VERITIV CORP MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

This Management's Discussion and Analysis of Financial Condition and Results of
Operations is intended to provide a reader of our financial statements with a
narrative from the perspective of our management regarding our financial
condition and results of operations, liquidity and certain material events and
uncertainties known to management that are reasonably likely to cause reported
financial information not to be necessarily indicative of our future financial
condition or results of operations. This discussion should be read in
conjunction with the consolidated financial statements and accompanying notes
included in Item 8 of this report.

Executive Overview

The COVID-19 Pandemic


The COVID-19 pandemic has had widespread, rapidly evolving and unpredictable
impacts on global societies, economies, financial markets and business
practices, and created significant uncertainty regarding potential impacts to
Veritiv ("Veritiv" or the "Company"). Federal and state governments have
implemented measures in an effort to contain the virus, including physical
distancing recommendations, travel restrictions, border closures, limitations on
public gatherings, work-from-home recommendations, supply chain logistical
changes and closure of non-essential businesses, some of which have since been
eased. Although the Company has not experienced any closures of its distribution
centers, Veritiv serves customers across a broad range of industry sectors and
geographies, with varying COVID-19 impacts. Primarily beginning in April 2020,
the COVID-19 pandemic began having a negative impact on the Company's financial
results, including decreased sales activity. The Company has seen economic
improvements during 2021 in many of the markets where it operates as global
vaccine distribution efforts continue. Sales activity during 2021 exceeded 2020
levels for three out of four of the Company's reportable segments, including the
Packaging segment, which exceeded pre-COVID-19 levels.

Veritiv's first priority remains the health and safety of its employees,
customers and their families. The Company has taken steps to limit exposure and
enhance the safety of its facilities for employees working to continue to supply
vital products to its customers. In response to the pandemic, Veritiv initiated
its Corporate Incident Response Team and initiated enhanced health and safety
measures across its facilities. The Company modified practices at its
distribution centers and offices to adhere to guidance from the United States
("U.S") Centers for Disease Control and Prevention and local health and
governmental authorities with respect to social distancing, enhanced cleaning
protocols and usage of personal protective equipment, where appropriate. In
addition, the Company implemented global travel restrictions and work-from-home
policies for employees who have the ability to work remotely.

In April 2020, Veritiv took several actions to help mitigate the effects of the
decreased sales activity and improve liquidity. These actions included (i)
temporarily reducing salaries for senior leaders ranging from 10% to 50% through
June 2020, (ii) temporarily reducing annual cash retainers for independent
directors by 50% through June 2020, (iii) placing approximately 15% of its
salaried workforce on temporary furloughs through mid-July 2020, (iv) adjusting
its supply chain operations staff depending on volume at specific locations, (v)
suspending its share repurchase program, which was resumed in March 2021 and
(vi) reducing discretionary spending including planned capital expenditures. In
July 2020, Veritiv took additional actions to enhance liquidity in response to
the impacts of the COVID-19 pandemic, including implementing cost-savings and
cash preservation initiatives as described under the heading "2020 Restructuring
Plan" below.

Veritiv's management expects that cash provided by operating activities and
available capacity under the Asset-Based Lending Facility (the "ABL Facility")
will provide sufficient funds to operate the business and meet other liquidity
needs. As of December 31, 2021, Veritiv had cash and cash equivalents of $49.3
million and also had $557.2 million in available additional borrowing capacity
under the ABL Facility. In May 2021, the Company amended its ABL Facility to,
among other things, extend the maturity date to May 2026.

The current circumstances are dynamic and the impacts of the COVID-19 pandemic
on the Company's business operations, including the duration and impact on
overall customer demand, cannot be reasonably estimated at this time. The extent
to which the COVID-19 pandemic impacts the Company's business, results of
operations, access to sources of liquidity and financial condition will depend
on future developments. These developments, which are uncertain and difficult to
predict, include, but are not limited to, the duration, spread and severity of
the COVID-19 pandemic, the effects of the COVID-19 pandemic on the Company's
employees, customers, suppliers and vendors, measures adopted or recommended by
local and federal governments or health authorities in response to the pandemic,
the availability, adoption and effectiveness of vaccines
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and to what extent normal economic and operating conditions can resume and be
sustained. Even after the COVID-19 pandemic has subsided, the Company may
experience an impact to its business as a result of any economic recession,
downturn or volatility or long-term changes in customer behavior.

See Part I, Item 1A, Risk Factors in this report, for additional information on
risks related to the COVID-19 pandemic.

Other Recent Developments

2022 Share Repurchase Program


On March 1, 2022, Veritiv announced that its Board of Directors authorized a
$200 million share repurchase program (the "2022 Share Repurchase Program"). The
2022 Share Repurchase Program authorizes the Company, from time to time, to
purchase shares of its common stock through open market transactions, privately
negotiated transactions, forward, derivative, or accelerated repurchase
transactions, tender offers or otherwise, including Rule 10b5-1 trading plans,
in accordance with all applicable securities laws and regulations. The timing
and method of any repurchases, which will depend on a variety of market factors,
including market conditions, are subject to results of operations, financial
conditions, cash requirements and other factors. This authorization may be
suspended, terminated, increased or decreased by the Board of Directors at any
time.

2021 Share Repurchase Program

On March 3, 2021, Veritiv announced that its Board of Directors authorized a $50
million share repurchase program (the "2021 Share Repurchase Program"). On May
24, 2021, the Company announced that its Board of Directors increased the 2021
Share Repurchase Program authorization to a total of $100 million. The 2021
Share Repurchase Program replaced the $25 million share repurchase authorization
previously approved by Veritiv's Board of Directors in March 2020 (the "2020
Share Repurchase Program"). The Company completed its repurchases under the 2021
Share Repurchase Program with repurchases totaling nearly $100 million, the
authorized repurchase limit, representing approximately 11% of the shares that
were outstanding at December 31, 2020.

2020 Restructuring Plan


During the second quarter of 2020, the Company initiated a restructuring plan in
response to the impact of the COVID-19 pandemic on its business operations and
the ongoing secular changes in its Print and Publishing segments. During the
fourth quarter of 2020, the Company expanded the initial plan to further align
its cost structure with ongoing business needs as the Company executes on its
stated corporate strategy. The initial and expansion activities are collectively
referred to as the "2020 Restructuring Plan." The 2020 Restructuring Plan
includes (i) a reduction of the Company's U.S. salaried workforce by
approximately 15% across all business segments and corporate functions, (ii) the
closure of certain warehouse facilities and retail stores, (iii) adjustments to
various compensation plans, (iv) repositioning of inventory to expand the
Company's service radius and (v) other actions. The Company currently estimates
it will incur total restructuring charges of between $70 million and $76 million
in connection with the 2020 Restructuring Plan. Initial charges were incurred
and recorded in June 2020. The 2020 Restructuring Plan was substantially
complete as of December 31, 2021 with remaining charges to be incurred through
the end of 2022. See   Note 4   of the Notes to Consolidated Financial
Statements for information related to the Company's restructuring efforts.

Company Strategy


In 2021, Veritiv continued to execute against its long-term strategy to be the
leading provider of business-to-business packaging products and services, as
well as paper and facility solutions products and services. The Company
continues to invest in organic packaging growth including selling and supply
chain capabilities and to pursue inorganic packaging growth opportunities. The
Company also continues to evaluate alternatives for non-core components of our
business including potential divestitures.

Business Overview


Veritiv is a leading North American business-to-business full-service provider
of value-added packaging products and services, as well as facility solutions,
print and publishing products and services. Additionally, Veritiv provides
logistics and supply chain management solutions to its customers. Veritiv was
established on July 1, 2014 following the merger of International Paper
Company's xpedx distribution solutions business and UWW Holdings, Inc., the
parent company of
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Unisource Worldwide, Inc. On August 31, 2017, Veritiv completed its acquisition
of 100% of the equity interest in various All American Containers entities
(collectively, “AAC”). The Company operates from 115 distribution centers
primarily throughout the U.S., Canada and Mexico.


Veritiv's business is organized under four reportable segments: Packaging,
Facility Solutions, Print, and Publishing and Print Management ("Publishing").
This segment structure is consistent with the way the Chief Operating Decision
Maker, who is Veritiv's Chief Executive Officer, makes operating decisions and
manages the growth and profitability of the Company's business. The Company also
has a Corporate & Other category which includes certain assets and costs not
primarily attributable to any of the reportable segments, as well as the Veritiv
logistics solutions business which provides transportation and warehousing
solutions. The following summary describes the products and services offered in
each of the reportable segments:

•Packaging - Veritiv is a global provider of packaging products, services and
solutions. The Packaging segment provides custom and standard packaging
solutions for customers based in North America and in key global markets. This
segment services its customers with a full spectrum of packaging product
materials within flexible, corrugated and fiber, ancillary packaging, rigid and
equipment categories. The business is strategically focused on higher growth
industry sectors including manufacturing, food and beverage, wholesale and
retail, healthcare and transportation, as well as specialty sectors based on
industry and product expertise. Veritiv's packaging professionals create
customer value through supply chain solutions, structural and graphic packaging
design and engineering, automation, workflow and equipment services and kitting.

•Facility Solutions - Veritiv is a global provider of hygiene and facility
solutions products and services. The Facility Solutions segment sources and
sells cleaning, break-room and other supplies in product categories that include
towels and tissues, food service, personal protective equipment, cleaning
chemicals and skincare, primarily in North America. Through this segment Veritiv
manages a world class network of leading suppliers in most facilities solutions
categories. Additionally, the Company offers total cost of ownership solutions
with re-merchandising, budgeting and compliance reporting and inventory
management. Its sales force is trained to bring leading vertical expertise to
the major North American geographies.

•Print - The Print segment sells and distributes commercial printing, writing,
copying, digital, specialty products and graphics consumables primarily in North
America. Veritiv's broad geographic platform of operations coupled with the
breadth of paper and graphics products, including exclusive private brand
offerings, provides a foundation to service national, regional and local
customers across North America.

•Publishing - The Publishing segment sells and distributes coated and uncoated
commercial printing papers to publishers, retailers, converters, printers and
specialty businesses for use in magazines, catalogs, books, directories, gaming,
couponing, retail inserts and direct mail primarily in the U.S. This segment
also provides print management, procurement and supply chain management
solutions to simplify paper and print procurement processes for its customers.

Results of Operations, Including Business Segments


The following discussion compares the consolidated operating results of Veritiv
for the years ended December 31, 2021 and 2020. For the discussion of results
for 2020 compared to 2019, refer to Part II, Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations of Veritiv's Annual
Report on Form 10-K for the year ended December 31, 2020, which was filed with
the SEC on March 3, 2021.
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                                                     Year Ended December 31,                 2021 vs. 2020
                                                                                                                            Increase (Decrease)
(in millions)                                             2021                   2020                                         $             %
Net sales                                            $   6,850.5             $ 6,345.6                                  $     504.9          8.0  %

Cost of products sold (exclusive of depreciation and
amortization shown separately below)

                     5,417.9               5,040.2                                        377.7          7.5  %
Distribution expenses                                      419.3                 429.8                                        (10.5)        (2.4) %
Selling and administrative expenses                        732.7                 717.9                                         14.8          2.1  %
Depreciation and amortization                               55.2                  57.7                                         (2.5)        (4.3) %

Restructuring charges, net                                  15.4                  52.2                                        (36.8)       (70.5) %
Operating income (loss)                                    210.0                  47.8                                        162.2        339.3  %
Interest expense, net                                       17.2                  25.1                                         (7.9)       (31.5) %
Other (income) expense, net                                 (4.7)                (20.3)                                        15.6         76.8  %
Income (loss) before income taxes                          197.5                  43.0                                        154.5        359.3  %
Income tax expense (benefit)                                52.9                   8.8                                         44.1        501.1  %

Net income (loss)                                    $     144.6             $    34.2                                  $     110.4        322.8  %




Net Sales

Net sales increased by $504.9 million, or 8.0%. The Packaging segment's net
sales were responsible for approximately 88% of the total increase. Net sales
increased in all reportable segments, except Facility Solutions. Net sales for
the Facility Solutions segment declined by $28.3 million. Net sales in 2021 were
negatively impacted by the COVID-19 pandemic while inflationary market price
increases across the Company's product portfolio continued throughout 2021. To
the extent feasible, the Company has adjusted its prices to reflect the impact
of inflation on the cost of purchased materials and services. Also, despite
constraints in the broader supply chain, the Company was able to mitigate some
of the impact to its customers through leveraging its portfolio of suppliers and
its North American supply chain network. Management expects higher market prices
and marketplace supply chain challenges to continue through at least the first
half of 2022. See the "Segment Results" section for additional discussion.

Cost of Products Sold (exclusive of depreciation and amortization shown
separately below)


Cost of products sold increased by $377.7 million, or 7.5%, primarily due to
higher net sales as previously discussed. See the "Segment Results" section for
additional discussion. Cost of products sold increased at a slower rate than net
sales due to improvements in pricing, as well as changes in both segment and
customer mix.

Distribution Expenses

Distribution expenses decreased by $10.5 million, or 2.4%. The decrease was
primarily attributable to (i) an $11.7 million decrease in facility and
equipment rent expense, (ii) a $7.1 million multi-employer pension plan
withdrawal charge in the first quarter of 2020 that did not repeat in 2021 and
(iii) a $6.4 million decrease in wages and temporary employee expenses,
partially offset by a $17.0 million increase in freight and logistics expense.
The decrease in facility and equipment rent expense was primarily driven by
consolidation of the Company's facilities. The decrease in wages and temporary
employee expenses was primarily driven by actions taken by the Company in
response to the COVID-19 pandemic, including lowering headcount across the
Company. The increase in freight and logistics expense was primarily driven by
an increase in third-party freight and higher diesel fuel and carrier prices.

Selling and Administrative Expenses


Selling and administrative expenses increased by $14.8 million, or 2.1%. The
increase was primarily due to (i) a $12.3 million increase in personnel
expenses, (ii) a $4.8 million increase in professional fees expense, (iii) $3.7
million in lower net gains from the sale of a business and facilities as
compared to the prior year period and (iv) a $1.5 million increase in marketing
and communications expense, partially offset by a $7.8 million decrease in bad
debt expense. The increase in personnel expenses was primarily driven by (i)
higher wages, (ii) higher incentive compensation expenses and (iii) an increase
in travel
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and entertainment expenses, partially offset by a decrease in commission
expenses due to a change in the sales force compensation plans. Higher wages
included the reinstatement of annual performance-related salary increases and
the Company's matching contributions to certain defined contribution plans. In
the fourth quarter of 2021, selling and administrative expenses were elevated
due to higher compensation expenses associated with improved company performance
and higher professional fees expense.

Depreciation and Amortization

Depreciation and amortization expense decreased by $2.5 million, or 4.3%,
primarily due to lower depreciation on information technology related assets.

Restructuring Charges, Net


Restructuring charges, net decreased by $36.8 million, or 70.5%. During the
second quarter of 2020, the Company initiated a restructuring plan in response
to the impact of the COVID-19 pandemic on its business operations and the
ongoing secular changes in its Print and Publishing segments. As of December 31,
2021, the Company has substantially completed its 2020 Restructuring Plan. See

Note 4 of the Notes to Consolidated Financial Statements for information
related to the Company’s restructuring efforts.

Interest Expense, Net


Interest expense, net decreased by $7.9 million, or 31.5%. The decrease was
primarily due to (i) lower average interest rates and (ii) a lower average
balance on the ABL Facility. The lower average balance was due to positive
operating cash flow, which was used to reduce the ABL Facility balance. Interest
expense, net in 2021 consisted of (i) $12.2 million of interest expense on the
Company's ABL Facility, (ii) $2.8 million of finance lease interest expense,
(iii) $1.5 million for amortization and write-off of deferred financing costs
related to the ABL Facility and (iv) $0.7 million in miscellaneous interest
expense. Interest expense, net in 2020 consisted of (i) $18.9 million of
interest expense on the Company's ABL Facility, (ii) $3.0 million of finance
lease interest expense, (iii) $2.1 million for amortization and write-off of
deferred financing costs related to the ABL Facility and (iv) $1.1 million in
miscellaneous interest expense. See   Note 6   of the Notes to Consolidated
Financial Statements for information related to the ABL Facility.

Other (Income) Expense, Net


Other (income) expense, net, in 2021 was income of $4.7 million. This was a net
unfavorable change of $15.6 million, as compared to 2020. In December 2020, the
Company and UWW Holdings, LLC (the "UWWH Stockholder") agreed to settle the Tax
Receivable Agreement ("TRA"), resulting in the recognition of a favorable fair
value adjustment of $20.1 million, recorded in other (income) expense in 2020,
that did not repeat in 2021. See   Note 8   and   Note 10   of the Notes to
Consolidated Financial Statements for information related to the TRA. This was
partially offset by (i) $1.5 million of lower pension expenses and (ii) a $1.0
million adjustment to a contingent consideration earnout in the prior year that
did not repeat. The remainder was driven by improvements in foreign exchange
impacts and other miscellaneous items.

Effective Tax Rate


Veritiv's effective tax rates were 26.8% and 20.5% for the years ended December
31, 2021 and 2020, respectively. The difference between the Company's effective
tax rates and the U.S. statutory tax rate of 21.0% primarily relates to state
income taxes (net of federal income tax benefit), non-deductible expenses, tax
credits, Global Intangible Low-Taxed Income, the tax impact of stock
compensation vesting and the Company's pre-tax book income (loss) by
jurisdiction. In addition, the Company's effective tax rate for the year ended
December 31, 2020 includes a $3.7 million benefit related to the tax effect of
TRA changes and a $2.4 million benefit related to the carryback of net operating
losses under the Coronavirus Aid, Relief, and Economic Security Act ("CARES
Act").

Segment Results


Adjusted EBITDA (earnings before interest, income taxes, depreciation and
amortization, restructuring charges, net, integration and acquisition expenses
and other similar charges including any severance costs, costs associated with
warehouse and office openings or closings, consolidation, and relocation and
other business optimization expenses, stock-based compensation expense, changes
in the LIFO reserve, non-restructuring asset impairment charges,
non-restructuring severance charges, non-restructuring pension charges, net,
fair value adjustments related to contingent liabilities assumed in mergers and
acquisitions and certain other adjustments) is the primary financial performance
measure Veritiv uses to manage its businesses, to monitor its results of
operations, to measure its performance against the ABL Facility and to
incentivize its management.
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Veritiv believes investors commonly use Adjusted EBITDA as a key financial
metric for valuing companies. In addition, the credit agreement governing the
ABL Facility permits the Company to exclude these and other charges in
calculating Consolidated EBITDA, as defined in the ABL Facility. This common
metric is intended to align shareholders, debt holders and management. Adjusted
EBITDA is a non-GAAP financial measure and is not an alternative to net income,
operating income or any other measure prescribed by U.S. generally accepted
accounting principles ("U.S. GAAP").

Adjusted EBITDA has limitations as an analytical tool and should not be
considered in isolation or as a substitute for analysis of Veritiv’s results as
reported under U.S. GAAP. For example, Adjusted EBITDA:


•does not reflect the Company's income tax expenses or the cash requirements to
pay its taxes; and
•although depreciation and amortization charges are non-cash charges, it does
not reflect that the assets being depreciated and amortized will often have to
be replaced in the future, and the foregoing metric does not reflect any cash
requirements for such replacements.

Other companies in the industry may calculate Adjusted EBITDA differently than
Veritiv does, limiting its usefulness as a comparative measure. Because of these
limitations, Adjusted EBITDA should not be considered as a measure of
discretionary cash available to Veritiv to invest in the growth of its business.
Veritiv compensates for these limitations by relying both on the Company's U.S.
GAAP results and by using Adjusted EBITDA for supplemental purposes.
Additionally, Adjusted EBITDA is not an alternative measure of financial
performance under U.S. GAAP and therefore should be considered in conjunction
with net income and other performance measures such as operating income or net
cash provided by operating activities and not as an alternative to such U.S.
GAAP measures.

Due to the shared nature of the distribution network to support the Packaging,
Facility Solutions and Print segments, distribution expenses are not a specific
charge to each segment but are instead allocated to each segment based primarily
on operational metrics that correlate with changes in volume. Accordingly,
distribution expenses allocated to each segment are highly interdependent on the
results of other segments. Lower volume in any segment that is not offset by a
reduction in distribution expenses can result in the other segments absorbing a
larger share of distribution expenses. Conversely, higher volume in any segment
can result in the other segments absorbing a smaller share of distribution
expenses. The impact of this at the segment level is that the changes in
distribution expense trends may not correspond with volume trends within a
particular segment.

Prior to the fourth quarter of 2021, Veritiv was unable to compute the impact of
changes in sales volume based on changes in sales of each individual product for
the Packaging and Facility Solutions segments. Rather, the Company assumed that
the margin stayed constant and estimated the volume impact based on changes in
cost of products sold as a proxy for the change in sales volume. After any other
significant sales variances were identified, the remaining sales variance was
attributed to price/mix. As a result of the Company's recent information
technology enhancements, the Company has improved its insight into products
within these segments and is now able to isolate the change in sales attributed
to volume and price separately at the item level for the majority of products
and thus it no longer needs to rely on cost of products sold as a proxy for the
changes in sales volumes. This change in calculation method is deemed to be a
more accurate and transparent way to measure volume, price and mix changes in
sales for these segments.

The Company approximates foreign currency effects by applying the foreign
currency exchange rate for the prior period to the local currency results for
the current period. We believe the elimination of the foreign currency
translation impact provides better year-to-year comparability without the
distortion of foreign currency fluctuations.


The Company believes that the decline in the demand for paper and related
products is due to the widespread use of electronic media and permanent product
substitution, more e-commerce, less print advertising, fewer catalogs and a
reduced volume of direct mail, among other factors. This trend, which may have
been accelerated by the COVID-19 pandemic, is expected to continue and will
place continued pressure on the Company's revenues and profit margins and make
it more difficult to maintain or grow Adjusted EBITDA within the Print and
Publishing segments.

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Included in the following table are net sales and Adjusted EBITDA for each of
the reportable segments and Corporate & Other:

                                                    Facility                                                  Corporate &
(in millions)                  Packaging           Solutions             Print            Publishing             Other
Year Ended December 31, 2021
Net sales                     $ 3,760.4          $     894.0          $ 1,484.2          $    596.6          $     115.3
Adjusted EBITDA                   393.5                 52.7               96.0                18.7               (218.3)
Adjusted EBITDA as a % of net
sales                              10.5  %               5.9  %             6.5  %              3.1  %                    *

Year Ended December 31, 2020
Net sales                     $ 3,316.7          $     922.3          $ 1,458.2          $    543.5          $     104.9
Adjusted EBITDA                   300.0                 41.6               33.7                12.8               (200.5)
Adjusted EBITDA as a % of net
sales                               9.0  %               4.5  %             2.3  %              2.4  %                    *


* - not meaningful

See Note 16 of the Notes to Consolidated Financial Statements for a
reconciliation of net income (loss) as reflected on the Consolidated Statements
of Operations to Adjusted EBITDA for the reportable segments.

Packaging


The table below presents selected data with respect to the Packaging segment:
                                                    Year Ended December 31,                       Increase (Decrease)
(in millions)                                       2021                 2020                       $             %
Net sales                                      $    3,760.4          $ 3,316.7                $     443.7         13.4  %
Adjusted EBITDA                                       393.5              300.0                       93.5         31.2  %
Adjusted EBITDA as a % of net sales                    10.5  %             9.0  %                                 150 bps



The table below presents the components of the net sales change compared to the
prior year:
(in millions)       Increase (Decrease)

Volume             $               90.0
Foreign currency                   22.7
Price/Mix                         331.0

Total change       $              443.7



Net sales increased $443.7 million, or 13.4%, compared to 2020. The net sales
increase was primarily attributable to higher market prices as well as increased
sales volume in all product categories and end use sectors and favorable foreign
currency impacts. Sales to consumer electronics, heavy manufacturing and
healthcare customers improved significantly compared to the prior year. Net
sales were positively impacted by strong e-commerce demand in 2021. Management
expects the strong demand and supply chain constraints to continue through at
least the first half of 2022 and the Company has invested in additional
inventory to support its customers.

Adjusted EBITDA increased $93.5 million, or 31.2%, compared to 2020. The
increase in Adjusted EBITDA was primarily attributable to cost of products sold
increasing at a slower rate than net sales and higher net sales, partially
offset by (i) a $23.8 million increase in selling and administrative expenses
and (ii) a $20.7 million increase in distribution expenses. The increase in
selling and administrative expenses was primarily driven by (i) a $15.4 million
increase in personnel expenses, (ii) a $3.1 million increase in professional
fees expense and (iii) a $2.6 million increase in bad debt expense. The increase
in personnel expenses was associated with (i) higher wages and benefits to
support the Company's Packaging growth strategy and (ii) higher incentive
compensation expenses, partially offset by a decrease in commission expenses
driven by a change in the sales force compensation plans. The increase in
distribution expenses was primarily driven by increased utilization of the
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distribution network, which is reflected in (i) a $12.6 million increase in
freight and logistics expense, (ii) a $6.0 million increase in facility expense
and (iii) a $3.2 million increase in personnel expenses.

Facility Solutions

The table below presents selected data with respect to the Facility Solutions
segment:

                                                  Year Ended December 31,            Increase (Decrease)
(in millions)                                     2021                2020                                       $           %
Net sales                                    $     894.0           $  922.3                                  $ (28.3)        (3.1) %
Adjusted EBITDA                                     52.7               41.6                                     11.1         26.7  %
Adjusted EBITDA as a % of net sales                  5.9   %            4.5  %                                               140 bps



The table below presents the components of the net sales change compared to the
prior year:
(in millions)       Increase (Decrease)

Volume             $             (109.3)
Foreign currency                   16.7
Price/Mix                          64.3

Total change       $              (28.3)



Net sales decreased $28.3 million, or 3.1%, compared to 2020. The net sales
decrease was primarily attributable to decreased sales of skincare products,
chemicals and wipers primarily driven by the negative impact on demand from the
COVID-19 pandemic which began in the prior year, partially offset by higher
market prices and favorable foreign currency impacts. Negative impacts to
customer demand have included business and school temporary closures, travel
restrictions, constraints on large venues hosting sporting, conventions and
entertainment events as well as extended work-from-home measures. However, food
service and can liners product categories had increased sales due to strong
demand, which partially offset the overall reduced customer demand in the
Facility Solutions segment. Management expects the facility solutions future
growth to follow the broader facility solutions away-from-home market in 2022.


Adjusted EBITDA increased $11.1 million, or 26.7%, compared to 2020. The
increase in Adjusted EBITDA was primarily attributable to (i) a $6.3 million
decrease in selling and administrative expenses, (ii) a $5.1 million decrease in
distribution expenses and (iii) cost of products sold decreasing at a faster
rate than net sales, partially offset by decreased net sales. The decrease in
selling and administrative expense was primarily driven by a $7.8 million
decrease in personnel expenses, including lower commission expenses, primarily
driven by a change in the sales force compensation plans. The decrease in
distribution expenses was primarily driven by a $4.2 million decrease in
personnel expenses.

Print

The table below presents selected data with respect to the Print segment:

                                                  Year Ended December 31,             Increase (Decrease)
(in millions)                                     2021                 2020                                       $           %
Net sales                                    $    1,484.2          $ 1,458.2                                  $  26.0          1.8  %
Adjusted EBITDA                                      96.0               33.7                                     62.3        184.9  %
Adjusted EBITDA as a % of net sales                   6.5  %             2.3  %                                               420 bps


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The table below presents the components of the net sales change compared to the
prior year:
(in millions)       Increase (Decrease)

Volume             $              (86.7)
Foreign currency                   11.3
Price/Mix                         101.4

Total change       $               26.0



Net sales increased $26.0 million, or 1.8%, compared to 2020. The net sales
increase was primarily attributable to higher market prices driven by strong
demand, compared to the prior year period when there was a significant negative
impact on demand due to the COVID-19 pandemic, and favorable foreign currency
impacts. The net sales increase was partially offset by lower volume primarily
due to higher net sales in 2020 that occurred prior to the COVID-19 pandemic,
resulting in a negative impact on 2021. Management expects the strong demand and
supply chain constraints to continue throughout 2022.

Adjusted EBITDA increased $62.3 million, or 184.9%, compared to 2020. The
Adjusted EBITDA increase was primarily attributable to (i) cost of products sold
increasing at a slower rate than net sales, (ii) a $17.0 million decrease in
distribution expenses, (iii) a $14.2 million decrease in selling and
administrative expenses and (iv) higher net sales. The decrease in distribution
expenses was primarily driven by (i) a $12.0 million decrease in facility and
equipment rent expense, primarily driven by consolidation of the Company's
facilities and (ii) a $4.6 million decrease in personnel expenses. The decrease
in selling and administrative expenses was primarily driven by (i) an $8.3
million decrease in personnel expenses and (ii) a $5.6 million decrease in bad
debt expense.

Publishing

The table below presents selected data with respect to the Publishing segment:

                                                  Year Ended December 31,            Increase (Decrease)
(in millions)                                     2021                2020                                       $           %
Net sales                                    $     596.6           $  543.5                                  $  53.1          9.8  %
Adjusted EBITDA                                     18.7               12.8                                      5.9         46.1  %
Adjusted EBITDA as a % of net sales                  3.1   %            2.4  %                                                70 bps



The table below presents the components of the net sales change compared to the
prior year:
(in millions)       Increase (Decrease)

Volume             $               34.9
Foreign currency                      -
Price/Mix                          18.2

Total change       $               53.1



Net sales increased $53.1 million, or 9.8%, compared to 2020. The net sales
increase was primarily attributable to an increase in demand compared to prior
year, when there was a significant negative impact on demand due to the COVID-19
pandemic, as well as higher market prices.

Adjusted EBITDA increased $5.9 million, or 46.1%, compared to 2020. The Adjusted
EBITDA increase was primarily attributable to (i) increased net sales and (ii) a
$4.3 million decrease in selling and administrative expenses, partially offset
by cost of products sold increasing at a faster rate than net sales. The
decrease in selling and administrative expenses was primarily driven by a $4.8
million decrease in bad debt expense.


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Corporate & Other

                        Year Ended December 31,              Increase (Decrease)
(in millions)              2021                2020                                    $        %
Net sales         $      115.3               $ 104.9                                $ 10.4     9.9  %
Adjusted EBITDA         (218.3)               (200.5)                                (17.8)   (8.9) %


Net sales increased $10.4 million, or 9.9%, compared to 2020. The net sales
increase was primarily attributable to an increase in the price of freight
brokerage services, partially offset by a decrease in volume.


Adjusted EBITDA decreased $17.8 million, or 8.9%, compared to 2020. The Adjusted
EBITDA decrease was primarily driven by a $21.0 million increase in selling and
administrative expenses, partially offset by increased net sales. The increase
in selling and administrative expenses was primarily driven by (i) a $16.7
million increase in incentive compensation expense driven by the Company
outperforming incentive targets and (ii) a $3.6 million increase in professional
fees expense.

Liquidity and Capital Resources

The cash requirements of the Company are provided by cash flows from operations
and borrowings under the ABL Facility. See Note 6 of the Notes to
Consolidated Financial Statements for additional information regarding the
Company’s debt position.


The following table sets forth a summary of cash flows for the years ended
December 31, 2021 and 2020. For information regarding the Company's cash flows
for 2019, refer to the "Liquidity and Capital Resources" section of Part II,
Item 7, Management's Discussion and Analysis of Financial Condition and Results
of Operations of Veritiv's Annual Report on Form 10-K for the year ended
December 31, 2020, which was filed with the SEC on March 3, 2021.
                                          Year Ended December 31,
(in millions)                                2021                2020
Net cash provided by (used for):
Operating activities                $      154.7               $ 289.2
Investing activities                        (4.3)                 (5.3)
Financing activities                      (221.4)               (202.6)



Analysis of Cash Flows

2021 Cash Flows

The Company ended 2021 with $49.3 million in cash and cash equivalents, a
decrease of $71.3 million from the prior year-end balance. During 2021 the
Company used its $75.0 million of cash held in highly-liquid investments to pay
down its long-term debt.


Net cash provided by operating activities decreased primarily as a result of an
increase in accounts receivable and inventory levels, partially offset by an
increase in accounts payable, driven by increasing sales in the current period
as compared to the pandemic driven decreases in the 2020 period. The decrease in
cash flows from operating assets and liabilities was partially offset by
improvements in operating results.

Net cash used for investing activities was a slightly lower use of cash due to
lower capital expenditures offset by lower cash proceeds received from the sale
of a business and other assets.

Net cash used for financing activities was a higher use of cash primarily due to
an increase in common stock repurchases partially offset by lower net repayments
under the Company's ABL Facility.

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2021 Special Operating Activities


In December 2021, the Company prepaid $3.3 million of restructuring costs for
other one-time compensation, which remained as a component of other current
assets on the Consolidated Balance Sheet as of December 31, 2021. Also, as of
December 31, 2021, the Company had not yet paid the $19.1 million in payroll
taxes it had incurred and deferred through December 31, 2020, related to the
CARES Act. During 2021 the Company used its $75.0 million of cash held in
highly-liquid investments to pay down its long-term debt.

2021 Special Financing Activities


Throughout 2021, the Company repurchased 1,734,810 shares of its common stock at
a cost of $100.0 million under its 2021 Share Repurchase Program. During the
second quarter of 2021, in conjunction with the amendment of the ABL Facility,
the Company incurred and paid $3.3 million in new financing fees. See   Note 6
of the Notes to Consolidated Financial Statements for additional information
regarding the Company's debt obligations.

2020 Special Operating Activities


In response to the COVID-19 pandemic, the Company (i) deferred the payment of
$19.1 million in payroll taxes incurred through December 31, 2020, as provided
by the CARES Act and (ii) beginning in the second quarter of 2020 invested $75.0
million of its cash in highly-liquid investments instead of paying down its
long-term debt. During the fourth quarter of 2020, the Company prepaid $8.1
million of restructuring costs for other one-time compensation, of which $7.0
million remained as a component of other current assets on the Consolidated
Balance Sheet as of December 31, 2020.

2020 Special Financing Activities


During the fourth quarter of 2020, the Company and the UWWH Stockholder agreed
to settle the TRA. The Company paid the UWWH Stockholder a total of $12.0
million in settlement of all past and future liabilities that would have been
owed under the TRA and the parties agreed to a mutual release of claims under
the TRA. During the first quarter of 2020, the Company repurchased 383,972
shares of its common stock at a cost of $3.5 million under its 2020 Share
Repurchase Program, which was suspended March 27, 2020. During the second
quarter of 2020, in conjunction with the amendment of the ABL Facility, the
Company incurred and paid $3.4 million in new financing fees.


Funding and Liquidity Strategy

ABL Facility


On May 20, 2021, the Company amended its ABL Facility to extend the maturity
date to May 20, 2026, adjust the pricing grid for applicable interest rates and
update certain provisions to facilitate the transition from LIBOR to a new
replacement benchmark rate. All other significant terms remained substantially
the same. Previously, on April 9, 2020, the Company amended its ABL Facility to
extend the maturity date to April 9, 2025, reduce the aggregate commitments from
$1.4 billion to $1.1 billion and adjust the pricing grid for applicable interest
rates. All other significant terms remained substantially the same. The ABL
Facility is comprised of U.S. and Canadian sub-facilities of $1.1 billion and
$150.0 million, respectively. The ABL Facility is available to be drawn in U.S.
dollars, in the case of the U.S. sub-facilities, and in U.S. dollars or Canadian
dollars, in the case of the Canadian sub-facilities, or in other currencies that
are mutually agreeable. The ABL Facility provides for the right of the
individual lenders to extend the maturity date of their respective commitments
and loans upon the request of Veritiv and without the consent of any other
lenders. The ABL Facility may be prepaid at Veritiv's option at any time without
premium or penalty and is subject to mandatory prepayment if the amount
outstanding under the ABL Facility exceeds either the aggregate commitments with
respect thereto or the current borrowing base, in an amount equal to such
excess.

In conjunction with the amendments of the ABL Facility in 2021 and 2020, the
Company incurred and deferred $3.3 million and $3.4 million, respectively, in
new financing costs, which are reflected in other non-current assets on the
Consolidated Balance Sheets and will be amortized to interest expense on a
straight-line basis over the new amended term of the ABL Facility.

Availability under the ABL Facility is determined based upon a monthly borrowing
base calculation which includes eligible customer receivables and inventory,
less outstanding borrowings, letters of credit and certain designated reserves.
As
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of December 31, 2021, the available additional borrowing capacity under the ABL
Facility was approximately $557.2 million. As of December 31, 2021, the Company
held $11.0 million in outstanding letters of credit.

The ABL Facility has a springing minimum fixed charge coverage ratio of at least
1.00 to 1.00 on a trailing four-quarter basis, which will be tested only when
specified availability is less than limits outlined under the ABL Facility. At
December 31, 2021 the above test was not applicable and based on information
available as of the date of this report it is not expected to be applicable in
the next 12 months.

Under the terms of the ABL Facility, interest rates are based upon LIBOR or the
prime rate plus a margin rate, or in the case of Canada, a banker's acceptance
rate or base rate plus a margin rate. For the years ended December 31, 2021 and
2020, the weighted-average borrowing interest rates were 1.8% and 2.9%,
respectively.

Short and long-term funding strategy


Veritiv's management expects that the Company's primary future cash needs will
be for working capital, capital expenditures, contractual commitments, share
repurchases and strategic investments. Veritiv's ability to fund its capital and
operating needs will depend on its ongoing ability to generate cash from
operations, availability of borrowings under the ABL Facility and access to the
capital markets. If Veritiv's cash flows from operating activities are lower
than expected, the Company would need to borrow under the ABL Facility and may
need to incur additional debt or issue additional equity. Although management
believes that the arrangements currently in place will permit Veritiv to finance
its capital and operating needs on acceptable terms and conditions, the
Company's access to, and the availability of, financing on acceptable terms and
conditions in the future will be impacted by many factors, including the
liquidity of the overall capital markets and the current state of the economy.
To preserve liquidity, particularly during the COVID-19 pandemic, the Company
may invest a portion of its cash in highly-liquid investments with original
maturities to the Company of three months or less that are readily convertible
into known amounts of cash.

The Company currently estimates it will incur total restructuring charges of
between $70 million and $76 million in connection with the 2020 Restructuring
Plan. The 2020 Restructuring Plan was substantially complete as of December 31,
2021. See   Note 4   of the Notes to Consolidated Financial Statements for
additional information regarding the Company's restructuring efforts. The
Company currently estimates that during 2022 it will spend approximately $35
million for capital expenditures covering both maintenance and strategic
investments. As provided by the CARES Act, in response to the COVID-19 pandemic
the Company deferred $19.1 million of payroll taxes, which it had incurred
through December 31, 2020. In January 2022 the Company paid $10.1 million of the
deferred payroll taxes and currently expects to pay the remaining amount in
December 2022. See   Note 3   of the Notes to Consolidated Financial Statements
for information regarding the Company's lease commitments, including leases that
have not yet commenced. See   Note 9   of the Notes to Consolidated Financial
Statements for information regarding the Veritiv Deferred Compensation Savings
Plans obligation, the Company's funding status of its pension plans and its
multi-employer pension plan commitments. Additionally, the Company has
recognized liabilities for uncertain tax positions, cash-based long-term
incentive plans and unscheduled portions of the Veritiv Deferred Compensation
Savings Plans, however, the Company cannot predict with reasonable certainty the
timing of future cash outflows associated with these liabilities.

All of the cash held by Veritiv's non-U.S. subsidiaries is available for general
corporate purposes. Veritiv considers the earnings of certain non-U.S.
subsidiaries to be permanently invested outside the U.S. on the basis of
estimates that future domestic cash generation will be sufficient to meet future
domestic cash needs and management's specific plans for reinvestment of those
subsidiary earnings. The table below summarizes the Company's cash and cash
equivalent positions as of December 31, 2021 and 2020:
                                                             As of December 

31,

        (in millions)                                         2021          

2020

Cash and cash equivalents held in the U.S. $ 25.8 $ 101.0

        Cash held in foreign subsidiaries                    23.5           

19.6

        Total Cash and cash equivalents                 $    49.3           $ 120.6



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Inflation and Changing Prices

Essentially all of the Company's revenue is derived from the sale of its
products and services in competitive markets. To the extent feasible, the
Company has adjusted its prices to reflect the impact of inflation on the cost
of purchased materials and services. Impacts on the Company's results from price
and product mix are discussed in the "Segment Results" section.

Critical Accounting Estimates


The preparation of financial statements in conformity with U.S. GAAP requires
the Company to utilize estimates that affect both the amounts and timing of the
recording of assets, liabilities, net sales and expenses. Some of these
estimates require judgment about matters that are inherently uncertain.
Different amounts would be reported under different operating conditions or
under alternative assumptions.

Management believes that the accounting estimates discussed below are the most
critical accounting policies whose application may have a significant effect on
the reported results of operations and financial position of the Company and can
require judgments by management that affect their application. Although these
estimates are based on management's knowledge of current events and actions it
may undertake in the future, actual results may ultimately differ from these
estimates and assumptions, particularly in light of the COVID-19 pandemic and
its effects on the domestic and global economies. Estimates are revised as
additional information becomes available. See the "Use of Estimates" section of

Note 1 of the Notes to Consolidated Financial Statements for additional
information regarding the Company’s estimates.

Revenue Recognition


Revenue generally consists of a single performance obligation to transfer a
promised good or service and is short-term in nature. Revenues are recognized
when control of the promised goods or services is transferred to Veritiv's
customers and in an amount that reflects the consideration the Company expects
to be entitled to in exchange for those goods and services.

Certain revenues are derived from shipments which are made directly from a
manufacturer to a Veritiv customer. The Company is considered to be a principal
to these transactions because, among other factors, it maintains control of the
goods after they leave the supplier and before they are received at the
customer's location, in most cases it selects the supplier and sets the price to
the customer, and it bears the risk of the customer defaulting on payment or
rejecting the goods. Revenues from these sales are reported on a gross basis on
the Consolidated Statements of Operations and have historically represented
approximately 35% of Veritiv's total net sales.

Veritiv enters into incentive programs with certain of its customers, which are
generally based on sales to those same customers. Estimates of the variable
consideration are based primarily on contract terms, current customer forecasts
as well as historical experience. Veritiv follows the expected value method when
estimating its retrospective incentives and records the estimated amount as a
reduction to gross sales when revenue is recognized.

Customer product returns are estimated based on historical experience and the
identification of specific events necessitating an adjustment. The estimated
return value is recognized as a reduction of gross sales and related cost of
products sold.

See Note 2 of the Notes to Consolidated Financial Statements for additional
information regarding the Company’s revenues.

Allowance for Credit Losses


The Company's allowance for credit losses reflects the best estimate of expected
losses to the Company's accounts receivable portfolio determined on the basis of
historical experience, current conditions, reasonable and supportable forecasts
and specific allowances for known troubled accounts. In developing the allowance
for credit losses, the Company utilizes internal risk ratings that are
determined based on a number of factors including a periodic evaluation of each
customer's financial condition where possible. In addition to leveraging the
internally developed risk ratings and historical experience, the expected credit
loss estimates are developed using quantitative analyses, where meaningful, and
qualitative analyses to forecast the impact that external factors and economic
indicators may have on the amount that the Company expects to collect. The
allowances contain uncertainties because the calculation requires management to
make assumptions and apply judgment
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regarding the customer's credit worthiness. Veritiv performs ongoing evaluations
of its customers' financial condition and adjusts credit limits based upon
payment history and the customer's current credit worthiness as determined by
its review of their current financial information. The Company continuously
monitors collections from its customers and maintains a provision for estimated
credit losses based upon the customers' financial condition, collection
experience and any other relevant customer specific information. Veritiv's
assessment of this and other information forms the basis of its allowances.

If the financial condition of Veritiv's customers deteriorates, resulting in an
inability to make required payments to the Company, or if economic conditions
deteriorate, additional allowances may be deemed appropriate or required. If the
allowance for doubtful accounts changed by 0.1% of gross billed receivables,
reflecting either an increase or decrease in expected future write-offs, the
impact to consolidated pre-tax income would have been approximately $1.0
million.

See Note 2 of the Notes to Consolidated Financial Statements for additional
information regarding the Company’s credit losses.

Income Taxes


The Company's determination of the provision for income taxes requires
significant judgment, the use of estimates and the interpretation and
application of complex tax laws. The provision for income taxes primarily
reflects a combination of income earned and taxed in the various U.S. federal
and state, as well as foreign, jurisdictions. Tax law changes, increases or
decreases in book versus tax basis differences, accruals or adjustments of
accruals for unrecognized tax benefits or valuation allowances, and the change
in the mix of earnings from these taxing jurisdictions all affect the overall
effective tax rate. The impact of the COVID-19 pandemic may change the mix of
earnings by jurisdiction and has increased the risk that operating losses may
occur within certain jurisdictions that could lead to the recognition of
valuation allowances against certain deferred tax assets in the future, if these
losses are prolonged beyond current expectations. This would negatively impact
Veritiv's income tax expense, net earnings, and balance sheet.

Employee Benefit Plans


Veritiv sponsors defined benefit plans and Supplemental Executive Retirement
Plans. Except for certain union employees who continue to accrue benefits under
the U.S. defined benefit pension plan in accordance with their collective
bargaining agreements, the defined benefit pension plans are frozen. See   Note
9   of the Notes to Consolidated Financial Statements for additional information
regarding these plans.

Management is required to make certain critical estimates related to actuarial
assumptions used to determine the Company's pension expense and related
obligation. The Company believes the most critical assumptions are related to
(i) the discount rate used to determine the present value of the liabilities and
(ii) the expected long-term rate of return on plan assets. All of the actuarial
assumptions are reviewed annually, or more frequently when changes in
circumstances warrant a reassessment. Changes in these assumptions could have a
material impact on the measurement of pension expense and the related
obligation.

At each measurement date, management determines the discount rate by reference
to rates of high-quality, long-term corporate bonds that mature in a pattern
similar to the future payments anticipated to be made under the plans. As of
December 31, 2021, the weighted-average discount rates used to compute the
benefit obligations were 2.54% and 2.95% for the U.S. and Canadian plans,
respectively.

The expected long-term rate of return on plan assets is based upon the long-term
outlook of the investment strategy as well as historical returns and
volatilities for each asset class. Veritiv also reviews current levels of
interest rates and inflation to assess the reasonableness of the long-term
rates. The Company's pension plan investment objective is to ensure all of its
plans have sufficient funds to meet their benefit obligations when they become
due. As a result, the Company periodically revises asset allocations, where
appropriate, to improve returns and manage risk. The weighted-average expected
long-term rates of return used to calculate the pension expense for the year
ended 2021 were 7.15% and 5.00% for the U.S. and Canadian plans, respectively.

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The following illustrates the effects of a 1% change in the discount rate or
return on plan assets on the 2021 net periodic pension cost and projected
benefit obligation (in millions):

                                                                                                                  Projected Benefit
              Assumption                              Change                  Net Periodic Benefit Cost              Obligation
Discount rate                                       1% increase              $                     0.7          $            (18.5)
                                                    1% decrease                                    1.1                        22.8
Return on plan assets                               1% increase                                   (1.4)                           N/A
                                                    1% decrease                                    1.4                            N/A


See Note 9 of the Notes to Consolidated Financial Statements for a
comprehensive discussion of Veritiv’s pension and postretirement benefit
expense, including a discussion of the actuarial assumptions and the policy for
recognizing the associated gains and losses.

Leases


The Company determines if an arrangement is a lease at lease inception and
reviews lease arrangements for finance or operating lease classification at
their commencement date. In order to value the right-of-use ("ROU") assets and
related liabilities, the Company makes certain estimates and assumptions related
to establishing the lease term, discount rates and variable lease payments
(e.g., rent escalations tied to changes in the Consumer Price Index). The
exercise of any lease renewal or asset purchase option is at the Company's sole
discretion. The lease term for all of the Company's leases includes the
noncancelable period of the lease and any periods covered by renewal options
that the Company is reasonably certain to exercise. Certain leases include rent
escalations pre-set in the agreements, which are factored into the lease payment
stream. Similar to a variable lease payment, certain delivery equipment leases
include a provision for an amount the Company may be required to pay at the end
of the lease for any residual value deficiency incurred by the lessor upon
resale of the underlying asset. The Company uses the implicit rate of interest
when it is available; however, as most of the Company's leases do not provide an
implicit rate of interest, the Company uses its incremental borrowing rate based
on information available at the lease commencement date in determining the
discounted value of the lease payments. Lease expense and depreciation expense
are recognized on a straight-line basis over the lease term, or for a finance
lease, over the shorter of the life of the underlying asset or the lease term.

The Company's decisions to cease operations in certain warehouse facilities and
retail locations leads to different accounting treatment depending upon whether
the leased properties are considered abandoned versus properties that the
Company has the intent and ability to sublease. Abandoned ROU assets are
assessed for impairment based on estimates of undiscounted operating cash flows
until the anticipated cease-use date and any remaining lease expense is
accelerated through the anticipated cease-use date. Leases for which the Company
has the intent and ability to sublease are assessed for impairment and any
remaining ROU asset values are amortized over the shorter of the remaining
useful lives of the assets or lease term. The intent and practical ability to
sublease and estimates of future cash flows attributable to the sublease are
assessed considering the terms of the lease agreement, certain market
conditions, remaining lease terms and the time required to sublease the facility
and other factors.

See Note 3 of the Notes to Consolidated Financial Statements for additional
information regarding the Company’s leases.

Impairment or Disposal of Long-Lived Assets and Goodwill


A long-lived asset is potentially impaired when the asset's carrying amount
exceeds its expected future undiscounted cash flows. When this situation occurs,
the Company must estimate the fair value of the long-lived asset and reduce the
carrying amount to the fair value if it is less than the carrying amount. A
goodwill impairment exists when the carrying amount of goodwill exceeds its fair
value. Assessments of possible impairments of long-lived assets and goodwill are
made annually in the fourth quarter, and when events or changes in circumstances
indicate that the carrying value of the assets may not be recoverable through
future operations. The amount and timing of any impairment charges based on
these assessments require the estimation of future cash flows and the fair
market value of the related assets based on management's best estimates of
certain key factors. These key factors include future selling prices and
volumes, operating, inventory, energy and freight costs and various other
projected operating economic factors.

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The calculation of lease impairment charges requires significant judgments and
estimates, including estimated sublease rentals, discount rates and future cash
flows based on the Company's experience and knowledge of the market in which the
property is located, previous efforts to dispose of similar assets and an
assessment of current market conditions. As these key factors change in future
periods, the Company will update its impairment analyses to reflect the latest
estimates and projections.

Goodwill is reviewed for impairment on a reporting unit basis. The testing of
goodwill for possible impairment is performed by completing a Step 0 test or
electing to by-pass the Step 0 test and comparing the fair value of a reporting
unit with its carrying value, including goodwill. The Step 0 test utilizes
qualitative factors to determine whether it is more likely than not that the
fair value of the reporting unit is less than its carrying value. Qualitative
factors include: macroeconomic conditions; industry and market considerations;
overall financial performance and cost factors to determine whether a reporting
unit is at risk for goodwill impairment. In the event a reporting unit fails the
Step 0 goodwill impairment test, it is necessary to move forward with a
comparison of the fair value of the reporting unit with its carrying value,
including goodwill. In calculating the estimated fair value of its reporting
units, Veritiv uses an income approach that utilizes discounted cash flows and
requires management to make significant assumptions and estimates related to the
forecasts of future revenues, profit margins and discount rates. Subsequent
changes in economic and operating conditions can affect these assumptions and
could result in additional interim testing and goodwill impairment charges in
future periods. Upon completion, the resulting estimated fair values are then
analyzed for reasonableness by comparing them to earnings multiples for historic
industry business transactions and by comparing the sum of the reporting unit
fair values to the fair value of the Company as a whole. As of the date of the
Company's annual goodwill impairment test in 2021 and 2020, the Company's
analyses reflected an excess fair value over carrying value of approximately
179% and 26%, respectively.

Intangible assets acquired in a business combination are recorded at fair value.
The Company's intangible assets may include customer relationships, trademarks
and trade names and non-compete agreements. Intangible assets with finite useful
lives are subsequently amortized using the straight-line method over the
estimated useful lives of the assets.

See Note 1 , Note 5 and Note 10 of the Notes to Consolidated
Financial Statements for additional information regarding the Company’s
long-lived assets, goodwill, other intangible assets and impairment assessments.

Recently Issued Accounting Standards

See Note 1 of the Notes to Consolidated Financial Statements for information
regarding recently issued accounting standards.

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