Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 30, 2019 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | VRS | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Class A, Shares Outstanding | 34,676,924 | |
Entity Registrant Name | VERSO CORPORATION | |
Entity Central Index Key | 0001421182 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 6 | $ 26 |
Accounts receivable, net | 201 | 197 |
Inventories | 473 | 398 |
Prepaid expenses and other assets | 9 | 12 |
Total current assets | 689 | 633 |
Property, plant and equipment, net | 1,007 | 1,016 |
Intangibles and other assets, net | 70 | 50 |
Total assets | 1,766 | 1,699 |
Current liabilities: | ||
Accounts payable | 210 | 215 |
Accrued and other liabilities | 102 | 118 |
Total current liabilities | 312 | 333 |
Long-term debt and finance leases | 45 | 0 |
Pension benefit obligation | 420 | 428 |
Other long-term liabilities | 45 | 32 |
Total liabilities | 822 | 793 |
Commitments and contingencies (Note 10) | ||
Equity: | ||
Preferred stock -- par value $0.01 (50,000,000 shares authorized, no shares issued) | 0 | 0 |
Common stock -- par value $0.01 (210,000,000 Class A shares authorized with 34,569,917 shares issued and 34,484,093 outstanding on December 31, 2018 and March 31, 2019; 40,000,000 Class B shares authorized with no shares issued and outstanding on December 31, 2018 and March 31, 2019) | 0 | 0 |
Treasury stock -- at cost (85,824 shares on December 31, 2018 and March 31, 2019) | (2) | (2) |
Paid-in-capital | 688 | 686 |
Retained earnings | 138 | 102 |
Accumulated other comprehensive income | 120 | 120 |
Total equity | 944 | 906 |
Total liabilities and equity | $ 1,766 | $ 1,699 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Treasury stock, shares (in shares) | 85,824 | 85,824 |
Common Class A | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 210,000,000 | 210,000,000 |
Common stock, shares issued (in shares) | 34,569,917 | 34,569,917 |
Common stock, shares outstanding (in shares) | 34,484,093 | 34,484,093 |
Common Class B | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 40,000,000 | 40,000,000 |
Common stock, shares issued (in shares) | 0 | 0 |
Common stock, shares outstanding (in shares) | 0 | 0 |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||
Net sales | $ 639 | $ 639 |
Costs and expenses: | ||
Cost of products sold (exclusive of depreciation and amortization) | 549 | 581 |
Depreciation and amortization | 28 | 27 |
Selling, general and administrative expenses | 24 | 25 |
Restructuring charges | 0 | 1 |
Other operating (income) expense | 1 | 0 |
Operating income (loss) | 37 | 5 |
Interest expense | 1 | 11 |
Other (income) expense | (1) | (4) |
Income (loss) before income taxes | 37 | (2) |
Income tax expense | 1 | 0 |
Net income (loss) | $ 36 | $ (2) |
Income (loss) per common share: | ||
Basic (usd per share) | $ 1.05 | $ (0.06) |
Diluted (usd per share) | $ 1.03 | $ (0.06) |
Weighted average common shares outstanding (in thousands): | ||
Basic (shares) | 34,484 | 34,465 |
Diluted (shares) | 35,225 | 34,465 |
UNAUDITED CONDENSED CONSOLIDA_4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 36 | $ (2) |
Defined benefit pension/other postretirement plans: | ||
Amortization of net actuarial loss | 0 | 1 |
Other comprehensive income (loss), net of tax | 0 | 1 |
Comprehensive income (loss) | $ 36 | $ (1) |
UNAUDITED CONDENSED CONSOLIDA_5
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFECIT) - USD ($) $ in Millions | Total | Class A | Class B | Common StockClass A | Common StockClass B | Treasury Stock | Paid-in-Capital | Retained Earnings (Deficit) | Accumulated Other Comprehensive Income (Loss) |
Common stock, shares, beginning of the period at Dec. 31, 2017 | 34,173,000 | 291,000 | |||||||
Stockholders' equity beginning of period at Dec. 31, 2017 | $ 746 | $ 0 | $ 0 | $ 0 | $ 676 | $ (62) | $ 132 | ||
Treasury stock, shares beginning of period at Dec. 31, 2017 | 9,000 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income (loss) | (2) | (2) | |||||||
Other comprehensive income (loss), net | 1 | 1 | |||||||
Class B stock converted to Class A stock (in shares) | 144,000 | (144,000) | |||||||
Class B stock converted to Class A stock | 0 | ||||||||
Equity award expense | 1 | 1 | |||||||
Common stock, shares, end of the period at Mar. 31, 2018 | 34,317,000 | 147,000 | |||||||
Stockholders' equity end of period at Mar. 31, 2018 | 746 | $ 0 | $ 0 | $ 0 | 677 | (71) | 140 | ||
Treasury stock, shares end of period at Mar. 31, 2018 | 9,000 | ||||||||
Common stock, shares, beginning of the period at Dec. 31, 2018 | 34,569,917 | 0 | 34,570,000 | 0 | |||||
Stockholders' equity beginning of period at Dec. 31, 2018 | $ 906 | $ 0 | $ 0 | $ (2) | 686 | 102 | 120 | ||
Treasury stock, shares beginning of period at Dec. 31, 2018 | 85,824 | 86,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income (loss) | $ 36 | 36 | |||||||
Other comprehensive income (loss), net | 0 | ||||||||
Equity award expense | 2 | 2 | |||||||
Common stock, shares, end of the period at Mar. 31, 2019 | 34,569,917 | 0 | 34,570,000 | 0 | |||||
Stockholders' equity end of period at Mar. 31, 2019 | $ 944 | $ 0 | $ 0 | $ (2) | $ 688 | $ 138 | $ 120 | ||
Treasury stock, shares end of period at Mar. 31, 2019 | 85,824 | 86,000 |
UNAUDITED CONDENSED CONSOLIDA_6
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash Flows From Operating Activities: | ||
Net income (loss) | $ 36 | $ (2) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 28 | 27 |
Net periodic pension cost (income) | 0 | (2) |
Pension plan contributions | (8) | (6) |
Amortization of debt issuance cost and discount | 0 | 6 |
Equity award expense | 2 | 1 |
(Gain) loss on sale or disposal of assets | 1 | 0 |
Deferred taxes | (1) | 0 |
Changes in assets and liabilities: | ||
Accounts receivable, net | (4) | (14) |
Inventories | (75) | (13) |
Prepaid expenses and other assets | 2 | 2 |
Accounts payable | (3) | 22 |
Accrued and other liabilities | (26) | (13) |
Net cash provided by (used in) operating activities | (46) | 8 |
Cash Flows From Investing Activities: | ||
Capital expenditures | (18) | (14) |
Net cash provided by (used in) investing activities | (18) | (14) |
Cash Flows From Financing Activities: | ||
Borrowings on ABL Facility | 150 | 147 |
Payments on ABL Facility | (105) | (95) |
Payments on Term Loan Facility | 0 | (46) |
Debt issuance costs | (1) | 0 |
Net cash provided by (used in) financing activities | 44 | 6 |
Change in Cash and cash equivalents and restricted cash | (20) | 0 |
Cash and cash equivalents and restricted cash at beginning of period | 28 | 9 |
Cash and cash equivalents and restricted cash at end of period | 8 | 9 |
Noncash investing and financing activities: | ||
Right-of-use assets recorded upon adoption of ASC 842 | 24 | 0 |
Right-of-use assets obtained in exchange for new finance lease liabilities | $ 2 | $ 0 |
SUMMARY OF BUSINESS AND BASIS O
SUMMARY OF BUSINESS AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
SUMMARY OF BUSINESS AND BASIS OF PRESENTATION | SUMMARY OF BUSINESS AND BASIS OF PRESENTATION Nature of Business — Verso operates in the pulp and paper market segments. However, Verso determined that the operating income (loss) of the pulp segment is immaterial for disclosure purposes. Verso’s core business platform is as a producer of specialty papers, graphic papers, packaging papers and pulp. Verso’s products are used primarily in media and marketing applications, including catalogs, magazines, commercial printing applications, such as high-end advertising brochures, annual reports and direct-mail advertising, and specialty applications, such as flexible packaging and label and converting. Verso’s market kraft pulp is used to manufacture printing, writing and specialty paper grades, tissue, containerboard, bag and other products. Verso’s assets are utilized across segments in an integrated mill system and are not identified by segment or reviewed by management on a segment basis. Verso operates primarily in one geographic location, North America. Basis of Presentation — This report contains the Unaudited Condensed Consolidated Financial Statements of Verso as of December 31, 2018 and March 31, 2019 and for the three months ended March 31, 2018 and March 31, 2019 . The December 31, 2018 Unaudited Condensed Consolidated Balance Sheet data was derived from audited financial statements, but it does not include all disclosures required annually by accounting principles generally accepted in the United States of America, or “GAAP.” In Verso’s opinion, the Unaudited Condensed Consolidated Financial Statements include all adjustments that are necessary for the fair presentation of Verso’s respective financial conditions, results of operations and cash flows for the interim periods presented. Except as disclosed in the notes to the Unaudited Condensed Consolidated Financial Statements, such adjustments are of a normal, recurring nature. Variable interest entities for which Verso is the primary beneficiary are consolidated. Intercompany balances and transactions are eliminated in consolidation. The results of operations and cash flows for the interim periods presented may not necessarily be indicative of full-year results. It is suggested that these financial statements be read in conjunction with the audited consolidated financial statements and notes thereto of Verso contained in its Annual Report on Form 10-K for the year ended December 31, 2018 . |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS Accounting Guidance Adopted in 2019 ASC Topic 842, Leases . Verso adopted Accounting Standards Codification, or “ASC,” 842, Leases, on January 1, 2019. Verso has elected the package of practical expedients under the transition provisions of the new standard including not reassessing lease classification or whether expired or existing contracts contain leases and not revaluing initial direct costs for existing leases. Verso has not elected to adopt the hindsight practical expedient. Verso has elected to apply the optional transition method provided by Accounting Standards Update, or “ASU,” 2018-11, which allows entities to continue to apply the legacy guidance under ASC 840, including its disclosure requirements, in the comparative periods presented in the year of adoption. Verso established a project team to evaluate and implement the new standard and its policies and procedures related to accounting for right-of-use assets, related liabilities and related income and expense, including implementation of a new system to track such leases. These policies and procedures modify contract review controls to consider the new criteria for determining whether a contract is or contains a lease, specifically to clarify the definition of a lease and align with the control concept. The most significant impact of the new standard for Verso is recording the right-of-use assets and related liabilities on the balance sheet for its operating leases. The new standard requires that fixed payments, probable amounts the lessee will owe under a residual value guarantee and certain other payments be included in the valuation of these right-of-use assets and related liabilities. Variable payments are excluded from the calculation unless they are based on an index or rate. The adoption of this new standard resulted in an adjustment to recognize $24 million in right-of-use assets and related liabilities on the Unaudited Condensed Consolidated Balance Sheet associated with Verso’s leases at January 1, 2019 (see Note 5). The impact to the Unaudited Condensed Consolidated Statements of Operations and Unaudited Condensed Consolidated Statements of Cash Flows was de minimis. Accounting Guidance Not Yet Adopted ASC Topic 350, Intangible Assets - Goodwill & Other . In August 2018, the Financial Accounting Standards Board, or “FASB” issued ASU 2018-15, Customer’s Accounting for Implementation Costs in a Cloud Computing Arrangement that is a Service Contract (Topic 350), which aligns the accounting for such costs with guidance on capitalizing costs associated with developing or obtaining internal use software. The guidance is effective for annual and interim periods beginning after December 15, 2019 and early adoption is permitted at any interim period. Verso is currently evaluating the impact of this guidance. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | REVENUE RECOGNITION The following table presents the revenues disaggregated by product included on the Unaudited Condensed Consolidated Statements of Operations: Three Months Three Months Ended Ended (Dollars in millions) March 31, 2018 March 31, 2019 Graphic papers $ 421 $ 388 Specialty papers 175 194 Packaging papers 14 24 Pulp 29 33 Total Net sales $ 639 $ 639 The following table presents the revenue disaggregated by sales channel included on the Unaudited Condensed Consolidated Statement of Operations: Three Months Three Months Ended Ended (Dollars in millions) March 31, 2018 March 31, 2019 Direct sales $ 357 $ 392 Merchant sales 241 212 Broker sales 41 35 Total Net sales $ 639 $ 639 |
SUPPLEMENTAL FINANCIAL STATEMEN
SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION | SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION Restricted Cash — As of December 31, 2018 and March 31, 2019 , $2 million of restricted cash was included in Intangibles and other assets, net on the Unaudited Condensed Consolidated Balance Sheets primarily related to asset retirement obligations in the state of Michigan. These cash deposits are required by the state and may only be used for the future closure of a landfill. For the three months ended March 31, 2018 and March 31, 2019 , Cash and cash equivalents in the Unaudited Condensed Consolidated Statements of Cash Flows include restricted cash of $2 million . Inventories — The following table summarizes inventories by major category: December 31, March 31, (Dollars in millions) 2018 2019 Raw materials $ 88 $ 110 Work-in-process 56 65 Finished goods 225 268 Replacement parts and other supplies 29 30 Inventories $ 398 $ 473 Property, plant and equipment — Depreciation expense for the three months ended March 31, 2018 and March 31, 2019 was $26 million and $27 million , respectively. Interest costs capitalized for the three months ended March 31, 2018 and March 31, 2019 were each zero . Capital expenditures unpaid as of March 31, 2018 and March 31, 2019 were each $5 million . |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
LEASES | LEASES Verso adopted ASC 842, Leases, on January 1, 2019 (see Note 2). Verso leases certain office space, warehouses, vehicles and equipment under operating leases and certain equipment under finance leases. Leases with an initial term of 12 months or less, including any renewal options which are not reasonably certain of exercise in 12 months or less, are not recorded on the Unaudited Condensed Consolidated Balance Sheet. Verso recognized lease expense for these leases on a straight line basis over the lease term. Certain assets include renewal terms that generally range from 1 month to 1 year. Certain warehouse leases include only a payment for space utilized. These payments are not based on an index or rate and are therefore not used in the valuation of the right-of-use asset and lease obligations. The lease agreements do not include residual value guarantees. Leases do not include any restrictions or covenants. The following table details right-of-use assets and associated obligations for operating and finance leases included in the Unaudited Condensed Consolidated Balance Sheet as of March 31, 2019. March 31, (Dollars in millions) Classification 2019 Assets: Operating lease assets Intangibles and other assets, net $ 21 Finance lease assets Property, plant and equipment, net (1) 2 Total leased assets $ 23 Liabilities Current liabilities: Operating Accrued and other liabilities $ 10 Finance Current maturities of long-term debt and finance leases — Non-current liabilities: Operating Other long-term liabilities 11 Finance Long-term debt and finance leases 2 Total lease liabilities $ 23 (1) Finance lease assets are recorded net of accumulated amortization. The following table details the costs associated with leasing transactions included on the Unaudited Condensed Consolidated Statement of Operations for the three months ended March 31, 2019. Three Months Ended (Dollars in millions) Classification March 31, 2019 Operating lease cost Cost of products sold (exclusive of depreciation and amortization) $ 3 Variable lease cost Cost of products sold (exclusive of depreciation and amortization) 2 Short term lease cost Cost of products sold (exclusive of depreciation and amortization) 1 Finance lease cost: Amortization of leased assets Depreciation and amortization — Interest on lease liabilities Interest expense — Net lease cost $ 6 The following table details the future lease payments associated with leases commenced as of March 31, 2019, including amounts for any renewals that Verso has determined are reasonably certain to be exercised. Operating Finance (Dollars in millions) Leases (1) Leases (2) Total 2019 (remaining) $ 8 $ — $ 8 2020 8 1 9 2021 4 — 4 2022 1 1 2 2023 1 — 1 Thereafter — — — Total lease payments $ 22 $ 2 $ 24 Interest expense (1 ) — (1 ) Present value of lease liabilities $ 21 $ 2 $ 23 (1) Operating lease payments include $5 million related to options to extend lease terms that are reasonably certain of being exercised. (2) Finance lease payments exclude $2 million of legally binding lease payments for leases signed, but not yet commenced. The following table represents the future minimum rental payments due under non-cancelable operating leases that have initial or remaining lease terms in excess of one year, as of December 31, 2018. Amounts are based on ASC 840, Leases , that was superseded upon our adoption of ASC 842, Leases , on January 1, 2019. (Dollars in millions) 2019 $ 6 2020 5 2021 2 2022 1 2023 — Thereafter — Total $ 14 The following assumptions were used to determine the right-of-use assets and obligations associated with our leases as of March 31, 2019. Verso uses its incremental borrowing rate to value the right-of-use asset and related obligations. March 31, 2019 Weighted-average remaining lease term (years): Operating leases 2.7 Finance leases 4.8 Weighted-average discount rate: Operating leases 4.3 % Finance leases 4.1 % The following table provides additional cash flow details associated with leases included in our Unaudited Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2019. Three Months Ended (Dollars in millions) March 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 3 Operating cash flows from finance leases — Financing cash flows from finance leases — |
LEASES | LEASES Verso adopted ASC 842, Leases, on January 1, 2019 (see Note 2). Verso leases certain office space, warehouses, vehicles and equipment under operating leases and certain equipment under finance leases. Leases with an initial term of 12 months or less, including any renewal options which are not reasonably certain of exercise in 12 months or less, are not recorded on the Unaudited Condensed Consolidated Balance Sheet. Verso recognized lease expense for these leases on a straight line basis over the lease term. Certain assets include renewal terms that generally range from 1 month to 1 year. Certain warehouse leases include only a payment for space utilized. These payments are not based on an index or rate and are therefore not used in the valuation of the right-of-use asset and lease obligations. The lease agreements do not include residual value guarantees. Leases do not include any restrictions or covenants. The following table details right-of-use assets and associated obligations for operating and finance leases included in the Unaudited Condensed Consolidated Balance Sheet as of March 31, 2019. March 31, (Dollars in millions) Classification 2019 Assets: Operating lease assets Intangibles and other assets, net $ 21 Finance lease assets Property, plant and equipment, net (1) 2 Total leased assets $ 23 Liabilities Current liabilities: Operating Accrued and other liabilities $ 10 Finance Current maturities of long-term debt and finance leases — Non-current liabilities: Operating Other long-term liabilities 11 Finance Long-term debt and finance leases 2 Total lease liabilities $ 23 (1) Finance lease assets are recorded net of accumulated amortization. The following table details the costs associated with leasing transactions included on the Unaudited Condensed Consolidated Statement of Operations for the three months ended March 31, 2019. Three Months Ended (Dollars in millions) Classification March 31, 2019 Operating lease cost Cost of products sold (exclusive of depreciation and amortization) $ 3 Variable lease cost Cost of products sold (exclusive of depreciation and amortization) 2 Short term lease cost Cost of products sold (exclusive of depreciation and amortization) 1 Finance lease cost: Amortization of leased assets Depreciation and amortization — Interest on lease liabilities Interest expense — Net lease cost $ 6 The following table details the future lease payments associated with leases commenced as of March 31, 2019, including amounts for any renewals that Verso has determined are reasonably certain to be exercised. Operating Finance (Dollars in millions) Leases (1) Leases (2) Total 2019 (remaining) $ 8 $ — $ 8 2020 8 1 9 2021 4 — 4 2022 1 1 2 2023 1 — 1 Thereafter — — — Total lease payments $ 22 $ 2 $ 24 Interest expense (1 ) — (1 ) Present value of lease liabilities $ 21 $ 2 $ 23 (1) Operating lease payments include $5 million related to options to extend lease terms that are reasonably certain of being exercised. (2) Finance lease payments exclude $2 million of legally binding lease payments for leases signed, but not yet commenced. The following table represents the future minimum rental payments due under non-cancelable operating leases that have initial or remaining lease terms in excess of one year, as of December 31, 2018. Amounts are based on ASC 840, Leases , that was superseded upon our adoption of ASC 842, Leases , on January 1, 2019. (Dollars in millions) 2019 $ 6 2020 5 2021 2 2022 1 2023 — Thereafter — Total $ 14 The following assumptions were used to determine the right-of-use assets and obligations associated with our leases as of March 31, 2019. Verso uses its incremental borrowing rate to value the right-of-use asset and related obligations. March 31, 2019 Weighted-average remaining lease term (years): Operating leases 2.7 Finance leases 4.8 Weighted-average discount rate: Operating leases 4.3 % Finance leases 4.1 % The following table provides additional cash flow details associated with leases included in our Unaudited Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2019. Three Months Ended (Dollars in millions) March 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 3 Operating cash flows from finance leases — Financing cash flows from finance leases — |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT The following table summarizes debt: December 31, March 31, (Dollars in millions) Maturity 2018 2019 ABL Facility 2/6/2024 $ — $ 45 Unamortized debt issuance costs, net — (2 ) Total Long-term debt $ — $ 43 As of March 31, 2019 , the fair value of Verso’s total debt outstanding was $45 million . On July 15, 2016, VPH entered into a $375 million asset-based revolving credit facility, or the “ABL Facility,” and a $220 million senior secured term loan (with loan proceeds of $198 million after the deduction of the original issue discount of $22 million ), or the “Term Loan Facility,” and collectively termed the “Credit Facilities.” After the Internal Reorganization, Verso Paper became the borrower under the Credit Facilities. During the three months ended March 31, 2018 , Verso made a scheduled principal payment of $4 million and a voluntary principal prepayment of $21 million on the Term Loan Facility. In addition, as a result of the excess cash flow requirement in the Term Loan Facility, Verso was obligated to fund additional principal payments during the three months ended March 31, 2018 of $21 million . The Term Loan Facility was paid in full on September 10, 2018 . On February 6, 2019 , Verso Paper, as borrower, and Verso Holding entered into a second amendment to the ABL Facility, or the “ABL Amendment.” As a result of the ABL Amendment, the ABL Facility provides for revolving commitments of $350 million , with a $100 million sublimit for letters of credit and a $35 million sublimit for swingline loans. Verso Paper may request one or more incremental revolving commitments in an aggregate principal amount up to the greater of (i) $75 million and (ii) the excess of the borrowing base over the revolving facility commitments of $350 million ; however, the lenders are not obligated to increase the revolving commitments upon any such request. Availability under the ABL Facility is subject to customary borrowing conditions. The ABL Facility will mature on February 6, 2024 . As a result of the ABL Amendment, outstanding borrowings under the ABL Facility bear interest at an annual rate equal to, at the option of Verso Paper, either (i) a customary London interbank offered rate plus an applicable margin ranging from 1.25% to 1.75% or (ii) a customary base rate plus an applicable margin ranging from 0.25% to 0.75% , determined based upon the average excess availability under the ABL Facility. Verso Paper also is required to pay a commitment fee for the unused portion of the ABL Facility of 0.25% per year, based upon the average revolver usage under the ABL Facility. All obligations under the ABL Facility are unconditionally guaranteed by Verso Holding and certain of the subsidiaries of Verso Paper. The security interest with respect to the ABL Facility consists of a first-priority lien on certain assets of Verso Paper, Verso Holding and the other guarantor subsidiaries, including accounts receivable, inventory, certain deposit accounts, securities accounts and commodities accounts. The ABL Facility contains financial covenants requiring us, among other things, to maintain a minimum fixed charge coverage ratio in certain circumstances and a maximum total net leverage ratio. The ABL Facility also contains restrictions, among other things and subject to certain exceptions, on our ability to incur debt or liens, pay dividends, repurchase equity interest, prepay indebtedness, sell or dispose of assets and make investments in or merge with another company. The amount of borrowings and letters of credit available to Verso pursuant to the ABL Facility is limited to the lesser of $350 million or an amount determined pursuant to a borrowing base ( $344 million as of March 31, 2019 ). As of March 31, 2019 , the outstanding balance of the ABL Facility was $45 million , with $ 35 million issued in letters of credit and $264 million available for future borrowings, and the weighted-average interest rate on outstanding borrowings was 4.19% . Amounts included in interest expense (inclusive of amounts capitalized) and amounts of cash interest payments related to long-term debt for the periods presented are as follows: Three Months Three Months Ended Ended (Dollars in millions) March 31, 2018 March 31, 2019 Interest expense (1) $ 6 $ 1 Cash interest paid 5 1 Debt issuance cost and discount amortization (2) 6 — (1) Represents interest expense incurred on the Credit Facilities, exclusive of amortization of debt issuance cost and discount and inclusive of amounts capitalized. See Note 4 for additional information on capitalized interest costs. (2) Amortization of debt issuance cost and original issue discount, including the accelerated amortization associated with the early extinguishment of the Term Loan Facility, are included in Interest expense on the Unaudited Condensed Consolidated Statements of Operations and in amortization of debt issuance cost and discount on the Unaudited Condensed Consolidated Statements of Cash Flows. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | EARNINGS PER SHARE The following table provides a reconciliation of basic and diluted income (loss) per common share: Three Months Three Months Ended Ended March 31, 2018 March 31, 2019 Net income (loss) available to common shareholders (in millions) $ (2 ) $ 36 Weighted average common shares outstanding - basic (in thousands) 34,465 34,484 Dilutive shares from stock awards (in thousands) — 741 Weighted average common shares outstanding - diluted (in thousands) 34,465 35,225 Basic income (loss) per share $ (0.06 ) $ 1.05 Diluted income (loss) per share $ (0.06 ) $ 1.03 As a result of the net loss from continuing operations for the three months ended March 31, 2018 , 1.4 million restricted stock units as of March 31, 2018 were excluded from the calculation of diluted earnings per share as their inclusion would be anti-dilutive. As of March 31, 2019 , Verso has 1.8 million warrants outstanding at an exercise price of $27.86 (see Note 9). As a result of the exercise price of the warrants exceeding the average market price of Verso’s common stock during the three months ended March 31, 2018 and 2019 , 1.8 million warrants as of March 31, 2018 and March 31, 2019 were excluded from the calculations of diluted earnings per share as their inclusion would be anti-dilutive. No dividends were declared or paid in the periods presented. |
RETIREMENT BENEFITS
RETIREMENT BENEFITS | 3 Months Ended |
Mar. 31, 2019 | |
Retirement Benefits [Abstract] | |
RETIREMENT BENEFITS | RETIREMENT BENEFITS The following table summarizes the components of net periodic pension cost for the periods presented: Three Months Three Months Ended Ended (Dollars in millions) March 31, 2018 March 31, 2019 Service cost $ 1 $ 1 Interest cost 15 16 Expected return on plan assets (18 ) (17 ) Net periodic pension cost (income) $ (2 ) $ — Verso makes contributions to fund retirement benefits on an actuarially-determined basis, generally equal to the minimum amounts required by the Employee Retirement Income Security Act. Verso made contributions to the pension plans of $6 million and $8 million during the three months ended March 31, 2018 and March 31, 2019 , respectively. Verso expects to make additional cash contributions of at least $29 million to the pension plans in the remainder of 2019 . |
EQUITY
EQUITY | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
EQUITY | EQUITY Equity Awards On March 28, 2019, Verso granted 0.2 million time-based restricted stock units to its executives and certain senior managers. The compensation committee also granted 0.2 million additional performance-based restricted stock units on March 28, 2019. The performance awards vest at December 31, 2021 subject to a comparison of annualized total shareholder return (“TSR”) of Verso to a select group of peer companies over a 3 -year period. The vesting criteria of the performance awards meet the definition of a market condition for accounting purposes. The full grant date value of the performance awards will be recognized over the remaining vesting period provided that the employee is employed continuously to the vesting date. The number of shares which will ultimately vest at the vesting date ranges from 50% to 150% based on Verso stock performance relative to the peer group if Verso TSR is at least 5% during the performance period. The compensation expense associated with these awards was determined using the Monte Carlo valuation methodology. Verso recognized equity award expense of $1 million and $2 million for the three months ended March 31, 2018 and March 31, 2019 , respectively. As of March 31, 2019 , there was approximately $17 million of unrecognized compensation cost related to the 1.6 million non-vested restricted stock units, which is expected to be recognized over the weighted average period of 2.0 years. Time-based Restricted Stock Units Changes to non-vested time-based restricted stock units for the three months ended March 31, 2019 were as follows: Restricted Stock Weighted Average Units Grant Date Shares (in thousands) Outstanding Fair Value Non-vested at December 31, 2018 678 $ 10.04 Granted 171 21.05 Vested — — Forfeited (6 ) 16.87 Non-vested at March 31, 2019 843 12.23 Performance-based Restricted Stock Units Changes to non-vested performance-based restricted stock units for the three months ended March 31, 2019 were as follows: Restricted Stock Weighted Average Units Grant Date Shares (in thousands) Outstanding Fair Value Non-vested at December 31, 2018 638 $ 22.26 Granted 171 16.21 Vested — — Forfeited (6 ) 18.22 Non-vested at March 31, 2019 803 21.00 In April 2019, Verso recognized equity award expense of $3 million for the accelerated vesting of 233 thousand performance-based restricted stock units and 108 thousand time-based restricted stock units, net of cancellation of 124 thousand time-based restricted stock units, pursuant to a separation agreement, dated April 11, 2019, with the former Chief Executive Officer (see Note 11 for more information). Warrants On July 15, 2016, warrants to purchase up to an aggregate of 1.8 million shares of Class A common stock were issued to holders of first-lien secured debt at an exercise price of $27.86 per share and a seven -year term. As of March 31, 2019 , no warrants have been exercised. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Represented Employees — Approximately 70% of Verso’s hourly workforce is represented by unions. On February 28, 2019, the United Steelworkers, or “USW,” represented employees at four Verso sites, voted to ratify a new Master Labor Agreement, or the “Agreement,” covering five USW locals. The Agreement, which was effective on March 1, 2019, will run for a period of three years with staggered expiration dates at each of the affected sites. In addition, two smaller local unions (the International Brotherhood of Electrical Workers and the International Brotherhood of Teamsters) at two of the mill locations also signed and will participate in the Agreement. In connection with the negotiations and ratification of the Agreement during the three months ended March 31, 2019, Verso recognized $6 million of expense for signing bonuses and for the settlement of various work arrangement issues, to represented employees covered by the Agreement, which was reported in cost of products sold. Verso continues to negotiate with four smaller trade unions at two of the sites while continuing to work under the terms and conditions of their expired agreements. General Litigation — Verso is involved from time to time in legal proceedings incidental to the conduct of its business. While any proceeding or litigation has the element of uncertainty, Verso believes that the outcome of any of these lawsuits or claims that are pending or threatened or all of them combined (other than those that cannot be assessed due to their preliminary nature) will not have a material effect on the Unaudited Condensed Consolidated Financial Statements. |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 3 Months Ended |
Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | SUBSEQUENT EVENT Departure of Chief Executive Officer Effective as of April 5, 2019, B. Christopher DiSantis ceased being Chief Executive Officer and a member of Verso’s Board of Directors. In connection with Mr. DiSantis’ departure from Verso, Verso entered into a Separation Agreement and General Release with Mr. DiSantis (the “Separation Agreement”), dated April 11, 2019, consistent with Mr. DiSantis’ employment contract. Pursuant to the Separation Agreement, Mr. DiSantis agreed to release certain claims he may have against Verso and other released parties and will receive certain payments from Verso, including (i) accrued obligations (as defined in Mr. DiSantis’ employment contract); (ii) a severance payment equal to 25 months base salary, in the total amount of $1,804,687.50 (minus applicable taxes, withholdings, and deductions); (iii) a prorated portion of Mr. DiSantis’ bonus for fiscal year 2019, if any, payable at such time as bonuses are generally paid to senior executives of Verso; (iv) a monthly amount, equal to the current Verso-paid portion of any premiums (grossed up for income taxes) for Mr. DiSantis’ existing healthcare coverage and for Mr. DiSantis’ cost of COBRA continuation coverage for up to a maximum of 18 months; and (v) vesting of 341,174 of Mr. DiSantis’ unvested stock units. Appointment of Interim Chief Executive Officer On and effective as of April 5, 2019, the Board of Directors appointed Leslie T. Lederer as Interim Chief Executive Officer of Verso. Closure of Luke Mill On April 30, 2019, Verso announced that it will permanently shut down its paper mill in Luke, Maryland in response to the continuing decline in customer demand for the grades of coated freesheet paper produced at the Luke Mill, along with rising input costs, a significant influx of imports and rising compliance costs and infrastructure challenges associated with recent environmental regulation changes. Verso is expected to complete the shutdown and closure of the Luke Mill by June 30, 2019. The shutdown of the Luke Mill will reduce Verso’s coated freesheet production capacity by approximately 450,000 tons, reducing total annual paper production capacity to approximately 2.7 million tons. The permanent shutdown of the Luke Mill will result in the elimination of jobs, impacting approximately 675 employees at the Luke Mill. Verso estimates that the closure of the Luke Mill will result in pre-tax cash charges for severance, benefits and other shutdown activities of approximately $25 million to $35 million to be recorded in 2019. These estimated cash charges consist of approximately $15 million to $20 million in severance and benefit costs to be recorded in the second quarter ending June 30, 2019, and approximately $10 million to $15 million in other shutdown costs to be recorded in 2019. In connection with the permanent shutdown of the Luke Mill, Verso determined that a reduction in the useful lives of property, plant and equipment and related replacement parts and other supplies at the Luke Mill will be necessary and expects to recognize non-cash charges of approximately $95 million to $115 million for accelerated depreciation and impairment charges in the second quarter ending June 30, 2019. Costs associated with closure activities are based on currently available information and reflect management’s best estimates; accordingly, actual cash costs and non-cash charges and their timing may differ from those stated above. |
SUMMARY OF BUSINESS AND BASIS_2
SUMMARY OF BUSINESS AND BASIS OF PRESENTATION (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation — This report contains the Unaudited Condensed Consolidated Financial Statements of Verso as of December 31, 2018 and March 31, 2019 and for the three months ended March 31, 2018 and March 31, 2019 . The December 31, 2018 Unaudited Condensed Consolidated Balance Sheet data was derived from audited financial statements, but it does not include all disclosures required annually by accounting principles generally accepted in the United States of America, or “GAAP.” In Verso’s opinion, the Unaudited Condensed Consolidated Financial Statements include all adjustments that are necessary for the fair presentation of Verso’s respective financial conditions, results of operations and cash flows for the interim periods presented. Except as disclosed in the notes to the Unaudited Condensed Consolidated Financial Statements, such adjustments are of a normal, recurring nature. Variable interest entities for which Verso is the primary beneficiary are consolidated. Intercompany balances and transactions are eliminated in consolidation. The results of operations and cash flows for the interim periods presented may not necessarily be indicative of full-year results. It is suggested that these financial statements be read in conjunction with the audited consolidated financial statements and notes thereto of Verso contained in its Annual Report on Form 10-K for the year ended December 31, 2018 . |
Recent Accounting Developments | Accounting Guidance Adopted in 2019 ASC Topic 842, Leases . Verso adopted Accounting Standards Codification, or “ASC,” 842, Leases, on January 1, 2019. Verso has elected the package of practical expedients under the transition provisions of the new standard including not reassessing lease classification or whether expired or existing contracts contain leases and not revaluing initial direct costs for existing leases. Verso has not elected to adopt the hindsight practical expedient. Verso has elected to apply the optional transition method provided by Accounting Standards Update, or “ASU,” 2018-11, which allows entities to continue to apply the legacy guidance under ASC 840, including its disclosure requirements, in the comparative periods presented in the year of adoption. Verso established a project team to evaluate and implement the new standard and its policies and procedures related to accounting for right-of-use assets, related liabilities and related income and expense, including implementation of a new system to track such leases. These policies and procedures modify contract review controls to consider the new criteria for determining whether a contract is or contains a lease, specifically to clarify the definition of a lease and align with the control concept. The most significant impact of the new standard for Verso is recording the right-of-use assets and related liabilities on the balance sheet for its operating leases. The new standard requires that fixed payments, probable amounts the lessee will owe under a residual value guarantee and certain other payments be included in the valuation of these right-of-use assets and related liabilities. Variable payments are excluded from the calculation unless they are based on an index or rate. The adoption of this new standard resulted in an adjustment to recognize $24 million in right-of-use assets and related liabilities on the Unaudited Condensed Consolidated Balance Sheet associated with Verso’s leases at January 1, 2019 (see Note 5). The impact to the Unaudited Condensed Consolidated Statements of Operations and Unaudited Condensed Consolidated Statements of Cash Flows was de minimis. Accounting Guidance Not Yet Adopted ASC Topic 350, Intangible Assets - Goodwill & Other . In August 2018, the Financial Accounting Standards Board, or “FASB” issued ASU 2018-15, Customer’s Accounting for Implementation Costs in a Cloud Computing Arrangement that is a Service Contract (Topic 350), which aligns the accounting for such costs with guidance on capitalizing costs associated with developing or obtaining internal use software. The guidance is effective for annual and interim periods beginning after December 15, 2019 and early adoption is permitted at any interim period. Verso is currently evaluating the impact of this guidance. |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table presents the revenues disaggregated by product included on the Unaudited Condensed Consolidated Statements of Operations: Three Months Three Months Ended Ended (Dollars in millions) March 31, 2018 March 31, 2019 Graphic papers $ 421 $ 388 Specialty papers 175 194 Packaging papers 14 24 Pulp 29 33 Total Net sales $ 639 $ 639 The following table presents the revenue disaggregated by sales channel included on the Unaudited Condensed Consolidated Statement of Operations: Three Months Three Months Ended Ended (Dollars in millions) March 31, 2018 March 31, 2019 Direct sales $ 357 $ 392 Merchant sales 241 212 Broker sales 41 35 Total Net sales $ 639 $ 639 |
SUPPLEMENTAL FINANCIAL STATEM_2
SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Inventories by Major Category | The following table summarizes inventories by major category: December 31, March 31, (Dollars in millions) 2018 2019 Raw materials $ 88 $ 110 Work-in-process 56 65 Finished goods 225 268 Replacement parts and other supplies 29 30 Inventories $ 398 $ 473 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Assets and Liabilities, Lessee | The following table details right-of-use assets and associated obligations for operating and finance leases included in the Unaudited Condensed Consolidated Balance Sheet as of March 31, 2019. March 31, (Dollars in millions) Classification 2019 Assets: Operating lease assets Intangibles and other assets, net $ 21 Finance lease assets Property, plant and equipment, net (1) 2 Total leased assets $ 23 Liabilities Current liabilities: Operating Accrued and other liabilities $ 10 Finance Current maturities of long-term debt and finance leases — Non-current liabilities: Operating Other long-term liabilities 11 Finance Long-term debt and finance leases 2 Total lease liabilities $ 23 (1) Finance lease assets are recorded net of accumulated amortization. |
Lease, Cost | The following table provides additional cash flow details associated with leases included in our Unaudited Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2019. Three Months Ended (Dollars in millions) March 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 3 Operating cash flows from finance leases — Financing cash flows from finance leases — The following table details the costs associated with leasing transactions included on the Unaudited Condensed Consolidated Statement of Operations for the three months ended March 31, 2019. Three Months Ended (Dollars in millions) Classification March 31, 2019 Operating lease cost Cost of products sold (exclusive of depreciation and amortization) $ 3 Variable lease cost Cost of products sold (exclusive of depreciation and amortization) 2 Short term lease cost Cost of products sold (exclusive of depreciation and amortization) 1 Finance lease cost: Amortization of leased assets Depreciation and amortization — Interest on lease liabilities Interest expense — Net lease cost $ 6 |
Lessee, Operating Lease, Liability, Maturity | The following table details the future lease payments associated with leases commenced as of March 31, 2019, including amounts for any renewals that Verso has determined are reasonably certain to be exercised. Operating Finance (Dollars in millions) Leases (1) Leases (2) Total 2019 (remaining) $ 8 $ — $ 8 2020 8 1 9 2021 4 — 4 2022 1 1 2 2023 1 — 1 Thereafter — — — Total lease payments $ 22 $ 2 $ 24 Interest expense (1 ) — (1 ) Present value of lease liabilities $ 21 $ 2 $ 23 (1) Operating lease payments include $5 million related to options to extend lease terms that are reasonably certain of being exercised. (2) Finance lease payments exclude $2 million of legally binding lease payments for leases signed, but not yet commenced. |
Finance Lease, Liability, Maturity | The following table details the future lease payments associated with leases commenced as of March 31, 2019, including amounts for any renewals that Verso has determined are reasonably certain to be exercised. Operating Finance (Dollars in millions) Leases (1) Leases (2) Total 2019 (remaining) $ 8 $ — $ 8 2020 8 1 9 2021 4 — 4 2022 1 1 2 2023 1 — 1 Thereafter — — — Total lease payments $ 22 $ 2 $ 24 Interest expense (1 ) — (1 ) Present value of lease liabilities $ 21 $ 2 $ 23 (1) Operating lease payments include $5 million related to options to extend lease terms that are reasonably certain of being exercised. (2) Finance lease payments exclude $2 million of legally binding lease payments for leases signed, but not yet commenced. |
Schedule of Future Minimum Rental Payments for Operating Leases | The following table represents the future minimum rental payments due under non-cancelable operating leases that have initial or remaining lease terms in excess of one year, as of December 31, 2018. Amounts are based on ASC 840, Leases , that was superseded upon our adoption of ASC 842, Leases , on January 1, 2019. (Dollars in millions) 2019 $ 6 2020 5 2021 2 2022 1 2023 — Thereafter — Total $ 14 |
Lessee, Weighted Average Assumption Information | The following assumptions were used to determine the right-of-use assets and obligations associated with our leases as of March 31, 2019. Verso uses its incremental borrowing rate to value the right-of-use asset and related obligations. March 31, 2019 Weighted-average remaining lease term (years): Operating leases 2.7 Finance leases 4.8 Weighted-average discount rate: Operating leases 4.3 % Finance leases 4.1 % |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Summary of Debt | The following table summarizes debt: December 31, March 31, (Dollars in millions) Maturity 2018 2019 ABL Facility 2/6/2024 $ — $ 45 Unamortized debt issuance costs, net — (2 ) Total Long-term debt $ — $ 43 |
Interest Expense Related to Debt and Cash Interests Payments on Debt | Amounts included in interest expense (inclusive of amounts capitalized) and amounts of cash interest payments related to long-term debt for the periods presented are as follows: Three Months Three Months Ended Ended (Dollars in millions) March 31, 2018 March 31, 2019 Interest expense (1) $ 6 $ 1 Cash interest paid 5 1 Debt issuance cost and discount amortization (2) 6 — (1) Represents interest expense incurred on the Credit Facilities, exclusive of amortization of debt issuance cost and discount and inclusive of amounts capitalized. See Note 4 for additional information on capitalized interest costs. (2) Amortization of debt issuance cost and original issue discount, including the accelerated amortization associated with the early extinguishment of the Term Loan Facility, are included in Interest expense on the Unaudited Condensed Consolidated Statements of Operations and in amortization of debt issuance cost and discount on the Unaudited Condensed Consolidated Statements of Cash Flows. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table provides a reconciliation of basic and diluted income (loss) per common share: Three Months Three Months Ended Ended March 31, 2018 March 31, 2019 Net income (loss) available to common shareholders (in millions) $ (2 ) $ 36 Weighted average common shares outstanding - basic (in thousands) 34,465 34,484 Dilutive shares from stock awards (in thousands) — 741 Weighted average common shares outstanding - diluted (in thousands) 34,465 35,225 Basic income (loss) per share $ (0.06 ) $ 1.05 Diluted income (loss) per share $ (0.06 ) $ 1.03 |
RETIREMENT BENEFITS (Tables)
RETIREMENT BENEFITS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Retirement Benefits [Abstract] | |
Components of Net Periodic Benefit Cost | The following table summarizes the components of net periodic pension cost for the periods presented: Three Months Three Months Ended Ended (Dollars in millions) March 31, 2018 March 31, 2019 Service cost $ 1 $ 1 Interest cost 15 16 Expected return on plan assets (18 ) (17 ) Net periodic pension cost (income) $ (2 ) $ — |
EQUITY (Tables)
EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Time-based Restricted Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Nonvested Restricted Stock Units Activity | Changes to non-vested time-based restricted stock units for the three months ended March 31, 2019 were as follows: Restricted Stock Weighted Average Units Grant Date Shares (in thousands) Outstanding Fair Value Non-vested at December 31, 2018 678 $ 10.04 Granted 171 21.05 Vested — — Forfeited (6 ) 16.87 Non-vested at March 31, 2019 843 12.23 |
Performance-based Restricted Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Nonvested Restricted Stock Units Activity | Changes to non-vested performance-based restricted stock units for the three months ended March 31, 2019 were as follows: Restricted Stock Weighted Average Units Grant Date Shares (in thousands) Outstanding Fair Value Non-vested at December 31, 2018 638 $ 22.26 Granted 171 16.21 Vested — — Forfeited (6 ) 18.22 Non-vested at March 31, 2019 803 21.00 |
SUMMARY OF BUSINESS AND BASIS_3
SUMMARY OF BUSINESS AND BASIS OF PRESENTATION (Detail) | 3 Months Ended |
Mar. 31, 2019Segment | |
North America | |
Segment Reporting Information [Line Items] | |
Number of geographical locations in operation | 1 |
RECENT ACCOUNTING PRONOUNCEME_2
RECENT ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Millions | Mar. 31, 2019 | Jan. 01, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease assets | $ 21 | |
Present value of lease liabilities | $ 21 | |
Accounting Standards Update 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease assets | $ 24 | |
Present value of lease liabilities | $ 24 |
REVENUE RECOGNITION (Details)
REVENUE RECOGNITION (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | $ 639 | $ 639 |
Direct sales | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 392 | 357 |
Merchant sales | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 212 | 241 |
Broker sales | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 35 | 41 |
Graphic papers | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 388 | 421 |
Specialty papers | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 194 | 175 |
Packaging papers | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 24 | 14 |
Pulp | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | $ 33 | $ 29 |
SUPPLEMENTAL FINANCIAL STATEM_3
SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION - Additional Information (Detail) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Restricted cash, intangibles | $ 2,000,000 | $ 2,000,000 | |
Restricted cash | 2,000,000 | $ 2,000,000 | |
Depreciation expense | 27,000,000 | 26,000,000 | |
Interest costs capitalized | 0 | 0 | |
Capital expenditures unpaid | $ 5,000,000 | $ 5,000,000 |
SUPPLEMENTAL FINANCIAL STATEM_4
SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION - Inventories by Major Category (Detail) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials | $ 110 | $ 88 |
Work-in-process | 65 | 56 |
Finished goods | 268 | 225 |
Replacement parts and other supplies | 30 | 29 |
Inventories | $ 473 | $ 398 |
LEASES (Details)
LEASES (Details) | Mar. 31, 2019 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Lessee, operating lease, renewal term | 1 month |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Lessee, operating lease, renewal term | 1 year |
LEASES - Balance Sheet Effect (
LEASES - Balance Sheet Effect (Details) $ in Millions | Mar. 31, 2019USD ($) |
Leases [Abstract] | |
Operating lease assets | $ 21 |
Finance lease assets | 2 |
Total leased assets | 23 |
Current liabilities: Operating | 10 |
Current liabilities: Finance | 0 |
Noncurrent liabilities, Operating | 11 |
Noncurrent liabilities, Finance | 2 |
Total lease liabilities | $ 23 |
LEASES - Statement of Operation
LEASES - Statement of Operations Effect (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Leases [Abstract] | |
Operating lease cost | $ 3 |
Variable lease cost | 2 |
Short term lease cost | 1 |
Finance lease cost: | |
Amortization of leased assets | 0 |
Interest on lease liabilities | 0 |
Net lease cost | $ 6 |
LEASES - Future Lease Payments
LEASES - Future Lease Payments (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Operating Leases | |
2019 (remaining) | $ 8 |
2020 | 8 |
2021 | 4 |
2022 | 1 |
2023 | 1 |
Thereafter | 0 |
Total lease payments | 22 |
Interest expense | (1) |
Present value of lease liabilities | 21 |
Payments, option to extend lease | 5 |
Finance Lease | |
2019 (remaining) | 0 |
2020 | 1 |
2021 | 0 |
2022 | 1 |
2023 | 0 |
Thereafter | 0 |
Total lease payments | 2 |
Interest expense | 0 |
Present value of lease liabilities | 2 |
Payments, lease not yet commenced | 2 |
2019 (remaining) | 8 |
2020 | 9 |
2021 | 4 |
2022 | 2 |
2023 | 1 |
Thereafter | 0 |
Total lease payments | 24 |
Interest expense | 1 |
Total lease liabilities | $ 23 |
LEASES - Future Minimum Rental
LEASES - Future Minimum Rental Payments (Details) $ in Millions | Dec. 31, 2018USD ($) |
Leases [Abstract] | |
2019 | $ 6 |
2020 | 5 |
2021 | 2 |
2022 | 1 |
2023 | 0 |
Thereafter | 0 |
Total | $ 14 |
LEASES - Assumptions (Details)
LEASES - Assumptions (Details) | Mar. 31, 2019 |
Leases [Abstract] | |
Weighted-average remaining lease term (years): Operating leases | 2 years 8 months 12 days |
Weighted-average remaining lease term (years): Finance leases | 4 years 9 months 18 days |
Weighted-average discount rate: Operating leases | 4.30% |
Weighted-average discount rate: Finance leases | 4.10% |
LEASES - Cash Flow Effect (Deta
LEASES - Cash Flow Effect (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Leases [Abstract] | |
Operating cash flows from operating leases | $ 3 |
Operating cash flows from finance leases | 0 |
Financing cash flows from finance leases | $ 0 |
DEBT - Summary of Debt (Detail
DEBT - Summary of Debt (Detail) - USD ($) $ in Millions | Mar. 31, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
Unamortized debt issuance costs, net | $ (2) | $ 0 |
Total Long-term debt | 43 | 0 |
ABL Facility | Revolving Credit Facilities | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 45 | $ 0 |
DEBT - Textual (Details)
DEBT - Textual (Details) | Feb. 06, 2019USD ($)incremental_revolving_commitments | Jul. 15, 2016USD ($) | Mar. 31, 2018USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) |
Line of Credit Facility [Line Items] | |||||
Debt instrument, fair value disclosure | $ 45,000,000 | ||||
ABL Facility | |||||
Line of Credit Facility [Line Items] | |||||
Credit facility, remaining borrowing capacity | 264,000,000 | ||||
ABL Facility | Revolving Credit Facilities | |||||
Line of Credit Facility [Line Items] | |||||
Long-term debt | $ 45,000,000 | $ 0 | |||
Interest rate (percentage) | 4.19252% | ||||
ABL Facility | Letter of Credit | |||||
Line of Credit Facility [Line Items] | |||||
Long-term debt | $ 35,000,000 | ||||
ABL Facility | Term Loan Facility | Revolving Credit Facilities | |||||
Line of Credit Facility [Line Items] | |||||
Credit facility, borrowing capacity | $ 375,000,000 | ||||
ABL Facility | ABL Amendment Facility | |||||
Line of Credit Facility [Line Items] | |||||
Number of incremental revolving commitments | incremental_revolving_commitments | 1 | ||||
Line of credit, maximum borrowing capacity, accordion feature | $ 75,000,000 | ||||
Line of credit facility, unused capacity, commitment fee percentage | 0.25% | ||||
ABL Facility | ABL Amendment Facility | Revolving Credit Facilities | |||||
Line of Credit Facility [Line Items] | |||||
Credit facility, borrowing capacity | $ 350,000,000 | ||||
ABL Facility | ABL Amendment Facility | Letter of Credit | |||||
Line of Credit Facility [Line Items] | |||||
Credit facility, borrowing capacity | 100,000,000 | ||||
ABL Facility | ABL Amendment Facility | Bridge Loan | |||||
Line of Credit Facility [Line Items] | |||||
Credit facility, borrowing capacity | $ 35,000,000 | ||||
ABL Facility | ABL Facility | Revolving Credit Facilities | |||||
Line of Credit Facility [Line Items] | |||||
Credit facility, borrowing capacity | $ 344,011,000 | ||||
Term Loan Facility | Term Loan Facility | |||||
Line of Credit Facility [Line Items] | |||||
Debt instrument, face amount | 220,000,000 | ||||
Current borrowing capacity | 198,000,000 | ||||
Debt issuance costs, gross | $ 22,000,000 | ||||
Debt instrument, periodic payment | $ 4,000,000 | ||||
Repayments of debt, net | 21,000,000 | ||||
Repayments of debt | $ 21,000,000 | ||||
LIBOR | Minimum | ABL Facility | ABL Amendment Facility | |||||
Line of Credit Facility [Line Items] | |||||
Debt instrument, basis spread on variable rate | 1.25% | ||||
LIBOR | Maximum | ABL Facility | ABL Amendment Facility | |||||
Line of Credit Facility [Line Items] | |||||
Debt instrument, basis spread on variable rate | 1.75% | ||||
Base Rate | Minimum | ABL Facility | ABL Amendment Facility | |||||
Line of Credit Facility [Line Items] | |||||
Debt instrument, basis spread on variable rate | 0.25% | ||||
Base Rate | Maximum | ABL Facility | ABL Amendment Facility | |||||
Line of Credit Facility [Line Items] | |||||
Debt instrument, basis spread on variable rate | 0.75% |
DEBT - Interest Expense Relate
DEBT - Interest Expense Related to Long Term Debt and Cash Interests Payments on Long Term Debt (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Debt Disclosure [Abstract] | ||
Interest expense | $ 1 | $ 6 |
Cash interest paid | 1 | 5 |
Debt issuance cost and discount amortization | $ 0 | $ 6 |
EARNINGS PER SHARE (Reconciliat
EARNINGS PER SHARE (Reconciliation of Basic and Diluted Earnings (Loss) per Common Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Earnings Per Share [Abstract] | ||
Net income (loss) available to common shareholders | $ 36 | $ (2) |
Weighted average common shares outstanding - basic (shares) | 34,484 | 34,465 |
Dilutive shares from stock options (shares) | 741 | 0 |
Weighted average common shares outstanding - diluted (shares) | 35,225 | 34,465 |
Basic income (loss) per share (usd per share) | $ 1.05 | $ (0.06) |
Diluted income (loss) per share (usd per share) | $ 1.03 | $ (0.06) |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - $ / shares shares in Millions | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2019 | Jul. 15, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Class of warrant or right, outstanding | 1.8 | ||
Exercise price of warrants (in dollars per share) | $ 27.86 | ||
Number of shares called by warrants (in shares) | 1.8 | 1.8 | 1.8 |
Restricted Stock Units (RSUs) | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Grants in period (in shares) | 1.4 |
RETIREMENT BENEFITS - Componen
RETIREMENT BENEFITS - Components of Net Periodic Benefit Cost (Detail) - Pension Plan - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | $ 1 | $ 1 |
Interest cost | 16 | 15 |
Expected return on plan assets | (17) | (18) |
Net periodic benefit cost | $ 0 | $ (2) |
RETIREMENT BENEFITS - Addition
RETIREMENT BENEFITS - Additional Information (Detail) - Pension Plan - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Contribution made by employer | $ 8 | $ 6 |
Cash contribution (at least) | $ 29 |
EQUITY (Details)
EQUITY (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | |||
Apr. 30, 2019 | Mar. 31, 2019 | Mar. 31, 2018 | Mar. 28, 2019 | Jul. 15, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Compound annual growth rate, period | 3 years | ||||
Vesting, total shareholder return threshold (at least) | 5.00% | ||||
Equity award expense | $ 2 | $ 1 | |||
Number of shares called by warrants (in shares) | 1,800,000 | 1,800,000 | 1,800,000 | ||
Exercise price of warrants (in dollars per share) | $ 27.86 | ||||
Class of warrant or right, exercised (in shares) | 0 | ||||
Restricted Stock Units (RSUs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares available for grant (in shares) | 200,000 | ||||
Compensation cost not yet recognized | $ 17 | ||||
Vested and expected to vest, outstanding (in shares) | 1,600,000 | ||||
Compensation cost not yet recognized, period for recognition | 2 years 12 days | ||||
Performance-based Restricted Stock Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vested (in shares) | 0 | ||||
Forfeited (in shares) | 6,000 | ||||
Time-based Restricted Stock Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vested (in shares) | 0 | ||||
Forfeited (in shares) | 6,000 | ||||
Subsequent Event | Performance-based Restricted Stock Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Accelerated compensation cost | $ 3 | ||||
Vested (in shares) | 233,000 | ||||
Subsequent Event | Time-based Restricted Stock Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vested (in shares) | 108,000 | ||||
Forfeited (in shares) | 124,000 | ||||
Common Class A | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Exercise price of warrants (in dollars per share) | $ 27.86 | ||||
Warrants term | 7 years | ||||
Performance Criteria | Restricted Stock Units (RSUs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares available for grant (in shares) | 200,000 | ||||
At Least 5% During Performance Period | Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting rights, percentage | 50.00% | ||||
At Least 5% During Performance Period | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting rights, percentage | 150.00% |
EQUITY - Changes In Non-vested
EQUITY - Changes In Non-vested Units (Details) shares in Thousands | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Time-based Restricted Stock Units | |
Units Outstanding | |
Non-vested, beginning balance (in shares) | shares | 678 |
Grants in period (in shares) | shares | 171 |
Vested (in shares) | shares | 0 |
Forfeited (in shares) | shares | (6) |
Non-vested, ending balance (in shares) | shares | 843 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Non-vested, beginning balance (in dollar per share) | $ / shares | $ 10.04 |
Grants in period (in dollar per share) | $ / shares | 21.05 |
Vested (in dollar per share) | $ / shares | 0 |
Forfeited (in dollar per share) | $ / shares | 16.87 |
Non-vested, ending balance (in dollar per share) | $ / shares | $ 12.23 |
Performance-based Restricted Stock Units | |
Units Outstanding | |
Non-vested, beginning balance (in shares) | shares | 638 |
Grants in period (in shares) | shares | 171 |
Vested (in shares) | shares | 0 |
Forfeited (in shares) | shares | (6) |
Non-vested, ending balance (in shares) | shares | 803 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Non-vested, beginning balance (in dollar per share) | $ / shares | $ 22.26 |
Grants in period (in dollar per share) | $ / shares | 16.21 |
Vested (in dollar per share) | $ / shares | 0 |
Forfeited (in dollar per share) | $ / shares | 18.22 |
Non-vested, ending balance (in dollar per share) | $ / shares | $ 21 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES - Additional Information (Detail) - Represented Employees $ in Millions | Mar. 01, 2019Number_of_union_localWork_site | Mar. 31, 2019USD ($) | Feb. 28, 2019Number_of_union_localWork_site |
Loss Contingencies [Line Items] | |||
Workforce, represented by union, percentage | 70.00% | ||
Litigation settlement | $ | $ 6 | ||
Union, negotiations with smaller trade unions | Number_of_union_local | 4 | ||
Union, work sites represented with expired agreements | Work_site | 2 | ||
United Steelworkers | |||
Loss Contingencies [Line Items] | |||
Union, work sites represented | Work_site | 4 | ||
Union, number of locals represented | Number_of_union_local | 5 | ||
Union, agreement term | 3 years | ||
International Brotherhood of Electrical Workers and the International Brotherhood of Teamsters | |||
Loss Contingencies [Line Items] | |||
Union, work sites represented | Work_site | 2 | ||
Union, number of locals represented | Number_of_union_local | 2 |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) T in Thousands | Apr. 11, 2019USD ($)month_coveragemonthly_paymentshares | Jun. 30, 2019USD ($)T | Mar. 31, 2019USD ($) | Mar. 31, 2018USD ($) | Jun. 30, 2019EmployeeT | Dec. 31, 2019USD ($) |
Subsequent Event [Line Items] | ||||||
Restructuring charges | $ 0 | $ 1,000,000 | ||||
Forecast | ||||||
Subsequent Event [Line Items] | ||||||
Revised annual production capacity (in tons) | T | 2,700 | 2,700 | ||||
Forecast | Closure of Luke Mill | ||||||
Subsequent Event [Line Items] | ||||||
Reduction of employee headcount | Employee | 675 | |||||
Forecast | Closure of Luke Mill | Minimum | ||||||
Subsequent Event [Line Items] | ||||||
Restructuring charges | $ 25,000,000 | |||||
Accelerated depreciation and impairment charges | $ 95,000,000 | |||||
Forecast | Closure of Luke Mill | Minimum | Severance and benefit costs | ||||||
Subsequent Event [Line Items] | ||||||
Restructuring charges | 15,000,000 | |||||
Forecast | Closure of Luke Mill | Minimum | Other costs | ||||||
Subsequent Event [Line Items] | ||||||
Restructuring charges | 10,000,000 | |||||
Forecast | Closure of Luke Mill | Maximum | ||||||
Subsequent Event [Line Items] | ||||||
Restructuring charges | 35,000,000 | |||||
Accelerated depreciation and impairment charges | 115,000,000 | |||||
Forecast | Closure of Luke Mill | Maximum | Severance and benefit costs | ||||||
Subsequent Event [Line Items] | ||||||
Restructuring charges | $ 20,000,000 | |||||
Forecast | Closure of Luke Mill | Maximum | Other costs | ||||||
Subsequent Event [Line Items] | ||||||
Restructuring charges | $ 15,000,000 | |||||
Forecast | Closure of Luke Mill | Coated Freesheet | ||||||
Subsequent Event [Line Items] | ||||||
Decrease in production capacity (in tons) | T | 450 | 450 | ||||
Subsequent Event | Chief Executive Officer | ||||||
Subsequent Event [Line Items] | ||||||
Number of months base salary | monthly_payment | 25 | |||||
Severance benefits | $ 1,804,687.50 | |||||
Number of months of COBRA payment | month_coverage | 18 | |||||
Vesting of unvested stock (in shares) | shares | 341,174 |
Uncategorized Items - vrs-20190
Label | Element | Value |
Accounting Standards Update 2018-02 [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 0 |
Accounting Standards Update 2018-02 [Member] | AOCI Attributable to Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 7,000,000 |
Accounting Standards Update 2018-02 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (7,000,000) |