UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
|
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number 1-37728
(Exact name of registrant as specified in its charter)
|
Delaware |
|
36-4829638 |
|
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
|
|
|
|
|
35 West Wacker Drive, Chicago, Illinois |
|
60601 |
|
(Address of principal executive offices) |
|
(Zip code) |
(844) 866-4337
(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 |
|
Common Stock (Par Value $0.01) |
|
DFIN |
|
NYSE |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Sections 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 ☒
As of April 26, 2019,
DONNELLEY FINANCIAL SOLUTIONS, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2019
TABLE OF CONTENTS
|
Part II |
||||
|
OTHER INFORMATION |
|
Page |
||
|
Item 1: |
|
43 |
||
|
|
|
|
|
|
|
Item 1A: |
|
43 |
||
|
|
|
|
|
|
|
Item 2: |
|
43 |
||
|
|
|
|
|
|
|
Item 4: |
|
43 |
||
|
|
|
|
|
|
|
Item 6: |
|
44 |
||
|
|
|
|
|
|
|
|
47 |
|||
2
Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)
Condensed Consolidated Statements of Operations
For the Three Months Ended March 31, 2019 and 2018
(in millions, except per share data)
(UNAUDITED)
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2019 |
|
|
2018 |
|
||
|
Services net sales |
$ |
|
|
|
$ |
|
|
|
Products net sales |
|
|
|
|
|
|
|
|
Total net sales |
|
|
|
|
|
|
|
|
Services cost of sales (exclusive of depreciation and amortization) |
|
|
|
|
|
|
|
|
Products cost of sales (exclusive of depreciation and amortization) |
|
|
|
|
|
|
|
|
Total cost of sales |
|
|
|
|
|
|
|
|
Selling, general and administrative expenses (exclusive of depreciation and amortization) |
|
|
|
|
|
|
|
|
Restructuring, impairment and other charges-net |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
Income from operations |
|
|
|
|
|
|
|
|
Interest expense-net |
|
|
|
|
|
|
|
|
Investment and other income-net |
|
( |
) |
|
|
( |
) |
|
(Loss) earnings before income taxes |
|
( |
) |
|
|
|
|
|
Income tax (benefit) expense |
|
( |
) |
|
|
|
|
|
Net (loss) earnings |
$ |
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) earnings per share (Note 11): |
|
|
|
|
|
|
|
|
Basic net (loss) earnings per share |
|
( |
) |
|
|
|
|
|
Diluted net (loss)earnings per share |
|
( |
) |
|
|
|
|
|
Weighted average number of common shares outstanding |
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
See Notes to Unaudited Condensed Consolidated Financial Statements
3
Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)
Condensed Consolidated Statements of Comprehensive Income
For the Three Months Ended March 31, 2019 and 2018
(in millions)
(UNAUDITED)
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2019 |
|
|
2018 |
|
||
|
Net (loss) earnings |
$ |
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income, net of tax: |
|
|
|
|
|
|
|
|
Translation adjustments |
|
|
|
|
|
|
|
|
Adjustment for net periodic pension and other postretirement benefits plan cost |
|
|
|
|
|
|
|
|
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
Comprehensive (loss) income |
$ |
|
|
|
$ |
|
|
See Notes to Unaudited Condensed Consolidated Financial Statements
4
Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)
Condensed Consolidated Balance Sheets
As of March 31, 2019 and December 31, 2018
(in millions, except per share data)
(UNAUDITED)
|
|
|
March 31, |
|
|
December 31, |
|
||
|
|
|
2019 |
|
|
2018 |
|
||
|
ASSETS |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
|
|
|
$ |
|
|
|
Receivables, less allowances for doubtful accounts of $ |
|
|
|
|
|
|
|
|
|
Inventories |
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets |
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
|
|
|
|
|
|
|
Property, plant and equipment-net |
|
|
|
|
|
|
|
|
|
Right-of-use assets |
|
|
|
|
|
|
|
|
|
Software-net |
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
|
|
|
|
|
|
|
Other intangible assets-net |
|
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
|
|
|
|
|
|
|
Other noncurrent assets |
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
|
|
|
$ |
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
|
|
|
$ |
|
|
|
Accrued liabilities |
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
|
|
|
|
|
|
|
Long-term debt (Note 14) |
|
|
|
|
|
|
|
|
|
Deferred compensation liabilities |
|
|
|
|
|
|
|
|
|
Pension and other postretirement benefits plan liabilities |
|
|
|
|
|
|
|
|
|
Noncurrent lease liabilities |
|
|
|
|
|
|
|
|
|
Other noncurrent liabilities |
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
|
|
|
|
|
|
|
Commitments and Contingencies (Note 15) |
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
|
|
|
Preferred stock, $ |
|
|
|
|
|
|
|
|
|
Authorized: |
|
|
|
|
|
|
|
|
|
Common stock, $ |
|
|
|
|
|
|
|
|
|
Authorized: |
|
|
|
|
|
|
|
|
|
Issued: |
|
|
|
|
|
|
|
|
|
Treasury stock, at cost: |
|
|
( |
) |
|
|
( |
) |
|
Additional paid-in-capital |
|
|
|
|
|
|
|
|
|
Retained earnings |
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
|
Total equity |
|
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
$ |
|
|
|
$ |
|
|
See Notes to Unaudited Condensed Consolidated Financial Statements
5
Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2019 and 2018
(in millions)
(UNAUDITED)
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2019 |
|
|
2018 |
|
||
|
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
Net (loss) earnings |
$ |
( |
) |
|
$ |
|
|
|
Adjustments to reconcile net (loss) earnings to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
Provision for doubtful accounts receivable |
|
|
|
|
|
|
|
|
Share-based compensation |
|
|
|
|
|
|
|
|
Deferred income taxes |
|
( |
) |
|
|
|
|
|
Net pension plan income |
|
( |
) |
|
|
( |
) |
|
Other |
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities - net of acquisitions: |
|
|
|
|
|
|
|
|
Accounts receivable - net |
|
( |
) |
|
|
( |
) |
|
Inventories |
|
( |
) |
|
|
( |
) |
|
Prepaid expenses and other current assets |
|
( |
) |
|
|
( |
) |
|
Accounts payable |
|
|
|
|
|
|
|
|
Income taxes payable and receivable |
|
( |
) |
|
|
|
|
|
Accrued liabilities and other |
|
( |
) |
|
|
( |
) |
|
Pension and other postretirement benefits plan contributions |
|
( |
) |
|
|
( |
) |
|
Net cash used in operating activities |
|
( |
) |
|
|
( |
) |
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Capital expenditures |
|
( |
) |
|
|
( |
) |
|
Acquisition of business, net of cash acquired |
|
( |
) |
|
|
|
|
|
Other investing activities |
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
( |
) |
|
|
( |
) |
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Revolving facility borrowings |
|
|
|
|
|
|
|
|
Payments on revolving facility borrowings |
|
( |
|
|
|
( |
) |
|
Proceeds from the issuance of common stock |
|
|
|
|
|
|
|
|
Treasury share repurchases |
|
( |
) |
|
|
( |
) |
|
Debt issuance costs |
|
( |
) |
|
|
|
|
|
Net cash provided by financing activities |
|
|
|
|
|
|
|
|
Effect of exchange rate on cash and cash equivalents |
|
|
|
|
|
( |
) |
|
Net decrease in cash and cash equivalents |
|
( |
) |
|
|
( |
) |
|
Cash and cash equivalents at beginning of year |
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information |
|
|
|
|
|
|
|
|
Income taxes paid |
$ |
|
|
|
$ |
|
|
|
Interest paid |
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
See Notes to Unaudited Condensed Consolidated Financial Statements
6
Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)
Condensed Consolidated Statements of Equity
For the Three Months Ended March 31, 2019 and 2018
(in millions)
(UNAUDITED)
|
|
Common Stock |
|
|
Treasury Stock |
|
|
Additional Paid-in-Capital |
|
|
Retained Earnings |
|
|
Accumulated Other Comprehensive Loss |
|
|
Total Equity |
|
||||||||||||||
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Balance at December 31, 2018 |
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
Net loss |
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
Other comprehensive income |
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of share-based awards, net of withholdings and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
Balance at March 31, 2019 |
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Treasury Stock |
|
|
Additional Paid-in-Capital |
|
|
Retained Earnings |
|
|
Accumulated Other Comprehensive Loss |
|
|
Total Equity |
|
||||||||||||||
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Balance at December 31, 2017 |
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
Net earnings |
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adoption of ASU 2014-09 |
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of share-based awards, net of withholdings and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2018 |
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
7
Donnelley Financial Solutions, Inc.
Notes to the Unaudited Condensed Consolidated Financial Statements
(in millions, except per share data, unless otherwise indicated)
Note 1. Overview and Basis of Presentation
Description of Business
Donnelley Financial Solutions, Inc. (“DFIN,” or the “Company”) is a leading global risk and compliance solutions company. The Company provides regulatory filing solutions, software-as-a-service (“SaaS”), technology-enabled services and print and distribution solutions to public and private companies, mutual funds and other regulated investment firms, to serve their regulatory and compliance needs. For corporate clients within its capital markets offerings, the Company offers technology-enabled filing solutions that allow U.S. public companies to comply with applicable U.S. Securities and Exchange Commission (“SEC”) regulations including filing agent services, digital document creation and online content management tools that support their corporate financial transactions and regulatory reporting; solutions to facilitate clients’ communications with their shareholders; and virtual data rooms and other deal management solutions. For the investment markets, including alternative investment and insurance investment companies, the Company provides technology-enabled filing solutions including cloud-based tools for creating and filing high-quality regulatory documents and solutions for investors designed to improve the speed and accuracy of their access to investment information. Throughout a company’s life cycle, the Company serves its clients’ regulatory and compliance needs. The Company’s deep industry and regulatory expertise and a commitment to exceptional service guides our clients to navigate a high-stakes and ever-changing regulatory environment.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of DFIN and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The financial data presented herein should be read in conjunction with the audited consolidated and combined financial statements and accompanying notes included in the Company’s latest Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on February 27, 2019. In the opinion of management, the financial data presented includes all adjustments necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented. Results of interim periods should not be considered indicative of the results for the full year. These unaudited condensed consolidated interim financial statements include estimates and assumptions of management that affect the amounts reported in the unaudited condensed consolidated financial statements. Actual results could differ from these estimates.
Changes in Presentation
Certain prior year amounts have been restated to conform to the Company’s current reporting unit structure. Due to the sale of the Language Solutions business in 2018, the Company made changes to the reporting units within the U.S. segment. The former Language Solutions and other reporting unit has been renamed “Language Solutions.” Certain results previously included within the former Language Solutions and other reporting unit are now included within the Investment Markets reporting unit.
Note 2. Revenue
Revenue Recognition
The Company manages highly-customized data and materials, such as Exchange Act, Securities Act and Investment Company Act filings with the SEC on behalf of its customers, manages virtual data rooms and performs XBRL and related services. Clients are provided with EDGAR filing services, XBRL compliance services and translation, editing, interpreting, proof-reading and multilingual typesetting services, among others. The Company’s SaaS offerings include the Venue Virtual Data Room (“Venue”), the FundSuiteArc software platform, ActiveDisclosure and data and analytics, among others.
Substantially all of the Company’s revenue is derived from contracts with an initial expected duration of one year or less. Generally, customer payment is due within
8
Donnelley Financial Solutions, Inc.
Notes to the Unaudited Condensed Consolidated Financial Statements
(in millions, except per share data, unless otherwise indicated)
Revenue is recognized upon transfer of control of promised services or products to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services or products. The Company’s arrangements with customers often include promises to transfer multiple services or products to a customer. Determining whether services and products are considered distinct performance obligations that should be accounted for separately requires significant judgment. Certain customer arrangements have multiple performance obligations as certain promises are both capable of being distinct and are distinct within the context of the contract. Other customer arrangements have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts, and therefore are not distinct.
Revenue for the Company’s services and products is recognized either over time or at a point in time, as outlined below.
Over time
The Company recognizes revenue for certain services over time.
|
|
• |
The Company’s SaaS solutions, including Venue, the FundSuiteArc software platform, ActiveDisclosure, data and analytics and others, are generally provided on a subscription basis and allow customers access to use the products over the contract period. As a result, revenue for SaaS solutions is recognized ratably over time as the customer receives the benefit throughout the contract period. The timing of invoicing varies, however the customer may be invoiced before the end of the contract period, resulting in a deferred revenue balance. |
|
|
• |
Revenue for warehousing services is recognized ratably over time as the customer receives the benefit throughout the storage period. |
Point in time
All remaining revenue arrangements are generally recognized at a point in time and are primarily invoiced upon completion of all services or upon shipment to the customer.
|
|
• |
Certain of these arrangements include multiple performance obligations and revenue is recognized upon completion of each performance obligation, such as when a document is filed with a regulatory agency and upon completion of printing the related document. For arrangements with multiple performance obligations, the transaction price is allocated to the separate performance obligations. The Company provides customer specific solutions and as such, observable standalone selling price is rarely available. Standalone selling price is more frequently determined using an estimate of the standalone selling price of each distinct service or product, taking into consideration historical selling price by customer for each distinct service or product. These estimates may vary from the final amounts invoiced to the customer and are adjusted upon completion of all performance obligations. Customers may be invoiced subsequent to the recognition of revenue for completed performance obligations, resulting in contract asset balances. |
|
|
• |
Revenue for arrangements which include assisting customers in completing regulatory filings for transactions, such as mergers and acquisitions or other public capital market transactions, is recognized upon completion of all promises, including the services performed and printing of the related document, if applicable. |
|
|
• |
Revenue for arrangements without a regulatory filing generally have a single performance obligation, as the services and products provided are not distinct within the context of the contract, and are recognized upon completion of the services performed or upon completion of printing of the related product. |
|
|
• |
Warehousing, fulfillment services and shipping and handling are each separate performance obligations. As a result, when the Company provides warehousing and future fulfillment services, revenue for the composition services performed and printing of the product is recognized upon completion of the performance obligation(s), as control of the inventory has transferred to the customer and the inventory is being stored at the customer’s request. |
Because substantially all of the Company’s products are customized, product returns are not significant; however, the Company accrues for the estimated amount of customer credits at the time of sale.
The Company records deferred revenue when amounts are invoiced but the revenue recognition criteria are not yet met. Such revenue is recognized when all criteria are subsequently met.
9
Donnelley Financial Solutions, Inc.
Notes to the Unaudited Condensed Consolidated Financial Statements
(in millions, except per share data, unless otherwise indicated)
Certain revenues earned by the Company require significant judgment to determine if revenue should be recorded gross, as a principal, or net of related costs, as an agent. Billings for shipping and handling costs as well as certain postage costs, and out-of-pocket expenses are recorded gross. Revenue is not recognized for customer-supplied postage. The Company’s printing operations process paper that may be supplied directly by customers or may be purchased by the Company from third parties and sold to customers. Revenue is not recognized for customer-supplied paper, however revenues for Company-supplied paper are recognized on a gross basis. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to authorities.
Disaggregation of revenue
The following tables disaggregate revenue by reporting unit and timing of revenue recognition for the three months ended March 31, 2019 and 2018:
|
|
Three Months Ended March 31, 2019 |
|
|||||||||
|
|
Point in time |
|
|
Over time |
|
|
Total |
|
|||
|
U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
Capital Markets |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Investment Markets |
|
|
|
|
|
|
|
|
|
|
|
|
Total U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
International |
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
Three Months Ended March 31, 2018 |
|
|||||||||
|
|
Point in time |
|
|
Over time |
|
|
Total |
|
|||
|
U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
Capital Markets |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Investment Markets* |
|
|
|
|
|
|
|
|
|
|
|
|
Language Solutions* |
|
|
|
|
|
|
|
|
|
|
|
|
Total U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
International |
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
* Certain prior year amounts were restated to conform to the Company’s current reporting unit structure.
Contract Balances
Contract assets represent revenue recognized for performance obligations completed before an unconditional right to payment exists, and therefore invoicing has not yet occurred. Contract assets were $
Contract liabilities consist of deferred revenue and progress billings which are included in accrued liabilities on the condensed consolidated balance sheet. Changes in contract liabilities for the three months ended March 31, 2019 and 2018, respectively, were as follows:
|
Balance at January 1, 2019 |
$ |
|
|
|
Deferral of revenue |
|
|
|
|
Revenue recognized |
|
( |
) |
|
Balance at March 31, 2019 |
$ |
|
|
10
Donnelley Financial Solutions, Inc.
Notes to the Unaudited Condensed Consolidated Financial Statements
(in millions, except per share data, unless otherwise indicated)
|
Balance at January 1, 2018 |
$ |
|
|
|
Deferral of revenue |
|
|
|
|
Revenue recognized |
|
( |
) |
|
Balance at March 31, 2018 |
$ |
|
|
Note 3. Acquisitions and Dispositions
Acquisition
On December 18, 2018, the Company acquired eBrevia, a leading provider of artificial intelligence-based data extraction and contract analytics software solutions. The eBrevia technology provides leading enterprise contract review and analysis solutions, leveraging machine learning to produce faster and more accurate results. eBrevia's software, which extracts and summarizes key legal provisions and other information, can be used in due diligence, contract management, lease abstraction and document drafting. The acquisition enhances the Company’s Venue Deal Solutions offerings to provide clients with secure data aggregation, due diligence, compliance and risk management solutions. The Company previously held a
During the three months ended March 31, 2019, there were
The eBrevia acquisition was recorded by allocating the cost of the acquisition to the assets acquired, including other intangible assets, based on their estimated fair values at the acquisition date. The excess of the cost of the acquisition over the net amounts assigned to the fair value of the assets acquired was recorded as goodwill.
There is
11
Donnelley Financial Solutions, Inc.
Notes to the Unaudited Condensed Consolidated Financial Statements
(in millions, except per share data, unless otherwise indicated)
The purchase price allocation for eBrevia is preliminary as the Company is still in the process of obtaining data to finalize the estimated fair values of certain deferred tax account balances. The final purchase price allocation may differ from what is currently reflected in the consolidated financial statements
|
Accounts receivable |
$ |
|
|
|
Other intangible assets |
|
|
|
|
Software |
|
|
|
|
Goodwill |
|
|
|
|
Accounts payable and accrued liabilities |
|
( |
) |
|
Deferred taxes-net |
|
( |
) |
|
Total purchase price-net of cash acquired |
|
|
|
|
Less: fair value of the Company's previously held investment in eBrevia |
|
( |
) |
|
Less: fair value of contingent consideration |
|
( |
) |
|
Less: payable for initial consideration |
|
( |
) |
|
Less: amounts held in escrow and liabilities assumed |
|
( |
) |
|
Net cash paid |
$ |
|
|
Disposition
On July 22, 2018, the Company sold its Language Solutions business, which helped companies adapt their business content into different languages for specific countries, markets and regions, for net proceeds of $
Note 4. Inventories
The components of the Company’s inventories, net of excess and obsolescence reserves for raw materials, at March 31, 2019 and December 31, 2018 were as follows:
|
|
March 31, 2019 |
|
|
December 31, 2018 |
|
||
|
Raw materials and manufacturing supplies |
$ |
|
|
|
$ |
|
|
|
Work in process |
|
|
|
|
|
|
|
|
Total |
$ |
|
|
|
$ |
|
|
Note 5. Property, Plant and Equipment <