|
x
|
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
For the quarterly period ended
December 31, 2015
|
o
|
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
For the transition period from
to
|
Delaware
|
|
47-3335141
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
501 South 5
th
Street, Richmond, Virginia
|
|
23219-0501
|
(Address of Principal Executive Offices)
|
|
(Zip Code)
|
Large accelerated filer
x
|
|
Accelerated filer
o
|
Non-accelerated filer
o
(Do not check if smaller reporting company)
|
|
Smaller reporting company
o
|
Class
|
|
Outstanding as of January 31, 2016
|
Common Stock, $0.01 par value
|
|
253,849,343
|
|
|
|
Page
|
PART I
|
|
|
|
|
|
Item 1.
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
PART II
|
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 6.
|
||
|
|
|
|
||
|
|
|
Term or Acronym
|
|
Definition
|
|
|
|
Adjusted Earnings per Diluted Share
|
|
As defined on p. 42
|
Adjusted Net Income
|
|
As defined on p. 42
|
A/R Sales Agreement
|
|
As defined on p. 23
|
Antitrust Litigation
|
|
As defined on p. 27
|
ASC
|
|
FASB’s Accounting Standards Codification
|
ASU
|
|
Accounting Standards Update
|
BSF
|
|
Billion square feet
|
Boiler MACT
|
|
As defined on p. 25
|
Business Combination Agreement
|
|
The Second Amended and Restated Business Combination Agreement, dated as of April 17, 2015 and amended as of May 5, 2015 by and among WestRock, RockTenn, MWV, RockTenn Merger Sub, and MWV Merger Sub
|
CERCLA
|
|
The Comprehensive Environmental Response, Compensation, and Liability Act of 1980
|
Code
|
|
The Internal Revenue Code of 1986, as amended
|
Combination
|
|
Pursuant to the Business Combination Agreement, (i) RockTenn Merger Sub was merged with and into RockTenn, with RockTenn surviving the merger as a wholly owned subsidiary of WestRock, and (ii) MWV Merger Sub was merged with and into MWV, with MWV surviving the merger as a wholly owned subsidiary of WestRock, which occurred on July 1, 2015
|
Common Stock
|
|
WestRock common stock, par value $0.01 per share
|
containerboard
|
|
Linerboard and corrugating medium
|
CO2e
|
|
Carbon dioxide equivalent
|
Credit Agreement
|
|
As defined on p. 22
|
Credit Facility
|
|
As defined on p. 22
|
EPA
|
|
U.S. Environmental Protection Agency
|
FASB
|
|
Financial Accounting Standards Board
|
Farm Loan Credit Agreement
|
|
As defined on p. 22
|
FIFO
|
|
First-in first-out inventory valuation method
|
Fiscal 2015 Form 10-K
|
|
WestRock’s Annual Report on Form 10-K for the fiscal year ended September 30, 2015
|
GAAP
|
|
Generally accepted accounting principles in the U.S.
|
GHG
|
|
Greenhouse gases
|
GPS
|
|
Green Power Solutions of Georgia, LLC
|
IDBs
|
|
Industrial Development Bonds
|
LIFO
|
|
Last-in first-out inventory valuation method
|
MWV
|
|
WestRock MWV, LLC, formerly known as MeadWestvaco Corporation
|
MWV Merger Sub
|
|
Milan Merger Sub, LLC
|
MMSF
|
|
Millions of square feet
|
NOV
|
|
Notice of Violation
|
Packaging Acquisition
|
|
The January 19, 2016 acquisition of certain legal entities formerly owned by Cenveo Inc., in a stock purchase
|
Pension Act
|
|
Pension Protection Act of 2006
|
PRPs or PRP
|
|
Potentially responsible parties
|
Term or Acronym
|
|
Definition
|
|
|
|
PSD
|
|
Prevention of Significant Deterioration
|
Receivables Facility
|
|
Our $700.0 million receivables-backed financing facility that expires on October 24, 2017
|
RockTenn
|
|
WestRock RKT Company, formerly known as Rock-Tenn Company
|
RockTenn Merger Sub
|
|
Rome Merger Sub, Inc.
|
SEC
|
|
Securities and Exchange Commission
|
SG&A
|
|
Selling, general and administrative expenses
|
Smurfit-Stone
|
|
Smurfit-Stone Container Corporation
|
Smurfit-Stone Acquisition
|
|
The May 27, 2011 acquisition of Smurfit-Stone by Rock-Tenn Company
|
SP Fiber
|
|
SP Fiber Holdings, Inc.
|
SP Fiber Acquisition
|
|
The October 1, 2015 acquisition of SP Fiber
|
Title V permit
|
|
Operating permits issued under Title V of the Clean Air Act
|
U.S.
|
|
United States
|
WestRock
|
|
WestRock Company
|
Item 1.
|
FINANCIAL STATEMENTS (UNAUDITED)
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Net sales
|
$
|
3,680.7
|
|
|
$
|
2,514.2
|
|
Cost of goods sold
|
2,979.5
|
|
|
2,044.7
|
|
||
Gross profit
|
701.2
|
|
|
469.5
|
|
||
Selling, general and administrative, excluding intangible amortization
|
363.7
|
|
|
221.3
|
|
||
Selling, general and administrative intangible amortization
|
64.2
|
|
|
22.4
|
|
||
Pension lump sum settlement and retiree medical curtailment, net
|
—
|
|
|
11.9
|
|
||
Restructuring and other costs, net
|
171.1
|
|
|
5.4
|
|
||
Impairment of Specialty Chemicals goodwill
|
478.3
|
|
|
—
|
|
||
Operating (loss) profit
|
(376.1
|
)
|
|
208.5
|
|
||
Interest expense
|
(65.2
|
)
|
|
(23.3
|
)
|
||
Interest income and other income (expense), net
|
14.5
|
|
|
0.2
|
|
||
Equity in income of unconsolidated entities
|
1.3
|
|
|
2.2
|
|
||
(Loss) income before income taxes
|
(425.5
|
)
|
|
187.6
|
|
||
Income tax expense
|
(26.2
|
)
|
|
(62.0
|
)
|
||
Consolidated net (loss) income
|
(451.7
|
)
|
|
125.6
|
|
||
Less: Net income attributable to noncontrolling interests
|
(1.8
|
)
|
|
(0.5
|
)
|
||
Net (loss) income attributable to common stockholders
|
$
|
(453.5
|
)
|
|
$
|
125.1
|
|
|
|
|
|
||||
Basic (loss) earnings per share attributable to common stockholders
|
$
|
(1.76
|
)
|
|
$
|
0.89
|
|
|
|
|
|
||||
Diluted (loss) earnings per share attributable to common stockholders
|
$
|
(1.76
|
)
|
|
$
|
0.88
|
|
|
|
|
|
||||
Cash dividends paid per share
|
$
|
0.375
|
|
|
$
|
0.1875
|
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Consolidated net (loss) income
|
$
|
(451.7
|
)
|
|
$
|
125.6
|
|
Other comprehensive loss, net of tax:
|
|
|
|
||||
Foreign currency translation loss
|
(49.7
|
)
|
|
(17.7
|
)
|
||
Derivatives:
|
|
|
|
||||
Reclassification adjustment of net loss on cash flow hedges included in earnings
|
0.3
|
|
|
—
|
|
||
Defined benefit pension plans:
|
|
|
|
||||
Net actuarial loss arising during the period
|
—
|
|
|
(2.8
|
)
|
||
Amortization and settlement recognition of net actuarial loss, included in pension cost
|
1.7
|
|
|
17.7
|
|
||
Prior service cost arising during the period
|
—
|
|
|
(13.9
|
)
|
||
Amortization and curtailment recognition of prior service cost (credit), included in pension cost
|
0.3
|
|
|
(5.2
|
)
|
||
Other comprehensive loss
|
(47.4
|
)
|
|
(21.9
|
)
|
||
Comprehensive (loss) income
|
(499.1
|
)
|
|
103.7
|
|
||
Less: Comprehensive income attributable to noncontrolling interests
|
(1.7
|
)
|
|
(0.4
|
)
|
||
Comprehensive (loss) income attributable to common stockholders
|
$
|
(500.8
|
)
|
|
$
|
103.3
|
|
|
December 31,
2015 |
|
September 30,
2015 |
||||
ASSETS
|
|||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
236.9
|
|
|
$
|
228.3
|
|
Restricted cash
|
7.3
|
|
|
7.3
|
|
||
Accounts receivable (net of allowances of $31.3 and $29.6)
|
1,491.0
|
|
|
1,690.0
|
|
||
Inventories
|
2,027.4
|
|
|
1,963.4
|
|
||
Other current assets
|
245.7
|
|
|
271.4
|
|
||
Total current assets
|
4,008.3
|
|
|
4,160.4
|
|
||
Property, plant and equipment, net
|
9,762.7
|
|
|
9,596.7
|
|
||
Goodwill
|
5,229.1
|
|
|
5,694.5
|
|
||
Intangibles, net
|
3,494.2
|
|
|
3,552.2
|
|
||
Restricted assets held by special purpose entities
|
1,298.7
|
|
|
1,302.1
|
|
||
Prepaid pension asset
|
530.4
|
|
|
532.9
|
|
||
Other assets
|
507.8
|
|
|
518.0
|
|
||
|
$
|
24,831.2
|
|
|
$
|
25,356.8
|
|
LIABILITIES AND EQUITY
|
|||||||
Current liabilities:
|
|
|
|
||||
Current portion of debt
|
$
|
184.8
|
|
|
$
|
74.1
|
|
Accounts payable
|
1,313.7
|
|
|
1,303.8
|
|
||
Accrued compensation and benefits
|
275.6
|
|
|
358.0
|
|
||
Other current liabilities
|
475.0
|
|
|
427.3
|
|
||
Total current liabilities
|
2,249.1
|
|
|
2,163.2
|
|
||
Long-term debt due after one year
|
5,631.7
|
|
|
5,558.3
|
|
||
Pension liabilities, net of current portion
|
301.6
|
|
|
316.0
|
|
||
Postretirement benefit liabilities, net of current portion
|
141.0
|
|
|
143.0
|
|
||
Non-recourse liabilities held by special purpose entities
|
1,176.7
|
|
|
1,179.6
|
|
||
Deferred income taxes
|
3,533.0
|
|
|
3,540.6
|
|
||
Other long-term liabilities
|
661.6
|
|
|
658.0
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
||||
Redeemable noncontrolling interests
|
14.1
|
|
|
14.2
|
|
||
Equity:
|
|
|
|
||||
Preferred stock, $0.01 par value; 30.0 million shares authorized; no shares outstanding
|
—
|
|
|
—
|
|
||
Common Stock, $0.01 par value; 600.0 million shares authorized; 255.0 million and 257.0 million shares outstanding at December 31, 2015 and September 30, 2015, respectively
|
2.6
|
|
|
2.6
|
|
||
Capital in excess of par value
|
10,696.5
|
|
|
10,767.8
|
|
||
Retained earnings
|
1,104.1
|
|
|
1,661.6
|
|
||
Accumulated other comprehensive loss
|
(827.5
|
)
|
|
(780.2
|
)
|
||
Total stockholders’ equity
|
10,975.7
|
|
|
11,651.8
|
|
||
Noncontrolling interests
|
146.7
|
|
|
132.1
|
|
||
Total equity
|
11,122.4
|
|
|
11,783.9
|
|
||
|
$
|
24,831.2
|
|
|
$
|
25,356.8
|
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Operating activities:
|
|
|
|
||||
Consolidated net (loss) income
|
$
|
(451.7
|
)
|
|
$
|
125.6
|
|
Adjustments to reconcile consolidated net (loss) income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation, depletion and amortization
|
294.3
|
|
|
151.8
|
|
||
Cost of real estate sold
|
9.3
|
|
|
—
|
|
||
Deferred income tax (benefit) expense
|
(20.5
|
)
|
|
58.9
|
|
||
Share-based compensation expense
|
11.8
|
|
|
10.7
|
|
||
(Gain) loss on disposal of plant, equipment and other, net
|
(0.5
|
)
|
|
0.6
|
|
||
Equity in income of unconsolidated entities
|
(1.3
|
)
|
|
(2.2
|
)
|
||
Pension and other postretirement funding (more) than expense (income)
|
(12.2
|
)
|
|
4.6
|
|
||
Cash surrender value increase in excess of premiums paid
|
(10.0
|
)
|
|
—
|
|
||
Impairment adjustments and other non-cash items
|
108.5
|
|
|
(2.9
|
)
|
||
Impairment of Specialty Chemicals goodwill
|
478.3
|
|
|
—
|
|
||
Change in operating assets and liabilities, net of acquisitions:
|
|
|
|
||||
Accounts receivable
|
228.6
|
|
|
94.8
|
|
||
Inventories
|
(59.5
|
)
|
|
(19.1
|
)
|
||
Other assets
|
16.0
|
|
|
(5.4
|
)
|
||
Accounts payable
|
(49.0
|
)
|
|
(51.5
|
)
|
||
Income taxes
|
30.5
|
|
|
(5.7
|
)
|
||
Accrued liabilities and other
|
(49.6
|
)
|
|
(27.8
|
)
|
||
Net cash provided by operating activities
|
523.0
|
|
|
332.4
|
|
||
Investing activities:
|
|
|
|
||||
Capital expenditures
|
(203.8
|
)
|
|
(126.9
|
)
|
||
Cash paid for the purchase of business, net of cash acquired
|
(281.7
|
)
|
|
—
|
|
||
Debt purchased in connection with an acquisition
|
(36.5
|
)
|
|
—
|
|
||
Investment in unconsolidated entities
|
(0.1
|
)
|
|
—
|
|
||
Return of capital from unconsolidated entities
|
0.1
|
|
|
0.2
|
|
||
Proceeds from sale of subsidiary and affiliates
|
10.2
|
|
|
—
|
|
||
Proceeds from sale of property, plant and equipment
|
8.4
|
|
|
3.5
|
|
||
Net cash used for investing activities
|
(503.4
|
)
|
|
(123.2
|
)
|
||
Financing activities:
|
|
|
|
||||
Additions to revolving credit facilities
|
121.9
|
|
|
39.4
|
|
||
Repayments of revolving credit facilities
|
(75.5
|
)
|
|
(58.7
|
)
|
||
Additions to debt
|
277.2
|
|
|
10.9
|
|
||
Repayments of debt
|
(143.8
|
)
|
|
(165.6
|
)
|
||
Commercial card program
|
(0.4
|
)
|
|
(0.4
|
)
|
||
Debt issuance costs
|
—
|
|
|
(0.1
|
)
|
||
Issuances of common stock, net of related minimum tax withholdings
|
5.4
|
|
|
1.8
|
|
||
Purchases of common stock
|
(94.3
|
)
|
|
(8.7
|
)
|
||
(Repayments to) advances from unconsolidated entity
|
(1.1
|
)
|
|
0.5
|
|
||
Cash dividends paid to shareholders
|
(96.4
|
)
|
|
(26.3
|
)
|
||
Cash distributions paid to noncontrolling interests
|
(2.8
|
)
|
|
(1.2
|
)
|
||
Net cash used for financing activities
|
(9.8
|
)
|
|
(208.4
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(1.2
|
)
|
|
(0.6
|
)
|
||
Increase in cash and cash equivalents
|
8.6
|
|
|
0.2
|
|
||
Cash and cash equivalents at beginning of period
|
228.3
|
|
|
32.6
|
|
||
Cash and cash equivalents at end of period
|
$
|
236.9
|
|
|
$
|
32.8
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid during the period for:
|
|
|
|
||||
Income taxes, net of refunds
|
$
|
23.4
|
|
|
$
|
8.8
|
|
Interest, net of amounts capitalized
|
19.2
|
|
|
5.6
|
|
|
Three Months Ended
December 31, 2015
|
||
|
(In millions)
|
||
Fair value of assets acquired, including goodwill
|
$
|
475.2
|
|
Cash consideration for the purchase of business, net of cash acquired
(1)
|
278.5
|
|
|
Debt purchased in connection with an acquisition
|
36.5
|
|
|
Liabilities assumed
|
$
|
160.2
|
|
|
|
||
Included in liabilities assumed is the following item:
|
|
||
Debt assumed in acquisition
|
$
|
13.7
|
|
Note 1.
|
Interim Financial Statements
|
Note 2.
|
New Accounting Standards
|
Note 3.
|
Equity and Other Comprehensive (Loss) Income
|
|
WestRock
Company
Stockholders’
Equity
|
|
Noncontrolling
(1)
Interests
|
|
Total
Equity
|
||||||
Balance at September 30, 2015
|
$
|
11,651.8
|
|
|
$
|
132.1
|
|
|
$
|
11,783.9
|
|
Net (loss) income
|
(453.5
|
)
|
|
1.7
|
|
|
(451.8
|
)
|
|||
Other comprehensive loss, net of tax
|
(47.3
|
)
|
|
—
|
|
|
(47.3
|
)
|
|||
Noncontrolling interests assumed in acquisition
|
—
|
|
|
10.9
|
|
|
10.9
|
|
|||
Income tax expense from share-based plans
|
(0.3
|
)
|
|
—
|
|
|
(0.3
|
)
|
|||
Compensation expense under share-based plans
|
12.2
|
|
|
—
|
|
|
12.2
|
|
|||
Cash dividends declared (per share - $0.375)
(2)
|
(97.1
|
)
|
|
—
|
|
|
(97.1
|
)
|
|||
Distributions and adjustments to noncontrolling interests
|
—
|
|
|
2.2
|
|
|
2.2
|
|
|||
Sale of subsidiary shares from noncontrolling interest
|
—
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
|||
Issuance of common stock, net of stock received for minimum tax withholdings
|
4.2
|
|
|
—
|
|
|
4.2
|
|
|||
Purchases of common stock
|
(94.3
|
)
|
|
—
|
|
|
(94.3
|
)
|
|||
Balance at December 31, 2015
|
$
|
10,975.7
|
|
|
$
|
146.7
|
|
|
$
|
11,122.4
|
|
(1)
|
Excludes amounts related to contingently redeemable noncontrolling interests which are separately classified outside of permanent equity in the mezzanine section of the Condensed Consolidated Balance Sheets.
|
(2)
|
Includes cash dividends paid, and dividends declared but unpaid, related to the shares reserved but unissued to satisfy Smurfit-Stone bankruptcy claims.
|
|
Deferred Loss on Cash Flow Hedges
|
|
Defined Benefit Pension and Postretirement Plans
|
|
Foreign Currency Items
|
|
Total
(1)
|
||||||||
Balance at September 30, 2015
|
$
|
(1.4
|
)
|
|
$
|
(540.7
|
)
|
|
$
|
(238.1
|
)
|
|
$
|
(780.2
|
)
|
Other comprehensive loss before reclassifications
|
—
|
|
|
—
|
|
|
(49.5
|
)
|
|
(49.5
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
0.3
|
|
|
1.9
|
|
|
—
|
|
|
2.2
|
|
||||
Net current period other comprehensive income (loss)
|
0.3
|
|
|
1.9
|
|
|
(49.5
|
)
|
|
(47.3
|
)
|
||||
Balance at December 31, 2015
|
$
|
(1.1
|
)
|
|
$
|
(538.8
|
)
|
|
$
|
(287.6
|
)
|
|
$
|
(827.5
|
)
|
|
Deferred Loss on Cash Flow Hedges
|
|
Defined Benefit Pension and Postretirement Plans
|
|
Foreign Currency Items
|
|
Total
(1)
|
||||||||
Balance at September 30, 2014
|
$
|
(0.2
|
)
|
|
$
|
(498.2
|
)
|
|
$
|
3.1
|
|
|
$
|
(495.3
|
)
|
Other comprehensive loss before reclassifications
|
—
|
|
|
(16.7
|
)
|
|
(17.5
|
)
|
|
(34.2
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
12.4
|
|
|
—
|
|
|
12.4
|
|
||||
Net current period other comprehensive loss
|
—
|
|
|
(4.3
|
)
|
|
(17.5
|
)
|
|
(21.8
|
)
|
||||
Balance at December 31, 2014
|
$
|
(0.2
|
)
|
|
$
|
(502.5
|
)
|
|
$
|
(14.4
|
)
|
|
$
|
(517.1
|
)
|
|
Three Months Ended
|
|
Three Months Ended
|
||||||||||||||||||||
|
December 31, 2015
|
|
December 31, 2014
|
||||||||||||||||||||
|
Pretax
|
|
Tax
|
|
Net of Tax
|
|
Pretax
|
|
Tax
|
|
Net of Tax
|
||||||||||||
Amortization of defined benefit pension and postretirement items
(1)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Actuarial losses
(2)
|
$
|
(2.3
|
)
|
|
$
|
0.7
|
|
|
$
|
(1.6
|
)
|
|
$
|
(28.3
|
)
|
|
$
|
10.7
|
|
|
$
|
(17.6
|
)
|
Prior service (cost) credits
(2)
|
(0.4
|
)
|
|
0.1
|
|
|
(0.3
|
)
|
|
8.4
|
|
|
(3.2
|
)
|
|
5.2
|
|
||||||
Subtotal defined benefit plans
|
(2.7
|
)
|
|
0.8
|
|
|
(1.9
|
)
|
|
(19.9
|
)
|
|
7.5
|
|
|
(12.4
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative Instruments
(1)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commodity cash flow hedges
(3)
|
(0.7
|
)
|
|
0.3
|
|
|
(0.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Foreign currency cash flow hedges
(4)
|
0.2
|
|
|
(0.1
|
)
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Subtotal derivative instruments
|
(0.5
|
)
|
|
0.2
|
|
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total reclassifications for the period
|
$
|
(3.2
|
)
|
|
$
|
1.0
|
|
|
$
|
(2.2
|
)
|
|
$
|
(19.9
|
)
|
|
$
|
7.5
|
|
|
$
|
(12.4
|
)
|
(1)
|
Amounts in parentheses indicate charges to earnings. Amounts pertaining to noncontrolling interests are excluded.
|
(2)
|
These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see “
Note 12. Retirement Plans
” for additional details).
|
(3)
|
These accumulated other comprehensive income components are included in cost of goods sold.
|
(4)
|
These accumulated other comprehensive income components are included in net sales.
|
Note 4.
|
Earnings per Share
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Basic (loss) earnings per share:
|
|
|
|
||||
Numerator:
|
|
|
|
||||
Net (loss) income attributable to common stockholders
|
$
|
(453.5
|
)
|
|
$
|
125.1
|
|
Less: Distributed and undistributed income available to participating securities
|
—
|
|
|
(0.1
|
)
|
||
Distributed and undistributed (loss) income attributable to common stockholders
|
$
|
(453.5
|
)
|
|
$
|
125.0
|
|
Denominator:
|
|
|
|
||||
Basic weighted average shares outstanding
|
257.6
|
|
|
140.3
|
|
||
|
|
|
|
||||
Basic (loss) earnings per share attributable to common stockholders
|
$
|
(1.76
|
)
|
|
$
|
0.89
|
|
|
|
|
|
||||
Diluted (loss) earnings per share:
|
|
|
|
||||
Numerator:
|
|
|
|
||||
Net (loss) income attributable to common stockholders
|
$
|
(453.5
|
)
|
|
$
|
125.1
|
|
Less: Distributed and undistributed income available to participating securities
|
—
|
|
|
(0.1
|
)
|
||
Distributed and undistributed (loss) income attributable to common stockholders
|
$
|
(453.5
|
)
|
|
$
|
125.0
|
|
Denominator:
|
|
|
|
||||
Basic weighted average shares outstanding
|
257.6
|
|
|
140.3
|
|
||
Effect of dilutive stock options and non-participating securities
|
—
|
|
|
2.5
|
|
||
Diluted weighted average shares outstanding
|
257.6
|
|
|
142.8
|
|
||
|
|
|
|
||||
Diluted (loss) earnings per share attributable to common stockholders
|
$
|
(1.76
|
)
|
|
$
|
0.88
|
|
Note 5.
|
Merger and Acquisition
|
|
Amounts Recognized as of the Acquisition Date
(1)
|
|
Measurement Period Adjustments
(2)
|
|
Amounts Recognized as of Acquisition Date (as Adjusted)
(3)
|
||||||
Cash and cash equivalents
|
$
|
265.7
|
|
|
$
|
—
|
|
|
$
|
265.7
|
|
Current assets, excluding cash and cash equivalents
|
1,858.8
|
|
|
—
|
|
|
1,858.8
|
|
|||
Property, plant and equipment
|
3,991.5
|
|
|
5.4
|
|
|
3,996.9
|
|
|||
Prepaid pension asset
|
1,407.8
|
|
|
—
|
|
|
1,407.8
|
|
|||
Goodwill
|
3,817.3
|
|
|
(37.6
|
)
|
|
3,779.7
|
|
|||
Intangible assets
|
2,994.2
|
|
|
—
|
|
|
2,994.2
|
|
|||
Restricted assets held by special purpose entities
|
1,302.0
|
|
|
—
|
|
|
1,302.0
|
|
|||
Other long-term assets
|
363.8
|
|
|
2.1
|
|
|
365.9
|
|
|||
Total assets acquired
|
16,001.1
|
|
|
(30.1
|
)
|
|
15,971.0
|
|
|||
|
|
|
|
|
|
||||||
Current portion of debt
|
62.3
|
|
|
—
|
|
|
62.3
|
|
|||
Current liabilities
|
1,099.4
|
|
|
13.4
|
|
|
1,112.8
|
|
|||
Long-term debt due after one year
|
2,090.6
|
|
|
—
|
|
|
2,090.6
|
|
|||
Non-recourse liabilities held by special purpose entities
|
1,181.0
|
|
|
—
|
|
|
1,181.0
|
|
|||
Accrued pension and other long-term benefits
|
235.1
|
|
|
—
|
|
|
235.1
|
|
|||
Deferred income tax liabilities
|
2,366.7
|
|
|
(43.5
|
)
|
|
2,323.2
|
|
|||
Other long-term liabilities
|
520.0
|
|
|
—
|
|
|
520.0
|
|
|||
Noncontrolling interest
|
159.3
|
|
|
—
|
|
|
159.3
|
|
|||
Total liabilities and noncontrolling interest assumed
|
7,714.4
|
|
|
(30.1
|
)
|
|
7,684.3
|
|
|||
|
|
|
|
|
|
||||||
Net assets acquired
|
$
|
8,286.7
|
|
|
$
|
—
|
|
|
$
|
8,286.7
|
|
(1)
|
As previously reported in “
Note 6. Merger and Acquisitions
” of the Notes to Consolidated Financial Statements section of the Fiscal 2015 Form 10-K.
|
(2)
|
The measurement period adjustments recorded in fiscal 2016 did not have a significant impact on our condensed consolidated statements of operations for the three months ended September 30, 2015 or December 30, 2015. In addition, these adjustments did not have a significant impact on our consolidated balance sheet as of September 30, 2015. Therefore, we have recorded the cumulative impact in fiscal 2016 and have not retrospectively adjusted the comparative 2015 financial information presented herein.
|
(3)
|
The measurement period adjustments were due primarily to refinements to third party appraisals and carrying amounts of certain assets and liabilities as well as adjustments to certain tax accounts based on among other things, adjustments to deferred tax liabilities including any appraisal adjustments, analysis of the tax basis of acquired assets and liabilities and other tax adjustments. The net impact of the measurement period adjustments resulted in a net decrease to goodwill.
|
|
|
Weighted Avg. Life
|
|
Gross Carrying Amount
|
||
Customer relationships
|
|
19.2
|
|
$
|
2,881.7
|
|
Patents
|
|
9.8
|
|
57.2
|
|
|
Trademarks
|
|
4.5
|
|
52.9
|
|
|
Favorable contracts
|
|
8.2
|
|
2.4
|
|
|
Total
|
|
18.8
|
|
$
|
2,994.2
|
|
|
Three Months Ended December 31, 2014
|
||
|
(Unaudited)
|
||
Net sales
|
$
|
3,855.9
|
|
Net income attributable to common stockholders
|
$
|
156.3
|
|
Note 6.
|
Restructuring and Other Costs, Net
|
Segment
|
|
Period
|
|
Net Property,
Plant and
Equipment
(1)
|
|
Severance
and Other
Employee
Related
Costs
|
|
Equipment
and Inventory
Relocation
Costs
|
|
Facility
Carrying
Costs
|
|
Other
Costs
|
|
Total
|
||||||||||||
Corrugated
Packaging
(2)
|
|
Current Qtr.
|
|
$
|
121.2
|
|
|
$
|
9.1
|
|
|
$
|
0.2
|
|
|
$
|
5.2
|
|
|
$
|
3.3
|
|
|
$
|
139.0
|
|
|
Prior Year Qtr.
|
|
0.3
|
|
|
—
|
|
|
0.1
|
|
|
0.9
|
|
|
0.9
|
|
|
2.2
|
|
|||||||
|
Cumulative
|
|
163.1
|
|
|
38.5
|
|
|
7.9
|
|
|
20.2
|
|
|
16.9
|
|
|
246.6
|
|
|||||||
|
Expected Total
|
|
163.1
|
|
|
38.5
|
|
|
9.1
|
|
|
26.6
|
|
|
21.2
|
|
|
258.5
|
|
|||||||
Consumer Packaging
(3)
|
|
Current Qtr.
|
|
(2.1
|
)
|
|
0.6
|
|
|
0.2
|
|
|
0.1
|
|
|
—
|
|
|
(1.2
|
)
|
||||||
|
Prior Year Qtr.
|
|
0.1
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|||||||
|
Cumulative
|
|
3.3
|
|
|
4.0
|
|
|
1.2
|
|
|
1.4
|
|
|
0.5
|
|
|
10.4
|
|
|||||||
|
Expected Total
|
|
3.3
|
|
|
4.0
|
|
|
1.2
|
|
|
1.4
|
|
|
0.5
|
|
|
10.4
|
|
|||||||
Other
(4)
|
|
Current Qtr.
|
|
1.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32.1
|
|
|
33.3
|
|
||||||
|
Prior Year Qtr.
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.7
|
|
|
2.7
|
|
|||||||
|
Cumulative
|
|
1.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
312.9
|
|
|
314.1
|
|
|||||||
|
Expected Total
|
|
1.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
312.9
|
|
|
314.1
|
|
|||||||
Total
|
|
Current Qtr.
|
|
$
|
120.3
|
|
|
$
|
9.7
|
|
|
$
|
0.4
|
|
|
$
|
5.3
|
|
|
$
|
35.4
|
|
|
$
|
171.1
|
|
|
Prior Year Qtr.
|
|
$
|
0.4
|
|
|
$
|
0.4
|
|
|
$
|
0.1
|
|
|
$
|
0.9
|
|
|
$
|
3.6
|
|
|
$
|
5.4
|
|
|
|
Cumulative
|
|
$
|
167.6
|
|
|
$
|
42.5
|
|
|
$
|
9.1
|
|
|
$
|
21.6
|
|
|
$
|
330.3
|
|
|
$
|
571.1
|
|
|
|
Expected Total
|
|
$
|
167.6
|
|
|
$
|
42.5
|
|
|
$
|
10.3
|
|
|
$
|
28.0
|
|
|
$
|
334.6
|
|
|
$
|
583.0
|
|
(1)
|
We have defined “
Net Property, Plant and Equipment
” as used in this
Note 6
to represent property, plant and equipment impairment losses, subsequent adjustments to fair value for assets classified as held for sale, subsequent (gains) or losses on sales of property, plant and equipment and related parts and supplies, and accelerated depreciation on such assets, if any.
|
(2)
|
The Corrugated Packaging segment current quarter charges primarily reflect the charges associated with the permanent closure of the Coshocton, OH medium mill and the Newberg, OR containerboard and newsprint mill and on-going closure costs at previously closed facilities. The prior year quarter charges primarily reflect on-going closure costs at previously closed facilities net of asset sales. The cumulative charges are primarily associated with the closure of the Coshocton, Newberg and Matane, Quebec mills and the cumulative closure of certain corrugated container plants and recycled collection facilities acquired in the Smurfit-Stone Acquisition, and gains and losses associated with the sale of closed facilities. We have transferred a substantial portion of each closed facility's production to our other facilities.
|
(3)
|
The Consumer Packaging segment current quarter income is primarily associated with the gain on sale of the Cincinnati, OH specialty recycled paperboard mill, partially offset by severance costs relating to exiting a product offering at one of our facilities and on-going closure activity at previously closed facilities. The prior year quarter charges primarily reflect the closure of a small converting facility and on-going closure activity at previously closed facilities. The cumulative charges primarily reflect our Cincinnati, OH mill and the consolidation of converting and merchandising displays facilities. We have transferred a substantial portion of each closed facility's production to our other facilities.
|
(4)
|
The expenses in the “Other” segment primarily reflect costs that we consider as related to Corporate that primarily consist of costs incurred as a result of the Combination, the Smurfit-Stone Acquisition, and other acquisition and divestiture expenses. The charges in the Net Property, Plant and Equipment column are for the write-off of leasehold improvements associated with the integration of the Combination. The pre-tax charges in the “Other” segment are summarized below (in millions):
|
|
Acquisition
Expenses
|
|
Integration
Expenses
|
|
Divestiture Expenses
|
|
Total
|
||||||||
Current Qtr.
|
$
|
3.5
|
|
|
$
|
21.5
|
|
|
$
|
8.3
|
|
|
$
|
33.3
|
|
Prior Year Qtr.
|
$
|
0.5
|
|
|
$
|
2.2
|
|
|
$
|
—
|
|
|
$
|
2.7
|
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Accrual at beginning of fiscal year
|
$
|
21.4
|
|
|
$
|
10.9
|
|
Additional accruals
|
20.2
|
|
|
0.2
|
|
||
Payments
|
(12.2
|
)
|
|
(2.7
|
)
|
||
Adjustment to accruals
|
0.6
|
|
|
0.9
|
|
||
Accrual at December 31
|
$
|
30.0
|
|
|
$
|
9.3
|
|
Reconciliation of accruals and charges to restructuring and other costs, net:
|
|
|
|
||||
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Additional accruals and adjustments to accruals (see table above)
|
$
|
20.8
|
|
|
$
|
1.1
|
|
Acquisition expenses
|
3.5
|
|
|
0.5
|
|
||
Integration expenses
|
12.3
|
|
|
2.1
|
|
||
Divestiture expenses
|
8.3
|
|
|
—
|
|
||
Net property, plant and equipment
|
120.3
|
|
|
0.4
|
|
||
Severance and other employee expense
|
0.1
|
|
|
0.4
|
|
||
Equipment and inventory relocation costs
|
0.4
|
|
|
0.1
|
|
||
Facility carrying costs
|
5.3
|
|
|
0.9
|
|
||
Other expense (income)
|
0.1
|
|
|
(0.1
|
)
|
||
Total restructuring and other costs, net
|
$
|
171.1
|
|
|
$
|
5.4
|
|
Note 7.
|
Income Taxes
|
Note 8.
|
Inventories
|
|
December 31,
2015 |
|
September 30,
2015 |
||||
Finished goods and work in process
|
$
|
1,023.4
|
|
|
$
|
983.3
|
|
Raw materials
|
691.7
|
|
|
697.4
|
|
||
Spare parts and supplies
|
344.3
|
|
|
333.3
|
|
||
Inventories at FIFO cost
|
2,059.4
|
|
|
2,014.0
|
|
||
LIFO reserve
|
(32.0
|
)
|
|
(50.6
|
)
|
||
Net inventories
|
$
|
2,027.4
|
|
|
$
|
1,963.4
|
|
Note 9.
|
Property, Plant and Equipment
|
|
December 31,
2015 |
|
September 30,
2015 |
||||
Property, plant and equipment at cost:
|
|
|
|
||||
Land and buildings
|
$
|
2,392.9
|
|
|
$
|
2,336.8
|
|
Machinery and equipment
|
10,491.2
|
|
|
10,066.6
|
|
||
Forestlands and mineral rights
|
148.6
|
|
|
161.3
|
|
||
Transportation equipment
|
20.2
|
|
|
20.3
|
|
||
Leasehold improvements
|
65.7
|
|
|
60.7
|
|
||
|
13,118.6
|
|
|
12,645.7
|
|
||
Less accumulated depreciation and amortization
|
(3,355.9
|
)
|
|
(3,049.0
|
)
|
||
Property, plant and equipment, net
|
$
|
9,762.7
|
|
|
$
|
9,596.7
|
|
Note 10.
|
Debt
|
|
December 31, 2015
|
|
September 30, 2015
|
||||||||||
|
Carrying Value
|
|
Weighted Avg. Interest Rate
|
|
Carrying Value
|
|
Weighted Avg. Interest Rate
|
||||||
U.S. Dollar Denominated Fixed Rate Debt:
|
|
|
|
|
|
|
|
||||||
Notes due fiscal 2017 to 2022
|
$
|
1,666.9
|
|
|
3.8
|
%
|
|
$
|
1,672.2
|
|
|
3.8
|
%
|
Notes due fiscal 2023 to 2027
|
437.2
|
|
|
4.4
|
%
|
|
436.8
|
|
|
4.4
|
%
|
||
Notes due fiscal 2030 to 2033
|
999.0
|
|
|
4.7
|
%
|
|
1,002.8
|
|
|
4.6
|
%
|
||
Notes due fiscal 2037 to 2047
|
179.9
|
|
|
5.9
|
%
|
|
180.1
|
|
|
5.9
|
%
|
||
|
|
|
|
|
|
|
|
||||||
U.S. Dollar Denominated Floating Rate Debt:
|
|
|
|
|
|
|
|
||||||
Term loan facilities
|
1,794.9
|
|
|
1.5
|
%
|
|
1,794.7
|
|
|
1.4
|
%
|
||
Revolving credit and swing facilities
|
110.4
|
|
|
1.2
|
%
|
|
64.1
|
|
|
2.6
|
%
|
||
Receivables-backed financing facility
|
365.0
|
|
|
1.0
|
%
|
|
198.0
|
|
|
0.9
|
%
|
||
|
|
|
|
|
|
|
|
||||||
Capital lease obligations
|
159.2
|
|
|
5.6
|
%
|
|
165.9
|
|
|
5.7
|
%
|
||
|
|
|
|
|
|
|
|
||||||
International and other debt
|
104.0
|
|
|
7.3
|
%
|
|
117.8
|
|
|
6.9
|
%
|
||
Total debt
|
5,816.5
|
|
|
3.2
|
%
|
|
5,632.4
|
|
|
3.3
|
%
|
||
Less current portion of debt
|
184.8
|
|
|
|
|
74.1
|
|
|
|
||||
Long-term debt due after one year
|
$
|
5,631.7
|
|
|
|
|
$
|
5,558.3
|
|
|
|
Note 11.
|
Fair Value
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Receivable from financial institution at beginning of fiscal year
|
$
|
5.8
|
|
|
$
|
10.4
|
|
Receivables sold to the financial institution and derecognized
|
337.0
|
|
|
219.4
|
|
||
Receivables collected by financial institution
|
(332.7
|
)
|
|
(219.8
|
)
|
||
Cash proceeds from financial institution
|
(4.2
|
)
|
|
(6.4
|
)
|
||
Receivable from financial institution at December 31,
|
$
|
5.9
|
|
|
$
|
3.6
|
|
Note 12.
|
Retirement Plans
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Service cost
|
$
|
21.9
|
|
|
$
|
7.7
|
|
Interest cost
|
77.4
|
|
|
49.6
|
|
||
Expected return on plan assets
|
(103.1
|
)
|
|
(65.0
|
)
|
||
Amortization of net actuarial loss
|
2.7
|
|
|
8.7
|
|
||
Amortization of prior service cost
|
1.0
|
|
|
0.3
|
|
||
Settlement loss recognized
|
—
|
|
|
20.0
|
|
||
Company defined benefit plan expense
|
(0.1
|
)
|
|
21.3
|
|
||
Multiemployer and other plans
|
1.4
|
|
|
1.3
|
|
||
Net pension cost
|
$
|
1.3
|
|
|
$
|
22.6
|
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Service cost
|
$
|
0.6
|
|
|
$
|
0.1
|
|
Interest cost
|
2.1
|
|
|
1.2
|
|
||
Amortization of net actuarial gain
|
(0.3
|
)
|
|
(0.3
|
)
|
||
Amortization of prior service credit
|
(0.5
|
)
|
|
(0.5
|
)
|
||
Curtailment gain recognized
|
—
|
|
|
(8.1
|
)
|
||
Postretirement plan expense (income)
|
$
|
1.9
|
|
|
$
|
(7.6
|
)
|
Note 13.
|
Commitments and Contingencies
|
Note 14.
|
Segment Information
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Net sales (aggregate):
|
|
|
|
||||
Corrugated Packaging
|
$
|
1,964.3
|
|
|
$
|
1,842.8
|
|
Consumer Packaging
|
1,542.2
|
|
|
713.0
|
|
||
Specialty Chemicals
|
209.8
|
|
|
—
|
|
||
Land and Development
|
15.4
|
|
|
—
|
|
||
Total
|
$
|
3,731.7
|
|
|
$
|
2,555.8
|
|
Less net sales (intersegment):
|
|
|
|
||||
Corrugated Packaging
|
$
|
34.3
|
|
|
$
|
32.2
|
|
Consumer Packaging
|
16.7
|
|
|
9.4
|
|
||
Specialty Chemicals
|
—
|
|
|
—
|
|
||
Land and Development
|
—
|
|
|
—
|
|
||
Total
|
$
|
51.0
|
|
|
$
|
41.6
|
|
Net sales (unaffiliated customers):
|
|
|
|
||||
Corrugated Packaging
|
$
|
1,930.0
|
|
|
$
|
1,810.6
|
|
Consumer Packaging
|
1,525.5
|
|
|
703.6
|
|
||
Specialty Chemicals
|
209.8
|
|
|
—
|
|
||
Land and Development
|
15.4
|
|
|
—
|
|
||
Total
|
$
|
3,680.7
|
|
|
$
|
2,514.2
|
|
Segment income:
|
|
|
|
||||
Corrugated Packaging
|
$
|
180.1
|
|
|
$
|
184.9
|
|
Consumer Packaging
|
91.2
|
|
|
59.0
|
|
||
Specialty Chemicals
|
7.1
|
|
|
—
|
|
||
Land and Development
|
0.7
|
|
|
—
|
|
||
Segment income
|
279.1
|
|
|
243.9
|
|
||
Pension lump sum settlement and retiree medical curtailment, net
|
—
|
|
|
(11.9
|
)
|
||
Restructuring and other costs, net
|
(171.1
|
)
|
|
(5.4
|
)
|
||
Impairment of Specialty Chemicals goodwill
|
(478.3
|
)
|
|
—
|
|
||
Non-allocated expenses
|
(4.5
|
)
|
|
(15.9
|
)
|
||
Interest expense
|
(65.2
|
)
|
|
(23.3
|
)
|
||
Interest income and other income (expense), net
|
14.5
|
|
|
0.2
|
|
||
(Loss) income before income taxes
|
(425.5
|
)
|
|
187.6
|
|
||
Income tax expense
|
(26.2
|
)
|
|
(62.0
|
)
|
||
Consolidated net (loss) income
|
(451.7
|
)
|
|
125.6
|
|
||
Less: Net income attributable to noncontrolling interests
|
(1.8
|
)
|
|
(0.5
|
)
|
||
Net (loss) income attributable to common stockholders
|
$
|
(453.5
|
)
|
|
$
|
125.1
|
|
|
Corrugated Packaging
|
|
Consumer
Packaging
|
|
Specialty Chemicals
|
|
Land and Development
|
|
Total
|
||||||||||
Balance as of September 30, 2015
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
$
|
1,667.5
|
|
|
$
|
3,022.4
|
|
|
$
|
1,047.4
|
|
|
$
|
—
|
|
|
$
|
5,737.3
|
|
Accumulated impairment losses
|
—
|
|
|
(42.8
|
)
|
|
—
|
|
|
—
|
|
|
(42.8
|
)
|
|||||
|
1,667.5
|
|
|
2,979.6
|
|
|
1,047.4
|
|
|
—
|
|
|
5,694.5
|
|
|||||
Goodwill acquired
|
66.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
66.0
|
|
|||||
Impairment loss
|
—
|
|
|
—
|
|
|
(478.3
|
)
|
|
—
|
|
|
(478.3
|
)
|
|||||
Purchase price allocation adjustments
|
—
|
|
|
(19.6
|
)
|
|
(18.0
|
)
|
|
—
|
|
|
(37.6
|
)
|
|||||
Translation adjustment
|
(1.7
|
)
|
|
(13.7
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(15.5
|
)
|
|||||
Balance as of December 31, 2015
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
1,731.8
|
|
|
2,989.1
|
|
|
1,029.3
|
|
|
—
|
|
|
5,750.2
|
|
|||||
Accumulated impairment losses
|
—
|
|
|
(42.8
|
)
|
|
(478.3
|
)
|
|
—
|
|
|
(521.1
|
)
|
|||||
|
$
|
1,731.8
|
|
|
$
|
2,946.3
|
|
|
$
|
551.0
|
|
|
$
|
—
|
|
|
$
|
5,229.1
|
|
Note 15.
|
Subsequent Events
|
Item 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Net sales
|
$
|
3,680.7
|
|
|
$
|
2,514.2
|
|
Cost of goods sold
|
2,979.5
|
|
|
2,044.7
|
|
||
Gross profit
|
701.2
|
|
|
469.5
|
|
||
Selling, general and administrative expenses, excluding intangible amortization
|
363.7
|
|
|
221.3
|
|
||
Selling, general and administrative intangible amortization
|
64.2
|
|
|
22.4
|
|
||
Pension lump sum settlement and retiree medical curtailment, net
|
—
|
|
|
11.9
|
|
||
Restructuring and other costs, net
|
171.1
|
|
|
5.4
|
|
||
Impairment of Specialty Chemicals goodwill
|
478.3
|
|
|
—
|
|
||
Operating (loss) profit
|
(376.1
|
)
|
|
208.5
|
|
||
Interest expense
|
(65.2
|
)
|
|
(23.3
|
)
|
||
Interest income and other income (expense), net
|
14.5
|
|
|
0.2
|
|
||
Equity in income of unconsolidated entities
|
1.3
|
|
|
2.2
|
|
||
(Loss) income before income taxes
|
(425.5
|
)
|
|
187.6
|
|
||
Income tax expense
|
(26.2
|
)
|
|
(62.0
|
)
|
||
Consolidated net (loss) income
|
(451.7
|
)
|
|
125.6
|
|
||
Less: Net income attributable to noncontrolling interests
|
(1.8
|
)
|
|
(0.5
|
)
|
||
Net (loss) income attributable to common stockholders
|
$
|
(453.5
|
)
|
|
$
|
125.1
|
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
(Loss) earnings per diluted share
|
$
|
(1.76
|
)
|
|
$
|
0.88
|
|
|
|
|
|
||||
Impairment of Specialty Chemicals goodwill
|
1.86
|
|
|
—
|
|
||
Restructuring and other items
|
0.49
|
|
|
0.02
|
|
||
Inventory stepped-up in purchase accounting
|
0.01
|
|
|
0.01
|
|
||
Pension lump sum settlement and retiree medical curtailment, net
|
—
|
|
|
0.05
|
|
||
Adjustment to reflect adjusted earning on a fully diluted basis
|
(0.01
|
)
|
|
—
|
|
||
Adjusted Earnings Per Diluted Share
|
$
|
0.59
|
|
|
$
|
0.96
|
|
(In millions, except percentages)
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Fiscal
Year
|
||||||||||
Fiscal 2015
|
$
|
2,514.2
|
|
|
$
|
2,455.6
|
|
|
$
|
2,538.9
|
|
|
$
|
3,872.6
|
|
|
$
|
11,381.3
|
|
Fiscal 2016
|
$
|
3,680.7
|
|
|
|
|
|
|
|
|
|
||||||||
% Change
|
46.4
|
%
|
|
|
|
|
|
|
|
|
|
|
(In millions, except percentages)
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Fiscal
Year
|
||||||||||
Fiscal 2015
|
$
|
2,044.7
|
|
|
$
|
1,998.5
|
|
|
$
|
2,012.6
|
|
|
$
|
3,114.7
|
|
|
$
|
9,170.5
|
|
(% of Net Sales)
|
81.3
|
%
|
|
81.4
|
%
|
|
79.3
|
%
|
|
80.4
|
%
|
|
80.6
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Fiscal 2016
|
$
|
2,979.5
|
|
|
|
|
|
|
|
|
|
||||||||
(% of Net Sales)
|
80.9
|
%
|
|
|
|
|
|
|
|
|
(In millions, except percentages)
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Fiscal
Year
|
||||||||||
Fiscal 2015
|
$
|
221.3
|
|
|
$
|
230.5
|
|
|
$
|
224.7
|
|
|
$
|
365.5
|
|
|
$
|
1,042.0
|
|
(% of Net Sales)
|
8.8
|
%
|
|
9.4
|
%
|
|
8.9
|
%
|
|
9.4
|
%
|
|
9.2
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Fiscal 2016
|
$
|
363.7
|
|
|
|
|
|
|
|
|
|
||||||||
(% of Net Sales)
|
9.9
|
%
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Fiscal
Year
|
|||||
Fiscal 2015
|
|
|
|
|
|
|
|
|
|
|||||
North American Corrugated Packaging Segment Shipments - thousands of tons
|
1,995.8
|
|
|
1,936.7
|
|
|
2,032.6
|
|
|
2,018.0
|
|
|
7,983.1
|
|
North American Corrugated Containers Shipments - BSF
|
18.8
|
|
|
18.9
|
|
|
19.6
|
|
|
19.4
|
|
|
76.7
|
|
North American Corrugated Containers Per Shipping Day - MMSF
|
309.0
|
|
|
304.5
|
|
|
309.9
|
|
|
303.2
|
|
|
306.6
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fiscal 2016
|
|
|
|
|
|
|
|
|
|
|||||
North American Corrugated Packaging Segment Shipments - thousands of tons
|
2,046.7
|
|
|
|
|
|
|
|
|
|
||||
North American Corrugated Containers Shipments - BSF
|
19.4
|
|
|
|
|
|
|
|
|
|
||||
North American Corrugated Containers Per Shipping Day - MMSF
|
318.1
|
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Fiscal
Year
|
|||||
Fiscal 2015
|
|
|
|
|
|
|
|
|
|
|||||
Brazil / India Corrugated Packaging Segment Shipments - thousands of tons
|
—
|
|
|
—
|
|
|
—
|
|
|
171.4
|
|
|
171.4
|
|
Brazil / India Corrugated Containers Shipments - BSF
|
—
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
|
1.4
|
|
Brazil / India Corrugated Containers Per Shipping Day - MMSF
|
—
|
|
|
—
|
|
|
—
|
|
|
18.1
|
|
|
18.1
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fiscal 2016
|
|
|
|
|
|
|
|
|
|
|||||
Brazil / India Corrugated Packaging Segment Shipments - thousands of tons
|
180.2
|
|
|
|
|
|
|
|
|
|
||||
Brazil / India Corrugated Containers Shipments - BSF
|
1.5
|
|
|
|
|
|
|
|
|
|
||||
Brazil / India Corrugated Containers Per Shipping Day - MMSF
|
19.2
|
|
|
|
|
|
|
|
|
|
(Shipments in thousands of tons)
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Fiscal
Year
|
|||||
Fiscal 2015
|
1,628.0
|
|
|
1,576.6
|
|
|
1,781.8
|
|
|
1,834.9
|
|
|
6,821.3
|
|
Fiscal 2016
|
1,975.2
|
|
|
|
|
|
|
|
|
|
|
Net Sales
(Aggregate)
|
|
Segment
Income
|
|
Return
on Sales
|
|||||
|
(In millions, except percentages)
|
|||||||||
Fiscal 2015
|
|
|
|
|
|
|||||
First Quarter
|
$
|
1,842.8
|
|
|
$
|
184.9
|
|
|
10.0
|
%
|
Second Quarter
|
1,799.5
|
|
|
169.4
|
|
|
9.4
|
|
||
Third Quarter
|
1,887.3
|
|
|
217.0
|
|
|
11.5
|
|
||
Fourth Quarter
|
1,987.3
|
|
|
235.4
|
|
|
11.8
|
|
||
Fiscal 2015
|
$
|
7,516.9
|
|
|
$
|
806.7
|
|
|
10.7
|
%
|
|
|
|
|
|
|
|||||
Fiscal 2016
|
|
|
|
|
|
|||||
First Quarter
|
$
|
1,964.3
|
|
|
$
|
180.1
|
|
|
9.2
|
%
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Fiscal
Year
|
|||||
Fiscal 2015
|
|
|
|
|
|
|
|
|
|
|||||
Consumer Packaging Segment Shipments - thousands of tons
|
371.2
|
|
|
378.5
|
|
|
388.6
|
|
|
1,043.9
|
|
|
2,182.2
|
|
Consumer Packaging Converting Shipments - BSF
|
5.2
|
|
|
5.3
|
|
|
5.5
|
|
|
9.2
|
|
|
25.2
|
|
Consumer Packaging Converting Per Shipping Day - MMSF
|
84.8
|
|
|
86.7
|
|
|
86.3
|
|
|
144.5
|
|
|
100.9
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fiscal 2016
|
|
|
|
|
|
|
|
|
|
|||||
Consumer Packaging Segment Shipments - thousands of tons
|
926.0
|
|
|
|
|
|
|
|
|
|
||||
Consumer Packaging Converting Shipments - BSF
|
8.9
|
|
|
|
|
|
|
|
|
|
||||
Consumer Packaging Converting Per Shipping Day - MMSF
|
145.3
|
|
|
|
|
|
|
|
|
|
|
Net Sales
(Aggregate)
|
|
Segment
Income
|
|
Return
on Sales
|
|||||
|
(In millions, except percentages)
|
|||||||||
Fiscal 2015
|
|
|
|
|
|
|||||
First Quarter
|
$
|
713.0
|
|
|
$
|
59.0
|
|
|
8.3
|
%
|
Second Quarter
|
694.9
|
|
|
52.4
|
|
|
7.5
|
|
||
Third Quarter
|
690.2
|
|
|
77.9
|
|
|
11.3
|
|
||
Fourth Quarter
|
1,642.0
|
|
|
77.7
|
|
|
4.7
|
|
||
Fiscal 2015
|
$
|
3,740.1
|
|
|
$
|
267.0
|
|
|
7.1
|
%
|
|
|
|
|
|
|
|||||
Fiscal 2016
|
|
|
|
|
|
|||||
First Quarter
|
$
|
1,542.2
|
|
|
$
|
91.2
|
|
|
5.9
|
%
|
|
Net Sales
(Aggregate)
|
|
Segment
Income
|
|
Return
on Sales
|
|||||
|
(In millions, except percentages)
|
|||||||||
Fiscal 2015
|
|
|
|
|
|
|||||
Fourth Quarter
|
$
|
256.5
|
|
|
$
|
33.6
|
|
|
13.1
|
|
Fiscal 2015
|
$
|
256.5
|
|
|
$
|
33.6
|
|
|
13.1
|
%
|
|
|
|
|
|
|
|||||
Fiscal 2016
|
|
|
|
|
|
|||||
First Quarter
|
$
|
209.8
|
|
|
$
|
7.1
|
|
|
3.4
|
%
|
|
Net Sales
(Aggregate)
|
|
Segment
Income
|
|
Return
on Sales
|
|||||
|
(In millions, except percentages)
|
|||||||||
Fiscal 2015
|
|
|
|
|
|
|||||
Fourth Quarter
|
$
|
45.0
|
|
|
$
|
(3.4
|
)
|
|
(7.6
|
)
|
Fiscal 2015
|
$
|
45.0
|
|
|
$
|
(3.4
|
)
|
|
(7.6
|
)%
|
|
|
|
|
|
|
|||||
Fiscal 2015
|
|
|
|
|
|
|||||
First Quarter
|
$
|
15.4
|
|
|
$
|
0.7
|
|
|
4.5
|
%
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(In millions)
|
||||||
Net cash provided by operating activities
|
$
|
523.0
|
|
|
$
|
332.4
|
|
Net cash used for investing activities
|
$
|
(503.4
|
)
|
|
$
|
(123.2
|
)
|
Net cash used for financing activities
|
$
|
(9.8
|
)
|
|
$
|
(208.4
|
)
|
|
Three Months Ended
|
||||||
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
Net (loss) income attributable to common stockholders
|
$
|
(453.5
|
)
|
|
$
|
125.1
|
|
Impairment of Specialty Chemicals goodwill
|
478.3
|
|
|
—
|
|
||
Restructuring and other items
|
125.6
|
|
|
3.9
|
|
||
Inventory stepped-up in purchase accounting
|
3.3
|
|
|
0.7
|
|
||
Pension lump sum settlement and retiree medical curtailment, net
|
—
|
|
|
7.9
|
|
||
Adjusted Net Income
|
$
|
153.7
|
|
|
$
|
137.6
|
|
Item 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 4.
|
CONTROLS AND PROCEDURES
|
Item 1.
|
LEGAL PROCEEDINGS
|
Item 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
|
|
Total Number
of Shares
Purchased
|
|
Average
Price Paid
Per Share
|
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
|
|
Maximum Number
of Shares that May Yet Be Purchased Under the Plans or
Programs
|
|||||
October 1, 2015 through October 31, 2015
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
34,552,648
|
|
November 1, 2015 through November 30, 2015
|
|
147,055
|
|
|
51.08
|
|
|
147,055
|
|
|
34,405,593
|
|
|
December 1, 2015 through December 31, 2015
|
|
1,951,027
|
|
|
44.50
|
|
|
1,951,027
|
|
|
32,454,566
|
|
|
Total
|
|
2,098,082
|
|
|
|
|
2,098,082
|
|
|
|
Item 6.
|
EXHIBITS
|
|
|
WESTROCK COMPANY
|
|||
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
Date:
|
February 9, 2016
|
|
|
By:
|
/s/ Ward H. Dickson
|
|
|
|
|
Ward H. Dickson
|
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
|
(Principal Financial Officer and duly authorized officer)
|
Exhibit 32.1
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Steven C. Voorhees, Chief Executive Officer and President of WestRock Company, and by Ward H. Dickson, Executive Vice President and Chief Financial Officer of WestRock Company.
|
LIBOR =
|
LIBOR
|
1.00 - EURODOLLAR RESERVE PERCENTAGE
|
US$200,000,000.00
(maximum amount)
|
November 2, 2015
|
Date
|
Bank's Reference Number
|
Amount
of Loan
|
Due Date
|
Applicable Interest Rate
|
Amount of Principal Paid
|
U
npaid Balance of
Note
|
Notation Made By:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of WestRock Company;
|
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.
|
Date:
|
February 9, 2016
|
/s/ Steven C. Voorhees
|
|
|
|
|
|
Steven C. Voorhees
|
|
|
|
|
Chief Executive Officer and President
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of WestRock Company;
|
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.
|
Date:
|
February 9, 2016
|
/s/ Ward H. Dickson
|
|
|
|
|
|
Ward H. Dickson
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
/s/ Steven C. Voorhees
|
Steven C. Voorhees
|
Chief Executive Officer and President
|
February 9, 2016
|
/s/ Ward H. Dickson
|
Ward H. Dickson
|
Executive Vice President and Chief Financial Officer
|
February 9, 2016
|