Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 13, 2018 | Jun. 30, 2017 | |
Document and Entity Information | |||
Entity Registrant Name | KAPSTONE PAPER & PACKAGING CORP | ||
Entity Central Index Key | 1,325,281 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 1,778,273,562 | ||
Entity Common Stock, Shares Outstanding | 97,380,941 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 28,065 | $ 29,385 |
Trade accounts receivable (Includes $425,216 at December 31, 2017, and $368,992 at December 31, 2016, associated with the securitization facility) | 443,462 | 392,962 |
Other receivables | 23,289 | 13,562 |
Inventories | 315,575 | 322,664 |
Prepaid expenses and other current assets | 17,470 | 10,247 |
Total current assets | 827,861 | 768,820 |
Plant, property and equipment, net | 1,453,607 | 1,441,557 |
Other assets | 24,431 | 25,468 |
Intangible assets, net | 297,475 | 314,413 |
Goodwill | 720,611 | 705,617 |
Total assets | 3,323,985 | 3,255,875 |
Current liabilities: | ||
Capital lease obligation | 30 | |
Dividend payable | 10,302 | 10,052 |
Accounts payable | 199,574 | 189,350 |
Accrued expenses | 105,951 | 76,480 |
Accrued compensation costs | 75,215 | 48,840 |
Accrued income taxes | 31,458 | 15,971 |
Total current liabilities | 422,530 | 340,693 |
Other liabilities: | ||
Long-term debt (Includes $308,849 at December 31, 2017, and $269,273 at December 31, 2016, associated with the securitization facility) | 1,374,502 | 1,485,323 |
Long-term financing obligation | 82,199 | |
Capital lease obligation | 4,595 | |
Pension and postretirement benefits | 14,196 | 34,207 |
Deferred income taxes | 252,101 | 405,561 |
Other liabilities | 36,848 | 85,761 |
Total other liabilities | 1,764,441 | 2,010,852 |
Stockholders' equity: | ||
Preferred stock $0.0001 par value; 1,000,000 shares authorized; no shares issued and outstanding | ||
Common stock-$0.0001 par value; 175,000,000 shares authorized; 97,043,750 shares issued and outstanding (excluding 40,000 treasury shares) at December 31, 2017 and 96,639,920 shares issued and outstanding (excluding 40,000 treasury shares) at December 31, 2016 | 10 | 10 |
Additional paid-in-capital | 291,629 | 275,970 |
Retained earnings | 894,061 | 689,668 |
Accumulated other comprehensive loss | (48,686) | (61,318) |
Total stockholders' equity | 1,137,014 | 904,330 |
Total liabilities and stockholders' equity | $ 3,323,985 | $ 3,255,875 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Trade accounts receivable | $ 425,216 | $ 368,922 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 175,000,000 | 175,000,000 |
Common stock, shares issued | 97,043,750 | 96,639,920 |
Common stock, shares outstanding | 97,043,750 | 96,639,920 |
Treasury shares, shares outstanding | 40,000 | 40,000 |
Receivables Credit Facility | ||
Long term debt portion associated with securitization facility | $ 308,849 | $ 269,273 |
Receivables Credit Facility | ||
Trade accounts receivable | $ 425,200 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Consolidated Statements of Comprehensive Income | |||
Net sales | $ 3,315,660 | $ 3,077,257 | $ 2,789,345 |
Cost of sales, excluding depreciation and amortization | 2,364,731 | 2,214,872 | 1,982,686 |
Depreciation and amortization | 186,801 | 182,213 | 162,179 |
Freight and distribution expenses | 299,872 | 279,023 | 234,469 |
Selling, general, and administrative expenses | 265,131 | 224,127 | 210,844 |
Multiemployer pension plan withdrawal expense | 6,376 | ||
Operating income | 199,125 | 170,646 | 199,167 |
Foreign exchange (gain) / loss | (993) | 2,255 | 2,556 |
Equity method investments income | (1,752) | (548) | |
Loss on debt extinguishment | 1,305 | 679 | 1,218 |
Interest expense, net | 52,282 | 40,078 | 33,759 |
Income before provision (benefit) for income taxes | 148,283 | 128,182 | 161,634 |
Provision (benefit) for income taxes | (95,220) | 41,930 | 55,248 |
Net income | 243,503 | 86,252 | 106,386 |
Other comprehensive income / (loss), net of tax | |||
Foreign currency translation adjustment | 373 | (551) | |
Defined pension and post-retirement plans: | |||
Net actuarial gain/(loss) | 12,178 | 502 | (13,182) |
Prior service cost | (2,063) | ||
Pension and postretirement plan reclassification adjustments : | |||
Amortization (accretion) of prior service costs | (282) | (416) | 1,413 |
Amortization of net loss | 2,426 | 2,403 | 502 |
Other comprehensive income/(loss), net of tax | 12,632 | 1,938 | (11,267) |
Total comprehensive income | $ 256,135 | $ 88,190 | $ 95,119 |
Weighted average number of shares outstanding: | |||
Basic (in shares) | 96,859,516 | 96,533,368 | 96,257,749 |
Diluted (in shares) | 98,615,101 | 97,777,066 | 97,635,539 |
Net income per share: | |||
Basic (in dollars per share) | $ 2.51 | $ 0.89 | $ 1.11 |
Diluted (in dollars per share) | 2.47 | 0.88 | 1.09 |
Dividends declared per common share | $ 0.40 | $ 0.40 | $ 0.40 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Common Stock, net of Treasury Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total |
Balance at Dec. 31, 2014 | $ 10 | $ 255,505 | $ 574,601 | $ (51,989) | $ 778,127 |
Balance (in shares) at Dec. 31, 2014 | 96,046,554 | ||||
Changes in Stockholders' Equity | |||||
Stock-based compensation expense | 9,835 | 9,835 | |||
Payment of withholding taxes on vested restricted stock awards and options exercised | (2,508) | (2,508) | |||
Payment of withholding taxes on vested restricted stock awards and options exercised (in shares) | 155,283 | ||||
Exercise of stock options | 896 | 896 | |||
Exercise of stock options (in shares) | 91,256 | ||||
Excess tax benefit from stock-based compensation | 1,649 | 1,649 | |||
Employee Stock Purchase Plan | 843 | 843 | |||
Employee Stock Purchase Plan (in shares) | 34,413 | ||||
Dividends declared | (38,681) | (38,681) | |||
Net income | 106,386 | 106,386 | |||
Pension and postretirement plan adjustments, net of tax of $4,459, $1,493 and $6,852 in 2017, 2016 and 2015, respectively | (11,267) | (11,267) | |||
Balance at Dec. 31, 2015 | $ 10 | 266,220 | 642,306 | (63,256) | 845,280 |
Balance (in shares) at Dec. 31, 2015 | 96,327,506 | ||||
Changes in Stockholders' Equity | |||||
Stock-based compensation expense | 8,938 | 8,938 | |||
Payment of withholding taxes on vested restricted stock awards and options exercised | (810) | (810) | |||
Payment of withholding taxes on vested restricted stock awards and options exercised (in shares) | 149,411 | ||||
Exercise of stock options | 858 | 858 | |||
Exercise of stock options (in shares) | 100,367 | ||||
Excess tax deficiency from stock-based compensation | (207) | (207) | |||
Employee Stock Purchase Plan | 971 | 971 | |||
Employee Stock Purchase Plan (in shares) | 62,636 | ||||
Dividends declared | (38,890) | (38,890) | |||
Net income | 86,252 | 86,252 | |||
Pension and postretirement plan adjustments, net of tax of $4,459, $1,493 and $6,852 in 2017, 2016 and 2015, respectively | 2,489 | 2,489 | |||
Foreign currency translation adjustment | (551) | (551) | |||
Balance at Dec. 31, 2016 | $ 10 | 275,970 | 689,668 | (61,318) | $ 904,330 |
Balance (in shares) at Dec. 31, 2016 | 96,639,920 | 96,639,920 | |||
Changes in Stockholders' Equity | |||||
Stock-based compensation expense | 14,910 | $ 14,910 | |||
Payment of withholding taxes on vested restricted stock awards and options exercised | (1,884) | (1,884) | |||
Payment of withholding taxes on vested restricted stock awards and options exercised (in shares) | 176,444 | ||||
Exercise of stock options | 1,686 | 1,686 | |||
Exercise of stock options (in shares) | 180,643 | ||||
Employee Stock Purchase Plan | 947 | 947 | |||
Employee Stock Purchase Plan (in shares) | 46,743 | ||||
Dividends declared | (39,110) | (39,110) | |||
Net income | 243,503 | 243,503 | |||
Pension and postretirement plan adjustments, net of tax of $4,459, $1,493 and $6,852 in 2017, 2016 and 2015, respectively | 12,259 | 12,259 | |||
Foreign currency translation adjustment | 373 | 373 | |||
Balance at Dec. 31, 2017 | $ 10 | $ 291,629 | $ 894,061 | $ (48,686) | $ 1,137,014 |
Balance (in shares) at Dec. 31, 2017 | 97,043,750 | 97,043,750 |
Consolidated Statements of Cha6
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Consolidated Statements of Changes in Stockholders' Equity | |||
Pension and postretirement plan liability adjustments, tax | $ 4,459 | $ 1,493 | $ 6,852 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating activities | |||
Net income | $ 243,503 | $ 86,252 | $ 106,386 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation of plant and equipment | 155,903 | 149,318 | 136,886 |
Amortization of intangible assets | 30,898 | 32,895 | 25,293 |
Stock-based compensation expense | 14,910 | 8,938 | 9,835 |
Pension and postretirement | (3,292) | (3,694) | (11,182) |
Multiemployer pension plan withdrawal expense | 6,376 | ||
Excess tax deficiency / (benefit) from stock-based compensation | 207 | (1,649) | |
Amortization of debt issuance costs | 4,787 | 4,804 | 5,546 |
Loss on debt extinguishment | 1,305 | 679 | 1,218 |
Loss on disposal of fixed assets | 5,372 | 3,599 | 951 |
Deferred income taxes | (157,918) | (14,440) | 11,042 |
Inventory step-up expense | 5,800 | ||
Change in fair value of contingent consideration liability | 5,794 | 1,600 | 3,700 |
Equity method investments income, net of cash received | 98 | (548) | |
Plant closure costs | 7,522 | ||
Provision for bad debt expense | 3,024 | 881 | 368 |
Changes in assets and liabilities: | |||
Trade accounts receivable, net | (51,040) | (27,452) | 8,960 |
Other receivables | (7,945) | 2,685 | (1,596) |
Inventories | 6,904 | 13,700 | (13,086) |
Prepaid expenses and other current assets | 296 | 17,063 | (13,375) |
Other assets | (843) | (993) | 478 |
Accounts payable | 9,676 | (12,782) | (13,352) |
Accrued expenses and other liabilities | 10,952 | 11,806 | 16,155 |
Accrued compensation costs | 30,075 | (15,364) | (7,120) |
Accrued income taxes | 15,487 | 17,271 | (8,433) |
Net cash provided by operating activities | 325,468 | 281,920 | 262,457 |
Investing activities | |||
Equity method investments | (11,807) | ||
Purchase of intangible assets | (2,525) | ||
Acquisitions, net of cash acquired | (33,500) | (15,438) | (617,046) |
Proceeds from the sale of assets | 472 | 4,881 | |
Capital expenditures | (138,358) | (126,865) | (126,756) |
Net cash used in investing activities | (171,386) | (151,754) | (743,802) |
Financing activities | |||
Proceeds from revolving credit facility | 422,000 | 451,000 | 350,000 |
Repayments on revolving credit facility | (422,000) | (457,400) | (343,600) |
Proceeds from receivables credit facility | 89,914 | 43,001 | 134,701 |
Repayments on receivables credit facility | (50,338) | (39,342) | (36,088) |
Proceeds from long-term debt | 519,763 | ||
Repayments on long-term debt | (155,000) | (64,687) | (116,438) |
Repayments on long-term financing obligations | (495) | ||
Repayments on capital lease | (22) | ||
Cash dividends paid | (38,722) | (38,736) | (38,729) |
Payment of loan amendment and debt issuance costs | (1,488) | (2,250) | (10,790) |
Proceeds from other current borrowings | 6,214 | 6,615 | |
Repayments on other current borrowings | (6,214) | (6,615) | |
Payment of withholding taxes on stock awards | (1,884) | (810) | (2,508) |
Proceeds from exercises of stock options | 1,686 | 858 | 896 |
Proceeds from shares issued to ESPP | 947 | 971 | 843 |
Excess tax (deficiency)/ benefit from stock-based compensation | (207) | 1,649 | |
Net cash (used in) provided by financing activities | (155,402) | (107,602) | 459,699 |
Net increase (decrease) in cash and cash equivalents | (1,320) | 22,564 | (21,646) |
Cash and cash equivalents-beginning of period | 29,385 | 6,821 | 28,467 |
Cash and cash equivalents-end of period | $ 28,065 | $ 29,385 | $ 6,821 |
Description of Business and Bas
Description of Business and Basis of Presentation | 12 Months Ended |
Dec. 31, 2017 | |
Description of Business and Basis of Presentation | |
Description of Business and Basis of Presentation | 1. Description of Business and Basis of Presentation KapStone Paper and Packaging Corporation, or the "Company," produces and sells a variety of containerboard, corrugated products and specialty paper products in the United States and globally. The Company was incorporated on April 15, 2005 in Delaware. On June 1, 2015, the Company acquired 100 percent of the partnership interests in Victory Packaging, L.P. and its subsidiaries ("Victory"). As a result of the Victory acquisition, the accompanying consolidated financial statements are not comparative. The accompanying consolidated financial statements include the results of Victory since the date of its acquisition, see Note 4 "Victory Acquisition". Principles of Consolidation —The consolidated financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. Use of Estimates —The preparation of financial statements and related disclosures requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Although these estimates are based on management's best knowledge of current events and actions that the Company may undertake in the future, actual results may be different from the estimates. Recently Adopted Accounting Standards —In July 2015, the Financial Accounting Standard's Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-11, "Simplifying the Measurement of Inventory", which is intended to simplify the subsequent measurement of inventories by replacing the current lower of cost or market test with a lower of cost and net realizable value test. The guidance applies only to inventories for which cost is determined by methods other than last-in first-out and the retail inventory method. Application of the standard, which should be applied prospectively, is required for the annual and interim periods beginning after December 15, 2016. We adopted ASU 2015-11 during the interim period ended March 31, 2017, and it had no material impact on the Company's consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting", which requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. It also allows an employer to repurchase more of an employee's shares than previously allowed for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur. The guidance is effective for public business entities for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. We adopted ASU 2016-09 prospectively during the interim period ended March 31, 2017. The adoption of this ASU increased the Company's provision for income taxes by $0.1 million for the year ended December 31, 2017. The Company has elected to continue recognizing estimated forfeitures over the vesting term of the awards. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Significant Accounting Policies | |
Significant Accounting Policies | 2. Significant Accounting Policies Revenue Recognition —Revenue is recognized when the customer takes title and assumes the risks and rewards of ownership, when the price is fixed and determinable and when collectability is reasonably assured. Sales with terms f.o.b. (free on board) shipping point are recognized at the time of shipment. For sales transactions with terms f.o.b. destination, revenue is recorded when the product is delivered to the customer's site and when title and risk of loss are transferred. Sales on consignment are recognized in revenue at the earlier of the month that the goods are consumed or after a period of time subsequent to receipt by the customer as specified by contract terms, provided all other revenue recognition criteria is met. Incentive rebates are typically paid in cash and are netted against revenue on an accrual basis as qualifying purchases are made by the customer to earn and thereby retain the rebate. During 2017, 2016, and 2015, customer rebates totaled $35.4 million, $34.3 million and $32.7 million, respectively. Freight charged to customers is recognized in net sales. Cost of Sales —Cost of sales includes material, labor and overhead costs, but excludes depreciation of plant and equipment and amortization. Proceeds received from the sale of by-products generated from the paper and packaging manufacturing process are reflected as a reduction to cost of sales. Income from sales of by-products is derived primarily from the sale of tall oil, hardwood, turpentine and waste bales to third parties. During 2017, 2016 and 2015 cost of sales was reduced by $40.9 million, $32.6 million and $36.1 million, respectively, for these by-product sales. Freight and Distribution Expenses —Freight and distribution includes shipping and handling costs for product sold to customers and is excluded from cost of sales. Planned Maintenance Outage Costs —The Company recognizes the cost of maintenance activities in the period in which they occur under the direct expense method in accordance with ASC 360, Property, Plant and Equipment . The Company performs planned maintenance outages at its paper mills. Costs of approximately $46.8 million, $32.6 million and $37.4 million related to planned maintenance outages are included in cost of sales for the years ended December 31, 2017, 2016 and 2015, respectively. Net Income per Common Share —Basic net income per share is based on the weighted average number of common shares outstanding during the period. Diluted income per share reflects the potential dilution assuming common shares were issued for the exercise of outstanding in-the-money stock options and unvested restricted stock awards and assuming the proceeds thereof were used to purchase common shares at the average market price during the period such awards were outstanding and inclusion of such shares is dilutive to net income per share. Concentrations of Risk —Financial instruments that potentially expose the Company to concentrations of credit and market risk consist primarily of cash and cash equivalents and trade accounts receivable from sales of product to third parties. When excess cash and cash equivalents are invested they are placed in investment grade commercial paper. No customer accounted for more than 10 percent of consolidated net sales in 2017, 2016 or 2015. In order to mitigate credit risk, the Company obtains letters of credit for certain export customers. For the years ended December 31, 2017, 2016 and 2015, net sales to U.S. based customers were 86 percent, 83 percent and 82 percent, respectively, of consolidated net sales. Net sales to foreign based customers during 2017, 2016 and 2015 were 14 percent, 17 percent and 18 percent, respectively, of consolidated net sales. See Note 18 "Segment Information". The Company establishes its allowance for doubtful accounts based upon factors mainly surrounding the credit risks of specific customers and other related information. Once an account is deemed uncollectible, it is written off. At December 31, 2017, 2016 and 2015 changes to the allowance for doubtful accounts are summarized as follows ($000's): Year ended: Balance at Acquisition Charged to Write-offs Balance at December 31, 2017 $ — $ $ ) $ December 31, 2016 $ $ — $ $ ) $ December 31, 2015 $ $ $ $ ) $ Foreign Currency Transactions —The Company invoices certain European customers in Euros and Mexican customers in Pesos. Outstanding amounts for such transactions are remeasured into U.S. dollars at the year-end rate of exchange and statements of comprehensive income items are remeasured at the weighted average exchange rates for the period. Gains and losses arising from these transactions are included in foreign exchange gains / (losses) within the Consolidated Statements of Comprehensive Income. Cash and Cash Equivalents —Cash equivalents include all highly liquid investments with maturities of three months or less when purchased. Fair value of Financial Instruments —The Company's cash and cash equivalents, trade accounts receivables, pension assets, contingent consideration liability and accounts payables are financial assets and liabilities with carrying values that approximate fair value. The Company's variable rate term loans are financial liabilities with fair values that approximate their carrying value of $1.4 billion. See Note 10 "Short-term Borrowings and Long-term debt". Inventories —Inventories are valued at the lower of cost or market; whereby cost includes all direct and indirect materials, labor and manufacturing overhead, less by-product recoveries. Costs of raw materials, work-in-process, and finished goods are determined using the first-in, first-out method for KapStone locations with the exception of the Longview Paper mill and the seven western corrugated products manufacturing plants, which are on the last-in, first-out method. In total, these locations represent 18 percent and 22 percent of consolidated inventories as of December 31, 2017 and 2016, respectively. Replacement parts and other supplies are stated using the average cost method. Purchases and sales of inventory with the same counterparty that are entered into in contemplation of one another are combined and recorded as exchanges of inventory measured at the book value of the item exchanged. In conjunction with the Victory acquisition, KapStone acquired inventories which were recorded at fair value as of the acquisition date. The cost for the Victory inventories is stated at the lower cost or market and is determined under the first-in, first-out method. Plant, Property, and Equipment, net —Plant, property, and equipment are stated at cost less accumulated depreciation. Property, plant, and equipment acquired in acquisitions were recorded at fair value on the date of acquisition. Depreciation is computed using the straight-line method over the assets' estimated useful lives. Assets under capital leases are depreciated on a straight-line method over the term of the lease or the useful life, if shorter. The range of estimated useful lives is as follows: Years Land improvements 3 - 25 Buildings 11 - 40 Machinery and equipment 3 - 30 Furniture and office equipment 5 - 10 Computer hardware and software 3 - 5 The Company accounts for costs incurred for the development of software for internal use in accordance with ASC 350 Intangibles—Goodwill and Other . This standard requires the capitalization of certain costs incurred in connection with developing or obtaining internal use software. Leases —The Company assesses lease classification as either capital or operating at lease inception or upon modification. We lease 13 of our corrugated products manufacturing plants and most distribution centers, as well as other property and equipment, under operating leases. For purposes of determining straight-line rent expense, the lease term is calculated from the date of possession of the facility, including any periods of free rent and any renewal option periods that are reasonably assured of being exercised. Goodwill and Intangible Assets —Goodwill is the excess of purchase price over the fair value of the net assets of businesses acquired. On an annual basis and in accordance with ASC 350, Intangibles—Goodwill and Other , the Company evaluates goodwill using a quantitative or qualitative assessment to determine whether it is more likely than not that fair value of any reporting unit is less than it carrying amount. If the Company determines that the fair value of the reporting unit may be less than its carrying amount, the Company evaluates goodwill using a two-step impairment test. Otherwise, the Company concludes that no impairment is indicated and does not perform the two-step impairment test. If the qualitative assessment concludes that the two-step impairment test is necessary, the first step is to compare the book value of the reporting unit, including goodwill, with its fair value. A reporting unit is an operating segment or one level below an operating segment (referred to as a "component"). A component is considered a reporting unit for purposes of goodwill testing if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component. The Company has identified three reporting units; Western Paper and Packaging Operations, Eastern Paper and Packaging Operations and Distribution. The fair value is estimated based on a market approach and a discounted cash flow analysis, also known as the income approach, and is reconciled to the current market capitalization for the Company to ensure that the implied control premium is reasonable. A discounted cash flow analysis requires the Company to make various judgmental assumptions, including assumptions about future cash flows, growth rates and discount rates. The assumptions about future cash flows and growth rates are based on the forecast and long-term business plans of each reporting unit. Discount rate assumptions are considered Level 3 inputs in the fair value hierarchy defined in ASC 820, Fair Value Measurements and Discounts . Management also considers market-multiple information to corroborate the fair value conclusions reached using the discounted cash flow analysis. If necessary, the second step of the goodwill impairment test compares the implied fair value of the reporting unit's goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. The Company's goodwill impairment analysis is performed annually at the beginning of the fourth quarter. The Company performed a quantitative assessment and it did not result in an impairment charge for any periods presented. Intangible assets acquired in a business combination or asset purchase are initially valued at the fair market value using generally accepted valuation methods appropriate for the type of the intangible asset. Definite-lived intangible assets are amortized over their estimated useful lives and are reviewed for impairment if indicators of impairment arise. The evaluation of the impairment is based upon a comparison of the carrying amount of the intangible asset to the estimated future undiscounted cash flows expected to be generated by the asset. If the estimated undiscounted future cash flows are less than the carrying amount of the assets, the asset is considered to be impaired. If impaired, the intangible asset is written down to estimated fair market value. Pension and Postretirement Benefits —The Company provides pension and postretirement benefits to certain employees and accounts for these benefits in accordance with ASC 715, Compensation—Retirement Benefits . For financial reporting purposes, long-term assumptions are developed through consultations with actuaries. Such assumptions include the expected long-term rate of return on plan assets, discount rates, health care trend rates and mortality rates. The discount rate for the current year is based on interest rates for long-term high quality bonds. The amount of unrecognized actuarial gains and losses recognized in the current year's operations is based on amortizing the unrecognized gains or losses for each plan that exceeds the larger of 10 percent of the projected benefit obligation or the fair value of plan assets, also known as the corridor. The amount of unrecognized gain or loss that exceeds the corridor is amortized over the average future service of the plan participants. While we believe that our assumptions are appropriate, significant differences in our actual experience or significant changes in our assumptions may materially affect our pension and other postretirement benefit obligations and our future expense. Income Taxes —The Company accounts for income taxes under the liability method in accordance with ASC 740, Income Taxes . Accordingly, deferred income taxes are provided for the future tax consequences attributable to differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. Deferred tax assets and liabilities are measured using tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is established when necessary to reduce deferred tax assets to the amount that is more likely than not to be realized. The Company recognizes the benefit of tax positions when it is more likely than not to be sustained on its technical merits. The Company records interest and penalties on unrecognized tax benefits in the provision for income taxes. Amortization of Debt Issuance Costs —The Company capitalizes costs incurred in connection with borrowings or establishment of credit facilities. These costs are amortized over the life of the borrowing or life of the credit facility using the effective interest method. For the years ended December 31, 2017, 2016 and 2015, $4.8 million, $4.8 million and $5.5 million, respectively, of debt issuance costs have been amortized and recognized within interest expense, net. In 2017, 2016 and 2015, the Company recorded losses on debt extinguishment of $1.3 million, $0.7 million and $1.2 million, respectively, due to voluntary prepayments totaling $155.0 million, $64.7 million and $103.5 million, respectively, on the term loans under the Company's senior secured credit facility. Stock Based Compensation Expense —The Company accounts for employee stock and stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation. Accordingly, compensation expense for the fair value of stock options, as determined on the date of grant, is recorded on an accelerated basis over the awards' vesting periods. The compensation expense for the fair value of restricted stock units, as determined on the date of grant, is recorded on a straight-line basis over the awards' vesting periods. Forfeitures are estimated on the date of grant and revised if actual or expected forfeiture activity differs materially from the original estimate. Segment Information —The Company reports results in two reportable segments: Paper and Packaging and Distribution. These segments represent distinct businesses that are managed separately because of differing products and services. Each of these businesses requires distinct operating and marketing strategies. The Paper and Packaging segment produces containerboard, corrugated products and specialty paper which are sold to customers who convert our products into end-market finished products or internally to corrugated products manufacturing plants that produce a wide variety of products ranging from basic corrugated shipping containers to specialized packaging. The Distribution segment, which operates under the Victory trade name, provides its customers comprehensive packaging solutions and services and distributes corrugated packaging materials and other specialty packaging products, which include stretch film, void fill, carton sealing tape and other specialty tapes. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standard's Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers". The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The guidance in this update supersedes the revenue recognition requirements in Accounting Standards Codification ("ASC") Topic 605, "Revenue Recognition", and most industry-specific guidance throughout the Industry Topics of the Codification. Additionally, this update supersedes some cost guidance included in Subtopic 605-35, "Revenue Recognition—Construction-Type and Production-Type Contracts". The standard will be effective for public entities for annual reporting periods beginning after December 15, 2017 and interim periods therein. Additionally the FASB approved the option to early adopt up to the original effective date (fiscal years beginning after December 15, 2016). The Company did not elect to early adopt this standard. The Company has determined that it will adopt this standard utilizing the modified retrospective method, which will result in the recognition of the cumulative effect of initially applying the standard (if any) as an adjustment to opening retained earnings for the fiscal year beginning January 1, 2018. Our implementation team, consisting of senior leadership from finance, legal, sales and operations, reported its progress to management and to the audit committee of our board of directors on a periodic basis. We have completed the significant contract review phase of the assessment and have made all necessary updates to our systems and control environment to support additional disclosures under the new standard. We have also made necessary changes to policies and procedures. During our assessment, the Company considered whether the adoption would require a transition from point-in-time revenue recognition to an over-time approach for products produced by the Company without an alternative use, which would result in acceleration of revenue. The Company has determined that based on its enforceable rights included in its contracts or prevailing terms and conditions, an enforceable right of payment that includes a reasonable profit throughout the duration of the contract does not exist. Therefore, the Company will remain at a point-in-time approach and record revenue at the point control transfers to the customer. We do not expect to recognize a cumulative adjustment to opening retained earnings under the modified retrospective approach and do not expect that the adoption of this standard to have a material effect on the Company's financial position or results of operations. We anticipate the primary impact to be the additional required disclosures around revenue recognition in the notes to the consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, "Leases". This guidance revises existing practice related to accounting for leases under ASC Topic 840 Leases for both lessees and lessors. The new guidance in ASU 2016-02 requires lessees to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The lease liability will be equal to the present value of lease payments and the right-of-use asset will be based on the lease liability, subject to adjustment such as for initial direct costs. For income statement purposes, the new standard retains a dual model similar to ASC 840, requiring leases to be classified as either operating or finance. For lessees, operating leases will result in straight-line expense (similar to current accounting by lessees for operating leases under ASC 840), while finance leases will result in a front-loaded expense pattern (similar to current accounting by lessees for capital leases under ASC 840). While the new standard maintains similar accounting for lessors as under ASC 840, it reflects updates to, among other things, align with certain changes to the lessee model. The guidance is effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those years. Early adoption is permitted for all entities. The Company does have a significant number of leases for both property and equipment. As such, the Company expects that there will be a material impact on our financial position and disclosures upon the adoption of ASU 2016-02. Our implementation team, consisting of senior leadership from finance, legal, IT and operations, reports its progress to management and to the audit committee of our board of directors on a periodic basis. We are in the process of abstracting data from existing leases and are assessing the need for new or updated systems to support additional disclosures under the new standard. The Company will provide additional disclosure as the implementation progresses. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments. This standard replaces the incurred loss methodology previously employed to measure credit losses for most financial assets and requires the use of a forward-looking expected loss model. Current accounting delays the recognition of credit losses until it is probable a loss has been incurred, while the update will require financial assets to be measured at amortized costs less a reserve and equal to the net amount expected to be collected. This standard will be effective for annual periods beginning after December 15, 2019, including interim periods within that reporting period, and early application is permitted. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments", which clarifies the treatment of several cash flow categories. In addition, ASU 2016-15 clarifies that when cash receipts and cash payments have aspects of more than one class of cash flows and cannot be separated, classification will depend on the predominant source or use. This update is effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted, including adoption in an interim period. The Company is currently evaluating the impact that the adoption of ASU 2016-15 will have on our cash flows and related disclosures. In January 2017, the FASB issued ASU 2017-04, "Simplifying the Test for Goodwill Impairment", which amends the guidance in ASC Topic 350, "Intangibles-Goodwill and Other". The ASU eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit's carrying amount over its fair value. The ASU is effective for annual and interim impairment tests performed in periods beginning after December 15, 2019. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The ASU will be applied prospectively. The Company currently does not expect that the adoption of these provisions will have a material effect on our consolidated financial statements and related disclosures, but will simplify the measurement of any impairment loss should goodwill be impaired in the future. In January 2017, the FASB issued ASU 2017-01, "Clarifying the Definition of a Business", which amends the guidance in ASC Topic 805, "Business Combinations". The ASU changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. Under the new guidance, an entity first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set is not a business. If it is not met, the entity then evaluates whether the set meets the requirements that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. The ASU defines an output as "the result of inputs and processes applied to those inputs that provide goods or services to customers, investment income (such as dividends or interest), or other revenues." The ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual periods, and early adoption is permitted. The ASU will be applied prospectively to any transactions occurring within the period of adoption. The Company currently does not expect that the adoption of these provisions will have a material effect on our consolidated financial statements. In March, 2017, the FASB issued ASU No. 2017-07, "Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." This ASU applies to all employers that offer to their employees defined benefit pension plans, other postretirement benefit plans, or other types of benefits accounted for under Topic 715, Compensation—Retirement Benefits. The ASU requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are used to present the other components of net benefit cost, that line item or items must be appropriately described. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. The ASU also allows only the service cost component to be eligible for capitalization when applicable (e.g., as a cost of internally manufactured inventory or a self-constructed asset). This ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance. The Company is currently evaluating the effect that ASU No. 2017-07 will have on its consolidated financial statements and related disclosures. In May 2017, the FASB issued ASU 2017-09 Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, to clarify which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This ASU is effective for annual periods beginning after December 15, 2017. This ASU will be applied prospectively when changes to the terms or conditions of a share-based payment award occur. The Company is currently evaluating the effect that ASU No. 2017-07 will have on its consolidated financial statements and related disclosures. In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02). Under existing U.S. GAAP, the effects of changes in tax rates and laws on deferred tax balances are recorded as a component of income tax expense in the period in which the law was enacted. When deferred tax balances related to items originally recorded in accumulated other comprehensive income are adjusted, certain tax effects become stranded in accumulated other comprehensive income. The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the 2017 Tax Cuts and Jobs Act. The amendments in this ASU also require certain disclosures about stranded tax effects. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption in any period is permitted. The Company's provisional adjustments recorded in 2017 to account for the impact of the 2017 Tax Cuts and Jobs Act resulted in stranded tax effects. The Company is currently evaluating the timing and impact of adopting ASU 2018-02. |
Strategic Investments
Strategic Investments | 12 Months Ended |
Dec. 31, 2017 | |
Strategic Investments | |
Strategic Investments | 3. Strategic Investments API Acquisition On February 1, 2017, the Company acquired the assets of Associated Packaging, Inc. and Fast Pak, LLC (together, "API") with operations located in Greer, South Carolina for $33.5 million. The acquisition was funded from borrowings on the Company's revolving credit facility ("Revolver"). API provides corrugated packaging and digital production needs serving a diverse customer base, including an emphasis on fulfillment and kitting for the automotive and consumer products industries. The Company has allocated the purchase price to the assets acquired and liabilities assumed, of which $14.0 million has been allocated to intangible assets (to be amortized over a life of 10 years), $2.8 million to plant, property and equipment, $1.7 million to net working capital and $15.0 million to goodwill (which is deductible for tax purposes). The purchase price allocation is final. Transaction fees and expenses for the API acquisition related to due diligence, advisory and legal services have been expensed as incurred. These expenses were $0.4 million for the year ended December 31, 2017, and were recorded as selling, general and administrative expenses in the Consolidated Statements of Comprehensive Income. This acquisition further strengthens the Company's goal of increasing mill integration. As part of the acquisition, the Company signed a four-year long-term incentive agreement with the sellers contingent on the achievement of certain financial targets. This agreement contains an acceleration clause that would trigger upon the sale of the Company prior to the fourth anniversary of the API acquisition. Contingent upon the closing of the KapStone acquisition by WestRock Company announced January 29, 2018, the Company will be required to make a $5.0 million payment to the sellers. As of December 31, 2017, no accrual has been recorded related to this contingent obligation. Operating results of the acquisition since February 1, 2017 are included in the Company's Paper and Packaging segment. The Company's consolidated statement of comprehensive income for the year ended December 31, 2017 includes $22.8 million of net sales and $1.0 million of operating income from this acquired business. In conjunction with the API acquisition, the Company signed a 25-year lease agreement with a total commitment of approximately $14.7 million. The Company estimated the fair value of the lease to be $4.7 million based on an assessment of the market values of comparable properties. The lease was capitalized as a long-term building asset and capital lease obligation as the present value of the payments is more than 90 percent of the fair value of the property. Amortization of the asset under this capital lease obligation is included in depreciation expense. CFB Acquisition On July 1, 2016, the Company acquired 100 percent of the common stock of Central Florida Box Corporation ("CFB"), a corrugated products manufacturer located near Orlando, Florida, for $15.4 million, net of cash acquired. Sales and total assets of CFB are not material to KapStone. Operating results of the acquisition since July 1, 2016 are included in the Company's Paper and Packaging segment operating results. The Company has allocated the purchase price to the fair value of assets acquired and liabilities assumed, of which $10.5 million has been allocated to plant, property and equipment, $1.7 million to net working capital, $1.0 million to goodwill (which is deductible for tax purposes) and $2.2 million to customer relationship intangible assets (to be amortized over a life of 10 years). The purchase price allocation is final. Equity Method Investments In September of 2016, the Company made a $10.6 million investment for a 49 percent equity interest in a sheet feeder operation located in Florida. In April of 2016, the Company made a $1.25 million investment for a 20 percent equity interest in a sheet feeder operation located in California. These investments are expected to increase the Company's vertical integration by over 60,000 tons per year and will ramp up to that level over eighteen months. Both investments are included in other assets on the Company's Consolidated Balance Sheets. For the years ended December 31, 2017 and 2016, the Company recognized $1.8 million and $0.5 million, respectively, of income from these equity method investments. New Plant Start-up In April of 2016, the Company approved a plan to expand its geographical footprint into Southern California with a new sheet plant. As of December 31, 2017, approximately $15.2 million has been invested. In addition, the Company signed a 10-year facility lease agreement with a total commitment of approximately $9.8 million. The new sheet plant started manufacturing boxes in February 2017 and is intended to primarily supply the Company's Victory distribution center in Southern California, as well as other KapStone customers. For the year ended December 31, 2017, $4.4 million of operating expenses were incurred. |
Victory Acquisition
Victory Acquisition | 12 Months Ended |
Dec. 31, 2017 | |
Victory Acquisition | |
Victory Acquisition | 4. Victory Acquisition On June 1, 2015, the Company purchased 100 percent of the partnership interests in Victory for $615.0 million in cash and $2.0 million for working capital adjustments. Victory, headquartered in Houston, TX, is a North American distributor of packaging materials. As of December 31, 2017, the Company is obligated to pay up an additional $20.7 million of contingent consideration to the former owners of Victory based on achieving certain financial performance criteria for the thirty month period following the closing. The excess of the purchase price paid at the time of the acquisition over the aggregate estimated fair value of net assets acquired was allocated to goodwill. The purchase price allocation is final. There has been no change to the fair value of the assets acquired and liabilities assumed since December 31, 2016. The following unaudited pro forma consolidated results of operations assume that the acquisition of Victory occurred as of January 1, 2015. The unaudited pro forma consolidated results include the accounting effects of the business combination, including the application of the Company's accounting policies, amortization of intangible assets and depreciation of equipment related to fair value adjustments, interest expense on acquisition related debt, elimination of intercompany sales and income tax effects of the adjustments. The pro forma adjustments are directly attributable to the Victory acquisition, factually supportable and are expected to have a continuing impact on the Company's combined results. Unaudited pro forma data is based on historical information and does not necessarily reflect the actual results that would have occurred, nor is it indicative of future results of operations. Year Ended December 31, Net sales $ Net income $ Net income per share—diluted $ |
Plant Closure and Assets Held f
Plant Closure and Assets Held for Sale | 12 Months Ended |
Dec. 31, 2017 | |
Plant Closure and Assets Held for Sale | |
Plant Closure and Assets Held for Sale | 5. Plant Closure and Assets Held for Sale In August 2017, the Company approved and announced the closing of its Paper and Packaging segment box plant located in Oakland, California. All operating activities ceased at this location in October 2017. For the year ended December 31, 2017, the Company recorded charges of $10.2 million, which includes $6.0 million write-off of impaired property, plant and equipment, $1.5 million of severance and other employee costs, $1.7 million of facility carrying costs and $1.0 million write-off of impaired inventory. As of December 31, 2017, the Company's Consolidated Balance Sheets includes $7.2 million of land and building held for sale and is included in prepaid expenses and other current assets. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2017 | |
Inventories | |
Inventories | 6. Inventories Inventories consist of the following at December 31, 2017 and 2016, respectively: December 31, 2017 2016 Raw materials $ $ Work in process Finished goods Replacement parts and supplies ​ ​ ​ ​ ​ ​ ​ ​ Inventory at FIFO costs LIFO inventory reserves ) ) ​ ​ ​ ​ ​ ​ ​ ​ Inventories $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, 2017 and 2016, finished goods inventory included inventory consigned to third parties totaling $6.2 million and $9.6 million, respectively. |
Plant, Property and Equipment,
Plant, Property and Equipment, net | 12 Months Ended |
Dec. 31, 2017 | |
Plant, Property and Equipment, net | |
Plant, Property and Equipment, net | 7. Plant, Property and Equipment, net Plant, property and equipment, net consist of the following at December 31, 2017 and 2016, respectively: December 31, 2017 2016 Land and land improvements $ $ Buildings and leasehold improvements Machinery and equipment Construction-in-process ​ ​ ​ ​ ​ ​ ​ ​ Less accumulated depreciation and amortization ​ ​ ​ ​ ​ ​ ​ ​ Plant, property, and equipment, net $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation expense for the years ended December 31, 2017, 2016 and 2015, was $155.9 million, $149.3 million and $136.9 million, respectively. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | 8. Goodwill and Other Intangible Assets The following table shows changes in goodwill for the years 2017 and 2016: Paper Distribution Total Balances at December 31, 2015 $ $ $ CFB acquisition — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balances at December 31, 2016 $ $ $ API acquisition — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balances at December 31, 2017 $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The following table shows changes in other intangible assets for the years 2017 and 2016: Intangible Balances at December 31, 2015 $ CFB acquisition Other Amortization expense ) ​ ​ ​ ​ ​ Balances at December 31, 2016 $ API acquisition Amortization expense ) ​ ​ ​ ​ ​ Balances at December 31, 2017 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Intangible assets other than goodwill include the following: December 31, 2017 December 31, 2016 Gross Accumulated Net Gross Accumulated Net Definite-lived trademarks $ $ ) $ $ $ ) $ Customer lists and relationships ) ) Lease, contracts and other ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ ) $ $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortization expense for the years ended December 31, 2017, 2016 and 2015, was $30.9 million, $32.9 million and $25.3 million, respectively. The increase in amortization expense for the year ended December 31, 2016 was primarily due to the Victory acquisition. Estimated amortization expense for the next five years, beginning with 2018, is as follows: $30.8 million, $30.4 million, $29.8 million, $26.7 million, and $22.8 million. At December 31, 2017, the weighted average remaining useful life for trademarks is 20.5 years; customer relationships is 10.8 years; other contractual agreements is 5.6 years; and for intangible assets in total is 11.8 years. |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2017 | |
Accrued Expenses | |
Accrued Expenses | 9. Accrued Expenses Accrued expenses consist of the following at December 31, 2017 and 2016, respectively: December 31, 2017 2016 Real and property taxes $ $ Energy costs Capital spending Customer rebates Worker's compensation Current postretirement obligation Freight Contingent consideration — Other accruals ​ ​ ​ ​ ​ ​ ​ ​ Accrued expenses $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Short-term Borrowings and Long-
Short-term Borrowings and Long-term Debt | 12 Months Ended |
Dec. 31, 2017 | |
Short-term Borrowings and Long-term Debt | |
Short-term Borrowings and Long-term Debt | 10. Short-term Borrowings and Long-term Debt Short-term Borrowings As of December 31, 2017, the Company had no amounts outstanding under its revolving credit facility and had borrowing availability of $485.9 million. Other Borrowing In 2017, the Company entered into a short-term financing agreement of $6.2 million at an annual interest rate of 2.4 percent for its annual property insurance premiums. The Company repaid this obligation as of December 31, 2017. Long-term Debt Long-term debt consists of the following at December 31, 2017 and 2016, respectively: December 31, 2017 2016 Term loan A-1 under Credit Agreement with interest payable monthly at LIBOR of 1.57% plus 1.75% at December 31, 2017 $ $ Term loan A-2 under Credit Agreement with interest payable monthly at LIBOR of 1.57% plus 1.875% at December 31, 2017 Receivable Credit Facility with interest payable monthly at LIBOR of 1.56% plus 0.75% at December 31, 2017 ​ ​ ​ ​ ​ ​ ​ ​ Total long-term debt Less unamortized debt issuance costs ) ) ​ ​ ​ ​ ​ ​ ​ ​ Long-term debt, net of debt issuance costs $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest paid for the years ended December 31, 2017, 2016 and 2015, was $44.7 million, $32.9 million and $28.1 million, respectively. Interest paid was $11.8 million higher for the year ended 2017, primarily due to higher interest rates, partially offset by lower term loan balances due to $155.0 million of prepayments made in 2017. The principal portion of the total long-term debt at December 31, 2017 becomes due as follows: 2018 $ — 2019 — 2020 2021 — 2022 ​ ​ ​ ​ ​ Total $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ KapStone and certain of our subsidiaries are parties to a Second Amended and Restated Credit Agreement dated June 1, 2015 (as amended from time to time, the "Credit Agreement"), which provides for a senior secured credit facility (the "Credit Facility") of $1.915 billion, consisting of a Term Loan A-1 in the aggregate amount of $940 million and a Term Loan A-2 in the aggregate amount of $475 million and a $500 million revolving credit facility (the "Revolver"). In addition, the Credit Facility also includes an uncommitted accordion feature that allows the Company, subject to certain significant conditions, to request additional commitments from our existing or new lenders under the Credit Facility without further approvals of any existing lenders thereunder. The aggregate amount of such increases in potential commitments (and potential borrowings) is limited to $600 million, unless the Company would maintain a pro forma total leverage ratio of 2.5 to 1.0 or less after giving effect to the increase in potential commitments (and potential borrowings). In July 2017, the Company entered into the Third Amendment ("Third Amendment") to the Credit Agreement. The Third Amendment modified the financial covenant in the Credit Agreement related to maintenance of a maximum total leverage ratio by increasing the permitted total leverage ratio for fiscal quarters ending on September 30, 2017, December 31, 2017 and March 31, 2018, and modified certain defined terms used in the calculation of the financial covenants in a manner favorable to the Company. The Company paid approximately $1.3 million of loan amendment fees associated with the Third Amendment, which are being amortized over the remaining term of the Credit Agreement using the effective interest method. During 2017, the Company made two voluntary prepayments totaling $155.0 million on its term loans under the credit facility and as a result, $1.3 million of unamortized debt issuance costs were written-off as loss on debt extinguishment. Receivables Credit Facility Effective as of June 1, 2017, the Company entered into Amendment No. 3 to the Receivables Purchase Agreement (the "Amendment") amending its Receivables Purchase Agreement dated as of September 26, 2014 (as amended from time to time, the "Receivables Purchase Agreement"), which is part of an accounts receivable securitization program (the "Securitization Program") of the Company and certain of its subsidiaries. The Amendment included the following changes to the Receivables Purchase Agreement: · the aggregate commitment of the Purchasers (as defined in the Receivables Purchase Agreement) under the Receivables Purchase Agreement was increased from $275.0 million to $325.0 million; · the "Facility Termination Date" (as defined in the Receivables Purchase Agreement) was extended from June 6, 2017 to June 1, 2018; and · certain definitions used to determine the maximum amount that may be outstanding under the Securitization Program were added or modified, as applicable, in a manner favorable to the Company. The Company paid approximately $0.2 million of loan amendment fees associated with this Amendment, which are being amortized over the remaining term using the effective interest method. On February 21, 2017, the Company entered into Amendment No. 3 to the Receivables Sale Agreement amending its Receivables Sale Agreement dated as of September 26, 2014, which is part of the Securitization Program. All accounts receivable purchased from API and all accounts receivable generated from facilities acquired from API that are not paid to an eligible bank account are designated as "Excluded Receivables". Under our Securitization Program, the Company and its subsidiaries that participate in the Securitization Program (the "Originators") sell, on an ongoing basis without recourse, certain trade receivables to KapStone Receivables, LLC ("KAR"), which is considered a wholly-owned, bankruptcy-remote variable interest entity ("VIE"). The Company has the authority to direct the activities of the VIE and, as a result, we have concluded that we maintain control of the VIE, are the primary beneficiary (as defined by accounting guidance) and, therefore, consolidate the account balances of KAR. As of December 31, 2017, $425.2 million of our trade accounts receivables were sold to KAR. KAR in turn assigns a collateral interest in these receivables to a group of financial institutions under a one-year $325 million facility (the "Receivables Credit Facility") for proceeds of $308.8 million. The assets of KAR are not available to the Company until all obligations of KAR are satisfied in the event of bankruptcy or insolvency proceedings. The Company included the Receivables Credit Facility in Long-term debt on the Consolidated Balance Sheets based on management's intent to continue to refinance this agreement until the maturity of the Term loan A-l which is June 1, 2020. The Company also has the ability to refinance this short-term obligation on a long-term basis using its Revolver. There are no additional requirements as to when borrowings under the Revolver would need to be repaid other than the maturity date of June 1, 2020. Debt Covenants Our Credit Agreement governing our Credit Facility contains, among other provisions, covenants with which we must comply. The covenants limit our ability to, among other things, incur indebtedness, create additional liens on our assets, make investments, engage in mergers and acquisitions and sell any assets outside the normal course of business. As of December 31, 2017, the Company was in compliance with all applicable covenants in the Credit Agreement. Fair Value of Debt As of December 31, 2017, the fair value of the Company's debt approximates the carrying value of $1.4 billion as the variable interest rates re-price frequently at current market rates. As of December 31, 2017 and 2016 our weighted-average cost of borrowings was 3.13 percent and 2.40 percent, respectively. |
Long-term Financing Obligations
Long-term Financing Obligations | 12 Months Ended |
Dec. 31, 2017 | |
Long-term Financing Obligations | |
Long-term Financing Obligations | 11. Long-term Financing Obligations In 2015, the Company signed non-cancellable contracts with a third party to construct facilities to produce wood chips for the use at the Company's North Charleston and Roanoke Rapids paper mills for twenty years, with an annual purchase obligation of approximately $13.4 million. The Company has evaluated these agreements and concluded that they represent in-substance leases under ASC 840, Leases. In accordance with the special provisions discussed in ASC 840-40-55-15, language within the contracts result in the Company assuming a certain level of construction risk, and as such, the Company is considered the accounting owner of the assets during the construction period, even though these facilities are being constructed and financed entirely by the third party. Accordingly, as the third-party incurred the construction project costs, the assets and corresponding financial obligation were recorded in plant, property and equipment, net and other liabilities in the Company's consolidated balance sheets. As of December 31, 2017 and 2016, $88.2 million and $46.6 million, respectively, for these facilities is included in property, plant and equipment, net. Upon completion of each project, the Company evaluated if the in-substance leases met certain 'sale-leaseback' criteria under ASC 840. The contract did not meet such requirements, which is the expectation for each of these contracts, and $82.2 million is recorded as a financing liability as of December 31, 2017. Payments under these contracts are allocated between a reduction of the financing obligation and interest expense, utilizing an imputed interest rate in accordance with ASC 840. The Company incurred $3.3 million of implicit interest expense on these long-term financing obligations for the year ended December 31, 2017. |
Pension and Postretirement Bene
Pension and Postretirement Benefits | 12 Months Ended |
Dec. 31, 2017 | |
Pension and Postretirement Benefits | |
Pension and Postretirement Benefits | 12. Pension and Postretirement Benefits The Company and its subsidiaries has a defined benefit retirement plan ("Plan") for certain eligible employees. The Plan provides benefits based on years of credited service and stated dollar level multipliers for each year of service. The Company also provides postretirement health care insurance benefits through an indemnity plan and a health maintenance organization plan for certain salary and hourly employees and their dependents. Individual benefits generally continue until age 65. The Company does not pre-fund these benefits, and, accordingly, there are no postretirement plan assets. The postretirement plan also includes a retiree contribution requirement for certain salaried and certain hourly employees. The retiree contribution amount is adjusted annually. The liabilities for the benefit obligation for the eligible union groups are based on the collective bargaining agreements currently in effect. Current and future negotiations on collective bargaining agreements could have an effect on these liabilities. The changes in benefit obligations and Plan assets at December 31, 2017 and 2016 were: Pension Benefits Other Benefits 2017 2016 2017 2016 Change in Benefit Obligation Benefit obligation at beginning of year $ $ $ $ Service cost Interest cost Actuarial loss (gain) ) ) ) Participant contributions — — Benefits paid ) ) ) ) Plan amendment — — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Benefit obligation at end of year $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in Plan Assets Fair value of plan assets at beginning of year $ $ $ — $ — Actual return on plan assets — — Employer contributions — — Participant contributions — — Benefits paid ) ) ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value of plan assets at end of year $ $ $ — $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The funded status and amounts recognized in our consolidated balance sheets at December 31, 2017 and 2016 were: Pension Benefits Other Benefits 2017 2016 2017 2016 Funded Status at End of Year $ ) $ ) $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amounts Recognized in Consolidated Balance Sheets: Accrued expenses $ — $ — $ ) $ ) Pension and postretirement benefits ) ) ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net amount recognized $ ) $ ) $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amounts Recognized in Accumulated Other Comprehensive Income / (Loss)—(Pre-tax) Total net actuarial (gain) loss $ $ $ ) $ ) Prior service cost ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-Average Discount Rate Assumption used to Determine Projected Benefit Obligations at December 31, 2017 and 2016 % % % % The accumulated benefit obligation for the defined Plan was $621.9 million and $602.4 million at December 31, 2017 and 2016, respectively. The change in our Plan's funded status in 2017 is primarily due to higher earnings in plan assets and changes in mortality and other assumptions, partially offset by a lower discount rate applied to the pension obligation. In 2017, we used the new mortality tables from the Society of Actuaries and evaluated our mortality experience to establish mortality assumptions. Based on our experience and in consultation with our actuaries, we utilized a base RP-2014 with MP-2017 projection scale. In 2016, we utilized the RP-2014 mortality tables with MP-2016 projection scale. The plan amendment cost of $2.7 million represents the respective negotiated increases in pension benefits for various union participants during 2017 for all applicable past service measured at the contract's effective date. Components of pension benefit and other postretirement benefit income was: Pension Benefits Other Benefits 2017 2016 2015 2017 2016 2015 Service cost $ $ $ $ $ $ Interest cost Expected return on plan assets ) ) ) — — — Amortization of prior service cost (benefit) ) ) ) Amortization of net loss (gain) ) ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Benefit income $ ) $ ) $ ) $ ) $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-Average actuarial assumptions used to determine benefit costs were: Pension Benefits Other Benefits 2017 2016 2015 2017 2016 2015 Discount rate % % % % % % Long-term rate of return on plan assets % % % — — — The Company assumed health care cost trend rates for its postretirement benefits plans as follows: Plans 2018 Health care cost trend rate assumed for next year % Rate to which the cost trend rate is assumed to decline (the ultimate rate) % Year the rate reaches the ultimate trend rate The effect of a one percentage point increase or decrease in the assumed health care cost trend rates at December 31, 2017 is summarized below: Change in Health Care Minus 1% Plus 1% Service and interest cost $ ) $ Accumulated benefit obligation $ ) $ Other changes in Plan assets and benefit obligations recognized in accumulated other comprehensive loss were: Pension Benefits Other Benefits 2017 2016 2017 2016 Net actuarial (gain) loss $ ) $ $ ) $ ) Prior service cost / (credit) — — — Amortization of prior service (cost) benefit ) ) Amortization of net gain (loss) ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net amount recognized before tax $ ) $ ) $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The amounts in accumulated other comprehensive loss expected to be recognized as components of net pension expense during 2018 are as follows: Pension Other Prior service cost (benefit) $ $ ) Net actuarial loss / (gain) $ $ ) For the pension plan, accumulated actuarial gains and losses in excess of 10 percent of the accumulated benefit obligation are amortized over the average future service period of approximately 8.4 years. As of December 31, 2017 and 2016, $(48.5) million and $(60.8) million, respectively, were included net of tax in accumulated other comprehensive loss. Plan Assets The fair value of Plan assets, summarized by level within the fair value hierarchy as of December 31, 2017 was as follows: Level 1 Level 2 Level 3 Total Cash and cash equivalents $ $ — $ — $ Equity securities: Common stock — — Domestic equity mutual funds — — International equity mutual funds — — U.S. large cap collective funds — — Fixed income: Corporate bonds and notes — U.S. Government securities — Limited partnership investments — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Assets measured at Net Asset Value Hedge funds: Fixed income funds Equity funds ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets at fair value $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The table below resents a summary of changes in the fair value of the Plans' level three assets as of December 31, 2017: Year ended December 31, 2017 Limited Total Balance, beginning of year $ $ Transfers into Level 3 — — Transfers out of Level 3 — — Total gains or (losses): Included in changes in net assets Included in other comprehensive income — — Purchases, issuances, sales, and settlements: Purchases Issuances — — Sales ) ) Settlements — — ​ ​ ​ ​ ​ ​ ​ ​ Balance, end of year $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The amount of total gains or losses for the year included in changes in net assets attributed to the change in unrealized gains or losses relating to assets still held at the reporting date $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The fair value of Plan assets, summarized by level within the fair value hierarchy as of December 31, 2016 was as follows: Level 1 Level 2 Level 3 Total Cash and cash equivalents $ $ — $ — $ Equity securities: Common stock — — Domestic equity mutual funds — — International equity mutual funds — — U.S. large cap collective funds — — Fixed income: Corporate bonds and notes U.S. Government securities Limited partnership investments — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Assets measured at Net Asset Value Hedge funds: Fixed income funds Equity funds ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets at fair value $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Level 1 assets are valued based on quoted prices in active markets for identical securities. Level 2 assets are valued based on other significant observable inputs including quoted prices for similar securities, yield curves, indices, etc. Level 2 assets listed above consist primarily of commingled equity investments where values are based on the net asset value of the underlying investments held, individual fixed income securities where values are based on quoted prices of similar securities and observable market data, and commingled fixed income investments where values are based on the net asset value of the underlying investments held. Level 3 assets are valued based on unobservable inputs. Quoted market prices are not available for certain investments, including real estate and limited partnership investments. These investments are recorded at their estimated fair market value; therefore, the reported value may differ from the value that would have been used had a quoted market price existed. Investments of this nature are valued by the Company based on the nature of each investment and the information available to management at the valuation date. Limited Partnership investments generally have limited liquidity and are made through long-term partnerships or joint ventures that invest in pools of capital invested in primarily non-publicly traded entities. Underlying investments include venture capital, buyout, and special situations investing. Private equity management firms typically acquire and then reorganize private companies to create increased long-term value. Valuation is based on statements received from the investment managers, transaction data, analysis of and judgments about underlying investments and other third-party information deemed reliable for the purposes of developing an estimate of fair market value. Hedge funds are privately owned institutional investment funds that generally have moderate liquidity. Hedge funds seek specified levels of return, regardless of market conditions, and generally have a low correlation to public equity and debt markets. Hedge funds often invest substantially in financial market instruments (stocks, bonds, commodities, currencies, derivatives, etc.) using a broad range of trading activities to manage portfolio risks. Plan holdings in hedge funds are valued using the net asset value ("NAV") provided by the administrator of the fund and reviewed by the Company. The NAV is based on the value of the underlying assets owned by the fund, minus liabilities and divided by the number of shares or units outstanding. These assets are reported at NAV as a practical expedient. For the year ended December 31, 2017, the Plan held investments in hedge funds with restrictions on redemption for the first year after funds are invested, and funds restricting investment redemption to a 25 percent gate in any given quarter. The Company believes that the reported amounts for these investments are a reasonable estimate of their fair value at December 31, 2017. However, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value at the reporting date. To develop the expected long-term rate of return on plan assets assumption for the Plan, the Company considers the current asset allocation strategy, the historical investment performance, and the expectations for future returns of each asset class. The Company's Plan weighted-average asset allocations and target asset allocations at December 31, 2017 and 2016, by asset category were as follows: 2017 2016 Target Fixed income % % % Equity securities % % % Cash % % — % Other % % — % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total % % % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The Company's investment strategy is to invest in a prudent manner to maintain the security of funds while maximizing returns within the Company's Investment Policy guidelines. The strategy is implemented utilizing assets from the categories listed. The investment goals are to provide a total return that, over the long term, increases the ratio of Plan assets to liabilities subject to an acceptable level of risk. This is accomplished through diversification of assets in accordance with the Investment Policy guidelines. Investment risk is mitigated by periodic rebalancing between asset classes as necessitated by changes in market conditions within the Investment Policy guidelines. The Company currently does not anticipate making any contributions to the Plan in 2018. This estimate is based on current tax laws, Plan asset performance, and liability assumptions, which are subject to change. The Company anticipates making contributions to the postretirement plans in 2018 as claims are submitted. The following table presents estimated future gross benefit payments for the Company's plans: Pension Other 2018 $ $ 2019 2020 2021 2022 Succeeding 5 years Multiemployer Pension Plan In conjunction with each of the Longview and U.S. Corrugated acquisitions, the Company assumed participation in the GCIU-Employer Retirement Fund for a total of approximately 300 hourly employees at four corrugated products manufacturing plants. For the plan year ended December 31, 2015, the most recent date for which information was available, the contributions made by the Company were less than 5.3 percent of the total employers' contributions to the multiemployer plan. On October 31, 2016, the Company provided formal notification to the plan trustee of its withdrawal from the plan and cessation of plan contributions effective December 31, 2016. Management has updated its analysis of the estimated withdrawal liability recorded as of December 31, 2017. The estimated withdrawal liability of approximately $6.4 million did not change. It is based on annual payments of approximately $0.4 million over 20 years, discounted at a credit adjusted risk-free rate return of approximately 3.6 percent. This liability is based on an analysis of the facts currently available to management; however, the withdrawal liability will ultimately be determined by the plan trustee. Defined Contribution Plans We offer a 401(k) Defined Contribution Plans ("Contribution Plans") to eligible employees. The Company's monthly contributions are based on the matching of certain employee contributions or based on a union negotiated formula. The expense related to this plan was $23.0 million, $9.2 million and $22.3 million for the years ended December 31, 2017, 2016 and 2015, respectively, for matching contributions. In 2017, the Company restored matching contributions to its Contribution Plans for certain employees that were previously suspended during 2016. As a result, contributions were $13.8 million higher for the year ended December 31, 2017, compared to 2016. |
Income taxes
Income taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income taxes | |
Income taxes | 13. Income taxes The Company's U.S. federal statutory income tax rates were 35.0 percent for each of 2017, 2016 and 2015. The Company's effective income tax rates for the years ended December 31, 2017, 2016 and 2015 were (64.2) percent, 32.7 percent and 34.2 percent, respectively. The Company's provision for income taxes for the years ended December 31, 2017, 2016 and 2015 consists of the following: Years Ended December 31, 2017 2016 2015 Income before provision (benefit) for income taxes: United States $ $ $ Foreign ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision (benefit) for income taxes: Current: US federal $ $ $ State and local Foreign ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total current ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred: US federal ) ) State and local ) Foreign — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total deferred ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total United States ) Foreign ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total provision (benefit) for income taxes $ ) $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the years ended December 31, 2017, 2016 and 2015, substantially all income was earned in the United States. Foreign earnings primarily include results from Victory's operations in Mexico, which were acquired June 1, 2015. Income taxes paid, net of refunds, were $45.8 million, $23.8 million and $65.5 million in 2017, 2016 and 2015, respectively. The Company's effective income tax rate differs from the statutory federal income tax rate as follows: Years Ended December 31, 2017 2016 2015 Statutory income tax rate % % % State income taxes, net of federal income tax benefit % % % Domestic manufacturing deduction )% )% )% Tax Cuts and Jobs Act )% — % — % Other )% )% )% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effective income tax rate )% % % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The Tax Cuts and Jobs Act (the "Tax Act") enacted on December 22, 2017 resulted in a provisional net tax benefit of $144.4 million, comprised of a $144.7 tax benefit from re-measuring federal deferred tax liabilities from 35 percent to 21 percent, partially offset by a $0.3 million transition tax expense. Absent the Tax Act, the Company's 2017 effective income tax rate would have been 33.2 percent. While the Company's analysis of the final impact from the Tax Act has not been completed, reasonable estimates can be made and therefore these provisional estimates are reflected in our consolidated financial statements. Adjustments will be made during the measurement period under SEC Staff Bulletin No. 118. At this time, we do not expect any material impact to the Company from other aspects of the Tax Act; however, due to the complexity of the new tax rules we are continuing to evaluate the Tax Act and the application of ASC 740. Therefore the recorded tax effects in the 2017 financial results are provisional estimates that will be adjusted and disclosed, as necessary, in future reporting periods as new information becomes available. The new information that could cause us to adjust in future periods the tax effects already recorded as of December 31, 2017, include changes to deferred tax assets and liabilities pending the final determination of 2017 taxable income when the 2017 tax return is prepared; transition tax computational adjustments from E&P calculations, foreign taxes paid and foreign tax credit limitations; and from new information from the Internal Revenue Service, the SEC and the FASB as further guidance is issued. The tax effects of the temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 31, 2017 and 2016, are as follows: December 31, 2017 2016 Deferred tax assets resulting from: Accrued compensation costs $ $ Pension and postretirement benefits Stock based compensation State tax credit and net operating loss carry-forwards Other ​ ​ ​ ​ ​ ​ ​ ​ Total deferred tax assets $ $ ​ ​ ​ ​ ​ ​ ​ ​ Valuation allowance ) — ​ ​ ​ ​ ​ ​ ​ ​ Net deferred tax assets $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred tax liabilities resulting from: Depreciable assets ) ) Goodwill and intangible assets ) ) Other ) ) ​ ​ ​ ​ ​ ​ ​ ​ Total deferred tax liabilities $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ Net deferred tax liabilities $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The Company has $21.4 million of state tax net operating loss carry-forwards, which are available to reduce future taxable income in various state jurisdictions and expire between 2029 and 2037. The Company has $3.8 million of state tax credit carry-forwards, which expire between 2018 and 2026. The Company believes that it is not more likely than not that the benefit from state tax credit carryforwards and other state deferred tax assets in certain states will be realized. In recognition of this risk the Company has provided a partial valuation allowance of $1.0 million on those deferred tax assets ($0.8 million net of federal benefit). The Company accounts for income taxes in accordance with ASC 740, Income Taxes, which provides that an entity shall initially recognize the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. The term more likely than not means a likelihood of more than 50 percent. When measuring the tax benefit to be recorded, in concluding a tax position meets the more-likely-than-not recognition threshold we consider the amounts and probabilities of the possible outcomes that could be realized upon settlement using the facts, circumstances and information available at the reporting date. If these cumulative probabilities exceed 50 percent the tax benefit is recognized. Total unrecognized tax benefits as of December 31, 2017 and December 31, 2016 are $0.7 million and $0.5 million, respectively. Unrecognized tax benefits and related accrued interest and penalties are included in other liabilities in the accompanying Consolidated Balance Sheets. The Company does not expect a material change in its unrecognized tax benefits within the next twelve months. In the normal course of business, the Company is subject to examination by taxing authorities. The Company's open federal tax years are 2014, 2015 and 2016. The Company has open tax years for state and foreign income tax filings generally starting in 2013. |
Stockholder's equity
Stockholder's equity | 12 Months Ended |
Dec. 31, 2017 | |
Stockholder's equity | |
Stockholder's equity | 14. Stockholder's equity Employee Stock Purchase Plan In December 2009, the Company established the KapStone Paper and Packaging Corporation Employee Stock Purchase Plan ("ESPP"), effective January 1, 2010. The ESPP allows for employees to purchase shares of Company stock at a five percent discount from market price. A total of 1,000,000 shares were reserved for future purchases under the ESPP (amount reflects the stock split announced in December 2013). A total of 46,743 shares and 62,636 shares were issued under the ESPP for the years ended December 31, 2017 and 2016, respectively. Common Stock Reserved for Issuance At December 31, 2017, approximately 6.3 million shares of common stock were reserved for issuance, including 5.6 million shares for stock awards and 0.7 million shares for the ESPP. Cash Dividends For the years ended December 31, 2017 and 2016, we paid $38.7 million of dividends to stockholders. On December 15, 2017, the board of directors approved a quarterly cash dividend $0.10 per share, which was paid on January 12, 2018, to stockholders of record as of December 29, 2017. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2017 | |
Stock-Based Compensation | |
Stock-Based Compensation | 15. Stock-Based Compensation Share-Based Plan On May 11, 2016, stockholders of the Company approved the 2016 Incentive Plan ("2016 Plan"). Under the 2016 Plan, awards may be granted to employees, officers and directors of, and consultants and advisors to, the Company. The maximum number of shares was increased to 9.1 million shares of our common stock which will initially be available for all awards, subject to adjustment in the event of certain corporate transactions described in the 2016 Plan. As of December 31, 2017, approximately 5.6 million shares were reserved for granting additional stock options, restricted stock awards or stock appreciation rights. If any award is forfeited or expires without being exercised, or if restricted stock is repurchased by the Company, the common shares subject to the award shall be available for additional grants under the 2016 Plan. The number of shares available under the 2016 Plan is subject to adjustment in the event of any stock split, stock dividend, recapitalization, spin-off or other similar action. Options intended to qualify, under the standards set forth in certain federal tax rules as incentive stock options ("ISOs"), may be granted only to employees while actually employed by the Company. Non-employee directors, consultants and advisors are not entitled to receive ISOs. Option awards granted under the 2016 Plan are exercisable for a period fixed by the administrator, but no longer than 10 years from the date of grant, at an exercise price which is not less than the fair market value of the shares on the date of the grant. The compensation committee of the board of directors has authority over the granting of all stock awards, but may delegate that authority to the full board of directors or, subject to certain exceptions, the Chief Executive Officer or another executive officer of the Company. The Company accounts for stock awards in accordance with ASC 718, Compensation—Stock Compensation , which requires that the cost resulting from all share-based payment transactions be recognized as compensation cost over the vesting period based on the fair value of the instrument on the date of grant. Total non-cash stock-based compensation expense related to stock options and restricted stock for the years ended December 31, 2017, 2016 and 2015 is as follows: Years Ended December 31, 2017 2016 2015 Stock option compensation expense $ $ $ Restricted stock unit compensation expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total stock-based compensation expense $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total unrecognized stock-based compensation cost related to the stock options and restricted stock as of December 31, 2017 and 2016 is as follows: December 31, 2017 2016 Unrecognized stock option compensation expense $ $ Unrecognized restricted stock unit compensation expense ​ ​ ​ ​ ​ ​ ​ ​ Total unrecognized stock-based compensation expense $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2017, total unrecognized compensation cost related to non-vested stock options and restricted stock units is expected to be recognized over a weighted average period of 2.0 years and 1.9 years, respectively. Stock Options In 2017, 2016 and 2015 the Company granted stock options for 975,873, 1,265,046 and 668,362 common shares, respectively, to executive officers, directors and employees as compensation for service. The Company's outstanding stock options awarded to employees generally vest as follows: 50 percent after two years and the remaining 50 percent after three years. Stock options granted in 2017, 2016, and 2015 have a contractual term of ten years. The stock options are subject to forfeiture should these employees terminate their employment with the Company for certain reasons prior to vesting in their awards, or the occurrence of certain other events such as termination with cause. The exercise price of these stock options is based on the average market price of our common stock on the date of grant. Compensation expense is recorded on an accelerated basis over the awards' vesting periods. A summary of information related to stock options is as follows: Options Weighted Weighted Intrinsic Outstanding at December 31, 2014 $ Granted Exercised ) Lapsed (forfeited or cancelled) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding at December 31, 2015 Granted Exercised ) Lapsed (forfeited or cancelled) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding at December 31, 2016 Granted Exercised ) Lapsed (forfeited or cancelled) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding at December 31, 2017 $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercisable at December 31, 2017 $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The total intrinsic value of options exercised during 2017, 2016 and 2015 was $2.3 million, $0.8 million and $2.0 million, respectively. The weighted average fair value of the Company stock options granted in 2017, 2016 and 2015 was $7.78, $3.82 and $9.45, respectively. The fair value of awards granted in 2017, 2016 and 2015 was $7.6 million, $4.8 million and $6.3 million, respectively. The fair value was calculated using the Black-Scholes option-pricing model based on the market price at the grant date and the weighted average assumptions specific to the underlying options. The expected life used by the Company is based on the historical average life of stock option awards. The expected volatility assumption is based on the volatility of the Company's common stock from the same time period as the expected term of the stock options. The risk-free interest rate was selected based upon yields of U.S. Treasury issues with a term similar to the expected life of the stock options. Cash proceeds from the exercise of stock options for the years ended December 31, 2017, 2016, and 2015 was $1.7 million, $0.9 million and $0.9 million, respectively. The assumptions utilized for determining the fair value of stock options awarded during the years 2017, 2016 and 2015 are as follows: December 31, 2017 2016 2015 KapStone Stock Options Black-Scholes assumptions (weighted average): Expected volatility % % % Expected life (years) Risk-free interest rate % % % Expected dividend yield % % % Restricted Stock In 2017, 2016 and 2015, the Company granted restricted stock units of 475,446, 393,389 and 214,051 to executive officers, directors, and employees as compensation for service. Restricted stock units for executive officers and certain employees are restricted as to transferability until they generally vest three years from the grant date or upon a grantee of such restricted stock units attaining the age 65. Restricted stock units for directors are restricted as to transferability until they generally vest one year from the grant date or upon a grantee of such restricted stock units attaining the age of 65. These restricted stock units are subject to forfeiture should applicable employees terminate their employment with the Company for certain reasons prior to vesting in their awards, or the occurrence of certain other events. The value of these restricted stock units is based on the average market price of our common stock on the date of grant and compensation expense is recorded on a straight-line basis over the awards' vesting periods. The following table summarizes non-vested restricted stock amounts and activity: Units Weighted Average Outstanding at December 31, 2014 $ Granted Vested ) Forfeited ) ​ ​ ​ ​ ​ ​ ​ ​ Outstanding at December 31, 2015 $ Granted Vested ) Forfeited ) ​ ​ ​ ​ ​ ​ ​ ​ Outstanding at December 31, 2016 $ Granted Vested ) Forfeited ) ​ ​ ​ ​ ​ ​ ​ ​ Outstanding at December 31, 2017 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The fair value of awards granted in 2017, 2016 and 2015 was $10.7 million, $5.0 million and $6.5 million, respectively. The fair value of awards vested in 2017, 2016 and 2015 was $6.9 million, $3.2 million and $2.5 million, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies | |
Commitments and Contingencies | 16. Commitments and Contingencies Commercial Commitments The Company's commercial commitments as of December 31, 2017 represent commitments not recorded on the balance sheet, but potentially triggered by future events, and primarily consist of letters of credit to provide security for certain transactions and operating leases as requested by third parties. The Company had $14.1 million and $16.6 million of these commitments as of December 31, 2017 and 2016, respectively, with all expiring in 2018 if not renewed. No amounts have been drawn under these letters of credit. Operating Leases The Company leases space for 13 of its corrugated products manufacturing plants and approximately 60 of its distribution warehouses. Most of these leases include escalation clauses. Future minimum rentals under non-cancellable leases The following represents the Company's future minimum rental payments due under non-cancellable operating leases that have initial or remaining lease terms in excess of one year as of the following years Years Ended December 31, 2018 $ 2019 2020 2021 2022 Thereafter ​ ​ ​ ​ ​ Total $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The Company's rental expense under operating leases amounted to $51.0 million, $49.1 million and $36.0 million for the years ended December 31, 2017, 2016 and 2015, respectively. The increase in rental expense for the year ended December 31, 2016 reflects the full year impact of the inclusion of approximately 60 distribution centers assumed with the Victory acquisition on June 1, 2015. Purchase Obligations In conjunction with the 2008 Charleston Kraft Division acquisition, the Company entered into a 15-year fiber supply agreement. Pursuant to the agreement, expiring in 2023, the Company's North Charleston mill will purchase approximately 25 percent of its pine pulpwood and 60 percent of its saw timber requirements. The purchases are based on market prices and are accounted for as raw materials. The Company's North Charleston mill purchased approximately $29.8 million, $35.2 million and $39.1 million of materials in accordance with the agreement for years ended December 31, 2017, 2016 and 2015, respectively. The Company has contracted with a third party to produce wood chips for use at the Company's North Charleston and Roanoke Rapids paper mills for twenty years, with an annual purchase obligation of approximately $13.4 million. The Company has committed to purchase $27.5 million of natural gas through 2022. Union Contract Status At December 31, 2017, we had approximately 6,400 employees. Of these, approximately 2,400, or 38 percent, are represented by trade unions under collective bargaining agreements. The majority of our unionized employees are represented by the United Steel Workers union. Currently, there is a collective bargaining agreement in effect with respect to approximately 630 employees at the Longview paper mill through May 2024, approximately 560 employees at the North Charleston paper mill through June 2025 and approximately 310 employees at the Roanoke Rapids paper mill through August 2020. Contingent Consideration The Company's contingent consideration obligation relates to the Victory acquisition that was consummated on June 1, 2015. As of December 31, 2017, the Company is obligated to pay an additional $20.7 million of contingent consideration to the former owners of Victory based on achieving certain financial performance criteria for the thirty month period following the closing. Legal claims The Company and its subsidiaries are from time to time subject to various administrative and legal investigations, claims and proceedings incidental to our business, including environmental and occupational, health and safety matters, labor and employment matters, personal injury and property damage claims, contractual, commercial and other disputes and taxes. We establish reserves for investigations, claims and proceedings when it is probable that liabilities exist and we can reasonably estimate the amount of such liabilities (including any losses, costs and expenses). We also maintain insurance that may limit our financial exposure for defense costs, as well as liability, if any, for claims covered by the insurance (subject also to deductibles and self-insurance amounts). Any investigation, claim or proceeding has an element of uncertainty, and we cannot predict or assure the outcome of any investigation, claim or proceeding involving the Company or any of its subsidiaries, particularly those described below that cannot be assessed due to their preliminary nature. It is possible that any of the investigations, claims and proceedings against the Company or its subsidiaries, including those described below, could be decided unfavorably against the Company or any of its subsidiaries involved in such matters and could also result in losses, costs or expenses in excess of any reserve we have established. Accordingly, it is possible that an adverse outcome from any investigation, claim or proceeding (including associated penalties, costs and expenses) could exceed any reserve we may have accrued in an amount that could have a material adverse effect on our consolidated results of operations, cash flows and financial condition. The Company's subsidiary, Longview is a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") with respect to the Lower Duwamish Waterway Superfund Site in the State of Washington (the "Site"). The U.S. Environmental Protection Agency ("EPA") asserts that the Site is contaminated as a result of discharges from various businesses and government entities located along the Lower Duwamish Waterway, including a corrugated converting plant owned and operated by Longview. In November 2014, the EPA issued a Record of Decision ("ROD") for the Site. The ROD includes a selected remedy for the Site. In the ROD, EPA states that the total estimated net present value costs (discounted at 2.3 percent) for the selected remedy are $342 million, although many uncertainties remain that could result in increased remedial costs. This estimate does not include actual costs already incurred to date for remedial investigation and feasibility studies or potential natural resource damage claims by parties allegedly affected by the contamination at the Site. The Company has received notice from the Elliot Bay Trustee Council regarding the Company's potential liability for natural resource damages arising from the Site. Neither the Company nor Longview has received a specific monetary demand regarding its potential liability for the Site. In addition, Longview is a participant with approximately 45 other potentially responsible parties in a non-judicial allocation process with respect to the Site. Pursuant to the non-judicial allocation process, Longview and other participating parties will seek to allocate certain costs, including but not limited to the costs necessary to perform the work under the ROD. The non-judicial allocation process is not scheduled to be completed until 2020. Based upon the information available to the Company at this time, the Company cannot reasonably estimate its potential liability for this Site, including any liability for the current or any future third-party claims associated with the Site. In January 2017, the Company received a letter from the state of Washington Department of Ecology ("WDOE") contending that the Company is, along with several other companies, responsible for investigation and cleanup of an allegedly contaminated site where the named companies, including Longview, may store or have stored petroleum products. The letter concerns the possible release of petroleum products into the environment. In 1998, Longview (before it was acquired by the Company) and certain other companies who owned or operated underground storage tanks and pipes entered into an agreement for investigating and remediating the area independently of (but in consultation with) the WDOE. Upon expiration of the 1998 agreement, groundwater monitoring continued. In June 2017, the WDOE further notified the Company that WDOE determined Longview is a potentially liable party related to the release or threatened release of petroleum at the site. The Company has responded to the notices and has been engaged in discussions with the WDOE and other potentially liable parties. Based upon the information available to the Company at this time, the Company cannot reasonably estimate its potential liability for this matter. |
Net income per share
Net income per share | 12 Months Ended |
Dec. 31, 2017 | |
Net income per share | |
Net income per share | 17. Net income per share The Company's basic and diluted net income per share is calculated as follows: Years Ended December 31, 2017 2016 2015 Net income $ $ $ Weighted-average number of common shares for basic net income per share Incremental effect of dilutive common stock equivalents: Unexercised stock options Unvested restricted stock awards ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average number of shares for diluted net income per share ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income per share—basic $ $ $ Net income per share—diluted $ $ $ A total of 1,670,288 and 1,107,999 weighted average unexercised stock options were outstanding at December 31, 2017 and 2016, respectively, but were not included in the computation of diluted net income per share because the awards were anti-dilutive. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2017 | |
Segment Information | |
Segment Information | 18. Segment Information Paper and Packaging: This segment manufactures and sells a wide variety of container board, corrugated products, and specialty paper for industrial and consumer markets. Distribution: Through Victory, a North American distributor of packaging materials, with approximately 60 distribution centers located in the United States, Mexico and Canada, the Company provides packaging materials and related products to a wide variety of customers. Each segment's operating income is measured on operating profits before foreign exchange losses, equity method investments income and interest expense, net. An analysis of operations by segment is as follows: Net Sales Year Ended December 31, 2017 Trade Inter- Total Operating Depreciation Capital Total Paper and Packaging(a): Containerboard / Corrugated products $ $ $ Specialty paper — Other — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Paper and Packaging $ $ $ $ $ $ $ Distribution — Corporate — — — ) Intersegment eliminations — ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ $ — $ $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Sales Year Ended December 31, 2016 Trade Inter- Total Operating Depreciation Capital Total Paper and Packaging(a): Containerboard / Corrugated products $ $ $ Specialty paper — Other — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Paper and Packaging $ $ $ $ $ $ $ Distribution — Corporate — — — ) Intersegment eliminations — ) ) — — — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ $ — $ $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Sales Year Ended December 31, 2015 Trade Inter- Total Operating Depreciation Capital Total Paper and Packaging: Containerboard / Corrugated products $ $ $ Specialty paper — Other — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Paper and Packaging $ $ $ $ $ $ $ Distribution(b) — Corporate — — — ) Intersegment eliminations — ) ) — — — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ $ — $ $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (a) The Paper and Packaging segment income excludes $1.8 million and $0.5 million of income from equity method investments for the years ended December 31, 2017 and 2016, respectively. (b) Results for the year ended December 31, 2015 includes Victory for the period June 1 through December 31, 2015 and represents the entire Distribution segment. Years Ended December 31, Net sales by location: 2017 2016 2015 To customers located in the United States $ $ $ Foreign and export sales to foreign based customers ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ No foreign country accounted for more than 10 percent of consolidated net sales in 2017, 2016, or 2015. Substantially all long-lived assets are located within the United States. |
Quarterly Financial Information
Quarterly Financial Information (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information (Unaudited) | |
Quarterly Financial Information (Unaudited) | 19. Quarterly Financial Information (Unaudited) The following tables set forth the historical unaudited quarterly financial data for 2017 and 2016. The information for each of these periods has been prepared on the same basis as the audited consolidated financial statements and, in our opinion, reflects all adjustments consisting only of normal recurring adjustments necessary to present fairly our financial results. Operating results for previous periods do not necessarily indicate results that may be achieved in any future period. Quarters Ended March 31, June 30, September 30, December 31, Fiscal 2017: Net sales $ $ $ $ Gross profit(1) $ $ $ $ Operating income(2) $ $ $ $ Net income(3) $ $ $ $ Net income per share: Basic $ $ $ $ Diluted $ $ $ $ (1) Gross profit is defined as net sales less cost of sales, depreciation and amortization, freight, and distribution expenses. Gross profit includes the following: • planned maintenance outage costs of $6.2 million, $17.6 million, $13.0 million and $10.0 million in the quarters ended March 31, June 30, September 30 and December 31, 2017, respectively; • California plant closure costs of $8.9 million and $1.3 million in the quarters ended September 30 and December 31, 2017, respectively; • union contract ratification costs of $5.0 million and $0.9 million in the quarters ended March 31 and September 30, 2017, respectively; and • Ontario, California plant operating expenses of $1.3 million, $1.0 million, $1.0 million and $1.1 million in the quarters ended March 31, June 30, September 30, and December 31, 2017, respectively. (2) Operating income includes Victory contingent consideration expense (income) of $2.5 million, $1.1 million, $(3.9) million and $6.1 million in the quarters ended March 31, June 30, September 30 and December 31, 2017, respectively. (3) For the quarter ended December 31, 2017, net income includes a $144.4 million provisional income tax benefit due to the passage of the Tax Act on December 22, 2017. Quarters Ended March 31, June 30, September 30, December 31, Fiscal 2016: Net sales(1) $ $ $ $ Gross profit(2) $ $ $ $ Operating income $ $ $ $ Net income $ $ $ $ Net income per share: Basic $ $ $ $ Diluted $ $ $ $ (1) Gross profit is defined as net sales less cost of sales, depreciation and amortization, freight, and distribution expenses. Gross profit includes planned maintenance outage costs of $6.6 million, $19.0 million, $3.8 million and $3.2 million in the quarters ended March 31, June 30, September 30 and December 31, 2016, respectively and $6.4 million of costs due to Hurricane Matthew in the quarter ended December 31, 2016. (2) Operating income in the quarter ended December 31, 2016, includes a $6.4 million charge for withdrawing from a GCIU multiemployer pension plan. Note: The sum of the quarters may not equal the total of the respective years' earnings per share on either a basic or diluted basis due to changes in the weighted average shares outstanding throughout the year. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events | |
Subsequent Events | 20. Subsequent Events On January 29, 2018, the Company signed a definitive agreement to be acquired by WestRock for $35.00 per share plus the assumption of long-term debt for a total purchase price of approximately $4.9 billion. The sale is subject to customary closing conditions and approval of the Company's stockholders. If approved, the sale is expected to close during the quarter ending September 30, 2018. On February 1, 2018, the Company signed a contract to sell land and building in Oakland, California for $14.7 million after fees, taxes and commissions. In conjunction with this sale, the Company will record a gain of $7.5 million in the first quarter of 2018. |
Significant Accounting Polici28
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Significant Accounting Policies | |
Revenue Recognition | Revenue Recognition —Revenue is recognized when the customer takes title and assumes the risks and rewards of ownership, when the price is fixed and determinable and when collectability is reasonably assured. Sales with terms f.o.b. (free on board) shipping point are recognized at the time of shipment. For sales transactions with terms f.o.b. destination, revenue is recorded when the product is delivered to the customer's site and when title and risk of loss are transferred. Sales on consignment are recognized in revenue at the earlier of the month that the goods are consumed or after a period of time subsequent to receipt by the customer as specified by contract terms, provided all other revenue recognition criteria is met. Incentive rebates are typically paid in cash and are netted against revenue on an accrual basis as qualifying purchases are made by the customer to earn and thereby retain the rebate. During 2017, 2016, and 2015, customer rebates totaled $35.4 million, $34.3 million and $32.7 million, respectively. Freight charged to customers is recognized in net sales. |
Cost of Sales | Cost of Sales —Cost of sales includes material, labor and overhead costs, but excludes depreciation of plant and equipment and amortization. Proceeds received from the sale of by-products generated from the paper and packaging manufacturing process are reflected as a reduction to cost of sales. Income from sales of by-products is derived primarily from the sale of tall oil, hardwood, turpentine and waste bales to third parties. During 2017, 2016 and 2015 cost of sales was reduced by $40.9 million, $32.6 million and $36.1 million, respectively, for these by-product sales. |
Freight and Distribution Expenses | Freight and Distribution Expenses —Freight and distribution includes shipping and handling costs for product sold to customers and is excluded from cost of sales. |
Planned Maintenance Outage Costs | Planned Maintenance Outage Costs —The Company recognizes the cost of maintenance activities in the period in which they occur under the direct expense method in accordance with ASC 360, Property, Plant and Equipment . The Company performs planned maintenance outages at its paper mills. Costs of approximately $46.8 million, $32.6 million and $37.4 million related to planned maintenance outages are included in cost of sales for the years ended December 31, 2017, 2016 and 2015, respectively. |
Net Income per Common Share | Net Income per Common Share —Basic net income per share is based on the weighted average number of common shares outstanding during the period. Diluted income per share reflects the potential dilution assuming common shares were issued for the exercise of outstanding in-the-money stock options and unvested restricted stock awards and assuming the proceeds thereof were used to purchase common shares at the average market price during the period such awards were outstanding and inclusion of such shares is dilutive to net income per share. |
Concentrations of Risk | Concentrations of Risk —Financial instruments that potentially expose the Company to concentrations of credit and market risk consist primarily of cash and cash equivalents and trade accounts receivable from sales of product to third parties. When excess cash and cash equivalents are invested they are placed in investment grade commercial paper. No customer accounted for more than 10 percent of consolidated net sales in 2017, 2016 or 2015. In order to mitigate credit risk, the Company obtains letters of credit for certain export customers. For the years ended December 31, 2017, 2016 and 2015, net sales to U.S. based customers were 86 percent, 83 percent and 82 percent, respectively, of consolidated net sales. Net sales to foreign based customers during 2017, 2016 and 2015 were 14 percent, 17 percent and 18 percent, respectively, of consolidated net sales. See Note 18 "Segment Information". The Company establishes its allowance for doubtful accounts based upon factors mainly surrounding the credit risks of specific customers and other related information. Once an account is deemed uncollectible, it is written off. At December 31, 2017, 2016 and 2015 changes to the allowance for doubtful accounts are summarized as follows ($000's): Year ended: Balance at Acquisition Charged to Write-offs Balance at December 31, 2017 $ — $ $ ) $ December 31, 2016 $ $ — $ $ ) $ December 31, 2015 $ $ $ $ ) $ |
Foreign Currency Transactions | Foreign Currency Transactions —The Company invoices certain European customers in Euros and Mexican customers in Pesos. Outstanding amounts for such transactions are remeasured into U.S. dollars at the year-end rate of exchange and statements of comprehensive income items are remeasured at the weighted average exchange rates for the period. Gains and losses arising from these transactions are included in foreign exchange gains / (losses) within the Consolidated Statements of Comprehensive Income. |
Cash and Cash Equivalents | Cash and Cash Equivalents —Cash equivalents include all highly liquid investments with maturities of three months or less when purchased. |
Fair value of Financial Instruments | Fair value of Financial Instruments —The Company's cash and cash equivalents, trade accounts receivables, pension assets, contingent consideration liability and accounts payables are financial assets and liabilities with carrying values that approximate fair value. The Company's variable rate term loans are financial liabilities with fair values that approximate their carrying value of $1.4 billion. See Note 10 "Short-term Borrowings and Long-term debt". |
Inventories | Inventories —Inventories are valued at the lower of cost or market; whereby cost includes all direct and indirect materials, labor and manufacturing overhead, less by-product recoveries. Costs of raw materials, work-in-process, and finished goods are determined using the first-in, first-out method for KapStone locations with the exception of the Longview Paper mill and the seven western corrugated products manufacturing plants, which are on the last-in, first-out method. In total, these locations represent 18 percent and 22 percent of consolidated inventories as of December 31, 2017 and 2016, respectively. Replacement parts and other supplies are stated using the average cost method. Purchases and sales of inventory with the same counterparty that are entered into in contemplation of one another are combined and recorded as exchanges of inventory measured at the book value of the item exchanged. In conjunction with the Victory acquisition, KapStone acquired inventories which were recorded at fair value as of the acquisition date. The cost for the Victory inventories is stated at the lower cost or market and is determined under the first-in, first-out method. |
Plant, Property, and Equipment, net | Plant, Property, and Equipment, net —Plant, property, and equipment are stated at cost less accumulated depreciation. Property, plant, and equipment acquired in acquisitions were recorded at fair value on the date of acquisition. Depreciation is computed using the straight-line method over the assets' estimated useful lives. Assets under capital leases are depreciated on a straight-line method over the term of the lease or the useful life, if shorter. The range of estimated useful lives is as follows: Years Land improvements 3 - 25 Buildings 11 - 40 Machinery and equipment 3 - 30 Furniture and office equipment 5 - 10 Computer hardware and software 3 - 5 The Company accounts for costs incurred for the development of software for internal use in accordance with ASC 350 Intangibles—Goodwill and Other . This standard requires the capitalization of certain costs incurred in connection with developing or obtaining internal use software. |
Leases | Leases —The Company assesses lease classification as either capital or operating at lease inception or upon modification. We lease 13 of our corrugated products manufacturing plants and most distribution centers, as well as other property and equipment, under operating leases. For purposes of determining straight-line rent expense, the lease term is calculated from the date of possession of the facility, including any periods of free rent and any renewal option periods that are reasonably assured of being exercised. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets —Goodwill is the excess of purchase price over the fair value of the net assets of businesses acquired. On an annual basis and in accordance with ASC 350, Intangibles—Goodwill and Other , the Company evaluates goodwill using a quantitative or qualitative assessment to determine whether it is more likely than not that fair value of any reporting unit is less than it carrying amount. If the Company determines that the fair value of the reporting unit may be less than its carrying amount, the Company evaluates goodwill using a two-step impairment test. Otherwise, the Company concludes that no impairment is indicated and does not perform the two-step impairment test. If the qualitative assessment concludes that the two-step impairment test is necessary, the first step is to compare the book value of the reporting unit, including goodwill, with its fair value. A reporting unit is an operating segment or one level below an operating segment (referred to as a "component"). A component is considered a reporting unit for purposes of goodwill testing if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component. The Company has identified three reporting units; Western Paper and Packaging Operations, Eastern Paper and Packaging Operations and Distribution. The fair value is estimated based on a market approach and a discounted cash flow analysis, also known as the income approach, and is reconciled to the current market capitalization for the Company to ensure that the implied control premium is reasonable. A discounted cash flow analysis requires the Company to make various judgmental assumptions, including assumptions about future cash flows, growth rates and discount rates. The assumptions about future cash flows and growth rates are based on the forecast and long-term business plans of each reporting unit. Discount rate assumptions are considered Level 3 inputs in the fair value hierarchy defined in ASC 820, Fair Value Measurements and Discounts . Management also considers market-multiple information to corroborate the fair value conclusions reached using the discounted cash flow analysis. If necessary, the second step of the goodwill impairment test compares the implied fair value of the reporting unit's goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. The Company's goodwill impairment analysis is performed annually at the beginning of the fourth quarter. The Company performed a quantitative assessment and it did not result in an impairment charge for any periods presented. Intangible assets acquired in a business combination or asset purchase are initially valued at the fair market value using generally accepted valuation methods appropriate for the type of the intangible asset. Definite-lived intangible assets are amortized over their estimated useful lives and are reviewed for impairment if indicators of impairment arise. The evaluation of the impairment is based upon a comparison of the carrying amount of the intangible asset to the estimated future undiscounted cash flows expected to be generated by the asset. If the estimated undiscounted future cash flows are less than the carrying amount of the assets, the asset is considered to be impaired. If impaired, the intangible asset is written down to estimated fair market value. |
Pension and Postretirement Benefits | Pension and Postretirement Benefits —The Company provides pension and postretirement benefits to certain employees and accounts for these benefits in accordance with ASC 715, Compensation—Retirement Benefits . For financial reporting purposes, long-term assumptions are developed through consultations with actuaries. Such assumptions include the expected long-term rate of return on plan assets, discount rates, health care trend rates and mortality rates. The discount rate for the current year is based on interest rates for long-term high quality bonds. The amount of unrecognized actuarial gains and losses recognized in the current year's operations is based on amortizing the unrecognized gains or losses for each plan that exceeds the larger of 10 percent of the projected benefit obligation or the fair value of plan assets, also known as the corridor. The amount of unrecognized gain or loss that exceeds the corridor is amortized over the average future service of the plan participants. While we believe that our assumptions are appropriate, significant differences in our actual experience or significant changes in our assumptions may materially affect our pension and other postretirement benefit obligations and our future expense. |
Income Taxes | Income Taxes —The Company accounts for income taxes under the liability method in accordance with ASC 740, Income Taxes . Accordingly, deferred income taxes are provided for the future tax consequences attributable to differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. Deferred tax assets and liabilities are measured using tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is established when necessary to reduce deferred tax assets to the amount that is more likely than not to be realized. The Company recognizes the benefit of tax positions when it is more likely than not to be sustained on its technical merits. The Company records interest and penalties on unrecognized tax benefits in the provision for income taxes. |
Amortization of Debt Issuance Costs | Amortization of Debt Issuance Costs —The Company capitalizes costs incurred in connection with borrowings or establishment of credit facilities. These costs are amortized over the life of the borrowing or life of the credit facility using the effective interest method. For the years ended December 31, 2017, 2016 and 2015, $4.8 million, $4.8 million and $5.5 million, respectively, of debt issuance costs have been amortized and recognized within interest expense, net. In 2017, 2016 and 2015, the Company recorded losses on debt extinguishment of $1.3 million, $0.7 million and $1.2 million, respectively, due to voluntary prepayments totaling $155.0 million, $64.7 million and $103.5 million, respectively, on the term loans under the Company's senior secured credit facility. |
Stock Based Compensation Expense | Stock Based Compensation Expense —The Company accounts for employee stock and stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation. Accordingly, compensation expense for the fair value of stock options, as determined on the date of grant, is recorded on an accelerated basis over the awards' vesting periods. The compensation expense for the fair value of restricted stock units, as determined on the date of grant, is recorded on a straight-line basis over the awards' vesting periods. Forfeitures are estimated on the date of grant and revised if actual or expected forfeiture activity differs materially from the original estimate. |
Segment Information | Segment Information —The Company reports results in two reportable segments: Paper and Packaging and Distribution. These segments represent distinct businesses that are managed separately because of differing products and services. Each of these businesses requires distinct operating and marketing strategies. The Paper and Packaging segment produces containerboard, corrugated products and specialty paper which are sold to customers who convert our products into end-market finished products or internally to corrugated products manufacturing plants that produce a wide variety of products ranging from basic corrugated shipping containers to specialized packaging. The Distribution segment, which operates under the Victory trade name, provides its customers comprehensive packaging solutions and services and distributes corrugated packaging materials and other specialty packaging products, which include stretch film, void fill, carton sealing tape and other specialty tapes. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standard's Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers". The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The guidance in this update supersedes the revenue recognition requirements in Accounting Standards Codification ("ASC") Topic 605, "Revenue Recognition", and most industry-specific guidance throughout the Industry Topics of the Codification. Additionally, this update supersedes some cost guidance included in Subtopic 605-35, "Revenue Recognition—Construction-Type and Production-Type Contracts". The standard will be effective for public entities for annual reporting periods beginning after December 15, 2017 and interim periods therein. Additionally the FASB approved the option to early adopt up to the original effective date (fiscal years beginning after December 15, 2016). The Company did not elect to early adopt this standard. The Company has determined that it will adopt this standard utilizing the modified retrospective method, which will result in the recognition of the cumulative effect of initially applying the standard (if any) as an adjustment to opening retained earnings for the fiscal year beginning January 1, 2018. Our implementation team, consisting of senior leadership from finance, legal, sales and operations, reported its progress to management and to the audit committee of our board of directors on a periodic basis. We have completed the significant contract review phase of the assessment and have made all necessary updates to our systems and control environment to support additional disclosures under the new standard. We have also made necessary changes to policies and procedures. During our assessment, the Company considered whether the adoption would require a transition from point-in-time revenue recognition to an over-time approach for products produced by the Company without an alternative use, which would result in acceleration of revenue. The Company has determined that based on its enforceable rights included in its contracts or prevailing terms and conditions, an enforceable right of payment that includes a reasonable profit throughout the duration of the contract does not exist. Therefore, the Company will remain at a point-in-time approach and record revenue at the point control transfers to the customer. We do not expect to recognize a cumulative adjustment to opening retained earnings under the modified retrospective approach and do not expect that the adoption of this standard to have a material effect on the Company's financial position or results of operations. We anticipate the primary impact to be the additional required disclosures around revenue recognition in the notes to the consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, "Leases". This guidance revises existing practice related to accounting for leases under ASC Topic 840 Leases for both lessees and lessors. The new guidance in ASU 2016-02 requires lessees to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The lease liability will be equal to the present value of lease payments and the right-of-use asset will be based on the lease liability, subject to adjustment such as for initial direct costs. For income statement purposes, the new standard retains a dual model similar to ASC 840, requiring leases to be classified as either operating or finance. For lessees, operating leases will result in straight-line expense (similar to current accounting by lessees for operating leases under ASC 840), while finance leases will result in a front-loaded expense pattern (similar to current accounting by lessees for capital leases under ASC 840). While the new standard maintains similar accounting for lessors as under ASC 840, it reflects updates to, among other things, align with certain changes to the lessee model. The guidance is effective for public entities for fiscal years beginning after December 15, 2018, including interim periods within those years. Early adoption is permitted for all entities. The Company does have a significant number of leases for both property and equipment. As such, the Company expects that there will be a material impact on our financial position and disclosures upon the adoption of ASU 2016-02. Our implementation team, consisting of senior leadership from finance, legal, IT and operations, reports its progress to management and to the audit committee of our board of directors on a periodic basis. We are in the process of abstracting data from existing leases and are assessing the need for new or updated systems to support additional disclosures under the new standard. The Company will provide additional disclosure as the implementation progresses. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments. This standard replaces the incurred loss methodology previously employed to measure credit losses for most financial assets and requires the use of a forward-looking expected loss model. Current accounting delays the recognition of credit losses until it is probable a loss has been incurred, while the update will require financial assets to be measured at amortized costs less a reserve and equal to the net amount expected to be collected. This standard will be effective for annual periods beginning after December 15, 2019, including interim periods within that reporting period, and early application is permitted. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments", which clarifies the treatment of several cash flow categories. In addition, ASU 2016-15 clarifies that when cash receipts and cash payments have aspects of more than one class of cash flows and cannot be separated, classification will depend on the predominant source or use. This update is effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted, including adoption in an interim period. The Company is currently evaluating the impact that the adoption of ASU 2016-15 will have on our cash flows and related disclosures. In January 2017, the FASB issued ASU 2017-04, "Simplifying the Test for Goodwill Impairment", which amends the guidance in ASC Topic 350, "Intangibles-Goodwill and Other". The ASU eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit's carrying amount over its fair value. The ASU is effective for annual and interim impairment tests performed in periods beginning after December 15, 2019. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The ASU will be applied prospectively. The Company currently does not expect that the adoption of these provisions will have a material effect on our consolidated financial statements and related disclosures, but will simplify the measurement of any impairment loss should goodwill be impaired in the future. In January 2017, the FASB issued ASU 2017-01, "Clarifying the Definition of a Business", which amends the guidance in ASC Topic 805, "Business Combinations". The ASU changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. Under the new guidance, an entity first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set is not a business. If it is not met, the entity then evaluates whether the set meets the requirements that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. The ASU defines an output as "the result of inputs and processes applied to those inputs that provide goods or services to customers, investment income (such as dividends or interest), or other revenues." The ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual periods, and early adoption is permitted. The ASU will be applied prospectively to any transactions occurring within the period of adoption. The Company currently does not expect that the adoption of these provisions will have a material effect on our consolidated financial statements. In March, 2017, the FASB issued ASU No. 2017-07, "Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." This ASU applies to all employers that offer to their employees defined benefit pension plans, other postretirement benefit plans, or other types of benefits accounted for under Topic 715, Compensation—Retirement Benefits. The ASU requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are used to present the other components of net benefit cost, that line item or items must be appropriately described. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. The ASU also allows only the service cost component to be eligible for capitalization when applicable (e.g., as a cost of internally manufactured inventory or a self-constructed asset). This ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance. The Company is currently evaluating the effect that ASU No. 2017-07 will have on its consolidated financial statements and related disclosures. In May 2017, the FASB issued ASU 2017-09 Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, to clarify which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This ASU is effective for annual periods beginning after December 15, 2017. This ASU will be applied prospectively when changes to the terms or conditions of a share-based payment award occur. The Company is currently evaluating the effect that ASU No. 2017-07 will have on its consolidated financial statements and related disclosures. In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02). Under existing U.S. GAAP, the effects of changes in tax rates and laws on deferred tax balances are recorded as a component of income tax expense in the period in which the law was enacted. When deferred tax balances related to items originally recorded in accumulated other comprehensive income are adjusted, certain tax effects become stranded in accumulated other comprehensive income. The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the 2017 Tax Cuts and Jobs Act. The amendments in this ASU also require certain disclosures about stranded tax effects. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption in any period is permitted. The Company's provisional adjustments recorded in 2017 to account for the impact of the 2017 Tax Cuts and Jobs Act resulted in stranded tax effects. The Company is currently evaluating the timing and impact of adopting ASU 2018-02. |
Significant Accounting Polici29
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Significant Accounting Policies | |
Schedule of changes to the allowance for doubtful accounts | At December 31, 2017, 2016 and 2015 changes to the allowance for doubtful accounts are summarized as follows ($000's): Year ended: Balance at Acquisition Charged to Write-offs Balance at December 31, 2017 $ — $ $ ) $ December 31, 2016 $ $ — $ $ ) $ December 31, 2015 $ $ $ $ ) $ |
Schedule of range of estimated useful lives | Years Land improvements 3 - 25 Buildings 11 - 40 Machinery and equipment 3 - 30 Furniture and office equipment 5 - 10 Computer hardware and software 3 - 5 |
Victory Acquisition (Tables)
Victory Acquisition (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Victory | |
Victory Acquisition | |
Schedule of unaudited pro forma data | Year Ended December 31, Net sales $ Net income $ Net income per share—diluted $ |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventories | |
Schedule of Inventories | December 31, 2017 2016 Raw materials $ $ Work in process Finished goods Replacement parts and supplies ​ ​ ​ ​ ​ ​ ​ ​ Inventory at FIFO costs LIFO inventory reserves ) ) ​ ​ ​ ​ ​ ​ ​ ​ Inventories $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Plant, Property and Equipment32
Plant, Property and Equipment, net (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Plant, Property and Equipment, net | |
Schedule of plant, property and equipment, net | December 31, 2017 2016 Land and land improvements $ $ Buildings and leasehold improvements Machinery and equipment Construction-in-process ​ ​ ​ ​ ​ ​ ​ ​ Less accumulated depreciation and amortization ​ ​ ​ ​ ​ ​ ​ ​ Plant, property, and equipment, net $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Goodwill and Other Intangible33
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Other Intangible Assets | |
Schedule of changes in goodwill | Paper Distribution Total Balances at December 31, 2015 $ $ $ CFB acquisition — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balances at December 31, 2016 $ $ $ API acquisition — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balances at December 31, 2017 $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of changes in other intangible assets | Intangible Balances at December 31, 2015 $ CFB acquisition Other Amortization expense ) ​ ​ ​ ​ ​ Balances at December 31, 2016 $ API acquisition Amortization expense ) ​ ​ ​ ​ ​ Balances at December 31, 2017 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of intangible assets other than goodwill | December 31, 2017 December 31, 2016 Gross Accumulated Net Gross Accumulated Net Definite-lived trademarks $ $ ) $ $ $ ) $ Customer lists and relationships ) ) Lease, contracts and other ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ ) $ $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accrued Expenses | |
Schedule of accrued expenses | December 31, 2017 2016 Real and property taxes $ $ Energy costs Capital spending Customer rebates Worker's compensation Current postretirement obligation Freight Contingent consideration — Other accruals ​ ​ ​ ​ ​ ​ ​ ​ Accrued expenses $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Short-term Borrowings and Lon35
Short-term Borrowings and Long-term Debt (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Short-term Borrowings and Long-term Debt | |
Schedule of long-term debt | December 31, 2017 2016 Term loan A-1 under Credit Agreement with interest payable monthly at LIBOR of 1.57% plus 1.75% at December 31, 2017 $ $ Term loan A-2 under Credit Agreement with interest payable monthly at LIBOR of 1.57% plus 1.875% at December 31, 2017 Receivable Credit Facility with interest payable monthly at LIBOR of 1.56% plus 0.75% at December 31, 2017 ​ ​ ​ ​ ​ ​ ​ ​ Total long-term debt Less unamortized debt issuance costs ) ) ​ ​ ​ ​ ​ ​ ​ ​ Long-term debt, net of debt issuance costs $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of annual principal repayments, paid quarterly | 2018 $ — 2019 — 2020 2021 — 2022 ​ ​ ​ ​ ​ Total $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Pension and Postretirement Be36
Pension and Postretirement Benefits (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Pension and Postretirement Benefits | |
Schedule of changes in benefit obligations and Plan assets | Pension Benefits Other Benefits 2017 2016 2017 2016 Change in Benefit Obligation Benefit obligation at beginning of year $ $ $ $ Service cost Interest cost Actuarial loss (gain) ) ) ) Participant contributions — — Benefits paid ) ) ) ) Plan amendment — — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Benefit obligation at end of year $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in Plan Assets Fair value of plan assets at beginning of year $ $ $ — $ — Actual return on plan assets — — Employer contributions — — Participant contributions — — Benefits paid ) ) ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value of plan assets at end of year $ $ $ — $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of funded status and amounts recognized in Consolidated Balance Sheets | Pension Benefits Other Benefits 2017 2016 2017 2016 Funded Status at End of Year $ ) $ ) $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amounts Recognized in Consolidated Balance Sheets: Accrued expenses $ — $ — $ ) $ ) Pension and postretirement benefits ) ) ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net amount recognized $ ) $ ) $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amounts Recognized in Accumulated Other Comprehensive Income / (Loss)—(Pre-tax) Total net actuarial (gain) loss $ $ $ ) $ ) Prior service cost ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-Average Discount Rate Assumption used to Determine Projected Benefit Obligations at December 31, 2017 and 2016 % % % % |
Schedule of pension and other postretirement benefit income | Pension Benefits Other Benefits 2017 2016 2015 2017 2016 2015 Service cost $ $ $ $ $ $ Interest cost Expected return on plan assets ) ) ) — — — Amortization of prior service cost (benefit) ) ) ) Amortization of net loss (gain) ) ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Benefit income $ ) $ ) $ ) $ ) $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of weighted-average actuarial assumptions used to determine benefit costs | Pension Benefits Other Benefits 2017 2016 2015 2017 2016 2015 Discount rate % % % % % % Long-term rate of return on plan assets % % % — — — |
Schedule of assumed health care cost trend rates postretirement benefits plans | Plans 2018 Health care cost trend rate assumed for next year % Rate to which the cost trend rate is assumed to decline (the ultimate rate) % Year the rate reaches the ultimate trend rate |
Summary of the effect of a one percentage point increase or decrease in the assumed health care cost trend rates | The effect of a one percentage point increase or decrease in the assumed health care cost trend rates at December 31, 2017 is summarized below: Change in Health Care Minus 1% Plus 1% Service and interest cost $ ) $ Accumulated benefit obligation $ ) $ |
Schedule of other changes in Plan assets and benefit obligations recognized in accumulated other comprehensive loss | Pension Benefits Other Benefits 2017 2016 2017 2016 Net actuarial (gain) loss $ ) $ $ ) $ ) Prior service cost / (credit) — — — Amortization of prior service (cost) benefit ) ) Amortization of net gain (loss) ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net amount recognized before tax $ ) $ ) $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of amounts in accumulated other comprehensive loss expected to be recognized as components of net pension expense | The amounts in accumulated other comprehensive loss expected to be recognized as components of net pension expense during 2018 are as follows: Pension Other Prior service cost (benefit) $ $ ) Net actuarial loss / (gain) $ $ ) |
Summary of fair value of Plan assets by level within the fair value hierarchy | The fair value of Plan assets, summarized by level within the fair value hierarchy as of December 31, 2017 was as follows: Level 1 Level 2 Level 3 Total Cash and cash equivalents $ $ — $ — $ Equity securities: Common stock — — Domestic equity mutual funds — — International equity mutual funds — — U.S. large cap collective funds — — Fixed income: Corporate bonds and notes — U.S. Government securities — Limited partnership investments — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Assets measured at Net Asset Value Hedge funds: Fixed income funds Equity funds ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets at fair value $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The fair value of Plan assets, summarized by level within the fair value hierarchy as of December 31, 2016 was as follows: Level 1 Level 2 Level 3 Total Cash and cash equivalents $ $ — $ — $ Equity securities: Common stock — — Domestic equity mutual funds — — International equity mutual funds — — U.S. large cap collective funds — — Fixed income: Corporate bonds and notes U.S. Government securities Limited partnership investments — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Assets measured at Net Asset Value Hedge funds: Fixed income funds Equity funds ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets at fair value $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Summary of changes in the fair value of the Plan's level three assets | The table below resents a summary of changes in the fair value of the Plans' level three assets as of December 31, 2017: Year ended December 31, 2017 Limited Total Balance, beginning of year $ $ Transfers into Level 3 — — Transfers out of Level 3 — — Total gains or (losses): Included in changes in net assets Included in other comprehensive income — — Purchases, issuances, sales, and settlements: Purchases Issuances — — Sales ) ) Settlements — — ​ ​ ​ ​ ​ ​ ​ ​ Balance, end of year $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The amount of total gains or losses for the year included in changes in net assets attributed to the change in unrealized gains or losses relating to assets still held at the reporting date $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of the Company's pension plan weighted-average asset allocations and target asset allocations by asset category | 2017 2016 Target Fixed income % % % Equity securities % % % Cash % % — % Other % % — % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total % % % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of estimated future gross benefit payments | Pension Other 2018 $ $ 2019 2020 2021 2022 Succeeding 5 years |
Income taxes (Tables)
Income taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income taxes | |
Schedule of provision for income taxes | Years Ended December 31, 2017 2016 2015 Income before provision (benefit) for income taxes: United States $ $ $ Foreign ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision (benefit) for income taxes: Current: US federal $ $ $ State and local Foreign ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total current ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred: US federal ) ) State and local ) Foreign — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total deferred ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total United States ) Foreign ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total provision (benefit) for income taxes $ ) $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of effective tax rate difference from the statutory federal income tax rate | Years Ended December 31, 2017 2016 2015 Statutory income tax rate % % % State income taxes, net of federal income tax benefit % % % Domestic manufacturing deduction )% )% )% Tax Cuts and Jobs Act )% — % — % Other )% )% )% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effective income tax rate )% % % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of significant portion of deferred tax assets and liabilities | December 31, 2017 2016 Deferred tax assets resulting from: Accrued compensation costs $ $ Pension and postretirement benefits Stock based compensation State tax credit and net operating loss carry-forwards Other ​ ​ ​ ​ ​ ​ ​ ​ Total deferred tax assets $ $ ​ ​ ​ ​ ​ ​ ​ ​ Valuation allowance ) — ​ ​ ​ ​ ​ ​ ​ ​ Net deferred tax assets $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred tax liabilities resulting from: Depreciable assets ) ) Goodwill and intangible assets ) ) Other ) ) ​ ​ ​ ​ ​ ​ ​ ​ Total deferred tax liabilities $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ Net deferred tax liabilities $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Stock-Based Compensation | |
Schedule of total stock-based compensation expense | Years Ended December 31, 2017 2016 2015 Stock option compensation expense $ $ $ Restricted stock unit compensation expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total stock-based compensation expense $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of total unrecognized stock-based compensation | December 31, 2017 2016 Unrecognized stock option compensation expense $ $ Unrecognized restricted stock unit compensation expense ​ ​ ​ ​ ​ ​ ​ ​ Total unrecognized stock-based compensation expense $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Summary of stock options amounts and activity | Options Weighted Weighted Intrinsic Outstanding at December 31, 2014 $ Granted Exercised ) Lapsed (forfeited or cancelled) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding at December 31, 2015 Granted Exercised ) Lapsed (forfeited or cancelled) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding at December 31, 2016 Granted Exercised ) Lapsed (forfeited or cancelled) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding at December 31, 2017 $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercisable at December 31, 2017 $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of the assumptions utilized for calculating the fair value of stock options | December 31, 2017 2016 2015 KapStone Stock Options Black-Scholes assumptions (weighted average): Expected volatility % % % Expected life (years) Risk-free interest rate % % % Expected dividend yield % % % |
Summary of unvested restricted stock units amounts and activity | Units Weighted Average Outstanding at December 31, 2014 $ Granted Vested ) Forfeited ) ​ ​ ​ ​ ​ ​ ​ ​ Outstanding at December 31, 2015 $ Granted Vested ) Forfeited ) ​ ​ ​ ​ ​ ​ ​ ​ Outstanding at December 31, 2016 $ Granted Vested ) Forfeited ) ​ ​ ​ ​ ​ ​ ​ ​ Outstanding at December 31, 2017 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies | |
Schedule of future minimum rental payments due under non-cancellable operating leases that have initial or remaining lease terms in excess of one year | Years Ended December 31, 2018 $ 2019 2020 2021 2022 Thereafter ​ ​ ​ ​ ​ Total $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Net income per share (Tables)
Net income per share (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Net income per share | |
Schedule of basic and diluted net income per share | Years Ended December 31, 2017 2016 2015 Net income $ $ $ Weighted-average number of common shares for basic net income per share Incremental effect of dilutive common stock equivalents: Unexercised stock options Unvested restricted stock awards ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average number of shares for diluted net income per share ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income per share—basic $ $ $ Net income per share—diluted $ $ $ |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment Information | |
Schedule of an analysis of operations by segment | Net Sales Year Ended December 31, 2017 Trade Inter- Total Operating Depreciation Capital Total Paper and Packaging(a): Containerboard / Corrugated products $ $ $ Specialty paper — Other — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Paper and Packaging $ $ $ $ $ $ $ Distribution — Corporate — — — ) Intersegment eliminations — ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ $ — $ $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Sales Year Ended December 31, 2016 Trade Inter- Total Operating Depreciation Capital Total Paper and Packaging(a): Containerboard / Corrugated products $ $ $ Specialty paper — Other — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Paper and Packaging $ $ $ $ $ $ $ Distribution — Corporate — — — ) Intersegment eliminations — ) ) — — — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ $ — $ $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Sales Year Ended December 31, 2015 Trade Inter- Total Operating Depreciation Capital Total Paper and Packaging: Containerboard / Corrugated products $ $ $ Specialty paper — Other — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Paper and Packaging $ $ $ $ $ $ $ Distribution(b) — Corporate — — — ) Intersegment eliminations — ) ) — — — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ $ — $ $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (a) The Paper and Packaging segment income excludes $1.8 million and $0.5 million of income from equity method investments for the years ended December 31, 2017 and 2016, respectively. (b) Results for the year ended December 31, 2015 includes Victory for the period June 1 through December 31, 2015 and represents the entire Distribution segment. |
Schedule of net sales by location | Years Ended December 31, Net sales by location: 2017 2016 2015 To customers located in the United States $ $ $ Foreign and export sales to foreign based customers ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Quarterly Financial Informati42
Quarterly Financial Information (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information (Unaudited) | |
Summary of quarterly supplemental consolidated financial information | Quarters Ended March 31, June 30, September 30, December 31, Fiscal 2017: Net sales $ $ $ $ Gross profit(1) $ $ $ $ Operating income(2) $ $ $ $ Net income(3) $ $ $ $ Net income per share: Basic $ $ $ $ Diluted $ $ $ $ (1) Gross profit is defined as net sales less cost of sales, depreciation and amortization, freight, and distribution expenses. Gross profit includes the following: • planned maintenance outage costs of $6.2 million, $17.6 million, $13.0 million and $10.0 million in the quarters ended March 31, June 30, September 30 and December 31, 2017, respectively; • California plant closure costs of $8.9 million and $1.3 million in the quarters ended September 30 and December 31, 2017, respectively; • union contract ratification costs of $5.0 million and $0.9 million in the quarters ended March 31 and September 30, 2017, respectively; and • Ontario, California plant operating expenses of $1.3 million, $1.0 million, $1.0 million and $1.1 million in the quarters ended March 31, June 30, September 30, and December 31, 2017, respectively. (2) Operating income includes Victory contingent consideration expense (income) of $2.5 million, $1.1 million, $(3.9) million and $6.1 million in the quarters ended March 31, June 30, September 30 and December 31, 2017, respectively. (3) For the quarter ended December 31, 2017, net income includes a $144.4 million provisional income tax benefit due to the passage of the Tax Act on December 22, 2017. Quarters Ended March 31, June 30, September 30, December 31, Fiscal 2016: Net sales(1) $ $ $ $ Gross profit(2) $ $ $ $ Operating income $ $ $ $ Net income $ $ $ $ Net income per share: Basic $ $ $ $ Diluted $ $ $ $ (1) Gross profit is defined as net sales less cost of sales, depreciation and amortization, freight, and distribution expenses. Gross profit includes planned maintenance outage costs of $6.6 million, $19.0 million, $3.8 million and $3.2 million in the quarters ended March 31, June 30, September 30 and December 31, 2016, respectively and $6.4 million of costs due to Hurricane Matthew in the quarter ended December 31, 2016. (2) Operating income in the quarter ended December 31, 2016, includes a $6.4 million charge for withdrawing from a GCIU multiemployer pension plan. |
Description of Business and B43
Description of Business and Basis of Presentation (Details) | Jun. 01, 2015 |
Victory | |
Victory Acquisition | |
Percentage of interest acquired in acquisition transaction | 100.00% |
Description of Business and B44
Description of Business and Basis of presentation - Recently Adopted Accounting Standards (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Recently Adopted Accounting Standards | |||
Provision for income taxes | $ (95,220) | $ 41,930 | $ 55,248 |
Adjustment | Accounting Standards Update No. 2016-09 | |||
Recently Adopted Accounting Standards | |||
Provision for income taxes | $ 100 |
Significant Accounting Polici45
Significant Accounting Policies - Concentration of Risk - (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenue Recognition | |||||||||||
Customer rebates | $ 35.4 | $ 34.3 | $ 32.7 | ||||||||
Planned Maintenance Outage | |||||||||||
Planned maintenance outages | $ 10 | $ 13 | $ 17.6 | $ 6.2 | $ 3.2 | $ 3.8 | $ 19 | $ 6.6 | |||
Cost of Sales | |||||||||||
Cost of Sales | |||||||||||
Reduction in cost of sales | 40.9 | 32.6 | 36.1 | ||||||||
Planned Maintenance Outage | |||||||||||
Planned maintenance outages | $ 46.8 | $ 32.6 | $ 37.4 | ||||||||
Net sales. | Sales by geographical location | US based customers | |||||||||||
Concentrations of Risk | |||||||||||
Net sales (as a percent) | 86.00% | 83.00% | 82.00% | ||||||||
Net sales. | Sales by geographical location | Foreign based customers | |||||||||||
Concentrations of Risk | |||||||||||
Net sales (as a percent) | 14.00% | 17.00% | 18.00% |
Significant Accounting Polici46
Significant Accounting Policies - Allowance for Doubtful Accounts, Fair Value of Financial Instruments and Inventories - (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Changes to the allowance for doubtful accounts | |||
Balance at beginning of year | $ 1,353 | $ 1,084 | $ 285 |
Acquisition | 742 | ||
Provision for bad debt expense | 3,024 | 881 | 368 |
Write-offs | (3,723) | (612) | (311) |
Balance at end of year | 654 | $ 1,353 | $ 1,084 |
Fair value of Financial Instruments | |||
Fair value of variable rate term loan and short-term borrowings | $ 1,400,000 | ||
Longview Paper mill and the corrugated products manufacturing plants | |||
Inventories | |||
Percentage of LIFO inventory to total inventory (as a percent) | 18.00% | 22.00% |
Significant Accounting Polici47
Significant Accounting Policies - Property, Plant, and Equipment and Leases (Details) | 12 Months Ended |
Dec. 31, 2017Plant | |
Plant, property and equipment, net | |
Number of leased corrugated products manufacturing plants | 13 |
Land Improvements | Minimum | |
Plant, property and equipment, net | |
Estimated useful lives | 3 years |
Land Improvements | Maximum | |
Plant, property and equipment, net | |
Estimated useful lives | 25 years |
Buildings | Minimum | |
Plant, property and equipment, net | |
Estimated useful lives | 11 years |
Buildings | Maximum | |
Plant, property and equipment, net | |
Estimated useful lives | 40 years |
Machinery and equipment | Minimum | |
Plant, property and equipment, net | |
Estimated useful lives | 3 years |
Machinery and equipment | Maximum | |
Plant, property and equipment, net | |
Estimated useful lives | 30 years |
Furniture and office equipment | Minimum | |
Plant, property and equipment, net | |
Estimated useful lives | 5 years |
Furniture and office equipment | Maximum | |
Plant, property and equipment, net | |
Estimated useful lives | 10 years |
Computer hardware and software | Minimum | |
Plant, property and equipment, net | |
Estimated useful lives | 3 years |
Computer hardware and software | Maximum | |
Plant, property and equipment, net | |
Estimated useful lives | 5 years |
Significant Accounting Polici48
Significant Accounting Policies - Amortization of Debt Issuance Costs (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017USD ($)segmentitem | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Significant Accounting Policies | |||
Number of reporting units | item | 3 | ||
Amortization of Debt Issuance Costs | |||
Amortization of debt issuance costs | $ 4,787 | $ 4,804 | $ 5,546 |
Loss on debt extinguishment | 1,305 | 679 | 1,218 |
Voluntary prepayments on term loans | $ 155,000 | $ 64,700 | $ 103,500 |
Segment information | |||
Number of operating segments | segment | 2 |
Strategic Investments - API Acq
Strategic Investments - API Acquisition (Details) - USD ($) $ in Thousands | Feb. 01, 2017 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Fair value of the assets acquired and liabilities assumed | ||||||||||||
Estimated useful life ( in years) | 11 years 9 months 18 days | |||||||||||
Goodwill | $ 720,611 | $ 705,617 | $ 720,611 | $ 705,617 | $ 704,592 | |||||||
Net sales | 858,682 | $ 868,418 | $ 822,717 | $ 765,843 | 777,495 | $ 776,636 | $ 784,911 | $ 738,215 | 3,315,660 | 3,077,257 | 2,789,345 | |
Operating income | 78,061 | $ 59,745 | $ 41,195 | $ 20,124 | $ 37,525 | $ 55,008 | $ 43,513 | $ 34,600 | $ 199,125 | $ 170,646 | $ 199,167 | |
Facility lease agreement term | 15 years | |||||||||||
API | ||||||||||||
Fair value of the assets acquired and liabilities assumed | ||||||||||||
Assets acquired | $ 33,500 | |||||||||||
Intangible assets | $ 14,000 | |||||||||||
Estimated useful life ( in years) | 10 years | |||||||||||
Plant, property and equipment | $ 2,800 | |||||||||||
Net working capital | 1,700 | |||||||||||
Goodwill | $ 15,000 | |||||||||||
Long-term incentive agreement, term (in years) | 4 years | |||||||||||
Contingent consideration if certain performance criteria are satisfied | $ 5,000 | |||||||||||
Accruals related to contingent consideration | $ 0 | $ 0 | ||||||||||
Net sales | 22,800 | |||||||||||
Operating income | 1,000 | |||||||||||
Facility lease agreement term | 25 years | |||||||||||
Total facility lease commitment | $ 14,700 | |||||||||||
Fair value of capital lease | $ 4,700 | |||||||||||
API | Selling, general and administrative expenses | ||||||||||||
Fair value of the assets acquired and liabilities assumed | ||||||||||||
Transaction fees and expenses | $ 400 |
Strategic Investments - CFB Acq
Strategic Investments - CFB Acquisition (Details) - USD ($) $ in Thousands | Jul. 01, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Fair value of the assets acquired and liabilities assumed | ||||
Goodwill | $ 720,611 | $ 705,617 | $ 704,592 | |
Estimated useful life ( in years) | 11 years 9 months 18 days | |||
Customer relationship intangible assets | ||||
Fair value of the assets acquired and liabilities assumed | ||||
Estimated useful life ( in years) | 10 years 9 months 18 days | |||
Central Florida Box Corporation Acquisition | ||||
Fair value of the assets acquired and liabilities assumed | ||||
Percentage of common stock acquired in business acquisition | 100.00% | |||
Acquisition consideration, net of cash acquired | $ 15,400 | |||
Plant, property and equipment | 10,500 | |||
Net working capital | 1,700 | |||
Goodwill | 1,000 | |||
Finite-lived intangible assets | $ 2,200 | |||
Central Florida Box Corporation Acquisition | Customer relationship intangible assets | ||||
Fair value of the assets acquired and liabilities assumed | ||||
Finite-lived intangible assets | $ 2,200 | |||
Estimated useful life ( in years) | 10 years |
Strategic Investments - Equity
Strategic Investments - Equity Method Investments (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Sep. 30, 2016USD ($) | Apr. 30, 2016USD ($) | Dec. 31, 2017USD ($)T | Dec. 31, 2016USD ($) | |
Equity Method Investments | ||||
Equity investment | $ 11,807 | |||
Equity method investments income | $ (1,752) | $ (548) | ||
Sheet Feeder Equity Investments | ||||
Equity Method Investments | ||||
Expected vertical integration ramp up time | 18 months | |||
Sheet Feeder Equity Investments | Minimum | ||||
Equity Method Investments | ||||
Number of tons expected from vertical integration | T | 60,000 | |||
Sheet Feeder Equity Investment Florida | ||||
Equity Method Investments | ||||
Ownership interest (as a percent) | 49.00% | |||
Sheet Feeder Equity Investment Florida | Other Assets | ||||
Equity Method Investments | ||||
Equity investment | $ 10,600 | |||
Sheet Feeder Equity Investment California | ||||
Equity Method Investments | ||||
Ownership interest (as a percent) | 20.00% | |||
Sheet Feeder Equity Investment California | Other Assets | ||||
Equity Method Investments | ||||
Equity investment | $ 1,250 |
Strategic Investments - New Pla
Strategic Investments - New Plant Start-up (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Apr. 30, 2016 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2017 | |
New Plant Start-up | ||||||
Facility lease agreement term | 15 years | |||||
Total lease commitment | $ 4,595 | $ 4,595 | ||||
Operating expenses | $ 1,100 | $ 1,000 | $ 1,000 | $ 1,300 | ||
Asset under Construction -Ontario California | ||||||
New Plant Start-up | ||||||
Estimated sheet plant cost | $ 15,200 | |||||
Facility lease agreement term | 10 years | |||||
Total lease commitment | $ 9,800 | |||||
Operating expenses | $ 4,400 |
Victory Acquisition - Acquisiti
Victory Acquisition - Acquisition Details (Details) - Victory - USD ($) $ in Millions | Dec. 31, 2017 | Jun. 01, 2015 | Dec. 31, 2017 |
Victory Acquisition | |||
Percentage of interest acquired in acquisition transaction | 100.00% | ||
Total consideration, net of cash acquired | $ 615 | ||
Working capital adjustments | $ 2 | ||
Contingent consideration if certain performance criteria are satisfied | $ 20.7 | $ 20.7 | |
Threshold period from closing of sale for potential additional contingent consideration | 30 months | 30 months | |
Increase (decrease) in fair value of assets acquired and liabilities assumed | $ 0 |
Victory Acquisition - Unaudited
Victory Acquisition - Unaudited Consolidated Pro Forma Financial Information (Details) - Victory $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2015USD ($)$ / shares | |
Victory Acquisition | |
Net sales | $ 3,166,725 |
Net income | $ 105,466 |
Net income per share - diluted (in dollars per share) | $ / shares | $ 1.08 |
Plant Closure and Assets Held55
Plant Closure and Assets Held for Sale (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Prepaid expenses and other current assets | |
Plant Closure and Assets Held for Sale | |
Land and building held for sale | $ 7.2 |
Oakland, California box plant | Shutdown | |
Plant Closure and Assets Held for Sale | |
Closure charges | 10.2 |
Closure charges - write-off of impaired property, plant and equipment | 6 |
Closure charges - severance and other employee costs | 1.5 |
Closure charges - facility carrying costs | 1.7 |
Closure charges - write-off of impaired inventory | $ 1 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Inventories | ||
Raw materials | $ 75,616 | $ 79,377 |
Work in process | 4,144 | 6,371 |
Finished goods | 145,652 | 151,497 |
Replacement parts and supplies | 93,043 | 85,857 |
Inventory at FIFO costs | 318,455 | 323,102 |
LIFO inventory reserves | (2,880) | (438) |
Inventories | 315,575 | 322,664 |
Finished goods consigned to third parties | $ 6,200 | $ 9,600 |
Plant, Property and Equipment57
Plant, Property and Equipment, net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Plant, property and equipment, net | |||
Plant, property and equipment, gross | $ 2,228,367 | $ 2,095,133 | |
Less accumulated depreciation and amortization | 774,760 | 653,576 | |
Plant, property and equipment, net | 1,453,607 | 1,441,557 | |
Depreciation expense | 155,903 | 149,318 | $ 136,886 |
Land and land improvements | |||
Plant, property and equipment, net | |||
Plant, property and equipment, gross | 72,963 | 76,704 | |
Buildings and leasehold improvements | |||
Plant, property and equipment, net | |||
Plant, property and equipment, gross | 187,521 | 177,705 | |
Machinery and equipment | |||
Plant, property and equipment, net | |||
Plant, property and equipment, gross | 1,913,020 | 1,741,552 | |
Construction-in-process | |||
Plant, property and equipment, net | |||
Plant, property and equipment, gross | $ 54,863 | $ 99,172 |
Goodwill and Other Intangible58
Goodwill and Other Intangible Assets - Changes in Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill | ||
Balances at the beginning of the period | $ 705,617 | $ 704,592 |
Balance at the end of the period | 720,611 | 705,617 |
Central Florida Box Corporation Acquisition | ||
Goodwill | ||
Acquisitions | 1,025 | |
API | ||
Goodwill | ||
Acquisitions | 14,994 | |
Paper and Packaging | ||
Goodwill | ||
Balances at the beginning of the period | 534,876 | 533,851 |
Balance at the end of the period | 549,870 | 534,876 |
Paper and Packaging | Central Florida Box Corporation Acquisition | ||
Goodwill | ||
Acquisitions | 1,025 | |
Paper and Packaging | API | ||
Goodwill | ||
Acquisitions | 14,994 | |
Distribution | ||
Goodwill | ||
Balances at the beginning of the period | 170,741 | 170,741 |
Balance at the end of the period | $ 170,741 | $ 170,741 |
Goodwill and Other Intangible59
Goodwill and Other Intangible Assets - Changes in Other Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Intangible Assets, Net | |||
Balance at the beginning of the period | $ 314,413 | $ 344,583 | |
Other | 525 | ||
Amortization expense | (30,898) | (32,895) | $ (25,293) |
Balance at the end of the period | 297,475 | 314,413 | $ 344,583 |
Central Florida Box Corporation Acquisition | |||
Intangible Assets, Net | |||
Acquisitions | $ 2,200 | ||
API | |||
Intangible Assets, Net | |||
Acquisitions | $ 13,960 |
Goodwill and Other Intangible60
Goodwill and Other Intangible Assets - Intangible Assets Other Than Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Intangible assets other than goodwill | |||
Gross Carrying Amount | $ 446,932 | $ 432,972 | |
Accumulated Amortization | (149,457) | (118,559) | |
Total | 297,475 | 314,413 | $ 344,583 |
Amortization of intangible assets | 30,898 | 32,895 | $ 25,293 |
Estimated amortization expense | |||
2,018 | 30,800 | ||
2,019 | 30,400 | ||
2,020 | 29,800 | ||
2,021 | 26,700 | ||
2,022 | $ 22,800 | ||
Estimated useful life ( in years) | 11 years 9 months 18 days | ||
Definite-lived trademarks | |||
Intangible assets other than goodwill | |||
Gross Carrying Amount | $ 70,185 | 69,325 | |
Accumulated Amortization | (34,614) | (32,060) | |
Total | $ 35,571 | 37,265 | |
Estimated amortization expense | |||
Estimated useful life ( in years) | 20 years 6 months | ||
Customer relationship intangible assets | |||
Intangible assets other than goodwill | |||
Gross Carrying Amount | $ 346,504 | 333,404 | |
Accumulated Amortization | (92,758) | (67,260) | |
Total | $ 253,746 | 266,144 | |
Estimated amortization expense | |||
Estimated useful life ( in years) | 10 years 9 months 18 days | ||
Lease, contracts and other | |||
Intangible assets other than goodwill | |||
Gross Carrying Amount | $ 30,243 | 30,243 | |
Accumulated Amortization | (22,085) | (19,239) | |
Total | $ 8,158 | $ 11,004 | |
Estimated amortization expense | |||
Estimated useful life ( in years) | 5 years 7 months 6 days |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Accrued Expenses | ||
Real and property taxes | $ 14,748 | $ 13,090 |
Energy costs | 12,911 | 12,527 |
Capital spending | 9,915 | 7,883 |
Customer rebates | 8,940 | 9,998 |
Worker's compensation | 6,416 | 8,249 |
Current postretirement obligation | 1,106 | 1,378 |
Freight | 3,881 | 2,354 |
Contingent consideration | 20,694 | |
Other accruals | 27,340 | 21,001 |
Accrued expenses | $ 105,951 | $ 76,480 |
Short-term Borrowings and Lon62
Short-term Borrowings and Long-term Debt - Short-term and Other Borrowing (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Jan. 31, 2017 |
Revolver | ||
Short-term borrowings | ||
Amounts outstanding | $ 0 | |
Current borrowing availability | $ 485.9 | |
Other Short-term Financing Agreement | ||
Other Borrowing | ||
Initial aggregate principal amount | $ 6.2 | |
Interest rate on borrowings (as a percent) | 2.40% |
Short-term Borrowings and Lon63
Short-term Borrowings and Long-term Debt - Long-term Debt (Details) $ in Thousands | Jun. 01, 2015USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Long term debt | ||||
Total long-term debt | $ 1,387,724 | $ 1,503,148 | ||
Less unamortized debt issuance costs | (13,222) | (17,825) | ||
Long-term debt, net of debt issuance costs | 1,374,502 | 1,485,323 | ||
Interest Paid | 44,700 | 32,900 | $ 28,100 | |
Prepayments of term loan | 155,000 | 64,687 | $ 116,438 | |
Term Loans | ||||
Long term debt | ||||
Increase in interest paid | 11,800 | |||
Term Loan A1 | ||||
Long term debt | ||||
Total long-term debt | $ 657,637 | 775,500 | ||
LIBOR | 1.57% | |||
Term Loan A2 | ||||
Long term debt | ||||
Total long-term debt | $ 421,238 | 458,375 | ||
LIBOR | 1.57% | |||
Receivables Credit Facility | ||||
Long term debt | ||||
Total long-term debt | $ 308,849 | $ 269,273 | ||
LIBOR | 1.56% | |||
Credit Facility | ||||
Long term debt | ||||
Maximum borrowing capacity | $ 1,915,000 | |||
Credit Facility | Term Loans | ||||
Long term debt | ||||
Prepayments of term loan | $ 155,000 | |||
Credit Facility | Term Loan A1 | ||||
Long term debt | ||||
Maximum borrowing capacity | 940,000 | |||
Credit Facility | Term Loan A2 | ||||
Long term debt | ||||
Maximum borrowing capacity | $ 475,000 | |||
Credit Facility | Maximum | ||||
Long term debt | ||||
Pro forma leverage ratio threshold to increase commitments under the Credit Facility | 2.5 | |||
Revolver | Credit Facility | ||||
Long term debt | ||||
Maximum borrowing capacity | $ 500,000 | |||
Accordion maximum borrowing capacity | $ 600,000 | |||
LIBOR | Term Loan A1 | ||||
Long term debt | ||||
Margin interest above reference rate (as a percent) | 1.75% | |||
LIBOR | Term Loan A2 | ||||
Long term debt | ||||
Margin interest above reference rate (as a percent) | 1.875% | |||
LIBOR | Receivables Credit Facility | ||||
Long term debt | ||||
Margin interest above reference rate (as a percent) | 0.75% |
Short-term Borrowings and Lon64
Short-term Borrowings and Long-term Debt - Principal Portion of Long-Term Debt Due (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Principal portion of long-term debt due | |
2,020 | $ 966,486 |
2,022 | 421,238 |
Total | $ 1,387,724 |
Short-term Borrowings and Lon65
Short-term Borrowings and Long-term Debt - Receivables Credit Facility (Details) - USD ($) $ in Thousands | Jun. 01, 2017 | May 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Jun. 01, 2015 |
Long-term Debt | ||||||
Payment of loan amendment fees | $ 1,488 | $ 2,250 | $ 10,790 | |||
Prepayments of term loan | 155,000 | 64,687 | 116,438 | |||
Trade receivables with securitization facility | 425,216 | 368,922 | ||||
Proceeds from receivables credit facility | 89,914 | $ 43,001 | $ 134,701 | |||
Receivables Credit Facility | ||||||
Long-term Debt | ||||||
Trade receivables with securitization facility | $ 425,200 | |||||
Term of debt instrument | 1 year | |||||
Maximum borrowing capacity | $ 325,000 | |||||
Proceeds from receivables credit facility | 308,800 | |||||
Credit Facility | ||||||
Long-term Debt | ||||||
Payment of loan amendment fees | 1,300 | |||||
Maximum borrowing capacity | $ 1,915,000 | |||||
Receivables Purchase Agreement | ||||||
Long-term Debt | ||||||
Payment of loan amendment fees | 200 | |||||
Receivables Purchase Agreement | Maximum | ||||||
Long-term Debt | ||||||
Receivables purchase agreement aggregate commitment amount | $ 325,000 | $ 275,000 | ||||
Term Loans | Credit Facility | ||||||
Long-term Debt | ||||||
Prepayments of term loan | 155,000 | |||||
Write off unamortized debt issuance costs | $ 1,300 |
Short-term Borrowings and Lon66
Short-term Borrowings and Long-term Debt - Fair Value of Debt (Details) - USD ($) $ in Billions | Dec. 31, 2017 | Dec. 31, 2016 |
Fair Value of Debt | ||
Weighted average cost of borrowings | 3.13% | 2.40% |
Level 2 | ||
Fair Value of Debt | ||
Fair value of debt | $ 1.4 |
Long-term Financing Obligatio67
Long-term Financing Obligations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
In-substance construction capital lease | |||
Long-term financing obligations | $ 82,199 | ||
North Charleston and Roanoke Rapids | |||
In-substance construction capital lease | |||
Term of the capital lease agreement (in years) | 20 years | ||
Annual purchase obligation | $ 13,400 | ||
Long-term financing obligations | 82,200 | ||
Implicit interest expense | 3,300 | ||
North Charleston and Roanoke Rapids | Property, plant and equipment, net | |||
In-substance construction capital lease | |||
Construction project costs | $ 88,200 | $ 46,600 |
Pension and Postretirement Be68
Pension and Postretirement Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Pension and Postretirement Benefits | |||
Age of employees until which individual benefits will continue | 65 years | ||
Change in Plan Assets | |||
Fair value of plan assets at beginning of year | $ 574,356 | ||
Fair value of plan assets at end of year | 613,067 | $ 574,356 | |
Weighted-Average Discount Rate Assumption used to Determine Projected Benefit Obligations | |||
Accumulated benefit obligation | $ 621,900 | 602,400 | |
Assumed health care cost trend rates postretirement benefits plans | |||
Health care cost trend rate assumed for next year (as a percent) | 7.25% | ||
Rate to which the cost trend rate is assumed to decline (the ultimate rate) (as a percent) | 4.50% | ||
Minus 1% | |||
Service and interest cost | $ (6) | ||
Accumulated benefit obligation | 132 | ||
Plus 1% | |||
Service and interest cost | 6 | ||
Accumulated benefit obligation | $ 138 | ||
Amounts in accumulated other comprehensive income (loss) expected to be recognized as components of net expense | |||
Percentage of accumulated benefit obligation and prior service cost which must be exceeded for accumulated actuarial gains and losses to be amortized | 10.00% | ||
Average future service period over which accumulated actuarial gains and losses in excess of specified percent of the accumulated benefit obligation and prior service cost are amortized | 8 years 4 months 24 days | ||
Amount, net of tax, included in accumulated other comprehensive loss | $ (48,500) | (60,800) | |
Pension Benefits | |||
Change in Benefit Obligation | |||
Benefit obligation at beginning of year | 602,426 | 626,056 | |
Service cost | 3,582 | 4,215 | $ 4,723 |
Interest cost | 26,626 | 28,237 | 27,610 |
Actuarial loss (gain) | 26,310 | (2,583) | |
Benefits paid | (39,758) | (53,499) | |
Plan amendment | 2,740 | ||
Benefit obligation at end of year | 621,926 | 602,426 | 626,056 |
Change in Plan Assets | |||
Fair value of plan assets at beginning of year | 574,356 | 593,125 | |
Actual return on plan assets | 78,469 | 34,730 | |
Benefits paid | (39,758) | (53,499) | |
Fair value of plan assets at end of year | 613,067 | 574,356 | 593,125 |
Funded status and amounts recognized in consolidated balance sheets | |||
Funded Status at End of Year | (8,859) | (28,070) | |
Amounts Recognized in Consolidated Balance Sheets: | |||
Pension and postretirement benefits | (8,859) | (28,070) | |
Net amount recognized | (8,859) | (28,070) | |
Amounts Recognized in Accumulated Other Comprehensive Loss - (Pre-tax) | |||
Total net actuarial (gain) loss | 79,908 | 101,193 | |
Prior service cost | 2,469 | 21 | |
Total | $ 82,377 | $ 101,214 | |
Weighted-Average Discount Rate Assumption used to Determine Projected Benefit Obligations | |||
Weighted-Average Discount Rate Assumption used to Determine Projected Benefit Obligations at December 31,2017 and 2016(as a percent) | 4.10% | 4.50% | |
Components of pension benefit and other postretirement benefit costs | |||
Service cost | $ 3,582 | $ 4,215 | 4,723 |
Interest cost | 26,626 | 28,237 | 27,610 |
Expected return on plan assets | (36,082) | (37,327) | (41,082) |
Amortization of prior service cost(benefit) | 292 | 95 | 275 |
Amortization of net loss(gain) | 5,208 | 4,657 | 1,934 |
Benefit income | $ (374) | $ (123) | $ (6,540) |
Weighted-average actuarial assumptions used to determine net expense | |||
Discount rate (as a percent) | 4.50% | 4.66% | 4.24% |
Long-term rate of return on plan assets (as a percent) | 6.50% | 6.50% | 6.50% |
Changes in plan assets and benefit obligations recognized in accumulated other comprehensive (income) loss | |||
Net actuarial (gain) loss | $ (16,077) | $ 15 | |
Plan amendment | 2,740 | ||
Amortization of prior service (cost) benefit | (292) | (95) | |
Amortization of net gain (loss) | (5,208) | (4,657) | |
Net amount recognized before tax | (18,837) | (4,737) | |
Amounts in accumulated other comprehensive income (loss) expected to be recognized as components of net expense | |||
Prior service cost (benefit) | 509 | ||
Net actuarial loss / (gain) | 2,109 | ||
Other Benefits | |||
Change in Benefit Obligation | |||
Benefit obligation at beginning of year | 7,515 | 9,418 | |
Service cost | 12 | 28 | $ 33 |
Interest cost | 262 | 332 | 428 |
Actuarial loss (gain) | (110) | (818) | |
Participant contributions | 363 | 526 | |
Benefits paid | (1,599) | (1,971) | |
Benefit obligation at end of year | 6,443 | 7,515 | 9,418 |
Change in Plan Assets | |||
Employer contributions | 1,236 | 1,445 | |
Participant contributions | 363 | 526 | |
Benefits paid | (1,599) | (1,971) | |
Fair value of plan assets at end of year | 0 | ||
Funded status and amounts recognized in consolidated balance sheets | |||
Funded Status at End of Year | (6,443) | (7,515) | |
Amounts Recognized in Consolidated Balance Sheets: | |||
Accrued expenses | (1,106) | (1,378) | |
Pension and postretirement benefits | (5,337) | (6,137) | |
Net amount recognized | (6,443) | (7,515) | |
Amounts Recognized in Accumulated Other Comprehensive Loss - (Pre-tax) | |||
Total net actuarial (gain) loss | (1,851) | (3,208) | |
Prior service cost | (1,317) | (2,079) | |
Total | $ (3,168) | $ (5,287) | |
Weighted-Average Discount Rate Assumption used to Determine Projected Benefit Obligations | |||
Weighted-Average Discount Rate Assumption used to Determine Projected Benefit Obligations at December 31,2017 and 2016(as a percent) | 3.91% | 4.20% | |
Components of pension benefit and other postretirement benefit costs | |||
Service cost | $ 12 | $ 28 | 33 |
Interest cost | 262 | 332 | 428 |
Amortization of prior service cost(benefit) | (762) | (762) | (242) |
Amortization of net loss(gain) | (1,467) | (812) | (1,126) |
Benefit income | $ (1,956) | $ (1,214) | $ (907) |
Weighted-average actuarial assumptions used to determine net expense | |||
Discount rate (as a percent) | 4.20% | 4.12% | 3.78% |
Changes in plan assets and benefit obligations recognized in accumulated other comprehensive (income) loss | |||
Net actuarial (gain) loss | $ (110) | $ (818) | |
Amortization of prior service (cost) benefit | 762 | 762 | |
Amortization of net gain (loss) | 1,467 | 812 | |
Net amount recognized before tax | 2,119 | $ 756 | |
Amounts in accumulated other comprehensive income (loss) expected to be recognized as components of net expense | |||
Prior service cost (benefit) | (761) | ||
Net actuarial loss / (gain) | $ (561) |
Pension and Postretirement Be69
Pension and Postretirement Benefits - Fair Value of Plan Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Pension and Postretirement Benefits | ||
Fair value of plan assets | $ 613,067 | $ 574,356 |
Cash and Cash Equivalents, Equity Securities, Fixed Income | ||
Pension and Postretirement Benefits | ||
Fair value of plan assets | 501,981 | 477,202 |
Cash and Cash Equivalents, Equity Securities, Fixed Income | Level 1 | ||
Pension and Postretirement Benefits | ||
Fair value of plan assets | 72,456 | 87,937 |
Cash and Cash Equivalents, Equity Securities, Fixed Income | Level 2 | ||
Pension and Postretirement Benefits | ||
Fair value of plan assets | 418,345 | 375,922 |
Cash and Cash Equivalents, Equity Securities, Fixed Income | Level 3 | ||
Pension and Postretirement Benefits | ||
Fair value of plan assets | 11,180 | 13,343 |
Cash and cash equivalents | ||
Pension and Postretirement Benefits | ||
Fair value of plan assets | 7,698 | 16,973 |
Cash and cash equivalents | Level 1 | ||
Pension and Postretirement Benefits | ||
Fair value of plan assets | 7,698 | 16,973 |
Common Stock, net of Treasury Stock | ||
Pension and Postretirement Benefits | ||
Fair value of plan assets | 97 | 12,869 |
Common Stock, net of Treasury Stock | Level 1 | ||
Pension and Postretirement Benefits | ||
Fair value of plan assets | 97 | 12,869 |
Domestic equity mutual funds | ||
Pension and Postretirement Benefits | ||
Fair value of plan assets | 12,560 | 9,556 |
Domestic equity mutual funds | Level 1 | ||
Pension and Postretirement Benefits | ||
Fair value of plan assets | 12,560 | 9,556 |
International equity mutual funds | ||
Pension and Postretirement Benefits | ||
Fair value of plan assets | 52,101 | 48,539 |
International equity mutual funds | Level 1 | ||
Pension and Postretirement Benefits | ||
Fair value of plan assets | 52,101 | 48,539 |
U.S. large cap collective funds | ||
Pension and Postretirement Benefits | ||
Fair value of plan assets | 112,411 | 96,518 |
U.S. large cap collective funds | Level 2 | ||
Pension and Postretirement Benefits | ||
Fair value of plan assets | 112,411 | 96,518 |
Corporate bonds and notes | ||
Pension and Postretirement Benefits | ||
Fair value of plan assets | 229,275 | 201,241 |
Corporate bonds and notes | Level 2 | ||
Pension and Postretirement Benefits | ||
Fair value of plan assets | 229,275 | 201,241 |
U.S. Government securities | ||
Pension and Postretirement Benefits | ||
Fair value of plan assets | 76,659 | 78,163 |
U.S. Government securities | Level 2 | ||
Pension and Postretirement Benefits | ||
Fair value of plan assets | 76,659 | 78,163 |
Limited partnership investments | ||
Pension and Postretirement Benefits | ||
Fair value of plan assets | 11,180 | 13,343 |
Limited partnership investments | Level 3 | ||
Pension and Postretirement Benefits | ||
Fair value of plan assets | 11,180 | 13,343 |
Fixed income funds | ||
Pension and Postretirement Benefits | ||
Fair value of plan assets | 37,976 | 34,897 |
Equity funds | ||
Pension and Postretirement Benefits | ||
Fair value of plan assets | $ 73,110 | $ 62,257 |
Pension and Postretirement Be70
Pension and Postretirement Benefits - Level Three Assets (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Purchases, issuances, sales, and settlements: | |
Percentage gate in any given quarter of funds restricting investment redemption | 25.00% |
Level 3 | |
Changes in the fair value of the Plan's level three assets | |
Balance, beginning of year | $ 13,343 |
Total gains or (losses): | |
Included in changes in net assets | 1,007 |
Purchases, issuances, sales, and settlements: | |
Purchases | 263 |
Sales | (3,433) |
Balance, end of year | 11,180 |
Total gains or losses included in changes in net assets attributed to change in unrealized gains or losses relating to assets | 219 |
Limited partnership investments | Level 3 | |
Changes in the fair value of the Plan's level three assets | |
Balance, beginning of year | 13,343 |
Total gains or (losses): | |
Included in changes in net assets | 1,007 |
Purchases, issuances, sales, and settlements: | |
Purchases | 263 |
Sales | (3,433) |
Balance, end of year | 11,180 |
Total gains or losses included in changes in net assets attributed to change in unrealized gains or losses relating to assets | $ 219 |
Pension and Postretirement Be71
Pension and Postretirement Benefits - Allocations (Details) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Pension and Postretirement Benefits | ||
Weighted-average asset allocations (as a percent) | 100.00% | 100.00% |
Target Allocation (as a percent) | 100.00% | |
Fixed income: | ||
Pension and Postretirement Benefits | ||
Weighted-average asset allocations (as a percent) | 56.00% | 55.00% |
Target Allocation (as a percent) | 53.00% | |
Equity securities: | ||
Pension and Postretirement Benefits | ||
Weighted-average asset allocations (as a percent) | 41.00% | 40.00% |
Target Allocation (as a percent) | 47.00% | |
Cash and cash equivalents | ||
Pension and Postretirement Benefits | ||
Weighted-average asset allocations (as a percent) | 1.00% | 3.00% |
Other securities | ||
Pension and Postretirement Benefits | ||
Weighted-average asset allocations (as a percent) | 2.00% | 2.00% |
Pension and Postretirement Be72
Pension and Postretirement Benefits - Estimated Future Gross Benefit Payments (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Pension Benefits | |
Estimated future gross benefit payments | |
2,018 | $ 39,271 |
2,019 | 39,482 |
2,020 | 39,670 |
2,021 | 40,310 |
2,022 | 40,681 |
Succeeding 5 years | 201,294 |
Other Benefits | |
Estimated future gross benefit payments | |
2,018 | 1,127 |
2,019 | 969 |
2,020 | 849 |
2,021 | 580 |
2,022 | 501 |
Succeeding 5 years | $ 1,532 |
Pension and Postretirement Be73
Pension and Postretirement Benefits - Multiemployer Pension Plan (Details) - GCIU-Employer Retirement Fund $ in Millions | 12 Months Ended | ||
Dec. 31, 2017USD ($)employeePlant | Dec. 31, 2016USD ($) | Dec. 31, 2015 | |
Multiemployer Pension Plan | |||
Number of hourly employees covered by the plan | employee | 300 | ||
Number of plants with hourly employees covered by plan | Plant | 4 | ||
Estimated withdrawal liability | $ 6.4 | $ 6.4 | |
Annual contributions by the Company | $ 0.4 | ||
Number of years employer contributed to the plan | 20 years | ||
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Discount Rate | 3.60% | ||
Maximum | |||
Multiemployer Pension Plan | |||
Contributions (as a percent) | 5.30% |
Pension and Postretirement Be74
Pension and Postretirement Benefits - Defined Contribution Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Pension and Postretirement Benefits | |||
Defined contribution plan expense recognized | $ 23 | $ 9.2 | $ 22.3 |
Increase in matching contributions | $ 13.8 |
Income taxes - Provision for In
Income taxes - Provision for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income before provision (benefit) for income taxes: | |||
United States | $ 144,585 | $ 125,540 | $ 159,790 |
Foreign | 3,698 | 2,642 | 1,844 |
Income before provision (benefit) for income taxes | 148,283 | 128,182 | 161,634 |
Current: | |||
US Federal | 54,808 | 49,131 | 40,324 |
State and local | 6,451 | 6,002 | 3,116 |
Foreign | 1,439 | 1,237 | 766 |
Total current | 62,698 | 56,370 | 44,206 |
Deferred: | |||
US federal | (156,655) | (14,841) | 10,990 |
State and local | (1,280) | 401 | 52 |
Foreign | 17 | ||
Total deferred | (157,918) | (14,440) | 11,042 |
Total United States | (96,676) | 40,693 | 54,482 |
Foreign | 1,456 | 1,237 | 766 |
Total provision (benefit) for income taxes | (95,220) | 41,930 | 55,248 |
Income taxes paid, net of refunds | $ 45,800 | $ 23,800 | $ 65,500 |
Income taxes - Difference of Ef
Income taxes - Difference of Effective Tax Rate From the Statutory Federal Income Tax Rate (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Difference of effective tax rate from the statutory federal income tax rate | |||||
Statutory income tax rate (as a percent) | 35.00% | 35.00% | 35.00% | ||
State income taxes, net of federal income tax benefit (as a percent) | 1.90% | 2.00% | 2.30% | ||
Domestic manufacturing deduction (as a percent) | (3.60%) | (3.60%) | (2.90%) | ||
Tax Cuts and Jobs Act | (97.40%) | ||||
Other (as a percent) | (0.10%) | (0.70%) | (0.20%) | ||
Effective income tax rate | (64.20%) | 32.70% | 34.20% | ||
Provisional net tax benefit | $ 144.4 | ||||
Tax benefit from re-measuring federal deferred tax liabilities | 144.7 | ||||
Transition tax expense | $ 0.3 | ||||
Absent the Tax Act, effective income tax rate | 33.20% | ||||
Forecast | |||||
Difference of effective tax rate from the statutory federal income tax rate | |||||
Statutory income tax rate (as a percent) | 21.00% |
Income taxes - Deferred Tax Ass
Income taxes - Deferred Tax Assets and Liabilities Due to Temporary Differences (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets resulting from: | ||
Accrued compensation costs | $ 5,091 | $ 8,200 |
Pension and postretirement benefits | 5,267 | 16,010 |
Stock based compensation | 8,200 | 10,433 |
State tax credit and net operating loss carry-forwards | 4,090 | 2,819 |
Other | 5,286 | 5,519 |
Total deferred tax assets | 27,934 | 42,981 |
Valuation allowance | (822) | |
Net deferred tax assets | 27,112 | 42,981 |
Deferred tax liabilities resulting from: | ||
Depreciable assets | (246,518) | (398,921) |
Goodwill and intangible assets | (28,359) | (40,810) |
Other | (4,336) | (8,811) |
Total deferred tax liabilities | (279,213) | (448,542) |
Net deferred tax liabilities | $ (252,101) | $ (405,561) |
Income taxes - Operating Loss C
Income taxes - Operating Loss Carry-forward (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Operating loss carry-forward | ||
Valuation allowance | $ 822 | |
Unrecognized tax benefits | 700 | $ 500 |
State | ||
Operating loss carry-forward | ||
Net operating loss carry-forward | 21,400 | |
Tax credits | 3,800 | |
Partial valuation allowance | $ 1,000 |
Stockholder's equity (Details)
Stockholder's equity (Details) - USD ($) $ / shares in Units, $ in Thousands | Jan. 12, 2018 | Dec. 15, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2010 |
Cash Dividends | ||||||
Cash dividends paid | $ 38,722 | $ 38,736 | $ 38,729 | |||
Dividends declared per common share | $ 0.10 | $ 0.40 | $ 0.40 | $ 0.40 | ||
Dividends paid per common share (in dollars per share) | $ 0.10 | |||||
KapStone Paper and Packaging Corporation Employee Stock Purchase Plan | Stock awards | ||||||
Stockholder's equity | ||||||
Shares reserved for future purchases | 1,000,000 | |||||
Common Stock, net of Treasury Stock | ||||||
Stockholder's equity | ||||||
Common stock reserved for issuance (in shares) | 6,300,000 | |||||
Common Stock, net of Treasury Stock | Stock awards | ||||||
Stockholder's equity | ||||||
Share reserved for issuance | 5,600,000 | |||||
Common Stock, net of Treasury Stock | KapStone Paper and Packaging Corporation Employee Stock Purchase Plan | ||||||
Stockholder's equity | ||||||
Discount from the market price on the common stock issued (as a percent) | 5.00% | |||||
Shares issued under ESPP | 46,743 | 62,636 | ||||
Share reserved for issuance | 700,000 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - shares shares in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | May 11, 2016 | |
2016 Incentive Plan | ||||
Stock-based compensation | ||||
Number of shares authorized by shareholders | 9.1 | |||
Number of shares reserved for grant | 5.6 | |||
Stock Options | ||||
Stock-based compensation | ||||
Contractual term | 10 years | 10 years | 10 years | |
Stock Options | 2016 Incentive Plan | ||||
Stock-based compensation | ||||
Contractual term | 10 years |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Based Compensation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Stock-based compensation | |||
Stock-based compensation expense | $ 14,910 | $ 8,938 | $ 9,835 |
Stock Options | |||
Stock-based compensation | |||
Stock-based compensation expense | 6,096 | 4,564 | 4,938 |
Restricted Stock Units | |||
Stock-based compensation | |||
Stock-based compensation expense | $ 8,814 | $ 4,374 | $ 4,897 |
Stock-Based Compensation - Unre
Stock-Based Compensation - Unrecognized Compensation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Unrecognized stock-based compensation expense | |||
Total unrecognized stock-based compensation expense | $ 10,600 | $ 8,748 | |
Excess tax benefit from stock-based compensation | $ 1,649 | ||
Excess tax deficiency from stock-based compensation | 207 | ||
Stock Options | |||
Unrecognized stock-based compensation expense | |||
Unrecognized stock option compensation expense | $ 4,709 | 3,849 | |
Weighted average period of recognition | 2 years | ||
Restricted Stock Units | |||
Unrecognized stock-based compensation expense | |||
Unrecognized restricted stock unit compensation expense | $ 5,891 | $ 4,899 | |
Weighted average period of recognition | 1 year 10 months 24 days |
Stock-Based Compensation - St83
Stock-Based Compensation - Stock Options (Details) - Stock Options - shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Stock Options | |||
Option grants (in shares) | 975,873 | 1,265,046 | 668,362 |
Contractual term | 10 years | 10 years | 10 years |
Awards that vest after two years | |||
Stock Options | |||
Percentage of granted awards that will vest | 50.00% | ||
Vesting period for awards | 2 years | ||
Awards that vest after three years | |||
Stock Options | |||
Percentage of granted awards that will vest | 50.00% | ||
Vesting period for awards | 3 years |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Information Related to Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Stock Options | |||
Cash proceeds from exercises of options | $ 1,700 | $ 900 | $ 900 |
Stock Options | |||
Stock Options | |||
Intrinsic value of options exercised | $ 2,300 | $ 800 | $ 2,000 |
Weighted average fair value (in dollars per share) | $ 7.78 | $ 3.82 | $ 9.45 |
Total grant-date fair value of stock options granted | $ 7,600 | $ 4,800 | $ 6,300 |
Options | |||
Outstanding at the beginning of the period (in shares) | 4,293,081 | 3,265,900 | 2,759,306 |
Granted (in shares) | 975,873 | 1,265,046 | 668,362 |
Exercised (in shares) | (192,260) | (121,146) | (108,952) |
Lapsed (forfeited or cancelled) (in shares) | (148,113) | (116,719) | (52,816) |
Outstanding at the end of the period (in shares) | 4,928,581 | 4,293,081 | 3,265,900 |
Exercisable at the end of the period (in shares) | 2,605,778 | ||
Weighted Average Exercise Price | |||
Outstanding at the beginning of the period (in dollars per share) | $ 14.61 | $ 15.45 | $ 11.81 |
Granted (in dollars per share) | 22.20 | 12.78 | 30.24 |
Exercised (in dollars per share) | 10.14 | 10.06 | 10.35 |
Lapsed (forfeited or cancelled) (in dollars per share) | 22.34 | 22.70 | 23.03 |
Outstanding at the end of the period (in dollars per share) | 16.07 | $ 14.61 | $ 15.45 |
Exercisable at the end of the period (in dollars per share) | $ 13.75 | ||
Weighted Average Remaining Life (Years) | |||
Outstanding at the end of the period | 6 years 1 month 6 days | ||
Exercisable at the end of the period | 4 years | ||
Intrinsic Value | |||
Intrinsic Value (dollars in thousands) | $ 40,027 | ||
Exercisable at the end of the period | $ 28,515 |
Stock-Based Compensation - KapS
Stock-Based Compensation - KapStone Stock Options Black-Scholes Assumptions (Details) - Stock Options | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Stock Options Black-Scholes assumptions (weighted average): | |||
Expected volatility (as a percent) | 43.40% | 43.63% | 38.73% |
Expected life | 5 years 3 months | 5 years 26 days | 4 years 11 months 1 day |
Risk-free interest rate (as a percent) | 2.05% | 1.35% | 1.36% |
Expected dividend yield | 1.76% | 1.81% | 1.55% |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock (Details) - Restricted Stock Units $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2017USD ($)age$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | |
Units | |||
Outstanding at the beginning of the period (in shares) | shares | 691,720 | 550,009 | 588,067 |
Granted (in shares) | shares | 475,446 | 393,389 | 214,051 |
Vested (in shares) | shares | (261,718) | (215,243) | (228,825) |
Forfeited (in shares) | shares | (42,522) | (36,435) | (23,284) |
Outstanding at the end of the period (in shares) | shares | 862,926 | 691,720 | 550,009 |
Weighted Average Grant Date Fair Value | |||
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 20.93 | $ 24.60 | $ 16.98 |
Granted (in dollars per share) | $ / shares | 22.42 | 12.79 | 30.41 |
Vested (in dollars per share) | $ / shares | 26.51 | 15 | 10.94 |
Forfeited (in dollars per share) | $ / shares | 20.49 | 23.16 | 20.43 |
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 20.11 | $ 20.93 | $ 24.60 |
Additional disclosures | |||
Fair value of awards granted | $ | $ 10.7 | $ 5 | $ 6.5 |
Fair value of awards vested | $ | $ 6.9 | $ 3.2 | $ 2.5 |
Executive officers and certain employees | |||
Stock-based compensation | |||
Vesting period for awards | 3 years | ||
Grantee's attained age when awards automatically vest (in years) | age | 65 | ||
Directors | |||
Stock-based compensation | |||
Vesting period for awards | 1 year | ||
Grantee's attained age when awards automatically vest (in years) | age | 65 |
Commitments and Contingencies87
Commitments and Contingencies (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | |
Commitments and contingencies | |||
Commercial commitments | $ 14,100 | $ 16,600 | |
Operating Leases | |||
Number of corrugated manufacturing plants leased | item | 13 | ||
Number of distribution centers | item | 60 | ||
Future minimum rental payments due under non-cancellable operating leases | |||
2,018 | $ 45,812 | ||
2,019 | 40,777 | ||
2,020 | 35,349 | ||
2,021 | 29,616 | ||
2,022 | 24,510 | ||
Thereafter | 97,802 | ||
Total | 273,866 | ||
Rental expense under operating lease | 51,000 | $ 49,100 | $ 36,000 |
Number of distribution and fulfillment centers | item | 60 | ||
Letter of credit sub-facility | |||
Commitments and contingencies | |||
Amount drawn under letters of credit | $ 0 |
Commitments and Contingencies -
Commitments and Contingencies - Purchase Obligation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Purchase Obligation | |||
Term of purchase commitment | 15 years | ||
Materials purchased | $ 29.8 | $ 35.2 | $ 39.1 |
Pine Pulpwood | |||
Purchase Obligation | |||
Percentage of material requirement | 25.00% | ||
Saw Timber | |||
Purchase Obligation | |||
Percentage of material requirement | 60.00% | ||
Natural Gas | |||
Purchase Obligation | |||
Materials purchased | $ 27.5 | ||
North Charleston and Roanoke Rapids paper mills | |||
Purchase Obligation | |||
Term of purchase commitment | 20 years | ||
Annual purchase obligation | $ 13.4 |
Commitments and Contingencies89
Commitments and Contingencies - Union Contract Status (Details) | Dec. 31, 2017employee |
Commitments and contingencies | |
Number of employees | 6,400 |
Collective bargaining agreement | |
Commitments and contingencies | |
Number of employees | 2,400 |
Percentage of employees represented by trade unions | 38.00% |
North Charleston | |
Commitments and contingencies | |
Number of employees | 560 |
Roanoke Rapids | |
Commitments and contingencies | |
Number of employees | 310 |
Longview | |
Commitments and contingencies | |
Number of employees | 630 |
Commitments and Contingencies90
Commitments and Contingencies - Contingent Consideration (Details) $ in Millions | Dec. 31, 2017USD ($) | Nov. 30, 2014USD ($)item | Dec. 31, 2017USD ($) |
Victory | |||
Contingent consideration | |||
Total potential payout | $ 20.7 | $ 20.7 | |
Threshold period from closing of sale for potential additional contingent consideration | 30 months | 30 months | |
Longview | |||
Legal Claims | |||
Discount rate (as a percent) | 2.30% | ||
Total estimated remedy | $ 342 | ||
Number of other potentially responsible parties | item | 45 |
Net income per share (Details)
Net income per share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Earnings Per Share, Diluted, by Common Class, Including Two Class Method | |||||||||||
Net income | $ 187,709 | $ 30,026 | $ 19,776 | $ 5,992 | $ 18,338 | $ 31,018 | $ 20,722 | $ 16,174 | $ 243,503 | $ 86,252 | $ 106,386 |
Weighted-average number of common shares for basic net income per share | 96,859,516 | 96,533,368 | 96,257,749 | ||||||||
Incremental effect of dilutive common stock equivalents: | |||||||||||
Unexercised stock options (in shares) | 1,285,701 | 915,488 | 1,096,085 | ||||||||
Unvested restricted stock awards (in shares) | 469,884 | 328,210 | 281,705 | ||||||||
Weighted-average number of shares for diluted net income per share | 98,615,101 | 97,777,066 | 97,635,539 | ||||||||
Net income per share - basic (in dollars per share) | $ 1.94 | $ 0.31 | $ 0.20 | $ 0.06 | $ 0.19 | $ 0.32 | $ 0.21 | $ 0.17 | $ 2.51 | $ 0.89 | $ 1.11 |
Net income per share - diluted (in dollars per share) | $ 1.90 | $ 0.30 | $ 0.20 | $ 0.06 | $ 0.19 | $ 0.32 | $ 0.21 | $ 0.17 | $ 2.47 | $ 0.88 | $ 1.09 |
Weighted average | |||||||||||
Incremental effect of dilutive common stock equivalents: | |||||||||||
Anti-dilutive unexercised stock options (in shares) | 1,670,288 | 1,107,999 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Segment information | |||||||||||
Net Sales | $ 858,682 | $ 868,418 | $ 822,717 | $ 765,843 | $ 777,495 | $ 776,636 | $ 784,911 | $ 738,215 | $ 3,315,660 | $ 3,077,257 | $ 2,789,345 |
Operating Income (Loss) | 78,061 | $ 59,745 | $ 41,195 | $ 20,124 | 37,525 | $ 55,008 | $ 43,513 | $ 34,600 | 199,125 | 170,646 | 199,167 |
Depreciation and Amortization | 186,801 | 182,213 | 162,179 | ||||||||
Capital Expenditures | 138,358 | 126,865 | 126,756 | ||||||||
Total Assets | 3,323,985 | 3,255,875 | 3,323,985 | 3,255,875 | |||||||
Income from equity method investments excluded from income | 1,752 | 548 | |||||||||
Operating Segment | |||||||||||
Segment information | |||||||||||
Net Sales | 3,315,660 | 3,077,257 | 2,789,345 | ||||||||
Operating Income (Loss) | 199,125 | 170,646 | 199,167 | ||||||||
Depreciation and Amortization | 186,801 | 182,213 | 162,179 | ||||||||
Capital Expenditures | 138,358 | 126,865 | 126,756 | ||||||||
Total Assets | 3,323,985 | 3,255,875 | 3,323,985 | 3,255,875 | 3,222,110 | ||||||
Intersegment | |||||||||||
Segment information | |||||||||||
Net Sales | (86,509) | (72,089) | (22,280) | ||||||||
Paper and Packaging | |||||||||||
Segment information | |||||||||||
Net Sales | 2,335,114 | 2,127,220 | 2,206,396 | ||||||||
Income from equity method investments excluded from income | 1,800 | 500 | |||||||||
Paper and Packaging | Operating Segment | |||||||||||
Segment information | |||||||||||
Net Sales | 2,421,623 | 2,199,309 | 2,228,676 | ||||||||
Operating Income (Loss) | 227,388 | 181,157 | 224,012 | ||||||||
Depreciation and Amortization | 155,605 | 151,506 | 145,363 | ||||||||
Capital Expenditures | 129,360 | 116,022 | 108,599 | ||||||||
Total Assets | 2,620,391 | 2,541,634 | 2,620,391 | 2,541,634 | 2,489,683 | ||||||
Paper and Packaging | Intersegment | |||||||||||
Segment information | |||||||||||
Net Sales | 86,509 | 72,089 | 22,280 | ||||||||
Distribution | |||||||||||
Segment information | |||||||||||
Net Sales | 980,546 | 950,037 | 582,949 | ||||||||
Distribution | Operating Segment | |||||||||||
Segment information | |||||||||||
Net Sales | 980,546 | 950,037 | 582,949 | ||||||||
Operating Income (Loss) | 30,204 | 29,296 | 20,719 | ||||||||
Depreciation and Amortization | 23,667 | 23,027 | 13,108 | ||||||||
Capital Expenditures | 2,258 | 4,349 | 3,190 | ||||||||
Total Assets | 652,544 | 658,208 | 652,544 | 658,208 | 675,204 | ||||||
Corporate | Operating Segment | |||||||||||
Segment information | |||||||||||
Operating Income (Loss) | (58,467) | (39,807) | (45,564) | ||||||||
Depreciation and Amortization | 7,529 | 7,680 | 3,708 | ||||||||
Capital Expenditures | 6,740 | 6,494 | 14,967 | ||||||||
Total Assets | $ 51,050 | $ 56,033 | $ 51,050 | 56,033 | 57,223 | ||||||
Victory | Minimum | |||||||||||
Segment information | |||||||||||
Number of distribution centers | item | 60 | ||||||||||
Containerboard / Corrugated Products | Paper and Packaging | |||||||||||
Segment information | |||||||||||
Net Sales | $ 1,528,427 | 1,348,250 | 1,399,522 | ||||||||
Containerboard / Corrugated Products | Paper and Packaging | Operating Segment | |||||||||||
Segment information | |||||||||||
Net Sales | 1,614,936 | 1,420,339 | 1,421,802 | ||||||||
Containerboard / Corrugated Products | Paper and Packaging | Intersegment | |||||||||||
Segment information | |||||||||||
Net Sales | 86,509 | 72,089 | 22,280 | ||||||||
Specialty paper | Paper and Packaging | |||||||||||
Segment information | |||||||||||
Net Sales | 718,532 | 692,043 | 720,588 | ||||||||
Specialty paper | Paper and Packaging | Operating Segment | |||||||||||
Segment information | |||||||||||
Net Sales | 718,532 | 692,043 | 720,588 | ||||||||
Other Products | Paper and Packaging | |||||||||||
Segment information | |||||||||||
Net Sales | 88,155 | 86,927 | 86,286 | ||||||||
Other Products | Paper and Packaging | Operating Segment | |||||||||||
Segment information | |||||||||||
Net Sales | 88,155 | 86,927 | 86,286 | ||||||||
US based customers | |||||||||||
Segment information | |||||||||||
Net Sales | 2,849,995 | 2,540,592 | 2,300,806 | ||||||||
Foreign based customers | |||||||||||
Segment information | |||||||||||
Net Sales | $ 465,665 | $ 536,665 | $ 488,539 |
Quarterly Financial Informati93
Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 31, 2017 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Net sales | $ 858,682 | $ 868,418 | $ 822,717 | $ 765,843 | $ 777,495 | $ 776,636 | $ 784,911 | $ 738,215 | $ 3,315,660 | $ 3,077,257 | $ 2,789,345 | |
Gross profit | 146,627 | 122,512 | 108,508 | 86,609 | 95,621 | 111,121 | 99,067 | 95,340 | ||||
Operating income | 78,061 | 59,745 | 41,195 | 20,124 | 37,525 | 55,008 | 43,513 | 34,600 | 199,125 | 170,646 | 199,167 | |
Net income | $ 187,709 | $ 30,026 | $ 19,776 | $ 5,992 | $ 18,338 | $ 31,018 | $ 20,722 | $ 16,174 | $ 243,503 | $ 86,252 | $ 106,386 | |
Net income per share: | ||||||||||||
Basic (in dollars per share) | $ 1.94 | $ 0.31 | $ 0.20 | $ 0.06 | $ 0.19 | $ 0.32 | $ 0.21 | $ 0.17 | $ 2.51 | $ 0.89 | $ 1.11 | |
Diluted (in dollars per share) | $ 1.90 | $ 0.30 | $ 0.20 | $ 0.06 | $ 0.19 | $ 0.32 | $ 0.21 | $ 0.17 | $ 2.47 | $ 0.88 | $ 1.09 | |
Planned maintenance outages | $ 10,000 | $ 13,000 | $ 17,600 | $ 6,200 | $ 3,200 | $ 3,800 | $ 19,000 | $ 6,600 | ||||
Plant closure costs | 1,300 | 8,900 | ||||||||||
Union contract ratification costs | 900 | 5,000 | ||||||||||
Operating expenses | 1,100 | 1,000 | 1,000 | 1,300 | ||||||||
Provisional net tax benefit | $ (144,400) | |||||||||||
GCIU-Employer Retirement Fund | ||||||||||||
Net income per share: | ||||||||||||
Estimated withdrawal liability | $ 6,400 | 6,400 | $ 6,400 | $ 6,400 | $ 6,400 | |||||||
Hurricane Matthew | ||||||||||||
Gross profit | $ (6,400) | |||||||||||
Victory | ||||||||||||
Net income per share: | ||||||||||||
Contingent consideration expense (income) | $ 6,100 | $ (3,900) | $ 1,100 | $ 2,500 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Events - USD ($) $ / shares in Units, $ in Millions | Feb. 01, 2018 | Mar. 31, 2018 | Sep. 30, 2018 |
Subsequent Events | |||
Proceeds from sale of land and building, net of fees, taxes and commissions | $ 14.7 | ||
Forecast | |||
Subsequent Events | |||
Gain on sale of land and building | $ 7.5 | ||
Forecast | WestRock | KapStone Paper and Packaging Corporation | |||
Subsequent Events | |||
Share price (in dollar per share) | $ 35 | ||
Long-term debt purchase price | $ 4,900 |