þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the fiscal year ended December 31, 2017
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the transition period from __________ to __________
|
Delaware
|
|
001-34056
|
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75-3217389
|
(State of Incorporation
or Organization)
|
|
(Commission File Number)
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(IRS Employer
Identification Number)
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Title of each class
|
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Name of each exchange on which registered
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Class A common stock, $0.01 par value
|
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New York Stock Exchange
|
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Class B common stock, $0.01 par value
|
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None
|
|
|
|
|
Securities registered pursuant to Section 12(g) of the Act: None
|
|||
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
o
Yes
þ
No
|
|||
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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
o
Yes
þ
No
|
|||
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 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.
þ
Yes
o
No
|
|||
|
|
|
|
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, 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).
þ
Yes
o
No
|
|||
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
þ
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|||
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PART I
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||
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Page
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PART II
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PART III
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PART IV
|
||
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Mill/Location
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Product/Paper Grades
|
Paper
Machines
|
|
Annual Production
Capacity
(in tons)
|
||||
Duluth, Minnesota
|
Supercalendered paper
|
|
1
|
|
|
|
270,000
|
|
Escanaba, Michigan
|
Coated, specialty and uncoated paper
|
|
3
|
|
|
|
730,000
|
|
Jay (Androscoggin), Maine
|
Coated, specialty and uncoated paper
|
|
2
(1)
|
|
|
|
250,000
(1)
|
|
Luke, Maryland
|
Coated paper
|
|
2
|
|
|
|
450,000
|
|
Quinnesec, Michigan
|
Coated freesheet
|
|
1
|
|
|
|
430,000
|
|
Stevens Point, Wisconsin
|
Specialty paper
|
|
2
|
|
|
|
200,000
|
|
Wisconsin Rapids, Wisconsin
|
Coated paper
|
|
2
|
|
|
|
540,000
|
|
•
|
price;
|
•
|
product availability;
|
•
|
product quality;
|
•
|
customer service;
|
•
|
breadth of product offerings; and
|
•
|
timeliness of product delivery.
|
•
|
product availability;
|
•
|
the quality of our products;
|
•
|
our breadth of product offerings;
|
•
|
our ability to maintain mill efficiencies and to achieve high operating rates;
|
•
|
manufacturing costs per ton;
|
•
|
customer service and our ability to distribute our products on time; and
|
•
|
the availability and/or cost of wood fiber, market pulp, chemicals, energy and other raw materials and labor.
|
•
|
Market prices for paper products are a function of supply and demand, factors over which we have limited control. We therefore have limited ability to control the pricing of our products. Market prices of grade No. 3, 60 lb. basis weight paper, which is an industry benchmark for coated freesheet paper pricing, have fluctuated since 2000 from a high of
$1,105
per ton to a low of
$740
per ton. In addition, market prices of grade No. 5, 34 lb. basis weight paper, which is an industry benchmark for coated groundwood paper pricing, have fluctuated between a high of
$1,130
per ton to a low of
$795
per ton over the same period. Prices are expected to continue to recover in 2018. As market conditions determine the price for our paper products, the price for our products could fall below our cash production costs.
|
•
|
Market prices for paper products typically are not directly affected by raw material costs or other costs of sales, and consequently we have limited ability to pass through increases in these raw materials and/or other sales costs to our customers absent increases in the market price. Thus, even though our costs may increase, we may not have the ability to increase the prices for our products, or the prices for our products may decline.
|
•
|
The manufacturing of coated paper is highly capital-intensive and a large portion of our operating costs are fixed. Additionally, paper machines are large, complex machines that operate more efficiently when operated continuously. Consequently, both we and our competitors typically continue to run our machines whenever marginal sales exceed the marginal costs, adversely impacting prices at times of lower demand.
|
•
|
limiting our ability to obtain additional financing in the future for working capital, capital expenditures, or other general corporate purposes;
|
•
|
requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes;
|
•
|
limiting our ability to refinance our indebtedness with acceptable terms;
|
•
|
placing us at a competitive disadvantage to competitors carrying less debt; and
|
•
|
making us more vulnerable to economic downturns and limiting our ability to withstand competitive pressure.
|
•
|
incur additional indebtedness;
|
•
|
incur liens;
|
•
|
enter into sale and lease back transactions;
|
•
|
make investments;
|
•
|
make capital expenditures;
|
•
|
consolidate, merge, sell, or otherwise dispose of all or substantially all of our assets;
|
•
|
pay dividends or make other distributions or repurchase or redeem our stock;
|
•
|
enter into transactions with our affiliates;
|
•
|
engage or enter into any new lines of business;
|
•
|
prepay, redeem, or repurchase certain of our indebtedness; and
|
•
|
amend or modify certain provisions of our, and our subsidiaries’, organizational documents.
|
•
|
our ability to complete the upgrade within our $17 million estimate and within our projected time frame;
|
•
|
our ability to attract, hire and train skilled labor for the operation of the No. 3 paper machine;
|
•
|
our competitors having more experience with the manufacture and sale of packaging products and having more fully integrated converting operations; and
|
•
|
our ability to offer these new products on favorable terms, achieve an adequate market acceptance, manage our inventory, and fulfill orders.
|
•
|
our operating and financial performance and prospects;
|
•
|
our quarterly or annual earnings or those of other companies in our industry;
|
•
|
conditions that impact demand for our paper products;
|
•
|
the public’s reaction to our press releases, other public announcements and filings with the SEC;
|
•
|
changes in earnings estimates or recommendations by securities analysts who track our common stock;
|
•
|
market and industry perception of our success, or lack thereof, in exploring strategic alternatives, including perceived uncertainties related to the future of Verso;
|
•
|
strategic actions by us or our competitors, such as acquisitions or restructurings;
|
•
|
changes in government regulations;
|
•
|
arrival and departure of key personnel;
|
•
|
changes in our capital structure;
|
•
|
sales of common stock by us or members of our management team; and
|
•
|
changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war and responses to such events.
|
•
|
not providing for cumulative voting in the election of directors;
|
•
|
requiring at least a supermajority vote of our stockholders to amend our Amended and Restated Bylaws or certain
|
•
|
establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings;
|
•
|
prohibiting stockholder action by written consent; and
|
•
|
authorizing the issuance of “blank check” preferred stock without any need for action by stockholders.
|
Price per share:
|
High
|
|
Low
|
||||
2017
|
|
|
|
||||
First quarter
|
$
|
8.43
|
|
|
$
|
5.54
|
|
Second quarter
|
6.23
|
|
|
3.17
|
|
||
Third quarter
|
5.53
|
|
|
3.82
|
|
||
Fourth quarter
|
17.77
|
|
|
5.04
|
|
||
2016
|
|
|
|
|
|
||
Third quarter (starting July 18, 2016)
|
13.60
|
|
|
5.55
|
|
||
Fourth quarter
|
7.51
|
|
|
4.37
|
|
|
Predecessor
|
|
|
Successor
|
||||||||||||||||||||
|
|
|
|
|
|
|
January 1, 2016
|
|
|
July 15, 2016
|
|
Year
|
||||||||||||
|
|
|
|
|
|
|
Through
|
|
|
Through
|
|
Ended
|
||||||||||||
|
Year Ended December 31,
|
|
July 14,
|
|
|
December 31,
|
|
December 31,
|
||||||||||||||||
(Dollars in millions except per share amounts)
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
|
2016
|
|
2017
|
||||||||||||
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net sales
|
$
|
1,389
|
|
|
$
|
1,297
|
|
|
$
|
3,122
|
|
|
$
|
1,417
|
|
|
|
$
|
1,224
|
|
|
$
|
2,461
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of products sold - (exclusive of depreciation, amortization and depletion)
|
1,179
|
|
|
1,176
|
|
|
2,727
|
|
|
1,249
|
|
|
|
1,098
|
|
|
2,237
|
|
||||||
Depreciation, amortization and depletion
|
105
|
|
|
91
|
|
|
308
|
|
|
100
|
|
|
|
93
|
|
|
115
|
|
||||||
Selling, general and administrative expenses
|
74
|
|
|
70
|
|
|
187
|
|
|
95
|
|
|
|
49
|
|
|
106
|
|
||||||
Restructuring charges
|
1
|
|
|
135
|
|
|
54
|
|
|
151
|
|
|
|
11
|
|
|
9
|
|
||||||
Other operating (income) expense
(1)
|
(4
|
)
|
|
—
|
|
|
1
|
|
|
(57
|
)
|
|
|
8
|
|
|
1
|
|
||||||
Operating income (loss)
|
34
|
|
|
(175
|
)
|
|
(155
|
)
|
|
(121
|
)
|
|
|
(35
|
)
|
|
(7
|
)
|
||||||
Interest expense
|
138
|
|
|
142
|
|
|
270
|
|
|
39
|
|
|
|
17
|
|
|
38
|
|
||||||
Other (income) expense
(2)
|
8
|
|
|
39
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(7
|
)
|
||||||
Income (loss) before reorganization items, net
|
(112
|
)
|
|
(356
|
)
|
|
(425
|
)
|
|
(160
|
)
|
|
|
(52
|
)
|
|
(38
|
)
|
||||||
Reorganization items, net
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,338
|
)
|
|
|
—
|
|
|
—
|
|
||||||
Income (loss) before income taxes
|
(112
|
)
|
|
(356
|
)
|
|
(425
|
)
|
|
1,178
|
|
|
|
(52
|
)
|
|
(38
|
)
|
||||||
Income tax benefit
|
(1
|
)
|
|
(3
|
)
|
|
(3
|
)
|
|
—
|
|
|
|
(20
|
)
|
|
(8
|
)
|
||||||
Net income (loss)
|
$
|
(111
|
)
|
|
$
|
(353
|
)
|
|
$
|
(422
|
)
|
|
$
|
1,178
|
|
|
|
$
|
(32
|
)
|
|
$
|
(30
|
)
|
Per Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
$
|
(2.09
|
)
|
|
$
|
(6.62
|
)
|
|
$
|
(5.19
|
)
|
|
$
|
14.39
|
|
|
|
$
|
(0.93
|
)
|
|
$
|
(0.87
|
)
|
Diluted
|
(2.09
|
)
|
|
(6.62
|
)
|
|
(5.19
|
)
|
|
14.39
|
|
|
|
(0.93
|
)
|
|
(0.87
|
)
|
||||||
Weighted average common shares outstanding (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
53,124
|
|
|
53,293
|
|
|
81,295
|
|
|
81,847
|
|
|
|
34,391
|
|
|
34,432
|
|
||||||
Diluted
|
53,124
|
|
|
53,293
|
|
|
81,295
|
|
|
81,847
|
|
|
|
34,391
|
|
|
34,432
|
|
||||||
Statement of Cash Flows Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cash provided by (used in) operating activities
|
$
|
(27
|
)
|
|
$
|
(58
|
)
|
|
$
|
(266
|
)
|
|
$
|
25
|
|
|
|
$
|
17
|
|
|
$
|
153
|
|
Cash provided by (used in) investing activities
|
(14
|
)
|
|
(25
|
)
|
|
111
|
|
|
29
|
|
|
|
(38
|
)
|
|
(39
|
)
|
||||||
Cash provided by (used in) financing activities
|
(9
|
)
|
|
78
|
|
|
153
|
|
|
(11
|
)
|
|
|
(20
|
)
|
|
(113
|
)
|
||||||
Other Financial and Operating Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
EBITDA
(4)
|
$
|
131
|
|
|
$
|
(123
|
)
|
|
$
|
153
|
|
|
$
|
1,317
|
|
|
|
$
|
58
|
|
|
$
|
115
|
|
Capital expenditures
|
(41
|
)
|
|
(42
|
)
|
|
(64
|
)
|
|
(31
|
)
|
|
|
(42
|
)
|
|
(40
|
)
|
||||||
Total tons sold (in thousands)
(5)
|
1,690
|
|
|
1,624
|
|
|
3,647
|
|
|
1,676
|
|
|
|
1,473
|
|
|
2,959
|
|
||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Working capital
(6)
|
$
|
63
|
|
|
$
|
5
|
|
|
$
|
371
|
|
|
$
|
463
|
|
|
|
$
|
412
|
|
|
$
|
309
|
|
Property, plant and equipment, net
|
743
|
|
|
531
|
|
|
1,857
|
|
|
1,180
|
|
|
|
1,132
|
|
|
1,062
|
|
||||||
Total assets
|
1,070
|
|
|
855
|
|
|
2,710
|
|
|
2,006
|
|
|
|
1,855
|
|
|
1,732
|
|
||||||
Total debt
|
1,220
|
|
|
1,304
|
|
|
2,879
|
|
|
310
|
|
|
|
293
|
|
|
190
|
|
||||||
Total equity (deficit)
|
(417
|
)
|
|
(784
|
)
|
|
(1,183
|
)
|
|
675
|
|
|
|
770
|
|
|
746
|
|
(1)
|
Other operating (income) expense for the period from January 1, 2016 to July 14, 2016 (Predecessor) primarily reflected the gain on sale of hydroelectric facilities in January 2016. Other operating (income) expense for the period from July 15, 2016 to December 31, 2016 (Successor) primarily reflected on-going costs incurred for professional fees paid for bankruptcy related services such as legal and consulting.
|
(2)
|
Other (income) expense in 2013 (Predecessor) reflected costs related to debt refinancing. Other (income) expense in 2014 (Predecessor) reflected costs incurred in connection with the NewPage acquisition.
|
(3)
|
Reorganization items, net, in 2016 (Predecessor) represented expenses and income directly associated with the Predecessor’s bankruptcy filing on the Petition Date. This amount represents primarily a gain on settlement of liabilities subject to compromise of $1,992 million, partially offset by a loss of $651 due to the revaluation of our assets and liabilities as part of the application of fresh-start accounting as of the Effective Date (see Note 2 to our Consolidated Financial Statements included elsewhere in this report).
|
(4)
|
EBITDA consists of earnings before interest, taxes, depreciation/depletion and amortization. Our use of EBITDA is further discussed in the “Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA” section of Item 7 herein. The following table reconciles net income (loss) to EBITDA for the periods presented:
|
|
Predecessor
|
|
|
Successor
|
||||||||||||||||||||
|
|
|
|
|
|
|
January 1, 2016
|
|
|
July 15, 2016
|
|
Year
|
||||||||||||
|
|
|
|
|
|
|
Through
|
|
|
Through
|
|
Ended
|
||||||||||||
|
Year Ended December 31,
|
|
July 14,
|
|
|
December 31,
|
|
December 31,
|
||||||||||||||||
(Dollars in millions)
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
|
2016
|
|
2017
|
||||||||||||
Reconciliation of net income (loss) to EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income (loss)
|
$
|
(111
|
)
|
|
$
|
(353
|
)
|
|
$
|
(422
|
)
|
|
$
|
1,178
|
|
|
|
$
|
(32
|
)
|
|
$
|
(30
|
)
|
Income tax benefit
|
(1
|
)
|
|
(3
|
)
|
|
(3
|
)
|
|
—
|
|
|
|
(20
|
)
|
|
(8
|
)
|
||||||
Interest expense
|
138
|
|
|
142
|
|
|
270
|
|
|
39
|
|
|
|
17
|
|
|
38
|
|
||||||
Depreciation, amortization and depletion
|
105
|
|
|
91
|
|
|
308
|
|
|
100
|
|
|
|
93
|
|
|
115
|
|
||||||
EBITDA
|
$
|
131
|
|
|
$
|
(123
|
)
|
|
$
|
153
|
|
|
$
|
1,317
|
|
|
|
$
|
58
|
|
|
$
|
115
|
|
(5)
|
See discussion of metric in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7 herein.
|
(6)
|
Working capital is defined as current assets net of current liabilities, excluding the current portion of long-term debt.
|
•
|
Verso issued 33,366,784 shares of its new Class A common stock, par value $0.01 per share, 1,023,859 shares of its new Class B common stock, par value $0.01 per share, and the Plan Warrants to purchase up to an aggregate of 1,810,035 shares of Class A Common Stock at an initial exercise price of $27.86, in exchange for the elimination of $2.6 billion of the Debtor’s outstanding indebtedness (principal and accrued interest);
|
•
|
All general unsecured claims were satisfied in full for an 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;
|
•
|
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 were honored by Verso upon emergence.
|
|
Predecessor
|
|
|
Successor
|
||||||||
|
Year Ended
|
|
January 1, 2016
|
|
|
July 15, 2016
|
|
Year Ended
|
||||
|
December 31,
|
|
Through
|
|
|
Through
|
|
December 31,
|
||||
|
2015
|
|
July 14, 2016
|
|
|
December 31, 2016
|
|
2017
|
||||
Weighted average assumptions used to determine benefit obligations as of end of period:
|
|
|
|
|
|
|
|
|
||||
Discount rate
|
4.17
|
%
|
|
3.43
|
%
|
|
|
3.99
|
%
|
|
3.51
|
%
|
Rate of compensation increase
|
N/A
|
|
|
N/A
|
|
|
|
N/A
|
|
|
N/A
|
|
Weighted average assumptions used to determine net periodic pension cost for the period:
|
|
|
|
|
|
|
|
|
|
|||
Discount rate
|
3.98
|
%
|
|
4.17
|
%
|
|
|
3.43
|
%
|
|
3.98
|
%
|
Rate of compensation increase
|
N/A
|
|
|
N/A
|
|
|
|
N/A
|
|
|
N/A
|
|
Expected long-term return on plan assets
|
7.05
|
%
|
|
6.75
|
%
|
|
|
6.75
|
%
|
|
6.50
|
%
|
|
|
Impact on 2018 Net Periodic
|
|
Impact on Pension
|
Change in Assumption
|
|
Pension (Income) Expense
|
|
Benefit Obligation
|
0.25 percentage point decrease in discount rate
|
|
Decrease $3 million
|
|
Increase $55 million
|
0.25 percentage point increase in discount rate
|
|
Decrease $3 million
|
|
Decrease $54 million
|
0.25 percentage point decrease in expected rate of return on assets
|
|
Increase $3 million
|
|
|
0.25 percentage point increase in expected rate of return on assets
|
|
Decrease $3 million
|
|
|
|
Predecessor
|
|
|
Successor
|
|
|
||||||||||||||
|
Year Ended
|
|
January 1, 2016
|
|
|
July 15, 2016
|
|
Year Ended
|
|
|
||||||||||
|
December 31,
|
|
Through
|
|
|
Through
|
|
December 31,
|
|
12 Month
|
||||||||||
(Dollars in millions)
|
2015
|
|
July 14, 2016
|
|
|
December 31, 2016
|
|
2017
|
|
$ Change
|
||||||||||
Net sales
|
$
|
3,122
|
|
|
$
|
1,417
|
|
|
|
$
|
1,224
|
|
|
$
|
2,461
|
|
|
$
|
(180
|
)
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of products sold (exclusive of depreciation, amortization and depletion)
|
2,727
|
|
|
1,249
|
|
|
|
1,098
|
|
|
2,237
|
|
|
(110
|
)
|
|||||
Depreciation, amortization and depletion
|
308
|
|
|
100
|
|
|
|
93
|
|
|
115
|
|
|
(78
|
)
|
|||||
Selling, general and administrative expenses
|
187
|
|
|
95
|
|
|
|
49
|
|
|
106
|
|
|
(38
|
)
|
|||||
Restructuring charges
|
54
|
|
|
151
|
|
|
|
11
|
|
|
9
|
|
|
(153
|
)
|
|||||
Other operating (income) expense
|
1
|
|
|
(57
|
)
|
|
|
8
|
|
|
1
|
|
|
50
|
|
|||||
Operating income (loss)
|
(155
|
)
|
|
(121
|
)
|
|
|
(35
|
)
|
|
(7
|
)
|
|
149
|
|
|||||
Interest expense
|
270
|
|
|
39
|
|
|
|
17
|
|
|
38
|
|
|
(18
|
)
|
|||||
Other (income) expense
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(7
|
)
|
|
(7
|
)
|
|||||
Income (loss) before reorganization items, net
|
(425
|
)
|
|
(160
|
)
|
|
|
(52
|
)
|
|
(38
|
)
|
|
174
|
|
|||||
Reorganization items, net
|
—
|
|
|
(1,338
|
)
|
|
|
—
|
|
|
—
|
|
|
1,338
|
|
|||||
Income (loss) before income taxes
|
(425
|
)
|
|
1,178
|
|
|
|
(52
|
)
|
|
(38
|
)
|
|
(1,164
|
)
|
|||||
Income tax benefit
|
(3
|
)
|
|
—
|
|
|
|
(20
|
)
|
|
(8
|
)
|
|
12
|
|
|||||
Net income (loss)
|
$
|
(422
|
)
|
|
$
|
1,178
|
|
|
|
$
|
(32
|
)
|
|
$
|
(30
|
)
|
|
(1,176
|
)
|
|
|
Predecessor
|
|
|
Successor
|
||||||||||||
|
|
Year
|
|
January 1, 2016
|
|
|
July 15, 2016
|
|
Year
|
||||||||
|
|
Ended
|
|
Through
|
|
|
Through
|
|
Ended
|
||||||||
|
|
December 31,
|
|
July 14,
|
|
|
December 31,
|
|
December 31,
|
||||||||
(Dollars in millions)
|
2015
|
|
2016
|
|
|
2016
|
|
2017
|
|||||||||
Net income (loss)
|
$
|
(422
|
)
|
|
$
|
1,178
|
|
|
|
$
|
(32
|
)
|
|
$
|
(30
|
)
|
|
Income tax benefit
|
(3
|
)
|
|
—
|
|
|
|
(20
|
)
|
|
(8
|
)
|
|||||
Interest expense
|
270
|
|
|
39
|
|
|
|
17
|
|
|
38
|
|
|||||
Depreciation, amortization and depletion
|
308
|
|
|
100
|
|
|
|
93
|
|
|
115
|
|
|||||
EBITDA
|
$
|
153
|
|
|
$
|
1,317
|
|
|
|
$
|
58
|
|
|
$
|
115
|
|
|
Adjustments to EBITDA:
|
|
|
|
|
|
|
|
|
|
||||||||
|
Reorganization items, net
(1)
|
—
|
|
|
(1,338
|
)
|
|
|
—
|
|
|
—
|
|
||||
|
Restructuring charges
(2)
|
59
|
|
|
151
|
|
|
|
11
|
|
|
9
|
|
||||
|
Fresh-start accounting adjustments
(3)
|
—
|
|
|
3
|
|
|
|
46
|
|
|
—
|
|
||||
|
(Gain) loss on disposal of assets
(4)
|
6
|
|
|
(57
|
)
|
|
|
2
|
|
|
3
|
|
||||
|
Pre- and post-reorganization costs
(5)
|
10
|
|
|
6
|
|
|
|
8
|
|
|
1
|
|
||||
|
NewPage acquisition and integration-related costs/charges
(6)
|
36
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
|
Other severance costs
(7)
|
2
|
|
|
2
|
|
|
|
3
|
|
|
6
|
|
||||
|
Strategic initiatives costs
(8)
|
—
|
|
|
—
|
|
|
|
—
|
|
|
3
|
|
||||
|
Extinguishment of NMTC obligation
(9)
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(7
|
)
|
||||
|
Other items, net
(10)
|
3
|
|
|
11
|
|
|
|
5
|
|
|
4
|
|
||||
Adjusted EBITDA
|
$
|
269
|
|
|
$
|
95
|
|
|
|
$
|
133
|
|
|
$
|
134
|
|
(2)
|
For 2015, charges represent severance and employee related costs and other restructuring charges associated with the NewPage acquisition, and the closure of the Bucksport Mill. For 2016, charges are primarily associated with the closure of the Wickliffe Mill, of which $137 million is non-cash. For 2017, charges are primarily associated with the announced closure and relocation of the Memphis office headquarters and closure of the Wickliffe Mill.
|
(3)
|
Non-cash charges related to the one-time impacts of adopting fresh-start accounting.
|
(4)
|
Realized (gains) and losses on the disposal of assets, which are primarily attributable to the sale of hydroelectric facilities in January 2016.
|
(5)
|
Costs incurred in connection with advisory and legal services related to planning for and emerging from the Chapter 11 Cases.
|
(6)
|
Professional fees and other charges and integration costs incurred in connection with the NewPage acquisition, including one-time impacts of purchase accounting.
|
(7)
|
Severance and related benefit costs not associated with restructuring activities.
|
(8)
|
Professional fees and other charges associated with strategic alternatives initiatives.
|
(9)
|
Extinguishment of obligation in December 2017 in connection with the unwind of a New Market Tax Credit (NMTC) transaction entered in 2010. See Note 17 to our Consolidated Financial Statements included elsewhere in this report.
|
(10)
|
For 2015, non-cash equity award expense, unrealized losses (gains) on energy-related derivative contracts, and miscellaneous other non-recurring adjustments. For 2016, costs associated with the indefinite idling of the Wickliffe Mill, non-cash equity award expense, unrealized losses (gains) on energy-related derivative contracts, and miscellaneous other non-recurring adjustments. For 2017, costs incurred in connection with the re-engineering of information systems, non-cash equity award expense, costs associated with the temporary idling of the No. 3 paper machine at the Androscoggin Mill, and miscellaneous other non-recurring adjustments.
|
|
Predecessor
|
|
|
Successor
|
||||||||||||
|
Year Ended
|
|
January 1, 2016
|
|
|
July 15, 2016
|
|
Year Ended
|
||||||||
|
December 31,
|
|
Through
|
|
|
Through
|
|
December 31,
|
||||||||
(Dollars in millions)
|
2015
|
|
July 14, 2016
|
|
|
December 31, 2016
|
|
2017
|
||||||||
Net cash provided by (used in):
|
|
|
|
|
|
|
|
|
||||||||
Operating activities
|
$
|
(266
|
)
|
|
$
|
25
|
|
|
|
$
|
17
|
|
|
$
|
153
|
|
Investing activities
|
111
|
|
|
29
|
|
|
|
(38
|
)
|
|
(39
|
)
|
||||
Financing activities
|
153
|
|
|
(11
|
)
|
|
|
(20
|
)
|
|
(113
|
)
|
||||
Net change in cash and cash equivalents
|
$
|
(2
|
)
|
|
$
|
43
|
|
|
|
$
|
(41
|
)
|
|
$
|
1
|
|
Consolidated Financial Statements
|
|
VERSO CORPORATION
|
|||||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Predecessor
|
|
|
Successor
|
|||||||||||||
|
Year Ended
|
|
January 1, 2016
|
|
|
July 15, 2016
|
|
Year Ended
|
|||||||||
|
December 31,
|
|
Through
|
|
|
Through
|
|
December 31,
|
|||||||||
(Dollars in millions)
|
2015
|
|
July 14, 2016
|
|
|
December 31, 2016
|
|
2017
|
|||||||||
Cash Flows From Operating Activities:
|
|
|
|
|
|
|
|
|
|||||||||
Net income (loss)
|
$
|
(422
|
)
|
|
$
|
1,178
|
|
|
|
$
|
(32
|
)
|
|
$
|
(30
|
)
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation, amortization and depletion
|
308
|
|
|
100
|
|
|
|
93
|
|
|
115
|
|
|||||
Noncash restructuring charges
|
7
|
|
|
137
|
|
|
|
—
|
|
|
—
|
|
|||||
Reorganization items and fresh-start reporting adjustments, net
|
—
|
|
|
(1,390
|
)
|
|
|
—
|
|
|
—
|
|
|||||
Noncash postretirement gain
|
(3
|
)
|
|
—
|
|
|
|
(25
|
)
|
|
(4
|
)
|
|||||
Net periodic pension cost (income)
|
(1
|
)
|
|
6
|
|
|
|
—
|
|
|
6
|
|
|||||
Pension plan contributions
|
(28
|
)
|
|
(16
|
)
|
|
|
(10
|
)
|
|
(32
|
)
|
|||||
Amortization of debt issuance cost and discount
|
9
|
|
|
1
|
|
|
|
3
|
|
|
9
|
|
|||||
Extinguishment of New Market Tax Credit obligation
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(7
|
)
|
|||||
Equity award expense
|
3
|
|
|
4
|
|
|
|
—
|
|
|
1
|
|
|||||
(Gain) loss on disposal of assets
|
7
|
|
|
(57
|
)
|
|
|
2
|
|
|
3
|
|
|||||
Deferred taxes
|
4
|
|
|
—
|
|
|
|
(20
|
)
|
|
(8
|
)
|
|||||
Debtor-in-possession financing costs
|
—
|
|
|
22
|
|
|
|
—
|
|
|
—
|
|
|||||
Prepayment premium on Term Loan Facility
|
—
|
|
|
—
|
|
|
|
—
|
|
|
1
|
|
|||||
Other, net
|
(9
|
)
|
|
6
|
|
|
|
—
|
|
|
—
|
|
|||||
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|||||||
Accounts receivable, net
|
24
|
|
|
26
|
|
|
|
4
|
|
|
(13
|
)
|
|||||
Inventories
|
15
|
|
|
(28
|
)
|
|
|
44
|
|
|
60
|
|
|||||
Prepaid expenses and other assets
|
(15
|
)
|
|
10
|
|
|
|
7
|
|
|
6
|
|
|||||
Accounts payable
|
(91
|
)
|
|
68
|
|
|
|
(40
|
)
|
|
67
|
|
|||||
Accrued liabilities
|
(74
|
)
|
|
(42
|
)
|
|
|
(9
|
)
|
|
(21
|
)
|
|||||
Net cash provided by (used in) operating activities
|
(266
|
)
|
|
25
|
|
|
|
17
|
|
|
153
|
|
|||||
Cash Flows From Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|||||||
Proceeds from sale of assets
|
51
|
|
|
63
|
|
|
|
1
|
|
|
—
|
|
|||||
Transfers (to) from restricted cash, net
|
1
|
|
|
(3
|
)
|
|
|
3
|
|
|
1
|
|
|||||
Capital expenditures
|
(64
|
)
|
|
(31
|
)
|
|
|
(42
|
)
|
|
(40
|
)
|
|||||
Cash acquired in acquisition
|
128
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|||||
Other investing activities
|
(5
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|||||
Net cash provided by (used in) investing activities
|
111
|
|
|
29
|
|
|
|
(38
|
)
|
|
(39
|
)
|
|||||
|
|||||||||||||||||
▪ 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.
|
(Years)
|
|
Predecessor
|
|
|
Successor
|
Buildings and building improvements
|
|
20 - 40
|
|
|
20 - 40
|
Land improvements
|
|
20
|
|
|
10 - 20
|
Machinery and equipment
|
|
10 - 20
|
|
|
3 - 20
|
Furniture and office equipment
|
|
3 - 10
|
|
|
10
|
Computer hardware and software
|
|
3 - 6
|
|
|
3 - 7
|
Leasehold improvements
|
|
Over the shorter of the lease term or the useful life of the improvements
|
|
|
Over the shorter of the lease term or the useful life of the improvements
|
|
Predecessor
|
|
|
Successor
|
||||||||
|
January 1, 2016
|
|
|
July 15, 2016
|
|
Year Ended
|
||||||
|
Through
|
|
|
Through
|
|
December 31,
|
||||||
(Dollars in millions)
|
July 14, 2016
|
|
|
December 31, 2016
|
|
2017
|
||||||
Asset retirement obligations, beginning balance
|
$
|
16
|
|
|
|
$
|
13
|
|
|
$
|
14
|
|
Settlement of existing liabilities
|
—
|
|
|
|
—
|
|
|
—
|
|
|||
Accretion expense
|
—
|
|
|
|
—
|
|
|
1
|
|
|||
Adjustments to existing liabilities
|
(3
|
)
|
|
|
1
|
|
|
—
|
|
|||
Asset retirement obligations, ending balance
|
13
|
|
|
|
14
|
|
|
15
|
|
|||
Less: Current portion
|
—
|
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Non-current portion of asset retirement obligations, ending balance
|
$
|
13
|
|
|
|
$
|
13
|
|
|
$
|
14
|
|
•
|
Entry into an asset-based loan facility and a term loan facility upon emergence from Chapter 11 on July 15, 2016. These Credit Facilities (as defined in Note
9
) provided exit financing in an amount sufficient to repay in full all amounts outstanding under the Verso debtor-in-possession credit agreements of VPH and its subsidiaries, pay fees and expenses related to the facilities and the emergence of Verso and its subsidiaries from bankruptcy.
|
◦
|
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.
|
•
|
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 VPH, including lenders under VPH’s revolving credit facilities and the holders of VPH’s
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 Stock,” or
50%
of Verso’s equity and Plan Warrants to purchase
1,810,035
shares of Class A Common Stock at an initial exercise price of
$27.86
.
|
◦
|
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 VPH’s senior debt received
980,133
shares of Class A Common Stock or
2.85%
of Verso’s equity.
|
◦
|
Holders of VPH’s subordinated (unsecured) debt received
51,587
shares of Class A Common Stock or
0.15%
of Verso’s equity.
|
•
|
All general unsecured claims were satisfied in full for an aggregate settlement totaling
$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.
|
•
|
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 Verso upon emergence.
|
Value of Successor Stock
|
$
|
665
|
|
Add: Fair value of Plan Warrants
|
10
|
|
|
Equity Value
|
675
|
|
|
Add: Fair value of long-term debt
|
318
|
|
|
Add: Other non-interest bearing liabilities
|
1,021
|
|
|
Less: Debt issuance costs
|
(8
|
)
|
|
Reorganization value of Successor assets
|
$
|
2,006
|
|
•
|
The income approach was used to estimate value based on the present value of future economic benefits that are expected to be produced;
|
•
|
The market approach was used to estimate the value through the analysis of recent sales of comparable assets or business entities; and
|
•
|
The cost approach was used to provide a systematic framework for estimating the value of tangible assets or intangible assets based on the economic principal of substitution.
|
•
|
Borrowing of
$318 million
from the Credit Facilities;
|
•
|
Issuance of
34,390,643
shares of stock or
100%
of Verso’s equity and Plan Warrants to purchase an aggregate of
1,810,035
shares of Class A Common Stock in exchange for the cancellation of all of our pre-petition indebtedness existing as of the Petition Date totaling
$2.6 billion
;
|
•
|
Payment for the satisfaction of general unsecured claims in aggregate settlement totaling
$3 million
; and
|
•
|
Repayment of
$279 million
of liabilities under the DIP Facilities (as defined in Note 9).
|
(Dollars in millions)
|
Predecessor
|
|
Reorganization Adjustments
|
|
Fresh-Start Adjustments
|
|
Successor
|
||||||||
ASSETS
|
|
|
|
|
|
|
|
||||||||
Current assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
27
|
|
|
$
|
20
|
|
(a)
|
$
|
—
|
|
|
$
|
47
|
|
Accounts receivable, net
|
201
|
|
|
—
|
|
|
(2
|
)
|
|
199
|
|
||||
Inventories
|
503
|
|
|
—
|
|
|
(14
|
)
|
(l)
|
489
|
|
||||
Prepaid expenses and other assets
|
27
|
|
|
(3
|
)
|
|
—
|
|
|
24
|
|
||||
Total current assets
|
758
|
|
|
17
|
|
|
(16
|
)
|
|
759
|
|
||||
Property, plant and equipment, net
|
1,660
|
|
|
—
|
|
|
(480
|
)
|
(m)
|
1,180
|
|
||||
Intangibles and other assets, net
|
97
|
|
|
—
|
|
|
(30
|
)
|
(n)
|
67
|
|
||||
Total assets
|
$
|
2,515
|
|
|
$
|
17
|
|
|
$
|
(526
|
)
|
|
$
|
2,006
|
|
|
|
|
|
|
|
|
|
||||||||
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
||||||||
Current liabilities:
|
|
|
|
|
|
|
|
||||||||
Accounts payable
|
$
|
103
|
|
|
$
|
41
|
|
(b)
|
$
|
—
|
|
|
$
|
144
|
|
Accrued liabilities
|
140
|
|
|
10
|
|
(c)
|
2
|
|
|
152
|
|
||||
Current maturities of long-term debt
|
461
|
|
|
(443
|
)
|
(d)
|
—
|
|
|
18
|
|
||||
Total current liabilities
|
704
|
|
|
(392
|
)
|
|
2
|
|
|
314
|
|
||||
Long-term debt
|
—
|
|
|
292
|
|
(e)
|
—
|
|
|
292
|
|
||||
Other liabilities
|
597
|
|
|
5
|
|
(f)
|
123
|
|
(o)
|
725
|
|
||||
Liabilities subject to compromise
|
2,535
|
|
|
(2,535
|
)
|
(g)
|
—
|
|
|
—
|
|
||||
Total liabilities
|
3,836
|
|
|
(2,630
|
)
|
|
125
|
|
|
1,331
|
|
||||
Commitment and contingencies
|
|
|
|
|
|
|
|
||||||||
Equity:
|
|
|
|
|
|
|
|
||||||||
Predecessor preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Successor preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Predecessor common stock
|
1
|
|
|
(1
|
)
|
(h)
|
—
|
|
|
—
|
|
||||
Successor common stock
|
—
|
|
|
—
|
|
(i)
|
—
|
|
|
—
|
|
||||
Treasury stock
|
(1
|
)
|
|
1
|
|
(h)
|
—
|
|
|
—
|
|
||||
Predecessor paid-in capital
|
322
|
|
|
(322
|
)
|
(h)
|
—
|
|
|
—
|
|
||||
Successor paid-in-capital
|
—
|
|
|
665
|
|
(i)
|
—
|
|
|
665
|
|
||||
Warrants
|
—
|
|
|
10
|
|
(j)
|
—
|
|
|
10
|
|
||||
Retained earnings (deficit)
|
(1,541
|
)
|
|
2,294
|
|
(k)
|
(753
|
)
|
(p)
|
—
|
|
||||
Accumulated other comprehensive loss
|
(102
|
)
|
|
—
|
|
|
102
|
|
(p)
|
—
|
|
||||
Total equity (deficit)
|
(1,321
|
)
|
|
2,647
|
|
|
(651
|
)
|
|
675
|
|
||||
Total liabilities and equity
|
$
|
2,515
|
|
|
$
|
17
|
|
|
$
|
(526
|
)
|
|
$
|
2,006
|
|
Sources:
|
|
||
Amount borrowed under the Credit Facilities
|
$
|
340
|
|
Less discount on Term Loan Facility
|
(22
|
)
|
|
Total Sources
|
318
|
|
|
Uses:
|
|
||
Repayment of DIP facility (principal and interest)
|
(279
|
)
|
|
Payment of deferred financing costs on exit financing
|
(8
|
)
|
|
Payment of professional fees
|
(8
|
)
|
|
Aggregate settlement of unsecured claims
|
(3
|
)
|
|
Total uses
|
(298
|
)
|
|
Net source
|
$
|
20
|
|
Short-term portion of Term Loan
|
$
|
18
|
|
Payment of the NewPage DIP Facilities
|
(278
|
)
|
|
Settlement of NewPage DIP Roll Up Loans
|
(183
|
)
|
|
|
$
|
(443
|
)
|
ABL Facility Borrowing
|
$
|
120
|
|
Term Loan Facility Borrowing
|
220
|
|
|
Debt Discount
|
(22
|
)
|
|
Debt issuance costs
|
(8
|
)
|
|
Less: Current Portion
|
(18
|
)
|
|
Long-term Debt
|
$
|
292
|
|
Settlement of LSTC debt
|
$
|
(2,324
|
)
|
Settlement of LSTC accrued interest
|
(126
|
)
|
|
Settlement of LSTC accounts payable and accrued liabilities
|
(85
|
)
|
|
Settlement of LSTC
|
(2,535
|
)
|
|
Settlement of NewPage DIP Roll-Up Loans (principal and interest)
|
(184
|
)
|
|
Reinstatement of certain liabilities from LSTC
|
49
|
|
|
Cash paid for the satisfaction of unsecured claims in aggregate settlement
|
3
|
|
|
Issuance of New Common Stock
|
665
|
|
|
Issuance of Plan Warrants
|
10
|
|
|
Net gain on settlement of LSTC and DIP Roll-Up Loans
|
$
|
(1,992
|
)
|
Replacement parts and other supplies
|
$
|
(52
|
)
|
Work-in-process and finished goods
|
38
|
|
|
|
$
|
(14
|
)
|
•
|
The fair value of work-in-process was determined based on the estimated selling price once completed less costs to complete the manufacturing effort, costs to sell including disposal and holding period costs, and a reasonable profit margin.
|
•
|
The fair value of finished goods inventory was determined based on the estimated price to sell including disposal and holding period costs and a reasonable profit margin on the selling and disposal.
|
•
|
The fair value of replacement parts and other supplies was determined based upon the cost approach. This approach considers the amount required to purchase a new asset of equal utility at current market prices, with adjustments in value for functional and economic obsolescence. Functional obsolescence is the loss in value of usefulness of an asset caused by inefficiencies or inadequacies of the asset itself, when compared to a more efficient or less costly replacement parts that a new technology has developed. Economic obsolescence is the loss in value of usefulness of an asset due to factors external to the asset such as the cost of materials, related demand for the product, increased competition and environmental regulations.
|
•
|
The cost approach was utilized to determine the fair market value of machinery and equipment. This approach considers the amount required to construct or purchase a new asset of equal utility at current market prices, with adjustments in value for functional and economic obsolescence. Functional obsolescence is the loss in value of usefulness of an asset caused by inefficiencies or inadequacies of the property itself, when compared to a more efficient or less costly replacement property that a new technology has developed. Economic obsolescence is the loss in value of usefulness of an asset due to factors external to the asset such as the cost of materials, related demand for the product, increased competition and environmental regulations.
|
•
|
The sales approach was also used to determine the fair market value of machinery and equipment. The principal behind this approach is the value of the asset is equal to the market price of an asset with comparable features such as design, location, size, construction materials, use, capacity, specifications, operational characteristics, technology level, accessories and other features that may impact value or marketability.
|
•
|
The income approach was also used to determine the fair market value of machinery and equipment. The principal behind this approach is the value of the asset is equal to the earnings potential of the assets such as the net rental savings attributable to owning the asset.
|
•
|
The market approach was utilized to determine the fair market value of real estate. This approach considers comparable land sale data and land held for sale. Variances in market conditions at the time of sale, property characteristics and other relevant factors were considered and analyzed when necessary.
|
•
|
Land and building improvements were valued using the cost approach which considers the replacement cost of the improvement.
|
Successor Trade Names
|
$
|
16
|
|
Successor Customer Relationships
|
26
|
|
|
Write-off of Predecessor intangible and other assets
|
(72
|
)
|
|
|
$
|
(30
|
)
|
Accounts receivable, net
|
$
|
(2
|
)
|
Inventory
|
(14
|
)
|
|
Write down Property, plant and equipment, net
|
(480
|
)
|
|
Record fair value of Intangibles and other assets
|
(30
|
)
|
|
Accrued liabilities
|
(2
|
)
|
|
Other long-term liabilities
|
4
|
|
|
Pension
|
(135
|
)
|
|
Change in deferred taxes
|
8
|
|
|
Total loss recorded as a result of Fresh-Start Accounting
|
(651
|
)
|
|
Elimination of Predecessor accumulated other comprehensive loss
|
(102
|
)
|
|
Net impact on Retained earnings (deficit)
|
$
|
(753
|
)
|
|
January 26, 2016
|
||
|
Through
|
||
(Dollars in millions)
|
July 14, 2016
|
||
VPH
|
$
|
98
|
|
NewPage Corp
|
25
|
|
|
Total contractual interest
|
$
|
123
|
|
|
January 26, 2016
|
||
|
Through
|
||
(Dollars in millions)
|
July 14, 2016
|
||
Net gain on settlement of LSTC and DIP Roll-Up Notes
|
$
|
(1,992
|
)
|
Total loss recorded as a result of Fresh-Start Accounting
|
651
|
|
|
Professional fees
|
52
|
|
|
DIP financing cost
|
22
|
|
|
Write-off of unamortized deferred financing costs, discounts/premiums and deferred gains
(1)
|
(81
|
)
|
|
Contract modifications and rejections, net
|
14
|
|
|
Other
|
(4
|
)
|
|
Total reorganization items, net
|
$
|
(1,338
|
)
|
|
Successor
|
||||||
(Dollars in millions)
|
December 31, 2016
|
|
December 31, 2017
|
||||
Raw materials
|
$
|
95
|
|
|
$
|
75
|
|
Work-in-process
|
62
|
|
|
54
|
|
||
Finished goods
|
264
|
|
|
228
|
|
||
Replacement parts and other supplies
|
24
|
|
|
28
|
|
||
Inventories
|
$
|
445
|
|
|
$
|
385
|
|
|
Predecessor
|
||
|
Pro Forma
|
||
|
Year Ended
|
||
(Unaudited)
|
December 31,
|
||
(Dollars in millions, except per share data)
|
2015
|
||
Revenues
|
$
|
3,155
|
|
Net loss
|
(391
|
)
|
|
Income (loss) per common share - basic and diluted
|
$
|
(4.78
|
)
|
Weighted-average common shares outstanding - basic and diluted (in thousands)
|
81,759
|
|
(Dollars in millions)
|
December 31, 2016
|
|
December 31, 2017
|
||||
Land and land improvements
|
$
|
52
|
|
|
$
|
51
|
|
Building and leasehold improvements
|
152
|
|
|
153
|
|
||
Machinery, equipment and other
|
995
|
|
|
1,028
|
|
||
Construction-in-progress
|
22
|
|
|
26
|
|
||
Property, plant and equipment, gross
|
1,221
|
|
|
1,258
|
|
||
Accumulated depreciation
|
(89
|
)
|
|
(196
|
)
|
||
Property, plant and equipment, net
|
$
|
1,132
|
|
|
$
|
1,062
|
|
|
Predecessor
|
|
|
Successor
|
||||||||||||
|
Year Ended
|
|
January 1, 2016
|
|
|
July 15, 2016
|
|
Year Ended
|
||||||||
|
December 31,
|
|
Through
|
|
|
Through
|
|
December 31,
|
||||||||
(Dollars in millions)
|
2015
|
|
July 14, 2016
|
|
|
December 31, 2016
|
|
2017
|
||||||||
Interest costs capitalized
|
$
|
2
|
|
|
$
|
1
|
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Depreciation expense
|
302
|
|
|
97
|
|
|
|
90
|
|
|
109
|
|
(Dollars in millions)
|
December 31, 2016
|
|
December 31, 2017
|
||||
Intangible assets:
|
|
|
|
||||
Customer relationships, net of accumulated amortization of $1 million on December 31, 2016 and $4 million on December 31, 2017
|
$
|
25
|
|
|
$
|
22
|
|
Trademarks, net of accumulated amortization of $1 million on December 31, 2016 and $4 million on December 31, 2017
|
15
|
|
|
12
|
|
||
Other assets:
|
|
|
|
|
|
||
Restricted cash
|
3
|
|
|
2
|
|
||
Other
|
15
|
|
|
20
|
|
||
Total other assets
|
$
|
18
|
|
|
$
|
22
|
|
Intangibles and other assets, net
|
$
|
58
|
|
|
$
|
56
|
|
|
Predecessor
|
|
|
Successor
|
||||||||||||
|
Year Ended
|
|
January 1, 2016
|
|
|
July 15, 2016
|
|
Year Ended
|
||||||||
|
December 31,
|
|
Through
|
|
|
Through
|
|
December 31,
|
||||||||
(Dollars in millions)
|
2015
|
|
July 14, 2016
|
|
|
December 31, 2016
|
|
2017
|
||||||||
Customer Relationships
|
$
|
6
|
|
|
$
|
2
|
|
|
|
$
|
1
|
|
|
$
|
3
|
|
Trademarks
|
—
|
|
|
—
|
|
|
|
1
|
|
|
3
|
|
(Dollars in millions)
|
December 31, 2016
|
|
December 31, 2017
|
||||
Payroll and employee benefit costs
|
$
|
83
|
|
|
$
|
69
|
|
Accrued sales rebates
|
21
|
|
|
24
|
|
||
Accrued energy
|
10
|
|
|
10
|
|
||
Accrued taxes - other than income
|
6
|
|
|
5
|
|
||
Restructuring costs
|
9
|
|
|
3
|
|
||
Accrued professional and legal fees
|
2
|
|
|
1
|
|
||
Accrued interest
|
2
|
|
|
2
|
|
||
Freight and other
|
15
|
|
|
15
|
|
||
Accrued liabilities
|
$
|
148
|
|
|
$
|
129
|
|
|
Original
|
|
|
|
||||
(Dollars in millions)
|
Maturity
|
December 31, 2016
|
|
December 31, 2017
|
||||
ABL Facility
|
7/14/2021
|
$
|
112
|
|
|
$
|
65
|
|
Term Loan Facility
|
10/14/2021
|
211
|
|
|
146
|
|
||
Unamortized (discount) and debt issuance costs, net
|
|
(30
|
)
|
|
(21
|
)
|
||
Less: Current portion
|
|
(28
|
)
|
|
(60
|
)
|
||
Total long-term debt
|
|
$
|
265
|
|
|
$
|
130
|
|
(Dollars in millions)
|
December 31, 2016
|
|
December 31, 2017
|
||||
Other employee related obligations
|
$
|
19
|
|
|
$
|
15
|
|
Asset retirement obligations
|
13
|
|
|
14
|
|
||
Non-controlling interests
|
8
|
|
|
—
|
|
||
Other postretirement benefit obligation
|
5
|
|
|
—
|
|
||
Deferred compensation
|
—
|
|
|
3
|
|
||
Other
|
3
|
|
|
2
|
|
||
Other long-term liabilities
|
$
|
48
|
|
|
$
|
34
|
|
|
Predecessor
|
|
|
Successor
|
||||||||||||
|
Year Ended
|
|
January 1, 2016
|
|
|
July 15, 2016
|
|
Year Ended
|
||||||||
|
December 31,
|
|
Through
|
|
|
Through
|
|
December 31,
|
||||||||
|
2015
|
|
July 14, 2016
|
|
|
December 31, 2016
|
|
2017
|
||||||||
Net income (loss) available to common shareholders (in millions)
|
$
|
(422
|
)
|
|
$
|
1,178
|
|
|
|
$
|
(32
|
)
|
|
$
|
(30
|
)
|
Weighted average common shares outstanding (in thousands)
|
80,838
|
|
|
81,450
|
|
|
|
34,391
|
|
|
34,432
|
|
||||
Weighted average restricted shares (in thousands)
|
457
|
|
|
397
|
|
|
|
—
|
|
|
—
|
|
||||
Weighted average common shares outstanding - basic (in thousands)
|
81,295
|
|
|
81,847
|
|
|
|
34,391
|
|
|
34,432
|
|
||||
Dilutive shares from stock awards (in thousands)
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Weighted average common shares outstanding - diluted (in thousands)
|
81,295
|
|
|
81,847
|
|
|
|
34,391
|
|
|
34,432
|
|
||||
Basic income (loss) per share
|
$
|
(5.19
|
)
|
|
$
|
14.39
|
|
|
|
$
|
(0.93
|
)
|
|
$
|
(0.87
|
)
|
Diluted income (loss) per share
|
$
|
(5.19
|
)
|
|
$
|
14.39
|
|
|
|
$
|
(0.93
|
)
|
|
$
|
(0.87
|
)
|
|
Predecessor
|
|
|
Successor
|
||||||||||||
|
Year Ended
|
|
January 1, 2016
|
|
|
July 15, 2016
|
|
Year Ended
|
||||||||
|
December 31,
|
|
Through
|
|
|
Through
|
|
December 31,
|
||||||||
(Dollars in millions)
|
2015
|
|
July 14, 2016
|
|
|
December 31, 2016
|
|
2017
|
||||||||
Components of net periodic pension cost (income):
|
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
11
|
|
|
$
|
9
|
|
|
|
$
|
8
|
|
|
$
|
16
|
|
Interest cost
|
65
|
|
|
36
|
|
|
|
31
|
|
|
65
|
|
||||
Expected return on plan assets
|
(83
|
)
|
|
(40
|
)
|
|
|
(39
|
)
|
|
(75
|
)
|
||||
Amortization of actuarial loss
|
2
|
|
|
1
|
|
|
|
—
|
|
|
—
|
|
||||
Curtailment
|
1
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Special termination benefits
|
3
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Net periodic pension cost (income)
|
$
|
(1
|
)
|
|
$
|
6
|
|
|
|
$
|
—
|
|
|
$
|
6
|
|
(Dollars in millions)
|
December 31, 2016
|
|
December 31, 2017
|
||||
Amounts recognized in Accumulated other comprehensive (income) loss:
|
|
|
|
||||
Net actuarial (gain) loss, net of tax
|
$
|
(126
|
)
|
|
$
|
(133
|
)
|
|
Predecessor
|
|
|
Successor
|
||||||||
|
January 1, 2016
|
|
|
July 15, 2016
|
|
Year Ended
|
||||||
|
Through
|
|
|
Through
|
|
December 31,
|
||||||
(Dollars in millions)
|
July 14, 2016
|
|
|
December 31, 2016
|
|
2017
|
||||||
Change in Projected Benefit Obligation:
|
|
|
|
|
|
|
||||||
Benefit obligation at beginning of period
|
$
|
1,672
|
|
|
|
$
|
1,839
|
|
|
$
|
1,672
|
|
Service cost
|
9
|
|
|
|
8
|
|
|
16
|
|
|||
Interest cost
|
36
|
|
|
|
31
|
|
|
65
|
|
|||
Actuarial (gain) loss
|
162
|
|
|
|
(152
|
)
|
|
106
|
|
|||
Benefits paid
|
(40
|
)
|
|
|
(54
|
)
|
|
(106
|
)
|
|||
Benefit obligation at end of period
|
$
|
1,839
|
|
|
|
$
|
1,672
|
|
|
$
|
1,753
|
|
Change in Plan Assets:
|
|
|
|
|
|
|
||||||
Plan assets at fair value at beginning of period
|
$
|
1,144
|
|
|
|
$
|
1,192
|
|
|
$
|
1,181
|
|
Actual net return on plan assets
|
72
|
|
|
|
33
|
|
|
189
|
|
|||
Employer contributions
|
16
|
|
|
|
10
|
|
|
32
|
|
|||
Benefits paid
|
(40
|
)
|
|
|
(54
|
)
|
|
(106
|
)
|
|||
Plan assets at fair value at end of period
|
$
|
1,192
|
|
|
|
$
|
1,181
|
|
|
$
|
1,296
|
|
Funded status at end of period
|
$
|
(647
|
)
|
|
|
$
|
(491
|
)
|
|
$
|
(457
|
)
|
|
Predecessor
|
|
|
Successor
|
||||||||
|
Year Ended
|
|
January 1, 2016
|
|
|
July 15, 2016
|
|
Year Ended
|
||||
|
December 31,
|
|
Through
|
|
|
Through
|
|
December 31,
|
||||
|
2015
|
|
July 14, 2016
|
|
|
December 31, 2016
|
|
2017
|
||||
Weighted average assumptions used to determine benefit obligations as of end of period:
|
|
|
|
|
|
|
|
|
||||
Discount rate
|
4.17
|
%
|
|
3.43
|
%
|
|
|
3.99
|
%
|
|
3.51
|
%
|
Rate of compensation increase
|
N/A
|
|
|
N/A
|
|
|
|
N/A
|
|
|
N/A
|
|
Weighted average assumptions used to determine net periodic pension cost for the period:
|
|
|
|
|
|
|
|
|
|
|||
Discount rate
|
3.98
|
%
|
|
4.17
|
%
|
|
|
3.43
|
%
|
|
3.98
|
%
|
Rate of compensation increase
|
N/A
|
|
|
N/A
|
|
|
|
N/A
|
|
|
N/A
|
|
Expected long-term return on plan assets
|
7.05
|
%
|
|
6.75
|
%
|
|
|
6.75
|
%
|
|
6.50
|
%
|
|
Allocation of Plan Assets
|
||||||||
|
2016
|
|
Allocation on
|
|
2017
|
|
Allocation on
|
||
|
Targeted
|
|
December 31,
|
|
Targeted
|
|
December 31,
|
||
|
Allocation
|
|
2016
|
|
Allocation
|
|
2017
|
||
Fixed income:
|
35-55%
|
|
|
|
35-55%
|
|
|
||
Fixed income funds
|
|
|
36
|
%
|
|
|
|
32
|
%
|
Equity securities:
|
35-60%
|
|
|
|
|
35-60%
|
|
|
|
Domestic equity funds - large cap
|
|
|
31
|
%
|
|
|
|
32
|
%
|
Domestic equity funds - small cap
|
|
|
5
|
%
|
|
|
|
6
|
%
|
International equity funds
|
|
|
17
|
%
|
|
|
|
20
|
%
|
Other:
|
4-15%
|
|
|
|
4-15%
|
|
|
||
Hedge funds, private equity, real estate, commodities
|
|
|
11
|
%
|
|
|
|
10
|
%
|
(Dollars in millions)
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Assets Valued at NAV Practical Expedient
|
||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed income funds
|
$
|
418
|
|
|
$
|
54
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
364
|
|
Domestic equity funds - large cap
|
412
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
390
|
|
|||||
International equity funds
|
266
|
|
|
126
|
|
|
—
|
|
|
—
|
|
|
140
|
|
|||||
Domestic equity funds - small cap
|
73
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
62
|
|
|||||
Other (hedge funds, private equity, real estate, commodities)
|
127
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
123
|
|
|||||
Total assets at fair value
|
$
|
1,296
|
|
|
$
|
217
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,079
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed income funds
|
$
|
421
|
|
|
$
|
58
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
363
|
|
Domestic equity funds - large cap
|
365
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
343
|
|
|||||
International equity funds
|
204
|
|
|
94
|
|
|
—
|
|
|
—
|
|
|
110
|
|
|||||
Domestic equity funds - small cap
|
64
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
54
|
|
|||||
Other (hedge funds, private equity, real estate, commodities)
|
127
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
120
|
|
|||||
Total assets at fair value
|
$
|
1,181
|
|
|
$
|
191
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
990
|
|
(Dollars in millions)
|
Fair Value
|
|
Unfunded Commitments
|
|
Redemption Frequency
|
|
Redemption Notice Period
|
||||
Multi-Strategy Hedge Fund
(1)
|
$
|
2
|
|
|
$
|
—
|
|
|
Annually
|
|
45 days
|
Debt Securities Hedge Fund
(2)
|
65
|
|
|
—
|
|
|
Semi-Annually
|
|
90 days
|
||
Private Equity
(3)
|
13
|
|
|
2
|
|
|
N/A
|
|
N/A
|
||
|
$
|
80
|
|
|
$
|
2
|
|
|
|
|
|
_________
|
|
|
|
|
|
|
|
|
Predecessor
|
|
|
Successor
|
||||||||
|
January 1, 2016
|
|
|
July 15, 2016
|
|
Year Ended
|
||||||
|
Through
|
|
|
Through
|
|
December 31,
|
||||||
(Dollars in millions)
|
July 14, 2016
|
|
|
December 31, 2016
|
|
2017
|
||||||
Change in Projected Benefit Obligation:
|
|
|
|
|
|
|
||||||
Benefit obligation at beginning of period
|
$
|
37
|
|
|
|
$
|
35
|
|
|
$
|
7
|
|
Interest cost
|
1
|
|
|
|
1
|
|
|
—
|
|
|||
Plan amendments and settlements
|
—
|
|
|
|
(25
|
)
|
|
(7
|
)
|
|||
Benefits paid
|
(4
|
)
|
|
|
(3
|
)
|
|
(3
|
)
|
|||
Actuarial (gain) loss
|
1
|
|
|
|
(1
|
)
|
|
5
|
|
|||
Benefit obligation at end of period
|
$
|
35
|
|
|
|
$
|
7
|
|
|
$
|
2
|
|
Change in Plan Assets:
|
|
|
|
|
|
|
||||||
Plan assets at fair value at beginning of period
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Employer contributions
|
4
|
|
|
|
3
|
|
|
3
|
|
|||
Benefits paid
|
(4
|
)
|
|
|
(3
|
)
|
|
(3
|
)
|
|||
Plan assets at fair value at end of period
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Funded status at end of period
|
$
|
(35
|
)
|
|
|
$
|
(7
|
)
|
|
$
|
(2
|
)
|
|
Predecessor
|
|
|
Successor
|
||||||||
|
January 1, 2016
|
|
|
July 15, 2016
|
|
Year Ended
|
||||||
|
Through
|
|
|
Through
|
|
December 31,
|
||||||
(Dollars in millions)
|
July 14, 2016
|
|
|
December 31, 2016
|
|
2017
|
||||||
Included in the balance sheet:
|
|
|
|
|
|
|
||||||
Other current liabilities
|
$
|
(3
|
)
|
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
Other long-term obligations
|
(32
|
)
|
|
|
(5
|
)
|
|
—
|
|
|||
Total net liability
|
(35
|
)
|
|
|
(7
|
)
|
|
(2
|
)
|
|||
Weighted average assumptions used to determine benefit obligations as of end of period:
|
|
|
|
|
|
|
||||||
Discount rate
|
3.09
|
%
|
|
|
3.32
|
%
|
|
—
|
|
|||
Weighted average assumptions used to determine net periodic pension cost for the period:
|
|
|
|
|
|
|
||||||
Discount rate
|
3.73
|
%
|
|
|
3.09
|
%
|
|
3.32
|
%
|
|
Predecessor
|
|
|
Successor
|
||||||||||||
|
Year Ended
|
|
January 1, 2016
|
|
|
July 15, 2016
|
|
Year Ended
|
||||||||
|
December 31,
|
|
Through
|
|
|
Through
|
|
December 31,
|
||||||||
(Dollars in millions)
|
2015
|
|
July 14, 2016
|
|
|
December 31, 2016
|
|
2017
|
||||||||
Components of net periodic postretirement cost (income):
|
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
1
|
|
|
1
|
|
|
|
1
|
|
|
—
|
|
||||
Amortization of prior service cost
|
(3
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Settlement
|
—
|
|
|
—
|
|
|
|
(25
|
)
|
|
(4
|
)
|
||||
Net periodic postretirement cost (income)
|
$
|
(2
|
)
|
|
$
|
1
|
|
|
|
$
|
(24
|
)
|
|
$
|
(4
|
)
|
(Dollars in millions)
|
December 31, 2016
|
|
December 31, 2017
|
||||
Amounts recognized in Accumulated other comprehensive (income) loss:
|
|
|
|
||||
Net actuarial (gain) loss, net of tax
|
$
|
(1
|
)
|
|
$
|
1
|
|
|
Predecessor
|
|
|
Successor
|
||||||||||||
|
Year Ended
|
|
January 1, 2016
|
|
|
July 15, 2016
|
|
Year Ended
|
||||||||
|
December 31,
|
|
Through
|
|
|
Through
|
|
December 31,
|
||||||||
(Dollars in millions)
|
2015
|
|
July 14, 2016
|
|
|
December 31, 2016
|
|
2017
|
||||||||
Defined Contribution Plans
|
|
|
|
|
|
|
|
|
||||||||
Defined contribution benefits expense
|
$
|
17
|
|
|
$
|
8
|
|
|
|
$
|
8
|
|
|
$
|
14
|
|
Employer 401(k) matching contributions
|
16
|
|
|
8
|
|
|
|
6
|
|
|
14
|
|
|
Successor
|
||||
(in thousands)
|
Restricted Stock Units
Outstanding
|
Weighted Average Grant Date Fair Value Per Share
|
|||
Outstanding on 7/15/2016
|
—
|
|
$
|
—
|
|
Granted
|
162
|
|
11.19
|
|
|
Forfeited
|
(2
|
)
|
11.50
|
|
|
Outstanding on 12/31/2016
|
160
|
|
11.18
|
|
|
Granted
|
528
|
|
6.41
|
|
|
Vested
|
(73
|
)
|
10.81
|
|
|
Forfeited
|
(32
|
)
|
11.50
|
|
|
Outstanding on 12/31/2017
|
583
|
|
6.89
|
|
(in thousands)
|
Options
Outstanding
|
|
Outstanding on 12/31/2014 (Predecessor)
|
6,464
|
|
Options granted
|
2,809
|
|
Forfeited
|
(647
|
)
|
Exercised
|
(9
|
)
|
Outstanding on 12/31/2015 (Predecessor)
|
8,617
|
|
Cancellation of Predecessor stock awards
|
(8,617
|
)
|
Outstanding on 7/15/2016 (Successor)
|
—
|
|
|
Year Ended
|
|
|
|
||||
|
December 31,
|
|
Cumulative
|
|
||||
(Dollars in millions)
|
2015
|
|
Incurred
|
|
||||
Property and equipment - disposal
|
$
|
4
|
|
|
$
|
4
|
|
|
Severance and benefit costs
|
16
|
|
|
16
|
|
|
||
Total restructuring costs
|
$
|
20
|
|
|
$
|
20
|
|
|
|
July 15, 2016
|
|
Year Ended
|
|
|
||||||
|
Through
|
|
December 31,
|
|
Cumulative
|
||||||
(Dollars in millions)
|
December 31, 2016
|
|
2017
|
|
Incurred
|
||||||
Severance and benefit costs
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
3
|
|
Write-off of purchase obligations
|
—
|
|
|
2
|
|
|
2
|
|
|||
Other costs
|
—
|
|
|
1
|
|
|
1
|
|
|||
Total restructuring costs
|
$
|
2
|
|
|
$
|
4
|
|
|
$
|
6
|
|
|
Predecessor
|
|
|
Successor
|
||||||||
|
January 1, 2016
|
|
|
July 15, 2016
|
|
Year Ended
|
||||||
|
Through
|
|
|
Through
|
|
December 31,
|
||||||
(Dollars in millions)
|
July 14, 2016
|
|
|
December 31, 2016
|
|
2017
|
||||||
Beginning balance of reserve
|
$
|
5
|
|
|
|
$
|
2
|
|
|
$
|
3
|
|
Severance and benefit costs
|
—
|
|
|
|
2
|
|
|
1
|
|
|||
Severance and benefit payments
|
(3
|
)
|
|
|
(1
|
)
|
|
(4
|
)
|
|||
Purchase obligations
|
—
|
|
|
|
—
|
|
|
2
|
|
|||
Other costs
|
—
|
|
|
|
—
|
|
|
1
|
|
|||
Payments on other costs
|
—
|
|
|
|
—
|
|
|
(1
|
)
|
|||
Ending balance of reserve
|
$
|
2
|
|
|
|
$
|
3
|
|
|
$
|
2
|
|
|
Year Ended
|
|
January 1, 2016
|
|
|
|
||||||
|
December 31,
|
|
Through
|
|
Cumulative
|
|
||||||
(Dollars in millions)
|
2015
|
|
July 14, 2016
|
|
Incurred
|
|
||||||
Property and equipment
|
$
|
—
|
|
|
$
|
127
|
|
|
$
|
127
|
|
|
Severance and benefit costs
|
16
|
|
|
10
|
|
|
26
|
|
|
|||
Write-off of spare parts, inventory and other assets
|
3
|
|
|
9
|
|
|
12
|
|
|
|||
Write-off of purchase obligations and commitments
|
1
|
|
|
2
|
|
|
3
|
|
|
|||
Other costs
|
1
|
|
|
3
|
|
|
4
|
|
|
|||
Total restructuring costs
|
$
|
21
|
|
|
$
|
151
|
|
|
$
|
172
|
|
|
|
July 15, 2016
|
|
Year Ended
|
|
|
||||||
|
Through
|
|
December 31,
|
|
Cumulative
|
||||||
(Dollars in millions)
|
December 31, 2016
|
|
2017
|
|
Incurred
|
||||||
Severance and benefit costs
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
5
|
|
Write-off of purchase obligations and commitments
|
1
|
|
|
2
|
|
|
3
|
|
|||
Other costs
|
3
|
|
|
3
|
|
|
6
|
|
|||
Total restructuring costs
|
$
|
9
|
|
|
$
|
5
|
|
|
$
|
14
|
|
|
Predecessor
|
|
|
Successor
|
||||||||
|
January 1, 2016
|
|
|
July 15, 2016
|
|
Year Ended
|
||||||
|
Through
|
|
|
Through
|
|
December 31,
|
||||||
(Dollars in millions)
|
July 14, 2016
|
|
|
December 31, 2016
|
|
2017
|
||||||
Beginning balance of reserve
|
$
|
7
|
|
|
|
$
|
5
|
|
|
$
|
6
|
|
Severance and benefit costs
|
7
|
|
|
|
4
|
|
|
—
|
|
|||
Severance and benefit payments
|
(10
|
)
|
|
|
(3
|
)
|
|
(5
|
)
|
|||
Purchase obligations
|
2
|
|
|
|
1
|
|
|
2
|
|
|||
Payments on purchase obligations
|
—
|
|
|
|
(1
|
)
|
|
(2
|
)
|
|||
Purchase obligations reserve adjustments
|
(1
|
)
|
|
|
—
|
|
|
—
|
|
|||
Other costs
|
—
|
|
|
|
—
|
|
|
3
|
|
|||
Payments on other costs
|
—
|
|
|
|
—
|
|
|
(3
|
)
|
|||
Ending balance of reserve
|
$
|
5
|
|
|
|
$
|
6
|
|
|
$
|
1
|
|
|
Predecessor
|
||||||
|
Year Ended
|
|
|
||||
|
December 31,
|
|
Cumulative
|
||||
(Dollars in millions)
|
2015
|
|
Incurred
|
||||
Property and equipment
|
$
|
—
|
|
|
$
|
89
|
|
Severance and benefit costs
|
2
|
|
|
29
|
|
||
Write-off of spare parts, inventory and other assets
|
—
|
|
|
14
|
|
||
Write-off of purchase obligations and commitments
|
6
|
|
|
8
|
|
||
Other costs
|
4
|
|
|
7
|
|
||
Total restructuring costs
|
$
|
12
|
|
|
$
|
147
|
|
|
Predecessor
|
|
|
Successor
|
||||||||||||
|
Year Ended
|
|
January 1, 2016
|
|
|
July 15, 2016
|
|
Year Ended
|
||||||||
|
December 31,
|
|
Through
|
|
|
Through
|
|
December 31,
|
||||||||
(Dollars in millions)
|
2015
|
|
July 14, 2016
|
|
|
December 31, 2016
|
|
2017
|
||||||||
Current tax (benefit) provision:
|
|
|
|
|
|
|
|
|
||||||||
U.S. federal
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
U.S. state and local
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Total current tax (benefit) provision
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(6
|
)
|
||||
Deferred tax (benefit) provision:
|
|
|
|
|
|
|
|
|
|
|
||||||
U.S. federal
|
(136
|
)
|
|
549
|
|
|
|
(19
|
)
|
|
64
|
|
||||
U.S. state and local
|
(37
|
)
|
|
78
|
|
|
|
2
|
|
|
(1
|
)
|
||||
Changes to reorganization
|
—
|
|
|
8
|
|
|
|
—
|
|
|
—
|
|
||||
Total deferred tax (benefit) provision
|
(173
|
)
|
|
635
|
|
|
|
(17
|
)
|
|
63
|
|
||||
Less: valuation allowance
|
170
|
|
|
(635
|
)
|
|
|
17
|
|
|
(63
|
)
|
||||
Allocation to Other comprehensive (income) loss
|
—
|
|
|
—
|
|
|
|
(20
|
)
|
|
(2
|
)
|
||||
Total income tax (benefit) provision
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
|
$
|
(20
|
)
|
|
$
|
(8
|
)
|
|
Predecessor
|
|
|
Successor
|
||||||||||||
|
Year Ended
|
|
January 1, 2016
|
|
|
July 15, 2016
|
|
Year Ended
|
||||||||
|
December 31,
|
|
Through
|
|
|
Through
|
|
December 31,
|
||||||||
(Dollars in millions)
|
2015
|
|
July 14, 2016
|
|
|
December 31, 2016
|
|
2017
|
||||||||
Tax at Statutory U.S. Rate of 35% in 2017, 2016 and 2015
|
$
|
(149
|
)
|
|
$
|
412
|
|
|
|
$
|
(18
|
)
|
|
$
|
(13
|
)
|
Increase resulting from:
|
|
|
|
|
|
|
|
|
|
|
||||||
Reorganization costs and fresh-start accounting
|
—
|
|
|
(680
|
)
|
|
|
—
|
|
|
—
|
|
||||
Federal tax rate change
|
—
|
|
|
—
|
|
|
|
—
|
|
|
71
|
|
||||
Allocation to Other comprehensive (income) loss related to pension and other postretirement benefits.
|
—
|
|
|
—
|
|
|
|
(20
|
)
|
|
(2
|
)
|
||||
Federal net operating losses
|
—
|
|
|
818
|
|
|
|
—
|
|
|
|
|||||
Cancellation of debt income
|
11
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Disallowed interest expense
|
5
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Nondeductible transaction costs
|
(4
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Other expenses
|
1
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Net permanent differences
|
13
|
|
|
138
|
|
|
|
(20
|
)
|
|
69
|
|
||||
Valuation allowance
|
170
|
|
|
(635
|
)
|
|
|
17
|
|
|
(63
|
)
|
||||
Changed to reorganization
|
—
|
|
|
8
|
|
|
|
—
|
|
|
—
|
|
||||
State income taxes (benefit)
|
(37
|
)
|
|
78
|
|
|
|
2
|
|
|
—
|
|
||||
Other
|
—
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
(1
|
)
|
||||
Total income tax (benefit) provision
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
|
$
|
(20
|
)
|
|
$
|
(8
|
)
|
(Dollars in millions)
|
December 31, 2016
|
|
December 31, 2017
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss and credit carryforwards
|
$
|
76
|
|
|
$
|
72
|
|
Pension
|
251
|
|
|
147
|
|
||
Compensation obligations
|
25
|
|
|
14
|
|
||
Inventory reserves/capitalization
|
43
|
|
|
26
|
|
||
Capitalized expenses
|
4
|
|
|
4
|
|
||
Other
|
21
|
|
|
10
|
|
||
Gross deferred tax assets
|
420
|
|
|
273
|
|
||
Less: valuation allowance
|
(193
|
)
|
|
(130
|
)
|
||
Deferred tax assets, net of allowance
|
$
|
227
|
|
|
$
|
143
|
|
Deferred tax liabilities:
|
|
|
|
|
|||
Property, plant and equipment
|
$
|
(207
|
)
|
|
$
|
(139
|
)
|
Cancellation of debt income deferral
|
(13
|
)
|
|
(3
|
)
|
||
Intangible assets
|
(4
|
)
|
|
—
|
|
||
Other
|
(3
|
)
|
|
(1
|
)
|
||
Total deferred tax liabilities
|
(227
|
)
|
|
(143
|
)
|
||
Net deferred tax liabilities
|
$
|
—
|
|
|
$
|
—
|
|
(Dollars in millions)
|
|
||
2018
|
$
|
52
|
|
2019
|
46
|
|
|
2020
|
39
|
|
|
2021
|
9
|
|
|
2022
|
5
|
|
|
Thereafter
|
11
|
|
|
Total
|
$
|
162
|
|
|
Year Ended
|
|
January 1, 2016
|
|
||||
|
December 31,
|
|
Through
|
|
||||
(Dollars in millions)
|
2015
|
|
July 14, 2016
|
|
||||
Net sales:
|
|
|
|
|
||||
Paper
|
$
|
2,914
|
|
|
$
|
1,349
|
|
|
Pulp
|
252
|
|
|
91
|
|
|
||
Intercompany eliminations
|
(44
|
)
|
|
(23
|
)
|
|
||
Total
|
$
|
3,122
|
|
|
$
|
1,417
|
|
|
Operating income (loss):
|
|
|
|
|
|
|
||
Paper
(1)
|
$
|
(129
|
)
|
|
$
|
(104
|
)
|
|
Pulp
|
(26
|
)
|
|
(17
|
)
|
|
||
Total
|
$
|
(155
|
)
|
|
$
|
(121
|
)
|
|
Depreciation, amortization and depletion:
|
|
|
|
|
|
|
||
Paper
|
$
|
278
|
|
|
$
|
92
|
|
|
Pulp
|
30
|
|
|
8
|
|
|
||
Total
|
$
|
308
|
|
|
$
|
100
|
|
|
Capital expenditures:
|
|
|
|
|
|
|
||
Paper
|
$
|
51
|
|
|
$
|
26
|
|
|
Pulp
|
13
|
|
|
5
|
|
|
||
Total
|
$
|
64
|
|
|
$
|
31
|
|
|
|
Predecessor
|
|
|
Successor
|
||||||||||||||||||||||||||||||||
|
|
|
|
|
July 1,
|
|
|
July 15,
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
2016
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
(Dollars in millions, except per share amounts)
|
First
|
|
Second
|
|
Through
|
|
|
Through
|
|
Fourth
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||||||||||||
Quarter
|
|
Quarter
|
|
July 14,
|
|
|
September 30,
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|||||||||||||||||||
2016
|
|
2016
|
|
2016
|
|
|
2016
|
|
2016
|
|
2017
|
|
2017
|
|
2017
|
|
2017
|
|||||||||||||||||||
Summary Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net sales
|
$
|
690
|
|
|
$
|
630
|
|
|
$
|
97
|
|
|
|
$
|
578
|
|
|
$
|
646
|
|
|
$
|
616
|
|
|
$
|
585
|
|
|
$
|
621
|
|
|
$
|
639
|
|
Cost of products sold (exclusive of depreciation, amortization and depletion)
|
618
|
|
|
548
|
|
|
83
|
|
|
|
559
|
|
|
539
|
|
|
560
|
|
|
571
|
|
|
552
|
|
|
554
|
|
|||||||||
Depreciation, amortization and depletion
|
48
|
|
|
45
|
|
|
7
|
|
|
|
24
|
|
|
69
|
|
|
33
|
|
|
27
|
|
|
27
|
|
|
28
|
|
|||||||||
Selling, general and administrative expenses
|
47
|
|
|
40
|
|
|
8
|
|
|
|
23
|
|
|
26
|
|
|
33
|
|
|
24
|
|
|
24
|
|
|
25
|
|
|||||||||
Restructuring charges
(1)
|
144
|
|
|
7
|
|
|
—
|
|
|
|
2
|
|
|
9
|
|
|
2
|
|
|
2
|
|
|
4
|
|
|
1
|
|
|||||||||
Other operating (income) expense
|
(57
|
)
|
|
—
|
|
|
—
|
|
|
|
2
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||||||
Interest expense
|
26
|
|
|
11
|
|
|
2
|
|
|
|
8
|
|
|
9
|
|
|
9
|
|
|
10
|
|
|
10
|
|
|
9
|
|
|||||||||
Reorganization items, net
|
(48
|
)
|
|
12
|
|
|
(1,302
|
)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Other (income) expense
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|||||||||
Income tax benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(20
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|||||||||
Net income (loss)
|
(88
|
)
|
|
(33
|
)
|
|
1,299
|
|
|
|
(40
|
)
|
|
8
|
|
|
(21
|
)
|
|
(49
|
)
|
|
4
|
|
|
36
|
|
|||||||||
Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Basic
|
$
|
(1.07
|
)
|
|
$
|
(0.40
|
)
|
|
$
|
15.88
|
|
|
|
$
|
(1.16
|
)
|
|
$
|
0.23
|
|
|
$
|
(0.61
|
)
|
|
$
|
(1.42
|
)
|
|
$
|
0.12
|
|
|
$
|
1.04
|
|
Diluted
|
(1.07
|
)
|
|
(0.40
|
)
|
|
15.88
|
|
|
|
(1.16
|
)
|
|
0.23
|
|
|
(0.61
|
)
|
|
(1.42
|
)
|
|
0.12
|
|
|
1.04
|
|
|||||||||
Weighted average shares of common stock outstanding (thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Basic
|
81,869
|
|
|
81,828
|
|
|
81,823
|
|
|
|
34,391
|
|
|
34,391
|
|
|
34,391
|
|
|
34,416
|
|
|
34,456
|
|
|
34,465
|
|
|||||||||
Diluted
|
81,869
|
|
|
81,828
|
|
|
81,823
|
|
|
|
34,391
|
|
|
34,391
|
|
|
34,391
|
|
|
34,416
|
|
|
34,460
|
|
|
34,618
|
|
|||||||||
Closing price per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
High
|
|
|
|
|
|
|
|
$
|
12.00
|
|
|
$
|
7.16
|
|
|
$
|
8.27
|
|
|
$
|
6.07
|
|
|
$
|
5.38
|
|
|
$
|
17.57
|
|
||||||
Low
|
|
|
|
|
|
|
|
5.66
|
|
|
4.82
|
|
|
5.70
|
|
|
3.37
|
|
|
3.86
|
|
|
5.15
|
|
||||||||||||
Period-end
|
|
|
|
|
|
|
|
6.45
|
|
|
7.10
|
|
|
6.00
|
|
|
4.69
|
|
|
5.09
|
|
|
17.57
|
|
Exhibit
|
|
Number
|
Description of Exhibit
|
|
|
2.1
|
|
|
|
2.2
|
|
|
|
3.1
|
|
|
|
3.2
|
|
|
|
4.1
|
|
|
|
4.2
|
|
|
|
4.3
|
|
|
|
10.1
|
|
|
|
10.2
|
|
|
|
10.3
|
|
|
|
10.4
|
|
|
|
10.5
|
|
|
|
10.6*
|
|
|
|
10.7*
|
|
|
|
10.8*
|
|
|
|
10.9*
|
|
|
|
(1)
|
Incorporated herein by reference to Exhibit 2.1 of Verso Corporation’s Current Report on Form 8-K filed with the SEC on June 24, 2016.
|
(2)
|
Incorporated herein by reference to Exhibit 2.2 of Verso Corporation’s Current Report on Form 8-K filed with the SEC on June 24, 2016.
|
(3)
|
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.
|
(4)
|
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.
|
(5)
|
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.
|
(6)
|
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.
|
(7)
|
Included in Exhibit 10.1.
|
(8)
|
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.
|
(9)
|
Incorporated herein by reference to Exhibit 10.1 to Verso Corporation’s Current Report on Form 8-K filed with the SEC on July 19, 2016.
|
(10)
|
Incorporated herein by reference to Exhibit 10.1 to Verso Corporation’s Current Report on Form 8-K filed with the SEC on December 8, 2016.
|
(11)
|
Incorporated herein by reference to Exhibit 10.2 to Verso Corporation’s Current Report on Form 8-K filed with the SEC on July 19, 2016.
|
(12)
|
Incorporated herein by reference to Exhibit 10.2 to Verso Corporation’s Current Report on Form 8-K filed with the SEC on December 8, 2016.
|
(13)
|
Incorporated herein by reference to Exhibit 10.3 to Verso Corporation’s Current Report on Form 8-K filed with the SEC on July 19, 2016.
|
(14)
|
Incorporated herein by reference to Exhibit 10.2 to Verso Corporation’s Current Report on Form 8-K, filed with the SEC on December 30, 2009.
|
(15)
|
Incorporated herein by reference to Exhibit 10.1 to Verso Corporation’s Current Report on Form 8-K, filed with the SEC on December 30, 2009.
|
(16)
|
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.
|
(17)
|
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.
|
(18)
|
Incorporated herein by reference to Exhibit 10.1 to Verso Corporation’s Current Report on Form 8-K filed with the SEC on September 8, 2015.
|
(19)
|
Incorporated herein by reference to Exhibit 10.3 to Verso Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2017, filed with the SEC on May 15, 2017.
|
(20)
|
Incorporated herein by reference to Exhibit 10.1 to Verso Corporation’s Current Report on Form 8-K filed with the SEC on July 5, 2017.
|
(21)
|
Incorporated herein by reference to Exhibit 10.6 to Verso Corporation’s Current Report on Form 8-K filed with the SEC on July 19, 2016.
|
(22)
|
Incorporated herein by reference to Exhibit 10.2 to Verso Corporation’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2012, filed with the SEC on May 14, 2012.
|
(23)
|
Incorporated herein by reference to Exhibit 23.2 to Verso Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, filed with the SEC on March 6, 2012.
|
(24)
|
Furnished herewith.
|
Date: March 8, 2018
|
|
|
|
VERSO CORPORATION
|
|
|
|
|
|
By:
|
/s/ B. Christopher DiSantis
|
|
|
B. Christopher DiSantis
President, Chief Executive Officer, and Director |
Signature
|
|
Position
|
Date
|
|
|
|
|
/s/ B. Christopher DiSantis
|
|
President, Chief Executive Officer, and Director
|
March 8, 2018
|
B. Christopher DiSantis
|
(Principal Executive Officer)
|
|
|
|
|
|
|
/s/ Allen J. Campbell
|
|
Senior Vice President and Chief Financial Officer
|
March 8, 2018
|
Allen J. Campbell
|
(Principal Financial Officer)
|
|
|
|
|
|
|
/s/ Robert M. Amen
|
|
Director
|
March 8, 2018
|
Robert M. Amen
|
|
|
|
|
|
|
|
/s/ Alan J. Carr
|
|
Director
|
March 8, 2018
|
Alan J. Carr
|
|
|
|
|
|
|
|
/s/ Eugene I. Davis
|
|
Director
|
March 8, 2018
|
Eugene I. Davis
|
|
|
|
|
|
|
|
/s/ Jerome L. Goldman
|
|
Director
|
March 8, 2018
|
Jerome L. Goldman
|
|
|
|
|
|
|
|
/s/ Steven D. Scheiwe
|
|
Director
|
March 8, 2018
|
Steven D. Scheiwe
|
|
|
|
|
|
|
|
/s/ Jay Shuster
|
|
Director
|
March 8, 2018
|
Jay Shuster
|
|
|
|
|
|
|
|
Vesting Schedule:
|
Subject to Sections 6 and 7 of the Terms, one-third (1/3) of the total number of Stock Units subject to the Award will vest on each of the first, second and third anniversaries of the Grant Date.
|
Vesting Schedule:
|
Subject to Section 7 of the Terms, this Award will become vested as to 100% of the total number of Stock Units subject to the Award on the earliest to occur of the following: (a) the first anniversary of the Grant Date; (b) the date immediately preceding the date of the first annual meeting of the Corporation’s stockholders that occurs in the Corporation’s fiscal year immediately following the fiscal year in which the Grant Date occurs; or (c) the date on which a Change in Control occurs. Vested Stock Units will be paid as provided in Section 6 of the Terms.
|
Vesting Schedule:
|
Subject to the Terms (as defined below) the Award will become vested as to the total number of Stock Units subject to the Award, as follows:
|
A
B
|
x
|
C
|
=
|
The number of Performance Vesting Stock Units that will remain subject of this Award after the date of Separation From Service
|
A
B
|
x
|
C
|
=
|
The number of performance-based vesting Stock Units that will remain subject of the Award after Separation From Service
|
Vesting Schedule:
|
Subject to Section 7 of the Terms, this Award will become vested as to 100% of the total number of Stock Units subject to the Award on the earliest to occur of the following: (a) the first anniversary of the Grant Date; (b) the date immediately preceding the date of the first annual meeting of the Corporation’s stockholders that occurs in the Corporation’s fiscal year immediately following the fiscal year in which the Grant Date occurs; or (c) the date on which a Change in Control occurs. Vested Stock Units will be paid as provided in Section 6 of the Terms.
|
Vesting Schedule:
|
Subject to the Terms (as defined below) the Award will become vested as to the total number of Stock Units subject to the Award, as follows:
|
•
|
If the Corporation ranks below the 55th percentile of the Peer Group, no portion of the Performance Vesting Award will vest. The Administrator will have discretion to override these results and permit vesting of some or all of the Performance Vesting Award, in its discretion.
|
•
|
If the Corporation ranks at the 55th percentile of the Peer Group, 50% of the Performance Vesting Award will vest.
|
•
|
If the Corporation ranks at the 65th percentile of the Peer Group, 100% of the Performance Vesting Award will vest.
|
•
|
If the Corporation ranks at the 75th percentile of the Peer Group, 150% percent of the Performance Vesting Award will vest.
|
A
B
|
x
|
C
|
=
|
The number of Performance Vesting Stock Units that will remain subject of this Award after the date of Separation From Service
|
A
B
|
x
|
C
|
=
|
The number of performance-based vesting Stock Units that will remain subject of the Award after Separation From Service
|
•
|
If the Corporation ranks below the 50th percentile of the Peer Group, no portion of the Performance Vesting Award will vest. The Administrator will have discretion to override these results and permit vesting of some or all of the Performance Vesting Award, in its discretion.
|
•
|
If the Corporation ranks at the 50th percentile of the Peer Group, 50% of the Performance Vesting Award will vest.
|
•
|
If the Corporation ranks at the 60th percentile of the Peer Group, 100% of the Performance Vesting Award will vest.
|
•
|
If the Corporation ranks at the 70th percentile of the Peer Group, 150% percent of the Performance Vesting Award will vest.
|
|
|
Jurisdiction of
|
|
|
Incorporation or
|
Subsidiary
|
|
Organization
|
|
|
|
Verso Holding LLC
|
|
Delaware
|
|
|
|
Verso Paper Holding LLC
|
|
Delaware
|
|
|
|
Verso Androscoggin LLC
|
|
Delaware
|
|
|
|
Verso Escanaba LLC
|
|
Delaware
|
|
|
|
Verso Luke LLC
|
|
Delaware
|
|
|
|
Verso Quinnesec LLC
|
|
Delaware
|
|
|
|
Verso Minnesota Wisconsin LLC
|
|
Delaware
|
|
|
|
Consolidated Water Power Company
|
|
Wisconsin
|
|
|
|
Verso Wickliffe LLC
|
|
Delaware
|
|
|
|
Verso Energy Holding LLC
|
|
Delaware
|
|
|
|
Verso Energy Services LLC
|
|
Delaware
|
1.
|
I have reviewed this
annual
report on
Form 10-K
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/ B. Christopher DiSantis
|
|
B. Christopher DiSantis
President and Chief Executive Officer (Principal Executive Officer) |
1.
|
I have reviewed this
annual
report on
Form 10-K
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:
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(a)
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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)
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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)
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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)
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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.
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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):
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(a)
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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
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(b)
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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/ Allen J. Campbell
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Allen J. Campbell
Senior Vice President and Chief Financial Officer (Principal Financial Officer) |
(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of
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/s/ B. Christopher DiSantis
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B. Christopher DiSantis
President and Chief Executive Officer (Principal Executive Officer) |
(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of
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/s/ Allen J. Campbell
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Allen J. Campbell
Senior Vice President and Chief Financial Officer (Principal Financial Officer) |