10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from __________ to __________

001-34056

(Commission File Number)

VERSO CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	75-3217389
(State of Incorporation or Organization)	(IRS Employer Identification Number)

8540 Gander Creek Drive

Miamisburg, Ohio 45342

(Address, including zip code, of principal executive offices)

(877) 855-7243

(Registrant’s telephone number, including area code)

_____________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.01 per share	VRS	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No    

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No    

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☐	Accelerated filer	☑
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act: ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  ☐ Yes ☑ No   

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ☑ Yes ☐ No

As of October 29, 2021, Verso Corporation had 29,062,302 shares of Class A common stock, par value $0.01 per share, outstanding.

Entity Names and Organization

In this report, the term “Verso,” “the Company,” “we,” “us,” and “our” refer to Verso Corporation, which is the ultimate parent entity and the issuer of Class A common stock listed on the New York Stock Exchange, and its consolidated subsidiaries. Verso is the sole member of Verso Holding LLC, which is the sole member of Verso Paper Holding LLC. As used in this report, the term “Verso Holding” refers to Verso Holding LLC, and the term “Verso Paper” refers to Verso Paper Holding LLC.

Forward-Looking Statements

In this quarterly report, all statements that are not purely historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or “Securities Act,” and Section 21E of the Securities Exchange Act of 1934, as amended, or “Exchange Act.” Forward-looking statements may be identified by the words “believe,” “expect,” “anticipate,” “project,” “plan,” “estimate,” “intend” and other similar expressions. They include, for example, statements relating to the unsolicited proposal from Atlas Holdings LLC; our business and operating outlook, including our plans with respect to our Wisconsin Rapids Mill; the continued impact of the COVID-19 pandemic; assessment of market conditions; and the growth potential of the industry in which we operate. Forward-looking statements are based on currently available business, economic, financial and other information and reflect management’s current beliefs, expectations and views with respect to future developments and their potential effects on us. Actual results could vary materially depending on risks and uncertainties that may affect us and our business. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: the adverse impact of idling production, shutting down machines or facilities, restructuring our operations and selling non-core assets; the unsolicited proposal from Atlas Holdings LLC regarding a potential transaction to acquire all of the outstanding shares of our common stock; uncertainties as to whether an agreement relating to a potential transaction with Atlas Holdings LLC or an alternative thereto will be negotiated and executed; uncertainties as to whether a potential transaction with Atlas Holdings LLC or an alternative thereto will be completed; changes in the costs of raw materials and purchased energy; security breaches and other disruption to our information technology infrastructure; uncertainties regarding the impact, duration and severity of the COVID-19 pandemic and measures intended to reduce its spread, and the impact of COVID-19 on economic conditions, including with respect to labor market conditions, economic activity, consumer behavior, supply chain shortages and disruptions and inflationary pressure; the long-term structural decline and general softening of demand facing the paper industry; adverse developments in general business and economic conditions; developments in alternative media, which are expected to continue to adversely affect the demand for some of our key products, and the effectiveness of our responses to these developments; intense competition in the paper manufacturing industry; our limited ability to control the pricing of our products or pass through increases in our costs to our customers; our business being less diversified because of the Pixelle Sale (as defined below), the sale of our Duluth Mill, the closure of our Luke Mill and permanent shut down of the No. 14 paper machine and certain other long-lived assets at our Wisconsin Rapids Mill; our dependence on a small number of customers for a significant portion of our business; our ability to compete with respect to certain specialty paper products for a period of two years after the closing of the Pixelle Sale (as defined below); any failure to comply with environmental or other laws or regulations; legal proceedings or disputes; any labor disputes; and the potential risks and uncertainties described in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2020, Part II, Item 1A, “Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other sections of this Quarterly Report on Form 10-Q as such disclosures may be amended, supplemented or superseded from time to time by other reports we file with the Securities and Exchange Commission, including subsequent annual reports on Form 10-K and quarterly reports on Form 10-Q. We assume no obligation to update any forward-looking statement made in this Quarterly Report to reflect subsequent events or circumstances or actual outcomes.

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TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		Page
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets	4
	Unaudited Condensed Consolidated Statements of Operations	5
	Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)	5
	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity	6
	Unaudited Condensed Consolidated Statements of Cash Flows	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	28

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities	29
Item 4.	Mine Safety Disclosures	29
Item 5.	Other Information	29
Item 6.	Exhibits	30
SIGNATURES		31

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PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

VERSO CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
	December 31,		September 30,
(Dollars in millions, except per share amounts)	2020		2021
ASSETS
Current assets:
Cash and cash equivalents	$	137	$	166
Accounts receivable, net	83		112
Inventories	224		141
Assets held for sale	17		6
Prepaid expenses and other assets	5		8
Total current assets	466		433
Property, plant and equipment, net	613		513
Deferred tax assets	122		151
Intangibles and other assets, net	44		37
Total assets	$	1,245	$	1,134
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	80	$	115
Accrued and other liabilities	92		84
Current maturities of long-term debt and finance leases	1		2
Total current liabilities	173		201
Long-term debt and finance leases	4		3
Pension benefit obligation	350		308
Other long-term liabilities	34		39
Total liabilities	561		551
Commitments and contingencies (Note 11)
Equity:
Preferred stock -- par value $0.01 (50,000,000 shares authorized, no shares issued)	—		—
Common stock -- par value $0.01 (210,000,000 Class A shares authorized with 35,877,533 shares issued and 33,133,649 outstanding on December 31, 2020 and 33,260,987 shares issued and 29,062,302 outstanding on September 30, 2021; 40,000,000 Class B shares authorized with no shares issued and outstanding on December 31, 2020 and September 30, 2021)	—		—
Treasury stock -- at cost (2,743,884 shares on December 31, 2020 and 4,198,685 shares on September 30, 2021)	(39)		(62)
Paid-in-capital	705		652
Retained deficit	(42)		(67)
Accumulated other comprehensive income	60		60
Total equity	684		583
Total liabilities and equity	$	1,245	$	1,134

See notes to Unaudited Condensed Consolidated Financial Statements.

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VERSO CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in millions, except per share amounts)	2020		2021		2020		2021
Net sales	$	306	$	339	$	1,045	$	950
Costs and expenses:
Cost of products sold (exclusive of depreciation and amortization)	309		274		1,007		810
Depreciation and amortization	21		18		66		137
Selling, general and administrative expenses	19		19		62		54
Restructuring charges	(2)		—		4		17
Other operating (income) expense	3		(7)		(84)		(5)
Operating income (loss)	(44)		35		(10)		(63)
Interest expense	1		—		1		1
Other (income) expense	(5)		(6)		(14)		(19)
Income (loss) before income taxes	(40)		41		3		(45)
Income tax expense (benefit)	(9)		(17)		14		(29)
Net income (loss)	$	(31)	$	58	$	(11)	$	(16)
Income (loss) per common share:
Basic	$	(0.92)	$	1.98	$	(0.33)	$	(0.53)
Diluted	(0.92)		1.96		(0.33)		(0.53)
Weighted average common shares outstanding (in thousands)
Basic	33,675		29,334		34,440		31,476
Diluted	33,675		29,605		34,440		31,476

See notes to Unaudited Condensed Consolidated Financial Statements.

VERSO CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in millions)	2020		2021		2020		2021
Net income (loss)	$	(31)	$	58	$	(11)	$	(16)
Other comprehensive income (loss), net of tax
Defined benefit pension plan:
Pension liability adjustment, net	(119)		—		(119)		—
Other comprehensive income (loss), net of tax	(119)		—		(119)		—
Comprehensive income (loss)	$	(150)	$	58	$	(130)	$	(16)

See notes to Unaudited Condensed Consolidated Financial Statements.

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VERSO CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
	Class A								Retained Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
(Dollars in millions, shares in thousands)	Common Shares	Common Stock		Treasury Shares	Treasury Stock		Paid-in-Capital
Balance - June 30, 2020	35,766	$	—	2,097	$	(32)	$	702	$	189	$	122	$	981
Net income (loss)	—	—		—	—		—		(31)		—		(31)
Treasury shares	—	—		6	—		—		—		—		—
Other comprehensive income (loss), net	—	—		—	—		—		—		(119)		(119)
Common stock issued for restricted stock	24	—		—	—		—		—		—		—
Dividends and dividend equivalents declared	—	—		—	—		2		(107)		—		(105)
Equity award expense	—	—		—	—		1		—		—		1
Balance - September 30, 2020	35,790	$	—	2,103	$	(32)	$	705	$	51	$	3	$	727
Balance - June 30, 2021	33,207	$	—	3,588	$	(50)	$	651	$	(122)	$	60	$	539
Net income (loss)	—	—		—	—		—		58		—		58
Treasury shares	—	—		611	(12)		—		—		—		(12)
Common stock issued for restricted stock	54	—		—	—		—		—		—		—
Dividends and dividend equivalents declared	—	—		—	—		—		(3)		—		(3)
Equity award expense	—	—		—	—		1		—		—		1
Balance - September 30, 2021	33,261	$	—	4,199	$	(62)	$	652	$	(67)	$	60	$	583
Balance - December 31, 2019	34,949	$	—	245	$	(5)	$	698	$	172	$	122	$	987
Net income (loss)	—	—		—	—		—		(11)		—		(11)
Other comprehensive income (loss), net	—	—		—	—		—		—		(119)		(119)
Treasury shares	—	—		1,858	(27)		—		—		—		(27)
Common stock issued for restricted stock	841	—		—	—		—		—		—		—
Dividends and dividend equivalents declared	—	—		—	—		2		(110)		—		(108)
Equity award expense	—	—		—	—		5		—		—		5
Balance - September 30, 2020	35,790	$	—	2,103	$	(32)	$	705	$	51	$	3	$	727
Balance - December 31, 2020	35,878	$	—	2,744	$	(39)	$	705	$	(42)	$	60	$	684
Net income (loss)	—	—		—	—		—		(16)		—		(16)
Treasury shares	—	—		1,455	(23)		—		—		—		(23)
Common stock issued for restricted stock	423	—		—	—		—		—		—		—
Dividends and dividend equivalents declared	—	—		—	—		—		(9)		—		(9)
Repurchase of common stock	(3,040)	—		—	—		(56)		—		—		(56)
Equity award expense	—	—		—	—		3		—		—		3
Balance - September 30, 2021	33,261	$	—	4,199	$	(62)	$	652	$	(67)	$	60	$	583

See notes to Unaudited Condensed Consolidated Financial Statements.

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VERSO CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	Nine Months Ended
	September 30,
(Dollars in millions)	2020		2021
Cash Flows From Operating Activities:
Net income (loss)	$	(11)	$	(16)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	66		137
Noncash restructuring charges	—		8
Net periodic pension cost (income)	(12)		(17)
Pension plan contributions	(47)		(25)
Amortization of debt issuance cost	—		1
Equity award expense	5		3
Gain on Sale of Androscoggin/Stevens Point Mills	(88)		—
Loss on Sale of Duluth Mill	—		3
(Gain) loss on sale or disposal of assets	3		—
Gain on insurance recoveries	—		(6)
Deferred taxes	14		(29)
Changes in assets and liabilities:
Accounts receivable, net	9		(29)
Inventories	(10)		79
Prepaid expenses and other assets	—		(3)
Accounts payable	(46)		27
Accrued and other liabilities	(12)		—
Net cash provided by (used in) operating activities	(129)		133
Cash Flows From Investing Activities:
Proceeds from sale of assets	1		1
Capital expenditures	(43)		(38)
Net proceeds from Sale of Androscoggin/Stevens Point Mills	338		—
Net proceeds from Sale of Duluth Mill	—		6
Proceeds from insurance recoveries	—		6
Recognition of deposits and net proceeds from sale of Luke Mill equipment	—		10
Net cash provided by (used in) investing activities	296		(15)
Cash Flows From Financing Activities:
Borrowings on ABL Facility	36		—
Payments on ABL Facility	(36)		—
Principal payment on financing lease obligation	(1)		(1)
Repurchase of common stock	—		(56)
Acquisition of treasury stock	(27)		(23)
Dividends paid to stockholders	(108)		(9)
Net cash provided by (used in) financing activities	(136)		(89)
Change in Cash and cash equivalents and restricted cash	31		29
Cash and cash equivalents and restricted cash at beginning of period	44		139
Cash and cash equivalents and restricted cash at end of period	$	75	$	168
Supplemental cash flow disclosures:
Total interest paid	$	—	$	1
Total income taxes paid	—		—
Noncash investing and financing activities:
Right-of-use assets obtained in exchange for new finance lease liabilities	$	—	$	1
Right-of-use assets obtained in exchange for new capitalized operating lease liabilities	7		1
Net right-of-use assets re-measurement	—		4

See notes to Unaudited Condensed Consolidated Financial Statements.

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VERSO CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF BUSINESS AND BASIS OF PRESENTATION

Nature of Business — Verso is a producer of graphic paper, specialty paper, packaging paper and Northern Bleached Hardwood Kraft, or “NBHK,” pulp. These products are used primarily in media, marketing applications and commercial printing applications. Uses include catalogs, magazines, high-end advertising brochures, direct-mail advertising, and specialty applications, such as labeling and other special applications. NBHK pulp is used to manufacture printing, writing and specialty paper grades, tissue and other products. Verso operates in the pulp and paper market segments primarily in North America (see Note 12).

Sale of Androscoggin Mill and Stevens Point Mill — On November 11, 2019, Verso and Verso Paper entered into a membership interest purchase agreement, or the “Purchase Agreement,” with Pixelle Specialty Solution LLC, or “Pixelle,” whereby Verso and Verso Paper agreed to sell to Pixelle, or the “Pixelle Sale,” or “Sale of Androscoggin/Stevens Point Mills,” all of the outstanding membership interests in Verso Androscoggin, LLC an indirect wholly owned subsidiary of Verso and the entity that, as of the closing date of the Pixelle Sale, held all the assets primarily related to Verso’s Androscoggin Mill located in Jay, Maine, and Stevens Point Mill, located in Stevens Point, Wisconsin. The transaction was approved by Verso’s stockholders on January 31, 2020 and closed on February 10, 2020 (see Note 5).

Duluth Mill and Wisconsin Rapids Mill — On June 9, 2020, Verso announced plans to indefinitely idle its mills in Duluth, Minnesota and Wisconsin Rapids, Wisconsin, while exploring viable and sustainable alternatives for both mills including restarting, selling or permanently closing one or both mills. Verso’s decision to reduce its production capacity was driven by the accelerated decline in graphic paper demand, primarily resulting from the COVID-19 pandemic. The production capacity of the Duluth Mill was approximately 270,000 tons of supercalendered/packaging paper and the production capacity of the Wisconsin Rapids Mill is approximately 540,000 tons of coated and packaging paper. Verso idled production at the Duluth Mill on July 1, 2020 and at the Wisconsin Rapids Mill on July 27, 2020. On December 31, 2020, Verso decided to permanently shut down the Duluth Mill, which was subsequently sold on May 13, 2021 (see Note 5). On February 8, 2021, Verso decided to permanently shut down the No. 14 paper machine and certain other long-lived assets at the Wisconsin Rapids Mill (see Note 10). Verso continues to operate the facility at the Wisconsin Rapids Mill to convert paper produced at the Quinnesec and Escanaba mills to sheets for the commercial print market.

COVID-19 Pandemic — The COVID-19 Pandemic has impacted Verso’s operations and financial results since the first quarter of 2020 and continues to have an impact on the Company. Verso serves as an essential manufacturing business and, as a result, its mills have continued to be operational during the pandemic in order to meet the ongoing needs of its customers, including those in other essential business sectors, which provide food, medical and hygiene products needed in a global health crisis. However, the guidelines and orders enacted by federal, state and local governments impacted demand from retailers, political campaigns, and sports and entertainment events, driving reduced purchases of printed materials and substantially impacting Verso’s graphic paper business.

There continues to be significant uncertainties associated with the COVID-19 Pandemic, including with respect to the resurgence of new variants of the virus; or if the vaccines introduced to combat the virus are not effective or public acceptance of such vaccines is not widespread; and the impact of COVID-19 on economic conditions, including with respect to labor market conditions, economic activity, consumer behavior, supply chain shortages and disruptions and inflationary pressure; all of which could have a material impact on the Company’s business, financial position, results of operations and cash flows.

While Verso cannot reasonably estimate the full impact of COVID-19 on the business, financial position, results of operations and cash flows, the Company has seen its sales, volume and prices continue to recover during the third quarter of 2021.

Basis of Presentation — This report contains the Unaudited Condensed Consolidated Financial Statements of Verso as of December 31, 2020 and September 30, 2021 and for the three and nine months ended September 30, 2020 and 2021. The December 31, 2020 Unaudited Condensed Consolidated Balance Sheet data was derived from audited financial statements, but it does not include all disclosures required annually by accounting principles generally accepted in the United States of America, or “GAAP.” In Verso’s opinion, the Unaudited Condensed Consolidated Financial Statements include all adjustments that are necessary for the fair presentation of Verso’s respective financial condition, results of operations and cash flows for the interim periods presented. Except as disclosed in the notes to the Unaudited Condensed Consolidated Financial Statements, such adjustments are of a normal, recurring nature. Intercompany balances and transactions are eliminated in consolidation. The results of operations and cash flows for the interim periods presented may not necessarily be indicative of full-year

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results. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of Verso contained in its Annual Report on Form 10-K for the year ended December 31, 2020.

2.  RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Guidance Adopted in 2021

Accounting Standards Codification Topic 740, Income Taxes. In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update 2019-12, Simplifying the Accounting for Income Taxes, which removes certain exceptions for investments, intraperiod allocations and interim calculations, and adds guidance to reduce the complexity in accounting for income taxes. Verso adopted this guidance on January 1, 2021, and the effect on the Unaudited Condensed Consolidated Financial Statements was not material.

3. REVENUE RECOGNITION

The following table presents revenue disaggregated by product included on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in millions)	2020		2021		2020		2021
Paper	$	260	$	296	$	900	$	835
Packaging	14		8		56		21
Pulp	32		35		89		94
Total Net sales	$	306	$	339	$	1,045	$	950

The following table presents revenue disaggregated by sales channel included on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in millions)	2020		2021		2020		2021
End-users and Converters	$	95	$	104	$	375	$	290
Brokers and Merchants	150		174		477		502
Printers	61		61		193		158
Total Net sales	$	306	$	339	$	1,045	$	950

4. SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION

Restricted Cash — As of December 31, 2020 and September 30, 2021, $2 million of restricted cash was included in Intangibles and other assets, net on the Unaudited Condensed Consolidated Balance Sheets primarily related to asset retirement obligations in the state of Michigan. These cash deposits are required by the state and may only be used for the future closure of a landfill. As of both September 30, 2020 and 2021, Cash and cash equivalents and restricted cash on the Unaudited Condensed Consolidated Statements of Cash Flows includes restricted cash of $2 million.

Inventories — The following table summarizes inventories by major category:

	December 31,		September 30,
(Dollars in millions)	2020		2021
Raw materials	$	45	$	34
Work-in-process	31		19
Finished goods	125		71
Replacement parts and other supplies	23		17
Inventories	$	224	$	141

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Property, plant and equipment — Depreciation expense for the three and nine months ended September 30, 2020 was $20 million and $62 million, respectively. Depreciation expense for three and nine months ended September 30, 2021 was $17 million and $134 million, respectively. Depreciation expense for the nine months ended September 30, 2021 includes $84 million in accelerated depreciation associated with the permanent shutdown of the No. 14 paper machine and certain other long-lived assets at the Wisconsin Rapids Mill (see Note 10). Property, plant and equipment as of September 30, 2020 and 2021 include $2 million and $11 million, respectively, of capital expenditures that were unpaid and included in Accounts payable and Accrued and other liabilities on the Unaudited Condensed Consolidated Balance Sheets.

Income Taxes — Income tax benefit for the three months ended September 30, 2020 was $9 million and income tax expense for the nine months ended September 30, 2020 was $14 million. Income tax benefit for the three and nine months ended September 30, 2021 was $17 million and $29 million, respectively. During the three and nine months ended September 30, 2020, Verso recognized $1 million and $8 million, respectively, of additional valuation allowance against state tax credits. During the three months ended September 30, 2021, Verso reduced the valuation allowance against state tax credits by $2 million. During the nine months ended September 30, 2021, the net additional valuation allowance against state tax credits was $2 million.

The Company’s income tax provision for interim periods is determined through the use of an estimated annual effective tax rate applied to year-to-date ordinary income/loss plus or minus the tax effects of discrete items. The Company’s estimated annual effective tax rate benefit is higher than statutory rates primarily due to the effect of forecasted pretax book income and permanent items impacting the forecasted rate such as portions of executive compensation and other expenses that are not fully deductible for tax.

Related Party Transactions — Net sales for the three and nine months ended September 30, 2021, include sales to a related party of $18 million and $51 million, respectively. Accounts receivable as of December 31, 2020 and September 30, 2021, include $4 million and $6 million, respectively, associated with this related party.

5. DISPOSITIONS

Sale of Androscoggin Mill and Stevens Point Mill

On February 10, 2020, Verso completed the Pixelle Sale, selling all of the outstanding membership interests in Verso Androscoggin, LLC, an indirect wholly owned subsidiary of Verso and the entity that, as of the closing date of the Pixelle Sale, held all the assets primarily related to Verso’s Androscoggin Mill located in Jay, Maine and Verso’s Stevens Point Mill, located in Stevens Point, Wisconsin. The Pixelle Sale did not qualify as a discontinued operation. As consideration for the Pixelle Sale, Verso received $352 million in cash, which reflected certain adjustments related to Verso’s estimates of cash, indebtedness and working capital of Verso Androscoggin, LLC and Pixelle assumed $37 million of Verso’s unfunded pension liabilities, which reflected certain adjustments in connection with the completed transfer of the unfunded pension liabilities during the year ended December 31, 2020.

During the nine months ended September 30, 2020, Verso received $338 million in net cash proceeds from the Pixelle Sale, consisting of $344 million in cash reduced by $6 million in selling costs and recognized an $88 million gain on the sale. In connection with the Pixelle Sale, Verso provided certain transition services to Pixelle and recognized $2 million and $5 million for these services during the three and nine months ended September 30, 2020, respectively, on the Unaudited Condensed Consolidated Statements of Operations. During the three months ended September 30, 2020, $1 million of these transition services was recognized as a reduction of Cost of products sold and $1 million was recognized as a reduction of Selling, general and administrative expenses. During the nine months ended September 30, 2020, $2 million of these transition services was recognized as a reduction Cost of products sold and $3 million was recognized as a reduction of Selling, general and administrative expenses. These transition services were completed in October 2020.

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Luke Mill Equipment and Other Asset Sales

On August 1, 2020, Verso entered into an equipment purchase agreement with Halkali Kagit Karton Sanayi ve Tic. A.S., or the “Purchaser,” a company organized under the laws of Turkey, whereby Verso agreed to sell, and the Purchaser agreed to purchase, certain equipment at Verso’s Luke Mill, primarily including two paper machines. The purchase price was $11 million in cash due at various milestones. As of September 30, 2021, Verso has received $11 million in non-refundable deposits associated with this sale which includes $1 million in the first quarter of 2021, $1 million in the second quarter of 2021 and the final payment of $1 million in the third quarter of 2021. Management determined that the control over the use of the acquired assets had transferred to the Purchaser and correspondingly recognized the sale of the two paper machines and related assets in June 2021. Verso is exploring options for disposal of the remaining assets of the Luke Mill. As of December 31, 2020 and September 30, 2021, Verso classified $17 million and $6 million, respectively, in Assets held for sale on the Unaudited Condensed Consolidated Balance Sheets.

Sale of Duluth Mill

On May 13, 2021, Verso Minnesota Wisconsin LLC, an indirect wholly owned subsidiary of Verso, entered into an asset purchase agreement with ST Paper 1, LLC and sold all of the assets primarily related to Verso’s Duluth Mill located in Duluth, Minnesota for $7 million in cash, less costs to sell of $1 million. The sale, including related selling costs, resulted in a loss of $3 million, which is included in Other operating (income) expense on the Unaudited Condensed Consolidated Statement of Operations for the nine months ended September 30, 2021.

6.  DEBT

As of December 31, 2020 and September 30, 2021, Verso Paper had no outstanding borrowings on its ABL Facility (as defined below).

ABL Facility

Verso Paper is the borrower under a $200 million asset-based revolving credit facility, or the “ABL Facility.” From February 6, 2019 until May 10, 2021, the ABL Facility provided for revolving commitments of $350 million, with a $100 million sublimit for letters of credit and a $35 million sublimit for swingline loans. During this time, Verso Paper could request one or more incremental revolving commitments in an aggregate principal amount up to the greater of (i) $75 million or (ii) the excess of the borrowing base over the revolving facility commitments of $350 million; however, the lenders were not obligated to increase the revolving commitments upon any such request. On May 10, 2021, Verso Paper entered into a third amendment to the ABL Facility, or the “Third ABL Amendment.” As a result of the Third ABL Amendment, the ABL Facility provides for revolving commitments of $200 million, with a $75 million sublimit for letters of credit and a $20 million sublimit for swingline loans. The amount of borrowings and letters of credit available to Verso Paper pursuant to the ABL Facility is limited to the lesser of $200 million or an amount determined pursuant to a borrowing base ($141 million as of September 30, 2021). As of September 30, 2021, there were no borrowings outstanding under the ABL Facility, with $21 million issued in letters of credit and $120 million available for future borrowings. Availability under the ABL Facility is subject to customary borrowing conditions. The ABL Facility will mature on February 6, 2024.

Outstanding borrowings under the ABL Facility bear interest at an annual rate equal to, at the option of Verso Paper, either (i) a customary London interbank offered rate plus an applicable margin ranging from 1.25% to 1.75% or (ii) the Federal Funds Rate plus an applicable margin ranging from 0.25% to 0.75%, determined based upon the average excess availability under the ABL Facility. Verso Paper is also required to pay a commitment fee for the unused portion of the ABL Facility of 0.25% per year, based upon the average revolver usage under the ABL Facility. The ABL Facility provides for determination of a benchmark replacement interest rate when LIBOR is no longer available, subject to the terms, and upon the satisfaction of conditions, specified therein.

All obligations under the ABL Facility are unconditionally guaranteed by Verso Holding and certain of the subsidiaries of Verso Paper. The ABL Facility is secured by a first-priority lien on certain assets of Verso Paper, Verso Holding and the other guarantor subsidiaries, including accounts receivable, inventory, certain deposit accounts, securities accounts and commodities accounts.

The ABL Facility contains financial covenants requiring Verso, among other things, to maintain a minimum fixed charge coverage ratio if availability were to drop below prescribed thresholds. The ABL Facility also requires that certain payment

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conditions, as defined therein, are met in order for Verso to incur debt or liens, pay cash dividends, repurchase equity interest, prepay indebtedness, sell or dispose of assets and make investments in or merge with another company.

7. EARNINGS PER SHARE

The following table provides a reconciliation of basic and diluted income (loss) per common share:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2021		2020		2021
Net income (loss) available to common stockholders (in millions)	$	(31)	$	58	$	(11)	$	(16)
Weighted average common shares outstanding - basic (in thousands)	33,675		29,334		34,440		31,476
Dilutive shares from stock awards (in thousands)	—		271		—		—
Weighted average common shares outstanding - diluted (in thousands)	33,675		29,605		34,440		31,476
Basic income (loss) per share	$	(0.92)	$	1.98	$	(0.33)	$	(0.53)
Diluted income (loss) per share	$	(0.92)	$	1.96	$	(0.33)	$	(0.53)

As a result of the net loss from continuing operations for the three and nine months ended September 30, 2020 and the nine months ended September 30, 2021, 0.9 million restricted stock units as of September 30, 2020 and 0.8 million restricted stock units as of September 30, 2021 were excluded from the calculations of diluted earnings per share for such periods as their inclusion would be anti-dilutive. As of September 30, 2020 and 2021, Verso had 1.8 million warrants outstanding at an adjusted exercise price per share of $21.67 and $20.66, respectively (see Note 9). As a result of the exercise price of the warrants exceeding the average market price of Verso’s common stock during the three and nine months ended September 30, 2020 and 2021, 2.3 million and 2.4 million shares, respectively, were excluded from the calculations of diluted earnings per share as their inclusion would be anti-dilutive.

8.  RETIREMENT BENEFITS

The following table summarizes the components of net periodic pension cost (income) for the periods presented:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in millions)	2020		2021		2020		2021
Service cost	$	1	$	—	$	2	$	1
Interest cost	12		10		35		29
Expected return on plan assets	(17)		(16)		(50)		(47)
Settlement	1		—		1		—
Net periodic pension cost (income)	$	(3)	$	(6)	$	(12)	$	(17)

Verso makes contributions to its pension plan that are sufficient to fund actuarially determined costs, generally equal to the minimum amounts required by the Employee Retirement Income Security Act. Contributions to the pension plan during the three and nine months ended September 30, 2020 were $29 million and $47 million, respectively. Contributions to the pension plan during the three and nine months ended September 30, 2021 were $9 million and $25 million, respectively. On March 11, 2021, the government signed into law the American Rescue Plan Act of 2021, or “ARPA.” The ARPA provides for pension funding relief that reduced Verso’s 2021 required cash contributions to its pension plan to $25 million from $46 million. Verso is not required to make any contributions to the pension plan in the remainder of 2021.

9. EQUITY

Equity Awards

During the nine months ended September 30, 2021, Verso granted 0.3 million time-based restricted stock units and 0.2 million performance-based restricted stock units to its executives and certain senior managers. The performance-based restricted stock unit awards granted vest on the performance determination date following the end of the performance period, as measured using

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an adjusted EBITDAP (earnings before interest, taxes, depreciation, amortization and pension expense/income) metric and a return on invested capital metric over a 3-year period ending December 31, 2023. The vesting criteria of the performance-based restricted stock unit awards meet the definition of a performance condition for accounting purposes. The number of shares which will ultimately vest at the vesting date ranges from 0% to 200% of the number of performance-based restricted stock units granted based on performance during the 3-year cumulative performance period. The compensation expense associated with these performance awards is currently estimated at 100%.

On March 5, 2021, Verso modified certain outstanding restricted stock unit awards as part of a retention arrangement for its former Chief Financial Officer who retired on June 30, 2021. As modified, his performance-based restricted stock units will remain outstanding and may vest on a pro-rata basis based on Verso’s achievement of established targets. In addition, the next tranche of his time-based restricted stock units vested at June 30, 2021. The foregoing changes were considered a modification and resulted in a revaluation of his 2019 and 2020 performance-based restricted stock units to a fair value of $0.67 and $8.66, respectively, and a revaluation of each of his 2018, 2019 and 2020 time-based restricted stock units that vested as a result of the modification to a fair value of $13.32.

Verso recognized equity award expense of $1 million and $5 million for the three and nine months ended September 30, 2020, respectively, and $1 million and $3 million for the three and nine months ended September 30, 2021, respectively. As of September 30, 2021, there was approximately $6 million of unrecognized compensation cost related to the 0.8 million non-vested restricted stock units, which is expected to be recognized over the weighted average period of 2.0 years.

Time-based Restricted Stock Units

Changes to non-vested time-based restricted stock units for the nine months ended September 30, 2021 were as follows:

	Restricted Stock	Weighted Average
	Units	Grant Date
Shares (in thousands)	Outstanding	Fair Value
Non-vested at December 31, 2020	421	$	9.95
Granted (1)	269	13.85
Vested	(265)	9.53
Forfeited	(73)	11.85
Non-vested at September 30, 2021(2)	352	13.36

(1) Includes 7 thousand dividend equivalent units on certain time-based restricted stock unit awards for dividends related to the stock units granted but not yet vested at the time cash dividends were paid.

(2) Includes the modified value of the time-based restricted stock units associated with the retention agreement for the former Chief Financial Officer.

Performance-based Restricted Stock Units

Changes to non-vested performance-based restricted stock units for the nine months ended September 30, 2021 were as follows:

	Restricted Stock	Weighted Average
	Units	Grant Date
Shares (in thousands)	Outstanding	Fair Value
Non-vested at December 31, 2020	424	$	12.21
Granted (1)	214	12.88
Incremental shares vested (2)	10	—
Vested	(143)	12.85
Forfeited	(77)	10.59
Non-vested at September 30, 2021 (3)	428	11.30

(1) Includes 8 thousand dividend equivalent units on certain performance-based restricted stock unit awards for dividends related to the stock units granted but not yet vested at the time cash dividends were paid.

(2) Incremental shares are a result of performance at 113% of the target level of shares subject to the performance-based restricted stock units.

(3) Includes the modified value of the performance-based restricted stock units associated with the retention agreement for the former Chief Financial Officer.

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Share Repurchase Authorization and Dividends

On February 26, 2020, Verso’s Board of Directors authorized up to $250 million of net proceeds from the Pixelle Sale to be used to repurchase outstanding shares of Verso common stock. In conjunction with the declaration of the special cash dividend of $3.00 per share, or $101 million, on August 5, 2020, Verso’s Board of Directors reduced Verso’s total share repurchase

authorization from $250 million to $150 million. During the nine months ended September 30, 2020, Verso purchased under its share repurchase authorization approximately 1.6 million of its common stock through open market purchases and 10b5-1 programs at a weighted average cost of $14.14 per share. During the nine months ended September 30, 2021, Verso purchased under its share repurchase authorization (i) approximately 1.3 million shares of its common stock through open market purchases and 10b5-1 programs at a weighted average cost of $15.97 per share and (ii) approximately 3.0 million shares at a purchase price of $18.10 per share through the modified Dutch auction tender offer discussed below. As of September 30, 2021, $45 million of the $150 million share repurchase authorization remained.

On May 13, 2021, Verso commenced a modified Dutch auction tender offer to purchase for cash shares of its common stock for an aggregate purchase price of not more than $55 million and at a price per share of common stock of not less than $16.00 and not more than $18.30 per share. The tender offer expired on June 10, 2021. Through the tender offer, Verso accepted for purchase approximately 3.0 million shares of its common stock at a purchase price of $18.10 per share for an aggregate purchase price of approximately $56 million, including fees and expenses. The shares of common stock purchased through the tender offer were immediately retired. The excess purchase price over par value was recorded as a reduction to Paid-in capital on the Unaudited Condensed Consolidated Balance Sheet during the second quarter of 2021.

On February 5, 2021, Verso’s Board of Directors declared a quarterly cash dividend of $0.10 per share of Verso's common stock, which was paid on March 29, 2021, to stockholders of record on March 18, 2021. On May 7, 2021, Verso’s Board of Directors declared a quarterly cash dividend of $0.10 per share of Verso’s common stock, which was paid on June 29, 2021, to stockholders of record on June 17, 2021. On August 6, 2021, Verso’s Board of Directors declared a quarterly cash dividend of $0.10 per share of Verso’s common stock, which was paid on September 28, 2021, to stockholders of record on September 17, 2021. On November 4, 2021, Verso’s Board of Directors declared a quarterly cash dividend of $0.10 per share of Verso’s common stock, payable on December 29, 2021, to stockholders of record on December 17, 2021. Verso commenced paying quarterly dividends in the second quarter of 2020.

Warrants

On July 15, 2016, warrants to purchase up to an aggregate of 1.8 million shares of Class A common stock were issued to holders of first-lien secured debt at an initial exercise price of $27.86 per share and a seven-year term, subject to customary anti-dilution adjustments. As a result of Verso’s various share repurchases, including the modified Dutch auction tender offer, and dividend payments since the issuance of the warrants, as of September 30, 2021, the number of shares of Verso common stock issuable upon exercise of each warrant increased to 1.35 shares of common stock, for an aggregate of approximately 2.4 million shares of common stock, and the warrant exercise price was reduced to $20.66 per share. If all warrants were exercised, Verso would issue 2.4 million shares of Class A common stock and receive $50 million in proceeds. The warrants expire on July 15, 2023. As of September 30, 2021, no warrants have been exercised.

10.  RESTRUCTURING CHARGES

Wisconsin Rapids Mill - On February 8, 2021, Verso decided to permanently shut down the No. 14 paper machine and certain other long-lived assets at its paper mill in Wisconsin Rapids, Wisconsin, while continuing to explore viable and sustainable alternatives with the remaining assets, including its converting operation, No. 16 paper machine and other remaining long-lived assets. This decision was made in response to the continued accelerated decline in printing and writing paper demand. The decision to permanently shut down the No. 14 paper machine and certain other long-lived assets, which have been idle since July 2020, permanently reduced Verso’s total annual production capacity by approximately 185,000 tons of coated paper.

In connection with the permanent shutdown of the No. 14 paper machine at the Wisconsin Rapids Mill, Verso recognized $84 million of accelerated depreciation which is included in Depreciation and amortization on the Unaudited Condensed Consolidated Statement of Operations for the nine months ended September 30, 2021.

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The following table details the charges incurred related to the shutdown of No. 14 paper machine and certain other long-lived assets as included in Restructuring charges on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended		Nine Months Ended		Cumulative
(Dollars in millions)	September 30, 2021		September 30, 2021		Incurred
Property, plant and equipment, net	$	—	$	5	$	5
Write-off of spare parts and inventory	—		3		3
Total restructuring costs	$	—	$	8	$	8

Duluth Mill — On December 31, 2020, Verso decided to permanently shut down the paper mill in Duluth, Minnesota while continuing with efforts to sell the mill. Management’s decision to permanently shut down the Duluth Mill was made in response to the continued accelerated decline in printing and writing paper demand resulting from the COVID-19 pandemic. The closure of the Duluth Mill, which had been idle since July 2020, reduced Verso’s total annual production capacity by approximately 270,000 tons of supercalendered/packaging paper. In May 2021, Verso completed the sale of the Duluth Mill (see Note 5).

The following table details the charges incurred related to the Duluth Mill closure as included in Restructuring charges on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended		Nine Months Ended		Cumulative
(Dollars in millions)	September 30, 2021		September 30, 2021		Incurred
Property, plant and equipment, net	$	—	$	—	$	3
Severance and benefit costs	—		—		1
Write-off of spare parts and inventory	—		—		2
Write-off of purchase obligations and commitments	—		7		8
Other costs	—		2		2
Total restructuring costs	$	—	$	9	$	16

The following table details the changes in the restructuring reserve liabilities related to the permanent shutdown of the Duluth Mill which are included in Accrued and other liabilities on the Unaudited Condensed Consolidated Balance Sheet:

	Nine Months Ended
(Dollars in millions)	September 30, 2021
Beginning balance of reserve	$	2
Severance and benefit payments	(1)
Purchase obligations	7
Other costs	2
Payments on other costs	(2)
Ending balance of reserve	$	8

Closure of Luke Mill — On April 30, 2019, Verso announced that it would permanently shut down its paper mill in Luke, Maryland in response to the continuing decline in customer demand for the grades of coated freesheet paper produced at the Luke Mill, along with rising input costs, a significant influx of imports and rising compliance costs and infrastructure challenges associated with environmental regulation. Verso completed the shutdown and closure of the Luke Mill in June 2019, which reduced Verso’s coated freesheet production capacity by approximately 450,000 tons and eliminated approximately 675 positions.

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The following table details the charges incurred related to the Luke Mill closure as included in Restructuring charges on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,				Cumulative
(Dollars in millions)	2020		2021		2020		2021		Incurred
Property, plant and equipment, net	$	—	$	—	$	—	$	—	$	10
Severance and benefit costs	—		—		(1)		—		18
Write-off of spare parts and inventory	—		—		—		—		9
Write-off of purchase obligations and commitments	—		—		—		—		1
Other costs(1)	(2)		—		5		—		19
Total restructuring costs	$	(2)	$	—	$	4	$	—	$	57

(1) Other costs primarily relate to activities associated with the shutdown of property, plant and equipment, such as draining, cleaning, dismantling, securing and disposing of such assets. Other costs for the nine months ended September 30, 2020 includes $4 million for the final cleaning and shutdown of various storage tanks.

11. COMMITMENTS AND CONTINGENCIES

General Litigation — Verso is involved from time to time in legal proceedings incidental to the conduct of its business. While any proceeding or litigation has the element of uncertainty, Verso believes that the outcome of any of these lawsuits or claims that are pending or threatened or all of them combined (other than those that cannot be assessed due to their preliminary nature) will not have a material effect on the Unaudited Condensed Consolidated Financial Statements.

In November 2019, the state of West Virginia asserted in an administrative enforcement action that three above-ground storage tanks at Verso’s Luke Mill leaked and that Verso had failed to take certain actions to prevent and report the release of pollutants into the North Branch of the Potomac River. In March 2020, the Potomac Riverkeeper Network (“PRKN”) filed a federal lawsuit against Verso alleging the improper handling, storage and disposal of wastes generated at the Luke Mill. In May 2020, Maryland joined the PRKN lawsuit and in July 2020, Maryland obtained dismissal of a lawsuit that it previously had filed with respect to the same facts. The Luke Mill sits on the border of West Virginia and Maryland, and it was closed in June 2019.

On April 1, 2021, a consent decree was approved and entered by the court in the federal lawsuit, setting forth the terms agreed by Verso with the PRKN and the Maryland Department of the Environment (“the Department”), to settle the claims by PRKN and the state of Maryland. Pursuant to the consent decree, Verso has agreed to pay an aggregate of $1 million in penalties and fees to the Department and PRKN. Verso has also agreed to reimburse the Department for any future response and oversight costs at the Luke Mill up to a maximum of $25,000 for the first year after the effective date of the consent decree and $20,000 per year thereafter until termination of monitoring oversight under the consent decree. In addition to the penalties and fees paid pursuant to the consent decree, Verso also agreed to continue its ongoing remedial activities at the Luke Mill and to monitor the site for at least three years after completion of its remedial efforts.

On September 1, 2021, a consent decree was approved and entered by the circuit court of Mineral County, West Virginia, setting forth the terms agreed by Verso with the West Virginia Department of Environmental Protection (“the Department of Environmental Protection”), to settle the claims by the Department of Environmental Protection. Pursuant to the consent decree, Verso has agreed to pay an aggregate of $650,000 in penalties to the Department of Environmental Protection. In addition to the penalties paid pursuant to the consent decree, Verso also agreed to maintain compliance at the Luke Mill, implement and continue certain remediation actions and abide by certain reporting requirements.

As a result of the consent decree approval on April 1, 2021 with respect to the lawsuit filed by PRKN, Verso revised its estimates of costs related to the ongoing environmental remediation and monitoring efforts and recorded $5 million in Cost of products sold on the Unaudited Condensed Consolidated Statement of Operations in the first quarter of 2021. As of September 30, 2021, $7 million of environmental remediation costs are included on the Unaudited Condensed Consolidated Balance Sheet, including $2 million in Accrued and other liabilities and $5 million in Other long-term liabilities. As of December 31, 2020, $5 million of environmental remediation costs, which included the cost related to the consent decrees mentioned above, are included in Accrued and other liabilities on the Unaudited Condensed Consolidated Balance Sheet.

In connection with the closure of former idled mills, claims were asserted against Verso relating to certain contractual obligations. Verso recognized zero and $6 million for the three and nine months ended September 30, 2021, respectively, included in Restructuring charges on the Consolidated Statements of Operations, associated with contractual obligations. Verso does not believe the claims are reasonable and will continue to defend its position and does not believe any additional charges will be material.

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12. INFORMATION BY INDUSTRY SEGMENT

We have two operating segments, paper and pulp. We previously determined that the operating income (loss) of the pulp segment was immaterial for disclosure purposes. However, as the price for pulp/ton has increased in 2021, we have determined that the pulp segment is material for disclosure purposes as of September 30, 2021. Our paper products are used primarily in media, marketing applications and commercial printing applications. Uses include catalogs, magazines, high-end advertising brochures, direct-mail advertising, and specialty applications, such as labeling and other special applications. Our NBHK pulp is used to manufacture printing, writing and specialty paper grades, tissue and other products. Our assets are utilized across operating segments in an integrated mill system and are not identified by operating segment or reviewed by management on an operating segment basis. We operate primarily in one geographic segment, North America.

The following table summarizes the operating segment data:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in millions)	2020		2021		2020		2021
Net sales(1)
Paper	$	274	$	304	$	956	$	856
Pulp	$	32	$	35	$	89	$	94
Total Net sales	$	306	$	339	$	1,045	$	950
Gross margin (exclusive of depreciation and amortization)
Paper	$	(6)	$	49	$	36	$	109
Pulp	$	3	$	16	$	2	$	31
Total Gross margin	$	(3)	$	65	$	38	$	140

(1)    Intersegment sales from the pulp segment to the paper segment of $3 million and $7 million are eliminated from Net sales above for the three and nine months ended September 30, 2020, respectively. Intersegment sales from the pulp segment to the paper segment of $12 million and $17 million are eliminated from the Net sales above for the three and nine months ended September 30, 2021, respectively.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis contains forward-looking statements within the meaning of the federal securities laws, and should be read in conjunction with the disclosures we make concerning risks and other factors that may affect our business and operating results. See “Forward-Looking Statements” preceding Part I, Item 1 in this Quarterly Report on Form 10-Q.

Overview

We are a leading North American producer of coated paper, shipped in both roll and sheet formats, which is used primarily in printing applications to produce high-end advertising brochures, catalogs and magazines among other media and marketing publications as well as specialty and packaging applications. We also produce and sell NBHK pulp, which is used to manufacture printing and writing paper grades and tissue products.

We operate three paper machines at our mill in Escanaba, Michigan and one paper machine and one NBHK pulp machine at our mill in Quinnesec, Michigan. The mills have an aggregate annual production capacity of approximately 1,400,000 tons of paper and NBHK pulp. We also operate a sheeting facility at our Wisconsin Rapids Mill to convert paper produced at our Michigan mills to sheets for the commercial print market.

2021 Developments

Receipt of Unsolicited Acquisition Proposal from Atlas Holdings LLC

On July 14, 2021, we issued a press release confirming receipt of an unsolicited, non-binding proposal from Atlas Holdings LLC, or “Atlas,” regarding a potential transaction to acquire all outstanding shares of our common stock for $20.00 per share in cash.

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On September 21, 2021, we announced that we entered into a confidentiality agreement with Atlas and communicated to Atlas that the previously disclosed $20.00 per share all-cash offer to acquire Verso was insufficient and that we would only consider a potential transaction if the offer meaningfully increased. Verso and Atlas agreed to exchange additional information under the terms of the confidentiality agreement to facilitate ongoing discussions regarding a potential transaction with Atlas on mutually acceptable terms.

There can be no assurance that any negotiations between Verso and Atlas will take place following the exchange of additional information, and if such negotiations do take place, there can be no assurance that any transaction with Atlas (or any other party) will occur or be consummated.

Return of Proceeds to Stockholders

In February 2020, we announced our intention to utilize no less than $225 million and up to $282 million of the net cash proceeds from the Pixelle Sale for the benefit of our stockholders. As of September 30, 2021, we have returned $225 million to our stockholders through a combination of share repurchases and special and quarterly cash dividends, including the modified Dutch auction tender offer in May 2021.

Modified Dutch Auction Tender Offer

On May 13, 2021, we commenced a modified Dutch auction tender offer to purchase for cash shares of our common stock for an aggregate purchase price of not more than $55 million and at a price per share of common stock of not less than $16.00 and not more than $18.30 per share. The tender offer expired on June 10, 2021. Through the tender offer, we accepted for purchase approximately 3.0 million shares of our common stock at a purchase price of $18.10 per share for an aggregate purchase price of approximately $56 million, including fees and expenses. The shares of common stock purchased through the tender offer were immediately retired.

Sale of Duluth Mill

On May 13, 2021, Verso Minnesota Wisconsin LLC, an indirect wholly owned subsidiary of Verso, entered into an asset purchase agreement with ST Paper 1, LLC and sold all of the assets primarily related to our Duluth Mill located in Duluth, Minnesota for $7 million in cash less costs to sell of $1 million. The sale, including related sale costs, resulted in a loss of $3 million included in Other operating (income) expense on the Unaudited Condensed Consolidated Statement of Operations for the nine months ended September 30, 2021.

Wisconsin Rapids Mill

On February 8, 2021, we decided to permanently shut down the No. 14 paper machine and certain other long-lived assets at our paper mill in Wisconsin Rapids, Wisconsin, while continuing to explore viable and sustainable alternatives with the remaining assets, including our converting operations, No. 16 paper machine and other remaining long-lived assets. This decision permanently reduced our total annual production capacity by 185,000 tons of coated paper. In the first quarter of 2021, we recognized $84 million of accelerated depreciation which is included in Depreciation and amortization on the Unaudited Condensed Consolidated Statement of Operations for the nine months ended September 30, 2021. In addition, we recognized $8 million in charges associated with the write-off of property, plant and equipment and spare parts and inventory which is included in Restructuring charges on the Unaudited Condensed Consolidated Statement of Operations for the nine months ended September 30, 2021.

Luke Mill

On August 1, 2020, we entered into an equipment purchase agreement with Halkali Kagit Karton Sanayi ve Tic. A.S., a company organized under the laws of Turkey, whereby we agreed to sell, and the buyer agreed to purchase, certain equipment at our Luke Mill, primarily including two paper machines. The purchase price was $11 million in cash due at various milestones. As of September 30, 2021, we have received the $11 million purchase price including the final payment of $1 million in the third quarter of 2021. We have determined that the control over the use of the acquired assets transferred to the purchaser in June 2021 and correspondingly recognized the sale of the two paper machines and related assets in June 2021.

We continue to evaluate options for sale of the remaining assets of our Luke Mill.

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Changes to Executive Officers

On January 27, 2021, the Board of Directors appointed Randy J. Nebel as Verso’s President and Chief Executive Officer, prior to which he served as our interim President and Chief Executive Officer since September 30, 2020.

On March 5, 2021, Allen J. Campbell, our Senior Vice President and Chief Financial Officer, informed us of his intent to retire, and he subsequently retired on June 30, 2021.

On April 5, 2021, Matthew M. Archambeau notified Verso of his decision to resign as Verso’s Senior Vice President of Manufacturing and Energy. His resignation was effective on April 5, 2021.

On May 6, 2021, the Board of Directors of Verso appointed Kevin M. Kuznicki as Senior Vice President, General Counsel and Secretary.

On June 4, 2021, the Board of Directors appointed Brian D. Cullen to serve as Verso’s Senior Vice President and Chief Financial Officer, effective June 16, 2021.

COVID-19 Pandemic

The COVID-19 Pandemic has impacted our operations and financial results since the first quarter of 2020 and continues to have an impact on us. We serve as an essential manufacturing business and, as a result, we have continued to be operational during the pandemic in order to meet the ongoing needs of our customers, including those in other essential business sectors, which provide food, medical and hygiene products needed in a global health crisis. However, the guidelines and orders enacted by federal, state and local governments impacted demand from retailers, political campaigns, and sports and entertainment events, driving reduced purchases of printed materials and substantially impacting our graphic paper business.

There continues to be significant uncertainties associated with the COVID-19 Pandemic, including with respect to the resurgence of new variants of the virus; or if the vaccines introduced to combat the virus are not effective or public acceptance of such vaccines is not widespread; and the impact of COVID-19 on economic conditions, including with respect to labor market conditions, economic activity, consumer behavior, supply chain shortages and disruptions and inflationary pressure; all of which could have a material impact on our business, financial position, results of operations and cash flows.

While we cannot reasonably estimate the full impact of COVID-19 on our business, financial position, results of operations and cash flows, we have seen our sales, volume and prices continue to recover during the third quarter of 2021.

Results of Operations

The following table sets forth the historical results of operations of Verso for the periods indicated below. The following discussion of our financial condition and results of operations should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements and notes thereto included elsewhere in this report.

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Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

	Three Months Ended
	September 30,				Three Months
(Dollars in millions)	2020		2021		$ Change
Net sales	$	306	$	339	$	33
Costs and expenses:
Cost of products sold (exclusive of depreciation and amortization)	309		274		(35)
Depreciation and amortization	21		18		(3)
Selling, general and administrative expenses	19		19		—
Restructuring charges	(2)		—		2
Other operating (income) expense	3		(7)		(10)
Operating income (loss)	(44)		35		79
Interest expense	1		—		(1)
Other (income) expense	(5)		(6)		(1)
Income (loss) before income taxes	(40)		41		81
Income tax expense (benefit)	(9)		(17)		(8)
Net income (loss)	$	(31)	$	58	$	89

Net sales. Net sales for the three months ended September 30, 2021 increased $33 million, or 11%, compared to the three months ended September 30, 2020, driven by favorable price/mix of $47 million, partially offset by $14 million, or 5%, largely attributable to our sold Duluth and idled Wisconsin Rapids mills. Total company sales volume was down from 382 thousand tons during the three months ended September 30, 2020, to 358 thousand tons during the same period of the current year, primarily attributable to our sold Duluth and idled Wisconsin Rapids mills.

Operating income (loss).  Operating income was $35 million for the three months ended September 30, 2021, an increase of $79 million when compared to an operating loss of $44 million for the three months ended September 30, 2020.

Our operating results for the three months ended September 30, 2021 were positively impacted by:

•Favorable price/mix of $47 million driven by price increase realization across all grades, including pulp

•Improved operating income of $11 million resulting from the conversion to our current two mill system

•Lower depreciation expense of $3 million

•Lower net operating expenses of $29 million driven primarily by $22 million lower closed/idled mill spend, lower wood costs, improved performance and cost reduction initiatives across our mill system

•Higher other operating income of $10 million, driven primarily by $6 million in insurance recoveries during the third quarter of 2021 associated with a 2019 insurance claim at our Quinnesec Mill and $3 million loss on sale or disposal of assets in 2020

Our operating results for the three months ended September 30, 2021 were negatively impacted by:

•Inflationary cost increases of $19 million driven by purchased pulp, latex, energy and freight

•Favorable Restructuring charge adjustments of $2 million in the third quarter of 2020 for activities associated with the closure of our Luke Mill in 2019

Other (income) expense.  Other income for the three months ended September 30, 2021 and 2020 includes income of $6 million and $5 million, respectively, associated with the non-operating components of net periodic pension cost (income).

Income tax expense (benefit).  Income tax benefit of $17 million for the three months ended September 30, 2021 reflects estimated net tax benefit for the period, including $2 million of tax benefit from the release of valuation allowance against state tax credits. Income tax benefit of $9 million for the three months ended September 30, 2020 primarily reflects our estimated tax benefit for the period, partially offset by $1 million of valuation allowance recognized against state tax credits. The three months ended September 30, 2020 includes $7 million of income tax expense related to the year ended December 31, 2019. This resulted from recording an adjustment for the federal tax effect on deferred tax assets for state net operating losses and state tax credits established in 2019 without a federal tax effect.

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Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

	Nine Months Ended
	September 30,				Nine Months
(Dollars in millions)	2020		2021		$ Change
Net sales	$	1,045	$	950	$	(95)
Costs and expenses:
Cost of products sold (exclusive of depreciation and amortization)	1,007		810		(197)
Depreciation and amortization	66		137		71
Selling, general and administrative expenses	62		54		(8)
Restructuring charges	4		17		13
Other operating (income) expense	(84)		(5)		79
Operating income (loss)	(10)		(63)		(53)
Interest expense	1		1		—
Other (income) expense	(14)		(19)		(5)
Income (loss) before income taxes	3		(45)		(48)
Income tax expense (benefit)	14		(29)		(43)
Net income (loss)	$	(11)	$	(16)	$	(5)

Net sales. Net sales for the nine months ended September 30, 2021 decreased $95 million, or 9%, compared to the nine months ended September 30, 2020, attributable to favorable price/mix of $72 million, which was more than offset by a decrease of $167 million, or 16%, primarily related to our sold Duluth, Androscoggin and Stevens Point mills and idled Wisconsin Rapids mill. Total company sales volume was down from 1,282 thousand tons during the nine months ended September 30, 2020, to 1,066 thousand tons during the same period of the current year, primarily attributable to our sold Duluth, Androscoggin and Stevens Point mills and idled Wisconsin Rapids mill.

Operating income (loss).  Operating loss was $63 million for the nine months ended September 30, 2021, a decrease of $53 million when compared to operating loss of $10 million for the nine months ended September 30, 2020.

Our operating results for the nine months ended September 30, 2021 were positively impacted by:

•Favorable price/mix of $72 million driven by price increase realization across all grades, including pulp

•Improved operating income of $22 million resulting from the conversion to our current two mill system

•Lower net operating expenses of $37 million driven primarily by lower closed/idled mill spend, improved performance and cost reduction initiatives across our mill system

•Lower planned major maintenance costs of $7 million driven by reduced scope

•Lower Selling, general and administrative expenses of $8 million driven primarily by cost reduction initiatives in connection with the sale of our Androscoggin and Stevens Point mills in February 2020, non-recurring costs associated with the proxy solicitation contest in the first quarter of 2020, and lower equity compensation expense and severance costs, partially offset by an increase in incentive expense

Our operating results for the nine months ended September 30, 2021 were negatively impacted by:

•Lower sales volume resulting in a decrease of $4 million in net operating income

•Inflationary costs of $32 million driven by purchased pulp, latex, energy and freight

•Higher depreciation expense of $71 million due primarily to $84 million in accelerated depreciation associated with the permanent shutdown of No. 14 paper machine and certain other long-lived assets at our Wisconsin Rapids Mill in February 2021

•Higher Restructuring charges of $13 million primarily associated with the permanent shutdown of our Duluth Mill in December 2020 and the No. 14 paper machine and certain other long-lived assets at our Wisconsin Rapids Mill in February 2021, partially offset by restructuring costs associated with the closure of our Luke Mill in June 2019

•Lower other operating income of $79 million, primarily as a result of the $88 million gain on the sale of our Androscoggin and Stevens Point mills in February 2020, partially offset by $6 million in insurance recoveries during the third quarter of 2021, associated with a 2019 insurance claim at our Quinnesec Mill and $3 million loss on sale or disposal of assets in 2020

Other (income) expense.  Other income for the nine months ended September 30, 2021 and 2020 includes income of $18 million and $15 million, respectively, associated with the non-operating components of net periodic pension cost (income).

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Income tax expense (benefit).  Income tax benefit of $29 million for the nine months ended September 30, 2021 reflects estimated tax benefit for the period, partially offset by $2 million of additional valuation allowance recognized against state tax credits. Income tax expense of $14 million for the nine months ended September 30, 2020 primarily reflects estimated taxes for the period and $8 million of additional valuation allowance recognized against state tax credits. The nine months ended September 30, 2020 includes $7 million of income tax expense related to the year ended December 31, 2019. This resulted from recording an adjustment for the federal tax effect on deferred tax assets for state net operating losses and state tax credits established in 2019 without a federal tax effect.

Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA

EBITDA consists of earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA reflects adjustments to EBITDA to eliminate the impact of certain items that we do not consider to be indicative of our ongoing performance. We use EBITDA and Adjusted EBITDA as a way of evaluating our performance relative to that of our peers and to assess compliance with our credit facilities. We believe that EBITDA and Adjusted EBITDA are non-GAAP operating performance measures commonly used in our industry that provide investors and analysts with measures of ongoing operating results, unaffected by differences in capital structures, capital investment cycles and ages of related assets among otherwise comparable companies.

We believe that the supplemental adjustments applied in calculating Adjusted EBITDA are reasonable and appropriate to provide additional information to investors.

Because EBITDA and Adjusted EBITDA are not measurements determined in accordance with GAAP and are susceptible to varying calculations, EBITDA and Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies. You should consider our EBITDA and Adjusted EBITDA in addition to, and not as a substitute for, or superior to, our operating or net income (loss), which are determined in accordance with GAAP.

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The following table reconciles Net income (loss) to EBITDA and Adjusted EBITDA for the periods presented:

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
(Dollars in millions)		2020		2021		2020		2021
Net income (loss)		$	(31)	$	58	$	(11)	$	(16)
Income tax expense (benefit)		(9)		(17)		14		(29)
Interest expense		1		—		1		1
Depreciation and amortization		21		18		66		137
EBITDA		$	(18)	$	59	$	70	$	93
Adjustments to EBITDA:
	Restructuring charges (1)	(2)		—		4		17
	Luke Mill post-closure costs (2)	3		(1)		9		7
	Noncash equity award compensation (3)	1		1		5		3
	Gain on Sale of the Androscoggin/Stevens Point Mills (4)	—		—		(88)		—
	Loss on Sale of Duluth Mill (5)	—		—		—		3
	Duluth and Wisconsin Rapids mills idle/post-closure costs(6)	17		3		17		17
	(Gain) loss on sale or disposal of assets (7)	3		—		3		—
	Stockholders proxy solicitation costs (8)	—		—		4		—
	Other severance costs (9)	8		2		13		4
	Other items, net (10)	—		3		1		5
Adjusted EBITDA		$	12	$	67	$	38	$	149

(1) For 2020, charges are associated with the closure of our Luke Mill in June 2019. For 2021, charges are primarily associated with the permanent shutdown of our Duluth Mill in December 2020 and of the No. 14 paper machine and certain other long-lived assets at our Wisconsin Rapids Mill in February 2021.

(2) Costs recorded after the permanent shutdown of our Luke Mill that are not associated with product sales or restructuring activities, including $5 million in March 2021 associated with the approval of a consent decree on April 1, 2021 relating to the ongoing environmental remediation and monitoring efforts.

(3) Amortization of noncash incentive compensation.

(4) Gain on the sale of outstanding membership interests in Verso Androscoggin, LLC in February 2020, which included our Androscoggin Mill and Stevens Point Mill.

(5) Loss on the sale of our Duluth Mill in May 2021.

(6) Idle/post-closure costs associated with our Duluth and Wisconsin Rapids mills that are not associated with product sales or restructuring activities.

(7) Realized (gain) loss on the sale or disposal of assets.

(8) Costs incurred in connection with the stockholders proxy solicitation contest.

(9) Severance and related benefit costs not associated with restructuring activities.

(10) For 2020, other miscellaneous adjustments. For 2021, professional fees and other charges associated with strategic initiatives, including activities in connection with the unsolicited acquisition proposal from Atlas, and other miscellaneous adjustments.

Liquidity and Capital Resources

Our principal cash requirements include ongoing operating costs for working capital needs, capital expenditures for maintenance and strategic investments in our mills and pension contributions. We believe our cash and cash equivalents at September 30, 2021, future cash generated from operations and, to the extent necessary, the availability under our ABL Facility, will be sufficient to meet these needs for at least the next twelve months.

As of September 30, 2021, we had cash and cash equivalents of $166 million while the outstanding balance of our ABL Facility was zero, with $21 million issued in letters of credit and $120 million available for future borrowings.

On February 26, 2020, our Board of Directors authorized up to $250 million of net proceeds from the Pixelle Sale to be used to repurchase outstanding shares of our common stock. In conjunction with the declaration of the special cash dividend of $3.00 per share, or $101 million, on August 5, 2020, our Board of Directors reduced the total amount of the share repurchase authorization from $250 million to $150 million. During the nine months ended September 30, 2020 and 2021, we purchased approximately 1.6 million and 1.3 million shares, respectively, of our common stock through open market purchases and

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10b5-1 programs under the share repurchase authorization at weighted average costs of $14.14 and $15.97 per share, respectively.

On May 13, 2021, we commenced a modified Dutch auction tender offer to purchase for cash shares of our common stock for an aggregate purchase price of not more than $55 million. The tender offer expired on June 10, 2021. Through the tender offer, we accepted for payment approximately 3.0 million shares at a purchase price of $18.10 per share for an aggregate purchase price of approximately $56 million, including fees and expenses. The shares purchased through the tender offer were immediately retired.

As of September 30, 2021, $45 million of the $150 million share repurchase authorization remained.

Our Board of Directors has approved quarterly dividends since the second quarter of 2020. Our Board of Directors has declared the following dividends in 2021:

Quarter	Date Declared	Date of Record	Date Paid	Amount
1st	February 5	March 18	March 29	$0.10
2nd	May 7	June 17	June 29	$0.10
3rd	August 6	September 17	September 28	$0.10
4th	November 4	December 17	December 29	$0.10

We make contributions to our pension plan that are sufficient to fund actuarially determined costs, generally equal to the minimum amounts required by the Employee Retirement Income Security Act. We made contributions to our pension plan of $47 million during the nine months ended September 30, 2020 and $25 million during the nine months ended September 30, 2021. On March 11, 2021, the government signed into law the American Rescue Plan Act of 2021, or “ARPA.” The ARPA provides for pension funding relief which reduced our 2021 required cash contribution to our pension plan to $25 million from $46 million. We are not required to make any contributions to the pension plan in the remainder of 2021.

Our cash flows from operating, investing and financing activities, as reflected on the Unaudited Condensed Consolidated Statements of Cash Flows, are summarized in the following table:

	Nine Months Ended
	September 30,
(Dollars in millions)	2020		2021
Net cash provided by (used in):
Operating activities	$	(129)	$	133
Investing activities	296		(15)
Financing activities	(136)		(89)
Change in Cash and cash equivalents and restricted cash	$	31	$	29

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Operating Activities

Our operating cash flow requirements are primarily for salaries and benefits, the purchase of raw materials including wood fiber, wood pulp, chemicals and energy, and other expenses such as maintenance and warehousing costs. For the nine months ended September 30, 2021, net cash provided by operating activities of $133 million primarily reflects adjustments for noncash charges associated with the permanent shutdown of the No. 14 paper machine and certain other long-lived assets, including $84 million in accelerated depreciation and $8 million in other noncash restructuring charges, regular depreciation and amortization of $53 million and net cash provided from working capital related changes of $74 million, partially offset by a net loss of $16 million, $17 million of noncash pension income, $25 million of pension plan contributions and deferred taxes of $29 million. The net cash provided from working capital related changes during the nine months ended September 30, 2021 was primarily attributable to decreases in inventory levels, partially offset by increases in accounts receivable and accounts payable. For the nine months ended September 30, 2020, net cash used in operating activities of $129 million primarily reflects a net loss of $11 million, a noncash gain of $88 million on the Sale of the Androscoggin/Stevens Point Mills, $12 million of noncash pension income, $47 million of pension plan contributions and net cash used for working capital related changes of $59 million, partially offset by noncash depreciation and amortization of $66 million, deferred taxes of $14 million and equity award expense of $5 million. The net cash used for working capital related changes during the nine months ended September 30, 2020 was primarily attributable to increases in inventory levels and payments that reduced our accounts payable and accrued liabilities.

Investing Activities

For the nine months ended September 30, 2021, net cash used in investing activities of $15 million consisted of cash paid for capital expenditures of $38 million, of which $3 million related to capital expenditures incurred in 2020 and paid in 2021, primarily offset by net proceeds from the Sale of Duluth Mill of $6 million, proceeds from insurance recoveries of $6 million, recognition of deposits and net proceeds from the sale of our Luke Mill equipment of $10 million and proceeds from sale of other assets of $1 million. For the nine months ended September 30, 2020, net cash provided by investing activities of $296 million consisted of $338 million in proceeds from the Sale of the Androscoggin/Stevens Point Mills, partially offset by cash paid for capital expenditures of $43 million, of which $15 million related to capital expenditures incurred in 2019 and paid in 2020.

Financing Activities

For the nine months ended September 30, 2021, net cash used in financing activities of $89 million primarily reflects $56 million in repurchases of our common stock, $9 million in cash dividends paid to stockholders and $23 million for the acquisition of treasury stock, consisting of $21 million of share repurchases and $2 million associated with the vesting of restricted stock units. For the nine months ended September 30, 2020, net cash used in financing activities of $136 million primarily reflects $108 million in cash dividends paid to stockholders and $27 million for the acquisition of treasury stock, consisting of $23 million of share repurchases and $4 million associated with the vesting of restricted stock units.

ABL Facility

Verso Paper maintains an asset-based revolving credit facility, or, as amended from time to time, our “ABL Facility.” On May 10, 2021, Verso Paper entered into the Third Amendment to the ABL Facility, or the “Third ABL Amendment” to the ABL Facility. As a result of the Third ABL Amendment, the ABL Facility provides for revolving commitments of $200 million, with a $75 million sublimit for letters of credit and a $20 million sublimit for swingline loans. The amount of borrowings and letters of credit available to Verso Paper pursuant to our ABL Facility is limited to the lesser of $200 million or an amount determined pursuant to a borrowing base ($141 million as of September 30, 2021). As of September 30, 2021, there were no borrowings outstanding under our ABL Facility, $21 million issued in letters of credit and $120 million available for future borrowings. Verso Paper may request one or more incremental revolving commitments in an aggregate principal amount up to the greater of (i) $75 million or (ii) the excess of the borrowing base over the revolving facility commitments of $200 million; however, the lenders are not obligated to increase the revolving commitments upon any such request. Availability under our ABL Facility is subject to customary borrowing conditions. Our ABL Facility will mature on February 6, 2024.

Outstanding borrowings under our ABL Facility bear interest at an annual rate equal to, at the option of Verso Paper, either (i) a customary London interbank offered rate plus an applicable margin ranging from 1.25% to 1.75% or (ii) the Federal Funds Rate plus an applicable margin ranging from 0.25% to 0.75%, determined based upon the average excess availability under our ABL Facility. Verso Paper also is required to pay a commitment fee for the unused portion of our ABL Facility of 0.25% per year, based upon the average revolver usage under our ABL Facility. In addition, pursuant to the Third ABL Amendment, certain modifications were made to the existing ABL Facility in order to, among other things, provide for determination of a

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benchmark replacement interest rate when LIBOR is no longer available, subject to the terms, and upon the satisfaction of conditions, specified therein.

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

Our ABL Facility contains financial covenants requiring Verso, among other things, to maintain a minimum fixed charge coverage ratio if availability were to drop below prescribed thresholds. As of September 30, 2021, we were above the prescribed thresholds in our ABL Facility. Our ABL Facility also requires that certain payment conditions, as defined therein, are met in order for Verso to incur debt or liens, pay cash dividends, repurchase equity interest, prepay indebtedness, sell or dispose of assets and make investments in or merge with another company.

If Verso Paper were to violate any of the covenants under our ABL Facility and were unable to obtain a waiver, it would be considered a default after the expiration of any applicable grace period. If Verso Paper were in default under our ABL Facility, then the lenders thereunder may exercise remedies in accordance with the terms thereof. In addition, if Verso Paper were in default under our ABL Facility, no additional borrowings under our ABL Facility would be available until the default was waived or cured. Our ABL Facility provides for customary events of default, including a cross-event of default provision with respect to any other existing debt instrument having an aggregate principal amount that exceeds $25 million.

Critical Accounting Policies

Our accounting policies are fundamental to understanding management’s discussion and analysis of financial condition and results of operations. Our Unaudited Condensed Consolidated Financial Statements are prepared in conformity with GAAP and follow general practices within the industry in which we operate. The preparation of the financial statements requires management to make certain judgments and assumptions in determining accounting estimates. Accounting estimates are considered critical if the estimate requires management to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and different estimates reasonably could have been used in the current period, or changes in the accounting estimate are reasonably likely to occur from period to period, that would have a material impact on the presentation of our financial condition, changes in financial condition or results of operations.

For a discussion of our critical accounting policies and estimates, see “Critical Accounting Policies” included in our Annual Report on Form 10-K for the year ended December 31, 2020, under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We have made no significant changes to our critical accounting policies and estimates from those described in our Annual Report on Form 10-K for the year ended December 31, 2020.

Recent Accounting Pronouncements

See Note 2, “Recent Accounting Pronouncements” in the Notes to our Unaudited Condensed Consolidated Financial Statements included elsewhere in this report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk from fluctuations in our paper prices, interest rates, energy prices and commodity prices for our inputs.

Paper Prices

Our sales, which we report net of rebates, allowances and discounts, are a function of the number of tons of paper that we sell and the price at which we sell our paper. Paper prices historically have been a function of macroeconomic factors that influence supply and demand, and have been substantially more variable than volume and can change significantly over relatively short time periods. Price is also subject to volatility due to fluctuations in foreign exchange rates of the U.S. dollar relative to other currencies, especially the euro, which can lead to lower average sales price realization.

We are primarily focused on serving the following end-user markets: specialty converters, general commercial print, catalogs and magazine publishers. Coated paper demand is primarily driven by advertising and print media usage. Advertising spending and magazine and catalog circulation tend to correlate with gross domestic product in the United States, as they rise with a

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strong economy and contract with a weak economy, which impacts media spend which further impacts magazine and catalog subscriptions.

Many of our customers provide us with forecasts, which allows us to plan our production runs in advance, optimizing production over our integrated mill system and thereby reducing costs and increasing overall efficiency. Generally, our sales agreements do not extend beyond the calendar year, and they typically provide for quarterly or semiannual price adjustments based on market price movements.

We reach our end-users through several channels, including merchants, brokers, printers and direct sales to end-users. We sell our products to approximately 200 customers. During the nine months ended September 30, 2021, our largest two customers, Central National-Gottesman and Veritiv Corporation, together accounted for 27% of our net sales.

Interest Rates

As of September 30, 2021, we had no borrowings outstanding under our ABL Facility. Borrowings under our ABL Facility bear interest at a variable rate based on LIBOR or the Federal Funds Rate, in each case plus an applicable margin (see “Liquidity and Capital Resources - ABL Facility” above for additional information).

An increase in interest rates would increase the costs of our variable rate debt obligations, if we were borrowing under our ABL Facility. While we may enter into agreements limiting our exposure to higher interest rates, any such agreements may not offer complete protection from this risk. In addition, there is uncertainty around whether LIBOR will continue to exist after 2021. However, for U.S. dollar LIBOR, the relevant date was deferred to June 30, 2023 for certain tenors (including overnight and one, three, six and 12 months), at which time the LIBOR administrator has indicated that it intends to cease publication of U.S. dollar LIBOR. Despite this deferral, the LIBOR administrator has advised that no new contracts using U.S. dollar LIBOR should be entered into after December 31, 2021. In addition, pursuant to the Third ABL Amendment, certain modifications were made to the existing ABL Facility in order to, among other things, provide for determination of a benchmark replacement interest rate when LIBOR is no longer available, subject to the terms, and upon the satisfaction of conditions, specified therein.

Commodity Prices

We are subject to changes in our cost of sales caused by movements in underlying commodity prices. The principal components of our cost of sales are wood fiber, wood pulp, chemicals, energy, labor and maintenance. The cost of commodities, including wood fiber, wood pulp, chemicals and energy, is the most variable component of our cost of sales because prices can fluctuate substantially, sometimes within a relatively short period of time. In addition, our aggregate commodity purchases fluctuate based on the volume of paper that we produce.

Wood Fiber.  We source our wood fiber from a broad group of timberland and sawmill owners located in the regions around our mills. Our cost to purchase wood is affected directly by the market price of wood in our regional markets and indirectly by the variability of fuel cost for the logging and transportation of timber to our facilities. While we have fiber supply agreements in place that ensure delivery of a substantial portion of our wood requirements, purchases under these agreements are typically at market rates.

Wood Pulp. We source bleached wood pulp from market producers to supplement fiber requirements at our mills. The primary pulp procured is Northern Bleached Softwood Kraft, or “NBSK.” We expect weather events and imbalances in supply and demand to create volatility in prices for NBSK from time to time.

Chemicals.  Chemicals utilized in the manufacturing of coated paper include latex, clay, starch, calcium carbonate, caustic soda, sodium chlorate and titanium dioxide. We purchase these chemicals from a variety of suppliers and are not dependent on any single supplier to satisfy our chemical needs. We expect imbalances in supply and demand and weather events to periodically create volatility in prices and supply for certain chemicals.

Energy.  We produce a significant portion of our energy needs for our paper mills from sources such as waste wood, waste heat recovery, liquid biomass from our pulping process and internal energy cogeneration facilities. Our external energy purchases include fuel oil, natural gas, coal and electricity. Our overall energy expenditures are mitigated by our internal energy production capacity and ability to switch between certain energy sources. The use of derivative contracts is also considered as part of our risk management strategy to manage our exposure to market fluctuations in energy prices.

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ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in reports that we file and submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There are inherent limitations to the effectiveness of any disclosure controls and procedures, including the possibility of human error or the circumvention or overriding of the controls and procedures, and even effective disclosure controls and procedures can provide only reasonable assurance of achieving their objectives. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2021. Based upon this evaluation, and subject to the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2021.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting during the quarter ended September 30, 2021, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II.  OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

See Note 11 to our Unaudited Condensed Consolidated Financial Statements for information regarding legal proceedings, which information is incorporated by reference in this Item 1.

ITEM 1A.   RISK FACTORS

There have been no material changes to the risk factors disclosed in “Part I - Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 other than those disclosed in “Part II - Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.

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ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On February 26, 2020, our Board of Directors authorized up to $250 million of net proceeds from the Pixelle Sale to be used to repurchase outstanding shares of Verso common stock. In conjunction with the declaration of the special cash dividend of $3.00 per share on August 5, 2020 (see “Liquidity and Capital Resources” above for more information), our Board of Directors reduced the total amount of the share repurchase authorization from $250 million to $150 million. During the three months ended September 30, 2021, we purchased approximately 0.6 million shares of our common stock through open market purchases and 10b5-1 programs under the share repurchase authorization at a weighted average costs of $19.31 per share. As of September 30, 2021, $45 million of the $150 million authorized remained.

The table below discloses the shares of our common stock repurchased during the third quarter of 2021 (dollars in millions, except per share amounts):

	Total Number  of Shares (or Units) Purchased (1)	Average Price Paid per Share (or Unit) (a)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (b) (in millions)
July 1, 2021 through July 31, 2021	257,433	$	19.33	257,433	$	51
August 1, 2021 through August 31, 2021	182,179	19.24		182,179	48
September 1, 2021 through September 30, 2021	152,166	19.37		152,166	45
Total	591,778	19.31		591,778	45

(1) Does not include 18,728 shares of Verso common stock repurchased during the three months ended September 30, 2021 at an average price of $17.79 per share to meet participant tax withholding obligations on restricted stock units that vested during the quarter.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.   MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.   OTHER INFORMATION

Not applicable.

29

ITEM 6.   EXHIBITS

The following exhibits are included with this report:

Exhibit Number Description of Exhibit

3.1 Amended and Restated Certificate of Incorporation of Verso Corporation, as amended by the Certificate of Amendment, dated February 18, 2020.(1)

3.2 Amended and Restated Bylaws of Verso Corporation.(2)

4.1 Form of specimen Class A Common Stock certificate.(3)

4.2 Form of specimen Class B Common stock certificate.(4)

4.3 Form of specimen Warrant certificate.(5)

4.4 Warrant Agreement dated as of July 15, 2016, between Verso Corporation and Computershare Inc. and its wholly owned subsidiary, Computershare Trust Company N.A., collectively, as warrant agent.(6)

10.1 Form of Employee Restricted Stock Unit Award Agreement - 2021

10.2 Form of Employee Performance Stock Unit Award Agreement - 2021

31.1 Certification of Principal Executive Officer of Verso Corporation pursuant to Rule 13a-14(a) under Securities Exchange Act of 1934.

31.2 Certification of Principal Financial Officer of Verso Corporation pursuant to Rule 13a-14(a) under Securities Exchange Act of 1934.

32.1 Certification of Principal Executive Officer of Verso Corporation pursuant to Rule 13a-14(b) under Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code.(7)

32.2 Certification of Principal Financial Officer of Verso Corporation pursuant to Rule 13a-14(b) under Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code.(7)

101.INS Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH Inline XBRL Taxonomy Extension Schema.

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase.

101.DEF Inline XBRL Taxonomy Extension Definition Linkbase.

101.LAB Inline XBRL Taxonomy Extension Label Linkbase.

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase.

104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

______________________

(1)    Incorporated herein by reference to Exhibit 3.1 to Verso Corporation’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 1, 2021.

(2)    Incorporated herein by reference to Exhibit 3.1 to Verso Corporation’s Current Report on Form 8-K filed with the SEC on June 26, 2020.

(3)    Incorporated herein by reference to Exhibit 4.1 to Verso Corporation’s Current Report on Form 8‑K filed with the SEC on July 19, 2016.

(4)    Incorporated herein by reference to Exhibit 4.2 to Verso Corporation’s Current Report on Form 8‑K filed with the SEC on July 19, 2016.

(5)    Included in Exhibit 4.4.

(6)    Incorporated herein by reference to Exhibit 10.4 to Verso Corporation’s Current Report on Form 8‑K filed with the SEC on July 19, 2016.

(7)    Furnished herewith.

30

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 5, 2021
	VERSO CORPORATION
	By:	/s/ Randy J. Nebel
		Randy J. Nebel President, Chief Executive Officer and Director (Principal Executive Officer)

By:	/s/ Brian D. Cullen
	Brian D. Cullen Senior Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

31

EX-10.1

MANAGEMENT – [__] EXHIBIT 10.1

VERSO CORPORATION

PERFORMANCE INCENTIVE PLAN

NOTICE OF MANAGEMENT STOCK UNIT AWARD

TIME-BASED

(“Grant Notice”)

You (the “Grantee”) have been granted an award of Stock Units (the “Award”), on the terms and subject to the conditions of the Plan and this Award Agreement, as follows:

Name of Grantee:    [Name]

Total Number of Stock Units

subject to the Award:    [Number of Units]

Grant Date:    February 13, 2021

Vesting Schedule:    Subject to the Terms (as defined below), the Award will become vested as follows: 33% on January 1, 2022, 33% on January 1, 2023, and 34% on January 1, 2024.

Vested Stock Units will be paid as provided in Section 6 of the Terms.

By your signature and the Corporation’s signature below, you and the Corporation agree that the Award is granted under and governed by the terms and conditions of the Corporation’s Performance Incentive Plan, as the same may be amended, modified or supplemented from time to time (the “Plan”), and the Terms and Conditions of Management Stock Unit Award (the “Terms”), which Terms are attached hereto as Exhibit A and are incorporated herein by this reference. This Grant Notice, together with its exhibits, including the Terms, is referred to as your “Award Agreement” applicable to the Award. Capitalized terms used in this Grant Notice are used as defined in the Terms if not defined herein. Capitalized terms used in this Award Agreement are used as defined in the Plan if not defined in this Grant Notice or in the Terms. You acknowledge receipt of a copy of this Grant Notice, the Terms, the Plan and the Prospectus for the Plan.

VERSO CORPORATION

By:

    Terrance M. Dyer

    Senior Vice President of Human Resources and Communications

ACCEPTED AND AGREED BY GRANTEE

By:

Print name:

VERSOLAW

BJR 20210114.1

MANAGEMENT – [__] EXHIBIT A

VERSO CORPORATION

PERFORMANCE INCENTIVE PLAN

TERMS AND CONDITIONS OF MANAGEMENT STOCK UNIT AWARD

1.Grant of Stock Units.

(a)General. These Terms and Conditions of Management Stock Unit Award (these “Terms”) apply to a particular stock unit award (the “Award”) if incorporated by reference in the Notice of Management Stock Unit Award Time-Based (the “Grant Notice”) corresponding to that particular grant. The recipient of the Award identified in the Grant Notice is referred to as the “Grantee.” The effective date of grant of the Award as set forth in the Grant Notice is referred to as the “Grant Date.” The Award was granted under and subject to the Verso Corporation Performance Incentive Plan, as the same may be amended, modified or supplemented from time to time (the “Plan”). The number of shares covered by the Award is subject to adjustment under Section 7.1 of the Plan. The Grant Notice and these Terms are collectively referred to as the “Award Agreement” applicable to the Award. Capitalized terms are defined in the Plan if not defined in this Award Agreement. The Award has been granted to the Grantee in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid to the Grantee.

(b)Stock Units. As used in this Award Agreement, a “Stock Unit” is a non-voting unit of measurement which is deemed for bookkeeping purposes to be equivalent in value to one outstanding share of Class A common stock, par value $0.01 per share, of the Corporation (“Common Stock”). The Stock Units shall be used solely as a device for the determination of any payment to eventually be made to the Grantee if and when such Stock Units vest pursuant to Section 2. The Stock Units create no fiduciary duty to the Grantee and shall create only a contractual obligation on the part of the Corporation to make payments, subject to vesting and the other terms and conditions hereof, as provided in Section 6 below. The Stock Units shall not be treated as property or as a trust fund of any kind. No assets have been secured or set aside by the Corporation with respect to the Award and, if amounts become payable to the Grantee pursuant to this Award Agreement, the Grantee’s rights with respect to such amounts shall be no greater than the rights of any general unsecured creditor of the Corporation.

2.Vesting. The Award shall vest and become earned as set forth in the Grant Notice, subject to earlier termination or acceleration and subject to adjustment as provided in this Award Agreement and in the Plan.

3.Continuance of Employment or Service Required; No Employment or Service Commitment. Except as otherwise provided in this Award Agreement, the vesting schedule applicable to the Award requires continued employment or service to the Corporation or one of its Subsidiaries through the applicable vesting date as a condition to the vesting of the Award and the rights and benefits under this Award Agreement. Except as provided in the Grant Notice, Section 7 below or under the Plan, employment or service for only a portion of the vesting period, even if a substantial portion, will not entitle the Grantee to any proportionate vesting of any outstanding and otherwise unvested portion of the Award, or avoid or mitigate a termination of rights and benefits upon or following a termination of employment or service.

Nothing contained in this Award Agreement or the Plan constitutes a continued employment or service commitment by the Corporation or any of its Subsidiaries, confers upon the Grantee any right to remain in employment or service to the Corporation or any Subsidiary, interferes in any way with the right of the Corporation or any Subsidiary at any time to terminate such employment or service, or affects the right of the Corporation or any Subsidiary to increase or decrease the Grantee’s other compensation. Nothing in this Award Agreement, however, is intended to adversely affect any independent contractual right of the Grantee without his/her consent thereto.

Exhibit A – Page 1

MANAGEMENT – [__] EXHIBIT A

4.Dividend and Voting Rights.

(a)Limitations on Rights Associated with Units. The Grantee shall have no rights as a stockholder of the Corporation, no dividend rights (except as expressly provided in Section 4(b) hereof) and no voting rights with respect to the Stock Units or any shares of Common Stock issuable in respect of such Stock Units, until shares of Common Stock are actually issued to and held of record by the Grantee. Except as expressly provided in Section 4(b) hereof or as may be provided pursuant to Section 7.1 of the Plan, no adjustments will be made for dividends or other rights of a holder for which the record date is prior to the date of issuance of the stock certificate evidencing the shares.

(b)Dividend Equivalent Reinvestment. In the event that the Corporation pays a cash dividend on its outstanding Common Stock for which the related record date occurs after the Grant Date and prior to the date all Stock Units subject to the Award have either been paid or have terminated, the Corporation shall credit (as of the related dividend payment date) the Grantee with an additional number of Stock Units equal to (a) the amount of the cash dividend paid by the Corporation on a single share of Common Stock on such dividend payment date, multiplied by (b) the number of Stock Units subject to the Award outstanding and unpaid as of the record date for such dividend payment (including any Stock Units previously credited under this Section 4(b) and with such total number subject to adjustment pursuant to Section 7.1 of the Plan), divided by (c) the closing price of a share of Common Stock on such dividend payment date. Any Stock Units credited pursuant to the foregoing provisions of this Section 4(b) will be subject to the same vesting, payment, termination and other terms, conditions and restrictions as the original Stock Units to which they relate. No crediting of Stock Units will be made pursuant to this Section 4(b) with respect to any Stock Units which, as of the related record date, have either been paid or have terminated.

5.Restrictions on Transfer. Prior to the time the Stock Units are vested and paid, neither the Stock Units comprising the Award nor any interest therein or amount payable in respect thereof may be sold, assigned, transferred, pledged or otherwise disposed of, alienated or encumbered, either voluntarily or involuntarily. The transfer restrictions in the preceding sentence shall not apply to (a) transfers to the Corporation or (b) transfers by will or the laws of descent and distribution.

6.Timing and Manner of Payment of Stock Units. The Stock Units subject to this Award Agreement that become vested shall be paid in an equivalent number of whole shares of Common Stock promptly after the applicable vesting date (and in all events not later than two and one-half months after the applicable vesting date) in accordance with the terms hereof. Each such payment of Stock Units shall be subject to the tax withholding provisions of Section 9 hereof and Section 8.5 of the Plan and subject to adjustment as provided in Section 7.1 of the Plan and shall be in complete satisfaction of such vested Stock Units. The Grantee or any other person entitled under the Plan to receive a payment of shares of Common Stock shall deliver to the Corporation any representations or other documents or assurances required pursuant to Section 8.1 of the Plan. The Corporation may make payment of shares of Common Stock either by delivering one or more certificates for such shares or by entering such shares in book entry form, as determined by the Corporation in its discretion. Any Stock Units corresponding to a particular vesting date shall be rounded down to the nearest whole Stock Unit; provided that fractional Stock Units subject to the Award shall be cumulated until sufficient to produce a whole Stock Unit, in all cases remaining fractional Stock Unit interests shall terminate in the event the remaining Stock Units subject to the Award terminate, and any remaining fractional Stock Unit interest shall terminate on the final vesting date applicable to the Award. In the event that payment of Stock Units is triggered by a Separation From Service and Section 7(c) applies, and the general release contemplated by such section and the expiration of any revocation rights provided therein or pursuant to applicable law could become effective in one of two taxable years depending on when the Grantee executes and delivers the general release, any payment conditioned on the release shall not be made earlier than the first business day of the later of such two tax years (but in all cases within the applicable two and one-half month payment period provided for above).

Exhibit A – Page 2

MANAGEMENT – [__] EXHIBIT A

7.Effect of Termination of Employment or Service; Change in Control.

(a)Termination of Employment or Service Generally. Except as otherwise provided in this Award Agreement, including but not limited to the Grant Notice or Sections 7(b) or 7(c) below, the Grantee’s Stock Units shall terminate to the extent that such Stock Units have not become vested on or before the date of the Grantee’s Separation From Service (as defined in Section 19), regardless of the reason for the termination of employment or service that triggers the Separation From Service.

(b)Termination Due to Death or Disability. In the event the Grantee’s Separation From Service is due to the Grantee’s death or Disability (as defined in Section 19), then the Stock Units, to the extent then outstanding and unvested, shall accelerate and become fully vested upon the Separation From Service (subject to the Grantee’s satisfying the requirement to provide a general release in accordance with Section 7(e) in the case of a Separation from Service due to the Grantee’s Disability).

(c)Termination Without Cause Not in Connection With a Change in Control. If the Grantee’s Separation From Service is the result of a termination of employment that constitutes a Qualifying Termination (as defined in Section 19) and such event occurs prior to a Change in Control or more than twelve (12) months after a Change in Control, then, subject to the Grantee’s satisfying the requirement to provide a general release in accordance with Section 7(e), the next tranche of Stock Units scheduled to vest (and otherwise outstanding and unvested) shall accelerate and become fully vested upon the Separation From Service; provided that if the Qualifying Termination occurs after the effective date of the definitive agreement providing for a Change in Control transaction (and such Change in Control transaction is consummated), then the portion of the Award (if any) that is outstanding and unvested immediately prior to the Qualifying Termination and after giving effect to the foregoing acceleration provision shall (subject to the Grantee’s satisfying the requirement to provide a general release in accordance with Section 7(e)) fully vest upon (or, as necessary to give effect to the acceleration, immediately prior to) the Change in Control.

(d)Termination Without Cause or For Good Reason In Connection With a Change in Control. If the Grantee’s Separation From Service is the result of a termination of employment that constitutes a Qualifying Termination, or a termination of employment by the Grantee for Good Reason (as defined in Section 19), and in either case such event occurs upon, or within twelve (12) months following, a Change in Control, the Stock Units, to the extent then outstanding and unvested and subject to the Grantee’s satisfying the requirement to provide a general release in accordance with Section 7(e), shall fully vest upon such Qualifying Termination or resignation for Good Reason.

(e)General Release. The benefits provided in Sections 7(c) and 7(d) in connection with a termination of the Grantee’s employment (and Section 7(b) in the case of a termination due to the Grantee’s Disability) are contingent upon the Grantee’s executing and not revoking a Waiver and Release of Claims Agreement (“Release”) in accordance with the timing and other requirements set forth in this section. The Release must be signed in connection with the termination of Grantee’s employment and not any earlier than the Corporation may prescribe and shall be in a form acceptable to the Corporation (except, if the Grantee is a party to an employment or severance agreement with the Corporation that includes a form of release attached thereto, shall be in the form provided for in such agreement). The Corporation will provide the final form of Release to the Grantee no later than ten (10) days following the Grantee’s termination of employment, and the Grantee will be required to execute and return the Release to the Corporation within twenty-one (21) days (or forty-five (45) days if such longer period of time is required to make the Release maximally enforceable under applicable law) after the Corporation provides the form of Release to the Grantee.

Exhibit A – Page 3

MANAGEMENT – [__] EXHIBIT A

(f)No Further Rights as to Terminated Units. If any unvested Stock Units terminate pursuant to this Award Agreement, such Stock Units shall automatically terminate and be cancelled as of the applicable termination date without payment of any consideration by the Corporation and without any other action by the Grantee, or the Grantee’s beneficiary or personal representative, as the case may be, and the Corporation shall have no obligation (or no further obligation, as the case may be) in respect thereof or with respect thereto.

8.Adjustments Upon Specified Events. Upon the occurrence of certain events relating to the Corporation’s stock contemplated by Section 7.1 of the Plan, the Administrator will make adjustments if appropriate in the number of Stock Units contemplated hereby and the number and kind of securities that may be issued in respect of the Award. No such adjustment shall be made with respect to any cash dividend for which dividend equivalents are credited pursuant to Section 4.

9.Taxes; Tax Withholding.

(a)Section 409A. It is intended that the terms of the Award will not result in the imposition of any tax liability pursuant to Section 409A of the Code. This Award Agreement shall be construed and interpreted consistent with that intent. Notwithstanding any provision of these Terms to the contrary, if the Grantee is a “specified employee” as defined in Section 409A of the Code, the Grantee shall not be entitled to any payment with respect to the Award in connection with the Grantee’s “separation from service” (as that term is used for purposes of Section 409A of the Code) until the earlier of (a) the date that is six months and one day after the Grantee’s separation from service for any reason other than the Grantee’s death, or the date of the Grantee’s death. For purposes of clarity, the six month delay shall not apply in the case of severance contemplated by Treasury Regulations Section 1.409A-1(b)(9)(iii) to the extent of the limits set forth therein. Any amounts otherwise payable to the Grantee following the Grantee’s separation from service that are not so paid by reason of this Section 9 shall be paid as soon as practicable for the Corporation (and in all events within 30 days) after the date that is six months after the Grantee’s separation from service (or, if earlier, the date of the Grantee’s death). The provisions of this Section 9 shall only apply if, and to the extent, required to comply with Section 409A of the Code.

(b)Tax Withholding. The Corporation shall reasonably determine the amount of any federal, state, local or other income, employment, or other taxes which the Corporation or any of its Subsidiaries may reasonably be obligated to withhold with respect to the grant, vesting or other event with respect to the Stock Units. If such withholding event occurs in connection with the distribution of shares of Common Stock in respect of the Stock Units and subject to compliance with all applicable laws, the Corporation shall automatically withhold and reacquire the appropriate number of whole shares, valued at their then fair market value (with the “fair market value” of such shares determined in accordance with the applicable provisions of the Plan), to satisfy any withholding obligations of the Corporation or its Subsidiaries with respect to such distribution. If, however, any withholding event occurs with respect to the Stock Units other than in connection with the distribution of shares of Common Stock in respect of the Stock Units, or if the Corporation cannot legally satisfy such withholding obligations by such withholding and reacquisition of shares as described above, the Corporation shall be entitled to require a cash payment by or on behalf of the Grantee and/or to deduct from other compensation payable to the Grantee the amount of any such withholding obligations.

(c)Responsibility for Taxes. Except for such withholding rights of the Corporation, the Grantee shall be solely responsible for any and all tax liability arising with respect to the Award or any payment in respect thereof.

10.Notices. Any notice to be given under the terms of this Award Agreement shall be in writing and addressed to the Corporation at its principal office to the attention of the Secretary, and to the Grantee at

Exhibit A – Page 4

MANAGEMENT – [__] EXHIBIT A

the Grantee’s last address reflected on the Corporation’s records. Any notice shall be delivered in person or shall be enclosed in a properly sealed envelope, addressed as aforesaid, registered or certified, and deposited (postage and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government or a courier of internationally recognized prominence. Any such notice shall be given only when received, but if the Grantee is no longer an Eligible Person, shall be deemed to have been duly given five business days after the date mailed in accordance with the foregoing provisions of this Section 10.

11.Plan. The Award and all rights of the Grantee under this Award Agreement are subject to the terms and conditions of the provisions of the Plan, which are incorporated herein by this reference. The Grantee agrees to be bound by the terms of the Plan and this Award Agreement. The Grantee acknowledges having read and understanding the Plan, the Prospectus for the Plan, and this Award Agreement. Unless otherwise expressly provided in other sections of this Award Agreement, provisions of the Plan that confer discretionary authority on the Board or the Administrator do not and shall not be deemed to create any rights in the Grantee unless such rights are expressly set forth herein or are otherwise in the sole discretion of the Board or the Administrator so conferred by appropriate action of the Board or the Administrator under the Plan after the date hereof.

12.Entire Agreement. This Award Agreement and the Plan together constitute the entire agreement and supersede in their entirety all prior understandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof. The Plan may be amended pursuant to Section 8.6 of the Plan. This Award Agreement may be amended by the Administrator from time to time. Any such amendment must be in writing and signed by the Corporation. Any such amendment that materially and adversely affects the Grantee’s rights under this Award Agreement requires the consent of the Grantee in order to be effective with respect to the Award. The Corporation may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not adversely affect the interests of the Grantee hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof.

13.Governing Law. This Award Agreement shall be governed by, construed under, and enforced in accordance with the laws of the State of Delaware without regard to conflict of law principles thereunder.

14.Effect of Award Agreement. Subject to the Corporation’s right to terminate the Award pursuant to Section 7.2 of the Plan, this Award Agreement shall be assumed by, be binding upon and inure to the benefit of any successor or successors to the Corporation.

15.Counterparts. This Award Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. Photographic or other electronic copies of such signed counterparts may be used in lieu of the originals for any purpose.

16.Section Headings. The section headings of this Award Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.

17.Clawback Policy. The Stock Units are subject to the terms of the Corporation’s recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of the Stock Units or any shares of Common Stock or other cash or property received with respect to the Stock Units (including any value received from a disposition of the shares acquired upon payment of the Stock Units).

Exhibit A – Page 5

MANAGEMENT – [__] EXHIBIT A

18.No Advice Regarding Grant. The Grantee is hereby advised to consult with his or her own tax, legal and/or investment advisors with respect to any advice the Grantee may determine is needed or appropriate with respect to the Award (including, without limitation, to determine the foreign, state, local, estate and/or gift tax consequences with respect to the Award and any shares that may be acquired upon payment of the Award). Neither the Corporation nor any of its officers, directors, affiliates or advisors makes any representation (except for the terms and conditions expressly set forth in this Award Agreement) or recommendation with respect to the Award.

19.Certain Defined Terms. For the purposes of this Award Agreement, the following terms shall have the meanings provided below:

“Cause” means (unless such term is defined in a written employment or severance agreement by and between the Grantee and the Corporation, in which case “Cause” is used as defined in such written employment or severance agreement) that any one or more of the following has occurred:

(a)    The Grantee’s indictment for, conviction of, or pleading guilty or nolo contendere to, a felony (other than motor vehicle offenses the effect of which do not materially impair the Grantee’s performance of the Grantee’s duties to the Corporation).

(b)    The Grantee’s willful failure to substantially perform the material duties of the Grantee’s position with the Corporation (other than any such failure resulting from the Grantee’s incapacity due to physical or mental illness), provided that the Grantee has been provided written notice of such failure and, if such failure is curable, the Grantee has not cured the failure to the satisfaction of the Corporation within 15 days after delivery of such notice.

(c)    The Grantee’s willful failure to obey legal orders consistent with the Grantee’s position at the Corporation given in good faith by the Corporation’s Chief Executive Officer or any other person to whom the Grantee reports at the Corporation, directly or indirectly (or, in the event the Grantee is the Corporation’s Chief Executive Officer, given in good faith by the Board), other than any such failure resulting from incapacity due to physical or mental illness; provided, however, that the Grantee has been given written notice of such failure and, if such failure is curable, the Grantee has not cured the failure to the satisfaction of the Corporation within 15 days after delivery of such notice.

(d)    The Grantee’s willful misconduct or breach of fiduciary duty (including, without limitation, any act of fraud, embezzlement, or dishonesty) which causes or is reasonably expected to result in material injury to the Corporation or its business reputation.

(e)    The Grantee’s entering into an agreement or consent decrease or being the subject of any regulatory order that in any of such cases prohibits the Grantee from serving as an officer or director of a company that has publicly-traded securities.

(f)    The Grantee’s material breach of any agreement that the Grantee may have with the Corporation or of any written policies or procedures of the Corporation, which is injurious to the Corporation; provided, however, that the Grantee has been given written notice of such failure and, if such breach is curable, the Grantee has not cured the breach to the satisfaction of the Corporation within 15 days after delivery of such notice.

Exhibit A – Page 6

MANAGEMENT – [__] EXHIBIT A

“Change in Control” means any of the following events:

(a)A transaction or series of transactions occurs whereby any "person" or related "group" of "persons" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act")), directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Corporation possessing more than 50% of the total combined voting power of the Corporation's securities outstanding immediately after such acquisition;

(b)During any period of two consecutive years, the Continuing Directors cease to constitute at least a majority of the Board. For purposes of this definition, the term “Continuing Director” means any director who was (i) a member of the Board at the beginning of the two-year period, (ii) elected to the Board by the Corporation’s stockholders, or (iii) appointed to the Board by a majority of the Continuing Directors then serving on the Board; in the case of clause (ii) and (iii), whose election or appointment to the Board did not occur in connection with any actual or threatened director election contest or proxy solicitation contest or any transaction or proposed transaction involving the Corporation or any subsidiary of the Corporation);

(c)The Corporation, directly, or indirectly through one or more subsidiaries or intermediaries, enters into an agreement to, or consummates, a sale or other disposition of all or substantially all of the Corporation’s assets in any single transaction or series of transactions (including pursuant to a spin-off, split-up or similar transaction) (each, a “Sale of Substantially All Assets”). Without limiting the generality of the foregoing sentence, and subject to the exclusions below, a Sale of Substantially All Assets will include the sale or other disposition, within any two-year period, in any one transaction or series of transactions, of more than two-thirds of the mills (whether determined by reference to mill-generated revenue or by number of mills) owned by the Corporation and its subsidiaries at the beginning of the two-year period. For purposes of this clause (c), however, in determining whether a Sale of Substantially All Assets has occurred the following assets and mills (or sales of assets and mills, as the case may be) shall be disregarded (together, any sales of such assets and mills, including related assets and real estate) are referred to as the “Excluded Sales”): (i) all or any portion of the Corporation’s mills, including related assets and real estate, in Duluth, MN, Wisconsin Rapids, WI, and Luke MD, (ii) all or any portion of Consolidated Water Power Company, including related assets and real estate, and (iii) any disposition of assets (including mills) that has been proposed as of, or that occurred prior to, the Grant Date;

(d)The Corporation, whether directly involving the Corporation or indirectly involving the Corporation through one or more subsidiaries or intermediaries, enters into an agreement to or consummates (i) a merger, combination, consolidation, conversion, exchange of securities, reorganization or business combination, or (ii) an acquisition of the assets or stock of another entity, in any single transaction or series of transactions, which event results in the voting securities of the Corporation outstanding immediately prior thereto failing to continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving or another entity) at least 66% percent of the combined voting power of the voting securities of the Corporation or such surviving or other entity outstanding immediately after such event; or

(e)Any transaction or series of transactions that has the substantial effect of any one or more of the foregoing events.

Exhibit A – Page 7

MANAGEMENT – [__] EXHIBIT A

“Disability” (unless such term is defined in a written employment or severance agreement by and between the Grantee and the Corporation, in which case “Disability” is used as defined in such written employment or severance agreement) has the meaning given to such term in Treas. Reg. Section 1.409A-3(i)(4).

“Good Reason” means (unless such term is defined in a written employment or severance agreement by and between the Grantee and the Corporation, in which case “Good Reason” is used as defined in such written employment or severance agreement) that any one or more of the following events has occurred without the Grantee’s written consent:

(a)    a material reduction by the Corporation in the Grantee’s annual base salary or target-level annual incentive award opportunity, other than a general reduction in the base salaries or target-level annual incentive award opportunities of all or substantially all of the Corporation’s executives;

(b)    a material demotion by the Corporation with respect to the Grantee’s job duties and responsibilities; or

(c)    the Corporation’s material breach of any material agreement between the Grantee and the Corporation;

provided, however, that the Grantee’s termination of his or her employment with the Corporation will not be considered a termination by the Grantee for Good Reason unless the Grantee has: (a) notified the Corporation in writing of the event(s) claimed to constitute Good Reason, no later than 30 days after the initial occurrence of the event(s); (b) the Corporation has failed to cure or remedy such event(s), no later than 30 days after its receipt of the Grantee’s written notice; and (c) the Grantee has notified the Corporation in writing that the Grantee is terminating his or her employment for Good Reason on account of such event(s), and the Grantee actually terminates the Grantee’s employment with the Corporation no later than 30 days after the expiration of such 30-day cure period. For clarity, a reduction in duties or responsibilities as a result of the Excluded Sales shall not constitute “Good Reason” pursuant to clause (b) above.

“Qualifying Termination” means (unless such term is defined in a written employment or severance agreement by and between the Grantee and the Corporation, in which case “Qualifying Termination” is used as defined in such written employment or severance agreement), if the Grantee is employed by the Corporation or one of its Subsidiaries, a termination of the Grantee’s employment by the Corporation or one of its Subsidiaries without Cause and other than due to the Grantee’s death or Disability.

“Separation From Service” means (unless such term is defined in a written employment or severance agreement by and between the Grantee and the Corporation, in which case “Separation From Service” is used as defined in such written employment or severance agreement) the Grantee ceases to be employed by, or ceases to provide services as a director to, the Corporation or one of its Subsidiaries; provided that no Separation From Service shall exist in any event unless such separation constitutes a “separation from service” within the meaning of Section 409A of the Code. If the Grantee ceases to be employed by or ceases to provide services as a director to the Corporation or a Subsidiary, but immediately thereafter continues to be employed by or provide services as a director to the Corporation or a Subsidiary (for example, and without limitation, if the Grantee ceases to be employed by the Corporation but immediately thereafter continues to be employed by a Subsidiary or continues to provide services as a director to the Corporation or a Subsidiary), such change shall not constitute a Separation From Service. The provisions of Section 6 of the Plan apply to the Award.

Exhibit A – Page 8

MANAGEMENT – [__] EXHIBIT A

*    *    *

Exhibit A – Page 9

EX-10.2

MANAGEMENT – [__] EXHIBIT 10.2

VERSO CORPORATION

PERFORMANCE INCENTIVE PLAN

NOTICE OF MANAGEMENT STOCK UNIT

AWARD PERFORMANCE-BASED

(“Grant Notice”)

You (the “Grantee”) have been granted an award of Stock Units (the “Award”), on the terms and subject to the conditions of the Plan and this Award Agreement, as follows:

Name of Grantee:    [Name]

Total “target” Number of Stock Units

subject to the Award:    [Number of Units]

Grant Date:    February 13, 2021

Vesting Schedule:    Subject to the Terms (as defined below), the Award will become vested as set forth in Exhibit A.

Vested Stock Units will be paid as provided in Section 6 of the Terms.

By your signature and the Corporation’s signature below, you and the Corporation agree that the Award is granted under and governed by the terms and conditions of the Corporation’s Performance Incentive Plan, as the same may be amended, modified or supplemented from time to time (the “Plan”), and the Terms and Conditions of Management Performance-Based Stock Unit Award (the “Terms”), which Terms are attached hereto as Exhibit B. The Terms, as well as Exhibit A hereto, are incorporated herein by this reference. This Grant Notice, together with its exhibits, including the Terms, is referred to as your “Award Agreement” applicable to the Award. Capitalized terms used in this Grant Notice are used as defined in the Terms if not defined herein. Capitalized terms used in this Award Agreement are used as defined in the Plan if not defined in this Grant Notice or in the Terms. You acknowledge receipt of a copy of this Grant Notice, its exhibits including the Terms, the Plan and the Prospectus for the Plan.

VERSO CORPORATION

By:

    Terrance M. Dyer

    Senior Vice President of

Human Resources and Communications

ACCEPTED AND AGREED BY GRANTEE

By:

Print name:

VERSOLAW

BJR 20210114.2

MANAGEMENT – [__] EXHIBIT A

VERSO CORPORATION

PERFORMANCE INCENTIVE PLAN

VESTING SCHEDULE OF AWARD

SUBJECT TO ACHIEVEMENT OF PERFORMANCE OBJECTIVES

General

Defined terms used, but not defined, in this Exhibit A will have the respective meanings given such terms in the Terms.

The provisions of this Exhibit A are subject to the terms and conditions of the Grant Notice to which this Exhibit A is attached, the Terms, and the Plan.

The Award is subject to both performance-based and time/service-based vesting conditions. Except as otherwise expressly provided in the Terms, the Stock Units subject to the Award that are determined to be eligible to vest based on performance as set forth below will only become vested if the Grantee remains employed by or in service to the Corporation or one of its Subsidiaries through the applicable vesting date set forth below.

Performance Vesting

The percentage of the Stock Units subject to the Award that will be eligible to vest on the applicable vesting date set forth below will be determined based upon the Corporation’s performance over the three-year period from January 1, 2021 to December 31, 2023 (the “Performance Period”) as measured by the following two metrics, each of which will apply to 50% of the total target number of Stock Units subject to the Award as set forth in the Grant Notice:

1.3-Year Adjusted EBITDAP

“3-Year Adjusted EBITDAP” means, as measured over the Performance Period, the Corporation’s consolidated earnings before interest, taxes, depreciation and amortization adjusted to: (a) exclude cash and non-cash income and expenses incurred in connection with (i) financings and other capital market transactions, (ii) business and asset acquisitions and dispositions, (iii) restructurings of the Corporation’s business and operations, (iv) non-cash stock compensation, (v) other non-cash changes, and (vi) unusual or one-time items; (b) exclude the effect of any changes in accounting principles, policies, practices and procedures adopted or implemented during the Measurement Period; and (c) exclude any net pension income or expense over the Performance Period.

2.3-Year Return on Invested Capital

“3-Year Return on Invested Capital” means the following calculation used to assess the Corporation’s efficiency at using and allocating invested capital dollars for profitable returns, as a ratio, calculated as follows:

Average Net Operating Profit After Tax / Average Equity and Debt

Where

“Average Net Operating Profit After Tax” is the 3-Year Adjusted EBITP, tax effected at a 25% rate / 3

And

Exhibit A – Page 1

MANAGEMENT – [__] EXHIBIT A

“3-Year Adjusted EBITP” is 3-Year Adjusted EBITDAP minus depreciation and amortization expense.

And

“Average Equity and Debt” is “Total equity” as reported in the Corporation’s annual financial statements prepared in accordance with Generally Accepted Accounting Principles, net of retained earnings and pension income/expense reported as “Accumulated other comprehensive income (loss)” on such financial statements, adjusted down $74 million for the idled assets at the Duluth mill and $242 million for the idled assets at the Wisconsin Rapids mill and any third party debt from the balance sheet contained in such financial statements, minus the year-end cash balance shown on such financial statements excluding cash received for the sale of assets over the Performance Period, averaged over four (4) data points: (1) Balance on December 31, 2020; (2) Balance on December 31, 2021; (3) Balance on December 31, 2022; and (4) Balance on December 31, 2023. The determination of Average Equity and Debt shall exclude the effect of any changes in accounting principles, policies, practices and procedures adopted or implemented during the Performance Period.

In the event of an acquisition by the Corporation or one of its subsidiaries during the Performance Period, 3-Year Adjusted EBITDAP, 3-Year Adjusted EBITP, and the determination of Average Equity and Debt, for the year in which the acquisition occurs shall be adjusted to exclude the impact of the acquisition, but the determination of 3-Year Adjusted EBITDAP, 3-Year Adjusted EBITP, and Average Equity and Debt for any year during the Performance Period after the year in which the acquisition occurs shall include the effect of the acquisition. In the event of an extraordinary transaction or item during the Performance Period not contemplated by the Administrator on the Grant Date, then the Administrator will have the authority to make such adjustment(s) (if any) to the determination of 3-Year Adjusted EBITDAP, 3-Year Adjusted EBITP, and Average Equity and Debt as the Administrator determines to be equitable. Whether, and the extent to which, any adjustment is required pursuant to this Exhibit A shall be determined by the Administrator, whose determination shall be final and binding.

Within two and one-half months after the end of the Performance Period, the Administrator will determine the Corporation’s performance measured by the 3-Year Adjusted EBITDAP and 3-Year Return on Invested Capital metrics to determine what portion of the Award will be eligible to vest as follows (the date of such determination by the Administrator, the “Determination Date”):

3-Year Adjusted EBITDAP:

If the Corporation’s 3-Year Adjusted EBITDAP for the Performance Period is:		The portion of the target Stock Units subject to the Award that will be eligible to vest based on this metric equals (a) 50% of the target Stock Units subject to the Award multiplied by (b) the corresponding percentage set forth below
Less than Threshold	Less than $298,000,000	0%
Threshold	$298,000,000	50%
Target	$337,000,000	100%
Max	$397,000,000 or greater	200%

Exhibit A – Page 2

MANAGEMENT – [__] EXHIBIT A

3-Year Return on Invested Capital:

If the Corporation’s 3-Year Return on Invested Capital for the Performance Period is:		The portion of the target Stock Units subject to the Award that will be eligible to vest based on this metric equals (a) 50% of the target Stock Units subject to the Award multiplied by (b) the corresponding percentage set forth below
Less than Threshold	Less than 10%	0%
Threshold	10%	50%
Target	14%	100%
Max	22% or greater	200%

If the performance of the Corporation falls between any two of the above-described achievement levels, straight-line interpolation between the two achievement levels will be applied to establish the corresponding percentage of the Award that will become eligible to vest. To the extent any Stock Units subject to the Award are not eligible to vest based on performance as described above, such Stock Units shall terminate as of the Determination Date.

Subject to the Terms, the vesting date for the Stock Units that become eligible to vest based on performance as set forth above will be the Determination Date. If the Grantee vests in any portion of the Award on such date, the Administrator will notify, or cause the Corporation to notify, the Grantee of the portion of the Award that vested on such date and the applicable vesting date.

Exhibit A – Page 3

MANAGEMENT – [__] EXHIBIT B

VERSO CORPORATION

PERFORMANCE INCENTIVE PLAN

TERMS AND CONDITIONS OF MANAGEMENT

PERFORMANCE-BASED STOCK UNIT AWARD

1.Grant of Stock Units.

(a)General. These Terms and Conditions of Management Performance-Based Stock Unit Award (these “Terms”) apply to a particular stock unit award (the “Award”) if incorporated by reference in the Notice of Management Stock Unit Award Performance-Based (the “Grant Notice”) corresponding to that particular grant. The recipient of the Award identified in the Grant Notice is referred to as the “Grantee.” The effective date of grant of the Award as set forth in the Grant Notice is referred to as the “Grant Date.” The Award was granted under and subject to the Verso Corporation Performance Incentive Plan, as the same may be amended, modified or supplemented from time to time (the “Plan”). The number of shares covered by the Award is subject to adjustment under Section 7.1 of the Plan. The Grant Notice (including exhibits thereto) and these Terms are collectively referred to as the “Award Agreement” applicable to the Award. Capitalized terms are defined in the Plan if not defined in this Award Agreement. The Award has been granted to the Grantee in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid to the Grantee.

(b)Stock Units. As used in this Award Agreement, a “Stock Unit” is a non-voting unit of measurement which is deemed for bookkeeping purposes to be equivalent in value to one outstanding share of Class A common stock, par value $0.01 per share, of the Corporation (“Common Stock”). The Stock Units shall be used solely as a device for the determination of any payment to eventually be made to the Grantee if and when such Stock Units vest pursuant to Section 2. The Stock Units create no fiduciary duty to the Grantee and shall create only a contractual obligation on the part of the Corporation to make payments, subject to vesting and the other terms and conditions hereof, as provided in Section 6 below. The Stock Units shall not be treated as property or as a trust fund of any kind. No assets have been secured or set aside by the Corporation with respect to the Award and, if amounts become payable to the Grantee pursuant to this Award Agreement, the Grantee’s rights with respect to such amounts shall be no greater than the rights of any general unsecured creditor of the Corporation.

2.Vesting. The Award shall vest and become earned as set forth in the Grant Notice (including the exhibits thereto), subject to earlier termination or acceleration and subject to adjustment as provided in this Award Agreement and in the Plan.

3.Continuance of Employment or Service Required; No Employment or Service Commitment. Except as otherwise provided in this Award Agreement, the vesting schedule applicable to the Award requires continued employment or service to the Corporation or one of its Subsidiaries through the applicable vesting date as a condition to the vesting of the Award and the rights and benefits under this Award Agreement. Except as provided in the Grant Notice, Section 7 below or under the Plan, employment or service for only a portion of the vesting period, even if a substantial portion, will not entitle the Grantee to any proportionate vesting of any outstanding and otherwise unvested portion of the Award, or avoid or mitigate a termination of rights and benefits upon or following a termination of employment or service.

Exhibit B – Page 1

MANAGEMENT – [__] EXHIBIT B

Nothing contained in this Award Agreement or the Plan constitutes a continued employment or service commitment by the Corporation or any of its Subsidiaries, confers upon the Grantee any right to remain in employment or service to the Corporation or any Subsidiary, interferes in any way with the right of the Corporation or any Subsidiary at any time to terminate such employment or service, or affects the right of the Corporation or any Subsidiary to increase or decrease the Grantee’s other compensation. Nothing in this Award Agreement, however, is intended to adversely affect any independent contractual right of the Grantee without his/her consent thereto.

4.Dividend and Voting Rights.

(a)Limitations on Rights Associated with Units. The Grantee shall have no rights as a stockholder of the Corporation, no dividend rights (except as expressly provided in Section 4(b) hereof) and no voting rights with respect to the Stock Units or any shares of Common Stock issuable in respect of such Stock Units, until shares of Common Stock are actually issued to and held of record by the Grantee. Except as expressly provided in Section 4(b) hereof or as may be provided pursuant to Section 7.1 of the Plan, no adjustments will be made for dividends or other rights of a holder for which the record date is prior to the date of issuance of the stock certificate evidencing the shares.

(b)Dividend Equivalent Reinvestment. In the event that the Corporation pays a cash dividend on its outstanding Common Stock for which the related record date occurs after the Grant Date and prior to the date all Stock Units subject to the Award have either been paid or have terminated, the Corporation shall credit (as of the related dividend payment date) the Grantee with an additional number of Stock Units equal to (a) the amount of the cash dividend paid by the Corporation on a single share of Common Stock on such dividend payment date, multiplied by (b) the target number of Stock Units subject to the Award outstanding and unpaid as of the record date for such dividend payment (including any Stock Units previously credited under this Section 4(b) and with such total number subject to adjustment pursuant to Section 7.1 of the Plan), divided by (c) the closing price of a share of Common Stock on such dividend payment date. Any Stock Units credited pursuant to the foregoing provisions of this Section 4(b) will be subject to the same vesting, payment, termination and other terms, conditions and restrictions as the original Stock Units to which they relate. No crediting of Stock Units will be made pursuant to this Section 4(b) with respect to any Stock Units which, as of the related record date, have either been paid or have terminated.

5.Restrictions on Transfer. Prior to the time the Stock Units are vested and paid, neither the Stock Units comprising the Award nor any interest therein or amount payable in respect thereof may be sold, assigned, transferred, pledged or otherwise disposed of, alienated or encumbered, either voluntarily or involuntarily. The transfer restrictions in the preceding sentence shall not apply to (a) transfers to the Corporation or (b) transfers by will or the laws of descent and distribution.

6.Timing and Manner of Payment of Stock Units. The Stock Units subject to this Award Agreement that become vested shall be paid in an equivalent number of whole shares of Common Stock promptly after the applicable vesting date (and in all events not later than two and one-half months after the earlier of (i) the end of the Performance Period or (ii) the applicable vesting date of the Award) in accordance with the terms hereof. Each such payment of Stock Units shall be subject to the tax withholding provisions of Section 9 hereof and Section 8.5 of the Plan and subject to adjustment as provided in Section 7.1 of the Plan and shall be in complete satisfaction of such vested Stock Units. The Grantee or any other person entitled under the Plan to receive a payment of shares of Common Stock shall deliver to the Corporation any representations or other documents or assurances required pursuant to Section 8.1 of the Plan. The Corporation may make payment of shares of Common Stock either by delivering one or more certificates for such shares or by entering such shares in book entry form, as determined by the Corporation in its discretion. Any Stock Units corresponding to a particular vesting date shall be rounded down to the nearest whole Stock Unit; provided that fractional Stock Units subject to the Award shall be cumulated until sufficient to produce a whole Stock

Exhibit B – Page 2

MANAGEMENT – [__] EXHIBIT B

Unit, in all cases remaining fractional Stock Unit interests shall terminate in the event the remaining Stock Units subject to the Award terminate, and any remaining fractional Stock Unit interest shall terminate on the final vesting date applicable to the Award. In the event that payment of Stock Units is triggered by a Separation From Service and Section 7(c) or Section 7(d) applies, and the general release contemplated by Section 7(e) and the expiration of any revocation rights provided therein or pursuant to applicable law could become effective in one of two taxable years depending on when the Grantee executes and delivers the general release, any payment conditioned on the release shall not be made earlier than the first business day of the later of such two tax years (but in all cases within the applicable two and one-half month payment period provided for above).

7.Effect of Termination of Employment or Service; Change in Control.

(a)Termination of Employment or Service Generally. Except as otherwise provided in this Award Agreement, including but not limited to the Grant Notice or Sections 7(b), 7(c), 7(d) or 7(e) below, the Grantee’s Stock Units shall terminate to the extent that such Stock Units have not become vested on or before the date of the Grantee’s Separation From Service (as defined in Section 19), regardless of the reason for the termination of employment or service that triggers the Separation From Service.

(b)Termination Due to Death or Disability. In the event the Grantee’s Separation From Service is due to the Grantee’s death or Disability (as defined in Section 19) and such event occurs prior to a Change in Control and while the Stock Units subject to the Award remain outstanding, the Award shall vest at the “target” level of performance upon the Separation From Service (for clarity, no additional portion of the Award above the “target” level shall vest after the Separation From Service (after giving effect to the acceleration provided for in the preceding sentence), regardless of actual performance). Notwithstanding the foregoing, if the Grantee’s Separation from Service is due to the Grantee’s Disability, the accelerated vesting of the Stock Units provided in this Section 7(b) is subject to the Grantee’s satisfying the requirement to provide a general release in accordance with Section 7(f).

(c)Termination Without Cause Not in Connection With a Change in Control. If the Grantee’s Separation From Service is the result of a termination of employment that constitutes a Qualifying Termination (as defined in Section 19) and such event occurs prior to a Change in Control and while Stock Units subject to the Award remain outstanding, then, subject to the Grantee’s satisfying the requirement to provide a general release in accordance with Section 7(f), the Award shall be adjusted in accordance with this formula upon the Separation From Service:

A B x C = The target number of Stock Units that will remain subject of the Award after Separation From Service

A = the number of days between 1/1/2021 and the date of Separation From Service (but in no event more than 1095)

B = 1095 (i.e., the number of days from 1/1/2021 through and including 12/31/2023)

C = the total target number of Stock Units subject to the Award

The Stock Units that remain subject of the Award, after adjustment, will not vest unless and until the date as of which the conditions to their vesting set forth in the Grant Notice are met, provided that the condition that the Grantee be employed by the Corporation at the time of vesting shall not apply. In the event that a Change in Control occurs after the Qualifying Termination and during the Performance Period, the pro-ration provided for above in this Section 7(c) (the fraction obtained by dividing A by B above) will apply to the

Exhibit B – Page 3

MANAGEMENT – [__] EXHIBIT B

number of Credited Units (determined as set forth below), and the resulting number of Stock Units that vest will be considered to vest on (or, as necessary to give effect to the acceleration, immediately prior to) the Change in Control; provided, that if the Qualifying Termination occurs after the effective date of the definitive agreement providing for the Change in Control transaction (and such Change in Control transaction is actually consummated), then the pro-ration (the fraction obtained by dividing A by B above) shall not apply and the Grantee shall (subject to the Grantee’s satisfying the requirement to provide a general release in accordance with Section 7(e)) vest in the total target number of Stock Units subject to the Award upon (or, as necessary to give effect to the acceleration, immediately prior to) the Change in Control. If the Grantee’s Separation From Service is the result of a termination of employment that constitutes a Qualifying Termination and such event occurs more than twelve (12) months after a Change in Control and while Stock units subject to the Award remain outstanding, then, subject to the Grantee’s satisfying the requirement to provide a general release in accordance with Section 7(f), the Grantee shall vest upon such Separation From Service in a number of Stock Units subject to the Award equal to (i) the number of Credited Units, multiplied by (ii) the fraction A/B (where A and B are determined as set forth above).

(d)Treatment on a Change in Control. Notwithstanding anything herein to the contrary, in connection with a Change in Control that occurs during the Performance Period while the Stock Units subject to the Award remain outstanding (i.e., they have not theretofore terminated pursuant to Section 7(a)), the number of Stock Units (if any) that shall be eligible to vest pursuant to the Award shall be equal to total target number of Stock Units subject to the Award (the “Credited Units”), with no modification for performance pursuant to Exhibit A. The Administrator shall, to the extent applicable and to the extent any Stock Units subject to the Award remained outstanding immediately prior to the Change in Control, ensure that the definitive documentation setting forth the terms of the Change in Control provides, that the Credited Units shall be subject to either Section 7(d)(i) or 7(d)(ii) below.

(i)    The Corporation shall continue to maintain in effect, or the Corporation’s successor shall assume, the Plan, this Award Agreement and all Credited Units outstanding hereunder, and such Credited Units shall continue to remain outstanding after the Change in Control and be scheduled to vest on the last day of the original Performance Period hereunder set forth in Exhibit A. Vesting of such Credited Units shall be subject to the Grantee’s continued employment or service with the Corporation or one of its Subsidiaries through such vesting date (without further modification based on performance), subject to the provisions of this Section 7.

(ii)    If the Credited Units are not continued or assumed in accordance with Section 7(d)(i), the Credited Units shall vest upon (or, as necessary to give effect to the acceleration, immediately prior to) such Change in Control.

(e)Termination Without Cause or For Good Reason In Connection With a Change in Control. If the Grantee’s Separation From Service is the result of a termination of employment that constitutes a Qualifying Termination, or a termination of employment by the Grantee for Good Reason (as defined in Section 19), and in either case such event occurs upon, or within twelve (12) months following, a Change in Control, the Grantee’s Credited Units, to the extent then outstanding and unvested and subject to the Grantee’s satisfying the requirement to provide a general release in accordance with Section 7(e), shall fully vest upon such Qualifying Termination or resignation for Good Reason.

(f)General Release. The benefits provided in Sections 7(c) and 7(e) in connection with a termination of the Grantee’s employment (and Section 7(b) in the case of a termination due to the Grantee’s Disability) are contingent upon the Grantee’s executing and not revoking a Waiver and Release of Claims Agreement (“Release”) in accordance with the timing and other requirements set forth in this section. The Release must be signed in connection with the termination of Grantee’s employment and not any earlier than the Corporation may prescribe and shall be in a form acceptable to the Corporation (except, if the Grantee is

Exhibit B – Page 4

MANAGEMENT – [__] EXHIBIT B

a party to an employment or severance agreement with the Corporation that includes a form of release attached thereto, shall be in the form provided for in such agreement). The Corporation will provide the final form of Release to the Grantee no later than ten (10) days following the Grantee’s termination of employment, and the Grantee will be required to execute and return the Release to the Corporation within twenty-one (21) days (or forty-five (45) days if such longer period of time is required to make the Release maximally enforceable under applicable law) after the Corporation provides the form of Release to the Grantee.

(g)No Further Rights as to Terminated Units. If any unvested Stock Units terminate pursuant to this Award Agreement, such Stock Units shall automatically terminate and be cancelled as of the applicable termination date without payment of any consideration by the Corporation and without any other action by the Grantee, or the Grantee’s beneficiary or personal representative, as the case may be, and the Corporation shall have no obligation (or no further obligation, as the case may be) in respect thereof or with respect thereto.

8.Adjustments Upon Specified Events. Upon the occurrence of certain events relating to the Corporation’s stock contemplated by Section 7.1 of the Plan, the Administrator will make adjustments if appropriate in the number of Stock Units contemplated hereby and the number and kind of securities that may be issued in respect of the Award. No such adjustment shall be made with respect to any cash dividend for which dividend equivalents are credited pursuant to Section 4.

9.Taxes; Tax Withholding.

(a)Section 409A. It is intended that the terms of the Award will not result in the imposition of any tax liability pursuant to Section 409A of the Code. This Award Agreement shall be construed and interpreted consistent with that intent. Notwithstanding any provision of these Terms to the contrary, if the Grantee is a “specified employee” as defined in Section 409A of the Code, the Grantee shall not be entitled to any payment with respect to the Award in connection with the Grantee’s “separation from service” (as that term is used for purposes of Section 409A of the Code) until the earlier of (a) the date that is six months and one day after the Grantee’s separation from service for any reason other than the Grantee’s death, or (b) the date of the Grantee’s death. For purposes of clarity, the six month delay shall not apply in the case of severance contemplated by Treasury Regulations Section 1.409A-1(b)(9)(iii) to the extent of the limits set forth therein. Any amounts otherwise payable to the Grantee following the Grantee’s separation from service that are not so paid by reason of this Section 9 shall be paid as soon as practicable for the Corporation (and in all events within 30 days) after the date that is six months after the Grantee’s separation from service (or, if earlier, the date of the Grantee’s death). The provisions of this Section 9 shall only apply if, and to the extent, required to comply with Section 409A of the Code.

(b)Tax Withholding. The Corporation shall reasonably determine the amount of any federal, state, local or other income, employment, or other taxes which the Corporation or any of its Subsidiaries may reasonably be obligated to withhold with respect to the grant, vesting or other event with respect to the Stock Units. If such withholding event occurs in connection with the distribution of shares of Common Stock in respect of the Stock Units and subject to compliance with all applicable laws, the Corporation shall automatically withhold and reacquire the appropriate number of whole shares, valued at their then fair market value (with the “fair market value” of such shares determined in accordance with the applicable provisions of the Plan), to satisfy any withholding obligations of the Corporation or its Subsidiaries with respect to such distribution. If, however, any withholding event occurs with respect to the Stock Units other than in connection with the distribution of shares of Common Stock in respect of the Stock Units, or if the Corporation cannot legally satisfy such withholding obligations by such withholding and reacquisition of shares as described above, the Corporation shall be entitled to require a cash payment by or on behalf of the

Exhibit B – Page 5

MANAGEMENT – [__] EXHIBIT B

Grantee and/or to deduct from other compensation payable to the Grantee the amount of any such withholding obligations.

(c)Responsibility for Taxes. Except for such withholding rights of the Corporation, the Grantee shall be solely responsible for any and all tax liability arising with respect to the Award or any payment in respect thereof.

10.Notices. Any notice to be given under the terms of this Award Agreement shall be in writing and addressed to the Corporation at its principal office to the attention of the Secretary, and to the Grantee at the Grantee’s last address reflected on the Corporation’s records. Any notice shall be delivered in person or shall be enclosed in a properly sealed envelope, addressed as aforesaid, registered or certified, and deposited (postage and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government or a courier of internationally recognized prominence. Any such notice shall be given only when received, but if the Grantee is no longer an Eligible Person, shall be deemed to have been duly given five business days after the date mailed in accordance with the foregoing provisions of this Section 10.

11.Plan. The Award and all rights of the Grantee under this Award Agreement are subject to the terms and conditions of the provisions of the Plan, which are incorporated herein by this reference. The Grantee agrees to be bound by the terms of the Plan and this Award Agreement. The Grantee acknowledges having read and understanding the Plan, the Prospectus for the Plan, and this Award Agreement. Unless otherwise expressly provided in other sections of this Award Agreement, provisions of the Plan that confer discretionary authority on the Board or the Administrator do not and shall not be deemed to create any rights in the Grantee unless such rights are expressly set forth herein or are otherwise in the sole discretion of the Board or the Administrator so conferred by appropriate action of the Board or the Administrator under the Plan after the date hereof.

12.Entire Agreement. This Award Agreement and the Plan together constitute the entire agreement and supersede in their entirety all prior understandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof. The Plan may be amended pursuant to Section 8.6 of the Plan. This Award Agreement may be amended by the Administrator from time to time. Any such amendment must be in writing and signed by the Corporation. Any such amendment that materially and adversely affects the Grantee’s rights under this Award Agreement requires the consent of the Grantee in order to be effective with respect to the Award. The Corporation may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not adversely affect the interests of the Grantee hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof.

13.Governing Law. This Award Agreement shall be governed by, construed under, and enforced in accordance with the laws of the State of Delaware without regard to conflict of law principles thereunder.

14.Effect of Award Agreement. Subject to the Corporation’s right to terminate the Award pursuant to Section 7.2 of the Plan, this Award Agreement shall be assumed by, be binding upon and inure to the benefit of any successor or successors to the Corporation.

15.Counterparts. This Award Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. Photographic or other electronic copies of such signed counterparts may be used in lieu of the originals for any purpose.

Exhibit B – Page 6

MANAGEMENT – [__] EXHIBIT B

16.Section Headings. The section headings of this Award Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.

17.Clawback Policy. The Stock Units are subject to the terms of the Corporation’s recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of the Stock Units or any shares of Common Stock or other cash or property received with respect to the Stock Units (including any value received from a disposition of the shares acquired upon payment of the Stock Units).

18.No Advice Regarding Grant. The Grantee is hereby advised to consult with his or her own tax, legal and/or investment advisors with respect to any advice the Grantee may determine is needed or appropriate with respect to the Award (including, without limitation, to determine the foreign, state, local, estate and/or gift tax consequences with respect to the Award and any shares that may be acquired upon payment of the Award). Neither the Corporation nor any of its officers, directors, affiliates or advisors makes any representation (except for the terms and conditions expressly set forth in this Award Agreement) or recommendation with respect to the Award.

19.Certain Defined Terms. For the purposes of this Award Agreement, the following terms shall have the meanings provided below:

“Cause” means (unless such term is defined in a written employment or severance agreement by and between the Grantee and the Corporation, in which case “Cause” is used as defined in such written employment or severance agreement) that any one or more of the following has occurred:

(a)    The Grantee’s indictment for, conviction of, or pleading guilty or nolo contendere to, a felony (other than motor vehicle offenses the effect of which do not materially impair the Grantee’s performance of the Grantee’s duties to the Corporation).

(b)    The Grantee’s willful failure to substantially perform the material duties of the Grantee’s position with the Corporation (other than any such failure resulting from the Grantee’s incapacity due to physical or mental illness), provided that the Grantee has been provided written notice of such failure and, if such failure is curable, the Grantee has not cured the failure to the satisfaction of the Corporation within 15 days after delivery of such notice.

(c)    The Grantee’s willful failure to obey legal orders consistent with the Grantee’s position at the Corporation given in good faith by the Corporation’s Chief Executive Officer or any other person to whom the Grantee reports at the Corporation, directly or indirectly (or, in the event the Grantee is the Corporation’s Chief Executive Officer, given in good faith by the Board), other than any such failure resulting from incapacity due to physical or mental illness; provided, however, that the Grantee has been given written notice of such failure and, if such failure is curable, the Grantee has not cured the failure to the satisfaction of the Corporation within 15 days after delivery of such notice.

(d)    The Grantee’s willful misconduct or breach of fiduciary duty (including, without limitation, any act of fraud, embezzlement, or dishonesty) which causes or is reasonably expected to result in material injury to the Corporation or its business reputation.

(e)    The Grantee’s entering into an agreement or consent decrease or being the subject of any regulatory order that in any of such cases prohibits the Grantee from serving as an officer or director of a company that has publicly-traded securities.

Exhibit B – Page 7

MANAGEMENT – [__] EXHIBIT B

(f)    The Grantee’s material breach of any agreement that the Grantee may have with the Corporation or of any written policies or procedures of the Corporation, which is injurious to the Corporation; provided, however, that the Grantee has been given written notice of such failure and, if such breach is curable, the Grantee has not cured the breach to the satisfaction of the Corporation within 15 days after delivery of such notice.

“Change in Control” means any of the following events:

(a)A transaction or series of transactions occurs whereby any "person" or related "group" of "persons" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act")), directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Corporation possessing more than 50% of the total combined voting power of the Corporation's securities outstanding immediately after such acquisition;

(b)During any period of two consecutive years, the Continuing Directors cease to constitute at least a majority of the Board. For purposes of this definition, the term “Continuing Director” means any director who was (i) a member of the Board at the beginning of the two-year period, (ii) elected to the Board by the Corporation’s stockholders, or (iii) appointed to the Board by a majority of the Continuing Directors then serving on the Board; in the case of clause (ii) and (iii), whose election or appointment to the Board did not occur in connection with any actual or threatened director election contest or proxy solicitation contest or any transaction or proposed transaction involving the Corporation or any subsidiary of the Corporation);

(c)The Corporation, directly, or indirectly through one or more subsidiaries or intermediaries, enters into an agreement to, or consummates, a sale or other disposition of all or substantially all of the Corporation’s assets in any single transaction or series of transactions (including pursuant to a spin-off, split-up or similar transaction) (each, a “Sale of Substantially All Assets”). Without limiting the generality of the foregoing sentence, and subject to the exclusions below, a Sale of Substantially All Assets will include the sale or other disposition, within any two-year period, in any one transaction or series of transactions, of more than two-thirds of the mills (whether determined by reference to mill-generated revenue or by number of mills) owned by the Corporation and its subsidiaries at the beginning of the two-year period. For purposes of this clause (c), however, in determining whether a Sale of Substantially All Assets has occurred the following assets and mills (or sales of assets and mills, as the case may be) shall be disregarded (together, any sales of such assets and mills, including related assets and real estate) are referred to as the “Excluded Sales”): (i) all or any portion of the Corporation’s mills, including related assets and real estate, in Duluth, MN, Wisconsin Rapids, WI, and Luke MD, (ii) all or any portion of Consolidated Water Power Company, including related assets and real estate, and (iii) any disposition of assets (including mills) that has been proposed as of, or that occurred prior to, the Grant Date;

(d)The Corporation, whether directly involving the Corporation or indirectly involving the Corporation through one or more subsidiaries or intermediaries, enters into an agreement to or consummates (i) a merger, combination, consolidation, conversion, exchange of securities, reorganization or business combination, or (ii) an acquisition of the assets or stock of another entity, in any single transaction or series of transactions, which event results in the voting securities of the Corporation outstanding immediately prior thereto failing to continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving or another entity) at least 66% percent of the combined voting power of the voting

Exhibit B – Page 8

MANAGEMENT – [__] EXHIBIT B

securities of the Corporation or such surviving or other entity outstanding immediately after such event; or

(e)Any transaction or series of transactions that has the substantial effect of any one or more of the foregoing events.

“Disability” (unless such term is defined in a written employment or severance agreement by and between the Grantee and the Corporation, in which case “Disability” is used as defined in such written employment or severance agreement) has the meaning given to such term in Treas. Reg. Section 1.409A-3(i)(4).

“Good Reason” means (unless such term is defined in a written employment or severance agreement by and between the Grantee and the Corporation, in which case “Good Reason” is used as defined in such written employment or severance agreement) that any one or more of the following events has occurred without the Grantee’s written consent:

(a)    a material reduction by the Corporation in the Grantee’s annual base salary or target-level annual incentive award opportunity, other than a general reduction in the base salaries or target-level annual incentive award opportunities of all or substantially all of the Corporation’s executives;

(b)    a material demotion by the Corporation with respect to the Grantee’s job duties and responsibilities; or

(c)    the Corporation’s material breach of any material agreement between the Grantee and the Corporation;

provided, however, that the Grantee’s termination of his or her employment with the Corporation will not be considered a termination by the Grantee for Good Reason unless the Grantee has: (a) notified the Corporation in writing of the event(s) claimed to constitute Good Reason, no later than 30 days after the initial occurrence of the event(s); (b) the Corporation has failed to cure or remedy such event(s), no later than 30 days after its receipt of the Grantee’s written notice; and (c) the Grantee has notified the Corporation in writing that the Grantee is terminating his or her employment for Good Reason on account of such event(s), and the Grantee actually terminates the Grantee’s employment with the Corporation no later than 30 days after the expiration of such 30-day cure period. For clarity, a reduction in duties or responsibilities as a result of the Excluded Sales shall not constitute “Good Reason” pursuant to clause (b) above.

“Qualifying Termination” means (unless such term is defined in a written employment or severance agreement by and between the Grantee and the Corporation, in which case “Qualifying Termination” is used as defined in such written employment or severance agreement), if the Grantee is employed by the Corporation or one of its Subsidiaries, a termination of the Grantee’s employment by the Corporation or one of its Subsidiaries without Cause and other than due to the Grantee’s death or Disability.

“Separation From Service” means (unless such term is defined in a written employment or severance agreement by and between the Grantee and the Corporation, in which case “Separation From Service” is used as defined in such written employment or severance agreement) the Grantee ceases to be employed by, or ceases to provide services as a director to, the Corporation or one of its Subsidiaries; provided that no Separation From Service shall exist in any event unless such separation constitutes a “separation from service” within the meaning of Section 409A of the Code. If the Grantee ceases to be

Exhibit B – Page 9

MANAGEMENT – [__] EXHIBIT B

employed by or ceases to provide services as a director to the Corporation or a Subsidiary, but immediately thereafter continues to be employed by or provide services as a director to the Corporation or a Subsidiary (for example, and without limitation, if the Grantee ceases to be employed by the Corporation but immediately thereafter continues to be employed by a Subsidiary or continues to provide services as a director to the Corporation or a Subsidiary), such change shall not constitute a Separation From Service. The provisions of Section 6 of the Plan apply to the Award.

* * *

Exhibit B – Page 10

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(a) UNDER SECURITIES EXCHANGE ACT OF 1934

I, Randy J. Nebel, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Verso Corporation (the “registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2021

/s/ Randy J. Nebel

Randy J. Nebel
President, Chief Executive Officer and Director
(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(a) UNDER SECURITIES EXCHANGE ACT OF 1934

I, Brian D. Cullen, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Verso Corporation (the “registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2021

/s/ Brian D. Cullen

Brian D. Cullen
Senior Vice President and Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(b) UNDER SECURITIES EXCHANGE ACT OF 1934 AND

SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF UNITED STATES CODE

In connection with the quarterly report on Form 10-Q of Verso Corporation (the “Company”) for the quarter ended September 30, 2021, as filed with the Securities and Exchange Commission (the “SEC”) on the date hereof (the “Report”), I, Randy J. Nebel, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of

operations of the Company.

Date: November 5, 2021

/s/ Randy J. Nebel

Randy J. Nebel
President, Chief Executive Officer and Director
(Principal Executive Officer)

A signed original of this statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(b) UNDER SECURITIES EXCHANGE ACT OF 1934 AND

SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF UNITED STATES CODE

In connection with the quarterly report on Form 10-Q of Verso Corporation (the “Company”) for the quarter ended September 30, 2021, as filed with the Securities and Exchange Commission (the “SEC”) on the date hereof (the “Report”), I, Brian D. Cullen, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of

operations of the Company.

Date: November 5, 2021

/s/ Brian D. Cullen

Brian D. Cullen
Senior Vice President and Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)

A signed original of this statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

XML

Cover Page - shares	9 Months Ended
	Sep. 30, 2021	Oct. 29, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2021
Document Transition Report	false
Entity File Number	001-34056
Entity Registrant Name	VERSO CORPORATION
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	75-3217389
Entity Address, Address Line One	8540 Gander Creek Drive
Entity Address, City or Town	Miamisburg
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	45342
City Area Code	877
Local Phone Number	855-7243
Title of 12(b) Security	Class A common stock, par value $0.01 per share
Trading Symbol	VRS
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Bankruptcy Proceedings, Reporting Current	true
Entity Common Stock, Class A, Shares Outstanding		29,062,302
Amendment Flag	false
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Central Index Key	0001421182

XML

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Sep. 30, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 166	$ 137
Accounts receivable, net	112	83
Inventories	141	224
Assets held for sale	6	17
Prepaid expenses and other assets	8	5
Total current assets	433	466
Property, plant and equipment, net	513	613
Deferred tax assets	151	122
Intangibles and other assets, net	37	44
Total assets	1,134	1,245
Current liabilities:
Accounts payable	115	80
Accrued and other liabilities	84	92
Current maturities of long-term debt and finance leases	2	1
Total current liabilities	201	173
Long-term debt and finance leases	3	4
Pension benefit obligation	308	350
Other long-term liabilities	39	34
Total liabilities	551	561
Commitments and contingencies (Note 11)
Equity:
Preferred stock -- par value $0.01 (50,000,000 shares authorized, no shares issued)	0	0
Common stock -- par value $0.01 (210,000,000 Class A shares authorized with 35,877,533 shares issued and 33,133,649 outstanding on December 31, 2020 and 33,260,987 shares issued and 29,062,302 outstanding on September 30, 2021; 40,000,000 Class B shares authorized with no shares issued and outstanding on December 31, 2020 and September 30, 2021)	0	0
Treasury stock -- at cost (2,743,884 shares on December 31, 2020 and 4,198,685 shares on September 30, 2021)	(62)	(39)
Paid-in-capital	652	705
Retained deficit	(67)	(42)
Accumulated other comprehensive income	60	60
Total equity	583	684
Total liabilities and equity	$ 1,134	$ 1,245

XML

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2021	Dec. 31, 2020
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	50,000,000	50,000,000
Preferred stock, shares issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Treasury stock, shares (in shares)	4,198,685	2,743,884
Class A
Common stock, shares authorized (in shares)	210,000,000	210,000,000
Common shares issued (in shares)	33,260,987	35,877,533
Common stock, shares outstanding (in shares)	29,062,302	33,133,649
Common Class B
Common stock, shares authorized (in shares)	40,000,000	40,000,000
Common shares issued (in shares)	0	0
Common stock, shares outstanding (in shares)	0	0

XML

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Income Statement [Abstract]
Net sales	$ 339	$ 306	$ 950	$ 1,045
Costs and expenses:
Cost of products sold (exclusive of depreciation and amortization)	274	309	810	1,007
Depreciation and amortization	18	21	137	66
Selling, general and administrative expenses	19	19	54	62
Restructuring charges	0	(2)	17	4
Other operating (income) expense	(7)	3	(5)	(84)
Operating income (loss)	35	(44)	(63)	(10)
Interest expense	0	1	1	1
Other (income) expense	(6)	(5)	(19)	(14)
Income (loss) before income taxes	41	(40)	(45)	3
Income tax expense (benefit)	(17)	(9)	(29)	14
Net income (loss)	$ 58	$ (31)	$ (16)	$ (11)
Income (loss) per common share:
Basic (usd per share)	$ 1.98	$ (0.92)	$ (0.53)	$ (0.33)
Diluted (usd per share)	$ 1.96	$ (0.92)	$ (0.53)	$ (0.33)
Weighted average common shares outstanding (in thousands)
Basic (shares)	29,334	33,675	31,476	34,440
Diluted (shares)	29,605	33,675	31,476	34,440

XML

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 58	$ (31)	$ (16)	$ (11)
Defined benefit pension plan:
Pension liability adjustment, net	0	(119)	0	(119)
Other comprehensive income (loss), net of tax	0	(119)	0	(119)
Comprehensive income (loss)	$ 58	$ (150)	$ (16)	$ (130)

XML

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Millions	Total	Class A	Common Stock Class A	Treasury Stock	Paid-in-Capital	Retained Earnings (Deficit)	Accumulated Other Comprehensive Income (Loss)
Common shares beginning balance (in shares) at Dec. 31, 2019			34,949,000
Treasury shares beginning balance (in shares) at Dec. 31, 2019				245,000
Beginning balance at Dec. 31, 2019	$ 987		$ 0	$ (5)	$ 698	$ 172	$ 122
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(11)					(11)
Treasury shares (in shares)				1,858,000
Treasury shares	(27)			$ (27)
Other comprehensive income (loss), net of tax	(119)						(119)
Common stock issued for restricted stock (in shares)			841,000
Dividends and dividend equivalents declared	(108)				2	(110)
Equity award expense	5				5
Common shares ending balance (in shares) at Sep. 30, 2020			35,790,000
Treasury shares ending balance (in shares) at Sep. 30, 2020				2,103,000
Ending balance at Sep. 30, 2020	727		$ 0	$ (32)	705	51	3
Common shares beginning balance (in shares) at Jun. 30, 2020			35,766,000
Treasury shares beginning balance (in shares) at Jun. 30, 2020				2,097,000
Beginning balance at Jun. 30, 2020	981		$ 0	$ (32)	702	189	122
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(31)					(31)
Treasury shares (in shares)				6,000
Other comprehensive income (loss), net of tax	(119)						(119)
Common stock issued for restricted stock (in shares)			24,000
Dividends and dividend equivalents declared	(105)				2	(107)
Equity award expense	1				1
Common shares ending balance (in shares) at Sep. 30, 2020			35,790,000
Treasury shares ending balance (in shares) at Sep. 30, 2020				2,103,000
Ending balance at Sep. 30, 2020	$ 727		$ 0	$ (32)	705	51	3
Common shares beginning balance (in shares) at Dec. 31, 2020		35,877,533	35,878,000
Treasury shares beginning balance (in shares) at Dec. 31, 2020	2,743,884			2,744,000
Beginning balance at Dec. 31, 2020	$ 684		$ 0	$ (39)	705	(42)	60
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(16)					(16)
Treasury shares (in shares)				1,455,000
Treasury shares	(23)			$ (23)
Other comprehensive income (loss), net of tax	0
Common stock issued for restricted stock (in shares)			423,000
Dividends and dividend equivalents declared	(9)					(9)
Repurchase of common stock (in shares)			(3,040,000)
Repurchase of common stock	(56)				(56)
Equity award expense	$ 3				3
Common shares ending balance (in shares) at Sep. 30, 2021		33,260,987	33,261,000
Treasury shares ending balance (in shares) at Sep. 30, 2021	4,198,685			4,199,000
Ending balance at Sep. 30, 2021	$ 583		$ 0	$ (62)	652	(67)	60
Common shares beginning balance (in shares) at Jun. 30, 2021			33,207,000
Treasury shares beginning balance (in shares) at Jun. 30, 2021				3,588,000
Beginning balance at Jun. 30, 2021	539		$ 0	$ (50)	651	(122)	60
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	58					58
Treasury shares (in shares)				611,000
Treasury shares	(12)			$ (12)
Other comprehensive income (loss), net of tax	0
Common stock issued for restricted stock (in shares)			54,000
Dividends and dividend equivalents declared	(3)					(3)
Equity award expense	$ 1				1
Common shares ending balance (in shares) at Sep. 30, 2021		33,260,987	33,261,000
Treasury shares ending balance (in shares) at Sep. 30, 2021	4,198,685			4,199,000
Ending balance at Sep. 30, 2021	$ 583		$ 0	$ (62)	$ 652	$ (67)	$ 60

XML

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Cash Flows From Operating Activities:
Net income (loss)	$ (16)	$ (11)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	137	66
Noncash restructuring charges	8	0
Net periodic pension cost (income)	(17)	(12)
Pension plan contributions	(25)	(47)
Amortization of debt issuance cost	1	0
Equity award expense	3	5
Gain on Sale of Androscoggin/Stevens Point Mills	0	(88)
Loss on Sale of Duluth Mill	3	0
(Gain) loss on sale or disposal of assets	0	3
Gain on insurance recoveries	(6)	0
Deferred taxes	(29)	14
Changes in assets and liabilities:
Accounts receivable, net	(29)	9
Inventories	79	(10)
Prepaid expenses and other assets	(3)	0
Accounts payable	27	(46)
Accrued and other liabilities	0	(12)
Net cash provided by (used in) operating activities	133	(129)
Cash Flows From Investing Activities:
Proceeds from sale of assets	1	1
Capital expenditures	(38)	(43)
Net proceeds from Sale of Androscoggin/Stevens Point Mills	0	338
Net proceeds from Sale of Duluth Mill	6	0
Proceeds from insurance recoveries	6	0
Recognition of deposits and net proceeds from sale of Luke Mill equipment	10	0
Net cash provided by (used in) investing activities	(15)	296
Cash Flows From Financing Activities:
Borrowings on ABL Facility	0	36
Payments on ABL Facility	0	(36)
Principal payment on financing lease obligation	(1)	(1)
Repurchase of common stock	(56)	0
Acquisition of treasury stock	(23)	(27)
Dividends paid to stockholders	(9)	(108)
Net cash provided by (used in) financing activities	(89)	(136)
Change in Cash and cash equivalents and restricted cash	29	31
Cash and cash equivalents and restricted cash at beginning of period	139	44
Cash and cash equivalents and restricted cash at end of period	168	75
Supplemental cash flow disclosures:
Total interest paid	1	0
Total income taxes paid	0	0
Noncash investing and financing activities:
Right-of-use assets obtained in exchange for new finance lease liabilities	1	0
Right-of-use assets obtained in exchange for new capitalized operating lease liabilities	1	7
Net right-of-use assets re-measurement	$ 4	$ 0

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SUMMARY OF BUSINESS AND BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

SUMMARY OF BUSINESS AND BASIS OF PRESENTATION

SUMMARY OF BUSINESS AND BASIS OF PRESENTATION

Nature of Business — Verso is a producer of graphic paper, specialty paper, packaging paper and Northern Bleached Hardwood Kraft, or “NBHK,” pulp. These products are used primarily in media, marketing applications and commercial printing applications. Uses include catalogs, magazines, high-end advertising brochures, direct-mail advertising, and specialty applications, such as labeling and other special applications. NBHK pulp is used to manufacture printing, writing and specialty paper grades, tissue and other products. Verso operates in the pulp and paper market segments primarily in North America (see Note 12).

Sale of Androscoggin Mill and Stevens Point Mill — On November 11, 2019, Verso and Verso Paper entered into a membership interest purchase agreement, or the “Purchase Agreement,” with Pixelle Specialty Solution LLC, or “Pixelle,” whereby Verso and Verso Paper agreed to sell to Pixelle, or the “Pixelle Sale,” or “Sale of Androscoggin/Stevens Point Mills,” all of the outstanding membership interests in Verso Androscoggin, LLC an indirect wholly owned subsidiary of Verso and the entity that, as of the closing date of the Pixelle Sale, held all the assets primarily related to Verso’s Androscoggin Mill located in Jay, Maine, and Stevens Point Mill, located in Stevens Point, Wisconsin. The transaction was approved by Verso’s stockholders on January 31, 2020 and closed on February 10, 2020 (see Note 5).

Duluth Mill and Wisconsin Rapids Mill — On June 9, 2020, Verso announced plans to indefinitely idle its mills in Duluth, Minnesota and Wisconsin Rapids, Wisconsin, while exploring viable and sustainable alternatives for both mills including restarting, selling or permanently closing one or both mills. Verso’s decision to reduce its production capacity was driven by the accelerated decline in graphic paper demand, primarily resulting from the COVID-19 pandemic. The production capacity of the Duluth Mill was approximately 270,000 tons of supercalendered/packaging paper and the production capacity of the Wisconsin Rapids Mill is approximately 540,000 tons of coated and packaging paper. Verso idled production at the Duluth Mill on July 1, 2020 and at the Wisconsin Rapids Mill on July 27, 2020. On December 31, 2020, Verso decided to permanently shut down the Duluth Mill, which was subsequently sold on May 13, 2021 (see Note 5). On February 8, 2021, Verso decided to permanently shut down the No. 14 paper machine and certain other long-lived assets at the Wisconsin Rapids Mill (see Note 10). Verso continues to operate the facility at the Wisconsin Rapids Mill to convert paper produced at the Quinnesec and Escanaba mills to sheets for the commercial print market.

COVID-19 Pandemic — The COVID-19 Pandemic has impacted Verso’s operations and financial results since the first quarter of 2020 and continues to have an impact on the Company. Verso serves as an essential manufacturing business and, as a result, its mills have continued to be operational during the pandemic in order to meet the ongoing needs of its customers, including those in other essential business sectors, which provide food, medical and hygiene products needed in a global health crisis. However, the guidelines and orders enacted by federal, state and local governments impacted demand from retailers, political campaigns, and sports and entertainment events, driving reduced purchases of printed materials and substantially impacting Verso’s graphic paper business.

There continues to be significant uncertainties associated with the COVID-19 Pandemic, including with respect to the resurgence of new variants of the virus; or if the vaccines introduced to combat the virus are not effective or public acceptance of such vaccines is not widespread; and the impact of COVID-19 on economic conditions, including with respect to labor market conditions, economic activity, consumer behavior, supply chain shortages and disruptions and inflationary pressure; all of which could have a material impact on the Company’s business, financial position, results of operations and cash flows.

While Verso cannot reasonably estimate the full impact of COVID-19 on the business, financial position, results of operations and cash flows, the Company has seen its sales, volume and prices continue to recover during the third quarter of 2021.

Basis of Presentation — This report contains the Unaudited Condensed Consolidated Financial Statements of Verso as of December 31, 2020 and September 30, 2021 and for the three and nine months ended September 30, 2020 and 2021. The December 31, 2020 Unaudited Condensed Consolidated Balance Sheet data was derived from audited financial statements, but it does not include all disclosures required annually by accounting principles generally accepted in the United States of America, or “GAAP.” In Verso’s opinion, the Unaudited Condensed Consolidated Financial Statements include all adjustments that are necessary for the fair presentation of Verso’s respective financial condition, results of operations and cash flows for the interim periods presented. Except as disclosed in the notes to the Unaudited Condensed Consolidated Financial Statements, such adjustments are of a normal, recurring nature. Intercompany balances and transactions are eliminated in consolidation. The results of operations and cash flows for the interim periods presented may not necessarily be indicative of full-year

results. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of Verso contained in its Annual Report on Form 10-K for the year ended December 31, 2020.

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RECENT ACCOUNTING PRONOUNCEMENTS

9 Months Ended

Sep. 30, 2021

Accounting Changes and Error Corrections [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS

RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Guidance Adopted in 2021

Accounting Standards Codification Topic 740, Income Taxes. In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update 2019-12, Simplifying the Accounting for Income Taxes, which removes certain exceptions for investments, intraperiod allocations and interim calculations, and adds guidance to reduce the complexity in accounting for income taxes. Verso adopted this guidance on January 1, 2021, and the effect on the Unaudited Condensed Consolidated Financial Statements was not material.

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REVENUE RECOGNITION

9 Months Ended

Sep. 30, 2021

Revenue from Contract with Customer [Abstract]

REVENUE RECOGNITION

REVENUE RECOGNITION

The following table presents revenue disaggregated by product included on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in millions)	2020		2021		2020		2021
Paper	$	260	$	296	$	900	$	835
Packaging	14		8		56		21
Pulp	32		35		89		94
Total Net sales	$	306	$	339	$	1,045	$	950

The following table presents revenue disaggregated by sales channel included on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in millions)	2020		2021		2020		2021
End-users and Converters	$	95	$	104	$	375	$	290
Brokers and Merchants	150		174		477		502
Printers	61		61		193		158
Total Net sales	$	306	$	339	$	1,045	$	950

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SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION

9 Months Ended

Sep. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION

SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION

Restricted Cash — As of December 31, 2020 and September 30, 2021, $2 million of restricted cash was included in Intangibles and other assets, net on the Unaudited Condensed Consolidated Balance Sheets primarily related to asset retirement obligations in the state of Michigan. These cash deposits are required by the state and may only be used for the future closure of a landfill. As of both September 30, 2020 and 2021, Cash and cash equivalents and restricted cash on the Unaudited Condensed Consolidated Statements of Cash Flows includes restricted cash of $2 million.

Inventories — The following table summarizes inventories by major category:

	December 31,		September 30,
(Dollars in millions)	2020		2021
Raw materials	$	45	$	34
Work-in-process	31		19
Finished goods	125		71
Replacement parts and other supplies	23		17
Inventories	$	224	$	141

Property, plant and equipment — Depreciation expense for the three and nine months ended September 30, 2020 was $20 million and $62 million, respectively. Depreciation expense for three and nine months ended September 30, 2021 was $17 million and $134 million, respectively. Depreciation expense for the nine months ended September 30, 2021 includes $84 million in accelerated depreciation associated with the permanent shutdown of the No. 14 paper machine and certain other long-lived assets at the Wisconsin Rapids Mill (see Note 10). Property, plant and equipment as of September 30, 2020 and 2021 include $2 million and $11 million, respectively, of capital expenditures that were unpaid and included in Accounts payable and Accrued and other liabilities on the Unaudited Condensed Consolidated Balance Sheets.

Income Taxes — Income tax benefit for the three months ended September 30, 2020 was $9 million and income tax expense for the nine months ended September 30, 2020 was $14 million. Income tax benefit for the three and nine months ended September 30, 2021 was $17 million and $29 million, respectively. During the three and nine months ended September 30, 2020, Verso recognized $1 million and $8 million, respectively, of additional valuation allowance against state tax credits. During the three months ended September 30, 2021, Verso reduced the valuation allowance against state tax credits by $2 million. During the nine months ended September 30, 2021, the net additional valuation allowance against state tax credits was $2 million.

The Company’s income tax provision for interim periods is determined through the use of an estimated annual effective tax rate applied to year-to-date ordinary income/loss plus or minus the tax effects of discrete items. The Company’s estimated annual effective tax rate benefit is higher than statutory rates primarily due to the effect of forecasted pretax book income and permanent items impacting the forecasted rate such as portions of executive compensation and other expenses that are not fully deductible for tax.

Related Party Transactions — Net sales for the three and nine months ended September 30, 2021, include sales to a related party of $18 million and $51 million, respectively. Accounts receivable as of December 31, 2020 and September 30, 2021, include $4 million and $6 million, respectively, associated with this related party.

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DISPOSITIONS

9 Months Ended

Sep. 30, 2021

Discontinued Operations and Disposal Groups [Abstract]

DISPOSITIONS

DISPOSITIONS

Sale of Androscoggin Mill and Stevens Point Mill

On February 10, 2020, Verso completed the Pixelle Sale, selling all of the outstanding membership interests in Verso Androscoggin, LLC, an indirect wholly owned subsidiary of Verso and the entity that, as of the closing date of the Pixelle Sale, held all the assets primarily related to Verso’s Androscoggin Mill located in Jay, Maine and Verso’s Stevens Point Mill, located in Stevens Point, Wisconsin. The Pixelle Sale did not qualify as a discontinued operation. As consideration for the Pixelle Sale, Verso received $352 million in cash, which reflected certain adjustments related to Verso’s estimates of cash, indebtedness and working capital of Verso Androscoggin, LLC and Pixelle assumed $37 million of Verso’s unfunded pension liabilities, which reflected certain adjustments in connection with the completed transfer of the unfunded pension liabilities during the year ended December 31, 2020.

During the nine months ended September 30, 2020, Verso received $338 million in net cash proceeds from the Pixelle Sale, consisting of $344 million in cash reduced by $6 million in selling costs and recognized an $88 million gain on the sale. In connection with the Pixelle Sale, Verso provided certain transition services to Pixelle and recognized $2 million and $5 million for these services during the three and nine months ended September 30, 2020, respectively, on the Unaudited Condensed Consolidated Statements of Operations. During the three months ended September 30, 2020, $1 million of these transition services was recognized as a reduction of Cost of products sold and $1 million was recognized as a reduction of Selling, general and administrative expenses. During the nine months ended September 30, 2020, $2 million of these transition services was recognized as a reduction Cost of products sold and $3 million was recognized as a reduction of Selling, general and administrative expenses. These transition services were completed in October 2020.

Luke Mill Equipment and Other Asset Sales

On August 1, 2020, Verso entered into an equipment purchase agreement with Halkali Kagit Karton Sanayi ve Tic. A.S., or the “Purchaser,” a company organized under the laws of Turkey, whereby Verso agreed to sell, and the Purchaser agreed to purchase, certain equipment at Verso’s Luke Mill, primarily including two paper machines. The purchase price was $11 million in cash due at various milestones. As of September 30, 2021, Verso has received $11 million in non-refundable deposits associated with this sale which includes $1 million in the first quarter of 2021, $1 million in the second quarter of 2021 and the final payment of $1 million in the third quarter of 2021. Management determined that the control over the use of the acquired assets had transferred to the Purchaser and correspondingly recognized the sale of the two paper machines and related assets in June 2021. Verso is exploring options for disposal of the remaining assets of the Luke Mill. As of December 31, 2020 and September 30, 2021, Verso classified $17 million and $6 million, respectively, in Assets held for sale on the Unaudited Condensed Consolidated Balance Sheets.

Sale of Duluth Mill

On May 13, 2021, Verso Minnesota Wisconsin LLC, an indirect wholly owned subsidiary of Verso, entered into an asset purchase agreement with ST Paper 1, LLC and sold all of the assets primarily related to Verso’s Duluth Mill located in Duluth, Minnesota for $7 million in cash, less costs to sell of $1 million. The sale, including related selling costs, resulted in a loss of $3 million, which is included in Other operating (income) expense on the Unaudited Condensed Consolidated Statement of Operations for the nine months ended September 30, 2021.

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DEBT

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

DEBT

DEBT

As of December 31, 2020 and September 30, 2021, Verso Paper had no outstanding borrowings on its ABL Facility (as defined below).

ABL Facility

Verso Paper is the borrower under a $200 million asset-based revolving credit facility, or the “ABL Facility.” From February 6, 2019 until May 10, 2021, the ABL Facility provided for revolving commitments of $350 million, with a $100 million sublimit for letters of credit and a $35 million sublimit for swingline loans. During this time, Verso Paper could request one or more incremental revolving commitments in an aggregate principal amount up to the greater of (i) $75 million or (ii) the excess of the borrowing base over the revolving facility commitments of $350 million; however, the lenders were not obligated to increase the revolving commitments upon any such request. On May 10, 2021, Verso Paper entered into a third amendment to the ABL Facility, or the “Third ABL Amendment.” As a result of the Third ABL Amendment, the ABL Facility provides for revolving commitments of $200 million, with a $75 million sublimit for letters of credit and a $20 million sublimit for swingline loans. The amount of borrowings and letters of credit available to Verso Paper pursuant to the ABL Facility is limited to the lesser of $200 million or an amount determined pursuant to a borrowing base ($141 million as of September 30, 2021). As of September 30, 2021, there were no borrowings outstanding under the ABL Facility, with $21 million issued in letters of credit and $120 million available for future borrowings. Availability under the ABL Facility is subject to customary borrowing conditions. The ABL Facility will mature on February 6, 2024.

Outstanding borrowings under the ABL Facility bear interest at an annual rate equal to, at the option of Verso Paper, either (i) a customary London interbank offered rate plus an applicable margin ranging from 1.25% to 1.75% or (ii) the Federal Funds Rate plus an applicable margin ranging from 0.25% to 0.75%, determined based upon the average excess availability under the ABL Facility. Verso Paper is also required to pay a commitment fee for the unused portion of the ABL Facility of 0.25% per year, based upon the average revolver usage under the ABL Facility. The ABL Facility provides for determination of a benchmark replacement interest rate when LIBOR is no longer available, subject to the terms, and upon the satisfaction of conditions, specified therein.

All obligations under the ABL Facility are unconditionally guaranteed by Verso Holding and certain of the subsidiaries of Verso Paper. The ABL Facility is secured by a first-priority lien on certain assets of Verso Paper, Verso Holding and the other guarantor subsidiaries, including accounts receivable, inventory, certain deposit accounts, securities accounts and commodities accounts.

The ABL Facility contains financial covenants requiring Verso, among other things, to maintain a minimum fixed charge coverage ratio if availability were to drop below prescribed thresholds. The ABL Facility also requires that certain payment

conditions, as defined therein, are met in order for Verso to incur debt or liens, pay cash dividends, repurchase equity interest, prepay indebtedness, sell or dispose of assets and make investments in or merge with another company.

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2021

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

The following table provides a reconciliation of basic and diluted income (loss) per common share:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2021		2020		2021
Net income (loss) available to common stockholders (in millions)	$	(31)	$	58	$	(11)	$	(16)
Weighted average common shares outstanding - basic (in thousands)	33,675		29,334		34,440		31,476
Dilutive shares from stock awards (in thousands)	—		271		—		—
Weighted average common shares outstanding - diluted (in thousands)	33,675		29,605		34,440		31,476
Basic income (loss) per share	$	(0.92)	$	1.98	$	(0.33)	$	(0.53)
Diluted income (loss) per share	$	(0.92)	$	1.96	$	(0.33)	$	(0.53)

As a result of the net loss from continuing operations for the three and nine months ended September 30, 2020 and the nine months ended September 30, 2021, 0.9 million restricted stock units as of September 30, 2020 and 0.8 million restricted stock units as of September 30, 2021 were excluded from the calculations of diluted earnings per share for such periods as their inclusion would be anti-dilutive. As of September 30, 2020 and 2021, Verso had 1.8 million warrants outstanding at an adjusted exercise price per share of $21.67 and $20.66, respectively (see Note 9). As a result of the exercise price of the warrants exceeding the average market price of Verso’s common stock during the three and nine months ended September 30, 2020 and 2021, 2.3 million and 2.4 million shares, respectively, were excluded from the calculations of diluted earnings per share as their inclusion would be anti-dilutive.

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RETIREMENT BENEFITS

9 Months Ended

Sep. 30, 2021

Retirement Benefits [Abstract]

RETIREMENT BENEFITS

RETIREMENT BENEFITS

The following table summarizes the components of net periodic pension cost (income) for the periods presented:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in millions)	2020		2021		2020		2021
Service cost	$	1	$	—	$	2	$	1
Interest cost	12		10		35		29
Expected return on plan assets	(17)		(16)		(50)		(47)
Settlement	1		—		1		—
Net periodic pension cost (income)	$	(3)	$	(6)	$	(12)	$	(17)

Verso makes contributions to its pension plan that are sufficient to fund actuarially determined costs, generally equal to the minimum amounts required by the Employee Retirement Income Security Act. Contributions to the pension plan during the three and nine months ended September 30, 2020 were $29 million and $47 million, respectively. Contributions to the pension plan during the three and nine months ended September 30, 2021 were $9 million and $25 million, respectively. On March 11, 2021, the government signed into law the American Rescue Plan Act of 2021, or “ARPA.” The ARPA provides for pension funding relief that reduced Verso’s 2021 required cash contributions to its pension plan to $25 million from $46 million. Verso is not required to make any contributions to the pension plan in the remainder of 2021.

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EQUITY

9 Months Ended

Sep. 30, 2021

Equity [Abstract]

EQUITY

EQUITY

Equity Awards

During the nine months ended September 30, 2021, Verso granted 0.3 million time-based restricted stock units and 0.2 million performance-based restricted stock units to its executives and certain senior managers. The performance-based restricted stock unit awards granted vest on the performance determination date following the end of the performance period, as measured using

an adjusted EBITDAP (earnings before interest, taxes, depreciation, amortization and pension expense/income) metric and a return on invested capital metric over a 3-year period ending December 31, 2023. The vesting criteria of the performance-based restricted stock unit awards meet the definition of a performance condition for accounting purposes. The number of shares which will ultimately vest at the vesting date ranges from 0% to 200% of the number of performance-based restricted stock units granted based on performance during the 3-year cumulative performance period. The compensation expense associated with these performance awards is currently estimated at 100%.

On March 5, 2021, Verso modified certain outstanding restricted stock unit awards as part of a retention arrangement for its former Chief Financial Officer who retired on June 30, 2021. As modified, his performance-based restricted stock units will remain outstanding and may vest on a pro-rata basis based on Verso’s achievement of established targets. In addition, the next tranche of his time-based restricted stock units vested at June 30, 2021. The foregoing changes were considered a modification and resulted in a revaluation of his 2019 and 2020 performance-based restricted stock units to a fair value of $0.67 and $8.66, respectively, and a revaluation of each of his 2018, 2019 and 2020 time-based restricted stock units that vested as a result of the modification to a fair value of $13.32.

Verso recognized equity award expense of $1 million and $5 million for the three and nine months ended September 30, 2020, respectively, and $1 million and $3 million for the three and nine months ended September 30, 2021, respectively. As of September 30, 2021, there was approximately $6 million of unrecognized compensation cost related to the 0.8 million non-vested restricted stock units, which is expected to be recognized over the weighted average period of 2.0 years.

Time-based Restricted Stock Units

Changes to non-vested time-based restricted stock units for the nine months ended September 30, 2021 were as follows:

	Restricted Stock	Weighted Average
	Units	Grant Date
Shares (in thousands)	Outstanding	Fair Value
Non-vested at December 31, 2020	421	$	9.95
Granted (1)	269	13.85
Vested	(265)	9.53
Forfeited	(73)	11.85
Non-vested at September 30, 2021(2)	352	13.36

(1) Includes 7 thousand dividend equivalent units on certain time-based restricted stock unit awards for dividends related to the stock units granted but not yet vested at the time cash dividends were paid.

(2) Includes the modified value of the time-based restricted stock units associated with the retention agreement for the former Chief Financial Officer.

Performance-based Restricted Stock Units

Changes to non-vested performance-based restricted stock units for the nine months ended September 30, 2021 were as follows:

	Restricted Stock	Weighted Average
	Units	Grant Date
Shares (in thousands)	Outstanding	Fair Value
Non-vested at December 31, 2020	424	$	12.21
Granted (1)	214	12.88
Incremental shares vested (2)	10	—
Vested	(143)	12.85
Forfeited	(77)	10.59
Non-vested at September 30, 2021 (3)	428	11.30

(1) Includes 8 thousand dividend equivalent units on certain performance-based restricted stock unit awards for dividends related to the stock units granted but not yet vested at the time cash dividends were paid.

(2) Incremental shares are a result of performance at 113% of the target level of shares subject to the performance-based restricted stock units.

(3) Includes the modified value of the performance-based restricted stock units associated with the retention agreement for the former Chief Financial Officer.

Share Repurchase Authorization and Dividends

On February 26, 2020, Verso’s Board of Directors authorized up to $250 million of net proceeds from the Pixelle Sale to be used to repurchase outstanding shares of Verso common stock. In conjunction with the declaration of the special cash dividend of $3.00 per share, or $101 million, on August 5, 2020, Verso’s Board of Directors reduced Verso’s total share repurchase

authorization from $250 million to $150 million. During the nine months ended September 30, 2020, Verso purchased under its share repurchase authorization approximately 1.6 million of its common stock through open market purchases and 10b5-1 programs at a weighted average cost of $14.14 per share. During the nine months ended September 30, 2021, Verso purchased under its share repurchase authorization (i) approximately 1.3 million shares of its common stock through open market purchases and 10b5-1 programs at a weighted average cost of $15.97 per share and (ii) approximately 3.0 million shares at a purchase price of $18.10 per share through the modified Dutch auction tender offer discussed below. As of September 30, 2021, $45 million of the $150 million share repurchase authorization remained.

On May 13, 2021, Verso commenced a modified Dutch auction tender offer to purchase for cash shares of its common stock for an aggregate purchase price of not more than $55 million and at a price per share of common stock of not less than $16.00 and not more than $18.30 per share. The tender offer expired on June 10, 2021. Through the tender offer, Verso accepted for purchase approximately 3.0 million shares of its common stock at a purchase price of $18.10 per share for an aggregate purchase price of approximately $56 million, including fees and expenses. The shares of common stock purchased through the tender offer were immediately retired. The excess purchase price over par value was recorded as a reduction to Paid-in capital on the Unaudited Condensed Consolidated Balance Sheet during the second quarter of 2021.

On February 5, 2021, Verso’s Board of Directors declared a quarterly cash dividend of $0.10 per share of Verso's common stock, which was paid on March 29, 2021, to stockholders of record on March 18, 2021. On May 7, 2021, Verso’s Board of Directors declared a quarterly cash dividend of $0.10 per share of Verso’s common stock, which was paid on June 29, 2021, to stockholders of record on June 17, 2021. On August 6, 2021, Verso’s Board of Directors declared a quarterly cash dividend of $0.10 per share of Verso’s common stock, which was paid on September 28, 2021, to stockholders of record on September 17, 2021. On November 4, 2021, Verso’s Board of Directors declared a quarterly cash dividend of $0.10 per share of Verso’s common stock, payable on December 29, 2021, to stockholders of record on December 17, 2021. Verso commenced paying quarterly dividends in the second quarter of 2020.

Warrants

On July 15, 2016, warrants to purchase up to an aggregate of 1.8 million shares of Class A common stock were issued to holders of first-lien secured debt at an initial exercise price of $27.86 per share and a seven-year term, subject to customary anti-dilution adjustments. As a result of Verso’s various share repurchases, including the modified Dutch auction tender offer, and dividend payments since the issuance of the warrants, as of September 30, 2021, the number of shares of Verso common stock issuable upon exercise of each warrant increased to 1.35 shares of common stock, for an aggregate of approximately 2.4 million shares of common stock, and the warrant exercise price was reduced to $20.66 per share. If all warrants were exercised, Verso would issue 2.4 million shares of Class A common stock and receive $50 million in proceeds. The warrants expire on July 15, 2023. As of September 30, 2021, no warrants have been exercised.

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RESTRUCTURING CHARGES

9 Months Ended

Sep. 30, 2021

Restructuring and Related Activities [Abstract]

RESTRUCTURING CHARGES

RESTRUCTURING CHARGES

Wisconsin Rapids Mill - On February 8, 2021, Verso decided to permanently shut down the No. 14 paper machine and certain other long-lived assets at its paper mill in Wisconsin Rapids, Wisconsin, while continuing to explore viable and sustainable alternatives with the remaining assets, including its converting operation, No. 16 paper machine and other remaining long-lived assets. This decision was made in response to the continued accelerated decline in printing and writing paper demand. The decision to permanently shut down the No. 14 paper machine and certain other long-lived assets, which have been idle since July 2020, permanently reduced Verso’s total annual production capacity by approximately 185,000 tons of coated paper.

In connection with the permanent shutdown of the No. 14 paper machine at the Wisconsin Rapids Mill, Verso recognized $84 million of accelerated depreciation which is included in Depreciation and amortization on the Unaudited Condensed Consolidated Statement of Operations for the nine months ended September 30, 2021.

The following table details the charges incurred related to the shutdown of No. 14 paper machine and certain other long-lived assets as included in Restructuring charges on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended		Nine Months Ended		Cumulative
(Dollars in millions)	September 30, 2021		September 30, 2021		Incurred
Property, plant and equipment, net	$	—	$	5	$	5
Write-off of spare parts and inventory	—		3		3
Total restructuring costs	$	—	$	8	$	8

Duluth Mill — On December 31, 2020, Verso decided to permanently shut down the paper mill in Duluth, Minnesota while continuing with efforts to sell the mill. Management’s decision to permanently shut down the Duluth Mill was made in response to the continued accelerated decline in printing and writing paper demand resulting from the COVID-19 pandemic. The closure of the Duluth Mill, which had been idle since July 2020, reduced Verso’s total annual production capacity by approximately 270,000 tons of supercalendered/packaging paper. In May 2021, Verso completed the sale of the Duluth Mill (see Note 5).

The following table details the charges incurred related to the Duluth Mill closure as included in Restructuring charges on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended		Nine Months Ended		Cumulative
(Dollars in millions)	September 30, 2021		September 30, 2021		Incurred
Property, plant and equipment, net	$	—	$	—	$	3
Severance and benefit costs	—		—		1
Write-off of spare parts and inventory	—		—		2
Write-off of purchase obligations and commitments	—		7		8
Other costs	—		2		2
Total restructuring costs	$	—	$	9	$	16

The following table details the changes in the restructuring reserve liabilities related to the permanent shutdown of the Duluth Mill which are included in Accrued and other liabilities on the Unaudited Condensed Consolidated Balance Sheet:

	Nine Months Ended
(Dollars in millions)	September 30, 2021
Beginning balance of reserve	$	2
Severance and benefit payments	(1)
Purchase obligations	7
Other costs	2
Payments on other costs	(2)
Ending balance of reserve	$	8

Closure of Luke Mill — On April 30, 2019, Verso announced that it would permanently shut down its paper mill in Luke, Maryland in response to the continuing decline in customer demand for the grades of coated freesheet paper produced at the Luke Mill, along with rising input costs, a significant influx of imports and rising compliance costs and infrastructure challenges associated with environmental regulation. Verso completed the shutdown and closure of the Luke Mill in June 2019, which reduced Verso’s coated freesheet production capacity by approximately 450,000 tons and eliminated approximately 675 positions.

The following table details the charges incurred related to the Luke Mill closure as included in Restructuring charges on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,				Cumulative
(Dollars in millions)	2020		2021		2020		2021		Incurred
Property, plant and equipment, net	$	—	$	—	$	—	$	—	$	10
Severance and benefit costs	—		—		(1)		—		18
Write-off of spare parts and inventory	—		—		—		—		9
Write-off of purchase obligations and commitments	—		—		—		—		1
Other costs(1)	(2)		—		5		—		19
Total restructuring costs	$	(2)	$	—	$	4	$	—	$	57

(1) Other costs primarily relate to activities associated with the shutdown of property, plant and equipment, such as draining, cleaning, dismantling, securing and disposing of such assets. Other costs for the nine months ended September 30, 2020 includes $4 million for the final cleaning and shutdown of various storage tanks.

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

General Litigation — Verso is involved from time to time in legal proceedings incidental to the conduct of its business. While any proceeding or litigation has the element of uncertainty, Verso believes that the outcome of any of these lawsuits or claims that are pending or threatened or all of them combined (other than those that cannot be assessed due to their preliminary nature) will not have a material effect on the Unaudited Condensed Consolidated Financial Statements.

In November 2019, the state of West Virginia asserted in an administrative enforcement action that three above-ground storage tanks at Verso’s Luke Mill leaked and that Verso had failed to take certain actions to prevent and report the release of pollutants into the North Branch of the Potomac River. In March 2020, the Potomac Riverkeeper Network (“PRKN”) filed a federal lawsuit against Verso alleging the improper handling, storage and disposal of wastes generated at the Luke Mill. In May 2020, Maryland joined the PRKN lawsuit and in July 2020, Maryland obtained dismissal of a lawsuit that it previously had filed with respect to the same facts. The Luke Mill sits on the border of West Virginia and Maryland, and it was closed in June 2019.

On April 1, 2021, a consent decree was approved and entered by the court in the federal lawsuit, setting forth the terms agreed by Verso with the PRKN and the Maryland Department of the Environment (“the Department”), to settle the claims by PRKN and the state of Maryland. Pursuant to the consent decree, Verso has agreed to pay an aggregate of $1 million in penalties and fees to the Department and PRKN. Verso has also agreed to reimburse the Department for any future response and oversight costs at the Luke Mill up to a maximum of $25,000 for the first year after the effective date of the consent decree and $20,000 per year thereafter until termination of monitoring oversight under the consent decree. In addition to the penalties and fees paid pursuant to the consent decree, Verso also agreed to continue its ongoing remedial activities at the Luke Mill and to monitor the site for at least three years after completion of its remedial efforts.

On September 1, 2021, a consent decree was approved and entered by the circuit court of Mineral County, West Virginia, setting forth the terms agreed by Verso with the West Virginia Department of Environmental Protection (“the Department of Environmental Protection”), to settle the claims by the Department of Environmental Protection. Pursuant to the consent decree, Verso has agreed to pay an aggregate of $650,000 in penalties to the Department of Environmental Protection. In addition to the penalties paid pursuant to the consent decree, Verso also agreed to maintain compliance at the Luke Mill, implement and continue certain remediation actions and abide by certain reporting requirements.

As a result of the consent decree approval on April 1, 2021 with respect to the lawsuit filed by PRKN, Verso revised its estimates of costs related to the ongoing environmental remediation and monitoring efforts and recorded $5 million in Cost of products sold on the Unaudited Condensed Consolidated Statement of Operations in the first quarter of 2021. As of September 30, 2021, $7 million of environmental remediation costs are included on the Unaudited Condensed Consolidated Balance Sheet, including $2 million in Accrued and other liabilities and $5 million in Other long-term liabilities. As of December 31, 2020, $5 million of environmental remediation costs, which included the cost related to the consent decrees mentioned above, are included in Accrued and other liabilities on the Unaudited Condensed Consolidated Balance Sheet.

In connection with the closure of former idled mills, claims were asserted against Verso relating to certain contractual obligations. Verso recognized zero and $6 million for the three and nine months ended September 30, 2021, respectively, included in Restructuring charges on the Consolidated Statements of Operations, associated with contractual obligations. Verso does not believe the claims are reasonable and will continue to defend its position and does not believe any additional charges will be material.

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INFORMATION BY INDUSTRY SEGMENT

9 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

INFORMATION BY INDUSTRY SEGMENT

INFORMATION BY INDUSTRY SEGMENT

We have two operating segments, paper and pulp. We previously determined that the operating income (loss) of the pulp segment was immaterial for disclosure purposes. However, as the price for pulp/ton has increased in 2021, we have determined that the pulp segment is material for disclosure purposes as of September 30, 2021. Our paper products are used primarily in media, marketing applications and commercial printing applications. Uses include catalogs, magazines, high-end advertising brochures, direct-mail advertising, and specialty applications, such as labeling and other special applications. Our NBHK pulp is used to manufacture printing, writing and specialty paper grades, tissue and other products. Our assets are utilized across operating segments in an integrated mill system and are not identified by operating segment or reviewed by management on an operating segment basis. We operate primarily in one geographic segment, North America.

The following table summarizes the operating segment data:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in millions)	2020		2021		2020		2021
Net sales(1)
Paper	$	274	$	304	$	956	$	856
Pulp	$	32	$	35	$	89	$	94
Total Net sales	$	306	$	339	$	1,045	$	950
Gross margin (exclusive of depreciation and amortization)
Paper	$	(6)	$	49	$	36	$	109
Pulp	$	3	$	16	$	2	$	31
Total Gross margin	$	(3)	$	65	$	38	$	140

(1)    Intersegment sales from the pulp segment to the paper segment of $3 million and $7 million are eliminated from Net sales above for the three and nine months ended September 30, 2020, respectively. Intersegment sales from the pulp segment to the paper segment of $12 million and $17 million are eliminated from the Net sales above for the three and nine months ended September 30, 2021, respectively.

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SUMMARY OF BUSINESS AND BASIS OF PRESENTATION (Policies)

9 Months Ended

Sep. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Business

Nature of Business — Verso is a producer of graphic paper, specialty paper, packaging paper and Northern Bleached Hardwood Kraft, or “NBHK,” pulp. These products are used primarily in media, marketing applications and commercial printing applications. Uses include catalogs, magazines, high-end advertising brochures, direct-mail advertising, and specialty applications, such as labeling and other special applications. NBHK pulp is used to manufacture printing, writing and specialty paper grades, tissue and other products. Verso operates in the pulp and paper market segments primarily in North America

Basis of Presentation

Basis of Presentation — This report contains the Unaudited Condensed Consolidated Financial Statements of Verso as of December 31, 2020 and September 30, 2021 and for the three and nine months ended September 30, 2020 and 2021. The December 31, 2020 Unaudited Condensed Consolidated Balance Sheet data was derived from audited financial statements, but it does not include all disclosures required annually by accounting principles generally accepted in the United States of America, or “GAAP.” In Verso’s opinion, the Unaudited Condensed Consolidated Financial Statements include all adjustments that are necessary for the fair presentation of Verso’s respective financial condition, results of operations and cash flows for the interim periods presented. Except as disclosed in the notes to the Unaudited Condensed Consolidated Financial Statements, such adjustments are of a normal, recurring nature. Intercompany balances and transactions are eliminated in consolidation. The results of operations and cash flows for the interim periods presented may not necessarily be indicative of full-year results. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of Verso contained in its Annual Report on Form 10-K for the year ended December 31, 2020.

Recent Accounting Developments

Accounting Guidance Adopted in 2021

Accounting Standards Codification Topic 740, Income Taxes. In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update 2019-12, Simplifying the Accounting for Income Taxes, which removes certain exceptions for investments, intraperiod allocations and interim calculations, and adds guidance to reduce the complexity in accounting for income taxes. Verso adopted this guidance on January 1, 2021, and the effect on the Unaudited Condensed Consolidated Financial Statements was not material.

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REVENUE RECOGNITION (Tables)

9 Months Ended

Sep. 30, 2021

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following table presents revenue disaggregated by product included on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in millions)	2020		2021		2020		2021
Paper	$	260	$	296	$	900	$	835
Packaging	14		8		56		21
Pulp	32		35		89		94
Total Net sales	$	306	$	339	$	1,045	$	950

The following table presents revenue disaggregated by sales channel included on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in millions)	2020		2021		2020		2021
End-users and Converters	$	95	$	104	$	375	$	290
Brokers and Merchants	150		174		477		502
Printers	61		61		193		158
Total Net sales	$	306	$	339	$	1,045	$	950

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SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION (Tables)

9 Months Ended

Sep. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Inventories by Major Category

The following table summarizes inventories by major category:

	December 31,		September 30,
(Dollars in millions)	2020		2021
Raw materials	$	45	$	34
Work-in-process	31		19
Finished goods	125		71
Replacement parts and other supplies	23		17
Inventories	$	224	$	141

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2021

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table provides a reconciliation of basic and diluted income (loss) per common share:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2021		2020		2021
Net income (loss) available to common stockholders (in millions)	$	(31)	$	58	$	(11)	$	(16)
Weighted average common shares outstanding - basic (in thousands)	33,675		29,334		34,440		31,476
Dilutive shares from stock awards (in thousands)	—		271		—		—
Weighted average common shares outstanding - diluted (in thousands)	33,675		29,605		34,440		31,476
Basic income (loss) per share	$	(0.92)	$	1.98	$	(0.33)	$	(0.53)
Diluted income (loss) per share	$	(0.92)	$	1.96	$	(0.33)	$	(0.53)

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RETIREMENT BENEFITS (Tables)

9 Months Ended

Sep. 30, 2021

Retirement Benefits [Abstract]

Components of Net Periodic Benefit Cost

The following table summarizes the components of net periodic pension cost (income) for the periods presented:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in millions)	2020		2021		2020		2021
Service cost	$	1	$	—	$	2	$	1
Interest cost	12		10		35		29
Expected return on plan assets	(17)		(16)		(50)		(47)
Settlement	1		—		1		—
Net periodic pension cost (income)	$	(3)	$	(6)	$	(12)	$	(17)

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EQUITY (Tables)

9 Months Ended

Sep. 30, 2021

Time-based RSUs

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Nonvested Restricted Stock Units Activity

Changes to non-vested time-based restricted stock units for the nine months ended September 30, 2021 were as follows:

	Restricted Stock	Weighted Average
	Units	Grant Date
Shares (in thousands)	Outstanding	Fair Value
Non-vested at December 31, 2020	421	$	9.95
Granted (1)	269	13.85
Vested	(265)	9.53
Forfeited	(73)	11.85
Non-vested at September 30, 2021(2)	352	13.36

(1) Includes 7 thousand dividend equivalent units on certain time-based restricted stock unit awards for dividends related to the stock units granted but not yet vested at the time cash dividends were paid.

(2) Includes the modified value of the time-based restricted stock units associated with the retention agreement for the former Chief Financial Officer.

Performance-based RSUs

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Nonvested Restricted Stock Units Activity

Changes to non-vested performance-based restricted stock units for the nine months ended September 30, 2021 were as follows:

	Restricted Stock	Weighted Average
	Units	Grant Date
Shares (in thousands)	Outstanding	Fair Value
Non-vested at December 31, 2020	424	$	12.21
Granted (1)	214	12.88
Incremental shares vested (2)	10	—
Vested	(143)	12.85
Forfeited	(77)	10.59
Non-vested at September 30, 2021 (3)	428	11.30

(1) Includes 8 thousand dividend equivalent units on certain performance-based restricted stock unit awards for dividends related to the stock units granted but not yet vested at the time cash dividends were paid.

(2) Incremental shares are a result of performance at 113% of the target level of shares subject to the performance-based restricted stock units.

(3) Includes the modified value of the performance-based restricted stock units associated with the retention agreement for the former Chief Financial Officer.

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RESTRUCTURING CHARGES (Tables)

9 Months Ended

Sep. 30, 2021

Restructuring and Related Activities [Abstract]

Charges Incurred as Included in Restructuring Charges

The following table details the charges incurred related to the shutdown of No. 14 paper machine and certain other long-lived assets as included in Restructuring charges on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended		Nine Months Ended		Cumulative
(Dollars in millions)	September 30, 2021		September 30, 2021		Incurred
Property, plant and equipment, net	$	—	$	5	$	5
Write-off of spare parts and inventory	—		3		3
Total restructuring costs	$	—	$	8	$	8

The following table details the charges incurred related to the Duluth Mill closure as included in Restructuring charges on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended		Nine Months Ended		Cumulative
(Dollars in millions)	September 30, 2021		September 30, 2021		Incurred
Property, plant and equipment, net	$	—	$	—	$	3
Severance and benefit costs	—		—		1
Write-off of spare parts and inventory	—		—		2
Write-off of purchase obligations and commitments	—		7		8
Other costs	—		2		2
Total restructuring costs	$	—	$	9	$	16

The following table details the charges incurred related to the Luke Mill closure as included in Restructuring charges on the Unaudited Condensed Consolidated Statements of Operations:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,				Cumulative
(Dollars in millions)	2020		2021		2020		2021		Incurred
Property, plant and equipment, net	$	—	$	—	$	—	$	—	$	10
Severance and benefit costs	—		—		(1)		—		18
Write-off of spare parts and inventory	—		—		—		—		9
Write-off of purchase obligations and commitments	—		—		—		—		1
Other costs(1)	(2)		—		5		—		19
Total restructuring costs	$	(2)	$	—	$	4	$	—	$	57

(1) Other costs primarily relate to activities associated with the shutdown of property, plant and equipment, such as draining, cleaning, dismantling, securing and disposing of such assets. Other costs for the nine months ended September 30, 2020 includes $4 million for the final cleaning and shutdown of various storage tanks.

Changes in Restructuring Reserve Liabilities Related to the Closure

The following table details the changes in the restructuring reserve liabilities related to the permanent shutdown of the Duluth Mill which are included in Accrued and other liabilities on the Unaudited Condensed Consolidated Balance Sheet:

	Nine Months Ended
(Dollars in millions)	September 30, 2021
Beginning balance of reserve	$	2
Severance and benefit payments	(1)
Purchase obligations	7
Other costs	2
Payments on other costs	(2)
Ending balance of reserve	$	8

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INFORMATION BY INDUSTRY SEGMENT (Tables)

9 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

The following table summarizes the operating segment data:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in millions)	2020		2021		2020		2021
Net sales(1)
Paper	$	274	$	304	$	956	$	856
Pulp	$	32	$	35	$	89	$	94
Total Net sales	$	306	$	339	$	1,045	$	950
Gross margin (exclusive of depreciation and amortization)
Paper	$	(6)	$	49	$	36	$	109
Pulp	$	3	$	16	$	2	$	31
Total Gross margin	$	(3)	$	65	$	38	$	140

(1)    Intersegment sales from the pulp segment to the paper segment of $3 million and $7 million are eliminated from Net sales above for the three and nine months ended September 30, 2020, respectively. Intersegment sales from the pulp segment to the paper segment of $12 million and $17 million are eliminated from the Net sales above for the three and nine months ended September 30, 2021, respectively.

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SUMMARY OF BUSINESS AND BASIS OF PRESENTATION (Detail) - Other Events, COVID-19	Sep. 30, 2021 T
Closure of Duluth Mill | Supercalendered/Packaging Papers
Segment Reporting Information [Line Items]
Number of production capacity	270,000
Idle of Wisconsin Rapids Mill | Coated and Packaging Papers
Segment Reporting Information [Line Items]
Number of production capacity	540,000

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REVENUE RECOGNITION (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	$ 339	$ 306	$ 950	$ 1,045
End-users and Converters
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	104	95	290	375
Brokers and Merchants
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	174	150	502	477
Printers
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	61	61	158	193
Paper
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	296	260	835	900
Packaging
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	8	14	21	56
Pulp
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	$ 35	$ 32	$ 94	$ 89

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SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Income Tax Contingency [Line Items]
Restricted cash, intangibles	$ 2	$ 2	$ 2	$ 2	$ 2
Depreciation expense	17	20	134	62
Accelerated depreciation recognized			84
Capital expenditures unpaid			11	2
Income tax expense (benefit)	(17)	(9)	(29)	14
Affiliated Entity
Income Tax Contingency [Line Items]
Revenue from affiliates	18		51
Accounts receivable, related parties	6		6		$ 4
State and Local Jurisdiction
Income Tax Contingency [Line Items]
Additional valuation allowance recognized (reduced)	$ (2)	$ 1	$ 2	$ 8

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SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION - Inventories by Major Category (Detail) - USD ($) $ in Millions	Sep. 30, 2021	Dec. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Raw materials	$ 34	$ 45
Work-in-process	19	31
Finished goods	71	125
Replacement parts and other supplies	17	23
Inventories	$ 141	$ 224

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DISPOSITIONS - Additional Information (Details) $ in Millions			3 Months Ended				9 Months Ended		14 Months Ended
	May 13, 2021 USD ($)	Aug. 01, 2020 USD ($) machine	Sep. 30, 2021 USD ($)	Jun. 30, 2021 USD ($) machine	Mar. 31, 2021 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2021 USD ($)	Dec. 31, 2020 USD ($)	Feb. 10, 2020 USD ($)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net proceeds from Sale of Androscoggin/Stevens Point Mills							$ 0	$ 338
Number of paper machines | machine		2		2
Proceeds from sale of machines and equipment		$ 11	$ 1	$ 1	$ 1				$ 11
Assets held for sale			6				6		6	$ 17
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Verso Androscoggin, LLC
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Consideration considered											$ 352
Verso’s unfunded pension											$ 37
Net proceeds from Sale of Androscoggin/Stevens Point Mills								338
Proceeds from divestiture of businesses								344
Cash divested								6
Gain (loss) on disposal								88
Transition services revenue recognized						$ 2		5
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Verso Androscoggin, LLC | Cost of Products Sold
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Transition services revenue recognized						1		2
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Verso Androscoggin, LLC | Selling, General and Administrative Expenses
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Transition services revenue recognized						$ 1		$ 3
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Duluth Mill
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from divestiture of businesses	$ 7
Cash divested	1
Gain (loss) on disposal	$ (3)
Disposal Group, Held-for-sale, Not Discontinued Operations | Luke Mill
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Assets held for sale			$ 6				$ 6		$ 6	$ 17

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DEBT - Narrative (Details) - USD ($)	May 10, 2021	Sep. 30, 2021	Dec. 31, 2020	Feb. 06, 2019
Line of Credit Facility [Line Items]
Debt instrument, fair value disclosure		$ 0	$ 0
ABL Facility
Line of Credit Facility [Line Items]
Credit facility, remaining borrowing capacity		120,000,000
ABL Facility | Revolving Credit Facilities
Line of Credit Facility [Line Items]
Long-term debt		0
ABL Facility | Letter of Credit
Line of Credit Facility [Line Items]
Long-term debt		21,000,000
ABL Facility | ABL Third Amendment Facility
Line of Credit Facility [Line Items]
Line of credit facility, unused capacity, commitment fee percentage	0.25%
ABL Facility | ABL Third Amendment Facility | Minimum | LIBOR
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate	1.25%
ABL Facility | ABL Third Amendment Facility | Minimum | Base Rate
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate	0.25%
ABL Facility | ABL Third Amendment Facility | Maximum | LIBOR
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate	1.75%
ABL Facility | ABL Third Amendment Facility | Maximum | Base Rate
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate	0.75%
ABL Facility | ABL Third Amendment Facility | Revolving Credit Facilities
Line of Credit Facility [Line Items]
Credit facility, borrowing capacity	$ 200,000,000
ABL Facility | ABL Third Amendment Facility | Letter of Credit
Line of Credit Facility [Line Items]
Credit facility, borrowing capacity	75,000,000
ABL Facility | ABL Third Amendment Facility | Bridge Loan
Line of Credit Facility [Line Items]
Credit facility, borrowing capacity	$ 20,000,000
ABL Facility | ABL Amendment Facility
Line of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity, accordion feature				$ 75,000,000
ABL Facility | ABL Amendment Facility | Revolving Credit Facilities
Line of Credit Facility [Line Items]
Credit facility, borrowing capacity				350,000,000
ABL Facility | ABL Amendment Facility | Letter of Credit
Line of Credit Facility [Line Items]
Credit facility, borrowing capacity				100,000,000
ABL Facility | ABL Amendment Facility | Bridge Loan
Line of Credit Facility [Line Items]
Credit facility, borrowing capacity				$ 35,000,000
ABL Facility | ABL Facility | Revolving Credit Facilities
Line of Credit Facility [Line Items]
Line of credit facility, current borrowing capacity		$ 141,000,000

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EARNINGS PER SHARE - Reconciliation of Basic and Diluted Earnings (Loss) per Common Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Earnings Per Share [Abstract]
Net income (loss) available to common stockholders (in millions)	$ 58	$ (31)	$ (16)	$ (11)
Weighted average common shares outstanding - basic (shares)	29,334	33,675	31,476	34,440
Dilutive shares from stock awards (shares)	271	0	0	0
Weighted average common shares outstanding - diluted (shares)	29,605	33,675	31,476	34,440
Basic income (loss) per share (usd per share)	$ 1.98	$ (0.92)	$ (0.53)	$ (0.33)
Diluted income (loss) per share (usd per share)	$ 1.96	$ (0.92)	$ (0.53)	$ (0.33)

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EARNINGS PER SHARE - Additional Information (Details) - $ / shares shares in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Sep. 16, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Class of warrant or right, outstanding (in shares)	1.8	1.8	1.8
Exercise price of warrants (in dollars per share)	$ 21.67	$ 20.66	$ 21.67	$ 20.66
Number of shares called by warrants (in shares)	2.3	2.4	2.3
Restricted Stock Units (RSUs)
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from calculation of diluted earnings per share (in shares)	0.9	0.8	0.9

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RETIREMENT BENEFITS - Components of Net Periodic Benefit Cost (Detail) - Pension Plan - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 0	$ 1	$ 1	$ 2
Interest cost	10	12	29	35
Expected return on plan assets	(16)	(17)	(47)	(50)
Settlement	0	1	0	1
Net periodic pension cost (income)	$ (6)	$ (3)	$ (17)	$ (12)

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RETIREMENT BENEFITS - Additional Information (Detail) - Pension Plan - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Mar. 11, 2021	Mar. 10, 2021
Defined Benefit Plan Disclosure [Line Items]
Contribution made by employer	$ 9	$ 29	$ 25	$ 47
Expected cash contributions for current fiscal year					$ 25	$ 46

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EQUITY - Additional Information (Details) - USD ($)								3 Months Ended		9 Months Ended
	Nov. 04, 2021	Sep. 16, 2021	Aug. 06, 2021	May 13, 2021	May 07, 2021	Feb. 05, 2021	Aug. 05, 2020	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Mar. 05, 2021	Dec. 31, 2020	Aug. 04, 2020	Feb. 26, 2020	Jul. 15, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compound annual growth rate, period (in years)										3 years
Estimated compensation expense, percentage										1
Equity award expense								$ 1,000,000	$ 1,000,000	$ 3,000,000	$ 5,000,000
Share repurchase program authorization							$ 150,000,000							$ 250,000,000	$ 250,000,000
Common stock, special dividends declared (in dollars per share)							$ 3.00
Special dividends declared							$ 101,000,000
Share repurchase program remaining authorization								$ 45,000,000		$ 45,000,000
Common stock, dividends declared (in dollars per share)			$ 0.10		$ 0.10	$ 0.10
Number of shares called by warrants (in shares)								2,400,000	2,300,000	2,400,000	2,300,000
Exercise price of warrants (in dollars per share)		$ 20.66						$ 20.66	$ 21.67	$ 20.66	$ 21.67
Number of shares called by each warrant (in shares)								1.35		1.35
Proceeds to be received upon exercise		$ 50,000,000
Class of warrant or right, exercised (in shares)								0		0
Subsequent Event
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, dividends declared (in dollars per share)	$ 0.10
Share Repurchase Authorization
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Repurchase of common stock, number of shares (in shares)										1,300,000	1,600,000
Repurchase of common stock, treasury stock acquired, average price per share (in dollars per share)										$ 15.97	$ 14.14
Dutch Auction Tender Offer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share repurchase program authorization				$ 55,000,000
Repurchase of common stock, number of shares (in shares)				3,000,000						3,000,000
Repurchase of common stock, treasury stock acquired, average price per share (in dollars per share)				$ 18.10						$ 18.10
Treasury stock acquired				$ 56,000,000
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation cost not yet recognized								$ 6,000,000		$ 6,000,000
Vested and expected to vest, outstanding (in shares)								800,000		800,000
Compensation cost not yet recognized, period for recognition (in years)										2 years
Time-based RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted (in shares)										269,000
Performance awards fair value (in dollars per share)								$ 13.36		$ 13.36			$ 9.95
Performance-based RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted (in shares)										214,000
Performance awards fair value (in dollars per share)								$ 11.30		$ 11.30			$ 12.21
Minimum | Dutch Auction Tender Offer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Repurchase of common stock, treasury stock acquired, average price per share (in dollars per share)				$ 16.00
Maximum | Dutch Auction Tender Offer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Repurchase of common stock, treasury stock acquired, average price per share (in dollars per share)				$ 18.30
Class A
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares called by warrants (in shares)		2,400,000														1,800,000
Exercise price of warrants (in dollars per share)																$ 27.86
Warrants term (in years)																7 years
Share Based Compensation Award Tranche One | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting rights, percentage										0.00%
Share Based Compensation Award Tranche One | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting rights, percentage										200.00%
Executive Officer and Management | Time-based RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted (in shares)										300,000
Award vesting period (in years)										3 years
Executive Officer and Management | Performance-based RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted (in shares)										200,000
Chief Financial Officer | Time-based RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance awards fair value (in dollars per share)												$ 13.32
Chief Financial Officer | Performance-based RSUs | 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance awards fair value (in dollars per share)												0.67
Chief Financial Officer | Performance-based RSUs | 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance awards fair value (in dollars per share)												$ 8.66

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EQUITY - Changes In Non-vested Units (Details) shares in Thousands	9 Months Ended
	Sep. 30, 2021 $ / shares shares
Weighted Average Grant Date Fair Value
Incremental granted share, percentage	113.00%
Time-based RSUs
Restricted Stock Units Outstanding
Non-vested, beginning balance (in shares)	421
Granted (in shares)	269
Vested (in shares)	(265)
Forfeited (in shares)	(73)
Non-vested, ending balance (in shares)	352
Weighted Average Grant Date Fair Value
Non-vested, beginning balance (in dollar per share) | $ / shares	$ 9.95
Granted (in dollar per share) | $ / shares	13.85
Vested (in dollar per share) | $ / shares	9.53
Forfeited (in dollar per share) | $ / shares	11.85
Non-vested, ending balance (in dollar per share) | $ / shares	$ 13.36
Time-based Dividend Equivalent Units
Restricted Stock Units Outstanding
Granted (in shares)	7
Performance-based RSUs
Restricted Stock Units Outstanding
Non-vested, beginning balance (in shares)	424
Granted (in shares)	214
Incremental shares vested (in shares)	10
Vested (in shares)	(143)
Forfeited (in shares)	(77)
Non-vested, ending balance (in shares)	428
Weighted Average Grant Date Fair Value
Non-vested, beginning balance (in dollar per share) | $ / shares	$ 12.21
Granted (in dollar per share) | $ / shares	12.88
Incremental shares vested (in dollar per share) | $ / shares	0
Vested (in dollar per share) | $ / shares	12.85
Forfeited (in dollar per share) | $ / shares	10.59
Non-vested, ending balance (in dollar per share) | $ / shares	$ 11.30
Performance-based Dividend Equivalent Units
Restricted Stock Units Outstanding
Granted (in shares)	8

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RESTRUCTURING CHARGES - Additional Information (Details) $ in Millions		1 Months Ended		9 Months Ended
	Feb. 08, 2021 T	Jul. 31, 2020 T	Jun. 30, 2019 T position	Sep. 30, 2021 USD ($)
Restructuring Cost and Reserve [Line Items]
Accelerated depreciation recognized | $				$ 84
Closure of No. 14 Paper Machine and Certain Other Long-Lived Assets
Restructuring Cost and Reserve [Line Items]
Decrease in production capacity (in tons)	185,000
Accelerated depreciation recognized | $				$ 84
Closure of Duluth Mill
Restructuring Cost and Reserve [Line Items]
Decrease in production capacity (in tons)		270,000
Closure of Luke Mill
Restructuring Cost and Reserve [Line Items]
Number of positions eliminated | position			675
Closure of Luke Mill | Coated Freesheet
Restructuring Cost and Reserve [Line Items]
Decrease in production capacity (in tons)			450,000

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RESTRUCTURING CHARGES - Charges Incurred as Included in Restructuring Charges (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Restructuring and Related Cost [Abstract]
Restructuring costs	$ 0	$ (2)	$ 17	$ 4
Closure of No. 14 Paper Machine and Certain Other Long-Lived Assets
Restructuring and Related Cost [Abstract]
Restructuring costs	0		8
Cumulative incurred	8		8
Closure of No. 14 Paper Machine and Certain Other Long-Lived Assets | Property, plant and equipment, net
Restructuring and Related Cost [Abstract]
Restructuring costs	0		5
Cumulative incurred	5		5
Closure of No. 14 Paper Machine and Certain Other Long-Lived Assets | Write-off of spare parts and inventory
Restructuring and Related Cost [Abstract]
Restructuring costs	0		3
Cumulative incurred	3		3
Closure of Duluth Mill
Restructuring and Related Cost [Abstract]
Restructuring costs	0		9
Cumulative incurred	16		16
Closure of Duluth Mill | Property, plant and equipment, net
Restructuring and Related Cost [Abstract]
Restructuring costs	0		0
Cumulative incurred	3		3
Closure of Duluth Mill | Severance and benefit costs
Restructuring and Related Cost [Abstract]
Restructuring costs	0		0
Cumulative incurred	1		1
Closure of Duluth Mill | Write-off of spare parts and inventory
Restructuring and Related Cost [Abstract]
Restructuring costs	0		0
Cumulative incurred	2		2
Closure of Duluth Mill | Write-off of purchase obligations and commitments
Restructuring and Related Cost [Abstract]
Restructuring costs	0		7
Cumulative incurred	8		8
Closure of Duluth Mill | Other costs
Restructuring and Related Cost [Abstract]
Restructuring costs	0		2
Cumulative incurred	2		2
Closure of Luke Mill
Restructuring and Related Cost [Abstract]
Restructuring costs	0	(2)	0	4
Cumulative incurred	57		57
Closure of Luke Mill | Property, plant and equipment, net
Restructuring and Related Cost [Abstract]
Restructuring costs	0	0	0	0
Cumulative incurred	10		10
Closure of Luke Mill | Severance and benefit costs
Restructuring and Related Cost [Abstract]
Restructuring costs	0	0	0	(1)
Cumulative incurred	18		18
Closure of Luke Mill | Write-off of spare parts and inventory
Restructuring and Related Cost [Abstract]
Restructuring costs	0	0	0	0
Cumulative incurred	9		9
Closure of Luke Mill | Write-off of purchase obligations and commitments
Restructuring and Related Cost [Abstract]
Restructuring costs	0	0	0	0
Cumulative incurred	1		1
Closure of Luke Mill | Other costs
Restructuring and Related Cost [Abstract]
Restructuring costs	0	$ (2)	0	5
Cumulative incurred	$ 19		$ 19
Closure of Luke Mill | Facility closing
Restructuring and Related Cost [Abstract]
Restructuring costs				$ 4

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RESTRUCTURING CHARGES - Changes in Restructuring Reserve Liabilities Related to the Closure (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Restructuring Reserve [Roll Forward]
Purchase obligations	$ 0	$ (2)	$ 17	$ 4
Closure of Duluth Mill
Restructuring Reserve [Roll Forward]
Beginning balance of reserve			2
Severance and benefit payments			(1)
Purchase obligations	0		9
Other costs			2
Payments on other costs			(2)
Ending balance of reserve	8		8
Closure of Duluth Mill | Purchase obligations
Restructuring Reserve [Roll Forward]
Purchase obligations			7
Closure of Duluth Mill | Property, plant and equipment, net
Restructuring Reserve [Roll Forward]
Purchase obligations	0		0
Closure of Duluth Mill | Severance and benefit costs
Restructuring Reserve [Roll Forward]
Purchase obligations	0		0
Closure of Duluth Mill | Write-off of spare parts and inventory
Restructuring Reserve [Roll Forward]
Purchase obligations	0		0
Closure of Duluth Mill | Write-off of purchase obligations and commitments
Restructuring Reserve [Roll Forward]
Purchase obligations	0		7
Closure of Duluth Mill | Other costs
Restructuring Reserve [Roll Forward]
Purchase obligations	$ 0		$ 2

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COMMITMENTS AND CONTINGENCIES (Detail) $ in Thousands		1 Months Ended	3 Months Ended		9 Months Ended
	Apr. 01, 2021 USD ($)	Nov. 30, 2019 tank	Sep. 30, 2021 USD ($)	Mar. 31, 2021 USD ($)	Sep. 30, 2021 USD ($)	Sep. 01, 2021 USD ($)	Dec. 31, 2020 USD ($)
Loss Contingencies [Line Items]
Number of aboveground storage tanks | tank		3
Charges to expense for new losses				$ 5,000
Accrual of environmental loss contingencies			$ 7,000		$ 7,000
Accrual of environmental loss contingencies, current			2,000		2,000		$ 5,000
Accrued environmental loss contingencies, noncurrent			5,000		5,000
Business exit costs			$ 0		$ 6,000
Potomac Riverkeeper Network and Maryland Department of the Environment
Loss Contingencies [Line Items]
Settlement penalties and fees	$ 1,000
Reimbursement for first year proceeding decree	25
Reimbursement each year after first year proceeding decree	$ 20
Monitoring period (in years)	3 years
West Virginia Department of Environmental Protection
Loss Contingencies [Line Items]
Accrual of environmental loss contingencies						$ 650

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INFORMATION BY INDUSTRY SEGMENT - Additional Information (Detail) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2021 USD ($) segment region	Sep. 30, 2020 USD ($)
Segment Reporting [Abstract]
Number of reporting segments | segment			2
Segment Reporting Information [Line Items]
Net sales	$ 339,000	$ 306,000	$ 950,000	$ 1,045,000
North America
Segment Reporting Information [Line Items]
Number of geographic operating regions | region			1
Operating Segments
Segment Reporting Information [Line Items]
Net sales	339,000	306,000	$ 950,000	1,045,000
Gross margin (exclusive of depreciation and amortization)	65,000	(3,000)	140,000	38,000
Operating Segments | Paper
Segment Reporting Information [Line Items]
Net sales	304,000	274,000	856,000	956,000
Gross margin (exclusive of depreciation and amortization)	49,000	(6,000)	109,000	36,000
Operating Segments | Pulp
Segment Reporting Information [Line Items]
Net sales	35,000	32,000	94,000	89,000
Gross margin (exclusive of depreciation and amortization)	16,000	3,000	31,000	2,000
Intercompany eliminations | Pulp
Segment Reporting Information [Line Items]
Net sales	$ (12,000)	$ (3,000)	$ (17,000)	$ (7,000)