VERITIV CORP, 10-Q filed on 11/14/2014
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2014
Nov. 13, 2014
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
Non-accelerated Filer 
 
Document Type
10-Q 
 
Document Period End Date
Sep. 30, 2014 
 
Document Fiscal Year Focus
2014 
 
Document Fiscal Period Focus
Q3 
 
Amendment Flag
false 
 
Entity Common Stock, Shares Outstanding
 
16,000,000 
Condensed Consolidated and Combined Statements of Operations (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Income Statement [Abstract]
 
 
 
 
Net sales (including sales to related parties of $9.2 and $12.8 for the three months ended September 30, 2014 and 2013, respectively, and $33.5 and $40.3 for the nine months ended September 30, 2014 and 2013, respectively)
$ 2,390.3 
$ 1,442.8 
$ 5,026.7 
$ 4,234.1 
Cost of products sold (including purchases from related parties of $62.7 and $158.6 for the three months ended September 30, 2014 and 2013, respectively, and $339.2 and $465.6 for the nine months ended September 30, 2014 and 2013, respectively) (exclusive of depreciation and amortization shown separately below)
1,987.1 
1,214.1 
4,192.2 
3,545.5 
Distribution expenses
138.2 
75.4 
289.5 
234.8 
Selling and administrative expenses
212.9 
134.0 
469.2 
408.9 
Depreciation and amortization
14.2 
4.4 
23.1 
12.8 
Merger and integration expenses
54.8 
56.9 
Restructuring charges (income)
0.1 
6.0 
(1.0)
30.4 
Operating income (loss)
(17.0)
8.9 
(3.2)
1.7 
Interest expense, net
6.8 
6.8 
Other expense (income), net
0.6 
(0.2)
0.1 
(2.3)
Income (loss) from continuing operations before income taxes
(24.4)
9.1 
(10.1)
4.0 
Income tax (benefit) expense
(10.4)
3.9 
(4.6)
2.0 
Income (loss) from continuing operations
(14.0)
5.2 
(5.5)
2.0 
Loss from discontinued operations, net of income taxes
(0.1)
(0.1)
Net income (loss)
$ (14.0)
$ 5.1 
$ (5.6)
$ 2.0 
Earnings (loss) per share: Basic and Diluted
 
 
 
 
Continuing operations (in dollars per share)
$ (0.88)
$ 0.64 
$ (0.51)
$ 0.25 
Discontinued operations (in dollars per share)
$ 0.00 
$ (0.01)
$ (0.01)
$ 0.00 
Basic and diluted earnings (loss) per share (in dollars per share)
$ (0.88)
$ 0.63 
$ (0.52)
$ 0.25 
Weighted-average shares outstanding - basic and diluted (in shares)
16,000,000 
8,160,000 
10,773,333 
8,160,000 
Condensed Consolidated and Combined Statements of Operations (Parenthetical) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Income Statement [Abstract]
 
 
 
 
Related party sales
$ 9.2 
$ 12.8 
$ 33.5 
$ 40.3 
Related party cost of products sold
$ 62.7 
$ 158.6 
$ 339.2 
$ 465.6 
Condensed Consolidated and Combined Statements of Comprehensive Income (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Statement of Comprehensive Income [Abstract]
 
 
 
 
Net income (loss)
$ (14.0)
$ 5.1 
$ (5.6)
$ 2.0 
Other comprehensive income (loss), net of tax:
 
 
 
 
Foreign currency translation adjustments
(4.5)
0.1 
(3.9)
0.5 
Other comprehensive income, net of tax
(4.5)
0.1 
(3.9)
0.5 
Total comprehensive income (loss), net of tax
$ (18.5)
$ 5.2 
$ (9.5)
$ 2.5 
Condensed Consolidated and Combined Balance Sheets (USD $)
In Millions, unless otherwise specified
Sep. 30, 2014
Dec. 31, 2013
Current assets:
 
 
Cash and cash equivalents
$ 61.0 
$ 5.7 
Accounts receivable, less allowances of $35.4 and $22.7 in 2014 and 2013, respectively
1,162.8 
669.7 
Related party receivable
3.4 
10.1 
Inventories
697.6 
360.9 
Other current assets
102.6 
26.3 
Assets held for sale
9.3 
Total current assets
2,027.4 
1,082.0 
Property and equipment, net
379.2 
107.1 
Goodwill
55.1 
26.4 
Other intangible assets, net
36.5 
9.3 
Deferred income tax assets
122.3 
22.7 
Other non-current assets
46.2 
9.4 
Total assets
2,666.7 
1,256.9 
Current liabilities:
 
 
Accounts payable
667.2 
357.3 
Related party payable
14.9 
2.6 
Accrued payroll and benefits
109.0 
54.9 
Deferred income tax liabilities
31.1 
13.5 
Other accrued liabilities
94.3 
36.5 
Current maturities of long-term debt
3.3 
Financing obligations to related party, current portion
15.8 
Total current liabilities
935.6 
464.8 
Long-term debt, net of current maturities
803.3 
Financing obligations to related party, less current portion
218.5 
Defined benefit pension obligations
28.3 
Other non-current liabilities
113.0 
12.5 
Total liabilities
2,098.7 
477.3 
Commitments and contingencies (Note 14)
   
   
Equity:
 
 
Parent company investment, prior to Spin-off
 
784.3 
Shareholders' equity:
 
 
Preferred stock, $0.01 par value, 10.0 million shares authorized, none issued
 
Common stock, $0.01 par value, 100.0 million shares authorized, 16.0 million shares issued and outstanding
0.2 
 
Additional paid-in capital
590.4 
 
Accumulated deficit
(14.0)
 
Accumulated other comprehensive loss
(8.6)
(4.7)
Total shareholders' equity
568.0 
(4.7)
Total equity
568.0 
779.6 
Total liabilities and equity
$ 2,666.7 
$ 1,256.9 
Condensed Consolidated and Combined Balance Sheets (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Sep. 30, 2014
Jul. 1, 2014
Dec. 31, 2013
Statement of Financial Position [Abstract]
 
 
 
Allowance for doubtful accounts (in US dollars)
$ 35.4 
 
$ 22.7 
Preferred stock par value (in Dollars per share)
$ 0.01 
 
 
Preferred stock, shares authorized (in Shares)
10,000,000 
 
 
Preferred stock, shares issued (in Shares)
 
 
Common stock par value (in Dollars per share)
$ 0.01 
 
 
Common stock, shares authorized (in Shares)
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 and Combined Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Net Cash Provided by (Used in) Operating Activities [Abstract]
 
 
Net income (loss)
$ (5.6)
$ 2.0 
Loss from discontinued operations, net of income taxes
(0.1)
Income (loss) from continuing operations
(5.5)
2.0 
Depreciation and amortization
23.1 
12.8 
Amortization of deferred financing fees
1.1 
Net gains on sales of property and equipment
(1.8)
(9.0)
Provision for allowance for doubtful accounts
6.2 
2.5 
Deferred income tax provision
(9.3)
3.5 
Stock-based compensation
4.3 
11.8 
Other noncash items, net
1.0 
Changes in operating assets and liabilities, net of Merger
 
 
Accounts receivable and related party receivable
(53.2)
(36.2)
Inventories
6.0 
17.7 
Accounts payable and related party payable
55.4 
10.0 
Accrued payroll and benefits
16.9 
3.5 
Other accrued liabilities
2.3 
(1.0)
Other
(16.9)
(5.6)
Net cash provided by operating activities – continuing operations
29.6 
12.0 
Net cash used for operating activities – discontinued operations
(1.1)
(0.1)
Net cash provided by operating activities
28.5 
11.9 
Investing Activities
 
 
Net cash acquired in Merger
37.0 
Property and equipment additions
(5.7)
(8.7)
Proceeds from asset sales
4.8 
20.9 
Other
0.3 
0.4 
Net cash provided by investing activities
36.4 
12.6 
Financing Activities
 
 
Net cash transfers to Parent
(61.5)
(16.9)
Change in bank and book overdrafts
9.1 
(9.2)
Transfer to Parent in connection with Spin-off
(404.2)
Borrowings of long-term debt
1,774.1 
Repayments of long-term debt
(1,302.4)
Payments under financing obligations to related party
(3.9)
Deferred financing fees
(22.5)
Other
(0.6)
0.1 
Net cash used for financing activities – continuing operations
(11.9)
(26.0)
Net cash provided by (used for) financing activities – discontinued operations
1.1 
(1.9)
Net cash used for financing activities
(10.8)
(27.9)
Effect of exchange rate changes on cash
1.2 
1.1 
Net change in cash and cash equivalents
55.3 
(2.3)
Cash and cash equivalents at beginning of period
5.7 
15.4 
Cash and cash equivalents at end of period
61.0 
13.1 
Supplemental Cash Flow Information
 
 
Cash paid for income taxes, net of refunds
1.4 
0.5 
Cash paid for interest
5.2 
Non-Cash Transactions
 
 
Common stock issued in connection with Spin-off
302.3 
Common stock issued in connection with Merger
284.7 
Contingent liability associated with the Tax Receivable Agreement
60.9 
Non-cash transfers (to) from Parent
$ (21.1)
$ 10.4 
Condensed Consolidated and Combined Statements of Shareholders' Equity (USD $)
In Millions, except Share data, unless otherwise specified
Total
Common Stock
Additional Paid-in Capital
Parent Company Investment
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Beginning of period at Dec. 31, 2013
$ 779.6 
 
 
$ 784.3 
$ 0 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Net income (loss)
8.4 
 
 
8.4 
 
 
End of period at Jun. 30, 2014
 
 
 
 
 
 
Beginning of period at Dec. 31, 2013
779.6 
784.3 
(4.7)
Beginning Balance (in shares) at Dec. 31, 2013
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Net income (loss)
(5.6)
 
 
 
 
 
Other comprehensive income, net of tax
(3.9)
 
 
 
 
(3.9)
Net transfers to Parent
(82.6)
 
 
(82.6)
 
 
Conversion of parent company investment in connection with Spin-off (in shares)
 
8,200,000 
 
 
 
 
Conversion of Parent Company Investment in connection with Spin-off
0.1 
710.0 
(710.1)
 
 
Transfer to Parent in connection with Spin-off
(404.2)
 
(404.2)
 
 
 
Issuance of common stock for Merger (in shares)
 
7,800,000 
 
 
 
 
Issuance of common stock for Merger
284.7 
0.1 
284.6 
 
 
 
End of period at Sep. 30, 2014
568.0 
0.2 
590.4 
 
(8.6)
Ending Balance (in shares) at Sep. 30, 2014
 
16,000,000 
 
 
 
 
Beginning of period at Jun. 30, 2014
 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Net income (loss)
(14.0)
 
 
 
(14.0)
 
Other comprehensive income, net of tax
(4.5)
 
 
 
 
 
Net transfers to Parent
 
 
 
(50.2)
 
 
End of period at Sep. 30, 2014
$ 568.0 
 
 
$ 0 
$ (14.0)
 
Description of Business and Basis of Presentation
Description of Business and Basis of Presentation
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

Veritiv Corporation ("Veritiv" or the "Company") is a leading North American business-to-business distributor of print, publishing, packaging, facility and logistics solutions. Established in 2014, following the merger of International Paper Company’s ("International Paper" or "Parent") xpedx division ("xpedx") and UWW Holdings, Inc., the Company operates from approximately 170 distribution centers throughout the U.S., Canada and Mexico.

xpedx was a business-to-business distributor of paper, publishing, packaging and facility supplies products in North America that operated 85 distribution centers in the U.S. and Mexico. xpedx distributed products and services to various customer markets, including printers, publishers, data centers, manufacturers, higher education institutions, healthcare facilities, sporting and performance arenas, retail, government agencies, property managers and building service contractors.

UWW Holdings, Inc., operating through Unisource Worldwide, Inc. and its other consolidated subsidiaries (collectively, "Unisource"), was a leading distributor of printing and business paper, publishing solutions, packaging supplies and equipment, facility supplies and equipment and logistics services primarily in the U.S. and Canada. Unisource sold its products to a diverse customer base that included commercial printing, retail, hospitality, healthcare, governmental, distribution and manufacturing sectors.

The Spin-off and Merger

On July 1, 2014 (the "Distribution Date"), International Paper completed the previously announced spin-off of its distribution solutions business, xpedx, to its shareholders (the "Spin-off"), forming a new public company called Veritiv. Immediately following the Spin-off, UWW Holdings, Inc. merged (the "Merger") with and into Veritiv. The primary reason for the business combination was to create a North American business-to-business distribution company with a broad geographic reach, an extensive product offering and a differentiated and leading service platform. The Merger has been reflected in Veritiv’s financial statements using the acquisition method of accounting, with Veritiv as the accounting acquirer of UWW Holdings, Inc.

On the Distribution Date:

8,160,000 shares of Veritiv common stock were distributed on a pro rata basis to the International Paper shareholders of record as of the close of business on June 20, 2014. Immediately following the Spin-off, but prior to the Merger, International Paper’s shareholders owned all of the shares of Veritiv common stock outstanding, and
A cash payment of $404.2 million was distributed to International Paper, which was comprised of: (i) a special payment of $400.0 million, (ii) reduced by a $15.3 million preliminary working capital adjustment and (iii) increased by $19.5 million of transaction expense-related adjustments. These payments have been reflected by Veritiv as a reduction to equity. Subsequent to September 30, 2014, the working capital and transaction expense-related adjustments were finalized, resulting in an additional cash payment of $30.7 million to International Paper. This payment will be reflected as a reduction to equity in the fourth quarter of 2014.

In addition to the above payment, International Paper also has a potential earnout payment of up to $100.0 million that would become due in 2020 if Veritiv's aggregate EBITDA for fiscal years 2017, 2018 and 2019 exceeds an agreed-upon target of $759.0 million, subject to certain adjustments. The $100.0 million potential earnout payment would be reflected by Veritiv as a reduction to equity at the time of payment.

Immediately following the Spin-off on the Distribution Date:

UWW Holdings, LLC, the sole shareholder of UWW Holdings, Inc., received 7,840,000 shares of Veritiv common stock for all outstanding shares of UWW Holdings, Inc. common stock that it held on the Distribution Date, in a private placement transaction,
Veritiv and UWW Holdings, LLC entered into a registration rights agreement (the "Registration Rights Agreement") that provides UWW Holdings, LLC with certain demand registration rights and piggyback registration rights. The agreement also entitles UWW Holdings, LLC to transfer its Veritiv common stock to one or more of its affiliates or equity-holders, and UWW Holdings, LLC may exercise registration rights on behalf of such transferees if such transferees become a party to the Registration Rights Agreement,
Veritiv and UWW Holdings, LLC entered into a tax receivable agreement (the "Tax Receivable Agreement") that sets forth the terms by which Veritiv generally will be obligated to pay UWW Holdings, LLC an amount equal to 85% of the U.S. federal, state and Canadian income tax savings that Veritiv actually realizes as a result of the utilization of Unisource’s net operating losses attributable to taxable periods prior to the date of the Merger, and
UWW Holdings, LLC received approximately $33.9 million of cash proceeds associated with preliminary working capital and net indebtedness adjustments, as well as cash proceeds of $4.7 million associated with transaction expense-related adjustments. The $33.9 million payment was recorded as part of the purchase price consideration for Unisource, and the $4.7 million payment was recorded within merger and integration expenses in the Condensed Consolidated and Combined Statements of Operations.

Immediately following the completion of the Spin-off and Merger, International Paper shareholders owned approximately 51%, and UWW Holdings, LLC owned approximately 49%, of the shares of Veritiv common stock on a fully-diluted basis. International Paper does not own any shares of Veritiv common stock. See Note 2, Merger with Unisource, for further details on the Merger.

Veritiv’s common stock began regular-way trading on the New York Stock Exchange on July 2, 2014 under the ticker symbol VRTV.
  

References in the Notes to the Condensed Consolidated and Combined Financial Statements to International Paper or Parent refer to International Paper Company and its consolidated subsidiaries (other than Veritiv).

Basis of Presentation

Prior to the Distribution Date, Veritiv’s financial position, results of operations and cash flows consisted of only the xpedx business of International Paper and have been derived from International Paper’s historical accounting records. The financial results of xpedx have been presented on a carve-out basis through the Distribution Date, while the financial results for Veritiv, post Spin-off, are prepared on a stand-alone basis. As such, the unaudited interim Condensed Consolidated and Combined Statements of Operations, Condensed Consolidated and Combined Statements of Comprehensive Income and Condensed Consolidated and Combined Statements of Cash Flows for the nine months ended September 30, 2014 consist of the consolidated results of Veritiv on a stand-alone basis for the three months ended September 30, 2014, and the combined results of operations of xpedx for the six months ended June 30, 2014 on a carve-out basis. The condensed combined financial statements as of December 31, 2013 and for the three and nine months ended September 30, 2013 consist entirely of the combined results of xpedx on a carve-out basis.

The unaudited interim Condensed Consolidated and Combined Financial Statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles ("GAAP") in the United States have been omitted.  These unaudited interim Condensed Consolidated and Combined Financial Statements should be read in conjunction with the xpedx audited combined financial statements and notes thereto included in the Company’s Registration Statement on Form S-1.

In the opinion of management, such unaudited interim Condensed Consolidated and Combined Financial Statements include all normal recurring adjustments necessary to present fairly the results of operations, financial position and cash flows.  Net sales and net earnings for any interim period are not necessarily indicative of future or annual results. The Company's business is subject to seasonal influences. Generally, the Company's highest volume of net sales occurs in the third fiscal quarter, and the lowest volume of net sales occurs during the first fiscal quarter.

The preparation of the unaudited interim Condensed Consolidated and Combined Financial Statements requires management to make use of estimates and assumptions that affect the reported amount of assets and liabilities, revenue and expenses, and certain financial statement disclosures. Significant estimates in these unaudited interim Condensed Consolidated and Combined Financial Statements include revenue recognition, accounts receivable valuation, inventory valuation, employee benefit plans, income tax and goodwill and other intangible asset valuation. Estimates are revised as additional information becomes available.

For periods prior to the Spin-off, the condensed combined financial statements include expense allocations for certain functions previously provided by International Paper, including, but not limited to, general corporate expenses related to finance, legal, information technology, human resources, communications, insurance and stock-based compensation. These expenses have been allocated on the basis of direct usage when identifiable, with the remainder principally allocated on the basis of percent of capital employed, headcount, sales or other measures. Management considers the basis on which the expenses have been allocated to reasonably reflect the utilization of services provided to or for the benefit received by xpedx during those periods. The allocations may not, however, reflect the expenses xpedx would have incurred as an independent company for the periods presented. Actual costs that may have been incurred if xpedx had been a stand-alone company would depend on a number of factors, including the organizational structure, whether functions were outsourced or performed by employees and strategic decisions made in areas such as information technology and infrastructure. Veritiv is unable to determine what such costs would have been had xpedx been independent. See Note 16, Related Party Transactions, for further information.

Following the Spin-off, certain corporate and other related functions described above continue to be provided by International Paper under a transition services agreement. For the three months ended September 30, 2014, the Condensed Consolidated and Combined Statements of Operations reflects $8.0 million in selling and administrative expenses related to this agreement.

The Company operates on a calendar year-end.

Recently Issued Accounting Standards Not Yet Adopted

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue From Contracts with Customers. ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 is effective for interim and annual reporting periods beginning after December 15, 2016 for public entities. Early adoption is not permitted. Entities have the option of using either a full retrospective or a modified approach to adopt the guidance in ASU 2014-09. Veritiv is currently in the process of evaluating the potential impact of adopting ASU 2014-09.
Merger with Unisource
Merger with Unisource
2. MERGER WITH UNISOURCE

As more fully described in Note 1, Description of Business and Basis of Presentation, on July 1, 2014, Unisource merged with and into Veritiv. During the three and nine months ended September 30, 2014, the Company incurred merger and integration-related expenses of $54.8 million and $56.9 million, respectively, which were expensed as incurred. These costs related primarily to third-party fees and costs associated with change-in-control agreements.

The Merger was accounted for in the Company’s financial statements using the acquisition method of accounting, with Veritiv as the accounting acquirer of Unisource. The preliminary estimated purchase price of $379.5 million was determined in accordance with the Merger Agreement. The preliminary purchase price is allocated to tangible and identifiable intangible assets and liabilities based upon their respective fair values.

The following table summarizes the components of the preliminary estimated purchase price for Unisource and the preliminary allocation of the purchase price to assets acquired and liabilities assumed as of the date of the Merger:

Preliminary estimated purchase price:
(in millions)
Fair value of Veritiv shares transferred
$
284.7

Cash payment associated with customary working capital and net indebtedness adjustments
33.9

Fair value of contingent liability associated with the Tax Receivable Agreement
60.9

Total preliminary estimated purchase price
$
379.5



Preliminary Allocation:
(in millions)
Cash
$
70.9

Accounts receivable
448.4

Inventories
351.9

Deferred income tax assets
79.8

Property and equipment
301.2

Goodwill
28.7

Other intangible assets
29.9

Other current and non-current assets (including below market leasehold agreements)
61.7

Accounts payable
(263.8
)
Long-term debt (including equipment capital leases)
(333.2
)
Financing obligations to related party
(238.2
)
Defined benefit pension obligations
(31.0
)
Other current and non-current liabilities (including above market leasehold agreements)
(126.8
)
Total purchase price
$
379.5



The fair value of Veritiv shares transferred represents the aggregate value of 7,840,000 shares issued at the closing “when-issued” market price of the Company’s stock on June 30, 2014, the day prior to the Merger, less a discount for lack of marketability.

The purchase price allocated to the identifiable intangible assets acquired is as follows:
 
Value
(in millions)
 
Estimated Useful Life (in years)
Customer relationships
$
23.1

 
10 — 12
Trademarks/Trade names
3.9

 
1 — 5
Non-compete agreements
2.9

 
1
Total identifiable intangible assets acquired
$
29.9

 
 


The amounts shown above may change as the purchase price will be based upon finalization of customary working capital adjustments and valuation of the contingent liability associated with the Tax Receivable Agreement. See Note 7, Fair Value Measurements, regarding the valuation of the contingent liability. The allocation of the purchase price above is considered preliminary and was based on valuation information, estimates and assumptions available on September 30, 2014. The Company is still in the process of verifying data and finalizing information related to the valuation and expects to finalize these matters within the measurement period as final asset and liability valuations are completed.

Preliminary goodwill of $28.7 million arising from the Merger consists largely of the synergies and other benefits expected from combining the operations and is not expected to be deductible for income tax purposes. See Note 6, Goodwill and Other Intangible Assets, for the preliminary allocation of goodwill to the Company's reportable segments.

Actual and Pro Forma Impact

The operating results for Unisource are included in the Company’s financial statements from July 1, 2014 through September 30, 2014. Net sales and pre-tax income attributable to Unisource during this period and included in the Company’s Condensed Consolidated and Combined Statements of Operations were $1,021.8 million and $3.0 million, respectively.

The following unaudited pro forma financial information presents results as if the Merger and the related financing, further described in Note 10, Debt, occurred on January 1, 2013. The historical consolidated financial information of the Company and Unisource has been adjusted in the pro forma information to give effect to pro forma events that are directly attributable to the transactions and factually supportable. The unaudited pro forma results do not reflect events that have occurred or may occur after the transactions, including the impact of any synergies expected to result from the Merger. Accordingly, the unaudited pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transactions been effected on the assumed date, nor is it necessarily an indication of future operating results.
(Unaudited)
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(in millions, except share and per share data)
2014
 
2013
 
2014
 
2013
Net sales
$
2,390.3

 
$
2,471.8

 
$
6,934.2

 
$
7,246.8

Net income(1)
$
21.2

 
$
244.7

 
$
22.8

 
$
189.2

Earnings per share - basic and diluted
$
1.33

 
$
15.29

 
$
1.43

 
$
11.83

Weighted-average shares outstanding - basic and diluted
16,000,000

 
16,000,000

 
16,000,000

 
16,000,000

(1) Unisource's historical results for the three and nine months ended September 30, 2013 include the reversal of a $238.7 million valuation allowance against its U.S. federal and a substantial portion of its state net deferred tax assets.

The unaudited pro forma information reflects primarily the following pre-tax adjustments for the respective periods:

Merger and integration expenses: Merger and integration expenses of $54.8 million and $3.8 million incurred during the three months ended September 30, 2014 and 2013, respectively, and $56.9 million incurred during the nine months ended September 30, 2014 have been eliminated. Pro forma net income for the nine months ended September 30, 2013 includes merger and integration expenses of $76.3 million.
Incremental depreciation and amortization expense: Pro forma net income for the three months ended September 30, 2013 and nine months ended September 30, 2014 and 2013 includes $3.2 million, $5.2 million and $9.8 million, respectively, of incremental depreciation and amortization expense related to the fair value adjustments to property and equipment and identifiable intangible assets.

A combined effective U.S. federal statutory and state rate of 39.0% was used to determine the after-tax impact on net income of the pro forma adjustments.
Restructuring Charges
Restructuring Charges
3. RESTRUCTURING CHARGES

Veritiv Restructuring

As part of the Spin-off and Merger, the Company is executing on a multi-year integration and restructuring of its North American operations to integrate the legacy xpedx and Unisource operations, generate cost savings and capture synergies across the combined company. As of September 30, 2014, no major initiatives were commenced as part of this effort.

xpedx Restructuring Plan

During 2010, xpedx completed a strategic assessment of its operating model, resulting in the decision to begin a multi-year restructuring plan. The restructuring plan involved the establishment of a lower cost operating model in connection with the repositioning of the Print segment in response to changing market considerations. The restructuring plan included initiatives to (i) optimize the warehouse network, (ii) improve the efficiency of the sales team and (iii) reorganize the procurement function. xpedx management launched the plan in 2011. This plan was substantially completed as of June 30, 2014.

The restructuring plan identified locations to be affected and a range of time for specific undertakings. A severance liability was established when positions to be eliminated were identified and communicated to the respective affected employees. Generally, severance arrangements were based on years of employee service. As of the Spin-off date, International Paper retained all liabilities associated with such restructuring actions.

During the three and nine months ended September 30, 2013, restructuring charges of $6.0 million and $30.4 million, respectively, were recorded and primarily comprised of shut-down costs and employee termination benefits. During the nine months ended September 30, 2014, restructuring income of $1.1 million was recorded under this plan, primarily related to a gain on sale of assets.

The corresponding liability and activity during the current year are detailed in the table below. In connection with the Spin-off on July 1, 2014, the remaining liability at June 30, 2014 was transferred to International Paper. See Note 16, Related Party Transactions, for more details.
(in millions)
Total
Liability at December 31, 2013
$
7.7

Additional provision
0.1

Payments
(3.9
)
Adjustment of prior year's estimate
(0.3
)
Liability transferred to Parent in connection with Spin-off
(3.6
)
Liability at September 30, 2014
$

Discontinued Operations
Discontinued Operations
4. DISCONTINUED OPERATIONS

During 2011, xpedx ceased its Canadian operations, which had provided distribution of printing supplies to Canadian-based customers. Additionally, xpedx ceased its printing press distribution business, which was located in the U.S. Both of these businesses were historically included in xpedx’s Print segment. The operations and cash flows of these components have been eliminated from the ongoing operations of xpedx, and going forward Veritiv will not have any significant continuing involvement in the operations of these components, as any assets and related obligations were retained by International Paper as part of the Spin-off. Prior to the Spin-off, these components were included in discontinued operations for all periods presented.

Results of discontinued operations were as follows:
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(in millions)
2014
 
2013
 
2014
 
2013
Loss from operations
$

 
$
(0.1
)
 
$
(0.1
)
 
$
(0.3
)
Restructuring and disposal income

 

 

 
0.3

Loss from discontinued operations
$

 
$
(0.1
)
 
$
(0.1
)
 
$

Earnings Per Share
Earnings Per Share
5. EARNINGS PER SHARE

Basic earnings (loss) per share for Veritiv common stock is calculated by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share 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 anti-dilutive impact.

On the Distribution Date, Veritiv had 16,000,000 shares of common stock issued and outstanding, including 7,840,000 shares issued in a private placement to UWW Holdings, LLC. The calculation of both basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2013 utilized 8,160,000
shares as no equity-based awards were outstanding prior to the Distribution Date, and Veritiv was a wholly-owned subsidiary of International Paper prior to that date. The calculation of both basic and diluted earnings (loss) per share for the three months ended September 30, 2014 utilized 16,000,000 shares as the private placement of 7,840,000 shares to UWW Holdings, LLC occurred on the Distribution Date. The calculation of both basic and diluted earnings (loss) per share for the nine months ended September 30, 2014 utilized 10,773,333 shares based on the weighted-average shares outstanding during this period, reflecting the impact of the private placement of shares to UWW Holdings, LLC on the Distribution Date. Also, as the Company has not issued or granted any dilutive securities since the Distribution Date, there was no dilutive impact to shares outstanding for the three and nine months ended September 30, 2014.

For the three and nine months ended September 30, 2014 and 2013, basic and diluted earnings (loss) per share were as follows:
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(in millions, except share and per share data)
2014
 
2013
 
2014
 
2013
Income (loss) from continuing operations
$
(14.0
)
 
$
5.2

 
$
(5.5
)
 
$
2.0

Income (loss) from discontinued operations

 
(0.1
)
 
(0.1
)
 

Net income (loss)
$
(14.0
)

$
5.1


$
(5.6
)

$
2.0

 
 
 
 
 
 
 
 
Weighted-average number of shares outstanding - basic and diluted
16,000,000

 
8,160,000

 
10,773,333

 
8,160,000

 
 
 
 
 
 
 
 
Earnings (loss) per share:
 
 
 
 
 
 
 
Basic and diluted
 
 
 
 
 
 
 
Continuing operations
$
(0.88
)
 
$
0.64

 
$
(0.51
)
 
$
0.25

Discontinued operations

 
(0.01
)
 
(0.01
)
 

Basic and diluted earnings (loss) per share
$
(0.88
)
 
$
0.63

 
$
(0.52
)
 
$
0.25

Goodwill and Other Intangible Assets
Goodwill and Other Intangible Assets
6. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

Goodwill represents the excess of the purchase price over the fair value of net assets acquired in connection with the Company’s acquisitions. Goodwill is reviewed by Veritiv for impairment on a reporting unit basis annually on October 1st or more frequently if indicators are present or changes in circumstances suggest that impairment may exist. The impairment test performed by xpedx during the fourth quarter of 2013 indicated the fair value of the reporting units containing goodwill was in excess of the related carrying value of the net assets.

The following table sets forth the changes in the carrying amount of goodwill:
(in millions)
Print
 
Publishing
 
Packaging
 
Facility Solutions
 
Corporate & Other
 
Total
Balance at December 31, 2013
$

 
$

 
$
26.4

 
$

 
$

 
$
26.4

Additions to goodwill

 

 
22.7

 
1.9

 
4.1

 
28.7

Balance at September 30, 2014
$

 
$

 
$
49.1

 
$
1.9

 
$
4.1

 
$
55.1



Additions to goodwill represent the preliminary goodwill resulting from the Merger. See Note 2, Merger with Unisource, for further details.

Other Intangible Assets

The components of the Company's other intangible assets were as follows:
 
 
 
September 30, 2014
 
December 31, 2013
(in millions)
Estimated Useful Lives (in years)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net
Customer relationships
1 — 12
 
$
53.8

 
$
23.0

 
$
30.8

 
$
30.7

 
$
21.5

 
$
9.2

Trademarks/Trade names
1 — 11
 
4.1

 
0.6

 
3.5

 
0.2

 
0.1

 
0.1

Non-compete agreements
1
 
2.9

 
0.7

 
2.2

 

 

 

Total
 
 
$
60.8

 
$
24.3

 
$
36.5

 
$
30.9

 
$
21.6

 
$
9.3



Additions to other intangible assets represent the preliminary identifiable intangible assets resulting from the Merger, as discussed in Note 2, Merger with Unisource.

The Company recorded amortization expense of $2.1 million and $0.4 million during the three months ended September 30, 2014 and 2013, respectively, and $2.7 million and $1.1 million during the nine months ended September 30, 2014 and 2013, respectively.

The estimated aggregate amortization expense for each of the five succeeding years is as follows (in millions):
Year-Ended
 
Total
   2014(1)
 
$
2.1

2015
 
6.2

2016
 
4.1

2017
 
4.1

2018
 
4.1

(1) Reflects remaining three months of 2014.
Fair Value Measurements Fair Value Measurements
Fair Value Measurements
7. FAIR VALUE MEASUREMENTS

Fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following fair value hierarchy is used in selecting inputs, with the highest priority given to Level 1, as these are the most transparent or reliable.

Level 1 - Quoted market prices in active markets for identical assets or liabilities.

Level 2 - Observable market-based inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 - Unobservable inputs for the asset or liability reflecting the reporting entity’s own assumptions or external inputs from inactive markets.

At September 30, 2014, the Company’s financial instruments consisted primarily of working capital-related accounts, the ABL Facility (as defined in Note 10, Debt), capital lease obligations and deferred compensation for which the carrying value approximated fair value.

At September 30, 2014, the contingent liability associated with the Tax Receivable Agreement, described in Note 16, Related Party Transactions, was recorded at fair value, using a discounted cash flow model that reflected management’s expectations about probability of payment. Key assumptions utilized in the discounted cash flow model include projected revenues and taxable income, as well as a discount rate of 4.8%. At September 30, 2014, the Company’s discounted cash flow model used significant unobservable (Level 3) inputs that were tied to the utilization of Unisource’s net operating losses, attributable to taxable periods prior to the Merger, by the Company. There were no changes to the underlying inputs and the model during the three months ended September 30, 2014. Any change in the fair value of the contingent liability will be reflected in other expense (income), net in the Company’s Condensed Consolidated and Combined Statements of Operations.

There have been no transfers of assets or liabilities between the fair value measurement levels. The Company’s policy regarding the timing for recording transfers between the fair value measurement levels is to do so at the end of the reporting period.
Supplementary Financial Statement Information
Supplementary Financial Statement Information
8. SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION
 
Accounts Receivable

Accounts receivable were recognized net of allowances that primarily consisted of allowances for doubtful accounts of $28.4 million and $22.5 million as of September 30, 2014 and December 31, 2013, respectively, with the remaining balance of $7.0 million and $0.2 million being comprised of other allowances as of September 30, 2014 and December 31, 2013, respectively. The allowance for doubtful accounts reflects the best estimate of losses inherent in the Company’s accounts receivable portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other available evidence. The other allowances balance is inclusive of credit risks, returns, discounts and any other items affecting the realization of these assets. Accounts receivable are written off when management determines they are uncollectible.

Inventories
 
The Company’s inventories are comprised of finished goods and are primarily valued at cost as determined by the last-in, first-out method ("LIFO"). Such valuations are not in excess of market. Elements of cost in inventories include the purchase price invoiced by a supplier, plus inbound freight and related costs, and are reduced by estimated volume-based rebates and purchase discounts available from certain suppliers. Approximately 86% and 97% of inventories were valued using the LIFO method as of September 30, 2014 and December 31, 2013, respectively. If the first-in, first-out method had been used, total inventory balances would have increased by approximately $74.0 million and $76.6 million at September 30, 2014 and December 31, 2013, respectively.

Other Current Assets

The components of other current assets were as follows:
(in millions)
September 30,
 
December 31,
2014
 
2013
Rebates receivable
$
50.8

 
$
18.4

Prepaid expenses
32.0

 
5.6

Other
19.8

 
2.3

Other current assets
$
102.6

 
$
26.3



Property and Equipment, Net

The components of property and equipment, net were as follows:
(in millions)
September 30,
 
December 31,
2014
 
2013
Land, buildings and improvements
$
132.0

 
$
143.8

Machinery and equipment
109.9

 
72.5

Equipment capital leases and assets related to financing obligations with related party
229.3

 

Internally developed software
104.3

 
84.5

Other
14.9

 
4.9

Less: Accumulated depreciation
(211.2
)
 
(198.6
)
Property and equipment, net
$
379.2

 
$
107.1



Other Non-Current Assets

The components of other non-current assets were as follows:
(in millions)
September 30,
 
December 31,
2014
 
2013
Deferred financing costs
$
21.2

 
$

Investments in real estate joint ventures
5.7

 

Below market leasehold agreements
6.2

 

Other
13.1

 
9.4

Other non-current assets
$
46.2

 
$
9.4



Accrued Payroll and Benefits

The components of accrued payroll and benefits were as follows:
(in millions)
September 30,
 
December 31,
2014
 
2013
Accrued payroll and related taxes
$
32.7

 
$
11.2

Accrued commissions
36.6

 
25.9

Other
39.7

 
17.8

Accrued payroll and benefits
$
109.0

 
$
54.9



Other Accrued Liabilities

The components of other accrued liabilities were as follows:
(in millions)
September 30,
 
December 31,
2014
 
2013
Accrued taxes
$
15.5

 
$
6.4

Accrued customer incentives
22.6

 
12.8

Accrued freight
9.7

 
2.4

Accrued professional fees
5.2

 

Customer deposits
4.4

 

Accrued interest
2.3

 

Other
34.6

 
14.9

Other accrued liabilities
$
94.3

 
$
36.5



Other Non-Current Liabilities

The components of other non-current liabilities were as follows:
(in millions)
September 30,
 
December 31,
2014
 
2013
Contingent liability associated with Tax Receivable Agreement
$
60.9

 
$

Deferred compensation
24.5

 

Above market leasehold agreements
7.5

 

Asset retirement obligations
6.5

 

Other
13.6

 
12.5

Other non-current liabilities
$
113.0

 
$
12.5

Income Taxes
Income Taxes
9. INCOME TAXES

The Company’s provision for income tax (benefit) expense for the three and nine months ended September 30, 2014 and 2013 is based on the estimated annual effective tax rate, plus any discrete items.

The following table presents the provision for income tax (benefit) expense and the effective tax rates for the three and nine months ended September 30, 2014 and 2013:

 
Three Months Ended September 30,
 
Nine Months Ended 
 September 30,
(in millions)
2014
 
2013
 
2014
 
2013
Income (loss) from continuing operations before income taxes
$
(24.4
)
 
$
9.1

 
$
(10.1
)
 
$
4.0

Income tax (benefit) expense
(10.4
)
 
3.9

 
(4.6
)
 
2.0

Effective income tax rate
42.6
%
 
42.9
%
 
45.5
%
 
50.0
%


The difference between the Company’s effective tax rate for the three and nine months ended September 30, 2014 and 2013 and the U.S. statutory tax rate of 35% is principally related to nondeductible transaction-related costs and other expenses.

As a result of the Merger, a significant change in the ownership of the Company occurred which, pursuant to the Internal Revenue Code, will limit on an annual basis the Company’s ability to utilize its U.S. federal and state net operating loss carryforwards ("NOLs"). The Company’s NOLs will continue to be available to offset taxable income and tax liabilities (until such NOLs and credits are either used or expire) subject to the Section 382 annual limitation. If the annual limitation amount is not fully utilized in a particular tax year, then the unused portion from that particular tax year will be added to the annual limitation in subsequent years. In connection with the Merger, Veritiv established a valuation allowance of $40.8 million against its federal, state and foreign net deferred tax assets.

As of September 30, 2014, the gross amount of uncertain tax positions was $1.6 million. Substantially all of the gross uncertain tax positions, if recognized, would impact Veritiv’s effective tax rate in the period of recognition. The Company accrues interest on unrecognized tax benefits as a component of interest expense, net. Penalties, if incurred, are recognized as a component of income tax expense. The corresponding liabilities are reflected in other non-current liabilities within the Condensed Consolidated and Combined Balance Sheets. As a result of the expiration of statutes of limitation, the Company currently estimates that the amount of unrecognized tax benefits could be reduced by up to $0.6 million during the next twelve months.

Undistributed earnings of the Company’s foreign subsidiaries are considered permanently reinvested and, accordingly, no provision for U.S. income taxes have been provided thereon.
Debt Debt
Debt
10. DEBT

The Company did not have any long-term debt obligations as of December 31, 2013. As of September 30, 2014, the Company's long-term debt obligations were as follows:
(in millions)
September 30, 2014
ABL Facility(1)
$
796.9

Equipment capital lease obligations
9.7

Less: current portion of long-term debt
(3.3
)
Long-term debt, net
$
803.3

         (1) Includes $22.8 million of Canadian bank overdrafts as of September 30, 2014.

ABL Facility

In conjunction with the Spin-off and Merger, Veritiv entered into a commitment with a group of lenders for a $1.4 billion asset-backed lending facility ("ABL Facility"). The ABL Facility is comprised of four sub-facilities: (i) a $1,180.0 million revolving facility to be made available to Unisource Worldwide, Inc. and xpedx, LLC (collectively, the "U.S. Borrowers"); (ii) a $70.0 million first-in, last-out facility to be made available to the U.S. Borrowers (such facility, along with the facility described in clause (i), the "U.S. Facilities"); (iii) a $140.0 million revolving facility to be made available to Unisource Canada, Inc. (the "Canadian Borrower" and, collectively with the U.S. Borrowers, the "Borrowers"); and (iv) a $10.0 million first-in, last-out facility made available to the Canadian Borrower (such facility, along with the facility described in clause (iii), the "Canadian Facilities"). The ABL Facility is available to be drawn in U.S. dollars, in the case of the U.S. Facilities, and in U.S. dollars or Canadian dollars, in the case of the Canadian Facilities, or in other currencies that are mutually agreeable.

The ABL Facility will mature and the commitments thereunder will terminate after July 1, 2019, however, it provides for the right of the individual lenders to extend the maturity date of their respective commitments and loans upon the request of the Borrowers and without the consent of any other lenders. The ABL Facility may be prepaid at the Borrowers' option at any time without premium or penalty and is subject to mandatory prepayment if the amount outstanding under the ABL Facility exceeds either the aggregate commitments with respect thereto or the current borrowing base, in an amount equal to such excess.

The ABL Facility requires a springing minimum fixed charge coverage ratio of at least 1.00 to 1.00 on a trailing four-quarter basis, which will be tested only when specified availability is less than the greater of (i) $90.0 million and (ii) 10.0% of the lesser of (x) the then applicable borrowing base and (y) the then total effective commitments under the ABL Facility, and continuing until such time as specified availability has been in excess of such threshold for a period of 20 consecutive calendar days. At September 30, 2014, the above test was not applicable.

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 September 30, 2014, the available borrowing capacity under the ABL Facility was approximately $509.1 million.

Financing and other related costs incurred in connection with the ABL Facility are reflected in other non-current assets in the Condensed Consolidated and Combined Balance Sheets and are being amortized over the ABL Facility term. For the three months ended September 30, 2014, interest expense, net in the Condensed Consolidated and Combined Statements of Operations included $1.1 million of amortization of deferred financing fees.

Senior Credit Facility

On March 15, 2011, Unisource entered into an asset-based senior credit facility agreement (the "Senior Credit Facility") which had an original maturity date of March 15, 2016. The Senior Credit Facility provided for a borrowing limit of up to $600.0 million as of July 1, 2014, of which $323.8 million was drawn and outstanding as of July 1, 2014. On July 1, 2014, Veritiv assumed the Senior Credit Facility debt in connection with the Merger and used a portion of the proceeds borrowed against the ABL Facility to repay all of the outstanding balance under the Senior Credit Facility. Accordingly, the Senior Credit Facility expired on July 1, 2014 as a result of the prepayment.

Equipment Capital Lease Obligations

Capital lease obligations consist of delivery equipment, material handling equipment, computer hardware and office equipment which are leased through third parties under non-cancelable leases with terms ranging from three to eight years. Many of the delivery equipment leases include annual rate increases based on the Consumer Price Index which are included in the calculation of the initial lease obligation. The carrying value of the related equipment associated with these capital leases is included within property and equipment, net in the Condensed Consolidated and Combined Balance Sheets at September 30, 2014.
Equity-Based Incentive Plans
Equity-Based Incentive Plans
11. EQUITY-BASED INCENTIVE PLANS

Veritiv Incentive Plans

2014 Omnibus Incentive Plan - In conjunction with the Spin-off and the Merger, Veritiv adopted the Veritiv Corporation 2014 Omnibus Incentive Plan (the "Omnibus Incentive Plan").  A total of 2,080,000 shares of Veritiv common stock may be issued under the Omnibus Incentive Plan, subject to certain adjustment provisions. Veritiv may grant options, stock appreciation rights, stock purchase rights, restricted shares, restricted stock units, dividend equivalents, deferred share units, performance shares, performance units and other equity-based awards under the Omnibus Incentive Plan. Awards may be granted under the Omnibus Incentive Plan to any employee, director, consultant or other service provider of Veritiv or a subsidiary of Veritiv. As of September 30, 2014, no awards had been granted pursuant to the Omnibus Incentive Plan.

International Paper Incentive Plans

At the time of the Spin-off, all equity awards held by employees of xpedx were granted under International Paper’s 2009 Incentive Compensation Plan ("ICP") or predecessor plans. The ICP authorizes grants of restricted stock, restricted or deferred stock units, performance awards payable in cash or stock upon the attainment of specified performance goals, dividend equivalents, stock options, stock appreciation rights, other stock-based awards, and cash-based awards at the discretion of the Management Development and Compensation Committee of the Board of Directors of International Paper that administers the ICP (the "Committee"). Restricted stock units were also awarded to certain non-U.S. employees. The following disclosures represented xpedx’s portion of such plans:

Performance Share Plan (PSP) - The PSP provided for grants of performance-based restricted stock units (PSUs). International Paper ceased granting awards under the PSP to xpedx employees as of July 1, 2014 as a result of the Spin-off and Merger.

Restricted Stock Award Program - The service-based Restricted Stock Award program, designed for recruitment, retention and special recognition purposes, provided for awards of restricted stock to key employees. International Paper ceased granting awards under this program to xpedx employees as of July 1, 2014 as a result of the Spin-off and Merger. 

In conjunction with the Spin-off, International Paper retained all rights and obligations of the above incentive plans.

Stock-based compensation expense and related income tax benefits associated with these International Paper plans were as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(in millions)
2014
 
2013
 
2014
 
2013
Total stock-based compensation expense
$

 
$
4.0

 
$
4.3

 
$
11.8

Income tax benefit related to stock-based compensation
$

 
$
3.8

 
$
1.3

 
$
4.7

Employee Benefit Plans
Employee Benefit Plans
12. EMPLOYEE BENEFIT PLANS

Defined Benefit Plans

At September 30, 2014, Veritiv did not maintain any active defined benefit plans for its nonunion employees.

Certain of xpedx’s employees participated in defined benefit pension and other post-retirement benefit plans sponsored by International Paper and accounted for by International Paper in accordance with accounting guidance for defined benefit pension and other post-employment benefit plans. In conjunction with the Spin-off, the above plans were frozen for the xpedx employees, and International Paper retained the associated liabilities and any potential costs for future periods. The amount of net pension and other post-employment benefit expense attributable to xpedx related to the International Paper sponsored plans was $1.5 million for the three months ended September 30, 2013, and $8.0 million and $9.1 million for the nine months ended September 30, 2014 and 2013, respectively.

In conjunction with the Merger, Veritiv assumed responsibility for Unisource’s defined benefit plans and Supplemental Executive Retirement Plan ("SERP") in the U.S. and Canada. These plans were frozen prior to the Merger, as further discussed below.

Unisource sponsored a defined benefit pension plan for its nonunion and union employees and a SERP for certain highly compensated employees. Effective February 15, 2008, Unisource elected to freeze its U.S. defined benefit pension plan for its nonunion employees and its SERP, although vested participants in such plans continue to receive interest credits on account balances earned prior to the freeze date. During the period from April 1, 2009 through September 25, 2013, the U.S. defined benefit pension plan for nonunion employees was prevented from making lump sum distributions to its participants, based on restrictions imposed by Internal Revenue Code Section 436, relating to the funded status of the plan. On September 26, 2013, the U.S. defined benefit pension plan received actuarial certification that the restrictions were lifted and eligible U.S. nonunion participants were permitted to receive lump sum payments for their full cash balance accounts. Expected benefit payments in the U.S. plan for 2014 assume that 10% of vested terminated participants will take lump sum payments; however, the timing of when the actual account balances will be paid is dependent on when participants elect to receive payment of their accounts. Union employees continue to accrue benefits under the U.S. defined benefit pension plan in accordance with collective bargaining agreements.

In Canada, Unisource sponsored one nonunion and two union defined benefit plans also known as Registered Pension Plans. Unisource also maintained a nonregistered SERP for certain highly compensated employees in Canada that provides pension benefits in excess of the registered plan compensation limits. Effective December 31, 2009, the nonunion defined benefit plan and the SERP plan were frozen for service credit. However, the participants are still eligible for early retirement benefits, and final average earnings continue to be used for calculating retirement benefits. Effective 2010, the Unisource Canadian union defined benefit plans were frozen for new participants under the two collective bargaining agreements.

Total net periodic pension credit associated with the defined benefit pension and SERP plans is summarized below:
(in millions)
Three Months Ended September 30, 2014
Service cost
$
0.4

Interest cost
1.8

Expected return on plan assets
(2.5
)
Net periodic pension credit
$
(0.3
)


Multiemployer Plans

Veritiv contributes to multiemployer pension plans for certain collective bargaining employees. The risks of participating in these multiemployer pension plans are different from a single employer plan in the following aspects:

Assets contributed to the multiemployer plans by one employer may be used to provide benefits to employees of other participating employers,
If a participating employer ceases contributing to the plan, the unfunded obligations of the plan may be inherited by the remaining participating employers, and
If the Company stops participating in any of the multiemployer plans, the Company may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

Contributions to the bargaining unit supported multiemployer pension plans were $1.1 million and $0.8 million for the three months ended September 30, 2014 and 2013, respectively, and $2.3 million and $1.9 million for the nine months ended September 30, 2014 and 2013, respectively. It is reasonably possible that changes to Veritiv employees covered under these plans might result in additional contribution obligations to the plans. Any such obligations would be governed by the specific agreement between Veritiv and any such plan.
Shareholders' Equity
Shareholders' Equity
13. SHAREHOLDERS' EQUITY

On the Distribution Date, Veritiv amended and restated its Certificate of Incorporation and its Bylaws. The following summarizes information concerning Veritiv's capital stock.

Authorized Capital Stock

As a result of the Spin-off, the Company’s authorized capital stock consists of 100,000,000 shares of common stock, par value $0.01 per share, and 10,000,000 shares of preferred stock, par value $0.01 per share.

Common Stock

Shares Outstanding: On the Distribution Date, 8,160,000 shares of Veritiv common stock were distributed on a pro rata basis to the International Paper shareholders of record as of the close of business on June 20, 2014. Furthermore, UWW Holdings, LLC, the sole shareholder of UWW Holdings, Inc., received 7,840,000 shares of Veritiv common stock for all outstanding shares of UWW Holdings, Inc. common stock that it held on the Distribution Date. Following these distributions, Veritiv had 16,000,000 shares of common stock issued and outstanding.

Dividends: Each holder of common stock shall be entitled to participate equally in all dividends payable with respect to the common stock.

Voting Rights: The holders of the Company’s common stock are entitled to vote only in the circumstances set forth in Veritiv's Amended and Restated Certificate of Incorporation. Each holder of common stock shall be entitled to one vote for each share of common stock held of record by such holder upon all matters to be voted on by the holders of the common stock.

Other Rights: Each holder of common stock shall be entitled to share equally, subject to any rights and preferences of the preferred stock (as fixed by resolutions, if any, of the Board of Directors), in the assets of the Company available for distribution, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of Veritiv, or upon any distribution of the assets of the Company.

Preferred Stock

Subject to the provisions of the Amended and Restated Certificate of Incorporation, the Board of Directors of Veritiv is authorized to provide for the issuance of up to 10,000,000 shares of preferred stock in one or more series. The Board of Directors may fix the number of shares constituting any series and determine the designation of the series, the dividend rates, rights of priority of dividend payment, the voting powers (if any) of the shares of the series, and the preferences and relative, participating, optional and other rights, if any, and any qualifications, limitations or restrictions, applicable to the shares of such series. No preferred stock was issued and outstanding as of September 30, 2014.
Commitments and Contingencies Disclosure
Commitments and Contingencies
14. COMMITMENTS AND CONTINGENCIES

Guarantees

In connection with sales of property, equipment and other assets, the Company commonly makes representations and warranties relating to such assets and, in some instances, may agree to indemnify buyers with respect to tax and environmental liabilities, breaches of representations and warranties and other matters. Liabilities for such matters are evaluated and accrued upon being probable and subject to reasonable estimation at the end of each reporting period. There were no such accruals at September 30, 2014 or December 31, 2013.

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.

Operating Leases

Certain properties and equipment are leased under cancelable and non-cancelable agreements. At September 30, 2014, total future minimum commitments under existing non-cancelable operating leases were as follows:

(in millions)
2014(1)
 
2015
 
2016
  
2017
 
2018
 
Thereafter
Lease obligations
$
23.6

 
$
79.5

 
$
66.2

 
$
55.2

 
$
46.2

 
$
95.1

Sublease income
(0.1
)
 
(0.3
)
 
(0.2
)
 
(0.1
)
 
(0.1
)
 

Total
$
23.5

 
$
79.2

 
$
66.0

 
$
55.1

 
$
46.1

 
$
95.1

(1) Reflects remaining three months of 2014.

The Company recorded rent expense of $23.5 million and $12.0 million for the three months ended September 30, 2014 and 2013, respectively, and $48.6 million and $35.7 million for the nine months ended September 30, 2014 and 2013, respectively. For the three months ended September 30, 2014, rent expense included $0.3 million of net amortization accretion related to the above and below market leasehold agreements that were acquired in conjunction with the Merger. The expected future amortization of such agreements is as follows:

(in millions)
2014(1)
 
2015
 
2016
  
2017
 
2018
 
Thereafter
Above market agreements
$
(0.5
)
 
$
(1.9
)
 
$
(1.5
)
 
$
(1.2
)
 
$
(1.0
)
 
$
(1.4
)
Below market agreements
0.2

 
0.6

 
0.5

 
0.4

 
0.4

 
4.1

Net amortization expense (accretion)
$
(0.3
)
 
$
(1.3
)
 
$
(1.0
)
 
$
(0.8
)
 
$
(0.6
)
 
$
2.7

(1) Reflects remaining three months of 2014.

Escheat Audit

During 2013, Unisource was notified by the State of Delaware that they 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 1981 to present. The Company has been informed that similar audits have generally taken two to four years to complete. Due to the preliminary stage of this audit, the Company has determined that the ultimate outcome cannot be estimated at this time. Any claims or liabilities resulting from these audits could have a material impact on the Company’s financial position, results of operations and cash flows.
Segment Information
Segment Information
15. SEGMENT INFORMATION

Effective July 1, 2014, in connection with the Spin-off and Merger, the Company reorganized its reportable segments as a result of a change in the way the Chief Executive Officer, who serves as the Chief Operating Decision Maker ("CODM"), manages and evaluates the business. Previously, the Company had three reportable segments: Print, Packaging and Facility Solutions. During the three months ended September 30, 2014, the Company realigned and expanded the Print segment into two separate reportable segments, Print and Publishing, and, therefore, expanded the number of reportable segments to four. In addition, as a result of the change in how the CODM manages and evaluates the business, certain costs such as executive costs, corporate affairs, finance, human resources, IT and legal that were previously allocated to the reportable segments are no longer allocated. The Company’s consolidated financial results now include a "Corporate & Other" category which includes certain assets and costs not directly related to any of the reportable segments. Corporate & Other also includes the Veritiv Logistics Solutions business which provides transportation and warehousing solutions. As a result of these changes in segment reporting, all historical segment information has been revised to conform to the new presentation, with no resulting impact on the consolidated and combined results of operations. The following is a brief description of the four reportable segments:

Print - The Print segment sells and distributes commercial printing, writing, copying, digital, wide format, and specialty paper products, graphics consumables, and graphics equipment primarily in the U.S., Canada and Mexico. This segment also includes customized paper conversion services of commercial printing paper for distribution to document centers and form printers.

Publishing - The Publishing segment sells and distributes coated and uncoated commercial printing papers to printers, converters, publishers, retailers and specialty businesses for use in magazines, catalogs, books, directories, gaming, couponing and retail inserts and direct mail. This segment also provides print management, e-commerce procurement and supply chain management solutions to simplify paper procurement processes for its customers.

Packaging - The Packaging segment sells and distributes consumer goods packaging, packaging for industrial or manufacturing components and point-of-sale displays, as well as the sale and distribution of single function or fully automated packaging machines in the U.S., Canada and Mexico. This segment also includes packaging design centers that design and test packaging, fulfillment and contract packaging services, and international operations focused on packaging design, development, testing and sourcing of packaging products for its customers primarily in the U.S. and Canada.

Facility Solutions - The Facility Solutions segment sells and distributes products such as towels, tissues, wipers and dispensers, can liners, commercial cleaning chemicals, soaps and sanitizers, sanitary maintenance supplies and equipment, safety and hazard supplies, and shampoos and amenities primarily in the U.S., Canada and Mexico. Products sold by this segment are primarily sourced from leading manufacturers in the U.S. and Canada.

In conjunction with the change in reportable segments, management re-evaluated its use of key performance metrics. Historically, xpedx presented operating profit, excluding certain charges, as its measure of operating performance for presentation of segment results. Based on the recent evaluation, Veritiv management has concluded that Adjusted EBITDA is the primary metric management uses to assess operating performance. Therefore, the current and prior period segment presentations reflect Adjusted EBITDA as the operating performance measure.

The following tables present net sales, Adjusted EBITDA and certain other measures for each of the reportable segments and total continuing operations for the periods presented:
(in millions)
Print

Publishing

Packaging

Facility Solutions

Corporate & Other

Total
Three Months Ended September 30, 2014











Net sales
$
947.2


$
338.2


$
725.0


$
357.0


$
22.9


$
2,390.3

Adjusted EBITDA
$
20.5


$
9.2


$
53.0


$
15.5


$
(46.7
)

$
51.5

Depreciation and amortization
$
3.7


$
0.5


$
4.2


$
1.8


$
4.0


$
14.2

Restructuring charges
$


$


$


$


$
0.1


$
0.1













Three Months Ended September 30, 2013











Net sales
$
613.2


$
215.0


$
404.5


$
210.1


$


$
1,442.8

Adjusted EBITDA
$
14.8


$
5.0


$
32.1


$
5.3


$
(30.0
)

$
27.2

Depreciation and amortization
$
1.0


$
0.1


$
0.7


$
0.4


$
2.2


$
4.4

Restructuring charges
$
2.5


$


$
1.8


$
1.1


$
0.6


$
6.0













Nine Months Ended September 30, 2014











Net sales
$
2,038.3


$
715.4


$
1,529.5


$
720.6


$
22.9


$
5,026.7

Adjusted EBITDA
$
38.1


$
16.6


$
104.4


$
18.4


$
(95.7
)

$
81.8

Depreciation and amortization
$
6.1


$
0.6


$
5.9


$
2.6


$
7.9


$
23.1

Restructuring charges (income)
$
(0.4
)

$


$
(0.2
)

$
(0.5
)

$
0.1


$
(1.0
)












Nine Months Ended September 30, 2013











Net sales
$
1,812.5


$
596.8


$
1,189.4


$
635.4


$


$
4,234.1

Adjusted EBITDA
$
35.7


$
12.0


$
91.4


$
10.3


$
(89.6
)

$
59.8

Depreciation and amortization
$
3.3


$
0.2


$
2.2


$
1.2


$
5.9


$
12.8

Restructuring charges
$
12.9


$
1.1


$
9.0


$
5.7


$
1.7


$
30.4



The table below presents a reconciliation of income (loss) from continuing operations before income taxes reflected in the Condensed Consolidated and Combined Statements of Operations to Total Adjusted EBITDA:
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(in millions)
2014
 
2013
 
2014
 
2013
Income (loss) from continuing operations before income taxes
$
(24.4
)
 
$
9.1

 
$
(10.1
)
 
$
4.0

Interest expense
6.8

 

 
6.8

 

Depreciation and amortization
14.2

 
4.4

 
23.1

 
12.8

Restructuring charges (income)
0.1

 
6.0

 
(1.0
)
 
30.4

Non-restructuring stock-based compensation

 
3.2

 
4.0

 
9.8

LIFO (income) expense
(0.5
)
 
4.2

 
(0.8
)
 
1.9

Non-restructuring severance charges

 
0.3

 
2.4

 
0.9

Merger and integration expenses
54.8

 

 
56.9

 

Other
0.5

 

 
0.5

 

Total Adjusted EBITDA
$
51.5

 
$
27.2

 
$
81.8

 
$
59.8



The table below summarizes total assets as of September 30, 2014 and December 31, 2013:
(in millions)
September 30, 2014
 
December 31, 2013
Print
$
1,025.8

 
$
517.1

Publishing
207.0

 
77.2

Packaging
802.5

 
401.7

Facility Solutions
380.2

 
201.7

Corporate & Other
251.2

 
59.2

Total assets
$
2,666.7

 
$
1,256.9

Related-Party Transactions
Related Party Transactions
16. RELATED PARTY TRANSACTIONS

Agreements with UWW Holdings, LLC

As described in Note 1, Description of Business and Basis of Presentation, on the Distribution Date UWW Holdings, LLC, the sole shareholder of UWW Holdings, Inc., received 7,840,000 shares of Veritiv common stock for all outstanding shares of UWW Holdings, Inc. common stock that it held, in a private placement transaction. Additionally, Veritiv and UWW Holdings, LLC executed the following agreements:

Registration Rights Agreement: The Registration Rights Agreement provides UWW Holdings, LLC with certain demand and piggyback registration rights. Under this Agreement, UWW Holdings, LLC is also entitled to transfer its Veritiv common stock to one or more of its affiliates or equity-holders and may exercise registration rights on behalf of such transferees if such transferees become a party to the Registration Rights Agreement. UWW Holdings, LLC, on behalf of the holders of shares of Veritiv’s common stock that are party to the Registration Rights Agreement, under certain circumstances and provided certain thresholds described in the Registration Rights Agreement are met, may make a written request to the Company for the registration of the offer and sale of all or part of the shares subject to such registration rights. If the Company registers the offer and sale of its common stock (other than pursuant to a demand registration or in connection with registration on Form S-4 and Form S-8 or any successor or similar forms, or relating solely to the sale of debt or convertible debt instruments) either on its behalf or on the behalf of other security holders, the holders of the registration rights under the Registration Rights Agreement are entitled to include their shares in such registration. The demand rights described will commence 180 days after the Distribution Date. Veritiv is not required to effect more than one demand registration in any 150-day period or more than two demand registrations in any 365-day period. If Veritiv believes that a registration or an offering would materially affect a significant transaction or would require it to disclose confidential information which it in good faith believes would be adverse to its interest, then Veritiv may delay a registration or filing for no more than 120 days in a 360-day period.

Tax Receivable Agreement: The Tax Receivable Agreement sets forth the terms by which Veritiv generally will be obligated to pay UWW Holdings, LLC an amount equal to 85% of the U.S. federal, state and Canadian income tax savings that Veritiv actually realizes as a result of the utilization of Unisource Worldwide, Inc.’s net operating losses attributable to taxable periods prior to the date of the Merger. For purposes of the Tax Receivable Agreement, Veritiv’s income tax savings will generally be computed by comparing Veritiv’s actual aggregate U.S. federal, state and Canadian income tax liability for taxable periods (or portions thereof) beginning after the date of the Merger to the amount of Veritiv’s aggregate U.S. federal, state and Canadian income tax liability for the same periods had Veritiv not been able to utilize Unisource Worldwide, Inc.’s net operating losses attributable to taxable periods prior to the date of the Merger. Veritiv will pay to UWW Holdings, LLC an amount equal to 85% of such tax savings, plus interest at a rate of LIBOR plus 1.00%, computed from the earlier of the date that Veritiv filed its U.S. federal income tax return for the applicable taxable year and the date that such tax return was due (without extensions) until payments are made. Under the Tax Receivable Agreement, UWW Holdings, LLC will not be required to reimburse Veritiv for any payments previously made if such tax benefits are subsequently disallowed or adjusted (although future payments under the Tax Receivable Agreement would be adjusted to the extent possible to reflect the result of such disallowance or adjustment). The Tax Receivable Agreement will be binding on and adapt to the benefit of any permitted assignees of UWW Holdings, LLC and to any successors to any of the parties of the Tax Receivable Agreement to the same extent as if such permitted assignee or successor had been an original party to the Tax Receivable Agreement.
 
Transactions with Georgia-Pacific

Veritiv purchases certain inventory items from, and sells certain inventory items to, Georgia-Pacific ("GP"), joint owner of UWW Holdings, LLC, in the normal course of business. Purchases from GP, net of applicable discounts, were $62.7 million, reflected in cost of products sold for the three months ended September 30, 2014. The aggregate amount of inventories purchased from GP that remained on Veritiv's Condensed Consolidated Balance Sheet was $27.0 million as of September 30, 2014. Net sales to GP were $9.2 million, reflected in net sales, for the three months ended September 30, 2014. Related party payable to GP and receivable from GP were $14.9 million and $3.4 million, as of September 30, 2014, respectively.

Financing Obligations to Related Party
In connection with Bain Capital Fund VII, L.P.’s acquisition of its 60% interest in UWW Holdings, Inc. on November 27, 2002, Unisource transferred 42 of its U.S. warehouse and distribution facilities (the "Properties") to GP, who then sold 38 of the Properties to an unrelated third party (the "Purchaser/Landlord"). Contemporaneously with the sale, GP entered into lease agreements with the Purchaser/Landlord with respect to the individual 38 Properties and concurrently entered into sublease agreements with Unisource, which are set to expire in June 2018. As a result of certain forms of continuing involvement, these transactions did not qualify for sale-leaseback accounting. Accordingly, the leases were classified as financing transactions. At the end of the lease term, the net remaining financing obligation of $174.0 million will be settled by the return of the assets.

The lease and sublease agreements also include rent schedules and escalation clauses throughout the lease and sublease terms. Subject to certain conditions, Unisource has the right to sublease any of the Properties. Under the terms of the lease and sublease agreements, GP and Unisource are responsible for all costs and expenses associated with the Properties, including the operation, maintenance and repair, taxes and insurances. Unisource leases from GP the remaining four Properties that are directly owned by GP and has classified them as capital or operating leases in accordance with the accounting guidance.

Relationship between Veritiv and International Paper

Transactions with International Paper

Prior to the Spin-off, xpedx purchased certain inventory items from, and sold certain inventory items to, International Paper in the normal course of business. For the three and nine months ended September 30, 2013, the Company sold products to International Paper in the amount of $12.8 million and $40.3 million, respectively, reflected in net sales. For the nine months ended September 30, 2014, the Company sold products to International Paper in the amount of $24.3 million, reflected in net sales. For the three and nine months ended September 30, 2013, the Company purchased and recognized in cost of products sold inventory from International Paper of $158.6 million and $465.6 million, respectively. For the nine months ended September 30, 2014, the Company purchased and recognized in cost of products sold inventory from International Paper of $276.5 million. As of December 31, 2013, the aggregate amount of inventories purchased from International Paper that remained on the Company’s Condensed Combined Balance Sheet was $48.5 million. Related party payable to International Paper and receivable from International Paper were $2.6 million and $10.1 million as of December 31, 2013, respectively. After the Spin-off and the Merger, Veritiv continues to purchase and sell certain inventory items to International Paper that are considered transactions in the normal course of the Company’s operations. While the Company and International Paper have entered into a transition services agreement, the Company has concluded that International Paper is not a related party.

Parent Company Investment

Net transfers (to) from International Paper are included within Parent company equity on the Condensed Combined Balance Sheet as of December 31, 2013. All significant intercompany transactions between xpedx and International Paper have been included for the periods prior to the Spin-off and are considered to be effectively settled for cash at the time the transaction is recorded. The total net effect of the settlement of these intercompany transactions is reflected in the Condensed Consolidated and Combined Statements of Cash Flows as a financing activity and in the Condensed Consolidated and Combined Balance Sheets as Parent company investment. The components of net transfers (to) from Parent for the three and nine months ended September 30, 2014 and 2013, were as follows:     
 
Three Months Ended 
 September 30,
 
For the Nine Months  
 Ended September 30,
(in millions)
2014
 
2013
 
2014
 
2013
Intercompany sales and purchases, net
$

 
$
157.7

 
$
255.4

 
$
431.6

Cash pooling and general financing activities

 
(165.7
)
 
(322.5
)
 
(503.2
)
Corporate allocations including income taxes

 
27.6

 
34.7

 
65.1

Net adjustments in conjunction with the Spin-off
(50.2
)
 

 
(50.2
)
 

Total net transfers (to) from International Paper
$
(50.2
)
 
$
19.6

 
$
(82.6
)
 
$
(6.5
)


In conjunction with the Spin-off, certain xpedx assets and liabilities were retained by International Paper. Such assets and liabilities were identified and quantified in accordance with the terms agreed to in the Contribution and Distribution Agreement ("C&DA") dated January 28, 2014, entered into by International Paper, xpedx Holding Company, UWW Holdings, Inc. and UWW Holdings, LLC. Additionally, in accordance with the C&DA, the parties agreed to settle, within 30 days of the Distribution Date, all intercompany balances outstanding between International Paper and xpedx as of the Distribution Date, determined based on an agreed-upon formula. The net effect of assets and liabilities retained and adjustments to intercompany balances as of the Distribution Date are reflected in the table above in the net adjustments in conjunction with the Spin-off. These primarily include $24.3 million of net assets transferred to International Paper and settlement of intercompany balances of $24.6 million as of the Distribution Date.

Allocation of General Corporate Expenses

Prior to the Spin-off, the xpedx financial statements included expense allocations for certain functions previously provided by International Paper, including, but not limited to, general corporate expenses related to finance, legal, information technology, human resources, communications, insurance and stock-based compensation. These expenses were allocated on the basis of direct usage when identifiable, with the remainder principally allocated on the basis of percent of capital employed, headcount, sales or other measures. During the three and nine months ended September 30, 2013, $20.6 million and $60.4 million of expenses were allocated to xpedx and were included within selling and administrative expenses in the Condensed Consolidated and Combined Statements of Operations. For the nine months ended September 30, 2014, the Condensed Consolidated and Combined Statements of Operations reflect approximately $25.5 million of expenses allocated to xpedx prior to the Spin-off.

Separation Agreements with Former Unisource CEO

Effective as of the Distribution Date, Allan R. Dragone, Jr. ceased to be the Chief Executive Officer of Unisource and became a member of Veritiv’s Board of Directors. Under his then existing employment agreement with Unisource, Mr. Dragone was entitled to receive severance benefits, subject to his execution and non-revocation of a general release of claims against Unisource, the Company and International Paper. Under a Separation and Non-Competition Agreement entered into between the Company and Mr. Dragone as of June 30, 2014 (the “Separation Agreement”), Mr. Dragone received an additional $3.0 million in severance pay and agreed to be bound by the restrictive covenants set forth in the Separation Agreement. During the three months ended September 30, 2014, the Company recognized $5.4 million in expense related to Mr. Dragone's employment agreement and the Separation Agreement, which is reflected in merger and integration expenses in the Condensed Consolidated and Combined Statements of Operations. In addition, as part of his employment agreement, Mr. Dragone exercised his right to sell his personal residence to the Company.
Restatement of Previously Issued Financial Statements
Restatement of Previously Issued Financial Statements
17. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

Subsequent to the issuance of the 2013 combined financial statements, xpedx management discovered an error related to the deferred tax effect of the LIFO reserve. xpedx incorrectly recognized a deferred tax asset instead of a deferred tax liability.

The following are previously reported and restated balances of affected line items in the Condensed Combined Balance Sheets as of December 31, 2013 and Condensed Combined Statements of Cash Flows for the nine months ended September 30, 2013.
 
Condensed Combined Balance Sheets
 
As of December 31, 2013 
(in millions)
As
 
Adjustments 
 
As
Reported 
 
 
Restated 
Deferred income tax assets
$
55.3

 
$
(55.3
)
 
$

Total current assets
1,137.3

 
(55.3
)
 
1,082.0

Total assets
1,312.2

 
(55.3
)
 
1,256.9

Deferred income tax liabilities

 
13.5

 
13.5

Total current liabilities
451.3

 
13.5

 
464.8

Total liabilities
463.8

 
13.5

 
477.3

Parent company investment
853.1

 
(68.8
)
 
784.3

Total equity
848.4

 
(68.8
)
 
779.6

Total liabilities and equity
1,312.2

 
(55.3
)
 
1,256.9


Condensed Combined Statements of Cash Flows
 
Nine Months Ended September 30, 2013
(in millions)
As
 
Adjustments 
 
As
Reported 
 
 
Restated 
Deferred income tax provision
$
4.2

 
$
(0.7
)
 
$
3.5

Cash provided by operating activities - continuing operations
12.7

 
(0.7
)
 
12.0

Cash provided by operating activities
12.6

 
(0.7
)
 
11.9

 
 
 
 
 
 
Net transfers to Parent
(17.6
)
 
0.7

 
(16.9
)
Cash used for financing activities - continuing operations
(26.7
)
 
0.7

 
(26.0
)
Cash used for financing activities
(28.6
)
 
0.7

 
(27.9
)


The Condensed Combined Balance Sheets as of December 31, 2013, the Condensed Combined Statements of Cash Flows for the nine months ended September 30, 2013 and Note 15, Segment Information, as of and for the year ended December 31, 2013, have been restated to correct for this error. This error did not have an impact on the Condensed Combined Statements of Operations and Condensed Combined Statements of Comprehensive Income for the three and nine months ended September 30, 2013.
Description of Business and Basis of Presentation (Policies)
Basis of Presentation

Prior to the Distribution Date, Veritiv’s financial position, results of operations and cash flows consisted of only the xpedx business of International Paper and have been derived from International Paper’s historical accounting records. The financial results of xpedx have been presented on a carve-out basis through the Distribution Date, while the financial results for Veritiv, post Spin-off, are prepared on a stand-alone basis. As such, the unaudited interim Condensed Consolidated and Combined Statements of Operations, Condensed Consolidated and Combined Statements of Comprehensive Income and Condensed Consolidated and Combined Statements of Cash Flows for the nine months ended September 30, 2014 consist of the consolidated results of Veritiv on a stand-alone basis for the three months ended September 30, 2014, and the combined results of operations of xpedx for the six months ended June 30, 2014 on a carve-out basis. The condensed combined financial statements as of December 31, 2013 and for the three and nine months ended September 30, 2013 consist entirely of the combined results of xpedx on a carve-out basis.

The unaudited interim Condensed Consolidated and Combined Financial Statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles ("GAAP") in the United States have been omitted.  These unaudited interim Condensed Consolidated and Combined Financial Statements should be read in conjunction with the xpedx audited combined financial statements and notes thereto included in the Company’s Registration Statement on Form S-1.

In the opinion of management, such unaudited interim Condensed Consolidated and Combined Financial Statements include all normal recurring adjustments necessary to present fairly the results of operations, financial position and cash flows.  Net sales and net earnings for any interim period are not necessarily indicative of future or annual results. The Company's business is subject to seasonal influences. Generally, the Company's highest volume of net sales occurs in the third fiscal quarter, and the lowest volume of net sales occurs during the first fiscal quarter.

The preparation of the unaudited interim Condensed Consolidated and Combined Financial Statements requires management to make use of estimates and assumptions that affect the reported amount of assets and liabilities, revenue and expenses, and certain financial statement disclosures. Significant estimates in these unaudited interim Condensed Consolidated and Combined Financial Statements include revenue recognition, accounts receivable valuation, inventory valuation, employee benefit plans, income tax and goodwill and other intangible asset valuation. Estimates are revised as additional information becomes available.

For periods prior to the Spin-off, the condensed combined financial statements include expense allocations for certain functions previously provided by International Paper, including, but not limited to, general corporate expenses related to finance, legal, information technology, human resources, communications, insurance and stock-based compensation. These expenses have been allocated on the basis of direct usage when identifiable, with the remainder principally allocated on the basis of percent of capital employed, headcount, sales or other measures. Management considers the basis on which the expenses have been allocated to reasonably reflect the utilization of services provided to or for the benefit received by xpedx during those periods. The allocations may not, however, reflect the expenses xpedx would have incurred as an independent company for the periods presented. Actual costs that may have been incurred if xpedx had been a stand-alone company would depend on a number of factors, including the organizational structure, whether functions were outsourced or performed by employees and strategic decisions made in areas such as information technology and infrastructure. Veritiv is unable to determine what such costs would have been had xpedx been independent. See Note 16, Related Party Transactions, for further information.

Following the Spin-off, certain corporate and other related functions described above continue to be provided by International Paper under a transition services agreement. For the three months ended September 30, 2014, the Condensed Consolidated and Combined Statements of Operations reflects $8.0 million in selling and administrative expenses related to this agreement.

The Company operates on a calendar year-end.

Accounts receivable were recognized net of allowances that primarily consisted of allowances for doubtful accounts of $28.4 million and $22.5 million as of September 30, 2014 and December 31, 2013, respectively, with the remaining balance of $7.0 million and $0.2 million being comprised of other allowances as of September 30, 2014 and December 31, 2013, respectively. The allowance for doubtful accounts reflects the best estimate of losses inherent in the Company’s accounts receivable portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other available evidence. The other allowances balance is inclusive of credit risks, returns, discounts and any other items affecting the realization of these assets. Accounts receivable are written off when management determines they are uncollectible.
are primarily valued at cost as determined by the last-in, first-out method ("LIFO"). Such valuations are not in excess of market. Elements of cost in inventories include the purchase price invoiced by a supplier, plus inbound freight and related costs, and are reduced by estimated volume-based rebates and purchase discounts available from certain suppliers.
Merger with Unisource (Tables)
The following table summarizes the components of the preliminary estimated purchase price for Unisource and the preliminary allocation of the purchase price to assets acquired and liabilities assumed as of the date of the Merger:

Preliminary estimated purchase price:
(in millions)
Fair value of Veritiv shares transferred
$
284.7

Cash payment associated with customary working capital and net indebtedness adjustments
33.9

Fair value of contingent liability associated with the Tax Receivable Agreement
60.9

Total preliminary estimated purchase price
$
379.5

Preliminary Allocation:
(in millions)
Cash
$
70.9

Accounts receivable
448.4

Inventories
351.9

Deferred income tax assets
79.8

Property and equipment
301.2

Goodwill
28.7

Other intangible assets
29.9

Other current and non-current assets (including below market leasehold agreements)
61.7

Accounts payable
(263.8
)
Long-term debt (including equipment capital leases)
(333.2
)
Financing obligations to related party
(238.2
)
Defined benefit pension obligations
(31.0
)
Other current and non-current liabilities (including above market leasehold agreements)
(126.8
)
Total purchase price
$
379.5

The purchase price allocated to the identifiable intangible assets acquired is as follows:
 
Value
(in millions)
 
Estimated Useful Life (in years)
Customer relationships
$
23.1

 
10 — 12
Trademarks/Trade names
3.9

 
1 — 5
Non-compete agreements
2.9

 
1
Total identifiable intangible assets acquired
$
29.9

 
 
The following unaudited pro forma financial information presents results as if the Merger and the related financing, further described in Note 10, Debt, occurred on January 1, 2013. The historical consolidated financial information of the Company and Unisource has been adjusted in the pro forma information to give effect to pro forma events that are directly attributable to the transactions and factually supportable. The unaudited pro forma results do not reflect events that have occurred or may occur after the transactions, including the impact of any synergies expected to result from the Merger. Accordingly, the unaudited pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transactions been effected on the assumed date, nor is it necessarily an indication of future operating results.
(Unaudited)
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(in millions, except share and per share data)
2014
 
2013
 
2014
 
2013
Net sales
$
2,390.3

 
$
2,471.8

 
$
6,934.2

 
$
7,246.8

Net income(1)
$
21.2

 
$
244.7

 
$
22.8

 
$
189.2

Earnings per share - basic and diluted
$
1.33

 
$
15.29

 
$
1.43

 
$
11.83

Weighted-average shares outstanding - basic and diluted
16,000,000

 
16,000,000

 
16,000,000

 
16,000,000

(1) Unisource's historical results for the three and nine months ended September 30, 2013 include the reversal of a $238.7 million valuation allowance against its U.S. federal and a substantial portion of its state net deferred tax assets.
Restructuring Charges (Tables)
Schedule of Restructuring Reserve
The corresponding liability and activity during the current year are detailed in the table below. In connection with the Spin-off on July 1, 2014, the remaining liability at June 30, 2014 was transferred to International Paper. See Note 16, Related Party Transactions, for more details.
(in millions)
Total
Liability at December 31, 2013
$
7.7

Additional provision
0.1

Payments
(3.9
)
Adjustment of prior year's estimate
(0.3
)
Liability transferred to Parent in connection with Spin-off
(3.6
)
Liability at September 30, 2014
$

Discontinued Operations (Tables)
Schedule of Net Sales, Income from Operations and Loss on Disposition for Discontinued Operations
Results of discontinued operations were as follows:
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(in millions)
2014
 
2013
 
2014
 
2013
Loss from operations
$

 
$
(0.1
)
 
$
(0.1
)
 
$
(0.3
)
Restructuring and disposal income

 

 

 
0.3

Loss from discontinued operations
$

 
$
(0.1
)
 
$
(0.1
)
 
$

Earnings Per Share (Tables)
Schedule of Earnings Per Share, Basic and Diluted
For the three and nine months ended September 30, 2014 and 2013, basic and diluted earnings (loss) per share were as follows:
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(in millions, except share and per share data)
2014
 
2013
 
2014
 
2013
Income (loss) from continuing operations
$
(14.0
)
 
$
5.2

 
$
(5.5
)
 
$
2.0

Income (loss) from discontinued operations

 
(0.1
)
 
(0.1
)
 

Net income (loss)
$
(14.0
)

$
5.1


$
(5.6
)

$
2.0

 
 
 
 
 
 
 
 
Weighted-average number of shares outstanding - basic and diluted
16,000,000

 
8,160,000

 
10,773,333

 
8,160,000

 
 
 
 
 
 
 
 
Earnings (loss) per share:
 
 
 
 
 
 
 
Basic and diluted
 
 
 
 
 
 
 
Continuing operations
$
(0.88
)
 
$
0.64

 
$
(0.51
)
 
$
0.25

Discontinued operations

 
(0.01
)
 
(0.01
)
 

Basic and diluted earnings (loss) per share
$
(0.88
)
 
$
0.63

 
$
(0.52
)
 
$
0.25

Goodwill and Other Intangible Assets (Tables)
The following table sets forth the changes in the carrying amount of goodwill:
(in millions)
Print
 
Publishing
 
Packaging
 
Facility Solutions
 
Corporate & Other
 
Total
Balance at December 31, 2013
$

 
$

 
$
26.4

 
$

 
$

 
$
26.4

Additions to goodwill

 

 
22.7

 
1.9

 
4.1

 
28.7

Balance at September 30, 2014
$

 
$

 
$
49.1

 
$
1.9

 
$
4.1

 
$
55.1

The components of the Company's other intangible assets were as follows:
 
 
 
September 30, 2014
 
December 31, 2013
(in millions)
Estimated Useful Lives (in years)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net
Customer relationships
1 — 12
 
$
53.8

 
$
23.0

 
$
30.8

 
$
30.7

 
$
21.5

 
$
9.2

Trademarks/Trade names
1 — 11
 
4.1

 
0.6

 
3.5

 
0.2

 
0.1

 
0.1

Non-compete agreements
1
 
2.9

 
0.7

 
2.2

 

 

 

Total
 
 
$
60.8

 
$
24.3

 
$
36.5

 
$
30.9

 
$
21.6

 
$
9.3

The estimated aggregate amortization expense for each of the five succeeding years is as follows (in millions):
Year-Ended
 
Total
   2014(1)
 
$
2.1

2015
 
6.2

2016
 
4.1

2017
 
4.1

2018
 
4.1

(1) Reflects remaining three months of 2014.
Supplementary Financial Statement Information (Tables)
The components of other current assets were as follows:
(in millions)
September 30,
 
December 31,
2014
 
2013
Rebates receivable
$
50.8

 
$
18.4

Prepaid expenses
32.0

 
5.6

Other
19.8

 
2.3

Other current assets
$
102.6

 
$
26.3

The components of property and equipment, net were as follows:
(in millions)
September 30,
 
December 31,
2014
 
2013
Land, buildings and improvements
$
132.0

 
$
143.8

Machinery and equipment
109.9

 
72.5

Equipment capital leases and assets related to financing obligations with related party
229.3

 

Internally developed software
104.3

 
84.5

Other
14.9

 
4.9

Less: Accumulated depreciation
(211.2
)
 
(198.6
)
Property and equipment, net
$
379.2

 
$
107.1

The components of other non-current assets were as follows:
(in millions)
September 30,
 
December 31,
2014
 
2013
Deferred financing costs
$
21.2

 
$

Investments in real estate joint ventures
5.7

 

Below market leasehold agreements
6.2

 

Other
13.1

 
9.4

Other non-current assets
$
46.2

 
$
9.4

Accrued Payroll and Benefits

The components of accrued payroll and benefits were as follows:
(in millions)
September 30,
 
December 31,
2014
 
2013
Accrued payroll and related taxes
$
32.7

 
$
11.2

Accrued commissions
36.6

 
25.9

Other
39.7

 
17.8

Accrued payroll and benefits
$
109.0

 
$
54.9

The components of other accrued liabilities were as follows:
(in millions)
September 30,
 
December 31,
2014
 
2013
Accrued taxes
$
15.5

 
$
6.4

Accrued customer incentives
22.6

 
12.8

Accrued freight
9.7

 
2.4

Accrued professional fees
5.2

 

Customer deposits
4.4

 

Accrued interest
2.3

 

Other
34.6

 
14.9

Other accrued liabilities
$
94.3

 
$
36.5

The components of other non-current liabilities were as follows:
(in millions)
September 30,
 
December 31,
2014
 
2013
Contingent liability associated with Tax Receivable Agreement
$
60.9

 
$

Deferred compensation
24.5

 

Above market leasehold agreements
7.5

 

Asset retirement obligations
6.5

 

Other
13.6

 
12.5

Other non-current liabilities
$
113.0

 
$
12.5

Income Taxes Income Taxes (Tables)
Schedule of Provision for Income Tax (Benefit) Expense
The following table presents the provision for income tax (benefit) expense and the effective tax rates for the three and nine months ended September 30, 2014 and 2013:

 
Three Months Ended September 30,
 
Nine Months Ended 
 September 30,
(in millions)
2014
 
2013
 
2014
 
2013
Income (loss) from continuing operations before income taxes
$
(24.4
)
 
$
9.1

 
$
(10.1
)
 
$
4.0

Income tax (benefit) expense
(10.4
)
 
3.9

 
(4.6
)
 
2.0

Effective income tax rate
42.6
%
 
42.9
%
 
45.5
%
 
50.0
%
Debt (Tables)
Schedule of Long-term Debt Obligations
The Company did not have any long-term debt obligations as of December 31, 2013. As of September 30, 2014, the Company's long-term debt obligations were as follows:
(in millions)
September 30, 2014
ABL Facility(1)
$
796.9

Equipment capital lease obligations
9.7

Less: current portion of long-term debt
(3.3
)
Long-term debt, net
$
803.3

         (1) Includes $22.8 million of Canadian bank overdrafts as of September 30, 2014.
Equity-Based Incentive Plans (Tables)
Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan
Stock-based compensation expense and related income tax benefits associated with these International Paper plans were as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(in millions)
2014
 
2013
 
2014
 
2013
Total stock-based compensation expense
$

 
$
4.0

 
$
4.3

 
$
11.8

Income tax benefit related to stock-based compensation
$

 
$
3.8

 
$
1.3

 
$
4.7

Employee Benefit Plans (Tables)
Schedule of Net Benefit Costs
otal net periodic pension credit associated with the defined benefit pension and SERP plans is summarized below:
(in millions)
Three Months Ended September 30, 2014
Service cost
$
0.4

Interest cost
1.8

Expected return on plan assets
(2.5
)
Net periodic pension credit
$
(0.3
)
Commitments and Contingencies Disclosure (Tables)
At September 30, 2014, total future minimum commitments under existing non-cancelable operating leases were as follows:

(in millions)
2014(1)
 
2015
 
2016
  
2017
 
2018
 
Thereafter
Lease obligations
$
23.6

 
$
79.5

 
$
66.2

 
$
55.2

 
$
46.2

 
$
95.1

Sublease income
(0.1
)
 
(0.3
)
 
(0.2
)
 
(0.1
)
 
(0.1
)
 

Total
$
23.5

 
$
79.2

 
$
66.0

 
$
55.1

 
$
46.1

 
$
95.1

(1) Reflects remaining three months of 2014.
The expected future amortization of such agreements is as follows:

(in millions)
2014(1)
 
2015
 
2016
  
2017
 
2018
 
Thereafter
Above market agreements
$
(0.5
)
 
$
(1.9
)
 
$
(1.5
)
 
$
(1.2
)
 
$
(1.0
)
 
$
(1.4
)
Below market agreements
0.2

 
0.6

 
0.5

 
0.4

 
0.4

 
4.1

Net amortization expense (accretion)
$
(0.3
)
 
$
(1.3
)
 
$
(1.0
)
 
$
(0.8
)
 
$
(0.6
)
 
$
2.7

(1) Reflects remaining three months of 2014.
Segment Information (Tables)
The following tables present net sales, Adjusted EBITDA and certain other measures for each of the reportable segments and total continuing operations for the periods presented:
(in millions)
Print

Publishing

Packaging

Facility Solutions

Corporate & Other

Total
Three Months Ended September 30, 2014











Net sales
$
947.2


$
338.2


$
725.0


$
357.0


$
22.9


$
2,390.3

Adjusted EBITDA
$
20.5


$
9.2


$
53.0


$
15.5


$
(46.7
)

$
51.5

Depreciation and amortization
$
3.7


$
0.5


$
4.2


$
1.8


$
4.0


$
14.2

Restructuring charges
$


$


$


$


$
0.1


$
0.1













Three Months Ended September 30, 2013











Net sales
$
613.2


$
215.0


$
404.5


$
210.1


$


$
1,442.8

Adjusted EBITDA
$
14.8


$
5.0


$
32.1


$
5.3


$
(30.0
)

$
27.2

Depreciation and amortization
$
1.0


$
0.1


$
0.7


$
0.4


$
2.2


$
4.4

Restructuring charges
$
2.5


$


$
1.8


$
1.1


$
0.6


$
6.0













Nine Months Ended September 30, 2014











Net sales
$
2,038.3


$
715.4


$
1,529.5


$
720.6


$
22.9


$
5,026.7

Adjusted EBITDA
$
38.1


$
16.6


$
104.4


$
18.4


$
(95.7
)

$
81.8

Depreciation and amortization
$
6.1


$
0.6


$
5.9


$
2.6


$
7.9


$
23.1

Restructuring charges (income)
$
(0.4
)

$


$
(0.2
)

$
(0.5
)

$
0.1


$
(1.0
)












Nine Months Ended September 30, 2013











Net sales
$
1,812.5


$
596.8


$
1,189.4


$
635.4


$


$
4,234.1

Adjusted EBITDA
$
35.7


$
12.0


$
91.4


$
10.3


$
(89.6
)

$
59.8

Depreciation and amortization
$
3.3


$
0.2


$
2.2


$
1.2


$
5.9


$
12.8

Restructuring charges
$
12.9


$
1.1


$
9.0


$
5.7


$
1.7


$
30.4

The table below presents a reconciliation of income (loss) from continuing operations before income taxes reflected in the Condensed Consolidated and Combined Statements of Operations to Total Adjusted EBITDA:
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
(in millions)
2014
 
2013
 
2014
 
2013
Income (loss) from continuing operations before income taxes
$
(24.4
)
 
$
9.1

 
$
(10.1
)
 
$
4.0

Interest expense
6.8

 

 
6.8

 

Depreciation and amortization
14.2

 
4.4

 
23.1

 
12.8

Restructuring charges (income)
0.1

 
6.0

 
(1.0
)
 
30.4

Non-restructuring stock-based compensation

 
3.2

 
4.0

 
9.8

LIFO (income) expense
(0.5
)
 
4.2

 
(0.8
)
 
1.9

Non-restructuring severance charges

 
0.3

 
2.4

 
0.9

Merger and integration expenses
54.8

 

 
56.9

 

Other
0.5

 

 
0.5

 

Total Adjusted EBITDA
$
51.5

 
$
27.2

 
$
81.8

 
$
59.8

The table below summarizes total assets as of September 30, 2014 and December 31, 2013:
(in millions)
September 30, 2014
 
December 31, 2013
Print
$
1,025.8

 
$
517.1

Publishing
207.0

 
77.2

Packaging
802.5

 
401.7

Facility Solutions
380.2

 
201.7

Corporate & Other
251.2

 
59.2

Total assets
$
2,666.7

 
$
1,256.9

Related-Party Transactions (Tables)
Parent Company Investment
The components of net transfers (to) from Parent for the three and nine months ended September 30, 2014 and 2013, were as follows:     
 
Three Months Ended 
 September 30,
 
For the Nine Months  
 Ended September 30,
(in millions)
2014
 
2013
 
2014
 
2013
Intercompany sales and purchases, net
$

 
$
157.7

 
$
255.4

 
$
431.6

Cash pooling and general financing activities

 
(165.7
)
 
(322.5
)
 
(503.2
)
Corporate allocations including income taxes

 
27.6

 
34.7

 
65.1

Net adjustments in conjunction with the Spin-off
(50.2
)
 

 
(50.2
)
 

Total net transfers (to) from International Paper
$
(50.2
)
 
$
19.6

 
$
(82.6
)
 
$
(6.5
)
Restatement of Previously Issued Financial Statements (Tables)
Schedule of Error Corrections and Prior Period Adjustments
The following are previously reported and restated balances of affected line items in the Condensed Combined Balance Sheets as of December 31, 2013 and Condensed Combined Statements of Cash Flows for the nine months ended September 30, 2013.
 
Condensed Combined Balance Sheets
 
As of December 31, 2013 
(in millions)
As
 
Adjustments 
 
As
Reported 
 
 
Restated 
Deferred income tax assets
$
55.3

 
$
(55.3
)
 
$

Total current assets
1,137.3

 
(55.3
)
 
1,082.0

Total assets
1,312.2

 
(55.3
)
 
1,256.9

Deferred income tax liabilities

 
13.5

 
13.5

Total current liabilities
451.3

 
13.5

 
464.8

Total liabilities
463.8

 
13.5

 
477.3

Parent company investment
853.1

 
(68.8
)
 
784.3

Total equity
848.4

 
(68.8
)
 
779.6

Total liabilities and equity
1,312.2

 
(55.3
)
 
1,256.9


Condensed Combined Statements of Cash Flows
 
Nine Months Ended September 30, 2013
(in millions)
As
 
Adjustments 
 
As
Reported 
 
 
Restated 
Deferred income tax provision
$
4.2

 
$
(0.7
)
 
$
3.5

Cash provided by operating activities - continuing operations
12.7

 
(0.7
)
 
12.0

Cash provided by operating activities
12.6

 
(0.7
)
 
11.9

 
 
 
 
 
 
Net transfers to Parent
(17.6
)
 
0.7

 
(16.9
)
Cash used for financing activities - continuing operations
(26.7
)
 
0.7

 
(26.0
)
Cash used for financing activities
(28.6
)
 
0.7

 
(27.9
)
Description of Business and Basis of Presentation - Narrative (Details) (USD $)
9 Months Ended 0 Months Ended 3 Months Ended 9 Months Ended 9 Months Ended 0 Months Ended 1 Months Ended 0 Months Ended 0 Months Ended
Sep. 30, 2014
Distribution_Center
Sep. 30, 2013
Jul. 1, 2014
Jul. 1, 2014
UWW Holdings, Inc. XPEDX Merger
Sep. 30, 2014
International Paper
Selling, General and Administrative Expenses
Sep. 30, 2013
International Paper
Selling, General and Administrative Expenses
Sep. 30, 2014
International Paper
Selling, General and Administrative Expenses
Sep. 30, 2013
International Paper
Selling, General and Administrative Expenses
Jun. 30, 2014
International Paper
Distribution_Center
Jul. 1, 2014
Veritiv
UWW Holdings, LLC
Sep. 30, 2014
Common Stock
Jul. 1, 2014
International Paper Shareholders
Jul. 1, 2014
International Paper Shareholders
Nov. 14, 2014
International Paper Shareholders
Subsequent Event
Jul. 1, 2014
International Paper Shareholders
Common Stock
Jul. 1, 2014
UWW Holdings, LLC
UWW Holdings, Inc. XPEDX Merger
Jul. 1, 2014
UWW Holdings, LLC
UWW Holdings, Inc. XPEDX Merger
Jul. 1, 2014
UWW Holdings, LLC
UWW Holdings, Inc. XPEDX Merger
Merger and Integration Expense
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of distribution centers
170 
 
 
 
 
 
 
 
85 
 
 
 
 
 
 
 
 
 
Conversion of parent company investment in connection with Spin-off (in shares)
 
 
 
 
 
 
 
 
 
 
8,200,000 
 
 
 
8,160,000 
 
 
 
Payment of Special Payment During Spinoff
 
 
 
 
 
 
 
 
 
 
 
$ 400,000,000 
 
 
 
 
 
 
Payment of cash during spinoff
404,200,000 
 
 
 
 
 
 
 
 
 
404,200,000 
 
 
 
 
 
 
Working capital adjustment
 
 
 
 
 
 
 
 
 
 
 
15,300,000 
 
30,700,000 
 
 
 
 
Transaction expense related adjustment
 
 
 
 
 
 
 
 
 
 
 
19,500,000 
 
 
 
 
 
4,700,000 
Spinoff potential earnout payment
 
 
 
 
 
 
 
 
 
 
 
 
100,000,000 
 
 
 
 
 
Spinoff, contingent consideration liability, aggregate EBITDA target
 
 
 
 
 
 
 
 
 
 
 
759,000,000 
 
 
 
 
 
 
Business acquisition, equity issued, number of shares
 
 
 
7,840,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Merger utilization of operating losses, percentage of tax savings payable to affiliate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
85.00% 
 
Cash payment associated with customary working capital and net indebtedness adjustments
 
 
 
33,900,000 
 
 
 
 
 
 
 
 
 
 
 
33,900,000 
 
 
Equity method investment, ownership percentage
 
 
 
 
 
 
 
 
 
49.00% 
 
 
 
 
 
 
 
 
Shareholder ownership percentage
 
 
51.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
General corporate expenses
 
 
 
 
$ 8,000,000 
$ 20,600,000 
$ 25,500,000 
$ 60,400,000 
 
 
 
 
 
 
 
 
 
 
Merger with Unisource - Narrative (Details) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended 0 Months Ended 3 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Dec. 31, 2013
Jul. 1, 2014
UWW Holdings, Inc. XPEDX Merger
Sep. 30, 2014
UWW Holdings, Inc. XPEDX Merger
Sep. 30, 2014
UWW Holdings, Inc. XPEDX Merger
Jul. 1, 2014
UWW Holdings, Inc. XPEDX Merger
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
 
Merger and integration expenses
$ 54.8 
$ 0 
$ 56.9 
$ 0 
 
 
$ 54.8 
$ 56.9 
 
Preliminary estimated purchase price
 
 
 
 
 
379.5 
 
 
 
Goodwill
55.1 
 
55.1 
 
26.4 
 
 
 
28.7 
Business acquisition, equity issued, number of shares
 
 
 
 
 
7,840,000 
 
 
 
Revenue of acquiree since acquisition date, actual
 
 
 
 
 
 
1,021.8 
 
 
Earnings or loss of acquiree since acquisition date, actual
 
 
 
 
 
 
$ 3.0 
 
 
Merger with Unisource - Assets Acquired and Liabilites Assumed (Details) (USD $)
In Millions, unless otherwise specified
0 Months Ended
Sep. 30, 2014
Dec. 31, 2013
Jul. 1, 2014
UWW Holdings, Inc. XPEDX Merger
Jul. 1, 2014
UWW Holdings, Inc. XPEDX Merger
Preliminary estimated purchase price:
 
 
 
 
Fair value of Veritiv shares transferred
 
 
$ 284.7 
 
Cash payment associated with customary working capital and net indebtedness adjustments
 
 
33.9 
 
Fair value of contingent liability associated with the Tax Receivable Agreement
 
 
60.9 
 
Total preliminary estimated purchase price
 
 
379.5 
 
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract]
 
 
 
 
Cash
 
 
 
70.9 
Accounts receivable
 
 
 
448.4 
Inventories
 
 
 
351.9 
Deferred income tax assets
 
 
 
79.8 
Property and equipment
 
 
 
301.2 
Goodwill
55.1 
26.4 
 
28.7 
Other intangible assets
 
 
 
29.9 
Other current and non-current assets (including below market leasehold agreements)
 
 
 
61.7 
Accounts payable
 
 
 
(263.8)
Long-term debt (including equipment capital leases)
 
 
 
(333.2)
Financing obligations to related party
 
 
 
(238.2)
Defined benefit pension obligations
 
 
 
(31.0)
Other current and non-current liabilities (including above market leasehold agreements)
 
 
 
(126.8)
Total purchase price
 
 
 
$ 379.5 
Merger with Unisource - Intangible Assets Acquired (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended 0 Months Ended
Sep. 30, 2014
Non-compete agreements
Sep. 30, 2014
Minimum
Customer relationships
Sep. 30, 2014
Minimum
Trademarks/Trade names
Sep. 30, 2014
Maximum
Customer relationships
Sep. 30, 2014
Maximum
Trademarks/Trade names
Jul. 1, 2014
UWW Holdings, Inc. XPEDX Merger
Jul. 1, 2014
UWW Holdings, Inc. XPEDX Merger
Customer relationships
Jul. 1, 2014
UWW Holdings, Inc. XPEDX Merger
Trademarks/Trade names
Jul. 1, 2014
UWW Holdings, Inc. XPEDX Merger
Non-compete agreements
Jul. 1, 2014
UWW Holdings, Inc. XPEDX Merger
Minimum
Customer relationships
Jul. 1, 2014
UWW Holdings, Inc. XPEDX Merger
Minimum
Trademarks/Trade names
Jul. 1, 2014
UWW Holdings, Inc. XPEDX Merger
Maximum
Customer relationships
Jul. 1, 2014
UWW Holdings, Inc. XPEDX Merger
Maximum
Trademarks/Trade names
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
Estimated Useful Lives (in years)
1 year 
1 year 
1 year 
12 years 
11 years 
 
 
 
1 year 
10 years 
1 year 
12 years 
5 years 
Value (in millions)
 
 
 
 
 
$ 29.9 
$ 23.1 
$ 3.9 
$ 2.9 
 
 
 
 
Merger with Unisource - Pro Forma (Details) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Business Acquisition, Pro Forma Information [Abstract]
 
 
 
 
Earnings (loss) per share - diluted (in dollars per share)
 
$ 15.29 
 
$ 11.83 
UWW Holdings, Inc. XPEDX Merger
 
 
 
 
Business Acquisition, Pro Forma Information [Abstract]
 
 
 
 
Net sales (in US dollars)
$ 2,390.3 
$ 2,471.8 
$ 6,934.2 
$ 7,246.8 
Net income (loss) (in US dollars)
21.2 1
244.7 1
22.8 1
189.2 1
Earnings (loss) per share - basic (in dollars per share)
$ 1.33 
$ 15.29 
$ 1.43 
$ 11.83 
Earnings (loss) per share - diluted (in dollars per share)
$ 1.33 
 
$ 1.43 
 
Weighted-average shares outstanding - basic and diluted (in shares)
16,000,000 
16,000,000 
16,000,000 
16,000,000 
Pro forma adjustments, effective income tax rate
39.00% 
 
39.00% 
 
UWW Holdings, Inc. XPEDX Merger |
Valuation Allowance Adjustment
 
 
 
 
Business Acquisition, Pro Forma Information [Abstract]
 
 
 
 
Net income (loss) (in US dollars)
 
(238.7)
 
(238.7)
UWW Holdings, Inc. XPEDX Merger |
Acquisition-related Costs
 
 
 
 
Business Acquisition, Pro Forma Information [Abstract]
 
 
 
 
Net income (loss) (in US dollars)
54.8 1
3.8 1
56.9 1
(76.3)1
UWW Holdings, Inc. XPEDX Merger |
Fair Value Adjustment to Property, Plant and Equipment and Intangible Assets
 
 
 
 
Business Acquisition, Pro Forma Information [Abstract]
 
 
 
 
Net income (loss) (in US dollars)
 
$ (3.2)
$ (5.2)
$ (9.8)
Restructuring Charges - Restructuring Liability (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Restructuring Cost and Reserve [Line Items]
 
 
 
 
Restructuring charges (income)
$ 0.1 
$ 6.0 
$ (1.0)
$ 30.4 
xpedx Restructuring Plan
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
Restructuring charges (income)
 
6.0 
(1.1)
30.4 
Restructuring Reserve [Roll Forward]
 
 
 
 
Restructuring reserve
 
 
7.7 
 
Restructuring charges
 
 
0.1 
 
Payments
 
 
(3.9)
 
Adjustment of prior year's estimate
 
 
(0.3)
 
Liability transferred to Parent in connection with Spin-off
 
 
(3.6)
 
Restructuring reserve
$ 0 
 
$ 0 
 
Discontinued Operations - Results of Discontinued Operations (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Discontinued Operations and Disposal Groups [Abstract]
 
 
 
 
Loss from operations
$ 0 
$ (0.1)
$ (0.1)
$ (0.3)
Restructuring and disposal income
0.3 
Loss from discontinued operations
$ 0 
$ (0.1)
$ (0.1)
$ 0 
Earnings Per Share - Narrative (Details)
3 Months Ended 9 Months Ended 0 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Jul. 1, 2014
Jul. 1, 2014
UWW Holdings, Inc. XPEDX Merger
Business Acquisition [Line Items]
 
 
 
 
 
 
Equity based awards outstanding (in shares)
 
 
 
 
Dilutive shares issued (in shares)
 
 
 
 
Dilutive shares granted (in shares)
 
 
 
 
Dilutive share impact (in shares)
 
 
 
 
Common stock, shares issued (in Shares)
16,000,000 
 
16,000,000 
 
16,000,000 
 
Common stock shares outstanding (in shares)
16,000,000 
 
16,000,000 
 
16,000,000 
 
Weighted-average shares outstanding - basic and diluted (in shares)
16,000,000 
8,160,000 
10,773,333 
8,160,000 
 
 
Business acquisition, equity issued, number of shares
 
 
 
 
 
7,840,000 
Earnings Per Share - Schedule of Earnings Per Share Basic and Diluated (Details) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Jun. 30, 2014
Sep. 30, 2014
Sep. 30, 2013
Earnings Per Share [Abstract]
 
 
 
 
 
Income (loss) from continuing operations
$ (14.0)
$ 5.2 
 
$ (5.5)
$ 2.0 
Loss from discontinued operations, net of income taxes
(0.1)
 
(0.1)
Net income (loss)
$ (14.0)
$ 5.1 
$ 8.4 
$ (5.6)
$ 2.0 
Weighted-average shares outstanding - basic and diluted (in shares)
16,000,000 
8,160,000 
 
10,773,333 
8,160,000 
Earnings (loss) per share: Basic and Diluted
 
 
 
 
 
Continuing operations (in dollars per share)
$ (0.88)
$ 0.64 
 
$ (0.51)
$ 0.25 
Discontinued operations (in dollars per share)
$ 0.00 
$ (0.01)
 
$ (0.01)
$ 0.00 
Basic and diluted earnings (loss) per share (in dollars per share)
$ (0.88)
$ 0.63 
 
$ (0.52)
$ 0.25 
Goodwill and Other Intangible Assets - Goodwill Roll-Forward (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2014
Goodwill [Roll Forward]
 
Balance at December 31, 2013
$ 26.4 
Additions to goodwill
28.7 
Balance at September 30, 2014
55.1 
Operating Segments |
Print
 
Goodwill [Roll Forward]
 
Balance at December 31, 2013
Additions to goodwill
Balance at September 30, 2014
Operating Segments |
Publishing
 
Goodwill [Roll Forward]
 
Balance at December 31, 2013
Additions to goodwill
Balance at September 30, 2014
Operating Segments |
Packaging
 
Goodwill [Roll Forward]
 
Balance at December 31, 2013
26.4 
Additions to goodwill
22.7 
Balance at September 30, 2014
49.1 
Operating Segments |
Facility Solutions
 
Goodwill [Roll Forward]
 
Balance at December 31, 2013
Additions to goodwill
1.9 
Balance at September 30, 2014
1.9 
Corporate and Other
 
Goodwill [Roll Forward]
 
Balance at December 31, 2013
Additions to goodwill
4.1 
Balance at September 30, 2014
$ 4.1 
Goodwill and Other Intangible Assets - Other Intagible Assets (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2014
Dec. 31, 2013
Finite-Lived Intangible Assets, Net [Abstract]
 
 
Gross Carrying Amount
$ 60.8 
$ 30.9 
Accumulated Amortization
24.3 
21.6 
Net
36.5 
9.3 
Customer relationships
 
 
Finite-Lived Intangible Assets, Net [Abstract]
 
 
Gross Carrying Amount
53.8 
30.7 
Accumulated Amortization
23.0 
21.5 
Net
30.8 
9.2 
Customer relationships |
Minimum
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Estimated Useful Lives (in years)
1 year 
 
Customer relationships |
Maximum
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Estimated Useful Lives (in years)
12 years 
 
Trademarks/Trade names
 
 
Finite-Lived Intangible Assets, Net [Abstract]
 
 
Gross Carrying Amount
4.1 
0.2 
Accumulated Amortization
0.6 
0.1 
Net
3.5 
0.1 
Trademarks/Trade names |
Minimum
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Estimated Useful Lives (in years)
1 year 
 
Trademarks/Trade names |
Maximum
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Estimated Useful Lives (in years)
11 years 
 
Non-compete agreements
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Estimated Useful Lives (in years)
1 year 
 
Finite-Lived Intangible Assets, Net [Abstract]
 
 
Gross Carrying Amount
2.9 
Accumulated Amortization
0.7 
Net
$ 2.2 
$ 0 
Goodwill and Other Intangible Assets - Other Intangible Assets - Future Amortization (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2014
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
 
2014
$ 2.1 1
2015
6.2 
2016
4.1 
2017
4.1 
2018
$ 4.1 
Goodwill and Other Intangible Assets - Narrative (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Goodwill [Line Items]
 
 
 
 
Amortization of intangible assets
$ 2.1 
$ 0.4 
$ 2.7 
$ 1.1 
Fair Value Measurements (Details)
9 Months Ended
Sep. 30, 2014
Fair Value Disclosures [Abstract]
 
Fair value inputs, discount rate
4.80% 
Supplementary Financial Statement Information - Narrative (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2014
Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Allowance for doubtful accounts
$ 35.4 
$ 22.7 
Inventory, Net [Abstract]
 
 
Percentage of LIFO inventory
86.00% 
97.00% 
Excess of replacement or current costs over stated LIFO value
74.0 
76.6 
Allowance for Trade Receivables
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Allowance for doubtful accounts
28.4 
22.5 
Allowance for Sales Returns
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Allowance for doubtful accounts
$ 7.0 
$ 0.2 
Supplementary Financial Statement Information - Other Current Assets (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2014
Dec. 31, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
 
Rebates receivable
$ 50.8 
$ 18.4 
Prepaid expenses
32.0 
5.6 
Other
19.8 
2.3 
Other current assets
$ 102.6 
$ 26.3 
Supplementary Financial Statement Information - Property and Equipment, Net (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2014
Dec. 31, 2013
Property, Plant and Equipment [Line Items]
 
 
Less: Accumulated depreciation
$ (211.2)
$ (198.6)
Property and equipment, net
379.2 
107.1 
Land, buildings and improvements
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
132.0 
143.8 
Machinery and equipment
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
109.9 
72.5 
Equipment capital leases and assets related to financing obligations with related party
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
229.3 
Internally developed software
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
104.3 
84.5 
Other
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
$ 14.9 
$ 4.9 
Supplementary Financial Statement Information - Other Non-Current Assets (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2014
Dec. 31, 2013
Other Non-Current Assets:
 
 
Deferred financing costs
$ 21.2 
$ 0 
Investments in real estate joint ventures
5.7 
Below market leasehold agreements
6.2 
Other
13.1 
9.4 
Other non-current assets
$ 46.2 
$ 9.4 
Supplementary Financial Statement Information - Accrued Payroll and Benefits (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2014
Dec. 31, 2013
Accrued Payroll and Benefits:
 
 
Accrued payroll and related taxes
$ 32.7 
$ 11.2 
Accrued commissions
36.6 
25.9 
Other
39.7 
17.8 
Accrued payroll and benefits
$ 109.0 
$ 54.9 
Supplementary Financial Statement Information - Other Accrued Liabilities (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2014
Dec. 31, 2013
Other Accrued Liabilities:
 
 
Accrued taxes
$ 15.5 
$ 6.4 
Accrued customer incentives
22.6 
12.8 
Accrued freight
9.7 
2.4 
Accrued professional fees
5.2 
Customer deposits
4.4 
Accrued interest
2.3 
Other
34.6 
14.9 
Other accrued liabilities
$ 94.3 
$ 36.5 
Supplementary Financial Statement Information - Other Non-Current Liabilities (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2014
Dec. 31, 2013
Other Non-Current Liabilities:
 
 
Contingent liability associated with Tax Receivable Agreement
$ 60.9 
$ 0 
Deferred compensation
24.5 
Above market leasehold agreements
7.5 
Asset retirement obligations
6.5 
Other
13.6 
12.5 
Other non-current liabilities
$ 113.0 
$ 12.5 
Income Taxes - Provision for Income Tax (Benefit) Expense (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Income Tax Disclosure [Abstract]
 
 
 
 
Income (loss) from continuing operations before income taxes
$ (24.4)
$ 9.1 
$ (10.1)
$ 4.0 
Income tax (benefit) expense
$ (10.4)
$ 3.9 
$ (4.6)
$ 2.0 
Effective income tax rate
42.60% 
42.90% 
45.50% 
50.00% 
Income Taxes - Narrative (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2014
Dec. 31, 2013
Income Tax Disclosure [Abstract]
 
 
 
Federal statutory income rate, percent
35.00% 
35.00% 
 
Deferred tax assets, valuation allowance
$ 40.8 
$ 40.8 
 
Unrecognized tax benefits
1.6 
1.6 
0.6 
Expected decrease in unrecognized tax benefits in the next 12 months
$ 0.6 
$ 0.6 
 
Debt - Long-Term Debt Obligations (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2014
Dec. 31, 2013
Debt Instrument [Line Items]
 
 
Equipment capital lease obligations
$ 9.7 
 
Less: current portion of long-term debt
(3.3)
Long-term debt, net
803.3 
Canadian Bank
 
 
Debt Instrument [Line Items]
 
 
Bank overdrafts
22.8 
 
Line of Credit |
Asset-Backed Lending Facility
 
 
Debt Instrument [Line Items]
 
 
ABL Facility
$ 796.9 1
 
Debt - Narrative (Details) (USD $)
9 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Capital Lease Obligations
Minimum
Sep. 30, 2014
Capital Lease Obligations
Maximum
Sep. 30, 2014
Asset-Backed Lending Facility
Line of Credit
Jul. 1, 2014
Asset-Backed Lending Facility
Line of Credit
Subfacility
Sep. 30, 2014
Asset-Backed Lending Facility
Line of Credit
Interest Expense
Sep. 30, 2014
Asset-Backed Lending Facility
Line of Credit
Maximum
Sep. 30, 2014
Asset-Backed Lending Facility
Revolving Credit Facility
U.S. Borrowers Line of Credit
Sep. 30, 2014
Asset-Backed Lending Facility
Revolving Credit Facility
Canadian Borrower Line of Credit
Sep. 30, 2014
Asset-Backed Lending Facility
First-In, Last-Out Facility
U.S. Borrowers Line of Credit
Sep. 30, 2014
Asset-Backed Lending Facility
First-In, Last-Out Facility
Canadian Borrower Line of Credit
Jul. 1, 2014
Senior Credit Facility
Line of Credit, Senior Facility
Mar. 15, 2011
Senior Credit Facility
Line of Credit, Senior Facility
Line of Credit Facility [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum borrowing capacity
 
 
 
 
$ 1,400,000,000 
 
 
 
$ 1,180,000,000 
$ 140,000,000 
$ 70,000,000 
$ 10,000,000 
 
$ 600,000,000 
Number of sub-facilities
 
 
 
 
 
 
 
 
 
 
 
 
 
Minimum fixed charge coverage ratio
 
 
 
 
100.00% 
 
 
 
 
 
 
 
 
 
Minimum fixed charge coverage ratio, borrowing base
 
 
 
 
90,000,000 
 
 
 
 
 
 
 
 
 
Minimum fixed charge coverage ratio, lessor of borrowing base and total effective commitments, percent
 
 
 
 
10.00% 
 
 
 
 
 
 
 
 
 
Minimum fixed charge coverage ratio, consecutive days in excess of facility threshold
 
 
 
 
 
 
 
20 days 
 
 
 
 
 
 
Remaining borrowing capacity
 
 
 
 
509,100,000 
 
 
 
 
 
 
 
 
 
Amortization of deferred financing fees
1,100,000 
 
 
 
 
1,100,000 
 
 
 
 
 
 
 
Line of credit outstanding
 
 
 
 
 
 
 
 
 
 
 
 
$ 323,800,000 
 
Debt Instrument, Term
 
 
3 years 
8 years 
 
 
 
 
 
 
 
 
 
 
Equity-Based Incentive Plans - Narrative (Details) (Omnibus Incentive Plan)
Sep. 30, 2014
Omnibus Incentive Plan
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Number of shares authorized
2,080,000 
Awards granted
Equity-Based Incentive Plans - Stock Based Compensation Expense (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
 
 
 
 
Total stock-based compensation expense
$ 0 
$ 4.0 
$ 4.3 
$ 11.8 
Income tax benefit related to stock-based compensation
$ 0 
$ 3.8 
$ 1.3 
$ 4.7 
Employee Benefit Plans - Pension Plans (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2014
plan
Sep. 30, 2013
Sep. 29, 2013
U.S. Defined Benefit Pension PLan
Sep. 30, 2014
Registered Pension Plans
plan
Dec. 31, 2010
Registered Pension Plans
agreement
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
 
 
 
Number of active defined benefit plans
 
 
 
 
 
Net pension and other post-employment benefit expense
$ 1.5 
$ 8.0 
$ 9.1 
 
 
 
Percentage of vested terminated pension participants taking lump sum payments
 
 
 
10.00% 
 
 
Number of nonunion benefit plans
 
 
 
 
 
Number of union benefit plans
 
 
 
 
 
Number of collective bargaining agreements freezing benefit plans
 
 
 
 
 
Employee Benefit Plans - Net Benefit Costs (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Sep. 30, 2014
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]
 
Service cost
$ 0.4 
Interest cost
1.8 
Expected return on plan assets
(2.5)
Net periodic pension credit
$ (0.3)
Employee Benefit Plans - Multiemployer Plans (Details) (US employee collective bargaining agreement, Multiemployer plans, pension, USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
US employee collective bargaining agreement |
Multiemployer plans, pension
 
 
 
 
Multiemployer Plans [Line Items]
 
 
 
 
Multiemployer plan contributions
$ 1.1 
$ 0.8 
$ 2.3 
$ 1.9 
Shareholders' Equity - Narrative (Details) (USD $)
9 Months Ended 0 Months Ended
Sep. 30, 2014
Jul. 1, 2014
Sep. 30, 2014
Common Stock
Jul. 1, 2014
International Paper Shareholders
Common Stock
Jul. 1, 2014
UWW Holdings, Inc. XPEDX Merger
Class of Stock [Line Items]
 
 
 
 
 
Common stock, shares authorized (in Shares)
100,000,000 
 
 
 
 
Common stock par value (in Dollars per share)
$ 0.01 
 
 
 
 
Preferred stock, shares authorized (in Shares)
10,000,000 
 
 
 
 
Preferred stock par value (in Dollars per share)
$ 0.01 
 
 
 
 
Conversion of parent company investment in connection with Spin-off (in shares)
 
 
8,200,000 
8,160,000 
 
Business acquisition, equity issued, number of shares
 
 
 
 
7,840,000 
Common stock, shares issued (in Shares)
16,000,000 
16,000,000 
 
 
 
Common stock votes per share owned (in votes per share)
 
 
 
 
Common stock shares outstanding (in shares)
16,000,000 
16,000,000 
 
 
 
Preferred stock, shares outstanding (in shares)
 
 
 
 
Preferred stock, shares issued (in Shares)
 
 
 
 
Commitments and Contingencies Disclosure - Narrative (Details) (USD $)
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Dec. 31, 2013
state
Loss Contingencies [Line Items]
 
 
 
 
 
Product warranty accrual
$ 0 
 
$ 0 
 
$ 0 
Operating leases, rent expense
23,500,000 
12,000,000 
48,600,000 
35,700,000 
 
Amortization of above and below market leases
$ 300,000 
 
 
 
 
Additional states joining escheat audit
 
 
 
 
Minimum
 
 
 
 
 
Loss Contingencies [Line Items]
 
 
 
 
 
Escheat audit period
 
 
 
 
2 years 
Maximum
 
 
 
 
 
Loss Contingencies [Line Items]
 
 
 
 
 
Escheat audit period
 
 
 
 
4 years 
Commitments and Contingencies Disclosure - Future Minimum Commitments for Operating Leases (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2014
Lease obligations
 
2014
$ 23.6 1
2015
79.5 
2016
66.2 
2017
55.2 
2018
46.2 
Thereafter
95.1 
Sublease income
 
2014
(0.1)1
2015
(0.3)
2016
(0.2)
2017
(0.1)
2018
(0.1)
Thereafter
Total
 
2014
23.5 1
2015
79.2 
2016
66.0 
2017
55.1 
2018
46.1 
Thereafter
$ 95.1 
Commitments and Contingencies Disclosure - Future Net Amortization Expense (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2014
Above market agreements
 
2014
$ (0.5)1
2015
(1.9)
2016
(1.5)
2017
(1.2)
2018
(1.0)
Thereafter
(1.4)
Below market agreements
 
2014
0.2 1
2015
0.6 
2016
0.5 
2017
0.4 
2018
0.4 
Thereafter
4.1 
Net amortization expense (accretion)
 
2014
(0.3)1
2015
(1.3)
2016
(1.0)
2017
(0.8)
2018
(0.6)
Thereafter
$ 2.7 
Segment Information - Net Sales by Reportable Segment (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended 9 Months Ended
Sep. 30, 2014
segment
Sep. 30, 2013
Jun. 30, 2014
segment
Sep. 30, 2014
Sep. 30, 2013
Segment Reporting Information [Line Items]
 
 
 
 
 
Number of reportable segments
 
 
 
Segment split number of segments
 
 
 
 
Net sales
$ 2,390.3 
$ 1,442.8 
 
$ 5,026.7 
$ 4,234.1 
Adjusted EBITDA
51.5 
27.2 
 
81.8 
59.8 
Depreciation and amortization
14.2 
4.4 
 
23.1 
12.8 
Restructuring charges (income)
0.1 
6.0 
 
(1.0)
30.4 
Operating Segments |
Print
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
Net sales
947.2 
613.2 
 
2,038.3 
1,812.5 
Adjusted EBITDA
20.5 
14.8 
 
38.1 
35.7 
Depreciation and amortization
3.7 
1.0 
 
6.1 
3.3 
Restructuring charges (income)
2.5 
 
(0.4)
12.9 
Operating Segments |
Publishing
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
Net sales
338.2 
215.0 
 
715.4 
596.8 
Adjusted EBITDA
9.2 
5.0 
 
16.6 
12.0 
Depreciation and amortization
0.5 
0.1 
 
0.6 
0.2 
Restructuring charges (income)
 
1.1 
Operating Segments |
Packaging
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
Net sales
725.0 
404.5 
 
1,529.5 
1,189.4 
Adjusted EBITDA
53.0 
32.1 
 
104.4 
91.4 
Depreciation and amortization
4.2 
0.7 
 
5.9 
2.2 
Restructuring charges (income)
1.8 
 
(0.2)
9.0 
Operating Segments |
Facility Solutions
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
Net sales
357.0 
210.1 
 
720.6 
635.4 
Adjusted EBITDA
15.5 
5.3 
 
18.4 
10.3 
Depreciation and amortization
1.8 
0.4 
 
2.6 
1.2 
Restructuring charges (income)
1.1 
 
(0.5)
5.7 
Corporate and Other
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
Net sales
22.9 
 
22.9 
Adjusted EBITDA
(46.7)
(30.0)
 
(95.7)
(89.6)
Depreciation and amortization
4.0 
2.2 
 
7.9 
5.9 
Restructuring charges (income)
$ 0.1 
$ 0.6 
 
$ 0.1 
$ 1.7 
Segment Information - Operating Profit by Reportable Segment (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Segment Reporting [Abstract]
 
 
 
 
Income (loss) from continuing operations before income taxes
$ (24.4)
$ 9.1 
$ (10.1)
$ 4.0 
Interest expense, net
6.8 
6.8 
Depreciation and amortization
14.2 
4.4 
23.1 
12.8 
Restructuring charges (income)
0.1 
6.0 
(1.0)
30.4 
Non-restructuring stock-based compensation
3.2 
4.0 
9.8 
LIFO (income) expense
(0.5)
4.2 
(0.8)
1.9 
Non-restructuring severance charges
0.3 
2.4 
0.9 
Merger and integration expenses
54.8 
56.9 
Other
0.5 
0.5 
Adjusted EBITDA
$ 51.5 
$ 27.2 
$ 81.8 
$ 59.8 
Segment Information - Assets by Reportable Segment (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2014
Dec. 31, 2013
Segment Reporting Information [Line Items]
 
 
Total assets
$ 2,666.7 
$ 1,256.9 
Operating Segments |
Print
 
 
Segment Reporting Information [Line Items]
 
 
Total assets
1,025.8 
517.1 
Operating Segments |
Publishing
 
 
Segment Reporting Information [Line Items]
 
 
Total assets
207.0 
77.2 
Operating Segments |
Packaging
 
 
Segment Reporting Information [Line Items]
 
 
Total assets
802.5 
401.7 
Operating Segments |
Facility Solutions
 
 
Segment Reporting Information [Line Items]
 
 
Total assets
380.2 
201.7 
Corporate and Other
 
 
Segment Reporting Information [Line Items]
 
 
Total assets
$ 251.2 
$ 59.2 
Related-Party Transactions Parent Company Investment (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Parent Company Investment [Line Items]
 
 
 
 
Total net transfers (to) from International Paper
 
 
$ (82.6)
 
Parent Company Investment
 
 
 
 
Parent Company Investment [Line Items]
 
 
 
 
Intercompany sales and purchases, net
157.7 
255.4 
431.6 
Cash pooling and general financing activities
(165.7)
(322.5)
(503.2)
Corporate allocations including income taxes
27.6 
34.7 
65.1 
Net adjustments in conjunction with the Spin-off
(50.2)
(50.2)
Total net transfers (to) from International Paper
$ (50.2)
$ 19.6 
$ (82.6)
$ (6.5)
Related-Party Transactions Narrative (Details) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended 0 Months Ended 0 Months Ended 3 Months Ended 3 Months Ended 3 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended 3 Months Ended 9 Months Ended 0 Months Ended 3 Months Ended 0 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Sep. 30, 2014
Sep. 30, 2013
Dec. 31, 2013
Jul. 1, 2014
UWW Holdings, LLC
Demand_Registration
Jul. 1, 2014
UWW Holdings, LLC
Jul. 1, 2014
UWW Holdings, LLC
LIBOR
Sep. 30, 2014
Georgia-Pacific
Sep. 30, 2014
Georgia-Pacific
Unisource
Sep. 30, 2014
Georgia-Pacific
Sales
Sep. 30, 2014
Georgia-Pacific
Cost of products sold
Sep. 30, 2014
Georgia-Pacific
UWW Holdings Inc
Property
Nov. 27, 2002
Georgia-Pacific
UWW Holdings Inc
Property
Sep. 30, 2014
International Paper
Dec. 31, 2013
International Paper
Sep. 30, 2013
International Paper
Sales
Other International Paper Businesses
Sep. 30, 2014
International Paper
Sales
Other International Paper Businesses
Sep. 30, 2013
International Paper
Sales
Other International Paper Businesses
Sep. 30, 2013
International Paper
Cost of products sold
Other International Paper Businesses
Sep. 30, 2014
International Paper
Cost of products sold
Other International Paper Businesses
Sep. 30, 2013
International Paper
Cost of products sold
Other International Paper Businesses
Sep. 30, 2014
International Paper
Selling, General and Administrative Expenses
Sep. 30, 2013
International Paper
Selling, General and Administrative Expenses
Sep. 30, 2014
International Paper
Selling, General and Administrative Expenses
Sep. 30, 2013
International Paper
Selling, General and Administrative Expenses
Jun. 30, 2014
CEO of Merged Company [Member]
Merger and Integration Expense
Sep. 30, 2014
CEO of Merged Company [Member]
Merger and Integration Expense
Jul. 1, 2014
UWW Holdings, Inc. XPEDX Merger
Related Party Transaction [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business acquisition, equity issued, number of shares
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7,840,000 
Registration rights agreement, period demand rights commence following distribution date
 
 
 
 
 
180 days 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Registration rights agreement, maximum demand registration in 150 day period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Registration rights agreement, maximum demand registration in 365 day period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Registration rights agreement, material transaction, period allowed to delay registration in 360 day period
 
 
 
 
 
120 days 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Merger utilization of operating losses, percentage of tax savings payable to affiliate
 
 
 
 
 
 
85.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax receivable agreement, basis spread on variable rate
 
 
 
 
 
 
 
1.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Purchases from related party
 
 
 
 
 
 
 
 
 
 
 
$ 62.7 
 
 
 
 
 
 
 
$ 158.6 
$ 276.5 
$ 465.6 
 
 
 
 
 
 
 
Related party sales
9.2 
12.8 
33.5 
40.3 
 
 
 
 
 
 
9.2 
 
 
 
 
 
12.8 
24.3 
40.3 
 
 
 
 
 
 
 
 
 
 
Related party payable
14.9 
 
14.9 
 
2.6 
 
 
 
14.9 
 
 
 
 
 
 
2.6 
 
 
 
 
 
 
 
 
 
 
 
 
 
Related party receivable
3.4 
 
3.4 
 
10.1 
 
 
 
3.4 
 
 
 
 
 
 
10.1 
 
 
 
 
 
 
 
 
 
 
 
 
 
Inventories
697.6 
 
697.6 
 
360.9 
 
 
 
27.0 
 
 
 
 
 
 
48.5 
 
 
 
 
 
 
 
 
 
 
 
 
 
General corporate expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8.0 
20.6 
25.5 
60.4 
 
 
 
Percentage of voting interest sold
 
 
 
 
 
 
 
 
 
 
 
 
 
60.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of properties transferred to related party
 
 
 
 
 
 
 
 
 
 
 
 
 
42 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of properties transferred to related party and subsequently sold to unrelated third party
 
 
 
 
 
 
 
 
 
 
 
 
 
38 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sublease agreements, number of properties
 
 
 
 
 
 
 
 
 
 
 
 
 
38 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financing obligation at end of lease term
 
 
 
 
 
 
 
 
 
174.0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of properties transferred to related party not sold
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net adjustments related to spin-off, tangible assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
24.3 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net adjustments of intercompany settlements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
24.6 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Related party transaction
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.0 
 
 
Severance costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 5.4 
 
Restatement of Previously Issued Financial Statements - Balance Sheet (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2014
Dec. 31, 2013
Deferred income tax assets
 
$ 0 
Total current assets
2,027.4 
1,082.0 
Total assets
2,666.7 
1,256.9 
Deferred income tax liabilities
31.1 
13.5 
Total current liabilities
935.6 
464.8 
Total liabilities
2,098.7 
477.3 
Parent company investment, prior to Spin-off
 
784.3 
Total equity
568.0 
779.6 
Total liabilities and equity
2,666.7 
1,256.9 
Adjustments
 
 
Deferred income tax assets
 
(55.3)
Total current assets
 
(55.3)
Total assets
 
(55.3)
Deferred income tax liabilities
 
13.5 
Total current liabilities
 
13.5 
Total liabilities
 
13.5 
Parent company investment, prior to Spin-off
 
(68.8)
Total equity
 
(68.8)
Total liabilities and equity
 
(55.3)
As Reported
 
 
Deferred income tax assets
 
55.3 
Total current assets
 
1,137.3 
Total assets
 
1,312.2 
Deferred income tax liabilities
 
Total current liabilities
 
451.3 
Total liabilities
 
463.8 
Parent company investment, prior to Spin-off
 
853.1 
Total equity
 
848.4 
Total liabilities and equity
 
$ 1,312.2 
Restatement of Previously Issued Financial Statements - Cash Flow Statement (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Deferred income tax provision
$ (9.3)
$ 3.5 
Cash provided by operating activities - continuing operations
29.6 
12.0 
Cash provided by operating activities
28.5 
11.9 
Net cash transfers to Parent
(61.5)
(16.9)
Cash used for financing activities - continuing operations
(11.9)
(26.0)
Cash used for financing activities
(10.8)
(27.9)
Adjustments
 
 
Deferred income tax provision
 
(0.7)
Cash provided by operating activities - continuing operations
 
(0.7)
Cash provided by operating activities
 
(0.7)
Net cash transfers to Parent
 
0.7 
Cash used for financing activities - continuing operations
 
0.7 
Cash used for financing activities
 
0.7 
As Reported
 
 
Deferred income tax provision
 
4.2 
Cash provided by operating activities - continuing operations
 
12.7 
Cash provided by operating activities
 
12.6 
Net cash transfers to Parent
 
(17.6)
Cash used for financing activities - continuing operations
 
(26.7)
Cash used for financing activities
 
$ (28.6)