☒
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
||
|
For the fiscal year ended
|
December 31, 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
|
|
30022
|
Alpharetta,
|
Georgia
|
|
|
(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.
|
|
Item 1.
|
|
Business
|
|
|
|
|
|
Item 1A.
|
|
Risk Factors
|
|
|
|
|
|
Item 1B.
|
|
Unresolved Staff Comments
|
|
|
|
|
|
Item 2.
|
|
Properties
|
|
|
|
|
|
Item 3.
|
|
Legal Proceedings
|
|
|
|
|
|
Item 4.
|
|
Mine Safety Disclosures
|
|
|
|
Part II.
|
|
Item 5.
|
|
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
|
|
|
|
Item 6.
|
|
Selected Financial Data
|
|
|
|
|
|
Item 7.
|
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
|
|
|
Item 7A.
|
|
Quantitative and Qualitative Disclosures about Market Risk
|
|
|
|
|
|
Item 8.
|
|
Financial Statements and Supplementary Data
|
|
|
|
|
|
Item 9.
|
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
|
|
|
|
|
Item 9A.
|
|
Controls and Procedures
|
|
|
|
|
|
Item 9B.
|
|
Other Information
|
|
|
|
Part III.
|
|
Item 10.
|
|
Directors, Executive Officers and Corporate Governance
|
|
|
|
|
|
Item 11.
|
|
Executive Compensation
|
|
|
|
|
|
Item 12.
|
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
|
|
|
|
|
Item 13.
|
|
Certain Relationships and Related Transactions and Director Independence
|
|
|
|
|
|
Item 14.
|
|
Principal Accountant Fees and Services
|
|
|
|
Part IV.
|
|
Item 15.
|
|
Exhibits and Financial Statement Schedules
|
|
|
|
||
Signatures
|
|||
|
|
||
Glossary of Terms
|
•
|
Use of Cocoa PaperTM as packaging material: Cocoa PaperTM is made from botanical fibers and is an eco-efficient product. Cocoa PaperTM fibers are 100% carbon neutral, a first in our Engineered Papers portfolio. Sales of Cocoa PaperTM benefit the Jacundá Forestry REDD+ Project in Brazil through the purchase of carbon credits to offset the impact of projected product sales.
|
•
|
100% of the wood pulp that SWM uses is sourced from Forest Stewardship Council (FSC) and/or Programme for the Endorsement of Forest Certification (PEFC)-certified suppliers.
|
•
|
Our mills in France are certified to the ISO 50001 energy management standard.
|
•
|
SWM has a history of supporting local biodiversity initiatives, such as the installation of salmon and eel runs in the Isole River near our EP facility in Quimperlé, France, and the planting of native trees and rebuilding of natural habitat near our plant in Santanesia, Brazil.
|
•
|
Many other initiatives are in place involving the reuse of waste products and packaging materials.
|
•
|
SWM works in partnership with the Brazilian federal government to train young professionals for the job market. Every year, trainees are given an opportunity to work at SWM or industrial companies as mechanics, electricians, or administrative assistants.
|
•
|
Employees at our Gilberdyke, UK, location provide support and sponsor special programs for disadvantaged children in the area.
|
•
|
Our EP facility in Le Mans, France, launched a partnership with Handisport, a charitable organization that helps disabled children participate in sport activities.
|
•
|
Many other philanthropic activities are conducted at our locations around the world, for example SWM’s facility in Suzhou, China, held a fundraiser for UNICEF, and SWM’s AMS facility in Athens, Georgia, recently built raised garden beds for a senior care facility.
|
Name
|
|
Age
|
|
Position
|
|
Dr. Jeffrey Kramer
|
|
59
|
|
|
Chief Executive Officer
|
R. Andrew Wamser
|
|
46
|
|
|
Executive Vice President, Finance and Chief Financial Officer
|
Omar Hoek
|
|
51
|
|
|
Executive Vice President, Engineered Papers
|
Daniel Lister
|
|
47
|
|
|
Executive Vice President, Advanced Materials & Structures
|
Ricardo Nunez
|
|
55
|
|
|
General Counsel and Corporate Secretary
|
Michael Schmit
|
|
47
|
|
|
Corporate Controller and Chief Accounting Officer
|
•
|
Foreign countries can impose significant import, export, excise and income tax and other regulatory restrictions on our business, including limitations on repatriation of profits and proceeds of liquidated assets. While we attempt to manage our operations and international movements of cash from and amongst our foreign subsidiaries in a tax-efficient manner, unanticipated international movement of funds due to unexpected changes in our business or changes in tax and associated regulatory schemes could materially affect our financial position, results of operations and cash flows.
|
•
|
We are exposed to global as well as regional macroeconomic and microeconomic factors, which can affect demand and pricing for our products, including: unsettled political and economic conditions, including as they relate to Brazil, Russia and the Ukraine; expropriation; import and export tariffs; regulatory controls and restrictions; and inflationary and deflationary economies. Events occurring in countries having a large share of the global economy (such as China, Japan, or the EU) can have an impact on economies that are interdependent and thereby affect those in which the Company primarily operates. For example, the impact of a slowdown of the Chinese economy due to the outbreak of a virus there on the global economy and our future results is uncertain. These factors together with risks inherent in international operations, including risks associated with any non-compliance with the U.S. Foreign Corrupt Practices Act, the 2013 Brazilian Clean Companies Act, the U.K. Bribery Act of 2010, the 2013 Russian Law on Preventing Corruption and other non-U.S. anti-bribery law compliance, could adversely affect our financial condition, results of operations and cash flows.
|
•
|
We participate in two joint ventures and have one manufacturing facility in China. The joint ventures sell our products primarily to Chinese tobacco companies. Operations in China entail a number of risks including international and domestic political risks, the need to obtain operating and other permits from the government, adverse changes in the policies or in our relations with government-owned or run customers and the uncertainty inherent in operating within an evolving legal and economic system. There are also risks inherent with 50% joint ventures, such as a lack of ability to control, and visibility with respect to operations, customer relations and compliance practice, among others.
|
•
|
Changes or increases in international trade sanctions or quotas may restrict or prohibit us from transacting business with established customers or securing new ones, including as to Russia and the Ukraine, which are areas where the Company has offices and/or significant customers and as to which the applicable sanctions have changed unexpectedly on a number of occasions since 2014.
|
•
|
demonstrating to customers that the restructuring activities will not result in adverse changes in service standards or business focus;
|
•
|
consolidating administrative infrastructure and manufacturing operations while maintaining adequate controls throughout the execution of the restructuring;
|
•
|
preserving distribution, sales and other important relationships and resolving potential conflicts that may arise;
|
•
|
estimating, managing and minimizing the cost of the restructuring activities;
|
•
|
minimizing the diversion of management attention from ongoing business activities;
|
•
|
maintaining employee morale, retaining key employees, maintaining reasonable collective bargaining agreements and avoiding strikes, work stoppages or other forms of labor unrest while implementing restructuring programs that often include reductions in the workforce;
|
•
|
securing government approval of such plans, where necessary, and managing the litigation and associated liabilities that often are associated with restructuring actions;
|
•
|
incurring costs associated with delays in restructuring activities caused by labor negotiations and/or governmental approvals;
|
•
|
coordinating and combining operations, which may be subject to additional constraints imposed by collective bargaining agreements and local laws and regulations; and
|
•
|
achieving the anticipated levels of net cost savings and efficiency as a result of the restructuring activities.
|
|
Year Ended December 31, 2019
|
||
Income Statement Classification
|
(Expense) Benefit
|
||
Cost of products sold1
|
$
|
(1.5
|
)
|
Operating profit1
|
(1.5
|
)
|
|
Other expense2
|
(2.2
|
)
|
|
Interest expense2
|
(7.1
|
)
|
|
Income from continuing operations before income taxes
|
(10.8
|
)
|
|
Income tax benefit
|
4.2
|
|
|
Net income
|
$
|
(6.6
|
)
|
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-June 30, 2019
|
|
773
|
|
|
34.84
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
July 1-September 30, 2019
|
|
152
|
|
|
33.33
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
October 1-October 31, 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
November 1-November 30, 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
December 1-December 31, 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total 2019
|
|
25,297
|
|
|
$
|
37.48
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
For the Years Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017 (1)
|
|
2016 (1)
|
|
2015 (1)
|
||||||||||
Results of Operations
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
1,022.8
|
|
|
$
|
1,041.3
|
|
|
$
|
982.1
|
|
|
$
|
839.9
|
|
|
$
|
764.1
|
|
Cost of products sold
|
732.8
|
|
|
762.8
|
|
|
698.7
|
|
|
582.0
|
|
|
538.3
|
|
|||||
Gross profit
|
290.0
|
|
|
278.5
|
|
|
283.4
|
|
|
257.9
|
|
|
225.8
|
|
|||||
Nonmanufacturing expenses
|
152.3
|
|
|
141.8
|
|
|
147.0
|
|
|
122.3
|
|
|
104.8
|
|
|||||
Restructuring & impairment expense
|
3.7
|
|
|
1.7
|
|
|
8.1
|
|
|
25.6
|
|
|
14.6
|
|
|||||
Operating profit
|
134.0
|
|
|
135.0
|
|
|
128.3
|
|
|
110.0
|
|
|
106.4
|
|
|||||
Income from continuing operations
|
85.8
|
|
|
94.8
|
|
|
34.4
|
|
|
82.8
|
|
|
90.5
|
|
|||||
Income (loss) from discontinued operations
|
—
|
|
|
(0.3
|
)
|
|
0.1
|
|
|
—
|
|
|
(0.8
|
)
|
|||||
Net income
|
$
|
85.8
|
|
|
$
|
94.5
|
|
|
$
|
34.5
|
|
|
$
|
82.8
|
|
|
$
|
89.7
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) per share - basic:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations
|
$
|
2.78
|
|
|
$
|
3.08
|
|
|
$
|
1.12
|
|
|
$
|
2.71
|
|
|
$
|
2.97
|
|
(Loss) income from discontinued operations
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
|
(0.02
|
)
|
|||||
Net income per share - basic
|
$
|
2.78
|
|
|
$
|
3.07
|
|
|
$
|
1.12
|
|
|
$
|
2.71
|
|
|
$
|
2.95
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) per share - diluted:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations
|
$
|
2.76
|
|
|
$
|
3.07
|
|
|
$
|
1.12
|
|
|
$
|
2.70
|
|
|
$
|
2.96
|
|
(Loss) income from discontinued operations
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
|
(0.02
|
)
|
|||||
Net income per share - diluted
|
$
|
2.76
|
|
|
$
|
3.06
|
|
|
$
|
1.12
|
|
|
$
|
2.70
|
|
|
$
|
2.94
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends declared and paid per share
|
$
|
1.76
|
|
|
$
|
1.73
|
|
|
$
|
1.69
|
|
|
$
|
1.62
|
|
|
$
|
1.54
|
|
EBITDA from continuing operations(2)
|
$
|
195.1
|
|
|
$
|
193.9
|
|
|
$
|
192.4
|
|
|
$
|
157.6
|
|
|
$
|
162.8
|
|
Adjusted EBITDA from continuing operations (2)
|
$
|
197.2
|
|
|
$
|
196.9
|
|
|
$
|
197.9
|
|
|
$
|
178.4
|
|
|
$
|
162.0
|
|
Percent of Net Sales
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross profit
|
28.4
|
%
|
|
26.7
|
%
|
|
28.9
|
%
|
|
30.7
|
%
|
|
29.6
|
%
|
|||||
Nonmanufacturing expenses
|
14.9
|
%
|
|
13.6
|
%
|
|
15.0
|
%
|
|
14.6
|
%
|
|
13.7
|
%
|
|||||
Financial Position
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital spending
|
$
|
28.6
|
|
|
$
|
27.0
|
|
|
$
|
37.2
|
|
|
$
|
27.8
|
|
|
$
|
24.2
|
|
Depreciation and amortization
|
57.7
|
|
|
61.6
|
|
|
59.5
|
|
|
44.5
|
|
|
41.0
|
|
|||||
Total assets
|
1,471.7
|
|
|
1,466.5
|
|
|
1,542.5
|
|
|
1,173.7
|
|
|
1,290.0
|
|
|||||
Total debt
|
542.7
|
|
|
622.1
|
|
|
684.2
|
|
|
440.4
|
|
|
571.5
|
|
|||||
Total debt to capital ratio
|
47.6
|
%
|
|
52.7
|
%
|
|
55.6
|
%
|
|
46.4
|
%
|
|
55.0
|
%
|
(1)
|
In March 2017, the FASB issued ASU 2017-07, "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." The amendment requires an employer to report the service cost component in the same line item or line items as other compensation costs arising from services rendered by the pertinent employees during the period. The other
|
(2)
|
Earnings before interest, taxes, depreciation and amortization ("EBITDA") from Continuing Operations is a non-GAAP financial measure that is calculated by adding interest expense, income tax provision and depreciation and amortization expense to income from continuing operations. Adjusted EBITDA from Continuing Operations is a non-GAAP financial measure that is calculated by adding restructuring and impairment expense, Loss (income) from equity affiliates and Other (income) expense, net to EBITDA from continuing operations. We caution investors that amounts presented in accordance with our definitions of EBITDA from Continuing Operations and Adjusted EBITDA from Continuing Operations may not be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate EBITDA from Continuing Operations and Adjusted EBITDA from Continuing Operations in the same manner. We present EBITDA from Continuing Operations and Adjusted EBITDA from Continuing Operations because we consider them to be important supplemental measures of our performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Reconciliations to income from continuing operations are as follows ($ in millions):
|
|
For the Years Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Income from continuing operations
|
$
|
85.8
|
|
|
$
|
94.8
|
|
|
$
|
34.4
|
|
|
$
|
82.8
|
|
|
$
|
90.5
|
|
Plus: Interest expense
|
36.1
|
|
|
28.2
|
|
|
26.9
|
|
|
16.6
|
|
|
9.7
|
|
|||||
Plus: Income tax provision
|
15.2
|
|
|
10.7
|
|
|
69.6
|
|
|
15.4
|
|
|
21.6
|
|
|||||
Plus: Depreciation and amortization(1)
|
58.0
|
|
|
60.2
|
|
|
61.5
|
|
|
42.8
|
|
|
41.0
|
|
|||||
EBITDA from continuing operations
|
195.1
|
|
|
193.9
|
|
|
192.4
|
|
|
157.6
|
|
|
162.8
|
|
|||||
Plus: Restructuring and impairment expense
|
3.7
|
|
|
1.7
|
|
|
8.1
|
|
|
25.6
|
|
|
14.6
|
|
|||||
Plus: Loss (income) from equity affiliates
|
(4.1
|
)
|
|
11.3
|
|
|
(2.5
|
)
|
|
(4.8
|
)
|
|
(6.6
|
)
|
|||||
Plus: Other (income) expense, net
|
1.0
|
|
|
(10.0
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(8.8
|
)
|
|||||
Plus: Litigation related expenses
|
1.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Adjusted EBITDA from continuing operations
|
$
|
197.2
|
|
|
$
|
196.9
|
|
|
$
|
197.9
|
|
|
$
|
178.4
|
|
|
$
|
162.0
|
|
(1)
|
A total of ($0.3) million, $1.4 million, ($2.0) million, $1.7 million, and $0.0 million, primarily related to amortization of deferred debt issuance costs, amortization of bond discount, and amortization of gains from termination of interest rate swaps in 2019, 2018, 2017, 2016, and 2015, respectively, are excluded from the Depreciation and amortization in the table above. The deferred debt issuance costs, amortization of bond discount and amortization of gains from the termination of interest rate swaps are included in Interest expense.
|
•
|
SUMMARY;
|
•
|
CRITICAL ACCOUNTING POLICIES AND ESTIMATES;
|
•
|
RECENT ACCOUNTING PRONOUNCEMENTS;
|
•
|
RESULTS OF OPERATIONS;
|
•
|
LIQUIDITY AND CAPITAL RESOURCES;
|
•
|
OTHER FACTORS AFFECTING LIQUIDITY AND CAPITAL RESOURCES;
|
•
|
OUTLOOK; and
|
•
|
FORWARD-LOOKING STATEMENTS.
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017(1)
|
||||||
|
($ in millions, except per share amounts)
|
||||||||||
Net sales
|
$
|
1,022.8
|
|
|
$
|
1,041.3
|
|
|
$
|
982.1
|
|
Cost of products sold
|
732.8
|
|
|
762.8
|
|
|
698.7
|
|
|||
Gross profit
|
290.0
|
|
|
278.5
|
|
|
283.4
|
|
|||
Selling expense
|
33.7
|
|
|
35.7
|
|
|
33.3
|
|
|||
Research expense
|
13.5
|
|
|
15.2
|
|
|
17.8
|
|
|||
General expense
|
105.1
|
|
|
90.9
|
|
|
95.9
|
|
|||
Total nonmanufacturing expenses
|
152.3
|
|
|
141.8
|
|
|
147.0
|
|
|||
Restructuring and impairment expense
|
3.7
|
|
|
1.7
|
|
|
8.1
|
|
|||
Operating profit
|
134.0
|
|
|
135.0
|
|
|
128.3
|
|
|||
Interest expense
|
36.1
|
|
|
28.2
|
|
|
26.9
|
|
|||
Other (expense) income, net
|
(1.0
|
)
|
|
10.0
|
|
|
0.1
|
|
|||
Income from continuing operations before income taxes and income from equity affiliates
|
96.9
|
|
|
116.8
|
|
|
101.5
|
|
|||
Provision for income taxes
|
15.2
|
|
|
10.7
|
|
|
69.6
|
|
|||
Income (loss) from equity affiliates, net of income taxes
|
4.1
|
|
|
(11.3
|
)
|
|
2.5
|
|
|||
Income from continuing operations
|
85.8
|
|
|
94.8
|
|
|
34.4
|
|
|||
(Loss) gain from discontinued operations
|
—
|
|
|
(0.3
|
)
|
|
0.1
|
|
|||
Net income
|
$
|
85.8
|
|
|
$
|
94.5
|
|
|
$
|
34.5
|
|
|
|
|
|
|
|
||||||
Net income (loss) per share - basic:
|
|
|
|
|
|
||||||
Income per share from continuing operations
|
$
|
2.78
|
|
|
$
|
3.08
|
|
|
$
|
1.12
|
|
Loss per share from discontinued operations
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
|||
Net income per share - basic
|
$
|
2.78
|
|
|
$
|
3.07
|
|
|
$
|
1.12
|
|
|
|
|
|
|
|
||||||
Net income (loss) per share - diluted:
|
|
|
|
|
|
||||||
Income per share from continuing operations
|
$
|
2.76
|
|
|
$
|
3.07
|
|
|
$
|
1.12
|
|
Loss per share from discontinued operations
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
|||
Net income per share - diluted
|
$
|
2.76
|
|
|
$
|
3.06
|
|
|
$
|
1.12
|
|
|
2019
|
|
2018
|
|
Change
|
|
Percent Change
|
|||||||
Advanced Materials & Structures
|
$
|
477.2
|
|
|
$
|
467.9
|
|
|
$
|
9.3
|
|
|
2.0
|
%
|
Engineered Papers
|
545.6
|
|
|
573.4
|
|
|
(27.8
|
)
|
|
(4.8
|
)
|
|||
Total
|
$
|
1,022.8
|
|
|
$
|
1,041.3
|
|
|
$
|
(18.5
|
)
|
|
(1.8
|
)%
|
|
Amount
|
|
Percent
|
|||
Changes in currency exchange rates
|
$
|
(21.2
|
)
|
|
(2.1
|
)%
|
Changes in royalties
|
(0.3
|
)
|
|
—
|
|
|
Changes in product mix, selling prices and sales volumes, net
|
3.0
|
|
|
0.3
|
|
|
Total
|
$
|
(18.5
|
)
|
|
(1.8
|
)%
|
|
|
|
|
|
|
Percent Change
|
|
Percent of Net Sales
|
||||||||||||
|
2019
|
|
2018
|
|
Change
|
|
|
2019
|
|
2018
|
||||||||||
Net sales
|
$
|
1,022.8
|
|
|
$
|
1,041.3
|
|
|
$
|
(18.5
|
)
|
|
(1.8
|
)%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of products sold
|
732.8
|
|
|
762.8
|
|
|
(30.0
|
)
|
|
(3.9
|
)
|
|
71.6
|
|
|
73.3
|
|
|||
Gross profit
|
$
|
290.0
|
|
|
$
|
278.5
|
|
|
$
|
11.5
|
|
|
4.1
|
%
|
|
28.4
|
%
|
|
26.7
|
%
|
|
|
|
|
|
|
Percent Change
|
|
Percent of Net Sales
|
||||||||||||
|
2019
|
|
2018
|
|
Change
|
|
|
2019
|
|
2018
|
||||||||||
Selling expense
|
$
|
33.7
|
|
|
$
|
35.7
|
|
|
$
|
(2.0
|
)
|
|
(5.6
|
)%
|
|
3.3
|
%
|
|
3.4
|
%
|
Research expense
|
13.5
|
|
|
15.2
|
|
|
(1.7
|
)
|
|
(11.2
|
)
|
|
1.3
|
|
|
1.5
|
|
|||
General expense
|
105.1
|
|
|
90.9
|
|
|
14.2
|
|
|
15.6
|
|
|
10.3
|
|
|
8.7
|
|
|||
Nonmanufacturing expenses
|
$
|
152.3
|
|
|
$
|
141.8
|
|
|
$
|
10.5
|
|
|
7.4
|
%
|
|
14.9
|
%
|
|
13.6
|
%
|
|
|
|
|
|
|
Percent Change
|
|
Percent of Net Sales
|
||||||||||||
|
2019
|
|
2018
|
|
Change
|
|
|
2019
|
|
2018
|
||||||||||
Advanced Materials & Structures
|
$
|
1.1
|
|
|
$
|
1.5
|
|
|
$
|
(0.4
|
)
|
|
(26.7
|
)%
|
|
0.2
|
%
|
|
0.3
|
%
|
Engineered Papers
|
2.6
|
|
|
0.2
|
|
|
2.4
|
|
|
N.M.
|
|
|
0.5
|
|
|
—
|
|
|||
Total
|
$
|
3.7
|
|
|
$
|
1.7
|
|
|
$
|
2.0
|
|
|
117.6
|
%
|
|
0.4
|
%
|
|
0.2
|
%
|
|
|
|
|
|
Percent Change
|
|
Return on Net Sales
|
|||||||||||||
|
2019
|
|
2018
|
|
Change
|
|
|
2019
|
|
2018
|
||||||||||
Advanced Materials & Structures
|
$
|
64.3
|
|
|
$
|
49.5
|
|
|
$
|
14.8
|
|
|
29.9
|
%
|
|
13.5
|
%
|
|
10.6
|
%
|
Engineered Papers
|
119.2
|
|
|
121.8
|
|
|
(2.6
|
)
|
|
(2.1
|
)
|
|
21.8
|
|
|
21.2
|
|
|||
Unallocated expenses
|
(49.5
|
)
|
|
(36.3
|
)
|
|
(13.2
|
)
|
|
(36.4
|
)
|
|
|
|
|
|||||
Total
|
$
|
134.0
|
|
|
$
|
135.0
|
|
|
$
|
(1.0
|
)
|
|
(0.7
|
)%
|
|
13.1
|
%
|
|
13.0
|
%
|
Debt Instruments and Related Covenants ($ in millions)
|
For the Years Ended December 31,
|
||||||
2019
|
|
2018
|
|||||
Changes in short-term debt
|
$
|
(0.1
|
)
|
|
$
|
(1.3
|
)
|
Proceeds from issuances of long-term debt
|
19.1
|
|
|
634.2
|
|
||
Payments on long-term debt
|
(99.5
|
)
|
|
(694.0
|
)
|
||
Net (repayments on) proceeds from borrowings
|
$
|
(80.5
|
)
|
|
$
|
(61.1
|
)
|
|
Payments due for the years ended
|
||||||||||||||||||||||||||
Contractual Obligations
|
Total
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
||||||||||||||
Current debt (1)
|
$
|
2.8
|
|
|
$
|
2.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Long-term debt (2)
|
549.4
|
|
|
—
|
|
|
3.5
|
|
|
3.5
|
|
|
2.8
|
|
|
2.1
|
|
|
537.5
|
|
|||||||
Debt interest (3)
|
203.0
|
|
|
31.2
|
|
|
31.1
|
|
|
31.1
|
|
|
31.0
|
|
|
30.9
|
|
|
47.7
|
|
|||||||
Restructuring obligations (4)
|
0.5
|
|
|
0.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Minimum operating lease
payments (5)
|
27.5
|
|
|
6.2
|
|
|
5.2
|
|
|
4.0
|
|
|
2.8
|
|
|
2.3
|
|
|
7.0
|
|
|||||||
Purchase obligations - raw
materials (6)
|
15.9
|
|
|
8.8
|
|
|
3.8
|
|
|
1.7
|
|
|
1.1
|
|
|
0.5
|
|
|
—
|
|
|||||||
Purchase obligations - energy (7)
|
46.7
|
|
|
25.4
|
|
|
14.8
|
|
|
2.1
|
|
|
0.5
|
|
|
0.5
|
|
|
3.4
|
|
|||||||
Tax Act transition obligation (8)
|
23.7
|
|
|
2.3
|
|
|
2.3
|
|
|
2.3
|
|
|
4.2
|
|
|
5.6
|
|
|
7.0
|
|
|||||||
Other contractual obligations (9) (10) (11)
|
0.4
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total
|
$
|
869.9
|
|
|
$
|
77.6
|
|
|
$
|
60.7
|
|
|
$
|
44.7
|
|
|
$
|
42.4
|
|
|
$
|
41.9
|
|
|
$
|
602.6
|
|
(1)
|
Current debt excludes debt issuance costs of $1.3 million; see Note 15. Debt, of the Notes to Consolidated Financial Statements.
|
(2)
|
Long-term debt excludes debt issuance costs of $4.6 million and $6.9 million in unamortized discount on the senior unsecured notes; see additional information regarding long-term debt in Note 15. Debt, of the Notes to Consolidated Financial Statements.
|
(3)
|
The amounts reflected in debt interest are based upon the short-term and long-term scheduled principal maturities and interest rates in effect as of December 31, 2019. Where specific maturities are not stated, such as for an overdraft line-of-credit, a repayment date coinciding with the end of the year was used for purposes of these calculations. With respect to our variable-rate debt outstanding at December 31, 2019, a 100 basis point increase in interest rates would increase our debt interest obligation by $3.7 million in 2020, taking into account the effect of the interest rate hedge transactions the Company has entered into as of December 31, 2019. For more information regarding our outstanding debt and associated interest rates, as well as hedging strategies in place which serve to fix the interest rate on a large portion of our debt, see Note 15. Debt, of the Notes to Consolidated Financial Statements.
|
(4)
|
Restructuring obligations are more fully discussed in Note 14. Restructuring and Impairment Activities, of the Notes to Consolidated Financial Statements.
|
(5)
|
Minimum operating lease payments relate to our future minimum obligations under non-cancelable operating leases having an initial or remaining term in excess of one year as of December 31, 2019.
|
(6)
|
Purchase obligations for raw materials include our calcium carbonate purchase agreement at our plant in Quimperlé, France, in which a vendor operates an on-site calcium carbonate plant and our plant has minimum purchase quantities. See Note 21. Commitments and Contingencies, of the Notes to Consolidated Financial Statements for additional information.
|
(7)
|
Purchase obligations for energy include obligations under agreements with (1) an energy co-generation supplier at our plants in Quimperlé, France and Spay, France, to supply steam for which our plants have minimum purchase commitments, (2) a natural gas supplier to supply and distribute 100% of the natural gas needs of our three French plants, (3) an electricity supplier to supply and distribute the electricity needs of our three French plants, (4) an energy supplier to supply a constant supply of electricity for our Pirahy plant in Brazil, (5) an energy supplier to supply natural gas for our Pirahy plant in Brazil and (6) an energy supplier has a contract to provide biomass at our Spay, France facility for the next two years. See Note 21. Commitments and Contingencies, of the Notes to Consolidated Financial Statements for additional information.
|
(8)
|
On December 22, 2017, the United States enacted the Tax Act into law, which requires a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries. Companies may elect to pay the tax over eight years based on an installment schedule outlined in the Tax Act. We have made this election and have reflected our transition tax due by year as a contractual obligation. See Note. 18. Income Taxes, of the Notes to Consolidated Financial Statements for additional information.
|
(9)
|
Other contractual obligations relate to commitments for capital projects. Other contractual obligations exclude $1.7 million of unrecognized tax benefits associated with uncertain tax positions for which there is no contractual obligation. We had no other long-term liabilities as defined for purposes of this disclosure by the SEC as of December 31, 2019.
|
(10)
|
Other contractual obligations do not include any amounts for our pension obligations. The pension obligations are funded by our separate pension trusts, which held $127.0 million in assets at December 31, 2019. The combined projected benefit obligation ("PBO") of our U.S. and French pension plans was underfunded by $24.9 million and $26.6 million as of December 31, 2019 and 2018, respectively. We make contributions to our pension trusts based on many factors including regulatory guidelines, investment returns of the trusts and availability of cash for pension contributions versus other priorities. We expect 2020 funding to be in compliance with the Pension Protection Act of 2006. For information regarding our long-term pension obligations and trust assets, see Note 19. Postretirement and Other Benefits, of the Notes to Consolidated Financial Statements.
|
(11)
|
Other contractual obligations do not include any amounts for our postretirement healthcare and life insurance benefits. Such payments are dependent upon our retirees incurring costs and filing claims; therefore, future payments are uncertain. Our net payments under these plans were approximately $0.0 million and $0.1 million in the years ended December 31, 2019 and 2018, respectively. Based on this past experience, we currently expect our share of the net payments to be less than $1.0 million during 2020 for these benefits. For more information regarding our retiree healthcare and life insurance benefit obligations, see Note 19. Postretirement and Other Benefits, of the Notes to Consolidated Financial Statements.
|
•
|
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;
|
•
|
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;
|
•
|
Events occurring in countries having a large share of the global economy (such as China, Japan, or the EU) can have an impact on economies that are interdependent and thereby affect those in which the Company primarily operates. For example, the impact of a slowdown of the Chinese economy due to the outbreak of a virus there on the global economy and our future results is uncertain.
|
•
|
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.
|
|
Page
|
Consolidated Financial Statements
|
|
Reports of Independent Registered Public Accounting Firm
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales
|
$
|
1,022.8
|
|
|
$
|
1,041.3
|
|
|
$
|
982.1
|
|
Cost of products sold
|
732.8
|
|
|
762.8
|
|
|
698.7
|
|
|||
Gross profit
|
290.0
|
|
|
278.5
|
|
|
283.4
|
|
|||
|
|
|
|
|
|
||||||
Selling expense
|
33.7
|
|
|
35.7
|
|
|
33.3
|
|
|||
Research expense
|
13.5
|
|
|
15.2
|
|
|
17.8
|
|
|||
General expense
|
105.1
|
|
|
90.9
|
|
|
95.9
|
|
|||
Total nonmanufacturing expenses
|
152.3
|
|
|
141.8
|
|
|
147.0
|
|
|||
|
|
|
|
|
|
||||||
Restructuring and impairment expense
|
3.7
|
|
|
1.7
|
|
|
8.1
|
|
|||
Operating profit
|
134.0
|
|
|
135.0
|
|
|
128.3
|
|
|||
Interest expense
|
36.1
|
|
|
28.2
|
|
|
26.9
|
|
|||
Other (expense) income, net
|
(1.0
|
)
|
|
10.0
|
|
|
0.1
|
|
|||
Income from continuing operations before income taxes and income from equity affiliates
|
96.9
|
|
|
116.8
|
|
|
101.5
|
|
|||
|
|
|
|
|
|
||||||
Provision for income taxes
|
15.2
|
|
|
10.7
|
|
|
69.6
|
|
|||
Income (Loss) from equity affiliates, net of income taxes
|
4.1
|
|
|
(11.3
|
)
|
|
2.5
|
|
|||
Income from continuing operations
|
85.8
|
|
|
94.8
|
|
|
34.4
|
|
|||
(Loss) gain from discontinued operations
|
—
|
|
|
(0.3
|
)
|
|
0.1
|
|
|||
Net income
|
$
|
85.8
|
|
|
$
|
94.5
|
|
|
$
|
34.5
|
|
|
|
|
|
|
|
||||||
Net income (loss) per share - basic:
|
|
|
|
|
|
||||||
Income per share from continuing operations
|
$
|
2.78
|
|
|
$
|
3.08
|
|
|
$
|
1.12
|
|
Loss per share from discontinued operations
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
|||
Net income per share – basic
|
$
|
2.78
|
|
|
$
|
3.07
|
|
|
$
|
1.12
|
|
|
|
|
|
|
|
||||||
Net income (loss) per share – diluted:
|
|
|
|
|
|
|
|
||||
Income per share from continuing operations
|
$
|
2.76
|
|
|
$
|
3.07
|
|
|
$
|
1.12
|
|
Loss per share from discontinued operations
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
|||
Net income per share – diluted
|
$
|
2.76
|
|
|
$
|
3.06
|
|
|
$
|
1.12
|
|
|
|
|
|
|
|
||||||
Weighted average shares outstanding:
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Basic
|
30,652,200
|
|
|
30,551,300
|
|
|
30,407,100
|
|
|||
|
|
|
|
|
|
||||||
Diluted
|
30,838,300
|
|
|
30,692,900
|
|
|
30,549,300
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
85.8
|
|
|
$
|
94.5
|
|
|
$
|
34.5
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
1.8
|
|
|
(28.6
|
)
|
|
36.0
|
|
|||
Less: Reclassification adjustment for realized translation adjustments
|
(0.9
|
)
|
|
(0.8
|
)
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
Unrealized gains on derivative instruments
|
1.6
|
|
|
2.4
|
|
|
2.0
|
|
|||
Less: Reclassification adjustment for (gains) losses on derivative instruments included in net income
|
(4.5
|
)
|
|
(3.7
|
)
|
|
0.3
|
|
|||
|
|
|
|
|
|
||||||
Net gain (loss) from postretirement benefit plans
|
0.6
|
|
|
(3.3
|
)
|
|
8.3
|
|
|||
Less: Amortization of postretirement benefit plans' costs included in net periodic benefit cost
|
3.3
|
|
|
3.8
|
|
|
3.3
|
|
|||
Other comprehensive income (loss)
|
1.9
|
|
|
(30.2
|
)
|
|
49.9
|
|
|||
Comprehensive income
|
$
|
87.7
|
|
|
$
|
64.3
|
|
|
$
|
84.4
|
|
|
December 31,
2019 |
|
December 31,
2018 |
||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
103.0
|
|
|
$
|
93.8
|
|
Accounts receivable, net
|
143.2
|
|
|
154.6
|
|
||
Inventories
|
161.4
|
|
|
151.5
|
|
||
Income taxes receivable
|
12.5
|
|
|
12.2
|
|
||
Assets held for sale
|
—
|
|
|
12.0
|
|
||
Other current assets
|
7.4
|
|
|
5.1
|
|
||
Total current assets
|
427.5
|
|
|
429.2
|
|
||
|
|
|
|
||||
Property, plant and equipment, net
|
330.3
|
|
|
340.3
|
|
||
Deferred income tax benefits
|
3.7
|
|
|
0.3
|
|
||
Investment in equity affiliates
|
52.4
|
|
|
51.9
|
|
||
Goodwill
|
337.4
|
|
|
338.1
|
|
||
Intangible assets
|
251.2
|
|
|
272.8
|
|
||
Other assets
|
69.2
|
|
|
33.9
|
|
||
Total assets
|
$
|
1,471.7
|
|
|
$
|
1,466.5
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
||
Current debt
|
$
|
1.9
|
|
|
$
|
3.3
|
|
Accounts payable
|
66.4
|
|
|
65.7
|
|
||
Income taxes payable
|
2.8
|
|
|
1.6
|
|
||
Accrued expenses
|
86.5
|
|
|
72.9
|
|
||
Total current liabilities
|
157.6
|
|
|
143.5
|
|
||
|
|
|
|
||||
Long-term debt
|
540.8
|
|
|
618.8
|
|
||
Long-term income tax payable
|
21.4
|
|
|
27.0
|
|
||
Pension and other postretirement benefits
|
31.6
|
|
|
28.2
|
|
||
Deferred income tax liabilities
|
48.2
|
|
|
48.0
|
|
||
Other liabilities
|
74.4
|
|
|
43.1
|
|
||
Total liabilities
|
874.0
|
|
|
908.6
|
|
||
Stockholders' equity:
|
|
|
|
|
|
||
Preferred stock, $0.10 par value per share; 10,000,000 shares authorized; none issued or outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.10 par value per share; 100,000,000 shares authorized; 30,896,661 and 30,771,244 shares issued and outstanding at December 31, 2019 and 2018, respectively
|
3.1
|
|
|
3.1
|
|
||
Additional paid-in-capital
|
78.8
|
|
|
71.1
|
|
||
Retained earnings
|
638.4
|
|
|
608.2
|
|
||
Accumulated other comprehensive loss
|
(122.6
|
)
|
|
(124.5
|
)
|
||
Total stockholders' equity
|
597.7
|
|
|
557.9
|
|
||
Total liabilities and stockholders' equity
|
$
|
1,471.7
|
|
|
$
|
1,466.5
|
|
|
Common Stock Issued
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Shares
|
|
Amount
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
(Loss)
Income
|
|
Total
|
|||||||||||
Balance, December 31, 2016
|
30,544,494
|
|
|
$
|
3.1
|
|
|
$
|
59.2
|
|
|
$
|
585.3
|
|
|
$
|
(139.3
|
)
|
|
$
|
508.3
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
34.5
|
|
|
—
|
|
|
34.5
|
|
|||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
49.9
|
|
|
49.9
|
|
|||||
Dividends declared ($1.69 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(51.9
|
)
|
|
—
|
|
|
(51.9
|
)
|
|||||
Restricted stock issuances, net
|
186,867
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based employee compensation expense
|
—
|
|
|
—
|
|
|
6.9
|
|
|
—
|
|
|
—
|
|
|
6.9
|
|
|||||
Stock issued to directors as compensation
|
5,798
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|||||
Purchases and cancellation of common stock
|
(25,860
|
)
|
|
—
|
|
|
—
|
|
|
(1.2
|
)
|
|
—
|
|
|
(1.2
|
)
|
|||||
Balance, December 31, 2017
|
30,711,299
|
|
|
$
|
3.1
|
|
|
$
|
66.3
|
|
|
$
|
566.7
|
|
|
$
|
(89.4
|
)
|
|
$
|
546.7
|
|
Cumulative effects of change in accounting standards
|
—
|
|
|
—
|
|
|
—
|
|
|
3.2
|
|
|
(4.9
|
)
|
|
(1.7
|
)
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
94.5
|
|
|
—
|
|
|
94.5
|
|
|||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(30.2
|
)
|
|
(30.2
|
)
|
|||||
Dividends declared ($1.73 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(53.2
|
)
|
|
—
|
|
|
(53.2
|
)
|
|||||
Restricted stock issuances, net
|
130,617
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based employee compensation expense
|
—
|
|
|
—
|
|
|
4.6
|
|
|
—
|
|
|
—
|
|
|
4.6
|
|
|||||
Stock issued to directors as compensation
|
4,723
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|||||
Purchases and cancellation of common stock
|
(75,395
|
)
|
|
—
|
|
|
—
|
|
|
(3.0
|
)
|
|
—
|
|
|
(3.0
|
)
|
|||||
Balance, December 31, 2018
|
30,771,244
|
|
|
$
|
3.1
|
|
|
$
|
71.1
|
|
|
$
|
608.2
|
|
|
$
|
(124.5
|
)
|
|
$
|
557.9
|
|
Cumulative effects of change in accounting standards
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
|
(0.3
|
)
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
85.8
|
|
|
—
|
|
|
85.8
|
|
|||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.9
|
|
|
1.9
|
|
|||||
Dividends declared ($1.76 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(54.4
|
)
|
|
—
|
|
|
(54.4
|
)
|
|||||
Restricted stock issuances, net
|
147,113
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based employee compensation expense
|
—
|
|
|
—
|
|
|
7.6
|
|
|
—
|
|
|
—
|
|
|
7.6
|
|
|||||
Stock issued to directors as compensation
|
3,601
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|||||
Purchases and cancellation of common stock
|
(25,297
|
)
|
|
—
|
|
|
—
|
|
|
(0.9
|
)
|
|
—
|
|
|
(0.9
|
)
|
|||||
Balance, December 31, 2019
|
30,896,661
|
|
|
$
|
3.1
|
|
|
$
|
78.8
|
|
|
$
|
638.4
|
|
|
$
|
(122.6
|
)
|
|
$
|
597.7
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Operations
|
|
|
|
|
|
||||||
Net income
|
$
|
85.8
|
|
|
$
|
94.5
|
|
|
$
|
34.5
|
|
Less: (Loss) gain from discontinued operations
|
—
|
|
|
(0.3
|
)
|
|
0.1
|
|
|||
Income from continuing operations
|
85.8
|
|
|
94.8
|
|
|
34.4
|
|
|||
Non-cash items included in net income:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
57.7
|
|
|
61.6
|
|
|
59.5
|
|
|||
Impairments
|
1.1
|
|
|
0.2
|
|
|
4.6
|
|
|||
Deferred income tax (benefit) provision
|
(3.4
|
)
|
|
7.5
|
|
|
1.6
|
|
|||
Pension and other postretirement benefits
|
2.6
|
|
|
2.8
|
|
|
3.8
|
|
|||
Stock-based compensation
|
7.7
|
|
|
4.8
|
|
|
7.1
|
|
|||
(Income) loss from equity affiliates
|
(4.1
|
)
|
|
11.3
|
|
|
(2.5
|
)
|
|||
Brazil tax assessment accruals, net
|
10.9
|
|
|
—
|
|
|
—
|
|
|||
Gain on sale of assets
|
—
|
|
|
—
|
|
|
(4.9
|
)
|
|||
Long-term income tax payable
|
(0.6
|
)
|
|
(12.0
|
)
|
|
36.7
|
|
|||
Change in fair value of contingent consideration
|
—
|
|
|
(10.2
|
)
|
|
—
|
|
|||
Cash dividends received from equity affiliates
|
2.6
|
|
|
2.0
|
|
|
1.8
|
|
|||
Other items
|
1.8
|
|
|
0.4
|
|
|
0.7
|
|
|||
Changes in operating working capital:
|
|
|
|
|
|
||||||
Accounts receivable
|
10.8
|
|
|
(18.3
|
)
|
|
(0.9
|
)
|
|||
Inventories
|
(11.2
|
)
|
|
(4.9
|
)
|
|
(6.4
|
)
|
|||
Prepaid expenses
|
(0.2
|
)
|
|
(0.1
|
)
|
|
0.8
|
|
|||
Accounts payable
|
(2.1
|
)
|
|
8.0
|
|
|
4.7
|
|
|||
Accrued expenses
|
3.9
|
|
|
(1.0
|
)
|
|
(3.0
|
)
|
|||
Accrued income taxes
|
(3.0
|
)
|
|
(8.0
|
)
|
|
(7.1
|
)
|
|||
Net changes in operating working capital
|
(1.8
|
)
|
|
(24.3
|
)
|
|
(11.9
|
)
|
|||
Net cash provided by operating activities of:
|
|
|
|
|
|
||||||
- Continuing operations
|
160.3
|
|
|
138.9
|
|
|
130.9
|
|
|||
- Discontinued operations
|
—
|
|
|
0.2
|
|
|
0.1
|
|
|||
Cash provided by operations
|
160.3
|
|
|
139.1
|
|
|
131.0
|
|
|||
Investing
|
|
|
|
|
|
||||||
Capital spending
|
(28.6
|
)
|
|
(27.0
|
)
|
|
(37.2
|
)
|
|||
Capitalized software costs
|
(5.5
|
)
|
|
(2.7
|
)
|
|
(3.5
|
)
|
|||
Acquisitions, net of cash acquired
|
—
|
|
|
—
|
|
|
(291.7
|
)
|
|||
Proceeds from sale of assets
|
14.7
|
|
|
—
|
|
|
7.0
|
|
|||
Other investing
|
4.6
|
|
|
2.2
|
|
|
6.9
|
|
|||
Cash used for investing
|
(14.8
|
)
|
|
(27.5
|
)
|
|
(318.5
|
)
|
|||
Financing
|
|
|
|
|
|
||||||
Cash dividends paid to SWM stockholders
|
(54.4
|
)
|
|
(53.2
|
)
|
|
(51.9
|
)
|
|||
Changes in short-term debt, net
|
(0.1
|
)
|
|
(1.3
|
)
|
|
1.5
|
|
|||
Proceeds from issuances of long-term debt
|
19.1
|
|
|
634.2
|
|
|
440.5
|
|
|||
Payments on long-term debt
|
(99.5
|
)
|
|
(694.0
|
)
|
|
(208.8
|
)
|
|||
Payments for debt issuance costs
|
—
|
|
|
(3.6
|
)
|
|
(0.6
|
)
|
|||
Purchases of common stock
|
(0.9
|
)
|
|
(3.0
|
)
|
|
(1.2
|
)
|
|||
Cash (used in) provided by financing
|
(135.8
|
)
|
|
(120.9
|
)
|
|
179.5
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(0.5
|
)
|
|
(3.8
|
)
|
|
7.5
|
|
|||
Increase (decrease) in cash and cash equivalents
|
9.2
|
|
|
(13.1
|
)
|
|
(0.5
|
)
|
|||
Cash and cash equivalents at beginning of period
|
93.8
|
|
|
106.9
|
|
|
107.4
|
|
|||
Cash and cash equivalents at end of period
|
$
|
103.0
|
|
|
$
|
93.8
|
|
|
$
|
106.9
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Accumulated pension and OPEB liability adjustments, net of income tax benefit of $12.8 million and $11.4 million at December 31, 2019 and 2018, respectively
|
$
|
(24.3
|
)
|
|
$
|
(28.2
|
)
|
Accumulated unrealized loss on derivative instruments, net of income tax benefit of $1.6 million and $1.6 million at December 31, 2019 and 2018, respectively
|
(3.5
|
)
|
|
(0.6
|
)
|
||
Accumulated unrealized foreign currency translation adjustments, net of income tax benefit of $5.0 million and $1.7 million at December 31, 2019 and 2018, respectively
|
(94.8
|
)
|
|
(95.7
|
)
|
||
Accumulated other comprehensive loss
|
$
|
(122.6
|
)
|
|
$
|
(124.5
|
)
|
|
For the Years Ended December 31,
|
||||||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||||||||||||||
|
Pre-tax
|
|
Tax
|
|
Net of
Tax
|
|
Pre-tax
|
|
Tax
|
|
Net of
Tax
|
|
Pre-tax
|
|
Tax
|
|
Net of
Tax
|
||||||||||||||||||
Pension and OPEB liability adjustments
|
$
|
2.5
|
|
|
$
|
1.4
|
|
|
$
|
3.9
|
|
|
$
|
(0.9
|
)
|
|
$
|
(2.4
|
)
|
|
$
|
(3.3
|
)
|
|
$
|
15.4
|
|
|
$
|
(3.8
|
)
|
|
$
|
11.6
|
|
Derivative instrument adjustments
|
(2.9
|
)
|
|
—
|
|
|
(2.9
|
)
|
|
(2.4
|
)
|
|
1.4
|
|
|
(1.0
|
)
|
|
5.1
|
|
|
(2.8
|
)
|
|
2.3
|
|
|||||||||
Unrealized foreign currency translation adjustments
|
(2.5
|
)
|
|
3.4
|
|
|
0.9
|
|
|
(28.0
|
)
|
|
(2.8
|
)
|
|
(30.8
|
)
|
|
31.5
|
|
|
4.5
|
|
|
36.0
|
|
|||||||||
Total
|
$
|
(2.9
|
)
|
|
$
|
4.8
|
|
|
$
|
1.9
|
|
|
$
|
(31.3
|
)
|
|
$
|
(3.8
|
)
|
|
$
|
(35.1
|
)
|
|
$
|
52.0
|
|
|
$
|
(2.1
|
)
|
|
$
|
49.9
|
|
|
For the Years Ended December 31,
|
||||||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||||||||||||||
|
AMS
|
|
EP
|
|
Total
|
|
AMS
|
|
EP
|
|
Total
|
|
AMS
|
|
EP
|
|
Total
|
||||||||||||||||||
Product revenues
|
$
|
462.8
|
|
|
$
|
484.2
|
|
|
$
|
947.0
|
|
|
$
|
455.5
|
|
|
$
|
500.1
|
|
|
$
|
955.6
|
|
|
$
|
419.5
|
|
|
$
|
464.7
|
|
|
$
|
884.2
|
|
Materials conversion revenues
|
8.9
|
|
|
56.4
|
|
|
65.3
|
|
|
8.4
|
|
|
68.2
|
|
|
76.6
|
|
|
11.4
|
|
|
79.3
|
|
|
90.7
|
|
|||||||||
Other revenues
|
5.5
|
|
|
5.0
|
|
|
10.5
|
|
|
4.0
|
|
|
5.1
|
|
|
9.1
|
|
|
2.3
|
|
|
4.9
|
|
|
7.2
|
|
|||||||||
Total revenues (1)
|
$
|
477.2
|
|
|
$
|
545.6
|
|
|
$
|
1,022.8
|
|
|
$
|
467.9
|
|
|
$
|
573.4
|
|
|
$
|
1,041.3
|
|
|
$
|
433.2
|
|
|
$
|
548.9
|
|
|
$
|
982.1
|
|
|
For the Years Ended December 31,
|
||||||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||||||||||||||
|
AMS
|
|
EP
|
|
Total
|
|
AMS
|
|
EP
|
|
Total
|
|
AMS
|
|
EP
|
|
Total
|
||||||||||||||||||
United States
|
$
|
331.3
|
|
|
$
|
182.8
|
|
|
$
|
514.1
|
|
|
$
|
320.1
|
|
|
$
|
193.3
|
|
|
$
|
513.4
|
|
|
$
|
292.7
|
|
|
$
|
176.2
|
|
|
$
|
468.9
|
|
Europe and the former Commonwealth of Independent States
|
45.8
|
|
|
172.6
|
|
|
218.4
|
|
|
46.2
|
|
|
214.6
|
|
|
260.8
|
|
|
51.6
|
|
|
208.3
|
|
|
259.9
|
|
|||||||||
Asia/Pacific (including China)
|
77.6
|
|
|
95.0
|
|
|
172.6
|
|
|
76.6
|
|
|
82.8
|
|
|
159.4
|
|
|
66.1
|
|
|
82.3
|
|
|
148.4
|
|
|||||||||
Latin America
|
7.6
|
|
|
45.6
|
|
|
53.2
|
|
|
10.0
|
|
|
43.5
|
|
|
53.5
|
|
|
9.4
|
|
|
48.5
|
|
|
57.9
|
|
|||||||||
Other foreign countries
|
14.9
|
|
|
49.6
|
|
|
64.5
|
|
|
15.0
|
|
|
39.2
|
|
|
54.2
|
|
|
13.4
|
|
|
33.6
|
|
|
47.0
|
|
|||||||||
Total revenues (1)
|
$
|
477.2
|
|
|
$
|
545.6
|
|
|
$
|
1,022.8
|
|
|
$
|
467.9
|
|
|
$
|
573.4
|
|
|
$
|
1,041.3
|
|
|
$
|
433.2
|
|
|
$
|
548.9
|
|
|
$
|
982.1
|
|
Assets
|
Classification
|
December 31, 2019
|
||
Operating lease right-of-use assets
|
Other assets
|
$
|
20.9
|
|
Finance lease right-of-use assets
|
Property, plant and equipment, net
|
2.9
|
|
|
Total right of use assets
|
|
$
|
23.8
|
|
|
|
|
||
Liabilities
|
Classification
|
December 31, 2019
|
||
Current operating lease obligation
|
Accrued expenses and other current liabilities
|
$
|
4.9
|
|
Long-term operating lease obligation
|
Other liabilities
|
17.2
|
|
|
Total operating lease obligation
|
|
$
|
22.1
|
|
|
|
|
||
Current finance lease obligation
|
Current debt
|
$
|
0.4
|
|
Long-term finance lease obligation
|
Long-term debt
|
2.8
|
|
|
Total finance lease obligation
|
|
$
|
3.2
|
|
|
December 31, 2019
|
||||||||||
Assets
|
Finance
|
|
Operating
|
|
Total
|
||||||
Land and improvements
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
Buildings and improvements
|
2.9
|
|
|
21.8
|
|
|
24.7
|
|
|||
Machinery and equipment
|
0.7
|
|
|
4.5
|
|
|
5.2
|
|
|||
Gross property, plant and equipment
|
3.6
|
|
|
26.4
|
|
|
30.0
|
|
|||
Less: Accumulated depreciation
|
(0.7
|
)
|
|
(5.5
|
)
|
|
(6.2
|
)
|
|||
Right-of-use assets
|
$
|
2.9
|
|
|
$
|
20.9
|
|
|
$
|
23.8
|
|
Lease Cost
|
Year Ended December 31, 2019
|
||
Finance lease cost (cost resulting from lease payments)
|
|
||
Interest expense on lease liabilities
|
$
|
0.2
|
|
Amortization of right-of-use assets
|
0.4
|
|
|
Operating lease cost
|
6.2
|
|
|
Short-term lease expense
|
0.3
|
|
|
Variable lease expense
|
—
|
|
|
Sublease income
|
—
|
|
|
Total Lease Cost
|
$
|
7.1
|
|
Maturity of Lease Liabilities
|
Finance
|
|
Operating
|
|
Total
|
||||||
2020
|
$
|
0.6
|
|
|
6.2
|
|
|
$
|
6.8
|
|
|
2021
|
0.6
|
|
|
5.2
|
|
|
5.8
|
|
|||
2022
|
0.5
|
|
|
4.0
|
|
|
4.5
|
|
|||
2023
|
0.5
|
|
|
2.8
|
|
|
3.3
|
|
|||
2024
|
0.5
|
|
|
2.3
|
|
|
2.8
|
|
|||
Thereafter
|
1.4
|
|
|
7.0
|
|
|
8.4
|
|
|||
Total Lease Payments
|
$
|
4.1
|
|
|
$
|
27.5
|
|
|
$
|
31.6
|
|
Less: Interest
|
0.9
|
|
|
5.4
|
|
|
6.3
|
|
|||
Present Value of Lease Liabilities
|
$
|
3.2
|
|
|
$
|
22.1
|
|
|
$
|
25.3
|
|
Lease Term and Discount Rate
|
December 31, 2019
|
|
Weighted-average remaining lease term (years)
|
|
|
Operating leases
|
6.7
|
|
Finance leases
|
7.3
|
|
Weighted-average discount rate
|
|
|
Operating leases
|
6.49
|
%
|
Finance leases
|
5.27
|
%
|
Other Information (millions)
|
Year Ended December 31, 2019
|
|
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
Operating cash flows from operating leases
|
6.3
|
|
Operating cash flows from finance leases
|
0.3
|
|
Financing cash flows from finance leases
|
0.2
|
|
Leased assets obtained in exchange for new finance lease liabilities
|
0.6
|
|
Leased assets obtained in exchange for new operating lease liabilities
|
3.3
|
|
2019
|
$
|
5.8
|
|
2020
|
5.0
|
|
|
2021
|
4.4
|
|
|
2022
|
3.6
|
|
|
2023
|
3.0
|
|
|
Thereafter
|
8.1
|
|
|
Total
|
$
|
29.9
|
|
|
Fair Value as of January 20, 2017
|
||
Cash and cash equivalents
|
$
|
3.3
|
|
Accounts receivable
|
15.4
|
|
|
Inventory
|
20.6
|
|
|
Other current assets
|
1.1
|
|
|
Property, plant and equipment
|
31.7
|
|
|
Identifiable intangible assets
|
134.4
|
|
|
Total assets
|
206.5
|
|
|
|
|
||
Accounts payable
|
8.2
|
|
|
Deferred tax liabilities
|
0.9
|
|
|
|
|
||
Net assets acquired
|
197.4
|
|
|
|
|
||
Goodwill
|
106.2
|
|
|
|
|
||
Total consideration
|
$
|
303.6
|
|
|
Fair Value as of January 20, 2017
|
|
Weighted-Average Amortization Period (Years)
|
||
Amortizable intangible assets:
|
|
|
|
||
Customer relationships
|
$
|
108.0
|
|
|
15.0
|
Developed technology
|
18.1
|
|
|
17.2
|
|
Non-competition agreements
|
1.2
|
|
|
7.2
|
|
Total amortizable intangible assets
|
127.3
|
|
|
|
|
Indefinite-lived intangible assets:
|
|
|
|
||
Trade names
|
7.1
|
|
|
Indefinite
|
|
Total
|
$
|
134.4
|
|
|
|
|
|
Net Sales
|
|
Income from Continuing Operations
|
||||
January 21, 2017 - December 31, 2017
|
|
$
|
141.3
|
|
|
$
|
11.9
|
|
|
|
Net Sales
|
|
Income from Continuing Operations
|
||||
2017 Supplemental Pro Forma from January 1, 2017 - December 31, 2017
|
|
$
|
989.8
|
|
|
$
|
31.1
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Assets of discontinued operations:
|
|
|
|
||||
Current assets
|
$
|
0.8
|
|
|
$
|
0.8
|
|
Other assets
|
1.2
|
|
|
1.2
|
|
||
|
|
|
|
||||
Liabilities of discontinued operations:
|
|
|
|
|
|
||
Current liabilities
|
0.1
|
|
|
0.1
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other (expense) income
|
—
|
|
|
(0.3
|
)
|
|
0.1
|
|
|||
(Loss) gain from discontinued operations before income taxes
|
—
|
|
|
(0.3
|
)
|
|
0.1
|
|
|||
Income tax (provision) benefit
|
—
|
|
|
—
|
|
|
—
|
|
|||
(Loss) gain from discontinued operations
|
$
|
—
|
|
|
$
|
(0.3
|
)
|
|
$
|
0.1
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Trade receivables
|
$
|
114.6
|
|
|
$
|
130.9
|
|
Business tax credits, including VAT
|
5.2
|
|
|
4.0
|
|
||
Hedge contracts receivable
|
4.9
|
|
|
2.1
|
|
||
Other receivables
|
20.0
|
|
|
19.3
|
|
||
Less allowance for doubtful accounts and sales discounts
|
(1.5
|
)
|
|
(1.7
|
)
|
||
Total accounts receivable, net
|
$
|
143.2
|
|
|
$
|
154.6
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Raw materials
|
$
|
61.1
|
|
|
$
|
50.2
|
|
Work in process
|
20.7
|
|
|
22.4
|
|
||
Finished goods
|
65.3
|
|
|
69.9
|
|
||
Supplies and other
|
14.3
|
|
|
9.0
|
|
||
Total
|
$
|
161.4
|
|
|
$
|
151.5
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Land and improvements
|
$
|
14.8
|
|
|
$
|
15.0
|
|
Buildings and improvements (20 to 40 years or remaining life of relevant lease)
|
142.3
|
|
|
142.0
|
|
||
Machinery and equipment (5 to 20 years)
|
622.6
|
|
|
620.9
|
|
||
Construction in progress
|
24.0
|
|
|
14.6
|
|
||
Gross property, plant and equipment
|
803.7
|
|
|
792.5
|
|
||
Less: Accumulated depreciation
|
473.4
|
|
|
452.2
|
|
||
Property, plant and equipment, net
|
$
|
330.3
|
|
|
$
|
340.3
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Current assets
|
$
|
99.4
|
|
|
$
|
116.7
|
|
Noncurrent assets
|
168.0
|
|
|
183.6
|
|
||
Current liabilities
|
43.1
|
|
|
65.3
|
|
||
Long-term liabilities
|
88.4
|
|
|
100.9
|
|
||
Stockholder's equity
|
135.9
|
|
|
134.1
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net sales
|
$
|
103.5
|
|
|
$
|
109.7
|
|
|
$
|
105.0
|
|
Gross profit
|
32.2
|
|
|
33.4
|
|
|
29.1
|
|
|||
Net income
|
8.3
|
|
|
7.4
|
|
|
4.9
|
|
|
Advanced Materials & Structures
|
|
Engineered Papers
|
|
Total
|
||||||
Goodwill as of December 31, 2017
|
$
|
336.1
|
|
|
$
|
5.2
|
|
|
$
|
341.3
|
|
Foreign currency translation adjustments
|
(3.0
|
)
|
|
(0.2
|
)
|
|
(3.2
|
)
|
|||
Goodwill as of December 31, 2018
|
$
|
333.1
|
|
|
$
|
5.0
|
|
|
$
|
338.1
|
|
Foreign currency translation adjustments
|
(0.6
|
)
|
|
(0.1
|
)
|
|
(0.7
|
)
|
|||
Goodwill as of December 31, 2019
|
$
|
332.5
|
|
|
$
|
4.9
|
|
|
$
|
337.4
|
|
|
December 31, 2019
|
||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Accumulated Impairments
|
|
Accumulated Foreign Exchange
|
|
Net
Carrying
Amount
|
||||||||||
Amortized Intangible Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Advanced Materials & Structures
|
|||||||||||||||||||
Customer relationships
|
$
|
276.3
|
|
|
$
|
67.7
|
|
|
$
|
—
|
|
|
$
|
1.8
|
|
|
$
|
206.8
|
|
Developed technology
|
34.0
|
|
|
10.9
|
|
|
—
|
|
|
0.4
|
|
|
22.7
|
|
|||||
Trade names
|
21.8
|
|
|
0.8
|
|
|
20.7
|
|
|
0.3
|
|
|
—
|
|
|||||
Non-compete agreements
|
2.9
|
|
|
2.2
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|||||
Patents
|
1.5
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
1.1
|
|
|||||
Total
|
$
|
336.5
|
|
|
$
|
82.0
|
|
|
$
|
20.7
|
|
|
$
|
2.5
|
|
|
$
|
231.3
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Unamortized Intangible Assets (Advanced Materials & Structures)
|
|||||||||||||||||||
Trade names
|
$
|
20.0
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
19.9
|
|
|
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
|
|
For the year ending December 31,
|
Estimated Amortization Expense
|
||
2020
|
$
|
19.9
|
|
2021
|
19.9
|
|
|
2022
|
19.9
|
|
|
2023
|
19.6
|
|
|
2024
|
19.2
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Capitalized software costs, net of accumulated amortization
|
$
|
11.9
|
|
|
$
|
8.3
|
|
Business tax credits, including VAT and ICMS (net of $12.1 million and $11.5 million reserve as of December 31, 2019 and 2018, respectively)
|
—
|
|
|
1.2
|
|
||
Grantor trust assets
|
14.7
|
|
|
10.9
|
|
||
Net pension assets
|
5.9
|
|
|
0.8
|
|
||
Long-term supplies inventory
|
6.9
|
|
|
6.8
|
|
||
Operating lease assets
|
20.9
|
|
|
—
|
|
||
Other assets
|
8.9
|
|
|
5.9
|
|
||
Total
|
$
|
69.2
|
|
|
$
|
33.9
|
|
|
2019
|
|
2018
|
||||
Balance at beginning of year
|
$
|
1.4
|
|
|
$
|
1.7
|
|
Accruals for announced programs
|
3.7
|
|
|
1.3
|
|
||
Cash payments
|
(4.2
|
)
|
|
(3.3
|
)
|
||
Other
|
(0.4
|
)
|
|
1.8
|
|
||
Exchange rate impacts
|
—
|
|
|
(0.1
|
)
|
||
Balance at end of period
|
$
|
0.5
|
|
|
$
|
1.4
|
|
|
December 31,
2019 |
|
December 31,
2018 |
||||
Revolving credit agreement - U.S. dollar borrowings
|
$
|
—
|
|
|
$
|
76.0
|
|
Term loan facility
|
197.5
|
|
|
199.5
|
|
||
6.875% senior unsecured notes due October 1, 2026, net of discount of $6.9 million and $7.6 million as of December 31, 2019 and December 31, 2018, respectively
|
343.1
|
|
|
342.4
|
|
||
French employee profit sharing
|
4.8
|
|
|
6.6
|
|
||
Finance lease obligations1
|
3.2
|
|
|
4.7
|
|
||
Other
|
—
|
|
|
0.1
|
|
||
Debt issuance costs
|
(5.9
|
)
|
|
(7.2
|
)
|
||
Total debt
|
542.7
|
|
|
622.1
|
|
||
Less: Current debt
|
(1.9
|
)
|
|
(3.3
|
)
|
||
Long-term debt
|
$
|
540.8
|
|
|
$
|
618.8
|
|
2020
|
$
|
2.8
|
|
2021
|
3.5
|
|
|
2022
|
3.5
|
|
|
2023
|
2.8
|
|
|
2024
|
2.1
|
|
|
Thereafter
|
537.5
|
|
|
Total *
|
$
|
552.2
|
|
2020
|
$
|
1.2
|
|
2021
|
1.2
|
|
|
2022
|
1.2
|
|
|
2023
|
1.0
|
|
|
2024
|
0.4
|
|
|
Thereafter
|
0.9
|
|
|
Total
|
$
|
5.9
|
|
•
|
September 13, 2019 - December 31, 2020 $185 million notional
|
•
|
December 31, 2020 - December 31, 2021 $150 million notional
|
•
|
December 31, 2021 - January 31, 2027 $100 million notional
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
||||
Derivatives Designated as Hedges:
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts
|
Accounts receivable
|
|
$
|
4.8
|
|
|
Accrued expenses
|
|
$
|
5.6
|
|
Foreign exchange contracts
|
Other assets
|
|
6.3
|
|
|
Other liabilities
|
|
5.5
|
|
||
Interest rate contracts
|
Accounts receivable
|
|
—
|
|
|
Accrued expenses
|
|
0.2
|
|
||
Interest rate contracts
|
Other assets
|
|
—
|
|
|
Other liabilities
|
|
—
|
|
||
Total derivatives designated as hedges
|
|
|
$
|
11.1
|
|
|
|
|
$
|
11.3
|
|
|
|
|
|
|
|
|
|
||||
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts
|
Accounts receivable
|
|
$
|
0.1
|
|
|
Accounts payable
|
|
$
|
—
|
|
Total derivatives not designated as hedges
|
|
|
0.1
|
|
|
|
|
—
|
|
||
Total derivatives
|
|
|
$
|
11.2
|
|
|
|
|
$
|
11.3
|
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
|
Balance Sheet
Location
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Fair
Value
|
||||
Derivatives Designated as Hedges:
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts
|
Accounts receivable
|
|
$
|
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
|
|
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 for the Year Ended December 31,
|
|
Location of Loss (Gain) Reclassified from AOCI
|
|
Loss (Gain) Reclassified
from AOCI, Net of Tax
|
||||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
Foreign exchange contracts
|
|
$
|
(0.7
|
)
|
|
$
|
(1.7
|
)
|
|
$
|
2.2
|
|
|
Net sales
|
|
$
|
(1.2
|
)
|
|
$
|
0.8
|
|
|
$
|
0.4
|
|
Foreign exchange contracts
|
|
(2.3
|
)
|
|
0.1
|
|
|
(0.6
|
)
|
|
Other income, net
|
|
(1.9
|
)
|
|
0.1
|
|
|
0.5
|
|
||||||
Interest rate contracts
|
|
4.6
|
|
|
4.0
|
|
|
0.4
|
|
|
Interest expense
|
|
7.6
|
|
|
2.8
|
|
|
(1.2
|
)
|
||||||
Total
|
|
$
|
1.6
|
|
|
$
|
2.4
|
|
|
$
|
2.0
|
|
|
|
|
$
|
4.5
|
|
|
$
|
3.7
|
|
|
$
|
(0.3
|
)
|
Derivatives Not Designated as Cash Flow Hedging Instruments
|
Amount of Gain / (Loss) Recognized in Other Income / Expense
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Foreign exchange contracts
|
$
|
1.1
|
|
|
$
|
(2.5
|
)
|
|
$
|
2.7
|
|
Total
|
$
|
1.1
|
|
|
$
|
(2.5
|
)
|
|
$
|
2.7
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Accrued salaries, wages and employee benefits
|
$
|
46.1
|
|
|
$
|
43.1
|
|
Other accrued expenses
|
40.4
|
|
|
29.8
|
|
||
Total
|
$
|
86.5
|
|
|
$
|
72.9
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
United States
|
$
|
60.0
|
|
|
$
|
55.8
|
|
|
$
|
42.6
|
|
Foreign
|
36.9
|
|
|
61.0
|
|
|
58.9
|
|
|||
Total
|
$
|
96.9
|
|
|
$
|
116.8
|
|
|
$
|
101.5
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Current income taxes:
|
|
|
|
|
|
||||||
U.S. federal
|
$
|
8.1
|
|
|
$
|
(9.2
|
)
|
|
$
|
53.2
|
|
U.S. state
|
0.8
|
|
|
0.8
|
|
|
0.6
|
|
|||
Foreign
|
9.7
|
|
|
11.6
|
|
|
14.2
|
|
|||
|
18.6
|
|
|
3.2
|
|
|
68.0
|
|
|||
Deferred income taxes:
|
|
|
|
|
|
||||||
U.S. federal
|
2.3
|
|
|
3.6
|
|
|
(1.3
|
)
|
|||
U.S. state
|
(1.9
|
)
|
|
1.4
|
|
|
2.9
|
|
|||
Foreign
|
(3.8
|
)
|
|
2.5
|
|
|
—
|
|
|||
|
(3.4
|
)
|
|
7.5
|
|
|
1.6
|
|
|||
Total
|
$
|
15.2
|
|
|
$
|
10.7
|
|
|
$
|
69.6
|
|
|
For the Years Ended December 31,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|||||||||
Tax provision at U.S. statutory rate
|
$
|
20.3
|
|
|
21.0
|
%
|
|
$
|
24.5
|
|
|
21.0
|
%
|
|
$
|
35.6
|
|
|
35.0
|
%
|
Foreign income tax rate differential
|
0.6
|
|
|
0.5
|
|
|
2.5
|
|
|
2.2
|
|
|
(3.3
|
)
|
|
(3.3
|
)
|
|||
Income from passthrough entities
|
1.7
|
|
|
1.6
|
|
|
0.7
|
|
|
0.6
|
|
|
6.4
|
|
|
6.4
|
|
|||
Global intangible low tax inclusion
|
(0.1
|
)
|
|
(0.1
|
)
|
|
7.0
|
|
|
6.0
|
|
|
—
|
|
|
—
|
|
|||
Foreign derived intangible income
|
(0.2
|
)
|
|
(0.2
|
)
|
|
(4.2
|
)
|
|
(3.6
|
)
|
|
—
|
|
|
—
|
|
|||
State income tax, net of federal benefit
|
(0.2
|
)
|
|
(0.2
|
)
|
|
1.7
|
|
|
1.5
|
|
|
2.7
|
|
|
2.6
|
|
|||
Adjustments to valuation allowances
|
(3.7
|
)
|
|
(3.8
|
)
|
|
(2.5
|
)
|
|
(2.1
|
)
|
|
(2.8
|
)
|
|
(2.8
|
)
|
|||
Transition tax
|
(0.7
|
)
|
|
(0.6
|
)
|
|
(11.6
|
)
|
|
(10.0
|
)
|
|
51.4
|
|
|
50.6
|
|
|||
Other tax credits
|
(2.0
|
)
|
|
(2.1
|
)
|
|
(2.6
|
)
|
|
(2.3
|
)
|
|
(2.3
|
)
|
|
(2.3
|
)
|
|||
Foreign tax credits
|
(3.5
|
)
|
|
(3.6
|
)
|
|
(5.1
|
)
|
|
(4.4
|
)
|
|
(9.2
|
)
|
|
(9.0
|
)
|
|||
Other foreign operational taxes
|
2.9
|
|
|
3.0
|
|
|
3.1
|
|
|
2.7
|
|
|
4.2
|
|
|
4.2
|
|
|||
Domestic production deduction
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.4
|
)
|
|
(2.3
|
)
|
|||
Remeasurement of deferred taxes due to tax law
|
0.9
|
|
|
1.0
|
|
|
(1.8
|
)
|
|
(1.5
|
)
|
|
(11.8
|
)
|
|
(11.7
|
)
|
|||
Non-deductible compensation
|
1.1
|
|
|
1.1
|
|
|
0.4
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|||
Other, net
|
(1.9
|
)
|
|
(1.9
|
)
|
|
(1.4
|
)
|
|
(1.2
|
)
|
|
1.1
|
|
|
1.2
|
|
|||
Provision for income taxes
|
$
|
15.2
|
|
|
15.7
|
%
|
|
$
|
10.7
|
|
|
9.2
|
%
|
|
$
|
69.6
|
|
|
68.6
|
%
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred Tax Assets
|
|
|
|
||||
Receivable allowances
|
$
|
0.4
|
|
|
$
|
0.8
|
|
Inventory and other assets
|
—
|
|
|
1.1
|
|
||
Postretirement and other employee benefits
|
19.0
|
|
|
14.8
|
|
||
Derivatives
|
0.1
|
|
|
—
|
|
||
Net operating loss and tax credit carryforwards
|
93.7
|
|
|
93.3
|
|
||
Capital loss carryforward
|
6.9
|
|
|
—
|
|
||
Investment in subsidiaries
|
—
|
|
|
5.6
|
|
||
Intangibles
|
45.7
|
|
|
60.0
|
|
||
Other
|
3.9
|
|
|
1.2
|
|
||
|
169.7
|
|
|
176.8
|
|
||
Less: Valuation allowance
|
(157.4
|
)
|
|
(172.1
|
)
|
||
Net deferred income tax assets
|
$
|
12.3
|
|
|
$
|
4.7
|
|
|
|
|
|
||||
Deferred Tax Liabilities
|
|
|
|
||||
Net property, plant and equipment
|
$
|
(52.6
|
)
|
|
$
|
(51.9
|
)
|
Accruals and other liabilities
|
(0.6
|
)
|
|
(0.2
|
)
|
||
Investment in subsidiaries
|
(3.5
|
)
|
|
—
|
|
||
Derivatives
|
—
|
|
|
(0.3
|
)
|
||
Other
|
(0.1
|
)
|
|
—
|
|
||
Net deferred income tax liabilities
|
$
|
(56.8
|
)
|
|
$
|
(52.4
|
)
|
|
|
|
|
||||
Total net deferred income tax liabilities
|
$
|
(44.5
|
)
|
|
$
|
(47.7
|
)
|
|
2019
|
||
2020-2023
|
$
|
0.2
|
|
2024-2035
|
15.3
|
|
|
Indefinite
|
75.0
|
|
|
|
$
|
90.5
|
|
|
December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Uncertain tax position balance at beginning of year
|
$
|
1.1
|
|
|
$
|
1.0
|
|
|
$
|
2.4
|
|
Increases related to current year tax positions
|
0.6
|
|
|
0.6
|
|
|
0.3
|
|
|||
Increases related to prior year tax positions
|
—
|
|
|
—
|
|
|
0.4
|
|
|||
Decreases related to prior year tax positions
|
—
|
|
|
(0.2
|
)
|
|
(2.0
|
)
|
|||
Decreases related to expiration of statute of limitations
|
—
|
|
|
(0.3
|
)
|
|
(0.1
|
)
|
|||
Uncertain tax position balance at end of year
|
$
|
1.7
|
|
|
$
|
1.1
|
|
|
$
|
1.0
|
|
Jurisdiction
|
Fiscal Years
|
Belgium
|
2017-2019
|
Brazil
|
2014-2019
|
Canada
|
2015-2019
|
China
|
2017-2019
|
France
|
2016-2019
|
Germany
|
2015-2019
|
Hong Kong
|
2013-2019
|
Luxembourg
|
2014-2019
|
Philippines
|
2016-2019
|
Poland
|
2013-2019
|
Spain
|
2015-2019
|
United Kingdom
|
2016-2019
|
United States
|
|
Federal
|
2016-2019
|
State
|
2014-2019
|
|
Pension Benefits
|
|
OPEB Benefits
|
||||||||||||||||||||
|
United States
|
|
France
|
|
United States
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||
Change in Projected Benefit Obligation, or PBO:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
PBO at beginning of year
|
$
|
112.3
|
|
|
$
|
124.1
|
|
|
$
|
29.5
|
|
|
$
|
30.5
|
|
|
$
|
1.2
|
|
|
$
|
1.4
|
|
Service cost
|
—
|
|
|
—
|
|
|
1.0
|
|
|
1.1
|
|
|
—
|
|
|
—
|
|
||||||
Interest cost
|
4.6
|
|
|
4.3
|
|
|
0.4
|
|
|
0.4
|
|
|
0.1
|
|
|
0.1
|
|
||||||
Actuarial loss (gain)
|
11.1
|
|
|
(8.2
|
)
|
|
3.2
|
|
|
0.9
|
|
|
0.1
|
|
|
(0.2
|
)
|
||||||
Participant contributions
|
—
|
|
|
—
|
|
|
0.7
|
|
|
1.0
|
|
|
0.1
|
|
|
0.1
|
|
||||||
Gross benefits paid
|
(8.1
|
)
|
|
(7.9
|
)
|
|
(2.3
|
)
|
|
(3.0
|
)
|
|
(0.1
|
)
|
|
(0.2
|
)
|
||||||
Currency translation effect
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|
(1.4
|
)
|
|
—
|
|
|
—
|
|
||||||
PBO at end of year
|
$
|
119.9
|
|
|
$
|
112.3
|
|
|
$
|
31.9
|
|
|
$
|
29.5
|
|
|
$
|
1.4
|
|
|
$
|
1.2
|
|
Change in Plan Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fair value of plan assets at beginning of year
|
$
|
113.1
|
|
|
$
|
128.7
|
|
|
$
|
2.1
|
|
|
$
|
3.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Actual return on plan assets
|
20.8
|
|
|
(7.6
|
)
|
|
0.2
|
|
|
(0.7
|
)
|
|
—
|
|
|
—
|
|
||||||
Employer contributions
|
—
|
|
|
—
|
|
|
1.1
|
|
|
1.2
|
|
|
—
|
|
|
—
|
|
||||||
Participant contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
0.2
|
|
||||||
Gross benefits paid
|
(8.1
|
)
|
|
(8.0
|
)
|
|
(2.3
|
)
|
|
(1.5
|
)
|
|
(0.1
|
)
|
|
(0.2
|
)
|
||||||
Currency translation effect
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
||||||
Fair value of plan assets at end of year
|
$
|
125.8
|
|
|
$
|
113.1
|
|
|
$
|
1.1
|
|
|
$
|
2.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Funded status at end of year
|
$
|
5.9
|
|
|
$
|
0.8
|
|
|
$
|
(30.8
|
)
|
|
$
|
(27.4
|
)
|
|
$
|
(1.4
|
)
|
|
$
|
(1.2
|
)
|
|
United States
|
|
France
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
PBO
|
$
|
119.9
|
|
|
$
|
112.3
|
|
|
$
|
31.9
|
|
|
$
|
29.5
|
|
ABO
|
119.9
|
|
|
112.3
|
|
|
31.9
|
|
|
24.9
|
|
||||
Fair value of plan assets
|
125.8
|
|
|
113.1
|
|
|
1.1
|
|
|
2.1
|
|
|
Pension Benefits
|
|
OPEB Benefits
|
||||||||
|
United States
|
|
France
|
|
United States
|
||||||
Accumulated loss
|
$
|
23.3
|
|
|
$
|
15.2
|
|
|
$
|
0.2
|
|
Prior service credit
|
—
|
|
|
(2.6
|
)
|
|
—
|
|
|||
Accumulated other comprehensive loss
|
$
|
23.3
|
|
|
$
|
12.6
|
|
|
$
|
0.2
|
|
|
Pension Benefits
|
|
OPEB Benefits
|
||||||||
|
United States
|
|
France
|
|
United States
|
||||||
Amortization of accumulated loss
|
$
|
(3.5
|
)
|
|
$
|
(1.2
|
)
|
|
$
|
—
|
|
Amortization of prior service credit
|
—
|
|
|
0.3
|
|
|
—
|
|
|||
Total
|
$
|
(3.5
|
)
|
|
$
|
(0.9
|
)
|
|
$
|
—
|
|
|
Pension Benefits
|
|
OPEB Benefits
|
||||||||||||||
|
United States
|
|
France
|
|
United States
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||
Discount rate
|
3.20
|
%
|
|
4.29
|
%
|
|
0.53
|
%
|
|
1.28
|
%
|
|
3.21
|
%
|
|
4.30
|
%
|
Rate of compensation increase
|
—
|
%
|
|
—
|
%
|
|
1.96
|
%
|
|
1.75
|
%
|
|
3.50
|
%
|
|
3.50
|
%
|
|
U.S. Pension Benefits
|
|
French Pension Benefits
|
|
U.S. OPEB Benefits
|
||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.0
|
|
|
$
|
1.1
|
|
|
$
|
1.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
4.6
|
|
|
4.3
|
|
|
4.8
|
|
|
0.4
|
|
|
0.4
|
|
|
0.4
|
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|||||||||
Expected return on plan assets
|
(5.8
|
)
|
|
(5.8
|
)
|
|
(6.4
|
)
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Amortizations and other
|
2.0
|
|
|
3.2
|
|
|
3.2
|
|
|
0.9
|
|
|
1.1
|
|
|
1.4
|
|
|
—
|
|
|
0.1
|
|
|
0.2
|
|
|||||||||
Net periodic benefit cost
|
$
|
0.8
|
|
|
$
|
1.7
|
|
|
$
|
1.6
|
|
|
$
|
2.2
|
|
|
$
|
2.5
|
|
|
$
|
2.7
|
|
|
$
|
0.1
|
|
|
$
|
0.2
|
|
|
$
|
0.3
|
|
|
Pension Benefits
|
|
OPEB Benefits
|
|||||||||||||||||||||||
|
United States
|
|
France
|
|
United States
|
|||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
|||||||||
Discount rate
|
4.29
|
%
|
|
3.60
|
%
|
|
4.11
|
%
|
|
1.28
|
%
|
|
1.28
|
%
|
|
1.14
|
%
|
|
4.30
|
%
|
|
3.59
|
%
|
|
4.09
|
%
|
Expected long-term rate of return on plan assets
|
5.14
|
%
|
|
5.00
|
%
|
|
5.56
|
%
|
|
3.00
|
%
|
|
3.00
|
%
|
|
3.00
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
Rate of compensation increase
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
1.96
|
%
|
|
1.75
|
%
|
|
1.75
|
%
|
|
3.50
|
%
|
|
3.50
|
%
|
|
3.50
|
%
|
|
United States
|
|
France
|
|||||||||||
|
2020 Target
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||
Asset Category
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents
|
—
|
%
|
|
1
|
%
|
|
1
|
%
|
|
41
|
%
|
|
43
|
%
|
Equity securities*
|
|
|
|
|
|
|
|
|
|
|||||
Domestic large cap
|
9
|
|
|
5
|
|
|
5
|
|
|
31
|
|
|
28
|
|
Domestic small cap
|
5
|
|
|
3
|
|
|
3
|
|
|
—
|
|
|
—
|
|
International
|
10
|
|
|
15
|
|
|
14
|
|
|
—
|
|
|
—
|
|
Fixed income securities
|
76
|
|
|
76
|
|
|
77
|
|
|
26
|
|
|
27
|
|
Alternative investments**
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
Total
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
*
|
None of the Company's pension plan assets are targeted for investment in SWM stock, except that it is possible that one or more mutual funds held by the plan could hold shares of SWM.
|
**
|
Investments in this category under the U.S. pension plan only may include hedge funds, and may include real estate under the French pension plan.
|
Level 1
|
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
|
Level 2
|
Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly;
|
Level 3
|
Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
|
|
United States
|
|
France
|
||||||||||||||||||||||||||||
Plan Asset Category
|
Total
|
|
Other*
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
||||||||||||||||
Cash equivalents
|
$
|
0.9
|
|
|
$
|
—
|
|
|
$
|
0.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.4
|
|
|
$
|
0.4
|
|
|
$
|
—
|
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Domestic large cap
|
6.8
|
|
|
6.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
0.3
|
|
|
—
|
|
||||||||
Domestic small cap
|
4.3
|
|
|
4.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
International
|
19.1
|
|
|
19.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Fixed income securities
|
94.7
|
|
|
44.4
|
|
|
—
|
|
|
50.3
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
0.3
|
|
||||||||
Alternative investments**
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
||||||||
Total
|
$
|
125.8
|
|
|
$
|
74.6
|
|
|
$
|
0.9
|
|
|
$
|
50.3
|
|
|
$
|
—
|
|
|
$
|
1.1
|
|
|
$
|
0.7
|
|
|
$
|
0.4
|
|
|
United States
|
|
France
|
||||||||||||||||||||||||||||
Plan Asset Category
|
Total
|
|
Other*
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
||||||||||||||||
Cash equivalents
|
$
|
1.0
|
|
|
$
|
—
|
|
|
$
|
1.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.9
|
|
|
$
|
0.9
|
|
|
$
|
—
|
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Domestic large cap
|
5.7
|
|
|
5.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.6
|
|
|
0.6
|
|
|
—
|
|
||||||||
Domestic small cap
|
3.3
|
|
|
3.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
International
|
15.5
|
|
|
15.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Fixed income securities
|
87.6
|
|
|
41.2
|
|
|
—
|
|
|
46.4
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
|
0.5
|
|
||||||||
Alternative investments**
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
||||||||
Total
|
$
|
113.1
|
|
|
$
|
65.7
|
|
|
$
|
1.0
|
|
|
$
|
46.4
|
|
|
$
|
—
|
|
|
$
|
2.1
|
|
|
$
|
1.5
|
|
|
$
|
0.6
|
|
*
|
Assets are measured at Net Asset Value ("NAV") as a practical expedient and not subject to hierarchy level classification disclosure.
|
Level 3 Asset Reconciliation
|
Alternative
Investments
Total
|
||
Beginning balance, January 1, 2018
|
$
|
0.1
|
|
Realized and unrealized gains
|
—
|
|
|
Purchases
|
—
|
|
|
Sales
|
(0.1
|
)
|
|
Ending balance, December 31, 2018
|
$
|
—
|
|
Realized and unrealized gains
|
—
|
|
|
Purchases
|
—
|
|
|
Sales
|
—
|
|
|
Ending balance, December 31, 2019
|
$
|
—
|
|
|
United States
|
|
France
|
||||||||
|
Pension
Benefits
|
|
Healthcare
and Life
Insurance
Benefits
|
|
Pension
Benefits
|
||||||
2020
|
$
|
8.5
|
|
|
$
|
0.2
|
|
|
$
|
1.6
|
|
2021
|
8.4
|
|
|
0.2
|
|
|
1.0
|
|
|||
2022
|
8.4
|
|
|
0.1
|
|
|
0.6
|
|
|||
2023
|
8.1
|
|
|
0.1
|
|
|
1.7
|
|
|||
2024
|
8.0
|
|
|
0.1
|
|
|
1.3
|
|
|||
2025 - 2029
|
37.6
|
|
|
0.3
|
|
|
8.0
|
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
# of Shares
|
|
Weighted Average Fair Value at Date of Grant
|
|
# of Shares
|
|
Weighted Average Fair Value at Date of Grant
|
|
# of Shares
|
|
Weighted Average Fair Value at Date of Grant
|
|||||||||
Nonvested restricted shares outstanding at January 1
|
184,190
|
|
|
$
|
40.33
|
|
|
283,338
|
|
|
$
|
37.26
|
|
|
224,289
|
|
|
$
|
41.30
|
|
Granted
|
155,982
|
|
|
35.62
|
|
|
142,475
|
|
|
39.58
|
|
|
216,017
|
|
|
36.03
|
|
|||
Forfeited
|
(8,869
|
)
|
|
41.34
|
|
|
(12,858
|
)
|
|
40.06
|
|
|
(29,150
|
)
|
|
42.50
|
|
|||
Vested
|
(109,681
|
)
|
|
40.12
|
|
|
(228,765
|
)
|
|
35.86
|
|
|
(127,818
|
)
|
|
41.06
|
|
|||
Nonvested restricted shares outstanding at December 31
|
221,622
|
|
|
$
|
37.08
|
|
|
184,190
|
|
|
$
|
40.33
|
|
|
283,338
|
|
|
$
|
37.26
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Numerator (basic and diluted):
|
|
|
|
|
|
||||||
Net income
|
$
|
85.8
|
|
|
$
|
94.5
|
|
|
$
|
34.5
|
|
Less: Dividends paid to participating securities
|
(0.4
|
)
|
|
(0.3
|
)
|
|
(0.4
|
)
|
|||
Less: Undistributed earnings available to participating securities
|
(0.2
|
)
|
|
(0.3
|
)
|
|
—
|
|
|||
Undistributed and distributed earnings available to common stockholders
|
$
|
85.2
|
|
|
$
|
93.9
|
|
|
$
|
34.1
|
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
||||||
Average number of common shares outstanding
|
30,652.2
|
|
|
30,551.3
|
|
|
30,407.1
|
|
|||
Effect of dilutive stock-based compensation
|
186.1
|
|
|
141.6
|
|
|
142.2
|
|
|||
Average number of common and potential common shares outstanding
|
30,838.3
|
|
|
30,692.9
|
|
|
30,549.3
|
|
|
Year Ended December 31, 2019
|
||
Income Statement Classification
|
(Expense) Benefit
|
||
Cost of products sold1
|
$
|
(1.5
|
)
|
Operating profit1
|
(1.5
|
)
|
|
Other expense2
|
(2.2
|
)
|
|
Interest expense2
|
(7.1
|
)
|
|
Income from continuing operations before income taxes
|
(10.8
|
)
|
|
Income tax benefit
|
4.2
|
|
|
Net income
|
$
|
(6.6
|
)
|
($ in millions)
|
Net Sales
|
|||||||||||||||||||
|
For the Years Ended December 31,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
Advanced Materials & Structures
|
$
|
477.2
|
|
|
46.7
|
%
|
|
$
|
467.9
|
|
|
44.9
|
%
|
|
$
|
433.2
|
|
|
44.1
|
%
|
Engineered Papers
|
545.6
|
|
|
53.3
|
|
|
573.4
|
|
|
55.1
|
|
|
548.9
|
|
|
55.9
|
|
|||
Consolidated
|
$
|
1,022.8
|
|
|
100.0
|
%
|
|
$
|
1,041.3
|
|
|
100.0
|
%
|
|
$
|
982.1
|
|
|
100.0
|
%
|
($ in millions)
|
Operating Profit
|
|||||||||||||||||||
|
For the Years Ended December 31,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
Advanced Materials & Structures
|
$
|
64.3
|
|
|
48.0
|
%
|
|
$
|
49.5
|
|
|
36.7
|
%
|
|
$
|
48.5
|
|
|
37.8
|
%
|
Engineered Papers
|
119.2
|
|
|
89.0
|
|
|
121.8
|
|
|
90.2
|
|
|
119.7
|
|
|
93.3
|
|
|||
Unallocated
|
(49.5
|
)
|
|
(37.0
|
)
|
|
(36.3
|
)
|
|
(26.9
|
)
|
|
(39.9
|
)
|
|
(31.1
|
)
|
|||
Consolidated
|
$
|
134.0
|
|
|
100.0
|
%
|
|
$
|
135.0
|
|
|
100.0
|
%
|
|
$
|
128.3
|
|
|
100.0
|
%
|
($ in millions)
|
Segment Assets
|
||||||||||
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||
Advanced Materials & Structures
|
$
|
781.2
|
|
|
$
|
796.1
|
|
|
$
|
811.7
|
|
Engineered Papers
|
512.4
|
|
|
527.4
|
|
|
537.6
|
|
|||
Unallocated
|
178.1
|
|
|
143.0
|
|
|
193.2
|
|
|||
Consolidated
|
$
|
1,471.7
|
|
|
$
|
1,466.5
|
|
|
$
|
1,542.5
|
|
($ in millions)
|
Capital Spending
|
Depreciation
|
|||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
Advanced Materials & Structures
|
$
|
16.1
|
|
|
$
|
15.0
|
|
|
$
|
11.5
|
|
|
$
|
12.8
|
|
|
$
|
14.1
|
|
|
$
|
12.3
|
|
Engineered Papers
|
12.0
|
|
|
11.7
|
|
|
25.6
|
|
|
22.8
|
|
|
23.9
|
|
|
23.4
|
|
||||||
Unallocated
|
0.5
|
|
|
0.3
|
|
|
0.1
|
|
|
0.2
|
|
|
0.1
|
|
|
—
|
|
||||||
Consolidated
|
$
|
28.6
|
|
|
$
|
27.0
|
|
|
$
|
37.2
|
|
|
$
|
35.8
|
|
|
$
|
38.1
|
|
|
$
|
35.7
|
|
|
Long-Lived Assets
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
United States
|
$
|
118.5
|
|
|
$
|
115.8
|
|
|
$
|
115.0
|
|
France
|
158.8
|
|
|
167.4
|
|
|
181.3
|
|
|||
Brazil
|
19.5
|
|
|
20.8
|
|
|
24.2
|
|
|||
Poland
|
14.7
|
|
|
16.8
|
|
|
21.9
|
|
|||
Other foreign countries
|
30.7
|
|
|
27.7
|
|
|
26.9
|
|
|||
Consolidated
|
$
|
342.2
|
|
|
$
|
348.5
|
|
|
$
|
369.3
|
|
|
Net Sales
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
United States
|
$
|
514.1
|
|
|
$
|
513.4
|
|
|
$
|
468.9
|
|
Europe and the former Commonwealth of Independent States
|
218.4
|
|
|
260.8
|
|
|
259.9
|
|
|||
Asia-Pacific (including China)
|
172.6
|
|
|
159.4
|
|
|
148.4
|
|
|||
Latin America
|
53.2
|
|
|
53.5
|
|
|
57.9
|
|
|||
Other foreign countries
|
64.5
|
|
|
54.2
|
|
|
47.0
|
|
|||
Consolidated
|
$
|
1,022.8
|
|
|
$
|
1,041.3
|
|
|
$
|
982.1
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Allowance for Doubtful Accounts
|
|
|
|
|
|
||||||
Beginning balance
|
$
|
1.7
|
|
|
$
|
1.0
|
|
|
$
|
0.8
|
|
Bad debt expense
|
0.4
|
|
|
1.2
|
|
|
0.8
|
|
|||
Recoveries
|
(0.3
|
)
|
|
(0.2
|
)
|
|
—
|
|
|||
Write-offs and discounts
|
(0.3
|
)
|
|
(0.3
|
)
|
|
(0.6
|
)
|
|||
Ending balance
|
$
|
1.5
|
|
|
$
|
1.7
|
|
|
$
|
1.0
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Interest paid
|
$
|
29.1
|
|
|
$
|
24.0
|
|
|
$
|
22.7
|
|
Income taxes paid
|
20.8
|
|
|
23.2
|
|
|
38.1
|
|
|||
Capital spending in accounts payable and accrued liabilities
|
5.9
|
|
|
5.0
|
|
|
7.7
|
|
|||
Deferred contingent business acquisition consideration
|
—
|
|
|
—
|
|
|
8.6
|
|
|
2019
|
||||||||||||||||||
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Year
|
||||||||||
Net sales
|
$
|
258.0
|
|
|
$
|
269.9
|
|
|
$
|
256.4
|
|
|
$
|
238.5
|
|
|
$
|
1,022.8
|
|
Gross profit
|
67.9
|
|
|
79.0
|
|
|
72.2
|
|
|
70.9
|
|
|
290.0
|
|
|||||
Restructuring and impairment expense
|
—
|
|
|
0.4
|
|
|
1.6
|
|
|
1.7
|
|
|
3.7
|
|
|||||
Operating profit
|
30.4
|
|
|
44.2
|
|
|
34.6
|
|
|
24.8
|
|
|
134.0
|
|
|||||
Income from continuing operations
|
17.4
|
|
|
20.5
|
|
|
27.7
|
|
|
20.2
|
|
|
85.8
|
|
|||||
Loss from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income
|
$
|
17.4
|
|
|
$
|
20.5
|
|
|
$
|
27.7
|
|
|
$
|
20.2
|
|
|
$
|
85.8
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income per share from continuing operations - basic
|
$
|
0.57
|
|
|
$
|
0.66
|
|
|
$
|
0.90
|
|
|
$
|
0.65
|
|
|
$
|
2.78
|
|
Loss per share from discontinued operations - basic
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income per share - basic
|
$
|
0.57
|
|
|
$
|
0.66
|
|
|
$
|
0.90
|
|
|
$
|
0.65
|
|
|
$
|
2.78
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income per share from continuing operations - diluted
|
$
|
0.56
|
|
|
$
|
0.66
|
|
|
$
|
0.90
|
|
|
$
|
0.64
|
|
|
$
|
2.76
|
|
Loss per share from discontinued operations - diluted
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income per share - diluted
|
$
|
0.56
|
|
|
$
|
0.66
|
|
|
$
|
0.90
|
|
|
$
|
0.64
|
|
|
$
|
2.76
|
|
|
2018
|
||||||||||||||||||
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Year
|
||||||||||
Net sales
|
$
|
261.9
|
|
|
$
|
270.4
|
|
|
$
|
260.3
|
|
|
$
|
248.7
|
|
|
$
|
1,041.3
|
|
Gross profit
|
72.0
|
|
|
77.4
|
|
|
65.3
|
|
|
63.8
|
|
|
278.5
|
|
|||||
Restructuring and impairment expense
|
0.4
|
|
|
0.6
|
|
|
0.4
|
|
|
0.3
|
|
|
1.7
|
|
|||||
Operating profit
|
35.0
|
|
|
42.1
|
|
|
31.1
|
|
|
26.8
|
|
|
135.0
|
|
|||||
Income from continuing operations
|
20.9
|
|
|
25.8
|
|
|
40.9
|
|
|
7.2
|
|
|
94.8
|
|
|||||
(Loss) income from discontinued operations
|
(0.4
|
)
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
(0.3
|
)
|
|||||
Net income
|
$
|
20.5
|
|
|
$
|
25.8
|
|
|
$
|
41.0
|
|
|
$
|
7.2
|
|
|
$
|
94.5
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income per share from continuing operations - basic
|
$
|
0.68
|
|
|
$
|
0.84
|
|
|
$
|
1.33
|
|
|
$
|
0.23
|
|
|
$
|
3.08
|
|
Loss per share from discontinued operations - basic
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|||||
Net income per share - basic
|
$
|
0.67
|
|
|
$
|
0.84
|
|
|
$
|
1.33
|
|
|
$
|
0.23
|
|
|
$
|
3.07
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income per share from continuing operations - diluted
|
$
|
0.68
|
|
|
$
|
0.83
|
|
|
$
|
1.33
|
|
|
$
|
0.23
|
|
|
$
|
3.07
|
|
Loss per share from discontinued operations - diluted
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|||||
Net income per share - diluted
|
$
|
0.67
|
|
|
$
|
0.83
|
|
|
$
|
1.33
|
|
|
$
|
0.23
|
|
|
$
|
3.06
|
|
•
|
Tested the effectiveness of controls over management’s application of income tax laws to its global corporate structure, including controls over the identification and assessment of changes to tax laws in the various jurisdictions in which it operates, including the Tax Act, and controls related to the allocation of income to the Company’s various tax jurisdictions.
|
•
|
Obtained an understanding of the Company’s overall legal entity structure by reading and evaluating the Company’s organizational charts and associated documentation, including legal documents.
|
•
|
We read minutes of the meetings of the board of directors and inquired of Company personnel, including legal, to evaluate whether there were any significant changes in the legal entity structure that were relevant to the provision for income taxes.
|
•
|
With the assistance of our U.S. and international income tax specialists, we evaluated management’s application of relevant tax laws to its legal entity structure and the effect on the Company’s income tax provision, including the Company’s calculations of current period income tax expense and deductions associated with GILTI and FDII, by reviewing and evaluating management’s income tax calculations and assessing the Company’s compliance with tax laws.
|
•
|
With the assistance of our U.S. and international income tax specialists, we evaluated management’s income reporting to the various tax jurisdictions in which the Company operates based on its global corporate structure.
|
Plan Category
|
|
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans
|
|
Equity compensation plans approved by stockholders:
|
|
|
|
Outside Directors Stock Plan (1)
|
|
101,722
|
|
Long-Term Incentive Plan (2)
|
|
4,350,587
|
|
Total approved by stockholders
|
|
4,452,309
|
|
Equity compensation plans not approved by stockholders
|
|
—
|
|
Grand total
|
|
4,452,309
|
|
(a)
|
The consolidated financial statements and financial statement schedules filed as part of this report are listed in the Index to the Consolidated Financial Statements set forth in Part II, Item 8.
|
Exhibit
Number
|
|
Exhibit
|
2.1
|
|
|
2.2
|
|
|
3.1
|
|
|
3.2
|
|
|
4.1
|
|
|
4.2
|
|
|
10.1
|
|
|
10.2
|
|
|
10.3
|
|
|
10.4.1
|
|
|
10.4.2
|
|
|
10.5
|
|
|
10.6.1
|
|
|
10.6.2
|
|
|
10.6.3
|
|
|
10.7
|
|
|
10.8
|
|
|
*10.9
|
|
Exhibit
Number
|
|
Exhibit
|
10.10.1
|
|
|
10.10.2
|
|
|
10.10.3
|
|
|
10.10.4
|
|
|
10.10.5
|
|
|
10.11.1
|
|
|
10.11.2
|
|
|
10.11.3
|
|
|
10.11.4
|
|
|
10.12
|
|
|
10.13
|
|
|
10.14.1
|
|
|
10.14.2
|
|
|
10.15
|
|
|
10.16
|
|
Exhibit
Number
|
|
Exhibit
|
10.17
|
|
|
10.18
|
|
|
10.19
|
|
|
10.20
|
|
|
10.21
|
|
|
10.22
|
|
|
*21.1
|
|
|
*23.1
|
|
|
*24.1
|
|
|
*31.1
|
|
|
*31.2
|
|
|
*32
|
|
|
99.2
|
|
|
101
|
|
The following materials from the Company's Annual Report on Form 10-K for the year ended December 31, 2019, formatted in Inline eXtensible Business Reporting Language ("iXBRL"): (i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Changes in Stockholders' Equity, (v) the Consolidated Statements of Cash Flow, and (vi) Notes to Consolidated Financial Statements (furnished herewith).
|
*
|
Filed herewith.
|
**
|
Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 15(b) of Form 10-K
|
***
|
Schedules omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish a supplemental copy of any omitted schedule to the SEC upon request.
|
‡
|
These Section 906 certifications are not being incorporated by reference into the Form 10-K filing or otherwise deemed to be filed with the SEC.
|
|
|
Schweitzer-Mauduit International, Inc.
|
|
|
|
By:
|
|
Dated:
|
March 2, 2020
|
|
/s/ Dr. Jeffrey Kramer
|
|
|
|
Dr. Jeffrey Kramer
|
|
|
|
Chief Executive Officer
|
|
|
|
(principal executive officer)
|
Name
|
|
Position
|
|
Date
|
|
|
|
|
|
/s/ Dr. Jeffrey Kramer
|
|
Chief Executive Officer and Director
|
|
March 2, 2020
|
Dr. Jeffrey Kramer
|
|
(principal executive officer)
|
|
|
|
|
|
|
|
/s/ Andrew Wamser
|
|
Executive Vice President and Chief Financial Officer
|
|
March 2, 2020
|
Andrew Wamser
|
|
(principal financial officer)
|
|
|
|
|
|
|
|
/s/ Michael Schmit
|
|
Corporate Controller and Chief Accounting Officer
|
|
March 2, 2020
|
Michael Schmit
|
|
(principal accounting officer)
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
March 2, 2020
|
Deborah Borg
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
March 2, 2020
|
K.C. Caldabaugh
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
March 2, 2020
|
Jeffrey Keenan
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
March 2, 2020
|
Marco Levi
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
March 2, 2020
|
Kimberly Ritrievi
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
March 2, 2020
|
John D. Rogers
|
|
|
|
|
|
|
|
|
|
*
|
|
Director
|
|
March 2, 2020
|
Anderson D. Warlick
|
|
|
|
|
|
|
|
|
|
*By:
|
|
|
|
|
|
|
|
|
|
/s/ Ricardo Nunez
|
|
|
|
March 2, 2020
|
Ricardo Nunez
|
|
|
|
|
Attorney-In-Fact
|
|
|
|
|
•
|
"Flax" is a cellulose fiber from a flax plant used as a raw material in the production of certain cigarette papers.
|
•
|
"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.
|
•
|
"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 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.
|
Function
|
|
Amount Paid
|
|
Form of Payment
|
|
|
|
|
|
Annual Stock Retainer
|
|
$95,000 annually
|
|
Payable in quarterly increments in shares of company common stock at its fair market value
|
|
|
|
|
|
Annual Cash Retainer
|
|
$70,000 annually
|
|
Payable in cash in quarterly increments
|
|
|
|
|
|
Audit Committee Members Meeting Fee
|
|
$15,000 annually
|
|
Payable in cash in quarterly increments
|
|
|
|
|
|
Audit Committee Chair Meeting Fee
|
|
$30,000 annually
|
|
Payable in cash in quarterly increments
|
|
|
|
|
|
Compensation Committee Members Meeting Fee
|
|
$10,000 annually
|
|
Payable in cash in quarterly increments
|
|
|
|
|
|
Compensation Committee Chair Meeting Fee
|
|
$20,000 annually
|
|
Payable in cash in quarterly increments
|
|
|
|
|
|
Nominating & Governance Committee Members Meeting Fee
|
|
$10,000 annually
|
|
Payable in cash in quarterly increments
|
|
|
|
|
|
Nominating & Governance Committee Chair Meeting Fee
|
|
$15,000 annually
|
|
Payable in cash in quarterly increments
|
|
|
|
|
|
Independent Chairman of the Board
|
|
$75,000 annually
|
|
Payable in cash in quarterly increments
|
The subsidiaries of the Company at December 31, 2019 were as follows:
|
||||
Name
|
|
Jurisdiction of
Incorporation or Organization |
|
Percentage of
Voting Power |
Schweitzer-Mauduit Canada, BCULC.
|
|
British Columbia (Canada)
|
|
100%
|
Schweitzer-Mauduit International China, Limited
|
|
Hong Kong, China
|
|
100%
|
China Tobacco Mauduit (Jiangmen) Paper
Industry Company Ltd. (1)
|
|
People’s Republic of China
|
|
50%
|
China Tobacco - Schweitzer (Yunnan) Reconstituted Tobacco Co. Ltd. (2)
|
|
People’s Republic of China
|
|
50%
|
DelStar Technologies (Shanghai) Trading Corp. Ltd.
|
|
People’s Republic of China
|
|
100%
|
DelStar Technologies (Suzhou) Co. Ltd.
|
|
People’s Republic of China
|
|
100%
|
Schweitzer-Mauduit Spain, S.L.
|
|
Spain
|
|
100%
|
Schweitzer-Mauduit do Brasil Indústria e Comércio de Papel Ltda.
|
|
Brazil
|
|
100%
|
Coretec Tubing, Inc.
|
|
Delaware
|
|
100%
|
U.S. Netting, Inc.
|
|
Delaware
|
|
100%
|
DelStar Technologies, Inc.
|
|
Delaware
|
|
100%
|
DelStar Air, Inc.
|
|
Delaware
|
|
100%
|
DelStar Electrostatic, Inc.
|
|
Delaware
|
|
100%
|
Schweitzer-Mauduit Holding S.A.S.
|
|
France
|
|
100%
|
LTR Industries S.A.S.
|
|
France
|
|
100%
|
Papeteries de Saint-Girons S.A.S.
|
|
France
|
|
100%
|
Papeteries de Malaucène S.A.S
|
|
France
|
|
100%
|
Malaucène Industries S.N.C.
|
|
France
|
|
100%
|
SWM Services S.A.S.
|
|
France
|
|
100%
|
PDM Industries S.A.S.
|
|
France
|
|
100%
|
SWM Europe S.a.R.L.
|
|
Luxembourg
|
|
100%
|
SWM HoldCo 1 S.à.R.L.
|
|
Luxembourg
|
|
100%
|
SWM HoldCo 2 S.à.R.L.
|
|
Luxembourg
|
|
100%
|
SWM HoldCo 3 S.à.R.L.
|
|
Luxembourg
|
|
100%
|
SWM HoldCo GP, LLC
|
|
Delaware
|
|
100%
|
SWM Luxembourg Service, LLC
|
|
Delaware
|
|
100%
|
SWM Luxembourg S.à.R.L.
|
|
Luxembourg
|
|
100%
|
SWM South S.à.R.L.
|
|
Luxembourg
|
|
100%
|
SWM Partners SCS
|
|
Luxembourg
|
|
100%
|
PDM Philippines Industries, Inc.
|
|
Philippines
|
|
100%
|
Luna Rio Landholding Corporation
|
|
Philippines
|
|
100%
|
SWM Poland GP Sp. zo.o.
|
|
Poland
|
|
100%
|
SWM RUS LLC
|
|
Russia
|
|
100%
|
DelStar International, Limited
|
|
United Kingdom
|
|
100%
|
Name
|
|
Jurisdiction of
Incorporation or Organization |
|
Percentage of
Voting Power |
SWM Argotec, LLC
|
|
Delaware
|
|
100%
|
Argotec LLC
|
|
Delaware
|
|
100%
|
Argotec Asia Pacific Limited
|
|
Singapore
|
|
100%
|
Argotec Deutschland GmBH
|
|
Germany
|
|
100%
|
Conwed Plastics B.V.B.A.
|
|
Belgium
|
|
100%
|
Conwed Plastics, LLC
|
|
Delaware
|
|
100%
|
Conwed Plastics Acquisitions Co. V LLC
|
|
Delaware
|
|
100%
|
(1)
|
Joint venture to produce tobacco-related papers in China.
|
(2)
|
Joint venture to produce reconstituted tobacco in China.
|
Dated this 2nd day of March 2020
|
|
/s/ Deborah Borg
|
|
|
Deborah Borg
|
Dated this 2nd day of March 2020
|
|
/s/ K.C. Caldabaugh
|
|
|
K.C. Caldabaugh
|
Dated this 2nd day of March 2020
|
|
/s/ Dr. Jeffrey Kramer
|
|
|
Dr. Jeffrey Kramer
|
Dated this 2nd day of March 2020
|
|
/s/ John D. Rogers
|
|
|
John D. Rogers
|
Dated this 2nd day of March 2020
|
|
/s/ Anderson D. Warlick
|
|
|
Anderson D. Warlick
|
Dated this 2nd day of March 2020
|
|
/s/ Marco Levi
|
|
|
Marco Levi
|
Dated this 2nd day of March 2020
|
|
/s/ Jeffrey Keenan
|
|
|
Jeffrey Keenan
|
Dated this 2nd day of March 2020
|
|
/s/ Kimberly Ritrievi
|
|
|
Kimberly Ritrievi
|
1.
|
I have reviewed this annual report on Form 10-K 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 annual report on Form 10-K 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/ Andrew Wamser
|
|
Andrew Wamser
Executive Vice President and
Chief Financial Officer
|
By:
|
/s/ Dr. Jeffrey Kramer
|
|
By:
|
/s/ Andrew Wamser
|
|
Dr. Jeffrey Kramer
Chief Executive Officer and Director
|
|
|
Andrew Wamser
Executive Vice President and
Chief Financial Officer
|
|
|
|
|
|
|
March 2, 2020
|
|
|
March 2, 2020
|