☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|
||
|
For the quarterly period ended
|
June 30, 2019
|
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|
|
For the transition period from __________________to __________________
|
Delaware
|
|
62-1612879
|
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
|
|
100 North Point Center East,
|
Suite 600
|
|
|
Alpharetta,
|
Georgia
|
|
30022
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Securities registered pursuant to Section 12(b) of the Act:
|
||
Title of each class
|
Trading Symbol
|
Name of each exchange on which registered
|
Common stock, $0.10 par value
|
SWM
|
New York Stock Exchange
|
|
|
|
Page
|
|
|
Part I. - Financial Information
|
|
Item 1.
|
|
||
|
|
|
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Item 2.
|
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|
|
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Item 3.
|
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||
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Item 4.
|
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||
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Part II. - Other Information
|
|
Item 1.
|
|
||
|
|
|
|
Item 1A.
|
|
||
|
|
|
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Item 2.
|
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||
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Item 3.
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||
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Item 4.
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Item 5.
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||
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Item 6.
|
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||
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||
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||
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Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
June 30, 2018
|
|
June 30, 2019
|
|
June 30, 2018
|
||||||||
Net sales
|
$
|
269.9
|
|
|
$
|
270.4
|
|
|
$
|
527.9
|
|
|
$
|
532.3
|
|
Cost of products sold
|
190.9
|
|
|
193.0
|
|
|
381.0
|
|
|
382.9
|
|
||||
Gross profit
|
79.0
|
|
|
77.4
|
|
|
146.9
|
|
|
149.4
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Selling expense
|
8.6
|
|
|
9.2
|
|
|
17.2
|
|
|
18.3
|
|
||||
Research expense
|
3.7
|
|
|
4.1
|
|
|
7.0
|
|
|
8.2
|
|
||||
General expense
|
22.1
|
|
|
21.4
|
|
|
47.7
|
|
|
44.8
|
|
||||
Total nonmanufacturing expenses
|
34.4
|
|
|
34.7
|
|
|
71.9
|
|
|
71.3
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Restructuring and impairment expense
|
0.4
|
|
|
0.6
|
|
|
0.4
|
|
|
1.0
|
|
||||
Operating profit
|
44.2
|
|
|
42.1
|
|
|
74.6
|
|
|
77.1
|
|
||||
Interest expense
|
15.1
|
|
|
6.6
|
|
|
22.9
|
|
|
12.8
|
|
||||
Other (expense), net
|
(2.7
|
)
|
|
(0.5
|
)
|
|
(3.3
|
)
|
|
(0.8
|
)
|
||||
Income from continuing operations before income taxes and income from equity affiliates
|
26.4
|
|
|
35.0
|
|
|
48.4
|
|
|
63.5
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Provision for income taxes
|
5.2
|
|
|
8.7
|
|
|
9.6
|
|
|
16.0
|
|
||||
(Loss) from equity affiliates, net of
income taxes
|
(0.7
|
)
|
|
(0.5
|
)
|
|
(0.9
|
)
|
|
(0.8
|
)
|
||||
Income from continuing operations
|
20.5
|
|
|
25.8
|
|
|
37.9
|
|
|
46.7
|
|
||||
(Loss) from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
||||
Net income
|
$
|
20.5
|
|
|
$
|
25.8
|
|
|
$
|
37.9
|
|
|
$
|
46.3
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per share - basic:
|
|
|
|
|
|
|
|
|
|
||||||
Income per share from continuing operations
|
$
|
0.66
|
|
|
$
|
0.84
|
|
|
$
|
1.23
|
|
|
$
|
1.52
|
|
(Loss) per share from discontinued
operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
||||
Net income per share – basic
|
$
|
0.66
|
|
|
$
|
0.84
|
|
|
$
|
1.23
|
|
|
$
|
1.51
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per share – diluted:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income per share from continuing operations
|
$
|
0.66
|
|
|
$
|
0.83
|
|
|
$
|
1.22
|
|
|
$
|
1.51
|
|
(Loss) per share from discontinued
operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
||||
Net income per share – diluted
|
$
|
0.66
|
|
|
$
|
0.83
|
|
|
$
|
1.22
|
|
|
$
|
1.50
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||||
Basic
|
30,661,400
|
|
|
30,565,800
|
|
|
30,641,100
|
|
|
30,527,400
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Diluted
|
30,809,300
|
|
|
30,705,900
|
|
|
30,791,000
|
|
|
30,663,000
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
June 30, 2018
|
|
June 30, 2019
|
|
June 30, 2018
|
||||||||
Net income
|
$
|
20.5
|
|
|
$
|
25.8
|
|
|
$
|
37.9
|
|
|
$
|
46.3
|
|
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
2.2
|
|
|
(30.6
|
)
|
|
3.1
|
|
|
(22.0
|
)
|
||||
Less: Reclassification adjustment for realized translation adjustments
|
(0.2
|
)
|
|
(0.2
|
)
|
|
(0.4
|
)
|
|
(0.4
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Unrealized gains (losses) on derivative instruments
|
0.9
|
|
|
(2.2
|
)
|
|
1.3
|
|
|
0.3
|
|
||||
Less: Reclassification adjustment for gains on derivative instruments included in net income
|
(1.8
|
)
|
|
(0.8
|
)
|
|
(2.7
|
)
|
|
(1.6
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Reclassification adjustment for amortization of postretirement benefit plans' costs included in net periodic benefit cost
|
1.0
|
|
|
0.8
|
|
|
1.5
|
|
|
1.5
|
|
||||
Other comprehensive income (loss)
|
2.1
|
|
|
(33.0
|
)
|
|
2.8
|
|
|
(22.2
|
)
|
||||
Comprehensive income (loss)
|
$
|
22.6
|
|
|
$
|
(7.2
|
)
|
|
$
|
40.7
|
|
|
$
|
24.1
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
ASSETS
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
87.8
|
|
|
$
|
93.8
|
|
Accounts receivable, net
|
166.6
|
|
|
154.6
|
|
||
Inventories
|
154.2
|
|
|
151.5
|
|
||
Income taxes receivable
|
14.2
|
|
|
12.2
|
|
||
Assets held for sale
|
12.0
|
|
|
12.0
|
|
||
Other current assets
|
6.9
|
|
|
5.1
|
|
||
Total current assets
|
441.7
|
|
|
429.2
|
|
||
|
|
|
|
||||
Property, plant and equipment, net
|
333.4
|
|
|
340.3
|
|
||
Deferred income tax benefits
|
0.4
|
|
|
0.3
|
|
||
Investment in equity affiliates
|
51.0
|
|
|
51.9
|
|
||
Goodwill
|
338.0
|
|
|
338.1
|
|
||
Intangible assets
|
262.3
|
|
|
272.8
|
|
||
Other assets
|
62.6
|
|
|
33.9
|
|
||
Total assets
|
$
|
1,489.4
|
|
|
$
|
1,466.5
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities
|
|
|
|
|
|
||
Current debt
|
$
|
1.9
|
|
|
$
|
3.3
|
|
Accounts payable
|
60.9
|
|
|
65.7
|
|
||
Income taxes payable
|
1.4
|
|
|
1.6
|
|
||
Accrued expenses
|
77.9
|
|
|
72.9
|
|
||
Total current liabilities
|
142.1
|
|
|
143.5
|
|
||
|
|
|
|
||||
Long-term debt
|
604.7
|
|
|
618.8
|
|
||
Long-term income tax payable
|
25.6
|
|
|
27.0
|
|
||
Pension and other postretirement benefits
|
28.6
|
|
|
28.2
|
|
||
Deferred income tax liabilities
|
47.0
|
|
|
48.0
|
|
||
Other liabilities
|
68.8
|
|
|
43.1
|
|
||
Total liabilities
|
916.8
|
|
|
908.6
|
|
||
Stockholders’ equity:
|
|
|
|
|
|
||
Preferred stock, $0.10 par value; 10,000,000 shares authorized; none issued or outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.10 par value; 100,000,000 shares authorized; 30,894,598 and 30,771,244 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
|
3.1
|
|
|
3.1
|
|
||
Additional paid-in-capital
|
73.6
|
|
|
71.1
|
|
||
Retained earnings
|
617.6
|
|
|
608.2
|
|
||
Accumulated other comprehensive loss, net of tax
|
(121.7
|
)
|
|
(124.5
|
)
|
||
Total stockholders’ equity
|
572.6
|
|
|
557.9
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,489.4
|
|
|
$
|
1,466.5
|
|
|
Common Stock Issued
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Shares
|
|
Amount
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
|
|||||||||||
Balance, March 31, 2018
|
30,767,897
|
|
|
$
|
3.1
|
|
|
$
|
67.8
|
|
|
$
|
569.8
|
|
|
$
|
(78.6
|
)
|
|
$
|
562.1
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
25.8
|
|
|
—
|
|
|
25.8
|
|
|||||
Other comprehensive (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33.0
|
)
|
|
(33.0
|
)
|
|||||
Dividends declared ($0.43 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(13.2
|
)
|
|
—
|
|
|
(13.2
|
)
|
|||||
Restricted stock forfeitures, net
|
(9,674
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based employee compensation expense
|
—
|
|
|
—
|
|
|
1.0
|
|
|
—
|
|
|
—
|
|
|
1.0
|
|
|||||
Stock issued to directors as compensation
|
1,239
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Purchases and retirement of common stock
|
(4,703
|
)
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
(0.2
|
)
|
|||||
Balance, June 30, 2018
|
30,754,759
|
|
|
$
|
3.1
|
|
|
$
|
68.8
|
|
|
$
|
582.2
|
|
|
$
|
(111.6
|
)
|
|
$
|
542.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance, March 31, 2019
|
30,889,589
|
|
|
$
|
3.1
|
|
|
$
|
72.0
|
|
|
$
|
610.8
|
|
|
$
|
(123.8
|
)
|
|
$
|
562.1
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
20.5
|
|
|
—
|
|
|
20.5
|
|
|||||
Other comprehensive (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.1
|
|
|
2.1
|
|
|||||
Dividends declared ($0.44 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(13.6
|
)
|
|
—
|
|
|
(13.6
|
)
|
|||||
Restricted stock issuances, net
|
5,084
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based employee compensation expense
|
—
|
|
|
—
|
|
|
1.5
|
|
|
—
|
|
|
—
|
|
|
1.5
|
|
|||||
Stock issued to directors as compensation
|
698
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|||||
Purchases and retirement of common stock
|
(773
|
)
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|||||
Balance, June 30, 2019
|
30,894,598
|
|
|
$
|
3.1
|
|
|
$
|
73.6
|
|
|
$
|
617.6
|
|
|
$
|
(121.7
|
)
|
|
$
|
572.6
|
|
|
Common Stock Issued
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Shares
|
|
Amount
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
|
|||||||||||
Balance, December 31, 2017
|
30,711,299
|
|
|
$
|
3.1
|
|
|
$
|
66.3
|
|
|
$
|
566.7
|
|
|
$
|
(89.4
|
)
|
|
$
|
546.7
|
|
Cumulative effects of changes in accounting standards
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.7
|
)
|
|
—
|
|
|
(1.7
|
)
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
46.3
|
|
|
—
|
|
|
46.3
|
|
|||||
Other comprehensive (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22.2
|
)
|
|
(22.2
|
)
|
|||||
Dividends declared ($0.86 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(26.4
|
)
|
|
—
|
|
|
(26.4
|
)
|
|||||
Restricted stock issuances, net
|
108,154
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based employee compensation expense
|
—
|
|
|
—
|
|
|
2.4
|
|
|
—
|
|
|
—
|
|
|
2.4
|
|
|||||
Stock issued to directors as compensation
|
2,643
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|||||
Purchases and retirement of common stock
|
(67,337
|
)
|
|
—
|
|
|
—
|
|
|
(2.7
|
)
|
|
—
|
|
|
(2.7
|
)
|
|||||
Balance, June 30, 2018
|
30,754,759
|
|
|
$
|
3.1
|
|
|
$
|
68.8
|
|
|
$
|
582.2
|
|
|
$
|
(111.6
|
)
|
|
$
|
542.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance, December 31, 2018
|
30,771,244
|
|
|
$
|
3.1
|
|
|
$
|
71.1
|
|
|
$
|
608.2
|
|
|
$
|
(124.5
|
)
|
|
$
|
557.9
|
|
Cumulative effects of changes in accounting standards
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
|
(0.3
|
)
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
37.9
|
|
|
—
|
|
|
37.9
|
|
|||||
Other comprehensive (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.8
|
|
|
2.8
|
|
|||||
Dividends declared ($0.88 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(27.2
|
)
|
|
—
|
|
|
(27.2
|
)
|
|||||
Restricted stock issuances, net
|
146,105
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based employee compensation expense
|
—
|
|
|
—
|
|
|
2.4
|
|
|
—
|
|
|
—
|
|
|
2.4
|
|
|||||
Stock issued to directors as compensation
|
2,394
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|||||
Purchases and retirement of common stock
|
(25,145
|
)
|
|
—
|
|
|
—
|
|
|
(1.0
|
)
|
|
—
|
|
|
(1.0
|
)
|
|||||
Balance, June 30, 2019
|
30,894,598
|
|
|
$
|
3.1
|
|
|
$
|
73.6
|
|
|
$
|
617.6
|
|
|
$
|
(121.7
|
)
|
|
$
|
572.6
|
|
|
Six Months Ended
|
||||||
|
June 30,
2019 |
|
June 30,
2018 |
||||
Operating
|
|
|
|
||||
Net income
|
$
|
37.9
|
|
|
$
|
46.3
|
|
Less: Loss from discontinued operations
|
—
|
|
|
(0.4
|
)
|
||
Income from continuing operations
|
37.9
|
|
|
46.7
|
|
||
Non-cash items included in net income:
|
|
|
|
||||
Depreciation and amortization
|
28.9
|
|
|
31.0
|
|
||
Restructuring-related impairment
|
—
|
|
|
0.2
|
|
||
Deferred income tax
|
(0.7
|
)
|
|
2.3
|
|
||
Pension and other postretirement benefits
|
1.3
|
|
|
2.0
|
|
||
Stock-based compensation
|
2.5
|
|
|
2.5
|
|
||
Loss from equity affiliates
|
0.9
|
|
|
0.8
|
|
||
Brazil tax assessment accruals, net (Note 13)
|
10.9
|
|
|
—
|
|
||
Other items
|
0.9
|
|
|
1.1
|
|
||
Changes in operating working capital, net of assets acquired:
|
|
|
|
||||
Accounts receivable
|
(12.2
|
)
|
|
(19.1
|
)
|
||
Inventories
|
(2.6
|
)
|
|
(5.4
|
)
|
||
Prepaid expenses
|
(1.9
|
)
|
|
(2.1
|
)
|
||
Accounts payable
|
(2.2
|
)
|
|
4.5
|
|
||
Accrued expenses
|
(4.9
|
)
|
|
(7.3
|
)
|
||
Accrued income taxes
|
(3.8
|
)
|
|
(1.3
|
)
|
||
Net changes in operating working capital
|
(27.6
|
)
|
|
(30.7
|
)
|
||
Net cash provided by operating activities of:
|
|
|
|
||||
- Continuing operations
|
55.0
|
|
|
55.9
|
|
||
- Discontinued operations
|
—
|
|
|
0.2
|
|
||
Net cash provided by operations
|
55.0
|
|
|
56.1
|
|
||
Investing
|
|
|
|
||||
Capital spending
|
(15.2
|
)
|
|
(13.7
|
)
|
||
Capitalized software costs
|
(2.8
|
)
|
|
(0.6
|
)
|
||
Other investing
|
0.8
|
|
|
(0.7
|
)
|
||
Net cash used in investing
|
(17.2
|
)
|
|
(15.0
|
)
|
|
Six Months Ended
|
||||||
|
June 30,
2019 |
|
June 30,
2018 |
||||
Financing
|
|
|
|
||||
Cash dividends paid to SWM stockholders
|
(27.2
|
)
|
|
(26.4
|
)
|
||
Changes in short-term debt
|
(0.1
|
)
|
|
(1.5
|
)
|
||
Proceeds from issuances of long-term debt
|
0.1
|
|
|
0.8
|
|
||
Payments on long-term debt
|
(15.3
|
)
|
|
(41.5
|
)
|
||
Purchases of common stock
|
(1.0
|
)
|
|
(2.7
|
)
|
||
Net cash used in financing
|
(43.5
|
)
|
|
(71.3
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(0.3
|
)
|
|
(2.8
|
)
|
||
Decrease in cash and cash equivalents
|
(6.0
|
)
|
|
(33.0
|
)
|
||
Cash and cash equivalents at beginning of period
|
93.8
|
|
|
106.9
|
|
||
Cash and cash equivalents at end of period
|
$
|
87.8
|
|
|
$
|
73.9
|
|
|
|
|
|
||||
Supplemental Cash Flow Disclosures
|
|
|
|
||||
Cash paid for interest, net
|
$
|
15.5
|
|
|
$
|
13.5
|
|
Cash paid for taxes, net
|
$
|
13.6
|
|
|
$
|
14.5
|
|
Change in capital spending in accounts payable and accrued liabilities
|
$
|
3.7
|
|
|
$
|
1.8
|
|
|
Three Months Ended
|
||||||||||||||||||||||
|
June 30, 2019
|
|
June 30, 2018
|
||||||||||||||||||||
|
AMS
|
|
EP
|
|
Total
|
|
AMS
|
|
EP
|
|
Total
|
||||||||||||
Product revenues
|
$
|
122.7
|
|
|
$
|
128.3
|
|
|
$
|
251.0
|
|
|
$
|
120.6
|
|
|
$
|
133.6
|
|
|
$
|
254.2
|
|
Materials conversion revenues
|
2.0
|
|
|
13.8
|
|
|
15.8
|
|
|
2.2
|
|
|
11.5
|
|
|
13.7
|
|
||||||
Other revenues
|
2.0
|
|
|
1.1
|
|
|
3.1
|
|
|
1.2
|
|
|
1.3
|
|
|
2.5
|
|
||||||
Total revenues (1)
|
$
|
126.7
|
|
|
$
|
143.2
|
|
|
$
|
269.9
|
|
|
$
|
124.0
|
|
|
$
|
146.4
|
|
|
$
|
270.4
|
|
|
Six Months Ended
|
||||||||||||||||||||||
|
June 30, 2019
|
|
June 30, 2018
|
||||||||||||||||||||
|
AMS
|
|
EP
|
|
Total
|
|
AMS
|
|
EP
|
|
Total
|
||||||||||||
Product revenues
|
$
|
240.2
|
|
|
$
|
249.5
|
|
|
$
|
489.7
|
|
|
$
|
229.0
|
|
|
$
|
254.4
|
|
|
$
|
483.4
|
|
Materials conversion revenues
|
3.9
|
|
|
28.7
|
|
|
32.6
|
|
|
8.4
|
|
|
36.2
|
|
|
44.6
|
|
||||||
Other revenues
|
3.1
|
|
|
2.5
|
|
|
5.6
|
|
|
1.9
|
|
|
2.4
|
|
|
4.3
|
|
||||||
Total revenues (1)
|
$
|
247.2
|
|
|
$
|
280.7
|
|
|
$
|
527.9
|
|
|
$
|
239.3
|
|
|
$
|
293.0
|
|
|
$
|
532.3
|
|
|
Three Months Ended
|
||||||||||||||||||||||
|
June 30, 2019
|
|
June 30, 2018
|
||||||||||||||||||||
|
AMS
|
|
EP
|
|
Total
|
|
AMS
|
|
EP
|
|
Total
|
||||||||||||
United States
|
$
|
87.4
|
|
|
$
|
50.9
|
|
|
$
|
138.3
|
|
|
$
|
84.8
|
|
|
$
|
50.0
|
|
|
$
|
134.8
|
|
Europe and the former Commonwealth of Independent States
|
13.4
|
|
|
41.0
|
|
|
54.4
|
|
|
10.7
|
|
|
60.0
|
|
|
70.7
|
|
||||||
Asia/Pacific (including China)
|
20.5
|
|
|
27.5
|
|
|
48.0
|
|
|
22.0
|
|
|
17.9
|
|
|
39.9
|
|
||||||
Latin America
|
1.5
|
|
|
12.3
|
|
|
13.8
|
|
|
2.5
|
|
|
10.5
|
|
|
13.0
|
|
||||||
Other foreign countries
|
3.9
|
|
|
11.5
|
|
|
15.4
|
|
|
4.0
|
|
|
8.0
|
|
|
12.0
|
|
||||||
Total revenues (1)
|
$
|
126.7
|
|
|
$
|
143.2
|
|
|
$
|
269.9
|
|
|
$
|
124.0
|
|
|
$
|
146.4
|
|
|
$
|
270.4
|
|
|
Six Months Ended
|
||||||||||||||||||||||
|
June 30, 2019
|
|
June 30, 2018
|
||||||||||||||||||||
|
AMS
|
|
EP
|
|
Total
|
|
AMS
|
|
EP
|
|
Total
|
||||||||||||
United States
|
$
|
170.7
|
|
|
$
|
98.3
|
|
|
$
|
269.0
|
|
|
$
|
162.9
|
|
|
$
|
99.7
|
|
|
$
|
262.6
|
|
Europe and the former Commonwealth of Independent States
|
26.6
|
|
|
86.1
|
|
|
112.7
|
|
|
26.5
|
|
|
117.6
|
|
|
144.1
|
|
||||||
Asia/Pacific (including China)
|
37.7
|
|
|
47.9
|
|
|
85.6
|
|
|
36.6
|
|
|
39.2
|
|
|
75.8
|
|
||||||
Latin America
|
3.5
|
|
|
23.4
|
|
|
26.9
|
|
|
5.7
|
|
|
22.0
|
|
|
27.7
|
|
||||||
Other foreign countries
|
8.7
|
|
|
25.0
|
|
|
33.7
|
|
|
7.6
|
|
|
14.5
|
|
|
22.1
|
|
||||||
Total revenues (1)
|
$
|
247.2
|
|
|
$
|
280.7
|
|
|
$
|
527.9
|
|
|
$
|
239.3
|
|
|
$
|
293.0
|
|
|
$
|
532.3
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Accumulated pension and OPEB liability adjustments, net of income tax benefit of $12.7 million and $11.4 million at June 30, 2019 and December 31, 2018, respectively
|
$
|
(26.7
|
)
|
|
$
|
(28.2
|
)
|
Accumulated unrealized loss on derivative instruments, net of income tax benefit of $1.7 million and $1.6 million at June 30, 2019 and December 31, 2018, respectively
|
(2.0
|
)
|
|
(0.6
|
)
|
||
Accumulated unrealized foreign currency translation adjustments, net of income tax benefit of $4.1 million and $1.7 million at June 30, 2019 and December 31, 2018, respectively
|
(93.0
|
)
|
|
(95.7
|
)
|
||
Accumulated other comprehensive loss
|
$
|
(121.7
|
)
|
|
$
|
(124.5
|
)
|
|
Three Months Ended
|
||||||||||||||||||||||
|
June 30, 2019
|
|
June 30, 2018
|
||||||||||||||||||||
|
Pre-tax
|
|
Tax
|
|
Net of
Tax
|
|
Pre-tax
|
|
Tax
|
|
Net of
Tax
|
||||||||||||
Net gain (loss) on pension and OPEB liability adjustments
|
$
|
0.8
|
|
|
$
|
0.2
|
|
|
$
|
1.0
|
|
|
$
|
1.1
|
|
|
$
|
(0.3
|
)
|
|
$
|
0.8
|
|
Unrealized (loss) gain on derivative instruments
|
(1.0
|
)
|
|
0.1
|
|
|
(0.9
|
)
|
|
(4.4
|
)
|
|
1.4
|
|
|
(3.0
|
)
|
||||||
Unrealized gain (loss) on foreign currency translation
|
1.9
|
|
|
0.1
|
|
|
2.0
|
|
|
(30.0
|
)
|
|
(0.8
|
)
|
|
(30.8
|
)
|
||||||
Total
|
$
|
1.7
|
|
|
$
|
0.4
|
|
|
$
|
2.1
|
|
|
$
|
(33.3
|
)
|
|
$
|
0.3
|
|
|
$
|
(33.0
|
)
|
|
Six Months Ended
|
||||||||||||||||||||||
|
June 30, 2019
|
|
June 30, 2018
|
||||||||||||||||||||
|
Pre-tax
|
|
Tax
|
|
Net of
Tax |
|
Pre-tax
|
|
Tax
|
|
Net of
Tax |
||||||||||||
Unrealized gain (loss) on pension and OPEB liability adjustments
|
$
|
0.2
|
|
|
$
|
1.3
|
|
|
$
|
1.5
|
|
|
$
|
2.2
|
|
|
$
|
(0.7
|
)
|
|
$
|
1.5
|
|
Unrealized (loss) gain on derivative instruments
|
(1.5
|
)
|
|
0.1
|
|
|
(1.4
|
)
|
|
(2.6
|
)
|
|
1.3
|
|
|
(1.3
|
)
|
||||||
Unrealized gain (loss) on foreign currency translation
|
0.3
|
|
|
2.4
|
|
|
2.7
|
|
|
(20.5
|
)
|
|
(1.9
|
)
|
|
(22.4
|
)
|
||||||
Total
|
$
|
(1.0
|
)
|
|
$
|
3.8
|
|
|
$
|
2.8
|
|
|
$
|
(20.9
|
)
|
|
$
|
(1.3
|
)
|
|
$
|
(22.2
|
)
|
Assets
|
Classification
|
June 30, 2019
|
||
Operating lease right-of-use assets
|
Other assets
|
$
|
23.4
|
|
Finance lease right-of-use assets
|
Property, plant and equipment, net
|
3.1
|
|
|
|
|
|
||
Liabilities
|
Classification
|
June 30, 2019
|
||
Current operating lease obligation
|
Accrued expenses
|
$
|
4.9
|
|
Long-term operating lease obligation
|
Other liabilities
|
19.7
|
|
|
Total operating lease obligation
|
|
$
|
24.6
|
|
|
|
|
||
Current finance lease obligation
|
Current debt
|
$
|
0.4
|
|
Long-term finance lease obligation
|
Long-term debt
|
3.1
|
|
|
Total finance lease obligation
|
|
$
|
3.5
|
|
|
June 30, 2019
|
||||||||||
Assets
|
Finance
|
|
Operating
|
|
Total
|
||||||
Land and improvements
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
Buildings and improvements
|
3.0
|
|
|
21.9
|
|
|
24.9
|
|
|||
Machinery and equipment
|
0.6
|
|
|
4.7
|
|
|
5.3
|
|
|||
Gross property, plant and equipment
|
3.6
|
|
|
26.7
|
|
|
30.3
|
|
|||
Less: Accumulated depreciation
|
(0.5
|
)
|
|
(3.3
|
)
|
|
(3.8
|
)
|
|||
Right-of-use assets
|
$
|
3.1
|
|
|
$
|
23.4
|
|
|
$
|
26.5
|
|
Lease Cost
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2019
|
||||
Finance lease cost (cost resulting from lease payments)
|
|
|
|
||||
Interest expense on lease liabilities
|
$
|
0.1
|
|
|
$
|
0.1
|
|
Amortization of right-of-use assets
|
0.1
|
|
|
0.2
|
|
||
Operating lease cost
|
1.6
|
|
|
3.1
|
|
||
Short-term lease expense
|
0.1
|
|
|
0.2
|
|
||
Total Lease Cost
|
$
|
1.9
|
|
|
$
|
3.6
|
|
Maturity of Lease Liabilities
|
Finance
|
|
Operating
|
|
Total
|
||||||
Remainder of 2019
|
$
|
0.3
|
|
|
$
|
3.2
|
|
|
$
|
3.5
|
|
2020
|
0.6
|
|
|
5.9
|
|
|
6.5
|
|
|||
2021
|
0.5
|
|
|
5.2
|
|
|
5.7
|
|
|||
2022
|
0.6
|
|
|
4.0
|
|
|
4.6
|
|
|||
2023
|
0.5
|
|
|
2.8
|
|
|
3.3
|
|
|||
2024
|
0.5
|
|
|
2.3
|
|
|
2.8
|
|
|||
Thereafter
|
1.4
|
|
|
7.0
|
|
|
8.4
|
|
|||
Total Lease Payments
|
$
|
4.4
|
|
|
$
|
30.4
|
|
|
$
|
34.8
|
|
Less: Interest
|
0.9
|
|
|
5.8
|
|
|
6.7
|
|
|||
Present Value of Lease Liabilities
|
$
|
3.5
|
|
|
$
|
24.6
|
|
|
$
|
28.1
|
|
Lease Term and Discount Rate
|
June 30, 2019
|
|
Weighted-average remaining lease term (years)
|
|
|
Operating leases
|
7.0
|
|
Finance leases
|
7.9
|
|
Weighted-average discount rate
|
|
|
Operating leases
|
6.49
|
%
|
Finance leases
|
5.28
|
%
|
Other Information (millions)
|
Six Months Ended June 30, 2019
|
|
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
Operating cash flows from operating leases
|
3.1
|
|
Operating cash flows from finance leases
|
0.2
|
|
Leased assets obtained in exchange for new finance lease liabilities
|
0.5
|
|
Leased assets obtained in exchange for new operating lease liabilities
|
3.2
|
|
2019
|
$
|
5.8
|
|
2020
|
5.0
|
|
|
2021
|
4.4
|
|
|
2022
|
3.6
|
|
|
2023
|
3.0
|
|
|
Thereafter
|
8.1
|
|
|
Total
|
$
|
29.9
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Assets of discontinued operations:
|
|
|
|
||||
Current assets
|
$
|
0.8
|
|
|
$
|
0.8
|
|
Other assets
|
1.3
|
|
|
1.2
|
|
||
|
|
|
|
||||
Liabilities of discontinued operations:
|
|
|
|
|
|||
Current liabilities
|
—
|
|
|
0.1
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2019
|
|
June 30, 2018
|
|
June 30, 2019
|
|
June 30, 2018
|
||||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other income (expense)
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
||||
Loss from discontinued operations before income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
||||
Income tax (provision) benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Loss from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
2019 |
|
June 30,
2018 |
|
June 30,
2019 |
|
June 30,
2018 |
||||||||
Numerator (basic and diluted):
|
|
|
|
|
|
|
|
|
|||||||
Net income
|
$
|
20.5
|
|
|
$
|
25.8
|
|
|
$
|
37.9
|
|
|
$
|
46.3
|
|
Less: Dividends paid to participating securities
|
(0.1
|
)
|
|
—
|
|
|
(0.2
|
)
|
|
(0.1
|
)
|
||||
Less: Undistributed earnings available to participating securities
|
(0.1
|
)
|
|
(0.2
|
)
|
|
(0.1
|
)
|
|
(0.2
|
)
|
||||
Undistributed and distributed earnings available to common stockholders
|
$
|
20.3
|
|
|
$
|
25.6
|
|
|
$
|
37.6
|
|
|
$
|
46.0
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
|
|
||||||
Average number of common shares outstanding
|
30,661.4
|
|
|
30,565.8
|
|
|
30,641.1
|
|
|
30,527.4
|
|
||||
Effect of dilutive stock-based compensation
|
147.9
|
|
|
140.1
|
|
|
149.9
|
|
|
135.6
|
|
||||
Average number of common and potential common shares outstanding
|
30,809.3
|
|
|
30,705.9
|
|
|
30,791.0
|
|
|
30,663.0
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Raw materials
|
$
|
53.2
|
|
|
$
|
50.2
|
|
Work in process
|
27.3
|
|
|
22.4
|
|
||
Finished goods
|
64.5
|
|
|
69.9
|
|
||
Supplies and other
|
9.2
|
|
|
9.0
|
|
||
Total
|
$
|
154.2
|
|
|
$
|
151.5
|
|
|
Advanced Materials & Structures
|
|
Engineered Papers
|
|
Total
|
||||||
Goodwill as of December 31, 2018
|
$
|
333.1
|
|
|
$
|
5.0
|
|
|
$
|
338.1
|
|
Foreign currency translation adjustments
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|||
Goodwill as of June 30, 2019
|
$
|
333.0
|
|
|
$
|
5.0
|
|
|
$
|
338.0
|
|
|
June 30, 2019
|
||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Accumulated Impairments
|
|
Accumulated Foreign Exchange
|
|
Net
Carrying
Amount
|
||||||||||
Amortized Intangible Assets (Advanced Materials & Structures)
|
|||||||||||||||||||
Customer relationships
|
$
|
276.3
|
|
|
$
|
59.1
|
|
|
$
|
—
|
|
|
$
|
0.9
|
|
|
$
|
216.3
|
|
Developed technology
|
34.0
|
|
|
9.7
|
|
|
—
|
|
|
0.3
|
|
|
24.0
|
|
|||||
Trade names
|
21.8
|
|
|
0.8
|
|
|
20.7
|
|
|
0.3
|
|
|
—
|
|
|||||
Non-compete agreements
|
2.9
|
|
|
2.0
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
|||||
Patents
|
1.5
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
1.1
|
|
|||||
Total
|
$
|
336.5
|
|
|
$
|
72.0
|
|
|
$
|
20.7
|
|
|
$
|
1.5
|
|
|
$
|
242.3
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Unamortized Intangible Assets (Advanced Materials & Structures)
|
|||||||||||||||||||
Trade names
|
$
|
20.0
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
(0.1
|
)
|
|
$
|
20.0
|
|
|
December 31, 2018
|
||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Accumulated Impairments
|
|
Accumulated Foreign Exchange
|
|
Net
Carrying
Amount
|
||||||||||
Amortized Intangible Assets (Advanced Materials & Structures)
|
|||||||||||||||||||
Customer relationships
|
$
|
276.3
|
|
|
$
|
50.4
|
|
|
$
|
—
|
|
|
$
|
0.7
|
|
|
$
|
225.2
|
|
Developed technology
|
34.0
|
|
|
8.5
|
|
|
—
|
|
|
0.2
|
|
|
25.3
|
|
|||||
Trade names
|
21.8
|
|
|
0.8
|
|
|
20.7
|
|
|
0.3
|
|
|
—
|
|
|||||
Non-compete agreements
|
2.9
|
|
|
1.7
|
|
|
—
|
|
|
—
|
|
|
1.2
|
|
|||||
Patents
|
1.5
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
1.1
|
|
|||||
Total
|
$
|
336.5
|
|
|
$
|
61.8
|
|
|
$
|
20.7
|
|
|
$
|
1.2
|
|
|
$
|
252.8
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Unamortized Intangible Assets (Advanced Materials & Structures)
|
|||||||||||||||||||
Trade names
|
$
|
20.0
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
(0.1
|
)
|
|
$
|
20.0
|
|
|
Six Months Ended
|
|
Year Ended
|
||||
|
June 30,
2019 |
|
December 31,
2018 |
||||
Balance at beginning of year
|
$
|
1.4
|
|
|
$
|
1.7
|
|
Accruals for announced programs
|
0.4
|
|
|
1.3
|
|
||
Cash payments
|
(1.0
|
)
|
|
(3.3
|
)
|
||
Other
|
—
|
|
|
1.8
|
|
||
Exchange rate impacts
|
—
|
|
|
(0.1
|
)
|
||
Balance at end of period
|
$
|
0.8
|
|
|
$
|
1.4
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Revolving credit facility - U.S. dollar borrowings
|
$
|
64.0
|
|
|
$
|
76.0
|
|
Term loan facility
|
198.5
|
|
|
199.5
|
|
||
6.875% senior unsecured notes due October 1, 2026, net of discount of $7.3 million and $7.6 million at June 30, 2019 and December 31, 2018, respectively
|
342.7
|
|
|
342.4
|
|
||
French employee profit sharing
|
4.4
|
|
|
6.6
|
|
||
Finance lease and capital lease obligations, respectively
|
3.5
|
|
|
4.7
|
|
||
Other
|
—
|
|
|
0.1
|
|
||
Debt issuance costs
|
(6.5
|
)
|
|
(7.2
|
)
|
||
Total debt
|
606.6
|
|
|
622.1
|
|
||
Less: Current debt
|
(1.9
|
)
|
|
(3.3
|
)
|
||
Long-term debt
|
$
|
604.7
|
|
|
$
|
618.8
|
|
2019
|
$
|
1.3
|
|
2020
|
3.2
|
|
|
2021
|
3.8
|
|
|
2022
|
3.7
|
|
|
2023
|
66.9
|
|
|
Thereafter
|
541.5
|
|
|
Total
|
$
|
620.4
|
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
||||
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts
|
Accounts receivable, net
|
|
$
|
1.9
|
|
|
Accrued expenses
|
|
$
|
6.9
|
|
Foreign exchange contracts
|
Other assets
|
|
3.0
|
|
|
Other liabilities
|
|
—
|
|
||
Interest rate contracts
|
Accounts receivable, net
|
|
0.4
|
|
|
Other liabilities
|
|
—
|
|
||
Total derivatives designated as hedges
|
|
|
5.3
|
|
|
|
|
6.9
|
|
||
|
|
|
|
|
|
|
|
||||
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts
|
Accounts receivable, net
|
|
0.1
|
|
|
Accrued expenses
|
|
0.1
|
|
||
Total derivatives not designated as hedges
|
|
|
0.1
|
|
|
|
|
0.1
|
|
||
Total derivatives
|
|
|
$
|
5.4
|
|
|
|
|
$
|
7.0
|
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
||||
Derivatives designated as hedges:
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts
|
Accounts receivable, net
|
|
$
|
2.0
|
|
|
Accrued expenses
|
|
$
|
1.3
|
|
Foreign exchange contracts
|
Other assets
|
|
1.0
|
|
|
Other liabilities
|
|
8.8
|
|
||
Interest rate contracts
|
Other assets
|
|
1.8
|
|
|
Other liabilities
|
|
—
|
|
||
Total derivatives designated as hedges
|
|
|
4.8
|
|
|
|
|
10.1
|
|
||
|
|
|
|
|
|
|
|
||||
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts
|
Accounts receivable, net
|
|
0.1
|
|
|
Accounts payable
|
|
—
|
|
||
Total derivatives not designated as hedges
|
|
|
0.1
|
|
|
|
|
—
|
|
||
Total derivatives
|
|
|
$
|
4.9
|
|
|
|
|
$
|
10.1
|
|
Derivatives Designated as Cash Flow Hedging Relationships
|
|
Unrealized Gain (Loss) Recognized in AOCI on Derivatives, Net of Tax
|
|
Location of Gain (Loss) Reclassified
from AOCI
|
|
Gain (Loss) Reclassified
from AOCI
|
||||||||||||||||||||||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||
|
|
June 30,
|
|
June 30,
|
|
|
|
June 30,
|
|
June 30,
|
||||||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||
Foreign exchange contracts
|
|
$
|
(0.3
|
)
|
|
$
|
(3.1
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
(2.7
|
)
|
|
Net sales
|
|
$
|
(0.4
|
)
|
|
$
|
0.1
|
|
|
$
|
(0.6
|
)
|
|
$
|
0.7
|
|
Foreign exchange contracts
|
|
0.4
|
|
|
0.1
|
|
|
0.1
|
|
|
—
|
|
|
Other income, net
|
|
0.5
|
|
|
0.2
|
|
|
0.1
|
|
|
—
|
|
||||||||
Interest rate contracts
|
|
0.8
|
|
|
0.8
|
|
|
1.4
|
|
|
3.0
|
|
|
Interest expense
|
|
1.7
|
|
|
0.5
|
|
|
3.2
|
|
|
0.9
|
|
||||||||
Total
|
|
$
|
0.9
|
|
|
$
|
(2.2
|
)
|
|
$
|
1.3
|
|
|
$
|
0.3
|
|
|
|
|
$
|
1.8
|
|
|
$
|
0.8
|
|
|
$
|
2.7
|
|
|
$
|
1.6
|
|
Derivatives Not Designated as Cash Flow Hedging Instruments
|
|
Location of Gain (Loss) Recognized in Income
|
|
Amount of Gain (Loss) Recognized in Income
|
||||||||||||||
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
|
|
June 30, 2019
|
|
June 30, 2018
|
|
June 30, 2019
|
|
June 30, 2018
|
||||||||
Foreign exchange contracts
|
|
Other income, net
|
|
$
|
0.1
|
|
|
$
|
(2.6
|
)
|
|
$
|
—
|
|
|
$
|
(2.1
|
)
|
Income Statement Classification
|
(Expense) Benefit
|
||
Cost of products sold1
|
$
|
(0.9
|
)
|
Operating profit1
|
(0.9
|
)
|
|
Other expense2
|
(2.1
|
)
|
|
Interest expense2
|
(7.8
|
)
|
|
Income from continuing operations before income taxes
|
(10.8
|
)
|
|
Provision for income taxes
|
3.1
|
|
|
Net income
|
$
|
(7.7
|
)
|
|
Three Months Ended June 30,
|
||||||||||||||||||||||
|
U.S. Pension Benefits
|
|
French Pension Benefits
|
|
U.S. OPEB Benefits
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.3
|
|
|
$
|
0.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
1.1
|
|
|
1.1
|
|
|
0.1
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
||||||
Expected return on plan assets
|
(1.4
|
)
|
|
(1.4
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
||||||
Amortizations and other
|
0.5
|
|
|
0.8
|
|
|
0.2
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
||||||
Net periodic benefit cost
|
$
|
0.2
|
|
|
$
|
0.5
|
|
|
$
|
0.6
|
|
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||
|
U.S. Pension Benefits
|
|
French Pension Benefits
|
|
U.S. OPEB Benefits
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.5
|
|
|
$
|
0.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
2.3
|
|
|
2.2
|
|
|
0.2
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
||||||
Expected return on plan assets
|
(2.9
|
)
|
|
(2.9
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
||||||
Amortizations and other
|
1.0
|
|
|
1.7
|
|
|
0.4
|
|
|
0.4
|
|
|
—
|
|
|
0.1
|
|
||||||
Net periodic benefit cost
|
$
|
0.4
|
|
|
$
|
1.0
|
|
|
$
|
1.1
|
|
|
$
|
1.1
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
($ in millions)
|
Net Sales
|
||||||||||||||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||
|
June 30, 2019
|
|
June 30, 2018
|
|
June 30, 2019
|
|
June 30, 2018
|
||||||||||||||||||||
Advanced Materials & Structures
|
$
|
126.7
|
|
|
46.9
|
%
|
|
$
|
124.0
|
|
|
45.9
|
%
|
|
$
|
247.2
|
|
|
46.8
|
%
|
|
$
|
239.3
|
|
|
45.0
|
%
|
Engineered Papers
|
143.2
|
|
|
53.1
|
|
|
146.4
|
|
|
54.1
|
|
|
280.7
|
|
|
53.2
|
|
|
293.0
|
|
|
55.0
|
|
||||
Total Consolidated
|
$
|
269.9
|
|
|
100.0
|
%
|
|
$
|
270.4
|
|
|
100.0
|
%
|
|
$
|
527.9
|
|
|
100.0
|
%
|
|
$
|
532.3
|
|
|
100.0
|
%
|
($ in millions)
|
Operating Profit
|
||||||||||||||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||
|
June 30, 2019
|
|
June 30, 2018
|
|
June 30, 2019
|
|
June 30, 2018
|
||||||||||||||||||||
Advanced Materials & Structures
|
$
|
20.4
|
|
|
46.2
|
%
|
|
$
|
17.0
|
|
|
40.4
|
%
|
|
$
|
35.3
|
|
|
47.3
|
%
|
|
$
|
27.6
|
|
|
35.8
|
%
|
Engineered Papers
|
32.5
|
|
|
73.5
|
|
|
33.3
|
|
|
79.1
|
|
|
61.2
|
|
|
82.1
|
|
|
67.2
|
|
|
87.2
|
|
||||
Unallocated
|
(8.7
|
)
|
|
(19.7
|
)
|
|
(8.2
|
)
|
|
(19.5
|
)
|
|
(21.9
|
)
|
|
(29.4
|
)
|
|
(17.7
|
)
|
|
(23.0
|
)
|
||||
Total Consolidated
|
$
|
44.2
|
|
|
100.0
|
%
|
|
$
|
42.1
|
|
|
100.0
|
%
|
|
$
|
74.6
|
|
|
100.0
|
%
|
|
$
|
77.1
|
|
|
100.0
|
%
|
($ in millions)
|
Segment Assets
|
||||||
|
June 30,
2019 |
|
December 31,
2018 |
||||
Advanced Materials & Structures
|
$
|
814.9
|
|
|
$
|
796.1
|
|
Engineered Papers
|
518.6
|
|
|
527.4
|
|
||
Unallocated
|
155.9
|
|
|
143.0
|
|
||
Total Consolidated
|
$
|
1,489.4
|
|
|
$
|
1,466.5
|
|
($ in millions, except per share amounts)
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||
|
June 30,
|
|
Percent of Net Sales
|
|
June 30,
|
|
Percent of Net Sales
|
||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||
Net sales
|
$
|
269.9
|
|
|
$
|
270.4
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
$
|
527.9
|
|
|
$
|
532.3
|
|
|
100.0
|
%
|
|
100.0
|
%
|
Gross profit
|
79.0
|
|
|
77.4
|
|
|
29.3
|
|
|
28.6
|
|
|
146.9
|
|
|
149.4
|
|
|
27.8
|
|
|
28.1
|
|
||||
Restructuring & impairment expense
|
0.4
|
|
|
0.6
|
|
|
0.1
|
|
|
0.2
|
|
|
0.4
|
|
|
1.0
|
|
|
0.1
|
|
|
0.2
|
|
||||
Operating profit
|
44.2
|
|
|
42.1
|
|
|
16.4
|
|
|
15.6
|
|
|
74.6
|
|
|
77.1
|
|
|
14.1
|
|
|
14.5
|
|
||||
Interest expense
|
15.1
|
|
|
6.6
|
|
|
5.6
|
|
|
2.4
|
|
|
22.9
|
|
|
12.8
|
|
|
4.3
|
|
|
2.4
|
|
||||
Income from continuing operations
|
20.5
|
|
|
25.8
|
|
|
7.6
|
|
|
9.5
|
|
|
37.9
|
|
|
46.7
|
|
|
7.2
|
|
|
8.8
|
|
||||
Income (loss) from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
—
|
|
|
(0.1
|
)
|
||||
Net income
|
$
|
20.5
|
|
|
$
|
25.8
|
|
|
7.6
|
%
|
|
9.5
|
%
|
|
$
|
37.9
|
|
|
$
|
46.3
|
|
|
7.2
|
%
|
|
8.7
|
%
|
Diluted earnings per share from continuing operations
|
$
|
0.66
|
|
|
$
|
0.83
|
|
|
|
|
|
|
|
$
|
1.22
|
|
|
$
|
1.51
|
|
|
|
|
|
|||
Diluted earnings per share
|
$
|
0.66
|
|
|
$
|
0.83
|
|
|
|
|
|
|
|
$
|
1.22
|
|
|
$
|
1.50
|
|
|
|
|
|
|||
Cash provided by operations
|
$
|
42.0
|
|
|
$
|
34.1
|
|
|
|
|
|
|
|
$
|
55.0
|
|
|
$
|
56.1
|
|
|
|
|
|
|||
Capital spending
|
$
|
7.9
|
|
|
$
|
7.7
|
|
|
|
|
|
|
|
$
|
15.2
|
|
|
$
|
13.7
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|||||||||
|
June 30, 2019
|
|
June 30, 2018
|
|
Change
|
|
Percent Change
|
|||||||
Advanced Materials & Structures
|
$
|
126.7
|
|
|
$
|
124.0
|
|
|
$
|
2.7
|
|
|
2.1
|
%
|
Engineered Papers
|
143.2
|
|
|
146.4
|
|
|
(3.2
|
)
|
|
(2.3
|
)
|
|||
Total
|
$
|
269.9
|
|
|
$
|
270.4
|
|
|
$
|
(0.5
|
)
|
|
(0.2
|
)%
|
|
Amount
|
|
Percent
|
|||
Changes in volume, product mix and selling prices
|
$
|
6.5
|
|
|
2.4
|
%
|
Changes due to net foreign currency impacts
|
(6.8
|
)
|
|
(2.5
|
)
|
|
Changes due to royalties
|
(0.2
|
)
|
|
(0.1
|
)
|
|
Total
|
$
|
(0.5
|
)
|
|
(0.2
|
)%
|
|
Three Months Ended
|
|
|
|
Percent Change
|
|
Percent of Net Sales
|
|||||||||||||
|
June 30, 2019
|
|
June 30, 2018
|
|
Change
|
|
|
2019
|
|
2018
|
||||||||||
Net sales
|
$
|
269.9
|
|
|
$
|
270.4
|
|
|
$
|
(0.5
|
)
|
|
(0.2
|
)%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of products sold
|
190.9
|
|
|
193.0
|
|
|
(2.1
|
)
|
|
(1.1
|
)
|
|
70.7
|
|
|
71.4
|
|
|||
Gross profit
|
$
|
79.0
|
|
|
$
|
77.4
|
|
|
$
|
1.6
|
|
|
2.1
|
%
|
|
29.3
|
%
|
|
28.6
|
%
|
|
Three Months Ended
|
|
|
|
Percent Change
|
|
Percent of Net Sales
|
|||||||||||||
|
June 30, 2019
|
|
June 30, 2018
|
|
Change
|
|
|
2019
|
|
2018
|
||||||||||
Selling expense
|
$
|
8.6
|
|
|
$
|
9.2
|
|
|
$
|
(0.6
|
)
|
|
(6.5
|
)%
|
|
3.2
|
%
|
|
3.4
|
%
|
Research expense
|
3.7
|
|
|
4.1
|
|
|
(0.4
|
)
|
|
(9.8
|
)
|
|
1.4
|
|
|
1.5
|
|
|||
General expense
|
22.1
|
|
|
21.4
|
|
|
0.7
|
|
|
3.3
|
|
|
8.1
|
|
|
7.9
|
|
|||
Nonmanufacturing expenses
|
$
|
34.4
|
|
|
$
|
34.7
|
|
|
$
|
(0.3
|
)
|
|
(0.9
|
)%
|
|
12.7
|
%
|
|
12.8
|
%
|
|
Three Months Ended
|
|
|
|
Percent Change
|
|
Percent of Net Sales
|
|||||||||||||
|
June 30, 2019
|
|
June 30, 2018
|
|
Change
|
|
|
2019
|
|
2018
|
||||||||||
Advanced Materials & Structures
|
$
|
—
|
|
|
$
|
0.4
|
|
|
$
|
(0.4
|
)
|
|
(100.0
|
)%
|
|
—
|
%
|
|
0.3
|
%
|
Engineered Papers
|
0.4
|
|
|
0.2
|
|
|
0.2
|
|
|
100.0
|
%
|
|
0.3
|
|
|
0.1
|
|
|||
Unallocated expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
N/A
|
|
|
|
|
|
|
|
|||
Total
|
$
|
0.4
|
|
|
$
|
0.6
|
|
|
$
|
(0.2
|
)
|
|
(33.3
|
)%
|
|
0.1
|
%
|
|
0.2
|
%
|
|
Three Months Ended
|
|
|
|
Percent Change
|
|
Return on Net Sales
|
|||||||||||||
|
June 30, 2019
|
|
June 30, 2018
|
|
Change
|
|
|
2019
|
|
2018
|
||||||||||
Advanced Materials & Structures
|
$
|
20.4
|
|
|
$
|
17.0
|
|
|
$
|
3.4
|
|
|
20.0
|
%
|
|
16.1
|
%
|
|
13.7
|
%
|
Engineered Papers
|
32.5
|
|
|
33.3
|
|
|
(0.8
|
)
|
|
(2.4
|
)
|
|
22.7
|
|
|
22.7
|
|
|||
Unallocated expenses
|
(8.7
|
)
|
|
(8.2
|
)
|
|
(0.5
|
)
|
|
(6.1
|
)
|
|
|
|
|
|||||
Total
|
$
|
44.2
|
|
|
$
|
42.1
|
|
|
$
|
2.1
|
|
|
5.0
|
%
|
|
16.4
|
%
|
|
15.6
|
%
|
|
Six Months Ended
|
|
|
|
|
|||||||||
|
June 30, 2019
|
|
June 30, 2018
|
|
Change
|
|
Percent Change
|
|||||||
Advanced Materials & Structures
|
$
|
247.2
|
|
|
$
|
239.3
|
|
|
$
|
7.9
|
|
|
3.3
|
%
|
Engineered Papers
|
280.7
|
|
|
293.0
|
|
|
(12.3
|
)
|
|
(4.1
|
)
|
|||
Total
|
$
|
527.9
|
|
|
$
|
532.3
|
|
|
$
|
(4.4
|
)
|
|
(0.8
|
)%
|
|
Amount
|
|
Percent
|
|||
Changes in volume, product mix and selling prices
|
$
|
9.5
|
|
|
1.8
|
%
|
Changes due to net foreign currency impacts
|
(14.0
|
)
|
|
(2.6
|
)
|
|
Changes due to royalties
|
0.1
|
|
|
—
|
|
|
Total
|
$
|
(4.4
|
)
|
|
(0.8
|
)%
|
|
Six Months Ended
|
|
|
|
Percent Change
|
|
Percent of Net Sales
|
|||||||||||||
|
June 30, 2019
|
|
June 30, 2018
|
|
Change
|
|
|
2019
|
|
2018
|
||||||||||
Net sales
|
$
|
527.9
|
|
|
$
|
532.3
|
|
|
$
|
(4.4
|
)
|
|
(0.8
|
)%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of products sold
|
381.0
|
|
|
382.9
|
|
|
(1.9
|
)
|
|
(0.5
|
)
|
|
72.2
|
|
|
71.9
|
|
|||
Gross profit
|
$
|
146.9
|
|
|
$
|
149.4
|
|
|
$
|
(2.5
|
)
|
|
(1.7
|
)%
|
|
27.8
|
%
|
|
28.1
|
%
|
|
Six Months Ended
|
|
|
|
Percent Change
|
|
Percent of Net Sales
|
|||||||||||||
|
June 30, 2019
|
|
June 30, 2018
|
|
Change
|
|
|
2019
|
|
2018
|
||||||||||
Selling expense
|
$
|
17.2
|
|
|
$
|
18.3
|
|
|
$
|
(1.1
|
)
|
|
(6.0
|
)%
|
|
3.3
|
%
|
|
3.4
|
%
|
Research expense
|
7.0
|
|
|
8.2
|
|
|
(1.2
|
)
|
|
(14.6
|
)
|
|
1.3
|
|
|
1.5
|
|
|||
General expense
|
47.7
|
|
|
44.8
|
|
|
2.9
|
|
|
6.5
|
|
|
9.0
|
|
|
8.5
|
|
|||
Nonmanufacturing expenses
|
$
|
71.9
|
|
|
$
|
71.3
|
|
|
$
|
0.6
|
|
|
0.8
|
%
|
|
13.6
|
%
|
|
13.4
|
%
|
|
Six Months Ended
|
|
|
|
Percent Change
|
|
Percent of Net Sales
|
|||||||||||||
|
June 30, 2019
|
|
June 30, 2018
|
|
Change
|
|
|
2019
|
|
2018
|
||||||||||
Advanced Materials & Structures
|
$
|
—
|
|
|
$
|
0.8
|
|
|
$
|
(0.8
|
)
|
|
(100.0
|
)%
|
|
—
|
%
|
|
0.3
|
%
|
Engineered Papers
|
0.4
|
|
|
0.2
|
|
|
0.2
|
|
|
100.0
|
|
|
0.1
|
|
|
0.1
|
|
|||
Unallocated expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
N/A
|
|
|
|
|
|
|||||
Total
|
$
|
0.4
|
|
|
$
|
1.0
|
|
|
$
|
(0.6
|
)
|
|
(60.0
|
)%
|
|
0.1
|
%
|
|
0.2
|
%
|
|
Six Months Ended
|
|
|
|
Percent Change
|
|
Return on Net Sales
|
|||||||||||||
|
June 30, 2019
|
|
June 30, 2018
|
|
Change
|
|
|
2019
|
|
2018
|
||||||||||
Advanced Materials & Structures
|
$
|
35.3
|
|
|
$
|
27.6
|
|
|
$
|
7.7
|
|
|
27.9
|
%
|
|
14.3
|
%
|
|
11.5
|
%
|
Engineered Papers
|
61.2
|
|
|
67.2
|
|
|
(6.0
|
)
|
|
(8.9
|
)
|
|
21.8
|
|
|
22.9
|
|
|||
Unallocated expenses
|
(21.9
|
)
|
|
(17.7
|
)
|
|
(4.2
|
)
|
|
(23.7
|
)
|
|
|
|
|
|||||
Total
|
$
|
74.6
|
|
|
$
|
77.1
|
|
|
$
|
(2.5
|
)
|
|
(3.2
|
)%
|
|
14.1
|
%
|
|
14.5
|
%
|
Cash Flows from Operating Activities
($ in millions)
|
Six Months Ended
|
||||||
June 30, 2019
|
|
June 30, 2018
|
|||||
Net income
|
$
|
37.9
|
|
|
$
|
46.3
|
|
Less: Loss from discontinued operations
|
—
|
|
|
(0.4
|
)
|
||
Income from continuing operations
|
37.9
|
|
|
46.7
|
|
||
Non-cash items included in net income:
|
|
|
|
||||
Depreciation and amortization
|
28.9
|
|
|
31.0
|
|
||
Restructuring-related impairment
|
—
|
|
|
0.2
|
|
||
Deferred income tax provision
|
(0.7
|
)
|
|
2.3
|
|
||
Pension and other postretirement benefits
|
1.3
|
|
|
2.0
|
|
||
Stock-based compensation
|
2.5
|
|
|
2.5
|
|
||
Loss (income) from equity affiliates
|
0.9
|
|
|
0.8
|
|
||
Brazil tax assessment accruals, net (Note 13)
|
10.9
|
|
|
—
|
|
||
Other items
|
0.9
|
|
|
1.1
|
|
||
Net changes in operating working capital
|
(27.6
|
)
|
|
(30.7
|
)
|
||
Net cash provided by (used in) operating activities of:
|
|
|
|
||||
Continuing operations
|
55.0
|
|
|
55.9
|
|
||
Discontinued operations
|
—
|
|
|
0.2
|
|
||
Net cash provided by operations
|
$
|
55.0
|
|
|
$
|
56.1
|
|
Operating Working Capital
($ in millions)
|
Six Months Ended
|
||||||
June 30, 2019
|
|
June 30, 2018
|
|||||
Changes in operating working capital
|
|
|
|
||||
Accounts receivable
|
$
|
(12.2
|
)
|
|
$
|
(19.1
|
)
|
Inventories
|
(2.6
|
)
|
|
(5.4
|
)
|
||
Prepaid expenses
|
(1.9
|
)
|
|
(2.1
|
)
|
||
Accounts payable
|
(2.2
|
)
|
|
4.5
|
|
||
Accrued expenses
|
(4.9
|
)
|
|
(7.3
|
)
|
||
Accrued income taxes
|
(3.8
|
)
|
|
(1.3
|
)
|
||
Net changes in operating working capital
|
$
|
(27.6
|
)
|
|
$
|
(30.7
|
)
|
Cash Flows from Investing Activities
($ in millions)
|
Six Months Ended
|
||||||
June 30, 2019
|
|
June 30, 2018
|
|||||
Capital spending
|
$
|
(15.2
|
)
|
|
$
|
(13.7
|
)
|
Capitalized software costs
|
(2.8
|
)
|
|
(0.6
|
)
|
||
Other
|
0.8
|
|
|
(0.7
|
)
|
||
Cash used for investing
|
$
|
(17.2
|
)
|
|
$
|
(15.0
|
)
|
Cash Flows from Financing Activities
($ in millions)
|
Six Months Ended
|
||||||
June 30, 2019
|
|
June 30, 2018
|
|||||
Cash dividends paid to SWM stockholders
|
$
|
(27.2
|
)
|
|
$
|
(26.4
|
)
|
Net repayments of short-term and long-term debt
|
(15.3
|
)
|
|
(42.2
|
)
|
||
Purchases of common stock
|
(1.0
|
)
|
|
(2.7
|
)
|
||
Cash (used in) provided by financing
|
$
|
(43.5
|
)
|
|
$
|
(71.3
|
)
|
Debt Instruments
($ in millions)
|
Six Months Ended
|
||||||
June 30, 2019
|
|
June 30, 2018
|
|||||
Changes in short-term debt
|
$
|
(0.1
|
)
|
|
$
|
(1.5
|
)
|
Proceeds from issuances of long-term debt
|
0.1
|
|
|
0.8
|
|
||
Payments on long-term debt
|
(15.3
|
)
|
|
(41.5
|
)
|
||
Net repayments of borrowings
|
$
|
(15.3
|
)
|
|
$
|
(42.2
|
)
|
•
|
Recent changes to U.S. federal income tax law, the overall impact and interpretation of which remain uncertain and could be material, in addition to the extent to which states may conform to the newly enacted federal tax law as well as the impact of the tax reform on holders of our common stock;
|
•
|
Changes in sales or production volumes, pricing and/or manufacturing costs of Recon products, cigarette paper (including for LIP cigarettes), including any change by our customers in their tobacco and tobacco-related blends for their cigarettes, their target inventory levels and/or the overall demand for their products, new technologies such as e-cigarettes, inventory adjustments and rebalancings in our EP segment. Additionally, competition and changes in AMS end-market products due to changing customer demands;
|
•
|
Changes in the Chinese economy, including relating to the demand for reconstituted tobacco, premium cigarettes and netting;
|
•
|
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 commercial segments. We operate in highly competitive markets in which alternative supplies and technologies may attract our customers away from our products. In additional, our customers may, in some cases, produce for themselves the components that the Company sells to them for incorporation into their products, thus reducing or eliminating their purchases from us;
|
•
|
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 for virgin tobacco leaf and natural disasters or unusual weather events;
|
•
|
Seasonal or cyclical market and industry fluctuations which may result in reduced net sales and operating profits during certain periods;
|
•
|
Increases in commodity prices and lack of availability of such commodities, including energy, wood pulp and resins, could impact the sales and profitability of our products;
|
•
|
Adverse changes in the oil, gas, automotive, construction and infrastructure, and mining sectors impacting key AMS segment customers;
|
•
|
Increases in operating costs due to inflation or otherwise, such as labor expense, compensation and benefits costs;
|
•
|
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 rule 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 strikes, stoppages, disruptions or other disruptions at our facilities;
|
•
|
The impact of tariffs, and the imposition of any future tariffs and other trade barriers, and the effects of retaliatory trade measures;
|
•
|
The impact of the withdrawal of the United Kingdom from the European Union ("Brexit"), with or without an agreement between these two parties, including but not limited to transportation disruptions, supply disruptions, the ability of our personnel to move freely to and from the UK, Brexit-related tariffs, and other factors;
|
•
|
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);
|
•
|
New reports as to the effect of smoking on human health or the environment;
|
•
|
Changes in general economic, financial and credit conditions in the U.S., Europe, China and elsewhere, including the impact thereof on currency exchange rates (including any weakening of the euro and Real) and on interest rates;
|
•
|
Changes in the method pursuant to which LIBOR rates are determined and the potential phasing out of LIBOR after 2021;
|
•
|
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, such as those involving the Russian Federation, Korea and the Middle East, which restrict our ability to supply products into affected regions, due to the corresponding effects on demand, the application of international sanctions, or practical consequences on transportation, banking transactions, and other commercial activities in troubled regions;
|
•
|
Compliance with the FCPA and other anti-corruption laws or trade control laws, as well as other laws governing our operations;
|
•
|
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, France and Germany;
|
•
|
The outcome and cost of LIP-related intellectual property infringement and validity litigation in Europe and the Glatz's German Patent Court invalidation proceedings;
|
•
|
Risks associated with our technological advantages in our intellectual property and the likelihood that our current technological advantages are unable to continue indefinitely;
|
•
|
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 tax law, treaties, interpretations, or regulatory determinations; audits made by applicable regulatory authorities and/or 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 of any upgrades or changes 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;
|
•
|
Changes in tax rates, the adoption of new U.S. or international tax legislation or exposure to additional tax liabilities;
|
•
|
Changes in construction and infrastructure spending and its impact on demand for certain products;
|
•
|
Potential loss of consumer awareness and demand for acquired companies’ products if it is decided to rebrand those products under the Company’s legacy brand names; 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)
|
||||||||
January 1 - March 31, 2019
|
|
24,372
|
|
|
$
|
37.59
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
April 1-30, 2019
|
|
357
|
|
|
38.95
|
|
|
|
|
|
|
|
||||||
May 1-31, 2019
|
|
416
|
|
|
31.32
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
June 1-30, 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total Year-to-Date 2019
|
|
25,145
|
|
|
$
|
37.51
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Exhibit
Number
|
|
Exhibit
|
3.1
|
|
|
3.2
|
|
|
10.1
|
|
|
31.1
|
|
|
31.2
|
|
|
32
|
|
|
101
|
|
The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, formatted in iXBRL (Inline 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.
|
By:
|
/s/ Andrew Wamser
|
|
Andrew Wamser
Executive Vice President and
Chief Financial Officer
(duly authorized officer and principal financial officer)
|
|
|
|
August 7, 2019
|
By:
|
/s/ Michael Schmit
|
|
Michael Schmit
Corporate Controller and
Chief Accounting Officer
(principal accounting officer)
|
|
|
|
August 7, 2019
|
•
|
"Flax" is a cellulose fiber from a flax plant used as a raw material in the production of certain cigarette papers.
|
•
|
"Net debt to Adjusted EBITDA ratio" is a financial measurement used in bank covenants where "Net Debt" is defined as consolidated total debt minus unrestricted cash and cash equivalents and "Adjusted EBITDA" is defined as net income plus the sum of interest expense, income tax expense, depreciation and amortization, restructuring and impairment charges, income or loss from discontinued operations, and certain other non-cash 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.
|
•
|
"Total debt to capital ratio" is total debt divided by the sum of total debt and total stockholders' equity.
|
•
|
"Net operating working capital" is accounts receivable, inventory, income taxes receivable assets held for sale and prepaid expense, less accounts payable, accrued expenses and income taxes payable.
|
•
|
"Polyurethane" is a polymer composed of organic units joined by carbamate (urethane) links.
|
•
|
"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.
|
•
|
"Reverse osmosis" is a water purification technology that uses a semipermeable membrane to remove larger particles from drinking water.
|
•
|
"Thermoplastics" are a plastic material, polymer, that becomes pliable or moldable above a specific temperature and solidifies upon cooling.
|
•
|
"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.
|
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:
|
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/ Dr. Jeffrey Kramer
|
|
Dr. Jeffrey Kramer
Chief Executive Officer and Director
|
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;
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4.
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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.
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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/ Andrew Wamser
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Andrew Wamser
Executive Vice President and
Chief Financial Officer
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By:
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/s/ Dr. Jeffrey Kramer
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By:
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/s/ Andrew Wamser
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Dr. Jeffrey Kramer
Chief Executive Officer and Director
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Andrew Wamser
Executive Vice President and
Chief Financial Officer
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August 7, 2019
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August 7, 2019
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