RR DONNELLEY
v3.7.0.1
Document and Entity Information - shares
shares in Millions
6 Months Ended
Jun. 30, 2017
Jul. 28, 2017
Document And Entity Information [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Jun. 30, 2017  
Document Fiscal Year Focus 2017  
Document Fiscal Period Focus Q2  
Trading Symbol RRD  
Entity Registrant Name RR Donnelley & Sons Co  
Entity Central Index Key 0000029669  
Current Fiscal Year End Date --12-31  
Entity Filer Category Large Accelerated Filer  
Entity Common Stock, Shares Outstanding   70.0
v3.7.0.1
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
Jun. 30, 2017
Dec. 31, 2016
ASSETS    
Cash and cash equivalents $ 224.0 $ 317.5
Receivables, less allowances for doubtful accounts of $35.7 in 2017 (2016 - $35.9) 1,301.5 1,354.4
Inventories (Note 4) 392.4 379.6
Prepaid expenses and other current assets 142.3 136.7
Investment in LSC and Donnelley Financial (Note 2) 2.3 328.7
Total current assets 2,062.5 2,516.9
Property, plant and equipment-net (Note 5) 633.2 650.3
Goodwill (Note 6) 607.1 602.0
Other intangible assets-net (Note 6) 157.5 171.9
Deferred income taxes 119.7 108.9
Other noncurrent assets 251.8 234.7
Total assets 3,831.8 4,284.7
LIABILITIES    
Accounts payable 911.6 1,001.2
Accrued liabilities 409.7 541.7
Short-term and current portion of long-term debt (Note 15) 19.1 8.2
Total current liabilities 1,340.4 1,551.1
Long-term debt (Note 15) 2,233.4 2,379.2
Pension liabilities 105.9 119.4
Other postretirement benefits plan liabilities 130.3 134.1
Other noncurrent liabilities 183.3 193.1
Total liabilities 3,993.3 4,376.9
Commitments and Contingencies (Note 14)
RRD stockholders' equity    
Preferred stock, $1.00 par value Authorized: 2.0 shares; Issued: None
Common stock, $0.01 par value Authorized: 165.0 shares; Issued: 89.0 shares in 2017 and 2016 0.9 0.9
Additional paid-in-capital 3,449.0 3,468.5
Accumulated deficit (2,140.1) (2,155.4)
Accumulated other comprehensive loss (143.0) (55.7)
Treasury stock, at cost, 19.0 shares in 2017 (2016 - 19.1 shares) (1,341.9) (1,364.0)
Total RRD stockholders' equity (175.1) (105.7)
Noncontrolling interests 13.6 13.5
Total equity (161.5) (92.2)
Total liabilities and equity $ 3,831.8 $ 4,284.7
v3.7.0.1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
$ in Millions
Jun. 30, 2017
Dec. 31, 2016
Statement Of Financial Position [Abstract]    
Receivables, allowance for doubtful accounts $ 35.7 $ 35.9
Preferred stock, par value $ 1.00 $ 1.00
Preferred stock, authorized 2,000,000 2,000,000
Preferred stock, Issued 0 0
Common stock, par value $ 0.01 $ 0.01
Common stock, Authorized 165,000,000 165,000,000
Common stock, Issued 89,000,000 89,000,000
Treasury stock, shares 19,000,000 19,100,000
v3.7.0.1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Millions, $ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Income Statement [Abstract]        
Products net sales $ 1,263.4 $ 1,231.7 $ 2,552.3 $ 2,474.4
Services net sales 382.6 400.9 770.0 803.8
Total net sales 1,646.0 1,632.6 3,322.3 3,278.2
Products cost of sales (exclusive of depreciation and amortization) 1,020.7 985.2 2,045.0 1,957.1
Services cost of sales (exclusive of depreciation and amortization) 322.2 331.0 646.4 672.2
Total cost of sales 1,342.9 1,316.2 2,691.4 2,629.3
Products gross profit 242.7 246.5 507.3 517.3
Services gross profit 60.4 69.9 123.6 131.6
Total gross profit 303.1 316.4 630.9 648.9
Selling, general and administrative expenses (exclusive of depreciation and amortization) 213.2 233.6 435.9 462.9
Restructuring, impairment and other charges-net (Note 7) 3.8 8.2 12.9 13.5
Depreciation and amortization 47.5 49.9 96.1 102.5
Other operating income       (12.3)
Income from operations 38.6 24.7 86.0 82.3
Interest expense-net 45.5 51.4 93.8 101.8
Investment and other (income) expense -net (93.1) 0.7 (44.4) 0.6
Loss on debt extinguishments 13.6   13.6  
Earnings (loss) before income taxes 72.6 (27.4) 23.0 (20.1)
Income tax benefit (4.1) (4.4) (3.9) (1.0)
Net earnings (loss) from continuing operations 76.7 (23.0) 26.9 (19.1)
Income from discontinued operations, net of tax (Note 2)   8.7   44.9
Net earnings (loss) 76.7 (14.3) 26.9 25.8
Less: Income attributable to noncontrolling interests 0.2 0.2 0.5 0.5
Net earnings (loss) attributable to RRD common stockholders $ 76.5 $ (14.5) $ 26.4 $ 25.3
Basic net earnings (loss) per share attributable to RRD common stockholders (Note 11):        
Continuing operations $ 1.09 $ (0.33) $ 0.38 $ (0.28)
Discontinued operations   0.12   0.64
Net earnings (loss) attributable to RRD stockholders 1.09 (0.21) 0.38 0.36
Diluted net earnings (loss) per share attributable to RRD common stockholders (Note 11):        
Continuing operations 1.09 (0.33) 0.38 (0.28)
Discontinued operations   0.12   0.64
Net earnings (loss) attributable to RRD 1.09 (0.21) 0.38 0.36
Dividends declared per common share $ 0.14 $ 0.78 $ 0.28 $ 1.56
Weighted average number of common shares outstanding:        
Basic 70.1 70.0 70.1 69.9
Diluted 70.2 70.0 70.3 69.9
v3.7.0.1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Statement Of Income And Comprehensive Income [Abstract]        
Net earnings (loss) $ 76.7 $ (14.3) $ 26.9 $ 25.8
Other comprehensive (loss) income, net of tax (Note 12):        
Translation adjustments 20.1 (22.5) 29.1 (4.6)
Adjustment for available-for-sale securities (85.2)   (117.5)  
Adjustment for net periodic pension and postretirement benefits plan cost 0.7 6.7 1.4 6.1
Other comprehensive (loss) income (64.4) (15.8) (87.0) 1.5
Comprehensive income (loss) 12.3 (30.1) (60.1) 27.3
Less: comprehensive income attributable to noncontrolling interests 0.3 0.2 0.8 0.7
Comprehensive income (loss) attributable to RRD common stockholders $ 12.0 $ (30.3) $ (60.9) $ 26.6
v3.7.0.1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Millions
6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
OPERATING ACTIVITIES    
Net earnings $ 26.9 $ 25.8
Adjustments to reconcile net earnings to net cash used in operating activities:    
Impairment charges - net 0.3 0.6
Depreciation and amortization 96.1 211.0
Provision for doubtful accounts receivable 1.4 12.5
Share-based compensation 4.3 10.0
Deferred income taxes (5.3) (20.8)
Changes in uncertain tax positions 0.4 (1.4)
Gain on investments and other assets - net (2.4) (12.4)
Realized gain on disposition of available-for-sale securities - net (40.8)  
Loss on debt extinguishments 13.6  
Net pension and other postretirement benefits plan income (7.3) (38.1)
Loss on pension settlement   96.9
Other 9.3 3.3
Changes in operating assets and liabilities - net of dispositions:    
Accounts receivable - net 69.8 14.2
Inventories (8.0) (3.3)
Prepaid expenses and other current assets (6.9) (10.8)
Accounts payable (111.2) (274.5)
Income taxes payable and receivable (3.4) (15.2)
Accrued liabilities and other (79.6) (84.9)
Pension and other postretirement benefits plan contributions (9.0) (13.2)
Net cash used in operating activities (51.8) (100.3)
INVESTING ACTIVITIES    
Capital expenditures (54.2) (101.4)
Disposition of businesses   13.4
Proceeds from sales of investments and other assets 126.7 3.1
Transfers from restricted cash 0.7 14.9
Other investing activities   (2.1)
Net cash provided by (used in) investing activities 73.2 (72.1)
FINANCING ACTIVITIES    
Net change in short-term debt 12.3 0.9
Payments of current maturities and long-term debt (200.4) (2.9)
Payments on Credit Agreement borrowings (655.0)  
Proceeds from Credit Agreement borrowings 820.0  
Net proceeds from credit facility borrowings   185.0
Dividends paid (19.6) (108.7)
Net transfer of cash and cash equivalents to LSC and Donnelley Financial (78.0)  
Other financing activities (1.6) 1.9
Net cash (used in) provided by financing activities (122.3) 76.2
Effect of exchange rate on cash and cash equivalents 7.4 (2.8)
Net decrease in cash and cash equivalents (93.5) (99.0)
Cash and cash equivalents at beginning of year 317.5 389.6
Cash and cash equivalents at end of period 224.0 290.6
SUPPLEMENTAL NON-CASH DISCLOSURE:    
Assumption of warehousing equipment related to customer contract   $ 8.8
Debt-for-equity exchange $ 130.5  
v3.7.0.1
Basis of Presentation
6 Months Ended
Jun. 30, 2017
Accounting Policies [Abstract]  
Basis of Presentation

1. Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements include the accounts of R.R. Donnelley & Sons Company and its subsidiaries (the “Company” or “RRD”) and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These unaudited condensed consolidated interim financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods and should be read in conjunction with the consolidated financial statements and the related notes thereto included in the Company’s latest Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on February 28, 2017. Operating results for the six months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2017. All significant intercompany transactions have been eliminated in consolidation. These unaudited condensed consolidated interim financial statements include estimates and assumptions of management that affect the amounts reported in the condensed consolidated financial statements. Actual results could differ from these estimates.

Spinoff Transactions

On October 1, 2016, the Company completed the separation of its financial communications and data services business (“Donnelley Financial Solutions, Inc.” or “Donnelley Financial”) and the publishing and retail-centric print services and office products business (“LSC Communications, Inc.” or “LSC”) into two separate publicly-traded companies (the "Separation"). The Company completed the tax-free distribution of 80.75% of the outstanding common stock of each Donnelley Financial and LSC to the Company’s stockholders of record on September 23, 2016 who received one share of each Donnelley Financial and LSC for every eight shares of RRD common stock owned as of the record date (the “Distribution”). The Company retained 19.25% of the outstanding common stock of each Donnelley Financial and LSC. The historical financial results of Donnelley Financial and LSC prior to the Separation, are presented as discontinued operations on the Condensed Consolidated Statements of Operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. Sales from RRD to Donnelley Financial and LSC previously eliminated in consolidation have been recast and are now shown as external sales within the financial results of continuing operations. These net sales were $36.3 million and $77.9 million for the three and six months ended June 30, 2016, respectively. Unless indicated otherwise, the information in the Notes to Condensed Consolidated Financial Statements relates to the Company's continuing operations. Prior periods have been recast to reflect the Company's current segment reporting structure. See Note 2, Discontinued Operations, for more information on the Separation.

Reverse Stock Split

Immediately following the Distribution on October 1, 2016, the Company affected a one-for-three reverse stock split for RRD common stock (the “Reverse Stock Split”). The Reverse Stock Split was approved by the Company’s Board of Directors on September 14, 2016 and previously approved by the Company’s stockholders at the annual meeting on May 19, 2016. As a result of the Reverse Stock Split, the number of issued and outstanding and treasury shares of the Company’s common stock was reduced proportionally based on the Reverse Stock Split ratio of one share for every three shares of common stock held before the Reverse Stock Split. All references in these unaudited condensed consolidated interim financial statements to the number of shares of common stock and per share amounts have been retroactively adjusted to give effect to the Reverse Stock Split.  

 

v3.7.0.1
Discontinued Operations
6 Months Ended
Jun. 30, 2017
Discontinued Operations And Disposal Groups [Abstract]  
Discontinued Operations

2. Discontinued Operations

Immediately following the Distribution, the Company held approximately 6.2 million shares of Donnelley Financial Solutions common stock and approximately 6.2 million shares of LSC common stock. The Company accounts for these investments as available-for-sale equity securities. In March 2017, the Company sold the 6.2 million shares of LSC common stock it retained upon spinoff for net proceeds of $121.4 million, resulting in a realized loss of $51.6 million, which was recorded within investment and other income (expense)-net in the Condensed Consolidated Statements of Operations for the six months ended June 30, 2017. In June 2017, the Company completed a non-cash debt-for-equity exchange, in which RRD exchanged 6,143,208 of its retained shares of Donnelley Financial for the extinguishment of $111.6 million in aggregate principal amount of RRD indebtedness. See Note 15, Debt, for additional details of this debt-for-equity transaction. As of June 30, 2017, the fair value of the remaining 99,594 retained shares of Donnelley Financial common stock was $2.3 million.

 

The following details the financial results of discontinued operations:

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2016

 

2016

 

Net sales

$

1,133.4

 

$

2,180.8

 

Cost of sales

 

845.0

 

 

1,655.6

 

Operating expenses (a)

 

260.9

 

 

422.0

 

Interest and other expense (income), net (b)

 

17.6

 

 

35.5

 

Earnings before income taxes

 

9.9

 

 

67.7

 

Income tax expense

 

1.2

 

 

22.8

 

Net earnings from discontinued operations

$

8.7

 

$

44.9

 

 

(a)

Includes spinoff transaction costs incurred of $18.4 million and $30.3 million during the three and six month period ended June 30, 2016.  

 

(b)

Includes the related interest expense of the corporate level debt which was retired in connection with the Separation totaling $17.8 million and $35.8 million for the three and six months ended June 30, 2016.

  

The significant non-cash items and capital expenditures of discontinued operations were as follows:

 

Six Months Ended

 

 

June 30,

 

 

2016

 

Depreciation and amortization

$

108.5

 

Pension settlement charges

 

76.5

 

Impairment charges

 

1.4

 

Assumption of warehousing equipment related to customer contract

 

8.8

 

Purchase of property, plant and equipment

 

31.2

 

 

In connection with the Separation, the Company entered into transition services agreements with Donnelley Financial and LSC under which the companies will provide one another with certain services to help ensure an orderly transition following the Separation (the “Transition Services Agreement”). The charges for these services are intended to allow the companies, as applicable, to recover the direct and indirect costs incurred in providing such services. The Transition Services Agreement generally provides for a term of services starting at the Separation date and continuing for a period of up to twenty-four months following the Separation. During the three and six months ended June 30, 2017, the Company recognized $2.2 million and $5.0 million, respectively, as a reduction of costs within selling general and administrative expenses within the Condensed Consolidated Statements of Operations from the Transition Services Agreement.

 

The Company also entered into various commercial agreements which govern sales transactions between the companies. Under these commercial agreements, the Company recognized the following transactions with LSC and Donnelley Financial during the three and six months ended June 30, 2017:

 

Three Months Ended

 

Six Months Ended

 

 

June 30, 2017

 

June 30, 2017

 

Net sales to LSC and Donnelley Financial

$

86.2

 

$

169.1

 

Purchases from LSC and Donnelley Financial

 

31.9

 

 

69.0

 

Additionally, the Company had the following balances recorded within the Condensed Consolidated Balance Sheets associated with LSC and Donnelley Financial:  

 

June 30,

 

December 31,

 

 

2017(b)

 

2016

 

Accounts receivable

$

17.5

 

$

78.1

 

Accounts payable

 

12.5

 

 

62.6

 

Accrued liabilities (a)

 

 

 

78.0

 

 

(a)

The balance as of December 31, 2016 consisted of the final cash settlement required by a provision in the Separation and Distribution agreement which was paid in April 2017.

 

(b)

The balance as of June 30, 2017 relates only to Donnelley Financial.

The Company also recognized $75.2 million of net cash inflow from Donnelley Financial and LSC within operating activities in the Condensed Consolidated Statements of Cash Flows during the six months ended June 30, 2017.

v3.7.0.1
Acquisitions and Dispositions
6 Months Ended
Jun. 30, 2017
Business Combinations [Abstract]  
Acquisitions and Dispositions

3. Acquisitions and Dispositions

2016 Acquisition

On August 4, 2016, the Company acquired Precision Dialogue Holdings, LLC (“Precision Dialogue”), a provider of email marketing, direct mail marketing and other services with operations in the United States for a purchase price, net of cash acquired, of approximately $59.2 million. The acquisition expanded the Company’s ability to help its customers measure communications effectiveness and audience engagement. During the three and six months ended June 30, 2017, Precision Dialogue contributed $13.7 million and $27.5 million, respectively, in sales and income before income taxes of $0.6 million and $1.5 million, respectively. Precision Dialogue is included within the operating results of the Variable Print and Strategic Services segments.

 2016 Dispositions

On January 11, 2016, the Company sold two entities within the business process outsourcing reporting unit for net proceeds of $13.4 million. This resulted in a net gain of $12.3 million during the six months ended June 30, 2016, which was recorded in other operating income in the Condensed Consolidated Statements of Operations. Additionally, during the three months ended September 30, 2016, the Company sold three immaterial entities in the International segment.

v3.7.0.1
Inventories
6 Months Ended
Jun. 30, 2017
Inventory Disclosure [Abstract]  
Inventories

4. Inventories

The components of the Company’s inventories, net of excess and obsolescence reserves for raw materials and finished goods, at June 30, 2017 and December 31, 2016 were as follows:

 

 

 

June 30,

 

 

December 31,

 

 

 

2017

 

 

2016

 

Raw materials and manufacturing supplies

 

$

144.3

 

 

$

133.8

 

Work in process

 

 

88.0

 

 

 

84.4

 

Finished goods

 

 

176.7

 

 

 

179.4

 

LIFO reserve

 

 

(16.6

)

 

 

(18.0

)

Total

 

$

392.4

 

 

$

379.6

 

 

  

v3.7.0.1
Property, Plant and Equipment
6 Months Ended
Jun. 30, 2017
Property Plant And Equipment [Abstract]  
Property, Plant and Equipment

5. Property, Plant and Equipment

The components of the Company’s property, plant and equipment at June 30, 2017 and December 31, 2016 were as follows:

 

 

June 30,

 

 

December 31,

 

 

 

2017

 

 

2016

 

Land

 

$

55.7

 

 

$

56.0

 

Buildings

 

 

410.5

 

 

 

403.0

 

Machinery and equipment

 

 

1,844.8

 

 

 

1,805.4

 

 

 

 

2,311.0

 

 

 

2,264.4

 

Less: Accumulated depreciation

 

 

(1,677.8

)

 

 

(1,614.1

)

Total

 

$

633.2

 

 

$

650.3

 

 

  

During the three and six months ended June 30, 2017, depreciation expense was $34.9 million and $70.6 million, respectively.  During the three and six months ended June 30, 2016, depreciation expense was $38.9 million and $78.6 million, respectively.  

 

v3.7.0.1
Goodwill and Other Intangible Assets
6 Months Ended
Jun. 30, 2017
Goodwill And Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets

6. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill for the six months ended June 30, 2017 were as follows:  

 

 

 

Variable

 

 

Strategic

 

 

 

 

 

 

 

 

 

 

 

Print

 

 

Services

 

 

International

 

 

Total

 

Net book value as of December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

$

1,823.0

 

 

$

365.2

 

 

$

1,017.9

 

 

$

3,206.1

 

Accumulated impairment losses

 

 

(1,550.5

)

 

 

(148.7

)

 

 

(904.9

)

 

 

(2,604.1

)

Total

 

 

272.5

 

 

 

216.5

 

 

 

113.0

 

 

 

602.0

 

Foreign exchange and other adjustments

 

 

 

 

 

 

 

 

5.1

 

 

 

5.1

 

Net book value as of June 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

 

1,823.5

 

 

 

365.2

 

 

 

1,060.0

 

 

 

3,248.7

 

Accumulated impairment losses

 

 

(1,551.0

)

 

 

(148.7

)

 

 

(941.9

)

 

 

(2,641.6

)

Total

 

$

272.5

 

 

$

216.5

 

 

$

118.1

 

 

$

607.1

 

 

The components of other intangible assets at June 30, 2017 and December 31, 2016 were as follows:

 

 

 

June 30, 2017

 

 

December 31, 2016

 

 

 

Gross

 

 

 

 

 

 

 

 

 

 

Gross

 

 

 

 

 

 

 

 

 

 

 

Carrying

 

 

Accumulated

 

 

Net Book

 

 

Carrying

 

 

Accumulated

 

 

Net Book

 

 

 

Amount

 

 

Amortization

 

 

Value

 

 

Amount

 

 

Amortization

 

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

$

527.9

 

 

$

(393.6

)

 

$

134.3

 

 

$

517.9

 

 

$

(370.7

)

 

$

147.2

 

Patents

 

 

2.0

 

 

 

(2.0

)

 

 

 

 

 

2.0

 

 

 

(2.0

)

 

 

 

Trademarks, licenses and agreements

 

 

26.2

 

 

 

(24.8

)

 

 

1.4

 

 

 

26.2

 

 

 

(24.4

)

 

 

1.8

 

Trade names

 

 

36.9

 

 

 

(15.1

)

 

 

21.8

 

 

 

36.8

 

 

 

(13.9

)

 

 

22.9

 

Total other intangible assets

 

$

593.0

 

 

$

(435.5

)

 

$

157.5

 

 

$

582.9

 

 

$

(411.0

)

 

$

171.9

 

 

Amortization expense for other intangible assets was $7.0 million and $14.5 million for the three and six months ended June 30, 2017, respectively. Amortization expense for other intangible assets was $8.1 million and $17.7 million for the three and six months ended June 30, 2016, respectively.

v3.7.0.1
Restructuring, Impairment and Other Charges
6 Months Ended
Jun. 30, 2017
Restructuring And Related Activities [Abstract]  
Restructuring, Impairment and Other Charges

7. Restructuring, Impairment and Other Charges

Restructuring, Impairment and Other Charges Recognized in Results of Operations

For the three months ended June 30, 2017 and 2016, the Company recorded the following net restructuring, impairment and other charges:  

Three Months Ended

 

Employee

 

 

Other

Restructuring

 

 

Total

Restructuring

 

 

 

 

 

 

Other

 

 

 

 

 

June 30, 2017

 

Terminations

 

 

Charges

 

 

Charges

 

 

Impairment

 

 

Charges

 

 

Total

 

Variable Print

 

$

0.6

 

 

$

0.2

 

 

$

0.8

 

 

$

(0.3

)

 

$

0.5

 

 

$

1.0

 

Strategic Services

 

 

0.1

 

 

 

(0.1

)

 

 

 

 

 

 

 

 

0.1

 

 

 

0.1

 

International

 

 

1.0

 

 

 

0.9

 

 

 

1.9

 

 

 

 

 

 

 

 

 

1.9

 

Corporate

 

 

0.7

 

 

 

0.1

 

 

 

0.8

 

 

 

 

 

 

 

 

 

0.8

 

Total

 

$

2.4

 

 

$

1.1

 

 

$

3.5

 

 

$

(0.3

)

 

$

0.6

 

 

$

3.8

 

 

Three Months Ended

 

Employee

 

 

Other

Restructuring

 

 

Total

Restructuring

 

 

 

 

 

 

Other

 

 

 

 

 

June 30, 2016

 

Terminations

 

 

Charges

 

 

Charges

 

 

Impairment

 

 

Charges

 

 

Total

 

Variable Print

 

$

0.2

 

 

$

0.4

 

 

$

0.6

 

 

$

0.4

 

 

$

0.5

 

 

$

1.5

 

Strategic Services

 

 

0.2

 

 

 

 

 

 

0.2

 

 

 

 

 

 

0.1

 

 

 

0.3

 

International

 

 

2.3

 

 

 

0.6

 

 

 

2.9

 

 

 

0.3

 

 

 

 

 

 

3.2

 

Corporate

 

 

3.4

 

 

 

(0.2

)

 

 

3.2

 

 

 

 

 

 

 

 

 

3.2

 

Total

 

$

6.1

 

 

$

0.8

 

 

$

6.9

 

 

$

0.7

 

 

$

0.6

 

 

$

8.2

 

For the six months ended June 30, 2017 and 2016, the Company recorded the following net restructuring, impairment and other charges:

Six Months Ended

 

Employee

 

 

Other

Restructuring

 

 

Total

Restructuring

 

 

 

 

 

 

Other

 

 

 

 

 

June 30, 2017

 

Terminations

 

 

Charges

 

 

Charges

 

 

Impairment

 

 

Charges

 

 

Total

 

Variable Print

 

$

1.0

 

 

$

0.3

 

 

$

1.3

 

 

$

(0.3

)

 

$

1.0

 

 

$

2.0

 

Strategic Services

 

 

1.1

 

 

 

0.3

 

 

 

1.4

 

 

 

0.5

 

 

 

0.2

 

 

 

2.1

 

International

 

 

4.5

 

 

 

1.9

 

 

 

6.4

 

 

 

 

 

 

 

 

 

6.4

 

Corporate

 

 

2.2

 

 

 

0.2

 

 

 

2.4

 

 

 

 

 

 

 

 

 

2.4

 

Total

 

$

8.8

 

 

$

2.7

 

 

$

11.5

 

 

$

0.2

 

 

$

1.2

 

 

$

12.9

 

 

Six Months Ended

 

Employee

 

 

Other

Restructuring

 

 

Total

Restructuring

 

 

 

 

 

 

Other

 

 

 

 

 

June 30, 2016

 

Terminations

 

 

Charges

 

 

Charges

 

 

Impairment

 

 

Charges

 

 

Total

 

Variable Print

 

$

0.4

 

 

$

1.2

 

 

$

1.6

 

 

$

0.3

 

 

$

0.9

 

 

$

2.8

 

Strategic Services

 

 

0.5

 

 

 

 

 

 

0.5

 

 

 

 

 

 

0.2

 

 

 

0.7

 

International

 

 

6.5

 

 

 

1.1

 

 

 

7.6

 

 

 

(2.5

)

 

 

 

 

 

5.1

 

Corporate

 

 

3.6

 

 

 

 

 

 

3.6

 

 

 

1.3

 

 

 

 

 

 

4.9

 

Total

 

$

11.0

 

 

$

2.3

 

 

$

13.3

 

 

$

(0.9

)

 

$

1.1

 

 

$

13.5

 

Restructuring and Impairment Charges

For the three and six months ended June 30, 2017, the Company recorded net restructuring charges of $2.4 million and $8.8 million, respectively, for employee termination costs. These charges primarily relate to ceasing the Company’s relationship in a joint venture within the International segment, the reorganization of selling, general and administrative functions primarily within the Corporate, International and Variable Print segments and one facility closure in the Strategic Services segment. The Company also recorded $0.3 million related to a net gain on the sale of previously impaired equipment during the three months ended June 30, 2017. For the six months ended June 30, 2017, the Company recorded net impairment charges of $0.2 million primarily related to the impairment of equipment associated with the facility closure in the Strategic Services segment, partially offset by the aforementioned net gain recorded in the second quarter of 2017. Additionally, the Company incurred lease termination and other restructuring charges of $1.1 million and $2.7 million, respectively, for the three and six months ended June 30, 2017.

For the three and six months ended June 30, 2016, the Company recorded net restructuring charges of $6.1 million and $11.0 million, respectively, for employee termination costs. These charges primarily related to two facility closures in the International segment and the reorganization of certain operations. Additionally, the Company incurred lease termination and other restructuring charges of $0.8 million and $2.3 million, respectively, for the three and six months ended June 30, 2016. The Company incurred $0.7 million of impairment charges related to buildings and machinery and equipment associated with facility closures for the three months ended June 30, 2016. For the six month period ended June 30, 2016, the Company recognized $0.9 million of net gains on the sale of previously impaired assets, partially offset by impairment charges related to buildings and machinery and equipment associated with facility closures.

Other Charges

For the three and six months ended June 30, 2017 and 2016, the Company recorded other charges of $0.6 million and $1.2 million and $0.6 million and $1.1 million, respectively, for multi-employer withdrawal pension plan obligations unrelated to facility closures. The total liabilities for the withdrawal obligations associated with the Company’s decision to withdraw from multi-employer pension plans included in accrued liabilities and other noncurrent liabilities are $4.9 million and $33.4 million, respectively, as of June 30, 2017

The Company’s multi-employer pension plan withdrawal liabilities could be affected by the financial stability of other employers participating in the plans and any decisions by those employers to withdraw from the plans in the future. While it is not possible to quantify the potential impact of future events or circumstances, reductions in other employers’ participation in multi-employer pension plans, including certain plans from which the Company has previously withdrawn, could have a material impact on the Company’s previously estimated withdrawal liabilities, consolidated results of operations, financial position or cash flows.

 Restructuring Reserve

The restructuring reserve as of December 31, 2016 and June 30, 2017, and changes during the six months ended June 30, 2017, were as follows:

 

 

 

 

 

 

 

 

 

 

 

Foreign

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

Restructuring

 

 

Exchange and

 

 

Cash

 

 

June 30,

 

 

 

2016

 

 

Charges

 

 

Other

 

 

Paid

 

 

2017

 

Employee terminations

 

$

7.6

 

 

$

8.8

 

 

$

(0.3

)

 

$

(7.6

)

 

$

8.5

 

Multi-employer pension withdrawal obligations

 

 

11.8

 

 

 

0.3

 

 

 

 

 

 

(0.7

)

 

 

11.4

 

Lease terminations and other

 

 

1.6

 

 

 

2.4

 

 

 

0.9

 

 

 

(1.6

)

 

 

3.3

 

Total

 

$

21.0

 

 

$

11.5

 

 

$

0.6

 

 

$

(9.9

)

 

$

23.2

 

 

The current portion of restructuring reserves of $9.0 million at June 30, 2017 was included in accrued liabilities, while the long-term portion of $14.2 million, primarily related to multi-employer pension plan withdrawal obligations related to facility closures and lease termination costs, was included in other noncurrent liabilities at June 30, 2017.

The Company anticipates that payments associated with the employee terminations reflected in the above table will be substantially completed by June 2018.

Payments on all of the Company’s multi-employer pension plan withdrawal obligations are scheduled to be completed by 2036. Changes based on uncertainties in these estimated withdrawal obligations could affect the ultimate charges related to multi-employer pension plan withdrawals.

The restructuring liabilities classified as “lease terminations and other” consisted of lease terminations, other facility closing costs and contract termination costs. Payments on certain of the lease obligations are scheduled to continue until 2020. Market conditions and the Company’s ability to sublease these properties could affect the ultimate charges related to the lease obligations. Any potential recoveries or additional charges could affect amounts reported in the Company’s financial statements.

 

v3.7.0.1
Employee Benefits
6 Months Ended
Jun. 30, 2017
Compensation And Retirement Disclosure [Abstract]  
Employee Benefits

8. Employee Benefits

The components of the estimated net pension and other postretirement benefits plan income for the three and six months ended June 30, 2017 and 2016 were as follows:

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Pension expense (income)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

$

0.2

 

 

$

0.2

 

 

$

0.4

 

 

$

0.5

 

Interest cost

 

7.9

 

 

 

32.3

 

 

 

15.7