Spinoff of LSC Communications (LSC) and Donnelley Financial Solutions (DFIN) from RR Donnelley and Sons (RRD)

RR Donnelley and Sons split the company into RR Donnelley and Sons and two other companies, LSC Communications (LSC) and Donnelly Financial Solutions (DFIN). RR Donnelley and Sons is considered the parent company. The parent company had a reverse split immediately after the spinoffs. The cost basis allocation information was found in the Investor Relations area of the RR Donnelley and Sons web site.

This action will need multiple entries in the accounting software. The information below is based on the information available from RR Donnelley and Sons in the document referenced above. Two spinoff entries will be needed to record this transaction and a reverse split for RRD.

The Spinoff Entries

Go to Transactions > Spinoff or Accounting > Securities > Record spinoff of securities depending on the version of the software being used. If you are unfamiliar with spinoff transactions you can get help at this URL: https://www.iclub.com/support/kb/default.asp?page=normal_spinoff

Here is the information you need to complete the first spinoff.

Date: 10/1/2016

Select Parent Security (or Parent Company) RR Donnelley and Sons (RRD)

Remaining Basis Percentage: 80.04

Cash received: See your broker statement for cash-in-lieu received

Spinoff Security (or Symbol of New Company) : Donnelly Financial (DFIN)

Shares received : .125 x (#of RRD shares owned) (Remember to include fractional shares.)

For example, if you owned 100 RRD shares, you should receive .125 x 100 = 12.5 DFIN shares.

Price Per Share : 22.97 (Closing price on 10/3/16, first trading day)

Save the transaction and this spinoff has been entered.

Here is the information you need to complete the second spinoff.

Date: 10/2/2016

Select Parent Security (or Parent Company) RR Donnelley and Sons (RRD)

Remaining Basis Percentage: 68.94

Cash received: See your broker statement for cash-in-lieu received

Spinoff Security (or Symbol of New Company) : LSC Communications (LSC)

Shares received : .125 x (#of RRD shares owned) (Remember to include fractional shares.)

For example, if you owned 100 RRD shares, you should receive .125 x 100 = 12.5 LSC shares.

Price Per Share : 28.61 (Closing price on 10/3/16, first trading day)

Save the transaction and this spinoff has been entered.

After all spinoff transactions have been entered the original cost basis for RRD should be apportioned in the following ratios:

RRD – 55.18%

LSC – 24.86%

DFIN – 19.96%.

The Reverse Split Entry

Here is the information you need to complete the reverse split. Enter this transaction after the spinoff transactions

Date: 10/2/2016

Security : RR Donnelley and Sons (RRD)

Split Ratio: 1 for 3

Cash for Fractional Share : See your broker statement. Do not confuse the amount with the cash received for fractional shares in the spinoff described above.

Save the transaction and the reverse split has been entered.