þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 31, 2017
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from __________ to __________
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Delaware
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001-34056
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75-3217389
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(State of Incorporation
or Organization)
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(Commission File Number)
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(IRS Employer
Identification Number)
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Large accelerated filer
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o
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Accelerated filer
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o
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Non-accelerated filer
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o
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(Do not check if a smaller reporting company)
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Smaller reporting company
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þ
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Emerging growth company
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o
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Page
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VERSO CORPORATION
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|||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
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|||||||
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|||||||
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Successor
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||||||
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December 31,
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March 31,
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||||
(Dollars in millions)
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2016
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2017
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||||
ASSETS
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Current assets:
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Cash and cash equivalents
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$
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6
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$
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7
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Accounts receivable, net
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194
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199
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Inventories, net
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445
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462
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Prepaid expenses and other assets
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20
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18
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Total current assets
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665
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686
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Property, plant, and equipment, net
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1,132
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1,107
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Intangibles and other assets, net
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58
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56
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Total assets
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$
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1,855
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$
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1,849
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LIABILITIES AND EQUITY
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Current liabilities:
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Accounts payable
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$
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105
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$
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118
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Accrued liabilities
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148
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120
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Current maturities of long-term debt
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28
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18
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Total current liabilities
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281
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256
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Long-term debt
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265
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311
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Pension benefit obligation
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491
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487
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Other liabilities
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48
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46
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Total liabilities
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1,085
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1,100
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Commitments and contingencies (Note 12)
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Equity:
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Successor preferred stock -- par value $0.01 (50,000,000 shares authorized, no shares issued)
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—
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—
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Successor common stock -- par value $0.01 (210,000,000 Class A shares authorized with 33,366,784 shares issued and outstanding on December 31, 2016 and 33,429,799 shares issued and outstanding on March 31, 2017; 40,000,000 Class B shares authorized with 1,023,859 shares issued and outstanding on December 31, 2016 and 960,844 shares issued and outstanding on March 31, 2017)
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—
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—
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Treasury stock -- at cost (no shares on December 31, 2016 or March 31, 2017)
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—
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—
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Successor Paid-in-capital (including Warrants of $10 million)
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675
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675
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Retained deficit
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(32
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)
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(53
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)
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Accumulated other comprehensive income
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127
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127
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Total equity
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770
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749
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Total liabilities and equity
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$
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1,855
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$
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1,849
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VERSO CORPORATION
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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||||||||
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Predecessor
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Successor
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||||
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Three Months
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Three Months
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||||
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Ended
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Ended
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(Dollars in millions, except per share amounts)
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March 31, 2016
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March 31, 2017
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Net sales
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$
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690
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$
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616
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Costs and expenses:
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Cost of products sold (exclusive of depreciation, amortization and depletion)
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618
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560
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Depreciation, amortization and depletion
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48
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33
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Selling, general and administrative expenses
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47
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33
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Restructuring charges
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144
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2
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Other operating income
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(57
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)
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—
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Operating loss
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(110
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)
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(12
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)
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Interest expense
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26
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9
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Loss before reorganization items, net
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(136
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)
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(21
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)
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Reorganization items, net
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(48
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)
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—
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Loss before income taxes
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(88
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)
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(21
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)
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Income tax expense
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—
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—
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Net loss
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$
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(88
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)
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$
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(21
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Loss per common share:
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Basic
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$
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(1.07
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)
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$
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(0.61
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)
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Diluted
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(1.07
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)
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(0.61
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)
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Weighted average common shares outstanding (in thousands)
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Basic
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81,869
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34,391
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Diluted
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81,869
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34,391
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VERSO CORPORATION
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
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||||||||
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Predecessor
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Successor
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||||
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Three Months
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Three Months
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||||
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Ended
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Ended
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||||
(Dollars in millions)
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March 31, 2016
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March 31, 2017
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Net loss
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$
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(88
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)
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$
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(21
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)
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Other comprehensive loss
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—
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—
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Comprehensive loss
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$
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(88
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)
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$
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(21
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)
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VERSO CORPORATION
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
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|||||||||||||||||||||||||||||||||
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Common Stock (Predecessor)
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Class A (Successor)
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Class B (Successor)
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Accumulated
Other
Comprehensive
Income (Loss)
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Total
Stockholders’
Equity (Deficit)
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|||||||||||||||||||||||
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Common Shares
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Common Stock
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Common Shares
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Common Stock
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Common Shares
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Common Stock
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Treasury Shares
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Treasury Stock
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Paid-in-Capital
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Retained Deficit
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||||||||||||||||||||||
(Dollars in millions, shares in thousands)
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|||||||||||||||||||||||||||||||||
Balance - December 31, 2015 - Predecessor
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82,115
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$
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1
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(241
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)
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$
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(1
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)
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$
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321
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$
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(1,402
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)
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$
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(102
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)
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$
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(1,183
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)
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||||||
Net loss
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—
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—
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—
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—
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—
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(88
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)
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—
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(88
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)
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||||||||||||
Treasury shares acquired
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—
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—
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(22
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)
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—
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—
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—
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—
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—
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||||||||||||
Balance - March 31, 2016 - Predecessor
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82,115
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$
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1
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|
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|
|
|
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(263
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)
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$
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(1
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)
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$
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321
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$
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(1,490
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)
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$
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(102
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)
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$
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(1,271
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)
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Balance - December 31, 2016 - Successor
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33,367
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$
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—
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1,024
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$
|
—
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|
—
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|
$
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—
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|
$
|
675
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|
$
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(32
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)
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$
|
127
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$
|
770
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|
|||
Net loss
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|
|
|
—
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|
—
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|
—
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|
—
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|
—
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|
—
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|
—
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(21
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)
|
—
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|
(21
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)
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||||||||||
Class B stock converted to Class A stock
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|
|
|
63
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|
—
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|
(63
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)
|
—
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|
—
|
|
—
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|
—
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|
—
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|
—
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—
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||||||||||
Balance - March 31, 2017 - Successor
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|
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33,430
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$
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—
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961
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$
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—
|
|
—
|
|
$
|
—
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|
$
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675
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|
$
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(53
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)
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$
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127
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$
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749
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VERSO CORPORATION
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||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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||||||||
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||||
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Predecessor
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Successor
|
||||
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Three Months
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Three Months
|
||||
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Ended
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Ended
|
||||
(Dollars in millions)
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March 31, 2016
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March 31, 2017
|
||||
Cash Flows From Operating Activities:
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|
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||||
Net loss
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$
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(88
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)
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$
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(21
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)
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Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
|
|
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Depreciation, amortization, and depletion
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48
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|
|
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33
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|
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Noncash restructuring charges
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137
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|
|
|
—
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|
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Reorganization items and fresh-start reporting adjustments, net
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(71
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)
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|
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—
|
|
||
Periodic pension expense
|
3
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|
|
|
2
|
|
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Pension plan contributions
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(5
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)
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|
|
(6
|
)
|
||
Amortization of debt issuance cost and discount
|
1
|
|
|
|
2
|
|
||
Gain on disposal of assets
|
(57
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)
|
|
|
—
|
|
||
Debtor in possession financing costs
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21
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|
|
|
—
|
|
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Other, net
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1
|
|
|
|
—
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|
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Changes in assets and liabilities:
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|
|
|
|
||||
Accounts receivable, net
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9
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|
|
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(5
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)
|
||
Inventories, net
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(10
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)
|
|
|
(17
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)
|
||
Prepaid expenses and other assets
|
11
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|
|
|
2
|
|
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Accounts payable
|
74
|
|
|
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16
|
|
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Accrued liabilities
|
(10
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)
|
|
|
(29
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)
|
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Net cash provided by (used in) operating activities
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64
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(23
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)
|
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Cash Flows From Investing Activities:
|
|
|
|
|
|
|
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Proceeds from sale of assets
|
63
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|
|
|
—
|
|
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Transfers (to) from restricted cash, net
|
(3
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)
|
|
|
—
|
|
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Capital expenditures
|
(11
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)
|
|
|
(10
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)
|
||
Net cash provided by (used in) investing activities
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49
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|
|
(10
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)
|
||
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
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Borrowings on revolving credit facilities
|
147
|
|
|
|
—
|
|
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Payments on revolving credit facilities
|
(446
|
)
|
|
|
—
|
|
||
Borrowings on debtor-in-possession revolving credit facilities
|
204
|
|
|
|
—
|
|
||
Payments on debtor-in-possession revolving credit facilities
|
(136
|
)
|
|
|
—
|
|
||
Proceeds from debtor-in-possession term loan
|
175
|
|
|
|
—
|
|
||
Borrowings on Exit ABL Facility
|
—
|
|
|
|
71
|
|
||
Payments on Exit ABL Facility
|
—
|
|
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|
(25
|
)
|
||
Repayment of long-term debt
|
—
|
|
|
|
(12
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)
|
||
Debtor in possession financing costs
|
(21
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)
|
|
|
—
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|
||
Net cash (used in) provided by financing activities
|
(77
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)
|
|
|
34
|
|
||
Change in cash and cash equivalents
|
36
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|
|
|
1
|
|
||
Cash and cash equivalents at beginning of period
|
4
|
|
|
|
6
|
|
||
Cash and cash equivalents at end of period
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$
|
40
|
|
|
|
$
|
7
|
|
Noncash investing and financing activities:
|
|
|
|
|
||||
Reduction in debt for debt modification
|
$
|
(1
|
)
|
|
|
$
|
—
|
|
Increase in debt from paid in kind (PIK) interest
|
2
|
|
|
|
—
|
|
•
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Entry into an asset-based loan facility and a term loan facility upon emergence from Chapter 11 on July 15, 2016. These facilities provided exit financing in an amount sufficient to repay in full all amounts outstanding under the Verso debtor-in-possession credit agreements of Verso Holdings and its subsidiaries, pay fees and expenses related to the facilities and the emergence of Verso and its subsidiaries from bankruptcy. See “Exit Credit Facilities” below.
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◦
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The satisfaction in full in cash of claims under the Verso DIP Facility, claims under the NewPage DIP ABL Facility, claims relating to the
$175 million
of new money term loans under the NewPage DIP Term Loan Facility, and claims entitled to administrative expense or priority status under the Bankruptcy Code.
|
•
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Issuance of
34,390,643
shares of stock or
100%
of Verso’s equity (subject to dilution by warrants issued to certain creditors described below, or “Plan Warrants,” and equity issuable to our employees under a management incentive plan) to our existing creditors in exchange for the cancellation of all of the Debtors’ pre-petition indebtedness (principal and interest) existing as of the date of bankruptcy totaling
$2.6 billion
.
|
◦
|
Holders of first-lien secured debt issued by Verso Holdings, including lenders under Verso Holdings’ revolving credit facilities and the holders of Verso Holdings’
11.75%
senior secured notes due 2019 (issued in 2012 and 2015), received
17,195,319
shares of Class A common stock,
$0.01
par value, or “Class A Common
|
◦
|
Lenders under the NewPage Corp senior secured term loan and the
$175 million
of “rolled up” term loans under the NewPage DIP Term Loan Facility, collectively, received
15,139,745
shares of Class A Common Stock and
1,023,859
shares of Class B common stock,
$0.01
par value, or “Class B Common Stock,” or
47%
of Verso’s equity.
|
◦
|
Holders of Verso Holdings’ senior debt received
980,133
shares of Class A Common Stock or
2.85%
of Verso’s equity.
|
◦
|
Holders of Verso Holdings’ subordinated (unsecured) debt received
51,587
shares of Class A Common Stock or
0.15%
of Verso’s equity.
|
•
|
The satisfaction in full of general unsecured claims in an aggregate settlement totaling a fixed
$3 million
in cash (except with respect to general unsecured claims against Debtors that have only de minimis assets, which have received no distributions under the Plan).
|
•
|
All shares of Verso’s common stock issued and outstanding immediately prior to the Effective Date were cancelled and discharged.
|
•
|
The shared services agreement between Verso, NewPage and NewPage Corp was terminated.
|
•
|
The prior employee incentive plans and other employment agreements were terminated and any awards issued under them were no longer honored, and a new performance incentive plan was adopted by Verso. See “Performance Incentive Plan” below.
|
•
|
Termination of the Management and Transaction Fee Agreement dated as of August 1, 2006 among Verso Paper LLC, Verso Paper Investments LP, Apollo Management V, L.P., and Apollo Management VI, L.P., and all rights and remedies thereunder were terminated, extinguished, waived and released.
|
•
|
Employee retirement contracts and collective bargaining agreements were honored by the Company upon emergence.
|
|
Predecessor
|
||
|
Three Months
|
||
|
Ended
|
||
(Dollars in millions)
|
March 31, 2016
|
||
Verso Holdings
|
$
|
38
|
|
NewPage Corp
|
10
|
|
|
Total contractual interest
|
$
|
48
|
|
|
Predecessor
|
||
|
Three Months
|
||
|
Ended
|
||
(Dollars in millions)
|
March 31, 2016
|
||
Professional fees
|
$
|
17
|
|
DIP financing cost
|
21
|
|
|
Write-off of unamortized deferred financing costs, discounts/premiums, and deferred gains
(1)
|
(81
|
)
|
|
Other
|
(5
|
)
|
|
Total reorganization items, net
|
$
|
(48
|
)
|
|
Predecessor
|
|
|
Successor
|
||||
|
Three Months
|
|
|
Three Months
|
||||
|
Ended
|
|
|
Ended
|
||||
|
March 31, 2016
|
|
|
March 31, 2017
|
||||
Net loss available to common shareholders (in millions)
|
$
|
(88
|
)
|
|
|
$
|
(21
|
)
|
Weighted average common shares outstanding (in thousands)
|
81,370
|
|
|
|
34,391
|
|
||
Weighted average restricted shares (in thousands)
|
499
|
|
|
|
—
|
|
||
Weighted average common shares outstanding - basic (in thousands)
|
81,869
|
|
|
|
34,391
|
|
||
Dilutive shares from stock awards (in thousands)
|
—
|
|
|
|
—
|
|
||
Weighted average common shares outstanding - diluted (in thousands)
|
81,869
|
|
|
|
34,391
|
|
||
Basic loss per share
|
$
|
(1.07
|
)
|
|
|
$
|
(0.61
|
)
|
Diluted loss per share
|
$
|
(1.07
|
)
|
|
|
$
|
(0.61
|
)
|
|
Successor
|
||||||
|
December 31,
|
|
March 31,
|
||||
(Dollars in millions)
|
2016
|
|
2017
|
||||
Raw materials
|
$
|
95
|
|
|
$
|
102
|
|
Work-in-process
|
62
|
|
|
73
|
|
||
Finished goods
|
264
|
|
|
263
|
|
||
Replacement parts and other supplies
|
24
|
|
|
24
|
|
||
Inventories, net
|
$
|
445
|
|
|
$
|
462
|
|
|
Predecessor
|
|
|
Successor
|
||||
|
Three Months
|
|
|
Three Months
|
||||
|
Ended
|
|
|
Ended
|
||||
(Dollars in millions)
|
March 31, 2016
|
|
|
March 31, 2017
|
||||
Asset retirement obligations, beginning balance
|
$
|
16
|
|
|
|
$
|
14
|
|
Accretion expense
|
—
|
|
|
|
—
|
|
||
Settlement of existing liabilities
|
—
|
|
|
|
—
|
|
||
Asset retirement obligations, ending balance
|
16
|
|
|
|
14
|
|
||
Less: Current portion
|
—
|
|
|
|
(2
|
)
|
||
Non-current portion of asset retirement obligations, ending balance
|
$
|
16
|
|
|
|
$
|
12
|
|
▪ Level 1:
|
Unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.
|
▪ Level 2:
|
Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.
|
▪ Level 3:
|
Unobservable inputs reflecting management’s own assumption about the inputs used in pricing the asset or liability at the measurement date.
|
|
Successor
|
||||||
|
December 31,
|
|
March 31,
|
||||
(Dollars in millions)
|
2016
|
|
2017
|
||||
Intangible assets:
|
|
|
|
||||
Customer relationships, net of accumulated amortization of $1 million on December 31, 2016, and $2 million on March 31, 2017
|
$
|
25
|
|
|
$
|
24
|
|
Trademarks, net of accumulated amortization of $1 million on December 31, 2016, and $2 million on March 31, 2017 (definite life)
|
15
|
|
|
14
|
|
||
Other assets:
|
|
|
|
|
|
||
Restricted cash
|
3
|
|
|
3
|
|
||
Other
|
15
|
|
|
15
|
|
||
Total other assets
|
$
|
18
|
|
|
$
|
18
|
|
Intangibles and other assets, net
|
$
|
58
|
|
|
$
|
56
|
|
|
Predecessor
|
|
|
Successor
|
||||
|
Three Months
|
|
|
Three Months
|
||||
|
Ended
|
|
|
Ended
|
||||
(Dollars in millions)
|
March 31, 2016
|
|
|
March 31, 2017
|
||||
Customer Relationships
|
$
|
1
|
|
|
|
$
|
1
|
|
Trademarks
|
—
|
|
|
|
1
|
|
|
Original
|
Successor
|
||||||
(Dollars in millions)
|
Maturity
|
December 31, 2016
|
|
March 31, 2017
|
||||
Revolving Credit Facilities
|
7/14/2021
|
$
|
112
|
|
|
$
|
158
|
|
Term Loan at par value
|
10/14/2021
|
211
|
|
|
200
|
|
||
Unamortized (discount) premium and debt issuance costs, net
|
|
(30
|
)
|
|
(29
|
)
|
||
Less: Current portion
|
|
(28
|
)
|
|
(18
|
)
|
||
Total long-term debt
|
|
$
|
265
|
|
|
$
|
311
|
|
|
Predecessor
|
|
|
Successor
|
||||
|
Three Months
|
|
|
Three Months
|
||||
|
Ended
|
|
|
Ended
|
||||
(Dollars in millions)
|
March 31, 2016
|
|
|
March 31, 2017
|
||||
Service cost
|
$
|
4
|
|
|
|
$
|
4
|
|
Interest cost
|
17
|
|
|
|
16
|
|
||
Expected return on plan assets
|
(18
|
)
|
|
|
(18
|
)
|
||
Net periodic benefit cost
|
$
|
3
|
|
|
|
$
|
2
|
|
|
Successor
|
||
|
Three Months
|
||
|
Ended
|
||
(Dollars in millions)
|
March 31, 2017
|
||
Beginning balance of reserve
|
$
|
3
|
|
Severance and benefit costs
|
1
|
|
|
Severance and benefit payments
|
(2
|
)
|
|
Ending balance of reserve
|
$
|
2
|
|
|
Predecessor
|
||||||
|
Three Months
|
|
|
||||
|
Ended
|
|
Cumulative
Incurred |
||||
(Dollars in millions)
|
March 31, 2016
|
|
|||||
Property and equipment write down
|
$
|
127
|
|
|
$
|
127
|
|
Severance and benefit costs
|
6
|
|
|
22
|
|
||
Write-off of spare parts and inventory
|
9
|
|
|
12
|
|
||
Write-off of purchase obligations and commitments
|
2
|
|
|
3
|
|
||
Other miscellaneous costs
|
—
|
|
|
1
|
|
||
Total restructuring costs
|
$
|
144
|
|
|
$
|
165
|
|
|
Successor
|
||||||
|
Three Months
|
|
Cumulative
Incurred |
||||
|
Ended
|
|
|||||
(Dollars in millions)
|
March 31, 2017
|
|
|||||
Severance and benefit costs
|
$
|
—
|
|
|
$
|
5
|
|
Write-off of purchase obligations and commitments
|
—
|
|
|
1
|
|
||
Other miscellaneous costs
|
1
|
|
|
4
|
|
||
Total restructuring costs
|
$
|
1
|
|
|
$
|
10
|
|
|
Successor
|
||
|
Three Months
|
||
|
Ended
|
||
(Dollars in millions)
|
March 31, 2017
|
||
Beginning balance of reserve
|
$
|
6
|
|
Purchase obligations
|
1
|
|
|
Payments on purchase obligations
|
(1
|
)
|
|
Ending balance of reserve
|
$
|
6
|
|
|
Predecessor
|
||
|
Three Months
|
||
|
Ended
|
||
|
March 31,
|
||
(Dollars in millions)
|
2016
|
||
Net Sales
|
|
||
Paper
|
$
|
660
|
|
Pulp
|
40
|
|
|
Intercompany eliminations
|
(10
|
)
|
|
Total
|
$
|
690
|
|
Operating loss
(1)
|
|
|
|
Paper
|
$
|
(93
|
)
|
Pulp
|
(17
|
)
|
|
Total
|
$
|
(110
|
)
|
Depreciation, amortization, and depletion
|
|
|
|
Paper
|
$
|
44
|
|
Pulp
|
4
|
|
|
Total
|
$
|
48
|
|
Capital expenditures
|
|
|
|
Paper
|
$
|
8
|
|
Pulp
|
3
|
|
|
Total
|
$
|
11
|
|
•
|
Verso issued 33,366,784 shares of its new Class A common stock, par value $0.01 per share, or “Class A Common Stock,” 1,023,859 shares of its new Class B common stock, par value $0.01 per share, or “Class B Common Stock,” and warrants to purchase up to an aggregate of 1,810,035 shares of Class A Common Stock, or “Plan Warrants,” in exchange for the elimination of $2.6 billion of the Debtor’s outstanding indebtedness (principal and accrued interest);
|
•
|
The satisfaction in full of general unsecured claims in aggregate settlement totaling
$3 million
in cash (except with respect to general unsecured claims against Debtors that have only de minimis assets, which will receive no distributions under the Plan);
|
•
|
All shares of Verso’s common stock issued and outstanding immediately prior to the Effective Date were cancelled and discharged;
|
•
|
The shared services agreement between Verso, NewPage and NewPage Corp was terminated;
|
•
|
The prior employee incentive plans and other employment agreements were terminated and any awards issued under them were no longer honored, and a new performance incentive plan was adopted by Verso;
|
•
|
Termination of the Management and Transaction Fee Agreement dated as of August 1, 2006 among Verso Paper LLC, Verso Paper Investments LP, Apollo Management V, L.P., and Apollo Management VI, L.P., and all rights and remedies thereunder were terminated, extinguished, waived and released; and
|
•
|
Employee retirement contracts and collective bargaining agreements will be honored by the Company upon emergence.
|
|
Predecessor
|
|
|
Successor
|
|
|
||||||
|
Three Months
|
|
|
Three Months
|
|
|
||||||
|
Ended
|
|
|
Ended
|
|
Three Month
|
||||||
(Dollars in millions)
|
March 31, 2016
|
|
|
March 31, 2017
|
|
$ Change
|
||||||
Net sales
|
$
|
690
|
|
|
|
$
|
616
|
|
|
$
|
(74
|
)
|
Costs and expenses:
|
|
|
|
|
|
|
|
|||||
Cost of products sold (exclusive of depreciation, amortization and depletion)
|
618
|
|
|
|
560
|
|
|
(58
|
)
|
|||
Depreciation, amortization and depletion
|
48
|
|
|
|
33
|
|
|
(15
|
)
|
|||
Selling, general and administrative expenses
|
47
|
|
|
|
33
|
|
|
(14
|
)
|
|||
Restructuring charges
|
144
|
|
|
|
2
|
|
|
(142
|
)
|
|||
Other operating income
|
(57
|
)
|
|
|
—
|
|
|
57
|
|
|||
Operating loss
|
(110
|
)
|
|
|
(12
|
)
|
|
98
|
|
|||
Interest expense
|
26
|
|
|
|
9
|
|
|
(17
|
)
|
|||
Loss before reorganization items, net
|
(136
|
)
|
|
|
(21
|
)
|
|
115
|
|
|||
Reorganization items, net
|
(48
|
)
|
|
|
—
|
|
|
48
|
|
|||
Loss before income taxes
|
(88
|
)
|
|
|
(21
|
)
|
|
67
|
|
|||
Income tax expense
|
—
|
|
|
|
—
|
|
|
—
|
|
|||
Net loss
|
$
|
(88
|
)
|
|
|
$
|
(21
|
)
|
|
$
|
67
|
|
|
|
Predecessor
|
|
|
Successor
|
||||
|
|
Three Months
|
|
|
Three Months
|
||||
|
|
Ended
|
|
|
Ended
|
||||
(Dollars in millions)
|
March 31, 2016
|
|
|
March 31, 2017
|
|||||
Net loss
|
$
|
(88
|
)
|
|
|
$
|
(21
|
)
|
|
Income tax expense
|
—
|
|
|
|
—
|
|
|||
Interest expense, net
|
26
|
|
|
|
9
|
|
|||
Depreciation, amortization and depletion
|
48
|
|
|
|
33
|
|
|||
EBITDA
|
$
|
(14
|
)
|
|
|
$
|
21
|
|
|
Adjustments to EBITDA:
|
|
|
|
|
|||||
|
Reorganization items, net
(1)
|
(48
|
)
|
|
|
—
|
|
||
|
Restructuring charges
(2)
|
144
|
|
|
|
2
|
|
||
|
Gains on disposal of assets
(3)
|
(57
|
)
|
|
|
—
|
|
||
|
Pre-reorganization costs
(4)
|
6
|
|
|
|
—
|
|
||
|
Other items, net
(5)
|
9
|
|
|
|
3
|
|
||
Adjusted EBITDA
|
$
|
40
|
|
|
|
$
|
26
|
|
|
Predecessor
|
|
|
Successor
|
||||
|
Three Months
|
|
|
Three Months
|
||||
|
Ended
|
|
|
Ended
|
||||
(Dollars in millions)
|
March 31, 2016
|
|
|
March 31, 2017
|
||||
Net cash provided by (used in):
|
|
|
|
|
||||
Operating activities
|
$
|
64
|
|
|
|
$
|
(23
|
)
|
Investing activities
|
49
|
|
|
|
(10
|
)
|
||
Financing activities
|
(77
|
)
|
|
|
34
|
|
||
Net change in cash and cash equivalents
|
$
|
36
|
|
|
|
$
|
1
|
|
Exhibit
Number
|
Description of Exhibit
|
3.1
|
Amended and Restated Certificate of Incorporation of Verso Corporation.
(1)
|
3.2
|
Amended and Restated Bylaws of Verso Corporation.
(2)
|
4.1
|
Form of specimen Class A Common Stock certificate.
(3)
|
4.2
|
Form of specimen Class B Common Stock certificate.
(4)
|
4.3
|
Form of specimen Plan Warrant certificate.
(5)
|
10.1*
|
Employment Agreement dated as of January 10, 2017 (effective as of February 1, 2017), between Verso Corporation and B. Christopher DiSantis.
(6)
|
10.2*
|
Restrictive Covenant Agreement dated as of January 10, 2017 (effective as of February 1, 2017), between Verso Corporation and B. Christopher DiSantis.
(7)
|
10.3*
|
Restricted Stock Unit Award Agreement dated as of February 7, 2017, between Verso Corporation and B. Christopher DiSantis.
|
31.1
|
Certification of Principal Executive Officer of Verso Corporation pursuant to Rule 13a-14(a) under Securities Exchange Act of 1934.
|
31.2
|
Certification of Principal Financial Officer of Verso Corporation pursuant to Rule 13a-14(a) under Securities Exchange Act of 1934.
|
32.1
|
Certification of Principal Executive Officer of Verso Corporation pursuant to Rule 13a-14(b) under Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code.
|
32.2
|
Certification of Principal Financial Officer of Verso Corporation pursuant to Rule 13a-14(b) under Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code.
|
101.INS
|
XBRL Instance Document.
|
101.SCH
|
XBRL Taxonomy Extension Schema.
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase.
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase.
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase.
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase.
|
*
|
An asterisk denotes a management contract or compensatory plan or arrangement.
|
(1)
|
Incorporated herein by reference to Exhibit 3.1 to Verso Corporation’s Registration Statement on Form 8-A filed with the SEC on July 15, 2016.
|
(2)
|
Incorporated herein by reference to Exhibit 3.2 to Verso Corporation’s Registration Statement on Form 8-A filed with the SEC on July 15, 2016.
|
(3)
|
Incorporated herein by reference to Exhibit 4.1 to Verso Corporation’s Current Report on Form 8‑K filed with the SEC on July 19, 2016.
|
(4)
|
Incorporated herein by reference to Exhibit 4.2 to Verso Corporation’s Current Report on Form 8‑K filed with the SEC on July 19, 2016.
|
(5)
|
Incorporated herein by reference to Exhibit 10.4 to Verso Corporation’s Current Report on Form 8‑K filed with the SEC on July 19, 2016.
|
(6)
|
Incorporated herein by reference to Exhibit 10.1 to Verso Corporation’s Current Report on Form 8‑K filed with the SEC on January 12, 2017.
|
(7)
|
Incorporated herein by reference to Exhibit 10.2 to Verso Corporation’s Current Report on Form 8‑K filed with the SEC on January 12, 2017.
|
Date: May 12, 2017
|
|
|
|
|
VERSO CORPORATION
|
||
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ B. Christopher DiSantis
|
|
|
|
B. Christopher DiSantis
President, Chief Executive Officer, and Director
(Principal Executive Officer)
|
|
By:
|
|
/s/ Allen J. Campbell
|
|
|
|
Allen J. Campbell
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
|
Exhibit
Number
|
Description of Exhibit
|
3.1
|
Amended and Restated Certificate of Incorporation of Verso Corporation.
(1)
|
3.2
|
Amended and Restated Bylaws of Verso Corporation.
(2)
|
4.1
|
Form of specimen Class A Common Stock certificate.
(3)
|
4.2
|
Form of specimen Class B Common Stock certificate.
(4)
|
4.3
|
Form of specimen Plan Warrant certificate.
(5)
|
10.1*
|
Employment Agreement dated as of January 10, 2017 (effective as of February 1, 2017), between Verso Corporation and B. Christopher DiSantis.
(6)
|
10.2*
|
Restrictive Covenant Agreement dated as of January 10, 2017 (effective as of February 1, 2017), between Verso Corporation and B. Christopher DiSantis.
(7)
|
10.3*
|
Restricted Stock Unit Award Agreement dated as of February 7, 2017, between Verso Corporation and B. Christopher DiSantis.
|
31.1
|
Certification of Principal Executive Officer of Verso Corporation pursuant to Rule 13a-14(a) under Securities Exchange Act of 1934.
|
31.2
|
Certification of Principal Financial Officer of Verso Corporation pursuant to Rule 13a-14(a) under Securities Exchange Act of 1934.
|
32.1
|
Certification of Principal Executive Officer of Verso Corporation pursuant to Rule 13a-14(b) under Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code.
|
32.2
|
Certification of Principal Financial Officer of Verso Corporation pursuant to Rule 13a-14(b) under Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code.
|
101.INS
|
XBRL Instance Document.
|
101.SCH
|
XBRL Taxonomy Extension Schema.
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase.
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase.
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase.
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase.
|
*
|
An asterisk denotes a management contract or compensatory plan or arrangement.
|
(1)
|
Incorporated herein by reference to Exhibit 3.1 to Verso Corporation’s Registration Statement on Form 8-A filed with the SEC on July 15, 2016.
|
(2)
|
Incorporated herein by reference to Exhibit 3.2 to Verso Corporation’s Registration Statement on Form 8-A filed with the SEC on July 15, 2016.
|
(3)
|
Incorporated herein by reference to Exhibit 4.1 to Verso Corporation’s Current Report on Form 8‑K filed with the SEC on July 19, 2016.
|
(4)
|
Incorporated herein by reference to Exhibit 4.2 to Verso Corporation’s Current Report on Form 8‑K filed with the SEC on July 19, 2016.
|
(5)
|
Incorporated herein by reference to Exhibit 10.4 to Verso Corporation’s Current Report on Form 8‑K filed with the SEC on July 19, 2016.
|
(6)
|
Incorporated herein by reference to Exhibit 10.1 to Verso Corporation’s Current Report on Form 8‑K filed with the SEC on January 12, 2017.
|
(7)
|
Incorporated herein by reference to Exhibit 10.2 to Verso Corporation’s Current Report on Form 8‑K filed with the SEC on January 12, 2017.
|
Vesting Schedule:
|
Subject to the Terms (as defined below), of the total number of Stock Units subject to the Award, (a) 25% will vest on February 1, 2020, (b) 25% will vest on February 1, 2021, and (c) 50% will vest upon the achievement of the performance objectives set forth in
Exhibit A
to this Grant Notice (as defined herein) in accordance with the provisions thereof.
|
1.
|
I have reviewed this
quarterly
report on
Form 10-Q
of Verso Corporation (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ B. Christopher DiSantis
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B. Christopher DiSantis
President and Chief Executive Officer (Principal Executive Officer) |
1.
|
I have reviewed this
quarterly
report on
Form 10-Q
of Verso Corporation (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
/s/ Allen J. Campbell
|
|
Allen J. Campbell
Senior Vice President and Chief Financial Officer (Principal Financial Officer) |
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of
|
|
/s/ B. Christopher DiSantis
|
|
B. Christopher DiSantis
President and Chief Executive Officer (Principal Executive Officer) |
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of
|
|
/s/ Allen J. Campbell
|
|
Allen J. Campbell
Senior Vice President and Chief Financial Officer (Principal Financial Officer) |