VERITIV CORP, 10-Q filed on 8/9/2016
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 30, 2016
Aug. 6, 2016
Document and Entity Information [Abstract]
 
 
Entity Registrant Name
VERITIV CORPORATION 
 
Entity Central Index Key
0001599489 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Accelerated Filer 
 
Document Type
10-Q 
 
Document Period End Date
Jun. 30, 2016 
 
Document Fiscal Year Focus
2016 
 
Document Fiscal Period Focus
Q2 
 
Amendment Flag
false 
 
Entity Common Stock, Shares Outstanding
 
16,000,921 
Condensed Consolidated Statements of Income (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Income Statement [Abstract]
 
 
 
 
Net sales (including sales to related party of $9.1, $8.0, $18.1 and $17.0, respectively)
$ 2,060.8 
$ 2,159.3 
$ 4,080.6 
$ 4,297.2 
Cost of products sold (including purchases from related party of $46.6, $67.1, $102.9 and $136.5, respectively) (exclusive of depreciation and amortization shown separately below)
1,687.9 
1,768.3 
3,342.4 
3,530.2 
Distribution expenses
121.7 
129.5 
249.2 
260.2 
Selling and administrative expenses
207.7 
218.0 
408.6 
428.6 
Depreciation and amortization
13.6 
15.3 
27.1 
28.8 
Integration expenses
6.1 
10.3 
12.3 
20.3 
Restructuring charges (income)
(0.3)
2.2 
1.4 
5.6 
Operating income
24.1 
15.7 
39.6 
23.5 
Interest expense, net
6.4 
6.4 
12.9 
12.8 
Other expense (income), net
3.6 
(1.5)
5.1 
2.0 
Income before income taxes
14.1 
10.8 
21.6 
8.7 
Income tax expense
6.2 
6.5 
10.4 
6.6 
Net income
$ 7.9 
$ 4.3 
$ 11.2 
$ 2.1 
Basic and diluted earnings (loss) per share (in dollars per share)
$ 0.49 
$ 0.27 
$ 0.70 
$ 0.13 
Weighted average shares outstanding - basic and diluted (in shares)
16.00 
16.00 
16.00 
16.00 
Condensed Consolidated Statements of Income (Parenthetical) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Income Statement [Abstract]
 
 
 
 
Related party sales
$ 9.1 
$ 8.0 
$ 18.1 
$ 17.0 
Related party cost of products sold
$ 46.6 
$ 67.1 
$ 102.9 
$ 136.5 
Condensed Consolidated Statements of Comprehensive Income (Loss) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Statement of Comprehensive Income [Abstract]
 
 
 
 
Net income
$ 7.9 
$ 4.3 
$ 11.2 
$ 2.1 
Other comprehensive income (loss):
 
 
 
 
Foreign currency translation adjustments
(1.6)
0.1 
2.2 
(6.5)
Change in fair value of cash flow hedge, net of $0.1 and $0.2 tax for 2016
0 
0 
(0.3)
0 
Pension liability adjustments, net of $0.0 and $0.1 tax for 2016
0.1 
0 
0.2 
0 
Other comprehensive income (loss)
(1.5)
0.1 
2.1 
(6.5)
Total comprehensive income (loss)
$ 6.4 
$ 4.4 
$ 13.3 
$ (4.4)
Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2016
Statement of Comprehensive Income [Abstract]
 
 
Change in fair value of cash flow hedge, tax
$ 0.1 
$ 0.2 
Pension liability adjustments, tax
$ 0 
$ 0.1 
Condensed Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Current assets:
 
 
Cash
$ 46.1 
$ 54.4 
Accounts receivable, less allowances of $31.7 and $33.3, respectively
999.2 
1,037.5 
Related party receivable
4.6 
3.9 
Inventories
692.9 
720.6 
Other current assets
110.4 
108.8 
Total current assets
1,853.2 
1,925.2 
Property and equipment, net
356.4 
363.7 
Goodwill
50.2 
50.2 
Other intangibles, net
28.4 
30.2 
Deferred income tax assets
67.0 
73.3 
Other non-current assets
30.9 
34.3 
Total assets
2,386.1 
2,476.9 
Current liabilities:
 
 
Accounts payable
604.1 
565.1 
Related party payable
11.1 
10.7 
Accrued payroll and benefits
96.7 
120.5 
Other accrued liabilities
90.6 
100.4 
Current maturities of long-term debt
2.6 
2.8 
Financing obligations to related party, current portion
14.9 
14.7 
Total current liabilities
820.0 
814.2 
Long-term debt, net of current maturities
697.5 
800.5 
Financing obligations to related party, less current portion
187.0 
197.8 
Defined benefit pension obligations
27.8 
28.7 
Other non-current liabilities
105.3 
105.6 
Total liabilities
1,837.6 
1,946.8 
Commitments and contingencies (Note 10)
   
   
Shareholders' equity:
 
 
Preferred stock, $0.01 par value, 10.0 million shares authorized, none issued
0 
0 
Common stock, $0.01 par value, 100.0 million shares authorized, 16.0 million shares issued and outstanding
0.2 
0.2 
Additional paid-in capital
571.3 
566.2 
Accumulated earnings (deficit)
9.9 
(1.3)
Accumulated other comprehensive loss
(32.9)
(35.0)
Total shareholders' equity
548.5 
530.1 
Total liabilities and shareholders' equity
$ 2,386.1 
$ 2,476.9 
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Statement of Financial Position [Abstract]
 
 
Allowance for doubtful accounts
$ 31.7 
$ 33.3 
Preferred stock par value (in Dollars per share)
$ 0.01 
$ 0.01 
Preferred stock, shares authorized (in Shares)
10,000,000 
10,000,000 
Preferred stock, shares issued (in Shares)
0 
0 
Common stock par value (in Dollars per share)
$ 0.01 
$ 0.01 
Common stock, shares authorized (in Shares)
100,000,000 
100,000,000 
Common stock, shares issued (in Shares)
16,000,000 
16,000,000 
Common stock, shares outstanding (in Shares)
16,000,000 
16,000,000 
Condensed Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Operating Activities
 
 
Net income
$ 11.2 
$ 2.1 
Depreciation and amortization
27.1 
28.8 
Amortization of deferred financing fees
2.2 
2.2 
Provision for allowance for doubtful accounts
(2.6)
5.8 
Deferred income tax provision
6.5 
5.5 
Stock-based compensation
5.1 
1.9 
Other non-cash items, net
4.1 
2.6 
Changes in operating assets and liabilities
 
 
Accounts receivable and related party receivable
43.8 
84.6 
Inventories
31.9 
(44.2)
Accounts payable and related party payable
36.9 
53.1 
Accrued payroll and benefits
(28.8)
(6.3)
Other
(14.6)
(11.7)
Net cash provided by operating activities
122.8 
124.4 
Investing Activities
 
 
Property and equipment additions
(17.8)
(22.6)
Proceeds from asset sales
4.9 
0.2 
Net cash used for investing activities
(12.9)
(22.4)
Financing Activities
 
 
Change in book overdrafts
0.9 
(18.5)
Borrowings of long-term debt
2,202.5 
2,292.8 
Repayments of long-term debt
(2,308.8)
(2,346.3)
Payments under equipment capital lease obligations
(1.8)
(2.0)
Payments under financing obligations to related party
(11.2)
(6.8)
Net cash used for financing activities
(118.4)
(80.8)
Effect of exchange rate changes on cash
0.2 
0.6 
Net change in cash
(8.3)
21.8 
Cash at beginning of period
54.4 
57.6 
Cash at end of period
46.1 
79.4 
Supplemental Cash Flow Information
 
 
Cash paid for income taxes, net of refunds
2.0 
1.1 
Cash paid for interest
10.3 
10.5 
Non-Cash Investing and Financing Activities
 
 
Non-cash additions to property and equipment
$ 1.9 
$ 5.0 
Business and Summary of Significant Accounting Policies
Business and Summary of Significant Accounting Policies
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Veritiv Corporation ("Veritiv" or the "Company") is a North American business-to-business distributor of print, publishing, packaging and facility solutions. Additionally, Veritiv provides logistics and supply chain management solutions to its customers. Veritiv was established in 2014, following the merger of International Paper Company's xpedx distribution solutions business ("xpedx") and UWW Holdings, Inc. ("UWWH"), the parent company of Unisource Worldwide, Inc. ("Unisource") (the "Merger"). The Company operates from approximately 180 distribution centers primarily throughout the U.S., Canada and Mexico.

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and with the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for a complete set of annual audited financial statements.

The accompanying unaudited financial information should be read in conjunction with the Consolidated and Combined Financial Statements and Notes contained in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2015. In the opinion of management, all adjustments, including normal recurring accruals and other adjustments, considered necessary for a fair presentation have been included. The operating results for the interim periods are not necessarily indicative of results for the full year.

All significant intercompany transactions between Veritiv's businesses have been eliminated.

Following the Merger, certain corporate and other related functions continued to be provided by International Paper under a transition services agreement. During the three and six months ended June 30, 2015, the Company recognized $3.2 million and $8.8 million in selling and administrative expenses related to this agreement. As of December 31, 2015, all of the functions originally provided by International Paper under this agreement have been fully transitioned to the Company.
    
Use of Estimates

The preparation of unaudited financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses, and certain financial statement disclosures. Estimates and assumptions are used for, but not limited to, revenue recognition, accounts receivable valuation, inventory valuation, employee benefit plans, income tax contingency accruals and valuation allowances and goodwill and other intangible asset valuations. Although these estimates are based on management's knowledge of current events and actions it may undertake in the future, actual results may ultimately differ from these estimates and assumptions. Estimates are revised as additional information becomes available.

Recently Issued Accounting Standards
Standard
 
Description
 
Effective Date
 
Effect on the Financial Statements or Other Significant Matters
Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers
 
The standard will replace existing revenue recognition standards and significantly expand the disclosure requirements for revenue arrangements. It may be adopted either retrospectively or on a modified retrospective basis to new contracts and existing contracts with remaining performance obligations as of the effective date.
 
January 1, 2018; early adoption date is no earlier than the annual period beginning after December 15, 2016
 
The Company is currently evaluating the alternative methods of adoption (full retrospective or modified retrospective), and the effect on its Consolidated Financial Statements and related disclosures. The Company plans to adopt this ASU on January 1, 2018.
ASU 2015-11, Simplifying the Measurement of Inventory
 
The standard requires companies to measure inventory at the lower of cost and net realizable value, thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. This ASU will not apply to inventories measured by either the last-in first-out (LIFO) method or retail inventory method.
 
January 1, 2017
 
The Company plans to adopt this ASU on January 1, 2017. Given that the majority (approximately 87% of the June 30, 2016 inventory balance) of the Company's inventory is measured using LIFO, it is not expected that the adoption of these provisions will have a material effect on its Consolidated Financial Statements.
ASU 2016-02, Leases (Topic 842)
 
The standard requires lessees to put most leases on their balance sheet but recognize expenses in their statement of operations in a manner similar to current accounting guidance. The new standard also eliminates the current guidance related to real estate specific provisions.
 
January 1, 2019; early adoption is permitted
 
The Company is currently evaluating the impact the ASU will have on its Consolidated Financial Statements and related disclosures. The Company plans to adopt this ASU on January 1, 2019.
ASU 2016-09, Compensation-Stock Compensation (Topic 718)
 
The standard was issued as part of the Financial Accounting Standards Board's simplification initiative. The areas for simplification involve several aspects of the accounting for share-based payment transactions, including income tax consequences, award classification as either equity or liabilities, and classification on the statement of cash flows.
 
January 1, 2017; early adoption is permitted
 
The Company adopted this ASU on January 1, 2016. The adoption did not materially impact the financial statements or related disclosures.
ASU 2016-13, Financial Instruments-Credit Losses (Topic 326)
 
The standard will replace the currently required incurred loss impairment methodology with guidance that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to be considered in making credit loss estimates.
 
January 1, 2020; early adoption for fiscal years beginning after December 15, 2018
 
The Company is currently evaluating the impact the ASU will have on its Consolidated Financial Statements and related disclosures. The Company plans to adopt this ASU on January 1, 2020.
Integration and Restructuring Charges
Integration and Restructuring Charges
2. INTEGRATION AND RESTRUCTURING CHARGES

Integration Charges

The Company currently expects integration and restructuring charges associated with achieving anticipated cost savings and other synergies from the Merger to be approximately $225 million through 2017, including approximately $55 million for capital expenditures primarily consisting of information technology infrastructure, systems integration and planning. Approximately $27 million of transaction-related expenses incurred at the time of the Merger are excluded from the $225 million estimate of integration and restructuring charges. Through June 30, 2016, the Company has incurred approximately $161 million in charges, including approximately $50 million for capital expenditures.
    
During the three and six months ended June 30, 2016 and 2015, Veritiv incurred costs to integrate the combined businesses of xpedx and Unisource. Integration expenses include professional services and project management fees, internally dedicated integration management resources, retention compensation, information technology conversion costs, rebranding costs and other costs to integrate the combined businesses of xpedx and Unisource.

The following table summarizes the components of integration expenses:
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
(in millions)
2016
 
2015
 
2016
 
2015
Integration management
$
2.0

 
$
—

 
$
3.8

 
$
—

Retention compensation
0.9

 
3.1

 
2.0

 
6.6

Information technology conversion costs
1.3

 
2.2

 
2.4

 
4.3

Rebranding
0.5

 
1.7

 
1.2

 
2.5

Legal, consulting and other professional fees
0.5

 
2.5

 
1.0

 
5.4

Other
0.9

 
0.8

 
1.9

 
1.5

Total integration expenses
$
6.1

 
$
10.3

 
$
12.3

 
$
20.3



Veritiv Restructuring Plan
As part of the Merger, the Company is executing on a multi-year restructuring program of its North American operations intended to integrate the legacy xpedx and Unisource operations, generate cost savings and capture synergies across the combined company. The restructuring plan includes initiatives to: (i) consolidate warehouse facilities in overlapping markets, (ii) improve efficiency of the delivery network, (iii) consolidate customer service centers, (iv) reorganize the field sales and operations functions and (v) restructure the corporate general and administrative functions. As part of its restructuring efforts, the Company continues to evaluate its operations outside of North America to identify additional cost saving opportunities. The Company has elected to restructure certain of its operations in specific countries, which included staff reductions, lease terminations, and facility closures.

Related to these company-wide initiatives, the Company recorded restructuring income of $0.3 million, driven primarily by a $2.7 million gain on the sale of a closed facility, and charges of $2.2 million for the three months ended June 30, 2016 and 2015, respectively. The Company recorded restructuring charges of $1.4 million and $5.6 million during the six months ended June 30, 2016 and 2015, respectively. See Note 11, Segment Information, for the impact these charges had on the Company's reportable segments. Other direct costs reported in the table below include facility closing costs and other incidental costs associated with the development, communication, administration and implementation of these initiatives.

The following is a summary of the Company's restructuring activity for the three and six months ended June 30, 2016:
(in millions)
Severance and Related Costs
 
Other Direct Costs
 
Non-Cash Items
 
Total
Balance at December 31, 2015
$
1.7

 
$
0.4

 
$
—

 
$
2.1

Costs incurred
0.7

 
0.3

 
0.7

 
1.7

Payments
(0.9
)
 
(0.4
)
 
—

 
(1.3
)
Other adjustments
—

 
—

 
(0.7
)
 
(0.7
)
Balance at March 31, 2016
1.5

 
0.3

 
—

 
1.8

Costs incurred
0.9

 
1.5

 
(2.7
)
 
(0.3
)
Payments
(0.6
)
 
(1.0
)
 
—

 
(1.6
)
Other adjustments
—

 
—

 
2.7

 
2.7

Balance at June 30, 2016
$
1.8

 
$
0.8

 
$
—

 
$
2.6



The following is a summary of the Company's restructuring activity for the three and six months ended June 30, 2015:
(in millions)
Severance and Related Costs
 
Other Direct Costs
 
Total
Balance at December 31, 2014
$
3.7

 
$
0.2

 
$
3.9

Costs incurred
1.9

 
1.5

 
3.4

Payments
(2.7
)
 
(0.4
)
 
(3.1
)
Balance at March 31, 2015
2.9

 
1.3

 
4.2

Costs incurred
1.0

 
1.2

 
2.2

Payments
(1.1
)
 
(0.7
)
 
(1.8
)
Balance at June 30, 2015
$
2.8

 
$
1.8

 
$
4.6

Debt
Debt
3. DEBT

The Company's long-term debt obligations were as follows:
(in millions)
June 30, 2016
 
December 31, 2015
Asset-Based Lending Facility (the "ABL Facility")
$
692.0

 
$
795.5

Equipment capital lease obligations (1)
8.1

 
7.8

Total debt
700.1

 
803.3

Less: current portion of long-term debt
(2.6
)
 
(2.8
)
Long-term debt, net of current maturities
$
697.5

 
$
800.5


(1) Equipment capital lease obligations include $2.6 million and $0.7 million related to the Toronto build-to-suit arrangement for the six months ended June 30, 2016 and for the year ended December 31, 2015, respectively.         

Availability under the ABL Facility is determined based upon a monthly borrowing base calculation which includes eligible customer receivables and inventory, less outstanding borrowings, letters of credit and certain designated reserves. As of June 30, 2016, the available additional borrowing capacity under the ABL Facility was approximately $451.3 million.
Income Taxes
Income Taxes
4. INCOME TAXES

The Company’s provision for income taxes for the three and six months ended June 30, 2016 and 2015 is based on the estimated annual effective tax rate, plus any discrete items.

The following table presents the provision for income taxes and the effective tax rates for the three and six months ended June 30, 2016 and 2015:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
(in millions)
2016
 
2015
 
2016
 
2015
 
Income before income taxes
$
14.1

 
$
10.8

 
$
21.6

 
$
8.7

 
Income tax expense
$
6.2

 
$
6.5

 
$
10.4

 
$
6.6

 
Effective tax rate
44.0
%
 
60.2
%
 
48.1
%
 
75.9
%
 


The difference between the Company’s effective tax rate for the three and six months ended June 30, 2016 and 2015 and the U.S. statutory tax rate of 35.0% primarily relates to the non-recognition of tax benefits on certain losses, non-deductible expenses, and state income taxes (net of federal income tax benefit). The effective tax rate may vary significantly due to potential changes in the amount and mix of pre-tax book income and changes in amounts of non-deductible expenses and other items.
Related Party Transactions
Related Party Transactions
5. RELATED PARTY TRANSACTIONS

Transactions with Georgia-Pacific

Veritiv purchases certain inventory items from, and sells certain inventory items to, Georgia-Pacific in the normal course of business. As a result of the Merger and related private placement, Georgia-Pacific, as joint owner of the sole stockholder of UWWH, is a related party. The following tables summarize the financial impact of these related party transactions with Georgia-Pacific:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(in millions)
 
2016
 
2015
 
2016
 
2015
Sales to Georgia-Pacific, reflected in net sales
 
$
9.1

 
$
8.0

 
$
18.1

 
$
17.0

Purchases of inventory from Georgia-Pacific, recognized in cost of products sold
 
$
46.6

 
$
67.1

 
$
102.9

 
$
136.5


(in millions)
 
June 30, 2016
 
December 31, 2015
Inventories purchased from Georgia-Pacific that remained on Veritiv's balance sheet
 
$
27.0

 
$
25.2

Related party payable to Georgia-Pacific
 
$
11.1

 
$
10.7

Related party receivable from Georgia-Pacific
 
$
4.6

 
$
3.9



In April 2016, Veritiv assumed ownership of a warehouse and distribution facility located in Austin, Texas that was subleased from Georgia-Pacific. The Company exercised its right of first refusal and matched a $5.4 million offer from an unrelated third party to purchase the facility directly from the owner. This transaction was accounted for as a settlement of the financing obligation related to the facility. Accordingly, Veritiv recognized a $1.3 million loss on the transaction, which is reflected in other expense (income), net, on the Condensed Consolidated Statements of Income.
Defined Benefit Plans
Defined Benefit Plan
6. DEFINED BENEFIT PLANS

In conjunction with the Merger, Veritiv assumed responsibility for Unisource’s defined benefit plans and Supplemental Executive Retirement Plans in the U.S. and Canada. Net periodic benefit cost (credit) associated with these plans is summarized below:
 
Three Months Ended June 30, 2016
 
Three Months Ended June 30, 2015
(in millions)
U.S.
 
Canada
 
U.S.
 
Canada
Components of net periodic benefit cost (credit):
 
 
 
 
 
 
 
Service cost
$
0.5

 
$
0.0

 
$
0.5

 
$
0.0

Interest cost
0.9

 
0.8

 
0.9

 
0.9

Expected return on plan assets
(1.3
)
 
(0.9
)
 
(1.3
)
 
(0.9
)
Amortization of net loss
0.1

 
0.0

 
—

 
—

Net periodic benefit cost (credit)
$
0.2

 
$
(0.1
)
 
$
0.1

 
$
0.0


    
 
Six Months Ended June 30, 2016
 
Six Months Ended June 30, 2015
(in millions)
U.S.
 
Canada
 
U.S.
 
Canada
Components of net periodic benefit cost (credit):
 
 
 
 
 
 
 
Service cost
$
0.9

 
$
0.1

 
$
0.9

 
$
0.1

Interest cost
1.8

 
1.6

 
1.7

 
1.7

Expected return on plan assets
(2.6
)
 
(1.8
)
 
(2.7
)
 
(1.8
)
Amortization of net loss
0.1

 
0.1

 
—

 
—

Net periodic benefit cost (credit)
$
0.2

 
$
0.0

 
$
(0.1
)
 
$
0.0

Fair Value Measurements
Fair Value Measurements
7. FAIR VALUE MEASUREMENTS

At June 30, 2016 and December 31, 2015, the carrying amounts of cash, receivables, payables and other components of other current assets and other current liabilities approximate their fair value due to the short maturity of these items. Borrowings under the ABL Facility are at variable market interest rates (Level 2 data), and accordingly, the carrying amount approximates fair value.

At the time of the Merger, the Company recorded a $59.4 million contingent liability associated with the Tax Receivable Agreement ("TRA") at fair value using a discounted cash flow model that reflected management's expectations about probability of payment. The fair value of the TRA is a Level 3 measurement which relied upon both Level 2 data (publicly observable data such as market interest rates) and Level 3 data (internal data such as the Company’s projected revenues, taxable income and assumptions about the utilization of Unisource’s net operating losses, attributable to taxable periods prior to the Merger, by the Company). The contingent liability is remeasured at fair value at each reporting period with the change in fair value recognized in other expense (income), net in the Company’s Condensed Consolidated Statements of Income. At June 30, 2016, the Company remeasured the contingent liability using a discount rate of 4.4%.

The following table provides a reconciliation of the beginning and ending balance of the contingent liability for the three and six months ended June 30, 2016:    
(in millions)
 
Contingent Liability
Balance at December 31, 2015
 
$
63.0

Change in fair value adjustment recorded in other expense (income), net
 
1.8

Balance at March 31, 2016
 
64.8

Change in fair value adjustment recorded in other expense (income), net
 
2.0

Balance at June 30, 2016
 
$
66.8



There have been no transfers between the fair value measurement levels for the three and six months ended June 30, 2016. The Company recognizes transfers between the fair value measurement levels at the end of the reporting period.
Earnings Per Share
Earnings Per Share
8. EARNINGS PER SHARE

Basic earnings per share ("EPS") for Veritiv common stock is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted EPS is similarly calculated, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued, except where the inclusion of such common shares would have an antidilutive impact.

A summary of the numerators and denominators used in the basic and diluted EPS calculation is as follows:
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
(in millions, except per share data)
2016
 
2015
 
2016
 
2015
Numerator:
 
 
 
 
 
 
 
Net income
$
7.9

 
$
4.3

 
$
11.2

 
$
2.1

 
 
 
 
 
 
 
 
Denominator:
 
 
 
 
 
 
 
Weighted average number of shares outstanding – basic and diluted
16.00

 
16.00

 
16.00

 
16.00

 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
     Basic and diluted earnings per share
$
0.49

 
$
0.27

 
$
0.70

 
$
0.13

 
 
 
 
 
 
 
 
Antidilutive stock-based awards excluded from computation of diluted EPS
0.20

 
0.06

 
0.20

 
0.06

Performance stock-based awards excluded from computation of diluted EPS because performance conditions had not been met
0.34

 
0.24

 
0.34

 
0.24

Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Loss
9. ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table provides the components of accumulated other comprehensive loss ("AOCL") at June 30, 2016 (amounts are shown net of their related income tax effect, if any):
(in millions)
 
Foreign currency translation adjustments
 
Retirement liabilities
 
Interest rate swap
 
AOCL
Balance at December 31, 2015
 
$
(27.1
)
 
$
(7.4
)
 
$
(0.5
)
 
$
(35.0
)
     Unrealized net gains (losses) arising during the year
 
3.8

 
—

 
(0.3
)
 
3.5

     Amounts reclassified from AOCL
 
—

 
0.1

 
—

 
0.1

Net current period other comprehensive income (loss)
 
3.8

 
0.1

 
(0.3
)
 
3.6

Balance at March 31, 2016
 
(23.3
)
 
(7.3
)
 
(0.8
)
 
(31.4
)
     Unrealized net losses arising during the year
 
(1.6
)
 
—

 
0.0

 
(1.6
)
     Amounts reclassified from AOCL
 
—

 
0.1

 
—

 
0.1

Net current period other comprehensive income (loss)
 
(1.6
)
 
0.1

 
—

 
(1.5
)
Balance at June 30, 2016
 
$
(24.9
)
 
$
(7.2
)
 
$
(0.8
)
 
$
(32.9
)
    
The following table provides the components of AOCL at June 30, 2015 (amounts are shown net of their related income tax effect, if any):
(in millions)
 
Foreign currency translation adjustments
 
Retirement liabilities
 
AOCL
Balance at December 31, 2014
 
$
(14.7
)
 
$
(7.4
)
 
$
(22.1
)
     Unrealized net losses arising during the year
 
(6.6
)
 
—

 
(6.6
)
Net current period other comprehensive loss
 
(6.6
)
 
—

 
(6.6
)
Balance at March 31, 2015
 
(21.3
)
 
(7.4
)
 
(28.7
)
     Unrealized net gains arising during the year
 
0.1

 
—

 
0.1

Net current period other comprehensive income
 
0.1

 
—

 
0.1

Balance at June 30, 2015
 
$
(21.2
)
 
$
(7.4
)
 
$
(28.6
)
Commitments and Contingencies
Commitments and Contingencies
10. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

From time to time, the Company is involved in various lawsuits, claims, and regulatory and administrative proceedings arising out of its business relating to general commercial and contractual matters, governmental regulations, intellectual property rights, labor and employment matters, tax and other actions.

Although the ultimate outcome of any legal proceeding or investigation cannot be predicted with certainty, based on present information, including the Company's assessment of the merits of the particular claim, the Company does not expect that any asserted or unasserted legal claims or proceedings, individually or in the aggregate, will have a material adverse effect on its cash flow, results of operations or financial condition.

Escheat Audit

During 2013, Unisource was notified by the State of Delaware that it intended to examine the books and records of Unisource to determine compliance with Delaware escheat laws. Since that date, seven other states have joined with Delaware in the audit process, which is conducted by an outside firm on behalf of the states and covers the period from 1986 to present. The Company has been informed that similar audits have generally taken four years or more to complete. The Company has determined that the ultimate outcome of this audit cannot be reasonably estimated at this time. Any claims or liabilities resulting from these audits could have a material impact on the Company’s financial condition, results of operations and cash flows.
Segment Information
Segment Information
11. SEGMENT INFORMATION

The following tables present net sales, Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, restructuring charges (income), stock-based compensation expense, LIFO (income) expense, non-restructuring severance charges, integration expenses, fair value adjustments on the contingent liability associated with the TRA and certain other adjustments) and certain other measures for each of the reportable segments and total operations for the periods presented:
(in millions)
Print
 
Publishing
 
Packaging
 
Facility Solutions
 
Corporate & Other
 
Total
Three Months Ended June 30, 2016
 
 
 
 
 
 
 
 
 
 
 
Net sales
$
751.7

 
$
252.5

 
$
704.8

 
$
322.0

 
$
29.8

 
$
2,060.8

Adjusted EBITDA
19.7

 
5.9

 
59.2

 
13.9

 
(48.6
)
 
50.1

Depreciation and amortization
3.2

 
0.8

 
3.1

 
1.5

 
5.0

 
13.6

Restructuring charges (income)
(0.6
)
 
—

 
0.1

 
0.2

 
—

 
(0.3
)
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2015
 
 
 
 
 
 
 
 
 
 
 
Net sales
812.5

 
294.4

 
699.6

 
324.5

 
28.3

 
2,159.3

Adjusted EBITDA
18.4

 
7.4

 
51.8

 
10.6

 
(47.5
)
 
40.7

Depreciation and amortization
3.4

 
1.0

 
4.0

 
2.1

 
4.8

 
15.3

Restructuring charges
0.8

 
—

 
0.5

 
0.4

 
0.5

 
2.2

 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2016
 
 
 
 
 
 
 
 
 
 
 
Net sales
1,510.8

 
514.8

 
1,376.3

 
623.0

 
55.7

 
4,080.6

Adjusted EBITDA
35.7

 
9.9

 
105.9

 
21.4

 
(87.9
)
 
85.0

Depreciation and amortization
6.4

 
1.7

 
6.1

 
3.0

 
9.9

 
27.1

Restructuring charges
0.3

 
—

 
0.4

 
0.5

 
0.2

 
1.4

 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2015
 
 
 
 
 
 
 
 
 
 
 
Net sales
1,633.2

 
603.9

 
1,374.8

 
633.6

 
51.7

 
4,297.2

Adjusted EBITDA
33.9

 
13.8

 
97.5

 
17.5

 
(93.6
)
 
69.1

Depreciation and amortization
6.8

 
1.6

 
7.8

 
3.9

 
8.7

 
28.8

Restructuring charges
1.6

 
—

 
1.4

 
1.3

 
1.3

 
5.6


    
The table below presents a reconciliation of income before income taxes as reflected in the Condensed Consolidated Statements of Income to total Adjusted EBITDA:
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
(in millions)
2016
 
2015
 
2016
 
2015
Income before income taxes
$
14.1

 
$
10.8

 
$
21.6

 
$
8.7

Interest expense, net
6.4

 
6.4

 
12.9

 
12.8

Depreciation and amortization
13.6

 
15.3

 
27.1

 
28.8

Restructuring charges (income)
(0.3
)
 
2.2

 
1.4

 
5.6

Stock-based compensation
3.1

 
0.9

 
5.1

 
1.9

LIFO (income) expense
2.2

 
(4.8
)
 
(3.1
)
 
(10.0
)
Non-restructuring severance charges
1.4

 
1.0

 
2.2

 
1.4

Integration expenses
6.1

 
10.3

 
12.3

 
20.3

Fair value adjustments on TRA contingent liability
2.0

 
(1.7
)
 
3.8

 
(0.4
)
Other
1.5

 
0.3

 
1.7

 
—

Adjusted EBITDA
$
50.1

 
$
40.7

 
$
85.0

 
$
69.1

Business and Summary of Significant Accounting Policies (Policies)
Basis of Presentation 
Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and with the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for a complete set of annual audited financial statements.

The accompanying unaudited financial information should be read in conjunction with the Consolidated and Combined Financial Statements and Notes contained in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2015. In the opinion of management, all adjustments, including normal recurring accruals and other adjustments, considered necessary for a fair presentation have been included. The operating results for the interim periods are not necessarily indicative of results for the full year.

All significant intercompany transactions between Veritiv's businesses have been eliminated.

Following the Merger, certain corporate and other related functions continued to be provided by International Paper under a transition services agreement. During the three and six months ended June 30, 2015, the Company recognized $3.2 million and $8.8 million in selling and administrative expenses related to this agreement. As of December 31, 2015, all of the functions originally provided by International Paper under this agreement have been fully transitioned to the Company.
    
Use of Estimates 
Use of Estimates

The preparation of unaudited financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses, and certain financial statement disclosures. Estimates and assumptions are used for, but not limited to, revenue recognition, accounts receivable valuation, inventory valuation, employee benefit plans, income tax contingency accruals and valuation allowances and goodwill and other intangible asset valuations. Although these estimates are based on management's knowledge of current events and actions it may undertake in the future, actual results may ultimately differ from these estimates and assumptions. Estimates are revised as additional information becomes available.

Recently Issued Accounting Standards 
Recently Issued Accounting Standards
Standard
 
Description
 
Effective Date
 
Effect on the Financial Statements or Other Significant Matters
Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers
 
The standard will replace existing revenue recognition standards and significantly expand the disclosure requirements for revenue arrangements. It may be adopted either retrospectively or on a modified retrospective basis to new contracts and existing contracts with remaining performance obligations as of the effective date.
 
January 1, 2018; early adoption date is no earlier than the annual period beginning after December 15, 2016
 
The Company is currently evaluating the alternative methods of adoption (full retrospective or modified retrospective), and the effect on its Consolidated Financial Statements and related disclosures. The Company plans to adopt this ASU on January 1, 2018.
ASU 2015-11, Simplifying the Measurement of Inventory
 
The standard requires companies to measure inventory at the lower of cost and net realizable value, thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. This ASU will not apply to inventories measured by either the last-in first-out (LIFO) method or retail inventory method.
 
January 1, 2017
 
The Company plans to adopt this ASU on January 1, 2017. Given that the majority (approximately 87% of the June 30, 2016 inventory balance) of the Company's inventory is measured using LIFO, it is not expected that the adoption of these provisions will have a material effect on its Consolidated Financial Statements.
ASU 2016-02, Leases (Topic 842)
 
The standard requires lessees to put most leases on their balance sheet but recognize expenses in their statement of operations in a manner similar to current accounting guidance. The new standard also eliminates the current guidance related to real estate specific provisions.
 
January 1, 2019; early adoption is permitted
 
The Company is currently evaluating the impact the ASU will have on its Consolidated Financial Statements and related disclosures. The Company plans to adopt this ASU on January 1, 2019.
ASU 2016-09, Compensation-Stock Compensation (Topic 718)
 
The standard was issued as part of the Financial Accounting Standards Board's simplification initiative. The areas for simplification involve several aspects of the accounting for share-based payment transactions, including income tax consequences, award classification as either equity or liabilities, and classification on the statement of cash flows.
 
January 1, 2017; early adoption is permitted
 
The Company adopted this ASU on January 1, 2016. The adoption did not materially impact the financial statements or related disclosures.
ASU 2016-13, Financial Instruments-Credit Losses (Topic 326)
 
The standard will replace the currently required incurred loss impairment methodology with guidance that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to be considered in making credit loss estimates.
 
January 1, 2020; early adoption for fiscal years beginning after December 15, 2018
 
The Company is currently evaluating the impact the ASU will have on its Consolidated Financial Statements and related disclosures. The Company plans to adopt this ASU on January 1, 2020.
Integration and Restructuring Charges (Tables)
Components of Integration Expense 
The following table summarizes the components of integration expenses:
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
(in millions)
2016
 
2015
 
2016
 
2015
Integration management
$
2.0

 
$
—

 
$
3.8

 
$
—

Retention compensation
0.9

 
3.1

 
2.0

 
6.6

Information technology conversion costs
1.3

 
2.2

 
2.4

 
4.3

Rebranding
0.5

 
1.7

 
1.2

 
2.5

Legal, consulting and other professional fees
0.5

 
2.5

 
1.0

 
5.4

Other
0.9

 
0.8

 
1.9

 
1.5

Total integration expenses
$
6.1

 
$
10.3

 
$
12.3

 
$
20.3

Schedule of Restructuring Reserve 
The following is a summary of the Company's restructuring activity for the three and six months ended June 30, 2016:
(in millions)
Severance and Related Costs
 
Other Direct Costs
 
Non-Cash Items
 
Total
Balance at December 31, 2015
$
1.7

 
$
0.4

 
$
—

 
$
2.1

Costs incurred
0.7

 
0.3

 
0.7

 
1.7

Payments
(0.9
)
 
(0.4
)
 
—

 
(1.3
)
Other adjustments
—

 
—

 
(0.7
)
 
(0.7
)
Balance at March 31, 2016
1.5

 
0.3

 
—

 
1.8

Costs incurred
0.9

 
1.5

 
(2.7
)
 
(0.3
)
Payments
(0.6
)
 
(1.0
)
 
—

 
(1.6
)
Other adjustments
—

 
—

 
2.7

 
2.7

Balance at June 30, 2016
$
1.8

 
$
0.8

 
$
—

 
$
2.6



The following is a summary of the Company's restructuring activity for the three and six months ended June 30, 2015:
(in millions)
Severance and Related Costs
 
Other Direct Costs
 
Total
Balance at December 31, 2014
$
3.7

 
$
0.2

 
$
3.9

Costs incurred
1.9

 
1.5

 
3.4

Payments
(2.7
)
 
(0.4
)
 
(3.1
)
Balance at March 31, 2015
2.9

 
1.3

 
4.2

Costs incurred
1.0

 
1.2

 
2.2

Payments
(1.1
)
 
(0.7
)
 
(1.8
)
Balance at June 30, 2015
$
2.8

 
$
1.8

 
$
4.6

Debt (Tables)
Schedule of Long-term Debt Obligations
The Company's long-term debt obligations were as follows:
(in millions)
June 30, 2016
 
December 31, 2015
Asset-Based Lending Facility (the "ABL Facility")
$
692.0

 
$
795.5

Equipment capital lease obligations (1)
8.1

 
7.8

Total debt
700.1

 
803.3

Less: current portion of long-term debt
(2.6
)
 
(2.8
)
Long-term debt, net of current maturities
$
697.5

 
$
800.5


(1) Equipment capital lease obligations include $2.6 million and $0.7 million related to the Toronto build-to-suit arrangement for the six months ended June 30, 2016 and for the year ended December 31, 2015
Income Taxes (Tables)
Schedule of Provision for Income Tax (Benefit) Expense
The following table presents the provision for income taxes and the effective tax rates for the three and six months ended June 30, 2016 and 2015:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
(in millions)
2016
 
2015
 
2016
 
2015
 
Income before income taxes
$
14.1

 
$
10.8

 
$
21.6

 
$
8.7

 
Income tax expense
$
6.2

 
$
6.5

 
$
10.4

 
$
6.6

 
Effective tax rate
44.0
%
 
60.2
%
 
48.1
%
 
75.9
%
 
Related Party Transactions (Tables)
Summarized Financial Impact of Transactions with Related Party
The following tables summarize the financial impact of these related party transactions with Georgia-Pacific:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(in millions)
 
2016
 
2015
 
2016
 
2015
Sales to Georgia-Pacific, reflected in net sales
 
$
9.1

 
$
8.0

 
$
18.1

 
$
17.0

Purchases of inventory from Georgia-Pacific, recognized in cost of products sold
 
$
46.6

 
$
67.1

 
$
102.9

 
$
136.5


(in millions)
 
June 30, 2016
 
December 31, 2015
Inventories purchased from Georgia-Pacific that remained on Veritiv's balance sheet
 
$
27.0

 
$
25.2

Related party payable to Georgia-Pacific
 
$
11.1

 
$
10.7

Related party receivable from Georgia-Pacific
 
$
4.6

 
$
3.9

Defined Benefit Plans (Tables)
Schedule of Net Periodic Benefit Costs
Net periodic benefit cost (credit) associated with these plans is summarized below:
 
Three Months Ended June 30, 2016
 
Three Months Ended June 30, 2015
(in millions)
U.S.
 
Canada
 
U.S.
 
Canada
Components of net periodic benefit cost (credit):
 
 
 
 
 
 
 
Service cost
$
0.5

 
$
0.0

 
$
0.5

 
$
0.0

Interest cost
0.9

 
0.8

 
0.9

 
0.9

Expected return on plan assets
(1.3
)
 
(0.9
)
 
(1.3
)
 
(0.9
)
Amortization of net loss
0.1

 
0.0

 
—

 
—

Net periodic benefit cost (credit)
$
0.2

 
$
(0.1
)
 
$
0.1

 
$
0.0


    
 
Six Months Ended June 30, 2016
 
Six Months Ended June 30, 2015
(in millions)
U.S.
 
Canada
 
U.S.
 
Canada
Components of net periodic benefit cost (credit):
 
 
 
 
 
 
 
Service cost
$
0.9

 
$
0.1

 
$
0.9

 
$
0.1

Interest cost
1.8

 
1.6

 
1.7

 
1.7

Expected return on plan assets
(2.6
)
 
(1.8
)
 
(2.7
)
 
(1.8
)
Amortization of net loss
0.1

 
0.1

 
—

 
—

Net periodic benefit cost (credit)
$
0.2

 
$
0.0

 
$
(0.1
)
 
$
0.0

Fair Value Measurements (Tables)
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation
The following table provides a reconciliation of the beginning and ending balance of the contingent liability for the three and six months ended June 30, 2016:    
(in millions)
 
Contingent Liability
Balance at December 31, 2015
 
$
63.0

Change in fair value adjustment recorded in other expense (income), net
 
1.8

Balance at March 31, 2016
 
64.8

Change in fair value adjustment recorded in other expense (income), net
 
2.0

Balance at June 30, 2016
 
$
66.8



Earnings Per Share (Tables)
Schedule of Earnings Per Share, Basic and Diluted
A summary of the numerators and denominators used in the basic and diluted EPS calculation is as follows:
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
(in millions, except per share data)
2016
 
2015
 
2016
 
2015
Numerator:
 
 
 
 
 
 
 
Net income
$
7.9

 
$
4.3

 
$
11.2

 
$
2.1

 
 
 
 
 
 
 
 
Denominator:
 
 
 
 
 
 
 
Weighted average number of shares outstanding – basic and diluted
16.00

 
16.00

 
16.00

 
16.00

 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
     Basic and diluted earnings per share
$
0.49

 
$
0.27

 
$
0.70

 
$
0.13

 
 
 
 
 
 
 
 
Antidilutive stock-based awards excluded from computation of diluted EPS
0.20

 
0.06

 
0.20

 
0.06

Performance stock-based awards excluded from computation of diluted EPS because performance conditions had not been met
0.34

 
0.24

 
0.34

 
0.24

Accumulated Other Comprehensive Loss (Tables)
Schedule of Accumulated Other Comprehensive Loss
The following table provides the components of accumulated other comprehensive loss ("AOCL") at June 30, 2016 (amounts are shown net of their related income tax effect, if any):
(in millions)
 
Foreign currency translation adjustments
 
Retirement liabilities
 
Interest rate swap
 
AOCL
Balance at December 31, 2015
 
$
(27.1
)
 
$
(7.4
)
 
$
(0.5
)
 
$
(35.0
)
     Unrealized net gains (losses) arising during the year
 
3.8

 
—

 
(0.3
)
 
3.5

     Amounts reclassified from AOCL
 
—

 
0.1

 
—

 
0.1

Net current period other comprehensive income (loss)
 
3.8

 
0.1

 
(0.3
)
 
3.6

Balance at March 31, 2016
 
(23.3
)
 
(7.3
)
 
(0.8
)
 
(31.4
)
     Unrealized net losses arising during the year
 
(1.6
)
 
—

 
0.0

 
(1.6
)
     Amounts reclassified from AOCL
 
—

 
0.1

 
—

 
0.1

Net current period other comprehensive income (loss)
 
(1.6
)
 
0.1

 
—

 
(1.5
)
Balance at June 30, 2016
 
$
(24.9
)
 
$
(7.2
)
 
$
(0.8
)
 
$
(32.9
)
    
The following table provides the components of AOCL at June 30, 2015 (amounts are shown net of their related income tax effect, if any):
(in millions)
 
Foreign currency translation adjustments
 
Retirement liabilities
 
AOCL
Balance at December 31, 2014
 
$
(14.7
)
 
$
(7.4
)
 
$
(22.1
)
     Unrealized net losses arising during the year
 
(6.6
)
 
—

 
(6.6
)
Net current period other comprehensive loss
 
(6.6
)
 
—

 
(6.6
)
Balance at March 31, 2015
 
(21.3
)
 
(7.4
)
 
(28.7
)
     Unrealized net gains arising during the year
 
0.1

 
—

 
0.1

Net current period other comprehensive income
 
0.1

 
—

 
0.1

Balance at June 30, 2015
 
$
(21.2
)
 
$
(7.4
)
 
$
(28.6
)


Segment Information (Tables)
Schedule of Segment Reporting Information, by Segment 
The following tables present net sales, Adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization, restructuring charges (income), stock-based compensation expense, LIFO (income) expense, non-restructuring severance charges, integration expenses, fair value adjustments on the contingent liability associated with the TRA and certain other adjustments) and certain other measures for each of the reportable segments and total operations for the periods presented:
(in millions)
Print
 
Publishing
 
Packaging
 
Facility Solutions
 
Corporate & Other
 
Total
Three Months Ended June 30, 2016
 
 
 
 
 
 
 
 
 
 
 
Net sales
$
751.7

 
$
252.5

 
$
704.8

 
$
322.0

 
$
29.8

 
$
2,060.8

Adjusted EBITDA
19.7

 
5.9

 
59.2

 
13.9

 
(48.6
)
 
50.1

Depreciation and amortization
3.2

 
0.8

 
3.1

 
1.5

 
5.0

 
13.6

Restructuring charges (income)
(0.6
)
 
—

 
0.1

 
0.2

 
—

 
(0.3
)
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2015
 
 
 
 
 
 
 
 
 
 
 
Net sales
812.5

 
294.4

 
699.6

 
324.5

 
28.3

 
2,159.3

Adjusted EBITDA
18.4

 
7.4

 
51.8

 
10.6

 
(47.5
)
 
40.7

Depreciation and amortization
3.4

 
1.0

 
4.0

 
2.1

 
4.8

 
15.3

Restructuring charges
0.8

 
—

 
0.5

 
0.4

 
0.5

 
2.2

 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2016
 
 
 
 
 
 
 
 
 
 
 
Net sales
1,510.8

 
514.8

 
1,376.3

 
623.0

 
55.7

 
4,080.6

Adjusted EBITDA
35.7

 
9.9

 
105.9

 
21.4

 
(87.9
)
 
85.0

Depreciation and amortization
6.4

 
1.7

 
6.1

 
3.0

 
9.9

 
27.1

Restructuring charges
0.3

 
—

 
0.4

 
0.5

 
0.2

 
1.4

 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2015
 
 
 
 
 
 
 
 
 
 
 
Net sales
1,633.2

 
603.9

 
1,374.8

 
633.6

 
51.7

 
4,297.2

Adjusted EBITDA
33.9

 
13.8

 
97.5

 
17.5

 
(93.6
)
 
69.1

Depreciation and amortization
6.8

 
1.6

 
7.8

 
3.9

 
8.7

 
28.8

Restructuring charges
1.6

 
—

 
1.4

 
1.3

 
1.3

 
5.6

Reconciliation of Total Adjusted EBITDA to Net Income (Loss) 
The table below presents a reconciliation of income before income taxes as reflected in the Condensed Consolidated Statements of Income to total Adjusted EBITDA:
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
(in millions)
2016
 
2015
 
2016
 
2015
Income before income taxes
$
14.1

 
$
10.8

 
$
21.6

 
$
8.7

Interest expense, net
6.4

 
6.4

 
12.9

 
12.8

Depreciation and amortization
13.6

 
15.3

 
27.1

 
28.8

Restructuring charges (income)
(0.3
)
 
2.2

 
1.4

 
5.6

Stock-based compensation
3.1

 
0.9

 
5.1

 
1.9

LIFO (income) expense
2.2

 
(4.8
)
 
(3.1
)
 
(10.0
)
Non-restructuring severance charges
1.4

 
1.0

 
2.2

 
1.4

Integration expenses
6.1

 
10.3

 
12.3

 
20.3

Fair value adjustments on TRA contingent liability
2.0

 
(1.7
)
 
3.8

 
(0.4
)
Other
1.5

 
0.3

 
1.7

 
—

Adjusted EBITDA
$
50.1

 
$
40.7

 
$
85.0

 
$
69.1

Business and Summary of Significant Accounting Policies (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Distribution_Center
Jun. 30, 2015
Jun. 30, 2016
Distribution_Center
Jun. 30, 2015
Accounting Policies [Line Items]
 
 
 
 
Number of distribution centers (more than)
180 
 
180 
 
Selling and administrative expenses
$ 207.7 
$ 218.0 
$ 408.6 
$ 428.6 
Percentage of FIFO Inventory
87.00% 
 
87.00% 
 
International Paper |
Transaction Service Agreement (TSA)
 
 
 
 
Accounting Policies [Line Items]
 
 
 
 
Selling and administrative expenses
 
$ 3.2 
 
$ 8.8 
Integration and Restructuring Charges - Narrative (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended 24 Months Ended 3 Months Ended 6 Months Ended 42 Months Ended 3 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2016
Veritiv Restructuring Plan
Mar. 31, 2016
Veritiv Restructuring Plan
Jun. 30, 2015
Veritiv Restructuring Plan
Mar. 31, 2015
Veritiv Restructuring Plan
Jun. 30, 2016
Veritiv Restructuring Plan
Jun. 30, 2015
Veritiv Restructuring Plan
Dec. 31, 2017
Scenario, Forecast
Jun. 30, 2016
Facility Closing
Veritiv Restructuring Plan
Jun. 30, 2015
Facility Closing
Veritiv Restructuring Plan
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Integration and restructuring charges including capital expenditures
 
 
 
 
$ 161 
 
 
 
 
 
 
$ 225 
 
 
Integration and restructuring charges, capital expenditures
 
 
 
 
50 
 
 
 
 
 
 
55 
 
 
Merger-related expenses
 
 
 
 
 
 
 
 
 
 
 
27 
 
 
Restructuring charges (income)
$ (0.3)
$ 2.2 
$ 1.4 
$ 5.6 
 
$ (0.3)
$ 1.7 
$ 2.2 
$ 3.4 
$ 1.4 
$ 5.6 
 
$ (2.7)
$ 2.2 
Integration and Restructuring Charges - Integration Expense (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Business Acquisition [Line Items]
 
 
 
 
Total integration expenses
$ 6.1 
$ 10.3 
$ 12.3 
$ 20.3 
UWW Holdings, Inc. XPEDX Merger
 
 
 
 
Business Acquisition [Line Items]
 
 
 
 
Integration management
2.0 
0 
3.8 
0 
Retention compensation
0.9 
3.1 
2.0 
6.6 
Information technology conversion costs
1.3 
2.2 
2.4 
4.3 
Rebranding
0.5 
1.7 
1.2 
2.5 
Legal, consulting and other professional fees
0.5 
2.5 
1.0 
5.4 
Other
0.9 
0.8 
1.9 
1.5 
Total integration expenses
$ 6.1 
$ 10.3 
$ 12.3 
$ 20.3 
Integration and Restructuring Charges - Restructuring Reserve (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Mar. 31, 2016
Jun. 30, 2015
Mar. 31, 2015
Jun. 30, 2016
Jun. 30, 2015
Restructuring Reserve [Roll Forward]
 
 
 
 
 
 
Costs incurred
$ (0.3)
 
$ 2.2 
 
$ 1.4 
$ 5.6 
Veritiv Restructuring Plan
 
 
 
 
 
 
Restructuring Reserve [Roll Forward]
 
 
 
 
 
 
Restructuring reserve, beginning balance
1.8 
2.1 
4.2 
3.9 
2.1 
3.9 
Costs incurred
(0.3)
1.7 
2.2 
3.4 
1.4 
5.6 
Payments
(1.6)
(1.3)
(1.8)
(3.1)
 
 
Other adjustments
2.7 
(0.7)
 
 
 
 
Restructuring reserve, ending balance
2.6 
1.8 
4.6 
4.2 
2.6 
4.6 
Severance and Related Costs |
Veritiv Restructuring Plan
 
 
 
 
 
 
Restructuring Reserve [Roll Forward]
 
 
 
 
 
 
Restructuring reserve, beginning balance
1.5 
1.7 
2.9 
3.7 
1.7 
3.7 
Costs incurred
0.9 
0.7 
1.0 
1.9 
 
 
Payments
(0.6)
(0.9)
(1.1)
(2.7)
 
 
Other adjustments
0 
0 
 
 
 
 
Restructuring reserve, ending balance
1.8 
1.5 
2.8 
2.9 
1.8 
2.8 
Other Direct Costs |
Veritiv Restructuring Plan
 
 
 
 
 
 
Restructuring Reserve [Roll Forward]
 
 
 
 
 
 
Restructuring reserve, beginning balance
0.3 
0.4 
1.3 
0.2 
0.4 
0.2 
Costs incurred
1.5 
0.3 
1.2 
1.5 
 
 
Payments
(1.0)
(0.4)
(0.7)
(0.4)
 
 
Other adjustments
0 
0 
 
 
 
 
Restructuring reserve, ending balance
0.8 
0.3 
1.8 
1.3 
0.8 
1.8 
Non-Cash Items |
Veritiv Restructuring Plan
 
 
 
 
 
 
Restructuring Reserve [Roll Forward]
 
 
 
 
 
 
Restructuring reserve, beginning balance
0 
0 
 
 
0 
 
Costs incurred
(2.7)
0.7 
 
 
 
 
Payments
0 
0 
 
 
 
 
Other adjustments
2.7 
(0.7)
 
 
 
 
Restructuring reserve, ending balance
$ 0 
$ 0 
 
 
$ 0 
 
Debt - Long-Term Debt Obligations (Details) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Debt Instrument [Line Items]
 
 
Equipment capital lease obligations
$ 8.1 
$ 7.8 
Total debt
700.1 
803.3 
Less: current portion of long-term debt
(2.6)
(2.8)
Long-term debt, net of current maturities
697.5 
800.5 
Line of Credit |
Asset-Backed Lending Facility
 
 
Debt Instrument [Line Items]
 
 
Asset-Based Lending Facility (the ABL Facility)
$ 692.0 
$ 795.5 
Debt - Narrative (Details) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Line of Credit Facility [Line Items]
 
 
Capital lease obligations
$ 8.1 
$ 7.8 
Toronto Build-to-Suit Arrangement
 
 
Line of Credit Facility [Line Items]
 
 
Capital lease obligations
2.6 
0.7 
Line of Credit |
Asset-Backed Lending Facility
 
 
Line of Credit Facility [Line Items]
 
 
Remaining borrowing capacity
$ 451.3 
 
Income Taxes - Income Tax Expense (Benefit) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Income Tax Disclosure [Abstract]
 
 
 
 
Income before income taxes
$ 14.1 
$ 10.8 
$ 21.6 
$ 8.7 
Income tax expense
$ 6.2 
$ 6.5 
$ 10.4 
$ 6.6 
Effective income tax rate (as percent)
44.00% 
60.20% 
48.10% 
75.90% 
Federal statutory income tax rate (as percent)
35.00% 
35.00% 
35.00% 
35.00% 
Related Party Transactions - Summarized Financial Impact of Transactions with Related Party (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 1 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Dec. 31, 2015
Jun. 30, 2016
Georgia-Pacific
Dec. 31, 2015
Georgia-Pacific
Jun. 30, 2016
Sales
Georgia-Pacific
Jun. 30, 2015
Sales
Georgia-Pacific
Jun. 30, 2016
Sales
Georgia-Pacific
Jun. 30, 2015
Sales
Georgia-Pacific
Jun. 30, 2016
Cost of products sold
Georgia-Pacific
Jun. 30, 2015
Cost of products sold
Georgia-Pacific
Jun. 30, 2016
Cost of products sold
Georgia-Pacific
Jun. 30, 2015
Cost of products sold
Georgia-Pacific
Apr. 30, 2016
Purchase of Austin Facility
Georgia-Pacific
Apr. 30, 2016
Settlement of Financing Obligation
Other expense (income)
Georgia-Pacific
Related Party Transaction [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Related party sales
$ 9.1 
$ 8.0 
$ 18.1 
$ 17.0 
 
 
 
$ 9.1 
$ 8.0 
$ 18.1 
$ 17.0 
 
 
 
 
 
 
Purchases from related party
 
 
 
 
 
 
 
 
 
 
 
46.6 
67.1 
102.9 
136.5 
5.4 
 
Inventories
692.9 
 
692.9 
 
720.6 
27.0 
25.2 
 
 
 
 
 
 
 
 
 
 
Related party payable
11.1 
 
11.1 
 
10.7 
11.1 
10.7 
 
 
 
 
 
 
 
 
 
 
Related party receivable
4.6 
 
4.6 
 
3.9 
4.6 
3.9 
 
 
 
 
 
 
 
 
 
 
Gain (loss) on settlement of financing obligation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ (1.3)
Defined Benefit Plans - Net Periodic Costs (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
U.S. Defined Benefit Pension Plan
 
 
 
 
Components of net periodic benefit cost (credit):
 
 
 
 
Service cost
$ 0.5 
$ 0.5 
$ 0.9 
$ 0.9 
Interest cost
0.9 
0.9 
1.8 
1.7 
Expected return on plan assets
(1.3)
(1.3)
(2.6)
(2.7)
Amortization of net loss
0.1 
0 
0.1 
0 
Net periodic benefit cost (credit)
0.2 
0.1 
0.2 
(0.1)
Canada Pension Plan
 
 
 
 
Components of net periodic benefit cost (credit):
 
 
 
 
Service cost
0 
0 
0.1 
0.1 
Interest cost
0.8 
0.9 
1.6 
1.7 
Expected return on plan assets
(0.9)
(0.9)
(1.8)
(1.8)
Amortization of net loss
0 
0 
0.1 
0 
Net periodic benefit cost (credit)
$ (0.1)
$ 0 
$ 0 
$ 0 
Fair Value Measurements - Narrative (Details) (UWW Holdings, Inc. XPEDX Merger, USD $)
In Millions, unless otherwise specified
0 Months Ended 3 Months Ended
Jul. 1, 2014
Jun. 30, 2016
Fair Value, Measurements, Recurring
Level 3
Contingent Liability
Business Acquisition [Line Items]
 
 
Fair value of contingent liability associated with the Tax Receivable Agreement
$ 59.4 
 
Fair value discount rate
 
4.40% 
Fair Value Measurements - Contingent Liability (Details) (Fair Value, Measurements, Recurring, Level 3, Contingent Liability, UWW Holdings, Inc. XPEDX Merger, USD $)
In Millions, unless otherwise specified
3 Months Ended
Jun. 30, 2016
Mar. 31, 2016
Fair Value, Measurements, Recurring |
Level 3 |
Contingent Liability |
UWW Holdings, Inc. XPEDX Merger
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Beginning balance
$ 64.8 
$ 63.0 
Change in fair value adjustment recorded in other expense (income), net
2.0 
1.8 
Ending balance
$ 66.8 
$ 64.8 
Earnings Per Share - Schedule of Earnings Per Share Basic and Diluted (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Earnings Per Share [Abstract]
 
 
 
 
Net income
$ 7.9 
$ 4.3 
$ 11.2 
$ 2.1 
Weighted-average shares outstanding - basic and diluted (in shares)
16.00 
16.00 
16.00 
16.00 
Basic and diluted earnings per share (in Dollars per share)
$ 0.49 
$ 0.27 
$ 0.70 
$ 0.13 
Antidilutive stock-based awards excluded from computation of diluted earnings per share (in shares)
0.20 
0.06 
0.20 
0.06 
Performance stock-based awards excluded from computation of diluted earnings per share because performance conditions had not been met (in shares)
0.34 
0.24 
0.34 
0.24 
Accumulated Other Comprehensive Loss (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Jun. 30, 2016
Dec. 31, 2015
Jun. 30, 2016
Foreign currency translation adjustments
Mar. 31, 2016
Foreign currency translation adjustments
Jun. 30, 2015
Foreign currency translation adjustments
Mar. 31, 2015
Foreign currency translation adjustments
Jun. 30, 2016
Retirement liabilities
Mar. 31, 2016
Retirement liabilities
Jun. 30, 2015
Retirement liabilities
Mar. 31, 2015
Retirement liabilities
Jun. 30, 2016
Interest rate swap
Mar. 31, 2016
Interest rate swap
Jun. 30, 2016
AOCL
Mar. 31, 2016
AOCL
Jun. 30, 2015
AOCL
Mar. 31, 2015
AOCL
AOCI Attributable to Parent, Net of Tax [Roll Forward]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$ 548.5 
$ 530.1 
$ (23.3)
$ (27.1)
$ (21.3)
$ (14.7)
$ (7.3)
$ (7.4)
$ (7.4)
$ (7.4)
$ (0.8)
$ (0.5)
$ (31.4)
$ (35.0)
$ (28.7)
$ (22.1)
Unrealized net gains (losses) arising during the year
 
 
(1.6)
3.8 
0.1 
(6.6)
0 
0 
0 
0 
0 
(0.3)
(1.6)
3.5 
0.1 
(6.6)
Amounts reclassified from AOCL
 
 
0 
0 
 
 
0.1 
0.1 
 
 
0 
0 
0.1 
0.1 
 
 
Net current period other comprehensive income (loss)
 
 
(1.6)
3.8 
0.1 
(6.6)
0.1 
0.1 
0 
0 
0 
(0.3)
(1.5)
3.6 
0.1 
(6.6)
Ending balance
$ 548.5 
$ 530.1 
$ (24.9)
$ (23.3)
$ (21.2)
$ (21.3)
$ (7.2)
$ (7.3)
$ (7.4)
$ (7.4)
$ (0.8)
$ (0.8)
$ (32.9)
$ (31.4)
$ (28.6)
$ (28.7)
Commitments and Contingencies (Details)
6 Months Ended
Jun. 30, 2016
state
Loss Contingencies [Line Items]
 
Additional states joining escheat audit
7 
Maximum
 
Loss Contingencies [Line Items]
 
Escheat audit period
4 years 
Segment Information - Net Sales and Other Measures by Reportable Segment (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Segment Reporting Information [Line Items]
 
 
 
 
Net sales
$ 2,060.8 
$ 2,159.3 
$ 4,080.6 
$ 4,297.2 
Adjusted EBITDA
50.1 
40.7 
85.0 
69.1 
Depreciation and amortization
13.6 
15.3 
27.1 
28.8 
Costs incurred
(0.3)
2.2 
1.4 
5.6 
Operating Segments |
Print
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Net sales
751.7 
812.5 
1,510.8 
1,633.2 
Adjusted EBITDA
19.7 
18.4 
35.7 
33.9 
Depreciation and amortization
3.2 
3.4 
6.4 
6.8 
Costs incurred
(0.6)
0.8 
0.3 
1.6 
Operating Segments |
Publishing
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Net sales
252.5 
294.4 
514.8 
603.9 
Adjusted EBITDA
5.9 
7.4 
9.9 
13.8 
Depreciation and amortization
0.8 
1.0 
1.7 
1.6 
Costs incurred
0 
0 
0 
0 
Operating Segments |
Packaging
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Net sales
704.8 
699.6 
1,376.3 
1,374.8 
Adjusted EBITDA
59.2 
51.8 
105.9 
97.5 
Depreciation and amortization
3.1 
4.0 
6.1 
7.8 
Costs incurred
0.1 
0.5 
0.4 
1.4 
Operating Segments |
Facility Solutions
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Net sales
322.0 
324.5 
623.0 
633.6 
Adjusted EBITDA
13.9 
10.6 
21.4 
17.5 
Depreciation and amortization
1.5 
2.1 
3.0 
3.9 
Costs incurred
0.2 
0.4 
0.5 
1.3 
Corporate and Other
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Net sales
29.8 
28.3 
55.7 
51.7 
Adjusted EBITDA
(48.6)
(47.5)
(87.9)
(93.6)
Depreciation and amortization
5.0 
4.8 
9.9 
8.7 
Costs incurred
$ 0 
$ 0.5 
$ 0.2 
$ 1.3 
Segment Information - Reconciliation of Consolidated Adjusted EBITDA (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Segment Reporting [Abstract]
 
 
 
 
Income before income taxes
$ 14.1 
$ 10.8 
$ 21.6 
$ 8.7 
Interest expense, net
6.4 
6.4 
12.9 
12.8 
Depreciation and amortization
13.6 
15.3 
27.1 
28.8 
Restructuring charges (income)
(0.3)
2.2 
1.4 
5.6 
Stock-based compensation
3.1 
0.9 
5.1 
1.9 
LIFO (income) expense
2.2 
(4.8)
(3.1)
(10.0)
Non-restructuring severance charges
1.4 
1.0 
2.2 
1.4 
Integration expenses
6.1 
10.3 
12.3 
20.3 
Fair value adjustments on TRA contingent liability
2.0 
(1.7)
3.8 
(0.4)
Other
1.5 
0.3 
1.7 
0 
Adjusted EBITDA
$ 50.1 
$ 40.7 
$ 85.0 
$ 69.1