|
|
|
Delaware
|
|
46-3234977
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S Employer Identification Number)
|
|
|
|
6600 Governors Lake Parkway
|
|
|
Norcross, Georgia
|
|
30071
|
(Address of principal executive offices)
|
|
(Zip code)
|
Large accelerated filer
|
¨
|
Accelerated filer
|
¨
|
|
|
|
|
Non-accelerated filer
|
x
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
¨
|
|
|
|
Page
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
|
For the Three Months
Ended June 30, |
|
For the Six Months
Ended June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(Unaudited, in Millions)
|
|
(Unaudited, in Millions)
|
||||||||||||
Net sales (including sales to a related-party of $12.3 and $13.5 for the three months ended June 30, 2014 and 2013, respectively, and $24.3 and $27.5 for the six months ended June 30, 2014 and 2013, respectively)
|
$
|
1,329.0
|
|
|
$
|
1,402.9
|
|
|
$
|
2,636.4
|
|
|
$
|
2,791.3
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of products sold (including purchases from a related-party of $136.5 and $139.8 for the three months ended June 30, 2014 and 2013, respectively, and $276.5 and $307.0 for the six months ended June 30, 2014 and 2013, respectively) (exclusive of depreciation and amortization shown separately below)
|
1,116.7
|
|
|
1,172.1
|
|
|
2,205.2
|
|
|
2,331.4
|
|
||||
Distribution expenses
|
72.0
|
|
|
77.9
|
|
|
149.1
|
|
|
159.4
|
|
||||
Selling and administrative expenses
|
132.0
|
|
|
135.8
|
|
|
260.6
|
|
|
274.9
|
|
||||
Depreciation and amortization
|
4.3
|
|
|
4.1
|
|
|
8.9
|
|
|
8.4
|
|
||||
Restructuring (income) charges
|
(0.9
|
)
|
|
17.3
|
|
|
(1.1
|
)
|
|
24.4
|
|
||||
Operating income (loss)
|
4.9
|
|
|
(4.3
|
)
|
|
13.7
|
|
|
(7.2
|
)
|
||||
Other income, net
|
(0.1
|
)
|
|
(0.6
|
)
|
|
(0.6
|
)
|
|
(2.1
|
)
|
||||
Income (loss) from continuing operations before income taxes
|
5.0
|
|
|
(3.7
|
)
|
|
14.3
|
|
|
(5.1
|
)
|
||||
Income tax provision (benefit)
|
2.1
|
|
|
(1.4
|
)
|
|
5.8
|
|
|
(1.9
|
)
|
||||
Income (loss) from continuing operations
|
2.9
|
|
|
(2.3
|
)
|
|
8.5
|
|
|
(3.2
|
)
|
||||
(Loss) income from discontinued operations, net of income taxes
|
—
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
0.1
|
|
||||
Net income (loss)
|
2.9
|
|
|
(2.4
|
)
|
|
8.4
|
|
|
(3.1
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
||||||||
Change in cumulative foreign currency translation adjustment
|
—
|
|
|
(0.6
|
)
|
|
0.6
|
|
|
0.4
|
|
||||
Total comprehensive income (loss), net of tax
|
$
|
2.9
|
|
|
$
|
(3.0
|
)
|
|
$
|
9.0
|
|
|
$
|
(2.7
|
)
|
|
June 30,
|
|
December 31,
|
||||
|
2014
|
|
2013
|
||||
|
|
|
(as restated, see Note 13)
|
||||
|
(Unaudited, in Millions)
|
||||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
3.9
|
|
|
$
|
5.7
|
|
Accounts receivable, less allowances of $17.0 and $22.7 in 2014 and 2013, respectively
|
657.0
|
|
|
669.7
|
|
||
Related-party receivable
|
0.8
|
|
|
10.1
|
|
||
Inventories, net
|
365.3
|
|
|
360.9
|
|
||
Other current assets
|
24.7
|
|
|
26.3
|
|
||
Assets held for sale
|
6.5
|
|
|
9.3
|
|
||
Total current assets
|
1,058.2
|
|
|
1,082.0
|
|
||
|
|
|
|
||||
Property and equipment, net
|
99.5
|
|
|
107.1
|
|
||
Other non-current assets
|
6.7
|
|
|
9.4
|
|
||
Goodwill
|
26.4
|
|
|
26.4
|
|
||
Other intangibles, net
|
8.6
|
|
|
9.3
|
|
||
Deferred income tax assets
|
21.9
|
|
|
22.7
|
|
||
Total assets
|
$
|
1,221.3
|
|
|
$
|
1,256.9
|
|
|
|
|
|
||||
Liabilities and parent company equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
348.8
|
|
|
$
|
357.3
|
|
Related-party payable
|
1.9
|
|
|
2.6
|
|
||
Accrued payroll and benefits
|
55.4
|
|
|
54.9
|
|
||
Deferred income tax liabilities
|
14.0
|
|
|
13.5
|
|
||
Other accrued liabilities
|
34.1
|
|
|
36.5
|
|
||
Total current liabilities
|
454.2
|
|
|
464.8
|
|
||
Non-current liabilities
|
10.9
|
|
|
12.5
|
|
||
Total liabilities
|
465.1
|
|
|
477.3
|
|
||
|
|
|
|
||||
Commitments and contingent liabilities
(Note 7)
|
|
|
|
|
|
||
Parent company equity:
|
|
|
|
||||
Parent company investment
|
760.3
|
|
|
784.3
|
|
||
Accumulated other comprehensive loss
|
(4.1
|
)
|
|
(4.7
|
)
|
||
Total parent company equity
|
756.2
|
|
|
779.6
|
|
||
Total liabilities and parent company equity
|
$
|
1,221.3
|
|
|
$
|
1,256.9
|
|
|
For the Six Months
Ended June 30, |
||||||
|
2014
|
|
2013
|
||||
|
(Unaudited, in Millions)
|
||||||
Operating activities
|
|
|
|
||||
Net income (loss)
|
$
|
8.4
|
|
|
$
|
(3.1
|
)
|
(Loss) income from discontinued operations, net of income taxes
|
(0.1
|
)
|
|
0.1
|
|
||
Income (loss) from continuing operations
|
8.5
|
|
|
(3.2
|
)
|
||
Depreciation and amortization
|
8.9
|
|
|
8.4
|
|
||
Net gains on sales of fixed assets
|
(1.5
|
)
|
|
(7.5
|
)
|
||
Provision for allowance for doubtful accounts
|
4.0
|
|
|
1.5
|
|
||
Deferred income tax provision
|
1.5
|
|
|
1.5
|
|
||
Stock-based compensation
|
4.3
|
|
|
7.8
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
19.5
|
|
|
9.2
|
|
||
Inventories, net
|
(4.4
|
)
|
|
(7.4
|
)
|
||
Accounts payable and accrued liabilities
|
(4.7
|
)
|
|
31.9
|
|
||
Other
|
1.9
|
|
|
(9.1
|
)
|
||
Cash provided by operating activities – continuing operations
|
38.0
|
|
|
33.1
|
|
||
Cash used for operating activities – discontinued operations
|
(1.1
|
)
|
|
(1.3
|
)
|
||
Cash provided by operating activities
|
$
|
36.9
|
|
|
$
|
31.8
|
|
|
|
|
|
||||
Investing activities
|
|
|
|
||||
Invested in capital projects
|
$
|
(1.3
|
)
|
|
$
|
(6.2
|
)
|
Proceeds from asset sales
|
4.8
|
|
|
18.9
|
|
||
Other
|
0.1
|
|
|
(0.1
|
)
|
||
Cash provided by investing activities – continuing operations
|
3.6
|
|
|
12.6
|
|
||
Cash provided by investing activities – discontinued operations
|
—
|
|
|
—
|
|
||
Cash provided by investing activities
|
$
|
3.6
|
|
|
$
|
12.6
|
|
|
|
|
|
||||
Financing activities
|
|
|
|
||||
Net transfers to Parent
|
$
|
(37.9
|
)
|
|
$
|
(33.7
|
)
|
Change in book overdrafts
|
(6.1
|
)
|
|
(13.0
|
)
|
||
Cash used for financing activities – continuing operations
|
(44.0
|
)
|
|
(46.7
|
)
|
||
Cash provided by (used for) financing activities – discontinued operations
|
1.1
|
|
|
(1.4
|
)
|
||
Cash used for financing activities
|
$
|
(42.9
|
)
|
|
$
|
(48.1
|
)
|
Effect of exchange rate changes on cash
|
0.6
|
|
|
0.4
|
|
||
|
|
|
|
||||
Change in cash and cash equivalents
|
(1.8
|
)
|
|
(3.3
|
)
|
||
Cash and cash equivalents at beginning of period
|
5.7
|
|
|
15.4
|
|
||
Cash and cash equivalents at end of period
|
$
|
3.9
|
|
|
$
|
12.1
|
|
|
|
|
|
||||
Supplementary cash flow information
|
|
|
|
||||
Income taxes paid, net of refunds
|
$
|
0.4
|
|
|
$
|
0.4
|
|
|
|
|
|
||||
Non-cash transactions
|
|
|
|
||||
Property additions included in accounts payable
|
$
|
—
|
|
|
$
|
0.4
|
|
|
Parent Company Investment
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total Parent Company Equity
|
||||||
|
(
Unaudited, in Millions, as restated, see Note 13
)
|
||||||||||
Balance at December 31, 2012
|
$
|
819.2
|
|
|
$
|
(6.1
|
)
|
|
$
|
813.1
|
|
Net income
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|||
Other comprehensive income, net of tax
|
—
|
|
|
1.4
|
|
|
1.4
|
|
|||
Net transfers to parent
|
(35.1
|
)
|
|
—
|
|
|
(35.1
|
)
|
|||
Balance at December 31, 2013
|
$
|
784.3
|
|
|
$
|
(4.7
|
)
|
|
$
|
779.6
|
|
Net income
|
8.4
|
|
|
—
|
|
|
8.4
|
|
|||
Other comprehensive income, net of tax
|
—
|
|
|
0.6
|
|
|
0.6
|
|
|||
Net transfers to parent
|
(32.4
|
)
|
|
—
|
|
|
(32.4
|
)
|
|||
Balance at June 30, 2014
|
$
|
760.3
|
|
|
$
|
(4.1
|
)
|
|
$
|
756.2
|
|
•
|
8,160,000
shares of Veritiv common stock were distributed on a pro rata basis to the International Paper shareholders of record as of the close of business on June 20, 2014. Immediately following the Spin-off, but prior to the Merger, International Paper’s shareholders owned all of the shares of Veritiv common stock outstanding, and
|
•
|
A special payment of
$400.0 million
was distributed to International Paper.
|
•
|
UWW Holdings, LLC, the sole shareholder of UWW Holdings, Inc., received
7,840,000
shares of Veritiv common stock for all outstanding shares of UWW Holdings, Inc. common stock that it held on the Distribution Date, in a private placement transaction,
|
•
|
Veritiv and UWW Holdings, LLC entered into a registration rights agreement (the "Registration Rights Agreement") that entitles UWW Holdings, LLC to transfer Veritiv’s common stock to one or more of its affiliates or equity holders. Additionally, UWW Holdings, LLC may exercise registration rights on behalf of such transferees if such transferees become a party to the Registration Rights Agreement. The agreement also provides UWW Holdings, LLC with certain demand registration rights and piggyback registration rights,
|
•
|
Veritiv and UWW Holdings, LLC entered into a tax receivable agreement (the "Tax Receivable Agreement") that sets forth the terms by which Veritiv generally will be obligated to pay UWW Holdings, LLC an amount equal to
85%
of the U.S. federal, state and Canadian income tax savings, if any, that Veritiv actually realizes as a result of the utilization of Unisource Worldwide, Inc.’s net operating losses attributable to taxable periods prior to the date of the Merger, and
|
•
|
UWW Holdings, LLC received approximately
$38.6 million
of cash proceeds associated with customary working capital adjustments, net indebtedness and transaction expenses related adjustments that are subject to finalization within a
90
-day period after the Distribution Date.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(Unaudited, in Millions, except per share and number of shares data)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Pro forma earnings (loss) per share
|
$
|
0.36
|
|
|
$
|
(0.29
|
)
|
|
$
|
1.03
|
|
|
$
|
(0.38
|
)
|
xpedx Net income (loss)
|
$
|
2.9
|
|
|
$
|
(2.4
|
)
|
|
$
|
8.4
|
|
|
$
|
(3.1
|
)
|
Veritiv pro forma shares outstanding
|
8,160,000
|
|
|
8,160,000
|
|
|
8,160,000
|
|
|
8,160,000
|
|
|
For the Three Months
Ended June 30, 2014 |
|
For the Six Months
Ended June 30, 2014 |
||||||||||||
|
Before-Tax
|
|
After-Tax
|
|
Before-Tax
|
|
After-Tax
|
||||||||
Charges
|
|
Charges
|
|
Charges
|
|
Charges
|
|||||||||
|
(In Millions)
|
|
(In Millions)
|
||||||||||||
Facility costs
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
|
$
|
0.1
|
|
Severance
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
||||
Personnel costs
|
0.1
|
|
|
0.1
|
|
|
0.2
|
|
|
0.1
|
|
||||
Accelerated amortization and depreciation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Professional services
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Gain on sale of fixed assets
|
(1.1
|
)
|
|
(0.8
|
)
|
|
(1.6
|
)
|
|
(1.0
|
)
|
||||
Total
|
$
|
(0.9
|
)
|
|
$
|
(0.6
|
)
|
|
$
|
(1.1
|
)
|
|
$
|
(0.7
|
)
|
|
For the Three Months
Ended June 30, 2013 |
|
For the Six Months
Ended June 30, 2013 |
||||||||||||
|
Before-Tax
|
|
After-Tax
|
|
Before-Tax
|
|
After-Tax
|
||||||||
Charges
|
|
Charges
|
|
Charges
|
|
Charges
|
|||||||||
|
(In Millions)
|
|
(In Millions)
|
||||||||||||
Facility costs
|
$
|
7.6
|
|
|
$
|
4.7
|
|
|
$
|
10.3
|
|
|
$
|
6.3
|
|
Severance
|
6.5
|
|
|
3.9
|
|
|
12.2
|
|
|
7.4
|
|
||||
Personnel costs
|
4.5
|
|
|
2.7
|
|
|
7.7
|
|
|
4.7
|
|
||||
Accelerated amortization and depreciation
|
0.3
|
|
|
0.2
|
|
|
0.3
|
|
|
0.2
|
|
||||
Professional services
|
0.2
|
|
|
0.1
|
|
|
0.9
|
|
|
0.5
|
|
||||
Gain on sale of fixed assets
|
(1.8
|
)
|
|
(1.1
|
)
|
|
(7.0
|
)
|
|
(4.3
|
)
|
||||
Total
|
$
|
17.3
|
|
|
$
|
10.5
|
|
|
$
|
24.4
|
|
|
$
|
14.8
|
|
|
Total
|
||
|
(In Millions)
|
||
Liability at December 31, 2012
|
$
|
3.8
|
|
Additional provision
|
44.0
|
|
|
Payments
|
(39.7
|
)
|
|
Adjustment of prior year's estimate
|
(0.4
|
)
|
|
Liability at December 31, 2013
|
7.7
|
|
|
Additional provision
|
0.1
|
|
|
Payments
|
(3.9
|
)
|
|
Adjustment of prior year's estimate
|
(0.3
|
)
|
|
Liability at June 30, 2014
|
$
|
3.6
|
|
|
For the Three Months
Ended June 30, |
|
For the Six Months
Ended June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(In Millions)
|
|
(In Millions)
|
||||||||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Loss from operations
|
$
|
—
|
|
|
$
|
(0.1
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
(0.2
|
)
|
Restructuring and disposal income
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
||||
(Loss) income from discontinued operations
|
$
|
—
|
|
|
$
|
(0.1
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
0.1
|
|
|
June 30,
|
|
December 31,
|
||||
|
2014
|
|
2013
|
||||
|
(In Millions)
|
||||||
Accounts receivable
|
$
|
674.0
|
|
|
$
|
692.4
|
|
Less: allowances
|
(17.0
|
)
|
|
(22.7
|
)
|
||
Accounts receivable, net
|
$
|
657.0
|
|
|
$
|
669.7
|
|
|
June 30,
|
|
December 31,
|
||||
2014
|
|
2013
|
|||||
|
(In Millions)
|
||||||
Rebates receivable
|
$
|
16.6
|
|
|
$
|
18.4
|
|
Prepaid expenses
|
5.9
|
|
|
5.6
|
|
||
Other
|
2.2
|
|
|
2.3
|
|
||
Other current assets
|
$
|
24.7
|
|
|
$
|
26.3
|
|
•
|
Assets contributed to the multiemployer plans by one employer may be used to provide benefits to employees of other participating employers.
|
•
|
If a participating employer ceases contributing to the plan, the unfunded obligations of the plan may be inherited by the remaining participating employers.
|
•
|
If the Company stops participating in the multiemployer plan, the Company may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.
|
|
Six Months Ended June 30, 2014
|
Expected volatility
|
30.84%
|
Risk-free interest rate
|
0.78%
|
|
International Paper Shares/
Units |
|
Weighted-Average
Grant Date Fair Value |
|||
|
|
|
(Actual Dollar)
|
|||
Outstanding at December 31, 2012
|
1,093,972
|
|
|
$
|
29.28
|
|
Granted
|
296,888
|
|
|
39.55
|
|
|
Shares issued
|
(334,228
|
)
|
|
28.93
|
|
|
Forfeited
|
(14,844
|
)
|
|
39.55
|
|
|
Outstanding at December 31, 2013
|
1,041,788
|
|
|
$
|
32.21
|
|
Granted
|
173,776
|
|
|
47.66
|
|
|
Shares issued
|
(451,431
|
)
|
|
28.04
|
|
|
Forfeited
|
(8,689
|
)
|
|
47.66
|
|
|
Outstanding at June 30, 2014
|
755,444
|
|
|
$
|
38.16
|
|
|
International Paper Shares/
Units |
|
Weighted-Average
Grant Date Fair Value |
|||
|
|
|
(Actual Dollar)
|
|||
Outstanding at December 31, 2012
|
27,500
|
|
|
$
|
34.43
|
|
Granted
|
—
|
|
|
—
|
|
|
Shares issued
|
(2,500
|
)
|
|
27.24
|
|
|
Outstanding at December 31, 2013
|
25,000
|
|
|
$
|
35.15
|
|
Granted
|
—
|
|
|
—
|
|
|
Shares issued
|
—
|
|
|
—
|
|
|
Outstanding at June 30, 2014
|
25,000
|
|
|
$
|
35.15
|
|
|
For the Three Months
Ended June 30, |
|
For the Six Months
Ended June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(In Millions)
|
|
(In Millions)
|
||||||||||||
Total stock-based compensation expense (included in Selling and administrative expense)
|
$
|
3.2
|
|
|
$
|
3.5
|
|
|
$
|
4.3
|
|
|
$
|
7.8
|
|
Income tax benefit related to stock-based compensation
|
$
|
0.3
|
|
|
$
|
0.9
|
|
|
$
|
1.3
|
|
|
$
|
0.9
|
|
|
For the Three Months
Ended June 30, |
|
For the Six Months
Ended June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(In Millions)
|
|
(In Millions)
|
||||||||||||
Print
|
$
|
735.1
|
|
|
$
|
791.9
|
|
|
$
|
1,471.4
|
|
|
$
|
1,588.2
|
|
Packaging
|
406.9
|
|
|
395.3
|
|
|
796.9
|
|
|
779.3
|
|
||||
Facility Solutions
|
187.0
|
|
|
215.7
|
|
|
368.1
|
|
|
423.8
|
|
||||
Net sales
|
$
|
1,329.0
|
|
|
$
|
1,402.9
|
|
|
$
|
2,636.4
|
|
|
$
|
2,791.3
|
|
|
For the Three Months
Ended June 30, |
|
For the Six Months
Ended June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(In Millions)
|
|
(In Millions)
|
||||||||||||
Print
|
$
|
7.2
|
|
|
$
|
4.8
|
|
|
$
|
14.1
|
|
|
$
|
13.6
|
|
Packaging
|
12.6
|
|
|
11.8
|
|
|
26.7
|
|
|
26.4
|
|
||||
Facility Solutions
|
(7.4
|
)
|
|
(12.7
|
)
|
|
(17.6
|
)
|
|
(25.1
|
)
|
||||
Operating profit
|
12.4
|
|
|
3.9
|
|
|
23.2
|
|
|
14.9
|
|
||||
Corporate items
|
(7.4
|
)
|
|
(7.6
|
)
|
|
(8.9
|
)
|
|
(20.0
|
)
|
||||
Income (loss) from continuing operations
before income taxes |
$
|
5.0
|
|
|
$
|
(3.7
|
)
|
|
$
|
14.3
|
|
|
$
|
(5.1
|
)
|
|
For the Three Months
Ended June 30, |
|
For the Six Months
Ended June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(In Millions)
|
|
(In Millions)
|
||||||||||||
Print
|
$
|
0.1
|
|
|
$
|
6.9
|
|
|
$
|
—
|
|
|
$
|
8.3
|
|
Packaging
|
(0.9
|
)
|
|
3.7
|
|
|
(0.9
|
)
|
|
4.1
|
|
||||
Facility Solutions
|
(0.1
|
)
|
|
1.5
|
|
|
(0.2
|
)
|
|
2.0
|
|
||||
Corporate
|
—
|
|
|
5.2
|
|
|
—
|
|
|
10.0
|
|
||||
Restructuring (income) charges
|
$
|
(0.9
|
)
|
|
$
|
17.3
|
|
|
$
|
(1.1
|
)
|
|
$
|
24.4
|
|
|
June 30, 2014
|
|
December 31, 2013
|
||||
|
(In Millions)
|
||||||
Print
|
$
|
629.2
|
|
|
$
|
628.5
|
|
Packaging
|
404.7
|
|
|
418.7
|
|
||
Facility Solutions
|
182.9
|
|
|
209.1
|
|
||
Corporate
|
4.5
|
|
|
0.6
|
|
||
Total assets
|
$
|
1,221.3
|
|
|
$
|
1,256.9
|
|
11.
|
Related-Party Transactions and Parent Company Equity
|
|
For the Three Months
Ended June 30, |
|
For the Six Months
Ended June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(In Millions)
|
|
(In Millions)
|
||||||||||||
Intercompany sales and purchases, net
|
$
|
126.6
|
|
|
$
|
124.5
|
|
|
$
|
255.4
|
|
|
$
|
273.9
|
|
Cash pooling and general financing activities
|
(148.2
|
)
|
|
(124.3
|
)
|
|
(322.5
|
)
|
|
(337.5
|
)
|
||||
Corporate allocations including income taxes
|
17.9
|
|
|
15.0
|
|
|
34.7
|
|
|
37.5
|
|
||||
Total net transfers (to) from Parent
|
$
|
(3.7
|
)
|
|
$
|
15.2
|
|
|
$
|
(32.4
|
)
|
|
$
|
(26.1
|
)
|
|
Three Months Ended June 30, 2014
|
||||||||||||
|
(In Millions, except per share data and number of shares)
|
||||||||||||
|
xpedx
|
|
Financing Adjustments
|
|
UWW Adjustments
|
|
Veritiv Pro Forma As Adjusted
|
||||||
Net sales
|
$
|
1,329.0
|
|
|
—
|
|
|
976.8
|
|
|
$
|
2,305.8
|
|
|
|
|
|
|
|
|
|
||||||
Net earnings (loss)
|
$
|
2.9
|
|
|
(0.9
|
)
|
|
(5.3
|
)
|
|
$
|
(3.3
|
)
|
|
|
|
|
|
|
|
|
||||||
Earnings (loss) per share of common stock
|
$
|
0.36
|
|
|
|
|
|
|
$
|
(0.21
|
)
|
||
|
|
|
|
|
|
|
|
||||||
Veritiv shares outstanding
|
8,160,000
|
|
|
|
|
|
|
16,000,000
|
|
||||
|
|
|
|
|
|
|
|
||||||
|
Six Months Ended June 30, 2014
|
||||||||||||
|
(In Millions, except per share data and number of shares)
|
||||||||||||
|
xpedx
|
|
Financing Adjustments
|
|
UWW Adjustments
|
|
Veritiv Pro Forma As Adjusted
|
||||||
Net sales
|
$
|
2,636.4
|
|
|
—
|
|
|
1,907.5
|
|
|
$
|
4,543.9
|
|
|
|
|
|
|
|
|
|
||||||
Net earnings (loss)
|
$
|
8.4
|
|
|
(1.8
|
)
|
|
(0.5
|
)
|
|
$
|
6.1
|
|
|
|
|
|
|
|
|
|
||||||
Earnings (loss) per share of common stock
|
$
|
1.03
|
|
|
|
|
|
|
$
|
0.38
|
|
||
|
|
|
|
|
|
|
|
||||||
Veritiv shares outstanding
|
8,160,000
|
|
|
|
|
|
|
16,000,000
|
|
||||
|
|
|
|
|
|
|
|
||||||
|
Three Months Ended June 30, 2013
|
||||||||||||
|
(In Millions, except per share data and number of shares)
|
||||||||||||
|
xpedx
|
|
Financing Adjustments
|
|
UWW Adjustments
|
|
Veritiv Pro Forma As Adjusted
|
||||||
Net sales
|
$
|
1,402.9
|
|
|
—
|
|
|
1,004.3
|
|
|
$
|
2,407.2
|
|
|
|
|
|
|
|
|
|
||||||
Net earnings (loss)
|
$
|
(2.4
|
)
|
|
(0.8
|
)
|
|
3.3
|
|
|
$
|
0.1
|
|
|
|
|
|
|
|
|
|
||||||
Earnings (loss) per share of common stock
|
$
|
(0.29
|
)
|
|
|
|
|
|
$
|
0.01
|
|
||
|
|
|
|
|
|
|
|
||||||
Veritiv shares outstanding
|
8,160,000
|
|
|
|
|
|
|
16,000,000
|
|
||||
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2013
|
||||||||||||
|
(In Millions, except per share data and number of shares)
|
||||||||||||
|
xpedx
|
|
Financing Adjustments
|
|
UWW Adjustments
|
|
Veritiv Pro Forma As Adjusted
|
||||||
Net sales
|
$
|
2,791.3
|
|
|
—
|
|
|
1,983.7
|
|
|
$
|
4,775.0
|
|
|
|
|
|
|
|
|
|
||||||
Net earnings (loss)
|
$
|
(3.1
|
)
|
|
(1.5
|
)
|
|
(2.4
|
)
|
|
$
|
(7.0
|
)
|
|
|
|
|
|
|
|
|
||||||
Earnings (loss) per share of common stock
|
$
|
(0.38
|
)
|
|
|
|
|
|
$
|
(0.44
|
)
|
||
|
|
|
|
|
|
|
|
||||||
Veritiv shares outstanding
|
8,160,000
|
|
|
|
|
|
|
16,000,000
|
|
|
As of December 31, 2013
|
||||||||||
(In Millions)
|
As
|
|
Adjustments
|
|
As
|
||||||
Reported
|
|
|
Restated
|
||||||||
Deferred income tax assets
|
$
|
55.3
|
|
|
$
|
(55.3
|
)
|
|
$
|
—
|
|
Total current assets
|
1,137.3
|
|
|
(55.3
|
)
|
|
1,082.0
|
|
|||
Total assets
|
1,312.2
|
|
|
(55.3
|
)
|
|
1,256.9
|
|
|||
Deferred income tax liabilities
|
—
|
|
|
13.5
|
|
|
13.5
|
|
|||
Total current liabilities
|
451.3
|
|
|
13.5
|
|
|
464.8
|
|
|||
Total liabilities
|
463.8
|
|
|
13.5
|
|
|
477.3
|
|
|||
Parent company investment
|
853.1
|
|
|
(68.8
|
)
|
|
784.3
|
|
|||
Total parent company equity
|
848.4
|
|
|
(68.8
|
)
|
|
779.6
|
|
|||
Total liabilities and parent company equity
|
1,312.2
|
|
|
(55.3
|
)
|
|
1,256.9
|
|
|
Parent Company Investment
|
||||||||||
(In Millions)
|
As
|
|
Adjustments
|
|
As
|
||||||
Reported
|
|
|
Restated
|
||||||||
Balance, December 31, 2012
|
$
|
890.3
|
|
|
$
|
(71.1
|
)
|
|
$
|
819.2
|
|
Net transfers to Parent
|
(37.4
|
)
|
|
2.3
|
|
|
(35.1
|
)
|
|||
Balance, December 31, 2013
|
$
|
853.1
|
|
|
$
|
(68.8
|
)
|
|
$
|
784.3
|
|
|
Facility Solutions:
There are few national but numerous regional and local distributors of facility supplies. Several groups of distributors have created strategic alliances among multiple distributors to provide broader geographic coverage for larger customers. Other key competitors include the business-to-business divisions of big box stores, purchasing group affiliates and both catalog-based and online business-to-business suppliers.
|
•
|
8,160,000 shares of Veritiv common stock were distributed on a pro rata basis to the International Paper shareholders of record as of the close of business on June 20, 2014. Immediately following the Spin-off, but prior to the Merger, International Paper’s shareholders owned all of the shares of Veritiv common stock outstanding, and
|
•
|
A special payment of $400.0 million was distributed to International Paper.
|
•
|
UWW Holdings, LLC, the sole shareholder of UWW Holdings, Inc., received 7,840,000 shares of Veritiv common stock for all outstanding shares of UWW Holdings, Inc. common stock that it held on the Distribution Date, in a private placement transaction,
|
•
|
Veritiv and UWW Holdings, LLC entered into a registration rights agreement (the "Registration Rights Agreement") that entitles UWW Holdings, LLC to transfer Veritiv’s common stock to one or more of its affiliates or equity holders. Additionally, UWW Holdings, LLC may exercise registration rights on behalf of such transferees if such transferees become a party to the Registration Rights Agreement. The agreement also provides UWW Holdings, LLC with certain demand registration rights and piggyback registration rights,
|
•
|
Veritiv and UWW Holdings, LLC entered into a tax receivable agreement (the "Tax Receivable Agreement") that sets forth the terms by which Veritiv generally will be obligated to pay UWW Holdings, LLC an amount equal to 85% of the U.S. federal, state and Canadian income tax savings, if any, that Veritiv actually realizes as a result of the utilization of Unisource Worldwide, Inc.’s net operating losses attributable to taxable periods prior to the date of the Merger, and
|
•
|
UWW Holdings, LLC received approximately $38.6 million of cash proceeds associated with customary working capital adjustments, net indebtedness and transaction expenses related adjustments that are subject to finalization within a 90-day period after the Distribution Date.
|
|
Six Months Ended June 30,
|
||||||
|
2014
|
|
2013
|
||||
|
(In Millions)
|
||||||
Cash provided by operations
|
$
|
36.9
|
|
|
$
|
31.8
|
|
Less: Cash invested in capital projects
|
(1.3
|
)
|
|
(6.2
|
)
|
||
Free cash flow
|
$
|
35.6
|
|
|
$
|
25.6
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(In Millions)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net income (loss)
|
$
|
2.9
|
|
|
$
|
(2.4
|
)
|
|
$
|
8.4
|
|
|
$
|
(3.1
|
)
|
Income tax provision (benefit)
|
2.1
|
|
|
(1.4
|
)
|
|
5.8
|
|
|
(1.9
|
)
|
||||
Depreciation and amortization
|
4.3
|
|
|
4.1
|
|
|
8.9
|
|
|
8.4
|
|
||||
EBITDA
|
$
|
9.3
|
|
|
$
|
0.3
|
|
|
$
|
23.1
|
|
|
$
|
3.4
|
|
Restructuring (income) charges
|
(0.9
|
)
|
|
17.3
|
|
|
(1.1
|
)
|
|
24.4
|
|
||||
Non-restructuring stock-based compensation
|
3.2
|
|
|
3.3
|
|
|
4.3
|
|
|
7.8
|
|
||||
LIFO expense (income)
|
3.4
|
|
|
(0.4
|
)
|
|
(0.3
|
)
|
|
(2.3
|
)
|
||||
Non-restructuring severance charges
|
0.6
|
|
|
0.2
|
|
|
2.2
|
|
|
0.6
|
|
||||
Merger and integration costs
|
2.1
|
|
|
—
|
|
|
2.1
|
|
|
—
|
|
||||
(Loss) income from discontinued operations, net of income taxes
|
—
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
0.1
|
|
||||
Adjusted EBITDA
|
$
|
17.7
|
|
|
$
|
20.8
|
|
|
$
|
30.4
|
|
|
$
|
33.8
|
|
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
1,329.0
|
|
|
$
|
1,402.9
|
|
|
$
|
2,636.4
|
|
|
$
|
2,791.3
|
|
Adjusted EBITDA margin
|
1.3
|
%
|
|
1.5
|
%
|
|
1.2
|
%
|
|
1.2
|
%
|
•
|
Does not reflect the Company’s income tax expenses or the cash requirements to pay its taxes; and
|
•
|
Although depreciation and amortization charges are non-cash charges, it does not reflect that the assets being depreciated and amortized will often have to be replaced in the future, and the foregoing metrics do not reflect any cash requirements for such replacements.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||
|
2014
|
|
2013
|
|
Increase (Decrease)
|
|
2014
|
|
2013
|
|
Increase (Decrease)
|
||||||||||||||||||
(In Millions)
|
|
|
$
|
|
%
|
|
|
|
$
|
|
%
|
||||||||||||||||||
Net sales
|
$
|
1,329.0
|
|
|
$
|
1,402.9
|
|
|
$
|
(73.9
|
)
|
|
(5.3
|
)%
|
|
$
|
2,636.4
|
|
|
$
|
2,791.3
|
|
|
$
|
(154.9
|
)
|
|
(5.5
|
)%
|
Cost of products sold (exclusive of depreciation and amortization shown separately below)
|
1,116.7
|
|
|
1,172.1
|
|
|
(55.4
|
)
|
|
(4.7
|
)%
|
|
2,205.2
|
|
|
2,331.4
|
|
|
(126.2
|
)
|
|
(5.4
|
)%
|
||||||
Distribution expenses
|
72.0
|
|
|
77.9
|
|
|
(5.9
|
)
|
|
(7.6
|
)%
|
|
149.1
|
|
|
159.4
|
|
|
(10.3
|
)
|
|
(6.5
|
)%
|
||||||
Selling and administrative expenses
|
132.0
|
|
|
135.8
|
|
|
(3.8
|
)
|
|
(2.8
|
)%
|
|
260.6
|
|
|
274.9
|
|
|
(14.3
|
)
|
|
(5.2
|
)%
|
||||||
Depreciation and amortization
|
4.3
|
|
|
4.1
|
|
|
0.2
|
|
|
4.9
|
%
|
|
8.9
|
|
|
8.4
|
|
|
0.5
|
|
|
6.0
|
%
|
||||||
Restructuring (income) charges
|
(0.9
|
)
|
|
17.3
|
|
|
(18.2
|
)
|
|
(105.2
|
)%
|
|
(1.1
|
)
|
|
24.4
|
|
|
(25.5
|
)
|
|
(104.5
|
)%
|
||||||
Operating income (loss)
|
4.9
|
|
|
(4.3
|
)
|
|
9.2
|
|
|
(214.0
|
)%
|
|
13.7
|
|
|
(7.2
|
)
|
|
20.9
|
|
|
(290.3
|
)%
|
||||||
Other (income) expense, net
|
(0.1
|
)
|
|
(0.6
|
)
|
|
0.5
|
|
|
(83.3
|
)%
|
|
(0.6
|
)
|
|
(2.1
|
)
|
|
1.5
|
|
|
(71.4
|
)%
|
||||||
Income tax provision (benefit)
|
2.1
|
|
|
(1.4
|
)
|
|
3.5
|
|
|
(250.0
|
)%
|
|
5.8
|
|
|
(1.9
|
)
|
|
7.7
|
|
|
(405.3
|
)%
|
||||||
(Loss) income from discontinued operations, net of income taxes
|
—
|
|
|
(0.1
|
)
|
|
0.1
|
|
|
(100.0
|
)%
|
|
(0.1
|
)
|
|
0.1
|
|
|
(0.2
|
)
|
|
(200.0
|
)%
|
||||||
Net income (loss)
|
$
|
2.9
|
|
|
$
|
(2.4
|
)
|
|
$
|
5.3
|
|
|
(220.8
|
)%
|
|
$
|
8.4
|
|
|
$
|
(3.1
|
)
|
|
$
|
11.5
|
|
|
(371.0
|
)%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
(In Millions)
|
|
||||||||||||||
Net sales:
|
|
|
|
|
|
|
|
||||||||
Print
|
$
|
735.1
|
|
|
$
|
791.9
|
|
|
$
|
1,471.4
|
|
|
$
|
1,588.2
|
|
Packaging
|
406.9
|
|
|
395.3
|
|
|
796.9
|
|
|
779.3
|
|
||||
Facility Solutions
|
187.0
|
|
|
215.7
|
|
|
368.1
|
|
|
423.8
|
|
||||
Total net sales
|
$
|
1,329.0
|
|
|
$
|
1,402.9
|
|
|
$
|
2,636.4
|
|
|
$
|
2,791.3
|
|
|
|
|
|
|
|
|
|
||||||||
Operating profit (loss):
|
|
|
|
|
|
|
|
||||||||
Print
|
$
|
7.2
|
|
|
$
|
4.8
|
|
|
$
|
14.1
|
|
|
$
|
13.6
|
|
Packaging
|
12.6
|
|
|
11.8
|
|
|
26.7
|
|
|
26.4
|
|
||||
Facility Solutions
|
(7.4
|
)
|
|
(12.7
|
)
|
|
(17.6
|
)
|
|
(25.1
|
)
|
||||
Total segment operating profit
|
12.4
|
|
|
3.9
|
|
|
23.2
|
|
|
14.9
|
|
||||
Corporate items
|
(7.4
|
)
|
|
(7.6
|
)
|
|
(8.9
|
)
|
|
(20.0
|
)
|
||||
Income (loss) from continuing operations before income taxes
|
$
|
5.0
|
|
|
$
|
(3.7
|
)
|
|
$
|
14.3
|
|
|
$
|
(5.1
|
)
|
|
|
|
|
|
|
|
|
||||||||
Operating margin:
|
|
|
|
|
|
|
|
||||||||
Print
|
1.0
|
%
|
|
0.6
|
%
|
|
1.0
|
%
|
|
0.9
|
%
|
||||
Packaging
|
3.1
|
%
|
|
3.0
|
%
|
|
3.4
|
%
|
|
3.4
|
%
|
||||
Facility Solutions
|
(4.0
|
)%
|
|
(5.9
|
)%
|
|
(4.8
|
)%
|
|
(5.9
|
)%
|
||||
Total segment operating margin
|
0.9
|
%
|
|
0.3
|
%
|
|
0.9
|
%
|
|
0.5
|
%
|
||||
Total operating margin
|
0.4
|
%
|
|
(0.3
|
)%
|
|
0.5
|
%
|
|
(0.2
|
)%
|
•
|
The increase in Print operating profit was primarily the result of a reduction in operating expenses of $8.4 million, or 9.8%.
|
•
|
Packaging operating profit remained relatively consistent for the two comparable periods.
|
•
|
Operating profit for Facility Solutions improved as a result of a decrease in operating expenses of $6.9 million, or 13.2%.
|
•
|
The increase in Print operating profit was primarily the result of a reduction in operating expenses of $10.8 million, or 6.3%, offset by the decrease in net sales and corresponding cost of products sold.
|
•
|
Packaging operating profit remained relatively consistent for the two comparable periods.
|
•
|
Operating profit for Facility Solutions improved primarily as a result of a decrease in operating expenses of $12.2 million, or 11.6%.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
(In Millions)
|
2014
|
|
2013
|
|
Increase (Decrease)
|
|
2014
|
|
2013
|
|
Increase (Decrease)
|
||||||||||||
Net sales
|
$
|
735.1
|
|
|
$
|
791.9
|
|
|
$
|
(56.8
|
)
|
|
$
|
1,471.4
|
|
|
$
|
1,588.2
|
|
|
$
|
(116.8
|
)
|
Operating profit
|
$
|
7.2
|
|
|
$
|
4.8
|
|
|
$
|
2.4
|
|
|
$
|
14.1
|
|
|
$
|
13.6
|
|
|
$
|
0.5
|
|
Operating margin
|
1.0
|
%
|
|
0.6
|
%
|
|
0.4
|
%
|
|
1.0
|
%
|
|
0.9
|
%
|
|
0.1
|
%
|
|
Comparison of the Six Months Ended June 30, 2014 and June 30, 2013
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
(In Millions)
|
2014
|
|
2013
|
|
Increase (Decrease)
|
|
2014
|
|
2013
|
|
Increase (Decrease)
|
||||||||||||
Net sales
|
$
|
406.9
|
|
|
$
|
395.3
|
|
|
$
|
11.6
|
|
|
$
|
796.9
|
|
|
$
|
779.3
|
|
|
$
|
17.6
|
|
Operating profit
|
$
|
12.6
|
|
|
$
|
11.8
|
|
|
$
|
0.8
|
|
|
$
|
26.7
|
|
|
$
|
26.4
|
|
|
$
|
0.3
|
|
Operating margin
|
3.1
|
%
|
|
3.0
|
%
|
|
0.1
|
%
|
|
3.4
|
%
|
|
3.4
|
%
|
|
—
|
%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
(In Millions)
|
2014
|
|
2013
|
|
Increase (Decrease)
|
|
2014
|
|
2013
|
|
Increase (Decrease)
|
||||||||||||
Net sales
|
$
|
187.0
|
|
|
$
|
215.7
|
|
|
$
|
(28.7
|
)
|
|
$
|
368.1
|
|
|
$
|
423.8
|
|
|
$
|
(55.7
|
)
|
Operating profit (loss)
|
$
|
(7.4
|
)
|
|
$
|
(12.7
|
)
|
|
$
|
5.3
|
|
|
$
|
(17.6
|
)
|
|
$
|
(25.1
|
)
|
|
$
|
7.5
|
|
Operating margin
|
(4.0
|
)%
|
|
(5.9
|
)%
|
|
1.9
|
%
|
|
(4.8
|
)%
|
|
(5.9
|
)%
|
|
1.1
|
%
|
•
|
The corporate items remained consistent in the three months ended June 30, 2014 and three months ended June 30, 2013 periods.
|
•
|
The decrease in corporate items from six months ended 2013 to 2014 of $11.1 million was primarily a result of a $10.0 million decrease in restructuring expenses and a $9.1 million decrease in allocated expenses from International Paper. These decreases were partially offset by a $7.7 million increase in corporate operating expenses attributed to incentive compensation.
|
|
Three Months Ended June 30, 2014
|
|
Three Months Ended June 30, 2013
|
||||||||||||||||||||||
(In Millions)
|
xpedx As Reported
|
Financing Adjust-ments
|
UWW Adjust-ments
|
Veritiv Pro Forma As Adjusted
|
|
xpedx As Reported
|
Financing Adjust-ments
|
UWW Adjust-ments
|
Veritiv Pro Forma As Adjusted
|
||||||||||||||||
Net income (loss)
|
$
|
2.9
|
|
$
|
(0.9
|
)
|
$
|
(5.3
|
)
|
$
|
(3.3
|
)
|
|
$
|
(2.4
|
)
|
$
|
(0.8
|
)
|
$
|
3.3
|
|
$
|
0.1
|
|
Interest expense, net
|
—
|
|
1.5
|
|
6.1
|
|
7.6
|
|
|
—
|
|
1.3
|
|
6.7
|
|
8.0
|
|
||||||||
Income tax provision (benefit)
|
2.1
|
|
(0.6
|
)
|
7.9
|
|
9.4
|
|
|
(1.4
|
)
|
(0.5
|
)
|
0.2
|
|
(1.7
|
)
|
||||||||
Depreciation and amortization
|
4.3
|
|
—
|
|
6.9
|
|
11.2
|
|
|
4.1
|
|
—
|
|
7.5
|
|
11.6
|
|
||||||||
EBITDA
|
9.3
|
|
—
|
|
15.6
|
|
24.9
|
|
|
0.3
|
|
—
|
|
17.7
|
|
18.0
|
|
||||||||
Restructuring (income) charges
|
(0.9
|
)
|
—
|
|
—
|
|
(0.9
|
)
|
|
17.3
|
|
—
|
|
1.7
|
|
19.0
|
|
||||||||
Non-restructuring stock based compensation
|
3.2
|
|
—
|
|
—
|
|
3.2
|
|
|
3.3
|
|
—
|
|
0.2
|
|
3.5
|
|
||||||||
LIFO (income) expense
|
3.4
|
|
—
|
|
1.5
|
|
4.9
|
|
|
(0.4
|
)
|
—
|
|
1.6
|
|
1.2
|
|
||||||||
Asset impairment charge
|
—
|
|
—
|
|
2.8
|
|
2.8
|
|
|
—
|
|
—
|
|
0.2
|
|
0.2
|
|
||||||||
Non-restructuring severance charges
|
0.6
|
|
—
|
|
0.2
|
|
0.8
|
|
|
0.2
|
|
—
|
|
0.2
|
|
0.4
|
|
||||||||
Merger and integration costs
|
2.1
|
|
—
|
|
—
|
|
2.1
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
(Loss) income from discontinued operations, net of income taxes
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(0.1
|
)
|
—
|
|
—
|
|
(0.1
|
)
|
||||||||
Pro Forma Adjusted
EBITDA
|
$
|
17.7
|
|
$
|
—
|
|
$
|
20.1
|
|
$
|
37.8
|
|
|
$
|
20.8
|
|
$
|
—
|
|
$
|
21.6
|
|
$
|
42.4
|
|
|
Six Months Ended June 30, 2014
|
|
Six Months Ended June 30, 2013
|
||||||||||||||||||||||
(In Millions)
|
xpedx As Reported
|
Financing Adjust-ments
|
UWW Adjust-ments
|
Veritiv Pro Forma As Adjusted
|
|
xpedx As Reported
|
Financing Adjust-ments
|
UWW Adjust-ments
|
Veritiv Pro Forma As Adjusted
|
||||||||||||||||
Net income (loss)
|
$
|
8.4
|
|
$
|
(1.8
|
)
|
$
|
(0.5
|
)
|
$
|
6.1
|
|
|
$
|
(3.1
|
)
|
$
|
(1.5
|
)
|
$
|
(2.4
|
)
|
$
|
(7.0
|
)
|
Interest expense, net
|
—
|
|
2.9
|
|
12.4
|
|
15.3
|
|
|
—
|
|
2.5
|
|
13.7
|
|
16.2
|
|
||||||||
Income tax provision (benefit)
|
5.8
|
|
(1.1
|
)
|
7.8
|
|
12.5
|
|
|
(1.9
|
)
|
(1.0
|
)
|
0.3
|
|
(2.6
|
)
|
||||||||
Depreciation and amortization
|
8.9
|
|
—
|
|
13.6
|
|
22.5
|
|
|
8.4
|
|
—
|
|
14.9
|
|
23.3
|
|
||||||||
EBITDA
|
23.1
|
|
—
|
|
33.3
|
|
56.4
|
|
|
3.4
|
|
—
|
|
26.5
|
|
29.9
|
|
||||||||
Restructuring (income) charges
|
(1.1
|
)
|
—
|
|
0.2
|
|
(0.9
|
)
|
|
24.4
|
|
—
|
|
2.5
|
|
26.9
|
|
||||||||
Non-restructuring stock based compensation
|
4.3
|
|
—
|
|
0.1
|
|
4.4
|
|
|
7.8
|
|
—
|
|
0.4
|
|
8.2
|
|
||||||||
LIFO (income) expense
|
(0.3
|
)
|
—
|
|
1.3
|
|
1.0
|
|
|
(2.3
|
)
|
—
|
|
1.3
|
|
(1.0
|
)
|
||||||||
Asset impairment charge
|
—
|
|
—
|
|
2.8
|
|
2.8
|
|
|
—
|
|
—
|
|
0.3
|
|
0.3
|
|
||||||||
Gain on sale of joint venture
|
—
|
|
—
|
|
(6.6
|
)
|
(6.6
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Non-restructuring severance charges
|
2.2
|
|
—
|
|
0.4
|
|
2.6
|
|
|
0.6
|
|
—
|
|
0.2
|
|
0.8
|
|
||||||||
Merger and integration costs
|
2.1
|
|
—
|
|
—
|
|
2.1
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
(Loss) income from discontinued operations, net of income taxes
|
(0.1
|
)
|
—
|
|
—
|
|
(0.1
|
)
|
|
0.1
|
|
—
|
|
—
|
|
0.1
|
|
||||||||
Pro Forma Adjusted
EBITDA
|
$
|
30.4
|
|
$
|
—
|
|
$
|
31.5
|
|
$
|
61.9
|
|
|
$
|
33.8
|
|
$
|
—
|
|
$
|
31.2
|
|
$
|
65.0
|
|
|
Six Months Ended June 30,
|
||||||
(In Millions)
|
2014
|
|
2013
|
||||
Net cash provided by (used for):
|
|
|
|
||||
Operating activities
|
$
|
36.9
|
|
|
$
|
31.8
|
|
Investing activities
|
3.6
|
|
|
12.6
|
|
||
Financing activities
|
(42.9
|
)
|
|
(48.1
|
)
|
|
|
|
VERITIV CORPORATION
|
|
|
|
(Registrant)
|
|
|
|
|
Date:
|
August 14, 2014
|
|
By: /s/ Stephen J. Smith
|
|
|
|
Name: Stephen J. Smith
|
|
|
|
Title: Senior Vice President and Chief Financial Officer
|
|
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
Exhibit
Number
|
|
Description
|
2.1
|
|
Agreement and Plan of Merger, dated as of January 28, 2014, by and among International Paper Company, Veritiv Corporation (f/k/a/ xpedx Holding Company), xpedx Intermediate, LLC, xpedx, LLC, UWW Holdings, LLC, UWW Holdings, Inc. and Unisource Worldwide, Inc., incorporated by reference from Exhibit 2.1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-193950) filed on April 4, 2014.
|
|
|
|
2.2
|
|
Amendment No. 1 to the Agreement and Plan of Merger, dated as of May 28, 2014, by and among International Paper Company, Veritiv Corporation (f/k/a xpedx Holding Company), xpedx Intermediate, LLC, xpedx, LLC, UWW Holdings, LLC, UWW Holdings, Inc. and Unisource Worldwide, Inc., incorporated by reference from Exhibit 2.2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-193950) filed on June 5, 2014.
|
|
|
|
2.3
|
|
Amendment No. 2 to the Agreement and Plan of Merger, dated as of June 4, 2014, by and among International Paper Company, Veritiv Corporation (f/k/a) xpedx Holding Company), xpedx Intermediate, LLC, xpedx, LLC, UWW Holdings, LLC, UWW Holdings, Inc. and Unisource Worldwide, Inc., incorporated by reference from Exhibit 2.3 to the Registrant’s Registration Statement on Form S-1 (File No. 333-193950) filed on June 5, 2014.
|
|
|
|
2.4
|
|
Contribution and Distribution Agreement, dated as of January 28, 2014, by and among International Paper Company, Veritiv Corporation (f/k/a/ xpedx Holding Company), UWW Holdings, Inc. and UWW Holdings, LLC, incorporated by reference from Exhibit 2.4 to the Registrant’s Registration Statement on Form S-1 (File No. 333-193950) filed on April 4, 2014.
|
|
|
|
2.5
|
|
Amendment No. 1 to the Contribution and Distribution Agreement, dated May 28, 2014, by and among International Paper Company, Veritiv Corporation (f/k/a xpedx Holding Company), UWW Holdings, Inc. and UWW Holdings, LLC, incorporated by reference from Exhibit 2.5 to the Registrant’s Registration Statement on Form S-1 (File No. 333-193950) filed on June 5, 2014.
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation of Veritiv Corporation, incorporated by reference from Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed on July 3, 2014.
|
|
|
|
3.2
|
|
Amended and Restated Bylaws of Veritiv Corporation, incorporated by reference from Exhibit 3.2 to the Registrant's Current Report on Form 8-K filed on July 3, 2014.
|
|
|
|
10.1
|
|
Credit Agreement, dated as of July 1, 2014, among Veritiv Corporation, xpedx Intermediate, LLC and xpedx, LLC, as borrowers, the several lenders and financial institutions from time to time parties thereto, Bank of America, N.A., as administrative agent and collateral agent for the lenders party thereto, and the other parties thereto, together with the ABL Joinder Agreement, dated as of July 1, 2014, made by Unisource Worldwide, Inc. and Unisource Canada, Inc. for the benefit of the Lenders under the Credit Agreement, incorporated by reference from Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on July 3, 2014.
|
|
|
|
10.2
|
|
U.S. Guarantee and Collateral Agreement, dated as of July 1, 2014, made by xpedx Intermediate, LLC, xpedx, LLC, the Subsidiary Borrowers and the U.S. Guarantors parties thereto and Veritiv Corporation, in favor of Bank of America, N.A., as administrative agent and collateral agent for the Secured Parties (as defined therein), together with the Assumption and Supplemental Agreement, dated as of July 1, 2014, made by Veritiv Corporation, Alco Realty, Inc., Graph Comm Holdings International, Inc., Graphic Communications Holdings, Inc., Paper Corporation of North America, Unisource International Holdings, Inc., Unisource International Holdings Poland, Inc., and Unisource Worldwide, Inc., in favor of Bank of America, N.A., as collateral agent and as administrative agent, incorporated by reference from Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed on July 3, 2014.
|
|
|
|
10.3
|
|
Canadian Guarantee and Collateral Agreement, dated as of July 1, 2014, made by Unisource Canada, Inc. and the Canadian Guarantors parties thereto, in favour of Bank of America, N.A., as administrative agent and collateral agent for the Secured Parties (as defined therein), incorporated by reference from Exhibit 10.3 to the Registrant's Current Report on Form 8-K filed on July 3, 2014.
|
|
|
|
10.4
|
|
Registration Rights Agreement, dated as of July 1, 2014, between UWW Holdings, LLC and Veritiv Corporation, incorporated by reference from Exhibit 10.4 to the Registrant's Current Report on Form 8-K filed on July 3, 2014.
|
|
|
|
10.5
|
|
Tax Receivable Agreement, dated as of July 1, 2014, by and among Veritiv Corporation and UWW Holdings, LLC, incorporated by reference from Exhibit 10.5 to the Registrant's Current Report on Form 8-K filed on July 3, 2014.
|
|
|
|
10.6
|
|
Transition Services Agreement, dated as of July 1, 2014, by and between International Paper Company and Veritiv Corporation, incorporated by reference from Exhibit 10.6 to the Registrant's Current Report on Form 8-K filed on July 3, 2014.
|
|
|
|
10.7
|
|
Employee Matters Agreement, dated as of January 28, 2014, by and between International Paper Company, Veritiv Corporation (f/k/a/ xpedx Holding Company) and UWW Holdings, Inc., incorporated by reference from Exhibit 10.2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-193950) filed on February 14, 2014.
|
|
|
|
10.8
|
|
Amendment to Employee Matters Agreement, dated as of June 2, 2014, by and between International Paper Company, Veritiv Corporation (f/k/a xpedx Holding Company) and UWW Holdings, Inc. , incorporated by reference from Exhibit 10.14 to the Registrant’s Registration Statement on Form S-1 (File No. 333-193950) filed on June 5, 2014.
|
|
|
|
10.9
|
|
Tax Matters Agreement, dated as of January 28, 2014, by and among International Paper Company, Veritiv Corporation (f/k/a/ xpedx Holding Company) and UWW Holdings, Inc., incorporated by reference from Exhibit 10.5 to the Registrant’s Registration Statement on Form S-1 (File No. 333-193950) filed on February 14, 2014.
|
|
|
|
10.10
|
|
Separation Agreement, dated as of June 30, 2014, between UWW Holdings, Inc. and Allan R. Dragone, incorporated by reference from Exhibit 10.7 to the Registrant's Current Report on Form 8-K filed on July 3, 2014.
|
|
|
|
10.11
|
|
Employment Agreement, dated as of January 28, 2014, between Veritiv Corporation (f/k/a xpedx Holding Company) and Mary A. Laschinger, incorporated by reference from Exhibit 10.9 to the Registrant’s Registration Statement on Form S-1 (File No. 333-193950) filed on February 14, 2014.
|
|
|
|
10.12*
|
|
Offer Letter, dated as of February 13, 2014, between Veritiv Corporation (f/k/a xpedx Holding Company) and Stephen J. Smith.
|
|
|
|
10.13
|
|
Form of Indemnification Agreement between Veritiv Corporation (f/k/a xpedx Holding Company) and each of its directors, incorporated by reference from Exhibit 10.10 to the Registrant’s Registration Statement on Form S-1 (File No. 333-193950) filed on June 11, 2014.
|
|
|
|
10.14
|
|
Veritiv Corporation 2014 Omnibus Incentive Plan, incorporated by reference from Exhibit 10.8 to the Registrant's Current Report on Form 8-K filed on July 3, 2014.
|
|
|
|
10.15*
|
|
2014 Short-Year Veritiv Incentive Plan adopted effective as of August 8, 2014.
|
|
|
|
10.16*
|
|
Form of Notice of 2014 Long-Term Transition Incentive Award.
|
|
|
|
10.17*
|
|
Form of Notice of 2014-15 Long-Term Transition Incentive Award.
|
|
|
|
10.18*
|
|
Form of Notice of 2014-15-16 Long-Term Transition Incentive Award.
|
|
|
|
10.19*
|
|
Terms and Conditions of Long-Term Transition Incentive Award Opportunities.
|
|
|
|
31.1*
|
|
Rule 13a-14(a) Certification of the Chief Executive Officer.
|
|
|
|
31.2*
|
|
Rule 13a-14(a) Certification of the Chief Financial Officer.
|
|
|
|
32.1*
|
|
Section 1350 Certification of the Chief Executive Officer.
|
|
|
|
32.2*
|
|
Section 1350 Certification of the Chief Financial Officer.
|
|
|
|
101.INS*
|
|
XBRL Instance Document.
|
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
101.PRE*
|
|
XBRL Taxomony Extension Presentation Linkbase Document.
|
|
|
|
* Filed herewith
|
•
|
Primary work location: Atlanta, GA once Newco’s executive offices are available. Prior to that time the expectation is you will work from Loveland OH.
|
•
|
Start Date: within 30 days of public announcement (the “
Public Announcement
”) that the definitive agreement for the Transaction has been signed.
|
•
|
Monthly salary of $45,833 payable in accordance with our normal payroll practices, currently payable on a the last working day of each month;
|
•
|
Sign-on bonus: $1,500,000 payable within 30 days of employment
by IP/xpedx.
|
•
|
Participation in annual non-equity incentive plan which provides an opportunity to earn a target of 85% of your base salary contingent upon attainment of selected business goals;
|
•
|
For the period of time you are employed by IP/xpedx, the terms of International Paper’s Management Incentive Plan (MIP) will be applicable with performance award levels and targets prorated for the portion of the performance cycle employed by IP/xpedx in accordance with the terms of the MIP. .
|
•
|
Once employed by Newco the terms of Newco’s non-equity incentive plan (“NewCo Management Incentive Plan”) will be applicable, It is anticipated that the expectations and opportunities for performance incentives will be consistent with that presented to potential Lenders.
|
•
|
Participation in a long term incentive plan of Newco. See
Exhibit A
to this offer letter for a summary of key terms. For the time you are employed by IP/ xpedx you will participate in International Paper’s PSP program at a similar target level as set forth in
Exhibit A
. Your portion of the 2014 grant earned in 2014 will be paid out in cash following the closing of the Transaction.
|
•
|
Commuting expenses. Through September 2015 your commuting expenses (flight, accommodations, rental car) will be expensed as travel or grossed up, as appropriate. This benefit does not include living costs like food, gasoline for car, household expenses.
|
•
|
Additional incentive compensation. You will have an opportunity to receive an additional incentive payment (“Additional Incentive Payment”) based upon Newco achieving certain EBITDA levels. Specifics of the plan will be approved by the board of directors of Newco. However, we contemplate this payout will be tied to EBITDA levels that Newco must achieve in order to trigger a payment to International Paper under the “earn-out” provisions of the definitive agreement for the Transaction.
|
•
|
If your payout threshold is met, your minimum payment will be $1,000,000, target will be $2,000,000 and maximum payment of $3,000,000 is possible.
|
•
|
It is possible that the Compensation Committee of the NewCo Board will decide to implement a compensation plan (“New Incentive”) for you and other members of senior management that is similar to this Additional Incentive Payment. In that event, the New Incentive program or plan approved by the Compensation Committee will replace the Additional Incentive Payment and your target payout under the New Incentive will not be less than $2,000,000. The Compensation Committee will have the final determination on whether the New Incentive is similar to the Additional Incentive Payment, but it will not be less than the current Additional Incentive Compensation Plan set forth above.
|
•
|
Your execution of a non-compete/ non-solicitation agreement. This agreement will be assigned to Newco at the closing of the Transaction.
|
•
|
Vacation: 4 weeks
|
•
|
Relocation: Newco Relocation program, which will be presented when available.
|
•
|
Travel Expenses. All reasonable and necessary travel expenses will be paid by the company.
|
•
|
Severance:
|
•
|
You will not be covered by IP/xpedx’s standard severance agreement, but rather the following provisions relating to severance.
|
i.
|
if the closing of the Transaction does not occur prior to the one-year anniversary of the Public Announcement, you will have the option to leave the employment of IP/xpedx and be paid a severance of 24 months base pay and your non-equity incentive plan payout at two times target. You must inform IP/xpedx of your decision regarding this severance within the seven days following the one-year anniversary of the Public Announcement.
|
ii.
|
If you are severed for any reason, other than discharge for cause, you will receive an amount equal to one and one-half (1.5) times: (i) annual base pay, plus (ii) the average annual NewCo Management Incentive Plan payments earned during your employment.
|
iii.
|
“Discharge for cause” is defined as a discharge resulting from employee’s willful misconduct, failure to comply with law or material company policy (including, but not limited to, the standards of conduct and codes of ethics), theft, dishonesty, falsification of company documents, or insubordination.
|
iv.
|
In order to receive the severance benefits described above, you must sign and not revoke a waiver and release of claims prepared by the Company at the time of termination.
|
•
|
Notwithstanding anything to the contrary contained in this offer letter, you shall be entitled to participate in all health, welfare, retirement, equity and perquisite plans and programs made available to other comparable senior executives of Newco generally on terms and conditions no less favorable than those offered to such senior executives
|
•
|
After you have accepted this offer of employment, you will receive instructions showing you how to access the online new hire materials you will need to complete for enrollment in our current IP/xpedx benefit plans, including the savings investments, retirement program, life insurance, optional medical, dental and long-term disability insurance as well as information
|
•
|
The verification of your eligibility for employment in accordance with the federal E-Verify system;
|
•
|
Successful completion of our pre-placement Health Assessment Program, a drug screen, a background investigation, and reference checks; and
|
•
|
Your execution of the enclosed Non-Compete/ Non-Solicitation Agreement.
|
/s/ Stephen Smith
____________
|
Feb. 13, 2014
Stephen Smith Date
|
•
|
Annual LTIP Awards
: Executive will be eligible to participate in NewCo’s long-term equity incentive program (LTIP). For the three year period of 2014-2016 (the “Initial Term”), Executive will have a target annual participation rate of $1,100,000 (collectively, the “LTIP Awards”). Although the details of the LTIP program are subject to review and approval by the NewCo Compensation Committee (the “Committee”), the current expectation is that 25% of the value of the LTIP Awards will be in the form of NewCo stock options (based upon the Black-Scholes value as of the date of grant, or other applicable valuation of such options as determined by the Committee) and 75% of the
value of the LTIP Awards will be in the form of NewCo performance stock (based upon the value of the stock on the date of grant).
|
•
|
Vesting and Payment
:
|
•
|
NewCo stock options will be subject to time-based cliff vesting at the end of three years from the date of grant, based on market competitive practices and,
|
•
|
NewCo performance stock awards will cliff vest at the end of the three year period following the date of grant and are conditioned on Executive’s continued employment through each applicable vesting date. NewCo performance stock LTIP Awards made in each year from 2014 through 2016 are payable (subject to vesting and performance criteria) three years after the award (e.g., the award made in 2014 is payable in 2017).
|
•
|
The actual amount of each of the LTIP Awards relative to target will be based upon the satisfaction of NewCo’s performance metrics established by the Committee.
|
•
|
Each of the LTIP Awards is conditioned on Executive’s continued employment through each applicable vesting date, i.e., the awards will not be prorated.
|
•
|
NewCo shall have the right to deduct from any LTIP Award, including the delivery of performance shares, a sufficient amount to cover the withholding of all applicable federal, state local or foreign taxes applicable to withholdings for wages.
|
•
|
The final terms and conditions of each LTIP Award will be set forth in the applicable grant documents related to such award and will be consistent with NewCo’s long-term equity incentive program approved by the Committee for such year.
It is anticipated that the expectations and opportunities for performance incentives will be consistent with that presented to potential Lenders.
|
•
|
Bridging LTIP Payments for 2015-2016
. Because the LTIP payments will not begin until 2017, Executive will have the opportunity to earn payments of $1,100,000 in each of 2015 and 2016 (the “NewCo Bridging Award”). The NewCo Bridging Award payments will be payments from NewCo in the form of lump sum cash payment and stock, as detailed below.
|
•
|
NewCo will make a guaranteed lump sum cash payment to Executive of 50% of the NewCo Bridging Award, payable at the end of the calendar year. The remaining 50% of the NewCo Bridging Award is payable at the sole discretion of the Committee based on NewCo performance metrics determined by the Committee. The Committee may make such payment in either a lump sum cash award, stock or some combination thereof. If NewCo’s performance exceeds the metrics, the Committee may, at its sole discretion increase the amount of this portion of the award.
|
•
|
In order to qualify for a NewCo Bridging Award, the Executive must remain employed by NewCo until the payout for each calendar year, or have a Qualifying Termination prior to payout in that year. A Qualifying Termination is defined as:
|
•
|
Involuntary termination not for cause
|
•
|
Death
|
•
|
Long-Term Disability
|
•
|
The NewCo Bridging Award payments, whether lump sum cash or stock, will be subject to all applicable federal, state local or foreign taxes applicable to withholdings for wages.
|
Company’s Adjusted EBITDA for Performance Period
|
Payout level (as percentage of target Award Opportunity)
|
below $[ ] million
|
0%
|
$[ ] million
(threshold)
|
50%
|
$[ ] million
(target)
|
100%
|
$[ ] million or above
(maximum)
|
200%
|
Straight-line interpolation will be used for performance between the levels listed above, subject to applicable rounding conventions as determined by the Company
|
Name of Grantee
:
|
[_______________]
|
Target Award Opportunity
:
|
$[___________]
|
Vesting
:
|
Fifty percent (50%) of the Target Award Opportunity (the “
Service-Based Award
”) will vest on December 31, 2014 (the “
Vesting Date
”), provided that the Grantee remains continuously employed by the Company and its Affiliates through the Vesting Date, except as otherwise provided herein.
|
Performance Objectives
:
|
The Company’s achievement of Adjusted EBITDA of at least $[ ] million for the Performance Period. Adjusted EBITDA shall mean net income before equity in earnings of unconsolidated subsidiary, income tax expense, loss on early debt extinguishment, interest and other (expense) income, realized gain (loss) on investments, interest expense, equity-based compensation expense, related party management fees, restructuring charges and depreciation and amortization expense and net income attributable to noncontrolling interests, adjusted in the same manner as the Company’s “Consolidated EBITDA” is adjusted pursuant to that certain ABL Credit Agreement dated as of July 1, 2014 among the Company and certain other parties named therein (as the same may be amended from time to time); provided, however that no adjustment will be made that would cause the Performance-Based Award to lose any otherwise available qualification as “performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Code.
|
Performance Period
:
|
The period from July 1, 2014 through December 31, 2014.
|
Company’s Adjusted EBITDA for Performance Period
|
Payout level (as percentage of portion of Target Award Opportunity allocated to Performance-Based Award)
|
below $[ ] million
|
0%
|
$[ ] million
(threshold)
|
50%
|
$[ ] million
(target)
|
100%
|
$[ ] million or above
(maximum)
|
200%
|
Straight-line interpolation will be used for performance between the levels listed above, subject to applicable rounding conventions as determined by the Company
|
Time and Form of Payment
:
|
Except as otherwise provided in this Notice, the Service-Based Award and the Performance-Based Award, to the extent earned and vested, each will be paid to the Grantee in cash by March 15, 2015.
|
Name of Grantee
:
|
[_______________]
|
Target Award Opportunity
:
|
$[___________]
|
Vesting
:
|
Fifty percent (50%) of the Target Award Opportunity (the “
Service-Based Award
”) will vest on December 31, 2015 (the “
Vesting Date
”), provided that the Grantee remains continuously employed by the Company and its Affiliates through the Vesting Date, except as otherwise provided herein.
|
Performance Objectives
:
|
The Company’s achievement of cumulative Adjusted EBITDA of at least $[ ] million for the Performance Period. Adjusted EBITDA shall mean net income before equity in earnings of unconsolidated subsidiary, income tax expense, loss on early debt extinguishment, interest and other (expense) income, realized gain (loss) on investments, interest expense, equity-based compensation expense, related party management fees, restructuring charges and depreciation and amortization expense and net income attributable to noncontrolling interests, adjusted in the same manner as the Company’s “Consolidated EBITDA” is adjusted pursuant to that certain ABL Credit Agreement dated as of July 1, 2014 among the Company and certain other parties named therein (as the same may be amended from time to time); provided, however that no adjustment will be made that would cause the Performance-Based Award to lose any otherwise available qualification as “performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Code.
|
Performance Period
:
|
The period from July 1, 2014 through December 31, 2015.
|
Company’s Adjusted EBITDA for Performance Period
|
Payout level (as percentage of portion of Target Award Opportunity allocated to Performance-Based Award)
|
below $[ ] million
|
0%
|
$[ ] million
(threshold)
|
50%
|
$[ ] million
(target)
|
100%
|
$[ ] million or above
(maximum)
|
200%
|
Straight-line interpolation will be used for performance between the levels listed above, subject to applicable rounding conventions as determined by the Company
|
Time and Form of Payment
:
|
Except as otherwise provided in this Notice, the Service-Based Award and the Performance-Based Award, to the extent earned and vested, each will be paid to the Grantee in cash by March 15, 2016.
|
Name of Grantee
:
|
[_______________]
|
Target Award Opportunity
:
|
$[___________]
|
Vesting
:
|
Fifty percent (50%) of the Target Award Opportunity (the “
Service-Based Award
”) will vest on December 31, 2016 (the “
Vesting Date
”), provided that the Grantee remains continuously employed by the Company and its Affiliates through the Vesting Date, except as otherwise provided herein.
|
Performance Objectives
:
|
The Company’s achievement of cumulative Adjusted EBITDA of at least $[ ] million for the Performance Period. Adjusted EBITDA shall mean net income before equity in earnings of unconsolidated subsidiary, income tax expense, loss on early debt extinguishment, interest and other (expense) income, realized gain (loss) on investments, interest expense, equity-based compensation expense, related party management fees, restructuring charges and depreciation and amortization expense and net income attributable to noncontrolling interests, adjusted in the same manner as the Company’s “Consolidated EBITDA” is adjusted pursuant to that certain ABL Credit Agreement dated as of July 1, 2014 among the Company and certain other parties named therein (as the same may be amended from time to time).
|
Performance Period
:
|
The period from July 1, 2014 through December 31, 2016.
|
Company’s Adjusted EBITDA for Performance Period
|
Payout level (as percentage of portion of Target Award Opportunity allocated to Performance-Based Award)
|
below $[ ] million
|
0%
|
$[ ] million
(threshold)
|
50%
|
$[ ] million
(target)
|
100%
|
$[ ] million or above
(maximum)
|
200%
|
Straight-line interpolation will be used for performance between the levels listed above, subject to applicable rounding conventions as determined by the Company
|
Time and Form of Payment
:
|
Except as otherwise provided in this Notice, the Service-Based Award and the Performance-Based Award, to the extent earned and vested, each will be paid to the Grantee in cash by March 15, 2017.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Veritiv Corporation;
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|
|
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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;
|
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|
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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))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; and
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b)
|
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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c)
|
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(s) 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)
|
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.
|
Date:
|
August 14, 2014
|
/s/ Mary A. Laschinger
|
Mary A. Laschinger
|
Chairman and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Veritiv Corporation;
|
|
|
|
|
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))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; and
|
|
|
|
|
b)
|
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
|
|
|
|
|
c)
|
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(s) 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.
|
Date:
|
August 14, 2014
|
/s/ Stephen J. Smith
|
Stephen J. Smith
|
Senior Vice President and Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Mary A. Laschinger
|
Mary A. Laschinger
|
Chairman and Chief Executive Officer
|
August 14, 2014
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Stephen J. Smith
|
Stephen J. Smith
|
Senior Vice President and Chief Financial Officer
|
August 14, 2014
|