Quarterly Report (10-q)

Date : 08/01/2019 @ 8:20PM
Source : Edgar (US Regulatory)
Stock : Donnelley Financial Solutions Inc (DFIN)
Quote : 8.52  -0.67 (-7.29%) @ 9:30PM
Donnelley Financial Solu... share price Chart
After Hours
Last Trade
Last $ 8.52 ◊ 0.00 (0.00%)

Quarterly Report (10-q)

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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 June 30, 2019  

OR

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

Commission File Number 1-37728

 

Donnelley Financial Solutions, Inc.

(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 July 26, 2019, 34.3 million shares of common stock were outstanding.  

 

1


 

 

DONNELLEY FINANCIAL SOLUTIONS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2019

 

TABLE OF CONTENTS

 

Part I

FINANCIAL INFORMATION

  

Page

Item 1:

Condensed Consolidated Financial Statements (unaudited)

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2019 and 2018

  

3

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2019 and 2018

  

4

 

 

 

 

 

Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018

  

5

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018

  

6

 

 

 

 

 

Condensed Consolidated Statements of Equity for the three months ended June 30, 2019 and 2018

 

7

 

 

 

 

 

Condensed Consolidated Statements of Equity for the six months ended June 30, 2019 and 2018

  

8

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

9

 

 

 

 

Item 2:

Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

31

 

 

 

 

Item 3:

Quantitative and Qualitative Disclosure About Market Risk

 

46

 

 

 

 

Item 4:

Controls and Procedures

 

46

 

Part II

OTHER INFORMATION  

  

Page

Item 1:

Legal Proceedings

  

47

 

 

 

 

Item 1A:

Risk Factors

  

47

 

 

 

 

Item 2:

Unregistered Sales of Equity Securities and Use of Proceeds

  

47

 

 

 

 

Item 4:

Mine Safety Disclosures

 

47

 

 

 

 

Item 6:

Exhibits

  

48

 

 

 

 

Signatures

  

51

 

 

 

2


 

 

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Condensed Consolidated Statements of Operations

For the Three and Six Months Ended June 30, 2019 and 2018

(in millions, except per share data)

(UNAUDITED)

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Services net sales

$

161.2

 

 

$

187.9

 

 

$

289.1

 

 

$

347.4

 

Products net sales

 

97.7

 

 

 

102.7

 

 

 

199.4

 

 

 

198.4

 

Total net sales

 

258.9

 

 

 

290.6

 

 

 

488.5

 

 

 

545.8

 

Services cost of sales (exclusive of depreciation and amortization)

 

75.6

 

 

 

92.0

 

 

 

151.0

 

 

 

177.9

 

Products cost of sales (exclusive of depreciation and amortization)

 

73.4

 

 

 

73.6

 

 

 

151.9

 

 

 

146.3

 

Total cost of sales

 

149.0

 

 

 

165.6

 

 

 

302.9

 

 

 

324.2

 

Selling, general and administrative expenses (exclusive of depreciation and amortization)

 

57.9

 

 

 

75.1

 

 

 

112.8

 

 

 

141.2

 

Restructuring, impairment and other charges-net

 

3.8

 

 

 

2.6

 

 

 

5.9

 

 

 

3.3

 

Depreciation and amortization

 

12.0

 

 

 

11.1

 

 

 

24.1

 

 

 

21.5

 

Other operating loss

 

2.8

 

 

 

 

 

 

2.8

 

 

 

 

Income from operations

 

33.4

 

 

 

36.2

 

 

 

40.0

 

 

 

55.6

 

Interest expense-net

 

9.1

 

 

 

9.8

 

 

 

18.0

 

 

 

18.8

 

Investment and other income-net

 

(0.5

)

 

 

(0.8

)

 

 

(1.1

)

 

 

(1.6

)

Earnings before income taxes

 

24.8

 

 

 

27.2

 

 

 

23.1

 

 

 

38.4

 

Income tax expense

 

7.5

 

 

 

8.3

 

 

 

7.2

 

 

 

11.8

 

Net earnings

$

17.3

 

 

$

18.9

 

 

$

15.9

 

 

$

26.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per share (Note 10):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net earnings per share

 

0.51

 

 

 

0.56

 

 

 

0.47

 

 

 

0.79

 

Diluted net earnings per share

 

0.51

 

 

 

0.56

 

 

 

0.47

 

 

 

0.78

 

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

34.1

 

 

33.8

 

 

 

34.0

 

 

 

33.7

 

Diluted

 

34.2

 

 

 

34.0

 

 

 

34.1

 

 

33.9

 

 

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 and Six Months Ended June 30, 2019 and 2018

(in millions)

(UNAUDITED)

 

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net earnings

$

17.3

 

 

$

18.9

 

 

$

15.9

 

 

$

26.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Translation adjustments

 

0.5

 

 

 

(3.4

)

 

 

2.7

 

 

 

(2.7

)

Adjustment for net periodic pension and other postretirement benefits plan cost

 

0.3

 

 

 

0.5

 

 

 

0.7

 

 

 

1.0

 

Other comprehensive income (loss), net of tax

 

0.8

 

 

 

(2.9

)

 

 

3.4

 

 

 

(1.7

)

Comprehensive income

$

18.1

 

 

$

16.0

 

 

$

19.3

 

 

$

24.9

 

 

See Notes to Unaudited Condensed Consolidated Financial Statements

 

 

4


 

 

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Condensed Consolidated Balance Sheets

As of June 30, 2019 and December 31, 2018

(in millions, except per share data)

(UNAUDITED)

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

ASSETS

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

9.5

 

 

$

47.3

 

Receivables, less allowances for doubtful accounts of $10.7 in 2019 (2018 - $7.9)

 

 

260.7

 

 

 

172.9

 

Inventories

 

 

13.0

 

 

 

12.1

 

Prepaid expenses and other current assets

 

 

17.7

 

 

 

16.7

 

Total current assets

 

 

300.9

 

 

 

249.0

 

Property, plant and equipment-net

 

 

37.0

 

 

 

32.2

 

Right-of-use assets

 

 

84.4

 

 

 

 

Software-net

 

 

51.6

 

 

 

47.8

 

Goodwill

 

 

450.3

 

 

 

450.0

 

Other intangible assets-net

 

 

30.0

 

 

 

37.2

 

Deferred income taxes

 

 

14.3

 

 

 

9.7

 

Other noncurrent assets

 

 

40.6

 

 

 

42.8

 

Total assets

 

$

1,009.1

 

 

$

868.7

 

LIABILITIES

 

 

 

 

 

 

 

 

Accounts payable

 

$

78.0

 

 

$

72.4

 

Accrued liabilities

 

 

123.2

 

 

 

126.0

 

Total current liabilities

 

 

201.2

 

 

 

198.4

 

Long-term debt (Note 13)

 

 

419.1

 

 

 

362.7

 

Deferred compensation liabilities

 

 

19.9

 

 

 

19.5

 

Pension and other postretirement benefits plan liabilities

 

 

49.0

 

 

 

51.3

 

Noncurrent lease liabilities

 

 

62.8

 

 

 

 

Other noncurrent liabilities

 

 

8.0

 

 

 

10.8

 

Total liabilities

 

 

760.0

 

 

 

642.7

 

Commitments and Contingencies (Note 14)

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value

 

 

 

 

 

 

 

 

Authorized: 1.0 shares; Issued: None

 

 

 

 

 

 

Common stock, $0.01 par value

 

 

 

 

 

 

 

 

Authorized: 65.0 shares;

 

 

 

 

 

 

 

 

Issued: 34.5 shares in 2019 (2018 - 34.2 shares)

 

 

0.3

 

 

 

0.3

 

Treasury stock, at cost: 0.2 shares in 2019 (2018 - 0.1 shares)

 

 

(3.7

)

 

 

(2.4

)

Additional paid-in-capital

 

 

221.6

 

 

 

216.5

 

Retained earnings

 

 

110.2

 

 

 

94.3

 

Accumulated other comprehensive loss

 

 

(79.3

)

 

 

(82.7

)

Total equity

 

 

249.1

 

 

 

226.0

 

Total liabilities and equity

 

$

1,009.1

 

 

$

868.7

 

 

See Notes to Unaudited Condensed Consolidated Financial Statements

 

 

5


 

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2019 and 2018

(in millions)

(UNAUDITED)

 

 

Six Months Ended

 

 

June 30,

 

 

2019

 

 

2018

 

OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net earnings

$

15.9

 

 

$

26.6

 

Adjustments to reconcile net earnings to net cash used in operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

24.1

 

 

 

21.5

 

Provision for doubtful accounts receivable

 

3.2

 

 

 

3.5

 

Share-based compensation

 

5.1

 

 

 

5.1

 

Deferred income taxes

 

(4.8

)

 

 

1.7

 

Net pension plan income

 

(1.0

)

 

 

(1.6

)

Other

 

18.3

 

 

 

1.7

 

Changes in operating assets and liabilities - net of acquisitions:

 

 

 

 

 

 

 

Accounts receivable – net

 

(90.7

)

 

 

(102.1

)

Inventories

 

(0.9

)

 

 

(4.8

)

Prepaid expenses and other current assets

 

(0.9

)

 

 

0.8

 

Accounts payable

 

6.1

 

 

 

13.3

 

Income taxes payable and receivable

 

(5.2

)

 

 

3.9

 

Accrued liabilities and other

 

(34.1

)

 

 

(18.3

)

Pension and other postretirement benefits plan contributions

 

(0.4

)

 

 

(1.5

)

Net cash used in operating activities

 

(65.3

)

 

 

(50.2

)

INVESTING ACTIVITIES

 

 

 

 

 

 

 

Capital expenditures

 

(26.2

)

 

 

(15.6

)

Acquisition of business, net of cash acquired

 

(2.6

)

 

 

 

Other investing activities

 

0.1

 

 

 

 

Net cash used in investing activities

 

(28.7

)

 

 

(15.6

)

FINANCING ACTIVITIES

 

 

 

 

 

 

 

Revolving facility borrowings

 

337.0

 

 

 

206.5

 

Payments on revolving facility borrowings

 

(281.5

)

 

 

(179.5

)

Proceeds from the issuance of common stock

 

 

 

 

1.2

 

Treasury share repurchases

 

(1.3

)

 

 

(0.8

)

Debt issuance costs

 

(0.2

)

 

 

 

Net cash provided by financing activities

 

54.0

 

 

 

27.4

 

Effect of exchange rate on cash and cash equivalents

 

2.2

 

 

 

(1.8

)

Net decrease in cash and cash equivalents

 

(37.8

)

 

 

(40.2

)

Cash and cash equivalents at beginning of year

 

47.3

 

 

 

52.0

 

Cash and cash equivalents at end of period

$

9.5

 

 

$

11.8

 

 

 

 

 

 

 

 

 

Supplemental cash flow information

 

 

 

 

 

 

 

Income taxes paid

$

17.6

 

 

$

6.1

 

Interest paid

$

16.5

 

 

$

17.8

 

 

 

 

 

 

 

 

 

 

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 June 30, 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 March 31, 2019

 

34.4

 

 

$

0.3

 

 

 

0.2

 

 

$

(3.6

)

 

$

218.0

 

 

$

92.9

 

 

$

(80.1

)

 

$

227.5

 

Net earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17.3

 

 

 

 

 

 

17.3

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.8

 

 

 

0.8

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

3.6

 

 

 

 

 

 

 

 

 

3.6

 

Issuance of share-based awards, net of withholdings and other

 

0.1

 

 

 

 

 

 

 

 

 

(0.1)

 

 

 

 

 

 

 

 

 

 

 

 

(0.1)

 

Balance at June 30, 2019

 

34.5

 

 

$

0.3

 

 

 

0.2

 

 

$

(3.7

)

 

$

221.6

 

 

$

110.2

 

 

$

(79.3

)

 

$

249.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Treasury Stock

 

 

Additional

Paid-in-

Capital

 

 

Retained

Earnings

 

 

Accumulated

Other

Comprehensive

Loss

 

 

Total

Equity

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2018

 

34.0

 

 

$

0.3

 

 

 

0.1

 

 

$

(1.7

)

 

$

208.9

 

 

$

17.5

 

 

$

(63.4

)

 

$

161.6

 

Net earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18.9

 

 

 

 

 

 

18.9

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2.9

)

 

 

(2.9

)

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

3.3

 

 

 

 

 

 

 

 

 

3.3

 

Issuance of share-based awards, net of withholdings and other

 

0.1

 

 

 

 

 

 

 

 

 

 

 

 

(0.1

)

 

 

 

 

 

 

 

 

(0.1

)

Balance at June 30, 2018

 

34.1

 

 

$

0.3

 

 

 

0.1

 

 

$

(1.7

)

 

$

212.1

 

 

$

36.4

 

 

$

(66.3

)

 

$

180.8

 

 

 

 

 

7


 

Donnelley Financial Solutions, Inc. and Subsidiaries (“DFIN”)

Condensed Consolidated Statements of Equity

For the Six Months Ended June 30, 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

 

34.2

 

 

$

0.3

 

 

 

0.1

 

 

$

(2.4

)

 

$

216.5

 

 

$

94.3

 

 

$

(82.7

)

 

$

226.0

 

Net earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15.9

 

 

 

 

 

 

15.9

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.4

 

 

 

3.4

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

5.1

 

 

 

 

 

 

 

 

 

5.1

 

Issuance of share-based awards, net of withholdings and other

 

0.3

 

 

 

 

 

 

0.1

 

 

 

(1.3

)

 

 

 

 

 

 

 

 

 

 

 

(1.3

)

Balance at June 30, 2019

 

34.5

 

 

$

0.3

 

 

 

0.2

 

 

$

(3.7

)

 

$

221.6

 

 

$

110.2

 

 

$

(79.3

)

 

$

249.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

33.8

 

 

$

0.3

 

 

 

 

 

$

(0.9

)

 

$

205.7

 

 

$

8.9

 

 

$

(64.6

)

 

$

149.4

 

Net earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26.6

 

 

 

 

 

 

26.6

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1.7

)

 

 

(1.7

)

Adoption of ASU 2014-09

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.9

 

 

 

 

 

 

0.9

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

5.1

 

 

 

 

 

 

 

 

 

5.1

 

Issuance of share-based awards, net of withholdings and other

 

0.3

 

 

 

 

 

 

0.1

 

 

 

(0.8

)

 

 

1.3

 

 

 

 

 

 

 

 

 

0.5

 

Balance at June 30, 2018

 

34.1

 

 

$

0.3

 

 

 

0.1

 

 

$

(1.7

)

 

$

212.1

 

 

$

36.4

 

 

$

(66.3

)

 

$

180.8

 

 

 

 

8


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 and deal solutions via its 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 ten days upon invoicing.

9


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 prom