RR DONNELLEY
v3.8.0.1
Document and Entity Information - USD ($)
12 Months Ended
Dec. 31, 2017
Feb. 22, 2018
Jun. 30, 2017
Document And Entity Information [Abstract]      
Document Type 10-K    
Amendment Flag false    
Document Period End Date Dec. 31, 2017    
Document Fiscal Year Focus 2017    
Document Fiscal Period Focus FY    
Trading Symbol RRD    
Entity Registrant Name RR Donnelley & Sons Co    
Entity Central Index Key 0000029669    
Current Fiscal Year End Date --12-31    
Entity Well-known Seasoned Issuer Yes    
Entity Current Reporting Status Yes    
Entity Voluntary Filers No    
Entity Filer Category Large Accelerated Filer    
Entity Common Stock, Shares Outstanding   70,083,915  
Entity Public Float     $ 866,581,829
v3.8.0.1
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Millions, $ in Millions
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Income Statement [Abstract]      
Products net sales $ 5,326.0 $ 5,225.4 $ 5,255.5
Services net sales 1,613.6 1,607.6 1,625.2
Total net sales 6,939.6 6,833.0 6,880.7
Products cost of sales (exclusive of depreciation and amortization) 4,260.5 4,101.7 4,122.3
Services cost of sales (exclusive of depreciation and amortization) 1,358.8 1,354.5 1,353.3
Total cost of sales 5,619.3 5,456.2 5,475.6
Products gross profit 1,065.5 1,123.7 1,133.2
Services gross profit 254.8 253.1 271.9
Total gross profit 1,320.3 1,376.8 1,405.1
Selling, general and administrative expenses (exclusive of depreciation and amortization) 849.4 900.8 872.6
Restructuring, impairment and other charges-net (Note 4) 53.0 584.3 62.7
Depreciation and amortization 191.4 204.2 232.5
Other operating income   (11.9)  
Income (loss) from operations 226.5 (300.6) 237.3
Interest expense-net (Note 11) 179.6 198.7 204.1
Investment and other (income) expense-net (48.7) (2.1) 43.9
Loss on debt extinguishment 20.1 96.1  
Earnings (loss) before income taxes 75.5 (497.2) (10.7)
Income tax expense (benefit) (Note 10) 108.7 (12.3) 21.0
Net loss from continuing operations (33.2) (484.9) (31.7)
(Loss) income from discontinued operations, net of tax (Note 2)   (9.7) 170.1
Net (loss) earnings (33.2) (494.6) 138.4
Less: Income (loss) attributable to noncontrolling interests 1.2 1.3 (12.7)
Net (loss) earnings attributable to RRD common stockholders $ (34.4) $ (495.9) $ 151.1
Basic net (loss) earnings per share attributable to RRD common stockholders (Note 13):      
Continuing operations $ (0.49) $ (6.95) $ (0.28)
Discontinued operations   (0.14) 2.48
Net (loss) earnings attributable to RRD stockholders (0.49) (7.09) 2.20
Diluted net (loss) earnings per share attributable to RRD common stockholders (Note 13):      
Continuing operations (0.49) (6.95) (0.28)
Discontinued operations   (0.14) 2.48
Net (loss) earnings attributable to RRD stockholders $ (0.49) $ (7.09) $ 2.20
Weighted average number of common shares outstanding      
Basic 70.2 70.0 68.5
Diluted 70.2 70.0 68.5
v3.8.0.1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Statement Of Income And Comprehensive Income [Abstract]      
Net (loss) earnings $ (33.2) $ (494.6) $ 138.4
Other comprehensive (loss) income, net of tax (Note 14):      
Translation adjustments 57.1 (38.3) (55.7)
Adjustment for net periodic pension and other postretirement benefits plan cost 14.9 11.2 34.8
Adjustment for of available-for-sale securities (119.3) 119.3  
Change in fair value of derivatives     0.1
Other comprehensive (loss) income (47.3) 92.2 (20.8)
Comprehensive (loss) income (80.5) (402.4) 117.6
Less: comprehensive income (loss) attributable to noncontrolling interests 1.9 0.8 (13.9)
Comprehensive (loss) income attributable to RRD common stockholders $ (82.4) $ (403.2) $ 131.5
v3.8.0.1
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
Dec. 31, 2017
Dec. 31, 2016
ASSETS    
Cash and cash equivalents $ 273.4 $ 317.5
Receivables, less allowances for doubtful accounts of $32.4 in 2017 (2016 - $35.9) (Note 1) 1,417.6 1,331.3
Inventories (Note 1) 416.8 386.8
Prepaid expenses and other current assets 109.1 136.7
Investment in LSC and Donnelley Financial (Note 2)   328.7
Total current assets 2,216.9 2,501.0
Property, plant and equipment-net (Note 1) 615.1 650.3
Goodwill (Note 5) 588.5 602.0
Other intangible assets-net (Note 5) 143.3 171.9
Deferred income taxes (Note 10) 81.7 108.9
Other noncurrent assets 259.0 234.7
Total assets 3,904.5 4,268.8
LIABILITIES    
Accounts payable 1,094.7 985.3
Accrued liabilities (Note 7) 447.5 541.7
Short-term and current portion of long-term debt (Note 11) 10.8 8.2
Total current liabilities 1,553.0 1,535.2
Long-term debt (Note 11) 2,098.9 2,379.2
Pension liabilities (Note 9) 102.7 119.4
Other postretirement benefits plan liabilities (Note 9) 113.2 134.1
Long-term income tax liability (Note 10) 59.4  
Other noncurrent liabilities 180.2 193.1
Total liabilities 4,107.4 4,361.0
Commitments and Contingencies (Note 8)
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 3,444.0 3,468.5
Accumulated deficit (2,225.7) (2,155.4)
Accumulated other comprehensive loss (103.7) (55.7)
Treasury stock, at cost, 18.9 shares in 2017 (2016 - 19.1 shares) (1,333.1) (1,364.0)
Total RRD stockholders' equity (217.6) (105.7)
Noncontrolling interests 14.7 13.5
Total equity (202.9) (92.2)
Total liabilities and equity $ 3,904.5 $ 4,268.8
v3.8.0.1
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
$ in Millions
Dec. 31, 2017
Dec. 31, 2016
Statement Of Financial Position [Abstract]    
Receivables, allowance for doubtful accounts $ 32.4 $ 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 18,900,000 19,100,000
v3.8.0.1
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
OPERATING ACTIVITIES      
Net (loss) earnings $ (33.2) $ (494.6) $ 138.4
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:      
Impairment charges-net 22.4 558.3 36.5
Depreciation and amortization 191.4 363.2 454.0
Provision for doubtful accounts receivable 3.2 22.7 15.4
Share-based compensation 8.4 12.9 17.3
Deferred income taxes 21.2 (57.6) (36.1)
Changes in uncertain tax positions (2.8) (3.6) 1.3
(Gain) loss on investments and other assets-net (2.8) (11.4) 14.3
Realized gain on disposition of available-for-sale securities-net (42.4)    
Loss related to Venezuela currency remeasurement-net     30.3
Loss on debt extinguishment 20.1 96.1  
Net pension and other postretirement benefits plan income (14.7) (59.8) (44.5)
Net loss on pension and other postretirement benefits plan settlements and curtailments 1.6 79.3  
Other 19.7 19.0 22.1
Changes in operating assets and liabilities - net of dispositions and acquisitions:      
Accounts receivable-net (57.3) (223.0) (14.2)
Inventories (20.1) (40.3) 16.5
Prepaid expenses and other current assets 3.7 2.7 26.3
Accounts payable 71.2 (20.6) 57.1
Income taxes payable and receivable 87.4 (53.7) 46.9
Accrued liabilities and other (42.7) (39.9) (90.0)
Pension and other postretirement benefits plan contributions (16.4) (22.5) (25.6)
Net cash provided by operating activities 217.9 127.2 666.0
INVESTING ACTIVITIES      
Capital expenditures (108.5) (172.1) (207.6)
Acquisitions of businesses, net of cash acquired   (48.1) (118.2)
Disposition of businesses   13.7 0.6
Proceeds from sales of investments and other assets 140.4 3.8 27.1
(Payments)/proceeds related to company-owned life insurance (7.2) 5.6 (5.7)
Other investing activities   (3.5) (18.5)
Net cash provided by (used in) investing activities 24.7 (200.6) (322.3)
FINANCING ACTIVITIES      
Proceeds from issuance of long-term debt   1,164.0  
Net change in other short-term debt 3.7 (17.5) 11.9
Payments of current maturities and long-term debt (201.6) (1,013.2) (272.7)
Proceeds from credit facility borrowings 1,437.0 850.0  
Payments on credit facility borrowings (1,406.0) (665.0)  
Debt issuance costs (5.9) (37.5)  
Dividends paid (39.2) (173.0) (212.6)
(Payments) proceeds to settle forward contracts (0.9)   33.3
Net transfer of cash, cash equivalents and restricted cash to LSC and Donnelley Financial (78.0) (85.9)  
Payments of withholding taxes on share-based compensation (2.2) (7.6) (8.3)
Other financing activities (1.2) 5.6 3.6
Net cash (used in) provided by financing activities (294.3) 19.9 (444.8)
Effect of exchange rate on cash, cash equivalents and restricted cash 17.3 (16.5) (39.1)
Net decrease in cash, cash equivalents and restricted cash (34.4) (70.0) (140.2)
Cash, cash equivalents and restricted cash at beginning of year 335.9 405.9 546.1
Cash, cash equivalents and restricted cash at end of period 301.5 335.9 405.9
Supplemental non-cash disclosure:      
Debt-for-equity exchange $ 132.9    
Assumption of warehousing equipment related to client contract   8.8  
Debt-for-debt exchange, including debt issuance costs of $5.5 million   $ 300.0  
Settlement of accounts receivable for acquisition of a business     8.6
Consolidated Graphics, Esselte and MultiCorpora      
Supplemental non-cash disclosure:      
Issuance of 2.7 million shares of RRD stock for acquisitions of businesses     $ 155.2
v3.8.0.1
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($)
shares in Millions, $ in Millions
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Debt-for-debt exchange, debt issuance costs $ 5.5  
Consolidated Graphics, Esselte and MultiCorpora    
Issuance of stock for acquisitions of businesses   2.7
v3.8.0.1
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)
shares in Millions, $ in Millions
Total
Common Stock
Additional Paid-in Capital
Treasury Stock
Accumulated Deficit
Accumulated Other Comprehensive Loss
Total RRD's Stockholders' Equity
Noncontrolling Interest
Balance at Dec. 31, 2014 $ 620.4 $ 107.9 $ 3,257.3 $ (1,438.7) $ (559.1) $ (773.6) $ 593.8 $ 26.6
Balance (in shares) at Dec. 31, 2014   86.3   (19.7)        
Net (loss) earnings 138.4       151.1   151.1 (12.7)
Other comprehensive loss (20.8)         (19.6) (19.6) (1.2)
Share-based compensation 17.3   17.3       17.3  
Issuances of common stock 154.2 $ 3.3 150.9       154.2  
Issuances of common stock (in shares)   2.7            
Issuances of treasury stock 1.0   (1.2) $ 2.2     1.0  
Issuance of share-based awards, net of withholdings and other (2.5)   (37.5) $ 35.0     (2.5)  
Issuance of share-based awards, net of withholdings and other (in shares)       0.3        
Cash dividends paid (212.6)       (212.6)   (212.6)  
Noncontrolling interests in acquired business 4.6             4.6
Noncontrolling interests in disposed business (2.4)             (2.4)
Distributions to noncontrolling interests (1.0)             (1.0)
Balance at Dec. 31, 2015 696.6 $ 111.2 3,386.8 $ (1,401.5) (620.6) (793.2) 682.7 13.9
Balance (in shares) at Dec. 31, 2015   89.0   (19.4)        
Net (loss) earnings (494.6)       (495.9)   (495.9) 1.3
Other comprehensive loss 92.2         92.7 92.7 (0.5)
Share-based compensation 12.9   12.9       12.9  
Par value amendment   $ (110.3) 110.3          
Issuance of share-based awards, net of withholdings and other (4.0)   (41.5) $ 37.5     (4.0)  
Issuance of share-based awards, net of withholdings and other (in shares)       0.3        
Cash dividends paid (173.0)       (173.0)   (173.0)  
Distribution of LSC and Donnelley Financial (221.1)       (865.9) 644.8 (221.1)  
Distributions to noncontrolling interests (1.2)             (1.2)
Balance at Dec. 31, 2016 (92.2) $ 0.9 3,468.5 $ (1,364.0) (2,155.4) (55.7) (105.7) 13.5
Balance (in shares) at Dec. 31, 2016   89.0   (19.1)        
Net (loss) earnings (33.2)       (34.4)   (34.4) 1.2
Other comprehensive loss (47.3)         (48.0) (48.0) 0.7
Share-based compensation 8.4   8.4       8.4  
Issuance of share-based awards, net of withholdings and other (2.0)   (32.9) $ 30.9     (2.0)  
Issuance of share-based awards, net of withholdings and other (in shares)       0.2        
Cash dividends paid (39.2)       (39.2)   (39.2)  
Spinoff adjustments 3.3       3.3   3.3  
Distributions to noncontrolling interests (0.7)             (0.7)
Balance at Dec. 31, 2017 $ (202.9) $ 0.9 $ 3,444.0 $ (1,333.1) $ (2,225.7) $ (103.7) $ (217.6) $ 14.7
Balance (in shares) at Dec. 31, 2017   89.0   (18.9)        
v3.8.0.1
Basis of Presentation and Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2017
Accounting Policies [Abstract]  
Basis of Presentation and Summary of Significant Accounting Policies

Note 1. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation —The accompanying consolidated 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”). All intercompany transactions have been eliminated in consolidation. The accounts of businesses acquired during 2016 and 2015 are included in the Consolidated Financial Statements from the dates of acquisition.

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 Donnelley Financial and LSC for every eight shares of RRD common stock held 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 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 of RRD within the financial results of continuing operations. Unless indicated otherwise, the information in the Notes to 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.

Revision of Net Sales and Cost of Sales

During the third quarter of 2017, the Company identified an error in the accounting for certain contracts with an inventory buy-back option within the Asia reporting unit, which is in the International segment. As a result, the error, which was determined by management to be immaterial to the previously issued financial statements, has been corrected herein from the amounts previously reported. There was no impact to net earnings (loss) or net earnings (loss) per share, or the Consolidated Statements of Comprehensive Income (Loss) or Stockholders’ Equity. The following table presents the impact of the revision on net sales and cost of sales:  

 

 

As Reported

 

 

Adjustments

 

 

As Revised

 

Year ended December 31, 2015

 

Products net sales

$

5,312.1

 

 

$

56.6

 

 

$

5,255.5

 

Total net sales

 

6,937.3

 

 

 

56.6

 

 

 

6,880.7

 

Products cost of sales

 

4,178.9

 

 

 

56.6

 

 

 

4,122.3

 

Total cost of sales

 

5,532.2

 

 

 

56.6

 

 

 

5,475.6

 

Year ended December 31, 2016

 

Products net sales

$

5,288.1

 

 

$

62.7

 

 

$

5,225.4

 

Total net sales

 

6,895.7

 

 

 

62.7

 

 

 

6,833.0

 

Products cost of sales

 

4,164.4

 

 

 

62.7

 

 

 

4,101.7

 

Total cost of sales

 

5,518.9

 

 

 

62.7

 

 

 

5,456.2

 

The following table presents the impact of the related balance sheet revision on the December 31, 2016 Consolidated Balance Sheet:

 

 

As Reported

 

 

Adjustments

 

 

As Revised

 

Receivables, less allowance for doubtful accounts

$

1,354.4

 

 

$

(23.1

)

 

$

1,331.3

 

Inventories

 

379.6

 

 

 

7.2

 

 

 

386.8

 

Accounts payable

 

1,001.2

 

 

 

(15.9

)

 

 

985.3

 

The Consolidated Statement of Cash Flows has also been revised to reflect the impact of the above balance sheet revision.

Nature of Operations —RRD is a global, integrated communications provider enabling organizations to create, manage, deliver and optimize their multichannel marketing and business communications. The Company has a flexible and comprehensive portfolio of integrated communications solutions that allows its clients to engage audiences, reduce costs and drive revenues. RRD’s innovative content management offering, production platform, logistics services, supply chain management, outsourcing capabilities and customized consultative expertise assist its clients in the delivery of integrated messages across multiple media to highly targeted audiences at optimal times for clients in virtually every private and public sector.

Use of Estimates —The preparation of consolidated financial statements, in conformity with GAAP, requires the extensive use of management’s estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates. Estimates are used when accounting for items and matters including, but not limited to, allowance for uncollectible accounts receivable, inventory obsolescence, asset valuations and useful lives, employee benefits, self-insurance reserves, taxes, restructuring and other provisions and contingencies.

Foreign Operations —Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rates existing at the respective balance sheet dates. Income and expense items are translated at the average rates during the respective periods. Translation adjustments resulting from fluctuations in exchange rates are recorded as a separate component of other comprehensive income (loss) while transaction gains and losses are recorded in net earnings (loss). Deferred taxes are not provided on cumulative foreign currency translation adjustments when the Company expects foreign earnings to be permanently reinvested.

Fair Value Measurements — Certain assets and liabilities are required to be recorded at fair value on a recurring basis. Fair value is determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company records the fair value of its foreign currency contracts, available-for-sale securities, interest rate swaps, pension plan assets and other postretirement plan assets on a recurring basis. Assets measured at fair value on a nonrecurring basis include long-lived assets held and used, long-lived assets held for sale, goodwill and other intangible assets. The fair value of cash, cash equivalents, restricted cash, accounts receivable, short-term debt and accounts payable approximate their carrying values. The three-tier value hierarchy, which prioritizes valuation methodologies based on the reliability of the inputs, is:

Level 1 Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2 Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants.

Revenue Recognition —The Company recognizes revenue for the majority of its products upon transfer of title and the passage of the risk of ownership, which is generally upon shipment to the client. Contracts generally specify F.O.B. shipping point terms. Under agreements with certain clients, custom products may be stored by the Company for future delivery. In these situations, the Company may also receive a logistics or warehouse management fee for the services it provides. In certain of these cases, delivery and billing schedules are outlined in the client agreement and product revenue is recognized when manufacturing is complete, title and risk of ownership transfer to the client, and there is a reasonable assurance as to collectability. Because the majority of products are customized, product returns are not significant; however, the Company accrues for the estimated amount of client credits at the time of sale.

Revenue from services is recognized as services are performed. For the Company’s logistics operations, whose operations include the delivery of printed material and other products, the Company recognizes revenue upon completion of the delivery of services. Within the Company’s business process outsourcing operations, the Company provides various outsourcing services. Depending on the nature of the service performed, revenue is recognized for outsourcing services either as services are rendered or upon completion of the service. Revenues related to the Company’s digital and creative solutions operations, which include digital content management, photography, color services and page production, are recognized in accordance with the terms of the contract, typically upon completion of the performed service and acceptance by the client.

The Company records deferred revenue in situations where amounts are invoiced but the revenue recognition criteria outlined above are not met. Such revenue is recognized when all criteria are subsequently met.

Certain revenues earned by the Company require judgment to determine if revenue should be recorded gross, as a principal, or net of related costs, as an agent. Billings for third-party shipping and handling costs as well as certain postage costs, primarily in the Company’s logistics operations, and out-of-pocket expenses are recorded gross. In the Company’s Global Turnkey Solutions and Sourcing operations, contracts are evaluated using various criteria to determine if revenue for components and other materials should be recognized on a gross or net basis. In general, these revenues are recognized on a gross basis if the Company has control over selecting vendors and pricing, is the primary obligor in the arrangement, bears all credit risk and bears the risk of loss for inventory in its possession. Revenue from contracts that do not meet these criteria is recognized on a net basis. Many of the Company’s operations process materials, primarily paper, that may be supplied directly by clients or may be purchased by the Company and sold to clients. No revenue is recognized for client-supplied paper, but revenues for Company-supplied paper are recognized on a gross basis.

The Company records taxes collected from clients and remitted to governmental authorities on a net basis and records the sale of by-products as a reduction of cost of sales.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents —The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Short-term securities consist of investment grade instruments of governments, financial institutions and corporations.

Restricted cash —Amounts included in restricted cash primarily relate to letters of credit and bank acceptance drafts.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statement of Cash Flows.

 

 

December 31,

 

 

2017

 

 

2016

 

Cash and cash equivalents

$

273.4

 

 

$

317.5

 

Restricted cash - current (a)

 

28.0

 

 

 

18.1

 

Restricted cash - noncurrent (b)

 

0.1

 

 

 

0.3

 

Total cash, cash equivalents and restricted cash

$

301.5

 

 

$

335.9

 

 

(a)

Included within prepaid expenses and other current assets within the Consolidated Balance Sheets.

 

(b)

Included within other noncurrent assets within the Consolidated Balance Sheets.

Receivables —Receivables are stated net of allowances for doubtful accounts and primarily include trade receivables, notes receivable and miscellaneous receivables from suppliers. No single client comprised more than 10% of the Company’s consolidated net sales in 2017, 2016 or 2015. Specific client provisions are made when a review of significant outstanding amounts, utilizing information about client creditworthiness and current economic trends, indicates that collection is doubtful. In addition, provisions are made at differing rates, based upon the age of the receivable and the Company’s historical collection experience.

Transactions affecting the allowance for doubtful accounts receivable during the years ended December 31, 2017, 2016 and 2015 were as follows:

 

 

2017

 

 

2016

 

 

2015

 

Balance, beginning of year

$

35.9

 

 

$

26.0

 

 

$

27.0

 

Provisions charged to expense

 

3.2

 

 

 

12.1

 

 

 

17.8

 

Write-offs and other

 

(6.7

)

 

 

(2.2

)

 

 

(18.8

)

Balance, end of year

$

32.4

 

 

$

35.9

 

 

$

26.0

 

 

Inventories —Inventories include material, labor and factory overhead and are stated at the lower of cost or market and net of excess and obsolescence reserves for raw materials and finished goods. Provisions for excess and obsolete inventories are made at differing rates, utilizing historical data and current economic trends, based upon the age and type of the inventory. Specific excess and obsolescence provisions are also made when a review of specific balances indicates that the inventories will not be utilized in production or sold. The cost of 37.7% and 43.8% of the inventories at December 31, 2017 and 2016, respectively, has been determined using the Last-In, First-Out (LIFO) method. This method is intended to reflect the effect of inventory replacement costs within results of operations; accordingly, charges to cost of sales generally reflect recent costs of material, labor and factory overhead. The Company uses an external-index method of valuing LIFO inventories. The remaining inventories, primarily related to certain acquired and international operations, are valued using the First-In, First-Out or specific identification methods.

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

 

 

2017

 

 

2016

 

Raw materials and manufacturing supplies

$

161.1

 

 

$

141.0

 

Work in process

 

75.0

 

 

 

84.4

 

Finished goods

 

198.2

 

 

 

179.4

 

LIFO reserve

 

(17.5

)

 

 

(18.0

)

Total

$

416.8

 

 

$

386.8

 

The Company recognized a LIFO benefit of $0.5 million, $1.1 million and $0.1 million, respectively, during the years ended December 31, 2017, 2016 and 2015.

Long-Lived Assets —The Company assesses potential impairments to its long-lived assets if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impaired asset is written down to its estimated fair value based upon the most recent information available. Estimated fair market value is generally measured by discounting estimated future cash flows. Long-lived assets, other than goodwill and other intangible assets, which are held for sale, are recorded at the lower of the carrying value or the fair market value less the estimated cost to sell.

Property, Plant and Equipment —Property, plant and equipment are recorded at cost and depreciated on a straight-line basis over their estimated useful lives. Useful lives range from 15 to 40 years for buildings, the lesser of 7 years or the lease term for leasehold improvements and from 3 to 15 years for machinery and equipment. Maintenance and repair costs are charged to expense as incurred. Major overhauls that extend the useful lives of existing assets are capitalized. When properties are retired or disposed, the costs and accumulated depreciation are eliminated and the resulting profit or loss is recognized in the results of operations.

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

 

 

2017

 

 

2016

 

Land

$

56.1

 

 

$

56.0

 

Buildings

 

417.3

 

 

 

403.0

 

Machinery and equipment

 

1,885.2

 

 

 

1,805.4

 

 

 

2,358.6

 

 

 

2,264.4

 

Accumulated depreciation

 

(1,743.5

)

 

 

(1,614.1

)

Total

$

615.1

 

 

$

650.3

 

During the years ended December 31, 2017, 2016 and 2015, depreciation expense was $139.8 million, $152.9 million, and $171.4 million, respectively.

During the fourth quarter of 2017, we entered into an agreement to sell a building and transfer the related land use rights to a third party for a facility in the International segment. During the period, we received a deposit in accordance with the terms of the agreement of approximately $12.5 million, which is recorded in other noncurrent liabilities on the December 31, 2017 Consolidated Balance Sheet. The terms of the agreement require the buyer to make additional deposits to us through the close date, which is expected to occur in the second half of 2019. As of December 31, 2017, we continue to classify the carrying cost of the building within property, plant and equipment and record depreciation. The carrying cost of the land use rights are classified in other noncurrent assets.

Goodwill —Goodwill is reviewed for impairment annually as of October 31 or more frequently if events or changes in circumstances indicate that it is more likely than not that the fair value of a reporting unit is below its carrying value.

For certain reporting units, the Company may perform a qualitative, rather than quantitative, assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. In performing this qualitative analysis, the Company considers various factors, including the excess of prior year estimates of fair value compared to carrying value, the effect of market or industry changes and the reporting units’ actual results compared to projected results. Based on this qualitative analysis, if management determines that it is more likely than not that the fair value of the reporting unit is greater than its carrying value, no further impairment testing is performed.

For the remaining reporting units, the Company compares each reporting unit’s fair value, estimated based on comparable company market valuations and expected future discounted cash flows to be generated by the reporting unit, to its carrying value. See Note 4, Restructuring, Impairment and Other Charges and Note 5, Goodwill and Other Intangible Assets, for additional information.

The Company also performs an interim review for indicators of impairment at each quarter-end to assess whether an interim impairment review is required for any reporting unit. In the Company’s interim review for indicators of impairment as of December 31, 2017, management concluded that there were no indicators that the fair value of any of the reporting units with goodwill was more likely than not below its carrying value.

Amortization —Certain costs to acquire and develop internal-use computer software are capitalized and amortized over their estimated useful life using the straight-line method, up to a maximum of five years. Amortization expense, primarily related to internally-developed software and excluding amortization expense related to other intangible assets, was $23.0 million, $17.6 million and $14.9 million for the years ended December 31, 2017, 2016 and 2015, respectively. Deferred debt issuance costs are amortized over the term of the related debt. Other intangible assets are recognized separately from goodwill and are amortized over their estimated useful lives. See Note 5, Goodwill and Other Intangible Assets, for further discussion of other intangible assets and the related amortization expense.

Financial Instruments —The Company uses derivative financial instruments to hedge exposures to interest rate and foreign exchange fluctuations in the ordinary course of business.

All derivatives are recorded as other current or noncurrent assets or other current or noncurrent liabilities on the balance sheet at their respective fair values with unrealized gains and losses recorded in other comprehensive income (loss), net of applicable income taxes, or in the results of operations, depending on the purpose for which the derivative is held. For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative, as well as the offsetting gain or loss on the hedged item attributable to the hedged risk, are recognized in the results of operations. Changes in the fair value of derivatives that do not meet the criteria for designation as a hedge at inception, or fail to meet the criteria thereafter, are recognized currently in the results of operations. At inception of a hedge transaction, the Company formally documents the hedge relationship and the risk management objective for undertaking the hedge. In addition, the Company assesses, both at inception of the hedge and on an ongoing basis, whether the derivative in the hedging transaction has been highly effective in offsetting changes in fair value of the hedged item and whether the derivative is expected to continue to be highly effective. The impact of any ineffectiveness is recognized currently in the results of operations.

The Company’s foreign currency contracts and interest rate swaps are subject to enforceable master netting agreements that allow the Company to settle positive and negative positions with the respective counterparties. The Company settles foreign currency contracts on a net basis when possible. Foreign currency contracts that can be settled on a net basis are presented net in the Consolidated Balance Sheets. Interest rate swaps are settled on a gross basis and presented gross in the Consolidated Balance Sheets. See Note 12, Derivatives, for additional information.

Share-Based Compensation —The Company recognizes share-based compensation expense based on estimated fair values for all share-based awards made to employees and directors, including stock options, restricted stock units and performance share units. The Company recognizes compensation expense for share-based awards expected to vest on a straight-line basis over the requisite service period of the award based on their grant date fair value. See Note 15, Stock and Incentive Programs for Employees and Directors, for further discussion.

Preferred Stock —The Company has two million shares of $1.00 par value preferred stock authorized for issuance. The Board of Directors may divide the preferred stock into one or more series and fix the redemption, dividend, voting, conversion, sinking fund, liquidation and other rights. The Company has no present plans to issue any preferred stock.

Pension and Other Postretirement Benefits Plans —The Company records annual income and expense amounts relating to its pension and other postretirement benefit plans based on calculations which include various actuarial assumptions, including discount rates, mortality, assumed rates of return, compensation increases, turnover rates and healthcare cost trend rates. The Company reviews its actuarial assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends when it is deemed appropriate to do so. The effect of modifications on the value of plan obligations and assets is recognized immediately within other comprehensive income (loss) and amortized into operating earnings over future periods. The Company believes that the assumptions utilized in recording its obligations under its plans are reasonable based on its experience, market conditions and input from its actuaries and investment advisors. See Note 9, Retirement Plans, for additional information.

Taxes on Income —Deferred taxes are provided using an asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

The Company recognizes deferred tax liabilities related to taxes on certain foreign earnings that were not considered to be permanently reinvested. No deferred tax liabilities were recognized for foreign earnings that were considered to be permanently reinvested. Management regularly evaluates whether foreign earnings are expected to be permanently reinvested. This evaluation requires judgment about the future operating and liquidity needs of the Company and its foreign subsidiaries. Changes in economic and business conditions, foreign or U.S. tax laws, or the Company’s financial situation could result in changes to these judgments and the need to record additional tax liabilities.

The Company is regularly audited by foreign and domestic tax authorities. These audits occasionally result in proposed assessments where the ultimate resolution might result in the Company owing additional taxes, including in some cases, penalties and interest. The Company recognizes a tax position in its financial statements when it is more likely than not (i.e., a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities. This recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Although management believes that its estimates are reasonable, the final outcome of uncertain tax positions may be materially different from that which is reflected in the Company’s financial statements. The Company adjusts such reserves upon changes in circumstances that would cause a change to the estimate of the ultimate liability, upon effective settlement or upon the expiration of the statute of limitations, in the period in which such event occurs. See Note 10, Income Taxes, for further discussion.

v3.8.0.1
Discontinued Operations
12 Months Ended
Dec. 31, 2017
Discontinued Operations And Disposal Groups [Abstract]  
Discontinued Operations

Note 2. Discontinued Operations

On October 1, 2016, RRD completed the Separation and Distribution. 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 accounted 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-net in the Consolidated Statements of Operations for the year ended December 31, 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 common stock for the extinguishment of $111.6 million in aggregate principal amount of RRD indebtedness, resulting in a realized net gain of $92.4 million, which was recorded within investment and other income-net in the Consolidated Statements of Operations for the year ended December 31, 2017. In August 2017, the Company disposed of its remaining 99,594 shares of Donnelley Financial common stock in exchange for the extinguishment of $1.9 million in aggregate principal amount of RRD indebtedness, resulting in a realized net gain of $1.6 million. See Note 11, Debt, for further discussion of these debt-for-equity transactions. As of December 31, 2017, the Company no longer held any shares of LSC or Donnelley Financial.

In conjunction with the Separation, the Company entered into certain agreements with Donnelley Financial and LSC to implement the legal and structural separation from Donnelley Financial and LSC, govern the relationship between the Company, Donnelley Financial and LSC up to and after the completion of the Separation, and allocate between the Company, Donnelley Financial and LSC various assets, liabilities and obligations, including, among other things, employee benefits, intellectual property and tax-related assets and liabilities. These agreements included the Separation and Distribution Agreement, Transition Services Agreement, Tax Disaffiliation Agreement, Patent Assignment and License Agreement, Trademark Assignment and License Agreement, Data Assignment and License Agreement, Software, Copyright and Trade Secret Assignment and License Agreement, Stockholder and Registration Rights Agreement and commercial and other arrangements and agreements.

Sales from RRD to Donnelley Financial and LSC previously eliminated in consolidation have been recast and are shown as external sales within the financial results of continuing operations. The net sales were $150.4 million and $153.4 million for the years ended December 31, 2016 and 2015. Interest expense was allocated to discontinued operations for interest expense directly attributable to the operations of the discontinued operations and interest expense related to corporate level debt that was repurchased in conjunction with the spinoff transactions.

The following table presents the financial results of discontinued operations:

 

 

Year Ended December 31,

 

 

2016

 

 

2015

 

Net sales

$

3,303.4

 

 

$

4,472.9

 

Cost of sales

 

2,534.7

 

 

 

3,414.2

 

Operating expenses (a)

 

615.9

 

 

 

708.7

 

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

 

151.4

 

 

 

71.6

 

Earnings before income taxes

 

1.4

 

 

 

278.4

 

Income tax expense

 

11.1

 

 

 

108.3

 

Net (loss) earnings from discontinued operations

$

(9.7

)

 

$

170.1

 

 

(a)

Includes spinoff transaction costs incurred of $81.2 million and $13.6 million, respectively, during the years ended December 31, 2016 and 2015.

 

(b)

Includes the related interest expense of the corporate level debt which was retired in connection with the Separation totaling $55.9 million and $73.3 million for the years ended December 31, 2016 and 2015. Also includes the losses on the extinguishment of corporate level debt executed in conjunction with the spinoff transactions totaling $96.1 million for the year ended December 31, 2016.

The following table presents the significant non-cash items and capital expenditures of discontinued operations:

 

 

Year Ended December 31,

 

 

2016

 

 

2015

 

Depreciation and amortization

$

159.0

 

 

$

221.5

 

Pension settlement charges

77.7

 

 

 

 

Impairment charges

 

1.5

 

 

 

7.1

 

Loss on debt extinguishments

96.1

 

 

 

 

Assumption of warehousing equipment related to client contract

8.8

 

 

 

 

Purchase of property, plant and equipment

 

(49.0

)

 

 

(74.0

)

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 Agreements"). 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 Agreements generally provides for a term of services starting at the Separation date and continuing for a period of up to 24 months following the Separation. The Company recognized $7.7 million and $3.3 million for the years ended December 31, 2017 and 2016, respectively, as a reduction of costs within selling, general and administrative expenses 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 years ended December 31, 2017 and 2016.

 

 

Year ended December 31,

 

 

2017

 

 

2016

 

Net sales to LSC and Donnelley Financial

$

279.5

 

 

$

98.0

 

Purchases from LSC and Donnelley Financial

 

159.4

 

 

 

79.0

 

The Company also recognized $126.1 million and $17.8 million of net cash inflow from Donnelley Financial and LSC within operating activities in the Consolidated Statements of Cash Flows during the years ended December 31, 2017 and 2016, respectively.

v3.8.0.1
Acquisitions and Dispositions
12 Months Ended
Dec. 31, 2017
Business Combinations [Abstract]  
Acquisitions and Dispositions

Note 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 our clients measure communications effectiveness and audience engagement. During the year ended December 31, 2016, Precision Dialogue contributed $22.4 million in net sales and earnings before income taxes of $1.8 million.

The Precision Dialogue acquisition was recorded by allocating the cost of the acquisition to the assets acquired, including other intangible assets, based on their estimated fair values at the acquisition date. The excess of the cost over the fair value of the net assets acquired was recorded as goodwill. The total tax deductible goodwill related to the Precision Dialogue acquisition was $8.8 million.

Based on the valuation, the final purchase price allocation for the Precision Dialogue acquisition was as follows:

 

Accounts receivable

$

11.5

 

Inventories

 

0.4

 

Prepaid expenses and other current assets

 

0.8

 

Property, plant and equipment

 

6.9

 

Other intangible assets

 

14.1

 

Other noncurrent assets

 

1.2

 

Goodwill

 

42.5

 

Accounts payable and accrued liabilities

 

(11.4

)

Deferred taxes-net

 

(6.8

)

Total purchase price-net of cash acquired

 

59.2

 

Less: debt assumed

 

11.1

 

Net cash paid

$

48.1

 

The fair values of other intangible assets, technology and goodwill associated with the Precision Dialogue acquisition were determined to be Level 3 under the fair value hierarchy. The following table presents the fair value, valuation techniques and related unobservable inputs for these Level 3 measurements:

 

 

Fair Value

 

 

Valuation Technique

 

Unobservable Input

 

Range

 

Client relationships

$

11.0

 

 

Excess earnings

 

Discount rate

Attrition rate

 

16.0%

7.0% - 8.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade names

 

1.4

 

 

Relief-from-royalty method

 

Discount rate

Royalty rate (pre-tax)

 

16.0%

0.75% - 1.25%

 

 

 

 

 

 

 

 

 

 

 

 

 

Technology

0.6

 

 

Relief-from-royalty method

 

Discount rate

Royalty rate (pre-tax)

Obsolescence factor

 

16.0%

15.0%                             0.0% - 40.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-compete agreements

 

1.7

 

 

With or without method

 

Discount rate

 

16.0%

 

The fair values of property, plant and equipment associated with the acquisition of Precision Dialogue were determined to be Level 3 under the fair value hierarchy and were estimated using either the market approach, if a secondhand market existed, or the cost approach.

For the year ended December 31, 2016, the Company recorded $2.7 million of acquisition-related expenses, respectively, associated with completed or contemplated acquisitions within selling, general and administrative expenses in the Consolidated Statements of Operations.

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, all of which was received in 2016. Additionally, during 2016 the Company sold three immaterial entities for proceeds of $0.3 million. The dispositions of these entities resulted in a net gain of $11.9 million during the period ended December 31, 2016, which was recorded in other operating income in the Consolidated Statements of Operations. The operations of these entities were included within the International segment.

2015 Acquisitions

The Company completed four insignificant acquisitions in 2015, one of which included the settlement of accounts receivable in exchange for the acquisition of the business. These acquisitions were recorded by allocating the cost of the acquisition to the assets acquired, including other intangible assets, based on their estimated fair values at the acquisition date. The excess of the cost of acquisition over the fair value of the net assets acquired was recorded as goodwill. The tax deductible goodwill related to these acquisitions was $9.8 million.

For the year ended December 31, 2015, the Company recorded $0.5 million of acquisition-related expenses associated with acquisitions completed or contemplated, within selling, general and administrative expenses in the Consolidated Statements of Operations.

2015 Disposition

On April 29, 2015, the Company sold its 50.1% interest in its Venezuelan operating entity. The proceeds were de minimis, and the sale resulted in a net loss of $14.7 million, which was recognized in investment and other (income) expense-net in the Consolidated Statement of Operations for the year ended December 31, 2015. The Company’s Venezuelan operations had net sales of $16.3 million and a loss before income taxes of $38.4 million, including the net loss as a result of the sale, for the year ended December 31, 2015. The operations of the Venezuela business were included in the International segment.

v3.8.0.1
Restructuring, Impairment and Other Charges
12 Months Ended
Dec. 31, 2017
Restructuring And Related Activities [Abstract]  
Restructuring, Impairment and Other Charges

Note 4. Restructuring, Impairment and Other Charges

For the year ended December 31, 2017, the Company recorded the following restructuring, impairment and other charges-net:

 

 

Employee

Terminations

 

 

Other

Restructuring

Charges

 

 

Total

Restructuring

Charges

 

 

Impairment

 

 

Other

Charges

 

 

Total

 

Variable Print

$

4.2

 

 

$

1.1

 

 

$

5.3

 

 

 

 

 

$

1.9

 

 

$

7.2

 

Strategic Services

 

2.6

 

 

 

0.3

 

 

 

2.9

 

 

 

21.9

 

 

 

0.4

 

 

 

25.2

 

International

 

8.0

 

 

 

2.6

 

 

 

10.6

 

 

 

0.1

 

 

 

 

 

 

10.7

 

Corporate

 

8.7

 

 

 

0.8

 

 

 

9.5

 

 

 

0.4

 

 

 

 

 

 

9.9

 

Total

$

23.5

 

 

$

4.8

 

 

$

28.3

 

 

$

22.4

 

 

$

2.3

 

 

$

53.0

 

Restructuring and Impairment Charges

For the year ended December 31, 2017, the Company recorded net restructuring charges of $23.5 million for employee termination costs. These charges primarily related to the reorganization of selling, general, and administrative functions primarily within the Corporate, International, and Variable Print segments, the termination of the Company’s relationship in a joint venture within the International segment and a facility closure in the Strategic Services segment. Additionally, the Company incurred lease termination and other restructuring charges of $4.8 million for the year ended December 31, 2017.

Additionally in the year ended December 31, 2017, the Company recorded net impairment charges of $22.4 million, primarily related to the $21.3 million impairment of the goodwill for the digital and creative solutions (“DCS”) reporting unit, which is included within the Strategic Services segment. The goodwill impairment charge in the DCS reporting unit was due to a major client beginning to transition their business away from DCS during the fourth quarter of 2017, as well as declines in sales with other existing clients which resulted in lower expectations of future revenues, profitability and cash flows. As of December 31, 2017, the DCS reporting unit had no remaining goodwill. The goodwill impairment charges were determined using Level 3 inputs, including comparable marketplace fair value data and a discontinued cash flow analysis. The remaining impairment charges recorded for the year ended December 31, 2017, included a $0.2 million impairment charge related to the impairment of intangible assets in the commercial and digital print reporting unit within the Variable Print segment and $0.9 million of impairment charges of other long-lived assets related to facility closures, partially offset by gains on the sale of previously impaired assets.

Other Charges

For the year ended December 31, 2017, the Company recorded charges of $2.3 million for multi-employer pension plan withdrawal obligations unrelated to facility closures. The total liabilities for the withdrawal obligations associated with the Company’s decision to withdraw from all multi-employer pension plans included in accrued liabilities and other noncurrent liabilities are $5.1 million and $31.7 million, respectively, as of December 31, 2017. See Note 9, Retirement Plans, for further discussion of multi-employer pension plans.

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.

For the year ended December 31, 2016, the Company recorded the following restructuring, impairment and other charges-net:

 

 

Employee

Terminations

 

 

Other

Restructuring

Charges

 

 

Total

Restructuring

Charges

 

 

Impairment

 

 

Other

Charges

 

 

Total

 

Variable Print

$

1.4

 

 

$

1.7

 

 

$

3.1

 

 

$

557.9

 

 

$

1.9

 

 

$

562.9

 

Strategic Services

 

1.8

 

 

 

(0.1

)

 

 

1.7

 

 

 

 

 

 

0.4

 

 

 

2.1

 

International

 

9.6

 

 

 

1.8

 

 

 

11.4

 

 

 

(2.5

)

 

 

 

 

 

8.9

 

Corporate

 

9.1

 

 

 

0.1

 

 

 

9.2

 

 

 

1.2

 

 

 

 

 

 

10.4

 

Total

$

21.9

 

 

$

3.5

 

 

$

25.4

 

 

$

556.6

 

 

$

2.3

 

 

$

584.3

 

Restructuring and Impairment Charges

For the year ended December 31, 2016, the Company recorded net restructuring charges of $21.9 million for employee termination costs. These charges primarily related to the reorganization of certain corporate administrative functions and operations and two facility closures in the International segment. Additionally, the Company incurred lease termination and other restructuring charges of $3.5 million for the year ended December 31, 2016.

In addition, in the year ended December 31, 2016, the Company recorded net impairment charges of $556.6, primarily related to the $416.2 million and $111.6 million impairment of goodwill in the commercial and digital print and statement printing reporting units, respectively, which are included within the Variable Print segment. The goodwill impairment charges were due to the continued declines in sales, primarily due to decreased volume, which resulted in a reduction in the estimated fair value of the reporting units based on lower expectations of future revenue, profitability and cash flows as compared to the expectations as of the October 31, 2016 annual goodwill impairment test. The goodwill impairment charges were determined using the Level 3 inputs, including discounted cash flow analysis, comparable marketplace fair value data and management’s assumptions in valuing the significant tangible and intangible assets. The remaining charges for the year ended December 31, 2016, included a $29.7 million impairment charge for certain acquired client relationship intangible assets in the commercial and digital print reporting unit within the Variable Print segment and $0.9 million of net gains on the sale of previously impaired assets. The impairment of the client relationship intangible assets resulted from lower expectations of future revenue to be derived from those relationships and was determined using Level 3 inputs and estimated based on cash flow analyses, which included management’s assumptions related to future revenues and profitability.

Other Charges

For the year ended December 31, 2016, the Company recorded charges of $2.3 million for multi-employer pension plan withdrawal obligations unrelated to facility closures. The total liabilities for the withdrawal obligations associated with the Company’s decision to withdraw from all multi-employer pension plans included in accrued liabilities and other noncurrent liabilities are $4.9 million and $34.8 million, respectively, as of December 31, 2016. See Note 9, Retirement Plans, for further discussion of multi-employer pension plans.

For the year ended December 31, 2015, the Company recorded the following restructuring, impairment and other charges-net:

 

 

Employee

Terminations

 

 

Other

Restructuring

Charges

 

 

Total

Restructuring

Charges

 

 

Impairment

 

 

Other

Charges

 

 

Total

 

Variable Print

$

3.1

 

 

$

4.7

 

 

$

7.8

 

 

$

(0.5

)

 

$

1.8

 

 

$

9.1

 

Strategic Services

 

4.4

 

 

 

0.1

 

 

 

4.5

 

 

 

0.9

 

 

 

0.4

 

 

 

5.8

 

International

 

11.9

 

 

 

3.2

 

 

 

15.1

 

 

 

28.5

 

 

 

 

 

 

43.6

 

Corporate

 

3.0

 

 

 

1.2

 

 

 

4.2

 

 

 

 

 

 

 

 

 

4.2

 

Total

$

22.4

 

 

$

9.2

 

 

$

31.6

 

 

$

28.9

 

 

$

2.2

 

 

$

62.7

 

Restructuring and Impairment Charges

For the year ended December 31, 2015, the Company recorded net restructuring charges of $22.4 million for employee termination costs. These charges primarily related to a facility closure in the International segment, one facility closure in the Variable Print segment and the reorganization of certain operations. Additionally, the Company incurred lease termination and other restructuring charges of $9.2 million for the year ended December 31, 2015.

In the third quarter of 2015, as the result of the Company’s interim goodwill impairment review performed under the Company’s previous segment and reporting unit structure, the Company recorded non-cash charges of $13.7 million and $4.3 million to recognize the impairment of goodwill in the former Europe and Latin America reporting units, respectively, both of which were within the International segment. The goodwill impairment charge in the former Europe reporting unit was due to the announced reorganization of certain operations which resulted in a reduction in the estimated fair value of the reporting unit based on lower expectations of future revenue, profitability and cash flows as compared to the expectations as of prior year annual goodwill impairment test. The goodwill impairment charges were determined using Level 3 inputs, including discounted cash flow analyses, comparable marketplace fair value data and management’s assumptions in valuing the significant tangible and intangible assets.

For the year ended December 31, 2015, the Company also recorded non-cash impairment charges of $11.9 million for the impairment of intangible assets, including $9.2 million and $2.2 million related to the impairment of certain acquired client relationship intangible assets in the previous labels reporting unit within the Variable Print segment and the Latin America reporting unit within the International segment, respectively. The impairment of the client relationship intangible assets resulted from lower expectations of future revenue to be derived from those relationships and was determined using Level 3 inputs and estimated based on cash flow analyses, which included management’s assumptions related to future revenues and profitability. The remaining impairment charges for the year ended December 31, 2015, included net gains of $1.0 million primarily related to the sale of previously impaired buildings and machinery and equipment associated with facility closings. The fair values of the buildings and machinery and equipment were determined to be Level 3 under the fair value hierarchy and were estimated based on discussions with real estate brokers, review of comparable properties, if available, discussions with machinery and equipment brokers, dealer quotes and internal expertise related to the current marketplace conditions

Other Charges

For the year ended December 31, 2015, the Company recorded $2.2 million of charges for multi-employer pension plan withdrawal obligations unrelated to facility closures.

Restructuring Reserve

The restructuring reserve as of December 31, 2017 and 2016, and changes during the year ended December 31, 2017, were as follows:

 

 

December 31, 2016

 

 

Restructuring

Charges

 

 

Foreign

Exchange and

Other

 

 

Cash

Paid

 

 

December 31, 2017

 

Employee terminations

$

7.6

 

 

$

23.5

 

 

$

0.1

 

 

$

(21.6

)

 

$

9.6

 

Multi-employer pension plan withdrawal obligations

 

11.8

 

 

 

0.7

 

 

 

 

 

 

(1.5

)

 

 

11.0

 

Lease terminations and other

 

1.6

 

 

 

4.1

 

 

 

1.0

 

 

 

(3.8

)

 

 

2.9

 

Total

$

21.0

 

 

$

28.3

 

 

$

1.1

 

 

$

(26.9

)

 

$

23.5

 

 

The current portion of restructuring reserves of $10.7 million at December 31, 2017 was included in accrued liabilities, while the long-term portion of $12.8 million, primarily related to multi-employer pension plan withdrawal obligations related to facility closures, employee terminations in litigation within the International segment and lease termination costs, was included in other noncurrent liabilities at December 31, 2017.

The Company anticipates that payments associated with the employee terminations reflected in the above table will be substantially completed by December 2018, excluding employee terminations in litigation within the International segment.

Payments on all of the Company’s multi-employer pension plan withdrawal obligations are scheduled to be substantially completed by 2034. Changes based on uncertainties in these estimated withdrawal obligations could affect the ultimate charges related to multi-employer pension plan withdrawals. See Note 9, Retirement Plans, for further discussion on multi-employer pension plans.

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.

The restructuring reserve as of December 31, 2016 and 2015, and changes during the year ended December 31, 2016, were as follows:

 

 

December 31, 2015

 

 

Restructuring

Charges

 

 

Foreign

Exchange and

Other

 

 

Cash

Paid

 

 

December 31, 2016

 

Employee terminations

$

6.1

 

 

$

21.9

 

 

$

(3.6

)

 

$