Concentrations of Risk

3 Months Ended

Mar. 31, 2016

Risks and Uncertainties [Abstract]

Concentration of Risk

Concentrations of Risk

Our Paper segment has had a long-standing commercial and contractual relationship with Office Depot, our largest customer in the paper business. Office Depot agreed to be acquired by Staples, Inc. on February 4, 2015. The pending acquisition by Staples is subject to the satisfaction of certain conditions, including regulatory approval. This relationship exposes us to a significant concentration of business and financial risk. Our sales to Office Depot represent approximately 9% and 10% of our total Company sales revenue, for the three months ended March 31, 2016 and 2015, respectively, and approximately 44% and 46% of our Paper segment sales revenue for both those periods, respectively. At March 31, 2016 and December 31, 2015 we had $33.9 million and $39.5 million of accounts receivable due from Office Depot, which represents 5% and 6% of our total Company accounts receivable, respectively.

Our agreement with Office Depot will continue to remain in effect after a merger or acquisition as to the office paper requirements of the legacy Office Depot business. However, we cannot predict how any merger or acquisition will affect the financial condition of the ultimate entity, the paper requirements of the legacy Office Depot business, the purchasing decisions of the ultimate entity or the effects on pricing or competition for office papers. In 2015, sales to Office Depot represented 45% of our Paper segment sales. If these sales are reduced, whether as a result of the future acquisition of Office Depot by Staples or otherwise, we would need to find new customers. We may not be able to fully replace any lost sales, and any new sales may be at lower prices or higher costs. Any significant deterioration in the financial condition of the ultimate entity affecting its ability to pay or any other change that affects its willingness to purchase our products will harm our business and results of operations.