to disclose information regarding remaining performance obligations at the end of the reporting period. The Company has also elected the practical expedient to recognize costs to obtain the contract, primarily commissions, as incurred.

9

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated Financial Statements

(in millions, except per share data, unless otherwise indicated)

The cumulative effect of the changes made to the Company’s consolidated January 1, 2018 balance sheet for the adoption of ASU 2014-09 were as follows:

	Balance at December 31, 2017		Adoption of ASU 2014-09			Balance at January 1, 2018
Assets
Receivables, less allowances for doubtful accounts	$	165.2	$	8.9		$	174.1
Inventories		23.3		(10.6	)		12.7
Deferred income taxes		22.2		(0.5	)		21.7
Total assets		893.5		(2.2	)		891.3
Liabilities
Accrued liabilities		119.2		(3.1	)		116.1
Equity
Retained earnings		8.9		0.9			9.8
Total liabilities and equity	$	893.5	$	(2.2	)	$	891.3

The impact of the adoption of ASU 2014-09 on the Company’s condensed consolidated statement of operations and condensed consolidated balance sheet was as follows:

	Three Months Ended March 31, 2018
	Previous Revenue Standard		Adoption of ASU 2014-09			As Reported
Services net sales	$	156.9	$	2.6		$	159.5
Products net sales		96.7		(1.0	)		95.7
Total net sales		253.6		1.6			255.2
Services cost of sales (exclusive of depreciation and amortization)		85.5		0.4			85.9
Products costs of sales (exclusive of depreciation and amortization)		74.1		(1.4	)		72.7
Total cost of sales		159.6		(1.0	)		158.6
Selling, general and administrative expenses (exclusive of depreciation and amortization)		65.8		0.3			66.1
Income tax expense		2.8		0.7			3.5
Net earnings	$	6.1	$	1.6		$	7.7
Earnings per share
Basic		0.18		0.05			0.23
Diluted		0.18		0.05			0.23

10

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated Financial Statements

(in millions, except per share data, unless otherwise indicated)

	March 31, 2018
	Previous Revenue Standard		Adoption of ASU 2014-09			As Reported
Assets
Receivables, less allowances for doubtful accounts	$	228.3	$	10.7		$	239.0
Inventories		27.8		(9.3	)		18.5
Deferred income taxes		21.5		(0.5	)		21.0
Total assets		914.3		0.9			915.2
Liabilities
Accrued liabilities		93.0		(1.5	)		91.5
Other noncurrent liabilities		22.9		(0.1	)		22.8
Equity
Retained earnings		15.0		2.5			17.5
Total liabilities and equity	$	914.3	$	0.9		$	915.2

Disaggregation of revenue

The following table disaggregates revenue by reporting unit and timing of revenue recognition:

	Three Months Ended March 31, 2018
	Point in time		Over time		Total
U.S.
Capital Markets	$	93.5	$	24.0	$	117.5
Investment Markets		71.1		13.5		84.6
Language Solutions and other		11.0		—		11.0
Total U.S.		175.6		37.5		213.1
International		37.9		4.2		42.1
Total net sales	$	213.5	$	41.7	$	255.2

Contract Balances

Contract assets represent revenue recognized for performance obligations completed before an unconditional right to payment exists, and therefore invoicing has not yet occurred. Contract assets were $11.2 million and $9.0 million at March 31, 2018 and January 1, 2018, respectively. Generally, the contract assets balance is impacted by the recognition of additional contract assets, offset by amounts invoiced to customers. For the three months ended March 31, 2018, final amounts invoiced to customers exceeded estimates of standalone selling price as of January 1, 2018 for the related arrangements by approximately $0.7 million. Contract assets are included in accounts receivable on the condensed consolidated balance sheet.

Contract liabilities consist of deferred revenue and progress billings which are included in accrued liabilities on the condensed consolidated balance sheet. Changes in contract liabilities were as follows:

Balance at January 1, 2018	$	14.2
Deferral of revenue		9.4
Revenue recognized		(10.5	)
Balance at March 31, 2018	$	13.1

11

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated Financial Statements

(in millions, except per share data, unless otherwise indicated)

Note 3. Inventories

The components of the Company’s inventories, net of excess and obsolescence reserves for raw materials and finished goods, at March 31, 2018 and December 31, 2017 were as follows:  

	March 31, 2018		December 31, 2017
Raw materials and manufacturing supplies	$	4.2	$	3.3
Work in process		14.3		13.7
Finished goods		—		6.3
Total	$	18.5	$	23.3

Note 4. Property, Plant and Equipment

The components of the Company’s property, plant and equipment at March 31, 2018 and December 31, 2017 were as follows:

	March 31, 2018			December 31, 2017
Land	$	10.0		$	10.0
Buildings		36.3			36.1
Machinery and equipment		104.1			104.0
		150.4			150.1
Less: Accumulated depreciation		(117.3	)		(115.4	)
Total	$	33.1		$	34.7

During the three months ended March 31, 2018 and 2017, depreciation expense was $1.9 million and $1.3 million, respectively.

Note 5. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill by segment for the three months ended March 31, 2018 were as follows:

	U.S.		International			Total
Net book value as of December 31, 2017	$	429.2	$	18.2		$	447.4
Foreign exchange and other adjustments		—		(0.1	)		(0.1	)
Net book value as of March 31, 2018	$	429.2	$	18.1		$	447.3

The components of other intangible assets at March 31, 2018 and December 31, 2017 were as follows:

	March 31, 2018							December 31, 2017
	Gross							Gross
	Carrying		Accumulated			Net Book		Carrying		Accumulated			Net Book
	Amount		Amortization			Value		Amount		Amortization			Value
Customer relationships	$	140.9	$	(104.4	)	$	36.5	$	140.6	$	(100.7	)	$	39.9
Trade names		2.9		(2.9	)		—		2.9		(2.9	)		—
Total other intangible assets	$	143.8	$	(107.3	)	$	36.5	$	143.5	$	(103.6	)	$	39.9

Amortization expense for other intangible assets was $3.4 million and $3.6 million for the three months ended March 31, 2018 and 2017, respectively.  

12

Donnelley Financial Solutions, Inc.

Notes to the Unaudited Condensed Consolidated Financial Statements

(in millions, except per share data, unless otherwise indicated)

The following table outlines the estimated annual amortization expense related to other intangible assets as of March 31, 2018:

For the year ending December 31,	Amount
2018	$	13.8
2019		13.8