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Inline XBRL Business Report

Component: (Network and Table)
Network
100000 - Document - Document and Entity Information
(http://www.dfsco.com/20171231/taxonomy/role/DocumentDocumentAndEntityInformation)
Table(Implied)
Slicers (applies to each fact value in each table cell)
Document And Entity Information [Abstract]Period [Axis]
2017-01-01 - 2017-12-31
2018-02-23
2017-06-30
Document And Entity Information [Abstract]
 
 
 
Document Type
10-K  
  
Amendment Flag
false  
  
Document Period End Date
2017-12-31  
  
Document Fiscal Year Focus
2017  
  
Document Fiscal Period Focus
FY  
  
Trading Symbol
DFIN  
  
Entity Registrant Name
Donnelley Financial Solutions, Inc.  
  
Entity Central Index Key
0001669811  
  
Current Fiscal Year End Date
--12-31  
  
Entity Well-known Seasoned Issuer
No  
  
Entity Current Reporting Status
Yes  
  
Entity Voluntary Filers
No  
  
Entity Filer Category
Large Accelerated Filer  
  
Entity Common Stock, Shares Outstanding
 
33,844,902  
 
Entity Public Float
  
773,142,550  

Component: (Network and Table)
Network
100010 - Statement - Consolidated and Combined Statements of Operations
(http://www.dfsco.com/20171231/taxonomy/role/StatementConsolidatedAndCombinedStatementsOfOperations)
TableStatement [Table]
Slicers (applies to each fact value in each table cell)
Statement [Line Items]Period [Axis]
2017-01-01 - 2017-12-31
2017-01-01 - 2017-06-30
2016-01-01 - 2016-12-31
2015-01-01 - 2015-12-31
Related PartyRelated PartyRelated PartyRelated Party
R.R. Donnelley AffiliatesRelated PartyR.R. Donnelley AffiliatesR.R. Donnelley AffiliatesRelated PartyR.R. Donnelley AffiliatesRelated Party
Services net sales
 
632,100,000  
  
598,600,000  
 
628,600,000  
Products net sales
 
372,800,000  
  
384,900,000  
 
420,900,000  
Total net sales
 
 
1,004,900,000  
 
8,300,000  
 
19,400,000  
 
983,500,000  
 
7,800,000  
 
1,049,500,000  
 
Services cost of sales (exclusive of depreciation and amortization)
19,500,000 1
328,700,000  
 
37,800,000 1
297,100,000  
40,400,000 1
291,900,000  
Products cost of sales (exclusive of depreciation and amortization)
32,300,000 1
240,900,000  
 
57,900,000 1
226,200,000  
68,300,000 1
230,900,000  
Total cost of sales
 
 
621,400,000  
 
 
 
 
 
619,000,000  
 
 
 
631,500,000  
 
Selling, general and administrative expenses (exclusive of depreciation and amortization)
 
232,900,000  
  
209,800,000  
 
199,200,000  
Restructuring, impairment and other charges-net
 
7,100,000  
  
5,400,000  
 
4,400,000  
Depreciation and amortization
 
44,500,000  
  
43,300,000  
 
41,700,000  
Income from operations
 
 
99,000,000  
 
 
 
 
 
106,000,000  
 
 
 
172,700,000  
 
Interest expense-net
 
42,900,000  
  
11,700,000  
 
1,100,000  
Investment and other income-net
 
(100,000) 
  
0  
 
(100,000) 
Earnings before income taxes
 
 
56,200,000  
 
 
 
 
 
94,300,000  
 
 
 
171,700,000  
 
Income tax expense
 
46,500,000  
  
35,200,000  
 
67,400,000  
Net earnings
 
 
9,700,000  
 
 
 
 
 
59,100,000  
 
 
 
104,300,000  
 
Net earnings per share (Note 13):
 
 
 
 
 
 
 
Basic net earnings per share
 
.29  
  
1.81  
 
3.22  
Diluted net earnings per share
 
.29  
  
1.80  
 
3.22  
Weighted average number to common shares outstanding
 
 
 
 
 
 
 
Basic
 
33,100,000  
  
32,600,000  
 
32,400,000  
Diluted
 
33,300,000  
  
32,800,000  
 
32,400,000  
1: Beginning in the quarter ended June 30, 2017, LSC Communications, Inc. (“LSC”) no longer qualified as a related party, therefore the 2017 amounts disclosed related to LSC are presented through March 31, 2017 only. Beginning in the quarter ended September 30, 2017, R.R. Donnelley & Sons Company ("RRD") no longer qualified as a related party, therefore the 2017 amounts disclosed related to RRD are presented through June 30, 2017 only.

Component: (Network and Table)
Network
100020 - Statement - Consolidated and Combined Statements of Comprehensive Income
(http://www.dfsco.com/20171231/taxonomy/role/StatementConsolidatedAndCombinedStatementsOfComprehensiveIncome)
Table(Implied)
Slicers (applies to each fact value in each table cell)
Statement Of Income And Comprehensive Income [Abstract]Period [Axis]
2017-01-01 - 2017-12-31
2016-01-01 - 2016-12-31
2015-01-01 - 2015-12-31
Statement Of Income And Comprehensive Income [Abstract]
 
 
 
Net earnings
9,700,000  
59,100,000  
104,300,000  
Other comprehensive income (loss), net of tax:
 
 
 
Translation adjustments
4,400,000  
(100,000) 
(7,500,000) 
Adjustment for net periodic pension and other postretirement benefits plan cost
(700,000) 
7,100,000  
27,500,000  
Other comprehensive income, net of tax
3,700,000  
 
7,000,000  
 
20,000,000  
 
Comprehensive income
13,400,000  
 
66,100,000  
 
124,300,000  
 

Component: (Network and Table)
Network
100030 - Statement - Consolidated Balance Sheets
(http://www.dfsco.com/20171231/taxonomy/role/StatementConsolidatedBalanceSheets)
TableStatement [Table]
Slicers (applies to each fact value in each table cell)
Statement [Line Items]Period [Axis]
2017-12-31
2016-12-31
Related PartyRelated Party
R.R. Donnelley & Sons CompanyRelated PartyR.R. Donnelley & Sons CompanyRelated Party
ASSETS
 
 
 
 
Cash and cash equivalents
 
52,000,000  
 
36,200,000  
Receivables, less allowances for doubtful accounts of $7.3 in 2017 (2016 - $6.4)
 
165,200,000  
 
156,200,000  
Receivable from RR Donnelley
0 1
 
96,000,000 1
 
Inventories
 
23,300,000  
 
24,100,000  
Prepaid expenses and other current assets
 
29,600,000  
 
17,100,000  
Total current assets
 
 
270,100,000  
 
 
 
329,600,000  
 
Property, plant and equipment-net
 
34,700,000  
 
35,500,000  
Goodwill
 
447,400,000  
 
446,400,000  
Other intangible assets-net
 
39,900,000  
 
54,300,000  
Software-net
 
41,100,000  
 
41,600,000  
Deferred income taxes
 
22,200,000  
 
37,000,000  
Other noncurrent assets
 
38,100,000  
 
34,500,000  
Total assets
 
 
893,500,000  
 
 
 
978,900,000  
 
LIABILITIES
 
 
 
 
Accounts payable
 
67,800,000  
 
85,300,000  
Accrued liabilities
 
119,200,000  
 
100,700,000  
Total current liabilities
 
 
187,000,000  
 
 
 
186,000,000  
 
Long-term debt (Note 12)
 
458,300,000  
 
587,000,000  
Deferred compensation liabilities
 
22,800,000  
 
24,400,000  
Pension and other postretirement benefits plan liabilities
 
52,500,000  
 
56,400,000  
Other noncurrent liabilities
 
23,500,000  
 
14,000,000  
Total liabilities
 
 
744,100,000  
 
 
 
867,800,000  
 
Commitments and Contingencies (Note 9)
 
xsi:nil  
 
xsi:nil  
EQUITY
 
 
 
 
Preferred stock, $0.01 par value Authorized: 1.0 shares; Issued: None
 
0  
 
0  
Common stock, $0.01 par value Authorized: 65.0 shares; Issued: 33.8 shares in 2017 (2016 - 32.6 shares)
 
300,000  
 
300,000  
Treasury stock, at cost: less than 0.1 shares in 2017
 
(900,000) 
  
Additional paid-in-capital
 
205,700,000  
 
179,900,000  
Retained earnings (deficit)
 
8,900,000  
 
(800,000) 
Accumulated other comprehensive loss
 
(64,600,000) 
 
(68,300,000) 
Total equity
 
 
149,400,000  
 
 
 
111,100,000  
 
Total liabilities and equity
 
 
893,500,000  
 
 
 
978,900,000  
 
1: Beginning in the quarter ended September 30, 2017, RRD no longer qualified as a related party.

Component: (Network and Table)
Network
100040 - Statement - Consolidated Balance Sheets (Parenthetical)
(http://www.dfsco.com/20171231/taxonomy/role/StatementConsolidatedBalanceSheetsParenthetical)
TableStatement [Table]
Slicers (applies to each fact value in each table cell)
Statement [Line Items]Period [Axis]
2017-12-31
2016-12-31
RangeRange
MaximumRangeRange
Receivables, allowance for doubtful accounts
 
7,300,000  
6,400,000  
Preferred stock, par value
 
0.01  
0.01  
Preferred stock, authorized
 
1,000,000  
1,000,000  
Preferred stock, Issued
 
0  
0  
Common stock, par value
 
0.01  
0.01  
Common stock, Authorized
 
65,000,000  
65,000,000  
Common stock, Issued
 
33,800,000  
32,600,000  
Treasury stock, Shares
100,000  
  

Component: (Network and Table)
Network
100050 - Statement - Consolidated and Combined Statements of Cash Flows
(http://www.dfsco.com/20171231/taxonomy/role/StatementConsolidatedAndCombinedStatementsOfCashFlows)
Table(Implied)
Slicers (applies to each fact value in each table cell)
Statement Of Cash Flows [Abstract]Period [Axis]
2017-01-01 - 2017-12-31
2016-01-01 - 2016-12-31
2015-01-01 - 2015-12-31
Statement Of Cash Flows [Abstract]
 
 
 
OPERATING ACTIVITIES
 
 
 
Net earnings
9,700,000  
59,100,000  
104,300,000  
Adjustments to reconcile net earnings to net cash provided by operating activities:
 
 
 
Depreciation and amortization
44,500,000  
43,300,000  
41,700,000  
Provision for doubtful accounts receivable
3,900,000  
3,100,000  
500,000  
Share-based compensation
6,800,000  
2,500,000  
1,600,000  
Deferred income taxes
12,400,000  
(5,900,000) 
10,200,000  
Changes in uncertain tax positions
(200,000) 
900,000  
300,000  
Gain on investments and other assets - net
200,000  
100,000  
0  
Net pension and other postretirement benefits plan income
(3,300,000) 
(1,000,000) 
0  
Other
2,800,000  
1,000,000  
200,000  
Changes in operating assets and liabilities - net of acquisitions:
 
 
 
Accounts receivable - net
18,000,000  
(43,100,000) 
(10,200,000) 
Inventories
800,000  
(1,900,000) 
200,000  
Prepaid expenses and other current assets
(3,500,000) 
(7,400,000) 
900,000  
Accounts payable
(18,300,000) 
42,300,000  
5,100,000  
Income taxes payable and receivable
5,400,000  
(3,600,000) 
(700,000) 
Accrued liabilities and other
14,400,000  
17,700,000  
(33,200,000) 
Pension and other postretirement benefits plan contributions
(2,200,000) 
(1,100,000) 
0  
Net cash provided by operating activities
91,400,000  
 
106,000,000  
 
120,900,000  
 
INVESTING ACTIVITIES
 
 
 
Capital expenditures
(27,800,000) 
(26,200,000) 
(27,100,000) 
Purchases of investments
(3,400,000) 
(3,500,000) 
(10,000,000) 
Other investing activities
200,000  
400,000  
0  
Net cash used in investing activities
(31,000,000) 
 
(29,300,000) 
 
(37,100,000) 
 
FINANCING ACTIVITIES
 
 
 
Revolving facility borrowings
298,500,000  
0  
0  
Payments on revolving facility borrowings
(298,500,000) 
0  
0  
Payments on long-term debt
(133,000,000) 
(50,000,000) 
0  
Debt issuance costs
(2,100,000) 
(9,300,000) 
0  
Separation-related payment from R.R. Donnelley
68,000,000  
0  
0  
Proceeds from issuance of common stock
18,800,000  
0  
0  
Proceeds from issuance of long-term debt
3,100,000  
348,200,000  
0  
Net change in short-term debt
0  
(8,800,000) 
(24,000,000) 
Payments on note payable with an R.R. Donnelley affiliate
0  
0  
(14,800,000) 
Net transfers to Parent and affiliates
0  
(340,100,000) 
(56,000,000) 
Treasury stock repurchases
(900,000) 
0  
0  
Other financing activities
400,000  
0  
0  
Net cash used in financing activities
(45,700,000) 
 
(60,000,000) 
 
(94,800,000) 
 
Effect of exchange rate on cash and cash equivalents
1,100,000  
4,400,000  
(2,500,000) 
Net increase (decrease) in cash and cash equivalents
15,800,000  
 
21,100,000  
 
(13,500,000) 
 
Cash and cash equivalents at beginning of year
36,200,000  
15,100,000  
28,600,000  
Cash and cash equivalents at end of period
52,000,000  
 
36,200,000  
 
15,100,000  
 
Supplemental non-cash disclosure:
 
 
 
Debt exchange with R.R. Donnelley, including $5.5 million of debt issuance costs
0  
300,000,000  
0  
Settlement of intercompany note payable
0  
29,600,000  
0  
Accrued debt issuance costs
0  
1,500,000  
0  

Component: (Network and Table)
Network
100060 - Statement - Consolidated and Combined Statements of Cash Flows (Parenthetical)
(http://www.dfsco.com/20171231/taxonomy/role/StatementConsolidatedAndCombinedStatementsOfCashFlowsParenthetical)
Table(Implied)
Slicers (applies to each fact value in each table cell)
Statement Of Cash Flows [Abstract]Period [Axis]
2017-01-01 - 2017-12-31
2016-01-01 - 2016-12-31
Statement Of Cash Flows [Abstract]
 
 
Debt issuance costs
5,500,000  
5,500,000  

Component: (Network and Table)
Network
100070 - Statement - Consolidated and Combined Statements of Equity
(http://www.dfsco.com/20171231/taxonomy/role/StatementConsolidatedAndCombinedStatementsOfEquity)
TableStatement [Table]
Slicers (applies to each fact value in each table cell)
Statement [Line Items]Period [Axis]
2017-01-01 - 2017-12-31
2016-01-01 - 2016-12-31
2015-01-01 - 2015-12-31
Equity ComponentsEquity ComponentsEquity Components
Common StockTreasury StockAdditional Paid-in-CapitalNet Parent Company InvestmentRetained Earnings (Accumulated Deficit)Accumulated Other Comprehensive LossEquity ComponentCommon StockTreasury StockAdditional Paid-in-CapitalNet Parent Company InvestmentRetained Earnings (Accumulated Deficit)Accumulated Other Comprehensive LossEquity ComponentCommon StockTreasury StockAdditional Paid-in-CapitalNet Parent Company InvestmentRetained Earnings (Accumulated Deficit)Accumulated Other Comprehensive LossEquity Component
Related Party TransactionRelated Party TransactionRelated Party TransactionRelated Party TransactionRelated Party TransactionRelated Party TransactionRelated Party TransactionRelated Party TransactionRelated Party TransactionRelated Party TransactionRelated Party TransactionRelated Party TransactionRelated Party TransactionRelated Party TransactionRelated Party TransactionRelated Party TransactionRelated Party TransactionRelated Party TransactionRelated Party TransactionRelated Party TransactionRelated Party Transaction
Related Party TransactionRelated Party TransactionRelated Party TransactionRelated Party TransactionRelated Party TransactionRelated Party TransactionRelated Party TransactionR.R. Donnelley & Sons CompanyRelated Party TransactionR.R. Donnelley & Sons CompanyRelated Party TransactionR.R. Donnelley & Sons CompanyRelated Party TransactionR.R. Donnelley & Sons CompanyRelated Party TransactionR.R. Donnelley & Sons CompanyRelated Party TransactionR.R. Donnelley & Sons CompanyRelated Party TransactionR.R. Donnelley & Sons CompanyRelated Party TransactionR.R. Donnelley & Sons CompanyRelated Party TransactionR.R. Donnelley & Sons CompanyRelated Party TransactionR.R. Donnelley & Sons CompanyRelated Party TransactionR.R. Donnelley & Sons CompanyRelated Party TransactionR.R. Donnelley & Sons CompanyRelated Party TransactionR.R. Donnelley & Sons CompanyRelated Party TransactionR.R. Donnelley & Sons CompanyRelated Party Transaction
Balance
300,000  
0  
179,900,000  
0  
(800,000) 
(68,300,000) 
111,100,000  
 
0  
 
0  
 
0  
 
639,500,000  
 
0  
 
(16,000,000) 
 
623,500,000  
 
0  
 
0  
 
0  
 
1,025,200,000  
 
0  
 
(673,700,000) 
 
351,500,000  
Balance (in shares)
32,600,000  
0  
    
32,600,000  
               
0  
 
0  
          
Net earnings
0  
0  
0  
0  
9,700,000  
0  
9,700,000  
 
0  
 
0  
 
0  
 
59,900,000  
 
(800,000) 
 
0  
 
59,100,000  
 
0  
 
0  
 
0  
 
104,300,000  
 
0  
 
0  
 
104,300,000  
Net transfers to R.R. Donnelley
       
0  
 
0  
 
0  
 
(598,800,000) 
 
0  
 
0  
 
(598,800,000) 
 
0  
 
0  
 
0  
 
(53,200,000) 
 
0  
 
0  
 
(53,200,000) 
 
Net transfer of pension plan to R.R. Donnelley
                     
0  
 
0  
 
0  
 
(436,800,000) 
 
0  
 
637,700,000  
 
200,900,000  
 
Separation-related adjustments
0  
0  
200,000  
0  
0  
0  
200,000  
 
0  
 
0  
 
0  
 
78,000,000  
 
0  
 
(59,300,000) 
 
18,700,000  
              
Reclassification of net parent company investment in connection with the Separation
        
0  
 
0  
 
178,600,000  
 
(178,600,000) 
 
0  
 
0  
 
0  
              
Issuance of common stock upon separation
        
300,000  
 
0  
 
0  
 
0  
 
0  
 
0  
 
300,000  
              
Issuance of common stock upon separation (in shares)
        
32,400,000  
                          
Issuance of additional common shares
0  
0  
18,800,000  
0  
0  
0  
18,800,000  
                            
Issuance of additional common shares (in shares)
900,000  
                                  
Share-based compensation
0  
0  
6,800,000  
0  
0  
0  
6,800,000  
 
0  
 
0  
 
1,300,000  
 
0  
 
0  
 
0  
 
1,300,000  
              
Issuance of share-based awards, net of withholdings and other
0  
(900,000) 
0  
0  
0  
0  
(900,000) 
 
0  
 
0  
 
0  
 
0  
 
0  
 
0  
 
0  
              
Issuance of share-based awards, net of withholdings and other (in shares)
300,000  
0  
      
200,000  
                          
Other comprehensive income
0  
0  
0  
0  
0  
3,700,000  
3,700,000  
 
0  
 
0  
 
0  
 
0  
 
0  
 
7,000,000  
 
7,000,000  
 
0  
 
0  
 
0  
 
0  
 
0  
 
20,000,000  
 
20,000,000  
Balance
300,000  
 
(900,000) 
 
205,700,000  
 
0  
 
8,900,000  
 
(64,600,000) 
 
149,400,000  
 
 
 
300,000  
 
 
 
 
 
 
 
179,900,000  
 
 
 
 
 
 
 
(800,000) 
 
 
 
(68,300,000) 
 
 
 
111,100,000  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
639,500,000  
 
 
 
 
 
 
 
(16,000,000) 
 
 
 
623,500,000  
 
Balance (in shares)
33,800,000  
 
0  
 
 
 
 
 
 
 
 
 
33,800,000  
 
 
 
32,600,000  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
32,600,000  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Component: (Network and Table)
Network
100080 - Disclosure - Overview and Basis of Presentation
(http://www.dfsco.com/20171231/taxonomy/role/DisclosureOverviewAndBasisOfPresentation)
Table(Implied)
Slicers (applies to each fact value in each table cell)
Accounting Policies [Abstract]Period [Axis]
2017-01-01 - 2017-12-31
Accounting Policies [Abstract]
 
Overview and Basis of Presentation

Note 1. Overview and Basis of Presentation

Description of Business

Donnelley Financial Solutions, Inc. (the “Company” or “Donnelley Financial” ) is a financial communications services company that supports global capital markets compliance and transaction needs for its corporate clients and their advisors (such as law firms and investment bankers) and global investment markets compliance and analytics needs for mutual fund companies, variable annuity providers and broker/dealers. With proprietary technology such as data storage and workflow collaboration tools, deep subject matter expertise and a global footprint, Donnelley Financial produces, manages, stores, distributes, and translates documents and electronic communications in order to deliver timely financial communications to investors and documents in a manner that complies with regulatory commissions.

Donnelley Financial’s Registration Statement on Form 10, as amended, was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on September 20, 2016. On October 1, 2016, Donnelley Financial became an independent publicly traded company through the distribution by R.R. Donnelley & Sons Company (“RRD”) of approximately 26.2 million shares, or 80.75%, of Donnelley Financial common stock to RRD shareholders (the “Separation”). Holders of RRD common stock received one share of Donnelley Financial common stock for every eight shares of RRD common stock held on September 23, 2016. As part of the Separation, RRD retained approximately 6.2 million shares of Donnelley Financial common stock, or a 19.25% interest in Donnelley Financial. Donnelley Financial’s common stock began regular-way trading under the ticker symbol “DFIN” on the New York Stock Exchange on October 3, 2016.  On October 1, 2016, RRD also completed the previously announced separation of LSC Communications, Inc. (“LSC”), its publishing and retail-centric print services and office products business. On March 28, 2017, RRD completed the sale of 6.2 million shares of LSC common stock (RRD’s remaining ownership stake in LSC) in an underwritten public offering. As a result, beginning in the quarter ended June 30, 2017, LSC no longer qualified as a related party of the Company.

On March 24, 2017, pursuant to the Stockholder and Registration Rights Agreement, dated as of September 30, 2016, by and between the Company and RRD, the Company filed a Registration Statement on Form S-1 to register the offering and sale of shares of the Company’s common stock retained by RRD. The Registration Statement on Form S-1, as amended, was declared effective by the SEC on June 13, 2017. On June 21, 2017, RRD completed the sale of approximately 6.1 million shares of the Company’s common stock in an underwritten public offering. Upon the consummation of the offering, RRD retained approximately 0.1 million shares of the Company’s common stock which were subsequently sold by RRD on August 4, 2017. In conjunction with the underwritten public offering, the underwriters exercised their option to purchase approximately 0.9 million of the Company’s shares (the “Option Shares”). The Company received approximately $18.8 million in net proceeds from the sale of the Option Shares, after deducting estimated underwriting discounts and commissions. The proceeds were used to reduce outstanding debt under the Revolving Facility (as defined in Note 12, Debt). Beginning in the quarter ended September 30, 2017, RRD no longer qualified as a related party, therefore amounts disclosed related to RRD are presented through June 30, 2017 only.  

On September 14, 2016, the Company and LSC entered into a Separation and Distribution Agreement with RRD to effect the distribution of the Company’s and LSC’s common stock to RRD’s common stockholders (the “Separation and Distribution Agreement”). This agreement governs the Company’s relationship with RRD and LSC with respect to pre-Separation matters and provides for the allocation of employee benefit, litigation and other liabilities and obligations attributable to periods prior to the Separation. The Separation and Distribution Agreement also includes an agreement that the Company, RRD and LSC will provide each other with appropriate indemnities with respect to liabilities arising out of the businesses being distributed and retained by RRD in the Separation. The Separation and Distribution Agreement also addresses employee compensation and benefit matters.

In connection with the Separation, the Company entered into transition services agreements separately with RRD and LSC, under which, in exchange for the fees specified in the arrangements, RRD and LSC agree to provide certain services to the Company and the Company agrees to provide certain services to RRD, respectively, for up to 24 months following the Separation. These services include, but are not limited to, information technology, accounts receivable, accounts payable, payroll and other financial and administrative services and functions. These agreements facilitate the separation by allowing the Company to operate independently prior to establishing stand-alone back office systems across its organization.  

At the time of the Separation, the Company entered into a number of commercial and other arrangements with RRD and its subsidiaries. These include, among other things, arrangements for the provision of services, including global outsourcing and logistics services, printing and binding, digital printing, composition, premedia and access to technology. The terms of the arrangements with RRD do not exceed 36 months. Subsequent to the Separation, RRD and LSC are clients of the Company and expect to utilize financial communication software and services that the Company makes available to all of its clients.

Basis of Presentation

The accompanying consolidated and combined financial statements reflect the consolidated financial position and consolidated results of operations of the Company as an independent, publicly traded company for the periods after the Separation and the combined results of operations for the periods prior to the Separation. Prior to the Separation, the combined financial statements were prepared on a stand-alone basis and were derived from RRD’s consolidated financial statements and accounting records. The consolidated and combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and in accordance with the rules and regulations of the SEC.

For periods prior to the Separation, the consolidated and combined financial statements include the allocation of certain assets and liabilities that were historically held at the RRD corporate level but which were specifically identifiable or attributable to the Company.  Cash and cash equivalents held by RRD were not allocated to Donnelley Financial unless they were held in a legal entity that was transferred to Donnelley Financial. All intercompany transactions and accounts within Donnelley Financial have been eliminated. All intracompany transactions between RRD and Donnelley Financial are considered to be effectively settled in the consolidated and combined financial statements at the time the transaction is recorded. The total net effect of the settlement of these intracompany transactions is reflected in the consolidated and combined statements of cash flows as a financing activity and in the consolidated and combined statements of equity as net parent company investment. Net parent company investment is primarily impacted by contributions from RRD which are the result of treasury activities and net funding provided by or distributed to RRD.  

Prior to the Separation, the consolidated and combined financial statements include certain expenses of RRD which were allocated to Donnelley Financial for certain functions, including general corporate expenses related to information technology, finance, legal, human resources, internal audit, treasury, tax, investor relations and executive oversight.  These expenses were allocated to the Company on the basis of direct usage, when available, with the remainder allocated on the pro rata basis of revenue, employee headcount, or other measures. We consider the expense methodology and results to be reasonable for all periods presented.  However these allocations may not be indicative of the actual expenses that would have been incurred as an independent public company or the costs that may be incurred in the future.

For periods prior to the Separation, the income tax amounts in the consolidated and combined financial statements were calculated based on a separate income tax return methodology and presented as if the Company’s operations were separate taxpayers in the respective jurisdictions.

RRD maintained various benefit and share-based compensation plans at a corporate level.  Donnelley Financial employees participated in those programs and a portion of the cost of those plans is included in Donnelley Financial’s consolidated and combined financial statements for periods prior to the Separation.  On October 1, 2016, Donnelley Financial recorded net pension plan liabilities of $68.3 million (consisting of a total benefit plan liability of $317.0 million, net of plan assets having fair market value of $248.7 million), as a result of the transfer of certain pension plan liabilities and assets from RRD to the Company upon the legal split of those plans. The pension plan asset allocation from RRD was finalized on June 30, 2017, which resulted in a $0.7 million decrease to the fair value of plan assets transferred to the Company from RRD. The Company also recorded a net other postretirement benefit liability of $1.5 million, as a result of the transfer of an other postretirement benefit plan from RRD to the Company. Refer to Note 10, Retirement Plans, for further details regarding the Company’s pension and other postretirement benefit plans.

Donnelley Financial generates a portion of net revenue from sales to RRD’s subsidiaries. Included in the consolidated and combined financial statements are net revenues from sales to RRD and affiliates of $8.3 million for the six months ended June 30, 2017 and $19.4 million and $7.8 million for the years ended December 31, 2016 and 2015, respectively. Donnelley Financial utilizes RRD for freight and logistics, production of certain printed products and outsourced business services functions. Included in the consolidated and combined financial statements are cost of sales to RRD and affiliates of $51.8 million for the six months ended June 30, 2017 and $95.7 million and $108.7 million for the years ended December 31, 2016 and 2015, respectively. See Note 19, Related Parties, for a further description of related party transactions.

 
 

Component: (Network and Table)
Network
100090 - Disclosure - Significant Accounting Policies
(http://www.dfsco.com/20171231/taxonomy/role/DisclosureSignificantAccountingPolicies)
Table(Implied)
Slicers (applies to each fact value in each table cell)
Accounting Policies [Abstract]Period [Axis]
2017-01-01 - 2017-12-31
Accounting Policies [Abstract]
 
Significant Accounting Policies

Note 2. Significant Accounting Policies

Use of Estimates —The preparation of consolidated and combined 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, 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. Deferred taxes are not provided on cumulative foreign currency translation adjustments when the Company expects foreign earnings to be indefinitely 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 pension plan assets on a recurring basis. See Note 10, Retirement Plans, for the fair value of the Company’s pension plan assets as of December 31, 2017.

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company is required to record certain assets and liabilities at fair value on a nonrecurring basis, generally as a result of acquisitions or the remeasurement of assets resulting in impairment charges. 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 and cash equivalents, 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 files highly-customized materials, such as regulatory S-filings and IPOs with the SEC on behalf of its customers, and performs XBRL and related services.  Revenue is recognized for these services upon completion of the service performed or following final delivery of the related printed product. The Company also provides virtual data room services and other content management services, for which revenue is recognized as the service is performed. The Company recognizes revenue for the majority of its products upon the transfer of title and risk of ownership, which is generally upon shipment to the customer. Because substantially all of the Company’s products are customized, product returns are not significant; however, the Company accrues for the estimated amount of customer credits at the time of sale.

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 shipping and handling costs as well as certain postage costs, and out-of-pocket expenses are recorded gross.  The Company’s printing operations process paper that may be supplied directly by customers or may be purchased by the Company and sold to customers.  No revenue is recognized for customer-supplied paper, but revenues for Company-supplied paper are recognized on a gross basis.

Refer to Note 20, New Accounting Pronouncements, for a discussion of the expected impact of the 2018 adoption of Accounting Standards Update No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”).

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.

Receivables— Receivables are stated net of allowances for doubtful accounts and primarily include trade receivables, notes receivable and miscellaneous receivables from suppliers. No single customer comprised more than 10% of the Company’s net sales in 2017, 2016 or 2015. Specific customer provisions are made when a review of significant outstanding amounts, utilizing information about customer 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. See Note 5, Accounts Receivable, for details of activity affecting the allowance for doubtful accounts receivable.

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.  Inventory is valued using the First-In, First-Out (FIFO) method.

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. Indefinite-lived intangible assets are reviewed annually for impairment or more frequently if events or changes in circumstances indicate that the carrying value 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, 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.

Goodwill —Goodwill is either assigned to a specific reporting unit or allocated between reporting units based on the relative fair value of each reporting unit.  The Company's goodwill balances were reallocated from RRD’s historical reporting units based on the relative fair values of the businesses.  

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 amount.  

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 amount. If the carrying amount exceeds the reporting unit’s fair value, the Company will recognize an impairment loss for the amount by which the carrying amount exceeds the fair value.

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 annual review at October 31, 2017, and its 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 amount.

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 three years. Amortization expense related to internally-developed software, excluding amortization expense related to other intangible assets, was $22.5 million, $20.5 million and $17.2 million for the years ended December 31, 2017, 2016 and 2015, respectively.  Other intangible assets are recognized separately from goodwill and are amortized over their estimated useful lives.  See Note 4, Goodwill and Other Intangible Assets, for further discussion of other intangible assets and the related amortization expense.

Share-Based Compensation — In periods prior to the Separation, RRD maintained an incentive share-based compensation program for the benefit of its officers, directors, and certain employees, including certain Donnelley Financial employees.  For those periods share-based compensation expense has been allocated to the Company based on the awards and terms previously granted to the Company’s employees as well as an allocation of compensation expense to RRD’s corporate and shared functional employees.  

Subsequent to the Separation, the Company recognizes share-based compensation expense based on estimated fair values for all share-based awards made to employees and directors, including restricted stock and restricted stock units. The Company recognizes compensation expense for restricted stock units expected to vest on a straight-line basis over the requisite service period of the award, based on the grant date fair value. The Company recognizes compensation expense for performance based restricted stock awards utlizing a graded vesting schedule. See Note 14, Share-Based Compensation, for further discussion.

Pension and Other Postretirement Benefit Plans — Prior to the Separation, RRD provided pension and other postretirement healthcare benefits to certain current and former employees of Donnelley Financial. Donnelley Financial’s consolidated and combined statements of operations include expense allocations for these benefits. These allocations were funded through intercompany transactions with RRD which are reflected within net parent company investment in Donnelley Financial.

On October 1, 2016, Donnelley Financial recorded net pension plan liabilities of $68.3 million (consisting of a total benefit plan liability of $317.0 million, net of plan assets having fair market value of $248.7 million), as a result of the transfer of certain pension plan liabilities and assets from RRD to the Company upon the legal split of those plans. The pension plan asset allocation from RRD was finalized on June 30, 2017, which resulted in a $0.7 million decrease to the fair value of plan assets transferred to the Company from RRD. The Company also recorded a net other postretirement benefit liability of $1.5 million, as a result of the transfer of an other postretirement benefit plan from RRD to the Company.

Donnelley Financial engages outside actuaries to assist in the determination of the obligations and costs under these plans.  The annual income and expense amounts relating to the pension plan are based on calculations which include various actuarial assumptions including, mortality expectations, discount rates and expected long-term rates of return. 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 effects 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. Refer to Note 10, Retirement Plans, for further discussion.

Taxes on Income - In the Company’s combined financial statements prior to Separation, income tax expense and deferred tax balances were calculated on a separate income tax return basis although the Company’s operations have historically been included in the tax returns filed by the respective RRD entities of which the Company’s business was a part. As a standalone entity, the Company will file tax returns on its own behalf and its deferred taxes and effective tax rate may differ from those in historical periods.

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 maintains an income taxes payable or receivable account in each jurisdiction and, with the exception of certain entities outside the U.S. that transferred to the Company at Separation, the Company is deemed to settle current tax balances with the RRD tax paying entities in the respective jurisdictions. The Company classifies interest expense and any related penalties related to income tax uncertainties as a component of income tax expense.

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 11, Income Taxes, for further discussion.

 
 

Component: (Network and Table)
Network
100100 - Disclosure - Restructuring, Impairment and Other Charges
(http://www.dfsco.com/20171231/taxonomy/role/DisclosureRestructuringImpairmentAndOtherCharges)
Table(Implied)
Slicers (applies to each fact value in each table cell)
Restructuring And Related Activities [Abstract]Period [Axis]
2017-01-01 - 2017-12-31
Restructuring And Related Activities [Abstract]
 
Restructuring, Impairment and Other Charges

Note 3.  Restructuring, Impairment and Other Charges

Restructuring, Impairment and Other Charges recognized in Results of Operations

 

2017

Employee

Terminations

 

 

Other

Restructuring

Charges

 

 

Total

Restructuring

Charges

 

 

Impairment

 

 

Other

Charges

 

 

Total

 

U.S.

$

3.3

 

 

$

0.2

 

 

$

3.5

 

 

$

0.2

 

 

$

0.2

 

 

$

3.9

 

International

 

2.1

 

 

 

0.1

 

 

 

2.2

 

 

 

 

 

 

 

 

 

2.2

 

Corporate

 

1.0

 

 

 

 

 

 

1.0

 

 

 

 

 

 

 

 

 

1.0

 

Total

$

6.4

 

 

$

0.3

 

 

$

6.7

 

 

$

0.2

 

 

$

0.2

 

 

$

7.1

 

 

Restructuring Charges

For the year ended December 31, 2017, the Company recorded net restructuring charges of $6.4 million for employee termination costs for 192 employees, substantially all of whom were terminated as of December 31, 2017. These charges primarily related to the reorganization of certain operations and certain administrative functions. During the year ended December 31, 2017, the Company also incurred $0.3 million of net lease termination and other restructuring costs, $0.2 million of net impairment charges related to leasehold improvements associated with facility closures and $0.2 million for other charges associated with the Company’s decision to withdraw in 2013 from certain-multi-employer pension plans serving facilities that continued to operate.

 

2016

Employee

Terminations

 

 

Other

Restructuring

Charges

 

 

Total

Restructuring

Charges

 

 

Other

Charges

 

 

Total

 

U.S.

$

3.0

 

 

$

1.5

 

 

$

4.5

 

 

$

0.2

 

 

$

4.7

 

International

 

0.6

 

 

 

 

 

 

0.6

 

 

 

 

 

 

0.6

 

Corporate

 

0.1

 

 

 

 

 

 

0.1

 

 

 

 

 

 

0.1

 

Total

$

3.7

 

 

$

1.5

 

 

$

5.2

 

 

$

0.2

 

 

$

5.4

 

 

Restructuring Charges

For the year ended December 31, 2016, the Company recorded net restructuring charges of $3.7 million for employee termination costs for 84 employees, all of whom were terminated as of December 31, 2017. These charges primarily related to the reorganization of certain administrative functions. Additionally, the Company incurred lease termination and other restructuring charges of $1.5 million for the year ended December 31, 2016.

 

2015

Employee

Terminations

 

 

Other

Restructuring

Charges

 

 

Total

Restructuring

Charges

 

 

Other

Charges

 

 

Total

 

U.S.

$

1.4

 

 

$

1.9

 

 

$

3.3

 

 

$

0.2

 

 

$

3.5

 

International

 

0.9

 

 

 

 

 

 

0.9

 

 

 

 

 

 

0.9

 

Total

$

2.3

 

 

$

1.9

 

 

$

4.2

 

 

$

0.2

 

 

$

4.4

 

 

Restructuring and Impairment Charges

For the year ended December 31, 2015, the Company recorded net restructuring charges of $2.3 million for employee termination costs for 64 employees, all of whom were terminated as of December 31, 2017.  These charges primarily related to the reorganization of certain administrative functions. Additionally, the Company incurred lease termination and other restructuring charges of $1.9 million for the year ended December 31, 2015.

 

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

 

 

Reversals

 

 

Foreign

Exchange and

Other

 

 

Cash

Paid

 

 

December 31,

2017

 

Employee terminations

$

1.6

 

 

$

6.5

 

 

$

(0.1

)

 

$

 

 

$

(6.7

)

 

$

1.3

 

Lease terminations and other

 

3.8

 

 

 

3.7

 

 

 

(3.4

)

 

 

0.3

 

 

 

(2.3

)

 

 

2.1

 

Total

$

5.4

 

 

$

10.2

 

 

$

(3.5

)

 

$

0.3

 

 

$

(9.0

)

 

$

3.4

 

 

The current portion of restructuring reserves of $2.7 million at December 31, 2017 was included in accrued liabilities, while the long-term portion of $0.7 million, primarily related to 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 June 30, 2018.

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 2021. 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. “Reversals” primarily relate to the reversal of previously recognized lease termination costs associated with a facility that the Company began using during the third quarter of 2017.

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

$

0.9

 

 

$

3.7

 

 

$

(0.1

)

 

$

(2.9

)

 

$

1.6

 

Lease terminations and other

 

4.9

 

 

 

1.5

 

 

 

 

 

 

(2.6

)

 

 

3.8

 

Total

$

5.8

 

 

$

5.2

 

 

$

(0.1

)

 

$

(5.5

)

 

$

5.4

 

 

The current portion of restructuring reserves of $3.7 million at December 31, 2016 was included in accrued liabilities, while the long-term portion of $1.7 million, primarily related to lease termination costs, was included in other noncurrent liabilities at December 31, 2016.

 
 

Component: (Network and Table)
Network
100110 - Disclosure - Goodwill and Other Intangible Assets
(http://www.dfsco.com/20171231/taxonomy/role/DisclosureGoodwillAndOtherIntangibleAssets)
Table(Implied)
Slicers (applies to each fact value in each table cell)
Goodwill And Intangible Assets Disclosure [Abstract]Period [Axis]
2017-01-01 - 2017-12-31
Goodwill And Intangible Assets Disclosure [Abstract]
 
Goodwill and Other Intangible Assets

Note 4. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill by segment for the years ended December 31, 2017 and 2016 were as follows:

 

 

U.S.

 

 

International

 

 

Total

 

Net book value as of January 1, 2016

$

429.2

 

 

$

17.6

 

 

$

446.8

 

Foreign exchange and other adjustments

 

 

 

 

(0.4

)

 

 

(0.4

)

Net book value as of December 31, 2016

 

429.2

 

 

 

17.2

 

 

 

446.4

 

Foreign exchange and other adjustments

 

 

 

 

1.0

 

 

 

1.0

 

Net book value as of December 31, 2017

$

429.2

 

 

$

18.2

 

 

$

447.4

 

 

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

 

 

December 31, 2017

 

 

December 31, 2016

 

 

Gross

 

 

 

 

 

 

 

 

 

 

Gross

 

 

 

 

 

 

 

 

 

 

Carrying

 

 

Accumulated

 

 

Net Book

 

 

Carrying

 

 

Accumulated

 

 

Net Book

 

 

Amount

 

 

Amortization

 

 

Value

 

 

Amount

 

 

Amortization

 

 

Value

 

Customer relationships

$

140.6

 

 

$

(100.7

)

 

$

39.9

 

 

$

138.8

 

 

$

(85.3

)

 

$

53.5

 

Trade names

 

2.9

 

 

 

(2.9

)

 

 

 

 

 

6.3

 

 

 

(5.5

)

 

 

0.8

 

Trademarks, licenses and agreements

 

 

 

 

 

 

 

 

 

 

3.2

 

 

 

(3.2

)

 

 

 

Total other intangible assets

$

143.5

 

 

$

(103.6

)

 

$

39.9

 

 

$

148.3

 

 

$

(94.0

)

 

$

54.3

 

 

Amortization expense for other intangible assets was $15.0 million, $14.4 million and $15.4 million for the years ended December 31, 2017, 2016 and 2015, respectively.

The following table outlines the estimated annual amortization expense related to other intangible assets as of December 31, 2017:

 

For the year ending December 31,

Amount

 

2018

$

13.8

 

2019

 

13.8

 

2020

 

12.3

 

2021

 

 

2022

 

 

2023 and thereafter

 

 

Total

$

39.9

 

 
 

Component: (Network and Table)
Network
100120 - Disclosure - Accounts Receivable
(http://www.dfsco.com/20171231/taxonomy/role/DisclosureAccountsReceivable)
Table(Implied)
Slicers (applies to each fact value in each table cell)
Receivables [Abstract]Period [Axis]
2017-01-01 - 2017-12-31
Receivables [Abstract]
 
Accounts Receivable

Note 5. Accounts Receivable

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

 

 

2017

 

 

2016

 

 

2015

 

Balance, beginning of year

$

6.4

 

 

$

4.6

 

 

$

3.9

 

Provisions charged to expense

 

3.9

 

 

 

3.1

 

 

 

0.5

 

Write-offs and other

 

(3.0

)

 

 

(1.3

)

 

 

0.2

 

Balance, end of year

$

7.3

 

 

$

6.4

 

 

$

4.6

 

 
 

Component: (Network and Table)
Network
100130 - Disclosure - Inventories
(http://www.dfsco.com/20171231/taxonomy/role/DisclosureInventories)
Table(Implied)
Slicers (applies to each fact value in each table cell)
Inventory Disclosure [Abstract]Period [Axis]
2017-01-01 - 2017-12-31
Inventory Disclosure [Abstract]
 
Inventories

Note 6. Inventories

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

$

3.3

 

 

$

7.6

 

Work in process

 

13.7

 

 

 

10.8

 

Finished goods

 

6.3

 

 

 

5.7

 

Total

$

23.3

 

 

$

24.1

 

 

 
 

Component: (Network and Table)
Network
100140 - Disclosure - Property, Plant and Equipment
(http://www.dfsco.com/20171231/taxonomy/role/DisclosurePropertyPlantAndEquipment)
Table(Implied)
Slicers (applies to each fact value in each table cell)
Property Plant And Equipment [Abstract]Period [Axis]
2017-01-01 - 2017-12-31
Property Plant And Equipment [Abstract]
 
Property, Plant and Equipment

Note 7. Property, Plant and Equipment

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

 

 

2017

 

 

2016

 

Land

$

10.0

 

 

$

10.0

 

Buildings

 

36.1

 

 

 

44.4

 

Machinery and equipment

 

104.0

 

 

 

109.2

 

 

 

150.1

 

 

 

163.6

 

Less: Accumulated depreciation

 

(115.4

)

 

 

(128.1

)

Total

$

34.7

 

 

$

35.5

 

 

During the years ended December 31, 2017, 2016 and 2015, depreciation expense was $7.0 million, $8.4 million and $9.1 million, respectively.

 

 
 

Component: (Network and Table)
Network
100150 - Disclosure - Accrued Liabilities
(http://www.dfsco.com/20171231/taxonomy/role/DisclosureAccruedLiabilities)
Table(Implied)
Slicers (applies to each fact value in each table cell)
Accrued Liabilities Current [Abstract]Period [Axis]
2017-01-01 - 2017-12-31
Accrued Liabilities Current [Abstract]
 
Accrued Liabilities

Note 8. Accrued Liabilities

 

The components of the Company’s accrued liabilities at December 31, 2017 and 2016 were as follows:

 

 

2017

 

 

2016

 

Employee-related liabilities

$

68.9

 

 

$

54.0

 

Customer-related liabilities

 

22.9

 

 

 

19.3

 

Accrued interest payable

 

6.4

 

 

 

6.2

 

Restructuring liabilities

 

2.7

 

 

 

3.7

 

Other

 

18.3

 

 

 

17.5

 

Total accrued liabilities

$

119.2

 

 

$

100.7

 

Employee-related liabilities consist primarily of sales commission, incentive compensation, employee benefit accruals and payroll.  Customer-related liabilities consist primarily of deferred revenue and progress billings and volume discount accruals. Other accrued liabilities include miscellaneous operating accruals and income and other tax liabilities.

 
 

Component: (Network and Table)
Network
100160 - Disclosure - Commitments and Contingencies
(http://www.dfsco.com/20171231/taxonomy/role/DisclosureCommitmentsAndContingencies)
Table(Implied)
Slicers (applies to each fact value in each table cell)
Commitments And Contingencies Disclosure [Abstract]Period [Axis]
2017-01-01 - 2017-12-31
Commitments And Contingencies Disclosure [Abstract]
 
Commitments and Contingencies

Note 9. Commitments and Contingencies

As of December 31, 2017, the Company had commitments of approximately $5.3 million for the purchase of property, plant and equipment related to incomplete projects. In addition, as of December 31, 2017, the Company had commitments of approximately $34.1 million for outsourced services, professional, maintenance and other services. The Company also has contractual commitments of $1.3 million for severance payments related to employee restructuring activities.

Future minimum rental commitments under operating leases are as follows:

 

Year Ended December 31

Amount

 

2018

$

26.6

 

2019

 

20.1

 

2020

 

13.4

 

2021

 

10.1

 

2022

 

8.4

 

2023 and thereafter

 

21.8

 

 

$

100.4

 

 

The Company has operating lease commitments, including those for vacated facilities, totaling $100.4 million extending through various periods to 2026. Lease terms for some locations provide for rent escalations and renewal options, with some leases requiring payment for taxes, insurance and maintenance. Escalation terms and renewal options vary by market and lease. Future rental commitments for leases have not been reduced by minimum non-cancelable sublease rentals aggregating approximately $31.9 million. The Company remains secondarily liable under these leases in the event that the sub-lessee defaults under the sublease terms. The Company does not believe that material payments will be required as a result of the secondary liability provisions of the primary lease agreements.

Rent expense for facilities in use and equipment was $27.4 million, $23.8 million and $22.2 million for the years ended December 31, 2017, 2016 and 2015, respectively. Rent expense for vacated facilities was recognized as restructuring, impairment and other charges. See Note 3, Restructuring, Impairment and Other Charges, for further details.

Litigation

From time to time, the Company’s customers and others file voluntary petitions for reorganization under United States bankruptcy laws. In such cases, certain pre-petition payments received by the Company from these parties could be considered preference items and subject to return. In addition, the Company may be party to certain litigation arising in the ordinary course of business. Management believes that the final resolution of these preference items and litigation will not have a material effect on the Company’s consolidated results of operations, financial position or cash flows.

 
 

Component: (Network and Table)
Network
100170 - Disclosure - Retirement Plans
(http://www.dfsco.com/20171231/taxonomy/role/DisclosureRetirementPlans)
Table(Implied)
Slicers (applies to each fact value in each table cell)
Compensation And Retirement Disclosure [Abstract]Period [Axis]
2017-01-01 - 2017-12-31
Compensation And Retirement Disclosure [Abstract]
 
Retirement Plans

Note 10. Retirement Plans

Donnelley Financial’s Participation in RRD’s Pension and Postretirement Benefit Plans

RRD provided pension and other postretirement healthcare benefits to certain current and former employees of Donnelley Financial. Donnelley Financial’s consolidated and combined statements of operations include expense allocations for these benefits. These allocations were funded through intercompany transactions with RRD which are reflected within net parent company investment in Donnelley Financial. Total RRD pension and postretirement benefit plan net income allocated to Donnelley Financial, related to pension cost and postretirement benefits was $4.2 million and $3.7 million in the years ended December 31, 2016 and 2015, respectively. Included in these amounts is an allocation for other postretirement benefit plans for $1.0 million and $1.9 million in the years ended December 31, 2016 and 2015, respectively.  These allocations are reflected in the Company’s selling, general and administrative expenses.  

Donnelley Financial’s Pension and Postretirement Benefit Plans

On October 1, 2016, Donnelley Financial recorded net pension plan liabilities of $68.3 million (consisting of a total benefit plan liability of $317.0 million, net of plan assets having fair market value of $248.7 million), as a result of the transfer of certain pension plan liabilities and assets from RRD to the Company upon the legal split of those plans. The pension plan asset allocation from RRD was finalized on June 30, 2017, which resulted in a $0.7 million decrease to the fair value of plan assets transferred to the Company from RRD. The Company also recorded a net other postretirement benefit liability of $1.5 million, as a result of the transfer of an other postretirement benefit plan from RRD to the Company.

The Company’s primary defined benefit plan is frozen. No new employees are permitted to enter the Company’s frozen plan and participants will earn no additional benefits. Benefits are generally based upon years of service and compensation. These defined benefit retirement income plans are funded in conformity with the applicable government regulations. The Company funds at least the minimum amount required for all funded plans using actuarial cost methods and assumptions acceptable under government regulations.

The annual income and expense amounts relating to the pension plan are based on calculations which include various actuarial assumptions including, mortality expectations, discount rates and expected long-term rates of return. The Company reviews its actuarial assumptions on an annual basis as of December 31 (or more frequently if a significant event requiring remeasurement occurs) and modifies the assumptions based on current rates and trends when it is appropriate to do so. The effects of modifications are recognized immediately on the consolidated balance sheets, but are amortized into operating earnings over future periods, with the deferred amount recorded in accumulated other comprehensive loss.  Total pension income was $3.3 million, $1.0 million and $27.0 million in 2017, 2016 and 2015, respectively, of which $25.2 million was allocated in 2015 to RRD and RRD related parties.  

During the year ended December 31, 2014, the Company adopted the Society of Actuaries RP-2014 mortality tables which were used in the calculation of the Company’s U.S. pension obligations. The new mortality tables increased the expected life of plan participants, extending the length of time that payments may be required and increasing the plans’ total expected benefit payments. During the years ended December 31, 2016, and December 31, 2017, the Company adopted updates to the Society of Actuaries RP-2014 mortality tables. The 2016 and 2017 mortality table updates both resulted in a partial reversal of the 2014 increases in the expected life of plan participants and benefit obligations.

The Company made cash contributions of $2.1 million and $0.1 million to its pension and other postretirement benefit plans, respectively, during the year ended December 31, 2017. The Company expects to make cash contributions of approximately $2.3 million and $0.1 million to its pension and other postretirement benefit plans, respectively, in 2018.

The pension plan obligations are calculated using generally accepted actuarial methods and are measured as of December 31. Actuarial gains and losses for frozen plans are amortized using the corridor method over the average remaining expected life of active plan participants.

The components of the estimated net pension plan income for Donnelley Financial’s pension plans for the years ended December 31, 2017, 2016 and 2015 were as follows:  

 

 

Pension Benefits

 

 

2017

 

 

2016

 

 

2015

 

Interest cost

$

10.6

 

 

$

2.4

 

 

$

147.3

 

Expected return on plan assets

 

(16.0

)

 

 

(4.1

)

 

 

(210.7

)

Amortization of actuarial loss

 

2.1

 

 

 

0.7

 

 

 

36.4

 

Net periodic benefit income

$

(3.3

)

 

$

(1.0

)

 

$

(27.0

)

Income allocated to RRD affiliates

 

 

 

 

 

 

 

25.2

 

Net periodic benefit income, net of allocation

$

(3.3

)

 

$

(1.0

)

 

$

(1.8

)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average assumption used to calculate net periodic benefit expense: