Company Quick10K Filing
Verso Quinnesec
Price12.59 EPS1
Shares35 P/E11
MCap442 P/FCF11
Net Debt16 EBIT43
TEV458 TEV/EBIT11
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-09-30 Filed 2020-11-12
10-Q 2020-06-30 Filed 2020-08-06
10-Q 2020-03-31 Filed 2020-05-11
10-K 2019-12-31 Filed 2020-03-02
10-Q 2019-09-30 Filed 2019-11-12
10-Q 2019-06-30 Filed 2019-08-08
10-Q 2019-03-31 Filed 2019-05-08
10-K 2018-12-31 Filed 2019-03-01
10-Q 2018-09-30 Filed 2018-11-07
10-Q 2018-06-30 Filed 2018-08-08
10-Q 2018-03-31 Filed 2018-05-09
10-K 2017-12-31 Filed 2018-03-08
10-Q 2017-09-30 Filed 2017-11-14
10-Q 2017-06-30 Filed 2017-08-09
10-Q 2017-03-31 Filed 2017-05-15
10-K 2016-12-31 Filed 2017-03-20
10-Q 2016-09-30 Filed 2016-11-14
10-Q 2016-06-30 Filed 2016-08-15
10-Q 2016-03-31 Filed 2016-05-23
10-K 2015-12-31 Filed 2016-04-14
10-Q 2015-09-30 Filed 2015-11-16
10-Q 2015-06-30 Filed 2015-08-11
10-Q 2015-03-31 Filed 2015-05-15
10-K 2014-12-31 Filed 2015-03-10
10-Q 2014-09-30 Filed 2014-11-13
10-Q 2014-06-30 Filed 2014-08-14
10-Q 2014-03-31 Filed 2014-05-07
10-K 2013-12-31 Filed 2014-03-06
10-Q 2013-09-30 Filed 2013-11-07
10-Q 2013-06-30 Filed 2013-08-08
10-Q 2013-03-31 Filed 2013-05-09
10-K 2012-12-31 Filed 2013-03-07
10-Q 2012-09-30 Filed 2012-11-14
10-Q 2012-06-30 Filed 2012-08-09
10-Q 2012-03-31 Filed 2012-05-14
10-K 2011-12-31 Filed 2012-03-06
10-Q 2011-09-30 Filed 2011-11-07
10-Q 2011-06-30 Filed 2011-08-11
10-Q 2011-03-31 Filed 2011-05-09
10-K 2010-12-31 Filed 2011-03-03
10-Q 2010-09-30 Filed 2010-11-03
10-Q 2010-06-30 Filed 2010-08-11
10-Q 2010-03-31 Filed 2010-05-06
10-K 2009-12-31 Filed 2010-03-03
8-K 2020-11-09
8-K 2020-09-30
8-K 2020-08-05
8-K 2020-06-24
8-K 2020-06-09
8-K 2020-06-01
8-K 2020-05-12
8-K 2020-05-11
8-K 2020-04-13
8-K 2020-03-13
8-K 2020-03-10
8-K 2020-02-27
8-K 2020-02-18
8-K 2020-02-10
8-K 2020-01-31
8-K 2020-01-30
8-K 2020-01-23
8-K 2020-01-07
8-K 2019-12-23
8-K 2019-12-16
8-K 2019-12-10
8-K 2019-11-12
8-K 2019-11-11
8-K 2019-11-11
8-K 2019-10-03
8-K 2019-08-08
8-K 2019-06-17
8-K 2019-06-13
8-K 2019-05-08
8-K 2019-04-30
8-K 2019-04-05
8-K 2019-02-28
8-K 2019-02-06
8-K 2018-11-07
8-K 2018-09-24
8-K 2018-09-24
8-K 2018-08-16
8-K 2018-08-08
8-K 2018-07-13
8-K 2018-07-05
8-K 2018-05-09
8-K 2018-03-20
8-K 2018-03-08
8-K 2018-01-16

VRS 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 exhibit3119302020.htm
EX-31.2 exhibit3129302020.htm
EX-32.1 exhibit3219302020.htm
EX-32.2 exhibit3229302020.htm

Verso Quinnesec Earnings 2020-09-30

Balance SheetIncome StatementCash Flow
3.12.21.30.4-0.5-1.42012201420172020
Assets, Equity
0.90.70.50.20.0-0.22012201420172020
Rev, G Profit, Net Income
0.20.10.0-0.1-0.2-0.32012201420172020
Ops, Inv, Fin

vrs-20200930
false2020Q312/31000142118200014211822020-01-012020-09-30xbrli:shares00014211822020-10-30iso4217:USD00014211822019-12-3100014211822020-09-30iso4217:USDxbrli:shares0001421182us-gaap:CommonClassAMember2020-09-300001421182us-gaap:CommonClassAMember2019-12-310001421182us-gaap:CommonClassBMember2020-09-300001421182us-gaap:CommonClassBMember2019-12-3100014211822019-07-012019-09-3000014211822020-07-012020-09-3000014211822019-01-012019-09-300001421182us-gaap:CommonClassAMemberus-gaap:CommonStockMember2019-06-300001421182us-gaap:TreasuryStockMember2019-06-300001421182us-gaap:AdditionalPaidInCapitalMember2019-06-300001421182us-gaap:RetainedEarningsMember2019-06-300001421182us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-06-3000014211822019-06-300001421182us-gaap:RetainedEarningsMember2019-07-012019-09-300001421182us-gaap:TreasuryStockMember2019-07-012019-09-300001421182us-gaap:CommonClassAMemberus-gaap:CommonStockMember2019-07-012019-09-300001421182us-gaap:AdditionalPaidInCapitalMember2019-07-012019-09-300001421182us-gaap:CommonClassAMemberus-gaap:CommonStockMember2019-09-300001421182us-gaap:TreasuryStockMember2019-09-300001421182us-gaap:AdditionalPaidInCapitalMember2019-09-300001421182us-gaap:RetainedEarningsMember2019-09-300001421182us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-09-3000014211822019-09-300001421182us-gaap:CommonClassAMemberus-gaap:CommonStockMember2020-06-300001421182us-gaap:TreasuryStockMember2020-06-300001421182us-gaap:AdditionalPaidInCapitalMember2020-06-300001421182us-gaap:RetainedEarningsMember2020-06-300001421182us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-3000014211822020-06-300001421182us-gaap:RetainedEarningsMember2020-07-012020-09-300001421182us-gaap:TreasuryStockMember2020-07-012020-09-300001421182us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300001421182us-gaap:CommonClassAMemberus-gaap:CommonStockMember2020-07-012020-09-300001421182us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300001421182us-gaap:CommonClassAMemberus-gaap:CommonStockMember2020-09-300001421182us-gaap:TreasuryStockMember2020-09-300001421182us-gaap:AdditionalPaidInCapitalMember2020-09-300001421182us-gaap:RetainedEarningsMember2020-09-300001421182us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300001421182us-gaap:CommonClassAMemberus-gaap:CommonStockMember2018-12-310001421182us-gaap:TreasuryStockMember2018-12-310001421182us-gaap:AdditionalPaidInCapitalMember2018-12-310001421182us-gaap:RetainedEarningsMember2018-12-310001421182us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-3100014211822018-12-310001421182us-gaap:RetainedEarningsMember2019-01-012019-09-300001421182us-gaap:TreasuryStockMember2019-01-012019-09-300001421182us-gaap:CommonClassAMemberus-gaap:CommonStockMember2019-01-012019-09-300001421182us-gaap:AdditionalPaidInCapitalMember2019-01-012019-09-300001421182us-gaap:CommonClassAMemberus-gaap:CommonStockMember2019-12-310001421182us-gaap:TreasuryStockMember2019-12-310001421182us-gaap:AdditionalPaidInCapitalMember2019-12-310001421182us-gaap:RetainedEarningsMember2019-12-310001421182us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001421182us-gaap:RetainedEarningsMember2020-01-012020-09-300001421182us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-09-300001421182us-gaap:TreasuryStockMember2020-01-012020-09-300001421182us-gaap:CommonClassAMemberus-gaap:CommonStockMember2020-01-012020-09-300001421182us-gaap:AdditionalPaidInCapitalMember2020-01-012020-09-30vrs:Segment0001421182srt:NorthAmericaMember2020-01-012020-09-30utr:T0001421182vrs:OtherCOVID19RelatedEventsMembervrs:SupercalenderedPackagingPapersMember2020-09-300001421182vrs:CoatedandPackagingPapersMembervrs:OtherCOVID19RelatedEventsMember2020-09-3000014211822020-09-012020-09-300001421182srt:RestatementAdjustmentMember2019-12-310001421182srt:ScenarioPreviouslyReportedMember2019-12-310001421182srt:RestatementAdjustmentMember2019-01-012019-12-310001421182vrs:PaperMember2019-07-012019-09-300001421182vrs:PaperMember2020-07-012020-09-300001421182vrs:PaperMember2019-01-012019-09-300001421182vrs:PaperMember2020-01-012020-09-300001421182vrs:PackagingMember2019-07-012019-09-300001421182vrs:PackagingMember2020-07-012020-09-300001421182vrs:PackagingMember2019-01-012019-09-300001421182vrs:PackagingMember2020-01-012020-09-300001421182vrs:PulpMember2019-07-012019-09-300001421182vrs:PulpMember2020-07-012020-09-300001421182vrs:PulpMember2019-01-012019-09-300001421182vrs:PulpMember2020-01-012020-09-300001421182vrs:EndUsersAndConvertersMember2019-07-012019-09-300001421182vrs:EndUsersAndConvertersMember2020-07-012020-09-300001421182vrs:EndUsersAndConvertersMember2019-01-012019-09-300001421182vrs:EndUsersAndConvertersMember2020-01-012020-09-300001421182vrs:BrokersAndMerchantsMember2019-07-012019-09-300001421182vrs:BrokersAndMerchantsMember2020-07-012020-09-300001421182vrs:BrokersAndMerchantsMember2019-01-012019-09-300001421182vrs:BrokersAndMerchantsMember2020-01-012020-09-300001421182vrs:PrintersMember2019-07-012019-09-300001421182vrs:PrintersMember2020-07-012020-09-300001421182vrs:PrintersMember2019-01-012019-09-300001421182vrs:PrintersMember2020-01-012020-09-300001421182vrs:ClosureofLukeMillMember2019-01-012019-09-300001421182us-gaap:StateAndLocalJurisdictionMember2020-07-012020-09-300001421182us-gaap:StateAndLocalJurisdictionMember2020-01-012020-09-300001421182us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMembervrs:VersoAndroscogginLLCMember2020-02-100001421182us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMembervrs:VersoAndroscogginLLCMember2020-01-012020-09-300001421182us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMembervrs:VersoAndroscogginLLCMember2020-07-012020-09-300001421182us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMembervrs:VersoAndroscogginLLCMemberus-gaap:CostOfSalesMember2020-07-012020-09-300001421182us-gaap:SellingGeneralAndAdministrativeExpensesMemberus-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMembervrs:VersoAndroscogginLLCMember2020-07-012020-09-300001421182us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMembervrs:VersoAndroscogginLLCMemberus-gaap:CostOfSalesMember2020-01-012020-09-300001421182us-gaap:SellingGeneralAndAdministrativeExpensesMemberus-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMembervrs:VersoAndroscogginLLCMember2020-01-012020-09-300001421182us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMembervrs:VersoAndroscogginLLCMember2020-02-102020-02-10vrs:machine00014211822020-08-0100014211822020-08-012020-08-010001421182vrs:AgreementExecutionMember2020-08-012020-08-010001421182vrs:VariousMilestonesMember2020-08-012020-08-010001421182us-gaap:SubsequentEventMember2020-10-012020-11-120001421182us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMembervrs:LukeMillMember2020-09-300001421182us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMembervrs:LukeMillMemberus-gaap:SubsequentEventMember2020-10-300001421182vrs:TermLoanFacilityMemberus-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2016-07-150001421182us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMembervrs:ABLAmendmentFacilityMember2019-02-060001421182us-gaap:LetterOfCreditMemberus-gaap:LineOfCreditMembervrs:ABLAmendmentFacilityMember2019-02-060001421182us-gaap:BridgeLoanMemberus-gaap:LineOfCreditMembervrs:ABLAmendmentFacilityMember2019-02-06vrs:incremental_revolving_commitment0001421182us-gaap:LineOfCreditMembervrs:ABLAmendmentFacilityMember2019-02-06xbrli:pure0001421182us-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:LineOfCreditMembervrs:ABLAmendmentFacilityMembersrt:MinimumMember2019-02-062019-02-060001421182srt:MaximumMemberus-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:LineOfCreditMembervrs:ABLAmendmentFacilityMember2019-02-062019-02-060001421182us-gaap:LineOfCreditMemberus-gaap:BaseRateMembervrs:ABLAmendmentFacilityMembersrt:MinimumMember2019-02-062019-02-060001421182srt:MaximumMemberus-gaap:LineOfCreditMemberus-gaap:BaseRateMembervrs:ABLAmendmentFacilityMember2019-02-062019-02-060001421182us-gaap:LineOfCreditMembervrs:ABLAmendmentFacilityMember2019-02-062019-02-060001421182vrs:ABLFacilityMemberus-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2020-09-300001421182us-gaap:LetterOfCreditMemberus-gaap:LineOfCreditMember2020-09-300001421182us-gaap:LineOfCreditMember2020-09-300001421182us-gaap:RestrictedStockUnitsRSUMember2019-01-012019-09-300001421182us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-09-300001421182us-gaap:RestrictedStockUnitsRSUMember2020-07-012020-09-300001421182us-gaap:PensionPlansDefinedBenefitMember2020-01-012020-09-300001421182us-gaap:PensionPlansDefinedBenefitMember2020-07-012020-09-300001421182us-gaap:PensionPlansDefinedBenefitMember2019-07-012019-09-300001421182us-gaap:PensionPlansDefinedBenefitMember2019-01-012019-09-300001421182us-gaap:PensionPlansDefinedBenefitMember2020-09-300001421182vrs:TimeBasedRestrictedStockUnitsRSUsMembervrs:ExecutiveOfficerAndManagementMember2020-01-012020-09-300001421182vrs:PerformanceBasedRestrictedStockUnitsRSUsMembervrs:ExecutiveOfficerAndManagementMember2020-01-012020-09-300001421182us-gaap:ShareBasedCompensationAwardTrancheOneMembersrt:MinimumMember2020-01-012020-09-300001421182srt:MaximumMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2020-01-012020-09-3000014211822020-05-110001421182vrs:A2019PerformanceGrantsMember2020-01-012020-09-300001421182vrs:A2020PerformanceGrantsMember2020-01-012020-09-300001421182srt:ManagementMembervrs:PerformanceBasedRestrictedStockUnitsRSUsMember2020-01-012020-09-300001421182srt:ManagementMembervrs:TimeBasedRestrictedStockUnitsRSUsMember2020-01-012020-09-300001421182srt:ManagementMembervrs:PerformanceBasedRestrictedStockUnitsAndDividendEquivalentUnitsMember2020-01-012020-09-300001421182us-gaap:RestrictedStockUnitsRSUMember2020-09-300001421182us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-09-300001421182vrs:TimeBasedRestrictedStockUnitsRSUsMember2020-01-012020-09-300001421182vrs:TimeBasedRestrictedStockUnitsRSUsMember2019-12-310001421182vrs:TimeBasedRestrictedStockUnitsRSUsMember2020-09-300001421182vrs:TimeBasedDividendEquivalentUnitsMember2020-01-012020-09-300001421182vrs:PerformanceBasedRestrictedStockUnitsRSUsMember2020-01-012020-09-300001421182vrs:PerformanceBasedRestrictedStockUnitsRSUsMember2019-12-310001421182vrs:PerformanceBasedRestrictedStockUnitsRSUsMember2020-09-300001421182vrs:PerformanceBasedDividendEquivalentUnitsMember2020-01-012020-09-3000014211822020-02-2600014211822020-05-122020-05-1200014211822020-08-052020-08-0500014211822020-08-0400014211822020-08-050001421182us-gaap:CommonClassAMember2016-07-1500014211822020-09-1700014211822020-09-180001421182vrs:CoatedFreesheetMembervrs:ClosureofLukeMillMember2019-06-30vrs:Employee0001421182vrs:ClosureofLukeMillMember2019-06-012019-06-300001421182us-gaap:PropertyPlantAndEquipmentMembervrs:ClosureofLukeMillMember2019-07-012019-09-300001421182us-gaap:PropertyPlantAndEquipmentMembervrs:ClosureofLukeMillMember2020-07-012020-09-300001421182us-gaap:PropertyPlantAndEquipmentMembervrs:ClosureofLukeMillMember2019-01-012019-09-300001421182us-gaap:PropertyPlantAndEquipmentMembervrs:ClosureofLukeMillMember2020-01-012020-09-300001421182us-gaap:PropertyPlantAndEquipmentMembervrs:ClosureofLukeMillMember2020-09-300001421182us-gaap:EmployeeSeveranceMembervrs:ClosureofLukeMillMember2019-07-012019-09-300001421182us-gaap:EmployeeSeveranceMembervrs:ClosureofLukeMillMember2020-07-012020-09-300001421182us-gaap:EmployeeSeveranceMembervrs:ClosureofLukeMillMember2019-01-012019-09-300001421182us-gaap:EmployeeSeveranceMembervrs:ClosureofLukeMillMember2020-01-012020-09-300001421182us-gaap:EmployeeSeveranceMembervrs:ClosureofLukeMillMember2020-09-300001421182us-gaap:InventoryValuationAndObsolescenceMembervrs:ClosureofLukeMillMember2019-07-012019-09-300001421182us-gaap:InventoryValuationAndObsolescenceMembervrs:ClosureofLukeMillMember2020-07-012020-09-300001421182us-gaap:InventoryValuationAndObsolescenceMembervrs:ClosureofLukeMillMember2019-01-012019-09-300001421182us-gaap:InventoryValuationAndObsolescenceMembervrs:ClosureofLukeMillMember2020-01-012020-09-300001421182us-gaap:InventoryValuationAndObsolescenceMembervrs:ClosureofLukeMillMember2020-09-300001421182vrs:WriteOffOfPurchaseObligationsAndCommitmentsMembervrs:ClosureofLukeMillMember2019-07-012019-09-300001421182vrs:WriteOffOfPurchaseObligationsAndCommitmentsMembervrs:ClosureofLukeMillMember2020-07-012020-09-300001421182vrs:WriteOffOfPurchaseObligationsAndCommitmentsMembervrs:ClosureofLukeMillMember2019-01-012019-09-300001421182vrs:WriteOffOfPurchaseObligationsAndCommitmentsMembervrs:ClosureofLukeMillMember2020-01-012020-09-300001421182vrs:WriteOffOfPurchaseObligationsAndCommitmentsMembervrs:ClosureofLukeMillMember2020-09-300001421182us-gaap:OtherRestructuringMembervrs:ClosureofLukeMillMember2019-07-012019-09-300001421182us-gaap:OtherRestructuringMembervrs:ClosureofLukeMillMember2020-07-012020-09-300001421182us-gaap:OtherRestructuringMembervrs:ClosureofLukeMillMember2019-01-012019-09-300001421182us-gaap:OtherRestructuringMembervrs:ClosureofLukeMillMember2020-01-012020-09-300001421182us-gaap:OtherRestructuringMembervrs:ClosureofLukeMillMember2020-09-300001421182vrs:ClosureofLukeMillMember2019-07-012019-09-300001421182vrs:ClosureofLukeMillMember2020-07-012020-09-300001421182vrs:ClosureofLukeMillMember2020-01-012020-09-300001421182vrs:ClosureofLukeMillMember2020-09-300001421182us-gaap:FacilityClosingMembervrs:ClosureofLukeMillMember2020-01-012020-09-300001421182vrs:ClosureofLukeMillMember2019-12-310001421182vrs:EmployeeSeveranceAdjustmentsMembervrs:ClosureofLukeMillMember2020-01-012020-09-300001421182vrs:RepresentedEmployeesMember2020-09-300001421182vrs:RepresentedEmployeesMember2019-07-012019-09-300001421182vrs:RepresentedEmployeesMember2019-01-012019-09-30vrs:tank00014211822019-11-012019-11-300001421182us-gaap:SubsequentEventMember2020-10-012020-10-310001421182us-gaap:SubsequentEventMember2020-11-052020-11-05

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from __________ to __________

001-34056
(Commission File Number)
vrs-20200930_g1.jpg
VERSO CORPORATION
(Exact name of registrant as specified in its charter)
Delaware  75-3217389
(State of Incorporation
or Organization)
  (IRS Employer
Identification Number)
8540 Gander Creek Drive
Miamisburg, Ohio 45342
(Address, including zip code, of principal executive offices)
(877) 855-7243
(Registrant’s telephone number, including area code)
_____________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, par value $0.01 per shareVRSNew York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes No    
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No    
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
Accelerated filer
Non-accelerated filer 
Smaller reporting company
Emerging growth company 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act:
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes No   
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No

As of October 30, 2020, Verso Corporation had 33,723,138 shares of Class A common stock, par value $0.01 per share, outstanding.



Entity Names and Organization

In this report, the term “Verso,” “the Company,” “we,” “us,” and “our” refer to Verso Corporation, which is the ultimate parent entity and the issuer of Class A common stock listed on the New York Stock Exchange, and its consolidated subsidiaries. Verso is the sole member of Verso Holding LLC, which is the sole member of Verso Paper Holding LLC. As used in this report, the term “Verso Holding” refers to Verso Holding LLC, and the term “Verso Paper” refers to Verso Paper Holding LLC.
Forward-Looking Statements
 
In this quarterly report, all statements that are not purely historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or “Securities Act,” and Section 21E of the Securities Exchange Act of 1934, as amended, or “Exchange Act.” Forward-looking statements may be identified by the words “believe,” “expect,” “anticipate,” “project,” “plan,” “estimate,” “intend” and other similar expressions. They include, for example, statements relating to our business and operating outlook, including our plans with respect to our Duluth Mill and Wisconsin Rapids Mill; the potential impact of the COVID-19 pandemic; assessment of market conditions; and the growth potential of the industry in which we operate. Forward-looking statements are based on currently available business, economic, financial and other information and reflect management’s current beliefs, expectations and views with respect to future developments and their potential effects on us. Actual results could vary materially depending on risks and uncertainties that may affect us and our business. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: uncertainties regarding the impact, duration and severity of the COVID-19 pandemic and measures intended to reduce its spread; the long-term structural decline and general softening of demand facing the paper industry; adverse developments in general business and economic conditions; developments in alternative media, which are expected to adversely affect the demand for some of our key products, and the effectiveness of our responses to these developments; intense competition in the paper manufacturing industry; our ability to compete with respect to certain specialty paper products for a period of two years after the closing of the Pixelle Sale (as defined in Note 1 to our Unaudited Condensed Consolidated Financial Statements); our business being less diversified following the sale of two mills in the Pixelle Sale and the idling of two other mills while exploring alternatives for those mills; our dependence on a small number of customers for a significant portion of our business; our limited ability to control the pricing of our products or pass through increases in our costs to our customers; changes in the costs of raw materials and purchased energy; negative publicity, even if unjustified; any failure to comply with environmental or other laws or regulations, even if inadvertent; legal proceedings or disputes; any labor disputes; and the potential risks and uncertainties described in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2019 and Part II, Item 1A, “Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 as such disclosures may be amended, supplemented or superseded from time to time by other reports we file with the Securities and Exchange Commission, including subsequent annual reports on Form 10-K and quarterly reports on Form 10-Q. We assume no obligation to update any forward-looking statement made in this Quarterly Report to reflect subsequent events or circumstances or actual outcomes.

2


TABLE OF CONTENTS

Page
 
 
 
 
 
 
 

3


PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS
VERSO CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
 December 31,September 30,
(Dollars in millions, except per share amounts)20192020
ASSETS 
Current assets: 
Cash and cash equivalents$42 $73 
Accounts receivable, net155 108 
Inventories395 315 
Assets held for sale 4 
Prepaid expenses and other assets7 6 
Total current assets599 506 
Property, plant and equipment, net945 711 
Deferred tax assets92 119 
Intangibles and other assets, net59 46 
Total assets$1,695 $1,382 
LIABILITIES AND EQUITY  
Current liabilities:  
Accounts payable$188 $97 
Accrued and other liabilities103 85 
Current maturities of long-term debt and finance leases2 1 
Total current liabilities293 183 
Long-term debt and finance leases5 4 
Pension benefit obligation369 435 
Other long-term liabilities41 33 
Total liabilities708 655 
Commitments and contingencies (Note 11)
Equity:  
Preferred stock -- par value $0.01 (50,000,000 shares authorized, no shares issued)
  
Common stock -- par value $0.01 (210,000,000 Class A shares authorized with
34,949,430 shares issued and 34,704,367 outstanding on December 31, 2019 and 35,790,600 shares issued and 33,687,197 outstanding on September 30, 2020; 40,000,000 Class B shares authorized with no shares issued and outstanding on December 31, 2019 and September 30, 2020)
  
Treasury stock -- at cost (245,063 shares on December 31, 2019 and 2,103,403 shares on
September 30, 2020)
(5)(32)
Paid-in-capital698 705 
Retained earnings172 51 
Accumulated other comprehensive income (loss)122 3 
Total equity987 727 
Total liabilities and equity$1,695 $1,382 
See notes to Unaudited Condensed Consolidated Financial Statements.
4


VERSO CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months EndedNine Months Ended
September 30,September 30,
(Dollars in millions, except per share amounts)2019202020192020
Net sales$616 $306 $1,857 $1,045 
Costs and expenses: 
Cost of products sold (exclusive of depreciation and amortization)
536 309 1,625 1,007 
Depreciation and amortization
25 21 157 66 
Selling, general and administrative expenses
23 19 76 62 
Restructuring charges4 (2)44 4 
Other operating (income) expense 3 2 (84)
Operating income (loss)28 (44)(47)(10)
Interest expense 1 2 1 
Other (income) expense(1)(5)(3)(14)
Income (loss) before income taxes29 (40)(46)3 
Income tax expense (benefit)(1)(9) 14 
Net income (loss)$30 $(31)$(46)$(11)
Income (loss) per common share:
Basic$0.86 $(0.92)$(1.33)$(0.33)
Diluted0.85 (0.92)(1.33)(0.33)
Weighted average common shares outstanding (in thousands)
    
Basic34,686 33,675 34,599 34,440 
Diluted35,137 33,675 34,599 34,440 
See notes to Unaudited Condensed Consolidated Financial Statements.
VERSO CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Three Months EndedNine Months Ended
 September 30,September 30,
(Dollars in millions)2019202020192020
Net income (loss)$30 $(31)$(46)$(11)
Other comprehensive income (loss), net of tax
Defined benefit pension plan:
Pension liability adjustment, net (119) (119)
Other comprehensive income (loss), net of tax (119) (119)
Comprehensive income (loss)$30 $(150)$(46)$(130)
See notes to Unaudited Condensed Consolidated Financial Statements.

5


VERSO CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Class A Retained EarningsAccumulated
Other
Comprehensive
Income (Loss)
Total
Stockholders’
Equity
(Dollars in millions, shares in thousands)
Common SharesCommon StockTreasury SharesTreasury StockPaid-in-Capital
Balance - June 30, 201934,911 $ 238 $(5)$694 $26 $120 $835 
Net income (loss)— — — — — 30 — 30 
Treasury shares— — 7 — — — —  
Common stock issued for
restricted stock
25 — — — — — — — 
Equity award expense— — — — 2 — — 2 
Balance - September 30, 201934,936 $ 245 $(5)$696 $56 $120 $867 
Balance - June 30, 202035,766 $ 2,097 $(32)$702 $189 $122 $981 
Net income (loss)—     (31) (31)
Treasury shares  6      
Other comprehensive income
(loss), net
      (119)(119)
Common stock issued for
restricted stock
24        
Dividends and dividend
equivalents declared
—    2 (107) (105)
Equity award expense    1   1 
Balance - September 30, 202035,790 $ 2,103 $(32)$705 $51 $3 $727 
Balance - December 31, 201834,570 $ 86 $(2)$686 $102 $120 $906 
Net income (loss)— — — — — (46)— (46)
Treasury shares— — 159 (3)— — — (3)
Common stock issued for
restricted stock
366 — — — — — — — 
Equity award expense— — — — 10 — — 10 
Balance - September 30, 201934,936 $ 245 $(5)$696 $56 $120 $867 
Balance - December 31, 201934,949 $ 245 $(5)$698 $172 $122 $987 
Net income (loss)     (11) (11)
Other comprehensive income
(loss), net
      (119)(119)
Treasury shares  1,858 (27)   (27)
Common stock issued for
restricted stock
841        
Dividends and dividend
equivalents declared
    2 (110) (108)
Equity award expense    5   5 
Balance - September 30, 202035,790 $ 2,103 $(32)$705 $51 $3 $727 
See notes to Unaudited Condensed Consolidated Financial Statements.

6


VERSO CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Nine Months Ended
 September 30,
(Dollars in millions)20192020
Cash Flows From Operating Activities: 
Net income (loss)$(46)$(11)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization157 66 
Noncash restructuring charges20  
Net periodic pension cost (income)(1)(12)
Pension plan contributions(34)(47)
Amortization of debt issuance cost and discount 1  
Equity award expense10 5 
Gain on Sale of Androscoggin/Stevens Point Mills (88)
(Gain) loss on sale or disposal of assets 3 
Deferred taxes 14 
Changes in assets and liabilities:
    Accounts receivable, net(5)9 
    Inventories(27)(10)
    Prepaid expenses and other assets4  
    Accounts payable(14)(46)
    Accrued and other liabilities(26)(12)
Net cash provided by (used in) operating activities39 (129)
Cash Flows From Investing Activities:
 
Proceeds from sale of assets1 1 
Capital expenditures(76)(43)
Net proceeds from Sale of the Androscoggin/Stevens Point Mills 338 
Net cash provided by (used in) investing activities(75)296 
Cash Flows From Financing Activities:
 
Borrowings on ABL Facility389 36 
Payments on ABL Facility(368)(36)
Principal payment on financing lease obligation
(1)(1)
Acquisition of treasury stock
(3)(27)
Dividends paid to stockholders
 (108)
Debt issuance costs(1) 
Net cash provided by (used in) financing activities16 (136)
Change in Cash and cash equivalents and restricted cash(20)31 
Cash and cash equivalents and restricted cash at beginning of period28 44 
Cash and cash equivalents and restricted cash at end of period$8 $75 
Supplemental cash flow disclosures:
Total interest paid$2 $ 
Total income taxes paid
2  
Noncash investing and financing activities:
Right-of-use assets recorded upon adoption of ASC 842
$24 $ 
Right-of-use assets obtained in exchange for new finance lease liabilities
7  
Right-of-use assets obtained in exchange for new capitalized operating lease liabilities
2 7 
See notes to Unaudited Condensed Consolidated Financial Statements.
7


VERSO CORPORATION
 
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF BUSINESS AND BASIS OF PRESENTATION
Nature of Business — Verso’s core business platform is as a producer of graphic papers, specialty papers, packaging papers and pulp. Verso’s products are used primarily in media and marketing applications, including catalogs, magazines, commercial printing applications, such as high-end advertising brochures, annual reports and direct-mail advertising, and specialty applications, such as flexible packaging and label and converting. Verso’s market kraft pulp is used to manufacture printing, writing and specialty paper grades, tissue and other products. Verso operates in the pulp and paper market segments. However, Verso determined that the operating income (loss) of the pulp segment is immaterial for disclosure purposes. Verso’s assets are utilized across segments in an integrated mill system and are not identified by segment or reviewed by management on a segment basis. Verso operates primarily in one geographic location, North America.

Sale of Androscoggin Mill and Stevens Point Mill — On November 11, 2019, Verso and Verso Paper entered into a membership interest purchase agreement, or the “Purchase Agreement,” with Pixelle Specialty Solutions LLC, or “Pixelle,” whereby Verso and Verso Paper agreed to sell to Pixelle, or the “Pixelle Sale,” or the “Sale of the Androscoggin/Stevens Point Mills,” all of the outstanding membership interests in Verso Androscoggin, LLC, an indirect wholly owned subsidiary of Verso and the entity that, as of the closing date of the Pixelle Sale, held all the assets primarily related to Verso’s Androscoggin Mill located in Jay, Maine, and Verso’s Stevens Point Mill located in Stevens Point, Wisconsin. As a result of the Pixelle Sale, which was completed on February 10, 2020, the assets and liabilities associated with the sale are not included in Verso’s Unaudited Condensed Consolidated Balance Sheet as of September 30, 2020 or Verso’s Unaudited Condensed Consolidated Statement of Operations for the three months ended September 30, 2020, and Verso’s Unaudited Condensed Consolidated Statement of Operations for the nine months ended September 30, 2020 only includes the results of operations associated with the Androscoggin and Stevens Point mills through February 9, 2020 (see Note 5).

Idle of Duluth Mill and Wisconsin Rapids Mill — On June 9, 2020, Verso announced plans to indefinitely idle its mills in Duluth, Minnesota and Wisconsin Rapids, Wisconsin, while exploring viable and sustainable alternatives for both mills. Those alternatives could include restarting if market conditions improve, marketing for sale or closing permanently one or both mills. Verso’s decision to reduce its production capacity was driven by the accelerated decline in graphic paper demand resulting from the COVID-19 pandemic (see below). The “stay-at-home” and other orders related to the COVID-19 pandemic have significantly reduced the use of print advertising in various industries, including retail, sports, entertainment and tourism. The production capacity of the Duluth Mill is approximately 270,000 tons of supercalendered/packaging papers and the production capacity of the Wisconsin Rapids Mill is approximately 540,000 tons of coated and packaging papers. Paper and pulp production ceased at the Duluth Mill on July 1, 2020 and at the Wisconsin Rapids Mill on July 27, 2020. In September 2020, Verso recognized $3 million in severance and benefit costs, included in Costs of products sold, associated with the Duluth Mill. See Note 12 for further information.

COVID-19 Pandemic — The outbreak of coronavirus disease, or “COVID-19”, which was declared by the World Health Organization to be a global pandemic, is impacting worldwide economic activity. In an effort to contain and combat the spread of COVID-19, government and health authorities around the world have taken extraordinary and wide-ranging actions, including orders to close all businesses not deemed “essential,” quarantines and “stay-at-home” orders. Although some of these governmental restrictions have since been lifted or scaled back, recent surges of COVID-19 have resulted in the re-imposition of certain restrictions and may lead to other restrictions being re-implemented in an effort to reduce the spread of COVID-19. Verso serves as an essential manufacturing business and, as a result, Verso’s mills have continued to be operational during this time in order to meet the ongoing needs of its customers, including those in other essential business sectors, which provide food, medical and hygiene products needed in a global health crisis. The guidelines and orders enacted by federal, state and local governments continue to affect retailers, political campaigns, and sports and entertainment events, driving reduced purchases of printed materials and substantially impacting Verso’s graphic papers business.

Verso’s COVID-19 preparedness and response team has been monitoring the pandemic and related events daily and preparing and implementing responses in accordance with Centers for Disease Control and Prevention, or the “CDC,” and Occupational Safety and Health Administration, or “OSHA,” recommendations as well as federal, state and local guidelines.

While Verso cannot reasonably estimate the full impact of COVID-19 on the business, financial position, results of operations and cash flows, the pandemic will continue to have a negative impact on business and financial results. The full extent to which
8


COVID-19 impacts Verso’s operations will depend on future developments, which are highly uncertain, including, among others, the duration of the outbreak, new information that may emerge concerning the severity of COVID-19 and the actions taken, especially those by governmental authorities, to contain its spread or treat its impact.

Basis of Presentation — This report contains the Unaudited Condensed Consolidated Financial Statements of Verso as of December 31, 2019 and September 30, 2020 and for the three and nine months ended September 30, 2019 and 2020. The December 31, 2019 Unaudited Condensed Consolidated Balance Sheet data was derived from audited financial statements, but it does not include all disclosures required annually by accounting principles generally accepted in the United States of America, or “GAAP.” In Verso’s opinion, the Unaudited Condensed Consolidated Financial Statements include all adjustments that are necessary for the fair presentation of Verso’s respective financial condition, results of operations and cash flows for the interim periods presented. Except as disclosed in the notes to the Unaudited Condensed Consolidated Financial Statements, such adjustments are of a normal, recurring nature. Intercompany balances and transactions are eliminated in consolidation. The results of operations and cash flows for the interim periods presented may not necessarily be indicative of full-year results. It is suggested that these financial statements be read in conjunction with the audited consolidated financial statements and notes thereto of Verso contained in its Annual Report on Form 10-K for the year ended December 31, 2019.

Correction of previously reported amounts — Subsequent to the original issuance of the Company’s 2019 Consolidated Financial Statements, Verso identified two adjustments necessary to correct deferred tax assets associated with property, plant and equipment and pension obligation, on the Consolidated Balance Sheet as of December 31, 2019. These errors occurred due to the incorrect measurement of the state deferred tax assets relating to bonus depreciation and the incorrect application of the tax accounting for the minimum pension liability in Accumulated other comprehensive income (loss). Management believes that the impact of these adjustments is immaterial to the previously issued Consolidated Financial Statements, based on an evaluation of both quantitative and qualitative factors. As a result, Verso corrected Deferred tax assets and Retained earnings on the Unaudited Condensed Consolidated Balance Sheet as of December 31, 2019 included in this Form 10-Q, reducing each by $26 million. Additionally, Verso corrected Retained earnings and Total stockholders’ equity as of December 31, 2019 and June 30, 2020, on the Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity included in this Form 10-Q to reflect the impact of this matter.

There was no impact to the Unaudited Condensed Consolidated Statements of Operations, the Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss), or the Unaudited Condensed Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2019 and 2020, as a result of this matter.

The following table presents the as corrected line items in the Consolidated Balance Sheet as of December 31, 2019:
December 31, 2019
(Dollars in millions)As ReportedAs Corrected
Deferred tax assets$118 $92 
Total assets$1,721 $1,695 
Retained earnings$198 $172 
Total equity$1,013 $987 
Total liabilities and equity$1,721 $1,695 

As a result of this matter, Verso will correct its Consolidated Financial Statements and related footnotes for the year ended December 31, 2019, when those statements are reproduced on a comparative basis in its Annual Report on Form 10-K for the year ending December 31, 2020. In addition to presenting the correct amounts on the Consolidated Balance Sheet as of December 31, 2019 as noted above, Verso will present corrected amounts of Net income and Income tax benefit on the Consolidated Statement of Operations for the year ended December 31, 2019, reducing each by $26 million, and the Net income and Deferred taxes on the Consolidated Statement of Cash Flows for the year ended December 31, 2019, reducing each by $26 million. The corrections do not have an effect on net cash provided by operating activities or used in investing or financing activities on the Consolidated Statement of Cash Flows for the year ended December 31, 2019.

2.  RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Guidance Adopted in 2020
ASC Topic 350, Intangible Assets - Goodwill & Other. In August 2018, the Financial Accounting Standards Board, or “FASB,” issued Accounting Standards Update, or “ASU,” 2018-15, Customer’s Accounting for Implementation Costs in a Cloud Computing Arrangement that is a Service Contract (Topic 350), which aligns the accounting for such costs with guidance on capitalizing costs associated with developing or obtaining internal use software. Verso adopted this guidance on
9


January 1, 2020 on a prospective basis and the effect on the Unaudited Condensed Consolidated Financial Statements was not material.

ASC Topic 326, Financial Instruments – Credit Losses. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This guidance replaces the current incurred loss impairment method with a method that reflects expected credit losses. Adoption of this standard is through a cumulative-effect adjustment to retained earnings as of the effective date. Verso adopted this guidance on January 1, 2020 and the effect on the Unaudited Condensed Consolidated Financial Statements was not material.

ASC Topic 820, Fair Value Measurement. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The new guidance modifies disclosure requirements related to fair value measurement. Verso adopted this guidance on January 1, 2020 and the effect on the Unaudited Condensed Consolidated Financial Statements was not material.

Accounting Guidance Not Yet Adopted

ASC Topic 740, Income Taxes. In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes. This guidance removes certain exceptions for investments, intraperiod allocations and interim calculations, and adds guidance to reduce the complexity in accounting for income taxes. It is effective for annual periods, and interim periods within those years, beginning after December 15, 2020 and is not expected to have a material effect on the Unaudited Condensed Consolidated Financial Statements.
3. REVENUE RECOGNITION

The following table presents the revenues disaggregated by product included on the Unaudited Condensed Consolidated Statements of Operations:
Three Months EndedNine Months Ended
September 30,September 30,
(Dollars in millions)2019202020192020
Paper$559 $260 $1,689 $900 
Packaging 28 14 75 56 
Pulp29 32 93 89 
Total Net sales$616 $306 $1,857 $1,045 
The following table presents the revenue disaggregated by sales channel included on the Unaudited Condensed Consolidated Statements of Operations:
Three Months EndedNine Months Ended
September 30,September 30,
(Dollars in millions)2019202020192020
End-users and Converters$282 $95 $851 $375 
Brokers and Merchants232 150 707 477 
Printers102 61 299 193 
Total Net sales$616 $306 $1,857 $1,045 
4. SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION

Restricted Cash — As of December 31, 2019 and September 30, 2020, $2 million of restricted cash was included in Intangibles and other assets, net on the Unaudited Condensed Consolidated Balance Sheets primarily related to asset retirement obligations in the state of Michigan. These cash deposits are required by the state and may only be used for the future closure of a landfill. As of both September 30, 2019 and 2020, Cash and cash equivalents and restricted cash on the Unaudited Condensed Consolidated Statements of Cash Flows includes restricted cash of $2 million.
10



Inventories — The following table summarizes inventories by major category:
 December 31,September 30,
(Dollars in millions)20192020
Raw materials$80 $51 
Work-in-process51 51 
Finished goods233 187 
Replacement parts and other supplies31 26 
Inventories$395 $315 

Property, plant and equipment — Depreciation expense for the three and nine months ended September 30, 2019 was $24 million and $153 million, respectively. Depreciation expense for the three and nine months ended September 30, 2020 was $20 million and $62 million, respectively. Depreciation expense for the nine months ended September 30, 2019 includes $76 million in accelerated depreciation associated with the closure of the Luke Mill in June 2019 (see Note 10).

Interest costs capitalized for the three and nine months ended September 30, 2019 were zero and $1 million, respectively. Interest costs capitalized for the three and nine months ended September 30, 2020 were zero and $1 million, respectively. Property, plant and equipment as of September 30, 2019 and 2020 include $13 million and $2 million, respectively, of capital expenditures that were unpaid and included on Accounts payable and Accrued and other liabilities on the Unaudited Condensed Consolidated Balance Sheets.

Income Taxes — Income tax benefit for the three and nine months ended September 30, 2019 was $1 million and zero, respectively. Income tax benefit for the three months ended September 30, 2020 was $9 million and income tax expense for the nine months ended September 30, 2020 was $14 million. During the three and nine months ended September 30, 2020, Verso recognized $1 million and $8 million, respectively, of additional valuation allowance against state tax credits. The nine months ended September 30, 2020 also includes $7 million of income tax expense related to the year ended December 31, 2019. This resulted from recording the federal tax effect on deferred tax assets for state net operating losses and state tax credits in the three months ended June 30, 2020, which was not recorded in the prior year. This adjustment was not material to the current periods’ Unaudited Condensed Consolidated Financial Statements or any prior periods.

5. DISPOSITIONS

Sale of Androscoggin Mill and Stevens Point Mill

On February 10, 2020, Verso completed the Pixelle Sale, selling all of the outstanding membership interests in Verso Androscoggin, LLC, an indirect wholly owned subsidiary of Verso and the entity that, as of the closing date of the Pixelle Sale, held all the assets primarily related to Verso’s Androscoggin Mill located in Jay, Maine and Verso’s Stevens Point Mill, located in Stevens Point, Wisconsin. The Pixelle Sale did not qualify as a discontinued operation. As consideration for the Pixelle Sale, Verso received $344 million in cash, which reflects certain adjustments in respect of Verso’s estimates of cash, indebtedness and working capital of Verso Androscoggin, LLC as of the closing date, and Pixelle assumed $37 million of Verso’s unfunded pension liabilities, which reflects certain adjustments in connection with the completed transfer of the unfunded pension liabilities during the three months ended September 30, 2020. The sale resulted in a gain of $88 million included in Other operating (income) expense on the Unaudited Condensed Consolidated Statement of Operations for the nine months ended September 30, 2020 and is subject to final post-closing adjustments. In connection with the Pixelle Sale, Verso provided certain transition services to Pixelle and recognized $2 million and $5 million for these services on the Unaudited Condensed Consolidated Statements of Operations during the three and nine months ended September 30, 2020, respectively. During the three months ended September 30, 2020, $1 million of these transition services were recognized as a reduction of Cost of products sold and $1 million as a reduction of Selling, general and administrative expenses. During the nine months ended September 30, 2020, $2 million of these transition services were recognized as a reduction of Cost of products sold and $3 million as a reduction of Selling, general and administrative expenses. These transition services were completed in October 2020.

11


The following table summarizes the components of the gain on sale:
(Dollars in millions)
Cash proceeds$344 
Less: costs to sell(6)
Net cash proceeds338 
Less: assets and liabilities associated with the sale
    Accounts receivable, net39 
    Inventories90 
    Property, plant and equipment, net195 
    Write-off of intangible assets5 
    Other assets4 
    Accounts payable(33)
    Pension benefit obligation(37)
    Other liabilities(13)
Gain on sale$88 

Luke Mill Equipment Sale

On August 1, 2020, Verso entered into an equipment purchase agreement with Halkali Kagit Karton Sanayi ve Tic. A.S., or the “Purchaser,” a company organized under the laws of Turkey, whereby Verso agreed to sell, and the Purchaser agreed to purchase, certain equipment at Verso’s Luke Mill, primarily including two paper machines. The purchase price is $11 million in cash, with $2 million due upon execution of the agreement and the remaining $9 million due at various milestones through closing. Verso received $4 million in non-refundable deposits associated with this sale during the three months ended September 30, 2020 and an additional $3 million in non-refundable deposits subsequent to September 30, 2020. The closing of the equipment purchase, including the transfer of title and ownership of the equipment to the Purchaser, will occur upon completion to Verso’s satisfaction of the disassembly and removal of the equipment and the receipt by Verso of all payments due from the Purchaser.

Luke Land - Assets Held for Sale

As of September 30, 2020, Verso had land associated with Verso’s Luke Mill classified as held for sale on the Unaudited Condensed Consolidated Balance Sheet of $4 million, which approximates the fair value of the land. On October 30, 2020, Verso received the $4 million of cash proceeds for the sale of the land.

6.  DEBT

As of December 31, 2019 and September 30, 2020, Verso Paper had no outstanding borrowings on the ABL Facility (as defined below).

ABL Facility

On July 15, 2016, Verso Paper Holdings LLC entered into a $375 million asset-based revolving credit facility, or the “ABL Facility.” After the Company completed an internal reorganization in December 2016, Verso Paper Holdings LLC ceased to exist and Verso Paper became the borrower under the ABL Facility.

On February 6, 2019, Verso Paper entered into a second amendment to the ABL Facility, or the “ABL Amendment.” As a result of the ABL Amendment, the ABL Facility provides for revolving commitments of $350 million, subject to a borrowing base limit, with a $100 million sublimit for letters of credit and a $35 million sublimit for swingline loans. Verso Paper may request one or more incremental revolving commitments in an aggregate principal amount up to the greater of (i) $75 million or (ii) the excess of the borrowing base over the revolving facility commitments of $350 million; however, the lenders are not obligated to increase the revolving commitments upon any such request. Availability under the ABL Facility is subject to customary borrowing conditions. The ABL Facility will mature on February 6, 2024.

Outstanding borrowings under the ABL Facility bear interest at an annual rate equal to, at the option of Verso Paper, either (i) a customary London interbank offered rate plus an applicable margin ranging from 1.25% to 1.75% or (ii) a customary base rate
12


plus an applicable margin ranging from 0.25% to 0.75%, determined based upon the average excess availability under the ABL Facility. Verso Paper also is required to pay a commitment fee for the unused portion of the ABL Facility of 0.25% per year, based upon the average revolver usage under the ABL Facility.

The amount of borrowings and letters of credit available to Verso Paper pursuant to the ABL Facility is limited to the lesser of $350 million or an amount determined pursuant to a borrowing base ($244 million as of September 30, 2020). As of September 30, 2020, there were no borrowings outstanding under the ABL Facility, with $24 million issued in letters of credit and $220 million available for future borrowings.

All obligations under the ABL Facility are unconditionally guaranteed by Verso Holding and certain of the subsidiaries of Verso Paper. The security interest with respect to the ABL Facility consists of a first-priority lien on certain assets of Verso Paper, Verso Holding and the other guarantor subsidiaries, including accounts receivable, inventory, certain deposit accounts, securities accounts and commodities accounts, if applicable.

The ABL Facility contains financial covenants requiring Verso, among other things, to maintain a minimum fixed charge coverage ratio if availability were to drop below prescribed thresholds. The ABL Facility also requires that certain payment conditions, as defined therein, are met in order for Verso to incur debt or liens, pay cash dividends, repurchase equity interest, prepay indebtedness, sell or dispose of assets and make investments in or merge with another company.

7. EARNINGS PER SHARE

The following table provides a reconciliation of basic and diluted income (loss) per common share:
Three Months EndedNine Months Ended
September 30,September 30,
2019202020192020
Net income (loss) available to common stockholders (in millions)
$30 $(31)$(46)$(11)
Weighted average common shares outstanding - basic (in thousands)
34,686 33,675 34,599 34,440 
Dilutive shares from stock awards (in thousands)
451    
Weighted average common shares outstanding - diluted (in thousands)
35,137 33,675 34,599 34,440 
Basic income (loss) per share
$0.86 $(0.92)$(1.33)$(0.33)
Diluted income (loss) per share
$0.85 $(0.92)$(1.33)$(0.33)

As a result of the net loss from continuing operations for the nine months ended September 30, 2019 and the three and nine months ended September 30, 2020, 1.2 million restricted stock units as of September 30, 2019 and 0.9 million restricted stock units as of September 30, 2020 were excluded from the calculation of diluted earnings per share as their inclusion would be anti-dilutive. As of September 30, 2020, Verso has 1.8 million warrants outstanding at an exercise price of $21.67 (see Note 9). As a result of the exercise price of the warrants exceeding the average market price of Verso’s common stock during the three and nine months ended September 30, 2019 and 2020, 1.8 million warrants as of September 30, 2019 and 2020 were excluded from the calculations of diluted earnings per share as their inclusion would be anti-dilutive.

13


8.  RETIREMENT BENEFITS

In connection with the completed transfer of the unfunded pension liabilities assumed by Pixelle, as part of the Pixelle Sale (See Note 5), Verso remeasured its pension plan assets and liabilities as of September 30, 2020. For the remeasurement, the discount rate was updated to 2.71% from 3.11% at December 31, 2019. The remeasurement resulted in a $162 million increase in Pension benefit obligation, a $119 million loss, net of tax, included in Accumulated other comprehensive income (loss) and a settlement loss of $1 million included in Other operating (income) expense on the Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2020.

The following table summarizes the components of net periodic pension cost (income) for the periods presented:
Three Months EndedNine Months Ended
September 30,September 30,
(Dollars in millions)
2019202020192020
Service cost
$1 $1 $3 $2 
Interest cost
16 12 48 35 
Expected return on plan assets
(18)(17)(52)(50)
Settlement 1  1 
Net periodic pension cost (income)
$(1)$(3)$(1)$(12)

Verso makes contributions that are sufficient to fund actuarially determined costs, generally equal to the minimum amounts required by the Employee Retirement Income Security Act. Verso made contributions to the pension plan of $18 million and $34 million during the three and nine months ended September 30, 2019, respectively, and $29 million and $47 million during the three and nine months ended September 30, 2020, respectively. Verso expects to make the required cash contribution of $2 million to the pension plan in the remainder of 2020.

9. EQUITY

Equity Awards

During the nine months ended September 30, 2020, Verso granted 0.2 million time-based restricted stock units and 0.2 million performance-based restricted stock units to its executives and certain senior managers. The performance awards granted vest at December 31, 2022, subject to a comparison of annualized total stockholder return, or “TSR,” of Verso to a select group of peer companies over a 3-year period. The vesting criteria of the performance awards meet the definition of a market condition for accounting purposes. The full grant date value of the performance awards will be recognized over the remaining vesting period assuming that the employee is employed continuously to the vesting date. The number of shares which will ultimately vest at the vesting date ranges from 0% to 150% based on Verso’s TSR relative to the peer group during the performance period. The compensation expense associated with these performance awards was determined using the Monte Carlo valuation methodology.

On May 11, 2020, the threshold requirement for vesting of achieving a 5% annualized TSR was eliminated for performance units granted in 2019 and 2020. This change was considered a modification of each award and requires Verso to incur additional compensation cost for the incremental difference in the fair value between the modified award (post-modification) and original award (pre-modification) over the remaining vesting period. The incremental difference was $1.60 and $3.75 per unit for the 2019 and 2020 performance grants, respectively.
Verso recognized equity award expense of $2 million and $10 million for the three and nine months ended September 30, 2019, respectively, and $1 million and $5 million for the three and nine months ended September 30, 2020, respectively. Equity award expense for the nine months ended September 30, 2020 includes $0.3 million related to the accelerated vesting of 138 thousand performance-based restricted stock units and 130 thousand time-based restricted stock units. Amounts are net of the cancellation of 90 thousand time-based and 93 thousand performance-based restricted stock units and dividend equivalent units, pursuant to separation agreements with key members of management. As of September 30, 2020, there was approximately $5 million of unrecognized compensation cost related to the 0.9 million non-vested restricted stock units, which is expected to be recognized over the weighted average period of 1.9 years.

14


Time-based Restricted Stock Units

Changes to non-vested time-based restricted stock units for the nine months ended September 30, 2020 were as follows:
Restricted StockWeighted Average
UnitsGrant Date
Shares (in thousands)OutstandingFair Value
Non-vested at December 31, 2019579 $11.55 
Granted (1)
383 9.24 
Vested(379)