x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
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For the quarterly period ended September 30, 2016
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
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For the transition period from __________________to __________________
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Delaware
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62-1612879
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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100 North Point Center East, Suite 600
Alpharetta, Georgia
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30022
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Page
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Part I. - Financial Information
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Part II. - Other Information
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Three Months Ended
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Nine Months Ended
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||||||||||||
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September 30, 2016
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September 30, 2015
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September 30, 2016
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September 30, 2015
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||||||||
Net Sales
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$
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209.3
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$
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184.4
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$
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641.2
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$
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554.3
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Cost of products sold
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146.2
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132.0
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447.7
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395.7
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Gross Profit
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63.1
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52.4
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193.5
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158.6
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Selling expense
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6.0
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5.5
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18.8
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16.0
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Research expense
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4.2
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3.5
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12.9
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10.5
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General expense
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20.8
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10.3
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57.9
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43.3
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Total nonmanufacturing expenses
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31.0
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19.3
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89.6
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69.8
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Restructuring and impairment expense
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1.3
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1.3
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4.0
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10.5
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Operating Profit
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30.8
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31.8
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99.9
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78.3
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Interest expense
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3.9
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1.7
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12.6
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5.3
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Other income, net
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0.7
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1.3
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4.0
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9.5
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Income from Continuing Operations before Income Taxes and Income from Equity Affiliates
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27.6
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31.4
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91.3
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82.5
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Provision for income taxes
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10.7
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5.9
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27.9
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17.9
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Income from equity affiliates, net of
income taxes
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1.8
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0.1
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2.4
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4.3
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Income from Continuing Operations
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18.7
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25.6
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65.8
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68.9
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Income (Loss) from Discontinued Operations
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—
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0.2
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—
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(0.9
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Net Income
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$
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18.7
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$
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25.8
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$
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65.8
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$
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68.0
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Net Income per Share - Basic:
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Income per share from continuing operations
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$
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0.62
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$
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0.84
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$
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2.16
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$
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2.26
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Income (loss) per share from discontinued
operations
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—
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0.01
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—
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(0.03
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)
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Net income per share – basic
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$
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0.62
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$
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0.85
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$
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2.16
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$
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2.23
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Net Income per Share – Diluted:
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Income per share from continuing operations
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$
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0.61
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$
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0.84
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$
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2.15
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$
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2.25
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Income (loss) per share from discontinued
operations
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—
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0.01
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—
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(0.03
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)
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Net income per share – diluted
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$
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0.61
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$
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0.85
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$
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2.15
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$
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2.22
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Weighted Average Shares Outstanding:
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Basic
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30,316,400
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30,275,400
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30,308,200
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30,243,000
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Diluted
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30,458,800
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30,408,600
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30,443,100
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30,366,600
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Three Months Ended
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Nine Months Ended
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September 30, 2016
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September 30, 2015
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September 30, 2016
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September 30, 2015
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||||||||
Net Income
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$
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18.7
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$
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25.8
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$
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65.8
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$
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68.0
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Other Comprehensive Income (Loss), net of tax:
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Foreign currency translation adjustments
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0.2
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(6.3
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5.3
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(42.1
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Unrealized gains (losses) on derivative instruments
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(0.3
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(15.4
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11.7
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(25.1
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Less: Reclassification adjustment for losses on derivative instruments included in net income
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0.6
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3.7
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6.2
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7.3
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Reclassification adjustment for amortization of postretirement benefit plans' costs (gains) included in net periodic benefit cost
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1.0
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(0.5
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2.1
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(1.8
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)
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Other Comprehensive Income (Loss)
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1.5
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(18.5
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)
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25.3
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(61.7
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)
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Comprehensive Income
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$
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20.2
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$
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7.3
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$
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91.1
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$
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6.3
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September 30,
2016 |
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December 31,
2015 |
||||
ASSETS
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Current Assets
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Cash and cash equivalents
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$
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89.5
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$
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186.5
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Accounts receivable, net
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137.0
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119.4
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Inventories
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110.9
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112.4
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Assets held for sale
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20.1
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21.9
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Other current assets
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5.6
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4.6
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Total Current Assets
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363.1
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444.8
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Property, Plant and Equipment, net
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308.9
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308.1
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Deferred Income Tax Benefits
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2.4
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0.1
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Investment in Equity Affiliates
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67.6
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67.5
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Goodwill
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232.4
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233.3
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Intangible Assets
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203.5
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213.9
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Other Assets
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27.0
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22.3
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Total Assets
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$
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1,204.9
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$
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1,290.0
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current Liabilities
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Current debt
|
$
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3.2
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$
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3.3
|
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Accounts payable
|
47.1
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|
|
49.0
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Income taxes payable
|
9.4
|
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5.3
|
|
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Accrued expenses
|
70.7
|
|
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85.5
|
|
||
Total Current Liabilities
|
130.4
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|
143.1
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||
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Long-Term Debt
|
441.1
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|
|
568.2
|
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Pension and Other Postretirement Benefits
|
33.1
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|
|
33.5
|
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Deferred Income Tax Liabilities
|
48.3
|
|
|
45.3
|
|
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Other Liabilities
|
26.6
|
|
|
32.0
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Total Liabilities
|
679.5
|
|
|
822.1
|
|
||
Stockholders’ Equity:
|
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|
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Preferred stock, $0.10 par value; 10,000,000 shares authorized; none issued or outstanding
|
—
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|
—
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Common stock, $0.10 par value; 100,000,000 shares authorized; 30,554,217 and 30,474,149 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively
|
3.1
|
|
|
3.0
|
|
||
Additional paid-in-capital
|
57.2
|
|
|
53.7
|
|
||
Retained earnings
|
581.2
|
|
|
552.6
|
|
||
Accumulated other comprehensive loss, net of tax
|
(116.1
|
)
|
|
(141.4
|
)
|
||
Total Stockholders’ Equity
|
525.4
|
|
|
467.9
|
|
||
Total Liabilities and Stockholders’ Equity
|
$
|
1,204.9
|
|
|
$
|
1,290.0
|
|
|
Common Stock Issued
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Shares
|
|
Amount
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
|
|||||||||||
Balance, December 31, 2014
|
30,465,522
|
|
|
$
|
3.0
|
|
|
$
|
49.8
|
|
|
$
|
512.7
|
|
|
$
|
(76.5
|
)
|
|
$
|
489.0
|
|
Net income
|
|
|
|
|
|
|
68.0
|
|
|
|
|
68.0
|
|
|||||||||
Other comprehensive loss, net of tax
|
|
|
|
|
|
|
|
|
(61.7
|
)
|
|
(61.7
|
)
|
|||||||||
Dividends declared ($1.14 per share)
|
|
|
|
|
|
|
(34.7
|
)
|
|
|
|
(34.7
|
)
|
|||||||||
Restricted stock issuances, net
|
70,949
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|||||||
Stock-based employee compensation expense
|
|
|
|
|
1.7
|
|
|
|
|
|
|
1.7
|
|
|||||||||
Excess tax benefits of stock-based employee compensation
|
|
|
|
|
0.5
|
|
|
|
|
|
|
0.5
|
|
|||||||||
Stock issued to directors as compensation
|
2,638
|
|
|
—
|
|
|
0.1
|
|
|
|
|
|
|
0.1
|
|
|||||||
Purchases and retirement of common stock
|
(63,365
|
)
|
|
—
|
|
|
|
|
(2.9
|
)
|
|
|
|
(2.9
|
)
|
|||||||
Balance, September 30, 2015
|
30,475,744
|
|
|
$
|
3.0
|
|
|
$
|
52.1
|
|
|
$
|
543.1
|
|
|
$
|
(138.2
|
)
|
|
$
|
460.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance, December 31, 2015
|
30,474,149
|
|
|
$
|
3.0
|
|
|
$
|
53.7
|
|
|
$
|
552.6
|
|
|
$
|
(141.4
|
)
|
|
$
|
467.9
|
|
Net income
|
|
|
|
|
|
|
65.8
|
|
|
|
|
65.8
|
|
|||||||||
Other comprehensive income, net of tax
|
|
|
|
|
|
|
|
|
25.3
|
|
|
25.3
|
|
|||||||||
Dividends declared ($1.20 per share)
|
|
|
|
|
|
|
(36.6
|
)
|
|
|
|
(36.6
|
)
|
|||||||||
Restricted stock issuances, net
|
94,576
|
|
|
0.1
|
|
|
—
|
|
|
|
|
|
|
0.1
|
|
|||||||
Stock-based employee compensation expense
|
|
|
|
|
3.5
|
|
|
|
|
|
|
3.5
|
|
|||||||||
Excess tax expense of stock-based employee compensation
|
|
|
|
|
(0.2
|
)
|
|
|
|
|
|
(0.2
|
)
|
|||||||||
Stock issued to directors as compensation
|
5,031
|
|
|
—
|
|
|
0.2
|
|
|
|
|
|
|
0.2
|
|
|||||||
Purchases and retirement of common stock
|
(19,539
|
)
|
|
—
|
|
|
|
|
(0.6
|
)
|
|
|
|
(0.6
|
)
|
|||||||
Balance, September 30, 2016
|
30,554,217
|
|
|
$
|
3.1
|
|
|
$
|
57.2
|
|
|
$
|
581.2
|
|
|
$
|
(116.1
|
)
|
|
$
|
525.4
|
|
|
Nine Months Ended
|
||||||
|
September 30,
2016 |
|
September 30,
2015 |
||||
Operating
|
|
|
|
||||
Net income
|
$
|
65.8
|
|
|
$
|
68.0
|
|
Less: Loss from discontinued operations
|
—
|
|
|
(0.9
|
)
|
||
Income from continuing operations
|
65.8
|
|
|
68.9
|
|
||
Non-cash items included in net income:
|
|
|
|
||||
Depreciation and amortization
|
33.3
|
|
|
29.0
|
|
||
Restructuring-related impairment
|
0.5
|
|
|
3.5
|
|
||
Deferred income tax provision
|
(3.3
|
)
|
|
0.5
|
|
||
Pension and other postretirement benefits
|
2.7
|
|
|
3.4
|
|
||
Stock-based compensation
|
3.7
|
|
|
1.8
|
|
||
Income from equity affiliates
|
(2.4
|
)
|
|
(4.3
|
)
|
||
Gain on sale of intangible assets
|
(1.8
|
)
|
|
(4.3
|
)
|
||
Excess tax expense (benefits) of stock-based awards
|
0.2
|
|
|
(0.5
|
)
|
||
Cash dividends received from equity affiliates
|
—
|
|
|
3.9
|
|
||
Other items
|
(1.2
|
)
|
|
0.3
|
|
||
Changes in operating working capital:
|
|
|
|
||||
Accounts receivable
|
(14.7
|
)
|
|
(32.6
|
)
|
||
Inventories
|
4.9
|
|
|
(3.0
|
)
|
||
Prepaid expenses
|
(1.0
|
)
|
|
—
|
|
||
Accounts payable
|
(2.5
|
)
|
|
2.0
|
|
||
Accrued expenses
|
(7.2
|
)
|
|
(1.5
|
)
|
||
Accrued income taxes
|
6.1
|
|
|
12.6
|
|
||
Net changes in operating working capital - (use) source
|
(14.4
|
)
|
|
(22.5
|
)
|
||
Net cash provided by (used in) operating activities of:
|
|
|
|
||||
- Continuing operations
|
83.1
|
|
|
79.7
|
|
||
- Discontinued operations
|
(0.1
|
)
|
|
0.5
|
|
||
Net Cash Provided by Operations
|
83.0
|
|
|
80.2
|
|
||
Investing
|
|
|
|
||||
Capital spending
|
(17.5
|
)
|
|
(14.0
|
)
|
||
Capitalized software costs
|
(1.7
|
)
|
|
(0.7
|
)
|
||
Acquisitions, net of cash acquired
|
—
|
|
|
(0.4
|
)
|
||
Other investing
|
4.2
|
|
|
2.9
|
|
||
Net Cash Used in Investing
|
(15.0
|
)
|
|
(12.2
|
)
|
|
Nine Months Ended
|
||||||
|
September 30,
2016 |
|
September 30,
2015 |
||||
Financing
|
|
|
|
||||
Cash dividends paid to SWM stockholders
|
(36.6
|
)
|
|
(34.7
|
)
|
||
Changes in short-term debt
|
—
|
|
|
0.2
|
|
||
Proceeds from issuances of long-term debt
|
35.6
|
|
|
35.5
|
|
||
Payments on long-term debt
|
(167.2
|
)
|
|
(68.1
|
)
|
||
Purchases of common stock
|
(0.6
|
)
|
|
(2.9
|
)
|
||
Excess tax benefits of stock-based awards
|
(0.2
|
)
|
|
0.5
|
|
||
Net Cash Used in Financing
|
(169.0
|
)
|
|
(69.5
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
4.0
|
|
|
(20.3
|
)
|
||
Decrease in cash and cash equivalents
|
(97.0
|
)
|
|
(21.8
|
)
|
||
Cash and cash equivalents at beginning of period
|
186.5
|
|
|
290.3
|
|
||
Cash and cash equivalents at end of period
|
$
|
89.5
|
|
|
$
|
268.5
|
|
|
|
|
|
||||
Supplemental Cash Flow Disclosures
|
|
|
|
||||
Cash paid for interest
|
$
|
10.5
|
|
|
$
|
5.2
|
|
Cash paid (recovered) for taxes, net
|
$
|
24.4
|
|
|
$
|
(3.7
|
)
|
Change in capital spending in accounts payable and accrued liabilities
|
$
|
1.3
|
|
|
$
|
1.0
|
|
|
September 30, 2016
|
|
December 31, 2015
|
||||
Accumulated pension and OPEB liability adjustments, net of income tax of $20.1 million and $21.9 million at September 30, 2016 and December 31, 2015, respectively
|
$
|
(33.5
|
)
|
|
$
|
(35.6
|
)
|
Accumulated unrealized loss on derivative instruments, net of income tax of $2.5 million and $0.3 million at September 30, 2016 and December 31, 2015, respectively
|
(3.7
|
)
|
|
(21.6
|
)
|
||
Accumulated unrealized foreign currency translation adjustments
|
(78.9
|
)
|
|
(84.2
|
)
|
||
Accumulated other comprehensive loss
|
$
|
(116.1
|
)
|
|
$
|
(141.4
|
)
|
|
Three Months Ended
|
||||||||||||||||||||||
|
September 30, 2016
|
|
September 30, 2015
|
||||||||||||||||||||
|
Pre-tax
|
|
Tax
|
|
Net of
Tax
|
|
Pre-tax
|
|
Tax
|
|
Net of
Tax
|
||||||||||||
Unrealized gain (loss) on Pension and OPEB liability adjustments
|
$
|
1.2
|
|
|
$
|
(0.2
|
)
|
|
$
|
1.0
|
|
|
$
|
(0.8
|
)
|
|
$
|
0.3
|
|
|
$
|
(0.5
|
)
|
Unrealized gain (loss) on derivative instruments
|
2.0
|
|
|
(1.7
|
)
|
|
0.3
|
|
|
(11.9
|
)
|
|
0.2
|
|
|
(11.7
|
)
|
||||||
Unrealized gain (loss) on foreign currency translation
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|
(6.3
|
)
|
|
—
|
|
|
(6.3
|
)
|
||||||
Total
|
$
|
3.4
|
|
|
$
|
(1.9
|
)
|
|
$
|
1.5
|
|
|
$
|
(19.0
|
)
|
|
$
|
0.5
|
|
|
$
|
(18.5
|
)
|
|
Nine Months Ended
|
||||||||||||||||||||||
|
September 30, 2016
|
|
September 30, 2015
|
||||||||||||||||||||
|
Pre-tax
|
|
Tax
|
|
Net of
Tax
|
|
Pre-tax
|
|
Tax
|
|
Net of
Tax
|
||||||||||||
Unrealized gain (loss) on Pension and OPEB liability adjustments
|
$
|
3.9
|
|
|
$
|
(1.8
|
)
|
|
$
|
2.1
|
|
|
$
|
(2.8
|
)
|
|
$
|
1.0
|
|
|
$
|
(1.8
|
)
|
Unrealized gain (loss) on derivative instruments
|
15.7
|
|
|
2.2
|
|
|
17.9
|
|
|
(18.3
|
)
|
|
0.5
|
|
|
(17.8
|
)
|
||||||
Unrealized gain (loss) on foreign currency translation
|
5.3
|
|
|
—
|
|
|
5.3
|
|
|
(42.1
|
)
|
|
—
|
|
|
(42.1
|
)
|
||||||
Total
|
$
|
24.9
|
|
|
$
|
0.4
|
|
|
$
|
25.3
|
|
|
$
|
(63.2
|
)
|
|
$
|
1.5
|
|
|
$
|
(61.7
|
)
|
|
Preliminary Fair Value as of October 28, 2015
|
||
Cash and cash equivalents
|
$
|
2.7
|
|
Accounts receivable
|
16.1
|
|
|
Inventory
|
16.3
|
|
|
Other current assets
|
0.1
|
|
|
Property, plant and equipment
|
15.9
|
|
|
Other noncurrent assets
|
0.1
|
|
|
Identifiable intangible assets
|
131.0
|
|
|
Total Assets
|
182.2
|
|
|
|
|
||
Accounts payable
|
4.6
|
|
|
Accrued expenses
|
4.5
|
|
|
|
|
||
Net assets acquired
|
173.1
|
|
|
|
|
||
Goodwill
|
109.6
|
|
|
|
|
||
Cash paid
|
$
|
282.7
|
|
|
Preliminary Fair Value as of October 28, 2015
|
|
Weighted-Average Amortization Period (Years)
|
||
Amortizable intangible assets:
|
|
|
|
||
Customer relationships
|
$
|
115.3
|
|
|
15
|
Non-competition agreements
|
1.7
|
|
|
4
|
|
Total amortizable intangible assets
|
117.0
|
|
|
15
|
|
Indefinite-lived intangible assets:
|
|
|
|
||
Trade names
|
14.0
|
|
|
Indefinite
|
|
Total
|
$
|
131.0
|
|
|
|
|
|
Net Sales
|
|
Income from Continuing Operations
|
||||
2015 Supplemental Pro Forma from July 1, 2015 - September 30, 2015
|
|
$
|
210.8
|
|
|
$
|
25.4
|
|
2015 Supplemental Pro Forma from January 1, 2015 - September 30, 2015
|
|
641.6
|
|
|
70.7
|
|
|
September 30, 2016
|
|
December 31, 2015
|
||||
Assets of discontinued operations:
|
|
|
|
||||
Current assets
|
$
|
1.1
|
|
|
$
|
1.1
|
|
Other assets
|
2.5
|
|
|
2.6
|
|
||
|
|
|
|
||||
Liabilities of discontinued operations:
|
|
|
|
|
|||
Current liabilities
|
0.1
|
|
|
0.2
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2016
|
|
September 30, 2015
|
|
September 30, 2016
|
|
September 30, 2015
|
||||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other expense
|
—
|
|
|
0.2
|
|
|
—
|
|
|
(0.7
|
)
|
||||
Loss from discontinued operations before income taxes
|
—
|
|
|
0.2
|
|
|
—
|
|
|
(0.7
|
)
|
||||
Income tax provision
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
||||
Loss from discontinued operations
|
$
|
—
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
(0.9
|
)
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
2016 |
|
September 30,
2015 |
|
September 30,
2016 |
|
September 30,
2015 |
||||||||
Numerator (basic and diluted):
|
|
|
|
|
|
|
|
|
|||||||
Net income
|
$
|
18.7
|
|
|
$
|
25.8
|
|
|
$
|
65.8
|
|
|
$
|
68.0
|
|
Less: Dividends paid to participating securities
|
(0.1
|
)
|
|
—
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
||||
Less: Undistributed earnings available to participating securities
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
||||
Undistributed and distributed earnings available to common stockholders
|
$
|
18.6
|
|
|
$
|
25.8
|
|
|
$
|
65.4
|
|
|
$
|
67.6
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
|
|
||||||
Average number of common shares outstanding
|
30,316.4
|
|
|
30,275.4
|
|
|
30,308.2
|
|
|
30,243.0
|
|
||||
Effect of dilutive stock-based compensation
|
142.4
|
|
|
133.2
|
|
|
134.9
|
|
|
123.6
|
|
||||
Average number of common and potential common shares outstanding
|
30,458.8
|
|
|
30,408.6
|
|
|
30,443.1
|
|
|
30,366.6
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Raw materials
|
$
|
39.5
|
|
|
$
|
45.2
|
|
Work in process
|
21.0
|
|
|
17.3
|
|
||
Finished goods
|
40.4
|
|
|
36.1
|
|
||
Supplies and other
|
10.0
|
|
|
13.8
|
|
||
Total
|
$
|
110.9
|
|
|
$
|
112.4
|
|
|
Engineered Papers
|
|
Advanced Materials & Structures
|
|
Total
|
||||||
Goodwill as of December 31, 2015
|
$
|
4.8
|
|
|
$
|
228.5
|
|
|
$
|
233.3
|
|
Goodwill adjusted during the period
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|||
Foreign currency translation adjustments
|
0.1
|
|
|
(1.1
|
)
|
|
(1.0
|
)
|
|||
Goodwill as of September 30, 2016
|
$
|
4.9
|
|
|
$
|
227.5
|
|
|
$
|
232.4
|
|
|
September 30, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization*
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization*
|
|
Net
Carrying
Amount
|
||||||||||||
Amortized intangible assets
|
|
|
|
|
|
|
|
|
|||||||||||||||
Engineered Papers
|
|||||||||||||||||||||||
Customer-related intangibles
|
$
|
10.0
|
|
|
$
|
10.0
|
|
|
$
|
—
|
|
|
$
|
10.0
|
|
|
$
|
10.0
|
|
|
$
|
—
|
|
Advanced Materials & Structures
|
|||||||||||||||||||||||
Customer Relationships
|
167.7
|
|
|
14.8
|
|
|
152.9
|
|
|
167.7
|
|
|
6.4
|
|
|
161.3
|
|
||||||
Developed Technology
|
16.0
|
|
|
3.7
|
|
|
12.3
|
|
|
16.0
|
|
|
2.4
|
|
|
13.6
|
|
||||||
Customer Contracts
|
0.9
|
|
|
0.8
|
|
|
0.1
|
|
|
0.9
|
|
|
0.5
|
|
|
0.4
|
|
||||||
Non-Compete Agreements
|
1.7
|
|
|
0.4
|
|
|
1.3
|
|
|
1.7
|
|
|
0.1
|
|
|
1.6
|
|
||||||
Patents
|
1.5
|
|
|
0.2
|
|
|
1.3
|
|
|
1.5
|
|
|
0.1
|
|
|
1.4
|
|
||||||
Total
|
$
|
197.8
|
|
|
$
|
29.9
|
|
|
$
|
167.9
|
|
|
$
|
197.8
|
|
|
$
|
19.5
|
|
|
$
|
178.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Unamortized intangible assets (Advanced Materials & Structures)
|
|||||||||||||||||||||||
Trade names
|
$
|
35.6
|
|
|
|
|
|
|
$
|
35.6
|
|
|
|
|
|
|
Nine Months Ended
|
|
Year Ended
|
||||
|
September 30,
2016 |
|
December 31,
2015 |
||||
Balance at beginning of year
|
$
|
7.7
|
|
|
$
|
8.7
|
|
Accruals for announced programs
|
3.5
|
|
|
8.0
|
|
||
Cash payments
|
(6.7
|
)
|
|
(8.3
|
)
|
||
Exchange rate impacts
|
0.5
|
|
|
(0.7
|
)
|
||
Balance at end of period
|
$
|
5.0
|
|
|
$
|
7.7
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Term Loan A-1
|
$
|
60.0
|
|
|
$
|
60.0
|
|
Term Loan A-2
|
247.5
|
|
|
249.4
|
|
||
Revolving Credit Agreement - U.S. dollar borrowings
|
134.0
|
|
|
197.0
|
|
||
Revolving Credit Agreement - euro borrowings
|
—
|
|
|
62.4
|
|
||
French Employee Profit Sharing
|
10.2
|
|
|
11.4
|
|
||
Total Debt
|
451.7
|
|
|
580.2
|
|
||
Less: Debt issuance costs
|
(7.4
|
)
|
|
(8.7
|
)
|
||
Less: Current debt
|
(3.2
|
)
|
|
(3.3
|
)
|
||
Long-Term Debt
|
$
|
441.1
|
|
|
$
|
568.2
|
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
||||
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts
|
Accounts receivable, net
|
|
$
|
1.5
|
|
|
Accrued expenses
|
|
$
|
2.2
|
|
Foreign exchange contracts
|
Other Assets
|
|
1.7
|
|
|
Other Liabilities
|
|
0.5
|
|
||
Interest rate contracts
|
Other Assets
|
|
—
|
|
|
Other Liabilities
|
|
0.9
|
|
||
Total derivatives designated as hedges
|
|
|
$
|
3.2
|
|
|
|
|
$
|
3.6
|
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
||||
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts
|
Accounts receivable, net
|
|
$
|
0.7
|
|
|
Accrued expenses
|
|
$
|
10.8
|
|
Foreign exchange contracts
|
Other Assets
|
|
—
|
|
|
Other Liabilities
|
|
7.0
|
|
||
Interest rate contracts
|
Other Assets
|
|
—
|
|
|
Other Liabilities
|
|
0.6
|
|
||
Total derivatives designated as hedges
|
|
|
$
|
0.7
|
|
|
|
|
$
|
18.4
|
|
Derivatives Designated as Cash Flow Hedging Relationships
|
Unrealized Gain (Loss) Recognized in AOCI on Derivatives, Net of Tax
|
|
Loss Reclassified
from AOCI
|
||||||||||||||||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||||||||
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
||||||||||||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||||||
Foreign exchange contracts
|
$
|
(0.4
|
)
|
|
$
|
(15.1
|
)
|
|
$
|
12.3
|
|
|
$
|
(24.6
|
)
|
|
$
|
(0.4
|
)
|
|
$
|
(3.7
|
)
|
|
$
|
(5.7
|
)
|
|
$
|
(7.3
|
)
|
Interest rate contracts
|
0.1
|
|
|
(0.3
|
)
|
|
(0.6
|
)
|
|
(0.5
|
)
|
|
(0.2
|
)
|
|
—
|
|
|
(0.5
|
)
|
|
—
|
|
||||||||
Total
|
$
|
(0.3
|
)
|
|
$
|
(15.4
|
)
|
|
$
|
11.7
|
|
|
$
|
(25.1
|
)
|
|
$
|
(0.6
|
)
|
|
$
|
(3.7
|
)
|
|
$
|
(6.2
|
)
|
|
$
|
(7.3
|
)
|
Derivatives Not Designated as Cash Flow Hedging Instruments
|
|
Amount of Gain (Loss) Recognized in Other Income / Expense
|
||||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
September 30, 2016
|
|
September 30, 2015
|
|
September 30, 2016
|
|
September 30, 2015
|
||||||||
Foreign exchange contracts
|
|
$
|
0.8
|
|
|
$
|
0.3
|
|
|
$
|
1.2
|
|
|
$
|
(1.3
|
)
|
|
Three Months Ended September 30,
|
||||||||||||||||||||||
|
U.S. Pension Benefits
|
|
French Pension Benefits
|
|
U.S. OPEB Benefits
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
|
$
|
0.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
1.3
|
|
|
1.2
|
|
|
0.2
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
||||||
Expected return on plan assets
|
(1.7
|
)
|
|
(1.8
|
)
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
||||||
Amortizations and other
|
0.8
|
|
|
1.1
|
|
|
0.3
|
|
|
0.3
|
|
|
0.1
|
|
|
0.1
|
|
||||||
Net periodic benefit cost
|
$
|
0.4
|
|
|
$
|
0.5
|
|
|
$
|
0.6
|
|
|
$
|
0.6
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||
|
U.S. Pension Benefits
|
|
French Pension Benefits
|
|
U.S. OPEB Benefits
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.8
|
|
|
$
|
0.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
3.9
|
|
|
3.8
|
|
|
0.4
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
||||||
Expected return on plan assets
|
(5.1
|
)
|
|
(5.3
|
)
|
|
(0.2
|
)
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
||||||
Amortizations and other
|
2.8
|
|
|
3.9
|
|
|
0.8
|
|
|
0.9
|
|
|
0.2
|
|
|
(0.1
|
)
|
||||||
Net periodic benefit cost
|
$
|
1.6
|
|
|
$
|
2.4
|
|
|
$
|
1.8
|
|
|
$
|
1.9
|
|
|
$
|
0.2
|
|
|
$
|
(0.1
|
)
|
($ in millions)
|
Net Sales
|
||||||||||||||||||||||||||
|
Three Months Ended
|
|
Nine months ended
|
||||||||||||||||||||||||
|
September 30, 2016
|
|
September 30, 2015
|
|
September 30, 2016
|
|
September 30, 2015
|
||||||||||||||||||||
Engineered Papers
|
$
|
136.8
|
|
|
65.4
|
%
|
|
$
|
142.4
|
|
|
77.2
|
%
|
|
$
|
425.7
|
|
|
66.4
|
%
|
|
$
|
431.2
|
|
|
77.8
|
%
|
Advanced Materials & Structures
|
72.5
|
|
|
34.6
|
|
|
42.0
|
|
|
22.8
|
|
|
215.5
|
|
|
33.6
|
|
|
123.1
|
|
|
22.2
|
|
||||
Total Consolidated
|
$
|
209.3
|
|
|
100.0
|
%
|
|
$
|
184.4
|
|
|
100.0
|
%
|
|
$
|
641.2
|
|
|
100.0
|
%
|
|
$
|
554.3
|
|
|
100.0
|
%
|
($ in millions)
|
Operating Profit
|
||||||||||||||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||||||||
|
September 30, 2016
|
|
September 30, 2015
|
|
September 30, 2016
|
|
September 30, 2015
|
||||||||||||||||||||
Engineered Papers
|
$
|
32.0
|
|
|
103.9
|
%
|
|
$
|
31.0
|
|
|
97.5
|
%
|
|
$
|
103.4
|
|
|
103.5
|
%
|
|
$
|
85.7
|
|
|
109.5
|
%
|
Advanced Materials & Structures
|
8.7
|
|
|
28.2
|
|
|
4.8
|
|
|
15.1
|
|
|
22.8
|
|
|
22.8
|
|
|
12.8
|
|
|
16.3
|
|
||||
Unallocated
|
(9.9
|
)
|
|
(32.1
|
)
|
|
(4.0
|
)
|
|
(12.6
|
)
|
|
(26.3
|
)
|
|
(26.3
|
)
|
|
(20.2
|
)
|
|
(25.8
|
)
|
||||
Total Consolidated
|
$
|
30.8
|
|
|
100.0
|
%
|
|
$
|
31.8
|
|
|
100.0
|
%
|
|
$
|
99.9
|
|
|
100.0
|
%
|
|
$
|
78.3
|
|
|
100.0
|
%
|
($ in millions, except per share amounts)
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||||||||
|
September 30, 2016
|
|
September 30, 2015
|
|
September 30, 2016
|
|
September 30, 2015
|
||||||||||||||||||||
Net sales
|
$
|
209.3
|
|
|
100.0
|
%
|
|
$
|
184.4
|
|
|
100.0
|
%
|
|
$
|
641.2
|
|
|
100.0
|
%
|
|
$
|
554.3
|
|
|
100.0
|
%
|
Gross profit
|
63.1
|
|
|
30.1
|
|
|
52.4
|
|
|
28.4
|
|
|
193.5
|
|
|
30.2
|
|
|
158.6
|
|
|
28.6
|
|
||||
Restructuring & impairment expense
|
1.3
|
|
|
0.6
|
|
|
1.3
|
|
|
0.7
|
|
|
4.0
|
|
|
0.6
|
|
|
10.5
|
|
|
1.9
|
|
||||
Operating profit
|
30.8
|
|
|
14.7
|
|
|
31.8
|
|
|
17.2
|
|
|
99.9
|
|
|
15.6
|
|
|
78.3
|
|
|
14.1
|
|
||||
Interest expense
|
3.9
|
|
|
1.9
|
|
|
1.7
|
|
|
0.9
|
|
|
12.6
|
|
|
2.0
|
|
|
5.3
|
|
|
1.0
|
|
||||
Income from continuing operations
|
18.7
|
|
|
8.9
|
|
|
25.6
|
|
|
13.9
|
|
|
65.8
|
|
|
10.3
|
|
|
68.9
|
|
|
12.4
|
|
||||
Loss from discontinued operations
|
—
|
|
|
—
|
|
|
0.2
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
(0.9
|
)
|
|
(0.2
|
)
|
||||
Net income
|
$
|
18.7
|
|
|
8.9
|
%
|
|
$
|
25.8
|
|
|
14.0
|
%
|
|
$
|
65.8
|
|
|
10.3
|
%
|
|
$
|
68.0
|
|
|
12.3
|
%
|
Diluted earnings per share from continuing operations
|
$
|
0.61
|
|
|
|
|
|
$
|
0.84
|
|
|
|
|
|
$
|
2.15
|
|
|
|
|
$
|
2.25
|
|
|
|
||
Diluted earnings per share
|
$
|
0.61
|
|
|
|
|
|
$
|
0.85
|
|
|
|
|
|
$
|
2.15
|
|
|
|
|
$
|
2.22
|
|
|
|
||
Cash provided by operations
|
$
|
30.8
|
|
|
|
|
|
$
|
24.5
|
|
|
|
|
|
$
|
83.0
|
|
|
|
|
$
|
80.2
|
|
|
|
||
Capital spending
|
$
|
7.8
|
|
|
|
|
|
$
|
4.9
|
|
|
|
|
|
$
|
17.5
|
|
|
|
|
$
|
14.0
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|||||||||
|
September 30, 2016
|
|
September 30, 2015
|
|
Change
|
|
Percent Change
|
|||||||
Engineered Papers
|
$
|
136.8
|
|
|
$
|
142.4
|
|
|
$
|
(5.6
|
)
|
|
(3.9
|
)%
|
Advanced Materials & Structures
|
72.5
|
|
|
42.0
|
|
|
30.5
|
|
|
72.6
|
|
|||
Total
|
$
|
209.3
|
|
|
$
|
184.4
|
|
|
$
|
24.9
|
|
|
13.5
|
%
|
|
Amount
|
|
Percent
|
|||
Incremental revenue from acquired companies
|
$
|
32.8
|
|
|
17.8
|
%
|
Changes in volume, product mix and selling prices
|
(10.1
|
)
|
|
(5.4
|
)
|
|
Changes due to net foreign currency impacts
|
2.3
|
|
|
1.2
|
|
|
Changes due to royalties
|
(0.1
|
)
|
|
(0.1
|
)
|
|
Total
|
$
|
24.9
|
|
|
13.5
|
%
|
|
Three Months Ended
|
|
|
|
Percent Change
|
|
Percent of Net Sales
|
|||||||||||||
|
September 30, 2016
|
|
September 30, 2015
|
|
Change
|
|
|
2016
|
|
2015
|
||||||||||
Net Sales
|
$
|
209.3
|
|
|
$
|
184.4
|
|
|
$
|
24.9
|
|
|
13.5
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of products sold
|
146.2
|
|
|
132.0
|
|
|
14.2
|
|
|
10.8
|
|
|
69.9
|
|
|
71.6
|
|
|||
Gross Profit
|
$
|
63.1
|
|
|
$
|
52.4
|
|
|
$
|
10.7
|
|
|
20.4
|
%
|
|
30.1
|
%
|
|
28.4
|
%
|
|
Three Months Ended
|
|
|
|
Percent Change
|
|
Percent of Net Sales
|
|||||||||||||
|
September 30, 2016
|
|
September 30, 2015
|
|
Change
|
|
|
2016
|
|
2015
|
||||||||||
Selling expense
|
$
|
6.0
|
|
|
$
|
5.5
|
|
|
$
|
0.5
|
|
|
9.1
|
%
|
|
2.9
|
%
|
|
3.0
|
%
|
Research expense
|
4.2
|
|
|
3.5
|
|
|
0.7
|
|
|
20.0
|
|
|
2.0
|
|
|
1.9
|
|
|||
General expense
|
20.8
|
|
|
10.3
|
|
|
10.5
|
|
|
101.9
|
|
|
9.9
|
|
|
5.6
|
|
|||
Nonmanufacturing expenses
|
$
|
31.0
|
|
|
$
|
19.3
|
|
|
$
|
11.7
|
|
|
60.6
|
%
|
|
14.8
|
%
|
|
10.5
|
%
|
|
Three Months Ended
|
|
|
|
Percent Change
|
|
Percent of Net Sales
|
|||||||||||||
|
September 30, 2016
|
|
September 30, 2015
|
|
Change
|
|
|
2016
|
|
2015
|
||||||||||
Engineered Papers
|
$
|
1.3
|
|
|
$
|
1.4
|
|
|
$
|
(0.1
|
)
|
|
(7.1
|
)%
|
|
1.0
|
%
|
|
1.0
|
%
|
Advanced Materials & Structures
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Unallocated expenses
|
—
|
|
|
(0.1
|
)
|
|
0.1
|
|
|
(100.0
|
)
|
|
|
|
|
|||||
Total
|
$
|
1.3
|
|
|
$
|
1.3
|
|
|
$
|
—
|
|
|
—
|
%
|
|
0.6
|
%
|
|
0.7
|
%
|
|
Three Months Ended
|
|
|
|
Percent Change
|
|
Return on Net Sales
|
|||||||||||||
|
September 30, 2016
|
|
September 30, 2015
|
|
Change
|
|
|
2016
|
|
2015
|
||||||||||
Engineered Papers
|
$
|
32.0
|
|
|
$
|
31.0
|
|
|
$
|
1.0
|
|
|
3.2
|
%
|
|
23.4
|
%
|
|
21.8
|
%
|
Advanced Materials & Structures
|
8.7
|
|
|
4.8
|
|
|
3.9
|
|
|
81.3
|
|
|
12.0
|
|
|
11.4
|
|
|||
Unallocated expenses
|
(9.9
|
)
|
|
(4.0
|
)
|
|
(5.9
|
)
|
|
147.5
|
|
|
|
|
|
|||||
Total
|
$
|
30.8
|
|
|
$
|
31.8
|
|
|
$
|
(1.0
|
)
|
|
(3.1
|
)%
|
|
14.7
|
%
|
|
17.2
|
%
|
|
Nine Months Ended
|
|
|
|
|
|||||||||
|
September 30, 2016
|
|
September 30, 2015
|
|
Change
|
|
Percent Change
|
|||||||
Engineered Papers
|
$
|
425.7
|
|
|
$
|
431.2
|
|
|
$
|
(5.5
|
)
|
|
(1.3
|
)
|
Advanced Materials & Structures
|
215.5
|
|
|
123.1
|
|
|
92.4
|
|
|
75.1
|
|
|||
Total
|
$
|
641.2
|
|
|
$
|
554.3
|
|
|
$
|
86.9
|
|
|
15.7
|
%
|
|
Amount
|
|
Percent
|
|||
Incremental revenue from acquired companies
|
$
|
97.2
|
|
|
17.5
|
%
|
Changes in volume, product mix and selling prices
|
(8.0
|
)
|
|
(1.4
|
)
|
|
Changes due to net foreign currency impacts
|
(1.9
|
)
|
|
(0.3
|
)
|
|
Changes due to royalties
|
(0.4
|
)
|
|
(0.1
|
)
|
|
Total
|
$
|
86.9
|
|
|
15.7
|
%
|
|
Nine Months Ended
|
|
|
|
Percent Change
|
|
Percent of Net Sales
|
|||||||||||||
|
September 30, 2016
|
|
September 30, 2015
|
|
Change
|
|
|
2016
|
|
2015
|
||||||||||
Net Sales
|
$
|
641.2
|
|
|
$
|
554.3
|
|
|
$
|
86.9
|
|
|
15.7
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of products sold
|
447.7
|
|
|
395.7
|
|
|
52.0
|
|
|
13.1
|
|
|
69.8
|
|
|
71.4
|
|
|||
Gross Profit
|
$
|
193.5
|
|
|
$
|
158.6
|
|
|
$
|
34.9
|
|
|
22.0
|
%
|
|
30.2
|
%
|
|
28.6
|
%
|
|
Nine Months Ended
|
|
|
|
Percent Change
|
|
Percent of Net Sales
|
|||||||||||||
|
September 30, 2016
|
|
September 30, 2015
|
|
Change
|
|
|
2016
|
|
2015
|
||||||||||
Selling expense
|
$
|
18.8
|
|
|
$
|
16.0
|
|
|
$
|
2.8
|
|
|
17.5
|
%
|
|
2.9
|
%
|
|
2.9
|
%
|
Research expense
|
12.9
|
|
|
10.5
|
|
|
2.4
|
|
|
22.9
|
|
|
2.0
|
|
|
1.9
|
|
|||
General expense
|
57.9
|
|
|
43.3
|
|
|
14.6
|
|
|
33.7
|
|
|
9.0
|
|
|
7.8
|
|
|||
Nonmanufacturing expenses
|
$
|
89.6
|
|
|
$
|
69.8
|
|
|
$
|
19.8
|
|
|
28.4
|
%
|
|
13.9
|
%
|
|
12.6
|
%
|
|
Nine Months Ended
|
|
|
|
Percent Change
|
|
Percent of Net Sales
|
|||||||||||||
|
September 30, 2016
|
|
September 30, 2015
|
|
Change
|
|
|
2016
|
|
2015
|
||||||||||
Engineered Papers
|
$
|
3.1
|
|
|
$
|
10.5
|
|
|
$
|
(7.4
|
)
|
|
(70.5
|
)%
|
|
0.7
|
%
|
|
2.4
|
%
|
Advanced Materials & Structures
|
0.6
|
|
|
(0.2
|
)
|
|
0.8
|
|
|
400.0
|
|
|
0.3
|
|
|
(0.2
|
)
|
|||
Unallocated expenses
|
0.3
|
|
|
0.2
|
|
|
0.1
|
|
|
50.0
|
|
|
|
|
|
|||||
Total
|
$
|
4.0
|
|
|
$
|
10.5
|
|
|
$
|
(6.5
|
)
|
|
(61.9
|
)%
|
|
0.6
|
%
|
|
1.9
|
%
|
|
Nine Months Ended
|
|
|
|
Percent Change
|
|
Return on Net Sales
|
|||||||||||||
|
September 30, 2016
|
|
September 30, 2015
|
|
Change
|
|
|
2016
|
|
2015
|
||||||||||
Engineered Papers
|
$
|
103.4
|
|
|
$
|
85.7
|
|
|
$
|
17.7
|
|
|
20.7
|
%
|
|
24.3
|
%
|
|
19.9
|
%
|
Advanced Materials & Structures
|
22.8
|
|
|
12.8
|
|
|
10.0
|
|
|
78.1
|
|
|
10.6
|
|
|
10.4
|
|
|||
Unallocated expenses
|
(26.3
|
)
|
|
(20.2
|
)
|
|
(6.1
|
)
|
|
30.2
|
|
|
|
|
|
|||||
Total
|
$
|
99.9
|
|
|
$
|
78.3
|
|
|
$
|
21.6
|
|
|
27.6
|
%
|
|
15.6
|
%
|
|
14.1
|
%
|
•
|
Reinvesting capital in businesses through a disciplined approach to meet global demand for value-adding solutions;
|
•
|
Returning at least one-third of annual free cash flow to stockholders via dividends and/or share repurchase programs; and
|
•
|
Retaining flexibility to execute growth opportunities in current and adjacent industries.
|
Cash Flows from Operating Activities
($ in millions)
|
Nine Months Ended
|
||||||
September 30, 2016
|
|
September 30, 2015
|
|||||
Net Income
|
$
|
65.8
|
|
|
$
|
68.0
|
|
Less: Loss from discontinued operations
|
—
|
|
|
(0.9
|
)
|
||
Income from continuing operations
|
65.8
|
|
|
68.9
|
|
||
Non-cash items included in net income:
|
|
|
|
||||
Depreciation and amortization
|
33.3
|
|
|
29.0
|
|
||
Restructuring-related impairment
|
0.5
|
|
|
3.5
|
|
||
Deferred income tax provision
|
(3.3
|
)
|
|
0.5
|
|
||
Pension and other postretirement benefits
|
2.7
|
|
|
3.4
|
|
||
Stock-based compensation
|
3.7
|
|
|
1.8
|
|
||
Income from equity affiliates
|
(2.4
|
)
|
|
(4.3
|
)
|
||
Gain on sale of intangible assets
|
(1.8
|
)
|
|
(4.3
|
)
|
||
Excess tax expense (benefits) of stock-based awards
|
0.2
|
|
|
(0.5
|
)
|
||
Cash dividends received from equity affiliates
|
—
|
|
|
3.9
|
|
||
Other items
|
(1.2
|
)
|
|
0.3
|
|
||
Net changes in operating working capital
|
(14.4
|
)
|
|
(22.5
|
)
|
||
Net cash provided by operating activities of:
|
|
|
|
||||
Continuing operations
|
83.1
|
|
|
79.7
|
|
||
Discontinued operations
|
(0.1
|
)
|
|
0.5
|
|
||
Net cash provided by operations
|
$
|
83.0
|
|
|
$
|
80.2
|
|
Operating Working Capital
($ in millions)
|
Nine Months Ended
|
||||||
September 30, 2016
|
|
September 30, 2015
|
|||||
Changes in operating working capital
|
|
|
|
||||
Accounts receivable
|
$
|
(14.7
|
)
|
|
$
|
(32.6
|
)
|
Inventories
|
4.9
|
|
|
(3.0
|
)
|
||
Prepaid expenses
|
(1.0
|
)
|
|
—
|
|
||
Accounts payable
|
(2.5
|
)
|
|
2.0
|
|
||
Accrued expenses
|
(7.2
|
)
|
|
(1.5
|
)
|
||
Accrued income taxes
|
6.1
|
|
|
12.6
|
|
||
Net changes in operating working capital
|
$
|
(14.4
|
)
|
|
$
|
(22.5
|
)
|
Cash Flows from Investing Activities
($ in millions)
|
Nine Months Ended
|
||||||
September 30, 2016
|
|
September 30, 2015
|
|||||
Capital spending
|
$
|
(17.5
|
)
|
|
$
|
(14.0
|
)
|
Capitalized software costs
|
(1.7
|
)
|
|
(0.7
|
)
|
||
Acquisitions, net of cash acquired
|
—
|
|
|
(0.4
|
)
|
||
Other
|
4.2
|
|
|
2.9
|
|
||
Cash used for investing
|
$
|
(15.0
|
)
|
|
$
|
(12.2
|
)
|
Cash Flows from Financing Activities
($ in millions)
|
Nine Months Ended
|
||||||
September 30, 2016
|
|
September 30, 2015
|
|||||
Cash dividends paid to SWM stockholders
|
$
|
(36.6
|
)
|
|
$
|
(34.7
|
)
|
Net repayments of borrowings
|
(131.6
|
)
|
|
(32.4
|
)
|
||
Purchases of common stock
|
(0.6
|
)
|
|
(2.9
|
)
|
||
Excess tax benefits of stock-based awards
|
(0.2
|
)
|
|
0.5
|
|
||
Cash used for financing
|
$
|
(169.0
|
)
|
|
$
|
(69.5
|
)
|
Debt Instruments
($ in millions)
|
Nine Months Ended
|
||||||
September 30, 2016
|
|
September 30, 2015
|
|||||
Changes in short-term debt
|
$
|
—
|
|
|
$
|
0.2
|
|
Proceeds from issuances of long-term debt
|
35.6
|
|
|
35.5
|
|
||
Payments on long-term debt
|
(167.2
|
)
|
|
(68.1
|
)
|
||
Net repayments of borrowings
|
$
|
(131.6
|
)
|
|
$
|
(32.4
|
)
|
•
|
Changes in sales or production volumes, pricing or manufacturing costs of reconstituted tobacco products, cigarette paper (including for lower ignition propensity cigarettes), filtration-related products due to changing customer demands, new technologies such as e-cigarettes, inventory adjustments and rebalancings, changing regulatory requirements, competition or otherwise;
|
•
|
Loss of one or more significant customers, or changes in their cigarette blending approaches;
|
•
|
New reports as to the effect of smoking on human health or the environment;
|
•
|
Risks associated with the implementation of our strategic growth initiatives, including diversification, and the Company's understanding of, and entry into, new industries and technologies;
|
•
|
Changes in the source and intensity of competition in our market segments, including risk from lower cost virgin tobacco leaf or other, cheaper, cigarette fillers;
|
•
|
Our ability to attract and retain key personnel, due to our prior restructuring actions, the tobacco industry in which we operate or otherwise;
|
•
|
Weather conditions, including potential impacts, if any, from climate change, known and unknown, seasonality factors that affect the demand and price for virgin tobacco leaf and natural disasters or unusual weather events;
|
•
|
Increases in commodity prices and lack of availability of such commodities, including energy, wood pulp and resins, could impact the profitability of our products;
|
•
|
Increases in operating costs due to inflation or otherwise, such as labor expense, compensation and benefits costs, including costs related to the comprehensive health care reform law enacted in the U.S. in 2010;
|
•
|
Employee retention and labor shortages;
|
•
|
Changes in employment, wage and hour laws and regulations in the U.S., France and elsewhere, including loi de Securisation de l'emploi, unionization rules and regulations by the National Labor Relations Board, equal pay initiatives, additional anti-discrimination rules or tests and different interpretations of exemptions from overtime laws;
|
•
|
Labor disruptions, strikes, stoppages, or other disruptions at our facilities or in the countries in which we operate;
|
•
|
Existing and future governmental regulation and the enforcement thereof, for example, relating to the tobacco industry, taxation and the environment (including the impact thereof on our Chinese joint ventures);
|
•
|
Changes in general economic, financial and credit conditions in the U.S., Europe, China and elsewhere, including the impact thereof on currency (including any weakening of the euro and Brazilian Real) and on interest rates;
|
•
|
Restrictions imposed on us through our Amended Credit Agreement, including as to the incurrence of additional debt, the granting of further security interests and the maintenance of certain financial ratios;
|
•
|
Changes in the manner in which we finance our debt and future capital needs, including potential acquisitions;
|
•
|
The success of, and costs associated with, our current or future restructuring initiatives, including the granting of any needed governmental approvals and the occurrence of work stoppages or other labor disruptions;
|
•
|
Changes in the discount rates, revenue growth, cash flow growth rates or other assumptions used by the Company in its assessment for impairment of assets and adverse economic conditions or other factors that would result in significant impairment charges;
|
•
|
The failure of one or more material suppliers, including energy, resin and pulp suppliers, to supply materials as needed to maintain our product plans and cost structure;
|
•
|
International conflicts and disputes (for example, relating to Russia and to the Ukraine), including their impact on our sales and the adoption of new LIP regulations;
|
•
|
The pace and extent of further international adoption of LIP cigarette standards and the nature of standards so adopted;
|
•
|
Risks associated with our 50%-owned, non-U.S. joint ventures relating to control and decision-making, compliance, accounting standards, transparency and customer relations, among others;
|
•
|
A failure in our risk management and/or currency or interest rate swaps and hedging programs, including the failures of any insurance company or counterparty;
|
•
|
The number, type, outcomes (by judgment or settlement) and costs of legal, tax, regulatory or administrative proceedings, litigation and/or amnesty programs, including those in Brazil;
|
•
|
The outcome and cost of LIP intellectual property infringement and validity litigation and European Patent Office opposition proceedings and the risk of eventual loss of our technological advantages including expiration of patents and ongoing protection of our proprietary trade secrets, or emergence of new disruptive technologies;
|
•
|
Risks associated with acquisitions or other strategic transactions, including acquired liabilities and restrictions, retaining customers from businesses acquired, achieving any expected results or synergies from acquired businesses, complying with new regulatory frameworks, difficulties in integrating acquired businesses or implementing strategic transactions generally and risks associated with international acquisition transactions, including in countries where we do not currently have a material presence;
|
•
|
Risks associated with dispositions, including post-closing claims being made against us, disruption to our other businesses during a sale process or thereafter, credit risks associated with any buyer of such disposed assets and our ability to collect funds due from any such buyer;
|
•
|
Risks associated with our global asset realignment initiatives, including: changes in law, treaties, interpretations or regulatory determinations; audits made by applicable regulatory authorities and our auditor; and our ability to operate our business in a manner consistent with the regulatory requirements for such realignment;
|
•
|
Increased taxation on tobacco-related products;
|
•
|
Costs and timing of implementation and effectiveness of any upgrades to our information technology systems;
|
•
|
Failure by us to comply with any privacy or data security laws or to protect against theft of customer, employee and corporate sensitive information; and
|
•
|
Other factors described elsewhere in this document and from time to time in documents that we file with the SEC.
|
Issuer Purchases of Equity Securities
|
||||||||||||||||||
Period
|
|
Total
Number of
Shares
Purchased
|
|
Average
Price
Paid per
Share
|
|
Total Number of Shares
Purchased as Part of
Publicly Announced
Programs
|
|
Approximate Dollar Value of Shares that May Yet be Purchased Under the Programs
|
||||||||||
|
|
|
|
|
|
(# shares)
|
|
($ in millions)
|
|
($ in millions)
|
||||||||
First Quarter 2016
|
|
18,379
|
|
|
$
|
32.83
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Second Quarter 2016
|
|
159
|
|
|
34.21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
July 2016
|
|
1,001
|
|
|
37.81
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
August 2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
September 2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Third Quarter 2016
|
|
1,001
|
|
|
37.81
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Total Year-to-Date 2016
|
|
19,539
|
|
|
$
|
33.10
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
•
|
a cash payment in an amount equal to 3 times the highest annual compensation (base salary and annual incentive awards) paid or payable within the 3-year period ending on the date of termination; and
|
•
|
specified health care and other benefits from the Company for a period of 3 years.
|
•
|
a cash payment in an amount equal to the product of (i) the participant’s annual base salary divided by 12 and (ii) the number of months of severance set forth in the participation agreement with such participant (provided that such amount shall not be more than the participant’s monthly base salary multiplied by 24); and
|
•
|
specified health care and other benefits from the Company for the number of months of severance set forth in the participation agreement with such participant (not to exceed 24 months).
|
Exhibit
Number
|
|
Exhibit
|
10.1
|
|
2016 Executive Severance Plan.
|
10.2
|
|
2016 Executive Severance Plan Participation Agreement.
|
31.1
|
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15(d)-14(a) of the Securities Exchange Act of 1934, as amended.
|
31.2
|
|
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15(d)-14(a) of the Securities Exchange Act of 1934, as amended.
|
32
|
|
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ‡
|
101
|
|
The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Income, (ii) the Condensed Consolidated Statements of Comprehensive Income (Loss), (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Changes in Stockholders' Equity, (v) the Condensed Consolidated Statements of Cash Flow, and (vi) Notes to Consolidated Financial Statements.
|
‡
|
This Section 906 certification is not being incorporated by reference into this Quarterly Report on Form 10-Q filing or otherwise deemed to be filed with the Securities and Exchange Commission.
|
By:
|
/s/ Allison Aden
|
|
Allison Aden
Executive Vice President, Finance and
Chief Financial Officer
(duly authorized officer and principal financial officer)
|
|
|
|
November 2, 2016
|
By:
|
/s/ Robert J. Cardin
|
|
Robert J. Cardin
Corporate Controller
(principal accounting officer)
|
|
|
|
November 2, 2016
|
•
|
"Banded cigarette paper"
is a type of paper, used to produce lower ignition propensity cigarettes, by applying bands to the paper during the papermaking process.
|
•
|
"Lower ignition propensity cigarette paper"
includes banded and print banded cigarette paper, both of which contain bands, which increase the likelihood that an unattended cigarette will self-extinguish.
|
•
|
"Net debt to EBITDA ratio"
is a financial measurement used in bank covenants where "
Net Debt
" is defined as consolidated total debt minus unrestricted domestic cash and cash equivalents and 65% of non-domestic unrestricted domestic cash and cash equivalents, in excess of $15 million, and "
EBITDA"
is defined as net income plus the sum of interest expense, income tax expense, depreciation and amortization, non-cash restructuring and impairment charges less amortization of deferred revenue and interest in the earnings of equity affiliates to the extent such earnings are not distributed to the Company.
|
•
|
"Net foreign currency translation impacts"
are estimates of the impact of changes in foreign currency rates on the translation of the Company's financial results as compared to the applicable comparable period and are derived by translating the current local currency results into U.S. Dollars based upon the foreign currency exchange rates for the applicable comparable period.
|
•
|
"Net debt to equity ratio"
is total debt less cash and cash equivalents, divided by stockholders' equity.
|
•
|
"Net operating working capital"
is accounts receivable, inventory, income taxes receivable and prepaid expense, less accounts payable, accrued expenses and income taxes payable.
|
•
|
"Non-wovens"
are a fabric-like material made from long fibers, bonded together by chemical, mechanical, heat or solvent treatment. The term is used to denote fabrics, such as felt, which are neither woven nor knitted.
|
•
|
"Print banded cigarette paper"
is a type of paper, used to produce lower ignition propensity cigarettes, with bands added to the paper during a printing process, subsequent to the papermaking process.
|
•
|
"Reconstituted tobacco"
is produced in two forms: leaf, or reconstituted tobacco leaf, and wrapper and binder products. Reconstituted tobacco leaf is blended with virgin tobacco as a design aid to achieve certain attributes of finished cigarettes. Wrapper and binder are reconstituted tobacco products used by manufacturers of cigars.
|
•
|
"Restructuring expense"
represents expenses incurred in connection with activities intended to significantly change the size or nature of the business operations, including significantly reduced utilization of operating equipment, exit of a product or market or a significant workforce reduction and charges to reduce property, plant and equipment to its fair value.
|
•
|
"Reverse osmosis"
is a water purification technology that uses a semipermeable membrane to remove larger particles from drinking water.
|
•
|
"Start-up costs"
are costs incurred prior to generation of income producing activities in the case of a new plant, or costs incurred in excess of expected ongoing normal costs in the case of a new or rebuilt machine. Start-up costs can include excess variable costs such as raw materials, utilities and labor and unabsorbed fixed costs.
|
•
|
"Tobacco paper"
includes cigarette paper which wraps the column of tobacco within a cigarette and has varying properties such as basis weight, porosity, opacity, tensile strength, texture and burn rate, as well as plug wrap paper which wraps the outer layer of a cigarette filter and is used to hold the filter materials in a cylindrical form, and tipping paper which joins the filter element to the tobacco-filled column of the cigarette and is both printable and glueable at high speeds.
|
•
|
"Total debt to capital ratio"
is total debt divided by the sum of total debt and total stockholders' equity.
|
•
|
"Urethane"
is a crystalline compound composed of organic units used in the manufacture of polyurethane and various types of films.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Schweitzer-Mauduit International, Inc. (the “Registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4.
|
The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
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5.
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The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
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a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
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/s/ Frédéric P. Villoutreix
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Frédéric P. Villoutreix
Chairman of the Board and
Chief Executive Officer
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1.
|
I have reviewed this quarterly report on Form 10-Q of Schweitzer-Mauduit International, Inc. (the “Registrant”);
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
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4.
|
The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
5.
|
The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
|
/s/ Allison Aden
|
|
Allison Aden
Executive Vice President, Finance and
Chief Financial Officer
|
By:
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/s/ Frédéric P. Villoutreix
|
|
By:
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/s/ Allison Aden
|
|
Frédéric P. Villoutreix
Chairman of the Board and
Chief Executive Officer
|
|
|
Allison Aden
Executive Vice President, Finance and
Chief Financial Officer
|
|
|
|
|
|
|
November 2, 2016
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November 2, 2016
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